-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OwOYdyrr7Fn+dCmQ0tKJ+ZMc/Tx5AgmK06o9se7RLUHa58MG+QQNqchHf5zsyk+W M2w2ZmdFfx8Tb3QGJj2RQA== 0000354963-00-000002.txt : 20000320 0000354963-00-000002.hdr.sgml : 20000320 ACCESSION NUMBER: 0000354963-00-000002 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000418 FILED AS OF DATE: 20000317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHENANDOAH TELECOMMUNICATIONS CO/VA/ CENTRAL INDEX KEY: 0000354963 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 541162807 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-09881 FILM NUMBER: 572181 BUSINESS ADDRESS: STREET 1: PO BOX 459 STREET 2: 124 SOUTH MAIN ST CITY: EDINBURG STATE: VA ZIP: 22824 BUSINESS PHONE: 5409844141 MAIL ADDRESS: STREET 1: P O BOX 459 CITY: EDINBURG STATE: VA ZIP: 22824 DEF 14A 1 SHENANDOAH TELECOMMUNICATIONS COMPANY 124 South Main Street Edinburg, Virginia NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 18, 2000 March 24, 2000 TO THE STOCKHOLDERS OF SHENANDOAH TELECOMMUNICATIONS COMPANY: The annual meeting of stockholders of Shenandoah Telecommunications Company will be held in the Social Hall of the Edinburg Fire Department, Stoney Creek Boulevard, Edinburg, Virginia, on Tuesday, April 18, 2000, at 11:00 a.m. for the following purposes: 1. To elect three Class II Directors to serve until the 2003 Annual Stockholders' Meeting; 2. To transact such other business as may properly come before the meeting or any adjournment thereof. Only stockholders of record at the close of business March 21, 2000, will be entitled to vote at the meeting. Lunch will be provided. By Order of the Board of Directors Harold Morrison, Jr. Secretary IMPORTANT YOU ARE URGED TO COMPLETE, SIGN, AND RETURN THE ENCLOSED PROXY CARD IN THE SELF-ADDRESSED STAMPED (FOR U. S. MAILING) ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING IN PERSON, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE YOUR OWN SHARES. SEE PROXY STATEMENT ON THE FOLLOWING PAGES. PROXY STATEMENT P. O. Box 459 Edinburg, VA 22824 March 24, 2000 TO THE STOCKHOLDERS OF SHENANDOAH TELECOMMUNICATIONS COMPANY: Your proxy in the enclosed form is solicited by the management of the Company for use at the Annual Meeting of Stockholders to be held in the Social Hall of the Edinburg Fire Department, Stoney Creek Boulevard, Edinburg, Virginia, on Tuesday, April 18, 2000, at 11:00 a.m., and any adjournment thereof. The mailing address of the Company's executive offices is P. O. Box 459, Edinburg, Virginia 22824. The Company has 8,000,000 authorized shares of common stock, of which 3,756,634 shares were outstanding on March 21, 2000. This proxy statement and the Company's annual report, including financial statements for 1999, are being mailed on or about March 24, 2000, to approximately 3,680 stockholders of record on March 21, 2000. Only stockholders of record on that date are entitled to vote. Each outstanding share will entitle the holder to one vote at the Annual Meeting. No director, officer, or other party beneficially owns as much as five percent of the outstanding shares of the common stock of the Company. The Company intends to solicit proxies by the use of the mail, in person, and by telephone. The cost of soliciting proxies will be paid by the Company. Executed proxies may be revoked at any time prior to exercise. Proxies will be voted as indicated by the stockholders. Executed but unmarked proxies will be voted "FOR" the election of the three nominees for Class II Directors. THE ELECTION OF DIRECTORS Directors Standing for Election There are currently nine directors (constituting the entire Board of Directors of the Company), divided into three classes. The current term of Class II Directors expires at the 2000 Annual Meeting. The Board of Directors proposes that the nominees described below, all of whom are currently serving as Class II Directors, be re-elected to Class II for a new term of three years and until their successors are duly elected and qualified. The proxy holders will vote the proxies received by them (unless contrary instructions are noted on the proxies) for the election of the three nominees as directors, all of whom are now members of and constitute the Class II Directors. If any such nominees should be unavailable, the proxy holders will vote for substitute nominees in their discretion. Stockholders may withhold the authority to vote for the election of directors or one or more of the nominees. Directors will be elected by a plurality of the votes cast. Abstentions and shares held in street name that are not voted in the election of directors will not be included in determining the number of votes cast. The names and principal occupation of the three nominees, six current directors and executive officers are indicated in the following table, and the number and percentage