<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Pacific Telecom, Inc.
- - - --------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Pacific Telecom, Inc.
- - - --------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction
applies:
Not Applicable
--------------------------------------------------------
2) Aggregate number of securities to which transaction
applies:
Not Applicable
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
Not Applicable
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4) Proposed maximum aggregate value of transaction:
Not Applicable
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* Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
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3) Filing Party:
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4) Date Filed:
Not Applicable
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<PAGE>
<PAGE>
PACIFIC TELECOM, INC.
805 BROADWAY
VANCOUVER, WASHINGTON 98668
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1994
To the Shareholders of Pacific Telecom, Inc.:
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting
of Shareholders of PACIFIC TELECOM, INC. (Company) will be held
at the Sheraton Portland Airport Hotel, 8235 N.E. Airport Way,
Portland, Oregon 97220, at 9:30 a.m. on Friday, April 29, 1994
for the following purposes:
(1) to elect a board of six directors;
(2) to approve the 1994 Restatement of the Pacific
Telecom, Inc. Long-Term Incentive Plan; and
(3) to transact any other business that properly
comes before the meeting or any adjournment or adjournments
thereof.
Only holders of record of the Company's Common Stock
at the close of business on March 18, 1994 will be entitled to
notice of and to vote at the meeting and any adjournment or
adjournments thereof. The meeting is subject to adjournment
from time to time as the shareholders present in person or by
proxy determine.
All shareholders who find it convenient to do so are
cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and
return the accompanying form of proxy in the enclosed stamped
envelope. We appreciate your giving this matter your prompt
attention.
By Order of the Board of Directors
Donn T. Wonnell
Vice President and Corporate
Secretary
April 1, 1994 <PAGE>
<PAGE>1
PACIFIC TELECOM, INC.
805 BROADWAY
VANCOUVER, WASHINGTON 98668
PROXY STATEMENT
A proxy in the accompanying form is solicited by the
Board of Directors of Pacific Telecom, Inc. (Company) for use
at the 1994 Annual Meeting of Shareholders of the Company to be
held at the Sheraton Portland Airport Hotel, 8235 N.E. Airport
Way, Portland, Oregon 97220, at 9:30 a.m. on Friday, April 29,
1994 and at any adjournment or adjournments thereof. The
approximate date this Proxy Statement and the accompanying form
of proxy are first being sent to shareholders is April 1, 1994.
Any person giving a proxy in the form accompanying
this Proxy Statement has the power to revoke it at any time
before its exercise. The proxy may be revoked by filing with
the Secretary of the Company an instrument of revocation or a
duly executed proxy bearing a later date. The proxy may also
be revoked by voting in person at the meeting. However, a
shareholder who attends the meeting need not revoke the proxy
and vote in person.
All valid, unrevoked proxies will be voted at the
Annual Meeting of Shareholders in accordance with the
instructions given. If a signed proxy is returned without
instructions, it will be voted for the director nominees, for
approval of the 1994 Restatement of the Pacific Telecom, Inc.
Long-Term Incentive Plan and in accordance with this Proxy
Statement on any other business which may properly come before
the meeting.
In the election of directors, the holders of Common
Stock have cumulative voting rights, which means each
shareholder has the right to give one candidate as many votes
as the number of directors multiplied by the number of his or
her shares, or to distribute votes among any number of
candidates on the same principle. If the authority to vote for
directors is granted to them, the persons named on the
accompanying form of proxy will have the discretionary
authority to vote on a cumulative basis. Directors are elected
by a plurality of the votes cast by the holders of shares
entitled to vote at the Annual Meeting if a quorum is present.
Except as disclosed with respect to Proposal II, abstentions
and broker non-votes are counted for purposes of determining
whether a quorum exists at the Annual Meeting, but are not
counted for any purpose in determining whether a proposal is
approved and have no effect in determining the number of votes
received by a nominee.
As of March 18, 1994, there were 39,608,264 shares of
the Company's Common Stock outstanding, each of which is
entitled to one vote on all matters other than election of
directors.
Only holders of record of Common Stock at the close
of business on March 18, 1994 will be entitled to vote at the
Annual Meeting of Shareholders and any adjournment thereof.
<PAGE>
<PAGE>2
I. ELECTION OF DIRECTORS
The persons named in the proxy will vote your stock
for the election of the persons listed below to serve as
directors unless contrary instructions are received. The
directors will be elected to hold office until the 1995 Annual
Meeting of Shareholders and until their successors are elected
and qualified. The following table shows, as to each nominee,
his or her name, age, other positions and offices with the
Company, principal occupation or employment for the past five
years and the year first elected a director of the Company.
All of the nominees are now directors of the Company. See
"Security Ownership of Certain Beneficial Owners and
Management" for information concerning stock ownership by
directors.
The Board of Directors recommends a vote FOR the
election of these nominees as directors.
<TABLE>
<CAPTION>
Director
Name Age Principal Occupation Since
- - - ---- --- -------------------- --------
<S> <C> <C> <C>
Joyce E. Galleher 64 Secretary-Treasurer of JODI 1982
(real estate, equipment
leasing)
Roy M. Huhndorf* 53 President and Chief Executive 1991
Officer of Cook Inlet Region,
Inc. (native regional
corporation)
Donald L. Mellish* 66 Director and Chairman of the 1992
Executive Committee of the
National Bank of Alaska
Charles E. Robinson* 60 Chairman, Chief Executive 1982
Officer and President of
the Company; Chairman and
Chief Executive Officer
from October 1990 to
December 1992; President and
Chief Executive Officer from
April 1985 to October 1990;
Chairman, Chief Executive
Officer and President of
Alascom, Inc.
Sidney R. Snyder 67 President, Sid's Super 1973
Market, Inc.;
Washington State Senator
Nancy Wilgenbusch 46 President, Marylhurst College, 1990
Portland, Oregon; Director,
PacifiCorp
___________________
<FN>
* Member of the Executive Committee
/TABLE
<PAGE>
DIRECTOR COMPENSATION
The Company's directors, other than Mr. Robinson, are
each paid $12,000 per year, $750 per board meeting and $900 for
the chairperson or $750 for committee members for committee
meetings. In 1993, there were five meetings of the Board of
Directors. All directors attended at least 75 percent of the
meetings of the Board of Directors and the committees of which
they were members.
Under the Company's Non-Employee Director Stock
Compensation Plan, directors of the Company who are not employees
of the Company or any of its subsidiaries or of PacifiCorp or any
of PacifiCorp's subsidiaries are awarded approximately $37,500
worth of the Company's Common Stock every five years. Non-
employee directors having fewer than five years of service
remaining before reaching retirement age receive stock awards
equivalent to approximately $7,500 for each <PAGE>
<PAGE>3
remaining year. The director's right to receive the stock
awarded under this provision of the plan accrues over the five-
year period following the award or shorter period to retirement
and unaccrued shares are forfeited if the recipient ceases to be
a director prior to the end of the five-year period. Accrued
shares vest upon the director's retirement and are subject to
forfeiture prior to retirement if the director (a) fails to
attend at least 50 percent of the meetings of the Board of
Directors or committee of which the director is a member, (b) is
removed by the Board of Directors for cause, or (c) becomes a
director of or is otherwise employed by a competing entity. The
shares awarded under the plan are purchased in the open market
with funds supplied by the Company, and the certificates
representing the shares and the dividends earned on the shares
are then held by the Company until the shares vest. On April 30,
1993, an initial award of 1,694 shares was made under this
provision of the plan to each of Ms. Galleher, Messrs. Huhndorf
and Mellish and Dr. Wilgenbusch, and an initial award of 1,355
shares was made to Mr. Snyder.
