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 ( ) 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
CFW COMMUNICATIONS COMPANY
(Name of Registrant as Specified in its Charter)
CFW COMMUNICATIONS COMPANY
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
<PAGE>
CFW
COMMUNICATIONS COMPANY
- -------------------------------------------------------------------------------
401 Spring Lane
Suite 300
P. O. Box 1990
JAMES S. QUARFORTH Waynesboro, VA 22980
PRESIDENT AND Telephone 540 946-3500
CHIEF EXECUTIVE OFFICER FAX 540 946-3595
March 17, 1997
Dear Shareholder:
You are cordially invited to attend our 1997 Annual Meeting of Shareholders
at 10:00 a.m. on Tuesday, April 22, 1997. The meeting will be held at the
Holiday Inn at the intersection of Route 275 and I-81, North of Staunton,
Virginia. Please join us for refreshments at 9:30 a.m.
You will find complete information about the meeting in the enclosed Notice
and Proxy Statement. Your 1996 Annual Report is sent to you herewith.
We sincerely hope you will be able to be present at the meeting, but
whether or not you plan to attend, we request that you sign your Proxy Card and
mail it in the enclosed envelope. The prompt return of your Proxy will be
appreciated.
Sincerely,
/s/ J.S. Quarforth
-------------------------
J. S. Quarforth
President and
Chief Executive Officer
1
<PAGE>
CFW
COMMUNICATIONS COMPANY
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is Hereby Given that the Annual Meeting of Shareholders of CFW
COMMUNICATIONS COMPANY (the "Meeting") will be held at the Holiday Inn at the
intersection of Route 275 and I-81, North of Staunton, Virginia, on Tuesday,
April 22, 1997, at 10:00 a.m. for the following purposes:
(1) To elect three directors for three-year terms expiring in 2000; and
(2) To approve the CFW Communications Company 1997 Stock Compensation
Plan; and
(3) To approve the CFW Communications Company Non-Employee Directors'
Stock Option Plan; and
(4) To transact such other business as may properly come before the meeting
or any adjournment.
Only shareholders of Common Stock of record at the close of business on
February 24, 1997 will be entitled to vote at the Meeting.
By Order of the Board of Directors
C. S. Smith
Corporate Secretary
Waynesboro, Virginia
March 17, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. SHAREHOLDERS
ATTENDING THE MEETING MAY PERSONALLY VOTE ON ALL MATTERS WHICH ARE CONSIDERED,
IN WHICH EVENT THE SIGNED PROXIES ARE REVOKED.
2
<PAGE>
CFW
COMMUNICATIONS COMPANY
- -------------------------------------------------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1997
This Proxy Statement is furnished to the Shareholders of CFW Communications
Company (the "Company") in connection with the solicitation of proxies by the
Board of Directors of the Company to be voted at the Annual Meeting of
Shareholders to be held at 10:00 a.m. on Tuesday, April 22, 1997, at the Holiday
Inn at the intersection of Route 275 and I-81, North of Staunton, Virginia, and
at any adjournment. The mailing address of the Company's Corporate Office is 401
Spring Lane, Suite 300, P. O. Box 1990, Waynesboro, Virginia 22980. The
Company's subsidiaries are CFW Telephone Inc., CFW Network Inc., CFW Wireless
Inc., CFW Communications Services Inc., CFW Cable Inc., CFW Cable of Virginia
Inc., CFW Information Services Inc., CFW Licenses Inc. and CFW PCS Inc.
Solicitations of proxies will be made by use of the United States mail and
may be made by direct or telephone contact by employees of the Company or First
Union National Bank of North Carolina. All solicitation expenses will be borne
by the Company. Brokerage houses and nominees will be requested to forward the
proxy materials to the beneficial holders of the shares held of record by these
persons and the Company will reimburse them for their reasonable charges in this
connection. Shares represented by duly executed proxies in the accompanying form
received by First Union National Bank of North Carolina prior to the Meeting
will be voted at the Meeting.
The Company does not know of any matters other than those referred to in
the accompanying Notice which are to come before the Meeting. If any other
matters are properly presented for action, the persons named in the accompanying
form of proxy will vote the proxy in accordance with their best judgment.
Where a shareholder directs in the proxy a choice with respect to any
matter that is to be voted on, that direction will be followed. If no direction
is made, proxies will be voted for the re-election of three Class III Directors,
the approval of the CFW Communications Company 1997 Stock Compensation Plan and
the approval of the CFW Communications Company Non-Employee Directors' Stock
Option Plan. Any person who has returned a proxy has the power to revoke it at
any time before it is exercised by submitting a subsequently dated proxy, or by
voting in person at the Meeting. The close of business on February 24, 1997, has
been fixed as the record date (the "Record Date") for the Meeting and any
adjournment. As of that date, there were 12,980,212 Common Shares outstanding,
each of which is entitled to one vote. As of the Record Date, and on the date
hereof, no person was known to the Company to own of record or beneficially more
than 5% of the outstanding shares of Common Stock of the Company. Votes that are
withheld and shares held in street name that are not voted in the election of
directors and other matters being considered at the meeting will not be included
in determining the number of votes cast. Unless otherwise specified in the
accompanying form of proxy, it is intended that votes will be cast for the
election of all of the nominees as directors and approval of the other matters
to be considered at the meeting.