of shares of Common Stock beneficially owned by each as of the Record Date is also shown. BOARD OF DIRECTORS Year Principal Occupation Elected Other Directorships for Name of Director Director Age Past Five Years - ---------------- -------- --- --------------- (1) (2) (3) Nominees for Election of Directors Class II (Term expires 2003) - The directors standing for election are: Noel M. Borden 1972 63 Pres., H. L. Borden Lumber Co. (a retail Board, First National Corp. Ken L. Burch 1995 55 Farmer Grover M. Holler, Jr. 1952 79 Pres., Valley View, Inc. (a real estate developer) Directors Continuing in Office Class I (Term expires 2002) Douglas C. Arthur 1997 57 Attorney-at-Law; Dir., First National Corp. Harold Morrison, Jr. 1979 70 Chairman of the Board, Woodstock Garage, First Virginia Bank-BR Zane Neff 1976 71 Retired Manager, Hugh Saum Co., Inc.(a Asst. Secretary of the Co. hardware and furniture store); Dir., Crestar Bank Class III (Term expires 2001) Dick D. Bowman 1980 71 Pres., Bowman Bros., Inc.; Dir., Shen. Treasurer of the Co. Valley Elec. Coop.; Dir., The Rockingham Group; Dir., Old Dominion Electric Coop. Christopher E. French 1996 42 Pres., Shenandoah Telecommunications Co. President & its Subsidiaries; Dir., First National Corp. James E. Zerkel II 1985 55 Vice Pres., James E. Zerkel, Inc. (a hardware firm); Dir., Shen. Valley Elec. Coop.; Member, Shenandoah County Industrial Development Auth. (1) The directors who are not full-time employees of the Company were compensated in 1999 for their services on the Board and one or more of the Boards of the Company's subsidiaries at the rate of $400 per month plus $400 for each Board meeting attended. Additional compensation was paid to certain non-employee directors who also serve as Vice President, Secretary, Assistant Secretary, and Treasurer, for their services in these capacities, in the amounts of $1,480, $3,080, $1,480, and $3,080, respectively. (2) Years shown are when first elected to the Board of the Company or the Company's predecessor, Shenandoah Telephone Company. Each nominee has served continuously since the year he joined the Board. (3) Each director also serves as a director of one or more of the Company's subsidiaries. Attendance of Board Members at Board and Committee Meetings During 1999, the Board of Directors held 14 meetings. All of the directors attended at least 75 percent of the aggregate of: (1) the total number of meetings of the Board of Directors; and (2) the total number of meetings held by all committees of the Board on which they served. Standing Audit, Nominating, and Compensation Committees of the Board of Directors 1. Audit Committee - The Finance Committee of the Board of Directors, consisted of the following directors: Dick D. Bowman (Chairman), Grover M. Holler, Jr., and Noel M. Borden. It performed a function similar to that of an Audit Committee. This committee is responsible for the employment of outside auditors and for receiving and reviewing the auditor's report. During 1999 there was one meeting of the Finance Committee. Additional business of the committee was conducted in connection with the regular Board meetings. 2. Nominating Committee - The Board of Directors does not have a standing Nominating Committee. 3. Compensation Committee - The Personnel Committee of the Board of Directors, consisted of the following directors: Noel M. Borden (Chairman), Harold Morrison, Jr., and James E. Zerkel. This committee performed a function similar to that of a Compensation Committee. It is responsible for the wages, salaries, and benefit programs for all employees. During 1999 there were three meetings of this committee. CERTAIN TRANSACTIONS In 1999, the Company purchased vehicles and received services from Mr. Morrison's company in the amount of $80,999; and, purchased supplies and received services from Mr. Zerkel's company in the amount of $3,170. Management believes that each of the companies provides these services to the Company on terms comparable to those available to the Company from other similar companies. No other director is an officer, director, employee, or owner of a significant supplier or customer of the Company. STOCK OWNERSHIP The following table presents information relating to the beneficial ownership of the Company's outstanding shares of common stock by all directors, executive officers, and all directors and officers as a group. No. of Shares Name and Address Owned as of 2-1-00 Percent of Class (1) (2) Douglas C. Arthur 1,440 * Strasburg, VA 22657 Noel M. Borden 18,803 * Strasburg, VA 22657 Dick D. Bowman 46,564 1.24 Edinburg, VA 22824 Ken L. Burch 45,172 1.20 Quicksburg, VA 22847 Christopher E. French 144,947 3.86 Woodstock, VA 22664 Grover M. Holler, Jr. 70,736 1.88 Edinburg, VA 22824 Harold Morrison, Jr. 21,028 * Woodstock, VA 22664 Zane Neff 7,716 * Edinburg, VA 