<PAGE> 1
SCHEDULE 14a
(RULE 14a-101)
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
[ ] 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 Rule 14a-11(c) or Rule 14a-12
WESTERN WIRELESS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
WESTERN WIRELESS CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11:
(1) Title of each class of securities to which transaction applies:
N.A.
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(2) Aggregate number of securities to which transaction applies:
N.A.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N.A.
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(4) Proposed maximum aggregate value of transaction:
N.A.
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(5) Total fee paid:
N.A.
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
N.A.
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(2) Form, Schedule or Registration Statement no.:
N.A.
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(3) Filing party:
N.A.
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(4) Date filed:
N.A.
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<PAGE> 2
LOGO
Seattle, Washington
April 25, 1997
Dear Shareholders:
You are cordially invited to attend the Western Wireless Corporation Annual
Meeting of Shareholders to be held on Wednesday, May 21, 1997 at 9:00 a.m.
(Pacific daylight time) at The Education Conference Center at Overlake Hospital,
1035 - 116th Avenue NE, Bellevue, Washington 98004. Directions to The Education
Conference Center at Overlake Hospital are included with this Notice of Annual
Meeting and Proxy Statement.
The matters to be acted upon are described in the accompanying Notice of
Annual Meeting and Proxy Statement. At the meeting, we will also report on
Western Wireless' operations and respond to questions you may have.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND, IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED. PLEASE SIGN, DATE, AND MAIL THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PREPAID ENVELOPE
IN ORDER TO ENSURE THAT YOUR VOTE IS COUNTED. IF YOU ATTEND THE MEETING, YOU
WILL, OF COURSE, HAVE THE RIGHT TO VOTE YOUR SHARES IN PERSON.
Very truly yours,
LOGO
John W. Stanton
Chairman and
Chief Executive Officer
Western Wireless Corporation 2001 NW Sammamish Rd., #100 Issaquah, WA
98027 (206) 313-5200 FAX (206) 313-5520
<PAGE> 3
WESTERN WIRELESS CORPORATION
2001 N.W. SAMMAMISH ROAD
ISSAQUAH, WASHINGTON 98027
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1997
To the Shareholders:
The Annual Meeting of the Shareholders of Western Wireless Corporation, a
Washington corporation, will be held at The Education Conference Center at
Overlake Hospital, 1035 - 116th Avenue NE, Bellevue, Washington 98004, on
Wednesday, May 21, 1997, at 9:00 a.m. (Pacific daylight time) for the following
purposes:
1. To elect six directors to serve until the Annual Meeting of Shareholders
for 1998 and until their respective successors are elected and
qualified;
2. To approve the Company's 1996 Employee Stock Purchase Plan;
3. To approve the Company's 1997 Executive Restricted Stock Plan;
4. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for 1997; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on April 15, 1997 will
be entitled to notice of, and to vote at, the Annual Meeting and any
adjournments thereof.
The Company's Proxy Statement is submitted herewith. Financial and other
information concerning the Company is contained in the enclosed Annual Report
for the year ended December 31, 1996.
By Order of the Board of Directors
Alan R. Bender
Secretary
Issaquah, Washington
April 25, 1997
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
STAMPED AND ADDRESSED ENVELOPE IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER
OR VOTE YOUR SHARES IN PERSON IN THE EVENT THAT YOU SHOULD ATTEND THE MEETING.
<PAGE> 4
WESTERN WIRELESS CORPORATION
2001 N.W. SAMMAMISH ROAD
ISSAQUAH, WASHINGTON 98027
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1997
This Proxy Statement is furnished by the Board of Directors of Western
Wireless Corporation, a Washington corporation (the "Company" or "Western
Wireless"), to the holders of Class A Common Stock, no par value per share, of
the Company (the "Class A Common Stock"), and to the holders of Class B Common
Stock, no par value per share, of the Company (the "Class B Common Stock," and,
together with the Class A Common Stock, the "Common Stock"), in connection with
the solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Shareholders of the Company for 1997 (the "Annual Meeting"), to be
held at 9:00 a.m. (Pacific daylight time) on Wednesday, May 21, 1997, at The
Education Conference Center at Overlake Hospital, 1035 - 116th Avenue NE,
Bellevue, Washington 98004, and at any adjournment thereof. Directions to The
Education Conference Center at Overlake Hospital are provided at the end of this
Proxy Statement.
A proxy delivered pursuant to this solicitation is revocable at the option
of the person giving the same at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by executing and delivering a later dated proxy
card to the Secretary of the Company prior to the Annual Meeting, delivering
written notice of revocation of the proxy to the Secretary of the Company prior
to the Annual Meeting, or attending and voting at the Annual Meeting. Attendance
at the Annual Meeting, in and of itself, will not constitute a revocation of a
proxy. Unless previously revoked, the shares represented by the enclosed proxy
will be voted in accordance with the shareholder's directions if the proxy is
duly executed and returned prior to the Annual Meeting. If no directions are
specified, the shares will be voted for the election of the directors
recommended by the Board of Directors, the approval of the Company's 1996
Employee Stock Purchase Plan, the approval of the Company's 1997 Executive
Restricted Stock Plan, the ratification of the selection by the Board of
Directors of the Company's independent auditors, and, at the discretion of the
named proxies, on other matters properly brought before the Annual Meeting.
The presence in person or by proxy of holders of record of a majority of
the total number of votes attributable to all shares of Common Stock outstanding
and entitled to vote is required to constitute a quorum for the transaction of
business at the Annual Meeting. Under Washington law and the Company's Bylaws,
if a quorum is present, a nominee for election to a position on the Board of
Directors will be elected as a Director if the votes cast for the nominee exceed
the votes cast against the nominee and exceed the votes cast for any other
nominee for that position. Abstentions and "broker non-votes" (shares held by a
broker or nominee as to which a broker or nominee indicates on the proxy that it
does not have the authority, either express or discretionary, to vote on a
particular matter) are counted for purposes of determining the presence or
absence of a quorum for the transaction of business at the Annual Meeting. For
the election of directors, an abstention from voting and broker non-votes will
have the legal effect of neither a vote for nor against the nominee. For all
other matters, an abstention from voting and broker non-votes, since they are
not affirmative votes, will have the same practical effect as a vote against the
respective matters. Proxies and ballots will be received and tabulated by
ChaseMellon Shareholder Services, LLC, the Company's transfer agent.
This Proxy Statement and the enclosed proxy card are first being mailed to
shareholders on or about April 25, 1997.
The expense of preparing, printing, and mailing this Proxy Statement and
the proxies solicited hereby will be borne by the Company. In addition to the
use of the mails, proxies may be solicited by directors, officers, and other
employees of the Company, without additional remuneration, in person, or by
telephone, telegraph
<PAGE> 5
or facsimile transmission. The Company will also request brokerage firms, banks,
nominees, custodians, and fiduciaries to forward proxy materials to the
beneficial owners of shares of Common Stock as of the record date and will
provide reimbursement for the cost of forwarding the proxy materials in
accordance with customary practice. Your cooperation in promptly signing and
returning the enclosed proxy card will help to avoid additional expense.
At March 31, 1997, the Company had outstanding 14,810,157 shares of Class A
Common Stock and 55,198,604 shares of Class B Common Stock, and there were no
shares of any other class of stock outstanding. Each share of Class A Common
Stock entitles the holder thereof to one vote, and each share of Class B Common
Stock entitles the holder thereof to ten votes. Only shareholders of record at
the close of business on April 15, 1997, will be entitled to notice of, and to
vote at, the Annual Meeting.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1997, certain information
regarding beneficial ownership of the Company's Common Stock by (i) each person
who is known by the Company to own beneficially 5% or more of either class of
Common Stock; (ii) each Named Executive Officer (as defined under "Executive
Compensation" below); (iii) each director and nominee for director of the
Company; and (iv) all directors and officers as a group. Unless otherwise
indicated, all persons listed have sole voting power and investment power with
respect to such shares, subject to community property laws, where applicable,
and the information contained in the notes to the table. The Company has been
provided such information by its directors, nominees for directors, and
executive officers.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
----------------------------------- ---------------------------
NAME AND ADDRESS A SHARES B SHARES TOTAL A SHARES B SHARES TOTAL
- -------------------------------------- --------- ---------- ---------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Hellman & Friedman(2)(5).............. -- 25,163,997 25,163,997 -- 45.6% 35.9%
One Maritime Plaza, 12th Floor
San Francisco, CA 94111
The Goldman Sachs Group, L.P.
and related investors (3)(5).......... -- 12,099,029 12,099,029 -- 21.9 17.3
85 Broad Street, 19th Floor
New York, NY 10004
John W. Stanton and
Theresa E. Gillespie(4)(5)(6)......... 65,000 6,290,852 6,355,852 * 11.4 9.1
2001 NW Sammamish Road
Issaquah, WA 98027
Providence Media Partners L.P.(5)..... -- 3,886,591 3,886,591 -- 7.0 5.6
c/o Providence Ventures, Inc.
900 Fleet Center
50 Kennedy Plaza
Providence, RI 02903
Wellington Management Co., LLP........ 1,239,980 -- 1,239,980 8.4 -- 1.8
75 State Street
Boston, MA 02109
T. Rowe Price Associates Inc.......... 1,075,000 -- 1,075,000 7.3 -- 1.5
100 E. Pratt Street
Baltimore, MD 21202
Strong Capital Management............. 786,600 -- 786,600 5.3 -- 1.1
100 Heritage Reserve
Menomonee Falls, WI 53051
Donald Guthrie(6)..................... 15,000 156,768 171,768 * * *
Robert A. Stapleton(6)................ 15,000 451,396 466,396 * * *
Mikal J. Thomsen(6)(7)................ 38,469 453,307 491,776 * * *
John L. Bunce, Jr.(8)................. -- 25,163,997 25,163,997 -- 45.6 35.9
Mitchell R. Cohen(8).................. -- 25,163,997 25,163,997 -- 45.6 35.9
Daniel J. Evans....................... -- -- -- -- -- --
Jonathan M. Nelson(9)................. 6,000 3,866,591 3,872,591 * 7.0 5.6
Terence M. O'Toole(10)................ -- 12,099,029 12,099,029 -- 21.9 17.3
All directors and executive officers
as a group (13 persons)(6)............ 159,969 48,738,201 48,898,170 1.1 86.7 68.8
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Computed in accordance with Rule 13d-3(d)(1) of the Exchange Act.
(2) Consists of shares held by Hellman & Friedman Capital Partners II, L.P.
("HFCP"), H&F Orchard Partners, L.P. ("HFOP") and H&F International
Partners, L.P. ("HFIP"), which are in turn beneficially owned by their
respective general partners and Warren Hellman, individually and as a
3
<PAGE> 7
trustee of The Hellman Family Revocable Trust dated December 17, 1984 (the
"Hellman Trust," and, with HFCP, HFOP and HFIP, the "Hellman Entities"),
and Tully M. Friedman, individually and as the trustee of The Tully M.
Friedman Revocable Trust UAD January 3, 1980 (the "Friedman Trust," and,
with Hellman Entities, the "Hellman & Friedman Entities"). HFCP owns of
record 22,727,539 shares of Class B Common Stock, HFOP owns of record
2,033,024 shares of Common Stock and HFIP owns of record 403,434 shares of
Class B Common Stock. HFCP, HFOP and HFIP are California limited
partnerships, the sole general partners of which are entities indirectly
controlled by the Hellman Trust and the Friedman Trust. The principal
business of each of such partnerships is to make strategic investments in a
variety of special situations, including restructurings, recapitalizations
and buyouts. Hellman is a trustee of the Hellman Trust and Friedman is a
trustee of the Friedman Trust. Each of Hellman and Friedman is a citizen of
the United States. Hellman and Friedman, individually and as trustees of
the respective trusts, share voting and investment power with respect to
the shares of Class B Common Stock held by the Hellman & Friedman Entities.
