SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COMMNET CELLULAR INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
COMMNET CELLULAR INC.
_____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 27, 1996
_____________________
The Annual Meeting of Stockholders of CommNet Cellular Inc., a Colorado
corporation (the "Company"), will be held on Tuesday, February 27, 1996, at
10:00 A.M., local time, at the Inverness Hotel & Golf Club, 200 Inverness Drive
West, Englewood, Colorado, for the following purposes:
1.To elect two directors of the Company; and
2.To transact such other business as may properly come before the meeting
or any adjournment thereof.
All stockholders are cordially invited to attend the meeting, although only
stockholders of record at the close of business on January 10, 1996 will be
entitled to notice of and to vote at the meeting.
Shares can only be voted at the meeting if the holder is present or
represented by proxy. If you do not expect to attend the meeting, you are urged
to date and sign the enclosed proxy and return it in the accompanying envelope
promptly, so that your shares may be voted in accordance with your wishes and
the presence of a quorum may be assured. The prompt return of your signed proxy,
regardless of the number of shares you hold, will aid the Company in reducing
the expense of additional proxy solicitation. The giving of such proxy does not
affect your right to vote in person in the event you attend the meeting.
The Company's Annual Report for the fiscal year ended September 30, 1995 is
enclosed.
AMY M. SHAPIRO
Secretary
Englewood, Colorado
January 12, 1996
PROXY STATEMENT
COMMNET CELLULAR INC.
8350 East Crescent Parkway
Englewood, Colorado 80111
This statement is furnished in connection with the solicitation of proxies by
CommNet Cellular Inc., a Colorado corporation (the "Company"), for use at the
Annual Meeting of Stockholders of the Company to be held on February 27, 1996,
and at any and all adjournments of such meeting.
January 10, 1996 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting or any
adjournments thereof. At the close of business on that date 13,699,604 shares of
Common Stock, par value $.001 per share, of the Company were issued and
outstanding. Each share of Common Stock is entitled to one vote on any matter
which properly comes before the meeting. Cumulative voting is not permitted with
respect to the election of directors. The presence in person or by proxy of the
holders of at least a majority of the shares of Common Stock entitled to be
voted at the meeting will constitute a quorum.
This proxy statement and the accompanying proxy card are being mailed to
stockholders commencing on or about January 12, 1996.
Stockholders who execute proxies retain the right to revoke them at any time
by giving written notice of revocation to the Secretary of the Company. Unless
so revoked, the shares represented by the proxies solicited by the Company will
be voted in accordance with the directions given therein by the stockholder. Any
proxy not specifying to the contrary will be voted FOR the election of the Board
of Directors' nominee as director referred to in Item I. So far as the Company's
management is aware, such matter is the only matter to be acted on at the
meeting. As to any other matter which may properly come before the meeting or
any adjournments thereof, the persons named in the accompanying proxy card will
vote thereon in accordance with their best judgment.
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The persons named in the accompanying proxy will vote for the election of one
Class II director with the term of office to continue until the 1998 Annual
Meeting of Stockholders or until his successor shall have been duly elected and
qualified, unless authority to vote is withheld. David E. Simmons is the nominee
for election as a Class II director of the Company and the Company is informed
that this nominee is willing to serve as a director. However, if such nominee
should decline or become unable to serve as a director for any reason, votes
will be cast for a substitute nominee, if any, designated by the Board of
Directors, or, if none is so designated prior to the election, votes will be
cast according to the judgment in such matters of the person or persons voting
the proxy. The nominee for election as a director of the Company is incumbent.
The following lists the nominee for election as Class II director of the
Company and the four directors of the Company whose term of office will continue
after the Annual Meeting, including the age of each person as of January 10,
1996, the positions with the Company or principal occupations of each person,
certain other directorships held and the year each person became a director of
the Company. The number of shares of Common Stock of the Company owned
beneficially by each such person as of January 10, 1996 is set forth in "Voting
Securities and Principal Holders Thereof."