22824 James E. Zerkel II 4,498 * Mt. Jackson, VA 22842 David E. Ferguson 1,172 * Edinburg, VA 22824 William L. Pirtle 310 * Edinburg, VA 22824 Total shares beneficially owned by 14 directors and officers as a group 365,675 9.73 (1) Includes shares held by relatives and in certain trust relationships, which may be deemed to be beneficially owned by the nominees under the rules and regulations of the Securities and Exchange Commission; however, the inclusion of such shares does not constitute an admission of beneficial ownership. (2) Asterisk indicates less than 1%. SUMMARY COMPENSATION TABLE The following Summary Table is furnished as to the salary and incentive payment paid by the Company and its subsidiaries on an accrual basis during the fiscal years 1997, 1998, and 1999 to, or on behalf of, the Chief Executive Officer and each of the other executive officers who earn more than $100,000 per year. Long-Term Annual Compensation Compensation Name and Principal Incentive Other ($) ($) (#) ($) (1) Christopher E. French 1999 $159,424 $35,700 529 $8,225 President 1998 148,318 38,041 489 7,849 1997 136,491 12,405 471 7,291 David E. Ferguson 1999 105,277 15,705 371 7,161 Vice President- 1998 101,204 16,232 361 7,096 Customer Service 1997 94,141 5,981 352 6,647 William L. Pirtle 1999 101,633 15,384 378 6,192 Vice President- 1998 96,990 15,991 329 6,196 Personal Comm. Service 1997 84,904 5,981 307 5,773 (1) Includes amounts contributed by the Company under its 401(k) and Flexible Benefits Plans, each of which is available to all regular Company employees. OPTION GRANTS TABLE Option Grants in Last Fiscal Year Individual Grants ----------------- Potential Realizable %of Total Value At Assumed Options Annual Rates of Granted To Exercise Stock Price Options Employees Or Base Appreciation For Granted In Fiscal Price Expiration Option Term Name (Shares) Year Per Share Date 5%(1) 10%(1) ---- -------- ---- --------- ---- ----- ------ Christopher E. French 529 3.0% $19.94 2/08/2004 $2,915 $6,438 David E. Ferguson 371 2.1% 19.94 2/08/2004 2,044 4,515 William L. Pirtle 378 2.2% 19.94 2/08/2004 2,083 4,600 (1) In order to realize the potential value set forth, the price per share of the Company's common stock would be approximately $25.45 and $32.11, respectively, at the end of the five-year option term. OPTION EXERCISES AND YEAR END VALUE TABLE Aggregated Option Exercises in Last Fiscal Year and FY-End Option Value Value of No. of Unexercised Unexercised Options/ in the Money FY-End (Shares)Options/FY-End($) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise Realized Unexercisable Unexercisable ---- ----------- -------- ------------- ------------- Christopher E. French 0 0 715/774 8,755/10,524 David E. Ferguson 0 0 532/552 6,512/ 7,502 William L. Pirtle 0 0 471/543 5,772/ 7,388 Closing price on December 31, 1999 was $33.75 and was used in calculating the value of unexercised options. RETIREMENT PLAN The Company maintains a noncontributory defined benefit Retirement Plan for its employees. The following table illustrates normal retirement benefits based upon Final Average Compensation and years of credited service. The normal retirement benefit is equal to the sum of: (1) 1.14% times Final Average Compensation plus 0.65% times Final Average Compensation in excess of Covered Compensation (average annual compensation with respect to which Social Security benefits would be provided at Social Security retirement age) times years of service (not greater than 30); and (2) 0.29% times Final Average Compensation times years of service in excess of 30 years (such excess service not to exceed 15 years). Estimated Annual Pension Years of Credited Service Final Average Compensation 15 20 25 30 35 $20,000 $3,420 $4,560 $5,700 $6,840 $7,130 35,000 5,985 7,980 9,975 11,970 12,478 50,000 10,003 13,337 16,671 20,006 20,731 75,000 16,715 22,287 27,859 33,431 34,518 100,000 23,428 31,237 39,046 46,856 48,306 125,000 30,140 40,187 50,234 60,281 62,093 150,000 36,853 49,137 61,421 73,706 75,881 170,000 42,223 56,297 70,371 84,446 86,911 Covered Compensation for those retiring in 2000 is $35,100. Final Average Compensation equals an employee's average annual compensation for the five consecutive years of credited service for which compensation was the highest. The amounts shown as estimated annual pensions were calculated on a straight-life basis assuming the employee retires in 2000. The Company did not make a contribution to the Retirement Plan in 1999, as the Plan was adequately funded. Christopher French, David Ferguson, and William Pirtle had 18 years, 32 years and 7 years, respectively, of credited service under the plan as of January 1, 2000. