Whether you choose to vote over the Internet, by telephone or by mail, you can specify whether your shares should be voted for all, any oneeither both, either or, two, or noneneither of the threetwo nominees for Director. You can specify whether you want to vote for or against, or abstain from voting for, the ratification of the appointment of the independent registered public accounting firm. You can also specify whether you want to vote for or against, or abstain from voting for the approvalproposal on the non-binding vote on executive compensation. You can also specify whether you want to vote for one year, two years or three years, or abstain from voting for the non-binding advisory vote on the frequency of the New Ulm Telecom, Inc. 2015 Employee Stock Plan.future executive compensation. If you make these specifications, your shares will be voted as you direct. If you sign, date and return your Proxy Card, but do not specify how you want to vote, your shares will be voted FOR the election of all Director Nominees, FOR the ratification of the appointment of the independent registered public accounting firm, FOR the proposal on the non-binding vote on executive compensation and FOR three years for the approvalnon-binding advisory vote on the frequency of the New Ulm Telecom, Inc. 2015 Employee Stock Plan. future executive compensation.
Beneficial Owners/Nominee Shares. If your shares are held by a bank, broker, trustee or some other nominee that entity will give you separate voting instructions. If you do not provide voting instructions to your nominee, your shares will not be voted in the election of Directors or the other proposals.
Registered shareholders and beneficial owners of shares held in street name may also vote in person at the Annual Meeting. If you are a registered shareholder and attend the Annual Meeting, you may deliver your completed proxy card in person. Additionally, written ballots will be available for any shareholder that wishes to vote in person at the Annual Meeting. Beneficial owners of shares held in registered name who wish to vote at the Annual Meeting will need to obtain a legal proxy from the entity that holds their shares.
The persons named as proxies are Board members who are not currently standing for election. If any other matters are properly presented for action at the Annual Meeting, including a question of adjourning or postponing the Annual Meeting from time to time, the persons named in the proxies and acting in that capacity, will have discretion to vote on these matters in accordance with their best judgment.
The notice of the Annual Meeting, this proxy statement and related proxy card are being mailed to shareholders on or about April 17, 2015.16, 2016.
May I change my vote?
Your proxy may be revoked at any time before it is voted. You may change your vote after you submit your proxy card by:
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Who is soliciting proxies? The enclosed proxy is being solicited by the Board and the Company will pay the cost of the solicitation, including preparing, assembling and mailing the proxies and solicitation materials. The Company is soliciting proxies principally by mail. In addition, the Directors, Officers and regular employees of the Company may solicit proxies personally or by telephone, for which they will receive no financial consideration other than their regular compensation. The Company will also request brokerage houses, nominees, custodians and fiduciaries to forward soliciting
When are shareholder proposals due for the next Annual Meeting? Shareholders who want to have their proposals considered for inclusion in the Company’s proxy materials for the Shareholder suggestions for Directors The Company’s Corporate Governance Committee will consider shareholder suggestions for nominees for election to the Company’s Board if these suggestions are in writing and include biographical data and a description of the nominee’s qualifications. These suggestions must also be accompanied by the written consent of each nominee and can be mailed to the Corporate Governance Committee, New Ulm Telecom, Inc., Attention: Corporate Secretary, 27 North Minnesota Street New Ulm, Minnesota 56073. These suggestions must be received by the Corporate Secretary no later than December Quorum, Abstentions, and Broker Non-Votes The presence, in person or by proxy, of the shareholders of thirty-five percent of the shares of common stock outstanding and entitled to vote is necessary to constitute a quorum for the transaction of Company business at the Annual Meeting. All votes will be tabulated by the inspector of election for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. If a properly executed proxy is returned and the shareholder has abstained from voting on any matter, the shares represented by that proxy will be considered present at the Annual Meeting for purposes of determining a quorum and for purposes of calculating the vote, but will not be considered to have been voted in favor of that matter. If a properly executed proxy that is returned by a broker holding shares in street name indicates that the broker does not have discretionary authority as to certain shares to vote on one or more matters, these shares will be considered present at the Annual Meeting for purposes of determining a quorum, but will not be considered to be represented at the Annual Meeting for purposes of calculating the vote with respect to those matters.
PROPOSAL 1 – ELECTION OF DIRECTORS
There are currently seven Directors serving on the Board and each Director serves a three-year term. We recommend that each proxy vote in favor of these nominees. The Board believes that each named nominee will be able to serve, but if any of the nominees are unable to stand for election, the Board may designate a substitute. Shares represented by proxies may be voted for the substitute, but will not be voted for more than the Directors are elected by a plurality of the votes cast, i.e. the nominees receiving the greatest number of votes will be elected. For each share held, shareholders may cast one vote for each of the If no shareholder provides a notice of such intent, the nominees who receive the affirmative vote of the holders of a plurality of the voting power of the shares present and entitled to vote at the Annual Meeting will be elected to serve on the Board. If any shareholder determines to vote on a cumulative basis and an individual other than the above-stated nominees has been nominated to serve as a Director, then the Votes cast for a nominee will be counted in favor of election. Withheld votes and broker non-votes will not count either in favor of or against election of a nominee. The persons appointed as proxies in the accompanying proxy card will vote for the election of the Board’s nominees, unless authorization to do so is withheld. Your Board recommends a vote FOR these nominees. Shares represented by proxy will be voted FOR the nominees, unless you specify otherwise in your voting instructions BOARD OF DIRECTORS Set forth on the following pages is biographical information on the
NOMINEES FOR ELECTION To Serve a Three-Year Term Expiring In
Perry L. Meyer
Term:
