<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 CO.
- --------------------------------------------------------------------------------
(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] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[CFW LETTERHEAD]
JAMES S. QUARFORTH 401 Spring Lane
CHAIRMAN OF THE BOARD AND Suite 300
CHIEF EXECUTIVE OFFICER P.O. Box 1990
Waynesboro, VA 22980
Telephone 540 946-3500
FAX 540 946-3595
March 20, 2000
Dear Shareholder:
You are cordially invited to attend our 2000 Annual Meeting of
Shareholders at 10:00 a.m. on Tuesday, April 25, 2000. 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 1999 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
Chairman of the Board
and Chief Executive Officer
<PAGE>
[CFW COMMUNICATIONS COMPANY LETTERHEAD]
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 25, 2000, at 10:00 a.m. for the following purposes:
(1) To elect three Class III Directors for three-year terms expiring in
2003.
(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 28, 2000 will be entitled to vote at the Meeting.
By Order of the Board of Directors
M. B. Moneymaker
Corporate Secretary
Waynesboro, Virginia
March 20, 2000
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.
<PAGE>
[CFW LOGO]
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
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 25, 2000, 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., CFW
PCS Inc., CFW Cornerstone, Inc., and NetAccess, 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 three Class III 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 28, 2000, has been
fixed as the record date (the "Record Date") for the Meeting and any
adjournment. As of that date, there were 13,062,252 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 20, 2000. An Annual Report to Shareholders
including financial statements for the years ending December 31, 1999, 1998 and
1997 is enclosed.
ELECTION OF DIRECTORS
There are currently eight members of the Board of Directors, divided into
three classes, two of which have two members and one of which has four members.
One class is elected each year for a three-year term. The names and employment
histories of the three nominees, five 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.
- 1 -
<PAGE>
Three Class III Directors are eligible for election at the 2000 Annual
Meeting of Shareholders. Mr. Robert S. Yeago, Jr.'s term as a Class III
Director will expire at the 2000 Shareholder Meeting coincident with his
planned retirement as a Director. As a result of Mr. Yeago's retirement, the
Company will have seven Directors. The Company will not presently be filling
Mr. Yeago'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 III Directors of the Company to serve a three-year term
expiring at the 2003 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.
Common Stock
<TABLE>
<CAPTION>
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
- ---- ---------- ---------- ------- ------- ---------- ---------------------------
CLASS III DIRECTORS - Nominees for Election
<S> <C> <C> <C> <C> <C> <C>
Phyllis H. Arnold 1,000 0 236 1,236 0.01% President and Chief
Age 51 Executive Officer - One
Director since 1999 Valley Bank, N.A.,
Charleston, WV;
Chief Operating
Officer - One Valley
Bancorp, Inc. since 1998,
Director - One Valley
Bancorp, Inc.,
Charleston, WV
John N. Neff 100 800 3,409 4,309 0.03% President and Chief
Age 48 Executive Officer - Nielsen
Director since 1995 Builders, Inc.,
Harrisonburg, VA
William W. Gibbs, V 61,934 116,525 809 179,268 1.35% President - Comprehensive
Age 59 Computer Consultants, Inc.,
Director since 1977 Staunton, VA
</TABLE>
- 2 -
<PAGE>
Common Stock
<TABLE>
<CAPTION>
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
- ---- ---------- ---------- ------- ------- ---------- -----------------------------
CLASS III DIRECTOR - Term Expires 2000
<S> <C> <C> <C> <C> <C> <C>
Robert S. Yeago, Jr. 18,482 84,510 0 102,992 0.77% Chairman of the Board
Age 75 until May 1, 1999
Director since 1973 (President and Chief
Executive Officer until
May 1, 1990)
CFW Communications
Company and Subsidiaries,
Waynesboro, VA
CLASS II DIRECTORS - Terms Expire 2002
John B. Mitchell, Sr. 1,522 3,382 1,592 6,496 0.05% President and Chairman
Age 59 of the Board - Hammond-
Director since 1989 Mitchell, Inc. (Construction
Contractor), Covington, VA
James S. Quarforth 392 43,903 101,700 145,995 1.10% Chairman of the Board
Age 45 and Chief Executive Officer
Director since 1987 since May 1, 1999 - President
and Chief Executive Officer
until May 1, 1999 - CFW
Communications
Company and Subsidiaries,
Waynesboro, VA; Director
of Virginia Financial
Corporation, Staunton, VA;
Director of Illuminet
Holdings, Inc., Olympia,
WA and Director of
American Telecasting, Inc.,
Colorado Springs, CO
until September 23, 1999
</TABLE>
- 3 -
<PAGE>
Common Stock
<TABLE>
<CAPTION>
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>
CLASS I DIRECTORS - Terms Expire 2001
C. Wilson McNeely, III 15,861 1,825 1,322 19,008 0.14% Chairman of
Age 57 the Board - Eagle
Director since 1995 Corporation
(Manufacturer of
concrete products
and distributor
of fuel oils),
Charlottesville, VA
Carl A. Rosberg 0 22,248 63,450 85,698 0.64% President and Chief
Age 47 Operating Officer
Director since 1992 since May 1, 1999;
Senior Vice President
until May 1, 1999 -
CFW Communications
Company and Subsidiaries,
Waynesboro, VA and
Director of American
Telecasting, Inc.,
Colorado Springs, CO until
September 23, 1999
</TABLE>
<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 9,278 0 11,375 20,653 0.15%
Age 59
Warren C. Catlett 1,329 0 14,940 16,269 0.12%
Age 40
David E. Lowe 0 500 6,250 6,750 0.05%
Age 58
David R. Maccarelli 0 3,500 37,516 41,016 0.31%
Age 47
Michael B. Moneymaker 0 9,199 17,400 26,599 0.20%
Age 42
Don Marie Persing 2,778 0 4,500 7,278 0.05%
Age 48
All officers and
directors as a
group (14 persons) 112,676 286,392 264,499 663,567 4.98%
</TABLE>
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- 4 -
<PAGE>
(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 1999 its Directors and Executive Officers
complied with all applicable Section 16 filing requirements except Mr.
