<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
[x] Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
</TABLE>
Nationwide Cellular Service, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
----------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] 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>
NATIONWIDE CELLULAR SERVICE, INC.
20 EAST SUNRISE HIGHWAY
VALLEY STREAM, NEW YORK 11582
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 1, 1995
------------------------
To the Stockholders of
NATIONWIDE CELLULAR SERVICE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
NATIONWIDE CELLULAR SERVICE, INC., a Delaware corporation (the 'Company'), will
be held at The Regency Hotel, 540 Park Avenue, New York, New York 10021, on
Thursday, June 1, 1995, at 10:00 A.M., local time, for the following purposes:
1. to elect three (3) Class III directors to the Company's Board of
Directors to serve until the Company's third Annual Meeting of Stockholders
following their election or until their respective successors are duly
elected and qualified; and
2. to transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
The stock transfer books of the Company will not be closed but only
stockholders of record at the close of business on April 25, 1995 will be
entitled to notice of and to vote at such meeting or any adjournments or
postponements thereof. A complete list of the stockholders entitled to vote will
be available for inspection by any stockholder during the meeting; in addition,
the list will be open for examination by any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at the offices of Parker Chapin Flattau & Klimpl,
LLP, 1211 Avenue of the Americas, 18th Floor, New York, New York 10036.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED PRE-ADDRESSED ENVELOPE
AS PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
JEROME SANDERS
Secretary
Valley Stream, New York
May 2, 1995
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
NATIONWIDE CELLULAR SERVICE, INC.
20 EAST SUNRISE HIGHWAY
VALLEY STREAM, NEW YORK 11582
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to stockholders of Nationwide Cellular
Service, Inc., a Delaware corporation (the 'Company'), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Stockholders (the 'Annual Meeting'), to be held at The Regency Hotel, 540
Park Avenue, New York, New York 10021, on Thursday, June 1, 1995 at 10:00 A.M.,
local time, or any adjournments or postponements thereof.
The mailing of this Proxy Statement and the enclosed proxy to stockholders
will begin on or about May 2, 1995. Stockholders should review the information
provided herein in conjunction with the Company's Annual Report to Stockholders
for the year ended December 31, 1994 which accompanies this Proxy Statement.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should you so desire. You may revoke or change your proxy at any time prior to
its use at the meeting by giving the Company a written direction to revoke your
proxy, giving the Company a new proxy or attending the meeting and voting in
person.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will consider and vote
upon the following matters:
(1) The election of three (3) Class III Directors to the Company's
Board of Directors to serve until the Company's third Annual Meeting of
Stockholders following their election or until their successors are duly
elected and qualified; and
(2) Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.
You are requested to mark, sign and date the accompanying proxy and return
it promptly in the enclosed pre-addressed envelope. Proxies duly executed and
received in time for the Annual Meeting will be voted at the meeting in
accordance with the instructions indicated. Where no instructions are indicated
proxies will be voted for the nominees for director set forth herein.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 25, 1995 as
the record date (the 'Record Date') for the determination of stockholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of April 15,
1995 there were issued and outstanding 7,893,699 shares of
<PAGE>
Common Stock. Each share of Common Stock outstanding on the Record Date is
entitled to one vote at the Annual Meeting on each matter submitted to
stockholders for approval at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors are elected by a plurality of votes
of the shares represented in person or by proxy at the Annual Meeting. Under
applicable Delaware law, abstentions and broker non-votes will not have the
effect of votes in opposition to the election of a director.
OWNERSHIP OF VOTING SECURITIES
The following table sets forth, as of April 15, 1995, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each of the
Named Executive Officers (as such term is hereinafter defined) and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OUTSTANDING
OF BENEFICIAL OWNER(1) OWNERSHIP(2) SHARES
- - ------------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Merv Adelson .................................................................. 1,607,739(3) 18.39%
c/o East-West Capital Associates
10100 Santa Monica Blvd.
Los Angeles, CA 90067
Stephen Katz .................................................................. 580,325(4) 7.11%
20 East Sunrise Highway
Valley Stream, NY 11582
Harvey and Phyllis Sandler .................................................... 562,850(5) 7.13%
2800 Island Boulevard
N. Miami Beach, FL 33160
Dimensional Fund Advisors Inc. ................................................ 464,000(6) 5.88%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Jay Bernstein ................................................................. 400,500(7) 5.07%
100 Cedarhurst Avenue
Cedarhurst, NY 11516
Mel Steinberg.................................................................. 318,500(7) 4.03%
Larry Altman................................................................... 170,500(7) 2.16%
Jerome Sanders................................................................. 157,500(8) 1.97%
Joseph A. Gregori.............................................................. 128,000(9) 1.60%
Harold Saving.................................................................. 48,000(10) *
Edward Seidenberg.............................................................. 42,000(9) *
Steven B. Fink................................................................. 10,500(9) *
Stuart D. Buchalter............................................................ 10,500(9) *
All directors and executive officers as a group (10 persons)................... 1,866,325(11) 21.88%
</TABLE>
- - ------------
* Less than 1%
(1) Pursuant to the rules of the Securities and Exchange Commission (the
'SEC'), addresses are only given for holders of 5% or more of the
outstanding Common Stock of the Company.