Recent Business Mr. Meyer currently serves on the Board of the Company. Mr. Meyer oversees all operations of a 2,500-acre diversified grain and livestock farm. Mr. Meyer serves as President of Steamboat Pork, a 1,500 head/sow farm started in 1998 by eight Nicollet and Sibley county farmers to produce isowean pigs. Company Mr. Meyer serves as the Chair of the Executive Committee and Chair of the Board. Mr. Meyer also serves as an Ex-officio member of the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Other Directorships: Currently serves as a board member for Heartland Corn Products – past President and Secretary, Winthrop, Minnesota; Minnesota Valley Lutheran (MVL) High School Foundation – past Chair, New Ulm, MN; served as President, St. John’s Lutheran Church, New Ulm, MN, served as a board member for the Planning and Zoning Commission, City of New Ulm; Treasurer for Lafayette Township, Nicollet County, Minnesota; board member for New Ulm Rural Fire Association, New Ulm, Minnesota; MVL High School, New Ulm, Minnesota; New Ulm Area Foundation, New Ulm, Minnesota; Director/Board Secretary for Cenex Harvest States Soybean Processing, Mankato, Minnesota; Secretary/Treasurer of the Nicollet County Township Officer Association, Nicollet County, Minnesota; board member for Nicollet County Corn Growers, Nicollet County, Minnesota; and Director for CHS, Inc. Selection Criteria: Mr. Meyer brings to the Board his previous experience both on the Board of the Company and on other Boards, in particular his experience on the Heartland Corn Products Board. In addition to his Board experiences, Mr. Meyer is also an active member of the community, including his membership on the Planning and Zoning Commission for the City of New Ulm, Minnesota and as the Chair of the MVL High School Foundation. As an independent business operator and an active member of community organizations and business organizations, the Board believes that Mr. Meyer contributes to the Board and the Committees on which he serves, through the skill and expertise he has developed in his operation of a diverse grain and livestock farm, his knowledge and experience on other Boards, his perspective as an active community member and his prior Company Board experience. Age: 61
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Bill D. Otis Term: Mr. Otis is currently a candidate to serve on the Board of New Ulm Telecom, Inc. Recent Business Mr. Otis currently serves as the CEO/President of New Ulm Telecom, Inc. Mr. Otis joined the Company in 1979 as the Controller and became CEO/President in 1982. Under his guidance, New Ulm Telecom, Inc. has become a well-established communications company. During his tenure, Company revenues grew from $3.65 million in 1982 to $41.68 million in 2015 and New Ulm Telecom, Inc. currently has 10 offices and proudly serves 36 communities. He is a graduate of Winona State University with a Bachelor’s Degree in Accounting and Business Administration. Other Directorships: Mr. Otis currently serves as Board Chair for Broadband Visions, LLC, Independent Emergency Services, LLC, Southern Minnesota Broadband, LLC, and Alliance Bank where he also is a member of the Senior Executive Committee and Audit Committee. Mr. Otis serves as a member of the Board for FiberComm, LC, and Minnesota Telecom Alliance. He also is a member of the National Telephone Cooperative Association Governance Advisory Committee. Mr. Otis’s past leadership roles include Chair of the Board of Hector Communications Corporation and Midwest Wireless, LLC; Board Member for OPASTCO, United States Telephone Association, Cellular 2000, Switch 2000, New Ulm Chamber of Commerce, Board of New Ulm Economic Development Corporation, United Way (New Ulm area) and Ducks Unlimited (local chapter). Selection Criteria: Mr. Otis brings more than 36 years of experience in the communications industry and has intimate knowledge of our Company and its history. Mr. Otis’s experience on other Boards and his extensive communication industry background, along with his numerous other leadership roles within the community qualifies him to serve on the Board of the Company. Mr. Otis’s experience in finance and operation management, merger and acquisition activities, development of collaborative initiatives and his years of executive leadership experience give Mr. Otis a wide-ranging perspective regarding New Ulm Telecom’s opportunities and challenges. The Board believes that Mr. Otis will contribute to the Board with his experience as the Company’s CEO and his vast knowledge of the communication industry. Age: 58 THE BOARD RECOMMENDS A VOTE "FOR" EACH NOMINEE FOR DIRECTOR 9
CONTINUING DIRECTORS
Duane D. Lambrecht Term: Current term expires in 2017. Independent Director since 1999. Per the Company by-laws, no individual is eligible to be appointed or elected as a Director after the age of 69. Upon the expiration of Mr. Lambrecht’s term in 2017, he will not be eligible to run for re-election. Recent Business Mr. Lambrecht currently serves on the Board of the Company. Mr. Lambrecht is the founder of Shelter Products, Inc., a regional wholesale building materials distributor serving a five-state area encompassing Minnesota. Mr. Lambrecht has served as Chair and CEO since the founding of Shelter Products in 1981. In this capacity, he has been responsible for product and market development, distribution systems, personnel recruitment and training, as well as all aspects of financial controls and relationships. From 1972–1981, Mr. Lambrecht worked for a material distributor as a Division Manager. Company Mr. Lambrecht serves as Chair of the Corporate Governance Committee and also serves as a member of the Audit Committee.
Other Directorships:
Selection Criteria: Mr. Lambrecht brings to the Board his experience on the Board of the Company, his experience on other Boards and his experience as a business entrepreneur. In addition to his Board experiences, Mr. Lambrecht is also an active and past member of many community organizations. As an independent business operator and an active member of community organizations and business organizations, the Board believes that Mr. Lambrecht contributes to the Board and the Committees on which he serves through the skills and expertise he has developed in his founding of businesses, 34 years’ operating as a regional wholesale building materials distributor, his knowledge and experience on other Boards, his perspective as an active community member and his prior Company Board experience. Age: 69
Other Directorships:
Selection Criteria: Mr. Miller brings to the Board his experience on the Board of the Company, his experience on other Boards and his wireless telecommunications experience. In addition, Mr. Miller is also active as a member of the Minnesota State University Foundation; the Minnesota State University College of Business Advisory Council and served as Chair of the Southern Minnesota Initiative Foundation Leader’s Circle. Due to Mr. Miller’s extensive experience in the wireless telecommunications industry, his experience in regulatory and legislative affairs, at both the state and federal level, and his participation on business and industry Boards, the Board believes that Mr. Miller contributes to the Board and the Committees on which he serves.
Age:
Wesley E. Schultz Term: Current term expires in 2018. Independent Director since 2012. Recent Business Mr. Schultz currently serves on the Board of the Company. Mr. Schultz served as the Chief Financial Officer (CFO) of Rural Cellular Corporation (RCC), headquartered in Alexandria, Minnesota. RCC, a wireless communications company, was listed among the 50 largest publicly traded companies in Minnesota prior to its sale to Verizon Wireless. Mr. Schultz was responsible for all accounting and financing activities, Securities and Exchange Commission (SEC) filings and reporting, financial planning and analysis, treasury, budgeting, audit, tax, accounting, human resources, purchasing, insurance and the oversight of company-owned and leased office facilities nationwide. Mr. Schultz was a senior management team member involved in major business decisions, developing and implementing strategic plans for growth and integrating its financial strategy. In addition to being the CFO, he was Executive Vice President and a member of the Board of Directors. Prior to working at RCC, Mr. Schultz was the CFO for two companies where he led their initial public offerings: Spanlink, Inc. and Serving Software, Inc. Company Mr. Schultz serves as the Chair of the Audit Committee.
