<PAGE>
(HTC LOGO)
HICKORY TECH CORPORATION
221 EAST HICKORY STREET
P.O. BOX 3248
MANKATO, MN 56002-3248
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
MONDAY, APRIL 14, 1997
The Annual Meeting of the Shareholders of Hickory Tech Corporation, a Minnesota
corporation (the "Company"), will be held at the Holiday Inn located at 101 Main
Street, Mankato, Minnesota, on Monday, April 14, 1997, at 2:00 p.m., Mankato
time, for the following purposes:
1. To elect two directors to serve for ensuing three-year terms;
2. To confirm the Board of Directors' selection of Olsen Thielen & Co.,
Ltd. as the Company's auditors for 1997; and
3. To transact such other business as may properly come before the meeting
or at any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, March 7, 1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and any adjournment hereof.
BY ORDER OF THE
BOARD OF DIRECTORS
HICKORY TECH CORPORATION
/s/ David A. Christensen
David A. Christensen, Secretary
Mankato, Minnesota
March 18, 1997
IMPORTANT
IF YOU DO NOT PLAN TO ATTEND THIS MEETING, PLEASE VOTE, SIGN AND RETURN THE
ENCLOSED PROXY PROMPTLY, USING FOR THAT PURPOSE THE ACCOMPANYING ENVELOPE, FOR
WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU ARE URGED TO
SIGN AND RETURN YOUR PROXY WITHOUT DELAY TO ENSURE ITS ARRIVAL IN TIME FOR THE
MEETING.
ADDITIONAL COPIES OF THIS NOTICE, THE RELATED PROXY STATEMENT AND ADDITIONAL
PROXY FORMS MAY BE OBTAINED FROM THE SECRETARY, HICKORY TECH CORPORATION, 221
EAST HICKORY STREET, P.O. BOX 3248, MANKATO, MINNESOTA 56002-3248. TELEPHONE
NUMBER (507) 387-3355 OR (800) 326-5789.
1
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HICKORY TECH CORPORATION
221 EAST HICKORY STREET
P.O. BOX 3248
MANKATO, MN 56002-3248
MARCH 18, 1997
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, APRIL 14, 1997
SOLICITATION
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Hickory Tech Corporation, a Minnesota corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company to
be held at the Holiday Inn located at 101 Main Street, Mankato, Minnesota, on
Monday, April 14, 1997, at 2:00 p.m. (Mankato time) or at any adjournment
thereof. All properly executed proxies will be voted at the meeting. This
proxy statement and the enclosed proxy card are being mailed to shareholders on
or about March 18, 1997.
REVOCABILITY OF PROXY
A shareholder's proxy may be revoked by a shareholder at any time before it is
exercised by filing a later dated proxy or a written notice of revocation with
the Company's secretary, or by voting in person at the meeting.
FINANCIAL STATEMENTS
The Annual Report for the Company for the calendar year 1996, including
financial statements, is separately enclosed in the envelope with this proxy
statement.
VOTING
Each shareholder of record at the close of business on March 7, 1997, is
entitled to one vote for each share of common stock held. As of that date,
4,665,946 shares were outstanding.
For each share held, shareholders may cast one vote for each proposal identified
on the proxy card. For each share held, shareholders may cast one vote for each
of two directorships to be filled at this meeting. If you do not wish your
shares to be voted for a particular nominee, please so indicate in the space
provided on the proxy card.
Abstentions and broker non-votes will be counted as present or represented at
the meeting for purposes of determining whether a quorum exists. However,
abstentions and broker non-votes with respect to any matter brought to a vote
will be treated as shares not voted for purposes of determining whether the
requisite vote has been obtained and, therefore, will have no effect on the
outcome on any such matter. A majority of the shares present or represented at
the meeting is required for approval of the proposals.
