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 Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use
of the Commission Only
(as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
360 COMMUNICATIONS COMPANY
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
360 COMMUNICATIONS
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON MAY 6, 1997
To the Shareowners of 360 Communications Company:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareowners of 360
Communications Company, a Delaware corporation (the "Company"), will be held at
the offices of The Northern Trust Company, 6th Floor Assembly Room, 50 S.
LaSalle Street, Chicago, Illinois, on Tuesday, May 6, 1997 at 10:00 a.m. local
time for the following purposes:
1. To elect three directors to hold office until the 2000 Annual Meeting
of Shareowners.
2. To approve the Company's Employee Stock Purchase Plan.
3. To approve the Company's Amended and Restated 1996 Equity Incentive
Plan.
4. To ratify the selection of Ernst & Young LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997.
5. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 17, 1997
as the record date for the determination of shareowners entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Kevin C. Gallagher
Kevin C. Gallagher
Senior Vice President, General
Counsel and Secretary
Chicago, Illinois
March 31, 1997
ALL SHAREOWNERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS PROVIDED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
360 COMMUNICATIONS COMPANY
8725 W. Higgins Road
Chicago, Illinois 60631-2702
PROXY STATEMENT
INFORMATION CONCERNING VOTING AND SOLICITATION
General
The accompanying proxy is solicited on behalf of the Board of Directors of
360 Communications Company, a Delaware corporation (the "Company"), for use at
the Annual Meeting of Shareowners to be held on May 6, 1997 at 10:00 a.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the attached Notice of Annual Meeting of
Shareowners. The Annual Meeting will be held at the offices of The Northern
Trust Company, 6th Floor Assembly Room, 50 S. LaSalle Street, Chicago, Illinois.
The Company intends to mail this Proxy Statement and the accompanying proxy on
or about March 31, 1997 to all shareowners entitled to vote at the Annual
Meeting.
Voting Rights and Outstanding Shares
The Company has only one class of stock outstanding, the Company's Common
Stock, $0.01 par value ("Common Stock"). Only holders of record of Common Stock
at the close of business on March 17, 1997 (the "Record Date") will be entitled
to notice of and to vote at the Annual Meeting. On the Record Date, the Company
had outstanding and entitled to vote 123,310,118 shares of Common Stock.
Each holder of record of Common Stock on the Record Date will be entitled
to one vote for each share held on all matters to be voted upon.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be considered shares entitled
to vote in the tabulation of votes cast on proposals presented to the
shareowners and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether a matter has been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive offices, 8725 W.
Higgins Road, Chicago, Illinois 60631-2702, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not,
by itself, revoke a proxy.
Solicitation
The Company will bear the entire cost of solicitation of proxies,
including the preparation, assembly, printing and mailing of this Proxy
Statement, the accompanying proxy and any additional information furnished to
shareowners. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial owners.
The Company may reimburse persons representing beneficial owners of Common Stock
for their costs of forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other regular
associates of the Company or, at the Company's request, ChaseMellon Shareholder
Services, L.L.C., which has been retained by the Company to aid in the
solicitation of proxies. No additional compensation will be paid to such
directors, officers or other regular associates for such services, but
ChaseMellon Shareholder Services, L.L.C. will be paid its customary fee,
estimated to be $5,500 plus out-of-pocket expenses, if it renders solicitation
services.
<PAGE>
Shareowner Proposals
Proposals of shareowners intended to be presented at the Company's 1998
Annual Meeting of Shareowners must be received by the Company at its principal
executive offices not later than November 27, 1997 for inclusion in the proxy
statement for that meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), provides that the Board of
Directors shall be divided into three classes, with each class having a
three-year term. Directors are assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. Vacancies on the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal or other causes shall be filled by the affirmative
vote of a majority of the remaining directors then in office, even if less than
a quorum of the Board of Directors. Newly-created directorships resulting from
any increase in the number of directors shall also be filled by the affirmative
vote of the directors then in office, even if less than a quorum of the Board of
Directors. A director elected by the Board of Directors to fill a vacancy
(including a vacancy created by an increase in the size of the Board of
Directors) shall serve for the remainder of the full term of the class of
directors in which the vacancy occurred until such director's successor has been
duly elected and qualified.
The Certificate of Incorporation provides that the number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted from time to time by a majority of the Board
of Directors, provided that such number shall not be less than three nor more
than twelve. The authorized number of directors is currently set at eight. Three
seats on the Board of Directors, currently held by Frank E. Reed, Robert E. R.
Huntley and Valerie B. Jarrett, have been designated as Class I Board seats,
with the term of the directors occupying such seats expiring as of the Annual
Meeting.
Each of the nominees for election to Class I is currently a Class I Board
member of the Company. If elected at the Annual Meeting, each of the three
nominees would serve until the 2000 Annual Meeting of Shareowners, in each case
until their successor has been duly elected and qualified, or until such
director's earlier death, resignation, retirement, disqualification or removal.
Directors are elected by a plurality of the votes of the shares of Common
Stock present in person or represented by proxy and entitled to vote on the
election of directors at the Annual Meeting. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the three nominees for the three Class I Board seats. In the event that any
nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as the Board of Directors may propose. Each person nominated for
election has agreed to serve if elected, and the Board of Directors has no
reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
<PAGE>
Nominees for Election for a Three-year Term Expiring at the 2000 Annual Meeting
of Shareowners
FRANK E. REED
Frank E. Reed, age 62, was elected the non-management Chairman of the
Board of Directors of the Company on March 7, 1996. He is former President and
Chief Executive Officer of Philadelphia National Bank, and serves as a director
of Harleysville Group, Inc. Mr. Reed had been President and Chief Executive
Officer of Philadelphia National Bank for more than five years. Mr. Reed
resigned as a director of Sprint Corporation effective with the spinoff of the
Company from Sprint on March 7, 1996. Prior to becoming a director of Sprint in
1993, Mr. Reed had been a director of Centel Corporation, a predecessor
corporation, since 1978.
ROBERT E. R. HUNTLEY
Robert E. R. Huntley, age 67, was elected a director of the Company on
March 7, 1996. He is former Counsel to Hunton & Williams, a law firm, and
currently serves as a director of Philip Morris Companies, Inc. Mr. Huntley had
been Counsel to Hunton & Williams for more than five years. Mr. Huntley resigned
as a director of Sprint Corporation effective with the spinoff of the Company
from Sprint on March 7, 1996. Prior to becoming a director of Sprint in 1993,
Mr. Huntley had been a director of Centel Corporation, a predecessor
corporation, since 1975.
VALERIE B. JARRETT
Valerie B. Jarrett, age 40, was elected a director of the Company on June
11, 1996. She is currently Executive Vice President of The Habitat Company, a
real estate development and property management company. Ms. Jarrett joined The
Habitat Company in her present position in 1995. Prior to joining The Habitat
Company, she served for more than five years in the government of the City of
Chicago, most recently as Commissioner of the Department of Planning and
Development. Ms. Jarrett also serves as Chairman of the Board of Directors of
the Chicago Transit Authority and as a director of the Regional Transportation
Authority.
The Board of Directors recommends voting FOR the
election of each of the named nominees.
Directors Continuing in Office Until the 1998 Annual Meeting of Shareowners
ALICE M. PETERSON
Alice M. Peterson, age 44, was elected a director of the Company on April
9, 1996. She is currently Vice President and Treasurer of Sears, Roebuck and
Co., a retail merchandiser. Ms. Peterson joined Sears, Roebuck and Co. in 1989
and was elected to her present position in 1993.
CHARLES H. PRICE, II
Charles H. Price, II, age 65, was elected a director of the Company on
March 7, 1996. He currently serves as a director of Hanson PLC, Mercantile Bank
of Kansas City, The New York Times Company, US Industries Inc. and Texaco, Inc.
Mr. Price resigned as Chairman of the Board of Mercantile Bank of Kansas City in
April 1996, a position he was elected to in 1992. He was President and Chief
Executive Officer of Ameribanc, Inc. from 1989 to 1992 and the United States
Ambassador to the United Kingdom of Great Britain and Northern Ireland from 1983
to 1989. Mr. Price resigned as a director of Sprint Corporation effective with
the spinoff of the Company from Sprint on March 7, 1996. He had been a director
of Sprint since 1989.
<PAGE>
Directors Continuing in Office Until the 1999 Annual Meeting of Shareowners
LESTER CROWN
Lester Crown, age 71, was elected a director of the Company on November 5,
1996. He currently serves as Chairman of the Board of Material Service
Corporation, a manufacturing company, a position he was elected to in 1983 after
having served as its President since 1970. Mr. Crown also currently serves as a
director and Chairman of the Executive Committee of General Dynamics
Corporation, as a director of Maytag Corporation and as President of Henry Crown
and Company.
DENNIS E. FOSTER
Dennis E. Foster, age 56, was elected a director of the Company on March
7, 1996. He was elected President of the Company in March 1993 and President and
Chief Executive Officer of the Company in February 1996. Mr. Foster had been
President and Chief Operating Officer of the Cellular and Wireless Division of
Sprint Corporation since 1993, a position he resigned from effective with the
spinoff of the Company from Sprint on March 7, 1996, and prior to that he was
Senior Vice President of the Local Telecommunications Division of Sprint
beginning in May 1992. Prior to joining Sprint, he was President and Chief
Operating Officer of GTE Mobilnet, a position he had held since June 1991. Mr.
Foster had been Area Vice President and General Manager of GTE North since
September 1989.
MICHAEL HOOKER
Michael Hooker, age 51, was elected a director of the Company on April 9,
1996. He is currently Chancellor of the University of North Carolina, a position
he has held since 1995. Mr. Hooker has previously served as President of
Bennington College in Vermont, as President of the University of Maryland -
Baltimore County and as President of the University of Massachusetts. He also
currently serves as a director of Microfluidics International Corporation and as
a director of Centura Bank, located in Rocky Mount, North Carolina.
Board Committees and Meetings
During 1996, the Board of Directors held nine meetings. The Board has an
Audit and Finance Committee and an Organization, Compensation and Nominating
Committee.
The Audit and Finance Committee examines and considers matters relating to
the financial affairs of the Company, including reviewing the Company's annual
financial statements, the scope of the independent annual audit and internal
audits and the independent auditor's letter to management concerning the
effectiveness of the Company's internal financial and accounting controls. The
Audit and Finance Committee also evaluates the effectiveness of the Company's
ethics and compliance policies and reports its findings to the Board. The Audit
and Finance Committee, which met four times during 1996, is composed of Mr.
Price (Committee Chairman), Mr. Reed, Ms. Peterson and Mr. Crown.
The Organization, Compensation and Nominating Committee considers and
makes recommendations to the Board of Directors with respect to programs for
human resource development and management organization and succession, approves
changes in senior executive compensation, considers and makes recommendations to
the Board of Directors with respect to compensation matters and policies and
associate benefit and incentive plans, exercises authority granted to it to
administer such plans, and administers the Company's stock option and equity
based plans and grants stock options and other rights under such plans. The
Organization, Compensation and Nominating Committee also recommends to the Board
nominees to fill director vacancies (including vacancies created by an increase
in the size of the Board of Directors) and for election at each annual meeting
of shareowners, and recommends policies to the Board with respect to corporate
governance matters. The Company's Amended and Restated Bylaws provide procedures
for shareowners wishing to recommend or nominate a candidate for election as
director. The Organization, Compensation and Nominating Committee, which met six
times during 1996, is composed of Mr. Huntley (Committee Chairman), Mr. Reed,
Mr. Hooker and Ms. Jarrett.
<PAGE>
During 1996, each Board member attended at least 75% of the aggregate of
the meetings of the Board of Directors, and the committees on which he or she
served, held during the period for which he or she was a director or committee
member, respectively.
Compensation of Directors
Directors who are not employees of the Company (the "Outside Directors")
are each compensated in the amount of $20,000 annually, 50% of which is provided
in the form of a restricted stock grant. The Chairman of the Board, if an
Outside Director, receives an additional $100,000 annually, 25% of which is
provided in the form of a restricted stock grant. Under the Company's Director
Equity and Deferred Compensation Plan (the "Director Equity and Deferred
Compensation Plan"), the number of shares of restricted stock granted is
determined by the fair market value of shares of Common Stock on the date of
each annual meeting of shareowners (or on the date the individual first becomes
an Outside Director with respect to the restricted stock grant associated with
his or her first year of service). Restrictions lapse immediately before the
commencement of the first annual meeting of shareowners following the grant of
restricted stock. Each Outside Director, excluding the Chairman of the Board,
receives $1,000 for each Board meeting and committee meeting attended.
The Director Equity and Deferred Compensation Plan also provides for the
grant of stock options to Outside Directors. Each Outside Director receives an
initial grant of an option to purchase 9,000 shares of Common Stock on the date
he or she first becomes an Outside Director. One-third of the shares subject to
each initial option grant becomes exercisable on December 31 of the year in
which the option is granted and an additional one-third becomes exercisable on
December 31 of each of the two succeeding years. Each Outside Director receives
subsequent grants of an option to purchase 3,000 shares of Common Stock on the
date of each annual meeting of shareowners commencing with the third annual
meeting of shareowners after he or she first becomes an Outside Director.
Twenty-five percent of the shares subject to each of the annual option grants
becomes exercisable on December 31 of the year in which the option is granted
and an additional twenty-five percent becomes exercisable on December 31 of each
of the three succeeding years. All options have an option price equal to 100% of
the fair market value of shares of Common Stock on the date of grant and expire
ten years after the date of the grant.
Outside Directors may also elect to defer some or all of the cash portion
of their annual fees under the Director Equity and Deferred Compensation Plan.
Prior to December 31, 1996, deferred amounts were credited with a rate of return
based on the prime rate. Effective January 1, 1997, the Director Equity and
Deferred Compensation Plan was amended to include the following investment
options: 360 Communications Company Common Stock; Large Market Capitalization
Equity; Small Market Capitalization Equity; International Equity; and
Intermediate Bond.
