<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
CENTRAL TELEPHONE COMPANY
(Name of Registrant as Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14c-5(g).
[ ] Fee Computed on table below per Exchange Act Rules 14c-
5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
NOTICE OF 1995 ANNUAL MEETING
AND INFORMATION STATEMENT
CENTRAL TELEPHONE COMPANY
2330 SHAWNEE MISSION PARKWAY
WESTWOOD, KANSAS 66205
To Our Shareowners:
The Central Telephone Company Annual Meeting of Shareowners
will be held at the offices of Sprint Corporation located at 2330
Shawnee Mission Parkway, Westwood, Kansas 66205, on Thursday,
November 9, 1995 at 9:00 A.M.
The enclosed notice of the meeting and Information Statement
contain detailed information about the business to be transacted
at the meeting.
Very truly yours,
D. Wayne Peterson
Chief Executive Officer
October 18, 1995
<PAGE>
NOTICE OF MEETING
The Annual Meeting of Shareowners of Central Telephone
Company will be held at the offices of Sprint Corporation, 2330
Shawnee Mission Parkway, Westwood, Kansas 66205, on Thursday,
November 9, 1995 at 9:00 A.M. to:
1. Elect seven Directors;
2. Transact such other business as may properly come before the
meeting.
Shareowners of record at the close of business on September
21, 1995, will be entitled to vote.
By Order of the Board of Directors
Marion W. O'Neill
Secretary
October 18, 1995
<PAGE>
CENTRAL TELEPHONE COMPANY
2330 SHAWNEE MISSION PARKWAY
WESTWOOD, KANSAS 66205
Information Statement
We Are Not Asking You for a Proxy and You Are Requested Not To
Send Us a Proxy
This Information Statement is furnished in connection with
the Annual Meeting of Shareowners of Central Telephone Company
(the "Company") to be held on November 9, 1995. This Information
Statement and the accompanying Notice of Meeting, and the Company's
Annual Report on Form 10-K for the year ended December 31, 1994,
are being mailed to Shareowners beginning on October 18, 1995.
On December 2, 1992, Centel Corporation (Centel) shareowners
approved an Agreement and Plan of Merger providing for the merger
of F W Sub Inc., a wholly-owned subsidiary of Sprint Corporation
(Sprint), with and into Centel (the Merger). As a result of the
Merger, which became effective March 9, 1993, Centel became a
wholly-owned subsidiary of Sprint. Centel owns 2,250,000 shares
of common stock of the Company, which is all of the common stock
of the Company and represents approximately 92.4% of the voting
power.
Election of Directors
The Board of Directors is presently composed of seven
Directors. Seven Directors are to be elected for a term of one
year, subject to the Company's bylaws. Centel intends to vote
all 2,250,000 shares of the Company's common stock which it holds
for the nominees, thus ensuring their election. All nominees are
now serving as Directors of the Company. Management knows of no
reason why any nominee would decline or be unable to serve.
These nominees have been selected by the Board of Directors. The
seven Directors who are to be elected are paid no compensation
for serving as a Director. The nominees are as follows:
Stephen M. Bailor - Mr. Bailor, 51, has been Vice President
since 1993. Mr. Bailor served as Vice President and Controller
of the Company from 1989 to 1993. He has also served as Vice
President-Financial and Local Billing Services of Sprint's
Finance Division since 1993. Mr. Bailor has been a Director
since 1993.
Don A. Jensen - Mr. Jensen, 60, has been Vice President-
Assistant Secretary since 1993. He has also served as Vice
President and Secretary of Sprint since 1975. Mr. Jensen has
been a Director since 1993.
Dianne Jett - Ms. Jett, 46, has been President of the
Company's Nevada Division since 1993. From 1989 to 1993, she was
General Regulatory Manager of the Company's Nevada Division. Ms.
Jett has been a Director since 1993.
William E. McDonald - Mr. McDonald, 53, has been President
of the Company's North Carolina Division since 1993. He has also
served as President of the other four companies comprising the
Mid-Atlantic Group of local exchange companies of Sprint since
1993. From 1988 to 1993, he served as President of the two
companies comprising the Eastern Group of local exchange
companies of Sprint. Mr. McDonald has been a Director since
1993.