NOMINEE FOR ELECTION AS CLASS II DIRECTOR
David E. Simmons; age 38; President of Simmons Family
Incorporated; Chairman and CEO of Keystone Communications, Inc.;
Director since 1987.
DIRECTORS WHOSE TERMS EXPIRE IN 1996
Daniel P. Dwyer, age 36; Chief Financial Officer, Treasurer
and Executive Vice President of the Company;
Director since 1990.
John E. Hayes, Jr., age 58; Chairman of the Board, President
and Chief Executive Officer of Western Resources, Inc.;
Director of Boatmen's Bancshares Inc.;
Director since 1990.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Arnold C. Pohs; age 67; Chairman of the Board, President,
and Chief Executive Officer of the Company;
Director since 1985.
Robert J. Paden; age 40; General Manager/Vice President of
the Stanton Telephone Company;
Director since 1985.
The Board of Directors recommends a vote FOR the nominee listed above.
2
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At January 10, 1996, there were 13,699,604 shares of Common Stock of the
Company issued and outstanding. As of such date, options to purchase 1,680,250
shares were outstanding. Each holder of Common Stock, but not unexercised
options, is entitled to one vote per share on each matter which may be presented
at a meeting of stockholders. Cumulative voting is not allowed. The Company's
Common Stock is traded on the Nasdaq National Market under the symbol CELS.
The following table sets forth information regarding ownership of the
Company's Common Stock at January 10, 1996 by each person who is known by
management of the Company to own beneficially more than 5% of the Common Stock,
by each director of the Company and by all directors and executive officers of
the Company as a group. Shares issuable on exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of persons
beneficially owning such options, but have not been deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. Insofar
as is known to the Company, the persons indicated below have sole voting and
investment power with respect to the shares indicated as owned by them except as
otherwise stated in the notes to the table.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
Arnold C. Pohs
8350 East Crescent Parkway 277,739 (1) 2.00%
Englewood, Colorado 80111
Daniel P. Dwyer
8350 East Crescent Parkway 148,315 (2) 1.07%
Englewood, Colorado 80111
John E. Hayes, Jr.
818 Kansas Avenue 7,500 0.05%
Topeka, Kansas 66612
Main Street Partners, L.P.
3637 Fall Creek Highway 2,075,800 (3) 15.15%
Granbury, Texas 76049
Janus Capital Corporation
100 Filmore Street 1,581,325 (4) 11.54%
Denver, Colorado 80206
The Equitable Companies Inc.
787 Seventh Avenue 1,189,900 (5) 8.69%
New York, New York 10019
All executive officers and
directors (10 persons) 543,803 (6) 3.86%
3
__________
(1) Includes options to purchase 187,500 shares of Common Stock.
(2) Includes options to purchase 120,000 shares of Common Stock.
(3) A Schedule 13D, dated April 4, 1995, was filed on behalf of Main Street
Partners, L.P., MS Advisory Partners, L.P., MS Advisory Partners (Overseas),
L.P., San Francisco Partners II, L.P., SF Advisory Partners, L.P., SF Advisory
Corp., SF Advisory Corp. II, The Phoebe Snow Foundation, John H. Scully, William
E. Oberndorf, William J. Patterson and Glenn B. Solomon.
(4) A Schedule 13G, dated November 9, 1995, filed on behalf of Janus Capital
Corporation, Janus Venture Fund and Thomas H. Bailey reflects that such group
has shared voting power and shared dispositive power over such shares.
(5) A Schedule 13G, dated February 28, 1995, filed on behalf of five French
mutual insurance companies, AXA Assurance I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle and
Uni Europe Assurance Mutuelle, as a group, AXA, The Equitable Companies
Incorporated and their subsidiaries reflects that such group has sole voting
power over 1,104,900 shares of Common Stock of the Company. No information is
given in respect of voting power over the remaining shares.
(6) Includes options to purchase 395,500 shares of Common Stock held by
directors and executive officers of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities Exchange Commission.