Other Directorships: Currently serves as a Board member for Geneva Capital, LLC, an equipment leasing company, Alexandria, Minnesota; served as a Board member for RCC, a wireless communications company, Alexandria, Minnesota; Professional Support Solutions, Inc., an IVR and CTI support solutions and integration company, Dublin, California and OrthoCor Medical, Inc., an innovator of devices utilizing pulsed electromagnetic frequency and thermal technologies to alleviate joint pain and minimize swelling, Minneapolis, Minnesota. Selection Criteria: Mr. Schultz brings to the Board his experience on the Board of the Company, 18 years of CFO experience, including 13 years of public company experience in the telecommunications industry, along with his background and experience in accounting and reporting. The Board has determined that Mr. Schultz satisfies the criteria adopted by the SEC to serve as an “Audit Committee Financial Expert.” The Board believes that Mr. Schultz contributes to the Board and the Committee on which he serves. Age: 59 Colleen R. Skillings Term: Current term expires in 2017. Independent Director since 2014. Recent Business Since 2000, Ms. Skillings has served as the CFO and Human Resources Director of Minnesota Valley Testing Laboratories, Inc. (MVTL). In her current position, Ms. Skillings oversees all of MVTL’s accounting, finance, financial planning, audit, tax, purchasing, human resources and information technology activities. In addition, she serves on MVTL’s Executive Team, which is responsible for the oversight and overall operations, and strategic planning of the company. Ms. Skillings maintains her Certified Public Accountant’s license. Prior to working at MVTL, Ms. Skillings was an Accounting and Auditing Manager for Biebl, Ranweiler, Christensen, Meyer, Thompson and Company and a Senior Auditor for the Office of the Legislative Auditor. Company Ms. Skillings serves as a member of the Corporate Governance Committee and Audit Committee. Other Directorships: Currently serves as Trustee and Finance Committee member for the Southern Minnesota Initiative Foundation; Treasurer and Board member of the New Ulm Rotary Club; Board member for Oak Hills Living Center, New Ulm, Minnesota; President of Sunset Apartments; served as Chair for MBW, Inc.; served as Community Advisory member for United Prairie Bank; New Ulm Chamber of Commerce and served as Treasurer for the Council for the Arts in New Ulm. Selection Criteria: Ms. Skillings brings 15 years of CFO experience and 15 years of public accounting experience to the Board. The Board has determined that Ms. Skillings satisfies the criteria adopted by the SEC to serve as an “Audit Committee Financial Expert.” The Board believes that Ms. Skillings contributes to the Board and the Committees on which she servers with her business, CFO and public accounting firm experience. Age: 54 Suzanne M. Spellacy Term: Current term expires in 2018. Independent Director since 2012. Recent Business Ms. Spellacy currently serves on the Board of the Company. Ms. Spellacy is Vice President and General Counsel of Taylor Corporation, which operates more than 80 subsidiaries, devoted to print services and marketing solutions and is one of the largest privately-held corporations in the country. Ms. Spellacy is responsible for the legal affairs of Taylor Corporation and its subsidiaries, which collectively have over 12,000 employees globally. Ms. Spellacy joined Taylor Corporation in 2000 and previously served as Vice President, Human Resources and Assistant General Counsel. Prior to joining Taylor Corporation, Ms. Spellacy was a shareholder in the Twin Cities law firm of Winthrop and Weinstine, P.A. and received her law degree from the University of Minnesota in 1992. Company Ms. Spellacy serves as a member of the Compensation Committee and Corporate Governance Committee. Other Directorships: Currently serves as a Board member for Southern Minnesota Advocates; served as a Board member for Minnesota Job Skills Partnership Board; Greater Mankato Early Learning Initiative – also served as President; Greater Mankato YMCA – served as Board Member and Finance Committee Member; Loyola Catholic School Board of Trustees; Loyola Catholic School Board. Selection Criteria: Ms. Spellacy brings to the Board her experience on the Board of the Company, 25 years of legal and business experience, including experience with business transactions, mergers and acquisitions, executive compensation, employee benefits, employment law and other legal matters. Ms. Spellacy gained experience in state policy and legislative affairs by serving as the Governor’s business representative on the Minnesota Job Skills Partnership Board. She has been an active member of the community and brings her leadership skills from service with many community organizations, including her role as a founding board member and first board chair for the Greater Mankato Early Learning Initiative, a collaborative effort between business, education and non-profits. The Board believes that Ms. Spellacy contributes to the Board and the Committees on which she serves. Age: 50 CORPORATE GOVERNANCE Director Independence All of the Company’s Directors have met the criteria for independence under the rules of the SEC and Rule 5605(a)(2) of NASDAQ. Director Qualifications Criteria for Membership The Company’s Corporate Governance Committee is responsible for annually reviewing the composition of the Board for desired skills and characteristics of Directors, as well as the composition of the Board as a whole. Terms, Limitations and Retirement All Directors are elected to three-year terms. The Board does not believe it should establish a limit on the number of times that a Director may stand for election. To ensure that the Board of the Company is made up of individuals who are active in the business, agriculture, professional or working life of the community, our By-Laws state that it is in the best interest of the Company that age limits are set for members of the Board. No individual is eligible to be appointed or elected as a Director after attaining the age of 69. Ownership of Company Stock All Directors are required to own common stock of the Company. Selecting Nominees for Election to the Board The Corporate Governance Committee is the standing committee responsible for recommending to the full Board the nominees for election as directors at our annual shareholder meetings. The Company’s Bylaws call for the Board to then select nominees to stand for election. In making its recommendations, the Committee reviews the composition of the full Board to determine the qualifications and areas of expertise needed to further enhance the composition of the Board, and works with management in attracting candidates with those qualifications. Although the Committee does not have a formal policy regarding diversity, the Committee seeks to provide the Board prospective nominees that reflect diversity in background, education, gender, business experience, skills, business relationships and associations, and other factors that would contribute to the Board’s governance of the Company.
Other Board Information Frequency of Meetings The Board typically holds twelve regularly scheduled meetings per year. If necessary, special meetings of the Board are held as determined by the Board. Annual Evaluations The Corporate Governance Committee conducts, or causes to be conducted, annual evaluations to assess the Board’s performance and composition. Executive Sessions of Independent Directors The Company’s independent Directors (all members of the Board are independent Directors) meet in executive sessions (without members of management present) regularly. Committees The Board has four standing Committees: (i) Audit; (ii) Compensation; (iii) Corporate Governance; and (iv) Executive. CEO and Management Succession The Corporate Governance Committee conducts periodic reviews to assess the succession planning for the Company’s Executive Officers. In the event of the loss of the CEO or any other Executive Officer, Review and Access to Guidelines The Corporate Governance Committee reviews the Company’s Corporate Governance Policy annually, and if Communication with the Board The Board has implemented a process by which Company shareholders may send written communications to the Board’s attention. Any shareholder desiring to communicate with the Board, or one or more of its Directors, may send a letter addressed to: New Ulm Telecom, Inc. Attention: Corporate Secretary (Board Matters) 27 North Minnesota Street New Ulm, Minnesota 56073 The Board has instructed the Corporate Secretary to promptly forward all communications received to the full Board or the individual Board members specifically addressed in the communication, without first screening those communications. The Company encourages all of its Directors and Officers to attend the Annual Meeting of Shareholders. All seven of the Company’s current Directors attended the Company’s
Code of Business Conduct We have adopted a Code of Business Conduct and Ethics that applies to all Directors, Executive Officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or persons performing similar functions. The Code of Business Conduct and Ethics includes the following principles related to the Company Directors, Executive Officers and employees:
Act with honesty and integrity; ● Promote full, fair, accurate, timely and understandable disclosures in reports and documents filed with the SEC and other public communications; ● Comply with laws, rules and regulations of governments and their agencies; ● Respect the confidentiality of information acquired in the course of performing work for the Company, except when authorized or otherwise legally obligated to disclose the information; and ● Do not use confidential information of the Company for personal advantage or for the benefit of acquaintances, friends or relatives. The Code of Business Conduct and Ethics is publically available by selecting the “About” tab drop down box and clicking on the “Investors” link on the Company’s website at Risk Oversight The Board and each of its Committees are involved in overseeing risk associated with the Company and its operations. The Board and Audit Committee monitor the Company’s credit risk, liquidity risk and regulatory risk through regular reviews with management, external auditors and other advisors. In its periodic meetings with management and the Company’s independent registered public accounting firm, the Audit Committee discusses the scope and plan for the audits and includes management in its review of accounting and financial controls, assessment of business risks, and legal and ethical compliance programs. The Board and the Corporate Governance Committee monitor the Company’s governance and succession risk through regular reviews with management and outside advisors. The Board and the Compensation Committee monitor the Company’s compensation and benefit policies and related risks through regular reviews with management and the Committee’s outside advisors. The Board and its Executive Committee monitor operational risk and enterprise risk by monitoring the Company’s overall strategic goals and objectives with management and the Board, and review and consider merger, acquisition and growth opportunities for recommendation to the Board. The Board as a whole monitors any potential for reputation risk. Board Leadership The Company’s governance policy states that the Board
THE BOARD OF DIRECTORS AND COMMITTEES Board of Director Committees The Board consists of seven members with staggered terms of three years. The Board typically holds regular monthly meetings and several special meetings. It has established the following Committees: (i) Audit Committee; (ii) Compensation Committee; (iii) Corporate Governance Committee; and (iv) Executive Committee. Committee Charters can be viewed on the Company’s website at Corporate Governance Committee Members of the Corporate Governance Committee are Duane D. Lambrecht (Chair), Colleen R. Skillings, and Suzanne M. Spellacy. The Corporate Governance Committee is responsible for reviewing, addressing and making recommendations to the Board on matters pertaining to appropriate governance standards (including the Board’s nominating process and succession planning). Committee responsibilities include:
Develop and recommend governance principles applicable to the Company and to the Board; ● Oversee the evaluation of the Board and its Committees; ● Make recommendations to the Chair and the Board as to composition of all Board Committees; ● Maintain shareholder relations efforts; ● Develop, maintain and implement a board-approved nomination process for seats on the Company’s Board, although the ultimate decision for nominations rests with the entire Board; ● Ensure appropriate succession planning is in place for both senior management and members of the Board; ● Ensure Board and Committee assessments are completed; and ● Identify and recommend Board educational opportunities from the completed assessments. Board policy requires consideration of candidates for Director The Corporate Governance Committee held three meetings in Audit Committee Members of the Audit Committee are Wesley E. Schultz (Chair), Duane D. Lambrecht and Colleen R. Skillings. All members of the Audit Committee are independent as defined in Rule 5605(a)(2) of the NASDAQ's listing standards. Each member of the Audit Committee is financially literate and two members of the Committee have accounting or related financial management expertise. The Board has determined that
The Audit Committee is responsible for overseeing the Company’s accounting procedures, financial reporting processes and internal controls and audit. It consults with management and the independent registered public accounting firm on, among other items, matters related to the annual audit, the published financial statements and the accounting principles applied. As part of its duties, the Audit Committee appoints, evaluates and retains the Company’s independent registered public accounting firm and evaluates that firm’s qualifications, performance and independence. The Audit Committee has established policies and procedures for the pre-approval of all services provided by the independent registered public accounting firm.