<PAGE> 2
D. Wayne Peterson - Mr. Peterson, 59, has been President and
Chief Executive Officer since 1993. He has also served as
President-Local Telecommunications Division of Sprint since 1993.
From 1980 to 1993, he served as President of Carolina Telephone
and Telegraph Company, a subsidiary of Sprint. Mr. Peterson has
been a Director since 1993.
M. Jeannine Strandjord - Ms. Strandjord, 49, has been Vice
President-Treasurer since 1993. She has also served as Senior
Vice President and Treasurer of Sprint since 1990. She served as
Vice President and Controller of Sprint from 1986 to 1990. Ms.
Strandjord has been a Director since 1993.
Alan J. Sykes - Mr. Sykes, 48, has been Vice President of
Revenues of Sprint's Local Telecommunications Division since
1987. Mr. Sykes has been a Director since 1993.
Beneficial Ownership of Shares of Directors
and Executive Officers
The following table sets forth information as of December
31, 1994, with respect to the shares of Sprint common stock owned
by each current Director, each of the executive officers named in
the executive compensation tables, and by all Directors and
executive officers as a group. No Director or executive officer
owns any equity security of the Company.
<TABLE>
<CAPTION>
Sprint Common Stock
Name of Individual or Beneficially Owned (1)
Identity of Group Number of Shares
<S> <C>
Stephen M. Bailor 49,543 (2)(3)
Don A. Jensen 39,341 (2)
Dianne Jett 18,954 (2)
William E. McDonald 71,350 (2)
D. Wayne Peterson 87,343 (2)
M. Jeannine Strandjord 53,530 (2)
Alan J. Sykes 32,707 (2)(3)
All Directors and executive officers
as a group (12 persons) 656,364 (2)(4)
___________
Notes:
<FN>
<F1> Unless otherwise noted, the persons for whom the information
is provided had sole voting and investment power over the
shares of stock shown as beneficially owned.
<F2> Includes shares which may be acquired upon the exercise of
stock options exercisable on or within 60 days after
December 31, 1994, under Sprint's stock option plans as
follows: 39,117, 19,359, 3,733, 53,250, 45,403, 40,250 and
26,500 shares for Mr. Bailor, Mr. Jensen, Ms. Jett, Mr.
McDonald, Mr. Peterson, Ms. Strandjord and Mr. Sykes,
respectively, and 463,601 shares for all Directors and
executive officers as a group.
<F3> Includes shares held by or for the benefit of family members
in which beneficial ownership has been disclaimed: 1,095
shares held by Mr. Bailor as custodian for his daughters,
and 89 shares held by Mr. Sykes as custodian for his son.
<F4> Represents less than 1% of class.
</TABLE>
Meetings and Committees
The Board of Directors took action during 1994 by unanimous
written consent but otherwise held no meetings during the year.
The Board has two committees which have all the powers of the
Board, with certain exceptions, to take action between meetings
of the Board. The Executive Committee of the Nevada Division has
such powers with respect to the business and property of the
Nevada Division and the Executive Committee of the North Carolina
Division has such powers with respect to the business and
property of the North Carolina Division.
All of the Directors are employees of Sprint subsidiaries
and receive no compensation for serving in their capacity as
Director of the Company.
<PAGE> 3
Executive Compensation
The following tables set forth the annual compensation of
the Chief Executive Officer of the Company and the other
executive officers of the Company who earned at least $100,000 in
salary and bonus for services to the Company and its subsidiaries
during 1994 (the Named Officers).
Summary Compensation Table
The following table reflects the cash and non-cash
compensation for the Named Officers. Annual salary and bonus
amounts shown are amounts allocated to the Company by Sprint.
The individuals designated as Named Officers also had
responsibilities during 1994 relating to Sprint, Centel and other
subsidiaries of Sprint and Centel. Except for amounts shown in
the "Salary" and "Bonus" columns, the compensation stated
reflects all compensation earned by the individuals in all his or
her capacities with Sprint, Centel, and their subsidiaries.
