<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 [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
SKYTEL COMMUNICATIONS, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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SKYTEL COMMUNICATIONS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
----------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
SkyTel Communications, Inc., a Delaware corporation (the "Company"), will be
held at the Capital Club, 125 South Congress Street, Capital Towers Building,
19th Floor, Jackson, Mississippi 39201 on May 20, 1999 at 3:00 P.M., Central
Daylight Savings Time, for the following purposes:
(1) To elect three Directors to serve for a three-year term expiring at the
2002 Annual Meeting of Stockholders; and
(2) To consider and take action upon any other matters that may properly
come before the 1999 Annual Meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ Leonard G. Kriss
----------------------------------
Leonard G. Kriss
Secretary
Jackson, Mississippi
April 16, 1999
IF YOU CANNOT BE PRESENT IN PERSON, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY.
<PAGE>
SKYTEL COMMUNICATIONS, INC.
200 South Lamar Street
SkyTel Centre
South Building
Jackson, Mississippi 39201
----------------
PROXY STATEMENT
----------------
The enclosed proxy is solicited by the Board of Directors of SkyTel
Communications, Inc. (the "Company") in connection with the 1999 Annual
Meeting of Stockholders to be held at the Capital Club, 125 South Congress
Street, Capital Towers Building, 19th Floor, Jackson, Mississippi 39201 on May
20, 1999 at 3:00 P.M., Central Daylight Savings Time, or any adjournment
thereof. This Proxy Statement and the enclosed proxy card were first sent or
given to stockholders of the Company on or about April 15, 1999.
Holders of record of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), as of the close of business on April 9, 1999 will be
entitled to vote at the 1999 Annual Meeting or any adjournment thereof, and
each holder of record of Common Stock on such date will be entitled to one
vote for each share held. As of April 9, 1999, there were 60,080,963 shares of
the Company's Common Stock outstanding.
Shares of Common Stock cannot be voted at the 1999 Annual Meeting unless the
beneficial owner is present or represented by proxy. Any stockholder giving a
proxy may revoke it at any time before it is voted by giving written notice of
revocation to the Company, c/o Leonard G. Kriss, Senior Vice President,
General Counsel and Secretary, at the address shown above, or by executing and
delivering prior to the 1999 Annual Meeting a proxy bearing a later date. Any
stockholder who attends the 1999 Annual Meeting may revoke the proxy by voting
his or her shares of Common Stock in person.
All properly executed proxies, unless previously revoked, will be voted at
the 1999 Annual Meeting or any adjournment thereof in accordance with the
directions given. With respect to the election of three directors to serve
until the 2002 Annual Meeting, stockholders of the Company voting by proxy may
vote in favor of all nominees, may withhold their vote for all nominees or may
withhold their vote as to any individual nominee. If no specific instructions
are given, shares of Common Stock represented by a properly executed proxy
will be voted FOR all nominees for election as directors, and in the
discretion of the persons named therein as proxies on all other matters that
may be brought before the 1999 Annual Meeting or any adjournment thereof.
A majority of the outstanding shares of Common Stock must be represented in
person or by proxy at the 1999 Annual Meeting in order to constitute a quorum
for the transaction of business. Abstentions and non-votes will be counted for
purposes of determining the existence of a quorum at the 1999 Annual Meeting.
The three nominees for election as directors will be elected by the
affirmative vote of a plurality of the shares of Common Stock present in
person or by proxy and actually voting at the 1999 Annual Meeting. Abstentions
and non-votes will have no effect on the outcome of the voting to elect the
directors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as otherwise set forth in the footnotes hereto, the following table
sets forth as of February 1, 1999 certain information with respect to all
stockholders known by the Company to be the beneficial owners of more than 5%
of the Company's Common Stock, the only class of voting securities currently
outstanding, as well as information with respect to the Company's Common Stock
owned beneficially by each director of the Company, each executive officer
named in the Summary Compensation Table on page 8, and by all directors and
executive officers of the Company as a group. Certain information set forth in
the table is based upon information contained in filings made by such
beneficial owners with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
<TABLE>
<CAPTION>
Amount of
Name and Address of Beneficial Approximate
Beneficial Owner Ownership(1) Percent of Class
------------------- ----------- ----------------
<S> <C> <C>
Capital Research and Management Company and
SMALLCAP World Fund, Inc....................... 7,772,780(2) 12.89%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp....................................... 5,187,912(3) 8.65%
82 Devonshire Street
Boston, MA 02109
Microsoft Corporation.......................... 3,403,600 5.67%
One Microsoft Way, Building 8
Redmond, WA 98052
John N. Palmer................................. 1,705,137(4) 2.81%
John T. Stupka................................. 322,205(5) *
Haley Barbour.................................. 55,341(6) *
Thomas G. Barksdale............................ 52,301(7) *
Jai P. Bhagat.................................. 588,440(8) *
Gregory B. Maffei.............................. 56,666(9) *
R. Faser Triplett.............................. 390,106(10) *
R. Gerald Turner............................... 58,366(11) *
E. Lee Walker.................................. 102,301(12) *
John E. Welsh III.............................. 496,715(13) *
Robert Kaiser.................................. 116,473(14) *
Leonard G. Kriss............................... 176,250(15) *
All directors and executive officers of the
Company as a Group
(15 persons).................................. 4,309,229(16) 6.91%
</TABLE>
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* Less than 1%
(1) Under the rules of the Commission, a person is deemed to be a beneficial
owner of a security if such person has or shares the power to vote or
direct the voting of such security or the power to dispose or direct the
disposition of such security. A person is also deemed to be a beneficial
owner of a security if that person has the right to acquire beneficial
ownership within 60 days. Accordingly, more than one person may be deemed
to be the beneficial owner of the same securities. Unless otherwise
indicated by footnote, the beneficial owners named in the table have sole
voting and dispositive power with respect to the shares of Common Stock
beneficially owned.
(2) The information set forth in the table is based on an amended Schedule
13G dated April 9, 1999 filed jointly by Capital Research and Management
Company ("CRMC") and SMALLCAP World Fund, Inc. ("SWF"). CRMC, an
investment adviser, is the beneficial owner of 7,772,780 shares of
Common Stock but claims no dispositive power and no voting power with
respect to such shares of Common Stock. SWF, an investment company
advised by CRMC, is the beneficial owner of 3,895,000 shares of Common
Stock and claims sole voting power but no dispositive power with respect
to such shares of Common Stock.
2
<PAGE>
(3) The information set forth in the table is based on an amended Schedule
13G dated March 10, 1999 filed jointly by FMR Corp. ("FMR") and its
affiliates, Fidelity Management and Research Company ("Fidelity"), Edward
C. Johnson III ("ECJ") and Abigail P. Johnson ("APJ"). Fidelity, an
investment adviser and wholly-owned subsidiary of FMR, is the beneficial
owner of 4,629,934 shares of Common Stock. ECJ, Chairman of FMR, and FMR,
through its control of Fidelity and the funds operated by Fidelity (the
"Funds"), each has sole power to dispose of the 4,629,934 shares of
Common Stock owned by the Funds. Neither ECJ nor FMR has sole power to
vote or direct the voting of the shares of Common Stock owned by the
Funds, which power is carried out under written guidelines established by
the Funds' Board of Trustees. Fidelity Management Trust Company ("FMTC"),
a wholly-owned subsidiary or FMR, is the beneficial owner of 557,977
shares of Common Stock as a result of its serving as an investment
manager of certain institutional accounts. ECJ and FMR, through their
control of FMTC, each has sole dispositive power with respect to such
557,977 shares of Common Stock beneficially owned by FMTC, sole power to
vote or to direct the voting of 214,678 of such shares of Common Stock,
and no power to vote or to direct the voting of 343,299 of such shares of
Common Stock. Members of ECJ's family and trusts for their benefit are
the predominant owners of the shares of Class B Common Stock of FMR,
representing approximately 49% of the voting power of FMR. ECJ owns 12%
and APJ owns 24.5% of the aggregate outstanding voting stock of FMR.