Executive officers and directors are required by SEC regulations to furnish th e
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company and written
representations from the Company's executive officers and directors, the Company
notes that one officer, Timothy C. Morrisey, inadvertently failed to file on a
timely basis an initial report indicating beneficial ownership of Common Stock
of the Company.
4
CONCERNING MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the executive
officers and directors of the Company:
Name Age Position
- ---- --- --------
Arnold C. Pohs 67 Chairman of the Board, President, Chief
Executive Officer and Director
Daniel P. Dwyer (1) 36 Executive Vice President, Treasurer,
Chief Financial Officer and Director
Andrew J. Gardner 41 Senior Vice President and Controller
Homer Hoe 46 Executive Vice President and Chief
Information Officer
Timothy C. Morrisey 42 Senior Vice President - Sales Operations
David S. Lynn 38 Senior Vice President - Network Operations
Amy M. Shapiro 42 Senior Vice President, Secretary and
General Counsel
John E. Hayes, Jr.(1)(2) 58 Director
Robert J. Paden (2) 40 Director
David E. Simmons (1)(2) 38 Director
__________
(1) Member Audit Committee.
(2) Member Compensation Committee.
The Company's Articles of Incorporation provide for a classified Board of
Directors consisting of three classes, each class to be as nearly equal in
number as possible. The members of each class are elected to a three-year term
and one class is elected at each annual meeting. Mr. Simmons is a member of
Class II with a term expiring at the 1995 Annual Meeting; Messrs. Dwyer and
Hayes are members of Class III with terms expiring at the 1996 Annual Meeting of
Stockholders (to be held in February 1997); and Messrs. Pohs and Paden are
members of Class I with terms expiring at the 1997 Annual Meeting (to be held in
February 1998).
Arnold C. Pohs has been Chairman of the Board of the Company since February
1991, President and Chief Executive Officer since August 1989 and a director
since September 1985. Mr. Pohs served as Executive Vice President of the Company
from January 1986 through August 1989. Mr. Pohs was designated Chief Operating
Officer of the Company in August 1987, prior to which time he was the Chief
Financial Officer of the Company. Mr. Pohs currently serves as Second Vice
Chairman and a member of the
5
Executive Committee of the Board of Directors of the Cellular
Telecommunications Industry Association, as Chairman and a director of the
Cellular Foundation for Wireless Telecommunications, a non-profit industry
association, as Chairman of the Industry Information Council and as Chairman of
the Board of TVX, Inc.
Daniel P. Dwyer has been Executive Vice President of the Company since
November 1992, a director of the Company since March 1990 and Chief Financial
Officer since August 1988 and Treasurer since August 1987. He was Vice
President -Finance of the Company from November 1989 until November 1992,
Secretary from August 1987 until March 1990, Assistant Secretary from January
1987 until August 1987, Controller from May 1986 until November 1988 and
accounting manager for the Company from March 1986 until May 1986. From January
1984 until March 1986, Mr. Dwyer was a staff accountant with Ernst & Young LLP.
He is a Certified Public Accountant and a member of the American Institute of
Certified Public Accountants and the Colorado Society of Certified Public
Accountants. Mr. Dwyer currently serves as a director of TVX, Inc.
Andrew J. Gardner was named Senior Vice President of the Company in July 1994.
He was Vice President and Controller from November 1992 to July 1994 and
Assistant Vice President - Accounting and Tax from August 1990 to October 1992.
From August 1986 until joining the Company in August 1990, Mr. Gardner was
employed by U S WEST, Inc. in various corporate financial management capacities,
most recently Manager, Financial Results. Mr. Gardner is a Certified Public
Accountant.
Homer Hoe was elected Executive Vice President and Chief Information Officer
of the Company in October 1994. From August 1992 until joining the Company in
October 1994, he was a self-employed consultant to the Information Services
industry, and was contracted by the Company as interim CIO from April 1994 to
October 1994. From August 1991 to August 1992, Mr. Hoe was Director of
Information Services for Tenneco Minerals, a subsidiary of Tenneco, Inc. From
May 1986 to August 1991, he was employed by Digital Equipment Corporation, most
recently as Senior Consultant, specializing in multi-vendor computer system
integration.
