<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
PRICE COMMUNICATIONS CORPORATION
(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 the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ________
(2) Aggregate number of securities to which transaction applies: ___________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): _____________
(4) Proposed maximum aggregate value of transaction: _______________________
(5) Total fee paid: ________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ________________________________________________
(2) Form, Schedule or Registration Statement No.: __________________________
(3) Filing Party: __________________________________________________________
(4) Date Filed: ____________________________________________________________
Notes:
<PAGE>
PRICE COMMUNICATIONS CORPORATION
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
To the shareholders of PRICE COMMUNICATIONS CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Price Communications
Corporation (the "Company") will be held at the offices of Proskauer Rose LLP,
1585 Broadway, New York, New York on Thursday, August 13, 1998 at 10:00 a.m.
Eastern Daylight Savings Time for the following purposes:
1. To elect three directors (Proposal 1);
2. To approve amendments to the Company's 1992 Long Term Incentive Plan
to, among other things, increase the number of shares that may be issued
thereunder by 500,000 shares (the equivalent of 976,562 shares after giving
effect to stock splits occurring after the approval of such increase by the
Company's Board of Directors in December 1997), in order to enable the
Company to continue to offer long-term stock incentive to its key employees
(Proposal 2);
3. To amend pursuant to a recent modification to the New York Business
Corporation Law the Company's Certificate of Incorporation to divide the
Board of Directors into three classes having staggered three-year terms as
was the case during the period prior to 1996 (Proposal 3); and
4. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed the close of business on July 9, 1998 as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting.
By order of the Board of Directors
Kim I. Pressman,
Executive Vice President, Chief
Financial Officer and Secretary
July 13, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
INSURE THAT YOUR SHARES ARE VOTED.
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
Proxy Statement............................................................. 1
Election of Directors....................................................... 2
Principal Shareholders and Security Ownership of Management................. 2
Directors and Executive Officers............................................ 3
Executive Compensation...................................................... 5
Related Party Transactions.................................................. 11
Proposed Amendments to the Company's 1992 Long-term Incentive Plan.......... 11
Proposed Return to a Classified Board Of Directors.......................... 16
Shareholders' Proposals..................................................... 18
General..................................................................... 18
</TABLE>
ii
<PAGE>
PRICE COMMUNICATIONS CORPORATION
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Price Communications
Corporation (the "Company") to be voted at the Annual Meeting of shareholders
of the Company (the "Meeting"), which will be held at the offices of Proskauer
Rose LLP, 1585 Broadway, New York, New York on Thursday, August 13, 1998 at
10:00 a.m., Eastern Daylight Savings Time. If not otherwise specified, all
proxies received pursuant to this solicitation will be voted in the election
of directors FOR the persons named herein, FOR the amendments to the Company's
Long Term Incentive Plan, and FOR the proposed amendments to the Company's
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") described herein.
Shareholders who execute proxies may revoke them at any time before they are
exercised by delivering a written notice to the Secretary of the Company
stating that the proxy is revoked, by executing a subsequent proxy and
presenting it to the Secretary of the Company, or by attending the Meeting and
voting in person.
The Board of Directors does not know of any matters other than those
specified in the Notice of Annual Meeting of Shareholders that will be
presented for consideration at the Meeting. However, if other matters properly
come before the Meeting, it is the intention of the persons named in the
enclosed proxy to vote thereon in accordance with their judgment. In the event
that any nominee is unable to serve as a director at the date of the Meeting,
the enclosed form of proxy will be voted for any nominee who shall be
designated by the Board of Directors to fill such vacancy.
As of July 9, 1998, the record date for the Meeting, there were outstanding
and entitled to vote at the Meeting approximately 11,533,419 shares of the
Company's Common Stock, with each share being entitled to one vote, and
728,133 shares of Series A Preferred Stock, with each share being entitled to
1.953125 votes (such Series A Preferred Stock, the "Preferred Stock"). Only
shareholders of record at the close of business on July 9, 1998 will be
entitled to vote at the Meeting, and this Proxy Statement and the accompanying
proxy are being sent to such shareholders on or about July 13, 1998.
Under New York Law and the Company's Certificate of Incorporation and By-
laws, if a quorum is present, directors are elected by a plurality of the
votes cast by the holders of shares entitled to vote thereon. A majority of
the outstanding shares entitled to vote, present in person or represented by
proxy constitutes a quorum. If a quorum is present, the affirmative vote of a
majority of the votes cast by holders of shares entitled to vote thereon is
required to approve the amendments to the Company's Long Term Incentive Plan
described herein. The amendments of the Company's Certificate of Incorporation
described herein require the affirmative vote of a majority of the voting
power of the Company's outstanding shares. Abstentions and broker non-votes
will be counted only for purposes of determining a quorum; consequently, an
abstention or broker non-vote with respect to a proposed amendment to the
Certificate of Incorporation will have the same effect as a vote against it.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE IN THE ELECTION OF DIRECTORS FOR THE PERSONS NAMED HEREIN,
FOR THE AMENDMENTS TO THE COMPANY'S LONG TERM INCENTIVE PLAN, AND FOR THE
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION. OFFICERS AND DIRECTORS HOLDING
SHARES OF COMMON AND PREFERRED STOCK OF THE COMPANY WITH % OF THE VOTING
POWER OF ALL OUTSTANDING SHARES HAVE INDICATED THAT THEY WILL VOTE IN FAVOR OF
SUCH DIRECTORS AND PROPOSALS.
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
Three directors are to be elected at the Meeting. All nominees have
consented to be named and to serve if elected. All of the nominees are
currently directors of the Company.
As set forth below (see Proposal 3), the Board of Directors is proposing to
stagger the terms of directors of the Company by dividing the Board into three
separate classes. In such event, the Board of Directors intends to place one
director, Mr. Cadgene, in the class whose term of office will expire in 1999,
one director, Mr. Price, in the class whose term of office will expire in 2000
and one director, Mr. Ellsworth, in the class whose term of office will expire
in 2001. If Proposal 3 is not approved, the three directors to be elected at
the Meeting will hold office until the next annual meeting and until their
successors have been elected and qualified.
The Company's Certificate of Incorporation currently provides for a Board of
Directors consisting of from five to ten members with the actual number being
set from time to time by resolution of the Board. Proposal 3 would amend the
Certificate of Incorporation to reduce the minimum number of directors to
three (the current number of directors) while retaining the current maximum
number of ten directors. Regardless of whether Proposal 3 is approved, proxies
solicited hereunder may not be voted for more than three directors.
PRINCIPAL SHAREHOLDERS
AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock and Preferred Stock as of
July 2, 1998 by (i) each person or group known to the Company who beneficially
owns more than five percent of the Company's Common Stock and (ii) all
directors and executive officers of the Company and the named executive
officers of Price Communications Wireless, Inc. ("PCW") as a group:
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENTAGE OF
BENEFICIAL OWNER CLASS OF STOCK SHARES(1) CLASS
---------------- ------------------------ --------- -------------
<S> <C> <C> <C>
Robert Price............ Common Stock 2,553,689 22.1%
Series A Preferred Stock(2) 728,133 100%
George H. Cadgene....... Common Stock 4,312 (3)
Robert F. Ellsworth..... Common Stock 2,048 (3)
Sandler Capital Manage-
ment................... Common Stock 1,247,578(4,5) 11.5%
Michael J. Marocco...... Common Stock 1,599,141(5,6) 14.6%
John Kornreich.......... Common Stock 1,599,141(5,6) 14.6%
Harvey Sandler.......... Common Stock 1,722,187(5,6,7) 15.9%
Andrew Sandler.......... Common Stock 1,599,141(5,6) 14.8%
Kim I. Pressman......... Common Stock 95,729 (3)
William J. Ryan......... -- -- --
M. Wayne Wisehart....... -- -- --
All directors and execu-
tive officers and named
executive officers of
PCW as a group
(6 persons)............ Common Stock 2,655,778 23.0%
Series A Preferred Stock 728,133 100%
</TABLE>
2
<PAGE>
- --------
(1) Under the applicable rules of the Securities and Exchange Commission (the
"SEC"), each person or entity is deemed to be a beneficial owner with the
power to vote and direct the disposition of these shares. Information as
to number of shares of the Company's Common Stock and voting power of
Preferred Stock gives effect to five-for-four stock splits of the
Company's Common Stock, in the form of stock dividends payable on December
23, 1997, April 1, 1998 and April 30, 1998.
