def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant To
Section 14(a) of
The Securities Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o |
Preliminary Proxy Statement |
o |
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)) |
þ |
Definitive Proxy Statement |
o |
Definitive Additional Materials |
ALASKA COMMUNICATIONS SYSTEMS GROUP, 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):
þ |
Fee not required. |
o |
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: |
|
|
|
|
|
|
|
(2) |
Aggregate number of securities to which transaction
applies: |
|
|
|
|
|
|
|
(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): |
|
|
|
|
|
|
|
(4) |
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
(5) |
Total fee paid: |
|
|
|
|
|
|
SEC 1913 (04-05) |
|
Persons who are to respond to the
collection of information contained in this form are not required to
respond unless the form displays a currently valid OMB control number. |
|
o |
Fee paid previously with preliminary materials. |
o |
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: |
|
|
|
|
|
|
|
(2) |
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
(3) |
Filing Party: |
|
|
|
|
|
|
|
(4) |
Date Filed: |
|
|
|
|
|
|
Alaska Communications Systems Group, Inc.
600 Telephone Avenue
Anchorage, Alaska 99503
Notice of Annual Meeting of Stockholders
to be Held June 12, 2009
You are cordially invited to attend the 2009 Annual Meeting of Stockholders of Alaska
Communications Systems Group, Inc., to be held at our corporate headquarters at 600 Telephone
Avenue, 4th floor, Anchorage, Alaska 99503, on Friday, June 12, 2009 at 9:00 a.m.
Alaska time, for the following purposes:
|
1. |
|
To elect eight directors for one-year terms expiring at the 2010 Annual Meeting; |
|
|
2. |
|
To approve an amendment to our 1999 Stock Incentive Plan extending the term of
the plan to December 31, 2012, making adjustments to the language of the Plan, and
allocating an additional 3,500,000 shares to the plan; |
|
|
3. |
|
To approve an amendment to our 1999 Employee Stock Purchase Plan to extend the
term of the plan to December 31, 2012 and reduce the shares allocated under the plan by
500,000; |
|
|
4. |
|
To approve an amendment to our 1999 Non-Employee Directors Stock Compensation
Plan to extend the term of the plan to December 31, 2012 and increase the shares
allocated under the plan by 150,000; |
|
|
5. |
|
To ratify the appointment of KPMG LLP as the companys independent auditors for
the year ending December 31, 2009; and |
|
|
6. |
|
To transact any other business that may properly come before the annual meeting
or any adjournment thereof. |
These matters are described in more detail in the accompanying proxy statement. In addition,
financial and other information about Alaska Communications Systems Group, Inc. is contained in the
accompanying Annual Report on Form 10-K for the year ended December 31, 2008. We encourage you to
read the proxy statement and the other information carefully.
Only stockholders of record at the close of business on April 21, 2009 will be entitled to
vote at the annual meeting including any adjournment or adjourned meeting held thereafter. During
the ten days prior to the annual meeting, a list of such stockholders will be available for
inspection at the executive offices at the address set forth above.
Whether or not you plan to attend the meeting, please promptly complete and return the
accompanying proxy (or follow the instructions set forth in the accompanying proxy to vote by
telephone or the Internet). Returning your proxy as described above does not deprive you of your
right to attend the meeting and to vote your shares in person. However, in order to vote your
shares in person at the meeting, you must be a stockholder of record or hold a valid proxy from
your broker permitting you to vote at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be Held on June 12, 2009:
The 2008 Annual Report and Proxy Statement of Alaska Communications Systems Group, Inc. are
available at www.proxydocs.com/alsk or via our investor relations website at www.alsk.com.
By order of the Board of Directors,
Leonard Steinberg
Vice President, General Counsel and
Corporate Secretary
Anchorage, Alaska
April 30, 2009
Please mark, sign and date the accompanying proxy and return it promptly.
The proxy is revocable at any time prior to its use.
Table of Contents
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
5 |
|
|
|
|
|
6 |
|
|
|
|
|
7 |
|
|
|
|
|
7 |
|
|
|
|
|
10 |
|
|
|
|
|
11 |
|
|
|
|
|
11 |
|
|
|
|
|
11 |
|
|
|
|
|
11 |
|
|
|
|
|
11 |
|
|
|
|
|
12 |
|
|
|
|
|
13 |
|
|
|
|
|
13 |
|
|
|
|
|
13 |
|
|
|
|
|
13 |
|
|
|
|
|
13 |
|
|
|
|
|
21 |
|
|
|
|
|
21 |
|
|
|
|
|
22 |
|
|
|
|
|
23 |
|
|
|
|
|
24 |
|
|
|
|
|
25 |
|
|
|
|
|
25 |
|
|
|
|
|
29 |
|
|
|
|
|
33 |
|
|
|
|
|
34 |
|
|
|
|
|
36 |
|
|
|
|
|
36 |
|
|
|
|
|
36 |
|
|
|
|
|
37 |
|
|
|
|
|
37 |
|
|
|
|
|
38 |
|
|
|
|
|
38 |
|
|
|
|
|
39 |
|
2
PROXY STATEMENT
Alaska Communications Systems Group, Inc.
600 Telephone Avenue
Anchorage, Alaska 99503
Annual Meeting of Stockholders
to be Held June 12, 2009
Information about the Annual Meeting of Stockholders
Date, Time and Place of Meeting
The annual meeting will be held on Friday, June 12, 2009 beginning at 9:00 a.m. local time in
the 4th floor conference room of our executive offices located at 600 Telephone Avenue, Anchorage,
Alaska 99503.
Proposals to Be Considered
At the annual meeting, you will be asked to vote on the following proposals:
|
1. |
|
To elect eight directors for one-year terms expiring at the 2010 Annual
Meeting; |
|
|
2. |
|
To approve an amendment to our 1999 Stock Incentive Plan extending the term of
the plan to December 31, 2012, allocating an additional 3,500,000 shares to the plan,
among other changes; |
|
|
3. |
|
To approve an amendment to our 1999 Employee Stock Purchase Plan to extend the
term of the plan to December 31, 2012 and reduce the shares allocated under the plan by
500,000; |
|
|
4. |
|
To approve an amendment to our 1999 Non-Employee Directors Stock Compensation
Plan to extend the term of the plan to December 31, 2012 and increase the shares
allocated under the plan by 150,000; |
|
|
5. |
|
To ratify the appointment of KPMG LLP as the companys independent auditors for
the year ending December 31, 2009; and |
|
|
6. |
|
To transact any other business that may properly come before the annual meeting
or any adjournment thereof. |
About this Proxy Statement
Our Board of Directors has made this proxy statement available to you to solicit your vote at
the annual meeting including any adjournment or adjourned meeting held thereafter. This proxy
statement contains summarized information required to be provided to stockholders under rules
promulgated by the Securities and Exchange Commission and is designed to assist stockholders in
voting their shares. On or about April 30, 2009, we will begin mailing a notice of Internet
availability of proxy materials, or the proxy materials, to all stockholders of record at the
close of business on April 21, 2009 (the Record Date).
Voting
Only stockholders of record as of the close of business on the Record Date will be entitled
to vote their shares at the annual meeting or any adjournment thereof. Each share is entitled to
one vote at the meeting. At the close of business on the Record Date, there were 44,177,898
outstanding shares of our common stock, par value $0.01 per share.
By proxy
If you received a Notice of Internet Availability of Proxy Materials by mail, you may vote
your shares by proxy at the Internet site address listed on your notice. You may also request a
free paper copy of the proxy materials by visiting the Internet site
3
address listed on your notice,
by calling the listed telephone number, or by sending an e-mail to the e-mail address listed on
your notice.
If you received a paper copy of the proxy materials by mail, please sign, date, and return the
enclosed proxy card in the envelope provided.
The individuals named in the proxy materials are your proxies. They will vote your shares as
indicated. If you submit your proxy without indicating how you wish to vote, all of your shares
will be voted:
|
|
|
FOR all of the nominees for director; |
|
|
|
|
FOR the amendment to the Alaska Communications Systems Group, Inc. 1999 Stock
Incentive Plan; |
|
|
|
|
FOR the amendment to the Alaska Communications Systems Group, Inc. 1999 Employee
Stock Purchase Plan; |
|
|
|
|
FOR the amendment to the 1999 Non-Employee Directors Plan; |
|
|
|
|
FOR ratification of the appointment of KPMG as the companys independent auditors
for 2009; and |
|
|
|
|
at the discretion of your proxies on any other matter that may be properly brought
before the annual meeting. |
In person
You may attend the annual meeting and vote in person. In order to vote in person, you must
have been a stockholder of record as of the Record Date, or hold a valid legal proxy from your
broker permitting you to vote at the meeting.
Revocation of Proxy
You may revoke your proxy before it is voted at the meeting by:
|
|
|
filing a written notice of revocation dated after the proxy date with Alaska
Communications Systems Group, Inc.; |
|
|
|
|
submitting to Alaska Communications Systems Group, Inc. a duly executed proxy for
the same shares of common stock bearing a later date than the original proxy; or |
|
|
|
|
attending the annual meeting and voting in person at the meeting. |
Attendance at the meeting will not, in and of itself, constitute revocation of a proxy. All
written notices of revocation and other communications regarding the revocation of proxies should
be addressed as follows: Alaska Communications Systems Group, Inc., Attention: Leonard Steinberg,
Vice President, General Counsel and Corporate Secretary, 600 Telephone Avenue MS65, Anchorage,
Alaska 99503.
Heidi L. Thomerson, an employee of the company designated by the Secretary, will act as
Inspector of Elections, and Mediant Communications, LLC will act as tabulator of the votes for
bank, broker and other stockholder of record proxies.
Quorum
Holders of a majority of the outstanding shares of capital stock entitled to vote generally
in the election of directors must be present at the meeting, in person or by proxy, for a quorum
to be present. If a quorum is not present, the Chair of the Board of Directors or a majority in
interest of the stockholders present and entitled to vote may adjourn the annual meeting.
Shares present either by proxy or in person that reflect abstentions or broker non-votes will
be counted toward a
quorum. Broker non-votes occur when a nominee (such as a bank or broker) returns a proxy,
but does not have the authority to vote on a particular proposal because it has not received
voting instructions from the beneficial owner.
Votes Necessary for Approval of Proposals
|
|
|
|
|
|
|
Proposal 1:
|
|
Election of Directors The eight persons nominated for director
receiving the most votes will be elected. Broker non-votes and abstentions will not
affect the election of directors except to the extent that failure to vote for an
individual results in another individual receiving a larger proportion of votes. |
|
|
|
|
|
|
|
Proposal 2:
|
|
Approval of the amendment to the Alaska Communications Systems Group,
Inc 1999 Stock Incentive Plan must receive an affirmative vote from a majority of
the shares of common stock that are present in person or by proxy and are voting on
such proposal. Broker non-votes and abstentions will reduce the |
4
|
|
|
|
|
|
|
|
|
absolute number but
not the percentage of the votes needed for approval. They will not be counted as
votes for or against this proposal. |
|
|
|
|
|
|
|
Proposal 3:
|
|
Approval of the amendment to the Alaska Communications Systems Group,
Inc 1999 Employee Stock Purchase Plan must receive an affirmative vote from a
majority of the shares of common stock that are present in person or by proxy and are
voting on such proposal. Broker non-votes and abstentions will reduce the absolute
number but not the percentage of the votes needed for approval. They will not be
counted as votes for or against this proposal. |
|
|
|
|
|
|
|
Proposal 4:
|
|
Approval of the amendment to the Alaska Communications Systems Group,
Inc 1999 Non-Employee Directors Stock Compensation Plan must receive an affirmative
vote from a majority of the shares of common stock that are present in person or by
proxy and are voting on such proposal. Broker non-votes and abstentions will reduce
the absolute number but not the percentage of the votes needed for approval. They
will not be counted as votes for or against this proposal. |
|
|
|
|
|
|
|
Proposal 5:
|
|
Ratification of Independent Auditors The ratification of KPMG LLP as
our independent auditors for the year ending December 31, 2009 must receive an
affirmative vote from a majority of the shares of common stock that are present in
person or by proxy and are voting on such proposal. Broker non-votes and abstentions
will reduce the absolute number but not the percentage of the votes needed for
approval. They will not be counted as votes for or against this proposal. |
Costs of Proxies
In addition to mailing a Notice of Internet Availability of Proxy Materials or this proxy
statement to you, we may also make additional solicitations by telephone, facsimile or other forms
of communication. We will reimburse brokers, banks and other nominees who hold stock for other
beneficial owners for their expenses related to forwarding these proxy materials to those
beneficial owners. We will bear the entire cost of the solicitation.
Information You Should Rely Upon When Casting Your Vote
You should rely only on the information contained in this proxy statement or incorporated by
reference when voting on these matters. We have not authorized anyone to give any information or
to make any representation in connection with this proxy solicitation other than the information
and representations contained in or incorporated by reference in this proxy statement. You should
not infer under any circumstances that because of the delivery of this proxy statement there has
not been a change in the facts set forth in this proxy statement or in our affairs since the date
of this proxy statement. This proxy statement does not constitute a solicitation by anyone in any
jurisdiction in which the solicitation is not authorized or in which the person making the
solicitation is not qualified to do so or to anyone to whom it is unlawful to make such a
solicitation.
5
Security Ownership of Certain Beneficial Owners
The following table provides information about beneficial owners of more than five percent
(5%) of the companys common stock outstanding as of April 1, 2009.
|
|
|
|
|
|
|
|
|
|
|
Amount and nature of |
|
|
Percent of |
|
|
|
beneficial ownership |
|
|
class |
|
Invesco, Ltd.
1555 Peachtree Street NE
Atlanta, GA 30309 |
|
|
2,611,785 |
(1) |
|
|
6.00 |
|
Barclays Global Investors
(Deutschland) AG
Apianstrasse 6
Unterfohring, Germany |
|
|
2,733,506 |
(2) |
|
|
6.27 |
|
Tocqueville Asset Management, L.P.
40 West 57th Street, 19th Floor
New York, New York 10019 |
|
|
2,778,400 |
(3) |
|
|
6.37 |
|
Prudential Financial, Inc.
751 Broad Street
Newark, New Jersey 07102 |
|
|
4,156,915 |
(4) |
|
|
9.50 |
|
Jennison Associates LLC
466 Lexington Avenue
New York, New York 10017 |
|
|
4,154,900 |
(5) |
|
|
9.52 |
|
Steinberg Asset Management, LLC
12 East 49th Street, Suite 1202
New York, NY 10017 |
|
|
4,556,500 |
(6) |
|
|
10.46 |
|
|
|
|
(1) |
|
Based solely on a Schedule 13G filed with the SEC on February 12, 2009 by Invesco
Ltd. The shares reported on Schedule 13G are beneficially owned by the following direct or
indirect subsidiaries of Invesco Ltd: Invesco Aim Advisors, Inc., Invesco Aim Capital
Management, Inc., Invesco PowerShares Capital Management LLC and Invesco National Trust
Company. Percentage of outstanding common stock is as reported on such Schedule 13G. |
|
(2) |
|
Based solely on a Schedule 13G filed with the SEC on February 05, 2009 by Barclays
Global Investors (Deutschland) A.G. Members of the reporting group include: Barclays Global
Investors, NA, Barclays Global Fund Advisors, Barclays Global Investors, LTD, Barclays Global
Investors Japan Limited, Barclays Global Investors Canada Limited, and Barclays Global
Investors Australia Limited. Percentage of outstanding common stock is as reported on such
Schedule 13G. |
|
(3) |
|
Based solely on a Schedule 13D/A filed with the SEC on February 06, 2009 by
Tocqueville Asset Management, L.P. Percentage of outstanding common stock is as reported on
such Schedule 13D/A. |
|
(4) |
|
Based solely on a Schedule 13G/A filed with the SEC on February 06, 2009 by
Prudential Financial, Inc. Prudential Financial, Inc. reported the combined holdings of the
entities: Prudential Insurance Company of America, Prudential Investment Management, Inc.,
Jennison Associates LLC, Prudential Bache Asset Management, Inc., Prudential Investments LLC,
Prudential Private Placement Investors, L.P., PRUCO Securities, LLC, Prudential Investment
Management Services LLC, AST Investment Services, Inc., Prudential Annuities Distributors,
Inc., Quantitative Management Associates LLC, Prudential International Investment Advisers,
LLC, Global Portfolio Strategies, Inc., Prudential Bache Securities, LLC, and Prudential Bache
Commodities, LLC. Percentage of outstanding common stock is as reported on such Schedule
13G/A. |
|
(5) |
|
Based solely on a Schedule 13G/A filed with the SEC on February 13, 2009 by Jennison
Associates, LLC. Prudential Financial, Inc. (Prudential) indirectly owns one hundred
percent (100%) of equity interests of Jennison. Percentage of outstanding common stock is as
reported on such Schedule 13G/A. |
|
(6) |
|
Based solely on a Schedule 13G/A filed with the SEC on February 10, 2009 by
Steinberg Asset Management, LLC. The shares reported on Schedule 13G are beneficially owned
by the following direct or indirect subsidiaries of Steinberg Asset Management, LLC: Michael
A. Steinberg; and Michael A. Steinberg & Company, Inc. In addition the securities reported
as beneficially owned by Michael A. Steinberg include securities held by Mr. Steinbergs wife
and children as well as securities held in trust for Mr. Steinbergs children of which Mr.
Steinberg is trustee. Percentage of outstanding common stock is as reported on such Schedule
13G/A. |
6
Security Ownership of Management
The following table sets forth the number of shares of the companys common stock beneficially
owned as of April 1, 2009 by:
|
|
|
each director nominee; |
|
|
|
|
each executive officer named in the Summary Compensation Table; and |
|
|
|
|
all of the directors and executive officers as a group. |
Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. Each
person has sole voting and investment power with respect to the shares indicated except as
otherwise stated in the footnotes to the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Acquirable |
|
|
|
|
|
|
|
|
|
|
Name of beneficial |
|
|
|
|
|
beneficial |
|
within 60 |
|
|
|
|
|
Percent of |
|
|
|
|
owner |
|
Shares owned |
|
ownership |
|
days |
|
Total |
|
class |
Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liane Pelletier |
|
|
391,662 |
|
|
|
|
|
|
|
700,000 |
|
|
|
1,091,662 |
|
|
|
2.47 |
% |
|
|
|
|
Brian Rogers |
|
|
8,988 |
|
|
|
|
|
|
|
26,993 |
|
|
|
35,981 |
|
|
|
* |
|
|
|
|
|
John M. Egan |
|
|
58,360 |
|
|
|
|
|
|
|
3,913 |
|
|
|
62,273 |
|
|
|
* |
|
|
|
|
|
Gary R. Donahee |
|
|
8,842 |
|
|
|
|
|
|
|
6,841 |
|
|
|
15,683 |
|
|
|
* |
|
|
|
|
|
Edward J. Hayes, Jr. |
|
|
8,852 |
|
|
|
|
|
|
|
|
|
|
|
8,852 |
|
|
|
* |
|
|
|
|
|
Annette Jacobs |
|
|
10,047 |
|
|
|
|
|
|
|
|
|
|
|
10,047 |
|
|
|
* |
|
|
|
|
|
David Southwell |
|
|
10,098 |
|
|
|
|
|
|
|
|
|
|
|
10,098 |
|
|
|
* |
|
|
|
|
|
Peter D. Ley |
|
|
22,713 |
|
|
|
|
|
|
|
|
|
|
|
22,713 |
|
|
|
* |
|
Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Wilson |
|
|
115,951 |
|
|
|
|
|
|
|
191,666 |
|
|
|
307,617 |
|
|
|
* |
|
|
|
|
|
Anand Vadapalli |
|
|
38,933 |
|
|
|
|
|
|
|
91,666 |
|
|
|
130,599 |
|
|
|
* |
|
|
|
|
|
Sheldon Fisher |
|
|
60,170 |
|
|
|
|
|
|
|
80,000 |
|
|
|
140,170 |
|
|
|
* |
|
|
|
|
|
Leonard Steinberg |
|
|
81,087 |
|
|
|
|
|
|
|
5,000 |
|
|
|
86,087 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total directors &
executive officers
as a group (13
persons) |
|
|
817,790 |
|
|
|
|
|
|
|
1,106,079 |
|
|
|
1,923,869 |
|
|
|
4.35 |
% |
|
|
|
* |
|
The percentage of shares beneficially owned does not exceed one percent (1%) of the class.
