<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SECTION 240.14a-11(c) or SECTION
240.14a-12
Alaska Communications Systems Group, Inc.
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ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
510 L STREET, SUITE 500
ANCHORAGE, ALASKA 99501
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Alaska Communications Systems Group, Inc. on Thursday, May 11, 2000, beginning
at 10:00 a.m. local time, in the Foredeck of the Ballroom of the Hotel Captain
Cook, 939 West 5th Avenue, Anchorage, Alaska. At the meeting, stockholders will
be asked to consider and vote on the following proposals:
1. To elect Charles E. Robinson, W. Dexter Paine, III, Saul A. Fox, Carl H.
Marrs, Byron I. Mallott and Wray T. Thorn as directors for one-year
terms expiring at the 2001 Annual Meeting;
2. To ratify the appointment of Deloitte & Touche LLP as our independent
auditors for the year ending December 31, 2000; and
3. To transact any other business that may properly come before the annual
meeting.
Stockholders of record at the close of business on March 27, 2000 are
entitled to notice of, and to vote at, the annual meeting. During the ten days
prior to the annual meeting, a list of such stockholders will be available for
inspection at the offices of Alaska Communications Systems Group, Inc., 510 L
Street, Suite 500, Anchorage, Alaska 99501.
Whether or not you plan to attend the meeting, please take the time to vote
by completing and mailing the enclosed proxy card to us in the envelope
provided.
This proxy statement provides you with detailed information about the
proposals to be voted on at the meeting. With this proxy statement we are also
providing a copy of our 1999 Annual Report to Stockholders in order to provide
you with additional information about us. We encourage you to read the proxy
statement and the other information carefully.
/s/ DONN T. WONNELL
Donn T. Wonnell
Executive Vice President, General
Counsel
and Secretary
Date: April 10, 2000
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE> 3
PROXY STATEMENT
------------------------
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
510 L STREET, SUITE 500
ANCHORAGE, ALASKA 99501
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2000
INFORMATION ABOUT THE ANNUAL MEETING
The annual meeting will be held on Thursday, May 11, 2000, beginning at
10:00 a.m. local time, in the Foredeck of the Ballroom of the Hotel Captain
Cook, 939 West 5th Avenue, Anchorage, Alaska.
INFORMATION ABOUT THE PROXY STATEMENT
The Board of Directors has sent you this proxy statement to solicit your
vote at the annual meeting (including any adjournment or postponement of the
annual meeting). This proxy statement contains summarized information required
to be provided to stockholders under the Securities and Exchange Commission
rules. This proxy statement is designed to assist stockholders in voting their
shares. On April 10, 2000, we began mailing the proxy materials to all
stockholders of record at the close of business on March 27, 2000.
PROPOSALS TO BE CONSIDERED BY YOU AT THE ANNUAL MEETING
At the annual meeting, you will be asked to vote on the following
proposals:
Proposal 1: To elect Charles E. Robinson, W. Dexter Paine, III, Saul A.
Fox, Carl H. Marrs, Byron I. Mallott and Wray T. Thorn as
directors for one-year terms expiring at the 2001 Annual
Meeting;
Proposal 2: To ratify the appointment of Deloitte & Touche LLP as our
independent auditors for the year ending December 31, 2000; and
Proposal 3: To transact any other business that may properly come before
the annual meeting.
INFORMATION ABOUT VOTING
Stockholders of record as of the close of business on March 27, 2000 will
be entitled to vote their shares at the annual meeting. Each share is entitled
to one vote at the annual meeting. At the close of business on March 27, 2000,
there were 32,715,474 shares of our common stock, par value $0.01 per share,
outstanding and entitled to vote at the annual meeting.
BY PROXY: You can vote by completing, signing and dating the enclosed proxy
card and returning it by mail in the envelope provided. The instructions
for voting are contained on the enclosed proxy card. The individuals named
on the card are your proxies. They will vote your shares as indicated. If
you sign your cards without indicating how you wish to vote, all of your
shares will be voted:
- FOR all of the nominees for director;
- FOR ratification of the appointment of Deloitte & Touche LLP as our
independent auditors to serve for the year ending December 31, 2000;
and
- at the discretion of your proxies on any other matter that may properly
come before the annual meeting.
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IN PERSON: You may attend the annual meeting and vote in person.
REVOCATION: You may revoke your proxy before it is voted at the meeting by:
- filing a written notice of revocation dated after the proxy date with
Alaska Communications Systems Group, Inc., c/o Michelle Bittner,
Assistant Secretary;
- sending Alaska Communications Systems Group, Inc., c/o Michelle Bittner,
Assistant Secretary, a later dated proxy for the same shares of common
stock; or
- attending the annual meeting AND voting in person there.
The address to send such correspondence is: Alaska Communications Systems Group,
Inc., c/o Michelle Bittner, Assistant Secretary, 510 L Street, Suite 500,
Anchorage, Alaska 99501.
INFORMATION ABOUT QUORUM
Holders of a majority of the outstanding shares of capital stock entitled
to vote generally in the election of directors must be present at the meeting,
in person or by proxy, for a quorum to be present. If a quorum is not present,
the Chairman of the Board of Directors or a majority in interest of the
stockholders entitled to vote thereat may adjourn the annual meeting.
Shares present either by proxy or in person that reflect abstentions,
proxies that are signed but do not indicate how to vote and broker "non-votes"
will be counted toward a quorum. Broker "non-votes" occur when a nominee (such
as a bank or broker) returns a proxy, but does not have the authority to vote on
a particular proposal because it has not received voting instructions from the
beneficial owner.
AMOUNT OF VOTES NECESSARY FOR EACH PROPOSAL TO BE APPROVED
Proposal One: Election of Directors -- The six persons nominated for
director receiving the most votes will be elected. Broker non-votes and
abstentions will not affect the election of directors except to the extent that
failure to vote for an individual results in another individual receiving a
larger proportion of votes.
Proposal Two: Ratification of Independent Auditors -- The ratification of
Deloitte & Touche LLP as our independent auditors for the year ending December
31, 2000 must receive an affirmative vote from a majority of the shares of
common stock that are present in person or by proxy and are voting on such
proposal. Broker "non-votes" and abstentions will reduce the absolute number but
not the percentage of the votes needed for approval. They will not be counted as
votes for or against this proposal.
COSTS OF PROXIES
In addition to mailing this proxy statement to you, we may also make
additional solicitations by telephone, facsimile or other forms of
communication. We will reimburse brokers, banks and other nominees who hold
stock for other beneficial owners for their expenses related to forwarding these
proxy materials to those beneficial owners. We will bear the entire cost of the
proxy solicitation.
INFORMATION YOU SHOULD RELY UPON WHEN CASTING YOUR VOTE
You should rely only on the information contained in this proxy statement
or incorporated by reference when voting on these matters. We have not
authorized anyone to give any information or to make any representation in
connection with this proxy solicitation other than those contained in or
incorporated by reference in this proxy statement. You should not rely on such
information or representation as having been authorized by us. You should not
infer under any circumstances that because of the delivery of this proxy
statement there has not been a change in the facts set forth in this proxy
statement or in our affairs since the date on this proxy statement. This proxy
statement does not constitute a solicitation by anyone in any jurisdiction in
which the solicitation is not authorized or in which the person making the
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make a solicitation.
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PROPOSAL ONE: ELECTION OF DIRECTORS
Six directors will be elected at the 2000 annual meeting to serve until the
annual meeting of stockholders in 2001. The six nominees are Charles E.
Robinson, W. Dexter Paine, III, Saul A. Fox, Carl H. Marrs, Byron I. Mallott and
Wray T. Thorn. Each of them is an incumbent director. The table below contains
certain biographical information about each of our directors and executive
officers. Each director has consented to serve if elected, but should any
nominee be unavailable to serve, each stockholder's proxy will vote for the
substitute nominee recommended by the Board of Directors.
VOTE REQUIRED
The six persons nominated for director receiving the most votes will be
elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE PERSONS
NOMINATED FOR DIRECTOR IN PROPOSAL ONE.
BOARD OF DIRECTORS AND MANAGEMENT
NOMINEES FOR DIRECTOR
Charles E. Robinson Mr. Robinson has served as a director and as
Chairman and Chief Executive our Chairman and Chief Executive Officer since
Officer May 1999. Mr. Robinson has over four decades of
Director since experience in the telecommunications industry
1999 and was instrumental in creating Alaska's long
Age: 66 distance communications systems, including the
White Alice Communications System, beginning in
the late 1950's. Between 1979 and 1982, Mr.
Robinson served as President of Alascom, the
state's primary long distance carrier at the
time. Under his guidance, Alascom developed the
first statewide long distance service network
in Alaska, connecting with more than 27
independent local companies. Mr. Robinson
served as President and Chief Operating Officer
of Pacific Telecom, Inc. from 1981 until its
sale to Century Telephone Enterprises, Inc., or
Century, in 1997 and was appointed Chairman and
Chief Executive Officer in 1989. Mr. Robinson
remained as President and Chief Executive
Officer of Pacific Telecom until February 1999.
Mr. Robinson has been a member of the National
Security Telecommunications Advisory Committee
for the last 18 years, having been appointed by
President Reagan. Mr. Robinson has also served
on the Board of Directors of the United States
Telecommunications Association from 1993 to
1995 and from 1999 to present.
W. Dexter Paine, III Mr. Paine, a director since July 1998, was a
Director since 1998 co-founder of Fox Paine & Company and has
Age: 39 served as President since its inception in
1997. From 1994 until founding Fox Paine &
Company, Mr. Paine served as a senior partner
of Kohlberg & Company. Prior to joining
Kohlberg & Company, Mr. Paine served as a
general partner at Robertson Stephens &
Company. Mr. Paine has a B.A. in economics from
Williams College.