This Proxy Statement and enclosed proxy card are being mailed to
shareholders beginning on or about March 17, 1997. An Annual Report to
Shareholders including financial statements for the years ending December 31,
1996, 1995 and 1994 is enclosed.
ELECTION OF DIRECTORS
The names and employment histories of the three nominees, six current
Directors and Executive Officers are indicated in the following table. The
number and percentage of shares of Common Stock beneficially owned by each as of
the Record Date is also indicated.
Class III Directors are eligible for election at the 1997 Annual Meeting of
Shareholders. The nominees listed below are current Directors who have consented
to stand for re-election as Class III Directors of the Company to serve
three-year terms expiring at the 2000 Annual Meeting of Shareholders of the
Company. It is not anticipated that any nominee for election will become unable
to serve as a Director of the Company, but if any or all are unable to accept
nomination, it is intended that shares represented by proxies in the
accompanying form will be voted for the election of substitute nominees selected
by the Board of Directors. A quorum being present, the persons receiving a
plurality of the votes cast will be elected as Directors.
3
<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Principal Occupation
Sole Voting and Business
and Invest- Percentage Experience for
Name ment Power Other (a) Total of Class Past 5 years
- ---- ----------- --------- ----- ---------- -------------------------
<S> <C>
CLASS III DIRECTORS - Nominees for Election
John N. Neff (b) 100 800 900 .01% President and Chief
Age 45 Executive Officer
Director since 1995 Nielsen Construction
Company/Nielsen
Management
Group, Inc.
Harrisonburg, VA
William Wayt Gibbs, V 76,934 116,672 193,606 1.47% President and Chief
Age 56 Executive Officer
Director since 1977 Comprehensive
Computer Consultants
(Formerly President,
Shenandoah Micro-
computer Services, Inc.)
Staunton, VA
Robert S. Yeago, Jr. (c) 17,211 88,483 105,694 .80% Chairman of the Board
Age 72 (President and
Director since 1973 Chief Executive Officer
until May 1, 1990)
CFW Communications
Company and Subsidiaries
Waynesboro, VA
CLASS I DIRECTORS - Terms Expire 1998
C. Wilson McNeely, III 2,741 1,825 4,566 .03% President
Age 54 Eagle Corporation
Director since 1995 (Manufacturer of
concrete products and
distributor of fuel oils)
Charlottesville, VA
C. Phillip Barger 173,639 0 173,639 1.32% Chairman
Age 68 E. W. Barger and
Director since 1963 Company
T/A Barger Insurance
Waynesboro, VA
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Principal Occupation
Sole Voting and Business
and Invest- Percentage Experience for
Name ment Power Other (a) Total of Class Past 5 years
- ---- ----------- --------- ----- ---------- -------------------------
<S> <C>
CLASS I DIRECTORS - Terms Expire 1998 (continued)
Meredith E. Yeago (c) 33,771 31,755 65,526 .50% Retired (Vice President
Age 74 and Treasurer until May 1,
Director since 1969 1989) CFW Communications
Company and Subsidiaries
Waynesboro, VA
CLASS II DIRECTORS - Terms Expire 1999
John B. Mitchell, Sr. 1,439 3,173 4,612 .04% President
Age 56 Hammond-Mitchell, Inc.
Director since 1989 (Construction Contractor)
Covington, VA
James S. Quarforth 12,200 87,357 99,557 .76% President and Chief
Age 42 Executive Officer
Director since 1987 since May 1, 1990
(Formerly Executive Vice
President-Operations
from January 1, 1989 to
May 1, 1990) CFW Commu-
nications Company and Sub-
sidiaries Waynesboro, VA;
Director of Planters Bank
and Trust Company of
Virginia, Staunton, VA
and Director of American
Telecasting, Inc., Colorado
Springs, CO
Carl A. Rosberg 7,748 47,500 55,248 .42% Senior Vice President
Age 44 since May 1, 1990
Director since 1992 (Formerly Vice President-
Administration since
January 1, 1989)
CFW Communications
Company and Subsidiaries
Waynesboro, VA and
Director of American
Telecasting, Inc., Colorado
Springs, CO
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Sole Voting
and Invest- Percentage
Name ment Power Other (a) Total of Class
- ---- ----------- --------- ----- --------
<S> <C>
NON-DIRECTOR EXECUTIVE OFFICERS
Christina S. Smith 3,342 4,350 7,692 .06%
Age 36
David R. Maccarelli 874 17,076 17,950 .14%
Age 44
J. William Brownlee 30,739 15,890 46,629 .35%
Age 56
Michael B. Moneymaker 4,620 2,600 7,220 .05%
Age 39
All officers and
directors as a
group (14 persons) 365,618 420,731 786,349 5.98%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes shares held by spouses, children, trusts and companies in which
the director or officer owns a controlling interest. Also includes 178,023
shares subject to options exercisable within sixty days.
(b) Through a competitive bidding process, during 1996 the Company awarded
a $1.6 million construction contract to Nielsen Construction Company.
(c) Robert S. Yeago, Jr. is a first cousin to Meredith E. Yeago.
Based on a review of the forms and written representations received by the
Company pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company believes that during 1996 its directors and executive officers complied
with all applicable Section 16 filing requirements.
COMMITTEES OF THE BOARD
C. Phillip Barger, James S. Quarforth, Meredith E. Yeago, Robert S. Yeago,
Jr. and John B. Mitchell, Sr. comprise the Executive Committee of the Board.
