SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 2)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of
Commission Only (as
permitted by
Rule 14a-6(e)(2))
[ ] 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>
Amended Preliminary Copy Filed With
the Commission on March 2, 1995
[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 require shareholders to provide advance notice
to nominate directors or bring other matters before shareholders'
meetings, 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 20, 1995
<PAGE>
Amended Preliminary Copy Filed With
the Commission on March 2, 1995
[CTEI LETTERHEAD]
Dear Shareholder:
The enclosed proxy card solicited on behalf of the Board of
Directors for 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 require shareholders to provide advance notice
to nominate directors or bring other matters before shareholders'
meetings, 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 20, 1995
<PAGE>
Amended Preliminary Copy Filed With
the Commission on March 2, 1995
[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 require
shareholders to provide advance notice to nominate directors or
bring other matters before shareholders' meetings, 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 20, 1995
<PAGE>
Amended Preliminary Copy Filed With
the Commission on March 2, 1995
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) require shareholders to provide advance notice to
nominate directors or bring other matters before
shareholders' meetings;
(3) clarify, and in certain instances expand, the
protections currently afforded under the Company's
"fair price" article by:
(A) adding a dispute resolution mechanism;
(B) clarifying the definition of Interested
Shareholder;
(C) clarifying the definition of Business
Combinations; and
(D) making certain ancillary changes, all as described
further herein; and
(4) 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) making certain other miscellaneous changes, all as
described further herein;
. To consider and vote upon a proposal to approve the
Company's 1995 Incentive Compensation Plan as set forth
herein; 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 20, 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.
________________________________________
<PAGE>
Amended Preliminary Copy Filed With
the Commission on March 2, 1995
CENTURY TELEPHONE ENTERPRISES, INC.
____________________________
PROXY STATEMENT
(dated March 20, 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 20, 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 53,574,361
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 ("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 133,872,636 votes are entitled to be cast
at the Meeting, of which 133,618,471 (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.
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 Evaluation (Chairman);
Photo 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
Director predecessor position) since July 1989.
Photo
Committee Memberships: Insurance Evaluation
Shares Beneficially Owned: 135,757<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; Insurance Evaluation;
Photo 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
Director to 1992.
Photo
Committee Membership: Executive
Shares Beneficially Owned: 288,329<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.
Director Williams, who is the father-in-law of Harvey P. Perry, founded
Photo the Company's telephone business in 1946.
Committee Membership: Executive (Chairman)
Shares Beneficially Owned: 656,438<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,
Director L.L.P., a law firm, from January 1989 to March 1992.
Photo
Committee Memberships: Audit; 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
Photo Committee Memberships: Audit; 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
Director operate Bluebonnet Savings Bank, F.S.B.; President and Chief
Photo Executive Officer of Marquette National Life Insurance Company
and an officer of its parent corporation from August 1990 to
March 1991; served from July 1987 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
consultant to local businesses and individuals regarding
financial and tax matters.
Director
Photo 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
Photo Committee Memberships: Audit; 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
Photo Committee Memberships: Executive; Audit (Chairman);
Shareholder Relations
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; Audit; Compensation
Photo
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
Photo Committee Membership: Executive
Shares Beneficially Owned: 165,619<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
Director to December 31, 1994.
Photo
Committee Memberships: Executive; Insurance Evaluation
Shares Beneficially Owned: 142,027<FN1>
_____________________________________________________________________________
<FN1> Includes (i) shares of restricted stock held as of the Record
Date that were issued under, and are subject to the
restrictions of, the Company's incentive compensation plans
("Restricted 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 8,339 103,666 91,161
Glen F. Post, III 11,247 223,782 28,619
Clarke M. William 16,797 551,203 69,739
Harvey P. Perry 7,923 120,529 12,796
Jim D. Reppond 6,552 99,403 32,024
<FN2> Constitutes 1.2% of the outstanding shares of Common Stock
and entitles Mr. Williams to cast .6% 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 11
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 3A through 3D 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 Company anticipates that the Amendment Proposals, if adopted
by the shareholders, will become effective immediately after the
Meeting.
In connection with formulating Amendment Proposals 3D and
4E, the Board has grouped together into a single proposal
interrelated recommendations that have been proposed for
substantially similar reasons or purposes. Shareholders should
weigh the merits of each element of these Amendment Proposals
before voting on the proposal as a whole. The only way to defeat
a particular portion of any Amendment Proposal as to which a
shareholder is opposed is to defeat the entire proposal.
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 an Interested Shareholder (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 Interested
Shareholder 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 39% 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 effects.
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 Proposal 2 - Addition of New Article Relating to
Shareholder Nominations and Proposals
The Company's Board of Directors recommends that the
Articles be amended to add new Article VI(C) (the "Advance Notice
Article"), which generally provides that shareholders who wish to
nominate directors or submit other matters for consideration at
shareholders' meetings must provide advance notice to the
Company. The full text of this Article, as proposed to the
shareholders for adoption, is included in Exhibit A.