PROPOSAL 2
APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN
On February 11, 1997, the Company adopted the 360 Communications Company
Employee Stock Purchase Plan (the "Company ESPP"), effective as of May 1, 1997
(the "Effective Date"), subject to shareowner approval. Approval of the Company
ESPP requires the affirmative vote of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting.
Summary of the Employee Stock Purchase Plan
A summary of the Company ESPP is set forth below. This summary is qualified
in its entirety by reference to the full text of the Company ESPP, which is
attached to this Proxy Statement as Appendix A.
Purpose. The purpose of the Company ESPP is to encourage and assist
associates of the Company to acquire a personal equity interest in the Company
by the purchase of Common Stock.
<PAGE>
Administration. The Company ESPP will be administered by the Human
Resources Department of the Company (the "Administrator"). The Administrator has
the power to construe and interpret the Company ESPP, to designate which
subsidiaries' employees will be eligible to participate in the Company ESPP, and
to adopt and amend such rules and regulations for the administration of the
Company ESPP as it may deem desirable. The Administrator may select from time to
time a person or persons, who may be officers or associates of the Company, to
operate the Company ESPP, perform the day-to-day administration of the Company
ESPP, and maintain records of the Company ESPP.
Eligibility. All associates who are employees of the Company and who have
been so employed for at least one month are eligible to participate in the
Company ESPP, except for associates owning or holding options to acquire 5% or
more of the value or voting power of all outstanding shares of all classes of
stock of the Company; associates who are customarily employed by the Company for
less than 20 hours per week; and associates who are prohibited from
participating in the Company ESPP by law. Approximately 4,000 associates of the
Company will be eligible to participate in the Company ESPP as of May 1, 1997.
Grant, Exercise and Expiration. Each eligible associate who timely elects
to participate in the Company ESPP will be granted an option to purchase Common
Stock. Options will be granted to participating associates on May 1 and November
1 of 1997, and on each succeeding May 1 and November 1, until no shares of
Common Stock are available for purposes of options granted under the Company
ESPP or until the Board of Directors terminates the Company ESPP, whichever
occurs first.
An option which was granted on a May 1 grant date will be deemed to have
been exercised in part on the next following October 31 and fully exercised as
of the next following April 30. An option to purchase Common Stock which was
granted on a November 1 grant date will be deemed to be exercised on the next
following April 30. Any date on which an option to purchase Common Stock is
exercisable is referred to as an "Exercise Date." Any option which is not
partially or fully exercised as of an Exercise Date will expire as of the end of
that Exercise Date.
Enrollment. An eligible associate may elect to become a participant in the
Company ESPP by authorizing a regular payroll deduction from the associate's
paycheck to be applied to the purchase of Common Stock. A participant's request
authorizing a payroll deduction will remain effective for one May 1-to-April 30
period (or one November 1-to-April 30 period if the associate enrolls on
November 1). A participant's payroll deduction may be in any whole percentage
from 2% to 25% of the participant's compensation payable each pay period. A
participant may not make cash contributions or payments to the Company ESPP. A
book account will be established for each participant, to which the
participant's payroll deductions will be credited, until these amounts are
either withdrawn, distributed or used to purchase Common Stock, as described
below. No interest will be credited on these cash amounts.
A participant may change his or her authorized payroll deduction to zero at
any time without withdrawing from the Company ESPP, in which case his or her
accumulated deductions will be applied to purchase shares of Common Stock on the
applicable Exercise Date. However, a participant who has changed his or her
payroll deduction authorization to zero before November 1 may, under certain
circumstances, elect to resume such payroll deductions on November 1 at the same
percentage of compensation that was deducted before the Participant changed his
or her payroll deductions to zero. A participant may not make more than one
election to resume payroll deductions during any May 1-to-April 30 period (or
November 1-to-April 30 period if the participant enrolled on November 1).
A participant may elect to withdraw from participation in the Company ESPP
at any time, subject to any notice or other procedural requirements imposed by
the Administrator.
Number of Shares That May Be Purchased. An option granted to an associate
under the Company ESPP will give such associate the right to purchase, on any
Exercise Date occurring during the term of the option, the number of whole
shares of Common Stock which may be purchased with such associate's accumulated
payroll deductions as of that Exercise Date at the applicable purchase price;
provided, however, that no option granted on May 1 or November 1 will give an
associate the right to purchase more than 1,000 shares of Common Stock during
the May 1-to-April 30 or November 1-to-April 30 period in which the option was
granted. In addition, no associate may be granted an option under the Company
ESPP (or any other plan of the Company which is intended to qualify under
Section 423 of the Internal Revenue Code) which would permit the associate to
purchase stock under the Company ESPP (or such other Section 423 plan) in any
calendar year with a fair market value (determined as of the time such option is
granted) in excess of $25,000.
<PAGE>
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted under the Company ESPP is 500,000 shares. In the
event of a stock dividend, recapitalization, stock split, merger or similar
transaction, the number, kind and/or purchase price of the shares of Common
Stock available for purchase under the Company ESPP shall be adjusted, as
appropriate.
Purchase Price. The purchase price per share of Common Stock under the
Company ESPP as of any Exercise Date is 85% of the lower of (a) the fair market
value of a share of Common Stock on the date the option is granted, or (b) the
fair market value of a share of Common Stock on the applicable Exercise Date.
However, for Common Stock purchased under an option granted on a November 1
grant date, the price per share will not be lower than 85% of the fair market
value of a share of Common Stock on the preceding May 1. The fair market value
of shares of Common Stock for this purpose will be the closing price on the New
York Stock Exchange on the date for which a determination of fair market value
is made, or if that date is not a trading date, the next prior trading date.
Withdrawal or Termination of Employment. A participant's termination of
employment or election to withdraw from further participation in the Company
ESPP prior to the exercise of an outstanding option held by such participant
will cause an immediate cancellation of such option, and the Company will
distribute the participant's accumulated payroll deductions to the participant
in cash as soon as administratively feasible.
Current Market Price of Common Stock. On March 17, 1997, the closing price
of shares of Common Stock as reported on the New York Stock Exchange Composite
Tape was $18.25 per share.
Federal Income Tax Considerations. The Company ESPP is intended to qualify
as an "employee stock purchase plan" within the meaning of Section 423 of the
Internal Revenue Code. Participants will have no taxable income when an option
is granted under the Company ESPP or when they purchase Common Stock pursuant to
the exercise of the option. If a participant disposes of Common Stock more than
two years after the date on which the option was granted and more than one year
after the date the stock was transferred to him or her pursuant to his or her
exercise of the option, the participant will have taxable ordinary income in the
amount of the excess of the fair market value of the option shares at the time
of disposition over the purchase price paid by the participant to acquire such
shares, or, if less, the excess of the fair market value of the option shares at
the time the option was granted over the price paid to acquire the shares. Any
additional gain is long-term capital gain. If the amount the participant
realizes on such disposition is less than the amount paid to acquire the option
shares, then the participant will have a long-term capital loss. If a
participant disposes of shares of Common Stock either two years or less after
the option was granted or one year or less after the stock was transferred to
him or her pursuant to his or her exercise of the option (a "disqualifying
disposition"), the participant generally will have taxable ordinary income equal
to the difference between the fair market value of the option shares at the time
the shares were purchased and the amount paid to acquire the shares. Any
additional gain is long-term or short-term capital gain, depending on how long
the participant held the shares of Common Stock. The Company is not entitled to
any deduction in connection with the purchase or sale of shares of Common Stock,
other than in connection with a disqualifying disposition, in which case the
Company is entitled to a deduction equal to the amount of ordinary income
required to be recognized by the participant.
Amendment or Termination. The Board of Directors may amend or terminate the
Company ESPP to comply with the rules or regulations of any governmental
authority, or to be eligible for tax benefits under the Internal Revenue Code,
or for any other reasons, provided that no amendment or termination may
adversely affect the rights of any participant with respect to any grant
previously made unless required by law, nor may any amendment increase the
number of shares of Common Stock authorized for sale under the Company ESPP
without the approval of the shareowners of the Company. The Administrator may
amend the Company ESPP, subject to the foregoing proviso, in order to facilitate
its tax-effective use for non-U.S. subsidiaries.
<PAGE>
Transferability. Options granted to an associate under the Company ESPP are
not transferable other than by will or by the laws of descent and distribution
and are exercisable only by the associate during his or her lifetime.
The Board of Directors recommends voting FOR the
approval of the Employee Stock Purchase Plan.
PROPOSAL 3
APPROVAL OF THE AMENDED AND RESTATED 1996 EQUITY INCENTIVE PLAN
The 360 Communications Company 1996 Equity Incentive Plan (the "Original
Plan") was initially approved in conjunction with the Company's spinoff from
Sprint Corporation on March 7, 1996. On December 10, 1996, the Board of
Directors adopted an amended and restated version of the Original Plan to
implement several technical enhancements to the Original Plan. As so amended and
restated, the Original Plan is referred to herein as the "Equity Incentive
Plan." The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy and entitled to vote at the Annual Meeting
is necessary for the approval of the Equity Incentive Plan.
Reason for Seeking Shareowner Approval
Approval of the Equity Incentive Plan is necessary to permit income
recognized in connection with grants of options and stock appreciation rights
after the Annual Meeting to qualify as "performance based" compensation for
purposes of Section 162(m) of the Internal Revenue Code ("Section 162(m)").
Under Section 162(m), the Company cannot claim a federal income tax deduction on
compensation paid to its chief executive officer or any of its four other most
highly compensated executive officers in excess of $1,000,000 in any year,
unless the compensation qualifies as shareowner-approved "performance based"
compensation. The "option spread" (the excess of the fair market value of the
option shares at the time of exercise over the option exercise price) in
connection with the exercise of an option (other than an incentive stock option)
is eligible to be considered as performance based compensation for purposes of
Section 162(m). Under the Treasury Regulations issued pursuant to Section
162(m), the approval of the Original Plan satisfied the Section 162(m)
shareowner approval requirements for grants made prior to the Annual Meeting.
Any grants made after the Annual Meeting will not satisfy the requirements of
Section 162(m) unless the shareowners of the Company approve the Equity
Incentive Plan at the Annual Meeting.
In addition, the Company is seeking shareowner approval of the performance
goals which have been added to the Equity Incentive Plan to permit additional
types of Awards (defined below), such as performance shares and
performance-vested restricted stock, to qualify as performance-based
compensation for purposes of Section 162(m). Such performance goals were not
included in the Original Plan.
Summary of the Equity Incentive Plan
The principal terms and provisions of the Equity Incentive Plan are
summarized below. This summary is not a complete description of all of the terms
of the Equity Incentive Plan. A copy of the Equity Incentive Plan is available
by writing to Investor Relations at the Company's principal executive offices,
8725 W. Higgins Road, Chicago, Illinois 60631-2702.
Purpose. The Company believes that the Equity Incentive Plan provides key
incentives for the Company to attract new associates, retain existing associates
and stimulate associates towards furthering the interests of both the Company
and shareowners alike.
Types of Awards. The Equity Incentive Plan permits the granting of any or
all of the following types of Awards to associates of the Company: (1) stock
options, including incentive stock options ("ISOs") and options other than ISOs
("non-qualified options"); (2) stock appreciation rights ("SARs") (either in
tandem with stock options or free-standing); (3) restricted stock; (4)
performance shares conditioned upon meeting performance criteria; and (5) bonus
shares (collectively, the "Awards").
<PAGE>
Number of Shares. Subject to adjustment as described below, the number of
shares of Common Stock available under the Equity Incentive Plan for grants of
Awards during any one year is 1.0% of the number of shares of Common Stock
outstanding at the beginning of the year, increased by the number of shares that
were available for grant under the Equity Incentive Plan in previous years but
were not used for this purpose. Of the aggregate number of shares available
under the Equity Incentive Plan, no more than 1,500,000 shares can be used for
the grant of incentive stock options over the term of the Equity Incentive Plan.
Eligibility. All associates of the Company and its subsidiaries
(approximately 4,000 persons) are eligible to be participants.
Administration. The Equity Incentive Plan is administered by the
Organization, Compensation and Nominating Committee of the Board of Directors
(the "Committee"), none of the members of which may be an associate of the
Company. The Committee has the authority to select associates to whom Awards are
granted, to determine the types of Awards and the number of shares covered and
to set the terms, conditions and provisions of such Awards and to cancel or
suspend Awards. The Committee is authorized to interpret the Equity Incentive
Plan, to establish, amend, and rescind any rules and regulations relating to the
Equity Incentive Plan, to determine and amend the terms of agreements entered
into with associates under the Equity Incentive Plan, and to make all other
determinations which may be necessary or advisable for the administration of the
Equity Incentive Plan.
Power to Amend Equity Incentive Plan. The Board may amend or terminate the
Equity Incentive Plan at any time without the approval of the shareowners of the
Company, except (i) as such shareowner approval may be required by stock
exchange listing requirements and (ii) that no amendment shall be made without
shareowner approval which shall (x) increase the total number of shares
available for issuance pursuant to the Equity Incentive Plan or (y) change the
class of eligible participants.
Stock Options. The exercise price per share of Common Stock purchasable
under any stock option will be determined by the Committee, but cannot in any
event be less than 100% of the fair market value of shares of Common Stock on
the date the option is granted. The Committee shall determine the term of each
stock option (subject to a maximum of 10 years), and the time or times when it
may be exercised. The grant and the terms of ISOs shall be restricted to the
extent required for qualification as ISOs by the Internal Revenue Code. Options
may be exercised by payment of the exercise price made (i) in cash, (ii) in
shares with a fair market value equal to the exercise price of either Common
Stock, or at the discretion of the Committee, restricted stock, (iii) pursuant
to a "cashless exercise" through a broker-dealer under an arrangement approved
by the Company, or (iv) at the discretion of the Committee, in an
interest-bearing promissory note.
