SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use
of Commission
Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Century Telephone Enterprises, Inc.
____________________________________________________________
(Name of Registrant as Specified In Its Charter)
N/A
____________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
______________________________________________________
2) Aggregate number of securities to which transaction
applies:
______________________________________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-
11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
______________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________
[X] 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>
[CTEI LETTERHEAD]
Dear Shareholder:
The enclosed proxy card solicited on behalf of the Board of
Directors of Century Telephone Enterprises, Inc. (the "Company")
indicates the number of votes that you will be entitled to cast
at the Company's Annual Meeting of Shareholders to be held May
11, 1995 (the "Annual Meeting"), according to the stock records
of the Company. At the Annual Meeting, the shareholders will
consider and vote upon (i) the election of five Class I
directors, (ii) amendments to the Company's articles of
incorporation to increase the number of authorized shares of
common stock, to clarify and expand the protections currently
afforded under the Company's "fair price" article, and to
clarify, simplify and update certain other specified articles and
(iii) a new incentive compensation plan for key employees, all of
which are described further in the accompanying notice and proxy
statement.
The Company's Articles of Incorporation, the relevant
provisions of which are printed on the reverse side of this
letter, provide that each voting share of the Company that has
been "beneficially owned" continuously since May 30, 1987
entitles the holder thereof to ten votes, subject to compliance
with certain procedures; each other voting share entitles the
holder thereof to one vote. In general, shares registered in the
name of any natural person or estate that are represented by
certificates dated prior to May 30, 1987 are presumed to have ten
votes per share. All other shares are presumed to have only one
vote per share.
The Articles of Incorporation, however, set forth a list of
circumstances in which the foregoing presumption may be refuted.
Please review the provisions on the reverse side of this letter
and, if you believe that the information set forth on your proxy
card is incorrect or a presumption made with respect to your
shares should not apply, send a letter to the Company at the
above address briefly describing the reasons for your belief.
Merely marking the proxy card will not be sufficient notification
to the Company that you believe the voting information thereon is
incorrect.
The Company will consider all letters received prior to the
date of the Annual Meeting and, when a return address is provided
in the letter, will promptly advise each shareholder concerned of
its decision with respect thereto, although in many cases the
Company will not have time to inform a shareholder of its
decision prior to the time the shares are voted. In limited
circumstances, the Company may require additional information
before a determination will be made. If you have any questions
about the Company's voting procedures, please call the Company at
(318) 388-9500.
Clarke M. Williams
Chairman of the Board
March 24, 1995
<PAGE>
[CTEI LETTERHEAD]
Dear Shareholder:
The enclosed proxy card solicited on behalf of the Board of
Directors of Century Telephone Enterprises, Inc. (the "Company")
indicates the number of shares that you will be entitled to have
voted at the Company's Annual Meeting of Shareholders to be held
May 11, 1995 (the "Annual Meeting"), according to the records of
your broker, bank or other nominee. At the Annual Meeting, the
shareholders will consider and vote upon (i) the election of five
Class I directors, (ii) amendments to the Company's articles of
incorporation to increase the number of authorized shares of
common stock, to clarify and expand the protections currently
afforded under the Company's "fair price" article, and to
clarify, simplify and update certain other specified articles and
(iii) a new incentive compensation plan for key employees, all of
which are described further in the accompanying notice and proxy
statement.
The Company's Articles of Incorporation, the relevant
provisions of which are printed on the reverse side of this
letter, provide that each voting share of the Company that has
been "beneficially owned" continuously since May 30, 1987
entitles the holder thereof to ten votes, subject to compliance
with certain procedures; each other voting share entitles the
holder thereof to one vote. All shares held through a broker,
bank or other nominee, however, are presumed to have one vote per
share. The Articles of Incorporation set forth a list of
circumstances in which this presumption may be refuted by the
person who has held all of the attributes of beneficial ownership
referred to in Paragraph 3 of the voting provisions printed on
the reverse side of this letter since May 30, 1987. Please
review those provisions and, if you believe that some or all of
your shares are entitled to ten votes, you may follow one of the
two procedures outlined below.
First, you may write a letter to the Company at the above
address describing the reasons for your belief. The letter
should contain your name (unless you prefer to remain anonymous),
the name of the brokerage firm, bank or other nominee holding
your shares, your account number with such nominee and the number
of shares you have beneficially owned continuously since May 30,
1987. Alternatively, you may ask your broker, bank or other
nominee to write a letter to the Company on your behalf stating
your account number and indicating the number of shares that you
have beneficially owned continuously since May 30, 1987. In
either case, your letter should indicate how you wish to have
your shares voted at the Annual Meeting so that, once a
determination as to voting power is made, your votes may be
counted.
The Company will consider all letters received prior to the
date of the Annual Meeting and, when a return address is provided
in the letter, will promptly advise each beneficial owner or
nominee, as the case may be, concerned of its decision with
respect thereto, although in many cases the Company will not have
time to inform an owner or nominee of its decision prior to the
time the shares are voted. In limited circumstances, the Company
may require additional information before a determination will be
made. If you have any questions about the Company's voting
procedures, please call the Company at (318) 388-9500.
Clarke M. Williams
Chairman of the Board
March 24, 1995
<PAGE>
[CTEI LETTERHEAD]
Dear Participants in the Company's Stock Bonus Plan, Employee
Stock Ownership Plan, Dollars & Sense Plan or Retirement
Savings Plan for Bargaining Unit Employees:
As a participant in one or more of the above-listed plans
you are entitled to direct the exercise of voting power with
respect to shares of the Company's Common Stock held in such
plans in connection with the Company's 1995 Annual Meeting of
Shareholders. At such meeting, the shareholders will consider
and vote upon (i) the election of five Class I directors, (ii)
amendments to the Company's articles of incorporation to increase
the number of authorized shares of common stock, to clarify and
expand the protections currently afforded under the Company's
"fair price" article, and to clarify, simplify and update certain
other specified articles and (iii) a new incentive compensation
plan for key employees, all of which are described further in the
accompanying notice and proxy statement.
If you choose to direct the exercise of the plans' voting
power, all of your instructions (subject to certain limited
exceptions) will be deemed to be made by you in your capacity as
a "named fiduciary" under the plans, which require you to direct
your votes in a manner that you believe to be prudent and in the
best interests of the participants of each respective plan. If
you wish to direct the exercise of such voting power in such
manner, please complete and return the enclosed voting
instruction cards no later than the close of business on May 9,
1995 in accordance with the accompanying instructions.
Most of you will receive the attached proxy materials of the
Company from both (i) Regions Bank of Louisiana ("Regions Bank"),
which is the trustee for the Company's Stock Bonus and Employee
Stock Ownership Plans, and (ii) Wells Fargo Bank, National
Association ("Wells Fargo"), which is the trustee for the
Company's Dollars & Sense and Retirement Savings Plans. To
ensure that your voting instructions are counted, please
carefully review the instructions separately provided by each
such trustee. It is important that all voting instruction cards
relating to the Stock Bonus or Employee Stock Ownership Plans are
returned ONLY to Regions Bank and that all voting instruction
cards relating to the Dollars & Sense and Retirement Savings
Plans are returned ONLY to Wells Fargo.
If after reading the accompanying instructions you have any
questions regarding the enclosed voting instruction cards, please
contact the trustee responsible for administering the plan or
plans to which your questions relate.
Clarke M. Williams
Chairman of the Board
March 24, 1995
<PAGE>
VOTING PROVISIONS
Paragraph A of Article III of the Company's Articles of
Incorporation provides, in part:
* * * * *
(2)Each share of Common Stock and each outstanding
share of the Series A and H Preferred Stock ("Voting
Preferred Stock") which has been beneficially owned
continuously by the same person since May 30, 1987 will
entitle such person to ten votes with respect to such
share on each matter properly submitted to the
shareholders of the Corporation for their vote, consent,
waiver, release or other action when the Common Stock and
the Voting Preferred Stock vote together with respect to
such matter.
(3)For purposes of this paragraph A, a change in
beneficial ownership of a share of the Corporation's stock
shall be deemed to have occurred whenever a change occurs
in any person or group of persons who, directly or
indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares (i)
voting power, which includes the power to vote, or to
direct the voting of such share; (ii) investment power,
which includes the power to direct the sale or other
disposition of such share; (iii) the right to receive or
retain the proceeds of any sale or other disposition of
such share; or (iv) the right to receive distributions,
including cash dividends, in respect to such share.
a. In the absence of proof to the contrary provided in
accordance with the procedures referred to in subparagraph
(5) of this paragraph A, a change in beneficial ownership
shall be deemed to have occurred whenever a share of stock
is transferred of record into the name of any other
person.
b. In the case of a share of Common Stock or Voting
Preferred Stock held of record in the name of a
corporation, general partnership, limited partnership,
voting trustee, bank, trust company, broker, nominee or
clearing agency, or in any other name except a natural
person, if it has not been established pursuant to the
procedures referred to in subparagraph (5) that such share
was beneficially owned continuously since May 30, 1987 by
the person who possesses all of the attributes of
beneficial ownership referred to in clauses (i) through
(iv) of subparagraph (3) of this paragraph A with respect
to such share of Common Stock or Voting Preferred Stock,
then such share of Common Stock or Voting Preferred Stock
shall carry with it only one vote regardless of when
record ownership of such share was acquired.
c. In the case of a share of stock held of record in
the name of any person as trustee, agent, guardian or
custodian under the Uniform Gifts to Minors Act as in
effect in any state, a change in beneficial ownership
shall be deemed to have occurred whenever there is a
change in the beneficiary of such trust, the principal of
such agent, the ward of such guardian or the minor for
whom such custodian is acting.
(4)Notwithstanding anything in this paragraph A to the
contrary, no change in beneficial ownership shall be
deemed to have occurred solely as a result of:
a. any event that occurred prior to May 30, 1987,
including contracts providing for options, rights of first
refusal and similar arrangements, in existence on such
date to which any holder of shares of stock is a party;
b. any transfer of any interest in shares of stock
pursuant to a bequest or inheritance, by operation of law
upon the death of any individual, or by any other transfer
without valuable consideration, including a gift that is
made in good faith and not for the purpose of
circumventing paragraph A;
c. any change in the beneficiary of any trust, or any
distribution of a share of stock from trust, by reason of
the birth, death, marriage or divorce of any natural
person, the adoption of any natural person prior to age 18
or the passage of a given period of time or the attainment
by any natural person of a specified age, or the creation
or termination of any guardianship or custodian
arrangement; or
d. any appointment of a successor trustee, agent,
guardian or custodian with respect to a share of stock.
(5)For purposes of this paragraph A, all determinations
concerning changes in beneficial ownership, or the absence
of any such change, shall be made by the Corporation.
Written procedures designed to facilitate such
determinations shall be established by the Corporation and
refined from time to time. Such procedures shall provide,
among other things, the manner of proof of facts that will
be accepted and the frequency with which such proof may be
required to be renewed. The Corporation and any transfer
agent shall be entitled to rely on all information
concerning beneficial ownership of a share of stock coming
to their attention from any source and in any manner
reasonably deemed by them to be reliable, but neither the
Corporation nor any transfer agent shall be charged with
any other knowledge concerning the beneficial ownership of
a share of stock .
(6)Each share of Common Stock acquired by reason of any
stock split or dividend shall be deemed to have been
beneficially owned by the same person continuously from
the same date as that on which beneficial ownership of the
share of Common Stock, with respect to which such share of
Common Stock was distributed, was acquired.
(7)Each share of Common Stock acquired upon conversion
of the outstanding Series A and H Preferred Stock of the
Corporation ("Convertible Stock") shall be deemed to have
been beneficially owned by the same person continuously
from the date on which such person acquired the
Convertible Stock converted into such share of Common
Stock.
(8)Where a holder beneficially owns shares having ten
votes per share and shares having one vote per share, and
transfers beneficial ownership of less than all of the
shares held, the shares transferred shall be deemed to
consist, in the absence of evidence to the contrary, of
the shares having one vote per share.
(9)Shares of Common Stock held by the Corporation's
employee benefit plans will be deemed to be beneficially
owned by such plans regardless of how such shares are
allocated to or voted by participants, until the shares
are actually distributed to participants.
(10) Each share of Common Stock, whether at any
particular time the holder thereof is entitled to exercise
ten votes or one, shall be identical to all other shares
of Common Stock in all other respects.
(11) Each share of Voting Preferred Stock, whether at
any particular time the holder thereof is entitled to
exercise ten votes or one, shall be identical in all other
respects to all other shares of Voting Preferred Stock in
the same designated series.
(12) Each share of Common Stock issued by the
Corporation in a business combination transaction shall be
deemed to have been beneficially owned by the person who
received such share in the transaction continuously for
the shortest period, as determined in good faith by the
Board of Directors, that would be permitted for the
transaction to be accounted for as a pooling of interests,
provided that the Audit Committee of the Board of
Directors has made a good faith determination that (i)
such transaction has a bona fide business purpose, (ii) it
is in the best interests of the Corporation and its
shareholders that such transaction be accounted for as a
pooling of interests under generally accepted accounting
principles and (iii) such issuance of Common Stock does
not have the effect of nullifying or materially
restricting or disparately reducing the per share voting
rights of holders of an outstanding class or classes of
voting stock of the Corporation. Notwithstanding the
foregoing, the Corporation shall not issue shares in a
business combination transaction if such issuance would
result in a violation of Rule 19c-4 under the Securities
Exchange Act of 1934 and nothing herein shall be
interpreted to require the Company to account for any
business combination transaction in any particular manner.
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
P. O. Box 4065
Monroe, Louisiana 71211
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF
CENTURY TELEPHONE ENTERPRISES, INC.
The Annual Meeting of Shareholders of Century Telephone
Enterprises, Inc. (the "Company") will be held at 2:00 p.m.,
local time, on May 11, 1995, at the Holiday Inn Professional
Centre/Atrium, 2001 Louisville Avenue, Monroe, Louisiana, for the
following purposes:
. To elect five Class I directors;
. To consider and vote upon amendments to the Company's
articles of incorporation to:
(1) increase the number of authorized shares of common
stock to 175 million shares;
(2) clarify and expand the protections currently afforded
under the Company's "fair price" article by:
(A) clarifying the definition of Related Person; and
(B) clarifying the definition of Business
Combinations; and
(3) clarify, simplify and update the articles by:
(A) adding a new article regarding directors'
qualifications;
(B) clarifying the Board's authority to limit
management's liability;
(C) deleting a provision mandating the use of stock
certificates;
(D) adding a clarifying definition of total voting
power; and
(E) adding a clarifying definition of capital stock;
. To consider and vote upon a proposal to approve the
Company's 1995 Incentive Compensation Plan as set forth in
the accompanying proxy statement; and
. To transact such other business as may properly come before
the meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on
March 13, 1995, as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting and
all adjournments thereof.
By Order of the Board of
Directors
HARVEY P. PERRY, Secretary
Dated: March 24, 1995
________________________________________
SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
EVEN IF YOU EXPECT TO ATTEND, IT IS IMPORTANT THAT YOU PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. IF YOU
PLAN TO ATTEND AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY
DO SO AT ANY TIME BEFORE YOUR PROXY IS VOTED.
________________________________________
CENTURY TELEPHONE ENTERPRISES, INC.
____________________________
PROXY STATEMENT
(dated March 24, 1995)
____________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1995
This proxy statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors (the
"Board") of Century Telephone Enterprises, Inc. (the "Company")
for use at its annual meeting of shareholders to be held at the
time and place set forth in the accompanying notice, and at any
adjournments thereof (the "Meeting"). This proxy statement is
first being mailed to shareholders of the Company on or about
March 27, 1995.
On March 13, 1995, the record date for determining
shareholders entitled to notice of and to vote at the Meeting
(the "Record Date"), the Company had outstanding 58,219,027
shares of common stock (the "Common Stock") and 90,707 shares of
preferred stock that votes together with the Common Stock as a
single class on all matters ("Voting Preferred Stock" and,
collectively with the Common Stock, "Voting Shares"). The
Company's Restated Articles of Incorporation (the "Articles")
generally provide that holders of Voting Shares that have been
beneficially owned continuously since May 30, 1987 are entitled
to cast ten votes per share, subject to compliance with certain
procedures. Article III of the Articles and the voting
procedures adopted thereunder contain several provisions
governing the voting power of the Voting Shares, including a
presumption that each Voting Share held by nominees or by any
holder other than a natural person or estate entitles such holder
to only one vote, unless the record holder thereof furnishes the
Company with evidence to the contrary. Applying the presumptions
described in Article III, the Company's records indicate that
138,489,744 votes are entitled to be cast at the Meeting, of
which 138,235,579 (99.8%) are attributable to the Common Stock.
All percentages of voting power set forth in this proxy statement
have been calculated based on such number of votes.
The Company will pay all expenses of soliciting proxies for
the Meeting. Proxies may be solicited personally, by mail, by
telephone or by facsimile by the Company's directors, officers
and employees, who will not be additionally compensated therefor.
The Company will also request persons holding Voting Shares in
their names for others, such as brokers, banks and other
nominees, to forward proxy materials to their principals and
request authority for the execution of proxies, for which the
Company will reimburse them for expenses incurred in connection
therewith. The Company has retained Hill and Knowlton, Inc. to
assist in the solicitation of proxies from brokers, banks,
nominees and individuals, for which it will be paid a fee of
$7,500 and will be reimbursed for certain out-of-pocket expenses.
<PAGE>
ELECTION OF DIRECTORS
The Articles authorize a board of directors of 14 members
divided into three classes. Members of the respective classes
hold office for staggered terms of three years, with one class
elected at each annual shareholders' meeting. Five Class I
directors will be elected at the Meeting. Unless authority is
withheld, all votes attributable to the shares represented by
each duly executed and delivered proxy will be cast for the
election of each of the five below-named Class I nominees, each
of whom has been recommended for election by the Board's
Nominating Committee. If for any reason any proposed nominee
should decline or become unable to stand for election as a
director, which is not anticipated, votes will be cast instead
for another candidate designated by the Board, without
resoliciting proxies.
The following provides certain information with respect to
each proposed nominee and each other director whose term will
continue after the Meeting, including his beneficial ownership of
shares of Common Stock determined in accordance with Rule 13d-3
of the Securities and Exchange Commission ("SEC"). Unless
otherwise indicated, (i) all information is as of the Record
Date, (ii) each person has been engaged in the principal
occupation shown for more than the past five years and (iii)
shares beneficially owned are held with sole voting and in-
vestment power. Unless otherwise indicated, none of the persons
named below beneficially owns more than 1% of the outstanding
shares of Common Stock or is entitled to cast more than 1% of the
total voting power.
____________________________________________________________
Class I Directors (for term expiring in 1998):
____________________________________________________________
William R. Boles, Jr., age 38; a
director since 1992; Vice President
and a director and practicing
attorney with Boles, Boles & Ryan,
a professional law corporation.
Director Committee Memberships: Insurance
Photo Evaluation (Chairman); Shareholder
Relations
Shares Beneficially Owned: 2,055
____________________________________________________________
W. Bruce Hanks, age 40; a director
since 1992; President-
Telecommunications Services of the
Company (or a comparable
predecessor position) since July
1989.
Director Committee Memberships: Insurance
Photo Evaluation
Shares Beneficially Owned:
135,801<FN1>
____________________________________________________________
C. G. Melville, Jr., age 54; a
director since 1968; private
investor; restaurant proprietor
from March 1991 to July 1992;
President, Melville Equipment,
Inc., a distributor of marine and
industrial equipment, prior to
March 1991.
