SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] 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-11c or Section 240.14a-12
</Table>
Warwick Valley Telephone Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class 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
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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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WARWICK VALLEY TELEPHONE COMPANY
47 MAIN STREET
WARWICK, NEW YORK 10990
- --------------------------------------------------------------------------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2002
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Warwick Valley
Telephone Company (the "Company") will be held at 2:00 p.m., local time, on
Friday, April 26, 2002 (the "Meeting"), at the Warwick Conference Center at
Warwick Center Road, Warwick, New York, for the following purposes which are
more fully discussed in the accompanying Proxy Statement:
I. To fix the number of Directors at ten until the next Annual
Meeting of Shareholders;
II. To elect three Class III Directors of the Company;
III. To approve the selection of Bush & Germain, P. C. as the
Company's independent auditors for the year ending December
31, 2002; and
IV. To transact such other business as may properly be brought
before the Meeting or any adjournment thereof.
The holders of the Common Stock of the Company of record at the close of
business on March 31, 2002 will be entitled to vote on each of the above
matters.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Herbert Gareiss, Jr.
Herbert Gareiss, Jr., Secretary
April 5, 2002
IMPORTANT
You are cordially invited to attend the Meeting in person.
Even if you plan to be present at the Meeting, you are urged to SIGN, DATE, AND
MAIL the enclosed proxy promptly.
If you attend the Meeting, you can vote either in person or by your proxy. All
shares represented by valid proxies received prior to the Meeting, pursuant to
this solicitation, and not revoked before they are exercised, will be voted in
accordance with the instructions therein.
1
PROXY STATEMENT
Annual Meeting of Shareholders
Warwick Valley Telephone Company
47 Main Street, Warwick, New York 10990
April 5, 2002
This Proxy Statement is furnished to shareholders in connection with a
solicitation of proxies by the Board of Directors of Warwick Valley Telephone
Company (the "Company"), to be used at the Annual Meeting of Shareholders of the
Company which will be held at 2:00 p.m., local time, on Friday, April 26, 2002,
at the Warwick Conference Center at Warwick Center Road, Warwick, New York, and
at any adjournments thereof (the "Meeting"), for the purposes set forth in the
preceding notice of the Annual Meeting of Shareholders. A properly executed
proxy received in time for the Meeting will be voted in the manner set forth
herein unless specifically otherwise directed by the shareholder, in which case
each proxy will be voted as directed. If the enclosed form of proxy is executed
and returned, it may nevertheless be revoked at any time by delivering a notice
of revocation or a duly executed proxy bearing a later date to the Secretary of
the Company before the proxy is voted.
At the close of business on March 31, 2002, the record date for the Meeting,
the Company had outstanding 1,803,661 shares of Common Stock, without par value
("Common Stock"). Only holders of record as of the record date will be entitled
to vote on the matters to be considered at the Meeting or any adjournments
thereof. Each such shareholder is entitled to one vote for each share of Common
Stock owned of record.
Pursuant to the Company's By-laws, the election of any director requires an
affirmative vote of a plurality and all other matters submitted require a
majority of the votes of the Company's Common Stock represented at the Meeting
in person or by proxy and entitled to vote and voting on that proposal. Votes
cast by proxy or in person at the Meeting will be counted by the persons
appointed by the Company to act as tellers for the Meeting. The tellers will
treat shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote for purposes of determining the presence of quorum
at the Meeting. The tellers will treat "broker non-votes" (i.e., shares held by
brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote and with respect to which broker
or nominee does not have discretionary power to vote on a particular matter) as
if the broker never voted.
The Annual Report to Shareholders for the fiscal year ended December 31,
2001, including financial statements, was mailed together with this Proxy
Statement to all shareholders of record. Such report is not a part of the proxy
soliciting material. THE COMPANY WILL FURNISH WITHOUT CHARGE TO ANY OF ITS
SHAREHOLDERS, UPON SUCH SHAREHOLDER'S WRITTEN REQUEST, A COPY OF THE COMPANY'S
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES. REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO: HERBERT GAREISS, JR., WARWICK VALLEY TELEPHONE
COMPANY, 47 MAIN STREET, WARWICK, NEW YORK 10990.
