<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Cincinnati Bell Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Merrill Corp
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (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>
[LOGO]
201 EAST FOURTH STREET
P.O. BOX 2301
CINCINNATI, OHIO 45201
NOTICE OF 1996 ANNUAL MEETING
AND PROXY STATEMENT
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
To The Shareholders:
The annual meeting of shareholders of Cincinnati Bell Inc. (the "Company")
will be held in the SPRINGER AUDITORIUM OF MUSIC HALL, 1243 Elm Street,
Cincinnati, Ohio, on Monday, April 22, 1996, at 11:30 A.M. for the following
purposes:
1. To elect three directors for three-year terms ending in 1999;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants to audit the financial statements of the Company for the year
1996; 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 29, 1996 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 SIGNATURE]
W. H. Zimmer III
Secretary
March 14, 1996
<PAGE>
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 18, 1996 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 on April 22, 1996.
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; (2) TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND
L.L.P. AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE YEAR 1996; AND (3) IN
THE DISCRETION OF THE INDIVIDUALS NAMED IN THE PROXY, ON ANY MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING. An abstention from voting and broker non-votes
(as defined below) will be included in determining the presence of a quorum.
In the event that a broker, bank, custodian, nominee or other record holder
of shares indicates on a proxy that it does not have discretionary authority to
vote certain shares on a particular matter (a "broker non-vote"), then those
shares will not be considered present and entitled to vote with respect to that
matter, although they will be counted in determining the presence of a quorum.
If a shareholder is a participant in the Company's Employee Stock Ownership
Plan ("ESOP"), Retirement Savings Plan or Savings and Security Plan, the CBIS
Retirement and Savings Plan or the MATRIXX Marketing Inc. Profit Sharing/401(k)
Plan, and the accounts are registered in the same name, the proxy will also
serve as a voting instruction for the trustees of those plans. All of the plans
except for the ESOP provide that the trustee shall vote plan shares represented
by cards which are not signed and returned in the same proportion as shares for
which signed cards are returned. Shares in the ESOP are not voted unless the
card is signed and returned.
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 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, write W. H. Zimmer III, Secretary, Room 732, 201
East Fourth Street, P.O. Box 2301, Cincinnati, Ohio 45201.
<PAGE>
On the record date, February 29, 1996, outstanding voting securities of the
Company consisted of 66,923,079 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 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 Percent of
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP (a) Class
- ------------------ ---------------------------------- -------------- -------------
<S> <C> <C> <C>
Common Shares The Western and Southern 6,452,696 9.6%
Life Insurance Company
400 Broadway
Cincinnati, Ohio 45202
Common Shares T. Rowe Price Trust Company 3,889,928(b) 5.8%
("T. Rowe Price")
10090 Red Run Boulevard
Owings Mills, Maryland 21117
Common Shares Bankers Trust Company 3,776,064(c) 5.6%
("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 (Key Trust Company of Ohio) 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 318,816 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, 1995 and ending
December 31, 1995, all such
2
<PAGE>
persons complied on a timely basis with the filing requirements of Section
16(a), with the exception of a Form 4 filed after its due date by Mrs.
Stonebraker and a Form 5 that reported a transaction late for Mr. Friedlander.
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, chief executive officer and other officers.
Meetings of the Board of Directors are held approximately eight 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 13 meetings in 1995. Each director
attended at least 93% of the aggregate number of meetings of the Board and
committees of which he or she was a member.
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 one time in 1995.
The Audit Committee has three members, none of whom is an officer 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 four times in 1995.
The Compensation Committee has four members, none of whom is an officer 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 eight times in 1995.
The Finance and Benefits Committee has three members, none of whom is an
officer of the Company. The Committee reviews the capital structure of the
Company, short term borrowing limits, proposed financings, options available for
the financing of all material acquisitions by the Company, the Company's
dividend policy and the Company's benefit plans, the performance of the
portfolio managers of such plans and pension plan funding. 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 five times in 1995.
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 1995.
3
<PAGE>
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 $16,000 and a meeting fee of $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 nonemployee director of the Company
upon his/her 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 such 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 1995, no options were exercised.
Pursuant to the Cincinnati Bell Inc. Retirement Plan for Outside Directors,
non-employee directors with at least five years of service as a director of the
Company upon their retirement 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 three 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, Mr.
Hibbard 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 does not participate
in the Retirement Plan for Outside Directors.
