<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PITTENCRIEFF COMMUNICATIONS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
PITTENCRIEFF COMMUNICATIONS, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(1):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
- - --------------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
[LOGO]
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Pittencrieff Communications, Inc. (the "Company"), to be held at 10:00
a.m., local time, on Wednesday, October 30, 1996, at the Company's office in
Abilene, Texas. A Notice of Annual Meeting, Proxy Statement, and form of
proxy relating to the Annual Meeting are enclosed with this letter. A copy
of the Company's 1995 Annual Report is also enclosed.
We urge you to read this material carefully. It is important that your
shares are represented at the Annual Meeting whether or not you plan to
attend. We encourage you to sign and date the enclosed proxy and return it
in the enclosed envelope at your earliest convenience.
Sincerely,
/s/ Warren D. Harkins
-----------------------------------
Warren D. Harkins
Chairman of the Board, President,
and Chief Executive Officer
Abilene, Texas
September 30, 1996
<PAGE>
PITTENCRIEFF COMMUNICATIONS, INC.
1 Village Drive, Suite 500
Abilene, Texas 79606
----------------------------------------
Notice of Annual Meeting of Stockholders
To Be Held on October 30, 1996
----------------------------------------
To the Stockholders of
PITTENCRIEFF COMMUNICATIONS, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Pittencrieff Communications, Inc., a Delaware corporation (the "Company"),
will be held on Wednesday, October 30, 1996, beginning at 10:00 a.m., local
time, at the offices of the Company, 1 Village Drive, Suite 500, Abilene,
Texas, for the following purposes:
1. To elect eight directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected and qualified;
2. To approve and ratify the Pittencrieff Communications, Inc. 1996 Stock
Option Plan;
3. To approve and ratify the Pittencrieff Communications, Inc. 1996
Non-Employee Director Stock Option Plan; and
4. To transact any other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on September 23,
1996, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting or any adjournment thereof. Only
stockholders of record at the close of business on the record date are
entitled to notice of, and to vote at, the meeting. A complete list of such
stockholders will be available for inspection at the offices of the Company
in Abilene, Texas, during regular business hours for a period of ten days
before the meeting.
All stockholders are cordially invited to attend the meeting. Stockholders
are urged, whether or not you plan to attend the meeting, to complete, date
and sign the accompanying proxy and to return it promptly in the enclosed
postage-paid return envelope. You may revoke the proxy at any time before the
proxy is exercised by delivering written notice of revocation to the Secretary
of the Company, by delivering a subsequently dated proxy, or by attending the
meeting and withdrawing the proxy.
By Order of the Board of Directors
C. G. Whitten
SECRETARY
Abilene, Texas
September 30, 1996
<PAGE>
PITTENCRIEFF COMMUNICATIONS, INC.
1 VILLAGE DRIVE, SUITE 500
ABILENE, TEXAS 79606
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 30, 1996
This Proxy Statement is furnished to stockholders of Pittencrieff
Communications, Inc., a Delaware corporation ("PCI" or the "Company"), in
connection with the solicitation of proxies on behalf of the Board of
Directors of the Company for use at the annual meeting of stockholders to be
held on October 30, 1996, and at any postponements or adjournments thereof.
Proxies in the form enclosed will be voted at the meeting if properly
executed, returned to the Company prior to the meeting, and not revoked. The
approximate date on which this Proxy Statement and the enclosed proxy card
will first be sent to stockholders is September 30, 1996. (All references to
PCI or the Company include, prior to January 16, 1996, Pittencrieff
Communications, Inc., a Texas corporation.)
REVOCABILITY OF PROXY
Your proxy may be revoked at any time before it is voted by delivering
written notice of revocation to the Secretary of the Company, by delivering a
subsequently dated proxy, or by attending the meeting and withdrawing the
proxy. Your attendance at the meeting will not constitute automatic
revocation of the proxy.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the stockholder otherwise specifies in
the proxy, will be voted (i) for the election as directors of the nominees
listed under "Election of Directors", (ii) for approval and ratification of
the 1996 Pittencrieff Communications, Inc. Stock Option Plan ("1996 Stock
Option Plan"), (iii) for approval and ratification of the 1996 Pittencrieff
Communications, Inc. Non-Employee Director Stock Option Plan ("1996
Non-Employee Director Plan"), and (iv) at the discretion of the proxy
holders, on any other matter that may properly come before the meeting or any
postponements or adjournments thereof.
Where stockholders have appropriately specified how their proxies are to
be voted, they will be voted accordingly. If any other matter of business is
brought before the meeting, the proxy holders may vote the proxies at their
discretion. The directors do not know of any such other matter or business.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to vote at the annual meeting
is September 23, 1996. At the close of business on that day, there were
26,162,225 shares of the Company's Common Stock, $0.01 par value ("PCI Common
Stock"), outstanding and entitled to vote at the meeting.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of PCI Common Stock is necessary to constitute a quorum at
the meeting. In deciding all questions, a holder of PCI Common Stock is
entitled to one vote, in person or by proxy, for each share held in his or
her name on the record date. Abstentions will be included in vote totals
and, as such, will have the same effect on each proposal other than the
election of directors as a negative vote. Broker non-votes, if any, will not
be included in vote totals and, as such, will have no effect on any proposal.
1
<PAGE>
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited by the Board of Directors of the
Company. The cost of soliciting your proxy will be borne entirely by the
Company and no other person or persons will bear such costs either directly
or indirectly. In addition to the use of the mails, proxies may be solicited
by personal interview, telephone, and telegram by directors and regular
officers and employees of the Company.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the shares of PCI Common Stock of the Company, as of
September 23, 1996, by (i) each director, (ii) the Company's chief executive
officer and three most highly compensated executive officers (whose total
salary and bonus exceeded $100,000 in 1995), (iii) all officers and directors
of the Company as a group, (iv) each nominee for directors, and (v) each
person known to the Company to beneficially own more than five percent of the
outstanding shares of PCI Common Stock. Except as otherwise indicated, each
stockholder identified in the table has sole voting and investment power with
respect to its or his shares.
SHARES OWNED (1)
----------------------------
NAME NUMBER PERCENTAGE
- - --------------------------------------- ----------- --------------
Lance C. Cawley (2)...................... -- --
Warren D. Harkins (3).................... 117,502 *
Dale E. Harkins (4)...................... 121,775 *
Dale N. Hatfield (5)..................... 10,250 *
Donald S. Heaton (6)..................... 11,063,859 42.3%
Herbert T. Hensley (5)................... 11,750 *
George K. Hertz ......................... -- --
James P. Hynes (6)....................... 11,063,859 42.3%
William C. Kennedy, Jr. (5).............. 8,750 *
Thomas R. Modisett (7)................... 56,750 *
C. G. Whitten (8)........................ 54,199 *
South Mountain Communications Company.... 1,478,787 5.7%
Advanced MobileComm, Inc. (9)............ 11,063,859 42.3%
All current directors and executive
officers as a group (11 persons)(6)(10). 11,454,865 43.3%
- - ------------------------
* Less than 1% of the outstanding shares of PCI Common Stock
(1) Excludes the 6,366,666 shares of PCI Common Stock that are beneficially
owned by the Company and continue to be held by Ukatex Resources, Inc.,
an indirect wholly owned subsidiary of the Company. These shares of PCI
Common Stock are treated for accounting purposes as treasury shares and,
accordingly, are not included in the calculation of issued and
outstanding shares or the percentage thereof in this table.
