<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ALLTEL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
PROXY STATEMENT
1998 ANNUAL MEETING ANNOUNCEMENT
[ALLTEL LOGO]
<PAGE> 3
[ALLTEL LOGO]
ALLTEL CORPORATION
One Allied Drive * Little Rock, Arkansas 72202
Telephone (501) 905-8000
March 2, 1998
Dear Stockholder:
The 1998 Annual Meeting of Stockholders of ALLTEL Corporation will be held on
Thursday, April 23, 1998, 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 important that you complete and return your proxy as promptly as possible.
Sincerely,
/s/ Joe T. Ford
Joe T. Ford
Chairman and
Chief Executive Officer
<PAGE> 4
ALLTEL CORPORATION
Notice of Annual Meeting of Stockholders
April 23, 1998
To the Stockholders of
ALLTEL Corporation:
Notice Is Hereby Given That the 1998 Annual Meeting of Stockholders of
ALLTEL Corporation ("ALLTEL") will be held in Arkansas' Excelsior Hotel,
Ballroom Level, Three Statehouse Plaza, Little Rock, Arkansas 72201, on
Thursday, April 23, 1998, at 11:00 a.m. (local time), for the following
purposes:
1. To elect directors to the class whose term will expire in 2001.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof, including a stockholder proposal related to
ALLTEL's shareholder rights plan.
A copy of the Annual Report for the calendar year 1997 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 23, 1998, are entitled to notice of and to vote at the meeting or at
any adjournment thereof; holders of unexchanged stock certificates of 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 23, 1998.
Little Rock, Arkansas By Order of the Board of Directors,
March 2, 1998 FRANCIS X. FRANTZ,
Secretary
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> 5
ALLTEL Corporation
One Allied Drive
Little Rock, Arkansas 72202
PROXY STATEMENT
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 1998 Annual Meeting of Stockholders to be held on Thursday, April 23,
1998, 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 if it has not already been exercised.
This Proxy Statement is being mailed to stockholders beginning on March
2, 1998.
The close of business on February 23, 1998, 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 184,263,179 shares of Common Stock and 340,792
shares of voting Cumulative Preferred Stock; up to 21,740 additional shares of
Common Stock would be entitled to vote in the event the unexchanged stock
certificates of companies previously acquired by ALLTEL were exchanged for
ALLTEL certificates by April 23, 1998.
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 four
nominees for election as directors for the term ending in 2001 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 2001 and (b) 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
<PAGE> 6
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 eleven members
divided into three classes, two of which consist of four members and one of
which consists of three members. Messrs. Michael D. Andreas, Lawrence L.
Gellerstedt, III, Emon A. Mahony, Jr., and Ronald Townsend, currently members of
the class whose term expires in 1998, are nominees for election at the 1998
Annual Meeting for the term ending in 2001. Following the election of directors
at the Annual Meeting, the Board of Directors will consist of eleven members
divided into three classes, two of which will consist of four members (the class
of 2000 and the class of 2001), and one of which will consist of three members
(the class of 1999).
Unless otherwise directed, the persons named in the accompanying form
of proxy will vote that proxy for the election of the four persons named below,
with each to hold office for a term of three years until the 2001 Annual Meeting
or until his or her 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 1999 and 2000, 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 (which, in the case of
each of Messrs. Joe T. Ford and Emon A. Mahony, is the year in which his
directorship commenced with ALLTEL's predecessor company, Allied Telephone
Company). Mr. Scott T. Ford is the son of Mr. Joe T. Ford. On December 4, 1996,
Mr. Michael D. Andreas was indicted by a federal
2
<PAGE> 7
grand jury in U.S. District Court for the Northern District of Illinois charging
Mr. Andreas and two former division presidents of Archer Daniels Midland Company
with conspiracy to fix prices and to allocate sales volumes for the feed
additive lysine. Mr. Andreas and the other two officers pleaded not guilty to
the charges.
- --------------------------------------------------------------------------------
NOMINEES - TERM ENDING 2001
- --------------------------------------------------------------------------------
Michael D. Andreas, Prior to October 17, 1996, Vice Chairman and Executive Vice
President and director of Archer Daniels Midland Company, Decatur, Illinois.
Director of ALLTEL since 1995. Member of Compensation and Nominating Committees.
Age 49.
Lawrence L. Gellerstedt, III, Chairman and director of Beers Construction
Company, Atlanta, Georgia; prior to January 1, 1998, Chairman and Chief
Executive Officer of Beers Construction Company; prior to June 1994, President
and Chief Executive Officer of Beers Construction Company. Director of AGL
Resources Inc., SunTrust Bank, Atlanta, and Rock Tenn Company. Director of
ALLTEL since 1994. Member of Compensation and Audit Committees. Age 41.
3
<PAGE> 8
Emon A. Mahony, Jr., Chairman of the Board of Arkansas Oklahoma Gas Corporation,
Fort Smith, Arkansas; Vice President, Secretary and director of Mahony
Corporation; Partner in EAM LLC; prior to July 1996, President of Arkansas
Oklahoma Gas Corporation. Director of ALLTEL since 1980. Member of Audit and
Executive Committees and Chairman of Pension Trust Investment Committee. Age 56.
Ronald Townsend, Communications Consultant, Jacksonville, Florida; prior to
October 1, 1996, President of Gannett Television Group, Gannett Co., Inc.,
Arlington, Virginia. Director of NationsBank Corporation. Director of ALLTEL
since 1992. Chairman of Nominating Committee and member of Pension Trust
Investment Committee. Age 56.
