SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DATA TRANSMISSION NETWORK CORPORATION
(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 ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------
2) Form, Schedule or Registration Statement No.:
-----------
3) Filing Party:
------------------------------------------
4) Date Filed:
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<PAGE>
DATA TRANSMISSION NETWORK CORPORATION
9110 West Dodge Road, Suite 200
Omaha, Nebraska 68114
(402) 390-2328
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Data
Transmission Network Corporation, a Delaware corporation (the Company), will be
held at the Holiday Inn - Old Mill, 655 North 108th Avenue, Omaha, Nebraska on
Wednesday, April 24, 1996 at 10:00 A.M. Omaha time for the following purposes,
as more fully described in the accompanying Proxy Statement:
1. To elect seven directors to the Board of Directors.
2. To consider and vote upon a proposal to ratify the appointment of Deloitte
& Touche LLP independent auditors for the Company for the 1996 fiscal year.
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Any action may be taken on any one of the foregoing proposals at the
meeting on the date specified above, or on any date or dates to which the
meeting may be adjourned. The Board of Directors of the Company has fixed the
close of business on March 1, 1996, as the record date for determination of the
stockholders of the Company entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, please complete, date and
sign the enclosed proxy card and mail it promptly in the self-addressed envelope
provided. The giving of such proxy does not affect your right to vote in person
in the event you attend the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Omaha, Nebraska Brian L. Larson
March 11, 1996 Secretary
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. AN ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
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<PAGE>
DATA TRANSMISSION NETWORK CORPORATION
Proxy Statement
Index Page
- -------------------------------------------------------------------------------
Proxy Statement ........................................................... 1
Proxies ................................................................... 1
Voting Securities ......................................................... 1
Election of Directors ..................................................... 2
Ownership By Certain Beneficial Owners and Management ..................... 4
Executive Compensation .................................................... 6
Compensaton Committee Report of Executive Compensation .................... 10
Transactions with Management .............................................. 11
Compensation Committee Interlocks and Insider Participation ............... 11
Approval of Appointment of Auditors ....................................... 11
Stockholder Proposals for 1997 Annual Meeting ............................. 11
Compliance With Section 16(a) of the Exchange Act ......................... 11
Other Matters ............................................................. 12
Miscellaneous ............................................................. 12
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<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Data Transmission Network Corporation, a
Delaware corporation (the Company), to be used at the Annual Meeting of
Stockholders (the Meeting) to be held at the Holiday Inn - Old Mill, 655 North
108th Avenue, Omaha, Nebraska on Wednesday, April 24, 1996, at 10:00 A.M. Omaha
time. Stockholders of record at the close of business on March 1, 1996 are
entitled to notice of and to vote at the Meeting. The Companys principal
executive offices are located at 9110 West Dodge Road, Suite 200, Omaha,
Nebraska 68114.
PROXIES
Proxies are being solicited by the Board of Directors of the Company
with all costs of the solicitation to be paid by the Company. If the
accompanying proxy is executed and returned, the shares represented by the proxy
will be voted as specified therein. A stockholder may revoke any proxy given
pursuant to this solicitation by delivering to the Company prior to the Annual
Meeting a written notice of revocation or by attending the Meeting and voting in
person. This notice of Annual Meeting of Stockholders, proxy statement and
accompanying proxy card are first being mailed to stockholders on or about March
15, 1996.
VOTING SECURITIES
At March 1, 1996, the Company had issued and outstanding 3,327,530
shares of the Companys $.001 par value common stock. The Company has no other
class of voting securities outstanding. Each stockholder voting in the election
of directors may cumulate such stockholders votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which such stockholders shares are entitled, or may
distribute such votes on the same principle among as many candidates as the
stockholder chooses, provided that votes cannot be cast for more than the total
number of directors to be elected at the Meeting. The seven nominees receiving
the most votes at the Meeting will be elected as directors. Each share has one
vote on all other matters. An affirmative vote of a majority of the shares
present in person or by proxy at the meeting is required for approval of all
items being submitted to the stockholders for their consideration.
In accordance with Delaware law, a shareholder entitled to vote for the
election of directors can withhold authority to vote for all nominees or for
certain nominees for directors. Abstentions from voting on the proposal to
ratify the appointment of auditors are treated as votes against such proposal.