David S. Lynn was named Senior Vice President - Network Operations of the
Company in July 1994. He was Vice President - Network Operations from March 1993
until July 1994, Vice President - Network Development from February 1992 until
March 1993, Assistant Vice President - Finance from June 1990 until February
1992, Controller from November 1988 until June 1990 and Manager, Financial
Reporting from August 1988 until November 1988. From August 1982 until joining
the Company in August 1988, Mr. Lynn was employed by American Television and
Communications Corporation in various accounting and financial management
capacities.
Timothy C. Morrisey was named Senior Vice President - Sales Operations of the
Company in February 1995. He was General Sales Manager of the Company's Midwest
Region from July 1993 until February 1995. From February 1990 until joining the
Company in July 1993, Mr. Morrisey was President and General Manager of the
Washington D.C. and Baltimore cellular operations for Southwestern Bell Mobile
Systems.
Amy M. Shapiro was named Senior Vice President of the Company in November
1995. She was Vice President of the Company from November 1992 to November 1995
and has been Secretary of the Company since March 1990 and General Counsel since
October 1989. From February 1986 until joining the Company in October 1989, Ms.
Shapiro was an associate with Hall & Evans, LLC, a Denver, Colorado law firm.
6
John E. Hayes, Jr. was elected a director of the Company in October 1990. Mr.
Hayes has served as Chairman of the Board, President and Chief Executive Officer
of Western Resources, Inc. since October 1989. From May 1989 to October 1989,
Mr. Hayes was Chairman of the Board of Triad Capital Partners, a venture capital
firm. Mr. Hayes was President and Chief Executive Officer of Southwestern Bell
Telephone Company from September 1986 to January 1989. Mr. Hayes is a director
of the Automobile Club of Missouri, Boatmen's Bancshares, Inc., American Gas
Association, Edison Electric Institute, Security Benefit Group, the Topeka
Community Foundation, Boys Hope, Kansas Wildscape and Boy Scouts of America and
a Trustee of Midwest Research Institute, Menninger Foundation and Rockhurst
College.
Robert J. Paden has been a director of the Company since December 1985. For
the past ten years, Mr. Paden has been General Manager/Vice President of the
Stanton Telephone Company, Stanton, Nebraska. He is also a board member of the
Nebraska Telephone Association.
David E. Simmons has been a director of the Company since August 1987. Mr.
Simmons has served as President of Simmons Family Incorporated, a broadcasting
and communications company, since 1989 and as its Executive Vice President from
1985 to 1989. Mr. Simmons also serves as Chairman and Chief Executive Officer of
Keystone Communications, Inc., a satellite communications company.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF COMPENSATION COMMITTEE
General. The Compensation Committee of the Board of Directors is responsible
for establishing the executive compensation program for the Company. The
Committee monitors and recommends changes in the compensation levels of
executive management and administers the Company's incentive compensation
programs as well as determining the grants under the Company's Employee Stock
Ownership Plan. All of the Committee members are outside, non-employee directors
of the Company. The Company has periodically retained the services of a
nationally recognized executive compensation consulting firm to assist the
Company in compensation matters.
Compensation Philosophy. The Company's compensation program is designed to
attract and retain high quality executive management, to give management
incentives that motivate superior performance on behalf of the Company and to
align the interests of management with those of the Company's shareholders. The
Committee believes that the Company's base salaries should approximate the
average of base salaries paid to executives with similar responsibilities in
similar cellular companies. Executive compensation should also be correlated to
the Company's performance and shareholder return.
The companies used for compensation comparison purposes are not all of the
same companies contained in the Nasdaq telecommunications industry group
comparison of total shareholder return in the Stockholder Performance Return
Graph. The companies used for compensation purposes are those companies which
are similarly sized and are in the cellular industry.
