<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
CINCINNATI BELL INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
201 EAST FOURTH STREET
P.O. BOX 2301
CINCINNATI, OHIO 45201
NOTICE OF 1998 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 27, 1998, at 11:30 A.M. for the following
purposes:
1. To elect five directors for three-year terms ending in 2001;
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
1998; 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 27, 1998 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. D. Baskett III
Secretary
March 12, 1998
<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 25, 1998 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 27, 1998, at 11:30 A.M. in the
Springer Auditorium of Music Hall, 1243 Elm Street, Cincinnati, Ohio.
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. D. Baskett
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 AS CLASS II DIRECTORS ON PAGES 6 AND 7; (2) TO RATIFY THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS OF THE
COMPANY FOR THE YEAR 1998; AND (3) TO ACT UPON SUCH OTHER 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"), 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 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 these plans. All of these
plans except for the ESOP provide that the trustee shall vote plan shares
represented by proxy 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.
<PAGE>
GENERAL
On the record date, February 27, 1998, outstanding voting securities of the
Company consisted of 136,420,671 Common Shares, $1.00 par value ("Common
Shares"), all of one class. Unless otherwise indicated, all references to
numbers of Common Shares in this Proxy Statement are after giving effect to the
May 30, 1997 two-for-one split of the Company's Common Shares. Each Common Share
has one vote on each matter presented for action at the meeting. The following
table sets forth information, unless otherwise indicated as of the record date,
with respect to those persons that 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 12,905,392(b) 9.45%
Life Insurance Company
("Western Southern")
400 Broadway
Cincinnati, Ohio 45202
Common Shares FMR Corp. and 7,174,295(c) 5.24%(c)
Edward C. Johnson 3d,
Chairman of FMR Corp.
</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) Western Southern has advised the Company that 8,000,000 of these Common
Shares may be transferred, at its option, to Salomon Inc upon the maturity
of Salomon's 6 1/4% Exchangeable Notes due February 1, 2001.
(c) Two wholly-owned subsidiaries of FMR Corp. beneficially own the Common
Shares: (1) Fidelity Management & Research Company, an investment adviser to
various investment companies, is the beneficial owner of 5,782,884 Common
Shares or 4.22%, and (2) Fidelity Management Trust Company, a bank serving
as an investment manager of institutional account(s), is the beneficial
owner of 1,391,411 Common Shares or 1.02%. The number of Common Shares owned
includes 1,011,126 Common Shares resulting from the assumed conversion of
606,700 of Salomon's 6 1/4% Exchangeable Notes due February 1, 2001 (1.6666
Common Shares for each Note). Amount and Nature of Ownership and Percent of
Class are as of December 31, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1997 and ending
December 31, 1997, all such persons complied on a timely basis with the filing
requirements of Section 16(a).
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
2
<PAGE>
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 scheduled 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 12 meetings in 1997. Each director
attended at least 80% of the total 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 six members, three of whom are 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 two
times in 1997.
The Audit Committee has five 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 1997.
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
Company's Long Term Incentive Plan, Short Term Incentive Plan, Pension Program
and Executive Deferred Compensation Plan (the "Deferred Compensation Plan"). The
Committee met five times in 1997.
The Corporate Responsibility Committee has four members, none of whom is an
officer of the Company. The Committee is charged with questioning and evaluating
the Company's policies and conduct as a corporate citizen. It is accountable to
and subject to the control and direction of the Board of Directors. The
Committee met three times in 1997.
The Corporate Strategy Committee has five members, none of whom is an
officer of the Company. The Committee meets from time to time to discuss
corporate strategies. From time to time the Committee will make such reports and
recommendations to the Board with respect to the foregoing as it deems
appropriate. The Committee did not meet in 1997.
The Finance Committee has six 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, 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 eight times in 1997.
The Governance and Nominating Committee has six members, one of whom is an
officer of the Company. The Committee reviews the performance of senior
management, recommends candidates for director, monitors the scope and
performance of Board committees, and suggests to the Board shareholder concerns
to be addressed. The Committee met two times in 1997.
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. The Chairmen of the Audit Committee, the
Compensation Committee, the Corporate Responsibility Committee and the Finance
Committee receive an additional fee of $3,000 per year for serving as Chairmen
of those committees. In lieu of the annual retainer and individual meeting fees,
Mr. Mechem, as Chairman of the Board, receives an annual fee of $300,000 and
supplemental medical insurance, the cost of which is approximately $1,941 per
year.
Directors may elect to defer the receipt of all or a part of their fees and
retainers under the Cincinnati Bell Inc. Deferred Compensation Plan for Outside
Directors (the "Directors Deferred Compensation Plan"). 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. Whether or not a
director elects to defer any fees or retainers, on each January 1 an amount
equivalent in value to 500 Common Shares automatically is credited to a share
account under the Directors Deferred Compensation Plan for each active director.
