def14a
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
|
|
|
Filed by the
Registrantþ
|
|
|
Filed by a Party other than the
Registranto
|
|
|
|
|
|
|
Check the appropriate box:
|
|
|
|
o Preliminary
Proxy Statement
|
|
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|
|
þ Definitive
Proxy Statement
|
|
|
|
o Definitive
Additional Materials
|
|
|
o Soliciting
Material Pursuant to Rule 14a-11(c) or Rule 14a-12
|
Golden Telecom,
Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
|
|
|
|
(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined): |
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|
|
|
|
o |
Fee paid previously with preliminary materials. |
|
|
o |
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing. |
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
|
|
|
GOLDEN TELECOM, INC.
Representative Offices of
Golden TeleServices, Inc.
1 Kozhevnichesky Proezd,
2nd Floor
Moscow, Russia 115114
|
|
|
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
May 18, 2006
Budapest, Hungary
April 28,
2006
Dear Shareholders:
The 2006 annual meeting of shareholders of Golden Telecom, Inc.
(the Company or Golden Telecom) will be
held in the Salon Marzio, Ground Floor, Kempinski Hotel Corvinus
Budapest, Erzsébet tér 7-8, Budapest, Hungary on
May 18, 2006 at 1:00 p.m. local time, to consider and
act on the following matters:
1. The election of ten directors for a term of one year
(Item No. 1);
2. Approval of the Golden Telecom, Inc. 2005 Stock
Appreciation Rights Plan (Item No. 2);
3. Ratification of the selection of the auditors of the
Company for fiscal year 2006 (Item No. 3); and
4. If presented, a shareholder proposal to elect one of the
ten directors for a term of one year (Item No. 4).
Shareholders of record at the close of business on
April 11, 2006 will be entitled to vote at the meeting. If
you will need special assistance at the meeting because of a
disability, please notify the office of the General Counsel of
the Company at the Representative Offices of Golden
TeleServices, Inc., 1 Kozhevnichesky Proezd, 2nd Floor,
Moscow, Russia 115114 or Golden Telecom, Inc., 2831 Twenty-Ninth
St. N.W., Washington, D.C., 20008 or through
e-mail at
annualmeeting@gldn.net. A list of shareholders entitled
to vote at the meeting may be examined at the principal
executive offices of the Company at the Representative Offices
of Golden TeleServices, Inc., 1 Kozhevnichesky Proezd,
2nd Floor, Moscow, Russia 115114.
By Order of the Board of Directors
DEREK A. BLOOM
Senior Vice President, General
Counsel and Secretary
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
19
|
|
|
|
|
22
|
|
|
|
|
23
|
|
|
|
|
27
|
|
|
|
|
31
|
|
|
|
|
32
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
A-1
|
|
|
|
|
GOLDEN TELECOM, INC.
Representative Offices of
Golden TeleServices, Inc.
1 Kozhevnichesky Proezd,
2nd Floor
Moscow, Russia 115114
|
|
|
PROXY
STATEMENT
April 28,
2006
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (the Board of
Directors or the Board) of Golden Telecom,
Inc. (the Company or Golden Telecom) of
proxies to be voted at the annual meeting of shareholders of the
Company to be held in the Salon Marzio, Ground Floor, Kempinski
Hotel Corvinus Budapest, Erzsébet tér 7-8, Budapest,
Hungary on May 18, 2006 beginning at 1:00 p.m. local
time (the Annual Meeting). Enclosed with this Proxy
Statement is a Notice of the Annual Meeting of Shareholders,
together with a Proxy Card for your signature if you are unable
to attend. Shareholders of record who execute Proxy Cards may
revoke them at any time before they are voted. Any Proxy Card
may be revoked by the person giving it any time before it is
voted by delivering to the Corporate Secretary of the Company at
the principal executive offices of the Company at the
Representative Offices of Golden TeleServices, Inc., 1
Kozhevnichesky Proezd, 2nd Floor, Moscow, Russia, 115114,
on or before the business day prior to the Annual Meeting or at
the Annual Meeting itself, a subsequent written notice of
revocation or a subsequent Proxy Card relating to the same
shares or by attending the meeting and voting in person. The
approximate date on which this Proxy Statement and the
accompanying Proxy Card will be first sent to the Companys
shareholders is April 28, 2006.
PROXIES
AND VOTING PROCEDURES
Shares of the Companys common stock, par value
$0.01 per share (Common Stock), represented by
properly executed Proxy Cards received prior to or at the
meeting, unless such Proxy Cards have been revoked, will be
voted in accordance with the instructions indicated on the Proxy
Card.
Shareholders of record (the Shareholders) on
April 11, 2006 (the Record Date) are entitled
to vote at the Annual Meeting. On April 11, 2006, the
Company had outstanding approximately 36,500,785 shares of
Common Stock, with each share representing one vote.
If you return your signed Proxy Card to the Company before the
Annual Meeting, Golden Telecom will vote your shares as you
direct. Items 1, 2 and 3 will be presented at the Annual
Meeting by management. Item 4 is expected to be presented
at the Annual Meeting by a shareholder.
If you return the Proxy Card to us and do not specify on your
Proxy Card how you want to vote your shares, we will vote them
FOR the election of all Company nominees for
director as set forth under Election of Directors
below, FOR the proposal to approve the
Companys 2005 Stock Appreciation Rights Plan,
FOR the proposal to ratify the selection of our
auditors and will WITHHOLD AUTHORITY from the
shareholder proposal to elect a director.
The affirmative vote of the holders of a plurality of the votes
cast by shareholders will elect candidates for director
(Items No. 1 and 4 on your Proxy Card). The
affirmative vote of the holders of at least a majority of the
shares of Common Stock present in person or represented by proxy
at the meeting and entitled to vote is required to approve the
2005 Stock Appreciation Rights Plan (Item No. 2 on
your Proxy Card) and ratify the Board of Directors
appointment of Ernst & Young LLC
(Ernst & Young) as the Companys
independent auditors for 2006 (Item No. 3 on your
Proxy Card). The required quorum is a majority of the
outstanding
shares of voting stock of Golden Telecom. Golden Telecom intends
to count abstentions both for purposes of determining presence
or absence of a quorum and in the total number of shares
represented and voting with respect to a proposal. Accordingly,
abstentions will have the same effect as a vote against
Item 2 and 3.
The ten nominees for director receiving the highest number of
affirmative votes will be elected. If you vote FOR
all ten of the Companys nominees for Director under
Item 1 and you also vote FOR the shareholder
proposal under Item 4, your Proxy Card will be invalid with
respect to Items 1 and 4 because you will have voted for
eleven candidates. Therefore, if you would like to vote
FOR the shareholder proposal, you must
WITHHOLD AUTHORITY to vote for at least one of the
Companys nominees. Unless authority to vote is withheld or
another contrary instruction is indicated, properly executed
Proxy Cards received by Golden Telecom prior to or at the Annual
Meeting will be voted FOR the election of the
Company nominees listed on the following pages and will be voted
to WITHHOLD AUTHORITY on the shareholder proposal
listed on the following pages. Should any of the nominees be
unavailable to serve at the time the election occurs, the
proxyholders named in the Proxy Card will vote for substitute
nominees at their discretion.
Broker non-votes occur when nominees have voted on some of the
matters to be acted on at a meeting, but fail to vote on certain
other matters because they are not permitted to vote on such
matters in the absence of instructions from the beneficial
owners of shares. Broker non-votes, if any, with respect to a
proposal will not be counted for purposes of determining the
presence or absence of a quorum, and will not be counted as
shares represented and voting with respect to that proposal. A
broker non-vote will have no effect on the outcome of the
election of directors.
* * * * * * * * * * * * * * * * * *
2
PROPOSALS TO
BE VOTED UPON
Item No. 1
on Your Proxy Card: Election of Directors
The
Board of Directors
The size of the Companys Board of Directors is set at ten
directors. At the Annual Meeting, ten directors will be elected.
Each director will serve a one year term and will serve until
the next annual meeting of shareholders or until the director is
succeeded by another qualified director who has been elected or
until their earlier resignation. Each of the Companys
nominees, with the exception of Mr. Jean-Pierre Vandromme,
Mr. Patrick Gallagher, Mr. Vladimir Bulgak,
Mr. Ronny Naevdal and Mr. David Smyth, is now a member
of the Board of Directors of the Company and each of the
Companys nominees has indicated that he is willing and
able to serve as a director if elected and has consented to
being named as a nominee in this Proxy Statement. The following
section sets forth the name and principal business occupation or
employment of each of the Companys nominee directors.
|
|
|
Petr Aven
Age 51 |
|
Since October 1994, Mr. Aven has served as President of
Alfa Bank. As President, his major responsibilities include
strategic planning as well as business and government relations
in Russia and in the other countries where the bank operates.
Mr. Aven also currently serves as the Co-Chairman of the
Board of CTC Media, Inc. Prior to his employment with Alfa Bank,
Mr. Aven acted as a financial consultant specializing in
financial instruments of the Russian Federation in a consultancy
that he established. From November 1991 until his resignation in
December 1992, Mr. Aven served as the Minister of Foreign
Economic Relations of the Russian Federation. Prior to his
appointment as Minister, Mr. Aven was employed as a
principal researcher at the International Institute for Applied
System Analysis (IIASA) in Laxenburg, Austria where his major
projects included the methodology of socio-economic comparisons,
comparative economics, and economic reforms in centrally planned
economies. Prior to this period, from 1981 to 1989,
Mr. Aven served as a research scholar at the Institute for
Systems Studies of the USSR Academy of Sciences where he advised
the administration of Mikhail Gorbachev. Among his other
activities, Mr. Aven has acted as a guest professor and
lecturer at numerous universities, including Yale University,
Bar-Elan University (Israel), and the University of Glasgow and
has published two books on econometrics and on economic reform
and numerous articles in Russian and international journals,
including Communist Economies and Economic
Transformation, and Economic Policy. Yale
University Press and the Kiel Institute of World Economics, and
other scientific and academic institutes have published
Mr. Avens monographs. |
|
|
|
Mr. Aven has served as a member of the Companys Board
of Directors since May 2001. Mr. Aven has served as the
Chairman of the Board since his election to the Board in May
2001 and on the Boards Nominating and Corporate Governance
Committee since July 2002, including serving as Chairman of this
committee until September 2005. |
|
David Herman
Age 60 |
|
Mr. Herman has served in senior executive positions
throughout the world, including the Commonwealth of Independent
States. He retired in 2002 from the position of Vice President
of General Motors Corporation for Russia and the Commonwealth of
Independent States after 29 years with General Motors and
since 2002 has |
3
|
|
|
|
|
been a consultant to General Motors. Mr. Herman was
instrumental in the establishment of a $340 million car
plant by General Motors, Avtovaz and the European Bank for
Reconstruction and Development. Prior to his appointment with
General Motors in the Commonwealth of Independent States,
Mr. Herman served as Chairman of Adam Opel A.G., and served
as President of SAAB Automobile. |
|
|
|
Mr. Herman has served as a member of the Companys
Board of Directors since November 2002. Mr. Herman has
served as the Chair of the Boards Audit Committee since
December 2002. He has served as the Chair of the Boards
Compensation Committee since November 2005 and as the Chair of
the Boards Nominating and Corporate Governance Committee
since September 2005. |
|
Kjell Johnsen
Age 38 |
|
Kjell Johnsen is a Senior Vice President of Telenor
Central & Eastern Europe. Mr. Johnsen is
Telenors representative in the Russian Federation. From
2001 to 2006, Mr. Johnsen worked as Vice President of
Telenor Networks with responsibility for Telenors fixed
line activities in Russia and the CIS. Prior to joining Telenor
in 2000, Mr. Johnsen worked for four years with the
Norwegian group Norsk Hydro, where he held executive positions
both as Country Manager in the Ukraine and as a manager at the
regional headquarters for the CIS, Africa and Latin America,
based in Paris. |
|
|
|
Before joining Norsk Hydro, Mr. Johnsen spent four years
working as a trade manager in the Swedish shipping and trading
company Scandsea International AB. This work was also connected
with the Russian market. Mr. Johnsen holds a Masters Degree
in Business Administration in Strategic Management from the
Norwegian School of Economics and Business Administration. He
also studied Russian at a military academy during his military
service. |
|
|
|
Mr. Johnsen has served as a member of the Companys
Board of Directors since December 2003. He has served as Chair
of the Boards Executive Committee and member of the
Boards Compensation Committee and Nominating and Corporate
Governance Committee since February 2004. |
|
Alexey Khudyakov,
Age 35 |
|
Mr. Khudyakov is Vice President of Altimo, a leading
private equity group which is Alfa Groups exclusive
vehicle for investing in telecommunications. Mr. Khudyakov
joined Altimo in 2004 from Alfa Bank, where he has served as
Vice President and was managing Alfa Groups investments in
Golden Telecom and Kyivstar. From 1998 until 2002,
Mr. Khudyakov worked for the Moscow office of
McKinsey & Co. Mr. Khudyakov holds a Masters
Degree in Business Administration from INSEAD and a Masters in
Applied Mathematics and Physics from Moscow Institute of Physics
and Technology. |
|
|
|
Mr. Khudyakov was elected to the Companys Board of
Directors in November 2005. |
|
Oleg Malis,
Age 31 |
|
Mr. Malis is Senior Vice President of Altimo.
Mr. Malis began working for Alfa Telecom Limited as Chief
of the Current Project Management Unit in 2005. From 2003 until
2005, Mr. Malis was Senior Vice President and Director of
Mergers and Acquisitions for |
4
|
|
|
|
|
Golden Telecom. Prior to joining Golden Telecom, Mr. Malis
founded ZAO Investelectrosvyaz and ZAO Corbina. Mr. Malis
holds a degree from Moscow State Aviation Technological
University in Systems Engineering. |
|
|
|
Mr. Malis was elected to the Companys Board of
Directors in November 2005. |
|
Jean-Pierre Vandromme
Age 52 |
|
Mr. Vandromme has served as the Chief Executive Officer of
the Company since September 1, 2005. Mr. Vandromme is
also the founder and Managing Director of VoIP.co.uk, a United
Kingdom based company, and is a Board member of Completel,
Ventelo Sweden and Norway, and was a Board member of Axxessit.
From 2001 to 2003, Mr. Vandromme was Chairman, President
and Chief Executive Officer of VENTELO Europe and from 1994 to
2001, Mr. Vandromme served in a variety of positions with
Global TeleSystems, Inc. (GTS), including as
President of GTS-Business Services. |
|
Patrick Gallagher
Age 51 |
|
Mr. Gallagher has over 25 years experience in
international telecommunications. He is currently non-executive
Vice Chairman of FLAG Telecom Group, a global company which owns
and manages an extensive sub sea optical fiber network spanning
four continents and serving the business markets of Asia,
Europe, Middle East and the U.S. He is also a member of the
Supervisory Board of Getronics NV, a Dutch listed global ICT
solutions and services company with operations in over 30
countries and revenues of Euro 3 billion. |
|
|
|
Until March 2006, Mr. Gallagher was Executive Vice Chairman
and Chief Executive Officer of FLAG Telecom Group. Prior to
joining FLAG in March 2003, he had a 17 year career with
British Telecommunications plc (BT). Initially, he
held the position of Commercial Advisor and Commercial Director
of BT and in 1994 was appointed Director of Business Development
to lead BTs international expansion and investment
strategy. He was President of BT Europe from January 1996 to
July 2000 where he grew and managed BTs European
operations to include 12 equity joint venture companies and five
subsidiaries, generating over £6 billion in annual
revenue. Subsequently, he sat on BTs Executive Committee
as Group Strategy and Development Director where he was central
to BTs restructuring and strategic re-positioning. Before
joining BT, Mr. Gallagher spent eight years with Racal
Electronics, managing international communications projects in
Europe, the Middle East and South America. Mr. Gallagher is
a graduate of Warwick University with a degree in Economics and
Industry. |
|
Ronny Naevdal
Age 38 |
|
Mr. Naevdal is a Director of Strategy and Business
development in Telenor Nordic, a business unit of the Norwegian
incumbent operator Telenor ASA. Mr. Naevdal has been
responsible for strategy and business development within
Telenors Swedish fixed line operations since January 2003.
Prior to joining Telenor Nordic in September 2002, he worked for
Nextra, Telenors European Internet division. In the period
from 1997 to 2002, Mr. Naevdal worked for Telenor in
Germany, Czech Republic, Slovak Republic, Austria and Hungary.
In this period, Mr. Naevdal held various executive positions, |
5
|
|
|
|
|
including Chief Operating Officer in Nextra Czech Republic from
1998 to 1999, Chief Operating Officer in Telenor Networks from
2000 to 2001, and Head of Strategy in Nextra Central Europe from
2001 to 2002. Mr. Naevdal was also a member of the Board of
Directors of Telenor Nextra and Telenor Networks in the Czech
Republic and the Slovak Republic from 1999 to 2005.
Mr. Naevdal has been a member of the Board of Directors of
Glocalnet, a Swedish switchless operator, since 2003. Prior to
joining Telenor in 1997, Mr. Naevdal worked for Norconsult.
Mr. Naevdal holds a Masters of Science from the Norwegian
Institute of Technology. |
|
David Smyth
Age 46 |
|
Mr. Smyth is the Chief Executive Officer and Chief
Financial Officer of The Diagnostic Clinic, an innovative
healthcare company based in London. Prior to that, his career
was predominantly in the Telecoms market, including eleven years
(1992 2003) in senior management roles at
Orange plc. These roles included serving seven years as Group
Director of Strategic Planning and Investor Relations, and four
years as Group Financial Controller, Strategy and Planning.
Mr. Smyth is a Fellow of the Chartered Institute of
Management Accountants, has an Honors degree in Accountancy, and
holds a Masters Degree in Business Administration from Middlesex
Business School in London. |
|
Vladimir Bulgak
Age 64 |
|
From 1990 to 1992, Mr. Bulgak served as Minister of
Communications of the Russian Federation Republic of the USSR.