(2) Each share of Series A Preferred Stock votes with the Common Stock on the
basis of 1.953125 votes for each vote cast by a share of the Common Stock.
(3) Less than 1%.
(4) Sandler Capital Management ("SCM"), a registered investment advisor and a
New York general partnership, may be deemed to have shared voting and
dispositive power with respect to 712,891 shares of Common Stock and sole
voting and dispositive power with respect to 534,688 shares of Common
Stock, including 483,359 of Common Stock owned by 21st Century
Communications Partners, L.P. ("21st Century"), 164,457 shares of Common
Stock owned by 21st Century Communications T-E Partners, L.P. ("T-E"), and
65,074 shares of Common Stock owned by 21st Century Communications Foreign
Partners, L.P. ("Foreign"), each of which is a limited partnership in
which SCM is, indirectly, a general partner. Also includes 534,688 shares
(including 26,875 shares issuable upon the exercise of warrants) held in
various investment accounts with respect to which SCM exercises investment
discretion (SCM disclaims beneficial ownership of these shares). Barry
Rubenstein, Irwin Lieber and Barry Fingerhut may also be deemed to have
shared voting and dispositive power with respect to the aggregate of
712,891 shares owned by 21st Century, T-E and Foreign, as these
individuals control a general partner of these entities.
(5) Based upon information contained in a Statement on Schedule 13D dated
October 6, 1997. Each person disclaims beneficial ownership of these
securities, except to the extent of his/her/its equity interest therein.
(6) Includes 1,247,578 shares of Common Stock that may be deemed to be
beneficially owned by SCM and 351,563 shares of Common Stock owned by
Sandler Associates, a New York limited partnership. Each of Michael J.
Marocco, John Kornreich, Harvey Sandler and Andrew Sandler controls a
general partner of SCM and is a general partner of Sandler Associates.
Consequently, each may be deemed to have shared voting and dispositive
power with respect to the shares deemed to be beneficially owned by such
entities. Each person disclaims beneficial ownership of the 507,813 shares
of Common Stock and 26,875 shares of Common Stock issuable upon the
exercise of warrants held in accounts managed by SCM.
(7) Includes 109,375 shares of Common Stock owned by Harvey Sandler and 13,672
shares owned by Phyllis Sandler, his spouse.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company and certain executive officers
of PCW:
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
Robert Price.......................... 65 Director, President, Chief Executive
Officer and Treasurer
Kim I. Pressman....................... 41 Executive Vice President, Chief
Financial Officer, Secretary and
Assistant Treasurer
George H. Cadgene..................... 79 Director
Robert F. Ellsworth................... 71 Director
William J. Ryan....................... 66 Chairman of the Board of PCW
M. Wayne Wisehart..................... 52 President and Chief Executive Officer
of PCW
</TABLE>
The following is a biographical summary of the experience of the executive
officers and directors of the Company, and the executive officers of PCW named
above (each of whom served as an executive officer and director of Palmer
Wireless, Inc. (Palmer Wireless, Inc. and its predecessors, "Palmer") prior to
its acquisition by PCW).
Robert Price has served concurrently as a Director and the Chief Executive
Officer and President of the Company since 1979, has served as Treasurer of
the Company since 1990, and has been a Director of Price Communications
Wireless Holdings, Inc. ("Holdings") and PCW since 1997. Mr. Price was a
Director of PriCellular Corporation ("PriCellular") from 1990 until it was
acquired by American Cellular Corporation in June 1998. Mr. Price was the
President and Assistant Treasurer of PriCellular from 1990 until May 1997 and
served as Chairman of PriCellular from May 1997 until June 1998. Mr. Price, an
attorney, is a former General Partner of Lazard Freres & Co. He has served as
an Assistant United States Attorney, practiced law in New York and served as
Deputy Mayor of New York City. In the early sixties, Mr. Price served as
President and Director of Atlantic States Industries, a corporation owning
weekly newspapers and four radio stations. After leaving public office, Mr.
Price became Executive Vice President of The Dreyfus Corporation and an
Investment Officer of The Dreyfus Fund. In 1972 he joined Lazard Freres & Co.
Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States
Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant,
Inc., and is currently a member of The Council on Foreign Relations. He is a
former appointee of Governor Pataki as a Trustee of the City University of New
York. Mr. Price serves as the Representative of the Majority Leader and
President Pro Tem of the New York Senate and as a member of the Board of
Directors of the Municipal Assistance Corporation for the City of New York.
Mr. Price is also a Director and president of TLM Corporation.
Kim I. Pressman, a certified public accountant, is a graduate of Indiana
University and holds an M.B.A. from New York University. Ms. Pressman was
elected Chief Financial Officer in May 1998. Before assuming her other present
offices as Executive Vice President and Secretary in October 1994 (in which
she served until August 1997 and again from February 1998 to the present), Ms.
Pressman was Vice President and Treasurer of the Company from November 1987 to
December 1989, and Senior Vice President of the Company from January 1990 to
September 1994. She was also Secretary of the Company from July 1989 to
February 1990. Ms. Pressman was Vice President--Broadcasting and Vice
President, Controller, and Assistant Treasurer of the Company from 1984 to
October 1987. Prior to joining the Company in 1984, Ms. Pressman was employed
for three years by Peat, Marwick, Mitchell & Co., a national certified public
accounting firm, and for more than three years thereafter was Supervisor,
Accounting Policies for International Paper Company and then Manager,
Accounting Operations for Corinthian Broadcasting of Dun & Bradstreet Company,
a large group owner of broadcasting stations. Ms. Pressman is a Director, Vice
President, Treasurer and Secretary of TLM Corporation. Until June 1998, she
had served as a Director, Vice President and Secretary of PriCellular for more
than the past five years.
4
<PAGE>
George H. Cadgene, an engineer by training, is a private investor and has
been a director of the Company since 1981. His former occupational
affiliations include Givaudan Corporation, Trubek Laboratories and
International Flavors and Fragrances, where he served as Vice President for
Aroma Chemical Sales. Mr. Cadgene has served as a Director of Highland Capital
Corporation and Intarome, Inc. He has also served as President of the
Essential Oil Association from 1967 to 1968 and as President of the Drug,
Chemical and Allied Trade Association from 1969 to 1971.
Robert F. Ellsworth has been a director of the Company since 1981. He is
President of Robert Ellsworth & Co., Inc., Washington, D.C., a private
investment firm, and Managing Director of The Hamilton Group, LLC, a private
venture group. From 1974 to 1977 he served as an Assistant Secretary and then
Deputy Secretary of Defense. He was a General Partner of Lazard Freres & Co.
from 1971 to 1974, and served in the United States House of Representatives
from 1961 to 1967. His professional affiliations include the International
Institute for Strategic Studies, London; Atlantic Council of the United
States, Washington, D.C.; The Council on Foreign Relations, New York; and the
American Council on Germany, New York.
William J. Ryan, Chairman of the Board of PCW since April 1, 1998, served as
Chief Executive Officer and President of Palmer from 1984 until its
acquisition by PCW on October 6, 1997, and served in such capacities with PCW
until April 1, 1998. Mr. Ryan was Chief Operating Officer and President of
Palmer from 1982 to 1984. Mr. Ryan has over 40 years of communications and
telecommunications experience. He joined Palmer in 1970 following that
company's acquisition of certain radio and cable properties which Mr. Ryan had
partially owned and operated since 1955. In his capacity as Chief Executive
Officer, Mr. Ryan successfully led Palmer through 18 acquisitions of cellular
telephone systems. Mr. Ryan is a director of the Cellular Telecommunications
Industry Association, the founding chairman of Cable Television Advertising
Bureau, Inc. and a former president of the Florida Cable Association, the
Florida Broadcasters Association and the Southern Cable Association.