Amounts credited to a director's share account will be assumed to be invested
and reinvested in Common Shares. Accounts under the Directors Deferred
Compensation Plan are paid out in cash, in one lump sum or up to ten annual
installments, when the director leaves the Board. However, amounts credited to a
share account are subject to forfeiture if the director leaves the Board (other
than by reason of death) prior to completing at least five years service as a
non-employee director.
Non-employee directors also receive stock options pursuant to the Stock
Option Plan for Non-Employee Directors ("Directors Stock Option Plan"). Each
non-employee director of the Company upon his or her initial appointment or
election as a director receives an option to purchase 12,000 Common Shares. On
the date of each annual shareholder meeting subsequent to a director's initial
election or appointment, he or she will receive an option to purchase 4,000
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.
Non-employee directors also are provided certain telecommunications
services. The cost of such services was approximately $686 per non-employee
director in 1997.
4
<PAGE>
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of Common Shares as
of February 27, 1998 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 3,282,341 Common Shares or 2.41% of the Common Shares outstanding.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AS OF PERCENT OF
FEB. 27, 1998 (A) COMMON SHARES
------------------ -------------
<S> <C> <C>
John F. Barrett (b)(c)....................................................... 36,768 .03%
Judith G. Boynton............................................................ 13,000 .01%
Phillip R. Cox............................................................... 28,600 .02%
Richard G. Ellenberger....................................................... 79,200 .06%
William A. Friedlander (b)(d)................................................ 174,963 .13%
Brian C. Henry............................................................... 260,836 .19%
Roger L. Howe................................................................ 56,000 .04%
Robert P. Hummel, M.D. (b)................................................... 43,002 .03%
James D. Kiggen (b).......................................................... 73,870 .05%
John T. LaMacchia............................................................ 964,957 .71%
Robert J. Marino............................................................. 135,844 .10%
Steven C. Mason.............................................................. 13,000 .01%
Charles S. Mechem, Jr........................................................ 41,151 .03%
Mary D. Nelson............................................................... 28,000 .02%
James F. Orr................................................................. 535,206 .39%
Brian H. Rowe................................................................ 19,317 .01%
David B. Sharrock............................................................ 26,802 .02%
All Directors and Officers as a group (consisting of 24 persons, including
those named above)......................................................... 3,223,365 2.36%
</TABLE>
- ------------------------
(a) Includes Common Shares subject to outstanding options under the Long Term
Incentive Plan and the Directors Stock Option Plan which are exercisable by
such individuals within 60 days. The following options are included in the
totals: 860,900 Common Shares for Mr. LaMacchia; 499,400 Common Shares for
Mr. Orr; 253,000 Common Shares for Mr. Henry; 104,200 Common Shares for Mr.
Marino; 54,200 Common Shares for Mr. Ellenberger; 36,000 Common Shares for
each of Messrs. Friedlander, Hummel and Kiggen; 32,000 Common Shares for
each of Messrs. Barrett and Mechem; 26,600 Common Shares for Mr. Cox; 24,000
Common Shares for Mrs. Nelson; 20,000 Common Shares for Mr. Sharrock; 16,000
Common Shares for each of Messrs. Howe and Rowe; and 12,000 Common Shares
for each of Mrs. Boynton and Mr. Mason.
(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: 8,200 for Mr.
Friedlander; 3,802 for Dr. Hummel; 3,551 for Mr. Kiggen; 1,568 for Mr.
Barrett; and 14,313 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.
(d) Includes 96,350 Common Shares as to which Mr. Friedlander disclaims
beneficial ownership. Mr. Friedlander has sole investment power as to these
96,350 Common Shares.
5
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The Board of Directors of the Company presently consists of fourteen
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 Class II directors expire in
1998. The Board of Directors has nominated Phillip R. Cox, William A.
Friedlander, Roger L. Howe, John T. LaMacchia and Steven C. Mason for election
as directors in Class II to serve until the 2001 annual meeting of shareholders.
The five nominees for director receiving the greatest number of votes will be
elected Class II directors. The five directors in Class III continue to serve
until the 1999 annual meeting of shareholders and the four directors in Class I
continue to serve until the 2000 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.
NOMINEES FOR CLASS II DIRECTORS
(TERMS EXPIRE IN 2001)
<TABLE>
<S> <C>
Phillip R. Cox, President and Chief Executive Officer of Cox
[PHOTO] Financial Corporation (financial planning) since 1972. Director
of Federal Reserve Bank of Cleveland, CINergy Corp., BDM
International, Touchstone Mutual Funds and PNC Bank, Ohio, N.A.
Director of the Company since 1993; Chairman of the Finance
Committee and member of the Corporate Responsibility Committee.
Age 50.