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The members of the Personnel Committee of the Board of Directors of the Company perform the function of a Compensation Committee. The Committee's approach to compensation of the Company's executive officers, including the chief executive officer, is to award a total compensation package consisting of salary, annual and long-term incentives, and fringe benefit components, which recognizes that the compensation of executive officers should be established at levels which are consistent with the Company's objectives and achievements. The compensation package, and the Committee's approach to setting compensation, is to provide base salaries at levels that are competitive with amounts paid to senior executives with comparable qualifications, experience, and responsibilities. The annual incentive compensation is approved upon achievement of corporate objectives. The longer-term incentive compensation, consisting of the Company's Incentive Stock Option Plan, is closely tied to the Company's success in achieving increases in the Company's stock price, thereby benefiting all shareholders. The Committee reviews industry compensation surveys, and compares compensation data from public filings by other publicly held companies in our industry and market region. In setting the compensation of the executive officers other than the Chief Executive Officer, the Committee receives and accords significant weight to the input of the Chief Executive Officer. The Committee has recognized the success of the Company's executives in accomplishing the Company's various strategic objectives, and has taken into account management's commitment to the long-term success of the Company. The Company has continued to expand its product and service offerings and has also continued its expansion beyond its traditional geographic base. The Company has also continued to focus its efforts on increasing earnings and on providing superior customer service while controlling operating costs. These actions will in turn assist the Company in meeting the challenge of achieving growth in an increasingly competitive telecommunications industry. Based upon its evaluation of these and other relevant factors, the Committee is satisfied that the executives have contributed positively to the Company's long-term financial performance. The annual base salary of the Chief Executive Officer is determined by the Committee in recognition of his leadership role in formulating and executing strategies for responding to the challenges of our industry, and the Committee's assessment of his past performance and its expectation for his future contributions in leading the Company. The 1999 base salary was not set in response to attainment of any specific goals by the Company, although the Committee took into consideration his individual contributions to the Company's performance, reflected by approximately 19% growth in revenues, and 15% growth in earnings. The annual incentive plan stresses improvement in both financial performance, as measured by increases in net income and service provided to the Company's customers, as measured by trouble reports from customers. Specific target goals are set each year. In 1999, as a result of its increase in earnings and significant improvement in service, the Company reached over 144 percent of its combined goals. While overall performance greatly exceeded the Company's goals, it did not exceed the goals by quite as large a margin as the previous year's plan; therefore, incentive payments made to the Company's president and other executive officers were comparable to payments made in the previous year. The long-term incentive plan involves most employees of the company, and incentive stock options are currently being granted on a formula related to base salary. Rewards under this plan for the executive officers, as well as all participating employees, are dependent upon increases in the market price of the Company's stock. Submitted by the Company's Personnel Committee: Noel M. Borden, Chairman Harold Morrison, Jr. James E. Zerkel II FIVE-YEAR STOCKHOLDER RETURN COMPARISON The Securities and Exchange Commission requires that the Company include in its Proxy Statement a line graph presentation comparing cumulative, five-year stockholder returns on an indexed basis with a performance indicator of the overall stock market and either a nationally recognized industry standard or an index of peer companies selected by the Company. The broad market index used in the graph is the NASDAQ Market Index. The S&P Telephone Index consists of the regional Bell Operating Companies, GTE, ALLTEL, and Frontier Corporation. The Company's stock is not listed on any national exchange or NASDAQ, but it is traded on the Over-the-Counter (OTC) Bulletin Board system under the symbol "SHET." Historically, the company maintained information on the prices of transactions that were reported to the Company, but did not have available information