Non-employee directors also were provided certain telecommunications
services. The cost of such services was approximately $1,100 per non-employee
director in 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Raymond R. Clark, who retired as an Executive Vice President and a director
of the Company during 1995, serves as a director of Xtek, Inc. Mr. Kiggen, who
is a director of the Company and a member of the Company's Compensation
Committee, is the Chairman of the Board and Chief Executive Officer 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. The Company's Compensation
Committee consists of Messrs. Kiggen (Chairman), Barrett, Cox and Sharrock.
4
<PAGE>
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of Common Shares as
of February 29, 1996 by each director and named 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 directors and officers of the Company as a group owned
beneficially 1,828,078 Common Shares or 2.73% of the Common Shares outstanding.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AS OF Percent of
FEB. 29, 1996 (a) Common Shares
------------------ -------------
<S> <C> <C>
John F. Barrett.............................................................. 14,384(b)(c) .02%
Phillip R. Cox............................................................... 10,300 .02%
William A. Friedlander....................................................... 95,319(b)(d) .14%
David S. Gergacz............................................................. 120,000 .18%
Brian C. Henry............................................................... 145,966 .22%
Dwight H. Hibbard............................................................ 487,853(b) .73%
Robert P. Hummel, M.D........................................................ 23,501(b) .04%
James D. Kiggen.............................................................. 31,916(b) .05%
John T. LaMacchia............................................................ 442,379(b) .66%
Charles S. Mechem, Jr........................................................ 7,000 .01%
Barry L. Nelson.............................................................. 50,124 .07%
Mary D. Nelson............................................................... 10,000 .01%
David B. Sharrock............................................................ 21,401 .03%
Barbara J. Stonebraker....................................................... 57,799(b) .09%
All Directors and Officers as a group (consisting of 18 persons, including
those named above)......................................................... 1,830,078(b) 2.73%
</TABLE>
- ---------
(a) Includes Common Shares subject to outstanding options under the 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: 384,300 Common Shares for Mr. LaMacchia; 290,000 Common Shares for
Mr. Hibbard; 120,000 Common Shares for Mr. Gergacz; 142,300 Common Shares
for Mr. Henry; 31,000 Common Shares for Mrs. Stonebraker; 29,500 Common
Shares for Mr. Nelson; 20,000 Common Shares for each of Messrs. Friedlander,
Hummel and Kiggen; 18,000 Common Shares for Mr. Sharrock; 12,000 Common
Shares for Mr. Barrett; 10,000 Common Shares for Mr. Cox; 8,000 Common
Shares for Mrs. Nelson and 6,000 Common Shares for Mr. Mechem. 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: 8,296 for Mr.
LaMacchia; 4,100 for Mr. Friedlander; 3,430 for Mrs. Stonebraker; 1,901 for
Dr. Hummel; 1,706 for Mr. Kiggen; 784 for Mr. Barrett; 401 for Mr. Hibbard;
and 1,081 for other officers.
(c) Does not include Common Shares held by The Western and Southern Life
Insurance Company of which Mr. Barrett is President and Chief Executive
Officer. Mr. Barrett disclaims beneficial ownership of those shares.
5
<PAGE>
(d) Includes 52,900 Common Shares as to which Mr. Friedlander disclaims
beneficial ownership. Mr. Friedlander has sole investment power as to these
52,900 Common Shares.
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The Board of Directors of the Company presently consists of ten members, two
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 III directors expire in 1996. The
Board of Directors has nominated Dr. Robert P. Hummel, James D. Kiggen and Mary
D. Nelson for election as directors in Class III to serve until the 1999 annual
meeting of shareholders. The three nominees for director receiving the greatest
number of votes will be elected Class III directors. The four directors in Class
I continue to serve until the 1997 annual meeting of shareholders, and the three
directors in Class II continue to serve until the 1998 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 on the table on page 5.
NOMINEES FOR CLASS III DIRECTORS
(TERMS EXPIRE IN 1999)
Dr. Robert P. Hummel, Chief of Staff of University Hospital; Emeritus
Professor of Surgery, College of Medicine, University of Cincinnati. Director of
the Company since 1983; Chairman of the Finance and Benefits Committee and
member of the Executive Committee. Age 67.
James D. Kiggen, Chairman of the Board and Chief Executive Officer of Xtek,
Inc. (manufacturer of engineered steel products for heavy industry) since 1985;
President of Xtek, Inc. 1985-1995. Director of Fifth Third Bancorp and its
subsidiary, The Fifth Third Bank, The United States Playing Card Company
(manufacturer of playing cards) and Xtek, Inc. Director of the Company since
1983; Chairman of the Compensation Committee and member of the Executive
Committee. Age 64.