ITEMS REQUIRING YOUR CONSIDERATION
THE FOLLOWING TWO ITEMS IN THIS PROXY STATEMENT REQUIRE YOUR CONSIDERATION AND
APPROVAL:
1. ELECTION OF TWO DIRECTORS FOR THREE-YEAR TERMS. SEE PAGE 3.
2. CONFIRMATION OF THE SELECTION OF OLSEN THIELEN & CO., LTD. AS THE COMPANY'S
AUDITORS FOR 1997. SEE PAGE 13.
2
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TWO DIRECTORS WILL BE ELECTED AT THE ANNUAL MEETING
FOR THREE-YEAR TERMS.
The terms of directors Lyle T. Bosacker and Brett M. Taylor, Jr. expire this
year and they are nominees. The Board of Directors is in the process of
searching for a candidate for a previously vacated directorship and does not
have a nominee at this time. Proxies may not be voted for more than two
nominees.
MEMBERS OF THE BOARD AND NOMINEES
ROBERT D. ALTON, JR. has served as a director since 1993. His present term
expires in 1999. Mr. Alton became President and Chief Executive Officer of the
Company in 1993. Mr. Alton, age 48, is the former President of Telephone
Operations of Contel Corporation and was employed in various executive and
financial capacities at Contel Corporation for twenty-one years.
LYLE T. BOSACKER has served as a director since 1988. His present term expires
this year and he is a nominee. Mr. Bosacker, age 54, is a management consultant
and President of CEO Advisors, Inc. Mr. Bosacker served as the Director of
Corporate Information Services for International Multifoods from 1991 to 1993
and as its Director of Corporate Information Systems Planning from 1987 to 1991.
ROBERT K. ELSE has served as a director since 1990. His present term expires in
1999. Mr. Else, age 61, has been the President of EI Microcircuits, Inc. in
Mankato, Minnesota, since 1984. EI Microcircuits manufactures and assembles
electronic circuit boards.
JAMES H. HOLDREGE has served as a director since 1992. His present term expires
in 1998. Mr. Holdrege, age 58, has been the General Manager of KATO Engineering
Division, Reliance Electric Co. since 1984. KATO Engineering is a manufacturer
of synchronous generators, power conditioning equipment and associated controls.
LYLE G. JACOBSON has served as a director since 1989. His present term expires
in 1998. Mr. Jacobson, age 55, has been the President and Chief Executive
Officer of Katolight Corporation in Mankato, Minnesota, since 1985. Katolight
Corporation is a manufacturer of emergency generator sets and generator
controls.
R. WYNN KEARNEY, JR. has served as a director since 1993. His present term
expires in 1999. Dr. Kearney, age 53, has been in private practice with the
Orthopaedic & Fracture Clinic, P.A., in Mankato, Minnesota, since 1972 and is
President-elect of the Minnesota Orthopaedic Society. Dr. Kearney, a minority
owner of the Minnesota Timberwolves, presently serves as President of the
Mankato State University Foundation. Dr. Kearney is also a director of
Exactech, Inc. of Gainesville, Florida.
STARR J. KIRKLIN has served as a director since 1989. His present term expires
in 1998. Mr. Kirklin, age 60, retired from First Bank System, Inc. in February
of 1996. Mr. Kirklin is now employed as Director of Development for Mankato
State University.
BRETT M. TAYLOR, JR. has served as a director since 1970. His present term
expires this year and he is a nominee. Mr. Taylor, age 67, is the retired
Chairman of Brett's Department Stores, Co. and previously served as its
President from 1971 to 1987.
3
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SECURITY OWNERSHIP OF MANAGEMENT
Directors, nominees and named executive officers of the Company own the
following securities of the Company:
NAME OF AMOUNT & NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
- ----------------------------------------------------------------------------
Robert D. Alton, Jr. 13,317 (a) *
Lyle T. Bosacker 118,756 (b) 2.5%
Robert K. Else 2,858 *
James H. Holdrege 1,108 *
Lyle G. Jacobson 7,696 (c) *
R. Wynn Kearney, Jr. 22,311 (d) *
Starr J. Kirklin 1,258 *
Brett M. Taylor, Jr. 28,778 (e) *
Thomas R. Borchert 5,888 (a) *
David A. Christensen 4,450 (a) *
David H. Rowley 3,914 (f) *
Bruce H. Malmgren 164 *
All of the above and other executive
officers as a group (14 persons) 211,737 4.5%
* Less than 1%
(a) Includes shares which may be acquired within 60 days after March 18, 1997
through the exercise of stock options. The persons who have such options
and the number of shares which may be so acquired are as follows: Mr.
