<PAGE>
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ROCHESTER TELEPHONE CORPORATION
(Name of Registrant as Specified In Its Charter)
ROCHESTER TELEPHONE CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
ROCHESTER TEL CENTER
ROCHESTER, NEW YORK 14646-0700
716-777-8007
716-325-7639 FAX
RONALD L. BITTNER
CHAIRMAN, PRESIDENT & CEO
[LOGO OF ROCHESTER TELEPHONE CORPORATION]
March 25, 1994
Dear Shareowner:
On behalf of your Board of Directors and management, I cordially invite
you to attend the Annual Meeting of Shareowners to be held on Wednesday,
April 27, 1994 at 10:00 a.m. at the Hyatt Regency Rochester, 125 East
Main Street, Rochester, New York 14604. For additional information about
the hotel, or to make overnight reservations, please call the Hyatt at
716-546-1234 and identify yourself as a Rochester Tel shareowner.
At this meeting you will be asked to vote for the election of twelve
Directors and for the election of Price Waterhouse as the Company's
independent auditors for the 1994 fiscal year. We believe it is important
to encourage increased common stock ownership by employees and Directors
of the Company. That belief forms the primary basis for the additional
proposals we are bringing forward this year for your approval. The
meeting agenda includes consideration of a Restated Executive Stock
Option Plan and modifications to the Directors' Stock Option Plan. Both
of these Plans were originally approved by shareowners in 1990, and
shareowner approval is now required to effect these Plan changes. Also,
during the past year the Company has made Company common stock an
investment option for participants of certain benefit plans, and the
meeting agenda includes consideration of those Plans. All of these
matters are discussed in detail in the attached Proxy Statement.
Your Board of Directors believes each of these proposals is in the best
interests of the Company and its shareowners and recommends that you vote
for them.
It is important that your shares be represented at the meeting whether
or not you plan to attend. Please sign, date and return the enclosed
proxy card in the envelope provided.
Thank you for your continued support.
Cordially,
/s/ Ronald L. Bittner
Ronald L. Bittner
Chairman, President and
Chief Executive Officer
<PAGE>
[LOGO OF ROCHESTER TELEPHONE CORPORATION]
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 27, 1994
Dear Shareowners:
The Annual Meeting of Shareowners of Rochester Telephone Corporation (the
"Company") will be held at the Hyatt Regency Rochester, 125 East Main Street,
Rochester, New York 14604, at 10:00 a.m. on April 27, 1994, for the following
purposes:
(1) To elect twelve Directors;
(2) To consider and act upon a proposal to elect Price Waterhouse as the
Company's independent auditors for the fiscal year ending December 31, 1994;
(3) To consider and act upon four proposals regarding employee and
director compensation plans; and
(4) To transact such other business, if any, as may properly come before
the meeting or any adjournments thereof.
The Board of Directors, on January 17, 1994, amended Article II, Section 2,
of the By-Laws to reduce the number of Directors constituting the entire Board
from fourteen to twelve, effective with the first meeting of Directors
following the Annual Meeting of Shareowners on April 27, 1994.
The Board of Directors has fixed the close of business on March 8, 1994, as
the record date for the determination of shareowners entitled to notice of and
to vote at the meeting.
YOUR VOTE IS VERY IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU
DECIDE TO ATTEND THE MEETING.
IF YOU ARE PLANNING TO ATTEND THE ANNUAL MEETING, PLEASE CHECK THE BOX ON THE
BACK OF THE PROXY CARD.
By Action of the Board of Directors,
/s/ Josephine S. Trubek
Josephine S. Trubek
Corporate Secretary
Rochester, New York
March 25, 1994
<PAGE>
PROXY STATEMENT TABLE OF CONTENTS
<TABLE>
<S> <C>
Proposal 1--Election of Directors.......................................... 2
Information about the Board of Directors................................... 2
Nominees for Director...................................................... 4
Security Ownership of Management........................................... 6
Management Security Ownership Table........................................ 7
Report of Committee on Management (Compensation Committee Report).......... 8
Performance Graph.......................................................... 11
Compensation of Company Management......................................... 12
Summary Compensation Table................................................. 12
Option/SAR Grants in Last Fiscal Year...................................... 13
Individual Grants Table.................................................... 13
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values Table................................... 14
Long-Term Incentive Plans--Awards in Last Fiscal Year Table................ 14
Pension Plan Table......................................................... 15
Compensation Committee Interlocks and Insider Participation in Committee 16
Decisions.................................................................
Certain Relationships and Related Transactions............................. 17
Indemnification of Certain Persons......................................... 17
Proposal 2--Election of Independent Auditors............................... 17
Proposals To Modify Employee and Director Compensation Plans............... 18
Proposal 3--Amendment to the Supplemental Retirement Savings Plan.......... 18
Proposal 4--Restated Executive Stock Option Plan........................... 19
Proposal 5--Amendment to the Directors' Stock Option Plan.................. 21
Proposal 6--Directors' Common Stock Deferred Growth Plan................... 22
New Plan Benefits Table.................................................... 24
Other Matters and Future Proposals of Shareowners.......................... 24
</TABLE>
<PAGE>
[LOGO OF ROCHESTER TELEPHONE CORPORATION]
PROXY STATEMENT
1994 ANNUAL MEETING OF SHAREOWNERS OF ROCHESTER TELEPHONE CORPORATION
This Proxy Statement and the enclosed proxy card are being furnished to
shareowners on or about March 25, 1994. The purpose of this solicitation of
proxies by the Board of Directors of Rochester Telephone Corporation, Executive
Offices, 180 South Clinton Avenue, Rochester, New York 14646, is the Annual
Meeting of Shareowners to be held on April 27, 1994.
The close of business on March 8, 1994, has been fixed as the record date for
the determination of the shareowners entitled to notice of, and to vote at, the
Annual Meeting. On that date there were 36,579,066 shares of the Company's
$1.00 par value common stock outstanding and entitled to vote at the meeting.
Each shareowner is entitled to cast one vote for each share of common stock
held as of the Record Date.
Each proxy which is properly executed and returned in the enclosed return
envelope will be voted at the Annual Meeting. Shares represented by proxies
will be voted in accordance with the shareowner's directions as specified on
the proxy card. If any proxy does not specify a choice, the shares will be
voted for the election of the Directors nominated in the proxy; in favor of the
election of Price Waterhouse as independent auditors; and in favor of each of
the four proposals regarding employee and Director compensation plans. A
shareowner granting a proxy has the right to revoke it by a duly executed proxy
bearing a later date, by attending the meeting and voting in person, or by
otherwise notifying the Company prior to the meeting.
The proxy card contains spaces for the shareowner to indicate if he or she
wishes to abstain on one or more of the proposals or to withhold authority to
vote for one or more nominees for Director. Directors are elected by a
plurality of the votes cast. Votes withheld in connection with the election of
one or more of the nominees for Director will not be counted as votes cast in
connection with that nominee's election. The election of auditors requires the
affirmative vote of a majority of the votes cast. In accordance with New York
law, abstentions are not counted in determining the votes cast in connection
with the selection of auditors. Approval of the proposals with respect to
employee and Director compensation plans (Proposals 3-6) requires the
affirmative vote of a majority of the outstanding shares entitled to vote on
those proposals; abstentions on any of the Plan proposals have the same effect
as a vote against that proposal.
Under the rules of the New York Stock Exchange, brokerage firms holding
shares for the benefit of their clients may vote in their discretion on behalf
of their clients with respect to "discretionary items" if the clients have not
furnished voting instructions within ten days of the shareowner meeting. The
election of Directors and auditors are discretionary items with respect to
which brokerage firms may vote. The proposals relating to the employee and
Director compensation plans are also discretionary items and brokers who
receive no instructions from their clients have the discretion to vote on these
proposals. Any broker "non-votes" will not be considered as votes cast with
respect to the employee and Director compensation plan proposals but will have
the same effect as a no vote since the proposals require approval by a majority
of the outstanding shares entitled to vote.
1
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PROPOSAL 1--ELECTION OF DIRECTORS
INFORMATION ABOUT THE BOARD OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors of the Company is currently composed of fourteen
Directors, but after April 27, 1994, the Board will be composed of twelve
members as a result of a recent change in the Company's By-Laws. The Board of
Directors nominates the twelve persons named on pages 4 through 6 for election
to the Board of Directors. All of the nominees are currently Directors of the
Company whose terms expire coincident with the Annual Meeting. If elected, all
nominees will serve until the Annual Meeting of Shareowners to be held in 1995
or until such time as their respective successors are elected.
The Board of Directors held six meetings during 1993. All of the Directors,
with the exception of Dr. Thomas, attended at least 75% of the total meetings
of the Board and its committees which they were eligible to attend.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and through the activities of its committees. The standing committees of the
Board are the Audit Committee, the Committee on Management, the Committee on
Directors and the Executive Committee.
The Audit Committee of the Board is composed at present of Douglas H.
McCorkindale, Chair; John R. Block, Brenda E. Edgerton, and G. Dennis O'Brien.
This committee reviews the scope of audit activities, reviews the financial
reports of the Company, and reviews with management significant and material
matters which may result in either potential liability to the Company or
significant exposure to the Company. The Committee also makes reports and
recommendations with respect to audit activities, findings, and reports of the
independent public accountants and the internal audit staff of the Company. The
Audit Committee held two meetings in 1993.
