<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 [ ] 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.
</TABLE>
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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
CELLULAR COMMUNICATIONS
OF PUERTO RICO, INC.
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
PROXY STATEMENT AND
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1999
------------------------
The Annual Meeting of Stockholders of Cellular Communications of Puerto
Rico, Inc. (the "Company") will be held at 9:15 a.m., local time, on Thursday,
June 3, 1999, at the Essex House, Hyde Park Suite, located at 160 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, 1999; and
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, 1999 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. The
transfer books will not be closed. 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 1998 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,
/s/ Richard J. Lubasch
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1999
<PAGE> 3
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1999
------------------------
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
Cellular Communications of Puerto Rico, Inc. (the "Company") to be held at 9:15
a.m., local time, on Thursday, June 3, 1999, at the Essex House, Hyde Park
Suite, located at 160 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, 1999, will be
entitled to vote at the Annual Meeting. At the close of business on April 14,
1999, 13,821,770 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, 1999.
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 $4,000, 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.
<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 20, 1999, 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 Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------------
PRESENTLY
EXECUTIVE OFFICERS, DIRECTORS COMMON EXERCISABLE
AND PRINCIPAL STOCKHOLDERS STOCK OPTIONS(1) TOTAL PERCENT(2)
----------------------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
J. Barclay Knapp.................................... 94,298 527,136 621,434 4.33%
George S. Blumenthal(3)............................. 145,449 532,472 677,921 4.72%
Richard J. Lubasch.................................. 44,432 116,041 160,473 1.15%
Stephen M. Shapiro.................................. 1,150 163,809 164,959 1.18%
Stanton N. Williams................................. 1,916 101,418 103,334 *
Jose J. Davila(4)................................... 12,230 36,596 48,826 *
Gregg Gorelick...................................... 18,837 46,937 65,774 *
Del Mintz........................................... 335,286 47,099 382,385 2.76%
Sidney R. Knafel.................................... 98,800 47,099 145,889 1.05%
Alan J. Patricof(5)................................. 13,236 47,099 60,335 *
Warren Potash....................................... 4,136 40,901 45,037 *
All directors and officers as a group (11 in
number)........................................... 769,770 1,706,607 2,476,377 15.95%
Snyder Capital Management, L.P.(6).................. 1,875,362 13.57%
Snyder Capital Management, Inc.(6)
350 California Street, Suite 1460
San Francisco, CA 94104
Ronald Baron(7)..................................... 1,506,200 10.90%
Baron Capital Group, Inc.(7)
Bamco, Inc.(7)
Baron Capital Management, Inc.(7)
Baron Asset Fund(7)
767 Fifth Avenue
New York, NY 10153
Wallace R. Weitz & Company(8)....................... 1,014,200 7.34%
1125 South 103rd Street, Suite 600
Omaha, NE 68124-6008
Georgica Advisors LLC(9)............................ 844,000 6.11%
Richard Reiss, Jr.(9)
1114 Avenue of the Americas
New York, NY 10036
NWQ Investment Management Company (10).............. 780,046 5.64%
2049 Century Park East, 4th Floor
Los Angeles, CA 90067
</TABLE>
- ---------------
* Represents less than one percent.
(1) Includes shares of Common Stock purchased 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 owned by trusts for the benefit of
Mr. Blumenthal's children and 120,000 shares of Common Stock and 214,673
options held by a Grantor Retained Annuity Trust. An additional 3,000
shares of Common Stock are owned by Mr. Blumenthal's wife, as to which
shares Mr. Blumenthal disclaims beneficial ownership.
(footnotes continued on following page)
2
<PAGE> 5
(4) Includes 230 shares of Common Stock owned by Mr. Davila's wife, as to which
shares Mr. Davila disclaims beneficial ownership.
(5) Includes 1,065 shares of Common Stock owned by Mr. Patricof's wife, as to
which shares Mr. Patricof disclaims beneficial ownership. An additional
2,500 shares of Common Stock are owned by the Patricof & Co. Ventures
Profit Sharing Plan. Mr. Patricof is a trustee of the Plan and disclaims
beneficial ownership of such securities other than the amount allocable to
his beneficial interest in the plan.
(6) Based solely upon Schedule 13-G, dated February 5, 1999, filed by Snyder
Capital Management, L.P. and Snyder Capital Management, Inc. with the
Securities and Exchange Commission (the "SEC").
