<PAGE> 1
[ALLTEL LOGO W/R]
ALLTEL CORPORATION
One Allied Drive - Little Rock, Arkansas 72202
Telephone (501) 661-8000
March 4, 1994
Dear Stockholder:
The 1994 Annual Meeting of Stockholders of ALLTEL Corporation will be held on
Thursday, April 21, 1994, for the purposes set forth in the accompanying notice.
The matters to be voted upon are explained in the proxy statement included with
the notice.
It is very important that you complete and return your proxy as promptly as
possible.
Sincerely,
Joe T. Ford
Chairman and
Chief Executive Officer
<PAGE> 2
ALLTEL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1994
To the Stockholders of
ALLTEL Corporation:
Notice Is Hereby Given That the 1994 Annual Meeting of Stockholders of
ALLTEL Corporation ("ALLTEL") will be held in the ALLTEL Auditorium, One Allied
Drive, Little Rock, Arkansas 72202, on Thursday, April 21, 1994, at 11:00 a.m.
(local time), for the following purposes:
1. To elect directors to the class whose term will expire in 1997.
2. To consider and vote on a proposal to adopt the ALLTEL Corporation 1994
Stock Option Plan for Employees.
3. To consider and vote on a proposal to adopt the ALLTEL Corporation 1994
Stock Option Plan for Nonemployee Directors.
4. To approve the material terms of the ALLTEL Corporation Performance
Incentive Compensation Plan.
5. To approve the material terms of the ALLTEL Corporation Long-Term
Performance Incentive Compensation Plan.
6. To elect independent auditors for the current fiscal year.
7. To transact such other business as may properly come before the meeting
or any adjournment thereof.
A copy of the Annual Report for the calendar year 1993 has been mailed to
each stockholder receiving this Notice.
Only holders of the Common Stock and of each series of the voting
Cumulative Preferred Stock, $25 par value, of record at the close of business on
February 25, 1994, are entitled to notice of and to vote at the meeting or at
any adjournment thereof; holders of unexchanged stock certificates of certain
companies previously acquired by ALLTEL are entitled to notice of the meeting
and shall be entitled to vote if they have exchanged their stock certificates
for ALLTEL certificates by April 21, 1994.
By Order of the Board of Directors,
FRANCIS X. FRANTZ,
Secretary.
Little Rock, Arkansas
March 4, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE FILL IN, SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, TO WHICH NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE> 3
PROXY STATEMENT
ONE ALLIED DRIVE, LITTLE ROCK, ARKANSAS 72202
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 21, 1994
To the Stockholders:
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ALLTEL Corporation ("ALLTEL") to be used at
its 1994 Annual Meeting of Stockholders to be held on Thursday, April 21, 1994,
and at any adjournment or adjournments thereof. Shares represented by properly
executed proxies will be voted at the meeting. If a choice is specified by a
stockholder, the proxy will be voted in accordance with that choice. Any proxy
may be revoked at any time insofar as it has not been exercised.
This Proxy Statement is being mailed to stockholders beginning on March 4,
1994.
The close of business on February 25, 1994, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting or any adjournment thereof. On the record date, there were
outstanding and entitled to vote 187,633,809 shares of Common Stock and 340,792
shares of voting Cumulative Preferred Stock; up to 67,012 additional shares of
Common Stock would be entitled to vote in the event the unexchanged stock
certificates of certain companies previously acquired by ALLTEL were exchanged
for ALLTEL certificates by April 21, 1994. On all matters to be acted upon at
the meeting, each share of Common Stock is entitled to one vote per share, and
each share of voting Cumulative Preferred Stock is entitled to one vote per
share (share for share with the holders of the Common Stock). Under Delaware law
and ALLTEL's Restated Certificate of Incorporation, if a quorum is present at
the meeting (a) the five nominees for election as directors for the term ending
in 1997 who receive the greatest number of votes cast for the election of
directors at the meeting by the shares present in person or by proxy and
entitled to vote shall be elected directors for the term ending in 1997 and (b)
proposals 2 through 6 and any other matters submitted to a vote of the
stockholders must be approved by the affirmative vote of the majority of shares
present in person or by proxy and entitled to vote on the matter. In the
election of directors, any action other than a vote for a nominee will have the
practical effect of voting against the nominee. Abstention from voting will have
the practical effect of voting against any of the other matters because the
abstention results in one less vote for approval. Broker nonvotes on one or more
matters will have no impact because they are not considered "shares present" for
voting purposes.
ELECTION OF DIRECTORS
The ALLTEL Board of Directors presently consists of fourteen members
divided into three classes, one class consisting of four members and two classes
consisting of five members. Messrs. Alfred E. Campdon, currently a member of the
class whose term expires in 1994, John H. McConnell, currently a member of the
class whose term expires in 1995, and Walter G. Olson,
<PAGE> 4
currently a member of the class whose term expires in 1996, will retire as
directors at the 1994 Annual Meeting in accordance with the retirement policy
for directors specified in Article X of ALLTEL's Bylaws. Messrs. Ben W. Agee,
Joe T. Ford, Emon A. Mahony, Jr., and Ronald Townsend, currently members of the
class whose term expires in 1994, and John P. McConnell (who is John H.
McConnell's son), currently not a member of the ALLTEL Board of Directors, are
nominees for election at the Annual Meeting for the term ending in 1997.
Effective upon the election of directors at the Annual Meeting and the
retirement of Messrs. Campdon, John H. McConnell, and Olson, the Board of
Directors will consist of twelve members divided into three classes, one of
which will consist of three members (the class of 1995), one of which will
consist of four members (the class of 1996), and one of which will consist of
five members (the class of 1997).
Unless otherwise directed, the persons named in the accompanying form of
proxy will vote that proxy for the election of the five persons named below,
with each to hold office for a term of three years until the 1997 Annual Meeting
or until his successor is elected and qualified. In case any nominee is unable
to serve (which is not anticipated), the persons named in the proxy may vote for
another nominee of their choice. For each nominee and each director whose term
expires in 1995 and 1996, there follows a brief listing of principal occupations
for at least the past five years, other major affiliations, ALLTEL Board
Committees, and age. The year in which each such person was initially elected as
an ALLTEL director is also set forth below; the year indicated for each of
Messrs. Ford, Mahony, and Tiedemann is the year in which his directorship
commenced with Allied Telephone Company (their directorships with ALLTEL
commenced on October 25, 1983, the date on which Allied Telephone Company merged
with ALLTEL).
NOMINEES -- TERM ENDING 1997
BEN W. AGEE, Consultant; former Chairman of the Board and
Chief Executive Officer and director of CP National
Corporation until it was acquired by ALLTEL on December 30,
1988, at which time he became a director of ALLTEL. Member of
Compensation Committee. Age 67.
JOE T. FORD, Chairman of the Board and Chief Executive Officer
of ALLTEL; prior to April 1993, Chairman of the Board,
President, and Chief Executive Officer of ALLTEL. Director of
Duke Power Corporation and The Dial Corp. Director of ALLTEL
since 1960. Chairman of Executive Committee. Age 56.
2
<PAGE> 5
EMON A. MAHONY, JR., President and director of Arkansas
Oklahoma Gas Corporation, Fort Smith, Arkansas. Director of
ALLTEL since 1980. Member of Audit Committee and Chairman of
Pension Trust Investment Committee. Age 52.
JOHN P. MCCONNELL, Vice Chairman and Chief Executive Officer
and director of Worthington Industries, Inc., Columbus, Ohio
(engaged in metal processing and manufacturing); from June
1992 until June 1993, Vice Chairman of Worthington Industries,
Inc. and, prior to June 1992, President of JMAC, Inc. and Vice
President-General Manager of The Worthington Steel Company.
Not currently a Director of ALLTEL. Age 40.
RONALD TOWNSEND, President of Gannett Television Group,
Gannett Co., Inc., Arlington, Virginia. Director of
NationsBank Corporation. Director of ALLTEL since 1992. Member
of Audit Committee. Age 52.
DIRECTORS -- TERM ENDING 1995
MAX E. BOBBITT, President of ALLTEL; prior to April 1993,
Executive Vice President and Executive Vice President and
Chief Financial Officer of ALLTEL. Director of Comdial
Corporation and LDDS Communications, Inc. Director of ALLTEL
since 1990. Age 49.
3
<PAGE> 6
GEORGE C. MCCONNAUGHEY, Of Counsel to Thompson, Hine and
Flory, Attorneys, Columbus, Ohio. Director of ALLTEL since
1966. Member of Executive Committee. Age 68.
JOHN H. MCCONNELL, Chairman and director of Worthington
Industries, Inc., Columbus, Ohio (engaged in metal processing
and manufacturing); prior to June 1993, Chairman and Chief
Executive Officer of Worthington Industries, Inc. Director of
ALLTEL since 1982. Member of Compensation and Executive
Committees. Age 70.
PHILIP F. SEARLE, Consultant to SunBanks, Inc., Orlando,
Florida, for which he served as Chairman of the Board and
director until December 31, 1985; former Chairman and Chief
Executive Officer and director of Flagship Banks Inc. until
January 1, 1984, at which time it merged into SunBanks, Inc.
Director of SunBank/Gulf Coast and of SunBank/Southwest
Florida. Director of ALLTEL since 1961. Chairman of Audit
Committee and member of Nominating Committee. Age 69.
DIRECTORS -- TERM ENDING 1996
W. W. JOHNSON, Chairman of the Executive Committee and
director of NationsBank Corporation, Charlotte, North Carolina
(a bank holding company). Director of The Liberty Corporation
and Duke Power Corporation. Director of ALLTEL since 1990.
Chairman of Compensation Committee and member of Nominating
Committee. Age 63.
4
<PAGE> 7
WALTER G. OLSON, Of Counsel to Orrick, Herrington & Sutcliffe,
Attorneys, San Francisco, California. Director of ALLTEL since
December 30, 1988; former director of CP National Corporation
prior to that date. Member of Audit Committee. Age 70.
JOHN E. STEURI, Chairman of the Board and Chief Executive
Officer of Systematics Information Services, Inc., a
wholly-owned subsidiary of ALLTEL; prior to January 1992,
Chairman of the Board, President, and Chief Executive Officer
of Systematics Information Services, Inc. Director of National
Computer Systems. Director of ALLTEL since 1990. Age 54.
CARL H. TIEDEMANN, General Partner of Tiedemann, Boltres
Partners, New York, New York (an investment management
partnership); former President of Donaldson, Lufkin &
Jenrette, Inc. until his retirement in 1980. Director of
Curtice Burns, Inc., Piedmont Management Company, Dillon Reed
Fund, and Kleinwort Benson Fund. Former Governor of the
American Stock Exchange, advising director of Nikko Securities
International, and director of Winrock International. Director
of ALLTEL since 1980. Member of Compensation and Pension Trust
Investment Committees. Age 67.
