<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
CoreComm Incorporated
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Jeffrey G. Wyman, Esq.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
[LOGO OF CORECOMM INCORPORATED]
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
--------------------------------
PROXY STATEMENT AND
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1997
-----------------------------------
The Annual Meeting of Stockholders of CoreComm Incorporated (the "Company")
will be held at 10:45 a.m., local time, on Tuesday, June 3, 1997, at The
Helmsley Park Lane Hotel, The Ballroom Suite, located at 36 Central Park South,
New York, New York 10019, for the following purposes:
1. To elect two directors to the Board of Directors.
2. To ratify the appointment by the Board of Directors of Ernst & Young
LLP as independent auditors for the year ending December 31, 1997.
3. To transact any other business that may properly be brought before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 14, 1997 as
the record date for the determination of the stockholders entitled to notice of
and to vote at the meeting. Accordingly, only stockholders of record at the
close of business on that date will be entitled to vote at the meeting. A list
of the stockholders entitled to vote at the meeting will be located at the
Company's principal executive offices, 110 East 59th Street, New York, New York
10022, at least ten days prior to the meeting and will also be available for
inspection at the meeting.
A copy of the Annual Report for 1996 is being mailed together with this
proxy material.
It is important that your shares be represented at the meeting. Regardless
of whether you plan to attend the meeting, please execute the enclosed proxy and
return it promptly in the accompanying postage-paid envelope. Submitting this
executed proxy will not preclude your right to revoke it and to vote in person
at the meeting.
By order of the Board of Directors,
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1997
<PAGE> 3
CORECOMM INCORPORATED
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
------------------------
PROXY STATEMENT
------------------------
This proxy statement sets forth certain information with respect to the
accompanying proxy proposed to be used at the Annual Meeting of Stockholders of
CoreComm Incorporated (the "Company") to be held at 10:45 a.m., local time, on
Tuesday, June 3, 1997, at The Helmsley Park Lane Hotel, The Ballroom Suite,
located at 36 Central Park South, New York, New York 10019, or at any
adjournment or postponement thereof (the "Annual Meeting"), for the purposes set
forth in the accompanying Notice of Annual Meeting. The Board of Directors of
the Company is soliciting the accompanying form of proxy and urges you to sign
the proxy, fill in the date, and return it immediately to the Secretary of the
Company. The prompt cooperation of stockholders is necessary in order to ensure
a quorum and to avoid expenses and delay.
Holders of record of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), at the close of business on April 14, 1997, will be
entitled to vote at the Annual Meeting. At the close of business on April 14,
1997, 13,451,856 shares of Common Stock were outstanding and entitled to vote at
the Annual Meeting. Each share of Common Stock is entitled to one vote.
The accompanying proxy is revocable on written instructions, including a
subsequently received proxy, signed in the same manner as the proxy, and
received by the Secretary of the Company at any time at or before the balloting
on the matter with respect to which such proxy is to be exercised. If you attend
the Annual Meeting you may, if you wish, revoke your proxy by voting in person.
This Proxy Statement and the accompanying proxy materials are first being mailed
to stockholders on or about April 28, 1997.
All expenses of soliciting proxies, including clerical work, printing and
postage, will be paid by the Company. Proxies may be solicited personally, or by
mail, telephone or facsimile, by current and former directors, officers and
other employees of the Company, but the Company will not pay any compensation
for such solicitations. In addition, the Company has agreed to pay D.F. King &
Co., Inc. a fee of $5,000, plus reasonable expenses, for proxy solicitation
services. The Company will also reimburse brokers and other persons holding
shares in their names or in the names of nominees for their expenses for sending
material to principals and obtaining their proxies.
THE RESTRUCTURING
Prior to January 31, 1997, the Company was known as Cellular Communications
of Puerto Rico, Inc. ("CCPR"). On January 31, 1997, CCPR effected a corporate
restructuring whereby stockholders of CCPR became stockholders of the Company on
a one-for-one basis upon the completion of a merger of CCPR with and into a
subsidiary of the Company. As a result of this restructuring the Company
replaced CCPR as the publicly traded entity and CCPR became a wholly-owned
subsidiary of the Company.
