CONESTOGA ENTERPRISES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 4, 1996
TO THE SHAREHOLDERS OF THE COMPANY:
The annual meeting of the Shareholders of CONESTOGA
ENTERPRISES, INC. will be held at the Office of the Company, 202
East First Street, Birdsboro, Pennsylvania, 19508, on Saturday,
May 4, 1996, at 10:00 A.M., for the following purposes:
1. To elect 3 Class I Directors for a term of 3 years.
2. To ratify the appointment of Beard and Company, Inc., as
independent accountants of the Company for 1996.
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
A copy of the Annual Report for 1995 is enclosed for your
information.
The Board of Directors has fixed the close of business on
April 4, 1996, as the record date for the determination of
Shareholders entitled to notice of and to vote at said meeting.
You are requested to vote, date and sign the enclosed proxy
and return it in the enclosed envelope at your earliest
convenience. If you attend the meeting and decide you want to vote
in person, the proxy will not be used.
By order of the Board of Directors
Date: April 12, 1996 Kenneth A. Benner, Secretary
PROXY STATEMENT
1996 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is mailed to Shareholders on or about
April 12, 1996 by the Board of Directors of Conestoga Enterprises,
Inc. (the "Company") in solicitation of proxies to be used in
voting at the Annual Meeting of Shareholders to be held on May 4,
1996, at the office of the Company, 202 East First Street,
Birdsboro, Pennsylvania 19508. This is a solicitation by the Board
of Directors of the Company. All costs of the solicitation of
proxies will be borne by the Company. In addition to use of the
mail, proxies may be solicited by directors, officers and regular
employees of the Company, without additional compensation, in
person or by telephone. Proxies which are validly executed by
shareholders and received by the Company prior to the meeting will
be voted in accordance with the instructions contained thereon. On
the accompanying proxy a shareholder may substitute the name of
another person in place of those persons presently named as
proxies. In order to vote, a substitute must present adequate
identification to the Secretary before the voting occurs.
Shareholders Entitled to Vote
Shareholders of record at the close of business on April 4,
1996, will be entitled to notice of, and to vote at, the Annual
Meeting of Shareholders. On April 4, 1996, the Company had
3,848,922 shares of common stock outstanding, all of which will be
entitled to vote at the meeting. In all matters other than the
election of directors, such Shareholders shall have one vote for
each share of stock registered in their name on the books of the
Company at the close of business on April 4, 1996. The holders of
a majority of the outstanding shares must be present in person or
represented by proxy at the Annual Meeting in order to constitute a
quorum for the transaction of business.
In all elections by the Shareholders for directors, each
Shareholder shall have cumulative voting rights, which is the right
to cast as many votes in the aggregate as shall equal the number of
shares held by him or her multiplied by the number of directors to
be elected, and each Shareholder may cast the whole number of votes
for 1 candidate or distribute such votes among 2 or more
candidates.
The affirmative vote of the holders of a plurality of votes
cast at the Annual Meeting will be required to elect directors, and
the affirmative vote of the holders of the majority of the votes
cast will be required to act on all other matters to come before
the Annual Meeting. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by the inspectors of election appointed
for the meeting, who will also determine whether or not a quorum is
present. Shares represented by each duly signed proxy will be
voted as directed by the shareholder thereon and, if no direction
is given on a duly signed proxy, such shares will be voted in favor
of the proposals described in this Proxy Statement. Such shares
will be voted in the judgment of the persons named in the proxy
upon such other business as may properly come before the meeting.
The inspectors of election will treat shares represented by proxies
submitted by brokers who indicate that they do not have authority
to vote on a particular matter as shares that are present for
purposes of determining the presence of a quorum, but as unvoted
(i.e., not cast) for purposes of determining the approval of the
particular matter in question.
Revocability of Proxy
Any proxy given pursuant to this solicitation may be revoked
by the person giving it by delivering to the Secretary of the
Company at any time prior to the commencement of the Annual Meeting
a written revocation or a proxy bearing a later date or by voting
in person at the Annual Meeting. Attendance at the Annual Meeting,
in and of itself, will not constitute revocation of a proxy.