Description of Proposal. As proposed, the Advance Notice
Article provides that nominations for the election of directors
and proposals to bring other matters before a shareholders'
meeting may be made by the Board of Directors or voting
shareholders of record. Under this Article, shareholders
intending to make a nomination or bring any other matter before a
shareholders' meeting must furnish timely written notice.
Subject to certain exceptions, to be timely the notice must be
received by the Company not less than 60 days nor more than 270
days prior to the anniversary date of the previous year's annual
meeting.
The notice to the Company from a shareholder intending to
nominate a person for election as a director or to propose other
matters at a shareholders' meeting must contain certain
information, including the name, age and address of the
shareholder proposing such action and any persons acting in
concert with such shareholder, a representation by such
shareholder that such shareholder is a holder of record of the
Company's capital stock and intends to appear at the meeting in
person to make the nomination or bring up the specified matter.
In the case of nominations for directors, the notice must also
include (i) the name, age, address and principal occupation of
each nominee, (ii) a description of all arrangements between the
nominating shareholder and each nominee, (iii) other information
required to be included in a proxy statement pursuant to the
proxy rules of the Securities and Exchange Commission (including
information concerning whether such nominee has been involved in
certain proceedings which may be material to an evaluation of the
nominee's ability or integrity), and (iv) the consent of each
nominee to serve as director of the Company if elected and an
affidavit that such nominee meets the qualifications specified in
newly-proposed Article IV(F) (the "Proposed Qualifications"),
which the Board has recommended for approval at the Meeting. See
"-- Amendment Proposal 4A." In the case of other proposed
business, the shareholder's notice must set forth a description
of the business, the reasons for conducting such business at the
meeting and any material interest of the shareholder therein.
The chairman of the meeting will have the power to disregard any
nomination or other matter that fails to comply with these
proposed procedures.
With respect to proposals by shareholders to propose matters
other than the nomination of directors, the Advance Notice
Article permits the Company to disregard proposals that (i) are
substantially duplicative of a prior-received proposal to be
voted upon at an upcoming meeting, (ii) deal with substantially
the same subject matter as a prior proposal that was voted upon
within the preceding five years and which failed to receive
affirmative votes in excess of certain specified levels which
range, depending on the circumstances, between 3% and 10%, or
(iii) in the judgment of the Board of Directors, are not proper
subjects for action by shareholders under Louisiana law.
Reasons For and Effects of the Proposal. Currently neither
the Articles nor the Bylaws prescribe any procedures governing
the shareholders' rights to nominate directors or bring other
matters before shareholders' meetings. Subject to certain
restrictions under Louisiana law, currently the Company's
shareholders can nominate directors or propose other matters from
the floor at a shareholders' meeting, without prior notice to the
Board or other shareholders.
The Advance Notice Article will afford the Board an
opportunity to consider in an orderly and informed manner the
qualifications of proposed nominees and the merits of any other
proposed business, and, to the extent it deems it necessary or
desirable, to advise shareholders and make recommendations or
propose alternatives with respect thereto. The Board believes
the Advance Notice Article will further the objectives of the
Board to identify candidates who have the experience,
qualifications and proven accomplishments to effectively serve
the Company and to identify other proposals that may advance the
best interest of the Company and its shareholders. The Board
believes that it is advantageous to be able to consider in
advance the qualifications of any proposed nominee and the merits
of any other proposed business, as opposed to being confronted
with unexpected nominations or proposals at or shortly before the
meeting. Moreover, by permitting the Company to disregard
matters that are belated, duplicative or otherwise not in
accordance with the Article's terms and conditions, the Board
believes the Article will facilitate orderly and constructive
shareholders' meetings.
As indicated above, the Advance Notice Article will enable
the Board of Directors to disregard a timely-received proposal if
it is substantially duplicative of other proposals, is
substantially similar to proposals that previously elicited
little shareholder support or is not a proper subject for
shareholder action. Moreover, the Article will permit the Board
to assess whether a proposed nominee meets the Proposed
Qualifications. Subject to these limited exceptions, the Article
does not give the Board the power to reject shareholders'
proposals to nominate directors or bring other matters before
shareholders' meetings if the prescribed procedures are followed.
However, the Article may have the effect of precluding both
contests for the election of directors and proposals by
shareholders of actions to be taken by the Company if the
procedures specified in the Article are not followed and may
discourage or deter a third party from conducting a solicitation
of proxies or otherwise attempting to elect its own slate of
directors or proposing that the Company take certain actions,
without regard to whether such actions might be harmful or
beneficial to the Company and its shareholders. As indicated
above, however, the Article has not been proposed in response to
any pending or threatened contest for the election of directors.