WILLIAM H. ZIMMER, JR., Vice Chairman and director of
Cincinnati Financial Corporation, Cincinnati, Ohio (an
insurance holding company). Director of ALLTEL since 1985.
Chairman of Nominating Committee and member of Executive and
Audit Committees. Age 64.
5
<PAGE> 8
During 1993, there were six meetings of ALLTEL's Board of Directors. With
the exception of Messrs. Campdon and Johnson, all of the directors attended 75%
or more of the meetings of the Board and Board Committees on which they served;
attendance averaged 92% at those meetings. The standing Committees of the Board
are the Executive Committee, Audit Committee, Compensation and Incentive Stock
Option Committee, Pension Trust Investment Committee, and Nominating Committee.
The functions of the Audit, Compensation, and Nominating Committees are
described below.
The Audit Committee held two meetings during 1993. This Committee meets
with ALLTEL's independent public accountants, internal auditors, and financial
executives, reviews the scope and results of audits by the internal auditors and
the independent public accountants, recommends nomination of independent public
accountants to the Board, reviews procedures for internal auditing, reviews
management responses to audit reports, reviews the implementation of the Code of
Conduct, and reviews various other matters, including the adequacy of internal
controls and security, application of new accounting rules, and other issues
that may from time to time be of concern to the Committee or to the members of
the Board.
The Compensation Committee held four meetings during 1993, at which it
reviewed and made recommendations to the Board with respect to fixing
compensation of and benefits for ALLTEL's principal officers. Members of the
Compensation Committee serve as members of the Incentive Stock Option Committee,
which met twice during the year.
The Nominating Committee held three meetings during 1993. The Nominating
Committee is responsible for making recommendations to the Board of Directors
concerning the size and composition of the Board and the selection of candidates
as nominees for election as directors. The Committee will consider qualified
candidates recommended by stockholders, who should submit any such
recommendations to the Nominating Committee, in care of the Corporate Secretary,
One Allied Drive, Little Rock, Arkansas 72202, with a detailed statement of the
qualifications of those candidates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Set forth below is certain information, as of February 25, 1994, with
respect to any person known to ALLTEL to be the beneficial owner of more than 5%
of any class of ALLTEL's voting securities, all of which are shares of Common
Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- ------------------------- ---------------------------------- ---------------------------------- ------------
<S> <C> <C> <C>
Common Stock Stephens Group Inc. 16,607,920 shares (sole voting and 8.85
111 Center Street investment power)
Little Rock, AR 72201
Common Stock Cincinnati Financial 12,832,508 shares (sole voting and 6.84
Corporation investment power)
P. O. Box 14596
Cincinnati, OH 45250-5496
</TABLE>
6
<PAGE> 9
Set forth below is certain information, as of February 25, 1994, as to
shares of each class of ALLTEL equity securities beneficially owned by each of
the non-management directors and nominees, each of the executive officers
identified in the Summary Compensation Table on page 12, and by all directors
and executive officers of ALLTEL as a group. Except as otherwise indicated by
footnote, all shares reported below are shares of Common Stock, and the nature
of the beneficial ownership is sole voting and investment power:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF CLASS
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (IF 1% OR MORE)
---------------------------------------- --------------------------- ---------------------
<S> <C> <C> <C>
NON-MANAGEMENT Ben W. Agee 54,000 --
DIRECTORS AND Alfred E. Campdon 85,818(a) --
NOMINEES W. W. Johnson 22,000 --
Emon A. Mahony, Jr. 52,872(b) --
George C. McConnaughey 34,246(c) --
John H. McConnell 4,770 --
John P. McConnell 2,000 --
Walter G. Olson 6,800 --
Philip F. Searle 3,400(d) --
Carl H. Tiedemann 15,590 --
Ronald Townsend 500 --
William H. Zimmer, Jr. 6,880 --
NAMED EXECUTIVE Joe T. Ford 701,390(e) --
OFFICERS Max E. Bobbitt 240,903(e) --
John E. Steuri 706,054(e) --
Francis X. Frantz 74,000(e) --
Dennis J. Ferra 67,368(e) --
ALL DIRECTORS AND
EXECUTIVE OFFICERS
AS A GROUP 2,076,618(f) 1.1
</TABLE>
- ---------------
(a) Includes 400 shares of voting Cumulative Preferred Stock; excludes 23,620
shares held by Mr. Campdon's child and 26,963 shares held by Mr. Campdon's
spouse as trustee, with respect to which Mr. Campdon disclaims beneficial
ownership.
(b) Includes 1,500 shares held by Mr. Mahony's spouse, with respect to which Mr.
Mahony has shared investment power and no voting power.
(c) Excludes 20,208 shares held by Mr. McConnaughey's spouse, with respect to
which Mr. McConnaughey disclaims beneficial ownership.
(d) Includes 400 shares held by Mr. Searle's child, with respect to which Mr.
Searle has shared investment power and no voting power.
(e) Includes shares that the indicated persons have the right to acquire
(through the exercise of options) within 60 days after February 25, 1994, as
follows: Joe T. Ford (205,000), Max E. Bobbitt (160,000), John E. Steuri
(500,000), Francis X. Frantz (64,000), and Dennis J. Ferra (42,000).
(f) Includes 1,175,768 shares that members of the group have the right to
acquire (through the exercise of options) within 60 days after February 25,
1994.
7
<PAGE> 10
COMPARATIVE STOCKHOLDER RETURN
Set forth below is a line graph showing a five year comparison of
cumulative total stockholder return on Common Stock, the Standard & Poor's 500
Stock Index, and an index of a group of peer issuers consisting of the following
companies: Ameritech Corporation, Bell Atlantic Corporation, BellSouth
Corporation, Cincinnati Bell Inc., GTE Corporation, Lincoln Telecommunications
Company, Nynex Corporation, Pacific Telesis Group, Rochester Telephone
Corporation, Southern New England Telecommunications Corporation, Southwestern
Bell Corporation, Sprint Corporation, and U S West, Inc. The returns of the
group of peer issuers have been weighted according to their respective stock
market capitalizations at the beginning of each period for which a return is
indicated.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
TELECOM-
MEASUREMENT PERIOD MUNICATIONS
(FISCAL YEAR COVERED) ALLTEL INDEX S&P 500
<S> <C> <C> <C>
12/31/88 100 100 100
12/31/89 167 159 132
12/31/90 152 151 127
12/31/91 181 164 166
12/31/92 229 181 179
12/31/93 292 213 197
</TABLE>
*Assumes that $100 was invested on the last trading day of 1988 and that all
dividends were reinvested.
8
<PAGE> 11
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
This report provides information concerning compensation determinations by
ALLTEL's Compensation Committee (the "Committee") for compensation reported for
1993 with respect to ALLTEL's Chief Executive Officer and ALLTEL's other
executive officers including the officers names in the compensation tables in
this Proxy Statement. In connection with those determinations, the Committee
reviewed compensation information from a group of 13 telecommunications and
information services companies that compete in ALLTEL's principal lines of
business, adjusted by regression analysis to account for the relative sizes of
ALLTEL and the comparison group. This comparison group is not identical to the
group of peer issuers identified in the Comparison of Five-Year Cumulative Total
Return graph on page 8.
The Committee is comprised entirely of independent, nonemployee directors,
none of whom has any "interlocking" relationships as defined for proxy statement
disclosure purposes.
BASE SALARIES
The Committee reviews the base salaries of ALLTEL's executive officers
annually and adjusts base salaries on the basis of the corresponding mean base
salaries of the comparison group and the Committee's subjective judgment of each
executive officer's performance during the prior year. The Committee does not
assign a precise weighting to the foregoing components. The executive officers'
base salaries in 1993 were approximately 5% below the corresponding mean base
salaries of the comparison group.
As reflected in the Summary Compensation Table on page 12, Mr. Ford's base
salary was increased in 1993 by $25,000 (4.5%). The Committee determined Mr.
Ford's base salary for 1993 on the basis of Mr. Ford's performance during 1992
(by reference to ALLTEL's "total return" to ALLTEL stockholders during 1992 of
26.3%) and a comparison of Mr. Ford's 1992 base salary to the mean salary of
CEO's in the comparison group. The Committee did not assign a precise weighting
to the foregoing components.
ANNUAL INCENTIVES
ALLTEL's Performance Incentive Compensation Plan (the "Incentive Plan")
provides ALLTEL's executive officers with the opportunity to receive annual cash
incentive payments if ALLTEL achieves certain financial performance targets
established by the Committee at the beginning of each year. The Committee
establishes the targeted amounts of those potential payments so that, if the
executive officers receive the targeted amounts, their total direct compensation
(base salary plus bonus) will approximate the mean total direct compensation of
corresponding officers of the comparison group.
For 1993, the financial performance targets were based 50% on earnings per
share, 25% on return on equity, and 25% on a return to ALLTEL stockholders
exceeding the average return on the comparison group. The targeted earnings per
share was a 6% increase over 1992, the targeted return on equity was 18.52%, and
the targeted excess return was 20%.
9
<PAGE> 12
As reflected in the Summary Compensation Table, Mr. Ford received a
$429,813 cash incentive payment under the Incentive Plan for 1993, which
reflects a 150% level of achievement on the earnings per share target, a 150%
level of achievement on the return on equity target, and a 148% level of
achievement on the excess stockholder return target.
LONG TERM INCENTIVES
ALLTEL's Long-Term Performance Incentive Compensation Plan (the "Long-Term
Incentive Plan") provides ALLTEL's executive officers with the opportunity to
receive cash incentive payments based on a three-year measurement period if
ALLTEL achieves a prescribed earnings-per-share target during that period. The
Committee believes this plan design focuses ALLTEL's executive officers on
ALLTEL's long-term financial success.
The Committee establishes the targeted amounts of those potential payments
so that, if the executive officers receive the targeted amounts, their net total
compensation (base salary plus Incentive Plan and Long-Term Incentive Plan
payments and stock option grants) will approximate the mean net total
compensation of corresponding officers of the comparison group. With respect to
cash incentive payments received by ALLTEL's executive officers for the three
year measurement period of 1991-1993, the targeted objective was an 8% increase
in earnings per share for each year. As reflected in the Summary Compensation
Table, Mr. Ford received a $135,417 cash incentive payment under the Long-Term
Incentive Plan for 1993 with respect to the three-year measurement period of
1991-1993, which reflects a 100% level of achievement on the targeted objective.
ALLTEL's 1991 Stock Option Plan allows ALLTEL's executive officers to
receive options to buy specified numbers of shares of Common Stock at the market
price on the date of grant. The Committee believes that stock options encourage
and reward effective management that results in long-term creation of
stockholder value because options granted to ALLTEL executive officers will
provide value to them only if ALLTEL's stock price appreciates after the date of
the grant. The Committee granted stock options to all ALLTEL executive officers
during 1993. Mr. Ford received options to purchase 100,000 shares of Common
Stock at an exercise price of $29, as detailed on the Option Grants in 1993
table on page 13. The Committee established the respective numbers of options
granted to ALLTEL's executive officers on the basis of their levels of
responsibility and accountability.
