SHENANDOAH TELECOMMUNICATIONS COMPANY
124 South Main Street
Edinburg, Virginia
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 2000
March 24, 2000
TO THE STOCKHOLDERS OF SHENANDOAH TELECOMMUNICATIONS COMPANY:
The annual meeting of stockholders of Shenandoah Telecommunications
Company will be held in the Social Hall of the Edinburg Fire Department, Stoney
Creek Boulevard, Edinburg, Virginia, on Tuesday, April 18, 2000, at 11:00 a.m.
for the following purposes:
1. To elect three Class II Directors to serve until the 2003 Annual
Stockholders' Meeting;
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record at the close of business March 21, 2000,
will be entitled to vote at the meeting.
Lunch will be provided.
By Order of the Board of Directors
Harold Morrison, Jr.
Secretary
IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN, AND RETURN THE ENCLOSED PROXY CARD IN THE
SELF-ADDRESSED STAMPED (FOR U. S. MAILING) ENVELOPE PROVIDED AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO
ATTEND THE MEETING IN PERSON, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE YOUR OWN
SHARES. SEE PROXY STATEMENT ON THE FOLLOWING PAGES.
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PROXY STATEMENT
P. O. Box 459
Edinburg, VA 22824
March 24, 2000
TO THE STOCKHOLDERS OF SHENANDOAH TELECOMMUNICATIONS COMPANY:
Your proxy in the enclosed form is solicited by the management of the
Company for use at the Annual Meeting of Stockholders to be held in the Social
Hall of the Edinburg Fire Department, Stoney Creek Boulevard, Edinburg,
Virginia, on Tuesday, April 18, 2000, at 11:00 a.m., and any adjournment
thereof.
The mailing address of the Company's executive offices is P. O. Box 459,
Edinburg, Virginia 22824.
The Company has 8,000,000 authorized shares of common stock, of which
3,756,634 shares were outstanding on March 21, 2000. This proxy statement and
the Company's annual report, including financial statements for 1999, are being
mailed on or about March 24, 2000, to approximately 3,680 stockholders of record
on March 21, 2000. Only stockholders of record on that date are entitled to
vote. Each outstanding share will entitle the holder to one vote at the Annual
Meeting. No director, officer, or other party beneficially owns as much as five
percent of the outstanding shares of the common stock of the Company. The
Company intends to solicit proxies by the use of the mail, in person, and by
telephone. The cost of soliciting proxies will be paid by the Company.
Executed proxies may be revoked at any time prior to exercise. Proxies
will be voted as indicated by the stockholders. Executed but unmarked proxies
will be voted "FOR" the election of the three nominees for Class II Directors.
THE ELECTION OF DIRECTORS
Directors Standing for Election
There are currently nine directors (constituting the entire Board of
Directors of the Company), divided into three classes. The current term of Class
II Directors expires at the 2000 Annual Meeting. The Board of Directors proposes
that the nominees described below, all of whom are currently serving as Class II
Directors, be re-elected to Class II for a new term of three years and until
their successors are duly elected and qualified.
The proxy holders will vote the proxies received by them (unless
contrary instructions are noted on the proxies) for the election of the three
nominees as directors, all of whom are now members of and constitute the Class
II Directors. If any such nominees should be unavailable, the proxy holders will
vote for substitute nominees in their discretion. Stockholders may withhold the
authority to vote for the election of directors or one or more of the nominees.
Directors will be elected by a plurality of the votes cast. Abstentions and
shares held in street name that are not voted in the election of directors will
not be included in determining the number of votes cast. The names and principal
occupation of the three nominees, six current directors and executive officers
are indicated in the following table, and the number and percentage of shares of
Common Stock beneficially owned by each as of the Record Date is also shown.
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BOARD OF DIRECTORS
Year Principal Occupation
Elected Other Directorships for
Name of Director Director Age Past Five Years
- ---------------- -------- --- ---------------
(1) (2) (3)
Nominees for Election of Directors
Class II (Term expires 2003) - The directors standing for election are:
Noel M. Borden 1972 63 Pres., H. L. Borden Lumber Co. (a retail
Board, First National Corp.
Ken L. Burch 1995 55 Farmer
Grover M. Holler, Jr. 1952 79 Pres., Valley View, Inc. (a real estate
developer)
Directors Continuing in Office
Class I (Term expires 2002)
Douglas C. Arthur 1997 57 Attorney-at-Law; Dir., First National
Corp.