Pursuant to the plan, an additional award of $7,500
worth of the Company's Common Stock was also made to directors
for each year of prior service with the Company or Alascom, Inc.
through 1992, up to a maximum of 10 years. Each recipient of
such an award was also awarded cash in an amount equal to the
dividends that would have been earned on the awarded shares had
the shares been awarded in the year of service to which the award
was attributable. These awards (including the dividend
equivalents) vest upon the director's retirement from service as
a director and are subject to forfeiture on the terms described
above. On April 30, 1993, an award of 3,390 shares and dividend
equivalents of $20,150 were made under this provision of the plan
to each of Messrs. Mellish and Snyder and Ms. Galleher, and Dr.
Wilgenbusch and Mr. Huhndorf received awards of 1,017 and 678
shares and dividend equivalents of $2,590 and $1,322,
respectively.
BOARD COMMITTEES
The Board of Directors has an Audit Committee and a
Personnel Committee, but does not have a nominating committee or
a compensation committee. The Audit Committee reviews the
independence of the Company's independent auditors, the work of
internal auditors, the adequacy of internal controls, the quality
of financial reporting, accounting estimates involving the use
of significant management judgment and the Company's construction
program. It also meets with the independent auditors from time
to time to discuss their audit plans and to review their audit
reports and findings. The members of the Audit Committee are
Messrs. Mellish and Snyder and Dr. Wilgenbusch. Dr. Wilgenbusch
is the chairperson of the Audit Committee, which met five times
in 1993.
The Personnel Committee of the Board of Directors makes
recommendations to the Board of Directors on compensation issues,
including salary levels for officers and management compensation
plans, and administers executive compensation plans as authorized
by the Board. The Committee currently consists of three
directors, Ms. Galleher and Messrs. Snyder and Huhndorf, none of
whom are current or former officers or employees of the Company
or any of its subsidiaries or PacifiCorp or any of its
subsidiaries. The Chairman of the Personnel Committee,
Mr. Huhndorf, attends meetings of the PacifiCorp personnel
committee in order to assure coordination of compensation
decisions among PacifiCorp's business units. The Personnel
Committee met four times in 1993. See "Personnel Committee
Report on Executive Compensation" below.
<PAGE>
<PAGE>4
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information
regarding the beneficial ownership, as of January 31, 1994, of
the Company's Common Stock and Common Stock of PacifiCorp by
(i) each nominee for director of the Company; (ii) each of the
executive officers named in the Summary Compensation Table; and
(iii) all executive officers and directors of the Company as a
group. As of January 31, 1994, each of the directors and
executive officers identified below and all executive officers
and directors of the Company as a group owned less than one
percent of the Company's Common Stock and less than one percent
of the Common Stock of PacifiCorp. No person is known by the
Company to be the beneficial owner of more than five percent of
the Company's Common Stock, except that, as of January 31, 1994,
PacifiCorp Holdings, Inc., a wholly owned subsidiary of
PacifiCorp, was the beneficial owner of 34,325,181 shares of the
Company's Common Stock, which represents approximately 87 percent
of the Company's Common Stock. PacifiCorp Holdings, Inc. has
pledged those shares to Morgan Guaranty Trust Company of New
York, as agent for a group of commercial banks, as security for
repayment of obligations of PacifiCorp Holdings, Inc. under a
Credit Agreement.
<TABLE>
<CAPTION>
Number of Number of
Shares of Shares of
Pacific Telecom PacifiCorp
Beneficial Owner Common Stock(1) Common Stock(1)
- - - ---------------- --------------- ---------------
<S> <C> <C>
Joyce E. Galleher. . . . . . . . . . . . 5,284 100
Roy M. Huhndorf. . . . . . . . . . . . . 2,472 100
Donald L. Mellish. . . . . . . . . . . . 5,084 3,000
Charles E. Robinson. . . . . . . . . . . 63,922 42,423
Sidney R. Snyder . . . . . . . . . . . . 7,769 --
Nancy Wilgenbusch. . . . . . . . . . . . 2,711 5,000
James H. Huesgen . . . . . . . . . . . . 19,310 2,501
Donn T. Wonnell. . . . . . . . . . . . . 4,098 623
Brian M. Wirkkala. . . . . . . . . . . . 19,923 2,347
Wesley E. Carson . . . . . . . . . . . . 2,644 872
All executive officers
and directors as a group
(11 persons) . . . . . . . . . . . . . 136,064 58,849
____________________
<FN>
(1) Includes ownership of (a) shares held by family members even
though beneficial ownership of such shares may be disclaimed
and (b) shares granted and subject to vesting as to which the
individual has voting but not investment power under one or
more of the stock based compensation plans of the Company or
PacifiCorp.
/TABLE
<PAGE>
<PAGE>5
II. RESTATEMENT OF THE LONG-TERM INCENTIVE PLAN
INTRODUCTION
On December 14, 1993, pursuant to authority delegated
to the Personnel Committee by the Board of Directors of the
Company, the Personnel Committee adopted the 1994 Restatement of
the Company's Long-Term Incentive Plan (Restated Plan) effective
January 1, 1994, subject to the approval of the Restated Plan by
the shareholders at the Annual Meeting. The purpose of the
Restated Plan is to promote the long-term success of the Company
by aligning the interests of executive employees more closely
with those of the shareholders through a combination of
performance-based incentives in the form of annual grants of
restricted shares of the Company's Common Stock and a requirement
for stock ownership by participants of the Common Stock of the
Company or PacifiCorp.
The Restated Plan amends and restates the Company's
Long-Term Incentive Plan initially approved by the shareholders
in 1988. Under the current plan, the Personnel Committee
established corporate performance objectives for overlapping
four-year performance cycles every two years and set a target
amount of shares of Company Common Stock for each participant.
The Restated Plan calls for grants of restricted shares based on
past performance rather than target awards for future performance
cycles. As of January 1, 1994, 85,735 shares of the Company's
Common Stock were available for awards under the current plan.
DESCRIPTION OF RESTATED PLAN
ADMINISTRATION
The Restated Plan will be administered by the Board of
Directors of the Company or a committee of the Board of Directors
to whom authority for administration has been delegated.
Administrative functions that do not involve selection of
participants or decisions concerning the timing, pricing or
amounts of awards may be delegated to an executive officer of the
Company. On February 4, 1994, the Board of Directors delegated
authority for administration of the Restated Plan to the
Personnel Committee and delegated those limited administrative
functions to the Chief Executive Officer of the Company, subject
to change by the Board or Personnel Committee (Committee).
