<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 Section 240.14a-11(c) or Section 240.14a-12
COMMNET CELLULAR 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):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
COMMNET CELLULAR INC.
_____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 26, 1997
_____________________
The Annual Meeting of Stockholders of CommNet Cellular Inc., a
Colorado corporation (the "Company"), will be held on Wednesday, February 26,
1997, at 10:00 A.M., local time, at the Inverness Hotel & Golf Club, 200
Inverness Drive West, Englewood, Colorado, for the following purposes:
1. To elect two directors of the Company; and
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
All stockholders are cordially invited to attend the meeting, although
only stockholders of record at the close of business on January 10, 1997 will be
entitled to notice of and to vote at the meeting.
Shares can only be voted at the meeting if the holder is present or
represented by proxy. If you do not expect to attend the meeting, you are urged
to date and sign the enclosed proxy and return it in the accompanying envelope
promptly, so that your shares may be voted in accordance with your wishes and
the presence of a quorum may be assured. The prompt return of your signed
proxy, regardless of the number of shares you hold, will aid the Company in
reducing the expense of additional proxy solicitation. The giving of such proxy
does not affect your right to vote in person in the event you attend the
meeting.
The Company's Annual Report for the fiscal year ended September 30,
1996 is enclosed.
AMY M. SHAPIRO
Secretary
Englewood, Colorado
January 17, 1997
<PAGE>
PROXY STATEMENT
COMMNET CELLULAR INC.
8350 East Crescent Parkway
Englewood, Colorado 80111
This statement is furnished in connection with the solicitation of
proxies by CommNet Cellular Inc., a Colorado corporation (the "Company"), for
use at the Annual Meeting of Stockholders of the Company to be held on February
26, 1997, and at any and all adjournments of such meeting.
January 10, 1997 has been fixed as the record date for the
determination of stockholders entitled to notice of and to vote at the meeting
or any adjournments thereof. At the close of business on that date 13,741,378
shares of Common Stock, par value $.001 per share, of the Company were issued
and outstanding. Each share of Common Stock is entitled to one vote on any
matter which properly comes before the meeting. Cumulative voting is not
permitted with respect to the election of directors. The presence in person or
by proxy of the holders of at least a majority of the shares of Common Stock
entitled to be voted at the meeting will constitute a quorum.
This proxy statement and the accompanying proxy card are being mailed
to stockholders commencing on or about January 17, 1997.
Stockholders who execute proxies retain the right to revoke them at
any time by giving written notice of revocation to the Secretary of the Company.
Unless so revoked, the shares represented by the proxies solicited by the
Company will be voted in accordance with the directions given therein by the
stockholder. Any proxy not specifying to the contrary will be voted FOR the
election of the Board of Directors' nominee as director referred to in Item I.
So far as the Company's management is aware, such matter is the only matter to
be acted on at the meeting. As to any other matter which may properly come
before the meeting or any adjournments thereof, the persons named in the
accompanying proxy card will vote thereon in accordance with their best
judgment.
<PAGE>
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The persons named in the accompanying proxy will vote for the election
of two Class III directors with the term of office to continue until the 1999
Annual Meeting of Stockholders or until his successor shall have been duly
elected and qualified, unless authority to vote is withheld. Daniel P. Dwyer
and John E. Hayes, Jr. are the nominees for election as Class III directors of
the Company and the Company is informed that these nominees are willing to serve
as directors. However, if such nominees should decline or become unable to
serve as directors for any reason, votes will be cast for a substitute nominee,
if any, designated by the Board of Directors, or, if none is so designated prior
to the election, votes will be cast according to the judgment in such matters of
the person or persons voting the proxy. Each nominee for election as a director
of the Company is incumbent.