M. Wayne Wisehart, President and Chief Executive Officer of PCW since April
1, 1998, served as Chief Financial Officer of Palmer from 1982 until its
acquisition by PCW on October 6, 1997, and served in such capacity with PCW
until April 1, 1998. He was promoted to Treasurer of Palmer in 1983 and to
Vice President in 1987. Mr. Wisehart has over 15 years of communications and
telecommunications experience. In his capacity as Chief Financial Officer of
Palmer, he was instrumental in the financial management and direction of the
Company. Prior to joining Palmer, Mr. Wisehart served as Treasurer of the Des
Moines Register & Tribune Company of Des Moines, Iowa, for approximately five
years. He began his career in 1972 with Peat, Marwick, Mitchell & Co. in St.
Louis, Missouri, where he became a Certified Public Accountant. Mr. Wisehart
then served as a tax specialist for three years with General Dynamics
Corporation in St. Louis, Missouri.
The Board of Directors of the Company met 12 times during the year ended
December 31, 1997. Each member of the Board attended in excess of 75% of the
meetings of the Board and the committees of the Board of which he is a member
held during the year while he was a member thereof.
Directors are compensated for their reasonable travel and related expenses
in attending in-person Board of Directors or committee meetings, and directors
who are not officers or employees of the Company receive fees of $25,000 per
annum, and also received a bonus of $15,000 for services during 1997 due to
the significant demands made on such directors during the year.
The Board of Directors has established an Audit and Finance Committee, a
Stock Option and Compensation Committee, and a Nominating Committee. The Audit
and Finance Committee consists of Messrs. Cadgene and Ellsworth. Its functions
include (i) making recommendations to the Board of Directors as to the
independent accountants to be appointed by the Board, (ii) reviewing with the
independent accountants the scope of their examination, (iii) receiving the
reports of the independent accountants and meeting with representatives of
such accountants for the purpose of reviewing and considering questions
relating to their examination and such reports, (iv) reviewing, either
directly or through the independent accountants, the internal accounting and
auditing procedures of the Company and (v) studying various issues relating to
the capital structure of the Company. The Audit and Finance Committee did not
meet during 1997, but various relevant matters were discussed by the Board of
Directors with the members of the Audit and Finance Committee present.
5
<PAGE>
The Stock Option and Compensation Committee consists of Messrs. Cadgene and
Ellsworth. Its functions include reviewing and approving arrangements relating
to the compensation of executive officers of the Company and administering the
Company's 1992 Long Term Incentive Plan. The Stock Option and Compensation
Committee held six meetings in 1997.
The Nominating Committee consists of Messrs. Cadgene and Ellsworth. The
Nominating Committee nominates candidates for election to the Company's Board
of Directors and met once in 1997. The Nominating Committee will consider
nominations by shareholders made pursuant to timely notice in proper written
form to the Secretary of the Company. To be timely, such a notice shall be
delivered to or mailed and received at the principal executive offices of the
Company not less than 50 days or more than 90 days prior to the meeting at
which directors are to be elected; provided, however, that if less than 50
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the security-holder to be timely must be so
received not later than the close of business on the earlier of (i) the tenth
day following the day on which such notice of the date of meeting was mailed
or such public disclosure was made or (ii) the last business day prior to the
meeting date. To be in proper written form, a shareholder's notice to the
Secretary must set forth in writing (i) as to each person whom the shareholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in connection with
the solicitation or proxies for election of directors, or is otherwise
required, in each case pursuant to Regulations 14A under the Securities
Exchange Act of 1934 or any successor regulation or law, including, without
limitation, such person's written consent to being named in the proxy
statement as a nominee and to serving as director if elected; and (ii) as to
the shareholder or shareholders giving notice, (x) the name and address, as
they appear on the Company's books, of such shareholder or shareholders and
(y) the class and number of shares of the Company which are beneficially owned
by such shareholder or shareholders. Nominations by shareholders not made in
accordance with the foregoing procedures shall be disregarded.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the executive officers of the Company for the three years
ended December 31, 1997 and compensation paid to the named executive officers
of PCW for the period from and after its acquisition of Palmer on October 6,
1997 until December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------- ------------
SECURITIES ALL OTHER
NAME AND UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (3) ($)
------------------ ---- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert Price,........... 1997 $375,000 $500,000(1) 97,656
President, Chief Execu-
tive 1996 $349,900 $564,300 0
Officer and Treasurer 1995 $306,300 $425,000 0
Kim I. Pressman,........ 1997 $ 90,900 $ 0 97,656 $155,000(4)
Executive Vice Presi-
dent, 1996 $125,000 $150,000 42,969 --
Chief Financial Officer
and Secretary 1995 $100,000 $107,500 93,262 --
William J. Ryan,........ 1997 $119,178 $ 0 195,313
Chairman of the Board
PWC (2)
M. Wayne Wisehart,...... 1997 $ 71,507 $ 0 146,406
President and Chief Ex-
ecutive Officer of PCW
(2)
</TABLE>
- --------
(1) Paid in Common Stock of the Company.
(2) Prior to their promotions to such positions effective April 1, 1998, Mr.
Ryan served as President and Chief Executive Officer of PCW and Mr.
Wisehart served as Executive Vice President, Treasurer and Chief Financial
Officer of PCW.
6
<PAGE>
(3) Gives effect to five-for-four stock splits of the Company's Common Stock,
in the form of stock dividends, paid on December 23, 1997, April 1, 1998
and April 30, 1998.
(4) Consists of amounts paid under former employment agreement.
The Company has an employment agreement with Robert Price, the President of
the Company, for a term ending October 6, 2000, subject to extension. The
agreement provides for base compensation at the rate of $375,000 per annum,
subject to certain cost of living increases, and such performance bonuses as
may be determined by the Board of Directors in its sole discretion. Under the
agreement, if the Company terminates Mr. Price's employment for Cause (as
defined therein), or if Mr. Price terminates his employment at his option, Mr.
Price will be entitled to a severance payment from the Company equal to one
year's base salary. If the Company terminates Mr. Prices' employment without
Cause, or if Mr. Price terminates his employment for Good Reason (as defined
in the employment agreement), Mr. Price will be entitled to a severance
payment from the Company equal to three years' base salary. Good Reason is
defined to include the occurrence of a Change in Control (as defined in the
agreement).
In 1997, PCW entered into an employment agreement with Mr. Ryan (the "Ryan
Agreement") for a term ending on December 31, 1999. The base salary rate per
annum under the Ryan Agreement for 1997 was $500,000, plus an annual bonus
based upon PCW's financial performance commencing in 1998. In connection with
Mr. Ryan's desire to serve as Chairman of the Board of the Company commencing
effective April 1, 1998, Mr. Ryan and PCW agreed that (i) Mr. Ryan will serve
as Chairman of the Board until December 31, 1998; (ii) in lieu of the other
compensation and benefits under the Ryan Agreement, Mr. Ryan received on April
1, 1988 a single lump sum payment of $875,000 and will participate in PCW's
Bonus Plan for 1998; and (iii) all options for the Company's Common Stock held
by Mr. Ryan have been terminated.
In 1997, PCW entered into an employment agreement with Mr. Wisehart (the
"Wisehart Agreement") for an initial term ending on December 31, 1999. The
Wisehart agreement has an automatic one-year renewal on each anniversary date
thereof. The base salary rate per annum under the Wisehart Agreement is
$300,000, plus an annual bonus based upon PCW's financial performance
commencing in 1998. The Wisehart Agreement specifies that if Mr. Wisehart is
terminated by PCW other than for Cause (as defined therein), disability or
death or if Mr. Wisehart terminates the agreement for Good Reason (as defined
therein), PCW will pay to Mr. Wisehart the full base salary and benefits which
would otherwise have been paid to Mr. Wisehart, as well as a pro-rated bonus,
until two years after the date of termination (to be paid at the time such
payments are due).