(3) Consists of (i) 11,096,078 shares of Class B Common Stock held of record by
GS Capital Partners, L.P. ("GS Capital"), (ii) 580,813 shares of Class B
Common Stock held of record by Stone Street Fund 1992, L.P. ("Stone
Street"), (iii) 337,163 shares of Class B Common Stock held of record by
Bridge Street Fund 1992, L.P. ("Bridge Street") and (iv) 84,975 shares of
Class B Common Stock held of record by The Goldman Sachs Group, L.P. ("GS
Group," and, with GS Capital, Stone Street and Bridge Street, the "Goldman
Sachs Entities"). Each of GS Capital, Stone Street and Bridge Street is an
investment limited partnership, the general partner, the managing general
partner or the managing partner of which is an affiliate of GS Group. GS
Group disclaims beneficial ownership of shares held by such investment
partnerships to the extent partnership interests in such partnerships are
held by persons other than GS Group and its affiliates. Each of such
investment partnerships shares voting and investment power with certain of
its respective affiliates. The amounts in the table do not include (i) 330
shares of Class A Common Stock (or less than 1% of the total number of
outstanding shares of Class A Common Stock) owned by Goldman, Sachs & Co.
as of March 31, 1997 which were acquired in the ordinary course of
market-making transactions or (ii) 178,800 shares of Class A Common Stock
(or 1.2% of the total number of outstanding shares of Class A Common Stock)
held in managed accounts (the "Managed Accounts") as of March 31, 1997 for
which Goldman, Sachs & Co. exercises voting or investment authority, or
both. GS Group disclaims beneficial ownership of the shares held in the
Managed Accounts.
(4) Includes (i) 1,686,069 shares of Class B Common Stock held of record by PN
Cellular, Inc. ("PN Cellular"), which is substantially owned and controlled
by Mr. Stanton and Ms. Gillespie, (ii) 1,274,520 shares of Class B Common
Stock held of record by Stanton Communications Corporation ("SCC"), which
is substantially owned and controlled by Mr. Stanton and Ms. Gillespie,
(iii) 30,000 shares of Class A Common Stock and 3,087,774 shares of Class B
Common Stock held by Mr. Stanton and Ms. Gillespie, as tenants in common,
(iv) 5,000 shares of Class A Common Stock and 159,437 shares of Class B
Common Stock held of record by The Stanton Family Trust, and (v) 30,000
shares of Class A Common Stock held of record by Mr. Stanton pursuant to
the Company's 1997 Executive Restricted Stock Plan. Mr. Stanton and Ms.
Gillespie are married and share voting and investment power with respect to
the shares jointly owned by them, as well as the shares held of record of
PN Cellular, SCC and The Stanton Family Trust. Mr. Stanton, Ms. Gillespie,
PN Cellular, SCC and The Stanton Family Trust are referred to collectively
as the "Stanton Entities."
(5) Parties or affiliates of parties to the Shareholders Agreement, which
provides that the parties thereto will vote their shares of Common Stock in
favor of the election as directors of the Company, the Chief Executive
Officer of the Company, one person designated by Stanton and Providence
Media Partners L.P. ("Providence"), one person designated by Goldman, Sachs
& Co. ("Goldman Sachs"), two persons designated by the Hellman & Friedman
Entities and one person selected by a majority of such designated persons,
subject to the ownership requirements set forth therein. See "Certain
Transactions."
(6) Includes aggregate exercisable options to purchase Class B Common Stock;
does not include unexercisable options. May include stock jointly or
separately owned with or by spouse.
4
<PAGE> 8
(7) Mr. Thomsen jointly holds voting and investment power with respect to all
of such shares with Lynn C. Thomsen, his wife, except for shares issued or
issuable upon the exercise of stock options. Includes 172,484 shares of
Class B Common Stock beneficially owned by Mr. Thomsen through his
ownership of approximately 10.2% of PN Cellular. Mr. Thomsen does not have
voting control over such shares.
(8) Mr. Bunce and Mr. Cohen may each be deemed to be the owner of the
25,163,997 shares of Class B Common Stock owned by the Hellman & Friedman
Entities as they are general partners of Hellman & Friedman. Each of Mr.
Bunce and Mr. Cohen disclaim beneficial ownership of shares held by the
Hellman & Friedman Entities to the extent interests in such entities are
held by persons other than such individual.
(9) Mr. Nelson may be deemed to be the owner of the 3,866,591 shares of Class B
Common Stock owned by Providence, as he is a managing general partner of
Providence Ventures, L.P., the general partner of the general partner of
Providence. Mr. Nelson disclaims beneficial ownership of shares held by
Providence to the extent interests in Providence are held by persons other
than Mr. Nelson.
(10) Mr. O'Toole, who is a managing director of Goldman Sachs, disclaims
beneficial ownership of shares which may be deemed to be beneficially owned
by GS Group.
1. ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
As of March 31, 1997, the Company's Board of Directors consisted of five
members. At each annual meeting, directors are to be elected to serve for a term
of one year and until their respective successors have been elected and
qualified. The terms of office of the Company's current directors are scheduled
to expire at the Annual Meeting.
At the Annual Meeting, shareholders will elect six directors. Unless
otherwise directed, the persons named in the proxy intend to cast all proxies in
favor of Mr. John W. Stanton, Mr. John L. Bunce, Jr., Mr. Mitchell R. Cohen, Mr.
Daniel J. Evans, Mr. Jonathan M. Nelson and Mr. Terence M. O'Toole to serve as
directors of the Company. In the event that Mr. Stanton, Mr. Bunce, Mr. Cohen,
Mr. Evans, Mr. Nelson or Mr. O'Toole should become unavailable for election to
the Board of Directors for any reason, the persons named in the proxy have
discretionary authority to vote the proxies for the election of other nominees
to be designated to fill each such vacancy by the Board of Directors of the
Company.
INFORMATION ABOUT THE NOMINEES
John W. Stanton, 41, has been a director, Chairman of the Board and Chief
Executive Officer of the Company since its formation in July 1994. Mr. Stanton
has been Chief Executive Officer of General Cellular Corporation, a wholly-owned
subsidiary of the Company ("GCC"), since March 1992, and was Chairman of the
Board of GCC from March 1992 to December 1995. Mr. Stanton has served as
Chairman of the Board and Chief Executive Officer of PN Cellular, Inc. since its
formation in October 1992. Mr. Stanton served as a director of McCaw Cellular
Communications, Inc. ("McCaw") from 1986 to 1994, and as a director of LIN
Broadcasting Corporation from 1990 to 1994, during which time it was a publicly
traded company. From 1983 to 1991, Mr. Stanton served in various capacities with
McCaw, serving as Vice-Chairman of the Board of McCaw from 1988 to September
1991 and as Chief Operating Officer of McCaw from 1985 to 1988. Mr. Stanton is
also a member of the Board of Directors of each of Advanced Digital Information
Corporation and SmarTone (Hong Kong). In addition, Mr. Stanton is a trustee of
Whitman College, a private college. Mr. Stanton is currently Second Vice
Chairman of the Cellular Telecommunications Industry Association. Mr. Stanton is
married to Ms. Gillespie.
John L. Bunce, Jr., 38, has been a director of the Company since its
formation in July 1994. Mr. Bunce was a director of GCC from March 1992 to
December 1995. Mr. Bunce is a general partner of Hellman & Friedman, a private
investment firm, having joined Hellman & Friedman as an associate in 1988. Mr.
Bunce currently is a director of MobileMedia Corporation, Falcon Cable TV, Young
& Rubicam and several other privately held companies.
Mitchell R. Cohen, 32, has been a director of the Company since its
formation in July 1994. Mr. Cohen was a director of GCC from March 1992 to
December 1995. Mr. Cohen is a general partner of Hellman & Friedman, having
joined Hellman & Friedman as an associate in July 1989. From 1986 to 1989, Mr.
Cohen
5
<PAGE> 9
was employed by Shearson Lehman Hutton, Inc. Mr. Cohen currently is a director
of MobileMedia Corporation and Advanstar Communications.
Daniel J. Evans, 71, is the Chairman of Daniel J. Evans Associates, a
consulting firm. From 1965 through 1977, Mr. Evans was Governor of the State of
Washington. In 1983 he was appointed and then elected to the United States
Senate to fill the seat of the late Senator Henry M. Jackson. He serves as a
director of Attachmate Corporation, Burlington Northern Santa Fe, Inc., Flow
International Corporation, Puget Sound Energy, Tera Computer Company, and is
President of the Board of Regents of the University of Washington.
Jonathan M. Nelson, 40, has been a director of the Company since its
formation in July 1994. Mr. Nelson is a managing general partner of Providence
Ventures, L.P., the general partner of the general partner of Providence Media
Partners L.P. ("Providence"), a private equity fund. Mr. Nelson has been
president and chief executive officer of Providence Equity Partners, Inc.
(investment advisor) since its inception in 1995 and is a Member of Providence
Equity Partners LLC which is the general partner of Providence Equity Partners
L.P. and Providence Equity Partners II L.P. Since 1986, Mr. Nelson has been a
managing director of Narragansett Capital, Inc., a private management company
for three separate equity investment funds. Mr. Nelson is currently a director
of Wellman, Inc. and Brooks Fiber Properties Inc.
Terence M. O'Toole, 38, has been a director of the Company since its
formation in July 1994. Mr. O'Toole joined Goldman Sachs & Co. ("Goldman Sachs")
in 1983 and became a Vice President in April 1988, a general partner in November
1992, and a Managing Director in 1996. He is currently a director of Insilco
Corporation and AMF Group Inc.
COMMITTEES
The Company's Board of Directors has standing Executive, Compensation and
Audit Committees; the Company has no standing nominating committee. The members
of each Committee and the functions performed thereby are described below:
Executive Committee. The Executive Committee is comprised of Messrs.
Stanton, Bunce and O'Toole. The Executive Committee, during the intervals
between meetings of the Board of Directors, may exercise the powers of the Board
of Directors except with respect to a limited number of matters, which include
amending the Articles of Incorporation or the Bylaws of the Company, adopting an
agreement of merger or consolidation for the Company and recommending to the
shareholders of the Company a merger of the Company, the sale of all or
substantially all of the assets of the Company or the dissolution of the
Company.
Compensation Committee. During 1996, the Compensation Committee was
comprised of Messrs. Cohen and Nelson and David A. Bayer, a former director of
the Company. The Compensation Committee reviews current remuneration of the
directors and of the executive officers of the Company and makes recommendations
to the Board of Directors regarding appropriate periodic adjustment of such
amounts. The Compensation Committee also makes all determinations concerning the
Company's grants of stock options and restricted stock offers and awards to
officers and employees of the Company who are eligible for such options under
each of the Company's 1994 Management Incentive Stock Option Plan and its 1997
Executive Restricted Stock Plan.
Audit Committee. During 1996, the Audit Committee was comprised of Messrs.
Cohen, Nelson and Bayer. The Audit Committee reviews the planned scope of the
services of the Company's independent auditors; reviews financial statements and
the auditors' opinion letter; recommends the independent auditors for the
following fiscal year; reviews the recommendations of the independent auditors
relating to accounting, internal controls, and other matters; and reviews
internal controls and accounting procedures with the Company's financial staff.
During 1996, the Compensation Committee met four times, the Audit Committee
met one time, and the entire Board of Directors met nine times. Each current
director attended at least 75 percent of all Board meetings and meetings of
Committees on which they served during the periods they served.
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table summarizes the compensation for services rendered
during 1996 and 1995 for the Company's Chief Executive Officer and its next four
most highly compensated executive officers (collectively referred to herein as
the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
ANNUAL COMPENSATION ------------------------------
NAME AND -------------------------------------- ALL OTHER
PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS COMPENSATION($)(1)
- ------------------------------ ----------- --------- -------- ------- ------------------
<S> <C> <C> <C> <C> <C>
John W. Stanton 1996 $ 180,000 $270,000 0 $4,500
Chairman and Chief 1995 120,000 180,000 0 4,500
Executive Officer
Robert R. Stapleton 1996 150,000 120,000 75,000 4,500
President 1995 139,461 100,000 139,500 4,500
Donald Guthrie 1996 150,000 80,000 145,250 563
Vice Chairman and 1995 18,750 0 93,000 0
Chief Financial Officer
Mikal J. Thomsen 1996 140,000 90,000 60,000 4,500
Chief Operating Officer 1995 134,375 65,000 124,000 4,500
Theresa E. Gillespie 1996 130,000 100,000 0 3,095
Senior Vice President 1995 119,167 80,000 100,750 4,500
</TABLE>
- ---------------
(1) Company paid matching contributions to the Company's 401(k) Profit Sharing
Plan and Trust.