AWARDS
Subject to adjustment due to changes in capital
structure, the total number of shares of Company Common Stock
that may be awarded under the Restated Plan may not exceed
200,000 shares. The Committee will select as participants those
executive employees of the Company and its subsidiaries who the
Committee believes have made or will make important contributions
to the long-term performance of the Company. Currently, seven
executive employees of the Company and its subsidiaries are
eligible for selection as participants.
The Restated Plan provides that the Committee may vary
the grants each year based on a subjective assessment of the
Company's overall performance in relation to long-term goals and
plans. In determining the individuals to whom awards will be
made and the amounts of the grants, the Committee will consider
criteria such as the following:
(a) Total shareholder return relative to peer
companies;
(b) Earnings per share growth over time relative to
peer companies;
(c) Achievement of long-term goals, strategies and
plans; and
(d) Maintenance of competitive position.
<PAGE>
<PAGE>6
Shares awarded under the Restated Plan will be subject
to such terms, conditions and restrictions as may be determined
by the Committee to be consistent with the purpose of the
Restated Plan and the best interests of the Company. The
restrictions may include, without limitation, stock transfer
restrictions and forfeiture provisions designed to facilitate the
achievement by participants of specified stock ownership goals.
Upon the award of shares under the Restated Plan, the
Company will pay to a securities broker or other third party an
amount equal to the purchase price of the shares. Such
securities broker or other third party will acquire the granted
shares in the market for the account of the participants. The
certificates and associated stock powers will be delivered to an
escrow holder appointed by the Company and will be held in escrow
until the Company certifies that the shares have vested or have
been forfeited to the Company. The participant will be entitled
to all the rights of a shareholder with respect to granted
shares, including the right to vote such shares and to receive
ordinary dividends payable with respect to such shares from the
date of the grant.
Awards under the Restated Plan are subject to
accelerated vesting upon termination of employment within two
years after a change in control of the Company. In general,
under the Restated Plan such a change in control would occur if
any person other than PacifiCorp or PacifiCorp Holdings, Inc.
acquires beneficial ownership of 20 percent or more of the
Company's Common Stock by tender offer or otherwise or if, during
any period of 12 months, individuals who were members of the
Board of Directors at the beginning of such period (and any new
directors whose election or nomination was approved by two-
thirds of such individuals) cease to constitute a majority of the
Board of Directors.
TERMS OF FEBRUARY 1994 GRANTS
Grants totalling 10,163 shares were made in February
1994 to six executive officers of the Company, subject to
approval of the Restated Plan by shareholders. As a result of
these grants, the four-year performance cycle beginning
January 1, 1993 and ending December 31, 1996 was cancelled
without any awards having been made, and the four-year
performance cycle beginning January 1, 1991 and ending
December 31, 1994 was terminated effective December 31, 1993,
with prorated awards being made as reflected in the Summary
Compensation Table.
The following table sets forth the number of shares
granted under the Restated Plan and the market value of those
shares on February 4, 1994, the date of grant, to (i) each of the
executive officers named in the Summary Compensation Table and
(ii) all current executive officers of the Company as a group.
No awards were made to employees of the Company who are not
executive officers. Directors who are not executive officers are
not eligible to participate in the Restated Plan.<PAGE>
<PAGE>7
<TABLE>
<CAPTION>
1994 RESTATEMENT OF THE
PACIFIC TELECOM, INC. LONG-TERM INCENTIVE PLAN
Dollar Value Number of
Name and Position of Grant Shares
- - - ----------------- ------------ ---------
<S> <C> <C>
Charles E. Robinson, Chairman,
President and Chief Executive
Officer. . . . . . . . . . . . . . . . $87,294 3,563
James H. Huesgen, Executive
Vice President and Chief
Financial Officer. . . . . . . . . . . $55,125 2,250
Donn T. Wonnell, Vice
President and Corporate
Secretary. . . . . . . . . . . . . . . $44,100 1,800
Brian M. Wirkkala, Vice
President and Treasurer. . . . . . . . $18,375 750
Wesley E. Carson, Vice
President - Human Resources. . . . . . $22,050 900
All current executive officers
(6 persons). . . . . . . . . . . . . .$248,994 10,163
</TABLE>
In order to align the interests of the executive
employees more closely with those of the shareholders, the
individual restricted stock agreements for each of the above
participants contain vesting, forfeiture and stock ownership
requirements designed to encourage the participants to remain
employed with the Company and requiring them to have invested
their own resources in the Common Stock of the Company or
PacifiCorp. In general, the restricted stock agreements provide
that 25 percent of the shares granted in February 1994 become
nonforfeitable on February 15 of each of the four calendar years
ending after December 31, 1994, provided the recipients remain
continuously employed by the Company, meet certain requirements
for annual investments in Common Stock of the Company or
PacifiCorp and do not attempt to transfer unvested shares. The
agreements provide for accelerated vesting upon death,
termination of employment after permanent and total disability,
retirement after age 55 with five years of service, or
termination of employment within two years after a change in
control of the Company as described above. Mr. Robinson is over
55 years of age with at least five years of service.
Failure to remain continuously employed by the Company
or a subsidiary results in forfeiture of all unvested shares
unless accelerated vesting occurs as described above. Failure
to meet the annual investment requirement results in forfeiture
of any shares that would have vested on February 15 following
the calendar year for which the requirement was not met. Any
attempted transfer of unvested shares results in forfeiture of
the shares with respect to which the attempted transfer was made.
The annual investment requirement for each of the
February 1994 grant recipients consists of an overall stock
ownership target and a specific annual purchase requirement. In
order to ensure full vesting of his or her restricted stock, each
recipient must satisfy the annual purchase requirement during
each of the four calendar years beginning with 1994 or until the
recipient's stock ownership target is exceeded. The stock
ownership target is a number of shares of Common Stock of the
Company or PacifiCorp with an aggregate value equal to a
specified multiple of the recipient's annual base salary, between
2 and 3.5 times base salary, depending on the recipient's
compensation level. Similarly, the annual purchase requirement
is a number of shares with an aggregate value equal to 10 percent
of base salary.
<PAGE>
<PAGE>8
The annual purchase requirement for a recipient may be
waived for a given year by the Board of Directors or the
Committee upon a showing of extraordinary hardship. The annual
purchase requirement may also be waived by the Chief Executive
Officer of the Company, to whom this authority has been
delegated, if such officer finds that compliance would result in
extraordinary hardship and that the recipient's stock ownership
exceeds a specified multiple of base salary, from 1 to 1.75 times
base salary depending on compensation level. The Chief Executive
Officer may not waive such requirement as it applies to himself.
TAX EFFECT
The recently enacted Federal Omnibus Budget
Reconciliation Act of 1993 includes as Section 162(m) of the
Internal Revenue Code (Section 162(m)) a provision limiting to
$1 million the annual deduction by a publicly held corporation
of compensation paid to any executive, with some forms of
incentive compensation excluded from the limitation. Under the
proposed regulations relating to Section 162(m), the Restated
Plan will not meet the technical requirements of the exclusion.
