<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CINCINNATI BELL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
William H. Zimmer III
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:________
(2) Aggregate number of securities to which transaction applies:___________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:____________________________________
(4) Proposed maximum aggregate value of transaction:_______________________
/ / 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:____________________________________________________________
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CINCINNATI BELL INC.
NOTICE OF 1994 ANNUAL MEETING
201 EAST FOURTH STREET
AND PROXY STATEMENT
P.O. BOX 2301
CINCINNATI, OHIO 45201
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NOTICE OF ANNUAL MEETING
To The Shareholders:
The annual meeting of shareholders of Cincinnati Bell Inc. (the "Company")
will be held in the Presidential Ballroom of the Westin Hotel, Fountain Square
South, Cincinnati, Ohio, on Monday, April 18, 1994, at 11:30 A.M. for the
following purposes:
1. To elect three directors for three-year terms ending in 1997;
2. To ratify the appointment of Coopers & Lybrand as independent
accountants to audit the financial statements of the Company for the
year 1994; and
3. To act upon such other matters as may properly come before the meeting.
Shareholders of record at the close of business on February 28, 1994 will
be entitled to vote at the meeting and any adjournment thereof.
The vote of each shareholder is important, whatever the number of shares
held. Whether or not you plan to attend the meeting, please sign and return the
accompanying proxy card promptly in the enclosed envelope. PLEASE NOTE THAT YOUR
VOTE CANNOT BE COUNTED UNLESS YOU SIGN AND RETURN THE PROXY CARD OR ATTEND THE
MEETING AND VOTE BY BALLOT.
W. H. Zimmer III
Secretary
March 14, 1994
<PAGE> 3
CINCINNATI BELL INC.
201 EAST FOURTH STREET
P.O. BOX 2301
CINCINNATI, OHIO 45201
------------------
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being mailed to
shareholders on or about March 14, 1994 in connection with the solicitation of
proxies by the Board of Directors of Cincinnati Bell Inc. (the "Company") for
use at the annual meeting to be held April 18, 1994.
Shares can be voted at the meeting only if the shareholder is represented
by proxy or is present in person. A shareholder giving a proxy in the
accompanying form retains the power to revoke it by a later appointment received
by the Company or by giving notice of revocation to the Company in writing or in
open meeting. Such later appointments or notices should be directed to W. H.
Zimmer III, Secretary of the Company, at the address set forth above. Shares
represented by properly executed proxies received in the accompanying form will
be voted in accordance with the instructions contained therein. IN THE ABSENCE
OF CONTRARY INSTRUCTIONS, SUCH SHARES WILL BE VOTED (1) TO ELECT AS DIRECTORS
THE PERSONS NAMED ON PAGE 6; AND (2) TO RATIFY THE APPOINTMENT OF COOPERS &
LYBRAND AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE YEAR 1994. An
abstention from voting on any matter will be tabulated as a vote withheld on
such matter and will be included in computing the number of shares present for
purposes of determining the presence of a quorum for the shareholder meeting. If
a broker indicates on the form of proxy that it does not have discretionary
authority to vote certain shares on a particular matter, those shares will be
considered as present but not entitled to vote with respect to that matter.
If a shareholder is a participant in the Company's Employee Stock Ownership
Plan ("ESOP"), Retirement Savings Plan, Savings and Security Plan (Non-Salaried
Employees), the CBIS Retirement and Savings Plan or the MATRIXX Marketing Inc.
Profit Sharing/401(k) Plan, his completed proxy card will serve as voting
instructions to the trustee or trustees of those plans, as the case may be.
Shares in the ESOP will not be voted unless a proxy card is signed and returned.
If cards representing shares in any plan other than the ESOP are not received,
those shares will be voted in the same proportions as the shares for which
signed cards are returned by other participants in the plan.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
PROMPTLY SO THAT A QUORUM MAY BE REPRESENTED AT THE MEETING.
In the past, shareholders with multiple accounts or multiple shareholders
at identical addresses may have received more than one Annual Report and Proxy
Statement which is costly to the Company and may have been inconvenient to those
shareholders. The Company has eliminated multiple mailings of the Annual Report
and Proxy Statement to accounts with the identical address. Additionally, all
proxy cards to identical addresses will be included in the same envelope. To
resume the mailing of an Annual Report and Proxy Statement to an account, call
the Company's investor relations number 1-800-345-6301 to reach the Treasury
Department, or write W. H. Zimmer III, Secretary, Room 732, 201 East Fourth
Street, P.O. Box 2301, Cincinnati, Ohio 45201.
On the record date, February 28, 1994, outstanding voting securities of the
Company consisted of 65,094,358 Common Shares, $1.00 par value ("Common
Shares"), all of one class. Each Common Share has one vote on each matter
presented for action at the meeting. The following table sets forth information,
as of
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the record date, with respect to those persons the Company believes to be
beneficial owners of more than 5% of the Company's voting securities:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP(A) OF CLASS
- ------------------ ------------------------------ ------------ --------
<S> <C> <C> <C>
Common Shares The Western and Southern 6,452,696 9.9%
Life Insurance Company
("Western and Southern")
400 Broadway
Cincinnati, Ohio 45202
Common Shares T. Rowe Price Trust Company 5,887,524(b) 9.0%
("T. Rowe Price")
10090 Red Run Boulevard
Owings Mills, Maryland 21117
Common Shares Bankers Trust Company 3,607,460(c) 5.5%
("Bankers Trust")
One Bankers Trust Plaza
New York, New York 10015
</TABLE>
- ---------------
(a) The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or investment
power with respect to any such security or has the right to acquire
beneficial ownership of any such security within 60 days.
(b) T. Rowe Price has advised the Company that these Common Shares are held by
it as trustee under the Cincinnati Bell Inc. Retirement Savings Plan, the
Cincinnati Bell Inc. Savings and Security Plan and the MATRIXX Marketing
Inc. Profit Sharing/401(k) Plan. T. Rowe Price may be considered as sharing
voting power with participants under these plans because T. Rowe Price has
power to vote the Common Shares to the extent the participants do not give
it instructions with respect to voting such shares. For each plan, this
power is limited to the voting of Common Shares as to which it does not
receive instructions in the same proportions as it votes Common Shares for
which it does receive instructions. Under the terms of these plans and the
applicable trust agreements, T. Rowe Price has only limited investment
powers with respect to the Common Shares held by it.
(c) Bankers Trust has advised the Company that these Common Shares include
3,457,248 Common Shares held by it as trustee under the Cincinnati Bell
Pension Plans Trust. Bankers Trust is required to vote these Common Shares
in the same proportions that the trustee (Star Bank, N.A., Cincinnati) under
the Cincinnati Bell Inc. Employee Stock Ownership Plan votes the Common
Shares held under that plan. (The trustee under the Employee Stock Ownership
Plan votes only the Common Shares for which voting instructions have been
received.) Bankers Trust does not have investment power with respect to
Common Shares held by it under the Pension Plans Trust because the Company
directs Bankers Trust with respect to purchases and sales of Common Shares.