18 The Audit Committee held Compensation Committee Members of the Compensation Committee are The Compensation Committee held Executive Committee Members of the Executive Committee are Perry L. Meyer (Chair), James P. Jensen The Executive Committee held NON-EMPLOYEE DIRECTOR COMPENSATION On February 28, 2012, our Board adopted the New Ulm Telecom, Inc. Director Stock Plan (the “Plan”). The Plan was subsequently approved by the Company shareholders on May 31, 2012 and became effective on that date. Under the plan, the Board (or a Committee) has the power to designate a portion of the Director’s retainer that will be paid in Company common stock. Each Director has the ability to designate an additional percentage of his or her retainers to be paid in Company common stock. For the director terms that began after the
Under Board policy for non-employee Director Compensation established May 26, 2009, a Director who serves at least three full terms (nine years) is entitled to receive as compensation three times the Board annual retainer in effect at the time of separation from the Board. A Director who serves full terms beyond the initial three terms is entitled to receive additional compensation of one-half times the annual Board retainer in effect at the time of separation for each additional full term served, not to exceed three additional terms. Separation includes retirement, resignation, death, disability or change of corporate ownership. This compensation to Directors will generally be paid within sixty days of the Director’s separation from the Board, and otherwise in accordance with Section 409A of the Internal Revenue Code. The Company’s future obligations under this policy as of December 31,
The following table shows the compensation paid or accrued to each of the Company’s Directors in
2015 DIRECTOR COMPENSATION Fees Earned or Paid in Cash ($) Fees Earned or Paid in Stock ($) (1) All Other Compensation ($) (2) Name Total ($) James P. Jensen $ 35,000 $ 11,667 $ 14,400 $ 61,067 Perry L. Meyer 28,083 18,667 14,400 61,150 Duane D. Lambrecht 31,667 10,000 12,800 54,467 Dennis Miller 20,916 18,667 - 39,583 Wesley E. Schultz 27,500 18,667 - 46,167 Colleen R. Skillings 31,667 10,000 - 41,667 Suzanne M. Spellacy 28,667 10,000 - 38,667 (1) As noted above, under the “New Ulm Telecom, Inc. Director Stock Plan,” all non-employee directors receive a portion of their board compensation in Company stock and have the ability to elect to have an additional amount paid in Company stock. All shares vest on the date of issuance. The value shown is the number of shares awarded valued at the market price on their grant dates, in all cases computed in accordance with (2) The amount listed in the All Other Compensation column represents the change in the non-employee Director Compensation policy value accruing to each Director for future payment under the Company’s Director Separation policy dated May 26, 2009.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table includes information regarding beneficial ownership of the Company’s common stock as of March 31,
______________ * Represents less than 1.0%
EXECUTIVE COMPENSATION Summary Compensation Table The following table shows compensation paid to or earned by the CEO, COO and CFO “Named Executive Officers” during
Grants of Plan-Based Awards in The following table sets forth information relating to potential plan-based awards in
Options and WarrantsThe Company did not issue any options or
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●Align executive incentives with shareholder value creation.
To achieve these objectives, the Compensation Committee implemented and maintains a compensation plan that ties a significant portion of an executive’s overall compensation to the Company’s financial performance. Overall, the total compensation opportunity is intended to create an executive compensation program that is set competitively compared to similar-sized companies, particularly telecommunication companies.
Each Executive Officer’s compensation package is generally comprised of three elements:
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The Executive Officers were not present during, and did not participate in, deliberations or decisions involving their own compensation during 2014.2015. While Executive Officers do not play a role in setting their own compensation, the Company’s CEO does make recommendations to the Compensation Committee concerning individual performance of other Executive Officers.
As required by Section 14A of the Securities Exchange Act of 1934, the Company proposed an advisory vote to the shareholders approving executive compensation at the May 30, 2013 New Ulm Telecom, Inc. annual meeting. This proposal, commonly known as a “say-on-pay” proposal, gave the Company shareholders the opportunity to express their views on the Company’s Named Executive Officers’ compensation. The Company shareholders approved the proposal with 2,220,076 votes for, 296,247 votes against, 312,917 abstentions and 500,419 broker non-votes. While this vote was advisory, and was not binding on the Compensation Committee or the Board, it did provide valuable information to the Compensation Committee and the Board in setting the Company’s general compensation policies and compensation plans for the Company’s Named Executive Officers.
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As required by Section 14A of the Securities Exchange Act of 1934, the Company also proposed an advisory vote to the shareholders at the May 30, 2013 New Ulm Telecom, Inc. annual meeting on the frequency of future advisory votes on the Company’s Named Executive Officers’ compensation. The Company asked the shareholders whether they would prefer an advisory vote on Named Executive Officers’ compensation every year, every two years, or every three years. The Company shareholders approved the vote for every three years with 1,828,357 for the three year selection compared to 610,642 votes for every one year, 36,247 votes for every two years, 353,994 abstentions and 500,419 broker non-votes. The Board adopted the recommendation of the shareholders and intends to haveis holding another advisory vote to approve executive compensation at the 2016 Annual Meeting of Shareholders.
Base Salary
The level of base salary is established primarily on the basis of an executive’s qualifications and relevant experience; the scope of his or her responsibilities; the strategic goals that he or she manages; the compensation levels of Executive Officers at similar-sized companies, particularly telecommunications companies; the relationship between the executive’s performance and the Company’s results; and market rates of compensation required to retain qualified management. The Company believes that executive base salaries should be competitive with salaries at similar-sized companies. The Compensation Committee reviews the base salary of each executive annually and makes recommendations to the Board pertaining to any adjustments in base salary that (i) take into account the individual’s performance and any changes in the individual’s responsibility and (ii) are necessary or appropriate to maintain a competitive salary structure.
Cash-BasedCash/Common Stock-Based Incentive Compensation
The Company engaged an outside consultant in 2005 to advise the Company on its development of Employee Incentive Plans for (i) employees other than Executive Officers and (ii) Executive Officers. Both plans were implemented in 2006. Payments on each plan were based on achievement of objectives of measurable corporate performance, with financial and customer-related targets. The financial targets included achievement of specified certain operating revenue and net income criteria based on the Company’s budget, while the customer service targets were based on several factors, including (i) “uptime” (the amount of time that the Company’s phone, cable and Internet services were available to customers) and restoration time (the ability of the Company to restore service when an interruption occurs); (ii) customer retention and (iii) customer service (derived from customer service data).