Accordingly, grants causing the annual limitation to be exceeded,
if any, will not be fully deductible by the Company. However,
grants under the Restated Plan are not expected to cause the
limitation to be exceeded by a material amount for all executives
as a group. The Restated Plan was designed to align the
interests of executives with those of shareholders, to encourage
retention of employment and to reward performance. The
achievement of those objectives was considered to be more
important than meeting the technical requirements of Section
162(m).
AMENDMENT, DURATION AND TERMINATION OF THE RESTATED PLAN
The Board of Directors may modify or amend the Restated
Plan in such respects as it may deem advisable because of changes
in the law while the plan is in effect or for any other reason.
Under the current plan, no amendment may be made without the
approval of shareholders if it would materially increase the
maximum aggregate performance share awards or materially modify
the eligibility requirements for participation in the plan.
The Restated Plan will be effective January 1, 1994,
subject to approval by the Company's shareholders. Unless
earlier terminated, the Restated Plan will continue in effect
until all shares available for awards are granted and all
restrictions on such shares, if any, have lapsed.
The Board of Directors may suspend or terminate the
Restated Plan at any time except with respect to granted shares
then subject to restrictions. Termination will not affect the
forfeitability of shares awarded under the Restated Plan.
VOTE REQUIRED
The affirmative vote of shares of the Company's Common
Stock representing a majority of the votes present and entitled
to be cast at the meeting will be required for approval of the
proposed Restated Plan. In order to take advantage of the
exemption contained in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, for purposes of this vote
abstentions will be counted as shares present and entitled to
vote and will have the same effect as negative votes, while
broker non-votes will not be counted for any purpose in
determining whether this proposal has been approved.
The Board of Directors recommends a vote FOR approval
of this proposal.
<PAGE>
<PAGE>9
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel Committee of the Board of Directors of
the Company has furnished the following report on executive
compensation. The following report shall not be deemed
incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed
filed under such Acts.
OVERVIEW
The Personnel Committee's executive compensation
policies are designed to retain and to fairly compensate quality
executives who will manage the Company's business effectively for
the benefit of its shareholders. To assist the Company in
achieving those ends, the Committee retains the services of a
national consulting firm with special expertise in compensation
matters to assist in the design and monitoring of compensation
arrangements that are fair and competitive for the executives and
consistent with the objectives of the shareholders. The
Committee believes that the Company's compensation plans achieve
an appropriate balance between incentives for long-term success
and those related to annual goals, which are intended, over time,
to result in sustained earnings and dividend growth.
Qualifying compensation for deductibility under Section
162(m) of the Internal Revenue Code, which limits to $1 million
the annual deduction by a publicly held corporation of
compensation paid to any executive except with respect to certain
forms of incentive compensation that qualify for exclusion, is
one of many factors that the Company considers in designing its
incentive compensation arrangements. The Company views the
objectives outlined above as more important than compliance with
the technical requirements necessary to exclude compensation from
the deductibility limits of Section 162(m). Nevertheless, the
Company anticipates that the amount of compensation in excess of
the deductibility limits of Section 162(m) for all executive
officers as a group will not be material. See "Description of
Restated Plan - Tax Effect" for certain information concerning
the tax effect of the Restated Plan.
COMPENSATION PROGRAM COMPONENTS
The Company has developed an executive compensation
system with three principal elements: (a) base salary;
(b) annual incentive compensation; and (c) long-term incentive
compensation. The Committee, assisted by its consultant, reviews
base salary levels annually and recommends appropriate changes
for each executive officer. In connection with this process, the
Committee evaluates total compensation of executives in relation
to comparable industry data. Companies used for the competitive
compensation analysis are not restricted to those included in the
preparation of the performance graph set forth below. The
Committee believes that a broader range of companies is more
representative of the labor market in which the Company must
compete for executive talent.
The Committee seeks to establish base salaries below
general industry levels so that bonus payments under the
Company's Executive Bonus Plan, as described below, are required
to bring annual compensation up to competitive levels. During
1993, the Committee recommended base salary increases for all
executive officers of the Company. The Committee believed, based
on its review of data from general industry and
telecommunications companies, that increases were justified
because total cash compensation levels (base salary plus
incentives) for the executive group as a whole fell below
competitive levels. The Committee considered factors such as the
nature,<PAGE>
<PAGE>10
complexity and diversity of Company operations, the duties and
responsibilities of each executive position and the relevance of
the comparative data and weighted those factors in making
individual determinations as to the appropriate amount of total
cash compensation.
As part of placing a significant element of the
compensation package for executive officers of the Company at
risk, executive officers of the Company are eligible to
participate in the annual short-term Executive Bonus Program.
The creation of this "at risk" portion of executive compensation
is intended to align compensation with shareholder interests.
Certain executive officers of the Company as determined by the
Committee, including the executive officers named in the Summary
Compensation Table below, are eligible to participate in this
plan, which provides for cash awards based on achievement of
business performance objectives. Guideline bonus percentages
ranging from 15 percent to 40 percent of salary are established
for each participant and are based on a subjective assessment of
the relative impact of each position on Company growth and
profitability. Payments are calculated by multiplying the
guideline bonus percentages by a Company performance factor that
is tied to (i) the return on average shareholder equity for the
current year in relation to the five-year Treasury Bond rate and
(ii) the compound annual growth rate in net income. The compound
annual growth rate is the constant rate that, when applied to
each year in the four-year period, produces a total net income
for that period equal to the total reported net income for that
four-year period. The performance factor is subject to
adjustment to reflect individual performance. The Executive
Bonus Plan is designed to yield a performance factor of up to 200
percent (capped at 150 percent for participants who are also
eligible for consideration under the Company's Long Term
Incentive Plan). For 1993, the performance factor was 150
percent. Payments for 1993 performance are shown in the Summary
Compensation Table below.
Executive officers of the Company and its subsidiaries
are also eligible to participate in the Company's Long-Term
Incentive Plan. Under the current plan, which was in effect
through 1993, the Committee sets a target award in shares of the
Company's Common Stock for each participant and establishes
corporate performance objectives for each four-year performance
cycle. The use of Common Stock is intended to further align the
interests of officers with those of the shareholders. The
Committee has used a variety of performance objectives under the
plan, including return on equity, earnings per share and net
income growth. Return on equity objectives are established based
upon peer group performance and a risk-free rate premised upon
a five-year Treasury Bond rate. Participants receive from zero
to 260 percent of the targeted shares of Common Stock, plus
dividend equivalents in cash, upon completion of a performance
cycle based on their degree of success in meeting the established
long-term objectives.
