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 Section 240.14a-11(c) or Section 240.14a-12
CT Communications, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CT Communications
68 Cabarrus Avenue East
Post Office Box 227
Concord, NC 28026-0227
704-722-2500
CTC
- ---
CT Communications
March 26, 1999
DEAR SHAREHOLDER:
You are cordially invited to attend the Corporation's Annual
Meeting of Shareholders to be held at 9:00 a.m., on Thursday,
April 22, 1999, at the Corporation's Customer Care Center located
at 2000 Progress Place, Northeast, Concord, North Carolina. In
addition to the matters to be voted on, I will be pleased to
report on the affairs of the Corporation.
This year we chose to write our proxy statement in "plain
English." We trust that you will like this new simplified format
and welcome any comments you may have.
We look forward to greeting personally those shareholders who are
able to be present at the meeting. However, whether or not you
plan to be with us at the meeting, it is important that your
shares be represented. Accordingly, you are requested to sign and
date the enclosed proxy and mail it in the envelope provided at
your earliest convenience.
Very truly yours,
/s/ Michael R. Coltrane
----------------------------
MICHAEL R. COLTRANE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
<PAGE>
CT COMMUNICATIONS, INC.
68 Cabarrus Avenue, East
Concord, North Carolina 28025
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1999
----------------------------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of CT Communications, Inc. will be held
at the Corporation's Customer Care Center, located at 2000 Progress Place,
Northeast, Concord, North Carolina on Thursday, April 22, 1999, at 9:00 a.m.,
for the following purposes:
1. To elect a Board of Directors
o Three Directors for a three-year term expiring in 2002,
o Three Directors for a two-year term expiring in 2001, and
o Three Directors for a one-year term expiring in 2000;
2. To approve the Corporation's 1999 Employee Stock Purchase Plan;
3. To ratify the action of the Board of Directors in selecting KPMG, LLP as
independent public accountants to audit the books of the Corporation for
the current year; and
4. To transact any other business properly brought before the meeting or
any adjournment or postponement thereof.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE THREE
PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.
Pursuant to the provisions of the North Carolina Business Corporation Act,
March 12, 1999 has been fixed as the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting. Only holders of Common
Stock of record at the close of business on that date will be entitled to
notice of and to vote at the meeting and at any adjournment or postponement
thereof.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend, please sign, date and return the accompanying proxy promptly,
so that your shares may be represented and voted at the Annual Meeting. A
return envelope is enclosed for your convenience.
By order of the Board of Directors,
/s/ Barry R. Rubens
----------------------------
BARRY R. RUBENS
SECRETARY
March 26, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Background Information ............................................... 1
Purpose of Proxy Statement ........................................... 1
Business to be Transacted ............................................ 1
Board of Directors Recommendation for Voting on the Proposals ........ 1
Who May Vote ......................................................... 1
How to Vote .......................................................... 2
Quorum to Transact Business .......................................... 2
Voting of Shares via Proxy ........................................... 2
Revocation of Proxy .................................................. 2
Vote Necessary for Action ............................................ 2
Duplicate Proxy Statements and Cards ................................. 2
Other Business ....................................................... 2
Expenses of Solicitation ............................................. 2
PRINCIPAL SHAREHOLDERS ................................................ 3
ITEM 1: ELECTION OF DIRECTORS ......................................... 3
Staggered Board of Directors ......................................... 3
Nominees ............................................................. 4
Compensation of Directors ............................................ 5
Attendance of Directors .............................................. 5
Committees of the Board of Directors ................................. 6
MANAGEMENT OWNERSHIP OF COMMON STOCK .................................. 7
EXECUTIVE COMPENSATION ................................................ 8
Summary Compensation Table ........................................... 8
Stock Benefit Plans .................................................. 9
Management Agreements ................................................ 10
SERP ................................................................. 10
Pension Plan ......................................................... 10
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION ............ 11
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION ................................................ 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................ 12
PERFORMANCE GRAPH ..................................................... 13
ITEM 2: APPROVAL OF 1999 EMPLOYEE STOCK PURCHASE PLAN ................. 13
ITEM 3: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS ................ 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ............... 15
SHAREHOLDER PROPOSALS ................................................. 15
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K ........................... 15
OTHER BUSINESS ........................................................ 15
</TABLE>
i
<PAGE>
CT COMMUNICATIONS, INC.
68 Cabarrus Avenue, East
Concord, North Carolina 28025
---------------
PROXY STATEMENT
---------------
1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1999
BACKGROUND INFORMATION
The principal executive offices of CT Communications, Inc., a North
Carolina corporation, are located at 68 Cabarrus Avenue, East, Concord, North
Carolina 28025, and our telephone number is (704) 722-2500.
Effective January 28, 1999, each outstanding share of the Corporation's
Voting Common Stock was converted into 4.4 shares of a newly created class of
Common Stock and each outstanding share of Class B Nonvoting Common Stock was
converted into 4.0 shares of Common Stock. Also, on July 24, 1997, the Board of
Directors declared a stock split in the form of a one-for-two stock dividend
payable August 29, 1997 to holders of record on August 1, 1997. All stock
ownership and per share information in this Proxy Statement has been restated
to give retroactive effect to these events.
The term "Corporation" (as well as the words "we," "us" and "our") refers
to CT Communications, Inc. and its subsidiaries. References to "you" or "your"
refer to our shareholders. The term "Common Stock" means the Corporation's
outstanding common stock.
PURPOSE OF PROXY STATEMENT
This proxy statement contains information related to our Annual Meeting of
Shareholders to be held on Thursday, April 22, 1999 at 9:00 a.m., at the
Corporation's Customer Care Center, located at 2000 Progress Place, Northeast,
Concord, North Carolina 28025, and any postponements or adjournments thereof.
This proxy statement was prepared under the direction of the Corporation's
Board of Directors to solicit your proxy for voting at our Annual Meeting. This
proxy statement was mailed to shareholders on or about March 26, 1999.
BUSINESS TO BE TRANSACTED
At the Annual Meeting, shareholders will vote on three items:
(1) the election of Directors,
(2) the approval of the 1999 Employee Stock Purchase Plan, and
(3) the ratification of the action of the Board of Directors in selecting
KPMG, LLP as independent public accountants for 1999.
No other items are scheduled to be voted upon.
BOARD OF DIRECTORS RECOMMENDATION FOR VOTING ON THE PROPOSALS
The Board of Directors recommends a vote FOR each of the nominees for
Director, FOR the approval of the 1999 Employee Stock Purchase Plan and FOR the
appointment of KPMG, LLP as our independent certified public accountants for
1999.
WHO MAY VOTE
Shareholders owning Common Stock as of the close of business on March 12,
1999 (the "Record Date") are entitled to vote at the Annual Meeting or any
postponement or adjournment of the meeting. Each Shareholder has one vote per
share on all matters to be voted upon at the meeting.
<PAGE>
HOW TO VOTE
Shareholders may vote
o In person, or
o By signing and dating the proxy card and returning it in the prepaid
envelope.
QUORUM TO TRANSACT BUSINESS
A "quorum" (to transact business) is the presence at the Annual Meeting,
in person or by proxy, of the holders of the majority of the issued and
outstanding shares of the Common Stock. As of the Record Date, 9,381,049 shares
of Common Stock were issued and outstanding, which is the only class of
securities entitled to vote at the Annual Meeting. Each share of Common Stock
is entitled to one vote. If you attend in person and indicate your presence, or
mail in a properly dated proxy card, your shares will be counted toward a
quorum.
VOTING OF SHARES VIA PROXY
If you have submitted a properly executed proxy via the mail and a quorum
is established, your shares will be voted as you indicate. However, if you mail
in your proxy card and sign and date your card, but do not mark it, your shares
will be voted in favor of the election of nominated persons for Directors, in
favor of approving the 1999 Employee Stock Purchase Plan and in favor of
ratifying KPMG, LLP as our independent public accountants for 1999. If you sign
and date your proxy card and withhold voting for any or all of the nominated
Directors (as explained on the proxy card) or abstain regarding the approval of
the 1999 Employee Stock Purchase Plan or the ratification of KPMG, LLP, your
vote will be recorded as being withheld or as an abstention, but it will have
no effect on the outcome of the vote. Proxies submitted by brokers that do not
indicate a vote for some or all of the proposals because they do not have
discretionary voting authority and have not received instructions as to how to
vote on those proposals (so-called "broker non-votes") will be counted for
purposes of determining a quorum, but will not affect the outcome of the vote.
REVOCATION OF PROXY
If you later decide to revoke or change your proxy, you may do so by
o sending a written statement to that effect to the Secretary of the
Corporation, or
o submitting a properly signed proxy with a later date, or
o voting in person at the Annual Meeting.
VOTE NECESSARY FOR ACTION
Directors are elected by a plurality of the votes cast by the shares
entitled to vote at the Annual Meeting, meaning that the Director nominee with
the most affirmative votes for a particular slot is elected for that slot. The
approval of the 1999 Employee Stock Purchase Plan and the ratification of the
appointment of KPMG, LLP as our independent public accountants for 1999 require
an affirmative vote of the majority of the shares present and voting at the
meeting.
DUPLICATE PROXY STATEMENTS AND CARDS
You may receive more than one proxy statement, proxy card or Annual
Report. This duplication will occur if you have shares registered in different
names or your shares are in more than one type of account maintained by First
Union National Bank, our transfer agent. To have all your shares voted, please
sign and return all proxy cards.
