SHENANDOAH TELECOMMUNICATIONS COMPANY
124 South Main Street
Edinburg, Virginia
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 16, 1996
March 22, 1996
TO THE STOCKHOLDERS OF
SHENANDOAH TELECOMMUNICATIONS COMPANY:
The annual meeting of stockholders of Shenandoah
Telecommunications Company will be held in the Social Hall of the
Edinburg Fire Department, Stoney Creek Boulevard, Edinburg,
Virginia, on Tuesday, April 16, 1996, at 11:00 a.m. for the
following purposes:
1. To elect nine directors to serve for the ensuing year;
2. To approve the Shenandoah Telecommunications Company Stock
Incentive Plan; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business March
20, 1996, will be entitled to vote at the meeting.
Lunch will be provided.
By Order of the Board of Directors
Harold Morrison, Jr.
Secretary
IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN, AND RETURN THE ENCLOSED PROXY
CARD IN THE SELF-ADDRESSED STAMPED (FOR U. S. MAILING) ENVELOPE
PROVIDED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING IN
PERSON, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE YOUR OWN
SHARES.
SEE PROXY STATEMENT ON THE FOLLOWING PAGES
PAGE
PROXY STATEMENT
P. O. Box 459
Edinburg, VA 22824
March 22, 1996
TO THE STOCKHOLDERS OF
SHENANDOAH TELECOMMUNICATIONS COMPANY:
Your proxy in the enclosed form is solicited by the
management of the Company for use at the Annual Meeting of
Stockholders to be held in the Social Hall of the Edinburg Fire
Department, Stoney Creek Boulevard, Edinburg, Virginia, on
Tuesday, April 16, 1996, at 11:00 a.m., and any adjournment
thereof.
The mailing address of the Company's executive offices is
P. O. Box 459, Edinburg, Virginia 22824.
The Company has 8,000,000 authorized shares of common stock,
of which 3,760,760 shares were outstanding on March 20, 1996.
This proxy statement and the Company's annual report, including
financial statements for 1995, are being mailed on or about March
22, 1996, to approximately 3,270 stockholders of record on March
20, 1996. Only stockholders of record on that date are entitled
to vote. Each outstanding share will entitle the holder to one
vote at the Annual Meeting. No director, officer, or other party
owns as much as five percent of the outstanding shares of the
common stock of the Company. The Company intends to solicit
proxies by the use of the mail, in person, and by telephone. The
cost of soliciting proxies will be paid by the Company.
Executed proxies may be revoked at any time prior to
exercise. Proxies will be voted as indicated by the
stockholders.
THE ELECTION OF DIRECTORS
At the meeting, nine directors (constituting the entire
Board of Directors of the Company) are to be elected for the
ensuing year.
The proxy holders will vote the proxies received by them
(unless contrary instructions are noted on the proxies) for the
election as directors of the following nominees, all of whom are
now members of and constitute the Company's Board of Directors.
If any such nominees should be unavailable, the proxy holders
will vote for substitute nominees in their discretion.
Stockholders may withhold the authority to vote for the election
of directors or one or more of the nominees. Directors will be
elected by a plurality of the votes cast. Abstentions and shares
held in street name that are not voted in the election of
directors will not be included in determining the number of votes
cast.
PAGE
THE ELECTION OF DIRECTORS (Continued)
Warren B. French, Jr. retired as Chairman and Director
December 31, 1995 in accordance with the age requirements of the
Bylaws of the Company; and effective January 1, 1996, President
Christopher French replaced him as Director. I. Clinton Miller,
who resigned as Director February 14, 1996, because of his
appointment to the Virginia State Corporation Commission, was
replaced effective February 15 by Philip M. Grabill, Jr.
PAGE
Nominees for Election of Directors
Elected Principal Occupation and Other
Name of Director Director Age Directorships for Past Five Years
(1) (2) (3)
Noel M. Borden 1972 59 Pres., H. L. Borden Lumber Co. (a
Vice President retail building materials firm); Chairman of Board,
1st National Corp.
Dick D. Bowman 1980 67 Pres., Bowman Bros., Inc. (a farm
Treasurer of the Co. equip. dealer); Dir., Shen. Valley
Elec. Coop.; Dir., Rockingham Mutual Ins. Co.; Dir.,
Old Dominion Electric Coop.
Ken L. Burch 1995 51 Farmer
Christopher E. French 1996 38 Pres., Shen. Telecommunications Co.
President & its Subsidiaries; Dir., 1st National Corp.
