<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Citizens Utilities Company
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
___________________________________________________________________________
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[GRAPHIC OMITTED] Administrative Offices
Three High Ridge Park, Stamford, CT 06905
(203) 614-5600
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March 24, 2000
Dear Fellow Stockholder:
I am pleased to invite you to attend the 2000 Annual Meeting of the
Stockholders of Citizens Utilities Company which will be held at the Hilton
Minneapolis Towers, Minneapolis, MN, on Thursday, May 18, 2000 at 10:00 a.m.,
Central Time.
At last year's Annual Meeting, almost 85 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 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
stockholders as of the record date or their authorized representative. Because
of space limitations, admission to the Annual Meeting will be by admission card
only. Registered stockholders planning to attend the meeting should complete
and return the advance registration form on the back page of this Proxy
Statement or you may send us an electronic mail message to
[email protected]. 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 an admission card by writing to Shareholder
Services, Citizens Utilities Company, Three 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,
/s/ Leonard Tow
Leonard Tow
Chairman and Chief Executive Officer
[GRAPHIC OMITTED]
<PAGE>
[GRAPHIC OMITTED] Administrative Offices
Three High Ridge Park, Stamford, CT 06905
(203) 614-5600
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March 24, 2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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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 Hilton Minneapolis Towers, Minneapolis,
MN, on Thursday, May 18, 2000 at 10:00 a.m., Central Time, for the following
purposes:
1. To elect directors;
2. To amend Article First of our Restated Certificate of Incorporation to
change our name to Citizens Communications Company; and
3. To transact any other business that may properly be brought before the
meeting or any adjournment or postponement of the meeting.
The board of directors has fixed the close of business on March 23, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any adjournment or postponement of 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 offices of Maslon Edleman
Borman & Brand, LLP, 2200 Norwest Center, Minneapolis, MN 55402 and at the site
of the meeting on the meeting date.
By Order of the Board of Directors
Charles J. Weiss
Secretary
<PAGE>
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
by the board of directors of Citizens Utilities Company to be voted at our
annual meeting of stockholders. The mailing address of our administrative
offices is Three 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 31, 2000.
Only holders of record of our common stock, par value $.25 per share, as
of the close of business on March 23, 2000, the record date, will be entitled
to notice of and to vote at the annual meeting. As of the record date, there
were 262,835,411 shares of common stock outstanding, each of which is entitled
to one vote at the annual meeting. As of the record date, an additional 113,597
shares of common stock were outstanding and held by us as treasury shares. We
have no other class of voting securities issued and outstanding. The presence
in person or by proxy of the holders of a majority of the outstanding shares of
common stock will be necessary to constitute a quorum for the transaction of
business at the annual meeting.
Directors will be elected by a plurality vote of the shares of common
stock present or represented by proxy at the meeting and entitled to vote at
the meeting. Approval of the amendment of the Restated Certificate of
Incorporation requires the affirmative vote of a majority of the outstanding
stock entitled to vote thereon. Abstentions will have the effect of a negative
vote with respect to the election of directors and the amendment of the
Restated Certificate of Incorporation. Brokers who hold shares in street name
for customers do not have discretionary authority to vote on certain items when
they have not received instructions from beneficial owners; shares represented
by proxies indicating that the broker has not voted the shares on such matters
are "broker non-votes". Under applicable Delaware law, a broker non-vote would
be counted for purposes of determining a quorum, but would not be counted for
purposes of determining the outcome of the vote for any proposal. Under the
rules of the New York Stock Exchange, brokers who hold shares in street name
for customers that have not given instructions to such brokers do have the
authority to vote on the election of directors and the amendment of the
Restated Certificate of Incorporation. Stockholders may not cumulate their
votes. Unless contrary instructions are given, all proxies received pursuant to
this solicitation will be voted in favor of the election of the nominees and
the amendment of the Restated Certificate of Incorporation. Stockholders who
execute proxies may revoke them at any time before they are voted.
Stock Ownership of Certain Beneficial Owners, Directors and Executive Officers
As of February 29, 2000, no person or group of persons, except for Capital
Research and Management Company, is known by us to own beneficially more than
5% of our common stock. All information regarding the number of our shares
beneficially owned, and regarding voting and investment power with respect
thereto, by any person or group that owns beneficially more than 5% of our
common stock is based solely on our review of Schedules 13G filed with the
Securities and Exchange Commission as of February 29, 2000. According to the
Schedule 13G that Capital Research and Management Company filed with the
Securities and Exchange Commission on February 10, 2000, Capital Research and
Management Company, with offices at 333 South Hope Street, Los Angeles, CA
90071 beneficially owned 13,355,000 shares of our common stock, representing
approximately 5.1% of our outstanding common stock. Capital Research and
Management Company holds sole dispositive power over these shares, but it does
not have voting power over any of these shares, and it disclaims beneficial
ownership of these shares under Rule 13d-4 of the Securities Exchange Act of
1934.
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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, 2000 by each of our directors, each of
the executive officers named in the Summary Compensation Table included
elsewhere herein, and all of our current directors and all our executive
officers as a group. Except as otherwise described below, each of the persons
named in the table has sole voting and investment power with respect to the
securities beneficially owned.
<TABLE>
<CAPTION>
Common Acquirable Percentage
Stock Within Of Common
Name Position Owned(1) 60 Days(2) Stock(3)
- ---------------------------- ------------------------------ ----------------------------- -------------------- -----------
<S> <C> <C> <C> <C>
Norman I. Botwinik Director 108,571(4) 84,274 *
Robert J. DeSantis CFO and Vice President 319,274 282,138 *
Aaron I. Fleischman Director 123,753 88,068 *
Stanley Harfenist Director 102,024 88,068(5) *
Andrew N. Heine Director 88,228 88,069 *
J. Michael Love Vice President 211,269(6) 180,723 *
L. Russell Mitten Vice President 212,215 179,396 *
John L. Schroeder Director 82,203 75,203(5) *
David B. Sharkey Vice President and President,
Electric Lightwave, Inc. 62,378(7) 60,799 *
Robert D. Siff Director 83,529(8) 77,346(5) *
Robert A. Stanger Director 90,607 88,068 *
Charles H. Symington, Jr. Director 85,679 79,900 *
Edwin Tornberg Director 26,773 18,376(5) *
Claire L. Tow Director 10,156,957(7,9,10) 3,592,844(11) 3.8%
Leonard Tow Chairman and CEO 10,156,957(7,9,12) 3,592,844(13) 3.8%
All Executive Officers and
Directors as a group
(24 persons) 12,837,536 5,277,839 4.7%
</TABLE>
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* Represents less than 1% of our outstanding common stock.
(1) Pursuant to rules of the Securities and Exchange Commission, includes
shares acquirable as further described in footnote (2). Shares owned as of
February 29, 2000 may be determined by subtracting the number under
"Acquirable Within 60 Days" from that under "Common Stock Owned."
(2) Reflects number of shares that could be purchased by exercise of options
as of February 29, 2000 or within 60 days thereafter under our Management
Equity Incentive Plan, the Equity Incentive Plan, or the Non-Employee
Directors' Deferred Fee Equity Plan, as applicable.
(3) Based on number of shares outstanding at, or acquirable within 60 days of,
February 29, 2000.
(4) Includes 11,406 shares of common stock owned by Mr. Botwinik's wife. Mr.
Botwinik disclaims beneficial ownership of such shares.
(5) Each of Messrs. Harfenist, Schroeder, Siff and Tornberg has transferred
all or a portion of these stock options to family limited partnerships or
trusts beneficially owned by him.
(6) Includes 75 shares of common stock owned by Mr. Love's wife. Mr. Love
disclaims beneficial ownership of such shares.
(7) Leonard Tow and David Sharkey also own 108,334, and 184,793 shares of
Class A Common Stock of Electric Lightwave, Inc., one of our subsidiaries
("ELI"), respectively, representing approximately 1.2%, and 2.0% of the
outstanding shares of Class A Common Stock of ELI. Claire Tow also is
deemed to beneficially own these shares of Class A Common Stock of ELI
held by Leonard Tow but disclaims beneficial ownership of all of the
shares owned by Leonard Tow.
(8) Includes 6,183 shares of common stock owned by M.R. Sidebore Limited
Partnership beneficially owned by Mr. Siff.
(9) Includes 5,136,156 shares of common stock owned by Lantern Partners LLC,
of which Leonard Tow is the sole member. Claire Tow is the wife of Leonard
Tow. These shares of common stock are included in the above table for
Leonard Tow and Claire Tow as required by the definition of beneficial
ownership in Rule
2
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13d-3 under the Securities Exchange Act of 1934. Therefore each of Leonard
Tow and Claire Tow is deemed to have a beneficial interest in these
5,136,156 shares of our common stock. Claire and Leonard Tow have shared
voting and investment power with respect to the 5,136,156 shares of our
common stock owned by Lantern Partners LLC. Except to the extent of this
interest, both Leonard Tow and Claire Tow disclaim beneficial ownership of
any of these shares of our common stock.