OTHER BUSINESS
We know of no other matters to be presented for shareholder action at the
Annual Meeting. If other matters are properly presented at the Annual Meeting,
your signed and dated proxy card gives authority to L.D. Coltrane, III, Michael
R. Coltrane and Barry R. Rubens to vote your shares in accordance with the
recommendations of the Board of Directors, unless you appoint a substitute to
vote your shares.
EXPENSES OF SOLICITATION
The Corporation pays the cost of preparing, assembling and mailing this
proxy material. In addition to the use of the mail, proxies may be solicited
personally, or by telephone or telegraph, by our officers and employees without
additional compensation. The Corporation pays all costs of solicitation,
including certain expenses of brokers and nominees who mail proxy material to
their customers or principals.
2
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table lists all shareholders known to us to beneficially own
more than 5% of the outstanding shares of the Common Stock on January 31, 1999.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED (1)
--------------------------------------
NAME AND ADDRESS NUMBER PERCENT OF CLASS
- ----------------------------------------- ------------------ -----------------
<S> <C> <C>
First Charter National Bank 1,187,121(2) 12.68%
Trust Department
P. O. Box 228
Concord, North Carolina 28026-0228
World Division Board of 1,080,845 11.54%
Global Ministries,
United Methodist Church
475 Riverside Drive
15th Floor
New York, New York 10027
The Cannon Foundation 1,010,988 10.79%
P. O. Box 548
Concord, North Carolina 28026-0548
Mariam C. Schramm 528,986 5.65%
(Mrs. T. M. Schramm)
400 Avinger Lane, Apartment 201
Davidson, North Carolina 28036
</TABLE>
- ---------
(1) All shares of Common Stock listed in the table (unless otherwise noted) are
directly owned, with sole voting and investment power, by the shareholder.
We have obtained certain information included in this table from schedules
filed with the Securities and Exchange Commission pursuant to Section
13(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(2) Includes 152,770 shares held in various fiduciary capacities where First
Charter National Bank has shared voting power and 1,034,351 shares held in
various fiduciary capacities where it has sole voting power. First Charter
National Bank has shared investment power over 1,001,555 shares and sole
investment power over 284,216 shares. First Charter National Bank has sole
voting power and shared investment power with regard to 489,794 shares of
Common Stock included in the shares shown in this table as held by Mariam
C. Schramm and First Charter National Bank.
--------------------
ITEM 1
ELECTION OF DIRECTORS
--------------------
STAGGERED BOARD OF DIRECTORS
Our Articles of Incorporation and Bylaws provide that the Board of
Directors will consist of at least six but not more than nine members. The
exact number of Directors is determined by the affirmative vote of at least 50%
of the members of the Board of Directors. The number of Directors is currently
fixed at nine.
William A. Coley was appointed to the Board of Directors on January 28,
1999, filling the last remaining vacancy on the Board and bringing the total
number of Directors to nine. If a board of directors consists of nine or more
members, the North Carolina Business Corporation Act permits the board to be
divided into equal classes of directors having staggered terms. This is known
as a staggered board. Our Articles of Incorporation provide that our Board of
Directors will be staggered as soon as permissible by North Carolina law.
Therefore, for the first time, our Board is being divided into three
classes. All nine Director slots will be voted upon at the Annual Meeting.
Three Director slots will be filled for a three-year term expiring in 2002 (the
"First Director
3
<PAGE>
Term"). Three Director slots will be filled for a two-year term expiring in
2001 (the "Second Director Term"). Three Director slots will be filled for a
one-year term expiring in 2000 (the "Third Director Term").
NOMINEES
The Board has nominated for re-election the nine current members of the
Board of Directors whose terms expire at the Annual Meeting. It is intended
that the persons named in the accompanying form of proxy will vote to elect the
nine nominees listed below unless authority to vote is withheld. The three
nominees for the First Director Term will serve until the 2002 Annual Meeting
of Shareholders or until an earlier resignation or retirement or until a
successor is elected and qualifies to serve. The three nominees for the Second
Director Term will serve until the 2001 Annual Meeting of Shareholders or until
an earlier resignation or retirement or until a successor is elected and
qualifies to serve. The three nominees for the Third Director Term will serve
until the 2000 Annual Meeting of Shareholders or until an earlier resignation
or retirement or until a successor is elected and qualifies to serve. Our
Bylaws require any Director to own directly at least five shares of the Common
Stock, and all nominees qualify.
We expect that each nominee will be available for election. However, if a
vacancy in the slate of nominees is caused by death or other unexpected
occurrence, it is intended that shares of Common Stock represented by the
accompanying proxy will be voted for the election of a substitute nominee
selected by the persons named in the proxy.
Directors will be elected by a plurality of the votes cast so long as a
quorum is present at the meeting. Accordingly, votes withheld from nominees and
broker non-votes, if any, will not have the effect of a "negative" vote for the
election of Directors. WE RECOMMEND A VOTE FOR ALL OF THE NOMINEES FOR ELECTION
AS DIRECTORS.
Nominees for the Board of Directors are as follows:
NOMINEES FOR TERMS EXPIRING IN 2002
O. CHARLIE CHEWNING, JR. - Age 63. Director. Mr. Chewning became a
Director in 1996. Mr. Chewning was the Senior Partner of the Carolinas Offices
for the accounting firm of Deloitte & Touche LLP, Charlotte, North Carolina
from June 1993 to December 1994. Prior to that, he was the Office Managing
Partner for the Charlotte office of Deloitte & Touche LLP. He is a member of
the Audit Committee and the Chairman of the Corporate Governance Committee.
L. D. COLTRANE, III - Age 80. Chairman of the Board. Mr. Coltrane has
served as a Director since 1965. In 1973, he was named Assistant Secretary and
Assistant Treasurer of the Corporation and, in 1974, Assistant to the
President. In 1986, Mr. Coltrane was named President of the Corporation to
succeed his father, L. D. Coltrane, Jr. He is the father of Michael R.
Coltrane.
PHIL W. WIDENHOUSE - Age 74. Director. Mr. Widenhouse retired as Executive
Vice President of the Corporation in 1992. He has served with the Corporation
since 1949 in various capacities and as a Director since 1952. Mr. Widenhouse
was named Executive Vice President in 1971 and served as a Treasurer from 1973
to 1990. He is Chairman of the Audit Committee and a member of the Compensation
Committee.
NOMINEES FOR TERMS EXPIRING IN 2001
JOHN R. BOGER, JR. - Age 69. Director. Mr. Boger became a Director in
1978. Mr. Boger is a practicing attorney with the firm of Williams, Boger,
Grady, Davis & Tuttle. He is Chairman of the Compensation Committee and a
member of the Audit Committee. Mr. Boger is a director of Carolina First
Bancshares, Inc., Lincolnton, North Carolina.
WILLIAM A. COLEY - Age 55. Mr. Coley was appointed as a Director by the
Board of Directors on January 28, 1999 and is a member of the Corporate
Governance Committee. He has served as the President of Duke Power, a division
of Duke Energy Corporation, an electric and natural gas utility headquartered
in Charlotte, North Carolina, since June 1997. Mr. Coley was the President -
Associated Enterprises Group of Duke Power from August 1994 to June 1997 and
was the Executive Vice President - Customer Group of Duke Power from January
1994 to August 1994. Mr. Coley is a director of Duke Energy Corporation,
Whisper Communications, Inc. and SouthTrust Bank (North Carolina board).
BEN F. MYNATT - Age 67. Director. Mr. Mynatt became a Director in 1994.
Mr. Mynatt is a member of the Compensation Committee. He is owner of Ben Mynatt
Chevrolet Inc,, in Concord, North Carolina. Mr. Mynatt serves as a trustee of
Rowan-Cabarrus Community College, Salisbury, North Carolina and Wingate
University, Wingate, North Carolina.
4
<PAGE>
NOMINEES FOR TERMS EXPIRING IN 2000
MICHAEL R. COLTRANE - Age 52. President, Chief Executive Officer,
Director. Prior to joining the Corporation in 1988, Mr. Coltrane served as
Executive Vice President of First Charter National Bank for more than six years
and as Vice President of a large regional bank for more than ten years. He
became a Director of the Corporation in 1988. Mr. Coltrane is a director of U.
S. Telecom Holdings, Inc., Access/On Multimedia and First Charter Corporation.
Mr. Coltrane is the son of L. D. Coltrane, III.
SAMUEL E. LEFTWICH - Age 68. Director. Mr. Leftwich became a Director in
1996. He is the retired Chairman of the Board of Centrel Telephone Company, a
telecommunications company located in Chicago, Illinois. Mr. Leftwich served as
Chairman of Centrel Telephone Company from January 1990 until December 1992. He
is a member of the Corporate Governance Committee and the Compensation
Committee.
JERRY H. MCCLELLAN - Age 68. Director. Mr. McClellan served as an
Executive Vice President of the Corporation from 1985 to 1996, when he retired.
He served with the Corporation in various capacities since 1949 and as a
Director since 1984. He is a member of the Corporate Governance Committee.
COMPENSATION OF DIRECTORS
During 1998, each Director of the Corporation who was not employed by the
Corporation or its subsidiaries (an "outside Director") was paid $5,500 as an
annual retainer and $500 for each meeting of the Board of Directors attended.
Committee chairmen were paid $300 per Committee meeting, and Committee members
were paid $250 per Committee meeting. For meetings by telephone conference
call, Board members were paid $100 per call, and Committee members were paid
$50 per call. The annual retainer was paid in the form of Common Stock. All
other fees were paid in cash, unless otherwise elected by the Director, as
described below.
