<PAGE>
<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CENTENNIAL CELLULAR CORP.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
<PAGE>
<PAGE>
[LOGO]
CENTENNIAL CELLULAR CORP.
50 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 1997
------------------------
The Board of Directors of Centennial Cellular Corp., a Delaware corporation
(the 'Company'), hereby gives notice that the 1997 Annual Meeting of
Shareholders of the Company (the 'Annual Meeting') will be held at the GTE
Management Development Center, Weed Avenue, Norwalk, Connecticut 06850, on
Friday, October 31, 1997, at 2:00 p.m., Eastern Time, for the following
purposes:
1. To elect eight Directors of the Company to serve until the next
annual meeting of shareholders and thereafter until their successors shall
have been elected and qualified.
2. To vote on the ratification of the selection by the Board of
Directors of Deloitte & Touche LLP as independent accountants for the
Company for the fiscal year ending May 31, 1998.
3. To transact such other business as may properly come before the
meeting.
All shareholders are cordially invited to attend. Only holders of record of
issued and outstanding shares of Class A Common Stock and Class B Common Stock
of the Company at the close of business on Monday, September 15, 1997 will be
entitled to receive notice of and vote at the Annual Meeting. In accordance with
Section 219 of the Delaware General Corporation Law, the Company will make
available for examination by any shareholder, for any purpose germane to the
Annual Meeting, during ordinary business hours, for a period of at least 10 days
prior to the Annual Meeting, at the location of the Annual Meeting, a complete
list of the shareholders entitled to vote at the Annual Meeting, arranged in
alphabetical order, and showing the address of each shareholder and the number
of shares registered in the name of each shareholder. If you attend the Annual
Meeting, you may vote in person if you wish, even though you have previously
returned your proxy.
A copy of each of the Company's Proxy Statement and 1997 Annual Report to
Shareholders for its fiscal year ended May 31, 1997 is enclosed herewith.
By Order of the Board of Directors
[David Z. Rosensweig]
DAVID Z. ROSENSWEIG,
Secretary
September 29, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE READ THE
ACCOMPANYING PROXY STATEMENT AND PROMPTLY COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES OF AMERICA. THE PROXY IS REVOCABLE BY YOU AT ANY
TIME PRIOR TO ITS USE AT THE ANNUAL MEETING. IF YOU RECEIVE MORE THAN ONE PROXY
CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH
PROXY CARD SHOULD BE SIGNED AND RETURNED TO ASSURE THAT ALL YOUR SHARES WILL BE
VOTED AT THE ANNUAL MEETING.
<PAGE>
<PAGE>
[LOGO]
CENTENNIAL CELLULAR CORP.
50 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
--------------------------
PROXY STATEMENT
--------------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Centennial Cellular Corp., a Delaware corporation (the
'Company'), of proxies for use at the 1997 Annual Meeting of Shareholders of the
Company (the 'Annual Meeting') to be held at the GTE Management Development
Center, Weed Avenue, Norwalk, Connecticut 06850, on Friday, October 31, 1997, at
2:00 p.m., Eastern Time, and at any adjournment or adjournments of the Annual
Meeting. This Proxy Statement and the enclosed proxy are first being sent to
shareholders on or about September 29, 1997.
At the Annual Meeting, shareholders of the Company will (i) elect eight
Directors of the Company to serve until the next annual meeting of shareholders
and thereafter until their successors shall have been elected and qualified; and
(ii) vote on the ratification of the selection by the Board of Directors of
Deloitte & Touche LLP as independent accountants for the Company for the fiscal
year ending May 31, 1998. Shareholders may also consider and act upon such other
matters as may properly come before the Annual Meeting or any adjournment or
adjournments thereof.
The close of business on Monday, September 15, 1997 has been selected as
the record date for determining the holders of outstanding shares of the
Company's Class A Common Stock, par value $.01 per share (the 'Class A Common
Stock'), and Class B Common Stock, par value $.01 per share (the 'Class B Common
Stock' and, together with the Class A Common Stock, the 'Common Stock'),
entitled to receive notice of and vote at the Annual Meeting. On September 15,
1997, there were 16,086,674 shares of Class A Common Stock outstanding and
10,544,113 shares of Class B Common Stock outstanding. Holders of Class A Common
Stock are entitled to one vote per share and holders of Class B Common Stock are
entitled to 15 votes per share. All shares of Class A Common Stock and Class B
Common Stock will vote together as one class on all questions that come before
the Annual Meeting.
VOTE REQUIRED
Votes at the Annual Meeting will be tabulated by inspectors of election
appointed by the Company. Shares of Common Stock represented by a properly
signed and returned proxy are considered present at the Annual Meeting for
purposes of determining a quorum.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from the owners. If specific
instructions are not received, as a general rule, brokers may vote these shares
in their discretion. However, brokers are precluded from exercising their voting
discretion on certain types of proposals and, absent specific instructions from
the beneficial owner in such cases, brokers may not vote on those proposals.
This results in what is known as a 'broker non-vote' on such proposals.
<PAGE>
<PAGE>
Election of Directors will be determined by a plurality vote of the
combined voting power of all shares of Common Stock present in person or by
proxy and voting at the Annual Meeting. Accordingly, votes 'withheld' from
Director-nominee(s) will not count against the election of such nominee(s).
Brokers have discretionary authority to vote on the election of Directors.
Passage of the proposal to ratify the selection of Deloitte & Touche LLP as
independent accountants for the Company for the fiscal year ending May 31, 1998
requires the approval of a majority of the votes cast on this proposal.
Abstentions as to this proposal will not count as votes cast for or against this
proposal and will not be included in calculating the number of votes necessary
for approval of this proposal. Brokers have discretionary authority to vote on
this proposal.
All other matters will be determined by the vote of a majority of the
combined voting power of all shares of Common Stock present in person or by
proxy at the Annual Meeting and voting on such matters. Abstentions and broker
non-votes as to particular matters will not count as votes cast for or against
such matters and will not be included in calculating the number of votes
necessary for approval of such matters.
Each shareholder of the Company is requested to complete, sign, date and
return the enclosed proxy without delay in order to ensure that shares owned
thereby are voted at the Annual Meeting. All shares represented by properly
executed proxies will be voted at the Annual Meeting in accordance with the
directions given on such proxies. If no direction is given, a properly executed
proxy will be voted FOR the election of the eight persons named under 'Election
of Directors' and FOR ratification of the selection of Deloitte & Touche LLP as
independent accountants for the Company for the fiscal year ending May 31, 1998.
The Board of Directors does not anticipate that any other matters will be
brought before the Annual Meeting. If, however, other matters are properly
presented, the persons named in the proxy will have discretion, to the extent
allowed by Delaware law, to vote in accordance with their own judgment on such
matters.
REVOCATION OF PROXIES
Any shareholder may revoke a proxy at any time before such proxy is voted.
Proxies may be revoked by (i) delivering to the Secretary of the Company a
written notice of revocation bearing a date later than the date of the proxy;
(ii) duly executing a subsequent proxy relating to the same shares of Common
Stock and delivering it to the Secretary of the Company; or (iii) attending the
Annual Meeting and stating to the Secretary of the Company an intention to vote
in person and so voting. Attendance at the Annual Meeting will not in and of
itself constitute revocation of a proxy. Any subsequent proxy or written notice
of revocation of a proxy should be delivered to Centennial Cellular Corp., 50
Locust Avenue, New Canaan, Connecticut 06840, Attention: Scott N. Schneider,
Assistant Secretary.
COST OF SOLICITATION
The Company will bear all costs of soliciting proxies in the accompanying
form. Solicitation will be made by mail, and officers and regular employees of
the Company may also solicit proxies by telephone, telegraph or personal
interview. In addition, the Company expects to request persons who hold shares
in their names for others to forward copies of this proxy soliciting material to
them and to request authority to execute proxies in the accompanying form, and
the Company will reimburse such persons for their out-of-pocket and reasonable
clerical expenses in doing this.