Director Committee Memberships: Audit;
Photo Insurance Evaluation; Nominating
Shares Beneficially Owned: 15,034
____________________________________________________________
Glen F. Post, III, age 42; a
director since 1985; Vice Chairman
of the Board and Chief Executive
Officer of the Company since 1992
and President since 1990; Chief
Operating Officer from 1988 to
1992.
Director Committee Membership: Executive
Photo
Shares Beneficially Owned:
288,395<FN1>
____________________________________________________________
Clarke M. Williams, age 73; a
director since 1968; Chairman of
the Board; Chief Executive Officer
from the Company's incorporation in
1968 to 1989 and from 1990 to 1992.
Mr. Williams, who is the father-in-
law of Harvey P. Perry, founded the
Company's telephone business in
1946.
Director Committee Membership: Executive
Photo (Chairman)
Shares Beneficially Owned:
641,438<FN1><FN2>
____________________________________________________________
The Board unanimously recommends a vote FOR each
of these proposed nominees.
____________________________________________________________
____________________________________________________________
Class II Directors (term expires in 1996):
____________________________________________________________
Virginia Boulet, age 41; a director
since January 1995(3); Partner,
Phelps Dunbar, L.L.P., a law firm,
since March 1992; Partner, Jones,
Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P., a law
firm, from January 1989 to March
1992.
Director Committee Memberships: Audit;
Photo Shareholder Relations
Shares Beneficially Owned: 500
____________________________________________________________
Ernest Butler, Jr., age 66; a
director since 1971; Executive Vice
President and Director, Stephens
Inc., an investment banking firm.
Director Committee Memberships: Audit;
Photo Compensation (Chairman);
Shareholder Relations
Shares Beneficially Owned: 337
____________________________________________________________
James B. Gardner, age 60; a
director since 1981; Managing
Director of a division of Service
Management Company, a financial
services firm, and Chairman of a
division of Affiliated Computer
Service, Inc., a data services
provider, since May 1994; President
and Chief Executive Officer,
Pacific Southwest Bank, F.S.B. from
November 1991 to April 1994; from
March 1991 to November 1991,
Chairman of the Board and President
of Elm Interests, Inc., a
corporation formed to acquire and
operate Bluebonnet Savings Bank,
F.S.B.; President and Chief
Executive Officer of Marquette
National Life Insurance Company and
an officer of its parent
corporation from August 1990 to
Director March 1991; served from July 1987
Photo to August 1990 as an executive
officer of either Bank One, Texas,
N.A., Mbank Dallas, N.A. or the
federal bridge bank organized to
acquire Mbank Dallas, N.A. Mr.
Gardner has also been a director of
Ennis Business Forms, Inc. since
1970.
Committee Memberships: Executive;
Audit; Compensation
Shares Beneficially Owned: 1,012
____________________________________________________________
R. L. Hargrove, Jr., age 63; a
director since 1985; retired as
Executive Vice President of the
Company in 1987 after 12 years of
service as an officer; has acted
since 1987 as a part-time
Director consultant to local businesses and
Photo individuals regarding financial and
tax matters.
Committee Memberships: Executive;
Audit; Shareholder Relations
(Chairman)
Shares Beneficially Owned: 29,987
____________________________________________________________
Johnny Hebert, age 66; a director
since 1968; private investor;
retired as Vice President of River
City Electric, an electrical
contracting firm, during 1994.
Director Committee Memberships: Audit;
Photo Nominating (Chairman); Insurance
Evaluation
Shares Beneficially Owned:
3,162<FN4>
____________________________________________________________
Nominees for Election as Class III Directors (term
expires in 1997):
____________________________________________________________
Calvin Czeschin, age 59; a director
since 1975; President and Chief
Execu-tive Officer of Yelcot
Telephone Company, Czeschin
Chrysler, Inc. and ComputerMart,
Inc.
Director Committee Memberships: Executive;
Photo Audit (Chairman); Shareholder Rela-
tions
Shares Beneficially Owned:
110,332<FN5>
____________________________________________________________
F. Earl Hogan, age 73; a director
since 1968; Managing Partner of EDJ
Farms Partnership, a farming
enterprise.
Director Committee Memberships: Executive;
Photo Audit; Compensation
Shares Beneficially Owned: 17,600
____________________________________________________________
Harvey P. Perry, age 50; a director
since 1990; Senior Vice President,
Secretary and General Counsel of
the Company. Mr. Perry is the son-
in-law of Clarke M. Williams.
Director Committee Membership: Executive
Photo
Shares Beneficially Owned:
165,661<FN1><FN6>
____________________________________________________________
Jim D. Reppond, age 53; a director
since 1986; Vice President of the
Company since January 1, 1995;
President-Telephone Group of the
Company (or a comparable
predecessor position) from May 1987
to December 31, 1994.
Director
Photo Committee Memberships: Executive;
Insurance Evaluation
Shares Beneficially Owned:
142,054<FN1>
____________________________________________________________
<FN1> Includes (i) shares of restricted stock held as of the Record
Date that were issued under, and are subject to the restrict-
ions of, the Company's incentive compensation plans ("Rest-
ricted Stock"), (ii) shares ("Option Shares") that the below-
named individuals have the right to acquire within 60 days
of the Record Date pursuant to options granted under the
Company's 1988 and 1990 Incentive Compensation Programs
and (iii) shares (collectively, "Plan Shares") allocated to
such individuals' accounts as of December 31, 1994 under
the Company's Stock Bonus Plan and Employee Stock Ownership
Plan ("ESOP"), and as of the Record Date under the
Company's Dollars & Sense Plan ("401(k) Plan"), as follows:
Restricted Option Plan
Name Stock Shares Shares
_______________ __________ _______ _______
W. Bruce Hanks 9,614 103,666 19,205
Glen F. Post, III 13,101 223,782 28,685
Clarke M. Williams 18,861 536,203 69,739
Harvey P. Perry 9,238 120,529 12,838
Jim D. Reppond 7,867 99,403 32,051
<FN2> Constitutes 1.1% of the outstanding shares of Common Stock
and entitles Mr. Williams to cast .5% of the total voting
power.
<FN3> Ms. Boulet replaced Tom S. Lovett, who retired as a Class II
Director in January 1995.
<FN4> Includes 750 shares owned by Mr. Hebert's wife, as to which
he disclaims beneficial ownership.
<FN5> Includes 5,332 shares owned by Mr. Czeschin's wife, as to
which he disclaims beneficial ownership.
<FN6> Includes 11,335 shares owned by Mr. Perry's wife, as to which
he disclaims beneficial ownership, and 550 shares held as
custodian for the benefit of his children.
_____________________
Meetings and Certain Committees of the Board
During 1994 the Board held four regular meetings and one
special meeting.
The Board's Executive Committee, which met five times during
1994, is authorized to exercise all the powers of the Board to
the extent permitted by law.
The Board's Audit Committee meets with the Company's
independent and internal auditors and the Company's personnel
responsible for preparing its financial reports and is
responsible for reviewing the scope and results of the auditors'
examination of the Company, discussing with the auditors the
scope, reasonableness and adequacy of internal accounting
controls, considering and recommending to the Board a certified
public accounting firm for selection as the Company's independent
auditors, and directing and supervising any special
investigations as instructed by the Board. The Audit Committee
held three meetings during 1994.
The Board's Nominating Committee, which held three meetings
in 1994, is responsible for recommending to the Board both a
proposed slate of nominees for election as directors and the
individuals proposed for appointment as officers.
The Board's Compensation Committee, which is described
further below, held four meetings during 1994.
Director Compensation
Each director who is not an employee of the Company is paid
an annual fee of $21,000 plus $1,500 for attending each regular
Board meeting, $2,000 for attending each special Board meeting
and $750 for attending each meeting of a Board committee. The
Company permits such directors to defer all or a portion of their
fees until the date designated by the director or the occurrence
of certain specified events. Amounts so deferred earn interest
equal to the one-year Treasury bill rate. Each director is also
reimbursed for expenses incurred in attending meetings.
Under the Company's Outside Directors' Retirement Plan, non-
employee directors who have completed five years of Board service
are entitled to receive, upon normal retirement, monthly payments
that on a per annum basis equal the director's annual rate of
compensation for Board service at retirement plus the fee payable
for attending one special board meeting. In addition, this plan
provides certain disability and preretirement death benefits.
PROPOSALS TO APPROVE AMENDMENTS TO THE COMPANY'S
ARTICLES OF INCORPORATION
The Board of Directors of the Company has approved a number
of amendments to the Company's Restated Articles of Incorporation
(the "Articles") and has directed that they be submitted to a
vote of the shareholders at the Meeting in the form of eight
separate proposals (the "Amendment Proposals"), each of which is
further described below.
To be adopted, each Amendment Proposal must receive the
affirmative vote of holders of two-thirds of the voting power
present or represented at the Meeting, except for Amendment
Proposals 2A and 2B described below, each of which must receive
the affirmative vote of the holders of a majority of the
Company's total voting power. Each Amendment Proposal will be
voted upon independently, and the adoption of none of the
Amendment Proposals is contingent upon the adoption of any other.
The Board of Directors believes that the Amendment Proposals
are in the best interests of the Company and its shareholders and
unanimously recommends a vote FOR approval of each. The
following discussion is qualified in its entirety by reference to
Exhibit A hereto, which contains the text of the Articles after
giving effect to the Amendment Proposals.
Certain General Effects of the Amendment Proposals
Certain of the Amendment Proposals seek to clarify, modify
or expand provisions currently contained in the Articles that are
intended to encourage any person desiring to acquire a
controlling interest in the Company to do so through a
transaction negotiated with the Company's Board of Directors
rather than through a hostile takeover attempt. These currently-
existing provisions are intended to assure that any acquisition
of control of the Company will be subject to review by the Board
to take into account, among other things, the interests of all of
the Company's shareholders. However, some shareholders may find
these provisions to be disadvantageous to the extent that they
could limit or preclude meaningful shareholder participation in
certain transactions and render more difficult or discourage
certain takeovers in which shareholders might receive for some or
all of their shares a price that is higher than the prevailing
market price at the time the takeover attempt is commenced.
These provisions might further render more difficult or
discourage proxy contests, the assumption of control by a person
of a large block of the Company's voting stock or other attempts
to influence or replace the Company's incumbent management.
Among the principal measures previously adopted by the
Company that are intended to encourage persons to negotiate with
the Board are (i) the Company's rights agreement, pursuant to
which the Company has issued preferred stock purchase rights,
each of which entitles the holder, subject to certain exceptions,
to purchase shares of the Company's preferred stock upon the
occurrence of certain events, including the acquisition by an
unaffiliated person of 15% or more of the outstanding Common
Stock or the announcement of an offer that could result in the
offeror acquiring 30% or more of the outstanding Common Stock,
(ii) a time-phased voting system that, subject to certain
exceptions, entitles the holder of each outstanding Voting Share
beneficially owned by the same person continuously since May 30,
1987 to cast ten votes with respect to matters submitted to the
shareholders for their consideration, (iii) a section of the
Articles (the "Fair Price Article") that requires various
corporate actions involving a Related Person (which is defined
below) to be approved by, among other votes, the holders of 80%
of the Company's total voting power and 66 2/3% of the total
voting power excluding shares held by the Related Person and his
affiliates, unless, among other exceptions, the transaction
satisfies certain minimum price, form of consideration and
procedural requirements, and (iv) provisions in the Articles that
require the Board of Directors, when considering a tender offer,
exchange offer or similar transactions, to consider, among other
factors, the social and economic effects of the proposal on the
Company, its subsidiaries, and their respective employees,
customers, creditors and communities.
In addition, (i) the Articles currently provide for a
classified board, authorize the issuance of "blank check"
preferred stock, restrict the ability of shareholders to call
special shareholders' meetings or act by written consent, require
supermajority votes to effect certain corporate actions, and
limit the ability of shareholders to recover monetary damages
from directors and officers, (ii) the Company has entered into
severance agreements with each of its executive officers and
indemnification agreements with each of its officers and
directors, and (iii) approximately 38% of the Company's total
voting power is held by the trustee for two of the Company's
employee benefit plans, each of which require the Trustee to cast
such voting power as directed by the plan's participants in the
manner described further herein. Each of these may be deemed to
have certain anti-takeover effects.
The Amendment Proposals have not been proposed in response
to any pending or threatened contest for the election of
directors or control of the Company and the Board has no reason
to believe that any person is currently planning any transactions
that would have such effect.
Amendment Proposal 1 - Increase of the Authorized Common Stock
General. The Company is currently authorized under the
Articles to issue up to 100 million shares of Common Stock. As
of the Record Date, approximately 64.3 million shares of Common
Stock were outstanding or reserved for issuance. As described
further below, the Board believes that the current amount of
unreserved shares of Common Stock available for issuance in the
future is inadequate. Accordingly, the Board proposes to amend
the Articles to increase the authorized number of shares of
Common Stock from 100 million to 175 million.
Purposes and Effects of the Proposal. This proposal is
intended to increase the Company's flexibility by increasing the
number of shares of Common Stock that can be issued without
further shareholder approval. The Board believes that the
adoption of this proposal will enable the Company promptly and
appropriately to respond to business opportunities, such as
opportunities to raise additional equity capital or to finance
acquisitions with Common Stock, and to issue additional shares in
connection with stock splits, stock dividends and employee
benefit plans. Given the limited number of shares currently
available for issuance, the Company may not be able in the future
to effect certain of these transactions without obtaining
shareholder approval for an increase in the authorized number of
shares of Common Stock. For instance, the Company is currently
unable to effect a two-for-one stock split without shareholder
approval. The cost, prior notice requirements and delay involved
in obtaining shareholder approval at the time that corporate
action may become desirable could eliminate the opportunity to
effect the action or reduce the anticipated benefits.
Although the Company is continually reviewing various
acquisitions and other transactions that could result in the
issuance of shares of the Company's capital stock, the Board of
Directors has no present plans to issue additional shares of
capital stock except for shares of Common Stock as may be
required in connection with (i) the conversion of outstanding
convertible securities, (ii) issuances pursuant to currently
outstanding options and other equity incentives, and (iii)
issuances pursuant to the Company's dividend reinvestment plan,
employee stock purchase plan, restricted stock plan or other
employee benefit plans. Although the Company has no current
plans to declare a stock split or stock dividend, the Company has
declared three stock splits (effected as stock dividends) since
June 1988 and may from time to time consider additional splits or
dividends if the circumstances warrant.
The additional shares of Common Stock proposed to be
authorized, together with existing authorized and unissued
shares, generally will be available for issuance without any
requirement for further shareholder approval, unless shareholder
action is required by applicable law or by the rules of the New
York Stock Exchange or of any other stock exchange on which the
Common Stock may then be listed. Although the Board will
authorize the issuance of additional shares only when it
considers doing so to be in the best interest of shareholders,
the issuance of additional Common Stock may, among other things,
have a dilutive effect on earnings per share of Common Stock and
on the voting rights of holders of Voting Shares. Shareholders
of the Company do not have any preemptive rights to subscribe for
additional shares of Common Stock that may be issued. In
addition, although the Board has no current plans to do so,
shares of Common Stock could be issued in various transactions
that would make a change in control of the Company more difficult
or costly and, therefore, less likely. For example, shares of
Common Stock could be sold privately to purchasers who might
support the Board in a control contest or to dilute the voting or
other rights of a person seeking to obtain control. However, as
indicated above, the Company is not aware of any effort by anyone
to obtain control of the Company, and the Company has no present
intention to use the increased shares of authorized Common Stock
for any such purposes.
The Board of Directors unanimously recommends that you vote
for this Proposal.
Amendment Proposals 2A and 2B - Clarification of Protections
Afforded Under the Fair Price Article
The Company's Board of Directors recommends that the Fair
Price Article currently in effect be amended to (a) clarify the
definition of Related Person ("Amendment Proposal 2A") and (b)
clarify the definition of Business Combinations ("Amendment
Proposal 2B").
Amendment Proposal 2A. The current Fair Price Article,
which was approved by the shareholders in 1985, is closely
modeled on the Louisiana "fair price" statute adopted by the
Louisiana legislature in 1984. The current Article defines a
Related Person generally as any person, other than the Company's
benefit plans and related trusts, who beneficially owns capital
stock representing more than 10% of the Company's total voting
power. This definition is similar to the 1984 statute's original
definition. In 1988, the Louisiana legislature expanded this
definition to include any person who is an affiliate of a
corporation and held 10% or more of the corporation's total
voting power within the prior two years. The effect of this
expanded definition is to deter or prevent a person from seeking
to circumvent the statute's protection by acquiring a significant
interest in a corporation, causing himself to, among other
things, be elected an officer or director, and thereafter
proposing a Business Combination after he has divested his voting
power below 10%. The Board recommends amending the definition of
Related Person in the Fair Price Article to match the statute's
expanded definition.
Amendment Proposal 2B. As indicated above, subject to
certain exceptions the Company's Fair Price Article currently
requires various corporate actions (defined in such article as
"Business Combinations") involving a Related Person to be
approved by various supermajority votes. Currently, the Fair
Price Article defines Business Combinations broadly to include
most corporate actions that a Related Person might contemplate
after acquiring a controlling interest in the Company in order to
increase his share ownership or reduce his acquisition debt,
including squeeze-out mergers, significant asset sales,
liquidation of the Company, and stock issuances or
reclassifications that benefit the Related Person. Although the
Fair Price Article currently contains express provisions designed
to deter a Related Person from seeking loans, guarantees,
pledges, tax credits or other financial assistance or tax
advantages from the Company that disproportionately benefit such
person, it is not entirely clear whether all of these
transactions would constitute Business Combinations. The Board
recommends clarifying the definition of Business Combination to
expressly include these transactions. The Board believes this
clarification may deter or prevent a person from proposing these
types of abusive transactions, will strengthen the incentives of
a person interested in obtaining a controlling interest in the
Company to negotiate with the Board, and will reduce the
likelihood of litigation regarding whether these types of
transactions constitute Business Combinations.
____________________
Shareholders are urged to review Article V set forth in
Exhibit A, which sets forth the entire Fair Price Article after
giving effect to the above-described proposals. In connection
with reviewing these proposals, shareholders are further urged to
review the discussion above under the caption "- Certain General
Effects of the Amendment Proposals."
The Board of Directors unanimously recommends that you vote
for Amendment Proposals 2A and 2B.
Amendment Proposals 3A through 3E - Other Changes to Articles
The Board of Directors has approved amendments to the
Articles that seek to (i) add a new article conforming to the
Company's current bylaw that requires directors to meet certain
qualifications designed to ensure that the Company does not
forfeit the benefits associated with its federal communications
licenses ("Amendment Proposal 3A"), (ii) clarify the authority of
the Board to take certain steps to limit the liability of
directors and officers in connection with shareholder suits
("Amendment Proposal 3B"), (iii) eliminate the requirement that
the Company's stock be represented by certificates ("Amendment
Proposal 3C"), (iv) add a definition of total voting power
("Amendment Proposal 3D"), and (v) add a definition of capital
stock ("Amendment Proposal 3E").
