<PAGE>
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
ALIANT COMMUNICATIONS INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check 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>
Thomas C. Woods III Aliant Communications Inc.
Chairman of the Board 1440 M Street
P.O. Box 81309
Lincoln, NE 68501-1309
[ALIANT COMMUNICATIONS LOGO]
March 20, 1998
To Our Shareholders:
The Board of Directors joins me in extending to you a cordial invitation to
attend the 1998 Annual Meeting of Shareholders. The meeting will be held
at The Cornhusker Hotel in Lincoln, Nebraska, at 10:30 a.m. on Wednesday,
April 22, 1998.
In addition to voting on the matters described in this Proxy Statement, we
will review the Corporation's 1997 business results and discuss our plans
for 1998 and beyond. There will be an opportunity to discuss matters of
interest to you as a shareholder.
We hope many Aliant Communications Inc. shareholders 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 shareholder 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
<PAGE>
ALIANT COMMUNICATIONS INC.
1440 M STREET
LINCOLN, NEBRASKA 68508
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 22, 1998
To the Holders of Common Stock of Aliant Communications Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of
Aliant Communications Inc., a Nebraska corporation (hereinafter the
"Corporation"), will be held at The Cornhusker Hotel, 333 South 13th
Street, Lincoln, Nebraska, 68508, on Wednesday, April 22, 1998, at 10:30
a.m. Central Time for the following purposes:
(1) To elect four (4) 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 9, 1998, has been fixed as the date of
record for the determination of common shareholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof. Accordingly, only common shareholders 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 shareholders entitled to vote at the
Annual Meeting shall be available for inspection by any shareholder during
usual business hours at the principal offices of the Corporation, which
address is set forth above, beginning two (2) days after notice of the
meeting is given for which the list was prepared continuing through 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
accompanying envelope. No postage need be affixed if mailed within the
United States.
By order of the Board of Directors,
Aliant Communications Inc.
/s/ Michael J. Tavlin
Michael J. Tavlin
Secretary
Lincoln, Nebraska
March 20, 1998
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.
<PAGE>
ALIANT COMMUNICATIONS INC.
1440 M STREET
LINCOLN, NEBRASKA 68508
PROXY STATEMENT
SOLICITATION OF PROXIES
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1998
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 Shareholders to be held on April 22, 1998 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 20, 1998.
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.
Shareholders 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
facsimile. The Corporation does not presently 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 the expense of 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 36,202,398 shares
of Common Stock (CUSIP 016090102), issued and outstanding as of March 9,
1998 each of which is entitled to one vote. Only holders of Common Stock
of record at the close of business on March 9, 1998 are entitled to notice
of and to vote with respect to this solicitation.
The following table sets forth information as of March 9, 1998
regarding the only persons or entities known by the Corporation, based on
Schedule 13G filing with the Securities and Exchange Commission, to own
more than 5% of the Corporation's Common Stock. Except as otherwise
indicated below, the entity owns such Common Stock directly with sole
investment and sole voting power.
1
<PAGE>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership Of Class
Sahara Enterprises, Inc.* 3,176,776 8.8%
Suite 2000
Three First National Plaza
Chicago, Illinois 60602
2
<PAGE>
* Reference should be made to the table and footnotes thereto under
"Security Ownership of Management" on pages 5 and 6, especially the
information concerning beneficial ownership of shares by Messrs. Woods
and Wheatley.
Information is as of February 28, 1998 (except that the percentage has
been calculated based on the number of shares outstanding as of the
record date of this meeting) and is from the Schedule 13G filed with
the Securities and Exchange Commission on January 31, 1998.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Four (4) Directors are to be elected at the Annual Meeting for a term
of three years to expire at the Corporation's Annual Meeting in the year
2001 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.
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 only for purposes of
determining the presence of a quorum for the transaction of business. If a
quorum is present, the affirmative vote of a plurality of the votes cast by
the holders of shares of Common Stock entitled to vote in the election at
the Annual Meeting shall be necessary for the election of a director
nominee. Shares of Common Stock 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 a representative of
ChaseMellon Shareholder Services, L. L. C., the Corporation's independent
transfer agent and registrar. Such individual will process the votes cast
by the shareholders, will make a report of inspection and count of the
votes cast by the shareholders 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
shareholder to vote the number of shares owned by the shareholder for as
many persons as there are directors to be elected, or to cumulate such
shares and give one candidate as many votes as the number of directors to
be elected multiplied by the number of the shareholder's shares, or to
distribute said votes among as many directors to be elected as the
shareholder 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 shareholder has not
withheld authority to vote.