Accordingly, members of ECJ's family may be deemed, under the Investment
Company Act of 1940, as amended, to form a controlling group with respect
to FMR.
(4) Includes 586,250 shares of Common Stock obtainable as of February 1,
1999 or within 60 days thereof by Mr. Palmer upon the exercise of
options.
(5) Includes 275,000 shares of Common Stock obtainable as of February 1,
1999 or within 60 days thereof by Mr. Stupka upon the exercise of
options and 955 shares of Common Stock held for Mr. Stupka in the
Company's Section 401(k) Employee Retirement Plan (the "Section 401(k)
Plan").
(6) Includes 100 shares of Common Stock owned by Mr. Barbour's wife, as to
which Mr. Barbour may be deemed to share dispositive power, and 2,301
shares of Common Stock obtainable as of February 1, 1999 or within 60
days thereof by Mr. Barbour upon the exercise of options.
(7) Includes 2,301 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Mr. Barksdale upon the exercise of options.
(8) Includes 331,250 shares of Common Stock obtainable as of February 1,
1999 or within 60 days thereof by Mr. Bhagat upon the exercise of
options.
(9) Includes 51,666 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Mr. Maffei upon the exercise of options.
(10) Includes 72,301 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Dr. Triplett upon the exercise of options.
Also includes 96,322 shares of Common Stock owned by the Mississippi
Asthma and Allergy Clinic, P.A. Trust, as to which Dr. Triplett may be
deemed to share voting power, and 10,200 shares of Common Stock owned by
Dr. Triplett's wife, as to which Dr. Triplett may be deemed to share
dispositive power. The amount in the table also includes 30,983 shares
of Common Stock beneficially owned by OMC Realty Corporation Profit
Sharing Plan and Trust, for which Dr. Triplett serves as a Trustee and
as to which he may be deemed to share voting and dispositive power.
(11) Includes 51,666 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Dr. Turner upon the exercise of options and
200 shares owned by Dr. Turner's daughter, as to which Dr. Turner may be
deemed to have sole voting and dispositive power.
(12) Includes 2,301 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Mr. Walker upon the exercise of options.
(13) Includes 456,250 shares of Common Stock obtainable as of February 1,
1999 or within 60 days thereof by Mr. Welsh upon the exercise of options
and 465 shares of Common Stock held for Mr. Welsh in the Section 401(k)
Plan.
(14) Includes 95,000 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Mr. Kaiser upon the exercise of options,
7,743 shares of Common Stock held for Mr. Kaiser in the Section 401(k)
Plan and 230 shares owned by Mr. Kaiser's children as to which Mr.
Kaiser may be deemed to have sole voting and dispositive power.
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<PAGE>
(15) Reflects 176,250 shares of Common Stock obtainable as of February 1, 1999
or within 60 days thereof by Mr. Kriss upon the exercise of options.
(16) Includes 2,233,286 shares of Common Stock obtainable as of February 1,
1999 or within 60 days thereof by all current directors and executive
officers of the Company upon the exercise of options and 10,491 shares
of Common Stock held for certain executive officers of the Company in
the Section 401(k) Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who beneficially own more than 10% of the
Company's Common Stock to file with the Commission initial reports of
beneficial ownership and reports of changes in beneficial ownership of such
Common Stock. Directors, executive officers and greater than 10% beneficial
owners are required by Commission rules to furnish the Company with copies of
all such reports. To the Company's knowledge, based solely upon a review of
the copies of such reports furnished to the Company and written
representations from the Company's directors and executive officers that no
other reports were required, all Section 16(a) filing requirements applicable
to the Company's directors and executive officers were complied with during
the year ended December 31, 1998, except that Mr. Haley Barbour, a director,
filed a Statement of Changes in Beneficial Ownership on Form 4 relating to the
acquisition of 350 shares of Common Stock of the Company by the Barbour,
Griffith & Rodgers Profit Sharing Plan, for which he serves as Trustee,
approximately one month late.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation Committee Report on Executive Compensation
Notwithstanding anything to the contrary set forth in any previous filings
made by the Company under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following report and the performance graph
on page 15 shall not be incorporated by reference into any of such filings.
The Compensation Committee of the Board of Directors of the Company has
furnished the following report on executive compensation.
Overview and Objectives. The Company's executive compensation program is
administered by the Compensation Committee of the Board of Directors which is
comprised of Mr. E. Lee Walker, Chairman, Dr. R. Faser Triplett and Dr. R.
Gerald Turner, none of whom serves as an officer or employee of the Company.
The Compensation Committee has been delegated the authority by the Board of
Directors to make determinations regarding the compensation of the Company's
executive officers and to review the compensation paid to other management
personnel. The Compensation Committee has also been delegated responsibility
for administering the Company's compensation plans, including the Short-Term
Management Incentive Plan, the Long-Term Management Incentive Plan and the
1988 and 1990 Executive Incentive Plans. In discharging its responsibilities
generally and in administering the Company's compensation plans in particular,
the Compensation Committee's overall objectives are to (i) attract and retain
the best possible executive personnel, (ii) motivate executives to achieve the
Company's performance goals and strategic objectives, and (iii) link
management and stockholder interests through appropriate equity-based plans.
Compensation Structure. The key elements of the Company's executive
compensation program generally consist of base salary, annual cash bonus,
long-term incentive compensation and stock options.
Base Salary. Base salaries are initially determined primarily by evaluating
the responsibilities of the position held by and the experience of each
executive officer and, in certain cases, after consultation with executive
recruiting firms or outside compensation consultants. The annual base salaries
of certain of the Company's executive officers (including those executive
officers named in the Summary Compensation Table on page 7 other than Messrs.
Kriss and Welsh) are the subject of employment agreements which were
originally established by negotiation between the executive and the Company.
These employment agreements provide for annual cost of living adjustments to
the base salary, in some cases after fixed increases during the initial years
of
4
<PAGE>
such employment agreements. The Compensation Committee also has the discretion
to approve base salary increases in lieu of the cost of living adjustment
provided in such employment agreements, as well as increases in the annual
base salaries of executive officers who are not subject to employment
agreements, based upon an assessment of the responsibilities and performance
of such executive officers.
Short-Term Management Incentive Plan. The executive officers of the Company
and other management personnel of the Company and its subsidiaries participate
in the Company's Short-Term Management Incentive Plan (the "STIP"). The STIP
generally provides for the payment of annual cash bonuses to executive
officers of the Company and other management personnel selected for
participation by the Compensation Committee based upon the achievement of
specific corporate performance criteria. The Compensation Committee is also
authorized to establish personal performance objectives for each participant
in the STIP, as well as criteria based on the performance of a discrete
business unit for which the participant has responsibility. Awards under the
STIP are not generally earned unless all corporate performance criteria are
achieved at the levels established by the Compensation Committee. The maximum
amount of awards for executive officers under the STIP range from 50% to 75%
of base salary, and the awards in any year are based upon the level of
achievement of the lowest achieved performance criterion in such year. The
Compensation Committee may also authorize discretionary cash bonuses outside
of the STIP to officers and employees of the Company and its subsidiaries,
including officers and employees selected to participate in the STIP. For the
year ended December 31, 1998, the Compensation Committee adopted performance
criteria that required the Company to achieve certain levels of revenue
growth, operating cash flow, free cash flow and domestic investment per
subscriber. In addition, the Compensation Committee required as a condition to
any awards under the STIP for the year ended December 31, 1998 that the
Company record a predetermined level of net unit additions during such year.
All of such performance criteria were exceeded for the year ended December 31,
1998, with the exception of the condition requiring a predetermined level of
net unit additions. As a result, participants under the STIP were not entitled
to awards thereunder for the year ended December 31, 1998. However, in light
of the operating results of the Company for the year ended December 31, 1998,
the Compensation Committee determined to grant discretionary bonuses to the
executive officers listed in the Summary Compensation Table on page 7
(excluding the President and Chief Executive Officer) as well as certain other
participants in the STIP which were generally 60% of the aggregate amount of
the awards that would have been earned under the STIP for such year had all
the performance criteria been met.