Broker non-votes on the proposal to ratify the appointment of auditors are
treated as shares as to which voting power has been withheld by the beneficial
holders of those shares and, therefore, as shares not entitled to vote on such
proposal.
1
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<PAGE>
ELECTION OF DIRECTORS
At the Meeting, the stockholders will elect a board of seven directors for
a term extending until the 1997 annual meeting of stockholders of the Company
and until their respective successors have been elected and qualify. The Board
of Directors has nominated for election or re-election as directors: Roger R.
Brodersen, Robert S. Herman, David K. Karnes, J. Michael Parks, Jay E. Ricks,
Greg T. Sloma and Roger W. Wallace. All of the nominees presently are serving as
directors of the Company. Proxies may be voted for seven directors.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the Board of Directors may amend the By-Laws and
reduce the size of the Board. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
Set forth below is certain information as of March 1, 1996, with respect to
the nominees for election as directors of the Company. The information relating
to their respective business experience was furnished to the Company by such
persons.
<TABLE>
<CAPTION>
Position and Office Director
Nominee Age with the Company Since
- ------------------ --- ------------------------------------ --------
<S> <C> <C>
Roger R. Brodersen 50 Chairman of the Board, 1984
Chief Executive Officer and Director
Robert S. Herman 43 Senior Vice President and Director 1984
David K. Karnes 47 Director 1989
J. Michael Parks 45 Director 1990
Jay E. Ricks 63 Director 1995
Greg T. Sloma 44 President, Chief Operating Officer, 1993
and Director
Roger W. Wallace 39 Senior Vice President and Director 1984
</TABLE>
Mr. Brodersen has served as Chairman of the Board and Chief Executive
Officer of the Company since 1984. Mr. Brodersen served as President of the
Company from 1984 to 1995.
Mr. Herman has served as Senior Vice President of the Company since 1989.
He served as Vice President of the Company from 1984 to 1989.
Mr. Karnes has served as President and Chief Executive Officer of The
Fairmont Group, Inc., a financial services and consulting firm, since 1989. He
also has served as Chairman of the Federal Home Loan Bank of Topeka since 1989.
Mr. Karnes served as a United States Senator from 1987 to 1989.
Mr. Parks served as President and Chief Operating Officer of First Data
Resources Inc. from November 1993 to December 1994 and President of the Merchant
Services Group of First Data Resources Inc. from December 1991 to November 1993.
He also served as President and Chief Executive Officer of Call Interactive, an
affiliate of First Data Resources Inc., from 1989 to 1991. From 1976 to 1989,
Mr. Parks served as President or Senior Vice President of various American
Express Information Services Companies or their subsidiaries.
2
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<PAGE>
Mr. Ricks has served as Chairman of Douglas Communications Corporation, an
operator of cable television systems, since 1990. He was a partner in the law
firm of Hogan & Hartson in Washington, D.C., from 1970 to 1990. Mr. Ricks is a
director of Intelcom Group, Inc., a competitive access provider and operator of
several satellite teleports, since 1992.
Mr. Sloma was elected President of the Company in January 1996. He has
served as Chief Operating Officer of the Company since January 1994. Mr. Sloma
served as Executive Vice President of the Company from January 1994 to December
1995 and as Chief Financial Officer from April 1993 to December 1993. From 1983
to 1993, Mr. Sloma was a Tax Partner at Deloitte & Touche.
Mr. Wallace has served as Senior Vice President of the Company since 1989.
He served as Vice President of the Company from 1984 to 1989.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met three times during the fiscal year ended
December 31, 1995. During fiscal 1995, all directors attended all of the
meetings of the Board of Directors and related committees on which they served.
The Company does not have a Standing Nominating Committee.
The Audit Committee recommends the selection of the independent auditors,
reviews the scope of the audits performed by them and reviews their audit report
and any recommendations made by them relating to internal financial controls and
procedures. Members of the Audit Committee, which met twice during fiscal 1995,
are David K. Karnes, J. Michael Parks and Jay E. Ricks.