On May 28, 2015, the shareholders of New Ulm Telecom, Inc. approved the New Ulm Telecom, Inc. 2015 Employee Stock Plan. The purpose of this plan is to enable the Company and its Subsidiaries to attract and retain employees by aligning the financial interests of these individuals with the other shareholders of the Company. The Plan provides for the issuance of Company Common Stock upon the attainment of objectives under the Company’s 2006 Employee Incentive Plans, as amended. Under the Employee Stock Plan, each qualified employee of the Company may elect to receive up to 50% of their incentive compensation earned under the 2006 Employee Incentive Plans in Company Common Stock in lieu of cash. The Board subsequently elected to require the Company’s Executive Officers to receive 50% of their incentive compensation earned in Company Common Stock in lieu of cash.
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The Executive Officer potential awards under the 2006 Management Incentive Plan, as amended, and in effect in 2014,2015, were as follows:
Position | Target Award | Maximum Award |
CEO | 20% of base salary | 40% of base salary |
COO | 15% of base salary | 30% of base salary |
CFO | 15% of base salary | 30% of base salary |
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The award formula was weighted according to each of the percentages listed below.
OIBITDA | 60% |
Operating Revenue | 25% |
Customer Service | 15% |
Total | 100% |
OIBITDA is defined as operating income excluding depreciation and amortization.
Substantially all of NU Telecom’s 148146 full-time equivalent employees were eligible to participate in the Company’s 20142015 Incentive Plan. Under the 2006 Management Incentive Plan, as in effect for 2014,2015, the OIBITDA target was $13,986,268,$14,762,442, the operating revenue target was $38,272,420$41,191,783 and the customer service target was 100%. The Company achieved OIBITDA of $14,348,835,$14,789,300, revenue of $39,987,409$41,684,068 and a customer service rating of 100%.
Grants of Plan-Based Awards in 20152016
The following table sets forth certain information concerning plan-based potential awards to be awarded to the Named Executive Officers below during the fiscal year ending December 31, 2015.2016. This information is based on criteria contained in the 2006 Management Incentive Plan, as amended, and described above.
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Bill D. Otis | 28,400 | 56,800 | 113,600 |
Barbara A.J. Bornhoft | 14,003 | 28,005 | 56,010 |
Curtis O. Kawlewski | 12,994 | 25,988 | 51,976 |
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Although the Company operated this plan as a non-equity incentive plan prior to 2016, payments under this plan in 2016 based on 2015 performance were made 50% in Company stock.
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Bill D. Otis | 28,400 | 56,800 | 113,600 |
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Barbara A.J. Bornhoft | 13,530 | 27,060 | 54,120 |
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Curtis O. Kawlewski | 12,375 | 24,750 | 49,500 |
Other Compensation Programs
The Company has a qualified 401(k) Retirement Savings Plan (Retirement Plan). The Named Executive Officers, along with other employees who made contributions to the Retirement Plan, receive matching contributions of 50% of every dollar, up to 6% of all eligible employee contributions. The Company matches a portion of employee contributions to the Retirement Plan in order to encourage employees to participate in their own retirement savings and to provide another competitive recruiting tool to attract and retain employees.
In addition, on February 24, 2015,29, 2016, the Board authorized the Company to make a discretionary corporate contribution of 3% of eligible compensation for all eligible employees to their respective 401(k) plan accounts for the fiscal year 20142015 under the Company’s Retirement Plan.
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Elements of Post-Termination Compensation
As noted above under “Employment Agreements,” our Employment Agreements with Mr. Otis, Ms. Bornhoft and Mr. Kawlewski contain change-in-control provisions. The Compensation Committee believes that severance and change-in-control arrangements for these Named Executive Officers aids in the recruitment and retention of Executive Officers and provides incentives for Executive Officers to grow our business and maintain focus on creating value for our shareholders. The Compensation Committee believes that providing protection to Executive Officers whose employment may be terminated in connection with a change-in-control transaction strikes an appropriate balance between the interests of our Executive Officers and the interests of others if a change-in-control transaction occurs.
TheOther than the stock awards earned under the 2015 Employee Stock Plan, the Company does not grant stock awards and does not have any pension plans or any nonqualified deferred compensation plans for its Executive Officers or employees.
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REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation program for the CEO and the Board is the responsibility of the Compensation Committee of the Board. The Compensation Committee is comprised entirely of independent members of the Board. The Compensation Committee oversees the Company’s compensation practices and establishes the principles and strategies that guide the design of compensation plans and benefit programs for all employees of the Company, and makes recommendations to the Board. The Compensation Committee is comprised of three Directors: Perry L. Meyer (Chair), Dennis E. Miller (Chair), James P. Jensen and Suzanne M. Spellacy.
The following discussion describes the Company’s approach pertaining to executive compensation. The Compensation Committee retains the right to consider factors other than those set forth below in setting executive compensation levels for individual officers.
The 20142015 salary program consisted of two elements: (i) an annual base salary and (ii) a cash/common stock in lieu of cash awardbased incentive under a Management Incentive Plan. The purpose of the Plan was to reward key executives for the long-term success of the Company and to assist in the recruitment and retention of key executives. The Plan was also used to link total executive compensation to the Company’s financial performance. Overall, the philosophy for the executive compensation program is to pay executives competitively compared to similar-sized companies, particularly telecommunications companies.
The Compensation Committee considers Company performance and compensation levels of comparable companies when making its recommendations pertaining to annual base salaries and making awards under the incentive plan. The Compensation Committee’s goal is to remain reasonably competitive with comparable companies.
The Compensation Committee worked with a consultant to develop the Management Incentive Plan. This plan was effective beginning in the year 2006. This Management Incentive Plan enables the Company to motivate its Executive Officers to achieve key financial and strategic objectives.
The Compensation Committee of the Board has reviewed and discussed with management the Executive Compensation discussion and analysis. Based on the review and discussions, the Compensation Committee recommended that the Board include the Executive Compensation discussion and analysis in the proxy statement.
In reviewing the CEO’s 20142015 performance, the Compensation Committee determined that Mr. Otis’ total compensation package was in alignment with the Company’s overall performance in 2014.2015. The Compensation Committee also reviewed the compensation levels of executives in comparable companies, and determined that Mr. Otis’ compensation was competitive within the industry. In addition, the Compensation Committee believes that the Company’s compensation practices and compensation philosophy align executive interests with those of its shareholders by linking total executive compensation to the Company’s overall financial performance and as evidenced by the Shareholder adoption of the “say-on- pay”“say-on-pay” proposal at the May 30, 2013 New Ulm Telecom, Inc. annual meeting.
Submitted by the Compensation Committee of the Board of Directors
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Dennis E. Miller, Chair |
James P. Jensen |
Suzanne M. Spellacy |
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AUDIT COMMITTEE DISCLOSURE
The Audit Committee is comprised of three Directors: Wesley E. Schultz (Chair), Duane D. Lambrecht and Colleen R. Skillings. Each member of the Audit Committee has been determined by the Board to be independent under the rules of the SEC. The Board has determined that Mr. Wesley E. Schultz and Colleen R. Skillings are qualified to be “Audit Committee Financial Experts,” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Exchange Act of 1934.