Saul A. Fox Mr. Fox, a director since May 1999, was a
Director since 1999 co-founder of Fox Paine & Company and has
Age: 46 served as Chief Executive Officer since its
inception in 1997. From 1984 until founding Fox
Paine & Company, Mr. Fox was at Kohlberg Kravis
& Roberts & Co. Prior to joining KKR, Mr. Fox
was an attorney at Latham & Watkins, a law firm
headquartered in Los Angeles,
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California. Mr. Fox has a B.S. in
communications and computer science from Temple
University and a J.D. from the University of
Pennsylvania Law School.
Carl H. Marrs Mr. Marrs, a director since July 1999, is
Director since 1999 President and Chief Executive Officer of Cook
Age: 51 Inlet Region, Inc., or Cook Inlet. Mr. Marrs
has been with Cook Inlet for approximately 25
years. During that period, Mr. Marrs has been
employed in a series of management positions,
culminating in his appointment as President in
1986. Mr. Marrs attended the Stanford
University School of Business for Executives in
1983 and the Amos Tuck School of Business at
Dartmouth College in 1986.
Byron I. Mallott Mr. Mallott, a director since January 2000, is
Director since 1999 the President and Chief Executive Officer of
Age: 57 the First Alaskans Foundation. From 1995 until
January 2000, Mr. Mallott served as the
Executive Director of the Alaska Permanent Fund
Corporation. Prior to joining the Alaska
Permanent Fund Corporation, Mr. Mallott served
in various capacities, including director,
Chairman and President and Chief Executive
Officer, of Sealaska Corporation over a period
of nearly 20 years. Mr. Mallott has also served
in various appointed and elected political
positions.
Wray T. Thorn Mr. Thorn, a director since January 2000, has
Director since 2000 also been a director with Fox, Paine & Company
Age: 28 since January 2000. From 1996 until joining
Fox, Paine & Company, Mr. Thorn was a principal
and founding member of Dubilier & Company.
Prior to joining Dubilier & Company, Mr. Thorn
was an associate in the Acquisition Finance
Group of Chase Securities, Inc. Mr. Thorn is a
graduate of Harvard University.
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EXECUTIVE OFFICERS
The table below sets forth certain information about those persons
currently serving as our executive officers. Biographical information on Charles
E. Robinson, our Chairman and Chief Executive Officer, is included above in the
section "Nominees for Directors."
<TABLE>
BUSINESS EXPERIENCE PRIOR TO
NAME AND TITLE AGE BECOMING AN EXECUTIVE OFFICER
- ------------------------------------- -- --------------------------------------------------------
<S> <C> <C>
Wesley E. Carson..................... 49 Mr. Carson has served as our President and Chief
President and Chief Operating Operating Officer since October 7, 1999 and previously
Officer served as an Executive Vice President. Mr. Carson has
over 20 years of experience in the telecommunications
industry. He began his career in telecommunications in
1980 with TRT Telecommunications Corporation, an
international data and voice carrier located in
Washington, D.C. that was acquired by Pacific Telecom in
1988. From 1989 to 1998, Mr. Carson served as the Vice
President of Human Resources for Pacific Telecom. In
1998, Mr. Carson became Director of Human Resources for
PacifiCorp and was responsible for administrative
services, the planning, development, implementation and
administration of human resources policies and
procedures and employee relations. From July 1998 to May
1999, Mr. Carson served as the Executive Vice President
of LEC Consulting Corporation. Mr. Carson has been
involved with labor issues for nearly 20 years and an
active participant in Alaska labor relations since 1989.
Mr. Carson holds a B.A. in International Relations from
Brigham Young University, a Master of Public
Administration degree from the University of
Illinois-Springfield and a J.D. from Georgetown
University.
Donn T. Wonnell...................... 53 Mr. Wonnell serves as our Executive Vice President,
Executive Vice President, General General Counsel and Secretary, a position he has held
Counsel and Secretary since June 1999. Mr. Wonnell has worked in the
telecommunications industry for more than 24 years. Mr.
Wonnell served as Vice President for legal, regulatory
and legislative affairs of Pacific Telecom until the
merger of Pacific Telecom into Century at the end of
1997. Prior to joining Pacific Telecom, Mr. Wonnell
served as President of the Telecommunications and Energy
Division of California Pacific Utilities in San
Francisco, and earlier, as Vice President and General
Counsel of RCA Alaska Communications in Anchorage. Mr.
Wonnell holds a B.A. from the College of William & Mary
and a J.D. from the University of Pennsylvania School of
Law. Mr. Wonnell has been admitted to practice before
the bars of Alaska, California, Pennsylvania and the
District of Columbia.
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO
NAME AND TITLE AGE BECOMING AN EXECUTIVE OFFICER
-------------- --- -----------------------------
<S> <C> <C>
Michael E. Holmstrom................. 57 Mr. Holmstrom serves as our Senior Vice President and
Senior Vice President and Chief Chief Financial Officer, a position he has held since
Financial Officer February 1999. He is responsible for our financial,
accounting, tax and business development functions. Mr.
Holmstrom's career in telecommunications spans 35 years.
Since 1990, he has consulted, served as Chief Operating
Officer for Spectrum Network Systems, Ltd. in Sydney,
Australia, and as Chief Financial Officer for Atlantic
Tele-Network in the U.S. Virgin Islands. From 1983
through 1989, he was Vice President of Unregulated
Operations, Chief Financial Officer and then President
of CP National Corporation, a telecommunications
provider that merged with Alltel Corporation in December
1988. Mr. Holmstrom was Vice President of Finance at
Alascom from 1976 through 1980, and Vice President of
Financial and Business Planning at Pacific Telecom,
Alascom's parent corporation, from 1980 to 1981. Mr.
Holmstrom has a B.S. in Business Administration from
Gannon University.
John R. Ayers........................ 57 Mr. Ayers serves as our Senior Vice President of
Senior Vice President of Marketing Marketing and Sales, a position he has held since May
and Sales 1999. Mr. Ayers has more than 20 years of experience in
the telecommunications industry. As President and
co-founder of e.Net, Ltd. in 1996, Mr. Ayers served as a
consultant to a variety of established and start-up
businesses. From February 1983 through March 1996, Mr.
Ayers held various management positions with Pacific
Telecom and its subsidiaries, including Executive Vice
President of Pacific Telecom Services Company, with
responsibility for strategic planning, marketing and
business development, and Executive Vice President and
General Manager of Alascom, Inc., Alaska's largest
interexchange carrier. Mr. Ayers holds a bachelor's
degree in management from Golden Gate University.
F. Scott Davis....................... 64 F. Scott Davis was appointed as our Senior Vice
Senior Vice President of Non- President of Non-Regulated Operations on February 9,
Regulated Operations 2000. He is responsible for the Company's nonregulated
communications enterprises, including cellular,
long-distance, Internet and wireless cable television
operations. Prior to his appointment, he served as
President and Chief Operating Officer of MACtel since
August 1995. Mr. Davis has been with MACtel since 1990,
previously serving as Sales and Marketing Manager, and
then General Manager. Mr. Davis has more than 30 years
of experience in the wireless telecommunications
industry, beginning in 1966 at Airsignal International,
Inc., where he advanced to the position of Executive
Vice President before he left in 1982. From 1982 to
1987, he served as Senior Vice President and General
Manager of McCaw Communications Companies, Inc., with
responsibility for Alaska and Hawaii. Mr. Davis worked
in Alaska as a communications broker and consultant from
1987 to 1990. Mr. Davis holds a B.B.A. degree from
Washburn University.
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS EXPERIENCE PRIOR TO
NAME AND TITLE AGE BECOMING AN EXECUTIVE OFFICER
-------------- --- -----------------------------
<S> <C> <C>
Kevin P. Hemenway.................... 39 Mr. Hemenway joined us as Vice President and Treasurer
Vice President and Treasurer in July 1999 with 10 years of prior experience in the
telecommunications industry. Before joining us, Mr.
Hemenway served as the Chief Financial Officer and
Treasurer of Atlantic Tele-Network, Inc. based in the
U.S. Virgin Islands. From January 1990 to October 1998,
as an independent consultant, Mr. Hemenway performed
financial, accounting, management and rate making
consulting services for the telecommunications industry,
principally for Atlantic Tele-Network, Inc. and its
subsidiaries. From 1986 through 1989, Mr. Hemenway was
employed by Deloitte & Touche LLP as a C.P.A. and
manager, performing both audit and consulting services
and from 1983 to 1986, was employed by Grant Thornton as
a C.P.A. and senior staff accountant. Mr. Hemenway
graduated from Creighton University in 1982 with a
B.S.B.A., majoring in accounting, and is a
non-practicing CPA certificate holder registered in the
State of Nebraska.
</TABLE>
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Presently, there are six members on the Board of Directors, five of whom
are not our officers. The directors are elected to serve for a one-year term. In
early 1999, the Board of Directors consisted of two directors, W. Dexter Paine
and Sanjay Swani, an employee of Fox Paine & Company, LLC at the time. On May 7,
1999, the Board of Directors was expanded to include Saul A. Fox and Charles E.
Robinson. Mr. Swani subsequently left the employment of Fox Paine and, as a
result, chose to resign his position as director on June 25, 1999. J. Russell
Triedman, also an employee of Fox Paine at the time, was selected to replace Mr.
Swani on the Board of Directors. On July 6, 1999, the Board of Directors was
once again expanded to include Carl H. Marrs as a director. As with Mr. Swani,
Mr. Triedman left the employment of Fox Paine in late 1999 and resigned his
position as a director. On October 29, 1999, Jason Hurwitz replaced Mr. Triedman
as a director. Byron I. Mallott joined the Board of Directors on January 3, 2000
to bring the Board of Directors to its present number of six directors. Mr.
Hurwitz resigned as director in January of 2000 and, on January 18, 2000, he was
replaced by Wray T. Thorn. All the directors who resigned from the Board of
Directors did so for personal reasons unrelated to us.
The Board of Directors met three times in 1999. Each director attended 75%
or more of the meetings held during 1999 for the period during which he was a
director.
