<PAGE> 1
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 [ ] 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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
CORECOMM INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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
Core Comm Logo
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
PROXY STATEMENT AND
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1998
------------------------
The Annual Meeting of Stockholders of CoreComm Incorporated (the "Company")
will be held at 9:50 a.m. local time, on Wednesday, June 3, 1998, at The Waldorf
Astoria Hotel, fourth floor, Park Avenue Center/North, located at 301 Park
Avenue, New York, New York 10022, 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, 1998.
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, 1998 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 1997 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, 1998
<PAGE> 3
CORECOMM INCORPORATED
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1998
------------------------
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 9:50 a.m., local time, on
Wednesday, June 3, 1998, at The Waldorf Astoria Hotel, fourth floor, Park Avenue
Center/North, located at 301 Park Avenue, New York, New York 10022, 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, 1998, will be
entitled to vote at the Annual Meeting. At the close of business on April 14,
1998, 13,329,336 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, 1998.
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, 1998, by (i) each executive
officer and director of the Company, (ii) all directors and executive officers
as a group (iii) stockholders holding 5% or more of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------------
PRESENTLY
EXECUTIVE OFFICERS, DIRECTORS AND COMPANY EXERCISABLE
PRINCIPAL STOCKHOLDERS STOCK OPTIONS(1) TOTAL PERCENT(2)
--------------------------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
George S. Blumenthal(3).......................... 131,449 231,813 363,262 2.63%
J. Barclay Knapp................................. 9,298 311,478 320,776 2.31
Richard J. Lubasch(4)............................ 3,282 105,185 108,467 *
Stephen Shapiro(5)............................... 3,150 78,752 81,902 *
Jose J. Davila................................... 30 32,000 32,030 *
Stanton N. Williams.............................. 1,916 50,000 51,916 *
Gregg Gorelick................................... 18,837 36,904 55,741 *
Del Mintz(6)..................................... 282,286 18,323 300,609 2.21
Sidney R. Knafel(7).............................. 199,249 18,323 217,572 1.60
Alan J. Patricof(8).............................. 11,172 18,323 29,495 *
Warren Potash.................................... 542 15,719 16,261 *
All directors and officers as a group (11 in 661,211 916,820 1,578,031 10.90
number)........................................
Ronald Baron(9).................................. 1,506,200 -- -- 11.10
Baron Capital Group, Inc. (9)
Bamco, Inc. (9)
Baron Capital Management Inc.(9)
Baron Asset Fund(9)
767 Fifth Avenue
New York, NY 10153
Snyder Capital Management, L.P.(10).............. 1,317,662 -- -- 9.71
350 California Street, Suite 1460
San Francisco, CA 94104
Wallace R. Weitz & Company(11)................... 829,300 -- -- 6.11
1125 South 103rd Street
Suite 600
Omaha, NE 68124-6008
The Equitable Companies Incorporated(12)......... 710,249 -- -- 5.24
1290 Avenue of the Americas
New York, NY 10104
Lazard Freres & Co., LLC(13)..................... 681,883 -- -- 5.03
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.
(footnotes continued on following page)
2
<PAGE> 5
(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 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.
(7) 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.
(8) 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.
(9) Based solely upon a Schedule 13-G (Amendment No. 2), dated February 13,
1998, filed by Baron Capital, Inc. with the Securities and Exchange
Commission (the "SEC").
(10) Based solely upon a Schedule 13-G, dated February 12, 1998, filed by Snyder
Capital Management, L.P. with the SEC.
(11) Based solely upon a Schedule 13-G, dated February 11, 1998, filed by
Wallace R. Weitz & Company with the SEC.
(12) Based solely upon a Schedule 13-G, dated February 10, 1998, filed by The
Equitable Companies Incorporated with the SEC.
(13) 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, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that Mr.
Mintz was inadvertently late in filing a form reporting the purchase of Common
Stock.
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. As a
3
<PAGE> 6
result of a director's resignation in June 1997, there is a vacancy on the
Board, which there is no intention to fill at this time. 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.
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 nominees and continuing directors of the Company were elected by the
Company's stockholders in 1995, 1996 and 1997, as applicable. The continuing
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>
Alan J. Patricof..................... 63 Director (2001)
Warren Potash........................ 66 Director (2001)
</TABLE>
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
<TABLE>
<CAPTION>
POSITION
NAME AGE (TERM AS DIRECTOR)
---- --- ------------------
<S> <C> <C>
Sidney R. Knafel..................... 67 Director (1999)
Del Mintz............................ 70 Director (1999)
George S. Blumenthal................. 54 Director, Chairman of the Board,
Chief Executive Officer and
Treasurer (2000)
J. Barclay Knapp..................... 41 Director, President and Chief
Operating Officer (2000)
</TABLE>
Additional information as of April 14, 1998 regarding the two nominees for
election as directors and the continuing directors and information regarding
executive officers of the Company is as follows:
NOMINEES
Alan J. Patricof, a director from the date of the February 1992
distribution by Cellular Communications, Inc. ("CCI") to its stockholders of the
Common Stock of the Company's predecessor, CCPR, (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 Cellular Communications
International, Inc. ("CCII"), NTL Incorporated ("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.