(2) Unless otherwise indicated, each person or group has sole voting and
investment power with respect to such shares. For purposes of this table, a
person or group of persons is deemed to have 'beneficial ownership' of any
shares which such person or group has the right to acquire within 60 days
of April 15, 1995. For purposes of computing the percent of outstanding
shares held by each person or group named above as of a given date, any
shares which such person or group has the right to so acquire are deemed to
be outstanding, but are not deemed to be outstanding for the purpose of
computing the percentage owned by any other person or group.
(footnotes continued on next page)
2
<PAGE>
(footnotes continued from previous page)
(3) Includes 850,000 shares issuable upon exercise of warrants. The information
as to Mr. Adelson is based on a Schedule 13D dated January 19, 1990, as
last amended on January 17, 1995, filed with the SEC by Mr. Adelson.
(4) Includes 40,000 shares held by Mr. Katz as custodian for one of his
children and shares issuable upon exercise of options to purchase 267,000
shares, and excludes 40,000 shares held by one of Mr. Katz' children as to
which he disclaims beneficial ownership.
(5) The information as to Harvey and Phyllis Sandler is based on a Schedule 13D
dated June 10, 1994, as amended on August 4, 1994, filed with the SEC by
Harvey and Phyllis Sandler.
(6) The information as to Dimensional Fund Advisors Inc. ('Dimensional') is
based on a Schedule 13G dated January 31, 1995, filed with the SEC by
Dimensional. Dimensional, a registered investment advisor, is deemed to
have beneficial ownership of 464,000 shares as of December 31, 1994, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
(7) Includes shares issuable upon exercise of options to purchase 10,500
shares.
(8) Includes shares issuable upon exercise of options to purchase 104,500
shares and excludes 8,000 shares held by Mr. Sanders' children as to which
he disclaims beneficial ownership.
(9) Represents shares issuable upon exercise of options.
(10) Includes shares issuable upon exercise of options to purchase 43,000
shares.
(11) Includes 40,000 shares held as custodian and options to purchase 637,000
shares.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes. One
class is elected each year to hold office for a term expiring at the third
succeeding Annual Meeting or until their successors are duly elected and
qualified. The term of office of the Class III Directors expires at the Annual
Meeting and when their successors are duly elected and qualified.
It is the intention of the persons named in the enclosed proxy to vote such
proxy for the election as directors of the nominees listed in the table below.
The Board of Directors has no reason to believe that any of these nominees will
not be available for election as a director. However, should any of them become
unwilling or unable to accept nomination for election, the individuals named in
the enclosed proxy may vote for the election of such other person(s) as the
Board of Directors may nominate or recommend, but in no event more than three
(3) persons.
The following sets forth the name, age, business experience, term of office
and other information concerning each director and each nominee for director.
A. INFORMATION AS TO NOMINEES FOR CLASS III DIRECTOR
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NAME AGE COMPANY SINCE
- - --------------------------------------------- --- --------------------------- --------
<S> <C> <C> <C>
Stuart D. Buchalter(1)....................... 57 Director 1993
Stephen Katz................................. 51 Chairman of the Board of 1984
Directors and Chief
Executive Officer
Jerome Sanders............................... 61 Executive Vice President, 1984
Secretary and Director
</TABLE>
3
<PAGE>
B. INFORMATION AS TO DIRECTORS CONTINUING IN OFFICE
CLASS I
DIRECTORS WHOSE TERM OF OFFICE EXTENDS TO THE
NEXT ENSUING ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NAME AGE COMPANY SINCE
- - --------------------------------------------- --- --------------------------- --------
<S> <C> <C> <C>
Larry Altman................................. 52 Director 1985
Joseph A. Gregori............................ 41 President and Director 1987
Mel Steinberg................................ 56 Director 1985
</TABLE>
CLASS II
DIRECTORS WHOSE TERM OF OFFICE EXTENDS TO THE
SECOND ENSUING ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NAME AGE COMPANY SINCE
- - --------------------------------------------- --- --------------------------- --------
<S> <C> <C> <C>
Jay Bernstein................................ 48 Director 1985
Steven B. Fink(1)............................ 44 Director 1991
</TABLE>
- - ------------
(1) Designated by Merv Adelson pursuant to the Securities Purchase and
Stockholder Agreement between him and the Company described under 'Executive
Compensation -- Certain Transactions.'