Receipt of Shareholder Proposals
If any Shareholder wishes a proposal to be included in the
Company's 1997 Proxy Statement and proxy form, which annual meeting
is scheduled for May 3, 1997, such proposal must be received by the
Company on or before December 13, 1996.
ELECTION OF DIRECTORS
One of the purposes of the meeting is to elect 3 Class I
Directors to the Board of Directors to serve for a term of 3 years.
It is the intention of the persons named as proxy holders in the
enclosed form of proxy to vote, either cumulatively or non-cumulatively,
in their discretion, all shares which they represent
for the election of the 3 nominees listed below as directors of the
Company. If any such nominee should become unable to serve, an
event not anticipated, the proxies will be voted for another person
designated by the present Board of Directors of the Company. The 3
nominees with the highest number of votes will be elected to the
Board of Directors. Vacancies in the Board of Directors may be
filled by the Board of Directors, and any director chosen to fill a
vacancy would hold office until the next election of the class for
which such director had been chosen.
Information with respect to each nominee and each director
whose term will continue after the Annual Meeting is set forth in
the following sections. Such information includes summaries of
their background, business experience and principal occupations
with the Company, the Company's telephone utility subsidiary,
Conestoga Telephone and Telegraph Company (hereinafter referred to
as "Conestoga Telephone"), and otherwise.
Information Concerning Nominees For Election as Directors
Position
with
Company Director Director of
and/or of the Conestoga
principal Company Telephone
Name Age occupation Since Since
Class I (Term Expires in 1999)
John R. Bentz 60 Executive Vice 1989 1986
President
James H. Murray 67 Vice President 1989 1957
& Partner
Miller and Murray,
Attorneys-at-Law,
Reading, PA
Robert M. Myers 48 Director of
Personnel,
Reading Hospital
and Medical Center,
Reading, PA
Mr. Bentz has been employed by Conestoga Telephone
continuously since 1958. He worked in plant craft for 18 years and
was appointed Central Office Engineer in 1975. In March 1980, he
was appointed Manager-Operations, and in January 1982, was elected
Executive Vice President-Operations. In October, 1986, he was
appointed to the Board of Directors of Conestoga Telephone and
named Executive Vice President. He was elected Executive Vice
President and a member of the Board of Directors of the Company at
its organizational meeting in June, 1989.
Mr. Murray is a partner of the law firm of Miller and Murray,
Reading, Pennsylvania, legal counsel to the Company. He has been a
member of the Board of Directors of Conestoga Telephone since 1957.
In June, 1988, he was elected Vice President of Conestoga
Telephone. He was elected Vice President and a member of the Board
of Directors of the Company at its organizational meeting in June,
1989.
Mr. Myers is the Director of Personnel of the Reading Hospital
and Medical Center where he has been employed since 1982. He has
been nominated by the Board of Directors for election as a Class I
Director for a term to expire in 1999.
Information Concerning Directors Who Are
Not Standing for Election at This Time
Position
with
Company Director Director of
and/or of the Conestoga
principal Company Telephone
Name Age occupation Since Since
Class II (Term Expires in 1998)
Kenneth A. Benner 48 Secretary/ 1989 1972
Treasurer
F. M. Brown 71 President & 1989 1972
President of
F. M. Brown's
Sons, Inc.,
Birdsboro, PA
Donald R. Breitenstein 55 Controller 1989 1987
Mr. Benner has been employed by Conestoga Telephone since 1974
and currently serves as Sales Manager. He has served as the
Secretary/Treasurer of Conestoga Telephone since 1982. He was
elected to the Board of Directors of Conestoga Telephone in 1972.
He was elected Secretary/Treasurer and a member of the Board of
Directors of the Company at its organizational meeting in June, 1989.
Mr. Brown has served as President of Conestoga Telephone since
1979 and has been a member of the Board of Directors of Conestoga
Telephone since 1972. He is not active in the day-to-day
management of Conestoga Telephone or the Company. He is President
of F.M. Brown's Sons, Inc., Birdsboro, Pennsylvania, feed
manufacturers. He was elected President and a member of the Board
of Directors of the Company at its organizational meeting in June,
1989.