(10) Includes 18,607 shares of common stock held by Claire Tow as custodian for
her minor grandchildren; 1,405,722 shares of common stock owned by her
husband, Leonard Tow; and 2,038 shares of common stock held in an
individual retirement account for the benefit of her husband, Leonard Tow.
Claire Tow disclaims beneficial ownership of all of these shares.
(11) Includes 3,504,776 shares of common stock acquirable by Leonard Tow within
60 days. Claire Tow disclaims beneficial ownership of all of these shares.
(12) Includes 18,607 shares of common stock held by his wife, Claire Tow, as
custodian for her minor grandchildren and 88,068 acquirable by Claire Tow
within 60 days; and 1,590 shares of common stock held in an individual
retirement account for the benefit of his wife, Claire Tow. Leonard Tow
disclaims beneficial ownership of all of these shares.
(13) Includes 88,068 shares of common stock acquirable by Claire Tow within 60
days. Leonard Tow disclaims beneficial ownership of all of these shares.
ELECTION OF DIRECTORS
At the meeting, 11 directors are to be elected to hold office until the
next annual meeting and until their successors have been elected and qualified.
All of the nominees are currently serving as our directors. Directors will be
elected by a plurality of the votes of the holders of shares of common stock,
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 of
these nominees 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 to us by
the nominees. Leonard Tow and Claire Tow are husband and wife. There are no
other family relationships between any of the nominees.
<TABLE>
<S> <C> <C>
Norman I. Botwinik President, Botwinik Brothers, Inc., machine tool Director Since 1968
sales, 1957-1983; Director, Executive Re, Inc.
1990-1993; and Director Emeritus, Board of
Governors, University of New Haven. Age 83.
Aaron I. Fleischman Senior Partner of Fleischman and Walsh, L.L.P., a Director since 1989
Washington, DC law firm specializing in regulatory,
corporate-securities, legislative and litigation matters
for telecommunications, regulated utility and
transportation companies, since 1976. Director,
Southern Union Company. Age 61.
Stanley Harfenist President and Chief Executive Officer of Adesso, Director since 1992
Inc., manufacturer of hardware for the Macintosh
computer, 1993 through 1999; President, Chief
Operating 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.
Director of ELI. Age 68.
</TABLE>
3
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<TABLE>
<S> <C> <C>
Andrew N. Heine Private investor; Of Counsel, Gordon Altman Director since 1975
Butowsky Weitzen Shalov & Wein, September 1995
to December 1999; practicing attorney/investor,
1989 to present; Of Counsel, Curtis Mallet-Prevost,
Colt & Mosle, October 1987 to 1989; Director, FPA
Group. Age 71.
John L. Schroeder Director, Morgan Stanley Dean Witter Funds, 1994 Director since 1980
to present; Executive Vice President and Chief
Investment Officer, The Home Insurance Company,
1991 to 1995; Chairman of the Board and Chief
Investment Officer, Axe-Houghton Management,
Inc., and Axe-Houghton Funds, 1983 to 1990;
Chartered Financial Analyst. Age 69.
Robert D. Siff Consultant, Regional Banks, 1987 to 1999; Director, Director since 1989
Century Communications Corp. 1987 to 1997.
Age 75.
Robert A. Stanger Chairman, Robert A. Stanger & Company, Director since 1992
investment banking and consulting services, 1978 to
present; Publisher, The Stanger Report; Director,
Callon Petroleum Company, Inc., exploration and
production of oil and natural gas; Director, ELI.
Age 60.
Charles H. Symington, Jr. Director, NASDAQ Stock Market Education Director since 1995
Foundation 1994 to present; until 1997, Director,
S.G. Warburg & Co., Inc., an investment bank and
Director, Camping World, Inc.; until 1998, Director
INA Life Insurance Company (a subsidiary of
Cigna); and until May 1999, Director, 3i
Corporation, an investment company. Age 69.
Edwin Tornberg President and Director, Edwin Tornberg & Company, Director since 1992
brokers, management consultants and appraisers
serving the communications industry, 1957 to
present. President and Director, Radio 780, Inc.
(Washington, DC), 1977 to present. Vice President
and Director, Radio One Five Hundred, Inc.
(Indianapolis, IN.), 1959 to present. Chairman and
Director, New World Radio Inc. (Washington, DC),
1992 to present. Chairman, Treasurer and Director,
Global Radio, LLC. (Philadelphia, PA), 1997 to
present, Chairman and Director, Nations Radio LLC
(Annapolis, MD) since 1999. Age 74.
Claire L. Tow Until October 1999 Senior Vice President since Director since 1993
1992 and Vice President and Director since 1988 of
Century Communications Corp., a cable television
company. Age 69.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
Leonard Tow Chairman and Chief Executive Officer, Citizens Director since 1989
Utilities Company, 1990 to present; Chief Financial
Officer, 1991 to 1997. Chief Executive Officer and
Director of Century Communications Corp., a cable
television company, since its organization in 1973 to
October 1999, and Chairman of the Board 1989 to
October of 1999 and Chief Financial Officer, 1973
to 1996; Chairman of the Board, ELI. Director,
Hungarian Telephone and Cable Corp. Director,
United States Telephone Association. Age 71.
</TABLE>
Our board of directors recommends that you vote "for" the election of all
nominees for director.
The board of directors held 11 meetings in 1999. Each director attended at
least 75% of the aggregate of these meetings and the total number of meetings
held by all committees of the board on which he or she served as described
below under "Committees of the Board."
Committees of the Board
The board has standing Executive, Audit, Compensation, Management
Oversight, Nominating and Retirement Plan Committees.
Executive Committee. Our Executive Committee is composed of Dr. Tow as
Chairman and Messrs. Harfenist, Fleischman and Stanger. The committee did not
meet in 1999. During intervals between meetings of the board, the Executive
Committee has the power and authority of the board over the management of our
business affairs and property, except for powers specifically reserved by
Delaware law or by our Restated Certificate of Incorporation.
Audit Committee. Our Audit Committee is composed of Mr. Heine as Chairman
and Messrs. Schroeder, Siff, Stanger and Symington. The committee met four
times in 1999. 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. The
committee discusses and reviews, with management and the independent
accountants, our draft annual report on Form 10-K and other major accounting,
reporting and audit matters. The committee also has oversight over our Internal
Audit Department.
Compensation Committee. The Compensation Committee is composed of Mr.
Stanger as Chairman and Messrs. Botwinik, Harfenist, Symington and Tornberg.
The committee met six times in 1999. The Committee reviews our general
compensation strategies, acts as the Committee for Citizens Incentive Plan, the
Management Equity Incentive Plan, the Equity Incentive Plan, the Employee Stock
Purchase Plan and the Non-Employee Directors Deferred Fee Equity Plan and
establishes and reviews compensation for our Chief Executive Officer and other
executive officers.
Management Oversight Committee. The Management Oversight Committee is
chaired by Mrs. Tow and Messrs. Harfenist and Siff are its other members. Its
function is to foster a high level of cooperation and exchange among members of
the management team. The committee held its first meeting in early 2000.
Nominating Committee. The Nominating Committee is chaired by Mr.
Harfenist, and Messrs. Botwinik and Fleischman are its other members. In 1999,
the committee did not meet. The committee's function is to recommend candidates
for election to the board of directors. The Nominating Committee will entertain
written suggestions for nominees from stockholders so long as they are
addressed to Mr. Harfenist at our address, on or before the date specified
under "Stockholder Proposals" and include a description of the qualifications
of the suggested nominee and any information that is required by the
regulations of the Securities and Exchange Commission concerning the suggested
nominee and his or her direct or indirect securities holdings, or other
interests, in us.
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<PAGE>
Retirement Plan Committee. The Retirement Plan Committee is composed of
Mr. Schroeder as Chairman and Mrs. Tow and Messrs. Botwinik, Symington and
Tornberg. The committee oversees our retirement plans. The committee met three
times in 1999.
DIRECTORS' COMPENSATION
Each non-employee director is entitled to a $30,000 annual retainer and
fee of $2,000 plus reasonable expenses for each board meeting attended in
person and $1,000 for each board meeting attended by telephone. Committee
chairs of the Audit and Compensation Committees are paid a fee of $4,000,
chairs of the other committees a fee of $2,000, and committee members $1,000
for each meeting attended. All of these fees are payable in cash and are
eligible for deferral until termination of service. Prior to 2000, directors
fees were also payable, at the election of the directors, and in whole or in
part, in stock options or stock plan units acquired under the Non-Employee
Directors' Deferred Fee Equity Plan. Beginning in 2000, a director may elect to
have either 50% or 100% of his compensation payable in shares of our common
stock or stock units. If a director elects compensation payable in shares of
our common stock, those shares will be purchased at the average of the high and
low prices on the first trading date of the year in which they are earned,
subject to adjustment. If a director elects payment of his compensation in
stock units, those units will be purchased at 85% of the average of the high
and low prices on the first trading day of the year in which they are earned,
subject to adjustment. These stock units which are payable either in cash or in
shares of our common stock as per the director's irrevocable election will be
held by us until the earlier of the director's retirement or death at which
time they will be paid to the director in accordance with his or her election.