- --------------------------------------------------------------------------------
DIRECTORS -- TERM ENDING 1999
- --------------------------------------------------------------------------------
John R. Belk, President and Chief Operating Officer of Belk Stores Services,
Inc., Charlotte, North Carolina (a department store retailer); prior to February
24, 1997, Senior Vice President of Belk Stores Services, Inc. Director of
Ruddick Corporation. Director of ALLTEL since 1996. Member of Audit Committee.
Age 38.
4
<PAGE> 9
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 Energy Corp. Director of ALLTEL since 1990.
Chairman of Compensation Committee and member of Executive Committee. Age 67.
William H. Zimmer, Jr., Retired; prior to July 1, 1995, Vice Chairman and
director of Cincinnati Financial Corporation, Cincinnati, Ohio (an insurance
holding company). Director of ALLTEL since 1985. Chairman of Audit Committee and
member of Executive and Pension Trust Investment Committees. Age 67.
- --------------------------------------------------------------------------------
DIRECTORS -- TERM ENDING 2000
- --------------------------------------------------------------------------------
Joe T. Ford, Chairman of the Board and Chief Executive Officer of ALLTEL.
Director of The Dial Corporation. Director of ALLTEL since 1960. Chairman of
Executive Committee. Age 60.
Scott T. Ford, President of ALLTEL since April 24, 1997; from January 31, 1996
until April 24, 1997, Executive Vice President of ALLTEL; prior to January 31,
1996, Assistant to the Chairman, Stephens Group, Inc. Director of ALLTEL since
1996. Age 35.
5
<PAGE> 10
John P. McConnell, Chairman and Chief Executive Officer and director of
Worthington Industries, Inc., Columbus, Ohio (engaged in metal processing and
manufacturing); from June 1993 until September 1996, Vice Chairman and Chief
Executive Officer and director of Worthington Industries, Inc.; from June 1992
until June 1993, Vice Chairman of Worthington Industries, Inc. Director of
ALLTEL since 1994. Member of Compensation and Nominating Committees. Age 44.
Josie C. Natori, Chief Executive Officer of The Natori Company, New York, New
York (upscale fashion house with offices in Paris, New York, and Manila).
Director of Manhattanville College, the Educational Foundation of Fashion
Industries, The Philippine American Foundation, KNJ International, JN Concepts,
Inc., and Calyx & Corolla. Trustee of Asia Society & Asian Cultural Council.
Director of ALLTEL since 1995. Member of Nominating Committee. Age 50.
During 1997, there were five meetings of ALLTEL's Board of Directors.
All of the directors attended 75% or more of the meetings of the Board and Board
Committees on which they served; attendance averaged 93% 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 three meetings during 1997. This Committee
meets with ALLTEL's independent public accountants, internal auditors, financial
executives, and general counsel; reviews the scope and results of audits by the
internal auditors and the
6
<PAGE> 11
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 ALLTEL's
compliance program; 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 1997, 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 one meeting during 1997. 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Set forth below is certain information, as of February 23, 1998, 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. 16,627,920 shares (sole 9.02
111 Center Street voting and investment
Little Rock, AR 72201 power)
Common Stock Cincinnati Financial 12,962,388 shares (sole 7.03
Corporation voting and investment
P.O. Box 14596 power)
Cincinnati, OH 45250
</TABLE>
7
<PAGE> 12
Set forth below is certain information, as of February 23, 1998, as to shares of
each class of ALLTEL equity securities beneficially owned by each of the
directors, each of the executive officers identified in the Summary Compensation
Table on page 16, 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>
Name of Amount and Nature Percent of Class
Beneficial Owner of Beneficial Ownership (if 1 % or more)
---------------- ----------------------- ----------------
<S> <C> <C> <C>
Directors Michael D. Andreas 56,871(a) --
John R. Belk 16,400(a) --
Lawrence L. Gellerstedt, III 18,725(a) --
W. W. Johnson 33,567(a) --
Emon A. Mahony, Jr. 72,200(b)(c) --
John P. McConnell 19,500(b) --
Josie C. Natori 17,038(a) --
Ronald Townsend 16,000(a) --
William H. Zimmer, Jr. 24,394(a) --
Named Joe T. Ford 915,801(d) --
Executive Scott T. Ford 87,214(d) --
Officers Tom T. Orsini 71,846(d) --
Francis X. Frantz 186,725(d) --
Dennis J. Ferra 113,315(d) --
All Directors
and Executive
Officers 1,996,878(e) 1.08
as a Group
</TABLE>
- ----------------
(a) Includes shares that the indicated persons have the right to acquire
(through the exercise of options) on or within 60 days after February
23, 1998, as follows: Michael D. Andreas (16,871); John R. Belk
(15,500); Lawrence L. Gellerstedt, III (18,725); W.W. Johnson (33,567);
Josie C. Natori (17,038); Ronald Townsend (15,500); and William H.
Zimmer, Jr. (15,500).
(b) Includes 17,500 shares that each of the indicated persons has the
right to acquire (through the exercise of options) on or within 60 days
after February 23, 1998.
(c) Includes 1,500 shares held by Mr. Mahony's spouse, with respect to
which Mr. Mahony has shared investment power and no voting power.
(d) Includes shares that the indicated persons have the right to acquire
(through the exercise of options) on or within 60 days after February
23, 1998, as follows: Joe T. Ford (337,000), Scott T. Ford (41,000),
Tom T. Orsini (-0-), Francis X. Frantz (168,000), and Dennis J. Ferra
(54,000).
(e) Includes a total of 1,019,560 shares that members of the group have the
right to acquire (through the exercise of options) on or within 60 days
after February 23, 1998.