Philip M. Grabill, Jr. 1996 46 Attorney-at-Law
Grover M. Holler, Jr. 1952 75 Pres., Blue Ridge Homes, Inc. (a real estate
developer); Pres., Valley View, Inc.
Harold Morrison, Jr. 1979 66 Chairman of the Board, Woodstock
Secretary of the Co. Garage, Inc. (auto sales & repair
firm); Dir., 1st Va. Bank-SV
Zane Neff 1976 67 Retired Manager, Hugh Saum Co.,
Asst. Secretary Inc. (a hardware and furniture
of the Co. store); Director, Crestar Bank
James E. Zerkel II 1985 51 Vice Pres., James E. Zerkel, Inc.
(a plumbing, heating, gas, & hardware firm)
PAGE
(1) The directors who are not full-time employees of the Company were compensated in 1995
for their services on the Board and one or more of the Boards of the Company's
subsidiaries at the rate of $340 per month plus $340 for each Board meeting attended.
Additional compensation was paid to the Vice President, Secretary, Assistant Secretary,
and Treasurer, for their services in these capacities, in the amounts of $1,240, $2,600,
$1,240, and $2,600, respectively.
(2) Years shown are when first elected to the Board of the Company or the Company's
predecessor, Shenandoah Telephone Company. Each nominee has served continuously since
the year he joined the Board.
(3) Each director also serves as a director of one or more of the Company's subsidiaries.
/TABLE
Standing Audit, Nominating, and Compensation Committees
of the Board of Directors
1. Audit Committee - The Finance Committee of the Board of
Directors, consisted of the following directors: Dick D.
Bowman (Chairman), Grover M. Holler, Jr., and Noel M.
Borden. It performed a function similar to that of an
Audit Committee. This committee is responsible for the
employment of outside auditors and for receiving and
reviewing the auditor's report. During 1995 there were
three meetings of the Finance Committee. Additional
business of the committee was conducted in connection with
the regular Board meetings.
2. Nominating Committee - The Board of Directors does not
have a standing Nominating Committee.
3. Compensation Committee - The Personnel Committee of the
Board of Directors, consisted of the following directors:
Noel M. Borden (Chairman), Harold Morrison, Jr., and I.
Clinton Miller. It performed a function similar to that of
a Compensation Committee. This committee is responsible
for the wages, salaries, and benefit programs for all
employees. During 1995 there were three meetings of this
committee.
Attendance of Board Members at Board and Committee Meetings
During 1995, the Board of Directors held 14 meetings. All of
the directors attended at least 75 percent of the aggregate of:
(1) the total number of meetings of the Board of Directors; and
(2) the total number of meetings held by all committees of the
Board on which they served.
Certain Transactions
In 1995, the Company received services from Mr. Morrison's
company in the amount of $10,827 and from Mr. Zerkel's company in
the amount of $9,390. Management believes that each of the
companies provides these services to the Company on terms
comparable to those available to the Company from other similar
companies. No other director is an officer, director, employee,
or owner of a significant supplier or customer of the Company.
PAGE
STOCK OWNERSHIP
The following table presents information relating to the beneficial ownership of the
Company's outstanding shares of common stock by all directors, the president, and all
directors and officers as a group.
No. of Shares
Name and Address Owned as of 2-1-96 Percent of Class
(1) (2)
Noel M. Borden 17,456 *
Strasburg, VA 22657
Dick D. Bowman 42,744 1.14
Edinburg, VA 22824
Ken L. Burch 45,172 1.20
Quicksburg, VA 22847
Christopher E. French 127,486 3.39
Woodstock, VA 22664
Philip M. Grabill, Jr. 3,840 *
Woodstock, VA 22664
Grover M. Holler, Jr. 70,736 1.88
Edinburg, VA 22824
Harold Morrison, Jr. 20,378 *
Woodstock, VA 22664
Zane Neff 7,616 *
Edinburg, VA 22824
James E. Zerkel II 4,298 *
Mt. Jackson, VA 22842
Total shares beneficially
owned by 12 directors and
officers as a group 341,882 9.09
(1) Includes shares held by relatives and in certain trust relationships, which may be
deemed to be beneficially owned by the nominees under the rules and regulations of the
Securities and Exchange Commission; however, the inclusion of such shares does not
constitute an admission of beneficial ownership.
(2) Asterisk indicates less than 1%.
PAGE
A report of beneficial ownership to the S.E.C. for the purchase of 300 shares by Dick D.
Bowman, Treasurer, was filed late due to a broker's delay in delivery for transfer. A
report of beneficial ownership to the S.E.C. for the purchase of 100 shares for an IRA and
30 shares for a Keogh Plan by Christopher E. French, President, was filed late due to a
clerical error.