From 1992 to 1997, Mr. Bulgak served as Minister of
Communications of the Russian Federation. Mr. Bulgak was
the Vice Premier of the Russian Federation from 1997 to 1999. In
1998, Mr. Bulgak served as Minister of Science and High
Technology of the Russian Federation. From 1999 to 2003,
Mr. Bulgak served as Chairman of the Board of Directors of
OAO Comincom. From 1999 to 2003, Mr. Bulgak also served as
Chairman of the Board of Directors of OAO Combellga. From 2004
to 2006, Mr. Bulgak was Chief Science Advisor of OAO
Telecom. Since March 1, 2004, Mr. Bulgak has been
employed as an Advisor to the General Director of EDN Sovintel,
LLC (Sovintel), a wholly owned subsidiary of the
Company. Mr. Bulgaks annual compensation under this
employment agreement with Sovintel is $60,000. The employment
agreement between Mr. Bulgak and Sovintel shall terminate
as of April 30, 2006. In addition, Mr. Bulgak had a
consulting services agreement with Golden TeleServices, Inc., a
wholly-owned subsidiary of the Company which agreement expired
on December 31, 2005. Golden TeleServices, Inc. paid
approximately $1,300 to Mr. Bulgak during the twelve months
ended December 31, 2005 under this consulting services
agreement. Mr. Bulgak holds a Doctorate Degree in Economic
Science and is a Professor at the Moscow Technical University of
Telecommunications and Information Systems, and holds a
Doctorate Degree in Philosophy from, and served as a Professor
at, the Wold Distributed University in Brussels, Belgium.
Mr. Bulgak is the author of seven books on questions
concerning the management, economics and technology of
telecommunications, and is the author of a well-known university
course book named The Theory and Technical Schematics of
Management Systems for Electronic Communications. |
6
The Board has determined that seven of the nominees for election
as a director should be deemed independent under the
listing standards of the Nasdaq National Market, as well as in
the assessment of the Board, with the exceptions of
Mr. Vandromme, the CEO, Mr. Malis who until
April 30, 2005 was an employee of the Company, and
Mr. Bulgak who until April 30, 2006 is an employee of
the Company.
All of the nominees to our Board of Directors listed above have
been approved by the Nominating and Corporate Governance
Committee. Mr. Gallagher, Mr. Naevdal and
Mr. Smyth were recommended to the Nominating Committee by a
third-party search firm. Mr. Vandromme, Mr. Malis and
Mr. Bulgak were identified as qualified candidates by the
Nominating and Corporate Governance Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF THE COMPANYS NOMINEES (ITEM NO. 1 ON
YOUR PROXY CARD).
Compensation
of Directors
The Board resolved on February 16, 2006 to increase the
level of compensation provided to members of the Board
commencing with the election of new directors at the 2006 annual
meeting of shareholders. Commencing with the election of new
directors at the 2006 annual meeting of shareholders, there
shall be two levels of Board fees. One level for non-executive
directors who are also not affiliated with a significant
shareholder in the Company in the total amount of $100,000, and
a second level for non-executive directors who are affiliated
with a significant shareholder in the Corporation in the total
amount of $75,000. At both levels, the Board fees shall be paid
seventy percent in cash and thirty percent in the form of shares
of restricted stock pursuant to the 1999 Equity Participation
Plan of Golden Telecom, Inc. that shall vest after one complete
year of service as a director of the Corporation. The cash
portion of the Board fees shall be paid 50% within two weeks
after the annual meeting at which directors are elected, and 50%
by the following November 30. In addition, the Chairman of
three of the Boards four committees, excluding the
Nominating and Corporate Governance Committee, shall receive an
annual fee of $15,000 for accepting the additional
responsibilities of chairing a Board Committee. The amount of
Board fees and Committee Chairmanship fees paid to a Director
shall be subject to pro rata adjustment and refund to the
Company, at the discretion of the Board of Directors, in the
event of a Directors resignation prior to completion of
his scheduled term of service to the Company. The Company does
not intend to issue new stock options to directors pursuant to
the 1999 Equity Participation Plan of Golden Telecom, Inc.
During 2005 and during 2006 until the annual meeting of the
shareholders, each non-employee member of Golden Telecoms
Board of Directors had been entitled to receive an annual
retainer fee of $15,000. In addition, each non-employee member
of the Board of Directors had been entitled to receive a fee of
$1,000 for each Board meeting attended in person and a fee of
$500 for each Board meeting attended by telephone. Non-employee
members were entitled to receive a fee of $750 for each Board
committee meeting attended in person, a fee of $500 for each
Board committee meeting attended by telephone and a fee of $500
for each Unanimous Written Consent in Lieu of Meeting adopted by
the Board. However, Board committee fees were not paid if the
meeting was held on the same day as a Board meeting. The Chair
of the Audit Committee and the Compensation Committee had been
entitled to receive an annual fee of $15,000 for service as the
Chair in addition to the $15,000 annual retainer. In accordance
with the Golden Telecom 1999 Equity Participation Plan,
non-employee directors were also entitled to receive 10,000
stock options upon their initial appointment and 2,500 stock
options for each subsequent year of service. The Company paid
for non-employee directors accommodation and business
class travel to and from the meetings of the Board and of the
Committees.
Each of the Directors waived his right to receive stock options
in 2005 with the exception of Mr. Herman.
Board
and Committee Matters
Board of Directors. The Board of Directors met
ten times and acted through unanimous written consents in lieu
of meetings twice during the year ended December 31, 2005.
During 2005, each of the then-incumbent directors attended, in
person or by telephone, 75 percent or more of the meetings
of the Board of Directors and 75 percent or more of the
meetings of the committees on which each director served.
7
The Board of Directors has four standing committees: the
Executive Committee, the Audit Committee, the Compensation
Committee, and the Nominating and Corporate Governance Committee.
Executive Committee. During the fiscal year
ended December 31, 2005, the Executive Committee of the
Board of Directors met eleven times and acted through unanimous
written consent in lieu of meeting two times. A principal
responsibility of the Executive Committee is to have and
exercise all the powers of the Board of Directors when the Board
is not in session, so far as such may be delegated in accordance
with law, except that the Committee may not take any final
action to: amend the Certificate of Incorporation or Bylaws;
elect directors to fill vacancies or newly created directorships
on the Board of Directors; fix the compensation of directors for
services in any capacity; fill vacancies on the Committee or
change its membership; declare dividends (unless authorized by
resolution of the Board of Directors); exchange, consolidate,
sell, lease, pledge or exchange all or substantially all of the
Companys property and assets; recommend to the
shareholders a plan of dissolution of the Company or a
revocation of a dissolution; or adopt an agreement of merger or
consolidation for the Company. The Executive Committee also
assumes an advisory role for the senior management of the
Company. In this capacity, the Executive Committee shall
(i) provide counsel in regard to significant matters
affecting the Company, its operations and financial performance;
(ii) provide advice on proposed corporate structure,
financings and financial strategy; (iii) review and offer
comment upon the strategic direction of the Company; and
(iv) undertake such other actions as may be requested by
the Board of Directors. The Board amended the Charter of the
Executive Committee in May 2005 to include the President and the
Chief Executive Officer of the Company as non-voting members of
the Executive Committee.
The current members of the Executive Committee are
Mr. Johnsen (Chair), Mr. Calvey and Mr. Malis.
Mr. Calvey is not seeking election to the Board of
Directors in 2006.
Audit Committee. During the fiscal year ended
December 31, 2005, the Audit Committee of the Board of
Directors held eight meetings and acted through unanimous
written consent in lieu of meeting seven times. The primary
function of the Audit Committee is to advise and assist the
Board in fulfilling its oversight responsibilities to the
investment community, including current and potential
shareholders. The Audit Committees purposes include
assisting: Board oversight of the integrity of the
Companys financial statements, the Companys
compliance with legal and regulatory requirements, and the
performance of the Companys internal audit function and
ethics and compliance function. The Audit Committee also has
sole responsibility for the appointment, compensation and
oversight of the Companys independent auditors. The Audit
Committees principal responsibilities in serving these
functions are described in the Audit Committee charter that was
adopted by the Companys Board of Directors.
Current copies of the Audit Committee charter and the
Companys Conduct Guidelines, which apply to all of the
Companys employees and directors and its subsidiaries and
both of which comply with the Sarbanes-Oxley Act of 2002 and the
Nasdaq National Market corporate governance standards, are
available at www.goldentelecom.com. In addition, the Audit
Committee charter and the Companys Conduct Guidelines may
also be obtained by writing:
Corporate Secretary
Golden Telecom, Inc.
2831 Twenty-Ninth St., N.W.
Washington, D.C.
20008
If the Company amends any provision of its Conduct Guidelines
that is required under the Nasdaq National Market corporate
governance standards or the Sarbanes-Oxley Act of 2002, or if a
waiver of such provision is granted to a director or an
executive officer, the notice of such amendment, other than
technical, administrative, and other non-substantive amendments,
or waiver will be posted on the Companys website at
www.goldentelecom.com. While the Board or the Audit Committee
may consider a waiver for an executive officer or director, such
waivers are not expected to be granted.
8
The current members of the Audit Committee are Mr. Herman
(Chair) and Mr. Calvey. Mr. Ashley Dunster also served
on the Audit Committee until his resignation from the Board of
Directors on March 15, 2006.
A Report from the Audit Committee is contained herein in the
section following Item No. 2 on Your Proxy Card:
Ratification of Appointment of Auditors.
Independence of the Audit Committee. The
National Association of Securities Dealers, as a condition for
quotation on the Nasdaq National Market, requires the Company to
comply with the Nasdaqs Marketplace Rules. One such rule
requires the Company to certify that it has and will continue to
have an audit committee comprised of at least three members,
each of whom is independent, as defined by the Marketplace Rules
and
Rule 10A-3
of the Securities Exchange Act of 1934. Currently, there is one
vacancy on the Audit Committee, which resulted from
Mr. Ashley Dunsters resignation as of March 15,
2006 from the Companys Board of Directors, and his
positions on the Audit Committee and the Nominating and
Corporate Governance Committee. This vacancy shall be filled at
the meeting of the Board of Directors to be held on May 18,
2006 following the election of directors at the annual general
meeting of shareholders. The Company has given notice to the
Nasdaq National Market that between March 15, 2006 and
May 18, 2006, there are only two directors on the
Companys Audit Committee in reliance on NASD
Rule 4350(d)(4)(B). Aside from this approximately two month
period following Mr. Dunsters resignation, the
Company has been in continual compliance with the audit
committee composition requirements without reliance on
Rule 4350(d)(4)(B). The slate of nominees for election to
the Board includes several additional persons who meet the
independent director definition as well as the more stringent
requirements for Audit Committee service under
Rule 4350(d). As noted above, the Board intends to fill the
vacancy on the Audit Committee immediately following the
Companys Annual Meeting. It is anticipated that
Mr. Gallagher and Mr. Smyth, if elected to the Board
of Directors by the shareholders, will join the Audit Committee.
Audit Committee Financial Expert. The Board of
Directors has determined that the Audit Committee members are
financially literate under the current listing standards of the
Nasdaq National Market and able to devote sufficient time to
serving on the Audit Committee. The Board has also determined
that Mr. Michael Calvey, who currently is Co-Managing
Partner of Baring Vostok Capital Partners Limited and a Senior
Partner of Baring Vostok Private Equity Partners Limited, is
currently the Audit Committee financial expert as defined in
Item 401 of
Regulation S-K
under the Securities Exchange Act of 1934. The Board has also
determined that Mr. Calvey is independent as
defined by the Nasdaq National Market. The Board made a
qualitative assessment of Mr. Calveys level of
knowledge and experience based on a number of factors, including
his formal education and experience as Co-Managing Partner of
Baring Vostok Capital Partners Limited and a Senior Partner of
Baring Vostok Private Equity Partners Limited and on audit
committees of other publicly traded companies.
Compensation Committee. During the fiscal year
ended December 31, 2005, the Compensation Committee of the
Board of Directors held seven meetings and acted through
unanimous written consent in lieu of meeting three times. The
primary purpose of the Compensation Committee is to ensure that
the compensation practices and policies of the Company are
consistent with and serve the best interests of the
Companys shareholders. To this end, the Committee develops
and approves the compensation arrangements of the officers of
the Company, makes recommendations to the Board of Directors
regarding grants under the Companys 1999 Equity
Participation Plan and Golden Telecom, Inc. 2005 Stock
Appreciation Rights Plan, and approves the compensation of, and
makes recommendations to the full Board of Directors regarding
certain benefits provided to, and compensation plans applicable
to the Chief Executive Officer and those individuals whose cash
compensation might reasonably be expected to be among the top
four most highly paid individuals. In addition, the Committee
acts as the Stock Option Administrator as defined in and
pursuant to the Companys 1999 Equity Participation Plan
with regard to stock option grants and as an administrator under
the Golden Telecom, Inc. 2005 Stock Appreciation Rights Plan. A
Report from the Compensation Committee is contained herein after
the discussion of executive compensation.
9
The current members of the Compensation Committee are
Mr. Herman (Chair), Mr. Johnsen and
Mr. Khudyakov. Mr. Andrey Kosogov resigned as Chair of
the Compensation Committee in November 2005 and the resulting
vacancy on this Committee was filled by Mr. Khudyakov.
Compensation
Committee Interlocks and Insider Participation
Mr. Kosogov, Mr. Dunster, Mr. Johnsen,
Mr. Khudyakov and Mr. Herman served on the
Compensation Committee during 2005. There were no Compensation
Committee interlocks or insider participation during 2005.
Nominating and Corporate Governance
Committee. During the fiscal year ended
December 31, 2005, the Nominating and Corporate Governance
Committee of the Board of Directors held two meetings and acted
by unanimous written consent in lieu of meeting three times. The
primary purposes of the Nominating and Corporate Governance
Committee are to insure that the Board is appropriately
constituted to meet its fiduciary obligations to the
Companys shareholders and to the Company and to insure
that the corporate governance practices of the Company are
appropriate and effective in enabling the Board to fulfill its
responsibilities independent of management and with a view to
the best interests of the Company and its shareholders
generally. To accomplish these purposes, the Committee develops
and implements policies and processes regarding corporate
governance matters, assesses Board membership needs and assists
the Board in identifying, recruiting and nominating candidates
for directorships.
In evaluating and determining whether to nominate a candidate
for a position on the Companys Board, the Committee will
consider the criteria outlined in the Committees Charter,
which include strength of character, mature judgment, career
specialization, relevant technical skills, diversity and the
extent to which the candidate would fill a present need on the
Board.
The Committee will consider shareholder recommendations of
candidates when the recommendations are properly submitted in
writing. Any shareholder recommendations which are submitted
should include the candidates name and qualifications for
Board membership under the criteria summarized above and should
be addressed to:
Corporate Secretary
Golden Telecom, Inc.
2831 Twenty-Ninth St., N.W.
Washington, D.C., 20008
For purposes of potential nominees to be considered at the 2007
annual meeting of shareholders, the Corporate Secretary must
receive this information by not later than December 22,
2006, the deadline for all shareholder proposals to be
considered by the Company for inclusion in the proxy statement
for the 2007 annual meeting. The notice must set forth the
candidates name, age, business address, residence address,
principal occupation or employment, the number of shares
beneficially owned by the candidate, and information that would
be required to be disclosed regarding such candidate in
connection with the solicitation of a proxy under federal
securities law. In addition, the notice must include the
nominating shareholders name, address and the number of
shares beneficially owned and the period such shares have been
held.
The Nominating and Corporate Governance Committee charter is
available on the Companys website at www.goldentelecom.com.
The current members of the Nominating and Corporate Governance
Committee are Mr. Herman (Chair), Mr. Calvey,
Mr. Aven and Mr. Johnsen. Mr. Aven resigned as
Chair of the Nominating and Corporate Governance Committee in
September 2005.
Communication with the Board. Shareholders may
communicate with the Board of Directors, including the
non-management directors, by sending an
e-mail to
boardofdirectors@gldn.net or by sending a letter to the Golden
Telecoms Board of Directors, c/o Corporate Secretary,
Golden Telecom, Inc., 2831 Twenty-Ninth St., N.W.,
Washington, D.C., 20008. The Corporate Secretary has the
authority to disregard any inappropriate communications or to
take other appropriate actions with respect to any such
inappropriate communications. If
10
deemed an appropriate communication, the Corporate Secretary
will submit your correspondence to the Chairman of the Board or
to any specific director to whom the correspondence is directed.
Annual Meeting of Shareholders. It has been a
practice of the Company for all directors to attend the Annual
Meeting of Shareholders. All directors who were elected to the
Board at the last Annual Meeting were in attendance.
Item No. 2
on Your Proxy Card: Approval of 2005 Stock Appreciation Rights
Plan
Introduction
On November 22, 2005, the Board of Directors, with the
recommendation of the Compensation Committee, approved the
Golden Telecom, Inc. 2005 Stock Appreciation Rights Plan (the
2005 SAR Plan) and the EDN Sovintel 2005 Stock
Appreciation Rights Bonus Plan (the Sovintel SAR
Plan). The 2005 SAR Plan provides for the award of stock
appreciation rights (SARs), which confers a benefit
that is based on appreciation in value of the Common Stock, and
is payable in the form either of shares of the Common Stock of
the Company or cash to officers and employees of the Company and
its subsidiaries. The Sovintel SAR Plan also provides for the
award of SARs which are payable only in the form of cash to
officers and employees of the Companys subsidiary,
Sovintel.
Since the 2005 SAR Plan provides for the issuance of up to
200,000 shares of Common Stock to be issued to
participants, the Company is requesting that stockholders
consider and act upon this proposal at the Annual Meeting to
approve the 2005 SAR Plan, a copy of which is attached as
Appendix A to this Proxy Statement, in order to comply with
the Nasdaq National Market rules. Notwithstanding the foregoing,
if the 2005 SAR Plan is not approved by stockholders, all awards
made under the 2005 SAR Plan will be settled in cash rather than
Common Stock as is otherwise contemplated.
The purpose of the 2005 SAR Plan is to promote the long-term
success of the Company and to create stockholder value by
(a) encouraging officers and employees performing services
for the Company to focus on critical long-range objectives,
(b) encouraging the attraction and retention of officers
and employees with exceptional qualifications, and
(c) linking officers and employees directly to stockholder
interests through ownership of the Company. The 2005 SAR Plan
seeks to achieve this purpose by providing for awards in the
form of SAR grants to officers and employees designated in the
sole discretion of the Company.
The aggregate number of shares of Common Stock that may be
issued pursuant to the 2005 SAR Plan is 200,000. On
April 11, 2006, the closing price of the Common Stock, as
reported on The Nasdaq National Market, was $30.18 per
share.
Description
of the 2005 SAR Plan
The following is a summary of the 2005 SAR Plan that is
qualified in its entirety by reference to the full text of the
2005 SAR Plan, which is attached as Appendix A to this
Proxy Statement.
Plan Administration. The Compensation
Committee of the Board of Directors has been appointed by the
Board to administer the 2005 SAR Plan. The Compensation
Committee has the authority, subject to the terms of the 2005
SAR Plan, to determine the persons eligible to receive awards,
when and how each award will be granted, the provisions of each
award and the number of SARs granted, and to construe and
interpret the terms of the 2005 SAR Plan and awards granted
under it.
