OFFICE OF THE CHAIRMAN
March 25, 1994
To Our Stockholders:
The Board of Directors joins me in extending to you a cordial invitation
to attend the 1994 Annual Meeting of Stockholders. The meeting will be held
in Lincoln, Nebraska, at 10:30 a.m. on Wednesday, April 27, 1994.
In addition to voting on the matters described in this Proxy Statement,
we will review the Corporation's 1993 business and discuss our plans for 1994
and beyond. There will be an opportunity to discuss matters of interest to
you as a stockholder.
We hope many Lincoln Telecommunications Company stockholders will find
it convenient to be present at the meeting, and we look forward to greeting
those personally able to attend. It is important that your shares be
represented and voted whether or not you plan to be present. THEREFORE,
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE COMPLETE, SIGN, AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED. No
postage is necessary if the envelope is mailed in the United States. The
prompt return of your proxy will save the expense involved in further
communications. Any stockholder attending the meeting may vote in person
even if a proxy has been returned.
We hope that you will be able to attend the meeting, and we look forward
to seeing you.
Sincerely,
/s/ Thomas C. Woods, III
THOMAS C. WOODS, III
Chairman of the Board
LINCOLN TELECOMMUNICATIONS COMPANY
1440 M STREET
LINCOLN, NEBRASKA 68508
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 27, 1994
To the Holders of Common Stock of
LINCOLN TELECOMMUNICATIONS COMPANY:
Notice is hereby given that the Annual Meeting of Stockholders of
Lincoln Telecommunications Company, a Nebraska corporation (hereinafter the
"Corporation"), will be held at the offices of the Corporation, 1440 M
Street, Lincoln, Nebraska, 68508, on Wednesday, April 27, 1994, at 10:30 a.m.
for the following purposes:
(1) To elect five (5) directors to hold office for a term of three
years or until their successors are elected and qualified.
(2) To transact any other business which may be properly brought
before the meeting or any adjournment or postponement thereof.
The close of business on March 11, 1994, has been fixed as the date of
record for the determination of common stockholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof. Accordingly, only common stockholders of record at the
close of business on that date will be entitled to notice of and to vote at
said meeting. A list of the stockholders entitled to vote at the Annual
Meeting will be open for examination by any stockholder for any purpose
germane to the meeting during ordinary business hours for a period of ten
days prior to the meeting at the offices of the Corporation, which address is
set forth above, and will also be available for examination at the Annual
meeting until its adjournment.
It is important that your shares of stock be represented at this Annual
Meeting. If you do not expect to be present in person, you are requested by
Management to fill in, sign, date and return the proxy in the enclosed
envelope. No postage need be affixed if mailed within the United States.
By order of the Board of Directors,
LINCOLN TELECOMMUNICATIONS COMPANY
/s/ Michael J. Tavlin
Michael J. Tavlin, Secretary
Lincoln, Nebraska
March 25, 1994
YOUR VOTE IS IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS,
SIGN EXACTLY AS YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
LINCOLN TELECOMMUNICATIONS COMPANY
1440 M STREET
LINCOLN, NEBRASKA 68508
PROXY STATEMENT
SOLICITATION OF PROXIES
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1994
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Management of the Corporation for use at the
Annual Meeting of Stockholders to be held on April 27, 1994 for the purposes
set forth in the foregoing Notice. This statement and the form of proxy are
being first sent to security holders on or about March 25, 1994.
The accompanying form of proxy, in ballot form, has been prepared at the
direction of the Board of Directors and is sent to you at its request. The
proxies named therein have been designated by Management.
Stockholders who execute proxies retain the right to revoke them at any
time before they are voted by attending the Annual Meeting and voting in
person or by notifying the Secretary of the Corporation at 1440 M Street,
Lincoln, Nebraska, 68508, in writing of such revocation prior to the
Meeting. A proxy, when properly executed, duly returned and not so revoked,
will be voted and, if it contains any specification, will be voted in
accordance therewith; provided the proxy is not mutilated or otherwise
received in such form or at such time as to render it unvotable. If no
choice is specified, the proxy will be voted in accordance with the
recommendations of Management, as stated on the proxy form and in this proxy
statement.
The solicitation will be conducted by mail, except that in a limited
number of instances proxies may be solicited by officers, directors and
regular employees of the Corporation personally, by telephone or by
telegraph. The Corporation does not anticipate payment of any compensation
or fees of any nature to anyone for the solicitation of these proxies, except
that the Corporation may pay persons holding shares in their name, or of
their nominees, for sending proxies and proxy material to principals. The
entire cost of solicitation will be borne by the Corporation.
Outstanding Shares and Voting Rights
The voting securities of the Corporation consist of 32,602,550 shares
of Common Stock (CUSIP534780 10 1), issued and outstanding as of March 11,
1994, each of which is entitled to one vote. Only holders of Common Stock of
record at the close of business on March 11, 1994 are entitled to notice of
and to vote with respect to this solicitation. (All share amounts in this
Proxy Statement reflect adjustment for the Corporation's 100% stock dividend
distributed January 6, 1994.)
The following table sets forth information as of March 11, 1994,
regarding the only persons or entities known by the Corporation to own more
than 5% of the Corporation's Common Stock. Except as otherwise indicated
below, both entities own such Common Stock directly with sole investment and
sole voting power.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership Of Class
Sahara Enterprises, Inc.* 5,412,976 16.60
Suite 2000
Three First National Plaza
Chicago, Illinois 60602
Gabelli Funds Inc., and 2,152,770 6.60
associated entities**
One Corporate Center
Rye, New York 10580-1434
* Reference should be made to the table and footnotes thereto under
"Security Ownership of Management" on pages 6 and 7, especially the
information concerning beneficial ownership of shares by Messrs. Woods and
Wheatley.