Bankers Trust has advised the Company that the remaining 150,212 Common
Shares are held by it in a variety of fiduciary capacities.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York and
Cincinnati Stock Exchanges. Officers, directors and greater than 10%
shareholders are required by regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, the
Company believes that, during the period commencing January 1, 1993 and ending
December 31, 1993, all such persons complied on a timely basis with the filing
requirements of Section 16(a), with the exception of a Form 5 amended after its
due date by Mr. LaMacchia and a Form 4 filed after its due date by Mr.
Friedlander.
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BOARD OF DIRECTORS
GENERAL INFORMATION
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Directors are kept informed of
the Company's business by various reports and documents sent to them, as well as
by operating and financial reports presented at Board and committee meetings by
the chairman and other officers.
Meetings of the Board of Directors are held approximately six times a year,
and there is also an organizational meeting following the annual meeting of
shareholders. Additional meetings of the Board may be called whenever needed.
The Board of Directors of the Company held eleven meetings in 1993. Each
director attended at least 75% of the aggregate number of meetings of the Board
and committees of which he was a member except for Mr. Sharrock due to schedule
conflicts.
COMMITTEES OF THE BOARD
The committees established by the Board of Directors to assist it in the
discharge of its responsibilities are described below. The biographical
information on each director, including those nominated for election, which
begins on page 6 of this Proxy Statement, identifies the committee memberships
currently held by each nominee and each incumbent director.
The Executive Committee has five members, two of whom are also officers of
the Company. The Committee meets on call whenever needed and has authority to
act on most matters during the intervals between Board meetings. The Committee
met four times in 1993.
The Audit Committee has three members, none of whom is an employee of the
Company. The Committee meets with management to consider the adequacy of the
internal controls of the Company and the objectivity of its financial reporting;
the Committee also meets with the independent accountants and with appropriate
Company financial personnel and internal auditors concerning these matters. The
Committee recommends to the Board the appointment of the independent
accountants, subject to ratification by the shareholders at the annual meeting.
Both the internal auditors and the independent accountants periodically meet
alone with the Committee and have unrestricted access to the Committee. The
Committee met six times in 1993.
The Compensation Committee has three members, none of whom is an employee
of the Company. It makes recommendations to the Board with respect to the
compensation of Senior Managers of the Company and also administers the
Cincinnati Bell Inc. 1988 Long Term Incentive Plan (the "1988 Long Term
Incentive Plan"), the Cincinnati Bell Inc. Short Term Incentive Plan (the "Short
Term Incentive Plan"), the Cincinnati Bell Inc. Pension Program (the "Pension
Program"), the Cincinnati Bell Inc. 1989 Stock Option Plan and the Cincinnati
Bell Inc. Executive Deferred Compensation Plan (the "Deferred Compensation
Plan"). The Committee met five times in 1993.
The Employee Benefit Funds Committee has three members, none of whom is an
employee of the Company. The Committee reviews the operation of the Company's
pension funds and savings funds, meets with management representatives to review
actuarial requirements, accruals, investment objectives and procedures, and the
findings and reports of the trustees and investment managers. From time to time
the Committee makes such reports and recommendations to the Board with respect
to the foregoing as it deems appropriate. The Committee met two times in 1993.
The Nominating Committee has three members, one of whom is also an officer
of the Company. The Committee meets from time to time to discuss potential
candidates for director and officer positions with the Company. From time to
time the Committee makes such reports and recommendations to the Board of
Directors with respect thereto as it may deem appropriate. The Committee met two
times in 1993.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no remuneration for
serving as directors or committee members. Non-employee directors receive an
annual retainer of $14,000 and a meeting fee of
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$1,000 for each Board and committee meeting attended. Directors may elect to
defer the receipt of all or a part of the fees and retainers. Amounts so
deferred earn interest, compounded quarterly, at a rate equal to the average
interest rate for ten-year United States Treasury notes for the previous
quarter.
Non-employee directors also receive stock options pursuant to the
Cincinnati Bell Inc. 1988 Stock Option Plan for Non-Employee Directors (the
"Directors Plan"). Pursuant to the Directors Plan each non-employee director of
the Company upon initial appointment or election as a director receives an
option to purchase 6,000 Common Shares and receives in each year thereafter an
option to purchase 2,000 Common Shares, provided that the non-employee director
continues in office subsequent to that year's annual meeting of shareholders.
The exercise price for each option granted is 100% of the fair market value of
the Common Shares on the date of grant. During 1993, no options were exercised.
Pursuant to the Cincinnati Bell Inc. Retirement Plan for Outside Directors,
non-employee directors who retire with at least five years of service as a
director of the Company are entitled to receive an amount per year, continuing
for the number of years that they served as a director, equal to the annual
retainer in effect at the date of their retirement. In the event of the death of
a director or retired director, no further payments will be made under the plan.
Presently two directors are receiving payments under the Retirement Plan for
Outside Directors.
Mr. Hibbard retired as an employee of the Company effective February 11,
1994; however, he continues to serve as a non-employee director and as an
officer of the Company. As long as he continues to serve as Chairman, he will be
compensated at the rate of $300,000 per annum and he will continue to receive
the perquisites which he was receiving as Chairman immediately prior to becoming
a non-employee director. As a non-employee director, Mr. Hibbard is eligible to
participate in the plan for deferring fees and retainers and the Directors Plan;
however, Mr. Hibbard will not participate in the Retirement Plan for Outside
Directors.
Non-employee directors also are provided certain telecommunications
services. The cost of such services was approximately $1,000 per non-employee
director in 1993.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Clark, an Executive Vice President and a director of the Company,
serves as a director of Xtek, Inc. Mr. Kiggen, who is a director of the Company
and a member of the Compensation Committee, is the Chairman of the Board and
President of Xtek, Inc. Since the Board of Directors of Xtek, Inc. does not have
a compensation committee, the entire Board of Directors of Xtek, Inc. (including
Mr. Clark) performs the function of a compensation committee. Cincinnati Bell's
Compensation Committee consists of Messrs. Christensen (Chairman), Kiggen and
Sharrock.