Long-Term Management Incentive Plan. The Company's Long-Term Management
Incentive Plan (the "LTIP") seeks to enhance corporate performance and,
ultimately, stockholder value, by linking compensation for certain senior
management personnel participating in the LTIP to specific performance
criteria based on the total return to stockholders on the Company's Common
Stock measured over a three-year performance cycle. The Compensation Committee
believes that the LTIP aligns the interests of senior management with those of
the Company's stockholders and will enhance stockholder value by focusing
senior management on long-term strategic objectives. Awards under the LTIP are
earned if (a) the Company's total return to stockholders ("TRS") over the
performance cycle exceeds the rate of return on a three-year United States
Treasury Bill over the performance cycle, assuming such United States Treasury
Bill had been purchased on the first day of the performance cycle, and (b) the
Company's TRS meets or exceeds certain levels of the TRS for a group of
companies in a telecommunications industry index selected by SIC code. The
stated amount of awards under the LTIP at the threshold, target and maximum
levels of achievement are calculated by multiplying a participant's average
base salary (excluding bonuses) over the three-year performance cycle by 25%,
50% and 100%, respectively. The awards, if earned, are payable in cash, shares
of Common Stock or options to purchase Common Stock, or any combination
thereof, as the Compensation Committee, in its discretion, determines at the
end of each performance cycle. No awards were earned under the LTIP for the
1994-1996, the 1995-1997 or the 1996-1998 performance cycles.
Stock Options. The Compensation Committee believes that equity ownership
through stock-based compensation programs aligns the interests of management
with the interests of the Company's stockholders. As a result, stock options
have been awarded pursuant to the 1988 and 1990 Executive Incentive Plans from
time to
5
<PAGE>
time at the discretion of the Compensation Committee to a wide range of
management personnel of the Company, including executive officers, as a means
of attracting and retaining personnel, rewarding achievement and providing an
incentive for future performance. The Compensation Committee has from time to
time granted stock options that are subject to the achievement of specified
corporate performance objectives and deferred vesting.
Chief Executive Officer Compensation. The employment agreement with Mr. John
T. Stupka, President and Chief Executive Officer of the Company, which was
effective as of August 1, 1996, originally provided for an annual base salary
of $400,000, subject to an annual cost of living adjustment or such other
increase as determined by the Compensation Committee. Mr. Stupka's original
base salary was determined by the Compensation Committee after consultation
with an executive recruiting firm, and took into account the base salaries of
chief executive officers of other companies in the telecommunications
industry. In 1998, the Compensation Committee approved a 45.6% increase to Mr.
Stupka's annual base salary. The Compensation Committee awarded Mr. Stupka
this increase based on the Company's improved operating results in 1997 and
took into account the annual base salaries paid to chief executive officers of
other companies in the telecommunications industry. Mr. Stupka also
participated in the STIP and the LTIP on the same general terms as other
executive officers of the Company. Mr. Stupka was not entitled to receive an
award under the STIP for the year ended December 31, 1998 or an award under
the LTIP for the 1994-1996, or 1995-1997 or 1996-1998 performance cycles.
However, in light of the improved operating results of the Company for the
year ended December 31, 1998, the Compensation Committee determined to grant a
discretionary bonus to Mr. Stupka in an amount which was approximately 85% of
the amount of the award that would have been earned by Mr. Stupka under the
STIP for such year had all the performance criteria been met. In addition, in
March 1998 Mr. Stupka was granted options to purchase 50,000 shares of the
Company's Common Stock pursuant to the 1990 Executive Incentive Plan at an
exercise price of $22.63 per share, the closing price for the Common Stock on
the date of grant. The options granted to Mr. Stupka become exercisable over a
two-year period, with 50% of the options becoming exercisable on March 5, 1999
and 50% becoming exercisable on March 5, 2000.
Internal Revenue Code Section 162(m). The Compensation Committee is mindful
of the requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), which limits the deductibility of certain executive
compensation in excess of $1.0 million, but is also cognizant of the need to
have the flexibility to exercise its judgment and discretion based on the
facts and circumstances then existing so that compensation decisions are in
the best interests of the Company and are fair to the affected executives.
Since some types of compensation payments and their deductibility depend upon
the timing of action by the executive (such as the exercise of stock options)
and because interpretations of and changes in the tax laws as well as other
factors beyond the Compensation Committee's control may also affect the
deductibility of compensation, in certain instances a portion of the
compensation paid by the Company may not meet the deductibility requirements
of Section 162(m).
Conclusion. The Compensation Committee believes that the compensation
program described above aligns the interests of the Company's executive
officers, managers and other key employees with the interests of the Company's
stockholders.
Respectfully submitted,
E. Lee Walker, Chairman
R. Faser Triplett, M.D.
R. Gerald Turner
6
<PAGE>
Summary of Cash and Certain Other Compensation
The following table sets forth for the years ended December 31, 1998, 1997
and 1996 the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to the
Chief Executive Officer and each of the five other most highly compensated
executive officers of the Company in all capacities in which they served.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------
Annual Compensation Awards Payouts
------------------------------- ----------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted All Other
Compen- Stock Securities LTIP Compen-
Name and Salary Bonus sation Award(s) Underlying Payouts sation
Principal Position Year ($) ($)(1) ($)(2) ($) Options(#) ($) ($)(3)
------------------ ---- -------- -------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John N. Palmer.......... 1998 $572,500(4) $100,000 -- $ -- -- -- $ 30,738
Chairman of the Board 1997 590,425 150,000 -- -- -- -- --
1996 578,007 -- -- -- 15,000 -- 8,352
John T. Stupka.......... 1998 572,462(5) 382,000 -- -- 50,000 -- 2,613
President and Chief 1997 408,769 247,200 -- -- -- -- 40,265
Executive Officer 1996 166,667(6) -- -- 750,000(7) 500,000 -- 41,000
Jai P. Bhagat........... 1998 397,053 95,000 -- -- -- -- 1,573
Vice Chairman 1997 375,848 110,000 -- -- 20,000 -- 2,518
1996 368,007 -- -- -- 15,000 -- 11,146
John E. Welsh III....... 1998 394,616 95,000 -- -- -- -- 1,234
Vice Chairman 1997 376,635 100,000 -- -- 20,000 -- 1,240
1996 367,500 -- -- -- 65,000 -- 2,713
Robert Kaiser........... 1998 252,885 160,000 -- -- -- -- 10,917
Senior Vice President-- 1997 222,444 210,000(8) -- -- 20,000 -- 108,124
Finance and Chief 1996 72,808(9) 20,000 -- 321,875(7) 150,000 -- 5,979
Financial Officer
Leonard G. Kriss........ 1998 317,964 131,000 -- -- -- -- 513
Senior Vice President, 1997 300,002 100,000 -- -- 20,000 -- 4,167
General Counsel and 1996 277,841 20,000 -- -- 65,000 -- --
Secretary
</TABLE>
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(1) In March 1999, the Compensation Committee awarded discretionary bonuses to
the participants in the STIP, including the executive officers listed in
the Summary Compensation Table, for services rendered during the year
ended December 31, 1998. See "Compensation Committee Report on Executive
Compensation--Short-Term Management Incentive Plan."
(2) The amount of "Other Annual Compensation" for 1998, 1997 and 1996 for each
of the executive officers named in the Summary Compensation Table, if any,
did not meet the threshold reporting requirements under the rules of the
Commission.