Directors will continue to receive an annual stock option award under the
Non-Employee Directors' Deferred Fee Equity Plan which is currently fixed at
5,000 shares.
Until May 31, 1999, directors who had completed five years of service
became participants in the Directors' Retirement Plan. At termination of
service, a participant received benefits for a term of years following the
termination of directorship 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 was payable over a
period of years equal to a participant's years of service or was paid in a
discounted lump sum at the participant's election. Effective May 31, 1999, the
Directors' Retirement Plan was terminated and each of our incumbent
non-employee directors was awarded a number of stock units based on the present
value of his or her expected monthly retirement benefit divided by the average
of the high and low sales prices of our common stock on the New York Stock
Exchange on May 31, 1999. These stock units are non-transferable and
non-convertible before a director's retirement, death or termination as a
director. On the retirement date, a director's stock units are convertible into
either (a) if the director made no election prior to July 15, 1999, cash based
on the fair market value of our common stock on the retirement date, (b) if the
director elected prior to July 15, 1999 to receive an annuity, an annuity
payable over 5 years in 5 equal installments plus applicable interest or (c) if
the director elected before July 15, 1999 to receive shares of common stock,
shares of our common stock on the basis of one share of common stock for each
unit.
At this time, Messrs. Stanger and Harfenist are non-employee directors of
both us and ELI. Directors who are also our employees or employees of ELI are
not entitled to receive compensation for services rendered as directors. Each
director of ELI who is not our employee or an employee of ELI is entitled to
receive an annual retainer of $30,000, an additional $1,000 plus reasonable
expenses for attending each meeting of the ELI board of directors, or committee
meeting and $2,000 for each meeting for which that director serves as chairman.
All of these fees are payable in shares of Class A Common Stock of ELI, cash or
stock units representing Class A Common Stock of ELI similar to those stock
units representing our common stock for our directors' compensation described
above. Each director of ELI who is not our employee or an employee of ELI will
also receive an annual grant of options for 7,500 shares of Class A Common
Stock of ELI, exercisable at an exercise price per share equal to the market
price of the Class A Common Stock on the first trading day of each year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the board of directors is composed of five
independent directors who are responsible for setting and administering
compensation, including base salaries, annual incentives and
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<PAGE>
stock-based awards paid or awarded to our executive officers. The Compensation
Committee oversees and approves incentive plan design, costs and
administration. This report discusses the Compensation Committee's activities
as well as its development and implementation of policies regarding
compensation paid to our executive officers for 1999.
COMPENSATION OF THE EXECUTIVE GROUP
This section discusses our 1999 strategy for our compensation program. The
compensation of our Chief Executive Officer is discussed separately in this
report.
COMPENSATION STRATEGY
The compensation committee's executive compensation policy has the
following objectives:
o To align the interests of our executives and other key employees with
those of our customers, shareholders, employees and our strategic
objectives.
o To link compensation of executives to our performance.
o To competitively compensate executives by matching the diverse businesses
we operate in with a diverse portfolio of compensation and benefits so
that we can attract, motivate and retain executives of outstanding
ability.
o To target base salaries at about the 50th percentile and total annual
cash incentive between the 50th and 75th percentile for each executive as
compared to his or her industry-specific peers.
o To offer significant levels of at-risk compensation in the form of stock
options and/or restricted and performance share grants so that the
long-term rewards available to our executive officers will have a direct
correlation to shareholder value.
Base Salary
The compensation committee reviews recommendations and sets the salary
levels of executive officers in the spring of each year. This review is based
on the duties and responsibilities which we expect each executive to discharge
during the current year and upon the executive's performance during the
previous year. We perform external market comparisons, relative to
industry-specific peers, based on individual job responsibility.
Annual Cash Incentives
To retain and incent employees, the Citizens Incentive Plan offers a
competitive mix of total cash compensation relative to comparable industry
norms. Under the Citizens Incentive Plan, target incentives are assigned for
each salary grade based on a continuous analysis of incentive pay practices in
the various industries in which we operate. The Citizens Incentive Plan
criteria are financial performance and individual performance, each of which is
assigned a relative weight. For 1999, the Public Services Sector had one
additional measure which was safety. Goals are established no later than the
first quarter of the year for the full year. The plan criteria may be revised
each year to reflect changes in our business strategy.
The Citizens Incentive Plan has a voluntary deferral option for employees
deemed to be highly compensated under Department of Labor guidelines. These
employees can elect to defer all or part of their cash incentives each year
into an interest-bearing account.
1998 Annual Cash Incentive Awarded in 1999
The annual at-risk incentives approved by the compensation committee in
March 1999 were based on 1998 performance. We achieved our financial goals and
overall the incentive pools were funded at 102.5% of the total target pool.
1,516 employees received Citizens Incentive Plan awards, representing 99% of
the employees eligible to receive an award.
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<PAGE>
1999 Annual Cash Incentive Awards - Other Cash Incentives
The compensation committee will consider awards for 1999 performance in
the spring of 2000.
For 2000 performance, the sole criterion for awards under the Citizens
Incentive Plan criteria will be financial performance. The financial measures
that will be used to determine payout are revenue and Earnings Before Interest,
Taxes, Depreciation and Amortization (EBITDA).
In May of 1999, we announced our intention to divest of our public
services operations instead of separating into two companies. In August of
1999, the Board of Directors approved the divestiture. As a result, an
officer's cash retention incentive designed originally to secure commitment
through separation was modified to secure commitment through the end of 1999.
We awarded these retention incentive bonuses on January 15, 2000.
Common Stock Long-Term Incentives
The purpose of the Equity Incentive Plan is to provide common
stock-related compensation to ensure that we can effectively attract, motivate
and retain executives and employees in our business sectors. Stock options
awarded in 1999 were granted in accordance with the Equity Incentive Plan. All
stock options awarded are non-qualified, awarded at fair market value, and vest
over a period of three years.
Within the Equity Incentive Plan, there are two separate award programs,
the Management Stock Option Plan and the Outstanding Citizen Award. The
Management Stock Option Plan is designed to grant stock options to executives
and other key management employees for individual contributions toward
achievement of goals. Target awards are based on salary grade and are designed
to compensate our employees within the range of 50% to 150% of the long-term
incentive compensation of companies in comparable industries based on
individual performance.
The Outstanding Citizen Award is designed to recognize and reward key
employees below the management level who are considered to have high potential
and who have made significant contributions. The target award is 1,500 stock
options and recommendations are designed to be within the range of 750 to 2,500
options. Recommendations are at the discretion of the employee's manager.
In April 1999, the compensation committee granted stock option awards to
206 executives/managers under the Management Stock Option Plan. 583 employees
received stock option awards under the Outstanding Citizen Award, representing
14.1% of the eligible employees.
The compensation committee amended the terms of the performance shares
that were granted to certain executive officers on October 19, 1998 in
connection with our previously announced separation plans to reflect the change
in our business strategy from separation to divestiture. These performance
shares have vested because we have achieved the EBITDA goal for the 15-month
period from October 1, 1998 through December 31, 1999.
The compensation committee will consider Equity Incentive Plan awards for
1999 performance in the spring of 2000.
Other
The compensation committee approves terms of employment offers to new
executive and other officers.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The employment agreement dated July, 1996 between Dr. Tow and us
establishes the base annual salary of $900,000 and other items included in the
"Other Annual Compensation" and "All Other Compensation" columns in the Summary
Compensation Table or referred to under the caption "Employment Agreement."
In 1999, in lieu of an Annual Cash Incentive for 1998 performance, the
Compensation Committee agreed to award Dr. Tow 225,000 shares of our common
stock which will be awarded on January 1 of the year after his retirement. Dr.
Tow was also awarded 350,000 stock options on March 29, 1999.
The Compensation Committee will consider the Annual Cash Incentive and
Equity Incentive Plan for 1999 performance in the spring of 2000.
8
<PAGE>
In reviewing Dr. Tow's incentive compensation for 1999, the compensation
committee also will consider the implementation of our long-term objectives as
established by the board of directors. Principal among these is the mandate to
expand and enlarge the scope and size of our communications activities through
acquisitions, viewed by the board as vital to our success. The employment
agreement referred to in this section is summarized in a later section of the
proxy statement under the heading "Employment Agreement".
Compliance with Internal Revenue Code Section 162(m)
The compensation committee has been advised that the compensation paid to
the named executive officers in 1999, including the Chief Executive Officer,
met the conditions required for full deductibility under Section 162(m) of the
Internal Revenue Code. Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the company's chief executive officer or any of the four other most
highly compensated executive officers. Section 162(m) provides that qualifying
performance-based compensation will not be subject to the tax deduction limit
if certain requirements are met. The compensation committee has been advised
that Section 162(m) does not apply to stock options outstanding as of December
31, 1999. The Company currently structures grants under stock-based programs in
a manner that provides for an exemption from Section 162(m). Outstanding awards
made under the Citizens Incentive Plan which, in conjunction with other
outstanding compensation paid in 1999, could have caused the Section 162(m)
limitation to be exceeded have been structured so they should be exempt from
Section 162(m) by reason of the deferral of payment until after the retirement
of the covered executive officer. Awards made under the Citizens Incentive Plan
to Dr. Tow, in conjunction with other compensation expected to be payable in
2000, may cause the Section 162(m) limitation to be exceeded for that year. If
the Chief Executive Officer's employment terminates prior to the end of the
term of employment, payments required to be made to him are expected to exceed
$1 million but, depending on the year of payment and depending on deferral
arrangements, may not be subject to the limitation on tax deductibility. The
compensation committee recognizes that, in certain instances, it may be in our
best interests to provide compensation that is not deductible.