7
Components of Compensation.
Salary: The salary of the Chief Executive Officer and the other executive
------
officers of the Company are based on a subjective evaluation of an individual
officer's responsibility and a comparison of salaries for similar positions in
comparable companies.
During 1995, the salary increases for the executive officers, other than
Arnold C. Pohs, the Chief Executive, ranged between 8% and 11%. Mr. Pohs'
base salary was increased by 20%. The basis for Mr. Pohs' salary increase was
twofold. First, the increase recognizes the performance of the Company in
terms of operating cash flow achievements. Second, Mr. Pohs' salary was
adjusted after an evaluation of comparative industry information to
approximate the Company's compensation objective of paying at the average.
Short-Term Incentive Plan Bonuses: The Company maintains an annual bonus
---------------------------------
plan which is based on meeting certain operational targets. The bonus
opportunities are established based on the average opportunities provided to
executives in similar positions at similar companies.
Actual annual bonuses for the executive officers were determined based on the
Company's performance relative to corporate operating targets and on each
individual's performance relative to officer specific individual goals. The
weightings of corporate and individual performance vary by position and
responsibilities and range from a weighting of 70% corporate/30% individual
to 90% corporate/10% individual, which is the weighting applied to Mr. Pohs'
award.
The corporate operating targets were based on the following measures which
represent the key business indicators of performance within the cellular
industry: Net managed market subscriber additions (20%), managed market
acquisition cost per net new subscriber (15%), consolidated service revenues
(20%), consolidated operating income before depreciation and amortization
("EBITDA") (30%) and consolidated service revenue as a percentage of total
consolidated property, plant and equipment (15%).
During fiscal 1995, the Company's weighted average performance results were
100.6% of the operating targets as described above and bonuses were paid
accordingly after a subjective evaluation of individual performance. The
corporate performance results represent excellent performance against
aggressive operating plan targets.
Mr. Pohs' award was 40% of base salary and was based 90% on the weighted
performance results of 100.6% of the operating targets and 10% on individual
performance. The Committee determined that the individual portion of Mr. Pohs'
award should be based on a maximum individual performance rating. Specifically,
the Committee considered the following: the Company added 52,480 managed market
customers, a 53% increase, bringing the total to 151,482 at September 30, 1995,
and consolidated EBITDA increased to $19.6 million which represented a 94%
increase over the $10.1 million reported in the prior fiscal year.
Long-Term Incentive Compensation: The Company provides long-term incentive
--------------------------------
compensation to its executives through stock option grants under the Omnibus
Stock and Incentive Plan which are intended to align the interest of executives
with those of shareholders. This plan was approved by the Company's shareholders
by proxy vote during fiscal 1991 and was amended in 1993 and 1995.
8
Subsequent to the 1995 fiscal year-end, stock options were granted to the
Company's executives as set forth in the "Option Grants Table." All options are
granted at an exercise price equal to the market price of the Company's Common
Stock at the date of grant and vest over a period of four years. The shares
owned by the named executives and their respective option positions were
considered in determining such option grants.
In November 1995, Mr. Pohs received an option to purchase 200,000 shares of
Common Stock at an exercise price equal to the fair market value of the stock on
the date of grant. The size of the award was determined based on a subjective
evaluation of Mr. Pohs' performance, as discussed earlier, and on a study by an
independent compensation consulting firm of dilution levels of comparable
companies. After the stock option grant, the Company's stock option dilution
levels are within the range of dilution levels found at comparable companies.
As of the date of this proxy statement, Mr. Pohs owns 85,944 shares of the
Company's Common Stock and, with the recent grant, holds options to purchase an
additional 640,000 shares. The committee believes that the equity interests held
by the named executives represent a significant incentive to continue to
increase shareholder value.