Alton, 7,455; Mr. Borchert, 3,832; and Mr. Christensen, 3,012.
(b) Includes 113,702 shares held by Mrs. Bosacker.
(c) Includes 6,588 shares held by Mrs. Jacobson.
(d) Includes 3,306 shares held in a Profit Sharing Trust.
(e) Includes 16,962 shares held in a partnership, 11,816 shares in a trust
for which Mr. Taylor is co-trustee.
(f) Includes 3,614 shares held in a family trust.
4
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OTHER EXECUTIVE OFFICERS
JON L. ANDERSON, age 44, has served as a Vice President since 1995. Mr.
Anderson has served as President of Collins Communications Systems Co. since
1994 and was its Vice President and General Manager from 1991 to 1994.
DAVID A. CHRISTENSEN, age 44, has served as Secretary since 1993, Vice President
and Chief Financial Officer since 1989, and Treasurer since 1986.
THOMAS R. BORCHERT, age 60, has served as Vice President since 1986. Mr.
Borchert has served as President of Mankato Citizens Telephone Company since
1984.
MARY T. JACOBS, age 39, has served as a Vice President since 1996 and has been
the Director of Human Resources since 1993. Ms. Jacobs was the Director of
Human Resources at Pueringer/Multifoods from 1991 to 1993. Pueringer/Multifoods
is a food service distributor.
BRUCE H. MALMGREN, age 52, has served as a Vice President of the Company and as
President of Computoservice, Inc. since 1995. Mr. Malmgren was Senior Vice
President of Sales and Marketing and National Sales Manager for Dataserv, Inc.
from 1992 to 1995. Dataserv, Inc. provides technical services for commercial
personal computer systems. From 1990 to 1992, Mr. Malmgren was Vice President
of Sales and Marketing for Facility Systems, Inc., a provider of business
furniture and design systems. Prior to this, beginning in 1968, Mr. Malmgren
held various sales and managerial positions in Xerox Corporation.
DAVID H. ROWLEY, age 56, has served as a Vice President since 1995 and President
of Digital Techniques, Inc. since 1993. Mr. Rowley served as an Assistant Vice
President for GTE Corp from 1991 to 1993. GTE Corp provides local and long
distance telephone services.
There are no present family relationships between the executive officers, nor
between the executive officers and the directors.
5
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REMUNERATION OF EXECUTIVE OFFICERS
The remuneration paid or accrued to the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company whose
aggregate remuneration exceeded $100,000 in 1996 is as follows:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
------------------- ------------------------
Restricted Securities All
Name and Stock Underlying Other
Principal Awards Options/ Compensation
Position Year Salary ($) Bonus($)(2) ($) SARs (#) ($)
- --------- ---- ---------- ----------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
ROBERT D. ALTON, JR. 1996 $213,050(1) $110,530 $60,000(4) 5,400 $7,923 (5)
Director, Chairman, 1995 $205,800(1) $113,740 $41,145(4) 3,486 $8,625 (5)
President and Chief 1994 $194,775(1) $ 87,990 $39,567(3) 3,092 $8,295 (5)
Executive Officer
THOMAS R. BORCHERT 1996 $153,800 $84,956 $21,000(4) 2,000 $8,389 (5)
Vice President 1995 $147,900 $83,182 $20,670(4) 1,754 $8,177 (5)
1994 $142,200 $62,237 $19,893(3) 1,580 $7,880 (5)
DAVID A. CHRISTENSEN 1996 $122,900 $57,135 $ 9,000(4) 800 $7,211 (5)
Vice President, 1995 $118,500 $51,139 $16,250(4) 1,405 $6,511 (5)
Chief Financial 1994 $112,000 $39,959 $15,614(3) 1,244 $1,492 (5)
Officer, Secretary
and Treasurer
BRUCE H. MALMGREN 1996 $119,600 $64,314 $12,000(4) 800 $ 3,561 (6)
Vice President 1995 $110,100 $ N/A N/A N/A N/A
DAVID H. ROWLEY 1996 $110,000 $47,737 $12,000(4) 1,000 $15,488 (6)
Vice President 1995 $104,500 $64,333 N/A N/A N/A
</TABLE>
(1) Includes deferred compensation of $9,275 in 1994, $9,800 in 1995 and $10,145
in 1996 pursuant to a Supplemental Retirement Agreement with the Company. Each
year Mr. Alton accrues benefits equal to five percent (5%) of his base salary.