Mary D. Nelson, President of Nelson & Co. (consulting actuaries) since 1975.
Director of Blount International, Inc. (manufacturer of outdoor products,
industrial and power equipment and sporting equipment) and The Union Central
Life Insurance Company. Director of the Company since 1994; a member of the
Audit Committee and the Finance and Benefits Committee. Age 62.
CLASS I DIRECTORS
(TERMS EXPIRE IN 1997)
John F. Barrett, President and Chief Executive Officer of The Western and
Southern Life Insurance Company since March 8, 1994; President and 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, The Fifth Third Bancorp and its subsidiary, The
Fifth Third Bank,
6
<PAGE>
and The Andersons, Inc. (diversified agribusiness and retailing company).
Director of the Company since 1992; member of the Audit Committee, the
Compensation Committee and the Nominating Committee. Age 46.
Dwight H. Hibbard, Chairman of the Company since 1985; Chief Executive
Officer of the Company, 1985-1993; Chairman of Cincinnati Bell Telephone
Company, 1985-1993. Director of Teradyne, Inc. (supplier of automatic test
systems). Director of the Company since 1974; Chairman of the Executive
Committee and Chairman of the Nominating Committee. Age 72.
Charles S. Mechem, Jr., Commissioner Emeritus, Ladies Professional Golf
Association (women's professional sports organization). Retired Commissioner,
Ladies Professional Golf Association, 1991-1995; Former Chairman of The United
States Shoe Corporation (manufacturer and retailer of shoes, retailer of women's
apparel, and manufacturer and retailer of eyeglasses), 1993-1995; Retired
Chairman & CEO of Taft Broadcasting Company, 1967-1990. Director of AGCO
(manufacturer and distributor of agricultural equipment and replacement parts),
Mead Corporation (forest products company), Ohio National Life Insurance
Company, J. M. Smucker Company (food products company), Star Banc Corp. and its
subsidiary, Star Bank, N.A. Director of the Company since December 1995. Age 65.
David B. Sharrock, Consultant since 1994; Retired Executive Vice President
and Chief Operating Officer of Marion Merrell Dow Inc. (researcher, manufacturer
and seller of pharmaceutical products) 1989-1993; President and Chief Operating
Officer of Merrell Dow Pharmaceuticals Inc., 1988-1989. Director of Unitog Co.
(uniform rental company), Interneuron Pharmaceuticals Inc. (pharmaceutical
research), Progenitor, Inc. (pharmaceutical research), Intercardia, Inc.
(pharmaceutical product development) and Pharmaceutical Peptides, Inc.
(pharmaceutical research). Director of the Company since 1987; member of the
Compensation Committee and the Nominating Committee. Age 59.
CLASS II DIRECTORS
(TERMS EXPIRE IN 1998)
Phillip R. Cox, President and Chief Executive Officer of Cox Financial
Corporation (financial planning) since 1972. Director of Federal Reserve Bank of
Cleveland, CINergy Corp. (gas and electric utility) and PNC Bank, Ohio, N.A.
Director of the Company since 1993; member of the Compensation Committee and the
Finance and Benefits Committee. Age 48.
William A. Friedlander, Chairman of Bartlett & Co. (a registered investment
advisor) since 1989; Chief Executive Officer, 1986-1989. Director of The Union
Central Life Insurance Company. Director of the Company since 1986; Chairman of
the Audit Committee and member of the Executive Committee. Age 63.
John T. LaMacchia, President and Chief Executive Officer of the Company
since October 1, 1993; President of the Company since January 1, 1988; Chairman
of Cincinnati Bell Telephone Company since November 1993; Chairman of Cincinnati
Bell Information Systems Inc. since October 1988; Chief Operating Officer of the
Company, 1988-1993. Director of The Kroger Co. (food retailer). Director of the
Company since 1985; member of the Executive Committee. Age 54.
7
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM 2 ON THE PROXY CARD)
Subject to shareholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has reappointed the firm of Coopers &
Lybrand L.L.P. as independent accountants to audit the financial statements of
the Company for the year 1996. Coopers & Lybrand L.L.P. 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 L.L.P. 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 L.L.P. 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, operating 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.