One committee meeting was held during 1996.
The Company has a standing Audit Committee, a Compensation Committee and a
Stock Option Committee. The Audit Committee, consisting of C. Phillip Barger,
William Wayt Gibbs, V, John N. Neff and Meredith E. Yeago, had two meetings in
1996 for the purpose of approving the 1995 audit and recommending an accounting
firm to the Board to serve as independent public auditors to make an audit of
the financial statements of the Company for the year 1996 and to perform certain
non-audit services.
The Compensation Committee, consisting of C. Phillip Barger, John B.
Mitchell, Sr., C. Wilson McNeely, III and Robert S. Yeago, Jr., held one meeting
during the year for the purpose of determining wage and salary increases.
The Stock Option Committee, consisting of C. Phillip Barger, John B.
Mitchell, Sr., C. Wilson McNeely, III and Robert S. Yeago, Jr., held one meeting
during the year for the purpose of granting stock options to certain key
employees of the Company and designing a new employee stock compensation plan
and non-employee directors' stock option plan.
The full Board of Directors has the responsibilities of a Nominating
Committee whose functions include consideration of
6
<PAGE>
the size, composition and continuity of the Board. In carrying out its
responsibilities, the Board will consider candidates suggested by shareholders.
Any shareholder recommendation for a nominee for director at the 1998 Annual
Meeting of Shareholders of the Company, together with a description of the
proposed nominee's qualifications, relevant biographical information and the
proposed nominee's signed consent to serve if elected, should be submitted in
writing to the Corporate Secretary of the Company not later than February 26,
1998.
The Board of Directors held eight regular meetings during 1996. All
directors attended more than 75% of the meetings of the Board and committees of
which he is a member.
SUMMARY COMPENSATION TABLES
The following tables set forth information as to compensation paid to the
chief executive officer and the next four most highly compensated executive
officers of the Company (the "Named Executives") for 1996, with comparisons to
1995 and 1994 information, as well as option grants and exercises for 1996:
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Awards
- -------------------------------------------------------------------------------------------------------
Name and Options/ All Other
Principal Position Year Salary Bonus SARs Compensation(1)
- ------------------ -------------------------------------- ----- -------------
<S> <C>
James S. Quarforth 1996 $198,750 $69,418 21,000 $6,018
President & Chief 1995 165,000 46,077 6,000 5,754
Executive Officer 1994 150,000 38,931 6,000 5,835
Carl A. Rosberg 1996 142,500 22,313 12,000 5,681
Senior Vice President 1995 118,308 22,223 4,000 5,371
1994 107,316 22,535 3,000 5,001
David R. Maccarelli 1996 113,751 35,250 12,000 5,014
Senior Vice President 1995 95,004 19,162 3,000 4,334
1994 89,000 15,858 3,000 4,162
Michael B. Moneymaker(2) 1996 102,500 26,141 6,750 2,329
Vice President-Finance 1995 19,792 0 5,000 0
1994 0 0 0 0
J. William Brownlee 1996 88,104 27,297 3,000 3,970
Vice President- 1995 82,416 21,540 2,000 3,860
Telephone Operations 1994 78,816 17,479 2,000 3,185
</TABLE>
(1) In 1996 the Company made contributions to the savings plan of $4,394
for James S. Quarforth, $4,500 for Carl A. Rosberg, $4,070 for David R.
Maccarelli, $1,706 for Michael B. Moneymaker, and $3,373 for J. William
Brownlee. In addition, the Company made group life insurance premium
payments of $1,624 for James S. Quarforth, $1,181 for Carl A. Rosberg, $944
for David R. Maccarelli, $623 for Michael B. Moneymaker and $597 for J.
William Brownlee.
In 1995 the Company made contributions to the savings plan of $4,278
for James S. Quarforth, $4,279 for Carl A. Rosberg, $3,439 for David R.
Maccarelli, and $3,291 for J. William Brownlee. In addition, the Company
made group life insurance premium payments of $1,476 for James S. Quarforth,
$1,092 for Carl A. Rosberg, $895 for David R. Maccarelli, and $569 for J.
William Brownlee.
(2) Mr. Moneymaker joined the Company on October 10, 1995.
7
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential Real-
izable Value At
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants For Option Term
- --------------------------------------------------------------------------------- ------------------------
% of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted(1) Employees in Price Expiration
Name (Shares) Fiscal Year Per Share Date 5%(2) 10%(2)
----- ------------ ------------ --------- ---- -- -------
<S> <C>
James S. Quarforth 21,000 21.0% $17.50 02/26/2006 $231,119 $585,700
Carl A. Rosberg 12,000 12.0% 17.50 02/26/2006 132,068 334,686
David R. Maccarelli 12,000 12.0% 17.50 02/26/2006 132,068 334,686
Michael B. Moneymaker 6,750 6.8% 17.50 02/26/2006 74,288 188,261
J. William Brownlee 3,000 3.0% 17.50 02/26/2006 33,017 83,671
</TABLE>
(1) No SARs were granted in tandem with stock options.
(2) In order to realize the potential value set forth, the price per share of
the Company's common stock would be approximately $28.50 and $45.40,
respectively, at the end of the ten year option term. Over the last ten years,
the market price of the Company's stock has increased at a compounded annual
rate of 18.5%.