Amendment Proposal 3A. Pursuant to regulations adopted by
the Federal Communications Commission (the "FCC") that implement
the Anti-Drug Abuse Act of 1988, the FCC cannot issue any new,
modified or renewed licenses to, or act upon any applications of,
any company unless such company provides certain certifications
regarding the absence of drug offenses by the Company's officers
and directors. As a result of these regulations and in light of
the significance of the Company's FCC licenses to its business,
in 1992 the Board of Directors amended the Company's bylaws to
provide that no person is eligible for nomination, election or
service as a director who shall (i) in the Board's opinion fail
to respond satisfactorily respecting any inquiry of the Company
for information to enable the Company to make any certification
required under the Anti-Drug Abuse Act of 1988, (ii) have been
arrested or convicted for the distribution or possession of
controlled substances, subject to certain exceptions, or (iii)
have engaged in actions that could lead to such an arrest or
conviction and that the Board determines would make it unwise for
such person to serve as a director. The Board believes that a
parallel provision should be included in the Articles, which are
more readily available to the public and may not be amended
without shareholder approval. Accordingly, the Board recommends
the addition of new Article IV(F), which provide for the same
protections as are currently in effect in the bylaws.
Amendment Proposal 3B. As permitted by Louisiana law, the
Articles currently provide that (i) no director or officer shall
be liable for monetary damages for breach of his fiduciary duty,
subject to certain exceptions including liability for breaches of
the duty of loyalty, and (ii) the Board may cause the Company to
enter into indemnification agreements with management and may
adopt indemnification bylaws. Louisiana law further permits
corporations to procure liability insurance for officers and
directors and to create self-insurance arrangements. The Board
recommends that the current Articles be clarified to provide that
the Board may exercise these powers to procure and self-fund
insurance arrangements covering officers and directors,
notwithstanding the potential conflicts raised in connection with
their authorization of such arrangements. The Board further
recommends that the Articles be clarified to expressly provide
that the Board may cause the Company to approve for its
subsidiaries' officers and directors limitation of liability,
indemnification and insurance provisions comparable to the
Company's. While the Board believes it already has these powers
under applicable law, the Board believes these clarifications
will help prevent disputes regarding its authority, thereby
enhancing its ability to provide for arrangements designed to
ensure that the Company remains able to attract and retain the
best possible directors and officers. Shareholders are urged to
review Article VII set forth in Exhibit A, which reflects the
above-described changes.
Amendment Proposal 3C. Currently the Articles provide that
the Company's stock shall be represented by certificates.
Proposals to develop direct registration systems are currently
pending which, if implemented, may permit investors on a
voluntary basis to directly register their ownership of Common
Stock with the Company without receiving a stock certificate. In
anticipation of the possible adoption of a direct registration
system, the Board recommends deleting from the Articles the
requirement that all shares of the Company's stock be represented
by a certificate.
Amendment Proposal 3D. Currently the Articles provide that
various matters required to be submitted to the shareholders for
their vote must be approved by the affirmative vote of a
specified percentage of the Company's "voting power." This term
is not defined in the Articles. The Company's bylaws, however,
define total voting power as the total number of votes that
shareholders and holders of any bonds or other obligations
granted voting rights by the Company are entitled to cast in the
determination of a particular matter. To the extent that certain
securities could have voting rights with respect to some but not
all of the matters to be voted upon at a shareholders' meeting,
this bylaw definition clarifies that the Company's voting power
is determined in each instance by specific reference to the
matter then being acted upon. The Board believes that a parallel
provision should be included in the Articles, and accordingly
recommends the addition of the definition of "total voting power"
set forth in new Article V(D).
Amendment Proposal 3E. Currently the Articles define voting
stock as shares of "capital stock" entitled to vote generally in
the election of directors. The term "capital stock" is not
defined in the Articles, and it is unclear whether debentures,
bonds or similar debt securities that may be granted voting
rights pursuant to Louisiana law would be considered capital
stock. Although the Board of Directors does not anticipate
granting voting rights to the holders of any such securities, the
Board believes that the Articles should be clarified to expressly
provide that any such securities accorded voting rights should be
considered capital stock. Accordingly, the Board recommends the
addition of the definition of "capital stock" set forth in new
Article V(D).
__________________
All of proposed changes contemplated by Amendment Proposals
3A through 3E are reflected in the proposed Articles attached as
Exhibit A.
The Board of Directors unanimously recommends that you vote
for Amendment Proposals 3A, 3B, 3C, 3D and 3E.
Effective Date of the Amendment Proposals
The Company anticipates that the Amendment Proposals, if
adopted by the shareholders, will become effective promptly after
the Meeting as soon as the Company files with the Louisiana
Secretary of State the necessary certificate required under state
law. The Board of Directors has authorized the Company, in
connection with such filing, to restate the Articles in their
entirety to reflect the adoption of the Amendment Proposals and
to renumber and reorder various articles in an effort to group
similar topics together. All such proposed changes are reflected
in the proposed Articles attached as Exhibit A.
PROPOSAL TO APPROVE THE CENTURY TELEPHONE ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
General
The Board of Directors of the Company believes that the
growth of the Company depends significantly upon the efforts of
its officers and key employees and that such individuals are
best motivated to put forth maximum effort on behalf of the
Company if they own an equity interest therein. In accordance
with this philosophy, in February 1995 the Board of Directors
unanimously adopted the Company's 1995 Incentive Compensation
Plan (the "Plan") and has directed that it be submitted for
approval by the shareholders at the Meeting. The affirmative
vote of the holders of a majority of the voting power present or
represented at the Meeting is necessary for the shareholders to
approve the Plan. The following summary of the Plan is qualified
in its entirety by reference to the Plan, which is attached to
this Proxy Statement as Exhibit B.
Officers and other key employees of the Company will be
eligible to receive awards ("Incentives") under the Plan when
designated by the Compensation Committee of the Board of
Directors or a subcommittee thereof (the "Compensation
Committee"). There are approximately 30 officers of the Company
and its subsidiaries who may be expected to participate in the
Plan. In addition, the Compensation Committee estimates that the
Company currently has approximately 35 other key employees who
may participate in the Plan. Incentives under the Plan may be
granted in any one or a combination of the following forms: (a)
incentive and non-qualified stock options; (b) stock appreciation
rights; (c) restricted stock; and (d) performance shares.
General Purposes of the Proposal
The Board of Directors is committed to creating and
maintaining a compensation system based to a significant extent
on grants of equity-based incentive awards. The Board of
Directors believes that providing key personnel with a
proprietary interest in the growth and performance of the Company
is crucial to stimulating individual performance while at the
same time enhancing shareholder value. The Board further
believes that the Plan will assist the Company in attracting,
retaining and motivating key personnel in a manner that is tied
to the interests of shareholders.
As described further below, the Plan will replace the
Company's 1988 and 1990 Incentive Compensation Programs (the
"Prior Plans") as to future awards if it is approved at the
Meeting. The Plan updates, modernizes, eliminates and clarifies
several provisions included in the Prior Plans, and includes
certain new terms. Among these new terms are provisions that (i)
permit the Compensation Committee, in connection with any
participant's payment of the exercise price of an option in
shares of Common Stock, to award an additional option to purchase
the same number of shares as were surrendered, (ii) permit the
Committee to take one or more alternative actions with respect to
outstanding Incentives in the event of a change of control of the
Company, and (iii) empower the Committee to permit the
transferability of Incentives if allowed under applicable
securities and tax laws. Each of these new terms is discussed
further below. In addition, the Plan has been designed so that
Incentives granted thereunder can qualify as performance-based
compensation and be excluded from the $1 million limit on
deductible compensation imposed by Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). Approval of the
Plan will also increase the number of shares of Common Stock
available for equity-based incentive awards. The Board of
Directors believes these changes will improve its ability to
achieve the goals of the Company's incentive compensation
programs.
Terms of the Plan
Shares Issuable through the Plan. A total of two million
shares of Common Stock are authorized to be issued under the
Plan, representing approximately 3.4% of the outstanding shares
of Common Stock as of the Record Date. Incentives with respect
to no more than 200,000 shares may be granted to a single
participant in one calendar year. A total of 491,984 shares
remain available for issuance under the Prior Plans. If the Plan
is approved by the shareholders at the Meeting, no further awards
will be made under the Prior Plans. A total of 422,641 shares
also remain available for issuance under the Company's 1983
Restricted Stock Plan (the "1983 Plan"). It is contemplated that
the 1983 Plan will continue to be utilized to pay a portion of
the Company's annual bonuses in the form of restricted stock.
See "Executive Compensation and Related Information - Report of
Compensation Committee Regarding Executive Compensation - Annual
Bonus."
Proportionate adjustments will be made to the number of
shares of Common Stock subject to the Plan in the event of any
recapitalization, stock dividend, stock split, combination of
shares or other change in the Common Stock. The Compensation
Committee may also amend the terms of any Incentive to the extent
appropriate to provide participants with the same relative rights
before and after the occurrence of such an event. Shares of
Common Stock subject to Incentives that are cancelled, terminated
or forfeited, or shares of Common Stock that are issued as
Incentives and forfeited or reacquired by the Company, will again
be available for issuance under the Plan.
On March 13, 1995, the closing sale price of a share of
Common Stock, as reported on the New York Stock Exchange
Composite Tape, was $31.
Administration of the Plan. The Compensation Committee
administers the Plan and has plenary authority to award
Incentives under the Plan, to interpret the Plan, to establish
any rules or regulations relating to the Plan that it determines
to be appropriate, to delegate its authority as appropriate, and
to make any other determination that it believes necessary or
advisable for the proper administration of the Plan.
Amendments to the Plan. The Board may amend or discontinue
the Plan at any time. However, in light of Section 16 of the
Securities Exchange Act of 1934 (the "1934 Act"), the Company
anticipates that any amendment that would materially increase the
benefits under the Plan, materially increase the number of
securities that may be issued under the Plan or materially modify
the eligibility requirements will be submitted to the
shareholders for their approval. Except in limited
circumstances, no amendment or discontinuance may change or
impair any previously-granted Incentive without the consent of
the recipient thereof.
Types of Incentives. The Compensation Committee will be
authorized under the Plan to grant stock options, restricted
stock, stock appreciation rights and performance shares, each of
which is described further below.
Stock Options. The Compensation Committee may grant non-
qualified stock options or incentive stock options to purchase
shares of Common Stock. The Compensation Committee will
determine the number and exercise price of the options, and the
time or times that the options become exercisable, provided that
the option exercise price may not be less than the fair market
value of the Common Stock on the date of grant. The term of an
option will also be determined by the Compensation Committee,
provided that the term of an incentive stock option may not
exceed 10 years. No stock option granted to an officer, director
or beneficial owner of more than 10% of the Common Stock who is
subject to Section 16 of the 1934 Act may be exercised within the
six-month period immediately following the date of grant. Any
provision in the Plan or a stock option agreement
notwithstanding, the Compensation Committee may accelerate the
exercisability of any stock option at any time. The Compensation
Committee may also approve the purchase by the Company of an
unexercised stock option from the optionee by mutual agreement
for the difference between the exercise price and the fair market
value of the shares covered by such option.
The option exercise price may be paid in cash, in shares of
Common Stock held for at least six months, in a combination of
cash and shares of Common Stock, or through a broker-assisted
exercise arrangement approved by the Compensation Committee. If
an optionee exercises an option while employed by the Company or
a subsidiary and pays the exercise price with previously owned
shares of Common Stock, the Compensation Committee may grant to
the optionee an additional option to purchase the same number of
shares as were surrendered at an exercise price equal to the fair
market value of the Common Stock on the date of grant.
Incentive stock options will be subject to certain
additional requirements necessary in order to qualify as
incentive stock options under Section 422 of the Code.
Restricted Stock. Shares of Common Stock may be granted by
the Compensation Committee to an eligible employee and made
subject to restrictions regarding their sale, pledge or other
transfer by the employee for a specified period (the "Restricted
Period"). All shares of restricted stock will be subject to such
restrictions as the Compensation Committee may designate in an
agreement with the employee, including, among other things, that
the shares are required to be forfeited or resold to the Company
in the event of termination of employment or in the event
specified performance goals or targets are not met. A Restricted
Period of at least three years is generally required, except that
if the vesting of the shares of restricted stock is subject to
the attainment of performance goals, the Restricted Period may be
one year or more. The Compensation Committee may prescribe
conditions for the lapse of restrictions prior to the end of the
Restricted Period in the case of death, disability, retirement or
other termination of employment, but shares of restricted stock
granted to an employee subject to Section 16 of the 1934 Act must
be subject to a Restricted Period of at least six months.
Subject to the restrictions provided in the participant's
agreement and the Plan, a participant receiving restricted stock
shall have all of the rights of a shareholder as to such shares.
Stock Appreciation Rights. A stock appreciation right, or
"SAR," is a right to receive, without payment to the Company, a
number of shares of Common Stock, cash or any combination
thereof, the amount of which is determined pursuant to the
formula described below. A SAR may be granted in conjunction
with a stock option or alone without reference to any stock
option. A SAR granted in conjunction with a stock option may be
granted concurrently with the grant of such option or at such
later time as determined by the Compensation Committee and as to
all or any portion of the shares subject to the option.
The Plan confers on the Compensation Committee discretion to
determine the number of shares to which a SAR will relate as well
as the duration and exercisability terms of a SAR. In the case
of a SAR granted with respect to a stock option, the number of
shares of Common Stock to which the SAR pertains will be reduced
in the same proportion that the holder exercises the related
option. Unless otherwise provided by the Compensation Committee,
a SAR will be exercisable for the same time period as any stock
option to which it relates. No SAR granted to an officer subject
to Section 16 of the 1934 Act may be exercised during the first
six months of its term. Notwithstanding any provision in the
Plan or a stock appreciation right agreement, the Compensation
Committee may accelerate the exercisability of an SAR at any
time.
Upon exercise of an SAR, the holder is entitled to receive
an amount that is equal to the aggregate amount of the
appreciation in the shares of Common Stock as to which the SAR is
exercised. For this purpose, the "appreciation" in the shares
consists of the amount by which the fair market value of the
shares of Common Stock on the exercise date exceeds (a) in the
case of a SAR related to a stock option, the purchase price of
the shares under the option or (b) in the case of a SAR granted
alone without reference to a related stock option, an amount
determined by the Compensation Committee at the time of grant.
The Committee may pay the amount of this appreciation to the
holder of the SAR by the delivery of Common Stock, cash, or any
combination of Common Stock and cash.
Performance Shares. Performance Shares consist of the grant
by the Company to an eligible employee of a contingent right to
receive shares of Common Stock or cash with or without any
payment by the employee. Each performance share will be subject
to the achievement of performance objectives by the Company, an
operating division or a subsidiary by the end of or within a
specified period. The number of shares granted and the
performance criteria will be determined by the Compensation
Committee. The award of performance shares shall not create any
rights in a participant as a shareholder of the Company until the
issuance of shares of Common Stock with respect to an award.
Performance shares may be awarded in conjunction with the grant
of dividend equivalent payment rights that entitle a participant
to receive an amount equal to the cash dividends paid on an equal
number of shares of Common Stock during the period beginning on
the date of grant of an award and ending on the date on which the
award is paid or forfeited.
Termination of Employment. If a participant ceases to be an
employee of the Company for any reason, including death, any
Incentive may be exercised, shall vest or shall expire at such
time or times as may be determined by the Committee in the
Incentive agreement with the participant.
Loans to Participants. The Committee may authorize the
extension of a loan to a participant by the Company to cover the
participant's tax liability that arises in connection with an
Incentive. The terms of the loan will be determined by the
Committee.
Change of Control. If (a) the Company is not the surviving
entity in a merger, consolidation or other reorganization, (b)
the Company sells, leases or exchanges all or substantially all
of its assets, (c) the Company is to be dissolved or liquidated,
(d) any person or entity, other than an employee benefit plan of
the Company or a related trust, acquires or gains control of more
than 30% of the outstanding shares of the Company's voting stock
or (e) in connection with a contested election of directors, the
persons who were directors of the Company before the election no
longer constitute a majority of the Board (collectively,
"corporate changes"), all outstanding Incentives will
automatically become exercisable and vested and all performance
criteria will be waived, and, in addition, the Compensation
Committee will have the authority to take several actions
regarding outstanding Incentives. Within certain time periods,
the Compensation Committee may (i) require that all outstanding
stock options and SARs remain exercisable only for a limited
time, after which time all such Incentives will terminate, (ii)
require the surrender to the Company of some or all outstanding
options and SARs in exchange for a cash or Common Stock payment
for each option or SAR equal in value to the per share change of
control value, calculated as described in the Plan, over the
exercise price, (iii) make any equitable adjustment to
outstanding Incentives as the Compensation Committee deems
necessary to reflect the corporate change or (iv) provide that an
option or SAR shall become an option or SAR relating to the
number and class of shares of stock or other securities or
property (including cash) to which the participant would have
been entitled in connection with the corporate change if the
participant had been the holder of record of the number of shares
of Common Stock then covered by such options or SARs.
The Board of Directors believes that providing the
Compensation Committee with the choices outlined above will
permit the Committee to review all relevant tax, accounting and
other issues relating to the treatment of outstanding Incentives
at the time of the corporate change, and thereby enable the
Committee to choose the treatment that will best serve the
participants and the Company. Although the automatic vesting of
Incentives and other certain actions permitted to be taken by the
Compensation Committee in the event of a change of control could
discourage a takeover of the Company, these provisions have not
been included for the purpose of making the Company a less
attractive takeover target.
Transferability of Incentives. Options, SARs and
performance shares are not transferable except (a) by will, (b)
by the laws of descent and distribution, (c) pursuant to a
domestic relations order or (d) to family members , to a trust
for the benefit of family members or to charitable institutions,
if permitted by the Committee after considering tax and
securities law consequences and if so provided in the Incentive
agreement.
Awards To Be Granted
The Compensation Committee has not made a determination as
to which key employees will receive Incentives under the Plan or
the amounts or types of Incentives that may be granted.
Federal Income Tax Consequences
Under existing federal income tax provisions, a participant
who receives stock options, SARs or performance shares or who
receives shares of restricted stock that are subject to
restrictions which create a "substantial risk of forfeiture"
(within the meaning of Section 83 of the Code) will not normally
realize any income, nor will the Company normally receive any
deduction for federal income tax purposes, in the year such
Incentive is granted.
When a non-qualified stock option granted pursuant to the
Plan is exercised, the employee will realize ordinary income
measured by the difference between the aggregate purchase price
of the shares of Common Stock as to which the option is exercised
and the aggregate fair market value of the shares of Common Stock
on the exercise date, and the Company will be entitled to a
deduction in the year the option is exercised equal to the amount
the employee is required to treat as ordinary income.
An employee generally will not recognize any income upon the
exercise of any incentive stock option, but the excess of the
fair market value of the shares at the time of exercise over the
option price will be an item of adjustment, which may, depending
on particular factors relating to the employee, subject the
employee to the alternative minimum tax imposed by Section 55 of
the Code. The alternative minimum tax is imposed to the extent
it exceeds federal regular individual income tax, and it is
intended to ensure that individual taxpayers who have economic
income do not avoid income tax by taking advantage of exclusions,
deductions and credits for regular tax purposes. An employee
will recognize capital gain or loss in the amount of the
difference between the exercise price and the sale price on the
sale or exchange of stock acquired pursuant to the exercise of an
incentive stock option, provided the employee does not dispose of
such stock within two years from the date of grant and one year
from the date of exercise of the incentive stock option (the
"required holding periods"). An employee disposing of such
shares before the expiration of the required holding period will
recognize ordinary income generally equal to the difference
between the option price and the fair market value of the stock
on the date of exercise. The remaining gain, if any, will be
capital gain. The Company will not be entitled to a federal
income tax deduction in connection with the exercise of an
incentive stock option, except where the employee disposes of the
Common Stock received upon exercise before the expiration of the
required holding period.