** These are investment firms which have the power to vote and dispose of
the stock owned by each, shared in part with others in a portfolio
management/agency relationship in respect to a number of accounts.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
In view of the fact that he is retiring from his positions with Sahara
Enterprises, Inc., Mr. George Kelm is retiring from the Board and is not
standing for re-election. The members of the Board and Management of the
Corporation appreciate Mr. Kelm's years of service on the Board of Directors.
Five Directors are to be elected at the Annual Meeting for a term of
three years or until their respective successors are elected and qualified.
The persons named in the accompanying form of proxy will vote the
shares represented by all executed proxies which are received for the
election of Management's nominees hereinafter named, unless the authority to
do so is withheld on the proxy. All nominees are presently serving as
Directors of the Corporation, being elected to office by its stockholders.
The holders of a majority of the Common Stock issued and outstanding,
present in person, or represented by proxy, shall constitute a quorum at the
Annual Meeting for the transaction of business. Shares represented by
proxies on which the authority to vote for a director nominee or nominees is
withheld and broker non-votes are counted for purposes of determining the
presence of a quorum for the transaction of business. If a quorum is
present, the affirmative vote of the majority of the shares of Common Stock
represented at the Annual Meeting shall be necessary for the election of a
director nominee. A director nominee must receive the affirmative vote of
the majority of Common Stock represented at the Annual Meeting in order to be
elected, and shares represented by proxies or ballots on which authority to
vote is withheld and non-votes are not treated as votes for a nominee.
At the Annual Meeting, votes will be counted by employees of Mellon
Securities Trust Company, the Corporation's independent transfer agent and
registrar. Such individuals will process the votes cast by the stockholders,
will make a report of their inspection and count of the votes cast by the
stockholders and will certify the affirmative votes and votes withheld for
the election of each director nominee.
Under Nebraska law, holders of Common Stock are entitled to cumulative
voting rights in the election of directors. Cumulative voting allows a
stockholder to vote the number of shares owned by him for as many persons as
there are directors to be elected, or to cumulate said votes and give one
person as many votes as the number of directors to be elected multiplied by
the number of his shares, or to distribute said votes among as many directors
to be elected as he sees fit. Unless directed differently on any executed
proxy, the persons named in the proxy will vote the shares represented by any
proxy equally among those nominees for whom the stockholder has not withheld
authority to vote.
Management has no reason to believe that any nominee will refuse to act
or be unable to accept election; however, in such event and if any other
unforeseen contingency should arise, it is the intention of the persons named
in such accompanying form of proxy to vote for other nominees selected by the
Board in accordance with their best judgment.
The following table sets forth certain information about each director,
including each person's business experience for the past five years, and
presents certain information for all present executive officers and directors
as a group. Information presented is stated as of February 28, 1994.
NOMINEES FOR TERM TO EXPIRE IN 1997
WILLIAM W. COOK, JR.; Director since 1981; Age 57; Beatrice, Nebraska. Mr.
Cook is Chairman, President and Chief Executive Officer of Beatrice National
Bank & Trust Co., of Beatrice, Nebraska, and has held such position since
1993. He was President and Chief Executive Officer of such company from 1971
to 1993.
JAMES E. GEIST; Director since 1973; Age 64; Lincoln, Nebraska. Mr. Geist
retired in 1993 from the positions of Chairman of the Board and Chief
Executive Officer of the Corporation and its principal subsidiary, The
Lincoln Telephone and Telegraph Company, and also retired from the positions
of Chairman of the Board of the Corporation's other subsidiaries, LinTel
Systems Inc. and Prairie Communications, Inc., all of Lincoln, Nebraska. He
was the President and Chief Executive Officer of the Corporation and The
Lincoln Telephone and Telegraph Company from 1988 to 1990, and was President
and Chief Operating Officer of the Corporation and The Lincoln Telephone and
Telegraph Company from 1983 to 1988. Mr. Geist is currently President of
Geist, Inc.
DONALD H. PEGLER, JR.; Director since 1979; Age 67; Lincoln, Nebraska. Mr.
Pegler is Chairman of the Board and Chief Executive Officer of Pegler-Sysco
Food Services Company (distributors of institutional food, food service
supplies and equipment), of Lincoln, Nebraska, and has held such
position since 1989. He was Chairman of the Board and President of Pegler
and Company from 1969 to 1989.
CHARLES N. WHEATLEY; Director since 1993; Age 43; Chicago, Illinois. Mr.
Wheatley is President and Chief Executive Officer of Sahara Enterprises, Inc.
(a diversified holding company) and has held such position since July, 1992.
He was Vice President and Secretary of Sahara Enterprises, Inc.
from 1985 to July 1992. Mr. Wheatley is a Director of Sahara Enterprises,
Inc.
THOMAS C. WOODS, III; Director since 1979; Age 48; Lincoln, Nebraska. Mr.
Woods is Chairman of the Board of the Corporation and its principal
subsidiary, The Lincoln Telephone and Telegraph Company. He was the
Corporation's Vice Chairman of the Board-Corporate Relations and
Communications from March 1990 to April 1993, and was Vice President
Corporate Relations from March 1985 to March 1990. Mr. Woods is a director
of Sahara Enterprises, Inc.
PRESENT TERM EXPIRES 1995
J. TAYLOR GREER; Director since 1972; Age 70; Lincoln, Nebraska. Mr. Greer
is a partner in the Woods & Aitken law firm of Lincoln, Nebraska, and has
held such position since 1956. (See Note 2 below.)