The Company will bear the cost of solicitation of proxies. In addition to the
use of the mails, proxies may be solicited by officers, directors and regular
employees of the Company personally, by telephone or telegraph. The approximate
date on which this Proxy Statement and accompanying form of proxy are first
being sent to shareholders is April 5, 2002.
I. DETERMINATION OF NUMBER OF DIRECTORS
Pursuant to the Company's By-laws, the size of the Company's Board of
Directors is fixed at each Annual Meeting of Shareholders until the next Annual
Meeting of Shareholders. The Company's Board of Directors recommends a vote in
favor of fixing the size of the Board of Directors of the Company at ten until
the next Annual Meeting of Shareholders and the persons named in the enclosed
proxy (unless otherwise instructed therein) will vote such proxies FOR such
proposal.
II. ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors of the Company
shall be divided into three classes of at least three Directors each. Such
classes are designated "Class I", "Class II" and "Class III". The Directors in
each Class are elected in alternating years for three-year terms. At the
Meeting, the number of Directors will be fixed at ten until the next Annual
Meeting of Shareholders, and three Directors will be elected to Class III for
terms which will last until the 2005 Annual Meeting of Shareholders (and until
their respective successors shall have been elected and qualified).
The Company's Board of Directors recommends the election of the three
nominees named below as Class III Directors. Unless authority for one or more of
the nominees is specifically withheld according to the instructions, proxies in
the enclosed form will be voted FOR the election of each of the three nominees
named below to the position of Director.
Philip S. Demarest
Herbert Gareiss, Jr.
Corinna S. Lewis
All of the above nominees are presently serving as Directors of the Company,
and their terms as such expire upon the election of Directors at the Meeting.
If any of the nominees shall be unable to serve, proxies will be voted with
the discretionary authority for a substitute chosen by the Board of Directors.
The Company has no reason to believe that any nominee will be unable to
serve.
1
INFORMATION ABOUT DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTOR
Name, Age and Other Position, Period Served as Director and
if any, with the Company Past Business Experience
NOMINEES FOR CLASS III DIRECTORS
(TERM WILL EXPIRE IN 2005)
Philip S. Demarest, 65 .................Director since 1964; Vice President,
Secretary and Treasurer of the Company
from prior to 1997 until retiring in
1998; Secretary and Director of Warwick
Valley Mobile Telephone Company, Inc.,
Warwick Valley Long Distance Company,
Inc., Warwick Valley Networks, Inc. and
Hometown Online, Inc., from prior to
1997 until 1998.
Herbert Gareiss, Jr., 56 ...............Director since 1998; Assistant Secretary
Vice President and Assistant Treasurer of the Company
since 1980 until 1990; Vice President
since 1990; Secretary of the Company
since January 2002; Vice President and
Director of Warwick Valley Mobile
Telephone Company, Inc., Warwick Valley
Long Distance Company, Inc., Warwick
Valley Networks, Inc. and Hometown
Online, Inc., since before 1997.
Corinna S. Lewis, 63 ...................Director since 1994; Retired public
relations consultant.
DIRECTORS WHOSE TERMS DO NOT EXPIRE AT THE MEETING
(ELECTED IN 2000 AND 2001)
Wisner H. Buckbee, 65 ..................Director since 1991 (Class II: current
Chairman of the Board term expires in 2004); Chairman of the
Board since January 2001; President of
Wisner Farms, Inc., an operating dairy
farm, since before 1997.
Howard Conklin, Jr., 74 ................Director since 1965 (Class I: current
term expires in 2003); Chairman of the
Board since 1988 until 2001; Chairman of
the Board of Conklin and Strong, Inc., a
retail lumber and building materials
company located in Warwick, N.Y., from
prior to 1997 until 1998.
Joseph E. DeLuca, M.D., 51 .............Director since 1993 (Class II: current
term expires in 2004); Physician, Vernon
Urgent Care Center, Vernon, N.J., since
before 1997.
Robert J. DeValentino, 58...............Director since 1998 (Class I: current
term expires in 2003); Executive
Director of the Horton Healthcare
Foundation since 1998; District Manager
for Citizens Telecommunications in
Middletown, N.Y., from prior to 1997
until 1998.