The present members of the Committee on Management are Daniel E. Gill, Chair;
Harlan D. Calkins and Richard P. Miller, Jr. This committee is responsible for
determining the compensation, benefits and perquisites of all executive
officers of the Company, with the exception of the Chief Executive Officer, and
for recommending the compensation, benefits and perquisites of the Chief
Executive Officer to the full Board. This committee also develops and
administers executive compensation plans and reviews succession planning for
the Company and other significant human resources issues. The Committee on
Management held three meetings in 1993.
The present members of the Executive Committee are Jairo A. Estrada, Chair;
Patricia C. Barron, Ronald L. Bittner, Daniel E. Gill, Alan C. Hasselwander,
and Douglas H. McCorkindale. The Executive Committee possesses all of the
powers of the Board of Directors except those which, by law or the Company's
By-Laws, cannot be delegated to it. The Executive Committee met four times in
1993.
The Committee on Directors was newly created in 1993. It focuses the Board's
attention on corporate governance issues and has also assumed responsibility,
previously held by the Executive Committee, to act as a nominating committee.
The Committee on Directors assists the Company in addressing a rapidly changing
industry through its efforts to attract and retain the most qualified Board
members. It is presently composed of Patricia C. Barron, Chair; Wolcott J.
Humphrey, Jr., Dr. Leo J. Thomas, and Michael T. Tomaino. This committee is
responsible for all matters relating to the selection, qualification,
evaluation, and compensation of members of the Board of Directors and all
nominees to the Board and serves as the nominating committee. The Committee on
Directors held two meetings in 1993.
2
<PAGE>
The Committee on Directors will consider nominations by shareowners. Such
shareowner submissions should include sufficient biographical information so
that the committee can appropriately assess a nominee's qualifications. This
information would include, at a minimum, the nominee's name and address,
business and other experience, and a listing of any other Boards on which the
nominee may be a member. All submissions should be sent by a letter addressed
in care of the Corporate Secretary, to the Committee on Directors, Board of
Directors, Rochester Telephone Corporation, 180 South Clinton Avenue,
Rochester, New York 14646-0700. Alternatively, any such letter may be addressed
to any individual member of the Committee on Directors, in care of the Company,
at the same address. Suggestions in connection with an Annual Meeting of
Shareowners should be received by September 1 of the prior year in order to
receive consideration.
COMPENSATION OF DIRECTORS
The Company compensates its Directors through the payment of an annual
retainer and meeting fees. The annual retainer is $18,000. Each Director also
receives a $1,300 fee for each Board and/or committee meeting attended. Each
committee chair receives an annual chairperson's retainer in the amount of
$3,000. Directors who are employees of the Company or its subsidiaries receive
no Director fees. Directors may elect to defer payment of their fees to future
years.
Pursuant to the Company's Directors' Stock Option Plan, Directors annually
receive an option to purchase 1,000 shares of the Company's common stock. These
options expire ten years after issuance, and the exercise price is the value of
the stock on the day the option was issued. Each outside Director, except Alan
C. Hasselwander, received an option for 1,000 shares at an exercise price of
$39.50 per share on April 21, 1993.
Outside Directors who join the Board on a date other than the date when the
annual grant of options is made receive an option for a prorated number of
shares of the Company's common stock. Brenda E. Edgerton joined the Board on
February 1, 1993, and on that date she received an option for 225 shares at an
exercise price of $36.875 per share. Additionally, Mr. Hasselwander completed
his pre-pension leave from the Company on May 11, 1993, and as of that date was
considered an outside Board member for purposes of option grants under the
Directors' Stock Option Plan. On May 11, 1993, Mr. Hasselwander received an
option for 949 shares at an exercise price of $37.25 per share.
The Company also provides its Directors with cellular telephone equipment and
service and other nominal in-kind benefits.
Mr. Michael T. Tomaino, a Director of the Company, is the sole shareowner of
Michael T. Tomaino, P.C., a partner in the law firm of Nixon, Hargrave, Devans
& Doyle. The Company has retained this law firm prior to and during the last
two years and intends to retain the firm in the current year.
The Board believes that all of the nominees will be available and willing to
serve as Directors. If any nominee is unable to serve, the shares represented
by all valid proxies will be voted for the election of such substitute as the
Board may recommend or the Board may fill the vacancy at a later date after
selecting an appropriate nominee.
The following sets forth information concerning the principal occupations and
business experience of the nominees.
3
<PAGE>
THE FOLLOWING PERSONS HAVE BEEN NOMINATED FOR ELECTION AT THE ANNUAL MEETING
OF SHAREOWNERS TO BE HELD ON APRIL 27, 1994:
PATRICIA C. BARRON, 51, is President, Xerox Engineering Systems, Xerox
Corporation, a manufacturer of office systems and equipment. Prior to her
present position, she held other executive positions at Xerox Corporation
including the position of President, Office Documents Products Division. She is
a Director of Quaker Chemical Corporation. She has been a Director of the
Company since 1990.
RONALD L. BITTNER, 52, is Chairman, President and Chief Executive Officer of
the Company. Prior to his present position, Mr. Bittner was Executive Vice
President and President--Telecommunications Group of the Company. He has held a
number of other executive positions at Rochester Tel, and has been a Director
of the Company since 1989.
JOHN R. BLOCK, 59, is President of the National American Wholesale Grocers'
Association, a trade association which serves as a forum for the exchange of
ideas and information and is a source of data for the industry. He is a
Director of Deere and Co., Arcadian Corporation, Crop Genetics, Inc., and
Purina Mills, Inc. He has been a Director of the Company since 1990.
HARLAN D. CALKINS, 62, is Chairman, President, Chief Executive Officer, and a
Director of Rochester Midland Corporation, a manufacturer of specialty
chemicals. He has been a Director of the Company since 1982.
BRENDA E. EDGERTON, 44, is Vice President and Treasurer of Campbell Soup
Company, a manufacturer of prepared convenience foods. Prior to her present
position she served as Deputy Treasurer of Campbell Soup Company. She has been
a Director of the Company since 1993.
4
<PAGE>
JAIRO A. ESTRADA, 46, is Chairman of the Board and Chief Executive Officer of
Garden Way Incorporated, a company which manufactures outdoor power equipment.
He is a Director of Garden Way Incorporated and of The Chase Manhattan
Corporation. He has been a Director of the Company since 1989.
DANIEL E. GILL, 57, is Chairman and Chief Executive Officer of Bausch & Lomb
Incorporated, a worldwide manufacturer and marketer of health care and optical
products. Prior to his current position, Mr. Gill was President and Chief
Executive Officer of Bausch & Lomb. He is a Director of Bausch & Lomb, Reebok
International, Ltd., and Welch Allyn, Inc. He has been a Director of the
Company since 1981.
ALAN C. HASSELWANDER, 60, is Past Chairman of the Board of Rochester Tel.
Formerly, he was President and Chief Executive Officer of the Company. He has
been a Director of the Company since 1984.
DOUGLAS H. McCORKINDALE, 54, is Vice Chairman and Chief Financial and
Administrative Officer of Gannett Co., Inc., a nationwide diversified
communications company. Prior to his present position, he held other executive
positions at Gannett Co., Inc. He is a Director of Gannett Co., Inc.,
Continental Airlines, and seven mutual funds in the Prudential Mutual Fund
complex of funds. He has been a Director of the Company since 1980.
RICHARD P. MILLER, JR., 51, is Vice President for External Affairs and Senior
Counsel to the President of the University of Rochester. Prior to his present
position he was Chief Executive Officer of The Case-Hoyt Corporation. He is a
Director of Genesee Corporation and a Director of Forbes Products Corporation.
He has been a Director of the Company since 1984.
5
<PAGE>
DR. LEO J. THOMAS, 57, is Group Vice President and President, Imaging, of
Eastman Kodak Company, a manufacturer of photographic and chemical products.
Prior to his present position, he was Group Vice President and General Manager,
Health Group of Eastman Kodak Company, Chairman of Sterling Drug, Inc., a
subsidiary of Eastman Kodak. He is a Director of Eastman Kodak Company and of
John Wiley & Sons, Inc. He has been a Director of the Company since 1984.
MICHAEL T. TOMAINO, 56, is an Attorney with the law firm of Nixon, Hargrave,
Devans & Doyle, and has been a Director of the Company since 1975.
The following companies (which are mentioned above) do not have registered
securities nor are the companies otherwise required to file reports with the
Securities and Exchange Commission: Continental Airlines, Forbes Products
Corporation, and Welch Allyn.
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE ABOVE NOMINEES
FOR DIRECTOR, DESIGNATED AS PROPOSAL 1 ON YOUR PROXY CARD. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF THE DIRECTION THEREON
TO THE CONTRARY.
SECURITY OWNERSHIP OF MANAGEMENT
In 1993, the Committee on Directors established guidelines for the minimum
amounts of the Company's common stock which Directors are encouraged to own.
