***PRELIMINARY COPY***
[LOGO] Administrative Offices
High Ridge Park, Stamford, CT 06905
(203) 329-8800
March 29, 1996
Dear Fellow Stockholder:
I am pleased to invite you to attend the 1996 Annual Meeting of the
Stockholders of Citizens Utilities Company which will be held at the Little
America Hotel, 500 South Main Street, Salt Lake City, Utah, on Thursday, May 23,
1996, at 9:00 a.m., Mountain Time.
At last year's Annual Meeting, more than 83 percent of Citizens'
outstanding shares were represented. We hope that the percentage will be even
higher at the forthcoming meeting. It is important that your shares be
represented whether or not you attend the meeting. In order to insure that you
will be represented, we ask that you promptly sign, date, and return the
enclosed proxy. If present, you may revoke your proxy and vote in person.
Attendance at the Annual Meeting will be limited to employees and to
stockholders as of the record date or their authorized representative. Because
of space limitations, admission to the Annual Meeting will be by ticket only.
Registered stockholders planning to attend the meeting should complete and
return the advance registration form on the back page of this Proxy Statement.
An admission card will be mailed to you about two weeks before the meeting. If
your shares are held through an intermediary such as a bank or broker, you
should request a ticket by writing to Shareholder Services, Citizens Utilities
Company, High Ridge Park, Stamford, CT 06905. Please include proof of ownership
such as a bank or brokerage firm account statement or a letter from the broker,
trustee, bank or nominee holding the stock confirming your beneficial ownership.
We look forward to seeing and meeting with you at the annual meeting.
Cordially,
Leonard Tow
Chairman and Chief Executive Officer
[Logo] Printed on recycled paper
<PAGE>
[LOGO] Administrative Offices
High Ridge Park, Stamford, CT 06905
(203) 329-8800
March 29, 1996
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
CITIZENS UTILITIES COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Citizens Utilities Company will be held at the Little America Hotel, 500 South
Main Street, Salt Lake City, Utah, on Thursday, May 23, 1996, at 9:00 a.m.,
Mountain Time, for the following purposes:
1. To elect directors;
2. To consider and vote upon a proposal to approve an amendment
to the Restated Certificate of Incorporation of Citizens
Utilities Company providing for an increase in the number of
authorized shares of capital stock to a total of 650,000,000
shares, consisting of 250,000,000 shares of Common Stock
Series A of the par value of twenty-five cents ($.25) each,
350,000,000 shares of Common Stock Series B of the par value
of twenty-five cents ($.25) each (together representing an
aggregate increase of 100,000,000 shares of Common Stock) and
50,000,000 shares of the par value of one cent ($.01) each of
Preferred Stock which have been previously authorized;
3. To approve the 1996 Equity Incentive Plan; and
4. To transact such other business as may properly be brought
before the meeting.
The Board of Directors has fixed the close of business on March 25,
1996 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting.
A complete list of stockholders entitled to vote at the meeting will be
open to the examination of stockholders during ordinary business hours, for a
period of ten days prior to the meeting, at the office of the Company's
subsidiary Electric Lightwave, Inc. at 4 Triad Center, Suite 200, Salt Lake
City, Utah 84180.
By Order of the Board of Directors
Charles J. Weiss
Secretary
PROXY STATEMENT
This statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Citizens Utilities Company (the "Company")
to be voted at the annual meeting of stockholders of the Company referred to in
the foregoing notice. The mailing address of the administrative offices of the
Company is High Ridge Park, P.O. Box 3801, Stamford, Connecticut 06905. The
approximate date on which this proxy statement and form of proxy are first being
sent or given to stockholders is March 29, 1996.
Directors will be elected by a majority of the shares of Common Stock
Series A and Series B, acting together, present or represented by proxy at the
meeting and entitled to vote at the meeting. Approval of the 1996 Equity
Incentive Plan and the amendment to the Restated Certificate of Incorporation of
the Company require the affirmative vote of a majority of the shares of Common
Stock Series A and Series B, acting together, present or represented by proxy at
the meeting and entitled to vote at the meeting. Abstentions will be included in
the determination of the number of shares present and entitled to vote and will
have the effect of a negative vote with respect to the election of directors,
the 1996 Equity Incentive Plan and the amendment to the Restated Certificate of
Incorporation. Under the rules of the New York Stock Exchange, brokers who hold
shares in street name for customers have the authority to vote on certain items
when they have not received instructions from beneficial owners. Pursuant to
such rules, brokers that do not receive instruction are entitled to vote on the
election of directors, the amendment to the Restated Certificate of
Incorporation and the 1996 Equity Incentive Plan. Under applicable Delaware law,
a broker non-vote would have no effect on the outcome of the election of
directors, the amendment to the Restated Certificate of Incorporation or the
1996 Equity Incentive Plan. Unless contrary instructions are given, all proxies
received pursuant to this solicitation will be voted in favor of the election of
the nominees, for approval of the amendment to the Restated Certificate of
Incorporation of the Company and for approval of the 1996 Equity Incentive Plan.
Stockholders who execute proxies may revoke them at any time before they are
voted.
The Company had outstanding xxx,xxx,xxx shares of Common Stock Series A
and xx,xxx,xxx shares of Common Stock Series B, each of which is entitled to one
vote at the annual meeting by stockholders of record at the close of business on
March 25, 1996.
<PAGE>
Stock Ownership of Directors and Executive Officers
No person or "group" of persons is known by the Company to own as much
as 5% of the common stock of the Company.
The following table reflects shares of Common Stock beneficially owned
(or deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of February 29, 1996 by each director of the Company,
each of the executive officers named in the Summary Compensation Table included
elsewhere herein, and the current directors and all executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Acquirable Percentage
Within of
Series A Series B 60 Common
Name and Position Owned Owned Days Stock(2)
- ----------------- ----------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
James P. Avery Vice President 55,793 47,002 *
Norman I. Botwinik Director 15,646(3) 19,646(3) 14,099 *
Robert J. DeSantis Vice President and
Treasurer 88,900 80,062 *
Daryl A. Ferguson President 186,423 171,414 *
Aaron I. Fleischman Director 30,877 16,981 16,981 *
James C. Goodale Director 2,000 *
Stanley Harfenist Director 7,584 21,845 17,347 *
Andrew N. Heine Director 146 17,225 17,255 *
Robert L. O'Brien Vice President 151,096 89,090 *
Elwood A. Rickless Director 6,514 21,758 17,624 *
John L. Schroeder Director 4,852 16,882 16,882 *
Robert D. Siff Director 4,445,358(4) 20,746(9) 15,398 1.9%
Robert A. Stanger Director 19,824 17,624 *
Charles H. Symington, Jr. Director 5,000 1,980 1,980 *
Edwin Tornberg Director 7,372(5) *
Claire L. Tow Director 4,458,874(4)(6) 3,152,201(6) 2,427,896(7) 3.3%
Leonard Tow Chairman and CEO 4,458,874(4)(8) 3,152,201(8) 2,427,896(7)(10)3.3%
</TABLE>
All directors and executive officers as a group
* Represents less than 1% of the Company's outstanding common stock.
(1) Reflects number of Series B shares that could be purchased by exercise
of options available as of February 29, 1996 or within 60 days
thereafter under the Company's stock option plan. Pursuant to the
definition of beneficial ownership of the Securities and Exchange
Commission, said shares are also included in the column "Series B
Owned."
(2) Based on number of shares outstanding at, or acquirable within 60 days
of, February 29, 1996.
(3) Includes 4,398 shares of Common Stock Series A and 5,547 shares of
Common Stock Series B owned by Mr. Botwinik's wife. Mr. Botwinik
disclaims beneficial ownership of such shares.
(4) Includes 4,445,358 shares of Common Stock Series A owned by Century
Investors Inc., a wholly owned subsidiary of Century Communications
Corp. of which Robert Siff is a Director, Leonard Tow is Chairman of
the Board, Chief Executive Officer, Chief Financial Officer and a
Director and Claire Tow is Senior Vice President and a Director and
wife of Leonard Tow. The same shares of Common Stock Series A are
included in the above table for Robert Siff, Leonard Tow and Claire Tow
as required by the definition of beneficial ownership of the Securities
and Exchange Commission. By reason of the definition of beneficial
ownership, Leonard Tow and Claire Tow are deemed to have an approximate
58% ownership interest in the common stock of Century Communications
Corp. and thereby both Leonard Tow and Claire Tow have an indirect
beneficial interest in such 4,445,358 shares of Common Stock Series A
of the Company. Except to the extent of such indirect interest, both
Leonard Tow and Claire Tow disclaim ownership interests in any of these
shares of Common Stock of the Company. Certain of the common stock of
Century Communications Corp. previously referred to is held jointly by
Leonard Tow and Claire Tow, or solely by Claire Tow, in a fiduciary
capacity for the benefit of members of their family. Leonard Tow and
Claire Tow each disclaims any ownership interest in shares held solely
by the other. Robert Siff and members of his family have no beneficial
interest in these shares of Common Stock of the Company. Citizens owns
6.4% of the Class A common stock of Century Communications Corp.
(5) Includes 572 shares of Common Stock Series B owned by Mr. Tornberg's
wife.Mr. Tornberg disclaims beneficial ownership of such shares.
(6) Includes 12,137 shares of Common Stock Series A held by Claire Tow as
custodian for her minor grandchildren; 3,972 shares of Common Stock
Series B held by Claire Tow as custodian for her minor grandchildren;
711,975 shares of Common Stock Series B owned by her husband, Leonard
Tow; and 1,766 shares of Common Stock Series B held in an individual
retirement account for the benefit of her husband, Leonard Tow. Claire
Tow disclaims beneficial ownership of all such shares.
(7) Includes 2,410,915 shares acquirable by Leonard Tow within 60 days.
Claire Tow disclaims beneficial ownership or control of said shares.
(8) Includes 12,137 shares of Common Stock Series A held by his wife,
Claire Tow, as custodian for their minor grandchildren; 1,379 shares of
Common Stock Series A owned by Claire Tow; and 3,972 shares of Common
Stock Series B held by his wife, Claire Tow as custodian for their
minor grandchildren. Leonard Tow disclaims beneficial ownership of all
such shares.
(9) Includes 5,348 shares of Common Stock Series B owned by MR Sidebore
Ltd. Partnership of which Robert Siff is a general partner.
(10) Includes 16,981 shares acquirable by Claire Tow within 60 days.
Leonard Tow disclaims beneficial ownership or control of said shares.
(11) Share information is qualified as described in the previous footnotes.
Common Stock Series A is convertible into Common Stock Series B on a
share-for-share basis. Under the definition of beneficial ownership of
the Securities and Exchange Commission, each owner of Series A shares
may be deemed to be the owner of the same number of Series B shares. If
any such conversion were to occur, the number of shares of Common Stock
owned by, and the percentage ownership of Common Stock of, a
stockholder would not change.
ELECTION OF DIRECTORS
At the meeting, 13 directors are to be elected to hold office until the
next annual meeting and until their successors have been elected and qualified.
Directors will be elected by a majority of the votes of the holders of shares of
Common Stock Series A and Series B, voting together, present in person or
represented by proxy at the meeting and entitled to vote at the meeting. It is
the intention of the persons named in the enclosed proxy to vote for the
election as directors of the nominees specified. In case any such nominee should
become unavailable for any reason, the proxy holders reserve the right to
substitute another person of their choice. The information concerning the
nominees and their security holdings has been furnished by them to the Company.
Leonard Tow and Claire Tow are husband and wife.
There are no other family relationships between any of the nominees.
<TABLE>
<CAPTION>
<S> <C> <C>
Norman I. Botwinik President, Botwinik Brothers, Inc., machine tool sales, 1957-1983; Director since
Director, Executive Re, Inc. 1990-1993; and Director Emeritus, 1968
Board of Governors, University of New Haven. Age 80
Aaron I. Fleischman Senior Partner of Fleischman and Walsh, L.L.P., a Washington, D.C. Director since
law firm specializing in regulatory, corporate-securities and 1989
litigation matters for telecommunications, regulated utilities
and transportation companies; Director, Southern Union
Company. Age 57
James C. Goodale Of Counsel, Debevoise & Plimpton, a New York City law firm, Director since
1994 to present; Partner, Debevoise & Plimpton, 1980-1994. Age 62 1996
Stanley Harfenist President and Chief Executive Officer of Adesso, Inc., manufacturer Director since
of hardware for the Macintosh computer; President, Chief Operating 1992
Officer and Director of Players International, Inc., 1985 to 1993;
Officer, Sega Enterprises, 1982 to 1984; and officer, Knickerbocker
Toy Company, Inc., 1978 to 1982. Age 65
Andrew N. Heine Of Counsel, Gordon Altman Butowsky Weitzen Shalov & Wein, Director since
September 1995 to present; Practicing attorney/investor 1989 to 1975
present; Of Counsel, Curtis, Mallet-Prevost, Colt & Mosle,
October 1987 to 1989; Director, The Olsten Corporation and FPA
Group. Age 67
Elwood A. Rickless Managing Partner, London, England office of law firm of Whitman Director since
Breed Abbott & Morgan, 1984 to present; Partner, law firm of 1989
Graham & James, London, England, 1973 to 1983; during
34 years of practice has specialized in the fields of
international corporate, tax, financing, and
copyright law and litigation; residence in Santa Fe,
New Mexico. Age 66
John L. Schroeder Director, Dean Witter Funds, 1994 to present; Executive Vice President Director since
and Chief Investment Officer, The Home Insurance Company, 1980
1991 to 1995; Chairman of the Board and Chief Investment Officer,
Axe-Houghton Management, Inc., and Axe-Houghton Funds, 1983
to 1990; President and Director, USF&G Investment Management
Group, Inc., 1990 to 1991. Age 66
Robert D. Siff Consultant, CoreStates Financial Corp, 1987 to present; Consultant, Director since
Citizens Utilities Company, 1990 to 1991; Director, Century 1989
Communications Corp. Age 71.
Robert A. Stanger Chairman, Robert A. Stanger & Company, investment banking and Director since
consulting services; Publisher, The Stanger Report 1992
Charles H. Symington, Jr. Director, S.G. Warburg & Co. Inc., an investment bank, since 1984 Director since
Director, 3i Corporation, an investment company, since 1987; Director, 1995
INA Life Insurance Company of New York, a subsidiary of CIGNA,
since 1969; Director, Camping World Inc., since 1993; Director,
NASDAQ Stock Market Education Foundation, since 1994
Age 65
Edwin Tornberg President and Director, Edwin Tornberg & Company, brokers, Director since
management consultants and appraisers serving the communications 1992
industry; President and Director, Radio 780, Inc. (Washington, D.C.);
Vice President and Director, Radio One Five Hundred, Inc.
(Indianapolis, Ind.); Chairman and Director, New World Radio, Inc.