RECENT TAX LAW CHANGES
Section 162(m) of the Internal Revenue Code, as added by the Revenue
Reconciliation Act of 1993, generally will not allow a deduction in years after
1993 for annual compensation in excess of $1,000,000 paid to ALLTEL's Chief
Executive Officer or to any other ALLTEL officer or executive whose individual
compensation during the year would be required to be disclosed in ALLTEL's
annual proxy statement by reason of being among ALLTEL's four highest
compensated officers for the year (other than the Chief Executive Officer). This
limitation on deductibility does not apply to certain compensation, including
compensation that is payable solely on account of the attainment of one or more
performance goals. In order for the exception for
10
<PAGE> 13
performance-based compensation to apply, however, the material terms under which
the compensation is to be paid, including the performance goals, must be
disclosed to stockholders and approved by a majority vote before the payment of
the compensation. The Committee's policy is to qualify performance-based
compensation for this exception, to the extent possible, including obtaining
stockholder approval of the material terms under which the compensation is to be
paid, in order for the compensation not to be subject to the limitation on
deductibility imposed by Section 162(m) of the Internal Revenue Code.
The Compensation Committee
Ben W. Agee
W. W. Johnson
John H. McConnell
Carl H. Tiedemann
MANAGEMENT COMPENSATION
COMPENSATION OF DIRECTORS
Directors who are not officers of ALLTEL receive $20,000 as an annual base
fee and $1,500 for each Board meeting and each committee meeting attended. Each
Director who is not an officer of ALLTEL and serves as chairman of a Board
committee receives an additional annual fee of $2,500. Directors may elect to
defer all or a part of their compensation under ALLTEL's deferred compensation
plan for directors.
Under the Directors' Retirement Plan, a director who retires and has served
ALLTEL as a director for at least five years and is not then serving as a
corporate officer will receive an annual retirement payment based on the annual
base director fee in effect in the year of retirement. The annual retirement
payment equals 50% of that fee with an additional 5% for each year of service in
excess of five years of service, to a maximum of 100% of the annual director fee
after fifteen or more, years of service. The retirement benefit is payable for a
retired director's life only. A director is considered to have "retired" if his
status as a director ceases for any reason other than his death or removal in
accordance with applicable law.
In accordance with the Directors' Retirement Plan, Mr. Campdon will receive
the maximum benefit of $20,000 per year and Messrs. McConnell and Olson will
receive benefits of $17,000 per year and $10,000 per year, respectively,
following their retirement at the Annual Meeting.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table shows the compensation, for each of the last three
years, of ALLTEL's Chief Executive Officer and of ALLTEL's other four most
highly compensated executive officers as of December 31, 1993:
11
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------
ANNUAL COMPENSATION
------------------------------------ AWARDS
OTHER ----------
ANNUAL SECURITIES
COMPEN- UNDERLYING
NAME PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) OPTIONS(#)
- -------------------- ------------------------------------ ----- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joe T. Ford Chairman and CEO 1993 575,000 429,813 --0-- 100,000
Chairman, President, and CEO 1992 550,000 412,500 --0-- 70,000
Chairman, President, and CEO 1991 500,000 75,000 -- --0--
Max E. Bobbitt President 1993 425,000 285,919 --0-- 75,000
Executive Vice President 1992 400,000 270,000 --0-- 50,000
Executive Vice President and Chief
Financial Officer 1991 360,000 54,000 --0-- --0--
John E. Steuri Chairman and CEO, Systematics
Information Services, Inc., a
wholly-owned subsidiary
("Systematics") 1993 340,000 229,500 --0-- 50,000
Chairman and CEO, Systematics 1992 320,000 216,000 --0-- --0--
Chairman, President, and CEO,
Systematics 1991 320,000 48,000 --0-- --0--
Francis X. Frantz Senior Vice President-External
Affairs, General Counsel, and
Secretary 1993 235,000 140,530 --0-- 50,000
Senior Vice President, General
Counsel, and Secretary 1992 215,000 129,000 --0-- 30,000
Senior Vice President, General
Counsel, and Secretary 1991 165,000 61,875 --0-- --0--
Dennis J. Ferra Senior Vice President-Accounting and
Administration 1993 220,000 131,560 --0-- 50,000
Senior Vice President and Chief
Financial Officer 1992 200,000 120,000 --0-- 30,000
Vice President and Controller 1991 145,000 15,225 --0-- --0--
<CAPTION>
PAYOUTS
----------
LONG-TERM
INCENTIVE ALL OTHER
PLAN COMPEN-
NAME PAYOUTS($) SATION($)
- -------------------- ---------- ---------
<S> <C> <C>
Joe T. Ford 135,417 419,518(a)
187,500 328,246
187,500 51,164
Max E. Bobbitt 98,750 281,612(a)
123,750 205,251
112,500 29,710
John E. Steuri
40,833 28,474(b)
--0-- 27,900
--0-- 27,892
Francis X. Frantz
41,000 118,696(c)
41,250 74,520
--0-- 8,864
Dennis J. Ferra
32,958 78,305(c)
32,810 60,744
26,400 9,145
</TABLE>
- ---------------
(a) Includes the following amounts for Messrs. Ford and Bobbitt: contributions
to the ALLTEL Profit Sharing Plan in the amount of $18,867 in each case,
allocated benefits under the ALLTEL Excess Benefit Plan in the respective
amounts of $60,935 and $38,302, dollar amount of premiums paid under
supplemental split dollar life insurance policies in the respective amounts
of $4,348 and $1,108, and "above-market" earnings on deferred compensation
in the respective amounts of $335,368 and $223,335.
(b) Includes employer contribution under the Systematics Employee Stock Purchase
Plan in the amount of $2,923, employer contribution to the Systematics
noncontributory, trusteed profit-sharing plan in the amount of $13,214,
employer matching contribution to the Systematics trusteed thrift plan in
the amount of $2,249, and dollar amount of premiums paid under decreasing
term life insurance policy in the amount of $10,088.
(c) Includes the following amounts for Messrs. Frantz and Ferra: allocated
benefits under the ALLTEL Excess Benefit Plan in the respective amounts of
$10,708 and $8,363, employer contributions under the ALLTEL Profit Sharing
Plan in the amount of $18,867 in each case, and "above-market" earnings on
deferred compensation in the respective amounts of $89,121 and $51,075.
12
<PAGE> 15
OPTION GRANTS IN 1993
The following table shows information concerning stock options granted
during 1993 to ALLTEL's Chief Executive Officer and to ALLTEL's other four most
highly compensated executive officers, which includes hypothetical realizable
values for those options (assuming they were exercised at the end of their ten
year term) and the hypothetical gain to all holders of Common Stock at the end
of that ten year period, in each case assuming the Common Stock had achieved a
cumulative appreciation of 5% and of 10% per year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUES AT ASSUMED ANNUAL
% OF RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM
TOTAL -------------------------------------------------
NUMBER OF OPTIONS
SECURITIES GRANTED 5% 10%
UNDERLYING TO EXERCISE ---------------------- ----------------------
OPTIONS EMPLOYEES PRICE EXPIRATION STOCK DOLLAR STOCK DOLLAR
NAME GRANTED(#) IN 1993 ($/SHARE) DATE PRICE($) GAINS($) PRICE($) GAINS($)
- --------------------- ---------- --------- --------- ---------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joe T. Ford 100,000 4.89 29 10/29/2003 47.24 1,823,794 75.22 4,621,853
Max E. Bobbitt 75,000 3.67 29 10/29/2003 47.24 1,367,846 75.22 3,466,390
John E. Steuri 50,000 2.44 29 10/29/2003 47.24 911,897 75.22 2,310,926
Francis X. Frantz 50,000 2.44 29 10/29/2003 47.24 911,897 75.22 2,310,926
Dennis J. Ferra 50,000 2.44 29 10/29/2003 47.24 911,897 75.22 2,310,926
Dollar Gains of
All ALLTEL
Stockholders* $3,419,000,000 $8,664,000,000
</TABLE>
- ---------------
* Total dollar gains are based on the indicated assumed annual rates of
appreciation and calculated on the 187,457,609 shares of Common Stock
outstanding as of December 31, 1993.
OPTION EXERCISES IN 1993 AND 1993 YEAR-END OPTION VALUES
The following table shows information concerning stock option exercises
during 1993 by ALLTEL's Chief Executive Officer and by ALLTEL's other four most
highly compensated executive officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT YEAR-END AT 1993 YEAR-END
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE($)
- ------------------------ ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Joe T. Ford 13,000 231,290 177,000/240,000 2,871,566/1,546,250
Max E. Bobbitt --0-- --0-- 140,000/175,000 2,299,360/1,106,250
John E. Steuri 200,000 3,598,580 500,000/ 50,000 9,183,950/25,000
Francis X. Frantz 2,000 24,000 52,000/130,000 686,125/933,750
Dennis J. Ferra --0-- --0-- 37,000/108,000 528,478/635,375
</TABLE>
13
<PAGE> 16
LONG-TERM INCENTIVE PLAN AWARDS IN 1993
The following table shows information concerning the awards made during
1993 to ALLTEL's Chief Executive Officer and to ALLTEL's other four most highly
compensated executive officers under the ALLTEL Long-Term Performance Incentive
Plan:
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS*
PERFORMANCE PERIOD ----------------------------------------------------------------
NAME UNTIL PAYOUT THRESHOLD($) TARGET($) MAXIMUM($)
- ------------------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Joe T. Ford 3 years 71,875 143,750 215,625
Max E. Bobbitt 3 years 47,812 95,624 143,436
John E. Steuri 3 years 38,250 76,500 114,750
Francis X. Frantz 3 years 23,500 47,000 70,500
Dennis J. Ferra 3 years 22,000 44,000 66,000
</TABLE>
- ---------------
* Awards will be paid upon completion of the 1995 year on the basis of ALLTEL's
performance during the three year period 1993-1995 as determined by ALLTEL's
attainment of prescribed corporate and unit performance targets. In January
1993, the Compensation Committee of the Board of Directors specified those
corporate and unit performance targets and the award levels for the indicated
executive officers (which are stated as a percentage of each executive
officer's average base salary during the 1993-95 period). The estimated future
payouts shown above assume that each executive officer's average base salary
during the 1993-95 period would be the same as his base salary during 1993.