Eligibility. SAR awards may be granted to any
employee or officer of the Company or any of its subsidiaries.
As of December 31, 2005, there were 16 officers and
employees of the Company and its subsidiaries eligible to
participate in the 2005 SAR Plan.
Shares Subject to Plan. The aggregate
number of shares of Common Stock that may be issued pursuant to
the 2005 SAR Plan is 200,000. If an award as to any shares is
surrendered before the applicable restrictions lapse, or expire
or terminate for any reason, the number of shares subject to the
award will again become available for grant under the 2005 SAR
Plan as if no award had been previously granted with respect to
such shares.
11
SAR Awards. The 2005 SAR Plan only provides
for awards of SARs. A SAR award shall contain such terms and
conditions, as determined by the Board including: (i) the
value for each SAR equal to the fair market value of one share
of Common Stock on the date of grant (Base Value)
and (ii) the number of SARs being granted to the
individual, where one (1) SAR shall equal one share of
Common Stock. The Company will have the discretion to grant SARs
to participants specifying a premium to the Base Value in an
amount that exceeds the Base Value (Premium Base
Value). A SAR generally entitles the grantee to receive,
subject to the terms of the 2005 SAR Plan and the award
agreement, the appreciation in the Base Value (or Premium
BaseValue) between the date of grant and the value of the Common
Stock on the date of exercise of the SAR. A SAR is payable in
the form of cash or shares of the Common Stock in accordance
with the terms of the 2005 SAR Plan and the award agreement.
All awards granted under the 2005 SAR Plan will be settled in
cash, unless a grantees award agreement expressly provides
the grantee with the ability to elect to receive cash or Common
Stock at his or her election upon exercise. Notwithstanding the
foregoing, if stockholders do not approve the 2005 SAR Plan, all
awards made under the plan will be settled in cash without
regard to a grantees election to receive stock pursuant to
his or her award agreement.
SARs will vest and be exercisable pursuant to the terms and
conditions outlined in each grantees individual award
agreement, which will be determined by the Compensation
Committee, as administrator of the 2005 SAR Plan. Vested SAR
awards will be exercisable by grantees only until the fifth
anniversary of the date of grant. In the event of a
grantees death prior to receiving a share distribution
payment when due, such distribution will be made to the
grantees designated beneficiary (as identified in the
award agreement). If the grantee is legally married at the time
of the designation, and the designated beneficiary is not the
grantees spouse, then a written consent of
his/her
spouse will be required to be provided by the grantee, or else
the Company may not pay benefits under the 2005 SAR Plan to the
designee named and the benefit would pass to the grantees
estate under applicable law. If a grantee dies, becomes disabled
or otherwise is unable to exercise a SAR award, the
grantees designated beneficiary shall have the right to
exercise such award under the terms and conditions set forth in
the 2005 SAR Plan and under the applicable award agreement. In
the event that a grantee dies, SARs granted under the 2005 SAR
Plan shall expire and thus be rendered not exercisable either by
the grantee, or as appropriate, his or her beneficiary on the
ninety-first (91st) day following the date of death. In the
event that a grantee terminates his or her employment with the
Company other than through discharge by the Company, SARs
granted hereunder shall expire and thus be rendered not
exercisable by the grantee or as appropriate, his beneficiary,
on the thirty-first
(31st)
day following the effective date of the termination of his or
her employment. Any vested SAR awards that remain unexercised
after five years from the date of grant will expire by their
terms.
Restrictions on Transferability. Until a SAR
award is exercised, none of the shares of Common Stock that may
be paid to the grantee upon settlement of a SAR may be sold,
assigned, transferred, pledged, hypothecated or otherwise
disposed of or encumbered by the grantee.
Amendment and Termination of the Plan. The
Companys Board of Directors, as well as the Compensation
Committee under authority delegated to it by the Board, may
amend or terminate the 2005 SAR Plan, provided that no such
action may adversely affect any outstanding awards without the
grantees consent.
SAR Grants. As of April 11, 2006, the
Company has awarded 217,400 SARs under the 2005 SAR Plan to
employees and officers of the Company, of which 4,000 have since
been forfeited by an employee who left the Company. On
December 12, 2005, SAR awards were made with respect to
157,400 shares, with a Base Value of $26.808 per share. As
of January 11, 2006, an additional 10,000 SARs were
granted. The Base Value of the SARs granted on January 11,
2006 was $27.052. On March 17, 2006, SAR awards were made
with respect to 50,000 shares, with a Base Value of
$29.63 per share. There is a three year vesting schedule
for the SAR awards pursuant to which participants will vest in
25% per year of the SARs awarded each year over three
years. With respect to 75% of SARs subject to time vesting, the
Base Value (granting price) shall increase by five percent on
each anniversary date after December 12, 2005 in
association with the SARs that shall be and become vested and
nonforfeitable on each such anniversary date. The remaining
additional 25% shall vest if the Companys Common Stock
achieves a closing trading price of at least $50 per share
for thirty
12
(30) consecutive days as determined in the sole discretion
of the Company within three years of the date of grant or such
portion of the Award shall expire by its terms and not be
exercisable.
New Plan Benefits. The table on the following
page sets forth information with respect to SARs granted to each
of the following individuals or groups as of the date of this
Proxy Statement. Directors of the Company and its subsidiaries
are not eligible to receive awards under the 2005 SAR Plan. Any
future awards under the 2005 SAR Plan to officers and employees
of the Company and its subsidiaries are discretionary and cannot
be determined at this time.
Accounting Treatment. In December 2004, the
FASB issued SFAS No. 123R (revised 2004), Share
Based Payment (SFAS 123(R)). Under
SFAS No. 123(R), companies must calculate and record
the cost of equity instruments, such as stock options or
restricted stock, awarded to employees for services received in
the income statement; pro forma disclosure (permitted before
issuance of SFAS 123(R)) is no longer permitted. The cost
of the equity instruments is to be measured based on fair value
of the instruments on the date they are granted (with certain
exceptions) and is required to be recognized over the period
during which the employees are required to provide services in
exchange for the equity instruments. SFAS 123(R) became
effective for the Company beginning in the first quarter of
fiscal year 2006. The impact of the adoption of SFAS 123(R)
is estimated to result in a reduction of net earnings from
approximately $6.2 million in 2006 depending on, among
other things, the price of our stock, as well as the assumptions
used to value SARs granted, such as the volatility of our stock,
risk-free interest rates, employee exercise patterns and
forfeiture rates. All other variables being constant, a $1
increase/decrease in the price of our stock is estimated to
result in approximately $0.6 million increase/decrease of
the SARs compensation costs. The impact of additional SARs
grants, if any, cannot be estimated at this time.
U.S. Federal
Income Tax Consequences
The following is only a summary of the consequences of
U.S. federal income taxation to the participants and the
Company with respect to the grant and exercise of awards under
the 2005 SAR Plan. The summary is not complete as it does not
discuss the income tax laws of any municipality, state or
foreign country in which a participant may reside, and is
subject to change. Participants in the 2005 SAR Plan should
consult their own tax advisors regarding the specific tax
consequences to them of participating in and receiving awards
under the 2005 SAR Plan.
Generally, a participant will not recognize income upon the
grant of a SAR. Instead, the holder of a SAR will recognize
ordinary income at the time of exercise in an amount equal to
the excess of the fair market value of the Common Stock at the
time of exercise over the Base Value (or Premium Base Value)
specified in the award agreement times the number of SARs
exercised. Upon a subsequent sale of the shares of Common Stock
received upon exercise, the difference between the net proceeds
of sale and the fair market value of the shares on the date of
exercise will generally be taxed as capital gain or loss
(long-term or short-term, depending on the holding period).
The Company will generally be entitled to a tax deduction
corresponding in amount and time to the participants
recognition of ordinary income in the circumstances described
above, provided, the deduction is not otherwise disallowed under
the Internal Revenue Code of 1986, as amended.
Sovintel
SAR Plan
On November 22, 2005, the Board of Directors approved the
Sovintel SAR Plan. The purpose of the Sovintel SAR Plan is to
promote the long-term success of the Company, Sovintel and the
creation of shareholder value by (a) encouraging officers
and employees performing services for Sovintel, to focus on
critical long-range objectives and (b) encouraging the
attraction and retention of officers and employees with
exceptional qualifications. The Sovintel SAR Plan provides for
the grant of SARs, which confers a benefit that is based on the
appreciation in value of the Common Stock, and is payable upon
exercise only in the form of cash. The Sovintel Board of
Directors and has the authority to determine the persons
eligible to receive awards, when and how each award shall be
granted, the provisions of each award, and the number of stock
appreciation rights granted. SAR awards may be granted to any
employee or officer of Sovintel. As of
13
December 12, 2005, there were 694,400 SARs granted under
the Sovintel SAR Plan to officers and employees of Sovintel. The
Base Value of the SARs was $26.808. The vesting of SARs is
calculated in the same manner under the Sovintel SAR Plan as
under the 2005 SAR Plan.
2005 SAR
Plan and Sovintel SAR Plan
|
|
|
|
|
|
|
|
|
|
|
Dollar Value of the
|
|
Number of SARs
|
Individual or Group Name and
Position
|
|
SARs(1)
|
|
Awarded
|
|
Jean-Pierre Vandromme,
|
|
$
|
70,000
|
|
|
|
200,000
|
(2)
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
Alexander Vinogradov,
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
Kevin Cuffe,
|
|
$
|
33,200
|
|
|
|
50,000
|
(3)
|
Vice President, Managing Director,
|
|
|
|
|
|
|
|
|
Business & Consumer
Solutions Business Unit
|
|
|
|
|
|
|
|
|
Derek Bloom,
|
|
$
|
19,920
|
|
|
|
30,000
|
|
Senior Vice President, General
|
|
|
|
|
|
|
|
|
Counsel and Corporate Secretary
|
|
|
|
|
|
|
|
|
Michael Wilson,
|
|
$
|
6,640
|
|
|
|
10,000
|
|
Vice President, Corporate
Controller
|
|
|
|
|
|
|
|
|
and Principal Accounting Officer
|
|
|
|
|
|
|
|
|
Brian Rich,
|
|
|
|
|
|
|
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
Chief Financial Officer and
|
|
|
|
|
|
|
|
|
Treasurer
|
|
|
|
|
|
|
|
|
Michal Cupa,
|
|
|
|
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
|
|
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
All Executive Officers
|
|
$
|
59,760
|
|
|
|
90,000
|
|
as a Group (3 persons)
|
|
|
|
|
|
|
|
|
All Non- Executive Officer and
Employees
|
|
$
|
508,509
|
|
|
|
817,800
|
|
as a Group (80 persons)
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The dollar value of the SARs for each individual or group in the
table above has been estimated by multiplying the securities
underlying the SARs by the amount equal to the difference
between the Base Value (or Premium Base Value), as defined in
the 2005 SAR Plan and set forth in each award agreement, and
$30.18, which is the closing price of the Common Stock on
April 11, 2006. |
|
(2) |
|
These SARs are not a part of the 2005 SAR Plan. They were
granted on the basis of Mr. Vandrommes employment
agreement. |
|
(3) |
|
Mr. Cuffes SARs were issued to under the Sovintel SAR
Plan. |
14
Equity
Compensation Plan Information
The following table provides information on securities that were
authorized for issuance under the Companys equity
compensation plans as of December 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
(a)
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
(b)
|
|
|
Remaining Available for
|
|
|
|
to Be Issued Upon
|
|
|
Weighted-Average
|
|
|
Future Issuance Under
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column
(a)).
|
|
|
Equity compensation plan approved
by security holders
|
|
|
373,012
|
|
|
$
|
14.31
|
|
|
|
852,699
|
|
Equity compensation plan not
approved by security holders
|
|
|
200,000
|
(1)
|
|
$
|
28.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
573,012
|
|
|
|
|
|
|
|
852,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The 200,000 shares represent all of the shares of Common
Stock authorized under the 2005 SAR Plan. |
Item No. 3
on Your Proxy Card: Ratification of Appointment of
Auditors
Golden Telecoms Audit Committee has voted to appoint
Ernst & Young as independent auditors to examine the
consolidated financial statements of Golden Telecom, Inc. and
subsidiaries for the year ending December 31, 2006, and
also report on their internal controls over financial reporting
as of December 31, 2006, and you are asked to ratify that
appointment at the Annual Meeting. In keeping with good
corporate governance practice, the Audit Committee will
periodically assess the suitability of its incumbent independent
auditors taking into account all relevant facts and
circumstances, including the possible consideration of the
qualifications of other accounting firms.
Ernst & Youngs report on the Companys
consolidated financial statements as of December 31, 2005
and 2004 and for each of the three fiscal years in the period
ended December 31, 2005 and on internal controls over
financial reporting as of December 31, 2005 and 2004, did
not contain any adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope, or
accounting principles. During the fiscal years ended
December 31, 2004 and 2005 and thereafter through the
filing date of the Companys 2005 annual report on
Form 10-K,
there were no disagreements between the Company and
Ernst & Young on any matter of accounting principles or
practices, financial statements disclosures, or auditing scope
or procedures, which, if not resolved to the satisfaction of
Ernst & Young, would have caused Ernst & Young
to make reference to the matter in their report. None of the
reportable events described in Item 304
(a)(1)(v) of
Regulation S-K
of the Securities Exchange Act of 1934 have occurred during the
fiscal years ended December 31, 2004 and 2005 or through
the filing date of the Companys 2005 annual report on
Form 10-K.
Audit Fees. For professional services rendered
in connection with the audit of the Companys 2005 and 2004
financial statements, the audit of the Companys internal
control over financial reporting as of December 31, 2005
and 2004, and the review of the financial statements included in
the Companys 2005 and 2004
Forms 10-Q,
Ernst & Young billed the Company a total of $1,449,000
in 2005 and $1,168,000 in 2004. These amounts also include
statutory audits of certain subsidiaries, reviews of Securities
and Exchange Commission (SEC) filings and accounting
consultations.
Audit-Related Fees. For professional
audit-related services rendered, Ernst & Young billed
the Company a total of $270,000 in 2005 and $179,000 in 2004.
Audit-related services generally include due diligence on
potential acquisitions.
Tax Fees. Ernst & Youngs fees
for the years 2005 and 2004 for expatriate tax services were
$85,000 and $51,000, respectively.
All other fees. Ernst & Youngs
fees for 2005 for training courses were $52,000.
Ernst & Youngs fees for 2004 for training courses
were $35,000.
15
The Companys Audit Committee pre-approved all of the
services described above that were provided after the
pre-approval requirements under the Sarbanes-Oxley Act of 2002.
The Audit Committee considered whether the non-audit services
rendered by Ernst & Young were compatible with
maintaining Ernst & Youngs independence as
auditors of the Companys financial statements and
determined that they were.
During 2003, the Company adopted policies and procedures
governing pre-approval of services to be provided by the
Companys independent auditors consisting of the following
key components:
|
|
|
|
|
The Audit Committee is directly responsible for the appointment,
compensation, retention, and oversight of the Companys
independent auditors.
|
|
|
|
The Audit Committee is responsible for the pre-approval of all
audit, audit-related, tax and non-audit services. Pre-approval
may be, but in the past has not been, delegated to one or more
members of the Audit Committee. The details of any services
approved under this delegation must be reported to the full
Audit Committee at its next regular meeting.
|
|
|
|
Pre-approval of certain recurring audit, audit-related and tax
services may be accomplished through pre-approval of a detailed
budget or an updated forecast for such services.
|
|
|
|
The Companys independent auditors are prohibited from
providing certain non-audit services. Any other permissible
non-audit service engagement must be specifically approved in
advance by the Audit Committee.
|
|
|
|
Generally, the Audit Committee will not engage the
Companys independent auditors for services other than
audit, audit-related, and tax services.
|
|
|
|
The Company provides regular reporting to the Audit Committee
regarding all audit, audit-related, tax and non-audit services
provided by the Companys independent auditors.
|
The Companys policy governing the provision of non-audit
services by the Companys independent auditors is more
restrictive than is required by the regulations implementing the
Sarbanes-Oxley Act of 2002.
It is not expected that representatives of Ernst &
Young will be present at the Annual Meeting.
The Audit Committee of the Board of Directors has selected
Ernst & Young, independent public accountants, to audit
the consolidated financial statements of the Company for the
fiscal year ending December 31, 2006 and recommends that
the shareholders ratify such selection.
The ratification of the appointment of Ernst & Young is
not required by law or by the By-laws of the Company. The Board
of Directors is nevertheless submitting it to the shareholders
to ascertain their views. If the shareholders do not ratify the
appointment, the selection of other independent public
accountants will be considered by the Board of Directors. If
Ernst & Young shall decline to accept or become
incapable of accepting its appointment, or if its appointment is
otherwise discontinued, the Board of Directors will appoint
other independent public accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR RATIFICATION OF THE APPOINTMENT OF AUDITORS
(ITEM NO. 3 ON YOUR PROXY CARD).
* * * * * * * * * * * * * * * * * *
Report of the Audit Committee. The Audit
Committee of the Board, which is composed of independent
Directors and has the principal responsibilities described on
pages 8 through 9 of this proxy statement, has furnished
the following report:
The Audit Committee has reviewed and discussed the
Companys audited consolidated financial statements with
management. The Audit Committee has also discussed with the
Companys independent auditors the matters required to be
discussed by Statements on Auditing Standards No. 61 (SAS
61 Communication with Audit Committees), as
amended, relating to the auditors judgment about the
quality of the Companys accounting principles, judgments
and estimates, as applied in its financial reporting.
16
The Audit Committee has received written disclosures and the
letter from the independent auditors required by Independence
Standards Board No. 1 (Independence Discussions with Audit
Committees) that relates to the auditors independence from
the Company and subsidiaries, and has discussed with the
independent auditors their independence.
The Audit Committee met with management periodically during
fiscal year 2005 to consider the adequacy of the Companys
internal controls and discussed these matters with the
Companys independent auditors and with appropriate Company
financial personnel. The Audit Committee also discussed with
senior management and the independent auditors the
Companys disclosure controls and procedures and the
certifications by the Companys Chief Executive Officer and
Interim Chief Financial Officer, which are required by the SEC
for certain of the Companys filings with the SEC. The
Audit Committee met privately with the independent auditors, the
internal auditor and other members of management, each of whom
has unrestricted access to the Audit Committee.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board that the audited
financial statements be included in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2005, for filing with the
SEC.