Percentage of class is based
on the number of shares outstanding as of April 1, 2009. |
Proposal 1: Election of Directors
Eight directors will be elected at the 2009 annual meeting to serve until the annual meeting
of stockholders in 2010. The nominees for director are: Liane Pelletier, Brian Rogers, John M.
Egan, Gary R. Donahee, Edward J. Hayes, Jr., Annette Jacobs, David Southwell, and Peter D. Ley.
Each of the nominees is an incumbent director. The table below contains certain biographical
information about each of the director nominees and the executive officers of the company. The
nominated directors have consented to serve if elected, but should any nominee be unavailable to
serve at the time of the annual meeting, each stockholders proxy will vote for the substitute
nominee recommended by the Board of Directors.
Vote Required. The eight persons nominated for director receiving the most votes will be
elected.
The Board of Directors recommends that you vote FOR each of the persons nominated for
director in Proposal 1.
7
Nominees for Director
The table below sets forth certain information as of April 1, 2009 about those persons who
have been nominated to serve as directors until the annual meeting of stockholders in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director |
Name |
|
Age |
|
Position |
|
Since |
Liane Pelletier
|
|
|
51 |
|
|
Chair, Chief Executive Officer and President
|
|
|
2003 |
|
Brian Rogers
|
|
|
58 |
|
|
Director
|
|
|
2001 |
|
John M. Egan
|
|
|
61 |
|
|
Director
|
|
|
2003 |
|
Gary R. Donahee
|
|
|
62 |
|
|
Director
|
|
|
2005 |
|
Edward J. Hayes, Jr.
|
|
|
53 |
|
|
Director
|
|
|
2006 |
|
Annette Jacobs
|
|
|
51 |
|
|
Lead Independent Director
|
|
|
2006 |
|
David Southwell
|
|
|
61 |
|
|
Director
|
|
|
2006 |
|
Peter Ley
|
|
|
49 |
|
|
Director
|
|
|
2008 |
|
Directors and Business Experience of Directors
Liane Pelletier, a director since October 2003 and board chair since January 2004, has served as
our Chief Executive Officer (CEO) and president since October 2003. Since joining us she has
rebuilt the executive lead team, and implemented a new business strategy, operating model and an
organization structure to reflect the Companys strategy, as well as overhauled the Companys image
with investors, customers, employees and the community. Key tenets of the ACS operating model and
culture are customer centricity, performance management and continuous process improvement. Under
her leadership, the company designed and constructed Alaskas first statewide 3G CDMA wireless
network and marketed mobile voice and data services that contributed to sector leading growth. ACS
also introduced innovative wireless-wireline services that are industry-firsts, nationwide. Also
under her leadership, the company built a diverse submarine fiber optic cable to travel to the
Lower-48 and purchased one of the three existing cables so that ACS now owns and operates two
cables, one of two carriers in the state with this infrastructure. These submarine assets
complement the unique ACS in-state assets of Metro Ethernet, MPLS and fiber rings all
positioning ACS as a leader in end to end data networking capabilities for Enterprise customers.
Prior to ACS, Ms. Pelletiers career included 17 years at Sprint as a member of the Executive
Management Committee. Ms. Pelletier earned her M.S. in Management at the Sloan School of Business
at the Massachusetts Institute of Technology and a B.A. in Economics, magna cum laude, from
Wellesley College. She currently serves as a Trustee on the Board of Alaska Pacific University.
Brian Rogers, a director since February 2001, is currently Interim Chancellor at the University of
Alaska Fairbanks, where he has served since July 2008. He was previously Principal Consultant and
Chief Financial Officer (CFO) for Information Insights, Inc., a management and public policy
consulting firm. Mr. Rogers served as Vice President of Finance for the University of Alaska
Statewide System from 1988 to 1995. Mr. Rogers is a former state legislator who served in the
Alaska State House of Representatives from 1979 to 1982. He chaired the State of Alaska Long-Range
Planning Commission during 1995 and 1996, and from 1999 through 2007 as a Regent of the University
of Alaska, served as the Board Chair and a member of all committees, including the Universitys
Finance and Audit Committee. He holds a Masters in Public Administration degree from the Kennedy
School of Government, Harvard University, Massachusetts.
John M. Egan, a director since November 2003, is the retired founder and chairman and CEO of ARRIS
Group (Nasdaq: ARRS). ARRIS is a global communications technology company specializing in the
design and engineering of broadband local access networks and a leading developer and supplier of
optical transmission, cable telephony and internet access for cable systems operators. Mr. Egan
joined ARRIS in 1973 and was Chairman of its Board of Directors from 1997 to May 2002. Mr. Egan
was President of ARRIS from 1980 to 1997 and CEO of ARRIS and its predecessors from 1980 through
1999. On January 1, 2000, Mr. Egan stepped down from his role as CEO of ARRIS. He remained a
full-time employee until his retirement in May 2002. Mr. Egan has served on the Board of Directors
of the National Cable Television Association, or NCTA, for 20 years, and has been actively involved
in the Walter Kaitz Foundation, an association seeking to help the cable industry diversify its
management workforce to include minorities, as well as the Society of Cable Television Engineers
and Cable Labs, Inc. Mr. Egan currently serves on the advisory
board of KB Partners, a Chicago-based venture capital firm and on several boards in the technology
start-up sector. Mr. Egan holds a B.S. in Economics from Boston College, Massachusetts.
Gary R. Donahee, a director since February 2005, has over 30 years telecommunications industry
experience and spent 16 years, before retiring in 2003, in senior management positions around the
world at Nortel Networks (NYSE: NT), most recently as Executive Vice President and President of the
Americas from 1999 to 2003. He served as Senior Vice President and President, Carrier Networks for
Nortel for Europe, the Middle East and Africa and in a similar capacity for the Caribbean and Latin
America region. Mr. Donahee also served as Senior Vice President, Corporate Human Resources for
Nortel from 1989 to 1993 and was responsible for 60,000 employees in 42 countries. In addition to
Nortel Networks, he held senior executive positions in human resources at Northern Telecom and
Bell-Northern Research Corporation. He presently serves on the boards
8
of Voice Mobility
International (Toronto: VMY.TO), Voice Age Networks and Epygi in addition to an advisory board
capacity with Anyware Group and Axiowave Networks Inc. Mr. Donahee holds a Bachelor of Education
degree from the University of New Brunswick, Canada.
Edward (Ned) J. Hayes, Jr., a director since February 2006, is CFO of Pillar Data Systems.
Pillars mission is to design and build the most cost-effective, highly available networked storage
solutions in the market. Prior to joining Pillar, Mr. Hayes served as Executive Vice President and
CFO of Quantum Corporation (NYSE: QTM), a global leader in data back-up, recovery and archive
storage. He joined Quantum in July 2004, after serving as President and CEO of DirecTV Broadband,
Inc. Prior to DirecTV Broadband, Mr. Hayes served as Executive Vice President and CFO at Telocity,
Inc., and Financial Vice President and CFO in two of Lucent Technologies divisions, including the
$20 billion Global Service Provider Business. He has also held senior financial management
positions at other multinational companies such as Unisys Corporation (NYSE: UIS), Asea Brown
Boveri (ABB), and Credit Suisse First Boston. He has previously served as an independent director
and Chair of the Audit Committee of New Wave Research, Inc. and as an independent director of and
Chair of the Audit Committee of NPTest, Inc. Mr. Hayes currently serves on the board of Super
Micro Computer, Inc. (NASD: SMCI) as an independent director and Chair of the Audit Committee. Mr.
Hayes conducted his graduate studies in Accounting and Finance at New York Universitys Stern
Graduate School of Business and received his undergraduate degree from Colgate University in New
York.
Annette Jacobs, a director since July 2006 and Lead Independent Director since March 2007, is the
President and CEO of Door to Door Storage and Moving. Previously, she served as the Chair and CEO
of SafeHarbor Technology Corporation. In addition, Ms. Jacobs has 25 years experience in the
telecommunications and wireless industries and held executive leadership positions at Qwest
Communications, Inc. (NYSE: Q) including Executive Vice President President, Consumer Markets
and Executive Vice President President, Wireless Markets. Ms. Jacobs has also served as Verizon
Wireless (NYSE: VZ) President, Great Lakes Area and has held executive leadership positions, across
the U.S., with GTE Wireless and Contel Cellular. Ms. Jacobs currently serves on the board
executive committees for the National Association of Corporate Directors-Northwest (NACD) and the
Seattle Humane Society. She is an adjunct professor for Seattle University and is a member of the
Deans Executive Advisory Board for the Albers School of Business and Economics. Ms. Jacobs holds
a Bachelors degree in Business Management, Cum Laude, from Jacksonville University in
Jacksonville, Florida.
David Southwell, a director since July 2006, has over 35 years of telecommunications experience.
Mr. Southwell has been a consultant in the telecommunications industry since retiring from Bell
Canada at the end of 2004, where he had been Group President-Operations since 2003. From 2000 to
2003, Mr. Southwell was President-Network Operations and from 1998-2000 was Executive Vice
President and Chief Technology Officer of BCE. In addition, Mr. Southwell currently serves on the
Olympics Technology board and has previously served on numerous other boards, including six years
with Expertech Network Installation, Inc., most recently as Chairman. Mr. Southwell holds a B.S.
degree from Queens University in Ontario, Canada.
Peter D. Ley, a Director since August 2008, is the CFO of Connexion Technologies. Connexion is a
leading builder and operator of residential fiber-optic video, voice, and data networks for gated
communities and high-rise towers. Connexion is headquartered in Cary, N.C. and has operations
across the United States. Mr. Ley has many years of finance and communications experience. Prior
to joining Connexion in November 2007, Mr. Ley served for seven years as a managing director at
Bank of America Securities, responsible for managing client relationships with the U.S.
telecommunications industry. Prior to joining Bank of America, he served as CFO of
Pennsylvania-based Commonwealth Telephone Enterprises Inc. Mr. Ley has also served as an
investment banker at Dominick & Dominick, Furman Selz, Robert Fleming, Morgan Grenfell and Salomon
Brothers. Ley holds an M.B.A. from Harvard University, Massachusetts and a B.A. from Dartmouth
College, New Hampshire.
Executive Officers
The table below sets forth certain information as of April 1, 2009 about those persons
currently serving as our executive officers. Biographical information on Liane Pelletier, our
Chair, CEO and President, is included above in the section Nominees for Directors.
|
|
|
|
|
Name |
|
Age |
|
Title |
David Wilson |
|
41 |
|
Executive Vice President and Chief Financial Officer |
Anand Vadapalli |
|
43 |
|
Executive Vice President, Operations and Technology |
Nathan E. Cagle |
|
58 |
|
Vice President, Human Resources |
Sheldon Fisher |
|
46 |
|
Senior Vice President, Sales and Service |
Leonard Steinberg |
|
55 |
|
Vice President, General Counsel and Corporate Secretary |
David Wilson has served as our Executive Vice President and CFO since January 2009, and previously
was our Senior Vice President and CFO since March 1, 2004. Prior to joining us, Mr. Wilson was CFO
of Triumph Communications, a subsidiary of Hughes Electronics from May 2003 through November 2003.
Prior to this, Mr. Wilson was at DirecTV Broadband (formerly Telocity Inc.) where he was appointed
CFO in April 2001, after serving as Vice President of Finance and Chief Accounting
9
Officer from
February 2000. At Telocity, he helped lead the Company through its initial public offering and its
eventual sale to Hughes Electronics. Mr. Wilson also worked in public accounting at
PricewaterhouseCoopers in both international and domestic offices from 1990 to 2000 where he most
recently managed a portfolio of high profile publicly traded network and communications audit
clients in San Jose, California. Mr. Wilson is a Chartered Accountant, and holds a Bachelor of
Commerce from the University of Birmingham, U.K.
Anand Vadapalli has served as our Executive Vice President, Operations and Technology, since
December 2008, and previously was our Senior Vice President, Network & Information Technology since
August 2006. Prior to joining us, Mr. Vadapalli had most recently served as Vice President of
Information Technology at Valor Telecom since February 2004. Prior to Valor, from January 2003 to
February 2004, he served as Executive Vice President and CIO at Network Telephone Corporation, and
from January 1996 through January 2003 at various positions at Broadwing / Cincinnati Bell, most
recently as Vice President, Information Technology. Mr. Vadapalli holds a B.E. in Mechanical
Engineering from Osmania University in Hyderabad, India as well as a P.G.D.M. from the Indian
Institute of Management in Calcutta, India.
Nathan Cagle joined ACS on July 9, 2008 and serves as Vice President of Human Resources and Chief
Compliance Officer. Prior to joining ACS in 2008, Mr. Cagle had been a Human Resources consultant
serving start-up and emerging businesses that require senior human resources services. Mr. Cagle
was Managing Partner and President of SunRise Partners of Sea Bright, N.J. since 2003. Prior to
that, he served as Vice President of Human Resources at NUI Corp. of Bedminster, N.J., a $1.25
billion diversified energy company. Mr. Cagle served as Senior Vice President, Human Resources for
Fine Host Corp., and held senior-level positions in human resources for Barnes Group Inc., Kraft
General Foods/Philip Morris, Lenders Bagels Corp., and Frito Lay/PepsiCo. Mr. Cagle is a retired
U.S. Naval Reserve Commander. He holds an M.A. in Labor and Industrial Relations from the
University of Illinois, and a B.A. with honors from High Point College in North Carolina.
Sheldon Fisher has served as our Senior Vice President, Sales & Service since February 23, 2004.
Prior to this appointment, Mr. Fisher served as Vice President, Wireless Broadband at Sprint
Corporation where he was the general manager of Sprints wireless broadband business since April
2002, with broad operational and product development responsibilities. Mr. Fisher started with
Sprint Corporation in January 1999 as Senior Attorney, Mergers and Acquisitions. In September
1999, he became the Senior Director, Business Development. In September 2000, Mr. Fisher became
Assistant Vice President, Architecture and Technology responsible for Sprints wireless broadband
advanced technology group. In September 2001, Mr. Fisher became Assistant Vice President, Network
Operations and Technology responsible for management of Sprints wireless broadband network
operations. Prior to joining Sprint, Mr. Fisher worked for Hughes Electronics from 1995 to 1999
and was an attorney for Latham & Watkins from 1990 to 1994. He earned a J.D. from Yale Law School
in Connecticut and a B.A. in Economics from Brigham Young University in Utah.
Leonard Steinberg has served as our Vice President, General Counsel and Corporate Secretary since
January 2001 after joining us as a senior attorney in June 2000. From 1998 to 2000, Mr. Steinberg
used his expertise in regulatory and administrative law to represent telecommunications and energy
clients of Brena, Bell & Clarkson, P.C., an Anchorage, Alaska law firm. Prior to that, Mr.
Steinberg was a partner in the firm of Hosie, Wes, Sacks & Brelsford
with offices in Anchorage, Alaska and San Francisco, California. Mr. Steinberg practiced in the
firms Anchorage office from 1996 to 1998 and in the firms San Francisco office from 1988 to 1996
where he primarily represented large clients in oil and gas royalty and tax disputes. Mr.
Steinberg holds J.D. from the University of Californias Hastings College of Law, a Masters in
Public Administration degree from Harvard Universitys Kennedy School of Government, an M.B.A. from
University of California Berkeleys Haas School of Business, and a B.A. from the University of
California at Santa Cruz.
Certain Relationships and Related Transactions
Through our Audit Committee, we require review, approval or ratification of covered related
person transactions. We may enter into a related person transaction only if the Audit Committee
approves or ratifies such transaction and if the transaction is on terms and conditions that are
reasonable under the circumstances and in the best interests of the stockholders.
We define a related party transaction as one in which we participate and that, individually
or taken together with related transactions, exceeds, or is reasonably likely to exceed, $100,000
in amount in any year and in which any of the following individuals (a covered person) has a
direct or indirect material interest:
|
|
|
any director or executive officer; |
|
|
|
|
any nominee for election as a director; |
|
|
|
|
any security holder who is known by us to own of record or beneficially more than
five percent (5%) of any class of our securities; or |
10
|
|
|
any immediate family member of any of the foregoing persons, including any child;
stepchild; parent; stepparent; spouse; sibling; mother, father-, son-, daughter-,
brother-, or sister-in-law; and any person (other than a tenant or employee) sharing
the same household. |
We do not deem a material interest to exist when a covered persons interest in the
transaction results from (a) the covered persons (together with his immediate familys) direct or
indirect ownership of less than a ten percent (10%) economic interest in the other party to the
transaction, and/or the covered persons service as a director of the other party to the
transaction, or (b) the covered persons pro rata participation in a benefit received by him solely
as a security holder.
A transaction is deemed to involve us if it involves one of our vendors or partners or any of
our subsidiaries and relates to the business relationship between us and that vendor or partner.
There have been no related party transactions since the beginning of the 2008 fiscal year nor
are there any such transactions proposed.
Section 16(a) Beneficial Ownership Reporting Compliance
Federal securities laws require executive officers, directors, and owners of more than ten
percent (10%) of our common stock to file reports (Forms 3, 4, and 5) with the SEC and any stock
exchange or trading system on which our securities are listed. These reports relate to the number
of shares of our common stock that each such person owns, and any change in their ownership. Based
solely on our review of Forms 3, 4 and 5 filed with the SEC, we believe that all persons required
to file such forms have done so in a timely manner during 2008.
Corporate Governance
We maintain corporate governance policies and practices that reflect what the Board of
Directors believes are best practices, as well as those with which we are required to comply
under the Sarbanes-Oxley Act of 2002 and the rules of the SEC and Nasdaq. Our Corporate
Governance Guidelines may be viewed or downloaded from our investor relations website at
www.alsk.com.
Board of Directors
Currently, there are eight members on the Board of Directors, seven of whom are neither our
officers nor our employees. The board may, at its discretion and within the bounds of the
corporate by-laws, periodically increase or decrease the number of directors serving. Of the eight
nominees for director to be voted on at the 2009 annual meeting, the board has determined that all
are independent, with the exception of Ms. Pelletier. The directors are elected to serve one-year
terms expiring at the next annual meeting. The Board of Directors met five times and the
independent directors met separately five times in 2008. All directors are expected to attend
each meeting of the board and the committees on which he or she serves.