<PAGE> 4
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of April 10, 1997, by (i) each executive
officer and director of the Company, (ii) all directors and executive officers
as a group and (iii) stockholders holding 5% or more of the Company's Common
Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-----------------------------------------------
PRESENTLY
EXERCISABLE
EXECUTIVE OFFICERS, DIRECTORS AND COMMON OPTIONS
PRINCIPAL STOCKHOLDERS STOCK (1) TOTAL PERCENT (2)
- - ------------------------------------------------ -------- -------- -------- -----------
<S> <C> <C> <C> <C>
George S. Blumenthal (3)........................ 24,173 450,089 474,262 3.41%
J. Barclay Knapp................................ 9,298 426,478 435,776 3.14
Richard J. Lubasch (4).......................... 3,282 119,185 122,467 *
Stephen Shapiro (5)............................. 3,150 92,752 95,902 *
Jose J. Davila.................................. 30 35,000 35,030 *
Leigh Costikyan Wood............................ 2,039 55,642 57,681 *
Gregg Gorelick.................................. 18,837 39,904 58,741 *
Ted H. McCourtney (6)........................... 10,355 26,623 36,978 *
Del Mintz (7)................................... 212,286 26,623 238,909 1.77
Sidney R. Knafel (8)............................ 199,249 26,623 225,872 1.68
Alan J. Patricof (9)............................ 14,616 26,623 41,239 *
Warren Potash................................... 542 24,019 24,561 *
All directors and officers as a group (12 in
number)....................................... 497,857 1,349,561 1,847,418 12.48
Baron Capital, Inc.
Ronald Baron (10)............................. 1,198,500 -- -- 8.91
767 Fifth Avenue, 24th Floor
New York, NY 10153
The Equitable Companies Incorporated (11)....... 760,333 -- -- 5.65
787 Seventh Avenue
New York, NY 10019
Lazard Freres & Co., LLC (12)................... 681,883 -- -- 5.07
30 Rockefeller Plaza
New York, NY 10020
</TABLE>
- - ---------------
* Represents less than one percent.
(1) Includes shares of Common Stock purchasable upon the exercise of options
which are presently exercisable or become exercisable in the next 60 days
("Presently Exercisable Options").
(2) Includes Common Stock and Presently Exercisable Options.
(3) Includes 1,980 shares of Common Stock held by trusts for the benefit of Mr.
Blumenthal's children.
(4) Includes 104 shares of Common Stock owned by Mr. Lubasch as custodian for
his child, as to which shares Mr. Lubasch disclaims beneficial ownership.
(5) Includes 2,000 shares of Common Stock owned by Mr. Shapiro's children, as to
which shares Mr. Shapiro disclaims beneficial ownership.
(6) Includes 520 shares of Common Stock held by trusts for the benefit of Mr.
McCourtney's children, as to which shares Mr. McCourtney disclaims
beneficial ownership.
(7) Includes 20,732 shares of Common Stock owned by Mr. Mintz's children or by
Mr. Mintz's children as trustees for their children and 25 shares owned by
Mr. Mintz's wife, as to which shares Mr. Mintz disclaims beneficial
ownership.
(8) Includes 100,449 shares of Common Stock owned by trust accounts for the
benefit of, Mr. Knafel's children, as to which shares Mr. Knafel disclaims
beneficial ownership. An additional 44,617 shares are owned by an adult
child of Mr. Knafel, as to which shares Mr. Knafel disclaims beneficial
ownership.
2
<PAGE> 5
(9) Includes 65 shares of Common Stock owned by Mr. Patricof's wife and 1,557
shares owned by, or in trust account for the benefit of, Mr. Patricof's
children as to which shares Mr. Patricof disclaims beneficial ownership.
(10) Based solely upon a Schedule 13-D (Amendment No. 2), dated December 3,
1996, filed by Baron Capital, Inc. with the Securities and Exchange
Commission (the "SEC").
(11) Based solely upon a Schedule 13-G (Amendment No. 4), dated February 12,
1997, filed by The Equitable Companies Incorporated with the SEC.
(12) Based solely upon a Schedule 13-G (Amendment No. 1), dated April 7, 1997,
filed by Lazard Freres & Co., LLC with the SEC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors and executive officers,
and persons who own more than ten percent of a registered class of the Company's
equity securities file with the SEC, and with each exchange on which the Common
Stock trades, initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers, directors
and greater than ten percent beneficial owners are required by the SEC's
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1996, its
officers and directors have complied with all Section 16(a) filing requirements
applicable to them, except that in the case of Mr. Potash, a filing reporting a
transaction made in 1996 was inadvertently not made when required in 1996, but
instead was made in April of 1997. The Company is not aware of any ten percent
or greater beneficial owners.