The Compensation Committee recommends to the Board of Directors compensation
for the Chief Executive Officer and Messrs. Henry and Gergacz. The compensation
of Mrs. Stonebraker is established by the Board of Directors of Cincinnati Bell
Telephone Company ("CBT"). The compensation of Mr. Nelson is established by the
Board of Directors of Cincinnati Bell Long Distance Inc. ("CBLD").
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.
BASE SALARY. After reviewing (i) several national surveys(1) concerning the
compensation paid by companies in a broad spectrum of businesses focusing on
compensation at the 50th percentile of companies whose revenues are comparable
to those of the Company, (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. LaMacchia and Henry,
the Compensation Committee recommended a $25,000 increase in base salary for
Messrs. LaMacchia and Henry effective January 1, 1995. Mr. Gergacz' salary was
established pursuant to his employment contract. The salaries of Messrs.
LaMacchia, Henry and Gergacz 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 75th percentile.
ANNUAL INCENTIVES. The Company's Short Term Incentive Plan, which includes
the Chief Executive Officer and Messrs. Henry and Gergacz, 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 must achieve certain levels of "earnings per share" (EPS) and, for
Mr. Gergacz, CBT must also achieve certain levels of operating income and meet
capital expenditure targets as well as meet certain levels of customer service
and (ii) the individual officer's performance, in the judgment of the
Compensation Committee, must be deserving. The threshold amount for the EPS
component is 90% with the maximum amount payable upon the achievement of 110% of
the targeted goal. The threshold amount for
- ---------
(1) The salary and bonus 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.
8
<PAGE>
the operating income component 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(2) and from historical bonus targets established in previous
years. Compared to the Survey Group, target cash awards for executive officers
average 91% of the 75th percentile.
Since 127% of the Company EPS goals, 107% of the CBT operating income goal,
and the CBT capital expenditure and service goals were achieved, 1995 short term
incentive awards were approved for Messrs. LaMacchia, Henry and Gergacz. The
amounts of those awards appear in the Summary Compensation Table on page 11.
LONG TERM INCENTIVES. 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 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(3) that measured option
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. Gergacz' 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 1995 to the named executive officers other
than Mr. Gergacz were at or below the 50th percentile with Mr. LaMacchia at the
50th percentile.
Beginning in 1996, a portion of the long-term incentive can be in the form
of performance shares. Distribution will be made at the end of a three-year
performance period depending on the extent to which the Company's cumulative
total shareholder return for the performance period compares with a comparison
group mean cumulative return.
STOCK OWNERSHIP GUIDELINES. To further align the interests of the
executives and the Company's shareholders, the Compensation Committee has
established stock ownership guidelines for its executive officers. The Chief
Executive Officer is expected to have approximately three times his base salary
in Common Shares and other executive officers are expected to have approximately
one and one-half times their base salary in Common Shares. These shares can
include shares acquired on the open market or through Company plans, including
the Retirement Savings Plan. Executives will be given a reasonable amount of
time to satisfy these guidelines.
- ---------
(2) The salary and bonus 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.
(3) The companies used in the survey from which stock option grants are
determined consist of 276 national companies that 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 the surveys.
9
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE. Mr. LaMacchia served in the capacity
of President and Chief Executive Officer throughout 1995. As President and Chief
Executive Officer, in accordance with the policies discussed, his base salary
for 1995 was $525,000. He received a stock option grant for 75,000 Common
Shares, and he received a short term award of $500,000.
COMPENSATION LIMITATIONS. The Compensation Committee is continuing to
consider the effect of section 162(m) of the Internal Revenue Code, which limits
the deduction for compensation paid to the Company's named executives. Of the
compensation paid to the Company's named executives for 1995, $25,000 of Mr.
LaMacchia's compensation may not be deductible by reason of this limitation. As
long as the Company's potential tax liability from the loss of the deduction
remains nominal, no action will be taken.
Compensation Committee
James D. Kiggen, Chairman
John F. Barrett
Phillip R. Cox
David B. Sharrock
10
<PAGE>
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
The following table shows the compensation of the Chief Executive Officer
and the other four most highly compensated executive officers of the Company or
any of its subsidiaries for services to the Company and its subsidiaries in all
capacities. Mr. LaMacchia served as a director of the Company but received no
separate compensation in that capacity.