<TABLE>
<CAPTION>
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option SAR Value
- -----------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End (Shares) at FY-End
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C>
James S. Quarforth 2,000 $31,125 83,157 / 33,799 $1,005,876 / $112,812
Carl A. Rosberg 1,200 16,950 45,100 / 16,500 427,438 / 63,750
David R. Maccarelli 874 3,278 14,676 / 15,750 40,020 / 61,688
Michael B. Moneymaker 0 0 1,250 / 10,500 4,844 / 45,750
J. William Brownlee 8,010 62,319 15,290 / 5,500 90,406 / 18,000
</TABLE>
Closing price on December 31, 1996 was $22.125 and was used in calculating the
value of unexercised options.
8
<PAGE>
PENSION PLAN/DEFINED BENEFIT PLAN DISCLOSURE
The following table reflects the estimated aggregate retirement benefits to
which certain executive officers of the Company, including each of the named
executive officers in the Summary Compensation Table, are expected to be
entitled under the provisions of the Company's non-contributory, funded employee
retirement plan and the executive supplemental retirement plan (the "Plans").
The table illustrates the amount of aggregate annual retirement benefits payable
under the Plans for an executive retiring in 1996 at age 65 computed on a
straight life annuity. The amount of benefit assumes that the executive has
completed a minimum of 15 years of service. The supplemental benefit amount will
not be paid for service of less than 15 years. Additional aggregate benefits are
not earned for service in addition to 35 years. Amounts listed will be reduced
by social security benefits and offset by employer 401(k) contributions.
<TABLE>
<CAPTION>
Average Annual Annual Retirement Benefits Payable for
Compensation Respective Years of Service
------------ ---------------------------
15 years 20 years 25 years 30 years 35 years
-------- -------------- --------------- ----------------- ------------
<S> <C>
$100,000 $ 50,000 $ 57,500 $ 65,000 $ 72,500 $ 80,000
125,000 62,500 71,875 81,250 90,625 100,000
150,000 75,000 86,250 97,500 108,750 120,000
175,000 87,500 100,625 113,750 126,875 140,000
200,000 100,000 115,000 130,000 145,000 160,000
225,000 112,500 129,375 146,250 163,125 180,000
250,000 125,000 143,750 162,500 181,250 200,000
275,000 137,500 158,125 178,750 199,375 220,000
300,000 150,000 172,500 195,000 217,500 240,000
</TABLE>
The number of credited years of service for James S. Quarforth, Carl A.
Rosberg, David R. Maccarelli, Michael B. Moneymaker and J. William Brownlee
is 17 years, 8 years, 4 years, 1 year and 33 years, respectively.
DIRECTOR COMPENSATION
Non-management directors receive a monthly retainer fee of $800 and $400
for each meeting attended. The Chairman of the Board receives an additional
monthly retainer fee of $600.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
As members of the Compensation Committee and Stock Option Committee it is
our duty to monitor the performance and compensation of executive officers and
other key employees and to make appropriate recommendations and reports to the
Board concerning matters of executive compensation.
The Company maintains a compensation program designed to motivate, retain
and attract management, with incentives linked to financial performance and
enhanced shareholder value. The fundamental philosophy is to relate the amount
of compensation for an executive directly to his or her contribution to the
Company's success in achieving superior performance objectives. The Company's
executive compensation program consists of three components: 1) base salary; 2)
potential for annual incentive compensation based on Company performance; and,
3) the opportunity to earn long-term stock-based incentives which are intended
to encourage achievement of superior long-term results and to align executive
officer interests with those of the shareholders. The base salary element is
developed based on the performance of the individual executives with reference
to industry, peer group and national surveys, with the objective of having the
Company's chief executive officer receive a level of base salary similar to the
average base salary of chief executives at similarly sized technological service
companies. Base salary levels of the Company's other executive officers are
established by reference to the chief executive
9
<PAGE>
officer's salary, depending on the type and level of responsibility of the
other executives. The annual incentive compensation element is based on the
Company's attainment of certain levels of profitability, service and on the
individual's overall performance, all as set forth in the Company's annual
management incentive plan. The criteria contained in the Company's annual
management incentive compensation plan (MIP) is developed in conjunction with
the Company's annual business plan. The long-term stock-based element is
developed by reference to competitive practices and trends of other companies
which use stock options as a component of executive compensation. Long-term
stock-based incentives are given great weight in the Company's overall
compensation mix in order to incentivize executive officers to increase
shareholder value. Accordingly, the Committee has taken into account the amount
and value of options held by each of the executive officers when considering new
grants to assure that deserving executives have a significant equity
participation in the Company.
The Chief Executive Officer's total compensation increased by $57,091 in
1996 compared to 1995. A number of factors and criteria were utilized by the
Compensation Committee in evaluating the increase in total compensation. An
independent compensation consulting firm's industry market survey of similarly
sized technological service companies as well as individual performance were
utilized to determine the base salary increase of $33,750 and an increase in
targeted payout as a percentage of base salary resulting in an incentive
increase of $23,341 for 1996. The incentive portion took into consideration the
strong financial performance of the Company and the successful execution of the
1996 business plan. During 1996, the Company's consolidated net operating
revenues increased $6.9 million or 16%, operating cash flows (operating income
before depreciation and amortization) increased $4 million or 20% and net income
increased $1.1 million or 12%. The Compensation Committee also considers the
Chief Executive Officer's continued leadership in advancing the Company's
long-term strategic business goals. Specifically, during 1996, the Company,
through a combination of acquisitions involving the Virginia PCS Alliance, L.C.
and a joint venture with R&B Communications, Inc., acquired radio frequency
spectrum licenses for Personal Communications Services for a contiguous area
encompassing a population of five million; launched its wireless cable service
in the Richmond, Virginia market, upgraded its cable system in Alleghany County,
became certified by the Virginia State Corporation Commission to provide local
telephone services to an eleven county region in the central and western
portions of Virginia, and acquired additional directory assistance business from
AT&T.