This accumulation of benefits will occur for a maximum of ten (10) years of
service commencing January 1, 1993. Benefits are paid upon termination of
employment commencing on the earlier of Mr. Alton's 62nd birthday or his date of
death.
(2) The Company and its subsidiaries have an Executive Incentive Plan whereby
key executives may receive additional compensation based on annual
performance and set goals of the Company, its subsidiaries and the individual
executive. In addition to cash compensation, each executive receives a
performance award equal to one-half of the cash compensation. The cash award
and performance award credit are shown in this column. The performance award
is credited to the executive's performance account. The performance account
is annually credited with interest equal to the rate for a ten year Treasury
Bond. One-fourth of the performance account is vested immediately and an
additional one-fourth vests each of the succeeding three years.
6
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(3) Awards actually granted under the Company's 1994 Stock Award Programs and
distributed to participants in 1997.
(4) Restricted Stock Awards under the Company's 1995 and 1996 Stock Award
Programs will only be issued, if the Company and its subsidiaries achieve
established goals of pre-tax net income growth for the three (3) year periods
ending December 31, 1997 and December 31, 1998, respectively. Certain
assumptions have been made in estimating the amount of compensation
associated with the Restricted Stock Awards. These assumptions include: a
4% compound annual growth rate in salaries for the individuals in the
Programs, that all financial targets are met, and that the Committee approves
a 100% payout of the awards to each participant. The awards will be paid in
stock of the Company, not in cash. See the LTIP table and associated
footnotes on page 9.
(5) Employer contributions to 401(k) Plans.
(6) Includes $6,600 contribution to 401(k) Plan and $8,888 in discretionary
Stock Award in 1996 under the Company's Stock Award Plan for Mr. Rowley, and
$598 contribution to 401(k) Plan and $2,963 in discretionary Stock Award in
1996 under the Company's Stock Award Plan for Mr. Malmgren.
7
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<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM ($)
--------------------------------------------------------- --------------------------
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME # (1) FISCAL YEAR ($/SHARE) DATE 5%(2) 10%(2)
- ---- ------- ------------ --------- ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
Alton 5,400 49.1% $28.125 May 31, 2006 $95,580 $242,325
Anderson 1,000 9.1% $28.125 May 31, 2006 $17,700 $44,875
Borchert 2,000 18.1% $28.125 May 31, 2006 $35,400 $89,750
Christensen 800 7.3% $28.125 May 31, 2006 $14,160 $35,900
Malmgren 800 7.3% $28.125 May 31, 2006 $14,160 $35,900
Rowley 1,000 9.1% $28.125 May 31, 2006 $17,700 $44,875
</TABLE>
(1) The options were granted at the fair market value of the shares on May
31, 1996. The options may be exercised for one-third (1/3) of the
shares after May 31, 1997, one-third (1/3) of the shares after May 31,
1998, and one-third (1/3) of the shares after May 31, 1999. All
options expire on May 31, 2006 and in the event the optionee is no
longer employed by the Company. All options vest upon the occurrence
of an Event (as described in the 1993 Stock Award Plan). Shares
acquired by the optionees are subject to rights of repurchase by the
Company in the event the optionee terminates employment with the
Company or wishes to transfer the shares.