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of Common Shares as
of February 28, 1994 by each director and executive officer and by all directors
and officers of the Company as a group. As of that date, no individual director
or officer owned beneficially more than 1.0% of the Common Shares outstanding
and all
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<PAGE> 7
directors and officers of the Company as a group owned beneficially 1,883,858
Common Shares of the Company or 2.89% of the Common Shares outstanding.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT OF
OWNED AS OF COMMON
FEBRUARY 28, 1994(A) SHARES
-------------------- ----------
<S> <C> <C>
John F. Barrett.......................................... 10,384(b) .02%
Paul W. Christensen, Jr.................................. 32,001(b) .05%
Raymond R. Clark......................................... 237,092 .36%
Phillip R. Cox........................................... 6,000 .01%
William A. Friedlander................................... 81,165(b)(c) .12%
Dwight H. Hibbard........................................ 487,162(b) .75%
Brian C. Henry........................................... 102,000 .16%
Sheldon Horing (d)....................................... 121,483 .19%
Robert P. Hummel, M.D.................................... 19,501(b) .03%
James D. Kiggen.......................................... 27,408(b) .04%
John T. LaMacchia........................................ 363,076(b) .56%
David B. Sharrock........................................ 17,601(b) .03%
All Directors and Officers as a group (consisting of 18
persons, including those named above).................. 1,883,858(b) 2.89%
</TABLE>
- ---------------
(a) Includes Common Shares subject to outstanding options under the Cincinnati
Bell Inc. 1988 Long Term Incentive Plan and the Directors Plan which are
exercisable by such individuals within 60 days. The following options are
included in the totals: 340,000 Common Shares for Mr. Hibbard, 300,000
Common Shares for Mr. LaMacchia, 153,000 Common Shares for Mr. Clark,
100,000 Common Shares for Mr. Henry, 100,500 Common Shares for Mr. Horing
and 16,000 Common Shares for each of Messrs. Friedlander, Hummel and Kiggen,
10,000 Common Shares for Mr. Christensen, 14,000 Common Shares for Mr.
Sharrock, 8,000 Common Shares for Mr. Barrett, 6,000 Common Shares for Mr.
Cox and 251,000 for other officers. The Common Share figures for the
non-employee directors do not include, however, the option to purchase an
additional 2,000 Common Shares that each non-employee director will receive
pursuant to the Directors Plan, provided that such non-employee director
continues in office subsequent to this year's annual meeting of
shareholders.
(b) Includes Common Shares held directly by members of the director's or
officer's family who have the same home as the director or officer but as to
which the director or officer disclaims beneficial ownership: 784 for Mr.
Barrett, 7,001 for Mr. Christensen, 4,100 for Mr. Friedlander, 401 for Mr.
Hibbard, 1,901 for Dr. Hummel, 1,598 for Mr. Kiggen, 6,277 for Mr.
LaMacchia, 200 for Mr. Sharrock and 6,896 for other officers.
(c) Includes 50,400 Common Shares as to which Mr. Friedlander disclaims
beneficial ownership; of the 50,400 Common Shares, Mr. Friedlander shares
investment power as to 4,200 Common Shares and has sole investment power as
to 46,200 Common Shares.
(d) Resigned as an officer February 4, 1994, but is included in the table
because he served as an executive officer of the Company for all of 1993.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Board of Directors of the Company presently consists of 10 members,
three of whom are officers of the Company. The Company's Amended Articles of
Incorporation require that the directors be divided into three classes. At each
annual meeting of shareholders, directors constituting a class are elected for a
three-year term. The terms of the three Class I directors expire in 1994. The
Board of Directors has nominated John F. Barrett, Dwight H. Hibbard and David B.
Sharrock, all of whom are incumbent directors, for election as
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directors in Class I to serve until the 1997 annual meeting of shareholders. The
three nominees for directors receiving the greatest number of votes will be
elected Class I Directors. The four directors in Class II continue to serve
until the 1995 annual meeting of shareholders and the three directors in Class
III continue to serve until the 1996 annual meeting of shareholders. The
directors of each class will serve until their respective successors are elected
and qualified.
It is intended that shares represented by the accompanying form of proxy
will be voted for the election of the nominees, unless contrary instructions are
indicated as provided on the proxy card. (If you do not wish your shares to be
voted for particular nominees, please so indicate on the proxy card.) If one or
more of the nominees should at the time of the meeting be unavailable or unable
to serve as a candidate, the shares represented by the proxies will be voted to
elect the remaining nominees and any substitute nominee or nominees designated
by the Board of Directors. The Board of Directors knows of no reason why any of
the nominees will be unavailable or unable to serve.
For each director of the Company, including those nominated for election,
there follows a brief listing of principal occupation during at least the past
five years, other major affiliations and age on the date of this Proxy
Statement. When indicating the tenure with the Company of each director, the
"Company" means the present corporation (post-June 1983) and Cincinnati Bell
Telephone Company (pre-July 1983). Directors' ownership of Common Shares is
shown in the table on page 5.
NOMINEES FOR CLASS I DIRECTORS
John F. Barrett, President and Chief Executive Officer of The Western and
Southern Life Insurance Company since March 8, 1994; President since November
1989; Chief Operating Officer, November 1989 to March 1994; Executive Vice
President and Chief Financial Officer, May 1987 to October 1989. Director of The
Western and Southern Life Insurance Company and The Fifth Third Bancorp and its
subsidiary, The Fifth Third Bank. Director of the Company since 1992; member of
Audit Committee and Nominating Committee. Age 44.
Dwight H. Hibbard, Chairman of the Company since 1985; Chief Executive
Officer of the Company, 1985-1993; President of the Company, 1983-1987; Chairman
of Cincinnati Bell Telephone Company, 1985-1993. Director of The Ohio National
Life Insurance Company and Teradyne, Inc. (supplier of automatic test systems).
Director of the Company since 1974; Chairman of Executive Committee and Chairman
of the Nominating Committee. Age 70.
David B. Sharrock, Executive Vice President and Chief Operating Officer
(retired) of Marion Merrell Dow Inc. (researcher, manufacturer and seller of
pharmaceutical products) 1989-1993; President and Chief Operating Officer of
Merrell Dow Pharmaceuticals Inc. (researcher, manufacturer and seller of
pharmaceutical products), 1988-1989. Director of Marion Merrell Dow Inc. since
1989. Director of the Company since 1987; member of Audit Committee,
Compensation Committee and Employee Benefit Funds Committee. Age 57.
CLASS II DIRECTORS
(TERMS EXPIRE IN 1995)
Paul W. Christensen, Jr., Retired; Chairman of the Board and Chief
Executive Officer of The Cincinnati Gear Company (manufacturer of custom gears
and enclosed drives), 1978-1987. Director of Eagle-Picher Industries, Inc.
(diversified manufacturer of industrial products) and The Ohio National Life
Insurance Company. Director of the Company since 1983; Chairman of Compensation
Committee and member of Executive Committee and Nominating Committee. Age 69.
Phillip R. Cox, President and Chief Executive Officer of Cox Financial
Corporation (financial planning) since 1972. Director of PNC Bank and the
Federal Reserve Bank of Cleveland. Director of the Company since 1993; member of
Employee Benefit Funds Committee. Age 46.