Mr. Breitenstein has been employed by Conestoga Telephone
since 1962. He worked as Accountant until September, 1979, when he
was appointed Accounting Supervisor. In 1981 he was appointed
Accounting Manager, and in August 1986, Controller, of Conestoga
Telephone. He was appointed to the Board of Directors of Conestoga
Telephone in 1987. He was elected Controller and a member of the
Board of Directors of the Company at its organizational meeting in
June, 1989.
Class III (Term Expires in 1997)
Richard G. Weidner 69 Retired 1989 1988
Emma F. Mullen 73 Retired 1989 1981
John M. Sausen 62 Self-Employed 1989 1974
Accountant,
Oley, PA
Mr. Weidner retired as president of Beard and Company, Inc.,
Certified Public Accountants in 1986. In June, 1988, he was
appointed to the Board of Directors of Conestoga Telephone. He was
elected to the Board of Directors of the Company at its
organizational meeting in June, 1989.
Mrs. Mullen is a retired partner of the law firm of Forry and
Forry, Reading, Pennsylvania. She served as Registrar of Wills,
Berks County, Pennsylvania, retiring from that position in January,
1980. She was appointed to the Board of Directors of Conestoga
Telephone in August, 1981. She was elected to the Board of
Directors of the Company at its organizational meeting in June,
1989.
Mr. Sausen is a self-employed accountant with an office in
Oley, PA. He formerly was employed as a Senior Accountant, CPR,
for Metropolitan Edison Company of Reading, Pa for 23 years. He
retired on December 31, 1992, as President/Treasurer of Waldman
Bros. Electric, Inc. He was elected to the Board of Directors of
Conestoga Telephone in 1974. He was elected to the Board of
Directors of the Company at its organizational meeting in June,
1989.
All of the foregoing directors have been principally employed
in their positions, as provided above, for the past 5 years, except
for John M. Sausen who on December 31, 1992, resigned from his
positions as President and Treasurer of Waldman Bros. Electric,
Inc.
Board Meetings and Committees
The Board of Directors of the Company during the last fiscal
year had 12 regularly scheduled meetings and 5 special meetings.
Each incumbent director attended 75% or more of the total number of
meetings of the Board and the Committees of which he was a member.
The Board of Directors has a standing audit committee of which
Mr. Sausen, Mrs. Mullen and Mr. Sponagle are members. This
committee reviews with the independent auditors the plan and
results of the auditing engagement. The audit committee of the
Company held 4 meetings during the last fiscal year with all
members in attendance at all of the meetings.
The Board of Directors has an executive committee of which
Mr. Sausen, Mr. Sponagle and Mr. Murray are members. This
committee reviews and makes recommendations to the Board of
Directors on matters of major policy. The executive committee of
the Company held 7 meetings during the last fiscal year with all
members in attendance at all of the meetings.
The Board of Directors has a compensation committee of which
Mr. Sausen, Mr. Sponagle and Mr. Murray are members. This
committee reviews at least annually the salaries of the executive
management and makes appropriate recommendations to the Board of
Directors. The compensation committee of the Company held 1
meeting during the last fiscal year with all members in attendance.
The Board of Directors does not have a nominating committee.
Director Compensation
During 1995, members of the Board of Directors of the Company,
except Messrs. Benner, Bentz and Breitenstein, received $75.00 per
board meeting and $50.00 per committee meeting.
During 1995, Conestoga Telephone paid each member of its Board
of Directors, except Messrs. Benner, Bentz and Breitenstein, (1) an
annual Director's salary of $8,400, provided that he or she
attended ten regular board meetings during the year; (2) a fee of
$700 for each special meeting of the Board of Directors he or she
attended; and (3) a fee of $350 for each committee meeting he or
she attended.
Messrs. Benner, Bentz and Breitenstein are employees of the
Company and Conestoga Telephone and, as such, do not receive
additional compensation for attending directors' and committee
meetings.