David Herman, Chair
Michael Calvey
* * * * * *
* * * * * * * * * * * * *
Item No. 4
on Your Proxy Card: Shareholder Proposal to elect
Mr. Dmitry Korol as a Director
A shareholder, Rostelecom, whose address is
1st Tverskaya-Yamskaya 14, Moscow, Russia, submitted
the following proposal under
Rule 14(a)-8
of the SECs proxy rules, which they intend to introduce at
the Annual Meeting (designated as Item 4). The Company has
been notified that Rostelecom held 4,024,067 shares of the
Companys stock as of April 11, 2006. The Company has
agreed to provide Rostelecom with access to this proxy statement
to present this candidate to the shareholders.
Rostelecom intends to nominate at the Annual Meeting
Mr. Dmitry Korol to serve as a director in place of one of
the Companys candidates listed in Item 1 above.
Mr. Korol currently serves as a director of the Company.
Supporting Statement:
As the third largest shareholder of Golden Telecom, owning in
excess of 11% of the Company, Rostelecom has a substantial stake
in its success. To succeed in todays competitive
telecommunications market, Rostelecom believes that the Company
needs a Board of Directors with the necessary background, skills
and experience to address the challenges faced by the Company in
its existing and prospective business environment. It is also
important to have a significant number of independent voices on
the Board.
Rostelecom is therefore nominating Dmitry Korol to continue to
serve the Company as a director for another one-year term.
Mr. Korol is an outside consultant, providing advice on
securities matters, to a variety of Russian companies.
Rostelecom had proposed Mr. Korol as an independent nominee
to the Companys Board at the 2005 annual meeting of
shareholders, because of his experience in securities and public
company matters, including strategic development. Mr. Korol
was approved by the Companys Nominating and Corporate
Governance Committee as an independent director and elected by
the shareholders in 2005. He has regularly attended meetings of
the Board and has been an effective contributor.
Rostelecom believes that Mr. Korols credentials make
him well suited for continued participation as an independent
director on the Board. His resume boasts a strong record of
leadership in business strategy and development for two public
companies: Bank of Moscow, one of Russias leading banks,
and Sibneft, one of Russias largest integrated oil
companies. He also, as Vice President of ZAO National Registry
Company, the
17
department head of the Emission Operations Unit of the
Securities Department of Bank of Moscow and the former General
Director at OAO Nezavisimy Registrator Reestr-Tsentr, has
extensive experience in securities and laws affecting public
companies.
Unlike some other independent nominees selected by the
Nominating and Corporate Governance Committee, Mr. Korol
has the following combination of attributes that we believe make
him a more effective director: first-hand experience with the
business of the Company and the Russian telecommunications
industry, having served the Company as an independent director
during the previous year, residency in Moscow and participation
in and familiarity with the Moscow business community.
Mr. Korol has indicated that he is willing and able to
serve as a director if elected and to fulfill his commitment to
the Company through continued active participation on the Board.
We believe that Mr. Korol is a candidate who has provided
noteworthy service on the Board and possesses the necessary
business acumen and sound judgment to provide continued value to
the Company.
|
|
|
Dmitry Korol
Age 32 |
|
Mr. Korol currently provides consulting services to a
variety of companies in Russia with respect to securities
matters. From February 2004 until November 2004, Mr. Korol
was the General Director at OAO Nezavisimy Registrator
Reestr-Tsentr. From August 2002 to January 2004, he served as
the department head in Emission Operations Unit of the
Securities Department of Bank of Moscow. Prior to working at
Bank of Moscow, Mr. Korol served from August 1998 to May
2000 as the Head of the Strategic Development Department at ZAO
National Registry Company and then from June 2000 to August 2002
as a Vice President at ZAO National Registry Company. From
August 1997 to July 1998, Mr. Korol worked as the
department Head for the Future Development Department of
Sibneft. Mr. Korol was elected to the Companys Board
of Directors in May 2005. |
Board of
Directors Statement: Recommendation that you WITHHOLD
AUTHORITY from Item 4
The Board of Directors recommends that you withhold
authority when voting on Item 4. The Board has
determined that it would be advantageous to increase the number
of Directors who are not affiliated with any of the
Companys largest shareholders. After considering various
candidates including the current members of the Board of
Directors, the Nominating and Corporate Governance Committee
recommended, and the Board of Directors approved, the
nominations of the persons listed in Item 1 of this proxy
statement and did not nominate either Mr. Korol or
Mr. Vladimir Androsik, who are current members of the Board
of Directors. Mr. Korol and Mr. Androsik were
previously designated for election by Rostelecom in accordance
with a shareholders agreement. We believe that Rostelecom is our
third largest shareholder beneficially owning approximately 11%
of our shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU WITHHOLD
AUTHORITY WHEN VOTING ON THE SHAREHOLDER PROPOSAL
(ITEM NO. 4 ON YOUR PROXY CARD).
Note
as to Director Voting Procedures
Please be aware that this year you have the option to choose
from eleven persons for election to the Board of Directors.
There are only ten available positions on the Board of
Directors. When voting on Item 1 (1) you may vote
FOR ALL of the Companys nominees, (2) you
may WITHHOLD AUTHORITY from the Companys
nominees, or (3) you may vote FOR ALL EXCEPT of
the Companys Director nominees in which case you should
list the individuals for which you are withholding your vote. If
you choose to WITHHOLD AUTHORITY or FOR ALL
EXCEPT (and indicate the name(s) you are witholding your
vote from), you may then vote FOR the shareholder
proposal to elect a director (Item 4) without
invalidating your Proxy Card with respect to Items 1 and 4.
If you vote FOR Item 4, but take no action with
respect to
18
Item 1, your Proxy Card will be considered a vote
FOR Item 1 and your Proxy Card will be invalid
with respect to Items 1 and 4 because it will be deemed to
be a vote for 11 directors. If you vote FOR ALL
of the Companys Director nominees, you must choose to
WITHHOLD AUTHORITY from the shareholder proposal to
elect a director (Item 4) or take no action with
respect to Item 4, or you will invalidate your Proxy Card
with respect to Items 1 and 4. If you vote both
FOR the Companys nominees and FOR
the shareholders proposal, your Proxy Card will be invalid
with respect to Items 1 and 4. If you do not vote for
either Item 1 or Item 4, your Proxy Card will be
considered a vote FOR Item 1, the
Companys nominees, and an instruction to WITHHOLD
AUTHORITY from Item 4, the shareholder proposal.
COMMON
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of the Common Stock and rights to acquire
Common Stock by shareholders that own five percent or more of
the Common Stock, by each of the Companys directors,
nominees for director and executive officers, and all of the
Companys directors and executive officers as a group. For
purposes of this table, a person or a group of persons is deemed
to have beneficial ownership of any shares as of a
date when such person or group has the right to acquire or vote
such shares within 60 days after such date, but such shares
are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person. Percentages of
shares owned are based on the 36,500,785 shares of Common
Stock issued and outstanding at April 11, 2006. These
shareholding numbers are based in part on the public filings of
several of the shareholders listed below.
|
|
|
|
|
|
|
|
|
|
|
Numbers of Shares
|
|
Percentage
|
Name and Address of Beneficial
Owner
|
|
Beneficially Owned
|
|
Beneficially Owned
|
|
Alfa Telecom Limited(1)
|
|
|
10,731,707
|
|
|
|
29.4
|
%
|
PO Box 3339 Geneva Place
|
|
|
|
|
|
|
|
|
333 Waterfront Drive
|
|
|
|
|
|
|
|
|
Road Town, Tortola
|
|
|
|
|
|
|
|
|
British Virgin Islands
|
|
|
|
|
|
|
|
|
Nye Telenor East Invest AS(2)
|
|
|
7,369,972
|
|
|
|
20.2
|
%
|
Snaroyveien 30
|
|
|
|
|
|
|
|
|
N-1331
|
|
|
|
|
|
|
|
|
Fornebu
|
|
|
|
|
|
|
|
|
Norway
|
|
|
|
|
|
|
|
|
OAO Rostelecom(3)
|
|
|
4,024,067
|
|
|
|
11
|
%
|
1st Tverskaya-Yamskaya
14
|
|
|
|
|
|
|
|
|
Moscow, Russia, 125047
|
|
|
|
|
|
|
|
|
Fidelity Management &
Research(4)
|
|
|
1,607,542
|
|
|
|
4.4
|
%
|
53 State Street, Boston, MA.
02109-3614
USA
|
|
|
|
|
|
|
|
|
Fidelity International(4)
|
|
|
1,497,476
|
|
|
|
4.1
|
%
|
25 Cannon Street, London EC4M 5TA
GB
|
|
|
|
|
|
|
|
|
European Bank of Reconstruction
and Development(5)
|
|
|
3,003,564
|
|
|
|
8.2
|
%
|
One Exchange Square
London EC2A 2JN
|
|
|
|
|
|
|
|
|
First NIS Regional
Fund SICAV(6)(7)(8)(9)
|
|
|
723,906
|
|
|
|
1.9
|
%
|
c/o Bank of Bermuda (Luxemburg )
S.A.
13 rue Goethe B.P.
|
|
|
|
|
|
|
|
|
413 L-2014 Luxemburg
|
|
|
|
|
|
|
|
|
Cavendish Nominees
Limited(6)(7)(8)(10)
|
|
|
1,845,769
|
|
|
|
5
|
%
|
c/o International Private Equity
Services
|
|
|
|
|
|
|
|
|
13-15
Victoria Road, P.O. Box 431
|
|
|
|
|
|
|
|
|
St. Peter Port
|
|
|
|
|
|
|
|
|
Guernsey, Channel Islands, GY1 3ZD
|
|
|
|
|
|
|
|
|
Vladimir Androsik(13)
|
|
|
|
|
|
|
|
|
Petr Aven(13)
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
Numbers of Shares
|
|
Percentage
|
Name and Address of Beneficial
Owner
|
|
Beneficially Owned
|
|
Beneficially Owned
|
|
Derek Bloom(13)
|
|
|
5,500
|
|
|
|
|
|
Vladimir Bulgak(13)
|
|
|
|
|
|
|
|
|
Michael Calvey(8)(13)
|
|
|
|
|
|
|
|
|
Kevin Cuffe(13)
|
|
|
|
|
|
|
|
|
Patrick Gallagher(13)
|
|
|
|
|
|
|
|
|
David Herman(11)(13)
|
|
|
|
|
|
|
|
|
Kjell Johnsen(13)
|
|
|
|
|
|
|
|
|
Alexey Khudyakov(13)
|
|
|
|
|
|
|
|
|
Dmitry Korol(13)(16)
|
|
|
|
|
|
|
|
|
Oleg Malis(11)(12)(13)
|
|
|
|
|
|
|
|
|
Ronny Naevdal(13)
|
|
|
|
|
|
|
|
|
David Smyth(13)
|
|
|
|
|
|
|
|
|
Boris Svetlichny(13)
|
|
|
200
|
|
|
|
|
|
Jan Thygesen(13)
|
|
|
|
|
|
|
|
|
Jean-Pierre Vandromme(14)
|
|
|
|
|
|
|
|
|
Alexander Vinogradov(12)(13)(16)
|
|
|
|
|
|
|
|
|
All Directors and Executive
Officers as a Group
|
|
|
5,700
|
|
|
|
|
|
(18 persons)(11)(14)(15)
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on information provided in Amendment No. 9 to
Schedule 13D filed with the SEC on August 23, 2004, we
understand that CTF Holdings Limited is the majority owner of
Cotesmore Holdings Limited, Laketown Services Limited and
Bardsley Investment Corp., (collectively, the Holding
Companies). The Holding Companies collectively own a
majority of the shares in Alfa Telecom Limited. CTF Holdings
Limited is a wholly-owned subsidiary of Crown Finance
Foundation. As a result of these relationships, each of CTF
Holdings Limited and Crown Finance Foundation may be deemed to
beneficially own the shares held for the account of Alfa Telecom
Limited. |
|
(2) |
|
Based on information provided in Amendment No. 3 to
Schedule 13D filed with the SEC on February 10, 2004. |
|
(3) |
|
Based on information provided in Schedule 13D filed with
the SEC on September 10, 2002. |
|
(4) |
|
Fidelity Management & Research and Fidelity
International may be deemed to be members of a group pursuant to
Rule 13(d)(5) under the Securities Exchange Act of 1934, as
amended. |
|
(5) |
|
Based on information provided in Schedule 13D filed with
the SEC on October 14, 1999. |
|
(6) |
|
Shares beneficially owned by The Barings Vostok Private Equity
Fund L.P. and The NIS Restructuring Facility (together, the
Barings Funds) are held in the name of Cavendish
Nominees Limited, as nominee. Of the 1,845,769 shares held
of record by Cavendish Nominees Limited, 1,491,485 shares
are beneficially owned by The Barings Vostok Private Equity Fund
L.P. and 354,284 shares are beneficially owned by The NIS
Restructuring Facility. |
|
(7) |
|
First NIS Regional Fund SICAV and the Barings Funds
holdings shares through Cavendish Nominees Limited may be deemed
to be members of a group pursuant to Rule 13(d)(5) under
the Securities Exchange Act of 1934, as amended. However, such
persons disclaim group status. |
|
(8) |
|
First NIS Regional Fund SICAV and the Barings Funds
holdings shares through Cavendish Nominees Limited are advised
by Barings Vostok Capital Partners Limited, as investment
adviser. Mr. Michael Calvey is the Managing Partner of
Barings Vostok Capital Partners Limited. Mr. Calvey
disclaims beneficial ownership of the shares held by First NIS
Regional Fund SICAV and the Barings Funds holdings shares
held by Cavendish Nominees Limited. |
20
|
|
|
(9) |
|
Based on the information provided in Amendment No. 1 to
Schedule 13D filed with the SEC on August 22, 2003. |
|
(10) |
|
Based on the information provided in Amendment No. 3 to
Schedule 13D filed with the SEC on August 26, 2003. |
|
(11) |
|
Included in these figures is the number of shares of our Common
Stock which the holder has the right to acquire beneficial
ownership of pursuant to the exercise of options, as follows:
Mr. David Herman, 15,000; Mr. Oleg Malis, 116,566 and
Mr. Alexander Vinogradov, 93,454. |
|
(12) |
|
Golden Telecom has adopted the 1999 Equity Participation Plan,
as amended, whereby certain employees of Golden Telecom and its
affiliates are granted Golden Telecom stock options. Owing to
ambiguities and inconsistencies in the legislation of the
countries in which some of our employees live, the Compensation
Committee of the Board of Directors of Golden Telecom decided
not to issue stock options to its Russian employees, including
Mr. Vinogradov and Mr. Malis. Instead, as part of its
key employee incentive and retention policy, Golden Telecom
established the Golden Telecom Incentive Bonus Program, whereby
Golden Telecom issues stock options to a trust in numbers
corresponding to the level of financial incentive Golden Telecom
wishes to award its eligible employees. When eligible employees,
including Mr. Vinogradov, and Mr. Malis who had
received a grant of stock options while he had been Senior Vice
President and Director of Mergers and Acquisitions, desire and
are eligible to receive the economic benefit of the options,
they inform Golden Telecom and Golden Telecom, in turn, advises
the trustee, who exercises an appropriate number of options for
contribution to the trust. Upon request of the Company and the
employee or former employee who may still hold a stock option,
the funds available in the trust may be disbursed in the form of
a cash incentive bonus. The economic value of
Mr. Vinogradovs participation in the Bonus Program at
December 31, 2005 is approximately equivalent to 88,954
options granted in 2001 and 4,500 options granted in 1999. The
economic value of Mr. Maliss participation in the
Bonus Program at December 31, 2005 is approximately
equivalent to 95,733 options granted in 2003. |
|
(13) |
|
Each of the individuals indicated by this footnote owns less
than one percent of our outstanding Common Stock. |
|
(14) |
|
In September 2005, we granted SARs to our Chief Executive
Officer (CEO) with respect to 200,000 shares of
our common stock, at a share price which was the closing price
of the our common stock on the Nasdaq National Market on
July 19, 2005 (CEO Granting Share Price), which
was $29.83, one-third of which shall be and become vested and
nonforfeitable on each of the first three anniversary dates from
September 1, 2005, provided the CEO remains continuously
employed by us until each such relevant date. If, prior to
August 31, 2008 and during the CEOs period of
employment with us, the average closing stock price of one share
of our common stock on the Nasdaq National Market, or any such
other exchange on which our common stock may then be traded,
exceeds $50.00 during any thirty day consecutive period, the CEO
will be granted SARs for an additional 200,000 shares of
our common stock at the CEO Granting Share Price, which SARs
shall be fully vested upon issuance. The SARs provide for a cash
only settlement and the related obligation is recorded as a
liability in the consolidated financial statements. |
|
(15) |
|
In December 2005, we granted SARs with respect to
851,800 shares of our common stock to senior management and
other employees. The SARs were granted pursuant to the Golden
Telecom, Inc. 2005 Stock Appreciation Rights Plan and the EDN
Sovintel Stock Appreciation Rights Bonus Plan at a share price
which shall be the lower of: (i) the average between the
high and low sales price per share of common stock on the grant
date, or in case no such sale takes place on grant date, the
last date on which a sale occurred, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on a
national securities exchange or included for quotation on the
Nasdaq National Market; or (ii) the average closing sales
price per share of our common stock for the fourteen trading
days immediately preceding such date, as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on a national
securities exchange or included for quotation on the Nasdaq
National Market, which was $26.808 (Granting Share
Price). Seventy-five percent of the SAR grant shall be
subject to time vesting, one-third of which shall be and become
vested and nonforfeitable on each of the first three anniversary
dates from December 12, |
21
|
|
|
|
|
2005, provided that the employee remains continuously employed
by the Company until each such relevant date. The Granting Share
Price shall increase by five percent on each anniversary date
after December 12, 2005, in association with the SARs that
shall be and become vested and nonforfeitable on each such
anniversary date. Twenty-five percent of the SARs granted are
subject to performance vesting upon the our common stock
achieving a closing trading price of at least $50.00 per
share for thirty consecutive days as determined in the sole
discretion of the Company. If the Companys Common Stock
does not achieve a closing trading price of at least
$50.00 per share for thirty consecutive days within three
years of the date of grant, such portion of the SARs shall
expire by its terms and shall not be exercisable. The aggregate
number of shares of common stock which may be issued pursuant to
the Golden Telecom, Inc. 2005 Stock Appreciation Rights plan
shall be 200,000 shares. |
|
|
|
In July 2004, the Board of Directors of the Company adopted a
Long Term Incentive Bonus Program (LTIBP) for senior
management of the Company, effective as of January 1, 2004.