3
<PAGE>
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, as of February 28,
1998, 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.
NOMINEES FOR TERM TO EXPIRE IN 2001
CHARLES R. HERMES; Director since 1992; Age 55; 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 53; Lincoln, Nebraska. Mr.
Hilsabeck is President and Chief Executive Officer of the Corporation, is
President of its principal subsidiary, Aliant Communications Co., and is
Chairman of the Board of its other subsidiaries, Aliant Cellular Inc.,
Aliant Systems Inc., Aliant Midwest Inc., Aliant Network Services Inc.,
Aliant Wireless Holdings Inc., and Prairie Communications, Inc. He has
been the Corporation's President and Chief Executive Officer since May
1993.
PAUL C. SCHORR, III; Director since 1973; Age 61; Lincoln, Nebraska. Mr.
Schorr is President and Chief Executive Officer of ComCor Holding
Incorporated (an electrical contractor specializing in construction
consulting services) of Lincoln, Nebraska, and has held such position since
1989. Mr. Schorr is also Chairman and Chief Executive Officer of Austins
Steaks & Saloon, Inc.
JAMES W. STRAND; Director since 1990; Age 51; Lincoln, Nebraska. Mr.
Strand is President-Diversified Operations of the Corporation, Executive
Vice President-Marketing and Customer Services of its principal subsidiary,
Aliant Communications Co., and is President of its subsidiaries, Aliant
Cellular Inc., Aliant Midwest Inc., Aliant Network Services Inc., Aliant
Wireless Holdings Inc., and Prairie Communications, Inc. He has been the
Corporation's President-Diversified Operations since May 1990.
PRESENT TERM EXPIRES IN 1999
DUANE W. ACKLIE; Director since 1983; Age 66; Lincoln, Nebraska. Mr.
Acklie is Chairman of Crete Carrier Corporation (a motor carrier) of
Lincoln, Nebraska, and has held such position since 1991. Mr. Acklie is
also Chairman of the First National Bank of Lincoln, Nebraska.
TERRY L. FAIRFIELD; Director since 1993; Age 49; 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.
4
<PAGE>
JOHN HAESSLER; Director since 1993; Age 61; 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 64; 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 45; Omaha, Nebraska. Mrs.
Ziegenbein is Executive Director of the Peter Kiewit Foundation of Omaha,
Nebraska, and has held such position since 1983.
PRESENT TERM EXPIRES IN 2000
WILLIAM W. COOK, JR.; Director since 1981; Age 61; Beatrice, Nebraska. Mr.
Cook is Chairman 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
1997.
CHARLES N. WHEATLEY; Director since 1993; Age 47; 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. Mr. Wheatley is also a Director of Sahara Enterprises, Inc.
THOMAS C. WOODS, III; Director since 1979; Age 52; Lincoln, Nebraska. Mr.
Woods is Chairman of the Board of the Corporation and its principal
subsidiary, Aliant Communications Co. He has been the Corporation's
Chairman of the Board since April 1993. Mr. Woods is also a director of
Sahara Enterprises, Inc.
- --------------------------------
Note 1. Woodmen Accident and Life Company is the insurer from which
the Corporation and its principal subsidiary, Aliant Communications Co.,
purchase key man life insurance and employee group life insurance. The
total net premiums paid for such insurance coverages in 1997 were
$1,565,110.18. The Corporation believes that the rates paid for such
insurance are comparable to market rates.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1997, five meetings of the Board of Directors were held. For
reasons related to health one Director, Mr. Schorr, did not attend 75% of
the meetings of the Board of Directors. The Corporation has no standing
nominating committee, but does have the following three standing
committees:
5
<PAGE>
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 did not meet during 1997. Committee members
during 1997 were: Frank H. Hilsabeck, Chairman; William W. Cook, Jr.; Paul
C. Schorr, III; 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 1997. Committee members during 1997 were: Charles R. Hermes,
Chairman; Terry L. Fairfield; and John Haessler.
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 in which
executive officers and other key employees participate. The Committee met
four times during 1997. Committee members during 1997 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, 1998,
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.