These guidelines take into account a Director's tenure on the Board in
determining the level of share ownership. By the end of 1995, each outside
Director with at least five years' service on the Board should own at least
2,000 shares of the Company's common stock. Executive officers of the Company
are also encouraged to own shares of the Company. Their recommended stock
ownership levels are based on their position in the organization and are a
multiple of salary. Mr. Bittner's stock ownership target, to be achieved over
no more than a five year period, is the beneficial ownership of Company common
stock equal in value to four times his salary. The stock ownership target for
each of the Company's Corporate Vice Presidents is beneficial ownership of
Company common stock equal in value to two times his or her respective salary.
All Corporate Vice Presidents are also encouraged to achieve their targets
within no more than a five year period.
The following table sets forth the number of shares of the Company's common
stock beneficially owned by each Director and nominee, by each of the named
executive officers, and by Directors and officers of the Company as a group as
of March 8, 1994. No Director or officer owns more than 1% of the Company's
outstanding shares of common stock.
6
<PAGE>
MANAGEMENT SECURITY OWNERSHIP TABLE
<TABLE>
<CAPTION>
BENEFICIALLY OWNED SHARES
BENEFICIAL SUBJECT TO OUTSTANDING
NAME OWNERSHIP(1) STOCK OPTIONS(2) TOTAL
- ---- ------------ ------------------------- ------
<S> <C> <C> <C>
DIRECTORS AND NOMINEES:
Patricia C. Barron................ 200 666 866
Ronald L. Bittner................. 18,013 10,332 28,345
John R. Block..................... 220 666 886
Harlan D. Calkins................. 560 666 1,226
Brenda E. Edgerton................ 453 408 861
Jairo A. Estrada.................. 1,015 666 1,681
Daniel E. Gill.................... 569 666 1,235
Alan C. Hasselwander(3)........... 18,233 316 18,549
Wolcott J. Humphrey, Jr.(4)....... 857 333 1,190
Douglas H. McCorkindale........... 200 666 866
Richard P. Miller, Jr............. 533 333 866
G. Dennis O'Brien(4).............. 5,113 666 5,779
Dr. Leo J. Thomas................. 9,331 666 9,997
Michael T. Tomaino................ 634 666 1,300
NAMED EXECUTIVE OFFICERS:
Ronald L. Bittner................. 18,013 10,332 28,345
Dale M. Gregory................... 6,575 3,100 9,675
Louis L. Massaro.................. 4,163 2,400 6,563
Frederick R. Pestorius............ 3,049 2,400 5,449
John K. Purcell................... 3,108 3,000 6,108
</TABLE>
- --------
As of March 8, 1994, all Directors, nominees and officers as a group, an
aggregate of twenty-one persons, beneficially owned 83,716 shares of the
Company's common stock and, as a group, had within the following sixty days
the right to acquire an additional 33,948 shares which were subject to
outstanding stock options. The group's total aggregate holdings of 117,664
benefically owned shares constitutes less than 1% of the issued and
outstanding common stock of the Company as of that date.
(1) Includes all shares which each Director or officer directly, through any
contract, arrangement, understanding, relationship or otherwise, has or
shares the power to vote or to direct the voting of such shares or to
dispose or to direct the disposition of such shares. However, these
amounts include no shares which each Director or officer has the right to
acquire within the following sixty days pursuant to options or other
rights. Amounts in this column determine whether a Director or executive
officer has met his or her stock ownership targets.
(2) All shares which such persons have the right to acquire within the
following 60 days pursuant to options or other rights. These amounts do
not include shares which such persons have the right to acquire more than
sixty days in the future.
(3) Mr. Hasselwander disclaims beneficial ownership of 700 shares which are
owned by his spouse.
(4) Mr. Humphrey and Mr. O'Brien are each retiring from the Board effective
with the 1994 Annual Meeting.
The Company's Directors and executive officers are required to file reports
with the Securities and Exchange Commission and the New York Stock Exchange,
with copies to the Company, concerning ownership of and transactions in the
Company's common stock. Based solely on those reports furnished to the Company
and related information, the Company believes that all such filing
requirements for 1993 were complied with in a timely fashion.
7
<PAGE>
REPORT OF COMMITTEE ON MANAGEMENT
The philosophy of the Company's compensation program is to offer performance-
based compensation to its employees, while rewarding employees whose efforts
enable the Company to achieve its vision. The executive compensation program is
designed to measure and enhance executive performance.
The Company's executive compensation program has four components:
. Base Salary
. Annual Bonus
. Long-Term Incentive Plan
. Stock Option Plan
These components are designed to provide incentives and motivate key
executives whose efforts and job performance will enhance the strategic well-
being of the Company and maximize value to its shareowners.
The executive compensation program rewards performance consistent with the
Company's consolidated performance and the contribution of the individual
executive officers, including Mr. Bittner, toward that performance. It is also
competitive with compensation programs offered by employers of comparable size
in this industry.
The Company retains William M. Mercer, Inc., to review its executive
compensation program on an annual basis. The Company uses information from this
consulting firm, as well as public information concerning salaries paid in
comparably sized companies in the telecommunications industry, to determine
what a comparable telecommunications firm would consider an appropriate
performance-based compensation package for its executives.
The analysis includes information from a self-constructed group of thirty-one
publicly-traded companies in the telephone, long distance and cellular
industries. This group includes all companies reported in the Standard and
Poor's Telephone Index, together with twenty-three additional companies. On a
comparative basis, for both base salary and total compensation, the Company's
CEO would be considered within the second quartile while its other executives
are generally at the average. The Company's policy is to benchmark compensation
levels at the median of comparative companies and to reward results based on
performance.
BASE SALARY. The salaries of the executive officers, including Mr. Bittner,
were determined based on the executive's performance and an analysis of base
salaries paid executive officers having similar responsibilities in other
companies of similar size, both within and outside the telecommunications
industry. This analysis included many of the companies in the self-constructed
group of thirty-one publicly-traded companies, together with additional
companies from other industries with similar revenues and/or asset values. The
level of Mr. Bittner's base salary was also based upon a subjective assessment
of his individual performance and responsibilities as well as overall corporate
performance as measured by actual earnings per share and cash flow versus pre-
established targets; strategic goals and objectives for customer and employee
satisfaction; and growth of the business. The other executive officers have
similar measurements, but specific factors are more closely linked to
individual responsibilities. No relative weights are attributed to any specific
measurement factors.
ANNUAL BONUS. The Company's annual bonus plan, the Short Term Incentive Plan
(STI), is designed to provide performance-based compensation awards to
executives for achievement during the past year. The bonus awards are a
function of individual performance and corporate or business unit results
during the year. Business unit performance is a component of only a business
unit officer's bonus while overall corporate performance is a component of each
officer's bonus. The specified qualitative and quantitative criteria employed
by the Committee in determining bonus awards vary both individually and from
year to year. These
8
<PAGE>
criteria, or targets, are established as a means of measuring executive
performance. The corporate target for 1993 was a combined aggressive earnings
per share and cash flow target established by this Committee of the Board of
Directors as an incentive to increase the Company's cash flow and thus improve
long-term stock performance. This target was exceeded. All the Company's senior
executives participate in STI with payout awards varying by salary grade. With
respect to Mr. Bittner's participation, his STI annual bonus was based solely
upon achievement of the corporate target and a mechanical application of the
STI Plan. Specifically, this mechanical application of the STI Plan was
calculated by multiplying the corporate performance payout achieved, which for
Mr. Bittner was 100%, times the higher of actual salary or mid-point of the
salary range.
LONG-TERM INCENTIVE PLAN. The Company's long-term incentive plan, the
Performance Unit Plan (PUP), is designed to motivate executives to improve
shareowner value. The Plan focuses on the Company's stock performance over
three-year cycles. Executives receive Plan payouts based equally on the
Company's stock performance appreciation over the past three years as compared
to a group of sixteen telecommunications firms and corporate performance
against targets of various elements selected by this Committee at the beginning
of the cycle. These elements, cash return on gross assets and stock performance
measures, are intended to align executive compensation with the return received
by Rochester Tel's shareowners. Cycle payouts are a product of the Company's
stock price at the end of the cycle, corporate performance against the selected
targets, and the number of units granted to an executive for the cycle.
Mr. Bittner's award was based upon performance achieved at 145% of the target
levels. The awards made to the other executive officers were based upon
performance achieved at 138.2% to 145% of the target levels.
STOCK OPTION PLAN. Stock option plans are an important component of executive
compensation programs because they are a compensation vehicle which ties long-
term compensation directly to furthering the interests of shareowners and
improved corporate performance. The current stock option plan, as approved by
the New York State Public Service Commission, limits the number of stock
options which may be granted to the Company's executives. Nevertheless, the
Company's Executive Stock Option Plan is designed to align executive
compensation with the long-term performance of the Company's stock. Options
issued in 1993 do not expire until 2003, and the exercise price is the value of
the option on the day the option was issued. Prior to the beginning of each
year, option grant ranges are established by salary grade with the assistance
of the William M. Mercer, Inc. consulting firm. This Committee makes a
subjective determination of the specific stock option grant to be awarded to
each executive officer. The factors considered by the Committee in making this
determination are (a) the executive officer's past performance of previously
set objectives and (b) his or her expected future contribution to the long-term
strategic goals and objectives of the Company. No relative weights are
attributed to either of these factors. All executive officers of the Company
received options in 1993 based on their position in the Company, their
contribution to the achievement of the Company's long-term objectives as
assessed by Committee members based on their experience with the executive
officers, and upon the recommendation of the chief executive officer. Upon this
Committee's recommendation, the full Board awarded Mr. Bittner options based
upon these factors as well.