EXECUTIVE COMPENSATION AGREEMENTS
Messrs. Joe T. Ford and Max E. Bobbitt are employed by ALLTEL for periods
extending, respectively, to July 1, 2002 and February 1, 2010, under contracts
with ALLTEL that provide for a minimum base annual salary plus any incentive
awards made under the Incentive Plan and the Long-Term Incentive Plan (the
"Incentive Plans"). If the Board of Directors discontinues either or both of the
Incentive Plans (or the application of either or both of them to the executive)
or should a change of control of ALLTEL occur, the contracts provide that the
executive will receive, in the year in which such event occurs, an annual salary
equal to the greater of his minimum base annual salary plus the average
incentive awards made under the Incentive Plans over the preceding three years
or his 1991 base annual salary compounded at an annual rate of 3% from January
1, 1991, to the beginning of the year in which such event occurs; thereafter the
executive will receive an annual salary equal to the compensation paid during
the preceding year, compounded by minimum annual increases of 3%. The contracts
provide for payment of disability benefits in amounts unaffected by that
disability through the end of the calendar year following the calendar year in
which the disability occurs and of death benefits in amounts equal to the
executive's compensation for one year. Assuming compensation at the 1993 level
and retirement at the expiration of the contract period, the estimated annual
benefits to be received by Messrs. Ford and Bobbitt are $672,892 and $469,477,
respectively. Each of the contracts also provides that the executive may retire
any time prior to the expiration of the contract period. If Mr. Ford or Mr.
Bobbitt elects early retirement, he would be entitled to retirement benefits
under his contract reduced in accordance with a formula set forth therein. The
contracts provide that retirement benefits paid thereunder are in lieu of
payments under
14
<PAGE> 17
ALLTEL's pension plan described below. Each of the contracts provides for
payment of survivorship benefits to the executive's wife, who would receive for
her life 50% of the annual retirement compensation to which the executive is
entitled. During 1993, ALLTEL accrued a total of $619,330 and $350,371 toward
its future liability under Mr. Ford's contract and Mr. Bobbitt's contract,
respectively.
Mr. Steuri is employed by Systematics Financial Services, Inc. for the
period extending to June 1, 2004, under a contract that provides for a minimum
base annual salary plus any incentive awards made under the Incentive Plan. If
the Board of Directors of ALLTEL discontinues the Incentive Plan (or its
application to Mr. Steuri), the contract provides that Mr. Steuri will receive,
in the year in which such event occurs, an annual salary equal to the greater of
his minimum base annual salary plus the average incentive award made in the
preceding three years (or such lesser time as the Incentive Plan has been in
effect or applicable to him) or his initial base annual salary compounded at an
annual rate of 3% from May 31, 1990, to the beginning of the year in which such
event occurs; thereafter Mr. Steuri will receive an annual salary equal to the
compensation paid during the preceding year, compounded by minimum annual
increases of 3%. The contract provides for payment of disability benefits in
amounts unaffected by that disability through the end of one full year following
the date on which that disability occurs and of death benefits in amounts equal
to Mr. Steuri's compensation for one year. Assuming compensation at the 1993
level and retirement at the expiration of the contract period, the estimated
annual retirement benefit to be received by Mr. Steuri would be $191,770. The
contract also provides that Mr. Steuri may retire any time on or after May 6,
1999, whereupon he would be entitled to retirement benefits under the contract
reduced in accordance with a formula set forth therein. The contract provides
for payment of survivorship benefits to Mr. Steuri's wife, who would receive for
her life 50% of the annual retirement compensation to which Mr. Steuri is
entitled. During 1993, Systematics Financial Services, Inc. accrued a total of
$180,984 toward its future liability under Mr. Steuri's contract.
DEFINED BENEFIT PENSION PLAN
ALLTEL maintains a trusteed, noncontributory, defined benefit pension plan
covering salaried and non-salaried employees under which benefits are not
determined primarily by final compensation (or average final compensation).
Under this pension plan, salaried employees (including executive officers) other
than those employed by CP National Corporation, HWC Distribution Corp.,
Systematics Information Services, Inc., CPI Acquisition, Inc., ALLTEL Publishing
Corporation, and TDS Healthcare Systems Corporation, and their respective
subsidiaries, retiring after January 1, 1988, have each period of post-January
1, 1988, service credited at 1% of compensation, plus .4% of that part of the
employee's compensation that exceeds the Social Security Taxable Wage Base for
such year. Service prior to 1988 is credited to a salaried employee on the basis
of a percentage of that employee's highest consecutive five-year average annual
base salary, equal to 1% for each year of service prior to 1982 and thereafter
increasing by .05% each year until 1988, but only prospectively, i.e., with
respect to service earned in such succeeding year; in addition, a salaried
employee receives an additional credit of .25% for each pre-1988 year of service
after age 55, subject to a maximum of 10 years' such credit. A salaried
15
<PAGE> 18
employee retiring after January 1, 1988, has added to the annual pension
benefits an amount equal to .4% of the amount by which the employee's pre-1988
career average annual base salary (three highest years) exceeds such employee's
Social Security covered compensation, multiplied by such employee's years of
pre-1988 credited service. The pension plan also provides a minimum retirement
pension for a salaried employee who attained age 55 on or before January 1,
1988, equal to the sum of (i) the employee's accrued pension computed under the
formula in effect for 1987, plus (ii) .8% times years of service after that date
multiplied further by an average compensation amount as of the date of
determination. Various benefit payment options are available on an actuarially
equivalent basis, including joint and survivor benefits. Special rules apply to
payments to married employees. Compensation included in the pension base
includes cash awards under the Incentive Plans.
Assuming compensation at the 1993 level, continuation in the position he
held during 1993, and retirement at age 65, the estimated annual benefit under
the pension plan for each of Francis X. Frantz and Dennis J. Ferra is $56,508
and $62,164 respectively. (Neither Joe T. Ford, Max E. Bobbitt, nor John E.
Steuri is a participant in or entitled to benefits under the pension plan.)
Amounts shown are straight life annuity amounts. Federal laws place certain
limitations on pensions that may be paid under federal income tax qualified
plans. The ALLTEL Excess Benefit Plan provides for payment by ALLTEL to certain
employees outside the tax-qualified pension plan of any amounts not payable
under the tax-qualified pension plan by reason of limitations specified in the
Internal Revenue Code. Currently, Francis X. Frantz and Dennis J. Ferra are
eligible for pension accruals under the ALLTEL Excess Benefit Plan.
GRANTOR TRUST
ALLTEL maintains a "grantor trust" under Section 671 of the Internal
Revenue Code (the "Trust") to provide certain participants in designated
compensation and supplemental retirement plans and arrangements with greater
assurance that the benefits and payments to which those participants are
entitled under those plans and arrangements will be paid. Contributions by
ALLTEL to the Trust are discretionary and totalled $3,120,000 as of December 31,
1993. Prior to a "change of control" of ALLTEL (as defined in the trust
agreement for the Trust), benefits may not be paid from the Trust. Following a
"change of control" of ALLTEL, benefits and payments may be paid from the Trust
to the extent those benefits and payments are not paid by ALLTEL or its
successor. The assets of the Trust are subject to the claims of the creditors of
ALLTEL in the event ALLTEL becomes "insolvent" (as defined in the trust
agreement for the Trust).
ADOPTION OF 1994 STOCK OPTION PLAN FOR EMPLOYEES
In the absence of contrary direction, the proxies will be voted for the
adoption of the ALLTEL Corporation 1994 Stock Option Plan for Employees in the
form set forth in Exhibit A of this Proxy Statement (the "Employee Plan"), which
is substantially the same as ALLTEL's stock option plan currently in effect. The
Board of Directors recommends approval of the Employee Plan.
16
<PAGE> 19
ALLTEL's incentive stock option plan currently in effect has, in the
opinion of the Board of Directors, promoted the interests of ALLTEL and its
stockholders by enabling ALLTEL, by the grant of stock options, to retain,
attract, and motivate key employees responsible for the continued development
and growth of ALLTEL's business. As of the date of this Proxy Statement, there
are outstanding options under ALLTEL's stock option plan currently in effect to
purchase a total of 3,948,120 shares of Common Stock, and only 1,009,000 of the
5,000,000 shares subject to the current stock option plan remain available for
the grant of new stock options. Accordingly, adoption of the Employee Plan will
permit ALLTEL to continue to offer present and prospective key employees the
foregoing benefits. As of the date of this Proxy Statement, there were no
options granted under the Employee Plan. Information with respect to options
granted and exercised during the past three fiscal years is set forth in the
Option Grants in 1993 table on page 13 and the Option Exercises in 1993 and 1993
Year-End Option Values table on page 13.
The material features of the Employee Plan are:
SHARES AVAILABLE FOR OPTIONS. Options may be granted until January 21,
2004, for a maximum of 10,000,000 shares of Common Stock, which may be
authorized but unissued shares or reacquired shares, as the Board of Directors
may determine. Common Stock subject to unexercised options that expire will
again become available for the grant of options under the Employee Plan.
TYPE OF OPTIONS. The Employee Plan provides that options granted
thereunder may be either "incentive stock options," within the meaning of
Section 422 of the Internal Revenue Code, non-qualified options for federal
income tax purposes, or any combination of the foregoing.
ADMINISTRATION AND ELIGIBILITY. The Employee Plan will be administered by
the Incentive Stock Option Committee of the Board of Directors. Options may be
granted to any key employee of ALLTEL or of any present or future subsidiary; a
director or officer of ALLTEL or a subsidiary who is not also an employee is not
eligible to receive options under the Employee Plan. The maximum number of
shares of Common Stock subject to options that may be granted under the Employee
Plan to any employee is 1,000,000 (subject to adjustment to the extent of any
adjustment to the number of shares that may be issued pursuant to options
granted under the Employee Plan). The Employee Plan otherwise does not limit the
number of shares that may be covered by non-qualified options granted to any
employee, and successive options may be granted to the same person whether or
not options previously granted to him remain unexercised. The Employee Plan
does, however, limit the aggregate fair market value of the shares for which an
optionee may be granted incentive stock options that become exercisable in any
calendar year (under all plans of ALLTEL) to $100,000 or such other maximum
amount as shall be specified by the Internal Revenue Code from time to time.
OPTION PRICE. The option price shall be determined by the Committee, but
may not be less that the fair market value of the Common Stock at the time the
option is granted, which is deemed to be the closing price of the Common Stock
on the New York Stock Exchange. Upon any
17
<PAGE> 20
change in the Common Stock by reason of a merger, acquisition, reorganization,
stock dividend, or stock split, the number or class, or both, of shares subject
to each outstanding option and the option price will be appropriately adjusted
by the Committee.
VESTING AND TERMINATION OF OPTIONS. An option will become exercisable at
any time during its term as to all or any portion of the shares subject thereto
or in installments over that term, as determined by the Committee, and shall
also become exercisable in its entirety, notwithstanding a later exercise date
or dates, in the event of a "change of control" involving ALLTEL. An option
shall terminate and no longer be exercisable at the time set forth in the grant,
which shall not be later than ten years after the grant. An option may be
exercised only while the optionee is an employee, subject to limited rights of
exercise following termination of employment.
PAYMENT FOR SHARES. At the time of exercise of any option, the optionee
must pay in full for the Common Stock purchased. The option price must be paid
either in cash or, at the discretion of the Committee, wholly or partly in
Common Stock having an equivalent fair market value, or a combination of cash
and stock.