If the exercise price of an option is paid by the surrender
of previously owned shares, the basis of the previously owned
shares carries over to the shares received in replacement
therefor. If the option is a non-qualified option, the income
recognized on exercise is added to the basis. If the option is
an incentive stock option, the optionee will recognize gain if
the shares surrendered were acquired through the exercise of an
incentive stock option and have not been held for the applicable
holding period. This gain will be added to the basis of the
shares received in replacement of the previously owned shares.
When a SAR is exercised, the employee will recognize
ordinary income in the year the SAR is exercised equal to the
value of the appreciation that he is entitled to receive pursuant
to the formula previously described, and the Company will be
entitled to a deduction in the same year and in the same amount.
An employee who receives restricted stock or performance
shares will normally recognize taxable income on the date the
shares become transferable or no longer subject to substantial
risk of forfeiture or on the date of their earlier disposition.
The amount of such taxable income will be equal to the amount by
which the fair market value of the shares of Common Stock on the
date such restrictions lapse (or any earlier date on which the
shares are disposed of) exceeds their purchase price, if any. An
employee may elect, however, to include in income in the year of
purchase or grant the excess of the fair market value of the
shares of Common Stock (without regard to any restrictions) on
the date of purchase or grant over its purchase price. Subject
to the limitations imposed by Section 162(m) of the Code, the
Company will be entitled to a deduction for compensation paid in
the same year and in the same amount as income is realized by the
employee. Dividends currently paid to the participant will be
taxable compensation income to the participant and deductible by
the Company.
If, upon a change in control of the Company, the
exercisability or vesting of an Incentive granted under the Plan
is accelerated, any excess on the date of the change in control
of the fair market value of the shares or cash issued under
Incentives over the purchase price of such shares, if any, may be
characterized as Parachute Payments (within the meaning of
Section 280G of the Code) if the sum of such amounts and any
other such contingent payments received by the employee exceeds
an amount equal to three times the "Base Amount" for such
employee. The Base Amount generally is the average of the annual
compensation of such employee for the five years preceding such
change in ownership or control. An Excess Parachute Payment,
with respect to any employee, is the excess of the Parachute
Payments to such person, in the aggregate, over and above such
person's Base Amount. If the amounts received by an employee
upon a change in control are characterized as Parachute Payments,
such employee will be subject to a 20% excise tax on the Excess
Parachute Payment, and the Company will be denied any deduction
with respect to such Excess Parachute Payment.
This summary of federal income tax consequences of non-
qualified stock options, incentive stock options, SARs,
restricted stock and performance shares does not purport to be
complete. Reference should be made to the applicable provisions
of the Code. There also may be state and local income tax
consequences applicable to transactions involving Incentives.
The Board of Directors unanimously recommends that you vote
for approval of the 1995 Incentive Compensation Plan.
VOTING SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding
ownership of the Company's Common Stock by (i) each person known
to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock and (ii) all of the Company's directors
and executive officers as a group. The table also sets forth
similar information for one of the executive officers listed in
the Summary Compensation Table set forth elsewhere herein;
similar information for each other executive officer listed in
such table is included under the heading "Election of Directors."
Unless otherwise indicated, all information is presented as of
the Record Date and all shares indicated as beneficially owned
are held with sole voting and investment power.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of Percent
Ownership of Outstanding of Voting
Name and Address of Beneficial Owner Common Stock<FN1> Common Stock<FN1> Power<FN2>
____________________________________ ______________ _____________ _________
<S> <C> <C> <C>
Principal Shareholders:
Regions Bank of Louisiana, as Trustee 6,685,592<FN3> 11.5% 37.6%
(the "Trustee") of the Stock Bonus
Plan and ESOP (the "Benefit Plans")
P. O. Box 7232
Monroe, Louisiana 71211
Putnam Investments, Inc. 4,476,431<FN4> 7.7% 3.2%
One Post Office Square
Boston, Massachusetts 02109
Gabelli Funds, Inc. 2,971,607<FN5> 5.1% 2.1%
One Corporate Center
Rye, New York 10580-1434
Management:
R. Stewart Ewing, Jr. 128,278<FN6> * *
All directors and executive 1,759,539<FN7> 3.0% 2.6%
officers as a group (16 persons)
</TABLE>
___________________
* Represents less than 1%.
<FN1> Determined in accordance with Rule 13d-3 of the SEC based
upon information furnished by the persons listed. In
addition to Common Stock, the Company has outstanding Series
A, H and K Voting Preferred Stock that votes together with
the Common Stock as a single class on all matters. Although
one or more persons beneficially own in excess of 5% of each
of these series of Voting Preferred Stock, the percentage of
voting power held by these persons is immaterial. For
additional information regarding the Voting Preferred Stock,
see page 1 of this proxy statement.
<FN2> Based on the Company's records and, with respect to all
shares held of record by the Trustee, based on information
the Trustee periodically provides to the Company to
establish that certain of the Trustee's shares entitle it to
ten votes per share.
<FN3> All voting power attributable to these shares is directed by
the participants of the Benefit Plans, each of whom is
deemed, subject to certain limited exceptions, to tender
such instructions as a "named fiduciary" under such plans,
which requires the participants to direct their votes in a
manner that they believe to be prudent and in the best
interests of the participants of each respective plan.
<FN4> Based on share ownership information as of January 23, 1995
contained in a Schedule 13G Report that Putnam Investments,
Inc. has filed with the SEC. Based on such information,
Putnam Investments, Inc. (i) shares voting power with
respect to 438,043 of the shares shown and (ii) shares
dispositive power with respect to all of the shares shown.
<FN5> Based on share ownership information as of March 10, 1993
contained in a Schedule 13D Report and amendments thereto
that Gabelli Funds, Inc. has filed with the SEC. Based on
such information, Gabelli Funds, Inc. (i) does not have
authority to vote 146,100 of the shares shown and (ii)
shares voting and dispositive power with respect to 3,000 of
the shares shown.
<FN6> Includes 9,152 shares of Restricted Stock, 93,717 Option
Shares that Mr. Ewing has the right to acquire within 60
days of the Record Date and 12,842 Plan Shares allocated to
his account as of December 31, 1994 under the Benefit Plans
and as of the Record Date under the 401(k) Plan.
<FN7> Includes (i) 73,618 shares of Restricted Stock, (ii)
1,225,985 Option Shares that such persons have the right to
acquire within 60 days of the Record Date, (iii) 189,710
Plan Shares allocated to their respective accounts as of
December 31, 1994 under the Benefit Plans and as of the
Record Date under the 401(k) Plan, (iv) 24,545 shares held
of record by the spouses of certain directors and executive
officers, as to which beneficial ownership is disclaimed,
and (v) 550 shares held as custodian for the benefit of the
children of a director and executive officer.
___________________
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Report of Compensation Committee Regarding Executive Compensation
General. The Board's Compensation Committee, among other
things, monitors and evaluates the compensation levels of the
Company's executive officers and directors and administers the
Company's restricted stock and incentive compensation programs.
All determinations of the Committee are submitted to the full
Board for its ratification, except for awards under certain of
the Company's stock-based compensation programs and certain other
determinations that require action by independent directors.
Under the Company's Bylaws, the Company may not, among other
things, set the salaries or change the benefits of its executive
officers without the approval of the Compensation Committee. The
Committee is composed entirely of Board members who are not
employees of the Company.
The Committee periodically consults with nationally
recognized consulting firms to assist it in evaluating the
Company's executive compensation. With the assistance of the
Committee and its consultants, the Board has adopted an executive
compensation philosophy statement setting forth the Company's
compensation objectives, which include:
. if justified by corporate performance, compensating the
executive group at rates higher than those of
comparable companies in an effort to hire, develop,
reward and retain key executives
. providing incentive compensation tied to the Company's
annual, intermediate and long-term performance
. encouraging team orientation
. providing sufficient benefit levels for executives and
their families in the event of disability, illness or
retirement
. structuring executive compensation to ensure its full
deductibility under the Omnibus Budget Reconciliation
Act of 1993
At present, the Company's executive compensation is
comprised of (i) salary, (ii) an annual cash and stock incentive
bonus, (iii) additional incentive compensation in the form of
stock options and a stock retention program, and (iv) other
benefits typically provided to executives of comparable
companies, all as described further below. For each such
component of compensation, the Company's compensation levels are
compared with those of comparable companies. For purpose of
establishing these comparable compensation levels, the Company
compares itself to a national group of several hundred companies
selected by management and its consultants. This group consists
of a substantial number of telecommunications companies
(including most of the 11 companies comprising the "Value Line
Telecommunications/Other Majors Index" referred to in the
Company's stock performance graph appearing elsewhere herein),
but also includes a large number of other companies that have
revenue levels similar to the Company's. Compensation data from
telecommunications companies is given substantially more weight
than data from other companies in establishing comparable
compensation levels.
Salary. The salary of each executive officer, including the
Chief Executive Officer, is based primarily on the officer's
level of responsibility and comparisons to prevailing salary
levels for similar positions at comparable companies. Based on
these criteria, the Committee seeks to provide the Company's
executive officers with salaries that are at least commensurate
with the median salary levels at comparable companies. In
connection with reviewing and establishing salaries, the
Committee typically also reviews the Company's financial
performance during the prior year. However, these criteria are
given less weight in determining salaries principally due to the
Committee's belief that it is more appropriate to reward positive
performance through bonuses, stock options and other incentive
compensation programs. Notwithstanding this, the Committee
believes it is appropriate to establish salaries in excess of
median salary levels when warranted by the Company's financial
performance in relation to comparable companies. Although the
individual performance of each executive officer is reviewed, the
Committee historically has not attempted to reward individual
achievement through the salary component of compensation due to
the inherent subjectivity of such evaluations and the detrimental
effect this might have on the Company's team orientation to
executive compensation.
During 1994, the Committee agreed to increase the salary of
each executive officer between 4 to 5%. In connection with this,
the Committee reviewed compensation information for comparable
companies previously prepared by the Company's consultants and
updated by management, along with the Company's return on equity,
revenue growth and earnings growth for the prior year. These
raises resulted in the Company's Chief Executive Officer
receiving a salary approximately equal to the median salary for
chief executive officers at comparable companies and all other
executive officers receiving salaries in excess of the median
salaries of comparable executives at other companies. The
Committee believes these raises were consistent with its
objectives of (i) ensuring that the executive officers receive
salaries at least equal to those of comparable executives, (ii)
providing above-market salaries when warranted by the Company's
financial performance, and (iii) applying a team orientation to
executive compensation.
The Chairman's compensation is determined in the same manner
as the compensation for all other executive officers, provided
that his annual salary cannot be reduced below the minimum salary
to which he is entitled under his 1993 employment agreement
described below under the heading "- Employment Contracts."
Annual Bonus. In connection with the Company's annual
incentive bonus program, the Compensation Committee annually
establishes target performance levels and the amount of bonus
payable if these targets are met, which typically is defined in
terms of a percentage of each officer's salary. In early 1994
the Committee recommended that the executive officers receive an
incentive bonus for 1994 equal to 25% of their annual salaries if
the Committee's 1994 targets were attained, with no bonus being
payable if certain minimum target performance levels were not
attained, and a bonus of up to 50% of salary being payable if the
Committee's 1994 targets were substantially exceeded. Although
the Committee may choose any measure of financial performance
that it deems appropriate, the Committee for the past several
years has used return on equity and revenue growth (as adjusted
for certain non-recurring transactions specified in
administrative guidelines prepared in 1990), but has weighted
return on equity more heavily than revenue growth in order to
reflect the Committee's desire to more closely tie executive
compensation to shareholder return.
As a result of the Company substantially exceeding its 1994
targets for both return on equity and revenue growth, each
executive officer has received a bonus equal to 50% of his 1994
salary. The Compensation Committee determined to pay 60% of each
executive officer's incentive bonus in cash and 40% in Restricted
Stock that may not be transferred by the officer for five years
and will be forfeited if prior to that time the officer leaves
the Company, other than as a result of death, disability or
retirement. As a result, the realization of a significant
portion of the 1994 bonus is tied to the Company's future stock
price performance.
In determining the size of the executive officers' target
bonuses, the Compensation Committee reviews the most current
information readily available furnished by its consultants and
management as to the bonus practices among comparable companies.
Based on this review, the 1994 bonus paid to the Company's Chief
Executive Officer is less than the median annual bonus paid in
recent years to CEOs at comparable companies and the 1994 bonuses
paid to the Company's other executive officers slightly exceed
the median annual bonuses paid in recent years by comparable
companies.
Similar to its policy with respect to salaries, the
Committee traditionally has refrained from rewarding individual
achievement through the use of bonuses. However, in 1993 and
1994 the Committee has approved a special incentive bonus for the
Company's President - Telecommunications Services based upon
attainment of certain quantitative goals relating to cellular
revenue growth (weighted 40%), operating expenses (weighted 20%)
and subscriber growth (weighted 20%), and certain specified
nonquantitative goals (weighted 20%). Under the special bonus,
this officer may receive a cash bonus of 10% of his salary if all
goals are met, with lesser amounts being payable for partial
satisfaction of one or more of these goals, and a bonus of up to
20% of salary being payable if all goals are substantially
exceeded. The 10% target bonus is designed to sufficiently
reward this executive for successful development of a line of
business that the Company believes has above-average growth
potential, while at the same time ensuring that the amount
received is not large enough to conflict with the Company's team
approach to executive compensation. For 1994, this officer
attained two of the three quantitative goals and fully attained
his nonquantitative goals, which resulted in a special cash bonus
of $23,885 (11% of salary). The Committee has approved a similar
arrangement for this officer for 1995 and is currently exploring
the possibility of reserving a portion of future bonus pools for
discretionary bonus awards to executive officers based on their
role in significant contributions benefiting the Company and its
shareholders.
Stock Incentive Programs. The Company's current incentive
compensation programs authorize the Compensation Committee to
grant stock options and various other incentives to key
personnel. The Committee's philosophy with respect to stock
incentive awards is to strengthen the relationship between
compensation and increases in the market price of the Common
Stock and thereby ally the executive officers' financial
interests with those of the Company's shareholders. For a
description of the Company's proposal to approve a new incentive
compensation program, see "Approval of the Century Telephone
Enterprises, Inc. 1995 Incentive Compensation Plan."
Options. Options granted under these programs become
exercisable based upon criteria established by the Compensation
Committee. The Compensation Committee determines the size of
option grants based on information furnished by the Committee's
consultants regarding stock option practices among comparable
companies and by applying compensation multiples designed to
create greater opportunities for stock ownership the greater
one's responsibilities and duties. The Committee also assesses
the degree to which outstanding unexercised options held by the
executive officers continue to provide appropriate incentives to
improve the Company's performance. In 1993 and 1994 the
Committee determined that it was unnecessary to award any new
options.
Stock Retention Program. To provide an incentive for
officers to acquire and hold Common Stock, the Compensation
Committee instituted a Stock Retention Program in 1993. Under
this program, each executive officer who in 1993 voluntarily
purchased a specified number of shares of Common Stock was
awarded (i) an equal number of shares of Restricted Stock, all of
which will be forfeited if within three years the purchased
shares are sold or if the officer's employment terminates, other
than as a result of death, disability or retirement, and (ii)
performance units entitling the officer to earn a number of
shares of Common Stock equal to 40% of the number of shares
purchased. These shares will be earned only if the ten-day
average closing price of the Common Stock increases by 30% over
the price on the award date at any time prior to the fifth
anniversary of the award, but may in no event be issued prior to
the third anniversary date of the award. The executive officers
are paid dividend equivalent cash payments with respect to
unearned performance units at the dividend rate applicable to the
underlying Common Stock. The Company arranged and guaranteed
loans to officers for the purchase of shares in 1993 under this
program. No awards were made under this program during 1994.
Other Benefits. The Company maintains certain broad-based
employee benefit plans in which the executive officers are
generally permitted to participate on terms substantially similar
to those relating to all other participants, subject to certain
legal limitations on the amounts that may be contributed or the
benefits that may be payable thereunder. The Board has
determined to have the Company's matching contribution under the
401(k) Plan invested in Common Stock so as to further align
employees' and shareholders' financial interests. The Company
also maintains the Bonus Plan and ESOP, which serve to further
align employees' and shareholders' interests.
Additionally, the Company makes available to its officers a
supplemental life insurance plan, supplemental benefits under its
medical reimbursement plan, a supplemental retirement plan (which
is described below under "- Pension Plan"), a supplemental
defined contribution plan, a supplemental 401(k) plan, and a
disability salary continuation plan.
Compensation of Chief Executive Officer. The criteria,
standards and methodology used by the Committee 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. Application of
these criteria in 1994 resulted in the Chief Executive Officer
receiving for 1994 (i) a salary of $336,129, representing a 4.3%
increase over his 1993 salary, and (ii) a bonus valued at 50% of
his base salary paid in the form of $100,839 cash and 2,169
shares of Restricted Stock.
Ernest Butler, Jr. James B. Gardner F. Earl Hogan
Compensation Committee Interlocks and Insider Participation
As indicated above, the members of the Compensation
Committee are Ernest Butler, Jr., James B. Gardner and F. Earl
Hogan. Mr. Butler is Executive Vice President of Stephens Inc.,
which has provided, and is expected to continue to provide,
investment banking services to the Company from time to time.
During 1994, Stephens Inc. was a co-manager of the Company's $150
million offering of senior notes.
Summary of Compensation
The following table sets forth certain information regarding
the compensation of (i) the Company's Chief Executive Officer and
(ii) each of the Company's four most highly compensated executive
officers other than the Chief Executive Officer.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
______________________
No. of
Annual Compensation Restricted Securities
Name and Current ______________________ Stock Underlying All Other
Principal Position Year Salary Bonus<FN1> Awards<FN1> Options Compensation<FN2>
_______________________ ____ ________ ________ _________ ________ _____________
<S> <C> <C> <C> <C> <C> <C>
Clarke M. Williams 1994 $448,161 $134,449 $ 89,621 0 $ 75,629
Chairman of the Board 1993 429,710 103,130 178,554 0 42,554
1992 412,648 123,795 82,545 97,500 40,768
Glen F. Post, III 1994 336,129 100,839 67,239 0 39,888
Vice Chairman of the 1993 322,288 77,349 132,229 0 20,366
Board, President and 1992 302,899 90,870 60,587 75,000 18,150
Chief Executive Officer
W. Bruce Hanks 1994 217,930 89,264 43,586 0 28,054
President - 1993 209,796 69,627 93,051 0 18,589
Telecommunications 1992 204,534 61,360 40,899 52,500 16,485
Services
Harvey P. Perry 1994 212,440 63,732 42,501 0 27,879
Senior Vice President, 1993 202,496 48,599 92,896 0 18,442
Secretary and General 1992 194,632 58,390 38,927 52,500 16,123
Counsel
R. Stewart Ewing, Jr. 1994 212,178 63,653 42,439 0 27,542
Senior Vice President 1993 202,256 48,541 92,605 0 18,174
and Chief Financial 1992 194,491 58,347 38,897 52,500 15,872
Officer
____________________
</TABLE>
<FN1> For each year indicated above, the Company has awarded a
portion of the officers' annual incentive bonuses in the
form of Restricted Stock ("Bonus Restricted Shares"). In
addition, in 1993 the Company issued in connection with its
Stock Retention Program additional shares of Restricted Stock
("Other Restricted Shares") and performance units entitling
officers to earn shares of Common Stock if the average
trading price of such stock increases by 30% over the price on
the award date ("Contingent Performance Shares"). The table
above reflects, for each year indicated, the aggregate value
of Bonus Restricted Shares and Other Restricted Shares awarded,
determined in each case as of the award date. The chart below
sets forth additional information as of December 31, 1994
regarding the named executive officers' aggregate holdings of
such shares and the aggregate value thereof, determined as if
all such Restricted Stock and all Contingent Performance Shares
were fully vested and earned. (This chart does not reflect
Bonus Restricted Shares granted in February 1995 as incentive
bonuses for the Company's 1994 performance.)