<TABLE>
<CAPTION>
Annual Compensation
_______________________________
Other
Annual
Name and Principal Compen-
Position Year Salary Bonus sation
($) ($) ($)
_________________ _____ ________ ________ ___________
<S> <S> <C> <C> <C>
D. Wayne Peterson <F2> 1994 67,412 69,714 36,426 <F3>
Chief Executive 1993 27,985 19,762 24,166
Officer
Diane Jett <F5> 1994 162,598 117,419 0
President - 1993 74,808 41,156 4,587
Nevada Division
William E. McDonald <F6> 1994 64,220 41,321 44,357 <F7>
President - North 1993 21,121 14,229 10,286
Carolina Division
<CAPTION>
Long-Term Compensation
____________________________________
Awards Payouts
_______________________ ___________
Securities
Restricted Underly-
Stock ing LTIP
Name and Principal Award(s) Options/ Payouts
Position Year ($) SARs ($)
(#)
_________________ _____ ________ ________ ___________
<S> <S> <C> <C> <C>
D. Wayne Peterson <F2> 1994 0 94,970 107,633
Chief Executive 1993 372,500 <F4> 11,000 89,783
Officer
Diane Jett <F5> 1994 0 5,000 0
President - 1993 0 5,000 0
Nevada Division
William E. McDonald <F6> 1994 0 14,000 66,048
President - North 1993 0 11,000 61,098
Carolina Division
<CAPTION>
All
Other
Compen-
Name and Principal sation
Position Year ($)<F1>
_________________ _____ __________
<S> <S> <C>
D. Wayne Peterson <F2> 1994 35,780
Chief Executive 1993 42,431
Officer
Diane Jett <F5> 1994 4,519
President - 1993 6,060
Nevada Division
William E. McDonald <F6> 1994 79,659
President - North 1993 12,874
Carolina Division
____________
Notes:
<FN>
<F1> Consists of the following amounts for 1994: (a) $6,195,
$4,080 and $5,503 contributed on behalf of Mr. Peterson, Ms.
Jett and Mr. McDonald, respectively, as company contributions
under Sprint's Retirement Savings Plan; (b) $439 in dividends
on Centel Employees' Stock Ownership Plan shares for Ms. Jett;
(c) $28,935 and $65,911 in relocation expenses for Mr.
Peterson and Mr. McDonald, respectively; (d) $650 and $8,245
for Mr. Peterson and Mr. McDonald, respectively, representing
the portion of interest credits on deferred compensation
accounts under Sprint's Executive Deferred Compensation Plan
that are deemed by Securities and Exchange Commission (SEC)
rules to be at above-market rates.
<F2> Mr. Peterson first became an executive officer of the
Company on September 28, 1993.
<F3> Includes the cost of providing tax and financial services
of $9,625 and automobile allowance of $12,500.
<F4> The value of the restricted stock shown is based on the
closing price of Sprint common stock on October 20, 1993, the
date of the grant. As of December 31, 1994, Mr. Peterson held
10,000 restricted shares valued at $276,250, based on the
closing price of Sprint common stock on December 31, 1994,
equal to $27.625. Mr. Peterson has the right to vote and
receive dividends on the restricted shares. Twenty-five
percent of the award vests on July 12, 1996, 25% on July 12,
1997, and 50% on July 12, 1998.
<F5> Ms. Jett first became an executive officer of the Company on
March 9, 1993.
<F6> Mr. McDonald first became an executive officer of the
Company on September 28, 1993.
<F7> Includes the cost of providing club memberships of
$12,110 and automobile allowance of $12,000.
</TABLE>
<PAGE> 4
Option Grants
The following table summarizes options granted to the Named
Officers during 1994 for the purchase of shares of Sprint common
stock under Sprint's stock option plans. The option grants
relate to compensation earned by the Named Officers for all
responsibilities with Sprint, Centel and their subsidiaries. The
amounts shown as potential realizable values on these options are
based on arbitrarily assumed annualized rates of appreciation in
the price of Sprint common stock of five percent and ten percent
over the term of the options, as set forth in SEC rules. The
Named Officers will realize no gain on these options without an
increase in the price of Sprint common stock. No stock
appreciation rights were granted during 1994.