The following lists the two nominees for election as Class III
directors of the Company and the three directors of the Company whose term of
office will continue after the Annual Meeting, including the age of each person
as of January 10, 1997, the positions with the Company or principal occupations
of each person, certain other directorships held and the year each person became
a director of the Company. The number of shares of Common Stock of the Company
owned beneficially by each such person as of January 10, 1997 is set forth in
"Voting Securities and Principal Holders Thereof."
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
Daniel P. Dwyer, age 37; Chief Financial Officer, Treasurer
and Executive Vice President of the Company;
Director since 1990.
John E. Hayes, Jr., age 59; Chairman of the Board, President
and Chief Executive Officer of Western Resources, Inc.;
Director of Boatmen's Bancshares Inc. and T-NETIX, Inc.
Director since 1990.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Arnold C. Pohs; age 68; Chairman of the Board, President,
and Chief Executive Officer of the Company;
Director since 1985.
Robert J. Paden; age 41; General Manager/Vice President of
the Stanton Telephone Company;
Director since 1985.
DIRECTOR WHOSE TERM EXPIRES IN 1998
David E. Simmons; age 39; President of Simmons Family Incorporated;
Director since 1987.
The Board of Directors recommends a vote FOR the nominees listed above.
2
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At January 10, 1997, there were 13,741,378 shares of Common Stock of
the Company issued and outstanding. As of such date, options to purchase
1,919,400 shares were outstanding. Each holder of Common Stock, but not
unexercised options, is entitled to one vote per share on each matter which may
be presented at a meeting of stockholders. Cumulative voting is not allowed.
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol CELS.
The following table sets forth information regarding ownership of the
Company's Common Stock at January 10, 1997 by each person who is known by
management of the Company to own beneficially more than 5% of the Common Stock,
by each director of the Company and by all directors and executive officers of
the Company as a group. Shares issuable on exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of persons
beneficially owning such options, but have not been deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. Insofar
as is known to the Company, the persons indicated below have sole voting and
investment power with respect to the shares indicated as owned by them except as
otherwise stated in the notes to the table.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- -----
Arnold C. Pohs 430,551 (1) 3.06%
8350 East Crescent Parkway
Englewood, Colorado 80111
Daniel P. Dwyer 218,627 (2) 1.57%
8350 East Crescent Parkway
Englewood, Colorado 80111
John E. Hayes, Jr. 7,500 .05%
818 Kansas Avenue
Topeka, Kansas 66612
Main Street Partners, L.P. 2,075,800 (3) 15.11%
3637 Fall Creek Highway
Granbury, Texas 76049
Janus Capital Corporation 2,000,100 (4) 14.56%
100 Filmore Street
Denver, Colorado 80206
The Equitable Companies Inc. 1,232,000 (5) 8.97%
787 Seventh Avenue
New York, New York 10019
All executive officers and 835,168 (6) 5.78%
directors (10 persons)
3
<PAGE>
__________
(1) Includes options to purchase 340,000 shares of Common Stock.
(2) Includes options to purchase 197,500 shares of Common Stock.
(3) A Schedule 13D, dated April 4, 1995, was filed on behalf of Main Street
Partners, L.P., MS Advisory Partners, L.P., MS Advisory Partners (Overseas),
L.P., San Francisco Partners II, L.P., SF Advisory Partners, L.P., SF
Advisory Corp., SF Advisory Corp. II, The Phoebe Snow Foundation, John H.
Scully, William E. Oberndorf, William J. Patterson and Glenn B. Solomon.
(4) A Schedule 13G, dated February 13, 1996, filed on behalf of Janus Capital
Corporation, Janus Venture Fund and Thomas H. Bailey reflects that such
group has shared voting and shared disposition power over such shares.
(5) A Schedule 13G, dated as of December 31, 1995, filed on behalf of five
French mutual insurance companies, AXA Assurance I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle and Uni Europe Assurance Mutuelle, as a group, AXA,
The Equitable Companies Incorporated and their subsidiaries reflects that
such group has sole voting power over 1,097,300 shares of Common Stock of
the Company. No information is given in respect of voting power over the
remaining shares.