In February 2006, the Board of Directors of the Company
discontinued the LTIBP effective January 1, 2005. During
the twelve months ended December 31, 2005 the Company did
not record any expense associated with the LTIBP. The Company
has not granted any shares under the LTIBP. The LTIBP was
terminated as of January 1, 2005.
|
|
|
|
(16) |
|
All directors, nominees for director and executive officers as a
group own/control less than 1% of our Common Stock outstanding. |
* * * * * * * * * * * * * * * * * *
EXECUTIVE
OFFICERS
Jean-Pierre Vandromme.
Age 52. Mr. Vandromme joined Golden
Telecom as Chief Executive Officer in September 2005.
Mr. Vandromme is the founder and Managing Director of
VoIP.co.uk, a United Kingdom based company. Mr. Vandromme
is also a Board member of Completel, Ventelo Sweden and Norway
and he was a Board member of Axxessit. From 2001 to 2003,
Mr. Vandromme was Chairman, President and Chief Executive
Officer of VENTELO Europe and from 1994 to 2001,
Mr. Vandromme served in a variety of positions with Global
TeleSystems, Inc., including President of GTS-Business Services.
Alexander Vinogradov. Age 51. Prior to
joining Golden Telecom as President and Chief Executive Officer
in 2001, Mr. Vinogradov worked at LLC EDN Sovintel as
General Director starting in November 1995. Prior to his
appointment as General Director, Mr. Vinogradov worked at
LLC EDN Sovintel as Commercial Director, Head of Marketing and
Sales Department and Head of Marketing and Development
Department. Mr. Vinogradov began his career at the Main
Center for Management of Long-Distance Communications of the
USSR. Mr. Vinogradov was originally elected to Golden
Telecoms Board of Directors and became President and Chief
Executive Officer of Golden Telecom in November 2001 and was
re-elected to one year terms in May 2002, May 2003 and May 2004.
Mr. Vinogradov has served on the Executive Committee of the
Board of Directors since his election as a Director.
Boris Svetlichny.
Age 44. Mr. Svetlichny joined Golden
Telecom as Senior Vice President, Chief Financial Officer and
Treasurer in March 2006. Mr. Svetlichny has served as the
Financial Controller of Bulgarian Telecommunications Company Plc
(BTC) from October 2004 to March 2006. Prior to
joining BTC, Mr. Svetlichny was from 2003 to 2004 a Partner
with VSRK Associates Ltd., a United Kingdom based management
consulting company. From 2000 to 2003, Mr. Svetlichny was
the Director and Vice President of Finance of Ventelo (UK) Ltd.,
and from 1994 to 2000, Mr. Svetlichny served in a variety
of positions with Global TeleSystems, Inc., including Director
of Finance of GTS Business Services and Finance Director of EDN
Sovintel. Mr. Svetlichny holds a Bachelors Degree in
Accounting from the University of Massachusetts and a MSIA
(Masters Degree in Business Administration) from Carnegie-Mellon
University.
Derek A. Bloom. Age 47. Mr. Bloom
joined Golden Telecom as Senior Vice President, General Counsel
and Corporate Secretary in February 2005. Prior to joining
Golden Telecom, Mr. Bloom was a partner with Coudert
Brothers, and practiced corporate law in Moscow and St.
Petersburg for 10 years. Before coming to Moscow in 1995,
Mr. Bloom practiced United States securities and tax law as
a partner with Elias, Matz, Tiernan & Herrick, a
Washington, DC based securities law firm.
22
Kevin Cuffe. Age 46. Mr. Cuffe
joined Golden Telecom as Commercial Director of Sovintel in
April 1998 and currently serves as Vice President, Deputy
General Director, Managing Director of Business and Consumer
Solutions & Customer Care/Call Center Business Unit.
Before joining Golden Telecom, Mr. Cuffe worked in a
variety of positions for AT&T, including as Area Director
Southern Europe, Middle East & Africa based in Rome,
Italy from 1996 to 1998; Project Director, New Ventures in
Moscow, Russia from 1993 to 1996 and Branch Client Services
Manager in San Francisco, California from 1987 to 1992.
Mr. Cuffe holds a Bachelors Degree in Business
Administration from the University of Miami (1981) and a
Masters Degree in Business Administration from San Diego
State University.
* * * * * * * * * * * * * * * * *
EXECUTIVE
COMPENSATION
The following table summarizes the compensation paid or awarded
to the Companys Chief Executive Officer and the four other
most highly compensated named executive officers in 2003, 2004
and 2005. It also discloses the compensation paid to two former
executive officers who left the Company in 2005 but would have
been included had they been executive officers at the end of
2005.
The column entitled Securities Underlying Options in
2003, 2004 and 2005 refers to shares of the Companys
Common Stock that could be issued upon the exercise of stock
options awarded to the listed employee under the Golden Telecom
1999 Equity Participation Plan.
In accordance with the Golden Telecom 1999 Equity Participation
Plan, not more than 4,320,000 shares of Common Stock
(subject to antidilution and other adjustment provisions) are
authorized for issuance upon exercise of options or upon vesting
of restricted or deferred stock awards. As of December 31,
2005, 852,699 shares of Common Stock remained available for
grant.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation
|
|
|
|
|
Annual Compensation
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
Other Annual
|
|
Restricted Stock
|
|
Underlying
|
|
All Other
|
|
|
|
|
Salary(1)
|
|
Bonus
|
|
Compensation
|
|
Awards
|
|
Options/SAR
|
|
Compensation
|
Name and Principal
Position
|
|
Year
|
|
$
|
|
$
|
|
$
|
|
$
|
|
#
|
|
($)
|
|
Jean-Pierre Vandromme
|
|
|
2005
|
|
|
|
166,700
|
|
|
|
355,000
|
(1)
|
|
|
2,244
|
(2)
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
Chief Executive Officer
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander Vinogradov
|
|
|
2005
|
|
|
|
439,552
|
|
|
|
346,600
|
(3)
|
|
|
4,502
|
(4)
|
|
|
183,235
|
(5)
|
|
|
|
|
|
|
|
|
President
|
|
|
2004
|
|
|
|
363,749
|
|
|
|
56,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
290,000
|
|
|
|
149,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Cuffe
|
|
|
2005
|
|
|
|
296,213
|
|
|
|
150,009
|
|
|
|
106,064
|
(6)
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
Vice President, Managing
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director, Business &
Consumer
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solutions Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derek Bloom
|
|
|
2005
|
|
|
|
291,532
|
|
|
|
44,100
|
|
|
|
102,553
|
(7)
|
|
|
155,045
|
(8)
|
|
|
30,000
|
|
|
|
|
|
Senior Vice President,
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel and
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Wilson
|
|
|
2005
|
|
|
|
216,934
|
|
|
|
63,210
|
|
|
|
68,060
|
(9)
|
|
|
56,380
|
(10)
|
|
|
10,000
|
|
|
|
|
|
Vice President, Corporate
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Controller and Principal
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Rich(11)
|
|
|
2005
|
|
|
|
318,000
|
|
|
|
105,000
|
|
|
|
266,645
|
(12)
|
|
|
82,570
|
(13)
|
|
|
|
|
|
|
574,500
|
(14)
|
Senior Vice President,
|
|
|
2004
|
|
|
|
137,500
|
|
|
|
28,261
|
|
|
|
126,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer and
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michal Cupa(15)
|
|
|
2005
|
|
|
|
318,000
|
|
|
|
105,000
|
|
|
|
44,086
|
(16)
|
|
|
68,812
|
(17)
|
|
|
|
|
|
|
557,462
|
(18)
|
Senior Vice President and
|
|
|
2004
|
|
|
|
258,750
|
|
|
|
40,447
|
|
|
|
36,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
(1) |
|
Mr. Vandromme became Chief Executive Officer on
September 1, 2005. Amount disclosed includes a bonus paid
at the time Mr. Vandromme was hired of $250,000, and an
annual bonus with regard to 2005 of $105,000. |
|
(2) |
|
Amount disclosed includes group term life insurance of $485, tax
preparation fees of $1,500, and salary from Sovintel ($259), the
Companys wholly owned subsidiary. |
|
(3) |
|
Amount disclosed includes a bonus of $250,000 paid at the time
of amendment of Mr. Vinogradovs employment agreement
in September 2005 when his position was changed to be President,
and an annual bonus with regard to 2005 of $96,600. |
|
(4) |
|
Amount disclosed includes meals, per diem, travel for spouse and
salary from Sovintel ($1,252). |
|
(5) |
|
Amount disclosed reflects the grant of 6,500 Restricted Shares
of Common Stock, par value $.01 per share. One-third (1/3)
of the Shares of Restricted Stock (2,166) vested on
August 1, 2005. The remaining two-thirds (2/3) of the
Shares of Restricted Stock vest monthly at the rate of one
twenty-fourth (1/24) per month (180) commencing on
September 1, 2005. Dividends are paid on restricted shares. |
|
(6) |
|
Amount disclosed includes, with regard to 2005: Russian tax
equalization payment of $76,473, 401(k) matching contribution of
$7,000, group term life insurance of $650, US Federal income tax
gross-up of
$3,659, children school fees of $11,685, tax preparation fees of
$3,700, storage of personal effects of $2,324, personal property
insurance of $259 and salary from Sovintel ($314). |
|
(7) |
|
Mr. Bloom joined Golden Telecom as Senior Vice President,
General Counsel and Corporate Secretary in February 2005. Amount
disclosed includes, with regard to 2005: Russian tax
equalization payment of $60,236, 401(k) matching contribution of
$7,000, group term life insurance of $650, US Federal income tax
gross-up of
$6,908, children school fees of $22,300, tax preparation fees of
$3,700, and personal property insurance of $250. |
|
(8) |
|
Amount disclosed reflects the grant of 5,500 Restricted Shares
of Common Stock, par value $.01 per share. One-third (1/3)
of the Shares of Restricted Stock (1,833) vested on
January 10, 2006. The remaining two-thirds (2/3) of the
Shares of Restricted Stock vest monthly at the rate of one
twenty-fourth (1/24) per month (152) commencing on
February 10, 2006 and on the 10th day of each month
thereafter, provided that any unvested Shares of Restricted
Stock shall vest on February 10, 2008. Dividends are paid
on restricted shares. |
|
(9) |
|
Amount disclosed includes, with regard to 2005: Russian tax
equalization payment of $54,175, 401(k) matching contribution of
$7,000, group term life insurance of $387, US Federal income tax
gross-up of
$71, tax preparation fees of $3,700, storage of personal effects
of $2,468; and personal property insurance of $259. |
|
(10) |
|
Amount disclosed reflects the grant of 2,000 Restricted Shares
of Common Stock, par value $.01 per share. One-third (1/3)
of the Shares of Restricted Stock (667) vested on
August 1, 2005. The remaining two-thirds (2/3) of the
Shares of Restricted Stock vest monthly at the rate of one
twenty-fourth (1/24) per month (55) commencing on
September 1, 2005 and on the 1st day of each month
thereafter, provided that any unvested Shares of Restricted
Stock shall vest on September 1, 2007. Dividends are paid
on restricted shares. |
|
(11) |
|
Mr. Rich joined Golden Telecom as Senior Vice President,
Chief Financial Officer and Treasurer as of August 4, 2004.
Mr. Rich resigned as Senior Vice President, Chief Financial
Officer and Treasurer as of December 16, 2005, but
continued to be an employee of the Company and to serve as
Special Advisor to the Chief Executive Officer of the Company
for the period from December 16, 2005 to February 17,
2006. |
|
(12) |
|
Amount disclosed includes, with regard to 2005: Russian tax
equalization payment of $141,041, 401(k) matching contribution
of $7,000, group term life insurance of $389, US Federal income
tax gross-up
of $10,581, tax preparation fees of $3,700, storage of personal
effects of $3,671, personal property insurance of $626, moving
expenses of $12,393, language lessons of $4,316, payments to
Mr. Richs spouse for consulting services of $10,000,
spouse airline tickets of $3,695, and spouse language lessons of
$906. Amount disclosed includes, with regard to 2004: 401
(k) matching contribution of $6,500, group term life |
24
|
|
|
|
|
insurance of $148, moving and living expenses of $70,721, the
cost of brokerage fees and closing documentation associated with
the sale of Mr. Richs house in the United States of
$49,533. |
|
(13) |
|
Amount disclosed reflects the grant of 5,500 restricted shares
of common stock, par value $.01 per share. 2,745 restricted
shares of common stock vested during 2005 and through
Mr. Richs notice period in 2006. The remaining 2,755
restricted shares were cancelled in February 2006 in connection
with Mr. Richs termination of employment. Dividends
are paid on restricted shares. |
|
(14) |
|
Amount disclosed reflects payments in connection with
Mr. Richs termination of employment: severance
payment of $574,500, including a payment in exchange for
unvested restricted shares of $100,000. |
|
(15) |
|
Mr. Cupa joined Golden Telecom as Senior Vice President and
Chief Operating Officer as of March 1, 2004. Mr. Cupa
resigned as Senior Vice President and Chief Operating Officer as
of September 15, 2005, but continued as an employee of the
Company as Special Adviser to the Chief Executive Officer for
the period from September 15, 2005 to December 31,
2005. |
|
(16) |
|
Amount disclosed includes, with regard to 2005: group term life
insurance of $651, tax preparation fees of $1,500, personal
property insurance of $626, children school fees of $41,000,
salary and compensation for unused vacation from Sovintel of
$685. Amount disclosed includes, with regard to 2004: children
school fees of $36,976. |
|
(17) |
|
Amount disclosed reflects the grant of 5,500 restricted shares
of common stock, par value $.01 per share. 2,441 restricted
shares of common stock vested during 2005. The remaining 3,059
restricted shares were cancelled in connection with
Mr. Cupas termination of employment. Dividends are
paid on restricted shares. |
|
(18) |
|
Amount disclosed reflects payments in connection with
Mr. Cupas termination of employment: severance
payment of $557,462, including a payment in exchange for
unvested restricted shares of $100,000. |
25
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table provides information on grants of stock
options and freestanding SARs made in 2005. The closing price of
the Companys stock on December 31, 2005 was
$26.05 per share on the Nasdaq National Market.
Option/SAR
Grants in Last Fiscal Year
Individual Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value
|
|
|
Number of
|
|
Percent of
|
|
|
|
|
|
at Assumed Annual Rates
|
|
|
Securities
|
|
Total
|
|
|
|
|
|
of Stock Price
|
|
|
Underlying
|
|
Options/SARs
|
|
Exercise
|
|
|
|
Appreciation for
|
|
|
Options/SARs
|
|
Granted to
|
|
or Base
|
|
|
|
Option/SAR Term
|
|
|
Granted
|
|
Employees in
|
|
Price
|
|
Expiration
|
|
5%
|
|
10%
|
Name
|
|
(#)
|
|
Fiscal Year
|
|
($/SH)
|
|
Date
|
|
($)
|
|
($)
|
|
Jean-Pierre Vandromme
|
|
|
200,000
|
(1)
|
|
|
19
|
%
|
|
$
|
29.83
|
|
|
|
|
(2)
|
|
$
|
1,648,296
|
(3)
|
|
$
|
3,642,303
|
(3)
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander Vinogradov
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Cuffe
|
|
|
50,000
|
|
|
|
5
|
%
|
|
$
|
26.81
|
(4)
|
|
|
12/12/2010
|
|
|
$
|
277,746
|
|
|
$
|
613,746
|
|
Vice President, Managing Director,
Business & Consumer Solutions Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derek Bloom
|
|
|
30,000
|
|
|
|
3
|
%
|
|
$
|
26.81
|
(4)
|
|
|
12/12/2010
|
|
|
$
|
166,648
|
|
|
$
|
368,247
|
|
Senior Vice President, General
Counsel and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Wilson
|
|
|
10,000
|
|
|
|
1
|
%
|
|
$
|
26.81
|
(4)
|
|
|
12/12/2010
|
|
|
$
|
55,549
|
|
|
$
|
122,749
|
|
Vice President, Corporate
Controller and Principal Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Rich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President, Chief
Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michal Cupa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Vandromme was granted 200,000 SARs when he joined the
Company. An additional 200,000 SARs will be granted and fully
vested upon issuance, if, prior to August 31, 2008 and
during Mr. Vandrommes period of employment with GTI
or one of its subsidiaries or business units, the average
closing price of GTI common stock exceeds $50.00 during any
thirty day consecutive period. |
|
(2) |
|
All SARs shall be cancelled, and GTI shall make payment to
Mr. Vandromme on the 30th day following
Mr. Vandrommes termination of employment. |
|
(3) |
|
SARs granted to Mr. Vandromme expire only upon termination
of employment. SAR term assumed to be equal to five years from
the grant date. |
|
(4) |
|
Twenty-five percent of the SARs granted are subject to
performance vesting upon GTI common stock achieving a closing
trading price of at least $50.00 per share for thirty
consecutive days. Seventy-five percent of the SARs granted are
subject to time vesting, one-third of which shall be and become
vested and nonforfeitable on each of the first three anniversary
dates from the grant date, provided that the employee remains
continuously employed by the Company until each such relevant
date. The Granting Share Price |
26
|
|
|
|
|
($26.81) shall increase by five percent on each anniversary date
after the grant date in association with the SARs that shall be
and become vested and nonforfeitable on each such anniversary
date. |
The following table provides information concerning exercise of
stock options and freestanding SARs made during 2005 by each of
the following most highly compensated executive officers:
Aggregated
Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Value of Unexercised
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
In-the-Money
|
|
|
|
Shares
|
|
|
|
|
|
Options/SARs
|
|
|
Options/SARs at
|
|
|
|
Acquired on
|
|
|
Value
|
|
|
at FY-End (#)
|
|
|
FY-End ($)
|
|
|
|
Exercise
|
|
|
Realized
|
|
|
Exercisable/
|
|
|
Exercisable/
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
Unexercisable
|
|
|
Unexercisable
|
|
|
Jean-Pierre Vandromme
|
|
|
|
|
|
|
|
|
|
|
/200,000
|
|
|
$
|
/
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander Vinogradov
|
|
|
|
|
|
|
|
|
|
|
93,454/
|
|
|
$
|
1,313,029/
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Cuffe
|
|
|
|
|
|
|
|
|
|
|
13,000/50,000
|
|
|
$
|
146,400/
|
|
Vice President, Managing
Director, Business & Consumer
Solutions Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derek Bloom
|
|
|
|
|
|
|
|
|
|
|
/30,000
|
|
|
$
|
/
|
|
Senior Vice President,
General Counsel and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Wilson
|
|
|
1,500
|
|
|
$
|
30,000
|
|
|
|
10,500/10,000
|
|
|
$
|
5,213/
|
|
Vice President, Corporate
Controller and Principal Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Rich
|
|
|
|
|
|
|
|
|
|
|
/
|
|
|
$
|
/
|
|
Senior Vice President, Chief
Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michal Cupa
|
|
|
|
|
|
|
|
|
|
|
/
|
|
|
$
|
/
|
|
Senior Vice President and Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* * * * * *
* * * * * * * * * * * *
REPORT OF
THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview. The role of the Compensation
Committee is to oversee and direct the development of executive
compensation policies and programs that are consistent with,
explicitly linked to, and supportive of the strategic objectives
of growing the Companys businesses in order to maximize
shareholder value. The Committees specific
responsibilities consist of determining the appropriate levels
of compensation, including salaries, quarterly or annual
incentives, long-term incentives and employee benefits for
members of the Companys senior management, including
executive officers. The Committee believes that a strong link
should exist between executive compensation and the financial
results of the Companys operations. The Committee seeks to
realize this goal by developing incentive compensation programs
that provide competitive compensation and reflect Company
performance.