The Committee may, in its discretion, provide for the automatic grant of a
so-called "reload" option to a grantee who delivers previously-owned shares of
Common Stock to the Company to pay the option exercise price or satisfy tax
withholding requirements in connection with the option exercise. Any reload
option will (i) cover a number of shares equal to the number of shares
surrendered in connection with the exercise of the original option, (ii) have an
exercise price equal to 100% of the fair market value of shares of Common Stock
on the date it is granted and (iii) expire on the expiration date of the
original option. A reload option will not have a similar reload feature.
Stock Appreciation Rights. An SAR may be granted free-standing or in tandem
with the grant of new options or outstanding non-qualified options. Upon
exercise of an SAR, the holder thereof is entitled to receive the excess of the
fair market value of the shares for which the right is exercised over the grant
price of the SAR. The grant price (which shall not be less than 100% of the fair
market value of the shares on the date of grant) and other provisions of the SAR
shall be determined by the Committee (except that the term may not exceed 10
years). Payment by the Company upon such exercise will be in cash unless the
Committee determines that it is to be paid wholly or partly in Common Stock.
<PAGE>
Restricted Stock. Restricted stock may not be disposed of by the recipient
until certain restrictions established by the Committee lapse. Recipients of
restricted stock are not required to provide consideration other than the
rendering of services or the payment of any minimum amount required by law. The
participant shall have, with respect to restricted stock, all of the rights of a
shareowner, including the right to vote the shares and the right to receive any
cash dividends, unless the Committee shall otherwise determine. Upon termination
of employment during the restriction period, all restricted stock shall be
forfeited, subject to such exceptions, if any, made by the Committee.
Performance Awards. From time to time, the Committee may select a period
during which one or more performance criteria designated by the Committee are
measured for the purpose of determining the extent to which a performance award
has been earned. The performance criteria which the Committee may designate are
(i) earnings (either in the aggregate or on a per share basis), (ii) operating
income, (iii) cash flow, including EBITDA (earnings before interest, taxes,
depreciation and amortization), (iv) return on equity, (v) per share rate of
return on shares of Common Stock (including dividends), (vi) market share, (vii)
customer retention rates, (viii) market penetration rates, (ix) revenues, (x)
reductions in expense levels, (xi) indices related to EVA (economic value
added), (xii) general indices relative to levels of general customer service
satisfaction, as measured through various randomly generated customer service
surveys, and (xiii) the attainment by shares of Common Stock of a specified
market value for a specified period of time, in each case where applicable to be
determined either on a Company-wide basis or in respect of any one or more
business units.
Performance awards may be in the form of performance shares (valued by
reference to shares of stock), or performance units (valued by reference to cash
or property other than stock). Performance awards may be paid in cash, stock,
other property or a combination thereof. Recipients of performance awards are
not required to provide consideration other than the rendering of services and
any minimum exercise price required by applicable law.
Bonus Shares. Bonus shares can be awarded to a grantee without cost and
without restrictions in recognition of past performance (whether determined by
reference to another employee benefit plan of the Company or otherwise) or as an
incentive to become an associate of the Company or a subsidiary of the Company.
Adjustments. In the event of any change affecting the shares of Common
Stock by reason of any stock dividend or split, recapitalization, merger,
consolidation, spinoff, combination or exchange of shares or other corporate
change, or any distribution to shareowners other than cash dividends, the
Committee shall make such substitution or adjustment in the aggregate number or
class of shares which may be distributed under the Equity Incentive Plan and in
the number, class and option price or other price of shares subject to the
outstanding Awards granted under the Equity Incentive Plan as it deems to be
appropriate in order to maintain the purpose of the original grant.
Change of Control. A change of control is deemed to occur in the event of
certain acquisitions of 30% or more of the outstanding Common Stock, certain
mergers which result in the Company's shareowners owning less than 60% of the
surviving corporation, or certain changes of a majority of the Board of
Directors. In order to maintain all of the participant's rights in the event of
a change of control of the Company, Awards granted prior to 1997 will
automatically become fully vested or fully exercisable, as applicable. Beginning
in 1997, Awards granted will become fully vested or fully exercisable, as
applicable, if, within 12 months after a change of control, the participant is
terminated by the Company for reasons other than for cause or the participant
terminates employment in direct response to certain defined, adverse actions
taken by the Company.
Other. The Equity Incentive Plan will terminate on March 7, 2006. Awards
may not be transferred other than by will or intestate succession or, at the
direction of the Committee, to members of a grantee's immediate family.
<PAGE>
Tax Aspects of the Equity Incentive Plan
The following are the federal tax consequences generally arising under
present law with respect to Awards granted under the Equity Incentive Plan. The
grant of an option or SAR will create no tax consequences for a grantee or the
Company. In general, the grantee will have no taxable income upon exercising an
ISO if the applicable ISO holding period is satisfied (except that the
alternative minimum tax may apply), and the Company will receive no deduction
when an ISO is exercised. Upon exercising a non-qualified option or a SAR, the
optionee must recognize ordinary income equal to the difference between the
exercise price and the fair market value of shares of Common Stock on the date
of the exercise; the Company will be entitled to a deduction for the same
amount, subject to the possible applicability of the $1,000,000 compensation
deductibility limit of Section 162(m). Generally, there will be no tax
consequence to the Company in connection with a disposition of shares acquired
by exercise of an option except that the Company may be entitled to a deduction
in the case of a disposition of shares acquired by exercise of an ISO before the
applicable ISO holding periods have been satisfied.
With respect to other Awards granted under the Equity Incentive Plan that
are settled either in cash or in stock or other property that is either
transferable or not subject to substantial risk of forfeiture, the participant
must recognize ordinary income equal to the cash or the fair market value of
shares or other property received and the Company will be entitled to a
deduction for the same amount. With respect to Awards that are settled in stock
or other property that is restricted as to transferability and subject to
substantial risk of forfeiture, the participant must recognize ordinary income
equal to the fair market value of the shares or other property received at the
first time the shares or other property become transferable or not subject to
substantial risk of forfeiture, whichever occurs earlier, and the Company will
be entitled to a deduction for the same amount, subject to possible limitation
under Section 162(m).
New Equity Incentive Plan Benefits
The table below provides certain information regarding stock options granted
pursuant to the Equity Incentive Plan during 1997 prior to the date of this
Proxy Statement to (i) each Named Officer (defined below), (ii) all current
executive officers as a group, (iii) all directors (excluding executive
officers) as a group, and (iv) all associates (excluding executive officers) as
a group. No Awards other than stock options were made under the Equity Incentive
Plan during 1997 prior to the date of this Proxy Statement. Grants under the
Equity Incentive Plan are made at the discretion of the Committee and grants
under the Equity Incentive Plan for the balance of 1997, if any, and future
years have not yet been determined and are subject to shareowner approval of the
Equity Incentive Plan at the Annual Meeting.
<PAGE>
New Equity Incentive Plan Benefits
Name and Position Dollar Value(1) Number of Options
----------------- --------------- -----------------
Dennis E. Foster, President Not Applicable 82,900
and Chief Executive Officer
Michael J. Small, Executive Not Applicable 41,500
Vice President and Chief
Financial Officer
Kevin L. Beebe, Executive Not Applicable 41,500
Vice President - Operations
Kevin C. Gallagher, Senior Not Applicable 14,600
Vice President, General
Counsel and Secretary
Gary L. Burge, Senior Vice Not Applicable 14,600
President - Finance
Executive Group Not Applicable 219,500
Non-Executive Director Group --- ---
Non-Executive Officer Employee Group Not Applicable 338,200
- ----------
(1) Options were granted on February 10, 1997 at a Fair Market Value (as
defined under the Equity Incentive Plan) of $19.9375 per share. 25% of
these options will become exercisable on February 10, 1998, and an
additional 25% will become exercisable on February 10 of each of the next
three successive years. These options will expire on February 10, 2007.
The Board of Directors recommends voting FOR the approval
of the Amended and Restated 1996 Equity Incentive Plan.
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997 and has
further directed that management submit the selection of independent accountants
for ratification by the shareowners at the Annual Meeting. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Shareowner ratification of the selection of Ernst & Young LLP as the
Company's independent accountants is not required by the Company's Amended and
Restated Bylaws or otherwise. However, the Board is submitting the selection of
Ernst & Young LLP to the shareowners for ratification as a matter of good
corporate practice. If the shareowners fail to ratify the selection, the Board
and the Audit and Finance Committee will reconsider whether or not to retain
that firm. Even if the selection is ratified, the Board and the Audit and
Finance Committee in their discretion may direct the appointment of a different
independent accounting firm at any time during the year if they determine that
such a change would be in the best interests of the Company and its shareowners.
The affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting will be required to ratify the
selection of Ernst & Young LLP.
The Board of Directors recommends voting FOR the
ratification of the selection of Ernst & Young LLP.
<PAGE>
EXECUTIVE COMPENSATION
Organization, Compensation and Nominating Committee Report on Executive
Compensation
This report on executive compensation is furnished by the Organization,
Compensation and Nominating Committee of the Board of Directors, which is
composed of four independent, non-employee directors, and which is responsible
for administering the Company's executive compensation policies and practices.
Overview. The Organization, Compensation and Nominating Committee (the
"Committee") establishes compensation guidelines and practices that are designed
to be a key support system in the Company's ongoing effort to attract, retain
and motivate highly qualified executives. The Committee's goal is to establish a
total compensation program that (a) creates a strong commonality of interest
between management and the Company's shareowners; (b) places a significant
portion of executive compensation "at risk;" (c) links the level of "at risk"
compensation specifically to Company performance; and (d) remains competitive to
the total compensation programs provided by companies of comparative size, as
measured in annual sales (collectively referred to as "comparison companies").
While for certain executive officer positions the best candidate pool would
include individuals with specific industry experience and knowledge, the
relative newness of the wireless industry and lack of sufficient "pure play"
companies limits the ability to obtain statistically valid industry-specific
compensation information. Therefore, the Committee utilized comparison companies
representing many industries for a "general industry" comparison. The annual
sales for this group ranges from $483 million to $2.9 billion, with an average
of $1.4 billion and a median of $1.3 billion. The Committee relies on
information contained in compensation studies performed by an independent
consulting firm. These studies provide important market information regarding
all components of executive officers' compensation.
In 1996, the Company's total compensation program for the executive
officers, including the Chief Executive Officer ("CEO"), consisted of base
salary, an annual cash incentive and long-term incentives, including stock
options, restricted stock and premium-priced stock options. At the time of the
Company's spinoff from Sprint Corporation ("Sprint"), the Committee's objective
was to target base salary ranges and total annual cash compensation (midpoint of
base salary range plus target annual cash incentive) of the Company's executive
officers at the 50th percentile of the ranges provided by comparison companies
for comparable executive positions. Long-term incentives were set to lead the
50th percentile.
Base Salary. The base salaries of individual executive officers, including
the CEO, and their applicable salary ranges, are reviewed annually by the
Committee. In determining base salary ranges for a particular year, the
Committee utilizes the market information previously described. In approving
adjustments to base salary, the Committee considers the position of the
executive officer's salary within his or her salary range and, other than for
the CEO, relies on the performance evaluation completed annually by the
supervisor of each individual officer. The CEO's performance is evaluated in
much the same manner as other executive officers, the difference being that
specific discretionary input is provided by each Committee member instead of
from a single supervisor, and additional comments may be offered by other
non-employee members of the Board relative to the CEO's performance of
pre-determined, non-financial goals.
Prior to the Company's spinoff from Sprint, the Compensation Committee of
the Sprint Board of Directors (the "Sprint Board") established the base salaries
of the executive officers, including the CEO.
Annual Incentive. Associates at all levels, including executive officers
and the CEO, participate in an annual cash incentive plan, the Company's
Associate Incentive Plan ("AIP"). The targeted amount of the annual incentive is
based on job level; the higher the job level, the higher the portion of total
annual cash compensation that is "at risk."
Seventy-five percent of the actual annual incentive amount paid each year
to associates, including the executive officers and the CEO, is based on the
achievement of stated company performance measures, which are reviewed and
approved by the Committee at the beginning of each year. In 1996, the
performance measures included Service Revenue, Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA), Net Access Lines Gained and Customer
Turnover (Churn). Each of these measures was weighted equally and required
specific threshold performance before any incentive was earned.
<PAGE>
Twenty-five percent of the actual amount paid is based on the achievement
of personal objectives, as rated by the executive's supervisor, or, in the case
of the CEO, the Committee. These personal objectives included qualitative
factors relating to business unit and departmental results of a non-financial
nature, the support the executive provided in furthering strategic and tactical
objectives, contribution to the progress of the quality improvement process, and
individual professional growth and development.
Based on the achievement in 1996 of both stated company performance
measures and their personal objectives, executive officers, excluding the CEO,
earned AIP payouts that averaged 95.1% of target. The CEO's annual incentive
payout for 1996 equaled 95.7% of target.
Long-Term Incentives. The Company's 1996 Equity Incentive Plan (the "Equity
Incentive Plan") provides, among other things, that stock options and restricted
stock awards may be granted to the CEO, executive officers and other key
associates who contribute to the management, growth and profitability of the
Company. Targeted long-term incentive compensation for 1996 was delivered in the
form of stock option grants and restricted stock.
On February 12, 1996, before the Company's spinoff from Sprint, the Sprint
Board granted non-qualified stock options to designated associates of Sprint,
including executive officers and the CEO of the Company, based on the
compensation objectives established by the Sprint Board for division level
executives. Following the spinoff, the Committee elected to augment these grants
for the executive officers to achieve total long-term incentive compensation for
1996 that was consistent with the Committee's newly-defined compensation
objectives.