(6) Includes options to purchase 698,938 shares of Common Stock held by
directors and executive officers of the Company.
4
<PAGE>
CONCERNING MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the
executive officers and directors of the Company:
Name Age Position
---- --- --------
Arnold C. Pohs 68 Chairman of the Board, President, Chief
Executive Officer and Director
Daniel P. Dwyer (1) 37 Executive Vice President, Treasurer, Chief
Financial Officer and Director
Homer Hoe 47 Executive Vice President and Chief
Information Officer
Timothy C. Morrisey 43 Executive Vice President - Sales Operations
Andrew J. Gardner 42 Senior Vice President and Controller
David S. Lynn 39 Senior Vice President - Network Operations
Amy M. Shapiro 43 Senior Vice President, Secretary and General
Counsel
John E. Hayes, Jr. (1) (2) 59 Director
Robert J. Paden (2) 41 Director
David E. Simmons (1) (2) 39 Director
- ----------
(1) Member Audit Committee.
(2) Member Compensation Committee.
The Company's Articles of Incorporation provide for a classified Board
of Directors consisting of three classes, each class to be as nearly equal in
number as possible. The members of each class are elected to a three-year term
and one class is elected at each annual meeting. Messrs. Dwyer and Hayes are
members of Class III with terms expiring at the 1996 Annual Meeting of
Stockholders; Messrs. Pohs and Paden are members of Class I with terms expiring
at the 1997 Annual Meeting (to be held in February 1998); and Mr. Simmons is a
member of Class II with a term expiring at the 1998 Annual Meeting (to be held
in February 1999).
Arnold C. Pohs has been Chairman of the Board of the Company since
February 1991, President and Chief Executive Officer since August 1989 and a
director since September 1985. Mr. Pohs served as Executive Vice President of
the Company from January 1986 through August 1989. Mr. Pohs was designated
Chief Operating Officer of the Company in August 1987, prior to which time he
was the Chief Financial Officer of the Company. Mr. Pohs currently serves as
1st Vice Chairman and a member of the Executive Committee of the Board of
Directors of the Cellular Telecommunications Industry Association and as
Chairman of the Public Policy Council. He is a director, and former Chairman,
of the CTIA Foundation
5
<PAGE>
for Wireless Telecommunications and is also a member of the CEO Council. He also
serves as Chairman of the Board of TVX, Inc.
Daniel P. Dwyer has been Executive Vice President of the Company since
November 1992, a director of the Company since March 1990, and Chief Financial
Officer since August 1988 and Treasurer since August 1987. He was Vice
President - Finance of the Company from November 1989 until November 1992,
Secretary from August 1987 until March 1990, Assistant Secretary from January
1987 until August 1987, Controller from May 1986 until November 1988 and
accounting manager for the Company from March 1986 until May 1986. He is a
Certified Public Accountant and a member of the American Institute of Certified
Public Accountants and the Colorado Society of Certified Public Accountants.
Mr. Dwyer currently serves as a director of TVX, Inc.
Homer Hoe was elected Executive Vice President and Chief Information
Officer of the Company in October 1994. From August 1992 until joining the
Company in October 1994, he was a self-employed consultant to the Information
Services industry, and was contracted by the Company as interim CIO from April
to October 1994. From August 1991 to August 1992, Mr. Hoe was Director of
Information Services for Tenneco Minerals, a subsidiary of Tenneco, Inc. From
May 1986 to August 1991, he was employed by Digital Equipment Corporation, most
recently as Senior Consultant, specializing in multi-vendor computer system
integration.
Timothy C. Morrisey was named Executive Vice President - Sales
Operations of the Company in November 1996. He was Senior Vice President-Sales
Operations from February 1995 until November 1996 and General Sales Manager of
the Company's Midwest Region from July 1993 until February 1995. From February
1990 until joining the Company in July 1993, Mr. Morrisey was President and
General Manager of the Washington D.C. and Baltimore cellular operations for
Southwestern Bell Mobile Systems.