In 1995, Conestoga Telephone paid $12,600.00 to Mr. Brown for
his services as President, $6,300.00 to Mr. Sponagle for his
services as Chairman of The Board, and $1,200.00 to Mr. Weidner for
his services as a consultant.
SECURITY OWNERSHIP OF MANAGEMENT
The following table reflects, as of March 1, 1996, the total
Common Stock ownership of the Corporation by each director and
reporting officer, and by all directors and reporting officers as a
group. The Company's voting Common Stock is its only class of
equity securities. Each named individual and all members of the
group exercise sole voting and investment power.
Amount
Name and Nature of
of Beneficial Percent
Beneficial Ownership of
Owner (See 1 and 2 Below) Class
Kenneth A. Benner 24,562 .64
John R. Bentz 17,959 .47
Donald R. Breitenstein 7,217 .19
F. M. Brown 99,686 2.59
Emma F. Mullen 52,499 1.36
James H. Murray 37,624 .98
Robert M. Myers 2,574 .07
John M. Sausen 87,749 2.28
Alvin W. Sponagle 72,452 1.88
Richard G. Weidner 2,205 .06
Thomas C. Keim 35,185 .91
Albert H. Kramer 200 .01
All Directors and Officers 439,912 11.43
as a Group (12 persons)
1. Under the proxy rules of the Securities and Exchange
Commission, a person who directly or indirectly has or shares voting
power and/or investment power with respect to a security is considered
a beneficial owner of the security. Shares as to which voting power
and/or investment power may be acquired within 60 days are also
considered as beneficially owned under these proxy rules.
2. Included in the shares set forth in the table above are (a)
shares beneficially owned by the director, his wife, minor children
and relatives living in his house and includable in such table under
rules of the Securities and Exchange Commission, and (b) shares which
are deemed to be beneficially owned because the director has voting
power or power of disposition with respect to the shares. Share
amounts are reported as of March 1, 1996 and percentages of share
ownership are calculated based upon 3,848,922 shares of Common Stock
of the Company outstanding as of that date. The information in the
table is based upon data furnished to the Company by, or on behalf of,
the persons referred to in the table.
EXECUTIVE COMPENSATION
Report of The Compensation Committee
The Company's executive compensation program is administered by
the Compensation Committee of the Board of Directors, composed of Mr.
Sausen, Mr. Sponagle and Mr. Murray. The executive compensation
program is structured and administered to support the Company's
business mission of providing superior tele-communications services to
its customers, generating respectable returns for its shareholders and
treating its employees fairly in the process.
The executive compensation administered by the committee is
primarily that of John R. Bentz, Executive Vice President and chief
executive officer; Thomas C. Keim, Vice President Operations; and
Donald R. Breitenstein, Controller.
Standards for compensation and performance reviews are
established in the employment contracts of Messrs. Bentz and
Breitenstein, described below under the heading Employment Contracts,
as follows:
1. Reasonably adjust their salaries for inflation in order to
protect their standards of living from the adverse effects of
inflation, provided that the Company is not obligated to base salary
adjustments on any cost of living index and further provided that the
Company's earnings permit such adjustments.
2. Make merit adjustments in their salaries, if their
respective performances justify merit adjustments and the Company's
earnings permit such adjustments.
3. Reasonably adjust their salaries to reflect any substantial
changes in their respective positions and responsibilities with the
Company, provided that the Company's earnings permit such adjustments.
These standards were generally applied in the Committee's review
of the compensation of Thomas C. Keim, although Mr. Keim does not have
an employment contract with the Company.
The committee also obtains information concerning the salaries of
employees in similar positions with comparable medium sized, publicly
held, independent telephone companies as well as other companies in
Berks County and surrounding counties in an effort to maintain the
compensation of its executives at reasonably comparable levels.