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
% of Total
Number of Options
Securities Granted to Exercise
Underlying Options Employees in Base Price
Name Granted (#)<F1> Fiscal Year ($/Sh)
_________ ________________ _____________ __________
<S> <C> <C> <C>
D. Wayne Peterson 30,000 1.1% $36.6875
30,000 1.1% 35.8125
1,892 0.1% 36.5625
3,525 0.1% 36.5625
4,041 0.1% 36.5625
4,895 0.2% 36.5625
3,512 0.1% 32.1875
10,444 0.4% 32.1875
6,661 0.2% 32.1875
Dianne Jett 5,000 0.2% 36.6875
William E. McDonald 14,000 0.5% 36.6875
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Expiration Option Term <F2>
Name Date 0% 5% 10%
_________ ___________ _____________________________
<S> <C> <C> <C> <C>
D. Wayne Peterson 02/11/04 $0 $692,177 $1,754,113
07/12/04 0 675,669 1,712,277
04/23/95 0 4,093 8,220
04/22/96 0 14,450 29,735
04/13/97 0 24,551 51,750
02/12/98 0 38,425 82,720
02/12/98 0 19,721 41,721
02/17/99 0 78,665 170,754
02/15/01 0 77,212 176,594
Dianne Jett 02/11/04 0 115,363 292,352
William E. McDonald 02/11/04 0 323,016 818,586
_____
Notes:
<FN>
<F1> The first two grants shown for Mr. Peterson are option
awards and the remaining grants are reload grants. Each grant
for Ms. Jett and Mr. McDonald is an option award.
Twenty-five percent of the first option grants shown for each
Named Officer became exercisable on February 11, 1995, and an
additional 25% will become exercisable on February 11 of each
of the three successive years. The second option grant shown
for Mr. Peterson will become exercisable on July 12, 1999.
The option awards each have a reload feature.
A reload option is an option granted when an optionee
exercises a stock option and makes payment of the purchase
price using shares of previously owned Sprint common stock. A
reload option is granted for the number of shares equal to the
number of shares utilized in payment of the purchase price and
tax withholding, if any. The option price for a reload option
is equal to the market price of Sprint common stock on the
date of exercise of the original option. The expiration date
of a reload option is the same as the expiration date of the
option that was exercised. A reload option becomes
exercisable one year from the date the original option was
exercised, provided the shares acquired on the exercise of the
original option are held by the optionee for at least six
months.
<F2> The dollar amounts in these columns are the result of
calculations at the five percent and ten percent rates set by
the SEC and are not intended to forecast future appreciation
of Sprint common stock.
</TABLE>
Option Exercises and Fiscal Year-End Values
The following table summarizes the net value realized on the
exercise of options in 1994, and the value of the outstanding
options at December 31, 1994, for the Named Officers.
<PAGE> 5
<TABLE>
Aggregated Option Exercises in 1994
and Year-end Option Values
<CAPTION>
Shares Acquired Value Realized
Name on Exercise(#) <F1>($)
<S> <C> <C>
D. Wayne Peterson 45,650 $704,188
Diane Jett 0 0
William E. McDonald 0 0
<CAPTION>
Number of Securities
Underlying Unexercised
Options at 12/31/94
_________________________________
Exercisable Unexercisable
Name (#) (#)
<S> <C> <C>
D. Wayne Peterson 18,050 11,470
Diane Jett 2,483 8,750
William E. McDonald 45,750 28,250
<CAPTION>
Value of Unexercised
In-the-Money
Options at 12/31/94<F2>
_________________________________
Exercisable Unexercisable
Name ($) ($)
<S> <C> <C>
D. Wayne Peterson $11,419 $14,953
Diane Jett 0 0
William E. McDonald 259,375 10,875
__________
Notes:
<FN>
<F1> The value realized upon exercise of an option is the
difference between the fair market value of the shares of
Sprint common stock received upon the exercise, valued on the
exercise date, and the exercise price paid.
<F2> The value of unexercised, in-the-money options is the
difference between the exercise price of the options and the
fair market value of Sprint common stock at December 31, 1994
($27.625).