The Compensation Committee reviews and makes recommendations to the Board
of Directors regarding officers compensation and the Companys employee benefit
plans; provided, however, the Compensation Committee administers the Companys
Stock Option Plan of 1989 through its Stock Option Plan Subcommittee, consisting
of all members of the Compensation Committee other than Greg Sloma. Members of
the Compensation Committee, which met once during fiscal 1995, are David K.
Karnes, J. Michael Parks, Jay E. Ricks and Greg T. Sloma.
DIRECTORS COMPENSATION
During fiscal 1995, each member of the Board of Directors who was not an
employee of the Company received $700 for each Board of Directors meeting
attended and $400 for each Board committee meeting attended. In 1995, each
director who was not an employee of the Company received options under the
Non-Employee Directors Stock Option Plan to purchase 2,500 shares of the
Companys common stock. On January 4, 1995 David K. Karnes and J. Michael Parks
each received options to purchase 1,000 shares at an exercise price of $16.50
per share and on April 26, 1995 each received options to purchase 1,500 shares
at an exercise price of $25.50 per share. On April 26, 1995, Jay E. Ricks
received options to purchase 2,500 shares at an exercise price of $25.50 per
share.
3
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<PAGE>
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial
ownership of the Companys common stock by each person or group who, as of March
1, 1996, to the knowledge of the Company, beneficially owned more than 5% of the
Companys common stock:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent of
Beneficial Owner of Ownership Class
- ------------------------- ------------------ -------------
<S> <C> <C>
Roger R. Brodersen 539,128 16.2%
16705 Ontario Plaza
Omaha, NE 68130
Furman Selz Incorporated 360,170 10.8%
230 Park Avenue
New York, NY 10169
Peter H. Kamin and Peak Investment 231,500 7.0%
Limited Partnership as a group
One Financial Center, Suite 1600
Boston, MA 02111
Wasatch Advisors, Inc. 168,270 5.1%
68 South Main
Salt Lake City, UT 84101
<FN>
(1) This includes 13,050 shares held in a trust for the benefit of Mr.
Brodersens children, 9,100 shares beneficially owned by Mr. Brodersens
spouse, and 5,955 shares allocated to Mr. Brodersen through his
participation in the Companys 401(k) Savings Plan.
(2) According to a Schedule 13G dated January 16, 1996, Furman Selz
Incorporated has sole voting and sole dispositive power over such shares.
(3) According to a Schedule 13D, amended through December 30, 1994, and a
telephone conversation by the Secretary of the Company with Peter H. Kamin
on February 1, 1996, Peak Investment Limited Partnership (Peak) is the
beneficial owner of 213,500 of these shares for which it has sole voting
and sole dispositive power. Peter H. Kamin is the sole general partner of
Peak with sole voting and sole dispositive power over the shares owned by
Peak and therefore also may be deemed to be the beneficial owner of such
213,500 shares. According to the Schedule 13D, as modified by such
telephone conversation, Mr. Kamin also is the beneficial owner of an
additional 18,000 shares for which he has sole voting and sole dispositive
power.
(4) According to a Schedule 13G dated February 12, 1996, Wasatch Advisors, Inc.
has sole voting and sole dispositive power over such shares.
</FN>
</TABLE>
4
-8-
<PAGE>
The following table sets forth information as to the shares of common stock
of the Company beneficially owned as of March 1, 1996, by each director of the
Company, by each nominee for election as a director of the Company, by each of
the executive officers named in the Summary Compensation Table beginning on page
6, and by all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount
and Nature Percent of
Beneficial Owner of Ownership (1) Class (2)
- -------------------- ------------------ ------------
<S> <C> <C>
Roger R. Brodersen 539,128 ( 3) 16.2%
Robert S. Herman 146,831 ( 4) 4.4%
David K. Karnes 18,645 ( 5) *
James J. Marquiss 47,766 ( 6) 1.4%
J. Michael Parks 11,333 ( 7) *
Jay E. Ricks 3,500 ( 8) *
Greg T. Sloma 37,482 ( 9) 1.1%
Roger W. Wallace 87,768 (10) 2.6%
All directors and executive officers
as a group (15 persons) 939,083 (11) 28.2%
<FN>
* Less than 1.0%
( 1) The number of shares in the table include interests of the named
persons, or of members of the directors and executive officers as a group,
in shares held by the trustee of the Companys 401(k) Savings Plan. The
beneficial owners have sole investment power over these shares but do not
have sole voting power.