In 1995 the Company increased Mr. Bentz' salary by 4.9% in
recognition of all of the factors mentioned above. Part of the
increase was to adjust for inflation, part to recognize his excellent
performance and that of the Company, and part to compensate him for
increased responsibilities as the Company pursued an important
acquisition and other growth opportunities in new ventures. His
compensation is in line with that of employees in similar positions
with comparable companies. The standards used in determining
Mr. Bentz' salary adjustment were subjective.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
John M. Sausen
James H. Murray
Alvin W. Sponagle
Compensation Committee Interlocks and Insider Participation
Messrs. Sausen, Sponagle and Murray served as members of the
Company's Executive Committee for the past fiscal year.
Mr. Sponagle is the Chairman of the Board of Directors of the
Company. He participates in all discussions and decisions concerning
executive compensation.
Mr. Murray is a Vice President of the Company. Miller and
Murray, Esquires, 542 Court Street, Reading, Pennsylvania, a law firm
in which Mr. Murray is a partner, performs legal services for the
Company and its subsidiaries and received the sum of $139,974.00 for
legal services rendered during the year 1995. Mr. Murray is not a
full time employee of the Company and is not compensated as an
employee of the Company. Mr. Murray participates in all discussions
and decisions concerning executive compensation.
Summary of Cash and Certain Other Compensation
The following table sets forth information concerning annual and
long term compensation for services in all capacities to the Company
and Conestoga Telephone during the years ended December 31, 1995, 1994
and 1993 of those persons who were, at December 31, 1995, the chief
executive officer and the other most highly compensated executive
officer of the Company whose compensation in 1995 exceeded $100,000:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Under-
Name and Compen-Stock lying LTIP All Other
Principal sationsAwards Option/ PayoutsCompen-
Position Year Salary Bonus SARs(#)(1) ($) sation
($) ($) ($) ($) (2) (3)
($)
John R. Bentz, 1995 $143,298 None None 423 900 0 $20,771
Executive Vice 1994 138,738 None None 0 900 0 19,929
President(4) 1993 131,250 None None 0 0 19,024
Donald R. 1995 $101,034 None None 94 200 0 $14,642
Breitenstein, 1994 100,071 None None 0 200 0 14,522
Controller 1993 94,534 None None 0 0 13,701
1. Messrs. Bentz and Breitenstein elected to subscribe for
900 and 200 shares respectively under the fifth offering of the
Employees' Stock Purchase Plan, described under the heading
"Stock Options", which offering commenced on August 1, 1995, and
will close on August 31, 1997. The value of the Restricted Stock
Award under column (f) is based on an assumed appreciation of the
Company's stock at the rate of 5% per annum and is taken from
column (f) of the Table entitled "Option Grants in Last Fiscal
Year" set forth below.
2. "All Other Compensation" includes amounts accrued
during each of the years stated in the Table for the accounts of
Messrs. Bentz and Breitenstein under the employment contracts,
described under the heading "Employment Contracts", between each
of them and Conestoga Telephone.
3. "All Other Compensation" includes amounts contributed
for the accounts of Messrs. Bentz and Breitenstein under the
Conestoga Telephone Savings and Investment Plan and under the
401(k) Plan which replaced the Savings and Investment Plan
effective June 1, 1995. All salaried employees (excluding union
members) with at least 3 months of service were eligible to
participate in the Conestoga Telephone Savings and Investment
Plan. Employees who elected to participate in the Savings and
Investment Plan could contribute from 2% to 10% of their total
plan year pay through payroll deductions. Conestoga Telephone
made contributions ranging from 25% to 100% of employee
contributions, as such percentage was determined each year by
Conestoga Telephone, against the first 6% of employee
contributions. During the period January 1, 1995 through May 31,
1995, Conestoga Telephone contributed 75% of member
contributions. Effective June 1, 1995, Conestoga Telephone
adopted a 401(k) Plan with essentially the same terms as the
Savings and Investment Plan and rolled over into it all of the
assets of the Savings and Investment Plan. Messrs. Bentz and
Breitenstein participated in the Savings and Investment Plan from
January 1, 1995 through May 31, 1995, during which period
Conestoga Telephone contributed $2,682 to the plan against Mr.