SUMMARY COMPENSATION TABLE
The following Summary Table is furnished as to the salary and incentive payment paid by
the Company and its subsidiaries on an accrual basis during the fiscal years 1993, 1994,
and 1995 to, or on behalf of, the chief executive officer and each of the next four most
highly compensated executive officers who earn $100,000 or more per year.
Name and Principal Incentive
Position Year Salary Payment
Christopher E. French 1995 $114,684 $ 20,150
President 1994 107,816 14,875
1993 100,904 14,159
/TABLE
RETIREMENT PLAN
The Company maintains a noncontributory defined benefit
Retirement Plan for its employees. The following table
illustrates normal retirement benefits based upon Final Average
Compensation and years of credited service. The normal
retirement benefit is equal to the sum of:
(1) 1.14% times Final Average Compensation plus 0.65% times
Final Average Compensation in excess of Covered
Compensation (average annual compensation with respect to
which Social Security benefits would be provided at Social
Security retirement age) times years of service (not
greater than 30); and
(2) 0.29% times Final Average Compensation times years of
service in excess of 30 years (such excess service not to
exceed 15 years).
Estimated Annual Pension
Years of Credited Service
Final Average
Compensation 15 20 25 30 35
$ 20,000 $ 3,420 $ 4,560 $ 5,700 $ 6,840 $ 7,130
35,000 6,709 8,945 11,181 13,418 13,925
50,000 10,736 14,315 17,894 21,473 22,198
75,000 17,449 23,265 29,081 34,898 35,985
100,000 24,161 32,215 40,269 48,323 49,773
120,000 29,531 39,375 49,219 59,063 60,803
Covered Compensation for those retiring in 1996 is $27,576.
Final Average Compensation equals an employee's average annual
compensation for the five consecutive years of credited service
for which compensation was the highest. The amounts shown as
estimated annual pensions were calculated on a straight-life
basis assuming the employee retires in 1996. The Company made
contributions totaling $197,200 to the Retirement Plan in 1995.
Christopher French has 14 years of credited service under the
plan as of January 1, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The members of the Personnel Committee of the Board of
Directors of the Company perform the function of a Compensation
Committee. The Committee's approach to compensation of the
Company's executive officers, including the chief executive
officer, is to award a total compensation package consisting of
salary, incentive, and fringe benefit components. The
compensation package is designed to provide a level of
compensation to enable the Company to attract and retain the
executive talent necessary for the long-term success of the
organization.
PAGE
The incentive plan component of the total compensation package
provides an incentive to the officers to meet or exceed certain
performance objectives. The plan also places a portion of the
officers' compensation at risk in the event the Company does not
achieve its objectives. The objectives include a component
measuring the improvement in the level of service provided to the
Company's customers and a component measuring the increase in the
Company's net income. In 1995, the Company reached over 123
percent of its combined goals.
Submitted by the Company's Personnel Committee:
Noel Borden, Chairman, Harold Morrison, Jr.,
Clinton Miller
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The Securities and Exchange Commission requires that the
Company include in its Proxy Statement a line graph presentation
comparing cumulative, five-year stockholder returns on an indexed
basis with a performance indicator of the overall stock market
and either a nationally recognized industry standard or an index
of peer companies selected by the Company. The broad market
index used in the graph is the NASDAQ Market Index. The S&P
Telephone Index consists of the seven regional Bell Operating
Companies and GTE.
The Company's stock is not listed on any national exchange nor
NASDAQ; therefore, for purposes of the following graph, the value
of the Company's stock, including the price at which dividends
are assumed to have been reinvested, has been determined based
upon the average of the prices of transactions in the Company's
stock that were reported to the Company in each fiscal year.
Comparison of Five-Year Cumulative Total Return* among Shenandoah
Telecommunications Company, NASDAQ Market Index, and S&P
Telephone Index
1990 1991 1992 1993 1994 1995
Shenandoah
Telecommunications 100.00 177.11 186.83 195.65 186.88 201.52
NASDAQ Market
Index 100.00 160.00 186.90 214.50 209.70 296.30
S&P Telephone
Index 100.00 107.54 118.01 136.29 130.66 196.82
Assumes $100 invested December 31, 1990 in Shenandoah
Telecommunications Company stock, NASDAQ Market Index, and S&P
Telephone Index
*Total return assumes reinvestment of dividends
PAGE
APPROVAL OF THE SHENANDOAH TELECOMMUNICATIONS
COMPANY STOCK INCENTIVE PLAN
The Board proposes that the shareholders approve the
Shenandoah Telecommunications Company Stock Incentive Plan (the
"Plan"), adopted by the Board on January 8, 1996, subject to the
approval of the Company's shareholders. The approval of the Plan
requires the affirmative vote of the holders of a majority of the
shares of Common Stock present or represented by properly
executed and delivered proxies at the meeting. Abstentions and
Broker Shares voted as to any matter at the meeting will be
included in determining the number of votes present or
represented at the meeting with respect to determining the vote
on the Plan. Broker Shares that are not voted on any matter at
the meeting will not be included in determining the number of
shares present or represented at the meeting with respect to
determining the vote on the Plan.