GRANTS OF STOCK OPTIONS
The following table summarizes the Options granted during 1996 to each of
the Named Executive Officers:
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS ASSUMED ANNUAL RATES OF STOCK PRICE
GRANTED TO EXERCISE OR APPRECIATION FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
- -------------- ---------- ------------ ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
John W.
Stanton 0 0% $ 0 -- $ 0 $ 0 $ 0
Robert R.
Stapleton 75,000(1) 6.6% 13.725(1) 12/31/2006 0 666,844 1,665,844
Donald Guthrie 85,250(3) 7.5% 1.13(3) 2/6/2006 1,086,511 1,831,703 2,967,233
60,000(1) 5.3% 13.725(1) 12/31/2006 0 533,475 1,332,675
Mikal J.
Thomsen 60,000(1) 5.3% 13.725(1) 12/31/2006 0 533,475 1,332,675
Theresa E.
Gillespie 0 0% 0 -- 0 0 0
</TABLE>
- ---------------
(1) These options have terms of ten years from the date of grant, December 31,
1996, and become exercisable as to 25% of the shares on the first
anniversary and an additional 25% every year thereafter until such options
are fully exercisable, provided that such officer remains continuously
employed by the Company.
(2) Potential realizable value is based on an assumption that the stock price of
the Common Stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the option term. These numbers are
calculated based on the requirements of the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
performance.
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<PAGE> 11
(3) These options were granted pursuant to a September 1995, agreement between
the Company and Mr. Guthrie. The options have a term of ten years from the
date of grant, February 6, 1996, and vest in 25% equal annual increments
over a period of four years from the vesting commencement date as specified
in the agreement. Pursuant to the agreement, as a result of the Company
consummating its public offering on certain agreed upon terms, the fourth
annual vesting increment has been accelerated and has become fully vested.
The Company recorded deferred compensation at the time the options were
granted based upon the difference between the fair market value of the
underlying securities and the exercise price of the options. As the fair
market value of the underlying securities of these options has declined
since the grant date, the Company has reflected the potential realizable
value at assumed annual rates of stock price appreciation for the option
term based upon the closing price of the Company's Class A Common Stock on
December 31, 1996, as quoted on the Nasdaq National Market. Had the Company
based the potential realizable value at assumed annual rates of stock price
appreciation on the fair market value of the underlying securities as of the
date of grant, the amounts disclosed above would have been $1,828,613,
$3,041,328 and $4,889,275, respectively.
EXERCISES OF STOCK OPTIONS
The following table provides information on option exercises in 1996 by the
Named Executive Officers and the value of such officers' unexercised options on
December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-
SHARES OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
ACQUIRED ON VALUE YEAR-END(#)(1) YEAR-END($)
EXERCISE REALIZED --------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- ---------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Stanton........... 0 $ 0 0 0 $ 0 $ 0
Robert R. Stapleton....... 100,000 1,247,595 441,209 215,791 3,899,739 433,422
Donald Guthrie............ 0 0 45,338 193,687 341,636 1,004,181
Mikal J. Thomsen.......... 0 0 103,334 189,166 383,576 401,121
Theresa E. Gillespie...... 0 0 83,054 104,496 307,860 316,704
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company currently receive no compensation for serving on
the Board. Directors are not reimbursed for their out-of-pocket expenses
incurred in connection with attendance at meetings of, and other activities
relating to serving on, the Board of Directors and any committees thereof. The
Board of Directors is currently considering compensation arrangements for the
directors.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Messrs.
Stanton, Guthrie, Stapleton and Thomsen and Ms. Gillespie, pursuant to which
such person's employment by the Company may be terminated by the Company at any
time, with or without cause (as such term is defined in the agreements). The
agreements provide for initial annual base compensation of $180,000, $150,000,
$150,000, $140,000 and $130,000, respectively (which such annual base
compensation has been subsequently adjusted by the Board of Directors to
$190,000, $160,000, $160,000, $150,000 and $140,000, respectively), and provide
each executive officer an opportunity to earn an annual bonus, as determined by
the Board of Directors of the Company, targeted at 100%, 70%, 70%, 60%, and 60%,
respectively, of such person's base compensation. Each such agreement provides,
that, in the event of an involuntary termination (as defined therein) for other
than cause (1) such executive officer will be entitled to receive a severance
payment in an amount equal to any accrued but unpaid existing annual targeted
incentive bonus through the date of termination, 12 months of such executive's
then base compensation, and an amount equal to 12 months of such executive's
existing annual targeted incentive bonus, (2) the Company will, at its expense,
make all specified insurance payment benefits on behalf of such executive
officer and his or her dependents for 12 months following such involuntary
termination, and (3) with respect to any stock options previously granted to
each executive officer which remain unvested at the time of involuntary
termination, there shall be immediate vesting of that portion of
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<PAGE> 12
each such grant of any unvested stock options equal to the product of the total
number of such unvested options under such grant multiplied by a fraction, the
numerator of which is the sum of the number of days from the date on which the
last vesting of options under such grant occurred to and including the date of
termination plus 365, and the denominator of which is the number of days
remaining from the date on which the last vesting of options under such grant
occurred to and including the date on which the final vesting under such grant
would have occurred absent the termination. Mr. Stapleton's agreement provides
for an immediate vesting of all options upon his involuntary termination for
other than cause. Among other things, an executive officer's death or permanent
disability will be deemed an involuntary termination for other than cause. In
addition, each agreement provides for full vesting of all stock options granted
upon a change of control (as such term is defined in the stock option agreements
with the executive officer) of the Company.
Pursuant to each such employment agreement, the Company has entered into an
indemnification agreement with such executive officer pursuant to which the
Company will agree to indemnify the executive officer against certain
liabilities arising by reason of the executive officer's affiliation with the
Company. Pursuant to the terms of each employment agreement, each executive
officer agrees that during such executive officer's employment with the Company
and for one year following the termination of such executive officer's
employment with the Company for any reason, such executive officer will not
engage in a business which is substantially the same as or similar to the
business of the Company and which competes within the applicable commercial
mobile radio services markets serviced by the Company. Mr. Stanton's agreement
provides that such prohibition shall not preclude Mr. Stanton's investment in
other companies engaged in the wireless communications business or his ability
to serve as a director of other companies engaged in the wireless communications
business, in each case subject to his fiduciary duties as a director of the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board was formed in July 1994.
None of the members was at any time during 1996, or at any other time, an
officer or employee of the Company. No member of the Compensation Committee of
the Company serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving as a
member of the Company's Board of Directors or Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
The Compensation Committee is responsible for setting policy and the
oversight of executive compensation. The Compensation Committee believes that
the actions of each executive officer has the potential to affect the short-term
and long-term performance of the Company. Consequently, the Compensation
Committee places considerable importance on its task of designing and overseeing
the executive compensation program. The Compensation Committee annually reviews
the compensation programs of peer and competing companies to assess the
competitiveness of its compensation.
Philosophy and Objectives for Executive Compensation. The purpose of the
Company's executive compensation program is to: (i) increase shareholder value,
(ii) improve the overall performance of the Company and (iii) attract, motivate,
reward and retain key executives.
The Compensation Committee believes that the Company's executive
compensation should reflect each executive officer's qualifications, experience,
role and performance achievements and the Company's performance achievements. In
determining compensation levels, the Compensation Committee focuses on the
competitive environment of the wireless and telecommunications industry group,
considering compensation practices, organization and performance of other
companies. The Compensation Committee also considers
- ---------------
* The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under either the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended (together, the "Acts"),
except to the extent that the Company specifically incorporated such report by
reference; and further such report shall not otherwise be deemed filed under
the Acts.
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<PAGE> 13
general industry trends in the geographic markets that are relevant to its
operations. Total cash compensation (base salary plus annual incentives) and
total direct compensation (base salary plus annual incentives plus the expected
value of incentives) should directly reflect the level of performance achieved
by the Company and its executives. Within this overall philosophy, the
Compensation Committee's specific objectives are to: (i) offer compensation
which is competitive with other well-managed wireless and telecommunications
companies and reward superior performance with enhanced levels of compensation;
and (ii) provide variable compensation awards that are based on the Company's
overall performance relative to corporate objectives, taking into account
individual contributions, teamwork and performance levels that help create value
for shareholders.
Components of Executive Compensation. The three primary components of
executive compensation are: (i) base salary, (ii) cash bonuses and (iii)
long-term incentive awards.
Base Salary. Executive officers' base salaries are set at levels which
reflect their specific job responsibilities, experience, qualifications, and job
performance in the context of the competitive marketplace. Marketplace levels of
compensation are determined using compensation surveys which reflect the
relevant segments of the market and include some of the companies which are
included in the Company's peer group as reflected in the Performance Graph, and
other companies which, while not in the peer group, are deemed appropriate
comparisons for compensation purposes. Base salaries are reviewed each year,
with consideration for adjustments being based on a combination of each
executive officer's ongoing role, his or her job performance and marketplace
competitiveness.
Cash Bonuses. Awards under the bonus plan are based on the achievement of
operating cash flow targets and specific objective performance goals. These
goals are set for a one-year period. Performance goals are set to represent a
range of performance, with the level of associated incentive award varying with
different levels of performance achievement. The Chief Executive Officer
recommends bonuses to the Compensation Committee for executive officers other
than himself. Awards earned under the plan are contingent upon employment with
the Company through the end of the year, except for payments made in the event
of death, retirement, disability, or in the event of a change in control. Bonus
payments to the Named Executive Officers are presented in the Summary of
Compensation Table under the heading "Bonus."
Long-Term Incentive Compensation. Long-term incentives are provided in the
stock options granted under the Management Incentive Stock Option Plan. The
grants listed in the Summary of Compensation Table above reflect grants to the
Named Executive Officers made in the calendar year 1996. Those grants were based
on the recommendations of the Chief Executive Officer.
Chief Executive Officer Compensation. The executive compensation policy
described above is applied in setting the Chief Executive Officer's
compensation. Mr. Stanton participated in the same base salary and cash bonus
compensation plans available to the Company's other executive officers. In 1996,
Mr. Stanton had a base salary of $180,000. Mr. Stanton's bonus was determined on
the basis of the Company's operating results versus established goals and other
objectives. During 1996, under Mr. Stanton's leadership, the Company
successfully achieved the following key goals and objectives. The Company grew
its cellular business at a rate above industry averages and Board of Directors'
target levels. The Company launched the first two auction awarded personal
communications services ("PCS") systems in the United States, commenced
operations in additional PCS systems, and rapidly grew its PCS subscriber base.
The Company successfully participated in Federal Communication Commission
auctions of additional spectrum. In addition, the Company won three
international licenses through its international subsidiary. The Company
strengthened its balance sheet by completing an initial public offering of its
Class A Common Stock and two public offerings of senior subordinated notes and
by expanding its bank and vendor borrowing facilities. Finally, Mr. Stanton
retained all of the Company's key executives and added several new executives.
The Compensation Committee determined that an annual bonus of $270,000 (150% of
his base salary) has been earned. Mr. Stanton is a large shareholder of the
Company and has, to date, declined to participate in the Company's Management
Incentive Stock Option Plan.
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended, limits the tax deductibility by a company of
compensation in excess of $1 million paid to any of its five most highly
compensated executive officers. However, performance-based compensation that has
been
10
<PAGE> 14
approved by shareholders is excluded from the $1 million limit if, among other
requirements, the compensation is payable only upon attainment of
preestablished, objective performance goals and the board committee that
establishes such goals consists only of "outside directors" as defined for
purposes of Section 162(m). All of the members of the Compensation Committee
qualify as "outside directors." The Compensation Committee intends to maximize
the extent of tax deductibility of executive compensation under the provisions
of Section 162(m) so long as doing so is compatible with its determinations as
to the most appropriate methods and approaches for the design and delivery of
compensation to the Company's executive officers.
Summary. The Compensation Committee believes that the mix of conservative
market-based salaries, significant variable cash incentives for both long-term
and short-term performance and the potential for equity ownership in the Company
represents a balance that will motivate the executive management team to
continue to produce strong results. The Committee further believes this program
strikes an appropriate balance between the interests and needs of the Company in
operating its business and appropriate rewards based on enhancement of
shareholder value.