INCOME TAX TREATMENT. Generally there are no federal income tax
consequences to ALLTEL or to the recipient of incentive stock options either at
the time of grant or at the time of exercise, except that the excess of the fair
market value at the time of exercise of shares acquired upon exercise of
incentive stock options over the option price may be subject to the alternative
minimum tax. If shares acquired upon exercise of incentive stock options are
held for at least two years after the date of grant and for one year after
transfer of the shares to the optionee upon exercise, any gain or loss on
subsequent disposition of the shares will be treated for federal income tax
purposes as long-term capital gain or loss. If the foregoing holding period
requirements are not met, gain recognized on disposition of the shares is
taxable as ordinary income to the optionee to the extent of the excess, if any,
of the fair market value of the shares acquired on the exercise date over the
option price, and ALLTEL thereupon becomes entitled to a deduction in the same
amount. Any further gain or loss to the optionee will be taxed as short-term or
long-term capital gain depending on the holding period.
A non-qualified option issued under the Employee Plan will not result in
any taxable income to the optionee or deduction to ALLTEL at the time it is
granted. Unlike an incentive stock option, the holder of a non-qualified option
will be deemed to have received compensation, taxable as ordinary income, at the
time of exercise of the option in an amount equal to the difference between the
fair market value of the Common Stock at the time of exercise and the option
price, and ALLTEL will at the same time become entitled to a tax deduction in a
like amount. If the Common Stock acquired is later sold or exchanged, the
difference between the sale price and the fair market value of the shares on the
date the option is exercised is taxable as long-term or short-term capital gain
or loss depending on the holding period.
AMENDMENT OF EMPLOYEE PLAN. The Board of Directors may amend the Employee
Plan, and the Committee may make changes in and additions to any option (subject
to the prior consent of the optionee if the effect would restrict, limit, or
deny any of the benefits of the
18
<PAGE> 21
option), without stockholder approval, unless that stockholder approval is
required under applicable securities or corporate law, rule, or regulation, the
rules of any stock exchange applicable to ALLTEL, or to preserve any special
income tax treatment under the Internal Revenue Code.
ADOPTION OF 1994 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
In the absence of contrary direction, the proxies will be voted for the
adoption of the ALLTEL Corporation 1994 Stock Option Plan for Nonemployee
Directors in the form set forth in Exhibit B of this Proxy Statement (the
"Director Plan"). ALLTEL does not currently have a stock option plan for
nonemployee directors. The Board of Directors recommends approval of the
Director Plan.
The material features of the Director Plan are:
SHARES AVAILABLE FOR OPTIONS. Options will be granted under the Director
Plan for a maximum of 1,000,000 shares of Common Stock, which may be authorized
but unissued shares or reacquired shares. Common Stock subject to unexercised
options that expire will again become available for the grant of options under
the Director Plan.
TYPE OF OPTIONS. The Director Plan provides that all options granted
thereunder will be non-qualified options for federal income tax purposes.
ADMINISTRATION AND OPTION GRANTS. The Director Plan will be administered
by the Board of Directors, subject to the terms and provisions of the Director
Plan. All Nonemployee Directors (as defined in the Director Plan) on the date of
each grant of options will receive automatic grants of options at specified
intervals. The first grant, in the amount of options to purchase 10,000 shares
of Common Stock, will be made to each Nonemployee Director on the date ALLTEL's
1994 Annual Meeting of Stockholders is concluded. Successive grants in the
amount of options to purchase 2,000 shares of Common Stock will be made on the
date each subsequent ALLTEL annual meeting of stockholders is concluded to each
Nonemployee Director (other than a Nonemployee Director who is first elected at
any such annual meeting). In addition, in the event a person first becomes a
Nonemployee Director on any date other than the date on which ALLTEL's 1994
Annual Meeting of Stockholders is concluded, that person will receive a grant in
the amount of options to purchase 10,000 shares of Common Stock on the date that
person first becomes a Nonemployee Director. The Director Plan will not permit
any other option grants.
OPTION PRICE. The option price of all options granted under the Director
Plan will be the fair market value of the Common Stock on the date the option is
granted, which is deemed to be the closing price of the Common Stock on the New
York Stock Exchange on that date. Upon any change in the Common Stock by reason
of a merger, acquisition, reorganization, stock dividend, or stock split, the
number or class, or both, of shares subject to each outstanding option and the
option price may be appropriately adjusted by the Board of Directors.
19
<PAGE> 22
VESTING AND TERMINATION OF OPTIONS. Subject to the terms of the Director
Plan, options granted thereunder will vest and become exercisable on the
earliest of (i) the day immediately preceding the date of the first ALLTEL
annual meeting of stockholders following the date the option is granted, (ii)
the death of an optionee, (iii) the disability of the optionee, or (iv) the
occurrence of a Change of Control (as defined in the Director Plan). In the
event a Nonemployee Director's status as such ceases for any reason other than
as a result of his death or disability, all options then held by him that are
not already vested and exercisable automatically shall lapse and be forfeited.
PAYMENT FOR SHARES. At the time of the exercise of any option, the
optionee must pay in full for the Common Stock purchased. The option price must
be paid either in cash or wholly or partly in Common Stock having an equivalent
fair market value, or a combination of cash and stock. The optionee also must
pay in cash all amounts due to satisfy applicable tax withholding requirements.
INCOME TAX TREATMENT. An option granted under the Director Plan will not
result in any taxable income to the optionee or deduction to ALLTEL at the time
it is granted. The holder of a non-qualified option will be deemed to have
received compensation, taxable as ordinary income, at the time of exercise of
the option in an amount equal to the difference between the fair market value of
the Common Stock at the time of exercise and the option price, and ALLTEL will
at the same time become entitled to a tax deduction in a like amount. If the
Common Stock acquired is later sold or exchanged, the difference between the
sale price and the fair market value of the shares on the date the option is
exercised is taxable as long-term or short-term capital gain or loss depending
on the holding period.
AMENDMENT OF DIRECTOR PLAN. The Board of Directors may make certain
amendments to the Director Plan (subject to the prior consent of the optionee if
the effect would be materially adverse to any of his options then outstanding),
without stockholder approval, unless that stockholder approval is required under
applicable securities or corporate law, rule, or regulation, the rules of any
stock exchange applicable to ALLTEL, or the Internal Revenue Code.
APPROVAL OF MATERIAL TERMS OF
PERFORMANCE INCENTIVE COMPENSATION PLAN
In the absence of contrary direction, the proxies will be voted for the
approval of the material terms of the ALLTEL Corporation Performance Incentive
Compensation Plan (the "Incentive Plan") in order to allow to ALLTEL a deduction
for federal income tax purposes in years after 1993 for compensation paid
pursuant to the Incentive Plan that might otherwise be limited or unavailable
under Section 162(m) of the Internal Revenue Code in the absence of stockholder
approval. The Board of Directors recommends approval of the material terms of
the Incentive Plan.
Under the Incentive Plan, annual cash incentive awards may be paid to any
officer or key management employee of ALLTEL or a subsidiary who is a regular
full-time employee of ALLTEL or a subsidiary. Incentive awards under the
Incentive Plan are earned on the basis of
20
<PAGE> 23
ALLTEL's performance during the year as determined by ALLTEL's attainment of
certain corporate and unit financial performance targets determined by ALLTEL's
Compensation Committee (the "Committee"). Formulas for determining the amount of
incentive awards are established by the Committee based upon the extent of
attainment of those financial performance targets.
The Committee assigns each participant in the Incentive Plan to a
classification that determines the percentage of base compensation payable as an
award. The percentage of the award that is paid depends on the percentage of
achievement of the financial performance targets, based upon the following
table:
<TABLE>
<CAPTION>
PERCENTAGE OF
ACHIEVEMENT OF
FINANCIAL PERFORMANCE
TARGETS PERCENTAGE OF AWARD
- --------------------- -------------------
<S> <C>
Above 150% 150%
100% 100%
50% 50%
Less than 50% 0%
</TABLE>
A pro rata portion of the award is paid for achievement of between 50% and 150%
of the financial performance targets.
The formula for determining the amount of an award paid under the Incentive
Plan is the percentage of base compensation determined by the classification of
the participant, multiplied by the percentage of award determined by the
percentage of achievement of the financial performance targets.
APPROVAL OF MATERIAL TERMS OF LONG-TERM
PERFORMANCE INCENTIVE COMPENSATION PLAN
In the absence of contrary direction, the proxies will be voted for the
approval of the material terms of the ALLTEL Corporation Long-Term Performance
Incentive Compensation Plan (the "Long-Term Incentive Plan") in order to allow
to ALLTEL a deduction for federal income tax purposes in years after 1993 for
compensation paid pursuant to the Long-Term Incentive Plan that might otherwise
be limited or unavailable under Section 162(m) of the Internal Revenue Code in
the absence of stockholder approval. The Board of Directors recommends approval
of the material terms of the Long-Term Incentive Plan.
Under the Long-Term Incentive Plan, awards may be earned every three years
by any officer or key management employee of ALLTEL or a subsidiary who is a
regular full-time employee of ALLTEL or a subsidiary. Awards under the Long-Term
Incentive Plan are earned on the basis of ALLTEL's performance during a three
year period as determined by ALLTEL's attainment of a prescribed
earnings-per-share target during that period.
21
<PAGE> 24
The Committee assigns each participant in the Long-Term Incentive Plan to a
classification that determines the percentage of base compensation payable as an
award. The percentage of the award that is paid depends on the percentage of
achievement of the earnings-per-share targets, based upon the following table:
<TABLE>
<CAPTION>
PERCENTAGE OF
ACHIEVEMENT OF
FINANCIAL PERFORMANCE
TARGETS PERCENTAGE OF AWARD
- --------------------- -------------------
<S> <C>
Above 150% 150%
100% 100%
50% 50%
Less than 50% 0%
</TABLE>
A pro rata portion of the award is paid for achievement of between 50% and
150% of the earnings-per-share targets.
The formula for determining the amount of an award paid under the Long-Term
Incentive Plan is the percentage of base compensation determined by the
classification of the participant, multiplied by the percentage of award
determined by the percentage of achievement of the earnings-per-share targets.
ELECTION OF INDEPENDENT AUDITORS
In the absence of contrary direction, the proxies will be voted for the
election of Arthur Andersen & Co. as independent auditors to audit the books and
accounts of ALLTEL at the close of the 1994 fiscal year. The Board of Directors
recommends that the stockholders vote in favor of the election of Arthur
Andersen & Co.
It is expected that representatives of Arthur Andersen & Co. will be
present at the Annual Meeting with the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
In connection with its audit of the books and accounts of ALLTEL for the
fiscal year ended December 31, 1993, Arthur Andersen & Co. examined ALLTEL's
annual consolidated financial statements and financial statements of most of its
subsidiaries, performed a limited interim review of its consolidated quarterly
reports to stockholders, reviewed annual and quarterly report and registration
statement filings with the Securities and Exchange Commission (the "SEC"),
conducted audits of employee benefit plans, and consulted with ALLTEL concerning
other accounting matters and certain tax and employee benefit matters.
