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 ☒ Filed
by a Party other than the Registrant ☐
Check the
appropriate box:
|
|
|
|
|
☐ |
|
Preliminary Proxy
Statement |
|
|
☐ |
|
Confidential, for Use of
the Commission Only (as permitted by Rule
14a-6(e)(2)) |
|
|
☒ |
|
Definitive Proxy
Statement |
|
|
☐ |
|
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): |
|
|
☒ |
|
Fee not
required. |
|
|
☐ |
|
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. |
|
|
|
|
|
|
|
☐ |
|
Fee paid previously with
preliminary materials. |
|
|
☐ |
|
Check box if any part of the
fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing. |
|
|
|
|
|
(1) |
|
Amount Previously
Paid:
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or
Registration Statement No.:
|
|
|
|
|
|
|
|
(3) |
|
Filing Party:
|
|
|
|
|
|
|
|
(4) |
|
Date Filed:
|
|
|
|
|
|

Alaska Communications Systems Group, Inc.
600 Telephone Avenue
Anchorage, Alaska 99503-6091
April 19, 2019
L ETTER FROM THE B
OARD OF D
IRECTORS
TO S TOCKHOLDERS OF
A LASKA C OMMUNICATIONS S
YSTEMS G ROUP , I NC
.
Dear Fellow Stockholders,
We hope you will join us at the 2019 Annual Meeting of
Stockholders. The attached Notice of Annual Meeting of Stockholders
and Proxy Statement will serve as your guide to the business to be
conducted.
2018 was a year with strong operating performance reflecting top
and bottom line growth. Our performance reflects market opportunity
and a management team that capitalizes on the opportunity to
deliver commendable operating results. We continue to see long-term
growth prospects in the markets we serve, with products and
services that differentiate us from our competition while creating
value for our customers.
We recently completed a balance sheet refinancing that reduced our
borrowing costs, creating capacity to invest in long-term growth
opportunities and creating the flexibility to consider shareholder
friendly actions. We remain committed to capital allocation that we
believe drives the most long-term stockholder value. We have
conviction about high quality future operating results, while we
continue to explore all strategic opportunities for shareholder
value creation.
You will note significant and shareholder friendly changes to our
Board in this Proxy Statement. First, we have taken action to
reduce our Board size from nine to six to help better align Board
expenses with the size of our company. The Board of Directors, as
proposed, has the breadth of relevant experience to represent the
best interests of our stockholders. Two of the five, or forty
percent of the independent director nominees, were referred to us
by our two largest stockholders. Lastly, the Board has also
established a tenure policy for its directors allowing the Board to
bring in new talent over the upcoming years, with an emphasis on
diversity and relevant experience. The directors nominated by the
Board of Directors should be re-elected. Accordingly, your Board of
Directors unanimously recommends that you vote FOR each of
the nominees using the enclosed proxy card. Your VOTE is
important to the future of Alaska Communications.
Our Board of Directors, and specifically its Compensation and
Personnel Committee, have spent considerable time to seek out
stockholder input and thoroughly review our executive compensation
program. This has resulted in changes to our compensation programs.
We believe these changes further enhance the link between pay and
performance and the alignment of executive compensation with your
long-term interests. We invite you to read the Executive
Compensation Narrative section of the Proxy Statement beginning on
page 21 for details of our executive compensation program and these
recent changes.
We appreciate your continued confidence in our Company, and value
your continued involvement as stockholders. We welcome your
comments and suggestions at the address above or by email at
investors@acsalaska.com . Thank you again for your support and
investment in Alaska Communications.
Sincerely,
The Board of Directors of Alaska Communications Systems Group,
Inc.