Compensation Philosophy. The three fundamental
principles to which the Committee adheres in discharging its
responsibilities are as follows. First, most annual and
long-term incentive compensation for the Companys
executive officers should be at risk, with actual compensation
levels correlating to the Companys performance in certain
key areas determined by the Committee. Second, incentive
compensation of the Companys executive officers should
focus more heavily on long-term rather than short-term
accomplishments and results. Third, the overall executive
compensation program should be competitive, equitable and
structured
27
so as to ensure the Companys ability to attract, retain,
motivate and reward the executives and senior management who are
essential to the Companys continuing success in the
difficult markets in which the Company operates. Total
compensation, rather than distinct compensation elements, is the
focus of the Companys goal to provide competitive
compensation opportunities.
Compensation Elements. The Companys
compensation program for executives and senior management
consists of four principal elements, each of which is vitally
important in meeting the Companys need to attract, retain,
motivate and reward highly-qualified executives and senior
management in the markets where the Company operates. The four
principal elements are described below and include base
salaries, periodic performance incentives, long-term incentives
and benefits.
Base Salaries. Base salaries for executive
officers and senior management are generally set at levels that
reflect the competitive marketplace for companies that are of
comparable size and complexity and that would be considered
competitors of the Company in attracting and retaining qualified
executives. The salaries of the executive officers are reviewed
and approved by the Compensation Committee based on its
assessment of each executives experience and performance
and a comparison of salaries of peers in other companies.
Periodic Performance Incentives. Incentive
awards are made on a quarterly or annual basis to executive
officers and senior management on the basis of Company and
business unit performance relative to budget in such areas as
revenue, net income, and EBITDA, which is a common performance
measure in the telecommunications industry and means earnings
before interest, tax, depreciation and amortization. The Company
adopted a revised executive officer and senior management
executive bonus program in 2001, whereby an additional
criterion, personal performance objectives, was added and
executives and senior management are eligible for an annual
incentive payment based on the fulfillment of these personal
objectives. The bonus program was revised in 2003 such that all
bonus components will be paid annually, and the formula for the
determination of the amount of bonuses payable was amended in
2005. The Company intends to continue providing incentives in
concert with other compensation elements in order to maintain a
competitive total compensation program for its executive
officers. The Committee reviews and approves all performance
measures and goals established under the annual and long-term
incentive plans.
Long-Term Incentives. At the time leading up
to the Companys initial public offering in 1999, the
Company relied on stock options as the principal means of
providing long-term incentive compensation. Stock options were
granted to executive officers and senior management under the
1999 Equity Participation Plan. In December 2005, we granted
SARs with respect to 851,800 shares of our common stock to
senior management and other employees. The SARs were granted
pursuant to the Golden Telecom, Inc. 2005 Stock Appreciation
Rights Plan and the EDN Sovintel Stock Appreciation Rights Bonus
Plan at a share price which shall be the lower of: (i) the
average between the high and low sales price per share of the
common stock on the grant date, or in case no such sale takes
place on grant date, the last date on which a sale occurred, in
either case as reported in the principal consolidated
transaction reporting system with respect to securities listed
or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq National Market; or
(ii) the average closing sales price per share of our
common stock for the fourteen trading days immediately preceding
such date, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted
to trading on a national securities exchange or included for
quotation on the Nasdaq National Market, which was $26.808
(Granting Share Price). Seventy-five percent of the
SAR grant shall be subject to time vesting, one-third of which
shall be and become vested and nonforfeitable on each of the
first three anniversary dates from December 12, 2005,
provided that the employee remains continuously employed by the
Company until each such relevant date. The Granting Share Price
shall increase by five percent on each anniversary date after
December 12, 2005, in association with the SARs that shall
be and become vested and nonforfeitable on each such anniversary
date. Twenty-five percent of the SARs granted are subject to
performance vesting upon our common stock achieving a closing
trading price of at least $50.00 per share for thirty
consecutive days as determined in the sole discretion of the
Company. If the Companys Common Stock does not achieve a
closing trading price of at least $50.00 per share for
thirty consecutive days within three years of the date of grant,
such portion of the SARs shall expire by its terms and shall not
be exercisable. The aggregate number of shares of common stock
which may be issued pursuant to the Golden Telecom, Inc. 2005
Stock Appreciation Rights plan shall be 200,000 shares.
28
Benefits. Benefits offered to executive
officers serve a different purpose than do other elements of the
total compensation program. In general, they act as a safety net
against problems that can arise from illness, disability or
death.
Golden Telecom, Inc. 401(k) Plan. The Company
offers a 401(k) retirement savings plan (the 401(k)
Plan) to its employees. The 401(k) Plan is a defined
contribution retirement benefit, the prototype of which has been
submitted by the Companys 401(k) Plan administrators to
the Internal Revenue Service for favorable tax treatment under
Section 401 of the Internal Revenue Service Code. All
employees of Golden Telecom, subject to certain regulatory
qualifications, who are U.S. citizens and are at least
21 years of age and have completed the minimum service
requirement are eligible to participate in the 401(k) Plan. The
401(k) Plan participants are able to defer pre-tax income by
contributing to the plan up to the maximum amount permitted by
law. After-tax contributions are also permitted under the 401(k)
Plan. Golden Telecom matches 50% of each participants
pre-tax contribution to the 401(k) Plan. In addition, Golden
Telecom may, in its sole discretion and in a nondiscriminatory
manner, contribute additional amounts as profit sharing to each
participants account. The Company did not contribute
additional amounts as profit sharing for the year 2005. The
amounts deposited into each participants account will be
invested among various investment options according to the
instructions of the participant. Each participants pre-tax
and after-tax contributions will be immediately vested and
non-forfeitable. The Companys matching contribution and
profit sharing allocations to each participants account
will not vest until the participant has completed three years of
service with Golden Telecom at which time the matching
contribution and profit sharing allocations become 100% vested.
Evaluation Procedures. In determining matters
regarding executive officer compensation (other than the Chief
Executive Officer), the Committee, with the Chairman of the
Board and Chief Executive Officer, reviews the performance of
key executives including the executive officers, the respective
areas of authority and responsibility of the various executive
officers, and the contribution of each to the efforts of the
Company in meeting its financial and strategic goals. The
Committee has confirmed that the compensation paid in 2005 to
the named executive officers is consistent with the
Companys compensation philosophy and objectives.
Compensation of the Chief Executive
Officer. The positions of Chief Executive Officer
and President of the Company were separated in July 2005, when
Jean-Pierre Vandromme was appointed Chief Executive Officer
effective September 1, 2005. Alexander Vinogradov remains
President of the Company and focuses on government relations and
regulatory aspects of the Companys business and regional
expansion. On July 18, 2005, Mr. Vinogradovs
employment arrangement was amended to provide for the change in
his position.
Under the terms of Mr. Vandrommes employment
agreement, Mr. Vandromme receives a base salary of
$500,000 per year, which amount will be reviewed by the
Compensation Committee of the Board of Directors annually.
Mr. Vandromme is eligible for an annual performance-based,
incentive bonus, which, in the first year of the term hereof, is
in the amount of up to $375,000. The Company paid to
Mr. Vandromme a one time signing bonus in the amount of
$250,000 during August 2005. Mr. Vandromme was issued SARs
with respect to 200,000 shares of Golden Telecom common
stock, at a share price which was the closing price of GTI
common stock on the Nasdaq National Market on July 19, 2005
(Granting Share Price), which was $29.83, one-third
of which shall be and become vested and nonforfeitable on each
of the first three anniversary dates from September 1,
2005, provided Mr. Vandromme remains continuously employed
by the Company or one of its subsidiaries or business units
until each such relevant date. If, prior to August 31, 2008
and during Mr. Vandrommes period of employment with
the Company or one of its subsidiaries or business units, the
average closing stock price of one share of the Company common
stock on the Nasdaq National Market, or any such other exchange
on which the Company common stock may then be traded, exceeds
$50.00 during any thirty day consecutive period,
Mr. Vandromme will be granted SARs for an additional
200,000 shares of the Company common stock at the Granting
Share Price, which SARs shall be fully vested upon issuance. The
employment agreement also provides for payments to
Mr. Vandromme following a change of control equal to two
times his salary and a pro rata share of the projected bonus (as
described in the agreement) other than a change of control
involving an excluded party which shall mean (1) the
Company or any of its subsidiaries, (2) any trustee or
other fiduciary holding securities under an employee benefit
plan of GTI or any of its subsidiaries, (3) an underwriter
temporarily holding securities pursuant to an offering of such
securities, (4) any corporation owned, directly or
indirectly, by the stockholders of the Company substantially in
the same
29
proportions as their ownership of GTIs common stock or
(5) Alfa Telecom Limited, Nye Telenor East Invest AS,
Rostelecom or their respective wholly-owned subsidiaries.
Deductibility of Certain Executive
Compensation. Beginning in 1994, the Omnibus
Reconciliation Act of 1993 limits to $1 million the amount
that may be deducted by a publicly-held company for compensation
paid to each of its named executive officers in a taxable year,
unless the compensation in excess of $1 million is
qualified performance-based compensation. The
Committee and the Company design short-term and long-term
compensation plans to qualify for the exemption from the
deduction limitations of Section 162(m) of the Internal
Revenue Code and to be consistent with providing appropriate
compensation to executives. Shareholder approval of incentive
compensation plans and various provisions thereunder covering
the executive officers has been sought and obtained and will be
sought in the future to continue to qualify performance-based
compensation for the exemption. Although it is the
Companys intent to qualify compensation for the exemption
from the deduction limitations, the Companys compensation
practices have been, and will continue to be, designed to serve
the best interests of the shareholders regardless of whether
specific compensation qualifies for the exemption.
Submitted by the Compensation Committee of the Board of
Directors:
Mr. David Herman (Chair)
Mr. Kjell Johnsen
Mr. Alexey Khudyakov
* * * * * * * * * * * * * * * * *
30
EMPLOYMENT
CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Employment Agreement of the Chief Executive
Officer. Under the terms of
Mr. Vandrommes employment agreement,
Mr. Vandromme receives a base salary of $500,000 per
year, which amount will be reviewed by the Compensation
Committee of the Board of Directors annually. Mr. Vandromme
is eligible for an annual performance-based, incentive bonus,
which, in the first year of the term hereof, shall be in the
amount of up to $375,000. The Company paid to Mr. Vandromme
a one time signing bonus in the amount of $250,000 during August
2005. Mr. Vandromme was issued SARs with respect to
200,000 shares of Golden Telecom common stock, at the
Granting Share Price, one-third of which shall be and become
vested and nonforfeitable on each of the first three anniversary
dates from September 1, 2005, provided Mr. Vandromme
remains continuously employed by the Company or one of its
subsidiaries or business units until each such relevant date.
If, prior to August 31, 2008 and during
Mr. Vandrommes period of employment with the Company
or one of its subsidiaries or business units, the average
closing stock price of one share of the Company common stock on
the Nasdaq National Market, or any such other exchange on which
the Company common stock may then be traded, exceeds $50.00
during any thirty day consecutive period, Mr. Vandromme
will be granted SARs for an additional 200,000 shares of
the Company common stock at the Granting Share Price, which SARs
shall be fully vested upon issuance. The employment agreement
also provides for payments to Mr. Vandromme following a
change of control equal to two times his salary and a pro rata
share of the projected bonus (as described in the agreement)
other than a change of control involving an excluded party which
shall mean (1) the Company or any of its subsidiaries,
(2) any trustee or other fiduciary holding securities under
an employee benefit plan of GTI or any of its subsidiaries,
(3) an underwriter temporarily holding securities pursuant
to an offering of such securities, (4) any corporation
owned, directly or indirectly, by the stockholders of the
Company substantially in the same proportions as their ownership
of GTIs common stock or (5) Alfa Telecom Limited, Nye
Telenor East Invest AS, Rostelecom or their respective
wholly-owned subsidiaries.
Employment Agreements of Other Executive
Officers. The employment contracts of the other
executive officers contain substantially the same terms, other
than compensation amounts, as that of Mr. Vandrommes
agreement.
31
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG GOLDEN TELECOM, INC., THE NASDAQ STOCK MARKET (U.S. &
FOREIGN) INDEX,
AND THE NASDAQ TELECOMMUNICATIONS INDEX
|
|
* |
$100 invested on 12/31/00 in stock or index-including
reinvestment of dividends.
Fiscal year ending December 31.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Shareholders and Standstill Agreements. On
December 1, 2003, subsidiaries of the Company completed the
purchase of OAO Comincom from Telenor. As a result of the
transaction, Telenor acquired 19.5% of the Companys then
issued and outstanding shares. Also as a result of the
transaction, the Company and certain major shareholders of the
Company entered into a shareholders agreement and a standstill
agreement. The shareholders agreement and standstill agreement,
which came into effect on December 1, 2003, were entered
into by the Company, Alfa Telecom Limited, Nye Telenor East
Invest AS, Rostelecom, Capital International Global Emerging
Markets Private Equity Fund L.P., Cavendish Nominees
Limited and First NIS Regional Fund SICAV. An Independent
Committee of the Board of Directors authorized both agreements
and granted its approval of the acquisition pursuant to
Section 203(a)(1) of the Delaware General Corporate Law.
The shareholders agreement provided that the parties to the
agreement would vote their shareholding such that the nominees
to the Board designated by the parties pursuant to the agreement
will be elected to the Golden Telecom Board of Directors. It is
the Companys opinion that this provision of the
Shareholders Agreement expired on December 1, 2005.
Accordingly, the Nominating and Corporate Governance Committee
of the Board of Directors recommended to the Board of Directors
a slate of candidates to be elected as directors which the
Nominating and Corporate Governance Committee considered to be
in the best interests of the Company, and not in accordance with
any provisions of the Shareholders Agreement. At a meeting held
on March 16, 2006, the Board of Directors approved the
slate of candidates recommended by the Nominating and Corporate
Governance Committee for presentation to the shareholders of the
Company for election on May 18, 2006.
32
The standstill agreement expired on June 1, 2005. The
standstill agreement had provided that Alfa Telecom Limited may
not acquire over 49.99%, Telenor may not acquire over 40.00% and
Rostelecom may not acquire over 35.00% of the Companys
outstanding stock on a fully diluted basis. Similar
standstill provisions were applicable to Capital and
Barings whereby neither of these entities shareholdings
may exceed 20% of the Companys outstanding stock.
Agreements with affiliates of the Company. In
the past, companies affiliated with Alfa Telecom Limited have
provided investment banking, corporate finance and consulting
services to the Company. We expect that this relationship will
continue. In particular, on October 6, 2005, the
Companys subsidiary, Sovintel, entered into a Contract for
Consulting Services (hereinafter the Contract) with
AT Consulting Limited, a legal entity organized under the laws
of the British Virgin Islands (hereinafter the Service
Provider) that is an affiliate of Alfa Telecom Limited.
The Contract provides that the Service Provider may be called
upon by the Company to provide specified services pursuant to a
written order signed in advance of the provisioning of any
particular services by the General Director of the Company. The
Company may pay the Service Provider remuneration for the
Services which shall be negotiated and agreed between the
General Director of the Company and an authorized person on
behalf of the Service Provider. The aggregate amount of
remuneration for Services that may be paid for Services provided
between the date of this Contract and December 31, 2005
shall not exceed the equivalent of: $1.0 million, exclusive
of VAT if applicable, and will be calculated with regard to
individual orders. The Company has ordered services from the
Service Provider under the Contract and paid $700,000 to the
Service Provider under the Contract during 2005. Prior to this
Contract, the Company had entered into a consulting services
agreement with Alfa Telecom Limited which became effective on
April 1, 2003 and terminated on December 31, 2004. The
Company has reached an agreement with Alfa Telecom Limited, in
which compensation for the services provided under the
consulting services agreement were in the aggregate
$0.5 million for the period of April 1, 2003 to
December 31, 2004. In December 2003, the Company entered
into a one year agreement with OOO Alfa Insurance, an affiliate
of Alfa Telecom Limited, to provide the Company with property
and equipment liability insurance. The amount payable under this
agreement was approximately $0.2 million. The Company
extended this agreement until February 2005 and in February
2005, the Company entered into a one year agreement with OOO
Alfa Insurance to provide the Company with property and
equipment liability insurance. The amount payable under this
agreement is approximately $0.4 million. The Company has
also entered into commercial arrangements in the ordinary course
of business with affiliates of Alfa Telecom Limited, Telenor,
and with Rostelecom. In the regular course of business, the
Company enters into infrastructure, settlement and other
operational contracts with Rostelecom. In 2005 and 2004, the
Company incurred costs from Rostelecom under such contracts of
approximately $24.0 million and $25.8 million,
respectively. In 2005 and 2004, the Company incurred costs from
Telenor of approximately $605,000 and $332,000, respectively.
The Company believes that the arrangements with these companies
have been conducted on commercially reasonable terms.
The Company maintains bank accounts with Alfa Bank, which acts
as one of the clearing agents for the payroll of the Russian
staff of the Company. The balances at these bank accounts were
minimal at December 31, 2004 and 2005. In addition, certain
of the Companys Russian subsidiaries maintain current
accounts with Alfa Bank. The amounts on deposit were
$0.1 million at December 31, 2004 and
$0.2 million at December 31, 2005.
The Company maintains bank accounts with International Moscow
Bank. The spouse of the Companys President is a member of
the Executive Board of Directors of International Moscow Bank.