2
<PAGE>
<PAGE>
The following table sets forth, as of September 15, 1997, certain
information with respect to the beneficial ownership of shares of Class A Common
Stock or Class B Common Stock by each person known to the Company to own
beneficially more than 5% of the outstanding shares of Class A Common Stock or
Class B Common Stock. Each share of Class B Common Stock is convertible, at any
time, into one share of Class A Common Stock. Holders of Class A Common Stock
are entitled to one vote per share and holders of Class B Common Stock are
entitled to 15 votes per share.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------------
NAME AND ADDRESS CLASS/NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ------------------------------------------------------------------------------- --------------------- --------
<S> <C> <C> <C>
Century Communications Corp.(2)(3) ............................................ Class B: 8,561,819 81.2%
50 Locust Avenue
New Canaan, CT 06840
Citizens Utilities Company(2)(3) .............................................. Class B: 1,982,294 18.8
High Ridge Park
Stamford, CT 06905
Putnam Investments, Inc.(4) ................................................... Class A: 1,102,470 6.9
Marsh & McLennan Companies, Inc.
One Post Office Square
Boston, MA 02109
Wallace R. Weitz & Company(5) ................................................. Class A: 1,060,500 6.6
1125 South 103rd Street
Omaha, NE 68124-6008
Putnam Investment Management, Inc.(6) ......................................... Class A: 933,476 5.8
One Post Office Square
Boston, MA 02109
James W. Hickman et al.(7) .................................................... Class A: 930,632 5.8
c/o Jonathan R. Moore
Moore & Bruce
1627 I Street, N.W.
Washington, D.C. 20006
T. Rowe Price Associates, Inc.(8) ............................................. Class A: 953,600 5.9
100 E. Pratt Street
Baltimore, MD 21202
Oliver R. Grace, Jr.(9) ....................................................... Class A: 853,506 5.3
55 Brookville Road
Glen Head, NY 11545
</TABLE>
- ------------
(1) As used in this table, 'beneficial ownership' means the sole or shared power
to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose of,
or to direct the disposition of, a security). In addition, for purposes of
this table, a person is deemed, as of any date, to have 'beneficial
ownership' of any security that such person has the right to acquire within
60 days after such date.
(2) Due to their positions with and ownership of stock of Century Communications
Corp. ('Century Communications') and their positions with Citizens Utilities
Company ('Citizens'), Leonard Tow, Chairman of the Board and Chief Executive
Officer of Century Communications and Chairman of the Board and Chief
Executive Officer of Citizens and his wife, Claire L. Tow, a Senior Vice
President and director of Century Communications and a director of Citizens,
may be deemed to own beneficially together 100% of the Company's outstanding
Class B Common Stock. See 'Principal Shareholders of Century
Communications.' Century Communications currently owns 3,978 shares of
Second Series Convertible Redeemable Preferred Stock of the Company which
are convertible into 115,710 shares of Class B Common Stock of the Company.
If all shares of the
(footnotes continued on next page)
3
<PAGE>
<PAGE>
(footnotes continued from previous page)
Second Series Convertible Redeemable Preferred Stock were converted, Century
Communications would hold 81.4% of the Class B Common Stock of the Company
and Citizens would hold 18.6% of the Class B Common Stock of the Company.
(3) Citizens currently owns 102,187 shares of Convertible Redeemable Preferred
Stock of the Company which are convertible into 2,972,334 shares of Class B
Common Stock of the Company. If all shares of the Convertible Redeemable
Preferred Stock were converted, Citizens would hold 34.6% of the Class B
Common Stock and Century Communications would hold 59% of the Class B Common
Stock of the Company.
(4) Based solely upon information contained in a Statement on Schedule 13G filed
with the Securities and Exchange Commission (the 'Commission') on February
9, 1996. According to said Schedule 13G, securities reported therein as
being beneficially owned by Putnam Investments, Inc. and Marsh & McLennan
Companies, Inc. consist of an aggregate of 1,102,470 shares of Class A
Common Stock beneficially owned by subsidiaries of Putnam Investments, Inc.
which are registered investment advisors, which in turn include securities
beneficially owned by clients of such investment advisors. Putnam
Investments, Inc. has shared voting power with respect to 142,544 shares and
shared dispositive power with respect to all of its shares.
(5) Based solely upon information contained in a Statement on Schedule 13G filed
with the Commission on February 12, 1997. According to said Schedule 13G,
Wallace R. Weitz & Company has sole voting power and sole dispositive power
with respect to such shares of Class A Common Stock.
(6) Based solely upon information contained in a Statement on Schedule 13G filed
with the Commission on February 9, 1996. According to said Schedule 13G,
Putnam Investment Management, Inc. shares dispositive power with respect to
all of its shares.
(7) Based solely upon information contained in Amendment No. 2 to Statement on
Schedule 13D filed with the Commission on August 22, 1994. According to said
Schedule 13D, James W. Hickman and members of his family owned more than 5%
of the Class A Common Stock at that time. The Company has been advised that
Mr. Hickman is deceased.
(8) Based solely upon information contained in Amendment No. 1 to a Statement on
Schedule 13G filed with the Commission on February 14, 1997. According to
said Amendment No. 1, T. Rowe Price Associates, Inc. has sole voting power
with respect to 23,100 shares of Class A Common Stock and sole dispositive
power with respect to 953,600 shares of Class A Common Stock.
(9) Based solely upon information contained in a Statement on Schedule 13G filed
with the Commission on February 14, 1995. Includes 46,132 shares held by Mr.
Grace as custodian for his minor children as to which shares Mr. Grace
disclaims beneficial ownership.
The Company has agreed pursuant to a Registration Rights Agreement, dated
August 30, 1991 (the 'Registration Rights Agreement'), among it, Century
Communications and Citizens, that, subject to certain conditions, upon the
request of Century Communications or Citizens, as the case may be, the Company
will file one or more registration statements under the Securities Act of 1933,
as amended (the 'Act'), in order to permit Century Communications or Citizens or
both, as the case may be, to offer and sell, pursuant to such registration
statement, shares of Class A Common Stock of the Company that Century
Communications or Citizens may hold at such time.
The Company, Century Communications and Citizens have entered into a Stock
Transfer Agreement, dated August 30, 1991 (the 'Stock Transfer Agreement'),
which governs any proposed public or private sale of stock of the Company by
Century Communications or Citizens and provides for the voting of shares of
Common Stock of the Company by Century Communications or Citizens in connection
with the election of Directors of the Company. See 'Election of Directors.'
4
<PAGE>
<PAGE>
PRINCIPAL SHAREHOLDERS OF CENTURY COMMUNICATIONS
The following table sets forth, as of September 15, 1997, certain
information regarding the persons known to the Company to own beneficially more
than 5% of any class of the voting securities of Century Communications. Each
share of Class B Common Stock of Century Communications is convertible, at any
time, into one share of Class A Common Stock of Century Communications. Century
Communications' Class A Common Stock has one vote per share and Century
Communications' Class B Common Stock has ten votes per share.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------------------------
NAME AND ADDRESS CLASS/NUMBER PERCENT
OF BENEFICIAL OWNER OF SHARES OF CLASS
- ------------------------------------------------------------------ --------
<S> <C> <C> <C>
Leonard Tow ...................................................... Class A: 950,956(2) 3.2%
50 Locust Avenue Class B: 42,297,059(3)(4)(5) 95.4
New Canaan, CT 06840
Claire L. Tow .................................................... Class A: 950,956(6) 3.2
50 Locust Avenue Class B: 42,297,059(4)(5)(7) 95.4
New Canaan, CT 06840
The Capital Group Companies, Inc. ................................ Class A: 4,197,220(8) 14
Capital Research and Management
Company
333 South Hope Street
Los Angeles, CA 90071
The Prudential Insurance Company of America ...................... Class A: 3,165,303(9) 10.6
751 Broad Street
Newark, NJ 07102-3777
Sentry Insurance ................................................. Class B: 2,060,249(5) 4.6
a Mutual Company
1800 N. Point Drive
Stevens Point, WI 54481
Citizens Utilities Company ....................................... Class A: 1,807,095(10) 6
CU Capital Corp.