During 1993, the Committee evaluated the plan, which
had been adopted in 1988, to ensure that it was consistent with
the Company's objectives. Following that evaluation and after
consideration of various alternative methods of providing
incentives for achievement of the Company's objectives, the
Committee developed the 1994 Restatement of the Long-Term
Incentive Plan to replace the existing plan. This Restated Plan
is designed to provide stock-based incentives in the form of
annual grants of restricted stock coupled with a requirement that
participants invest their own personal resources in the stock of
the Company or PacifiCorp. The Restated Plan is more fully
described elsewhere in this proxy statement. See "Restatement
of the Long-Term Incentive Plan." The Committee believes the
Restated Plan will align the interests of executive employees
more closely with those of shareholders, will provide greater
opportunity to link grant size to achievement of performance, and
will increase the Company's ability to retain key employees. The
principal factor considered by the Committee in selecting the
participants and determining the level of<PAGE>
<PAGE>11
grants in February 1994 was the Committee's subjective assessment
of the potential impact of each position on corporate strategy,
policies, and investment and business decisions relating to the
long-term direction of the Company. The Committee also took into
consideration competitive practices for positions at similar
levels in the industry and at PacifiCorp, the termination of
existing cycles under the current Long-Term Incentive Plan, the
fact that prorated awards were made with respect to the
performance cycle ending December 31, 1994 under the current plan
and the Company's strong financial performance and success in
attaining its long term goals during 1993.
In connection with the adoption of the Restated Plan,
the Company terminated the performance cycle that was to end
December 31, 1994 and made prorated awards for that performance
cycle, as reflected in the Summary Compensation Table below. The
performance objectives for that performance cycle were earnings
per share growth and return on equity compared to a five-year
Treasury Bond rate. Performance results measured against
performance objectives produced a performance factor of 101.27
percent, which was applied to the target award. The resulting
amount was then prorated to reflect early termination of the
scheduled four-year cycle.
CEO COMPENSATION
For 1993, the Committee approved a base salary increase
for Mr. Robinson of four percent based upon various factors,
including a recommendation by the PacifiCorp personnel committee,
consideration of competitive pay data and a subjective assessment
of Mr. Robinson's performance, potential and changes in duties
and responsibilities.
Mr. Robinson's 1993 award under the Executive Bonus
Plan, his prorated award under the current Long-Term Incentive
Plan for the performance cycle ending December 31, 1994, and the
number of shares of restricted stock awarded to him pursuant to
the Restated Plan were determined on the same basis as for other
executive officers of the Company, as described above.
Executive officers of the Company, who are designated
by the personnel committee of PacifiCorp, are also eligible to
participate in the PacifiCorp long-term incentive plan. Mr.
Robinson is a participant in this plan and the costs of his
participation are borne by the Company. In 1993, PacifiCorp also
restated its long-term incentive plan in a manner substantially
identical to the Restated Plan so that it provides for annual
grants of restricted stock coupled with a requirement that
participants invest their own personal resources in Common Stock
of PacifiCorp or the Company. Pursuant to the PacifiCorp plan,
a grant of 4,500 shares of PacifiCorp Common Stock was made to
Mr. Robinson effective November 17, 1993. The principal factors
considered by the PacifiCorp personnel committee in making the
grants under its plan were the committee's subjective assessment
of the success of restructuring PacifiCorp in 1993 and the
improvement in PacifiCorp's financial performance after the
restructuring. The committee also was aware that target awards
for the four-year cycle ending December 31, 1993 would not be
paid under PacifiCorp's pre-restatement plan because the
established performance objectives were not met.
PERSONNEL COMMITTEE
Roy M. Huhndorf
Joyce E. Galleher
Sidney R. Snyder
<PAGE>
<PAGE>12
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN AMONG THE COMPANY,
S&P 500 INDEX AND COMPANY PEER GROUP
The following performance graph shall not be deemed
incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed
filed under such Acts.
The following graph provides a comparison of the annual
percentage change in the Company's cumulative total shareholder
return on its Common Stock, with the cumulative total return of
the S&P 500 Index and a peer group consisting of the Dow Jones
Telephone Systems Index plus the following additional companies
not included in that index: Telephone & Data Systems, Inc.,
Rochester Telephone Corporation, Century Telephone Enterprises,
Inc., Lincoln Telecommunications Company, C-TEC Corporation and
Citizens Utilities Company. The comparison assumes $100 was
invested on December 31, 1988 in the Company's Common Stock and
in each of the foregoing indices and assumes the reinvestment of
dividends.
PACIFIC TELECOM, INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
1988-1993
<TABLE>
<CAPTION>
Pacific
Measurement Period Telecom S&P Peer
(Fiscal Year Covered) Inc. 500 Index Group
- - - --------------------- ---------- --------- -----
<S> <C> <C> <C>
Measurement Pt-12/31/88 $100 $100 $100
FYE 12/31/89 $168.77 $131.59 $158.53
FYE 12/31/90 $189.43 $127.49 $140.70
FYE 12/31/91 $203.75 $166.17 $155.95
FYE 12/31/92 $206.54 $178.81 $173.73
FYE 12/31/93 $231.49 $196.75 $207.27
</TABLE>
<PAGE>
<PAGE>13
EXECUTIVE COMPENSATION
The following table sets forth information concerning
compensation for services in all capacities to the Company and
its subsidiaries for fiscal years ended December 31, 1993, 1992
and 1991 of those persons who were, at December 31, 1993, the
Chief Executive Officer of the Company and the other four most
highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------ --------------------------------------------
Other Restricted Long-Term All
Annual Annual Stock Incentive Other
Name and Principal Position Salary Bonus(1) Compensation Award Payouts Compensation(2)
- - - --------------------------- ------ -------- ------------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. Robinson, 1993 $387,500 $232,500 $ -- $85,500(3) $185,865(4) $12,611
Chief Executive Officer and 1992 375,000 -- -- -- 380,419(4) 12,006
Chairman of the Board of 1991 373,462 226,000 -- -- 289,512(5) 11,856
Directors
James H. Huesgen, 1993 184,200 96,700 -- -- 111,967(4) 9,691
Executive Vice President and 1992 175,850 -- 1,528 -- 209,696(4) 10,268
Chief Financial Officer 1991 173,081 87,600 634 -- -- 10,153
Donn T. Wonnell, 1993 145,601 54,600 -- -- 53,742(4) 8,383
Vice President and 1992 134,800 -- -- -- 42,762(4) 8,718
Corporate Secretary 1991 110,354 42,800 -- -- -- 938
Brian M. Wirkkala, 1993 118,650 35,600 -- -- 38,069(4) 6,834
Vice President and 1992 113,900 -- -- -- 96,488(4) 9,149
Treasurer 1991 112,992 32,700 -- -- -- 9,619
Wesley E. Carson, 1993 111,451 41,800 -- -- 35,001(4) 6,416
Vice President - 1992 101,050 -- -- -- 23,028(4) 6,536
Human Resources 1991 81,837(6) 20,300 -- -- -- 4,360
____________________
<FN>
(1) Please refer to the Personnel Committee Report on Executive
Compensation for a description of the Company's Executive
Bonus Plan.
(2) Amounts shown for 1993 include (a) contributions to defined
contribution plans of $9,214, $8,107, $7,131, $5,814 and
$5,458 for Messrs. Robinson, Huesgen, Wonnell, Wirkkala and
Carson, respectively, and (b) premiums on term life insurance
policies of $3,397, $1,584, $1,252, $1,020 and $958 for
Messrs. Robinson, Huesgen, Wonnell, Wirkkala and Carson,
respectively.