William A. Friedlander, Chairman of Bartlett & Co. (a registered
[PHOTO] investment advisor) since 1989; Chief Executive Officer,
1966-1989. Director of The Union Central Life Insurance Company.
Director of the Company since 1986; member of the Corporate
Responsibility Committee, the Corporate Strategy Committee and
the Governance and Nominating Committee. Age 65.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Roger L. Howe, Retired Chairman of the Board of U.S. Precision
[PHOTO] Lens, Inc. (manufacturer of optics for consumer and industrial
applications) since 1997; Chairman of the Board, 1988-1997;
Chairman of the Board and Chief Executive Officer, 1970-1988.
Director of Baldwin Piano & Organ Co., Cintas Corporation, and
Star Bank Corp. and its subsidiary, Star Bank, N.A. Director of
the Company since 1996; member of the Audit Committee, the
Corporate Strategy Committee, the Finance Committee and the
Governance and Nominating Committee. Age 63.
John T. LaMacchia, President and Chief Executive Officer of the
[PHOTO] Company since 1993; President of the Company since 1988;
Chairman of Cincinnati Bell Telephone Company since 1993;
Chairman of Cincinnati Bell Information Systems Inc., 1988-1996;
Chief Operating Officer of the Company, 1988-1993. Director of
The Kroger Co. and Burlington Resources Inc. Director of the
Company since 1985; member of the Executive Committee. Age 56.
Steven C. Mason, Retired Chairman of the Board, Chief Executive
[PHOTO] Officer and President of Mead Corporation since 1997; Chairman
of the Board and Chief Executive Officer and President of Mead
Corporation, 1992-1997. Director of PPG Industries, Inc. and
Elder Beerman Stores. Director of the Company since February
1998. Age 62.
</TABLE>
CLASS III DIRECTORS
(TERMS EXPIRE IN 1999)
<TABLE>
<S> <C>
Judith G. Boynton, Vice President and Controller of Amoco
[PHOTO] Corporation since 1996; General Manager-Auditing, 1994-1996;
Controller of Amoco Oil Company, 1993-1994. Director of the
Company since 1997; member of the Audit Committee and the
Finance Committee. Age 43.
Dr. Robert P. Hummel, Retired Chief of Staff of University
[PHOTO] Hospital since 1997; Chief of Staff of University Hospital,
1992-1997; Emeritus Professor of Surgery, College of Medicine,
University of Cincinnati since 1996. Director of the Company
since 1983; Chairman of the Corporate Responsibility Committee
and member of the Executive Committee and the Finance Committee.
Age 69.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
James D. Kiggen, Chairman of the Board of Xtek, Inc.
[PHOTO] (manufacturer of engineered steel products for heavy industry)
since 1985; Chief Executive Officer of Xtek, Inc., 1985-1998;
President of Xtek, Inc., 1985-1995. Director of Fifth Third
Bancorp and its subsidiary, The Fifth Third Bank, The United
States Playing Card Company and R.A. Jones & Co. Inc. Director
of the Company since 1983; Chairman of the Compensation
Committee, member of the Corporate Strategy Committee, the
Executive Committee and the Finance Committee. Age 66.
Mary D. Nelson, President of Nelson & Co. (consulting actuaries)
[PHOTO] since 1975. Director of Blount International, Inc. and its
subsidiary, Blount Inc. and The Union Central Life Insurance
Company. Director of the Company since 1994; member of the Audit
Committee, the Corporate Responsibility Committee and the
Finance Committee. Age 64.
Brian H. Rowe, Retired Chairman of General Electric Aircraft
[PHOTO] Engines (GEAE) since 1995; Chairman of GEAE, 1993-1995;
President and Chief Executive Officer of GEAE, 1979-1993; Senior
Vice President of the General Electric Company, 1979-1993.
Director of Stewart & Stevenson Services, Inc., B/E Aerospace,
Textron, Inc., The Fifth Third Bank and Canadian Marconi
Company. Director of the Company since 1996; member of the
Compensation Committee, the Corporate Strategy Committee and the
Governance and Nominating Committee. Age 66.
</TABLE>
CLASS I DIRECTORS
(TERMS EXPIRE IN 2000)
<TABLE>
<S> <C>
John F. Barrett, President and Chief Executive Officer of The
[PHOTO] Western and Southern Life Insurance Company since 1994;
President and Chief Operating Officer, 1989-1994; Executive Vice
President and Chief Financial Officer, 1987-1989. Director of
The Western and Southern Life Insurance Company, The Fifth Third
Bancorp and its subsidiary, The Fifth Third Bank, and The
Andersons, Inc. Director of the Company since 1992; member of
the Audit Committee, the Compensation Committee and the
Governance and Nominating Committee. Age 48.