CHARLES R. HERMES; Director since 1992; Age 51; Hastings, Nebraska. Mr.
Hermes is President of Dutton-Lainson Company (wholesale electrical and
plumbing supplies, and a manufacturer of hardware and marine specialties) of
Hastings, Nebraska, and has held such position since 1974.
FRANK H. HILSABECK; Director since 1990; Age 49; Lincoln, Nebraska. Mr.
Hilsabeck is President and Chief Executive Officer of the Corporation, and is
President of its principal subsidiary, The Lincoln Telephone and Telegraph
Company. He was the Corporation's President and Chief Operating Officer from
March 1991 to May 1993, was President-Telephone Operations from March 1990 to
March 1991, was Vice President-Telephone Operations from 1986 to March 1990,
and was Executive Vice President-Operations of such principal subsidiary from
1986 to March 1990.
PAUL C. SCHORR, III; Director since 1973; Age 57; Lincoln, Nebraska. Mr.
Schorr is President and Chief Executive Officer of ComCor Holding
Incorporated (an electrical contractor specializing in construction
consulting and services) of Lincoln, Nebraska, and has held such position
since 1989. He was President of Fischbach Corporation (a diversified
electrical/mechanical contractor) from 1990 to 1992, and President and Chief
Executive Officer of Commonwealth Companies, Inc. (a diversified electrical
contractor) from 1986 to 1989.
JAMES W. STRAND; Director since 1990; Age 47; Lincoln, Nebraska. Mr. Strand
is President-Diversified Operations of the Corporation, Executive Vice
President-Marketing and Customer Services of its principal subsidiary, The
Lincoln Telephone and Telegraph Company and is President of its subsidiaries,
LinTel Systems Inc. and Prairie Communications, Inc. He was the
Corporation's Vice President-Diversified Operations from 1987 to March 1990
and the Corporation's Vice President-LinTel Enterprises from 1986 to 1987.
PRESENT TERM EXPIRES 1996
DUANE W. ACKLIE; Director since 1983; Age 62; Lincoln, Nebraska. Mr. Acklie
is Chairman of Crete Carrier Corporation (a contract and common motor
carrier) of Lincoln, Nebraska, and has held such position since 1991. He was
President and Chief Executive Officer from 1971 to 1991. Mr. Acklie is a
Director of FirsTier Financial, Inc. of Omaha, Nebraska.
TERRY L. FAIRFIELD; Director since 1993; Age 45; Lincoln, Nebraska. Mr.
Fairfield is President and Chief Executive Officer of the University of
Nebraska Foundation, Lincoln, Nebraska. He has held such position since
1987.
JOHN HAESSLER; Director since 1993; Age 57; Lincoln, Nebraska. Mr. Haessler
is President and Chief Executive Officer of Woodmen Accident and Life Company
of Lincoln, Nebraska, and has held such position since 1986. (See Note 1
below.)
WILLIAM C. SMITH; Director since 1983; Age 60; Lincoln, Nebraska. Mr. Smith
retired in 1989 from the position of Chairman and Chief Executive Officer of
FirsTier Financial, Inc. of Omaha, Nebraska, a position which he had held
since 1988. Mr. Smith is currently self-employed in business and financial
consulting.
LYN WALLIN ZIEGENBEIN; Director since 1992; Age 41; Omaha, Nebraska. Mrs.
Ziegenbein is an attorney and is Executive Director of Peter Kiewit
Foundation of Omaha, Nebraska, and has held such position since 1983. (See
Note 2 below.)
______________________________
Note 1. Woodmen Accident and Life Company is the insurer from which
the Corporation and its principal subsidiary, The Lincoln Telephone and
Telegraph Company, purchase key man life insurance and employee group life
insurance. The total net premiums paid for such insurance coverages in
1993 were $867,818.
Note 2. The Woods & Aitken law firm, of which Mr. Greer is a partner
and Mr. John H. Ziegenbein, the husband of Mrs. Ziegenbein, is of counsel,
provided legal services to the Corporation and its subsidiaries, The Lincoln
Telephone and Telegraph Company, LinTel Systems Inc., and Prairie
Communications, Inc., during 1993 for which it received fees in the amount of
$185,203.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1993, six meetings of the Board of Directors were held. One
director, Mrs. Lyn Wallin Ziegenbein, attended fewer than 75% of the
aggregate number of meetings of the Board of Directors and the committee on
which she served. The Corporation has no standing nominating committee, but
does have the following three standing committees:
Executive Committee
The Executive Committee, in accordance with By-Law 17 of the Corporation's
By-Laws, and subject to the limitations of the Nebraska Business Corporation
Act, possesses and may exercise all powers of the Board of Directors. The
Committee met three times during 1993. Committee members during 1993 were:
Frank H. Hilsabeck, Chairman; William W. Cook, Jr.; J. Taylor Greer; George
Kelm; and William C. Smith.
Audit Committee
The Audit Committee recommends the independent auditors for the Corporation
to the full Board of Directors, reviews the scope of the audit and approves
the fees for the auditors. In addition, the Committee reviews the work of
the Corporation's Internal Audit Section. The Committee met four times
during 1993. Committee members during 1993 were: George Kelm, Chairman;
Terry L. Fairfield; John Haessler; Charles R. Hermes; and Charles N.
Wheatley.