Compensation Committee and Stock Option Committee
R. S. Yeago, Jr. John B. Mitchell, Sr.
C. Phillip Barger C. Wilson McNeely, III
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Robert S. Yeago, Jr., a Director and member of the Compensation Committee
and Stock Option Committee of the Company, formerly served as President and
Chief Executive Officer.
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the NASDAQ Composite Index and to the S&P Telecommunications
Index (which includes the seven Regional Bell Operating Companies (RBOCS), GTE
and ALLTEL) for the Company's last five fiscal years. The graph assumes that the
value of the investment in each scenario was $100 at December 31, 1991 and that
all dividends were reinvested in their respective common stock issue in the
month paid.
10
<PAGE>
[GRAPH GOES HERE]
Fiscal Year Ended December 31
1991 1992 1993 1994 1995 1996
CFW Communications Company 100 132 190 157 138 176
NASDAQ Composite Index 100 116 134 131 185 227
S&P Telecom Index 100 133 151 137 184 193
PROPOSAL TO APPROVE THE CFW COMMUNICATIONS COMPANY
1997 STOCK COMPENSATION PLAN
The Board proposes that the shareholders approve the CFW Communications
Company 1997 Stock Compensation Plan (the "1997 Plan"), adopted by the Board on
December 16, 1996, subject to the approval of the Company's shareholders. The
1997 Plan permits the grant of options to purchase shares of Common Stock from
the Company, stock appreciation rights ("SARs"), Stock Awards and Performance
Shares.
The CFW Communications Company 1988 Stock Option Plan (the 1988 Plan) was
adopted by the Board and received shareholder approval in 1988. As of the date
of this prospectus, approximately 65,000 shares of Common Stock remain available
for awards under the 1988 Plan. The Board believes that the 1988 Plan has
provided significant incentives to its participants and the Board wishes to
further those objectives under the 1997 Plan. No additional awards will be made
under the 1988 Plan if the shareholders approve the 1997 Plan.
Due to the Company's current growth strategies and aggressive personal
communication services (PCS) buildout plan, the Board believes the 1997 Plan is
essential and will benefit the Company by (i) assisting it in recruiting and
retaining the services of industry experienced employees with ability and
initiative, (ii) providing greater incentive for key management employees who
provide valuable services to the Company and (iii) associating the interests of
such persons with those of the Company and its shareholders through
opportunities for increased stock ownership and performance-based incentive
compensation.
11
<PAGE>
The following paragraphs summarize the more significant features of the 1997
Plan. This summary is subject, in all respects, to the terms of the 1997 Plan
which is incorporated herein by reference. The Company will provide promptly,
upon request and without charge, a copy of the full text of the 1997 Plan to
each person to whom a copy of this proxy statement is delivered. Requests should
be directed to: Christina S. Smith, Corporate Secretary, CFW Communications
Company, P. O. Box 1990, Waynesboro, Virginia 22980-1990, telephone (540)
946-3500.
Administration
A committee of non-employee Directors appointed by the Board (the
"Committee") will administer the 1997 Plan. The Committee will have the
authority to select the individuals who will participate in the 1997 Plan
("Participants") and to grant Options and SARs and to make Stock Awards and
awards of Performance Shares upon such terms (not inconsistent with the terms of
the 1997 Plan), as the Committee considers appropriate. In addition, the
Committee will have complete authority to interpret all provisions of the 1997
Plan, to prescribe the form of agreements evidencing awards under the 1997 Plan,
to adopt, amend and rescind rules and regulations pertaining to the
administration of the 1997 Plan and to make all other determinations necessary
or advisable for the administration of the 1997 Plan.
The Committee may delegate its authority to administer the 1997 Plan to an
officer of the Company. The Committee, however, may not delegate its authority
with respect to individuals who are subject to Section 16 of the Securities
Exchange Act of 1934 ("Section 16"). As used in this summary, the term
"Administrator" means the Compensation Committee and any delegate, as
appropriate.
Eligibility
Any employee of the Company or any affiliate of the Company is eligible to
participate in the 1997 Plan if the Administrator, in its sole discretion,
determines that such person has contributed significantly or can be expected to
contribute significantly to the profits or long term growth of the Company or an
affiliate.
Awards
Options. Options granted under the 1997 Plan may be incentive stock options
("ISOs") or nonqualified stock options. A stock option entitles the Participant
to purchase shares of Common Stock from the Company at the option price. The
option price will be fixed by the Administrator at the time the option is
granted, but in the case of an ISO the price cannot be less than the shares'
fair market value on the date of grant. The option price may be paid in cash, a
cash equivalent acceptable to the Administrator, or, with the Administrator's
consent, with shares of Common Stock, or a combination thereof.