During 1999, the Board of Directors carried out all its duties necessary
for our operations. On February 9, 2000, the Board of Directors established
three standing committees: (1) Audit, (2) Compensation and Personnel and (3)
Executive. The membership and functions of these committees are as follows:
AUDIT COMMITTEE. The functions of the Audit Committee are as follows:
- to recommend annually to the Board of Directors the appointment of our
independent auditors;
- to discuss and review in advance the scope and the fees of our annual
audit and review the results thereof with our independent auditors;
- to review and approve non-audit services of our independent auditors;
- to review compliance with our existing major accounting and financial
reporting policies;
- to review the adequacy of major accounting and financial reporting
policies; and
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- to review management's procedures and policies relating to the adequacy
of our internal accounting controls and compliance with applicable laws
relating to accounting practices.
The Audit Committee consists of three directors who are not our employees,
Byron I. Mallot, Chair, Carl H. Marrs and Wray T. Thorn. The Audit Committee is
examining, and plans to adopt, a charter to govern its future operations.
COMPENSATION AND PERSONNEL COMMITTEE. The functions of the Compensation and
Personnel Committee are as follows:
- to review and approve annual salaries and bonuses and to recommend for
approval by the Board of Directors grants of stock options under our
stock incentive plans for all executive officers and other key members of
management;
- to review and approve a competitive total compensation program, including
performance-based incentive programs focused on short- and long-term
objectives, that enables us to attract and retain key executive officers;
and
- to recommend for approval by the Board of Directors performance
objectives that encourage sustained superior earnings performance and
increase stockholder value.
The Compensation and Personnel Committee consists of three directors, Carl
H. Marrs, Chair, W. Dexter Paine, III and Charles E. Robinson.
EXECUTIVE COMMITTEE. The Executive Committee has the authority to exercise
the powers of the Board of Directors, other than those reserved to the Audit
Committee and the Compensation and Personnel Committee or to the full Board of
Directors, between meetings of the full Board of Directors. The Executive
Committee consists of three directors, Charles E. Robinson, Chair, W. Dexter
Paine, III and Carl H. Marrs.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of our common stock
beneficially owned by:
- each director nominee;
- each executive officer named in the Annual Compensation Table;
- all of the directors and executive officers as a group; and
- beneficial owners of 5% or more of our common stock.
<TABLE>
<CAPTION>
NUMBER OF % OF SHARES
SHARES OF OUR OF OUR
COMMON STOCK COMMON STOCK
------------- ------------
NAME OF BENEFICIAL OWNER(1) SHARES %
--------------------------- ------------- ------------
<S> <C> <C>
DIRECTORS:
W. Dexter Paine, III(2)..................................... 19,555,751 59.78%
Saul A. Fox(2).............................................. 19,555,751 59.78%
Carl H. Marrs(3)............................................ 1,632,407 4.99%
Charles E. Robinson(4)...................................... 890,538 2.59%
Byron I. Mallott............................................ 0 0%
Wray T. Thorn(2)............................................ 19,555,751 59.78%
NON-DIRECTOR EXECUTIVE OFFICERS:
Wesley E. Carson(5)......................................... 222,341 *
Donn T. Wonnell(6).......................................... 141,249 *
Michael E. Holmstrom(7)..................................... 96,249 *
John Ayers(8)............................................... 91,249 *
All directors and executive officers as a group (10
persons)(2)(3)............................................ 22,629,784 69.01%
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF % OF SHARES
SHARES OF OUR OF OUR
COMMON STOCK COMMON STOCK
------------- ------------
NAME OF BENEFICIAL OWNER(1) SHARES %
--------------------------- ------------- ------------
<S> <C> <C>
CERTAIN BENEFICIAL OWNERS:
Fox Paine Capital, LLC(2)................................... 19,555,751 59.78%
Fox Paine Capital Fund L.P.(2).............................. 16,251,658 9.25%
FPC Investors, L.P.(2)...................................... 241,144 *
Cook Inlet Region, Inc.(3).................................. 1,624,907 4.97%
Goldman Sachs Group, Inc.................................... 1,641,026 5.02%
</TABLE>
- ---------------
* The percentage of shares beneficially owned does not exceed 1% of the class.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Exchange Act. Shares of common stock that a person has the right to acquire
within 60 days of the Record Date are deemed to be beneficially owned by
such person and are included in the computation of the ownership and voting
percentages only of such person. Each person has sole voting and investment
power with respect to the shares indicated except as otherwise stated in the
footnotes to the table.
(2) Fox Paine Capital, LLC is General Partner or Manager of Fox Paine Capital
Fund, FPC Investors, L.P., ALEC Coinvestment Fund I, LLC, ALEC Coinvestment
Fund II, LLC, ALEC Coinvestment Fund III, LLC, ALEC Coinvestment IV, LLC,
ALEC Coinvestment Fund V, LLC and ALEC Coinvestment Fund VI, LLC and
possesses voting and investment power over all shares held by each of these
entities. Fox Paine Capital is not the record owner of any shares of our
common stock. Messrs. Fox and Paine are members of Fox Paine Capital and
share voting power of Fox Paine Capital. Mr. Thorn is a director of Fox
Paine Capital. None of the shares shown as beneficially owned by Messrs.
Fox, Paine and Thorn are owned of record by these individuals. Each of
Messrs. Fox, Paine and Thorn disclaims beneficial ownership of the shares
owned by the entities of which Fox Paine Capital is General Partner or
Manager, except to the extent of his respective pecuniary interest therein.
The address of Fox Paine Capital, Fox Paine Capital Fund, FPC Investors, and
Messrs. Fox and Paine is c/o Fox Paine & Company, LLC, 950 Tower Lane, Suite
501, Foster City, California 94404.
(3) Cook Inlet Region, Inc. is record owner of 1,624,907 shares of our common
stock. The address of Cook Inlet is P.O. Box 93330, Anchorage, Alaska
99509-3330. Mr. Marrs is President and Chief Executive Officer of Cook
Inlet. Mr. Marrs is the record holder of 7,500 shares of our common stock
and disclaims beneficial ownership of the shares owned by Cook Inlet, except
to the extent of his pecuniary interest therein.
(4) Mr. Robinson is record owner of 281,788 of our common stock and has vested
option rights in 608,750 shares. The address of Mr. Robinson is c/o Alaska
Communications Systems Group, Inc., 510 L Street, Suite 500, Anchorage,
Alaska 99501. Of these shares, 172,729 represent stock grants. See "Insider
Relationships and Related Party Transactions."
(5) Mr. Carson is record owner of 132,341 shares of our common stock and has
vested option rights in 90,000 shares. The address of Mr. Carson is c/o
Alaska Communications Systems Group, Inc., 510 L Street, Suite 500,
Anchorage, Alaska 99501. Of these shares, 85,469 represent stock grants. See
"Insider Relationships and Related Party Transactions."
(6) Mr. Wonnell is record owner of 66,249 shares of our common stock and has
vested option rights in 75,000 shares. The address of Mr. Wonnell is c/o
Alaska Communications Systems Group, Inc., 510 L Street, Anchorage, Alaska
99501. Of these shares, 50,000 represent stock grants. See "Insider
Relationships and Related Party Transactions."
(7) Mr. Holmstrom is record owner of 16,249 shares of our common stock and has
vested option rights in 80,000 shares. The address of Mr. Holmstrom is c/o
Alaska Communications Systems Group, Inc., 510 L Street, Suite 500,
Anchorage, Alaska 99501.
9
<PAGE> 12
(8) Mr. Ayers is record owner of 16,249 shares of our common stock and has
vested option rights in 75,000 shares. The address of Mr. Ayers is c/o
Alaska Communications Systems Group, Inc., 510 L Street, Suite 500,
Anchorage, Alaska 99501.
COMPENSATION OF DIRECTORS
In 1999, directors received no compensation for their services as
directors. In the future, we will not compensate employee directors for serving
as directors. However, we will compensate our non-employee directors for serving
as directors under the Alaska Communications Systems Group, Inc. 1999 Non-
Employee Director Stock Compensation Plan. Under the plan, each non-employee
director will receive an annual retainer fee of $28,000 plus an additional
$1,500 for each Board of Directors and/or committee meeting attended. This
compensation will be paid in either shares of our common stock or in cash.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require executive officers, directors, and owners
of more than ten percent of our common stock to file reports (Forms 3, 4, and 5)
with the SEC and the New York Stock Exchange. These reports relate to the number
of shares of our common stock that each own, and any change in their ownership.
Based solely on our review of Forms 3 and 4 filed with the SEC and
representations of the executive officers and directors, we believe all persons
required to file such forms have done so during fiscal year 1999.
10
<PAGE> 13
SUMMARY OF EXECUTIVE COMPENSATION
The table below sets forth a summary of the compensation we paid our Chief
Executive Officer and the four additional most highly compensated executive
officers.
The acquisitions of Century's Alaska properties and Anchorage Telephone
Utility, or ATU, closed on May 14, 1999. Two of our executive officers, Wesley
Carson and Michael Holmstrom, were employed prior to that date by LEC Consulting
Corporation, a company that was merged into one of our subsidiaries at closing.
Other than Messrs. Carson and Holmstrom, none of our executive officers was
compensated by us or any of our subsidiaries to any meaningful extent prior to
May 14, 1999. As a result, individual information for Messrs. Carson and
Holmstrom is provided for periods prior to and after May 14, 1999. For our other
executive officers, individual information is not provided for periods prior to
May 14, 1999. The following table shows the actual 1999 cash compensation and
the payment of targeted bonuses paid by us for our Chief Executive Officer and
each of our four other most highly compensated executive officers under their
employment agreements.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------------
AWARDS PAYOUTS
------------- -------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL STOCK OPTIONS ALL OTHER
POSITION FISCAL YEAR SALARY BONUS SHARES(1) LTIP COMPENSATION(2)(3)
------------------ ----------- -------- -------- ------------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Robinson........... 1999 $298,060 $500,000 1,117,500 $0 $1,458,863
Chairman and
Chief Executive Officer
Wesley E. Carson.............. 1999 186,154 181,655 450,000 0 723,924
President and
Chief Operating Officer
Donn T. Wonnell............... 1999 110,776 58,634 300,000 0 506,000
Executive Vice President,
General Counsel and
Secretary
Michael E. Holmstrom.......... 1999 175,362 87,677 350,000 0 248,290
Senior Vice President and
Chief Financial Officer
John R. Ayers................. 1999 115,392 60,278 300,000 0 198,290
Senior Vice President
</TABLE>
- ---------------
(1) Options to purchase shares of common stock. See "Options Grants in Last
Fiscal Year."