High Ridge Park
Stamford, CT 06905
Merrill Lynch & Co., Inc. ........................................ Class A: 2,811,802(11) 9.4
Merrill Lynch Group, Inc.
World Financial Center
North Tower
250 Vesey Street
New York, NY 10281
</TABLE>
- ------------
(1) As used in this table, 'beneficial ownership' means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In addition, for
purposes of this table, a person is deemed, as of any date, to have
'beneficial ownership' of any security that such person has the right to
acquire within 60 days after such date.
(2) Consists of 876,577 shares of Class A Common Stock as to which Mr. Tow has
sole voting and investment power. Includes the 74,379 shares set forth in
(6) below beneficially owned solely by Mrs. Tow, as to which shares he
disclaims beneficial ownership.
(3) Consists of 18,946,095 shares of Class B Common Stock as to which Mr. Tow
has sole, and 20,537,599 shares of Class B Common Stock as to which he
shares, voting and investment power.
(footnotes continued on next page)
5
<PAGE>
<PAGE>
(footnotes continued from previous page)
Includes the 2,813,365 shares set forth in (7) below beneficially owned
solely by Mrs. Tow, as to which shares he disclaims beneficial ownership.
(4) By virtue of the definition of 'beneficial ownership,' substantial
duplication is involved in the beneficial ownership of shares listed for
these shareholders. Eliminating duplication in the table, Mr. Tow owns of
record and beneficially 18,946,095 shares of Class B Common Stock, Mr. Tow
and Mrs. Tow jointly own of record and beneficially 20,537,599 shares of
Class B Common Stock as trustees for the benefit of Mrs. Tow and their
adult children, and Mrs. Tow owns of record and beneficially 2,813,365
shares of Class B Common Stock as trustee for the benefit of their adult
children.
(5) By virtue of the definition of 'beneficial ownership,' each person who owns
shares of Class B Common Stock is deemed to own an equal number of shares
of Class A Common Stock. Thus, Leonard Tow, Claire L. Tow and Sentry
Insurance are deemed to be beneficial owners, respectively, of 43,248,015,
43,248,015 and 2,060,249 shares of Class A Common Stock. As a percent of
the Class A Common Stock, this ownership by the above-named persons is
deemed to be 58.2%, 58.2% and 2.8%, respectively.
(6) Consists of 74,379 shares of Class A Common Stock as to which Mrs. Tow has
sole voting and investment power. Includes the 876,577 shares set forth in
(2) above beneficially owned solely by Mr. Tow, as to which shares she
disclaims beneficial ownership.
(7) Consists of 2,813,365 shares of Class B Common Stock as to which Mrs. Tow
has sole, and 20,537,599 shares of Class B Common Stock as to which she
shares, voting and investment power. Includes the 18,946,095 shares set
forth in (3) above beneficially owned solely by Mr. Tow, as to which shares
she disclaims beneficial ownership.
(8) Based solely upon information contained in Amendment No. 10 to a Statement
on Schedule 13G filed with the Commission on February 12, 1997. According
to said Schedule 13G, The Capital Group Companies, Inc. has sole voting
power with respect to 1,930,600 shares of Class A Common Stock and sole
dispositive power with respect to 4,197,220 shares of Class A Common Stock,
by virtue of Rule 13d-3 under the Act. Its wholly owned subsidiaries,
Capital Research and Management Company and Capital Guardian Trust Company,
have sole dispositive power with respect to 1,726,610 and 1,730,000 shares
of Class A Common Stock, respectively.
(9) Based solely upon information contained in Amendment No. 1 to a Statement
on Schedule 13G filed with the Commission on July 10, 1997. According to
said Schedule 13G, The Prudential Insurance Company of America holds 29,400
shares of Class A Common Stock for its general account and may have direct
or indirect voting and/or investment discretion with respect to 3,135,903
shares of Class A Common Stock which are held for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or other affiliates.
(10) Based solely upon information contained in a Statement on Schedule 13D
filed with the Commission on July 2, 1992. Century Communications has
agreed pursuant to an agreement dated July 2, 1992 between it and Citizens
that, subject to certain conditions, upon the request of Citizens, it will
file up to two registration statements under the Securities Act of 1933, as
amended (the 'Act'), in order to permit Citizens to offer and sell,
pursuant to such registration statement(s), such shares of Class A Common
Stock.
(11) Based solely upon information contained in Amendment No. 3 to a Statement
on Schedule 13G filed with the Commission on February 12, 1997. According
to said Schedule 13G, Merrill Lynch &
(footnotes continued on next page)
6
<PAGE>
<PAGE>
(footnotes continued from previous page)
Co., Inc. and Merrill Lynch Group, Inc. each has shared voting and
dispositive power with respect to 2,811,802 shares of Class A Common Stock,
Princeton Services, Inc. has shared voting and dispositive power with
respect to 2,810,000 shares of Class A Common Stock, and Fund Asset
Management, L.P. and Merrill Lynch Phoenix Fund, Inc. each has shared
voting and dispositive power with respect to 2,600,000 shares of Class A
Common Stock. The address of Princeton Services, Inc., Fund Asset
Management, L.P. and Merrill Lynch Phoenix Fund, Inc. is 800 Scudders Mill
Road, Plainsboro, New Jersey 08536.
ELECTION OF DIRECTORS
Eight persons have been nominated for election as Directors to serve until
the 1998 Annual Meeting of Shareholders and until their successors are elected
and qualified. All of the nominees are currently Directors. The Directors will
be elected by vote of a plurality of the combined voting power of all shares of
Class A Common Stock and Class B Common Stock present and voting at the Annual
Meeting, voting together as a single class, with each share of Class A Common
Stock having one vote and each share of Class B Common Stock having 15 votes.
The Company, Century Communications and Citizens have entered into the
Stock Transfer Agreement which provides, among other things, that so long as
Citizens is the holder and beneficial owner of any shares of Convertible
Redeemable Preferred Stock of the Company and Century Communications is the
holder and beneficial owner of any shares of Common Stock of the Company,
Century Communications will vote its shares of Common Stock for the election to
the Board of Directors of the Company of one person designated by Citizens and
Citizens will vote its shares of Common Stock for the election to the Board of
Directors of the Company of all persons designated by Century Communications. At
such time as Citizens is no longer the holder and beneficial owner of any shares
of Convertible Redeemable Preferred Stock of the Company, Century Communications
and Citizens will vote their respective shares of Common Stock of the Company
for the election to the Board of Directors of the Company of the person or
persons designated by each other, with each party having the right to designate
the number of persons that is in proportion to the voting power of such party as
compared to the combined voting power of both parties. If a fraction results,
the number of persons to be designated by Citizens will be rounded down to the
nearest whole number. Such voting arrangements, in accordance with Delaware law,
will expire on August 30, 2001 unless extended by agreement of the parties.
Pursuant to the Stock Transfer Agreement, Citizens has designated Daryl A.
Ferguson and Century Communications has designated Bernard P. Gallagher, Rudy J.
Graf, William M. Kraus, David Z. Rosensweig, Scott N. Schneider, Peter J.
Solomon and Frank Tow as nominees for Directors. See 'Principal Shareholders of
the Company.'
The persons named in the accompanying proxy will vote for the election of
such nominees unless, by reason of death or other unexpected occurrence, one or
more of such nominees shall not be available for election, in which event it is
intended that such votes will be cast for a substitute nominee or nominees
designated by the Board or the respective party to the Stock Transfer Agreement
or, if no substitute nominee or nominees are so designated, that the membership
of the Board will be reduced to a number equal to the number of such nominees.