Directors are encouraged to attend our Annual Meetings of Stockholders. Six of the eight
incumbent directors standing for reelection attended the 2007 Annual Meeting of Stockholders. Each
director attended at least seventy-five percent (75%) of the meetings of the board and the
committees on which he or she served that were held in 2008 while he or she was serving as
director.
Lead Independent Director
Since March 2007, Ms. Jacobs has served as our Lead Independent Director. The Lead
Independent Director presides at executive sessions of the board and serves as the liaison between
the Chair and the independent directors. In addition, the Lead Independent Directors
responsibilities include: advising the Chair with respect to the schedule, agenda and information
for board meetings; advising the Chair with respect to consultants who may report directly to the
board; and being available, as appropriate, for communication with the companys stockholders.
Committees of the Board
The board has established four standing committees: the Audit Committee, the Compensation and
Personnel Committee, the Nominating and Corporate Governance Committee, and the Executive
Committee. The principal functions of each committee are briefly described below.
Audit Committee
The purpose of the Audit Committee is to provide assistance to the Board of Directors in
fulfilling the boards oversight of the companys accounting and system of internal controls, the
quality and integrity of the companys financial reports and the independence and performance of
the companys registered independent public accounting firm. The Audit Committee operates pursuant
to a written charter adopted by the Board of Directors and amended in June 2005.
The Audit Committee currently consists of three directors, none of whom are employees of the
company. One former director, Mr. Pichette, was a member of the Audit Committee until his
resignation from the board on August 1, 2008.
11
The directors serving as committee members are
Messrs. Hayes (Chair), Rogers, and Ley. The Audit Committee met nine times during 2008 and all of
the members then serving attended at least seventy-five percent (75%). The Board of Directors has
determined that all of the members of the committee are independent within the meaning of
applicable Nasdaq Marketplace Rules. Our board has also determined that Messrs. Hayes and Ley are
audit committee financial experts as that term is defined under the Securities Exchange Act of
1934.
The charter of the Audit Committee is available on our investor website at
www.alsk.com. The Report of the Audit Committee is included in this proxy statement.
Compensation and Personnel Committee
The purpose of the Compensation and Personnel Committee is to discharge the boards
responsibilities relating to company compensation plans, policies and procedures including: (i)
evaluation of director and executive officer compensation and performance; (ii) approval of equity
and cash incentive programs for all employees of the company; (iii) oversight of succession
planning for directors, executive officers and other management, as appropriate; and (iv)
production of an annual executive compensation report to be included in the companys proxy
statement.
The members of the Compensation and Personnel Committee currently are Messrs. Donahee (Chair),
Rogers, and Egan. During 2008, the Compensation and Personnel Committee of the Board of Directors
held eleven meetings and all members attended at least seventy-five percent (75%) of the meetings.
The board has determined that Messrs. Donahee, Rogers, and Egan are independent within the
meaning of the applicable Nasdaq Marketplace Rules. The Compensation and Personnel Committee
operates under a charter which the Board of Directors approved in June 2005.
The charter of the Compensation and Personnel Committee is available on our investor website
at www.alsk.com. The report of the Compensation and Personnel Committee is included in
this proxy statement.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee assists the board in discharging its duties
for screening and proposing candidates to serve on the board and all matters of corporate
governance.
For director nominations, the committee does not require director candidates to meet any
particular set of minimum qualifications. The committee reviews the suitability of each candidate
in light of the companys needs for independence, expertise, experience, commitment, community
ties, and other appropriate attributes. Some of the factors used in evaluating candidates
include: character and integrity; business judgment; management experience; knowledge of
particular areas such as technology, finance, or marketing; strategic vision; and ties to the
companys various constituencies such as employees, customers, and vendors.
Our stockholders may nominate candidates for director positions by submitting the candidates
name and qualifications to the Nominating and Corporate Governance Committee, c/o Corporate
Secretary, Alaska Communications Systems, 600 Telephone Avenue, Anchorage, Alaska 99503. The
committee applies the same criteria to its evaluation of stockholder-recommended candidates as it
applies to other candidates. The committee has no obligation to actually nominate
stockholder-recommended candidates for election as a director.
The committee is comprised of Ms. Jacobs (Chair) and Messrs. Egan and Southwell. The board
has determined that each current member of the committee is independent within the meaning of
the applicable Nasdaq Marketplace Rules and the nominations of directors are in full compliance
with those rules. The committee held four meetings during 2008 and all members attended at least
seventy-five percent (75%) of the meetings.
The charter of the Nominating and Corporate Governance Committee is available on our investor
website at www.alsk.com.
Executive Committee
The Executive Committee has been delegated the authority by the Board of Directors to exercise
the powers of the Board of Directors, between meetings of the full Board of Directors. The
Executive Committee currently consists of four directors: Liane Pelletier (Chair), Annette Jacobs,
Ned Hayes, and Gary Donahee. Mr. Pichette also served on the Executive Committee until his
resignation on August 1, 2008. The Executive Committee held three meetings in 2008 and all members
attended at least seventy-five percent (75%) of the meetings held during their term as a director.
Director Nomination Process
The Nominating and Corporate Governance Committee assesses all director candidates, whether
submitted by management or a stockholder, and recommends nominees for election to the board.
Recommendations for election are based upon the factors described above under the heading
Committees of the BoardNominating and Corporate Governance Committee.
12
Each year, the Nominating and Corporate Governance Committee reviews all eligible director
candidates, including incumbents. The committee then decides, based upon the pool of eligible
candidates and the number of vacancies to be filled, whom to recommend to the board to be
nominated for election that year. The full board reviews the committees recommendations and
approves the individuals to stand for election. This is the process that was used to identify and
evaluate the current nominees standing for election that appear in this proxy statement.
The Nominating and Corporate Governance Committee welcomes stockholder recommendations of
director candidates. Stockholders may suggest candidates for the consideration by the committee
by submitting their suggestions in writing to the companys Secretary, including the agreement of
the nominee to serve as a director. In addition, the companys By-Laws contain a procedure for
the direct nomination of director candidates by stockholders, and any such nomination will also be
automatically submitted to the Nominating and Corporate Governance Committee for consideration.
Board Self-Evaluation
The Board of Directors conducts a self-evaluation of its performance annually, which includes
a review of the boards composition, responsibilities, leadership and committee structure,
processes and effectiveness. Each committee of the board, other than the Executive Committee,
conducts a similar self-evaluation with respect to such committee.
Code of Ethics
In order to help assure we practice the highest levels of business ethics, we have adopted a
Code of Ethics,
which is posted on our investor website at www.alsk.com. We post amendments to or
waivers from the provisions applicable to senior executives on our website. A copy of our Code of
Ethics is also available upon request to our Secretary.
Communicating with the Board of Directors
Stockholders may communicate with any or all of the companys directors via U. S. mail
addressed to one or more directors, the board, or any committee of the board c/o Corporate
Secretary, Alaska Communications Systems, 600 Telephone Avenue, Anchorage, Alaska 99503. The
Corporate Secretary may review and summarize communications received for the purpose of expediting
director review as well as forwarding the underlying correspondence.
Executive Compensation
Compensation Discussion and Analysis
The compensation discussion and analysis (CD&A) in this section provides information
regarding the 2008 compensation programs in place for the executive officers named in the Summary
Compensation Table presented below. We refer to these officers as our named executive officers.
In this CD&A, we have included certain information that is forward-looking that does not
reflect past results or historical facts. This information is based on our current knowledge and
assumptions. Please be aware that actual results, including compensation plans and arrangements
that may be used in the future, may vary from those we currently use or expect to use in the
future.
Messrs. Donahee (chair), Egan, and Rogers served on the Compensation and Personnel Committee
(the Committee) during all of 2008. Each of the members of the Committee is independent as
defined by applicable Nasdaq Marketplace Rules.
Overview
We believe that our long-term success depends in a large measure on the talents of our
employees. The discussion and analysis that follows sets forth the Committees methodology through
which it makes compensation determinations. The Committee seeks to confer value on our executives
through carefully crafted compensation programs designed to both align executive focus with that of
our stockholders and reward executives that further our corporate strategy.
Our compensation programs reflect our philosophies:
|
|
|
Pay for performance with due caution not to encourage executives to
engage in unnecessary risks; |
|
|
|
|
Alignment of interests of our employees and our stockholders; and |
|
|
|
|
Attracting skilled prospects to and retaining top talent in our remote
location by offering attractive compensation packages. |
Please see Goals of our Executive Compensation Programs below for a more detailed
description of these goals.
Our compensation objectives are implemented through the following programs:
|
|
|
Competitive total target cash compensation, fifty percent (50%) of
which is at-risk; and |
13
|
|
|
Performance-based equity compensation that also includes retention
elements. |
Please see Components Comprising Total Executive Compensation below for additional
information about these programs.
Performance Targets
Beginning in 2005, the Committee has based annual performance targets on achievement of a
specified annual EBITDA less maintenance capital expenditures metric. We define EBITDA as earnings
before interest, tax, depreciation, amortization and stock-based compensation expense. EBITDA is
not a GAAP measure, and our measurement of EBITDA may differ from other companies. In addition our
measurement of maintenance capital expenditures depends often on our judgment as to the character of expenditures being made.
Because the determination of EBITDA less maintenance capital expenditures, when used to determine
managements performance (the Company Performance Target) is subject to significant judgment, the
Committee must approve the formulation through which we arrive at its value for any period that
affects compensation. In addition, the Committee may make adjustments to the Company Performance
Target to exclude extraordinary events that it deems unrelated to company or management
performance.
For 2009, the Committee has determined that target cash incentive awards will be paid (subject
to adjustment for individual performance factors) and vesting of restricted stock awards subject to
2009 company performance targets would accelerate if we achieve the 2009 Company Performance
Targets described below under the heading 2009 Outlook
2008 Results
Our 2008 business results, along with consideration of our strategies and challenges ahead,
served as a starting point for how the Committee ultimately decided to compensate our CEO, CFO and
NEOs. Our executive team delivered positive results in 2008 in spite of many challenges in
negotiating and completing critical, large-scale projects in line with our budgets and doing so in
difficult economic and competitive conditions. As in prior years, the executive team focused on
the companys ability to grow distributable cash generated by the business over the long term. In
2008, it focused heavily on development in our highest growth areas while maintaining disciplined
resource allocation and strict cost containment practices consistent with this focus. During 2008,
our wireless and enterprise lines of business generated the largest growth in distributable cash
generated of all our core businesses. We returned an aggregate of $37.3 million to stockholders
via cash dividend payments.
The Committee believes our executive team has worked to continue our growth by addressing
timely changes in the telecommunications industry. For example, our executive team led the
construction of our Alaska-Oregon Network (AKORN) fiber facility in 2007 and 2008, which will
connect our Alaskan network to the Lower 48 using a newly constructed, high-speed fiber optic
cable. We also completed acquisition of Crest Communications Corporation during 2008.
Summarized below are some additional key quantitative factors considered by the Committee:
|
§ |
|
We reported an EBITDA for 2008, exclusive of $3.5 million in start-up costs for
our long haul fiber investments, of $132.2 million, for the twelve-months ended
December 31, 2008. |
|
|
§ |
|
Our maintenance capital expenditures during 2008 were $40.3 million, which was
well within our budget. |
|
|
§ |
|
We raised incremental debt at favorable prices, and covered the increase in debt
service obligations with adequate incremental cash from operations. |
The compensation of our named executive officers was consistent with these results. The
Committee is required to certify whether its pre-established performance targets for 2008 were met.
In March 2009, the Committee determined that we achieved results that were 100.8% of target.
Based on the foregoing, in March 2009, the Committee declared cash incentive awards based on
2008 company performance. Actual payments to named executive officers were further adjusted for
individual performance factors.
The performance targets for acceleration of annual restricted stock and long-term restricted
stock were also exceeded, resulting in accelerated vesting of restricted stock awards that were
subject to 2008 and prior years performance targets.
2009 Outlook
In determining the 2009 Company Performance Targets, the Committee considered the strategic
goals of the company to be achieved in 2009, including expected capital expenditures to be made in
furtherance of those goals, general economic conditions, Alaskan economic conditions, the
competitiveness of our executive compensation within the industry, increased competition in both of
our wireline and wireless segments, and the anticipated value of the services to be provided by the
participants. In addition, the Committee noted that the directional EBITDA guidance provided to
investors reflected
14
an increase in 2009. Based on this understanding, the Committee determined
that the following goals applied to Ms. Pelletier and Messrs. Vadapalli and Wilson:
|
|
|
The company must exit the year ending December 31, 2009 with a specified
available liquidity, which the Committee believes we need to maintain our operating
flexibility and growth objectives; and |
|
|
|
|
The company must generate EBITDA for the year ending December 31, 2009 of at
least $132.2 million. |
In determining applicability of the foregoing goals to named executive officers, the Committee
considered each such officers ability to affect our performance against such goals. Based on
those considerations the Committee determined only the penultimate, EBITDA based, goal set forth
above applied to other named executive officers.
The Committee believed, at the time the 2009 Company Performance Targets were set, such
targets were attainable.
Evolution of our Executive Compensation Practices
Prior to 2005, our practice was to split incentive-based compensation for senior management
among stock options and cash compensation. Beginning in 2005, we began to rebalance the allocation
of long-term incentive opportunities for our named executive officers, reflecting our evolving
business circumstances. The equity-based portion of long-term incentive opportunities (i.e., stock
options and restricted stock) from 2006 through the greater portion of 2008 was allocated
principally to restricted stock awards. The purpose of this rebalancing was to phase in restricted
stock as the principal vehicle for equity compensation while outstanding stock options vested. As
a result, since 2004, we have not granted stock options to any named executive officer. Stock
options granted to Ms. Pelletier in 2003 vested in full late in 2008, and stock options granted to
Messrs. Wilson and Fisher vest in full early this year. Substantially all stock options previously
granted to Mr. Steinberg have vested.
In 2008, we allocated a substantial portion of our named executive officers total direct
compensation to variable compensation that is at risk. The proportion of an executives direct
compensation that is at risk is generally similar across all named executive officers.
During 2008, the Committee granted targeted individual equity performance awards that will
vest only upon achievement of specific highly-targeted milestones that the Committee believed were
essential to long-term company success, particularly in our enterprise line of business. For
further detail on these prospective awards, please see Components Comprising Total Executive
CompensationPerformance Share Awards below. In March 2009, the Committee determined no grants
of this type would be awarded in 2009.
The Committee also began awarding stock-settled stock appreciation rights (SSARs) to our
CEO, CFO and executive vice presidents as an incentive for our executives to enter into amended and
restated employment contracts with our company. The Committee determined that these awards closely
align the interests of these individuals with our total stockholder return (TSR), and, thus, the
interests of our stockholders. We feel that SSARs give our executive vice presidents a strong
incentive to deliver growth and remain with us.
The overall mix of compensation elements may be further adjusted in the future if the
Committee determines that a more tailored approach is needed to address the specific circumstances
of an executive or a change in our strategic focus.
Goals of our Executive Compensation Programs
|
|
|
Motivate executives to pursue growth of cash generated by our core businesses. Payouts
are generally determined based on sustained growth of cash provided by our core business
operations that can be attributed directly to management efforts. We believe this approach
to compensation directs executives toward achieving long-term profitable growth,
disciplined capital allocation, and value delivery to our stockholders. |
|
|
|
|
Assure all opportunities for long-term growth are pursued. While company performance
targets have, since 2005, been based principally on growth of cash provided by our core
business operations, we believe heavy investment directed at long-term growth may, in some
cases, affect short-term results. Thus, we seek to set complementary goals that take into
account these factors, and in doing so, the Committee sets additional goals that it
believes will result in long-term growth in stockholder value and provide compensation
requisite to motivate achievement. |
|
|
|
|
Differentiate awards based on performance. Incentive-based awards depend heavily on
company performance, as described in greater detail below. In addition, individual cash
and equity awards also reflect performance against goals tailored to each executives roles
and responsibilities. Awards may also reflect an executives sustained level of
performance over time and future potential, as well as retention considerations. |
|
|
|
|
Compete for, and retain, top talent. Our restricted stock awards generally accelerate
upon satisfactory company performance; however, notwithstanding company performance,
restricted stock awards vest after five years. We believe this promotes retention of key
talent. The addition of SSARs that vest ratably over the term of the |
15
|
|
|
executives employment contract promotes retention of executive talent while aligning the executives
interests with those of our stockholders. |
|
|
|
|
Memorialize mutual responsibilities through employment agreements. We have entered into
employment agreements with each of our named executive officers, most of which will not
expire until 2011 or later. Most notably, Ms. Pelletiers employment agreement has been
amended and restated and does not expire until April 2011. The Committee believes that
employment agreements on appropriate terms are necessary to retain and ensure the continued
availability of named executive officers to develop and implement our strategic plans,
including, for example developing our enterprise line of business and integration of our
AKORN and Crest investments. Our employment agreements generally determine the annual base
salaries and benefits for our named executive officers. |
Our Process for Setting Compensation
The Committee is responsible for reviewing and approving compensation for our senior
management. The Committee considers the following list of quantitative and qualitative factors in
total as part of the process in establishing appropriate compensation for our executive officers.
Our approach to compensation is disciplined, but not entirely formulaic. The Committee relies on
their own business judgment in applying these factors to an individuals performance more than
assigning a relative weight to each factor. Additional considerations and the role of other
advisors are discussed in the paragraphs below.
Quantitative criteria
§ Operating earnings
§ Expense management
§ Revenue growth
§ Return on capital
§ Investment for growth and business expansion
§ Process improvement
§ Capital and liquidity management
Qualitative criteria
§ Quality of earnings
§ Establishing, refining, and executing long-term strategic plans
§ Achieving and maintaining leadership positions in strategic markets
§ Attracting, developing and retaining highly effective leaders
§ Thinking beyond the individuals own business area
§ Maintaining compliance and controls
§ Protecting the integrity and reputation of the Company
§ Supporting and strengthening the Companys core values
Role of management
Although management provides recommendations and information to the Committee on the
compensation of our executives, including peer group information, the Committee has the ultimate
authority to approve or modify managements recommended compensation packages. Management has a
very limited role with respect to the compensation of the CEO, which is determined independently by
the Committee, as discussed below. The CEO and the Committee jointly develop and recommend the
compensation packages for other named executive officers.
Role of our president and CEO
Ms. Pelletier develops and makes recommendations regarding the compensation of the executive
officers who report directly to her as well as makes recommendations as to their individual
performance goals. In addition, the CEO, prior to each Committee meeting, prepares and reviews
materials to be presented to the Committee in advance of the meeting (except for any materials
relating to the CEOs compensation).
Role of the Committees compensation consultant
Watson Wyatt Worldwide, Inc. (Watson Wyatt) served in 2008 as the Committees independent
compensation consultant. Other than its consulting services to the Committee, Watson Wyatt does
not provide any services to us. The Committee has complete discretion to select, retain and
dismiss the consultant. Specific matters on which the Watson Wyatt firm advised in 2008 included:
reviewing compensation practices of our peer group companies and other similarly situated
companies.
16
In addition, the Committee reviews other survey data and similar information about
compensation programs that it obtains from various sources.