Nothing in the Advance Notice Article will affect the rights
of shareholders under the proxy rules of the Securities and
Exchange Commission to request that their proposals be included
in the Company's proxy statements or to solicit their own
proxies. If this Article is adopted at the Meeting, shareholders
who desire to pursue these rights at future meetings will be
required to comply with both the Advance Notice Article and the
proxy rules.
The Board of Directors unanimously recommends that you vote
for this Proposal.
Amendment Proposals 3A through 3D - 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) provide a
mechanism for resolving certain disputes ("Amendment Proposal
3A"), (b) clarify the definition of Interested Shareholder
("Amendment Proposal 3B"), (c) clarify the definition of Business
Combinations ("Amendment Proposal 3C"), and (d) make certain
other ancillary and clarifying changes ("Amendment Proposal 3D").
Amendment Proposal 3A. The Board of Directors recommends
that the Articles be amended to include new Article V(D), which
generally provides that the Board of Directors will have the
power to make good faith determinations regarding the
applicability of the Fair Price Article, including whether any
particular person is an Interested Shareholder, the number of
shares owned by such person, and whether any particular
transaction constitutes a Business Combination. The Company
believes that in most instances the applicability of the
Article's provisions would be readily determinable. However, the
Article is currently silent regarding the standard of review that
a court should apply in the event that one of the Company's
determinations is challenged. Under this proposed amendment, all
good faith determinations by the Board would be conclusive and
binding on the Company and its shareholders for all purposes of
the Fair Price Article. Accordingly, adoption of this proposal
could substantially limit the shareholders' ability to challenge
determinations of the Board under this Article. However, nothing
in the proposal would prevent suits challenging whether the Board
acted in good faith. The Board of Directors believes this
amendment will strengthen the protection of the Article by
reducing the likelihood that an Interested Shareholder will
institute lawsuits lacking merit or attempt to circumvent the
terms, purposes and intents of the Article.
Amendment Proposal 3B. 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 an
Interested Shareholder 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
Interested Shareholder in the Fair Price Article to match the
statute's expanded definition.
Amendment Proposal 3C. 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 an Interested Shareholder to
be approved by various supermajority votes. Currently, the Fair
Price Article defines Business Combinations broadly to include
most corporate actions that an Interested Shareholder 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 Interested Shareholder.
Although the Fair Price Article currently contains express
provisions designed to deter an Interested Shareholder 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.
Amendment Proposal 3D. For the reasons indicated below, the
Board of Directors recommends that the Fair Price Article be
amended to:
. delete certain definitions not used in the Article (to
simplify and shorten the Article);
. conform the definitions of certain terms to those
definitions used under the federal securities laws (to
shorten the Article);
. conform the definitions of certain other terms to those
used under the Louisiana "fair price" statute (to
eliminate unnecessary disparities between the Article
and the statute);
. add new clarifying definitions (to avoid use of
duplicative language and to simplify and clarify the
Article);
. move from the Article to new Article IV various
provisions not related to the Fair Price Article (to
simplify the Article);
. combine into a single section closely related
provisions (to simplify and shorten the Article); and
. make conforming changes necessitated by the foregoing.
To the extent these changes clarify the scope and coverage of the
Fair Price Article, they may discourage or prevent attempts to
circumvent the terms, purposes or intents of the Article.
However, the Board has not proposed these miscellaneous changes
for the purpose of expanding the protections of the Article and,
subject to the foregoing sentence, the Board does not believe
that such changes will have any significant effect on the current
rights, powers or obligations of the Company or its shareholders.
____________________
Shareholders are urged to review newly-proposed Article V
set forth in Exhibit A, which reflects all of the above-described
proposals in their entirety. In connection with reviewing the
foregoing 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 3A, 3B, 3C and 3D.
Amendment Proposals 4A through 4E - Other Changes to Articles
The Board of Directors has approved a number of amendments
to the Articles that are designed generally to conform certain
articles to the bylaws, to clarify the Board's powers in certain
specific instances, to update and modernize certain other
articles, and to simplify, consolidate and reorder various other
provisions.
As described further below, the proposed amendments 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 4A"), (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 4B"),
(iii) eliminate the requirement that the Company's stock be
represented by certificates ("Amendment Proposal 4C"), (iv) add a
definition of total voting power ("Amendment Proposal 4D"), and
(v) update, modernize, simplify, consolidate and reorder the
Articles as described further below ("Amendment Proposal 4E").
Amendment Proposal 4A. 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 4B. 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 their 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 4C. 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 4D. Currently the Articles provide that
all 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 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(C).