( 2) Shares subject to options exercisable within 60 days of March 1, 1996
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.
( 3) Includes 13,050 shares which are held in trust for Mr. Brodersens
children, 9,100 shares beneficially owned by Mr. Brodersens spouse, and
5,955 shares allocated to Mr. Brodersen through his participation in the
Companys 401(k) Savings Plan.
( 4) Includes 26,515 shares subject to options exercisable within 60 days
of March 1, 1996, 9,600 shares beneficially owned by Mr. Hermans spouse,
and 4,822 shares allocated to Mr. Herman through his participation in the
Companys 401(k) Savings Plan.
( 5) Includes 8,833 shares subject to options exercisable within 60 days of
March 1, 1996
( 6) Includes 18,291 shares subject to options exercisable within 60 days
of March 1, 1996 and 4,475 shares allocated to Mr. Marquiss through his
participation in the Companys 401(k) Savings Plan.
5
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<PAGE>
( 7) Includes 8,333 shares subject to options exercisable within 60 days of
March 1, 1996.
( 8) Includes 2,500 shares subject to options exercisable within 60 days of
March 1, 1996.
( 9) Includes 28,500 shares subject to options exercisable within 60 days
of March 1, 1996, 940 shares beneficially owned by Mr. Slomas children and
5,942 shares allocated to Mr. Sloma through his participation in the
Companys 401(k) Savings Plan.
(10) Includes 26,517 shares subject to options exercisable within 60 days
of March 1, 1996, 1,500 shares beneficially owned by Mr. Wallaces spouse,
and 4,821 shares allocated to Mr. Wallace through his participation in the
Companys 401(k) Savings Plan.
(11) Includes 159,789 shares subject to options exercisable within 60 days
of March 1, 1996, 13,050 shares held in trust for the children of executive
officers and directors, 21,140 shares owned beneficially by spouses or
children of executive officers and directors, and 31,900 shares allocated
to executive officers through their participation in the Companys 401(k)
Savings Plan.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the Chief
Executive Officer and the four remaining most highly compensated executive
officers of the Company for the fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
------------------------ -------------
(a) (b) (c) (d) (e) (f) (g)
- ------------------------- ------ --------- --------- ---------- -------------- ----------------
Other Securities
Annual Underlying
Name and Principal Compen- Options All Other
Position Year Salary Bonus sation(1) (shares) Compensation (2)
- ------------------------- ------ --------- --------- ---------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Roger R. Brodersen 1995 $ 172,000 $ 147,897 $0 10,000 $ 9,240
Chairman, President 1994 165,000 80,217 0 10,000 9,240
& Chief Executive Officer 1993 157,500 79,497 0 6,000 8,994
Greg T. Sloma 1995 140,000 131,466 0 6,000 9,240
Chief Operating Officer & 1994 135,000 65,712 0 6,000 2,464
Executive Vice President 1993 93,462 35,360 0 30,000 0
Robert S. Herman 1995 115,000 131,466 0 5,000 9,240
Senior Vice President 1994 110,000 71,304 0 5,000 6,160
1993 104,000 70,922 0 4,500 6,165
Roger W. Wallace 1995 115,000 126,227 0 5,000 9,240
Senior Vice President 1994 110,000 70,108 0 5,000 7,204
1993 104,000 70,970 0 4,500 6,998
James J. Marquiss 1995 115,000 125,843 0 4,000 9,240
Vice President 1994 110,000 62,540 0 3,000 6,902
1993 80,000 87,889 0 3,000 7,027
6
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<PAGE>
<FN>
(1) Excludes perquisites and other benefits because the aggregate of such
compensation was less than either $50,000 or 10% of the total of annual
salary and bonus reported for the named executive officer.
(2) The amounts included in the All Other Compensation column represent 401(k)
matching contributions made by the Company.