CERTAIN TRANSACTIONS
ALLTEL purchases property, liability, workers compensation, and directors
and officers insurance coverage from Cincinnati Insurance Company, a subsidiary
of Cincinnati Financial
22
<PAGE> 25
Corporation, and paid premiums of $6,364,100 during the period January 1, 1993,
through December 31, 1993. Cincinnati Financial Corporation, its subsidiaries,
and its pension fund beneficially owned, on February 25, 1994, 12,832,508 shares
of Common Stock (see page 6).
ALLTEL engaged Stephens Inc., an affiliate of Stephens Group Inc., to
render investment banking and brokerage services to ALLTEL and its subsidiaries
during 1993, for which ALLTEL paid investment banking fees and brokerage
commissions totalling $877,000 to Stephens Inc. during the period January 1,
1993, through December 31, 1993. In addition, during October 1993, Systematics
Telecommunications Services, Inc. ("STSI"), a subsidiary of Systematics
Information Services, Inc., purchased a 40,500 square foot warehouse facility
(the "Facility") located in Maumelle, Arkansas, from a limited partnership (the
"Limited Partnership") of which Stephens Group Inc. was one of the general
partners. The purchase price of the Facility to STSI was $550,000. STSI agreed
to purchase the Facility at the foregoing negotiated price after evaluating,
with the assistance of a third party real estate consultant, the price per
square foot, location, features, and date of availability of the Facility in
comparison to several comparable alternative properties that were considered.
Stephens Group Inc. beneficially owned, on February 25, 1994, 16,607,920 shares
of Common Stock (see page 6).
ANNUAL REPORT
The 1993 Annual Report, which includes financial statements and an outline
of ALLTEL's operations during 1993, was mailed to each stockholder receiving
this Proxy Statement.
ALLTEL WILL PROVIDE, WITHOUT CHARGE, TO ANY PERSON RECEIVING A COPY OF THIS
PROXY STATEMENT, UPON WRITTEN REQUEST, A COPY OF ALLTEL'S ANNUAL REPORT ON FORM
10-K FOR THE CALENDAR YEAR 1993, INCLUDING THE FINANCIAL STATEMENTS AND THE
FINANCIAL STATEMENT SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SEC. Those
requests should be addressed to Ronald D. Payne, Vice President -- Corporate
Communications, ALLTEL Corporation, One Allied Drive, Little Rock, Arkansas
72202.
OTHER MATTERS
The management and the Board of Directors of ALLTEL do not know of any
other matters that may come before the meeting. If any other matters properly
come before the meeting, however, it is the intention of the persons named in
the accompanying form of proxy to vote the proxy in accordance with their
judgment on those matters.
Any proposals by ALLTEL stockholders intended to be presented at the 1995
Annual Meeting must be received by ALLTEL prior to November 4, 1994, in order to
be considered for inclusion in ALLTEL's proxy statement for its 1995 Annual
Meeting.
ALLTEL will bear the cost of solicitation of proxies. In addition to the
use of the mail, proxies may be solicited by officers, directors, and employees
of ALLTEL, personally or by telephone or by telegraph. ALLTEL will pay persons
holding stock in their names or those of
23
<PAGE> 26
their nominees for their expenses in sending soliciting material to their
principals in accordance with regulations of the SEC and The New York Stock
Exchange, Inc.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
FRANCIS X. FRANTZ,
Secretary.
Dated: March 4, 1994
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<PAGE> 27
EXHIBIT A
ALLTEL CORPORATION
1994 STOCK OPTION PLAN FOR EMPLOYEES
(AS ADOPTED BY THE BOARD OF DIRECTORS ON JANUARY 27, 1994)
1. PURPOSE
The purpose of this 1994 Stock Option Plan for Employees (hereinafter
called "Plan") of ALLTEL Corporation (hereinafter called "ALLTEL") is to promote
the interests of ALLTEL's stockholders by furnishing additional incentive to key
employees of ALLTEL and its subsidiaries, by strengthening ALLTEL's ability to
attract and retain in its employ personnel of outstanding competence, and by
furthering the identity of the interests of those employees with those of
ALLTEL's stockholders generally.
This purpose will be effected by the granting of stock options as herein
provided. Options granted under the Plan may be (a) "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), (b) non-qualified stock options (all
options other than "incentive stock options"), or (c) any combination of the
foregoing, except that incentive stock options may not be granted under the Plan
after January 27, 2004.
2. STOCK SUBJECT TO THE PLAN
The stock that may be issued pursuant to options granted under this Plan
shall not exceed in the aggregate 10,000,000 (subject to adjustment in
accordance with Section 9) shares of Common Stock of ALLTEL ("Common Stock") and
may be authorized but unissued shares or reacquired shares, as the Board of
Directors of ALLTEL (hereinafter called the "Board") may from time to time
determine. Any shares subject to an option under this Plan that, for any reason,
expires or is terminated unexercised as to those shares, may again be subjected
to an option hereunder.
3. ELIGIBILITY
The group of employees eligible to receive options under this Plan shall
consist only of officers and key employees of ALLTEL and of any present or
future subsidiary. A director or officer of ALLTEL or of any such subsidiary who
is not also an employee shall not be eligible to receive options. A committee of
the Board of Directors constituted as provided in Section 11 (hereinafter called
the "Committee") will determine the employees to be granted options, the number
of options, the number of shares subject to each option, the time or times when
those options shall be granted, and the manner in which options may be
exercised. The Committee shall determine, at the time options are granted,
whether the options are incentive stock options, non-qualified options, or a
combination thereof. In making that determination, the Committee may take into
consideration the value of the services rendered by the respective employees,
their present and potential contributions to the success of ALLTEL and its
subsidiar-
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ies, and such other factors as the Committee may deem relevant in accomplishing
the purpose of this Plan. No option shall be granted hereunder to an employee
who, immediately after that option is granted to him, owns stock possessing more
than 10% of the total combined voting power or value of all classes of stock of
ALLTEL or any subsidiary. The maximum number of shares of Common Stock subject
to options that may be granted hereunder to any employee is 1,000,000 (subject
to adjustment to the extent of any adjustment to the number of shares that may
be issued pursuant to options granted under this Plan). The aggregate fair
market value (determined at the time the option is granted) of the shares of
Common Stock with respect to which incentive stock options are exercisable for
the first time during any calendar year (under all plans of ALLTEL and its
subsidiaries) shall not exceed $100,000 or such other maximum amount as shall be
specified by the Internal Revenue Code from time to time.
4. OPTION PRICE
The price at which shares may be purchased upon exercise of a particular
option shall be determined by the Committee, but shall not be less than the fair
market value of the Common Stock at the time of granting the option. That fair
market value shall be deemed to be the closing price of the Common Stock on the
New York Stock Exchange on the day determination of value is to be made or, if
no sale of the Common Stock shall have been made on the New York Stock Exchange
that day, on the next preceding day on which there was a sale of Common Stock.
5. EXERCISE OF OPTIONS
Each optionee's right to purchase shares shall become exercisable at one
time, in its entirety, or in installments over the term of the option, or a
portion thereof, as the Committee in its discretion may determine and shall also
become exercisable in its entirety, notwithstanding a later exercise date or
dates determined by the Committee or set forth in any Stock Option Agreement
between the optionee and ALLTEL, upon the occurrence of a "change of control,"
as defined in the last paragraph of this Section 5. An incentive stock option
may be exercised in any order and may be exercised before the exercise of
incentive stock options granted prior thereto. An option may be exercised, at
any time or from time to time, as to full shares that have become so purchasable
by depositing with ALLTEL (i) the cash or cash equivalent of the full purchase
price of those shares, (ii) at the discretion of the Committee, through delivery
of shares of Common Stock already owned by the optionee taken at their fair
market value at the time of exercise of the option (as determined in accordance
with Section 4 above) or a combination of such stock and cash; except that
ALLTEL shall not be required to issue or deliver any certificates for shares of
Common Stock purchased upon the exercise of an option prior to (y) if requested
by ALLTEL, the filing with ALLTEL by the optionee or by a purchaser acting under
Section 8 hereof of a representation in writing that at the time of such
exercise it is the purchaser's then present intention to acquire the shares
being purchased for investment and not for resale or (z) the completion of any
registration or other qualification of those shares under any state or federal
laws or rulings or regulations of any government regulatory body that ALLTEL
shall determine to be necessary or advisable. An option shall be deemed
exercised on the date payment therefor is received by a representative of the
Committee.
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The term of the options shall not be more than ten years from the date the
options were granted, subject to earlier termination as provided in Section 7.
Except as provided in Sections 6 and 7, no option may be exercised at any time,
unless the holder thereof is then an employee of ALLTEL or of a subsidiary of
ALLTEL and shall have been continuously so employed since the grant of his
option.
The holder of an option, or his executor, administrator, legatee, or
distributee, as the case may be, shall have none of the rights of a stockholder
with respect to the shares subject thereto until those shares shall be issued to
him upon the exercise of his option, but ALLTEL will furnish to optionees copies
of all annual and quarterly reports and statements, proxy statements, and other
information and material furnished to its stockholders.
For purposes of this Section 5, a "change of control" shall be deemed to
occur if:
(a) Any "person," as defined in Sections 13(d) and 14(d) of the
Exchange Act, other than ALLTEL, any of its subsidiaries, or any employee
benefit plan maintained by ALLTEL or any of its subsidiaries becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of 15%
or more of the outstanding voting capital stock of ALLTEL, unless prior
thereto, the Continuing Directors (as defined in the immediately following
sentence) approve the transaction that results in the person becoming the
beneficial owner of 15% or more of the outstanding voting capital stock of
ALLTEL. "Continuing Directors" means directors who were directors of ALLTEL
at the beginning of the 24-month period ending on the date the
determination is made or whose election, or nomination for election, by
ALLTEL's stockholders was approved by at least a majority of the directors
who are in office at the time of the election or nomination and who either
(i) were directors at the beginning of the period or (ii) were elected, or
nominated for election, by at least a majority of the directors who were in
office at the time of the election or nomination and were directors at the
beginning of the period;
(b) At any time Continuing Directors no longer constitute a majority
of the directors of ALLTEL;
(c) The Board fixes a record date for determining stockholders
entitled to vote upon (i) a merger or consolidation of ALLTEL, statutory
share exchange, or other similar transaction with another corporation,
partnership, or other entity or enterprise in which either ALLTEL is not
the surviving or continuing corporation or shares of Common Stock are to be
converted into or exchanged for cash, securities other than Common Stock,
or other property, (ii) a sale or disposition of all or substantially all
of the assets of ALLTEL, or (iii) the dissolution of ALLTEL; or
(d) ALLTEL enters into an agreement with any person, entity, or
enterprise the consummation of which would result in the occurrence of an
event described in subparagraphs (a), (b), or (c) of this paragraph.