(2) Nominee for director.
(3) Includes options to purchase 87,500 shares of PCI Common Stock that are
currently exercisable.
(4) Includes options to purchase 66,250 shares of PCI Common Stock that are
currently exercisable.
(5) Includes options to purchase 8,750 shares of PCI Common Stock that are
currently exercisable.
(6) Deemed to beneficially own 6,373,378 shares of PCI Common Stock that are
beneficially owned by AMI and 4,690,481 shares of PCI Common Stock for
which AMI has voting rights pursuant to a voting agreement.
(7) Includes options to purchase 51,250 shares of PCI Common Stock that are
currently exercisable.
(8) Includes options to purchase 40,000 shares of PCI Common Stock that are
currently exercisable.
(9) Includes 1,300,850 shares of PCI Common Stock held in escrow and 4,690,481
shares of PCI Common Stock for which AMI has voting rights pursuant to a
voting agreement. Excludes currently exercisable warrants held by AMI's
parent, FMR Corp., to purchase 500,000 shares of PCI Common Stock.
(10) Includes options to purchase 281,250 shares of PCI Common Stock that are
currently exercisable.
2
<PAGE>
ELECTION OF DIRECTORS
Eight directors are to be elected at the annual meeting. To be elected
a director, each nominee must receive a plurality of all of the votes cast at
the meeting for the election of directors. Should any nominee become unable
or unwilling to accept nomination or election, the proxy holders may vote the
proxies for the election, in his or her stead, of any other person the Board
of Directors may recommend.
The Company's By-Laws give Advanced MobileComm, Inc. ("AMI"), a Fidelity
Capital company, or its designees on the Company's Board of Directors ("AMI
Designees"), the right to designate three of the management nominees for
election to the Board of Directors, subject to reductions in the number of AMI
Designees upon reduction of the number of outstanding shares of PCI Common Stock
held by AMI. See "Certain Relationships and Related Transactions."
The Board of Directors' nominations for directors are as set forth in the
following table. Each nominee has expressed his intention to serve the entire
term for which election is sought.
YEAR FIRST
BECAME
NAME AGE DIRECTOR
- - ------------ ------------ ------------
Lance C. Cawley (6) 38 -
Warren D. Harkins (1)(4) 44 1994
Dale N. Hatfield (2)(3)(5) 58 1993
Donald S. Heaton (3)(6) 50 1996
Herbert T. Hensley (2)(3)(5) 57 1993
James P. Hynes (1)(2)(6) 48 1996
William C. Kennedy, Jr. (2)(3)(5) 57 1993
C. G. Whitten (1)(4) 71 1994
- - -----------------------------------------
(1) Member of the Executive Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Non-Employee Director Stock Option Committee
(5) Independent director
(6) AMI Designee
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF SUCH NOMINEES.
Set forth below is certain information concerning each of the persons
nominated for election as directors of the Company.
LANCE C. CAWLEY is being nominated for his initial term as a director.
Mr. Cawley joined Fidelity Capital's Telecommunications and Technology group
as Vice President in April 1995. Prior to joining Fidelity, Mr. Cawley served
as Vice President and Chief Financial Officer of GO Communications
Corporation ("GO") since its inception. GO was formed to develop personal
communications systems ("PCS") licenses being auctioned by the Federal
Communications Commission ("FCC") for small businesses. Mr. Cawley also
worked as Vice President of Schelle Cellular Group and American Personal
Communications where he supported that Company's startup wireless ventures
(i.e., PCS, cellular, paging, and radio) and merger and acquisition
activities. Prior to Schelle Cellular Group, Mr. Cawley worked in the
commercial banking industry specializing in communications lending and
related activities. Mr. Cawley received a B.S. in Business Administration
from Washington & Lee University and a M.B.A. from Loyola College.
3
<PAGE>
WARREN D. HARKINS was elected to the Board of Directors and became
President and Chief Executive Officer of the company in April 1994 and was
elected Chairman of the Board in August 1994. He was first elected a Vice
President of the Company in January 1991, most recently as Vice President -
Corporate Development, and served as President of the Company for
approximately one year before the management team was restructured in March
1993 in connection with the Company's initial public offering. He has served
as President of A&B Electronics Inc. ("A&B"), a subsidiary of the Company,
since 1986 and in other executive capacities at A&B since 1982. He
previously served in the U.S. Air Force and is currently a Major in the Air
Force Reserve. He received a Master of Public Administration degree from
Golden Gate University and a Bachelor of Arts degree from the University of
Oklahoma. Mr. Harkins is the brother of Dale Harkins.
DALE N. HATFIELD has served as a director of the Company since June
1993. Mr. Hatfield is the Chief Executive Officer of Hatfield Associates,
Inc., a telecommunications/SMR consulting firm. He is currently an adjunct
professor in the interdisciplinary telecommunications program at the
University of Colorado at Boulder. He is a former Deputy Assistant Secretary
of Commerce for Communications and Information. Mr. Hatfield previously
served as Deputy Administrator to the NTIA, and Chief of the FCC's Office of
Plans and Policy. He has a Master of Science degree in Industrial Management
from Purdue University and a Bachelor of Science in Electrical Engineering
from Case Institute of Technology. Mr. Hatfield is a director of Datamarine
International, Inc., which is publicly traded on Nasdaq.
DONALD S. HEATON has been a director of the Company since January 1996.
Since April 1991, he has been Vice President and Chief Financial Officer of
Fidelity Capital's Telecommunications & Technology Group and an officer and
director of several other Fidelity Capital companies including a Vice
President and Controller of AMI. Prior to joining Fidelity Capital in 1990
as Vice President of Corporate Planning, Mr. Heaton was employed for 11 years
by Cabot Corporation and served as Corporate Controller and Chief Accounting
Officer from 1986 through 1990. He is a certified public accountant and has
a Masters in Business Administration and Bachelor of Science degree from
Boston University.
HERBERT T. HENSLEY has served as a director of the company since June
1993 and as nonexecutive Chairman of the Board on an interim basis from June
1994 until August 1994. Mr. Hensley has been the Chairman of the Board of
DATA RACE, Inc. (a public company traded on Nasdaq), since December 1984 and
previously served as its President and Chief Executive Officer. DATA RACE,
Inc., is a leading manufacturer of high speed data/fax modems for portable
computers and statistical multiplexers. He was previously employed for 15
years by Datapoint Corporation (a public company traded on the New York Stock
Exchange), where his positions included Vice President of International
Operations.
JAMES P. HYNES has been director of the Company since January 1996. He
is a Managing Director of Fidelity Capital directing its business development
and investments in the areas of telecommunications and technology. Since
1990, he has been Chief Executive Officer of AMI and is currently Chairman of
the Board and Chief Executive Officer of City of London Telecommunications, a
public telecommunications operator in the United Kingdom. Prior to joining
Fidelity Capital in 1989, Mr. Hynes was a Vice President and a division
executive with Chase Manhattan Bank.
WILLIAM C. KENNEDY, JR., has served as a director of the Company since
June 1993. Since April 1992, Mr. Kennedy has been the Chairman of
HighwayMaster Communications, Inc. (a public company traded on Nasdaq), which
provides tracking, voice and data communication to the long-haul trucking
industry. He served as its Chief Executive Officer from April 1992 until
January 1995. He was also the Chairman, President and Chief Executive
Officer of By-Word Technologies, Inc., a company engaged in the engineering
and manufacturing of voice recognition products, from January 1988 until
February 1995. Previously, Mr. Kennedy founded Instacom, Inc., which
provided computerized money transfer services for trucking companies and
their drivers, and served as the Chairman of Comdata Network, Inc., after its
merger with Instacom.