Bentz' contributions and $1,923 against Mr. Breitenstein's
contributions. Messrs. Bentz and Breitenstein participated in
the 401(k) Plan from June 1995 through December 31, 1995, during
which period Conestoga Telephone contributed $3,764 against Mr
Bentz' contributions and $2,621 against Mr. Breitenstein's
contributions.
4. Mr. Bentz, as Executive Vice President, functions as
the Company's chief executive officer with responsibility for
major policy decisions and the day to day operations of the
Company and is compensated accordingly. Mr. Brown, as President,
heads the Company's Board of Directors.
Stock Options
Stock options were granted to employees of the Company
during 1995 under the Employees' Stock Purchase Plan (the
"Plan"). The Plan was adopted by the Board of Directors of
Conestoga Telephone on March 25, 1986, and approved by the
Shareholders on May 3, 1986. Two Hundred Thousand (200,000)
shares of Conestoga Telephone were available for issuance under
the Plan, reflecting a two for one stock split on August 1, 1988.
Effective as of January 1, 1990, as a consequence of a
reorganization in which the Company's shares were issued and
exchanged for the issued and outstanding shares of Conestoga
Telephone, the Plan was amended by Conestoga Telephone and
adopted by the Company to provide for the issuance and sale of
the Company's shares under the Plan. Such shares have been
purchasable by employees pursuant to one or more offerings under
the Plan. An eligible employee may elect to purchase 1 share for
each $50 of his annual base pay on the offering date of each
offering under the Plan, provided that no employee may purchase
more than 900 shares under each offering. All employees of
Conestoga Telephone who are customarily employed by Conestoga
Telephone for more than 20 hours per week and more than 5 months
in a calendar year and have completed 90 days' employment on any
offering date of the Plan, are eligible to purchase shares under
that offering. Although Conestoga Telephone anticipated making a
series of offerings under the Plan, it was not obligated to make
any offerings subsequent to the first offering or at any
particular time or times.
The first offering under the Plan commenced on July 1, 1986,
and ended on July 31, 1988, with 100 employees purchasing 15,540
shares of Conestoga Telephone at $16.82 per share. The second
offering commenced on September 1, 1988 and ended on
September 30, 1990, with 102 employees purchasing 17,210 shares
of the Company at $22.79 per share. A third offering commenced
on October 1, 1990 and ended on October 31, 1992. No shares were
purchased in the third offering, because the market price of the
shares fell below the offering price. The fourth offering ended
on December 31, 1994, with 52 employees purchasing 5,473 shares
of the Company at $25.65 per share. A fifth offering under the
Plan commenced on August 1, 1995 and will end on August 31, 1997.
Sixty-one (61) employees have subscribed for 5,764 shares under
the fifth offering under the Plan.
John R. Bentz purchased 900 shares in each of the first,
second and fourth offerings under the Plan. Donald R.
Breitenstein purchased 800 shares in the first offering and 200
shares in the second and fourth offerings. Neither purchased any
shares in the third offering. John R. Bentz has subscribed for
900 shares, and Donald R. Breitenstein for 200 shares, under the
fifth offering.
The following table provides details regarding stock options
granted to the named executive officers in 1995 to purchase
shares of the Company under the Employees' Stock Purchase Plan of
Conestoga Telephone.
Option Grants in Last Fiscal Year
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Under- Granted to
lying Employees Base
Options in Fiscal Price Expiration
Name (#) (1) Year ($/Sh)(2) Date 5%($)(3) 10%($)(3)
John R. Bentz, 900 16 $28.38 8/31/97 $423 $2,943
Executive Vice
President
Donald R. 200 3 28.38 8/31/97 94 654
Breitenstein,
Controller
1. The shares subscribed for by Messrs. Bentz and Breitenstein
in 1995 under the fifth offering under the Plan are listed.
2. The option price per share is 95% of the average of the
closing sales prices of the shares as quoted on NASDAQ for the days on
which sales are reported during the ten (10) business days prior to
the Closing Date, August 31, 1997, but will not be less than 95%, nor
more than 108.5%, of the average of the closing sales prices of the
shares as quoted on NASDAQ for the days on which sales are reported
during the ten (10) business days prior to the Offering Date,
August 1, 1995. The average price of the shares, determined as
described above, on the Offering Date was $26.16 per share, so the
maximum price under this offering is $28.38 per share, that is, 108.5%
of the price on the Offering Date. Consequently the "Base Price", as
provided in the above table is $28.38 per share.