Based on its review with Watson Wyatt and other sources, the Committee determined the
following companies to comprise a peer group from which it might compare our compensation
practices. These peer group companies are:
|
|
|
|
|
|
|
§ CenturyTel, Inc.
|
|
|
|
|
§ Centennial Communications Corp.
|
|
|
|
|
§ General Communication, Inc.
|
|
|
|
|
§ Iowa Telecommunications Services,Inc.
|
|
|
|
|
§ Otelco, Inc. |
|
|
|
|
§ Rural Cellular Corporation |
|
|
|
|
§ Shenandoah Telephone Company |
|
|
|
|
§ Surewest Communications
|
|
|
When reviewing the compensation of the executives of the peer group, the Committee compared,
among other metrics, results of operations, market overlap, market capitalization, revenues,
EBITDA, and number of employees to our comparable metrics. In addition, the Committee also
reviewed the total compensation, as well as the amount and type of each element of such
compensation, of the executive officers of the peer group with the compensation of our executive
officers with comparable duties and responsibilities. The purpose of reviewing such data regarding
the peer group was for the Committee to determine whether the compensation paid to our executive
officers was generally competitive with that paid by peer group companies to their executive
officers. We strive to retain our key employees in a highly competitive industry. The Committee
believes that our executive officers operate in a more geographically remote market and manage a
more diverse telecommunications services portfolio than do the executives of many of our peer
companies. As a result, the Committee believes that our named executive officers should generally
be compensated at a level greater than the median of compensation paid by our peer group.
Although the Committee believes that it is important to periodically review the compensation
policies of our peer group, the Committee also believes that we must adopt a compensation policy
that incorporates our own business objectives and culture. Therefore, while the Committee reviews
these data, including the total and type of compensation paid to executive officers, pertaining to
the peer group companies to ensure that compensation paid to our executive officers remains
generally competitive; the Committee does not annually adjust the compensation paid to named
executive officers based on the compensation policies of peer group companies.
CEOs Compensation
The Committee determines the CEOs compensation package in consultation with our Lead
Independent Director and other independent members of the board. The Committee has also received
information from Watson Wyatt to consider when making its decisions and engaged independent legal
counsel for the purpose of advising it during its negotiations with Ms. Pelletier for a new,
multi-year employment agreement. During negotiations, the Committee retained sole authority to
retain or terminate such counsel and approve its fees and other retention terms. Management does
not provide input in the determination of the CEOs compensation. Ms. Pelletiers new employment
agreement expires in April 2011.
Components Comprising Total Executive Compensation
In analyzing compensation paid to named executive officers, the Committee considers total
target cash compensation and equity compensation. Generally, aggregate target compensation of the
CEO and the other executive officers are determined by the Committee based on a variety of factors including:
nature and responsibility of the position, expertise of the individual executive, competitiveness
of the market for the executives services, executives potential for driving the companys success
in the future, peer data, performance reviews and recommendations of the CEO (except in the case of
her own compensation), and other judgmental factors deemed relevant by the Committee such as data
provided by a compensation consultant.
Cash Compensation
In determining cash compensation paid to named executive officers, the Committee first
determines the total target cash compensation that would be required to attract and retain such
qualified executives. Total target cash compensation, as defined by the Committee, combines an
employees base salary with annual target cash incentive awards. The Committee believes that total
target cash compensation should be allocated such that named executive officers hold a significant
at risk portion of cash compensation. The Committee has thus determined that base salary and
target annual cash incentive amounts should each generally comprise fifty percent (50%) of an
executives total target cash compensation.
Base salaries
Our named executive officers respective employment agreements provide for annual base
salaries as described elsewhere in this CD&A under Summary Compensation Table set forth below.
These agreements generally forbid reduction of base salary. In considering increases to base
salary levels, we take into account individual performance and competitive considerations
(including local market conditions).
17
In 2008, the Committee increased Mr. Vadapallis base salary (and, thus, total target cash
compensation) by approximately ten percent (10%), as part of executing a new employment agreement
with Mr. Vadapalli. The increase was based primarily on Mr. Vadapallis performance since his hire
in 2006 and additional responsibilities undertaken. In January 2009, the Committee negotiated a
new employment agreement with Mr. Wilson that provides for a similar increase in his base salary
and total target cash compensation. The increase in Mr. Wilsons compensation package reflects his
strong performance and additional responsibilities that he has assumed.
Annual cash incentive awards
Annual cash incentive awards represent the performance-based portion of named executive
officers total target cash compensation. Actual amounts paid are primarily determined by our
performance relative to the Company Performance Target (as more fully defined below) during the
year giving rise to the award.
At the start of the year, an annual individual target award is established for each
participant. During the first quarter of each year, the Committee approves the parameters for
determining final awards including the Company Performance Target applying to such year. For named
executive officers, target awards have generally been equal to one hundred percent (100%) of such
named executive officers base salary. The target awards for an individual participant may be
revised during the year as a result of a promotion or other change of the individuals position.
The calculation of final payouts of annual cash incentive awards generally occurs during the
first quarter of the subsequent year, following the completion of the company audited financials.
Initially, baseline results are determined upon the Committees review of reported EBITDA less
maintenance capital expenditures. These baseline results can then be adjusted up or down based on
modifiers that reflect matters the Committee deems important in determining actual management
performance. Adjustments have been made in the past to normalize for one-time events unrelated to
performance of the company. The resulting performance metric is then certified by the Committee
and used to assess performance relative to the Company Performance Target.
Cash incentive payouts to named executive officers are not paid if the company does not
achieve at least 90% of the Company Performance Target. Cash incentive payouts to named executive
officers may be enhanced when actual performance exceeds 100% of the Company Performance Target.
Finally, in addition to the Company Performance Target, an individual performance factor for
each named executive officer is applied based on a review of such officers individual performance.
This can result in cash incentive payouts greater or lesser than what would otherwise have been
payable based solely on the calculation described in the previous paragraph.
18
Equity Compensation
Performance-Accelerated Restricted Stock
We grant awards of performance-accelerated restricted stock awards to our named executive
officers. These restricted stock awards vest after five years of continued employment with the
company. These awards can vest on an accelerated basis if we achieve Company Performance Targets
(described above).
The program was developed during 2004, deployed in 2005, and granted annually thereafter
following substantial change in the companys management. Our performance-accelerated restricted
stock awards partially accelerate if we achieve the Company Performance Target during any one year
during the successive three-year period following grant. For each of these years, one-third (1/3)
of the restricted stock award vests following each year we achieve the applicable Company
Performance Target for that year.
The program is designed to further align managements interests with those of stockholders and
avoid excessive dilution. It has also served to retain a stable management group which has
delivered results.
Long-Term Performance-Accelerated Restricted Stock
Our long-term performance-accelerated restricted stock awards, which have been granted each
year since 2005, accelerate and vest in full if we achieve the three-year cumulative Company
Performance Target set by the Committee during the successive three-year period following grant.
One half (1/2) of all restricted stock awards granted to named executive officers have been
designated as long-term.
Performance Share Units
During 2008, the Committee has noted that current at-risk compensation provided to named
executive officers focuses heavily on measurements of cash generated by core business activities.
We believe that continued growth will depend on the success of numerous initiatives currently
underway that may not immediately affect cash-heavy metrics such as EBITDA less maintenance capital
expenditures. Such initiatives are: construction of our AKORN fiber facility, integration of
Crest, deployment of a more robust statewide IP fiber network, and provision of a redundant network
operations center located in the Lower-48. As a result, the Committee granted performance share
unit awards (PSUs) to our CEO, CFO and each of our named executive officers. In March 2009, the
Committee determined that fifty percent (50%) of these PSUs had vested as certain performance goals
had been achieved. The Committee retains the right to determine when and if the remaining goals
have been achieved and to determine the appropriate vesting percentage. The Committee does not
expect to grant PSUs in 2009.
Stock Settled Stock Appreciation Rights
The Committee believes that our compensation programs should strengthen the alignment of our
executives interests with those of our stockholders. Therefore, as part of the new employment
agreements recently negotiated with our CEO, CFO and one other executive vice president, the
Committee has awarded SSARs that will vest ratably over the term of the officers employment
agreement. The SSARs all have expiration dates that are five years from award.
Equity Awards Generally
If a named executive officer leaves the company before his or her equity-based award vests, he
or she forfeits the award. Further, our named executive officers may not sell, pledge or otherwise
encumber any securities comprising an unvested equity-based award until the award vests. We do
not pay dividends on any unvested equity-based compensation.
Perquisites and other Fringe Benefits
Other than monthly car allowances, we do not generally provide perquisites to named executive
officers. Executives are invited to participate in our broad-based pension, benefit, health and
welfare plans available to all of our employees in general.
19
Other Policies, Practices, and Judgments Affecting our Executive Compensation
Policy Regarding Security Ownership of Management
We have adopted minimum share ownership requirements because we believe that management will
more effectively pursue the long-term interests of stockholders if they are stockholders
themselves. Ownership levels are provided for executives to acquire and hold a minimum amount of
common stock based on their position and total target cash compensation level. The Committee
recently reviewed our share ownership requirements and made changes to bring our policy into line
with emerging market practice. Our policy requires each executive except the CEO to accumulate and
hold a number of shares of common stock having value of at least one-and-a-half (1.5) times the
executives base salary. The CEO is expected to hold shares of common stock equal to at least
three (3) times her base salary. New officers have five (5) years to achieve the prescribed
ownership levels.
Relative Levels of Compensation among Named Executive Officers
Generally, the elements of compensation described earlier apply to all of our named executive
officers. Our CEO is the most highly paid of our named executive officers, reflecting her level of
responsibility. Ms. Pelletier has the ultimate responsibility for the strategic direction of the
Company and a more visible role than other named executive officers. Ms. Pelletier also
effectively acts as our chief operating officer, taking substantial part in day-to-day
decision-making. Ms. Pelletiers compensation also reflects the importance of her retention to the
successful execution of our current business strategy, which has been principally of her design.
Ms. Pelletiers total compensation package is in the top quartile of CEO compensation paid by the
companies in our peer group based on information provided by Watson Wyatt.
Wealth Accumulation
It is not our practice to take into account wealth accumulated by the named executive officers
when determining the value of current awards. Our named executive officers do not have a
substantial benefit from their participation in our defined contribution or benefit plans. A
majority of our executives retirement savings consists of the executives own contributions and
accumulated retirement savings from principally other companies retirement plans earned over
lengthy careers. We believe that it would be inconsistent with the purpose of our executive
compensation program, which is to motivate and reward ongoing performance, to make decisions about
current awards taking into account the named executive officers accumulated savings and investment
returns, whether or not under our company plans.
Considerations of Equity Compensation Practices on Stockholders
In administering our equity compensation plans, the Committee avoids practices that it deems
to not be in the best interests of our stockholders. For example, the Committee does not allow
re-pricing of equity awards and does not make in-the-money equity grants (other than basic
restricted stock grants).
In order to assess the potential dilution to our stockholders, the Committee may take into
account the total outstanding but unexercised equity awards when determining the total number of
shares that would be subject to any new equity award. In addition, the Committee may consider the
number of shares that remain subject to outstanding but unvested equity awards in determining
whether any additional grants of equity awards should be made.
However, the Committee does not take into account an employees holdings of vested but
unexercised awards in determining additional awards to such employee. The Committee also does not
take into account the value realized by an employee during a fiscal year from the exercise of
equity awards granted during a prior year. The Committee believes that value realized by an
employee from the exercise of any such equity award relates to services provided during the year of
the grant or of vesting and not necessarily during the year of exercise. Furthermore, because we
expect certain equity awards to be made to employees in connection with the employees contribution
to the successful consummation and implementation of a transaction, the Committee believes that an
equity award designed to reward a separate transaction should not be affected by the employees
determination not to exercise a previously granted equity award.
Section 409A of the Internal Revenue Code
Section 409A of the Internal Revenue Code imposes certain requirements on nonqualified
deferred compensation plans and potentially applies to a number of our executive employment
agreement and compensation plans. Final regulations under Section 409A were released in April 2007
and became effective on January 1, 2009. We have designed our compensation practices to comply
with Section 409A.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally limits to one million dollars
($1,000,000) the tax deductibility of annual compensation paid to certain officers.
Performance-based compensation may, however, be excluded from the limit so long as it meets certain
requirements. While the Committee retains flexibility, we design when practicable our compensation
plans and programs so as to allow us to deduct compensation expense.
20
Policies and Practices Regarding Equity Awards
Under our policy, grants of restricted stock units are made at a regularly scheduled meeting
of the Committee occurring at approximately the same time each year.
In addition, a Non-Executive Equity Compensation Subcommittee has been delegated authority by
the Committee to make equity compensation grants at regularly scheduled meetings, but only to
employees who are not members of the executive leadership team.
Compensation and Personnel Committee Report
The Compensation and Personnel Committee of the Board of Directors operates under a written
charter and is comprised entirely of directors meeting the independence requirements of Nasdaq.
The board established this committee to discharge the boards responsibilities relating to
compensation of the companys CEO and each of the companys other executive officers. The
committee has overall responsibility for decisions relating to all compensation plans, policies,
and benefit programs as they affect the CEO and other executive officers. The committee has
reviewed and discussed the information appearing previously under the heading Compensation
Discussion and Analysis with management and, based on that review and discussion, has recommended
to the Board of Directors that the Compensation Discussion and Analysis section be included in
this proxy statement.
Submitted by,
Gary R. Donahee, Chair
John M. Egan
Brian Rogers
Compensation and Personnel Committee Interlocks and Insider Participation
Our Compensation and Personnel Committee comprises of Messrs. Donahee, Egan, and Rogers. No
member of such committee is or was our officer or employee or has had any relationship with us
requiring disclosure pursuant to Item 404 of Regulation S-K. No member of the committee is an
executive officer of another entity on which any of our executives serve on the compensation
committee of such other entity. None of our executive officers served as a director for a company
that employs as an executive officer any of our directors.
Summary Compensation Table
The table below sets forth a summary of the compensation we incurred for our CEO, CFO, each
of the three (3) additional most highly compensated executive officers who served in such
capacities as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Pension |
|
All Other |
|
|
Name and Principal |
|
|
|
|
|
Salary |
|
Awards |
|
Awards |
|
Compensation |
|
Value |
|
Compensation |
|
Total |
Position |
|
Year |
|
($) |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($)(5) |
|
($) |
Liane Pelletier |
|
|
2008 |
|
|
|
500,000 |
|
|
|
1,770,180 |
|
|
|
736,042 |
|
|
|
553,500 |
|
|
|
293,436 |
|
|
|
16,210 |
|
|
|
3,869,368 |
|
President and |
|
|
2007 |
|
|
|
500,000 |
|
|
|
725,201 |
|
|
|
210,496 |
|
|
|
1,332,000 |
|
|
|
|
|
|
|
12,000 |
|
|
|
2,779,697 |
|
Chief Executive Officer |
|
|
2006 |
|
|
|
500,000 |
|
|
|
855,245 |
|
|
|
372,835 |
|
|
|
1,100,000 |
|
|
|
|
|
|
|
12,000 |
|
|
|
2,840,080 |
|
David Wilson |
|
|
2008 |
|
|
|
250,000 |
|
|
|
578,170 |
|
|
|
19,906 |
|
|
|
297,000 |
|
|
|
|
|
|
|
|
|
|
|
1,145,076 |
|
Executive Vice President and |
|
|
2007 |
|
|
|
250,000 |
|
|
|
234,970 |
|
|
|
38,260 |
|
|
|
555,000 |
|
|
|
|
|
|
|
|
|
|
|
1,078,230 |
|
Chief Financial Officer |
|
|
2006 |
|
|
|
250,000 |
|
|
|
354,745 |
|
|
|
64,851 |
|
|
|
550,000 |
|
|
|
|
|
|
|
|
|
|
|
1,219,596 |
|
Anand Vadapalli |
|
|
2008 |
|
|
|
249,540 |
|
|
|
577,291 |
|
|
|
109,449 |
|
|
|
297,000 |
|
|
|
|
|
|
|
20,855 |
|
|
|
1,254,135 |
|
Executive Vice President, |
|
|
2007 |
|
|
|
230,000 |
|
|
|
136,791 |
|
|
|
|
|
|
|
400,000 |
|
|
|
|
|
|
|
10,500 |
|
|
|
777,291 |
|
Technology and Operations |
|
|
2006 |
|
|
|
88,462 |
|
|
|
35,183 |
|
|
|
|
|
|
|
210,833 |
|
|
|
|
|
|
|
|
|
|
|
334,478 |
|
Sheldon Fisher |
|
|
2008 |
|
|
|
250,000 |
|
|
|
570,065 |
|
|
|
15,297 |
|
|
|
202,500 |
|
|
|
|
|
|
|
|
|
|
|
1,037,862 |
|
Senior Vice President, |
|
|
2007 |
|
|
|
250,000 |
|
|
|
237,793 |
|
|
|
29,674 |
|
|
|
555,000 |
|
|
|
|
|
|
|
|
|
|
|
1,072,467 |
|
Sales and Service |
|
|
2006 |
|
|
|
250,000 |
|
|
|
289,326 |
|
|
|
50,371 |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
1,089,697 |
|
Leonard Steinberg |
|
|
2008 |
|
|
|
220,000 |
|
|
|
448,890 |
|
|
|
8,975 |
|
|
|
237,600 |
|
|
|
53,314 |
|
|
|
|
|
|
|
968,779 |
|
Vice President, |
|
|
2007 |
|
|
|
219,617 |
|
|
|
280,709 |
|
|
|
6,530 |
|
|
|
488,400 |
|
|
|
41,241 |
|
|
|
|
|
|
|
1,036,497 |
|
General Counsel and |
|
|
2006 |
|
|
|
200,000 |
|
|
|
288,034 |
|
|
|
8,910 |
|
|
|
400,000 |
|
|
|
34,000 |
|
|
|
|
|
|
|
930,944 |
|
Corporate Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Stock awards comprise restricted stock awards that vest on the fifth
(5th) anniversary of the date of grant, unless the company achieves |
21
|
|
|
|
|
certain performance targets specified by the company. These performance targets comprise one-year
and three-year performance periods. Approximately one-sixth (1/6) of this amount is eligible
to vest in each of 2009, 2010 and 2011, respectively, if the one-year performance target is
achieved. Approximately one-half (1/2) of this amount will vest in 2011, in the event the
three-year performance target is achieved. |
|
(2) |
|
Represents expense recorded for outstanding options and for stock-settled stock
appreciation rights awarded in 2008. No options or stock appreciation rights were granted by
the company in 2007 or 2006. |
|
(3) |
|
Represents annual cash incentive payments under our 2005 Contributor Pay Program.