(3) Restricted stock grant made in connection with the 1993
restatement of PacifiCorp's long-term incentive plan, in
which Mr. Robinson is a participant and which is subject to
shareholder approval at the 1994 annual meeting of
shareholders of PacifiCorp. Please refer to the Personnel
Committee Report on Executive Compensation for a description
of the 1993 restatement of PacifiCorp's long-term incentive
plan and the restricted stock grants. At December 31, 1993,
the aggregate value of all restricted stock holdings held by
Mr. Robinson, based on the market value of the shares at
December 31, 1993, without giving effect to the diminution of
value attributable to the restrictions on such stock, was
$86,625.
(4) Please refer to the "Restatement of the Long-Term Incentive
Plan" for a description of the Company's current Long-Term
Incentive Plan, which had a four-year performance cycle
ending December 31, 1992. For that performance cycle, the
performance criteria were relative return on equity compared
to an industry composite and earnings per share growth. In
connection with the adoption of the Restated Plan, the
Company terminated the performance cycle that was to end
December 31, 1994 and made prorated awards in December, 1993
for that performance cycle. See "Personnel Committee Report
on Executive Compensation."
<PAGE>
<PAGE>14
(5) The current PacifiCorp long-term incentive plan had four-
year performance cycles ending December 31, 1991 and
December 31, 1993. For the performance cycle ending
December 31, 1991, the performance criteria were relative
return on equity compared to an industry composite, earnings-
per-share growth, cash flow per share growth and return on
equity in excess of the risk-free interest rate. No awards
were made for the performance cycle ended December 31, 1993.
(6) Mr. Carson became an executive officer in November 1991.
</TABLE>
SEVERANCE ARRANGEMENTS
The Company adopted an Executive Officer Severance Plan
effective January 1, 1994 under which certain executive officers
of the Company, including Messrs. Robinson, Huesgen, Wonnell and
Carson, will receive a severance payment equal to twice the
executive's total cash compensation during the last full calendar
year upon termination of employment with the Company. The
severance payment will be made to the executive in 24 equal
monthly payments following the date of the termination of his
employment, and the payments may be terminated by the Company if
the executive accepts employment with a competitor of the Company
or its affiliates. The plan does not apply to the termination
of an executive for reasons of normal retirement, death or total
disability, or to a termination for cause or a voluntary
termination. "Voluntary termination" does not include a change
in reporting relationship, a material change in authority or a
change in control of the ownership of the Company that results
in a change in position that is detrimental to the executive
officer, unless such change in reporting relationship, authority
or control is agreed to by the executive officer. Under the
plan, "cause" for termination includes any act by an executive
that is materially contrary to the interests of the Company or
its affiliates and the willful and continued failure by an
executive to devote his full business time and efforts to the
business affairs of the Company or its affiliates. The plan will
terminate on December 31, 1995, unless extended by the Personnel
Committee.
RETIREMENT PLANS
The Company and many of its subsidiaries have adopted
a noncontributory defined benefit retirement plan (Retirement
Plan) for their employees (other than employees subject to
collective bargaining agreements that do not provide for
coverage). Certain of the Company's executive officers,
including Messrs. Robinson, Huesgen and Wonnell, are also
eligible to participate in PacifiCorp's non-qualified
Supplemental Executive Retirement Plan ("SERP"). The plans
provide benefits at retirement payable for life based on length
of service with the Company or its subsidiaries and average pay
in the 60 consecutive months of highest pay out of the last 120
months. Actuarially equivalent alternative forms of benefits are
also available at the participant's election. Retirement
benefits are reduced to reflect Social Security benefits. For
participants in both plans, pay includes salary and bonuses, as
reflected in the Summary Compensation Table. For participants
in the Retirement Plan only, pay includes base salary plus
bonuses up to 10 percent of base pay, reduced by any nonqualified
salary reductions elected by the employee. Accrued benefits are
completely unvested until an employee has five years of service
or reaches age 65, when the benefits become 100 percent vested.
The SERP provides a normal retirement benefit of 65 percent of
final average pay reduced by the amount of Social Security
benefits and certain other retirement benefits. SERP
participants are eligible to receive full benefits after age 62
with 30 years of service or at age 65 with at least 15 years of
service. Participants in the SERP are also entitled to receive
reduced benefits upon early retirement after age 55 and at least
five years of service.
<PAGE>
<PAGE>15
The following table shows the estimated annual
retirement benefit payable upon normal retirement age at age 65
as of January 1, 1994. Amounts in the table reflect payments
from the Retirement Plans and the SERP combined.
<TABLE>
<CAPTION>
Final Average
Annual Pay at
Retirement Date Years of Credited Service
- - - --------------- --------------------------------------------
5 15 25 30
--------------------------------------------
<S> <C> <C> <C> <C>
$ 200,000 $ 43,333 $130,000 $130,000 $130,000
400,000 86,667 260,000 260,000 260,000
600,000 130,000 390,000 390,000 390,000
800,000 173,333 520,000 520,000 520,000
1,000,000 216,667 650,000 650,000 650,000
_______________
<FN>
(1) The benefits shown in the table above assume that the
individual will remain in the employ of the Company until
normal retirement at age 65 and that the plans will continue
in their present form. Amounts shown above do not reflect
the Social Security offset.
(2) The number of credited years of service used to compute
benefits under the Retirement Plan for Messrs. Robinson,
Huesgen and Wonnell are 30, 11 and 3.
(3) Mr. Wirkkala has a fixed benefit under the SERP of $1,283
per year payable at normal retirement without further offset
for Social Security or other retirement plan benefits.
</TABLE>
Messrs. Wirkkala and Carson are accruing benefits only
under the Retirement Plan. The following table shows the
estimated annual benefits payable under the Retirement Plan upon
normal retirement at age 65 as of January 1, 1994:
<TABLE>
<CAPTION>
Pension
Qualified
Salary Years of Credited Service
- - - --------- -----------------------------------------------------
10 15 20 25 30
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,151 $12,227 $16,302 $20,378 $24,453
100,000 17,901 26,852 35,802 44,753 53,703
150,000 27,651 41,477 55,302 69,128 82,953
_______________
<FN>
(1) Amounts shown above do not reflect the Social Security
offset. The number of credited years of service used to
compute benefits under the Retirement Plan for Messrs.
Wirkkala and Carson are 30 and 10, respectively.
(2) 1993 pension qualified salary used to compute Retirement
Plan benefits for Messrs. Wirkkala and Carson was $128,139
and $126,281, respectively.
</TABLE>
CERTAIN TRANSACTIONS
PacifiCorp provides certain corporate services to the
Company, at PacifiCorp's cost, under a Management Services
Agreement. In addition, an indirect subsidiary of PacifiCorp
provides certain air transportation services to the Company and
its subsidiaries. For the year ended December 31, 1993, billings
to the Company under these agreements totaled $1,674,000. During
1993, a subsidiary of PacifiCorp also billed the Company
$4,718,000, primarily for computer hardware lease payments, and
PacifiCorp billed the Company $126,000 for pole contact rental.