McNeely, whose Form 4 filing with respect to the purchase of 4,000 shares was
filed seven months late.
COMMITTEES OF THE BOARD
James S. Quarforth, Robert S. Yeago, Jr. and John B. Mitchell, Sr. comprise
the Executive Committee of the Board. Six committee meetings were held during
1999.
The Company has a standing Audit Committee and a Compensation Committee. The
Audit Committee, consisting of William Wayt Gibbs, V, C. Wilson McNeely, III
and John N. Neff, had three meetings in 1999 for the purpose of approving the
1998 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 1999 and to perform certain non-audit services.
The Compensation Committee, consisting of John B. Mitchell, Sr., C. Wilson
McNeely, III, John N. Neff and Robert S. Yeago, Jr., held five meetings in
1999.
The Governance Committee, consisting of John B. Mitchell, Sr., James S.
Quarforth, Robert S. Yeago, Jr. and Phyllis H. Arnold, whose function includes
consideration of the size and composition of the Board, monitoring procedures
for corporate decision-making, reviewing public policy issues, recommending
actions to increase the Board's effectiveness, and evaluating shareholder
proposals, held three meetings in 1999.
The Nominating Committee, consisting of 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 two meetings in 1999. The
Governance Committee has now assumed the responsibilities of the Nominating
Committee. The Governance Committee will consider nominees for Director
suggested by shareholders. Any shareholder recommendation for a nominee for
Director at the 2001 Annual Meeting of Shareholders should be submitted in
writing to the Corporate Secretary of the Company not later than February 23,
2001 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 1999. All
Directors attended more than 75% of the meetings of the Board and committees
of which he is a member, except John N. Neff who attended 68% and C. Wilson
McNeely, III who attended 57%.
- 5 -
<PAGE>
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 1999, with comparisons to
1998 and 1997 information, as well as option grants and exercises for 1999:
EXECUTIVE COMPENSATION
<TABLE>
<S> <C> <C> <C> <C> <C>
Long Term
Compensation
Annual Compensation Awards
- ------------------------------------------------------------------------------
<CAPTION>
Name and Options/
Principal Position Year Salary Bonus SARs All Other/1//
- ------------------ ---- ------ ----- -------- -------------
<S> <C> <C> <C> <C> <C>
James S. Quarforth 1999 $267,250 $64,140 40,000 $14,950
Chairman of the Board and 1998 237,000 90,616 21,000 7,728
Chief Executive Officer 1997 221,250 98,698 20,000 7,668
Carl A. Rosberg 1999 183,500 38,535 18,000 10,288
President and 1998 167,500 49,409 12,000 7,334
Chief Operating Officer 1997 157,500 54,237 11,000 7,176
David R. Maccarelli 1999 144,200 25,956 10,000 8,118
President -
Virginia Operations 1998 137,500 39,917 12,000 7,039
1997 127,500 43,804 11,000 6,881
Michael B. Moneymaker 1999 132,000 23,760 10,000 7,290
Vice President and 1998 120,500 31,488 7,000 6,227
Chief Financial Officer, 1997 111,000 31,583 8,000 3,185
Treasurer and Secretary
David E. Lowe2/ 1999 131,000 19,650 10,000 7,004
President - West Virginia 1998 113,000 23,317 7,500 2,921
Operations 1997 0 0 0 0
</TABLE>
1/In 1999 the Company made contributions to the savings plan of $5,760 for
James S. Quarforth, $5,760 for Carl A. Rosberg, $4,507 for David R.