8
<PAGE> 13
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, AT&T Corp., Bell Atlantic Corporation, BellSouth
Corporation, Cincinnati Bell Inc., Electronic Data Systems Corporation, Frontier
Corporation, GTE Corporation, MCI Communications Corporation, SBC Communications
Ind., Sprint Corporation, and U S West, Inc. (the "Peer Index"). 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 returns are
indicated.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLTEL 100 127.26 134.36 136.19 149.98 202.58
- -------------------------------------------------------------------------------------
S&P 500 100 110.03 111.53 153.30 188.40 251.17
- -------------------------------------------------------------------------------------
Peer Index 100 112.82 106.92 155.07 155.05 211.71
- -------------------------------------------------------------------------------------
</TABLE>
*Assumes that $100 was invested on the last trading day of 1992 and that all
dividends were reinvested.
9
<PAGE> 14
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
This report provides information concerning compensation determinations
by ALLTEL's Compensation Committee (the "Committee") for compensation reported
for 1997 with respect to ALLTEL's Chief Executive Officer and ALLTEL's other
executive officers including the officers named in the compensation tables in
this Proxy Statement. In connection with those determinations, the Committee
reviewed compensation information from a group of 26 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 9.
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 1997 were approximately 5% below the corresponding mean base
salaries of the comparison group.
The Committee evaluated Mr. Ford's base salary on the basis of Mr.
Ford's performance in 1996 (by reference to ALLTEL's "total return" to ALLTEL
stockholders during 1996 of 9.9%) and a comparison of Mr. Ford's 1996 base
salary to the mean salary of chief executive officers in the comparison group
(without assigning a precise weighting to the foregoing components). The
Committee believes that the greater portion of total compensation (annual salary
10
<PAGE> 15
plus annual incentive plus long-term incentive awards) is determined by the
incentive elements of an individual's aggregate compensation rather than by
salary. Payments under these incentive plans are based upon the achievement of
annual and long-term performance goals and, accordingly, are "at risk."
Therefore, Mr. Ford's salary was not increased for 1997, as reflected in the
Summary Compensation Table on page 16.
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 (calculated as a percentage of each executive officer's base
salary) if ALLTEL achieves certain financial performance criteria established by
the Committee at the beginning of each year. The Committee establishes the
criteria at three levels, "minimum","target", and "maximum" and, for each
executive officer, corresponding percentages of base salary for each level so
that, if ALLTEL achieves the "target" level, the executive officer's total
direct compensation (base salary plus bonus) will approximate the mean total
direct compensation of corresponding officers of the comparison group.
For 1997, the financial performance criteria were based exclusively on
earnings per share from operations, and the target level earnings per share from
operations amount was $2.11.
As reflected in the Summary Compensation Table, Mr. Ford received a
$715,000 cash incentive payment under the Incentive Plan for 1997, which
reflects ALLTEL's achievement of the financial performance criteria at a level
between the target and maximum levels (calculated by interpolation).
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
(calculated as a percentage of each
11
<PAGE> 16
executive officer's average annual salary during that three-year period) if
ALLTEL achieves any of three prescribed levels of growth in earnings per share
from operations during that period, a "minimum" level, a "target" level, and a
"maximum" level. The Committee believes this plan design focuses ALLTEL's
executive officers on ALLTEL's long-term financial success.
The Committee establishes the amounts of those potential payments so
that, if ALLTEL achieves the target level, the executive officers will receive
net total compensation (base salary plus Incentive Plan and Long-Term Incentive
Plan payments and stock option grants) that 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 1995-1997, the target level of growth in
earnings per share from operations established by the Committee was 12.8%. As
reflected in the Summary Compensation Table, Mr. Joe T. Ford received a $390,000
cash incentive payment under the Long-Term Incentive Plan for 1997 with
respect to the three-year measurement period of 1995-1997, which reflects
ALLTEL's achievement of the financial performance criteria at the maximum level.
ALLTEL's 1994 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 and assist in retaining management personnel who
add a high degree of value to ALLTEL that result in long-term creation of
stockholder value because options granted to ALLTEL executive officers will
benefit them only if ALLTEL's stock price appreciates after the date of the
grant. The Committee granted options to ALLTEL's executive officers on January
30, 1997, and on September 30, 1997, including Mr. Joe T. Ford and the other
officers listed in the Summary Compensation Table in the respective amounts
indicated in that table and in the Option Grants in 1997 table on page 17. The
Committee determined the respective numbers of options granted to Mr. Joe T.
Ford and the other executive officers on the basis of the Committee's subjective
judgment of the ongoing value that each of those executive officers would
provide to ALLTEL.
12
<PAGE> 17
DEDUCTIBILITY LIMITS
Section 162(m) of the Internal Revenue Code, as added by the Revenue
Reconciliation Act of 1993, generally does not allow a deduction 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. The Committee's
policy is to qualify performance-based compensation for this exception, to the
extent possible, 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
W.W. Johnson, Chairman
Michael D. Andreas
Lawrence L. Gellerstedt, III
John P. McConnell
MANAGEMENT COMPENSATION
COMPENSATION OF DIRECTORS
Directors who are not officers of ALLTEL receive $24,000 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 $3,000. Directors may elect to
defer all or a part of their compensation under ALLTEL's deferred compensation
plan for directors.