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Awards
Annual Compensation ------------------------ Payouts
------------------------------------- SECURITIES ----------
OTHER ANNUAL RESTRICTED UNDERLYING LONG-TERM ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK OPTIONS INCENTIVE COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) AWARDS($) (#) PAYOUTS($) ($) (a)
---------------------- ---- --------- --------- -------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John T. LaMacchia 1995 $525,000 $500,000 (b) $ 0 75,000 $ 0 $ 6,000
President & CEO 1994 500,000 500,000 (b) 0 100,000 0 6,000
1993 415,000 0 (b) 0 60,000 0 6,994
Brian C. Henry 1995 $300,000 $175,000 (b) $ 0 25,000 $ 0 $ 18,808
Executive Vice 1994 275,000 175,000 (b) 0 20,000 0 11,000
President & CFO 1993 180,000 160,000 (b) 0 80,000 0 0
Barbara J. Stonebraker 1995 $192,000 $120,885 (b) $254,070(c) 7,500 $ 0 $ 10,741
Senior Vice 1994 186,000 80,000 (b) 0 4,000 0 8,000
President of CBT 1993 184,000 46,000 (b) 0 4,000 0 9,434
David S. Gergacz(d) 1995 $115,000 $195,000 $ 197,047(e) $ 0 100,000 $ 0 $ 0
Executive Vice 1994 -- -- -- -- -- -- --
President of CBI & 1993 -- -- -- -- -- -- --
President &
CEO of CBT
Barry L. Nelson 1995 $160,000 $150,000 (b) $254,070(c) 10,000 $ 0 $ 6,000
President & CEO 1994 151,699 120,000 (b) 0 2,500 0 5,533
of CBLD 1993 133,987 100,000 (b) 0 2,500 0 9,434
</TABLE>
a) Represents Company contributions to defined contribution savings plans and
to the Deferred Compensation Plan described on page 16.
b) 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.
c) 15,000 Common Shares at $16.938. Restrictions lapse with respect to 9,000
Common Shares in 1997, an additional 3,000 Common Shares in 1998 and the
remaining 3,000 Common Shares in 1999.
d) Mr. Gergacz' date of employment was July 17, 1995.
e) Includes $192,099 of relocation expenses. Other amounts were less than 25%
of the total perquisites and other personal benefits reported for Mr.
Gergacz.
11
<PAGE>
II. GRANTS OF STOCK OPTIONS
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 1995.
<TABLE>
<CAPTION>
Potential Realizable
NUMBER OF % of Total Value at Assumed Annual
SECURITIES Options Rates of Stock Price
UNDERLYING Granted to Exercise Appreciation for Option
OPTIONS Employees or Base Term (b)
GRANTED (#) in Fiscal Price Expiration ------------------------
NAME (a) Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------- ----------- ----------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
John T. LaMacchia 75,000 7.5% $ 16.938 1/3/05 $ 798,900 $ 2,024,400
Brian C. Henry 25,000 2.5% $ 16.938 1/3/05 $ 266,300 $ 674,800
Barbara J. Stonebraker 7,500 .8% $ 16.938 1/3/05 $ 79,890 $ 202,440
David S. Gergacz 100,000 10.1% $ 26.625 7/17/05 $ 1,674,500 $ 4,243,500
Barry L. Nelson 10,000 1.0% $ 16.938 1/3/05 $ 106,520 $ 269,920
</TABLE>
(a) The material terms of the options granted are: grant type, non-statutory;
grant price, fair market value on grant date; in general, exercisable after
one year; term of grant, 10 years, except in cases of retirement, disability
or death; and unexercisable options are cancelled upon termination of
employment. In the case of Mr. Gergacz' grant, the options are exercisable
as follows: one-third are exercisable in 1996, an additional one-third in
1997 and the remaining one-third in 1998.
(b) 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 $27.59 and $43.93 for the named executives other than Mr.
Gergacz and $43.37 and $69.06 for Mr. Gergacz. They are not intended,
however, to forecast possible future appreciation, if any, in the price of
the Company's Common Shares. The total of all stock options granted to
employees, including executive officers, during fiscal 1995 was
approximately 1.49% of the total Common Shares outstanding during the year.
As an alternative to the assumed potential realizable values stated in the
above table, the Securities and Exchange Commission rules would permit
stating the present value of such options at date of grant. Methods of
computing present values suggested by different authorities can produce
significantly different results. Moreover, since stock options granted by
the Company are not transferable, there are no objective criteria by which
any computation of present value can be verified. Consequently, the
Company's management does not believe there is a reliable method of
computing the present value of such stock options.