ELECTION OF DIRECTORS
(ITEM 1)
ELECTION OF DIRECTORS
Pursuant to the Company's Restated Certificate of Incorporation, which
provides for a classified Board of Directors, the Board of Directors consists of
three classes of directors with overlapping three year terms. One class of
directors is to be elected each year with terms expiring on the third succeeding
annual meeting after such election. The terms of two directors expire this year.
Accordingly, at the Annual Meeting, two directors will be elected to serve for a
three year term and until their successors shall have been elected and
qualified. Unless otherwise indicated on any proxy, the proxy holders intend to
vote the shares it represents for each of the nominees whose biographical
sketches appear in the section immediately following. Both of the nominees are
now serving as directors of the Company and were previously elected by the
Company's stockholders. Mr. Ted H. McCourtney, who has been a member of the
Board of Directors from the Distribution (as defined below), has informed the
Board that he intends to resign from the Board on June 3, 1997, so as to make
his portfolio of directorships more manageable. As a result of Mr. McCourtney's
resignation, there will be a vacancy on the Board. The proxies cannot be voted
for a greater number of persons than the number of nominees named.
The election to the Board of Directors of both of the nominees identified
in this Proxy Statement will require the affirmative vote of the holders of a
plurality of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote. In tabulating the vote,
abstentions from voting and broker non-votes will be disregarded and have no
effect on the outcome of the vote.
3
<PAGE> 6
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ELECTION TO THE BOARD OF DIRECTORS OF BOTH
OF THE NOMINEES IDENTIFIED FOR REELECTION
The votes applicable to the shares represented by proxies in the
accompanying form will be cast in favor of the two nominees below. While it is
not anticipated that any of the nominees will be unable to serve, if any should
be unable to serve, the proxy holders reserve the right to substitute any other
person.
The continuing directors of the Company were elected by the Company's
stockholders in 1994, 1995 and 1996, as applicable. The current directors will
serve for the terms indicated and until their successors are duly elected and
qualified.
PRESENT DIRECTORS WHO ARE NOMINEES FOR REELECTION
<TABLE>
<CAPTION>
POSITION
NAME AGE (PROPOSED TERM AS DIRECTOR)
------------------------------------- --- ---------------------------------
<S> <C> <C>
George S. Blumenthal................. 53 Director, Chairman of the Board,
Chief Executive Officer and
Treasurer (2000)
J. Barclay Knapp..................... 40 Director, President, Chief
Operating Officer and Chief
Financial Officer (2000)
</TABLE>
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
<TABLE>
<CAPTION>
POSITION
NAME AGE (TERM AS DIRECTOR)
-------------------------------------- --- -------------------
<S> <C> <C>
Alan J. Patricof...................... 62 Director (1998)
Warren Potash......................... 65 Director (1998)
Sidney R. Knafel...................... 66 Director (1999)
Del Mintz............................. 69 Director (1999)
</TABLE>
Additional information as of April 14, 1997 regarding the two nominees for
election as directors and the continuing directors and information regarding
executive officers of the Company is as follows:
NOMINEES
George S. Blumenthal has been Chairman, Treasurer and a director of the
Company from and prior to the February 1992 distribution by Cellular
Communications, Inc. ("CCI") to its stockholders of the Common Stock of the
Company's predecessor, CCPR, (the "Distribution") and was appointed Chief
Executive Officer in March 1994. In addition, Mr. Blumenthal is Chairman,
Treasurer and a director of NTL Incorporated ("NTL"), which was formerly known
as International CableTel Incorporated. Mr. Blumenthal is also a director of
Andover Togs, Inc. Mr. Blumenthal was Chairman, Treasurer and a director of
Cellular Communications International, Inc. ("CCII") from its organization until
April 1994. Mr. Blumenthal was also Chairman, Treasurer and a director of CCI,
which positions he held from CCI's founding in 1981 until its merger in 1996
into a subsidiary of AirTouch Communications, Inc. (the "CCI Merger").