Harold Morrison, Jr. 1979 70 Chairman of the Board, Woodstock Garage,
First Virginia Bank-BR
Zane Neff 1976 71 Retired Manager, Hugh Saum Co., Inc.(a
Asst. Secretary of the Co. hardware and furniture store); Dir.,
Crestar Bank
Class III (Term expires 2001)
Dick D. Bowman 1980 71 Pres., Bowman Bros., Inc.; Dir., Shen.
Treasurer of the Co. Valley Elec. Coop.; Dir., The Rockingham
Group; Dir., Old Dominion Electric Coop.
Christopher E. French 1996 42 Pres., Shenandoah Telecommunications Co.
President & its Subsidiaries; Dir., First National
Corp.
James E. Zerkel II 1985 55 Vice Pres., James E. Zerkel, Inc. (a
hardware firm); Dir., Shen. Valley Elec.
Coop.; Member, Shenandoah County
Industrial Development Auth.
(1) The directors who are not full-time employees of the Company were
compensated in 1999 for their services on the Board and one or more of
the Boards of the Company's subsidiaries at the rate of $400 per month
plus $400 for each Board meeting attended. Additional compensation was
paid to certain non-employee directors who also serve as Vice
President, Secretary, Assistant Secretary, and Treasurer, for their
services in these capacities, in the amounts of $1,480, $3,080, $1,480,
and $3,080, respectively.
(2) Years shown are when first elected to the Board of the Company or the
Company's predecessor, Shenandoah Telephone Company. Each nominee has
served continuously since the year he joined the Board.
(3) Each director also serves as a director of one or more of the Company's
subsidiaries.
Attendance of Board Members at Board and Committee Meetings
During 1999, the Board of Directors held 14 meetings. All of the
directors attended at least 75 percent of the aggregate of: (1) the total number
of meetings of the Board of Directors; and (2) the total number of meetings held
by all committees of the Board on which they served.
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Standing Audit, Nominating, and Compensation Committees
of the Board of Directors
1. Audit Committee - The Finance Committee of the Board of Directors,
consisted of the following directors: Dick D. Bowman (Chairman), Grover M.
Holler, Jr., and Noel M. Borden. It performed a function similar to that of
an Audit Committee. This committee is responsible for the employment of
outside auditors and for receiving and reviewing the auditor's report.
During 1999 there was one meeting of the Finance Committee. Additional
business of the committee was conducted in connection with the regular
Board meetings.
2. Nominating Committee - The Board of Directors does not have a standing
Nominating Committee.
3. Compensation Committee - The Personnel Committee of the Board of Directors,
consisted of the following directors: Noel M. Borden (Chairman), Harold
Morrison, Jr., and James E. Zerkel. This committee performed a function
similar to that of a Compensation Committee. It is responsible for the
wages, salaries, and benefit programs for all employees. During 1999 there
were three meetings of this committee.
CERTAIN TRANSACTIONS
In 1999, the Company purchased vehicles and received services from Mr.
Morrison's company in the amount of $80,999; and, purchased supplies and
received services from Mr. Zerkel's company in the amount of $3,170. Management
believes that each of the companies provides these services to the Company on
terms comparable to those available to the Company from other similar companies.
No other director is an officer, director, employee, or owner of a significant
supplier or customer of the Company.
STOCK OWNERSHIP
The following table presents information relating to the beneficial
ownership of the Company's outstanding shares of common stock by all directors,
executive officers, and all directors and officers as a group.
No. of Shares
Name and Address Owned as of 2-1-00 Percent of Class
(1) (2)
Douglas C. Arthur 1,440 *
Strasburg, VA 22657
Noel M. Borden 18,803 *
Strasburg, VA 22657
Dick D. Bowman 46,564 1.24
Edinburg, VA 22824
Ken L. Burch 45,172 1.20
Quicksburg, VA 22847
Christopher E. French 144,947 3.86
Woodstock, VA 22664
Grover M. Holler, Jr. 70,736 1.88
Edinburg, VA 22824
Harold Morrison, Jr. 21,028 *
Woodstock, VA 22664
Zane Neff 7,716 *
Edinburg, VA 22824
James E. Zerkel II 4,498 *
Mt. Jackson, VA 22842
David E. Ferguson 1,172 *
Edinburg, VA 22824
William L. Pirtle 310 *
Edinburg, VA 22824
Total shares beneficially owned by
14 directors and officers as a group 365,675 9.73
(1) Includes shares held by relatives and in certain trust relationships, which
may be deemed to be beneficially owned by the nominees under the rules and
regulations of the Securities and Exchange Commission; however, the
inclusion of such shares does not constitute an admission of beneficial
ownership.