Effective January 28, 1999, the Corporation revised its Director
compensation arrangements, based on the recommendations of an outside
consultant. Outside Directors now receive an annual retainer of $12,000 and
$750 for each meeting of the Board of Directors attended. Committee chairmen
are paid $600 per Committee meeting, and Committee members are paid $500 per
Committee meeting. For meetings by telephone conference call, Board members are
paid $100 per call, and Committee members are paid $50 per call. The annual
retainer is paid in the form of Common Stock. All other fees are paid in cash,
unless otherwise elected by the Director, as described below.
The Corporation's 1996 Director Compensation Plan (the "Director Plan")
reserves 45,000 shares of Common Stock for issuance to non-employee Directors
who elect to receive part or all of their compensation in Common Stock instead
of cash. Under the Director Plan, dollar values for the retainer and any
accumulated meeting fees are added together, and this amount is converted to a
number of shares based on the fair market value at the time of the meetings.
Payments in Common Stock are made annually following the election of Directors.
Any fractional shares are rounded up to the next whole share when issued.
Directors also receive an annual grant of shares of Common Stock having a
fair market value of $5,000, which is fully vested on the date of grant.
ATTENDANCE OF DIRECTORS
During 1998, the Board of Directors held nine meetings. Each Director
attended at least 75% of the meetings of the Board of Directors and committee
meetings of the Board of Directors on which he served that were held when he
was a Director.
5
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The full Board considers all major decisions of the Corporation. However,
the Board of Directors has established Corporate Governance, Audit and
Compensation Committees with specific duties for the Corporation. The following
table lists the various members of each Committee and the number of Committee
meetings in 1998. A description of the duties of each Committee follows the
table.
COMMITTEE MEMBERSHIP AND MEETINGS
<TABLE>
<CAPTION>
CORPORATE GOVERNANCE AUDIT COMPENSATION
- ------------------------------------------------------------------------------
<S> <C> <C>
O. C. Chewning, Jr. John R. Boger, Jr. John R. Boger, Jr.
S. E. Leftwich O. C. Chewning, Jr. S. E. Leftwich
Jerry H. McClellan Phil W. Widenhouse Ben F. Mynatt
William A. Coley -- Phil W. Widenhouse
3 meetings during 1998 2 meetings during 1998 1 meeting during 1998
</TABLE>
CORPORATE GOVERNANCE COMMITTEE. The Corporate Governance Committee
determines the nominees for Directors and may consider written nominations of
candidates for election to the Board of Directors properly submitted by our
shareholders to the Secretary of the Corporation. The Corporate Governance
Committee also establishes and reviews various procedures used by the Board of
Directors and executive officers in conducting the business of the Board of
Directors and the Corporation.
AUDIT COMMITTEE. On an annual basis, this Committee reviews our
independent auditors' reports. The Audit Committee also reviews the scope and
detail of our audit program, which is conducted to protect against improper and
unsound practices and to furnish adequate protection of all of our assets and
records. It also reviews other reports from the independent public accountants
and makes recommendations to the full Board of Directors.
COMPENSATION COMMITTEE. The Compensation Committee, composed of outside
("non-employee") Directors, annually reviews and approves all executive
officers' salaries, including base salaries, target bonus levels, actual
bonuses and long-term incentive awards to be paid to executive officers. It
also reviews recommendations from management regarding major benefit plans. In
carrying out these functions, we believe it is important to align executive
compensation with business objectives and strategies, management initiatives,
financial performance and enhanced shareholder value.
6
<PAGE>
MANAGEMENT OWNERSHIP OF COMMON STOCK
The following table shows, as of January 31, 1999, the number of shares of
Common Stock and the percent of outstanding shares of Common Stock beneficially
owned by (i) all current Directors and nominees for Director, (ii) each
executive officer of the Corporation named in the Summary Compensation Table
contained herein and (iii) all Directors, nominees for Director and executive
officers as a group. None of the Directors or executive officers of the
Corporation owned any shares of the Corporation's 4 1/2% Preferred Stock or 5%
Preferred Stock as of January 31, 1999.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED (1)
-----------------------------------
NAME NUMBER PERCENT OF CLASS
- ----------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Michael R. Coltrane 338,522(2) 3.6%
L.D. Coltrane, III 231,550(3) 2.5
Phil W. Widenhouse 99,299(4) 1.1
Jerry H. McClellan 27,780(5) *
Thomas A. Norman 23,036(6) *
Barry R. Rubens 21,605(7) *
Kenneth R. Argo 17,989(8) *
Ben F. Mynatt 12,576(9) *
Catherine A. Duda 5,647(10) *
O.C. Chewning, Jr. 4,586 *
John R. Boger, Jr. 3,966(11) *
S.E. Leftwich 2,108 *
Michael R. Nash 1,600 *
Richard L. Garner, Jr. 1,040 *
Charlotte S. Walsh 1,000 *
William A. Coley 129 *
All Directors and executive officers
of the Corporation as a group (16 persons)(12) 792,433 8.3%
</TABLE>
- ---------
* Less than 1%.
(1) Unless otherwise noted, the persons named in the table have sole voting and
investment power over shares included in the table.
(2) Includes 157,753 shares held in trust for which Mr. Coltrane is a
co-trustee with Phyllis C. Ausband, his sister, with whom he shares voting
and investment power; 7,249 shares owned by his spouse and 22,185 shares
represented by currently exercisable options. Does not include 179,498
shares held indirectly by a trust for which Mr. Coltrane is the trustee
and a beneficiary, as described in footnote 3, below.
(3) Includes 22,725 shares owned by spouse and 179,498 shares owned by LDC
Associates, L.P., as to which Mr. Coltrane shares voting and investment
power. LDC Associates, L.P. is 99% owned by a grantor trust established by
Mr. Coltrane and his wife (the "Trust") and is 1% owned by the general
partner of LDC Associates, L.P. (the "General Partner"). Mr. Coltrane and
his wife together own all of the stock of the General Partner and,
therefore, share voting and investment power over the Common Stock held by
LDC Associates, L.P. Michael R. Coltrane is the trustee and a beneficiary
of the Trust.
(4) Includes 50,659 shares owned by spouse.
(5) Includes 7,316 shares owned by spouse and 2,248 shares represented by
currently exercisable options.
(6) Includes 13,872 shares represented by currently exercisable options.
(7) Includes 14,329 shares represented by currently exercisable options.
(8) Includes 1,937 shares owned by spouse and 438 shares represented by
currently exercisable options.
(9) Includes 2,142 shares owned by spouse.
(10) Includes 2,292 shares represented by currently exercisable options.
(11) Includes 1,086 shares owned by spouse.
(12) Includes an aggregate of 181,094 shares represented by currently
exercisable options. Does not include 522,328 shares held by First Charter
National Bank. L.D. Coltrane, III and Michael R. Coltrane are shareholders
and Michael R. Coltrane is a Director of First Charter Corporation, the
parent corporation of First Charter National Bank.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows the compensation of the
Chief Executive Officer and the four additional most highly compensated
executive officers (other than the Chief Executive Officer) of the Corporation
during 1998 (the "named executive officers") for the past three years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- ----------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION(S) YEAR ($)(1) ($)(2) ($)(3) $(4) (#) ($)(5)
- ----------------------- ------ ----------- ----------- -------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael R. Coltrane 1998 $225,000 $139,311 $65,891 $ 40,741 3,748 $17,172
President and Chief 1997 220,000 86,680 0 172,163 11,268 11,333
Executive Officer 1996 200,000 34,538 18,634 21,828 0 5,627
Nicholas L.
Kottyan(6) 1998 $168,000 77,129 0 19,257 1,772 $ 8,011
Senior Vice 1997 160,000 61,430 0 50,611 1,330 6,622
President 1996 135,000 33,405 0 10,593 0 4,603
and Assistant
Secretary
Barry R. Rubens 1998 $168,000 71,613 0 18,602 1,708 $12,595
Senior Vice 1997 152,000 47,262 0 59,385 5,124 10,323
President 1996 130,000 62,178 0 10,272 0 2,265
Chief Financial
Officer,
Secretary and
Treasurer
Thomas A. Norman 1998 $151,915 87,214 0 18,471 1,692 $12,762
Senior Vice 1997 125,000 41,938 0 66,447 5,088 8,712
President 1996 119,000 16,885 0 3,531 0 1,116
and Assistant
Secretary
Catherine A. Duda 1998 $137,672 67,560 0 7,074 656 $ 8,967
Senior Vice 1997 120,000 31,432 0 25,038 1,972 5,356
President 1996 101,923 6,662 0 0 1,810 161
and Assistant
Secretary
</TABLE>
- ---------
(1) Amounts shown include cash and non-cash compensation received by the
executive officer.
(2) The annual bonus is paid each year based on goals reviewed and approved by
the Board of Directors. See "Report of the Compensation Committee on
Executive Compensation -- Bonuses."
(3) Gain from the exercise of stock options.
(4) Represents the value of shares of restricted stock under the Corporations's
1995 Restricted Stock Award Program (the "RSAP"). A total of 7,084
restricted shares of Common Stock with a weighted average fair market
value of $32.75 per share were granted in 1998 to key employees who
achieved certain performance goals. The shares are subject to certain
transferability restrictions for specific periods of four or ten years.
Recipients are entitled to receive any cash dividends made with respect to
the shares of restricted stock prior to the end of this restricted period.
The number and value of the aggregate restricted stock holdings of the
named executive officers as of December 31, 1998 were as follows: Michael
R. Coltrane -- 12,120 shares ($439,350); Nicholas L. Kottyan -- 4,016
shares ($145,580); Barry R. Rubens -- 5,232 shares ($189,660); Thomas A.