(7) Based solely upon Schedule 13-G (Amendment No. 2), dated February 19, 1998,
filed by Ronald Baron, Baron Capital Group, Inc., Bamco, Inc., Baron
Capital Management, Inc. and Baron Asset Fund with the SEC.
(8) Based solely upon Schedule 13-G, dated February 9, 1999, filed by Wallace
R. Weiss & Company with the SEC.
(9) Based solely upon Schedule 13-G, dated October 21, 1998, filed by Georgica
Advisors LLC and Richard Reiss, Jr. with the SEC.
(10) Based solely upon Schedule 13-G, dated February 16, 1999, filed by NWQ
Investment Management Company with the SEC.
3
<PAGE> 6
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 10% 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 10% 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, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except that each of
Messrs. Mintz and Patricof was inadvertently late in filing a Form 4, and Mr.
Davila was inadvertently late in filing two Forms 4.
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 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 1996, 1997 and 1998, 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>
Sidney R. Knafel........................... 68 Director (2002)
Del Mintz.................................. 71 Director (2002)
</TABLE>
4
<PAGE> 7
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
<TABLE>
<CAPTION>
POSITION
NAME AGE (TERM AS DIRECTOR)
---- --- ------------------
<S> <C> <C>
George S. Blumenthal....................... 55 Director, Chairman of the Board
and Treasurer (2000)
J. Barclay Knapp........................... 42 Director, President
and Chief Executive Officer (2000)
Alan J. Patricof........................... 64 Director (2001)
Warren Potash.............................. 67 Director (2001)
</TABLE>
Additional information as of April 14, 1999 regarding the two nominees for
election as directors and the continuing directors and information regarding
executive officers of the Company is as follows:
NOMINEES
Sidney R. Knafel, a director of the Company from February 1992, 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., NTL Incorporated ("NTL"),
CoreComm Limited ("CoreComm") and some privately owned companies.
Del Mintz, a director of the Company from February 1992, 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 NTL, CoreComm and several privately owned companies.
CONTINUING DIRECTORS
George S. Blumenthal has been Chairman, Treasurer and a director of the
Company from February 1992 and was Chief Executive Officer of the Company from
March 1994 to March 1998. In addition, Mr. Blumenthal is Chairman, Treasurer and
a director of NTL and Chairman and a director of CoreComm. Mr. Blumenthal is
also a director of Andover Togs, Inc. Mr. Blumenthal was also Chairman,
Treasurer and a director of Cellular Communications, Inc. ("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 of the Company in
March 1998 and President of the Company in March 1994. Mr. Knapp had been Chief
Financial Officer from February 1992 to 1997. Mr. Knapp has been a director of
the Company from February 1992. He is President, Chief Executive Officer, Chief
Financial Officer and a director of NTL and CoreComm. Mr. Knapp was also
Executive Vice President, Chief Operating Officer, Chief Financial Officer and a
director of CCI until the CCI Merger.
Alan J. Patricof, a director from February 1992, is Co-Chairman of Patricof
& Co. Ventures, Inc., a venture capital firm he founded in 1969. Mr. Patricof
also serves as a director of NTL and other privately owned companies.
Warren Potash has been a director from February 1992. Mr. Potash retired in
1991 as President and Chief Executive Officer of the Radio Advertising Bureau, a
trade association, a position he held since February 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 NTL and CoreComm.
5
<PAGE> 8
EXECUTIVE OFFICERS OTHER THAN DIRECTORS
Richard J. Lubasch, 52, has been the Company's Senior Vice
President - General Counsel and Secretary from February 1992. Mr. Lubasch is
also Senior Vice President - General Counsel and Secretary of NTL and CoreComm.
Mr. Lubasch was Vice President - General Counsel and Secretary of CCI from 1987
until the CCI Merger.
Gregg Gorelick, 40, has been the Company's Vice President - Controller from
February 1992. 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 NTL and at CoreComm, where he is also Treasurer.
Stanton N. Williams, 37, has been the Company's Vice President and Chief
Financial Officer since June 1997. Prior to that date, he had been the Director
of Corporate Development for the Company, a title he currently holds at NTL and
held at CCI until the CCI Merger. Mr. Williams was also Vice-President - Chief
Financial Officer of Cellular Communications International, Inc. from March 1995
until its sale in March 1999. Prior to joining CCI in 1989, Mr. Williams was
employed by Arthur Andersen & Co's consulting division.