(Washington, D.C.) Age 70
Claire L. Tow Senior Vice President since 1992 and Vice President and Director since
Director since 1988 of Century Communications Corp., a cable 1993
television company. Claire L. Tow is the wife of Leonard Tow. Age 65
Leonard Tow Chairman, Chief Executive Officer and Chief Financial Officer, Director since
Citizens Utilities Company, 1990 to present; Chairman of the 1989
Board, Chief Executive Officer, Chief Financial Officer and
Director of Century Communications Corp., a cable television
company, since its organization in 1973 to present, and President
from 1973 to 1989; Director, United States Telephone Association,
1996. Leonard Tow is the husband of Claire L. Tow. Age 67
</TABLE>
The Board of Directors held 11 meetings in 1995. All directors attended at
least 75% of Board and appropriate committee meetings.
COMMITTEES OF THE BOARD
The Board has standing Executive, Audit, Compensation, Nominating and
Retirement Plan Committees. The following special committees are currently
functioning: Diversity in the Work Force, Marketing and Development, and
Strategic Planning.
Executive Committee. The Executive Committee is composed of Dr. Tow as
Chair and Messrs. Harfenist, Fleischman and Schroeder. In 1995 the Committee met
once. During intervals between meetings of the Board, the Executive Committee
has the power and authority of the Board over the management of the business
affairs and property of the Company, except for powers specifically reserved by
Delaware law or by the Company's Restated Certificate of Incorporation.
Audit Committee. The Audit Committee is composed of Mr. Heine as Chair and
Messrs. Schroeder, Siff and Stanger. The Committee met three times in 1995. The
Committee's functions are to review the arrangements for and scope of the
independent accountants' audit, as well as to review the adequacy of the system
of internal accounting controls and recommend improvements thereto. The
Committee discusses and reviews, with management and the independent
accountants, the Company's draft annual report on Form 10-K and other major
accounting, reporting and audit matters. The Committee also has oversight over
the Company's Internal Audit Department.
Compensation Committee. The Compensation Committee is composed of Mr.
Stanger as Chair and Messrs. Harfenist, Rickless, Symington and Tornberg. The
Committee met four times in 1995. The Committee reviews the Company's general
compensation strategies, acts as the Committee for the Company's Incentive
Deferred Compensation Plan, the Management Equity Incentive Plan and the
Employee Stock Purchase Plan and establishes and reviews compensation for the
Chief Executive Officer and other executive officers of the Company.
Nominating Committee. The Nominating Committee is chaired by Mr. Harfenist,
and Messrs. Botwinik and Tornberg are its other members. The Committee met twice
in 1995. The Committee's function is to recommend candidates for election to the
Board of Directors. The Nominating Committee will entertain suggestions for
nominees from stockholders.
Retirement Committee. The Retirement Committee is composed of Mr. Schroeder
as Chair and Mrs. Tow and Messrs. Botwinik and Tornberg. The Committee oversees
the pension and savings plans of the Company. The Committee met three times in
1995.
Special Committees. Special committees of the Board have been established
to focus on issues of current importance to the Company where it is believed
that the Board of Directors should have involvement in and oversight of
processes. The Diversity in the Work Force Committee is chaired by Claire Tow
and its other members are Messrs. Harfenist and Rickless. The Marketing and
Development Committee is chaired by Mr. Harfenist and Mr. Tornberg is the other
member. The Strategic Planning Committee is composed of Messrs. Harfenist,
Heine, Schroeder and Stanger.
DIRECTORS' COMPENSATION
Each Director is entitled to a $20,000 annual retainer and fee of
$2,000 for each Board meeting attended in person and $1,000 for each Board
meeting attended telephonically. Committee chairs are paid a fee of $2,000 and
committee members $1,000 for each meeting attended. All such fees are eligible
for deferral until termination of service either in cash or, in the instance of
non-employee directors, also in stock options or stock plan units acquired under
the Non-Employee Directors' Deferred Fee Equity Plan approved by the
stockholders at the Company's 1995 annual meeting. Deferred cash amounts are
credited with an interest component. Directors who are not Citizens employees
and who have completed five years of service become participants in the
Directors' Retirement Plan. At termination of service, a participant receives
benefits for a term of years equal to the sum of 50% of average compensation as
a Director for the three most highly compensated years plus 2.5% of such average
compensation for each year of service in excess of ten years, but not in excess
of twenty years. Generally, the annual benefit will be payable over a period of
years equal to a participant's years of service or may be paid in a discounted
lump sum at the participant's election.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is composed of five independent Directors, who are responsible for setting and
administering compensation, including Base Salaries, Annual Incentives, and
stock-based awards paid or awarded to senior executives of the Company. The
following report represents the actions of the Committee and the Board regarding
compensation paid to the named executive officers during 1995.
COMPENSATION OF THE SENIOR EXECUTIVE GROUP
The following section discusses the Company's strategy underlying the
compensation program, excluding the Company's Chief Executive Officer, whose
compensation is discussed separately later in this report.
Executive Compensation Strategy
The Committee's senior executive compensation policy has the following
objectives:
To align the interests of its senior executives and other key
employees with those of the Company's customers, shareholders,
employees and the strategic objectives of the Company.
To link compensation to the performance of the Company and to the
individual contribution of each executive to that performance.
To compensate executives at a level that is competitive in the
marketplace so that the Company can continue to attract, motivate and
retain executives of outstanding ability.
To establish Base Salaries at about the 50th percentile and Total
Annual Cash Compensation (Base Salary plus Annual Cash Incentive) at
the 75th percentile of three "Comparison Groups" (general industrial
companies of similar revenue size, telecommunications companies and
utilities) recommended by its compensation consultant, The Hay Group.
The three Comparison Groups were selected to represent the labor
markets in which the Company competes. Since these three groups
represent more industries than the Dow Jones Utilities, the companies
used as labor market peers are not the same as the companies used as an
element of the performance graph set forth later in this proxy
statement. Within each labor market, the Company looks at the
compensation offered by Comparison Groups for jobs of similar
responsibility levels. In addition, the Company considers other
factors, such as the relative cost of living in job locations, which
are taken into account in attracting and retaining a highly competent
key employee and senior executive group.
To offer significant levels of at-risk compensation in the form of
stock options and/or restricted stock grants so that the long-term
rewards available to the Company's executives will parallel shareholder
returns.
Base Salary
The Compensation Committee reviews recommendations and sets the salary
levels of senior executives in the spring of each year. This review is based
upon the duties and responsibilities which the Company expects each executive to
discharge during the current year and upon the executive's performance during
the previous year. The standards the Company uses are the confidential rankings
and assessments described more fully in the "Annual Cash Incentives" section of
this report.
The Company periodically conducts a comprehensive audit of its senior
executive compensation levels. The Company found, based upon its latest study,
that its 1995 Base Salary levels for the senior executives are at the 50th
percentile of the three Comparison Groups.
At-risk Incentive Compensation
The Company's Annual Cash Incentives (the Incentive Deferred
Compensation Plan, "IDCP") and Long-term Incentives (the Management Equity
Incentive Plan,"MEIP") introduce elements of risk to employee into the executive
compensation program.
Annual Cash Incentives
The review and determination of awards under the IDCP for all
management employees are based upon performance for the previous year. In 1995,
707 employees received IDCP awards. The incentive awards made in 1995 were based
upon 1994 performance.
The awards were based, with equal weighting, on the Company's financial
performance and individual accomplishments. The Company assesses performance
against predetermined corporate, sector, and business unit goals for income
before interest and taxes. In 1994, the Company and all sectors exceeded those
goals. Individual performance was measured by (1) confidential survey rankings
of customer satisfaction and employee satisfaction, (2) peer and superior
evaluations of each executive's contributions toward financial and service
results and (3) demonstrated leadership in fostering the Company-wide continuous
improvement initiative called "Target: Excellence," which is dedicated to the
continuous improvement of every aspect of the Company's management and
performance. The improvements are measured and documented by internal and
external surveys and evaluations.
The Company sets its targeted Total Annual Cash Compensation (the total
of Base Salary and Annual Cash Incentives) levels up to the 75th percentile of
the Comparison Groups. Each executive is assigned a bonus opportunity which, if
fully realized, when combined with Base Salary, will approximately result in the
targeted Total Annual Cash Compensation level.
For 1995, the Company's Total Annual Cash Compensation levels for the
senior executives were approximately 15% below the 75th percentile of general
industrial companies and telecommunications companies, and 19% above the 75th
percentile of utilities companies.
Long-term Incentives
The Company's equity-based incentives are awarded under the MEIP. These
awards are intended to provide incentives for high performance and productivity
and a close identification with the Company's financial performance and image by
enabling employees, including senior executives, to participate as stockholders.
All employees of the Company are eligible to participate in the MEIP. In 1995,
no MEIP awards, other than sign-on awards, were made as the Committee determined
that it would be better able to determine appropriate award levels if it had
additional information relating to the Company's 1995 financial results which
were not available until after year-end. Awards were granted on February 15,
1996, including awards to the named executive officers and the chief executive
officer.
The criteria for MEIP awards determined by the Committee include the
Company's financial performance for the prior year compared to corporate and
sector targeted returns on investment. The size of each executive's award is
also based on ratings by each executive's internal customers including peers and
subordinates. In comparing the resulting senior executive's Total Direct
Compensation level, which includes Base Salary, Annual Cash Incentives and
Long-term Incentives, and excludes indirect remuneration such as benefits, with
those of the Comparison Group, the Committee uses the percentile levels
determined by the Company's consultant, the Hay Group, for the three Comparison
Groups mentioned above. The Committee has targeted a range for senior executive
Total Direct Compensation between the 75th to the 90th percentile, with
individual awards dependent on the executive's and Company's achievement of
performance goals. The Committee selection of this range reflects the Company's
ten year annual earnings growth record which has been higher than 424 of the
Fortune 500 companies (1985-1994, the latest available period). Within the
guidelines, the Committee judgmentally determines the awards given to each of
the executives, considering experience and performance.
For 1995, (awards granted in February, 1996 for 1995 performance) the
Company's Total Direct Compensation levels for the senior executives are 5%
above the 75th percentile of general industrials, 11% below telecommunications
companies and 43 percent above the utilities. The relative value of the
Company's Long-term Incentives was determined from data developed by its outside
consultant, the Hay Group, using the same model which Hay uses to evaluate the
Long-term Incentives in its Comparison Groups. This method calculates the
opportunity value of option grants using consistent assumptions regarding stock
price appreciation, discount rate, risk of the long term incentive vehicle and
the risk of forfeiture.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The elements of the compensation for the Chief Executive Officer were
established by the employment agreement as of July 1, 1990, negotiated between
Dr. Tow's attorney and the Compensation Committee. Although Dr. Tow had been a
Director of the Company prior to July 1, 1990, he had not been an employee of
the Company and had not assumed the responsibilities of Chief Executive Officer.
His employment agreement, as amended, is summarized in a later section of this
proxy statement.
Compensation elements for 1995 set according to the agreement included
a base salary of $1,171,291 and certain items included in the "Other Annual
Compensation" and the "All Other Compensation" columns in the compensation
table. Other Annual Compensation column shows personal expenses of $50,000 and
reimbursement for insurance premiums of $13,790.
The Compensation Committee deferred consideration of 1994 and 1995 IDCP
and 1994 MEIP awards to Dr. Tow in compliance with a memorandum of understanding
reached in the course of settlement of certain shareholder suits. The Committee
made awards in 1996 to Dr. Tow recognizing his 1993 and 1994 achievements which
would have been recognized in 1994 and 1995 absent the requirements of the
memorandum of understanding. The Compensation Committee recognizes Dr. Tow's
continuing achievements in carrying out the Board of Directors' mandate to
expand and enlarge the Company's activities and in altering the Company's
business strategies so as to take advantage of competitive opportunities and to
improve efficiencies of the Company's operations. These achievements, which
include the ongoing program of prudent growth through acquisitions such as the
GTE and ALLTEL transactions and the Target: Excellence program, have continued
to produce outstanding successes and are viewed by the Compensation Committee as
vital to the Company.
Compliance with Internal Revenue Code Section 162(m)
The Committee has been advised that the compensation paid to the named
executive officers, including the CEO, meets the conditions required for full
deductibility under Internal Revenue Code Section 162(m).
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to each of
the corporation's Chief Executive Officer and the four other most highly
compensated executive officers. Section 162(m) provides that qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The Committee has been advised that Section 162(m)
does not apply to: (i) compensation paid to the Chief Executive Officer under
his current employment agreement, dated as of July 1, 1990 or (ii) stock options
currently outstanding or subsequently granted or awarded prior to the next
annual meeting after 1996 under the Company's current MEIP. The Company
currently intends to structure grants under future stock option plans in a
manner that provides for an exemption from Section 162(m). Awards made under the
IDCP that, in conjunction with other compensation paid, would otherwise cause
the Section 162(m) limitation to be exceeded would do so because of the ability
to defer payment under the IDCP until after the retirement of the covered
executive officer. The Committee also recognizes that, in certain instances, it
may be in the best interests of the Company in the future to provide
compensation that is not deductible.
Robert Stanger Stanley Harfenist Elwood A. Rickless
Chairman
Edwin Tornberg Charles H. Symington,Jr.
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company for
each of the last three years to its Chief Executive Officer and the four other
most highly compensated executive officers.
<TABLE>
<CAPTION>
Long-term Compensation
Annual Compensation Long-term Compensation
Awards Payouts
Securities Long-
Under term
lying Incentive All
Other Annual Restricted(2) Options/ Plan Other
Name & Salary Bonus(1) Compensation Stock Awards SAR(3) Payouts Compensation(4)
Position Year $ $ $ $ (#) $ $
- --------------- ------ ------------ ----------- ------------ ------------ ----------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. Tow 1995 1,210,296(5) 0(6) 63,790(7) 0 0(6) 0 4,620
C.E.O., C.F.O. 1994 1,103,808(5) 0(6) 62,180(7) 0 0(6) 0 4,620(8)
and Chairman 1993 1,003,000(5) 485,000 167,580(7) 0 643,671 0 4,497(8)
D.A. Ferguson 1995 374,076 300,000 5,000 0 0(6) 0 52,879
C.O.O. and 1994 359,220 250,000 5,000 0 106,345 0 48,031
President 1993 343,742 170,000 5,000 107,250 84,615 0 4,497
R.L. O'Brien 1995 231,588 40,000 0 0 0(6) 0 25,678
Vice President 1994 227,018 35,000 0 0 27,645 0 23,157
1993 222,567 40,000 0 39,325 29,330 0 4,497
J.P. Avery 1995 149,625 60,000 0 0 0(6) 0 20,964
Vice President 1994 138,253 60,000 0 0 30,840 0 18,953
1993 128,893 35,000 0 0 36,074 0 3,867
R.J. DeSantis 1995 152,523 50,000 0 0 0(6) 0 27,866
Vice President 1994 146,666 35,000 0 0 30,840 0 25,421
and Treasurer 1993 140,750 25,000 0 56,063 29,330 0 4,222
</TABLE>
<PAGE>
(1) All amounts in the column were paid under the Incentive Deferred
Compensation Plan. Plan amounts paid in any year are attributable to performance
in the immediately prior year.