(3) "All Other Compensation" includes the Company's contribution in the amount
of $1,000 on behalf of certain executive officers to the Section 401(k)
Plan and premiums paid by the Company on behalf of certain executive
officers for life insurance. The term "All Other Compensation" also
includes (a) $32,512 and $40,000 paid to Mr. Stupka in 1997 and 1996,
respectively, in connection with the relocation of his residence to
Jackson, Mississippi, and (b) $9,908 and $91,979 paid to Mr. Kaiser in
1998 and 1997, respectively, in connection with the relocation of his
residence to Jackson, Mississippi. In addition, "All
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<PAGE>
Other Compensation" includes (a) approximately $1,009 of interest imputed
to Mr. Kaiser in 1998, (b) approximately $1,603 and $7,595 of interest
imputed to Messrs. Stupka and Kaiser, respectively, in 1997, and (c) $5,983
and $2,946 of interest imputed to Messrs. Bhagat and Kaiser, respectively,
in 1996, in each case with respect to unsecured, interest-free loans made
by the Company in connection with the relocation of their residences. The
loans made to Messrs. Stupka, Kaiser and Bhagat were repaid in full in
August 1997, February 1998 and April 1996, respectively.
(4) At Mr. Palmer's request, the Company agreed to amend his employment
agreement to reduce his annual base salary by approximately 50%, effective
October 16, 1998.
(5) The Compensation Committee increased Mr. Stupka's base compensation from
$412,000 to $600,000, effective March 5, 1998.
(6) Reflects base salary paid from August 1, 1996, the date Mr. Stupka assumed
the duties of President and Chief Executive Officer of the Company, to
December 31, 1996.
(7) Reflects the value of 62,500 shares and 25,000 shares of Common Stock
(determined, as required by the rules of the Commission, by multiplying
the number of shares of Common Stock awarded by the closing market price
on July 17, 1996 and August 15, 1996, the respective dates of award)
awarded to Messrs. Stupka and Kaiser in connection with their employment
as President and Chief Executive Officer and Senior Vice President-Finance
and Chief Financial Officer of the Company, respectively. Such shares of
Common Stock vest at the rate of 25% on each of the first, second, third
and fourth anniversaries of the date of grant.
(8) Includes a $50,000 signing bonus paid to Mr. Kaiser in 1997 and a $50,000
special incentive bonus awarded to Mr. Kaiser for services rendered in
1996 but paid in 1997, in addition to the discretionary bonus awarded to
Mr. Kaiser with respect to services rendered during the year ended
December 31, 1997.
(9) Reflects base salary paid from August 15, 1996, the date Mr. Kaiser
assumed the duties of Senior Vice President-Finance and Chief Financial
Officer of the Company, to December 31, 1996.
Stock Options
The following table sets forth certain information with respect to stock
options granted during the year ended December 31, 1998 pursuant to the
Company's 1990 Executive Incentive Plan to the executive officers of the
Company named in the Summary Compensation Table on page 7.
Option Grants in 1998
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of Securities % of Total Options Exercise or Grant Date
Underlying Options Granted to Base Expiration Present
Name Granted (#)(1) Employees in 1998 Price ($/sh) Date Value(2)(3)
---- -------------------- ------------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
John N. Palmer.......... -- N/A $ N/A N/A $ N/A
John T. Stupka.......... 50,000 13.6% 22.63 3/5/08 639,000
Jai P. Bhagat........... -- N/A N/A N/A N/A
John E. Welsh III....... -- N/A N/A N/A N/A
Robert Kaiser........... -- N/A N/A N/A N/A
Leonard G. Kriss........ -- N/A N/A N/A N/A
</TABLE>
- --------
(1) The stock options reflected in this table vest as to 50% of the shares of
Common Stock covered thereby on March 5, 1999 and 50% on March 5, 2000.
The exercise price of such stock options is equal to the closing price for
the Common Stock on the date of grant. See "Change in Control
Arrangements" for a description of the vesting provisions of stock options
granted under the 1990 Executive Incentive Plan in the event of a change
in control.
(2) The actual value, if any, that an executive officer may ultimately realize
upon the exercise of stock options will depend on the excess of the stock
price over the exercise price on the date the stock option is exercised.
Therefore, there can be no assurance that the value realized by Mr. Stupka
upon actual exercise of the stock options granted in 1998 will be at or
near the Grant Date Present Value indicated in the table.
8
<PAGE>
(3) As required by the Commission's rules regarding the disclosure of
executive compensation, the Company has used the Black-Scholes option
pricing model to determine the Grant Date Present Value. The Company does
not advocate or necessarily agree that the Black-Scholes option pricing
model can determine with reasonable accuracy the value of such stock
options. To the extent that the Grant Date Present Value of the stock
options determined in accordance with the Black-Scholes option pricing
model is achieved, the stockholders of the Company will also have
benefited from an increased stock price.
Option Exercises and Holdings
The following table sets forth certain information with respect to stock
options exercised in 1998 and unexercised stock options held by the executive
officers of the Company named in the Summary Compensation Table on page 7 as
of December 31, 1998.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Acquired Value Underlying Unexercised In-the-Money Options
Name on Exercise (#) Realized ($) Options at FY-End (#) at FY-End ($)(1)
- ------------------------ --------------- ------------ ------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John N. Palmer.......... 800,000(2) $14,011,992 582,500 7,500 $7,653,438 $ 53,438
John T. Stupka.......... -- -- 250,000 300,000 2,531,250 2,531,250
Jai P. Bhagat........... 150,000(2) 2,006,250 307,500 27,500 2,092,188 377,138
John E. Welsh III....... -- -- 432,500 52,500 2,390,000 555,263
Robert Kaiser........... -- -- 75,000 95,000 759,375 1,083,075
Leonard G. Kriss........ -- -- 152,500 52,500 835,313 555,263
</TABLE>
- --------
(1) The amounts set forth under this caption represent the difference between
the closing price for the Common Stock on The Nasdaq Stock Market on
December 31, 1998 ($22.125 per share) and the exercise price of in-the-
money stock options.
(2) The options exercised by Messrs. Palmer and Bhagat in 1998 were scheduled
to terminate by their terms in October 1998.
Long-Term Incentive Plan
The following table sets forth information concerning awards granted during
the year ended December 31, 1998 under the Company's LTIP to the executive
officers of the Company named in the Summary Compensation Table on page 7. The
actual payout of any awards reflected in the table below is subject to the
achievement of certain performance criteria based on the total return to
stockholders on the Company's Common Stock measured over the three-year
performance cycle commencing January 1, 1998 and ending December 31, 2000. No
awards were earned pursuant to the LTIP by any executive officer in respect of
the 1996-1998 performance cycle. See "Compensation Committee Report on
Executive Compensation--Long-Term Management Incentive Plan."
Long-Term Incentive Plan--Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Estimated Future
Payments(1)
---------------------------
(a) (b) (c) (d) (e) (f)
Number of Performance or
Shares Units Other Period
or Other Until Maturation Threshold Target Maximum
Name Rights (#) or Payout ($ or #) ($ or #) ($ or #)
---- ------------ ---------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John N. Palmer....... -- (2) 1998-2000 $143,125 $286,250 $572,500
John T. Stupka....... -- (2) 1998-2000 143,115 286,231 572,462
Jai P. Bhagat........ -- (2) 1998-2000 99,263 198,527 397,053
John E. Welsh III.... -- (2) 1998-2000 98,654 197,308 394,616
Robert Kaiser........ -- (2) 1998-2000 63,221 126,443 252,885
Leonard G. Kriss..... -- (2) 1998-2000 79,491 158,982 317,964
</TABLE>
- --------
9
<PAGE>
(1) The Estimated Future Payments at the threshold, target and maximum levels
represent the stated amount of awards under the LTIP (the "Stated Amount")
which are calculated by multiplying 25%, 50% and 100%, respectively, by
the participant's average annual cash compensation, excluding bonuses,
over the performance cycle. For purposes of this table, it has been
assumed that average annual cash compensation for each executive officer
named in the table equals cash compensation, excluding bonuses, paid to
such executive officer in the last fiscal year. Awards under the LTIP for
the 1998-2000 performance cycle will be earned if (a) the Company's TRS
over the performance cycle exceeds the rate of return on a three-year
United States Treasury Bill over the performance cycle assuming such
United States Treasury Bill had been purchased on the first day of the
performance cycle, and (b) the Company's TRS meets or exceeds certain
levels of the TRS of a group of companies included in the
telecommunications industry group ("TII Group") that includes all
companies (other than the Company) listed in SIC #4812 (Radio Telephone
Communications). The target amount will be earned if the Company's TRS
during the 1997-1999 performance cycle equals or exceeds the 75th
percentile of the TRS for the same period of the TII Group. The threshold
and maximum amounts will be earned if the Company's TRS for such
performance cycle equals or exceeds the 50th and 90th percentiles of the
TRS of the TII Group for the same period, respectively. Awards will be
interpolated to reflect the incremental attainment of performance criteria
between the threshold, target and maximum levels. These award levels may
be modified, under certain circumstances, as the Compensation Committee
deems appropriate and advisable.