The following paragraphs summarize the principal features of
the Plan. This summary is subject, in all respects, to the terms
of the Plan. The Company will provide promptly, upon request and
without charge, a copy of the full text of the Plan to each
person to whom a copy of this proxy statement is delivered.
Requests should be directed to: Laurence F. Paxton, Vice
President-Finance, Shenandoah Telecommunications Company, P. O.
Box 459, Edinburg, Virginia 22824 (Telephone (540) 984-5222).
Summary of the Plan
The Board believes that the Plan will benefit the Company by
(i) assisting it in recruiting and retaining employees with
ability and initiative, (ii) providing greater incentive for
employees of the Company or its affiliates and (iii) associating
the interests of employees with those of the Company, its
affiliates, and its shareholders through opportunities for
increased stock ownership. A maximum of 240,000 shares of Common
Stock may be issued under the Plan.
The Personnel Committee of the Board (the "Committee") will
administer the Plan. The Committee may delegate its authority to
administer the Plan to one or more officers of the Company. The
Committee, however, may not delegate its authority with respect
to individuals who are subject to Section 16 of the Securities
Exchange Act of 1934 ("Section 16"). As used in this summary,
the term "Administrator" means the Committee and any delegate, as
appropriate.
Each employee of the Company or an affiliate is eligible to
participate in the Plan. The Administrator will select the
individuals who will participate in the Plan ("Participants") but
no person may participate in the Plan while he is a member of the
Committee. The Administrator may, from time to time, grant stock
options, stock appreciation rights ("SARs"), or stock awards to
Participants.
Options granted under the Plan may be incentive stock options
("ISOs") or nonqualified stock options. A stock option entitles
the Participant to purchase shares of Common Stock from the
Company at the option price. The option price will be fixed by
the Administrator at the time the option is granted, but the
price cannot be less than the shares' Fair Market Value on the
date of grant. The option price may be paid in cash, with shares
of Common Stock, or with a combination of cash and Common Stock.
"Fair Market Value" means, on any given date, the fair market
value of a share of Common Stock as determined by the Committee
using any reasonable method in good faith.
SARs entitle the Participant to receive with respect to each
share of Common Stock encompassed by the exercise of such SAR, an
amount determined by the Committee. If the Committee does not
make such a determination, the Participant will be entitled to
receive the excess of the Fair Market Value of a share of Common
Stock on the date of exercise over the initial value of the SAR.
The initial value of the SAR is the Fair Market Value of a share
of Common Stock on the date of grant. The amount payable upon
the exercise of an SAR may be paid in cash, Common Stock, or a
combination of the two.
SARs may be granted in relation to option grants
("Corresponding SARs") or independently of option grants. The
difference between these two types of SARs is that to exercise a
Corresponding SAR, the Participant must surrender unexercised
that portion of the stock option to which the Corresponding SAR
relates.
Participants may also be awarded shares of Common Stock
pursuant to a stock award. The Administrator, in its discretion,
may prescribe that a Participant's rights in a stock award shall
be nontransferable or forfeitable or both unless certain
conditions are satisfied. These conditions may include, for
example, a requirement that the Participant continue employment
with the Company or an affiliate for a specified period or that
the Company, an affiliate, or the Participant achieve stated
objectives.
All awards made under the Plan will be evidenced by written
agreements between the Company and the Participant. A maximum of
240,000 shares of Common Stock may be issued under the Plan. The
share limitation and the terms of outstanding awards shall be
adjusted, as the Committee deems appropriate, in the event of a
stock dividend, stock split, combination, reclassification,
recapitalization, or other similar events.
No option, SAR or stock award may be granted under the Plan
after January 7, 2006. The Board may sooner terminate the Plan
without further action by shareholders. The Board also may amend
the Plan except that no amendment that increases the number of
shares of Common Stock that may be issued under the Plan, changes
the class of individuals who may be selected to participate in
the Plan, or materially increases the benefits that may be
provided under the Plan will become effective until it is
approved by shareholders.