Charles S. Mechem, Jr., Chairman of the Board of the Company
[PHOTO] since 1996. Commissioner Emeritus, Ladies Professional Golf
Association (LPGA); Commissioner of the LPGA, 1991-1995;
Chairman of The United States Shoe Corporation, 1993-1995;
Director of AGCO, Mead Corporation, Ohio National Life Insurance
Company, J. M. Smucker Company, Star Banc Corp. and its
subsidiary, Star Bank, N.A. Director of the Company since
December 1995; Chairman of the Executive Committee and member of
the Governance and Nominating Committee. Age 67.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
James F. Orr, Chief Operating Officer of the Company since 1996;
[PHOTO] Chairman of Cincinnati Bell Information Systems Inc. since 1996;
Chairman of MATRIXX Marketing Inc. since 1997; Executive Vice
President of the Company and President and Chief Executive
Officer of Cincinnati Bell Information Systems Inc., 1995-1996;
Chief Operating Officer of Cincinnati Bell Information Systems
Inc., 1994; President and Chief Executive Officer of MATRIXX
Marketing Inc., 1993-1994; Director of the Company since
September 1996; member of the Executive Committee. Age 52.
David B. Sharrock, Consultant since 1994. Executive Vice
[PHOTO] 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., Interneuron Pharmaceuticals Inc., Progenitor, Inc.,
Intercardia, Inc. and Praecis Pharmaceutical, Inc. Director of
the Company since 1987; Chairman of the Audit Committee and
member of the Compensation Committee, the Corporate Strategy
Committee, the Executive Committee and the Governance and
Nominating Committee. Age 61.
</TABLE>
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 1998. Coopers & Lybrand L.L.P. has audited the
financial statements of the Company 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.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee recommends to the Board of Directors compensation
for the Company's Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer and Chief Legal Officer, as well as the compensation for the
Chief Executive Officers of the Company's principal subsidiaries, Cincinnati
Bell Telephone Company ("CBT"), Cincinnati Bell Information Systems Inc.
("CBIS") and MATRIXX Marketing Inc. ("MATRIXX").
The executive compensation program established by the Compensation Committee
is based on the principles (a) that compensation must be competitive with other
companies to attract and retain high-quality executives, (b) that a significant
portion of executive compensation should be "at risk" and tied to the
achievement of specific short and long term performance objectives, principally
the Company's earnings and the performance of the Company's Common Shares, that
will inure to the benefit of the Company's shareholders and (c) that emphasis
should be given to the long term incentive component of each executive's
compensation package, rather than to base salary or annual incentives.
Compensation levels for executives are benchmarked to the outside market,
using information from general industry surveys conducted by outside
consultants. Each executive's total direct compensation (base salary, annual
incentives and long term incentives) is targeted to be competitive with the
revenue-adjusted median of the outside market. Proxy materials of a comparison
group consisting of twenty-five companies, including the Telephone Peer Group
companies identified on page 18 in the communications, information systems and
telephone marketing industries also are reviewed as an additional comparison for
the Chief Executive Officer of the Company.
BASE SALARY. Based upon a review of the market data, the Compensation
Committee recommended base salary increases of from 3% to 22% for the named
executive officers, both to ensure equity with the market and, where
appropriate, to recognize their increased responsibilities. The salaries of
Messrs. LaMacchia, Orr, Henry, Marino and Ellenberger appear in the Summary
Compensation Table on page 12.
ANNUAL INCENTIVE. The Company's short term incentive plan, which includes
all of the above named executive officers, is one of the means by which the
Compensation Committee encourages the Company's management to enhance
shareholder value. As in the case of base salary, short term award targets are
benchmarked against market data.
For Messrs. LaMacchia, Orr and Henry to receive a short term award, the
Company must achieve certain levels of "earnings per share" ("EPS"). In addition
to a Company EPS component, the short term awards for the Chief Executive
Officers of the Company's principal subsidiaries were based upon the achievement
of certain subsidiary operating income levels, revenue levels (in the case of
CBIS, CBT and MATRIXX) and customer satisfaction levels (in the case of CBT).
For 1997, 108% of the Company EPS goal was achieved, 110% of the CBT operating
income goal and 100% of the CBT customer satisfaction goals were achieved, and
105% of the CBIS operating income goal and 96% of the CBIS revenue goal were
achieved. 95% of the MATRIXX revenue goal was achieved but the MATRIXX operating
income goal was not achieved. The short term incentive awards of Messrs.
LaMacchia, Orr, Henry, Marino and Ellenberger are reflected in the Summary
Compensation Table.
LONG TERM INCENTIVES. The Company's executive compensation program includes
two long term elements, stock options and performance share awards, both of
which are intended to more closely align the interests of the Company's
executives with those of the Company's shareholders.
Stock options are awarded under the Company's Long Term Incentive Plan. The
present value of the stock options awarded to each executive is targeted to
represent approximately two-thirds of the present value of the executive's total
long term incentives, with the present value of performance share targets
constituting the remaining third. The options granted to the named executive
officers during 1997 are shown in the "Grants of Stock Options" table on page
13.