13
<PAGE> 18
Under the 1994 Stock Option Plan for Nonemployee Directors, as amended
(the "Director Plan"), immediately following the 1994 Annual Meeting of
Stockholders on April 21, 1994, each nonemployee director received the initial
grant of an option to purchase 10,000 shares of Common Stock at an exercise
price of $26.25 per share (the closing market price of the Common Stock on that
date). Similarly, each nonemployee director who first becomes a director after
April 21, 1994, also automatically receives the initial grant of an option to
purchase 10,000 shares of Common Stock on the date the person first becomes a
nonemployee director, at an exercise price equal to the closing market price of
the Common Stock on that date. The Director Plan also provides for the automatic
grant, following the conclusion of each annual meeting of stockholders, of an
option to purchase 4,500 shares of Common Stock to each nonemployee director
(other than a director who was elected at an annual meeting).
The option price of options granted under the Director Plan is the fair
market value of the Common Stock on the date the option is granted and is
payable in cash, already-owned Common Stock, or a combination of both. The
options vest and become exercisable on the day immediately preceding the next
annual meeting of stockholders following the date of grant or, if earlier, on
the death or disability of the holder or the occurrence of a "change of
control."
If a person ceases to be a nonemployee director, all vested options
held by the person continue to be exercisable for a period of six months or the
earlier expiration of the ten-year term of the option. Any options that have not
vested by the time the person ceases to be a nonemployee director may not
thereafter be exercised. The Director Plan will continue until the 1,000,000
shares of Common Stock available under the plan are issued, unless the plan is
earlier terminated by the Board of Directors.
ALLTEL's Directors' Retirement Plan was terminated effective January
30, 1997. Under the terms of that termination, each director who was a director
on January 30, 1997, and retires thereafter is entitled to receive, commencing
on his retirement, an annual benefit, payable for his life only, equal to 10% of
the $24,000 annual base directors' fee in effect at the time the plan was
terminated for each
14
<PAGE> 19
year of his service prior to January 30, 1997 (rounded up to the next whole
year) up to five years and 5% of the $24,000 annual base fee for each year of
that service in excess of five years, up to a maximum annual benefit of $24,000.
A director is considered to have "retired" if he ceases to be a director for any
reason other than death or removal in accordance with applicable law. The
termination of the Directors' Retirement Plan did not affect the benefits
payable to any director who retired prior to January 30, 1997.
In lieu of the foregoing future retirement benefit, each director who
was a director on January 30, 1997, had the opportunity to elect to receive
either a one-time grant of a fully-vested option to purchase Common Stock under
the Director Plan at an option price of $33.875 per share (the closing price of
the Common Stock on February 14, 1997) with a value at the time of grant
(calculated using the Black-Sholes method) approximately equal to the value of
the director's retirement benefit under the Directors' Retirement Plan or a
credit to his account under ALLTEL's deferred compensation plan for directors in
an amount approximately equal to the value of the director's retirement benefit
under the Directors' Retirement Plan.
Michael D. Andreas, Lawrence L. Gellerstedt, III, W.W. Johnson, and
Josie C. Natori elected to receive stock options under the Director Plan in lieu
of a benefit under the terminated Directors' Retirement Plan and were granted
options to purchase 1,371, 1,225, 16,067, and 1,538 shares of Common Stock,
respectively. John R. Belk, Emon A. Mahony, John P. McConnell, Ronald Townsend,
and William H. Zimmer elected to receive credits of $3,625, $65,186, $7,850,
$31,794, and $134,522, respectively, to their accounts under ALLTEL's deferred
compensation plan for directors in lieu of a benefit under the terminated
Directors' Retirement Plan.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table shows the compensation, for each of the last three
years, of ALLTEL's Chief Executive Officer and of ALLTEL's other four most
highly compensated executive officers as of December 31, 1997:
15
<PAGE> 20
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Awards Payouts
------ -------
Other Long-Term
Annual Securities Incentive All Other
Compen- Underlying Plan Compen-
Name Principal Position Year Salary ($) Bonus ($) sation ($) Options (#) Payouts ($) sation ($)
- ---- ------------------ ---- ---------- -------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joe T. Ford Chairman and CEO 1997 650,000 715,000 -0- 525,000 390,000 1,481,930(a)
Chairman and CEO 1996 650,000 682,500 -0- 80,000 390,000 192,185
Chairman and CEO 1995 650,000 585,000 -0- -0- 234,375 251,818
Scott T. Ford President 1997 375,000 386,719 -0- 465,000 160,000 78,290(b)
Executive Vice President 1996 320,000 380,000 -0- 70,000 -0- -0-
Tom T. Orsini Executive Vice President 1997 275,000 226,875 -0- 230,000 130,500 663,907(b)
Executive Vice President 1996 320,000 240,000 -0- 20,000 126,750 73,497
Senior Vice President-Fin,
and Corp. Dev. 1995 275,000 185,625 -0- -0- 72,442 92,270
Francis X. Frantz Senior Vice President-External
Affairs and Genera) Counsel 1997 300,000 247,500 -0- 230,000 132,000 594,432(b)
Senior Vice President-External
Affairs and General Counsel 1996 295,000 199,125 -0- 20,000 126,000 69,242
Senior Vice President-External
Affairs and General Counsel 1995 285,000 192,375 -0- -0- 78,000 86,380
Dennis J. Ferra Senior Vice President-CEO 1997 300,000 247,500 -0- 180,000 127,500 316,156(b)
Senior Vice President-CEO 1996 285,000 192,375 -0- 20,000 118,500 51,764
Senior Vice President-Acct.
and Admin. 1995 265,000 178,875 -0- -0- 72,500 63,024
</TABLE>
- ------------------
(a) Includes the following amounts for Mr. Joe T. Ford: employer
contributions to the ALLTEL Profit Sharing Plan and ALLTEL Thrift Plan
in the amount of $12,800, allocated benefits under the ALLTEL Benefit
Restoration Plan in the amount of $125,000, dollar amount of premiums
paid under supplemental split dollar life insurance policies in the
amount of $10,395, and "above-market" earnings on deferred compensation
in the amount of $1,333,735 (payment of which is deferred until the
deferred compensation is paid). The amount of "above market" earnings
on deferred compensation was substantially higher for 1997 than in 1996
and 1995 because of ALLTEL's large stock price appreciation during 1997
of 30.9%.