Fred M. Knipp, 71 ......................Director since 1989 (Class II: current
term expires in 2004); President of the
Company from 1988 until retiring in
January 2000; President and Director of
Warwick Valley Mobile Telephone Company,
Inc., Warwick Valley Long Distance
Company, Inc., Warwick Valley Networks,
Inc. and Hometown Online, Inc., from
prior to 1997 until retiring in January
2000.
Henry L. Nielsen, Jr., 75 ..............Director since 1984 (Class I: current
Vice Chairman of the Board term expires in 2003); Vice Chairman of
the Board since 1992; President of
Nielsen Construction Company, Inc., a
heavy construction and earth-moving
company located in Warwick, N.Y., since
before 1997.
M. Lynn Pike, 55 .......................Director since 2000 (Class I: current
President term expires in 2003); President of
the Company since January 2000; General
Manager of Geneseo Telephone Company and
Chief Operating Officer of Illinois PCS
in Geneseo, Ill., from 1996 until
January 2000; Managing Director for
United Telecom International in
Budapest, Hungary prior to 1997.
BOARD MEETINGS AND BOARD COMMITTEES
The Board of Directors held twelve regular meetings during the fiscal year
ended December 31, 2001. The Company has standing Audit, Officers' Compensation
and Nominating Committees of the Board of Directors. Each Director attended 75%
or more of the Board Meetings and Committee Meetings which he or she served on
during such year.
The Audit Committee held one meeting in 2001. Director DeLuca is Chairman of
the Committee and Directors Buckbee, Conklin, DeValentino, Lewis and Nielsen are
members of the Committee. The Audit Committee's duties and responsibilities
include recommending to the Board of Directors the engagement of the Company's
independent auditors, approving the plan and scope of the audit and the fee
before the audit begins and, following the audit, reviewing the results and the
independent auditors'
2
comments on the Company's system of internal accounting controls with the
independent auditors, and recommending the inclusion of the Company's audited
financial statements in its Annual Report on Form 10-K. The Committee also
advises the Board as to the implementation of recommendations which have been
made pursuant to suggestions of the independent auditors.
In carrying out these functions, the Audit Committee represents the Board in
discharging its responsibility of oversight, but the existence of the Audit
Committee does not alter the traditional roles and responsibilities of the
Company's management and the independent auditors with respect to the accounting
and control functions and financial statement presentation. The Report of the
Audit Committee to the Shareholders relating to the year ended December 31, 2001
appears on page 5 of this Proxy Statement.
The Officers' Compensation Committee held two meetings in 2001. Director
Nielsen is Chairman of the Committee and Directors Buckbee, Conklin, DeLuca,
Demarest, DeValentino, Knipp and Lewis are members. The Committee makes specific
salary recommendations to the Board concerning executive officers of the Company
and reviews salaries of other management personnel.
The Nominating Committee held one meeting during 2001. Director DeValentino
is Chairman of the Committee and Directors Conklin, Nielsen and Pike are
members. The Nominating Committee recommends to the Board the names of nominees
to be recommended for election or reelection as Directors by the shareholders at
Annual Meetings of Shareholders. The Nominating Committee is not precluded from
considering written recommendations for nominees from shareholders. For the 2003
Annual Meeting of Shareholders, such recommendations, together with a
description of the proposed nominee's qualifications and other relevant
biographical information, are to be sent to the Secretary of the Company not
later than December 16, 2002.
COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 2001, the Company paid Directors
$450 per regular or special meeting and the chairman receives $675 per regular
or special meeting for their services. During the fiscal year ended December 31,
2001 such fees paid aggregated $59,750.00. Non-employee Board committee members
receive $225 per committee meeting. During the fiscal year ended December 31,
2001 such fees paid aggregated $5,500.00. The Company had no other compensation
arrangements with non-employee directors during the fiscal year ended December
31, 2001.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2002, certain information
concerning shares of the Company's capital stock held by: (i) each shareholder
known by the Company to own beneficially more than 5% of a class of the
Company's outstanding equity securities; (ii) each Director of the Company;
(iii) each "Named Executive" (see "EXECUTIVE COMPENSATION"); and all Directors
and executive officers of the Company as a group. Holders of shares of the
Company's 5% Series Preferred Shares, $100 par value ("5% Preferred"), are not
entitled to vote those shares at the Meeting.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER ADDRESS TITLE OF CLASS OWNERSHIP (SHARES) OF CLASS
- ----------------------------------------------------------------------------------------------------------------------------
Julia S. Barry 20 Fairview Ave., Warwick, NY 10990 Common Stock 120,340 6.67%
Julia S. Barry 20 Fairview Ave., Warwick, NY 10990 5% Preferred 142 2.84%
Wisner H. Buckbee 64B Upper Wisner Rd., Warwick, NY 10990 Common Stock 6,114 0.34%
Wisner H. Buckbee 64B Upper Wisner Rd., Warwick, NY 10990 5% Preferred 20 0.40%
Howard Conklin, Jr. 5 Spanktown Rd., Warwick, NY 10990 Common Stock 10,108(1) 0.56%
Joseph E. DeLuca 5 Stone Ridge Rd., Sussex, NJ 07461 Common Stock 2,000(1) 0.11%
Philip S. Demarest 10 Crescent Ave., Warwick, NY 10990 Common Stock 8,906 0.49%
Philip S. Demarest 10 Crescent Ave., Warwick, NY 10990 5% Preferred 10 0.20%
Robert J. DeValentino 44 Jackson Ave., Middletown, NY 10940 Common Stock 500 0.03%
Herbert Gareiss, Jr. 267 Bellvale Lakes Rd, Warwick, NY 10990 Common Stock 14,827(1), (2) 0.82%
Fred M. Knipp 15 Almond Tree Lane, Warwick, NY 10990 Common Stock 14,673(1) 0.81%
Fred M. Knipp 15 Almond Tree Lane, Warwick, NY 10990 5% Preferred 85 1.70%
Corinna S. Lewis PO Box 318, Warwick, NY 10990 Common Stock 2,608 0.14%
Corinna S. Lewis PO Box 318, Warwick, NY 10990 5% Preferred 15 0.30%
Henry L. Nielsen, Jr. PO Box 848, Warwick, NY 10990 Common Stock 300 0.02%
M. Lynn Pike 8 Silo Lane, Warwick, NY 10990 Common Stock 993 0.06%
Brenda A. Schadt 164 Bushville Rd., Westtown, NY 10998 Common Stock 6,292 0.35%
Brenda A. Schadt 164 Bushville Rd., Westtown, NY 10998 5% Preferred 5 0.10%
Total as a Group:
Total Common Stock.................187,661 10.40% of the class
Total Preferred Stock.............. 277 5.54% of the class
- -------------------------------------------------------------------------------------------------------------------
(1) Includes shares held by spouse.
(2) Includes shares held in trust for children.
(3) Includes shares which may be voted pursuant to power of attorney.
As of March 31, 2002, the only holder of more than 5% of the Company's
Common Stock known to the Company was Julia S. Barry, Warwick, New York 10990,
who holds 120,340 shares (6.67%).
3
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the Forms 3, 4 and 5 submitted to the Company
during calendar year 2001, or written representations that no Forms 5 were
required, the Company believes that all such reports were filed on time, except
that Mr. Howard Conklin, Jr., a Director, filed late one report on Form 4
reporting transactions for the calendar year 2001, and that Mr. Herbert Gareiss,
Jr., Vice President and Director filed late two reports on Form 4 reporting
transactions for the calendar year 1999. All such reports have since been filed,
and all of the Company's Directors and executive officers are now current in
such filings. In making the foregoing statements, the Company has relied on the
written representations of its Directors and executive officers and copies of
the reports that they have filed with the Securities and Exchange Commission.