4
<PAGE>
C. G. WHITTEN became Senior Vice President, General Counsel, and
Secretary of the Company in April 1994 and was elected to the Board of
Directors in June 1994. Mr. Whitten has been the Company's in-house counsel
since July 1992 and has previously served in various official capacities with
the Company, including Assistant Secretary since May 1993. Prior to joining
the Company, Mr. Whitten was a partner in the Abilene law firm of Whitten,
Hacker, Hagin, Anderson & Rucker, P.C., and represented the Company, Ukatex,
and Pittencrieff, plc. Mr. Whitten is a fellow of the Texas Bar Foundation
and the American Bar Foundation and a past director of the State Bar of
Texas. He has a Bachelor of Law degree and a Bachelor of Arts degree in
Government from the University of Texas.
Each independent director of PCI receives a fee of $15,000 annually and
is reimbursed for out-of-pocket expenses incurred in connection with
attendance at board of directors and committee meetings. Each independent
director of PCI was granted options to purchase 5,000 shares of PCI Common
Stock at the time of PCI's initial public offering, which were originally
exercisable at the initial public offering price of $14.00 per share. In
1995, these options were repriced at $4.00 per share, the market value per
share of the PCI Common Stock on the date of the repricing. Subject to
stockholder approval of the 1996 Non-Employee Director Plan, each independent
director serving on the Board on February 22, 1996, was granted options to
purchase 10,000 shares of PCI Common Stock, which are exercisable at $4.50
per share, the market value of the PCI Common Stock at the time of the grant.
In addition, each independent director serving on the Board on each February
22nd hereafter will be granted options to purchase 10,000 shares. Independent
directors include those directors, currently Messrs. Hatfield, Hensley, and
Kennedy, who are not employees of the Company or otherwise affiliated with the
Company, and are not serving at the request of a stockholder of the Company.
The AMI Designees only receive reimbursement of out-of-pocket expenses.
BOARD MEETINGS, ATTENDANCE, AND COMMITTEES
The Board of Directors met six times during the year ended December 31,
1995. In 1995, all directors attended at least 75% of all meetings of the
Board of Directors and each of the committees on which they served.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee, and a Non-Employee Director Stock Option Committee.
Messrs. Harkins, Whitten, and Hynes currently serve on the Executive Committee.
Subject to statutory limitations, the Executive Committee is authorized to
exercise the powers of the Board of Directors between regular meetings. The
Executive Committee did not formally meet during 1995, but did take action by
unanimous written consent.
The Audit Committee is currently composed of Messrs. Heaton, Hensley,
Hatfield, and Kennedy, with Mr. Heaton serving as its chairman. The Audit
Committee is responsible for reviewing the scope of the independent auditors'
examinations of the Company's financial statements and receiving and reviewing
their reports. The Audit Committee also meets with the independent auditors,
receives recommendations or suggestions for changes in accounting procedures,
and initiates or supervises any special investigations it may choose to
undertake. The Audit Committee met one time during 1995.
Messrs. Hensley, Hatfield, Hynes, and Kennedy also currently serve on the
Compensation Committee, and Mr. Hensley is its chairman. The Compensation
Committee determines the Company's policy with respect to the nature and amount
of all compensation of the Company's officers. The Compensation Committee did
not formally meet during 1995, but took all actions by unanimous written
consent.
Messrs. Harkins and Whitten serve on the Non-Employee Director Stock
Option Committee, with Mr. Harkins as its chairman. The Non-Employee
Director Stock Option Committee administers the Pittencrieff Communications,
Inc. 1994 Non-Employee Director Stock Option Plan and the 1996 Non-Employee
Director Plan. The Non-Employee Director Stock Option Committee did not
formally meet during 1995, but took all actions by unanimous written consent.
5
<PAGE>
EXECUTIVE OFFICERS
The following persons are the current executive officers of the Company:
Name Age Position
--------------------- ------ ------------------------------------
Warren D. Harkins 44 Chairman of the Board, President
and Chief Executive Officer
C. G. Whitten 71 Senior Vice President, General
Counsel, and Secretary
Dale E. Harkins 43 Senior Vice President - Business
Development
Thomas R. Modisett 47 Chief Financial Officer, Vice
President - Finance, Treasurer,
and Assistant Secretary
Bradley B. Waldrip 33 Vice President - Analog Operations
Set forth below is a description of the business experience of each of
the executive officers.
Information concerning the business experience of Warren Harkins is
provided in the section entitled "Election of Directors."
Information concerning the business experience of C. G. Whitten is provided
in the section entitled "Election of Directors."
DALE E. HARKINS became Senior Vice President - Business Development in
February 1996. He previously served as Chief Operating Officer and Vice
President - Operations since February 1994 and Technical Manager since
October 1990. He has been a Vice President of A&B for the last seven years
and has served in executive capacities at A&B since 1977. Mr. Harkins is
responsible for acquisitions, new technology development, FCC liaison and
licensing management. Mr. Harkins has 24 years of experience in the
communications industry. He received his technical training in radio while
serving as a radio technician in the U.S. Army. Mr. Harkins is the brother
of Warren Harkins.
THOMAS R. MODISETT has been the Chief Financial Officer, Vice President
- - - Finance, Treasurer and Assistant Secretary of the Company since May 1995.
Mr. Modisett was the Company's Controller from November 1991 until February
1996 and has served in other financial positions with the Company since June
1991. Mr. Modisett is a certified public accountant with 23 years of financial
and managerial experience, including management positions with several energy
and ranching companies. He previously served as the Finance Director of Y.O.
Ranch in Kerrville, Texas. He has a Bachelor of Business Administration degree
from the University of Texas.
BRADLEY B. WALDRIP became Vice President - Analog Operations in May 1995
and was designated an executive officer in February 1996. Mr. Waldrip has
been Operations Manager of the Company since May 1994 and served in various
operational management capacities at A&B since 1988. He is responsible for
the operations of the Company, including sales, construction and operation of
all site equipment. Mr. Waldrip has 15 years experience in the communications
industry and received his technical and business management training from
Odessa College.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the Company's
chief executive officer and its three other most highly compensated executive
officers for services rendered in all capacities to the Company during 1993,
1994, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
Securities
Name and Other Annual Underlying All Other
Principal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($)(1) (#) ($)(2)(3)
- - --------------- ---- ------ ----- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Warren D. Harkins (4) 1993 $ 100,769 - - 50,000 $ 706
President and 1994 136,154 - - 100,000 2,043
Chief Executive 1995 150,000 96,803 (6) - -
Officer
C. G. Whitten 1993 40,000 20,000 (5) - - -
Senior Vice President, 1994 130,000 - - 90,000 -
General Counsel and 1995 130,000 60,580 (6) - - -
Secretary
Dale E. Harkins 1993 89,898 - - 35,000 725
Senior Vice President - 1994 118,211 - - 80,000 1,505
Business Development 1995 125,000 66,513 (6) - - 1,308
Thomas R. Modisett 1993 89,460 - - 35,000 -
Vice President - Finance 1994 97,654 - - 80,000 -
and Chief Financial 1995 118,769 68,997 (6) - - -
Officer, Treasurer, and
Assistant Secretary
</TABLE>
__________________
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary and cash bonuses. The aggregate amount of the
personal benefits, however, does not exceed the lesser of $50,000 or 10%
of the total of the annual salary and bonus reported for the named
executive officer.