3. The Potential Realizable Value set forth in columns (f) and
(g) is determined as follows: (1) assume that the $26.16 average
price of the shares on the Offering Date determined as described
above, appreciated by 5% per annum for column (f) and 10% per annum
for column (g); and (2) multiply the difference between the
appreciated value of the shares and the $28.38 per share Base Price
under column (d) by the number of shares to which Messrs. Bentz and
Breitenstein respectively subscribed to under the Plan.
AGGREGATED OPTION EXERCISES IN 1994
AND YEAR-END OPTION VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Number of Options Options
Shares at 12/31/94 at 12/31/94
Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise ($) Unexercisable(1) Unexercisable(2)
John R. Bentz, 0 0 0 900 0 ---
Executive Vice
President
Donald R. 0 0 0 200 0 ---
Breitenstein,
Controller
1. The listed shares are the shares subscribed to by
Messrs. Bentz and Breitenstein in the fifth offering under the
Plan.
2. This value is computed by subtracting $28.38, the
maximum price provided under the fifth offering under the Plan,
from the sales price of CEI shares on December 31, 1995, the
result of which in this case is de minimis.
Pension Plan
The following table shows the estimated annual pension
benefits payable to a covered participant at normal retirement
age (65) under the Company's qualified defined benefit pension
plan for employees with years of service ranging from 15 through
40 years and earning compensation ranging from $90,000 to $180,000:
PENSION PLAN TABLE
Years of Service
Compensation 15 20 25 30 35 40
90,000 13,500 18,000 22,950 27,900 33,300 38,700
100,000 15,000 20,000 25,500 31,000 37,000 43,000
110,000 16,500 22,000 28,050 34,100 40,700 47,300
120,000 18,000 24,000 30,600 37,200 44,400 51,600
130,000 19,500 26,000 33,150 40,300 48,100 55,900
140,000 21,000 28,000 35,700 43,400 51,800 60,200
150,000 22,500 30,000 38,250 46,500 55,500 64,500
160,000 24,000 32,000 40,800 49,600 59,200 68,800
170,000 25,500 34,000 43,350 52,700 62,900 73,100
180,000 27,000 36,000 45,900 55,800 66,600 77,400
The normal retirement benefit at age 65 is 1.0% of the
employees' "average pay" multiplied by years of service to normal
retirement date for the first twenty (20) years of service; 1.1%
for service in excess of twenty (20) years but less than thirty
(30) years; 1.2% for service in excess of thirty (30) years but
less than forty (40) years; and 1.0% for service in excess of
forty (40) years. "Average pay" is defined as the average of the
highest 5 consecutive years of salary during an employee's last
10 years as a plan participant. At the end of 1995 Mr. Bentz'
covered compensation was $143,298 and Mr. Breitenstein's was
$101,034, the amounts reported for both as "salary" in the
Summary Compensation Table. In 1996 Mr. Bentz will have 38, and
Mr. Breitenstein 34, credited years of service under the Plan.
Benefits are computed as straight-life annuity amounts. The
benefits listed in the Pension Plan Table are not subject to any
deduction for Social Security or other offset amounts. Although
the normal retirement age is 65, an employee with ten years of
service may retire at age 55 with actuarially reduced benefits.
An employee who has attained the age of 55, but not 65, may
retire without any actuarial reduction of his benefits, if the
sum of his age and years of service with Conestoga Telephone is
at least eighty (80) when he retires. The years and months of
service of an employee are the total length of time that he is
employed by Conestoga Telephone.
Employment Contracts
Conestoga Telephone has entered into employment contracts
with John R. Bentz, Executive Vice-President, and Donald R.