(2) In May and July 1999, Messrs. Robinson, Carson and Wonnell received common
stock grants in the amounts of 172,729 shares for Mr. Robinson, 85,469
shares for Mr. Carson and 50,000 shares for Mr. Wonnell. The fair market
value of these grants was established using a per share price of $6.1542.
(3) On September 28, 1999, Messrs. Carson, Wonnell, Holmstrom and Ayers each
received a grant of stock options for 50,000 shares and Mr. Robinson
received a grant of stock options for 100,000 shares. The exercise price per
share was $6.1542 and the market price on the date of the grant $10.12.
These shares vested on November 23, 1999 upon the completion of our initial
public offering.
11
<PAGE> 14
OPTIONS GRANTS IN LAST FISCAL YEAR
The table below sets forth information as of December 31, 1999 concerning
the issuance of nonqualified stock options in the last fiscal year.
<TABLE>
<CAPTION>
PERCENTAGE
OF
TOTAL
NUMBER OF STOCK POTENTIAL REALIZABLE VALUES AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO MARKET PRICE APPRECIATION FOR STOCK
STOCK EMPLOYEES EXERCISE PRICE ON OPTION TERM
OPTIONS IN OR BASE GRANT EXPIRATION -----------------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE DATE 0%(4) 5% 10%
---- ------------- ------------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles E. Robinson........ 508,750(1) 16.37% $6.1542 $ 6.1542 05/14/2008 N/A $1,726,180 $4,251,665
100,000(2) 3.2% 6.1542 10.1200 09/28/2008 396,580 954,524 1,770,823
508,750(3) 16.3% 6.1542 14.00 11/17/2008 $3,991,551 1,726,180 4,251,665
Wesley E. Carson........... 400,000(1) 12.9% 6.1542 6.1542 05/14/2008 N/A 1,357,194 3,342,833
50,000(2) 1.6% 6.1542 10.1200 09/28/2008 198,290 477,262 885,412
Donn T. Wonnell............ 250,000(1) 8.0% 6.1542 6.1542 05/25/2008 N/A 848,246 2,089,270
50,000(2) 1.6% 6.1542 10.1200 09/28/2008 198,290 477,262 885,412
Michael E. Holmstrom....... 300,000(1) 4.7% 6.1542 6.1542 05/14/2008 N/A 1,017,895 2,507,125
50,000(2) 1.6% 6.1542 10.1200 09/28/2008 198,290 477,262 885,412
John R. Ayers.............. 250,000(1) 8.0% 6.1542 6.1542 05/24/2008 N/A 848,246 2,089,270
50,000(2) 1.6% 6.1542 10.1200 09/28/2008 198,290 477,262 885,412
</TABLE>
- ---------------
(1) Of these stock options, 10% (16 2/3% in the case of Mr. Robinson) vest on
each anniversary of their grant for a period of five years (three years in
case of Mr. Robinson). The first anniversary of Messrs. Robinson's, Carson's
and Holmstrom's grants will be May 14, 2000; the first anniversary of Mr.
Wonnell's grant will be June 1, 2000; and the first anniversary of Mr.
Ayers' grant will be May 24, 2000. An additional 10% (16 2/3% in the case of
Mr. Robinson ) of these stock options granted to each such officer will vest
on December 31st in each of five years (three years in the case of Mr.
Robinson) in equal installments, if corporate financial goals established
under our stock incentive plan are attained. In the event annual performance
criteria are not met, 10% of participants' grants will vest at the end of
five years (three years in the case of Mr. Robinson) if the five year
cumulative target is met. Because the corporate financial goals for 1999
were obtained, the first year options for each of the above officers, except
Mr. Robinson, vested on December 31, 1999, and Mr. Robinson's shares for the
first three years vested upon the completion of our initial public offering.
(2) These stock options vested on completion of our initial public offering.
Each executive officer has agreed not to dispose of more than 20% annually
of the shares he may receive upon exercise of these options. This 20%
becomes available for disposition in January for each of five years
commencing in the year 2000.
(3) These stock options granted to Mr. Robinson represent variable options.
Variable options result in compensation expense through the vesting date
based on the difference between the exercise price and the current market
value of the underlying stock. These options vested upon the completion of
the initial public offering. Mr. Robinson has agreed not to dispose of more
than 20% annually of the shares he may receive upon exercise of these
options. This 20% becomes available for disposition in January for each of
five years commencing in the year 2000.
(4) Represents the potential realizable value of each grant of options
calculated through its expiration date assuming that the underlying stock
appreciates from its market price on the date of grant through the options
expiration date at the annual rate of 0%, 5% and 10%.
12
<PAGE> 15
AGGREGATED STOCK OPTION EXERCISES AND YEAR-END VALUE
The table below sets forth, on an aggregated basis:
- information regarding the exercise of options to purchase our common
stock by each of the named executive officers listed on the Executive
Compensation table above; and
- the value on December 31, 1999 of all unexercised options held by such
individuals.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles E. Robinson....................... 608,750 508,750 $3,786,912 $3,164,832
Wesley E. Carson.......................... 90,000 360,000 559,872 2,239,488
Donn T. Wonnell........................... 75,000 225,000 466,560 1,399,680
Michael E. Holmstrom...................... 80,000 270,000 497,664 1,679,616
John R. Ayers............................. 75,000 225,000 466,560 1,399,680
</TABLE>
- ---------------
(1) The fair market value of stock options as of December 31, 1999 was assumed
to be $12.375 per share, based on the closing price of the securities
underlying the stock options on that date.
REPORT ON EXECUTIVE COMPENSATION
TO OUR STOCKHOLDERS
During 1999, the Board of Directors and certain senior management oversaw
and administered our executive pay program on behalf of our stockholders. This
report provides details and background information regarding the executive pay
program. It is our philosophy that executive compensation be linked closely to
corporate performance and increases in shareholder value. Our current
compensation program articulates the following objectives in support of this
philosophy:
- provides competitive total compensation that enables us to attract and
retain key executives;
- provides variable compensation opportunities that are linked to
performance; and
- establishes an appropriate balance between incentives focused on
short-term objectives and those encouraging sustained superior earnings
performance and increases in shareholder value.
COMPENSATION OF EXECUTIVE OFFICERS
During the year ended December 31, 1999, the Board of Directors and certain
senior managers undertook the review and setting of compensation for our
executive officers. The decisions were made by the members of the Board of
Directors serving at the time of the decisions. Throughout 1999, our officers
Charles Robinson and Wesley Carson also participated in executive officer
compensation deliberations other than their own.
In their deliberations, the Board of Directors and senior managers took
into account how compensation compared to compensation paid by competing
companies as well as our performance and available resources. At the Board of
Director's request, our Human Resources Division, assisted by an outside
consultant, evaluated the total compensation package of executives in relation
to competitive pay levels. Our outside consultant provided us with market
reference points from general industry and the telecommunications industry
sector to establish competitive pay for all executive jobs. For compensation
analysis purposes, general industry and telecommunications industry sector data
were equally weighted. Given the increasingly aggressive business environment in
which we must operate and the competitive marketplace for executive talent, this
approach recognizes industry specific knowledge without limiting the recruitment
market. This approach will continue to be reviewed in the future to ensure that
it yields the desired results of attracting and retaining top-notch talent.
13
<PAGE> 16
Our executive compensation programs have three principal elements: base
salary, annual incentive compensation and long-term incentive compensation. The
following is a summary of the compensation received by our executive officers.
SALARIES. The salaries for the Chief Executive Officer and each other
executive officer for 1999 are based primarily on the officer's level of
responsibility and comparisons to prevailing salary levels for similar officers
at comparable companies. Their compensation was generally set around the
fiftieth percentile in relation to comparable companies. The need for superior
industry knowledge, skills and abilities during our start-up phase resulted in a
few of the higher ranking positions at or about the seventy-fifth percentile in
relation to comparable companies. This was required to ensure a solid foundation
for growth. We therefore entered into employment agreements with certain of our
officers including the Chief Executive Officer. The Board of Directors believes
that the levels of the executive officers' salaries are consistent with its
objective of attracting and retaining key personnel. For a detailed description
of the compensation agreements with our executive officers, see the "Employment
Agreements" section below.
ANNUAL INCENTIVES. All executive officers participated in the annual
Executive Bonus Plan, or the Plan, during 1999. Awards under the Plan are earned
based upon our EBITDA (earnings before interest, taxes, depreciation and
amortization) performance. The Board of Directors set a target EBITDA of
$105,345,000 for 1999 at which executive officers would receive 100% of their
target bonus. The Plan provides for modification of total dollars included in
the bonus pool, up or down, based on our performance relative to target EBITDA
and also modification of individual awards, up or down, based on an individual's
performance in relation to established objectives. No bonus pool is established
if our financial performance is less than 96% of our annual EBITDA target.
Payments due under the Plan for 1999 were paid in the year 2000.