<TABLE>
<CAPTION>
Aggregate
Bonus Other Contingent Value at
Restricted Restricted Performance December 31,
Name Shares Shares Shares Total 1994
_____________ __________ __________ ___________ ______ ___________
<S> <C> <C> <C> <C> <C>
Williams 13,906 3,600 1,440 18,946 $558,907
Post 9,078 2,700 1,080 12,858 379,311
Hanks 6,933 2,025 810 9,768 288,156
Perry 6,552 2,025 810 9,387 276,917
Ewing 6,286 2,025 810 9,121 269,070
</TABLE>
Dividends or dividend equivalent cash payments are paid currently
with respect to all shares described above. For additional
information regarding the foregoing, see "- Report of
Compensation Committee Regarding Executive Compensation."
<FN2> Comprised of the Company's (i) matching contributions to the 401(k)
Plan, (ii) premium payments under a medical reimbursement plan
that are attributable to benefits in excess of those provided
generally for other employees, (iii) premium payments for life
insurance policies providing death benefits to the executive
officers' beneficiaries (and no other benefit to such officers),
and (iv) contributions pursuant to the Stock Bonus Plan and
ESOP valued as of December 31, 1994 (as supplemented in 1994 by
contributions under the Company's Supplemental Defined Contribution
Plan), in each case for and on behalf of the named executive
officers as follows:
<TABLE>
<CAPTION>
Medical Life Stock Bonus
401(k) Plan Plan Insurance Plan and ESOP
Name Year Contributions Premiums Premiums Contributions
________ ____ _____________ ________ _________ _____________
<S> <C> <C> <C> <C> <C>
Williams 1994 $ 0 $ 1,344 $ 29,245 $45,040
1993 0 1,344 25,923 15,287
1992 2,182 1,344 23,131 14,111
Post 1994 4,135 1,344 628 33,781
1993 3,164 1,344 571 15,287
1992 2,182 1,344 513 14,111
Hanks 1994 4,424 1,344 384 21,902
1993 3,285 1,344 361 13,599
1992 2,182 1,344 348 12,611
Perry 1994 4,429 1,344 756 21,350
1993 3,323 1,344 669 13,106
1992 2,182 1,344 597 12,000
Ewing 1994 4,429 1,344 445 21,324
1993 3,323 1,344 397 13,110
1992 2,182 1,344 354 11,992
___________________
</TABLE>
Option Exercises and Holdings
The following table sets forth certain
information concerning the exercise of options
during 1994 and unexercised options held at
December 31, 1994.
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
<TABLE>
<CAPTION>
No. of Number of Securities Value of Unexercised
Shares Underlying Unexercised in-the-Money Options at
Acquired Options at December 31, 1994 December 31, 1994
on Value __________________________ __________________________
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
__________________ ________ ________ ___________ _____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
Clarke M. Williams 0 $ 0 596,203 30,835 $8,104,903 $241,438
Glen F. Post, III 15,000 340,500 223,782 12,950 2,213,523 101,399
W. Bruce Hanks 37,375 846,544 103,666 8,528 496,705 66,774
Harvey P. Perry 27,500 566,215 120,529 7,817 899,557 61,207
R. Stewart Ewing, Jr. 3,537 71,796 93,717 6,870 418,804 53,792
</TABLE>
Pension Plan
The Company has a Supplemental Executive
Retirement Plan (the "Supplemental Plan") pursuant to
which each officer who has completed at least five
years of service is entitled to receive a monthly
payment upon retirement or, under certain
circumstances, attainment of age 55. The following
table reflects the annual retirement benefits that a
participant with the indicated years of service and
compensation level may expect to receive under the
Supplemental Plan assuming retirement at age 65.
Early retirement may be taken at age 55 by any person
with 15 or more years of service, with reduced
benefits.
Annual Benefit Payable on Retirement
Years of Service
__________________________________________
Compensation 15 20 25 30
____________ ________ ________ ________ _______
$250,000 $ 56,250 $ 75,000 $ 93,750 $112,500
300,000 67,500 90,000 112,500 135,000
350,000 78,750 105,000 131,250 157,500
400,000 90,000 120,000 150,000 180,000
450,000 101,250 135,000 168,750 202,500
500,000 112,500 150,000 187,500 225,000
550,000 123,750 165,000 206,250 247,500
600,000 135,000 180,000 225,000 270,000
650,000 146,250 195,000 243,750 292,500
700,000 157,500 210,000 262,500 315,000
750,000 168,750 225,000 281,250 337,500
The above table reflects the benefits payable
under the Supplemental Plan assuming such benefits
will be paid in the form of a monthly lifetime
annuity and before reductions relating to the receipt
of Social Security benefits as described below. The
amount of an officer's monthly payment under the
Supplemental Plan is equal to his number of years of
service (up to a maximum of 30 years) multiplied by
the difference between 1.5% of his average monthly
compensation during the 36-month period within his
last ten years of employment in which he received his
highest compensation and 3 1/3% of his estimated
monthly Social Security benefit.
Under the Supplemental Plan, the number of
credited years of service at December 31, 1994 was
over 30 years for Mr. Williams, 18 years for Mr.
Post, 14 years for Mr. Hanks, 11 years for Mr. Ewing
and 10 years for Mr. Perry, and the compensation upon
which benefits are based is the aggregate amount
reported for each respective officer under the
columns in the Summary Compensation Table appearing
above that are entitled "Salary", "Bonus" and
"Restricted Stock Awards" (less, for 1993 only,
amounts included under the "Restricted Stock Awards"
column that are attributable to Other Restricted
Shares).
Mr. Williams has the option of receiving
retirement benefits under either the Supplemental
Plan or under a separate supplemental retirement plan
(the "Other Plan") in which he held grandfathered
rights when the Supplemental Plan was adopted. Under
this Other Plan, Mr. Williams would be entitled upon
retirement to receive an annual benefit equal to 65%
of his highest annual salary during the last five
years of employment. This benefit is reduced by (i)
his Social Security benefit, determined as of the
date of retirement, and (ii) the value of his Stock
Bonus Plan and related Paysop accounts converted to a
monthly annuity. The salary upon which benefits are
based is the amount reported under the "Salary"
column in the Summary Compensation Table appearing
above. Currently, the benefits Mr. Williams would
receive upon retirement under the Supplemental Plan
significantly exceed the benefits he would receive
under the Other Plan. The Company anticipates that
this benefit level differential will continue for the
foreseeable future.
Employment Contracts
The Company has agreements with certain
executive officers, including Messrs. Post, Hanks,
Perry and Ewing, providing for a severance payment if
such officer is terminated without cause or resigns
under certain specified circumstances within three
years following any change in control of the Company.
"Change in control" is defined as the occurrence of,
among other things, any event relating to the Company
that would be required to be reported to the
Securities and Exchange Commission under Schedule 14A
of Regulation 14A. The severance payment is equal to
three times the officer's annual salary if the Board
did not approve, and one year's salary if the Board
did approve, the change in control. In no event,
however, may a severance payment exceed the amount
allowable to the Company as a deduction for federal
tax purposes.
The Company also has an employment agreement
with Mr. Williams providing for, among other things,
a minimum annual salary of $436,800, participation in
all of the Company's employee benefit plans and use
of the Company's aircraft. The agreement's initial
three-year term lapses in May 1996 but thereafter
continues from year to year, subject to the right of
Mr. Williams or the Company to terminate the
agreement as of the third anniversary or any
subsequent anniversary date. If Mr. Williams is
terminated without cause or resigns under certain
specified circumstances, including following any
change in control of the Company (defined in the same
manner as in the agreements described in the
preceding paragraph), he will be entitled to receive,
in addition to all amounts to which he is entitled
pursuant to the Company's termination policies then
in effect, certain severance benefits, including (i)
a lump sum payment equal to three times his annual
compensation, (ii) continued participation in the
Company's employee benefit plans for three years and
(iii) continued use of the Company's aircraft for one
year on terms comparable to those previously in
effect. If Mr. Williams terminates his employment
following a change in control of the Company, he will
be entitled to receive, in addition to any other
amounts due, amounts sufficient to reimburse him for
any excise or income taxes payable as a result of his
receipt of severance benefits under the agreement.
Performance Graph
The graph below compares the cumulative total
shareholder return on the Common Stock for the last
five years with the cumulative total return on the
S&P 500 Index and the Value Line
Telecommunications/Other Majors Index, in each case
assuming (i) the investment of $100 on January 1,
1990 at closing prices on December 31, 1989 and (ii)
reinvestment of dividends. The Value Line
Telecommunications/Other Majors Index is prepared by
Value Line, Inc., consists of 11 telecommunications
companies, including the Company, and is available by
contacting Value Line, Inc. directly.
<TABLE>
<CAPTION>
December 31,
_____________________________________________________________________________________
1989 1990 1991 1992 1993 1994
_____________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Century Telephone Enterprises, Inc. $100 $89 $ 87 $124 $113 $131
_____________________________________________________________________________________
S&P 500 Index $100 $97 $126 $136 $150 $152
_____________________________________________________________________________________
Value Line Telecommunications/ $100 $85 $103 $113 $126 $117
Other Majors Index
_____________________________________________________________________________________
</TABLE>
Certain Transactions and Filings
The Company paid approximately $445,000 to
Boles, Boles & Ryan, a professional law corporation,
for legal services rendered to the Company in 1994.
William R. Boles, Jr., a director of the Company
since 1992, is Vice President and a director and
practicing attorney with such firm, which has
provided legal services to the Company since 1968.
During 1994, the Company paid approximately
$739,000 to a real estate firm owned by the brother
of Harvey P. Perry, the Company's Senior Vice
President, Secretary and General Counsel. In
exchange for such payments (a substantial portion of
which were used to compensate subcontractors and
vendors and to recoup other out-of-pocket costs),
such firm provided a variety of services with respect
to several of the Company's office sites and over 120
of its cellular tower sites in several states,
including locating and analyzing properties suitable
for acquisition as cellular tower sites, negotiating
purchase terms with the land owners, and subleasing
cellular tower space.
During 1994, the Company purchased approximately
$543,000 of electrical contracting services from a
firm owned by the wife and son of Johnny Hebert, a
director of the Company.
During 1994, the Company purchased in the
ordinary course of business approximately $151,000 of
automobiles, computers and computer repair services
from companies owned and operated by Calvin Czeschin,
a director of the Company. During 1994, the Company,
a local telephone company owned and operated by Mr.
Czeschin, and a third telephone company collaborated
to build a 60-mile fiber optic route in Arkansas to
replace a microwave radio route jointly used by all
three companies. In connection with this project,
the Company acted as the general contractor for Mr.
Czeschin's company for purposes of constructing the
9.7-mile portion of the route located in the
franchised service territory of Mr. Czeschin's
company. In exchange for these and other ancillary
services, the Company was reimbursed approximately
$427,000, which represented 100% of the Company's
engineering and direct construction costs.
For further information see "- Compensation
Committee Interlocks and Insider Participation."
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP, independent certified
public accountants for the Company for 1994, has been
selected by the Board to serve again in that capacity
for 1995. A representative of such firm is expected
to attend the Meeting, will have an opportunity to
make a statement if he or she wishes to do so, and
will be available to respond to appropriate
questions.
OTHER MATTERS
Quorum and Voting of Proxies
The presence, in person or by proxy, of two-
thirds of the total voting power of the Voting Shares
is necessary to constitute a quorum to organize the
Meeting. Shareholders voting or abstaining from
voting on any issue will be counted as present for
purposes of constituting a quorum to organize the
Meeting.
If a quorum is present, directors will be
elected by plurality vote and, as such, withholding
authority to vote in the election of directors will
not affect whether the proposed nominees named herein
are elected. As indicated above, (i) the affirmative
vote of the holders of two-thirds of the voting power
present or represented at the Meeting will be
required to approve the Amendment Proposals, except
for Amendment Proposals 2A and 2B, each of which must
receive the affirmative vote of the holders of a
majority of the Company's total voting power, and
(ii) the affirmative vote of the holders of a
majority of the voting power present or represented
at the Meeting will be required to approve the
Company's 1995 Incentive Compensation Plan (the
"Incentive Plan Proposal"). For purposes of
determining the amount of voting power present with
respect to the votes to be taken with respect to each
proposal other than Amendment Proposals 2A and 2B,
shares as to which the proxy holders have been
instructed to abstain from voting will not be treated
as present and will therefor not affect the outcome
of the vote. Abstaining with respect to Amendment
Proposals 2A and 2B will have the same effect as a
negative vote.
Under the rules of the New York Stock Exchange,
brokers who hold shares in street name for customers
may vote in their discretion on matters when they
have not received voting instructions from beneficial
owners unless the matter is a non-routine, "non-
discretionary" item. According to the New York Stock
Exchange, brokers who do not receive such
instructions will be entitled to vote in their
discretion with respect to the Company's election of
directors and Amendment Proposal 1, but will not be
entitled to vote in their discretion with respect to
the other proposals described herein. If brokers who
do not receive voting instructions may not or do not
exercise discretionary voting power (a "broker non-
vote") with respect to any matter to be considered at
the Meeting, shares that are not voted will be
treated as present for purposes of constituting a
quorum to organize the Meeting but not present with
respect to considering such matter. Because
Amendment Proposals 2A and 2B must be approved by the
affirmative vote of the holders of a majority of the
Company's total voting power, broker non-votes with
respect to these proposals will have the same effect
as a negative vote. Because all other matters must
be approved by plurality vote or the affirmative vote
of a specified percentage of the voting power present
with respect to such matter, broker non-votes with
respect to these proposals will not effect the
outcome of the voting.
Voting Shares represented by all properly
executed proxies received in time for the Meeting
will be voted at the Meeting. A proxy may be revoked
at any time before it is exercised by filing with the
Secretary of the Company a written revocation or a
duly executed proxy bearing a later date, or by
attending the Meeting and voting in person. Unless
revoked, the proxy will be voted as specified and, if
no specifications are made, will be voted in favor of
the proposed nominees and the proposals described
herein.
Management is unaware of any matter for action
by shareholders at the Meeting other than the
election of directors and the other proposals
described herein. The enclosed proxy, however, will
confer discretionary authority with respect to any
other matter that may properly come before the
Meeting. It is the intention of the persons named
therein to vote in accordance with their best
judgment on any such matter.
Shareholder Nominations and Proposals
In connection with the Company's 1996 annual
shareholders' meeting, the Nominating Committee of
the Board of Directors will consider director
candidates suggested by shareholders, who should
advise the Secretary of the Company in writing at any
time prior to November 25, 1995 and include
sufficient biographical information to permit
appropriate evaluation. In order to be considered
for inclusion in the Company's 1996 proxy materials
pursuant to the proxy rules of the Securities and
Exchange Commission, shareholder proposals must be
received by the Company on or before November 25,
1995.
By Order of the Board of Directors
Harvey P. Perry
Secretary
Dated: March 24, 1995
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CENTURY TELEPHONE ENTERPRISES, INC.
The undersigned hereby constitutes and appoints Clarke M. Williams or
Glen F. Post, III, or either of them, proxies for the undersigned, with
full power of substitution, to represent the undersigned and to cast the
number of votes attributable to all of the shares of common stock and
voting preferred stock (collectively, the "Voting Shares") of Century
Telephone Enterprises, Inc. (the "Company") that the undersigned is
entitled to vote at the annual meeting of shareholders of the Company to
be held on May 11, 1995, and at any and all adjournments thereof (the
"Meeting").
. To elect five Class I Directors.
FOR [ ] all nominees listed WITHHOLD AUTHORITY [ ] to vote for
below (except as all nominees
marked to the contrary listed below
below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below:
William R. Boles, Jr. W. Bruce Hanks C. G. Melville, Jr.
Glen F. Post, III Clarke M. Williams
. Proposals described in the Proxy Statement for the Meeting to amend the
Company's articles of incorporation:
Amendment Proposal 1 - to increase
the Company's authorized common
stock [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 2A - to clarify
the definition of Related Person [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 2B - to clarify
the definition of Business
Combinations [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3A - to add a
new article regarding directors'
qualifications [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3B - to clarify
the Board's authority to limit
management's liability [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3C - to delete
a provision mandating the use
of stock certificates [ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please See Reverse Side)
<PAGE>
Amendment Proposal 3D - to define
total voting power [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3E - to define
capital stock [ ] FOR [ ] AGAINST [ ] ABSTAIN
. Proposal to approve the Company's 1995 Incentive Compensation Plan
described in the Proxy Statement for the Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
. In their discretion to vote upon such other business as may properly come
before the Meeting.
The Board of Directors recommends that you vote FOR the nominees and the
proposals listed above. This Proxy will be voted as specified. If no
specific directions are given, all of the votes attributable to your voting
shares will be voted for the nominees and the proposals.
____________________ ___________________________________
DATE NAME (PLEASE PRINT)
_________________________________________ Please sign exactly as name
SIGNATURE appears on the certificate
or certificates representing
shares to be voted by this
_________________________________________ proxy. When signing as
ADDITIONAL SIGNATURE (IF JOINTLY HELD) executor, administrator,
attorney, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
president or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized persons.
EXHIBIT A
PROPOSED ARTICLES OF INCORPORATION
OF
CENTURY TELEPHONE ENTERPRISES, INC.
Assuming the adoption of each of the Amendment Proposals by
the shareholders, the articles of incorporation of the Company
will be amended and restated to (i) amend paragraphs A(1), A(12)
and C of Article III and reorder the Article's paragraphing, (ii)
amend the second paragraph of Article IV and renumber the entire
Article as Article VII, (iii) consolidate the provisions of
Article V into Article VII(B), (iv) renumber Article VI as
Article VIII, (v) modify Article VII and renumber it as Article
VI(B), (vi) amend paragraphs A(4) and A(14) of Article VIII and
consolidate and reorder paragraphs A, C, D and E of this Article
into Article V, (vii) reorder and modify paragraph B of Article
VIII into paragraphs A, B, C and D of Article IV, (viii) renumber
Article IX as Article VI(A), (ix) renumber Article X as Article
IV(E), (x) renumber and modify Article XI as Article IX, (xi)
renumber paragraph C of Article XI as Article V(E), and (xii) add
new provisions as Articles IV(F), IV(G), V(D)(6), V(D)(17) and
VII(C). Set forth below are the articles of incorporation of the
Company, after giving effect to these modifications.
* * * * * * * * * *
[Articles I and II, which will not be amended, are
intentionally omitted.]
ARTICLE III
Capital
A. Authorized Stock. The Corporation shall be authorized
to issue an aggregate of 177 million shares of capital stock, of
which 175 million shares shall be Common Stock, $1.00 par value
per share, and two million shares shall be Preferred Stock,
$25.00 par value per share.
B. Preferred Stock. (1) The Preferred Stock may be
issued from time to time in one or more series.
(2) In respect to any series of Preferred Stock, the
Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rates, conversion rights, voting
rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation
preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease
the number of shares of any series subsequent to the issue of
shares of that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares
of such series. In addition thereto the Board of Directors shall
have such other powers with respect to the Preferred Stock and
any series thereof as shall be permitted by applicable law.