Stephen M. Shapiro, 53, 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, 42, 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 he 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.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During calendar 1998, ten meetings (including regularly scheduled and
special meetings) of the Board of Directors were held. The Board of Directors
has a Compensation and Option Committee (the "Compensation Committee") and an
Audit Committee. Messrs. Knafel and Mintz serve as members of the Compensation
Committee, and Messrs. Mintz, Patricof and Potash serve as members of the Audit
Committee. The Compensation 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 year 1998, the Compensation Committee held
one meeting and the Audit Committee held one meeting. No director during 1998
attended fewer than 82% of the meetings of the Board of Directors of the Company
and committee meetings of the Board of which he was a member, except for Mr.
Patricof who attended 73% of the meetings. 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, 1998, Messrs. Knafel, Mintz, Patricof and Potash have each
been granted options to purchase an aggregate of 104,042 shares of Common Stock
at a weighted average price of $3.01 per share. Directors who are not officers
are paid a fee of $250 for each Board meeting and each committee meeting that
they attend.
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
POLICY
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 stockholders. 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 stockholder 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 stockholder interests through equity-based compensation,
thereby seeking to enhance the Company's profitability and stockholder 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 certain 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 Compensation 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 1998, 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 $180,000 and for Mr. Davila was $132,800. With
respect to 1998, the bonus paid to Mr. Shapiro was $180,200 and to Mr. Davila
was $95,900. With respect to Messrs. Blumenthal, Knapp and Lubasch, 1998 bonuses
have not yet been determined. The level of emphasis on bonuses for Messrs.
Shapiro and Davila reflects the Compensation Committee's view that a meaningful
portion of such executives' cash compensation should be performance based and
the Compensation Committee intends to continue to determine their bonuses in
this light.
STOCK OPTIONS
Under one of the Company's stock option plans, stock options were granted
to the Company's executive officers during 1998. 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 stockholders. 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, executives are provided additional incentive to
create stockholder 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.
7
<PAGE> 10
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 stockholder value, taking into consideration
their cash compensation levels.
In 1998, Messrs. Blumenthal and Knapp each received an option to purchase
507,893 shares of Common Stock at an exercise price of $3.00 per share. Messrs.
Blumenthal and Knapp now own 145,449 shares and 94,298 shares, respectively, of
Common Stock and hold options to purchase an additional 965,753 shares and
960,418 shares, respectively, of Common Stock.
The Compensation Committee believes that the equity interests in the
Company held by the named executive officers represent a significant incentive
to increase overall stockholder value.
COMPENSATION DEDUCTION CAP POLICY
In 1996, the Company's stockholders approved an amendment to the Company's
employee stock option plan (the "Approved 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 stock options granted pursuant to the Approved Plan 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. Compensation realized from the
exercise of stock options granted pursuant to the Company's 1998 stock option
plan or granted pursuant to agreements not governed by a plan would not be
exempt from the deduction limitations under sec.162(m) of the Code. Other annual
compensation, such as salary and bonus, is not expected to exceed $1 million per
executive.
THE COMPENSATION AND OPTION COMMITTEE
Sidney R. Knafel
Del Mintz
8
<PAGE> 11
GENERAL
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers for the
three years ended December 31, 1998.
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
----------------------------------- COMMON
OTHER ANNUAL STOCK ALL OTHER
BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($) ($)(1) OPTIONS(#)(2) ($)(3)
--------------------------- ---- ---------- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Barclay Knapp................ 1998 30,000 -- -- 507,893 --
President and Chief 1997 30,000 -- -- 321,365(g) --
Executive and Chief 1996 30,000 -- -- -- --
Operating Officer
George S. Blumenthal(4)......... 1998 30,000 -- 507,893 --
Chairman and Treasurer 1997 30,000 -- -- 321,365(h)
1996 30,000 -- -- -- --
Richard J. Lubasch.............. 1998 20,000 -- -- 56,433 --
Senior Vice President -- 1997 20,000 -- -- 89,302(i) --
General Counsel and Secretary 1996 20,000 -- -- 20,000 --
Stephen Shapiro................. 1998 180,000 180,200 44,300(a) 84,649 2,000
Senior Vice President -- 1997 177,500 116,300 52,500(b) 198,662(j) --
General Manager 1996 166,250 113,200 52,500(c) 50,000 2,000
Jose J. Davila.................. 1998 132,800 95,900 11,500(d) 11,287 2,000
Vice President -- 1997 125,600 64,300 11,700(e) 91,802(k) 2,000
Finance and Administration 1996 120,000 66,000 7,600(f) 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
year ended December 31, 1996, CCI charged the Company approximately
$429,000. 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 1998, 1997 and 1996, NTL charged the Company $1,148,000,
$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. Messrs. Knapp, Blumenthal
and Lubasch 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 $5,900.