(2) These amounts were paid on behalf of the listed executive officers for
term life insurance policies.
(3) No restricted stock has been awarded to the listed executive officers.
(4) Mr. Harkins was elected President and Chief Executive Officer of the
Company in April 1994. At December 31, 1993, Mr. Harkins was Vice
President - Corporate Development of the Company.
(5) 1993 Bonus paid in 1994
(6) 1995 Bonus paid in 1996. See "Certain Relationships and Related
Transactions."
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to any of the named executive officers during 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is responsible for
determining executive compensation, including decisions related to stock
option grants to executive officers. In 1995, the Compensation
Committee was composed of the Company's three independent directors,
Messrs. Hatfield, Hensley, and Kennedy. None of Messrs. Hatfield,
Hensley, and Kennedy are officers or employees of the Company. In
February 1996, James P. Hynes was added to the Compensation Committee.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENT
The Company has entered into separate employment agreements with
Messrs. Warren Harkins, Whitten, Dale Harkins, Modisett, and Waldrip,
each effective February 22, 1996, for a term of two years. The
agreements provide for each individual to serve in his current offices
and in other offices as may from time to time be agreed. The agreements
include provisions prohibiting each officer from competing with the
Company during the term of
7
<PAGE>
his employment and for a period of one year thereafter for Messrs. Whitten,
Modisett, and Waldrip and two years thereafter for Messrs. Warren Harkins and
Dale Harkins.
Each individual is eligible for annual bonuses which will be determined by
the Compensation Committee based on the achievement of certain established
goals relating to the performance of the Company. The employment of each
officer is automatically terminated upon a change of control of the Company,
entitling each individual to receive, among other things, an amount equal to
two times his base salary, the vesting of all stock options granted to the
individual, and a special bonus in the form of repayment of the individual's
indebtedness to the Company (along with a cash payment to gross-up the
special bonus for payment of income taxes). These employment agreements
supersede, in all respects, all other employment and noncompetition
agreements which the individuals shall have entered into with the Company.
STOCK OPTION PLANS
EMPLOYEE STOCK OPTION PLANS. Pursuant to the Company's 1993 Stock Option
Plan ("1993 Stock Option Plan"), options may be granted to eligible employees
and directors for the purchase of an aggregate of up to 1,060,000 shares of
PCI Common Stock. In February 1996, subject to future stockholder approval,
the board of directors also approved the Company's 1996 Stock Option Plan
(the 1993 Stock Option Plan and the 1996 Stock Option Plan are sometimes
referred to collectively as the "Employee Plans"), pursuant to which options
may be granted for the purchase of an aggregate of up to 1,000,000 additional
shares. Employees eligible under the Employee Plans are those whose
performance and responsibilities are determined to be instrumental to the
Company's success. The Employee Plans are administered by the Compensation
Committee, which determines, in its discretion, the number of shares subject
to each option granted and the related purchase price and option period.
Both nonqualified stock options and incentive stock options, as defined by
the Internal Revenue Code, may be granted under the Employee Plans.
The Employee Plans require that the exercise price for each stock option
must be not less than 100% of the fair market value of the PCI Common Stock
at the time the option is granted. No incentive stock option, however, may
be granted to an employee who owns more than 10% of the total combined voting
power of all classes of outstanding stock of the Company unless the option
price is at least 110% of the fair market value of the PCI Common Stock at
the date of grant. The fair market value of incentive stock options that may
be granted to an employee in any calendar year is not limited, but no
employee may be granted incentive stock options that first become exercisable
during a calendar year to purchase PCI Common Stock with an aggregate fair
market value (determined as of the date of grant of each option) in excess of
$100,000. An incentive stock option counts against the annual limitation
only in the year it first becomes exercisable. Incentive stock options may
not be granted to independent directors.
The option period may not be more than six years from the date the option
is granted. Options may be exercised in annual installments of 25% as
specified by the Compensation Committee. All installments that become
exercisable are cumulative and may be exercised at any time after they become
exercisable until the option expires. Options are not assignable.
Full payment for shares purchased upon exercise of an option must be made
at the time of exercise. No shares may be issued until full payment is made.
The Employee Plans provide that an option agreement may permit an optionee
to tender previously owned shares of PCI Common Stock in partial or full
payment for shares to be purchased on exercising an option.
Unless sooner terminated by action of the board of directors, the 1993
Stock Option Plan will terminate in 2003 and, assuming stockholder approval,
the 1996 Stock Option Plan will terminate in 2006. Subject to certain
exceptions, the Employee Plans may be amended, altered, or discontinued by
the board of directors without stockholder approval.
At August 31, 1996, options to purchase a total of 1,055,019 shares of PCI
Common Stock had been granted under the 1993 Stock Option Plan with 940,608
options still outstanding and 4,981 additional options
8
<PAGE>
available for grant. In January 1995, all options granted under the 1993
Stock Option Plan in 1993 and 1994 were repriced at the market value per
share of the PCI Common Stock on the respective dates of the repricing. No
options have been granted under the 1996 Stock Option Plan.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLANS. Pursuant to the Company's 1994
Non-Employee Director Stock Option Plan ("1994 Stock Option Plan") options will
be granted to non-employee directors pursuant to specified formulas for the
purchase of an aggregate of up to 60,000 shares of PCI Common Stock. The 1994
Stock Option Plan provided for the grant of nonqualified options to purchase
10,000 shares of PCI Common Stock to each non-employee director serving on the
board effective June 23, 1994. In addition, the 1994 Stock Option Plan provides
for the grant of an option to purchase 5,000 shares of PCI Common Stock to each
non-employee director elected to the board of directors who has not previously
served as a director of the Company.
In February 1996, subject to future stockholder approval, the board of
directors adopted the 1996 Non-Employee Director Plan (the 1994 Stock Option
Plan and the 1996 Non-Employee Director Plan are sometimes collectively referred
to as the "Non-Employee Director Plans"), pursuant to which options will be
granted to non-employee directors pursuant to specified formulas for the
purchase of an aggregate of up to 90,000 shares of PCI Common Stock. The 1996
Non-Employee Director Plan provides for the grant, subject to stockholder
approval, of nonqualified options to purchase 10,000 shares of PCI Common Stock
to each non-employee director serving on the board effective February 22, 1996,
and on each anniversary thereafter.
The Non-Employee Director Plans are administered by the Non-Employee
Director Stock Option Committee. The Non-Employee Director Plans require that
the exercise price for each stock option be equal to the closing price of PCI
Common Stock on the date the option is granted.
Unless sooner terminated by action of the board of directors, the 1994
Stock Option Plan will terminate in 2004 and, assuming stockholder approval,
the 1996 Non-Employee Director Stock Option Plan will terminate in 2006. Subject
to certain exceptions, the Non-Employee Director Plans may be amended, altered,
or discontinued by the board of directors without Stockholder approval, but may
not be amended more than once every six months.
At June 30, 1996, options to purchase a total of 60,000 shares of PCI
Common Stock had been granted under the Non-Employee Director Plans and were
outstanding.