The Audit Committee acts under a written charter that sets forth its responsibilities and duties as well as requirements for the Audit Committee’s composition and meetings. The Audit Committee Charter is available on the Company’s website at www.nutelecom.net and is also available in print, free of charge, upon request. Requests for a printed copy of the Audit Committee Charter should be submitted to the Corporate Secretary, New Ulm Telecom, Inc., at 27 North Minnesota Street, New Ulm, Minnesota 56073.
During the year ended December 31, 2014,2015, the Audit Committee met with the Company’s management at each of its regularly scheduled meetings. The Audit Committee also met with a representative from Olsen Thielen & Co., Ltd., the Company’s independent registered public accounting firm, at several of its meetings. Agendas for the Audit Committee’s meetings are established by the Chair of the Audit Committee in consultation with the CFO. At those meetings, the Audit Committee reviewed and discussed various financial and regulatory issues, accounting and financial management issues, developments in the accounting profession as well as a summary of anonymous reports received via the Company’s anonymous reporting process. The Audit Committee also had separate executive sessions from time to time. The Audit Committee provides reports of its activities at each regularly scheduled Board meeting.
The Audit Committee reviews each of the Company’s quarterly and annual reports, including Management’s Discussion and Analysis of Financial Condition and Results of Operations. As part of this review, the Audit Committee discusses these reports with the Company’s management and the Company’s independent registered public accounting firm prior to the filing of each report with the SEC. In addition, the Audit Committee also reviews related matters, such as the quality of the Company’s accounting practices, alternative methods of accounting under generally accepted accounting principles in the United States and the preferences of the independent registered public accounting firm in this regard. The Company’s critical accounting policies and the clarity and completeness of the Company’s financial and other disclosures are also discussed.
Management of the Company has the primary responsibility for the Company’s financial statements. The independent registered public accounting firm has responsibility for the audit of the Company’s financial statements. The responsibility of the Audit Committee is to oversee financial matters, among other responsibilities fulfilled by the Audit Committee under its charter. The Audit Committee meets periodically with representatives of Olsen Thielen & Co., Ltd. without the presence of management, to ensure candid and constructive discussions about the Company’s compliance with accounting standards and best practices among public companies comparable in size and scope to the Company.
The Audit Committee has also discussed with Olsen Thielen & Co., Ltd. that their firm is retained by the Audit Committee and that they must raise any concerns about the Company’sCompany’s financial reporting and procedures directly with the Audit Committee.
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The Audit Committee has:
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● Discussed with Olsen Thielen & Co., Ltd., the matters required to be discussed under Statement on Auditing Standards No. 114, The Auditors Communication with Those Charged with Governance, as amended and as adopted by the Public Company Accounting Oversight Board (PCAOB).
The Audit Committee has received written disclosures and a letter, required by PCAOB Rule 3526, Communications with Audit Committees Concerning Independence. The Audit Committee has also discussed with Olsen Thielen & Co., Ltd., its independence as it relates to the Company. The Audit Committee has concluded that Olsen Thielen & Co., Ltd. is independent with respect to the Company and its management.
The Audit Committee has reviewed and discussed the fees paid to Olsen Thielen & Co., Ltd. during the year ended December 31, 2014.2015. The fees paid were for services related to the audit and other services and are included on page 3032 under "Fees Billed and Paid to Independent Registered Public Accounting Firm."
The Audit Committee has adopted a policy that requires pre-approval of all services of Olsen Thielen & Co., Ltd. by the Audit Committee or the Chair of the Audit Committee. When services are pre-approved by the Chair of the Audit Committee, notice of this approval is given to the other members of the Audit Committee and presented to the full Audit Committee at its next scheduled meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
It is the Company's policy that all proposed transactions by the Company with Directors, Officers, five percent shareholders and their affiliates, be entered into only if these transactions are on terms no less favorable to the Company than could be obtained from unaffiliated parties, are reasonably expected to benefit the Company and are approved by a majority of the disinterested, independent members of its Board.
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REPORT OF AUDIT COMMITTEE
The Audit Committee assists the Board in its oversight of the Company’s financial reporting process. The Audit Committee operates under a written charter adopted by the Board.
In addition to its other duties described in the Committee’s Charter, the Audit Committee has:
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Reviewed and discussed with the Company’s management and the independent registered public accounting firm, the audited financial statements as of December 31, 2015 and for the year then ended;
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Discussed with the independent registered public accounting firm, the matters required to be discussed by Statement on Auditing Standards No. 114, The Auditor’s Communication with Those Charged with Governance; and
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Received from the independent registered public accounting firm, the written disclosures and letter required by PCAOB Rule 3526, Communications with Audit Committees Concerning Independence, and discussed their independence with them.
Based upon the review and discussions summarized above, together with the Committee’s other deliberations, the Audit Committee recommended to the Board that the audited financial statements of the Company, as of December 31, 20142015 and for the year then ended, be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20142015 to be filed with the SEC.
Management is responsible for the Company’s internal controls and financial reporting processes. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States and for expressing an opinion thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described in the Audit Committee Charter.
Submitted by the Audit Committee of the Board of Directors
PROPOSAL 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Services of Independent Registered Public Accounting Firm for 20142015
Olsen Thielen & Co., Ltd. served as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2014.2015. The Audit Committee of the Board appointed Olsen Thielen & Co., Ltd. as the independent registered public accounting firm for the Company beginning with the fiscal year ended December 31, 2008.
Fees Billed and Paid to Independent Registered Public Accounting Firm
The following is a summary of fees billed by Olsen Thielen & Co., Ltd. for professional services rendered for the fiscal years ended December 31, 20142015 and 2013,2014, respectively.
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Fee Category | 2014 Fees |
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Audit Fees | $ | 151,145 |
| $ | 151,377 | $ | 162,381 |
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Audit - Related Fees |
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Tax Fees |
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All Other Fees |
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| 110,230 | |
Total Fees | $ | 269,656 |
| $ | 219,333 | $ | 197,965 |
| $ | 269,656 |
Audit Fees
Audit fees are those billed for professional services rendered for the audit of the Company’s annual consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports.
Audit-Related Fees
Audit-related fees billed for assurance and services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” The audit-related fees for 20142015 and 20132014 related to the audits of the Company’s employee benefit plan.
Tax Fees
Tax fees are those billed for professional services for tax compliance and tax advice.
All Other Fees
All other fees are those for products and services other than the services reported above. The fees billed for all other services paid in 20142015 and 2013,2014, respectively, were for general regulatory assistance. The Company typically does not engage its current independent registered public accounting firm directly for other fees or services.
30Independence
Independence
The Audit Committee of the Board has determined that the provision of the non-audit services described above is compatible with maintaining the independence of the independent registered public accounting firm’s independence.
Audit Committee Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
The Audit Committee annually approves the scope and fees payable for the year-end audit to be performed by the independent registered public accounting firm for the next fiscal year. The Audit Committee is required to pre-approve audit and non-audit services performed by the independent registered public accounting firm in order to assure that the provision of such services does not impair the independent registered public accounting firm’s independence. The Audit Committee does not delegate to management, its responsibilities to pre‑approvepre-approve services performed by the independent registered public accounting firm. The Audit Committee pre-approved all services the Company received from Olsen Thielen & Co., Ltd. during the year ended December 31, 2014.2015.
Appointment of Independent Registered Public Accounting Firm for 20152016
Subject to ratification by the shareholders at the May 28, 201526, 2016 Annual Meeting, the Audit Committee of the Board has appointed Olsen Thielen & Co., Ltd. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015.2016. In the event the shareholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s and its shareholders’ best interests.