J. Barclay Knapp was appointed President of the Company in March 1994 and
has been Executive Vice President, Chief Operating Officer, Chief Financial
Officer and a director of the Company from and prior to the Distribution. He is
Executive Vice President, Chief Operating Officer and a director of CCII and he
is President, Chief Executive Officer, Chief Financial Officer and a director of
NTL. Mr. Knapp was also Executive Vice President, Chief Operating Officer, Chief
Financial Officer and a director of CCI until the CCI Merger.
4
<PAGE> 7
CONTINUING DIRECTORS
Alan J. Patricof, a director from the date of the Distribution, is Chairman
of Patricof & Co. Ventures, Inc., a venture capital firm he founded in 1969. Mr.
Patricof also serves as a director of CCII, NTL and other privately owned
companies.
Warren Potash has been a director from the date of the Distribution. Mr.
Potash retired in 1991 as President and Chief Executive Officer of the Radio
Advertising Bureau, a trade association, a position he held since 1989. Prior to
that time and beginning in 1986, he was President of New Age Communications,
Inc., a communications consultancy firm. Until his retirement in 1986, Mr.
Potash was a Vice President of Capital Cities/ABC Broadcasting, Inc., a position
he held since 1970. Mr. Potash is also a director of CCII and NTL.
Sidney R. Knafel, a director of the Company from the date of the
Distribution, has been Managing Partner of SRK Management Company, a private
investment company, since 1981. In addition, Mr. Knafel is Chairman of Insight
Communications, Inc. and BioReliance Corporation. Mr. Knafel is also a director
of General American Investors Company, Inc., IGENE Biotechnology, Inc., CCII,
NTL and some privately owned companies.
Del Mintz, a director of the Company from the date of the Distribution, is
President of Cleveland Mobile Tele Trak Company, Cleveland Mobile Radio Sales,
Inc. and Ohio Mobile Tele Trak, Inc., companies providing telephone answering
and radio communications services in Cleveland and Columbus. Mr. Mintz has held
similar positions with the predecessors of these companies since 1967. Mr. Mintz
is President of several other companies, and was President of Cleveland Mobile
Cellular Telephone, Inc. before such Company was acquired by a merger with CCI's
predecessor in 1985. Mr. Mintz is also a director of CCII, NTL and several
privately owned companies.
EXECUTIVE OFFICERS OTHER THAN DIRECTORS
Richard J. Lubasch, 50, has been the Company's Senior Vice
President-General Counsel and Secretary from the date of the Distribution. Mr.
Lubasch is also Senior Vice President-General Counsel and Secretary of CCII and
NTL, as well as Treasurer of CCII. Mr. Lubasch was Vice President, General
Counsel and Secretary of CCI from July 1987 until the CCI Merger.
Leigh Costikyan Wood, 39, has been the Company's Vice President-Operations
from the date of the Distribution. She is also Senior Vice President of NTL and
Chief Operating Officer of NTL's United Kingdom operations and Vice
President-Operations at CCII. Ms. Wood was the Chief Executive Officer of CCI's
Ohio and Michigan cellular telephone joint venture with AirTouch Communications,
Inc. from April 1993 until the CCI Merger and Vice President-Operations of CCI
from 1984 until the CCI Merger. Ms. Wood is a certified public accountant and
holds an M.B.A. from New York University.
Gregg Gorelick, 38, has been the Company's Vice President-Controller from
the date of the Distribution. Mr. Gorelick is also Vice President-Controller of
CCII and NTL. From 1981 to 1986 he was employed by Ernst & Whinney (now known as
Ernst & Young LLP). Mr. Gorelick is a certified public accountant and was Vice
President-Controller of CCI from 1986 until the CCI Merger.
Stephen M. Shapiro, 51, is President of CCPR Services, Inc. ("Services"),
the Company's Puerto Rico operating subsidiary, having served as its Senior Vice
President-General Manager since 1993. In May 1995, Mr. Shapiro was appointed
Senior Vice President-General Manager of the Company. From 1991 to 1993 he was
Senior Vice President-General Manager of OCOM Corporation (the predecessor of
NTL).
Jose J. Davila, 40, has been Vice President-Finance of Services since July
1992. In May 1995, Mr. Davila was appointed Vice President-Finance and
Administration of the Company. From 1990 to 1992, he was Vice President for
Financial Affairs of the Ana G. Mendez Foundation and from 1984 to 1990 held the
positions of General Auditor and Vice President-Controller of Banco de Ponce,
the second largest state bank in Puerto Rico at that time. From 1978 to 1984 he
was employed by Peat, Marwick, Mitchell & Co.
Executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
5
<PAGE> 8
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During calendar 1996, nine meetings (including regularly scheduled and
special meetings) of the Board of Directors were held. The Board of Directors
has a Compensation and Option Committee and an Audit Committee. Messrs. Knafel,
McCourtney and Mintz serve as members of the Board of Director's Compensation
and Option Committee and Messrs. Mintz, Patricof and Potash serve as members of
the Board of Director's Audit Committee. The Compensation and Option Committee
reviews and makes recommendations regarding annual compensation for Company
officers and the Audit Committee oversees the Company's financial reporting
process on behalf of the Company's Board of Directors. During calendar 1996, the
Compensation and Option Committee held two meetings and the Audit Committee held
one meeting. No director during 1996 attended fewer than 80% of the meetings of
the Board of Directors of the Company and committee meetings of which he was a
member. There are no other committees of the Board of Directors. Directors are
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board of Directors and the committees. In addition, as of December 31, 1996,
Messrs. Knafel, McCourtney, Mintz, Patricof and Potash have each been granted
options to purchase an aggregate 40,323 shares of Common Stock at a weighted
average price of $20.69 per share. Directors who are not officers are paid a fee
of $250 for each Board meeting and each committee meeting that they attend.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
POLICY
The Compensation and Option Committee of the Board of Directors (the
"Compensation Committee") has the responsibility for the design and
implementation of the Company's executive compensation program. The Compensation
Committee is composed entirely of independent non-employee directors.
The Company's executive compensation program is designed to be closely
linked to corporate performance and return to shareholders. To this end, the
Company has developed an overall compensation strategy and specific compensation
plans that tie a very significant portion of an executive's aggregate
compensation to the appreciation in the Company's stock price. In addition,
executive bonuses are linked to the achievement of operational goals and
therefore relate to shareholder return. The overall objective of this strategy
is to attract and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's business strategy and
to link executive and shareholder interests through equity-based compensation,
thereby seeking to enhance the Company's profitability and shareholder value.
The Compensation Committee also recognizes that the cash portion of
compensation for Messrs. Blumenthal, Knapp and Lubasch is small in light of
their compensation from CCI (prior to August 15, 1996) and NTL (from August 15,
1996) (which is reimbursed to NTL by the Company based on a reasonable estimate
of the time these executives spent on Company activity in the relevant period).
The Compensation Committee believes that for such executives, stock-based
compensation becomes even more significant.
Each year the Compensation Committee conducts a review of the Company's
executive compensation program to determine the appropriate level and forms of
compensation. Such review permits an annual evaluation of the link between the
Company's performance and its executive compensation.
In assessing compensation levels for the executives, the Compensation
Committee recognizes the fact that such executives have participated in the
development of the Company (and its predecessors) from its earliest stages, and
have produced significant consistent long-term value for stockholders of the
Company (and its predecessors) over such period. In determining the annual
compensation for the Chief Executive Officer, the Committee uses the same
criteria as it does for the other named executives.
BASE SALARY AND BONUS
In furtherance of the Company's incentive-oriented compensation goals set
forth above, cash compensation (annual base salary and bonus) is supplemented by
equity-based option grants. With respect to 1996, the annual rate of base salary
for each of Messrs. Blumenthal and Knapp was $30,000, for Mr. Lubasch was
$20,000, for Mr. Shapiro was $166,250 and for Mr. Davila was $120,000. With
respect to 1996, the bonus paid
6
<PAGE> 9
to Mr. Shapiro was $113,200 and for Mr. Davila was $66,000. With respect to
Messrs. Blumenthal, Knapp and Lubasch, 1996 bonuses have not yet been
determined. The level of emphasis on bonus for Messrs. Shapiro and Davila
reflects the Committee's view that a meaningful portion of such executives' cash
compensation should be performance based and the Committee intends to continue
to determine their bonuses in this light.
STOCK OPTIONS
Under the Company's stock option plan, stock options were granted to the
Company's executive officers during 1996. Information with respect to such
option grants to the named executive officers is set forth in the table entitled
"Option Grants in Last Fiscal Year."