(3) No full dividend for any quarterly dividend period
may be declared or paid on shares of any series of Preferred
Stock unless the full dividend for that period shall be
concurrently declared or paid on all series of Preferred Stock
outstanding in accordance with the terms of each series. If
there are any accumulated dividends accrued or in arrears on any
share of any series of Preferred Stock those dividends shall be
paid in full before any full dividend shall be paid on any other
series of Preferred Stock. If less than a full dividend is to be
paid, the amount of the dividend to be distributed shall be
divided among the shares of Preferred Stock for which dividends
are accrued or in arrears in proportion to the aggregate amounts
which would be distributable to those holders of Preferred Stock
if full cumulative dividends had previously been paid thereon in
accordance with the terms of each series.
C. Voting Rights. (1) Each share of Common Stock and
each outstanding share of the Series A and H Preferred Stock
("Voting Preferred Stock") which has been beneficially owned
continuously by the same person since May 30, 1987 will entitle
such person to ten votes with respect to such share on each
matter properly submitted to the shareholders of the Corporation
for their vote, consent, waiver, release or other action when the
Common Stock and the Voting Preferred Stock vote together with
respect to such matter.
(2) (a) For purposes of this paragraph C, a change in
beneficial ownership of a share of the Corporation's stock shall
be deemed to have occurred whenever a change occurs in any person
or group of persons who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise
has or shares (i) voting power, which includes the power to vote,
or to direct the voting of such share; (ii) investment power,
which includes the power to direct the sale or other disposition
of such share; (iii) the right to receive or retain the proceeds
of any sale or other disposition of such share; or (iv) the right
to receive distributions, including cash dividends, in respect to
such share.
(b) In the absence of proof to the contrary
provided in accordance with the procedures referred to in
subparagraph (4) of this paragraph C, a change in beneficial
ownership shall be deemed to have occurred whenever a share of
stock is transferred of record into the name of any other person.
(c) In the case of a share of Common Stock or
Voting Preferred Stock held of record in the name of a
corporation, general partnership, limited partnership, voting
trustee, bank, trust company, broker, nominee or clearing agency,
or in any other name except a natural person, if it has not been
established pursuant to the procedures referred to in
subparagraph (4) that such share was beneficially owned
continuously since May 30, 1987 by the person who possesses all
of the attributes of beneficial ownership referred to in clauses
(i) through (iv) of subparagraph (2)(a) of this paragraph C with
respect to such share of Common Stock or Voting Preferred Stock,
then such share of Common Stock or Voting Preferred Stock shall
carry with it only one vote regardless of when record ownership
of such share was acquired.
(d) In the case of a share of stock held of
record in the name of any person as trustee, agent, guardian or
custodian under the Uniform Gifts to Minors Act, the Uniform
Transfers to Minors Act or any comparable statute as in effect in
any state, a change in beneficial ownership shall be deemed to
have occurred whenever there is a change in the beneficiary of
such trust, the principal of such agent, the ward of such
guardian or the minor for whom such custodian is acting.
(3) Notwithstanding anything in this paragraph C to
the contrary, no change in beneficial ownership shall be deemed
to have occurred solely as a result of:
(a) any event that occurred prior to May 30,
1987, including contracts providing for options, rights of first
refusal and similar arrangements, in existence on such date to
which any holder of shares of stock is a party;
(b) any transfer of any interest in shares of
stock pursuant to a bequest or inheritance, by operation of law
upon the death of any individual, or by any other transfer
without valuable consideration, including a gift that is made in
good faith and not for the purpose of circumventing this
paragraph C;
(c) any change in the beneficiary of any trust,
or any distribution of a share of stock from trust, by reason of
the birth, death, marriage or divorce of any natural person, the
adoption of any natural person prior to age 18 or the passage of
a given period of time or the attainment by any natural person of
a specified age, or the creation or termination of any
guardianship or custodian arrangement; or
(d) any appointment of a successor trustee,
agent, guardian or custodian with respect to a share of stock.
(4) For purposes of this paragraph C, all
determinations concerning changes in beneficial ownership, or the
absence of any such change, shall be made by the Corporation.
Written procedures designed to facilitate such determinations
shall be established by the Corporation and refined from time to
time. Such procedures shall provide, among other things, the
manner of proof of facts that will be accepted and the frequency
with which such proof may be required to be renewed. The
Corporation and any transfer agent shall be entitled to rely on
all information concerning beneficial ownership of a share of
stock coming to their attention from any source and in any manner
reasonably deemed by them to be reliable, but neither the
Corporation nor any transfer agent shall be charged with any
other knowledge concerning the beneficial ownership of a share of
stock.
(5) Each share of Common Stock acquired by reason of
any stock split or dividend shall be deemed to have been
beneficially owned by the same person continuously from the same
date as that on which beneficial ownership of the share of Common
Stock, with respect to which such share of Common Stock was
distributed, was acquired.
(6) Each share of Common Stock acquired upon
conversion of the outstanding Series A and H Preferred Stock of
the Corporation ("Convertible Stock") shall be deemed to have
been beneficially owned by the same person continuously from the
date on which such person acquired the Convertible Stock
converted into such share of Common Stock.
(7) Where a holder beneficially owns shares having ten
votes per share and shares having one vote per share, and
transfers beneficial ownership of less than all of the shares
held, the shares transferred shall be deemed to consist, in the
absence of evidence to the contrary, of the shares having one
vote per share.
(8) Shares of Common Stock held by the Corporation's
employee benefit plans will be deemed to be beneficially owned by
such plans regardless of how such shares are allocated to or
voted by participants, until the shares are actually distributed
to participants.
(9) Each share of Common Stock, whether at any
particular time the holder thereof is entitled to exercise ten
votes or one, shall be identical to all other shares of Common
Stock in all other respects.
(10) Each share of Voting Preferred Stock, whether at
any particular time the holder thereof is entitled to exercise
ten votes or one, shall be identical in all other respects to all
other shares of Voting Preferred Stock in the same designated
series.
(11) Each share of Common Stock issued by the
Corporation in a business combination transaction shall be deemed
to have been beneficially owned by the person who received such
share in the transaction continuously for the shortest period, as
determined in good faith by the Board of Directors, that would be
permitted for the transaction to be accounted for as a pooling of
interests, provided that the Audit Committee of the Board of
Directors has made a good faith determination that (a) such
transaction has a bona fide business purpose, (b) it is in the
best interests of the Corporation and its shareholders that such
transaction be accounted for as a pooling of interests under
generally accepted accounting principals and (c) such issuance of
Common Stock does not have the effect of nullifying or materially
restricting or disparately reducing the per share voting rights
of holders of an outstanding class or classes of voting stock of
the Corporation. Notwithstanding the foregoing, (i) the
Corporation shall not issue shares in a business combination
transaction if such issuance would result in a violation of any
rule or regulation regarding the per share voting rights of
publicly-traded securities that is promulgated by the Securities
and Exchange Commission or the principal exchange upon which the
Common Stock is then listed for trading and (ii) nothing herein
shall be interpreted to require the Corporation to account for
any business combination transaction in any particular manner.
D. Non-Assessability; Transfers; Pre-emptive Rights. The
stock of this Corporation shall be fully paid and non-assessable
when issued and shall be personal property. No transfer of such
stock shall be binding upon this Corporation unless such transfer
is made in accordance with these Articles and the by-laws of this
Corporation and duly recorded in the books thereof. No
stockholder shall have any pre-emptive right to subscribe to any
or all additions to the stock of this Corporation.
[The remainder of Article III, which sets forth the terms
and conditions of the Company's Series A, H, K and AA Preferred
Stock, has been intentionally omitted.]
ARTICLE IV
Directors
A. Number of Directors. The business and affairs of this
Corporation shall be managed under the direction of the Board of
Directors. The number of directors comprising the Board of
Directors of this Corporation (exclusive of directors who may be
elected by the holders of any one or more series of Preferred
Stock voting separately) shall be 14 unless otherwise determined
from time to time by resolution adopted by the affirmative votes
of both (i) 80% of the directors then in office and (ii) a
majority of the Continuing Directors (as defined in Article
V(D)), voting as a separate group, provided, however, that no
decrease in the number of directors shall shorten the term of any
incumbent director.
B. Classification. The Board of Directors, other than
those who may be elected by the holders of any one or more series
of Preferred Stock voting separately, shall be divided, with
respect to the time during which they shall hold office, into
three classes, designated Class I, II and III, as nearly equal in
number as possible. Any increase or decrease in the number of
directors shall be apportioned by the Board of Directors so that
all classes of directors shall be as nearly equal in number as
possible. At each annual meeting of shareholders, directors
chosen to succeed those whose terms then expire shall be elected
to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their
election and until their successors are duly elected and
qualified.
C. Vacancies. Except as provided in Article IV(G) hereof,
any vacancy on the Board (including any vacancy resulting from an
increase in the authorized number of directors or from a failure
of the shareholders to elect the full number of authorized
directors) may, notwithstanding any resulting absence of a quorum
of directors, be filled only by the Board of Directors, acting by
vote of both (i) a majority of the directors then in office and
(ii) a majority of all the Continuing Directors, voting as a
separate group, and any director so appointed shall serve until
the next shareholders' meeting held for the election of directors
of the class to which he shall have been appointed and until his
successor is duly elected and qualified.
D. Removal. Subject to Article IV(G) hereof and
notwithstanding any other provisions of these Articles or the
Bylaws of this Corporation, any director or the entire Board of
Directors may be removed at any time, but only for cause, by the
affirmative vote at a meeting of shareholders called for such
purpose of the holders of both (i) a majority of the Total Voting
Power (as defined in Article V(D) hereof) entitled to be cast by
the holders of Voting Stock (as defined in Article V(D) hereof),
voting together as a single class, and (ii) a majority of the
Total Voting Power entitled to be cast by the Independent
Shareholders (as defined in Article V(D) hereof), voting as a
separate group. At the same meeting in which the shareholders
remove one or more directors, a successor or successors may be
elected for the unexpired term of the director or directors
removed. Except as set forth in this Article, directors shall
not be subject to removal.
E. Tender Offers and Other Extraordinary Transactions. In
connection with the exercise of its judgment in determining what
is in the best interest of the Corporation and its stockholders
when evaluating a Business Combination (as defined in Article
V(D) hereof) or a tender or exchange offer or a proposal by
another Person or Persons to make a tender or exchange offer, the
Board of Directors of the Corporation shall consider, in addition
to the adequacy of the amount to be paid in connection with any
such transaction, all of the following factors and any other
factors which it deems relevant: (i) the social and economic
effects of the transaction on the Corporation and its
subsidiaries, and their respective employees, customers,
creditors and other elements of the communities in which they
operate or are located, (ii) the business and financial condition
and earnings prospects of the acquiring Person or Persons,
including, but not limited to, debt service and other existing or
likely financial obligations of the acquiring Person or Persons,
and the possible effect of such conditions upon the Corporation
and its Subsidiaries and the other elements of the communities in
which the Corporation and its subsidiaries operate or are
located, and (iii) the competence, experience and integrity of
the acquiring Person or Persons and its or their management.
F. Board Qualifications. (1) Except as otherwise
provided in Article IV(G) hereof, no person shall be eligible for
nomination, election or service as a director of the Corporation
who shall:
(a) in the opinion of the Board of Directors fail
to respond satisfactorily to the Corporation respecting any
inquiry of the Corporation for information to enable the
Corporation to make any certification required by the
Federal Communications Commission under the Anti-Drug Abuse
Act of 1988 or to determine the eligibility of such person
under this Article;
(b) have been arrested or convicted of any
offense concerning the distribution or possession of, or
trafficking in, drugs or other controlled substances,
provided that in the case of an arrest the Board of
Directors may in its discretion determine that
notwithstanding such arrest such persons shall remain
eligible under this Article; or
(c) have engaged in actions that could lead to
such an arrest or conviction and that the Board of Directors
determines would make it unwise for such person to serve as
a director of the Corporation.
(2) Any person serving as a director of the
Corporation shall automatically cease to be a director on such
date as he ceases to have the qualifications set forth in
paragraph (1) above, and his position shall be considered vacant
within the meaning of Article IV(C) hereof.
G. Directors Elected by Preferred Shareholders.
Notwithstanding anything in these Articles of Incorporation to
the contrary, whenever the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a
class, to elect one or more directors of the Corporation, the
provisions of these Articles of Incorporation (as they may be
duly amended from time to time) fixing the rights and preferences
of such Preferred Stock shall govern with respect to the
nomination, election, term, removal, vacancies or other related
matters with respect to such directors.
ARTICLE V
Certain Business Combinations
A. Vote Required in Business Combinations. No Business
Combination may be effected unless all of the following
conditions have been fulfilled:
(1) In addition to any vote otherwise required by law
or these Articles, the proposal to effect a Business Combination
shall have been approved by (i) a majority of the directors then
in office and a majority of the Continuing Directors and (ii) by
the affirmative votes of both of the following:
(a) 80% of the Total Voting Power entitled to be
cast by holders of outstanding shares of Voting Stock of
this Corporation, voting as a separate voting group; and
(b) Two-thirds of the Total Voting Power entitled
to be cast by the Independent Stockholders present or duly
represented at a meeting, voting as a separate voting group.
(2) A proxy or information statement describing the
proposed Business Combination and complying with the requirements
of the Securities Exchange Act of 1934, as amended (the "Act"),
and the rules and regulations thereunder (or any subsequent
provisions replacing the Act, rules or regulations as a whole or
in part) is mailed to all shareholders of the Corporation at
least 30 days prior to the consummation of such Business
Combination (regardless of whether such proxy or information
statement is required pursuant to the Act or subsequent
provisions).
B. Nonapplicability of Voting Requirements. The vote
required by Paragraph A of this Article does not apply to a
Business Combination if all conditions specified in either of
paragraphs 1 or 2 below are met:
(1) The proposed Business Combination is approved
prior to the time the Related Person involved in the proposed
transaction became a Related Person by the affirmative votes of
both a majority of the directors then in office and a majority of
the Continuing Directors, voting as a separate group.
(2) All of the following five conditions have been
met:
(a) The aggregate amount of the cash and the
Market Value on the Valuation Date of consideration other
than cash to be received per share by all holders of Common
Stock in such Business Combination is at least equal to the
highest of the following:
1. the highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by or on behalf of the
Related Person for any shares of Common Stock of the
same class or series acquired by it within the two-year
period immediately prior to the Announcement Date or in
the transaction in which it became a Related Person,
whichever is higher;
2. The Market Value per share of Common
Stock of the same class or series on the Announcement
Date or on the Determination Date, whichever is higher;
or
3. The price per share equal to the Market
Value per share of Common Stock of the same class or
series determined pursuant to clause (2) immediately
preceding, multiplied by the fraction of (i) the
highest per share price, including any brokerage
commissions, transfer taxes and soliciting dealers'
fees, paid by or for the Related Person for any shares
of Common Stock of the same class or series acquired by
it within the two-year period immediately prior to the
Announcement Date, over (ii) the Market Value per share
of Common Stock of the same class or series on the
first day in such two-year period on which the Related
Person acquired any shares of Common Stock.
(b) The aggregate amount of the cash and the
Market Value as of the Valuation Date of consideration other
than cash to be received per share by holders of shares of
any class or series of outstanding stock other than Common
Stock is at least equal to the highest of the following,
whether or not the Related Person has previously acquired
any shares of a particular class or series of stock:
1. The highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by or for the Related
Person for any shares of such class of stock acquired
by it within the two-year period immediately prior to
the Announcement Date or in the transaction in which it
became a Related Person, whichever is higher;
2. The highest preferential amount per
share to which the holders of shares of such class of
stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
this Corporation;
3. The Market Value per share of such class
of stock on the Announcement Date or on the
Determination Date, whichever is higher; or
4. The price per share equal to the Market
Value per share of such class of stock determined
pursuant to clause (3) immediately preceding,
multiplied by the fraction of (i) the highest per share
price, including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by or for the
Related Person for any shares of any class of Voting
Stock acquired by it within the two-year period
immediately prior to the Announcement Date, over (ii)
the Market Value per share of the same class of Voting
Stock on the first day in such two-year period on which
the Related Person acquired any shares of the same
class of Voting Stock.
(c) The consideration to be received by holders
of any class or series of outstanding stock is to be in cash
or in the same form as the Related Person has previously
paid for shares of the same class or series of stock. If
the Related Person has paid for shares of any class of stock
with varying forms of consideration, the form of
consideration for such class of stock shall be either cash
or the form used to acquire the largest number of shares of
such class or series of stock previously acquired by it.
(d) After the Related Person has become a Related
Person and prior to the consummation of such Business
Combination:
1. There shall have been no failure to
declare and pay at the regular date therefor any
full periodic dividends, cumulative or not, on any
outstanding Preferred Stock of this Corporation;
2. There shall have been no reduction in
the annual rate of dividends paid on any class or
series of stock of this Corporation that is not
Preferred Stock except as necessary to reflect any
subdivision of the stock, and no failure to
increase the annual rate of dividends as necessary
to reflect any reclassification, including any
reverse stock split, recapitalization, reorgani-
zation, or any similar transaction which has the
effect of reducing the number of outstanding
shares of the stock; and
3. The Related Person did not become the
Beneficial Owner of any additional shares of stock
of this Corporation except as part of the
transaction which resulted in such Related Person
becoming a Related Person or by virtue of
proportionate stock splits or stock dividends.
The provisions of clause (1) and (2) immediately preceding
shall not apply if no Related Person or an Affiliate or
Associate of the Related Person voted as a director of this
Corporation in a manner inconsistent with such clauses and
the Related Person, within ten days after any act or failure
to act inconsistent with such clauses, notifies the Board of
Directors of this Corporation in writing that the Related
Person disapproves thereof and requests in good faith that
the Board of Directors rectify such act or failure to act.
(e) After the Related Person has become a Related
Person, the Related Person may not have received the
benefit, directly or indirectly, except proportionately as a
shareholder, of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by this Corporation or any of its
Subsidiaries, whether in anticipation of or in connection
with such Business Combination or otherwise.
C. Alternative Shareholder Vote for Business Combinations.
In the event the conditions set forth in Subparagraph (B)(1) or
(B)(2) have been met, the affirmative vote required of
shareholders in order to approve the proposed Business
Combination shall be 66-2/3% of the Total Voting Power present or
duly represented at the meeting called for such purpose.
D. Definitions. The following terms, for all purposes of
these Articles or the By-laws of this Corporation, shall have the
following meaning:
(1) An "Affiliate" of, or a person "affiliated with,"
a specified person means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, the person specified.
(2) "Announcement Date" means the first general public
announcement of the proposal or intention to make a proposal of
the Business Combination or its first communication generally to
shareholders of this Corporation, whichever is earlier.
(3) "Associate," when used to indicate a relationship
with any person, means any of the following:
(a) Any corporation or organization, other than
this Corporation, of which such person is an officer,
director or partner or is, directly or indirectly, the
Beneficial Owner of 10% or more of any class of Equity
Securities.
(b) Any trust or other estate in which such
person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary
capacity.
(c) Any relative or spouse of such person, or any
relative of such spouse, who has the same home as such
person.
(d) Any investment company registered under the
Investment Company Act of 1940 for which such person serves
as investment advisor.
(4) A person shall be deemed to be the "Beneficial
Owner" of any shares of capital stock (regardless whether owned
of record):
(a) Which that person or any of its Affiliates or
Associates, directly or indirectly, owns beneficially;
(b) Which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to
any agreement, arrangement or understanding; or
(c) Which are beneficially owned, directly or
indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of voting capital
stock of the corporation or any of its subsidiaries.