C. BUSINESS EXPERIENCE OF NOMINEES AND CONTINUING DIRECTORS
Stephen Katz has been Chairman of the Board and Chief Executive Officer of
the Company since September 1984 and President of the Company from September
1984 until September 1993. Mr. Katz is also Chairman of the Board and Chief
Executive Officer of Cellular Technical Services Company, Inc. ('CTS'), a
company whose securities are publicly traded and which is engaged in designing
and marketing software products for the cellular communications industry. The
Company owns 33.6% of the issued and outstanding common stock of CTS (see
'Executive Compensation -- Compensation Committee Interlocks and Insider
Participation'). For more than five years prior to January 1991 Mr. Katz had
been a director and President of Manhattan Leasing Group, Inc. ('Manhattan') and
its affiliated companies, which were engaged in the business of leasing
automobiles and equipment.
Joseph A. Gregori has been President of the Company since September 1993.
He was Vice President -- Operations of the Company from January 1987 to
September 1993. Mr. Gregori has also been a director of the Company since
January 1987 and a director of CTS since 1988. Mr. Gregori is a certified public
accountant.
Jerome Sanders has been Executive Vice President and a director of the
Company since May 1984 and Secretary of the Company since October 1992. Mr.
Sanders has also been Executive Vice President, Secretary and a director of CTS
since 1988. Mr. Sanders is a certified public accountant.
Jay Bernstein has been a director of the Company since September 1985 and
until October 1992 also served as Secretary and Treasurer of the Company,
performing services on a part-time basis. Since December 1993 Mr. Bernstein has
been President of Leasing Systems and Management, Inc. ('LSM'). For more than
five years prior thereto, he had been Secretary and Treasurer of Manhattan and
its affiliated companies.
Mel Steinberg has been a director of the Company since September 1985.
Since October 1993 Mr. Steinberg has been a Vice President of LSM. For more than
five years prior thereto, he had been a Vice President of Manhattan and its
affiliated companies.
Larry Altman has been a director of the Company since September 1985. Since
October 1993 Mr. Altman has been a private investor. For more than five years
prior thereto, he had been a Vice President of Manhattan and its affiliated
companies.
4
<PAGE>
Steven B. Fink has been a director of the Company since October 1991. Since
December 1993 Mr. Fink has been a partner of MC Group, a private investment
company. From 1990 to November 1993 Mr. Fink was an executive officer of
East-West Capital Associates, a private investment company, from 1988 to 1990 he
was the Chief Executive Officer and Chairman of The International Capital Access
Group, a manager of funds, and from 1986 to 1987 he was a partner of Pacific
Assets Group, also a manager of funds.
Stuart D. Buchalter has been a director of the Company since November 1993.
Mr. Buchalter is Chairman of the Board of The Art Store, a retailer of artists'
materials, and is of counsel to the law firm of Buchalter, Nemer, Fields and
Younger. From August 1980 to June 1993 he served as Chairman of the Board and
Chief Executive Officer of Standard Brands Paint Company. On February 11, 1992,
Standard Brands Paint Company filed for protection from creditors pursuant to
Chapter 11 of the United States Bankruptcy Code. Its plan of reorganization was
confirmed on May 14, 1993 and became effective on June 15, 1993. Mr. Buchalter
also serves as a director of City National Corp., a bank holding company, and
Authentic Fitness Corp., an athletic and fitness wear company.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Officers of the Company are elected annually by, and serve at the pleasure
of, the Board of Directors for one year or until their successors are elected
and qualified, subject to the employment agreements described below under
'Executive Compensation -- Employment Agreements.' The following persons are
executive officers of the Company but are not directors. Such persons and those
directors who are executive officers are expected to be elected as executive
officers by the Board of Directors at a meeting following the Annual Meeting.
Edward Seidenberg has been Vice President and Chief Financial Officer of
the Company since April 1990. From June 1986 until April 1990, Mr. Seidenberg
was Vice President, Finance and Administration of, and was a consultant to,
Strategic Information, Inc., an information services company.
Harold Saving has been Vice President -- Sales of the Company since October
1991 and prior thereto from 1987 was Vice President and General Manager of Nova
Cellular Co., a wholly-owned subsidiary of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1994, the Board of Directors held six
meetings and took certain actions on three other occasions by written consent.
