SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CFW COMMUNICATIONS COMPANY
(Name of Registrant as Specified in its Charter)
(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 LOGO]
401 Spring Lane
Suite 300
JAMES S. QUARFORTH P. O. Box 1990
PRESIDENT AND Waynesboro, VA 22980
CHIEF EXECUTIVE OFFICER Telephone 540 946-3500
FAX 540 946-3595
March 15, 1999
Dear Shareholder:
You are cordially invited to attend our 1999 Annual Meeting of
Shareholders at 10:00 a.m. on Tuesday, April 27, 1999. 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 1998 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
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<PAGE>
[CFW LOGO]
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 27, 1999, at 10:00 a.m. for the following purposes:
(1) To elect two Class II Directors for three-year terms expiring in 2002.
(2) 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 22, 1999 will be entitled to vote at the Meeting.
By Order of the Board of Directors
M. B. Moneymaker
Corporate Secretary
Waynesboro, Virginia
March 15, 1999
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.
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<PAGE>
[CFW LOGO]
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
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 27, 1999, 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 the Company. 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 the Company 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 election of two Class II Directors. 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 22, 1999, has been
fixed as the record date (the "Record Date") for the Meeting and any
adjournment. As of that date, there were 13,016,988 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.
This Proxy Statement and enclosed proxy card are being mailed to
shareholders beginning on or about March 15, 1999. An Annual Report to
Shareholders including financial statements for the years ending December 31,
1998, 1997 and 1996 is enclosed.
ELECTION OF DIRECTORS
There are currently eight members of the Board of Directors, divided into
three classes, two of which have three members and one of which has two
members. One class is elected each year for a three-year term. The names and
employment histories of the two 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.
Two Class II Directors are eligible for election at the 1999 Annual
Meeting of Shareholders. Mr. C. Phillip Barger's term as a Class II Director
will expire at the 1999 Shareholder Meeting coincident with his planned
retirement as a Director. As a result of Mr. Barger's retirement, the Company
will have seven Directors. The
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<PAGE>
Company will not presently be filling Mr. Barger's Director seat but will
continue to maintain a Board of Directors constituting eight members. The
Company is maintaining a vacant Director's seat in order to provide flexibility
to add an additional Director if the Board of Directors so determines. Any
Director added would be subject to election by shareholders at the next
succeeding annual meeting. Shares represented by proxies in the accompanying
form cannot be voted for a greater number of persons than the number of
nominees named below. The nominees listed below are current Directors who have
consented to stand for re-election as Class II Directors of the Company to
serve a three-year term expiring at the 2002 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. Votes
that are withheld and shares held in street name that are not voted in the
election of Directors 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.
<TABLE>
<CAPTION>
Common Stock
------------
Sole Shared
Voting and Voting and
Investment Investment
Name Power Power(a) Other(b)
- ------------------------------------------ ------------ ------------ ----------
<S> <C> <C> <C>
CLASS II DIRECTORS - NOMINEES FOR ELECTION
John B. Mitchell, Sr. 1,494 3,321 874
Age 58
Director since 1989
James S. Quarforth 392 33,696 91,750
Age 44
Director since 1987
CLASS II DIRECTOR - TERM EXPIRES 1999
C. Phillip Barger 119,857 29,992 0
Age 70
Director since 1963
CLASS III DIRECTORS - TERMS EXPIRE 2000
John N. Neff 100 800 2,240
Age 47
Director since 1995
<CAPTION>
Principal
Occupation and
Business
Percentage Experience for
Name Total of Class Past 5 years
- ------------------------------------------ ---------- ------------ -----------------------------
<S> <C> <C> <C>
CLASS II DIRECTORS - NOMINEES FOR ELECTION
John B. Mitchell, Sr. 5,689 .04% President and Chairman of
Age 58 the Board - Hammond-
Director since 1989 Mitchell, Inc. (Construction
Contractor), Covington, VA
James S. Quarforth 125,838 .95% President and Chief
Age 44 Executive Officer since
Director since 1987 May 1, 1990 - CFW
Communications Company
and Subsidiaries,
Waynesboro, VA; Director of
Virginia Financial
Corporation, Staunton, VA;