Executive Compensation Committee
The Executive Compensation Committee reviews and makes recommendations to the
full Board of Directors for compensation levels of the Corporation's officers
and administers the 1989 Stock and Incentive Plan participated in by
executive officers and other key employees. The Committee met twice during
1993. Committee members during 1993 were: Duane W. Acklie, Chairman; Paul
C. Schorr, III; Charles N. Wheatley; and Lyn Wallin Ziegenbein.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is a tabulation indicating as of February 28, 1994, the
shares of the Corporation's Common Stock beneficially owned by each director
and nominee, each of the named executive officers, and directors and
executive officers of the Corporation as a group.
Name of Beneficial Principal Amount and Percent
Owner Position Nature of of
Beneficial Class
Ownership
(Note 1)
Thomas C. Woods, III. Chairman of the Board 52,540 Direct 16.98%
and Director 5,482,000 Indirect* Note 4
Frank H. Hilsabeck President & Chief 24,003 Direct Note 3
Executive Officer 200 Indirect*
and Director
James W. Strand President-Diversified 12,467 Direct Note 3
Operations & Director 100 Indirect*
Charles P. Arnold Senior Vice President- 7,707 Direct Note 3
Network Operations (Note 2) 3,829 Indirect*
Name of Beneficial Principal Amount and Percent
Owner Position Nature of of
Beneficial Class
Ownership
(Note 1)
Robert L. Tyler Senior Vice President- 8,481 Direct Note 3
Chief Financial Officer 1,886 Indirect*
Duane W. Acklie Director 88,717 Direct Note 3
45,200 Indirect*
William W. Cook, Jr. Director 6,552 Direct Note 3
856 Indirect*
Terry L. Fairfield Director None Direct Note 3
50,312 Indirect*
James E. Geist Director 41,347 Direct Note 3
15,412 Indirect*
J. Taylor Greer Director 25,232 Direct Note 3
7,168 Indirect*
John Haessler Director 2,000 Direct Notes
242,432 Indirect* 3 & 5
Charles R. Hermes Director 2,000 Direct Note 3
30,835 Indirect*
Donald H. Pegler, Jr. Director 800 Direct Note 3
40,000 Indirect*
Paul C. Schorr, III. Director 1,669 Direct Note 3
29,776 Indirect*
William C. Smith Director 2,400 Direct Note 3
None Indirect*
Charles N. Wheatley Director None Direct 16.62%
5,412,976 Indirect* Note 4
Lyn Wallin Ziegenbein Director 4,000 Direct Note 3
None Indirect*
All Directors and Executive
Officers as a Group TOTAL 6,251,473**
TOTAL PERCENT OF CLASS 19.17%**
* Includes shares held by individual's spouse, held by the individual in
custodianship for minor children, or held by a corporation with which the
individual is affiliated, and to the extent listed as owned by the director
should not be construed as an admission of beneficial ownership.
** Total shares and percent of class ownership do not reflect the
cumulative effect of beneficial ownership by Messrs. Woods and Wheatley of
shares held of record by Sahara Enterprises, Inc. (See Note 4 below.)
Note 1. Approximate number of shares of Common Stock owned, directly
or indirectly, as of February 28, 1994. This information, not being wholly
within the knowledge of the Corporation, has been furnished by each Director
or Officer. Also includes all Short-Term Incentive awards of Restricted
Stock of the Corporation under the 1989 Stock and Incentive Plan (the "Plan")
but does not include any Long-Term Incentive awards of Stock Options under
the Plan. (All share numbers reflect adjustment for the Corporation's 100%
stock dividend distributed on January 6, 1994).
Note 2. Mr. Arnold is Senior Vice President-Network Operations of the
Corporation's subsidiary, The Lincoln Telephone and Telegraph Company, and
does not serve as an officer of the Corporation.
Note 3. Owns less than one percent of the Corporation's outstanding
Common Stock.
Note 4. The shares of the Corporation's Common Stock shown as
indirectly owned by Messrs. Woods and Wheatley are held as follows:
5,412,976 shares included in each individual's indirect ownership total were
held of record by Sahara Enterprises, Inc., as of February 28, 1994, in
connection with which Messrs. Woods and Wheatley each serve as Directors, and
additionally, Mr. Wheatley serves as President and Chief Executive Officer.
The balance of Mr. Woods' indirect ownership total is held by his spouse,
held in trust, or held as a Co-Personal Representative of the Estate of
Thomas C. Woods, Jr.
Note 5. The shares of the Corporation's Common Stock shown as
indirectly owned by Mr. Haessler include 242,342 shares held by Woodmen
Accident and Life Company, of which Company Mr. Haessler is President and
Chief Executive Officer. Woodmen Accident and Life Company is the insurer
from which the Corporation and its principal subsidiary, The Lincoln
Telephone and Telegraph Company, purchase key man life insurance and employee
group life insurance. The total net premiums paid for such insurance
coverages in 1993 were $867,818.