The Board has no reason to believe that any of the nominees listed below will
not be available for election as a Director.
The following table sets forth the name of each nominee, his age, the year
he was elected a Director of the Company, his principal occupation, other
business experience during the last five years,
7
<PAGE>
<PAGE>
other directorships in publicly-held corporations and ownership of shares of
Class A Common Stock of the Company as of September 15, 1997.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, NUMBER OF SHARES
NOMINEE, AGE, YEAR OTHER BUSINESS EXPERIENCE BENEFICIALLY PERCENT
FIRST BECAME DIRECTOR AND OTHER DIRECTORSHIPS OWNED(1) OF CLASS
- ------------------------------------ ------------------------------------------- -------------------- --------
<S> <C> <C> <C>
Daryl A. Ferguson .................. Mr. Ferguson has been the President and Class A: 7,812(6) *
Age: 58 Chief Operating Officer of Citizens since
Director since 1991 June 1990. Mr. Ferguson was Vice President,
Administration of Citizens from July 1989
through March 1990 and Senior Vice
President, Operations of Citizens from
March 1990 through June 1990. From April
1986 through July 1989, he was President
and Chief Executive Officer of Microtecture
Corporation, a communications corporation.
Bernard P. Gallagher(3) ............ Mr. Gallagher has been Chairman of the Class A: 216,897(7) 1.3%
Age: 50 Board and Chief Executive Officer of the
Director since 1991 Company since August 1991 and has been a
Director of the Company since March 1991.
From February 1990 to August 1991, Mr.
Gallagher was President and Chief Operating
Officer of the Company. He has been a
director of Century Communications since
October 1990 and President and Chief
Operating Officer of Century Communications
since October 1989. From 1979 to October
1989, Mr. Gallagher served in various
financial and executive capacities at
Comcast Corporation, a cable television and
cellular telephone company, and its
subsidiaries, including Vice President and
Treasurer from November 1984 to October
1989.
Rudy J. Graf ....................... Mr. Graf has been President and Chief Class A: 131,719(8) *
Age: 48 Operating Officer and a Director of the
Director since 1991 Company since August 1991 and was Vice
President, Operations of the Company from
November 1990 to August 1991. Prior to
joining the Company, Mr. Graf served in
various executive capacities, including
Regional Vice President from December 1987
to July 1990 of Metromedia Company, a
cellular telephone company.
</TABLE>
(table continued on next page)
8
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, NUMBER OF SHARES
NOMINEE, AGE, YEAR OTHER BUSINESS EXPERIENCE BENEFICIALLY PERCENT
FIRST BECAME DIRECTOR AND OTHER DIRECTORSHIPS OWNED(1) OF CLASS
- ------------------------------------ ------------------------------------------- -------------------- --------
<S> <C> <C> <C>
William M. Kraus(2)(4)(5) .......... Mr. Kraus is the Chairman of Kraus Sikes Class A: 6,266(9) *
Age: 71 Inc., a publishing company, and has been
Director since 1991 such since 1985. From 1983 to 1985, he was
a Vice President of The Equitable Life
Assurance Society of the United States.
From 1979 to 1983, Mr. Kraus held positions
as the Secretary of the Department of
Development of the State of Wisconsin and
as Assistant to the Governor of the State
of Wisconsin. Mr. Kraus has been a director
of Century Communications since 1986.
David Z. Rosensweig(2)(3)(4) . Mr. Rosensweig has been a Director and Class A: 9,451(10) *
Age: 72 Secretary of the Company since the date of
Director since 1988 its incorporation in 1988 and of Century
Communications since 1982. Mr. Rosensweig
is a member of the New York law firm of
Leavy Rosensweig & Hyman, which acts as
general counsel to the Company and Century
Communications. He has been practicing law
since 1948.
Scott N. Schneider ................. Mr. Schneider has been a Director and Class A: 122,268(11) *
Age: 39 Senior Vice President, Chief Financial
Director since 1991 Officer and Treasurer of the Company since
August 1991. He was a Vice President and
Controller of the Company from the date of
its incorporation in 1988 to August 1991.
Mr. Schneider has been Senior Vice
President and Treasurer of Century
Communications since June 1991, Chief
Financial Officer of Century Communications
since December 1996, an Assistant Secreta-
ry of Century Communications since October
1986 and a Director or Century
Communications since 1994. He was a Vice
President of Century Communications from
October 1986 to June 1991 and was
Controller of Century Communications from
1985 to June 1991.
</TABLE>
(table continued on next page)
9
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, NUMBER OF SHARES
NOMINEE, AGE, YEAR OTHER BUSINESS EXPERIENCE BENEFICIALLY PERCENT
FIRST BECAME DIRECTOR AND OTHER DIRECTORSHIPS OWNED(1) OF CLASS
- ------------------------------------ ------------------------------------------- -------------------- --------
<S> <C> <C> <C>
Peter J. Solomon(5) ................ Mr. Solomon has been Chairman of Peter J. Class A: 27,805(12) *
Age: 59 Solomon Company, Limited, an investment
Director since 1991 banking company, since May 1989. From 1985
to May 1989, he was a Vice Chairman and a
member of the Board of Directors of
Shearson Lehman Hutton Inc. and its
predecessor organizations. Mr. Solomon has
been a director of Century Communications
since 1987. Mr. Solomon is also a director
of Culbro Corporation, Monro Muffler/Brake,
Inc., Office Depot, Inc., and
Phillips-VanHeusen Corporation.
Frank Tow .......................... Mr. Tow has been employed by Century Class A: 600(13) *
Age: 41 Communications as an Executive Director of
Director since 1994 Century Advertising, its in-house
advertising department, since September
1992. From May 1990 to August 1992, he was
an Account Supervisor for Earle, Palmer,
Brown and Spiro, an advertising agency.
From May 1989 to April 1990, he was a
Marketing Manager for Century Com-
munications. Frank Tow is the son of
Leonard and Claire Tow.
</TABLE>
- ------------
* Less than 1%.
(1) As used in this table, 'beneficial ownership' means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In addition, for
purposes of this table, a person is deemed, as of any date, to have
'beneficial ownership' of any security that such person has the right to
acquire within 60 days after such date.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Employee Stock Option Committee and the 1993 Management
Equity Incentive Plan Committee.
(5) Member of the Audit Committee.
(6) Consists of 5,760 shares which Mr. Ferguson owns directly and 2,052 shares
which Mr. Ferguson has the right to acquire pursuant to a stock option
grant.
(7) Consists of 95,130 shares as to which Mr. Gallagher is the record and
beneficial holder and 121,767 shares which Mr. Gallagher has the right to
acquire pursuant to stock option grants.
(8) Consists of 19,071 shares as to which Mr. Graf is the record and beneficial
holder and 72,648 shares which Mr. Graf has the right to acquire pursuant
to stock option grants and 40,000 shares granted to Mr. Graf under the 1993
Management Equity Incentive Plan.
(footnotes continued on next page)
10
<PAGE>
<PAGE>
(footnotes continued from previous page)
(9) Consists of 4,214 shares as to which Mr. Kraus or his spouse is the record
and beneficial holder directly and 2,052 shares which Mr. Kraus has the
right to acquire pursuant to stock option grants.
(10) Consists of 4,653 shares as to which Mr. Rosensweig is the record and
beneficial holder and 4,798 shares which Mr. Rosensweig has the right to
acquire pursuant to stock option grants.
(11) Consists of 58,149 shares as to which Mr. Schneider is the record and
beneficial holder and 64,119 shares which Mr. Schneider has the right to
acquire pursuant to stock option grants.
(12) Consists of 25,753 shares as to which Mr. Solomon is the record and
beneficial holder and 2,052 shares which Mr. Solomon has the right to
acquire pursuant to stock option grants.