(2) If earned, awards will be payable at the end of the 1998-2000 performance
cycle in cash, shares of Common Stock and/or stock options, as determined
by the Compensation Committee. The cash and Common Stock components of an
award, if any, will be paid in three equal annual installments beginning
no later than April 15 of the year following the end of the performance
cycle for which the award was achieved. The stock option component of an
award, if any, will be deemed granted as of April 15 of the year following
the end of the performance cycle for which the award is made and will vest
as to 100% of the shares of Common Stock covered thereby one year after
the date of grant. The Common Stock component of an award will vest in
full when paid. If applicable, the number of shares of Common Stock
subject to options constituting the stock option component of an award
shall be determined by dividing that percentage of the Stated Amount of
such award payable in options, as determined by the Compensation
Committee, by the average closing price of the Common Stock for the last
45 trading days of the last calendar year (the "Average Closing Price") in
the performance cycle for which the award is made. The exercise price of
such options shall be the Average Closing Price. Accordingly, such options
can only be profitably exercised to the extent the market price of the
Common Stock subsequent to the vesting of the options exceeds the Average
Closing Price. If applicable, the number of shares of Common Stock
constituting the Common Stock component of an award shall be determined by
dividing that percentage of the Stated Amount of the award payable in
shares of Common Stock by the Average Closing Price. See also "Change in
Control Arrangements."
Compensation of Directors
Directors who are officers of the Company receive no additional compensation
for serving on the Board of Directors. Directors who are not officers of the
Company receive an annual fee of $10,000 and an additional fee of $600 for
each Board and committee meeting attended. In addition, prior to May 1998,
each of the directors who were not officers of the Company received options to
purchase shares of the Company's Common Stock at the time of their election to
the Board of Directors having an exercise price equal to the closing price for
the Common Stock as of the date of such election. Mr. Walker and Dr. Triplett
were each granted options to purchase 70,000 shares of Common Stock at
exercise prices of $2.25 and $5.25 per share, respectively, the fair market
value of the Company's Common Stock on the date of their initial election as
directors in 1988 and 1989, respectively. In addition, Messrs. Barbour,
Maffei, Turner and Welsh were each granted options to purchase 50,000 shares
of Common Stock at exercise prices of $9.50, $23.375, $12.375 and $9.50 per
share, respectively, the fair market value of the Company's Common Stock on
the date of their initial election as directors in 1992, 1995, 1996 and 1992,
respectively. Mr. Barksdale was granted options to purchase 95,000 shares of
the Company's Common Stock having an exercise price of $2.25 per share in 1988
in connection with his employment by the Company.
10
<PAGE>
On May 21, 1998, the stockholders of the Company approved the 1998 Outside
Directors' Stock Option Plan (the "Outside Directors' Plan"). The Outside
Directors' Plan provides each director who is not an officer or employee of
the Company or its subsidiaries (a "Non-Employee Director") with (i) a grant
of non-qualified options to purchase 10,000 shares of Common Stock upon his or
her initial election as a director of the Company ("Initial Options"), (ii) an
annual grant of non-qualified options to purchase shares of Common Stock, with
the number of shares of Common Stock based upon achievement of certain
performance objectives ("Annual Formula Options"), and (iii) the right to
receive non-qualified options to purchase shares of Common Stock in lieu of
receiving annual directors' fees in cash ("Options in Lieu of Annual
Directors' Fees"). The options granted under the Outside Directors' Plan are
subject to vesting requirements as described below. However, in the event of a
"change in control" of the Company (as defined in the Outside Directors'
Plan), all options granted under the Outside Directors' Plan will become fully
vested and immediately exercisable. The Outside Directors' Plan is
administered by a Committee comprised of Messrs. Palmer and Stupka
(the "Committee").
Initial Options. Each person who first becomes a Non-Employee Director of
the Company after March 5, 1998 will be entitled to receive non-qualified
options to purchase 10,000 shares of Common Stock as of the date such
individual first becomes a director. The per-share exercise price for the
Initial Options will be the average of the closing prices for the Common Stock
on The Nasdaq Stock Market for the sixty (60) trading days prior to the date
of grant. Unless otherwise determined by the Committee, Initial Options vest
as to 33 1/3% of the shares of Common Stock subject thereto on each of the
first, second and third anniversaries of the date of grant and will be fully
vested after three years of consecutive service as a director.
Annual Formula Options. Commencing in 1998 for the Non-Employee Directors
currently serving on the Board of Directors and in the calendar year following
the initial election of any new Non-Employee Director, each Non-Employee
Director will be eligible to receive non-qualified options to purchase shares
of Common Stock each year. The date of grant for the Annual Formula Options
will be the tenth business day following the issuance of the earnings press
release for the preceding calendar year, and the per-share exercise price will
be the average of the closing prices for the Common Stock on The Nasdaq Stock
Market for the sixty (60) trading days prior to the date of grant. Unless
another option award formula is selected by the Committee, the number of
shares of Common Stock subject to Annual Formula Options will be determined as
follows:
(a) No Annual Formula Options will be granted unless the Company's TRS over
the immediately preceding calendar year exceeds the rate of return on a
one-year United States Treasury Bill over such calendar year, assuming that
such United States Treasury Bill had been purchased on the first day of
such calendar year; and
(b) If the Company's TRS also meets or exceeds certain levels of TRS set
forth below for a group of companies in a telecommunications index selected
by SIC code or such other group of companies selected by the Committee
("TRS Achievement") ranked by percentile on the basis of TRS Achievement,
each Non-Employee Director will receive non-qualified options to purchase
shares of Common Stock as follows:
<TABLE>
<CAPTION>
Number of Shares
Subject to
Percentile of Annual
TRS Achievement Formula Options
--------------- ----------------
<S> <C>
Less than 40th........................ 1,000
40th to 60th.......................... 3,000
Greater than 60th..................... 5,000
</TABLE>
Unless otherwise determined by the Committee, each Annual Formula Option
will vest as to 33 1/3% of the shares of Common Stock subject to such options
on each of the first, second and third anniversaries of the date of grant and
will be fully vested after three years of consecutive service.
Options in Lieu of Annual Directors' Fees. Each Non-Employee Director may
elect to receive non-qualified options in lieu of receiving annual directors'
fees in cash. Such election must be for the full amount of the annual
directors' fees for the year. The per-share exercise price of Common Stock
subject to such options will be the closing price for the Common Stock on the
last business day of the year preceding the year for which the election is
made. The number of shares of Common Stock subject to such options will be
determined by
11
<PAGE>
dividing the annual directors' fees by the value of an option to purchase one
share of Common Stock as determined by the Committee pursuant to the Black-
Scholes option pricing model. Unless otherwise provided by the Committee,
Options in Lieu of Annual Directors' Fees will be exercisable no earlier than
December 31 following the date of grant of such option; provided, however,
that Options in Lieu of Annual Directors' Fees are subject to certain
forfeiture provisions if a director fails to attend at least 80% of the
regularly scheduled meetings of the Board of Directors of the Company during
the calendar year for which the option was granted.