William A. Friedlander, Chairman of Bartlett & Co. (investment advisor)
since 1989; Chairman and Chief Executive Officer, 1968-1988. Director and Chief
Executive Officer of the Greater Cincinnati
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<PAGE> 9
Foundation (community foundation) since 1990. Director of The Union Central Life
Insurance Company. Director of the Company since 1986; Chairman of Audit
Committee. Age 61.
John T. LaMacchia, President and Chief Executive Officer of the Company
since October 1, 1993; President of the Company since January 1, 1988; Chief
Operating Officer of the Company 1988-1993; Chairman of Cincinnati Bell
Telephone Company since November 1, 1993; Chairman of Cincinnati Bell
Information Systems Inc. since October 1988 and President, 1983-1987. Director
of The Kroger Co. (food retailer) and Multimedia, Inc. (diversified media
communications company). Director of the Company since 1985; member of Executive
Committee. Age 52.
CLASS III DIRECTORS
(TERMS EXPIRE IN 1996)
Raymond R. Clark, Executive Vice President of the Company since January 1,
1987; Chief Executive Officer of Cincinnati Bell Telephone Company since January
1, 1988; President since January 1, 1987. Director of Star Banc Corporation and
Xtek, Inc. (manufacturer of engineered products for heavy industry). Director of
the Company since 1985. Age 56.
Robert P. Hummel, M.D., Chief of Staff of University Hospital since 1992;
Professor of Surgery, College of Medicine, University of Cincinnati since 1976;
Vice Chairman-Department of Surgery, College of Medicine, University of
Cincinnati since 1986. Director of the Company since 1983; Chairman of Employee
Benefit Funds Committee and a member of the Executive Committee. Age 65.
James D. Kiggen, Chairman of the Board and President of Xtek, Inc.
(manufacturer of engineered products for heavy industry) since 1985. Director of
Fifth Third Bancorp and its subsidiary, The Fifth Third Bank, The United States
Playing Card Company (worldwide manufacturer of playing cards). Director of the
Company since 1983; member of Executive Committee and Compensation Committee.
Age 62.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
Subject to shareholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has reappointed the firm of Coopers &
Lybrand as independent accountants to audit the financial statements of the
Company for the year 1994. Coopers & Lybrand has audited the financial
statements of the Company (and Cincinnati Bell Telephone Company prior to July
1983) for many years. If the shareholders do not ratify this appointment, other
independent accountants will be appointed by the Board upon recommendation of
the Audit Committee. One or more members of the firm of Coopers & Lybrand will
attend the annual meeting, will have an opportunity to make a statement and will
be available to answer questions.
OUR RECOMMENDATION
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON SHARES, PRESENT OR
REPRESENTED AND ENTITLED TO VOTE AT THE MEETING. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR SUCH RATIFICATION.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The overall goals of the Company's executive compensation program are (i)
to encourage and provide an incentive to its executive officers to achieve the
Company's strategic business and financial goals, both short-term and long-term,
and thereby enhance shareholder value, (ii) to attract and retain well-qualified
executive officers, and (iii) to reward individuals for outstanding job
performance in a fair and equitable manner when measured not only with respect
to the Company's internal performance goals but also the Company's performance
in comparison to its peers.
The Compensation Committee recommends to the Board of Directors
compensation for the Chief Executive Officer and all of the named executive
officers. Mr. Henry joined the Company in March 1993. His compensation was
established in his employment agreement which was approved by both the
Compensation Committee and the Board of Directors.
The components of the Company's executive compensation program are base
salary, annual short term incentives and long term incentives, each of which
assists in achieving the program's goals.
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<PAGE> 10
After reviewing (i) several national surveys*, concerning the compensation
paid by companies in a broad spectrum of businesses focusing on compensation at
the 50th percentile, (ii) historical compensation data for each executive
officer, (iii) information from the Company's Chairman of the Board, and (iv)
the Committee's evaluation of the performance of Messrs. Hibbard, LaMacchia and
Clark, the Compensation Committee recommended and the Board of Directors
approved a base salary increase, effective April 1, 1993, for Messrs. Hibbard,
LaMacchia and Clark. Mr. Henry's salary was established pursuant to his
employment contract. Mr. Horing also received a salary increase effective with
his promotion to Executive Vice President of the Company on January 1, 1993. The
salaries of Messrs. Hibbard, LaMacchia, Clark, Henry and Horing appear in the
Summary Compensation Table on page 11. Compared to the survey group, salaries
paid to the executive officers average in the 50th to 55th percentile.
The Company's Short Term Incentive Plan, which includes the Chief Executive
Officer and the named executive officers, is one of the means by which the
Compensation Committee encourages the Company's management to enhance
shareholder value. To receive an annual short term incentive award, the
Compensation Committee recommended and the Board of Directors approved that: (i)
the Company's standing in a composite ranking matrix based on a Peer Group
Comparison** must be between first and eighth place (depending on the executive
officer, this factor determines 25%-50% of his short term incentive award); (ii)
the Company must achieve certain levels of "earnings per share" (EPS) and, for
Mr. Clark, the Telecom Group must achieve certain levels of operating income
and, for Mr. Horing, the Information Services Group must achieve certain levels
of operating income; and (iii) the individual officer's performance, in the
judgment of the Compensation Committee, must be deserving. The threshold amount
for both the EPS and operating income components is 96%, with the maximum award
payable upon the achievement of 114% of the targeted goal. Based upon the
achievement of predetermined goals, each executive officer may receive from 0%
to 250% of the targeted cash award. The target cash awards are determined by
reviewing survey bonus information* and from historical bonus targets
established in previous years. Compared to the Survey Group, target cash awards
for executive officers average 110% of the 50th percentile.
Under the Short Term Incentive Plan, any awards for a performance year are
paid in the following year. However, no awards can be paid if, for the 12-month
period preceding the month in which the awards would have been paid, the
estimated consolidated net income of the Company is less than the dividends
applicable to that 12-month period (on an accrual basis) on all of the Company's
outstanding Common Shares and Preferred Shares.
Since the Peer Group Comparison and Company EPS goals for 1993 were not
achieved and the overriding net income restriction existed, no awards were made
under the Short Term Incentive Plan. Nevertheless, the Compensation Committee
believed that a 1993 bonus for Mr. Clark should be made outside the plan in
recognition of the Telecom Group's achievement of its operating income goals. In
addition, Mr. Henry was paid a bonus pursuant to his employment agreement. These
bonuses appear in the Summary Compensation Table on page 11.
The Company's 1988 Long Term Incentive Plan provides incentive compensation
for key officers and employees of the Company and its subsidiaries in the form
of stock options, stock appreciation rights, restricted stock, performance
shares and performance units and other stock unit awards. In connection with any
award, payments of dividend or interest equivalents also may be authorized.