During 1994, no director attended fewer than 75 percent of the aggregate of (1)
the number of meetings of the Board of Directors held during the period he
served on the Board, and (ii) the number of meetings of committees of the Board
of Directors held during the period he served on such committees. The Company
has no nominating committee. The Compensation Committee, which is composed of
Messrs. Altman, Bernstein, Buchalter and Steinberg, has authority over officer
compensation and the administration of the Company's Stock Option Plans. The
Compensation Committee met twice and took certain actions on one other occasion
by written consent in 1994. The Audit Committee, which met twice and took
certain actions on one other occasion by written consent in 1994, has various
functions, including oversight and review of accounting matters. The Audit
Committee is presently composed of Messrs. Altman, Buchalter and Fink.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning annual and long-term
compensation, paid or accrued, for the Chief Executive Officer and the four
other most highly compensated executive officers of the Company (the 'Named
Executive Officers') for services in all capacities to the Company and its
subsidiaries during the last three fiscal years.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(2) COMPENSATION(3)
- - --------------------------------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Stephen Katz ...................................... 1994 $359,087 $200,000 50,000 $35,784
Chairman of the Board of Directors and 1993 346,345 300,000 182,500 500
Chief Executive Officer 1992 244,147 450,000 0 0
Joseph A. Gregori ................................. 1994 224,154 100,000 65,000 750
President and Director 1993 202,720 0 37,500 500
1992 194,798 100,000 0 0
Jerome Sanders .................................... 1994 194,788 20,000 40,000 750
Executive Vice President, Secretary and 1993 189,240 0 20,000 500
Director 1992 181,812 65,000 0 0
Edward Seidenberg ................................. 1994 157,212 75,000 50,000 750
Vice President and Chief Financial 1993 141,520 0 32,500 500
Officer 1992 119,327 60,000 15,000 0
Harold Saving ..................................... 1994 147,212 0 40,000 750
Vice President -- Sales 1993 139,308 0 27,500 500
1992 120,000 60,000 15,000 0
</TABLE>
- - ------------
(1) In 1992, 1993 and 1994 none of the Named Executive Officers received
perquisites or other personal benefits in excess of the lesser of $50,000 or
10% of the total of his salary and bonus for that year, as reported in this
table. None of the Named Executive Officers received any Restricted Stock
Awards or LTIP Payouts in 1992, 1993 or 1994.
(2) Cellular Technical Services Company, Inc. ('CTS') granted options to Mr.
Katz in 1994 and 1993 to purchase 106,000 shares and 200,000 shares of the
common stock of CTS, respectively and to Messrs. Gregori and Sanders in 1994
to purchase 6,000 shares each of the common stock of CTS. At December 31,
1994 CTS was 33.8% owned by the Company.
(3) Represents contributions to the Named Executive Officers' accounts under a
401(k) plan, and in addition includes for Mr. Katz in 1994, insurance
premiums paid by the Company on his behalf in the amount of $35,034.
6
<PAGE>
STOCK OPTIONS
The following table sets forth information as to all grants of options to
the Named Executive Officers during 1994.
OPTION GRANTS IN 1994(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE OF ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(2)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ----------------------
NAME GRANTED IN 1994 PRICE DATE AT 5% AT 10%
- - ------------------------------- ---------- ---------- -------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen Katz................... 15,000(3) 3.21% $13.31 06/09/04 $125,559 $ 318,191
35,000(4) 7.49 17.81 12/22/04 392,021 993,459
6,000(5)(7) -- (5) 12.25 01/01/04 49,224 117,140
100,000(6)(7) -- (6) 14.50 12/19/04 911,897 2,310,917
Joseph A. Gregori.............. 35,000(3) 7.49 13.31 06/09/04 292,971 742,445
30,000(4) 6.42 17.81 12/22/04 336,018 851,537
6,000(5)(7) -- (5) 12.25 01/01/94 46,224 117,140
Jerome Sanders................. 25,000(3) 5.35 13.31 06/09/04 209,265 530,318
15,000(4) 3.21 17.81 12/22/04 168,009 425,768
6,000(5)(7) -- (5) 12.25 01/01/04 46,224 117,140
Edward Seidenberg.............. 25,000(3) 5.35 13.31 06/09/04 209,265 530,318
25,000(4) 5.35 17.81 12/22/04 280,015 709,614
Harold Saving.................. 25,000(3) 5.35 13.31 06/09/04 209,265 530,318
15,000(4) 3.21 17.81 12/22/04 168,009 425,768
</TABLE>
- - ------------
(1) The Company did not grant any stock appreciation rights during 1994.
(2) The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates established by the SEC and are not
intended to forecast future appreciation of the Company's stock price. The
Company did not use an alternative formula for a grant date valuation as it
is unaware of any formula which would determine with reasonable accuracy a
present value based upon future unknown factors. In order to realize the
potential values set forth under the columns headed 'At 5%' and 'At 10%',
the price per share of the Company's Common Stock at the end of the ten year
option term would be $21.68 and $34.52, respectively, for the June 10, 1994
grants and $29.01 and $46.20, respectively, for the December 23, 1994
grants. In order to realize the potential values set forth under the columns
headed 'At 5%' and 'At 10%', the price per share of the common stock of CTS
at the end of the ten year option term would be $19.95 and $31.77,
respectively, for the January 2, 1994 grants and $23.62 and $37.61,
respectively, for the December 20, 1994 grant.