10
<PAGE>
Since 1996, executives have had the opportunity to earn performance shares,
each equivalent in value to a Common Share, based upon the extent to which the
Company's total shareholder return ("TSR"), which includes dividends and share
price appreciation, for a three-year performance period, compares with a
comparison group mean TSR for the same period.
No performance shares will be awarded at the end of the performance period
if the Company's TSR is negative. If the Company's TSR is 80% of the comparison
group mean TSR, 50% of the target number of performance shares will be awarded.
If the Company's TSR is greater than 80% of the comparison group mean TSR, up to
200% of the target number of performance shares will be awarded, with 100% being
awarded if the Company's TSR is 100% of the comparison group mean TSR and 200%
being awarded if the Company's TSR is 140% of the comparison group mean TSR. The
first three-year performance period will end on December 31, 1998 and the second
three-year performance period will end on December 31, 1999.
STOCK OWNERSHIP GUIDELINES. To further align the interests of the
executives and the Company's shareholders, the Compensation Committee has
established Common Share 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 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 are given a reasonable amount of time to
satisfy these guidelines.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Mr. LaMacchia served in the
capacity of President and Chief Executive Officer throughout 1997. As President
and Chief Executive Officer, in accordance with the policies discussed, his base
salary for 1997 was $550,000 and he received a short term award of $461,500. He
received a stock option grant for 62,600 Common Shares and a performance share
target of 9,800 performance shares.
COMPENSATION LIMITATION. The Compensation Committee is continuing to
consider the effect of section 162(m) of the Internal Revenue Code, which limits
the deduction for compensation paid to the Company's named executives. The
Compensation Committee intends to maximize the amount of compensation expense
that is deductible by the Company when it is appropriate and in the best
interests of the Company and its shareholders. However, compensation decisions
will continue to be based primarily on the extent to which performance goals
have been achieved.
Compensation Committee
James D. Kiggen, Chairman
John F. Barrett
Brian H. Rowe
David B. Sharrock
11
<PAGE>
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
The following table shows the compensation of the Chief Executive Officer
and the other four most highly compensated executive officers of the Company or
any of its subsidiaries for services to the Company and its subsidiaries in all
capacities. Messrs. LaMacchia and Orr served as directors of the Company but
received no separate compensation in that capacity.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------ PAYOUTS
------------------------------------- SECURITIES ----------
OTHER ANNUAL RESTRICTED UNDERLYING LONG-TERM ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK OPTIONS INCENTIVE COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) AWARDS($) (#) PAYOUTS($) ($) (A)
---------------------- ---- --------- --------- -------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John T. LaMacchia 1997 $550,000 $461,500 (b) $ 0 62,600 $ 0 $ 6,400
President & CEO 1996 525,000 472,500 (b) 0 78,600 0 9,500
1995 525,000 500,000 (b) 0 150,000 0 7,182
James F. Orr 1997 $370,000 $284,000 (b) $ 0 43,800 $ 0 $ 31,344
Chief Operating
Officer 1996 304,375 415,144 (b) 340,018(c) 411,200 0 14,585
1995 245,833 0 (b) 270,023(c) 60,000 0 9,844
Brian C. Henry 1997 $320,000 $170,400 (b) $ 0 28,400 $ 0 $ 19,719
Executive Vice 1996 310,000 172,500 (b) 0 134,600 0 22,392
President & CFO 1995 300,000 175,000 (b) 0 50,000 0 6,000
Robert J. Marino 1997 $270,000 $177,601 (b) $ 0 27,000 $ 0 $ 9,500
President & CEO of 1996 240,000 206,974 (b) 0 20,000 0 10,435
CBIS 1995 40,000 125,141 $ 29,391(e) 404,063(d) 30,000 0 51,462
Richard G. Ellenberger 1997 $180,603 $135,452 $ 95,574(f) $765,625(g) 27,000 $ 0 $ 0
President & CEO 1996 -- -- -- -- -- -- --
of CBT 1995 -- -- -- -- -- -- --
</TABLE>
(a) Represents Company contributions to defined contribution savings plans and
to the Deferred Compensation Plan described on page 17.
(b) Does not include the value of perquisites and other personal benefits
because the total 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) As of December 31, 1997, Mr. Orr's total restricted stock holdings were
16,000 Common Shares with a value of $496,000. 20,844 Common Shares were
awarded in 1996, vesting one year from date of grant; 29,546 Common Shares
were awarded in 1995, vesting one year from date of grant; and 40,000 Common
Shares were awarded in 1994, vesting 24,000 Common Shares in 1996, 8,000
Common Shares in 1997 and 8,000 Common Shares in 1998. Dividends are paid on
all restricted stock.