(2) The exercise price was compounded at 5% and 10% over the ten (10) year
term of the options. The resulting stock price was reduced by the
exercise price to determine the potential realizable gain at the
assumed rates of appreciation.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
NAME (#) ($) (1)
- ---- ------------------------------- --------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
----------- ------------- ----------- -------------
Alton 6,425 8,754 $0 $0
Anderson 0 1,000 $0 $0
Borchert 3,306 3,695 $0 $0
Christensen 2,598 2,150 $0 $0
Malmgren 0 800 $0 $0
Rowley 0 1,000 $0 $0
(1) Value of unexercised options equals fair market value of shares
underlying in-the-money options at December 31, 1996 ($27.00), less the
exercise price times the number of in-the-money options outstanding.
8
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LONG TERM INCENTIVE PLANS
AWARDS IN LAST FISCAL YEAR
Stock Award Programs (the "Programs") were implemented in 1993, 1994, 1995 and
1996 pursuant to the terms of the Company's 1993 Stock Award Plan. This Plan
was approved by the shareholders in 1993 and since amended. Each Program
established a pool of shares that may be issued to the executives of the Company
contingent upon achievement of performance objectives over a three year period.
The objectives are based on compound annual increases in the earnings of the
Company and its subsidiaries. The restricted shares established in the 1994
Stock Award Program were distributed to the participants in February of 1997.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE UNDER NON-STOCK PRICE-BASED PLANS(1)
SHARES, UNITS OR OTHER PERIOD ------------------------------------
OR OTHER UNTIL MATURATION
NAME RIGHTS(#)(1) OR PAYOUT THRESHOLD(2) TARGET(3) MAXIMUM(4)
- ---- ------------ --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Alton 1,372 1 year 1,372 1,372 2,058
2,000 2 years 1,400 2,000 3,000
Anderson 400 2 years 200 400 600
Borchert 689 1 year 689 689 1,033
700 2 years 500 700 1,050
Christensen 542 1 year 542 542 813
300 2 years 100 300 450
Malmgren 400 2 years 200 400 600
Rowley 400 2 year 200 400 600
</TABLE>
(1) Under the terms of the Programs, shares will only be issued if the
Company and its subsidiaries achieve established goals of compound annual
growth in pre-tax net income for the three year periods ending December
31, 1997 and 1998, respectively. It is not possible to predict future
salaries, stock prices or the financial results of the Company and its
subsidiaries, therefore, certain assumptions have been made to estimate
the outcome of the Programs. These assumptions include: a 4% compound
annual growth rate in salaries for the individuals in the Programs, all
financial objectives being achieved, the Committee approving a payout for
each participant and a potential market value of the Company's stock of
$30.00 per share in both 1998 and 1999. The Company is making no
representations as to market appreciation potential for the Company's
stock in these calculations.
(2) No restricted shares will be issued unless the Company and its
subsidiaries achieve the performance objectives. The number of shares in
the "Threshold" column indicates the minimum number of shares to be
awarded if the Company and subsidiary performance objectives have been
achieved.
(3) The number of shares in the "Target" column are the same as the shares in
the "Threshold" column for the 1995 Stock Program because there is a
predetermined number of restricted shares that will be issued if the
performance objectives are achieved. Beginning in 1996, there is a
potential range of shares established for each participant under the
Program. The range has a separate threshold and target number of shares
that can be awarded once the pre-established performance objectives of
the Company and subsidiaries have been achieved. The number of shares in
the "Target" column are the high end of this range, without consideration
of footnote (4) below. No shares under the Program will be issued if
pre-established performance objectives are not achieved.
(4) The Programs allow the Committee the authority to reward outstanding
individual performance by issuing restricted shares to an individual in
an amount not to exceed 150% of the number of shares the individual would
have received under the targeted level. The shares in the "Maximum"
column assumes the Committee will issue 150% of the target number of
shares to all participants.