The Company provides certain computer services to
PacifiCorp. During 1993, the Company billed PacifiCorp $328,000
for these services.
<PAGE>
<PAGE>16
Pursuant to the terms of an intercompany borrowing
arrangement, from time to time the Company and PacifiCorp
Holdings, Inc. (Holdings) make open account advances to each
other. Advances are evidenced by notes, payable on demand, and
bear interest at a short-term market rate. No advances were made
from Holdings to the Company during 1993. The daily weighted
average balance of advances to Holdings was $1,412,000 during
1993, with a weighted average interest rate of 3.1 percent. No
advances to Holdings were outstanding on December 31, 1993. The
Company joins with PacifiCorp in filing a consolidated federal
income tax return along with unitary state income tax returns and
will pay an estimated $41,924,000 to PacifiCorp for the Company's
1993 federal and state income taxes.
INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche
as the Company's independent auditors for the year 1994.
Representatives of Deloitte & Touche are expected to be at the
meeting and will have the opportunity to make a statement if they
desire to do so. They will also be available to respond to
appropriate questions.
METHOD AND COST OF SOLICITING PROXIES
The cost of solicitation of proxies will be paid by the
Company. In addition to solicitation by mail, employees of the
Company may request the return of proxies personally or by
telephone. The Company will, upon request, reimburse brokers and
other persons holding shares for the benefit of others for their
expenses in forwarding proxies and accompanying material and in
obtaining authorization from beneficial owners of the Common
Stock to execute proxies.
ANNUAL REPORT
The Company's 1993 Annual Report to Shareholders is
transmitted with this Proxy Statement.
OTHER BUSINESS
The Board of Directors does not intend to present any
business for action by the shareholders at the meeting except the
matters referred to in this Proxy Statement and has not been
informed of any matters which may be presented by others. If any
other matter properly comes before the meeting, it is the
intention of the persons named in the accompanying form of proxy
to vote thereon in accordance with the recommendations of the
Board of Directors.
SHAREHOLDER PROPOSALS
A shareholder proposal to be considered for inclusion
in proxy material for the Company's 1995 annual meeting must be
received by the Company not later than December 1, 1994.
Whether or not you expect to be present at the meeting,
please sign the accompanying form of proxy and return it promptly
in the enclosed stamped return envelope.
By Order of the Board of Directors
Donn T. Wonnell
Vice President and
Corporate Secretary
April 1, 1994
<PAGE>
<PAGE>
PACIFIC TELECOM, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
April 29, 1994
The undersigned hereby appoints Charles E. Robinson and
Dr. Nancy Wilgenbusch, or either of them, with full power of
substitution, the undersigned's true and lawful attorneys to
vote all the Common Stock standing in the undersigned's name on
the Company's books at the close of business on March 18, 1994
at the Annual Meeting of Shareholders of Pacific Telecom, Inc.
to be held at the Sheraton Portland Airport Hotel, 8235 N.E.
Airport Way, Portland, Oregon 97220, on Friday, April 29, 1994
at 9:30 a.m., and any adjournment or adjournments thereof.
1. ELECTION OF DIRECTORS / / WITHHOLD AUTHORITY / /
For all nominees listed to vote for all
below (except as marked nominees listed
to the contrary below) below
Joyce E. Galleher
Roy M. Huhndorf
Sidney R. Snyder
Charles E. Robinson
Donald L. Mellish
Nancy Wilgenbusch
2. APPROVAL OF THE 1994 RESTATEMENT OF THE LONG-TERM
INCENTIVE PLAN
/ / FOR / / AGAINST / / ABSTAIN
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW
- - - -------------------------------------------------------------
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS, IF GIVEN. IF THIS PROXY IS
RETURNED UNMARKED, IT WILL BE VOTED FOR THE DIRECTORS AND FOR
APPROVAL OF THE 1994 RESTATEMENT OF THE LONG-TERM INCENTIVE
PLAN. THE PROXIES MAY VOTE IN THEIR DISCRETION AS TO OTHER
MATTERS THAT PROPERLY COME BEFORE THE MEETING. The undersigned
hereby acknowledges receipt of the notice of Annual Meeting
of Shareholders dated April 1, 1994 and the Proxy Statement
furnished therewith.
Dated this day of April, 1994
- - - -------------------------------------------------------------
- - - -------------------------------------------------------------
Shareholder(s)
When signing as an attorney, executor, administrator,
trustee or guardian, please give full title. If more than
one trustee, all should sign. All joint owners must sign.
Please mark, date, sign and return the proxy form promptly.
<PAGE>
<PAGE>
The following copy of the Pacific Telecom, Inc. Long-Term
Incentive Plan, 1994 Restatement, is being sent to the
Commission pursuant to the requirements of Instruction 3
to Item 10 of Regulation 14A. A copy of the plan is not being
sent to shareholders with the definitive proxy statement.
<PAGE>
PACIFIC TELECOM, INC. LONG TERM INCENTIVE PLAN
1994 RESTATEMENT
<PAGE>1
PACIFIC TELECOM, INC. LONG TERM INCENTIVE PLAN
1994 RESTATEMENT
Pacific Telecom, Inc., a Washington corporation (the
"Company"), amends and restates its Long Term Incentive Plan, as
adopted effective January 1, 1988, to provide in its entirety as
set forth herein. This Long Term Incentive Plan, as amended and
restated (the "Plan"), shall govern incentive awards made on or
after the date the Plan is approved by the Company's Board of
Directors(the "Board of Directors"). Approval of the Plan by the
Board of Directors shall not affect incentive awards to be made
with respect to performance cycles that began under the Company's
existing Long Term Incentive Plan prior to such approval, unless
the Company and the recipients of such awards agree otherwise.
1. PURPOSE. The Purpose of the Plan, as restated
herein,is to promote the long-term success of the Company by
providing stock-based incentives for selected executive employees
of the Company to exert their best efforts on behalf of the
Company and its shareholders. Awards under the Plan shall take
the form of grants of shares of the Company's Common Stock
("Common Stock"). Such shares shall be held by Plan participants
("Participants") subject to satisfaction of such vesting and
stock ownership restrictions as may be specified at the time of
grant.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as
provided in Section 7, the total number of shares of Common Stock
that may be awarded under the Plan shall not exceed 200,000
shares. Shares awarded under the Plan shall be purchased on the
open market for delivery to Participants.
3. EFFECTIVE DATE AND DURATION OF PLAN.
3.1 EFFECTIVE DATE. The Plan shall become effective
on the date adopted by the Board of Directors; provided,
however, that no award under the Plan shall be deemed
effective until the Plan is approved by the affirmative
vote of the holders of a majority of the securities of the
Company represented and entitled to vote at a duly held
meeting of the Company's shareholders at which a quorum is
present. Any award made prior to shareholder approval of
the Plan shall be conditioned on and made subject to such
approval. Subject to this limitation, shares may be
awarded under the Plan at any time after the effective date
and before termination of the Plan.