EXECUTIVE COMPENSATION
The Summary Compensation Table appearing below shows the compensation
for the past three years for each of the Corporation's five most highly
compensated executive officers, including both individuals who served as the
Corporation's Chief Executive Officer during 1993 (the "named executive
officers"). All share amounts in the following tables and notes have been
adjusted to reflect the Corporation's 100% stock dividend distributed on
January 6, 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
<CAPTION>
Options All
Restricted in Other
Stock Number Compen-
Bonus Awards Shares sation
Name Year Salary (1) (2) (3) (4)
<S> <C> <C> <C> <C> <C> <C>
James E. Geist (5) 1993 $112,744 $41,400 -- -- $2,925
1992 250,000 54,600 $54,600 20,000 6,557
1991 236,250 52,808 52,792 -- 6,008
Frank H. Hilsabeck (6) 1993 196,167 52,211 52,189 -- 6,040
1992 164,825 28,818 28,782 9,700 5,035
1991 141,500 20,406 20,394 -- 4,245
James W. Strand 1993 146,000 26,400 26,400 -- 4,380
1992 138,750 19,500 19,500 7,900 4,162
1991 131,750 18,962 18,959 -- 3,953
Charles P. Arnold 1993 125,000 19,805 19,795 -- 3,751
1992 119,000 14,422 14,378 6,800 3,571
1991 113,400 14,163 14,157 -- 3,332
Robert L. Tyler 1993 111,000 19,805 19,795 -- 3,331
1992 105,000 13,218 13,182 6,800 3,151
1991 92,651 11,648 11,633 -- 2,908
Michael J. Tavlin 1993 96,000 13,817 13,783 -- 2,880
1992 91,700 10,208 10,192 5,300 2,579
1991 87,700 10,157 10,123 -- 1,864
</TABLE>
______________________________
(1) The 1989 Stock and Incentive Plan (the "Plan") is administered by the
Executive Compensation Committee of the Board of Directors (the
"Committee") constituted of members of the Board not eligible to
participate in the Plan, and permits the award of Short-Term
Incentives, Stock Options, Stock Appreciation Rights and Restricted
Stock. The bonus amounts shown reflect the cash bonus amounts paid
pursuant to the terms of the Plan attributable to the fiscal years of
the Corporation shown. On April 26, 1989, the stockholders of the
Corporation approved the Plan.
(2) Pursuant to the terms of the Plan, a participant may elect to receive
up to forty percent (40%) of the amount of any Short-Term Incentive
award in Restricted Stock of the Corporation. With the exception of
Mr. Geist in 1993, each of the listed individuals has so elected. For
1991, the number of shares of Restricted Stock awarded to participants
was based upon the closing price of the Corporation's Common Stock as
of January 17, 1991, the date of the award. For 1992 and 1993, the
number of such shares awarded was based upon the closing price of the
Corporation's Common Stock as of December 31, 1992 and 1993,
respectively. In each year, the number of shares awarded was increased
by a multiple previously determined by the Committee, which was 1.5.
The dollar value of the Restricted Stock awards are attributable to the
Corporation's fiscal year as indicated. The number of shares of
Restricted Stock awarded and values thereof for each named
executive officer and the aggregate value as of December 31, 1993, are
as follows:
<TABLE>
Number of Restricted Shares
<CAPTION>
Name 1991 Award 1992 Award 1993 Award Aggregate Value
<S> <C> <C> <C> <C>
Mr. Geist 4,266 4,200 -- $156,621
Mr. Hilsabeck 1,648 2,214 2,821 123,636
Mr. Strand 1,532 1,500 1,427 82,491
Mr. Arnold 1,144 1,106 1,070 61,420
Mr. Tyler 940 1,014 1,070 55,944
Mr. Tavlin 818 784 745 43,420
------ ------ ------ -------
Totals 10,348 10,818 7,133 $523,532
</TABLE>
The restrictions against sale, transfer, pledge or assignment of the
Restricted Stock will lapse, and the awards have vested or will vest as
follows: 1991 Awards - January 17, 1994; 1992 Awards - February 1,
1995; and 1993 Awards - January 31, 1996. Restrictions will lapse
sooner if the participant dies, becomes disabled, retires or there is
a change in control of the Corporation during the period of
restriction. As noted below, Mr. Geist retired effective May 1, 1993.
Dividends are paid during the period of restriction on the shares of
Restricted Stock to the executive officer holding such shares and their
voting rights may be exercised.
(3) The options shown for 1992 were awarded on May 1, 1992, and were
attributable to the performance of the Corporation during 1991.
(4) The Corporation maintains a 401(k) Savings and Stock Ownership Plan for
the benefit of its nonunion-eligible employees, including the named
executive officers. Pursuant thereto the Corporation (a)has
contributed 1.75% of the employee's base salary in the form of the
Corporation's Common Stock for the employee's benefit (to the following
maximum base salary amounts: 1991 - $222,200; 1992 - $228,860; and
1993 - $235,840; and (b) has contributed on a matching basis, at the
rate of .25% for each 1% of the employee's salary contributed to the
401(k) account, up to a maximum of 1.25% of such salary contribution.
Such match is also made in shares of the Corporation's Common Stock.
Amounts in the table show the value of the stock contributions as of
the contribution dates.
(5) Mr. Geist retired from his position of Chairman of the Board and Chief
Executive Officer of the Corporation, and all officer positions with
the Corporation's subsidiaries effective May 1, 1993.
(6) Mr. Hilsabeck became President and Chief Executive Officer of the
Corporation effective May 1, 1993.
The Corporation has in effect the 1989 Stock and Incentive Plan which
was approved by its stockholders and pursuant to which options to purchase
shares of Common Stock of the Corporation have been granted to officers and
other key employees of the Corporation and its subsidiaries in the past.
However, no options to purchase shares of Common Stock were granted in fiscal
year 1993.
The following table sets forth information concerning the exercise of
stock options by each of the named executive officers during the 1993 fiscal
year, the number of unexercised options existing at the end of the year 1993
for each of the named executive officers, and the 1993 year-end value of
unexercised options.