Stock options are designed to align the interests of executives with those
of shareholders. The options generally are granted at an exercise price equal to
the market price of the Common Stock on the date of grant and vest over a period
of five years. Accordingly, the executives are provided additional incentive to
create shareholder value over the long term since the full benefit of the
options cannot be realized unless stock price appreciation occurs over a number
of years.
In determining individual options grants, the Compensation Committee takes
into consideration the number of options previously granted to that individual,
the amount of time and effort dedicated to the Company during the preceding year
and expected commitment to the Company on a forward-looking basis. The
Compensation Committee also strives to provide each option recipient with an
appropriate incentive to increase shareholder value, taking into consideration
their cash compensation levels.
The Compensation Committee believes that the equity interests in the
Company held by the named executive officers represent a significant incentive
to increase overall shareholder value.
In 1996, Messrs. Lubasch, Shapiro and Davila received options to purchase
20,000 shares, 50,000 shares and 20,000 shares, respectively, of Common Stock
with an exercise price of $27.25 per share (the fair market value of the Common
Stock on the date of the grant). Messrs. Blumenthal and Knapp did not receive
any option grants in 1996. In 1997, Mr. Shapiro had an option to purchase 50,000
shares of Common Stock at an exercise price of $31.75 per share and an option to
purchase 50,000 shares of Common Stock at an exercise price of $27.25 per share
canceled and received an option to purchase 100,000 shares of Common Stock at an
exercise price of $20.375 per share (the fair market value of the Common Stock
on the date of grant). In 1997, Mr. Davila had an option to purchase 20,000
shares of Common Stock at an exercise price of $31.75 per share and an option to
purchase 20,000 shares of Common Stock at an exercise price of $27.25 per share
canceled and received an option to purchase 40,000 shares of Common Stock at an
exercise price of $20.375 per share (the fair market value of the Common Stock
on the date of grant). Messrs. Blumenthal, Knapp, Lubasch, Shapiro and Davila
now own 24,173 shares, 9,298 shares, 3,282 shares, 3,150 shares and 30 shares,
respectively, of Common Stock and hold options to purchase an additional 500,089
shares, 476,478 shares, 144,185 shares, 180,752 shares and 70,000 shares,
respectively, of Common Stock.
COMPENSATION DEDUCTION CAP POLICY
In 1996, the stockholders approved an amendment to the Company's stock
option plan to, among other things, bring the plan into compliance with the
requirements regarding non-deductibility of compensation in excess of $1 million
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). Any compensation realized from the exercise of such stock options
granted at fair market value as of the date of grant thus generally would be
exempt from the deduction limitations under Section 162(m) of the Code. Other
compensation, such as salary and bonus, is not expected to exceed $1 million per
executive.
THE COMPENSATION AND OPTION COMMITTEE
Sidney R. Knafel
Ted H. McCourtney
Del Mintz
7
<PAGE> 10
GENERAL
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers for the
three years ended December 31, 1996.
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------
------------------------------------------ COMMON
OTHER STOCK
SALARY BONUS ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)(2)
- - ------------------------------- ----- -------- -------- ------------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
George S. Blumenthal........... 1996 30,000 -- -- -- --
Chairman, Chief Executive 1995 25,000 75,000 -- -- --
Officer and Treasurer 1994 18,000 -- -- 250,000 --
J. Barclay Knapp............... 1996 30,000 -- -- -- --
President, Chief Operating 1995 25,000 50,000 -- -- --
Officer and Chief Financial 1994 18,000 -- -- 250,000 --
Officer
Richard J. Lubasch............. 1996 20,000 -- -- 20,000 --
Senior Vice President -- 1995 16,000 -- -- 20,000 --
General Counsel and 1994 12,000 -- -- 25,000 --
Secretary
Stephen Shapiro................ 1996 166,250 113,200 52,500(a) 50,000 2,000
Senior Vice President -- 1995 151,250 101,500 67,900(b) 50,000 2,000
General Manager 1994 138,750 84,300 44,100(c) 40,000 2,000
Jose J. Davila................. 1996 120,000 66,000 7,600(d) 20,000 2,000
Vice President -- Finance 1995 107,000 56,800 -- 20,000 2,000
and Administration 1994 103,750 49,300 -- 15,000 2,000
</TABLE>
- - ---------------
* CCI provided management, financial and legal services to the Company until the
CCI Merger. Amounts charged to the Company by CCI consisted of salaries and
indirect costs allocated to the Company. For the years ended December 31,
1996, 1995 and 1994, CCI charged the Company approximately $429,000, $458,000
and $456,000, respectively. In August 1996, after the CCI Merger, NTL
commenced providing management, financial and legal services to the Company.