7
<PAGE>
PRICE COMMUNICATIONS CORPORATION
STOCK PRICE PERFORMANCE
The following graph shows the five year cumulative total return (change in
the year-end stock price plus reinvested dividends) to shareholders for Price
Communications Corporation compared to the Standard & Poor's 500 Index, the
Standard & Poor's Broadcast Industry Index and the Standard & Poor's
Cellular/Wireless Telecommunications Industry Index cumulative total return.
The graph assumes investment of $100 on December 31, 1992 in the Company's
Common Stock, the Standard & Poor's Broadcast Industry Index, the Standard &
Poor's Cellular/Wireless Telecommunications Industry Index and the Standard &
Poor's 500 Index. The companies represented in the Standard & Poor's Broadcast
Industry Index and the Standard & Poor's Cellular/Wireless Telecommunications
Industry Index are not necessarily similar in size to the Company and include
some companies larger than the Company.
COMPARATIVE ANALYSIS
TOTAL RETURN TO SHAREHOLDERS
[LINE GRAPH APPEARS HERE]
TOTAL SHAREHOLDER RETURNS
-------------------------
(DIVIDENDS REINVESTED)
INDEXED RETURNS
YEARS ENDING
BASE
PERIOD
COMPANY/INDEX DEC92 DEC93 DEC94 DEC95 DEC96 DEC97
- --------------------------------------------------------------------------------
PRICE COMMUNICATIONS CORP 100 175.00 288.89 444.51 479.24 594.71
CELLULAR/WRLESS TELECOM-500 100 201.35 202.61 196.52 175.77 289.31
BRDCAST(TV,RADIO,CABLE)-500 100 140.27 130.24 170.50 139.76 229.94
S&P 500 INDEX 100 110.08 111.53 153.45 188.68 251.63
<PAGE>
The Company has determined to replace the Standard & Poor's Broadcast
Industry Index with the Standard & Poor's Cellular/Wireless Telecommunications
Industry Index in light of the sale by the Company of all of its broadcasting
properties and its acquisition in October 1997 of Palmer Wireless, Inc.
Pursuant to the rules of the SEC, the graph for the current year set forth
above shows the Company's stock price performance in comparison to each such
Index.
Under the rules of the SEC this graph is not deemed "soliciting material"
and is not incorporated by reference in any filings with the SEC under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
executive officers of the Company to file with the SEC initial reports of
ownership and reports of changes in ownership of securities of the Company.
Directors and executive officers are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms that they file. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports
were required, all Section 16(a) filing requirements applicable to directors
and executive officers were timely satisfied during the fiscal year ended
December 31, 1997.
STOCK OPTIONS
The following table reflects the number of options for shares of the
Company's Common Stock subject to options granted under the Company's 1992
Long Term Incentive Plan (the "LTIP") during the year ended December 31, 1997
to executive officers of the Company and the named executive officers of PCW.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATED FOR
UNDERLYING GRANTED TO OPTION TERM (3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -------------------
NAME GRANTED (1)(2) FISCAL YEAR PRICE (2) DATE 5% 10%
---- -------------- ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert Price............ 97,656 6.3% $5.37 12/09 $329,800 $ 835,779
Kim I. Pressman......... 97,656 6.3 5.37 12/09 329,800 835,779
William J. Ryan (4)..... 195,313 12.6 4.67 10/09 573,622 1,453,671
M. Wayne Wisehart....... 146,406 9.4 4.67 10/09 429,985 1,089,667
</TABLE>
- --------
(1) Upon the occurrence of a "change in control" of the Company, as defined in
the LTIP, the Company's Stock Option and Compensation Committee may, in
its discretion, provide for the purchase of any then outstanding options
by the Company or a designated subsidiary for an amount of cash equal to
the excess of (i) the product of the "change in control price" (as defined
below) and the number of shares of the Company's Common Stock subject to
the options over (ii) the aggregate exercise price of such options. The
change in control price means the higher of (1) the highest price per
share of the Company's Common Stock paid in any transaction related to a
change in control of the Company and (ii) the "highest fair market value,"
as defined in the LTIP, of the Company's Common Stock at any time during
the 60-day period preceding the change in control. (No material change in
the foregoing "change in control" provisions will be effected by the
proposed amendments to the LTIP described under Proposal 2 below.)
(2) Number of options and exercise price give effect to five-for-four stock
splits, in the form of stock dividends, paid on December 23, 1997, April
1, 1998 and April 30, 1998.
(3) In order to realize these potential values, the closing price of the
Company's Common Stock on October 7, 2007 would have to be $7.61 and
$12.11 per share and on December 4, 2007 would have to be $8.75 and $13.93
per share, respectively.
(4) Mr. Ryan's options terminated unexercised on April 1, 1998. See "Executive
Compensation".
9
<PAGE>
The following table reflects the number of stock options held by the
executive officers of the Company and the named executive officers of PCW on
December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEARAND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
SHARES UNDERLYING THE-
ACQUIRED UNEXERCISED OPTIONS MONEY OPTION AT FISCAL
ON VALUE AT FISCAL YEAR END (1) YEAR END
EXERCISE REALIZED ------------------------- -------------------------
NAME (1) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Price............ 972,563 $3,062,500 -- 97,656 $ 9,765
Kim I. Pressman......... 55,860 146,450 95,703 97,656 $147,406 9,765
William J. Ryan (2)..... -- -- 195,313 154,204
M. Wayne Wisehart....... -- -- 146,406 118,589
</TABLE>
- --------
(1) Numbers of shares gives effect to five-for-four stock splits, in the form
of stock dividends, paid on December 23, 1997, April 1, 1998 and April 30,
1998.
(2) Mr. Ryan's options terminated unexercised on April 1, 1998. See "Executive
Compensation".
10
<PAGE>
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND
REPRICING OF OPTIONS
Under the rules of the SEC, this report is not deemed "soliciting material"
and is not incorporated by reference in any filing with the SEC under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
The Stock Option and Compensation Committee of the Board of Directors is
composed of two non-employee directors, Messrs. George H. Cadgene and Robert
F. Ellsworth. It is responsible for developing and making recommendations to
the Board of Directors with respect to the Company's executive compensation
policies and the annual compensation paid to the Company's executive officers
and administering the LTIP. The Committee believes that the Company's
compensation arrangements should enable the Company to attract and retain
highly qualified executive employees, reward individual performance and foster
an identity of interest between management and the Company's shareholders. The
Company has only two executive employees, Mr. Price and Ms. Pressman; Mr. Ryan
is Chairman of the Board of PCW and Mr. Wisehart is President and Chief
Executive Officer of PCW.
The Company awarded Mr. Price a bonus for 1997 payable solely in Common
Stock of the Company with a value of $500,000. Among the factors taken into
account by the Company's Stock Option and Compensation Committee in
determining to award such bonus payable in Common Stock were Mr. Price's
significant role in the successful completion of the acquisition of Palmer
during 1997 and in the excellent financial performance achieved by the Company
during 1997. In determining to award Mr. Price a bonus payable solely in the
Company's Common Stock rather than cash, such Committee considered the fact
that Mr. Price had declined to accept a bonus payable in cash in an amount
which such Committee deemed to be adequate to compensate Mr. Price for the
excellent results achieved by the Company during such year and Mr. Price's
contribution to such results, in significant part because of Mr. Price's
concern about the perception to holders of the Company's debt of significant
cash payments to the Company's Chief Executive Officer. Among the factors
taken into account by the Board of Directors and such Committee in approving
the compensation arrangements of Messrs. Ryan and Wisehart described above
were that a significant portion of such compensation consisted of a bonus
based on PCW's financial performance exceeding budgeted amounts.