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual compensation for
services rendered to the Company in all capacities, for the fiscal years ended
December 31, 2001, 2000 and 1999, paid by the Company to those persons who were,
at the end of the fiscal year ended December 31, 2001, the President of the
Company and the other highest paid executive officers of the Company in 2001
(collectively, the "Named Executives"):
SUMMARY COMPENSATION TABLE
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS COMPENSATION*
- -------------------------------------------------------------------------------------------------------------------
M. Lynn Pike 2001 $ 203,749.69 $ 3,653.84 $ 17,400.92
President and Director 2000 $ 182,596.07 $ --- $ 17,668.01
(Hired January 3, 2000)
Herbert Gareiss, Jr. 2001 $ 157,230.65 $ 2,826.92 $ 17,453.79
Vice President and Director 2000 $ 142,846.08 $ 2,596.15 $ 18,621.15
1999 $ 131,192.08 $ 2,384.62 $ 11,850.14
Larry D. Drake 2001 $ 154,474.83 $ 2,798.08 $ 12,057.92
Vice President 2000 $ 135,999.91 $ 2,615.38 $ 10,942.88
1999 $ 134,038.40 $ 2,500.00 $ 10,755.12
Brenda A. Schadt 2001 $ 125,288.24 $ 2,211.54 $ 6,506.94
Vice President 2000 $ 111,538.42 $ 2,019.23 $ 5,807.46
(Promoted September 1, 1999) 1999 $ 92,884.57 $ 1,576.92 $ 4,812.72
Philip A. Grybas 2001 $ 63,374.31 $ --- $ 4,476.94
Vice President and
Chief Financial Officer, Treasurer
(Hired August 6, 2001)
*Directors' fees, where applicable, Company match of 401K contributions
and Company-paid life insurance premiums.
REPORT OF OFFICERS' COMPENSATION COMMITTEE
WITH RESPECT TO EXECUTIVE COMPENSATION
April 9, 2001
EXECUTIVE COMPENSATION'S PHILOSOPHY AND POLICY
The Company believes that a compensation program should offer
performance-based compensation to the Company's employees and reward employees
whose results enable the Company to achieve its vision. The executive
compensation program is designed to measure and enhance executive performance.
The Company's executive compensation program has two components:
- Base Salary
- Annual Bonus
These components are designed to provide incentives and motivate key
executives, including the Named Executives, whose efforts and job performance
will enhance the strategic well-being of the Company and maximize value to its
shareholders. The program is also structured to attract and retain the highest
caliber executives.
The executive compensation program compensates the individual executive
officers based on the Company's consolidated performance and the individual's
contribution. The program is designed to be competitive with compensation
programs offered by comparable employers.
Public information concerning salaries paid by companies in the
telecommunications and related industries is used to determine what a comparable
firm would consider an appropriate performance-based compensation package for
its executives.
BASE SALARY
The salaries of the Named Executives, including Mr. Pike, were determined
based on each Named Executive's performance and an analysis of base salaries
paid to executive officers having similar responsibilities in other companies.
The level of Mr. Pike's base salary was also based upon a subjective assessment
of his individual performance and responsibilities as well as overall corporate
4
performance as measured by actual earnings per share, cash flow and growth of
the Company's business. The performance of other Named Executives is measured
similarly, but the criteria used to determine their compensation is based more
on their individual responsibilities. No relative weights are attributed to any
specific measurement factors.
ANNUAL BONUS
The Company's annual bonus plan is designed to reward all Company employees
on the basis of consolidated corporate results during the past year. Employees,
including executive officers, may be entitled to a cash bonus of up to one
week's salary based on the change in consolidated corporate earnings for the
current year as compared to the immediate previous year.
COMPENSATION COMMITTEE:
Fred M. Knipp, Chairman Philip S. Demarest
Wisner H. Buckbee Robert J. DeValentino
Howard Conklin, Jr. Corinna S. Lewis
Dr. Joseph E. DeLuca Henry L. Nielsen, Jr.
REPORT OF THE AUDIT COMMITTEE TO SHAREHOLDERS
The following report of the Audit Committee of the Board of Directors (the
"Audit Committee") required by the rules of the Securities and Exchange
Commission to be included in this proxy statement shall not be deemed
incorporated by reference by any statement incorporating this proxy statement by
reference into any filing under the Securities Act or the Exchange Act of 1934
as amended, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under either
such Act.
The Audit Committee is comprised of six members of the Company's Board of
Directors, each of whom is independent pursuant to the NASDAQ National Market's
listing standards. The duties and responsibilities of the Audit Committee are
set forth in the Audit Committee Charter, as adopted by the Board of Directors
included in the Company's 2001 Proxy Statement. The Audit Committee, among other
things, recommends to the Board of Directors: (a) that the audited financial
statements be included in the Company's Annual Report on Form 10-K; and (b) the
selection of the independent auditors to audit the books and records of the
Company.