Maccarelli, $3,680 for Michael B. Moneymaker, and $5,125 for David E. Lowe. In
1999 the Company made contributions to the deferred compensation plan of
$7,366 for James S. Quarforth, $2,916 for Carl A. Rosberg, $2,287 for David R.
Maccarelli, $2,467 for Michael B. Moneymaker, and $839 for David E. Lowe. In
addition, the Company made group life insurance premium payments of $1,032 for
James S. Quarforth, $877 for Carl A. Rosberg, $722 for David R. Maccarelli,
$634 for Michael B. Moneymaker, and $629 for David E. Lowe.
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, $5,115 for Michael B. Moneymaker, and $2,072 for David E. Lowe. In
addition, the Company made group life insurance premium payments of $1,968 for
James S. Quarforth, $1,574 for Carl A. Rosberg, $1,279 for David R.
Maccarelli, $1,112 for Michael B. Moneymaker, and $541 for David E. Lowe.
- 6 -
<PAGE>
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, 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, and $1,033 for
Michael B. Moneymaker.
2/Mr. Lowe joined the Company as an executive officer on January 1, 1998.
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value At Assumed
Annual Rates
of
Stock Price Appreciation
For Option
Individual Grants 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 40,000 23.8% $22.625 02/22/2009 $ 569,150 $1,442,337
Carl A. Rosberg 18,000 10.7% 22.625 02/22/2009 256,117 649,052
David R. Maccarelli 10,000 6.0% 22.625 02/22/2009 142,287 360,584
Michael B. Moneymaker 10,000 6.0% 22.625 02/22/2009 142,287 360,584
David E. Lowe 10,000 6.0% 22.625 02/22/2009 142,287 360,584
</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 $36.85 and $58.68, 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 16,000 $206,000 77,250 / 74,150 $1,337,338 / $953,713
Carl A. Rosberg 9,500 122,313 50,800 / 37,300 897,838 / 483,113
David R. Maccarelli 3,500 35,875 26,866 / 29,300 380,988 / 386,113
Michael B. Moneymaker 5,000 51,875 9,800 / 21,950 123,425 / 305,638
David E. Lowe 0 0 1,875 / 15,625 23,672 / 192,266
</TABLE>
Closing price on December 31, 1999 was $34.75 and was used in calculating the
value of unexercised options.
- 7 -
<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 1999 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
<TABLE>
<CAPTION>
Average Annual
Compensation 15 years 20 years 25 years 30 years 35 years
<S> <C> <C> <C> <C> <C>
$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
</TABLE>
The number of credited years of service for James S. Quarforth, Carl A.
Rosberg, David R. Maccarelli, Michael B. Moneymaker and David E. Lowe is 20
years, 11 years, 7 years, 4 years and 2 years, respectively. Mr. Lowe does not
participate in the executive supplemental retirement plan.
DIRECTOR COMPENSATION
Non-management Directors received a monthly retainer fee of $800 and $400
for each meeting attended until May 1, 1999 when the monthly retainer fee
increased to $900. Robert S. Yeago, Jr. served as Chairman of the Board until
May 1, 1999 and received an additional monthly retainer fee of $600; James S.
Quarforth, the current Chairman of the Board, receives no additional monthly
fee. 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.
- 8 -
<PAGE>
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 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 $3,774 in 1999 compared to 1998. 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 $30,250. The achievement of strong revenue and customer growth
compared to the Company's annual business plan resulted in an incentive
compensation of $64,140. However, this compensation reflected a decrease of
$26,476 from 1998, a year in which the Company's financial performance
exceeded the Company's annual business plan to a greater extent than in 1999.
During 1999, the Company's consolidated net operating revenues increased $7.1
million or 11% ($7.7 million or 13% for 1998 over 1997), operating cash flows
(operating income before depreciation and amortization) decreased $3.0 million
or 9% (an increase of $4.5 million or 16% for 1998 over 1997). The
Compensation Committee also considers the Chief Executive Officer's continued
leadership in advancing the Company's long-term strategic business goals.
Specifically, during 1999, the Company added 31,000 digital PCS customers
within the Virginia and West Virginia PCS Alliances, added nearly 38,000
Internet subscribers and added over 5,000 competitive business telephone
lines; commenced providing competitive local exchange services to businesses
in four markets; closed on five Internet acquisitions; and launched PCS
services in Clarksburg, Fairmont and Morgantown, West Virginia.
Compensation Committee
John N. Neff C. Wilson McNeely, III
John B. Mitchell, Sr. Robert S. Yeago, Jr.
- 9 -
<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.
OTHER EMPLOYEE ARRANGEMENTS
The Company has entered into management agreements with James S. Quarforth,
Carl A. Rosberg, David R. Maccarelli, J. William Brownlee, Michael B.