9
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COMPENSATION OF DIRECTORS
Directors received $350 for each Board and committee meeting they attended. In
1996, the Directors were paid an annual retainer of $10,000. These fees are
waived if the individual is a paid employee of the Company. Directors have the
option of receiving the retainer fee in cash or shares of Company stock.
401(K) PLANS
Hickory Tech Corporation and all of its subsidiaries (the "Companies") have a
Retirement Savings Plan ("401(k) Plan"). Participation in the 401(k) Plans
is open to each employee of the Companies who has completed three (3) months of
continuous employment. Participation in the 401(k) Plans is optional.
Employees may participate beginning with any pay period after completion of
eligibility requirements. As of December 31, 1996, there were 356 employees
eligible to participate in the 401(k) Plans. All but 31 eligible employees
participated in the 401(k) Plans in 1996.
A participant may elect to defer, on a pre-tax basis, up to 15% of annual base
compensation limited to $9,500 in 1996. The Companies will make an employer-
matching contribution of up to 6% of the participant's pre-tax contribution.
In 1996, the Companies contributed $683,748 to the accounts of all eligible
employees.
CHANGE OF CONTROL
The Company has change of control agreements with the following named executive
officers: Robert D. Alton, Jr., Thomas R. Borchert, David A. Christensen, Bruce
H. Malmgren and David H. Rowley. These agreements provide that in the event
there is a change in control of the Company, the officers shall receive pay for
the following number of years, unless they are released for cause, are disabled
or die: 2.99 years for Robert D. Alton, Jr., and two (2) years for Thomas R.
Borchert, David A. Christensen, Bruce H. Malmgren and David H. Rowley. If the
officers are released within three (3) years after change in control, for a
reason other than cause, death or disability, they shall be paid their salary
for the designated time periods. In the event of a change in control of the
Company and the simultaneous release of the officers, the approximated maximum
amount of salary that would be paid to Messrs. Alton, Borchert, Christensen,
Malmgren and Rowley under their current agreements would be $1,215,000,
$527,000, $382,000, $404,000 and $357,000, respectively.
SEVERANCE PAY
The Company has an agreement with Robert D. Alton, Jr. that if he is discharged
by the Company, he will receive severance pay equal to twelve (12) times his
then current monthly base salary. The current maximum amount payable under this
agreement would be $211,000. No payments will be made to Mr. Alton if he is
discharged for fraud, misappropriation of funds, embezzlement, or the commission
of a work related felony.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year 1996, the Board of Directors held eleven (11) meetings.
The Company has an Audit Committee consisting of Messrs. Else, Holdrege and
Kearney. The Audit Committee reviews internal controls of the Company and its
financial reporting, and meets with certified public accountants on these
matters; four (4) meetings were held in 1996. The Company also has a
Compensation Committee consisting of Messrs. Bosacker, Jacobson and Taylor. The
Compensation Committee makes recommendations to the Board regarding compensation
for top management of the Company; three (3) meetings were held in 1996. The
Company also has a Corporate Development Committee consisting of Messrs. Else,
Kearney and Kirklin. The Corporate Development Committee investigates potential
expansion and new markets for the Company; three (3) meetings were held in 1996.
Incumbent director nominees, Messrs. Bosacker and Taylor each attended 100% of
their meetings held in 1996. Attendance at meetings of the Board of Directors
and all committees as a whole averaged 95% in 1996.
10
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation program for executives is the responsibility of the
Compensation Committee of the Board of Directors. In 1996, this Committee was
composed of three outside directors, Messrs. Bosacker, Jacobson and Taylor. Mr.
Bosacker is Chairperson of this Committee.
The Board of Directors has established the following ongoing principles and
objectives for the Company's executive compensation program:
1. Provide compensation opportunities that will attract, motivate and
retain highly qualified managers and executives.
2. Link executives' total compensation to the Company's financial
performance and individual job performance.
3. Provide a balance between incentives focused on achievement of annual
objectives and longer term incentives linked to increases in earnings
and shareholders' value.
There are three elements to the compensation plan: annual base salary, cash
bonuses (the "Executive Incentive Plan") and longer term incentives (the "Stock
Award Plan").