and Director of American
Telecasting, Inc., Colorado
Springs, CO
CLASS II DIRECTOR - TERM EXPIRES 1999
C. Phillip Barger 149,849 1.13% Retired Chairman - E.W.
Age 70 Barger and Company T/A
Director since 1963 Barger Insurance Network,
Waynesboro, VA
CLASS III DIRECTORS - TERMS EXPIRE 2000
John N. Neff 3,140 .02% President and Chief
Age 47 Executive Officer - Nielsen
Director since 1995 Builders, Inc.,
Harrisonburg, VA
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Principal
Sole Shared Occupation and
Voting and Voting and Business
Investment Investment Percentage Experience for
Name Power Power(a) Other(b) Total of Class Past 5 years
- ------------------------ ------------ ------------ ---------- --------- ------------ --------------------------------
<S> <C> <C> <C> <C> <C> <C>
William W. Gibbs, V 76,934 101,525 1,464 179,923 1.36% President - Comprehensive
Age 58 Computer Consultants,
Director since 1977 Staunton, VA
Robert S. Yeago, Jr. 18,046 86,652 0 104,698 .79% Chairman of the Board
Age 74 (President and Chief
Director since 1973 Executive Officer until
May 1, 1990) CFW
Communications Company
and Subsidiaries,
Waynesboro, VA
CLASS I DIRECTORS - TERMS EXPIRE 2001
C. Wilson McNeely, III 11,861 1,825 1,322 15,008 .11% Chairman of the Board -
Age 56 Eagle Corporation
Director since 1995 (Manufacturer of concrete
products and distributor of
fuel oils), Charlottesville, VA
Carl A. Rosberg 0 12,748 59,300 72,048 .54% Senior Vice President since
Age 46 May 1, 1990 - CFW
Director since 1992 Communications Company
and Subsidiaries,
Waynesboro, VA and
Director of American
Telecasting, Inc.,
Colorado Springs, CO
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Sole Shared
Voting and Voting and
Investment Investment Percentage
Name Power Power(a) Other(b) Total of Class
- -------------------------------- ------------ ------------ ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
NON-DIRECTOR EXECUTIVE OFFICERS
J. William Brownlee 8,388 0 16,050 24,438 .18%
Age 58
Warren C. Catlett 500 0 10,500 11,000 .08%
Age 39
David E. Lowe 0 500 1,875 2,375 .02%
Age 57
David R. Maccarelli 0 2,200 29,616 31,816 .24%
Age 46
Michael B. Moneymaker 2,070 4,601 13,550 20,221 .15%
Age 41
Don Marie Persing 1,738 0 0 1,738 .01%
Age 47
Walter M. Zirkle, III 3,803 0 13,500 17,303 .13%
Age 41
All officers and directors as a
group (15 persons) 245,183 277,860 242,041 765,084 5.77%
</TABLE>
- --------------------------------------------------------------------------------
(a) Includes shares held by spouses, children, trusts and companies in which
the director or officer owns a controlling interest.
(b) Shares subject to options exercisable within sixty days.
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 1998 its Directors and executive officers complied
with all applicable Section 16 filing requirements except, Mr. McNeely, whose
Form 4 filings with respect to the sale of 5,200 shares and the purchase of 200
shares were filed eight and five months late, respectively.
COMMITTEES OF THE BOARD
C. Phillip Barger, James S. Quarforth, Robert S. Yeago, Jr. and John B.
Mitchell, Sr. comprise the Executive Committee of the Board. Two committee
meetings were held during 1998.
The Company has a standing Audit Committee and a Compensation Committee.
The Audit Committee, consisting of C. Phillip Barger, William Wayt Gibbs, V and
John N. Neff, had two meetings in 1998 for the purpose of approving the 1997
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 1998 and to perform certain non-audit services.
The Compensation Committee, consisting of C. Phillip Barger, John B.
Mitchell, Sr., C. Wilson McNeely, III, John N. Neff and Robert S. Yeago, Jr.,
held two meetings during the year for the purpose of determining wage and
salary increases and granting stock options to certain key employees of the
Company.
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<PAGE>
The Nominating Committee, consisting of C. Phillip Barger, John B.
Mitchell, Sr., James S. Quarforth and Robert S. Yeago, Jr., whose function
includes consideration of the size and composition of the Board, held three
meetings during 1998. The Nominating Committee will consider nominees for
Director suggested by shareholders. Any shareholder recommendation for a
nominee for Director at the 2000 Annual Meeting of Shareholders should be
submitted in writing to the Corporate Secretary of the Company not later than
February 26, 2000 and shall include a description of the proposed nominee's
qualifications and relevant biographical information, as well as certain
information required by the Bylaws of the Company, including (i) the name and
business address of the proposed nominee; (ii) the proposed nominee's consent
to his name being placed in nomination; (iii) the recommending shareholder's
name and address; (iv) the class and number of shares of the Company's stock
beneficially owned by the shareholder, and (v) any material interest of the
shareholder in the proposed nomination.