(3) The option was awarded at the fair market value of the Company's Common
Stock at June 10, 1994, the date of the award, and becomes exercisable in
cumulative annual installments of 20% per year on each of the first five
anniversaries of the grant date. The option is exercisable over a ten year
period.
(4) The option was awarded at the fair market value of the Company's Common
Stock at December 23, 1994, the date of the award, and becomes exercisable
in cumulative annual installments of 20% per year on each of the first five
anniversaries of the grant date. The option is exercisable over a ten year
period.
(5) Represents an option to acquire shares of common stock of CTS. This option
was granted for services during 1994 as a director of CTS under the terms of
the CTS 1993 Non-Employee Director Stock Option Plan.
(footnotes continued on next page)
7
<PAGE>
(footnotes continued from previous page)
(6) Represents an option to acquire shares of common stock of CTS. This option
was granted at fair market value at December 20, 1994 based upon the
recommendation of the Compensation and Stock Option Committee of CTS in
recognition of Mr. Katz' efforts on behalf of CTS and represented 15.90% of
the options granted to employees of CTS.
(7) At December 31, 1994, CTS, whose shares are publicly traded on the NASDAQ
National Market, was 33.8% owned by the Company.
------------------------
The following table sets forth information with respect to the exercise of
stock options by the Named Executive Officers during 1994 and unexercised
options held by them on December 31, 1994.
AGGREGATED OPTION EXERCISES IN 1994
AND DECEMBER 31, 1994 OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS
ON VALUE DECEMBER 31, 1994 AT DECEMBER 31, 1994
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- - --------------------------------- -------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Stephen Katz..................... 18,325 $215,319 259,000/187,500 $2,774,025/$1,638,801
35,000(3) 520,625 150,000/266,000 1,451,250/ 406,750
Joseph A. Gregori................ 0 0 116,000/107,500 1,522,750/ 745,725
0 0 45,000/ 6,000 568,125/ 14,500
Jerome Sanders................... 12,000 158,356 93,500/ 72,000 1,319,100/ 563,400
25,000(3) 358,801 50,000/ 6,000 611,250/ 14,250
Edward Seidenberg................ 4,000 32,500 33,500/ 91,500 376,450/ 636,050
Harold Saving.................... 0 0 36,500/ 73,500 393,963/ 522,450
</TABLE>
- - ------------
(1) There were no stock appreciation right exercises during 1994 and no such
rights were outstanding at December 31, 1994.
(2) The closing price of the Company's Common Stock as reported on the NASDAQ
National Market on December 31, 1994 was $19.125 per share. The closing
price of CTS's common stock as reported on the NASDAQ National Market on
December 31, 1994 was $14.625 per share. Value is calculated by multiplying
(a) the difference between the respective closing prices and the option
exercise price by (b) the number of shares of Common Stock underlying the
option.
(3) Option on shares of common stock of CTS. At December 31, 1994, 33.8% of the
common stock of CTS was owned by the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions regarding the Company's Named Executive Officers are
determined by a Compensation Committee composed of Messrs. Altman, Bernstein,
Buchalter and Steinberg, all outside directors of the Company. Three of the
Compensation Committee members, Messrs. Altman, Bernstein and Steinberg are
partners of Mr. Katz, the Company's Chairman of the Board and Chief Executive
Officer, in various real estate ventures.
Cellular Technical Services Company, Inc. ('CTS') was a majority-owned
subsidiary of the Company prior to May 1992. Since then the Company's ownership
of CTS common stock has been reduced from 53.0% to 33.6% as a result of the
issuance of common stock by CTS upon exercise of warrants and stock options. The
number of shares of CTS common stock owned by the Company did not change as a
result of such issuances.
In August 1991, the Company and CTS entered into a Management Services
Agreement under which Mr. Katz and other Company personnel provide management,
financial and administrative
8
<PAGE>
services to CTS on a part-time or consulting basis for which the Company
receives a monthly fee of $25,000 for a four year period. As further described
under the caption 'Election of Directors -- Business Experience', Messrs. Katz,
Gregori and Sanders are executive officers and/or directors of both the Company
and CTS. On December 20, 1994, Mr. Katz was awarded, by the CTS Compensation and
Stock Option Committee, a $100,000 cash bonus and an option to purchase 100,000
shares of CTS common stock in recognition of his services to CTS beyond those
contemplated in the Management Services Agreement.