Policy with Respect to the $1 Million Limit. Section 162(m) of the
-------------------------------------------
Internal Revenue Code generally limits to $1,000,000 the tax deductible
compensation paid to the Chief Executive Officer and the four highest-paid
executive officers who are employed as executive officers on the last day of the
year. However, the limitation does not apply to performance-based compensation
provided certain conditions are satisfied.
Section 162(m) and proposed regulations thereunder do not affect the
Company's compensation payments for fiscal 1995 or compensation expected to be
paid in fiscal 1996. However, the Committee will continue to monitor the impact
of the new Code requirements and will adopt a policy as appropriate.
David E. Simmons John E. Hayes, Jr. Robert J. Paden
9
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the named
Executive Officers for each of the three years ended September 30, 1995.
Long-Term
---------
Annual Compensation Compensation
---------------------------------------- ------------
Other All Others
Name and ----- ----------
Principal Position Year Salary ($) Bonus ($) ($) (1) Options (#) ($) (2)
- ------------------ ---- ---------- --------- ------- ----------- -------
Arnold C. Pohs ........... 1995 300,000 126,455 10,861 200,000 8,625
Chairman of the Board, 1994 250,000 112,601 - 250,000 13,980
President and Chief 1993 210,000 85,352 - 100,000 9,987
Executive Officer
Daniel P. Dwyer ........... 1995 200,000 66,203 3,734 100,000 8,625
Executive Vice President, 1994 180,000 58,974 - 125,000 13,070
Treasurer and Chief 1993 144,000 44,512 - 50,000 7,815
Financial Officer
Homer Hoe ................. 1995 170,000 55,253 2,206 35,000 975
Executive Vice President 1994 - - - - -
and Chief Information 1993 - - - - -
Officer
David S. Lynn ............. 1995 120,000 33,095 - 20,000 8,625
Senior Vice President - 1994 108,000 28,755 - 20,000 7,637
Network Operations 1993 94,500 22,433 - 15,000 5,070
Amy M. Shapiro ............ 1995 108,000 29,914 - 20,000 7,783
Vice President, Secretary 1994 100,000 25,184 - 30,000 7,050
and General Counsel 1993 94,500 20,070 - 15,000 5,096
- ------------
(1) The amounts shown represent premiums paid on supplemental health
benefits for certain named executives.
(2) The amounts shown represent contributions by the Company to defined
contribution plans.
10
1995 OPTION GRANTS
The following table provides information on option grants for fiscal 1995 to
the named Executive Officers.
Individual Grants
----------------------------------------------------------------------
Potential Realizable Value at
Percent of Assumed Annual Rates of
Number of Total Options Stock Price Appreciation for
Options Granted to Exercise Option Term (2)
Granted Employees in Price Expiration ----------------------------
Name (#1) (1) Fiscal Year ($/Share) Date 5% 10%
- ---- -------- ------------ --------- ---------- ------------- -------------
Arnold C. Pohs 200,000 37.81% 25.5625 11/08/05 $3,125,224 $8,148,008
Daniel P. Dwyer 100,000 18.90% 25.5625 11/08/05 1,607,612 4,070,004
Homer Hoe 35,000 6.62% 25.5625 11/08/05 562,664 1,425,901
David S. Lynn 20,000 3.78% 25.5625 11/08/05 321,522 814,801
Amy M. Shapiro 20,000 3.78% 25.5625 11/08/05 321,522 814,801
____________
(1) Indicates number of shares as to which options were granted on November 8,
1995 pursuant to the Company's Omnibus Stock and Incentive Plan. Options
become exercisable in four equal annual installments commencing November 8,
1996.
(2) These are hypothetical values using assumed growth as prescribed by the SEC.
The assumed annual rates of appreciation of 5% and 10% over the ten year
term of the options would result in the price of the Company's stock
increasing to $41.64 and $66.30, respectively.
1995 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information on the value of options exercised by
the named Executive Officers during fiscal 1995 as well as the value of
unexercised options at September 30, 1995.