Amount and Nature
Name of Beneficial Principal of Beneficial Percent of
Owner Position Ownership (Note 1) Class
- ------------------ -------- ----------------- -----
Thomas C. Woods, III Chairman of the 47,244 Direct 9.0%
Board and Director 3,240,136 Indirect* Note 3
Frank H. Hilsabeck President & Chief 15,494 Direct Note 2
Executive Officer 375 Indirect
and Director
James W. Strand President-Diversified 4,221 Direct Note 2
Operations and 6,179 Indirect*
Director
Robert L. Tyler Senior Vice 9,011 Direct Note 2
President-Chief 4,473 Indirect*
Financial Officer
6
<PAGE>
Amount and Nature
Name of Beneficial Principal of Beneficial Percent of
Owner Position Ownership (Note 1) Class
- ------------------ -------- ----------------- -----
Bryan C. Rickertsen Vice President- 10,862 Direct Note 2
Technology 1,851 Indirect*
Michael J. Tavlin Vice President- 8,698 Direct Note 2
Treasurer and Secretary 3,393 Indirect*
Duane W. Acklie Director 130,054 Direct Note 2
61,950 Indirect*
William W. Cook, Jr. Director 7,233 Direct Note 2
1,102 Indirect*
Terry L. Fairfield Director None Direct Note 2
None Indirect
John Haessler Director 7,000 Direct Note 2
None Indirect
Charles R. Hermes Director 2,000 Direct Note 2
34,692 Indirect*
Paul C. Schorr, III Director 1,913 Direct Note 2
28,384 Indirect*
William C. Smith Director 2,400 Direct Note 2
None Indirect
Charles N. Wheatley Director None Direct 8.9%
3,218,520 Indirect* Note 3
Lyn Wallin Ziegenbein Director 4,000 Direct Note 2
10 Indirect*
All Directors and
Executive Officers
as a Group (15 persons) TOTAL 3,674,419 ** 10.1%
* 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 or named executive officer 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 3 below.)
7
<PAGE>
Note 1. Approximate number of shares of Common Stock owned, directly
or indirectly, as of February 28, 1998. This information 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") and any Long-Term Incentive awards of
Stock Options under the Plan which are exercisable within 60 days of the
date hereof, of which there are none.
Note 2. Owns less than one percent of the Corporation's outstanding
Common Stock.
Note 3. The shares of the Corporation's Common Stock shown as
indirectly owned by Messrs. Woods and Wheatley are held as follows:
3,176,776 shares included in each individual's indirect ownership total
were held of record by Sahara Enterprises, Inc., as of February 28, 1998.
Messrs. Woods and Wheatley each serve as Directors and Mr. Wheatley serves
as President and Chief Executive Officer of Sahara Enterprises, Inc. The
balance of Mr. Woods' indirect ownership is held by his spouse or consists
of shares held by him as trustee of various Woods family trusts. The
balance of Mr. Wheatley's indirect ownership consists of shares held by him
as trustee of various Woods family trusts.
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 the Corporation's Chief Executive
Officer (the "named executive officers").
8
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------- ----------------------
Number of
Securities
Underlying
Restricted Stock All Other
Name and Salary Bonus Stock Options Compensation
Principal Position Year ($) ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------ ---- ------ ------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Frank H. Hilsabeck 1997 324,000 84,009 83,991 16,400 4,800
President & Chief 1996 300,000 45,001 44,999 17,900 4,500
Executive Officer 1995 270,000 61,392 61,368 16,350 4,500
and Director
James W. Strand 1997 216,000 36,013 35,987 8,200 4,800
President-Diversified 1996 200,000 19,812 19,788 8,950 4,500
Operations and Director 1995 184,800 27,611 27,589 8,400 4,500
Robert L. Tyler 1997 162,000 24,030 23,970 5,350 4,800
Senior Vice President- 1996 150,000 13,208 13,192 5,800 4,500
Chief Financial Officer 1995 138,000 18,193 18,167 5,450 4,140
Bryan C. Rickertsen 1997 135,000 19,802 19,798 3,750 4,050
Vice President- 1996 125,000 10,200 10,200 4,100 3,750
Technology 1995 100,250 11,109 11,091 1,900 3,008
Michael J. Tavlin 1997 113,000 13,223 13,177 3,150 3,390
Vice President- 1996 113,000 7,036 7,004 3,700 3,390
Treasurer and Secretary 1995 107,000 12,610 12,590 3,550 3,210
</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 Short-Term Incentive feature of the Plan attributable
to the fiscal years of the Corporation shown. The shareholders of the
Corporation approved the Plan on April 26, 1989.