The Committee approved two changes to the executive compensation program to
be effective in 1994. The Performance Unit Plan (PUP) will be discontinued. No
new grants will be issued in 1994. The existing cycles, 1992-1994 and 1993-
1995, will run to their normal conclusion. For 1994, stock options will be used
as the sole long-term incentive. The Committee believes that stock options are
better motivators and better align the efforts of the executives with
objectives of the shareowners.
The second action was to enhance the retirement benefit for Mr. Bittner and
the Corporate Vice Presidents by the addition of a Supplemental Executive
Retirement Plan (SERP). The plan has an accrual and vesting schedule based on
years of service and age. The maximum benefit of 60% of final compensation,
less any amounts paid through the Company's Management Pension Plan and
Supplemental Management Pension Plan, will be paid to an executive retiring at
age 50 or older with 30 or more years of service.
The Committee has also established stock ownership guidelines for the
Company's executives. These guidelines are a multiple of salary. Mr. Bittner's
target, to be achieved over a five-year period, is the beneficial ownership of
Company common stock equal in value to four times his annual salary.
9
<PAGE>
This Committee is aware of the limitations which the Omnibus Budget
Reconciliation Act of 1993 places upon a corporation's ability to obtain a tax
deduction on executive compensation in excess of $1 million. Although it has
not yet developed a formal policy concerning the $1 million ceiling, this
Committee favors pay for performance and intends to continue to review
executive compensation in consideration of the legislation.
No member of this Committee is a former or current officer or employee of the
Company or any of its subsidiaries.
Respectfully submitted,
/s/ Daniel E. Gill
Daniel E. Gill (Chairman)
Harlan D. Calkins
Richard P. Miller, Jr.
March 21, 1994
10
<PAGE>
PERFORMANCE GRAPH
The following graph charts the Company's cumulative total shareowner return
performance against the Standard and Poor's Telephone Index as well as against
the Standard and Poor's 500 Index. A variety of factors may be used in order to
assess a corporation's performance. This Performance Graph, which reflects the
Company's total return against the selected peer group, reflects one such
method. The performance of the Standard and Poor's Telephone Index is weighted
by the stock market capitalization of the companies within that peer group.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ROCHESTER, S&P TELEPHONE INDEX AND S&P 500 INDEX
<CAPTION>
Measurement period Rochester S&P Telephone S&P 500
(Fiscal year Covered) Telephone Corp. Index Index
- --------------------- --------------- -------- ------------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $ 100 $ 100 $ 100
FYE 12/31/89 $ 165 $ 158 $ 132
FYE 12/31/90 $ 125 $ 150 $ 127
FYE 12/31/91 $ 144 $ 163 $ 166
FYE 12/31/92 $ 168 $ 179 $ 179
FYE 12/31/93 $ 221 $ 207 $ 197
</TABLE>
11
<PAGE>
COMPENSATION OF COMPANY MANAGEMENT
The tables and other information set forth below are included to enable our
shareowners to better understand the compensation of the Company's executives.
These tables reflect the various forms of compensation paid the executive
officers of Rochester Telephone Corporation. Specifically, these are salary,
bonus, stock options and a long-term incentive plan. The Company does not
provide its executives with stock appreciation rights. The executive officer
titles in the Summary Compensation Table indicate the position held by those
officers on December 31, 1993. No executive officers exercised any stock
options during 1993.
The Report of the Committee on Management of the Board of Directors appears
on pages 8-10 of this Proxy Statement. This Report discusses the factors taken
into consideration to set Mr. Bittner's compensation and the compensation of
the other executive officers. A Performance Graph showing the performance of
the Company's stock as compared to the Standard and Poor's 500 Index and the
Standard and Poor's Telephone Index appears on page 11 of this Proxy Statement.
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation paid to the CEO and
the four most highly compensated executive officers of the Company for services
rendered to the Company and its subsidiaries over the past three fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------
AWARDS
---------- PAYOUTS
ANNUAL COMPENSATION SECURITIES --------
------------------- UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) SARS (#) ($)(3) ($)(4)
- ------------------ ---- ------------------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Bittner(1)........ 1993 $360,000 $407,500 23,000 $230,121 $26,856
Chairman, President 1992 292,750 160,000 8,000 8,946 14,901
& CEO 1991 220,000 103,600 -0- 25,439 12,230
D. M. Gregory(2)........ 1993 186,567 131,625 6,600 69,753 29,963
Corporate Vice President 1992 178,413 67,200 2,700 -0- 43,701
and President--
Telecommunication Group 1991 190,200 16,500 -0- -0- 7,479
L. L. Massaro........... 1993 174,800 131,625 4,500 95,662 11,721
Corporate Vice 1992 165,100 58,600 2,700 5,126 19,247
President--
Finance and Treasurer 1991 155,600 51,100 -0- 14,372 8,261
F. R. Pestorius......... 1993 173,700 131,625 4,500 99,452 12,611
Corporate Vice 1992 168,600 62,000 2,700 5,275 21,521
President--
Sales and Marketing 1991 159,800 57,900 -0- 15,013 10,352
J. K. Purcell........... 1993 175,600 131,625 6,300 98,589 12,033
Corporate Vice 1992 168,800 63,100 2,700 5,135 11,237
President--
Partnering and Alliances 1991 159,200 57,700 -0- 14,468 10,731
</TABLE>
- --------
(1) Mr. Bittner was named President and Chief Executive Officer effective
February 16, 1992. The compensation indicated for 1991 relates to his prior
position as Executive Vice President of the Company.
(2) Mr. Gregory became an employee and a Vice President of the Company
effective February 16, 1992. From July 1, 1991, until February 16, 1992, he
rendered consulting services as President of the Company's subsidiary RCI
Network Services, Inc. (RCINS). (In January, 1994, the name of this company
was changed to RCI Long Distance, Inc.) During the period January 8, 1991,
through June 30, 1991, he also rendered consulting services to RCINS, but
was neither an officer nor an employee of that company. This table reflects
payments made by the Company and/or RCINS in 1992 to Dale M. Gregory
Management Consultants, Inc., for these consulting services. The amount of
these payments was $29,687.
12
<PAGE>
(Summary Compensation Table footnotes continued)
(3) As described in more detail in the Report of Committee on Management at
page 9 of this Proxy Statement, 1993 Performance Unit Plan awards are
based upon performance achieved at 138.2% to 145% of the target levels.
(4) "All Other Compensation" includes imputed income from term life insurance
coverage and the Company's contributions to both the tax-qualified 401(k)
and nonqualified defined contribution plans. For 1993, imputed income from
term life insurance coverage was $3,456 for Mr. Bittner, $970 for Mr.
Gregory, $1,218 for Mr. Massaro, $2,004 for Mr. Pestorius, and $1,292 for
Mr. Purcell. The Company's 1993 contributions on behalf of the named
executive officers to the tax-qualified 401(k) and nonqualified defined
contribution plans, respectively, were as follows: $3,976 and $19,424 for
Mr. Bittner; $3,568 and $8,051 for Mr. Gregory; $6,745 and $3,758 for Mr.
Massaro; $3,116 and $7,491 for Mr. Pestorius; and $3,169 and $7,573 for
Mr. Purcell. For Mr. Gregory, "All Other Compensation" in 1991 and 1992
also includes travel and living expenses which were incurred by Mr.
Gregory as a consultant to the Company and were paid or reimbursed by the
Company. Additionally, in 1992, the amount includes a payment in the
amount of $35,000 negotiated for a non-compete agreement. In 1992, "All
Other Compensation" also includes special payments in the amounts of
$10,311 to Mr. Pestorius and $11,791 to Mr. Massaro. For Mr. Gregory in
1993, "All Other Compensation" includes a special payment in the amount of
$17,375. Each of these special payments was a reimbursement of personal
expenses incurred at the Company's request by the named executive officer
to further business opportunities.
The following companion tables to the Summary Compensation Table list the
stock options granted during the 1993 fiscal year to the named executive
officers, their stock option exercises in 1993 and the aggregate options they
held at the end of 1993, long-term incentive plan awards made to them during
1993, and the estimated retirement benefits which would be paid to them at age
65.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following Option Grant table includes two columns designated as
"Potential Realizable Value." The calculations in those columns are based on
hypothetical growth assumptions, proposed by the Securities and Exchange
Commission, of 5% and 10% for stock price appreciation for the option term.
There is no way to anticipate what the actual growth rate of the Company's
stock price will be.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1993
- ---------------------------------------------------------------------------------------------------
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED(1) (#) IN FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- -------------- -------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Bittner........... 23,000 19.9% $38.125 3/15/03 $551,462 $1,397,513
D. M. Gregory........... 6,600 5.7% $38.125 3/15/03 $158,246 $ 401,025
L. L. Massaro........... 4,500 3.9% $38.125 3/15/03 $107,895 $ 273,426
F. R. Pestorius......... 4,500 3.9% $38.125 3/15/03 $107,895 $ 273,426
J. K. Purcell........... 6,300 5.4% $38.125 3/15/03 $151,053 $ 382,797
</TABLE>
- --------
(1) The option grants have the following material terms: exercise price is the
market price (based on the closing price of the Company's common stock on
the New York Stock Exchange) on the date of the option grant; 1/3 of the
options granted may be exercised commencing one year following the grant
date, a second 1/3 may be exercised commencing two years following the
grant date, and the remaining 1/3 may be exercised commencing three years
following the grant date. The option grant date was 3/15/93. Options may
not be transferred other than by will or the laws of descent and
distribution. An option may be exercised upon written notice to the
Company accompanied by payment in full for the shares being acquired. In
the event of a "change in control" as defined by the Executive Stock
Option Plan, all options become immediately vested and exercisable.