Neither the number of individuals who will be selected to
participate in the Plan nor the type or size of awards that will
be approved by the Administrator can be determined. The Company
is also unable to determine the number of individuals who would
have participated in the Plan or the type or size of awards that
would have been made under the Plan had it been in effect in
1995.
Federal Income Tax Consequences
The Company has been advised by counsel regarding the federal
income tax consequences of the Plan. No income is recognized by
a Participant at the time an option is granted. If the option is
an ISO, no income will be recognized upon the Participant's
exercise of the option. Income is recognized by a Participant
when he disposes of shares acquired under an ISO. The exercise
of a nonqualified stock option generally is a taxable event that
requires the Participant to recognize, as ordinary income, the
difference between the shares' fair market value and the option
price.
No income is recognized upon the grant of an SAR. The
exercise of an SAR generally is a taxable event. The Participant
generally must recognize income equal to any cash that is paid
and the fair market value of Common Stock that is received in
settlement of an SAR.
The Participant will recognize income on account of a stock
award on the first day that the shares are either transferable or
not subject to a substantial risk of forfeiture. The amount of
income recognized by the Participant is equal to the fair market
value of the Common Stock received on that date.
The employer (either the Company or an affiliate) will be
entitled to claim a federal income tax deduction on account of
the exercise of a nonqualified option or SAR and the vesting of a
stock award. The amount of the deduction is equal to the
ordinary income recognized by the Participant. The employer will
not be entitled to a federal income tax deduction on account of
the grant or the exercise of an ISO. The employer may claim a
federal income tax deduction on account of certain dispositions
of Common Stock acquired upon the exercise of an ISO.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE SHENANDOAH TELECOMMUNICATIONS COMPANY INCENTIVE
PLAN.
PAGE
EMPLOYMENT OF AUDITORS
The Board of Directors, on the recommendation of the Audit
Committee, has appointed the firm of McGladrey and Pullen as
auditors to make an examination of the accounts of the Company
for the 1996 fiscal year. It is not expected that representatives
of the firm will be present at the annual meeting.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders to be included in management's
proxy statement and form of proxy relating to next year's annual
meeting must be received at the Company's principal executive
offices not later than November 22, 1996.
OTHER MATTERS
Management does not intend to bring before the meeting any
matters other than those specifically described above and knows
of no matters other than the foregoing to come before the
meeting. If any other matters properly come before the meeting,
it is the intention of the persons named in the accompanying form
of proxy to vote such proxy in accordance with their judgment on
such matters, including any matters dealing with the conduct of
the meeting.
FORM 10-K
The Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission is available to stockholders,
without charge, upon request to Mr. Laurence F. Paxton, Vice
President-Finance, Shenandoah Telecommunications Company, P. O.
Box 459, Edinburg, VA 22824.
PAGE
(Front)
PROXY
SHENANDOAH TELECOMMUNICATIONS COMPANY
124 South Main Street This Proxy is Solicited on Behalf
Edinburg, VA 22824 of the Board of Directors
The undersigned hereby appoints Christopher E. French, Noel
M. Borden, and Grover M. Holler, Jr., and each of them, as
Proxies with full power of substitution, to vote all common stock
of Shenandoah Telecommunications Company held of record by the
undersigned as of March 20, 1996, at the Annual Meeting of
Stockholders to be held on April 16, 1996, and at any and all
adjournments thereof.
1. ELECTION OF DIRECTORS
( ) FOR Noel M. Borden, Dick D. Bowman, Ken L. Burch,
Christopher E. French, Philip M. Grabill, Jr., Grover
M. Holler, Jr., Harold Morrison, Jr., Zane Neff, James
E. Zerkel II
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
LISTED ABOVE
( ) VOTE WITHHELD for all nominees listed above
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
ELECTION OF DIRECTORS.
2. APPROVAL OF THE SHENANDOAH TELECOMMUNICATIONS COMPANY STOCK
INCENTIVE PLAN
( ) FOR
( ) AGAINST
( ) ABSTAIN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE SHENANDOAH TELECOMMUNICATIONS STOCK INCENTIVE
PLAN.
(Back)
3. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND
2.
Please mark, sign exactly as name appears below, date, and
return this proxy card promptly, using the enclosed envelope,
whether or not you plan to attend the meeting.
________________________________________________________________
When signing as attorney,
executor, administrator,
trustee, guardian, or agent,
please give full title as
such. If a corporation,
please sign in full corporate
name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated___________________, 1996
____________________________________________
Signature
I plan to attend the meeting___
Number of persons attending ___
____________________________________________
I cannot attend the meeting ___
Additional Signature (if held jointly)