(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. Each of the listed
individuals has elected to receive the maximum amount. The number of
such shares awarded was based upon the closing price of the
Corporation's Common Stock as of December 29, 1995, December 31, 1996,
and December 31, 1997, respectively. In order to promote ownership of
the Corporation's Common Stock, the Committee in each year has
9
<PAGE>
increased the number of shares awarded by a multiple of 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, 1997, are as
follows:
Number of Restricted Shares
------------------------------------------------------------
Name 1995 Award 1996 Award 1997 Award Aggregate Value
---------- --------- ---------- ---------------
Mr. Hilsabeck 2,905 2,647 2,677 $ 258,185
Mr. Strand 1,306 1,164 1,147 113,483
Mr. Tyler 860 776 764 75,300
Mr. Rickertsen 525 600 631 55,095
Mr. Tavlin 596 412 420 44,804
----- ----- ----- -------
Totals 6,192 5,599 5,639 $ 546,867
The restrictions against sale, transfer, pledge or assignment of the
Restricted Stock will lapse, and the awards have vested or will vest
as follows: 1995 Awards - January 31, 1998; 1996 Awards - January 29,
1999; and 1997 Awards - January 30, 2000. 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.
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 by the executive officer.
(3) The options shown for 1995 were awarded on March 15, 1995, the options
awarded for 1996 were awarded on July 1, 1996, and the options awarded
for 1997 were awarded on July 1, 1997. The awards were not attributed
to any past performance.
(4) The Corporation maintains a 401(k) Savings and Stock Ownership Plan
for the benefit of its 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: 1995 - $150,000.00; 1996 - $150,000.00; and 1997 -
$160,000.00); and (b) has contributed on a matching basis, at the rate
of 0.25% for each 1.00% of the employee's salary contributed to the
401(k) account, up to a maximum of 1.25% of such salary contribution.
Such match is also made in shares of the Corporation's Common Stock.
10
<PAGE>
OPTION EXERCISES IN FISCAL 1997
AND FISCAL 1997 YEAR-END OPTION VALUES
The Corporation has in effect the 1989 Stock and Incentive Plan which
was approved by its shareholders and pursuant to which options to purchase
shares of Common Stock of the Corporation have been granted to officers and
other key employees of the Corporation and its subsidiaries in the past.
The following table sets forth information concerning the exercise of stock
options by each of the named executive officers during the 1997 fiscal
year, the number of unexercised options existing at the end of the year
1997 for each of the named executive officers and the 1997 year-end value
of unexercised options.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options
12/31/97 (#) at 12/31/97 ($)
---------------------- --------------------
Shares
Acquired on Value
Exercise Realized Exercis- Unexer- Exercis- Unexer-
Name (#) ($) able cisable able cisable
- ---- ----------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Frank H. Hilsabeck 17,500 167,700 0 50,650 0 695,644
James W. Strand 11,900 150,775 0 25,550 0 351,169
Robert L. Tyler 12,300 97,588 0 16,600 0 228,088
Bryan C. Rickertsen 6,400 52,800 0 9,750 0 131,819
Michael J. Tavlin 8,100 76,075 0 10,400 0 143,538
</TABLE>
PENSION PLAN TABLE
The following table illustrates the annual pension plan benefit
provided by the Corporation's Plan for Employees' Pensions, 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 Plan for Employees' Pensions is not integrated with Social
Security and is maintained for all employees.