(2) Asterisk indicates less than 1%.
SUMMARY COMPENSATION TABLE
The following Summary Table is furnished as to the salary and incentive
payment paid by the Company and its subsidiaries on an accrual basis during the
fiscal years 1997, 1998, and 1999 to, or on behalf of, the Chief Executive
Officer and each of the other executive officers who earn more than $100,000 per
year.
Long-Term
Annual Compensation Compensation
Name and Principal Incentive Other
($) ($) (#) ($) (1)
Christopher E. French 1999 $159,424 $35,700 529 $8,225
President 1998 148,318 38,041 489 7,849
1997 136,491 12,405 471 7,291
David E. Ferguson 1999 105,277 15,705 371 7,161
Vice President- 1998 101,204 16,232 361 7,096
Customer Service 1997 94,141 5,981 352 6,647
William L. Pirtle 1999 101,633 15,384 378 6,192
Vice President- 1998 96,990 15,991 329 6,196
Personal Comm. Service 1997 84,904 5,981 307 5,773
(1) Includes amounts contributed by the Company under its 401(k) and Flexible
Benefits Plans, each of which is available to all regular Company
employees.
OPTION GRANTS TABLE
Option Grants in Last Fiscal Year
Individual Grants
-----------------
Potential Realizable
%of Total Value At Assumed
Options Annual Rates of
Granted To Exercise Stock Price
Options Employees Or Base Appreciation For
Granted In Fiscal Price Expiration Option Term
Name (Shares) Year Per Share Date 5%(1) 10%(1)
---- -------- ---- --------- ---- ----- ------
Christopher E. French 529 3.0% $19.94 2/08/2004 $2,915 $6,438
David E. Ferguson 371 2.1% 19.94 2/08/2004 2,044 4,515
William L. Pirtle 378 2.2% 19.94 2/08/2004 2,083 4,600
(1) In order to realize the potential value set forth, the price per share of
the Company's common stock would be approximately $25.45 and $32.11,
respectively, at the end of the five-year option term.
OPTION EXERCISES AND YEAR END VALUE TABLE
Aggregated Option Exercises in Last
Fiscal Year and FY-End Option Value
Value of
No. of Unexercised Unexercised
Options/ in the Money
FY-End (Shares)Options/FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
Christopher E. French 0 0 715/774 8,755/10,524
David E. Ferguson 0 0 532/552 6,512/ 7,502
William L. Pirtle 0 0 471/543 5,772/ 7,388
Closing price on December 31, 1999 was $33.75 and was used in calculating the
value of unexercised options.
<PAGE>
RETIREMENT PLAN
The Company maintains a noncontributory defined benefit Retirement Plan
for its employees. The following table illustrates normal retirement benefits
based upon Final Average Compensation and years of credited service. The normal
retirement benefit is equal to the sum of:
(1) 1.14% times Final Average Compensation plus 0.65% times Final Average
Compensation in excess of Covered Compensation (average annual compensation
with respect to which Social Security benefits would be provided at Social
Security retirement age) times years of service (not greater than 30); and
(2) 0.29% times Final Average Compensation times years of service in excess of
30 years (such excess service not to exceed 15 years).