Number of Unexercised Value of Unexercised
Shares Options At Fiscal In-the-Money Options
Acquired Year End (#) (1) At Fiscal Year End ($)
on Value --------------------- ------------------------
Name Exercise (#) Realized ($) Vested Unvested Vested Unvested
- ---- ------------ ------------ ------ -------- -------- -----------
Arnold C. Pohs 20,000 312,500 80,000 360,000 1,088,750 2,102,500
Daniel P. Dwyer 32,500 507,813 64,375 183,125 954,219 1,099,531
Homer Hoe - - - 25,000 - 84,375
David S. Lynn 10,000 168,425 13,875 39,625 192,047 306,516
Amy M. Shapiro 5,000 92,500 16,875 50,625 230,156 352,969
_________
(1) Does not reflect options granted on November 8, 1995 for fiscal 1995.
11
CHANGE IN CONTROL AGREEMENTS
In July 1993, the Board of Directors approved change in control agreements
(the "Agreements") with Messrs. Pohs and Dwyer. In October 1994, the Board
authorized a comparable agreement with Mr. Hoe, the Company's Chief Information
Officer. In November 1995, the Board authorized comparable agreements with
Messrs. Gardner, Lynn and Morrisey, the Company's Senior Vice President and
Controller, Senior Vice President - Network Operations and Senior
Vice President - Sales Operations, respectively, and Ms. Shapiro, the
Company's Senior Vice President and General Counsel. The purpose of the
Agreements is to reinforce and encourage the officers to maintain objectivity
and a high level of attention to their duties without distraction from the
possibility of a change in control of the Company. These Agreements provide that
in the event of a change in control of the Company, as that term is defined in
the Agreements, each officer is entitled to receive certain severance benefits
upon the subsequent termination or constructive termination of his employment,
unless such termination is due to death, disability or voluntary retirement;
unless the termination is by the Company for cause (as defined in the
Agreements) or is by the officer for other than good reason (as defined in the
Agreements).
The severance benefits include the payment of the officer's full base salary
through the date of termination. The severance benefits also include a lump sum
payment equal to 2.99 times the sum of (a) the officer's annual base salary in
effect immediately prior to the circumstances giving rise to termination, and
(b) the actual bonus earned by the officer in the year prior to the year in
which termination occurs. In addition, each officer will be provided with life
and health benefits and a continuation of all other employee benefits for 12
months following the date of termination. In addition, the officers will be
fully vested in all benefit plans to the extent not otherwise entitled to 100%
of all contributions made by the Company on their behalf.
In the event any payment or benefit to be received by an officer pursuant
to the Agreements would be subject to the federal excise tax, the amount of the
benefits payable under the Agreement will be increased such that the net amount
retained by the officer after deduction of any excise tax on such payment and
any federal, state and local tax upon such additional payment shall be equal to
the full severance benefits contemplated by the Agreement.
STOCKHOLDER PERFORMANCE RETURN GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock with that of the
cumulative total return of the Nasdaq Stock Market - US Index ("NASDAQ STOCK
MRKT - US") and the Nasdaq Telecommunications Index ("NASDAQ TELECOM") for the
five-year period ended on September 30, 1995. The information below is based on
an investment of $100, on September 30, 1990, in the Company's Common Stock, the
NASDAQ STOCK MRKT - US and the NASDAQ TELECOM, with dividends reinvested.
12
[GRAPH APPEARS HERE]
COMMNET NASDAQ
Measurement period CELLULAR STOCK NASDAQ
(Fiscal Year Covered) INC. MARKET--US TELECOMMUNICATIONS
Measurement PT -
9/30/95
FYE 9/30/90 $ 100.00 $ 100.00 $ 100.00
FYE 9/30/91 $ 163.00 $ 157.00 $ 140.00
FYE 9/30/92 $ 152.00 $ 176.00 $ 153.00
FYE 9/30/93 $ 216.00 $ 231.00 $ 270.00
FYE 9/30/94 $ 285.00 $ 233.00 $ 250.00
FYE 9/30/95 $ 363.00 $ 321.00 $ 288.00
DIRECTORS' COMPENSATION
Directors of the Company who are not employees receive an annual retainer of
$12,000, plus reimbursement of expenses incurred in attending Board or committee
meetings. Directors who are also employees of the Company receive no
compensation in their capacities as directors.