</FN>
</TABLE>
The following table shows, as to the Chief Executive Officer and the four
remaining most highly compensated executive officers of the Company, information
about stock option grants in fiscal 1995. The Company does not grant any Stock
Appreciation Rights.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
- -----------------------------------------------------------------------------------------------
Individual Grants
- -----------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
- ------------------- ------------ -------------- ----------- ---------- ----------
Number of
Securities Percent of
Underlying Total Options
Options Granted to Exercise Grant Date
Granted Employees In Price Expiration Present
Name (shares) (1) Fiscal 1995 (Per share) Date Value (2)
- ------------------- ------------ -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Roger R. Brodersen 10,000 7.9% $ 18.15 1-04-00 $66,900
Greg T. Sloma 6,000 4.8% 16.50 1-04-05 40,900
Robert S. Herman 5,000 4.0% 16.50 1-04-05 34,100
Roger W. Wallace 5,000 4.0% 16.50 1-04-05 34,100
James J. Marquiss 4,000 3.2% 16.50 1-04-05 27,300
<FN>
(1) The options listed above were granted on January 4, 1995 under the Companys
Stock Option Plan of 1989.
(2) As permitted by the Securities and Exchange Commissions rules on disclosure
of executive compensation, the Company has elected to use a valuation method
other than the value at 5% and 10% annual appreciation or the Black-Scholes
valuation method. The Company has on its staff Dr. H. Wade German, Vice
President of Business Research, an experienced business economist with more than
25 years experience building industry price indexes and short term forecasting
models. Dr. German holds the BA, MA and CAS Degrees in Economics and a Ph.D. in
Sociology.
</FN>
</TABLE>
Dr. German has constructed a stock option valuation method (DTN-SOVM) which the
Company believes provides a more realistic measure of stock option values. The
DTN-SOVM is determined as follows:
Using the well-known Census Bureau Seasonal Adjustment Program, an
autoregressive integrated moving average technique (referred to as the
X-11 program), the Company has:
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<PAGE>
Isolated the long term trend and the intermediate term cyclical
effects impacting the Companys stock price. This is done on a monthly
average basis.
Isolated the seasonality and the irregular component of the monthly
average stock price over the calendar years 1991 through 1995,
inclusive .
Quantified on a monthly basis the four major components of its stock
price movement. These components are (1) long term trend (2)
intermediate term cyclical component (3) short term seasonal component
and (4) the irregular or exogenous element of the monthly average
stock price.
Since the Companys stock options will only have a positive value if the
long term outlook for the stock is positive, it is necessary to estimate
the long term underlying value of the stock, after removing any irregular
effects from the data. The DTN-SOVM accomplishes this by:
Regressing the trend-cycle component of the Companys monthly average
stock price on alternative time trends, over alternative time periods,
to determine which provides the most realistic assessment of the
future trend-cycle estimate of the Companys stock. Since the
trend-cycle data from the X-11 program is monthly, the regression
analysis of the Companys trend-cycle on the time trend provides an
equation that enables the Company to estimate future trend-cycle
values on a monthly basis. This is conducted over a ten year time
period; from January, 1996 through December, 2005.
Once the appropriate future values of the Companys trend-cycle
estimates are constructed, the next steps are to:
Determine the weighted average exercise time period from
historical data with respect to the Companys stock options over
the seven year time period from January 1, 1989 to December 31,
1995.
Assuming the historical experience regarding the exercise of the
Companys stock options will be repeated in the future, the
DTN-SOVM determines the estimated trend- cycle value.
Subtract the exercise price of the option from the trend-cycle
value of such option, and then discount to present value using a
discount rate equal to the annual yield on a U.S. Treasury Note
having a maturity date closest to the end of the exercise period
of such option.
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<PAGE>
The following table provides information on option exercises in fiscal 1995
and the value of unexercised options at December 31, 1995 for the Chief
Executive Officer and the four remaining most highly compensated executive
officers.
<TABLE>
<CAPTION>
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year End Option Values
- ----------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at Fiscal In-the-Money Options
Acquired Year End (shares) At Fiscal Year End(1)
On Value -------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger R. Brodersen 2,769 $ 31,428 20,666 18,667 $ 668,400 $ 498,700
Greg T. Sloma -- 0 17,000 25,000 569,000 805,000
Robert S. Herman -- 0 21,683 9,833 748,500 285,100
Roger W. Wallace -- 0 21,683 9,833 748,500 285,100
James J. Marquiss -- 0 14,958 7,000 517,100 206,500
<FN>
(1) The closing bid price of the Companys common stock as quoted by NASDAQ on
December 31, 1995 was $48.50. The values shown are computed based upon the
difference between this price and the exercise price of the underlying
options.