Respectfully submitted,
COMPENSATION COMMITTEE
Jonathan M. Nelson
Mitchell R. Cohen
11
<PAGE> 15
PERFORMANCE GRAPH
The following graph depicts the Company's Class A Common Stock price
performance from May 22, 1996 (the date on which quotations for the Class A
Common Stock first appeared on the NASDAQ National Market) through December 31,
1996, relative to the performance of the NASDAQ and the NASDAQ TELECOM. All
indices shown in the graph have been reset to a base of 100 as of May 22, 1996,
and assume an investment of $100 on that date and the reinvestment of dividends,
if any, paid since that date. The Company has not paid cash dividends on its
Common Stock. The chart set forth below was prepared by the Company.
5/22/96 12/31/96
-------- ---------
Western Wireless Corporation $ 23.50 $ 13.875
NASDAQ TELECOM 633.09 579.827
NASDAQ 411.103 425.247
CERTAIN TRANSACTIONS
The Hellman & Friedman Entities, the Stanton Entities, the Goldman Sachs
Entities and Providence are parties to a Shareholders Agreement, which, with
respect to election of directors of the Company, provides that each of the
Hellman & Friedman Entities, the Stanton Entities, the Goldman Sachs Entities
and Providence shall vote their shares of Common Stock to elect a Board of
Directors which will include (but not necessarily be limited to) the following
six members: (i) the Chief Executive Officer of the Company, (ii) so long as the
Hellman & Friedman Entities beneficially own at least (A) 15% of the total
voting power (as defined in the Shareholders Agreement) of the Company, two
persons designated by the Hellman & Friedman Entities or (B) 7 1/2% of the total
voting power of the Company, one person designated by the Hellman & Friedman
Entities, (iii) so long as the Goldman Sachs Entities beneficially own at least
7 1/2% of the total voting power of the Company, one person designated by the
Goldman Sachs Entities, (iv) so long as the Stanton Entities and Providence
collectively beneficially own at least 7 1/2% of the total voting power of the
Company, one person designated by majority vote of the Stanton Entities and
Providence (such designee
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<PAGE> 16
being in addition to Mr. Stanton if he is then serving on the Board of Directors
by reason of being the Chief Executive Officer of the Company); the Stanton
Entities agreed that so long as Mr. Stanton is serving as Chief Executive and
Providence owns at least 75% of the shares of Common Stock it beneficially owns
at the date of execution of the Shareholders Agreement, the Stanton Entities
shall vote their shares of Common Stock for one member of the Board of Directors
designated by Providence; and (v) one member of the Board of Directors of the
Company selected by a majority of the persons selected as described above. The
Shareholders Agreement further provides that so long as the Hellman & Friedman
Entities hold shares of Common Stock having voting power (as defined in the
Shareholders Agreement) in excess of 49.9% of the total voting power, then for
so long as the Hellman & Friedman Entities hold shares of Common Stock having
voting power in excess of the aforesaid percentage, it shall abstain from voting
that number of shares of Common Stock, which gives it more votes than the
aforesaid percentage. Such agreement has a term of 10 years. The Goldman Sachs
Entities are also limited in their voting power pursuant to provisions of the
Company's Articles of Incorporation.
In February 1996, the Company acquired, through mergers intended to be
tax-free reorganizations, Palouse Paging, Inc. ("Palouse") and Sawtooth Paging,
Inc. ("Sawtooth"), paging system operators that provide services in some markets
in which the Company operates its cellular systems. Prior to the acquisitions,
Mr. Stanton and Ms. Gillespie had a significant ownership interest in each of
Palouse and Sawtooth. The acquisitions, each of which was approved by the
Company's Board of Directors in September 1995, contemplated a per share value
of the Common Stock of $11.29 for purposes of the exchange. The value of each of
Palouse and Sawtooth was determined by the disinterested directors of the
Company's Board of Directors. Mr. Stanton and Ms. Gillespie together had
independent legal representation in connection with the acquisition and Mr.
Stanton did not participate in either the Board of Directors' decision as to
whether to complete the transaction or its determination of the value to be
assigned to the interests acquired. Prior to the acquisition of Palouse, Mr.
Stanton and Ms. Gillespie jointly owned approximately 99% of the issued and
outstanding shares of common stock of Palouse. In consideration for the
acquisition, the shares of stock of Palouse were exchanged for 515,561 shares of
Class B Common Stock. In connection with the acquisition, Palouse repaid Mr.
Stanton and Ms. Gillespie loans in the amount of $355,000. Prior to the
acquisition of Sawtooth, Mr. Stanton and Ms. Gillespie, the Company and another
individual, who now is an employee of the Company, owned approximately 47%, 47%
and 6%, respectively, of the issued and outstanding shares of common stock of
Sawtooth. In consideration for the acquisition of Sawtooth, the issued and
outstanding shares of common stock of Sawtooth owned by Mr. Stanton and Ms.
Gillespie and the other individual shareholder were exchanged for 79,748 shares
of Class B Common Stock. In connection with the acquisition, Sawtooth repaid Mr.
Stanton and Ms. Gillespie loans in the amount of $288,000.
Pursuant to an agreement reached in September 1995, Donald Guthrie, the
Company's Vice Chairman and Chief Financial Officer, purchased 88,567 shares of
Class B Common Stock in February 1996 for $999,950, which represents a per share
price of $11.29 and he was granted options to purchase 85,250 shares of Class B
Common Stock at an exercise price of $1.13 per share.
An affiliate of the Goldman Sachs Entities is a member of the syndicate of
lenders pursuant to a credit facility (the "Credit Facility") providing the
Company $750 million of revolving credit and a $200 million term loan, and has
committed to lend to the Company under the Credit Facility up to the aggregate
principal amount of $10 million.
Goldman Sachs served as a managing underwriter in the Company's May 1996
equity and debt initial public offerings and as a purchaser in its October 1996
private debt offering (together with the May 1996 debt initial public offering,
the "Debt Offerings"), receiving customary fees therefor.
The Company believes that the foregoing transactions were on terms as fair
to the Company as those which would have been available in arm's-length
negotiations. The Credit Facility, a $300 million credit facility that a
subsidiary of the Company has with Northern Telecom Inc. and other lenders, the
Washington Business Corporation Act and the indentures with respect to the Debt
Offerings contain provisions which limit the terms on which the Company may
enter into transactions with its affiliates.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of the Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of beneficial ownership
("Forms 3") and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company ("Forms 4"). Officers, directors, and
greater than 10% shareholders of the Company are required by SEC regulations to
furnish to the Company copies of all Section 16(a) reports that they file. To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than 10% beneficial owners were complied with for the
year ended December 31, 1996, and, other than one late filing by Theresa E.
Gillespie, a Senior Vice President of the Company, all Section 16(a) filings
were made on a timely basis by the Company's officers and directors.
2. APPROVAL OF 1996 EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, the Board of Directors will request that the
shareholders approve the 1996 Employee Stock Purchase Plan (the "Purchase
Plan"). On September 19, 1996, the Board of Directors adopted the Purchase Plan
to allow the Company to offer to its employees the ability to invest in Class A
Common Stock at an attractive price. The Board recommends approval of the
Purchase Plan in order to qualify the Purchase Plan for the favorable tax
treatment under Sections 421 and 423 of the Internal Revenue Code (the "Code").
DESCRIPTION OF THE PURCHASE PLAN
The following description is qualified in its entirety by reference to the
Purchase Plan itself, which is included as Appendix A to this Proxy Statement.
The Purchase Plan allows any employee who has been employed by the Company
for three months to participate in the Purchase Plan and authorize payroll
deductions at either a fixed dollar amount, the amounts of which shall be
determined by the Board of Directors, or a percentage of such employee's base
pay. Such deductions are applied toward the purchase of the Class A Common
Stock. Payroll deductions may not exceed 10 percent of an employee's total
compensation. The Board of Directors has reserved for issuance under the
Purchase Plan 1,000,000 shares of Class A Common Stock. As of January 1, 1997,
there were approximately 1,700 employees eligible to participate in the Purchase
Plan. The Purchase Plan will terminate on December 31, 2001 or earlier at the
discretion of the Board of Directors or in the event that all the shares that
are reserved under the plan have been purchased. The Purchase Plan will be
administered by the Board of Directors, which, pursuant to its authority under
the Purchase Plan, has engaged Smith Barney Inc. to assist in the administration
of the Purchase Plan.
Separate offerings will commence on January 1 and July 1 of each year.
Payroll deductions will be authorized by an employee prior to his or her
participation in any offering in order to participate in that offering. Such
deductions will continue until declined by the participating employee. On one or
more purchase dates during each offering, but in no event later than the last
business day of the offering, the employee will be deemed to have exercised the
right to purchase as many shares as his or her accumulated payroll deductions
will allow, at the purchase price. The purchase price shall be established by
the Board of Directors, but in no event shall the purchase price per share be
less than lower of (i) 85 percent of the fair market value of the stock on the
first business day of the offering, (ii) 85 percent of the fair market value of
the stock on the last business day of the offering, or (iii) 85 percent of the
fair market value of the stock on the date of purchase.
The closing price of the Company's Class A Common Stock on the Nasdaq
National Market on March 31, 1997 was $12.50.
An employee may withdraw from an offering at any time. Upon withdrawal, the
Company shall refund to the employee the amount of accumulated payroll
deductions in that employee's account. An employee who
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<PAGE> 18
has withdrawn from an offering may not again participate in the Purchase Plan
until the next new offering commences.
No employee shall be permitted to purchase any shares under the Purchase
Plan if such employee, immediately after such purchase, owns shares that possess
five percent or more of the total combined voting power or value of all classes
of stock of the Company or its parent or subsidiary corporations. In the absence
of any other determination by the Board of Directors, no employee may have
withheld payroll deductions under the Purchase Plan in excess of $10,200 during
any calendar year. In no event may the fair market value of all shares purchased
by an employee under the Purchase Plan during any calendar year exceed $25,000,
in accordance with provisions of the Code.
Because the Company has not previously had an employee stock purchase plan,
and because the purchase of shares under the Purchase Plan is discretionary for
all eligible employees, the Company is unable to include information as to the
amount of shares that will be distributed to eligible employees in 1997 or show
what would have been distributable to any eligible employee or group of
employees if the Purchase Plan had been in effect during 1996.
The Board of Directors may at any time amend or terminate the Purchase
Plan, provided that no employee's existing rights under any offering already
commenced may be adversely affected thereby. To retain the favorable tax
treatment under Sections 421 and 423 of the Code, however, an amendment to the
Purchase Plan that increases the number of shares that are reserved under the
Plan may not be made without prior approval of the shareholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of an employee's purchases under the
Purchase Plan will vary. The following discussion regarding taxation does not
take into consideration any changes to the Code that may occur after the date of
this Proxy Statement. The tax consequences under the Code are generally as
follows:
The Purchase Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Sections 421 and 423
of the Code. Under those provisions, no income will be taxable to a participant
at the time of grant of the right to purchase or the time of the purchase of
shares. A participant, however, may become liable for tax upon the disposition
of shares that were acquired under the Purchase Plan, and such tax consequences
depend on how long a participant has held the shares prior to a disposition.
Alternative 1. The participant sells or disposes of shares (i) at least two
years after the date of the beginning of the offering period or, if applicable,
a date of purchase with respect to any offering (the "offering date") and (ii)
at least one year after the stock is purchased in accordance with the Purchase
Plan.
In this event, participant will realize ordinary income to the extent of
the lesser of (i) the excess of the fair market value of the shares at the time
of such disposition over the purchase price of the shares, or (ii) the excess of
the fair market value of the shares at the time the right to purchase was
granted over the purchase price, as determined as of the offering date. Any
further gain upon the disposition will be taxed at long-term capital gain rates.
If the shares are sold and the sales price is less than the purchase price,
there is no ordinary income and the participant has a long-term capital loss
equal to the difference.
Alternative 2. The participant sells or disposes of shares (including by
way of gift) before the expiration of either the two-year or the one-year
holding periods described above.
In this event (a "disqualifying disposition"), the amount by which the fair
market value of the shares on the date the right to purchase is exercised (which
is the day of the purchase during the offering period and which is hereafter
referred to as the "purchase date") exceeds the purchase price of the shares
will be treated as ordinary income to the participant. This excess will
constitute ordinary income in the year of sale or other disposition even if no
gain is realized on the sale or a gratuitous transfer of the shares is made. The
balance of any gain will be treated as capital gain and will qualify for
long-term capital gain treatment if the shares have been held for more than six
months following the exercise of the right to purchase. Even if the shares are
sold for less than their fair market value on the purchase date, the same amount
of ordinary income is attributed to
15
<PAGE> 19
a participant and a capital loss is recognized equal to the difference between
the sales price and the value of the shares on such purchase date.