12
<PAGE>
III. AGGREGATE OPTION EXERCISES
The following table shows fiscal year-end values only because no options
were exercised during fiscal year 1995.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS AT
FY-END (#)
EXERCISABLE
(E)/
SHARES ACQUIRED VALUE UNEXERCISABLE
NAME ON EXERCISE (#) REALIZED ($) (U)
- --------------------------------------------------------- --------------- ------------ -------------
<S> <C> <C> <C>
E270,000
John T. LaMacchia 0 $ 0 U 75,000
E 73,333
Brian C. Henry 0 $ 0 U 51,667
E 12,000
Barbara J. Stonebraker 0 $ 0 U 11,500
David S. Gergacz 0 $ 0 E 0
E 7,000
Barry L. Nelson 0 $ 0 U 12,500
<CAPTION>
VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT
FY-END ($) (a)
Exercisable (E)/
NAME Unexercisable(U)
- --------------------------------------------------------- -----------------------------------
<S> <C>
E$4,203,700.00
John T. LaMacchia U 1,335,900.00
E$1,024,569.00
Brian C. Henry U 791,971.00
E$ 177,500.00
Barbara J. Stonebraker U 199,838.00
E$ 0.00
David S. Gergacz U 812,500.00
E$ 105,187.50
Barry L. Nelson U 219,525.00
</TABLE>
(a) Values stated based on the fair market value (average of the high and low)
of $34.75 per share of the Common Shares on the New York Stock Exchange on
December 29, 1995.
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, 1995, no table has
been included.
V. DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
Mr. LaMacchia participates 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>
$ 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
1,000,000 340,500 453,333 566,667 680,000
1,075,000 365,000 487,333 609,167 731,000
</TABLE>
Pension amounts shown under the foregoing table are annual straight life
annuity pension amounts assuming retirement at age 65, prior to deduction for
Social Security benefits. If retirement occurs prior to age 60, the pension
amounts shown may be reduced by 5% for each year by which the participant's age
at retirement is less than age 60. To compute the estimated annual retirement
benefits of Mr. LaMacchia, the amount of compensation which can be used is
$1,025,000 and the number of his years of credited service at December 31, 1995
is 29. The covered compensation is for the twelve consecutive month period
during the thirty-six consecutive month period ending December 31, 1995 which
produces the highest dollar amount.
13
<PAGE>
Currently, the benefit formula under the Management Pension Plan is a cash
balance formula. Under this 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 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>
Less than 30 years 2.50% of total covered compensation plus 2.50% of excess
compensation
30 but less than 35 years 2.75% of total covered compensation plus 2.75% of excess
compensation
35 but less than 40 years 3.25% of total covered compensation plus 3.25% of excess
compensation
40 but less than 45 years 4.00% of total covered compensation plus 4.00% of excess
compensation
45 but less than 50 years 5.25% of total covered compensation plus 5.25% of excess
compensation
50 but less than 55 years 6.50% of total covered compensation plus 6.50% of excess
compensation
55 or more years 8.00% of total 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 was credited with
pension credits equivalent to the employee's accrued benefit on that date.)
Messrs. Henry, Gergacz and Nelson and Mrs. Stonebraker participate in the
Management Pension Plan but do not participate in the Pension Program. If they
continue in employment and retire at normal retirement age of 65, their
estimated annual pension amounts under the Management Pension Plan would be
$161,687 for Mr. Henry, $97,736 for Mrs. Stonebraker, $100,819 for Mr. Gergacz
and $80,604 for Mr. Nelson.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In December 1987, the Company entered into an Executive Employment Agreement
with Mr. LaMacchia. The Agreement is not a typical employment agreement in that
Mr. LaMacchia's term of employment under the Agreement does not commence until
the date of a "change in control" (as defined in the Agreement) of the Company.
Under the Agreement, Mr. LaMacchia (i) continues to be employed in the same
position that he had on the day preceding the change in control with the
responsibilities and authorities that executives in comparable companies possess
and (ii) receives 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, he may terminate his employment, with or without
reason, upon one month's prior written notice. The Company may terminate his
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 his employment in a breach of his Agreement or
he 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
Agreement includes all amounts attributed or earned 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 Agreement 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,
14
<PAGE>
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; 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, 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.