The amounts on deposit were approximately $1.7 million at
December 31, 2004 and $2.6 million at
December 31, 2005.
Mr. Maliss brother is a senior vice president of two
Russian based telecommunications service providers. The Company
received revenue from these two telecommunications service
providers in the amount of approximately $5.3 million and
$5.1 million for the years ended December 31, 2004 and
December 31, 2005, respectively and incurred costs to these
two telecommunications service providers in the amount of
approximately $1.9 million and $1.3 million in the
years ended December 31, 2004 and December 31, 2005,
respectively. At December 31, 2004, the Company had
accounts receivable of approximately $0.7 million and
accounts payable of approximately $0.3 million with these
two telecommunications service providers. At
33
December 31, 2005, the Company had accounts receivable of
approximately $0.9 million and zero accounts payable with
these two telecommunications service providers.
Registration Rights Agreements. Golden Telecom
entered into a registration rights agreement with Alfa Telecom
Limited, Telenor, Rostelecom, Capital and Cavendish and First
NIS on August 19, 2003 which became effective on the
closing of the OAO Comincom transaction on December 1,
2003. The agreement provides that upon the written request of
any of Alfa Telecom Limited, Telenor, or Rostelecom, the Company
will use all reasonable efforts to register under the applicable
federal and state securities laws the resale of any of the
shares of the Companys Common Stock owned by Alfa Telecom
Limited, Telenor or Rostelecom, respectively. Each of Alfa
Telecom Limited, Telenor, and Rostelecom may make such requests
twice. The agreement also provides that upon the written request
of either Capital or Barings, the Company will use all
reasonable efforts to register under the applicable federal and
state securities laws the resale of any of the shares of the
Companys Common Stock owned by Capital or Barings,
respectively. Each of Capital or Barings may make such request
once. Alfa Telecom Limited, Telenor, Rostelecom, Capital and
Barings each have the right to include their respective shares
of the Companys Common stock in future registrations
initiated by the Company on its own behalf or on behalf of other
shareholders. This right is subject to certain limitations as to
whether and to what extent each of Alfa Telecom Limited,
Telenor, Rostelecom, Capital and Barings may include their
shares in any such registration. The Company has agreed to pay
any registration expenses. The registration rights agreement
contains customary indemnification and contribution provisions
between the Company, Alfa Telecom Limited, Telenor, Rostelecom,
Capital, Cavendish and First NIS.
* * * * * * * * * * * * * * * * *
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company reports that during 2005 Mr. Malis,
Mr. Khudyakov, directors of the Company, and Mr. Cuffe
were late in filing their Forms 3 and Mr. Malis also
made a late Form 4 filing with the SEC. These forms have
now been filed. The Company believes that during 2005 all other
reports for the Companys executive officers and directors
that were required to be filed under Section 16(a) of the
Securities Exchange Act of 1934 and related regulations were
filed on a timely basis.
* * * * * * * * * * * * * * * * *
OTHER
BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
Although we know of no items of business that will be presented
at the Annual Meeting other than those described herein, proxies
in the accompanying form will confer discretionary authority on
us with respect to any other matters that may come before the
meeting to the extent permitted by applicable rules of the SEC.
In this regard consistent with the provisions of
Rule 14a-14(c)(1),
this proxy will grant us discretionary authority to vote on any
shareholder proposals presented at the meeting of which we have
not received notice at least 45 days before the anniversary
of the date on which we first mailed our proxy materials for
last years Annual Meeting.
* * * * * * * * * * * * * * * * *
GENERAL
QUESTIONS
|
|
|
Q.: |
|
When and where is the shareholder meeting? |
|
A.: |
|
The 2006 Annual Meeting of shareholders of Golden Telecom will
be held in the Salon Marzio, Ground Floor, Kempinski Hotel
Corvinus Budapest, Erzsébet tér 7-8, Budapest, Hungary
on May 18, 2006 at 1:00 p.m. local time. |
|
Q.: |
|
Why am I receiving this Proxy Statement and Proxy Card? |
|
A.: |
|
You are receiving this Proxy Statement and Proxy Card from us
because you owned shares in Golden Telecom on the record date.
This Proxy Statement describes issues on which we would like
you, as a |
34
|
|
|
|
|
shareholder, to vote. It also provides you information on these
issues so that you can make an informed decision. The Proxy Card
is used for voting. |
|
Q.: |
|
Who can vote? |
|
A.: |
|
Shareholders of record at close of business on April 11,
2006 are entitled to vote at the 2006 Annual Meeting. A list of
the shareholders of record entitled to vote at the Annual
Meeting will be available for review by any shareholder, for any
purpose relating to the meeting between 9:00 a.m. and
5:00 p.m. at the executive offices of the Company at the
Representative Offices of Golden TeleServices, Inc., 1
Kozhevnichesky Proezd, 2nd Floor, Moscow, Russia 115114. |
|
Q.: |
|
How many shares are entitled to vote? |
|
A.: |
|
On April 11, 2006 Golden Telecom had outstanding
approximately 36,500,785 shares of Common Stock, par value
$0.01 per share, with each share representing one vote. |
|
Q.: |
|
What is a quorum? |
|
A.: |
|
In order to hold the meeting, there must be present in person or
by Proxy Card holders of a majority of voting power of the
outstanding shares of stock entitled to vote at the meeting,
which is approximately 18,250,393 shares. |
|
Q.: |
|
When are shareholder proposals for the next annual meeting
due? |
|
A.: |
|
Shareholder proposals, in order to be timely submitted for
inclusion in the Companys proxy materials for the 2007
annual meeting of shareholders, must be received at the
Companys principal executive offices no later than
December 22, 2006. |
|
Q.: |
|
Who pays the cost of solicitation? |
|
A.: |
|
Golden Telecom pays the cost of soliciting your proxy and
reimburses brokerage firms and others for forwarding this Proxy
Statement and Proxy Card to you. In addition, Mellon Investor
Services has been retained by Golden Telecom to assist in
soliciting proxies from brokerage firms, bank nominees and other
institutional holders to assure a timely vote by the beneficial
owners of stock held of record by such firms, banks and
institutions. This firm will receive a fee of approximately
$5,500, plus reasonable expenses, for its services. In addition
to solicitation by mail, proxies may be solicited in person, or
by telephone, facsimile transmission or other means of
electronic communication, by directors, officers and other
employees of Golden Telecom. If you plan to attend, please
advise the Corporations Corporate Secretary by
e-mail at
annualmeeting@gldn.net or by written correspondence. |
|
Q.: |
|
Who can attend the Annual Meeting? |
|
A.: |
|
Only shareholders are invited to attend the meeting. To gain
admittance to the meeting, you must bring proof of your
ownership. If you are a shareholder of record and received this
Proxy Statement and your Proxy Card by mail, no brokerage or
other statement is needed for you to attend the Annual Meeting.
If a broker or other nominee holds your shares, and you plan to
attend the Annual Meeting, you should bring a recent brokerage
statement showing your ownership of the shares. In all cases you
must also bring a form of personal identification. |
|
Q.: |
|
How can I receive a copy of the annual report? |
|
A.: |
|
The 2005 Annual Report of Golden Telecom will be mailed together
with this Proxy Statement. |
* * * * * * * * * * * * * * * * *
35
VOTING
PROCEDURES (For Shareholders of Record)
You are a shareholder of record if you have an account directly
with our transfer agent, Mellon Investor Services.
|
|
|
Q.: |
|
How do I vote? |
|
A.: |
|
You may vote by signing and mailing your Proxy Card. If you
return your signed Proxy Card to Golden Telecom before the
Annual Meeting, Golden Telecom will vote your shares as you
direct. Please review the instructions as to Voting Procedures
under Item No. 4 on your proxy card relating to the
election of directors. You can also specify whether you approve,
disapprove, or abstain from the proposal to approve the 2005 SAR
Plan and the proposal to ratify the selection of our auditors.
The proposals will be presented at the Annual Meeting by
management. |
|
Q.: |
|
What does discretionary authority mean for shareholders of
record? |
|
A.: |
|
If you return your Proxy Card to the Company, but do not specify
on your Proxy Card how you want to vote your shares, we will
vote them FOR the election of all Company nominees
for director as set forth under Election of
Directors above, FOR Items No. 2 and
3 on your Proxy Card and we will WITHHOLD AUTHORITY
on Item 4, the shareholder proposal to elect a director.
However, if you vote FOR Item 4, but do not
specify how you want to vote on Item 1, we will vote your
shares FOR Item 1 and your Proxy Card will be
invalid with respect to Items 1 and 4 because it will be
deemed to be a vote for 11 directors. |
|
Q.: |
|
How do I change my vote? |
|
A.: |
|
Shareholders of record who execute proxies may revoke them at
any time before they are voted. Any Proxy Card may be revoked by
the person giving it any time before it is voted by delivering
to the Corporate Secretary of the Company at the Representative
Offices of Golden TeleServices, Inc., 1 Kozhevnichesky Proezd,
2nd Floor, Moscow, Russia 115114 or Golden Telecom, Inc.,
2831 Twenty-Ninth St., N.W., Washington, D.C., 20008 on or
before the business day prior to the Annual Meeting or at the
Annual Meeting itself, a subsequent written notice of revocation
or a subsequent Proxy Card relating to the same shares or by
attending the meeting and voting in person. |
* * * * * * * * * * * * * * * * *
VOTING
PROCEDURES (For Beneficial Shareholders)
You are a beneficial shareholder if a brokerage firm, bank,
trustee or other agent (the nominee) holds your
stock. This form of ownership is often called ownership in
street name since your name does not appear anywhere
on our records.
|
|
|
Q.: |
|
How do I vote? |
|
A.: |
|
You must vote in the manner described by the nominee in the
materials delivered by the nominee with this Proxy Statement.
Detailed instructions are also included in this Proxy Statement. |
|
Q.: |
|
How do I change my vote? |
|
A.: |
|
To change your vote, follow the nominees instructions on
revoking or changing your Proxy Card. |
* * * * * * * * * * * * * * * * *
GENERAL
VOTING QUESTIONS
|
|
|
Q.: |
|
How many votes are needed for a proposal to pass? |
|
A.: |
|
The vote of the holders of a plurality of the votes cast by
shareholders will elect candidates for director
(Item No. 1 and 4 on your Proxy Card). Only ten
Directors will be elected to the Board, therefore one of the
persons listed in this proxy statement will not be elected. When
your Proxy Card is completed, please confirm that you have only
voted for ten candidates and not eleven candidates. The vote of
the |
36
|
|
|
|
|
holders of at least a majority of the shares of Common Stock
present in person or represented by proxy at the meeting and
entitled to vote is required to approve the 2005 Stock
Appreciation Plan (Item No. 2 on your Proxy Card) and
ratify the Board of Directors appointment of
Ernst & Young as the Companys independent public
accountants for 2006 (Item No. 3 on your Proxy Card). |
|
Q.: |
|
What shares are reflected on my Proxy Card? |
|
A.: |
|
The Proxy Card we delivered to you reflects all shares owned by
you at the close of business on the record day. If you hold
shares in street name you will receive a voting
instruction card from your nominee. |
|
Q.: |
|
If I plan to attend the meeting should I still vote by Proxy
Card? |
|
A.: |
|
Yes. Casting your vote in advance does not affect your right to
attend the meeting. Written ballots will be available at the
Annual Meeting for shareholders of record. If you send in your
Proxy Card and also attend the meeting, you do not need to vote
again at the meeting unless you want to change your vote.
Beneficial owners who wish to attend the meeting and vote in
person must request a proxy from the nominee and bring that
proxy to the meeting. |
A copy of the Annual Report to Shareholders of Golden
Telecom, Inc., which includes financial statements, will be
mailed to you with this Proxy Statement. You may receive an
additional copy of the Annual Report to Shareholders at no
charge upon written request directed to Shareholder Relations,
Representative Offices of Golden TeleServices, Inc., 1
Kozhevnichesky Proezd, 2nd Floor, Moscow, Russia, 115114,
Fax Number 7-495-797-9306 or from Shareholder Relations, Golden
Telecom, Inc., 2831 Twenty-Ninth St., N.W.,
Washington, D.C., 20008, Fax Number 1-202-332-4877 or
e-mail to
annualmeeting@gldn.net
37
Appendix A
GOLDEN
TELECOM, INC.
2005 STOCK APPRECIATION RIGHTS PLAN
ARTICLE I
ESTABLISHMENT
OF THE PLAN
Golden Telecom, Inc. (the Company) hereby
establishes the Golden Telecom, Inc. 2005 Stock Appreciation
Rights Plan (the Plan) upon the terms and conditions
hereinafter stated. The purpose of the Plan is to promote the
long-term success of the Company and the creation of shareholder
value by (a) encouraging officers and employees performing
services for the Company to focus on critical long-range
objectives, (b) encouraging the attraction and retention of
officers and employees with exceptional qualifications, and
(c) linking officers and employees directly to shareholder
interests through ownership of the Company. The Plan seeks to
achieve this purpose by providing for Awards in the form of
Stock Appreciation Rights grants to individuals designated in
the sole discretion of the Company.
ARTICLE II
DEFINITIONS
2.01 Award means Stock Appreciation Rights granted
to a Participant under the Plan.
2.02 Award Agreement means the written agreement
pursuant to Article VI hereof, that sets forth the terms,
conditions, restrictions and privileges for an Award that
incorporates the terms of the Plan.
2.03 Base Value means the Fair Market Value of one
share of Common Stock on the date of grant of such Stock
Appreciation Rights hereunder.
2.04 Board means the Board of Directors of the
Company.
2.05 Change of Control has the meaning ascribed to
such term as provided for hereunder.
2.06 Code means the Internal Revenue Code of 1986,
as amended.
2.07 Committee means the Compensation Committee of
the Company.
2.08 Common Stock means shares of the common stock
of the Company.
2.09 Disability means any physical or mental
impairment which qualifies an Employee for disability benefits
under any applicable long-term disability plan maintained by the
Company or, if no such plan applies, any physical or mental
impairment which would qualify such individual for disability
benefits under the Federal Social Security System.
2.10 Effective Date means the date upon which the
Board approves this Plan.
2.11 Employee means any person who is employed by
the Company or a subsidiary thereof. The Company classification
as to who is an Employee shall be determinative for purposes of
an individuals eligibility under the Plan.
2.12 Exchange Act means the Securities Exchange Act
of 1934, as amended.
2.13 Fair Market Value of a share of the
Companys Common Stock for all purposes under the Plan on a
particular date shall be the lower of: (i) the mean between
the high and low sales price per share of Common Stock on such
date, or in case no such sale takes place on such date, the last
date on which a sale occurred, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on a national
securities exchange or included for quotation on the Nasdaq
market; or (ii) the average closing sales price share of
Common Stock for the fourteen (14) trading days immediately
preceding such date, as reported in the principal consolidated
transaction reporting system with respect to
A-1
securities listed or admitted to trading on a national
securities exchange or included for quotation on the Nasdaq
market.
If the relevant date is not a trading day, the determination
shall be made as of the next preceding trading day. As used
herein, the term trading day means a day on which
public trading of securities occurs and as reported in the
principal consolidated reporting system referred to above.
2.14 Final Value means the Fair Market Value of a
share of Common Stock as of the date on which Stock Appreciation
Rights are exercised by a Grantee hereunder.
2.15 Grantee refers to any Participant in the Plan
who receives an Award.
2.16 Officer means any Employee of the Company or
any of its subsidiaries who is designated by the Board as a
corporate officer.
2.17 Participant means any Employee or Officer who
is designated by the Board pursuant to Article VI to
participate in the Plan.
2.18 Premium Base Value means the Base Value
expressed as a dollar value on the date of grant of such Stock
Appreciation Rights hereunder.
2.19 Stock Appreciation Rights means the right of a
Participant to receive the appreciation in value of the
Companys Common Stock, payable in the form of cash or
shares of the Companys Common Stock in accordance with
Section 7.03 hereof, the terms of the Award Agreement and
the Plan.
ARTICLE III
ADMINISTRATION
OF THE PLAN AND MISCELLANEOUS
3.01 Plan Administration. The Board
shall administer the Plan unless and until the Board delegates
administration responsibility to the Committee in the manner
provided in Section 3.02. The Board shall have the powers,
subject to, and within the limitations of, the express
provisions of the Plan:
(a) To determine from time to time which of the persons
eligible under the Plan shall be granted Awards; when and how
each Award shall be granted; the provisions of each Award
granted (which need not be identical), including the time or
times when a person shall be permitted to receive the number of
Stock Appreciation Rights granted.
(b) To construe and interpret the Plan and Awards granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or inconsistency
in the Plan or in any Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan
fully effective.
(c) To amend the Plan or an Award Agreement pursuant to the
terms of Article IX hereof.
(d) Generally, to exercise such powers and to perform such
acts as the Board deems reasonable and necessary to promote the
best interests of the Company which are not in conflict with the
provisions of the Plan.
3.02 Delegation to the
Committee. The Board may delegate administration
of the Plan to the Committee which shall be comprised of three
(3) or more members of the Board, and the term Committee
shall apply to those whom such authority has been delegated. If
administration is delegated to the Committee, the Committee
shall have, in connection with the administration of the Plan,
the powers theretofore possessed by the Board, including the
power to authorize an officer of the Company to assume those
limited administrative powers that are related to the day to day
operation and administration of the Plan that the Committee is
authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may
abolish the Committee any time and revest in the Board the
administration of the Plan.
A-2
3.03 Revocation for Misconduct. Any
Stock Appreciation Rights Award under this Plan, whether or not
vested and exercisable, made to a Participant who is discharged
from the employ of the Company or any of its subsidiaries due to
the individuals (i) personal dishonesty of a material
nature affecting his or her ability to perform his or her duties
with the Company, (ii) willful misconduct or gross
negligence, (iii) breach of fiduciary duty involving
personal profit, or (iv) conviction of any criminal offense
which involves dishonesty or breach of trust or conviction of
any felony shall automatically terminate, rescind and be revoked.
3.04 Limitation on Liability. No
member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan. To
the maximum extent allowed by law and the Companys bylaws,
the Board shall be indemnified by the Company in respect of all
their activities under the Plan.
3.05 Compliance with Law and
Regulations. All Awards granted hereunder shall
be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or
regulatory agency as may be required.
ARTICLE IV
ELIGIBILITY
Awards may be granted to such Employees and Officers as may be
designated from time to time by the Board or Committee, pursuant
to guidelines, if any, which may be adopted by the Board or
Committee from time to time.