Stock Options. The Committee believes stock options afford it the
ability to deliver long-term incentive compensation in a way that
creates a strong commonality of interest between management and the
Company's shareowners. The Committee elected to deliver half of the
targeted long-term incentive for 1996 in the form of stock options.
Stock option grants were awarded by the Committee to executive
officers, including the CEO, such that the value of these grants, in
combination with the grant made by the Sprint Board prior to the
spinoff, totaled one-half of the total targeted value of the long-term
incentive.
Restricted Stock. The Committee believes that restricted stock forms
a strong retention device. The Committee felt retention of the
executive officers, including the CEO, was critical for the Company as
it became newly-independent and, for 1996, elected to grant restricted
stock to these key individuals for the remaining half of the total
targeted long-term incentive value. These grants carry a five year
vesting period.
Premium-Priced Stock Options. In 1996, in addition to awards that met
its stated compensation objectives, the Committee chose to award
premium-priced stock options to two executive officers. The purpose of
the awards was to focus these particular senior executives on
delivering superior shareowner value. The options were granted at four
separate exercise prices, in increments from approximately 15% to 54%
above the fair market value of shares of Common Stock on the date of
grant. The size of the awards was based on the Committee's subjective
assessment of the individual potential and contribution.
Replacement Grants. In addition to the aforementioned stock option
grants, all other outstanding options of associates of the Company
under Sprint plans as of the closing date of the spinoff (including
those of the executive officers and the CEO), were canceled by the
Sprint Board and replaced with Company options (the "Replacement
Options"). The Replacement Options covered the same aggregate fair
market values of Sprint common stock underlying the options and
continue the vesting schedules and other conditions for exercise of
the Sprint options they replaced. Aggregate fair market value of the
options was maintained by adjusting the per share exercise price of
the options as well as the number of shares which may be purchased
under the options. The formula to determine per share exercise prices
was based on the respective weighted average market values of Sprint
common stock during the ten trading days prior to the closing date of
the spinoff and of Common Stock during the ten trading days after the
closing date of the spinoff.
<PAGE>
The executive officers, including the CEO, were eligible for a separate
long-term incentive plan of Sprint, a portion of which was forfeited upon the
spinoff. In addition, the CEO held restricted stock that was canceled by the
Sprint Board upon the spinoff. The Committee elected to replace targeted
opportunities that were lost upon the spinoff with additional shares of
restricted stock.
Policy with Respect to Qualifying Compensation for Deductibility and Other
Matters. Section 162(m) of the Internal Revenue Code ("Section 162(m)")
generally limits the annual tax deductible compensation paid to the CEO and the
four other most highly-compensated executive officers of the Company to $1
million. However, this limitation does not apply to performance-based
compensation, provided that certain conditions are satisfied.
The Company's policy is generally to preserve the federal income tax
deductibility of compensation paid. However, notwithstanding the Company's
general policy, the Committee retains the authority to approve payments that may
not be deductible if it believes that such payments are in the best overall
interests of the Company and its shareowners.
Based on a review of the long-term implications of Section 162(m), a
proposal is included in this Proxy Statement recommending that shareowners
approve amendments to the Equity Incentive Plan. The Equity Incentive Plan was
originally approved in conjunction with the Company's spinoff from Sprint. On
December 10, 1996, the Board of Directors approved an amended and restated
version of the Equity Incentive Plan, the general terms and conditions of which
are summarized elsewhere in this Proxy Statement. If approved by the Company's
shareowners, the Equity Incentive Plan will meet the requirements of Section
162(m) with respect the deductibility of any taxable compensation resulting from
either the exercise of stock options granted to covered executive officers, or
from the granting of other performance-based equity awards, as applicable.
No direct cash compensation paid to any individual executive officer
exceeded the $1 million deductibility limit in 1996, nor is the level of direct
cash compensation paid to any executive officer in 1997 expected to exceed this
limit. The vast majority of cash compensation paid to executive officers is
comprised of base salary and annual incentives paid under the AIP. As discussed
above, the AIP covers associates of the Company at all levels and provides an
annual cash payment based on a combination of job grade, company performance and
individual performance. The Committee will continue to monitor the level of cash
compensation paid to executive officers. If, in the future, an executive
officer's cash compensation is expected to exceed $1 million, the Company will
seek shareowner approval for a separate, performance-based annual incentive plan
for designated executive officers.
ORGANIZATION, COMPENSATION AND NOMINATING
COMMITTEE OF THE BOARD OF DIRECTORS
Robert E. R. Huntley, Committee Chairman
Frank E. Reed
Michael Hooker
Valerie B. Jarrett
<PAGE>
Performance Graph
The graph below provides an indicator of cumulative shareowner returns for
the Company as compared with the S&P MidCap 400 Index and a Peer Group, weighted
quarterly for stock market capitalization.
The graph covers the period of time from the Company's spinoff from
Sprint on March 7, 1996 through December 31, 1996.
[GRAPH APPEARS HERE, DATA IN GRAPH APPEARS BELOW]
1996 Measurement Period (1) (2)
<TABLE>
<CAPTION>
March 7, 1996 March 29, 1996 June 28, 1996 September 30, 1996 December 31, 1996
------------- -------------- ------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
360 Communications Co. $100 $102 $102 $100 $ 99
S&P MidCap 400 Index $100 $100 $103 $106 $113
Peer Group (3) $100 $100 $ 96 $ 91 $ 87
- --------
<FN>
(1) Assumes $100 invested on March 7, 1996 in shares of Common Stock, the S&P
MidCap 400 Index, and a Peer Group.
(2) Total returns assume reinvestment of dividends on a quarterly basis.
(3) The Peer Group consists of the following cellular and Personal
Communications Services (PCS) carriers: Aerial Communications, Inc.;
Airtouch Communications, Inc.; Cellular Communications of Puerto Rico,
Inc.; Centennial Cellular Corp.; Clearnet Communications, Inc.; CommNet
Cellular, Inc.; InterCel, Inc.; Nextel Communications, Inc.; Omnipoint
Corporation; Orange Plc-ADR; Palmer Wireless, Inc.; PriCellular
Corporation; Rogers Cantel Mobile Communications, Inc.; Rural Cellular
Corporation; United States Cellular Corporation; Vanguard Cellular Systems,
Inc.; Vodafone Group Plc-ADR; Western Wireless Corporation. Market returns
have been adjusted for spinoffs of both the Company and any Peer Group
companies. If any member of the Peer Group is a foreign issuer and is not
traded on a U.S. stock exchange, the market value was converted to U.S.
dollars. Total returns only reflect the performance of the stock and not
gains or losses due to currency fluctuations.
</FN>
</TABLE>
<PAGE>
Summary Compensation Table
The following table summarizes the cash and non-cash compensation for
services rendered in all capacities to the Company for the year ended December
31, 1996 for the Chief Executive Officer and the four most highly-compensated
executive officers (collectively, the "Named Officers") of the Company.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
---------------------------- ------------------------ --------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Salary Bonus sation Awards Options Payouts sation
Position Year ($) (1) ($) (1) ($) ($) (5) (#) (6) ($) (7) ($) (8)
- -------------------------- ------ -------- -------- -------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis E. Foster 1996 $377,196 $334,788 $59,057 (4) $1,301,800 189,432 --- $324,601
President and Chief 1995 249,339 147,274 21,519 --- --- --- 4,995
Executive Officer
Michael J. Small 1996 193,101 68,480(3) 12,000 285,924 93,051 --- 34,209
Executive Vice 1995 36,648(2) 8,937 1,000 --- --- --- 328
President
& Chief Financial
Officer
Kevin L. Beebe 1996 165,321 136,307 19,036 297,419 86,565 --- 15,433
Executive Vice 1995 134,979 64,771 14,919 --- --- --- 7,338
President -
Operations
Kevin C. Gallagher 1996 156,236 90,358 10,800 152,158 79,773 --- 15,427
Senior Vice 1995 144,122 53,189 10,800 --- --- --- 6,301
President,
General Counsel and
Secretary
Gary L. Burge 1996 150,653 92,784 10,800 154,457 82,720 --- 13,151
Senior Vice 1995 132,571 68,546 14,588 --- --- --- 4,227
President -
Finance
<PAGE>
- ---------
<FN>
(1) Includes amounts earned for the year specified, including any deferrals
made under Section 125 and 401(k) pre-tax contribution plans.
(2) Includes $25,000 of consulting fees earned by Mr. Small in 1995 prior to
his becoming an associate of the Company on December 1, 1995.
(3) Excludes bonus amount associated with Mr. Small's election to receive
options in lieu of 50% of his short-term annual target incentive
opportunity under the provisions of Sprint's Management Incentive Stock
Option Plan prior to the Company's spinoff from Sprint.
(4) Includes the cost to the Company of club memberships of $41,586.
(5) On December 31, 1996, the Named Officers held the following number of
shares of restricted stock with the following value, based on the closing
per share price of Common Stock on December 31, 1996 of $23.25: Mr. Foster
- 56,600 shares at $1,315,950 (of which 3,600 shares will vest on March 9,
1999); Mr. Small - 12,600 shares at $292,950 (of which 2,600 shares will
vest on March 9, 1999); Mr. Beebe - 13,100 shares at $304,575 (of which
3,100 shares will vest on March 9, 1999); Mr. Gallagher - 6,700 shares at
$155,775 (of which 1,700 shares will vest on March 9, 1999); and Mr. Burge
- 6,800 shares at $158,100 (of which 1,800 shares will vest on March 9,
1999).
(6) Represents options granted under the Equity Incentive Plan and options
granted at the time of the spinoff to replace all outstanding options to
purchase Sprint common stock that were canceled in conjunction with the
spinoff. These "Replacement Options" were granted under the Company's 1996
Replacement Stock Option Plan. (See "Option Grants" for a discussion
regarding the Replacement Options.)
(7) In 1995, Mr. Foster received a payout of $60,775 under Sprint's Long-Term
Incentive Plan. The Company does not have a long-term incentive plan.
(8) Includes the following amounts for: (a) Mr. Foster - $60,025 in relocation
expenses; $14,369 in company contributions made to the Company's Retirement
Savings Plan (the "401(k) Plan"), $27,815 in non-cash credits allocated to
a non-qualified, defined contribution restoration plan, and $222,392 in
non-cash credits allocated to a supplemental retirement arrangement, as
provided under the terms of an employment agreement effective March 9, 1996
between the Company and Mr. Foster; (b) Mr. Small - $19,970 in relocation
expenses, $10,865 in company contributions made to the 401(k) Plan, and
$3,374 in non-cash credits allocated to a non-qualified, defined
contribution restoration plan; (c) Mr. Beebe - $511 in relocation expenses,
$9,429 in company contributions made to the 401(k) Plan, and $5,493 in
non-cash credits allocated to a non-qualified, defined contribution
restoration plan; (d) Mr. Gallagher - $10,994 in company contributions made
to the 401(k) Plan, and $4,433 in non-cash credits allocated to a
non-qualified, defined contribution restoration plan; and (e) Mr. Burge -
$9,867 in company contributions made to the 401(k) Plan, and $3,284 in
non-cash credits allocated to a non-qualified, defined contribution
restoration plan.
</FN>
</TABLE>
<PAGE>
Option Grants
As of the closing date of the Company's spinoff from Sprint, all
outstanding options of associates of the Company maintained under the Sprint
plans were canceled by the Sprint Board and subsequently replaced by Company
options (the "Replacement Options") under the Company's 1996 Replacement Stock
Option Plan (the "Replacement Stock Option Plan"). The Replacement Options cover
the same aggregate fair market values of Sprint common stock underlying the
options and continue the vesting schedules and other conditions for exercise of
the Sprint options they replaced. The aggregate fair market value of the options
was maintained by adjusting the per share exercise price of the options as well
as the number of shares which may be purchased under the options. The formula to
determine per share exercise prices was based on the respective weighted average
market values of Sprint common stock during the ten trading days prior to the
closing date of the spinoff and of Common Stock during the ten trading days
after the closing date of the spinoff.
The following table summarizes options granted during 1996 to the Named
Officers under (a) the Equity Incentive Plan and (b) the Replacement Stock
Option Plan for option grants originally made by Sprint in 1996 prior to the
spinoff, which were subsequently canceled by the Sprint Board at the time of the
spinoff. No stock appreciation rights were granted on these awards.
<PAGE>
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options Market of Stock Price Appreciation
Underlying Granted to Exercise Price per for Option Term (14)
Options Employees or Base Share -----------------------------
Granted in Fiscal Price on Grant Expiration
Name (#) Year ($/share) Date (5) Date 0% 5% 10%
- -------------------- ------------- ---------- ---------- ----------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis E. Foster 38,280 (1)(2) 2.81% $23.3443 $23.4375 2/12/06 (6) $3,568 $561,993 $1,424,200
21,000 (2) 1.54% 24.0625 3/09/06 (7) 317,788 805,338
Michael J. Small 35,797 (2)(3) 2.63% 23.3443 23.4375 2/12/06 (8) 3,336 525,539 1,331,820
21,054 (1)(2) 1.55% 23.3443 23.4375 2/12/06 (6) 1,962 309,096 783,310
4,200 0.31% 22.6250 4/09/06 (9) 59,761 151,445
8,000 (4) 0.59% 26.0000 4/09/06 (10) 130,810 331,498
8,000 (4) 0.59% 29.0000 4/09/06 (11) 145,903 369,748
8,000 (4) 0.59% 32.0000 4/09/06 (12) 160,997 407,998
8,000 (4) 0.59% 35.0000 4/09/06 (13) 176,090 446,248
Kevin L. Beebe 11,484 (1)(2) 0.84% 23.3443 23.4375 2/12/06 (6) 1,070 168,598 427,260
5,400 (2) 0.40% 24.0625 3/09/06 (7) 81,717 207,087
6,100 0.45% 22.6250 4/09/06 (9) 86,795 219,956
8,000 (4) 0.59% 26.0000 4/09/06 (10) 130,810 331,498
8,000 (4) 0.59% 29.0000 4/09/06 (11) 145,903 369,748
8,000 (4) 0.59% 32.0000 4/09/06 (12) 160,997 407,998
8,000 (4) 0.59% 35.0000 4/09/06 (13) 176,090 446,248
Kevin C. Gallagher 7,656 (1)(2) 0.56% 23.3443 23.4375 2/12/06 (6) 714 112,399 284,840
2,700 (2) 0.20% 24.0625 3/09/06 (7) 40,859 103,543
1,600 0.12% 22.6250 4/09/06 (9) 22,766 57,693
Gary L. Burge 11,484 (1)(2) 0.84% 23.3443 23.4375 2/12/06 (6) 1,070 168,598 427,260
1,400 0.10% 22.6250 4/09/06 (9) 19,920 50,482
<PAGE>
- ----------
<FN>
(1) These options were initially awarded by the Sprint Board on February 12,
1996, canceled on March 7, 1996 by the Sprint Board in conjunction with the
spinoff and subsequently replaced by the Company under the Replacement
Stock Option Plan.