Annual base salaries are somewhat influenced by the pay practices of comparable
companies so that the Company remains reasonably competitive with what others
are doing.
The Executive Incentive Plan has both an annual and a long-term component. The
Executive Incentive Plan rewards an executive with a cash bonus for attainment
of annually established financial objectives based on a combination of revenue,
pre-tax earnings and/or return on equity. The individual executive's
performance is also factored into awards made under the Executive Incentive
Plan. In addition to the payment of a cash bonus, an account is established for
each executive equal to 50% of the cash bonus. The account is increased
annually based on interest equal to the rate on a ten year Treasury Bond. One-
fourth of this account is vested immediately and an additional one-fourth vests
each of the succeeding three years.
The Stock Award Plan allows the Company to issue restricted shares, unrestricted
shares, incentive stock options and non-qualified stock options to officers of
the Company. The 1996 Stock Award Program that was adopted pursuant to the
Stock Award Plan issued incentive stock options to six officers of the Company.
The incentive stock options vest over a three year period and must be exercised
within ten years of their issuance. The stock options reward the executives in
the event they increase the fair market value of the shares of the Company. The
1996 Stock Award Program also established a range of restricted shares that may
be issued to each officer under the Program contingent upon the achievement of
performance objectives over a three year period. The objectives are based on
increases in the earnings of the Company and its subsidiaries.
The Committee applied the above-described principles and objectives in
determining the compensation for the Chief Executive of the Company, Mr. Alton.
In setting the 1996 salary, the Committee reviewed Mr. Alton's total
compensation program to make sure that it was closely related to the performance
of the Company in 1995. In establishing salary for 1996, the Committee
specifically considered the satisfactory results of the Company in 1995 as
compared to targeted goals in the areas of annual revenue, pre-tax
profitability, return on equity and rate of growth. The Committee also reviewed
the compensation of the CEO to determine that the compensation was competitive
for similar positions in comparable companies and was equitable for the Company
and its shareholders.
COMPENSATION COMMITTEE
Lyle T. Bosacker
Lyle G. Jacobson
Brett M. Taylor, Jr.
11
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FIVE YEAR SHAREHOLDER RETURN
PERFORMANCE PRESENTATION
The line graph presentation compares cumulative, five-year shareholder returns
on an indexed basis. The graph shows the value at each year of $100 invested in
the Company's stock or the index at December 31, 1991 and assumes the
reinvestment of all dividends. The Board of Directors has approved a peer group
of four (4) independent telecommunications companies which have been used for
purposes of this performance comparison. These companies were selected because
they have a similar proportion of core business in regulated telephone
operations, a similar pattern of internal diversification and moderate external
acquisition activity. The companies selected to be in the peer group are
identified below. The following graph compares the cumulative five year
performance of the Company's common stock to the S&P Composite and to an index
of peer companies.
TOTAL RETURN TO SHAREHOLDERS
DECEMBER 1991 TO DECEMBER 1996
(Following are the tables in the proxy which describe the points of the graph.)
<TABLE>
<CAPTION>
ANNUAL RETURNS (BASED ON DIVIDENDS REINVESTED MONTHLY)
- --------------------------------------------------------------------------------------------------
RETURN RETURN RETURN RETURN RETURN
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Hickory Tech 7.75 7.51 -1.17 1.45 -8.93
S&P 500 Comp-Ltd 7.62 10.08 1.32 37.58 22.96
Peer Group Index Average 10.85 16.81 -3.74 51.43 6.81
Indexed Returns (12/31/91 = 100)
VALUE AT DECEMBER 31
- --------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Hickory Tech 100 107.75 115.84 114.49 116.15 105.78
S&P 500 Comp-Ltd 100 107.62 118.46 120.03 165.13 203.05
Peer Group Index Average 100 110.85 129.49 124.65 188.76 201.61
</TABLE>
Companies in selected Peer Group are:
Aliant Communications, Inc. (Name Change from Lincoln
Telecommunications Company)
Cincinnati Bell, Inc.