concerning the OTC activity. For purposes of the following graph, the value of the Company's stock, including the price at which dividends are assumed to have been reinvested, has historically been determined based upon the average of the prices of transactions in the Company's stock that were reported to the Company in each fiscal year. More recently, the Company has been receiving monthly reports of OTC trading activity in the Company's stock from broker/dealers that track the Company's stock. The volume of OTC trading activity in the Company's stock, as reported by those broker/dealers, significantly exceeds the volume of trades reported by stockholders or brokers directly to the Company. The Company believes that the last reported sale price for the Company's stock, as reflected on broker/dealer OTC trading reports provided to the Company, is a more accurate reflection of the Company's stock price than the average annual price of trades directly reported to the Company. Therefore, the following performance chart includes information regarding performance of the Company's stock from December 31, 1995 (the earliest date for which the Company has OTC data) and thereafter on the basis of both the historical valuation of average annual sale price on directly reported trades and the last reported sale price on OTC transactions. Comparison of Five-Year Cumulative Total Return among Shenandoah Telecommunications Company, NASDAQ Market Index, and S&P Telephone Index 1994 1995 1996 1997 1998 1999 ---------------------------------- Shenandoah-OTC 100 110 100 107 193 Shenandoah-reported transactions 100 108 112 108 107 119 NASDAQ Stock Market 100 141 174 213 300 542 S&P Telephone Index 100 151 152 212 312 330 [OBJECT OMITTED] Assumes $100 invested December 31, 1994 in Shenandoah Telecommunications Company stock, NASDAQ Market Index, and S&P Telephone Index; and, the reinvestment of dividends. EMPLOYMENT OF AUDITORS The Board of Directors, on the recommendation of the Audit Committee, has appointed the firm of McGladrey and Pullen, LLP as auditors to make an examination of the accounts of the Company for the 2000 fiscal year. It is not expected that representatives of the firm will be present at the annual meeting. PROPOSALS OF STOCKHOLDERS Proposals of stockholders to be included in management's proxy statement and form of proxy relating to next year's annual meeting must be received at the Company's principal executive offices no later than November 25, 2000. In addition, in order for any matter to be properly brought before the 2001 annual meeting, the stockholder must notify the Company in writing no later than December 25, 2000. OTHER MATTERS Management does not intend to bring before the meeting any matters other than those specifically described above and knows of no matters other than the foregoing to come before the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote such proxy in accordance with their judgment on such matters, including any matters dealing with the conduct of the meeting. FORM 10-K The Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission is available to stockholders, without charge, upon request to Mr. Laurence F. Paxton, Vice President-Finance, Shenandoah Telecommunications Company, P. O. Box 459, Edinburg, VA 22824. Shenandoah Telecommunications Company PROXY 124 South Main Street Edinburg, VA 22824 This proxy is solicited on behalf of the Board of Directors - ------------------------------------------------------------ The undersigned hereby appoints Noel M. Borden, Christopher E. French, and Grover M. Holler, Jr., and each of them, as Proxies with full power of substitution, to vote all common stock of Shenandoah Telecommunications Company held of record by the undersigned as of March 21, 2000, at the Annual Meeting of Stockholders to be held on April 18, 2000, and at any and all adjournments thereof. 1. Election of Directors FOR CLASS II Noel M. Borden, Ken L. Burch, and Grover M. Holler, Jr. To withhold authority to vote for any individual nominee, strike a line through the nominee's name listed above. Vote Withheld for all nominees listed above. The Board of Directors unanimously recommends a vote "FOR" election of directors. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. Please mark, sign exactly as name appears below, date, and return this proxy card promptly, using the enclosed envelope, whether or not you plan to attend the meeting. When signing as attorney, executor, administrator, trustee, guardian, or agent, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated ______________________, 2000 ------------------------- I plan to attend the meeting SIGNATURE - ------ Number of persons attending - ------ ------------------------- I cannot attend the meeting ADDITIONAL SIGNATURE (if held jointly) -----END PRIVACY-ENHANCED MESSAGE-----