<TABLE>
OPTION EXERCISES
AND 1993 YEAR-END VALUE TABLE
Option Exercises in 1993 and 1993 Year-End Option Values
<CAPTION>
Number of Share Value of Unexer-
Unexercised cised In-The-
Options at Money Options at
1993-End (#)(1) 1993-End ($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
James E. Geist 46,400 $259,200 0/0 $ 0/0
Frank H. Hilsabeck -- -- 7800/9700 54,600/55,775
James W. Strand 3,100 25,188 4000/7900 28,000/45,425
Charles P. Arnold -- -- 7200/6800 50,400/39,100
Robert L. Tyler -- -- 5500/6800 38,500/39,100
Michael J. Tavlin 2,800 22,750 2800/5300 19,600/30,475
</TABLE>
(1) Options granted on May 1, 1990, are first exercisable by the holder on
May 1, 1993. Such options were priced at the market price for the
shares of the Corporation's Common Stock at date of grant, which was
$11.50 per share. Options granted on May 1, 1992, are first
exercisable by the holder on May 1, 1995. Options may be exercised
prior to May 1, 1995, if the holder dies, becomes disabled, retires or
there is a change in control of the Corporation. Such options were
also priced at the market price for the shares of the Corporation's
Common Stock at date of grant, which was $12.75 per share. The closing
price of the Corporation's Common Stock on December 31, 1993, was
$18.50 per share. The options granted on May 1, 1990, and May 1, 1992,
were, as of December 31, 1993, "In-The-Money" $7.00 and $5.75 per
share, respectively.
The following table illustrates the annual pension plan benefit
provided by the Corporation's Pension Plan, as supplemented by the
Executive Benefit Plan, for eligible executive employees upon
retirement at age 65, assuming no optional forms of benefit have
been elected. The Pension Plan is not integrated with Social Security
and is maintained for all employees.
<TABLE>
PENSION PLAN TABLE
Estimated Annual Pension at Normal Retirement
Age for Representative Years of Credited Service
<CAPTION>
Highest 15 Years Service 20 Years Service 25 Years Service 30 Years Service
Consecutive (34.875 Percent (52.00 Percent (59.375 Percent (67.00 Percent
5-yr Average Factor) Factor) Factor) Factor)
Compensation
<C> <C> <C> <C> <C>
$ 90,000 $ 31,388 $ 46,800 $ 53,438 $ 60,300
120,000 41,850 62,400 71,250 80,400
150,000 52,313 78,000 89,063 100,500
180,000 62,775 93,600 106,875 120,600
210,000 73,238 109,200 124,688 140,700
240,000 83,700 124,800 142,500 160,800
270,000 94,163 140,400 160,313 180,900
300,000 104,625 156,000 178,125 201,000
330,000 115,088 171,600 195,938 221,100
360,000 125,550 187,200 213,750 241,200
Highest 35 Years Service 40 Years Service 45 Years Service 50 Years Service
Consecutive (74.875 Percent (82.00 Percent (89.125 Percent (96.25 Percent
5-yr Average Factor) Factor) Factor) Factor)
Compensation
<C> <C> <C> <C> <C>
$ 90,000 $ 67,388 $ 73,800 $ 80,213 $ 86,625
120,000 89,850 98,400 106,950 115,500
150,000 112,313 123,000 133,688 144,375
180,000 134,775 147,600 160,425 173,250
210,000 157,238 172,200 187,163 202,125
240,000 179,700 196,800 213,900 231,000
270,000 202,163 221,400 240,638 259,875
300,000 224,625 246,000 267,375 288,750
330,000 247,088 270,600 294,113 317,625
360,000 269,550 295,200 320,850 346,500
</TABLE>
Compensation covered by the Pension Plan is a participant's salary, as
shown in the Summary Compensation Table on page 8 herein, (whether or not
such compensation has been deferred at participant's election). Benefits are
based on a participant's average compensation for the five consecutive
calendar years, or, in the case of a participant who has been employed for
less than five full calendar years, the period of his employment covered by
the Pension Plan. Under the Pension Plan, only salary as shown in the
Summary Compensation Table up to the limits imposed by the Internal Revenue
Code is taken into account. The 1993 compensation limit applicable to the
Pension Plan is $235,840.
Included in the information reflected in the above table are the
supplemental retirement benefits which the Corporation provides pursuant to
an Executive Benefit Plan for the benefit of Messrs. Hilsabeck, Strand,
Arnold, Tyler, Tavlin, and certain other executive officers. The Executive
Benefit Plan also provides pre-retirement death benefits and long-term
disability benefits. Pension benefits which exceed the limitations imposed
by the Internal Revenue Code are payable under the Executive Benefit Plan.
All pension benefits payable under the Executive Benefit Plan will be paid
outside the Pension Plan as an operating expense.
The named executive officers have the following years of service with
the Corporation and The Lincoln Telephone and Telegraph Company as of
December 31, 1993: Frank H. Hilsabeck, 26; James W. Strand, 20; Charles P.
Arnold, 42; Robert L. Tyler, 34 years; and Michael J. Tavlin, 7 years.
COMPENSATION OF DIRECTORS
Full-time officers of the Corporation or its subsidiaries do not
receive additional compensation for serving as members of the Boards of
Directors of the Corporation or its subsidiaries. No additional compensation
is paid if a full-time officer serves on any committee of one of such Boards
of Directors.
Effective January 1, 1992, non-employees serving as members of the
Corporation's Board of Directors are paid: (a) an annual retainer of $7,200,
paid in monthly installments of $600; (b) an additional fee of $700 for
attendance at each meeting of the Board and any meeting of a Board Committee;
and (c) reimbursement of expenses incurred in connection with such meetings.