</FN>
</TABLE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Companys
common stock to the Center for Research in Securities Prices (CRSP) Total Return
Index for the NASDAQ Stock Market (U.S. Companies) and to the CRSP Total Return
Industry Index for NASDAQ Telecommunications Stocks. The graph assumes that the
value of the investment in the Companys Common Stock and each index was $100 at
December 31, 1990.
<TABLE>
<CAPTION>
Performance Graph in Tabular Form
Comparison of Five Year Cumulative Return
-----------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
DTN Common Stock 100 100 118 218 142 410
NASDAQ Total Return Index 100 161 187 215 210 296
NASDAQ Telecommunication
Industry Index 100 138 169 261 216 260
</TABLE>
9
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<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Company strives to apply a consistent philosophy on compensation for
all employees, including senior management. The goals of the compensation
program are to directly link compensation with corporate profitability and the
enhancement of the underlying value of the Companys business. The following
objectives are used by the Company and the Compensation Committee as guidelines
for compensation decisions:
Provide a competitive total compensation package that allows the Company to
attract and retain the best people possible.
The Company pays for performance. Employees are rewarded based upon
corporate performance, business unit performance and individual
performance.
Provide variable compensation programs that are linked with the performance
of the Company and that align executive compensation with the interests of
shareholders.
COMPENSATION PROGRAM COMPONENTS
The Committee annually reviews the Companys compensation program to ensure
that pay levels and incentive opportunities are competitive and reflect the
performance of the Company. The components of the compensation program for
executive officers, which are comparable to those used for all employees, are
outlined below.
Base Salary - Base pay levels are determined by reviewing competitive
positions in the market, including comparisons with companies of similar size,
complexity and growth rates. Modest increases in base salary were recommended by
senior management for fiscal 1995 for the Chief Executive Officer and the other
executive officers named in the Summary Compensation Table, and the Committee
acted in accordance with this recommendation.
Annual Incentive Compensation - The large majority of the Companys
employees, including the executive officers, participate in an annual bonus
plan. For fiscal 1995, the bonus pool amounted to eight percent of the Companys
income before income taxes and depreciation and amortization expenses. The five
executive officers named in the Summary Compensation Table received
approximately forty percent of this bonus pool.
Stock Option Program - The purpose of this program, which is available to
the large majority of employees, is to provide additional incentives to
employees to work to maximize long-term shareholder value. It also uses vesting
periods to encourage key employees to continue in the employ of the Company. The
number of stock options granted to executive officers is based on competitive
practices.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
David K. Karnes
J. Michael Parks
Jay E. Ricks
Greg T. Sloma
10
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<PAGE>
TRANSACTIONS WITH MANAGEMENT
No reportable transactions occurred during fiscal 1995 between the Company
and its officers and directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation Committee of the
Companys Board of Directors: David K. Karnes, J. Michael Parks, Jay E. Ricks and
Greg T. Sloma. Mr. Sloma, because he is an officer and employee of the Company,
abstains from all votes dealing with officer compensation. Also, only Mr.
Karnes, Mr. Parks and Mr. Ricks are members of the Stock Option Plan
Subcommittee of the Compensation Committee which administers the Companys Stock
Option Plan of 1989.
APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Directors has, upon the recommendation of the Audit Committee,
appointed the firm of Deloitte & Touche LLP to audit the Companys financial
statements for the fiscal year ending December 31, 1996, subject to ratification
by the stockholders of the Company. Deloitte & Touche LLP served as the Companys
auditors for the 1995 fiscal year.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the shares of Common Stock present, in person
or by proxy, and voting at the Meeting. If the stockholders should not ratify
the appointment of Deloitte & Touche LLP, the Board of Directors will reconsider
the appointment.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting, will have an opportunity to make a statement if desired, and will be
available to respond to appropriate stockholder questions.