(b) Includes the following amounts for Messrs. Scott T. Ford, Orsini,
Frantz, and Ferra: allocated benefits under the ALLTEL Benefit
Restoration Plan in the respective amounts of $47,481, $38,637,
$37,199, and $36,038, employer contributions under the ALLTEL Profit
Sharing Plan and ALLTEL Thrift Plan in the amount of $12,800 in each
case, dollar amount of premiums paid under supplemental split dollar
life insurance policies in the respective amounts of $-0-, $682, $561,
and $525, and "above-market" earnings on deferred compensation in the
respective amounts of $18,009, $611,788, $543,872, and $266,793
(payment of which is deferred until the deferred compensation is paid).
The amount of "above market" earnings on deferred compensation was
substantially higher for 1997 than in 1996 and 1995 because of ALLTEL's
large stock price appreciation during 1997 of 30.9%.
OPTION GRANTS IN 1997
The following table shows information Concerning stock option grants during 1997
to ALLTEL's Chief Executive Officer and to ALLTEL's other four most highly
compensated executive officers:
16
<PAGE> 21
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------ ---------------------------------------------------
Number of % of Total
Securities Options 5% 10%
Underlying Granted --------------------- -----------------------
Options to Exercise
Granted Employees or Base Price Expiration Stock Dollar Stock Dollar
Name (#) in 1997 ($/Sh) Date Price ($) Gains ($) Price ($) Gains ($)
---- --- ------- ------ ---- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joe T. Ford 75,000 1.49 32.00 1/29/07 52.125 1,509,347 83.000 3,824,982
450,000 11.73 34.50 9/30/07 56.197 9,763,589 89.484 24,742,852
Scott T. Ford 65,000 1.69 32.00 1/29/07 52.125 1,308,101 83.000 3,314,984
400,000 10.43 34.50 9/30/07 56.197 8,678,746 89.484 21,993,646
Tom T. Orsini 30,000 .78 32.00 1/29/07 52.125 603,739 83.000 1,529,993
200,000 5.22 34.50 9/30/07 56.197 4,339,373 89.484 10,996,823
Francis X. Frantz 30,000 .78 32.00 1/29/07 52.125 603,739 83.000 1,529,993
200,000 5.22 34.50 9/30/07 56.197 4,339,373 89.484 10,996,823
Dennis J. Ferra 30,000 .78 32.00 1/29/07 52.125 603,739 83.000 1,529,993
150,000 3.91 34.50 9/30/07 56.197 3,254,530 89.484 8,247,617
Dollar Gains of
All ALLTEL $ 3,696,417,000 $ 9,367,317,000
Stockholders* $ 3,985,150,000 $ 10,099,070,000
</TABLE>
- -----------
*Total dollar gains are based on the indicated assumed annual rates of
appreciation in the two option exercise prices, in each case calculated on the
183,672,880 shares of Common Stock outstanding as of December 31, 1997.
OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
The following table shows information concerning stock option exercises
during 1997 by ALLTEL's Chief Executive Officer and by ALLTEL's other four
most highly compensation executive officers:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Options at 1997 Year-End Options at 1997 Year-End
Name on Exercise (#) Value Realized ($) Exercisable/Unexercisable Exerciseable/Unexercisable ($)
- ---- --------------- ------------------ ------------------------- ------------------------------
<S> <C> <C> <C> <C>
Joe T. Ford 90,405 1,941,784 312,595/609,000 6,151,637/4,478,063
Scott T. Ford -0- -0- 14,000/521,000 135,625/3,756,563
Tom T. Orsini 88,016 1,064,829 14,000/256,000 158,375/1,856,000
Francis X. Frantz 16,000 364,687 158,000/256,000 3,169,813/1,856,000
Dennis J. Ferra 9,984 184,080 112,016/206,000 2,000,432/1,527,875
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
The following table shows information concerning the awards made during
1997 with respect to the three-year measurement period 1997 through 1999 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:
17
<PAGE> 22
<TABLE>
<CAPTION>
Estimated Future Payouts*
---------------------------
Performance Period
Name Until Payout Minimum ($) Target ($) Maximum ($)
- ---- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
Joe T. Ford 3 years 227,500 455,000 682,500
Scott T. Ford 3 years 112,500 225,000 337,500
Tom T. Orsini 3 years 68,750 137,500 206,250
Francis X. Frantz 3 years 75,000 150,000 225,000
Dennis J. Ferra 3 years 75,000 150,000 225,000
</TABLE>
- --------------
* Awards will be paid upon completion of the 1999 year on the basis of ALLTEL's
performance during the three year period 1997-1999 as determined by ALLTEL's
attainment of prescribed corporate and unit performance targets. In January
1997, 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 1997-99 period). The estimated future payouts
shown above assume that each executive officer's average base salary during the
1997-99 period would be the same as his base salary during 1997.
EXECUTIVE COMPENSATION AGREEMENT
Mr. Joe T. Ford is employed by ALLTEL for a period extending to July 1,
2002, under a contract with ALLTEL that provides 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 Mr. Ford) or should a change of control of ALLTEL occur, the contract
provides that Mr. Ford 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 Mr. Ford 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 the calendar year following the calendar year
in which the disability occurs and of a death benefit in the amount equal to Mr.