(13) Consists of 600 shares as to which Mr. Frank Tow is the record and
beneficial holder.
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors met four times and acted eight times by unanimous
written consent during the fiscal year ended May 31, 1997. Each Director
attended all of the meetings of the Board of Directors and the committees of
which said Director was a member.
The Compensation Committee, whose members are noted above, makes
recommendations to the Board of Directors concerning the salary and cash bonus
compensation for the Company's Chief Executive Officer and determines the salary
and cash bonus compensation for the Company's other executive officers and
senior management. The Compensation Committee also administers the Company's
1991 Employee Stock Purchase Plan, Incentive Award Plan and 1991 Stock
Equivalent Plan. The 1993 Management Equity Investment Plan is administered by a
separate committee whose membership is the same as the Stock Option Committee.
The Compensation Committee determines the participants and selects the
recipients of awards or units under the 1991 Employee Stock Purchase Plan and
the 1991 Stock Equivalent Plan and the amount and terms of compensation granted
under each plan. The Compensation Committee met once during the fiscal year
ended May 31, 1997.
The Board of Directors determines the recipients of options under the
Company's 1991 Employee Stock Option Plan (the 'Employee Stock Option Plan') and
the provisions of options granted under such plan, including the option price,
term and number of shares subject to option. The Employee Stock Option
Committee, whose members are noted above, administers the Employee Stock Option
Plan subject to the authority and responsibility of the Board of Directors as
set forth in such plan. The Employee Stock Option Committee met four times
during the fiscal year ended May 31, 1997, and acted by unanimous written
consent once.
The Executive Committee, whose members are noted above, is empowered,
except as limited by the laws of the State of Delaware, to function with the
full power of the Board of Directors when the Board is not meeting. The
Executive Committee did not meet during the fiscal year ended May 31, 1997.
The Audit Committee, whose members are noted above, recommends to the Board
of Directors the independent auditors to be selected for the Company and reviews
the following matters with the independent auditors: scope and results of the
independent audits; corporate accounting; internal accounting control
procedures; adequacy and appropriateness of financial reporting to shareholders;
and such other related matters as the Audit Committee considers to be
appropriate. The Audit Committee met twice during the fiscal year ended May 31,
1997.
The Company has not designated a nominating committee or other committee
performing a similar function. Such matters, to the extent not dealt with
pursuant to the Stock Transfer Agreement, are discussed by the Board as a whole.
11
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and each of the other executive officers of the Company whose total
annual salary and bonus exceeded $100,000 during the fiscal year ended May 31,
1997 (collectively, the 'Named Executives') for each of the Company's last three
fiscal years. Certain of the Company's executive officers, including the
Chairman of the Board and Chief Executive Officer, did not receive any cash
compensation directly from the Company during the fiscal years ended May 31,
1995, 1996 and 1997 but, in accordance with the Services Agreement, were
compensated by Century Communications. See 'Certain Relationships and Related
Transactions.'
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
AWARDS
----------------------
ANNUAL COMPENSATION RESTRICTED
-------------------- STOCK ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS AWARDS($) SARS(#) COMPENSATION($)
- -------------------------------------------- ----------- -------- -------- ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Bernard P. Gallagher ....................... 1997 -0- -0- -0- -0- -0-
Chairman of the Board and Chief 1996 -0- -0- -0- -0- -0-
Executive Officer 1995 -0- -0- -0- 75,000(3) -0-
Rudy J. Graf ............................... 1997 $198,365 $125,000 -0- -0- $ 4,750(4)
President and Chief Operating Officer 1996 189,575 120,000 $322,500(1) -0- 4,834(4)
1995 175,000 75,000 315,000(2) 50,000(3) 4,630(4)
Phillip Mayberry ........................... 1997 147,668 80,000 -0- -0- 4,750(4)
Senior Vice President 1996 146,824 60,000 161,250(1) -0- 2,962(4)
Senior Vice President, Operations 1995 140,000 50,000 157,500(2) 25,000(3) 2,800(4)
Thomas Cogar ............................... 1997 131,173 40,000 -0- -0- 4,750(4)
Vice President, Engineering 1996 128,385 50,000 118,125(1) -0- 3,221(4)
1995 120,000 50,000 32,250(2) 20,000(3) 2,825(4)
Robert Braden .............................. 1997 137,156 75,000 -0- -0- 4,750(4)
Senior Vice President, International 1996 136,719 50,000 129,000(1) -0- 5,002(4)
Operations 1995 95,000 25,000 47,250(2) 20,000(3) 1,250(4)
</TABLE>
(1) The value indicated is based on the closing price of the Class A Common
Stock of the Company on August 21, 1995, the date of grant. The aggregate
number and value (based on the closing price of the Class A Common Stock of
the Company at May 30, 1997, the last trading day of fiscal 1997) of the
restricted shares held by the Named Executives at May 30, 1997 was: Mr.
Graf -- 20,000, $280,000; Mr. Mayberry -- 10,000, $140,000; Mr.
Cogar -- 7,500, $105,000; and Mr. Braden -- 8,000, $112,000. The
restrictions on transferability lapse on the fifth anniversary date of the
date of grant and earlier in the event the award recipient retires after
reaching 65 years of age, dies or becomes disabled or if the Compensation
Committee elects to terminate the restrictions on transfer that are
otherwise applicable. The award recipient has the right to receive dividends
and other distributions paid on the shares of restricted stock.
(2) The value indicated is based on the closing price of the Class A Common
Stock of the Company on July 26, 1995 for Messrs. Graf, Mayberry and Cogar
and August 21, 1995 for Mr. Braden, the respective dates of grant. The
aggregate number and value (based on the closing price of the Class A Common
Stock of the Company at May 30, 1997, the last trading day of fiscal 1997)
of the restricted shares held by the Named Executives at May 30, 1997 was:
Mr. Graf -- 20,000, $280,000; Mr. Mayberry -- 10,000, $140,000; Mr.
Cogar -- 2,000, $28,000; and Mr. Braden -- 3,000, $42,000. The restrictions
on transferability lapse on the fifth anniversary date of the date of grant
and earlier in the event the award recipient retires after reaching 65 years
of age, dies or becomes disabled or if
(footnotes on next page)
12
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(footnotes from previous page)
the Compensation Committee elects to terminate the restrictions on transfer
that are otherwise applicable. The award recipient has the right to receive
dividends and other distributions paid on the shares of restricted stock.
(3) Options to acquire shares of Class A Common Stock of the Company that were
granted in December 1994 with respect to fiscal 1995.
(4) Consists of matching contributions made by the Company on behalf of the
Named Executives in fiscal 1997, 1996 and 1995, respectively, under the
Company's Retirement Investment Plan.
EMPLOYMENT AGREEMENTS
During fiscal 1994, the Company entered into employment agreements with
three of its executive officers: Rudy J. Graf, President and Chief Operating
Officer, Philip Mayberry, Senior Vice President, Operations, and Thomas Cogar,
Vice President, Engineering. In addition, during fiscal 1996, the Company
entered into an employment agreement with Robert Braden, Vice President, Network
Services. A summary of each employment agreement is set forth below.
The agreement between the Company and Mr. Graf provides for the employment
by the Company of Mr. Graf as its chief operating officer for a term of five
years commencing on January 1, 1994. The base salary provided for in the
agreement is $175,000 per year, subject to annual increases based upon the
percentage increase in the United States Labor Department consumer price index.