Options granted under the 1988 Long Term Incentive Plan are either incentive
stock options or nonstatutory options. The exercise price of each option granted
equals or is greater than the fair market value of the Company's Common Shares
on
- ---------------
*The salary and bonuses surveys are prepared by recognized consulting firms,
each of which establishes its own criteria for including companies in its data
pool. These surveys may or may not include the Peer Group Companies. The
consulting firms do not disclose the defining characteristics of the companies
used in these surveys.
**The "Peer Group Comparison", which was prepared by a consulting firm, compares
the Company's performance to 12 other telecommunication companies (the "Peer
Group" which appears in the performance graph on page 16) based on the
following equally weighted financial criteria: return on equity, growth in net
income, growth in revenue and total shareholder return. The performance graph
on page 17 is for shareholder information only and is not used to compute
executive compensation.
8
<PAGE> 11
the date of grant. The term of any option cannot exceed 10 years from the date
of grant. Generally, options will be canceled in the event of termination of
employment for any reason other than retirement, disability or death.
The Compensation Committee uses long term compensation, mainly the grant of
stock options, as a means to align the interests of the Company's executive
officers with those of its shareholders and thus enhance shareholder value.
After considering (i) an independent consultant's survey* that measured options
grants as a multiple of base salary and focusing on the 50th and 75th
percentiles of this survey, (ii) each executive officer's level of
responsibility, (iii) total compensation objective, (as identified in the first
paragraph in this report), (iv) previous grant information (as reflected in the
Summary Compensation Table) and (v) statistical data concerning total grants
under the Company's 1988 Long Term Incentive Plan compared to total outstanding
shares, the Compensation Committee granted options to all of the named executive
officers. Mr. Henry's options were issued pursuant to the terms of his
employment contract. The options granted to the Chief Executive Officer and each
of the named executive officers are shown in the "Grants of Stock Options" table
on page 12. The options granted in 1993 to the executive officers ranged from
the 48th percentile to the 68th percentile with Mr. Hibbard at the 60th
percentile and Mr. LaMacchia at the 68th percentile.
In 1989 the Company granted performance shares to Messrs. Hibbard,
LaMacchia and Clark. No performance shares have been granted to the named
executives since 1989. The performance shares are distributed at the end of a
five-year performance period based on the Company's peer group rank as
determined solely by total shareholder value. The percentage of the shares
distributed is based on an exact composite ranking matrix which provides that
for each Company placement vis-a-vis its Peer Group higher than twelfth place, a
percentage of shares is earned. Since the Company's rank for the five-year
period ended December 31, 1993 was thirteenth, none of the performance shares
that were granted in 1989 were paid to the participating executive officers. On
each dividend payment date, a cash payment equal to the dividend payment on one
Common Share is paid with respect to each undistributed or uncanceled
performance share. However, these dividend equivalents cannot be paid if, for
the 12-month period preceding the month in which the dividend payments would
have been paid, the estimated consolidated net income of the Company is less
than the dividends applicable to that 12-month period. Since this net income
goal was not met, no dividend equivalent payments were made to the participating
executive officers during 1993.
Mr. Hibbard served in the capacity of Chairman throughout 1993 and in the
capacity of Chief Executive Officer through September 30, 1993. On October 1,
1993, Mr. LaMacchia was elected Chief Executive Officer. As Chairman and Chief
Executive Officer, in accordance with the policies discussed previously,
effective April 1, 1993, Mr. Hibbard's base salary rate was increased to
$600,000. He received a stock option grant for 100,000 Common Shares. In
connection with the annual short term incentive, Mr. Hibbard's award objectives
were measured 50% against the Company's EPS factor and 50% against the Peer
Group Comparison rank. As a result of the Company's failure to reach its EPS
goal and to rank sufficiently high in the Peer Group Comparison, no short term
incentive award payment was made to Mr. Hibbard for 1993.
Effective October 1, 1993, with his promotion, Mr. LaMacchia's base salary
rate was increased to $500,000 per annum. Based on the policies discussed
previously, Mr. LaMacchia received a long term stock option grant for 60,000
Common Shares. In connection with the annual short term incentive, Mr.
LaMacchia's award objectives were measured 50% against the Company's EPS factor
and 50% against the Peer Group comparison rank. As a result of the Company's
failure to reach its EPS goal and to rank sufficiently high in the Peer Group
Comparison, no short term incentive award payment was made to Mr. LaMacchia for
1993.
- ---------------
*The companies used in the survey from which stock option grants are determined
consist of 276 national companies which responded to the survey. This survey
was not used to compute salaries or bonuses. The consulting firms do not
disclose the defining characteristics of the companies used in these surveys.
9
<PAGE> 12
It is not anticipated that any executive officer will receive compensation
during 1994 which is not deductible by reason of the limitation contained in
section 162(m) of the Internal Revenue Code. This limitation will be considered
by the Compensation Committee when it determines the amounts of compensation to
be paid to executive officers in 1995 and subsequent calendar years.
Compensation Committee
Paul W. Christensen, Jr.
James D. Kiggen
David B. Sharrock
10
<PAGE> 13
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
The following table shows the compensation of the Chief Executive Officer
and the four most highly compensated executive officers of the Company or any of
its subsidiaries for services to the Company and its subsidiaries, including
Cincinnati Bell Telephone ("CBT"), MATRIXX Marketing Inc. ("MATRIXX") and
Cincinnati Bell Information Systems Inc. ("CBIS"), in all capacities. Messrs.
Hibbard, LaMacchia and Clark served as directors of the Company but received no
separate compensation in those capacities.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------- PAYOUTS
-------------------------------------- SECURITIES ----------
OTHER ANNUAL RESTRICTED UNDERLYING LONG-TERM
NAME AND PRINCIPAL COMPENSATION STOCK OPTIONS INCENTIVE
POSITION YEAR SALARY($) BONUS($) ($) (A) AWARD($) (#) PAYOUTS($)
- ---------------------- ----- -------- -------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dwight H. Hibbard(c) 1993 $590,000 $ 0 (d) $ 0 100,000 $ 0
Chairman 1992 550,000 0 $ 53,045(e) 0 100,000 0
1991 550,000 0 0 80,000 97,132
- ------------------------------------------------------------------------------------------------------------------
John T. LaMacchia(c) 1993 $415,000 $ 0 (d) $ 0 60,000 $ 0
President & CEO 1992 360,000 0 (d) 0 60,000 0
1991 360,000 0 0 50,000 48,403
- ------------------------------------------------------------------------------------------------------------------
Raymond R. Clark 1993 $295,000 $ 76,600 $ 67,290(e) $ 0 40,000 $ 0
Executive Vice 1992 270,000 80,000 (d) 0 30,000 0
President 1991 270,000 30,000 0 25,000 48,403
- ------------------------------------------------------------------------------------------------------------------
Brian C. Henry(h) 1993 $180,000 $160,000 (d) $ 0 80,000 $ 0
Executive Vice 1992 -- -- -- -- -- --
President 1991 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Sheldon Horing 1993 $277,500 $ 0 $ 43,137(f) $ 0 20,000 $ 0
Executive Vice 1992 232,935 70,000 50,293(f) 0 20,000 0
President 1991 210,000 25,000 465,000(g) 20,000 0
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($) (A)(B)
- ---------------------- ------------
<S> <C>
Dwight H. Hibbard(c) $8,994
Chairman 9,154
- ----------------------
John T. LaMacchia(c) $8,994
President & CEO 9,154
- ----------------------
Raymond R. Clark $8,994
Executive Vice 9,154
President
- ----------------------
Brian C. Henry(h) $ 0
Executive Vice --
President --
- ----------------------
Sheldon Horing $7,670
Executive Vice 5,819
President
</TABLE>
(a) In accordance with the transition provisions of the rules of the Securities
and Exchange Commission, information with respect to fiscal year 1991 is
omitted.