13
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY END SARS AT FY END(1)
------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
NAME (#) (#) ($) ($)
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
R. L. Bittner............... 2,666 28,334 $36,658 $234,347
D. M. Gregory............... 900 8,400 $12,263 $ 70,725
L. L. Massaro............... 900 6,300 $12,263 $ 56,025
F. R. Pestorius............. 900 6,300 $12,263 $ 56,025
J. K. Purcell............... 900 8,100 $12,263 $ 68,625
</TABLE>
- --------
(1) Options are valued at the market value of RTC common stock at December 31,
1993, (closing price of $45.125) less the per share option exercise price,
multiplied by the number of exercisable/unexercisable options.
The following table shows the number of units of the Company's long-term
incentive plan which participants were awarded in the last fiscal year. The
information in the table is expressed in number of units unless otherwise
specified. At the end of the cycle, a participant's payout is based on the
value of these units multiplied by Company performance (measured as defined by
the long-term incentive plan and ranging from 0% to 150%) during the three-
year plan cycle. The threshold payout is .1% of the units awarded, the target
payout is 100% of the units awarded, and the maximum payout is 150% of the
units awarded. As noted in the Report of the Committee on Management on page 9
of this Proxy Statement, the long-term incentive plan will be discontinued
after conclusion of the existing performance cycles. For 1994, stock options
will be used as the sole long-term incentive.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL ----------------------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#)(1) OR PAYOUT (#) (#) (#)
- ---- ------------ ------------ ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
R. L. Bittner........... 3,065 Units 3 Years 3.07 Units 3,065.00 Units 4,597.50 Units
D. M. Gregory........... 984 Units 3 Years 0.98 Units 984.00 Units 1,476.00 Units
L. L. Massaro........... 937 Units 3 Years 0.94 Units 937.00 Units 1,405.50 Units
F. R. Pestorius......... 931 Units 3 Years 0.93 Units 931.00 Units 1,396.50 Units
J. K. Purcell........... 941 Units 3 Years 0.94 Units 941.00 Units 1,411.50 Units
</TABLE>
- --------
(1) The number of units granted for a performance cycle is based on the
participant's salary and RTC's stock price at the beginning of the cycle.
Cycle Performance is based on two equally weighted components. One
component compares RTC common stock's actual total return for the cycle to
the actual total market return of the Standard and Poor's 500 Index. The
other component ranks RTC common stock's risk adjusted total return
compared with a self-constructed group of sixteen telecommunications
companies. Each of the two components is given a performance range of 0%
to 150%. The cycle payout is a product of the stock price at the end of
the cycle, the average component performance, and the number of units
granted to the participant for the cycle. There is a cap on the end of the
cycle stock price used to calculate payouts to preclude extraordinary
gains to a participant in the event of major stock price movements.
14
<PAGE>
The following table shows the estimated annual benefits payable upon
retirement at age 65 to individuals in specified remuneration and years of
service classifications. The amounts set forth in this table do not reflect
early retirement incentives which the Company had previously offered certain of
its management employees. Furthermore, the amounts set forth are neither
subject to any deduction for Social Security benefits or any other offsets nor
adjusted to reflect maximum allowable benefits under the Internal Revenue Code.
All of the Company's officers, including those listed in the Summary
Compensation Table, are participants in the Company's Management Pension Plan
as supplemented by a Supplemental Management Pension Plan (SMPP). The annual
aggregate pension benefit for an officer under these Plans is based upon
several factors and is largely determined by the number of years of employment
multiplied by a percentage of the officer's three consecutive years of highest
average annual compensation preceding retirement.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION (15) (20) (25) (30) (35)
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000 $ 44,837 $ 59,782 $ 74,728 $ 89,673 $104,619
225,000 50,612 67,482 84,353 101,223 118,094
250,000 56,387 75,182 93,978 112,773 131,569
300,000 67,937 90,582 113,228 135,873 158,519
350,000 79,487 105,982 132,478 158,973 185,469
400,000 91,037 121,382 151,728 182,073 212,419
450,000 102,587 136,782 170,978 205,173 239,369
500,000 114,137 152,182 190,228 228,273 266,319
550,000 125,687 167,582 209,478 251,373 293,269
600,000 137,237 182,982 228,728 274,473 320,219
650,000 148,787 198,382 247,978 297,573 347,169
700,000 160,337 213,782 267,228 320,673 374,119
750,000 171,887 229,182 286,478 343,773 401,069
800,000 183,437 244,582 305,728 366,873 428,019
850,000 194,987 259,982 324,978 389,973 454,969
900,000 206,537 275,382 344,228 413,073 481,919
</TABLE>
Mr. Bittner, Mr. Gregory, Mr. Massaro, and Mr. Purcell each have executive
contracts which may pay a benefit in the event of a "Change in Control" of the
Company. These contracts are explained in detail on page 16 of this Proxy
Statement. Each of them also participates in the Company's Pension Plan. Under
SMPP, their service factor would include, subject to certain limitations, the
amount of service for which payment is made to them under their executive
contract.
The SMPP also provides that in the event of a Change in Control of the
Company, the Board may not terminate a participant's benefit and the Employees'
Benefit Committee may not change prior decisions regarding a participant's
service factor.
Effective January 1, 1994, the Company established a Supplemental Executive
Retirement Plan (SERP) which covers all the officers named in the preceding
tables plus two additional executive officers. The Plan has an accrual and
vesting schedule based on years of service and age. A maximum benefit of 60% of
final compensation will be paid to an executive retiring at age 50 or older
with 30 or more years of service. Payments made under the Company's Management
Pension Plan and the Supplemental Management Pension Plan are included in
determining the ultimate benefit payable under the SERP. However, in order to
qualify for the SERP benefit a covered executive must be at least 50 years of
age. Executive officers who are not at least 50 years old when they retire
would only receive the retirement benefits set forth in the above Pension Plan
Table and would receive no SERP benefit.
15
<PAGE>
For the purposes of these Plans, annual compensation is the same as that
given in the Salary and Bonus columns of the Summary Compensation Table for the
named executive officers. The number of years of employment of such individuals
for the purposes of these Plans currently are as follows: Mr. Bittner--31; Mr.
Gregory--15; Mr. Massaro--25; Mr. Pestorius--31; and Mr. Purcell--29.
Additionally, the Company has agreed to bridge Mr. Gregory's prior service with
other telecommunications companies provided he remains employed by Rochester
Telephone Corporation until January 1, 1997. Effective that date, the Company
will credit Mr. Gregory his additional six years and six months experience in
the telecommunications industry.
Neither Mr. Massaro nor Mr. Gregory has yet reached the age of 50 years.
Assuming they left the Company as of the current date, each would receive only
a deferred pension based upon the amount reflected in the Pension Plan Table
and neither would ever receive any additional benefit under the SERP. Mr.
Bittner and Mr. Pestorius have each reached the age of 50 years and have
accrued at least 30 years of service credit. If they retired as of the current
date, each would receive a full pension based on the amount reflected in the
Pension Plan Table. In addition, assuming annual compensation at the level each
received as of March 8, 1994, under the SERP Mr. Bittner would receive his full
pension plus an estimated annual SERP benefit of $66,996 and Mr. Pestorius
would receive his full pension plus an estimated annual SERP benefit of
$33,607. Although Mr. Purcell has reached the age of 50 years, his 29 years of
service credit entitles him only to a reduced pension rather than a full
pension. Assuming annual compensation at his March 8, 1994 level, if
Mr. Purcell were to retire as of the current date, he would receive a reduced
pension plus an estimated annual SERP benefit of $67,960. If Mr. Purcell
retired after achieving 30 years of service, he would be eligible for a full
pension. In that event, assuming annual compensation at the level he received
March 8, 1994, Mr. Purcell's estimated annual SERP benefit would only be
$37,535.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The members of the Committee on Management during the last completed fiscal
year were Mr. Calkins, Mr. Gill (Chairman), and Mr. Miller. None of these
persons were, during 1993 or previously, an officer or employee of the Company
or any of its subsidiaries.
The full Board of Directors accepted the recommendation of the Committee on
Management concerning Mr. Bittner's compensation. Mr. Hasselwander is a former
officer of the Company and, during 1993, he participated in those deliberations
of the registrant's Board of Directors in which the Board accepted the
Committee on Management's recommendations concerning executive officer
compensation. Mr. Hasselwander is not a member of the Committee on Management.
No executive officer of the Company has, during 1993 or previously, served as a
Director or member of the Compensation Committee of any other entity that has
an executive officer who serves or has served either as a member of the
Committee on Management or as a member of the Board of Directors of Rochester
Telephone Corporation.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into agreements, for an indefinite term, with Mr.