Norman -- 6,589 shares ($238,851); and Catherine A. Duda -- 2,192 shares
($79,460).
(5) Amounts represent the Corporation's matching contributions to the Employee
Savings Plan, contributions by the Corporation with respect to term life
insurance and supplemental disability insurance.
(6) Mr. Kottyan's employment with the Corporation ended effective December 31,
1998.
8
<PAGE>
STOCK BENEFIT PLANS
We have in effect the Comprehensive Stock Option Plan (the "Comprehensive
Plan") pursuant to which the Corporation may grant stock options to certain key
employees. No options were granted to or exercised by named executive officers
in 1998 under the Comprehensive Plan.
We also have in effect the 1989 Executive Stock Option Plan (the "1989
Plan"). No options were granted to named executive officers in 1998 under the
1989 Plan. Pursuant to the 1989 Plan, no additional options may be granted, and
all options outstanding at year-end expire in 1999.
In addition, the Corporation has the CT Communications, Inc. Omnibus Stock
Compensation Plan (the "Omnibus Plan"). During 1998, options to purchase an
aggregate of 20,752 shares of Common Stock were granted under the Omnibus Plan,
of which options to purchase an aggregate of 9,576 shares of Common Stock were
granted to named executive officers. No options were exercised by named
executive officers in 1998 under the Omnibus Plan.
The following table sets forth information regarding options granted to
the executive officers named in the Summary Compensation Table during 1998. No
free-standing stock appreciation rights ("SARs") were granted to executive
officers during 1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
-----------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/ MARKET
SECURITIES SARS PRICE POTENTIAL REALIZABLE VALUE AT
UNDERLYING GRANTED TO EXERCISE ON ASSUMED ANNUAL RATES OF STOCK PRICE
OPTIONS/ EMPLOYEES OR BASE GRANT APPRECIATION FOR OPTION TERM
SARS IN FISCAL PRICE DATE EXPIRATION ------------------------------------------
NAME GRANTED(#) YEAR ($/SH) ($) DATE 0%($) 5%($) 10%($)
- ---------------------- ------------ ------------ ---------- ---------- ----------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael R. Coltrane 3,748 18.06 32.58 32.75 2/28/08 637.16 77,845.96 196,282.26
Barry R. Rubens 1,708 8.23 32.58 32.75 2/28/08 290.36 35,475.16 89,447.96
Nicholas L. Kottyan 1,772 8.54 32.58 32.75 2/28/08 301.24 36,804.44 92,799.64
Thomas A. Norman 1,692 8.15 32.58 32.75 2/28/08 287.64 35,142.84 88,610.04
Catherine A. Duda 656 3.16 32.58 32.75 2/28/08 111.52 3,625.12 34,354.72
</TABLE>
- ---------
(1) All options vest at the rate of 25% per year over four years.
The following table provides a summary of the stock option exercises
during 1998 by the named executive officers and the value of these executive
officer's unexercised stock options held at fiscal year end.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
ACQUIRED ON VALUE ----------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------- ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Coltrane 3,128(1) 65,891 22,185 12,199 441,317 184,671
Barry R. Rubens 0 0 14,329 5,551 300,032 83,995
Nicholas L. Kottyan 0 0 13,928 5,764 289,336 87,241
Thomas A. Norman 0 0 13,872 5,508 217,158 65,259
Catherine A. Duda 0 0 2,292 2,136 34,197 25,309
</TABLE>
- ---------
(1) Exercised pursuant to the 1989 Plan.
The Corporation has in effect the 1995 Employee Stock Purchase Plan (the
"1995 ESPP") and the 1997 Employee Stock Purchase Plan (the "1997 ESPP").
During 1998, the Corporation did not sell any additonal shares of Common Stock
to employees under the 1995 ESPP, but sold 2,344 shares at $32.75 per share
under the 1997 ESPP.
9
<PAGE>
MANAGEMENT AGREEMENTS
CHANGE IN CONTROL AGREEMENTS. The Corporation has entered into Change in
Control Agreements with Michael R. Coltrane, Barry R. Rubens, Nicholas L.
Kottyan, Thomas A. Norman, Catherine A. Duda, Michael R. Nash, Richard L.
Garner, Jr. and Charlotte S. Walsh. These agreements provide for certain
payments, additional medical and other fringe benefits to such officers in the
event their employment is terminated following a "change in control" of the
Corporation, as defined in the agreements. The Agreements also include
covenants not to compete and not to disclose confidential information.
NORMAN EMPLOYMENT AGREEMENT. The Corporation, CT Global
Telecommunications, Inc., a wholly owned subsidiary of the Corporation
("CTGT"), and Thomas A. Norman entered into an Employment Agreement, dated as
of September 10, 1998 (the "Norman Agreement"). Pursuant to the Norman
Agreement, the Corporation and CTGT agreed to employ Mr. Norman as a Senior
Vice President of the Corporation, President of CTGT and (on an interim basis)
as Chief Executive Officer of Amaritel, S.A. de C.V (doing business as
"Maxcom"). The Corporation currently owns approximately 17% of the equity
securities of Maxcom, and CTGT provides certain management and operating
services to Maxcom under an operating agreement. For his services, Mr. Norman
receives (i) an annual base salary of $132,000 (increased to $185,000 so long
as he remains the Maxcom Chief Executive Officer), (ii) a foreign service
premium of $2,000 per week for each calendar week that Mr. Norman works at
least four full days in Mexico (reduced to $1,000 per week so long as Mr.
Norman is the Maxcom Chief Executive Officer), (iii) a one-time $25,000 signing
bonus and (iv) a one-time $100,000 at such time as CTGT may earn an equity
incentive option under the Maxcom operating agreement (the "CTGT Options"). In
lieu of participating in the Corporation's annual bonus program, Mr. Norman
participates in the CTGT annual bonus program, with performance measures based
on the extent to which CTGT achieves the CTGT options. Mr. Norman also is
eligible to receive an annual bonus based on the performance of Maxcom, in lieu
of any annual bonus plan of the Corporation. Mr. Norman receives normal
benefits under the Corporation's various welfare benefit plans, except that he
is reimbursed for 100% of his actual reasonable travel expenses on behalf of
CTGT and living expenses incurred while in Mexico. The Norman Agreement expires
on August 31, 2000, unless it is extended by mutual agreement or it is
terminated (i) for cause, (ii) for death or disability of Mr. Norman, or (iii)
upon 60-days prior notice by the Corporation, subject to certain payments by
the Corporation to Mr. Norman. Mr. Norman's Change in Control Agreement remains
in effect, subject to certain modifications related to the operation of Maxcom.
KOTTYAN SEPARATION AGREEMENT AND RELEASE. The Corporation and Nicholas L.
Kottyan entered into a Separation Agreement and Release, dated as January 18,
1999 ( the "Separation Agreement"), in connection with Mr. Kottyan's
termination of employment as of December 31, 1998. Except for the
confidentiality, non-compete and other post employment obligations of Mr.
Kottyan under his Change in Control Agreement, as described above, Mr.
Kottyan's Change in Control Agreement was terminated effective December 31,
1998. The Separation Agreement provides that Mr. Kottyan will receive various
payments under the Corporation's annual bonus program for the period through
December 31, 1998 and provides for certain vesting schedules for existing stock
options and restricted shares. The Separation Agreement further provides the
Corporation shall pay salary continuation to Mr. Kottyan from January 1, 1999
through March 31, 1999 based on his 1998 salary rate. Such salary continuation
payments shall continue thereafter through September 30, 1999 or until Mr.
Kottyan accepts or begins other work, starts his own business or becomes
otherwise self-employed, whichever is earlier.
SERP
The Corporation's Supplemental Executive Retirement Plan ("SERP") provides
additional benefits for key executive employees, who include Michael R.
Coltrane, Barry R. Rubens, Nicholas L. Kottyan, Thomas A. Norman and Catherine
A. Duda. The SERP is intended to provide an aggregate income replacement ratio
of 60% after 20 years of service of such employee's pre-retirement average
compensation when taking into account the Corporation's pension benefit plan
and Social Security. Because Mr. Kottyan's employment terminated prior to his
attaining five years of service, he will not receive any benefits under the
SERP.
PENSION PLAN
The Corporation has in effect a non-contributory pension plan, which
applies to all employees, including officers, who have completed one year of
service and attained age 21. The amount of annual benefit to be paid in monthly
installments for life, based on service to normal retirement date and straight
life annuity, is the sum of (i) 1.1% of average compensation multiplied by
creditable service not in excess of 40 years, plus (ii) .65% of average
compensation in excess of covered compensation multiplied by creditable service
not in excess of 35 years. Covered compensation is determined
10
<PAGE>
from Internal Revenue Service tables published annually. Payments under the
Pension Plan are not offset by Social Security. Contributions for officers to
the Pension Plan fund are not included because they cannot be readily
calculated by the regular actuary for the Pension Plan.
PENSION PLAN TABLE*
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS PAYABLE UPON RETIREMENT
WITH YEARS OF CREDITABLE SERVICE INDICATED
-----------------------------------------------------------------------
5-YEAR AVERAGE ANNUAL PAY 15 20 25 30 35 40
- -------------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 10,200 $ 13,600 $ 17,000 $ 20,400 $ 23,800 $ 26,550
75,000 16,763 22,350 27,938 33,525 39,113 43,238
100,000 23,325 31,100 38,875 46,650 54,425 59,925
125,000 29,888 39,850 49,813 59,775 69,738 76,613
150,000 36,450 48,600 60,750 72,900 85,050 93,300
175,000 43,013 57,350 71,688 86,025 100,363 109,988
200,000 49,575 66,100 82,625 99,150 115,675 126,675
225,000 56,138 74,850 93,563 112,275 130,988 143,363
250,000 62,700 83,600 104,500 125,400 146,300 160,050
</TABLE>
*Assuming a normal retirement date of December 31, 1998.