ARTICLE V
COMMON STOCK
AVAILABLE FOR THE PLAN; ADJUSTMENTS
The aggregate number of shares of Common Stock which may be
issued pursuant to this Plan shall be two hundred thousand
(200,000) shares. If and to the extent that the number of issued
shares of Common Stock shall be increased or reduced by change
in par value, split up, reclassification, distribution of a
dividend payable in Common Stock, merger, consolidation,
reorganization, recapitalization, reincorporation, or the like,
the Board may make appropriate adjustment in the number of
shares of Common Stock authorized by the Plan and in the number
of shares covered by outstanding Awards under the Plan. In the
event of any adjustment in the number of shares covered by any
Award, any fractional shares resulting from such adjustment
shall be disregarded and each such Award shall cover only the
number of full shares resulting from such adjustment. The Board
may make such adjustments, and its determination shall be final,
binding and conclusive.
Where appropriate, the Board also may adjust the number of
shares subject to outstanding Awards and the terms of
outstanding Awards to take into consideration material changes
in accounting practices or principles, extraordinary dividends,
acquisitions or dispositions of stock or property or any other
event if it is determined by the Board that such adjustment is
appropriate in order to prevent dilution or expansion of the
rights of Participants.
No shares shall be the subject of more than one Award at any
time, but if an Award as to any shares is surrendered before the
applicable restrictions lapse, or expires or terminates for any
reason, the number of shares covered thereby shall again become
available for grant under the Plan as if no Awards had been
previously granted with respect to such shares.
ARTICLE VI
PARTICIPATION;
STOCK APPRECIATION RIGHTS AWARD AGREEMENTS
The Board shall, in its discretion, determine from time to time
which Employees and Officers will participate in the Plan and
receive Awards under the Plan. In making all such determinations
there shall be taken into account the duties, responsibilities
and performance of each respective Employee and Officer, his or
her present and potential contributions to the growth and
success of the Company, his or her cash
A-3
compensation and such other factors as the Board shall deem
relevant to accomplishing the purposes of the Plan.
All awards are subject to the terms, conditions, restrictions
and privileges of the Plan in addition to the terms, conditions,
restrictions and privileges for an Award contained in the Award
Agreement. No Award under this Plan shall be effective unless
memorialized in writing by the Board or Committee in an Award
Agreement delivered to and signed by the Participant.
ARTICLE VII
STOCK APPRECIATION RIGHTS AWARDS
7.01 Stock Appreciation
Rights. Subject to the provisions hereof and
individual Stock Appreciation Rights Award Agreements, the
Company shall award to Participants that it designates in its
sole discretion, Stock Appreciation Rights. This Stock
Appreciation Rights Award Agreement shall contain such terms and
conditions as the Board shall from time to time determine, shall
specify the Base Value of one (1) share of Common Stock,
and shall specify the number of Stock Appreciation Rights being
granted to the individual, where one (1) Stock Appreciation
Right shall equal one share of Common Stock. The Company shall
have the discretion to grant Stock Appreciation Awards to
Participants specifying a premium Base Value expressed in
dollars that exceeds Base Value (Premium Base Value).
7.02 Vesting of Stock Appreciation Rights
Awards. Stock Appreciation Rights Awards shall
vest and be exercisable pursuant to the terms outlined in each
Grantees individual Stock Appreciation Rights Award
Agreement.
7.03 Settlement of Stock Appreciation Rights Upon
Exercise. A Grantee shall exercise his Stock
Appreciation Rights by submitting to the Board or the Committee
a Notice of Exercise in the form provided by the Board or the
Committee. Under a Stock Appreciation Rights Award Agreement, as
soon as practicable following exercise of such Award, the
Grantee will receive cash or shares (including fractional
shares) of Common Stock equal in value to the positive
difference between the Base Value (or Premium Base Value) and
the Final Value multiplied by the number of Stock Appreciation
Rights being exercised. This process shall be referred to as the
settlement of Stock Appreciation Rights.
Partial exercises of Stock Appreciation Rights are permitted
hereunder. A Stock Appreciation Rights Award may not be
exercised if there is no positive difference between the Base
Value (or Premium Base Value) and the Final Value, and the
Grantee shall not be entitled to any settlement in cash or
Common Stock hereunder in such circumstances. All Awards granted
under the Plan shall settle in cash unless a Grantees
Award Agreement expressly provides the Grantee with the ability
to elect to receive cash or Common Stock at his or her election
upon exercise. Notwithstanding the foregoing, if the Board is
unable to secure shareholder approval of the Plan, all Awards
made hereunder shall be settled in cash without regard to a
Grantees election to receive stock pursuant to his or her
Stock Appreciation Rights Award Agreement.
In the event of the Grantees death prior to receiving such
share distribution payment when due, such distribution will be
made to the Grantees designated beneficiary (as identified
in the Stock Appreciation Rights Award Agreement). If the
Grantee is legally married at the time of the designation, and
the designated beneficiary is not the Grantees spouse,
then a written consent of
his/her
spouse will be required to be provided by the Grantee, or else
the Company may not pay benefits under the Plan to the designee
named and the benefit would pass to the Grantees estate
under applicable law. A Grantee may at any time designate a new
beneficiary, subject to the restrictions in the preceding
sentence, by notifying the Board or as appropriate, the
Committee, in writing and such new designation shall be
incorporated with and attached to the Companys file copy
of the Stock Appreciation Right Awards Agreement.
7.04 Restriction on Transfer. Until
an Award is exercised, none of the shares of Common Stock which
may be paid to the Grantee upon settlement may be sold,
assigned, transferred, pledged, hypothecated or otherwise
disposed of or encumbered by the Grantee, and no attempt to
transfer the shares or the right to
A-4
receive such shares, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to the shares.
7.05 Exercise by Beneficiary. If a
Grantee dies, becomes disabled or otherwise is unable to
exercise an Award, the Grantees designated beneficiary
shall have the right to exercise such Award under the terms and
conditions set forth hereunder and under the applicable Stock
Appreciation Rights Award Agreement.
7.06 Termination of Employment, Effect on
Awards. In the event that a Grantee dies, Stock
Appreciation Rights granted hereunder shall expire and thus be
rendered not exercisable either by the Grantee or as
appropriate, his beneficiary, on the ninety-first (91st) day
following the date of death.
In the event that a Grantee terminates his employment with the
Company other than for the reasons set forth in
Section 3.03 hereof, Stock Appreciation Rights granted
hereunder shall expire and thus be rendered not exercisable by
the Grantee or as appropriate, his beneficiary, on the thirty
first
(31st)
day following the effective date of the termination of his
employment.
ARTICLE VIII
AMENDMENT
AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the
Plan with respect to any shares of Common Stock or Awards which
have not been granted, but no such action shall adversely affect
the rights under any outstanding Award without the
Grantees consent.
ARTICLE IX
EMPLOYMENT
RIGHTS
Neither the Plan nor any Award hereunder shall create any right
on the part of any Employee of the Company or any of its
subsidiaries to continue in such capacity.
ARTICLE X
TAX
CONSIDERATIONS
In order to provide the Company with the opportunity to claim
the benefit of any income tax deduction which may be available
to it in connection with the exercise of a Stock Appreciation
Rights Award, and in order to comply with all applicable federal
or state tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all
applicable federal or state income and social security taxes are
withheld or collected from the Grantee in connection with the
exercise of any Award.
ARTICLE XI
EFFECTIVE
DATE OF THE PLAN; TERM
11.01 Effective Date of the
Plan. This Plan shall become effective on the
Effective Date, and Awards may be granted hereunder as of or
after the Effective Date and prior to the termination of the
Plan.
11.02 Term of Plan. Unless sooner
terminated, this Plan shall remain in effect for a period of ten
(10) years ending on the tenth anniversary of the Effective
Date. Termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in
effect until the restrictions contained therein have lapsed, or
by their terms expire or are forfeited.
A-5
ARTICLE XII
GOVERNING LAW
To the extent not governed by Federal law, this Plan shall be
construed under the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused a duly
authorized officer to execute this Golden Telecom, Inc. 2005
Stock Appreciation Rights Plan, and to apply the Corporate seal
hereto as of the day
of ,
2005.
GOLDEN TELECOM, INC.
By: _
_
Name: _
_
A-6
GOLDEN
TELECOM, INC.
2005 STOCK APPRECIATION RIGHTS PLAN
STOCK APPRECIATION RIGHTS AWARD AGREEMENT
To:
Date:
Golden Telecom, Inc. (the Company), pursuant
to the Golden Telecom, Inc. 2005 Stock Appreciation Rights Plan
(the Plan), has granted you Stock Appreciation
Rights (SARs) Awards under the Plan. These Awards
are subject to all of the terms and conditions as set forth in
the Plan, a copy of which is attached hereto and incorporated
herein in its entirety. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan.
Date of Grant: [insert date]
Date of Expiration: [insert Date of Grant +
5 years]
Total Number of Stock Appreciation Rights Subject to this
Award: [insert # ] (divided 25% subject to
performance vesting and 75% subject to time
vesting)
1.) SARs Subject to Performance
Vesting: [insert # equal to 25% of total]
|
|
|
|
|
[Base OR Premium Base] Value Per
Share: [insert $]
|
2.) SARs Subject to Time
Vesting: [insert # equal to 75% of total]
1st anniversary
of the date of grant [insert # equal to 33%]
Premium Base Value Per
Share: [insert $]
2nd anniversary
of the date of grant [insert # equal to 33%]
Premium Base Value Per
Share: [insert $]
3rd anniversary
of the date of grant [insert # equal to 33%]
Premium Base Value Per
Share: [insert $]
|
|
|
Vesting Schedule: |
|
Stock Appreciation Rights Awards shall vest in the amounts set
forth above as follows: |
|
|
|
Performance Vesting. Vesting of the
Performance Vesting portion of the SAR Award shall vest in full
only upon the Companys Common Stock achieving a closing
trading price of at least [insert $] per share for thirty
(30) consecutive days as determined in the sole discretion
of the Company. If the Companys Common Stock does not
achieve a closing trading price of at least [insert $] per share
for thirty (30) consecutive days within three
(3) years of the Date of Grant, such portion of the Award
shall expire by its terms and shall not be exercisable by you. |
|
|
|
Time Vesting. Vesting of the Time Vesting
portion of the SAR Award shall vest incrementally in accordance
with the schedule set forth above on each one year anniversary
of the Date of Grant, provided that you continue to be employed
by the Company as of each such anniversary date. |
|
Settlement: |
|
A Grantee shall exercise his Stock Appreciation Rights in
accordance with the requirements of the Plan. In connection with
a |
A-7
|
|
|
|
|
proper exercise of your Award, you will receive [CASH
and/or
SHARES (including fractional shares) of Common Stock] equal
in value to the positive difference between the Base Value (or
Premium Base Value) and the Final Value multiplied by the number
of Stock Appreciation Rights being exercised. |
|
|
|
[FOR MIXED CASH AND STOCK SETTLEMENTS ADD: In
connection with your exercise of this Award, you may notify the
Company of your election to receive some or all of your Stock
Appreciation Rights received in cash
and/or
Common Stock of the Company. If you do not make an election, the
Company shall exercise its discretion to settle the Stock
Appreciation Rights so exercised by you in cash
and/or
Common Stock in its discretion.] |
|
|
|
[FOR STOCK SETTLEMENTS ADD: Notwithstanding
the foregoing, if the Board is unable to secure shareholder
approval of the Plan, this Award shall be settled in cash
without regard to a Grantees election to receive stock
pursuant to his or her Stock Appreciation Rights Award
Agreement.] |
|
Exercisability: |
|
Vested Awards shall be exercisable by you only until the fifth
(5) anniversary of the Date of Grant. Awards that remain
unexercised after such date shall expire by their terms. |
|
Withholding: |
|
The Company shall be entitled to withhold from any settlement of
Stock Appreciation Rights Awards under the Plan the cash
necessary to cover applicable income and payroll taxes and, if
the amount of such withholding is insufficient, the Company may
require you or your beneficiary to pay to the Company the amount
required to be withheld in taxes. |
|
Award Not a Service Contract: |
|
Your Stock Appreciation Rights Award is not an employment or
service contract, and nothing in your Award shall be deemed to
create in any way whatsoever any obligation on your part to
continue in the employ of the Company or a subsidiary, or of the
Company or a subsidiary to continue your employment. In
addition, nothing in your Award shall obligate the Company or a
subsidiary, their respective shareholders, Boards of Directors,
Officers or Employees to continue any relationship that you
might have as an Employee of the Company or a subsidiary. |
|
Notices: |
|
Any notices provided for in your Award or the Plan shall be
given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to
you, at your address as shown in the Companys records. |
|
Governing Plan Document: |
|
Your Stock Appreciation Rights Award is subject to the
provisions of the Plan, the provisions of which are hereby made
a part of your Award, and is further subject to all
interpretations, amendments, rules and regulations which may
from time to time be promulgated and adopted pursuant to the
Plan. In the event of any conflict between the provisions of
your Award and those of the Plan, the provisions of the Plan
shall control. |
|
Beneficiary Designation: |
|
The Plan grants you the right to designate a beneficiary to
receive your Awards in the event you predecease the date such
Award, once exercised, is distributable to you. If you are
legally married at |
A-8
|
|
|
|
|
the time of the designation, and the designated beneficiary is
not your spouse, then a written consent of your spouse will be
required to be provided by you, or else the Company may not pay
benefits under the Plan to the designee named and the benefit
would pass to your estate under applicable law. You may change
your beneficiary designation at any time, subject to the
restrictions provided above, by doing so in writing and
submitting such written notice to the Company, subject to the
restrictions provided above, which shall (i) attach a copy
of such change to this document and (ii) mark the
beneficiary designation line of this document as Amended
Effective as of [the date of your change submission]. |
|
Termination of Employment; Effect
On Awards: |
|
In the event that you die, Stock Appreciation Rights granted
hereunder shall expire and thus be rendered not exercisable
either by you or as appropriate, your beneficiary, on the
ninety-first (91st) day following the date of death. |
|
|
|
In the event that you terminate your employment with the Company
other than for the reasons set forth in Section 3.03 of the
Plan, Stock Appreciation Rights granted hereunder shall expire
and thus be rendered not exercisable by you or as appropriate,
your beneficiary, on the thirty-first (31st) day following the
effective date of the termination of your employment. |
|
Additional Terms/Acknowledgements: |
|
The undersigned recipient of a Stock Appreciation Rights Award
acknowledges receipt of, and understands and agrees to, this
Award notice and the Plan. The undersigned further acknowledges
that as of the date of each such Award, this notice and the Plan
set forth the entire understanding between you and the Company
regarding the acquisition of the rights conferred by the Plan
and supersede all prior oral and written agreements on that
subject with the exception of Awards previously granted and
delivered to you under the Plan. |
|
|
|
Golden Telecom, Inc.
|
|
Grantee:
|
|
|
|
|
|
|
Signature
|
|
Signature
|
|
|
|
|
|
Date:
|
|
|
|
Date:
|
|
|
Beneficiary Designation:
|
|
|
|
|
|
Name
|
|
Address
|
Attachment: Golden Telecom, Inc. 2005 Stock
Appreciation Rights Plan
A-9
The Board of Directors Recommends Votes FOR Items 1, 2 and 3.
|
|
|
Please
Mark Here
for Address
Change or
Comments.
|
|
o |
SEE REVERSE SIDE |
1. ELECTION OF DIRECTORS
|
|
|
Nominees:
|
|
Approved by the Company |
|
|
01. Petr Aven, |
|
|
02. Vladimir Bulgak, |
|
|
03. Patrick Gallagher, |
|
|
04. David Herman, |
|
|
05. Keil Johnsen, |
|
|
06. Alexi Khudyakov, |
|
|
07. Oleg Malie, |
|
|
08. Ronny Noovdal, |
|
|
09. David Smyth and |
|
|
10. Jean-Pierre
Vandromme |
|
|
|
|
FOR all nominees
|
|
|
WITHHOLD AUTHORITY |
approved by the
|
|
|
to vote for all nominees |
Company
|
|
|
approved by the Company |
o
|
|
|
o |
|
|
|
FOR ALL EXCEPT
|
o |
To withhold authority to vote for any individual Company nominee, write that nominees number on
the line below
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
2. |
|
APPROVAL OF GOLDEN TELECOM INC. 2005 STOCK APPRECIATION RIGHTS PLAN |
|
o |
|
o |
|
o |
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
3. |
|
RATIFICATION OF THE
SELECTION OF
ERNST & YOUNG LLC AS INDEPENDENT
PUBLIC AUDITORS OF THE COMPANY FOR 2006 |
|
o |
|
o |
|
o |
|
|
|
|
|
|
FOR
|
|
WITHHOLD
AUTHORITY
|
|
|
4.
|
|
If presented, a shareholder proposal to elect
Dmitry Karol as Director
|
|
1. Dmitry Karol
|
|
o
|
|
o
|
|
|
Please note that if you vote FOR or take no action in item 1 and FOR in item 4 your proxy card
will be invalidated with respect to those two items because you will have voted for 11 candidates
while you are only permitted to vote for 10 candidates.
The Board of Directors Recommends that you WITHHOLD AUTHORITY from item 4.
|
|
|
|
|
|
|
CHECK HERE IF YOU PLAN TO ATTEND THE STOCKHOLDERS MEETING ON MAY 18, 2006
|
|
o |
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by the President or other authorized
officer. If a partnership, please sign in partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
5 FOLD AND DETACH HERE 5
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2006
PROXY
COMMON STOCK
GOLDEN TELECOM, INC.
Representative Offices of Golden TeleServices, Inc.
1 Kozhevnichesky Proezd, 2nd Floor, Moscow, 115114, Russia
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Derek Bloom and Boris Svetlichny or either of
him, as proxies with full power of substitution to each, and hereby authorizes each of him to
represent and to vote, as designated hereon, all shares of Common Stock of GOLDEN TELECOM, INC.
(the Company) which the undersigned is entitled to vote on all matters that come before the
Annual Meeting of Stockholders to be held on May 18, 2006, and any adjournments thereof.
Items 1, 2, and 3 will be presented by Golden Telecom, Inc. and Item 4 is expected to be presented
by a shareholder.
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 VOTED FOR THE ELECTION OF THE
COMPANYS NOMINATED DIRECTORS (ITEM 1) AND FOR ITEMS 2
AND 3 AND TO WITHHOLD AUTHORITY ON ITEM 4.
(Continued and to be signed on reverse side)
|
|
|
|
|
|
|
|
Address Change/Comments (Mark the corresponding box on the reverse side) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 FOLD AND DETACH HERE 5