(b) housing allowance of $38,400 and car allowance of $14,100.
(c) housing allowance of $38,400 and car allowance of $14,100.
(d) car allowance of $11,500.
(e) car allowance of $11,700.
(f) car allowance of $7,600.
(2) Long-Term Compensation Awards include option grants upon the cancellation of
the equal number of options previously outstanding as follows:
(g) options to purchase 275,000 shares which were adjusted in 1998, as a
consequence of a corporate restructuring, at a ratio of 1.1686 to 1.
(h) options to purchase 275,000 shares which were adjusted in 1998, as a
consequence of a corporate restructuring, at a ratio of 1.1686 to 1.
(footnotes continued on following page)
9
<PAGE> 12
(i) options to purchase 70,000 shares which were adjusted in 1998 as a
consequence of a corporate restructuring, at a ratio of 1.1686 to 1.
(j) options to purchase 170,000 shares which were adjusted in 1998 as a
consequence of a corporate restructuring, at a ratio of 1.1686 to 1.
(k) options to purchase 70,000 shares which were adjusted in 1998 as a
consequence of a corporate restructuring, at a ratio of 1.1686 to 1.
(3) All other compensation reflects the Company's match of employee
contributions to a 401(k) plan.
(4) Mr. Blumenthal resigned as Chief Executive Officer in March 1998 and Mr.
Knapp was appointed Chief Executive Officer in March 1998.
OPTION GRANTS TABLE
The following table provides information on stock option grants during 1998
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------------------- ANNUAL RATE OF STOCK
NUMBER OF MARKET PRICE APPRECIATION
SECURITIES % OF TOTAL PRICE FOR OPTION TERM(2)
UNDERLYING OPTIONS GRANTED EXERCISE OR ON DATE --------------------
OPTIONS TO EMPLOYEES BASE PRICE OF GRANT EXPIRATION 5%($) 10%($)
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SHARE) ($/SHARE) DATE $4.89 $7.78
---- --------------- --------------- ----------- ---------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Barclay Knapp..... 507,893 34.06% 3.000 9.359 03/12/08 958,394 2,428,744
George S.
Blumenthal......... 507,893 34.06 3.000 9.359 03/12/08 958,394 2,428,744
Richard J. Lubasch... 56,433 3.78 3.000 9.359 03/12/08 106,489 269,863
Stephen Shapiro...... 84,649 5.68 3.000 9.359 03/12/08 159,733 404,792
Jose J. Davila....... 11,287 0.76 3.000 9.359 03/12/08 21,299 53,974
</TABLE>
- ---------------
(1) All options were granted on March 13, 1998; 20% were exercisable upon
issuance, 20% became exercisable on January 1, 1999 and an additional 20%
will become exercisable on each of January 1, 2000, 2001 and 2002. Upon a
change of control of the Company all unvested options become fully vested
and exercisable.
(2) The amounts shown in these columns are the potential realizable value of
options granted at assumed rates of stock price appreciation (5% and 10%)
specified by the SEC, and have not been discounted to reflect the present
value of such amounts. The assumed rates of stock price appreciation are not
intended to forecast the future appreciation of the Common Stock.
10
<PAGE> 13
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on stock option exercises during
1998 by the named executive officers and the value at December 31, 1998 of
unexercised in-the-money options held by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR-END
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
SHARES FY-END(#) AT FY-END($) *
ACQUIRED ON VALUE EXERCISABLE(E)/ EXERCISABLE(E)/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE(U) UNEXERCISABLE(U)
---- ----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
J. Barclay Knapp.................... 85,000 1,434,375 361,285(E) 5,899,443(E)
599,133(U) 9,286,562(U)
George S. Blumenthal................ 366,620(E) 5,755,916(E)
599,133(U) 9,286,563(U)
Richard J. Lubasch.................. 41,150 694,406 89,895(E) 1,468,225(E)
95,727(U) 1,474,454(U)
Stephen Shapiro..................... 107,147(E) 1,689,436(E)
189,916(U) 2,897,199(U)
Jose J. Davila...................... 12,000 135,000 26,978(E) 409,880(E)
64,111(U) 981,301(U)
</TABLE>
- ---------------
* Based on the closing price on The Nasdaq Stock Market's National Market on
December 31, 1998 of $18.50.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative return on the 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. and Vanguard Cellular Systems, 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 on December 31, 1993 in each of
the Common Stock, the Peer Group Index, the CRSP Index and the Nasdaq (U.S.)