(2) These options include a reload feature. A reload feature means that a
reload option may be granted when an optionee exercises a stock option and
makes payment of the purchase price using shares of previously owned Common
Stock. A reload option grant is for the number of shares utilized in
payment of the purchase price and tax withholding, if any. The option price
for a reload option is equal to the market price of shares of Common Stock
on the date of exercise of the original option. A reload option becomes
exercisable one year after the date the original option was exercised.
(3) This option represents a grant originally made under Sprint's Management
Incentive Stock Option Plan ("MISOP") that was canceled by the Sprint Board
in conjunction with the spinoff and then replaced under the Replacement
Stock Option Plan. Under Sprint's MISOP, Mr. Small elected to receive
options in lieu of receiving a portion of his annual incentive for 1996
under the Company's Associate Incentive Plan.
(4) These options represent different tranches of a single premium-price stock
option grant which each carry a different exercise price.
(5) Reflects the average of the high and low sales price of shares of Common
Stock as of March 7, 1996, the date on which the Replacement Options were
awarded.
(6) 25% of these options became exercisable on February 12, 1997, and an
additional 25% will become exercisable on February 12 of each of the next
three successive years.
(7) 25% of these options become exercisable on March 9, 1997, and an additional
25% will become exercisable on March 9 of each of the next three successive
years.
(8) This option became fully exercisable on December 31, 1996.
(9) 25% of these options become exercisable on April 9, 1997, and an additional
25% will become exercisable on April 9 of each of the next three successive
years.
(10) This tranche becomes fully exercisable on April 9, 1997.
(11) This tranche becomes fully exercisable on April 9, 1998.
(12) This tranche becomes fully exercisable on April 9, 1999.
(13) This tranche becomes fully exercisable on April 9, 2000.
(14) The dollar amounts in these columns are the result of calculations at the
assumed appreciation rates set by the Securities and Exchange Commission
and are not intended to forecast future appreciation of shares of Common
Stock.
</FN>
</TABLE>
<PAGE>
The following table summarizes Replacement Options granted at the time of
the spinoff in 1996 to Named Officers under the Replacement Stock Option Plan
for option grants originally made prior to 1996 under the Sprint plans.
<TABLE>
Options/SARs Granted by Sprint in 1995 and Prior Years That Were Canceled
Upon the Company's Spinoff and Replaced With Company Option Grants
<CAPTION>
Potential Realizable Value
Number of % of Total Market at Assumed Annual Rates
Securities Options Price per of Stock Price Appreciation
Underlying Granted to Exercise Share for Option Term (10)
Options Employees or Base on Grant --------------------------------
Granted in Fiscal Price Date (4) Expiration
Name (#) (1) Year ($/share) ($/share) Date 0% 5% 10%
- ----------------- ------------ ----------- ----------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis E. Foster 15,312 (2) 1.12% $12.5684 $23.4375 5/01/02 (5) $166,428 $121,029 $306,711
21,054 (2) 1.55% 16.0951 23.4375 3/09/03 (5) 154,587 213,111 540,066
22,968 (2) 1.69% 19.1646 23.4375 2/11/04 (6) 98,140 276,822 701,522
47,850 (2) 3.51% 18.7074 23.4375 7/12/04 (7) 226,335 562,954 1,426,637
22,968 (2) 1.69% 15.4747 23.4375 2/17/05 (8) 182,890 223,524 566,453
Michael J. Small --- --- --- ---
Kevin L. Beebe 957 (2) 0.07% 17.6299 23.4375 2/16/00 (5) 5,558 10,611 26,889
2,871 (2) 0.21% 11.6541 23.4375 2/14/02 (5) 33,830 21,042 53,325
4,785 (2) 0.35% 16.0951 23.4375 3/09/03 (5) 35,133 48,434 122,742
6,699 (2) 0.49% 19.1646 23.4375 2/11/04 (6) 28,624 80,740 204,611
9,570 (2) 0.70% 18.7074 23.4375 7/12/04 (7) 45,267 112,591 285,327
6,699 (2) 0.49% 15.4747 23.4375 2/17/05 (8) 53,343 65,194 165,215
Kevin C. Gallagher 3,540 (3) 0.26% 7.5565 23.4375 11/11/98 (5) 56,219 16,823 42,633
3,538 0.26% 7.5561 23.4375 11/11/98 (5) 56,188 16,813 42,606
3,933 (3) 0.29% 15.5049 23.4375 9/14/99 (5) 31,199 38,350 97,188
3,933 0.29% 15.5049 23.4375 9/14/99 (5) 31,199 38,350 97,188
26,221 1.92% 9.4826 23.4375 8/29/00 (5) 365,911 156,371 396,273
6,555 0.48% 11.3414 23.4375 8/28/01 (5) 79,290 46,754 118,483
6,699 (2) 0.49% 16.0951 23.4375 3/09/03 (5) 49,187 67,808 171,839
6,699 (2) 0.49% 19.1646 23.4375 2/11/04 (6) 28,624 80,740 204,611
6,699 (2) 0.49% 15.4747 23.4375 2/17/05 (8) 53,343 65,194 165,215
Gary L. Burge 1,179 0.09% 15.5052 23.4375 9/14/99 (5) 9,352 11,497 29,135
1,180 (3) 0.09% 15.4997 23.4375 9/14/99 (5) 9,367 11,502 29,149
26,221 1.92% 9.4826 23.4375 8/29/00 (5) 365,911 156,371 396,273
3,933 0.29% 11.3414 23.4375 8/28/01 (5) 47,574 28,052 71,090
4,785 (2) 0.35% 16.0951 23.4375 3/09/03 (5) 35,133 48,434 122,742
6,699 (2) 0.49% 19.1646 23.4375 2/11/04 (6) 28,624 80,740 204,611
19,140 (2) 1.40% 18.7074 23.4375 7/12/04 (9) 90,534 225,182 570,655
6,699 (2) 0.49% 15.4747 23.4375 2/17/05 (8) 53,343 65,194 165,215
<PAGE>
- ----------
<FN>
(1) The option grants reflected in the above table represent stock options
awarded by Sprint (or its predecessor, Centel Corporation) in 1995 and
prior years, which were canceled by the Sprint Board and replaced by the
Company under the Replacement Stock Option Plan in conjunction with the
Company's spinoff from Sprint on March 7, 1996.
(2) These options include a reload feature. A reload feature means that a
reload option may be granted when an optionee exercises a stock option and
makes payment of the purchase price using shares of previously owned Common
Stock. A reload option grant is for the number of shares utilized in
payment of the purchase price and tax withholding, if any. The option price
for a reload option is equal to the market price of shares of Common Stock
on the date of exercise of the original option. A reload option becomes
exercisable one year after the date the original option was exercised.
(3) These options carry tandem stock appreciation rights (SARs).
(4) Reflects the average of the high and low sales price of shares of Common
Stock as of March 7, 1996, the date on which the Replacement Options were
awarded.
(5) These options are fully exercisable.
(6) 75% of these options are currently exercisable and the remaining 25% will
become exercisable on February 11, 1998.
(7) No portion of these options are currently exercisable. These options will
become fully exercisable on July 12, 1999.
(8) 50% of these options are currently exercisable and an additional 25% will
become exercisable on each of February 11, 1998 and February 11, 1999.
(9) No portion of these options are currently exercisable. 50% of these options
will become exercisable on July 12, 1997 and an additional 25% will become
exercisable on July 12 of each of the next two successive years.
(10) The dollar amounts in these columns are the result of calculations at the
assumed appreciation rates set by the Securities and Exchange Commission
and are not intended to forecast future appreciation of shares of Common
Stock.
</FN>
</TABLE>
<PAGE>
Option Exercises and Fiscal Year-End Values
The following table summarizes the value of the outstanding options at
December 31, 1996, for the Named Officers. There were no exercises of options by
the Named Officers during 1996.
<TABLE>
Year-End Option/SAR Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at 12/31/96 (#) Options/SARs at 12/31/96 ($)(1)
---------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
Dennis E. Foster 48,328 141,104 $383,197 $469,803
Michael J. Small 35,797 57,254 7,811 8,531
Kevin L. Beebe 12,439 74,126 94,927 119,001
Kevin C. Gallagher 57,767 22,006 691,755 71,053
Gary L. Burge 41,124 41,596 491,329 161,058
- ---------
<FN>
(1) The value of unexercised, in-the-money options/SARs is the difference
between the exercise price of the options and the average of the high and
low sales price of shares of Common Stock as of December 31, 1996
($23.5625).
</FN>
</TABLE>
Employment Agreement
In March 1996, the Board of Directors of the Company authorized the Company
to enter into an Employment Agreement (the "Employment Agreement") with Mr.
Foster which became effective as of March 9, 1996. The following is a summary of
the terms of the Employment Agreement.
The initial term of the Employment Agreement is five years, with automatic
one year renewals thereafter unless either party provides notice of intent not
to renew. If a change in control (as defined therein) occurs, the Employment
Agreement will be irrevocable for the greater of the remaining term or two
years. The Employment Agreement provides a base salary at a minimum of $400,000,
an annual incentive opportunity no less than 50% of base salary, and long-term
incentive awards and perquisites commensurate with the marketplace for this
position.
If Mr. Foster remains employed by the Company for the full length of the
initial term of the Employment Agreement, the Company will provide both he and
his spouse with post-retirement medical insurance benefits at the same cost and
coverage levels as is then provided to active associates (with a carve-out for
Medicare benefits). This commitment is subject to change or termination to the
same extent the active associate's plan is changed or terminated. Coverage will
also be provided to the same extent if termination occurs prior to the
expiration of the initial term due to death, disability, involuntary termination
without cause or voluntary termination for good reason.
<PAGE>
Under the Employment Agreement, the Company also provides a supplemental
retirement benefit taking the form of a defined contribution arrangement. The
amount of the Company contribution will be based on the actuarially computed
value necessary to provide an annual replacement of 40% of Mr. Foster's final
compensation (annual base salary and annual target incentive) for his expected
life beginning at age sixty-five, offset by the age sixty-five pension benefit
provided by his former employers. The actuarial calculation will be leveled such
that all future contributions equate to a relatively level percentage of
compensation. This non-qualified, general asset promise is backed by a rabbi
trust that will be funded not less than annually. Company contributions, and
actual earnings thereon, will fully vest at the earlier of Mr. Foster reaching
age sixty, death, disability, involuntary termination without cause, voluntary
termination for good reason or change in control. Vested benefits will be
distributed in five annual installments beginning at the time of termination
unless he makes a timely election of an alternative form of distribution, which
may include a lump sum. The Company may choose to distribute the balance in a
lump sum in the event of Mr. Foster's death or disability.
The Employment Agreement will also provide for the payments and benefits
enumerated below in the case of Mr. Foster's termination of employment.
Death or Disability. The Company will pay base salary and pro rata target
incentive through termination plus all other compensation and benefits to which
Mr. Foster had a vested right, including the supplemental retirement benefit and
vesting of restricted stock and stock options.
Voluntary Termination Without Good Reason or Termination For Cause. The
Company will pay base salary through termination plus all other compensation and
benefits to which Mr. Foster had a vested right.
Involuntary Termination by the Company Without Cause or Termination for
Good Reason. Termination for good reason includes a significant adverse change
in duties or responsibilities, a required relocation, material reduction in
compensation or benefits other than a prospective change which applies similarly
to all executives and a material breach of contract by the Company. The Company
will pay base salary and pro rata target incentive through termination, a lump
sum cash amount equal to two times the then-current base salary and target
incentive at termination plus all other compensation and benefits to which Mr.
Foster had a vested right. The supplemental retirement benefit accrued to date
will become fully vested and funded in the rabbi trust. Vesting of outstanding
restricted stock and stock option grants will be accelerated and Mr. Foster will
be eligible for outplacement services for a period of two years (with a maximum
expense of 25% of base salary).
Change in Control. A change in control occurs under certain changes in
ownership, the Board of Directors or composition of the Company (e.g.
liquidation, merger, consolidation, sale or disposition of all or substantially
all of the assets, etc.). Change in control severance benefits will be triggered
if, within twenty-four months of a change in control, termination occurs under
one of the following: involuntary termination without cause; voluntary
termination for good reason; failure of a successor company to assume
obligations under the Employment Agreement; breach of contract by the Company;
or voluntary termination at any time during the consecutive thirty-day period
beginning on the first day of the thirteenth full month following the change in
control. Payments and benefits include: base salary and pro rata target
incentive through termination plus all other compensation and benefits to which
Mr. Foster had a vested right; lump-sum cash payment equal to three times base
salary and target incentive; immediate full vesting and funding of the
supplemental retirement benefit accrued to date; immediate full vesting of
restricted stock and stock options; and, outplacement services for a period of
two years (with a maximum expense of 35% of base salary). Under certain
circumstances, a portion of the present value of the benefits payable under the
Employment Agreement or of the acceleration of the vesting of the restricted
stock or the stock options could be subject to a 20% excise tax under the
Internal Revenue Code and be nondeductible by the Company. The Company will
agree to reimburse Mr. Foster for any such excise taxes, together with any
additional excise or income taxes resulting from such reimbursement.