Andrew J. Gardner was named Senior Vice President of the Company in
July 1994. He was Vice President and Controller from November 1992 to July 1994
and Assistant Vice President - Accounting and Tax from July 1990 to October
1992.
David S. Lynn was named Senior Vice President-Network Operations of
the Company in July 1994. He was Vice President-Network Operations from March
1993 until July 1994, Vice President-Network Development from February 1992
until March 1993, Assistant Vice President-Finance from June 1990 until February
1992, Controller from November 1988 until June 1990 and Manager, Financial
Reporting from August 1988 until November 1988.
Amy M. Shapiro was named Senior Vice President of the Company in
November 1995. She was Vice President of the Company from November 1992 to
November 1995 and has been Secretary of the Company since March 1990 and General
Counsel since October 1989.
John E. Hayes, Jr. was elected a director of the Company in October
1990. Mr. Hayes has served as Chairman of the Board, President and Chief
Executive Officer of Western Resources, Inc. since October 1989. Mr. Hayes is a
director of Boatmen's Bancshares, Inc., Edison Electric Institute, Security
Benefit Group, The Topeka Community Foundation and T-NETIX, Inc. He is a
Trustee of the Midwest Research Institute, the Menninger Foundation and
Rockhurst College.
Robert J. Paden has been a director of the Company since December
1985. For the past 13 years, Mr. Paden has been General Manager/Vice President
of the Stanton
6
<PAGE>
Telephone Company, Stanton, Nebraska. He is also a board member of the Nebraska
Telephone Association.
David E. Simmons has been a director of the Company since August 1987.
Mr. Simmons has served as President of Simmons Family Incorporated, a
broadcasting and communications company, since 1989 and as its Executive Vice
President from 1985 to 1989.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF COMPENSATION COMMITTEE
General. The Compensation Committee of the Board of Directors is
responsible for establishing the executive compensation program for the Company.
The Committee monitors and recommends changes in the compensation levels of
executive management and administers the Company's incentive compensation
programs as well as determining the grants under the Company's Employee Stock
Ownership Plan. All of the Committee members are outside, non-employee
directors of the Company. The Company has periodically retained the services of
a nationally recognized executive compensation consulting firm to assist the
Company in compensation matters.
Compensation Philosophy. The Company's compensation program is
designed to attract and retain high quality executive management, to give
management incentives that motivate superior performance on behalf of the
Company and to align the interests of management with those of the Company's
shareholders. The Committee believes that the Company's base salaries should
approximate the average of base salaries paid to executives with similar
responsibilities in similar cellular companies. Executive compensation should
also be correlated to the Company's performance and shareholder return. In
determining executive compensation, the Committee considers compensation from
Company subsidiaries and affiliates received by executive officers in their
capacity as Board members of such entities.
The companies used for compensation comparison purposes are not all of
the same companies contained in the Nasdaq telecommunications industry group
comparison of total shareholder return in the Stockholder Performance Return
Graph. The companies used for compensation purposes are those companies which
are similarly sized and are in the cellular industry.
Components of Compensation.
Salary: The salary of the Chief Executive Officer and the other
------
executive officers of the Company are based on a subjective evaluation of an
individual officer's responsibility, Company performance and a comparison of
salaries for similar positions in comparable companies.
During 1996 the salary increases for the executive officers, other
than Arnold C. Pohs, the Chief Executive Officer, ranged between 10% and 25%.
Mr. Pohs' base salary was increased by 17%. The basis for Mr. Pohs' salary
increase was twofold. First, the increase recognizes the performance of the
Company in terms of operating cash flow achievements. Second, Mr. Pohs' salary
was adjusted after an evaluation of comparative industry information to
approximate the Company's compensation objective of paying at the average.