Robert Stanger, Chairman
Norman I. Botwinik
Stanley Harfenist
Charles H. Symington, Jr.
Edwin Tornberg
EMPLOYMENT AGREEMENT
In 1996 we and Dr. Tow entered into a new employment agreement which
replaced the then effective 1990 employment agreement. The following
constitutes a summary of certain of the provisions of the 1996 agreement. The
1996 agreement provides for Dr. Tow's service as our Chairman and Chief
Executive Officer for the term of employment, January 1, 1997 through the end
of 2000, and as a consultant for an additional five-year advisory period. Dr.
Tow has agreed to accept an annual base salary of $900,000 for the term, which
is substantially reduced from his 1996 base salary under the 1990 employment
agreement, and to accept more of his remuneration in risk-based compensation.
After the term he will receive compensation for advisory services at one-half
of his former base salary. If employment terminates for any reason, except for
termination by us for good cause or voluntary resignation by Dr. Tow, he will
receive a commuted lump sum equivalent to 150% of his base salary for the
remainder of the term and 100% of cash compensation during the advisory period,
as well as the annual bonuses and benefit plan contributions for the remainder
of the term, and all then existing benefits including share-based compensation.
If Dr. Tow terminates employment because of a breach of the 1996 agreement by
us, he will receive $1 million. Dr. Tow is eligible to participate in all
employee benefit and compensation plans.
The 1996 agreement included a performance share grant of 500,000 shares of
common stock which shares are restricted. Restrictions on transfer will lapse
at the end of the term, or upon death, earlier termination of employment or
certain corporate events. If employment ends at the end of 2000, or through
resignation by Dr. Tow or termination by us for good cause, and there has been
no increase in EBIDTA, as defined in the 1996 agreement, for the year of
termination compared to 1996, the performance shares will be canceled, or, if
the increase in EBIDTA for the year of termination compared to that for 1996 is
less than the performance goals,
9
<PAGE>
the shares will be reduced under a formula. In the event that Dr. Tow's
entitlements are deemed to constitute excess parachute payments for tax
purposes, we will pay any taxes resulting to him. His employee and retirement
benefits are nonforfeitable except in certain circumstances which are
materially detrimental to us. In lieu of supplemental pension and retirement
benefits designed to reflect the extension of the period during which Dr. Tow
will render services, the 1996 agreement provides for life insurance coverage
of $7,500,000, or equivalent, provided through a program of split-dollar
arrangements payable to his estate or family or a trust for their
benefit, in addition to that provided under the 1990 employment agreement. In
addition, a $3,000,000 first-to-die split-dollar policy required by the 1990
employment agreement was converted to a $6,000,000 second-to-die policy which
will permit us to recover our costs. All of the insurance arrangements
purchased by us have been structured so that all of our costs, including the
time value of funds, in providing such benefits should be recovered from
insurance proceeds. Dr. Tow and his wife during their lifetimes will continue
to participate in our health and other benefit plans, and, after his retirement
from full-time employment, we will provide offices and support staff.
If a threatened or actual change of control, as defined in the 1996
agreement, occurs, which includes, among other events, the acquisition by a
person or group of 9% or more of our voting securities and certain changes in
the board of directors, Dr. Tow will thereafter have the option exercisable by
notice to us to acquire up to 6,000,000 shares of common stock at a price per
share equal to the fair market value of the stock on the date notice is given.
All shares covered by the 1996 Agreement will be adjusted to reflect the
occurrence after June 27, 1996 of stock dividends, stock splits, or new
issuances to holders of common stock of options, warrants, rights to acquire
additional shares, or similar events.
EXECUTIVE RETIREMENT AGREEMENT
In connection with Dr. Ferguson's retirement as our President and Chief
Operating Officer and as Vice Chairman and Chief Executive Officer of ELI, we
and ELI entered into an executive retirement agreement dated as of October 12,
1999 with Dr. Ferguson. Under the terms of this executive retirement agreement,
Dr. Ferguson remained our employee through December 31, 1999. We have agreed to
retain Dr. Ferguson as a consultant and to pay him $185,000 annually for each
of the years 2000, 2001, 2002 and 2003. Under the terms of his retirement
agreement, all of the stock options granted to Dr. Ferguson vested on October
12, 1999, and all of the restrictions on the restricted stock granted to Dr.
Ferguson under our Equity Incentive Plan lapsed on October 12, 1999. All
performance goals prerequisite to the lapse of such restrictions (other than
the performance goals relating to any grants of restricted performance shares
to be granted for calendar year 1999 performance) are deemed to have been met.
For the purposes of Dr. Ferguson's Split Dollar Death Benefit, December
31, 1999 will be deemed to be Dr. Ferguson's normal retirement date. Dr.
Ferguson's death benefit is deemed to be $4,000,000, and he has elected to
receive this amount in equal quarterly installments of $66,666 over a 15-year
period with payments to begin on December 3, 2003 (Dr. Ferguson's 65th
birthday). In the event that Dr. Ferguson dies before all of these payments are
made, the remaining payments must be paid to his wife and if Dr. Ferguson's
wife also dies before all of the payments are made, the remaining balance will
be paid in one lump sum to Dr. Ferguson's estate.
On April 1, 2000, Dr. Ferguson is entitled to receive approximately
$160,000 plus accrued interest from June 30, 1999 in satisfaction of our
matching obligation under our Executive Deferred Savings Plan. On January 2,
2000, we paid Dr. Ferguson $351,086 to satisfy our obligations to him under our
Pension Plan. Dr. Ferguson is also entitled to be paid the full amount of his
credited balance of approximately $3 million in our Citizens Incentive Plan.
In fulfillment of certain retention commitments for key employees made in
connection with the divestiture of our public services businesses, Dr. Ferguson
was paid $225,000.
From January 1, 2000 until the earlier of Dr. Ferguson's death or his
reaching the age of 65, we will provide Dr. Ferguson with medical benefits
equivalent to those we provide to our officers under our then existing medical
insurance plan. Once Dr. Ferguson dies or reaches age 65, Dr. Ferguson's wife
will be entitled to participate (at her sole cost and expense) in our medical
insurance plan until she reaches age 65 or sooner dies.
10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth, for services rendered to us and our
subsidiaries for each of the fiscal years ended December 31, 1999, 1998 and
1997, the compensation awarded to, earned by or paid to (i) our Chief Executive
Officer; (ii) the four other most highly compensated executive officers for
1999 who were serving as our executive officers on December 31, 1999; and (iii)
two other individuals who would have been included in (ii) above but for the
fact that they were no longer serving as our executive officers on December 31,
1999.
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------------
Other
Annual
Name and Position Year Salary Bonus(1) Compensation
- -------------------------- ------ ----------- ------------------- ----------------
<S> <C> <C> <C> <C>
L. Tow ................... 1999 $900,000 $ -- $ 0
C.E.O. and 1998 900,000 0 0
Chairman 1997 900,000 0 140,837(8)
D.A. Ferguson(11) ........ 1999 $479,765 $ -- $ 0
Former C.O.O. 1998 439,583 550,000 0
And President 1997 414,585 0 11,683
D.B. Sharkey(12) ......... 1999 $259,375 $ 203,438(13) $ 0
Vice President 1998 229,167 150,000(13) 0
And President, 1997 183,333 100,000(13) 0
Electric Lightwave,
Inc.
J. Michael Love .......... 1999 $211,250 $ -- $ 0
Vice President- 1998 193,750 118,000 0
President of 1997 183,958 50,000 0
Public Services
Sector
R.J. DeSantis ............ 1999 $205,250 $ -- $ 0
Chief Financial 1998 195,833 97,800 0
Officer, Vice 1997 167,083 33,000 0
President and
Treasurer
L. Russell Mitten ........ 1999 $200,100 $ -- $ 0
Vice President 1998 191,750 97,700 0
and General 1997 184,200 27,000 0
Counsel
O. Lee Jobe .............. 1999 $169,455 $ -- $ 0
Former Vice 1998 269,765 160,000 0
President- 1997 162,930 55,000 0
Communications
Sector
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long-term Compensation
--------------------------------------
Awards Payouts
------------ ----------
Securities
Underlying Long-term
Restricted Options/ Incentive
Stock SARs Plan All Other
Name and Position Awards (#)(2) Payouts Compensation
- -------------------------- ------------ ------------ ---------- ---------------------------------
<S> <C> <C> <C> <C>
L. Tow ................... $ (3) 350,000 $0 $ 162,631(4)(5)
C.E.O. and (3) -- 0 333,377(6)(7)
Chairman (9) 208,127 0 27,000(10)
D.A. Ferguson(11) ........ $ (3) 225,000 $0 $ 2,844,478(4)(9)(11)
Former C.O.O. (3) -- 0 91,250(6)
And President (9) 140,486 0 85,879(10)
D.B. Sharkey(12) ......... $ (3) -- $0 $ 32,295(4)
Vice President (3) -- 0 33,759(6)
And President, (9) 41,625 0 30,036(10)
Electric Lightwave,
Inc.