(5) "Business Combination" means any of the following
transactions, when entered into by the Corporation or a
Subsidiary with, or upon a proposal by, a Related Person:
(a) The merger or consolidation of, or an
exchange of securities by, the Corporation or any
Subsidiary;
(b) The sale, lease, exchange, mortgage, pledge,
transfer or any other disposition (in one or a series of
transactions) of any assets of the Corporation, or of any
Subsidiary, having an aggregate book or fair market value of
$1,000,000 or more, measured at the time the transaction or
transactions are approved by the Board of Directors;
(c) The adoption of a plan or proposal for the
liquidation or dissolution of the Corporation or any
Subsidiary;
(d) The issuance or transfer by the Corporation
or any Subsidiary (in one or a series of transactions) of
securities of the Corporation, or of any Subsidiary, having
a fair market value of $1,000,000 or more;
(e) The reclassification of securities (including
a reverse stock split), recapitalization, consolidation or
any other transaction (whether or not involving a Related
Person) which has the direct or indirect effect of
increasing the voting power (regardless whether then
exercisable) or the proportionate amount of the outstanding
shares of any class or series of Equity Securities of this
Corporation or any of its Subsidiaries of a Related Person,
or any Associate or Affiliate of a Related Person;
(f) Any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by the Corporation or any Subsidiary to
an Interested Shareholder or any Affiliate or Associate
thereof, except proportionately as a shareholder; or
(g) Any agreement, contract or other arrangement
providing directly or indirectly for any of the foregoing.
(6) "Capital Stock" means any Common Stock, Preferred
Stock or other capital stock of the Corporation, or any bonds,
debentures, or other obligations granted voting rights by the
Corporation pursuant to La. R.S. 12:75H.
(7) "Common Stock" means any stock other than a class
or series of preferred or preference stock.
(8) "Continuing Director" shall mean any member of the
Board of Directors who is not a Related Person or an Affiliate or
Associate thereof, and who was a member of the Board of Directors
prior to the time that the Related Person became a Related
Person, and any successor to a Continuing Director who is not a
Related Person or an Affiliate or Associate thereof and was
recommended to succeed a Continuing Director by a majority of
Continuing Directors who were then members of the Board of
Directors, provided that, in the absence of a Related Person, any
reference to "Continuing Directors" shall mean all directors then
in office.
(9) "control," including the terms "controlling,"
"controlled by" and "under common control with," means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract
or otherwise. The beneficial ownership of 10% or more of the
votes entitled to be cast by a corporation's voting stock creates
a presumption of control.
(10) "Determination Date" means the date on which a
Related Person first became a Related Person.
(11) "Equity Security" means any of the following:
(a) Any stock or similar security, certificate of
interest or participation in any profit sharing agreement,
voting trust certificate or certificate of deposit for an
equity security.
(b) Any security convertible, with or without
consideration, into an equity security, or any warrant or
other security carrying any right to subscribe to or
purchase an equity security.
(c) Any put, call, straddle or other option or
privilege of buying an equity security from or selling an
equity security to another without being bound to do so.
(12) "Independent Shareholder" or "Independent
Stockholder" means a holder of Voting Stock of this Corporation
who is not a Related Person.
(13) "Market Value" means the following:
(a) In the case of stock, the highest closing
sale price on the date or during the period in question of a
share of such stock on the principal United States
securities exchange registered under the Securities Exchange
Act of 1934 on which such stock is listed or, if such stock
is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock on the date
or during the period in question on the National Association
of Securities Dealers, Inc., Automated Quotations Systems,
or any alternative system then in use, or, if no such
quotations are available, the fair market value on the date
or during the period in question of a share of such stock as
determined by a majority of the Continuing Directors of this
Corporation in good faith.
(b) In the case of property other than cash or
stock, the fair market value of such property on the date or
during the period in question as determined by a majority of
the Continuing Directors of this Corporation in good faith.
(14) A "person" shall mean any individual, firm,
corporation or other entity, or a group of persons acting or
agreeing to act together in the manner set forth in Rule 13d-5
under the Securities Exchange Act of 1934, as in effect on
January 1, 1984.
(15) "Related Person" means any person (other than the
Corporation, a Subsidiary or any profit sharing, employee stock
ownership or other employee benefit plan of the Corporation or
any Subsidiary or any trust, trustee of or fiduciary with
respect to any such plan acting in such capacity) who (a) is the
direct or indirect Beneficial Owner of shares of Capital Stock
representing more than 10% of the outstanding Total Voting Power
entitled to vote for the election of directors, and any Affiliate
or Associate of any such person, or (b) is an Affiliate or
Associate of the Corporation and at any time within the two-year
period immediately prior to the date in question was the
Beneficial Owner, directly of indirectly, of shares of Capital
Stock (including two or more classes or series voting together as
a single class) representing 10% or more of the outstanding Total
Voting Power entitled to vote for the election of directors. For
the purpose of determining whether a person is the Beneficial
Owner of a percentage, specified in this Article, of the
outstanding Total Voting Power, the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed owned
by that person through application of Article V(D)(3) but shall
not include any other shares which may be issuable to any other
person.
(16) "Subsidiary" means any corporation of which Voting
Stock having a majority of the votes entitled to be cast is
owned, directly or indirectly, by this Corporation.
(17) "Total Voting Power," when used in reference to
any particular matter properly brought before the shareholders
for their consideration and vote, means the total number of votes
that holders of Capital Stock are entitled to cast with respect
to such matter.
(18) "Valuation Date" means the following:
(a) For a Business Combination voted upon by
shareholders, the latter of the date prior to the date of
the shareholders' vote and the day 20 days prior to the
consummation of the Business Combination; and
(b) For a Business Combination not voted upon by
the shareholders, the date of the consummation of the
Business Combination.
(19) "Voting Stock" means shares of Capital Stock of
the Corporation entitled to vote generally in the election of
directors.
E. Benefit of Statute. This Corporation claims and shall
have the benefit of the provisions of R.S. 12:133 except that the
provisions of R.S. 12:133 shall not apply to any business
combination involving an interested shareholder that is an
employee benefit plan or related trust of this Corporation.
ARTICLE VI
Shareholders' Meetings
A. Written Consents. Any action required or permitted to
be taken at any annual or special meeting of shareholders may be
taken only upon the vote of the shareholders, present in person
or represented by duly authorized proxy, at an annual or special
meeting duly noticed and called, as provided in the Bylaws of the
Corporation, and may not be taken by a written consent of the
shareholders pursuant to the Business Corporation Law of the
State of Louisiana.
B. Special Meetings. Subject to the terms of any
outstanding class or series of Preferred Stock that entitles the
holders thereof to call special meetings, the holders of a
majority of the Total Voting Power of the Corporation shall be
required to cause the Secretary of the Corporation to call a
special meeting of shareholders pursuant to La. R.S. 12:73B (or
any successor provision). Nothing in this Article VI shall limit
the power of the President of the Corporation or its Board of
Directors to call a special meeting of shareholders.
ARTICLE VII
Limitation of Liability and Indemnification
A. Limitation of Liability. No director or officer of the
Corporation shall be liable to the Corporation or to its
shareholders for monetary damages for breach of his fiduciary
duty as a director or officer, provided that the foregoing
provision shall not eliminate or limit the liability of a
director or officer for (1) any breach of his duty of loyalty to
the Corporation or its shareholders; (2) acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law; (3) liability for unlawful distributions of the
Corporation's assets to, or redemptions or repurchases of the
Corporation's shares from, shareholders of the Corporation, under
and to the extent provided in La. R.S. 12:92D; or (4) any
transaction from which he derived an improper personal benefit.
B. Authorization of Further Actions. The Board of
Directors may (1) cause the Corporation to enter into contracts
with its directors and officers providing for the limitation of
liability set forth in this Article to the fullest extent
permitted by law, (2) adopt By-laws or resolutions, or cause the
Corporation to enter into contracts, providing for
indemnification of directors and officers of the Corporation and
other persons (including but not limited to directors and
officers of the Corporation's direct and indirect Subsidiaries)
to the fullest extent permitted by law and (3) cause the
Corporation to exercise the insurance powers set forth in La.
R.S. 12:83F, notwithstanding that some or all of the members of
the Board of Directors acting with respect to the foregoing may
be parties to such contracts or beneficiaries of such By-laws or
resolutions or the exercise of such powers. No repeal or
amendment of any such By-laws or resolutions limiting the right
to indemnification thereunder shall affect the entitlement of any
person to indemnification whose claim thereto results from
conduct occurring prior to the date of such repeal or amendment.
C. Subsidiaries. The Board of Directors may cause the
Corporation to approve for the officers and directors of its
direct and indirect Subsidiaries limitation of liability,
indemnification and insurance provisions comparable to the
foregoing.
D. Amendment of Article. Notwithstanding any other
provisions of these Articles of Incorporation, the affirmative
vote of the holders of at least 80% of the Total Voting Power
shall be required to amend or repeal this Article VII, and any
amendment or repeal of this Article shall not adversely affect
any elimination or limitation of liability of a director or
officer of the Corporation under this Article with respect to any
action or inaction occurring prior to the time of such amendment
or repeal.
ARTICLE VIII
Reversion
Except for cash, shares or other property or rights payable
or issuable to the holders of Preferred Stock, the rights to
which shall be determined under applicable state law, Cash,
property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption
price of redeemed shares, that are not claimed by the
shareholders entitled thereto within one year after the dividend
or redemption price became payable or the shares became issuable,
despite reasonable efforts by the Corporation to pay the dividend
or redemption price or deliver the certificates for the shares to
such shareholders within such time, shall, at the expiration of
such time, revert in full ownership to the Corporation, and the
Corporation's obligation to pay such dividend or redemption price
or issue such shares, as the case may be, shall thereupon cease,
provided, however, that the Board of Directors may, at any time,
for any reason satisfactory to it, but need not, authorize (i)
payment of the amount of any cash or property dividend or
redemption price or (ii) issuance of any shares, ownership of
which has reverted to the Corporation pursuant to this Article,
to the person or entity who or which would be entitled thereto
had such reversion not occurred.
ARTICLE IX
Amendments
A. Charter Amendments. Articles IV (other than paragraphs
F and G), V, VI(A) and IX of these Articles of Incorporation
shall not be amended in any manner (whether by modification or
repeal of an existing Article or Articles or by addition of a new
Article or Articles) except upon resolutions adopted by the
affirmative vote of both (i) 80% of the Total Voting Power
entitled to be cast by the holders of outstanding shares of
Voting Stock, voting together as a single group, and (ii) two-
thirds of the Total Voting Power entitled to be cast by the
Independent Shareholders present or duly represented at a
shareholders' meeting, voting as a separate group; provided,
however, that if such resolutions shall first be adopted by both
a majority of the directors then in office and a majority of the
Continuing Directors, voting as a separate group, then such
resolutions shall be deemed adopted by the shareholders upon the
affirmative vote of a majority of the Total Voting Power entitled
to be cast by the holders of outstanding shares of Voting Stock,
voting as a single group.
B. Bylaw Amendments. Bylaws of this Corporation may be
altered, amended, or repealed or new Bylaws may be adopted by (i)
the shareholders, but only upon the affirmative vote of both 80%
of the Total Voting Power entitled to be cast by the holders of
outstanding shares of Voting Stock, voting together as a single
group, and two-thirds of the Total Voting Power entitled to be
cast by the Independent Shareholders present or duly represented
at a shareholders' meeting, voting as a separate group, or (ii)
the Board of Directors, but only upon the affirmative vote of
both a majority of the directors then in office and a majority of
the Continuing Directors, voting as a separate group.
* * * * * * * *
EXHIBIT B
CENTURY TELEPHONE ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the 1995 Incentive Compensation
Plan (the "Plan") of Century Telephone Enterprises, Inc.
("Century") is to increase shareholder value and to advance the
interests of Century and its subsidiaries (collectively, the
"Company") by furnishing a variety of economic incentives (the
"Incentives") designed to attract, retain and motivate employees
and officers and to strengthen the mutuality of interests between
such employees and officers and Century's shareholders.
Incentives may consist of opportunities to purchase or receive
shares of common stock, $1.00 par value per share, of Century
(the "Common Stock"), on terms determined under the Plan. As
used in the Plan, the term "subsidiary" means any corporation of
which Century owns (directly or indirectly) within the meaning of
Section 425(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), 50% or more of the total combined voting power of
all classes of stock. No Incentives shall be granted hereunder
unless the Plan is first approved by the shareholders of Century.
2. Administration.
2.1 Composition. The Plan shall be administered by the
compensation committee of the Board of Directors of Century,
or by a subcommittee of the compensation committee. The
committee or subcommittee that administers the Plan shall
hereinafter be referred to as the "Committee". The Committee
shall consist of not fewer than two members of the Board of
Directors, each of whom shall (a) qualify as a "disinterested
person" under Rule 16b-3 under the Securities Exchange Act of
1934 (the "1934 Act"), as currently in effect or any
successor rule, and (b) beginning on the date of Century's
1996 annual meeting of shareholders, qualify as "outside
directors" under Section 162(m) of the Code.
2.2 Authority. The Committee shall have plenary
authority to award Incentives under the Plan, to interpret
the Plan, to establish any rules or regulations relating to
the Plan that it determines to be appropriate, to enter into
agreements with participants as to the terms of the
Incentives (the "Incentive Agreements") and to make any other
determination that it believes necessary or advisable for the
proper administration of the Plan. Its decisions in matters
relating to the Plan shall be final and conclusive on the
Company and participants. The Committee may delegate its
authority hereunder to the extent provided in Section 3
hereof. The Committee shall not have authority to award
Incentives under the Plan to directors in their capacities as
such.
3. Eligible Participants. Key employees of the Company
(including officers who also serve as directors of the Company)
shall become eligible to receive Incentives under the Plan when
designated by the Committee. Employees may be designated
individually or by groups or categories, as the Committee deems
appropriate. With respect to participants not subject to Section
16 of the 1934 Act, the Committee may delegate to appropriate
personnel of the Company its authority to designate participants,
to determine the size and type of Incentives to be received by
those participants and to determine or modify performance
objectives for those participants.
4. Types of Incentives. Incentives may be granted under the
Plan to eligible participants in any of the following forms,
either individually or in combination, (a) incentive stock
options and non-qualified stock options; (b) stock appreciation
rights ("SARs") (c) restricted stock; and (d) performance shares.
5. Shares Subject to the Plan.
5.1. Number of Shares. Subject to adjustment as
provided in Section 10.6, a total of 2 million shares of
Common Stock are authorized to be issued under the Plan.
Incentives with respect to no more than 200,000 shares of
Common Stock may be granted through the Plan to a single
participant in one calendar year. No more than 500,000
shares may be issued through the Plan as restricted stock.
In the event that a stock option, SAR or performance share
granted hereunder expires or is terminated or cancelled prior
to exercise or payment, any shares of Common Stock that were
issuable thereunder may again be issued under the Plan. In
the event that shares of Common Stock are issued as
Incentives under the Plan and thereafter are forfeited or
reacquired by the Company pursuant to rights reserved upon
issuance thereof, such forfeited and reacquired shares may
again be issued under the Plan. If an Incentive is to be
paid in cash by its terms, the Committee need not make a
deduction from the shares of Common Stock issuable under the
Plan with respect thereto. If and to the extent that an
Incentive may be paid in cash or shares of Common Stock, the
total number of shares available for issuance hereunder shall
be debited by the number of shares payable under such
Incentive, provided that upon any payment of all or part of
such Incentive in cash, the total number of shares available
for issuance hereunder shall be credited with the appropriate
number of shares represented by the cash payment, as
determined in the sole discretion of the Committee.
Additional rules for determining the number of shares granted
under the Plan may be made by the Committee, as it deems
necessary or appropriate.
5.2. Type of Common Stock. Common Stock issued under
the Plan may be authorized and unissued shares or issued
shares held as treasury shares.
6. Stock Options. A stock option is a right to purchase
shares of Common Stock from Century. Stock options granted under
this Plan may be incentive stock options or non-qualified stock
options. Any option that is designated as a non-qualified stock
option shall not be treated as an incentive stock option. Each
stock option granted by the Committee under this Plan shall be
subject to the following terms and conditions:
6.1. Price. The exercise price per share shall be
determined by the Committee, subject to adjustment under
Section 10.6; provided that in no event shall the exercise
price be less than the Fair Market Value of a share of Common
Stock on the date of grant.
6.2. Number. The number of shares of Common Stock
subject to the option shall be determined by the Committee,
subject to Section 5.1 and subject to adjustment as provided
in Section 10.6.
6.3. Duration and Time for Exercise. Subject to earlier
termination as provided in Section 10.4, the term of each
stock option shall be determined by the Committee. Subject
to Section 10.12, each stock option shall become exercisable
at such time or times during its term as shall be determined
by the Committee, provided, however, that, except as provided
below, no stock option granted to an officer or director of
Century who is subject to Section 16 of the 1934 Act (an
"Insider") shall be exercisable within the six-month period
immediately following the date of grant. Notwithstanding the
foregoing, the Committee may accelerate the exercisability of
any stock option at any time, except to the extent of any
automatic acceleration of stock options under Section 10.12.
6.4. Repurchase. Upon approval of the Committee, the
Company may repurchase a previously granted stock option from
a participant by mutual agreement before such option has been
exercised by payment to the participant of the amount per
share by which: (i) the Fair Market Value (as defined in
Section 10.13) of the Common Stock subject to the option on
the business day immediately preceding the date of purchase
exceeds (ii) the exercise price.
6.5. Manner of Exercise. A stock option may be exer-
cised, in whole or in part, by giving written notice to the
Company, specifying the number of shares of Common Stock to
be purchased. The exercise notice shall be accompanied by
the full purchase price for such shares. The option price
shall be payable in United States dollars and may be paid by
(a) cash; (b) uncertified or certified check; (c) unless
otherwise determined by the Committee, by delivery of shares
of Common Stock held by the optionee for at least six months,
which shares shall be valued for this purpose at the Fair
Market Value on the business day immediately preceding the
date such option is exercised; (d) by the simultaneous
exercise of options and sale of the shares of Common Stock
acquired upon exercise, pursuant to a brokerage arrangement
that has been approved in advance by the Committee, with the
proceeds from such sale delivered in payment of the exercise
price; or (e) in such other manner as may be authorized from
time to time by the Committee. In the case of delivery of an
uncertified check upon exercise of a stock option, no shares
shall be issued until the check has been paid in full. Prior
to the issuance of shares of Common Stock upon the exercise
of a stock option, a participant shall have no rights as a
shareholder.
6.6. Incentive Stock Options. Notwithstanding anything
in the Plan to the contrary, the following additional
provisions shall apply to the grant of stock options that are
intended to qualify as Incentive Stock Options (as such term
is defined in Section 422 of the Code):
(a) Any Incentive Stock Option agreement authorized
under the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events
be consistent with and contain or be deemed to contain
all provisions required in order to qualify the options
as Incentive Stock Options.
(b) All Incentive Stock Options must be granted
within ten years from the date on which this Plan is
adopted by the Board of Directors.
(c) Unless sooner exercised, all Incentive Stock
Options shall expire no later than ten years after the
date of grant.
(d) No Incentive Stock Options shall be granted to
any participant who, at the time such option is granted,
would own (within the meaning of Section 422 of the Code)
stock possessing more than 10% of the total combined
voting power of all classes of stock of the employer
corporation or of its parent or subsidiary corporation.
(e) The aggregate Fair Market Value (determined with
respect to each Incentive Stock Option as of the time
such Incentive Stock Option is granted) of the Common
Stock with respect to which Incentive Stock Options are
exercisable for the first time by a participant during
any calendar year (under the Plan or any other plan of
Century or any of its subsidiaries) shall not exceed
$100,000. To the extent that such limitation is
exceeded, such options shall not be treated, for federal
income tax purposes, as incentive stock options.