The Non-Employee Director Stock Option Committee of PCI has determined
that the AMI Designees, including any future AMI Designees, will not, by virtue
of AMI's right to have them designated for director nominations, be deemed to
be non-employee directors for purposes of the Non-Employee Director Plans.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers concerning exercise of options during 1995 and unexercised
options held as of the end of 1995.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR-END (#) YEAR-END ($)(1)
---------------------------- ----------------------------
SHARES
ACQUIRED VALUE
ON REALIZED
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warren D. Harkins...... -- -- 50,000 100,000 -- --
C. G. Whitten.......... -- -- 22,500 67,500 -- --
Dale E. Harkins........ -- -- 37,500 77,500 -- --
Thomas R. Modisett.... -- -- 37,500 77,500 -- --
</TABLE>
- - ------------
(1) Based on the closing sale price of the PCI Common Stock on December 29,
1995, as reported by Nasdaq.
9
<PAGE>
TEN YEAR OPTION REPRICING
The following table sets forth information with respect to the named
executive officers concerning option repricing during 1995.
<TABLE>
<CAPTION>
SECURITIES MARKET PRICE EXERCISE LENGTH OF
UNDERLYING OF STOCK PRICE ORIGINAL OPTION
NUMBER OF AT TIME OF AT TIME OF NEW TERM REMAINING
OPTIONS REPRICING OR REPRICING OR EXERCISE AT DATE OF
REPRICED OR AMENDMENT AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED(#) ($) ($) ($) AMENDMENT
- - ----------------- ------ ------------- -------------- ------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Warren D. Harkins 1/3/95 50,000 $5.25 $14.00 $5.75 4.5 years
100,000 5.25 14.50 5.25 5.5
C. G. Whitten 1/3/95 10,000 5.25 14.50 5.25 5.0
100,000 5.25 24.25 5.25 5.5
Dale E. Harkins 1/3/95 35,000 5.25 14.00 5.25 4.5
80,000 5.25 14.50 5.25 5.5
Thomas R. Modisett 1/3/95 35,000 5.25 14.00 5.25 4.5
80,000 5.25 14.50 5.25 5.5
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on the Company's executive compensation program. The report
describes the Compensation Committee's policies applicable to the Company's
executive officers and provides specific information regarding the
compensation of the Company's Chief Executive Officer.
The Compensation Committee, which currently consists of the Company's
three independent directors and one of the AMI Designees, administers and
oversees all aspects of the Company's executive compensation. The Compensation
Committee is responsible for the review of the objectives, structure, cost, and
administration of the Company's compensation and benefit policies and programs.
The Compensation Committee's basic policy is to ensure that salary
levels and compensation incentives are designed to attract and retain
qualified individuals in key positions and are commensurate with the level of
executive responsibility, the type and scope of the Company's operations, and
the Company's financial condition and performance. The goal of this policy
is to promote the attainment of the financial and strategic objectives of the
Company and, thus, enhance stockholder value. Except as otherwise discussed
in this report, the Compensation Committee postponed a comprehensive review
of executive compensation until February 1996, following completion of the
Company's acquisition of stock and assets from AMI and other related and
unrelated parties.
The Compensation Committee was created in July 1993 following the Company's
initial public offering of PCI Common Stock in June 1993. The base salary for
each of the Company's executive officers for 1993 was established pursuant to
agreements entered into by the Company prior to the initial public offering. In
May 1994, the Compensation Committee completed an annual review of the base
salary levels and approved increases for several of the executive officers,
including the Company's new Chief Executive Officer. The Compensation Committee
believes that the base salary levels, as adjusted effective May 1, 1994, remain
consistent with the Company's status as a young, public company and with the
Company's peers in the SMR industry. The Compensation Committee has not,
however, conducted a detailed examination of the compensation structure of
peer companies, nor has it engaged the services of an executive compensation
consultant.
As set forth above (see "Executive Compensation-Employment and Change of
Control Agreements"), the Compensation Committee approved new employment
agreements with each of the Company's executive officers, which were entered
into in February 1996. In addition to providing for base salary at the
previously set levels,
10
<PAGE>
benefits, and compensation upon termination of employment, including a change
of control of the Company, these employment agreements also provide that the
executive officers are entitled to an annual bonus.
Annual bonuses will be determined by the Compensation Committee based on
the executive officer's achievement of goals approved by the Compensation
Committee for the applicable fiscal year, as well as other factors that the
Compensation Committee, in its discretion, may consider. General goals
approved by the Compensation Committee for 1996 include consolidation to
effect economies of scale, obtaining positive operating cash flow from each
profit center, as adjusted for the impact of capital expenditures, and
successful disposition of non-core assets in order to increase capital
resources to acquire additional primary spectrum. Individual goals have also
been set for each of the executive officers.
The Compensation Committee may also consider other factors in determining
bonus awards, including, but not limited to, the quality of the work
performed by the individual executive officer during the period, the
financial condition and result of operation of the Company for the period,
the Company's progress toward its business objectives, both financial and
strategic, during the period, performance of the PCI Common Stock for the
period, and recommendations by the Chief Executive Officer with respect to
the other executive officers.
A specific executive bonus plan was not in place for 1995. The
Compensation Committee, however, approved a special bonus for each of the
executive officers in recognition of their efforts and achievements in 1995
and early 1996, culminating with the successful completion of the Company's
acquisition of stock and assets from AMI and other related and unrelated
parties (collectively referred to as "AMI Parties") in January 1996. The
special bonuses were paid in the form of a repayment of one-half of the
principal balance of outstanding indebtedness to the Company and a cash
payment for income taxes payable on the special bonus. See "Certain
Relationships and Related Transactions."
Another component of the Company's executive compensation structure is the
grant of stock options pursuant to the Employee Plans. The Compensation
Committee is responsible for administering the Employee Plans and making
decisions about grants of stock options.. The original grants of stock
options to the Company's executive officers were made at the time of the
Company's initial public offering. Grants of stock options to executive
officers are intended both as additional compensation and incentives for
future performance. During 1995, the Compensation Committee granted no
additional stock options to the Company's executive officers. Additional
stock options under the 1993 Stock Option Plan were granted to the Company's
executive officers in February 1996 when the Compensation Committee reviewed
all aspects of executive compensation. It is the objective of the
Compensation Committee, through grants under the Employee Plans, to encourage
ownership of PCI Common Stock by executive officers and other employees in
order to enhance mutuality of interest with stockholders of the Company.
In late 1994, the Compensation Committee began reviewing the significant
decrease in the market price per share of the PCI Common Stock. After
determining that the decrease was primarily industry-related and not
reflective of the Company's performance and potential, the Compensation
Committee decided in January 1995 to reprice stock options granted under the
1993 Stock Option Plan in 1993 and 1994. The outstanding stock options held
by executive officers, as well as those held by other employees, were
regranted with an exercise price of $5.25 per share, the market price per
share on the date of the repricing.
At this time, based on the Company's current executive compensation
structure, the Company does not believe it is necessary to adopt a policy
with respect to qualifying executive compensation in excess of $1 million for
deductibility under the Section 162(m) of the Internal Revenue Code.
In April 1994, the Board of Directors elected Mr. Warren Harkins as its
new President and Chief Executive Officer. In August 1994, Mr. Harkins was
elected to the additional post of Chairman of the Board. Prior to his
election as President and Chief Executive Officer, Mr. Harkins served as the
Company's Vice President - Corporate Development. In May 1994, in
recognition of his contributions to the Company and his increased
responsibilities, the Compensation Committee approved an increase in Mr.
Harkins' annual base salary to $150,000, which has not been adjusted. Mr.