The Company has not developed a policy with respect to qualifying
compensation paid to its executive officers for deductibility under Section
162(m) of Internal Revenue Code for the reason that none of the Company's
executive officers receive a level of compensation which would make it
advisable for the Company to have such a policy. As a result of the amendments
to the Company's LTIP proposed for consideration by the Company's shareholders
at the Meeting, it is intended that certain awards under the LTIP will satisfy
the requirements of Section 162(m).
George H. Cadgene
Robert F. Ellsworth
(members of the Stock Option and
Compensation Committee)
11
<PAGE>
RELATED PARTY TRANSACTIONS
The Company has had a long-standing program of repurchasing shares of its
Common Stock at times when it believes such shares represent a good long term
investment for the Company and an appropriate use of its current cash
resources. On February 10, 1997, the Company purchased 1,013,000 shares of its
Common Stock (the equivalent of 1,978,515 shares after giving effect to the
Company's stock splits payable in December 1997 and April 1998) from Fir Tree
Partners for an aggregate purchase price of $10.6 million. From time to time,
the Company engaged in discussions with Franklin Advisers, Inc. ("Franklin
Funds") concerning the purchase of 2,291,953 shares (the equivalent of
4,476,470 shares after giving effect to the aforesaid stock splits) of the
Company's Common Stock held by the Franklin Funds but the Company was unable
to negotiate a purchase from the Franklin Funds directly. In June 1997,
NatWest Capital Markets Limited ("NatWest") approached the Company with a
proposal for a transaction, negotiated in June and July, 1997, in which: (i)
NatWest would purchase the shares owned by the Franklin Funds directly from
the Franklin Funds, (ii) NatWest would agree to act as initial purchaser in
the offering of certain discount notes by Holdings and warrants to purchase
shares of Common Stock of the Company (the "Cellular Holdings Offering"), the
proceeds of which were to be used in part to fund the acquisition of Palmer
and in part to redeem the PIK Units described below, (iii) the Company would
issue to NatWest 1,129 units (the "PIK Units") of PIK Preferred Stock and
warrants ("PIK Warrants") in exchange for the shares of the Company's Common
Stock acquired from the Franklin Funds and $3.0 million in fees payable to
NatWest in connection with the Cellular Holdings Offering and (iv) the PIK
Units would be redeemed at a redemption price equal to the liquidation value
of the PIK Preferred Stock plus dividends accrued at the rate of 15% per annum
out of the proceeds of the Cellular Holdings Offering following the
consummation of the acquisition by the Company of Palmer (which redemption
occurred in October 1997). Each PIK Unit consisted of 1,000 shares of PIK
Preferred Stock, each with a liquidation value of $25.00 per share, and PIK
warrants to purchase 515.6 shares of the Company's Common Stock (the
equivalent of 1007 shares after giving effect to the aforesaid stock splits),
per unit (or an aggregate of 582,112 shares of the Company's Common Stock; the
equivalent of 1,136,937 shares after giving effect to the aforesaid stock
splits) at an exercise price of $0.01 per share.
On May 21, 1997 the Board of Directors of the Company authorized the sale to
Mr. Price of 364,066 shares of the Company's Series B Preferred Stock. The
purpose of such shares was to provide Mr. Price with incentive to maximize
shareholder value by permitting him to receive value from such shares if,
among other things, the trading price of the Company's Common Stock during any
ten consecutive trading days exceeded $15.00 per share (the equivalent of
$7.68 per share after giving effect to the aforesaid stock splits). The
trading price of the Company's Common Stock on May 21, 1997 was $9.375 per
share (the equivalent of $4.80 per share after giving effect to such stock
splits). On June 11, 1998, Mr. Price notified the Company that he was
considering the exercise of his right to have redeemed by the Company such
shares of Series B Preferred Stock. The trading price of such Common Stock on
June 11, 1998 was $12. Under the provisions of the Series B Preferred Stock as
originally approved by the Board of Directors, Mr. Price would have received a
cash payment of $5.0 million in respect of such redemption. In order to avoid
a significant cash payment to Mr. Price at a time when the Company had
substantial indebtedness, Mr. Price and the Board agreed that in place of such
cash payment the Company would issue 411,423 shares of its Common Stock to Mr.
Price in exchange for his shares of Series B Preferred Stock, valuing such
shares of Common Stock at $12.15 for such purpose (the average trading price
of such Common Stock during the ten consecutive trading days ended June 23,
1998).
PROPOSED AMENDMENTS TO THECOMPANY'S 1992 LONG-TERM INCENTIVE PLAN
(PROPOSAL 2)
On December 4, 1997, the Board of Directors of the Company approved an
amendment to the Company's 1992 Long Term Incentive Plan (the "LTIP")
increasing the number of shares of the Company's Common Stock which could be
issued or used for reference purposes under the LTIP by 500,000 shares (the
equivalent of
12
<PAGE>
976,562 shares after giving effect to subsequent stock splits), and to permit
awards under the LTIP to satisfy the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). See "U.S. Federal
Income Tax Consequences." The principal reason for the Board's determination
to increase the number of shares available under the LTIP was the acquisition
of Palmer by the Company in October 1997 and the Board's belief that providing
the former Palmer employees (as well as new employees of the continuing Palmer
business and other employees of the Company) with stock based incentives would
benefit the Company and its shareholders. On July 2, 1998, 737,305 out of
965,148 shares covered by outstanding options granted under the LTIP (or 67%
of such options) were held by employees of the continuing Palmer business. On
June 11, 1998, the Board further amended certain aspects of the LTIP as
described below (the LTIP as amended through such further amendments, the
"Plan"). The amendments adopted pursuant to the Plan, including the aforesaid
increase in the number or shares covered thereby, have been adopted subject to
and conditioned upon shareholder approval.
PURPOSE
The purpose of the Plan is to enable the Company to offer key employees of
the Company and its designated subsidiaries performance-based stock incentives
and other equity interests in the Company thereby attracting, retaining and
rewarding such key employees, and strengthening the mutuality of interests
between key employees and the Company's shareholders.
ADMINISTRATION
The Plan will be administered by a committee of the Board of Directors
(currently the Stock Option and Compensation Committee), consisting of two or
more non-employee directors, each of whom is intended to be, to the extent
required by Rule 16b-3 and Section 162(m) of the Code, a non-employee director
under Rule 16b-3 and an outside director under Section 162(m) of the Code (the
"Committee"). If no Committee exists, the functions of the Committee will be
exercised by the Board of Directors. (Prior to the amendments proposed hereby,
the LTIP was required to be administered by a committee of two or more
"disinterested persons" within the meaning of prior Rule 16b-3.)
The Committee has the full authority to administer and interpret the Plan,
to grant discretionary awards under the Plan, to determine the persons to whom
awards will be granted, to determine the number of shares of Common Stock to
be covered by each award, to prescribe the form of instruments evidencing
awards and to make all other determinations and to take all such steps in
connection with the Plan and the awards thereunder as the Committee, in its
sole discretion, deems necessary or desirable.
The terms and conditions of individual awards will be set forth in written
agreements consistent with the Plan. Awards under the Plan may not be made on
or after December 31, 2002, but awards granted prior to such date may extend
beyond that date.
ELIGIBILITY AND TYPES OF AWARDS
All employees of the Company and its designated subsidiaries are eligible to
be granted non-qualified stock options, stock appreciation rights, restricted
stock, performance shares, performance units and other stock-based awards
under the Plan. In addition, employees of the Company or any designated
subsidiary that qualify as "subsidiary corporation" (within the meaning of
Section 424 of the Code) are eligible to be granted incentive stock options.
AVAILABLE SHARES
After giving effect to the increase in the number of shares that may be
issued under the Plan in accordance with the amendments proposed hereby, a
maximum of 2,065,429 shares of Common Stock may be issued or used for
reference purposes under the Plan, of which 965,148 shares are covered by
outstanding stock options
13
<PAGE>
and 1,102,235 shares are currently available for issuance or use for reference
purposes. On July 8, 1998, the fair market value of a share of Common Stock
was $16.875.