4
<PAGE> 7
CONTINUING DIRECTORS
George S. Blumenthal has been Chairman, Treasurer and a director of the
Company from and prior to the Distribution and was Chief Executive Officer from
March 1994 to March 1998. In addition, Mr. Blumenthal is Chairman, Treasurer and
a director of NTL. Mr. Blumenthal is also a director of Andover Togs, Inc. Mr.
Blumenthal was Chairman, Treasurer and a director of 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 Chief Executive Officer in March 1998 and
President of the Company in March 1994. Mr. Knapp had been Executive Vice
President and Chief Operating Officer of the Company from and prior to the
Distribution and was Chief Financial Officer from that date to 1997. Mr. Knapp
has been 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.
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 concern, 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 TeleTrak Inc., Cleveland Mobile Radio Sales, Inc.
and Ohio Mobile TeleTrak, Inc., companies providing telephone answering and
radio communications services in Cleveland and Columbus, respectively. 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 and a
principal stockholder 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, 51, 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 1987 until the CCI Merger.
Gregg Gorelick, 39, has been the Company's Vice President-Controller from
the date of the Distribution. 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. Mr. Gorelick holds that position at CCII and NTL.
Stephen M. Shapiro, 52, 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, 41, 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 1997, twelve 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
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 1997, the Compensation and
Option Committee held two meetings and the Audit Committee held one meeting. No
director during 1997 attended fewer than 83% 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, 1997, Messrs. Knafel, Mintz,
Patricof and Potash have each been granted options to purchase an aggregate
47,823 shares of Common Stock at a weighted average price of $13.66 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 NTL (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 1997, the
6
<PAGE> 9
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 $177,500 and for Mr. Davila was
$125,600. With respect to 1997, the bonus paid to Mr. Shapiro was $116,300 and
for Mr. Davila was $64,300. With respect to Messrs. Blumenthal, Knapp and
Lubasch, 1997 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 1997. 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 1997, Messrs. Blumenthal and Knapp each had an option to purchase 25,000
shares of Common Stock at an exercise price of $17.625 and an option to purchase
250,000 shares of Common Stock at an exercise price of $22.75 per share
cancelled and received an option to purchase 275,000 shares of Common Stock at
an exercise price of $15.125 per share (the fair market value of the Common
Stock on the date of grant). Messrs. Blumenthal and Knapp now own 131,449 shares
and 9,298 shares, respectively, of Common Stock and hold options to purchase an
additional 396,813 shares and 476,478 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 sec. 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 sec. 162(m) of the Code. Other compensation,
such as salary and bonus, is not expected to exceed $1 million per executive.
THE COMPENSATION AND OPTION COMMITTEE
Sidney R. Knafel
Del Mintz
7
<PAGE> 10
GENERAL
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers for the
three years ended December 31, 1997.
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION COMMON
------------------------------------------------ STOCK
SALARY BONUS OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR ($) ($) COMPENSATION($)(1) OPTIONS(#)(2) COMPENSATION($)(3)
- ---------------------------- ---- ------- ------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
George S. Blumenthal(4)... 1997 30,000 -- -- 275,000(f) --
Chairman, Treasurer and 1996 30,000 -- -- -- --
Chief Executive Officer 1995 25,000 75,000 -- -- --
J. Barclay Knapp.......... 1997 30,000 -- -- 275,000(g) --
President and 1996 30,000 -- -- -- --
Chief Operating and 1995 25,000 50,000 -- -- --
Financial Officer
Richard J. Lubasch........ 1997 20,000 -- -- 77,500(h) --
Senior Vice President -- 1996 20,000 -- -- 20,000 --
General Counsel and 1995 16,000 -- -- 20,000 --
Secretary
Stephen Shapiro........... 1997 177,500 116,300 52,500(a) 170,000(i) --
Senior Vice President -- 1996 166,250 113,200 52,500(b) 50,000 2,000
General Manager 1995 151,250 101,500 67,900(c) 50,000 2,000
Jose J. Davila............ 1997 125,600 64,300 11,700(d) 80,000(j) 2,000
Vice President -- 1996 120,000 66,000 7,600(e) 20,000 2,000
Finance and Administration 1995 107,000 56,800 -- 20,000 2,000
</TABLE>
- ---------------
* CCI provided management, financial, legal and technical 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 and 1995, CCI charged the Company approximately $429,000 and
$458,000, respectively. In August 1996, after the CCI Merger, NTL commenced
providing management, financial, legal and technical services to the Company.
Amounts charged to the Company consist of salaries and direct costs allocated
to the Company. In 1997 and 1996, NTL charged the Company $1,492,000 and
$207,000, respectively. 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.
(footnotes contined on following page)
8
<PAGE> 11
(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 and car allowance of $14,100.
(c) housing allowance of $38,400, car allowance of $11,500 and tax
equalization of $18,000.
(d) car allowance of $11,700.
(e) car allowance of $7,600.