Ford's compensation for one year. Assuming compensation at the 1997 level and
retirement at the
18
<PAGE> 23
expiration of the contract period, the estimated annual benefit to be received
by Mr. Ford is $1,099,798. The contract also provides that Mr. Ford may retire
any time prior to the expiration of the contract period. If Mr. Ford were to
elect early retirement, he would be entitled to retirement benefits under his
contract reduced in accordance with a formula. The contract provides that those
retirement benefits are in lieu of payments under ALLTEL's defined benefit
pension plan described below. The contract provides for payment of survivorship
benefits to Mr. Ford's wife, who would receive for her life 50% of the annual
retirement compensation to which Mr. Ford is entitled.
CHANGE IN CONTROL AGREEMENTS
ALLTEL is a party to agreements with each of Messrs. Scott T. Ford, Tom
T. Orsini, Francis X. Frantz, and Dennis J. Ferra which provide that if,
following a "change in control," the executive's employment terminates within
twelve months (unless the termination is as a result of death, by ALLTEL as a
result of the executive's disability or for "cause", or by the executive without
"good reason") or if, after remaining employed for twelve months, the
executive's employment terminates during the following three-month period
(unless the termination is a result of death or is by ALLTEL as a result of the
executive's disability) (each of the foregoing events being referred to as a
"Payment Trigger"), ALLTEL is required to pay the executive an amount equal to
three times the sum of his base salary as in effect immediately prior to the
change in control or Payment Trigger and the maximum amounts he could have
received under the Incentive Plans for the period commencing coincident with or
most recently prior to the period in which the change in control or Payment
Trigger occurs, but reduced by any other cash severance paid to him. ALLTEL also
is required to make an additional payment to the executive in the amount of any
excise tax under Section 4999 of the Internal Revenue Code as a result of any
payments or distributions by ALLTEL plus the amount of all additional income tax
payable by him as a result of such additional payments. Payments under the
agreements are covered by ALLTEL's "grantor trust" described below.
19
<PAGE> 24
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, each of Messrs. Scott T. Ford, Orsini, Frantz, and
Ferra would have each period of post-January 1, 1988, service credited at 1% of
compensation, plus .4% of that part of his compensation that exceeds the Social
Security Taxable Wage Base for such year. Service prior to 1988, if any, would
be credited on the basis of a percentage of his 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, each
of Messrs. Frantz, Orsini, and Ferra would receive an additional credit of .25%
for each pre-1988 year of service after age 55, subject to a maximum of 10
years' such credit, and would have added to his annual pension benefits an
amount equal to .4% of the amount by which his pre-1988 career average annual
base salary (three highest years) exceeds his Social Security covered
compensation, multiplied by his years of pre-1988 credited service. Various
benefit payment options are available on an actuarially equivalent basis,
including joint and survivor benefits. Compensation included in the pension base
includes cash awards under the Incentive Plans.
Assuming annual increases in compensation in future years of 5% per
year, continuation in the position he held during 1997, and retirement at age
65, the estimated annual benefit under the pension plan for each of Messrs.
Scott T. Ford, Orsini, Frantz, and Ferra is $55,629, $63,615, $55,010, and
$61,674, respectively. (Mr. Joe T. Ford, the only other executive included in
the Summary Compensation Table on page 16, is not a participant in and is not
entitled to benefits under the pension plan.) Amounts shown are straight life
annuity amounts and include amounts payable under the defined benefit portion of
the ALLTEL Benefit Restoration Plan.
20
<PAGE> 25
BENEFIT RESTORATION PLAN
Federal laws place certain limitations on pensions that may be paid
under federal income tax qualified plans. The ALLTEL Benefit Restoration Plan
provides for the payment to certain employees outside tax-qualified plans of any
amounts not payable under the tax-qualified plans by reason of limitations
specified in the Internal Revenue Code. Currently, under the ALLTEL Benefit
Restoration Plan, Messrs. Joe T. Ford, Scott T. Ford, Orsini, Frantz, and Ferra
are eligible for accruals with respect to benefits not payable under ALLTEL's
defined contribution plans, and Messrs. Scott T. Ford, Orsini, Frantz, and Ferra
are eligible for accruals with respect to benefits not payable under ALLTEL's
defined benefit pension plan. Amounts accrued under the defined contribution
portion of these plans in 1997 for each of these executives are included in the
Summary Compensation Table on page 16.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ALLTEL maintains a non-qualified supplemental executive retirement plan
(the "SERP") in which certain employees designated by the Board of Directors,
including Messrs. Scott T. Ford, Orsini, Frantz, and Ferra, participate. The
SERP provides with respect to Messrs. Scott T. Ford, Orsini, Frantz, and Ferra
that, upon normal retirement at age 65 (or, if earlier, following a Payment
Trigger that occurs after the participant's early retirement date), the
executive will receive an annual benefit under the SERP, payable as a single
life annuity, equal to 60% of (A) if a Payment Trigger has not occurred, the
greater of (i) his total compensation for the calendar year preceding his
retirement, or (ii) his average annual total compensation for the three calendar
years preceding his retirement; or (B) if a Payment Trigger has occurred, the
greater of (i) the amount determined under (A) above (as if a Payment Trigger
had not occurred), or (ii) the sum of (a) his annual base salary in effect
immediately prior to the change in control (as defined in the change in control
agreements described above), the Payment Trigger, or his retirement date,
whichever is greatest, plus (b) the maximum amounts payable to him under
specified incentive compensation plans for the period coincident with or most
recently prior to the
21
<PAGE> 26
change in control, the Payment Trigger, or his retirement date, whichever is
greatest. The amount of the normal retirement benefit under the SERP is not
determined based on years of service.