The Audit Committee has: (a) reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2001 with the
Company's management and with Bush & Germain, P. C., the Company's independent
auditors; (b) discussed with the Company's independent auditors the matters
required to be discussed by SAS 61 (Codification for Statements on Auditing
Standards); and (c) received and discussed the written disclosures and the
letter from the Company's independent auditors required by Independence
Standards Board Statement No. 1 (Independent Discussions with Audit Committee)
and has discussed with the Company's independent accountants their independence.
Based on such review and discussions with management and the independent
auditors, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001 for filing with the Securities
and Exchange Commission.
AUDIT COMMITTEE:
Dr. Joseph E. DeLuca, Chairman Robert J. DeValentino
Wisner H. Buckbee Corinna S. Lewis
Howard Conklin, Jr. Henry L. Nielsen, Jr.
STOCK PRICE PERFORMANCE GRAPH
This graph shows, as a percentage, the Company's cumulative total shareholder
return, assuming reinvestment of dividends, compared against the Russell 2000, a
widely regarded stock market index representing 2000 small cap companies. A
variety of factors may be used in order to assess a corporation's performance.
This Stock Price Performance Graph, which reflects the Company's total return
against the Russell 2000, reflects one such method. For 1997, the shareholder
return values for the Company included in the graph are based on a valuation
prepared annually for the Company by an independent appraisal firm in connection
with the Company's 401K Plans including the Savings Plan for Management
Employees discussed later in this proxy statement. The values for year end 1998,
1999, 2000 and 2001 were established by using the closing price on the last day
in December on which the Company's Common Stock traded, which was December 16,
1998, December 29, 1999, December 26, 2000 and December 31, 2001,
respectively.
[GRAPH]
ANNUAL PERCENTAGE CHANGE IN
CUMULATIVE SHAREHOLDER RETURN
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Index 22.36 19.23 44.58 40.19 43.69
WVTC 17.03 102.19 151.14 124.67 233.32
5
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Officers' Compensation Committee at the end of the fiscal
year ended December 31, 2001 were Mr. Buckbee, Mr. Conklin, Dr. DeLuca, Mr.
Demarest, Mr. DeValentino, Mr. Knipp, Mrs. Lewis and Mr. Nielsen. None of these
persons were, during 2001, an officer or employee of the Company or any of its
subsidiaries. Mr. Demarest and Mr. Knipp are former officers and employees of
the Company, having retired in 1998 and January 3, 2000, respectively. Mrs.
Lewis is a director and shareholder of John W. Sanford & Son, Inc., which
received payments from the Company with respect to various insurance policies
maintained by the Company. See "Certain Transactions with Directors" on page 7
of this proxy statement.
The full Board of Directors accepted the recommendation of the Compensation
Committee concerning all executive officers' compensation. Mr. Pike and Mr.
Gareiss are Directors of the Company and, during the fiscal year ended December
31, 2001 participated in those deliberations of the Company's Board of Directors
in which the Board accepted the Compensation Committee's recommendations
concerning executive officer compensation. Mr. Pike and Mr. Gareiss are not
members of the Compensation Committee. No executive officer of the Company has,
during the fiscal year ended December 31, 2001 or previously, served as a
director or member of the Compensation Committee of any other entity that has an
executive officer who serves or has served either as a member of the
Compensation Committee or as a member of the Board of Directors of the Company.
MANAGEMENT RETIREMENT PLAN
The Company's Management Retirement Plan (the "Plan") covers all management
employees over the age of 21 who have completed one year of eligible service.
The Plan benefits are fully vested after five years of service. Normal
retirement under the plan is at age 60. An employee's accumulated monthly
retirement benefit equals either: (1) 2-1/2% times years of service times
average monthly earnings (maximum benefit not to exceed the lesser of 25% of
average monthly earnings on a monthly basis or $10,800 annually); or (2) 1%
times years of service times average monthly earnings. Retirement benefits for
employees hired prior to December 1, 1985 are determined by using the
calculation that results in the highest amount. Retirement benefits for
employees hired on or after December 1, 1985 are calculated by using the second
method. Two years of benefit service are currently credited to M. Lynn Pike,
twenty-one years of benefit service are currently credited to Herbert Gareiss,
Jr., three years of benefit service are currently credited to Larry D. Drake,
thirty-nine years of benefit service are currently credited to Brenda A. Schadt,
and no years of service are credited to Philip A. Grybas. Average monthly
earnings equal the highest average earnings per month during any three
consecutive twelve-month periods within the last ten twelve-month periods
immediately preceding retirement. The Plan does not provide for any deductions
for social security benefits received.