Mr. Graf is also eligible to receive a cash bonus or any award or grant of stock
options, shares of the Company's stock, or any other incentive or stock-related
awards awarded or granted by the Board of Directors of the Company or the
applicable committee thereof. The agreement also provides that the Company will
provide Mr. Graf with an automobile for his use in the performance of his
duties. In the event of Mr. Graf's death during the term of the agreement,
payments equal to 50% of the base salary shall continue to be made for the
balance of the term, and in the event of Mr. Graf's permanent disability during
such term, payments equal to 100% of the base salary shall continue to be made
for the balance of the term or twelve months, whichever is longer. If the
agreement is terminated without 'cause' (as defined in the agreement) by the
Company prior to the expiration of the term, Mr. Graf will receive the base
salary, an annual cash bonus for the remainder of the term equal to the most
recently awarded cash bonus, and the opportunity to exercise any stock options
previously awarded, whether or not fully exercisable.
The agreement between the Company and Mr. Mayberry provides for the
employment by the Company of Mr. Mayberry as its officer in charge of the
day-to-day functioning of the Company's various systems and its operations for a
term of five years commencing on January 1, 1994. The base salary provided for
in the agreement is $140,000 per year, subject to annual increases based upon
the percentage increase in the United States Labor Department consumer price
index. Mr. Mayberry is also eligible to receive a cash bonus or any award or
grant of stock options, shares of the Company's stock, or any other incentive or
stock-related awards awarded or granted by the Board of Directors of the Company
or the applicable committee thereof. The agreement also provides that the
Company will provide Mr. Mayberry with an automobile for his use in the
performance of his duties. In the event of Mr. Mayberry's death during the term
of the agreement, payments equal to 50% of the base salary shall continue to be
made for the balance of the term, and in the event of Mr. Mayberry's permanent
disability during such term, payments equal to 100% of the base salary shall
continue to be made for the balance of the term or twelve months, whichever is
longer. If the agreement is terminated without 'cause' (as defined in the
agreement) by the Company prior to the expiration of the term, Mr. Mayberry will
receive the base salary, an annual cash bonus for the remainder of the term
equal to
13
<PAGE>
<PAGE>
the most recently awarded cash bonus, and the opportunity to exercise any stock
options previously awarded, whether or not fully exercisable.
The agreement between the Company and Mr. Cogar provides for the employment
by the Company of Mr. Cogar as the chief engineering officer of the Company for
a term of five years commencing on January 1, 1994. The base salary provided for
in the agreement is $120,000 per year, subject to annual increases based upon
the percentage increase in the United States Labor Department consumer price
index. Mr. Cogar is also eligible to receive a cash bonus or any award or grant
of stock options, shares of the Company's stock, or any other incentive or
stock-related awards awarded or granted by the Board of Directors of the Company
or the applicable committee thereof. The agreement also provides that the
Company will provide Mr. Cogar with an automobile for his use in the performance
of his duties. In the event of Mr. Cogar's death during the term of the
agreement, payments equal to 50% of the base salary shall continue to be made
for the balance of the term, and in the event of Mr. Cogar's permanent
disability during such term, payments equal to 100% of the base salary shall
continue to be made for the balance of the term or twelve months, whichever is
longer. If the agreement is terminated without 'cause' (as defined in the
agreement) by the Company prior to the expiration of the term, Mr. Cogar will
receive the base salary, an annual cash bonus for the remainder of the term
equal to the most recently awarded cash bonus, and the opportunity to exercise
any stock options previously awarded, whether or not fully exercisable.
The agreement between the Company and Mr. Braden provides for the
employment by the Company of Mr. Braden as its officer in charge of network
services for a term of three years and three months commencing on September 1,
1995. The base salary provided for in the agreement is $125,000 per year,
subject to annual increases based upon the percentage increase in the United
States Labor Department consumer price index. Mr. Braden is also eligible to
receive a cash bonus or any award or grant of stock options, shares of the
Company's stock, or any other incentive or stock-related awards awarded or
granted by the Board of Directors of the Company or the applicable committee
thereof. In the event of Mr. Braden's death during the term of the agreement,
payments equal to 50% of the base salary shall continue to be made for the
balance of the term or twelve months, whichever is longer, and in the event of
Mr. Braden's permanent disability during such term, payments equal to 100% of
the base salary shall continue to be made for the balance of the term or twelve
months, whichever is longer. If the agreement is terminated without 'cause' (as
defined in the agreement) by the Company prior to the expiration of the term,
Mr. Braden will receive the base salary, an annual cash bonus for the remainder
of the term equal to the most recently awarded cash bonus, and the opportunity
to exercise any stock options previously awarded, whether or not fully
exercisable.
STOCK OPTIONS; RESTRICTED SHARES
No stock options or awards of restricted shares were granted to any of the
Named Executives with respect to fiscal 1997.
The table below summarizes the exercise of stock options during fiscal 1997
by the Named Executives and provides information as to the unexercised stock
options held by them at the end of the 1997 fiscal year.
14
<PAGE>
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1997
AND FISCAL YEAR-END 1997 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#)(1) FY-END($)(1)
SHARES --------------- -----------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------- -------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C>
Bernard P. Gallagher....................... - 0 - - 0 - 106,767/120,000 $418,135/$367,500
Rudy J.Graf................................ - 0 - - 0 - 62,648/80,000 242,504/245,000
Phillip Mayberry........................... - 0 - - 0 - 25,993/45,000 98,595/168,437
Thomas Cogar(1)............................ - 0 - - 0 - 19,688/27,000 74,343/82,687
Robert Braden.............................. - 0 - - 0 - 8,000/32,000 24,500/98,000
</TABLE>
- ------------
(1) Calculated by determining the difference between the exercise price and the
closing price of the Company's Class A Common Stock on the exercise date or
May 31, 1997, as the case may be.
(2) Includes shares owned by his spouse.
DIRECTOR COMPENSATION
During the fiscal year ended May 31, 1997, each Director who was not also
an employee of the Company received quarterly retainers of $3,000 plus a uniform
fee of $750 for each Board and committee meeting attended. In addition, options
for 1,000 shares of Class A Common Stock were automatically granted under the
1993 Non-Employee/Officer Directors' Stock Option Plan to each person who was a
non-employee/officer Director on the date of the 1995 annual meeting of
shareholders of the Company. During such period, Directors who were also
employees of the Company received no remuneration for attendance at Board and
committee meetings. The Company believes that such compensation is consistent
with compensation paid to directors in comparable public companies.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended May 31, 1997, the members of the Compensation
Committee were William M. Kraus and David Z. Rosensweig. Mr. Rosensweig also
serves as Secretary of the Company and Century Communications. Mr. Rosensweig is
a member of Leavy Rosensweig & Hyman, which acts as general counsel to the
Company and Century Communications. During fiscal 1997, the Company paid a total
of approximately $518,000 for legal services and disbursements to Leavy
Rosensweig & Hyman.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Certain of the executive, managerial and engineering services required by
the Company are supplied to it by its parent company, Century Communications,
under the Services Agreement (as herein defined), pursuant to which Century
Communications provides the Company with the services of Bernard P. Gallagher,
as its Chief Executive Officer, Scott N. Schneider, as Chief Financial Officer
and Michael G. Harris, as Vice President, Engineering. See 'Certain
Relationships and Related Transactions.' Accordingly, the Compensation Committee
does not set the compensation of Messrs. Gallagher, Schneider and Harris.
The Compensation Committee sets the compensation level of the Company's
President and Chief Operating Officer, Rudy J. Graf, its Senior Vice President
for Operations, Phillip Mayberry, its Vice
15
<PAGE>
<PAGE>
President of Network Services, Robert Braden, and its Vice President for
Engineering, Thomas Cogar. The Compensation Committee is mindful of the
Company's commitment to being a provider of quality wireless telephone and
related services in the areas in which it operates. To realize these objectives,
the Company's compensation levels must be such as to motivate and retain these
individuals.