(d) As of December 31, 1997, Mr. Marino's total restricted stock holdings were
30,000 Common Shares with a value of $930,000. Restrictions lapse with
respect to 15,000 Common Shares in 1998 and the remaining 15,000 Common
Shares in 2000. Dividends are paid on all restricted stock.
(e) $28,121 reimbursement for payment of taxes and $1,270 for auto use.
(f) Includes $74,677 of relocation expenses. Other amounts were less than 25% of
the total perquisites and other personal benefits reported for Mr.
Ellenberger.
(g) As of December 31, 1997, Mr. Ellenberger's total restricted stock holdings
were 25,000 Common Shares with a value of $775,000. Restrictions lapse with
respect to all of these Common Shares on June 9, 2002. Dividends are paid on
all restricted stock.
12
<PAGE>
II. GRANTS OF STOCK OPTIONS
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES OR BASE TERM (B)
GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (#) (A) YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------- ---------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
John T. LaMacchia 62,600 4.4% $ 30.188 1/2/07 $1,188,085 $ 3,011,247
James F. Orr 43,800 3.1% $ 30.188 1/2/07 $ 831,280 $ 2,149,911
Brian C. Henry 28,400 2.0% $ 30.188 1/2/07 $ 539,003 $ 1,366,125
Robert J. Marino 27,000 1.9% $ 30.188 1/2/07 $ 512,433 $ 1,298,781
Richard G. Ellenberger 27,000 1.9% $ 30.625 6/9/07 $ 519,885 $ 1,317,627
</TABLE>
(a) The material terms of the options granted are: grant type, non-statutory;
grant price, fair market value on grant date; exercisable 25% after one
year, an additional 25% after the second year and the remaining 50% after
the third year; term of grant, 10 years; except in case of retirement,
disability or death, and unexercisable options are cancelled upon
termination of employment.
(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 62.8% and 159.3%) resulting in values of
approximately $49.16 and $78.29 for all options expiring on January 2, 2007
($49.88 and $79.42 for Mr. Ellenberger's options which expire on June 9,
2007). They are not intended, however, to forecast possible future
appreciation, if any, in the price of the Company's Common Shares. The total
of all stock options granted to employees, including executive officers,
during fiscal 1997 was approximately 1.57% of the total Common Shares
outstanding during the year. As an alternative to the assumed potential
realizable values stated in the above table, the Securities and Exchange
Commission rules would permit stating the present value of such options at
date of grant. Methods of computing present values suggested by different
authorities can produce significantly different results. Moreover, since
stock options granted by the Company are not transferable, there are no
objective criteria by which any computation of present value can be
verified. Consequently, the Company's management does not believe there is a
reliable method of computing the present value of such stock options for
proxy disclosure purposes.
13
<PAGE>
III. AGGREGATE OPTION EXERCISES
The following table shows aggregate option exercises in the last fiscal year
and fiscal year-end values:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS AT
FY-END (#) VALUE OF UNEXERCISED IN-THE-MONEY
EXERCISABLE OPTIONS AT
(E)/ FY-END ($) (A)
SHARES ACQUIRED VALUE UNEXERCISABLE EXERCISABLE (E)/
NAME ON EXERCISE (#) REALIZED ($) (U) UNEXERCISABLE (U)
- ------------------------------------- --------------- ------------ ------------- -----------------------------------
<S> <C> <C> <C> <C>
E669,650 E$14,330,237
John T. LaMacchia 0 $ 0 U121,550 U 881,613
E 75,300 E$ 1,452,162
James F. Orr 70,000 $1,471,859 U439,700 U 1,268,604
E123,650 E$ 2,627,819
Brian C. Henry 110,000 $2,110,000 U128,400 U 126,160
E 35,000 E$ 596,465
Robert J. Marino 0 $ 0 U 42,000 U 233,319
E 0 E$ 0
Richard G. Ellenberger 0 $ 0 U 27,000 U 10,125
</TABLE>
(a) Values stated based on the fair market value (average of the high and low)
of $31.00 per share of the Common Shares on the New York Stock Exchange on
December 31, 1997.
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, 1997, no table has
been included.
V. DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
All of the named executive officers of the Company participate in both the
Company's Management Pension Plan and a non-qualified pension plan known as the
Pension Program.
Under the Pension Program, a participant's pension at retirement is a
percentage of the participant's average monthly compensation reduced by benefits
payable under the Management Pension Plan, including amounts which are intended
to supplement or be in lieu of benefits under the Management Pension Plan, and
Social Security benefits. For Class I Senior Managers (admitted prior to March
3, 1997), the applicable pension percentage is 68%, the compensation averaging
period is the high 12 month period during the 36 month period preceding
retirement, there is a reduction of 5% for each year by which the participant's
age at retirement is less than 60 and there is a reduction of 3.3% for each year
by which the participant's years of service at retirement total less than 30.