Annual benefits payable at age 60 to Plan participants are illustrated in the
following table:
AVERAGE ANNUAL SALARY
DURING HIGHEST PAID
PERIOD OF THREE ANNUAL RETIREMENT BENEFITS
CONSECUTIVE YEARS YEARS OF BENEFIT SERVICE
- -------------------------------------------------------------------------------
5 10 15 20 30
- -------------------------------------------------------------------------------
$110,000 5,500 11,000 16,500 22,000 33,000
$130,000 6,500 13,000 19,500 26,000 39,000
$150,000 7,500 15,000 22,500 30,000 45,000
$170,000 8,500 17,000 25,500 34,000 51,000
$190,000 9,500 19,000 28,500 38,000 57,000
$210,000 10,500 21,000 31,500 42,000 63,000
$230,000 11,500 23,000 34,500 46,000 69,000
$250,000 12,500 25,000 37,500 50,000 75,000
SAVINGS PLAN FOR MANAGEMENT EMPLOYEES
The Company's Savings Plan for Management Employees (the "Savings Plan")
covers all active management employees of the Company. Eligible employees are
permitted to make contributions of up to 15% of their total compensation before
taxes, up to a statutory maximum ($10,500 in 2001), to a choice of predefined
funds maintained by the trustee of the Savings Plan. Eligible employees may
apply accumulated contributions towards the purchase of shares of the Company's
Common Stock. Such Common Stock is acquired in brokerage transactions at the
market price as of the transaction date. The Company has agreed to make matching
contributions of one dollar for every dollar contributed by a management
employee, up to a maximum Company contribution of 9% of total compensation.
Participants are fully vested in the Company's contributions to their Savings
Plan accounts immediately. The trustee of the Plan is the Charles Schwab Trust
Company.
6
AUDIT FEES
Audit Fees: For professional services rendered in connection with the audit
of the Company's annual financial statements for 2001, and reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for 2001, Bush & Germain, P. C. billed the Company fees in the aggregate amount
of $41,600.
All Other Fees: For professional services other than those described above
rendered for 2001, Bush & Germain, P. C. billed the Company fees in the
aggregate amount of $6,000.
The Audit Committee has considered whether the provision of services
described above and "ALL OTHER FEES" is compatible with maintaining the
independence of Bush & Germain, P. C.
CERTAIN TRANSACTIONS WITH DIRECTORS
During the fiscal years ended December 31, 2000 and 2001, the Company paid a
total of $255,860.00 and $322,717.72, respectively, to John W. Sanford & Son,
Inc., of which Corinna S. Lewis, a Director of the Company, is a director and
shareholder. These amounts were paid as premiums on property, liability and
workers' compensation insurance policies maintained by the Company. The Company
believes that the transactions with John W. Sanford & Son, Inc. are on terms as
favorable as those available from unaffiliated third parties.
III. APPROVAL OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The public accounting firm of Bush & Germain, P. C. served as the independent
auditors of the Company for the fiscal year ended December 31, 2001, and the
Company's Board of Directors has selected Bush & Germain, P. C. as the Company's
auditors for the fiscal year ending December 31, 2002. This selection will be
presented to the shareholders for their approval at the Meeting. The Board of
Directors recommends a vote in favor of the proposal to approve and ratify this
selection, and the persons named in the enclosed proxy (unless otherwise
instructed therein) will vote such proxies FOR such proposal. If the
shareholders do not approve this selection, the Board of Directors will
reconsider its choice. A representative of Bush & Germain, P. C. is not expected
to attend the Meeting, however, in the event a representative does attend, such
representative will have the opportunity to make a statement and respond to
appropriate questions.