The Board of Directors held seven regular meetings during 1998. 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 1998, with comparisons to
1997 and 1996 information, as well as option grants and exercises for 1998:
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- --------------------------------------------------------- --------------
AWARDS
--------------
<S> <C> <C> <C> <C> <C>
Name and Options/
Principal Position Year Salary Bonus SARs All Other 1/
- ---------------------------------- ---- ------ ----- ---- ------------
James S. Quarforth 1998 $237,000 $90,616 21,000 $7,728
President and 1997 221,250 98,698 20,000 7,668
Chief Executive Officer 1996 198,750 69,418 21,000 6,018
Carl A. Rosberg 1998 167,500 49,409 12,000 7,334
Senior Vice President and 1997 157,500 54,237 11,000 7,176
Chief Operating Officer 1996 142,500 22,313 12,000 5,681
David R. Maccarelli 1998 137,500 39,917 12,000 7,039
Senior Vice President - 1997 127,500 43,804 11,000 6,881
Engineering and Carrier Services 1996 113,751 35,250 12,000 5,014
Walter M. Zirkle, III 2/ 1998 131,000 26,465 10,000 6,402
President - Virginia Operations 1997 119,000 31,679 10,000 5,392
1996 96,250 23,771 10,000 361
Michael B. Moneymaker 1998 120,500 31,488 7,000 6,227
Vice President and 1997 111,000 31,583 8,000 3,185
Chief Financial Officer, 1996 102,500 26,141 6,750 2,329
Treasurer and Secretary
</TABLE>
1/ In 1998 the Company made contributions to the savings plan of $5,760
for James S. Quarforth, $5,760 for Carl A. Rosberg, $5,760 for David R.
Maccarelli, $5,202 for Walter M. Zirkle, III, and $5,115 for Michael B.
Moneymaker. In addition, the Company made group life insurance premium payments
of $1,968 for
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<PAGE>
James S. Quarforth, $1,574 for Carl A. Rosberg, $1,279 for David R. Maccarelli,
$1,200 for Walter M. Zirkle, III, and $1,112 for Michael B. Moneymaker.
In 1997 the Company made contributions to the savings plan of $5,700 for
James S. Quarforth, $5,700 for Carl A. Rosberg, $5,700 for David R. Maccarelli,
$4,310 for Walter M. Zirkle, III, and $2,152, for Michael B. Moneymaker. In
addition, the Company made group life insurance premium payments of $1,968 for
James S. Quarforth, $1,476 for Carl A. Rosberg, $1,181 for David R. Maccarelli,
$1,082 for Walter M. Zirkle, III, and $1,033 for Michael B. Moneymaker.
2/ Mr. Zirkle joined the Company on February 16, 1996 and became an
executive officer of the Company effective April 22, 1997.
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
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> <C> <C> <C> <C> <C>
James S. Quarforth 21,000 18.3% $ 23.000 02/23/2008 $303,756 $769,778
Carl A. Rosberg 12,000 10.5% 23.000 02/23/2008 173,575 439,873
David R. Maccarelli 12,000 10.5% 23.000 02/23/2008 173,575 439,873
Walter M. Zirkle, III 10,000 8.7% 23.000 02/23/2008 144,646 366,561
Michael B. Moneymaker 7,000 6.1% 23.000 02/23/2008 101,252 256,593
</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 $37.46 and $59.66, respectively, at the
end of the ten year option term.
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End (Shares) FY-End
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
- ----------------------- ----------------- ---------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
James S. Quarforth 26,781 $458,625 77,300 / 50,100 $674,225 / $125,400
Carl A. Rosberg 2,500 35,000 51,150 / 28,450 447,513 / 71,425
David R. Maccarelli 2,200 10,725 21,466 / 28,200 75,475 / 70,425
Walter M. Zirkle, III 0 0 6,500 / 23,500 28,750 / 56,250
Michael B. Moneymaker 0 0 8,450 / 18,300 40,081 / 47,825
</TABLE>
Closing price on December 31, 1998 was $23.375 and was used in calculating the
value of unexercised options.
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<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 1998 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.
Annual Retirement Benefits Payable for
Respective Years of Service
---------------------------
Average Annual
Compensation 15 years 20 years 25 years 30 years 35 years
- --------------- ---------- ---------- ---------- ---------- ----------
$ 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
325,000 162,500 186,875 211,250 235,625 260,000
350,000 175,000 201,250 227,500 253,750 280,000
375,000 187,500 215,625 243,750 271,875 300,000
400,000 200,000 230,000 260,000 290,000 320,000
425,000 212,500 244,375 276,250 308,125 340,000
450,000 225,000 258,750 292,500 326,250 360,000
The number of credited years of service for James S. Quarforth, Carl A.