The Company leases approximately 23,000 square feet for use as its
principal office facility at 20 East Sunrise Highway, Valley Stream, New York
from Phoenix Capital & Management Co., a partnership of Messrs. Katz, Bernstein
and Steinberg. The lease, which expired on October 31, 1994 is continuing on a
month-to-month basis pending the completion for occupancy of the Company's new
headquarters building, expected late in 1995. The lease provides for a monthly
rent of $42,250.
The Company believes that the terms of all of the transactions with its
affiliates are fair and reasonable and as favorable to it as could be obtained
from unaffiliated third parties.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the performance graph on page 11 shall not be incorporated by
reference to any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation strategy which is endorsed by the Compensation
Committee (the 'Committee'), is to develop and maintain executive reward
programs consisting of base salary, short-term bonus and long-term incentives
that are competitive with markets in which the Company competes for talented
employees and consistent with results of the Company.
The Committee has delegated to management the responsibility and authority
to design and administer its short-term incentive compensation plans.
Accordingly, management adopts performance goals at the beginning of each year
which are approved by the Committee. The Company then advises the Committee at
its December Committee meeting of the short-term incentive payouts to be made
under the plans to participating employees as a result of their attaining
performance goals established at the beginning of the year.
Each fiscal year, the Committee considers the desirability of granting
employees, including the Named Executive Officers, awards under the Company's
stock option plans. The Committee believes that grants of stock options are an
important component of the Company's executive compensation program. To ensure a
long-term perspective, options generally have a ten-year term and are
exercisable in cumulative annual installments of 20% per year on each of the
first five anniversaries of the grant date. In determining the amount and nature
of awards under such plans to be granted to the Named Executive Officers, other
than the Chief Executive Officer, the Committee reviews with the Chief Executive
Officer awards recommended by him, taking into account the respective
significant accountability, strategic and operational goals and anticipated
performance requirements and contributions of each of such Named Executive
Officers. The award to the Chief Executive Officer is established separately and
is based, among other things, on the Committee's analysis of his past and
expected future contributions to the Company's achievements and its long-term
performance goals.
CEO COMPENSATION
In reaching its conclusions as to the nature and amount of Mr. Katz'
compensation award the Committee considered several criteria including Mr. Katz'
overall leadership of the Company, contribution to the formulation of the
Company's strategic objectives, implementation of such objectives and the
continued increase in stockholder value. The Committee does not assign specific
weights to these criteria but reviews them in the context of Mr. Katz' overall
contribution to the Company. Based upon these factors the Committee in 1994
awarded Mr. Katz an incentive award of $200,000 in cash and a grant of options
to purchase 50,000 shares of Common Stock of the Company.
9
<PAGE>
EXECUTIVE PAY DEDUCTION LIMITATION
The Committee has not yet developed a policy with respect to amending pay
policies or asking stockholders to vote on 'pay for performance' plans in order
to qualify compensation in excess of $1 million a year which might be paid to
the five highest paid executives for federal tax deductibility. The Committee
intends to continue to monitor this matter and will balance the interests of the
Company in maintaining flexible incentive plans against the possible loss of a
tax deduction should taxable compensation for any of the five highest paid
executives exceed $1 million in future years.
The foregoing report is approved by all members of the Committee.
LARRY ALTMAN
JAY BERNSTEIN
STUART D. BUCHALTER
MEL STEINBERG
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the five-year cumulative total return
of the Company's Common Stock, the NASDAQ Stock Market Index (U.S.) and the
NASDAQ Telecommunications Index. The Company notes the difficulty of determining
a true peer group as it is currently the only pure reseller of cellular service
whose securities are publicly traded. Accordingly, the Company chose as its peer
group the NASDAQ Telecommunications Index which consists of 139 companies,
approximately one-half of which are engaged in telephone communications
enterprises. The graph assumes $100 invested on December 31, 1989 in the
Company's Common Stock and each of the indices and that all dividends on the
stocks included in the NASDAQ indices were reinvested. No cash dividends were
paid on the Company's Common Stock. The stockholder return shown on the graph
below is not necessarily indicative of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN OF
NATIONWIDE CELLULAR SERVICE, INC. COMMON STOCK,
NASDAQ STOCK MARKET INDEX (U.S.)
AND NASDAQ TELECOMMUNICATIONS INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Nationwide 100.00 37.62 47.71 63.30 97.25 140.37
NASDAQ Stock Market
Index (U.S.) 100.00 84.92 136.28 158.58 180.93 176.92
NASDAQ Telecommunications
Index 100.00 67.41 92.97 114.19 175.97 145.79
</TABLE>
11
<PAGE>
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company receives an annual
retainer of $6,000 plus $1,000 for each Board meeting attended and $500 for each
committee meeting attended. All directors are reimbursed for out-of-pocket
expenses incurred in connection with attendance at meetings or other Company
business.