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6. TRANSFERABILITY
Except as otherwise permitted under the rules and regulations under Section
16 of the Exchange Act and under the Internal Revenue Code, in each case as from
time to time in effect, an option granted under this Plan is not transferable
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder.
7. TERMINATION OF EMPLOYMENT
After having been continuously employed by ALLTEL or by a subsidiary of
ALLTEL for a period of at least one year from the date his option is granted to
him, if an optionee ceases employment due to any reason other than death or
disability, he may exercise his option (to the extent that he was entitled to
exercise it as provided in Section 5 on the date he ceased employment) (i)
within the remaining term of the option if due to retirement or (ii) within
three months next succeeding the date he ceased employment if due to any reason
other than retirement, disability, or death, except that such option may not be
exercised beyond the term of the option. This Plan does not confer upon any
optionee any right with respect to continuance of employment by ALLTEL or by a
subsidiary of ALLTEL, nor does it modify in any way the status of any at-will
employee.
8. DEATH OR DISABILITY OF OPTIONEE
In the event of the (i) death or disability of an optionee who is employed
by ALLTEL or by a subsidiary of ALLTEL on the date of his death or disability
and, prior thereto, was continuously employed by ALLTEL or a subsidiary of
ALLTEL for a period of at least one year from the date his option was granted to
him or (ii) death or disability of an optionee at any time following his
termination of employment due to retirement during which he would have been
entitled, under Section 7, to exercise his option, the option previously granted
to him may be exercised by a legatee or legatees of the optionee under his last
will or by his legal representative or representatives, at any time after his
death or disability within the remaining term of the option, to the extent that
he was entitled to exercise that option on the date of his death or disability
as provided in Section 5.
9. CHANGES IN COMMON STOCK
In the event there is any change in the stock subject to options under this
Plan or to options granted hereunder, through merger, acquisition,
consolidation, or reorganization, or in the event of any stock split or dividend
to holders of such stock payable in stock of the same class, or in the event of
any change in the capital structure of the Corporation, the Committee shall make
such adjustments with respect to the aggregate number of shares as to which
options may thereafter be granted under this Plan, the number or class, or both,
of shares subject to each outstanding option, and the option price for shares
subject to each outstanding option, or to any
A-4
<PAGE> 31
other provision of the option or this Plan, as the Committee deems equitable to
prevent dilution or enlargement of any such option.
10. TERMINATION
This Plan may be abandoned or terminated at any time by the Board of
Directors except with respect to any options then outstanding under this Plan.
11. ADMINISTRATION AND AMENDMENT
This Plan shall be administered by a Committee of the Board of Directors to
be composed of not fewer than three directors as appointed from time to time by
the Board. Members of the Committee shall not be granted options under this Plan
while serving on the Committee and shall meet all disinterested administration
requirements specified by the rules and regulations under Section 16 of the
Exchange Act from time to time in effect. ALLTEL shall effect the grant of
options under this Plan in accordance with the determination of the Committee by
execution of instruments in form approved by the Committee. The Committee may,
in its discretion and to the extent not inconsistent with the express terms of
this Plan, define the terms of any options so that they qualify for special
income tax treatment under the Internal Revenue Code from time to time in
effect. The Committee from time to time may adopt rules and regulations for
carrying out this Plan. The determination or the interpretation and construction
of any provision of this Plan by the Committee shall, unless otherwise
determined by the Board, be final and conclusive. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to this Plan or any option granted under it. The Board from time to
time may make such changes in and additions to this Plan as it may deem proper
and in the best interests of ALLTEL, and the Committee from time to time may
make such changes in and additions to any option (subject to the prior consent
of the optionee if the effect of any such change or addition would restrict,
limit, or deny any of the benefits of the option) or waive any option condition
or restriction, in each case, without further approval on the part of the
stockholders of ALLTEL, unless that stockholder approval is required under
applicable securities or corporate law, rule, or regulation or the rules of any
stock exchange applicable to ALLTEL or to preserve any special income tax
treatment under the Internal Revenue Code from time to time in effect.
12. EFFECTIVE DATE
This Plan shall become effective on January 27, 1994, the date on which it
was adopted by the Board of Directors, subject to the approval thereof by the
stockholders of ALLTEL prior to the first anniversary thereof.
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EXHIBIT B
ALLTEL CORPORATION
1994 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
(AS ADOPTED BY THE BOARD OF DIRECTORS EFFECTIVE JANUARY 27, 1994)
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. ALLTEL Corporation ("ALLTEL") hereby
establishes this ALLTEL Corporation 1994 Stock Option Plan for Nonemployee
Directors (the "Plan"). The Plan permits the grant of Nonqualified Stock
Options, subject to the terms set forth herein. The Plan is effective as of
January 27, 1994 (the "Effective Date"), subject to approval by an affirmative
vote of a majority of Shares present and entitled to vote at the 1994 Annual
Meeting of Stockholders.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
interests of ALLTEL by linking the personal interests of Nonemployee Directors
to those of ALLTEL stockholders and to attract and retain Nonemployee Directors
of outstanding competence.
1.3 DURATION OF THE PLAN. The Plan shall continue in effect following the
Effective Date until all Shares subject to options granted under the Plan have
been purchased or acquired in accordance with the provisions of the Plan or
until the Board of Directors terminates the Plan in accordance with Section 7.1.
ARTICLE 2. DEFINITIONS
Capitalized terms used and not otherwise defined in the Plan shall have the
meanings set forth below:
(a) "Award Agreement" means an agreement between ALLTEL and a
Nonemployee Director setting forth the terms and provisions applicable to
an Option granted to that Nonemployee Director under the Plan.
(b) "Beneficial Owner" has the meaning given that term in Rule 13d-3
under the Exchange Act, as amended from time to time.
(c) "Board" or "Board or Directors" means the Board of Directors of
ALLTEL, as constituted from time to time.
(d) "Change of Control" shall be deemed to have occurred if:
(i) Any "person," as defined in Sections 13(d) and 14(d) of the
Exchange Act, other than ALLTEL, any of its subsidiaries, or any
employee benefit plan maintained by ALLTEL or any of its subsidiaries
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of 15% or more of the outstanding voting capital stock of
ALLTEL, unless prior thereto, the Continuing Directors (as defined in
the immediately following sentence) approve the transaction that results
in the person becoming
B-1
<PAGE> 33
the beneficial owner of 15% or more of the outstanding voting capital
stock of ALLTEL. "Continuing Directors" means directors who were
directors of ALLTEL at the beginning of the 24-month period ending on
the date the determination is made or whose election, or nomination for
election, by ALLTEL's stockholders was approved by at least a majority
of the directors who are in office at the time of the election or
nomination and who either (1) were directors at the beginning of the
period or (2) were elected, or nominated for election, by at least a
majority of the directors who were in office at the time of the election
or nomination and were directors at the beginning of the period;
(ii) At any time Continuing Directors no longer constitute a
majority of the directors of ALLTEL;
(iii) The Board fixes a record date for determining stockholders
entitled to vote upon (1) a merger or consolidation of ALLTEL, statutory
share exchange, or other similar transaction with another corporation,
partnership, or other entity or enterprise in which either ALLTEL is not
the surviving or continuing corporation or Shares are to be converted
into or exchanged for cash, securities other than Shares, or other
property, (2) a sale or disposition of all or substantially all of the
assets of ALLTEL, or (3) the dissolution of ALLTEL; or
(iv) ALLTEL enters into an agreement with any person, entity, or
enterprise the consummation of which would result in the occurrence of
an event described in subparagraphs (i), (ii), or (iii) of this
paragraph.
Notwithstanding the foregoing, in no event shall a "Change of Control"
be deemed to have occurred with respect to a Participant if the
Participant is part of a purchasing group that consummates the Change of
Control transaction. A Participant shall be deemed "part of a purchasing
group" for purposes of the immediately preceding sentence if the
Participant is an equity participant in the purchasing company or group
other than as a result of (y) passive ownership of less than five
percent of the voting capital stock or voting equity interests of the
purchasing company; or (z) equity participation in the purchasing
company or group that is otherwise not significant, as determined prior
to the Change of Control by a majority of the Continuing Directors.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Director" means any individual who is a member of the Board of
Directors of ALLTEL.
(g) "Disability" means a permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
(h) "Employee" means any full-time, nonunion, salaried employee of
ALLTEL or of any of ALLTEL's Subsidiaries. An individual whose only
employment relationship with ALLTEL is as a Director shall not be deemed to
be an Employee.
B-2
<PAGE> 34
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Fair Market Value" means the closing price of the Shares on the
New York Stock Exchange on the relevant date or, if there were no sales on
that date, the closing price on the next preceding date on which there were
sales.
(k) "Nonemployee Director" means a Director who is not an Employee.
(l) "Nonqualified Stock Option" or "Option" means an option to
purchase Shares granted in accordance with Article 6.
(m) "Option Price" means the price at which a Share may be purchased
upon exercise of an Option.
(n) "Participant" means a Nonemployee Director who holds one or more
outstanding Options.
(o) "Person" has the meaning given to that term in Section 3(a)(9) of
the Exchange Act and used in Section 13(d).
(p) "Shares" means the shares of Common Stock, $1.00 par value, of
ALLTEL.
(q) "Subsidiary" means (i) any corporation in which ALLTEL owns,
directly or indirectly, capital stock representing more than 50% of the
combined voting power of all classes of capital stock or (ii) any other
entity or enterprise (including, but not limited to, a partnership or a
joint venture) in which ALLTEL owns, directly or indirectly, equity
interests representing more than 50% of the combined voting power of all
classes of equity.
ARTICLE 3. ADMINISTRATION
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board of Directors, subject to the terms and provisions of the Plan. The Board
shall have the full power, discretion, and authority to interpret and administer
the Plan in a manner consistent with the provisions of the Plan; except that, in
no event shall the Board have the power to determine eligibility for
participation under the Plan or to determine the number, price, vesting period,
or timing of Options to be granted under the Plan (all of which determinations
are automatic under the provisions of the Plan), or any other determinations
that would cause the Plan not to comply with the "formula award" condition for
grants of Options specified in Rule 16b-3(c)(2)(ii) under the Exchange Act.
3.2 DECISIONS BINDING. All determinations and decisions made by the Board
pursuant to the provisions of the Plan, and all related resolutions or actions
of the Board, shall be final, conclusive, and binding on all Persons, including
ALLTEL, its stockholders, employees, Participants, and Participants' legal
representatives and beneficiaries.
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<PAGE> 35
ARTICLE 4. SHARES SUBJECT TO THE PLAN.
4.1 NUMBER OF SHARES. Subject to adjustment in accordance with Section 4.3,
the total number of Shares with respect to which Options may be granted under
the Plan is 1,000,000. The grant of an Option shall reduce the Shares available
for grant under the Plan by the number of Shares subject to that Option.