The maximum number of shares of Common Stock with respect to which an award
may be granted under the Plan during any fiscal year of the Company to any
individual will be 500,000 shares or, in the case of performance units, a
maximum value at grant of $500,000 (the "Maximum Numbers"), except that the
Maximum Numbers for an individual shall be increased (but not above a maximum
of 750,000 shares or, in the case of performance units $750,000) for
subsequent fiscal years to the extent that awards with respect to fewer than
500,000 shares or Performance Units with a value of $500,000 are made for such
individual during any fiscal year. (Prior to the amendments proposed hereby,
there were no limitations on individual awards.)
The Committee may, in accordance with the term of the Plan, make appropriate
adjustments to the number of shares of Common Stock available for the grant of
awards and the terms of outstanding options and other awards to reflect any
stock dividend or distribution, stock split, reverse stock split,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares (and certain other events affecting the Company's
capital structure or business).
AWARDS UNDER THE PLAN
Stock Options. The Plan authorizes the Committee to grant stock options to
purchase shares of Common Stock. Options granted to employees of the Company
or any designated subsidiary that qualifies as a "subsidiary corporation"
(within the meaning of Section 424 of the Code) may be in the form of
incentive stock options ("ISOs") or non-qualified stock options. Options
granted to employees of any designated subsidiary that does not qualify as a
"subsidiary corporation" may only be non-qualified stock options. The
Committee will determine the number of shares of Common Stock subject to each
option, the term of each option (which may not exceed ten years, or five years
in the case of an ISO granted to a ten percent shareholder), the exercise
price, any vesting schedule, and the other material terms of each option. No
ISO may have an exercise price less than the fair market value of the Common
Stock at the time of grant (or, in the case of an ISO granted to a ten percent
shareholder, 110 percent of fair market value).
Options will be exercisable at such times and subject to such terms as
determined by the Committee at grant. The exercise price may, to the extent
determined by the Committee, be paid in cash, in shares of Common Stock owned
for at least six months or restricted stock, by a reduction in the number of
shares issuable upon exercise of the option, or by such other method as is
approved by the Committee. The Committee may at any time offer to buy an
option previously granted on such terms as the Committee shall establish.
Stock Appreciation Rights. The Plan authorizes the Committee to grant stock
appreciation rights ("SARs") either with a stock option ("Tandem SAR") or
independent of a stock option ("Non-Tandem SARs"). A SAR is a right to receive
a payment either in cash or Common Stock equal in value to the excess of the
fair market value of one share of Common Stock on the date of exercise over
the exercise price per share of the SAR. The exercise price of a SAR will be
the exercise price of the related option in the case of a Tandem SAR and will
be the fair market value of the Common Stock on the date of grant in the case
of a Non-Tandem SAR.
A Tandem SAR generally may be exercised only at such times and to the extent
the related option is exercisable and is exercised by surrendering the same
portion of the option. A Tandem SAR expires upon the termination of the
related option.
A Non-Tandem SAR will be exercisable as provided by the Committee, will have
such other terms and conditions as the Committee may determine, and may have a
term no longer than ten years from its date of grant.
Restricted Stock. The Plan authorizes the Committee to award shares of
restricted stock. Recipients of restricted stock enter into an agreement with
the Company subjecting the shares to restrictions and providing the
14
<PAGE>
criteria or dates on which such restrictions lapse. Within these limits, based
on service, attainment of objective performance goals, and such other factors
as the Committee may determine in its sole discretion, the Committee may
provide for the lapse of such restrictions or may accelerate or waive such
restrictions.
If the lapse of the restriction is based on the attainment of objective
performance goals, the Committee will establish the performance goals and the
applicable vesting percentage for the restricted stock. These performance
goals will be based on one or more of the following criteria ("Performance
Criteria"):(i) the attainment of certain target levels of, or a percentage
increase in, cash flow, EBITDA, earnings per share, after-tax or pre-tax
profits, revenue or subscribers of the Company including, without limitation,
those attributable to continuing and/or other operations of the Company (or in
any case a subsidiary, division, or other operational unit of the Company); or
(ii) the attainment of certain target levels in the value of the Company's
Common Stock. Such Performance Criteria may be based upon the attainment of
performance relative to the performance of other corporations.
Performance Shares and Performance Units. The Plan authorizes the Committee
to grant performance shares to employees entitling them to receive a fixed
number of shares of Common Stock or the cash equivalent, as determined by the
Committee, upon the attainment of Performance Criteria. The Committee may also
grant performance units to employees entitling them to receive a value payable
in cash or shares of Common Stock, as determined by the Committee, upon the
attainment of Performance Criteria.
Other Stock-Based Awards. The Plan authorizes the Committee to grant awards
of Common Stock and other awards that are valued in whole or in part by
reference to, or are payable in or otherwise based on, Common Stock and may be
granted either alone or in addition to or in tandem with stock options, stock
appreciation rights, restricted stock, performance shares or performance
units.
CHANGE IN CONTROL
Unless determined otherwise by the Committee at the time of grant, upon a
change in control of the Company (as defined in the Plan), all vesting and
forfeiture conditions, restrictions and limitations in effect with respect to
any outstanding award will immediately lapse and any unvested awards will
automatically become fully vested and immediately exercisable in their
entirety. Notwithstanding the foregoing, in the event any benefits to a
participant under the Plan, either alone or together with any payments or
benefits provided outside of the Plan by the Company, would, in the Board of
Director's opinion, be deemed "parachute payments" under Section 280G of the
Code, the benefits under the Plan shall be reduced to the extent necessary are
so that no portion of the benefits shall be considered "excess parachute
payments."
AMENDMENT AND TERMINATION
Notwithstanding any other provision of the Plan, the Board may at any time,
amend, in whole or in part, any or all of the provisions of the Plan, or
suspend or terminate it entirely, retroactively or otherwise; provided,
however, that, unless otherwise required by law or specifically provided in
the Plan, the rights of a participant with respect to awards granted prior to
such amendment, suspension or termination, may not be impaired without the
consent of such participant and, provided further, without the approval of the
shareholders of the Company in accordance with the laws of the State of New
York, to the extent required under Section 162(m) of the Code, or to the
extent applicable to ISO's, Section 422 of the Code, no amendment may be made
which would (i) increase the aggregate number of shares of Common Stock that
may be issued under the Plan; (ii) increase the maximum individual participant
share limitations for a fiscal year; (iii) change the classification of
employees eligible to receive awards under the Plan; (iv) decrease the minimum
exercise price of any stock option or SAR; (v) extend the maximum option term;
(vi) materially alter the Performance Criteria for the award of restricted
stock, performance units or performance shares; or (vii) require shareholder
approval in order for the Plan to continue to comply with the applicable
provisions of Section 162(m) of the Code or, to the extent applicable to
incentive stock options, Section 422 of the Code.
15
<PAGE>
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal U.S. federal income tax
consequences with respect to options under the Plan is based on statutory
authority and judicial and administrative interpretations as of the date of
this Proxy Statement, which are subject to change at any time (possibly with
retroactive effect) and may vary in individual circumstances. Therefore, the
following is designed to provide a general understanding of the federal income
tax consequences (state, local and other tax consequences are not addressed
below). This discussion is limited to the U.S. federal income tax consequences
to individuals who are citizens or residents of the U.S., other than those
individuals who are taxed on a residence basis in a foreign country.