11
<PAGE>
Estimated Annual Pension at Normal Retirement
Age for Representative Years of Credited Service
<TABLE>
<CAPTION>
Highest 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
Consecutive Service Service Service Service Service Service
Five-Year (34.875 (52.00 (59.375 (67.00 (74.875 (82.00
Average Percent Percent Percent Percent Percent Percent
Compensation Factor) Factor) Factor) Factor) Factor) Factor)
<S> <C> <C> <C> <C> <C> <C>
$ 90,000 $ 31,388 $ 46,800 $ 53,438 $ 60,300 $ 67,388 $ 73,800
120,000 41,850 62,400 71,250 80,400 89,850 98,400
150,000 52,313 78,000 89,063 100,500 112,313 123,000
180,000 62,775 93,600 106,875 120,600 134,775 147,600
210,000 73,238 109,200 124,688 140,700 157,238 172,200
240,000 83,700 124,800 142,500 160,800 179,700 196,800
270,000 94,163 140,400 160,313 180,900 202,163 221,400
300,000 104,625 156,000 178,125 201,000 224,625 246,000
330,000 115,088 171,600 195,938 221,100 247,088 270,600
360,000 125,550 187,200 213,750 241,200 269,550 295,200
<CAPTION>
Highest 45 Years 50 Years
Consecutive Service Service
Five-Year (89.125 (96.25
Average Percent Percent
Compensation Factor) Factor)
<S> <C> <C>
$ 90,000 $ 80,213 $ 86,625
120,000 106,950 115,500
150,000 133,688 144,375
180,000 160,425 173,250
210,000 187,163 202,125
240,000 213,900 231,000
270,000 240,638 259,875
300,000 267,375 288,750
330,000 294,113 317,625
360,000 320,850 346,500
</TABLE>
Compensation covered by the Pension Plan is a participant's salary, as
shown in the Summary Compensation Table on page 7 herein (whether or not
such compensation has been deferred at participant's election). Benefits
are based on a participant's average compensation for five consecutive
years, or, in the case of a participant who has been employed for less than
five full 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 1997 compensation limit applicable to the Pension Plan is
$160,000.00.
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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,
Tyler, Rickertsen, 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 Aliant Communications Co. as of December 31, 1997:
Frank H. Hilsabeck, 30 years; James W. Strand, 24 years; Robert L. Tyler,
38 years; Bryan C. Rickertsen, 18 years; and Michael J. Tavlin, 11 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 such
Boards of Directors.
Effective April 26, 1995, non-employees serving as members of the
Corporation's Board of Directors are paid: (a) an annual retainer of
$8,400.00, paid in monthly installments of $700.00; (b) an additional fee
of $700.00 for attendance at each meeting of the Board; (c) an additional
fee of $1,000.00 for attendance at any meeting of a Board Committee by the
Committee Chairman; (d) an additional fee of $700.00 for attendance at any
meeting of a Board Committee by other Committee members; and (e)
reimbursement of expenses incurred in connection with such meetings. Total
fees paid to Directors in 1997 were $151,900.00.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Corporation has agreements with Messrs. Hilsabeck, Strand, Tyler,
Rickertsen, 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.
13
<PAGE>
As used in such agreements, (a) "change in control" means (i) if any person
is or becomes a thirty percent beneficial owner of the Corporation or (ii)
a change in a majority of the members of the Board of Directors of the
Corporation over a two consecutive year period; and (b) "cause" means
termination of an executive's employment by the Corporation after a change
in control based upon willful and intentional conduct causing serious
injury to the Corporation, conviction for a felony or willful and
unreasonable neglect or refusal to perform the executive's duties. 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 employees 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 Aliant Communications Co. (the principal
subsidiary of the Corporation), has approved a compensation program for the
Corporation's executive officers consistent with the policies described
below.
14
<PAGE>
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 12 which graphically illustrates returns on
investments by stockholders over a five-year period, including reinvestment
of dividends). 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. In its
discussions, the Committee evaluates the proactive and reactive actions of
the executive officers concerning these first two factors and subjectively
incorporates the evaluation into its compensation decisions. Third, and
most important to the Committee's considerations, the Committee considers
surveys of executive compensation obtained from available sources. Such
surveys take into account both the telecommunications industry and other
industries nationwide. The surveys include the five mid-sized
telecommunications companies in the Corporation's peer group, as well as a
number of other similarly sized companies in telecommunications or related
industries. The 1995, 1996 and 1997 surveys indicated that the compensation
of the Corporation's Chief Executive Officer was significantly below the mid-
point of the survey results after giving consideration to the size of the
Corporation compared to the size of the companies in the survey. Certain
other officers were also below the mid-point of the survey results. The
Committee's actions concerning 1997 salary level adjustments for these
officers included steps to more closely align the salary of the Chief
Executive Officer and other Corporation officers with the mid-point of the
survey results.
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 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. The minimum return on equity required to
award short-term incentives for 1997 was 15.0%. In 1997, the Corporation's
earnings and return on equity yielded an aggregate short-term incentive
pool of $416,500.00 or 24.9% of composite salaries for eligible executives.
The portion of such incentive pool received by an executive is based on
his or her position of responsibility and individual performance.
Further, to align the interests of executives with shareholder
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 1997, the Committee determined
15
<PAGE>
1.5 to be an appropriate multiple to be applied to the stock portion of the
award to incent ownership in view of its objective to increase ownership of
the Corporation's Common Stock and the two-year period of transfer
restrictions applicable to Restricted Stock. 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.