In January 1994 the Board of Directors adopted the 1994 Non-Employee
Director Stock Option Plan pursuant to which each person who on January 4, 1994
was not a salaried employee of the Company and was then a director was granted
an option to purchase 10,500 shares of Common Stock. Each person who is not a
salaried employee of the Company who first becomes a director after January 4,
1994 shall be granted on the date he first becomes a director an option to
purchase 5,000 shares of Common Stock. On January 2 of each year beginning with
January 2, 1995, each person who is not a salaried employee of the Company and
is then a director shall be granted an option to purchase an additional 3,000
shares of Common Stock. The exercise price of each share of Common Stock under
any option granted under such plan shall be equal to the fair market value of a
share of Common Stock on the date the option is granted.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Stephen Katz,
Joseph A. Gregori, Jerome Sanders, Edward Seidenberg and Harold J. Saving
pursuant to which the employment of Messrs. Katz and Sanders terminates on
December 31, 1995, and that of Mr. Gregori on December 31, 1997, Mr. Seidenberg
on May 31, 1996 and Mr. Saving on June 30, 1996. Messrs. Katz, Sanders and
Gregori have also agreed to serve as directors of the Company if elected as
such.
All executive officers, other than Mr. Katz, are eligible to receive
performance bonuses subject to specific criteria, which vary from year to year,
determined by management and approved by the Compensation Committee. Bonuses to
Mr. Katz and additional bonuses to the other executive officers may be awarded
at the discretion of the Company's Board of Directors. While no maximum amounts
are designated for additional bonus payments, such payments, if any, are limited
by the performance of the Company and the executive officer. In general, a
portion of the bonus of each executive is based on meeting overall corporate
operating statement and cash flow goals, and in addition, Mr. Gregori's bonus is
based upon meeting certain operating performance goals and subscriber retention
goals; Mr. Saving's bonus is based upon meeting certain marketing and subscriber
acquisition goals; Mr. Seidenberg's bonus is based on goals with respect to the
Company's financing arrangements and management information system performance;
and Mr. Sanders' bonus is based upon certain responsibilities with regard to
regulatory, industry association, legislative, interconnection, tax and
administrative matters.
Each employment agreement provides that in the event of a 'Change of
Control' of the Company, which is defined to mean a merger, consolidation or
sale of assets by the Company to another entity of which it is not the majority
stockholder, the executive will be entitled to a lump sum payment (the
'Severance Payment'). For Messrs. Katz, Gregori, Sanders, Seidenberg and Saving
such Severance Payments are equal, respectively, to the sum of (i) 2.99, 2.99,
2.99, 2.99 and 1 times the total of the executive's base salary immediately
prior to the events giving rise to the 'Change of Control' plus the highest
annual bonus paid during the term of the agreement (the bonus for the preceding
year in the case of Mr. Katz) and (ii) the sum of the executive's base salary
through the date of termination not yet paid and a pro rata portion of the
highest annual bonus awarded to the executive during the term of his agreement
(the bonus for the preceding year in the case of Mr. Katz). Mr. Katz' agreement
also provides for an additional Severance Payment of $500,000. Pursuant to their
agreements, Messrs. Gregori, Sanders, Seidenberg and Saving have each agreed to
remain in the employ of the Company for at least twelve months in the event of a
'Change of Control.' Messrs. Katz, Gregori, Sanders, Seidenberg and Saving have
agreed for two years after the termination of their employment not to compete
directly or indirectly in those cellular geographic areas where they would be in
competition with the business activities of the Company.
The employment agreements of Messrs. Katz, Gregori, Sanders, Seidenberg and
Saving provide that upon expiration, the term of such executive's employment
will automatically be extended for one additional year, unless, not later than
six months (three months in the case of Mr. Katz) prior to the
12
<PAGE>
expiration date of the agreement, either party gives written notice that such
party does not wish to extend the agreement. Mr. Katz' employment agreement also
provides upon the expiration of its term for a three year consulting arrangement
at $60,000 per annum.
CERTAIN TRANSACTIONS
Pursuant to a Securities Purchase and Stockholder Agreement dated January
11, 1990, as amended, (the 'Agreement') between the Company and Merv Adelson,
Mr. Adelson acquired 400,000 shares of the Company's Cumulative Convertible
Preferred Stock ('Preferred Stock'), 400,000 Contingent Value Rights ('CVRs')
and a warrant to purchase up to 850,000 shares of the Company's Common Stock at
an exercise price of $11.00 per share ('Warrant'). Pursuant to a letter
agreement dated January 6, 1995 the Warrant was amended to provide that its
expiration date is January 11, 1996 and the Agreement was amended to, among
other things, terminate certain of Mr. Adelson's substantive rights other than a
'tag along' right in the event of the sale under certain circumstances of more
than 5% of the voting securities held by certain principal stockholders of the
Company and his right to designate two persons to be elected to the Company's
Board of Directors (which number is subject to adjustment in certain
circumstances). Mr. Adelson has designated Steven B. Fink and Stuart D.