Non-employee Directors of the Corporation are not compensated for serving as
Directors of the Corporation's principal subsidiary, The Lincoln Telephone
and Telegraph Company. Total fees paid to Directors in 1993 were $164,400.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Corporation has agreements with Messrs. Hilsabeck, Strand, Arnold,
Tyler and Tavlin which provide that the named executive officer is entitled
to benefits if, after a change in control (as defined), such executive
officer's employment is ended through (i) termination by the Corporation
other than by reason of death or disability or for cause (as defined), or
(ii) termination by the executive officer following the first anniversary of
the change in control or due to a breach of the agreement by the Corporation
or a significant adverse change in his responsibilities. The benefits
provided are: (a) a cash termination payment of up to three times the sum of
executive officer's annual salary and his highest annual bonus during the
three years before the termination and (b) continuation of equivalent
hospital, medical, dental, accident, disability and life insurance coverage
as in effect at the termination. The agreements provide that if any portion
of the benefits under the agreements or under any other agreement would
constitute an "excess parachute payment" for purposes of the Internal Revenue
Code of 1986 (the "Code"), benefits are reduced so that the executive officer
is entitled to receive $1.00 less than the maximum amount which he can
receive without becoming subject to the 20% excise tax imposed by the Code or
which the Corporation may pay without loss of deduction under the Code.
In accordance with agreements pursuant to the Corporation's Executive
Benefit Plan, in the event of a change in control of the Corporation,
entitlement to benefits payable to the named executive officers shall become
vested, provided that such employee shall comply with specified
non-competition and confidentiality requirements of such agreements. The
vested amount shall equal 25% of average final compensation irrespective of
the employee's net credited service on the date of employee's retirement. If
after the change of control the employee's employment is terminated for
reasons other than death or retirement, the vested 25% of average final
compensation shall be payable on the later of his attaining age 60 or his
date of termination.
EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation Committee of the Board is responsible for
all aspects of the Corporation's compensation package offered to its
corporate officers, including the named executive officers. The following
report was approved by members of the Executive Compensation Committee.
Compensation Policies. The Corporation's principal executive
compensation objective is to compensate executive officers in a manner that
will attract and retain the services of an outstanding management team and
provide incentives to motivate superior performance by key employees. In
light of that objective, the Executive Compensation Committee of the Board of
Directors (the "Committee"), which also serves as the executive compensation
committee for The Lincoln Telephone and Telegraph Company (the principal
subsidiary of the Corporation), has approved a compensation program for the
Corporation's executive officers that reflects the policies described below.
There are currently seven executive officers (including one person who is an
employee of such subsidiary of the Corporation).
To attract and retain employees, the Corporation's compensation program
provides a base salary and an overall compensation package that are intended
to be competitive and are based upon the following factors. First, the
Committee reviews the financial performance of the Corporation as compared to
the peer group of telecommunications companies (as shown in the Performance
Graph on page 14.) Second, the Committee reviews competitive, legislative,
regulatory and operational issues which the Corporation has faced during the
past fiscal year, or will face during the ensuing fiscal year, and evaluates
completed and planned responses thereto. Third, the Committee considers
surveys of executive compensation obtained from available sources. Such
survey sources take into account both the telecommunications industry and
other industries nationwide.
To provide incentives to motivate performance, the Corporation's
executive compensation program establishes a direct relationship between
compensation and the Corporation's performance and encourages executives to
acquire an ownership interest in the Corporation. Pursuant to the provisions
of the Corporation's 1989 Stock and Incentive Plan (the "Plan"), eligible
executives, who have been chosen in advance by the Committee, receive a
portion of their compensation in the form of incentive awards ("Short-Term
Incentive awards"). The amounts of such Short-Term Incentive awards are
established in accordance with ranges of earnings and return on equity
realized by the Corporation as pre-determined by the Committee. In 1993, the
Corporation's earnings and return on equity yielded an aggregate short-term
incentive pool of $390,702 or 27.5% of composite salaries for eligible
executives. The portion of such incentive pool received by an executive
depends upon his or her position of responsibility and individual
performance.
Further, to align the interests of executives with stockholder
interests and to provide a means for the acquisition of an ownership interest
in the Corporation, executives are encouraged to elect to receive up to 40%
of the cash portion of the Short-Term Incentive awards in Restricted Stock of
the Corporation. If such an election is made, the Committee may increase the
stock portion of the award by a multiple not to exceed two times such stock
portion. For 1993, a 1.5 multiple was determined by the Committee to apply
to the cash portion of the Short-Term Incentive award which an executive
elected to receive as Restricted Stock of the Corporation. Finally, the
Committee may grant stock options under the Plan to key executives in amounts
that are competitive based upon market considerations, which are exercisable
after three years. No stock options were granted in 1993.
Chief Executive Officer Compensation. The compensation for Mr. James
E. Geist, Chairman of the Board and Chief Executive Officer until his
retirement effective May 1, 1993, and for Mr. Frank H. Hilsabeck, President
and Chief Executive Officer effective May 1, 1993, reported for 1993 reflect
the application of the policies described above.
Mr. Geist and Mr. Hilsabeck also received Short-Term Incentive awards
for 1993. On December 10, 1992, the Committee adopted performance goals for
the Corporation for 1993 for purposes of the Corporation's Short-Term
Incentive awards. As a result of the Corporation's earnings and return on
equity and his performance in 1993, Mr. Geist received a Short-Term Incentive
award of $41,400, or approximately 10.6% of the aggregate award, and Mr.
Hilsabeck received a Short-Term Incentive award of $87,000 or approximately
22.3% of the aggregate award.
Consistent with the Corporation's desire to encourage acquisition of an
ownership interest in the Corporation, Mr. Hilsabeck elected to receive
Restricted Stock pursuant to the Plan to the maximum of 40% of the Short-Term
Incentive award. The Committee had previously determined to increase the
value of the portion of the award used for the granting of Restricted Stock
by a multiple of 1.5, thereby enabling Mr. Hilsabeck to receive Restricted
Stock with a value of $52,189, as well as a cash award of $52,211. As of
December 31, 1993, Mr. Hilsabeck held unvested Restricted Stock with an
aggregate value of $123,636, including the 1993 award. Mr. Geist did not
hold any unvested Restricted Stock as of December 31, 1993.