Moneymaker, Warren C. Catlett, Don Marie Persing and David E. Lowe. The
agreements are identical. Each was approved by the non-employee members of the
Board of Directors.
The agreements provide for certain benefits if the Company has a change in
control followed by (1) termination of the executive's employment without
cause prior to the fifth anniversary of the change of control date, or (2)
resignation of the executive for good reason prior to the fifth anniversary of
the change of control date (even if such resignation occurs after the term of
the agreement). "Cause" means that the executive has been convicted of a
felony that involves misappropriation or has willfully and continually failed
to perform a material duty or responsibility. "Good reason" means any of the
following: compensation is reduced; responsibilities are diminished;
relocation of more than 50 miles is required; deferred compensation is
withheld; benefits diminish following a change of control; receives direction
from the Board of Directors or an officer to commit an illegal or unethical
act; or receives direction from the Board of Directors or an officer to
refrain from acting and to do so is unethical or illegal.
The agreements for the named executive officers provide for two year terms.
At the end of such two year period, the term is extended automatically for an
additional year unless the Company provides written notice that the agreement
will not be extended. The current agreements are in effect until December 31,
2001.
If terminated within twenty-four months of a change in control, the
executive will receive severance benefits equal to two years' compensation. If
terminated after twenty-four months but prior to sixty months of a change in
control, the executive will receive severance benefits equal to one year's
compensation or the severance benefits available to employees, whichever is
greater. The severance pay due to the executive will be reduced by any cash
compensation paid to the executive by another employer after the executive's
termination.
The Company has amended its Executive Supplemental Retirement Plan to
provide that a participant who terminates his employment with the Company
prior to retirement but after (i) seven years service or (ii) a change in
control date with good reason, shall be entitled to benefits under the plan as
of the date he would have been eligible to retire. "Change of control" means
(i) any person acquires direct or indirect ownership of more than 30% of the
combined voting power of the Company; (ii) during any period of two
consecutive years, individuals who constitute the Board of Directors, and any
new Director whose election was approved by a majority of the Directors who
either (a) were Directors at the beginning of the period or (b) were so
elected, cease for any reason to constitute at least a majority of the Board
of Directors; (iii) the shareholders of the Company approve a merger or
consolidation of the Company with another entity and the merger or
consolidation is consummated, other than (a) a merger or consolidation where
the voting securities of the Company outstanding immediately prior to the
merger or consolidation continue to represent 50% of the combined voting power
of the Company or surviving entity or (b) a merger or consolidation effected
to recapitalize the Company where no person acquires more than 30% of the
combined voting power of the Company's then outstanding securities; or (iv)
the shareholders of the Company approve a plan of complete liquidation or an
agreement for the sale of substantially all of the assets of the Company and
such liquidation or sale is consummated.
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<PAGE>
The Company has also amended its 1997 Stock Compensation Plan to provide
that the options granted thereunder may become fully exercisable upon a change
in control (as defined above). Notwithstanding the foregoing, the
exercisability of the options will not accelerate if the Company determines
that the acceleration will have an adverse effect on the availability of
pooling of interest accounting.
RELATED TRANSACTIONS
In 1999, the Company awarded the construction project for a new $3.7 million
corporate facility to Nielsen Builders, Inc. through a competitive bidding
process. Construction of the new facility commenced in 2000. In 1998, 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, 1994 and
that all dividends were reinvested in their respective common stock issue in
the month paid.
[graph]
Fiscal Year Ended December 31
- -----------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- -----------------------------------------------------------------
CFW Communications Company 100 88 112 116 123 180
NASDAQ Composite Index 100 141 174 213 300 546
S&P Telecom Index 100 151 152 212 312 330
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<PAGE>
FINANCIAL STATEMENTS
The Company's 1999 Annual Report to Shareholders contains audited financial
statements for 1999, 1998 and 1997 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 1999 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, 1999. 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, 1999.
SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be considered for inclusion in the
Proxy Statement and Proxy for the 2001 Annual Meeting of Shareholders, such
proposals must be received by the Corporate Secretary of the Company by
November 20, 2000.
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 20, 2000
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<PAGE>
P R O X Y CFW COMMUNICATIONS COMPANY
Proxy Solicited by the Board of Directors
The undersigned hereby constitutes J.B. Mitchell, Sr. 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 25, 2000, 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 to vote
(Except as marked to the contrary for all nominees listed below
below)
(Instruction: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
P.H. Arnold W.W. Gibbs, V J.N. Neff
(Class III) (Class III) (Class III)
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)
<PAGE>
(continued from other side)
Dated: , 2000
_______________________________________
(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
III DIRECTORS AND APPROVAL OF THE
OTHER MATTERS TO BE CONSIDERED AT THE
MEETING.