(b) Represents Company contributions to defined contribution savings plans and
to the CBIS Deferred Compensation Plan described on page 15.
(c) Mr. Hibbard also served as the CEO until October 1, 1993. Mr. LaMacchia was
elected CEO on October 1, 1993. Since October 1, 1993 Mr. Hibbard has
continued to serve as Chairman. During their tenure as CEO Mr. Hibbard
received $437,500 and Mr. LaMacchia received $125,000, respectively.
(d) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or 10% of the total amount of the annual salary and
bonus for the individual for that year.
(e) Includes $50,400 for dividend equivalent rights on exercised options for Mr.
Clark and $37,638 for dividend equivalent rights on exercised options for
Mr. Hibbard. Other amounts were less than 25% of the total perquisites and
other personal benefits reported for each individual.
(f) Includes $13,675 in 1993 and $20,295 in 1992 for commuting expenses. Other
amounts were less than 25% of the total perquisites and other personal
benefits reported for Mr. Horing.
(g) 20,000 shares at $23.25 vesting at a rate of 4,000 shares per year beginning
in 1991 over a period of five years. Dividends on the entire amount of
shares payable quarterly beginning in 1991.
(h) Mr. Henry's date of employment was March 29, 1993.
11
<PAGE> 14
II. GRANTS OF STOCK OPTIONS
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 1993.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES OR BASE EXPIRA- TERM (A)
GRANTED IN FISCAL PRICE TION -------------------------------
NAME (#)(B) YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------- ---------- ---------- -------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dwight H. Hibbard 100,000 11% $17.625 1/22/03 $ 1,108,427 $ 2,808,971
- -----------------------------------------------------------------------------------------------------------------
John T. LaMacchia 60,000 7% $17.625 1/22/03 $ 665,506 $ 1,685,383
- -----------------------------------------------------------------------------------------------------------------
Raymond R. Clark 40,000 4% $17.625 1/22/03 $ 443,371 $ 1,123,588
- -----------------------------------------------------------------------------------------------------------------
Brian C. Henry 80,000 9% $21.750 4/05/03 $ 1,094,277 $ 2,773,112
- -----------------------------------------------------------------------------------------------------------------
Sheldon Horing 20,000 2% $17.625 1/22/03 $ 221,685 $ 561,794
</TABLE>
(a) As required by rules of the Securities and Exchange Commission, potential
values stated are based on the prescribed assumption that the Company's
Common Shares will appreciate in value from the date of grant to the end of
the option term (ten years from the date of grant) at annualized rates of
5% and 10% (total appreciation of 62.9% and 159.4%) resulting in values of
approximately $28.71 and $45.71, respectively, in the case of the $17.625
options and $35.43 and $56.41, respectively, in the case of the $21.75
options. They are not intended, however, to forecast possible future
appreciation, if any, in the price of the Company's Common Shares. The
total of all stock options granted to employees, including executive
officers, during fiscal 1993 was approximately 1.42% of the total Common
Shares outstanding during the year. As an alternative to the assumed
potential realizable values stated in the above table, the Securities and
Exchange Commission rules would permit stating the present value of such
options at date of grant. Methods of computing present values suggested by
different authorities can produce significantly different results.
Moreover, since stock options granted by the Company are not transferable,
there is no objective criteria by which any computation of present value
can be verified. Consequently, the Company's management does not believe
there is a reliable method of computing the present value of such stock
options.
(b) The material terms of the options granted are: grant type, non-statutory;
grant price, fair market value on grant date; exercisable after one year;
term of grant, 10 years; except in cases of retirement, disability or
death, unexercisable options are cancelled upon termination of employment.
12
<PAGE> 15
III. AGGREGATE OPTION EXERCISES
The following table shows aggregate option exercises in last fiscal year
and fiscal year-end values.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FY-END (#) AT FY-END ($)(A)
SHARES ACQUIRED VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- ------------------------- --------------- ------------ ----------------- --------------------
<S> <C> <C> <C> <C>
E 274,000 E$ 0
Dwight H. Hibbard 0 $ 0 U 100,000 U 43,800
- ------------------------------------------------------------------------------------------------------------
E 156,000 E$ 0
John T. LaMacchia 0 $ 0 U 60,000 U 26,280
- ------------------------------------------------------------------------------------------------------------
E 73,000 E$ 0
Raymond R. Clark 6,569 $121,816 U 40,000 U 17,520
- ------------------------------------------------------------------------------------------------------------
E 0 E$ 0
Brian C. Henry 0 $ 0 U 80,000 U 0
- ------------------------------------------------------------------------------------------------------------
E 25,500 E$ 0
Sheldon Horing 0 $ 0 U 40,000 U 8,760
</TABLE>
(a) Values stated based on the fair market value (average of the high and low)
of $18.063 per share of the Company Common Shares on the New York Stock
Exchange on December 31, 1993.
IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE
Since no awards pursuant to any long-term incentive plans were made to any
named executive officer in the fiscal year ended December 31, 1993, no table has
been included.
V. DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
Messrs. LaMacchia and Clark participate in both the Company's Management
Pension Plan and the Pension Program. The following table illustrates the
approximate pension amounts which would be payable under those plans combined.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE AND PENSION AMOUNT
-------------------------------------------------------------
COMPENSATION 15 20 25 30 OR MORE
- ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
$ 325,000 $ 110,500 $ 147,333 $ 184,167 $221,000
400,000 136,000 181,333 226,667 272,000
475,000 161,500 215,333 269,167 323,000
550,000 187,000 249,333 311,667 374,000
625,000 212,500 283,333 354,167 425,000
700,000 238,000 317,333 396,667 476,000
775,000 263,500 351,333 439,167 527,000
850,000 289,000 385,333 481,667 578,000
925,000 314,500 419,333 524,167 629,000
1,000,000 340,000 453,333 566,667 680,000
1,075,000 365,500 487,333 609,167 731,000
</TABLE>
Pension amounts shown under the foregoing table are annual straight life
annuity pension amounts, prior to deduction for Social Security benefits. The
amounts of covered compensation which can be used to
13
<PAGE> 16
compute the estimated annual retirement benefits of Messrs. LaMacchia and Clark
and the number of their years of credited service at December 31, 1993 are as
follows: Mr. LaMacchia, $415,000 and 27 years of service; and Mr. Clark,
$370,000 and 29 years of service. The covered compensation is the participant's
base salary and bonuses for the twelve consecutive month period during the
thirty-six consecutive month period ending December 31, 1993 which produces the
highest dollar amount. Pension amounts under the foregoing table are based on
the Pension Program formula which includes amounts payable under the Management
Pension Plan.