Amounts reported for each year are based on performance in such year, even if paid subsequent
to year end. |
|
(4) |
|
Based on vested benefits under the Alaska Electrical Pension Plan (AEPP), a
multi-employer defined benefit plan. The company does not manage the plan, and the numbers
provided are estimates. Ms. Pelletiers benefits vested in the plan in 2008 and therefore the
entire estimated amount vested has been included in the value for 2008. |
|
(5) |
|
Includes a car allowance of twelve thousand dollars ($12,000) and moving expenses
of four thousand two hundred ten dollars ($4,210) paid to Ms. Pelletier. Mr. Vadapalli
received nine thousand nine hundred dollars ($9,900) as a car allowance and ten thousand nine
hundred fifty-five ($10,955) of moving expenses. |
Grants of Plan-Based Awards
The following table sets forth each grant of an award including equity and non-equity awards
made to a named executive officer during the year ended December 31, 2008, including awards that
subsequently have been transferred.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under |
|
Number of |
|
Number of |
|
Exercise or |
|
Grant Date Fair |
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(1) |
|
Shares of |
|
Securities |
|
base price |
|
Value of Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or |
|
Underlying |
|
of option |
|
and Option |
|
|
Grant |
|
Threshold |
|
Target |
|
Maximum |
|
Units |
|
Options |
|
awards |
|
Awards |
Name |
|
Date |
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
($/Sh) |
|
($) |
Liane Pelletier |
|
|
2008 |
|
|
|
|
|
|
|
550,000 |
|
|
|
|
|
|
|
307,689 |
|
|
|
500,000 |
|
|
|
12.56 |
|
|
|
3,821,734 |
|
David Wilson |
|
|
2008 |
|
|
|
|
|
|
|
275,000 |
|
|
|
|
|
|
|
57,999 |
|
|
|
|
|
|
|
|
|
|
|
571,861 |
|
Anand Vadapalli |
|
|
2008 |
|
|
|
|
|
|
|
275,000 |
|
|
|
|
|
|
|
89,486 |
|
|
|
275,000 |
|
|
|
9.09 |
|
|
|
1,127,236 |
|
Sheldon Fisher |
|
|
2008 |
|
|
|
|
|
|
|
250,000 |
|
|
|
|
|
|
|
57,999 |
|
|
|
|
|
|
|
|
|
|
|
571,861 |
|
Leonard Steinberg |
|
|
2008 |
|
|
|
|
|
|
|
220,000 |
|
|
|
|
|
|
|
39,333 |
|
|
|
|
|
|
|
|
|
|
|
396,774 |
|
|
|
|
(1) |
|
Represents amounts payable under our 2005 Contributor Pay Program, as adjusted for
requirements in individual employment agreements. Under the program there are no maxima, and
the actual incentive payment is based on the companys performance relative to the performance
target and an individual performance factor. The factor for company
performance decreases by fifteen percent (15%) for every one percent (1%) below our financial
measure target and increases ten percent (10%) for every one percent (1%) above. |
22
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth unexercised options; stock that has not vested; and equity
incentive plan awards for each named executive officer outstanding as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Equity Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Market or |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned |
|
Payout Value of |
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares, Units |
|
Unearned |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
Number of Shares |
|
Market Value of |
|
or Other |
|
Shares, Units or |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
or Units of Stock |
|
Shares or Units of |
|
Rights That |
|
Other Rights |
|
|
Options |
|
Options |
|
Exercise |
|
Expiration |
|
That Have Not |
|
Stock That Have |
|
Have Not |
|
That Have Not |
Name |
|
(#) Exercisable |
|
(#) Unexercisable |
|
Price ($) |
|
Date |
|
Vested (#) |
|
Not Vested($)(1) |
|
Vested (#) |
|
Vested ($) |
Liane Pelletier |
|
|
200,000 |
|
|
|
|
|
|
|
4.50 |
|
|
10/6/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
|
250,000 |
|
|
|
12.56 |
|
|
9/22/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213,681 |
|
|
|
2,004,328 |
|
|
|
131,369 |
|
|
|
1,232,241 |
|
David Wilson |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
4.44 |
|
|
3/1/2014 |
|
|
69,632 |
|
|
|
653,148 |
|
|
|
33,333 |
|
|
|
312,664 |
|
Anand Vadapalli |
|
|
91,666 |
|
|
|
183,334 |
|
|
|
9.09 |
|
|
12/19/2013 |
|
|
77,548 |
|
|
|
727,400 |
|
|
|
33,333 |
|
|
|
312,664 |
|
Sheldon Fisher |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
4.35 |
|
|
2/22/2014 |
|
|
69,632 |
|
|
|
653,148 |
|
|
|
33,333 |
|
|
|
312,664 |
|
Leonard Steinberg |
|
|
|
|
|
|
1,000 |
|
|
|
4.35 |
|
|
1/31/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
4,000 |
|
|
|
5.36 |
|
|
7/27/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667 |
|
|
|
5.50 |
|
|
11/20/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
7.00 |
|
|
1/4/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,166 |
|
|
|
8.00 |
|
|
2/20/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,666 |
|
|
|
12.63 |
|
|
6/20/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,632 |
|
|
|
653,148 |
|
|
|
14,667 |
|
|
|
137,576 |
|
|
|
|
(1) |
|
Based on the closing price on December 31, 2008 of $9.38 per share of our common
stock as traded in the Nasdaq Global Market. |
23
Option Exercises and Stock Vested
The following table sets forth information regarding stock options exercised by, and the
shares of restricted stock that vested for, each of the named executive officers in 2008. The
value of the shares acquired upon exercise of stock options is based on the difference between the
closing price of the shares on the exercise date and the exercise price. The value of restricted
stock realized is based on the closing price of the shares on the vesting date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
Shares |
|
Value |
|
Shares |
|
Value |
|
|
Acquired on |
|
Realized on |
|
Acquired on |
|
Realized on |
Name |
|
Exercise (#) |
|
Exercise ($) |
|
Vesting (#) |
|
Vesting ($) |
Liane Pelletier |
|
|
400,000 |
|
|
|
3,148,000 |
|
|
|
193,389 |
(1) |
|
|
2,429,277 |
(1) |
David Wilson |
|
|
|
|
|
|
|
|
|
|
41,060 |
|
|
|
516,945 |
|
A nand Vadapalli |
|
|
|
|
|
|
|
|
|
|
17,146 |
|
|
|
179,008 |
|
Sheldon Fisher |
|
|
|
|
|
|
|
|
|
|
31,060 |
|
|
|
391,045 |
|
Leonard Steinberg |
|
|
5,000 |
|
|
|
35,260 |
|
|
|
33,060 |
|
|
|
416,225 |
|
|
|
|
(1) |
|
Includes 100,000 units awarded and vested on September 22, 2008 with a value of
$12.56 per unit realized upon vesting. The units will be released upon Stockholder approval
of the amendment to our 1999 Stock Incentive Plan or otherwise settled in cash in July 2009. |
Pension Benefits
The table set forth below includes, for each named executive officer, the number of years of
service credited to the named executive officer under the Alaska Electrical Pension Plan (AEPP)
as of December 31, 2008. The AEPP is a multiemployer pension plan that we do not manage. As a
result, we do not include the present value of accumulated benefits under the AEPP in our audited
financial statements. This table includes our estimates of the actuarial present value of each
named executive officers accumulated benefit under the plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years |
|
Present Value |
|
Payments |
|
|
|
|
|
|
Credited Service |
|
of Accumulated |
|
During Last |
Name |
|
Plan Name |
|
(#) |
|
Benefit ($) |
|
Fiscal Year ($) |
Liane Pelletier |
|
AEPP |
|
|
5 |
|
|
|
293,436 |
|
|
|
|
|
David Wils on |
|
AEPP |
|
|
5 |
|
|
|
|
|
|
|
|
|
Anand Vadapalli |
|
AEPP |
|
|
3 |
|
|
|
|
|
|
|
|
|
Sheldon Fisher |
|
AEPP |
|
|
5 |
|
|
|
|
|
|
|
|
|
Leonard Steinberg |
|
AEPP |
|
|
8 |
|
|
|
364,366 |
|
|
|
|
|
The AEPP is a non-contributory, multi-employer defined benefit retirement plan administered by
a board of trustees representing the member participants. We make contributions on behalf of our
employees in accordance with schedules based on wage rates and job classifications. Participants,
including each of our named executive officers, receive a monthly benefit upon retirement, payable
for life based on the contributions made on the employees behalf. Actuarially equivalent
alternative forms of benefits are available at the participants election. For benefits accrued
prior to July 1, 2006 participants are entitled to receive full benefits upon retirement at or
after age 58 and age 60 for benefits accrued after July 1, 2006. Participants must have at least
five years of recognized service, at least one of which must be future credited service as
defined by the AEPP. Participants may elect to receive reduced benefits upon early retirement on
or after age 48 and at least five years of recognized service, of which at least three years must
be future credited service.
We also maintain, separate from the AEPP, the Alaska Communications Systems Retirement Plan
and an executive post retirement health benefit plan, both of which are frozen in terms of
benefits and participation. None of our named executive officers participate in either of these
plans.
24
Director Compensation
The following table sets forth for each of our directors, unless such director is also a named
executive officer, the aggregate dollar amount of all fees earned or paid in cash for services as a
director, including annual retainer fees, committee and/or chairmanship fees, and meeting fees, and
for awards of stock, the aggregate grant date fair value computed in accordance with FAS 123(R), in
each case for the year ended December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
Stock |
|
All Other |
|
|
|
|
|
|
|
|
Paid in Cash |
|
Awards |
|
Compensation |
|
Total |
Name |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
Brian D. Rogers |
|
|
2008 |
|
|
|
43,750 |
|
|
|
22,895 |
|
|
|
|
|
|
|
66,645 |
|
John M. Eagan |
|
|
2008 |
|
|
|
34,250 |
|
|
|
22,895 |
|
|
|
|
|
|
|
57,145 |
|
Gary R. Donahee |
|
|
2008 |
|
|
|
|
|
|
|
54,895 |
|
|
|
|
|
|
|
54,895 |
|
Patrick Pichette |
|
|
2008 |
|
|
|
12,090 |
|
|
|
27,206 |
|
|
|
|
|
|
|
39,296 |
|
Edward J. Hayes, Jr. |
|
|
2008 |
|
|
|
20,687 |
|
|
|
43,541 |
|
|
|
|
|
|
|
64,228 |
|
Annette M. Jacobs |
|
|
2008 |
|
|
|
23 |
|
|
|
64,872 |
|
|
|
|
|
|
|
64,895 |
|
David A. Southwell |
|
|
2008 |
|
|
|
28 |
|
|
|
52,617 |
|
|
|
|
|
|
|
52,645 |
|
Peter D. Ley |
|
|
2008 |
|
|
|
13,587 |
|
|
|
8,763 |
|
|
|
|
|
|
|
22,350 |
|
Effective January 1, 2008, we provide cash compensation to the independent directors
consisting of a $20,000 annual retainer payable in quarterly installments, plus additional annual
retainers of $5,000 to the chair of the Audit Committee and $10,000 to the Lead Director. The
independent directors also receive quarterly grants of 500 shares of our common stock or
equivalents granted on the last trading day of each quarter, which vest immediately.
In addition, our directors are paid $1,500 (or $750 for telephonic attendance) for each Board
of Directors and/or committee meeting attended in person, except for audit committee meetings. The
audit committee members are paid $2,500 for each audit committee (or $1,250 for telephonic
attendance).
Independent directors may elect to receive all or a portion of their cash retainer and
meetings fees in common stock or equivalents. The stock based compensation component of directors
compensation is provided under the Alaska Communications Systems Group, Inc. 1999 Non-Employee
Director Stock Compensation Plan. For 2009, all non-employee directors have elected to receive
100% of their compensation in common stock of the Company.
Employment Arrangements, Potential Payments upon Termination or Change in Control
We have entered into employment agreements with each of our named executive officers. These
arrangements are summarized below.
Liane Pelletier
We have entered into an amended and restated employment agreement (Employment Agreement)
with Liane Pelletier effective September 22, 2008. Ms. Pelletier has served as our President and
CEO since October 6, 2003. Ms. Pelletier was also elected to our Board of Directors as well as to
the executive committee of the board beginning on October 6, 2003. Ms. Pelletier has served as
the Chair of the Board of Directors since January 1, 2004. Her Employment Agreement expires on
April 1, 2011. Ms. Pelletier receives an annual base salary of five hundred, fifty thousand
dollars ($550,000) of which fifty thousand dollars ($50,000) is payable in common stock
awarded in the form of restricted stock units that vest in full on December 31 of each year.
Ms. Pelletier is also eligible to receive a target annual cash incentive payment of five hundred,
fifty thousand dollars ($550,000) based on achieving one hundred percent (100%) of targeted
performance objectives. Subject to the terms of the applicable annual cash incentive plan, the
actual cash incentive paid for any fiscal year, if earned, ranges from zero percent (0%) to three
hundred percent (300%) of base salary based on the achievement of performance objectives
determined by the board (or a designated committee of the board) in consultation with Ms.
Pelletier for each fiscal year. Ms. Pelletiers Employment Agreement also provides for other
customary benefits including eligibility to participate in fringe benefit plans, paid vacation,
life and disability insurance plans and expense reimbursement.
On October 6, 2003, Ms. Pelletier was granted an option to purchase one million (1,000,000)
shares of our common stock with an exercise price equal to the fair market value of the common
stock on that date. The option has a term of ten (10) years, and vests twenty percent (20%) per
year, or upon a change of control, if earlier. This option award fully vested in 2008.
25
On September 22, 2008, Ms. Pelletier was granted five hundred thousand (500,000) Stock Settled
Stock Appreciation Rights (SSARs) pursuant to her Employment Agreement. The SSARs vest fifty
percent (50%) upon grant and fifty percent (50%) on April 1, 2009. Ms. Pelletier also received an
additional five hundred thousand (500,000) SSARs on January 2, 2009 that will vest fifty percent
(50%) on April 1, 2010 and fifty percent (50%) on April 1, 2011.
Ms. Pelletier received one hundred thousand (100,000) fully vested restricted stock units on
September 22, 2008 as part of her Employment Agreement. These units are payable on July 31, 2009
with one share of Alaska Communications Systems Group, Inc common stock for each vested unit. If
the stockholders do not approve the 2009 Amendment to the Alaska Communications Systems Group, Inc.
1999 Stock Incentive Plan, the award shall be paid to Ms. Pelletier in one lump sum of cash in an
amount equal to one hundred thousand (100,000) multiplied by the Fair Market Value as defined under
the ACS 1999 Stock Incentive Plan.
In the event we terminate Ms. Pelletiers employment for any reason other than a board
determination of cause or a termination for death or disability, or if Ms. Pelletier terminates
her employment because of a constructive termination, Ms. Pelletier will be entitled to receive a
severance payment under the agreement of one million, one hundred thousand dollars ($1,100,000).
The severance amount would be paid to Ms. Pelletier in one lump sum within sixty (60) days of
her termination. In addition, Ms. Pelletier would receive any unpaid cash incentive payment from
the previously completed fiscal year, payable when cash incentive payments are paid to our other
senior executives for such fiscal year; and
|
|
|
receive a pro rata cash incentive payment (of the amount actually earned) for the
year of termination, payable when cash incentive payments are paid to our other senior
executives for such year; |
|
|
|
|
become vested in the number of unvested SSARs on a pro-rata basis based upon; the
number of days employed since April 1, 2008; |
|
|
|
|
receive COBRA health insurance coverage reimbursed for herself and her eligible
dependents for the eighteen (18) month period following such termination; and |
|
|
|
|
be reimbursed up to fifty thousand dollars ($50,000, plus any income tax gross-up)
for the costs of relocation back to the contiguous United States within sixty (60) days
of her termination. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
|
Base |
|
Target Cash |
|
Stock and |
|
|
|
|
Termination Event |
|
Salary |
|
Incentive |
|
Options(1) |
|
Benefits |
|
Total |
Without cause or for good reason |
|
$ |
1,100,000 |
|
|
$ |
550,000 |
|
|
$ |
3,236,569 |
|
|
$ |
50,000 |
(2) |
|
$ |
4,936,569 |
(2) |
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
Change- in-control |
|
$ |
2,200,000 |
|
|
$ |
550,000 |
|
|
$ |
3,236,569 |
|
|
$ |
50,000 |
(2) |
|
$ |
6,036,569 |
(2)(3) |
With cause or without good reason |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price on December 31, 2008 of $9.38 per share of our common
stock as traded in the Nasdaq Global Market for unvested restricted stock and options as of
December 31, 2008. |
|
(2) |
|
COBRA health insurance coverage is reimbursed for the 18-month period following
termination and relocation costs to the Lower 48 are paid. |
|
(3) |
|
Excludes a possible additional gross up payment that would be made to Ms.
Pelletier if the compensation constitutes an excess parachute payment within the meaning of
Section 280G of the Internal Revenue Code. |
David Wilson
We entered into an employment agreement with David Wilson, Executive Vice President & Chief
Financial Officer on January 5, 2009. The employment agreement for Mr. Wilson provides for an
annual base salary of two hundred seventy-five thousand dollars ($275,000), target annual bonuses
of one hundred percent (100%) of base salary, the grant of two hundred seventy-five thousand
(275,000) stock-settled stock appreciation rights and the grant of 30,253 restricted stock units.
Other benefits include paid-time off, participation in the Companys health and welfare
plans, 401(k) retirement investment plan, employee stock purchase plan, pension plan, and a
relocation allowance up to $50,000 (plus any required income tax gross-up) to assist Mr. Wilson
with relocating his personal property following termination of the Employment Agreement.
26
Upon a termination by the Company without cause or by Mr. Wilson for good reason, Mr. Wilson
is entitled to post-termination benefits in accordance with the Companys 2008 Officer Severance
Program (the Plan). The Plan provides severance benefits to officers of the company in the
event the officer is terminated without cause or resigns for good reason or in the event
employment is terminated in connection with a change of control of the company. Severance
payments include cash of $550,000 and continued vesting of equity awards for one year, subject to
certain limitations.
Under a previous employment agreement, Mr. Wilson received an option to purchase two hundred
fifty thousand (250,000) shares of our stock with an exercise price equal to the fair market value
of our stock on the commencement date of his employment. The option has a term of ten years, and
vests twenty percent (20%) per year for the five-year period starting with the commencement of his
employment with the company, or upon a change in control, if earlier. Except as provided below,
vesting ceases and the term of unvested options lapses upon termination of employment for any
reason.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
|
Base |
|
Target Cash |
|
Stock and |
|
|
|
|
Termination Event |
|
Salary |
|
Incentive |
|
Options(1) |
|
Benefits |
|
Total |
Without cause or for good reason |
|
$ |
550,000 |
|
|
$ |
275,000 |
|
|
$ |
867,671 |
|
|
$ |
50,000 |
(2) |
|
$ |
1,742,671 |
(2) |
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change- in-control |
|
$ |
550,000 |
|
|
$ |
275,000 |
|
|
$ |
1,212,811 |
|
|
$ |
50,000 |
(2) |
|
$ |
2,087,811 |
(2) |
With cause or without good reason |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price on December 31, 2008 of $9.38 per share of our common
stock as traded in the Nasdaq Global Market for unvested restricted stock as of December 31,
2008. |
|
(2) |
|
COBRA health insurance coverage is reimbursed for the 12-month period following
termination and relocation costs to the Lower 48 are paid. |
Anand Vadapalli
We entered into an employment agreement with Anand Vadapalli, Executive Vice President,
Operation and Technology on December 19, 2008. The employment agreement for Mr. Vadapalli
provides for an annual base salary of two hundred seventy-five thousand dollars ($275,000), target
annual bonuses of one hundred percent (100%) of base salary, the grant of two hundred seventy-five
thousand (275,000) stock-settled stock appreciation rights and the grant of 30,253 restricted
stock units.
Other benefits include paid-time off, participation in the Companys health and welfare
plans, 401(k) retirement investment plan, employee stock purchase plan, pension plan, and a
relocation allowance up to $50,000 (plus any required income tax gross-up) to assist Mr. Vadapalli
with relocating his personal property following termination of the Employment Agreement.
Upon a termination by the Company without cause or by Mr. Vadapalli for good reason, Mr.