The ordinary income reported under the rules described above, added to the
actual purchase price of the shares, determines the tax basis of the shares for
the purpose of determining capital gain or loss on a sale or exchange of the
shares. Any long-term capital gain or loss must be taken into consideration in
determining a participant's liability for alternative minimum tax.
In the event that a participant makes a disqualifying disposition, the
Company is entitled to a deduction for the amount that is taxed as ordinary
income to the participant.
VOTE REQUIRED
The affirmative vote of a majority of the total number of votes
attributable to all shares of Common Stock represented at the meeting is
required for approval of the Board's adoption of the Purchase Plan. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE PURCHASE PLAN.
3. APPROVAL OF 1997 EXECUTIVE RESTRICTED STOCK PLAN
At the Annual Meeting, the Board of Directors will request that the
shareholders approve the 1997 Executive Restricted Stock Plan (the "Restricted
Stock Plan"). The Board of Directors adopted the Restricted Stock Plan effective
January 1, 1997, and recommends its approval by the shareholders, in order to
allow the Company to grant bonuses in the form of the Company's Class A Common
Stock and sell Class A Common Stock to key executives of the Company as part of
its overall compensation package. The Board of Directors believes that the
ability to award such stock bonuses and make such sales pursuant to this
Restricted Stock Plan are essential to attract and retain the best available
personnel for positions of substantial responsibility, to encourage ownership of
Class A Common Stock by executives of the Company and its subsidiaries and
affiliates, and to promote the Company's success.
DESCRIPTION OF THE RESTRICTED STOCK PLAN
The following description is qualified in its entirety by reference to the
Restricted Stock Plan itself, which is included as Appendix B to this Proxy
Statement.
The Restricted Stock Plan provides for the grant or sale of the Company's
Class A Common Stock to key executives of the Company and its subsidiaries and
affiliates. The Class A Common Stock to be issued pursuant to the Restricted
Stock Plan will be Restricted Stock, as discussed below, and as such will be
subject to certain restrictions, described below, that are imposed to promote
the purposes of the Restricted Stock Plan. The Restricted Stock Plan is adopted
to be effective for a 10-year period that commenced as of January 1, 1997. The
Board of Directors, subject to approval by the shareholders, initially has
reserved for issuance under the Restricted Stock Plan 500,000 shares of the
Company's Class A Common Stock. To date, 95,000 shares have been granted or sold
to the Company's executives, conditioned upon approval by the shareholders of
the Restricted Stock Plan at the Annual Meeting.
The Restricted Stock Plan shall be administered by the Board of Directors,
although the Board may delegate its administrative responsibilities to a
committee of not less than three "non-employee directors" in accordance with
Rule 16b-3 promulgated under the Exchange Act. All members of such committee
also must be "outside directors" within the meaning of Section 162(m) of the
Code. The Board of Directors shall have full power and authority to administer
and interpret the Restricted Stock Plan, make all grants, offers, bonuses, and
awards under the Restricted Stock Plan and adopt, from time to time, such
guidelines, rules, regulations, agreements, and instruments for the
administration of the Restricted Stock Plan as the Board of Directors deems
necessary or advisable.
The closing price of the Company's Class A Common Stock on the Nasdaq
National Market on March 31, 1997 was $12.50.
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<PAGE> 20
The following table sets forth information regarding the number of
restricted shares granted under the Restricted Stock Plan as of the date hereof.
With respect to all future grants and sales, because the executives who may
participate in the Restricted Stock Plan and the number of shares granted or
sold to them are determined by the Board of Directors, in its sole discretion,
it is not possible to state the names or positions of, or the number of shares
that may be granted or sold to, the Company's executives in the future.
<TABLE>
<CAPTION>
NUMBER OF SHARES
GRANTED OR
NAME AND PRINCIPAL POSITION DOLLAR VALUE(1) SOLD(2)
- -------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
John W. Stanton............................................... $ 416,250 30,000
Chairman and Chief Executive Officer
Robert R. Stapleton........................................... 208,125 15,000
President
Donald Guthrie................................................ 208,125 15,000
Vice Chairman and Chief Financial Officer
Mikal J. Thomsen.............................................. 208,125 15,000
Chief Operating Officer
Theresa E. Gillespie.......................................... 0 0
Senior Vice President
Executive Group (8 persons)................................... 1,318,125 95,000
Non-Executive Director Group.................................. 0 0
Non-Executive Officer Employee Group.......................... 0 0
</TABLE>
- ---------------
(1) The Company recorded deferred compensation based upon the difference between
the market value of the Class A Common stock at January 1, 1997, and the
price at which the Restricted Stock Plan shares were granted. Until such
time as all restrictions on the shares have been removed, the Company will
record and reflect any necessary adjustments on a quarterly basis.
(2) Shares granted or sold pursuant to the Restricted Stock Plan are subject to
restrictions and may not be transferred or sold by the executive until
certain predetermined Company performance goals as set by the Board of
Directors have been achieved. These performance goals include achieving a
predetermined level of cash flow from cellular operations, achieving a
predetermined level of subscribers, and achieving a predetermined level of
cash flow from combined cellular and PCS operations. If the Company fails to
achieve some or all of the performance goals, as determined by the Board of
Directors, some or all of the restrictions to which these shares are subject
will not lapse, thereby requiring the executive to return or resell to the
Company some or all of such shares in accordance with the terms of the
Restricted Stock Plan.
The Board of Directors will designate the key executives of the Company, or
any of its subsidiaries or affiliates (including officers and directors of the
Company) engaged in activities that further the Company's objectives who will be
eligible to obtain shares under the Restricted Stock Plan and the number of
shares of Restricted Stock of the Company to be issued to each such executive.
In addition, the Board of Directors shall determine the type and applicable
restrictions, performance criteria, terms and conditions of issuances to be made
to such executives, and to determine a time when issuances will occur to
eligible executives.
The purchase price, if any, of Restricted Stock must be paid in full, in
cash or certified or bank check, at the Company's principal office before the
offer to purchase such shares expires. There is no purchase price in cases where
the Board of Directors grants a Restricted Stock bonus to an eligible executive.
Unless otherwise indicated in an offer of Restricted Stock, whether by
grant or though a sale, an eligible executive may not transfer any shares issued
under the Restricted Stock Plan, except in the case of death, in which case
shares may be conveyed by will or by the laws of descent and distribution,
subject to the provisions of the Restricted Stock Plan and to applicable
provisions of any other Restricted Stock agreement between the Company and the
participant. Any such successor in interest may not further convey, transfer,
encumber or otherwise dispose of such shares except as provided in the
Restricted Stock Plan. Certificates that represent shares subject to the
Restricted Stock Plan will bear a restrictive legend. Once the restrictions
under the Restricted Stock Plan and in the Restricted Stock offer have been
satisfied, such restrictive legends may be removed.
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<PAGE> 21
If certain events occur or, having occurred, continue in effect, on or
before the date all restrictions in the Restricted Stock Plan or in the
Restricted Stock offer have lapsed with respect to any shares, the holder will
sell to the Company all shares that remain subject to the Restricted Stock Plan.
In such event, the repurchase price shall equal the original price paid by the
holder for such shares, and if there is no purchase price, then without payment
therefore. Such events include: (i) termination of employment other than by
reason of death or permanent and total disability; (ii) a non-employee director
of the Company, if nominated, fails or refuses to stand for election or, if
elected, fails to serve as such or resigns as a director; or (iii) such other
events as may be set forth in a Restricted Stock offer.
VOTE REQUIRED
The affirmative vote of a majority of the total number of votes
attributable to all shares of Common Stock represented at the meeting is
required for approval of the Board's adoption of the Restricted Stock Plan. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE RESTRICTED STOCK
PLAN.
4. RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors will request that the shareholders ratify its
selection of Arthur Andersen LLP, independent auditors, to examine the
consolidated financial statements of Western Wireless for the year ending
December 31, 1997. Arthur Andersen LLP examined the consolidated financial
statements of the Company for the year ended December 31, 1996. Representatives
of Arthur Andersen LLP will be present at the Annual Meeting to make a statement
if they desire to do so and respond to questions by shareholders. The
affirmative vote of a majority of the total number of votes attributable to all
shares represented at the meeting is required for the ratification of the
Board's selection of Arthur Andersen LLP as the Company's independent auditors
for the fiscal year ending December 31, 1997. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS OF THE COMPANY.
PROPOSALS OF SHAREHOLDERS
Shareholder proposals to be presented at the Company's next Annual Meeting
of Shareholders and included in the Company's Proxy Statement relating to such
meeting must be received by the Company at its executive offices no later than
December 27, 1997.
OTHER BUSINESS
It is not intended by the Board of Directors to bring any other business
before the meeting, and so far as is known to the Board, no matters are to be
brought before the meeting except as specified in the notice of the meeting.
However, as to any other business which may properly come before the meeting, it
is intended that proxies, in the form enclosed, will be voted in respect
thereof, in accordance with the judgment of the persons voting such proxies.
WESTERN WIRELESS
By Order of the Board of Directors
Alan R. Bender
Secretary
Issaquah, Washington
April 25, 1997
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<PAGE> 22
10-K REPORT AVAILABLE
A copy of the Company's annual report on Form 10-K, as filed with the
Securities and Exchange Commission, will be furnished without charge to
shareholders upon request to:
Investor Relations
Western Wireless Corporation
2001 N.W. Sammamish Road
Issaquah, Washington 98027
(206) 313-5200
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<PAGE> 23
APPENDIX A
WESTERN WIRELESS CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
Western Wireless Corporation (the "Company") does hereby establish its 1996
Employee Stock Purchase Plan (the "Plan") as follows:
1. PURPOSE OF THE PLAN. The Plan is intended to provide a method whereby
eligible employees of the Company and its Subsidiaries will have an opportunity
to acquire a proprietary interest in the Company through the purchase of shares
of Class A Common Stock of the Company. The Company believes that employee
participation in the ownership of the Company will be of benefit to both the
employees and the Company. The Company intends to have the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Code. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner that is consistent with the requirements of that
Section of the Code. This Plan shall not be effective until approved by the
holders of a majority of the voting power of the Company's voting securities,
which approval must occur (if at all) within 12 months of the adoption of this
Plan by the Board of Directors. If not so approved, the Plan and any rights
granted hereunder shall be void and of no effect.
2. DEFINITIONS.
"Account" shall mean the funds that are accumulated with respect to each
individual Participant as a result of payroll deductions for the purpose of
purchasing Shares under the Plan. The funds that are allocated to a
Participant's account shall at all times remain the property of that
Participant, but such funds may be commingled with the general funds of the
Company.
The "Board" means the Board of Directors of the Company, or any committee
of the Board, comprised to comply with Rule 16b-3 promulgated under the Exchange
Act, established thereby for the purpose of administering this Plan.
The "Code" means the Internal Revenue Code of 1986, as amended.
The "Commencement Date" means the January 1 or July 1, as the case may be,
on which the particular Offering begins.
The "Company" means Western Wireless Corporation, a Washington corporation.
The "Ending Date" means the June 30 or December 31, as the case may be, on
which the particular Offering concludes.
The "ESPP Broker" is a qualified stock brokerage or other financial
services firm that has been designated by the Board.
The "Exchange Act" means the Securities Exchange Act of 1934, as amended.
The "Holding Period" shall mean the holding period that is set forth in
Section 423(a) of the Code, which, as of the date that the Company's Board of
Directors adopted this Plan, is both (a) that two (2) year period after the
Commencement Date, or, if applicable, a Purchase Date with respect to any
Offering, and (b) that one (1) year period after transfer to a Participant of
any Shares under the Plan.
"Offerings" means the ten separate consecutive six-month offerings for the
purchase and sale of Shares under the Plan. Each one of the Offerings shall be
referred to as an "Offering."
"Participant" means an employee who, pursuant to Section 3, is eligible to
participate in the Plan and has complied with the requirements of Section 7.
"Purchase Date" means a date during an Offering, as determined from time to
time by the Board, on which a Participant shall be deemed to have carried out
its right of purchase pursuant to Section 10. The Board may designate that there
shall be one or more Purchase Dates during an Offering. In the absence of any
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<PAGE> 24
other determination by the Board, the Purchase Date will be the last business
day of each month. For purposes of this definition, a business day shall mean a
day in which the Nasdaq National Market is accepting trades.