(2) Recipients of Restricted Stock have rights to receive dividends. Value
shown in table is as of date of grant. Restrictions lapse at the rate of 20% per
year for grants awarded in 1992. The 1993 grants have fully vested. As of
December 31, 1995, the aggregate number of restricted shares held by each
executive officer listed above and the market value of such shares on that date
were as follows: Dr. Tow, 141,526, $1,804,456; Dr. Ferguson, 4,802, $61,225; Mr.
O'Brien, 2,586, $32,971; Mr. Avery, 1,478, $18,844; and Mr. DeSantis, 1,108,
$14,127. As of such date, the total number of restricted shares held by all
executive officers as a group was 154,085 and the aggregate market value of the
shares on that date was $1,964,577.
(3) Options/SARs adjusted to reflect subsequent stock dividends, and the
2-for-1 stock split paid August, 1993. All awards shown are options.
(4) Represents the Company's matching contribution to each executive's
401(k) plan and $48,307, $20,678, $16,475 and $23,292 as the 1995 economic
benefit of split-dollar life insurance for Dr. Ferguson and Messrs. O'Brien,
Avery and DeSantis respectively.
(5) Includes salary of $1,171,291 and Director's fees of $39,000 for 1995,
$1,064,808 and $39,000 for 1994, and $968,000 and $35,000 for 1993,
respectively.
(6) As referred to in the report of the Compensation Committee, MEIP Awards
for 1995 performance were deferred until 1996. On February 15, 1996, options
were granted in the following share amounts: Dr. Tow, 190,000; Dr. Ferguson,
100,000; Mr. O'Brien, 30,000; Mr. Avery 39,750 and Mr. DeSantis 39,750. As also
referred to in the Compensation Committee report, the grant of certain awards
for Dr. Tow that would have ordinarily been made in 1994 and 1995 were deferred
until early 1996. The Awards were as follows: 1994 bonus, $600,000; 1995 bonus,
$780,000; and 1994 MEIP, 197,000 shares.
(7) $50,000 of the amount shown in this column for each year represents
payment for expenses pursuant to Dr. Tow's employment agreement; $97,260
represents payment of certain legal and accounting fees for the period July 1,
1990 to December 31, 1993 and is shown in the 1993 row; $12,180 for 1994 and
$13,790 for 1995 represents reimbursement for the cost of term life insurance.
(8) $3,500,000 and $3,500,000 representing the 1994 and 1993 portions of an
accrual over six years for supplemental retirement benefits as shown in prior
Proxy Statements previously required for Dr. Tow under his employment agreement
have been reversed to reflect the substitution of split-dollar life insurance
benefits which will be payable to his estate or heirs as a replacement for such
supplemental retirement benefits. The insurance policies purchased by the
Company have been structured so that all of the Company's costs including the
time value of funds, in providing such benefits will be recovered from policy
proceeds.
1995 OPTION GRANTS AND STOCK APPRECIATION RIGHTS
No stock option or stock appreciation rights were granted to any of the
named executive officers in 1995.
1995 OPTION EXERCISES AND VALUE OF OUTSTANDING OPTIONS AT DECEMBER 31, 1995
The following table sets forth option and stock appreciation rights
exercised by the named executive officers during 1995 and the number and value
of options held by them at December 31, 1995. There were no outstanding stock
appreciation rights at December 31, 1995.
<TABLE>
<CAPTION>
Value of
Shares Number of Unexercised
Acquired on Unexercised In-the-money
Exercise(#) Options/SARs Options/SARs
Series B Value at Fiscal Year-end(#) at Fiscal Year-end($)
Name Common Stock Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Tow 0 $ 0 2,410,915 163,119 $ 952,981 $ 241,961
D.A. Ferguson 12,500 39,438 171,414 198,995 294,719 173,940
R.L. O'Brien 0 0 89,090 68,929 216,311 75,933
J.P. Avery 1,609 9,831 47,002 65,157 67,223 45,560
R.J. DeSantis 6,127 47,546 80,062 62,989 193,643 76,520
</TABLE>
All numbers are as of December 31, 1995 and reflect adjustment for stock
splits and stock dividends paid subsequent to the date of grant. The market
price of Common Stock Series B on December 31, 1995 was $12.75. Dollar amounts
shown under all columns other than "Value Realized" have not been, and may never
be, realized. The underlying options have not been, and may never be, exercised,
and actual gains, if any, on exercise will depend on the value of the Company's
stock on the date of exercise.
CITIZENS
UTILITIES
COMPANY
PENSION
PLAN
The
Company
has a
noncontributory qualified retirement plan covering substantially all employees
that provides benefits based on formulas related to base salary and years of
service. Benefits shown are not subject to reduction for Social Security
payments. The following table illustrates the estimated annual plan pension
benefits (ten years certain for those who became participants prior to 1976)
available to all covered employees (other than Kauai Division employees,
Louisiana Gas Division employees and certain telecommunications bargaining unit
employees covered by separate benefit formulas) upon retirement at age 65 in the
classifications specified assuming a preretirement death benefit election of
100% joint and survivorship benefits. The remuneration classifications are based
on the highest five-year average annual salary and the years of service
represent years of credited service. Under federal tax law, remuneration above a
specified annual limit may not be credited in the computation of retirement
benefits under qualified plans. For 1995, this limit was $150,000.
PENSION PLAN TABLE (000 Omitted)
Remuneration Years of Service
5 10 15 20 25 30
$150 $10 $20 $30 $41 $51 $61
Full years of credited service for individuals participating in the plan
and listed in the Summary Compensation Table are four for Dr. Tow, five for Dr.
Ferguson, nineteen for Mr. O'Brien, eight for Mr. DeSantis, and thirteen for Mr.
Avery. It should be noted that effective in 1994, remuneration above $150,000
(subject to inflation adjustments) may not be credited in the computation of
benefits under qualified plans. For this reason, remuneration above $150,000 has
not been included in the table. Dr. Tow's insurance and post-employment benefits
are described under the caption "Employment Agreement."
Comparison of Five-year Cumulative Total Return Among Citizens Utilities
Company, Dow Jones Industrial Average (DJIA) and Dow Jones Utility Average
(DJUA).
PERFORMANCE GRAPH AS REQUIRED BY ITEM 402(l)
The annual changes for the five year period shown on the graph are based on
the assumption that $100 had been invested in Citizens stock (weighted average
of Series A and Series B) and in each index on December 31, 1990 as required by
SEC rules, and that all quarterly dividends were reinvested at the average of
the closing stock prices at the beginning and end of the quarter. The total
cumulative dollar return shown on the graph represents the value that such
investment would have had on December 31, 1995. The year-end cumulative total
return for the DJIA and the DJUA for calendar years 1991, 1992, 1993, 1994 and
1995 were respectively $124, $133, $156, $164 and $224, and $115, $120, $131,
$111 and $147. Return for the Company is shown on the graph. It should be noted
that the cumulative return of the DJIA and the DJUA does not take into account
the fact that a large majority of investors would be required to pay federal and
state income taxes on cash dividends received and thus not have the total
proceeds of the dividends to reinvest. Unlike most of the companies constituting
the indices, Citizens has paid stock dividends during the period 1991-1995. As
there was no income tax payable upon the receipt of dividends paid by Citizens,
the value that would be realized upon receipt of dividends by holders of the
DJIA and DJUA after taxation would be diminished as compared to holders of
Citizens. For illustration's sake, the year-end cumulative returns of the DJIA
and DJUA have been decreased to reflect after-tax reinvestment assuming the
maximum federal tax rate payable by individuals. These rates were 31% for 1991
and 1992, and 36% for 1993 through 1995. State income tax has not been taken
into account. The adjusted cumulative total returns for the DJIA and DJUA for
calendar years 1991, 1992, 1993, 1994 and 1995 are $123, $131, $151, $157 and
$214 and $113, $115, $124, $102 and $133, respectively.
EMPLOYMENT AGREEMENT
Dr. Tow is currently covered by an employment agreement providing for his
service as Chairman and Chief Executive Officer of the Company for the
employment Term, July 1, 1990 through December 31, 1996, and as a consultant for
an additional five-year Advisory Period. The following constitutes a summary of
certain of the provisions of the agreement as amended upon settlement of certain
shareholder suits referred to in prior proxy statements. Dr. Tow's base annual
salary for 1991 was $800,000 which is to be increased annually thereafter during
the Term, by the greater of 10% or the annual increase in the consumer price
index. During the Advisory Period the Company will pay Dr. Tow a base salary of
25% of the base salary for the last year of the Term. In the event of
termination of employment for any reason, except for termination by the Company
for good cause or certain voluntary resignations by Dr. Tow, payments at least
equal to annual bonuses and benefit plan contributions for the remainder of the
Term and payments at the base salary rates provided in the agreement for the
remainder of the Term and for the Advisory Period will continue to be owing, to
be paid in a commuted lump sum. In the event of termination of employment by Dr.
Tow occasioned by breach of the agreement by the Company, the Company will also
pay Dr. Tow $1 million. The amount of benefits under employee benefit plans will
be determined by the amount of his then base salary and bonus. Accelerated
vesting of contributions under the IDCP is provided for termination of
employment. In the event that Dr. Tow's entitlements constitute excess parachute
payments for tax purposes, the Company will pay any taxes resulting to him. Dr.
Tow's continued employment and association with Century Communications Corp. is
acknowledged under the agreement. His employee and retirement benefits are
nonforfeitable except in certain circumstances which are materially detrimental
to the Company. Dr. Tow is entitled during his lifetime to life insurance
coverage of the greater of the amount provided by the Company's formula for
executive officers based on salary, or $3,000,000, or equivalent. Dr. Tow and
his wife during their lifetimes will continue to participate in the Company's
health and other benefit plans, and, after retirement from full-time employment,
the Company will provide offices and support staff equivalent to the offices and
support services provided during employment. Dr. Tow's annual retirement benefit
referred to in prior Proxy Statements has been modified. The supplemental annual
retirement benefits previously provided for by the employment agreement have
been replaced by split-dollar life insurance payable to his estate or heirs.
Dr. Tow's employment agreement provides that if a threatened or actual change of
control,as defined, shall occur, which includes, among other events, the
acquisition by a person or group of 9% or more of the Company's voting
securities and certain changes in the Board of Directors, Dr. Tow shall
thereafter have the option exercisable by notice to the Company to acquire up to
2,000,000 shares of common stock at a price per share equal to the fair market
value of the stock on the date such notice is given. The stated number of shares
subject to the option shall be adjusted to reflect the occurrence after July 1,
1990 of any declaration or payment of dividends in the form of stock, stock
splits, stock divisions or new issuances to holders of common stock of options,
warrants, rights to acquire additional shares or similar events.
CERTAIN
TRANSACTIONS
Fleischman and Walsh, of which Aaron Fleischman (a Director) is Senior Partner,
performed legal services for the Company for which it paid in 1995 approximately
$1,215,000. The Company proposes to retain Fleischman and Walsh during the
current year.
In 1995, the Company advanced, for up to a five year period, to Ronald E.
Spears, Vice President of the Company, $400,000 for the purpose of purchasing a
primary residence. As of February 29, 1996, $335,038 remains outstanding.
Interest is payable at the applicable Federal Rate and the loan is secured by a
mortgage on his primary residence.
APPROVAL OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
Although the Board of Directors has no plans or proposals under
consideration for any sale of common stock or any other issuance except for the
payment of quarterly stock dividends on Common Stock and quarterly distributions
on the recently issued Citizens Utilities Trust securities, use in employee and
director stock plans, and conversions as hereafter discussed, the Board believes
that the stockholders should take action at this time to make and keep readily
available sufficient authorized shares of Common Stock as may be necessary for
these purposes and for other proper corporate purposes.
Pursuant to its Restated Certificate of Incorporation, the Company is
authorized to issue 200,000,000 shares of Common Stock Series A, 300,000,000
shares of Common Stock Series B and 50,000,000 shares of preferred stock. As of
March 25, 1996, there were outstanding xxx,xxx,xxx and xx,xxx,xxx shares of
Common Stock Series A and Common Stock Series B, respectively. Common Stock
Series A is convertible into Common Stock Series B on a share-for-share basis
pursuant to certain provisions of the Company's Restated Certificate of
Incorporation. Consequently, one share of Common Stock Series B is automatically
required to be authorized for each share of Common Stock Series A which may
become outstanding, so that an adequate number of shares of Citizens Common
Stock Series B can be legally reserved for issuance upon conversion of the
maximum number of shares of Citizens Common Stock Series A which may reasonably
be expected to be outstanding. Currently, there are no shares of preferred stock
outstanding, but recently issued preferred securities of Citizens Utilities
Trust are convertible to shares of Series A Common Stock and shares of Series A
and Series B must be reserved for that purpose.
The proposal to be submitted to the stockholders at the annual meeting will
be to approve an amendment to its Restated Certificate of Incorporation pursuant
to which the number of authorized shares of capital stock of the Company will be
increased to a total of 650,000,000 shares, including 250,000,000 shares of
Common Stock Series A, and 350,000,000 shares of Common Stock Series B (an
aggregate increase of 100,000,000 shares of Common Stock). The previously
authorized 50,000,000 shares of Preferred Stock will not be affected.
The Company intends to reserve the authorized and unissued shares of Common
Stock for various corporate purposes, including, but not limited to: payment of
stock dividends or stock splits; issuance upon conversion of shares of Common
Stock Series A into shares of Common Stock Series B pursuant to the Company's
Restated Certificate of Incorporation; use under the Management Equity Incentive
Plan, the 1996 Equity Incentive Plan, the Employee Stock Purchase Plan, the
401(k) Plans, the Non-Employee Director's Plan and any other employee benefit
plans; and for conversion of Citizens Utilities Trust securities into Common
Stock Series A. Authorized and unissued shares of Common Stock may be issued for
the foregoing purposes by the Board of Directors without further stockholder
action being necessary.
The amendment would provide the Board of Directors with flexibility to issue
additional shares of Common Stock in addition to the Board's ability to issue
previously authorized shares of Preferred Stock. The Board of Directors believes
it advisable for the Company to have an increased number of shares of authorized
Common Stock available for future issuance for various corporate purposes at the
discretion of the Board of Directors, and without further authorization by the
stockholders, except as may be required by law, the New York Stock Exchange or
other self-regulatory organizations on which the Company's securities may then
be listed or reported. In addition to the purposes described above, such
corporate purposes might include the sale of stock to obtain additional capital
funds, the acquisition by the Company or merger into the Company of other
companies, or the adoption of additional employee compensation plans.