LONG-TERM INCENTIVE COMPENSATION. In 1999, our company established the ALEC
Holdings, Inc. 1999 Stock Incentive Plan and the Alaska Communications Systems
Group, Inc. 1999 Stock Incentive Plan. Alaska Communications Systems Group,
Inc.'s long-term performance incentive programs provide our executive officers
with the opportunity to receive stock options conditioned on the achievement of
certain performance targets based on our EBITDA and other performance related
goals. The programs allow executive officers to buy specified numbers of shares
of Common Stock at the value of the stock at the time of the grant or at other
prices determined by the Board of Directors. The options granted in 1999 are
designed to vest over the course of not more than nine years. These programs are
designed to promote our success and enhance our value by linking the interests
of our officers to those of our stockholders and by providing participants with
an incentive for outstanding performance. For a detailed description of the
programs, see the "Stock Incentive Programs" section below.
OTHER BENEFITS. We also provide certain other benefits to our executive
officers including car allowances and the reimbursement of moving expenses.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The criteria, standards and
methodology used by the Board of Directors and certain senior managers in
reviewing and establishing the Chief Executive Officer's salary, bonus and other
compensation are the same as those used with respect to all other executive
officers, as described above. Based on its review of data compiled by the Human
Resources Division, with assistance by an outside consultant, the Board of
Directors set Mr. Robinson's base compensation for 1999 at an annual rate of
$500,000. In connection with the completion of the acquisitions of Century's
Alaska properties and ATU, a stock grant of 172,729 shares valued at
approximately $1,062,283 was given to Mr. Robinson in May 1999. Application of
our compensation criteria based on the meeting of EBITDA targets resulted in the
Chief Executive Officer receiving for 1999 a bonus valued at $500,000. Finally,
as described herein, Mr. Robinson received 1,117,500 shares of restricted stock
options that are subject to performance based criteria. Upon completion of our
initial public offering on November 23, 1999, 608,750 of those shares vested.
14
<PAGE> 17
REPORT ON REPRICING OF OPTIONS/SAR'S. In connection with our initial public
offering, we accelerated the vesting terms of variable options originally
granted on May 14, 1999 to Charles Robinson. We determined that accelerating the
vesting of the variable options was appropriate since the nine-year cliff
vesting terms of those options were significantly beyond the retirement age of
Mr. Robinson. Failure to accelerate the vesting of all of those variable options
to the date of our initial public offering would have resulted in periodic
stock-based compensation expenses to us. We do not believe that this would have
been in the best interest of our stockholders. The original vesting terms for
Mr. Robinson prior to amendment was three years. The following table presents
the data underlying the amendment of the options granted to Mr. Robinson.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT REMAINING AT
OPTIONS/SARS TIME OF TIME OF NEW DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
---------- ------------ ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Robinson....... 11/18/1999 508,750 $14.00 $6.1542 $6.1542 05/14/2008
Chairman and Chief
Executive Officer
</TABLE>
SUMMARY
The Board of Directors believes that the caliber, motivation and leadership
abilities of our employees are critical to our success in a competitive
marketplace. Effective and motivational compensation programs are essential
ingredients to success. The Board of Directors believes that our compensation
programs are effective in serving us and our stockholders in the short and long
term.
SUBMITTED BY THE MEMBERS OF THE BOARD OF DIRECTORS
Charles E. Robinson
Saul A. Fox
Byron I. Mallott
W. Dexter Paine, III
Carl H. Marrs
Wray T. Thorn
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
As described above, the compensation for our executive officers was
determined by the members of the Board of Directors as constituted at the time
of the decisions. In addition, our officers Charles Robinson and Wesley Carson
participated in these deliberations other than the deliberations regarding their
own compensation.
15
<PAGE> 18
PERFORMANCE GRAPH
The following line graph compares the cumulative total stockholder return
on our common stock from November 18, 1999 (the first day on which our stock was
publicly traded) through December 31, 1999 with the cumulative total return of
the Standard & Poor's Corporation Composite 500 Index (the "S&P 500") and the
cumulative total return of a peer group index. The graph assumes an initial
investment of $100 in our common stock and in each of the S&P 500 and peer group
indices on November 18, 1999, and assumes that dividends, if any, were
reinvested.
The peer group index consists of the following companies:
- Century Telephone Enterprises, Inc.
- CFW Communications Company
- Commonwealth Telephone Enterprises, Inc.
- Conestoga Enterprises, Inc.
- CT Communications, Inc.
- D&E Communications, Inc.
- General Communication, Inc.
- ITC Deltacom, Inc.
- Telephone and Data Systems, Inc.
- Warwick Valley Telephone Company
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
COMPARISONS OF CUMULATIVE TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
ALASKA COMMUNICATIONS
SYSTEMS GROUP, INC S&P 500 INDEX PEER GROUP INDEX
--------------------- ------------- ----------------
<S> <C> <C> <C>
Nov. 18, 1999 100.00 100.00 100.00
Dec. 31, 1999 88.79 105.89 99.86
</TABLE>
16
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the execution of the purchase agreement relating to
Century's Alaska properties, Century entered into a consulting agreement, dated
August 14, 1998, with LEC Consulting Corporation, a corporation owned and
operated by current and former members of our management team. Pursuant to the
consulting agreement, LEC Consulting provided management and advisory services
to Century's Alaska properties with respect to its day-to-day business
operations. Under the terms of the consulting agreement, Century paid LEC
Consulting $175,000 per month for these services. In addition to the services
required under the consulting agreement, LEC Consulting employees were
responsible for managing the transition process for us and for creating the
infrastructure necessary to begin operations as of May 14, 1999. In addition,
Fox Paine & Company loaned to LEC Consulting approximately $3.4 million
beginning in August 1998 for funding of start-up expenses, which amount was
repaid out of funds provided by us on May 14, 1999 as part of the fees and
expenses related to the acquisitions of Century's Alaska properties and ATU. LEC
Consulting was merged into Alaska Communications Systems Holdings, Inc. on May
10, 1999.
Pursuant to a consulting agreement between Century and Mr. Robinson, Mr.
Robinson will continue to provide consulting services to Century with respect to
its operations in Alaska and the lower 48 states. We do not believe that these
services will interfere with Mr. Robinson's fulfillment of his duties and
responsibilities to us. We have agreed that Mr. Robinson will not participate in
making any decisions relating to acquisitions by us in the lower 48 states
during the term of his consulting agreement and for two years thereafter. This
consulting agreement will expire on or before November 2000.
Pursuant to a consulting agreement between ATU and e.Net, Ltd., e.Net, Ltd.
received $90,955 in consulting fees. Mr. Ayers' wife is the majority investor in
e.Net, Ltd. and Mr. Ayers was a founder and the former President of the company.
We do not believe that this relationship will interfere with Mr. Ayers'
fulfillment of his duties and responsibilities to us.
In connection with the completion of the acquisitions of Century's Alaska
properties and ATU, members of management were given grants of our common stock.
In connection with the stock grants, we loaned Messrs. Robinson and Carson
approximately 40% of the fair market value of the grants on May 14, 1999 on a
non-recourse basis. The largest aggregate amount of Mr. Robinson's indebtedness
was $425,204.68. An interest rate of 8% was being charged on the loan. The
largest aggregate amount of Mr. Carson's indebtedness was $210,396.15. An
interest rate of 8% was charged on the loan. Subsequently, we loaned Mr. Wonnell
approximately 40% of the fair market value of the grants made to him on July 31,
1999 on a non-recourse basis. The largest aggregate amount of Mr. Wonnell's
indebtedness was $121,853. An interest rate of 8% was charged on the loan. We
forgave Mr. Robinson's, Mr. Carson's and Mr. Wonnell's indebtedness in early
January of 2000. The proceeds of these loans, which were secured by the shares
of our common stock owned by the individual borrowers, were used by those three
individuals to pay taxes on the income deemed received in connection with the
grants.
Fox Paine & Company received aggregate advisory fees in the amount of $14.2
million upon consummation of the acquisitions of Century's Alaska properties and
ATU. In addition, Fox Paine & Company will receive an annual management fee in
the amount of 1% of our consolidated net income before interest expense,
interest income, income taxes, depreciation and amortization and equity in
earnings (losses) of minority investments, calculated without regard to the fee.
As described above, Messrs. Fox and Paine are co-founders and officers of Fox
Paine & Company and Mr. Thorn is a director of Fox Paine & Company.
STOCKHOLDERS' AGREEMENTS
On May 14, 1999, we entered into a stockholders' agreement with Fox Paine
Capital Fund, L.P., investors affiliated with Fox Paine Capital Fund, L.P. and
several non-fund investors, including co-investors and some of our employees
listed on the signature pages to the stockholders' agreement. Since May 14,
1999, additional parties, including Cook Inlet, have been added to the
stockholders' agreement. The
17
<PAGE> 20
following is a summary of the material terms of the stockholders' agreement and
is qualified in its entirety by reference to the stockholders' agreement, which
is listed as an exhibit to our Annual Report on Form 10-K for 1999.
TRANSFER RESTRICTIONS
The stockholders' agreement contains general restrictions on the ability of
our stockholders to transfer their shares of common stock. In addition, if Fox
Paine Capital Fund and its affiliates desire to sell or dispose of all their
shares of common stock, they have the right to require the non-fund investors to
sell all of their shares of common stock on a pro rata basis and on the same
terms and conditions in that transaction. The non-fund investors have tag-along
rights which enable them to participate on a pro rata basis and on the same
terms and conditions in sales of shares of common stock by Fox Paine Capital
Fund and its affiliates other than sales made pursuant to Rule 144 under the
Securities Act.
REGISTRATION RIGHTS
Under the stockholders' agreement, as of November 23, 1999 and subject to
limited exceptions,
- Fox Paine Capital Fund and its affiliates, as a group, may make up to six
demands for registration under the Securities Act of their shares of
common stock;
- Affiliates of Donaldson, Lufkin & Jenrette Securities Corporation, or
holders of at least 25% of the shares of common stock presently owned by
DLJ, may make one demand for registration under the Securities Act of
their shares of common stock; and
- Cook Inlet, or holders of at least 25% of the shares of common stock
presently owned by Cook Inlet, may make one demand for registration under
the Securities Act of its shares of common stock.