The "Plan" means this Western Wireless Corporation 1996 Employee Stock
Purchase Plan.
"Shares" means shares of the Company's Class A Common Stock, no par value
per share.
"Subsidiaries" shall mean any present or future domestic or foreign
corporation that: (a) would be a "subsidiary corporation" of the Company as that
term is defined in Section 424 of the Code, and (b) whose employees have been
designated by the Board to be eligible, subject to Section 3, to be Participants
under the Plan.
"Total Annual Compensation" means an employee's regular straight time
salary or earnings, plus review cycle bonuses and overtime payments, payments
for incentive compensation, commissions and other special payments except to the
extent any such item is excluded specifically by the Board.
"Withdrawal Notice" means a notice, in a form designated by the Board, that
must be submitted to the Company pursuant to Section 22 by any Participant who
wishes to withdraw from an Offering.
3. EMPLOYEES ELIGIBLE TO PARTICIPATE. Any regular employee of the Company
or any of its Subsidiaries who (a) is in the employ of the Company or any of its
Subsidiaries on the Commencement Date, and (b) has been so employed for at least
three (3) months is eligible to participate in the Plan. With respect to any
employee subject to Section 16(b) of the Exchange Act, the Company may impose
such conditions on the grant or exercise of any rights hereunder necessary to
satisfy the requirements of the Exchange Act or applicable regulations
promulgated thereunder.
4. OFFERINGS. The Plan shall consist of ten separate consecutive six-month
Offerings. The first Offering shall commence on January 1, 1997. Thereafter,
Offerings shall commence on each subsequent July 1 and January 1, and the final
Offering under the Plan shall commence on July 1, 2001 and terminate on December
31, 2001.
5. PRICE. The purchase price per share shall be as established by the
Board, but in no event shall the purchase price per share be less than the lower
of (a) 85 percent of the fair market value of the Shares on the Commencement
Date, or the nearest subsequent business day; (b) 85 percent of the fair market
value of the Shares on the Ending Date, or the nearest prior business day, or
(c) 85 percent of the fair market value of the Shares on the Purchase Date. Fair
market value shall mean the closing bid price as reported on the National
Association of Securities Dealers Automated Quotation System or, if the Shares
are traded on a stock exchange, the closing price for the Shares on the
principal of such exchange, or, if the Shares are purchased by the ESPP Broker,
the price paid for such Shares by the ESPP Broker. In the absence of any other
determination by the Board, the purchase price will be 85 percent of the fair
market value of the Shares on the Purchase Date.
6. NUMBER OF SHARES RESERVED UNDER THE PLAN. The maximum number of Shares
that will be offered under the Plan is one million (1,000,000). If, on any date,
the total number of Shares for which purchase rights are to be granted pursuant
to Section 9 exceeds the number of Shares then available under this Section
(after deduction of all Shares that have been purchased under the Plan and for
which rights to purchase are then outstanding), the Board shall make a pro rata
allocation of the Shares that remain available in as nearly a uniform manner as
shall be practicable and as it shall determine to be equitable. In such event,
each Participant's payroll deductions shall be reduced accordingly and the
Company shall give to each Participant a written notice of such reduction.
7. PARTICIPATION. An eligible employee may become a Participant by
completing the Enrollment Agreement that shall be provided by the Company and
filing it with the Company on or before a date prior to the Commencement Date of
the Offering to which it relates, as established by the Board. Participation in
one Offering under the Plan shall neither limit, nor require, participation in
any other Offering.
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<PAGE> 25
8. PAYROLL DEDUCTIONS.
8.1 At the time the Enrollment Agreement is filed and for so long as a
Participant participates in the Plan, each Participant shall authorize the
Company to make payroll deductions of either (a) a per pay period fixed dollar
amount the minimum of which will be determined by the Board or (b) a whole
percentage (not partial or fractional) of Total Annual Compensation; provided,
however, that no payroll deduction shall exceed 10 percent of Total Annual
Compensation. The amount of the minimum fixed dollar deduction, if any, may be
adjusted by the Board of Directors from time to time; provided, however, that a
Participant's existing rights under any Offering that has already commenced may
not be adversely affected thereby. In the absence of any other determination by
the Board, fixed dollar amount deductions shall not be permitted.
8.2 Each Participant's payroll deductions shall be credited to that
Participant's Account. A Participant may not make a separate cash payment into
such Account nor may payment for Shares be made from other than the
Participant's Account.
8.3 A Participant's payroll deductions shall begin on the Commencement
Date, and shall end on the Ending Date unless the Participant elects to withdraw
pursuant to Section 13.
8.4 A Participant may discontinue participation in the Plan as provided in
Section 13, but no other change may be made during an Offering and,
specifically, a Participant may not alter the amount or rate of payroll
deductions during an Offering.
9. GRANTING OF RIGHT TO PURCHASE. On the Commencement Date, the Plan shall
be deemed to have granted to each Participant a right to purchase as many full
Shares (not any fractional Shares) as may be purchased with such Participant's
Account. The maximum amount of payroll deductions during any calendar year that
any Participant may have withheld under this Plan shall be determined from time
to time by the Board. In the absence of any other determination by the Board, no
Participant may have withheld payroll deductions in excess of $10,200 during any
calendar year.
10. PURCHASE OF SHARES. On each of one or more Purchase Dates during an
Offering, but in no event later than the Ending Date, each Participant who has
not otherwise withdrawn from an Offering pursuant to Section 13 shall be deemed
to have carried out the right to purchase, and shall be deemed to have purchased
at the purchase price set forth in Section 5, the number of full Shares (not any
fractional Shares) that may be purchased with such Participant's Account.
11. PARTICIPANT'S RIGHTS AS A SHAREHOLDER. No Participant shall have any
rights of a shareholder with respect to any Shares until the Shares have been
purchased in accordance with Section 10 and issued by the Company.
12. EVIDENCE OF OWNERSHIP OF SHARES.
12.1 Promptly following the Ending Date of each Offering, the Shares that
are purchased by each Participant shall be deposited into an account that is
established in the Participant's name with the ESPP Broker.
12.2 A Participant may direct, by written notice to the Company prior to
the Ending Date of the pertinent Offering, that the ESPP Broker account be
established in the names of the Participant and one such other person as may be
designated by the Participant as joint tenants with right of survivorship,
tenants in common, or community property, to the extent and in the manner
permitted by applicable law.
12.3 A Participant shall be free to undertake a disposition, as that term
is defined in Section 424(c) of the Code (which generally includes any sale,
exchange, gift or transfer of legal title), of Shares in the Participant's ESPP
Broker account at any time, whether by sale, exchange, gift or other transfer of
title. In the absence of such a disposition of the Shares, however, the Shares
must remain in the Participant's account at the ESPP Broker until the Holding
Period has been satisfied. With respect to Shares for which the Holding Period
has been satisfied, a Participant may move such Shares to an account at another
brokerage firm of the Participant's choosing or request that a certificate that
represents the Shares be issued and delivered to the Participant.
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<PAGE> 26
12.4 A Participant who is not subject to United States taxation, at any
time and without regard to the Holding Period, may move its Shares to an account
at another brokerage firm of the Participant's choosing or request that a
certificate that represents the Shares be issued and delivered to the
Participant.
13. WITHDRAWAL.
13.1 A Participant may withdraw from an Offering, in whole but not in
part, at any time by delivering a Withdrawal Notice to the Company. Such
Withdrawal Notice shall be effective as of the first day of the second pay
period following the pay period in which the Withdrawal Notice was delivered
(e.g., if a Participant submits a Withdrawal Notice during the pay period of
February 16 through February 28, the withdrawal will be effective as of the pay
period that commences on March 16). Until such notice is effective, such
withdrawing Participant shall be deemed to be a Participant with respect to all
terms and conditions of the Plan, including, without limitation, the right to
purchase Shares pursuant to Section 10. Upon effectiveness of the Withdrawal
Notice, the Company shall refund the Participant's entire Account as soon as
practicable thereafter.
13.2 An employee who has previously withdrawn from the Plan may re-enter
by complying with the requirements of Section 7. An employee's re-entry into the
Plan will become effective on the Commencement Date of the next Offering
following withdrawal, and, if the withdrawing employee is an officer of the
Company within the meaning of Section 16 of the Exchange Act, such employee may
not re-enter the Plan before the beginning of the second Offering following such
withdrawal.
14. CARRYOVER OF ACCOUNT. At the conclusion of each Offering, the Company
automatically shall re-enroll each Participant in the next Offering, and the
balance of each Participant's Account shall be used to purchase Shares in the
subsequent Offering, unless the Participant has advised the Company otherwise in
writing, in which case the Company shall refund to the Participant the funds
that remain in the Participant's Account as soon as practicable thereafter. Upon
termination of the Plan, the balance of each Participant's Account shall be
refunded to the respective Participant.
15. INTEREST. No interest shall be paid or allowed on a Participant's
Account.
16. RIGHTS NOT TRANSFERABLE. No Participant shall be permitted to sell,
assign, transfer, pledge, or otherwise dispose of or encumber such Participant's
Account or any rights to purchase or to receive Shares under the Plan other than
by will or the laws of descent and distribution, and such rights and interests
shall not be liable for, or subject to, a Participant's debts, contracts, or
liabilities. If a Participant purports to make a transfer, or a third party
makes a claim in respect of a Participant's rights or interests, whether by
garnishment, levy, attachment or otherwise, such purported transfer or claim
shall be treated as a withdrawal election under Section 13.
17. TERMINATION OF EMPLOYMENT. Upon termination of a Participant's
employment for any reason whatsoever, including but not limited to death or
retirement, the Participant's Account shall be returned to the Participant or
the Participant's estate, as applicable.
18. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Board shall have the right
to amend, modify, or terminate the Plan at any time without notice, provided
that (a) subject to Sections 19 and 23.1(b), no Participant's existing rights
under any Offering that is in progress may be adversely affected thereby, and
(b) subject to Section 19, in the event that the Board desires to retain the
favorable tax treatment under Sections 421 and 423 of the Code, no such
amendment of the Plan shall increase the number of Shares that were reserved for
issuance hereunder unless the Company's shareholders approve such an increase.
19. CHANGES IN CAPITALIZATION. In the event of reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, offerings of rights, or any other change in the capital structure
of the Company, the Board may make such adjustment, if any, as it may deem
appropriate in the number, kind, and the price of the Shares that are available
for purchase under the Plan, and in the number of Shares that an employee is
entitled to purchase.
20. SHARE OWNERSHIP. Notwithstanding anything herein to the contrary, no
Participant shall be permitted to subscribe for any Shares under the Plan if
such Participant, immediately after such subscription,
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<PAGE> 27
owns shares that account for (including all shares that may be purchased under
outstanding subscriptions under the Plan) five percent (5%) or more of the total
combined voting power or value of all classes of shares of the Company or its
Subsidiaries. For the foregoing purposes the rules of Section 424(d) of the Code
shall apply in determining share ownership. In addition, no Participant shall be
allowed to subscribe for any Shares under the Plan that permit such
Participant's rights to purchase Shares under all "employee stock purchase
plans" of the Company and its Subsidiaries formed pursuant to Section 423 of the
Code to accrue at a rate that exceeds $25,000 of the fair market value of such
shares (determined at the time such right to subscribe is granted) for each
calendar year in which such right to subscribe is outstanding at any time.
21. ADMINISTRATION. The Plan shall be administered by the Board, which may
engage the ESPP Broker to assist in the administration of the Plan. The Board
shall be vested with full authority to make, administer, and interpret such
rules and regulations as it deems necessary to administer the Plan, and any
determination, decision, or action of the Board in connection with the
construction, interpretation, administration, or application of the Plan shall
be final, conclusive, and binding upon all Participants and any and all persons
that claim rights or interests under or through a Participant.
22. NOTICES. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, that is designated by the Company from time to time for the receipt
thereof, and, in the absence of such a designation, Human Resources shall be
authorized to receive such notices.
23. TERMINATION OF THE PLAN.
23.1 This Plan shall terminate at the earliest of the following:
(a) December 31, 2001.
(b) The date of the filing of a Statement of Intent to Dissolve by the
Company or the effective date of a merger or consolidation wherein the
Company is not to be the surviving corporation, which merger or
consolidation is not between or among corporations related to the Company.