For Class II Senior Managers (admitted on or after March 3, 1997), the
applicable pension percentage is 50%, the compensation averaging period is the
high 36 month period during the 60 month period preceding retirement, there is a
reduction of 2.5% for each year by which the sum of the participant's years of
age and years of service at retirement total less than 75, and no benefits are
payable if the participant leaves prior to attaining age 55 and completing at
least 10 years of service.
14
<PAGE>
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, 8.125%
per annum for 1997 and 1998 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 a participant who was
a participant in the Management Pension Plan on December 31, 1993, the
participant's account also was credited with pension credits equivalent to the
participant's accrued benefit on that date.)
As a Class I Senior Manager under the Pension Program with more than 30
years of service, if Mr. LaMacchia continues in employment and retires at the
normal retirement age of 65, his estimated straight life annuity annual pension
amount under both the Management Pension Plan and the Pension Program combined,
prior to deduction for Social Security benefits, would be $687,820. Mr.
LaMacchia's pension would be reduced if he retires prior to age 60.
As Class II Senior Managers under the Pension Program, if Messrs. Orr,
Henry, Marino and Ellenberger continue in employment and retire at the normal
retirement age of 65, their estimated straight life annuity annual pension
amounts under both the Management Pension Plan and the Pension Program combined,
prior to deduction for Social Security benefits, would be: $327,000 for Mr. Orr,
$245,200 for Mr. Henry, $223,800 for Mr. Marino and $280,000 for Mr.
Ellenberger. For this purpose, Mr. Ellenberger's compensation as set forth in
the Summary Compensation Table on page 12 has been annualized. These annual
pension amounts would be reduced: in the case of Mr. Orr (age 52 and nine years
of service), if he retires prior to age 59; in the case of Mr. Henry (age 41 and
four years of service), if he retires prior to age 55; in the case of Mr. Marino
(age 50 and two years of service) if he retires prior to age 61; and in the case
of Mr. Ellenberger (age 45 and less than one year of service), if he retires
prior to age 58;
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
15
<PAGE>
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 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 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 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 August 1994, the Company entered into an Employment Agreement with Mr.
Orr which provides for the employment and retention of Mr. Orr for a term
commencing on January 1, 1995 and terminating on December 31, 1999. The
Employment Agreement provides for a minimum base salary of $240,000 per year; a
minimum bonus target of $170,000 per year; an annual grant of options to
purchase at least 20,000 Common Shares (pre-split); if he remains employed
through December 31, 1998, a minimum pension of $40,000 per year and retiree
medical benefits; and benefits and perquisites consistent with the treatment of
similarly situated employees. The Executive Employment Agreement provides that
if Mr. Orr's employment terminates following a change in control of the Company,
Mr. Orr will receive a lump sum payment equal to the greater of $720,000 or 2.99
times his annual base salary and bonus target on the date of termination, plus
the minimum pension and retiree medical benefits described above, but not less
than the amount called for in the event of a termination without cause. In the
event that the Company terminates Mr. Orr's employment (other than for cause or
disability), Mr. Orr will receive a lump sum severance payment equal to the
greater of (a) two times his base salary rate and bonus target or (b) the base
salary rate and bonus target for the remainder of the term, plus the minimum
pension and retiree medical benefits described above.
In March 1993, the Company entered into an Executive Employment Agreement
with Mr. Henry which provides for the employment and retention of Mr. Henry for
a term commencing on March 29, 1993 and terminating on March 29, 1998. The
Executive Employment Agreement provides for a minimum base salary of $270,000
per year; the opportunity to earn a bonus under the Short Term Incentive Plan; 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 September 1995, CBIS entered into an Employment Agreement with Mr. Marino
which provides for the employment and retention of Mr. Marino for a term
commencing on October 1, 1995 and terminating on September 30, 2000. The
Employment Agreement provides for a minimum base salary of $240,000 per year,
which is subject to annual performance reviews and increases consistent with his
performance and the treatment of similarly situated employees; a minimum bonus
target of $110,000 per year; 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 CBIS. In the event that CBIS terminates Mr.
Marino's employment (other than for cause or disability), Mr. Marino will
receive a lump sum severance payment equal to two times his then current base
salary.
In June 1997, CBT entered into an Employment Agreement with Mr. Ellenberger
which provides for the employment and retention of Mr. Ellenberger for a term
commencing on June 9, 1997 and ending on
16
<PAGE>
June 8, 2002. The Employment Agreement provides for: a minimum base salary of
$320,000 per year; a minimum bonus target of $160,000 per year; a performance
share target; and benefits and perquisites consistent with the treatment of
similarly situated employees. The Employment Agreement states that if Mr.
Ellenberger's employment terminates following a change in control of the Company
or CBT, Mr. Ellenberger will receive a lump sum payment equal to 2.99 times his
base salary. In the event that CBT terminates Mr. Ellenberger's employment
(other than for cause or disability), Mr. Ellenberger will receive a lump sum
severance payment equal to two times his then current base salary.