Harkins' employment agreement also provides for certain personal benefits,
including vacation
11
<PAGE>
and use of a company vehicle. The employment agreement also provides for
annual bonuses, to be determined by the Compensation Committee, based on the
achievement of certain established goals as discussed in this report.
Individual goals for the Chief Executive Officer for 1996 include
transitioning the Company from analog to digital technology and facilitating
required financing, strategic relationships and technology selection. The
employment agreement provides for the automatic termination of Mr. Harkins
upon a change of control of the Company, entitling him to receive, among
other things, an amount equal to two times his base salary, the vesting of
all stock options granted him, and a special bonus in the form of repayment
of Mr. Harkins indebtedness to the Company (along with a cash payment to
gross-up the special bonus for payment of income taxes). In January 1995,
stock options previously granted to Mr. Harkins under the 1993 Stock Option
Plan were repriced as discussed in this report.
The Compensation Committee considers that Mr. Harkins' base salary is
within, or below, the range of salaries of chief executive officers of
comparable companies. The Compensation Committee further believes that Mr.
Harkins' compensation is commensurate with his high level of experience with
the Company and the SMR industry and his significant contributions to the
Company's growth. The Compensation Committee recognizes, and Mr. Harkins'
base salary reflects, that he did not have experience as an executive of a
public company before the Company's initial public offering.
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1993 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Herbert T. Hensley
Dale N. Hatfield
James P. Hynes
William C. Kennedy, Jr.
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the PCI Common Stock during the two and one-half year period ended December
31, 1995, with the cumulative total stockholder return on the Nasdaq Stock
Market Index and on the Nasdaq Telecommunications Stocks Index (which
comprises wireless telecommunications companies traded on Nasdaq) over the
same period. The comparison assumes a $100 investment on June 23, 1993 (the
initial day of trading in PCI Common Stock), in PCI Common Stock, The Nasdaq
Stock Market Index, and The Nasdaq Telecommunications Stocks Index, and
assumes reinvestment of all dividends and distributions.
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN
PITTENCRIEFF COMMUNICATIONS, INC., NASDAQ STOCK MARKET AND
NASDAQ TELECOMMUNICATIONS STOCKS
06/23/93 12/31/93 12/31/94 12/31/95
-------- -------- -------- --------
Pittencrieff 100 175 36 27
Nasdaq Stock Market 100 110 107 156
Nasdaq Telecommunications Stocks 100 121 100 120
13
<PAGE>
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
PCI Common Stock to file with the Securities and Exchange Commission ("SEC") and
Nasdaq initial reports of ownership and reports of changes in ownership of PCI
Common Stock. Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file with the SEC. Based
solely on the Company's review of the copies of such forms it has received
during the year, the Company believes that during the year ended December 31,
1995, all the Company's directors, officers, and holders of more than 10% of PCI
Common Stock complied with all Section 16(a) filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1994, the Company made loans to each of its executive officers
to facilitate their exercise, before the exchange transaction which resulted
in the liquidation of the Company's former indirect parent, Pittencrieff plc
("PLC"), of options they held to acquire PLC shares. The following executive
officers borrowed from the Company the amounts shown below: Warren Harkins -
$115,616; C. G. Whitten - $72,201; Dale Harkins - $79,518; and Thomas Modisett
- - - $82,205. Each loan bears interest at a market interest rate of prime plus
one percent and is due and payable 12 months from the date the respective
loan was drawn down. In June 1995, the Company extended the maturity of each
of the loans until June 1996 under the same terms and conditions and added
all accrued and unpaid interest to the outstanding principal balance. In
February 1996, the Compensation Committee of the Company's board of directors
awarded a special bonus to each of the named executive officers in recognition
of their efforts and achievements in 1995 and 1996, culminating with the
successful completion of the acquisition of stock and assets from AMI Parties.
The bonuses were paid April 1, 1996, in the form of a repayment of one-half of
the principal balance of such executive officer's outstanding indebtedness to
the Company and a cash payment as a gross-up for income taxes payable on the
special bonus. The gross bonus payable for each executive officer is as
follows: Warren Harkins - $96,803; C. G. Whitten - $60,580; Dale Harkins -
$66,513; and Thomas Modisett - $68,997.
Pursuant to the Contribution Agreement between the Company and the AMI
Parties governing the merger of the specialized mobile radio ("SMR") businesses
of the AMI Parties, the Company agreed to expand its board of directors from
five to eight members and AMI was authorized to appoint three directors of its
choosing. The Company's By-Laws give AMI or its designees on the board the
right to designate three of the management nominees for election to the board,
subject to reductions in the number of AMI designees upon reductions in the
number of outstanding shares of PCI Common Stock held by AMI. The Company's
By-Laws also require a vote of two-thirds of the whole board of directors to
change the size of the board or AMI's right to designate nominees.
In order to participate in the FCC's auction of 900 MHz SMR channels, FMR
Corp., the indirect parent of AMI, provided a $1 million auction loan to the
Company in November 1995. The note was due on demand and required interest
payable monthly at the prime rate plus 2%. The auction loan was replaced with
a new note on January 31, 1996, in the principal amount of $2,523,463 which was
subsequently repaid from the proceeds of a revolving loan received from First
Interstate Bank of Texas, N.A. in March 1996. FMR Corp. has provided a letter
of credit in connection with the revolving loan and has received warrants to
purchase 250,000 shares of PCI Common Stock, at an exercise price of $4.50 per
share effective March 18, 1996, and 250,000 shares of PCI Common Stock, at an
exercise price of $4.73 per share effective September 14, 1996, in
consideration thereof.
PROPOSAL TO APPROVE AND RATIFY PITTENCRIEFF COMMUNICATIONS, INC.
1996 STOCK OPTION PLAN
The Board of Directors has established the 1996 Stock Option Plan, subject
to the approval of the stockholders, pursuant to which options may be granted to
eligible employees of the Company for the purchase of an aggregate of 1,000,000
shares of PCI Common Stock. Employees eligible under the 1996 Stock Option Plan
are those employees whose performance and responsibilities are determined by the
Compensation Committee to be influential to the Company'ssuccess. The 1996
Stock Option Plan is administered by the Compensation Committee which
determines, in its discretion, the number of shares of each option granted and
the related purchase price. The
14
<PAGE>
Compensation Committee may grant either nonqualified stock options or incentive
stock options, as defined by the Internal Revenue Code. No options have been
granted by the Compensation Committee under the 1996 Stock Option Plan.
The 1996 Stock Option Plan requires that the purchase price under each
stock option must not be less than 100% of the fair market value of the PCI
Common Stock at the time of the grant of the option. No incentive stock option,
however, may be granted to an employee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company unless
the option price is at least 110% of the fair market value of the PCI Common
Stock at the date of the grant. The closing sale price of PCI Common Stock as
reported on The Nasdaq Stock Market on September 16, 1996 was $4.4375 per share.
There is no limit on the fair market value of incentive stock options
that may be granted to an employee in any calendar year, but no employee may
be granted incentive stock options that first become exercisable during a
calendar year for the purchase of stock with an aggregate fair market value
(determined as of the date of grant of each option) in excess of $100,000. An
incentive stock option (or an installment thereof) counts against the annual
limitation only in the calendar year it first becomes exercisable.