Chief Executive Officer Compensation. The compensation for Mr. Frank
H. Hilsabeck, President and Chief Executive Officer, reported for 1997
reflects the application of the policies described above.
Mr. Hilsabeck also received a Short-Term Incentive award for 1997. On
December 13, 1995, the Committee adopted performance goals for the
Corporation for 1997 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 1997, Mr. Hilsabeck received a Short-Term Incentive
award of $140,000.00 or approximately 42.7% 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 permitted 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 $83,991.00, as well as a cash
award of $84,009.00. As of December 31, 1997, Mr. Hilsabeck held unvested
Restricted Stock with an aggregate value of $258,185.00, including the 1997
award.
Mr. Hilsabeck also participated in other employee benefit plans
available to other executive officers during 1997, 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.
Internal Revenue Code Section 162(m). 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 1997 were:
Duane W. Acklie, Chairman Charles N. Wheatley
Paul C. Schorr, III Lyn Wallin Ziegenbein
16
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
shareholder return by quarter, commencing December 31, 1992, and ending
December 31, 1997, 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.
[COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN GRAPH]
Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
Aliant Communications
Inc. $100 $147 $139 $179 $149 $284
S&P 500 $100 $110 $112 $153 $189 $252
S&P Telephone Index $100 $115 $111 $167 $168 $235
Custom Composite Index
(5 Stocks) $100 $116 $120 $148 $160 $200
The 5-Stock Custom Composite Index consists of Alltel Corp., Century
Telephone Enterprise, Cincinnati Bell Inc., Frontier Corp. and Southern
New England Telecommunications.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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,
1997, and ending December 31, 1997, 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 L.L.P. as the
Company's independent certified public accountants for the calendar year
ending December 31, 1998. This accounting firm has audited the financial
statements of Aliant Communications Co., formerly known as 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. Representatives of KPMG Peat Marwick L.L.P. will be present
at the Annual Meeting of Stockholders, have the opportunity to make any
statements they desire and respond to appropriate questions.
17
<PAGE>
OTHER BUSINESS AT THE ANNUAL MEETING OF SHAREHOLDERS
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
shareholders 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 shareholder proposals intended for inclusion in the Corporation's
1999 proxy materials and for presentation at the Corporation's 1999 Annual
Meeting set in the Corporation's By-Laws as the fourth Wednesday in April,
or April 28, 1999, must be received by the Corporation (Attn: Corporate
Secretary) not later than November 16, 1998. In addition, the
Corporation's By-Laws establish procedures for shareholder nominations for
election of directors and bringing business before the Annual Meeting of
the Corporation's shareholders. Among other requirements, to bring
business before the 1999 Annual Meeting or to nominate a person for
election as a director, a shareholder must give written notice to the
Secretary of the Corporation not less than 75 days nor more than 100 days
prior to April 28, 1999, 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 shareholder making the proposal.
Any shareholder 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,
Aliant Communications Inc.
/s/ Michael J. Tavlin
Michael J. Tavlin
Secretary
Lincoln, Nebraska
March 20, 1998
ALIANT COMMUNICATIONS
18
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[ALIANT COMMUNICATIONS LOGO]
PROXY
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Thomas C. Woods, III and Frank H. Hilsabeck
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as
designated on the other side, all the shares of stock of Aliant
Communications Inc. standing in the name of the undersigned with all
powers which the undersigned would possess if present at the Annual Meeting
of Stockholders of the Company to be held April 22, 1998 or any
adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example [X]
This proxy, when properly executed, will be voted in the manner directed
herein by the signed shareholder. If no direction is made, this proxy will
be voted for Item 1.
ITEM 1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES:
Charles R. Hermes, Frank H. Hilsabeck, Paul C. Schorr III and James W.
Strand.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space to the right.)
- -----------------------------------------------------
ITEM 2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
Signature: Signature:
----------------------- ---------------------------
Date:
----------------------
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
FOLD AND DETACH HERE
[ALIANT COMMUNICATIONS LOGO]
Annual Meeting of Stockholders
Wednesday, April 22, 1998
10:30 a.m.
The Cornhusker Hotel
333 So. 13th St.
Lincoln, Nebraska
Agenda:
Election of Directors
Report on the progress of the corporation
Discussion on matters of current interest
<PAGE>