7
<PAGE>
Short-Term Incentive Plan Bonuses: The Company maintains an annual
---------------------------------
bonus plan which is based on meeting certain operational targets. The bonus
opportunities are established based on the average opportunities provided to
executives in similar positions at similar companies.
Actual annual bonuses for the executive officers were determined based
on the Company's performance relative to corporate operating targets and on each
individual's performance relative to officer specific individual goals. The
weightings of corporate and individual performance vary by position and
responsibilities and range from a weighting of 70% corporate/30% individual to
90% corporate/10% individual, which is the weighting applied to Mr. Pohs' award.
The corporate operating targets were based on the following measures
which represent the key business indicators of performance within the cellular
industry: Net managed market subscriber additions (20%), managed market
acquisition cost (including equipment margin) net subscriber addition (25%),
consolidated service revenues (15%), consolidated operating cash flow (30%) and
total consolidated debt as a percentage of financed proportionate cash flow
(10%).
During fiscal 1996, the Company's weighted average performance results
were 101.8% of the operating targets as described above and bonuses were paid
accordingly after a subjective evaluation of individual performance. The
corporate performance results represent excellent performance against aggressive
operating plan targets.
Mr. Pohs' award was 40% of base salary and was based 90% on the
weighted performance results of 101.8% of the operating targets and 10% on
individual performance. The Committee determined that the individual portion of
Mr. Pohs' award should be based on a maximum individual performance rating.
Specifically, the Committee considered the following: the Company added 60,286
managed market customers, a 39% increase, bringing the total to 211,278 at
September 30, 1996, and consolidated EBITDA increased to $38.2 million which
represented a 95% increase over the $19.6 million reported in the prior fiscal
year.
Long-Term Incentive Compensation: The Company provides long-term
--------------------------------
incentive compensation to its executives through stock option grants under the
Omnibus Stock and Incentive Plan which are intended to align the interest of
executives with those of stockholders. This plan was approved by the Company's
shareholders during fiscal 1991 and was amended in 1993 and 1995.
Subsequent to the 1996 fiscal year-end, stock options were granted to
the Company's executives as set forth in the "Option Grants Table." All options
are granted at an exercise price equal to the market price of the Company's
Common Stock at the date of grant and vest over a period of four years. The
size of option grants to the executives were based on a subjective evaluation of
Company and individual performance and on a study by an independent compensation
consulting firm of dilution levels of comparable companies. After the stock
option grant, the Company's stock option dilution levels are within the range of
dilution levels found at comparable companies. In addition, the shares owned by
the named executives and their respective option positions were considered in
determining such option grants.
8
<PAGE>
In December 1996, Mr. Pohs received an option to purchase 100,000
shares of Common Stock with an exercise price equal to the fair market value of
the stock on the date of grant. The size of the award was determined based on a
subjective evaluation of Mr. Pohs' performance.
As of the date of this report, Mr. Pohs owns 85,944 shares of the
Company's Common Stock and, with the recent grant, holds options to purchase an
additional 740,000 shares. The Committee believes that the equity interests
held by the named executives represent a significant incentive to continue to
increase stockholder value.
Policy with Respect to the $1 Million Limit. Section 162(m) of the
--------------------------------------------
Internal Revenue Code generally limits to $1,000,000 the tax deductible
compensation paid to the Chief Executive Officer and the four highest-paid
executive officers who are employed as executive officers on the last day of the
year. However, the limitation does not apply to performance-based compensation
provided certain conditions are satisfied.
None of the Company's compensation payments for fiscal 1996 exceeded
the tax deductibility limit set forth in Section 162(m) nor is it expected that
compensation to be paid in fiscal 1997 will exceed the limit. The committee
will continue to monitor the Company's executive compensation program with the
impact of Section 162(m) and will seek to minimize the impact of Section 162(m)
where appropriate and consistent with the Company's compensation philosophy.