Options may be exercised at such times and subject to such conditions as
may be prescribed by the Administrator. The maximum period in which an option
may be exercised will be fixed by the Administrator at the time the option is
granted but, in the case of an incentive stock option, cannot exceed ten years.
No employee may be granted ISOs (under the 1997 Plan or any other plan of
the Company) that are first exercisable in a calendar year for Common Stock
having an aggregate fair market value (determined as of the date the option is
granted) exceeding $100,000.
SARs. SARs generally entitle the Participant to receive the excess of the
fair market value of a share of Common Stock on the date of exercise over the
initial value of the SAR. The initial value of the SAR is the fair market value
of a share of Common Stock on the date of grant. The 1997 Plan provides that the
Administrator may prescribe that the Participant will realize appreciation on a
different basis than described in the preceding sentences. For example, the
Administrator may limit the amount of appreciation that may be realized upon the
exercise of an SAR.
SARs may be granted in relation to option grants ("Corresponding SARs")
or independently of option grants. The difference between these two types
of SARs is that to exercise a Corresponding SAR, the Participant must
surrender unexercised that portion of the stock option to which the
Corresponding SAR relates and vice versa.
SARs may be exercised at such times and subject to such conditions as may
be prescribed by the Administrator. The maximum period in which an SAR may
be exercised will be fixed by the Administrator at the time the SAR is granted,
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except that no Corresponding SAR that is related to an incentive stock option
shall have a term of more than ten years from the date such related option was
granted. The amount payable upon the exercise of an SAR may, in the
Administrator's discretion, be settled in cash, Common Stock, or a combination
of cash and Common Stock.
Stock Awards. The 1997 Plan also permits the grant of Stock Awards, i.e.,
shares of Common Stock. A Stock Award may be, but is not required to be,
forfeitable or otherwise restricted until certain conditions are satisfied.
These conditions may include, for example, a requirement that the Participant
complete a specified period of service or that certain objectives be achieved.
Any restrictions imposed on a Stock Award will be prescribed by the
Administrator.
Performance Shares. The 1997 Plan also permits the award of Performance
Shares, i.e., an award stated with reference to a number of shares of Common
Stock that entitles the holder to receive a payment equal to the fair market
value of the Common Stock if the performance objectives are achieved. The
Administrator will determine the performance criteria at the time Performance
Shares are granted. To the extent that a Performance Share award is earned, it
may be settled in cash, with Common Stock or a combination of cash and Common
Stock.
Transferability
In general, options, SARs, Performance Shares and Stocks will be
nontransferable except by will or the laws of descent and distribution. If
provided in the agreement governing the grant or award, options (other than
incentive stock options), Performance Shares, and SARs (other than a
Corresponding SAR that is related to an incentive stock option), may be
transferred by the Participant to his spouse, children, or grandchildren or to a
trust or trusts for the benefit of such family members or to a partnership in
which such family members are the only partners, on such terms as permitted
under Securities and Exchange Commission Rule 16b-3.
Share Authorization
Under the 1997 Plan, a maximum of 950,000 shares of Common Stock may be
issued upon the exercise of options and SARs and the grant of Stock Awards and
the settlement of Performance Shares. This limitation will be adjusted as the
Committee determines is appropriate in the event of a change in the number of
outstanding shares of Common Stock by reason of a stock dividend, stock split,
combination, reclassification, recapitalization, or other similar events. The
terms of outstanding awards and the limitations on individual grants also may be
adjusted by the Administrator to reflect such changes.
Amendment and Termination
No option, SAR, or Stock Award may be granted and no Performance Shares may
be awarded under the 1997 Plan after December 16, 2006. The Board may, without
further action by shareholders, terminate or suspend the 1997 Plan in whole or
in part. The Board also may amend the 1997 Plan except that no amendment that
materially increases the number of shares of Common Stock that may be issued
under the 1997 Plan, materially changes the class of individuals who may be
selected to participate in the 1997 Plan, or materially increases the benefits
that may be provided under the Plan will become effective until it is approved
by shareholders.
On February 24, 1997, the Committee granted ISOs under the 1997 Plan,
subject to the shareholders' approval of the 1997 Plan. The options become
exercisable ratably over a four year period beginning on the anniversary date of
the grant. The options had a ten year term and cannot be exercised after
termination of employment, although a longer period for exercise is permitted
if employment ends on account of death, disability or retirement. The option
price is $20.875 per share, the fair market value on the date of grant, and may
be paid in cash, by surrendering Common Stock, or a combination of cash and
Common Stock. Mr. Quarforth, Mr. Rosberg, Mr. Maccarelli, Mr. Moneymaker and Mr.
Brownlee received 20,000, 11,000, 11,000, 8,000 and 5,000 options, respectively.
The total executive officer group received 63,000 options.
The Company is not able to estimate the number of individuals that the
Administrator will select to participate in the future or the type or size of
awards that the Administrator will approve.
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Federal Income Tax Consequences
The Company has been advised by counsel regarding the federal income tax
consequences of the 1997 Plan. No income is recognized by a Participant at the
time an option is granted. If the option is an ISO, no income will be recognized
upon the Participant's exercise of the option. Income is recognized by a
Participant when he disposes of shares acquired under an ISO. The exercise of a
nonqualified stock option generally is a taxable event that requires the
Participant to recognize, as ordinary income, the difference between the shares'
fair market value and the option price.