<PAGE>
Compensation and Benefits Assurance Agreements
In March 1996, the Board of Directors of the Company authorized the Company
to enter into Compensation and Benefits Assurance Agreements (the "Change in
Control Agreements") with all executive officers other than Mr. Foster. The
following is a summary of the terms of the Change in Control Agreements. The
initial term of the Change in Control Agreements is three years, with automatic
three year renewals thereafter unless either party provides notice of intent not
to renew. If a change in control (as defined therein) occurs, the Change in
Control Agreements are irrevocable for the greater of the remaining term or two
years.
Under the Change In Control Agreements, a change in control occurs under
certain changes in ownership, Board or composition of the Company (e.g.
liquidation, merger, consolidation, sale or disposition of all or substantially
all of the assets, etc.). Change in control severance benefits will be triggered
if, within twenty-four months of a change in control, termination occurs under
one of the following: involuntary termination without cause; voluntary
termination for good reason; failure of a successor company to assume
obligations under the Change in Control Agreements; or material breach of
contract by the Company. Payments and benefits will include: base salary and pro
rata target incentive through termination plus all other compensation and
benefits to which the executive officer had a vested right; lump-sum cash
payment equal to three times base salary and target incentive; continuation of
health insurance at the same cost and coverage level as in effect at termination
for the greater of 36 months or until similar benefits are obtained from a
subsequent employer; immediate full vesting of restricted stock and stock
options; and outplacement services for a period of two years (with a maximum
expense of 25% of base salary). Under certain circumstances, a portion of the
present value of the benefits payable under the Change in Control Agreements or
of the acceleration of the vesting of the restricted stock or the stock options
could be subject to a 20% excise tax under the Internal Revenue Code and be
nondeductible by the Company. The Company has agreed to reimburse the executive
officer for any such excise taxes, together with any additional excise or income
taxes resulting from such reimbursement.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 1, 1997 with
respect to shares of Common Stock that was owned beneficially by: (i) each
beneficial owner of more than 5% of the outstanding shares of Common Stock; (ii)
each of the Named Officers of the Company; (iii) each of the directors; and (iv)
all executive officers and directors of the Company as a group. Approximately
123,310,118 shares of Common Stock were outstanding as of March 1, 1997.
<TABLE>
<CAPTION>
Beneficial Owners, Number of Shares Percent of
Directors and Executive Officers (1) Beneficially Owned (2)(3) Outstanding Shares
- -------------------------------------- ------------------------- ------------------
<S> <C> <C>
Southeastern Asset Management, Inc. 14,580,497 (4) 11.82%
6075 Poplar Avenue
Suite 900
Memphis, TN 38119
FMR Corp. 12,295,883 (5) 9.97
82 Devonshire Street
Boston, MA 02109
Lester Crown, Director 6,509,427 (6) 5.28
Dennis E. Foster, Director, 144,041 (7) *
President and Chief
Executive Officer
Michael J. Small, Executive 68,023 (8) *
Vice President and
Chief Financial Officer
Kevin L. Beebe, Executive 44,730 (9) *
Vice President - Operations
Kevin C. Gallagher, Senior 76,008 (10) *
Vice President,
General Counsel and Secretary
Gary L. Burge, Senior 61,745 (11) *
Vice President - Finance
Robert E. R. Huntley, Director 5,415 (12) *
Frank E. Reed, Chairman of the 5,143 (13) *
Board of Directors
Charles H. Price, II, Director 4,235 (14) *
Michael Hooker, Director 3,441 (15) *
Alice M. Peterson, Director 3,441 (16) *
Valerie B. Jarrett 3,423 (17) *
Directors and executive 6,984,088 (18) 5.66
officers as a group
(14 persons)
<PAGE>
- ------------
<FN>
*Represents less than 1%
(1) This table is based upon information supplied by directors, executive
officers and principal shareowners.
(2) Unless otherwise indicated in the footnotes to this table, each of the
shareowners named in this table has sole voting and investment power with
respect to the shares shown as beneficially owned. This table includes the
number of the Company stock options exercisable currently or within 60
days by the directors and executive officers. The number of such Company
stock options held by each director and executive officer is indicated in
the following notes.
(3) The executive officers are participants in the Company's Retirement
Savings Plan (the "401(k) Plan"). The number of shares of Common Stock
beneficially held by each executive officer in the 401(k) Plan as of
December 31, 1996 is indicated in the following notes.
(4) According to a Schedule 13G/A, dated January 31, 1997, Southeastern Asset
Management, Inc. has sole voting power with respect to 8,173,200 shares,
shared voting power with respect to 4,966,837 shares and no voting power
with respect to 1,440,460 shares. Such firm has sole investment power with
respect to 9,613,660 shares and shared investment power with respect to
4,966,837 shares.
(5) According to a Schedule 13G/A, dated February 14, 1997, FMR Corp. has sole
voting power with respect to 1,565,665 shares and no voting power with
respect to 10,730,218 shares. Such firm has investment power with respect
to all shares.
(6) Includes 4,379,186 shares held by Independent Cellular Network Partners, a
partnership of which a partner is a trust of which Mr. Crown is a trustee
for the benefit of his children, 1,356,885 shares held by CC Industries,
Inc., of which Mr. Crown is Chairman of the Board, 757,029 shares held by
The Crown Fund, a partnership of which Mr. Crown is a partner, and 12,900
shares held in charitable funds of which Mr. Crown is the trustee or a
co-trustee. Mr. Crown disclaims beneficial ownership of all shares held by
such entities. Includes 3,000 shares that may be acquired upon exercise of
stock options exercisable currently or within 60 days.
(7) Includes 693 shares jointly held by Mr. Foster's wife, and as to such
shares Mr. Foster and his wife share voting power and investment power.
Includes 79,896 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days.
(8) Includes 360 shares jointly owned by Mr. Small's wife, and as to such
shares Mr. Small and his wife share voting power and investment power.
Includes 2,293 shares invested in the 401(k) Plan and 50,111 shares that
may be acquired upon exercise of stock options exercisable currently or
within 60 days.
(9) Includes 460 shares jointly owned by Mr. Beebe's wife, and as to such
shares Mr. Beebe and his wife share voting power and investment power.
Includes 437 shares invested in the 401(k) Plan and 30,733 shares that may
be acquired upon exercise of stock options exercisable currently or within
60 days.
(10) Includes 1,479 shares jointly owned by Mr. Gallagher's wife, and as to
such shares Mr. Gallagher and his wife share voting power and investment
power. Includes 1,284 shares invested in the 401(k) Plan and 65,782 shares
that may be acquired upon exercise of stock options exercisable currently
or within 60 days.
(11) Includes 2,873 shares jointly owned by Mr. Burge's wife, and as to such
shares Mr. Burge and his wife share voting power and investment power.
Includes 2,688 shares invested in the 401(k) Plan and 48,893 shares that
may be acquired upon exercise of stock options exercisable currently or
within 60 days.
(12) Includes 825 shares jointly owned by Mr. Huntley's wife, and as to such
shares Mr. Huntley and his wife share voting power and investment power.
Includes 3,000 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days.
(13) Includes 3,000 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days.
(14) Includes 400 shares held by Charles H. and Carol Swanson Price Foundation,
of which Mr. Price is a trustee, and 333 shares held by Mr. Price's wife.
Mr. Price disclaims beneficial ownership of all shares held by his wife
and such entity. Includes 3,000 shares that may be acquired upon exercise
of stock options exercisable currently or within 60 days.
(15) Includes 3,000 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days.
(16) Includes 3,000 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days.
(17) Includes 3,000 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days.
(18) Includes 6,912 shares invested in the 401(k) Plan and 335,103 shares that
may be acquired upon exercise of stock options exercisable currently or
within 60 days.
</FN>
</TABLE>
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and holders of more than 10% of the
outstanding shares of Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. The Company believes
that during 1996, its directors, executive officers and holders of more than 10%
of the outstanding shares of Common Stock complied with all Section 16(a) filing
requirements. In making these statements, the Company has relied upon the
written representations of its directors and executive officers.
CERTAIN TRANSACTIONS
On November 1, 1996, the Company completed the acquisition (the "ICN
Acquisition") of Independent Cellular Network, Inc. and affiliated companies
(collectively, the "Acquired Companies"), pursuant to an Exchange and Merger
Agreement (the "Exchange and Merger Agreement") dated as of May 31, 1996 by and
between the Company and Independent Cellular Network Partners and certain of its
affiliates (collectively "ICNP"). The Acquired Companies own and operate
cellular licenses and related systems and assets in Kentucky, Ohio, Pennsylvania
and West Virginia and provide cellular service to approximately 140,000
customers in 20 markets representing an estimated 3.2 million customers. The
Company acquired the Acquired Companies from ICNP for approximately $519
million, comprised of 6,500,000 shares of Common Stock, $122 million in
aggregate principal amount of the Company's subordinated non-negotiable
promissory notes (the "Subordinated Notes") and the Company's assumption of $240
million of Independent Cellular Network Partners' senior debt. The remaining
portion of the purchase price was paid in cash.
The Subordinated Notes are due October 31, 2006 and originally accrued
interest at the rate of 9.5% per annum, which was reduced to 9.0% on February
10, 1997. Fifty percent of the interest due and owing on the Subordinated Notes
will be paid on each semiannual interest payment date and the remaining 50% of
the interest due and owing will be capitalized and become part of the principal
amount owed thereunder. The $240 million of senior debt assumed by the Company
in connection with the ICN Acquisition was refinanced, and the cash portion of
the purchase price was funded, under the Company's existing revolving credit
facility with a number of banks and institutional lenders.
The terms of the ICN Acquisition were arrived at through private
negotiation conducted by management of the Company, and were based primarily on
the population of the acquired markets, the value of existing operations and the
customer base.
In connection with the ICN Acquisition, Independent Cellular Network
Partners received 4,379,186 shares of Common Stock and $98,331,229 in aggregate
principal amount of the Subordinated Notes, of which $5,770,000 in aggregate
principal amount were subsequently transferred; CC Industries, Inc. received
1,356,885 shares of Common Stock; and Henry Crown and Company (Not
Incorporated), a limited partnership received $13,125,000 in aggregate principal
amount of the Subordinated Notes, which were subsequently transferred. In
January 1997, an aggregate of 757,029 shares of Common Stock originally issued
in connection with the ICN Acquisition were acquired by The Crown Fund, a
partnership, and $9,867,053 in aggregate principal amount of the Subordinated
Notes were acquired by Arie and Ida Crown Memorial, a not-for-profit
corporation. Lester Crown, who was elected a director of the Company after the
completion of the ICN Acquisition, is a trustee for the benefit of his children
of a trust which is a partner of Independent Cellular Network Partners. Mr.
Crown is also Chairman of the Board of CC Industries, Inc., a director of Arie
and Ida Crown Memorial and a partner of The Crown Fund.
<PAGE>
The Exchange and Merger Agreement contains provisions providing each party
thereto with indemnification, subject to certain limitations, from and against
all damages resulting from the breach of the other parties' representations and
warranties thereunder. Under the Exchange and Merger Agreement, Henry Crown and
Company (Not Incorporated) irrevocably and unconditionally guaranteed the
indemnification obligations of ICNP to the Company. Mr. Crown is a trustee for
the benefit of his children of a trust which is a partner of Henry Crown and
Company (Not Incorporated).
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, it is the intention of the persons named on the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Kevin C. Gallagher
Kevin C. Gallagher
Senior Vice President, General
Counsel and Secretary
March 31, 1997
<PAGE>
APPENDIX A
360 COMMUNICATIONS COMPANY
EMPLOYEE STOCK PURCHASE PLAN
Section 1
Purpose and Effective Date
1.1 The purpose of the 360 Communications Company Employee Stock Purchase
Plan (the "Plan") is to provide an opportunity for eligible associates
of 360 Communications Company (the "Company") to purchase shares of
common stock of the Company. It is the intent of the Company to have
the Plan qualify as an "employee stock purchase plan" under Section 423
of the Internal Revenue Code. The provisions of the Plan shall be
construed to extend and limit participation in a manner consistent with
the requirements of Section 423 of the Internal Revenue Code.
1.2 The Plan shall be effective on the Effective Date stated below, subject
to the approval of the Company's stockholders within one year before or
one year after the date the Plan is approved by the Board of Directors
of the Company (the "Board"). No option shall be granted under the Plan
after the date on which the Plan is terminated by the Board in
accordance with Section 12.6 of the Plan.
Section 2
Definitions
The following words and phrases, when used in the Plan, unless their
context clearly indicates otherwise, shall have the following respective
meanings:
2.1 "Account" means a recordkeeping account maintained for a Participant to
which payroll deductions are credited in accordance with Section 8 of
the Plan.
2.2 "Administrator" means the Human Resources Department of the Company
which shall administer the Plan.
2.3 "Associate" means any individual, including any officer of the Company,
who performs services for the Company or a Participating Subsidiary
pursuant to an employment relationship described in Treasury
Regulations Section 31.3401(c)-1 or any successor provision, as
determined by the Company or Participating Subsidiary. Any individual
whose relationship with the Company or a Participating Subsidiary is
not initially determined by the Company or Participating Subsidiary to
be such an employment relationship but is finally determined by the
Internal Revenue Service or a court of competent jurisdiction to be
such an employment relationship shall be an Associate, for purposes of
the Plan from the date of such final determination.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Common Stock" means the Company's common stock, $.01 par value.
2.7 "Company" means 360 Communications Company, a Delaware corporation.