</TABLE>
Long-Term Incentive Plan Awards
The following table represents awards to the Named Officers
(relating to all their responsibilities with Sprint, Centel and
their subsidiaries) under Sprint's long-term incentive plan
which, subject to Sprint's right to amend the plan at any time
prior to the approval of payouts by the Organization and
Compensation Committee of Sprint's Board of Directors, can be
earned by the achievement of certain financial objectives over
the three year period ending December 31, 1996. Payouts of
awards (which represent items of compensation attributable to
Sprint as a whole) are tied to achieving certain non-financial
business objectives for the local Operating Telephone Company and
specified levels of performance criteria, based on certain
financial objectives, within the Long Distance Division (LDD),
the Local Telecommunications Division (LTD), the local Operating
Telephone Company (OTC) and the Cellular Division. The relative
weight given to the performance criteria of these divisions in
computing an executive's payout is based on the executive's
responsibilities with Sprint.
The portion of the payout applicable to the LDD is tied to
achieving specified levels of operating margin and net
collectible revenue growth. The portion of the payout applicable
to the LTD and the OTC is tied to achieving specified levels of
earnings before interest, taxes and depreciation as a percent of
net revenues, and return on assets. The portion of the payout
applicable to the Cellular Division is tied to achieving
specified levels of operating income and net collectible revenue.
The target amount will be earned if 100% of the targeted levels
of such criteria is achieved and an award payout will not be
earned for the portion of the payout applicable to the LDD
criteria for performance below the threshold.
The portion of the payout applicable to the OTC nonfinancial
business objectives is tied to efforts and results in the
regulatory area and in improvements in employee attitude survey
results.
The calculated payout, based on the achievement of the above
financial criteria, is adjusted (increased or decreased) by the
percent change in the market price of Sprint common stock as
determined by the change in the average of the high and low
prices on January 1, 1994 and December 31, 1996. If stock price
increases over the three-year performance period, the payout is
adjusted by the percentage increase in stock price. Conversely,
if the stock price decreases over the three-year performance
period, the payout is reduced by the percentage decrease in stock
price. Upon approval of the payouts by the Organization and
Compensation Committee, each payout will be paid as specified by
the executive in restricted or unrestricted shares of Sprint
common stock, or deferred under the Executive Deferred
Compensation Plan.
<PAGE> 6
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
<CAPTION>
Estimated Future Payouts
under Non-Stock Price Based Plans<F1>
______________________________
Performance
or Other
Period Until
Maturation or Threshold Target Maximum
Name Payout ($) ($) ($)
<S> <C> <C> <C> <C>
D. Wayne Peterson 1/1/94-12/31/96 $27,278 $109,110 $186,305
Dianne Jett 1/1/94-12/31/96 10,100 40,400 65,165
William E. McDonald 1/1/94-12/31/96 17,044 68,175 109,966
_________
<FN>
<F1> Awards are based on a percentage of the Named
Officers' average base salary midpoint over the three-year
performance cycle which ends December 31, 1996. In
calculating the average base salary midpoint, the table
assumes the base salary midpoint for 1995 and 1996 will equal
the 1994 base salary midpoint. In addition, the estimated
future payouts shown assume that the average of the high and
low price of Sprint common stock on December 31, 1996 will be
the same as it was on January 1, 1994.
</TABLE>
Pension Plans
Under the Sprint Retirement Pension Plan, employees earn a
benefit equal to 1.5% of actual yearly salary and bonus. Prior
to 1990, however, the Sprint plan provided pension benefits based
on an employee's five highest consecutive years' compensation in
the last ten years before retirement. The benefit was determined
by taking 1.2% of the average compensation over such five year
period plus .35% of such average compensation in excess of a
certain amount ($23,400 in 1995) and multiplying the result by
the individual's years of credited service. Employees who retire
before the year 2000 will have their pension benefit calculated
under both the new and old formulas and will receive the greater
of the two benefits. Because the benefit for Mr. Peterson and
Mr. McDonald is expected to be greater under the old formula, the
table below reflects the estimated annual pension benefit payable
to an individual retiring in 1994 at age 65 under the old
formula. The amounts include all prospective benefits under
Sprint's plans, whether tax-qualified or not. Mr. Peterson has
an agreement with Sprint that if his employment is discontinued
after July 31, 1996, through no fault of his own, he will not
incur any penalty for early retirement.
The following table reflects the estimated annual pension
benefit payable to an individual retiring in 1995 at age 65. The
amounts include all prospective benefits under Sprint's plans,
whether tax-qualified or not.