Each of Messrs. Scott T. Ford, Orsini, Frantz, and Ferra also is
entitled to an early retirement benefit under the SERP if he retires before
becoming entitled to the normal retirement benefit but after attaining the age
of 60 with 15 or more years of service or age 55 with 20 or more years of
service or after a Payment Trigger occurs (regardless of his years of service).
The early retirement benefit is calculated the same as the normal retirement
benefit, except that the percentage used in the calculation is 45% (increased
ratably for the number of years of his service after the early retirement date,
up to a maximum of 60%) rather than 60%.
If Messrs. Scott T. Ford, Orsini, Frantz, or Ferra dies after benefits
commence, his surviving spouse will receive 50% of the amount that he was
receiving prior to his death. If he dies while employed, his surviving spouse
will receive 50% of the amount that he would have received if he had retired on
the day before death. Following retirement, each of Messrs. Scott T. Ford,
Orsini, Frantz, and Ferra (and his spouse and dependents) also is entitled to
receive post-retirement medical benefits under the SERP together with
reimbursement for any additional taxes incurred as a result of the benefits
being taxed less favorably than they would have been if received by other
retired employees. Payments to Messrs. Scott T. Ford, Orsini, Frantz, and Ferra
under the SERP are covered by ALLTEL's "grantor trust" described below.
The retirement benefits payable under the SERP are reduced by benefits
(other than benefits attributable to employee contributions) paid under other
ALLTEL qualified and nonqualified benefit plans other than the Allied Telephone
Company Profit Sharing Plan. The benefits under the SERP are not subject to
offset for Social Security. Assuming annual increases in compensation in future
years of 5% per year, retirement at age 65, and based on estimates of the
benefits that reduce the retirement benefits payable under the SERP, the
estimated normal retirement benefit under the SERP payable for each of Messrs,
Scott T. Ford, Orsini,
22
<PAGE> 27
Frantz, and Ferra is $24,889, $163,743, $124,225, and $90,577, respectively.
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. 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).
STOCKHOLDER PROPOSAL
- --------------------------------------------------------------------------------
Stockholders who intend to present proposals at the 1999 Annual
Meeting, and who wish to have those proposals included in ALLTEL's Proxy
Statement for the 1999 Annual Meeting, must be certain that those proposals are
received by the Corporate Secretary at One Allied Drive, Little Rock, Arkansas
72202, prior to November 2, 1998. Such proposals must meet the requirements set
forth in the rules and regulations of the SEC in order to be eligible for
inclusion in the Proxy Statement for ALLTEL's 1999 Annual Meeting.
- --------------------------------------------------------------------------------
Mr. John R. Lambdin, 41259 Whitney Road, Lagrange, Ohio 44050, the
beneficial owner of 1,126 shares of Common Stock, has proposed the adoption of
the following resolution and has furnished the following statement of support
for his proposal:
Resolved, that the shareholders of ALLTEL Corporation request the Board
of Directors to refrain from adopting any future shareholder rights plan, rights
agreement, or other device
23
<PAGE> 28
commonly known as a "poison pill," without the prior approval of the
stockholders at an annual or special meeting, and to redeem or terminate any
such plan, agreement or device which may be in effect at the adoption of this
resolution.
Statement of Support
A poison pill is an anti-takeover device, which effectively prevents a
change in control of a company without the approval of the Board of Directors.
It forces potential acquirers to negotiate acquisitions with management, instead
of making an offer directly to the stockholders.
The stockholders, who own the Company, should have the right to decide
what is a fair price for their holdings. The directors and managers, who serve
as our agents, should not usurp that right. In addition, by forcing potential
acquirers to negotiate with the Board, poison pills have a tendency to entrench
management, to insulate it from accountability, and to make management less
responsive to the views of stockholders. Stockholders should have the right to
decide whether the risk of such consequences may be warranted by special
circumstances that might make it appropriate to adopt a poison pill.
In this regard, proposals to redeem or allow shareholder votes on
poison pills have received the support of a majority of the shareholders at
fourteen publicly traded American companies within the last two years. According
to the Investor Responsibility Research Center (IRRC), these include CSX,
Wellman, the Fleming Companies, Columbia/HCA, Flour, Bausch & Lomb, J.C. Penney,
Lukens, Consolidated Natural Gas, Harrah's Entertainment, Baker Hughes,
Weyerhaeuser and Rowan.
Of the proposals to redeem or allow votes on poison pills within the
IRRC research universe, the proponents won 53% of the votes cast during 1996 and
1997. And these results do not take account of many companies that have decided
to redeem or allow votes on poison pills without action by their stockholders.
24
<PAGE> 29
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE PROPOSAL
In January 1997, the Board of Directors amended and extended the ALLTEL
shareholder rights plan originally adopted in 1987, to protect ALLTEL's
stockholders against abusive takeover tactics and to ensure that each ALLTEL
stockholder would be treated fairly in the event of an unsolicited offer to
acquire ALLTEL. The Board believes that the continuation of the ALLTEL
shareholder rights plan is in the best interests of ALLTEL and its stockholders.
The ALLTEL shareholder rights plan is not designed or intended to, nor
would it, prevent an unsolicited, non-abusive offer to acquire ALLTEL at a fair
price. Rather, the plan is designed and intended to enhance the Board's ability
to discharge its fiduciary duty by protecting both a stockholder's right to
retain an equity investment in ALLTEL and also the full value of that investment
without preventing an offer to acquire ALLTEL at a fair price and upon terms
that treat all stockholders fairly. The Board's ability to achieve this
objective by negotiating with a potential acquiror on behalf of all stockholders
is significantly greater than the ability of stockholders individually.