The Board of Directors' ability to approve the issuance of the increased number
of authorized shares of Common Stock and previously authorized Preferred Stock
might discourage a takeover attempt because the issuance of additional shares
could dilute the voting power of the Common Stock then
outstanding. To the extent that issuance of additional shares might impede
attempts to acquire a controlling interest in the Company, the amendment may
serve to entrench management. The Company is not aware of any effort to
accumulate Common Stock or obtain control of the Company by a tender offer,
proxy contest or otherwise, and the Company has no present intention to use the
increased number of shares of authorized Common Stock or the shares of Preferred
Stock for anti-takeover purposes.
The additional shares of Common Stock that may be authorized pursuant to the
amendment do not carry preemptive rights. The proposed amendment, if approved by
the stockholders, would become effective upon the filing of a Certificate of
Amendment of Restated Certificate of Incorporation with the Secretary of State
of Delaware.
The Board of Directors of the Company believes that the increase in the number
of authorized shares of Common Stock is in the best interest of the Company and
its
stockholders and recommends that stockholders vote their shares for the approval
of the amendment. Approval of the amendment requires the favorable vote of
holders of a majority of the shares of the Company's Common Stock present in
person or represented by proxy and voting at the Annual Meeting.
APPROVAL OF THE CITIZENS UTILITIES COMPANY 1996 EQUITY INCENTIVE PLAN
At the Annual Meeting, stockholders will be requested to approve the
Citizens Utilities Company 1996 Equity Incentive Plan (the "Plan") which has
been adopted by the Company's Board of Directors upon the recommendation of its
Compensation Committee (the "Committee").
The Board of Directors believes that the limited number of outstanding
capable employees and the intense growing competition for capable managers and
other employees makes it imperative that the Company maintain strong and
competitive incentive compensation programs. It believes that the Plan, which is
a successor Plan to the Management Equity Incentive Plan approved by the
stockholders in 1990, will continue to assist the Company in attracting and
retaining outstanding management and other employees by providing them with
incentives to develop and continue their careers with the Company and its
subsidiaries. Approval of the Plan requires the favorable vote of holders of a
majority of the shares of the Company's Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote at the meeting.
The full text of the Plan is set forth as Appendix A hereto, and the reader is
urged to refer to it for a complete description of the proposed Plan. The
summary of principal features of the Plan which follows is qualified entirely by
such reference. Compliance with all applicable regulatory requirements will be
necessary. The Board of Directors recommends a vote for approval of the 1996
Equity Incentive Plan.
Purpose Of The Plan
The purpose of the Plan is to provide additional incentives for high levels
of performance and productivity by employees of the Company. The Plan is
intended to strengthen the Company's existing operations through its ability to
attract and retain outstanding employees upon whose judgment, initiative and
efforts the continued efficiency, productivity, growth and development of the
Company is dependent. The Plan is the second incentive compensation plan of its
type adopted by the Company. The Committee expects to begin to make awards of
shares under the plan at such time as shares are no longer available under the
Management Equity Incentive Plan approved in 1990.
Shares Subject To The Plan
Awards granted under the Plan will relate to shares of the Company's Series A or
Series B Common Stock. The maximum number of shares of Common Stock which will
be issued pursuant to awards at any time will be no more than 11.3 million
shares. No individual shall be granted more than 500,000 shares in any calendar
year. These shares will be divided among the various components of the Plan in
such manner as the Committee shall determine or authorize. No awards will be
granted more than ten years after the effective date of the Plan.
Any shares of Common Stock which were issued and have been forfeited or were
subject to awards under the Plan which have expired or terminated for any reason
will remain available for issuance with respect to the granting of awards during
the term of the Plan, except as may otherwise be provided by applicable law.
Shares of Common Stock received by the Company in connection with the exercise
of an award shall also be available for issuance under the Plan.
The number and kind of securities which may be issued under the Plan and
pursuant to then outstanding awards are subject to adjustments to prevent
enlargement or dilution of rights resulting from recapitalizations,
reorganizations or similar transactions.
The quoted closing prices of the Company's Series A and Series B Common
Stock on February 29, 1996 were $11 5/8 and $11 3/4, respectively.
Participation
All employees of the Company or any of its subsidiaries are eligible for
selection to participate in the Plan. Directors who are not employees of the
Company or its subsidiaries are ineligible for selection to participate in the
Plan.
No determination has yet been made as to the employees who will be selected to
participate and receive awards, the number of such awards to be granted or the
amounts of awards to be distributed under the Plan. The Committee presently
estimates, however, that a consideration of the employees as a group would
result in the grant of awards to up to 25% (currently about 1,200) of the
employee group.
Administration
The Plan will be administered by the Committee consisting of members of the
Board of Directors. The Administration of the Plan is intended to satisfy any
"disinterested administration" or similar requirements under the Securities
Exchange Act of 1934 rules and "outside directors" or similar requirements under
Section 162(m) of the Internal Revenue Code of 1986 (the "Code"). Subject to the
express provisions of the Plan, the Committee would be authorized to (a)
determine those Eligible Employees or groups to whom awards may be granted; (b)
grant awards to employees eligible to participate in the Plan; (c) determine the
terms and conditions (which need not be identical) of each award; (d) establish
and modify performance objectives; (e) modify or amend any award (by
cancellation and regrant or substitution of awards or otherwise and with terms
and conditions more or less favorable to the employee) or waive any restrictions
or conditions applicable to any award or the exercise or realization thereof
(except that, with certain exceptions based on regulation, the Committee may not
undertake any such modifications, amendments or waivers if the effect thereof,
taken as a whole, adversely and materially affects the rights of any recipient
of a previously granted award without his or her consent); (f) prescribe and
rescind rules, regulations and policies for the administration of the Plan; (g)
interpret, construe and administer the Plan and any related award agreement and
define the terms employed therein; and (h) make all of the determinations
necessary or advisable with respect to the Plan or any award granted thereunder.
AWARDS
Stock Options
A Stock Option, which may be a nonqualified or an incentive stock option,
is the right to purchase a specified number of shares of Common Stock at a price
fixed by the Committee. A Stock Option may be granted either alone or in
conjunction with one or more other awards, and, if granted in conjunction with
another award, may be canceled to the extent that payment of the other award is
made. The option price, except in the discretion of the Committee in the case of
new employees, shall be equal to or greater than the fair market value of the
underlying Common Stock on the date of grant. The term of each Stock Option is
also determined by the Committee but may not exceed ten years from the date the
Stock Option is granted.
The option price of each Stock Option is payable in cash upon the exercise
of the Stock Option or, in the sole discretion of the Committee and upon such
terms and conditions as it may deem appropriate, through the delivery of shares
of the Company's Common Stock owned by the option holder and valued at their
fair market value or in a combination of cash and shares. The ability to pay the
option price in shares of the Company's Common Stock would, if permitted by the
Committee, enable an option holder to engage in stock-for-stock exercise of a
Stock Option and thereby fully exercise the Stock Option with little or no cash
investment.
The Committee may grant a replacement Stock Option to an option holder for
a number of shares equal to the number of shares which the option holder
delivered to Company in payment of the option price in a stock-for-stock
exercise of a Stock Option or any withholding taxes. The option price of any
replacement Stock Option shall be subject to the restrictions summarized above,
except that the option price may not be less than 100% of the fair market value
of the Common Stock delivered to the Company on the date of such payment.
The Committee is also authorized, in its sole discretion and upon such
terms and conditions as it may deem appropriate, to accept the surrender of the
right to exercise any Stock Option granted under the Plan as to all or any of
the shares as to which the Stock Option is then exercisable for alternative
settlement by payment to the option holder of an amount not to exceed the
difference between the option price and the then fair market value of the shares
as to which such right of exercise is surrendered. Such payment may be made in
cash or in shares of the Company's Common Stock (valued at the then fair market
value) or any combination thereof as the Committee determines in its sole
discretion. The Committee may also grant stock appreciation rights, free
standing or in tandem with Stock Options, which entitle the holder thereof to
receive a similar payment at his or her election.
Other Stock-based Awards
In order to enable the Company and the Committee to respond quickly to
significant developments in applicable tax and other legislation and regulations
and to trends in executive compensation practices, the Plan also authorizes the
Committee to grant other stock-based awards to employees eligible for selection
to participate in the Plan. Other stock-based awards will consist of awards that
are valued in whole or in part by reference to, or otherwise based on, the
Company's Common Stock and may include, but are not limited to, restricted
stock, performance shares and deferred stock. Subject to the terms of the Plan,
the Committee may determine any and all terms and conditions of other
stock-based awards. The total number of shares of Common Stock which may be
issued pursuant to all components of the Plan may not exceed the limit stated
above under "Shares Subject To The Plan."
Payment or settlement of other stock-based awards will be in cash or in
shares of the Company's Common Stock or in any combination thereof as the
Committee determines in its sole discretion. The Committee may permit the
payment of withholding taxes due in connection with awards under the Plan by the
withholding of shares to be issued under the award or by the employee's delivery
of other shares of Common Stock of the Company.
"Change in Control" Provisions Awards may include, or may incorporate from
any relevant guidelines adopted by the Committee, terms which provide that any
or all of the following actions may occur as a result of, or in anticipation of,
any "Change in Control" (as defined below) to assure fair and equitable
treatment of employees: (i) acceleration of time periods for purposes of
vesting, or realizing gain from, any outstanding award; (ii) purchase of any
outstanding award from the holder for its equivalent value, as determined by the
Committee; (iii) adjustments or modifications to outstanding awards, including
the modification or elimination of performance goals, as the Committee deems
appropriate to maintain and protect the rights and interests of participants.
A "Change in Control" is defined to mean the occurrence of any of the
following events: (i) a third person, including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act of 1934, is or
becomes the beneficial owner (as so determined) of Common Stock having 20% or
more of the total number of votes that may be cast for the election of members
of the Board; or (ii) all or substantially all of the assets and business of the
Company are transferred to any other entity; or (iii) as a result of, or in
connection with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who are members of the
Board before the Transaction shall cease to constitute a majority of the Board
of the Company; or (iv) unless the Board otherwise directs prior thereto, if a
third person is or becomes the beneficial owner, directly or indirectly, of 20%
or more of the voting stock of the Company, or a proxy contest occurs, and
during a period of 24 months following such event the individuals who at the
occurrence of such event constituted the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company's shareholders, of each new director was approved by
a vote of at least three-quarters of the directors then in office who were
directors at the occurrence of such event.
These provisions in the 1996 Equity Incentive Plan allowing the Committee
to award accelerated vesting upon a Change in Control could in some
circumstances have the effect of an "antitakeover" defense because, as a result
of these provisions, a Change in Control of the Company could be more difficult
or costly. This however, is not the Company's intention in adopting the 1996
Equity Incentive Plan, because the purpose of the 1996 Equity Incentive Plan is
to attract and retain the most qualified persons available to contribute to the
future success of the Company.
A "Change in Control" is defined to mean the occurrence of any of the following
events and shall be deemed hostile unless the Board of Directors declares by
resolution adopted prior to the occurrence of such event that the Board consents
to such event: (i) a person or group becomes the owner of stock having 20% or
more of the total number of votes that may be cast for the election of directors
of the Board or 20% or more of the fair market value of the Company's issued and
outstanding stock; (ii) a consolidation or merger or sale of assets in which the
Company is not the surviving corporation or pursuant to which the Company's
stock will be converted into cash, securities or other property; or (iii) as a
result of any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing Transactions, the persons who are members of the Board before the
Transaction shall cease to constitute a majority of the Board of the Company.
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to awards under the
Plan.
Stock Options
Under the Plan, the Committee may grant options which either qualify or do
not qualify as "incentive stock options" as defined in Section 422 of the Code.
No taxable income will be realized by an option holder and no deduction will be
available to the Company upon the grant of either type of option. However, the
tax consequences of the exercise of the option and subsequent disposition of the
shares received upon exercise will depend upon which type of option is granted.
Incentive Stock Options
No regular taxable income will be realized by an option holder upon the
exercise of an incentive stock option if the holding period and employment
requirements contained in the Code are met. However, the spread between the
exercise price and the fair market value on the date of exercise will be an item
of tax preference which may give rise to alternative minimum tax liability at
the time of exercise. Under the holding requirements, the option holder must not
dispose of the shares within two years of the date the option was granted nor
within one year from the time of exercise; and the option holder generally must
exercise the option while employed by the Company or its subsidiaries or within
three months after the termination of such employment.
Upon the subsequent disposition of shares acquired through the exercise of
an incentive stock option after satisfaction of the above holding period and
employment requirements, any gain or loss realized upon such disposition will be
long-term capital gain or loss; and the Company will not be entitled to any
income tax deduction in respect to the exercise of the option or the disposition
of the shares received upon exercise. For purposes of determining the amount of
such gain or loss, the option holder's tax basis in the shares will be the
option price.
If the holding period or employment requirements are not met, the option
will be treated as one which does not meet the requirements of the Code for
incentive stock options and the tax consequences in the following paragraphs for
nonqualified options generally apply. However, in the event shares acquired
pursuant to an incentive stock option are disposed of prior to meeting the
holding period requirements, gain or loss will be recognized at that time and
measured as the difference between the sales price and the option price; but the
amount of ordinary income, if any, cannot exceed the excess, if any, of the fair
market value of the stock at exercise over the option price.
Nonqualified Stock Options
Except as noted below under "Securities Exchange Act of 1934," at the time
of exercise of a nonqualified option, an option holder will realize taxable
income at ordinary income tax rates, and the Company will be entitled to a
deduction in the amount by which the then fair market value of the shares
purchased exceeds the option price of the shares. The option holder may be
subject to the withholding requirements of the tax law.
Upon the subsequent disposition of shares received upon exercise of a
nonqualified option, an option holder will also realize income or loss in an
amount equal to the difference between the sales price of the shares and the
fair market value of the shares used for computing ordinary income or loss
realized in connection with the exercise of the option. The income or loss will
be long or short-term capital gain or loss depending upon the length of time the
shares have been held from the date as of which ordinary income or loss was
recognized in connection with the exercise of the option.
Stock Appreciation Rights
Except as noted under "Securities Exchange Act of 1934," the exercise of a
stock appreciation right will result in ordinary income to the holder in the
year the stock appreciation right is exercised. The amount of income recognized
will be equal to the total value of all cash and the fair market value of the
Common Stock received pursuant to the exercise of the stock appreciation right.
The Company will be entitled to a corresponding income tax deduction equal to
such amount provided the Company undertakes applicable tax withholding. The tax
treatment of a stock appreciation right is the same whether the stock
appreciation right is exercised in conjunction with an incentive stock option or
a nonqualified stock option.
All Stock Options
If an option holder tenders shares of the Company's Common Stock in partial
or full payment of the option price for shares to be acquired through the
exercise of an option, the option holder generally will not recognize any
taxable gain or loss on the tendered shares. However, if the shares tendered
were previously acquired upon the exercise of an incentive stock option and such
exercise occurs prior to satisfaction of the holding period requirement for the
tendered shares, the tender of such shares will be an early disposition with the
tax consequences described above for an early disposition of shares acquired
upon exercise of an incentive stock option.