Bittner, Mr. Gregory, Mr. Massaro and Mr. Purcell. Each agreement provides
that, in the event of a change in control (as defined in the agreement) which
is followed within three (3) years by termination of employment under
circumstances other than one of the following: (i) death, (ii) retirement,
(iii) disability, (iv) termination by the Company for Cause (as defined in the
agreement), or (v) Voluntary Termination (as defined in the agreement), the
employee will be entitled to (a) continuation for three years of certain health
and life insurance benefits, and (b) a cash severance payment equal to three
(3) times the aggregate annual salary and bonus as determined under the
agreement. Additionally, in the event any of these amounts are determined to
trigger an Excise Tax (as defined in the agreement), the employee may also be
entitled to a Gross-Up Payment (as defined in the agreement). The employee is
also entitled to the above benefits if after a change in control the employee
terminates his employment for Good Reason (as defined in the agreement) or
during a "window period" (also as defined in the agreement). Mr. Bittner, Mr.
Gregory, Mr. Massaro, and Mr. Purcell would each receive their individual
severance payments in a lump sum.
16
<PAGE>
Executives who retired prior to January 1, 1994, received a combined Pre-
Pension Leave and Executive Pre-Pension Leave of up to twelve months' salary
and up to six months' service credit toward pension. This benefit was
discontinued for executives retiring after December 31, 1993. Mr. Pestorius was
eligible to retire at the end of 1993, with a full pension and an Executive
Pre-Pension Leave, and he had indicated to the Company his desire to do so. The
Company asked Mr. Pestorius to remain in the employ of the Company until at
least July 1, 1994, in order to transition to a successor those areas of the
business for which he is responsible. If Mr. Pestorius did so he would forego
the Executive Pre-Pension Leave to which he was entitled if he retired by
December 31, 1993.
In order to keep Mr. Pestorius whole and as an inducement for him to honor
the Company's request, Mr. Pestorius and the Company have entered into an
agreement under which Mr. Pestorius will receive a sum of money approximately
equal to one year's salary following his retirement from the Company, plus
service credit toward his pension. Additionally, Mr. Pestorius has agreed to
refrain from competing with the Company for a minimum of five years following
his retirement in exchange for a sum of money approximately equal to an
additional year's salary and bonus which will be made in installments over a
five-year period following his last day of active employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Please see page 3 for the discussion concerning Mr. Tomaino's affiliation
with a law firm which has provided legal services to the Company.
INDEMNIFICATION OF CERTAIN PERSONS
As authorized by New York State Law, the Company and its subsidiaries have
purchased insurance from the Chubb Group insuring such companies against
amounts they may pay as a result of indemnifying their officers and Directors
for certain liabilities such officers and Directors might incur. These
insurance policies also insure all officers and Directors of the Company and
its affiliates for additional liabilities against which such officers and
Directors may not be indemnified by the Company and its affiliates. The
insurance was renewed on May 7, 1993, for a period of one year. During 1993,
the Company paid $499,915 for this insurance and the renewal policy cost will
be negotiated in April, 1994.
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS
The Company's independent auditors are Price Waterhouse. At the Annual
Meeting, the shareowners will consider and vote upon a proposal to elect
independent auditors for the Company's fiscal year ending December 31, 1994.
The Audit Committee of the Board of Directors, none of whose members is an
officer or employee of the Company, has recommended that Price Waterhouse be
re-elected as independent auditors for that year. The Board of Directors
unanimously recommends that shareowners vote FOR this proposal. Proxies
solicited by the Board of Directors will be voted FOR the foregoing proposal
unless otherwise indicated. Approval of this proposal will require the
affirmative vote of a majority of the votes cast at the Annual Meeting by the
holders of the common stock outstanding.
Representatives of Price Waterhouse will be present at the Annual Meeting to
make a statement, if they wish, and to respond to appropriate questions from
shareowners.
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF PRICE WATERHOUSE AS THE
COMPANY'S INDEPENDENT AUDITORS, DESIGNATED AS PROPOSAL 2 ON YOUR PROXY CARD.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF
THE DIRECTION THEREON TO THE CONTRARY.
17
<PAGE>
PROPOSALS TO MODIFY EMPLOYEE AND DIRECTOR COMPENSATION PLANS
The Company is requesting shareowner approval of several amendments and
modifications to existing employee and Director compensation plans. In general
the modifications are designed to increase the participants' ownership of
Company common stock or to facilitate the participants' disclosure document
filing obligations. These proposals are included on pages 18 through 23 of this
Proxy Statement as Proposals 3, 4, 5 and 6. Specifically, in the case of
Proposals 3 and 6, shareowner approval is requested to facilitate disclosure
document filing obligations of Plan participants who are either Directors or
executive officers of the Company. In the case of Proposals 4 and 5, shareowner
approval is requested to increase the number of shares available for stock
option grants and/or to approve an increase in the number of options granted
under the Plans. A brief summary of the intent of each proposal is presented
after the title of the proposal. As required by the regulations of the
Securities and Exchange Commission, there is also included a summary of the
material provisions of each Plan.
Copies of each of these Plans and any amendments to them will be available at
the meeting. They also will be sent to any shareowner upon written or oral
request. Shareowners should direct such requests to the Corporate Secretary at
the Company's office at Rochester Tel Center, 180 South Clinton Avenue,
Rochester, New York 14646. Alternatively, shareowners may request this material
via the Shareowner Line by calling 1-800-836-0342.
PROPOSAL 3--AMENDMENT TO THE SUPPLEMENTAL
RETIREMENT SAVINGS PLAN
SUMMARY OF PROPOSED ACTION
The Supplemental Retirement Savings Plan (the "Plan") is a retirement savings
plan for certain employees of Rochester Telephone Corporation. The amendment to
the Plan adds Rochester Telephone common stock as an investment vehicle which
may be elected by the participants. The Board of Directors has approved this
amendment. As stated earlier in this Proxy Statement, the Company has
established recommended stock ownership levels for its senior management based
upon a multiple of annual salary. Shareowner approval would facilitate the
periodic filings required by the stock acquisitions for certain Plan
participants who are officers of the Company.
INTRODUCTION
The Company's Supplemental Retirement Savings Plan (the "Plan") is a non-
qualified "top-hat" plan. Its principal purpose is to permit certain highly
compensated employees to contribute to retirement savings notwithstanding
limits imposed by the Internal Revenue Code on contributions made to tax-
qualified plans. Currently, there are 48 participants in the Plan and employer
matching contributions are approximately $120,000 per year. No contributions
are made for past service. All contributions to the Plan and the earnings on
the contributions are held in a "rabbi" trust.
SUMMARY OF PLAN PROVISIONS
The Plan automatically supplements the Employees' Retirement Savings Plan,
which is a broad-based 401(k) plan. The terms of the Plan primarily adopt and
mirror the terms of the 401(k) plan, with certain exceptions. First, the Plan
only covers 401(k) plan participants who earn above a specific level as defined
by Internal Revenue Service regulations. Currently this amount is $66,000 per
year. Second, the current investment options in this Plan are the Mariner Cash
Management Fund (a money market fund), the Vanguard Index Trust--500 Portfolio
(an S&P 500 index fund), the Merrill Lynch Capital Fund (a balanced fund), and
the Merrill Lynch Corporate Bond Fund (an intermediate bond fund). The Plan
amendment which is the subject of this Proposal 3 adds to these options a
Rochester Telephone Corporation Common Stock Fund. Third, contributions to this
Plan are solely pre-tax. The amount of these contributions equals the
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<PAGE>
amount that could have been contributed to the 401(k) plan but without various
statutory restrictions. Finally, Plan benefits can be paid out only at
termination of employment or at a fixed date specified by a participant when
the contribution is made. In addition, the form of benefit payment must be
elected at the time a contribution is made rather than at the time of
distribution.
PLAN AMENDMENTS
In August, 1992, the IRS issued new guidelines concerning rabbi trusts and
their associated non-qualified deferred compensation plans. These guidelines
permit rabbi trusts to invest in common stock of the sponsoring employer.
Effective July 1, 1993, in response to the expansion of permitted rabbi trust
investments, the Plan began to permit investments in Company common stock.
FEDERAL TAX CONSEQUENCES
Plan participants are not subject to current income taxes on contributions to
the Plan or on the income or gains on these contributions. These amounts do
constitute "wages" for purposes of Social Security taxes. A participating
company is not entitled to a current deduction for contributions made to this
Plan. In addition, the Company is subject to current income taxes on the income
and gains on investments held in the rabbi trust. Participants will be taxed on
all benefits they receive from the Plan. The Company will be entitled to take a
tax deduction for these same amounts at the time the participants recognize the
income for tax purposes.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO THE
SUPPLEMENTAL RETIREMENT SAVINGS PLAN, DESIGNATED AS PROPOSAL 3 ON YOUR PROXY
CARD. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE
ABSENCE OF THE DIRECTION THEREON TO THE CONTRARY.
PROPOSAL 4-- RESTATED EXECUTIVE STOCK OPTION PLAN
SUMMARY OF PROPOSED ACTION
Stock options are a form of compensation which clearly link financial reward
to Company performance. As discussed in the Report of Committee on Management
at page 9 of this Proxy Statement, the Company is replacing the existing long-
term incentive program with an increased stock option program. In order to have
sufficient options available for grant in future years, it is necessary for
shareowners to approve this Restated Executive Stock Option Plan (the "Plan")
which, among other modifications, will increase from 300,000 to 1,000,000 the
number of authorized shares which may be granted under this Plan. The Committee
on Management of the Company's Board of Directors has adopted the restated
Plan, subject to shareowners' approval. The New York State Public Service
Commission approved the restated Plan in open session on March 16, 1994, also
subject ultimately to shareowners' approval.