No income is recognized upon the grant of an SAR. The exercise of an SAR
generally is a taxable event. The Participant must recognize income equal to any
cash that is paid and the fair market value of Common Stock that is received in
settlement of an SAR.
Income is recognized on account of the grant of a Stock Award when the
shares first become transferable or are no longer subject to a substantial risk
of forfeiture. At that time the Participant recognizes income equal to the fair
market value of the Common Stock.
No income is recognized on account of the award of Performance Shares. The
Participant must recognize income equal to any cash that is paid and the fair
market value of Common Stock that is received in settlement of a Performance
Share award.
The employer (either the Company or its affiliate) will be entitled to
claim a federal income tax deduction on account of the exercise of a
nonqualified stock option or SAR or the vesting of a Stock Award or the
settlement of Performance Shares. The amount of the deduction is equal to the
ordinary income recognized by the Participant. The employer will not be entitled
to a federal income tax deduction on account of the grant or the exercise of an
ISO. The employer may claim a federal income tax deduction on account of certain
dispositions of ISO stock.
For the approval of the 1997 Plan, it must be approved by the holders of a
majority of the shares of common stock represented at the Annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF
THE 1997 STOCK COMPENSATION PLAN.
PROPOSAL TO APPROVE THE CFW COMMUNICATIONS
COMPANY NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The Company proposes that the shareholders approve the CFW Communications
Company Non-Employee Directors' Stock Option Plan (the "Directors' Plan"). The
Company's Board of Directors (the "Board") adopted the Directors' Plan on
December 16, 1996, subject to the approval of the Company's shareholders.
The Board believes that the Directors' Plan will benefit the Company by
promoting a greater identity of interest between the Company's non-employee
directors ("Directors") and its shareholders by affording a Director the
opportunity to reduce the retainer fees otherwise payable to the Director in
return for an option to purchase Common Stock ("Option") in the future.
The following paragraphs summarize the principal features of the Directors'
Plan. This summary is subject, in all respects, to the terms of the Directors'
Plan, which is incorporated herein by reference. The Company will provide
promptly, upon request and without charge, a copy of the full text of the
Directors' Plan to each person to whom a copy of this proxy statement is
delivered. Requests should be directed to: Christina S. Smith, Corporate
Secretary, CFW Communications Company, P.O. Box 1990, Waynesboro, Virginia
22980-1990 (540) 946-3500.
Eligibility. Each non-employee director is eligible to participate in
the Directors' Plan. Each Director who elects to participate in the Directors'
Plan is referred to as a "Participant".
Options. Prior to December 15 (the "Election Date") of each year, each
Director may elect to forgo all or a portion of the retainer fee he or she would
have received in the next following calendar year in exchange for an Option.
Options will be granted on January 2 (or, if January 2 is not a business day,
the next following business day), of each year (the "Date of Grant")
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during the term of the Directors' Plan. Prior to each Election Date, the Board
will determine the number of shares of Common Stock for which an Option will be
granted with respect to stated amounts of retainer fee that each Participant
relinquishes. January 2, 1997, is the first Date of Grant.
Terms of Options. The Option price per share of Common Stock will be the
share's Fair Market Value. The term "Fair Market Value" means, on any given
date, the average of the bid and asked prices of a share of Common Stock as
reported by such source as the Board may select. If there is no bid and asked
price for the Common Stock on such day, then Fair Market Value means the average
bid and asked prices as reported on the next preceding day as reported by such
source as the Board may select. The Option price may be paid in cash, by
surrendering shares of Common Stock to the Company, or a combination thereof.
Options granted on January 2, 1997, will first be exercisable with respect
to five-twelfths of the shares covered by the Option on May 1, 1997, and with
respect to an additional one-twelfth of the shares covered by the Option on the
first day of each month thereafter. Notwithstanding the preceding sentence,
Options granted on January 2, 1997, will not become exercisable and each
Participant will receive a cash payment on May 1, 1997, equal to the value of
any retainer fees relinquished in exchange for an Option if the shareholders do
not approve the Directors' Plan. Options granted on any Date of Grant other than
January 2, 1997, will become exercisable with respect to one-twelfth of the
shares covered by the Option on the Option's Date of Grant and with respect to
an additional number of whole shares equal to or less than one-twelfth of the
shares covered by the Option on the first day of each month thereafter. Options
may be exercised for any number of whole shares for which the option is
exercisable.
To the extent that an Option is not exercisable on the date that the
Participant's service on the Board terminates, the Option will be forfeited. All
Options will become exercisable as of the date the Participant's service on the
Board of Directors terminates on account of death or Disability. The term
"Disability" means a permanent and total disability within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. To the extent
that an Option is exercisable or becomes exercisable on the date that the
Participant's service on the Board terminates due to death or Disability, the
Option will remain exercisable until the date that is ten years from the
Option's Date of Grant. The maximum period in which an Option may be exercised
will be ten years from the Option's Date of Grant.
Options are nontransferable except by will or the laws of descent and
distribution. During the Participant's lifetime, the Options may be exercised
only by the Participant. No right or interest of a Participant under the
Directors' Plan will be liable for, or subject to, any lien, obligation or
liability of such Participant.
A Participant will not have any rights as a shareholder with respect to
shares covered by Options until the Options are exercised.