Buchalter, who have been elected as directors of the Company.
The letter agreement also provided that, in the event that a Person (as
defined in the Agreement) shall, in one or more transactions, acquire all or
substantially all of the Company's outstanding Common Stock, Mr. Adelson shall
have the right to require the Company to repurchase the Warrant for an amount
equal to the product of (i) the difference between the fair market value of the
consideration received by the Company's stockholders in such transaction(s) and
the exercise price of the Warrant, times (ii) the number of shares of the
Company's Common Stock issuable upon exercise of the Warrant. Such purchase
price shall be payable in the same proportion of cash and securities as are
received by the Company's stockholders. If Mr. Adelson shall require that the
Warrant be repurchased, the Company may, in its sole discretion, cause the
Person purchasing all or substantially all the stock of the Company to purchase
the Warrant.
On January 12, 1995 the Preferred Stock was converted into shares of Common
Stock on a one-for-one basis, and the CVRs which entitled Mr. Adelson to receive
from the Company a cash payment equal to the amount, if any, by which $26.00
exceeds the fair market value on January 12, 1995 of a share of the Company's
Common Stock, but in no event more than a total payment of $11.00 per CVR, were
extinguished by a payment of $3,280,000.
See also 'Executive Compensation -- Compensation Committee Interlocks and
Insider Participation.'
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of the Company's Audit
Committee, has selected KPMG Peat Marwick LLP as the Company's independent
public accountants for the year ending December 31, 1995. One or more
representatives of that firm are expected to be present at the Annual Meeting to
respond to appropriate questions from stockholders and make a statement if they
desire to do so.
The firm of Ernst & Young, independent public accountants, served as the
Company's public accountants for the year ended December 31, 1993. The Audit
Committee of the Board of Directors selected KPMG Peat Marwick LLP as the
Company's independent public accountants for the year ending December 31, 1994.
On April 21, 1994, Ernst & Young was advised that it would not be engaged as
independent auditors for the Company's 1994 audit. The Company's audited
financial statements for the two fiscal years ended December 31, 1993 did not
contain an adverse opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles. The Company
did not have any disagreements with Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures that would require disclosure in their reports during the two fiscal
years ended December 31, 1993.
13
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Under the rules of the Securities and Exchange Commission stockholder
proposals intended for inclusion in the proxy statement for the Company's 1996
annual meeting of stockholders must be received by the Corporate Secretary no
later than January 3, 1996.
FORM 10-K EXHIBITS
The Company will furnish, upon payment of a reasonable fee to cover
reproduction and mailing expenses, a copy of any exhibit to the Company's Annual
Report on Form 10-K requested by any person solicited hereunder.
By Order Of The Board of Directors
JEROME SANDERS
Secretary
Valley Stream, New York
May 2, 1995
14
<PAGE>
APPENDIX 1
NATIONWIDE CELLULAR SERVICE, INC.
20 EAST SUNRISE HIGHWAY
VALLEY STREAM, NEW YORK 11582
THIS PROXY IS SOLICITED BY THE COMPANY'S
BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 1, 1995
The undersigned holder of Common Stock of Nationwide Cellular Service,
Inc., a Delaware corporation (the 'Company'), hereby appoints Stephen Katz and
Jerome Sanders, and each of them, as proxies for the undersigned, each with full
power of substitution, for and in the name of the undersigned to act for the
undersigned and to vote, as designated below, all of the shares of stock of the
Company that the undersigned is entitled to vote at the 1995 Annual Meeting of
Stockholders of the Company, to be held on June 1, 1995 at 10:00 a.m., local
time, at The Regency Hotel, 540 Park Avenue, New York, New York 10021, and at
any adjournment or postponement thereof.
The Board of Directors unanimously recommends a vote FOR the election of
all the nominees for election as Class III directors listed below.
(1) Election of Stuart D. Buchalter, Stephen Katz and Jerome Sanders as
Class III directors of the Company.
[ ]VOTE FOR all nominees listed above, except vote withheld from the
following nominee(s) (if any).
--------------------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
(2) Upon such other matters as may properly come before the Annual Meeting
and any adjournments thereof. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof. (see reverse side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED 'FOR' THE ELECTION OF EACH CLASS III DIRECTOR NOMINEE LISTED ABOVE.
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement and (iii) the Company's 1994 Annual Report.
Dated .................... , 1995
.................................
(Signature)
.................................
(Signature if held jointly)
IMPORTANT: Please sign exactly as
your name appears hereon and mail
it promptly even though you now
plan to attend the meeting. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN AND DATE THIS
PROXY CARD AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