2.8 "Compensation" means compensation, as such term is defined from time to
time in the 360 Communications Company Retirement Savings Plan for
purposes of Pre-Tax Contributions (as defined in such plan).
2.9 "Cut-Off Date" means the date established by the Administrator from
time to time by which enrollment forms must be received prior to an
Enrollment Date.
<PAGE>
2.10 "Effective Date" means May 1, 1997.
2.11 "Eligible Associate" means an Associate eligible to participate in the
Plan in accordance with Section 5.
2.12 "Enrollment Date" means the first Trading Day of an Offer Period.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.14 "Fair Market Value" means, as of any applicable date:
(a) if the security is listed for trading on the New York
Stock Exchange, the closing price of the security as reported in the
Wall Street Journal or such other source as the Administrator deems
reliable, or if no such reported sale of the security shall have
occurred on such date, on the latest preceding date on which there was
such a reported sale, or
(b) if the security is not so listed, but is listed on another
national securities exchange or authorized for quotation on the
National Association of Securities Dealers Inc.'s NASDAQ National
Market ("NASDAQ/NMS"), the closing price, regular way, of the security
on such exchange or NASDAQ/NMS, as the case may be, or if no such
reported sale of the security shall have occurred on such date, on the
latest preceding date on which there was such a reported sale, or
(c) if the security is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the
average of the low bid and high asked prices as reported by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or, if no such prices shall have been so reported for such
date, on the latest preceding date for which such prices were so
reported, or
(d) if the security is not listed for trading on a national
securities exchange or is not authorized for quotation on NASDAQ/NMS or
NASDAQ, the fair market value of the security as determined in good
faith by the Board.
2.15 "Grant Date" means a date on which an Eligible Associate is granted an
option under the Plan pursuant to Section 7, and which shall either be
a May 1 Grant Date or a November 1 Grant Date. "May 1 Grant Date" means
a Grant Date occurring on May 1 or, if May 1 is not a Trading Day, the
next following Trading Day. "November 1 Grant Date" means a Grant Date
occurring on November 1 or, if November 1 is not a Trading Day, the
next following Trading Day.
2.16 "Grant Price" means the Fair Market Value of a share of Common Stock on
the Grant Date for such option; provided that, with respect to shares
of Common Stock purchased under an option with a November 1 Grant Date,
the Grant Price shall be the greater of (a) the Fair Market Value of a
share of Common Stock on such November 1 Grant Date; or (b) the Fair
Market Value of a share of Common Stock on the May 1 which most closely
precedes the November 1 Grant Date.
2.17 "Offer Period" means a period of 12 months commencing on each
successive May 1, beginning with May 1, 1997 and a period of 6 months
commencing on each successive November 1, beginning with November 1,
1997.
2.18 "Participant" means an Eligible Associate who has enrolled in the Plan
pursuant to Section 6.
2.19 "Participating Subsidiary" means a Subsidiary which has been designated
by the Administrator in accordance with Section 3.2 of the Plan as
covered by the Plan.
2.20 "Purchase Date" with respect to a Purchase Period means the last
Trading Day in such Purchase Period.
<PAGE>
2.21 "Purchase Period" means each period of six months which occurs within
an Offer Period. Purchase Periods shall commence on each successive May
1 and November 1, beginning with May 1, 1997.
2.22 "Purchase Price" means for each share of Common Stock purchased under
any option, 85% of the lesser of:
(a) the Grant Price, as defined in Section 2.16; and
(b) the Fair Market Value of a share of Common Stock on
the applicable Purchase Date.
2.23 "Retirement" or "Retire" means a termination (or to terminate)
employment with the Company and its subsidiaries after reaching age 65
with 5 years of Company service.
2.24 "Rule 16b-3" means Rule 16b-3 under the Exchange Act.
2.25 "Section" means a section of this Plan, unless indicated otherwise.
2.26 "Securities Act" means the Securities Act of 1933, as amended.
2.27 "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if, as of the applicable Enrollment Date,
each of the corporations other than the last corporation in the chain
owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
2.28 "Trading Day" means any day the New York Stock Exchange is open for
trading.
Section 3
Administration
3.1 The Plan shall be administered by the Human Resources Department of the
Company (the "Administrator"). The Administrator shall make such rules
and regulations for the conduct of business regarding the Plan as it
shall deem advisable.
3.2 The Administrator shall have the power, subject to and within the
limits of the express provisions of the Plan, to construe and interpret
the Plan and options granted under it; to establish, amend and revoke
rules and regulations for administration of the Plan; to determine all
questions of policy and expediency that may arise in the administration
of the Plan; and, generally, to exercise such powers and perform such
acts as the Administrator deems necessary or expedient to promote the
best interests of the Company, including, but not limited to,
designating from time to time which Subsidiaries of the Company shall
be Participating Subsidiaries. The Administrator's determinations as to
the interpretation and operation of this Plan shall be final and
conclusive.
In exercising the powers described in the foregoing paragraph, the
Administrator may adopt special or different rules for the operation of
the Plan including, but not limited to, rules which allow employees of
any foreign Subsidiary to participate in, and enjoy the tax benefits
offered by, the Plan; provided that such rules shall not result in any
grantees of options having different rights and/or privileges under the
Plan nor otherwise cause the Plan to fail to satisfy the requirements
of Section 423 of the Code and the regulations thereunder.
3.3 This Section 3 relating to the administration of the Plan may be
amended by the Board from time to time as may be desirable to satisfy
any requirements of or under the federal securities and/or other
applicable laws of the United States, or to obtain any exemption under
such laws.
<PAGE>
Section 4
Number of Shares
4.1 500,000 shares of the Common Stock are reserved for sale and authorized
for issuance pursuant to the Plan. Shares sold under the Plan may be
newly-issued shares, or treasury shares, or both. If any option granted
under the Plan shall for any reason terminate without having been
exercised, the shares not purchased under such option shall again
become available for the Plan.
4.2 In the event of any reorganization, recapitalization, stock split,
reverse stock split, stock dividend, combination of shares, merger,
consolidation, acquisition of property or shares, separation, asset
spinoff, stock rights offering, liquidation or other similar change in
the capital structure of the Company, the Administrator shall make such
adjustment, if any, as it deems appropriate in the number, kind and
purchase price of the shares available for purchase under the Plan,
including those then subject to an outstanding option. In the event
that, after a Grant Date, there occurs a dissolution or liquidation of
the Company, except pursuant to a transaction to which Section 424(a)
of the Code applies, each option to purchase Common Stock shall
terminate, but the Participant holding such option shall have the right
to exercise his or her option prior to such dissolution or liquidation.
Section 5
Eligibility Requirements
5.1 Except as provided in Section 5.2, an individual shall become eligible
to participate in the Plan in accordance with Section 6 on the first
Enrollment Date following the later of (a) the date that such
individual has been an Associate (regularly scheduled to work 20 or
more hours per week), and (b) the Effective Date; provided that the
individual has been an Associate on such Enrollment Date for at least
one full calendar month. Participation in the Plan is entirely
voluntary.
5.2 The following Associates are not eligible to participate in the Plan:
(a) Associates who, immediately upon purchasing shares under
the Plan, would own directly or indirectly, or hold options or rights
to acquire, an aggregate of 5% or more of the total combined voting
power or value of all outstanding shares of all classes of stock of the
Company or any Subsidiary (and for purposes of this paragraph, the
rules of Section 424(d) of the Code shall apply, and stock which the
Associate may purchase under outstanding options shall be treated as
stock owned by the Associate);
(b) Associates who are customarily employed by the Company or
a Participating Subsidiary for less than 20 hours per week;
(c) Associates who are prohibited by the laws of the nation of
their residence or employment from participating in the Plan; and
(d) Associates who are members of a collective bargaining unit
covered by a collective bargaining agreement; provided that
participation in the Plan has been specifically considered (after
review of the terms of the Plan) and rejected by the collective
bargaining representative representing such associates.
<PAGE>
Section 6
Enrollment
6.1 Any Eligible Associate may enroll in the Plan for an Offer Period by
completing and signing an enrollment election form or by such other
means as the Administrator shall prescribe (which authorizes payroll
deductions during such Offer Period in accordance with Section 8.1) and
submitting such enrollment election to the Company or a Participating
Subsidiary on or before the Cut-Off Date immediately preceding the
Offer Period. Such enrollment election (and the authorization therein)
shall be effective as of the first regular payroll check dated after
the Enrollment Date occurring within the Offer Period to which the
enrollment election relates, and shall continue in effect until the
earliest of:
(a) the end of the last payroll period the wages or salary for
which is reflected in the last regular payroll check dated on or prior
to the last day in the Offer Period;
(b) the date during the Offer Period that the Associate elects
to change his or her enrollment in accordance with Section 8.3; and
(c) the date during the Offer Period that the Associate
withdraws from the Plan or has a termination of employment in
accordance with Section 10.
Notwithstanding the foregoing, a Participant may not be enrolled in the
Plan for more than one Offer Period at any time.
Section 7
Grant of Options on Enrollment
7.1 Enrollment by an Eligible Associate in the Plan as of an Enrollment
Date will constitute the grant by the Company to such Participant of an
option on such Enrollment Date to purchase shares of Common Stock from
the Company pursuant to the Plan.
7.2 An option granted to a Participant pursuant to this Plan shall expire,
if not terminated for any reason first, on the earliest to occur of (a)
the end of the Offer Period in which such option was granted; (b) the
completion of the purchase of Common Stock under the option under
Section 9; or (c) the date on which participation of such Participant
in the Plan terminates for any reason.
7.3 An option granted to a Participant under the Plan shall give the
Participant a right to purchase on a Purchase Date the largest number
of whole shares of Common Stock which the funds accumulated in the
Participant's Account as of such Purchase Date will purchase at the
applicable Purchase Price; provided, however, that Participants shall
be limited to purchasing no more than 1,000 shares of Common Stock
during any Offer Period.
Notwithstanding anything to the contrary herein, no Associate shall be
granted an option under the Plan (or any other plan of the Company or a
Subsidiary intended to qualify under Section 423 of the Code) which
would permit the Associate to purchase Common Stock under the Plan (and
such other plan) in any calendar year with a Fair Market Value
(determined at the time such option is granted) in excess of $25,000.
Section 8
Payroll Deductions
8.1 An Associate who makes an enrollment election pursuant to Section 7
shall elect and authorize in such election deductions to be made from
his or her pay on each payday during the Offer Period to which the
enrollment election relates, and he or she shall designate in such
election the total percentage of pay to be deducted during such Offer
Period. The percentage of pay which is designated in an enrollment
election shall be a whole percentage of Compensation of no less than 2%
and no more than 25%.
<PAGE>
8.2 The amount of each payroll deduction made for a Participant shall be
credited to the Participant's Account as soon as administratively
feasible after the Participant's pay is withheld. The Account shall not
be credited with interest. All payroll deductions received or held by
the Company or a Participating Subsidiary may be used by the Company or
Participating Subsidiary for any corporate purpose, and the Company or
Participating Subsidiary shall not be obligated to segregate such
payroll deductions.
8.3 During an Offer Period, a Participant may elect to cease payroll
deductions made on his or her behalf for the remainder of such Offer
Period by delivering notice of such election to the Company or
Participating Subsidiary in such manner and at such time as permitted
by the Administrator. A Participant who has ceased payroll deductions
during an Offer Period may voluntarily withdraw from the Plan pursuant
to Section 10.1. If such Participant does not voluntarily withdraw from
the Plan in accordance with Section 10.1, his or her accumulated
contributions will be applied to the purchase of Common Stock at the
next Purchase Date.
Notwithstanding anything to the contrary herein, a Participant who has
ceased payroll deductions for the remainder of an Offer Period may not
resume his or her payroll deductions during such Offer Period, except
that, if the Participant ceases payroll deductions before November 1 of
a 12-month Offer Period, he or she may elect to resume his or her
payroll deductions, at the same percentage of Compensation designated
in the Participant's original enrollment election for that Offer
Period, in accordance with procedures prescribed by the Administrator.
A Participant's valid election to resume payroll deductions shall apply
to the first regular payroll check occurring after November 1 of the
Offer Period and all paydays for the remainder of the Offer Period. A
Participant who makes an election to resume payroll deductions may
again cease payroll deductions or may withdraw from the Plan in
accordance with Section 10.1; provided, however, that a Participant may
elect to recommence payroll deductions only once during any Offer
Period.
8.4 A Participant may not make any separate or additional contributions to
his or her Account under the Plan. Neither the Company nor any
Participating Subsidiary shall make separate or additional
contributions to any Participant's Account under the Plan.
Section 9
Purchase of Shares
9.1 Any option held by the Participant which was granted under this Plan
and which remains outstanding as of a Purchase Date shall be deemed to
have been exercised on such Purchase Date for the number of whole
shares of Common Stock which the funds accumulated in the Participant's
Account as of the Purchase Date will purchase at the applicable
Purchase Price (but not in excess of the number of shares for which
options have been granted to the Participant pursuant to Section 7.3).
9.2 If, after a Participant's exercise of an option under Section 9.1, an
amount remains credited to the Participant's Account as of a Purchase
Date, then the remaining amount shall be (a) if such Purchase Date
coincides with the last day of an Offer Period, distributed to the
Participant as soon as administratively feasible, or (b) otherwise,
carried forward in the Account for application to the purchase of
Common Stock on the next following Purchase Date.
9.3 If Common Stock is purchased by a Participant pursuant to Section 9.1,
then, within a reasonable time after the Purchase Date, the Company
shall deliver or cause to be delivered to the Participant a certificate
or certificates for the number of shares purchased by the Participant
unless the Company has made arrangements to have the shares held at a
bank or other appropriate institution in non-certificated form. If any
law or applicable regulation of the Securities and Exchange Commission
or other body having jurisdiction shall require that the Company or the
Participant take any action in connection with the shares being
purchased under the option, delivery of the certificate or certificates
for such shares shall be postponed until the necessary action shall
have been completed, which action shall be taken by the Company at its
own expense, without unreasonable delay.