Upon any demand for registration by any of Fox Paine Capital Fund and its
affiliates, DLJ or Cook Inlet, each of our other stockholders will be given the
opportunity to participate on a pro rata basis in the registration demanded. The
stockholders' agreement also provides the stockholders with piggyback
registration rights that allow each of them to include all or a portion of their
shares of common stock under a registration statement filed by us, subject to
limited exceptions. The stockholders amended the stockholders' agreement so that
piggyback registration rights were not exercisable in connection with the
initial public offering.
OTHER AGREEMENTS
Pursuant to the stockholders' agreement, each of our stockholders has
agreed at all times during the term of the stockholders' agreement, not to act
as a member of a group or in concert with others in connection with the
acquisition, disposition or voting of shares of common stock in any manner
inconsistent with the stockholders' agreement.
Provisions in the stockholders' agreement:
- preclude stockholders from granting any proxy or entering into any voting
trust with respect to our common stock or entering into any stockholders'
agreement or arrangement inconsistent with the provisions of the
stockholders' agreement; or
- grant members of management various rights to put or call their shares of
common stock upon completion of the offering.
TERMINATION
The rights and obligations described under "Transfer Restrictions" will
terminate when:
- Fox Paine Capital Fund and its affiliates own less than 20% of the fully
diluted shares of common stock then outstanding; or
- the warrants issued in connection with the senior discount debentures are
exercised.
18
<PAGE> 21
In addition, the stockholders' agreement will terminate upon any
recapitalization, consolidation, reorganization or other restructuring of Alaska
Communications Systems Group, Inc. as a result of which parties to the
stockholders' agreement and their permitted transferees own less than a majority
of the outstanding voting power of the entity surviving that recapitalization,
consolidation, reorganization or other restructuring. After such a transaction,
only rights and obligations described under "Registration Rights" will survive
until the earlier of:
- May 14, 2019; or
- the date when there are no longer any shares outstanding or issuable upon
exercise or conversion of any options, warrants, rights or other
convertible securities that remain to be registered.
Rights and obligations under the stockholders' agreement relating to
indemnification will survive indefinitely.
STOCK INCENTIVE PLANS
ALEC HOLDINGS, INC. 1999 STOCK INCENTIVE PLAN
In connection with the completion of the acquisitions of Century's Alaska
properties and ATU, we adopted the ALEC Holdings, Inc. 1999 Stock Incentive Plan
under which we may grant incentive awards in the form of options to purchase
shares of our common stock, restricted shares of our common stock and stock
appreciation rights to participants, which include non-employee directors,
officers, employees and consultants of us and our affiliates. The total number
of shares of our common stock initially reserved and available for grant under
the stock incentive plan is 3,410,486 shares. A committee of our Board of
Directors, or our Board of Directors itself in the absence of a committee, is
authorized to make grants and various other decisions under the stock incentive
plan. Unless otherwise determined by the Board of Directors or such committee,
any participant granted an award under the stock incentive plan must become a
party to, and agree to be bound by, the stockholders' agreement.
GENERAL. Stock options may include incentive stock options, nonqualified
stock options or both, in each case, with or without stock appreciation rights.
Stock options are generally nontransferable and, unless otherwise determined by
the Board of Directors or a designated committee, have a term of ten years. Upon
a participant's death or when the participant's employment with us or the
applicable affiliate of us is terminated for any reason, the participant's
then-unvested stock options are forfeited and the participant or his or her
legal representative may, within three months if termination of employment is
for any reason other than death, or one year in the case of the participant's
death, exercise any previously vested stock options. Stock appreciation rights
may be granted in conjunction with all or part of any stock option award and are
generally exercisable only in connection with the exercise of the related stock
option. Upon termination or exercise of the related stock option, stock
appreciation rights terminate and are no longer exercisable. Stock appreciation
rights are transferable only with the related stock options. Unless otherwise
provided in the related award agreement or, if applicable, the stockholders'
agreement, immediately prior to the change of control transactions described in
the stock incentive plan, all outstanding stock options and stock appreciation
rights will become fully exercisable and vested, and any restrictions and
deferral limitations applicable to any restricted stock awards will lapse. The
Board of Directors or its designated committee may also grant to any
participant, on terms and conditions determined by the Board of Directors or its
designated committee, the right to receive cash payments to be paid at that time
as an award results in compensation income to the participant in order to assist
the participant in paying the resulting taxes.
On May 14, 1999, we issued options to purchase 2,244,500 shares of common
stock to some of our employees and a consulting firm (204,000 of which were
subsequently forfeited); on May 24, 1999, we issued options to purchase 250,000
shares of common stock to some of our employees; on May 25, 1999, we issued
options to purchase 250,000 shares of common stock to some of our employees; on
June 1, 1999, we issued options to purchase 25,000 shares of common stock to
some of our employees; on June 9,
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1999, we issued options to purchase 15,000 shares of common stock to some of our
employees; and on June 25, 1999, we issued options to purchase 73,500 shares of
common stock to some of our employees. For all of these options, 10% vest on
each anniversary of their grant for a period of five years (16 2/3% for a period
of three years in the case of Mr. Robinson) and an additional 50% of the options
vest on the ninth year of the date of grant, and vesting will be accelerated to
each December 31 of the five years (three years in the case of Mr. Robinson)
following the date of grant, in equal installments, if corporate financial goals
established under our stock incentive plans are obtained. The vesting of 508,750
performance-based options of Mr. Robinson, however, have been accelerated and
vested upon the completion of our initial public offering. In addition, vesting
of 20,000 variable options held by another employee, F. Scott Davis, have been
accelerated and vested upon the completion of our initial public offering. These
employees have agreed not to dispose of more than 20% annually of the shares
they may receive upon exercise of these options. This 20% becomes available for
disposition in January for each of five years commencing in the year 2000. On
September 28, 1999, we issued options to purchase 470,000 shares of common stock
to some of our employees; on October 25, 1999, we issued options to purchase
4,000 shares of our common stock to some of our employees; on November 1, 1999,
we issued options to purchase 8,000 shares of our common stock to some of our
employees; and on November 15, 1999, we issued options to purchase 21,500 shares
of common stock to some of our employees, all of which vested upon the
completion of our initial public offering. The employees to whom these options
have been granted have agreed not to dispose of more than 20% annually of the
shares they may receive upon exercise of these options. This 20% becomes
available for disposition in January for each of five years commencing in the
year 2000 (plus any shares permitted to be disposed of, but not disposed of, in
any previous year). We had an independent appraisal of the fair market value of
these recently granted options. Based upon this appraisal, we recorded
$1,997,000 as of November 15 of deferred compensation that was charged to
expense on November 23, 1999.
Additionally, as discussed above, 528,750 of the options granted in May
1999 under the ALEC Holdings, Inc. 1999 Stock Incentive Plan are
performance-vesting options that vested upon completion of our initial public
offering. Based upon the midpoint of our initial public offering price range, we
recorded compensation expense of $4,148,000.
AMENDMENTS OR TERMINATION. The stock incentive plan will terminate on May
14, 2009. However, awards outstanding at that time will not be affected or
impaired by the stock incentive plan's termination. Our Board of Directors and
any designated committee have authority to amend the stock incentive plan and
awards granted thereunder.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. 1999 STOCK INCENTIVE PLAN
In connection with our November 23, 1999 offering, we adopted and approved
the Alaska Communications Systems Group, Inc. 1999 Stock Incentive Plan. This
plan is designed to promote our success and enhance our value by linking the
interests of our officers, employees and consultants to those of our
stockholders and by providing participants with an incentive for outstanding
performance. This plan is further intended to provide flexibility in its ability
to motivate, attract and retain employees upon whose judgment, interest and
special efforts our business is largely dependent. Our officers, employees and
consultants, including employees who are members of our board of directors, and
officers, employees and consultants of our subsidiaries and affiliates are
eligible to participate in this plan. Non-employee directors are not eligible to
participate in this plan. This plan is intended to remain in effect until 2009.
The description below summarizes the material terms of this plan.
GENERAL. The plan will be administered by the Compensation and Personnel
Committee of our Board of Directors, or another committee designated by our
Board of Directors, and provides for the grant of stock options, both
non-qualified and incentive stock options and other types of equity-based
awards.
The plan provides that the maximum number of shares of common stock
available for grant under the 1999 plan is 1,500,000.
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The term of options granted under the plan may not exceed 10 years. Unless
otherwise determined by our Compensation and Personnel Committee, options will
vest ratably on each of the first four anniversaries after the grant date and
will have an exercise price equal to the fair market value of the common stock
on the date of grant.
A participant exercising an option may pay the exercise price in cash or,
if approved by our Compensation and Personnel Committee, with previously
acquired shares of common stock or in a combination of cash and stock. Our
Compensation and Personnel Committee, in its discretion, may allow the cashless
exercise of options. Vesting of stock options occurs as follow: 1/3 based on
time, 1/3 based on our performance and 1/3 based on the individual's
performance. The 1/3 based upon our performance will vest at the end of each
fiscal year provided that we meet our EBITDA objectives.
Options are nontransferable other than by will or the laws of descent and
distribution or, at the discretion of our Compensation and Personnel Committee,
by a written beneficiary designation and, in the case of a non-qualified option,
by a gift to members of the holder's immediate family. The gift may be made
directly or indirectly or by means of a trust or partnership or limited
liability company and, during the participant's lifetime, may be exercised only
by the participant, any such permitted transferee or a guardian, legal
representative or beneficiary. On February 9, 2000, our Board of Directors
granted stock options under this plan to certain of our employees.
OTHER AWARDS. A stock appreciation right, or SAR, permits a participant to
receive cash or shares of common stock, or a combination thereof, as determined
by our Board of Directors or our Compensation and Personnel Committee. The
amount of cash or the value of the shares is equal to the excess of the fair
market value of a share of common stock on the date of exercise over the SAR
exercise price, multiplied by the number or shares with respect to which the SAR
is exercised. Restricted stock may be subject to performance or service-based
goals upon which restrictions will lapse. Performance units or restricted units
may be granted subject to performance goals and/or service-based restrictions,
and will be payable in cash or shares of common stock or a combination as
determined by our board of directors or our Compensation and Personnel
Committee. Dividend and interest equivalents with respect to awards, and other
awards based on the value of common stock, may also be granted.