A total of 25,000 shares of Common Stock may be issued upon the exercise of
Options granted under the Directors' Plan. If the Company (a) affects one or
more dividends, stock split-ups, subdivisions or consolidations of shares or (b)
engages in any transaction described in Section 242 of the Code, the Board will
adjust the maximum number of shares that may be issued under the Directors' Plan
and the terms of outstanding Options.
No Options will be granted under the Directors' Plan after January 2, 2006.
Amendments. The Board of Directors may amend or terminate the Directors'
Plan without further action by the shareholders; provided, however, that no
amendment may become effective without shareholder approval if the amendment (i)
materially increases the aggregate number of shares of Common Stock that may be
issued pursuant to the Directors' Plan, (ii) materially increases the benefits
accruing to Participants under the Directors' Plan or (iii) materially changes
the class of individuals who may become Participants.
On January 2, 1997, subject to shareholder approval, options were granted
at the option price of $21.875. Prior to December 15, 1996, certain directors
elected to forego all or a portion of their 1997 retainer fee in exchange for
options. Mr McNeely, III, Mr. Neff, Mr. Mitchell and Mr.Gibbs, V received 1,322,
926, 661 and 264 options, respectively.
Except as previously described, the Company is not able to estimate the
number of directors who will elect to forego their retainer fees in the future
or the number of options which they may be granted.
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Federal Income Tax Consequences. The Company has been advised by counsel
regarding the federal income tax consequences of the Directors' Plan. No income
is recognized by a Participant on account of the grant of an Option. Income is
recognized on the date that an Option is exercised. The amount of income
recognized by the Participant is equal to the difference between the Option
price and the fair market value of the Common Stock on the date the Option is
exercised. Any gain or loss that a Participant realizes on a subsequent
disposition of Common Stock acquired upon the exercise of an Option will be
treated as long-term or short-term capital gain or loss, depending on the period
during which the Participant held such shares.
If the Participant pays the Option price by surrendering shares of Common
Stock, the Participant will not recognize gain or loss to the extent that the
number of shares received in the exchange does not exceed the number of shares
surrendered. The Participant will, however recognize ordinary income equal to
the fair market value of the shares received in the exchange that exceed the
number of shares surrendered (the "Additional Shares"), less any cash paid by
the Participant to exercise the Option. The Participant's tax basis in the
shares received in the exchange that do not exceed the number of shares
surrendered is the same as his tax basis in the shares surrendered. The
Participant's tax basis in the Additional Shares will be equal to the sum of the
ordinary income recognized by the Participant on account of the exchange and any
cash paid by the Participant to exercise the Option. The exercise of an Option
will entitle the Company to claim a federal income tax deduction equal to the
amount of income recognized by the Participant.
For the approval of the Directors' Plan, it must be approved by the holders
of a majority of the shares of common stock represented at the Annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE CFW
COMMUNICATIONS COMPANY NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN.
FINANCIAL STATEMENTS
The Company's 1996 Annual Report to Shareholders contains audited financial
statements for 1996, 1995 and 1994 and the report of McGladrey & Pullen, LLP
thereon. Management's Discussion and Analysis of financial condition and results
of operations is also contained in this 1996 Annual Report.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen, LLP, P. O. Box 1276, Richmond, Virginia,
independent public accountants, audited the financial statements of the Company
for the fiscal year ending December 31, 1996. A representative of McGladrey &
Pullen, LLP is expected to be present at the Annual Meeting and will be
available to make a statement if he desires to do so and to answer appropriate
questions with respect to that firm's audit of the Company's financial
statements and records for the fiscal year ended December 31, 1996.
SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be considered for inclusion in the
Proxy Statement and Proxy for the 1998 Annual Meeting of Shareholders, such
proposals must be received by the Corporate Secretary of the Company by February
26, 1998.
FORM 10-K
Upon written request to the Corporate Office of the Company, P. O. Box 1990,
Waynesboro, Virginia 22980, shareholders will be furnished without charge a copy
of the Company's Annual Report on Form 10-K required to be filed with the
Securities and Exchange Commission, including the financial statements and the
schedules thereto for the most recent fiscal year.
Waynesboro, Virginia
March 17, 1997
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CFW COMMUNICATIONS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes M. E. Yeago and C. S. Smith, or
either of them, attorneys and proxies, with power of substitution in each, to
act for the undersigned with respect to all common stock of the undersigned at
the Annual Meeting of Shareholders to be held at the Holiday Inn at the
intersection of Route 275 and I-81, North of Staunton, Virginia, on Tuesday,
April 22, 1997, at 10:00 a.m., or any adjournment thereof.
The Board of Directors recommends a vote "FOR":
1. ELECTION OF DIRECTORS (three Class III)
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
William Wayt Gibbs, V John N. Neff Robert S. Yeago, Jr.
2. To approve the CFW Communications Company 1997 Stock Compensation Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the CFW Communications Company Non-Employee Directors'
Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To vote on such other business, if any, that may properly come before the
meeting.
[ ] Please check box if you plan to attend meeting.
-----------------------------------
- -----------------------------------, 1997
Date
-------------------------------------------------
(Please sign your name(s) exactly as shown hereon.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES FOR ELECTION OF THE CLASS III DIRECTORS AND APPROVAL OF THE OTHER
MATTERS TO BE CONSIDERED AT THE MEETING.