As of December 31, 1998, the credited years of service and compensation
covered by the Pension Plan, for each named executive officer, were as follows:
Mr. Coltrane -- 10 years ($149,350), Mr. Kottyan -- 4 years ($145,219), Mr.
Rubens -- 6 years ($123,607), Mr. Norman -- 3 years ($128,015) and Ms. Duda --
3 years ($128,790). Under the terms of the Pension Plan, Mr. Norman and Ms.
Duda will not have any vested benefit until each of them attains five years of
service with the Corporation. Because Mr. Kottyan's employment terminated prior
to his attaining five years of service, he will not receive any benefits under
the Pension Plan.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee approves all executive officer compensation and
submits it to the full Board of Directors for its information. Set forth below
is a report of the Compensation Committee regarding executive compensation for
fiscal year 1998.
EXECUTIVE COMPENSATION POLICIES AND PROGRAM. Our executive compensation
program is designed to:
o Attract and retain qualified management,
o Enhance short-term financial gains, and
o Enhance long-term shareholder value and align interests with
shareholders.
The total compensation package for our executives includes cash and
equity-based compensation. Annual compensation may consist of a base salary, a
bonus, grants of stock options and grants of restricted stock. Our policy is
generally to provide base salary at approximately the 50th percentile paid to
comparable executives, while focusing also on incentive compensation that is
linked to the performance of the Corporation. We strive, however, to provide
each executive officer with total annual cash compensation (base salary and
bonus) in an amount that would be paid on the open market for a fully qualified
officer of that position.
BASE SALARIES. Generally, the Compensation Committee determines the level
of base salary for the Chief Executive Officer ("CEO") and the Corporation's
other executive officers based on competitive norms derived primarily from
reports of consultants retained by the Corporation for this purpose. Actual
salary changes are based upon an evaluation of each individual's performance.
In addition, with respect to each executive, including the CEO, the
Compensation Committee considers the individual's performance, including that
individual's total level of experience in the telecommunications industry, his
record of performance and contribution to our success relative to his job
responsibilities and his overall service to us. During 1998, the Compensation
Committee maintained 1998 base salaries for our executive officers that were
equal approximately to the 50th percentile paid to comparable executives, based
on the information available to the Compensation Committee.
11
<PAGE>
BONUSES. An annual bonus has been a long-standing tradition of the
Corporation. The annual bonus is paid each year based on goals reviewed and
approved by the Board of Directors. These goals fall generally into three
categories: financial, customer satisfaction and individual. Financial goals
include targets for revenue, operating margins, share price, ratio of revenue
to labor costs, access line additions and major account retention, and comprise
60% of the bonus award. Customer satisfaction goals take into account the
results of new customer satisfaction surveys, the achievement of service repair
targets and the timeliness of call center responses, and comprise 25% of the
bonus award. Individual goals are set at the beginning of each year for each
executive, based on his or her particular areas of responsibility, and comprise
15% of the bonus award.
EQUITY BASED COMPENSATION. The final component of an executives' core
annual compensation consists of stock options and restricted stock. This
equity-based compensation is designed to be a long-term incentive for
executives to enhance shareholder value. We maintain the 1989 Plan, the
Comprehensive Plan, the Omnibus Plan, and the Restricted Stock Award Plan
pursuant to which we may grant stock options (both statutory and nonstatutory)
and restricted stock awards to key employees. The Compensation Committee
administers these Plans in its sole discretion, including the determination of
the individuals to whom options or awards will be granted, the terms on which
those options are granted and the number of shares subject thereto. In general,
when determining the key employees to whom options or awards shall be granted,
the Compensation Committee considers an executive's relative job
responsibilities and abilities to impact the financial and operating
performance of the Corporation, the aggregate value of options or awards
granted in relation to base salary and the relative positions of the executives
with the Corporation. When the Compensation Committee granted options and
awards in 1998, it considered several factors, including the maximum aggregate
number of options and awards to be granted under the Plans in 1998, the
cumulative amount outstanding and the aggregate number of options and awards to
be granted as a percentage of total shares outstanding.
OTHER. In addition to the above forms of compensation, we also provide
group term life insurance, full life insurance and short and long-term
disability insurance. Executive officers generally also participate in the
non-contributory pension plan, as discussed above.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The CEO's base salary is
determined by the Compensation Committee after reviewing the salaries of top
executives of comparable telecommunication companies, using the process
previously described. The Committee targeted the total annual compensation for
the CEO in 1998 to be approximately the median for comparable executives, based
on information available to the Compensation Committee. The Committee targeted
the CEO's base salary in 1998 for between the 35th to 40th percentile for
comparable executives. The bonus paid in 1998 was pursuant to the bonus plan
available to the Corporation's other executive officers.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
<TABLE>
<S> <C>
JOHN R. BOGER, JR. S.E. LEFTWICH
BEN F. MYNATT PHIL W. WIDENHOUSE
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John R. Boger, Jr., S.E. Leftwich, Ben F. Mynatt and Phil W. Widenhouse
currently serve as members of the Compensation Committee. Mr. Widenhouse
retired as Executive Vice President of the Corporation in 1992 and served in
various capacities with the Corporation from 1949 to 1992.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation may from time to time have short-term loans outstanding
with First Charter National Bank, Concord, North Carolina. L.D. Coltrane, III
is a member of the Advisory Board and a shareholder and Michael R. Coltrane is
a shareholder and director of First Charter National Bank's holding company. As
of December 31, 1998, the Corporation had no outstanding loans with First
Charter National Bank. The Corporation also has an available line of credit
totaling $5 million at First Charter National Bank. First Charter National Bank
is the Trustee of the Corporation's Employee Stock Ownership Plan, the Employee
Savings Plus Plan and the Employees Plan of The Concord Telephone Company. The
Corporation paid First Charter National Bank a fee of approximately $225,000
for such services in 1998.
12
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Common Stock with (i) the Tel Index, a composite of nine
telecommunications companies, and (ii) the Standard & Poor's 500 Stock Index, a
broad equity market index, assuming in each case the investment of $100 on
December 31, 1993 and the reinvestment of dividends. The companies in the Tel
Index are Alltel Corporation, Ameritech Corporation, Bell Atlantic Corporation,
BellSouth Corporation, GTE Corporation, Nynex Corporation, Pacific Telesis
Group, SBC Communications Inc., and US West Inc.
COMPARISON OF THE TOTAL RETURN OF THE CORPORATION'S COMMON STOCK,
THE S&P 500 AND A PEER GROUP INDEX
Plot points for Performance Graph appear below:
CTC S&P 500 Tel Index
--- ------- ---------
12/93 100 100 100
3/94 156.2 118.44 127.09
6/94 155.29 113.95 119.77
9/94 153.83 114.43 127.1
12/94 149.91 120.03 124.82
3/95 152.34 120 121.74
6/95 156.6 131.69 131.66
9/95 155.98 144.27 139.03
12/95 181.87 155.74 161.6
3/96 204.78 165.11 183.25
6/96 250.66 173.98 170.06
9/96 270.59 181.79 178.7
12/96 285.48 187.43 164.67
3/97 331.5 199.87 185.52
6/97 346.61 205.27 189.25
9/97 356.19 241.11 214.65
12/97 383.76 259.19 222.22
3/98 390.76 266.63 263.4
6/98 394.32 303.8 312.05
9/98 395.77 313.94 301.39
12/98 399.55 282.55 324.75
401.04 342.68 400.48
--------------------------------------------
ITEM 2
APPROVAL OF 1999 EMPLOYEE STOCK PURCHASE PLAN
--------------------------------------------
The Board of Directors has adopted the CT Communications, Inc. 1999
Employee Stock Purchase Plan (the "1999 ESPP"), which is subject to the
approval of the shareholders of the Corporation. The text of the 1999 ESPP is
set forth in its entirety as Exhibit A to this Proxy Statement, and the
following summary is qualified by reference thereto. The proposal for approval
of the 1999 ESPP will require the affirmative vote of the holders of a majority
of the votes present and voting with respect to this matter at the Annual
Meeting. Accordingly, neither abstentions nor broker non-votes, if any, will
have the effect of a negative vote with respect to this matter. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ADOPTION OF THE 1999
ESPP.
The 1999 ESPP is designed to give all eligible employees an employment
incentive by increasing their proprietary interest in the Corporation's
success, encouraging ownership of the Common Stock and encouraging them to
remain in the employ of the Corporation. The maximum number of shares of Common
Stock subject to the 1999 ESPP will be 150,000 shares, subject to adjustment
generally to protect against dilution in the event of changes in the
capitalization of the Corporation. In the event that any option expires or is
terminated, surrendered or canceled without being exercised, in whole or in
part, the number of shares of Common Stock subject to that option shall again
be available for grant as an option and shall not reduce the aggregate number
of shares available for grant as options under the 1999 ESPP. The closing price
for the Common Stock on March 12, 1999 on the Nasdaq National Market was
$40.00.
The 1999 ESPP provides for the granting of options to all eligible
employees of the Corporation and its subsidiaries, both officers and
non-officers, entitling them to purchase shares of the Common Stock at the fair
market value on the date of grant (the "Exercise Price"). The fair market value
generally will be the closing price of a share of Common Stock (the "Fair
Market Value") as reported on the Nasdaq National Market. In each period during
which options are made available, the Corporation also may provide each
employee with one or more additional share(s) of Common Stock based on a ratio
to the shares purchased by the employee in such period (the "Bonus Shares").