Vadapalli is entitled to post-termination benefits in accordance with the Companys 2008 Officer
Severance Program (the Plan). The Plan provides severance benefits to officers of the company
in the event the officer is terminated without cause or resigns for good reason or in the
event employment is terminated in connection with a change of control of the company. Severance
payments include cash of $550,000 and continued vesting of equity awards for one year, subject to
certain limitations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
|
Base |
|
Target Cash |
|
Stock and |
|
|
|
|
Termination Event |
|
Salary |
|
Incentive |
|
Options(1) |
|
Benefits |
|
Total |
Without cause or for good reason |
|
$ |
550,000 |
|
|
$ |
275,000 |
|
|
$ |
617,261 |
|
|
$ |
50,000 |
(2) |
|
$ |
1,492,261 |
(2) |
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change- in -control |
|
$ |
550,000 |
|
|
$ |
275,000 |
|
|
$ |
1,093,231 |
|
|
$ |
50,000 |
(2) |
|
$ |
1,968,231 |
(2) |
With cause or without good reason |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price on December 31, 2008 of $9.38 per share of our common
stock as traded in the Nasdaq Global Market for unvested restricted stock and stock-settled
stock appreciation rights as of December 31, 2008. |
|
(2) |
|
COBRA health insurance coverage is reimbursed for the 12-month period following
termination and relocation costs to the Lower 48 are paid. |
27
Sheldon Fisher
We entered into an employment agreement with Sheldon Fisher, Senior Vice President, Sales and
Service on January 23, 2004. The employment agreement for Mr. Fisher is similar to Mr. Wilsons
agreement. The agreement provides for an annual base salary of two hundred fifty thousand dollars
($250,000), target annual bonuses of one hundred percent (100%) of base salary, and the grant of
two hundred thousand (200,000) stock options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
|
Base |
|
Target Cash |
|
Stock and |
|
|
|
|
Termination Event |
|
Salary |
|
Incentive |
|
Options(1) |
|
Benefits |
|
Total |
Without cause or for good reason |
|
$ |
250,000 |
|
|
$ |
250,000 |
|
|
|
|
|
|
$ |
50,000 |
(2) |
|
$ |
550,000 |
(2) |
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
Change- in-control |
|
$ |
250,000 |
|
|
$ |
250,000 |
|
|
$ |
965,812 |
|
|
$ |
50,000 |
(2) |
|
$ |
1,515,812 |
(2) |
With cause or without good reason |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price on December 31, 2008 of $9.38 per share of our common
stock as traded in the Nasdaq Global Market for unvested restricted stock as of December 31,
2008. |
|
(2) |
|
COBRA health insurance coverage is reimbursed for the 12-month period following
termination and relocation costs to the Lower 48 are paid. |
Leonard Steinberg
We also entered into an employment agreement with Leonard Steinberg, Vice President, General Counsel
and Corporate Secretary, as most recently amended on November 7, 2007. The restated agreement provides for a five-year
employment period comprising a minimum annual base salary of two hundred twenty thousand dollars ($220,000) and a target annual
cash incentive payment equal to his base salary, subject to company and individual performance. The agreement provides severance
benefits to Mr. Steinberg in the event he is terminated without cause or otherwise terminates his employment for good reason, as
defined in the agreement. The cash severance benefits provided to Mr. Steinberg comprises an amount equal to one times (1x) his annual base
salary plus one times (1x) his annual target cash incentive. In addition, the company is required to provide relocation expenses of up to fifty thousand
dollars ($50,000) and reimbursement for the cost of continuing health insurance under COBRA for the twelve months following termination of employment.
In addition, any outstanding shares of restricted stock or equivalent units subject to performance acceleration provisions held by Mr. Steinberg prior to
termination shall vest ratably, if the company achieves its performance goals during the subsequent twelve-month period following Mr. Steinbergs termination, to
the extent his employment period coincides with the performance period giving rise to the vesting event. Further, in the event Mr. Steinberg is terminated without
cause or otherwise terminates his employment for good reason in connection with a change of control of the company, in addition to the foregoing severance benefits,
any and all equity compensation granted to Mr. Steinberg, including restricted stock, equivalent units, and options, will immediately vest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
|
Base |
|
Target Cash |
|
Stock and |
|
|
|
|
Termination Event |
|
Salary |
|
Incentive |
|
Options(1) |
|
Benefits |
|
Total |
Without cause or for good reason |
|
$ |
220,000 |
|
|
$ |
220,000 |
|
|
$ |
445,588 |
|
|
$ |
50,000 |
(2) |
|
$ |
935,588 |
(2) |
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
Change- in-control |
|
$ |
220,000 |
|
|
$ |
220,000 |
|
|
$ |
828,939 |
|
|
$ |
50,000 |
(2) |
|
$ |
1,318,939 |
(2) |
With cause or without good reason |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price on December 31, 2008 of $9.38 per share of our common
stock as traded in the Nasdaq Global Market for unvested restricted stock and options as of
December 31, 2008. |
|
(2) |
|
COBRA health insurance coverage is reimbursed for the 12-month period following
termination and relocation costs to the Lower-48 are paid. |
28
Proposal 2: Approval of the amendment to our 1999 Stock Incentive Plan
General
We are asking our stockholders to approve an amendment and restatement to our 1999 Stock
Incentive Plan (the 1999 Plan) to: (i) extend the term of the 1999 plan to December 31, 2012;,
(ii) clarify that shares surrendered for taxes or the exercise of options are available for
distribution under the 1999 Plan, adjust the change-in-control provision from 30% to 50%, and make
other technical changes; and (iii) to allocate an additional 3,500,000 shares to the 1999 plan.
Subject to stockholder approval, the Board approved the amendment to the 1999 Plan on March 27,
2009.
The proposed amendment and restatement will provide a reserve of common stock for future
issuance under the 1999 plan and provide us with the basis for future long-term compensation awards
by means of stock options and restricted stock grants. We believe that such long-term compensation
awards are critical to our ability to attract and retain highly motivated and qualified employees.
A copy of the actual 1999 Plan as filed with the Securities and Exchange Commission may be accessed
from the SECs website (www.sec.gov). Additionally, a copy of the 1999 Plan may be
obtained from the Company by written request to: Alaska Communications Systems; Attn: Investor
Relations, 600 Telephone Avenue; Anchorage, Alaska 99503.
As of December 31, 2008, we had 1,385,010 shares remaining and reserved for issuance under the
1999 Plan. We are asking that 3,500,000 be added to the pool of shares available for issuance of
awards under the amended and restated 1999 Plan. The number of shares available for issuance of
awards under the 1999 Plan will also include, as of the effective date, the number of shares
subject to outstanding awards under our 1999 Plan to the extent that such awards expire, lapse,
settle in cash or otherwise terminate without shares of common stock being issued pursuant to the
awards, together with the 3,500,000 requested shares, would comprise 6,774,232 (the Available
Shares).
We operate in a competitive market and our success depends in large part on our ability to
attract, retain and reward employees, advisors, officers and directors of the highest caliber
across the entire organization. To be able to do so we must offer competitive compensation. We
believe that providing equity compensation to our employees, advisors, consultants, officer and
directors is an important component of total compensation in order to give them a sense of
ownership and align their interests with all stockholders. The 1999 Plan provides the Boards
Compensation Committee with a sufficient range of tools and flexibility to help it make effective
use of the shares authorized for incentive purposes.
We currently expect that the number of Available Shares under the 1999 Plan, as amended, will
be sufficient for issuance of awards under our equity compensation program for at least three
years.
The Board believes that the 1999 Plan will serve a critical role in attracting and motivating
high caliber employees, directors, advisors and consultants that will be essential to our future
success. Therefore, our Board urges you to vote to approve the adoption of the amendments to the
1999 Plan.
Why you should vote for the amendment to the 1999 Stock Incentive Plan
Our 1999 Plan is expiring. Equity awards are currently made to officers and employees from
our 1999 Plan. On November 17, 2009, the 1999 Plan will expire and we will be unable to issue
equity awards unless our stockholders approve an extension to the 1999 Plan. We anticipate that we
will have difficulty attracting, retaining, and motivating officers and employees if we are unable
to make equity awards to them. In addition, we believe that equity awards are an effective
compensation vehicle because they offer significant potential value with a smaller impact on
current income and cash flow. Therefore, we are asking our stockholders to approve the amendment
to the 1999 Plan.
Equity Incentives are an Important Part of Our Compensation Philosophy. Approval of the
amendment to the 1999 Plan is critical to our ongoing effort to create stockholder value. As
discussed in the Compensation Discussion and Analysis earlier in this Proxy Statement, equity-based
incentives are an integral part of our compensation program. We grant stock awards to a broad base
of our employees annually and, as of December 31, 2008, approximately seventy-eight percent (78%)
of our outstanding stock awards were held by rank-and-file
employees. We believe we must continue to offer a competitive equity compensation plan in
order to attract, retain and motivate the talent necessary to successfully grow our business.
We Manage Use of Equity Compensation Carefully. We manage our long-term stockholder dilution
by limiting the number of equity award shares granted each year. The Compensation Committee
monitors our annual burn rate, total dilution, and related stock-based compensation expense and
grants only the number of equity awards it determines necessary
29
to attract, reward, and retain
employees. Our commitment to a carefully managed equity incentive program is demonstrated by the
following facts:
We consider equity compensation to be an expense to our stockholders, and we take care in
determining the size and type of grant made to value the stockholder value that is transferred to
our employees. In doing this, we actively manage this transferred value, or burn rate,
continuously, and we request stockholder approval of specifically crafted share allocations that
are designed to require us to continue this practice. Our average annual burn rate over the
three-year period ending December 31, 2008 was 3.47%, which is below the recommended mean plus one
standard deviation of 3.74% average gross burn rates of similarly situated companies during that
period as reported in RiskMetrics Group Burn Rate Table for 2009 for Russell 3000 Companies in the
telecommunications industry.
The 1999 Plan, as amended, Combines Compensation and Governance Best Practices. We believe
some of the key features of the 1999 Plan that are designed to protect our stockholders interests
and to reflect corporate governance best practices are as follows:
|
|
|
Continued broad-based eligibility for equity awards. We grant equity awards to a
broad base of employees on an annual basis. By doing so, we link employee interests
with stockholder interests throughout the organization and motivate our employees to
act as owners of the Company. |
|
|
|
|
Reasonable share counting provisions. In general, when awards granted under the
1999 Plan expire, lapse, are cancelled, or paid in cash, the shares reserved for
those awards will be returned to the share reserve and be available for future
issuance under the 1999 Plan. |
|
|
|
|
Option exercise price. Under the 1999 Plan, the exercise price per share of stock
options may not be less than one hundred percent (100%) of the fair market value on
the date of grant. |
|
|
|
|
Repricing is not allowed. Under the 1999 Plan, repricing of stock options
(including reduction in the exercise price of stock options or replacement of an
award with cash or another award type) is prohibited without prior stockholder
approval. |
Description of the 1999 Plan
A summary of the 1999 Plan, as amended, is set forth below. The summary is qualified in its
entirety by the detailed amendment to the 1999 Plan, a copy of which is attached to this Proxy
Statement as Attachment A and as filed with the Securities and Exchange Commission and may be
accessed from the SECs website (www.sec.gov). Additionally, a copy of the 1999 Plan may
be accessed from the SECs website (www.sec.gov) or may be obtained from the Company by
written request to: Alaska Communications Systems, Attn: Investor Relations, 600 Telephone Avenue;
Anchorage, Alaska 99503.
Purpose. The 1999 Plan is intended to provide incentives to the Companys officers,
directors, and employees by providing them with opportunities to acquire a direct proprietary
interest in the operations and future success of the Company.
Effective Date. The 1999 Plan is currently in effect and will be extended to December 31,
2012.
Types of Awards. The 1999 Plan provides for the following types of awards: (i) incentive
stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) restricted
stock awards, (v) restricted stock units, (vi) performance stock awards, (vii) and other
stock-based awards (collectively, Awards).
Administration. The 1999 Plan will be administered by the Board or a committee of the Board.
The Board of Directors of the Company has designated the Compensation and Personnel Committee (the
Committee) as the administrator of the 1999 Plan. The 1999 Plan authorizes the Committee to
designate participants to receive awards, determine the type and number of awards and the number of
shares to which an award relates, determine the terms of each award and make other decisions and
determinations as set forth in the 1999 Plan. All decisions and determinations of the Committee
and the Committees interpretation of the 1999 Plan are final and binding and upon
all parties, including participants. The Committee may delegate its authority to grant Awards
under the 1999 Plan to one or more of the Companys executive officers to the extent permitted by
applicable law, provided the grantees are not executive officers or directors of the Company.
Eligibility. Awards under the 1999 Plan may be made to employees, officers, and consultants
of the Company or any present or future parent or subsidiary of the Company or other business
venture in which the Company has a substantial interest (Related Entities).
Stock Option Awards. The following terms apply to stock option awards:
Awards. All options awarded will be evidenced by a written award agreement between the
participant and the Company. The term of any option granted will not exceed ten years.
30
Exercise Price. The exercise price for each share of stock pursuant to an option award will
be determined by the Committee, but will be not less than the fair market value as of the date of
the grant (or 110% of the fair market value if the award is granted to an individual who, on the
date of the grant, owns or is deemed to own shares representing more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the Company). If at the time, the
stock is listed on any stock exchange or Nasdaq or traded in the over-the-counter market, then the
fair market value is the closing selling price on the date in question. If the closing selling
price is not available, then (i) fair market value will be the average of the highest bid and
lowest asked prices or (ii) if no bid or asked prices are available, then fair market value will be
the closing selling price (or the average of the highest bid and lowest asked prices) on the last
preceding day for which such quotes exist. The common stock price as of December 31, 2008 was
$9.38 per share.
Incentive Stock Options Incentive stock options may be granted only to employees of the
Company. No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive
Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section
422 of the Code.
Non-Qualified Stock Options. The Committee is authorized to grant Options to Eligible
Individuals from time to time, in its sole discretion.
Performance Shares Performance shares are rights granted to a participant to receive cash,
stock or other awards, the payment of which is contingent upon achieving certain performance goals
established by the Committee. The Committee may award performance shares upon such terms and
conditions as it may select. All grants of performance shares shall be evidenced by an award
agreement between the participant and the Company.
Restricted Stock Awards. The Committee may make such awards of restricted stock to
participants in such amounts and subject to such terms and conditions as the Committee shall
determine. All awards of restricted stock will be evidenced by a written restricted stock award
agreement between the participant and the Company. Unless otherwise determined by the Committee at
the time of an award, restricted stock will be forfeited immediately if the participant ceases
providing services to the Company.
Restricted Stock Units. The 1999 Plan permits awards of restricted stock units entitling
recipients to acquire shares of the Companys common stock (or the cash equivalent) in the future.
Subject to the provisions of the 1999 Plan, the Committee will determine the terms and conditions
of any restricted stock unit award, including the grant date and vesting schedule for the award.
Stock Appreciation Rights. Under the 1999 Plan, the Committee is authorized to grant stock
appreciation rights to eligible recipients from time to time and in its sole discretion, on such
terms and conditions as it may determine consistent with the 2009 Plan. A stock appreciation right
entitles the holder to exercise the stock appreciation right to acquire shares of the Companys
common stock (or the cash equivalent) upon exercise. Subject to the provisions of the stock
appreciation right award, the holder may receive from the Company an amount determined by
multiplying the difference between the price per share of the stock appreciation right and the
value of the share on the date of exerciser by the number of shares of underlying common stock.
Payment by Participants. Awards granted under the 1999 Plan may be settled upon exercise by
payment in cash, by delivery of shares of the Company valued at fair market value, by cashless
exercise of the award, or by any combination of these methods or other method authorized by the
1999 Plan or by the Committee.
Limitations on Transfer. No award may be transferred or otherwise disposed of by any
participant, except by will or the laws of descent and distribution. Additionally, no rights or
interest of a participant in any award may be pledged or encumbered, except to the Company, nor
shall any award be subject to any lien, obligation or other
liability of a participant.
Change in Control. If a change in control of the Company (as defined in the 1999 Plan)
occurs, the Committee is authorized in its discretion to cause all outstanding awards to become
exercisable and all restrictions on awards to lapse.
Change in Capital Structure. In the event of any change in the number of shares outstanding
as the result of any Company stock dividend or split, recapitalization, merger, consolidation,
combination or exchange, the maximum aggregate number of shares available for awards under the 1999
Plan, the number of shares subject to any award and the exercise price of each share included in an
award will be appropriately adjusted by the Committee.
Amendment, Modification or Termination. The Board is authorized, without action by the
stockholders, to amend, make additions to, suspend or terminate the 1999 Plan as it deems necessary
or appropriate and in the best interest of the Company. However, the Board must obtain the consent
of an award holder before taking any action that adversely impairs the right of such holder and
obtain stockholder approval for any amendment which increases the aggregate number of shares
subject to the 1999 Plan, or for any amendment where stockholder approval is otherwise required by
law.
31
Indemnification. Each member of the Committee and the Board will be indemnified and held
harmless by the Company for any loss, cost or liability incurred or sustained in connection with
the 1999 Plan, all as set forth in the 1999 Plan.
Compliance with Laws. The Company will have no liability to deliver any shares or to make any
award unless such delivery or award complies with all applicable laws and regulations, including
the Securities Exchange Act and the Internal Revenue Code, and all applicable requirements of any
stock exchange, Nasdaq or similar entity.
Federal Income Tax Consequences. The grant of an option will create no tax consequences for
the participant or the Company. A participant will have no taxable income upon exercise of an
incentive stock option, except that the alternative minimum tax may apply. Upon exercise of an
option other than an incentive stock option, a participant generally must recognize ordinary income
equal to the fair market value of the shares acquired minus the exercise price.
Upon a disposition of shares acquired by exercise of an incentive stock option before the end
of the applicable incentive stock option holding periods, the participant generally must recognize
ordinary income equal to the lesser of (1) the fair market value of the shares at the date of
exercise minus the exercise price or (2) the amount realized upon the disposition of the incentive
stock option shares minus the exercise price. Otherwise, a participants disposition of shares
acquired upon the exercise of an option (including an incentive stock option for which the
incentive stock option holding periods are met) generally will result in only capital gain or loss.
Other awards under the 1999 Plan, including non-qualified options, performance shares and
restricted stock award, generally will result in ordinary income to the participant at the later of
the time of delivery of cash, shares, or other awards, or the time that either the risk of
forfeiture or restriction on transferability lapses on previously delivered cash, shares, or other
awards. The Company will have withholding and employment tax obligations at that time. Except as
discussed below, the Company generally will be entitled to a tax deduction equal to the amount
recognized as ordinary income by the participant in connection with an option, stock appreciation
rights, or other award, but will be entitled to no tax deduction relating to amounts that represent
a capital gain to a participant. Thus, the Company will not be entitled to any tax deduction with
respect to an incentive stock option if the participant holds the shares for the incentive stock
option holding periods.
Section 162(m) generally allows the Company to obtain tax deductions without limit for
performance-based compensation. A number of requirements must be met in order for particular
compensation to so qualify, so there can be no assurance that such compensation under the 1999 Plan
will be fully deductible under all circumstances. In addition, some awards under the 1999 Plan,
such as restricted stock and other stock-based awards, generally may not qualify, so that
compensation paid to executive officers in connection with such awards may not be deductible.
This general tax discussion is intended for the information of stockholders considering how to
vote with respect to this proposal and not as tax guidance to participants in the 1999 Plan.