CHANGE IN CONTROL. In the event of a change in control, any option or SAR
that is not then exercisable and vested will become fully exercisable and
vested, restrictions on restricted stock will lapse and performance units will
be deemed earned. Change in control generally means:
- the acquisition of an amount of common stock greater than the amount
held, directly or indirectly, by Fox Paine, our controlling stockholder,
and representing at least 30% of the outstanding common stock or voting
securities;
- a change in the majority of the members of the Board of Directors, unless
approved by the incumbent directors or Fox Paine;
- the completion of a merger or other business combination involving us in
which, among other things, our stockholders fail to retain more than 50%
of the common stock and voting power; or
- approval by our stockholders of a complete liquidation or dissolution or
sale of substantially all of our assets.
AMENDMENTS OR TERMINATION. Our Board of Directors may at any time amend or
terminate the plan and may amend the terms of any outstanding option or other
award, except that no termination or amendment may impair the rights of the
participants as they relate to outstanding options or awards. However, no such
amendment to the plan will be made without the approval of our stockholders to
the extent such approval is required by law or stock exchange or automated
quotation system rule.
The Plan is designed to provide a greater identity of interests between the
executive and stockholders by affording the executives an opportunity to share
in our future success.
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ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN
In connection with our November 23, 1999 offering, we adopted and approved
the Alaska Communications Systems Group, Inc. 1999 Employee Stock Purchase Plan.
The purpose of the purchase plan is to further our long-term stability and
financial success by providing a method for our employees to increase their
ownership of common stock. Under the purchase plan, 1,000,000 shares of common
stock is available for issuance and sale. Unless sooner terminated at the
discretion of our Board of Directors, the purchase plan will terminate on
December 31, 2009.
ELIGIBILITY. All of our employees and all of the employees of designated
subsidiaries generally are eligible to participate in the purchase plan, other
than employees whose customary employment is 20 hours or less per week or is for
not more than five months in a calendar year, or who are not eligible to
participate due to restrictions under the Internal Revenue Code.
GENERAL. A participant in the purchase plan may authorize regular salary
deductions of a maximum of 15% and a minimum of 1% of base compensation. The
fair market value of shares which may be purchased by any employee during any
calendar year may not exceed $25,000. The amounts so deducted and contributed
will be applied to the purchase of full shares of common stock under options to
purchase shares at 85% of the lesser of the fair market value of such shares on
the date of purchase or on the offering date for such offering period. The
offering dates will be January 1 and July 1 of each purchase plan year, and each
offering period will consist of one six-month purchase period. Shares will be
purchased for participating employees on the last business days of June and
December for each purchase plan year and each such participant will have the
rights of a stockholder with respect to such shares.
Participants may decrease their payroll deductions at any time but not more
than once during any offering period. Participants may increase or decrease
their payroll deductions for any subsequent offering period by notifying the
purchase plan administrator no later than 15 days prior to such offering period.
Participants may also withdraw from participation in the purchase plan at any
time on or prior to the 15th day of the last month of the offering period. If a
participant withdraws from the purchase plan, any contributions that have not
been used to purchase shares will be refunded. A participant who has withdrawn
may not participate in the purchase plan again until the next offering period.
In the event of retirement or other termination of employment before the
15th day of the last month in the offering period, any contributions that have
not yet been used to purchase shares will be refunded and a certificate issued
for the full shares in the participant's account. In the event of a
participant's death, any contributions that have not yet been used to purchase
shares and all shares in such participant's account will be delivered to the
participant's beneficiary designated in writing and filed with us, or, if no
beneficiary has been designated or survives the participant, to the
participant's estate. Any payroll deductions that have not been used to purchase
shares will be returned to the participant after the end of the applicable
offering period.
AMENDMENTS OR TERMINATION. Our Board of Directors may amend the purchase
plan in any respect, although our stockholders must approve any amendment that
would increase the number of securities that may be issued under the purchase
plan or would cause the plan to fail to qualify for beneficial tax treatment
under Section 423 of the Internal Revenue Code. Our Board of Directors may
suspend or terminate the purchase plan at any time. However, in the event of a
termination while an offering period is in progress, our Compensation and
Personnel Committee may return accumulated payroll deductions or shorten the
offering period by setting a new date of purchase.
ALASKA COMMUNICATIONS SYSTEMS GROUP., INC. 1999 NON-EMPLOYEE DIRECTOR STOCK
COMPENSATION PLAN
In connection with our November 23, 1999 offering, we adopted and approved
the Alaska Communications Systems Group, Inc. 1999 Non-Employee Director Stock
Compensation Plan. The purpose of this plan is to promote a greater identity of
interests between our non-employee directors and our stockholders and to attract
and retain individuals to serve as directors. The plan is administered by our
Board of Directors.
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ELIGIBILITY. Our non-employee directors were eligible to participate in the
plan as of the date of the offering. A total of 150,000 shares of common stock
has been reserved for issuance and is available for grants under the plan.
ADJUSTMENT OF AWARDS. Our Board of Directors or its designated committee
may adjust the awards under the plan if there is any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as a
merger, consolidation, separation, including a spin-off, or other distribution
of our stock or property, any reorganization or any partial or complete
liquidation.
GENERAL. Each non-employee director, other than directors affiliated with
Fox Paine, will receive a portion of his or her annual retainer and meeting fees
in shares of common stock. In addition, non-employee directors may make an
annual irrevocable election to receive shares of common stock in lieu of all, or
a portion, of such director's remaining fees. The number of shares of common
stock granted to a director will be equal to the appropriate percentage of fees
payable to the director in each calendar quarter, divided by the fair market
value of a share of common stock on the last business day of the calendar
quarter. We will round the number of shares granted to the director down to the
nearest whole share of common stock and pay cash for the value of any fractional
share. Each director may defer the receipt of his or her cash payments into an
interest-bearing cash account and/or his or her elected or mandatory share of
common stock into a share account which will be credited with additional shares
having a value equal to the dividends that would be paid on the shares credited
to the share account, if they were outstanding. When the director leaves our
Board of Directors or, if earlier, upon a change of control, the amount of cash
in his or her cash account, plus a number of shares of common stock equal to the
number of shares in his or her share account will be delivered to the director,
with cash being paid in lieu of any fractional shares.
Grants and awards under the plan are nontransferable other than by will or
the laws of descent and distribution, or at the discretion of our Board of
Directors or its designated committee, by a written beneficiary designation.
AMENDMENTS OR TERMINATION. Our Board of Directors may at any time terminate
or amend the plan, except that no termination or amendment may impair the rights
of directors relating to outstanding awards. No amendment will be made without
the approval of our stockholders to the extent such approval is required by law
or stock exchange or automated quotation system rule.
IMPACT OF INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code limits deductible compensation
to $1,000,000 a year for each of the five highest paid executive officers.
Performance-based compensation, however, can be excluded from the determination
of compensation subject to this limit if it meets certain requirements. The
Compensation and Personnel Committee's policy is to take this limitation into
account in structuring executive compensation programs, but the Committee does
not believe it is necessarily in our or our stockholders' best interest for all
plans to meet the requirements of Section 162(m) deductibility.
A special transitional rule applies to compensation paid under plans and
programs that were in existence prior to the time a company becomes publicly
held. Thus, stock grants pursuant to the ALEC Holdings, Inc. 1999 Stock
Incentive Plan, the Alaska Communications Systems Group, Inc. 1999 Stock
Incentive Plan and Alaska Communications Systems Group, Inc. 1999 Employee Stock
Purchase Plan will be exempt from the limits of Section 162(m). The transitional
period expires upon the earliest of: (i) the expiration of the plan; (ii) the
material modification of the plan; (iii) the issuance of all stock or other
compensation that has been reserved under the plan; or (iv) the first meeting of
shareholders that occurs after December 31, 2002.
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EMPLOYMENT AGREEMENTS
Before completion of the acquisitions of Century's Alaska properties and
ATU, we entered into new employment arrangements with some of our employees
relating to their employment with us and Alaska Communications Systems Holdings,
their ownership of our common stock and the granting of options to purchase
shares of our common stock following the completion of these acquisitions.
EMPLOYMENT AGREEMENT WITH CHARLES E. ROBINSON
Under the employment agreement among Alaska Communications Systems Group,
Inc., Alaska Communications Systems Holdings, Inc. and Charles E. Robinson,
dated as of March 12, 1999, Mr. Robinson served as the Chairman of the Board of
Directors, Chief Executive Officer and President Alaska Communications Systems
Group, Inc. and Alaska Communications Systems Holdings, Inc. for a three-year
period, which will be extended automatically for successive additional one-year
periods unless either our Board of Directors, or Mr. Robinson gives no less than
90 days written notice of an intention not to extend the term. On October 7,
1999, Mr. Carson became our President and Chief Operating Officer while Mr.
Robinson retained his title of Chairman of the Board and Chief Executive
Officer. Mr. Robinson will receive an initial annual base salary of $500,000,
which may be increased at the beginning of each year following the first year of
employment. Mr. Robinson will be eligible for an annual bonus equal to 100% of
his annual base salary for each calendar year based on our attainment of
mutually determined business targets, with appropriate adjustments to the extent
we exceed or fail to reach these targets. In no event will Mr. Robinson's annual
bonus be less than $200,000. Mr. Robinson's employment agreement also provides
for other customary benefits including fringe benefit plans, paid vacation, life
and disability insurance plans and expense reimbursement.