The Compensation Committee may set this ratio for each period in its sole
discretion. The Compensation Committee shall grant the options at its
13
<PAGE>
discretion. Accordingly, adoption of the 1999 ESPP by the shareholders will not
result in any grant of options unless and until additional action is taken by
the Compensation Committee.
All employees of the Corporation and its subsidiaries will be eligible to
participate in the 1999 ESPP, including those directors and nominees for
election as director who also are employees of the Corporation or its
subsidiaries. Currently, there are approximately 500 employees of the
Corporation and its subsidiaries who will be eligible to participate in the
1999 ESPP. The number of options that may be awarded to executive officers of
the Corporation or other eligible employees cannot be determined at this time.
The 1999 ESPP permits the Compensation Committee to establish the date(s) upon
which an option may be granted and the exercise date for such options (the
"Exercise Date").
Options will terminate on a date specified by the Compensation Committee,
and the option is exercisable only at the end of a period specified by the
Compensation Committee (the "Exercise Date"). However, the 1999 ESPP provides
that if an employee's employment terminates after the granting of an option and
before the Exercise Date for any reason other than retirement with the consent
of the Corporation (as defined in the 1999 ESPP), medical disability (as
defined in the 1999 ESPP) or death, then such employee's options terminate
immediately. If an employee retires with the consent of the Corporation or if
an employee becomes medically disabled or dies, such employee (or his or her
estate, personal representative or beneficiary) may exercise the option within
two business days prior to the Exercise Date.
Options shall be exercised by delivering to the Corporation, not later
than three business days prior to the Exercise Date, such forms as the
Corporation shall prescribe, along with the full Exercise Price. The employee
may elect to pay the Exercise Price by making full payment of the Fair Market
Value of the shares to the Corporation by the Exercise Date. Alternatively, the
employee may deliver a note (the "Note") to the Corporation by the Exercise
Date in payment of some or all of the Exercise Price. The Note will have a
maturity date not to exceed 24 months from the date of issuance and shall
accrue simple interest at a rate of 6% per annum. The Note shall be secured by
the shares of Common Stock to be purchased thereby, and the Corporation will
hold the certificate for such shares until the Note is paid in full. Payments
on the Note are made from the employee's salary on a payroll deduction basis.
The employee will have all rights as a shareholder of the Corporation with
respect to such shares upon payment of the Exercise Price (whether by cash, by
Note, or both), including the power to vote such shares and receive dividends
or other distributions thereon. Notwithstanding the foregoing, if the number of
shares of Common Stock for which options are granted exceeds the remaining
shares available under the 1999 ESPP, then options shall be reduced
proportionately by rounding down to the nearest whole share.
The 1999 ESPP will be administered by the Compensation Committee. The
Compensation Committee may prescribe rules and regulations for such
administration and decide questions with respect to the interpretation or
application of the 1999 ESPP. In addition, the Compensation Committee will have
the authority to alter, amend, suspend or discontinue the 1999 ESPP at any time
without notice, except that no such action may adversely affect the rights of
any employee who has been granted an option. The Compensation Committee,
however, may not increase the number of shares of Common Stock subject to
option under the 1999 ESPP, change the formula by which the price at which
options may be exercised is determined or increase the number of shares that an
employee who is granted an option may purchase.
Options are not transferable, except as provided by will or applicable
laws of descent or distribution. An option may be exercised only by the
employee during his or her lifetime, and only be the employee's beneficiary,
estate or similar person upon an employee's death. The Corporation intends to
register the shares to be issued under the 1999 ESPP under the Securities Act
of 1933, as amended, as soon as practicable after approval of the 1999 ESPP by
the shareholders at the Annual Meeting.
The 1999 ESPP is not intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Code, and the shares acquired under
the 1999 Plan will not have the tax treatment available under Section 423 of
the Code. For Federal income tax purposes, the grant of the options will not be
a taxable event to the employees. The exercise of the options, however, will be
a taxable event. At the time an option is exercised under the 1999 Plan, the
employee will be treated as having received ordinary income equal to the
difference between the fair market value of the acquired shares on the Exercise
Date over the price paid for the shares. The fair market value of any Bonus
Shares received by an employee on an Exercise Date will also be treated as
ordinary income. The Company will be allowed a deduction for Federal income tax
purposes equal to the amount of ordinary income attributable to the employee
upon exercise. The employee's holding period for the acquired shares will
commence on the Exercise Date.
The 1999 ESPP is not qualified under the provisions of Section 401(a) of
the Internal Revenue Code and is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
14
<PAGE>
---------------------------------------------
ITEM 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
---------------------------------------------
We have appointed KPMG, LLP, independent public accountants, as our
auditors for 1999 and recommend our shareholders ratify the appointment. KPMG,
LLP has acted in this capacity since 1988. We have been advised by KPMG, LLP
that neither the firm nor any of its members or associates has any direct
financial interest or material indirect financial interest in the Corporation
other than as its auditors. Although the selection and appointment of the
independent auditors is not required to be submitted to a vote, we deem it
advisable to obtain your ratification of this appointment. We understand that a
representative from KPMG, LLP will be present at the Annual Meeting, will have
the opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions. WE RECOMMEND A VOTE FOR
RATIFICATION OF THE APPOINTMENT OF THIS FIRM AS INDEPENDENT AUDITORS OF THE
CORPORATION FOR 1999. If you do not ratify the appointment of KPMG, LLP, we
will consider a change in auditors for the next fiscal year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon our records, we believe that under Section 16 of the Exchange
Act, all filing requirements of our Directors and officers have been complied
with on a timely basis for 1998, except that L.D. Coltrane, III, the Chairman
of the Board of the Corporation, failed to timely file one report reflecting
nine transactions and Michael R. Coltrane, the President and Chief Executive
Officer of the Corporation, failed to timely file one report reflecting two
transactions. Both late reports and each transaction related to the creation of
a family trust for estate planning purposes, for which L.D. Coltrane, III and
his wife are the settlors and Michael R. Coltrane is a trustee and beneficiary.
SHAREHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant to Rule
14a-8 under the Exchange Act for inclusion in our proxy statement for the 2000
Annual Meeting of Shareholders is November 23, 1999. Additionally, we must
receive notice of any shareholder proposal to be submitted at the 2000 Annual
Meeting of Shareholders (but not required to be included in our proxy
statement) by February 6, 2000. A proposal received after such date will be
considered untimely pursuant to Rules 14a-4 and 14a-5(e) under the Exchange
Act, and the persons named in the proxies solicited by us may exercise
discretionary voting authority with respect to such proposal.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
Our 1998 Annual Report to Shareholders and our Annual Report on Form 10-K
for the year ended December 31, 1998, as filed with the Securities and Exchange
Commission, excluding exhibits, accompany this Proxy Statement. COPIES OF THE
EXHIBITS TO OUR ANNUAL REPORT ON FORM 10-K ARE AVAILABLE UPON WRITTEN REQUEST
TO CT COMMUNICATIONS, INC., 68 CABARRUS AVENUE, EAST, CONCORD, NORTH CAROLINA
28026-0228, ATTENTION: BARRY R. RUBENS, CHIEF FINANCIAL OFFICER AND PAYMENT OF
$25.00 TO COVER THE COSTS OF REPRODUCTION.
OTHER BUSINESS
We know of no other matter to come before the meeting. However, if any
other matter requiring a vote of the shareholders should arise, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with the recommendations of the Board of Directors.
15
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
APPENDIX A
CT COMMUNICATIONS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSES.
This CT Communications, Inc. 1999 Employee Stock Purchase Plan is intended
to provide an employment incentive to eligible employees, including officers,
of CT Communications, Inc. (the "Corporation") and its Subsidiary corporations,
by increasing their proprietary interest in the Corporation's success and
encouraging ownership of the Corporation's Common Stock, and to encourage them
to remain in the employ of the Corporation or a Subsidiary. It is not intended
that this Plan shall operate as an "employee stock purchase plan" within the
meaning of Code section 423(b).
2. DEFINITIONS.
Wherever used herein, the following words and phrases shall have the
meanings stated below unless a different meaning is plainly required by the
context:
(a) "Board of Directors" means the Board of Directors of the Corporation.
(b) "Code" means the Internal Revenue Code of 1986, as now in force or as
hereafter amended.
(c) "Committee" means the Compensation Committee of the Board of
Directors, to which the Board of Directors may delegate its powers with
respect to administration of the Plan pursuant to Section 3 hereof.
(d) "Common Stock" means the common stock, no par value, of the
Corporation. Common Stock hereunder includes stock of original issue, stock
acquired on the open market, and stock acquired through a private
placement.
(e) "Corporation" means CT Communications, Inc., a North Carolina
corporation.
(f) "Elected Shares" means those shares of Common Stock which an Optionee
elects to purchase pursuant to Section 6(c) hereof.
(g) "Employee" means an employee (including officers) of the Corporation
or a Subsidiary.
(h) "Exercise Date" means the date after which an Option shall lapse and
become null and void. The Exercise Date for each Option Period shall be
established by the Committee.
(i) "Fair Market Value" of the Common Stock as of any date means, for so
long as shares of the Common Stock are listed on a national securities
exchange or reported on the Nasdaq Stock Market as a National Market
Security, the closing price of a share of Common Stock; or if no sales
prices are quoted for such date, or if the Common Stock is not listed on a
national securities exchange or reported on the Nasdaq Stock Market as a
National Market Security, "fair market value" shall mean the average of the
closing bid and asked prices for a share of Common Stock in the
over-the-counter market as reported by the Nasdaq Stock Market. If the
Common Stock is not quoted in the over-the-counter market, "fair market
value" shall be the fair value thereof determined in good faith by the
Board.