Mr. Geist and Mr. Hilsabeck also participated in other employee benefit
plans available to other executive officers during 1993, which the Committee
believes are competitive, including the Pension Plan, Executive Benefit Plan,
the 401(k) Savings and Stock Ownership Plan and life and health insurance
programs.
Section 162(m) of the Internal Revenue Code (the "Code") eliminates,
subject to certain exceptions, the deductibility of executive compensation to
the extent that any executive's compensation for any year exceeds $1 million.
Exceptions to amounts included in executive compensation for purposes
of Section 162(m) involve various types of performance-based compensation. As
noted above, it is the Executive Compensation Committee's policy to base a
substantial amount of executive compensation on the Corporation's
performance. Currently the cash compensation levels for the Corporation's
executive officers fall significantly below $1 million. In the event that in
the future the annual remuneration of any executive of the Corporation
approaches $1 million, the Committee will consider the various alternatives
to preserving the deductibility of compensation payments to the extent
reasonably practicable and consistent with its compensation objectives.
Members of the Executive Compensation Committee for 1993 were:
Duane W. Acklie, Chairman Charles N. Wheatley
Paul C. Schorr, III Lyn Wallin Ziegenbein
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Executive Compensation Committee are
identified above. Mrs. Ziegenbein, a member of the Executive Compensation
Committee, is the spouse of John H. Ziegenbein, of counsel in the law firm of
Woods & Aitken. Woods & Aitken has acted as outside counsel for the
Corporation for 1993 for which it received fees of $183,203.
PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
stockholder return by quarter, commencing December 1988 and ending December
1993, on an investment of $100 in (a) shares of the Corporation's Common
Stock; (b) shares of Standard & Poor's telephone company composite; (c)
shares of Standard & Poor's 500 company composite; and (d) shares of the
Corporation's telephone company peer group identified below. The cumulative
total market appreciation includes the cumulative amount of dividends for the
five-year period, assuming dividend reinvestment.
<TABLE>
CUMULATIVE TOTAL RETURN
Based on investment of $100 on December 31, 1988
with continuous reinvestment of dividends
<CAPTION>
Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93
<S> <C> <C> <C> <C> <C> <C>
LTEC $100 $194 $160 $149 $171 $251
S&P TEL $100 $157 $150 $162 $177 $205
S&P 500 $100 $132 $128 $166 $179 $197
PEER $100 $161 $136 $145 $175 $204
GEORGESON & COMPANY INC.
LTEC PEER GROUP:
Alltel Corporation
Cincinnati Bell
Century Telephone Enterprises
Rochester Telephone
Southern New England Telecommunications
</TABLE>
FILING OF REPORTS OF BENEFICIAL OWNERSHIP
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Corporation's executive officers, directors and holders of more than ten
percent of the Corporation's outstanding shares ("Insiders") file reports (on
prescribed forms) of their beneficial ownership of the Corporation's stock
and furnish copies of such forms to the Corporation. Based solely on a
review of the copies of such forms furnished to the Corporation, or written
representations that no Form 5 was required to be filed, the Corporation
believes that, during its fiscal year commencing January 1, 1993, and ending
December 31, 1993, all Forms 3, 4 and 5 required by Section 16(a) to be filed
by Insiders were filed on a timely basis.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Corporation, on the recommendation of the
Audit Committee, has reappointed KPMG Peat Marwick as the Company's
independent certified public accountants for the calendar year ending
December 31, 1994. This accounting firm has audited the financial statements
of The Lincoln Telephone and Telegraph Company (LT&T) continuously since
calendar year 1946, and has audited the consolidated financial statements of
the Corporation and its other subsidiaries since their respective dates of
incorporation, as well as LT&T. Representatives of KPMG Peat Marwick will be
present at the Annual Meeting of Stockholders with the opportunity to make
any statements they desire and to respond to appropriate questions.
OTHER BUSINESS AT THE ANNUAL MEETING OF STOCKHOLDERS
Management is not aware of any business which properly may be presented
for action at the meeting other than the matters set forth in the Notice of
Annual Meeting. Should any other matter requiring a vote of the stockholders
properly arise, the enclosed proxy gives discretionary authority to the
persons named in the proxy to vote on such matters in accordance with their
best judgment.
DATE OF RECEIPT OF PROPOSALS
All stockholder proposals intended for inclusion in the Corporation's
1995 proxy materials and for presentation at the Corporation's 1995 Annual
Meeting must be received by the Corporation (Attn: Corporate Secretary) not
later than November 21, 1994. In addition, the Corporation's By-Laws
establish procedures for stockholder nominations for election of directors
and bringing business before the Annual Meeting of the Corporation's
stockholders. Among other requirements, to bring business before the 1995
Annual Meeting or to nominate a person for election as a director, a
stockholder must give written notice to the Secretary of the Corporation not
less than 90 days prior to April 26, 1995, or in the event an earlier date is
set by the Board of Directors within ten days after the first public
disclosure of the earlier date. The notice must contain certain information
concerning the proposed business or the nominee and the stockholder making
the proposal. Any stockholder interested in making a nomination or proposal
should request a copy of the applicable By-Law provisions from the Secretary
of the Corporation.
By order of the Board of Directors
LINCOLN TELECOMMUNICATIONS COMPANY
/s/ Michael J. Tavlin
Michael J. Tavlin, Secretary
Lincoln, Nebraska
March 23, 1994