Amendment Proposal 4E. The Board has approved several
miscellaneous amendments that seek to update, modernize,
simplify, consolidate and reorder the Articles. If adopted,
these proposed amendments would (i) condense and simplify the
Article that currently permits the Board of Directors to issue
"blank-check" preferred stock solely in an effort to shorten the
Articles, (ii) correct references to laws or regulations no
longer in effect to avoid confusion, and (iii) reorder various
articles in an effort to group similar topics together and make
the Articles easier to read. Due to their relatively limited
scope and interrelated nature, these proposed amendments are
being presented to the shareholders as a single Amendment
Proposal. The Board does not believe that these miscellaneous
changes will have any significant effect on the current rights,
powers or obligations of the Company or its shareholders.
____________________
All of proposed changes contemplated by Amendment Proposals
4A through 4E are reflected in the proposed Articles attached as
Exhibit A.
The Board of Directors unanimously recommends that you vote
for Amendment Proposals 4A, 4B, 4C, 4D and 4E.
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, the Board of Directors has 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 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"). The Compensation Committee estimates that the
Company currently has approximately 75 employees who could be
designated as key employees under 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. 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 February 28, 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, except 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 must be
approved by the shareholders. 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 Securities Exchange Act of 1934 (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 on sale, pledge or other transfer by the
employee for a certain period (the "Restricted Period"). All
shares of restricted stock will be subject to such restrictions
as the Compensation Committee may provide 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 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 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 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 is 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.
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/or 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 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 6,714,833<FN3> 12.5% 39.0%
(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> 8.4% 3.3%
One Post Office Square
Boston, Massachusetts 02109
Gabelli Funds, Inc. 2,971,607<FN5> 5.5% 2.2%
One Corporate Center
Rye, New York 10580-1434
Management:
R. Stewart Ewing, Jr. 126,679<FN6> * *
All directors and executive 1,774,311<FN7> 3.2% 2.7%
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. Although
several persons beneficially own in excess of 5% of certain
classes of Voting Preferred Stock, the percentage of voting
power held by these persons is immaterial.
<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 7,655 shares of Restricted Stock, 93,717 Option
Shares and 12,800 Plan Shares.
<FN7> Includes (i) 63,207 shares of Restricted Stock, (ii)
1,240,985 Option Shares that such persons have a right to
acquire within 60 days of the Record Date, (iii) 189,483
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) 18,284 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 12 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 he 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 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 18,164
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.
<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 6,582 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 maximul
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 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 12 telecommunications companies,
including the Company, and is available by contacting Value Line,
Inc. directly.
[GRAPH TO COME.]
<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 $376,000 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 $128,000 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 3A
through 3D, 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 3A through 3D, 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 3A
through 3D 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
such matter. Because Amendment Proposals 3A through 3D 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
As described above under the heading "Approval of Amendments
to the Company's Articles of Incorporation - Amendment Proposal 2
- Addition of New Article Relating to Shareholder Nominations and
Proposals," the Board of Directors has recommended an amendment
to the Articles that would require shareholders intending to
nominate a person for election as a director or to bring other
matters before a shareholders' meeting to provide advance written
notice and follow certain other procedures. If this amendment is
adopted by the shareholders, the advance written notice required
thereunder in connection with the Company's 1996 annual
shareholders' meeting must be received by the Company between
August 15, 1995 and March 12, 1996. 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 21, 1995.
By Order of the Board of Directors
Harvey P. Perry
Secretary
Dated: March 20, 1995
<PAGE>
Amended Preliminary Copy Filed With
the Commission on March 2, 1995
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 WITHHOLD AUTHORITY [ ] to vote for
listed below all nominees
(except as listed below
marked to the
contrary 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 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 2 [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3A [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3B [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3C [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 3D [ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please See Reverse Side)
Amendment Proposal 4A [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 4B [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 4C [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 4D [ ] FOR [ ] AGAINST [ ] ABSTAIN
Amendment Proposal 4E [ ] 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
ADDITIONAL SIGNATURE (IF JOINTLY HELD) proxy. When signing as
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.
Set forth below are the articles of incorporation of the
Company, as restated, assuming the adoption of each of the
Amendment Proposals, pursuant to which the Board of Directors
proposes to amend such articles by (i) amending paragraphs A(1),
B, C and D of Article III and reordering the Article's
paragraphing, (ii) amending the second paragraph of Article IV
and renumbering the entire article as Article VII, (iii)
consolidating the provisions of Article V into Article VII(B),
(iv) renumbering Article VI as Article VIII, (v) amending Article
VII and renumbering it as Article VI(B), (vi) amending paragraphs
A, C, D and E of Article VIII and consolidating and reordering
such amended provisions into Article V, (vii) amending paragraph
B of Article VIII and renumbering such amended provisions as
Article IV, (viii) renumbering Article IX as Article VI(A), (ix)
renumbering Article X as Article IV(E), (x) amending paragraphs A
and B of Article XI and renumbering such amended provisions as
Article IX, (xi) amending paragraph C of Article XI and
renumbering it as Article V(E), and (xii) adding new provisions
as Articles IV(F), V(D), VI(C) and VII(C).