<PAGE>
Certificates delivered pursuant to this Section 9.3 shall be registered
in the name of the Participant or, if the Participant so elects, in the
names of the Participant and his or her spouse, as joint tenants with
rights of survivorship, or as spousal community property, or in certain
forms of trust approved by the Administrator, to the extent permitted
by law.
9.4 In the case of Participants employed by a Participating Subsidiary, the
Administrator may provide for Common Stock to be sold through the
Subsidiary to such Participants, to the extent consistent with Section
423 of the Code.
9.5 If the total number of shares of Common Stock for which options are or
could be exercised on any Purchase Date in accordance with this Section
9, when aggregated with all shares of Common Stock for which options
have been previously exercised under this Plan, exceeds the maximum
number of shares reserved in Section 4.1, the Company shall allocate
the shares available for delivery and distribution in the ratio that
the balance in each Participant's Account bears to the aggregate
balances of all Participants' Accounts, and the remaining balance of
the amount credited to the Account of each Participant under the Plan
shall be returned to him or her as promptly as possible.
9.6 If a Participant or former Participant sells, transfers, or otherwise
makes a disposition of Common Stock purchased pursuant to an option
granted under the Plan within two years after the date such option is
granted or within one year after the date such Common Stock was
transferred to the Participant, and if such Participant or former
Participant is subject to U.S. Federal income tax, then such
Participant or former Participant shall notify the Company or
Participating Subsidiary in writing of such sale, transfer or other
disposition within 10 days of the consummation of such sale, transfer
or other disposition.
Section 10
Withdrawal From the Plan; Termination of
Employment and Leave of Absence
10.1 Withdrawal from the Plan. A Participant may withdraw from the Plan in
full (but not in part) during any Offer Period by delivering a notice
of withdrawal to the Company or a Participating Subsidiary (in a manner
prescribed by the Administrator) at any time up to but not including
the 15 days prior to the Purchase Date next following the date such
notice of withdrawal is delivered, or at such shorter time in advance
of such Purchase Date as the Administrator may permit. If notice of
withdrawal is timely received, all funds then accumulated in the
Participant's Account shall not be used to purchase Common Stock, but
shall instead be distributed to the Participant as soon as
administratively feasible. An Associate who has withdrawn during an
Offer Period may not return funds to the Company or a Participating
Subsidiary during the same Offer Period and require the Company or
Participating Subsidiary to apply those funds to the purchase of Common
Stock. Any Eligible Associate who has withdrawn from the Plan may,
however, re-enroll in the Plan on the next subsequent Enrollment Date
which follows withdrawal and occurs on May 1 (or the next following
Trading Day), in accordance with the provisions of Section 6.
10.2 Termination of Employment. Participation in the Plan terminates
immediately when a Participant ceases to be employed by the Company or
a Participating Subsidiary for any reason whatsoever or otherwise
ceases to be an Eligible Associate, and such terminated Participant's
outstanding options shall thereupon terminate. As soon as
administratively feasible after termination of participation, the
Company or Participating Subsidiary shall pay to the Participant or his
or her beneficiary or legal representative all amounts accumulated in
the Participant's Account at the time of termination of participation.
Notwithstanding anything to the contrary herein, if a Participant
ceases to be an Eligible Associate by reason of Retirement, death, or
becoming employed by the Company for less than 20 hours per week, the
Participant (or his or her designated beneficiary, as applicable) shall
have the right to maintain the Participant's Account for the remainder
of the Offer Period in which the Participant Retired, died or became
employed for less than 20 hours per week, and to purchase shares of
Common Stock in accordance with the terms of the Plan on any Purchase
Date(s) occurring within that Offer Period.
<PAGE>
10.3 Leave of Absence. If a Participant takes a leave of absence without
terminating employment, such Participant shall have the right, at the
commencement of the leave of absence and in accordance with procedures
prescribed by the Administrator, to elect to withdraw from the Plan in
accordance with Section 10.1, or to cease contributions to the Plan in
accordance with Section 8.3.
Section 11
Designation of Beneficiary
11.1 Each Participant may designate in writing one or more beneficiaries to
receive the amount in his or her Account in the event of death and may,
in his or her sole discretion, change such designation in writing at
any time. Any such designation shall be effective upon receipt by the
Company or a Participating Subsidiary and shall control over any
disposition by will or otherwise.
11.2 Except as otherwise provided in Section 10.2, as soon as
administratively feasible after the death of a Participant, amounts
accumulated in his or her Account shall be paid in cash to the
designated beneficiaries or, in the absence of a valid designation, to
the executor, administrator or other legal representative of the
Participant's estate. Such payment shall relieve the Company of further
liability with respect to the Plan on Account of the deceased
Participant. If more than one beneficiary is designated, each
beneficiary shall receive an equal portion of the Account unless the
Participant has given express contrary instructions.
11.3 No beneficiary shall, prior to the death of the Participant by whom he
or she has been designated, acquire any interest in the amounts
credited to the Participant's Account under the Plan.
Section 12
Miscellaneous
12.1 Restrictions on Transfer. Options granted under the Plan to a
Participant may not be exercised during the Participant's lifetime
other than by the Participant. Neither payroll deductions credited to a
Participant's Account nor any rights with respect to the exercise of an
option or to receive stock under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way by the Participant other
than by will or the laws of descent and distribution. Any such
attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an
election to withdraw from the Plan in accordance with Section 10.1.
12.2 Administrative Assistance. If the Administrator in its discretion so
elects, it may retain a brokerage firm, bank or other financial
institution to assist in the purchase of shares, delivery of reports or
other administrative aspects of the Plan. If the Administrator so
elects, each Participant shall (unless prohibited by applicable law) be
deemed upon enrollment in the Plan to have authorized the establishment
of an account on his or her behalf at such institution. Shares
purchased by a Participant under the Plan shall be held in the account
in the Participant's name, or if the Participant so indicates in the
enrollment form, in the Participant's name together with the name of
his or her spouse in joint tenancy with right of survivorship or
spousal community property, or in certain forms of trust approved by
the Administrator.
12.3 Costs. All costs and expenses incurred in administering the Plan shall
be paid by the Company, except that any stamp duties, transfer taxes
and any brokerage fees applicable to participation in the Plan may be
charged to the Account of such Participant by the Company.
12.4 Equal Rights and Privileges. All Eligible Associates shall have equal
rights and privileges with respect to the Plan so that the Plan
qualifies as an "employee stock purchase plan" within the meaning of
Section 423 or any successor provision of the Code and the related
regulations. Notwithstanding the express terms of the Plan, any
provision of the Plan which is inconsistent with Section 423 or any
successor provision of the Code shall without further act or amendment
by the Company or the Board be reformed to comply with the requirements
of Section 423 of the Code. This Section 12.4 shall take precedence
over all other provisions in the Plan.
<PAGE>
12.5 Applicable Law. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of Illinois.
12.6 Amendment and Termination. The Board may amend, alter or terminate the
Plan at any time; provided, however, that (1) no amendment which would
amend or modify the Plan in a manner requiring stockholder approval
under Section 423 of the Code, Rule 16b-3, or the requirements of any
securities exchange on which the Common Stock is traded shall be
effective unless, no earlier than 12 months prior to and no later than
12 months after it is adopted by the Board, it is approved by the
holders of a majority of the voting power of the Company's outstanding
shares; and provided that (2) any change in the duration (which
duration shall not exceed 27 months) or frequency of the Offer Periods
or Purchase Periods for which prior shareholder approval is not
obtained shall not be effective unless notice of such change is
provided to shareholders of the Company no later than 15 days before
such change is to go into effect. In addition, the Administrator may
amend the Plan as provided in Section 3.2, subject to the conditions
set forth therein and in this Section 12.6.
If the Plan is terminated, the Board may elect to terminate all
outstanding options either prior to their expiration or upon completion
of the purchase of shares on the next Purchase Date, or may elect to
permit options to expire in accordance with their terms (and
participation to continue through such expiration dates). If the
options are terminated prior to expiration, all funds accumulated in
Participants' Accounts as of the date the options are terminated shall
be returned to the Participants as soon as administratively feasible.
12.7 No Right of Employment. Neither the grant nor the exercise of any
rights to purchase shares under this Plan nor anything in this Plan
shall impose upon the Company or a Participating Subsidiary any
obligation to employ or continue to employ any associate. The right of
the Company or Participating Subsidiary to terminate any associate
shall not be diminished or affected because any rights to purchase
shares have been granted to such associate.
12.8 Requirements of Law. The Company shall not be required to sell, issue,
or deliver any shares of Common Stock under this Plan if such sale,
issuance, or delivery might constitute a violation by the Company or
the Participant of any provision of law. Unless a registration
statement under the Securities Act is in effect with respect to the
shares of Common Stock proposed to be delivered under the Plan, the
Company shall not be required to issue such shares if, in the opinion
of the Company or its counsel, such issuance would violate the
Securities Act. Regardless of whether such shares of Common Stock have
been registered under the Securities Act or registered or qualified
under the securities laws of any state, the Company may impose
restrictions upon the hypothecation or further sale or transfer of such
shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company or its counsel, such
restrictions are necessary or desirable to achieve compliance with the
provisions of the Securities Act, the securities laws of any state, or
any other law or are otherwise in the best interests of the Company.
Any determination by the Company or its counsel in connection with any
of the foregoing shall be final and binding on all parties.
If, in the opinion of the Company and its counsel, any legend placed on
a stock certificate representing shares of Common Stock issued under
the Plan is no longer required in order to comply with applicable
securities or other laws, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing a
like number of shares lacking such legend.
The Company may, but shall not be obligated to, register or qualify any
securities covered by the Plan. The Company shall not be obligated to
take any other affirmative action in order to cause the grant or
exercise of any right or the issuance, sale, or deliver of shares
pursuant to the exercise of any right to comply with any law.
<PAGE>
12.9 Gender. When used herein, masculine terms shall be deemed to include
the feminine, except when the context indicates to the contrary.
Executed this __________ day of March, 1997.
360 COMMUNICATIONS COMPANY
By: _______________________
Title: ______________________
<PAGE>
If signed and returned, the shares represented by this Proxy will be voted in
accordance with the specifications given. If this Proxy is executed but no
specifications are given as to the voting of each item, this Proxy will be voted
FOR all Proposals.
Please mark your votes
as indicated in this
example |X|
The Board of Directors recommends a vote FOR all Proposals.
1. To elect the following nominees as Directors:
FOR all nominees WITHHOLD
except any AUTHORITY
(01) Frank E. Reed indicated to vote for all
(02) Robert E. R. Huntley listed nominees
(03) Valerie B. Jarrett |_| |_|
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below)
_____________________________________________________________________________
FOR AGAINST ABSTAIN
2. To approve the Company's Employee Stock |_| |_| |_|
Purchase Plan.
3. To approve the Company's Amended and FOR AGAINST ABSTAIN
Restated 1996 Equity Incentive Plan. |_| |_| |_|
4. To ratify the selection of Ernst & FOR AGAINST ABSTAIN
Young LLP as the Company's independent |_| |_| |_|
accountants for the fiscal year ending
December 31, 1997.
YES NO
Please check YES |_| |_|
if you plan to attend
the meeting.
Signature__________________________________________
Signature__________________________________________Date__________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
oFOLD AND DETACH HERE o
HELP US SAVE MONEY - VOTE BY TELEPHONE (Tel)
*** IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW ***
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
On a Touch Tone Telephone call TOLL FREE 1-888-776-5661 24 hours per day - 7
days a week.
You will be asked to enter the Control number.
OPTION #1 To vote as the Board of Directors recommends on ALL Proposals, Press 1
now. If you wish to vote on each Proposal separately, press 0 now.
When you Press 1, your vote will be confirmed and cast as you directed. END OF
CALL
OPTION #2 If you selected to vote on each Proposal separately, you will here
these instructions
Proposal 1: To vote FOR all nominees, press 1; to WITHHOLD AUTHORITY to vote
for all nominees, press 9; to WITHHOLD AUTHORITY to vote for an individual
nominee, press 0. Please make your selection now.
To WITHHOLD AUTHORITY to vote for an individual nominee, please enter the
two digit number that appears next to the nominee you DO NOT wish to vote
for. Once you have completed voting for Directors, press 0.
Proposal 2: You may make your selection any time: To vote FOR, press 1;
AGAINST, press 9; ABSTAIN, press 0. The instructions are the same for all
remaining Proposals.
Your vote selection will be repeated and you will have
an opportunity to confirm it.
If you vote by telephone, there is no need for you to mail back your proxy.
THANK YOU FOR VOTING.
<PAGE>
PROXY/VOTING INSTRUCTION CARD
360 COMMUNICATIONS COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D.E. Foster, M.J. Small and K.C. Gallagher, and
each of them, acting jointly or severally and with full power of substitution,
for and in the name of the undersigned to vote, as specified on the reverse
side, all shares of Common Stock of 360 Communications Company that the
undersigned is entitled to vote at the Annual Meeting of Shareowners to be held
on Tuesday, May 6, 1997, at 10:00 local time at the offices of The Northern
Trust Company, 6th Floor Assembly Room, 50 S. LaSalle Street, Chicago, Illinois,
or at any adjournment thereof.
The undersigned also hereby revokes previous proxies and acknowledges receipt of
360 Communications Company's Notice of Annual Meeting of Shareowners and Proxy
Statement.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
oFOLD AND DETACH HERE o
360 Communications Company
Annual Meeting of Shareowners
Tuesday, May 6, 1997 at 10:00 a.m.
The Northern Trust Company
6th Floor Assembly Room
50 S. LaSalle Street
Chicago, Illinois 60675
All shareowners are cordially invited to attend the Annual Meeting in person.