The Deferred Compensation Plan was adopted effective January 1, 1994 to
permit senior managers to defer receipt of up to 75% of their base salary, up to
100% of their cash bonuses (including cash awards under the Long Term Incentive
Plan and the Short Term Incentive Plan) and up to 100% of share awards under the
Long Term Incentive Plan. For participating employees who are not Class I Senior
Managers under the Pension Program, there will be a Company "match" which is
established by the Compensation Committee. For 1997, the "match" was $0.666 for
each dollar deferred, with a maximum match of 4% of the participant's
compensation in excess of $160,000. 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 1997 "match" for Messrs. Orr, Henry, Marino and Ellenberger is
reflected in the Summary Compensation Table under the "All Other Compensation"
column. Mr. LaMacchia did not participate in the Deferred Compensation Plan
during 1997.
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.
17
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares 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
<S> <C> <C>
Based on reinvestment of $100 beginning December 31,
1992
Cincinnati Bell Inc. S&P 500-R-
Dec-92 $100 $100
Dec-93 $109 $110
Dec-94 $106 $112
Dec-95 $228 $153
Dec-96 $409 $189
Dec-97 $417 $252
SOURCE: GEORGESON & COMPANY INC.
<CAPTION>
<S> <C>
Telephone Peer Group
Dec-92 $100
Dec-93 $117
Dec-94 $111
Dec-95 $168
Dec-96 $171
Dec-97 $239
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. (through
6/30/97), Pacific Telesis Group (through 3/31/97), SBC Communications Inc.,
Southern New England Telecommunications Corp., Sprint Corp., and U S West
Communications Group (aka US West).
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in next year's Proxy Statement
should be sent to W. D. Baskett III, Secretary, 201 East Fourth Street, P.O. Box
2301, Cincinnati, Ohio 45201, and must be received by November 18, 1998. 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 12,
1998, 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
18
<PAGE>
beneficial owners of Common 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 $10,000 plus
reimbursement of out-of-pocket expenses.
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 1997. A copy of
the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission for the year 1997 will be furnished, without charge, on
request directed to W. D. Baskett III, Secretary, 201 East Fourth Street, P.O.
Box 2301, Cincinnati, Ohio 45201.
<TABLE>
<S> <C>
By Order of the Board of Directors
W. D. Baskett III
Secretary
</TABLE>
March 12, 1998
19
<PAGE>
[LOGOS]
PRINTED ON RECYCLED PAPER
<PAGE>
CINCINNATI
BELL
CINCINNATI BELL INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 27, 1998
The undersigned hereby appoints John T. LaMacchia, Robert P. Hummel, M.D.
and James D. Kiggen, and each or any of them, proxies, with full power of
substitution, to represent and to vote all common shares of Cincinnati Bell
Inc held of record by the undersigned on February 27, 1998, at the annual
meeting of shareholders to be held on April 27, 1998, at 11:30 A.M. in
Springer Auditorium of Music Hall in Cincinnati, Ohio, and at any adjournment
thereof, notice of which meeting together with the related proxy statement
has been received. The proxies are directed to vote the shares the
undersigned would be entitled to vote if personally present.
<TABLE>
<S><C>
ITEM 1 Authority to vote for the election FOR / / WITHHELD / /
of Class II directors whose terms ALL NOMINEES LISTED AUTHORITY TO VOTE
expire in 2001: (EXCEPT AS MARKED TO
THE CONTRARY BELOW)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW:
Phillip R. Cox William A. Friedlander Roger L. Howe John T. LaMacchia Steven C. Mason
ITEM 2 To ratify the appointment of Coopers & Lybrand FOR / / AGAINST / / ABSTAIN / /
L.L.P. as independent accountants to examine
the financial statements of the Company for
the year 1998,
ITEM 3 To transact such other business as may be properly brought before the meeting.
(CONTINUED ON REVERSE SIDE)
</TABLE>
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CINCINNATI
BELL
C/O CORPORATE TRUST SERVICES
MAIL DROP 1090FS--4129
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
FOLD AND DETACH HERE
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Please vote, date and sign below and return this proxy form promptly in the
enclosed envelope. If you attend the meeting and wish to change your vote,
you may do so automatically by casting your vote at the meeting.
This proxy form, when properly executed, will be voted in accordance with the
directions given by the shareholder. If no directions are given hereon, the
proxy form will be voted FOR the election of directors and FOR item number 2.
This proxy delegates discretionary authority with respect to any other matters
which may come before the meeting.
Dated _________________________________, 1998
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SIGNATURE
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SIGNATURE IF SHARES HELD JOINTLY
Please sign exactly as name appears opposite.
Executors, trustees, administrators and other
fiduciaries should so indicate.