The option period may not be more than six years from the date the option
is granted. Options may be exercised in annual installments of 25% as specified
by the Compensation Committee. All installments that become exercisable are
cumulative and may be exercised at any time after they become exercisable until
the option expires. Options may not be transferred other than by will or by the
laws of descent and distribution. If an optionee dies prior to the termination
of his option without having totally exercised the option, the option may be
exercised, to the extent the deceased optionee could have exercised the option
on the date of his death, by his estate or by the person who acquired the right
to exercise the option by bequest or inheritance, provided that the option is
exercised prior to the date of the option's expiration or six months from the
date of the optionee's death, whichever occurs first.
Full payment for shares purchased upon exercise of an option must be made
at the time of exercise, and no shares may be issued until full payment is made.
The 1996 Stock Option Plan provides that an option agreement may include a
provision permitting an optionee the right to tender previously owned shares of
PCI Common Stock in partial or full payment for shares to be purchased on
exercise of an option. Unless sooner terminated by action of the Board of
Directors, the 1996 Stock Option Plan will terminate in February 2006 and no
options may thereafter be granted under the 1996 Stock Option Plan.
The 1996 Stock Option Plan contains antidilution provisions applicable
in the event of increase or decrease in the number of outstanding shares of
the Company, effected by any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation, or the like, of or by the Company.
The Board of Directors may at any time amend or discontinue the 1996
Stock Option Plan except that it may not, without stockholder approval, (i)
materially increase the benefits accruing to participants under the 1996 Stock
Option Plan, (ii) materially increase the number of securities that may be
issued under the 1996 Stock Option Plan, or (iii) materially modify the
requirements of eligibility for participation in the 1996 Stock Option Plan.
Tax Status of Stock Options
INCENTIVE STOCK OPTIONS. All stock options that qualify under the rules
of Section 422 of the Internal Revenue Code will be entitled to incentive
stock option treatment. To receive incentive stock option treatment, an
optionee must not dispose of the acquired stock within two years after the
date option is granted or within one year after the date the shares are
transferred to the optionee. In addition, the individual must have been an
employee of the Company for the entire time from the date of granting of the
option until three months (one year if the employee is disabled) before the
date of the exercise. The requirement that the individual be an employee and
the two-year and one-year holding periods are waived in the case of death of
the employee. If all such requirements are met, no tax will be imposed upon
the exercise of the option, and any gain upon sale of stock will be entitled
to capital gain treatment. The employee's gain on exercise (the excess of
fair market value at the time of exercise over the exercise
15
<PAGE>
price) of an incentive stock option is a tax preference item and, accordingly,
is included in the computation of alternative minimum taxable income.
If an employee does not meet the two-year and one-year holding requirements
(a "disqualifying disposition"), but does meet all other requirements, tax will
be imposed at the time of sale of the stock. In such event, the employee's gain
on exercise will be treated as ordinary income rather than capital gain and
the Company will get a corresponding deduction at the time of sale. Any
remaining gain on sale will be short-term or long-term capital gain,
depending on the holding period of the stock. If the amount realized on the
disqualifying disposition is less than the value at the date of exercise, the
amount includible in gross income, and the amount deductible by the Company,
will equal the excess of the amount realized on the sale or exchange over
exercise price.
NONQUALIFIED STOCK OPTIONS. Generally, an optionee will not recognize
income for federal income tax purposes upon the grant of an option. On
exercise of such option, however, the optionee will recognize ordinary income
in an amount equal to the excess of the fair market value of the shares on
the date of exercise over the option price of such shares, and the Company
will be allowed a federal income tax deduction equal to the amount of
ordinary income recognized by the optionee at the time of such recognition by
the optionee.
The foregoing statements are based upon present federal income tax laws
and regulations and are subject to change if the tax laws and regulations, or
interpretations thereof, are changed.
RECOMMENDATION AND REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of record of a majority of the
outstanding shares of PCI Common Stock present in person or by proxy and
entitled to vote thereon at the annual meeting is required in order to
approve and ratify the 1996 Stock Option Plan. If the requisite vote of the
stockholders is not obtained, the 1996 Stock Option Plan and all then
outstanding options will become null and void. Accordingly, the Board of
Directors recommends that the stockholders vote FOR the approval and
ratification of the 1996 Stock Option Plan.
PROPOSAL TO APPROVE AND RATIFY PITTENCRIEFF COMMUNICATIONS, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors has adopted the 1996 Non-Employee Director Plan,
subject to approval by stockholders at the annual meeting. The 1996
Non-Employee Director Plan provides for the granting of nonqualified stock
options, as defined by the Internal Revenue Code, to directors who are not
officers of the Company. The purpose of the 1996 Non-Employee Director Plan
is to provide non-employee directors with a proprietary interest in the Company
which will (i) increase the interest of non-employee directors in the Company's
welfare, (ii) furnish an incentive to the non-employee directors to continue
their services to the Company, and (iii) provide a means through which the
Company may attract able persons to serve on its Board. There are currently
three non-employee directors: Messrs. Herbert T. Hensley, William C. Kennedy,
Jr., and Dale N. Hatfield.
The 1996 Non-Employee Director Plan covers an aggregate of up to 90,000
shares of PCI Common Stock and provides for automatic grants of stock
options. The 1996 Non-Employee Director Plan provides for the grant, subject
to the approval of the 1996 Non-Employee Director Plan by the stockholders of
the Company, of nonqualified options to purchase 10,000 shares of PCI Common
Stock to each non-employee director effective as of February 22, 1996 (the "
Effective Date"). The 1996 Non-Employee Director Plan also provides for the
grant of additional nonqualified options to purchase 10,000 shares of PCI
Common Stock to each non-employee director on each anniversary date of the
Effective Date. Non-employee directors may elect not to receive option
grants under the 1996 Non-Employee Director Plan by giving written notice to
the Company in the manner specified in the plan.
The 1996 Non-Employee Director Plan requires that the exercise price for each
stock option must be equal to the closing price of PCI Common Stock on the
date the option is granted. On February 22, 1996, the date options were
granted under the 1996 Non-Employee Director Plan to Messrs. Hensley, Kennedy
and Hatfield, the closing sale price of PCI Common Stock as reported on The
Nasdaq Stock Market was $4.50. The closing sale price of PCI Common Stock as
reported on The Nasdaq Stock Market on September 16, 1996 was $4.4375 per
share.
16
<PAGE>
The 1996 Non-Employee Director Plan is administered by the Non-Employee
Director Stock Option Committee ("Non-Employee Director Plan Committee").
PITTENCRIEFF COMMUNICATIONS, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<TABLE>
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
----------------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Warren D. Harkins (1)...................................... - -
President and Chief Executive Officer
C. G. Whitten (1).......................................... - -
Senior Vice President General Counsel and Secretary
Dale E. Harkins (1)........................................ - -
Senior Vice President - Business Development
Thomas R. Modisett (1)..................................... - -
Vice President-Finance and Chief Financial Officer,
Treasurer, and Assistant Secretary
Executive officers as a group (1).......................... - -
Non-executive directors as a group (2)..................... $135,000 30,000
Non-executive officers and employees as a group (1)........ - -
</TABLE>
- - ------------------------------
(1) Ineligible to participate in the 1996 Non-Employee Director Plan.