David E. Simmons John E. Hayes, Jr. Robert J. Paden
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the named
Executive Officers for each of the three years ended September 30, 1996.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation All Others
------------------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Name and Other
Principal Position Year Salary ($) Bonus ($) ($)(1) Options (#) ($)(2)
- ------------------ ---- --------- -------- ------ ---------- -----
Arnold C. Pohs.......................... 1996 350,000 149,306 11,473 100,000 10,125
Chairman of the Board, 1995 300,000 126,455 10,861 200,000 8,625
President and Chief 1994 250,000 112,601 - 250,000 13,980
Executive Officer
Daniel P. Dwyer......................... 1996 250,000 83,598 2,880 50,000 10,125
Executive Vice 1995 200,000 66,203 3,734 100,000 8,625
President, Treasurer 1994 180,000 58,974 - 125,000 13,070
and Chief Financial
Officer
Homer Hoe............................... 1996 200,000 63,878 2,259 20,000 8,112
Executive Vice 1995 170,000 55,253 2,206 35,000 975
President and Chief 1994 - - - - -
Information Officer
Timothy C. Morrisey..................... 1996 132,000 36,753 - 20,000 10,125
Executive Vice 1995 115,000 23,820 - 20,000 8,625
President- Sales 1994 - - - - -
Operations
David S. Lynn........................... 1996 132,000 35,103 - 20,000 10,125
Senior Vice President - 1995 120,000 33,095 - 20,000 8,625
Network Operations 1994 108,000 28,755 - 20,000 7,637
- ----------
</TABLE>
(1) The amounts shown represent premiums paid on supplemental health benefits
for certain named executives.
(2) The amounts shown represent contributions by the Company to defined
contribution plans.
10
<PAGE>
1996 OPTION GRANTS
The following table provides information on option grants for fiscal
1996 by the Company to its named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------
Potential Realizable Value
Percent of at Assumed Rates of
Number of Total Options Stock Price Appreciation
Options Granted to for Option Term ($)(2)
Granted Employees in Exercise Price Expiration --------------------------
Name (#) (1) Fiscal Year ($/Share) Date 5% 10%
---- ------ ---------- -------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Arnold C. Pohs 100,000 33.87% 29.375 12/11/06 1,847,378 4,681,618
Daniel P. Dwyer 50,000 16.93% 29.375 12/11/06 923,689 2,340,809
Homer Hoe 20,000 6.77% 29.375 12/11/06 369,476 936,324
Timothy C. Morrisey 20,000 6.77% 29.375 12/11/06 369,476 936,324
David S. Lynn 20,000 6.77% 29.375 12/11/06 369,476 936,324
- ------------
</TABLE>
(1) Indicates number of shares as to which options were granted on December 11,
1996 pursuant to the Company's Omnibus Stock and Incentive Plan. Options
become exercisable in four equal annual installments commencing December 11,
1997.
(2) These are hypothetical values using assumed growth as prescribed by the SEC.
The assumed annual rates of appreciation of 5% and 10% over the ten year
term of the options would result in the price of the Company's stock
increasing to $47.85 and $76.19, respectively.
The following table provides information on option grants for fiscal
1996 by TVX, Inc., a subsidiary of the Company.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------
Potential Realizable Value
Percent of at Assumed Rates of
Number of Total Options Stock Price Appreciation
Options Granted to for Option Term ($)(2)
Granted Employees in Exercise Price Expiration --------------------------
Name (#) (1) Fiscal Year ($/Share) Date 5% 10%
---- ------ ---------- -------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Arnold C. Pohs 100,000 29.67% 1.50 9/18/06 41,442 94,334
Daniel P. Dwyer 50,000 14.84% 1.50 9/18/06 20,721 47,167
- ------------
</TABLE>
(1) Indicates number of shares as to which options were granted on September 18,
1996 to purchase shares of TVX, Inc.
(2) These are hypothetical values using assumed growth as prescribed by the SEC.