* * * * * * * * * *
[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. Shares of Preferred Stock may be
issued from time to time in one or more series. Authority is
hereby vested in the Board of Directors of the Corporation to
amend these Articles of Incorporation from time to time to fix
the preferences, limitations and relative rights as between the
Preferred Stock and the Common Stock, to fix the number of shares
constituting any series of Preferred Stock and the designation
thereof, and to fix variations in the preferences, limitations
and relative rights as between different series of Preferred
Stock.
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 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(C)), 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(C) hereof) entitled to be cast by
the holders of Voting Stock (as defined in Article V(C) 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(C)), 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 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. Supermajority Vote. In addition to any affirmative
vote otherwise required by law or these Articles of Incorporation
(notwithstanding the fact that a lesser percentage may be
specified by law or these Articles of Incorporation) and except
as otherwise expressly provided in Article V(B):
(1) any merger, consolidation or share exchange of the
Corporation or any Subsidiary with an Interested Shareholder
or with any other corporation, whether or not itself an
Interested Shareholder, which is, or after such merger,
consolidation or share exchange would be, an Affiliate or
Associate of an Interested Shareholder who was an Interested
Shareholder prior to the transaction;
(2) any sale, lease, transfer, exchange, mortgage,
pledge, loan, advance, or other similar disposition (in one
or more series of transactions), with or for the direct or
indirect benefit of any Interested Shareholder or any
Affiliate or Associate thereof, of any assets of the
Corporation or any Subsidiary having, measured at the time
the transaction or transactions are approved by the Board of
Directors, an aggregate book value or Market Value as of the
end of the Corporation's most recently ended fiscal quarter
of $1 million or more;
(3) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or any
Subsidiary;
(4) the issuance or transfer by the Corporation or any
Subsidiary, in one transaction or in a series of
transactions in any twelve-month period, of any Equity
Securities of the Corporation or any Subsidiary that have an
aggregate Market Value of $1 million or more to any
Interested Shareholder or any Affiliate or Associate
thereof, except pursuant to the exercise of warrants or
rights to purchase securities offered pro rata to all
holders of the Corporation's Voting Stock or by any other
method affording substantially proportionate treatment to
the holders of Voting Stock;
(5) any reclassification or recapitalization of
securities of the Corporation, including any reverse stock
split, any merger, consolidation or share exchange of the
Corporation with any Subsidiary, or any other transaction
(whether or not involving an Interested Shareholder) that
has the effect, directly or indirectly, in one transaction
or a series of transactions, of increasing the voting power
(regardless of when exercisable) or the proportionate amount
of the outstanding shares of any class or series of Equity
Securities of the Corporation or any Subsidiary directly or
indirectly beneficially owned by any Interested Shareholder
or any Affiliate or Associate thereof;
(6) 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
(7) any agreement, contract or other arrangement
providing directly or indirectly for any of the foregoing;
shall require (i) the approval by a majority of both the
directors then in office and a majority of the Continuing
Directors, voting as a separate group, and (ii) the affirmative
vote of both 80% of the Total Voting Power entitled to be cast by
the holders of Voting Stock, voting together as a single class,
and two-thirds of the Total Voting Power entitled to be cast by
the Independent Shareholders present or duly represented at a
meeting, voting together as a separate class. In addition, a
proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder shall be
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 such act).