J. Michael Love .......... $ (3) 57,200 $0 $ 61,969(4)
Vice President- (3) 46,019 0 54,976(6)
President of 36,421 0 52,231(10)
Public Services
Sector
R.J. DeSantis ............ $ (3) 55,300 $0 $ 23,287(4)
Chief Financial (3) 40,906 0 59,491(6)
Officer, Vice 41,625 0 56,212(10)
President and
Treasurer
L. Russell Mitten ........ $ (3) 44,800 $0 $ 9,037(4)
Vice President (3) 35,792 0 66,043(6)
and General 31,218 0 62,716(10)
Counsel
O. Lee Jobe .............. $ (3) 140,400 $0 $ 7,134(4)
Former Vice (14) 51,133 0 60,892(6)
President- 46,019 0 39,706(15)
Communications
Sector
</TABLE>
- ------------
(1) All amounts in the column, unless otherwise indicated, were paid under the
Citizens Incentive Plan for 1998 and 1997. Amounts granted are for
performance for the stated Salary Year, but are determined and awarded in
the subsequent year. Awards for 1999 will be considered by the
Compensation Committee in the spring of 2000.
(2) Number of shares underlying options adjusted to reflect subsequent stock
dividends. All awards shown are options; we have not awarded any SARs.
(3) On October 19, 1998, Drs. Tow and Ferguson were granted 141,655 and 70,828
performance shares, respectively, and Messrs. Love, DeSantis, Mitten and
Jobe were granted 31,535, 31,535, 30,729 and 43,323 performance shares,
respectively. As of December 31, 1999, the total number of restricted or
performance shares held by each of Drs. Tow and Messrs. Love, DeSantis and
Mitten were 701,629, 31,535, 31,535 and
11
<PAGE>
30,729, respectively, with a market value as of December 31, 1999 of
$9,954,361, $447,403, $447,403 and $435,968, respectively. Performance
shares granted on October 19, 1998 have vested because we have achieved the
EBITDA goal for the period of October 1, 1998 through December 31, 1999. The
goal consisted of EBITDA targets for the Communications and Public Services
sectors and did not include ELI. The performance goals with respect to the
70,828 performance shares granted to Dr. Ferguson are deemed to have been
met under the terms of his retirement agreement. The market value on
December 31, 1999 of the performance shares granted to Dr. Ferguson was
$1,004,872. See footnote 11 to the Summary Compensation Table. Performance
shares granted to Dr. Tow on July 11, 1996 will vest on January 1, 2001 if a
specified EBITDA goal is attained. Recipients of performance shares have the
right to vote and receive dividends, if paid, on such shares.
(4) Represents our matching contribution to each named executive officer's
401(k) plan ($4,800 for each named executive officer, except for Mr. Love
whose matching contribution was $2,309.39) and for Dr. Tow, Dr. Ferguson and
Mr. DeSantis also represents the matching contribution to our executive
Deferred Savings Plan of $22,200, $5,958 and $250, respectively.
Additionally, $148,414, $27,495, $59,660, $18,487, $4,237 and $2,334,
represent the 1999 economic benefit of split dollar life insurance for Dr.
Ferguson and Messrs. Sharkey, Love, DeSantis, Mitten and Jobe, respectively.
There was no economic benefit of split-dollar life insurance for Dr. Tow in
1999. We used the premium ratio method to calculate the economic benefit of
split dollar life insurance for 1999. We calculated the economic benefit of
split dollar life insurance for 1998 and 1997 that is set forth in footnotes
(6) and (10) to the Summary Compensation Table using the adjusted prorated
unit credit method.
(5) $135,631 of this amount represents the pretax cost to us under Dr. Tow's
employment agreement of the term portion of split-dollar insurance
arrangements. See footnote 7 to the Summary Compensation Table and
"Employment Agreement."
(6) Represents our matching contribution to each named executive officer's
401(k) and also represents the matching contribution to our executive
Deferred Savings Plan of $22,500, $5,958 and $250 for Dr. Tow, Dr.
Ferguson and Mr. DeSantis, respectively. Additionally, $80,292, $28,759.
$52,663, $54,241, $61,249 and $55,892, respectively, represent the 1998
economic benefit of split-dollar life insurance for Dr. Ferguson and
Messrs. Sharkey, Love, DeSantis, Mitten and Jobe. There was no economic
benefit of split-dollar life insurance for Dr. Tow in 1998.
(7) $305,877 of this amount represents the pretax cost to us under Dr. Tow's
employment agreements of the term portion of split-dollar insurance
arrangements for the three year period commencing with 1995. The
split-dollar insurance arrangements are required under the Memorandum of
Understanding entered into on June 21, 1996 that led to the settlement of
certain stockholder litigation as a substitution for supplemental retirement
benefits which resulted in a reversal of accruals as previously reported.
The insurance arrangements purchased by us have been structured so that all
of our costs, including the time value of funds, in providing such benefits
should be recovered from insurance proceeds. See "Employment Agreement."
(8) $50,000 of the amount shown in this column for 1997 represents payment for
expenses pursuant to Dr. Tow's employment agreement; $90,837 for 1997
represents reimbursement pursuant to his employment agreement of legal and
accounting fees incurred by Dr. Tow in 1994-1996.
(9) In connection with the ELI IPO, on November 24, 1997 each of Drs. Tow and
Ferguson and Mr. Sharkey was granted 125,000 restricted performance shares
of Class A Common Stock of ELI. As of December 31, 1999, the total number
of performance shares of Common Stock of ELI granted to each of Drs. Tow
and Ferguson and Mr. Sharkey was 125,000, with a market value as of
December 31, 1999 of $2,343,750. Two-thirds of the shares granted to Mr.
Sharkey have vested and the remaining one-third will vest on the later of
November 24, 2000 or the achievement of a specified twelve-month revenue
goal. The restrictions on Dr. Tow's 125,000 shares will lapse only if ELI
attains revenues of at least $170 million for the thirteen months ended June
30, 2001 or for any thirteen month period thereafter until January 2005. The
restrictions on all of Dr. Ferguson's shares have lapsed and the performance
criteria were deemed to have been met on January 1, 2000 under the terms of
Dr. Ferguson's retirement agreement. Recipients of restricted shares have
the right to vote and to receive dividends, if paid, on such shares.
12
<PAGE>
(10) Represents our matching contribution to each named executive officer's
401(k) plan and in the instance of Dr. Tow and Dr. Ferguson also
represents the matching contribution to our executive Deferred Savings
Plan of $22,250 and $4,958, respectively. Additionally, $76,179, $27,286,
$47,480, $51,462 and $58,111, respectively, represent the 1997 economic
benefit of split-dollar life insurance for Dr. Ferguson, Mr. Sharkey, Mr.
Love, Mr. DeSantis and Mr. Mitten. There was no economic benefit of
split-dollar life insurance for Dr. Tow in 1997.
(11) In connection with his early retirement, effective October 11, 1999 Dr.
Ferguson resigned as our President and Chief Operating Officer. Dr.
Ferguson remained an employee through December 31, 1999. As part of his
retirement package, on January 2, 2000 Dr. Ferguson received $2,759,513 in
additional compensation, which amount was reduced by applicable
withholding taxes. By the terms of his retirement agreement, all of the
options granted to Dr. Ferguson have vested and are exercisable for the
same exercise period that was applicable at the time of the awards or
grants of these options. All restrictions on restricted stock granted to
Dr. Ferguson under the Citizens Equity Incentive Plan lapsed on October
12, 1999. All performance goals prerequisite to the lapse of all such
restrictions are deemed to have been met. All restrictions on stock
granted under the Citizens Equity Incentive Plan lapsed on January 1,
2000.
(12) The full amount of Mr. Sharkey's compensation is attributable to services
rendered to ELI and is paid by or charged to ELI.
(13) Reflects amount paid by ELI in 1998 for 1997 performance, paid in 1999 for
1998 performance and paid in 2000 for 1999 performance.
(14) Mr. Jobe was granted restricted shares of common stock on June 30, 1997.
As of December 31, 1998, the number of restricted shares held by Mr. Jobe
pursuant to such grant was 12,612 shares, with a market value as of
December 31, 1998 of $100,896. The first half of these shares vested on
June 30, 1999. The remainder of such shares were cancelled upon
termination of Mr. Jobe's employment. Mr. Jobe had the right to vote and
to receive dividends, if paid, on such shares. For the aggregate market
value of restricted and performance shares held by Mr. Jobe as of December
31, 1999, see footnote 3 to the Summary Compensation Table. Mr. Jobe
resigned as of July 3, 1999.