The compensation to these executives consists of base salary and cash bonus
compensation. Effective January 1, 1994 the Company entered into employment
agreements with each of Messrs. Graf, Mayberry and Cogar. Effective September 1,
1995, the Company entered into an employment agreement with Mr. Braden. Each
agreement provides, among other things, (i) for a term of five years commencing
January 1, 1994 (three years and three months commencing September 1, 1995 in
the case of Mr. Braden), (ii) for the payment of a specified base salary,
subject to annual increases based upon the percentage increase in the United
States Labor Department consumer price index, and (iii) for the payment of a
cash bonus or the award or grant of stock options, shares of the Company's stock
or other incentive or stock-related awards in the discretion of the Board of
Directors or a committee thereof. See 'Employment Agreements.'
In setting the compensation level of Messrs. Graf, Mayberry, Cogar and
Braden, the Compensation Committee relied primarily upon the recommendation of
Mr. Gallagher, the Chairman and Chief Executive Officer of the Company, as the
person in the best position to judge the respective performances of said
individuals. In this regard the Compensation Committee took into consideration
Mr. Gallagher's evaluation of the contributions of said individuals toward (i)
increasing revenues, (ii) increasing the number of subscribers, (iii) increasing
cash flow, (iv) meeting budgetary objectives, and (v) the initiation and
development of the Company's personal communications system business and (vi)
the successful completion of certain financings. The Compensation Committee
believes the compensation of Messrs. Graf, Mayberry, Braden and Cogar to be
appropriate.
The Compensation Committee administers and the Board of Directors makes
grants under the Company's 1991 Employee Stock Purchase Plan, Incentive Award
Plan and 1991 Stock Equivalent Plan. No such grants were made in fiscal 1997.
The Compensation Committee does not administer the Company's 1993
Management Equity Incentive Plan, the Employee Stock Option Plan or the
Non-Employee/Officer Director Stock Option Plan. The Employee Stock Option
Committee makes recommendations to the Board of Directors with respect to grants
under the Company's Employee Stock Option Plan, and the 1993 Management Equity
Incentive Plan Committee makes recommendations to the Board of Directors with
respect to awards under the 1993 Management Equity Incentive Plan. The
Non-Employee/Officer Director Stock Option Plan, which is designed to link a
portion of total compensation to performance as reflected in the appreciation in
the price of the Company's Class A Common Stock on a long-term basis, is self-
operating. The Board of Directors did not make any grants or awards of shares or
options with respect to fiscal 1997 to the Named Executives.
Compensation Committee
William M. Kraus
David Z. Rosensweig
The Compensation Committee's recommendations for compensation for fiscal
1997 were accepted by the Board of Directors.
16
<PAGE>
<PAGE>
PERFORMANCE GRAPH
The following graph compares the total returns (assuming reinvestment of
dividends) on the Company's Class A Common Stock, the Nasdaq Stock Market -- US
Index (which includes the Company) and a peer group index consisting of three
corporations in the wireless telephone business selected by the Company in good
faith. The corporations included in the peer group are Commnet Cellular Inc.,
Vanguard Cellular Systems Inc. and Nextel Communications Inc. McCaw Cellular,
which had previously been included in the peer group, was deleted because it was
acquired in September 1994 by AT&T Wireless. Cellular Communications Inc., which
had previously been included in the peer group, was deleted because it was
acquired in August 1996 by AirTouch Communications, Inc. The graph assumes $100
invested in the Company's Class A Common Stock or in each of the indices on
December 3, 1992, including the reinvestment of dividends, if any.
COMPARISON OF 54 MONTH CUMULATIVE TOTAL RETURN
AMONG CENTENNIAL CELLULAR CORP., THE NASDAQ STOCK MARKET -- U.S. INDEX
AND A PEER GROUP
[GRAPHIC]
<TABLE>
<CAPTION>
5/92 5/93 5/94 5/95 5/96 5/97
<S> <C> <C> <C> <C> <C> <C>
Centennial Cellular Corp. $100 $106 $148 $105 $129 $107
Nasdaq Stock Market -- US Index $100 $120 $127 $151 $219 $222
Peer Group $100 $148 $215 $121 $158 $112
</TABLE>
17
<PAGE>
<PAGE>
BENEFICIAL OWNERSHIP BY MANAGEMENT
The following table sets forth, as of September 15, 1997, certain
information with respect to the beneficial ownership of shares of Class A Common
Stock by certain Named Executives of the Company and all Directors, nominees for
Director and executive officers as a group. See 'Election of Directors' for
ownership by Directors, nominees for Director and the Named Executives not
listed below.
<TABLE>
<CAPTION>
TITLE OF SHARES OF STOCK PERCENT
NAME CLASS BENEFICIALLY OWNED OF CLASS
- -------------------------------------------------------------------- -------- ------------------ --------
<S> <C> <C> <C>
Phillip Mayberry.................................................... Class A 60,431(1) *
Thomas Cogar........................................................ Class A 41,877(2) *
Robert Braden....................................................... Class A 23,000(3) *
All Directors and executive officers as a group (15 persons)........ Class A 703,122(4) 4.4%
Class B - 0 -
</TABLE>
- ------------
* Less than 1%.
(1) Consists of 8,438 shares as to which Mr. Mayberry is the record and
beneficial owner, 31,993 shares which Mr. Mayberry has the right to acquire
pursuant to stock option grants and 20,000 shares granted pursuant to the
1993 Management Equity Incentive Plan.
(2) Consists of 5,494 shares as to which Mr. Cogar is the record and beneficial
owner and 21,662 shares which Mr. Cogar has the right to acquire pursuant to
stock option grants and 9,500 shares granted pursuant to the 1993 Management
Equity Incentive Plan. Also includes 4,155 shares as to which Mrs. Cogar is
the record and beneficial owner and 1,066 shares which Mrs. Cogar has the
right to acquire pursuant to stock option grants.
(3) Consists of 12,000 shares which Mr. Braden has the right to acquire pursuant
to stock option grants and 11,000 shares granted pursuant to the 1993
Management Equity Incentive Plan.
(4) Consists of 236,893 shares owned directly by such persons and 385,729 shares
which may be acquired by such persons pursuant to stock option grants and
80,500 shares granted pursuant to the 1993 Management Equity Incentive Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Century Communications and the Company have entered into a Services
Agreement, dated August 30, 1991, as subsequently amended, extended and renewed
(the 'Services Agreement'), pursuant to which Century Communications, through
its personnel, provides such design, construction, management, operational,
technical and maintenance services to the Company as may be necessary, or as
Century Communications determines may be appropriate, for the wireless
telephone, paging and related systems owned and operated by the Company (the
'Controlled Systems'). Such services also include, but are not limited to,
providing all the services necessary for the monitoring, to the extent possible,
of the activities of the limited partnerships in which the Company has
investment interests in such manner as to protect the interests of the Company.
Such services have historically been provided to the Company by Century
Communications. The Company believes that it is in its best interest for Century
Communications to continue to provide such services until, in the judgment of
the Board of Directors of the Company, the Company has established its own
executive management team capable of providing such services. No annual fee was
paid or was to be paid to Century Communications, and as consideration for the
services rendered and to be rendered under the Services Agreement as originally
adopted, the Company issued to Century Communications the Second Series
Convertible Redeemable Preferred Stock valued at $5,000,000.
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The Services Agreement had an original term of five years, to automatically
terminate earlier upon the occurrence of certain events, none of which
transpired under the original agreement. The Services Agreement was amended as
of August 30, 1996, to (i) extend the term to August 30, 2001, unless earlier
terminated by Century Communications on any of August 30, 1997, 1998, 1999 or
2000, and (ii) to provide for the payment to Century Communications of an annual
management fee of $1,000,000.
The Company is obligated to reimburse Century Communications for all costs
incurred by Century Communications or its affiliates (excluding the Company and
its subsidiaries) that are directly attributable to the design, construction,
management, operation and maintenance of the Controlled Systems or to the
performance by Century Communications of its other duties under the Services
Agreement, including all fees and expenses paid to third parties and the
out-of-pocket expenses incurred by Century Communications or its affiliates
(excluding the Company and its subsidiaries) in respect of its employees who are
engaged in the performance of services for the wireless systems controlled by
the Company.