B. Exceptions to Supermajority Vote Requirements. If all
conditions specified in either of paragraphs 1 or 2 below are
met, the provisions of Article V(A) shall not be applicable to
any Business Combination, and such Business Combination shall
require only the affirmative vote of two-thirds of the Total
Voting Power entitled to be cast by the holders of Voting Stock
present or duly represented at a shareholders' meeting called for
such purpose and such other votes as may be required by law, any
other provisions or these Articles of Incorporation or the
Bylaws, and shall further require only the delivery of such proxy
or information statements, if any, as may be required by law:
(1) The Business Combination shall have been approved
prior to the time such Interested Shareholder became an
Interested Shareholder by a majority of the directors then
in office and a majority of the Continuing Directors, voting
as a separate group; or
(2) All of the following five conditions have been
met:
(a) 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
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 dealer's fees, paid by the Interested
Shareholder for any shares of Common Stock
acquired by it within the two-year period
immediately prior to the Announcement Date or in
the transaction in which it became an Interested
Shareholder, whichever is higher;
2. the Market Value per share of Common
Stock 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 determined
pursuant to clause (2) immediately preceding,
multiplied by a fraction, the numerator of which
is the highest per share price, including any
brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of Common Stock
acquired by it within the two-year period
immediately prior to the Announcement Date, and
the denominator of which is the Market Value per
share of Common Stock on the first date in such
two-year period on which the Interested
Shareholder 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 Interested
Shareholder has previously acquired any shares of any
such class or series of stock:
1. the highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of such class or series
of stock acquired by it within the two-year period
immediately prior to the Announcement Date or in
the transaction in which it became an Interested
Shareholder, whichever is higher;
2. the highest preferential amount per
share to which the holders of shares of such class
or series of stock are entitled in the event of
any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
3. the Market Value per share of such class
or series 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 or series of stock,
determined pursuant to clause (3) immediately
preceding, multiplied by a fraction, the numerator
of which is the highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of any such class or
series of Voting Stock acquired by it within the
two-year period immediately prior to the
Announcement Date, and the denominator of which is
the Market Value per share of the same class or
series of voting stock on the first day in such
two-year period on which the Interested
Shareholder acquired any shares or the same class
or series 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 Interested Shareholder
has previously paid for shares of the same class or
series of stock. If the Interested Shareholder 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 in cash or the form
used to acquire the largest number of shares of such
class or series of stock previously acquired by it. In
making any price calculation under paragraph 2 of this
Article V(B), appropriate adjustments shall be made to
reflect any reclassification or stock split (including
any reverse stock split), stock dividend,
recapitalization, reorganization or any similar
transaction which has the effect or increasing or
reducing the number of outstanding shares of stock.
(d) After the Interested Shareholder has become
an Interested Shareholder 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, whether or not
cumulative, on any outstanding Preferred Stock of
the Corporation or other capital stock entitled to
a preference over the Common Stock as to dividends
or upon liquidation;
2. there shall have been no reduction in
the annual rate of dividends paid on the Common
Stock, except as necessary to reflect any
subdivision of the Common Stock, and no failure to
increase the annual rate of dividends as necessary
to reflect any reclassification (including any
reverse stock split), recapitalization,
reorganization or other similar transaction which
has the effect of reducing the number of
outstanding shares of Common Stock; and
3. the Interested Shareholder did not
become the Beneficial Owner of any additional
shares of stock of the Corporation except as part
of the transaction which resulted in such
Interested Shareholder becoming an Interested
Shareholder or by virtue of proportionate stock
splits or stock dividends.
The provisions of clauses (1) and (2) immediately
preceding shall not apply if no Interested Shareholder
or any Affiliate or Associate thereof voted as a
director of the Corporation in favor of foregoing or
reducing dividends in the manner specified in such
clauses and the Interested Shareholder, within ten days
after any such act or failure to act that resulted in
such loss or diminution of dividends, notifies the
Board of Directors of the Corporation in writing that
the Interested Shareholder disapproves thereof and
requests in good faith that the Board of Directors
rectify such act or failure to act.
(e) After the Interested Shareholder has become
an Interested Shareholder, the Interested Shareholder
shall not have received the benefit, directly or
indirectly, except proportionately as a shareholder, of
any loans, advances, guarantees, pledges or other
financial assistance provided by the Corporation or any
Subsidiary, whether in anticipation of or in connection
with such Business Combination or otherwise.
C. Definitions. For purposes of these Articles of
Incorporation or the Bylaws of this Corporation:
(1) "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations promulgated under the
Exchange Act (the term "registrant" in such Rule 12b-2
meaning in this case the Corporation), provided, however,
that in no event shall the Corporation, any of its
Subsidiaries, any employee benefit plan or any of the other
persons or entities exempted from the definition of
Interested Shareholder in Article V(C) hereof be deemed to
be an Affiliate or Associate of any Interested Shareholder.
(2) "Announcement Date" means the first general public
announcement of the proposal or intention to make a proposal
to consummate a Business Combination or its first
communication generally to shareholders of the Corporation,
whichever is earlier.
(3) 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;
or
(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 Subsidiaries.
(4) "Business Combination" means any transaction
referred to in any one or more of the clauses (1) through
(7) of Article V(A).
(5) "Capital Stock" means any Common Stock, Preferred
Stock or other shares of 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.
(6) "Continuing Director" means any member of the
Board of Directors who is not an Interested Shareholder or
an Affiliate or Associate thereof, and who was a director of
the Corporation prior to the time the Interested Shareholder
became an Interested Shareholder, and any other member of
the Board of Directors who is not an Interested Shareholder
or an Affiliate or Associate thereof, and was recommended or
elected by a majority of the Continuing Directors at a
meeting at which a quorum consisting of a majority of the
Continuing Directors was present, provided that, in the
absence of an Interested Shareholder, any reference to
"Continuing Directors" shall mean all the directors then in
office.
(7) "Determination Date" means the date on which an
Interested Shareholder first became an Interested
Shareholder.
(8) "Employee Benefit Plan" means any option, bonus,
profit sharing, employee stock ownership, dividend
reinvestment, savings or similar plan of the Corporation or
any Subsidiary, or any trust related thereto.