Prior to the occurrence of either of such events, on such date as the
Company may determine, the Company may permit a Participant to carryout the
right to purchase, and to purchase at the purchase price set forth in
Section 5, the number of full Shares (not any fractional Shares) that may
be purchased with that Participant's Account. In such an event, the Company
shall refund to the Participant the funds that remain in the Participant's
Account after such purchase.
(c) The date the Board acts to terminate the Plan in accordance with
Section 18 above.
(d) The date when all of the Shares that were reserved for issuance
hereunder have been purchased.
23.2 Upon termination of the Plan, the Company shall refund to each
Participant the balance of each Participant's Account.
24. LIMITATIONS ON SALE OF SHARES PURCHASED UNDER THE PLAN. The Plan is
intended to provide Shares for investment and not for resale. The Company,
however, does not intend to restrict or influence the conduct of any employee's
affairs. Consequently, an employee may sell Shares that are purchased under the
Plan at any time, subject to compliance with any applicable federal or state
securities laws. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE
PRICE OF THE SHARES.
25. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
Shares under this Plan is subject to any governmental approval that is required
in connection with the authorization, issuance, or sale of such Shares.
26. NO EMPLOYMENT RIGHTS. The Plan does not create, directly or indirectly,
any right for the benefit of any employee or class of employees to purchase any
Shares under the Plan, or create in any employee or class of employees any right
with respect to continuation of employment by the Company, and it shall not be
deemed to interfere in any way with the Company's right to terminate, or
otherwise modify, an employee's employment at any time.
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27. GOVERNING LAW. The law of the state of Washington shall govern all
matters that relate to this Plan except to the extent it is superseded by the
laws of the United States.
28. SAVINGS CLAUSE. It is intended that this Plan conform to Section 423 of
the Code, all regulations promulgated thereunder and all rules adopted with
respect thereto. Any provision of this Plan that does not conform to such Code
section, regulations and rules, or is in violation thereof, shall be of no force
or effect.
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APPENDIX B
WESTERN WIRELESS CORPORATION
EXECUTIVE RESTRICTED STOCK PLAN
ADOPTED BY THE BOARD: JANUARY 1, 1997
ADOPTED BY THE SHAREHOLDERS:
TERM: JANUARY 1, 1997 TO DECEMBER 31, 2006
1. PURPOSE.
This Executive Restricted Stock Plan (this "Plan") allows Western Wireless
Corporation (the "Company") to grant stock bonuses or sell stock to its key
officers and employees, and is intended to promote the interests of the Company
and its shareholders by aligning the interests of the Company executives with
Company shareholders. The stock to be issued pursuant to this Plan will be
Restricted Stock, as defined in 3 below, and as such will be subject to certain
restrictions, described herein, that are imposed to promote the purposes hereof.
2. ADOPTION AND ADMINISTRATION OF PLAN.
This Plan shall become effective as of January 1, 1997 and shall remain in
effect until December 31, 2006 unless sooner terminated as herein provided.
Adoption of this Plan and any issuances of Restricted Stock hereunder prior to
the annual meeting of the shareholders of the Company held during calendar year
1997 are subject to approval of the Plan by shareholders at such time.
This Plan shall be administered by the Company's Board of Directors (the
"Board"), provided that the Board may delegate its administrative
responsibilities hereunder to a committee of not less than three directors who
shall administer this Plan in the name of the Board (the "Committee"). As used
hereafter herein, the term "Committee" shall refer to the Board if no Committee
then exists or is then designated. So long as the Company is a reporting company
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each
member of the Committee who participates in administration must be a
"Non-Employee Director" as that term is defined in Rule 16b(3) promulgated by
the Securities and Exchange Commission pursuant to the Exchange Act. All members
of the Committee shall also be "outside directors" within the meaning of section
162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended. The
Committee shall have full power and authority to (i) administer and interpret
this Plan, (ii) make all grants, offers, bonuses, and awards hereunder and (iii)
adopt, from time to time, such guidelines, rules, regulations, agreements, and
instruments for the administration of this Plan as the Committee deems necessary
or advisable. Such powers include, but are not limited to (subject to the
specific limitations described herein), authority to determine the employees to
be issued Restricted Stock under this Plan, to determine the size, type, and
applicable restrictions, performance criteria, terms and conditions of issuances
to be made to such employees, to determine a time when issuances will occur, and
to authorize issuances to eligible employees. The Committee shall have absolute
discretion in any determination of whether any particular performance goal in
any grant has been achieved or restriction has lapsed. The Committee shall
prepare guidelines for notification to holders of Restricted Stock with
performance based restrictions as to whether any such performance criteria have
been met, and upon determination that the criteria have been met the Committee
shall have the obligation to deliver written confirmation of the same to each
holder of Restricted Stock within 30 days following achievement of the
performance goal. The Committee shall also establish a mechanism to allow the
removal of restrictive legends promptly after the achievement of the applicable
performance criteria.
The Committee's interpretations of this Plan, and all actions taken and
determinations made by the Committee concerning any matter arising under or with
respect to this Plan or any issuances of Restricted Stock pursuant to this Plan,
shall be final, binding, and conclusive on all interested parties, including the
Company, its shareholders, and all former, present, and future employees of the
Company. At such time as the Company is not subject to the reporting
requirements of the Exchange Act, the Committee may delegate some or all of its
power and authority hereunder to the Chairman or Chief Executive Officer of the
Company,
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such delegation to be subject to such terms and conditions as the Committee in
its discretion shall determine. Such delegation of authority may be contained in
guidelines, rules, and regulations adopted by the Board from time to time with
respect to this Plan. The Committee may, as to questions of accounting, rely
conclusively upon any determinations made by independent public accountants of
the Company.
3. STOCK SUBJECT TO PLAN.
There is hereby established a reserve (the "Reserve"), out of the Company's
authorized but unissued stock, of 500,000 shares of the Company's Class A Common
Stock, no par value per share (the "Restricted Stock"), for issuance under this
Plan. As grants, offers, bonuses and awards are made, the Reserve shall be
reduced by the number of shares of Restricted Stock issued. Any shares of
Restricted Stock that are forfeited by the holder shall be added back to the
Reserve. Any shares with respect to which restrictions have lapsed shall not be
eligible to be added back to the Reserve. If the shares of Class A Common Stock
of the Company should, as a result of a stock split, stock dividend, combination
of shares, or any other change or exchange for other securities by
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization or otherwise, be increased or decreased or changed into, or
exchanged for, a different number or kind of shares of stock or other securities
of the Company or of another corporation, the number of shares of Restricted
Stock then remaining in the Reserve shall be appropriately adjusted to reflect
such action. If any such adjustment shall result in a fractional share, such
fraction shall be disregarded. Upon the issuance of shares of Restricted Stock
pursuant to this Plan, the Reserve will be reduced by the number of shares
issued. Notwithstanding any other provision hereof, no single employee may at
any single time receive a grant, offer, bonus, or award of Restricted Stock in
excess of 33.33 percent of the shares of Restricted Stock remaining at such time
in the Reserve.
4. ELIGIBILITY.
The Committee will designate, from time to time, key executives of the
Company or any of its subsidiaries, parents or affiliates (including officers
and directors of the Company), engaged in activities which further the Company's
objectives, who will be eligible to obtain shares under this Plan and the number
of shares of Restricted Stock of the Company to be issued to each. In selecting
the persons to whom offers to obtain shares hereunder will be made and in
determining the number of shares to be offered, the Committee will consider the
position and responsibilities of such persons, the value of their services to
the Company or its subsidiaries, and such other factors as the Committee deems
pertinent.
5. RIGHTS TO RESTRICTED STOCK.
(a) Restricted Stock Offers. After the Committee has determined to offer a
person the right to obtain Restricted Stock under this Plan, it will advise the
offeree in writing of the offer's terms, including the number of shares which
such person will be entitled to obtain, the price per share, if any, and any
other terms, conditions, and restrictions relating thereto (the "Restricted
Stock Offer"). This notice will also provide that such person has 15 days from
the date of the Restricted Stock Offer to accept the offer in the manner set
forth in the Restricted Stock Offer. The form by which the Restricted Stock
Offer will be made is attached hereto and incorporated herein as Exhibit A, and
the same may be amended from time-to-time at the discretion of the Committee.
The Committee may also, in the exercise of its discretion, extend the Restricted
Stock Offer's acceptance or effective term. Subject to this Plan's express
provisions, the Committee may make any such Restricted Stock Offer subject to
any terms and conditions it establishes, and the Restricted Stock Offers made to
different persons, or to the same person at different times, may be subject to
terms, conditions and restrictions which differ from each other.
(b) Special Performance Awards. In connection with any Restricted Stock
Offer to any one of the five most highly compensated officers of the Company, in
order to comply with limitations imposed by Section 162(m) while retaining the
flexibility to ensure that executive compensation is tied to performance and
reward executives consistent with the Company's compensation philosophy, all or
part of the shares covered by a Restricted Stock Offer may be designated as a
Special Performance Award, as to which the restrictions on shares so designated
shall only be removed and the shares shall only become freely tradable by
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<PAGE> 31
the holder thereof if certain pre-established performance goals are met during a
specified performance period as set by the Committee. Restrictions on shares
subject to a Special Performance Award granted to any individual whose
compensation from the company is covered by Section 162(m) of the Code shall be
removed only after the Committee certifies in writing that the performance goals
have been met.
The Committee shall establish Performance Periods of any duration or with
respect to any criteria, which may overlap and which may differ for each
executive, but shall not exceed ten years. Prior to the end of 90 days following
the commencement of each Performance Period, the Committee shall establish
specific and objective performance goals for the Performance Period and a
specific formula in connection with such performance goals for the removal of
restrictions. The performance goals shall be based on one of more of the
following performance measures, or other specific measures determined from time
to time by the Committee: growth; financial results; and quality, productivity
and efficiency.
(i) Growth shall be measured in terms of increases one or more of the
following: number of license areas served, number of subscribers, and
revenue. Customer growth shall be measured in terms of one or more of the
following: number of new customers; number of net new customers; revenue
per new customer; and level of customer churn.
(ii) Financial results shall be measured in terms of one or more of
the following relating to the Company as a whole or a particular operating
unit: operating cash flow; free cash flow; cash operating income (Earnings
Before Interest, Taxes, Depreciation and Amortization ("EBITDA")); net
income; earnings per share; total stockholder return; and relative
stockholder return.
(iii) Quality, productivity and efficiency shall be measured in terms
of one or more of the following: customer and employee satisfaction;
quantitative measures of system and customer service performance; and the
cost of acquiring and cost of serving customers.
6. TERMS OF RESTRICTED STOCK OFFERS.
(a) Price. The Committee will determine if there is to be a purchase price
of the shares being offered under this Plan, and if so shall set the price. If
there is no purchase price, the Restricted Stock Offer will be treated as a
Restricted Stock bonus. Whether or not there is a purchase price, the offeree
must accept the offer in a timely manner to receive the offered Restricted
Stock. The purchase price, if any, must be paid in full, in cash or certified or
bank check, at the Company's principal office before the offer expires, for the
Restricted Stock Offer's acceptance to be effective. The date upon which the
Restricted Stock Offer is finally accepted and the purchase price, if any, is
paid is sometimes hereinafter called the "Closing Date."
(b) Restrictions. By accepting the Restricted Stock under this Plan being
offered to him or her, an offeree agrees and consents to all terms, conditions,
and restrictions contained in the Restricted Stock Offer and to the following
(unless the Restricted Stock Offer by its terms indicates the following shall
not apply):
(i) Any transfer or purported transfer made by a purchaser of shares
under this Plan, except at the times and in the manner specified herein and
in the Restricted Stock Offer, will be null and void and the Company shall
not recognize or give effect to such transfer on its books and records or
recognize the person or persons to whom such proposed transfer has been
made as the legal or beneficial holder of those shares.
(ii) Notwithstanding anything in this Plan to the contrary, upon the
death of a holder of shares of Restricted Stock subject to this Plan, such
shares may be conveyed by will or by the laws of descent and distribution,
subject to the provisions of this Plan and to applicable provisions of any
other Agreement by which the Company may be bound. Any successor in
interest to the holder in such event may not further convey, transfer,
encumber or otherwise dispose of such shares except as provided herein.