The assumed annual rates of appreciation of 5% and 10% over the ten year
term of the options would result in the value of the options increasing to
$1.91 and $2.44, respectively.
CHANGE IN CONTROL AGREEMENTS
In July 1993, the Board of Directors approved change in control
agreements (the "Agreements") with Messrs. Pohs and Dwyer. In October 1994, the
Board authorized a comparable agreement with Mr. Hoe, the Company's Chief
Information Officer. In November 1995, the Board authorized comparable
agreements with Messrs. Gardner, Lynn and Morrisey, the Company's Senior Vice
President and Controller, Senior Vice President - Network Operations, and
Executive Vice President - Sales Operations, respectively, and Ms.
11
<PAGE>
Shapiro, the Company's Senior Vice President and General Counsel. The purpose of
the Agreements is to reinforce and encourage the officers to maintain
objectivity and a high level of attention to their duties without distraction
from the possibility of a change in control of the Company. These Agreements
provide that in the event of a change in control of the Company, as that term is
defined in the Agreements, each officer is entitled to receive certain severance
benefits upon the subsequent termination or constructive termination of
employment, unless such termination is due to death, disability or voluntary
retirement; unless the termination is by the Company for cause (as defined in
the Agreements) or is by the officer for other than good reason (as defined in
the Agreements).
The severance benefits include the payment of the officer's full base
salary through the date of termination. The severance benefits also include a
lump sum payment equal to 2.99 times the sum of (a) the officer's annual base
salary in effect immediately prior to the circumstances giving rise to
termination, and (b) the actual bonus earned by the officer in the year prior to
the year in which termination occurs. In addition, each officer will be
provided with life and health benefits and a continuation of all other employee
benefits for 12 months following the date of termination. In addition, the
officers will be fully vested in all benefit plans to the extent not otherwise
entitled to 100% of all contributions made by the Company on their behalf.
In the event any payment or benefit to be received by an officer
pursuant to the Agreements would be subject to the federal excise tax, the
amount of the benefits payable under the Agreement will be increased such that
the net amount retained by the officer after deduction of any excise tax on such
payment and any federal, state and local tax and excise tax upon such additional
payment shall be equal to the full severance benefits contemplated by the
Agreement.
1996 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information on the value of unexercised
options at September 30, 1996. No options were exercised by the named Executive
Officers during fiscal 1996.
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
Fiscal Year End (#)(1) at Fiscal Year End ($)
----------------------- -----------------------
Name Vested Unvested Vested Unvested
---- ------ -------- ------ --------
Arnold C. Pohs 537,500 (2) 452,500 2,030,000 (2) 1,978,750
Daniel P. Dwyer 270,000 (2) 227,500 1,470,844 (2) 1,009,219
Homer Hoe 6,250 53,750 20,313 176,876
Timothy C. Morrisey 3,125 28,125 13,984 96,484
David S. Lynn 27,250 46,250 313,281 244,844
- ---------
(1) Does not reflect options granted on December 11, 1996 for fiscal 1996.
(2) Includes options to purchase 250,000 and 150,000 shares of TVX, Inc. held by
Arnold C. Pohs and Daniel P. Dwyer, respectively. There is currently no
public market for shares of TVX, Inc., accordingly the table reflects an
assumed fair market value per share of $1.50.
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STOCKHOLDER PERFORMANCE RETURN GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock with that of
the cumulative total return of the Nasdaq Stock Market - US Index ("NASDAQ STOCK
MRKT - US") and the Nasdaq Telecommunications Index ("NASDAQ TELECOM") for the
five-year period ended on September 30, 1996. The information below is based on
an investment of $100, on September 30, 1991, in the Company's Common Stock, the
NASDAQ STOCK MRKT - US and the NASDAQ TELECOM, with dividends reinvested.
[STOCKHOLDER PERFORMANCE RETURN GRAPH APPEARS HERE]
DIRECTORS' COMPENSATION
Directors of the Company who are not employees receive an annual
retainer of $12,000, plus reimbursement of expenses incurred in attending Board
or committee meetings. Directors who are also employees of the Company receive
no compensation in their capacities as directors.