Incentive Stock Options. Under current federal income tax laws, the grant or
exercise of an ISO generally has no income tax consequences for the optionee
or the Company. However, the amount by which the fair market value of the
Common Stock acquired pursuant to the exercise of an ISO exceeds the exercise
price is an adjustment item for purposes of alternative minimum tax. The sale
of Common Stock received pursuant to the exercise of an option which satisfied
all of the ISO requirements, as well as the holding period requirement
described below, will result in a long-term capital gain or loss equal to the
difference between the amount realized on the sale and the exercise price. To
receive ISO treatment, an optionee must be an employee of the Company (or any
"subsidiary") at all times during the period beginning on the date of the
grant of the ISO and ending on the day three months before the date of
exercise, and the optionee must not dispose of the Common Stock purchased
pursuant to the exercise of an option either (i) within two years after the
option is granted, or (ii) within one year after the date of exercise. If the
disposition of the shares is made more than 18 months after the date of the
exercise of the ISO, the optionee will be taxed at the lowest rate applicable
to capital gains for such individual. The Company will not be entitled to a
tax deduction upon the exercise of an ISO, nor upon a subsequent disposition
of the shares of Common Stock, unless the disposition occurs prior to the
expiration of the holding period described above.
In general, if the optionee does not satisfy these holding period
requirements, any gain equal to the difference between the exercise price and
the fair market value of the Common Stock at exercise (or, if a lesser amount,
the amount realized on disposition over the exercise price) will constitute
ordinary income. In the event of such a disposition before the expiration of
either holding period described above, the Company is entitled to a deduction
at that time equal to the amount of ordinary income recognized by the
optionee. Any gain in excess of the amount recognized by the optionee as
ordinary income would be taxed to the optionee as short-term or long-term
capital gain (depending on the applicable holding period).
Non-Qualified Stock Options. In general, an optionee will recognize no
taxable income upon the grant of a non-qualified stock option and the Company
will not receive a deduction at the time of such grant. Upon exercise of a
non-qualified stock option, an optionee generally will recognize ordinary
income in an amount equal to the excess of the fair market value of the Common
Stock on the date of exercise over the exercise price. Upon a subsequent sale
of the Common Stock by the optionee, the optionee will recognize short-term or
long-term capital gain or loss, depending upon his holding period for the
common stock. In addition, any officers of the Company subject to Section
16(b) of the Exchange Act may be subject to special tax rules regarding the
income tax consequences concerning their options. The Company will generally
be allowed a deduction equal to the amount recognized by the optionee as
ordinary income.
Section 162(m) of the Code. Section 162(m) of the Code denies a deduction to
any publicly held corporation for compensation paid to certain "covered
employees" in its taxable year to the extent that such compensation exceeds
$1,000,000. "Covered employees" are a Company's chief executive officer on the
last day of the taxable year and any other individual whose compensation is
required to be reported to shareholders in its proxy statement under the
Exchange Act by reason of being among the four most highly compensated
officers for the taxable year and who are employed on the last day of the
taxable year. Compensation paid under certain qualified performance-based
compensation arrangements, which (among other things) provide for compensation
based on preestablished performance goals established by a compensation
committee that is comprised solely of two or more "outside directors", is not
considered in determining whether a "covered
16
<PAGE>
employee's" compensation exceeds $1,000,000. It is intended that certain
awards under the Plan will satisfy these requirements so that the income
recognized in connection with awards will not be included in a "covered
employee's" compensation for the purpose of determining whether such
individual's compensation exceeds $1,000,000.
The Plan. The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended and is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE AMENDMENTS TO THE 1992 LONG TERM INCENTIVE PLAN IN ORDER TO ENABLE THE
COMPANY TO CONTINUE TO OFFER LONG-TERM STOCK INCENTIVE TO ITS EMPLOYEES.
PROPOSED RETURN TO A CLASSIFIED BOARD OF DIRECTORS
(PROPOSAL 3)
Prior to 1996, the Company's Certificate of Incorporation contained a
provision (which automatically expired by its terms at the end of 1995) for a
classified Board of Directors with each class of directors elected for a
staggered three-year term. At the time such classified Board provision
expired, the New York Business Corporation Law required a classified board to
have a minimum of nine directors; the Board currently has three directors.
Since the Company's management believed that the Company could be adequately
managed by a smaller board, and that the expense and inconvenience of a larger
board outweighed the benefits of a classified board of directors, management
ultimately determined (after initially proposing continuation of a classified
Board) not to recommend to the Company's shareholders in 1995 continuation of
a classified board, and the Company's shareholders voted against retention of
a classified board. The New York Business Corporation Law has since been
amended, however, effective February 1998, to permit a classified board with
fewer than three directors in each class. The Board wishes to take advantage
of such amendment to the Business Corporation Law by submitting to the
Company's shareholders an amendment to the Certificate of Incorporation (the
"Classified Board Amendment") to divide the Company's Board of Directors into
three classes serving staggered three-year terms as had been the case prior to
1996.
The Classified Board Amendment would provide for the classification of the
Company's Board of Directors into three separate classes as nearly equal in
number as possible (initially having one director in each class), with one
class being elected each year to serve a staggered three-year term. If the
Classified Board Amendment is approved by the shareholders, members of each
class would be elected at the 1998 Annual Meeting, with the directors
initially elected in Class A (i.e., Mr. Cadgene), Class B (i.e, Mr. Price) and
Class C (i.e., Mr. Ellsworth) serving until the annual meetings of
shareholders in 1999, 2000 and 2001, respectively. The directors elected at
such subsequent annual meetings would serve for three-year terms. Any vacancy
on the Board could be filled only by the Board itself; the term of any
director elected to fill a vacancy would expire at the next meeting of
shareholders at which the election of directors is in the regular order of
business.
The Classified Board Amendment would also amend the Company's Certificate of
Incorporation to provide for a Board of Directors consisting of not less than
three nor more than ten directors (rather than not less than five nor more
than ten as is currently the case), with the actual number of directors being
set from time to time by resolution of the Board. Only three directors
currently serve on the Board of Directors, and the Company does not believe
that adding directors is necessary or desirable at this time. Under the New
York Business Corporation Law and the Company's Certificate of Incorporation,
the presence of all three directors is currently required to constitute a
quorum for the purpose of holding meetings of the Board of Directors. If the
proposed amendment is adopted, the presence of two directors will constitute a
quorum, thereby increasing the Board of Directors' ability to conduct business
on a timely basis.
17
<PAGE>
In order to prevent the purposes underlying the Classified Board Amendment
from being circumvented, the Classified Board Amendment would also require
that provisions of the Company's By-laws relating to the directors or the
Board of Directors or meetings of shareholders be adopted, amended or repealed
only by the affirmative vote of either (a) a majority of the directors present
at the time of the vote, if a quorum is present at such time (or by the
unanimous written consent of the directors); or (b) 66 2/3% of the votes of
all outstanding shares entitled to vote thereon, voting together as a single
class. Under the Business Corporation Law and the Company's current
Certificate of Incorporation, By-law provisions may, in general, be adopted,
amended or repealed by the vote of directors set forth above or by a majority
of the votes of the shares entitled to vote on the election of directors,
which voting provisions would continue to govern with respect to provisions of
the Company's By-laws other than those relating to the Board of Directors or
meetings of shareholders.
The Board of Directors believes that classification of the Board of
Directors would promote continuity of Board membership and stability of the
Company's management and policies and would help the Company to retain the
services of experienced directors for more than the current one year term.
Although the Board of Directors is not aware of, and has not in the past
encountered, difficulties with respect to continuity and stability, the Board
of Directors believes a classified board would decrease the likelihood of such
difficulties in the future. Two annual elections would, in general, be
required to replace a majority of a classified Board of Directors and effect a
forced change in the business of the Company. The proposed amendment may
therefore discourage an individual or entity from acquiring a significant
position in the stock of the Company with the intention of obtaining rapid
control of the Board of Directors.
The Classified Board Amendment is intended to encourage persons seeking to
acquire control of the Company to initiate such an acquisition through arms-
length negotiations with the Company's management and Board of Directors. If
adopted, the Classified Board Amendment could have the effect of discouraging
a third party from making a tender offer or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its shareholders. The Classified Board Amendment would also make
more difficult a proxy contest or the assumption of control of the Company by
a holder of a substantial block of the Company's outstanding shares or the
removal of incumbent directors or the change of control of the Board of
Directors and could thus have the effect of entrenching incumbent management.