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(iii) Certificates representing shares which are subject to this Plan
will bear the following legend, in addition to such other legends as
counsel to the Company may deem appropriate:
RESTRICTED SHARES
"The shares represented by this certificate are restricted and
subject to (i) all terms, conditions, and restrictions of the Western
Wireless Corporation Executive Restricted Stock Plan, and (ii) the terms
of the Restricted Stock Offer pursuant to which the shares represented
hereby were originally issued, copies of which are on file and available
for inspection during normal business hours at the principal offices of
Western Wireless Corporation."
7. EVENTS OF RESALE.
If any of the following events ("Events of Resale") occurs or, having
occurred, continues in effect, on or before the date all restrictions in this
Plan or in the Restricted Stock Offer have lapsed with respect to particular
shares of Restricted Stock, the holder will sell to the Company and the Company
will purchase from the holder all the Restricted Stock obtained by the holder
under this Plan that remains subject to such restrictions. With respect to any
shares of Restricted Stock to which the restrictions herein or in the Restricted
Stock Offer no longer apply, this provision shall not apply. The price per share
in the case of Restricted Stock subject hereto shall equal the original price
paid by the holder for such shares, and if there is no purchase price, then
without payment therefore:
(a) if the employment of the offeree by the Company or its
subsidiaries is terminated other than by reason of the offeree's death or
permanent and total disability (as defined in the Company's 1994 Management
Incentive Stock Option Plan);
(b) if an offeree who is not an employee, having been nominated as a
director of the Company, fails or refuses to stand for election or, if
elected, to serve as such or resigns as a director; or
(c) if the offeree receives shares of Restricted Stock subject to any
other Event of Resale in the Restricted Stock Offer, and such Event of
Resale Occurs.
Within 30 days after such an occurrence, the Company, by notice to the
holder, will state that an Event of Resale has occurred and will specify a date
not less than five, and not more than ten, days from the date of such notice to
consummate the purchase and sale of such shares at the Company's principal
office. At the closing, the holder will deliver to the Company certificates
representing all of the shares purchased hereunder, and duly endorsed with all
necessary transfer stamps affixed. Upon the receipt of such share certificates,
the Company will deliver to the holder a check in the amount of the purchase
price, if any. If the holder fails to deliver the share certificates to the
Company at the closing, the Company may deposit the purchase price, if any, with
the Secretary of the Company, and thereafter the shares will be deemed to have
been transferred to the Company and the holder, despite the holder's failure to
deliver the share certificates, will have no further rights derived from such
shares as a stockholder of the Company. In this event, the Secretary of the
Company will continue to hold the purchase price, if any, for such shares and
will make payment thereof, without interest, upon delivery of the share
certificates to the Company, accompanied by the appropriate endorsements.
8. EXPENSES.
The Company will pay all expenses and costs in connection with the
administration of this Plan.
9. NO PRIOR RIGHT OF OFFER.
Nothing in this Plan will be deemed to give any director, officer, or
employee, or such individual's legal representatives or assigns, or any other
person or entity claiming under or through such individual, any contractual or
other right to participate in the benefits of this Plan.
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<PAGE> 33
10. INDEMNIFICATION OF THE COMMITTEE.
In addition to such other rights or indemnification as they may have, the
Company will indemnify members of the Committee against all costs and expenses
reasonably incurred by them or any of them in connection with: any action, suit,
or proceeding to which they or any of them may be a party by reason of any
action taken, or failure to act, under or in connection with this Plan or any
award granted pursuant thereto and against all amounts paid by them in
settlement thereof (provided such settlement is approved by legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
action, suit or proceeding; provided that upon institution of any such action,
suit, or proceeding, the person desiring indemnification gives the Company an
opportunity, at its own expense, to handle and defend the same.
11. AMENDMENT AND TERMINATION OF PLAN; AMENDMENT OF TERMS OF GRANTS.
The Board may at any time terminate or extend this Plan, or modify this
Plan as it deems advisable; provided, that any amendment or extension required
by Section 162(m) to be approved by the Shareholders shall be effective subject
to such approval within twelve months of adoption by the Board. No termination
or amendment of this Plan shall, without the consent of any person affected
thereby, modify or in any way affect any right or obligation created prior to
such termination or amendment. The Board may amend the terms and conditions of
outstanding Restricted Stock Offers or Restricted Stock, provided, however, that
(i) no such amendment would be adverse to the holders thereof, and (ii) the
amended terms would be permitted under this Plan.
Subject to the provisions of Section 162(m) as applicable, in the event of
(i) any change in the business or condition of the Company, including any change
in connection with mergers, reorganizations, separations, or other transaction
to which Section 424(a) of the Code would apply if applicable, or (ii) or in the
event of any changed circumstances in the duties and/or responsibilities of any
employee holding Restricted Stock when restrictions are specific to performance
of duties or responsibilities that have changed, the Committee shall have
discretion as to adjustment or removal of any or all restrictions of any
Restricted Stock, and in the event thereof any adjustments by the Committee of
restrictions shall attempt to as closely as possible establish restrictions that
have the same intent and effect as the original performance based restrictions.
12. LIABILITY OF COMPANY.
The Company's liability under this Plan and any sale made hereunder is
limited to the obligations set forth with respect to such sale and nothing in
this Plan will be construed to impose any liability on the Company in favor of
the purchaser with respect to any loss, cost, or expense which the purchaser may
incur in connection with, or arising out of, any transaction in connection
therewith.
13. NO AGREEMENT TO EMPLOY.
Nothing in this Plan will be construed to constitute, or evidence, an
agreement or understanding, express or implied, by the Company to employ or
retain the purchaser for any specific period of time.
14. PURCHASE AGREEMENT.
Any Restricted Stock Offer made hereunder, as accepted, may be embodied in
a Restricted Stock Agreement containing such terms and conditions, not
inconsistent with this Plan, as will, in the opinion of the Committee and
counsel for the Company, be necessary or desirable to protect the Company. For
all purposes thereafter, the Restricted Stock Agreement will be the Restricted
Stock Offer as referenced herein.
15. FEDERAL INCOME TAX CONSEQUENCES.
The federal income tax consequences of a person's acquisition of Restricted
Stock pursuant to this Plan are complex and subject to change. The following
discussion, which has been prepared by the law firm of Preston Gates & Ellis
LLP, counsel to the Company, is only a summary of the general rules applicable
at the time of adoption of this Plan by the Board to the acquisition of stock
subject to restrictions that are linked to
B-5
<PAGE> 34
the continued performance of services. It is based on the Internal Revenue Code
of 1986, as amended (the "Code"), the Regulations promulgated thereunder, and
judicial and administrative interpretations thereof, all as currently in effect.
These laws, Regulations and interpretations are subject to change, potentially
retroactively. Further, a person's particular situation may be such that some
variation of these general rules would apply. ACCORDINGLY, IT IS STRONGLY
RECOMMENDED THAT EACH PERSON WHO MAY RECEIVE RESTRICTED STOCK PURSUANT TO THIS
PLAN CONSULT WITH HIS OR HER OWN TAX ADVISOR REGARDING THE IMPLICATIONS OF THE
RECEIPT OF RESTRICTED STOCK AND THE FILING OF A SECTION 83(B) ELECTION.
Generally, a person who receives Restricted Stock who is an employee,
officer or director of the Company, or otherwise provides services to the
Company (a "Restricted Stock Holder") will be treated as receiving stock that is
subject to a "substantial risk of forfeiture" for federal income tax purposes.
This is because the Restricted Stock is subject to redemption by the Company if
a Restricted Stock Holder's employment terminates under certain circumstances
and may be unsaleable by the Restricted Stock Holder unless certain other events
occur, such as the achievement of particular personal or Company performance
goals. As a result, a Restricted Stock Holder will not be subject to tax, as a
general matter, on his or her acquisition of the Restricted Stock but will be
subject to federal income tax at such time as such Restricted Stock vests (i.e.,
is, in whole or in part, no longer subject to a redemption right on the part of
the Company or the other restrictions on sale). At that time, a Restricted Stock
Holder will recognize ordinary compensation income per share in an amount equal
to the difference between what he or she paid for the share of Restricted Stock
and the value of such share at such later time. Such compensation income is
subject to federal income tax withholding as well as to Social Security (FICA)
taxes and unemployment taxes.
If a Restricted Stock Holder makes an election under Section 83(b) of the
Code, however, a different result will apply. If this election is properly
filed, then an acquired share of Restricted Stock will no longer be treated as
property subject to a "substantial risk of forfeiture" for federal income tax
purposes. As a result, a Restricted Stock Holder will recognize as compensation
income at the time of receipt of the Restricted Stock any excess of the value of
the Restricted Stock over the amount paid for such Restricted Stock. If the
election is properly made, any gain subsequently realized on a sale of
Restricted Stock shares would constitute capital gain, not subject to federal
income tax withholding, FICA taxes or unemployment taxes. If an Event of Resale
takes place and if an amount is included in the income of the Restricted Stock
Holder as a result of a Section 83(b) election, the Restricted Stock Holder will
not recognize a loss on the resale of the Restricted Stock to the Company (even
though an amount was included in the income of the Restricted Stock Holders as a
result of the Section 83(b) election).
AN ELECTION UNDER SECTION 83(B) OF THE CODE MUST BE FILED WITH THE INTERNAL
REVENUE SERVICE AND DELIVERED TO THE EMPLOYER OF AN RESTRICTED STOCK HOLDER
WITHIN THIRTY (30) DAYS AFTER THE DATE ON WHICH A RESTRICTED STOCK HOLDER
RECEIVES THE APPLICABLE RESTRICTED STOCK. A FORM OF A SECTION 83(B) ELECTION IS
AVAILABLE FROM THE COMPANY'S SECRETARY.
16. NOTICES.
Any notice or other communication required or permitted to be made or given
hereunder will be sufficiently made or given if sent by certified mail or other
personal delivery service addressed to the offeree or holder at such
individual's address as set forth in the Company's regular books and records
and, if to the Company, addressed to it at its principal office.
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LOGO
<PAGE> 36
PROXY
WESTERN WIRELESS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Annual Meeting of
Shareholders of Western Wireless Corporation (the "Company"), and the related
Proxy Statement dated April 25, 1997, hereby appoints John W. Stanton and Alan
R. Bender, and each of them, proxies for the undersigned, with full power of
substitution, and authorizes them to attend the Annual Meeting of Shareholders
of the Company on May 21, 1997, and any adjournments thereof, and to vote all
shares of Common Stock of the Company that the undersigned would be entitled to
vote if personally present, such proxies being instructed to vote as specified
on the reverse side, or, to the extent not specified, to vote FOR the election
as directors of all nominees named on the reverse side and FOR Proposals 2, 3
and 4 and to vote in their discretion on any other matters presented at the
meeting or any adjournments thereof.
PLEASE SIGN AND DATE THIS PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
*FOLD AND DETACH HERE*
<PAGE> 37
Please mark
your votes as
indicated in
this example. [X]
WITHHOLD
authority to vote
for all nominees
FOR named below
1. ELECTION OF DIRECTORS [ ] [ ]
John W. Stanton, John L. Bunce, Jr.,
Mitchell L. Cohen, Daniel J. Evans,
Jonathan M. Nelson, and Terence M. O'Toole
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
FOR AGAINST ABSTAIN
2. APPROVE THE COMPANY'S 1996 EMPLOYEE STOCK [ ] [ ] [ ]
PURCHASE PLAN.
FOR AGAINST ABSTAIN
3. APPROVE THE COMPANY'S 1997 EXECUTIVE RESTRICTED [ ] [ ] [ ]
STOCK PLAN.
FOR AGAINST ABSTAIN
4. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP [ ] [ ] [ ]
AS THE COMPANY'S INDEPENDENT AUDITORS FOR 1997.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
SPECIFIED BY THE UNDERSIGNED. EXCEPT AS OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES NAMED ABOVE, FOR APPROVAL
OF THE 1996 EMPLOYEE STOCK PURCHASE PLAN, FOR APPROVAL OF THE 1997 EXECUTIVE
RESTRICTED STOCK PLAN, AND FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL OF THE NOMINEES NAMED ABOVE
AND FOR PROPOSALS 2, 3 AND 4.
Signature Signature, if held jointly
----------------------- --------------------
Dated: , 1997
----------
Please sign name exactly as it appears hereon. If shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such.
*FOLD AND DETACH HERE*