(15) Represents moving expenses paid to Mr. Jobe in 1997.
1999 OPTION GRANTS
The following table sets forth certain information concerning all options
to purchase our common stock granted to named executive officers in 1999. No
stock appreciation rights were granted in 1999. Option totals are as of the
grant date.
<TABLE>
<CAPTION>
% of Total
Number of Securities Options/SARs Exercise
Underlying Granted to or Base Grant Date
Options/SARs Employees in Price Expiration Present
Name Granted(#)(1) Fiscal Year ($/Sh)(2) Date Value $(3)
- --------------------------- ---------------------- -------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
L. Tow .................... 350,000 8.45% 7.72 3/28/09 1,064,000
D. Ferguson ............... 225,000 5.44% 7.72 3/28/09 684,000
J. Michael Love ........... 57,200 1.38% 7.72 3/28/09 173,888
O. Lee Jobe ............... 140,400 3.39% 7.72 3/28/09 426,816
R.J. DeSantis ............. 55,300 1.34% 7.72 3/28/09 168,112
L. Russell Mitten ......... 44,800 1.08% 7.72 3/28/09 136,192
</TABLE>
- ------------
(1) All options become exercisable at the rate of 33.3% per year on March 29 of
2000, 2001 and 2002.
(2) These options were granted on March 29, 1999 and the exercise price is
$7.72.
(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may
realize will depend on the excess, if any, of the stock price over the
exercise price on the date the option is exercised, so that there is no
assurance the value realized, if any, by an executive will be at or near
the value estimated by the Black-Scholes model. The estimated values under
13
<PAGE>
that model are based on arbitrary assumptions as to variables such as
interest rates, stock price volatility and future dividend yield. The
pricing model assumes a dividend yield of 0.00%, a riskless rate of return
of 5.275%, a six-year term to exercise and volatility of 0.287059.
AGGREGATED 1999 OPTION EXERCISES AND VALUE OF
OUTSTANDING OPTIONS AT DECEMBER 31, 1999
The following table sets forth certain information concerning options
exercised by the named executive officers during 1999 and the number and value
of options held by them at December 31, 1999. There were no outstanding stock
appreciation rights at December 31, 1999.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-money
Options/SARs at Options/SARs at
Fiscal Year-End(#) Fiscal Year-End ($)
------------------------------ -----------------------------
Shares Acquired
On Exercise(#) Value
Name Common Stock Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ---------------- ---------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
L. Tow .................... 0 $ 0 3,388,110 463,308 10,685,139 2,816,255
D.A. Ferguson ............. 0 0 909,312 0 4,191,395 0
D.B. Sharkey .............. 7,000 20,797 60,799 17,579 233,395 92,015
J. Michael Love ........... 24,277 76,691 145,959 108,118 400,015 589,350
R. DeSantis ............... 0 0 250,072 105,642 1,410,092 646,175
L. Russell Mitten ......... 0 0 152,534 86,008 481,610 468,185
O. Lee Jobe ............... 35,959 82,351 0 0 0 0
</TABLE>
All numbers are as of December 31, 1999 and reflect adjustment for stock
splits and stock dividends paid subsequent to the date of grant. The closing
price of the common stock on the NYSE on December 31, 1999 was $14.1875 per
share. 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 our stock on the date of exercise. Under the terms of his
retirement agreement, all of Dr. Ferguson's options are vested and exercisable
as of October 12, 1999.
CITIZENS UTILITIES COMPANY PENSION PLAN
We have 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 year certain for those who became participants prior to
1976) available to all covered employees (other than Kauai Electric Division
employees, Louisiana Gas Division employees and certain telecommunications
bargaining unit employees covered by separate benefit formulas) upon a
participant's retirement at age 65 with a spouse age 62 or older. The table
also assumes a preretirement death 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 1999, this limit was $160,000. For this reason remuneration above
$160,000 has not been included in the table below.
Pension Plan Table
Remuneration
(in thousands) Years of Service
- ------------------- ----------------------------------------------
5 10 15 20 25 30
- -- -- -- -- --
$160 ............ $12 $25 $37 $49 $62 $74
The number of full years of credited service for individuals participating
in the plan and listed in the Summary Compensation Table are eight for Dr. Tow,
nine for Dr. Ferguson, five for Mr. Sharkey, fourteen for Mr. DeSantis, one for
Mr. Jobe, fifteen for Mr. Love and nine for Mr. Mitten. On January 2, 2000, we
paid Dr. Ferguson $351,086 to satisfy our obligations to him under our Pension
Plan.
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Mr. Stanger as Chairman
and Messrs. Botwinik, Harfenist, Symington and Tornberg. None of our executive
officers served as: (i) a member of the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served on our compensation committee; (ii) a director of
another entity, one of whose executive officers served on our compensation
committee; or (iii) a member of the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served as our director.
STOCK PRICE PERFORMANCE GRAPH
Cumulative Total Return
------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
CITIZENS UTILITIES COMPANY 100.00 108.15 98.01 90.20 77.24 136.99
DOW JONES INDUSTRIAL AVERAGE 100.00 136.95 176.26 220.11 260.01 330.75
DOW JONES UTILITIES AVERAGE 100.00 131.98 143.99 177.11 210.54 197.86
The chart above compares our common stock performance with the performance on
the Dow Jones Industrial Average Index and the Dow Jones Utilities Average
Index by valuing the annual changes in common stock prices from December 31,
1994 through December 31, 1999, as required by Securities and Exchange
Commission rules. The chart above assumes in each case an initial investment of
$100 on December 31, 1994 and that all quarterly dividends were reinvested at
the average of the closing stock prices at the beginning and end of the
quarter.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons holding more than 10% of a registered class of our equity
securities to file with the Securities and Exchange Commission and the New York
Stock Exchange initial reports of ownership, reports of changes in ownership
and annual reports of ownership of common stock and our other equity
securities. Such directors, officers, and 10% stockholders are also required to
furnish us with copies of all such filed reports.
Based solely upon a review of the copies of such reports furnished to us,
or representations that no reports were required, we believe that all of our
directors, executive officers and 10% shareholders timely filed all required
reports under Section 16(a) in 1999.
15
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AGREEMENTS WITH ELI
General
We own 100% of the outstanding Class B Common Stock of ELI, which
represents approximately 97% of the combined voting power of all of the
outstanding common stock of ELI. Leonard Tow, our Chairman of the Board and
Chief Executive Officer, is the Chairman of the Board of ELI. Rudy J. Graf, our
President and Chief Operating Officer as of October 11, 1999 became the Chief
Executive Officer and a director of ELI on November 23, 1999. Robert J.
DeSantis, our Chief Financial Officer, is Chief Financial Officer of ELI. David
B. Sharkey, one of our Vice Presidents and an executive officer, is the
President and Chief Operating Officer and a director of ELI, Scott N.
Schneider, our Executive Vice President is Executive Vice President and a
director of ELI. Stanley Harfenist and Robert Stanger, our directors, are also
directors of ELI.
Our relationship with ELI is governed by agreements entered into with ELI
in connection with its initial public offering, including an Administrative
Services Agreement, a Tax Sharing Agreement, an Indemnification Agreement, a
Customers and Service Agreement and a Registration Rights Agreement, the
material terms of which are described below.
Administrative Services Agreement
The Administrative Services Agreement provides for us to render certain
financial management services, information services, legal and contract
services, human resources services and corporate planning services to ELI.
Under the terms of the Administrative Services Agreement, all of the services
are rendered by us subject to the oversight, supervision and approval of ELI,
acting through its board of directors.
The administrative costs payable by ELI to us pursuant to the
Administrative Services Agreement are not expected to exceed the fees that
would be paid if such services were to be provided by an independent third
party.
The Administrative Services Agreement will terminate on December 31, 2005,
unless earlier terminated by us or by ELI. The Administrative Services
Agreement will be automatically renewed for additional terms of two years
unless either party gives at least six months' written notice before a
scheduled termination date. The Administrative Services Agreement can be
terminated upon a material breach and will be terminated upon a change of
control of ELI. Pursuant to the Administrative Services Agreement, $6,689,000
in fees were payable to us for 1999 by ELI, excluding reimbursements for costs.
Tax Sharing Agreement
As ELI is included in our consolidated income tax group, ELI's federal
income tax liability is included in the consolidated federal income tax
liability of us and our subsidiaries. ELI is also included with some
subsidiaries in combined, consolidated or unitary income tax groups for state
and local tax purposes. We and ELI are parties to a federal, state and local
tax-sharing agreement. Pursuant to the Tax Sharing Agreement, we and ELI make
payments between us such that, with respect to any period, the amount of taxes
to be paid by ELI, subject to certain adjustments, will generally be determined
as though ELI were to file separate federal, state and local income or
franchise tax returns (including, except as provided below, any amounts
determined to be due as a result of a re-determination of our tax liability
arising from an audit or otherwise). ELI is responsible for any tax liability
due any foreign jurisdiction arising from its business activities. The Tax
Sharing Agreement will remain in effect so long as any taxing jurisdiction
requires the filing of a combined tax return by both ELI and us.