IV. OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors knows of no other matters which are likely to be
brought before the Meeting. However, if any other matter should properly come
before the Meeting it is the intention of the persons named in the enclosed
proxy to vote in accordance with their judgment on such matter.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with the regulations of the Securities and
Exchange Commission. If a shareholder intends to present a proposal at the
Company's 2003 Annual Meeting of Shareholders, the proposal must be received by
the Secretary of the Company, 47 Main Street, Warwick, New York 10990, not later
than December 6, 2002 in order to be included in the Company's Proxy Statement
and form of proxy relating to such Annual Meeting of Shareholders. Under the
rules of the Securities and Exchange Commission, shareholders submitting such
proposals are required to have held shares of the Company's Common Stock
amounting to at least $2,000 in market value or one percent of the Common Stock
outstanding for at least one year prior to the date on which such proposals are
submitted. Furthermore, such shareholders must continue to own at least that
amount of the Company's Common Stock through the date on which the Annual
Meeting of Shareholders is held.
Rule 14a-4 of the Securities and Exchange Commission's proxy rules allows a
company to exercise discretionary voting authority to vote on matters coming
before an annual meeting of shareholders if the company does not have notice of
the matter at least 45 days before the date corresponding to the date on which
the company first mailed its proxy materials for the prior year's annual meeting
of shareholders or the date specified by an advance notice provision in the
company's by-laws. The By-laws of the Company do not contain an advance notice
provision. The date by which shareholders must submit their proposals for the
Company's 2003 Annual Meeting of Shareholders for purposes of Rule 14a-4 is
February 19, 2003.
BY ORDER OF THE BOARD OF DIRECTORS,
Dated: April 5, 2002 Herbert Gareiss, Jr., Secretary
7
NOTES
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PROXY
WARWICK VALLEY TELEPHONE COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints HERBERT GAREISS, Jr. and COLLEEN
SHANNON, and each of them, proxies for the undersigned, with full power of
substitution, to vote all shares of the Common Stock of WARWICK VALLEY TELEPHONE
COMPANY owned by the undersigned at the Annual Meeting of Shareholders of
Warwick Valley Telephone Company to be held at the Warwick Conference Center,
Warwick Center Road, Warwick, New York, on Friday, April 26, 2002 at 2:00 p.m.,
local time, and at any adjournments thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. THIS PROXY
REVOKES ANY PRIOR PROXY GIVEN BY THE UNDERSIGNED. UNLESS AUTHORITY TO VOTE FOR
ONE OR MORE OF THE NOMINEES IS SPECIFICALLY WITHHELD ACCORDING TO THE
INSTRUCTIONS, A SIGNED PROXY WILL BE VOTED FOR THE ELECTION OF THE THREE
NOMINEES FOR DIRECTORS, AND, UNLESS OTHERWISE SPECIFIED, FOR EACH OF THE OTHER
TWO PROPOSALS LISTED HEREIN AND DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT WITH THIS PROXY OF A COPY OF THE NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT DATED APRIL 5, 2002, DESCRIBING MORE FULLY
THE PROPOSALS SET FORTH HEREIN.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
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PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
WARWICK VALLEY TELEPHONE COMPANY
APRIL 26, 2002
- Please Detach and Mail in the Envelope Provided -
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A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE RESOLUTIONS.
listed at right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed at right
II. ELECTION [ ] [ ] NOMINEES: I. PROPOSAL TO FIX THE NUMBER OF FOR AGAINST ABSTAIN
OF Philip S. Demarest DIRECTORS AT TEN until the [ ] [ ] [ ]
DIRECTORS: Herbert Gareiss, Jr. Company's next Annual Meeting.
Corinna S. Lewis
INSTRUCTION: TO WITHHOLD AUTHORITY TO III. PROPOSAL TO APPROVE THE APPOINTMENT
VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A OF BUSH AND GERMAIN, PC as the [ ] [ ] [ ]
LINE THROUGH THE NOMINEE'S NAME IN THE independent public accountants of
LIST AT RIGHT. the Company for the year ending
December 31, 2002.
IV. In their discretion, the Proxies are authorized to Vote
upon such other business as may properly come before the
Annual Meeting.
Signature WITNESS my hand this day of , 2002
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NOTE: Please sign exactly as name appears hereon. When shares are held by joint tenants both should sign. When signing as an
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign
in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by
authorized person.
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