Ratification of the appointment of Olsen Thielen & Co., Ltd. as the Company’s independent registered public accounting firm requires that a majority of the votes cast, whether in person or by proxy, be cast in favor of the proposal. Broker non-votes are counted in determining the votes present at a meeting for purposes of establishing a quorum, but are not considered votes cast and will not count either in favor or against the proposal. Abstentions are counted as present and entitled to vote for the purposes of determining a quorum, but are not counted for the purposes of determining whether shareholders have approved the matter. Therefore, if you abstain from voting on Proposal 2: Ratification of Olsen Thielen & Co., Ltd. as the Company’s Independent Registered Public Accounting Firm, it has the same effect as a vote against the proposal.
Representatives of Olsen Thielen & Co., Ltd. are expected to be present at the annual meeting and will have an opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions from shareholders in attendance.
THE BOARD AND THE AUDIT COMMITTEE RECOMMEND A VOTE "FOR" THE RATIFICATION OF APPOINTMENT OF OLSEN THIELEN & CO., LTD. AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. SHARES REPRESENTED BY PROXY WILL BE VOTED “FOR” THIS PROPOSAL, UNLESS YOU SPECIFY A DIFFERENT CHOICE ON THE ACCOMPANYING PROXY CARD.
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PROPOSAL 3 – APPROVAL OF THE NEW ULM TELECOM, INC.ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act of 1934, we are asking shareholders to cast an advisory vote on named executive officer compensation.
As described in detail in the section entitled “Executive Compensation,” which can be found on pages 22-24, we have designed our executive compensation program to implement core compensation principles, including pay for performance and alignment of our management’s interests with those of our shareholders. Under these programs, in 2015 EMPLOYEE STOCK PLAN
we paid our Named Executive Officers their base salaries and non-equity incentive plan compensation as the Company achieved the specific financial performance goals that the Board had set. We encourage shareholders to read the “Executive Compensation” section of this proxy statement for a more detailed discussion of our executive compensation program, including information about 2015 compensation of our Named Executive Officers.
On February 24, 2015,
We are asking our Board adoptedshareholders to indicate their support for our Named Executive Officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named Executive Officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our shareholder to vote “FOR” the following resolution at the Annual Meeting.
RESOLVED, that the shareholders of New Ulm Telecom, Inc. 2015 Employee Stock Plan (the “2015 Plan”), subject to shareholder approval. A copyapprove, on an advisory basis, the compensation of the 2015 Plan is attached to this proxy statementNamed Executive Officers as Appendix A.
Purpose of the 2015 Plan
The purpose of the 2015 Plan is to enabledisclosed in New Ulm Telecom, Inc. (the “Company”) and its Subsidiaries’s proxy statement for the 2016 Annual Meeting of Shareholders pursuant to attract and retain employees by allowing these employees to acquire Company common stock, thereby aligning the financial interestscompensation disclosure rules of the employees withSEC.
Vote Required
Approval of this Proposal 3 requires the other shareholdersaffirmative vote of the Company. The 2015 Plan provides for the issuance of Company common stock upon the attainment of objectives under the Company’s 2006 Employee Incentive Plans, as amended (“2006 Incentive Plan”).
Key Termsholders of the 2015 Plan
The following is a brief summarymajority of the key terms ofshares present, in person or by proxy, and entitled to vote on this Proposal 3. While this vote is advisory, and not binding on the 2015 Plan:
Key Plan Features Description
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Overview of 2015 Plan
The Company currently operates Employee Incentive Plans for (i) employees other than Executive Officers and (ii) Executive Officers. Both plans were implemented in 2006, operate on an annual basis and make cash payments to employees on achievement of objective measurable corporate performance, with financial and customer-related targets. See “Compensation Policy – Cash-Based Incentive Compensation” on page 24 for a description of these plans. These Employee Incentive Plans are collectively referred to in this section as the “2006 Incentive Plan.” Each year the Company's Board of Directors determines the goals for payments under the 2006 Incentive Plan.
Although the Company maintain operates a Director Stock Plan under which each non-employee director is paid a portion of director fees in common stock, the Company has no plan or program under which employees may be issued Common Stock.
The Board of Directors wishes to increase the ownership of common stock by Company employees. Therefore, after approval of the 2015 Plan by the Company shareholders, each participant in the 2006 Incentive Plan will be able to electconsider when determining executive compensation philosophy, policies and practices for the remainder of 2016 and future years.
THE BOARD RECOMMENDS A VOTE "FOR" THE ADVISORY VOTE ON EXECTUIVE COMPENSATION.
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PROPOSAL 4 – ADVISORY VOTE ON FREQUENCY OF FUTURE EXECUTIVE COMPENSATION ADVISORY VOTES
As required by Section 14A of the Securities Exchange Act of 1934, we are also asking shareholders to receivecast an advisory vote on the frequency of future advisory votes on our Named Executive Officer compensation. By voting on this Proposal 4, shareholders may indicate whether they would prefer an advisory vote on Named Executive Officer compensation every year, every two years, or every three years.
After careful consideration, our Board has determined that an advisory vote on executive compensation that occurs every three years (triennially) is the most appropriate alternative for New Ulm Telecom, Inc. and therefore our Board recommends that your vote “FOR” “Every Three Years” as the frequency for future advisory votes on executive compensation.
In formulating its recommendation, our Board believes that a portion of his or her payment undertriennial vote would provide us the 2006 Incentive Plantime to thoughtfully consider the voting results, engage with shareholders to further understand the voting results, and respond to the vote and to shareholders’ feedback as described in detail in the form of Company common stock, with the first payout made in 2016. The 2015 Plan will not increase the amounts payable under the 2006 Incentive Plan, but will simply give Company employees the ability to receive a portion of the payout in Company common stock.
Who is Eligible for Stock
Only Employees participating in the 2006 Incentive Plan, or any successor plan or similar plan, are eligible to receive Common Stock under the 2015 Plan.
Types of Stock Incentives tosection entitled “Executive Compensation,” which can be Awarded
Only Common Stock may be issued under the 2015 Plan.
Administration
The Board, or the Compensation Committee if one is in operation, will administer the 2015 Plan. The Committee will have the power and authority to designate by resolution to determine:
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Tax Consequences of stock payments to Participants and the Company
Common Stock issued under the 2015 Plan will be subject to ordinary income taxfound on issuance. The Company is entitled to a corresponding deduction at the time the participant recognizes taxable income on the Common Stock.
Additional Matter
The Board believes the 2015 Stock Plan will enable employees to participate in the long-term success and growth of the Company by enabling them to obtain Company common stock, which otherwise may be difficult for them to obtain given (i) the limited depth and liquidity in the Company common stock and (ii) the strict insider trading laws that the Company operates under.
Registration with the SEC
If the 2015 Plan is approved by our shareholders,pages 22-24. Additionally, we intend to fileengage with our shareholders regarding executive compensation during the period between shareholder advisory votes. We believe that our openness to input from our shareholders regarding executive compensation and the ability of shareholders to contact us at any time regarding these matters will reduce the need for and value of a registration statement withmore frequent advisory vote on executive compensation.
We are not asking shareholders to approve or disapprove of the SEC pursuantBoard’s recommendation, but rather to indicate their own choice as among the frequency options. Shareholders may cast a vote on their preferred voting frequency by choosing the option of every year, every two years, every three years, or abstain from voting on Proposal 4.
Vote Required
The option of every year, every two years or every three years that receives a plurality of the votes cast at the Annual Meeting by shareholders voting on Proposal 4 will be the option for the advisory vote on executive compensation that has been selected by shareholders and recommended to the Securities ActBoard. While this vote is advisory, and not binding on the Board, the Board will take into account the outcome of 1933, as amended, covering the 200,000 share issuable undervote in making its determination concerning the Plan.frequency of future advisory votes on executive compensation.