We have sole and exclusive responsibility for (i) preparing any tax
returns (including amended returns or claims for refund) of ELI; (ii)
representing ELI with respect to any tax audit or tax contest; (iii) engaging
outside counsel and accountants with respect to tax matters regarding ELI; and
(iv) performing such other acts and duties with respect to ELI's tax returns as
we determine is appropriate. The amounts that ELI will pay under the
Administrative Services Agreement will encompass reimbursement to us for all
direct and indirect costs and expenses incurred with respect to ELI's share of
the overall costs and expenses incurred by us with respect to tax related
services.
16
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Each member of a consolidated group is jointly and severally liable for
the federal income tax liability of each other member of the consolidated
group. Accordingly, although the Tax Sharing Agreement allocates tax
liabilities between us and ELI, during the period in which ELI is included in
our consolidated group, ELI could be liable in the event that any federal tax
liability is incurred, but not discharged, by any other member of our
consolidated group.
Indemnification Agreement
We and ELI are parties to an indemnification agreement. The
Indemnification Agreement provides that ELI will indemnify us for any
liabilities incurred by us under any guarantees of ELI's obligations or
liabilities of ELI and that ELI will pay us for our direct costs, if any, of
maintaining such guarantees.
Registration Rights Agreement
We and ELI are parties to a Registration Rights Agreement. The
Registration Rights Agreement provides that, upon our request, ELI, at its
expense, will use its best efforts to effect the registration under the
applicable federal and state securities laws of any of the shares of common
stock (and any other securities issued in respect of or in exchange therefor)
held by us for sale in accordance with ELI's intended method of disposition
thereof and will take such other actions necessary to permit the sale thereof
in other jurisdictions, subject to certain specified limitations. We will also
have the right, at our expense, to include the shares of common stock held by
us in certain other registrations of common equity securities of ELI initiated
by ELI on its own behalf or on behalf of its other shareholders.
Customers and Service Agreement
We and ELI are parties to a Customers and Service Agreement. The Customers
and Service Agreement contains provisions prohibiting ELI from competing with
us for customers in our existing service areas and in certain new lower density
territories which we were or will be first to enter after ELI's initial public
offering. We have agreed that we will not compete with ELI in the service
territories in which we provided services prior to ELI's initial public
offering and in certain new higher density territories which ELI was or will be
first to provide services after ELI's initial public offering. Neither we nor
ELI may solicit an existing wholesale customer of the other company for
services which such customer is currently receiving under contract from the
other company. The relevant provisions were intended to permit ELI to continue
all activities in which it engaged prior to its initial public offering, and to
expand into related markets. The Customers and Service Agreement will remain in
effect until we cease to own a majority of the voting interest of the capital
stock of ELI or our designees cease to constitute a majority of ELI's
directors.
Citizens' Guarantees of ELI's Obligations
Lease
In June 1995, ELI entered into agreements to lease certain equipment to be
constructed for ELI. The lessor has agreed to commit up to a maximum of
$110,000,000 of the cost of purchasing and installing the equipment. Rental
obligations for the equipment commenced in June 1995, and, with renewal
options, will expire on April 30, 2002. We have guaranteed all obligations of
ELI under the Lease and ELI is required to pay us a guarantee fee of 3.25% per
year of the amount of the lessor's investment in the leased assets. At December
31, 1999, $110,000,000 was outstanding on the lease.
Credit Facility
On November 2, 1997, ELI entered into a five year, $400 million revolving
credit facility with Citibank, as agent for a group of lending banks. We have
agreed to guarantee all debt obligations under the credit facility. The credit
facility requires that we maintain a minimum net worth of at least $1 billion
and continue to own at least 51% of the outstanding common stock of ELI. ELI
has agreed to pay us a guarantee fee at a rate of 3.25% per year based on the
average balance outstanding. At December 31, 1999, ELI had outstanding loans
payable to Citibank in the amount of $260 million.
17
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ELI Senior Unsecured Notes
In April 1999, ELI completed an offering of $325 million of five-year
senior unsecured notes. The notes have an annual interest rate of 6.05% and
will mature on May 15, 2004. We have guaranteed the payment of principal, any
premium and interest on the notes when due. ELI has agreed to pay us a
guarantee fee at a rate of 4.0% per year based on the average outstanding
balance. At December 31, 1999, ELI had $325 million principal amount of these
notes outstanding.
For 1999, the amount payable to us by ELI was $19.8 million in fees for
guarantees to ELI under the lease, the revolving credit facility and the senior
unsecured notes.
Refinancing of Obligations
We and ELI have agreed that, if we intend to reduce our economic interest
in ELI to less than 51%, we will be entitled to request ELI to refinance its
obligations under the lease and the Credit Facility and ELI will be obligated
to use its best efforts to do so. This refinancing would occur when we reduce
our economic interest in ELI to less than 51%.
Telecommunications Services
Citizens Communications has transactions in the normal course of business
with ELI. Our communications segment is an Incumbent Local Exchange Carrier
("ILEC") in certain markets in which ELI provides services. In order to provide
services in those markets, ELI purchases access from our communications
segment. ELI is charged the full-tariff rate for those services, which was
$1,891,000 in 1999, representing usage-based charges for the services provided.
Our communications segment purchases certain services from ELI at prevailing
market rates. In 1999, ELI recognized revenue in the amount of $2,517,000 for
these related party transactions.
Network Capacity Lease
In 1996, ELI entered into an agreement to lease rights to fiber optic
lines on ELI's network to us over 10 years for a monthly fee of $30,000.
In 1999, ELI entered into an agreement to lease certain capacity on its
network to us over 20 years. Performance under this agreement begins when
services are activated during 2000. We paid ELI $6.5 million under this
agreement in 1999.
Other
In the future, additional transactions may occur and agreements may be
reached between us and ELI in a number of areas relating to their past and
ongoing relationships, including potential acquisitions of businesses or
properties or other corporate opportunities, potential competitive business
activities, payment of dividends, incurrence of indebtedness, guarantees, tax
matters, financial commitments, marketing functions, indemnity arrangements,
registration rights, administrative and services arrangements, and issuances or
sales of capital stock of ELI.
CERTAIN OTHER RELATIONSHIPS AND RELATED TRANSACTIONS
On October 1, 1999, Century Communications Corporation merged with
Adelphia Communications Corporation. Century was a cable television company of
which Leonard Tow, our Chairman and Chief Executive Officer, was Chairman and
Chief Executive Officer. In addition, Claire Tow, one of our directors, was a
Senior Vice President and a director of Century. We owned 1,807,095 shares of
Century Class A Common Stock. Under this merger agreement, our Century Class A
Common shares were exchanged for $10,832,000 in cash and 1,206,705 shares of
Adelphia Class A Common Stock (for a total market value of $79,600,000 based on
Adelphia's October 1, 1999 closing price of $57.00).
18
<PAGE>
One of our subsidiaries, in a joint venture with a subsidiary of Century,
owned and operated four cable television systems in southern California serving
over 90,000 basic subscribers. In July 1999, we entered into a separate
agreement with Adelphia to sell our interest in the joint venture. Under this
agreement on October 1, 1999, we received approximately $27,700,000 in cash and
1,852,302 shares of Adelphia Class A Common Stock (for a total market value of
$133,300,000 based on Adelphia's October 1, 1999 closing price of $57.00). In
addition, Adelphia has assumed our interest in the debt of the joint venture. A
management board on which we and Century were equally represented governed the
joint venture. A subsidiary of Century managed the day-to-day operations of the
systems.
Fleischman and Walsh LLP, of which Aaron Fleischman (a director) is Senior
Partner, performed legal services for us for which it was paid approximately
$1,422,298 in 1999. We propose to retain Fleischman and Walsh during the
current year.
APPROVAL OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION
Our board of directors is submitting for stockholder approval an amendment
to our Restated Certificate of Incorporation that will change our name to
Citizens Communications Company.
Recommendation and Vote Required
Our board of directors recommends a vote to amend our Restated Certificate
of Incorporation. Approval of the amendment to our Restated Certificate of
Incorporation requires the affirmative vote of holders of a majority of the
outstanding stock entitled to vote on the amendment at the annual meeting.
On February 22, 2000, our board of directors approved an amendment to
Article First of our Restated Certificate of Incorporation to change our name
from "Citizens Utilities Company" to "Citizens Communications Company" in order
to better reflect the nature of our activities as a communications business on
a going-forward basis as a result of our disposition of our public services
businesses that is currently in progress.
The board of directors has determined that it is in our best interests to
effect this name change. By approving this proposal, the stockholders will
authorize the board to amend our Restated Certificate of Incorporation to
reflect the name change. The amendment to the certificate of incorporation will
take the following form:
"Article First is hereby amended to read as follows:
1. The name of the corporation is
CITIZENS COMMUNICATIONS COMPANY
The date of filing of its original Certificate of Incorporation with the
Secretary of State was November 12, 1935."
We expect formal implementation of the name change with the Delaware
Secretary of State to be completed no later than May 30, 2000, after
stockholder approval. However, transitional uses of the name "Citizens
Utilities Company" may continue for several months in order to minimize the
risks of both vendor and customer confusion. Implementation costs during fiscal
year 2000 are not expected to be material.