Breitenstein, Controller, whereby Conestoga Telephone has agreed
to pay to each of them, or his estate, at such time as he (1)
elects to retire from the active and daily service of Conestoga
Telephone on or after a specified date, (2) becomes disabled or
(3) dies at any time during the period of employment covered by
the agreement, additional retirement, disability, or death
compensation equal to ten percent (10%) of his annual gross
salary, before deductions, for each year he is employed by
Conestoga Telephone after the date specified in his contract.
Such compensation is payable commencing one (1) month after his
retirement on or after his specified retirement date, his
disability or death, as applicable, in equal monthly installments
of 1/120 of the amount of additional compensation accumulated.
The obligation of Conestoga Telephone to make such payments is
conditioned and contingent upon the employee remaining an
employee of Conestoga Telephone until his specified retirement
date, unless prior to attaining such retirement age he dies,
becomes disabled, or terminates his employment with Conestoga
Telephone for proper cause. Conestoga Telephone is obligated to
employ each of them until he attains the age of 65 unless his
employment is terminated prior thereto as a result of his early
retirement, death, disability or for proper cause.
Mr. Bentz' contract is dated January 28, 1987, and benefits
are accrued under it for each year he is employed by Conestoga
Telephone after January 1, 1983. His retirement date is on or
after December 31, 1996. The amount of $14,325 accrued for Mr.
Bentz under his contract for 1995 is included in the Summary
Compensation Table under the heading "all other compensation".
The total amount accrued for Mr. Bentz under his contract as of
December 31, 1995 was $127,649, which upon his retirement on or
after December 31, 1996, disability or death would provide him
equal monthly payments of $1,063.74 for ten years.
Mr. Breitenstein's contract is dated March 22, 1989, and
benefits accrue under it for each year he is employed by
Conestoga Telephone after January 1, 1989. His retirement date
is on or after December 31, 2005. The amount of $10,098 accrued
for Mr. Breitenstein under his contract for 1994 is included in
the Summary Compensation Table under the heading "all other
compensation". The total amount accrued for Mr. Breitenstein
under his contract as of December 31, 1995, was $61,860, which
upon his retirement on or after December 31, 2005, disability or
death would provide him equal monthly payments of $515.50 for ten
years.
SHAREOWNER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareowner return on
the Company's Common Stock against the cumulative total return of
the S & P 500 Stock Index and the S & P Telephone Index for the
period of five calendar years commencing on December 31, 1990 and
ending on December 31, 1995.
Comparison of Five Year Cumulative Total Return
250
200
150
100
50
Dec. Dec. Dec. Dec. Dec. Dec.
1990 1991 1992 1993 1994 1995
CEI S&P 500 S&P TEL
1990 1991 1992 1993 1994 1995
CEI 100 85 89 93 98 119
S&P 500 100 130 140 154 156 215
S&P TEL. 100 108 118 136 131 197
DEC 90 DEC 91 DEC 92 DEC 93 DEC 94 DEC 95
RATIFICATION OF THE APPOINTMENT OF
BEARD & COMPANY, INC., AS AUDITORS
The Board of Directors has appointed the firm of Beard &
Company, Inc., independent certified public accountants, to audit
the accounts and certify the financial statements of the Company
for the year ending December 31, 1996, subject to the approval of
the Shareholders. Beard and Company, Inc., was the independent
certified public accountants for the Company for the year ended
December 31, 1995. The Shareholders are asked to approve the
action of the Board of Directors in making such appointment for
1996, and it is intended that proxies not limited to the contrary
will be voted for ratification of such appointment. A
representative of Beard and Company, Inc., is expected to be
present at the Shareholders' meeting with the opportunity to make a
statement if he desires to do so, and such representative is
expected to be available to respond to appropriate questions.
OTHER MATTERS
The foregoing are the only items of business which the
Management intends to present, or is informed that others will
present, at the meeting for any action as to which proxies received
in response to this solicitation are to be exercised or used for a
quorum. However, if other matters properly come before the
meeting, it is the intention of the persons named in the proxy to
vote the same in accordance with their judgment.
By Order of the Board of Directors
Kenneth A. Benner, Secretary
Dated: April 12, 1996