4.2 LAPSED AWARDS. If any Option granted under the Plan terminates,
expires, or lapses for any reason without being exercised, all Shares subject to
that Option again shall be available for grant under the Plan.
4.3 ADJUSTMENTS IN SHARES. In the event of any merger, reorganization,
consolidation, recapitalization, liquidation, stock dividend, stock split, share
combination, or other change in the corporate structure of ALLTEL affecting the
Shares, the Board may make such adjustments to the number of outstanding
Options, the number of Shares specified in Section 4.1, and to the numbers of
Options specified in Sections 6.1 and 6.2 as it determines, in its sole
discretion, to be appropriate to prevent dilution or enlargement of rights under
the Plan; except that no such adjustment shall be made if the effect of the
adjustment would cause the Plan not to comply with the "formula award" condition
for grants of Options specified in Rule 16b-3(c)(2)(ii) under the Exchange Act.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION.
5.1 ELIGIBILITY. Persons eligible to participate in the Plan are limited to
Persons who are Nonemployee Directors on the date of each grant of Options in
accordance with Article 6.
5.2 PARTICIPATION. Nonemployee Directors shall become Participants upon
their receipt of grants of Options in accordance with Article 6.
ARTICLE 6. NONQUALIFIED STOCK OPTIONS
6.1 INITIAL GRANT OF OPTIONS. Each Person who is a Nonemployee Director
immediately following ALLTEL's 1994 Annual Meeting of Stockholders shall be
granted an Option to purchase 10,000 Shares, effective on the date that annual
meeting is concluded.
6.2 SUBSEQUENT GRANTS OF OPTIONS. During the period after the date ALLTEL's
1994 Annual Meeting is concluded that the Plan is in effect, each Person who is
a Nonemployee Director immediately following each of ALLTEL's annual meetings of
stockholders held during calendar years after 1994 (other than a Person who
first becomes a Nonemployee Director on the date of any such annual meeting)
shall be granted an Option to purchase 2,000 Shares, effective as of the date
each such annual meeting of stockholders is concluded, and each Person who first
becomes a Nonemployee Director on any date other than the date on which ALLTEL's
1994 Annual Meeting of Stockholders is concluded shall be granted an Option to
purchase 10,000 Shares, effective as of the date such Person first becomes a
Nonemployee Director.
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<PAGE> 36
6.3 LIMITATION ON GRANT OF OPTIONS. Except for the Options specified in
Sections 6.1 and 6.2 herein, no Options shall be granted under the Plan. Options
granted under the Plan are not intended to be incentive stock options, as
defined in Section 422 of the Code.
6.4 OPTION AWARD AGREEMENT. Each Option granted in accordance with Sections
6.1 and 6.2 shall be evidenced by an Award Agreement that shall specify the
Option Price, the duration of the Option, the number of Shares subject to the
Option, the vesting schedule applicable to the Option, and such other provisions
as the Board shall determine.
6.5 OPTION PRICE. The Option Price applicable to Shares subject to an
Option granted in accordance with Sections 6.1 and 6.2 shall be the Fair Market
Value of a Share on the date the grant of the Option is effective.
6.6 DURATION OF OPTIONS. Each Option shall expire on the tenth anniversary
of the effective date of its grant, unless earlier terminated in accordance with
the Plan.
6.7 VESTING OF OPTIONS. Subject to the terms of the Plan, an Option granted
under the Plan and held by a Participant shall vest and become exercisable on
the earliest of:
(a) The day immediately preceding the date of the first ALLTEL annual
meeting of stockholders following the effective date of the grant of
the Option;
(b) The date of the death of the Participant;
(c) The date of the Disability of the Participant; or
(d) The date a Change of Control is deemed to have occurred.
6.8 TERMINATION OF DIRECTORSHIP. In the event a Participant's status as a
Participant terminates because he ceases to be a Nonemployee Director for any
reason other than as a result of death or Disability, all Options then held by
that former Participant that are not vested and exercisable on the date the
Participant ceased to be a Nonemployee Director automatically shall lapse and be
forfeited, and the former Participant shall be entitled to no further right or
benefit with respect to those Options. All Options then held by that former
Participant that are vested and exercisable on the date the Participant ceases
to be a Nonemployee Director shall remain exercisable for six months following
the date the Participant ceased to be a Nonemployee Director or until the date
those Options expire under Section 6.6, whichever period is shorter. In the
event of the death of a Participant, all Options then held by the decedent that
are exercisable immediately following the death shall remain exercisable until
the first anniversary of the date of death or until the date those Options
expire under Section 6.6, whichever period is shorter, by the Person who has
acquired the Participant's rights under the Option by will or by the laws of
descent and distribution. In the event of the Disability of a Participant, all
Options then held by the disabled Participant that are exercisable immediately
following the Disability (the "Disability Date") shall remain exercisable until
the first anniversary of the Disability Date or until the date those Options
expire under Section 6.6, whichever period is shorter, by the Participant or by
the Participant's legal representative. In the event a Change of Control is
deemed to have occurred, all Options then held by a Participant with respect to
whom a Change
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<PAGE> 37
of Control is deemed to have occurred that are exercisable immediately following
the Change of Control shall remain exercisable until the date those Options
expire under Section 6.6.
6.9 PAYMENT. Options shall be exercised by the delivery of a written notice
of exercise (in the form prescribed by or at the direction of the Board) to the
Secretary of ALLTEL, setting forth the number of Shares with respect to which
the Option is being exercised, accompanied by full payment for those Shares. The
Option Price payable upon exercise of any Option shall be paid either: (a) in
cash or (b) by tendering previously acquired Shares of which the Participant
exercising the Option has been the "beneficial owner" (as defined under Section
16 of the Exchange Act) for more than six months prior to the date of exercise
and that have a Fair Market Value on the date of exercise equal to the total
Option Price, or (c) by any combination of (a) and (b). As soon as practicable
after receipt of the foregoing written notice of exercise, full payment of the
Option Price, and full payment of all amounts due to satisfy any applicable tax
withholding requirements (which the Participant shall be required to pay in
cash, rather than by application of Shares otherwise deliverable upon exercise
of the Option), ALLTEL shall deliver to the Participant, in the Participant's
name, certificates evidencing the number of Shares purchased upon exercise of
the Option.
6.10 RESTRICTIONS ON SHARE TRANSFERABILITY. The Board shall impose such
restrictions on any Options and Shares acquired upon the exercise of any Options
under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable federal securities laws, the requirements of the
New York Stock Exchange, and any blue sky or state securities laws applicable to
the Options and Shares; except that no such restriction shall be imposed if the
effect of the restriction would cause the Plan not to comply with the "formula
award" condition for grants of Options specified in Rule 16b-3(c)(2)(ii) under
the Exchange Act.
6.11 NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order, as defined by the Code, Title I of the
Employee Retirement Income Security Act, or the rules thereunder. The
designation of a beneficiary with respect to an Option shall not constitute a
transfer for purposes of this Section 6.11.
ARTICLE 7. AMENDMENT, MODIFICATION, AND TERMINATION
7.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms
specified in this Section 7.1, the Board may terminate, amend, or modify the
Plan at any time and from time to time; except that the provisions set forth in
the Plan regarding the amount, price, timing, and vesting of Options granted
under the Plan may not be amended more than once every six months other than to
comport with changes in the Code, the Employee Retirement Income Security Act,
or the rules thereunder. Without any approval of the stockholders of ALLTEL
required by the Code, by the rules under Section 16 of the Exchange Act, by the
New York Stock Exchange, or by a regulatory body having jurisdiction with
respect hereto, no such termination, amendment, or modification may (a)
materially increase the total number or value of Shares that may be available
for grants of Options under the Plan, except in accordance with Section 4.3; (b)
B-6
<PAGE> 38
change the class of Participants eligible to participate in the Plan; or (c)
materially increase the benefits accruing to Participants under the Plan.
7.2 OPTIONS PREVIOUSLY GRANTED. Unless otherwise required by law, no
termination, amendment, or modification of the Plan may, in any material
respect, adversely affect any Option previously granted and then outstanding
under the Plan, without the prior written consent of the Participant holding the
Option.
ARTICLE 8. MISCELLANEOUS
8.1 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
8.2 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in the event of
the Participant's death (or who may exercise the Participant's rights hereunder
that are exercisable following the Participant's death). Each designation shall
revoke all prior designations by the Participant, shall be in a form prescribed
by the Board, and shall be effective only when filed by the Participant in
writing with the Board or its designate during the Participant's lifetime.
8.3 NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by ALLTEL's stockholders.
8.4 SHARES AVAILABLE. The Shares subject to Options granted under the Plan
may be either authorized but unissued Shares or Shares that have been or may be
reacquired by ALLTEL.
8.5 SUCCESSORS. All obligations of ALLTEL under the Plan with respect to
Options granted hereunder shall be binding on any successor of ALLTEL by merger,
consolidation, or other acquisition of all or substantially all of the business
or assets of ALLTEL.
8.6 REQUIREMENTS OF LAW AND STOCK EXCHANGE. The granting of Options under
the Plan shall be subject to all applicable laws, rules, and regulations of any
federal and state governmental agencies and of the New York Stock Exchange.
8.7 GOVERNING LAW. The Plan, and all agreements and instruments
contemplated thereby, shall be governed by and construed in accordance with the
laws of the State of Delaware.
B-7
<PAGE> 39
ALLTEL CORPORATION
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 21, 1994.
R
The undersigned hereby appoints Joe T. Ford, Max E. Bobbitt, and
O John E. Steuri, or any of them, with full power of substitution,
as proxies to vote all of the undersigned's shares of voting stock
X at the Annual Meeting of Stockholders on April 21, 1994, and at any
and all adjournments thereof, in accordance with and as more fully
Y described in the Notice of the Annual Meeting and the Proxy
Statement, receipt of which is acknowledged.
<TABLE>
<S> <C>
Election of Directors, Nominees:
Ben W. Agee, Joe T. Ford, Emon A.
Mahony, Jr.,
John P. McConnell, and Ronald Townsend.
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES ON THE REVERSE SIDE, BUT YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 40
<TABLE>
<C> <S> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of 2. Adopt the 1994 4. Approve Perfor-
Directors Stock Option mance Incentive
(see reverse) Plan for Compensation
Employees. Plan.
For, except vote withheld from the following nominee(s):
_____________________________________________________ 5. Approve Long-
3. Adopt the 1994 Term Performance
Stock Option Incentive Compen-
Plan for Non- sation Plan.
Employee
Directors. 6. Elect independent
auditors.
7. In their discretion,
to transact such
other business as
may properly come
before the meeting
or any adjournment
thereof.
SIGNATURE(S) _______________________________________________________ DATE __________
SIGNATURE(S) _______________________________________________________ DATE __________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
</TABLE>