6.7 Equity Maintenance. If a participant exercises an
option during the term of his employment with the Company,
and pays the exercise price (or any portion thereof) through
the surrender of shares of outstanding Common Stock owned by
the participant, the Committee may, in its discretion, grant
to such participant an additional option to purchase the
number of shares of Common Stock equal to the shares of
Common Stock so surrendered by such participant. Any such
additional options granted by the Committee shall be
exercisable at the Fair Market Value of the Common Stock
determined as of the business day immediately preceding the
respective dates such additional options may be granted. As
stated above, such additional options may be granted only in
connection with the exercise of options by the participant
during the term of his active employment with the Company.
The grant of such additional options under this Section 6.7
shall be made upon such other terms and conditions as the
Committee may from time to time determine.
7. Restricted Stock
7.1 Grant of Restricted Stock. The Committee may award
shares of restricted stock to such key employees as the
Committee determines to be eligible pursuant to the terms of
Section 3. An award of restricted stock may be subject to
the attainment of specified performance goals or targets,
restrictions on transfer, forfeitability provisions and such
other terms and conditions as the Committee may determine,
subject to the provisions of the Plan. To the extent
restricted stock is intended to qualify as performance based
compensation under Section 162(m) of the Code, it must meet
the additional requirements imposed thereby.
7.2 The Restricted Period. At the time an award of
restricted stock is made, the Committee shall establish a
period of time during which the transfer of the shares of
restricted stock shall be restricted (the "Restricted
Period"). Each award of restricted stock may have a
different Restricted Period. A Restricted Period of at least
three years is required, except that if vesting of the shares
is subject to the attainment of specified performance goals,
a Restricted Period of one year or more is permitted. In
addition, any participant subject to Section 16 of the 1934
Act shall be prohibited from selling or otherwise
transferring shares of restricted stock for a period of six
months from the grant thereof. The expiration of the
Restricted Period shall also occur as provided under Section
10.4 and under the conditions described in Section 10.12
hereof.
7.3 Escrow. The participant receiving restricted stock
shall enter into an Incentive Agreement with the Company
setting forth the conditions of the grant. Certificates
representing shares of restricted stock shall be registered
in the name of the participant and deposited with the
Company, together with a stock power endorsed in blank by the
participant. Each such certificate shall bear a legend in
substantially the following form:
The transferability of this certificate and the
shares of Common Stock represented by it are subject
to the terms and conditions (including conditions of
forfeiture) contained in the Century Telephone
Enterprises, Inc. 1995 Incentive Compensation Plan
(the "Plan"), and an agreement entered into between
the registered owner and Century Telephone
Enterprises, Inc. thereunder. Copies of the Plan and
the agreement are on file at the principal office of
the Company.
7.4 Dividends on Restricted Stock. Any and all cash and
stock dividends paid with respect to the shares of restricted
stock shall be subject to any restrictions on transfer,
forfeitability provisions or reinvestment requirements as the
Committee may, in its discretion, prescribe in the Incentive
Agreement.
7.5 Forfeiture. In the event of the forfeiture of any
shares of restricted stock under the terms provided in the
Incentive Agreement (including any additional shares of
restricted stock that may result from the reinvestment of
cash and stock dividends, if so provided in the Incentive
Agreement), such forfeited shares shall be surrendered and
the certificates cancelled. The participants shall have the
same rights and privileges, and be subject to the same
forfeiture provisions, with respect to any additional shares
received pursuant to Section 10.6 due to a recapitalization,
merger or other change in capitalization.
7.6 Expiration of Restricted Period. Upon the
expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided for in Section
7.2 and in the Incentive Agreement or an amendment thereto,
the restrictions applicable to the restricted stock shall
lapse and a stock certificate for the number of shares of
restricted stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions and
legends, except any that may be imposed by law, to the
participant or the participant's estate, as the case may be.
7.7 Rights as a Shareholder. Subject to the terms and
conditions of the Plan and subject to any restrictions on the
receipt of dividends that may be imposed in the Incentive
Agreement, each participant receiving restricted stock shall
have all the rights of a shareholder with respect to shares
of stock during any period in which such shares are subject
to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares.
8. Stock Appreciation Rights. A SAR is a right to receive,
without payment to the Company, a number of shares of Common
Stock, cash or any combination thereof, the amount of which is
determined pursuant to the formula set forth in Section 8.4. A
SAR may be granted (a) with respect to any stock option granted
under the Plan, either concurrently with the grant of such stock
option or at such later time as determined by the Committee (as
to all or any portion of the shares of Common Stock subject to
the stock option), or (b) alone, without reference to any related
stock option. Each SAR granted by the Committee under the Plan
shall be subject to the following terms and conditions:
8.1 Number. Each SAR granted to any participant shall
relate to such number of shares of Common Stock as shall be
determined by the Committee, subject to Section 5.1 and
subject to adjustment as provided in Section 10.6. In the
case of a SAR granted with respect to a stock option, the
number of shares of Common Stock to which the SAR pertains
shall be reduced in the same proportion that the holder of
the option exercises the related stock option.
8.2 Duration and Time for Exercise. Subject to Section
10.12, the term and exercisability of each SAR shall be
determined by the Committee. Unless otherwise provided by
the Committee in the Incentive Agreement, each SAR issued in
connection with a stock option shall become exercisable at
the same time or times, to the same extent and upon the same
conditions as the related stock option. No SAR granted to a
person subject to Section 16 of the 1934 Act may be exercised
during the first six months of its term. Notwithstanding the
foregoing, the Committee may in its discretion accelerate the
exercisability of any SAR at any time, except to the extent
of any automatic acceleration of SARs under Section 10.12.
8.3 Exercise. A SAR may be exercised, in whole or in
part, by giving written notice to the Company, specifying the
number of SARs that the holder wishes to exercise. The
Company shall, within 30 days of receipt of notice of
exercise by the Company, deliver to the exercising holder
certificates for the shares of Common Stock or cash or both,
as determined by the Committee, to which the holder is
entitled pursuant to Section 8.4.
8.4 Payment. Subject to the right of the Committee to
deliver cash in lieu of shares of Common Stock, the number of
shares of Common Stock that shall be issuable upon the
exercise of an SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to which
the SAR is exercised multiplied by the dollar amount of
the appreciation in such shares (for this purpose, the
"appreciation" shall be the amount by which the Fair
Market Value of the shares of Common Stock subject to the
SAR on the Exercise Date exceeds (1) in the case of a SAR
related to a stock option, the purchase price of the
shares of Common Stock under the stock option or (2) in
the case of a SAR granted alone, without reference to a
related stock option, an amount equal to the Fair Market
Value of a share of Common Stock on the date of grant,
which shall be determined by the Committee at the time of
grant, subject to adjustment under Section 10.6); by
(b) the Fair Market Value of a share of Common Stock
on the Exercise Date.
In lieu of issuing shares of Common Stock upon the
exercise of a SAR, the Committee may elect to pay the holder
of the SAR cash equal to the Fair Market Value on the
Exercise Date of any or all of the shares which would
otherwise be issuable. No fractional shares of Common Stock
shall be issued upon the exercise of a SAR; instead, the
holder of a SAR shall be entitled to receive a cash
adjustment equal to the same fraction of the Fair Market
Value of a share of Common Stock on the Exercise Date or to
purchase the portion necessary to make a whole share at its
Fair Market Value on the Exercise Date.
9. Performance Shares. A performance share consists of an
award that may be paid in shares of Common Stock or in cash, as
described below. The award of performance shares shall be
subject to such terms and conditions as the Committee deems
appropriate.
9.1 Performance Objectives. Each performance share
will be subject to performance objectives for Century or one
of its subsidiaries, divisions or departments to be achieved
by the end of a specified period. The number of performance
shares awarded shall be determined by the Committee and may
be subject to such terms and conditions as the Committee
shall determine. If the performance objectives are achieved,
each participant will be paid (a) a number of shares of
Common Stock equal to the number of performance shares
initially granted to that participant; (b) a cash payment
equal to the Fair Market Value of such number of shares of
Common Stock on the date the performance objectives are met
or such other date as may be provided by the Committee or (c)
a combination of shares of Common Stock and cash, as may be
provided by the Committee. If such objectives are not met,
each award of performance shares may provide for lesser
payments in accordance with a pre-established formula set
forth in the Incentive Agreement. To the extent a
performance share is intended to qualify as performance based
compensation under Section 162(m) of the Code, it must meet
the additional requirements imposed thereby.
9.2 Not a Shareholder. The award of performance shares
to a participant shall not create any rights in such partic-
ipant as a shareholder of the Company, until the payment of
shares of Common Stock with respect to an award, at which
time such stock shall be considered issued and outstanding.
9.3 Dividend Equivalent Payments. A performance share
award may be granted by the Committee in conjunction with
dividend equivalent payment rights or other such rights.
Dividend equivalent payments may be made to the participant
at the time of the payment of the dividend or issuance of the
other right or at the end of the specified performance period
or may be deemed to be invested in additional performance
shares at the Fair Market Value of a share of Common Stock on
the date of payment of the dividend or issuance of the right.
10. General.
10.1. Duration. Subject to Section 10.11, the Plan
shall remain in effect until all Incentives granted under the
Plan have either been satisfied by the issuance of shares of
Common Stock or the payment of cash or been terminated under
the terms of the Plan and all restrictions imposed on shares
of Common Stock in connection with their issuance under the
Plan have lapsed.
10.2 Transferability of Incentives. Options, SARs and
performance shares granted under the Plan shall not be
transferable except: (a) by will; (b) by the laws of descent
and distribution; (c) to family members, to a trust for the
benefit of family members or to charitable institutions, if
permitted by the Committee and provided in the Incentive
Agreement, after a determination that the ability to transfer
the Incentive will not result in the grant of the Incentive
being taxable and, with respect to such Incentives to
Insiders, if permitted by Rule 16b-3 under the 1934 Act; or
(d) pursuant to a domestic relations order, as defined by the
Code. Options or SARs may be exercised during the lifetime
of a participant only by the participant or by the
participant's guardian or legal representative. Any
attempted assignment, transfer, pledge, hypothecation or
other disposition of an Incentive, or levy of attachment or
similar process upon the Incentive not specifically permitted
herein, shall be null and void and without effect.
10.3. Non-transferability of Common Stock. Any shares
of Common Stock awarded to an Insider as restricted stock or
in payment of a performance share award must be held for a
period of six months from the date of grant, unless otherwise
permitted to be transferred and still be in compliance with
Rule 16b-3 under the 1934 Act.
10.4. Effect of Termination of Employment or Death. In
the event that a participant ceases to be an employee of the
Company for any reason, including death, disability, early
retirement or normal retirement, any Incentives may be
exercised, shall vest or shall expire at such times as may be
determined by the Committee in the Incentive Agreement.
10.5. Additional Condition. Anything in this Plan to
the contrary notwithstanding: (a) the Company may, if it
shall determine it necessary or desirable for any reason, at
the time of award of any Incentive or the issuance of any
shares of Common Stock pursuant to any Incentive, require the
recipient of the Incentive, as a condition to the receipt
thereof or to the receipt of shares of Common Stock issued
pursuant thereto, to deliver to the Company a written
representation of present intention to acquire the Incentive
or the shares of Common Stock issued pursuant thereto for his
own account for investment and not for distribution; and (b)
if at any time the Company further determines, in its sole
discretion, that the listing, registration or qualification
(or any updating of any such document) of any Incentive or
the shares of Common Stock issuable pursuant thereto is
necessary on any securities exchange or under any federal or
state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with the award
of any Incentive, the issuance of shares of Common Stock
pursuant thereto, or the removal of any restrictions imposed
on such shares, such Incentive shall not be awarded or such
shares of Common Stock shall not be issued or such restric-
tions shall not be removed, as the case may be, in whole or
in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Company.
10.6. Adjustment. In the event of any recapitalization,
stock dividend, stock split, combination of shares or other
change in the Common Stock, the number of shares of Common
Stock then subject to the Plan, including shares subject to
outstanding Incentives, shall be adjusted in proportion to
the change in outstanding shares of Common Stock. In the
event of any such adjustments, the purchase price of any
option, the performance objectives of any Incentive, and the
shares of Common Stock issuable pursuant to any Incentive
shall be adjusted as and to the extent appropriate, in the
reasonable discretion of the Committee, to provide partici-
pants with the same relative rights before and after such
adjustment.
10.7. Incentive Agreements. The terms of each Incentive
shall be stated in an agreement approved by the Committee.
The Committee may also determine to enter into agreements
with holders of options to reclassify or convert certain
outstanding options, within the terms of the Plan, as
Incentive Stock Options or as non-qualified stock options.
10.8. Withholding. The Company shall have the right to
withhold from any payments made under the Plan or to collect
as a condition of payment, any taxes required by law to be
withheld.
10.9. No Continued Employment. No participant under the
Plan shall have any right, because of his or her par-
ticipation, to continue in the employ of the Company for any
period of time or to any right to continue his or her present
or any other rate of compensation.
10.10. Deferral Permitted. Payment of cash or distribu-
tion of any shares of Common Stock to which a participant is
entitled under any Incentive shall be made as provided in the
Incentive Agreement. Payment may be deferred at the option
of the participant if provided in the Incentive Agreement.
10.11. Amendment of the Plan. The Board may amend or
discontinue the Plan at any time. In addition, no amendment
or discontinuance shall, subject to adjustments permitted
under Section 10.6, change or impair, without the consent of
the recipient, an Incentive previously granted, except that
the Company retains the right to (a) convert any outstanding
Incentive Stock Option to a non-qualified stock option, (b)
require the forfeiture of an Incentive if a participant's
employment is terminated for cause, and (c) exercise all
rights under Section 10.12.
10.12 Change of Control. Notwithstanding anything to
the contrary in the Plan or any related Incentive Agreement,
if (i) Century shall not be the surviving entity in any
merger, consolidation or other reorganization (or survives
only as a subsidiary of an entity other than a previously
wholly-owned subsidiary of the Company), (ii) the Company
sells, leases or exchanges all or substantially all of its
assets to any other person or entity (other than a wholly-
owned subsidiary of the Company), (iii) Century is to be
dissolved or liquidated, (iv) any person or entity, including
a "group" as contemplated by section 13(d)(3) of the 1934
Act, other than an employee benefit plan of the Company or a
related trust, acquires or gains ownership or control
(including, without limitation, power to vote) of more than
30% of the outstanding shares of Century's voting stock, or
(v) as a result of or in connection with a contested election
of directors, the persons who were directors of Century
before such election shall cease to constitute a majority of
the Board of Directors of Century (each such event is
referred to herein as a "Corporate Change"), then upon the
approval by the Board of Directors of Century of any
Corporate Change of the type described in clause (i) to (iii)
or upon a Corporate Change described in clause (iv) or (v),
all outstanding options and SARs shall automatically become
fully exercisable, all restrictions or limitations on any
Incentives shall lapse and all performance criteria and other
conditions relating to the payment of Incentives shall be
deemed to be achieved or waived by the Company, without the
necessity of any action by any person. In addition, no later
than (a) 30 days after the approval by the Board of Directors
of Century of any Corporate Change of the type described in
clauses (i) to (iii) or (b) 30 days after a Corporate Change
of the type described in clause (iv) or (v), the Committee,
acting in its sole discretion without the consent or approval
of any participant (and notwithstanding any removal or
attempted removal of some or all of the members thereof as
directors or committee members), may act to effect one or
more of the following alternatives, which may vary among
individual participants and which may vary among Incentives
held by any individual participant: (1) require that all
outstanding options and/or SARs be exercised on or before a
specified date (before or after such Corporate Change) fixed
by the Committee, after which specified date all unexercised
options and SARs and all rights of participants thereunder
shall terminate, (2) provide for mandatory conversion of some
or all of the outstanding options and SARs held by some or
all participants as of a date, before or after such Corporate
Change, specified by the Committee, in which event such
options and SARs shall be deemed automatically cancelled and
the Company shall pay, or cause to be paid, to each such
participant an amount of cash per share equal to the excess,
if any, of the Change of Control Value of the shares subject
to such option or SAR, as defined and calculated below, over
the exercise price(s) of such options or SARs, or, in lieu of
such cash payment, the issuance of Common Stock having a Fair
Market Value equal to such excess, (3) make such equitable
adjustments to Incentives then outstanding as the Committee
deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole
discretion that no adjustment is necessary to Incentives then
outstanding) or (4) provide that thereafter upon any exercise
of an option or SAR theretofore granted the participant shall
be entitled to purchase under such option or SAR, in lieu of
the number of shares of Common Stock then covered by such
option or SAR, the number and class of shares of stock or
other securities or property (including, without limitation,
cash) to which the participant would have been entitled
pursuant to the terms of the agreement providing for the
merger, consolidation, asset sale, dissolution or other
Corporate Change of the type described in clause (i) to (iii)
above, if, immediately prior to such Corporate Change, the
participant had been the holder of record of the number of
shares of Common Stock then covered by such options or SARs.
For the purposes of clause (2) above, the "Change of Control
Value" shall equal the amount determined by whichever of the
following items is applicable: (i) the per share price
offered to shareholders of Century in any such merger,
consolidation or other reorganization, determined as of the
date of the definitive agreement providing for such
transaction, (ii) the price per share offered to shareholders
of Century in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) in all other events,
the Fair Market Value per share of Common Stock into which
such options or SARs being converted are exercisable, as
determined by the Committee as of the date determined by the
Committee to be the date of conversion of such options or
SARs. In the event that the consideration offered to
shareholders of Century in any transaction described herein
consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.
10.13. Definition of Fair Market Value. Whenever "Fair
Market Value" of Common Stock shall be determined for pur-
poses of this Plan, it shall be determined as follows: (i) if
the Common Stock is listed on an established stock exchange
or any automated quotation system that provides sale
quotations, the closing sale price for a share of the Common
Stock on such exchange or quotation system on the applicable
date; (ii) if the Common Stock is not listed on any exchange
or quotation system, but bid and asked prices are quoted and
published, the mean between the quoted bid and asked prices
on the applicable date, and if bid and asked prices are not
available on such day, on the next preceding day on which
such prices were available; and (iii) if the Common Stock is
not regularly quoted, the fair market value of a share of
Common Stock on the applicable date as established by the
Committee in good faith.
10.14. Compliance with Section 16. It is the intent of
the Company that the Plan and Incentives hereunder satisfy
and be interpreted in a manner, that, in the case of
participants who are or may be Insiders, satisfies the
applicable requirements of Rule 16b-3, so that such persons
will be entitled to the benefits of Rule 16b-3 or other
exemptive rules under Section 16 of the 1934 Act and will not
be subjected to avoidable liability thereunder. If any
provision of the Plan or of any Incentives would otherwise
frustrate or conflict with the intent expressed in this
Section 10.14, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with
such intent, the provision shall be deemed void as applicable
to Insiders.
10.15. Loans. In order to assist a participant to
satisfy his tax liabilities arising in connection with an
Incentive granted under the Plan, the Committee may
authorize, subject to the provisions of Regulation G of the
Board of Governors of the Federal Reserve System, at either
the time of the grant of the Incentive, at the time of the
acquisition of Common Stock pursuant to the Incentive, or at
the time of the lapse of restrictions on shares of restricted
stock granted under the Plan, the extension of a loan to the
participant by the Company. The terms of any loans,
including the interest rate, collateral and terms of
repayment, will be subject to the discretion of the
Committee. The maximum credit available hereunder shall be
equal to the maximum tax liability that may be incurred in
connection with the Incentive.