<TABLE>
Pension Plan Table
<CAPTION>
Remuneration<F1> Years of Service <F2>
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $27,834 $37,112 $46,390 $55,668 $64,946
150,000 33,647 44,862 56,078 67,293 78,509
175,000 39,459 52,612 65,765 78,918 92,071
200,000 45,272 60,362 75,453 90,543 105,634
225,000 51,084 68,112 85,140 102,168 119,196
250,000 56,897 75,862 94,828 113,793 132,759
275,000 62,709 83,612 104,515 125,418 146,321
300,000 68,522 91,362 114,203 137,043 159,884
__________
<PAGE> 7
<FN>
<F1> Compensation, for purposes of estimating a pension
benefit, includes salary and bonus as reflected under Annual
Compensation in the Summary Compensation Table. The
calculation of benefits under the pension plans generally is
based upon average compensation for the highest five
consecutive years of the ten years preceding retirement.
<F2> These amounts are straight life annuity amounts and would
not be subject to reduction because of Social Security
benefits. For purposes of estimating a pension benefit, the
years of service credited are 37 years for Mr. Peterson and 27
years for Mr. McDonald.
</TABLE>
Ms. Jett's pension benefit is determined primarily by a
career average formula and is not disclosed under the table
above. Assuming she continues in her current position with the
Company at current compensation levels and retires at age 65, her
annual pension benefit payable would be approximately $102,025.
This amount is a straight life annuity amount.
Employment Contracts
Mr. Peterson has signed a non-competition agreement with
Sprint which provides that he will not associate himself with a
competitor for an 18-month period following termination of
employment. In addition, the agreements provide that he will
receive 18 months of compensation and benefits following an
involuntary termination of employment.
Sprint has a Key Management Benefit Plan providing for a
survivor benefit in the event of the death of a participant or,
in the alternative, a supplemental retirement benefit. Under the
plan, if a participant dies prior to retirement, the
participant's beneficiary will receive ten annual payments each
equal to 25% of the participant's highest annual salary during
the five-year period immediately prior to the time of death. If
a participant dies after retiring or becoming permanently
disabled, the participant's beneficiary will receive a benefit
equal to 300% (or a reduced percentage if the participant retires
before age 60) of the participant's highest annual salary during
the five-year period immediately prior to the time of retirement
or disability, payable either in a lump sum or in installments at
the election of the participant. Prior to reaching age 60 and at
least 13 months before retirement, a participant may elect a
supplemental retirement benefit in lieu of all or a portion of
the survivor benefit. Messrs. Peterson and McDonald are
participants in the plan.
Compensation Committee Report on Executive Compensation
All of the Company's executive officers at December 31,
1994, received compensation reflecting their contributions to the
entire Sprint organization. (The portion of compensation that
was attributable to the executive officers' services to the
Company and its subsidiaries was allocated to the Company in
accordance with regulatory standards.) Decisions regarding the
post-Merger compensation of executive officers of the Company
were made by the Organization and Compensation Committee of the
Board of Directors of Sprint (the Committee). Accordingly, the
Committee is furnishing the following report on executive
compensation.
The principal responsibilities of the Committee, as they
relate to the Company, are to: (a) assess and appraise the
performance of executive management; (b) recommend to the Board
of Directors of Sprint base salaries, incentive compensation and
other benefits for the key officers; (c) counsel and advise
management on plans for orderly development and succession of
executive management; (d) take any and all action required or
permitted to be taken by the Board of Directors under the stock
option and restricted stock plans, stock purchase plans,
incentive compensation plans and the deferred compensation plans
of Sprint in which executives of the Company participate; and (e)
review recommendations for major changes in compensation and
benefit and retirement plans which have application to
significant numbers of Sprint's and its subsidiaries' total
employees and which require review or approval of Sprint's Board
of Directors.
Sprint's compensation philosophy is to link, by using specific
objectives, executives' compensation to the short-term and long-
term performance of Sprint and its subsidiaries so as to maximize
long-term Shareowner value. Sprint's executive compensation
program consists of four elements: (1) base salary, (2) short-term
incentive compensation, (3) long-term incentive compensation
<PAGE> 8
and (4) stock options. To develop a competitive compensation
package, both base salary and total compensation (i.e., the sum
of all four elements) are compared to a defined competitive group.