MEETINGS OF THE BOARD
The Board of Directors held three meetings during the fiscal year ended
September 30, 1995. Each incumbent director attended at least 75% of the total
number of meetings of the Board and committees thereof on which such director
served during that period.
13
COMMITTEES
The Company has no standing nominating committee of the Board of Directors.
The Compensation Committee makes recommendations to the Board of
Directors concerning the compensation of the Company's officers. The
Compensation Committee, which currently consists of Messrs. Simmons, Hayes and
Paden, held one meeting during the fiscal year ended September 30, 1995.
The Audit Committee makes recommendations to the Board of Directors
concerning the selection of the Company's auditors and the scope of auditing and
accounting matters. The Audit Committee currently consists of Messrs. Simmons,
Hayes and Dwyer. The Audit Committee held one meeting during the fiscal year
ended September 30, 1995.
INDEPENDENT AUDITOR
The firm of Ernst & Young LLP serves as the Company's independent certified
public accountant as it has since 1985. A partner of Ernst & Young LLP will be
present at the meeting and will have an opportunity to make a statement if he so
desires and will be available to respond to appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended for presentation at the Company's next annual
meeting must be received by the Company at its principal offices in Englewood,
Colorado, not later than September 18, 1996.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of the Company by personal interview, telephone or telegram. Such
directors, officers and employees will not receive additional compensation for
such activities. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward the solicitation material to the
beneficial owners of common stock held of record by such persons and the Company
may reimburse them for reasonable out-of-pocket and clerical expenses incurred
by them in connection therewith. The Company has retained Beacon Hill
Associates, Inc. to aid in the solicitation of proxies for a fee of $2,500, plus
out-of-pocket expenses.
A COPY OF THE COMPANY'S FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED BY STOCKHOLDERS WITHOUT CHARGE
BY WRITTEN REQUEST ADDRESSED TO SHAREHOLDER RELATIONS, COMMNET CELLULAR INC.,
8350 EAST CRESCENT PARKWAY, ENGLEWOOD, COLORADO 80111.
Englewood, Colorado
January 12, 1996
14
COMMENT CELLULAR INC.
PROXIES SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 27, 1996
The undersigned holder of shares of Common Stock of Commnet Cellular Inc. (the
"Company") hereby appoints Arnold C. Pohs and Daniel P. Dwyer, and each of them,
as proxies of the undesigned, with full power of substitution, to act and to
vote for and in the name, place and stead of the undersigned at the Annual
Meeting of the Stockholders of the Company to be held at the Inverness
Hotel & Golf Club, 200 Inverness Drive West, Englewood, Colorado, at 10:00
A.M., local time, on February 27, 1996, and at any and all adjournments
thereof, according to the number of votes and as fully as the undersigned
would be entitled to vote if personally present at such meeting, and
particularly with respect to the proposals listed on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED, IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR ITEM 1.
_______________________________________________________________________________
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
_______________________________________________________________________________
Please sign this proxy exactly as your name appears on the reverse side. Joint
owners should each sign personally. Trustees and others signing in a
representative capacity should indicate the capacity in which they sign.
_______________________________________________________________________________
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________________ ___________________________________
_____________________________________ ___________________________________
_____________________________________ ___________________________________
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
1.) Election of Directors. For [_] Withhold [_]
Nominee for a three-year term:
David E. Simmons
If you do not wish your shares voted "For" the nominee, mark the "Withhold"
box.
2.) Such other matters as may properly come before the meeting.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date _____________________________
Mark box at right if comments or address change have been noted on the reverse
side of this card. [_]
Stockholder sign here ____________________ Co-owner sign here _________________
DETACH CARD DETACH CARD