MEETINGS OF THE BOARD
The Board of Directors held four meetings during the fiscal year ended
September 30, 1996. Each incumbent director attended at least 75% of the total
number of meetings of the
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Board and committees thereof on which such director served during that period,
except Mr. Paden who attended 67% of such meetings.
COMMITTEES
The Company has no standing nominating committee of the Board of
Directors.
The Compensation Committee makes recommendations to the Board of
Directors concerning the compensation of the Company's officers. The
Compensation Committee, which currently consists of Messrs. Simmons, Hayes and
Paden, held two meeting during the fiscal year ended September 30, 1996.
The Audit Committee makes recommendations to the Board of Directors
concerning the selection of the Company's auditors and the scope of auditing and
accounting matters. The Audit Committee currently consists of Messrs. Simmons,
Hayes and Dwyer. The Audit Committee held one meeting during the fiscal year
ended September 30, 1996.
INDEPENDENT AUDITOR
The firm of Ernst & Young LLP serves as the Company's independent
certified public accountant as it has since 1985. A partner of Ernst & Young
LLP will be present at the meeting and will have an opportunity to make a
statement if he so desires and will be available to respond to appropriate
questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended for presentation at the Company's next
annual meeting must be received by the Company at its principal offices in
Englewood, Colorado, not later than September 16, 1997.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by directors,
officers and employees of the Company by personal interview, telephone or
telegram. Such directors, officers and employees will not receive additional
compensation for such activities. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries to forward the
solicitation material to the beneficial owners of common stock held of record by
such persons and the Company may reimburse them for reasonable out-of-pocket and
clerical expenses incurred by them in connection therewith. The Company has
retained Beacon Hill Associates, Inc. to aid in the solicitation of proxies for
a fee of $2,500, plus out-of-pocket expenses.
A COPY OF THE COMPANY'S FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED BY STOCKHOLDERS WITHOUT
CHARGE BY WRITTEN REQUEST ADDRESSED TO STOCKHOLDER RELATIONS, COMMNET CELLULAR
INC., 8350 EAST CRESCENT PARKWAY, ENGLEWOOD, COLORADO 80111.
Englewood, Colorado
January 17, 1997
14
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COMMNET CELLULAR INC.
PROXIES SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 26, 1997
The undersigned holder of shares of Common Stock of CommNet Cellular Inc.
(the "Company") hereby appoints Arnold C. Pohs and Daniel P. Dwyer, and each of
them, as proxies of the undersigned, with full power of substitution, to act and
to vote for and in the name, place and stead of the undersigned at the Annual
Meeting of Stockholders of the Company to be held at the Inverness Hotel & Golf
Club, 200 Inverness Drive West, Englewood, Colorado, at 10:00 A.M., local time,
on February 26, 1997, and at any and all adjournments thereof, according to the
number of votes and as fully as the undersigned would be entitled to vote if
personally present at such meeting, and particularly with respect to the
proposals listed on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR ITEM 1.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this proxy exactly as your name appears on the reverse side. Joint
owners should each sign personally. Trustees and others signing in a
representative capacity should indicate the capacity in which they sign.
- --------------------------------------------------------------------------------
(REVERSE SIDE OF PROXY)
[X]PLEASE MARK VOTES AS IN
THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors [ ] [ ] [ ]
Nominees for a three-year term:.
DANIEL P. DWYER AND JOHN E. HAYES, JR.
If you do not wish your shares voted "For" a
particular nominee, mark the "For All Except"
box and strike a line through that nominee's
name. Your shares will be voted for the
remaining nominee.
2.) Such other matters as may properly come before the meeting.
Please be sure to sign and date this Proxy.
Date____________
_________________________________________________
Stockholder sign here ---------Co-owner sign here