In the case of a tender of shares in partial or full payment of the option
price, the option holder's tax basis in the shares received upon exercise of the
option is not uniform. The number of shares acquired that equals the number of
shares tendered will take the tax basis of the tendered shares including the
effect of the tax consequences of any early disposition. The additional shares
acquired in excess of the number of shares tendered will have a tax basis equal
to the ordinary income realized on the exercise in the case of a nonqualified
option. In the case of an incentive stock option the tax basis in the additional
shares will be zero.
Cash payments by the Company to an option holder upon surrender of the
right to exercise any stock option are subject to withholding and are taxable to
the option holder at ordinary income tax rates and deductible by the Company at
the time of payment. When such payments are made in shares of the Company's
Common Stock, the fair market value of the shares at the time of payment are
taxable to the option holder at ordinary income tax rates and deductible to the
Company except as provided below under "Securities Exchange Act of 1934." Upon
the disposition of the shares received, taxable income or loss also will be
realized in an amount equal to the difference between the sales price of the
shares and the fair market value of the shares on the date they were taxable to
the option holder. The income or loss will be a long or short-term capital gain
or loss depending upon the period of time the shares have been held by the
option holder.
Other Stock-based Awards
Generally, an employee will not realize any income upon the grant of other
stock-based performance awards. Except as noted below under "Securities Exchange
Act of 1934," upon the payment of other stock-based awards, an employee will
realize compensation taxable as ordinary income, and the Company will be
entitled to a corresponding deduction in an amount equal to the sum of any cash
received by the employee plus the fair market value of any shares of Common
Stock received by the employee. However, if any such shares are subject to
substantial restrictions such as a requirement of continued employment or the
attainment of certain performance objectives, the employee will not recognize
income; and the Company will not be entitled to a deduction, until the
restrictions lapse unless the employee elects otherwise. The amount of the
employee's income and the Company's deduction will be the fair market value of
the shares at the time the restrictions lapse.
An employee will not realize any taxable income upon the grant of an award
of restricted stock unless the employee elects to be taxed at that time in
accordance with Section 83 of the Code. Generally, any dividends received by the
employee with respect to shares of restricted stock prior to the date the
employee realizes income with respect to such an award will be treated by the
employee as compensation taxable as ordinary income; and the Company will be
entitled to a deduction equal to the amount of ordinary income realized by the
employee. Except as noted below under "Securities Exchange Act of 1934," upon
the lapse of restrictions on restricted stock which may occur in accordance with
terms of such restriction, the employee will realize taxable income and the
Company will be entitled to a corresponding deduction equal to the excess of the
fair market value of the shares at that time over any amount paid for the
shares. The employee may be subject to the withholding requirements of the tax
law.
Securities Exchange Act of 1934
Taxable income in connection with the receipt of shares of the Company's
Common Stock pursuant to awards will be deferred, generally speaking, for six
months for any employee who is director or officer of the Company subject to
Section 16(b) of the Securities Exchange Act of 1934, if the sale of the shares
received could subject the employee to suit under Section 16(b). Regulations
issued by the Treasury Department provide that the taxable income will be
realized not later than six months after such receipt even though a sale of the
shares after that time could still subject the employee to suit under Section
16(b). The amount of the taxable income will equal the difference between the
then fair market value of the shares and the option price or any other amount,
if any, paid for the shares. As an alternative, the officer or director may
elect to include in income at the time of exercise or receipt the amount by
which the then fair market value of the shares exceed the option price or other
amount paid. The Company is entitled to a deduction at the same time and in the
same amount as the income realized by the officer or director.
The foregoing federal income tax information is a summary only and does not
purport to be a complete statement of the relevant provisions of the Code.
Amendment, Termination and Expiration
The Plan is subject to suspension, amendment, modification or termination
at any time by the Company's Board of Directors. However, no amendment or
modification would become effective unless approved by affirmative vote of the
shareholders of the Company if such approval is necessary or desirable for the
continued validity of the Plan or its compliance with Rule 16b-3 or any
successor rule under the Securities Exchange Act of 1934 or any other rule or
regulation.
GENERAL INFORMATION
A subsidiary of the Company and a subsidiary of Century Communications
Corp. ("Century") entered into a joint venture agreement for the purpose of
acquiring, for approximately $89 million, and operating two cable television
systems in Southern California (the "Systems"). The joint venture is governed by
a management board on which the Company and Century are equally represented. The
joint venture has entered into an agreement pursuant to which a subsidiary of
Century (the "Manager") will manage the day-to-day operations of the Systems.
The Manager will not receive a management fee but will be reimbursed only for
the actual costs it incurs on behalf of the joint venture. With respect to the
purchase of any service or asset for the joint venture for use in the Systems,
the Manager is obligated to pass through to the joint venture any discount, up
to 5%, off the published prices of vendors and is entitled to retain any
discount in excess of 5%. On September 30, 1994, the joint venture acquired one
of the Systems serving approximately 24,000 subscribers. The purchase of the
second of the Systems, serving approximately 21,000 subscribers, took place on
December 1, 1995. See "Stock Ownership of Directors and Executive Officers".
GENERAL
Representatives of KPMG Peat Marwick LLP, the Company's independent public
accountants, are expected to be present at the annual meeting with an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
REPORTS UNDER SECTION 16(a)
Robert J. DeSantis, J. Michael Love and Livingston E. Ross, vice presidents
of the Company, each inadvertently filed a report on Form 4 relating to a
transaction involving shares of the Company two months, two weeks and one day
late, respectively.
OTHER MATTERS
The management does not know of matters other than the foregoing that will
be presented for consideration at the meeting. If two proposals that were
excluded from this proxy statement in accordance with Rule 14a-8 of the
Securities Exchange Act of 1934 are properly brought before the meeting, it is
intended that the proxy holders will use their discretionary authority to vote
the proxies against such proposals. If any other matters properly come before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote thereon in accordance with their judgment.
STOCKHOLDER PROPOSALS
For proposals, if any, to be considered for inclusion in the proxy
materials for the 1997 annual meeting, they must be received by December 1,
1996.
The entire cost of soliciting management proxies will be borne by the
Company. Proxies will be solicited by mail and may be solicited personally by
directors, officers or regular employees of the Company, who will not be
compensated for such services. Morrow & Co. has been retained to assist in
soliciting proxies at a fee of $7,500, plus distribution costs and other
expenses.
By Order of the Board of Directors
Charles J. Weiss
Secretary
<PAGE>
APPENDIX A
Section 1. Purpose
The purpose of the Citizens Utilities Company Equity Incentive Plan (the
"Plan") is to provide compensation incentives for high levels of performance and
productivity by employees of the Company. The Plan is intended to strengthen the
Company's existing operations and its ability to attract and retain outstanding
employees upon whose judgment, initiative and efforts the continued success,
growth and development of the Company is dependent, as well as encourage such
employees to have a greater personal financial investment in the Company through
ownership of its common stock.
Section 2. Definitions
When used herein, the following terms have the following meanings:
(a) "Affiliate" means any company controlled by the Company,
controlling the Company or under common control with the
Company.
(b) "Award" means an award granted to any Eligible Employee in
accordance with the provisions of the Plan.
(c) "Award Agreement" means the written agreement or
certificate evidencing the terms of the Award granted to an
Eligible Employee under the Plan.
(d) "Beneficiary" means the beneficiary or beneficiaries
designated pursuant to Section 11 to receive the amount, if
any, payable under the Plan upon the death of an Eligible
Employee.
(e) "Board" means the Board of Directors of the Company.
(f) A "Change in Control" shall mean the occurrence of any of the following
events with respect to the Company. Change in Control shall be deemed hostile
unless, for an event described below the Board of Directors declares by
resolution adopted prior to the occurrence of such event that the Board consents
to such event:
(i) (A) a third "person" (other than an employee benefit plan of the
Company), including a "group", as those terms are used in Section 13(d) of the
Exchange Act is or becomes the beneficial owner (as that term is used in said
Section 13(d)) of stock having twenty percent (20%) or more of the total number
of votes that may be cast for the election of members of the Board of the
Company twenty percent (20%) or more of the fair market value of the Company's
issued and outstanding stock or (B) the receipt by the Company of any report,
schedule, application or other document filed with a state or federal
governmental agency or commission disclosing such ownership or proposed
ownership. (ii) approval by the stockholders of the Company of any (1)
consolidation or merger or sale of assets of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of stock
the Company would be converted into cash, securities or other property, other
than a consolidation or merger of the Company in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as they held immediately before,
or (2) sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all the assets or businesses of
the Company;
(iii) as a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who are members of the Board of the Company before
the Transaction shall cease to constitute a majority of the Board of the Company
or any successor to the Company.
(g) "Citizens Pension Plans" means any of the Company's non-contributory
defined-benefit qualified retirement plans in effect on the date in question.
(h) "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to Sections of the Code are to such Sections
as they are currently designated and reference to such Sections shall include
the provisions thereof as they may from time to time be amended or renumbered
and any successor provisions.)
(i) "Company" means Citizens Utilities Company, and its successors and
assigns.
(j) "Committee" means the Compensation Committee of the Board of Directors
of the Company.
(k) "Deferred Stock" means Stock credited to an Eligible Employee under the
Plan subject to the requirements of Section 8 and such other terms and
restrictions as the Committee deems appropriate or desirable.
(l) "Effective Date" means May 23, 1996.
(m) "Eligible Employee" means an employee of any Participating Company
whose responsibilities and decisions in the judgment of the Committee foster the
management, growth, performance or profitability of any Participating Company.
Where required by the context, "Eligible Employee" includes an individual who
has been granted an Award but is no longer an employee of any Participating
Company.
(n) "Fair Market Value" means, unless another reasonable method for
determining fair market value is specified by the Committee, the average of the
high and low sales prices of a share of the appropriate Series of Stock as
reported by the New York Stock Exchange (or if such shares are listed on another
national stock exchange or national quotation system, as reported or quoted by
such exchange or system) on the date in question or, if no such sales were
reported for such date, for the most recent date on which sales prices were
quoted.
(o) "Family Member" and "Family Trust" shall have the same meanings as are
employed from time to time by the SEC for the purpose of the exception to the
rules promulgated by the SEC which limit transferability of stock options and
stock awards for purposes of Section 16 of the Exchange Act and the use of Form
S-8 under the Securities Act. For the purposes of the Plan, the phrases "Family
Member" and "Family Trust" shall be further limited, if necessary, so that
neither the transfer to a Family Member or Family Trust nor the ability of a
Participant to make such a transfer shall have adverse consequences to the
Company or a Participant by reason of Section 162(m) of the Code.
(p) "Option" means an option to purchase Stock, including Restricted Stock
or Deferred Stock, if the Committee so determines, subject to the applicable
provisions of Section 5 and awarded in accordance with the terms of the Plan and
which may be an incentive stock option qualified under Section 422 of the Code
or a nonqualified stock option.
(q) "Participating Company" means the Company or any subsidiary or other
affiliate of the Company; provided however, for incentive stock options only,
"Participating Company" means the Company, any corporation or other entity which
at the time such option is granted under the Plan qualifies as a subsidiary of
the Company under the definition of "subsidiary corporation" contained in
Section 425(f) of the Code.
(r) "Participant" means an Eligible Employee who has been or is being
granted an Award. When required by the context, the definition of Participant
shall include an individual who has been granted an Award but is no longer an
employee of any Participating Company.
(s) "Performance Share" means a performance share subject to the
requirements of Section 6 and awarded in accordance with the terms of the Plan.
(t) "Plan" means the Citizens Utilities Company Equity Incentive Plan, as
the same may be amended, administered or interpreted from time to time.
(u) "Restricted Stock" means Stock delivered under the Plan subject to the
requirements of Section 7 and such other terms and restrictions as the Committee
deems appropriate or desirable.
(v) "SAR" means a stock appreciation right subject to the appropriate
requirements under Section 5 and awarded in accordance with the terms of the
Plan.
(w) "SEC" means the Securities and Exchange Commission. "Exchange Act"
means the Securities Exchange Act of 1934. "Rule 16b-3" shall mean such rule
promulgated by the SEC under the Exchange Act and, unless the circumstances
require otherwise, shall include any other rule or regulation adopted under
Sections 16(a) or 16(b) of the Exchange Act relating to compliance with, or an
exemption from, Section 16(b). "Securities Act" means the Securities Act of
1933. Reference to any section of the Securities Act, Exchange Act or any rule
promulgated thereunder shall include any successor section or rule.
(x) "Stock" means the Series A or Series B Common Stock of the Company and
any successor Common Stock.
(y) "Termination Without Cause" means termination of employment with a
Participating Companies by the employer for any reason other than death, Total
Disability or termination for deliberate, willful or gross misconduct and also
means voluntary termination of employment by employee.
(z) "Total Disability" means the complete and permanent inability of an
Eligible Employee to perform all of his or her duties under the terms of his or
her employment with any Participating Company, as determined by the Committee
upon the basis of such evidence, including independent medical reports and data,
as the Company deems appropriate or necessary.
Section 3. Shares Subject to the Plan
(a) Subject to adjustment as provided in Section 14 hereof, eleven million
three hundred thousand shares of Stock is hereby reserved for issuance pursuant
to Awards under the Plan. In the event that the number of shares of Stock
subject to Awards or issued at any time is in excess of the eleven million three
hundred thousand share limit, the number need not be reduced if such excess has
resulted solely from a reduction in the amount of issued and outstanding shares
of Stock subsequent to the time that such Awards were granted or such shares
were issued. Shares reserved for issuance under the Plan shall be made available
either from authorized and unissued shares, shares held by the Company in its
treasury or reacquired shares. The term "issued" shall include all deliveries to
a Participant of shares of Stock pursuant to Awards under the Plan. The
Committee may, in its discretion, decide to award other shares issued by the
Company that are convertible into Stock or make such shares subject to purchase
by an option, in which event the maximum number of shares of Stock into which
such shares may be converted shall be used in applying the aggregate share limit
under this Section 3 and all provisions of the Plan relating to Stock shall
apply with full force and effect with respect to such convertible shares.
(b) If, for any reason, any shares of Stock awarded or subject to purchase
or issuance under the Plan are not delivered or are reacquired by the Company
for reasons including, but not limited to, a forfeiture of Restricted Stock or
Deferred Stock or termination, expiration or a cancellation of an Option, SAR or
a Performance Share, such shares of Stock shall be deemed not to have been
issued pursuant to Awards under the Plan, or to have been subject to the Plan;
provided, however, that the counting of shares of Stock subject to Awards
granted under the Plan against the number of shares available for further Awards
shall in all cases conform to the requirements of Rule 16b-3 under the Exchange
Act; and provided, further, that with respect to any Award granted to any
Eligible Employee who is a "covered employee" as defined in Section 162(m) of
the Code that is canceled, the number of shares of Stock originally subject to
such Award shall continue to count in accordance with Section 162(m) of the
Code.