THE BOARD RECOMMENDS THAT SHAREHOLDERSA VOTE "FOR"OF "EVERY THREE YEARS" ON PROPOSAL 4: ADVISORY VOTE ON THE PROPOSAL TO ADOPT THE NEW ULM TELECOM, INC. 2015 EMPLOYEE STOCK PLAN
FREQUENCY OF FUTURE COMPENSATION ADVISORY VOTES.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's Officers, Directors and beneficial owners of more than ten percent of the Company’s common stock are required to file reports of their beneficial ownership with the SEC. Based on the Company's review of copies of such reports received by it, or written representations from reporting persons, the Company believes that during the fiscal year ended December 31, 2014,2015, Executive Officers and Directors of the Company filed all reports with the SEC required under Section 16(a) to report their beneficial ownership on a timely basis.
ANNUAL REPORT ON FORM 10-K
Upon written request to New Ulm Telecom, Inc., 27 North Minnesota Street, New Ulm, Minnesota 56073, Attention: President, the Company will send, without charge, a copy of its Annual Report on Form 10-K for the fiscal year ended December 31, 2014,2015, including the financial statements and the financial statement schedules as filed with the SEC, to any person whose proxy is being solicited. The Annual Report on Form 10-K can also be found on the Company’s website at www.nutelecom.net.www.nutelecom.net.
SHAREHOLDER PROPOSALS FOR 20162017 ANNUAL MEETING
The Company intends to mail the Proxy Statement for its 20162017 annual meeting of shareholders on or about April 15, 2016.16, 2017. If any shareholder intends to present a proposal to be considered for inclusion in the Company’s proxy materials in connection with the Company’s 20162017 Annual Meeting of Shareholders, the proposal must be in proper form (per SEC Regulation 14A, Rule 14a-8 – Shareholder Proposals) and be received at the principal Executive Offices of the Company at 27 North Minnesota Street, New Ulm, Minnesota 56073, Attention: Bill Otis, no later than December 17, 2015.19, 2016. In addition, if the Company is not notified by March 1, 2016,2, 2017, of a proposal to be brought before the 20162017 Annual Meeting of Shareholders by a shareholder, the proxies held by management may provide the discretion to vote against the proposal even though it is not discussed in the proxy statement for the meeting.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING
The Proxy Statement, Proxy Form and Annual Report on Form 10-K, are available at the Company’s website, located at www.proxyvote.com.www.proxyvote.com.
OTHER MATTERS
The Company did not receive notice by December 15, 201417, 2015 of any shareholder proposals that are to be presented for a vote at the meeting. Therefore, no shareholder proposals are included in this proxy statement and if any other matter requiring a vote properly comes before the meeting, the persons named on the accompanying proxy card will vote your shares on that matter in their discretion.
YOUR VOTE IS IMPORTANT. Whether or not you expect to attend the meeting, please sign and date the proxy and return it promptly in the enclosed envelope, or take advantage of the option to vote by Internet or telephone. If you choose to return the proxy card by mail, we have enclosed an envelope, for which no postage is required if mailed in the United States. You may also vote your shares electronically either over the Internet at www.proxyvote.com or by touch tone telephone at 1-800-690-6903.
By Order of the Board of Directors
/s/ Barbara A.J. Bornhoft
Barbara A.J. Bornhoft
Corporate Secretary
New Ulm, Minnesota
April 15, 201516, 2016
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APPENDIX A
NEW ULM TELECOM, INC.
2015 EMPLOYEE STOCK PLAN
1.General Purpose of Plan; Definitions.
(a) The name of this Plan is the New Ulm Telecom, Inc. 2015 Employee Stock Plan (the “Plan”). The purpose of the Plan is to enable New Ulm Telecom, Inc. (the “Company”) and its Subsidiaries to attract and retain employees by aligning the financial interests of these individuals with the other shareholders of the Company. The Plan provides for the issuance of Company Common Stock upon the attainment of objectives under the Company’s 2006 Employee Incentive Plans, as amended (“2006 Incentive Plan”).
(b) For purposes of the Plan, the following terms are defined:
(i)“Board” means the Board of Directors of the Company.
(ii)“Committee” means the Committee referred to in Section 2 of the Plan. If at any time there is no Committee, then the functions of the Committee specified in the Plan will be exercised by the Board, unless the Plan specifically states otherwise.
(iii)“Common Stock” means the Common Stock, $1.66 par value per share, of the Company.
(iv)“Company” means New Ulm Telecom, Inc., a corporation organized under the laws of the State of Minnesota, and any successor corporation.
(v)“Employee” means an employee of New Ulm Telecom, Inc. or any subsidiary of New Ulm Telecom, Inc.
(vi)“Fair Market Value” means the value of the Share of Common Stock on a given date as determined by the Committee in good faith using reasonable valuation methods.
2.Administration.
(a) The Board has the power to delegate, by resolution, all or any portion of its authority under this Plan to any committee of the Board. Until such time as the Board delegates its authority under this Section 2, the Plan will be administered by the Board of Directors of the Company acting as a committee of the Whole.
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(b)The Committee will have the power and authority to designate by resolution to determine:
(i)The terms under which Common Stock may be issued under the 2006 Incentive Plan, or any successor plan, including the ability of Employees to elect to receive Common Stock.
(ii)The maximum percentage, if any, of the payout that an Employee can elect to receive in common stock.
(iii)The date or dates on which any Employee must elect whether to receive a payout under the 2006 Incentive Plan in Common Stock, which date or dates may be different for Employees that are executive officers of the Company or otherwise Reporting Persons subject to Section 16(a) of the Securities Exchange of 1934.
(c) The Committee also has the authority to:
(i)Adopt, alter and repeal administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable;
(ii)Interpret the terms and provisions of the Plan; and
(iii)Otherwise supervise the administration of the Plan.
(d) All shares of Common Stock issued under the Plan are to be issued at Fair Market Value.
3.Stock Subject to Plan.
(a) The total number of shares of Common Stock reserved and available for issue under the Plan will be 200,000.
(b)Shares may be issued under the Plan only for achievement of objectives under the 2006 Incentive Plan, or any successor plan or similar plan, as operated by the Company on an annual basis.
(c) In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, other change in corporate structure affecting the Common Stock, or spin-off or other distribution of assets to shareholders, the Board will have the power to make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan, and in the number of outstanding unvested shares granted under the Plan, as may be determined to be appropriate by the Board, in its sole discretion.
4.Eligibility.
(a)Only Employees participating in the 2006 Incentive Plan, or any successor plan or similar plan, are eligible to receive Common Stock under the Plan.
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5.Amendments and Termination.
(a)This Plan may be amended by the Board from time to time to the extent that the Committee deems necessary or appropriate. No amendment that would increase the number of shares reserved under Section 3(a) may be made without the approval of the shareholders of the Company.
(b) No shares may be issued under the Plan for any purpose other than for issuance under the 2006 Incentive Plan or any successor plan or similar plan under which payments are based upon achievement of Company-defined objectives.
6.General Provisions.
(a) Common Stock delivered under the Plan will be subject to such restrictions, if any, as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to these restrictions.
(b) All shares received under this Plan will be subject to the Company’s Insider Trading Policy, as in effect from time to time.
(c) Nothing contained in the Plan will prevent the Board of Directors from adopting other or additional employee compensation arrangements, subject to shareholder approval if required.
7.Effective Date of the Plan; Termination Date of the Plan.
(a) The Plan will become effective on the date it is approved by a vote of the shareholders of the Company in accordance with Minnesota law.
(b) This Plan will operate for a period of ten years and will expire on May 31, 2025.
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