SUMMARY OF PLAN PROVISIONS
The Plan is a standard stock option plan which authorizes the grant to key
employees of options to purchase shares of Company common stock at its fair
market value as of the date of grant. The Plan was originally adopted by the
Board of Directors on November 20, 1989, and approved by shareowners on April
25, 1990. It covers approximately 55 employees who may be granted either
incentive stock options ("ISOs") or non-qualified stock options ("NQSOs") or a
combination of the two. Options with respect to 147,036 shares of common stock
were outstanding, as of March 8, 1994, to 50 employees.
A Committee of the Board of Directors (the "Committee") has discretion to
determine the identities of key employees who will participate and the timing
of the option grants. The Committee also has authority to determine whether the
granted options will be ISOs or NQSOs.
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<PAGE>
An aggregate of 1,000,000 shares of the Company's common stock will be
available for the grant of options under the Plan. The shares may be authorized
and unissued shares. If an option expires, terminates, or is cancelled without
being exercised, new options may thereafter be granted incorporating such
shares. No option will be granted more than ten (10) years after the effective
date of the Plan.
The exercise price under each option is not less than the fair market value
of the common stock at the time the option is granted. Options by their terms
are not transferable by the participant other than by will or the laws of
descent and distribution. Options become exercisable with respect to 33 1/3% of
the shares subject to the option on the first anniversary of the date of the
grant and with respect to an additional 33 1/3% of such shares on the second
and third anniversaries of such grant. ISOs expire automatically if not
exercised within ten (10) years following the date of grant. The maximum value
of common stock under which an ISO granted under this Plan or any other Company
plan which first becomes exercisable in any calendar year cannot exceed
$100,000.00.
In the event of a change in control of the Company, all of a participant's
ISOs or NQSOs become immediately vested and exercisable, unless directed
otherwise by resolution of the Board adopted prior to and specifically relating
to the occurrence of such change in control. Each participant also has the
right, exercised by written notice to the Company within sixty (60) days after
the change in control, to receive, in exchange for the surrender of the option
or any portion thereof to the extent the option is then exercisable, an amount
of cash equal to the difference between the fair market value (as determined by
the Board) on the date of surrender of the common stock covered by the option
or portion thereof which is so surrendered and the option price of such common
stock under the option.
PLAN AMENDMENTS
The restated Plan increases the Plan's authorized number of shares and
conforms certain provisions of the Plan to plans of a similar nature within the
telecommunication industry. The material differences between the prior Plan and
the restated Plan approved by the Board are set forth in the following table:
<TABLE>
<CAPTION>
AMENDED PLAN PRIOR PLAN
------------ ----------
<S> <C> <C>
Shares Available for Grant......... 1,000,000 300,000
Exercise rights following Three years One year
termination upon death............
Exercise rights following Automatic Three months
termination other than death or cancellation
retirement........................
Exercise rights following For duration of term Three months--ISOs;
retirement........................ one year--NQSOs
Employment transferred to Cellular Rights continue Treated as termination
Partnership with NYNEX............
Stock splits or other changes Awards adjust Board action required
affecting common stock............ automatically to adjust awards
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The Company has been advised by counsel that under present law the following
are the Federal income tax consequences generally arising with respect to
options granted under the Plan. The grant of an option will create no tax
consequences for an optionee or the Company. The optionee will have no taxable
income upon exercising an ISO (except that the alternative minimum tax may
apply), and the Company will receive no deduction when an ISO is exercised.
Upon exercising an option (other than an ISO), the optionee must recognize
ordinary income equal to the difference between the exercise price and the fair
market value of the stock on the date of exercise. The Company will be entitled
to a deduction for the same amount. The treatment of an optionee's disposition
of shares acquired through the exercise of an option depends on how
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<PAGE>
long the shares have been held and on whether such shares were acquired by
exercising an ISO or by exercising an NQSO. Generally there will be no tax
consequences to the Company in connection with the disposition of shares
acquired under an option except that the Company may be entitled to a deduction
in the case of the disposition of shares acquired under an ISO before the
applicable holding periods have been satisfied.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF A RESTATED EXECUTIVE STOCK
OPTION PLAN, DESIGNATED AS PROPOSAL 4 ON YOUR PROXY CARD. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF THE DIRECTION THEREON
TO THE CONTRARY.
PROPOSAL 5--AMENDMENT TO THE DIRECTORS' STOCK OPTION PLAN
SUMMARY OF PROPOSED ACTION
An increased common share ownership in the Company by Directors will more
closely align their interests to those of our general shareowner population.
Based on management's recommendation, the Company's Board of Directors adopted
an amendment to the Directors' Stock Option Plan. Among other modifications,
the amendment increases from 1,000 to 2,000 the annual grant of options to
outside Directors and increases from 100,000 to 500,000 the number of shares
available to be issued in connection with this Plan. The increase in the number
of shares available to be issued in connection with this Plan is subject to
shareowners' approval. The New York State Public Service Commission approved
this amendment in open session on March 16, 1994, also subject ultimately to
shareowners' approval.
In order to have sufficient options available for grant in future years, it
is necessary for shareowners to approve this Plan amendment.
SUMMARY OF PLAN PROVISIONS
The Rochester Telephone Corporation Directors' Stock Option Plan (the "Plan")
was adopted by the Board of Directors on November 20, 1989, and approved by
shareowners on April 25, 1990. With two significant exceptions, the Plan is
substantially the same as the Executive Stock Option Plan discussed in Proposal
4. One of the exceptions is that Directors may be granted only non-qualified
options. The second exception is that the grant of options is not discretionary
with a Board Committee but is fixed by the terms of the Plan itself. As
originally adopted, the Plan provides for a non-discretionary grant to non-
employee Directors of a non-qualified option to purchase 1,000 shares of the
Company's common stock. Grants are made each year on the date of the Annual
Meeting electing Directors to the Board. Board members who begin service on the
Board on a date other than the date of the Annual Meeting are granted an option
to purchase a pro rata portion of 1,000 shares. All thirteen current non-
employee Directors currently participate in this Plan. The following is a
summary of the material provisions of the Plan.
Each option granted under the Plan is evidenced by an option agreement
between the individual Director and the Company. At the date each year that
Directors are elected to the Board, each Director so elected (whether newly
elected or continuing as a carryover Director) will receive an option to
purchase a fixed number of shares of the Company's common stock. The exercise
price under each option equals the fair market value of the common stock at the
time the option is granted. Options are not transferable by the participant
other than by will or the laws of descent and distribution. New options granted
under the Plan may become exercisable with respect to 33 1/3% of the shares
subject thereto on the first anniversary of the date of grant and with respect
to an additional 33 1/3% of such shares on the second and third anniversaries
of the grant.
21
<PAGE>
Notwithstanding any of the provisions of the Plan, in the event of a change
in control of the Company, all of a participant's options are immediately
vested and exercisable, unless directed otherwise by resolution of the Board
adopted prior to and specifically relating to the change in control. In the
event of a change in control, each holder of an exercisable option shall also
have the right at any time thereafter during the term of such option to
exercise the option in full, notwithstanding any limitation or restriction in
any option agreement or in the Plan. Each participant shall also have the
right, exercised by written notice to the Company within sixty (60) days after
the change in control, to receive, in exchange for the surrender of the option
or any portion thereof to the extent the option is then exercisable, an amount
of cash. This amount of cash will be equal to the difference between the fair
market value (as determined by the Board) on the date of surrender of the
common stock covered by the option or portion thereof which is so surrendered
and the option price of such common stock under the option.
PLAN AMENDMENTS
On November 16, 1993, the Board of Directors, acting upon the recommendation
of management, amended the Plan. The material differences between the prior
Plan and the restated Plan approved by the Board are set forth in the following
table:
<TABLE>
<CAPTION>
AMENDED PLAN PRIOR PLAN
------------ ----------
<S> <C> <C>
Shares Available for Grant......... 500,000 100,000
Annual Grant to Directors.......... 2,000 1,000
Exercise rights following
termination of service in event of
death, resignation due to conflict
of interest, or removal for cause. One year One year
Exercise rights following
termination other than death,
resignation due to conflict of
interest, or removal for cause.... For duration of term One year
Stock splits or other changes Awards adjust Board action required
affecting common stock............ automatically to adjust awards
</TABLE>
TAX CONSEQUENCES
For a discussion of the tax consequences of the options issued under the
Plan, see the description of NQSOs in Proposal 4.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF THIS AMENDMENT TO THE
DIRECTORS' STOCK OPTION PLAN, DESIGNATED AS PROPOSAL 5 ON YOUR PROXY CARD.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF
THE DIRECTION THEREON TO THE CONTRARY.