(2) Subject to stockholder approval of the 1996 Non-Employee Director Plan,
the Non-Employee Director Plan Committee has granted options to purchase
10,000 shares of PCI Common Stock to each of Messrs. Hatfield, Hensley,
and Kennedy, at an exercise price of $4.50 per share. The AMI Designees
are ineligible to participate in the 1996 Non-Employee Director Plan
Options granted under the 1996 Non-Employee Director Plan are exercisable
in four installments of 25% each beginning on the first anniversary of the
date the option is granted and terminate on the sixth anniversary of the option
grant date. Options may not be transferred other than by will or by the laws
of descent and distribution. If a non-employee director dies prior to the
termination of his option without having totally exercised the option, the
option may be exercised, to the extent the deceased non-employee director could
have exercised the option on the date of his death, by his estate or by the
person who acquired the right to exercise the option by bequest or inheritance,
provided that the option is exercised prior to the date of the option's
expiration or six months from the date of the non-employee director's death,
whichever occurs first.
Full payment for shares purchased upon exercise of an option must be
made at the time of exercise. No shares may be issued until full payment is
made. Unless sooner terminated by action of the Board of Directors, the 1996
Non-Employee Director Plan will terminate in February 2006.
The 1996 Non-Employee Director Plan contains antidilution provisions
applicable in the event of increase or decrease in the number of outstanding
shares of the Company, effected by any stock dividend, stock split, share
combination, exchange of shares, recapitalization, merger, consolidation,
separation, reorganization, liquidation, or the like, of or by the Company.
The Board of Directors may at any time amend or discontinue the 1996
Non-Employee Director Plan except that it may not, without stockholder
approval, (i) materially increase the benefits accruing to participants under
the 1996 Non-Employee Director Plan, (ii) materially increase the number of
securities that may be issued under the 1996 Non-Employee Director Plan, or
(iii) materially modify the requirements of eligibility for
17
<PAGE>
participation in the 1996 Non-Employee Director Plan. In addition, the 1996
Non-Employee Director Plan may not be amended more than once every six months.
Under the 1996 Non-Employee Director Plan, a non-employee director is
defined as a director who is not an employee or executive officer of the
Company and who is not serving on the Board of Directors pursuant to a
contractual obligation of the Company or at the request of a stockholder of
the Company. Accordingly, the AMI Designees are not eligible for grants
under the 1996 Non-Employee Director Plan.
TAX STATUS OF STOCK OPTIONS
Generally, an optionee will not recognize income for federal income tax
purposes upon the grant of an option. On exercise of such option, however,
the optionee will recognize ordinary income in an amount equal to the excess
of the fair market value of the shares on the date of exercise over the
option price of such shares, and the Company will be allowed a federal income
tax deduction equal to the amount of ordinary income recognized by the
optionee at the time of such recognition by the optionee. The foregoing
statements are based upon present federal income tax laws and regulations and
are subject to change if the tax laws and regulations, or interpretations
thereof, are changed.
RECOMMENDATION AND REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of record of a majority of the
outstanding shares of PCI Common Stock present in person or by proxy and
entitled to vote thereon at the annual meeting is required in order to
approve and ratify the 1996 Non-Employee Director Plan. If the requisite
vote of the stockholders is not obtained, the 1996 Non-Employee Director Plan
and all then outstanding options will become null and void. Accordingly,.
the Board of Directors recommends that the stockholders vote FOR the approval
and ratification of the 1996 Non-Employee Director Plan.
INDEPENDENT AUDITORS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP as
the Company's independent auditors for the year ending December 31, 1996.
KPMG Peat Marwick LLP has served as the Company's independent auditors since
1991. A representative of such firm is expected to be present at the meeting
and will be available to answer questions and will be afforded an opportunity
to make a statement if desired.
STOCKHOLDER PROPOSALS
Any proposals from stockholders to be presented for consideration for
inclusion in the proxy material in connection with the 1997 annual meeting of
stockholders of the Company must be submitted in accordance with the rules of
the SEC and received by the Secretary of the Company at the Company's principal
executive offices no later than the close of business on June 2, 1997.
OTHER MATTERS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. Costs of solicitation will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, and telegram by directors, officers, and
employees of the Company. Arrangements have also been made with brokerage
houses, banks, and other custodians, nominees, and fiduciaries for the
forwarding of soliciting materials to the beneficial owners of PCI Common
Stock held of record by such persons, and the Company will reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith.
All information contained in this Proxy Statement relating to the
occupations, affiliations, and securities holdings of directors and officers
of the Company and their relationship and transactions with the Company is based
upon information received from the individual directors and officers. All
information relating to any beneficial
18
<PAGE>
owner of more than 5% of the PCI Common Stock is based upon information
contained in reports filed by such owner with the SEC.
The Annual Report to Stockholders of the Company for the fiscal year
ended December 31, 1995, which includes financial statements, accompanying
this Proxy Statement, does not form any part of the material for the
solicitation of proxies.
THE COMPANY HAS PROVIDED WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED HEREBY A COPY OF THE COMPANY'S 1995 ANNUAL REPORT WHICH INCLUDES A
COPY OF THE COMPANY'S 1995 FORM 10-K. EXHIBITS TO THE FORM 10-K ARE AVAILABLE
UPON REQUEST AT A REASONABLE CHARGE TO COVER THE COMPANY'S COST IN PROVIDING
SUCH EXHIBITS. ADDITIONAL COPIES OF THE 1995 ANNUAL REPORT TO STOCKHOLDERS MAY
BE OBTAINED WITHOUT CHARGE BY ANY PERSON WHOSE PROXY IS SOLICITED HEREBY UPON
WRITTEN REQUEST TO CORPORATE SECRETARY, PITTENCRIEFF COMMUNICATIONS, INC.,
1 VILLAGE DRIVE, SUITE 500, ABILENE, TEXAS 79606.
By the Order of the Board of Directors
C. G. Whitten
SECRETARY
19
<PAGE>
PROXY
PITTENCRIEFF COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 30, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Warren D. Harkins and C. G.
Whitten, or either of them, as the true and lawful attorneys and proxies of
the undersigned, with full power of substitution, to represent the
undersigned and to vote all of the shares of Common Stock of Pittencrieff
Communications, Inc. (the "Company"), that the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Company to be held on
October 30, 1996 and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE.
IF NO SPECIFIC DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS, "FOR" EACH OF THE PROPOSALS
SET FORTH HEREIN AND IN THE DISCRETION OF THE PROXY HOLDERS
ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
See Reverse
Side
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in
this example /X/
1. Election of Directors.
FOR all nominees
listed to the right
(except as
marked
to the contrary)
/ /
WITHHOLD
AUTHORITY
to vote for all
nominees named
to the right
/ /
NOMINEES:
Lance C. Cawley, Warren D. Harkins, Dale N. Hatfield, Donald S. Heaton,
Herbert T. Hensley, James P. Hynes, William C. Kennedy, Jr.,
and C.G. Whitten
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name on the line below.)
_______________________________________________________________________
2. A proposal to approve and ratify the FOR AGAINST ABSTAIN
Pittencrieff Communications, Inc. / / / / / /
1996 Stock Option Plan.
3. A proposal to approve and ratify / / / / / /
the Pittencrieff Communications, Inc.
1996 Non-Employee Director Stock
Option Plan.
4. In their discretion, to vote upon / / / / / /
such other business as may properly
come before the meeting or any
adjournment thereof.
Please sign exactly as the name appears on the certificate or certificates
representing shares to be voted by this proxy. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized person. If a partnership, please sign in partnership name by
authorized person.
Signature of Stockholder ____________________________
Signature (if jointly owned) ________________________
Dated: ________________________, 1996
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
FOLD AND DETACH HERE