Index.
COMPARISON OF CELLULAR COMMUNICATIONS OF PUERTO RICO, INC., THE PEER GROUP
INDEX, THE CRSP INDEX AND THE NASDAQ (U.S.) INDEX
[CELLULAR COMMM OF PUERTO RICO GRAPH]
<TABLE>
<CAPTION>
CRSP INDEX CELLULAR THE PEER GROUP
NASDAQ (U.S.) ---------- COMMUNICATIONS OF --------------
INDEX PUERTO RICO, INC.
------------- -----------------
<S> <C> <C> <C> <C>
12/31/93 100 100 100 100
12/30/94 97.752 83.458 148.889 102.372
12/29/95 138.256 109.257 123.333 93.715
12/31/96 170.015 111.719 87.778 71.573
12/31/97 208.58 165.433 45 69.987
12/31/98 293.209 270.154 82.222 117.271
</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, 1999.
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 1999 will require the affirmative vote of the holders
of a majority of the outstanding 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 non-votes 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 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2000 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, 1999 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,
/s/ Richard J. Lubasch
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1999
13
<PAGE> 16
PROXY
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
110 EAST 59TH STREET, NEW YORK, NEW YORK 10022
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
ON JUNE 3, 1999
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 Cellular
Communications of Puerto Rico, Inc. (the "Company") to be held on Thursday, June
3, 1999 at 9:15 a.m., local time, at the Essex House, Hyde Park Suite, located
at 160 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.
<TABLE>
<S> <C>
1. Election of Directors: Nominees: Sidney R. Knafel and Del Mintz
[ ] VOTE FOR both nominees listed, except as marked to [ ] VOTE WITHHELD from both nominees.
the contrary above. (To withhold your votes for
either 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, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(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 PERSONS NAMED ABOVE TO VOTE SUCH
PROXIES IN ACCORDANCE WITH THEIR BEST JUDGMENT.
-------------------------
Signature
-------------------------
Signature
Dated , 1999
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.
<PAGE> 18
<TABLE>
<S> <C> <C>
TWO ADDITIONAL WAYS TO VOTE CELLULAR COMMUNICATIONS
N OF PUERTO RICO, INC.
N
VOTE BY TELEPHONE N
N Vote by Internet
IT'S FAST, CONVENIENT, AND YOUR VOTE IS IMMEDIATELY N
CONFIRMED AND POSTED. N It's fast, convenient, and your vote is
N immediately
USING A TOUCH-TONE PHONE N confirmed and posted and you can get all future
CALL THE TOLL-FREE NUMBER SHOWN ON THE VOTING N materials by internet.
INSTRUCTION FORM. N WWW.PROXYVOTE.COM
N Just follow these 4 easy steps:
JUST FOLLOW THESE 4 EASY STEPS: N
N 1. Read the accompanying Proxy Statement and
1. READ THE ACCOMPANYING PROXY STATEMENT AND VOTING N voting instruction form.
INSTRUCTION FORM. N
N 2. Go to website WWW.PROXYVOTE.COM.
2. CALL THE TOLL-FREE NUMBER SHOWN ON YOUR VOTING N
INSTRUCTION FORM. 3. ENTER YOUR 12 DIGIT CONTROL NUMBER LOCATED ON
YOUR VOTING INSTRUCTION FORM.
3. ENTER YOUR 12 DIGIT CONTROL NUMBER LOCATED ON YOUR
VOTING INSTRUCTION FORM. 4. FOLLOW THE SIMPLE INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
4. FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT! GO TO WWW.PROXYVOTE.COM
CALL 24 HOURS A DAY
24 HOURS A DAY
DO NOT RETURN VOTING FORM IF YOU ARE VOTING BY TELEPHONE OR INTERNET
</TABLE>