The Company has also agreed to indemnify, defend and hold harmless Century
Communications and its affiliates from any claims, costs, damages (including
consequential damages), losses or expenses (including reasonable attorneys'
fees) arising out of or relating to the Services Agreement or Century
Communications' performance of its responsibilities thereunder, except where
attributable to the gross negligence or willful misconduct of Century
Communications. Any liability of Century Communications to the Company that
results from its willful misconduct or gross negligence is limited to the
aggregate amount of $5,000,000.
The Company has entered into a Facilities Agreement (the 'Facilities
Agreement') with Century-ML Cable Venture (the 'Venture'), which is 50% owned by
Century Communications, and Century-ML Cable Corp., a wholly-owned subsidiary of
the Venture (together with the Venture, 'Century-ML'), pursuant to which the
Company is given the right to use certain of Century-ML's plant and equipment
constituting its fiber network in connection with the Company's Puerto Rico
telecommunications businesses. Pursuant to the Facilities Agreement, the Company
shares the cost of constructing the fiber network used or reserved by the
Company and pays a proportional share of the costs of operating the fiber
network. The Company must also pay any additional franchise fees resulting from
the use by it of the fiber network and a proportionate share of pole attachment
fees and rentals, conduit fees and other related out-of-pocket expenses. The
Facilities Agreement terminates on the earlier to occur of January 31, 2022 and
the expiration of the Century-ML franchise in Puerto Rico.
The Company leases space for the mobile telephone switching office serving
the Southwestern cluster and space on an antenna tower in the Southwestern
cluster from Century Communications for a current annual rental of approximately
$1,200. The Company also leases certain space for equipment in Puerto Rico from
Century-ML. The current annual rent is approximately $2,400. Furthermore, the
Company leases certain office space in Puerto Rico to Century-ML for a current
annual rent of $68,850.
The Company believes that the above transactions between it and Century
Communications and/or Century-ML are or will be, as the case may be, on terms no
less favorable to the Company than would be obtainable at that time in
comparable transactions with unaffiliated parties.
With respect to the Company's wireless systems in Elkhart, Fort Wayne and
South Bend, Indiana, and Battle Creek and Kalamazoo, Michigan, Century
Communications has the right to receive an amount equal to five percent of an
incremental value over a base value received by the Company in the event the
Company sells or otherwise disposes of any of such systems (a 'carried
interest'). Century Communications has the right, at any time, to force the
Company to purchase the carried interest in any of such systems using an
appraisal procedure to determine the price, if necessary. On June 30, 1995, the
Company disposed of its Roanoke, Virginia wireless telephone system, in which
Century Communications also had a carried interest and, accordingly, the Company
is obligated to compensate Century Communications for its carried interest in
the Roanoke system.
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Leavy Rosensweig & Hyman, of which David Z. Rosensweig, a Director and
Secretary of the Company, is a member, serves as general counsel to the Company
and Century Communications. See 'Executive Compensation and Other
Information -- Compensation Committee Interlocks and Insider Participation.'
The Company believes that the transactions between it and Century
Communications, Citizens and Leavy Rosensweig & Hyman are on terms no less
favorable to the Company than would have been available from unaffiliated
parties. The Company will continue to apply its policy that any transaction
between the Company and any of its officers, Directors and principal
shareholders be on terms no less favorable to the Company than would be
obtainable at that time in comparable transactions with unaffiliated parties.
PROPOSED RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent accountants, to audit the accounts of the Company and its
subsidiaries for the fiscal year ending May 31, 1998. In accordance with the
Company's policy of seeking annual shareholder ratification of the selection of
auditors, the Company requests that such selection be ratified by shareholders.
The Company has been advised by Deloitte & Touche LLP that, except as described
in the following sentence, neither that firm nor any of its partners has any
other relationship, direct or indirect, with the Company or its subsidiaries.
Deloitte & Touche LLP has also been selected by the Board of Directors of
Century Communications to audit the accounts of Century Communications for its
fiscal year ending May 31, 1998. The Company expects representatives of Deloitte
& Touche LLP to be present at the Annual Meeting, and such representatives will
have the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from shareholders.
VOTE REQUIRED; RECOMMENDATION
A majority of the votes cast by the holders of all shares of Class A Common
Stock and Class B Common Stock present in person or by proxy and voting at the
Annual Meeting is required for ratification of the selection of Deloitte &
Touche LLP. The Board of Directors recommends that shareholders vote FOR the
proposal to ratify the selection of Deloitte & Touche LLP as independent
accountants for the Company for the fiscal year ending May 31, 1998.
SHAREHOLDER PROPOSALS
If a shareholder wishes to submit a proposal for inclusion in the proxy
statement for the 1998 Annual Meeting of Shareholders, such proposal must be
received by the Company at its principal executive offices not later than June
2, 1998.
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OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and does not know of any other business which others intend
to bring before the Annual Meeting. However, if any other matter should properly
come before the Annual Meeting or any adjournment of the Annual Meeting, the
persons named in the accompanying proxy intend to vote on such matters as they,
in their discretion, may determine.
By Order of the Board of Directors
[David Z. Rosensweig]
DAVID Z. ROSENSWEIG,
Secretary
Dated: September 29, 1997
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE.
ON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MAY 31, 1997, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13A-1 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, MAY BE OBTAINED WITHOUT CHARGE FROM SCOTT N.
SCHNEIDER, ASSISTANT SECRETARY, CENTENNIAL CELLULAR CORP., 50 LOCUST AVENUE, NEW
CANAAN, CONNECTICUT 06840.
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APPENDIX 1
PROXY CENTENNIAL CELLULAR CORP.
50 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints SCOTT N. SCHNEIDER and ROBERT J. LARSON, and
each of them, proxies of the undersigned, with full power of substitution, to
vote all common stock of Centennial Cellular Corp., a Delaware corporation (the
'Company'), the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on Friday, October 31, 1997, or at any
adjournment or adjournments thereof, with all the power the undersigned would
possess if personally present, on the following matters:
(Continued and to be signed on other side)
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_____ Please mark your ___ |
A | X | votes as in this | |
----- example |___
WITHHOLD
For all nominees AUTHORITY
listed to right by all nominees FOR AGAINST ABSTAIN
1. Election ________ _________ ______ ______ ______
of | | | | Nominees: Daryl A. Ferguson 2. Proposal to ratify | | | | | |
Directors | | | | Bernard P. Gallagher the selection by | | | | | |
-------- --------- Rudy J. Graf the Board of Directors ----- ------- ------
William M. Kraus of Deloitte & Touche
Instruction: To withhold authority to vote for any David Z. Rosensweig LLP as independent accountants
nominee, write that nominee's name on the line Scott N. Schneider for the fiscal year ending
provided below. Peter J. Solomon May 31, 1998.
Frank Tow
____________________________________________
3. In their discretion, ------ ------ ------
the named proxies are | | | | | |
authorized to vote | | | | | |
in accordanced with ------ ------ ------
their own judgment upon such other matters
as may properly come before the Annual Meeting.
This proxy when properly executed will be voted
in the manner directed herein by the undesigned
shareholder. If no direction is indicated, this
Proxy will be voted FOR the election of all
nominees for director, FOR proposal 2 and the
proxies will use their discretion with respect
to any matters referred to in Item 3.
The undersigned hereby acknowledge receipt of
a copy of the Notice of Annual Meeting of
Shareholders and the Proxy Statement.
The undersigned hereby revokes any proxies
heretofore given.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
SIGNATURE __________________________________________ SIGNATURE _____________________________________ DATED ___________, 1997
NOTE: Please complete, date and sign exactly as your name appears hereon. In the case of joint owners, each owner should sign.
When signing as administrator, attorney, corporate officer, executor, guardian, trustee, etc., please give your full
title as such.
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