(9) "Equity Security" means (a) any stock or similar
security, certificate of interest, or participation in any
profit-sharing agreement, voting trust certificate, or
certificate of deposit for the foregoing, (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, or (c)
any put, call, straddle, or other option, right or privilege
to acquire an equity security from or to sell an equity
security to another without being bound to do so.
(10) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(11) "Independent Shareholder" means a holder of Voting
Stock who is not an Interested Shareholder or an Affiliate
or Associate thereof.
(12) "Interested Shareholder" means any person (other
than the Corporation, any Subsidiary, any Employee Benefit
Plan, any fiduciary with respect to an Employee Benefit Plan
acting in such capacity, or any Affiliate or Associate of
any of the foregoing) who (a) is the Beneficial Owner,
directly or 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, 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 or 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 an Interested Shareholder, the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed
owned by the person through application of paragraph 3 of
Article V(C) but shall not include any other shares of
Voting Stock that may be issuable pursuant to any agreement,
arrangement, or understanding or upon exercise of conversion
rights, warrants or options, or otherwise.
(13) "Market Value" means:
(a) in the case of stock, the highest closing
sale price during the 30 calendar day period
immediately preceding the date in question of a share
of such stock on the Composite Tape for New York Stock
Exchange listed stocks, or, if such stock is not quoted
on such Composite Tape, on the New York Stock Exchange,
or if such stock is not listed on such exchange, on the
principal United States securities exchange registered
under the Exchange Act on which such stock is listed,
or, if such stock is not listed on any such exchange,
the highest closing sales price during the 30 calendar
day period immediately preceding the date in question
as reported by the National Association of Securities
Dealers, Inc. for securities traded on the National
Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ"),
or, if such stock is not traded in such system, the
closing bid quotation with respect to a share of such
stock during the 30 calendar day period preceding the
date in question on NASDAQ, or any similar system then
in use, or if no such quotation is available, the fair
market value on the date in question of a share of such
stock as determined by a majority of the Continuing
Directors at a meeting of the Board of Directors at
which a quorum consisting of at least a majority of the
then Continuing Directors is present; and
(b) in the case of property other than cash or
stock, the fair market value or such property on the
date in question as determined by a majority of the
Continuing Directors at a meeting of the Board of
Directors at which a quorum consisting of at least a
majority of the then Continuing Directors is present.
(14) A "person" means 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.
(15) "Subsidiary" means any corporation of which voting
stock having a majority of the votes entitled to be cast
generally in the election of directors is owned, directly or
indirectly, by the Corporation.
(16) "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.
(17) "Valuation Date" means:
(a) for a Business Combination voted upon by
shareholders, the later of the day prior to the date of
the shareholders' vote or the date 20 business days
prior to the consummation of the Business Combination;
and
(b) for a Business Combination not voted upon by
shareholders, the date of the consummation of the
Business Combination.
(18) "Voting Stock" means shares of Capital Stock
entitled to vote generally in an election of directors.
D. Determinations. For the purpose of this Article V, so
long as Continuing Directors constitute at least a majority of
the entire Board of Directors, the Board of Directors shall have
the power to make a good faith determination, on the basis of
information known to them, of: (1) the number of shares of
capital stock of which any person or entity is the Beneficial
Owner, (2) whether any person or entity is an Interested
Shareholder or an Affiliate or Associate thereof, (3) whether any
person or entity has an agreement, arrangement or understanding
with another as to the matters referred to in the definition of
Beneficial Owner herein, (4) whether any transaction constitutes
a Business Combination (including the power to determine in good
faith the book value or Market Value of the assets of the
Corporation or any Subsidiary) or is a transaction with or for
the benefit of an Interested Shareholder, (5) whether any of the
events referred to in subsection (B)(2)(d) of this Article V have
occurred, and (6) such other matters with respect to which a
determination is required under this Article V. All such good
faith determinations by the Board of Directors shall be
conclusive and binding on the Company and its shareholders for
all purposes of this Article V.
E. Benefit of Statute. This Corporation claims and shall
have the benefits of La.R.S. 12:132-134, provided, however, that
the provisions of La.R.S. 12:132-134 shall not apply to any
"business combination" (as defined in La. R.S. 12:132(4))
involving any Employee Benefit Plan (as defined in Article V(C))
or any fiduciary with respect to any such plan acting in such
capacity.
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, 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.
C. Notice of Shareholder Nominations and Shareholder
Business. (1) At any meeting of the shareholders, only such
business shall be conducted as shall have been properly brought
before the meeting. Except as otherwise provided in Article
IV(G), nominations for the election of directors at a meeting at
which directors are to be elected may be made by or at the
direction of the Board of Directors, or a committee duly
appointed thereby, or by any shareholder of record entitled to
vote generally for the election of directors who complies with
the procedures set forth below. Other matters to be properly
brought before a meeting of the shareholders must be (a)
specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, including
matters covered by Rule 14a-8 of the Securities and Exchange
Commission, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by any shareholder of record
entitled to vote at such meeting who complies with the procedures
set forth below.