PROPOSAL 6--DIRECTORS' COMMON STOCK DEFERRED GROWTH PLAN
SUMMARY OF PROPOSED ACTION
The Directors' Common Stock Deferred Growth Plan (the "Plan") allows a
participating Director to defer some or all of the compensation received for
service on the Board. Amounts deferred under this Plan are invested in Company
common stock. This new Plan was approved by the Board of Directors effective
November 1, 1993. Shareowner approval of this Plan would facilitate the filing
of periodic stock acquisition disclosure for Company Directors who have elected
to participate in this Plan.
22
<PAGE>
SUMMARY OF PLAN PROVISIONS
On November 1, 1993, the Committee on Directors of the Company's Board of
Directors adopted the Rochester Telephone Corporation Directors' Common Stock
Deferred Growth Plan (the "Plan"). This new Plan is in addition to and mirrors
the Company's Plan for the Deferral of Directors' Fees. Both plans contain
virtually the same terms and conditions except with respect to the investment
of the deferred fees. The Plan for the Deferral of Directors' Fees provides for
deferral of fees into cash which is then credited with interest at a rate equal
to the rate which the Company pays on its customer deposits. The new Plan
permits Directors to defer some or all of the fees they earn as Company
Directors into Company common stock. The following is a summary of the material
provisions of the Plan.
The Plan is administered by the Board's Committee on Directors (the
"Committee"). The Committee has the authority to construe the Plan's terms and
to adopt rules and regulations for implementing the Plan. The Board of
Directors has the authority to amend or to terminate the Plan.
Any Director who is not also an employee of the Company or of a subsidiary is
eligible to participate in this Plan on a voluntary basis. As of the Plan's
November 1, 1993, effective date, thirteen Directors were eligible to
participate in the Plan, and as of December 31, 1993, seven Directors had
elected to participate.
An eligible Director may defer all or a portion of his or her Directors' Fees
into this Plan. Any such election must generally be made prior to the beginning
of the calendar year that the fees are to be earned by the Director. A
Director's deferral election must indicate when deferrals will commence, the
amount of the deferrals, and when payments are to be made.
At the present time, the Company has established a rabbi trust to meet its
obligations to accumulate and pay out the deferred fees and the earnings on
them. The deferred fees are paid to the trustee who uses the fees to purchase
shares of the Company's common stock on the open market at its then fair market
value. Dividends paid on the shares are used to purchase additional shares of
common stock.
Eligible Directors have a one-time right to transfer to this Plan amounts
previously deferred under the Company's Plan for the Deferral of Directors'
Fees. Amounts so transferred will be invested in shares of the Company's common
stock. The transferred amounts will, however, remain subject to the terms of
the election form the Director completed under the Plan for the Deferral of
Directors' Fees. None of the amounts transferred to this Plan, nor the amounts
deferred initially under this Plan, may be transferred back to the Plan for the
Deferral of Directors' Fees.
Payment of benefits from this Plan will be made in accordance with the terms
of a Director's election form. Payments will be made in whole shares of common
stock with fractional shares paid in cash.
The Company's obligation to pay deferred amounts is an unsecured promise. In
the event of the Company's bankruptcy or insolvency, the creditors of the
Company may reach any assets set aside to pay promised benefits, including any
assets held in the rabbi trust.
TAX CONSEQUENCES
Amounts deferred under this Plan are not subject to Federal income or Social
Security taxes at the time of deferral. Benefits paid from the Plan are subject
to both income and Social Security taxes in the year paid.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF A DIRECTORS' COMMON STOCK
DEFERRED GROWTH PLAN, DESIGNATED AS PROPOSAL 6 ON YOUR PROXY CARD. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF THE
DIRECTION THEREON TO THE CONTRARY.
As required by regulations of the Securities and Exchange Commission, the
following table shows the benefits under each of the Plans described in
Proposals 3 through 6. The table indicates the Plan benefits which may be
received by or allocated for the named executive officers, the executive
officers as a group,
23
<PAGE>
Directors who are not executive officers, and Company employees who are not
executive officers. The benefits are expressed in either dollar values or
number of units. The Directors and executive officers will benefit from
approval of the Plans in which they participate.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
DIRECTORS'
COMMON
SUPPLEMENTAL EXECUTIVE DIRECTORS' STOCK
RETIREMENT STOCK STOCK DEFERRED
SAVINGS OPTION OPTION GROWTH
NAME AND POSITION PLAN(1) PLAN(2) PLAN(3) PLAN(3)
- ----------------- ------------ --------- ---------- ----------
($) (#) (#) ($)
------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
R. L. Bittner
Chairman, President and CEO..... $ 19,424 37,000 N/A N/A
D. M. Gregory
Corporate Vice President and
President--Telecommunication
Group........................... $ 8,051 11,000 N/A N/A
L. L. Massaro
Corporate Vice President--
Finance and Treasurer........... $ 3,758 11,000 N/A N/A
F. R. Pestorius
Corporate Vice President--
Sales and Marketing............. $ 7,491 11,000 N/A N/A
J. K. Purcell
Corporate Vice President--
Partnering and Alliances........ $ 7,573 11,000 N/A N/A
Executive Group................. $ 49,897 103,000 N/A N/A
Non-Executive Director Group.... N/A N/A 22,000 $164,450(4)
Non-Executive Officer Employee
Group........................... $129,392 84,600 N/A N/A
</TABLE>
- --------
(1) All contributions are actual 1993 contributions.
(2) All amounts are 1994 projections.
(3) All amounts are 1994 projections. This Plan is available only to Directors
who are not employees of the Company.
(4) These amounts are normal Directors' fees and retainers otherwise payable
to Directors in 1994 which Plan participants have elected to defer into
this Plan.
OTHER MATTERS AND FUTURE PROPOSALS OF SHAREOWNERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present any matter for action at the Annual Meeting other than as
set forth in the Notice of Annual Meeting. If any other matters properly come
before the meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
In order to be eligible for inclusion in the proxy materials for the
Company's 1995 Annual Meeting of Shareowners, any shareowner proposal to take
action at such meeting must be received at the Company's principal executive
offices by November 23, 1994. Any such proposal should be addressed to 180
South Clinton Avenue, Rochester, New York 14646, Attention: Josephine S.
Trubek, Corporate Secretary. However, as described previously under the
caption "Information About the Board of Directors", shareowner suggestions for
nominees to be proposed by the Board of Directors for election as Directors at
next year's Annual Meeting will normally be considered if received by
September 1, 1994.
24
<PAGE>
The cost of the solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by mail, certain of the officers and
employees of the Company, without extra remuneration, may solicit proxies
personally or by telephone, facsimile, telegraph, or cable. The Company will
also request brokerage houses, nominees, custodians, and fiduciaries to forward
soliciting materials to the beneficial owners of stock held of record and will
reimburse such persons for forwarding such materials. In addition, the Company
has retained Corporate Investor Communications, Inc., 111 Commerce Road,
Carlstadt, New Jersey 07072-8017, to aid in the solicitation of proxies at a
fee of $3,500, plus reimbursement for out-of-pocket expenses incurred by that
firm on behalf of the Company.
Copies of the 1993 Annual Report have been mailed to shareowners. Additional
copies may be obtained from the Corporate Secretary, Rochester Telephone
Corporation, 180 South Clinton Avenue, Rochester, New York 14646.
25
<PAGE>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
The Board of Directors recommends a vote FOR proposals 1 through 6:
1. NOMINEES FOR DIRECTORS: Patricia C. Barron, Ronald E. Bittner, John R.
Block, Harlan D. Calkins, Brenda E. Edgerton, Jairo A. Estrada, Daniel E.
Gill, Alan C. Hasselwander, Douglas H. McCorkindale, Richard P. Miller, Jr.,
Dr. Leo J. Thomas, and Michael T. Tomaino
FOR ALL NOMINEES WITHHOLD FROM ALL NOMINEES
[ ] [ ]
For, except withhold vote from the following nominee(s):
[_]
2. Election of Price Waterhouse as Auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of an Amendment to the Supplemental Retirement Savings Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Approval of the Restated Executive Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Approval of an Amendment to the Directors' Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. Approval of the Directors' Common Stock Deferred Growth Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
7. To act in their discretion upon such other matters which may properly
come before the meeting, or which are incident to the conduct of the meeting,
and which the Board of Directors does not know, at the time of this
solicitation, will be presented at the meeting.
MARK HERE FOR ADDRESS [ ]
CHANGE AND NOTE AT LEFT
MARK HERE IF YOU PLAN [ ]
TO ATTEND THE MEETING
(Please sign exactly as name appears hereon)
Signature:_____________________________ Date _______________
Signature:_____________________________ Date _______________
<PAGE>
<PROXY>
[LOGO OF ROCHESTER TELEPHONE CORP.]
PROXY FOR COMMON SHARES
I authorize Ronald L. Bittner and/or Josephine S. Trubek, or their
substitutes, to vote all shares of Rochester Telephone Corporation which I am
entitled to vote at the Annual Shareowners Meeting on April 27, 1994, or at any
adjournment thereof, as specified on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION TO THE
CONTRARY IS INDICATED, IT WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
AND AUDITORS AND IN FAVOR OF EACH OF THE BENEFIT PLAN PROPOSALS, ITEMS 3-6.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
Graphic Appendix List
Page No. Description
-------- -----------
4 Photos of the nominees appear beside their
names.
5 Photos of the nominees appear beside their
names.
6 Photos of the nominees appear beside their
names.
11 5 year performance graph appears on page 11.