Effective December 31, 1993, the benefit formula under the Management
Pension Plan was converted to a cash balance formula. Under the cash balance
formula, each participant has an account to which pension credits are allocated
at the end of each year based upon the participant's attained age and covered
compensation for the year. To the extent that a participant's covered
compensation (base salary) exceeds the Social Security wage base, additional
pension credits are given for such excess compensation. The following chart
shows the pension credits which will be given at the ages indicated:
<TABLE>
<CAPTION>
ATTAINED AGE PENSION CREDITS
- ------------------------------ --------------------------------------
<S> <C> <C>
Less than 30 years 2.50% of covered compensation plus 2.50% of
excess compensation
30 but less than 35 years 2.75% of covered compensation plus 2.75% of
excess compensation
35 but less than 40 years 3.25% of covered compensation plus 3.25% of
excess compensation
40 but less than 45 years 4.00% of covered compensation plus 4.00% of
excess compensation
45 but less than 50 years 5.25% of covered compensation plus 5.25% of
excess compensation
50 but less than 55 years 6.50% of covered compensation plus 6.50% of
excess compensation
55 or more years 8.00% of covered compensation plus 8.00% of
excess compensation
</TABLE>
At the end of each year, a participant's account is also credited with
assumed interest at the rate of 8% per annum through December 31, 1996 and 4%
per annum for subsequent years. At retirement or other termination of
employment, an amount equivalent to the balance then credited to the account is
payable to the participant in the form of an immediate or deferred lump sum or
annuity. (In the case of an employee who was a participant in the Management
Pension Plan on December 31, 1993, the employee's account also is credited with
pension credits equivalent to the employee's accrued benefit on that date.)
Mr. Henry and Mr. Horing participate in the Management Pension Plan but do
not participate in the Pension Program. If they continue employment and retire
at normal retirement age of 65, their estimated annual pension amount under the
Management Pension Plan would be: $139,391 for Mr. Henry and $52,659 for Mr.
Horing. It is not anticipated that Mr. Horing's employment will continue beyond
March 10, 1996.
Mr. Hibbard retired as an employee of the Company on February 11, 1994 and
elected to receive a lump sum benefit from the Management Pension Plan in the
amount of $1,376,215. He will also receive an annual payout of $590,983 from the
Pension Program for the remainder of his life.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In December 1987, the Company entered into Executive Employment Agreements
with Messrs. LaMacchia and Clark, respectively. The Executive Agreements with
Messrs. LaMacchia and Clark are not typical employment agreements in that their
terms of employment under the Agreements do not commence until the date of a
"change in control" (as defined in the Agreements) of the Company. Under the
Agreements, Messrs. LaMacchia and Clark (i) continue to be employed in the same
positions that they had
14
<PAGE> 17
on the day preceding the change in control with the responsibilities and
authorities that executives in comparable companies possess and (ii) receive the
same level of compensation (with annual cost of living increases) and benefits
in effect immediately prior to the change in control. After a change in control,
the executives may terminate their employment, with or without reason, upon one
month's prior written notice. The Company may terminate any executive's
employment without breach of his Agreement only upon his death, disability or
for "cause" (as defined in the Agreement). If, after a change in control of the
Company, the Company terminates any executive's employment in breach of his
Agreement or any executive voluntarily terminates his employment, he is entitled
to receive as severance pay in cash an amount equal to five times his "base
amount" within the meaning of section 280G of the Internal Revenue Code. ("Base
amount" for purposes of the Executive Agreements includes all amounts attributed
or earned by the executive for that year pursuant to the Short Term Incentive
Plan, the 1988 Long Term Incentive Plan and any other deferred compensation
plan.) The severance pay payable under the Executive Agreements will be greater
than the maximum amount which may currently be paid under the Internal Revenue
Code for these types of agreements without the individual incurring an excise
tax and without the Company being denied a tax deduction of a portion of the
payments.
In March 1993, the Company entered into an Executive Employment Agreement
with Mr. Henry which provides for the employment and retention of Mr. Henry as
Executive Vice President and Chief Financial Officer of the Company for a term
commencing on March 29, 1993 and terminating on March 29, 1998. The Executive
Employment Agreement provides for: an initial base salary of $270,000 per year,
which is subject to annual performance reviews and increases consistent with his
performance and the treatment of similarly situated employees of the Company;
the opportunity to earn a bonus under the Short Term Incentive Plan of up to
250% of the annual short term incentive amount goal per calendar year (for 1993,
Mr. Henry's guaranteed bonuses totaled $160,000; there are no guaranteed bonuses
for later years); options to purchase 80,000 Common Shares; a supplemental
pension equal to that portion of his accrued pension under the Management
Pension Plan attributable to his first 10 years of service; and benefits and
perquisites consistent with the treatment of similarly situated employees of the
Company. The Executive Employment Agreement provides that if Mr. Henry's
employment terminates following a "change in control" of the Company (as defined
in the 1988 Long Term Incentive Plan) Mr. Henry will receive a lump sum payment
equal to the greater of $810,000 or three times his annual base salary on the
date of termination. In the event that the Company terminates Mr. Henry's
employment (other than for cause or disability) after March 29, 1995, Mr. Henry
will receive a lump sum severance payment equal to his previous 12 months base
salary. If the Company terminates Mr. Henry's employment (other than for cause
or disability) prior to March 29, 1995, Mr. Henry will receive a lump sum
severance payment equal to his base salary for the remainder of the term.
Under the Executive Employment Agreement in effect for Mr. Hibbard at the
time of his retirement, he will be entitled to receive a tax gross up with
respect to amounts paid to him during 1994 and 1995 under the Company's
Retirement Savings Plan and Incentive Award Deferral Plan to reflect the change
in Federal income tax rates caused by the Omnibus Budget Reconciliation Act of
1993.
In March 1994, the Company entered into a consulting and separation
agreement with Mr. Horing. Under the terms of that agreement, Mr. Horing will
continue in employment, as a consultant, until March 10, 1996 and be compensated
for his services at the rate of $341,562 per annum. In the event of his death,
his estate will continue to receive the payments due through the end of the
consulting period. While employed under the consulting and separation agreement,
Mr. Horing will continue to receive the employee benefits and perquisites which
he was receiving when he resigned as an officer of the Company.