3.2 DURATION AND EARLY TERMINATION. Unless earlier
terminated, the Plan shall continue in effect until all
shares available for awards under the Plan have been
awarded and all restrictions on such shares, if any, have
lapsed. The Board of Directors may suspend or terminate
the Plan at any time except with respect to outstanding
shares held subject to restrictions. Termination shall not
affect the forfeitability of shares awarded under the Plan.
<PAGE>
<PAGE>2
4. ADMINISTRATION.
4.1 BOARD OF DIRECTORS. The Plan shall be
administered by the Board of Directors of the Company,
which shall determine and designate from time to time the
individuals to whom awards shall be made, the amount of the
awards and the other terms and conditions of the awards.
Subject to the provisions of the Plan, the Board of
Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, waive
or modify any restriction applicable to shares (except
those restrictions imposed by law) and make all other
determinations that are, in the judgment of the Board of
Directors, necessary or desirable for the administration of
the Plan. The interpretation and construction of the
provisions of the Plan and related agreements by the Board
of Directors shall be final and conclusive. The Board of
Directors may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be
the sole and final judge of such expediency.
4.2 COMMITTEE. The Board of Directors may delegate
to a committee of directors(the "Committee") any or all
authority for administration of the Plan. If authority is
delegated to a Committee, all references to the Board of
Directors in the Plan shall mean and relate to the
Committee except (i) as otherwise provided by the Board of
Directors, and (ii) that only the Board of Directors may
terminate or amend the Plan as provided in Sections 3.2 and
11.
4.3 OFFICER. The Board of Directors or the
Committee, as applicable, may delegate to an executive
officer of the Company authority to administer those
aspects of the Plan that do not involve selection of
Participants or decisions concerning the timing, pricing,
or amounts of awards. No officer to whom administrative
authority has been granted under this Section 4.3 may waive
or modify any restriction applicable to shares granted to
such officer under the Plan.
5. ELIGIBILITY. All executive employees of the Company
are eligible for selection as Participants. The Board of
Directors may, from time to time, select as Participants those
executive employees who the Board of Directors believes have made
or will make important contributions to the long-term performance
of the Company.
<PAGE>
<PAGE>3
6. AWARDS.
6.1 GRANT CRITERIA. In determining the individuals
to whom awards under the Plan shall be made and the amounts
of the awards, the Board of Directors shall consider
criteria such as the following:
(a) Total shareholder return relative to peer
companies;
(b) Earnings per share growth over time relative
to peer companies;
(c) Achievement of long term goals, strategies
and plans; and
(d) Maintenance of competitive position.
6.2 RESTRICTIONS. Shares awarded shall be subject to
such terms, conditions, and restrictions as may be
determined by the Board of Directors to be consistent with
the purpose of the Plan and the best interests of the
Company. The restrictions may include, without limitation,
stock transfer restrictions and forfeiture provisions
designed to facilitate the achievement by Participants of
specified stock ownership goals.
6.3 AGREEMENTS. The Board of Directors may require
the recipient to sign an agreement as a condition of the
award.
7. CHANGES IN CAPITAL STRUCTURE. If the outstanding
Common Stock of the Company is hereafter increased or decreased
or changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corpo-
ration by reason of any reorganization, merger, consolidation,
plan of exchange, recapitalization, reclassification, stock
split-up, combination of shares or dividend payable in shares,
appropriate adjustment shall be made by the Board of Directors
in the number and kind of shares available for awards under the
Plan. Notwithstanding the foregoing, the Board of Directors
shall have no obligation to effect any adjustment that would or
might result in the issuance of fractional shares, and any
fractional shares resulting from any adjustment may be disre-
garded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors
shall be conclusive.
8. ACCELERATION UPON TERMINATION AFTER CHANGE IN CONTROL.
Notwithstanding any other provisions of the Plan or related
agreements, all restrictions affecting shares of Common Stock
awarded to a Participant under the Plan shall immediately lapse
upon termination of the Participant's employment within two years
after the date on which any one of the following events has taken
place:
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8.1 TENDER OR EXCHANGE OFFER. A tender or exchange
offer, other than one made by the Company, is made for
Common Stock (or securities convertible into Common Stock)
and such offer results in a portion of those securities
being purchased and the offeror after the consummation of
the offer is the beneficial owner (as determined pursuant
to Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of
at least 20 percent of the outstanding Common Stock; or
8.2 20 PERCENT OWNER. The Company receives a report
on Schedule 13D of the Exchange Act reporting the
beneficial ownership by any person of 20 percent or more of
the Company's outstanding Common Stock; or
8.3 BOARD OF DIRECTORS. During any period of 12
months or less, individuals who at the beginning of such
period constituted a majority of the Board of Directors
cease for any reason to constitute a majority thereof
unless the nomination or election of such new directors was
approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of
such period.
9. STOCK CERTIFICATE LEGENDS. The certificates
representing shares of Common Stock awarded under the Plan shall
bear any legends required by the Board of Directors.
10. WITHHOLDING TAX. The Company may require any recipient
of an award under the Plan to pay to the Company in cash upon
demand amounts necessary to satisfy any applicable federal, state
or local tax withholding requirements. If the recipient fails
to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the recipient,
including salary or fees for services, subject to applicable law.
11. AMENDMENT OF PLAN. The Board of Directors may at any
time, and from time to time, modify or amend the Plan in such
respects as it shall deem advisable because of changes in the law
while the Plan is in effect or for any other reason. Except as
provided in Sections 4.1 and 8, however, no change in an award
already granted shall be made without the written consent of the
recipient of such award.
12. APPROVALS. Should the approval of state and federal
authorities or agencies with jurisdiction in the matter be
required, the obligations of the Company under the Plan are
subject to the Company obtaining such approval. The Company will
use its best efforts to take steps required by state or federal
law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange
on which the Company's shares may then be listed, in connection
with the grants under the Plan. The foregoing notwithstanding,
the Company shall not be obligated to issue or deliver Common
Stock under the Plan if such issuance or delivery would violate
applicable state or federal securities laws.
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13. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or
any award pursuant to the Plan shall (i) confer upon any employee
any right to be continued in the employment of the Company or
interfere in any way with the right of the Company by whom such
employee is employed to terminate such employee's employment at
any time, for any reason, with or without cause, or to decrease
such employee's compensation or benefits, or (ii) confer upon any
person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension,
renewal, or modification of any compensation, contract, or
arrangement with or by the Company.
14. RIGHTS AS A SHAREHOLDER. The recipient of an award
under the Plan shall have the right to vote all shares of Common
Stock awarded to such recipient and shall have the right to all
dividends and distributions payable in respect of such shares,
regardless of whether such shares have vested or are subject to
restrictions.
Adopted by Board of Directors: December 14, 1993
Approved by Shareholders: ,199__
PACIFIC TELECOM, INC., a Washington
corporation
By Charles E. Robinson
_____________________________
Executed: January 1,1994