Estimated Annual Pension
Years of Credited Service
Final Average
Compensation 15 20 25 30 35
$20,000 $3,420 $4,560 $5,700 $6,840 $7,130
35,000 5,985 7,980 9,975 11,970 12,478
50,000 10,003 13,337 16,671 20,006 20,731
75,000 16,715 22,287 27,859 33,431 34,518
100,000 23,428 31,237 39,046 46,856 48,306
125,000 30,140 40,187 50,234 60,281 62,093
150,000 36,853 49,137 61,421 73,706 75,881
170,000 42,223 56,297 70,371 84,446 86,911
Covered Compensation for those retiring in 2000 is $35,100. Final
Average Compensation equals an employee's average annual compensation for the
five consecutive years of credited service for which compensation was the
highest. The amounts shown as estimated annual pensions were calculated on a
straight-life basis assuming the employee retires in 2000. The Company did not
make a contribution to the Retirement Plan in 1999, as the Plan was adequately
funded. Christopher French, David Ferguson, and William Pirtle had 18 years, 32
years and 7 years, respectively, of credited service under the plan as of
January 1, 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The members of the Personnel Committee of the Board of Directors of the
Company perform the function of a Compensation Committee. The Committee's
approach to compensation of the Company's executive officers, including the
chief executive officer, is to award a total compensation package consisting of
salary, annual and long-term incentives, and fringe benefit components, which
recognizes that the compensation of executive officers should be established at
levels which are consistent with the Company's objectives and achievements. The
compensation package, and the Committee's approach to setting compensation, is
to provide base salaries at levels that are competitive with amounts paid to
senior executives with comparable qualifications, experience, and
responsibilities. The annual incentive compensation is approved upon achievement
of corporate objectives. The longer-term incentive compensation, consisting of
the Company's Incentive Stock Option Plan, is closely tied to the Company's
success in achieving increases in the Company's stock price, thereby benefiting
all shareholders. The Committee reviews industry compensation surveys, and
compares compensation data from public filings by other publicly held companies
in our industry and market region. In setting the compensation of the executive
officers other than the Chief Executive Officer, the Committee receives and
accords significant weight to the input of the Chief Executive Officer.
The Committee has recognized the success of the Company's executives in
accomplishing the Company's various strategic objectives, and has taken into
account management's commitment to the long-term success of the Company. The
Company has continued to expand its product and service offerings and has also
continued its expansion beyond its traditional geographic base. The Company has
also continued to focus its efforts on increasing earnings and
<PAGE>
on providing superior customer service while controlling operating
costs. These actions will in turn assist the Company in meeting the challenge of
achieving growth in an increasingly competitive telecommunications industry.
Based upon its evaluation of these and other relevant factors, the Committee is
satisfied that the executives have contributed positively to the Company's
long-term financial performance.
The annual base salary of the Chief Executive Officer is determined by
the Committee in recognition of his leadership role in formulating and executing
strategies for responding to the challenges of our industry, and the Committee's
assessment of his past performance and its expectation for his future
contributions in leading the Company. The 1999 base salary was not set in
response to attainment of any specific goals by the Company, although the
Committee took into consideration his individual contributions to the Company's
performance, reflected by approximately 19% growth in revenues, and 15% growth
in earnings.
The annual incentive plan stresses improvement in both financial
performance, as measured by increases in net income and service provided to the
Company's customers, as measured by trouble reports from customers. Specific
target goals are set each year. In 1999, as a result of its increase in earnings
and significant improvement in service, the Company reached over 144 percent of
its combined goals. While overall performance greatly exceeded the Company's
goals, it did not exceed the goals by quite as large a margin as the previous
year's plan; therefore, incentive payments made to the Company's president and
other executive officers were comparable to payments made in the previous year.
The long-term incentive plan involves most employees of the company,
and incentive stock options are currently being granted on a formula related to
base salary. Rewards under this plan for the executive officers, as well as all
participating employees, are dependent upon increases in the market price of the
Company's stock.
Submitted by the Company's Personnel Committee:
Noel M. Borden, Chairman
Harold Morrison, Jr.
James E. Zerkel II
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The Securities and Exchange Commission requires that the Company
include in its Proxy Statement a line graph presentation comparing cumulative,
five-year stockholder returns on an indexed basis with a performance indicator
of the overall stock market and either a nationally recognized industry standard
or an index of peer companies selected by the Company. The broad market index
used in the graph is the NASDAQ Market Index. The S&P Telephone Index consists
of the regional Bell Operating Companies, GTE, ALLTEL, and Frontier Corporation.