GENERAL
Representatives of KPMG LLP, our 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.
OTHER MATTERS
Our management does not know of matters other than the foregoing that will
be presented for consideration at the meeting.
19
<PAGE>
STOCKHOLDER PROPOSALS
For proposals, if any, to be considered for inclusion in the proxy
materials for the 2000 annual meeting, they must be received by November 24,
2000. Under our Bylaws, if any stockholder intends to propose a nominee for
director or the adoption or approval of any other matter by the stockholders at
the annual meeting, the proponent must give written notice to us not earlier
than January 1, 2001 nor later than February 15, 2001.
The entire cost of soliciting management proxies will be borne by us.
Proxies will be solicited by mail and may be solicited personally by our
directors, officers or regular employees, who will not be compensated for these
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
20
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See Advance Registration Form on back cover.
21
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Citizens Utilities Company
2000 Annual Meeting of Stockholders
10:00 a.m., Central Time, May 18, 2000
Hilton Minneapolis Towers
Minneapolis, Minnesota
ADVANCE REGISTRATION FORM
(for registered stockholders only)*
Attendance at the Annual Meeting is limited to Citizens' stockholders, or their
authorized representatives, and our guests and employees. If you plan to attend
or send a representative to the Annual Meeting, please notify us by completing
the Advance Registration Form and mailing it, along with your proxy, in the
enclosed envelope, or by sending us an electronic mail message to
[email protected].
You may view this proxy statement and our Annual Report at the following
internet web site: www.onlineproxy.com/citizens/2000/index.asp. An Advance
Registration Form may be submitted (for registered stockholders only)* by
selecting the proxy statement, the Advanced Registration Form and then clicking
on the Submit button, once you have completed the Form.
Cut off at dotted line.
- --------------------------------------------------------------------------------
(Please type or print)
Stockholder's
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
City ------------------------------------- State ---------------- Zip ---------
I am a Citizens stockholder. I am sending the following person as my
representative:
- --------------------------------------------------------------------------------
(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>
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<S> <C> <C>
--------------
| BULK RATE |
CITIZENS UTILITIES COMPANY |U.S. POSTAGE|
C/O Illinois Stock Transfer Company | PAID |
209 West Jackson Blvd., Suite 903 | PERMIT #20 |
Chicago, Illinois 60606-6905 | SANFORD, ME|
| 04073 |
--------------
MAIL TO:
PROXY FOR CITIZENS UTILITIES COMPANY ANNUAL MEETING OF STOCKHOLDERS
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways: 1. By Internet
2. By telephone
3. By mail
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY INTERNET OR BY TELEPHONE, COMPLETE BOTH SIDES OF THE
---
PROXY CARD BELOW, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:
ILLINOIS STOCK TRANSFER CO.
209 WEST JACKSON BOULEVARD, SUITE 903
CHICAGO, ILLINOIS 60606
DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
CITIZENS UTILITIES COMPANY
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby appoints Andrew N. Heine, John L. Schroeder and Robert D. Siff 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 18, 2000, at 10:00 a.m., Central Daylight 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.
------------------------
| Voter Control Number | Signature: _______________________________________
| |
------------------------ Signature: _______________________________________
Date: _____________________________________, 2000
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" Proposal 1 and "For" Proposal 2.
VOTE BY INTERNET
</TABLE>
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<S> <C> <C> <C>
VOTE BY INTERNET
Voting by Internet is quick, confidential and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our Internet Voting Site at www.eproxyvote.com/ist-cuccb and follow the instructions on the screen.
----------------------------
3. When prompted for your Voter Control Number, enter the number printed in the box on the front of your proxy card.
Please note that votes cast by Internet must be submitted prior to midnight, CDT, Tuesday, May 16, 2000.
Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned
the proxy card.
IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL
- ------------------------------------------------------------------------------------------------------------------------------------
VOTE BY TELEPHONE
Voting by telephone is quick, confidential and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Using a Touch-Tone telephone, call toll free 1.800.555.8140 and follow the instructions.
3. When asked for your Voter Control Number, enter the number printed in the box on the front of your proxy card.
Please note that votes cast by telephone must be submitted prior to midnight, CDT, Tuesday, May 16, 2000.
Your telephone vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned
the proxy card.
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT RETURN YOUR PROXY BY MAIL
- ------------------------------------------------------------------------------------------------------------------------------------
VOTE BY MAIL
To vote by mail, complete both sides, sign and date the proxy card below. Detach the card and return it in the envelope provided.
If you plan to attend Citizens' Annual Meeting of Stockholders on May 18, 2000, complete the registration form on the back page of
the Proxy Statement and return it in the envelope provided.
THANK YOU FOR YOUR VOTE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 1 -- Election of Directors
Nominees:
For Withheld Norman I. Botwinik
___ ___ Aaron I. Fleischman
| | | | Stanley Harfenist
|___| |___| Andrew N. Heine
John L. Schroeder
Robert D. Siff
For, except vote withheld from Robert A. Stanger
the following Nominee(s) Charles H. Symington, Jr.
Edwin Tornberg
_____________________________________ Claire L. Tow
Leonard Tow
Proposal 2
___ ___ ___
Approve the Amendment to the Company's Certificate of Incorporation | | | | | |
to change the Company's name to Citizens Communications Company For |___| Against |___| Abstain |___|
</TABLE>
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| BULK RATE |
PUTNAM INVESTMENTS |U.S. POSTAGE|
DCPA | PAID |
Citizens 401(k) Savings Plan | PERMIT #20 |
Location 33 | SANFORD, ME|
P. O. Box 9740 | 04073 |
Providence, RI 02940-9740 --------------
MAIL TO:
CITIZENS 401(k) SAVINGS PLAN
PROXY FOR CITIZENS UTILITIES COMPANY ANNUAL MEETING OF STOCKHOLDERS
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways: 1. By Internet
2. By telephone
3. By mail
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY INTERNET OR BY TELEPHONE, COMPLETE BOTH SIDES OF THE
---
PROXY CARD BELOW, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:
ILLINOIS STOCK TRANSFER CO.
209 WEST JACKSON BOULEVARD, SUITE 903
CHICAGO, ILLINOIS 60606
DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
CITIZENS 401(k) SAVINGS PLAN
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby authorizes and directs Putnam Fiduciary Trust Company, as the Trustee under the Citizens 401(k) Savings Plan,
to vote all shares of stock allocable to the undersigned under the provisions of the Plan and appoints Andrew N. Heine, John L.
Schroeder and Robert D. Siff 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 18, 2000, at 10:00 a.m., Central Daylight 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 directed.
------------------------
| Voter Control Number | Signature: _______________________________________
| |
------------------------ Signature: _______________________________________
Date: _____________________________________, 2000
Note: Please sign exactly as name appears hereon.
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 in the same proportion as the voted shares in the Citizens 401(k) Savings Plan.
VOTE BY INTERNET
</TABLE>
<PAGE>
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<CAPTION>
<S> <C> <C> <C> <C> <C>
VOTE BY INTERNET
Voting by Internet is quick, confidential and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our Internet Voting Site at www.eproxyvote.com/ist-cuc4k and follow the instructions on the screen.
----------------------------
3. When prompted for your Voter Control Number, enter the number printed in the box on the front of your proxy card.
Please note that votes cast by Internet must be submitted prior to midnight, CDT, Saturday, May 13, 2000.
Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned
the proxy card.
IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL
- ------------------------------------------------------------------------------------------------------------------------------------
VOTE BY TELEPHONE
Voting by telephone is quick, confidential and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Using a Touch-Tone telephone, call toll free 1.800.555.8140 and follow the instructions.
3. When asked for your Voter Control Number, enter the number printed in the box on the front of your proxy card.
Please note that votes cast by telephone must be submitted prior to midnight, CDT, Saturday, May 13, 2000.
Your telephone vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned
the proxy card.
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT RETURN YOUR PROXY BY MAIL
- ------------------------------------------------------------------------------------------------------------------------------------
VOTE BY MAIL
To vote by mail, complete both sides, sign and date the proxy card below. Detach the card and return it in the envelope provided.
If you plan to attend Citizens' Annual Meeting of Stockholders on May 18, 2000, complete the registration form on the back page of
the Proxy Statement and return it in the envelope provided.
THANK YOU FOR YOUR VOTE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 1 -- Election of Directors Citizens 401(k) Savings Plan
Nominees:
For Withheld
___ ___ Norman I. Botwinik
| | | | Aaron I. Fleischman
|___| |___| Stanley Harfenist
Andrew N. Heine
John L. Schroeder
Robert D. Siff
For, except vote withheld from Robert A. Stanger
the following Nominee(s) Charles H. Symington, Jr.
Edwin Tornberg
_____________________________________ Claire L. Tow
Leonard Tow
Proposal 2
___ ___ ___
Approve the Amendment to the Company's Certificate of Incorporation | | | | | |
to change the Company's name to Citizens Communications Company For |___| Against |___| Abstain |___|
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