Rosberg, David R. Maccarelli, Walter M. Zirkle, III and Michael B. Moneymaker
is 19 years, 10 years, 6 years, 2 years and 3 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. Upon election by December 15th of the preceding
year, non-management directors may elect to receive all, or a portion of their
annual retainer fee in Company stock option grants.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
As members of the Compensation 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
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<PAGE>
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 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 compensation is given great weight in the
Company's overall compensation mix in order to provide incentive for 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 $7,728 in 1998 compared to 1997. 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 $15,750. The achievement of strong financial
performance compared to the Company's annual business plan resulted in an
incentive compensation of $90,616. However, this compensation reflected a
decrease of $8,082 from 1997, a year in which the Company's financial
performance exceeded the Company's annual business plan to a greater extent
than in 1998. During 1998, the Company's consolidated net operating revenues
increased $7.7 million or 13% ($9.1 million or 18% for 1997 over 1996),
operating cash flows (operating income before depreciation and amortization)
increased $4.5 million or 16% ($4.8 million or 20% for 1997 over 1996). Net
income for 1998 was $8.5 million, a decrease of $3.7 million. Excluding equity
losses from PCS investees and gains and losses on investment transactions in
both 1998 and 1997, net income for 1998 would have been $13.1 million ($11.3
million for 1997), an increase of $1.8 million or 16%. The Compensation
Committee also considers the Chief Executive Officer's continued leadership in
advancing the Company's long-term strategic business goals. Specifically,
during 1998, the Company achieved greater than 30% growth in cellular and
paging customers; commenced providing competitive local exchange services to
businesses in three markets; introduced internet access services in four
markets; launched PCS services in Charleston and Huntington, WV; and achieved a
one percent market penetration rate in the Virginia PCS Alliance covered
populated area, as customer count at year-end exceeded 12,000.
Compensation Committee
R. S. Yeago, Jr. C. Phillip Barger
John B. Mitchell, Sr. C. Wilson McNeely, III
John N. Neff
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Robert S. Yeago, Jr., a Director and member of the Compensation Committee
of the Company, formerly served as President and Chief Executive Officer.
RELATED TRANSACTIONS
The Company paid $2.7 million to Nielsen Builders, Inc. for the
construction of the Company's Customer Contact Facility and certain additional
construction activities which were completed in 1998. The construction project
for the Customer Contact Facility had been awarded to Nielsen Builders, Inc. in
1997 through a competitive bidding process. Mr. John N. Neff currently serves
as President and Chief Executive Officer of Nielsen Builders, Inc.
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 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, 1993 and that
all dividends were reinvested in their respective common stock issue in the
month paid.
Comparison of Five-Year Cumulative Total Return
[GRAPH]
Fiscal Year Ended December 31
1993 1994 1995 1996 1997 1998
CFW Communications Company 100 83 73 93 96 103
NASDAQ Composite Index 100 140 172 209 244 292
S&P Telecom Index 100 96 141 148 203 290
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<PAGE>
FINANCIAL STATEMENTS
The Company's 1998 Annual Report to Shareholders contains audited
financial statements for 1998, 1997 and 1996 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 1998 Annual
Report.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen, LLP, P. O. Box 1276, Richmond, Virginia,
23218, independent public accountants, audited the financial statements of the
Company for the fiscal year ending December 31, 1998. 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, 1998.
SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be considered for inclusion in
the Proxy Statement and Proxy for the 2000 Annual Meeting of Shareholders, such
proposals must be received by the Corporate Secretary of the Company by
November 16, 1999.
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 15, 1999
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P R O X Y CFW COMMUNICATIONS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes W.W. Gibbs, V and M.B. Moneymaker, 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 27, 1999, at 10:00 a.m., or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
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1. ELECTION OF DIRECTORS (TWO CLASS II)
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(Except as marked to the contrary below) vote for all nominees listed below
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(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
J.S. Quarforth J.B. Mitchell, Sr.
(Class II) (Class II)
2. To vote on such other business, if any, that may properly come before the
meeting.
[ ] Please check box if you plan to attend the meeting.
(continued on other side)
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(continued from other side)
Dated: ______________ , 1999
(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(S). IF NO DIRECTION
IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES FOR
ELECTION OF THE CLASS II
DIRECTORS AND APPROVAL OF THE
OTHER MATTERS TO BE CONSIDERED
AT THE MEETING.