The Company's stock is not listed on any national exchange or NASDAQ,
but it is traded on the Over-the-Counter (OTC) Bulletin Board system under the
symbol "SHET." Historically, the company maintained information on the prices of
transactions that were reported to the Company, but did not have available
information concerning the OTC activity. For purposes of the following graph,
the value of the Company's stock, including the price at which dividends are
assumed to have been reinvested, has historically been determined based upon the
average of the prices of transactions in the Company's stock that were reported
to the Company in each fiscal year. More recently, the Company has been
receiving monthly reports of OTC trading activity in the Company's stock from
broker/dealers that track the Company's stock. The volume of OTC trading
activity in the Company's stock, as reported by those broker/dealers,
significantly exceeds the volume of trades reported by stockholders or brokers
directly to the Company. The Company believes that the last reported sale price
for the Company's stock, as reflected on broker/dealer OTC trading reports
provided to the Company, is a more accurate reflection of the Company's stock
price than the average annual price of trades directly reported to the Company.
Therefore, the following performance chart includes information regarding
performance of the Company's stock from December 31, 1995 (the earliest date for
which the Company has OTC data) and thereafter on the basis of both the
historical valuation of average annual sale price on directly reported trades
and the last reported sale price on OTC transactions.
Comparison of Five-Year Cumulative Total Return among Shenandoah
Telecommunications Company, NASDAQ Market Index, and S&P Telephone Index
1994 1995 1996 1997 1998 1999
----------------------------------
Shenandoah-OTC 100 110 100 107 193
Shenandoah-reported transactions 100 108 112 108 107 119
NASDAQ Stock Market 100 141 174 213 300 542
S&P Telephone Index 100 151 152 212 312 330
[OBJECT OMITTED]
Assumes $100 invested December 31, 1994 in Shenandoah Telecommunications Company
stock, NASDAQ Market Index, and S&P Telephone Index; and, the reinvestment of
dividends.
EMPLOYMENT OF AUDITORS
The Board of Directors, on the recommendation of the Audit Committee,
has appointed the firm of McGladrey and Pullen, LLP as auditors to make an
examination of the accounts of the Company for the 2000 fiscal year. It is not
expected that representatives of the firm will be present at the annual meeting.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders to be included in management's proxy
statement and form of proxy relating to next year's annual meeting must be
received at the Company's principal executive offices no later than November 25,
2000. In addition, in order for any matter to be properly brought before the
2001 annual meeting, the stockholder must notify the Company in writing no later
than December 25, 2000.
OTHER MATTERS
Management does not intend to bring before the meeting any matters
other than those specifically described above and knows of no matters other than
the foregoing to come before the meeting. If any other matters properly come
before the meeting, it is the intention of the persons named in the accompanying
form of proxy to vote such proxy in accordance with their judgment on such
matters, including any matters dealing with the conduct of the meeting.
FORM 10-K
The Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission is available to stockholders, without charge, upon request
to Mr. Laurence F. Paxton, Vice President-Finance, Shenandoah Telecommunications
Company, P. O. Box 459, Edinburg, VA 22824.
<PAGE>
Shenandoah Telecommunications Company PROXY
124 South Main Street
Edinburg, VA 22824 This proxy is solicited on behalf of the Board of
Directors
- ------------------------------------------------------------
The undersigned hereby appoints Noel M. Borden, Christopher E. French, and
Grover M. Holler, Jr., and each of them, as Proxies with full power of
substitution, to vote all common stock of Shenandoah Telecommunications Company
held of record by the undersigned as of March 21, 2000, at the Annual Meeting of
Stockholders to be held on April 18, 2000, and at any and all adjournments
thereof.
1. Election of Directors
FOR CLASS II Noel M. Borden, Ken L. Burch, and Grover M. Holler, Jr.
To withhold authority to vote for any individual nominee, strike a line
through the nominee's name listed above.
Vote Withheld for all nominees listed above.
The Board of Directors unanimously recommends a vote "FOR" election of
directors.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
Please mark, sign exactly as name appears below, date, and return this
proxy card promptly, using the enclosed envelope, whether or not you plan to
attend the meeting.
When signing as attorney,
executor, administrator,
trustee, guardian, or
agent, please give full
title as such. If a
corporation, please sign
in full corporate name by
president or other
authorized officer. If a
partnership, please sign
in partnership name by
authorized person.
Dated ______________________, 2000
-------------------------
I plan to attend the meeting SIGNATURE
- ------
Number of persons attending
- ------
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I cannot attend the meeting ADDITIONAL SIGNATURE
(if held jointly)