This comparison group is composed of approximately 140
companies similar to Sprint in size as measured by annual sales.
The Committee believes that the comparison group accurately
reflects the market in which Sprint and its subsidiaries compete for
executive talent. The Committee's policy is to target base salaries
at the 50th percentile for base pay of similar positions within the
comparison group, and total compensation at the 75th percentile
provided certain performance objectives are achieved.
Base Salary. Each year the Committee makes a recommendation
to the Board establishing base pay for all executive officers of
Sprint and most of its subsidiaries, including the Company.
Merit increases are based on individual performance over the
previous year and are consistent with the policy to pay base
salaries approximating the median of the comparison group.
Short-Term Incentive Plans. Sprint's Management Incentive
Plan is a performance-driven short-term, annual incentive plan
designed to promote the near-term objectives of the organization.
Target incentive opportunity is based on job level and potential
impact on organization results. Seventy-five percent of the
payout was based on the achievement of seven financial objectives
- -- three for the Local Telecommunications Division (LTD) and two
for each of the Long Distance Division (LDD) and the Cellular
Division. For each objective, targets were established and
compared to actual 1994 financial results. The relative weights
assigned to the objectives depended on an executive's
responsibilities with Sprint. The objectives for the LTD related
to regulated operating income, cash generation and nonregulated
operating income. The objectives for the LDD related to
operating income and net collectible revenue growth relative to
market growth. The objectives for the Cellular Division related
to operating income and net collectible revenue.
Twenty-five percent to 30% of the Sprint plan payout was
based on the achievement of certain personal objectives in 1994.
Based on the results of the financial objectives described above,
and the achievement of their personal objectives, the Company's
executive officers earned payouts on average of 118.0% of target.
Mr. Peterson's payout was based on the financial results
described above using relative weights for objectives by division
as follows: 50% for the LTD, 15% for the LDD, and 10% for the
Cellular Division. Mr. Peterson's payout was also based 25% of
the accomplishment of his personal objectives. Based on these
factors, Mr. Peterson earned a payout of 121.3% of target.
Long-Term Incentive Plan. Sprint's Long-Term Incentive Plan
(LTIP) is a three-year performance-driven incentive plan designed
to promote the long-term objectives of the organization. Key
employees who are in a position to make a substantial
contribution to the accomplishment of the long-term strategic and
financial objectives of the organization are eligible to
participate. Target incentive opportunity is established as a
percentage of the three-year average salary range midpoint and is
based on job level and potential impact on organization results.
LTIP payouts were based entirely on the achievement of
financial objectives. These financial objectives related to the
LTD and the LDD. The Cellular Division was acquired with the
Merger and was not included in the LTIP criteria for the three-
year period from January 1, 1992 to December 31, 1994. Beginning
with the performance period January 1, 1993 to December 31, 1995,
the Cellular Division will be included in the LTIP. The relative
weights assigned to the LTIP objectives depended on an
executive's responsibilities with Sprint. The objectives for the
LTD related to return on assets and earnings before interest,
income taxes and depreciation as a percent of revenues. The
objectives for the LDD related to net collectible revenue growth
relative to market and cumulative operating income.
The specific amounts of the LTIP payouts were determined by
comparing actual financial results to the pre-established targets
for each objective. The payout was also adjusted by a stock
price factor under which the payout based on financial objectives
as described above was multiplied by a fraction, the numerator of
which was the market price of Sprint common stock on December 31,
1994 and the denominator of which was the market price on January
1, 1992. The three-year increase in price of Sprint common stock
resulted in a multiplier of 118.7%
Based on the financial results and the methodology described
above, Mr. Peterson received a payout of 130.4% of target. The
payout for Mr. Peterson was paid in restricted shares of Sprint
common stock.
<PAGE> 9
Stock Options and Restricted Stock Grants. Stock option
grants combined with LTIP comprise long-term incentive
compensation awarded to executive officers of the Company. Total
long-term incentive compensation is targeted at the 75th
percentile of the comparison group. The Committee believes stock
options encourage increased ownership of Sprint Common Stock by
executive officers which, in turn, more closely aligns Shareowner
and employee interests by focusing executives on long-term growth
and profitability of Sprint and its Common Stock.