(2) Long-Term Compensation Awards include option grants upon the cancellation of
the equal number of options previously outstanding as follows:
(b) options to purchase 275,000 shares
(c) options to purchase 275,000 shares
(d) options to purchase 70,000 shares
(e) options to purchase 170,000 shares
(f) options to purchase 70,000 shares
(3) All other compensation reflects the Company's match of employee
contributions to a 401(k) plan.
(4) Mr. Blumenthal resigned as Chief Executive Officer in March 1998 and Mr.
Knapp was appointed Chief Executive Officer in March 1998.
9
<PAGE> 12
OPTION GRANTS TABLE
The following table provides information on stock option grants during 1997
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION -----------------------------
NAME (#)(1) YEAR ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
George S. Blumenthal............ 275,000 20.28% 15.125 07/30/07 2,616,247(3) 6,630,044(3)
J. Barclay Knapp................ 275,000 20.28 15.125 07/30/07 2,616,247(3) 6,630,044(3)
Richard J. Lubasch.............. 7,500 .55 18.250 06/02/07 86,094(4) 218,179(4)
70,000 5.16 15.125 07/30/07 665,954(3) 1,687,648(3)
Stephen Shapiro................. 170,000 12.54 15.125 07/30/07 1,617,316(3) 4,098,573(3)
Jose J. Davila.................. 10,000 .74 18.250 06/02/07 114,793(4) 290,905(4)
70,000 5.16 15.125 07/30/07 665,954(3) 1,687,648(3)
</TABLE>
- ---------------
(1) All options were granted on June 3, 1997 or July 31, 1997 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, 1998 and an additional 20%
will become exercisable on each of January 1, 1999, 2000 and 2001. 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.
(3) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's stock increasing to $24.64 and $39.23, respectively.
(4) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's stock increasing to $29.73 and $47.34, respectively.
10
<PAGE> 13
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on stock option exercises during
1997 by the named executive officers and the value at December 31, 1997 of
unexercised in-the-money options held by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR-END AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
SHARES AT FY-END (#) FY-END ($)*
ACQUIRED ON VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- ---- ----------- ----------- -------------------- -------------------
<S> <C> <C> <C> <C>
George S. Blumenthal..................... 103,276 1,008,783 231,813(E) 257,716(E)
165,000(U) 0(U)
J. Barclay Knapp......................... 311,478(E) 1,032,741(E)
165,000(U) 0(U)
Richard J. Lubasch....................... 105,185(E) 282,854(E)
46,500(U) 0(U)
Stephen Shapiro.......................... 78,752(E) 100,124(E)
102,000(U) 0(U)
Jose J. Davila........................... 32,000(E) 0(E)
48,000(U) 0(U)
</TABLE>
- ---------------
* Based on the closing price on the NNM on December 31, 1997 of $10.125.
11
<PAGE> 14
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 Centennial Cellular Corp., United States Cellular
Corporation, Rogers Cantel Mobile Communications, Inc., Vanguard Cellular
Systems, Inc. and PriCellular Corporation, 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>
NASDAQ
NASDAQ STOCK THE PEER
MEASUREMENT PERIOD CORECOMM TELECOMMUNICATIONS MARKET GROUP
(FISCAL YEAR COVERED) INCORPORATED STOCKS (U.S.) INDEX INDEX
<S> <C> <C> <C> <C>
2/28/92 100.00 100.00 100.00 100.00
12/31/92 95.40 113.81 107.51 84.46
12/31/93 148.03 175.51 123.47 123.60
12/31/94 220.40 146.48 120.69 129.01
12/31/95 182.57 191.81 170.69 121.81
12/31/96 129.93 196.10 209.94 96.41
12/31/97 66.61 289.65 257.62 77.69
</TABLE>
- ---------------
NOTE: Stock price performance shown above for the Common Stock is historical
and not necessarily indicative of future price performance.
12
<PAGE> 15
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, 1998.
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 1998 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 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 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, 1998 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, 1998
13
<PAGE> 16
CORECOMM INCORPORATED, 110 EAST 59TH STREET, NEW YORK, NY 10022
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON JUNE 3,
1998
The undersigned hereby appoints George S. Blumenthal, J. Barclay Knapp and
Richard J. Lubasch, and each of them, with full power of substitution, proxies
to represent the undersigned at the Annual Meeting of Stockholders of CoreComm
Incorporated (the "Company") to be held on Wednesday, June 3, 1998 at 9:50 a.m.,
local time, at The Waldorf Astoria Hotel, fourth floor, Park Avenue
Center/North, located at 301 Park Avenue, New York, New York 10022, 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: Alan J. Patricof and Warren Potash
<TABLE>
<S> <C>
[ ] VOTE FOR both nominees listed, except as marked to the [ ] VOTE WITHHELD from both
contrary above. (TO WITHHOLD YOUR VOTES FOR EITHER nominees.
NOMINEE STRIKE A LINE THROUGH THE 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, 1998.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Please date and sign on reverse side and return promptly.)
<PAGE> 17
(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
----------------------------------- ,
1998
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.