In July, the Company entered into an Employment Agreement with Mr. Gergacz
which provides for the employment and retention of Mr. Gergacz as Executive Vice
President of the Company and as President and Chief Executive Officer of CBT for
a term commencing on July 17, 1995 and ending on July 16, 2000. The Employment
Agreement provides for: an initial base salary of $300,000 per year; the
opportunity to earn a bonus under the Short Term Incentive Plan, with minimum
bonus targets of $62,500 for 1995 and $150,000 for each subsequent year; the
opportunity to participate in a long term incentive plan providing a payment of
up to $1,200,000 depending on the extent to which 5-year performance goals are
exceeded; an initial grant of options to purchase 100,000 Common Shares and an
annual grant, commencing in 1996, of options to purchase 20,000 Common Shares; a
supplemental pension of up to that portion of his accrued pension under the
Management Pension Plan attributable to his first 10 years of service; a hiring
bonus of $100,000; and benefits and perquisites consistent with the treatment of
similarly situated employees of the Company. The Employment Agreement provides
that if Mr. Gergacz' employment terminates following a change in control of the
Company or CBT, Mr. Gergacz will receive a lump sum payment equal to the greater
of $900,000 or three times his annual base salary on the date of termination. In
the event that the Company terminates Mr. Gergacz' employment (other than for
cause or disability), Mr. Gergacz will receive a lump sum severance payment
equal to two times the sum of his current annual base salary and target bonus.
In December 1994, CBT entered into an Employment Agreement with Mrs.
Stonebraker which provides for the employment and retention of Mrs. Stonebraker
as a Senior Vice President for a term commencing on December 31, 1994 and ending
on December 31, 1999. The Employment Agreement provides for: an initial base
salary of $192,000 per year, which is subject to annual performance reviews; the
opportunity to earn a bonus under CBT's regular compensation program; an annual
grant of options to purchase 7,500 Common Shares; a restricted stock award of
15,000 Common Shares (which were issued on January 3, 1995); and benefits and
perquisites consistent with the treatment of similarly situated employees. The
Employment Agreement states that if Mrs. Stonebraker's employment terminates
following a change in control of the Company or CBT, Mrs. Stonebraker will
receive a lump sum payment equal to 2.99 times her base salary, her options will
become immediately exercisable and the restrictions otherwise applicable to her
restricted stock award will lapse. In the event that CBT terminates Mrs.
Stonebraker's employment (other than for cause or disability), Mrs. Stonebraker
will receive a lump sum severance payment equal to the lesser of two times her
base salary or her base salary for the remainder of the term.
In October 1994, the Company entered into an employment agreement with Mr.
Nelson which provides for the employment and retention of Mr. Nelson as
President and Chief Executive Officer of CBLD for a term commencing on January
1, 1995 and terminating on December 31, 1999. The Employment Agreement provides
for: an initial base salary of $160,000 per year, which is subject to annual
performance reviews; the opportunity to earn a bonus under the Company's regular
compensation program, with a minimum bonus target of $75,000 per year; an annual
grant of options to purchase 10,000 Common Shares; a restricted stock award of
15,000 Common Shares (which were issued on January 3, 1995); and benefits and
perquisites consistent with the treatment of similarly employees. The Employment
Agreement states that if Mr. Nelson's employment terminates following a change
in control of the Company or CBLD, Mr. Nelson will receive a lump sum payment
equal to 2.99 times his base salary, his options will become immediately
exercisable and the restrictions otherwise applicable to his restricted stock
award will lapse. In the event that the Company terminates Mr. Nelson's
employment (other than for
15
<PAGE>
cause or disability), Mr. Nelson will receive a lump severance payment equal to
the lesser of two times his base salary or his base salary for the remainder of
the term and the restrictions applicable to a pro-rata portion of the restricted
stock award shall lapse.
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 75% 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 will be a
Company "match" which is established by the Compensation Committee. For 1995,
the "match" was $.666 for each dollar deferred (up to 6% of compensation).
Amounts deferred by participants (and the related Company "match") are assumed
to have been invested in various mutual funds and other investments (including
Company Shares). Upon termination of employment, the amounts then credited to
the participant's account are distributed in two equal annual installments or in
up to ten annual installments. The 1995 "match" for Mr. Henry and Mrs.
Stonebraker is reflected in the Summary Compensation Table under the "All Other
Compensation" column. Messrs. LaMacchia, Gergacz and Nelson did not participate
in the Deferred Compensation Plan during 1995.
Under the Long Term Incentive 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31,
1990
CINCINNATI BELL
INC. S&P 500 TELEPHONE PEER GROUP
<S> <C> <C> <C>
Dec-90 $100 $100 $100
Dec-91 $87 $130 $108
Dec-92 $80 $140 $120
Dec-93 $88 $155 $140
Dec-94 $87 $157 $133
Dec-95 $183 $215 $201
Source: Georgeson & Company Inc.