(c) Unless the Committee otherwise determines, shares of Stock received by
the Company in connection with the exercise of Options by delivery of shares or
in connection with the payment of withholding taxes shall reduce the number of
shares deemed to have been issued pursuant to Awards under the Plan for the
limit set forth in Section 3(a) hereof.
Section 4. Grant of Awards and Award Agreements
(a) Subject to the provisions of the Plan, the Committee shall (i)
determine and designate from time to time those Eligible Employees or groups of
Eligible Employees to whom Awards are to be granted; (ii) grant Awards to
Eligible Employee; (iii) determine the form or forms of Award to be granted to
any Eligible Employee; (iv) determine the amount or number of shares of Stock,
including Restricted Stock or Deferred Stock if the Committee so determines,
subject to each Award; (v) determine the terms and conditions (which need not be
identical) of each Award; (vi) determine the rights of each Participant after
employment has terminated and the periods during which such rights may be
exercised; (vii) establish and modify performance objectives; (viii) determine
whether and to what extent Eligible Employees shall be allowed or required to
defer receipt of any Awards or other amounts payable under the Plan to the
occurrence of a specified date or event; (ix) determine the price at which
shares of Stock may be offered under each Award which price may, except in the
case of Options, be zero; (x) interpret, construe and administer the Plan and
any related Award Agreement and define the terms employed therein; and (xi) make
all of the determinations necessary or advisable with respect to the Plan or any
award granted thereunder. Awards granted to different Eligible Employees or
Participants need not be identical and, in addition, may be modified in
different respects by the Committee.
(b) Each Award granted under the Plan shall be evidenced by a written Award
Agreement, in a form approved by the Committee. Such agreement shall be subject
to and incorporate the express terms and conditions, if any, required under the
Plan or as required by the Committee for the form of Award granted and such
other terms and conditions as the Committee may specify.
(c) The Committee may modify or amend any Awards (by cancellation and
regrant or substitution of Awards or otherwise and with terms and conditions
more or less favorable to Eligible Employees) or waive any restrictions or
conditions applicable to any Awards or the exercise or realization thereof
(except that the Committee may not undertake any such modifications, amendments
or waivers if the effect thereof, taken as a whole, adversely and materially
affects the rights of any recipient of previously granted Awards without his or
her consent, unless such modification, amendment or waiver is necessary or
desirable for the continued validity of the Plan or its compliance with Rule
16b-3 or any other applicable law, rule or regulation or pronouncement or to
avoid any adverse consequences under Section 162(m) of the Code or any
requirement of a securities exchange or association or regulatory or
self-regulatory body).
(d) The Committee may permit the voluntary surrender of all or a portion of
any Award granted under the Plan to be conditioned upon the granting of a new
Award or may require such voluntary surrender as a condition to a grant of a new
Award. Any such new Award shall be subject to such terms and conditions as are
specified by the Committee at the time the new Award is granted, determined in
accordance with the provisions of the Plan without regard to the terms of the
surrendered Award.
(e)
In any calendar year, no Eligible Employee may receive Awards covering more than
five hundred thousand shares of the Company's Stock. Such number of shares shall
be adjusted in accordance with Section 14 hereof.
Section 5. Stock Options and Stock Appreciation Rights
(a) With respect to the Options and SARs, the Committee shall (i) authorize
the granting of incentive stock options, nonqualified stock options, SARs or a
combination of incentive stock options, nonqualified stock options and SARs;
(ii) determine the number of shares of Stock subject to each Option or the
number of shares of Stock that shall be used to determine the value of a SAR;
(iii) determine whether such Stock shall be Restricted Stock or, with respect to
nonqualified stock options, Deferred Stock; (iv) determine the time or times
when and the manner in which each Option shall be exercisable and the duration
of the exercise period; and (v) determine whether or not all or part of each
Option may be canceled by the exercise of a SAR; provided, however, that the
aggregate Fair Market Value (determined as of the date of Option is granted) of
the Stock (disregarding any restrictions in the case of Restricted Stock) for
which incentive stock options granted to any Eligible Employee under this Plan
may first become exercisable in any calendar year shall not exceed $100,000.
Notwithstanding the foregoing, to the extent that Options intended to be
incentive stock options granted to an Eligible Employee under this Plan for any
reason exceed such limit on exercisability, such excess Options shall be treated
as nonqualified stock options as provided under Section 422(d) of the Code, but
shall in all other respects remain outstanding and exercisable in accordance
with their terms.
(b) The exercise period for a nonqualified stock option or SAR shall be ten
years from the date of grant or such shorter period as may be specified by the
Committee at the time of grant. The exercise period for an incentive stock
option and any related SAR, including any extension which the Committee may from
time to time decide to grant, shall not exceed ten years from the date of grant;
provided however, that, in the case of an incentive stock option granted to
Eligible Employee who, at the time of grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company (a "Ten Percent Stockholder"), such period, including extensions, shall
not exceed five years from the date of grant.
(c) The Option or SAR price per share shall be determined by the Committee
at the time any Option is granted and shall be not less than the Fair Market
Value, or, in the case of an incentive stock option granted to a Ten Percent
Stockholder and any related tandem SARs, 110 percent of the Fair Market Value,
disregarding any restrictions in the case of Restricted Stock or Deferred Stock,
on the date the Option is granted, as determined by the Committee; provided,
however, that such price shall be at least equal to the par value of one share
of Stock; provided further, however, that in the discretion of the Committee in
the case of a nonstatutory stock option, the Option or SAR price per share may
be less than the Fair Market Value in the case of an Option or SAR granted in
order to induce an individual to become an employee of a Participating Company
or in the case of an Option or SAR granted to a new or prospective employee in
order to replace stock options or other long-term incentives under a program
maintained by a prior employer which are forfeited or cease to be available to
the new employee by reason of his termination of employment with his prior
employer.
(d) No part of any Option or SAR may be exercised (i) until the Participant
who has been granted the Award shall have remained in the employ of a
Participating Company for such period after the date on which the Option or SAR
is granted as the Committee may specify and (ii) until achievement of such
performance or other criteria, if any, by the Participant, as the Committee may
specify. A SAR and a related Option shall commence to be exercisable no earlier
than six months following the date the Option and SAR are granted. The Committee
may further require that an Option or SAR become exercisable in installments.
(e) Except as otherwise provided in the Plan, the purchase price of the
shares as to which an Option shall be exercised shall be paid to the Company at
the time of exercise either in cash or in such other consideration as the
Committee deems appropriate, including, Stock, or with respect to nonqualified
options, Restricted Stock or Deferred Stock, already owned by the optionee
(subject to any minimum holding period specified by the Committee), having a
total Fair Market Value, as determined by the Committee, equal to the purchase
price, or a combination of cash and such other consideration having a total Fair
Market Value, as so determined, equal to the purchase price; provided, however,
that if payment of the exercise price is made in whole or in part in the form of
Restricted Stock or Deferred Stock, the Stock received upon the exercise of the
Option shall be Restricted Stock or Deferred Stock, as the case may be, at least
with respect to the same number of shares and subject to the same restrictions
or other limitations as the Restricted Stock or Deferred Stock paid on the
exercise of the Option. The Committee may provide that a Participant who pays
the exercise price of an Option, or the withholding taxes relating to an Option
exercise, with shares of Stock, shall receive a replacement Option to purchase a
number of shares of Stock equal to the number of shares so paid to the Company.
The replacement Option shall have an exercise price equal to Fair Market Value
on the date of such payment and shall include such other terms and conditions as
the Committee may specify.
(f)
(i) Upon the Termination Without Cause of a Participant holding Options or
SARs who is not immediately eligible to receive benefits under the terms of the
Citizens Pension Plans, his or her Options and SARs may be exercised to the
extent exercisable on the date of Termination Without Cause, at any time and
from time to time within the three months of the date of such Termination. The
Committee, however, in its discretion, may provide that any Option or SAR of
such a Participant which is not exercisable by its terms on the date of
Termination Without Cause will become exercisable in accordance with a schedule
(which may extend the time limit referred to above, but not later than the final
expiration date specified in the Option or SAR Award Agreement) to be determined
by the Committee at any time during the period that any other Options or SARs
held by the Participant are exercisable.
(ii) Upon the death or Total Disability (during a Participant's employment
or within three months after termination of employment for any reason other than
termination for cause) of a Participant holding an Option or SAR who is not
immediately eligible to receive benefits under the terms of the Citizens Pension
Plans, his or her Options and SARs may be exercised only to the extent
exercisable at the time of death or Total Disability (or such earlier
termination of employment) from time to time (A) in the event of death or Total
Disability, within the twelve months following death or Total Disability or (B)
in the event of such termination of employment followed by death or Total
Disability within the three months after such termination, within the twelve
months following such termination. The Committee, however, in its discretion,
may provide that any Options or SAR's outstanding but not exercisable at the
date of the first to occur of death or, Total Disability will become exercisable
in accordance with a schedule (which may extend the limits referred to above,
but not to a date later than the final expiration date specified in such Option
or SAR Award Agreement) to be determined by the Committee at any time during the
period while any other Option or SARs held by the Participant are exercisable.
(iii) Upon death, Total Disability or Termination Without Cause of a
Participant holding an Option(s) or SAR(s) who is immediately eligible to
receive benefits under the terms of the Citizens Pension Plans, his or her
Options or SARs may be exercised in full as to all shares or SAR rights covered
by Options and SAR Award Agreements (whether or not then exercisable) at any
time, or from time to time, but no later than the expiration date specified in
such Option or SAR Award Agreement as specified in Section 5(b) above or, in the
case of incentive Options, within twelve months following such death, Total
Disability or Termination Without Cause.
(iv) If the employment of a Participant holding an Option or SAR is
terminated for deliberate, willful or gross misconduct, as determined by the
Company, all rights of such Participant and any Family Member or Family Trust or
other transferee to which such Participant has transferred his or her Option or
SAR shall expire upon receipt by the Participant of the notice of such
termination.
(v) In the event of the death of a Participant, his or her Options and SARs
may be exercised by the person or persons to whom the Participant's rights under
the Option or SAR pass by will, or if no such person has such right, by his or
her executors or administrators or Beneficiary. The death of a Participant after
Total Disability or Termination Without Cause will not adversely effect the
rights of a Participant or anyone entitled to the benefits of such Option or
SAR.
(g) Except as otherwise determined by the Committee, no Option or SAR
granted under the Plan shall be transferable other than by will or by the laws
of descent and distribution, unless the Committee determines that an Option or
SAR may be transferred by a Participant to a Family Member or Family Trust or
other transferee. Such transfer shall be evidenced by a writing from a grantee
to the Committee or Committee's designee on a form established by the Committee.
Absent an authorized transfer during the lifetime of the Participant an Option
shall be exercisable only by him or her by his or her guardian or legal
representative.
(h) With respect to an incentive stock option, the Committee shall specify
such terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify such Option as an incentive stock option within
the meaning of Section 422 of the Code.
(i) Upon exercise of a SAR, the Participant shall be entitled, subject to
such terms and conditions as the Committee may specify at any time, to receive
upon exercise thereof all or a portion of the excess of (i) the Fair Market
Value of a specified number of shares of Stock at the time of exercise, as
determined by the Committee, over (ii) a specified amount which shall not,
subject to Section 5(j), be less than the Fair Market Value of such specified
number of shares of Stock at the time the SAR is granted. Upon exercise of a
SAR, payment of such excess shall be made as the Committee shall specify (A) in
cash, (B) through the issuance or transfer to the Participant of whole shares of
Stock, including Restricted Stock or Deferred Stock, with a Fair Market Value,
disregarding any restrictions in the case of Restricted Stock or Deferred Stock,
at such time equal to any such excess, or (C) a combination of cash and shares
of Stock with a combined Fair Market Value at such time equal to such excess,
all as determined by the Committee; provided, however, a fractional share of
Stock shall be paid in cash equal to the Fair Market Value of the fractional
share of Stock, disregarding any restrictions in the case of Restricted Stock or
Deferred Stock, at such time.
(j) If the Award granted to a Participant allows the Participant to elect
to cancel all or any portion of an unexercised Option by exercising a related
SAR, then the Option price per share of Stock shall be used as the specified
price in Section 5(i), to determine the value of the SAR upon such exercise,
and, in the event of the exercise of such SAR, the Company's obligation in
respect of such Option or such portion thereof will be discharged by payment of
the SAR so exercised.
(k) If authorized by the Committee in its sole discretion, the Company may
accept the surrender of the right to exercise any Option granted under the Plan
(whether or not granted with a related SAR) as to all or any of the shares of
Stock as to which the Option is then exercisable, in exchange for payment to the
optionee (in cash or shares of Stock valued at the then Fair Market Value) of an
amount not to exceed the difference between the option price and the then Fair
Market Value of the shares as to which such right to exercise is surrendered.
Section 6. Performance Shares
(a) The Committee shall determine a performance period (the "Performance
Period") of one or more years and shall determine the performance objectives for
grants of Performance Shares. Performance objectives may vary from Participant
to Participant and between groups of Participants and shall be based upon such
performance criteria or combination of factors as the Committee may deem
appropriate. Performance Periods may overlap and participants may participate
simultaneously with respect to Performance Shares for which different
performance periods are prescribed.
(b) At the beginning of a Performance Period, the Committee shall determine
for each Eligible Employee or group of Eligible Employees with respect to that
Performance Period the range of dollar values, if any, which may be fixed or may
vary in accordance with such performance or other criteria specified by the
Committee, which shall be paid to an Eligible Employee as an Award if the
relevant measure of Company performance for the Performance Period is met.
(c) If during the course of a Performance Period there shall occur
significant events as determined by the Committee, including, but not limited
to, a reorganization of the Company, which the Committee expects to have a
substantial effect on a performance objective during such period, the Committee
may revise such objective.
(d) If a Participant terminates service with all Participating Companies
during a Performance Period because of death, Total Disability, or a significant
event, as determined by the Committee, that Participant shall be entitled to
payment in settlement of each Performance Share for which the Performance Period
was prescribed (i) based upon the performance objectives satisfied at the end of
such period and (ii) prorated for the portion of the Performance Period during
which the Participant was employed by any Participating Company; provided,
however, the Committee may provide for an earlier payment in settlement of such
Performance Share in such amount and under such terms and conditions as the
Committee deems appropriate or desirable with the consent of the Participant. If
a Participant terminates service with all Participating Companies during a
Performance Period for any other reason, then such Participant shall not be
entitled to any payment with respect to that Performance Period unless the
Committee shall otherwise determine.
(e) Each Performance Share may be paid in whole shares of Stock, including
Restricted Stock or Deferred Stock (together with any cash representing
fractional shares of Stock), or cash, or a combination of Stock and cash either
as a lump sum payment or in annual installments, all as the Committee shall
determine, at the time of grant of the Performance Share or otherwise,
commencing as soon as practicable after the end of the relevant Performance
Period. Any dividends or distributions payable on Performance Shares (or the
equivalent as specified in the grant), other than cash dividends representing
the periodic distribution of profits which shall be retained by the Company,
shall be paid over to the Participant when and if payment is made of the
underlying Performance Shares, unless the grant provides otherwise.