Under Mr. Robinson's employment agreement, if Mr. Robinson's employment
were to be terminated by Mr. Robinson for good reason or following a change in
control or by Alaska Communications Systems Group, Inc. without cause, we would
be obligated to pay Mr. Robinson a lump sum cash payment in an amount equal to
the sum of:
- Mr. Robinson's annual base salary, as then in effect, plus
- Mr. Robinson's most recent annual bonus, as well as reimbursement for the
cost of continuing health insurance coverage under COBRA for twelve
months.
In addition, upon the termination of Mr. Robinson's employment, the number
of then-unvested options will vest as are necessary to vest at least one-third
of all options received by Mr. Robinson. In addition, in the event we decide at
any time not to extend the term of his employment agreement, we will pay Mr.
Robinson the sum of:
- Mr. Robinson's annual base salary, as then in effect, plus
- Mr. Robinson's most recent annual bonus, plus
- reimbursement for the cost of continuing health insurance coverage under
COBRA for twelve months.
The employment agreement with Mr. Robinson also provides that during his
employment and during the 12-month period following any termination of his
employment, Mr. Robinson will not directly or indirectly own, make equity or
debt investments in, manage, control, participate in, consult with, advise,
render services to, or in any manner engage in, or be connected as an employee,
officer, partner, director, consultant or otherwise with:
- any enterprise engaged in the provision of local exchange or wireless
telecommunications services in any state in which:
-- we, our affiliates or subsidiaries, or
-- any entity that is a party to an acquisition agreement with us, our
affiliates or subsidiaries is engaged in the provision of local
exchange or wireless telecommunications services, or
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<PAGE> 27
- any enterprise that is the subject of a potential transaction made known
to us, our affiliates or subsidiaries, or Mr. Robinson during or at any
time prior to the termination of his employment agreement, that is
engaged in the provision of local exchange or wireless telecommunications
services.
However, Mr. Robinson may be a passive owner of not more than 1% of any
publicly traded class of capital stock of any entity engaged in the provision of
local exchange or wireless telecommunications services. Mr. Robinson's
employment agreement also provides for other non-inducement and non-
solicitation restrictions during Mr. Robinson's employment and during the
12-month period following any termination of his employment.
EMPLOYMENT AGREEMENT WITH WESLEY E. CARSON
Under the employment agreement, dated March 12, 1999, by and among Alaska
Communications Systems Group, Inc., Alaska Communications Systems Holdings, Inc.
and Wesley E. Carson, Mr. Carson served as our Executive Vice President and
Alaska Communications Systems Holdings, Inc. for a two-year initial term at an
annual base salary of $200,000. On October 7, 1999, Mr. Carson assumed the title
of President and Chief Operating officer of Alaska Communications Systems Group,
Inc. Previously, Mr. Robinson held the title of President. Mr. Carson's
employment agreement generally contains provisions similar to those in Mr.
Robinson's employment agreement, except that:
- Mr. Carson does not have a guaranteed minimum annual bonus, and
- Mr. Carson's employment agreement does not provide any additional rights
with respect to vesting of then-unvested options upon termination.
OTHER EMPLOYMENT ARRANGEMENTS
We have made additional employment commitments to other of our officers on
terms and conditions substantially similar to those in the employment agreement
with Mr. Carson.
PROPOSAL TWO: APPOINTMENT OF AUDITORS
Our Board of Directors has appointed Deloitte & Touche LLP to serve as our
independent auditors for the year ending December 31, 2000. This appointment is
subject to your ratification. Our management considers Deloitte & Touche LLP to
be well qualified.
Representatives of Deloitte & Touche LLP are expected to be present at the
annual meeting. They will have an opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
VOTE REQUIRED
The affirmative vote from a majority of the shares of common stock that are
present in person or by proxy and voting on such proposal is required for
ratification of the appointment of independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR SUCH APPOINTMENT.
OTHER MATTERS
We do not know of any other matters to be presented at the annual meeting
other than those discussed in this proxy statement. However, if other matters
are properly brought before the annual meeting, your proxies will be able to
vote those matters at their discretion.
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STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
In order for stockholder proposals to be included in the proxy statement
for the 2001 annual meeting, we must receive them no later than December 11,
2000. Stockholder proposals must be in compliance with Rule 14a-8 under the
Exchange Act and with our Bylaws. They must also be submitted in writing by
notice delivered to the Corporate Secretary, Alaska Communications Systems
Group, Inc., 510 L Street, Suite 500, Anchorage, Alaska 99501. These notices
must set forth:
- the stockholder's name and address;
- the text of the proposal to be introduced;
- the number of shares of our common stock the stockholder held of record,
owned beneficially and represented by proxy as of the date of the notice;
and
- a representation that the stockholder intends to appear in person or by
proxy at the meeting to introduce the proposal specified in the notice.
In addition, any stockholder who meets the requirements of the proxy rules
under the Exchange Act may nominate a candidate for director or may bring other
business before the annual meeting of stockholders for 2001. For other such
business to be included in the proxy materials, it must meet the additional
requirements set forth in the paragraph above. Any such nomination or other
business must be submitted in writing by notice delivered to the Corporate
Secretary, Alaska Communications Systems Group, Inc., 510 L Street, Suite 500,
Anchorage, Alaska 99501, not later than December 11, 2000.
For director nominations, the stockholder's notice must list all
information relating to the nominee that is required to be disclosed in
solicitations of proceeds for election of the directors in an election contest,
or that is required under the Exchange Act. This includes the nominee's written
consent to serving as a director, if elected. For other business, the
stockholder's notice must include a brief description of the business desired to
be brought before the meeting and the reasons for conducting such business at
the meeting. It must also describe any material interest that the stockholder or
beneficial owner has in that business. In both cases, the stockholder's notice
must also set forth, both as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made:
- the name and address of such stockholder and of such beneficial owner, as
they appear on our books; and
- the number of each class of our shares which are owned beneficially and
of record by such stockholder and such beneficial owner.
ANNUAL REPORT TO STOCKHOLDERS
We are mailing a copy of our 1999 Annual Report to Stockholders together
with this proxy statement to stockholders of record on the Annual Meeting record
date. Any stockholder who desires additional copies may obtain one, without
charge, by addressing a request to the Assistant Secretary, Alaska
Communications Systems Group, Inc., 510 L Street, Suite 500, Anchorage, Alaska
99501. We will charge an amount equal to the reproduction cost if the exhibits
are requested.
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ANNUAL MEETING OF STOCKHOLDERS
OF ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
The 2000 Annual Meeting of Stockholders of Alaska Communications Systems
Group, Inc. will be held on Thursday, May 11, 2000 in the Foredeck of Ballroom
of the Hotel Captain Cook, 939 West 5th Avenue, Anchorage, Alaska 99501. The
meeting will begin at 10:00 a.m. Doors to the meeting will open at 9:30 a.m.
The Hotel Captain Cook
939 West 5th Avenue
Anchorage, Alaska 99501
Phone: 907-276-6000
Fax: 907-343-2298
DIRECTIONS TO THE HOTEL
From the Airport, take International Airport Road East. Go approximately
2.5 miles, bear right onto Minnesota Boulevard North. Continue on Minnesota
Boulevard North, it will become I Street. Turn left on to 4th Avenue for the
Hotel Captain Cooks's main circular driveway and valet parking. Entrances to the
parking garage are located on 4th and 5th Avenues.
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PROXY
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated April 10, 2000 and holding common stock of Alaska
Communications Systems Group, Inc. ("Company") of record determined as of March
27, 2000 hereby appoints Donn T. Wonnell, Executive Vice President, General
Counsel and Secretary, and Michelle S. Bittner, Assistant Secretary, on behalf
of the Board of Directors of the Company, and each of them, the proxy of the
undersigned, with full power of substitution, to attend the annual meeting
("Annual Meeting") of shareholders, to be held on Thursday, May 11, 2000,
beginning at 10:00 a.m. local time, in the Foredeck of the Ballroom of the
Hotel Captain Cook, 939 West 5th Avenue, Anchorage, Alaska and any adjournment
or adjournments of the Annual Meeting. The undersigned further directs those
holders of this Proxy to vote at the Annual Meeting, as specified in the Proxy,
all of the shares of common stock of the undersigned in the Company, which the
undersigned would be entitled to vote if personally present, as follows:
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 31
PLEASE MARK
VOTE IN BOX IN
THE FOLLOWING [X]
MANNER USING
DARK INK ONLY.
The Board of Directors recommends a vote "FOR" proposals 1 and 2. If no
direction is made, it will be voted "FOR" proposals 1 and 2. If any
other business properly comes before the annual meeting, the
Proxy will be voted at the discretion of your proxies.
FOR WITHHOLD
all nominees AUTHORITY
(excepted as to vote for
written all of the
below) listed nominees
1. ELECTION OF DIRECTORS [ ] [ ]
To elect Charles E. Robinson, W. Dexter
Paine, III, Saul A. Fox, Carl. H. Marrs,
Byron I. Mallott and Wray T. Thorn as
Directors for one-year terms expiring at
the 2001 Annual Meeting.
___________________________________________________
FOR AGAINST ABSTAIN
2. To ratify the appointment of [ ] [ ] [ ]
Deloitte & Touche LLP as
independent auditors for the
year ending December 31, 2000:
3. In accordance with their discretion, to vote upon all other matters that may
properly come before said Annual Meeting and adjournment, thereof, including
matters incidental to the conduct of the meeting.
The undersigned hereby ratifies and confirms all that the proxyholder or the
holder's substitute lawfully does or causes to be done by virtue of this Proxy
and hereby revokes any and all proxies given prior to this Proxy by the
undersigned to vote at the Annual Meeting or any adjournments of the Annual
Meeting. The undersigned acknowledges receipt of the Notice of the Annual
Meeting and the Proxy Statement accompanying the Notice.
Signature of Shareholder(s) ____________________ Print Name ____________________
Date ____________, 2000
Please date this Proxy, sign it above as your name (or names) appears and
return it in the enclosed envelope which requires no postage. Joint owners
should each sign personally. When signing as attorney, executor, trustee,
guardian, administrator or officer of a corporation, please give that title.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