(j) "Note" means the promissory note which may be entered into between an
Optionee and the Corporation to facilitate payment for the Elected Shares,
as further described in Section 6(e) hereof.
(k) "Notice of Grant" means the document or documents which shall: (i) be
in such form as the Committee shall determine; (ii) incorporate, by
reference, the terms and provisions of this Plan; and (iii) be issued to
each Optionee at least two weeks prior to the Exercise Date.
(l) "Option" (or "Options") means the right granted hereunder which will
entitle an Optionee to purchase shares of Common Stock.
(m) "Option Date" means the date upon which Options are granted by the
Board of Directors.
(n) "Option Period" means the term to be established by the Committee for
each Option during which an Option may be exercised. Each Option Period
shall begin on an Option Date and end on an Exercise Date.
(o) "Option Price" means the price per share of Common Stock described in
Section 6(b) hereof.
A-1
<PAGE>
(p) "Optionee" means an Employee selected by the Committee to receive an
Option.
(q) "Plan" means the CT Communications, Inc. 1999 Employee Stock Purchase
Plan.
(r) "Subsidiary" or "Subsidiaries" means the corporation or corporations
meeting the requirements of Code section 424(f) and which the Board
designates as a participant in the Plan.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. No member of the Board of
Directors who is not otherwise employed by the Corporation shall be eligible to
receive an Option. No individual director who is or within the preceding year
has been eligible to receive an Option may serve as a member of the Committee.
No member of the Board of Directors may exercise discretion with respect to, or
participate in, the administration of the Plan if, at any time within one year
prior to such exercise or participation, he or she has been eligible for
selection as a person to whom stock may be allocated or to whom stock options
or stock appreciation rights may be granted pursuant to the Plan or any other
plan of the Corporation or any Subsidiary or other affiliate thereof entitling
the participants therein to acquire stock, stock options or stock appreciation
rights of the Corporation or of any of its Subsidiaries or other affiliates.
Subject to the express provisions of the Plan, the Committee may interpret the
Plan, prescribe, amend and rescind rules and regulations relating to it,
correct any defect or omission or reconcile any inconsistency in the Plan,
determine the terms and provisions of the Options granted hereunder, determine
and change the Offering Periods, Offering Dates and Exercise Periods (except as
otherwise limited herein) and make all other determinations necessary or
advisable for the administration of the Plan. The determinations of the
Committee on all matters regarding the Plan shall be conclusive. The Committee
shall have the absolute discretion to select Optionees and determine the number
of shares of Common Stock that may be purchased by an Optionee under this Plan.
4. ELIGIBILITY.
Any Employee may be designated as an Optionee by the Committee and may be
granted as of an Option Date an Option to purchase Common Stock.
5. STOCK.
The stock subject to the Options to be issued hereunder shall be the
Common Stock. The maximum number of such shares to be issued upon the exercise
of the Options hereby granted shall be an aggregate of One Hundred and Fifty
Thousand (150,000) shares. In the event that any Option expires or is
terminated, surrendered or canceled without being exercised, in whole or in
part, for any reason, the number of shares of Common Stock theretofore subject
to such Option shall again be available for grant as an Option hereunder and
shall not reduce the aggregate number of shares of Common Stock available for
grant as such Options as set forth in this Section 5.
6. TERMS AND CONDITIONS OF OPTIONS.
Options granted hereunder shall be evidenced by a Notice of the Grant.
Such Options shall be subject to the following terms and conditions:
(a) DURATION OF THE OPTION. Each Option shall be exercised by the
Exercise Date unless it has expired sooner as a result of the Optionee's
termination of the Option or the Optionee's termination of employment as
provided in Section 6(h) or 6(i). Each Option not exercised during an
Option Period shall expire on the Exercise Date for the Option Period.
(b) OPTION PRICE. The Option Price shall be the Fair Market Value of the
Common Stock on the Option Date but not less than the par value of such
stock.
(c) ELECTED SHARES. Each Optionee shall notify the Corporation, in the
manner described in Section 6(g) and on such forms as shall be provided by
the Corporation, of the number of Elected Shares which the Optionee wishes
to purchase, which election may be for either all or any part of the shares
subject to the Option.
The Optionee may elect to pay the Corporation the Fair Market Value of
the Common Stock as described in Section 6(g) by making full payment for
the Fair Market Value of the Elected Shares to the Corporation by the
Exercise Date. Alternatively, the Optionee may enter into a Note by the
Exercise Date (as described in Section 6(e)) to facilitate payment to the
Corporation of the Fair Market Value of the Elected Shares.
A-2
<PAGE>
Notwithstanding any provision of this Plan to the contrary, if the number
of shares of Common Stock for which Options are granted hereunder exceeds
the remaining shares of Common Stock available under Section 5 on any
Option Date, then the Options granted on such Option Date to all Optionees
shall, in a nondiscriminatory manner, be reduced proportionately by
rounding down to the nearest whole share; provided, however, that if such
an adjustment would result in the grant of any Option to purchase less than
one whole share of Common Stock, then in such event no Options shall be
granted hereunder on such Option Date.
(d) MATCHING SHARES. The Corporation may provide each Optionee with one
(1) or more additional share(s) of Common Stock based upon a ratio to each
Optionee's Elected Shares which an Optionee purchases pursuant to this Plan
during each Option Period. The Corporation, in its sole discretion, may set
the ratio of matching shares to Elected Shares for each Option Period
hereunder, and such matching share(s), if granted for an Option Period,
will be transferred to the Optionee upon the completed exercise of the
Option as described in Section 6(g).
(e) NOTE. The Corporation shall make available to each Optionee an
alternative means of exercising an Option as described in this Section
6(e). Before the Exercise Date, the Optionee and the Corporation may enter
into a Note for a period not to exceed twenty-four (24) months, such Note
accruing simple interest at the rate of six percent (6%) per annum,
computed on a 365 day basis, on the amount due on the Note. The Note, which
will be secured by the Elected Shares held by the Corporation as described
in Section 9, will be in a principal amount equal to the Fair Market Value
of the Elected Shares for which the Optionee does not tender payment by the
Exercise Date, and shall be secured by Elected Shares purchased under the
Option and held by the Corporation as described in Section 6(l). Payments
on the Note will be made from the Optionee's salary on a payroll deduction
basis and all amounts withheld shall be exclusively applied to the
retirement of the Note.
(f) DATE BY WHICH OPTION SHALL BE EXERCISED. Except as provided in
Section 6(i) and (j), each Option which is exercised shall be exercised on
or before the Exercise Date.
(g) MANNER OF EXERCISING OPTION. Except as provided in Section 6(i) and
6(j), each Optionee shall, on such forms as shall be provided by the
Corporation, at least three (3) business days prior to the Exercise Date,
notify the Corporation of the Optionee's election either to: (i) exercise
the Option to purchase all or any part of the Elected Shares by cash
payment on or before the Exercise Date; (ii) exercise the Option to
purchase all or any part of the Elected Shares by entering into a Note for
payment of the Option Price and secured by the Elected Shares; (iii) any
combination of (i) or (ii); or, (iv) decline to so exercise the Option,
which election, in all events, shall be effective as of said Exercise Date.
In the event the Optionee so exercises the Option by payment of cash, the
Optionee shall tender to the Corporation all funds as may be necessary to
purchase all or any part of the Optionee's Elected Shares.
In the event that the Optionee enters into a Note, salary withholding for
repayment of the Note shall begin immediately and continue until the Note
is paid in full.
Should the Optionee fail to deliver the notification form referred to in
this Section 6(g), such failure shall be deemed an election by said
Optionee to decline to exercise the Option.
(h) TERMINATION OF OPTION. An Optionee may at any time on or before the
Exercise Date terminate the Option in its entirety by written notice of
such termination delivered in the manner set forth in Section 11 hereof.
Such termination shall become effective upon receipt of such notice by the
Corporation. Upon such termination, all further rights and privileges of
Optionee granted pursuant to this Plan and the Option granted hereunder
shall be terminated.
(i) TERMINATION OF EMPLOYMENT. In the event that an Optionee's employment
by the Corporation or a Subsidiary is terminated other than by retirement
with the consent of the Corporation, medical disability (determined in
accordance with the Corporation's long term disability plan then in effect)
or by death, all rights and privileges of Optionee granted pursuant to the
Plan and of any Option granted hereunder shall terminate, except that any
obligations arising under the Note(s) shall continue under the terms of the
Note(s). If any termination of employment is due to retirement with the
consent of the Corporation, the Optionee shall have the right within two
(2) business days prior to the Exercise Date, to exercise the Option to
purchase all or any part of the Optionee's shares. If the Optionee shall
become medically disabled or dies while in the employment of the
Corporation or any Subsidiary of the Corporation before the Exercise Date,
the Optionee's beneficiary (as provided in Section 6(k) estate, or personal
representative shall have the right, at any time, within two (2) business
days prior to the Exercise Date, to exercise
A-3
<PAGE>
the employee's Option to purchase all or any part of the shares. Options
exercised pursuant to the terms of this Section 6(i) may be exercised
(during the specified times) as to all or any part of the shares by written
notice delivered in the manner set forth in Section 11 hereof and tendering
with such notice payment of any or all funds, and shall be deemed exercised
as of the date such notice is delivered. Failure to deliver such notice and
payment within the time provided shall be deemed an election not to
exercise the Option, which shall terminate.