Except as otherwise provided in this Section 6, no Performance Shares
awarded to Participants shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Performance Period unless the
Committee determines that an Award may be transferred to a Family Member or
Family Trust or other transferee.
Section 7. Restricted Stock
(a) Restricted Stock may be received by a Participant either as an Award or
as the result of an exercise of an Option or SAR or as payment for a Performance
Share. Restricted Stock shall be subject to a restriction period (after which
restrictions shall lapse)which shall mean a period commencing on the date the
Award is granted and ending on such date or upon the achievement of such
performance or other criteria as the Committee shall determine (the "Restriction
Period"). The Committee may provide for the lapse of restrictions in
installments where deemed appropriate.
(b) Except as otherwise provided in this Section 7, no shares of Restricted
Stock received by a Participant shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Restriction Period unless the
Committee determines that an Award may be transferred by a Participant to a
Family Member or Family Trust or other transferee; provided, however, the
Restriction Period for any Participant shall expire and all restrictions on
shares of Restricted Stock shall lapse upon the Participant's (i) death, (ii)
Total Disability or (iii) Termination Without Cause where the Participant is
immediately eligible to receive benefits under the terms of Citizens Pension
Plans, or with the consent of the Company, or upon some significant event, as
determined by the Committee, including, but not limited to, a reorganization of
the Company.
(c) If a Participant terminates employment with all Participating Companies
for any reason other than under the circumstances referred to in clause (b)
before the expiration of the Restriction Period, all shares of Restricted Stock
still subject to restriction shall, unless the Committee otherwise determines
within 90 days after such termination, be forfeited by the Participant and shall
be reacquired by the Company, and, in the case of Restricted Stock purchased
through the exercise of an Option, the Company shall refund the purchase price
paid on the exercise of the Option.
(d) The Committee may require under such terms and conditions as it deems
appropriate or desirable that the certificates for Restricted Stock delivered
under the Plan may be held in custody until the Restriction Period expires or
until restrictions thereon otherwise lapse, and may require as a condition of
any receipt of Restricted Stock that the Participant shall have delivered a
stock power endorsed in blank relating to the Restricted Stock.
(e) Nothing in this Section 7 shall preclude a Participant from exchanging
any shares of Restricted Stock subject to the restrictions contained herein for
any other shares of Stock that are similarly restricted.
(f) Unless the Award Agreement provides otherwise, amounts equal to any
cash dividends representing the periodic distributions of profits declared and
payable during the Restriction Period with respect to the number of shares of
Restricted Stock credited to a Participant shall be paid to the Participant
within 30 days after each dividend becomes payable, unless, at the time of the
Award, the Committee determines that the dividends should be reinvested in
additional shares of Restricted Stock, in which case additional shares of
Restricted Stock shall be credited to the Participant based on the Stock's Fair
Market Value at the time of each such dividend, or unless the Committee
specifies otherwise. All dividends or distributions payable on shares (other
than cash dividends representing periodic distributions of profits) of
Restricted Stock (or the equivalent as specified in the grant) shall be paid
over to the Participant when and if as restrictions lapse on the underlying
shares of Restricted Stock, unless the grant provides otherwise.
Section 8. Deferred Stock
(a) Deferred Stock may be credited to an Eligible Employee either as an
Award or as the result of an exercise of an Option or SAR or as payment for a
Performance Share. Deferred Stock shall be subject to a deferral period which
shall mean a period commencing on the date the Award is granted and ending on
such date or upon the achievement of such performance or criteria as the
Committee shall determine (the "Deferral Period"). The Committee may provide for
the expiration of the Deferral Period in installments where deemed appropriate.
(b) Except as otherwise provided in this Section 8, no Deferred Stock
credited to Participant shall be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of during the Deferral Period unless the
Committee determines that an Award may be transferred to a Family Member or
Family Trust or other transferee; provided, however, the Deferral Period for any
Participant shall expire upon the Participant's (i) death, (ii) Total Disability
or (iii) Termination Without Cause where the Participant is immediately eligible
to receive benefits under the terms of Citizens Pension Plans, or an earlier age
with the consent of the Company, or upon some significant event, as determined
by the Committee, including, but not limited to, a reorganization of the
Company.
(c) At the expiration of the Deferral Period, the Participant shall be
entitled to receive a certificate pursuant to Section 10 for the number of
shares of Stock equal to the number of shares of Deferred Stock credited on his
or her behalf. Unless the Award Agreement provides otherwise, amounts equal to
any cash dividends representing the periodic distributions of profits declared
and payable during the Deferral Period with respect to the number of shares of
Deferred Stock credited to a Participant shall be paid to such Participant
within 30 days after each dividend becomes payable unless, at the time of the
Award, the Committee determined that such dividends should be reinvested in
additional shares of Deferred Stock, in which case additional shares of Deferred
Stock shall be credited to the Participant based on the Stock's Fair Market
Value at the time of each such dividend, or unless the Committee specifies
otherwise. All dividends or distributions payable on shares (other than cash
dividends representing periodic distributions of profits) of Deferred Stock (or
the equivalent as specified in the grant) shall be paid over to the Participant
when the Deferral Period ends, unless the grant provides otherwise.
(d) If a Participant terminates employment with all Participating Companies
for any reason other than under the circumstances referred to in clause (b)
before the expiration of the Deferral Period, all shares of Deferred Stock
shall, unless the Committee otherwise determines within 90 days after such
termination, be forfeited by the Participant, and, in the case of Deferred Stock
purchased through the exercise of an Option, the Company shall refund the
purchase price paid on the exercise of the Option.
Section 9. Other Stock-Based Awards
The Committee may grant other Awards under the Plan which are denominated
in stock units or pursuant to which shares of Stock may be acquired, including
Awards valued using measures other than market value or Fair Market Value, if
deemed by the Committee in its discretion to be consistent with the purposes of
the Plan. Subject to the terms of the Plan, the Committee shall determine the
form of such Awards, the number of shares of Stock to be granted or covered
pursuant to such Awards and all other terms and conditions of such Awards.
Section 10. Certificates for Awards of Stock
(a) Subject to Section 7(d), each Participant entitled to receive shares of
Stock under the Plan shall be issued a certificate for such shares or have their
shares registered for their account in book entry form by the Company's transfer
agent. In the instance of a certificate, such certificate shall be registered in
the name of the Participant, and shall bear an appropriate legend reciting the
terms, conditions and restrictions, if any, applicable to such shares and shall
be subject to appropriate stop-transfer orders.
(b) The Company shall not be required to issue or deliver any shares or
certificates for shares of Stock prior to (i) the listing of such shares on any
stock exchange or quotation system on which the Stock may then be listed or
quoted and (ii) the completion of any registration, qualification, approval or
authorization of such shares under any federal or state law, or any ruling or
regulation or approval or authorization of such shares under any governmental
body which the Company shall, in its sole discretion, determine to be necessary
or advisable.
(c) All shares and certificates for shares of Stock delivered under the
Plan shall also be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state securities or
regulatory laws, and the Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions. The
foregoing provisions of this Section 10(c) shall not be effective if and to the
extent that the shares of Stock delivered under the Plan are covered by an
effective and current registration statement under the Securities Act of 1933,
or if the Committee determines that application of such provisions is no longer
required or desirable. In making such determination, the Committee may rely upon
an opinion of counsel for the Company.
(d) Except for the restrictions on Restricted Stock under Section 7, each
Participant who receives an award of Stock shall have all of the rights of a
stockholder with respect to such shares, including the right to vote the shares
and receive dividends and other distributions. No Participant awarded an Option,
a SAR or Performance Share or Deferred Stock shall have any right as a
stockholder with respect to any shares subject to such Award prior to the date
of issuance to him or her of certificate or certificates for such shares.
Section 11. Beneficiary
(a) Each Eligible Employee shall file with the Committee a written
designation of one or more persons as the Beneficiary who shall be entitled to
receive the Award, if any, payable under the Plan upon his or her death. An
Eligible Employee may from time to time revoke or change his or her Beneficiary
designation without the consent of any prior Beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Eligible Employee's death, and in no event shall it be
effective as of a date prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of an
Employee's death, or if no designated Beneficiary survives the Eligible Employee
or if such designation conflicts with law, the Eligible Employee's estate shall
be entitled to receive the Award, if any, payable under the Plan upon his or her
death. If the Committee is in doubt as to the right of any person to receive
such Award, the Company may retain such Award, without liability for any
interest thereon, until the Committee determines the right thereto, or the
Company may pay such Award into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Company therefor.
Section 12. Administration of the Plan
(a) The Plan shall be administered by the Committee, as appointed by the
Board and serving at the Board's pleasure. Each member of the Committee shall be
both a member of the Board and shall satisfy the "disinterested administration"
or similar requirements, if any, of Rule 16b-3 under the Exchange Act and the
"outside director" or similar successor requirements, if any, of Section 162(m)
of the Code and the regulations promulgated thereunder.
(b) All decisions, determinations or actions of the Committee made or taken
pursuant to grants of authority under the Plan shall be made or taken in the
sole and absolute discretion of the Committee and shall be final, conclusive and
binding on all persons for all purposes.
(c) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof and any related
Award Agreement and define the terms employed in the Plan or any agreement, and
its interpretations and constructions thereof and actions taken thereunder shall
be final, conclusive and binding on all persons for all purposes.
(d) The Committee shall have full power, discretion and authority to
prescribe and rescind rules, regulations and policies for the administration of
the Plan.
(e) The Committee's decisions and determinations under the Plan and with
respect to any Award granted thereunder need not be uniform and may be made
selectively among Awards, Participants or Eligible Employees, whether or not
such Awards are similar or such Participants or Eligible Employees are similarly
situated.
(f) The Committee shall keep minutes of its actions under the Plan. The act
of a majority of the members present at a meeting duly called and held shall be
the act of the Committee. Any decision or determination reduced to writing and
signed by all members of the Committee shall be fully as effective as if made by
unanimous vote at a meeting duly called and held.
(g) The Committee may employ such legal counsel, including without
limitation independent legal counsel and counsel regularly employed by the
Company, consultants and agents as the Committee may deem appropriate for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computations received from any such consultant or
agent. All expenses incurred by the Committee in interpreting and administering
the Plan, including without limitation, meeting fees and expenses and
professional fees, shall be paid by the Company.
(h) No member or former member of the Committee or the Board shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award granted under it. Each member or former member of the
Committee or the Board shall be indemnified and held harmless by the Company
against all cost or expense (including counsel fees and expenses) or liability
(including any sum paid in settlement of a claim with the approval of the Board)
arising out of any act or omission to act in connection with the Plan unless
arising out of such member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights to indemnification or
insurance the members or former member may have as directors or under the
by-laws of the Company or otherwise.
(i) The Committee's determination that an Option, SAR, Performance Share,
Restricted Stock, Deferred Stock or other Stock-based Awards may be transferred
by a Participant to a Family Member or Family Trust or other transferee may be
set forth in: determinations pursuant to Section 12(c), rules and regulations of
general application adopted pursuant to Section 12(d), in the written Award
Agreement, or by a writing delivered to the Participant made any time after the
relevant Award or Awards have been granted, on a case by case basis, or
otherwise. In any event, the transferee or Family Member or Family Trust shall
agree in writing to be bound by all the provisions of the Plan and the Award
Agreement, and in no event shall any such transferee have greater rights under
such Award than the Participant effecting such transfer.
(j) With respect to credits, shares, cash or other property credited to a
Participant by reason of dividends or distributions, if the Committee shall so
determine, all such credits, shares, cash or other property to a Participant
shall be paid to the Participant periodically at the end of the applicable
period, whether or not the performance, employment or other standards (or lapse
of time) upon which such Award is conditioned have been satisfied. In addition,
the Committee may determine to include in Award Agreements granting Options and
SARs a provision to the effect that (a) an amount equal to any dividends
(payable in cash or other property) paid after the grant of the Option or SAR
and before to the exercise of such Option or SAR with respect to the number of
shares of Stock subject to such Option or SAR shall be credited to a Participant
and, if the Award Agreement so provides, thereafter paid to such Participant
within thirty days after each dividend becomes payable or, (b) if the Committee
so determines, such Award shall be reinvested in additional shares of Stock, in
which case such additional shares of Stock shall be credited to the Participant
based on the Stock's Fair Market Value at the time of payment of each such
dividend. In the latter event, if the Committee so determines, such additional
shares of Stock shall be delivered to the Participant (whether or not such
Option or SAR is exercised) at the time that such Option or SAR ceases to be
exercisable in accordance with its terms or otherwise.
Section 13. Amendment or Discontinuance
The Board may, at any time, amend or terminate the Plan. The Plan may also
be amended by the Committee, provided that all such amendments shall be reported
to the Board. No amendments shall become effective unless approved by
affirmative vote of the Company's stockholders if such approval is necessary or
desirable for the continued validity of the Plan or if the failure to obtain
such approval would adversely affect the compliance of the Plan with Rule 16b-3
or any successor rule under the Exchange Act or any other rule or regulation. No
amendment or termination shall, when taken as a whole, adversely and materially
affect the rights of any Participant who has received a previously granted Award
without his or her consent unless the amendment or termination is necessary or
desirable for the continued validity of the Plan or its compliance with Rule
16b-3 or any other applicable law, rule or regulation or pronouncement or to
avoid any adverse consequences under Section 162(m) of the Code or any
requirement of a securities exchange or association or regulatory or
self-regulatory body).
Section 14. Adjustments in Event of Change in Common Stock
In the event of a change in corporate capitalization, stock split or stock
dividend, the number of shares purchasable upon exercise of an Option or SAR
shall be increased to the new number of shares which result from the shares
covered by the Option or SAR immediately before the change, split or dividend.
The purchase price per share shall be reduced proportionately and the total
purchase price will remain the same.
In the event of any other change in corporate capitalization, or a
corporate transaction, such as any merger of a corporation into another
corporation, any consolidation of two or more corporations into another
corporation, any separation of a corporation (including a spinoff or other
distribution of stock or property by a corporation), any reorganization of a
corporation (whether or not such reorganization comes within the definition of
such term in Section 368 of the Code), or any partial or complete liquidation by
a corporation or other similar event which could distort the implementation of
the Plan or the realization of its objectives, the Committee shall make an
appropriate adjustment in the number of shares of Stock (i) which are covered by
the Plan, (ii) which may be granted to any one Eligible Employee and which are
subject to any Award, and the purchase price therefor, and in terms, conditions
or restrictions on securities as the Committee deems equitable, with the
objective that the securities covered under the Plan or an Award shall be those
securities which a Participant would have received if he or she had exercised
his or her Option or SAR prior to the event or been entitled to his or her
Restricted or Deferred Stock or Performance Shares.
All such events occurring between the effective date of the Option and its
exercise shall result in an adjustment to the Option terms.