</TABLE>
The Telephone Peer Group consists of ALLTEL Corp., Ameritech Corp., Bell
Atlantic Corp., BellSouth Corp., Frontier Corp., GTE Corp., NYNEX Corp.,
Pacific Telesis Group, SBC Communications Inc., Southern New England
Telecommunications Corp., Sprint Corp., and U S West Inc.
16
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN SINCE INSTITUTED
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31,
1983
CINCINNATI BELL
INC. S&P 500 TELEPHONE PEER GROUP
<S> <C> <C> <C>
Dec-83 $100 $100 $100
Dec-84 $113 $106 $127
Dec-85 $158 $140 $174
Dec-86 $245 $166 $230
Dec-87 $307 $174 $233
Dec-88 $562 $203 $285
Dec-89 $718 $268 $451
Dec-90 $633 $260 $421
Dec-91 $549 $339 $457
Dec-92 $508 $364 $505
Dec-93 $555 $401 $591
Dec-94 $550 $406 $562
Dec-95 $1,158 $559 $847
Source: Georgeson & Company Inc.
</TABLE>
The Telephone Peer Group consists of ALLTEL Corp., Ameritech
Corp., Bell Atlantic Corp., BellSouth Corp., Frontier Corp., GTE
Corp., NYNEX Corp., Pacific Telesis Group, SBC Communications
Inc., Southern New England Telecommunications Corp., Sprint Corp.,
and U S West Inc.
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 19,
1996. 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 14,
1996, 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>
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 1995. A copy of
the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission for the year 1995 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 SIGNATURE]
W. H. Zimmer III
Secretary
March 14, 1996
18
<PAGE>
CINCINNATI BELL INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder appoints Dwight H. Hibbard, Dr. Robert P. Hummel,
and James D. Kiggen, or any of them, with full power of substitution, as
proxies, to vote all shares of the undersigned in Cincinnati Bell Inc. at the
annual meeting of its shareholders to be held on Monday, April 22, 1996, and at
any adjournment thereof, upon the matters listed on the other side and, in their
discretion, upon such other matters as may properly come before the meeting.
Election of Directors, Nominees: (change of address)
Dr. Robert P. Hummel, James D. Kiggen and Mary D. Nelson
----------------------
----------------------
----------------------
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
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>
SHARES IN YOUR NAME REINVESTMENT SHARES
/X/ Please mark your votes as in this example.
The Board of Directors recommends a vote FOR proposals 1 and 2.
FOR WITHHELD
1. Election of
Directors / / / /
(SEE REVERSE)
FOR AGAINST ABSTAIN
2. Ratification of appointment of
Coopers & Lybrand L.L.P. as / / / / / /
independent accountants.
3. In their discretion, upon such
other matters as may properly come
before the meeting.
For, except vote withheld from the following nominee(s):
- ------------------------------------------------------------
Change of Address / /
Attend Meeting / /
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.
<PAGE>
PROXY
CONFIDENTIAL VOTING INSTRUCTIONS
TO TRUST COMPANY BANK
AS TRUSTEE FOR CBIS RETIREMENT AND SAVINGS PLAN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby instruct the trustee to vote (in person or by proxy) all
Cincinnati Bell Inc. common shares which are credited to my account at the
shareholders' annual meeting of the Company to be held April 22, 1996 and at all
adjournments thereof, on the following matters, as checked.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE PLAN PARTICIPANT WHOSE SIGNATURE APPEARS.
The Trustee shall vote all shares for which voting instructions have not
been received by April 17, 1996 in the same proportion as those shares for which
the Trustee received instructions.
Using the enclosed envelope, please date, sign and return this proxy to
Trust Company Bank by April 17, 1996.
(change of address)
--------------------------------------
--------------------------------------
--------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
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>
SHARES IN YOUR NAME REINVESTMENT SHARES
/X/ Please mark your votes as in this example.
The Board of Directors recommends a vote FOR proposals 1 and 2.
FOR WITHHELD
1. Election of
Directors / / / /
(SEE REVERSE)
FOR AGAINST ABSTAIN
2. Ratification of appointment of
Coopers & Lybrand L.L.P. as / / / / / /
independent accountants.
3. In their discretion, upon such
other matters as may properly come
before the meeting.
For, except vote withheld from the following nominee(s):
- ------------------------------------------------------------
Dr. Robert P. Hummel, James D. Kiggen and Mary D. Nelson
Change of Address / /
Attend Meeting / /
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.