Pursuant to the Outside Directors' Plan, in 1998 Messrs. Barbour, Barksdale,
Maffei and Walker and Drs. Triplett and Turner were each granted Annual
Formula Options to purchase 5,000 shares of Common Stock at an exercise price
of $21.753 per share, and Messrs. Barbour, Barksdale and Walker and Dr.
Triplett each elected to receive Options in Lieu of Annual Directors' Fees to
purchase 635 shares of Common Stock at an exercise price of $22.98 per for
1998.
Employment Agreements
The Company has entered into an employment agreement with each of Messrs.
Palmer, Stupka, Bhagat and Kaiser. The employment agreements for Messrs.
Palmer, Stupka, Bhagat and Kaiser expire on April 3, 2004, July 31, 2001,
April 3, 2002 and August 14, 1999, respectively. The employment agreements
described above provide for annual cost of living adjustments, in some cases
after fixed increases during the initial years of such employment agreements.
Such agreements also provide that the Compensation Committee may authorize
increases in such executive officers' salaries in lieu of the annual cost of
living increase. In the event of an executive officer's disability during the
term of the agreement, monthly payments of approximately 60% of such executive
officer's monthly salary (up to a maximum of $6,000) will be made to such
executive officer for the duration of such disability, but not longer than 42
months. These disability payments are funded by insurance with respect to all
executive officers except Mr. Palmer whose disability payments are the direct
obligations of the Company.
Change in Control Arrangements
The 1990 Executive Incentive Plan provides that all outstanding stock
options granted thereunder will automatically become vested and exercisable in
full (i) upon a filing pursuant to any federal or state law in connection with
any tender offer for shares of the Company (other than a tender offer by the
Company), (ii) upon the signing of any agreement for the merger or
consolidation of the Company with another corporation or for the sale of all
or substantially all of the assets of the Company, (iii) upon adoption of any
resolution of reorganization or dissolution of the Company by the
stockholders, (iv) upon the occurrence of any other event or series of events,
which tender offer, merger, consolidation, sale, reorganization, dissolution
or other event or series of events, in the opinion of the Board of Directors
of the Company, will, or is likely to, if carried out, result in a change of
control of the Company, or (v) if during any period of two consecutive years,
individuals who at the beginning of such period constituted the directors of
the Company cease for any reason to constitute a majority thereof (unless the
election, or the nomination for election by the Company's stockholders, of
each director of the Company first elected during such period was approved by
a vote of at least two-thirds of the directors then still in office who were
directors of the Company at the beginning of any such period).
The Board of Directors of the Company has authorized the Company to enter
into agreements with certain officers of the Company, including the executive
officers in the Summary Compensation Table on page 7, and other key employees
designated by the President and Chief Executive Officer. The agreements
provide for the payment of severance benefits and the continuation of health
and other welfare benefits in the event of a "change of control" of the
Company if the executive's employment with the Company is terminated (i) by
the Company (or by the acquiring or successor business entity following a
change of control) other than for cause, death or disability or (ii) by the
executive for "good reason," in either event within two years after a change
of control and in certain circumstances 180 days prior to a change in control.
The severance benefit will be an amount equal to two times the executive's
highest annual base salary in effect within two years immediately preceding
the change of control plus the average of the executive's annual cash bonus
for the two calendar years immediately preceding the change of control. For
purposes of the agreements, a "change of control" would be deemed to have
occurred if (i) any person becomes the beneficial owner of securities of the
Company representing 30% or more of the outstanding voting power of the
Company's then outstanding voting securities,
12
<PAGE>
(ii) during any period of two years, a majority of the Board of Directors
ceases to consist of individuals who served continuously on the Board since
the beginning of such period, unless the election or nomination for election
of each director during such period was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of such period, (iii) the Company completes a merger of the Company,
other than (a) a merger in which voting securities of the Company would
continue to represent more than 80% of the outstanding voting power of the
surviving entity or (b) a merger to effect a recapitalization of the Company
in which no person acquires more than 30% of the outstanding voting power of
the Company's then-outstanding voting securities, or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or the
Company completes the sale or disposition by the Company of all or
substantially all of the Company's assets. The agreement defines "good reason"
as (i) the modification of the executive's job title, position or
responsibilities without the executive's prior written consent, (ii) the
change of the location where the executive is based to a location which is
more than thirty-five (35) miles from his present location without the
executive's prior written consent, or (iii) the reduction of the executive's
actual or projected annual base salary and bonus by more than 10% from the sum
of the highest rate of the executive's annual base salary and bonus in effect
within two years immediately preceding the change of control. The agreements
also provide that the executives party thereto will receive an additional
amount which will be sufficient (on an after-tax basis) to pay all excise
taxes that may be applicable to amounts deemed to be paid by reason of the
change in control under the special federal income tax rules applicable to
certain change-in-control payments (other than in respect of employee options
). In addition, the executives are entitled to reimbursement from the Company
for the costs and expenses incurred by them in enforcing the agreements.
The LTIP provides that all proposed, unvested and unpaid awards under the
LTIP will be immediately payable in the event of a "change of control." The
definition of a "change of control" for purposes of the LTIP is the same as
the definition of a "change of control" in the preceding paragraph.
Compensation Committee Interlocks and Insider Participation
During 1998, the Compensation Committee of the Board of Directors consisted
of Mr. Walker and Drs. Triplett and Turner, none of whom serves as an officer
or employee of the Company or any of its subsidiaries. Dr. Triplett is an
officer, director and a majority owner of a corporation that provided travel
related services to the Company during 1998. The Company incurred travel
expenses in the amount of approximately $322,350 in the year ended December
31, 1998 for airline transportation, hotel and rental car services arranged
through this corporation.
Certain Transactions
In 1996 and 1997, the Company loaned Mr. Robert Kaiser, Senior Vice
President-Finance and Chief Financial Officer of the Company, an aggregate of
$140,000 on an unsecured, interest-free basis in connection with the
relocation of his residence to Jackson, Mississippi. Mr. Kaiser repaid the
$140,000 principal balance of this loan in full in February 1998.
In 1998, Mr. Barksdale, a director of the Company, provided certain
consultancy services to the Company for an annual fee of $78,592.
In July 1998, the Company sold its Dassault/SUD Fan Jet Falcon aircraft to
J.P. Investments, Inc., a corporation owned by Mr. Palmer, Chairman of the
Board of the Company, for a purchase price of $1,512,295. The purchase price
represented the average of two appraisals performed by independent third
parties unaffiliated with the Company or Mr. Palmer which were selected by
Arthur Andersen LLP, the Company's independent certified public accountants.
In conjunction with the sale, the Company entered into a "time sharing
agreement" as that term is defined by the Federal Aviation Regulations (the
"FAR") for a one-year term, beginning July 1, 1998 (the "Initial Term"). The
time sharing agreement is for a term of one year commencing on July 1, 1998
and is subject to a one year renewal each year, unless terminated by one of
the parties upon 90 days prior notice. Pursuant to this agreement the Company
has agreed to use the aircraft for a minimum of one hundred (100) in-flight
hours per annum and has agreed to pay a per-flight charge equal to two times
the amount of expenses of each flight as authorized by the FAR. In 1998, the
Company paid J.P. Investments, Inc. a total of $87,829 under this agreement.