In the view of the Board of Directors, however, the Classified Board Amendment
would help ensure that the Board of Directors and management, if confronted by
a surprise proposal from a third party who had acquired a block of the
Company's stock, would have time to review the proposal and appropriate
alternatives to the proposal and possibly to attempt to negotiate a better
transaction. The Board of Directors believes the Classified Board Amendment
would reduce the possibility that a third party could effect a sudden or
surprise change in control of the Board of Directors without the support of
the then incumbent Board of Directors.
By raising the shareholder vote required to adopt, amend or repeal
provisions of the By-laws relating to the Board of Directors or meetings of
shareholders, shareholders would have more difficulty in taking such actions.
At present, Robert Price holds shares with approximately 30.7% of the voting
power of all outstanding shares.
The Board of Directors has unanimously approved the Classified Board
Amendment and is asking shareholders to consider and adopt such Amendment to
discourage undesirable forced transactions that involve an actual or
threatened change of control of the Company. The Classified Board Amendment is
designed to make it more difficult and time-consuming to change majority
control of the Board of Directors and thus to reduce the vulnerability of the
Company to an unsolicited takeover proposal. The Board of Directors believes
that the Classified Board Amendment would encourage any person intending to
attempt such a takeover or restructuring to try first to negotiate with the
Board and management of the Company and that the Board and management would
therefore be better able to protect the interest of all shareholders.
The Classified Board Amendment would reduce the minimum number of directors
to three; consequently, if Proposal 3 is adopted, the Board of Directors will
consist of not less than three nor more than ten directors (rather than not
less than five nor more than ten as is currently the case) regardless of
whether Proposal 3 set forth above is adopted.
18
<PAGE>
The foregoing summary description of the Classified Board Amendment is not
intended to be complete and is qualified in its entirety by reference to
Exhibit A, which contains the complete text of the Classified Board Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders to be presented at the annual meeting to be held
in 1999 must be received a reasonable time before the solicitation date for
inclusion in the Company's proxy statement and form of proxy.
GENERAL
Arthur Andersen & Co. has been engaged as the Company's independent auditors
for 1998. A representative of Arthur Andersen & Co. is expected to be present
at the Meeting with the opportunity to make a statement if such representative
desires to do so, and is expected to respond to appropriate questions.
The entire cost of soliciting proxies hereunder will be borne by the
Company. Proxies will be solicited by mail, and may be solicited personally by
directors, officers or regular employees of the Company who will not be
compensated for their services.
The Company intends to furnish its shareholders an annual report containing
audited financial statements. SHAREHOLDERS WHO WOULD LIKE A COPY OF THE
COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES EXCHANGE
COMMISSION MAY OBTAIN ONE, WITHOUT CHARGE, BY WRITING TO: KIM I. PRESSMAN,
SECRETARY, PRICE COMMUNICATIONS CORPORATION, 45 ROCKEFELLER PLAZA, SUITE 3200,
NEW YORK, NEW YORK 10020.
New York, New York
July 13, 1998
19
<PAGE>
EXHIBIT A
PROPOSED AMENDMENTS TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
Article NINTH is hereby deleted in its entirety and the following is hereby
substituted for it:
(a) The number of directors constituting the entire Board of Directors of
the Corporation shall be not less than three (3) and not more than ten
(10), with the actual number of directors being set form time to time by
resolution of the Board.
(b) The Board of Directors shall be divided into three classes, each
class to be as nearly equal in number as possible. The classes shall be
designated as Class A, Class B and Class C. The term of office of the
initial Class A director(s) shall expire at the 1999 annual meeting of
shareholders; that of the initial Class B director(s) at the 2000 annual
meeting of shareholders; and that of the initial Class C director(s) at the
2001 annual meeting of shareholders. At each annual meeting of
shareholders, directors elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third
succeeding annual meeting of shareholders after their election. Each
director shall be elected by a plurality of votes cast at the annual
meeting of shareholders by the holders of shares entitled to vote thereon
to serve until his or her respective successor is duly elected and
qualified. Except as otherwise provided by law, if the number of directors
is changed, any increase or decrease shall be apportioned among the classes
so as to maintain the number of directors in each class as nearly equal as
possible; provided, however, that no decrease in the number of directors
shall shorten the term of any incumbent director. Any vacancies in the
Board of Directors that occur for any reason prior to the expiration of the
term of office of the class in which the vacancy occurs, including
vacancies that occur by reason of an increase in the number of directors,
may be filled only by the Board of Directors of the Corporation, acting by
the affirmative vote of a majority of the remaining directors then in
office (even if less than a quorum). A director elected to fill a vacancy
shall hold office until the next annual meeting of shareholders at which
the election of directors is in the regular order of business and until his
or her successor shall have been elected and shall qualify.
(c) Directors may be removed by vote of the shareholders for cause.
Article TENTH is hereby amended by adding the following sentence at the end
thereof:
Provisions of the By-laws of the Corporation relating to directors or the
Board of Directors and meetings of shareholders may be adopted, amended or
repealed only by the affirmative vote of either (a) majority of the
directors present at the time of the vote, if a quorum is present at such
time (or by the unanimous written consent of the directors); or (b) 66 2/3%
of the votes of all outstanding shares entitled to vote thereon, voting
together as a single class.
<PAGE>
Provisions of the By-laws of the Corporation relating to
directors or the Board of Directors and meetings of shareholders may be
adopted, amended or repealed only by the affirmative vote of either (a)
majority of the directors present at the time of the vote, if a quorum
is present at such time (or by the unanimous written consent of the
directors); or (b) 662/3% of the votes of all outstanding shares
entitled to vote thereon, voting together as a single class.
<PAGE>
PROXY
PRICE COMMUNICATIONS CORPORATION
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Robert Price and Kim I. Pressman and each of
them, with full power of substitution, proxies of the undersigned, to vote all
shares of Common Stock of Price Communications Corporation (the "Company")
that the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders of the Company to be held on Thursday, August
13, 1998, at 10:00 o'clock a.m., Eastern Daylight Savings Time, at the offices
of Proskauer Rose LLP, 1585 Broadway, New York, New York 10036 and at any
adjournments thereof. The undersigned hereby revokes any proxy heretofore
given with respect to such shares.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
This Proxy, when properly executed and returned, will be voted in the manner
directed below. If no direction is made, this Proxy will be voted FOR all
nominees and FOR each proposal.
<PAGE>
The Board of Directors recommends votes FOR the election of all nominees and
FOR each Proposal.
(1) Election of Directors:
[_]FOR ALL NOMINEES LISTED (Except as marked below to the contrary)
[_]WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
(Instructions: To withhold authority to vote for any individual
nominee, write such name(s) in the space provided below.)
NOMINEES: Robert Price George H. Cadgene Robert F. Ellsworth
Withholding authority for: _______________
(2) Proposal to approve amendments to the 1992 Long Term Incentive Plan,
including an increase in the number of shares that may be issued
thereunder, in order to enable the Company to continue to offer long-
term stock incentives to employees.
[_] For [_] Against [_] Abstain
(3) Proposal to amend the Company's Certificate of Incorporation to return
to a classified Board of Directors.
[_] For [_] Against [_] Abstain
(4) In their discretion, on any other matters properly coming before the
meeting or any adjournments thereof.
If no direction is made, this Proxy will be voted FOR all nominees
listed above and FOR each Proposal.
------------------------------------- Dated: ______ , 1998
SIGNATURE(S) OF SHAREHOLDERS(S)
Please sign above exactly as your name or names appear hereon. If
shares are registered in more than one name, each joint owner or
fiduciary should sign. When signing as executor, administrator,
personal representative, attorney, agent, trustee or guardian,
please give full title as such.