Section 15. Change in Control
Awards may include, or may incorporate from any relevant guidelines adopted
by the Committee, terms which provide that any or all of the following actions
may occur as a result of, or in anticipation of, any "Change in Control" to
assure fair and equitable treatment of Participants:
(a) All Options outstanding at least six months as of the date of Change in
Control shall, if held by a current employee of the Company, become immediately
exercisable in full. In addition, all Participants may, regardless of whether
still an employee of the Company, elect to cancel all or any portion of any
Option or Award no later than 90 days after the Change in Control, in which
event the Company shall pay to such electing Participant, an amount in cash
equal to the excess, if any, of the Current Market Value (as defined below) of
the shares of Stock, including Restricted Stock or Deferred Stock, subject to
the Option or of the portion thereof so canceled over the option price for such
shares; provided, however, that no Participant shall have the right to elect
cancellation unless and until at least 6 months have elapsed after the date of
grant of the Option.
(b) All Performance Periods shall end and the Company shall pay each
Participant an amount in cash equal to the value of such Participant's
performance shares, if any, based upon the Stock's Current Market Value in full
settlement of such performance shares.
(c) All Restriction Periods shall end and the Company shall pay each
Participant an amount in cash equal to the Current Market Value of the
Restricted Stock held by, or on behalf of, each Participant in exchange for such
Restricted Stock.
(d) All Deferral Period shall end and the Company shall pay to each
Participant an amount in cash equal to the Current Market Value of the number of
shares of Stock equal to the number of shares of deferred stock credited to such
Participant in full settlement of such Deferred Stock.
(e) The Company shall pay to each Participant all amounts due, if any,
deferred by or payable under Awards granted to such Participant under the Plan
which are not Performance Shares, Restricted Stock or Deferred Stock, in
accordance with the terms provided by the Committee at the time of deferral or
grant.
(f) For purpose of this section 15, "Current Market Value" means the
highest Fair Market Value during the period commencing 30 days prior to the
Change in Control and ending 30 days after the Change in Control (the "reference
period"); provided that, if the Change in Control occurs as a result of a tender
offer or exchange offer, or a merger, purchase of assets or stock or other
transaction approved by shareholders of the Company, Current Market Value means
the higher of (i) the highest Fair Market Value during the reference period, or
(ii) the highest price paid per share of Stock pursuant to such tender offer,
exchange offer or transaction.
Section 16. Miscellaneous
(a) Nothing in this Plan or any Award granted hereunder shall confer upon
any employee any right to continue in the employ of any Participating Company or
interfere in any way with the right of any Participating Company to terminate
his or her employment at any time.
(b) No Award payable under the Plan shall be deemed salary or compensation
for the purpose of computing benefits under any employee benefit plan or other
arrangement of any Participating Company for the benefit of its employees unless
the Company shall determine otherwise.
(c) No Eligible Employee or Participant shall have any claim to an Award
until it is actually granted under the Plan. To the extent that any person
acquires a right to receive payments from the Company under this Plan, such
right shall be no greater than the right of an unsecured general creditor of the
Company. All payments of Awards provided for under the Plan shall be paid by the
Company either by issuing shares of Stock or by delivering cash from the general
funds of the Company or other property of the Company; provided, however, that
such payments shall be reduced by the amount of any payments made to the
Participant or his or her dependents, beneficiaries or estate from any trust or
special or separate fund established in connection with this Plan. The Company
shall not be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the Company shall make
any investments to aid it in meeting its obligations hereunder, the Participant
shall have no right, title, or interest whatever in or to any such investments
except as may otherwise be expressly provided in a separate written instrument
relating to such investments.
(d) Absence on leave approved by a duly constituted officer of the Company
shall not be considered interruption or termination of employment for any
purposes of the Plan; provided, however, that no Award may be granted to an
employee while he or she is absent on leave.
(e) If the Committee shall find that any person to whom any Award, or
portion thereof, is payable under the Plan is unable to care for his or her
affairs because of illness or accident, or is a minor, then any payment due him
or her (unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be paid to his or
her spouse, a child, a relative, an institution maintaining or having custody of
such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Company therefor.
(f) The right of any Participant or other person to any Award payable under
the Plan may not be assigned, transferred, pledged or encumbered, either
voluntarily or by operation of law, except as provided in Section 11 with
respect to the designation of a Beneficiary or as may otherwise be required by
law or pursuant to a qualified domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act, or the rules
thereunder or unless the Committee determines that an Award may be transferred
to a Family Member or Family Trust or other transferee. If, by reason of any
attempted assignment, transfer, pledge, or encumbrance or any bankruptcy or
other event happening at any time, any amount payable under the Plan would be
made subject to the debts or liabilities of the Participant or his or her
Beneficiary or would otherwise devolve upon anyone else and not be enjoyed by
the Participant or his or her Beneficiary, then the Committee may terminate such
person's interest in any such payment and direct that the same be held and
applied to or for the benefit of the Participant, his or her Beneficiary, taking
into account the expressed wishes of the Participant (or, in the event of his or
her death, those of his or her Beneficiary) in such manner as the Committee may
deem proper.
(g) Copies of the Plan and all amendments, administrative rules and
procedures and interpretations shall be made available for review to all
Eligible Employees at all reasonable times at the Company's administrative
offices.
(h) The Committee may cause to be made, as a condition precedent to the
payment of any Award, or otherwise, appropriate arrangements with the
Participant or his or her Beneficiary, for the withholding of any federal,
state, local or foreign taxes. The Committee may in its discretion permit the
payment of such withholding taxes by authorizing the Company to withhold shares
of Stock to be issued, or the Participant to deliver to the Company shares of
Stock owned by the Participant or Beneficiary, in either case having a Fair
Market Value equal to the amount of such taxes.
(i) All elections, designations, requests, notices, instructions and other
communications from an Eligible Employee, Participant, Beneficiary or other
person to the Committee, required or permitted under the Plan, shall be in such
form as is prescribed from time to time by the Committee and shall be mailed by
first class mail or delivered to such location as shall be specified by the
Committee.
(j) The terms of the Plan shall be binding upon the Company and its
successors and assigns.
(k) Captions preceding the sections hereof are inserted solely as a matter
of convenience and in no way define or limit the scope or intent of any
provision hereof.
(l) The Plan and the grant, exercise and carrying out of Awards shall be
subject to all applicable federal and state laws, rules, and regulations and to
all required or otherwise appropriate approvals and authorizations by any
governmental or regulatory agency or commission. The Company shall have no
obligation of any nature hereunder to any Eligible Employee, Participant or any
other person in the absence of all necessary or desirable approvals or
authorizations and shall have no obligation to seek or obtain the same.
(m) Whenever possible, each provision of this Plan and any Award Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any such provision is held to be ineffective, invalid, illegal or
unenforceable in any respect under the applicable laws or regulations of the
United States or any state, such ineffectiveness, invalidity, illegality or
unenforceability will not affect any other provision but this Plan and any such
agreement will be reformed, construed and enforced so as to carry out the intent
hereof or thereof and as if any invalid or illegal provision had never been
contained herein.
Section 16. Effective Date and Stockholder Approval
The Effective Date of the Plan shall be May 23, 1996, subject to approval
by the holders of a majority of the Company's common stock at the 1996 Annual
Meeting. Any Awards granted prior to May 23, 1996 will be subject to the receipt
of such approval. No Awards will be granted under the Plan after the expiration
of ten years from the Effective Date.
<PAGE>
Citizens Utilities Company
1996 Annual Meeting of Stockholders
9:00 a.m., Mountain Time, May 23, 1996
Little America Hotel
500 South Main Street
Salt Lake City, Utah
Cut off at dotted line.
ADVANCE REGISTRATION FORM (for registered stockholders only)*
Please send your completed and signed proxy form in the enclosed envelope.
Include this Advance Registration Form in the envelope if you plan to attend or
send a representative to the Annual Meeting.
Attendance at the Annual Meeting is limited to Citizens' stockholders, or
their authorized representative, and guests and employees of the Company.
(Please type or print)
Stockholder's Name
Address
City State Zip
I am a Citizens stockholder. My representative at the Annual Meeting will be:
(Admission card will be returned c/o the stockholder's address.)
Stockholder's Signature
* if your shares are held in the name of any intermediary, please see
instructions in the Chairman's letter (front cover of this proxy statement)
<PAGE>
SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Citizens Utilities Company
...........................................................................
(Name of Registrant as Specified in Its Charter)
............................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X $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:
5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
***PRELIMINARY COPY***
CITIZENS UTILITIES COMPANY
Please complete both sides of the Proxy Card,
detach and return in the enclosed envelope.
DETACH PROXY CARD HERE
CITIZENS UTILITIES COMPANY
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby appoints Norman I. Botwinik, John L. Schroeder and Elwood
A. Rickless or any of them with full power of substitution, proxies to vote at
the Annual Meeting of Stockholders of Citizens Utilities Company (the "Company")
to be held on Thursday, May 23, 1996, at 9:00 a.m., Mountain Time, and at any
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of common stock of the Company held or owned by the undersigned as
directed, and in their discretion upon such other matters as may come before the
meeting.
Signature:______________________________________
Signature:______________________________________
Date:_____________________________________, 1996
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
This proxy when properly executed will be voted in the manner directed by the
signatory stockholder. If no direction is made, this proxy will be voted "For"
all directors, "For" Proposal 1 and "For" Proposal 2.
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Election of Directors Proposal 1
<S> <C> <C>
Nominees: Approve an amendment to the Restated Certificate of
Incorporation of Citizens Utilities Company providing for an
Increase in the number ofc~~thorized share
For Withheld Norman I. Botwinik to a total of 650,000,000 shares consisting of 250,000,000
Aaron I. Fleischman shares of Common Stock Series A of the par value of
James C. Goodale twenty-five cents ($.25) each, 350,000,000 shares of
Stanley N. Harfenist Common Stock Series B of the par value of twenty-five
Andrew N. Heine ($.25) each, (together representing an aggregate increase
Elwood A. Rickless of 100,000,000 shares of Common Stock) and 50,000,000
John L. Schroeder shares of the par value of one cent ($.01) each of the
Robert D. Siff previously authorized Preferred Stock.
Robert A. Stanger For Against Abstain
Charles H. Symington, Jr.
Edwin Tornberg Proposal 2
Claire L. Tow
For, except vote withheld Leonard Tow Approve the 1996 Equity Incentive Plan.
from the following
nominee(s): For Against Abstain
</TABLE>
- ------------------------------------------------
***PRELIMINARY COPY***
CITIZENS UTILITIES COMPANY
Please complete both sides of the Proxy Card,
detach and return in the enclosed envelope.
DETACH PROXY CARD HERE
CUC 401(k) EMPLOYEE BENEFIT PLAN
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby authorizes and directs PNC Bank as the Trustee under the
CUC 401(k) Employee Benefit Plan to vote all shares of stock allocable to the
undersigned under the provisions of the Plan and to appoint Norman I. Botwinik,
John L. Schroeder and Elwood A. Rickless or any of them with full power of
substitution, proxies to vote at the Annual Meeting of Stockholders of Citizens
Utilities Company (the "Company") to be held on Thursday, May 23, 1996, at 9:00
a.m., Mountain Time, and at any adjournments thereof. Said Trustee is authorized
and directed to execute and deliver a written proxy appointing such individuals
to act as proxies as indicated.
Signature:______________________________________
Signature:______________________________________
Date:_____________________________________, 1996
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
This proxy when properly executed will be voted in the manner directed by the
signatory stockholder. If no direction is made, this proxy will be voted "For"
all directors, "For" Proposal 1 and "For" Proposal 2.
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Election of Directors Proposal 1
<S> <C> <C>
Nominees: Approve an amendment to the Restated Certificate of
Incorporation of Citizens Utilities Company providing for an
Increase in the number ofc~~thorized share
For Withheld Norman I. Botwinik to a total of 650,000,000 shares consisting of 250,000,000
Aaron I. Fleischman shares of Common Stock Series A of the par value of
James C. Goodale twenty-five cents ($.25) each, 350,000,000 shares of
Stanley N. Harfenist Common Stock Series B of the par value of twenty-five
Andrew N. Heine ($.25) each, (together representing an aggregate increase
Elwood A. Rickless of 100,000,000 shares of Common Stock) and 50,000,000
John L. Schroeder shares of the par value of one cent ($.01) each of the
Robert D. Siff previously authorized Preferred Stock.
Robert A. Stanger For Against Abstain
Charles H. Symington, Jr.
Edwin Tornberg Proposal 2
Claire L. Tow
For, except vote withheld Leonard Tow Approve the 1996 Equity Incentive Plan.
from the following
nominee(s): For Against Abstain
- ------------------------------------------------
</TABLE>
<PAGE>
***PRELIMINARY COPY***
CITIZENS UTILITIES COMPANY
Please complete both sides of the Proxy Card,
detach and return in the enclosed envelope.
DETACH PROXY CARD HERE
CITIZENS UTILITIES 401(k) SAVINGS PLAN
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby authorizes and directs PNC Bank as the Trustee under the
Citizens Utilities 401(k) Savings Plan to vote all shares of stock allocable to
the undersigned under the provisions of the Plan and to appoint Norman I.
Botwinik, John L. Schroeder and Elwood A. Rickless or any of them with full
power of substitution, proxies to vote at the Annual Meeting of Stockholders of
Citizens Utilities Company (the "Company") to be held on Thursday, May 23, 1996,
at 9:00 a.m., Mountain Time, and at any adjournments thereof. Said Trustee is
authorized and directed to execute and deliver a written proxy appointing such
individuals to act as proxies as indicated.
Signature:______________________________________
Signature:______________________________________
Date:_____________________________________, 1996
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
This proxy when properly executed will be voted in the manner directed by the
signatory stockholder. If no direction is made, this proxy will be voted "For"
all directors, "For" Proposal 1 and "For" Proposal 2.
- --------------------------------------------------------------------------
Election of Directors Proposal 1
<TABLE>
<CAPTION>
<S> <C> <C>
Nominees: Approve an amendment to the Restated Certificate of
Incorporation of Citizens Utilities Company providing for an
Increase in the number ofc~~thorized share
For Withheld Norman I. Botwinik to a total of 650,000,000 shares consisting of 250,000,000
Aaron I. Fleischman shares of Common Stock Series A of the par value of
James C. Goodale twenty-five cents ($.25) each, 350,000,000 shares of
Stanley N. Harfenist Common Stock Series B of the par value of twenty-five
Andrew N. Heine ($.25) each, (together representing an aggregate increase
Elwood A. Rickless of 100,000,000 shares of Common Stock) and 50,000,000
John L. Schroeder shares of the par value of one cent ($.01) each of the
Robert D. Siff previously authorized Preferred Stock.
Robert A. Stanger For Against Abstain
Charles H. Symington, Jr.
Edwin Tornberg Proposal 2
Claire L. Tow
For, except vote withheld Leonard Tow Approve the 1996 Equity Incentive Plan.
from the following
nominee(s): For Against Abstain
- ------------------------------------------------
</TABLE>