Amounts charged to the Company consist of salaries and direct costs allocated
to the Company. In 1996, NTL charged the Company $207,000. It is not
practicable to determine the amounts of these expenses that would have been
incurred had the Company operated as an unaffiliated entity. However, in the
opinion of management of the Company, the allocation method is reasonable. The
named executives had received salaries from CCI and now receive salaries from
NTL and spend portions of their time providing executive management to the
Company.
(1) Other annual compensation reflects perquisites as follows:
(a) housing allowance of $38,400 and car allowance of $14,100.
(b) housing allowance of $38,400, car allowance of $11,500 and tax
equalization of $18,000.
(c) housing allowance of $36,200 and car allowance of $7,900.
(d) car allowance of $7,600.
(2) All other compensation reflects the Company's match to the defined
contribution plan.
8
<PAGE> 11
OPTION GRANTS TABLE
The following table provides information on stock option grants during 1996
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL RATES
-------------------------------------------- OF
NUMBER OF % OF TOTAL STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES OR BASE ------------------------
GRANTED IN FISCAL PRICE EXPIRATION 5%($) 10%($)
NAME (#)(1) YEAR ($/SHARE) DATE $44.39 $70.69
- - ------------------------------------- --------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
George S. Blumenthal................. -- -- -- -- -- --
J. Barclay Knapp..................... -- -- -- -- -- --
Richard J. Lubasch................... 20,000 7.97% 27.25 03/25/06 342,805 868,730
Stephen Shapiro...................... 50,000 19.92 27.25 03/25/06 857,013 2,171,825
Jose J. Davila....................... 20,000 7.97 27.25 03/25/06 342,805 868,730
</TABLE>
- - ---------------
(1) All options were granted on March 26, 1996 at an exercise price equal to the
closing price of the Common Stock on The Nasdaq Stock Market's National
Market ("NNM") on such date; 20% were exercisable upon issuance, 20% became
exercisable on January 1, 1997 and an additional 20% will become exercisable
on each of January 1, 1998, 1999 and 2000. Upon a change of control of the
Company all unvested options become fully vested and exercisable.
(2) The amounts shown in these columns are the potential realizable value of
options granted at assumed rates of stock price appreciation (5% and 10%)
specified by the SEC, and have not been discounted to reflect the present
value of such amounts. The assumed rates of stock price appreciation are not
intended to forecast the future appreciation of the Common Stock.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table presents the value at December 31, 1996 of unexercised
in-the-money options held by each of the named executive officers. None of the
named executive officers exercised options during 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
AT FY-END (#) FY-END ($)*
EXERCISABLE (E)/ EXERCISABLE (E)/
NAME UNEXERCISABLE (U) UNEXERCISABLE (U)
- - ------------------------------------------------------ -------------------- -------------------
<S> <C> <C>
George S. Blumenthal.................................. 245,089(E) 2,999,699(E)
5,000(U) 10,625(U)
J. Barclay Knapp...................................... 221,478(E) 2,538,687(E)
5,000(U) 10,625(U)
Richard J. Lubasch.................................... 78,095(E) 781,655(E)
1,090(U) 3,824(U)
Stephen Shapiro....................................... 34,752(E) 254,810(E)
6,000(U) 12,750(U)
Jose J. Davila........................................ 12,000(E) 25,500(E)
3,000(U) 6,375(U)
</TABLE>
- - ---------------
(*) Based on the closing price on the NNM on December 31, 1996 of $19.75.
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph compares the cumulative return on the Company's Common
Stock with The Nasdaq Stock Market (U.S.) Index (the "Nasdaq (U.S.) Index"), the
Center for Research in Security Prices Index of Nasdaq Telecommunications Stocks
(the "CRSP Index") and the Peer Group Index. In the Company's view, the Peer
Group Index, which includes AirTouch Communications, Inc., Centennial Cellular
Corp., United States Cellular Corporation, Rogers Cantel Mobile Communications,
Inc., Vanguard Cellular Systems, Inc., PriCellular Corporation and Palmer
Wireless, Inc., provides a better representation of the performance of cellular
companies over the required period than the broader based CRSP Index.