The consequences of shareholder rights plans were most recently
validated by a study released by Georgeson & Company Inc., in November 1997,
which found that: (i) premiums paid to acquire companies with shareholder rights
plans were on average eight percentage points higher than premiums paid for
target companies that did not have shareholder rights plans; (ii) the presence
of a shareholder rights plan at a target company did not increase the likelihood
of the defeat of a hostile takeover bid, nor the withdrawal of a friendly bid;
and (iii) a shareholder rights plan did not reduce the likelihood that a company
would become a takeover target. (The takeover rate was similar for companies
with and without shareholder rights plans.)
For the reasons set forth above, the Board of Directors urges ALLTEL's
stockholders to reject this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"AGAINST" THE ADOPTION OF THE FOREGOING STOCKHOLDER PROPOSAL. PROXIES
25
<PAGE> 30
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED, UNLESS STOCKHOLDERS
SPECIFY OTHERWISE IN THEIR PROXIES.
CERTAIN TRANSACTIONS
ALLTEL purchases property, liability, workers compensation, and
directors and officers insurance coverage from Cincinnati Insurance Company, a
subsidiary of Cincinnati Financial Corporation, for which ALLTEL paid premiums
of $5,025,299 during the period January 1, 1997, through December 31, 1997.
Cincinnati Financial Corporation, its subsidiaries, and its pension fund
beneficially owned, on February 23, 1998, 12,962,388 shares of Common Stock (see
page 7).
ALLTEL engaged Stephens Inc., an affiliate of Stephens Group, Inc., to
render investment banking and brokerage services to ALLTEL and its subsidiaries
during 1997, for which ALLTEL paid investment banking fees and brokerage
commissions totaling $527,930 to Stephens Inc. during the period January 1,
1997, through December 31, 1997. Stephens Group, Inc. beneficially owned, on
February 23, 1998, 16,627,920 shares of Common Stock (see page 7).
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires ALLTEL's
directors and executive officers, and persons who own more than ten percent of
ALLTEL's Common Stock, to file with the Securities and Exchange Commission and
the New York Stock Exchange initial reports of ownership and reports of changes
in ownership of that Common Stock. To ALLTEL's knowledge, based solely upon a
review of copies of reports provided by those individuals to ALLTEL and written
representations of those individuals that no other reports were required with
respect to the year ended December 31, 1997, ALLTEL believes that all of the
foregoing filing requirements
26
<PAGE> 31
applicable to its directors, executive officers, and greater-than-ten percent
beneficial owners have been met.
ANNUAL REPORT
The 1997 Annual Report, which includes financial statements and an
outline of ALLTEL's operations during 1997, 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 1997, including the
financial statements and the financial statement schedules thereto, required to
be filed with the SEC. Those requests should be addressed to Shawne Leach, Vice
President-Investor Relations, ALLTEL Corporate Services, Inc., 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 property
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. Under ALLTEL's Bylaws, nominations for director may
be made only by the Board, or by an ALLTEL stockholder entitled to vote who has
delivered notice to ALLTEL not fewer than 90 days nor more than 120 days prior
to the first year anniversary of the immediately preceding year's annual
meeting. The Bylaws also provide that no business may be brought before an
annual meeting except as specified in the notice of the meeting or as otherwise
brought before the meeting by or at the direction of the Board or by an ALLTEL
stockholder entitled to vote who has delivered notice to ALLTEL (containing
certain information specified in the Bylaws) within the time limits described
above for delivering notice of a nomination for the election of a director.
These requirements apply to any matter that an ALLTEL stockholder wishes to
raise at an annual meeting other than in accordance with the procedures in SEC
rule 14a-8. A copy of the full text of the Bylaw provisions
27
<PAGE> 32
discussed above may be obtained by writing to the Corporate Secretary, One
Allied Drive, Little Rock, Arkansas 72202.
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 electronic means. In the
event the management of ALLTEL deems it advisable, ALLTEL may engage the
services of an independent proxy solicitation firm to aid in the solicitation of
proxies. The fees paid by ALLTEL, in the event of such an engagement, likely
would not exceed $15,000. ALLTEL will pay persons holding stock in their names
or those of 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.
Dated: March 2, 1998 By Order of the Board of Directors,
FRANCIS X. FRANTZ,
Secretary
28
<PAGE> 33
[ALLTEL LOGO]
One Allied Drive
Little Rock, AR 72202
501.905.8000
www/alltel.com
<PAGE> 34
ALLTEL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, APRIL 23, 1998.
The undersigned hereby appoints Joe T. Ford and Francis X. Frantz, or
either of them, with full power of substitution, as proxies to vote all
of the undersigned's shares of voting stock at the Annual Meeting of
Stockholders on April 23, 1998, and at any and all adjournments thereof,
in accordance with and as more fully described in the Notice of the
Annual Meeting and the Proxy Statement, receipt of which is
acknowledged.
P
R ELECTION OF DIRECTORS, NOMINEES:
O MICHAEL D. ANDREAS, LAWRENCE L. GELLERSTEDT, III,
X EMON A. MAHONY, JR., AND RONALD L. TOWNSEND
Y 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.
<PAGE> 35
(Continued from other side)
<TABLE>
<S> <C>
(1) Election of Directors (see reverse)
For, except vote withheld from the following nominee(s): FOR [ ] WITHHELD [ ]
- ------------------------------------------------------------
(2) Stockholder Proposal -- Shareholder Rights Plan FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) In their discretion, to transact such other business as
may properly come before the meeting or any adjournment
thereof.
Dated: -----------------, 1998
------------------------------
Signature
------------------------------
Signature
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>