The Deferred Compensation Plan was adopted effective January 1, 1994 to
permit officers at the level of senior vice president and above to defer receipt
of up to 25% of their base salary, up to 100% of their cash bonuses (including
cash awards under the 1988 Long Term Incentive Plan and the Short Term Incentive
Plan) and up to 100% of share awards under the 1988 Long Term Incentive Plan.
For participating employees who are not in the Pension Program, there also will
be a Company "match" of up to the lesser of (a) 66 2/3% of the base salary and
cash bonuses deferred by the participant or (b) 4% of the participant's base
salary and cash bonuses. (Messrs. LaMacchia and Clark participate in the Pension
Program.) Amounts deferred by participants (and the related Company "match") are
assumed to have been invested in various mutual funds
15
<PAGE> 18
and other investments (including Company Shares). Upon termination of
employment, the amounts then credited to the participant's account are
distributed in a lump sum or in up to ten annual installments.
Effective November 1, 1993, CBIS adopted a deferral compensation plan (the
"CBIS Plan") for key executives of that subsidiary. The provisions of the CBIS
Plan were similar to the provisions of the Deferred Compensation Plan. Mr.
Horing participated in the CBIS Deferred Compensation Plan during the months of
November and December 1993 and received a "match" which is reflected in the
Compensation Table under the "All Other" column. The CBIS Plan was superseded by
the Deferred Compensation Plan effective January 1, 1994.
Under the Long Term Incentive Plan, the 1984 Stock Option Plan and the
Short Term Incentive Plan, in the event of a change in control, all outstanding
stock options will become immediately exercisable, all restrictions applicable
to restricted stock awards will lapse and a pro rata portion of all accrued
incentive awards will be paid in cash. Under the Incentive Award Deferral Plan
and the Deferred Compensation Plan, the present value of all deferred amounts
will be paid in cash in the event of a change in control. The present values of
all accrued unfunded benefits under the Management Pension Plan and the Pension
Program will be funded within five days after a change in control.
PERFORMANCE GRAPHS
The following Performance Graphs compare the yearly percentage change of
the cumulative total shareholder return on the Company's Common Shares with the
cumulative total return assuming reinvestment of dividends, of (i) the S&P 500
Stock Index and (ii) the Telephone Peer Group.
<TABLE>
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning December 31, 1988
<CAPTION>
Dec. Dec. Dec. Dec. Dec. Dec.
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
Cincinnati Bell Inc. $100 $128 $113 $ 98 $ 90 $ 99
S&P 500 registered $100 $132 $128 $166 $179 $197
trademark
Telephone Peer Group $100 $155 $145 $155 $169 $200
<FN>
The Telephone Peer Group includes ALLTEL Corp., Ameritech Corp., Bell Atlantic Corp. BellSouth
Corp., BCE Inc., NYNEX Corp., Pacific Telosis Group, Rochester Telephone Corp., Southern New
England Telecommunications Corp., Sprint Corp., Southwestern Bell Corp., and U S West Inc.
</TABLE>
16
<PAGE> 19
<TABLE>
CUMULATIVE TOTAL RETURN SINCE DIVESTURE
Based on reinvestment of $100 beginning December 31, 1983
<CAPTION>
Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec.
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cincinnati Bell Inc. $100 $113 $158 $245 $307 $562 $718 $633 $549 $508 $555
S&P 500 registered $100 $106 $140 $166 $174 $203 $268 $260 $339 $364 $401
trademark
Telephone Peer Group $100 $129 $176 $226 $229 $275 $426 $399 $426 $463 $550
<FN>
The Telephone Peer Group includes ALLTEL Corp., Ameritech Corp., Bell Atlantic Corp. BellSouth
Corp., BCE Inc., NYNEX Corp., Pacific Telosis Group, Rochester Telephone Corp., Southern New
England Telecommunications Corp., Sprint Corp., Southwestern Bell Corp., and U S West Inc.
Footnote -- This performance graph is for shareholder information only and is
not used to compute executive compensation.
</TABLE>
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in next year's Proxy Statement
should be sent to W. H. Zimmer III, Secretary, Room 732, 201 East Fourth Street,
P.O. Box 2301, Cincinnati, Ohio 45201, and must be received by November 14,
1994. Any such proposal must comply with Rule 14a-8 promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
OTHER MATTERS TO COME BEFORE MEETING
At the time this Proxy Statement was released for printing on March 9,
1994, the Company knew of no other matters which might be presented for action
at the meeting. If any other matters properly come before the meeting, it is
intended that the Common Shares represented by proxies will be voted with
respect thereto in accordance with the judgment of the persons voting them.
The costs of soliciting proxies will be borne by the Company. In addition
to this solicitation by mail, directors, officers and regular employees of the
Company may solicit proxies in person or by telephone, make additional requests
for the return of proxies and may receive proxies on behalf of the Company.
Brokers, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares and will be reimbursed
for their expenses. The Company also has retained Georgeson & Company Inc. to
assist it in connection with the solicitation at an estimated fee of $8,500 plus
reimbursement of out-of-pocket expenses.
17
<PAGE> 20
FINANCIAL STATEMENTS AVAILABLE
Financial statements for the Company and its subsidiaries are included in
the Annual Report of the Company to shareholders for the year 1993. A copy of
the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission for the year 1993 will be furnished, without charge, on
request directed to W. H. Zimmer III, Secretary, Room 732, 201 East Fourth
Street, P.O. Box 2301, Cincinnati, Ohio 45201.
By order of the Board of Directors
W. H. ZIMMER III
Secretary
March 14, 1994
18
<PAGE> 21
CINCINNATI BELL INC.
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
The undersigned shareholder appoints Dwight H. Hibbard, Robert T.
O Hummel, M.D. and James D. Kiggen, as proxies, to vote all shares of
the undersigned in Cincinnati Bell Inc. at the annual meeting
X of its shareholders to be held on Monday, April 18, 1994, and at
any adjournment thereof, upon the matters listed on the other side.
Y
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
John F. Barrett, Dwight H. Hibbard and David B. Sharrock ______________________________
______________________________
______________________________
______________________________
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE 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> 22
<TABLE>
<S> <C> <C> <C>
/ X / PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES |
VOTES AS IN THIS |
EXAMPLE. -----
</TABLE>
<TABLE>
<CAPTION> FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Ratification of ap- / / / / / /
Directors pointment of
(see reverse) Coopers & Lybrand
as independent
For, except vote withheld from the accountants
following nominee(s):
___________________________________
3. In their discretion, / / / / / /
upon such other
matters as may
properly come
Change / / before the meeting.
of
Address
Attend / /
Meeting
</TABLE>
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.