(2) A notice of the intent of a shareholder to make a
nomination or to bring any other matter before the meeting shall
be made in writing and received by the Secretary of the
Corporation not more than 270 days and not less than 60 days in
advance of the first anniversary of the preceding year's annual
meeting of shareholders or, in the event of a special meeting of
shareholders or an annual meeting scheduled to be held either 30
days earlier or later than such anniversary date, such notice
shall be received by the Secretary of the Corporation within 15
days of the earlier of the date on which notice of such meeting
is first mailed to shareholders or public disclosure of the
meeting date is made.
(3) Every such notice by a shareholder shall set
forth:
(a) the name, age, business address and
residential address of the shareholder of record who intends
to make a nomination or bring up any other matter, and any
person acting in concert with such shareholder;
(b) a representation that the shareholder is a
holder of record of shares of the Corporation's capital
stock that accord such shareholder the voting rights
specified in paragraph (1) above and that the shareholder
intends to appear in person at the meeting to make the
nomination or bring up the matter specified in the notice;
(c) with respect to notice of an intent to make a
nomination, a description of all agreements, arrangements or
understandings among the shareholder, any person acting in
concert with the shareholder, each proposed nominee and any
other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be
made by the shareholder;
(d) with respect to notice of an intent to make a
nomination, (i) the name, age, business address and
residential address of each person proposed for nomination,
(ii) the principal occupation or employment of such person,
(iii) the class and number of shares of capital stock of the
Corporation of which such person is the beneficial owner,
and (iv) any other information relating to such person that
would be required to be disclosed in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission had such nominee been nominated by the Board of
Directors; and
(e) with respect to notice of an intent to bring
up any other matter, a complete and accurate description of
the matter, the reasons for conducting such business at the
meeting, and any material interest of the shareholder in the
matter.
(4) Notice of an intent to make a nomination shall be
accompanied by the written consent of each nominee to serve as a
director of the Corporation if so elected and an affidavit of
each such nominee certifying that he meets the qualifications
specified in Article IV(F). The Corporation may require any
proposed nominee to furnish such other information as may be
reasonably required by the Corporation to determine the
eligibility and qualifications of such person to serve as a
director.
(5) With respect to any proposal by a shareholder to
bring before a meeting any matter other than the nomination of
directors, the following shall govern:
(a) If the Secretary of the Corporation has
received sufficient notice of a proposal that may properly
be brought before the meeting, a proposal sufficient notice
of which is subsequently received by the Secretary and that
is substantially duplicative of the first proposal shall not
be properly brought before the meeting. If in the judgment
of the Board of Directors a proposal deals with
substantially the same subject matter as a prior proposal
submitted to shareholders at a meeting held within the
preceding five years, it shall not be properly brought
before any meeting held within three years after the latest
such previous submission if (i) the proposal was submitted
at only one meeting during such preceding period and it
received affirmative votes representing less than 3% of the
total number of votes cast in regard thereto, (ii) the
proposal was submitted at only two meetings during such
preceding period and it received at the time of its second
submission affirmative votes representing less than 6% of
the total number of votes cast in regard thereto, or (iii)
the proposal was submitted at three or more meetings during
such preceding period and it received at the time of its
latest submission affirmative votes representing less than
10% of the total number of votes cast in regard thereto.
(b) Notwithstanding compliance with all of the
procedures set forth above in this Article, no proposal
shall be deemed to be properly brought before a meeting of
shareholders if, in the judgment of the Board, it is not a
proper subject for action by shareholders under Louisiana
law.
(6) At the meeting of shareholders, the chairman shall
declare out of order and disregard any nomination or other matter
not presented in accordance with the foregoing procedures or
which is otherwise contrary to the foregoing terms and
conditions.
(7) Nothing in this Article shall be deemed to affect
any rights of shareholders to request inclusion of proposals in
the Corporation's proxy statement or to solicit their own proxies
pursuant to the proxy rules of the Securities and Exchange
Commission.
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 votes 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:
(1) the shareholders, but only upon 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; or
(2) the Board of Directors, but only upon the
affirmative vote of both (i) a majority of the
directors then in office and (ii) 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, or
(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 and 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
Value Market 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 surrendered are exercisable, as
determined by the Committee as of the date determined by the
Committee to be the date of cancellation and surrender 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.
Adopted by the Compensation Committee: ________________, 1995.
Ratified by the Board of Directors: ________________, 1995.
Approved by the Shareholders: ________________, 1995.