The graph assumes that $100 was invested at the time of the Company's
initial public offering on February 28, 1992 in each of the Company's Common
Stock, the Peer Group Index, the CRSP Index and the Nasdaq (U.S.) Index.
COMPARISON OF CORECOMM INCORPORATED, THE PEER GROUP INDEX,
THE CRSP INDEX AND THE NASDAQ (U.S.) INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CORECOMM THE PEER GROUP NASDAQ (U.S.)
(FISCAL YEAR COVERED) INCORPORATED INDEX CRSP INDEX INDEX
<S> <C> <C> <C> <C>
2/28/92 100 100 100 100
12/31/92 95 86 113 108
12/31/93 148 104 175 123
12/31/94 220 119 146 121
12/31/95 183 115 191 171
12/31/96 130 100 196 210
</TABLE>
- - ---------------
NOTE: Stock price performance shown above for the Company's Common Stock is
historical and not necessarily indicative of future price performance.
10
<PAGE> 13
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
Subject to ratification by the stockholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the financial
statements of the Company for the year ending December 31, 1997.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the Annual Meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
The ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for 1997 will require the affirmative vote of the holders
of a majority of the shares of Common Stock present at the Annual Meeting, in
person or represented by proxy, and entitled to vote. In determining whether the
proposal has received the requisite number of affirmative votes, abstentions
will be counted and will have the same effect as a vote against the proposal;
broker nonvotes will be disregarded and will have no effect on the outcome of
the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
SUCH RATIFICATION
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting must be received by the Company at the address set forth on the first
page of this Proxy Statement on or before December 29, 1997 to be considered for
inclusion in the Company's Proxy Statement and form of Proxy relating to that
meeting.
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those set
forth in this Proxy Statement that will be presented for action at the Annual
Meeting and does not intend to bring any other matters before the Annual
Meeting. However, if any others matters should properly come before the Annual
Meeting, or at any adjournment or postponement thereof, it is the intention of
the persons named in the accompanying proxy to vote on such matters as they, in
their discretion, may determine.
By order of the Board of Directors,
Richard J. Lubasch
Secretary
New York, New York
April 28, 1997
11
<PAGE> 14
CORECOMM INCORPORATED, 110 EAST 59TH STREET, NEW YORK, N.Y. 10022
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON JUNE 3,
1997
The undersigned hereby appoints George S. Blumenthal, J. Barclay Knapp and
Richard J. Lubasch, and each of them, with full power of substitution, proxies
that represent the undersigned at the Annual Meeting of Stockholders of CoreComm
Incorporated (the "Company") to be held on June 3, 1997 at 10:45 a.m., local
time, at The Helmsley Park Lane Hotel, The Ballroom Suite, located at 36 Central
Park South, New York, New York 10019, and at any adjournment or postponement
thereof and thereat to vote all of the shares of stock which the undersigned
would be entitled to vote, with all the powers the undersigned would possess if
personally present. The Board of Directors recommends that you vote FOR the
following proposals.
1. Election of Directors: Nominees: George S. Blumenthal and J. Barclay
Knapp.
<TABLE>
<S> <C>
[ ] VOTE FOR both nominees listed, except as marked to the contrary above. [ ] VOTE WITHHELD from both
(To withhold your votes for either nominee strike a line through the nominees.
nominee's name above.)
</TABLE>
2. To ratify the appointment of Ernst & Young LLP as the independent auditors
of the Company for the fiscal year ending December 31, 1997.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Please date and sign on reverse side and return promptly.)
<PAGE> 15
(Continued from other side)
3. In their discretion, to act upon such other business as may properly come
before the Annual Meeting and any adjournment or postponement thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" THE PROPOSALS SET FORTH ON THE
REVERSE SIDE HEREOF. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL
MEETING, IT IS THE INTENTION OF THE PERSON NAMED ABOVE TO VOTE SUCH PROXIES IN
ACCORDANCE WITH THEIR BEST JUDGMENT.
-----------------------------------
Signature
-----------------------------------
Signature
Dated , 1997
In case of joint owners, each joint
owner must sign. If signing for a
corporation or partnership or as
agent, attorney or fiduciary,
indicate the capacity in which you
are signing.
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD
AND RETURN IN THE ENCLOSED ENVELOPE.