13
<PAGE>
In January 1999, Microsoft Corporation, a 5.67% shareholder of the Company
("Microsoft"), purchased 10,000 shares of Cumulative Accruing Pay-In-Kind
Preferred Stock of Mtel Latin America, Inc. ("Mtel Latam") ("Latam Preferred
Stock") for a total purchase price of $10,000,000. Mtel Latam is a 76% owned
subsidiary of the Company that serves as the holding company for the Company's
Latin American operations and investments. The Latam Preferred Stock accrues
dividends, which are payable in the form of additional shares of Latam
Preferred Stock, at an annual compounded rate of 25% or $250 per share the
first year, 30% or $300 per share the second year and 35% or $350 per share
the third year and will accrue quarterly. The Latam Preferred Stock ranks
senior to the common stock of Mtel Latam with respect to dividend rights and
rights upon liquidation. The Latam Preferred Stock is redeemable, in whole or
in part, at the option of Mtel Latam, at any time after the first anniversary
of the issuance date, at a redemption price of $1,010 for each share to be
redeemed, plus an amount equal to all accrued but unpaid dividends. Microsoft
has the right to require Mtel Latam to redeem the Latam Preferred Stock upon
the occurrence of certain events, including the merger or consolidation of
Mtel Latam, the completion of an initial public offering by Mtel Latam or the
occurrence of a change of control of Mtel Latam. In addition, Mtel Latam may
not incur aggregate indebtedness for borrowed money in excess of $20 million
so long as the Latam Preferred Stock remains outstanding. Mr. Maffei, a
director of the Company, serves as the Chief Financial Officer of Microsoft.
14
<PAGE>
Stockholder Return Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company during the period from December 31, 1993 to
December 31, 1998, with (i) the cumulative total stockholder return of
companies comprising The Nasdaq Stock Market Index, and (ii) the cumulative
total stockholder return of (a) a transitional peer group (the "Transitional
Peer Group"), and (b) a new peer group (the "New Peer Group"). The companies
that comprise the Transitional Peer Group and the New Peer Group are companies
engaged in the wireless data messaging business, weighted by market
capitalization as of the beginning of the period, selected by the Company
solely for purposes of this comparative analysis. The New Peer Group consists
of Arch Communications, Inc. ("Arch"), Metrocall, Inc. ("Metrocall"), Paging
Network, Inc. ("PageNet") and Pagemart Wireless, Inc. ("Pagemart"). Pagemart's
common stock began trading on The Nasdaq Stock Market on June 14, 1996;
therefore, the data in the graph prior to that date does not include Pagemart.
The Transitional Peer Group consists of Arch, Metrocall and PageNet which were
each included in the peer group index in the performance graph in the
Company's 1998 Proxy Statement (the "1997 Peer Group Index"): but excludes
ProNet,Inc. and American Paging, Inc (which were also included in the 1997
Peer Group Index) due to their mergers with Metrocall and Telephone and Data
Systems, Inc., respectively. The graph assumes $100 invested on December 31,
1993, as well as the reinvestment of any dividends. The comparisons in this
table are required by the Commission and, therefore, are not intended to
forecast or be indicative of possible future performance of the Company's
Common Stock.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SKYTEL COMMUNICATIONS, INC.,
THE NASDAQ STOCK MARKET (U.S. & FOREIGN) INDEX
AND PEERS GROUPS
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
SKYTEL NEW OLD NASDAQ STOCK
Measurement Period COMMUNICATIONS, PEER PEER MARKET
(Fiscal Year Covered) INC. GROUP GROUP (U.S. & FOREIGN)
- --------------------- --------------- ------- ------ ----------------
<S> <C> <C> <C>
Measurement Pt-12/31/1993 $100 $100 $100 $100
FYE 12/31/1994 $ 80 $111 $111 $ 97
FYE 12/31/1995 $ 88 $156 $156 $136
FYE 12/31/1996 $ 35 $ 87 $ 87 $167
FYE 12/31/1997 $ 91 $ 67 $ 62 $204
FYE 12/31/1998 $ 91 $ 35 $ 30 $282
</TABLE>
* $100 INVESTED ON 12/31/93 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
15
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held nine meetings during 1998. The
Audit Committee of the Board of Directors, which is comprised of Messrs.
Barbour, Barksdale and Maffei, held three meetings during 1998. The principal
functions of the Audit Committee include the review of the results of the
annual audit with the Company's independent public accountants and the review
of the adequacy of the Company's internal accounting controls and practices.
The Audit Committee also makes a recommendation to the Board of Directors
concerning the selection of the independent public accountants to be retained
by the Company. The Compensation Committee, which is comprised of Mr. Walker
and Drs. Triplett and Turner, held four meetings in 1998. The Compensation
Committee has been delegated certain authority by the Board of Directors with
respect to matters relating to the Company's compensation plans, including the
1988 and 1990 Executive Incentive Plans, the Short-Term Management Incentive
Plan and the Long-Term Management Incentive Plan, and is responsible for
determining the compensation of the executive officers of the Company. The
Board of Directors has also established the Regulatory Committee, which is
comprised of Messrs. Barbour and Bhagat and has been delegated the
responsibility to oversee and advise the Board of Directors with respect to
significant regulatory matters affecting the Company and its subsidiaries, and
the Director Affairs Committee, which is comprised of Dr. Turner and Messrs.
Barbour, Maffei and Walker and has been delegated authority to oversee and
evaluate certain matters relating to the Board of Directors, including
director compensation, the composition of committees of the Board of Directors
and the performance of the Company's directors. The Company's Board of
Directors does not have a standing committee on nominations. Each director
attended at least seventy-five percent (75%) of the meetings of the Board of
Directors and the committees on which such director serves.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors of the Company shall be divided into three classes of
directors, excluding those directors who may be elected by the holders of any
class or series of stock having preference over the Common Stock as to
dividends or upon liquidation. The Company's Board of Directors is currently
comprised of ten directors, two classes consisting of three directors each and
one class consisting of four directors. Each director is elected for a three-
year term, with one class of directors being elected at each annual meeting of
stockholders.
All holders of Common Stock of the Company are entitled to participate in
the election of directors at each annual meeting. Except as otherwise required
by law or established by the Board of Directors with respect to the holders of
any class or series of preferred stock, the holders of Common Stock
exclusively possess such voting power.
Set forth below is information concerning the nominees for directors to be
elected at the 1999 Annual Meeting for a three-year term expiring at the 2002
Annual Meeting, as well as certain information concerning the directors whose
terms extend beyond the 1999 Annual Meeting. If any nominee for election as a
director at the 1999 Annual Meeting for any reason should become unavailable
for election, or if a vacancy should occur before the election (which events
are not anticipated), it is intended that the shares of Common Stock
represented by the proxies will be voted for such other person as the Board of
Directors of the Company shall designate.
Directors to be Elected at the 1999 Annual Meeting
Thomas G. Barksdale, age 61, has served as a director of the Company since
October 1988. Mr. Barksdale also served as President and Chief Operating
Officer of the Company from December 1988 to December 1989. Mr. Barksdale is
also a partner of the Pickwick Group, an investment partnership.
John T. Stupka, age 49, has served as President and Chief Executive Officer
and a director of the Company since August 1996. Prior to joining the Company,
Mr. Stupka served as Senior Vice President-Strategic Planning of SBC
Communications, Inc. from August 1995 to August 1996 and as President and
Chief Executive Officer
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of Southwestern Bell Mobile Systems, Inc. from November 1985 to August 1995.
Mr. Stupka is also a director of CellStar Corp. and HighwayMaster Corporation.
E. Lee Walker, age 57, is a private investor and has served as a director of
the Company since October 1988. Mr. Walker also currently serves as the
Chairman of the Capital Metropolitan Transportation Authority, Austin, Texas,
and as a director of Intelliquest Information Group, Inc. From June 1986 to
March 1990, Mr. Walker served as President and Chief Operating Officer of Dell
Computer Corp., a computer manufacturer located in Austin, Texas.
Directors Whose Terms Extend Beyond the 1999 Annual Meeting
Haley Barbour, age 51, was elected a director of the Company in September
1992. Mr. Barbour has been an attorney in Washington, D.C. and Yazoo City,
Mississippi for approximately twenty-one years and served as Chairman of the
Republican National Committee from January 1993 until January 1997. Mr.
Barbour also serves as a director of Blount International and the Mississippi
Chemical Corporation. In addition, Mr. Barbour serves as Managing Director of
National Environmental Strategies Inc., Chairman of Policy Impact
Communications, Inc., and Vice Chairman of International Equity Partners
Advisors. Mr. Barbour's term as a director of the Company expires at the 2001
Annual Meeting.