Frontier Corporation.
Southern New England Telecommunications Corporation
12
<PAGE>
SELECTION OF AUDITORS
Subject to the approval of the shareholders, the Board of Directors has re-
employed Olsen Thielen & Co., Ltd., 223 Little Canada Road, St. Paul, Minnesota
55117, as the Company's auditors for 1997. The auditors report directly to the
Board of Directors. No representative of Olsen Thielen & Co., Ltd. is expected
to be present at the Annual Meeting on April 14, 1997.
METHOD AND EXPENSES OF SOLICITATION
The entire cost of this solicitation will be paid by the Company. In addition
to solicitation by mail, officers or regular employees of the Company may
solicit proxies by personal interview, mail, telephone and telegraph and may
request brokers and other custodians, nominees and fiduciaries to forward
soliciting material to their beneficial owners at the expense of the Company.
PROPOSALS OF SHAREHOLDERS
Proposals submitted by shareholders must be received by the Company not later
than December 15, 1997, for inclusion in the proxy materials for the next Annual
Meeting proposed to be held in April, 1998.
AVAILABILITY OF FORM 10-K
Shareholders of record on March 7, 1997, may obtain a copy of the Company's Form
10-K for the 1996 fiscal year, free of charge, by a written request to the
Company's executive offices directed to:
David A. Christensen, Secretary
Hickory Tech Corporation
221 East Hickory Street, P.O. Box 3248
Mankato, Minnesota 56002-3248
OTHER MATTERS
The Management does not know of other matters to come before the meeting.
However, if any other matters properly come before the meeting, it is the
intention of the persons designated as proxies to vote in accordance with their
best judgment on such matter.
IN THE INTEREST OF ECONOMY, YOU ARE REQUESTED TO VOTE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. ALL SHAREHOLDERS SHOULD SIGN THE
PROXY. (NO POSTAGE IS REQUIRED ON THE ENCLOSED ENVELOPE.)
BY THE ORDER OF
THE BOARD OF DIRECTORS
HICKORY TECH CORPORATION
/s/ Robert D. Alton, Jr.
Robert D. Alton, Jr.
Chairman
13
<PAGE>
PROXY/VOTING INSTRUCTION CARD
HICKORY TECH CORPORATION
221 EAST HICKORY STREET
P.O. BOX 3248
MANKATO, MN 56002-3248
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS ON APRIL 14, 1997
Messrs. Robert D. Alton, Jr. and Starr J. Kirklin are hereby appointed
Proxies to represent and to vote on the reverse side hereof, all shares of
common stock of Hickory Tech Corporation, a Minnesota corporation, held by the
undersigned at the Annual Meeting of Shareholders on April 14, 1997, and at any
adjournment thereof. This proxy when properly executed will be voted in the
manner directed herein. If no direction is made, this proxy will be voted FOR
Items 1 and 2. In their discretion, the Proxies are authorized to vote upon
such other matters as may properly come before the meeting.
THIS PROXY MUST BE SIGNED AND RETURNED IN ORDER FOR YOUR SHARES TO BE VOTED.
PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE
THANK YOU
14
<PAGE>
The Board of Directors recommends a vote FOR the following proposal:
ITEM 1. Election of Directors.
/ / FOR all nominees listed below
/ / AGAINST all nominees listed below
The nominees are: Lyle T. Bosacker and Brett M. Taylor, Jr.
(Instructions: To withhold authority to vote for any individual nominee, write
such name in the space provided below.)
________________________________________________________________________________
ITEM 2. Approve the Appointment of Olsen Thielen & Co., Ltd. as Independent
Auditors of the Company for 1997.
/ / FOR / / AGAINST / / ABSTAIN
Dated ______________________, 1997
_________________________________
Signature of Shareholder
All persons named on the stock certificates
should sign exactly as their names appear
thereon. The label shows the names according
to the Company records.
PLEASE SIGN AND RETURN PROMPTLY. THANK YOU.
15