The option price for shares of Sprint Common Stock issuable
under stock option plans is 100% of the fair market value of the
shares on the date of grant. In making option grants, the
Committee does not consider the number of options already held by
an executive. Grants of restricted stock have recently been made
as consideration for certain executive officers to enter into
noncompetition agreements. The number of restricted shares
granted was determined in the discretion of the Committee.
Deductibility of Compensation Under New Tax Law. Recently
enacted federal income tax legislation has limited the
deductibility, effective January 1, 1994, of compensation paid to
the chief executive officer and the other four most highly
compensated executive officers of a Company to $1 million per
executive per year. None of the Company's executive officers is
expected to exceed the deductibility limit in the foreseeable
future. The Committee intends to take action necessary to
preserve the deduction if the limitation is exceeded in future
years.
Stewart Turley, Chairman
Donald J. Hall
Robert E. R. Huntley
Linda Koch Lorimer
Charles E. Rice
Independent Public Accountants
The Board of Directors and shareowners of Sprint have voted
to appoint Ernst & Young LLP as independent auditors to examine
the financial statements of Sprint and its subsidiaries,
including the Company, for 1994. Ernst & Young first examined
the Company's financial statements in 1993. Representatives of
Ernst & Young will not be present at the Annual Meeting, will not
make a statement and will not be available to respond to
questions.
As a result of the Merger, Arthur Andersen LLP, which had
been the Company's auditors for many years, was dismissed;
however, Ernst & Young relied on the report of Arthur Andersen
with respect to the 1992 consolidated financial statements of the
Company in Ernst & Young's report on the Company's consolidated
financial statements for each of the three years in the period
ended December 31, 1994. Arthur Andersen's reports on the
Company's consolidated financial statements for the 1992 fiscal
year did not contain an adverse opinion or a disclaimer of
opinion, nor were the reports qualified or modified as to
uncertainty, audit scope, or accounting principles. During 1992
and in any subsequent interim period preceding the dismissal of
Arthur Andersen, there were no disagreements between the Company
and Arthur Andersen on any matters of accounting principles or
practice, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Arthur
Andersen, would have caused Arthur Andersen to make reference to
the matter in their report.
Other Matters
The Board of Directors does not know of any matters to be
presented at the meeting other than those mentioned in this
Information Statement.
<PAGE> 10
Shares Entitled to Vote
Shareowners of record at the close of business on September
21, 1995 are entitled to vote. At that date there were
outstanding 2,250,000 shares of common stock, 151,278 shares of
cumulative preferred stock and 31,642 shares of convertible
junior preferred stock. Each share is entitled to one vote on
each matter to be voted on at the meeting. All of the shares
vote together as one class. The Company's Certificate of
Incorporation provides that, except as otherwise expressly
provided in the Certificate of Incorporation or by law, a quorum
for the transaction of any business shall exist if a majority of
the shares issued, outstanding and entitled to be voted upon such
business are represented in person or by proxy at such meeting.
It also provides that, except as otherwise expressly provided in
the Certificate of Incorporation or by law, the affirmative vote
of a majority of such quorum shall suffice to adopt any measure.
Centel owns all of the common stock of the Company, which
represents approximately 92.4% of the voting power. Centel
intends to vote the common stock of the Company in favor of the
election as Directors of the seven aforementioned nominees.
Under applicable Delaware law, in determining whether the
proposal has received the requisite number of affirmative votes,
abstentions will be counted and will have the same effect as a
vote against the proposal. "Broker non-votes", which occur when
brokers are prohibited from exercising discretionary voting
authority for beneficial owners who have not provided voting
instructions, are not counted for the purpose of determining the
number of shares present in person or represented by proxy on a
voting matter and have no effect on the outcome of the vote.
Voting
Shareowners may vote at the meeting by voting in person.
Shareowner Proposals for the 1996 Annual Meeting
Any Shareowner who desires to present a proposal at the 1996
Annual Meeting must submit it in writing to the Company, at the
address set forth on the first page of this Information
Statement, a reasonable time before the meeting.
By order of the Board of Directors
Marion W. O'Neill
Secretary