The Board of Directors recommends a vote FOR the approval of the
appointment of Deloitte & Touche LLP as independent auditors for the Company.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of stockholders for which consideration is desired at the 1997
Annual Meeting of Stockholders must be received by the Company no later than
December 31, 1996, in order to be considered for inclusion in the Companys proxy
statement and form of proxy relating to such meeting. Any such proposals shall
be subject to the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934, as amended.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
Exchange Act), requires the Companys directors, executive officers and holders
of more than 10% of the Companys common stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. The
Company believes that during the fiscal year ended December 31, 1995, its
executive officers, directors and holders of more than 10% of the Companys
common stock complied with all Section 16(a) filing requirements, with the
following exception. Jay E. Ricks, a director of the Company, filed late his
initial report on Form 3 due upon his becoming a director of the Company. In
making these statements, the Company has relied solely upon a review of Forms 3
and 4 furnished to the Company during its most recent fiscal year, Forms 5
furnished to the Company with respect to its most recent fiscal year, and
written representations from reporting persons that no Form 5 was required.
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OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in the Proxy Statement.
However, if any other matters should properly come before the meeting, the
persons named in the accompanying form of proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgement.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the Company. The
Company will, upon request, reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending
proxy material to the beneficial owners of Common Stock. In addition to
solicitations by mail, directors, officers, and regular employees of the Company
may solicit proxies personally or by telegram or telephone without additional
compensation. The Company has retained First National Bank of Omaha, the
Companys stock transfer agent, to assist in the distribution and solicitation of
proxies at a cost of approximately $2,500, including the reimbursement of
certain expenses.
The Companys Annual Report to Stockholders, including financial statements,
has been mailed to all stockholders of record as of the close of business on
March 1, 1996. Any stockholder who has not received a copy of such Annual Report
may obtain a copy by writing the Company. Such Annual Report is not to be
treated as a part of this proxy solicitation material nor as having been
incorporated herein by reference.
Notwithstanding anything to the contrary set forth in any of the Companys
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the Compensation Committee Report on page 10 and the
Performance Graph on page 9 shall not be incorporated by reference into any such
filings.
THE BOARD OF DIRECTORS
Omaha, Nebraska
March 11, 1996
A COPY OF THE FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCLUDING EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, DATA TRANSMISSION NETWORK
CORPORATION, 9110 WEST DODGE ROAD, SUITE 200, OMAHA, NEBRASKA 68114.
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INTENTIONALLY LEFT BLANK
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DATA TRANSMISSION NETWORK CORPORATION
9110 West Dodge Road, Suite 200
Omaha, NE 68114
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DATA TRANSMISSION NETWORK CORPORATION PROXY
Annual Meeting of Stockholders To Be Held April 24, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Roger R. Brodersen and Brian L. Larson, or
either of them, as proxies of the undersigned, with full power of substitution
to either of them, and hereby authorizes them to vote as designated below all
shares of common stock of Data Transmission Network Corporation held of record
by the undersigned on March 1, 1996 at the Annual Meeting of Stockholders to be
held on April 24, 1996 and at any adjournments thereof (a) on the following
matters and (b) on any other matters that properly may come before the meeting
or any adjournments thereof:
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked)
-----
WITHHOLD AUTHORITY to vote for all nominees listed below
-----
(INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), draw
a line through the nominee's name below.)
Roger R. Brodersen Robert S. Herman David K. Karnes J. Michael Parks
Jay E. Ricks Greg T. Sloma Roger W. Wallace
2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP as independent
auditors of the Corporation for fiscal year ending December 31, 1996
AGAINST ABSTAIN
---- ----
This proxy will be voted as specified. IF NO SPECIFICATION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE PROPOSALS SET FORTH ABOVE. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders of Data
Transmission Network Corporation to be held on April 24, 1996 and the Proxy
Statement for such meeting.
Dated , 1996
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(Signature of Stockholder)
Note: Please sign exactly as name appears on stock certificate (as Indicated on
reverse side). All joint owners should sign. When signing as personal
representative, executor, administrator, attorney, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporation name
by president or other authorized person. If a partnership, please sign in
partnership name by a partner.
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