Jai P. Bhagat, age 52, has served as Vice Chairman of the Company since May
1995 and as Executive Vice President and a director since October 1988. Mr.
Bhagat previously served as Executive Vice President of Mobile Communications
Corporation of America ("MCCA") from 1980 to 1988. Mr. Bhagat is a past
Chairman and currently serves on the Board of Directors of the Personal
Communications Industry Association, a national association representing the
mobile telecommunications industry, and is Chairman of its Paging and
Messaging Alliance. Mr. Bhagat's term as a director of the Company expires at
the 2001 Annual Meeting.
Gregory B. Maffei, age 38, has served as a director of the Company since May
1995. Mr. Maffei has been employed by Microsoft Corporation ("Microsoft")
since 1993 and has served as Chief Financial Officer of Microsoft since July
1997. From April 1994 until July 1997, Mr. Maffei served as Vice President-
Corporate Development and Treasurer of Microsoft. Mr. Maffei is also a
director of Cort Business Services Corp. Mr. Maffei's term as a director of
the Company expires at the 2000 Annual Meeting.
John N. Palmer, age 64, has served as the Chairman of the Board of Directors
of the Company since October 1988, acting Chief Executive Officer of the
Company from January 1, 1996 to August 1, 1996 and Chief Executive Officer of
the Company from October 1988 to May 1995. Mr. Palmer previously served as
Chairman of the Board, President and Chief Executive Officer of MCCA from 1973
to April 1989. Mr. Palmer is also a director and member of the Executive
Committee of Entergy Corporation, and a director of First American Corp. and
EastGroup Properties, Inc. In addition, Mr. Palmer serves as Chairman of the
National Trustees of the National Symphony Orchestra. Mr. Palmer's term as a
director of the Company expires at the 2000 Annual Meeting.
R. Faser Triplett, M.D., age 66, has served as a director of the Company
since May 1989. Dr. Triplett has been a practicing physician in Jackson,
Mississippi since 1966. Dr. Triplett is also a director of Cal Maine Foods,
Inc. Dr. Triplett's term as a director of the Company expires at the 2001
Annual Meeting.
R. Gerald Turner, age 53, has served as a director of the Company since July
1996. Dr. Turner has been the President of Southern Methodist University since
June 1995 and previously served as the Chancellor of the University of
Mississippi from April 1984 until May 1995. Dr. Turner is also a director of
ChemFirst, Inc., Capstar Broadcasting, Inc. and J.C. Penney, Inc. Dr. Turner's
term as a director of the Company expires at the 2001 Annual Meeting.
John E. Welsh III, age 48, has served as Vice Chairman of the Company since
May 1995, a director of the Company since September 1992, acting Chief
Financial Officer of the Company from February 1996 until August 1996 and
Managing Director of the Company from December 1992 until May 1995. Mr. Welsh
was a
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principal in Seaport Capital, Inc., a financial advisory and merchant banking
firm, from January 1992 to December 31, 1994. Mr. Welsh also serves as a
director of General Cable Corporation, where he also serves on the
Compensation Committee, and of York International Corporation. Mr. Welsh's
term as a director of the Company expires at the 2000 Annual Meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the auditors of the Company for the year ended
December 31, 1998, and is serving in such capacity for the year ending
December 31, 1999. Representatives of the firm of Arthur Andersen LLP are
expected to be present at the 1999 Annual Meeting with the opportunity to make
a statement if they desire to do so and to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
A stockholder who wishes to submit a proposal to be included in next year's
proxy materials for consideration at the 2000 Annual Meeting should submit the
proposal in writing to the Company at the address set forth on page 1 of this
Proxy Statement. The proponent of the proposal is required to have been a
record or beneficial owner of at least 1% or $2,000 in market value of Common
Stock of the Company for a period of at least one year and must continue to
own such securities through the date on which the 2000 Annual Meeting is held.
The Company has the right to request documentary support (as provided in Rule
14a-8 promulgated by the Commission pursuant to the Exchange Act) of the
proponent's ownership claim within 14 calendar days after receipt of the
proposal, and the proponent's response must be postmarked or transmitted
electronically no later than 14 days from the date the proponent received the
Company's request. Proposals must be received by the Company on or before
December 18, 1999 for inclusion in next year's proxy materials. Stockholders
who submit proposals to be included in next year's proxy materials must, in
all other respects, comply with Rule 14a-8 under the Exchange Act.
A stockholder who wishes to submit a proposal for consideration at the 2000
Annual Meeting must also comply with the Company's Bylaws, whether or not the
proponent wishes for the proposal to be included in the proxy materials to be
mailed to stockholders by the Company for the 2000 Annual Meeting. The
Company's Bylaws provide that in order for a stockholder proposal to be
brought before an annual meeting of stockholders, a stockholder must give
written notice to the Secretary of the Company, which notice must be received
by the Company at the address set forth on page 1 of this Proxy Statement not
less than 80 days prior to the annual meeting; provided that if less than 90
days' notice or prior public disclosure has been given of the date of the
annual meeting, notice of a stockholder proposal must be received not later
than the close of business on the tenth day following the date on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. The 2000 Annual Meeting is scheduled to be held on May 18, 2000.
Accordingly, notice of a stockholder proposal must be received by the Company
on or before February 28, 2000 in order for such stockholder proposal to be
properly brought before the 2000 Annual Meeting.
MISCELLANEOUS
The Board of Directors does not intend to present and knows of no other
person who intends to present any matter of business at the 1999 Annual
Meeting other than as set forth in the accompanying Notice of Annual Meeting
of Stockholders. However, if other matters properly come before the meeting,
it is the intention of the persons named on the enclosed proxy card to vote in
accordance with their best judgment.
The Company will bear the costs of preparing and mailing the Proxy
Statement, proxy card and other material that may be sent to stockholders in
connection with this solicitation. In addition to solicitations by mail,
officers and other employees of the Company may solicit proxies personally or
by telephone or telegram. The
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Company has retained Beacon Hill Partners, Inc. to assist in the solicitation
of proxies in connection with the 1999 Annual Meeting. The Company has agreed
to pay Beacon Hill Partners, Inc. a fee of $5,000 plus reasonable out-of-
pocket expenses for such services.
By Order of the Board of Directors
Leonard G. Kriss
Secretary
Jackson, Mississippi
April 16, 1999
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________________________________________________________________________________
SKYTEL COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Leonard G. Kriss and Robert T. Pike and
each of them as Proxies and authorizes them to represent and vote all the shares
of Common Stock of Skytel Communications, Inc. (the "Company") that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to be
held on May 20, 1999 and at any adjournment thereof (A) as designated below for
the election of the directors identified below, and (B) at the discretion of
said Proxies on such other matters as may properly come before such Annual
Meeting or any adjournment thereof, provided the Company did not have notice of
such matters before the close of business on April 10, 1999.
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NOT
SPECIFIED, WILL BE VOTED FOR ALL NOMINEES NAMED IN ITEM 1.
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(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________________________
<S> <C>
The Board of Directors recommends a vote FOR the election of all nominees named in item 1 below. Please mark --------
your vote as
indicated in X
this example --------
1. Election of Thomas G. Barksdale, John T. Stupka and E. Lee Walker.
FOR WITHHOLD WITHHELD FOR (Write that nominee's name in the space provided below.)
all AUTHORITY
nominees to vote for all
nominees
__________________________________________________________________________________
------ -------
------ -------
Date _______________________________________, 1999
__________________________________________________
Signature(s)
__________________________________________________
(If held jointly, each joint owner should sign)
Please mark, date and sign exactly as the name
appears herein and return this proxy card in the
enclosed envelope. persons signing as executors,
administrators, trustees, etc, should so indicate.
If a joint account, each joint owner should sign. In
the case of a corporation or partnership, the full
name of the organization should be used and the
signature should be that of a duly authorized
officer or partner.
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. FOLD AND DETACH HERE.
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