Retirement of an Optionee at the Optionee's normal retirement date in
accordance with the provisions of any retirement plan adopted by the
Corporation or by any Subsidiary shall be deemed to be a retirement with
the consent of the Corporation. Whether any other terminations of
employment (either at an optional retirement date in accordance with the
provision of any such retirement plan or otherwise) are to be considered
retirements with the consent of the Corporation and whether authorized
leaves of absence or absences on military or government service or for
other reasons shall constitute a termination of employment for the purposes
of the Plan, shall be determined by the Committee, the determination of
which shall be final and conclusive. Employment by the Corporation or any
Subsidiary shall be deemed to be continuous and not to terminate during any
uninterrupted period in which an employee is in the employment of the
Corporation or any Subsidiary, but only if and so long, in the case of
employment by a Subsidiary, as employment by such Subsidiary will, under
the applicable provisions of the Code as then in effect, result in the same
tax treatment as would be accorded if such Optionee were an employee of the
Corporation.
(j) ADJUSTMENT PROVISIONS. The aggregate number of shares of Common Stock
with respect to which Options may be granted, the aggregate number of
shares of Common Stock subject to each outstanding Option, and the Option
Price per share of each Option may all be appropriately adjusted as the
Board of Directors may determine for any increase or decrease in the number
of shares of issued Common Stock resulting from a subdivision or
consolidation of shares, whether through reorganization, recapitalization,
stock split-up, stock distribution or combination of shares, or the payment
of a share dividend or other increase or decrease in the number of such
shares outstanding effected without receipt of consideration by the
Corporation. Adjustments under this Section 6(j) shall be made according to
the sole discretion of the Board of Directors, and its decision shall be
binding and conclusive.
(k) TRANSFERABILITY AND DESIGNATION OF BENEFICIARY. No Option may be
transferred, assigned, pledged, or hypothecated (whether by operation of
law or otherwise), except as provided by will or the applicable laws of
descent or distribution, and no Option shall be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of an Option, or levy of attachment or
similar process upon the Option not specifically permitted herein shall be
null and void and without effect. An Option may be exercised only by the
Optionee during his or her lifetime, and only by the Optionee's beneficiary
(as described below), estate or the person who acquires the right to
exercise such Option upon the Optionee's death.
Each Optionee may file a written designation of beneficiary who is to
receive any stock or cash in the event that such Optionee dies after the
end of an Offering Period but before the issuance of the shares or during
an Offering Period but before the Exercise Date.
(l) RIGHTS AS A SHAREHOLDER. An Optionee shall have all rights as a
shareholder with respect to shares purchased pursuant to the Options to be
granted hereunder after payment has been made (whether by cash payment or
by entering into a Note as described in Section 6(e)) for such shares and a
stock certificate for such shares has been actually issued to said
Optionee, except that Elected Shares which are security for a Note shall be
held by the Corporation until the Note is paid in full. No adjustment will
be made for dividends or other rights for which the record date is prior to
the date of such issuance.
(m) REGISTRATION. Each Option under the Plan shall be granted on the
condition that a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Common Stock subject
to such Option has become effective and a copy of the prospectus has been
delivered to the Optionee.
7. DURATION OF THE PLAN.
The Plan will terminate on the first to occur of (i) the granting of all
Options authorized under the Plan or (ii) termination by the Committee pursuant
to Section 8 hereof.
A-4
<PAGE>
8. TERMINATION AND AMENDMENT OF THE PLAN.
The Committee may, from time to time, alter, amend or suspend the Plan at
any time without notice, or may at any time terminate the Plan, provided that
no Optionee's existing rights are materially and adversely affected thereby
without the consent of the affected Optionee; provided further, upon any such
amendment or modification, all Optionees shall continue to have the same rights
and privileges as other Optionees (except as otherwise provided for in Section
6 hereof); and provided further, that no such amendment of the Plan shall,
except as provided in Section 6 hereof, change the formula by which the price
for which the Common Stock shall be sold is determined or increase the maximum
number of shares which any Optionee may purchase.
9. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of its Common Stock
pursuant to Options granted hereunder will be used for general corporate
purposes.
10. NO OBLIGATION TO PURCHASE SHARES.
The granting of an Option pursuant to this Plan shall impose no obligation
upon the Optionee to purchase any shares covered by such Option unless such
Optionee affirmatively elects to purchase Common Stock as described in Section
6(c).
11. NOTICES.
Any notice which the Corporation or Optionee may be required or permitted
to give to each other shall be in writing and shall be deemed given when
delivered personally or deposited in the U.S. Mail, first class postage
prepaid, addressed as follows: Secretary, CT Communications, Inc., 68 Cabarrus
Avenue, Post Office Box 227, Concord, North Carolina 28026-0227, or as such
other address as the Corporation, by notice to the Optionee, may designate in
writing from time to time; to the Optionee, at the address shown on the records
of the Corporation, or at such other address as the Optionee, by notice to the
Corporation, may designate in writing from time to time.
12. THE RIGHT OF THE CORPORATION TO TERMINATE EMPLOYMENT.
Nothing contained in the Plan or in any option granted pursuant to the
Plan shall confer upon any Optionee any right to be continued in the employment
of the Corporation or one of its Subsidiaries, or shall interfere in any way
with the right of the Corporation or any of its Subsidiaries, as the case may
be, to terminate his employment at any time for any reason.
13. MISCELLANEOUS.
(a) LEGAL AND OTHER REQUIREMENTS. The obligations of the Corporation to
sell and deliver Common Stock under the Plan shall be subject to all
applicable foreign or domestic laws, regulations, rules and approvals,
including, but not by way of limitation, the effectiveness of a
registration statement under the Securities Act and the requirements of any
stock exchange upon which the shares of Common Stock may be listed if
deemed necessary or appropriate by the Corporation. Certificates for shares
of Common Stock issued hereunder may be legended as the Committee shall
deem appropriate.
(b) WITHHOLDING TAXES. Upon the exercise of any Option under the Plan,
the Corporation shall have the right to require the Optionee to remit to
the Corporation an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the delivery of any certificate
or certificates for shares of Common Stock.
14. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective only if:
(a) The Plan shall have been adopted by the Board of Directors of the
Corporation; and
(b) The Plan shall have been approved by the affirmative vote of at least
a majority of the votes cast with respect to approval of the Plan at the
shareholders' meeting at which the Plan is considered.
A-5
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
<PAGE>
********************************APPENDIX******************************
o FOLD AND DETACH HERE o
- ------------------------------------------------------------------------------
COMMON STOCK
This Proxy is Solicited on Behalf
of the Board of Directors of
CT COMMUNICATIONS, INC.
ANNUAL MEETING OF SHAREHOLDERS, APRIL 22, 1999
KNOW ALL MEN BY THESE PRESENT, that the undersigned shareholder of CT
COMMUNICATIONS, INC., a North Carolina corporation (the "Company"), hereby
constitutes and appoints L. D. Coltrane, III, Michael R. Coltrane and Barry R.
Rubens, attorneys and proxies with full power of substitution, for and on
behalf of the undersigned to act and vote as indicated below, according to the
number of shares of the Company's Common Stock held of record by the
undersigned on March 12, 1999, and as fully as the undersigned would be
entitled to act and vote if personally present at the Annual Meeting of
Shareholders to be held at the Company's Customer Care Facility, 2000 Progress
Place, Concord, North Carolina, at 9:00 a. m., local time, April 22, 1999, and
any adjournment or adjournments thereof (the "Annual Meeting"), as follows:
(1) Election of directors.
<TABLE>
<CAPTION>
<S> <C>
[ ] FOR electing the nine nominees listed [ ] WITHHOLD AUTHORITY to vote for
below for the terms indicated election of all nominees listed below
</TABLE>
(Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
strike a line through the nominee's name in the list below.)
<TABLE>
<CAPTION>
TERM EXPIRING 2002 TERM EXPIRING 2001 TERM EXPIRING 2000
- ---------------------------- -------------------- --------------------
<S> <C> <C>
O. Charlie Chewning, Jr. John R. Boger, Jr. Michael R. Coltrane
L.D. Coltrane, III William A. Coley Samuel E. Leftwich
Phil W. Widenhouse Ben F. Mynatt Jerry H. McClellan
</TABLE>
(2) Approval of the adoption of the CT Communications, Inc. 1999 Employee
Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Ratification of selection of KPMG, LLP as independent public
accountants for 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, the proxies are authorized to act and vote upon
any other business which may properly be brought before said meeting or
any adjournment or adjournments thereof.
<PAGE>
o FOLD AND DETACH HERE o
------------------------------------------------------------------------------
The undersigned hereby ratifies and confirms all that said attorneys and
proxies or any of them lawfully do or cause to be done by virtue hereof. A
majority of said attorneys and proxies who shall be present and acting as such
at the Annual Meeting or any adjournment thereof, or if only one such attorney
and proxy be present and acting, then that one, shall have and may exercise all
powers hereby conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED IN FAVOR OF PROPOSALS 1, 2 AND 3.
The undersigned hereby acknowledges
receipt of the Notice of Annual
Meeting of Shareholders, dated March
26, 1999, and the proxy materials
furnished therewith.
Dated this ___ day of _________, 1999.
_______________________________(SEAL)
_______________________________(SEAL)
NOTE: Signature should agree with
name on stock certificate as printed
on this proxy card. When shares are
held by joint tenants, both should
sign. Executors, administrators,
trustees and other fiduciaries, and
persons signing on behalf of
corporations or partnerships, should
so indicate when signing.
PLEASE MARK, DATE, SIGN AND RETURN THIS
PROXY PROMPTLY. THANK YOU.