Different tax rules may apply to specific participants and transactions under the 1999 Plan.
No new 1999 Plan benefits table for the 1999 Plan is included in this document. All awards
under the 1999
Plan will be granted as the discretion of the Committee and the Board, and, accordingly, the
amount of such awards to be issued are not yet determinable. Discretionary awards may be made
under the 1999 Plan to employees, executive officers, and independent contractors, and one award is
currently pending approval of the 1999 Plan. The Committee has approved an award of one hundred
thousand (100,000) restricted stock units to our Chief Executive Officer upon approval of the 1999
Plan. This award is pursuant to the Employment Agreement with our Chief Executive Officer dated
September 22, 2008 and filed with the SEC on Form 8-K on September 26, 2008. As of December 31,
2008, there were six executive officers, and approximately 986 employees who were eligible to
participate in the 1999 Plan.
The Board believes that the 1999 Plan is in the best interest of the Company and its
stockholders for the reasons stated above.
The Board of Directors recommends a vote FOR Proposal 2.
32
Proposal 3: Approval of the amendment to our 1999 Employee Stock Purchase Plan
At the Annual Meeting, the stockholders are being asked to approve an amendment to our 1999
Employee Stock Purchase Plan (the ESPP) to (i) extend the term of the ESPP to December 31, 2012
and (ii) reduce the shares allocated to the plan by 500,000 shares. Subject to stockholder
approval, the Board approved the ESPP on March 27, 2009.
The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the
Internal Revenue code (the Code) and would provide eligible employees with an opportunity to
purchase our common stock through payroll deductions. If adopted, the number of shares available
under the ESPP will be 251,912.
The principal provisions of the ESPP are summarized below. The summary is qualified in its
entirety by the detailed amendment to the ESPP, a copy of which is attached to this Proxy Statement
as Attachment B and as filed with the Securities and Exchange Commission and may be accessed from
the SECs website (www.sec.gov). Additionally, a copy of the ESPP may be accessed from the
SECs website (www.sec.gov) or may be obtained from the Company by written request to:
Alaska Communications Systems, Attn: Investor Relations, 600 Telephone Avenue; Anchorage, Alaska
99503.
Description of the 1999 Employee Stock Purchase Plan.
General. The purpose of the ESPP is to provide to eligible employees of the Company a
convenient method for becoming stockholders. The ESPP will become effective upon approval by the
stockholders and will terminate on December 31, 2012. Shares offered under the ESPP will be common
stock of the Company, $0.01 par value, from shares reserved by the Company for the ESPP. The
maximum number of shares that will be offered under the ESPP after the proposed reduction is
251,912 shares.
Administration. The ESPP is administered by the Board. The Board may delegate any or all of
its administrative authority to a committee of the Board or an officer of the Company. There are
separate consecutive six-month offerings pursuant to the ESPP. The next six-month period will
commence upon approval of the ESPP by the stockholders and thereafter offerings will commence on
each subsequent July 1 and January 1 with the final offering beginning on July 1, 2012.
Eligibility. Except as explained below, any full-time, regular employee of the Company is
eligible to participate in the ESPP, subject to signing an enrollment agreement and other necessary
papers. However, no employee shall be permitted to subscribe for shares (i) if that employee after
subscription would own shares possessing five percent (5%) or more of the total combined voting
power or value of all classes of shares issued by the Company, (ii) to the extent that the total
number of shares purchased would exceed 10,000 shares, or (iii) to the extent that the fair market
value of shares subscribed pursuant to the ESPP would exceed twenty-five thousand dollars ($25,000)
in any calendar year. As of December 31, 2008, we had approximately 989 employees who were
eligible to participate in the ESPP.
Participation. Payments for participation are made via payroll deduction and the employee may
choose to participate in any offering at 1%-15% of base pay. Payroll deductions accruing to an
employees account during a six-month offering period will be utilized immediately at the end of
the period to purchase shares for the employee from common shares reserved by the Company for that
purpose. The number of shares purchased will be the number of whole shares as the employees
accumulated payroll deductions will pay for at the price determined under the ESPP. Interest will
not be paid on funds deducted and held in an employees ESPP account. The employee assumes the
risk of any market fluctuations in the price of the shares.
Brokerage Account. Shares purchased by each participant will be deposited into an account in
the name of the participant at a stock brokerage or other financial services firm designated by the
Company. To the extent permitted by applicable laws, the employee may choose to establish the
brokerage account jointly with one other person designated by the employee, as joint tenants with
right of survivorship, tenants in common or as community property.
Price. The purchase price per share will be eighty-five percent (85%) of the fair market
value of the stock, determined either on the first business day or the last business day of the
six-month period, whichever price is less. The stock price as of December 31, 2008 was $9.38 per
share of common stock.
Amendment of the Plan. The Board shall have the right to amend, modify, or terminate the Plan
at any
time without notice, provided that no employees existing rights under any offering already
made under the Plan are adversely affected thereby, and provided further that no such amendment of
the Plan shall, except as provided in the Plan with respect to certain changes in capitalization of
the Company, increase the total number of shares to be offered to a greater number, unless
stockholder approval is obtained therefore.
United States Federal Income Tax Awards under the ESPP. The ESPP is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code. Under a plan which
so qualifies, a participant
33
recognizes no taxable income upon either the grant or the exercise of
the purchase rights. The participant will not recognize taxable income until there is a sale or
other disposition of the shares acquired under the ESPP or in the event the participant should die
while still owning the purchased shares.
The tax treatment of a sale or disposition of shares acquired under the ESPP will depend on
whether the holding period requirements are satisfied. Generally, these requirements are
satisfied if a participant does not sell or dispose of shares acquired in a given purchase period
within two years after the beginning of such period, or within one year after the end of such
period.
If a participant sells or disposes of shares before the holding period requirements are
satisfied with respect to such shares, then the participant will recognize ordinary income at the
time of such sale or disposition equal to the fair market value of the stock on the date the option
was exercised over the exercise price for such shares. Any gain in excess of this amount can be
treated as capital gain.
If a participant sells or disposes of shares after the holding period requirements are
satisfied with respect to such shares, or if the participant owns shares acquired under the ESPP at
the time of death regardless of whether the holding period requirements are satisfied, then the
participant will have ordinary income equal the lesser of: (1) the fair market value of such shares
on the date of death minus the option price or (2) the fair market value of such shares on the
first day of the purchase period from which they were acquired minus the option price.
The Company is not allowed any deductions upon either the grant or exercise of the purchase
rights. If the holding period requirements are not satisfied with respect to the sale or
disposition of any shares acquired under the ESPP or if a participant owns shares acquired under
the ESPP at the time of death, then the Company will be entitled to a tax deduction in the year of
such sale or disposition equal to the amount of ordinary income recognized by the participant at
such time. In all other cases, the Company is not entitled to a tax deduction.
This general tax discussion is intended for the information of stockholders considering how to
vote with respect to this proposal and not as tax guidance to participants in the ESPP. Different
tax rules may apply to specific participants and transactions under the ESPP, particularly in
jurisdictions outside the United States.
Benefits to Executive Officers. No new plan benefits table for the ESPP is included in this
document. Participation in the ESPP is voluntary and is independent on each eligible employees
election to participate and his or her determination as to the level of payroll deduction.
Accordingly, future purchases under the ESPP are not determinable.
The Board of Directors recommends a vote FOR Proposal 3.
Proposal 4: Approval of the amendment to our 1999 Non-Employee Director Stock Plan
At the Annual Meeting, the stockholders are being asked to approve an amendment to our 1999
Non-Employee Director Stock Plan (the Director Plan) to (i) extend the term of the Director Plan
to December 31, 2012 and to increase the shares allocated to the plan by 150,000 shares. Subject
to stockholder approval, the Board approved the amendment to the Director Plan on March 27, 2009.
The Director Plan enhances our ability to attract and retain qualified persons who are not our
employees to provide services as directors and to promote a greater identity of interests between
our directors and our stockholders. If adopted the number of shares allocated under the Director
Plan will be 252,314.
The principal provisions of the Director Plan are summarized below. The summary is qualified
in its entirety by the detailed amendment to the Director Plan, a copy of which is attached to this
Proxy Statement as Attachment C and as filed with the Securities and Exchange Commission and may be
accessed from the SECs website (www.sec.gov) or on our website at www.alsk.com.
Additionally, a copy of the Director Plan may be accessed from the SECs website
(www.sec.gov) or may be obtained from the Company by written request to: Alaska
Communications Systems, Attn: Investor Relations, 600 Telephone Avenue; Anchorage, Alaska 99503.
Description of the 1999 Non-Employee Director Stock Plan.
General. The purpose of the Director Plan is to enhance our ability to attract and retain
qualified persons who are not employees for service as directors and to encourage ownership in our
company by the non-employee directors by granting shares of our common stock as described below.
Administration. The Director Plan is administered by the Board or a committee of the Board as
designated by the Board. The board has delegated authority to administer the Director Plan to the
Compensation and Personnel Committee of the Board.
34
Eligibility. Only our non-employee directors are eligible to receive grants under the
Director Plan. A non-employee director is a director who is not an employee of our company and was
not an employee of our company at any time during the preceding calendar year. Seven of the eight
nominees standing for election as directors at the annual meeting qualify as non-employee
directors.
Awards. Each non-employee director who is in office is awarded 2,000 shares or share
equivalents annually, pro-rated for length of service. In addition, each non-employee director may
elect to receive up to 100% of his/her cash compensation in common stock or equivalents thereof.
Non-employee directors are each required to hold at least 5,000 shares of our common stock or stock
equivalents by March 2010 or the fifth anniversary of the directors continuous service to our
board, whichever is later.
Amendment. Our Board and its designee also have the right to construe and interpret the
Director Plan, amend and rescind rules and regulations relating to the Director Plan, and to take
all actions and make determinations in connection with the Director Plan as it may deem necessary
or desirable. The Board or its designee may amend, alter, or discontinue the Director Plan at any
time as it deems necessary or to comply with changes to the Internal Revenue Code, the Employee
Retirement Income Security Act of 1974 or the rules thereunder.
Termination. The plan may be terminated by our Board at any time. Unless sooner terminated,
no shares may be issued under the plan after December 31, 2012.
Federal Income Tax Consequences. The following is a general summary of the material United
States federal income tax consequences relating to the plan based on federal income tax laws
currently in effect. The summary is not intended to be exhaustive and does not describe the
effect, if any, of gift, estate and inheritance taxes.
A non-employee director who receives a grant of shares and elects to defer receipt of the
shares at the time of grant will not recognize taxable income and we will not be entitled to a
deduction until such shares are issued. Upon issuance, such director will recognize taxable
ordinary income in an amount equal to the fair market value of our common stock at that time, and
we will be entitled to a deduction in the same amount. A director will, however, recognize taxable
ordinary income in the year the shares are granted in an amount equal to their fair market value
when granted if the director has elected immediate receipt of such shares. In that event, we will
be entitled to a deduction in the year of grant in the same amount, and any gain or loss recognized
by the non-employee director upon subsequent disposition of the shares will be capital gain or
loss.
The Board of Directors recommends that you vote FOR Proposal 4.
35
Proposal 5: Ratification of Selection of Independent Registered Public Accounting Firm
Our Audit Committee has approved the appointment of KPMG LLP, or KPMG, to be our independent
registered public accounting firm for 2009. A representative of KPMG is expected to be present at
the Annual Meeting to respond to appropriate questions and make a statement should he or she so
desire.
Although it is not required to do so, the Board of Directors is submitting the Audit
Committees selection of our independent registered public accounting firm for ratification by the
stockholders at the Annual Meeting in order to ascertain the view of the stockholders regarding
such selection. The affirmative vote of the holders of a majority of our shares of common stock
present or represented and voting at the Annual Meeting will be required to approve this proposal.
The Board of Directors recommends a vote FOR Proposal 5.
Audit Fees
The Sarbanes-Oxley Act passed by Congress in July of 2002, requires that the audit committee
be directly responsible for the appointment, compensation, and oversight of the companys
independent registered public accounting firm. The Audit Committee has unanimously approved the
appointment of KPMG LLP as the companys independent registered public accounting firm for the year
ending December 31, 2009. KPMG LLP has examined the financial statements of the company since
March 2005.
The following summarizes the fees billed to us by KPMG LLP for services rendered in connection
with fiscal years 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2007 |
|
Audit Fees (1) |
|
$ |
589,851 |
|
|
$ |
884,255 |
|
Audit Related Fees |
|
|
|
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
|
|
All Other Fees (2) |
|
|
|
|
|
$ |
90,000 |
|
|
|
|
|
|
|
|
Total |
|
$ |
589,851 |
|
|
$ |
974,255 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This category includes the audit of our annual financial statements, the review of
the condensed financial statements included in our quarterly reports on Form 10-Q, and reviews
and assessment of our internal controls over financial reporting, and services for SEC
filings. An additional $183,000 was excluded for service performed in the first quarter of
2008 related to the financial restatement for prior periods and was included in the fees for
the period ended December 31, 2007. |
|
(2) |
|
This category includes fees for financial due diligence work performed in 2007
related to our agreement to purchase Crest Communications Corporation. |
Audit Committee Report
The following report of the Audit Committee does not constitute soliciting material and shall
not be deemed filed or incorporated by reference into any other filing by Alaska Communications
Systems Group, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934.
The Audit Committee consisted of at least three directors each of whom, in the judgment of the
board, is an independent director within the meaning of the applicable Nasdaq Marketplace Rules.
During the period January 1 though August 1, 2008, the committee was comprised of Patrick Pichette,
Edward J. Hayes, Jr., and Brian Rogers. On, August 1, 2008, Mr. Pichette left the committee and
Peter Ley joined the committee. The Board of Directors has determined that each of Messrs. Hayes
and Ley qualifies as an Audit Committee Financial Expert. The Audit Committee acts pursuant to a
written charter that has been adopted by the Board of Directors.
The Audit Committee oversees the quality of Alaska Communications Systems Group, Inc.s
financial reporting process on behalf of the Board of Directors. It assists the Board of Directors
in fulfilling its oversight responsibilities to the stockholders relating to the companys
financial statements and the financial reporting process, the systems of internal accounting and
financial controls, and the audit process. While the Audit Committee sets the overall corporate
tone for quality financial reporting, management has the primary responsibility for the
preparation, presentation and integrity of the companys financial statements and the reporting
process, including internal control systems and procedures designed to
reasonably assure compliance with accounting standards, applicable laws and regulations. The
companys independent registered public accounting firm is responsible for expressing an opinion as
to the conformity of the companys audited financial statements with accounting principles
generally accepted in the United States of America and the effectiveness of the companys internal
control over financial reporting.
The Audit Committee has discussed and reviewed with its independent registered public
accounting firm, KPMG LLP for the periods covered by this report, all matters required to be
discussed pursuant to Statement on Auditing Standards No. 114 (The Auditors Communication With
Those Charged With Governance).
36
The Audit Committee has received from KPMG LLP a formal written statement describing all
relationships between the independent registered public accounting firm and the company that might
bear on the auditors independence consistent with Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and discussed with the auditors any relationships
that may impact their objectivity and independence, and satisfied itself as to the auditors
independence.
The Audit Committee has met with KPMG LLP, with and without management present as deemed
appropriate, to discuss the overall scope of KPMG LLPs quarterly reviews and annual audit of the
companys financial statements, the results of its examinations, its evaluations of the companys
internal controls and the overall quality of its financial reporting. The Audit Committee has met
and discussed with management and KPMG LLP the quarterly financial information and statements and
the annual audited financial statements prior to the release of that information and the filing of
the companys quarterly and annual reports with the Securities and Exchange Commission.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the companys annual report
on Form 10-K for the year ended December 31, 2008.
Submitted by,
Edward J. Hayes, Jr., Chair
Brian Rogers
Peter D. Ley
Proposal 6: Other Business Matters
We do not know of any other matters to be presented at the annual meeting other than those
discussed in this proxy statement. However, if other matters are properly brought before the
annual meeting, your proxies will be able to vote those matters at their discretion.
Annual Report on Form 10-K
We are providing a copy of our Annual Report on Form 10-K for the year ended December 31,
2008 together with this proxy statement to stockholders of record as of April 21, 2009. Any
stockholder who desires additional copies may obtain one (excluding exhibits not incorporated by
reference in this proxy statement), without charge, by addressing a request to the Corporate
Secretary, Alaska Communications Systems Group, Inc., 600 Telephone Avenue, Anchorage, Alaska
99503. We will charge an amount equal to the reproduction cost and postage if exhibits other than
those incorporated by reference into this proxy statement are requested.
37
Performance Graph
The following line graph compares the cumulative total stockholder return on our common stock
from December 31, 2003 through December 31, 2008 with the cumulative total return of the Standard
and Poors Corporation Composite 500 Index, or the S&P 500, and the cumulative total return of a
custom peer group index. The graph assumes an initial investment of $100 in our common stock and
in each of the S&P 500 and peer group indices on January 1, 2003, and assumes that dividends, if
any, were reinvested.
The peer group index consists of the following companies:
|
§ |
|
Cincinnati Bell |
|
|
§ |
|
Frontier Communications |
|
|
§ |
|
General Communication, Inc |
|
|
§ |
|
Iowa Telecommunications Services,
Inc |
|
|
§ |
|
Otelco, Inc. |
|
|
§ |
|
Shenandoah Telephone Company |
|
|
§ |
|
Surewest Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003 |
|
2004 |
|
2005 |
|
2006 |
|
2007 |
|
2008 |
|
Alaska Communications Systems |
|
|
100.00 |
|
|
|
186.08 |
|
|
|
236.48 |
|
|
|
377.70 |
|
|
|
395.35 |
|
|
|
267.04 |
|
S&P 500 Index |
|
|
100.00 |
|
|
|
110.87 |
|
|
|
116.30 |
|
|
|
134.66 |
|
|
|
142.07 |
|
|
|
89.51 |
|
Peer Group Index |
|
|
100.00 |
|
|
|
104.09 |
|
|
|
97.48 |
|
|
|
125.80 |
|
|
|
116.21 |
|
|
|
87.41 |
|
Proposals by Stockholders
The annual meeting of stockholders for 2010 is tentatively scheduled to be held on or about
June 16, 2010. If you wish to submit a proposal for possible inclusion in our 2010 proxy statement
pursuant to the SECs rules, send the proposal to: Secretary, Alaska Communications Systems Group,
Inc., 600 Telephone Avenue, Anchorage, Alaska 99503, by registered, certified, or express mail.
Stockholder proposals for inclusion in our proxy statement for the 2010 Annual Stockholders
Meeting must be received by the Company on or before December 30, 2009.
38
Stockholders who wish to bring business before the 2010 Annual Stockholders Meeting other
than through inclusion in our proxy statement pursuant to the SECs rules must notify the Corporate
Secretary of the Company in writing and provide the information required by the provision of our
Bylaws dealing with stockholder proposals. The notice must be delivered to or mailed and received
at the principal offices of Alaska Communications Systems not less than 90 days or more than 120
days prior to the first anniversary of the preceding years annual meeting; provided, however, that
in the event that the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date, notice by the stockholder to be timely must be
delivered to the Secretary at the principal executive offices of the Corporation not later than the
close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th
day following the day on which the Public Announcement of the date of such meeting is first made.
The requirements for such notice are set forth in our Bylaws, a copy of which can be found on our
website at www.alsk.com. In addition the Bylaws were filed as an exhibit to our Current
Report on Form 8-K dated September 12, 2008.
Directions to the Annual Meeting
The 2009 Annual Meeting of Stockholders of Alaska Communications Systems Group, Inc. will be
held on Friday, June 12, 2009, beginning at 9:00 a.m. local time, at the companys 4th floor
conference room at 600 Telephone Avenue, Anchorage, Alaska. Doors to the meeting will open at 8:45
a.m.
Alaska Communications Systems Group, Inc.
600 Telephone Avenue
Anchorage, Alaska 99503
Phone: (907) 297-3000
Fax: (907) 297-3100
Directions to our offices at 600 Telephone Avenue:
|
1. |
|
From the Airport (A), take International Airport Road East. |
|
|
2. |
|
Go approximately 1.9 miles and turn right onto the Minnesota Boulevard North
ramp. |
|
|
3. |
|
Continue North on Minnesota approximately 0.5 miles and turn right at the first
stoplight onto Tudor Road. |
|
|
4. |
|
Continue on Tudor Road for approximately 1.2 miles and turn left onto Denali
Street. |
|
|
5. |
|
Continue on Denali Street approximately 0.4 miles and turn right onto Telephone
Avenue. |
|
|
6. |
|
Alaska Communications Systems Group, Inc.s building is on the right side at
600 Telephone Avenue (B); parking is located across the street. |
39
ATTACHMENT A
AMENDMENT TO ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
1999 STOCK INCENTIVE PLAN
This AMENDMENT, dated as of the date set forth by the Secretary below (Amendment Effective
Date) of the Alaska Communications Systems Group, Inc. (the Company) 1999 Stock Incentive Plan,
as amended (the Plan), hereby amends the Plan as of the Amendment Effective Date.
RECITALS
WHEREAS, the Company has previously adopted the Plan to attract, retain, and motivate
officers, employees and/or consultants and to provide the Company and its Subsidiaries and
Affiliates with a stock plan providing incentives directly linked to the profitability of the
Companys businesses and increases in the Companys shareholder value; and
WHEREAS, Article XII of the Plan provides that the Plan shall terminate on the tenth
anniversary of the Effective Date of the Plan (which will be November 17, 1999); and
WHEREAS, the Board of Directors has determined it to be in the best interests of the
Company and its stockholders to, among other matters, extend the term of the Plan and allocate a
specified number of shares that shall continue to be reserved for issuance under the Plan.
In respect of the foregoing premises, among other matters, the Plan is amended hereby as set
forth in the following articles of amendment.
AMENDMENT
Section I. Capitalized terms used without definition in this amendment to the Plan
shall have the meanings set forth in the Plan.
Section II. The following sentence shall be appended to Article II, Subsection (40),
Restricted Stock. Any reference to an interest in Restricted Stock subject to this Plan may,
instead, be referred to where appropriate as a Restricted Stock Unit, wherever such term may more
accurately reflect the specific character of the Award.
Section III. A new subsection (39.5) shall be inserted into Article II, Definitions
of the Plan after subsection (39) and before subsection (40) thereof, as follows: Section 409A
Excise Tax means the excise tax imposed on certain non-qualified deferred compensation under
Section 409A of the Code.
Section IV. Article III, Administration, shall be replaced in its entirety with the
following:
The Plan shall be administered by the Compensation Committee of the Board or such other
committee of the Board as the Board may from time to time designate (the Committee), which shall
be composed of not less than two independent directors, and shall be appointed by and serve at the
pleasure of the Board.
The Committee shall have plenary authority to grant Awards pursuant to the terms of the Plan
to Eligible Individuals.
Among other things, the Committee shall have the authority, subject to the terms of the Plan:
(a) To select the Eligible Individuals to whom Awards may from time to time be granted;
A-1
(b) To determine whether and to what extent Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units and
other stock-based awards or any combination thereof are to be granted hereunder;
(c) To determine the number of shares of Common Stock to be covered by each Award granted
hereunder;
(d) To determine the terms and conditions of any Award granted hereunder (including, but not
limited to, the option price (subject to Article VI (1))), any vesting condition, restriction or
limitation (which may be related to the performance of the participant, the Company or any
Subsidiary or Affiliate) and any vesting acceleration or forfeiture waiver regarding any Award and
the shares of Common Stock relating thereto, based on such factors as the Committee shall
determine; provided, however, in no event may the Committee grant any Incentive
Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, or like award, that has an
exercise price less than the Fair Market Value of the Common Stock on the grant date of the Award.
(e) To modify, amend or adjust the terms and conditions of any Award, at any time or from time
to time, including but not limited to Performance Goals; provided, however, that
the Committee may not (i) subject to the last paragraph of Section 3, reduce the exercise price or
cancel and regrant a Stock Option theretofore granted or (ii) adjust upwards the amount payable
with respect to a Qualified Performance-Based Award or waive or alter the Performance Goals
associated therewith;
(f) To determine to what extent and under what circumstances Common Stock and other amounts
payable with respect to an Award shall be deferred; and
(g) To determine under what circumstances an Award may be settled in cash or Common Stock
under Articles VI(9), VI(10), Articles VII(2), VII(3) and Article VIII(2)(d).
The Committee shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall from time to time deem advisable, to
interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office, except that the
Committee may, except to the extent prohibited by applicable law or the applicable rules of a stock
exchange or automated quotation system, allocate all or any portion of its responsibilities and
powers to any one or more of its members and may delegate all or any part of its responsibilities
and powers to any person or persons selected by it; provided, however, that no such delegation may
be made that would cause Awards or other transactions under the Plan to cease to be exempt from
Section 16(b) of the Exchange Act or cause an Award designated as a Qualified Performance-Based
Award not to qualify for, to cease to qualify for, the Section 162(m) Exemption, or incur or become
subject to the imposition of Section 409A Excise Tax. Any such allocation or delegation may be
revoked by the Committee at any time.
Any determination made by the Committee or pursuant to delegated authority pursuant to the
provisions of the Plan with respect to any Award shall be made in the sole discretion of the
Committee or such delegate at the time of the grant of the Award or, unless in contravention of any
express term of the Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Plan participants.
Section V. The first two paragraphs of Article IV, Common Stock Subject to the Plan
shall be replaced with the following:
The maximum number of shares of Common Stock that may be delivered to participants and their
beneficiaries under the Plan shall be 6,774,232 (the Reserve). No participant may be granted
Stock Options and Freestanding Stock Appreciation Rights covering in excess of 500,000 shares
allocated under the Reserve in any calendar year. In no event may any participant may be granted
more than 500,000 shares of Restricted Stock,
A-2
Restricted Stock Units, or Performance Units covering
in excess of 500,000 shares of Common Stock subject to the Reserve (as most recently approved by
the Companys stockholders). Shares subject to an Award under the Plan may be authorized and
unissued shares or may be treasury shares.
Any Common Stock subject to an Award under this Plan, the Pre-Merger Plan or the ALEC Plan
that is terminated unexercised, forfeited or surrendered or that expires for any reason (including,
but not limited to, Common Stock tendered to exercise outstanding Stock Options or shares tendered
or withheld for taxes under any Award under this Plan) shall again be available for issuance under
this Plan; provided, however, that the Common Stock related to any such terminated,
unexercised, forfeited, surrendered or expired Award may only be used in respect of Awards of the
same type (i.e., shares related to forfeited Stock Options may be used to grant new Stock Options,
forfeited Restricted Stock or Restricted Stock Units may be used to grant new Restricted Stock or
Restricted Stock Units, as the case may be; provided, however, any shares of Common
Stock tendered to exercise outstanding Stock Options or shares tendered or withheld for taxes under
any Award under this Plan shall be deemed to have value equal to the Fair Market Value of the
Common Stock on the date of surrender that would have otherwise remained outstanding but for the
Companys acceptance or withholding of such tendered or withheld securities, respectively.
Section VI. Article XI, Subsection (2), Definition of Change in Control, shall be
replaced in its entirety with the following:
For purposes of the Plan, a Change in Control shall mean:
(a) the consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a Business Combination), in
each case, unless, following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Power immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Companys assets either directly or
through one or more subsidiaries); or
(b) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
Section VII. Article XII, Term, Amendment and Termination, shall be replaced in its
entirety with the following:
The Plan will terminate on December 31, 2012. Awards outstanding under the Plan as of such
date shall not be affected or impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made which would impair the rights of an optionee under a Stock Option or
a recipient of a Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award,
Performance Unit Award or other stock-based Award theretofore granted without the optionees or
recipients consent, except such an amendment made to comply with applicable law, stock exchange
rules or accounting rules. In addition, no such amendment shall be made without the approval of
the Companys stockholders to the extent such approval is required by applicable law or stock
exchange rules; provided, however, that stockholder approval shall be required for any amendment
which (i) increases the maximum number of shares for which Stock Options may be granted under the
Plan (subject, however, to the provisions of Section 3 hereof), (ii) reduces the exercise price at
which Awards may be granted (subject, however, to the provisions of Section 3 hereof), (iii)
extends the period during which Stock Options may be granted or exercised beyond the times
originally prescribed, (iv) changes the persons eligible to participate in the Plan, or (v)
materially increases the benefits accruing to participants under the Plan.
Subject to the re-pricing restrictions in Article III(5)(a), the Committee may amend the terms
of any Stock Option or other Award theretofore granted, prospectively or retroactively, but no such
amendment shall be
A-3
permitted that would cause an Award that is, or is intended to be, a Qualified
Performance-Based Award to fail or cease to qualify for the Section 162(m) Exemption or cause the
Award to incur Section 409A Excise Tax, nor shall any such amendment impair the rights of any
holder without the holders consent except such an amendment made to cause the Plan or Award to
comply with applicable law, stock exchange or automated quotation system rules or accounting rules.
Subject to the above provisions, the Board shall have the authority to amend the Plan to take
into account changes in law and in tax and accounting rules as well as other developments, and to
grant Awards which qualify for beneficial treatment under such rules without stockholder approval.
Section VIII. Except as amended hereby, the Plan, as previously amended prior to the
Amendment Effective Date, remains in full force and effect.
A-4
ATTACHMENT B
AMENDMENT TO ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
This AMENDMENT, dated as of the date set forth by the Secretary below (Amendment Effective
Date) of the Alaska Communications Systems Group, Inc. (the Company) 1999 Employee Stock
Purchase Plan, as amended to date (the Plan), hereby amends the Plan as of the Amendment
Effective Date.
RECITALS
WHEREAS, the Company has previously adopted the Plan, which is designed to qualify as
an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as
amended (the Code);
WHEREAS, the Section 23 of the Plan provides that the Plan shall terminate on December
31, 2009; and
WHEREAS, the Board of Directors has determined it to be in the best interests of the
Company and its stockholders to, among other matters, extend the term of the Plan and allocate a
specified number of shares that shall continue to be reserved for issuance under the Plan.
In respect of the foregoing premises, among other matters, the Plan is amended hereby as set
forth in the following articles of amendment.
AMENDMENT
ARTICLE I. Capitalized terms used without definition in this amendment to the Plan
shall have the meanings set forth in the Plan.
ARTICLE II. Section 2, Stock Subject to the Plan, is hereby replaced in its entirety
as follows:
A total of 251,912 shares of the Common Stock will be available for issuance under this Plan.
Such number shall be subject to adjustments effected in accordance with Section 16 of this Plan.
Any shares of Common Stock that have been made subject to an Option that cease to be subject to the
Option (other than by means of exercise of the Option), including, without limitation, in
connection with the cancellation or termination of an Option, shall again be available for issuance
in connection with future grants of Options under this Plan.
ARTICLE III. The last paragraph in Section 11(b) is hereby replaced in its entirety
as follows:
Subject to the limitations of Section 423 of the Code, and notwithstanding the foregoing, the
Committee may from time to time determine that a different maximum number of shares may be
purchased on any given Purchase Date in lieu of the maximum amounts described above in this Section
11(b), in which case the number of shares which may be purchased by any employee on such Purchase
Date may not exceed such different limitation; provided, that any change made by the Committee
pursuant to this sentence shall only be effective for Offering Periods that begin at least 30 days
after the change is announced to eligible employees and that such change is subject to Section
11(e) below.
Section 11 (e) is added as follows: Subject to the limitation of Section 423 of the Code
herein described in Section 11(b), the number of shares which may be purchased by an individual
shall not exceed the lower of 10,000 shares per Offering Period or the $25,000 per calendar year
limitation set forth in Section 11(b) above.
ARTICLE IV. Section 23, Termination of the Plan, is hereby replaced in its entirety
as follows:
The Board may suspend or terminate this Plan at any time. Upon a suspension or termination of
the Plan while an Offering Period is in progress, the Committee shall either shorten such Offering
Period by setting a new
B-1
Purchase Date before the date of such suspension or termination of the Plan
or shall return the accumulated payroll
deductions of all participants as if they had all withdrawn before the Withdrawal Deadline for
such Offering Period, as set forth in Section 15. Unless this Plan shall have been previously
terminated by the Board, this Plan shall terminate on, and no Options shall be granted after,
December 31, 2012. No Options shall be granted during any period of suspension of this Plan.
ARTICLE V. Except as amended hereby, the Plan, as previously amended prior to the
Amendment Effective Date, remains in full force and effect.
B-2
ATTACHMENT C
AMENDMENT TO ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
1999 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
This AMENDMENT, dated as of the date set forth by the Secretary below (Amendment Effective
Date) of the Alaska Communications Systems Group, Inc. (the Company) 1999 Non-Employee Director
Stock Compensation Plan, as amended (the Plan), hereby amends the Plan as of the Amendment
Effective Date.
RECITALS
WHEREAS, the Company has previously adopted the Plan to promote a greater identity of
interests between the Companys non-employee directors and its stockholders and attract and retain
directors by affording them an opportunity to share in the future successes of the Company;
WHEREAS, the Section 13 of the Plan provides that the Plan shall terminate on the
tenth anniversary of the Effective Date of the Plan (which will be on November 17, 2009); and
WHEREAS, the Board of Directors has determined it to be in the best interests of the
Company and its stockholders to, among other matters, extend the term of the Plan and allocate a
specified number of shares that shall continue to be reserved for issuance under the Plan.
In respect of the foregoing premises, among other matters, the Plan is amended hereby as set
forth in the following articles of amendment.
AMENDMENT
ARTICLE I. Capitalized terms used without definition in this amendment to the Plan
shall have the meanings set forth in the Plan.
ARTICLE II. Section 4, Shares Subject to the Plan, is hereby replaced in its
entirety with the following:
The maximum number of shares of Common Stock which shall be reserved and available for use
under the Plan shall be 252,314, subject to adjustment pursuant to Section 11 hereunder. The
shares issued under the Plan may be authorized and unissued shares or may be treasury shares or
both.
ARTICLE III. Section 13, Duration of Plan, is hereby replaced in its entirety with
the following:
Unless earlier terminated pursuant to Section 9 hereof, this Plan shall automatically
terminate on, and no grants, awards or elections may be made after December 31, 2012, other than
the receipt of Common Stock under Section 6 for Fees earned prior to such date and the payment of
Share Accounts and Cash Accounts under Section 7 for shares of Common Stock and cash, as
applicable, deferred prior to such date.
ARTICLE IV. Except as amended hereby, the Plan, as previously amended prior to the
Amendment Effective Date, remains in full force and effect.
C-1
ANNUAL MEETING OF ALASKA COMMUNICATIONS SYSTEMS
Date: June 12, 2009
Time: 9:00 A.M. (Alaska Daylight Time)
Place: 600 Telephone Avenue, 4th Floor; Anchorage,
Alaska 99503 See Voting Instruction on Reverse
Side.
Please make your marks like this: Use dark black pencil or pen only
Board of Directors Recommends a Vote FOR proposals 1 through 5.
1: To elect eight directors for one-year terms
expiring at the 2010 Annual Meeting. The nominees
are: 01) Liane Pelletier 05) Edward J. Hayes, Jr.
02) Brian Rogers 06) Annette Jacobs 03) John M.
Egan 07) David Southwell 04) Gary R. Donahee 08)
Peter D. Ley
Vote For Withhold Vote *Vote For All
Nominees From All Nominees All Except
*INSTRUCTIONS: To withhold
authority to vote for any
nominee, mark the Exception
box and write the number(s)
in the space provided to the
right.
Directors
Recommend
For Against Abstain
2: To approve an amendment to our 1999 Stock Incentive
For Plan extending the term of the plan to December
31, 2012, allocating an additional 3,500,000 shares
to the plan, among other changes.. |
3: To approve an amendment to our 1999 Employee Stock
For Purchase Plan to extend the term of the plan to
Decem-ber 31, 2012 and reduce the shares allocated
under the plan by 500,000. |
4: To approve an amendment to our 1999 Non-Employee
For Directors Stock Compensation Plan to extend the
term of the plan to December 31, 2012 and increase
the shares allocated under the plan by 150,000. |
5: To ratify the appointment of KPMG LLP as the For
companys independent auditors for the year ending
December 31, 2009. |
To attend the meeting and vote
your shares in person, please
mark this box.
Authorized Signatures This
section must be completed for your
Instructions to be executed. |
Please Sign Here Please Date Above |
Please Sign Here Please Date Above (Joint
Owners) |
Please sign exactly as your name(s) appears on your stock
certifi cate. If held in joint tenancy, all persons
should sign. Trustees, administrators, etc., should
include title and authority. Corporations should provide
full name of corporation and title of authorized offi cer
signing the proxy.
Annual Meeting of Alaska Communications Systems to be held on Friday, June 12, 2009
for Holders as of April 21, 2009
VOTED BY:
INTERNET TELEPHONE
Go To
866-390-5401 www.proxypush.com/alsk
· Use any touch-tone telephone. Cast your vote online. OR
·
Have your Voting Instruction Form ready.
· View Meeting Documents.
·
Follow the simple recorded instructions.
MAIL
OR Mark, sign and date your Voting Instruction Form.
· Detach your Voting Instruction Form.
·
Return your Voting Instruction
Form in the postage-paid
envelope provided.
All proxies must be received by 5:00 P.M., Eastern Time, June 11, 2009.
PROXY TABULATOR FOR
ALASKA COMMUNICATIONS SYSTEMS P.O. Box
8016 Cary, NC 27512-9903
EVENT # CLIENT # OFFICE #
Please separate carefully at the perforation and return just this portion in the envelope provided. |
Revocable Proxy Alaska Communications Systems
Annual Meeting of Stockholders on June 12, 2009
beginning at 9:00 a.m. (Alaska Daylight Time)
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Leonard Steinberg, Vice President, General Counsel
and Secretary, David Wilson, Executive Vice President and CFO, and Laurie Butcher,
Vice President, Finance and Controller, and each of them, proxies with power of
substitution to vote on behalf of the undersigned all shares that the undersigned
may be entitled to vote at the Annual Meeting of Stockholders of Alaska
Communications Systems (the Company) on June 12, 2009, and any adjournments
thereof, with all powers that the undersigned would possess if personally present,
with respect to the following:
The shares represented by this proxy will be voted as specifi ed on the reverse side,
but if no specifi cation is made, this proxy will be voted as recommended by the
companys board of directors. The proxies are authorized to vote in their discretion
as to other matters that may come before this meeting. A majority of the proxies or
substitutes at the meeting may exercise all the powers granted hereby.
Please separate carefully at the perforation and return just this portion in the envelope provided. |