N OTICE OF A NNUAL
M EETING OF S
TOCKHOLDERS OF A LASKA
C OMMUNICATIONS S YSTEMS G
ROUP , I NC .
|
|
|
|
|
Time and Date: |
|
9:00
a.m. Alaska daylight time, on May 29, 2019 |
|
|
Place: |
|
Alaska Communications Business and Technology
Center |
|
|
600
East 36th Avenue |
|
|
Anchorage, Alaska 99503 |
|
|
|
|
You
can find directions to the 2019 Annual Meeting of the Stockholders
(the “Annual Meeting”) location on page 47. |
|
|
|
Items of Business: |
|
(1) |
|
To elect the
following directors as nominated by the Board of
Directors: |
|
|
|
|
|
|
|
Peter D.
Aquino |
|
|
|
|
|
|
|
Wayne Barr,
Jr. |
|
|
|
|
|
|
|
David W.
Karp |
|
|
|
|
|
|
|
Peter D.
Ley |
|
|
|
|
|
|
|
Brian A.
Ross |
|
|
|
|
|
|
|
Anand
Vadapalli |
|
|
|
|
|
(2) |
|
To hold an
advisory vote to approve executive compensation; |
|
|
|
|
|
(3) |
|
To ratify the
appointment of Moss Adams LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2019;
and |
|
|
|
|
|
(4) |
|
To consider any
other business properly brought before the Annual Meeting or any
adjournment or postponement. |
All stockholders are invited to attend the Annual Meeting in
person. Only stockholders of record as of the close of business on
April 5, 2019, are entitled to notice of and to vote at the
Annual Meeting and any adjournment, postponement, rescheduling or
continuation. A complete list of stockholders entitled to vote at
the Annual Meeting will be available at our executive offices
located at 600 Telephone Avenue, Anchorage Alaska for ten days
before the meeting and during the meeting. Any stockholder of
record in attendance at the Annual Meeting and entitled to vote may
do so in person, even if the stockholder returned a proxy.
YOUR VOTE IS VERY IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
Whether or not you plan to attend the meeting, we urge you to vote
your shares at your earliest convenience. Please sign and return
the enclosed proxy card as soon as possible in the envelope
provided or vote by telephone or via the Internet as provided in
the proxy card. Voting by proxy will ensure your representation at
the Annual Meeting if you do not attend in person. If you attend
the meeting and you are a stockholder of record, you can revoke
your proxy at any time before it is exercised at the meeting and
vote your shares personally by following the procedures described
in the Proxy Statement. If you hold your shares through a broker,
bank, or other institution (the “holder”), please be sure to follow
the voting instructions that you receive from the holder. The
holder will not be able to vote your shares on any of the proposals
unless you have provided voting instructions.
By Order of the Board of Directors
Leonard Steinberg

Senior Vice President, Legal, Regulatory, and Government Affairs
and Corporate Secretary
|
|
|
GENERAL INFORMATION ABOUT THE
ANNUAL MEETING |
|
 |
Voting Your Proxy
Important Notice Regarding the Availability of Proxy Materials
for the 2019 Annual Meeting of Stockholders to be held on
May 29, 2019: Our 2019 Proxy Statement and Annual Report to
Stockholders for the year ended December 31, 2018 are
available free of charge on our investor relations website at
www.alsk.com and at www.proxydocs.com/alsk .
This Proxy Statement or a Notice of Internet Availability of Proxy
Materials is first being sent on or about April 19, 2019. We
will also provide access to our proxy materials over the Internet,
beginning on April 19, 2019, for the holders of record and
beneficial owners of our common stock as of the close of business
on April 5, 2019, the Record Date. Stockholders will have one
vote at the Annual Meeting for each share of the Company’s common
stock held on the Record Date. As of the Record Date, there were
approximately 53,610,124 shares of the Company’s common stock
issued and outstanding.
There are four ways stockholders may vote:
|
1. |
By Internet — You can vote via the Internet by
following the instructions on the enclosed proxy card or voting
instruction form;
|
|
2. |
By Telephone — In the United States and Canada,
you can vote by toll-free telephone by following the instructions
on the proxy card or voting instruction form;
|
|
3. |
By Mail — You can vote by mail by signing and
dating the enclosed proxy card or voting instruction form and
returning it in the postage-paid envelope provided with this Proxy
Statement; or
|
|
4. |
In person at the Annual Meeting of Stockholders
:
|
|
a. |
If your shares are held directly in your name with our
transfer agent, Computershare Trust Company, N.A., and you want to
vote at the Annual Meeting, you must provide valid identification,
such as a driver’s license, when you arrive at the Annual
Meeting.
|
|
b. |
If your shares are held through a broker, bank, trust
or other similar organization (held in street name), and you want
to vote in person at the Annual Meeting, you must obtain a valid
“legal proxy”, executed in your favor, from your broker, bank,
trust or other similar organization before the Annual Meeting and
bring it to the Annual Meeting with you.
|
|
c. |
Directions to the Annual Meeting are on page 47 of
this Proxy Statement.
|
Whichever method you select to transmit your instructions, the
named proxies will vote your shares in accordance with those
instructions. If you sign and return a proxy card without giving
specific voting instructions, your shares will be voted as
recommended by the Alaska Communications Systems Group, Inc.
(“Alaska Communications” or “the Company”) Board of Directors
(“Board”) for each proposal.
Revocation of Proxy
You may revoke your proxy before it is voted at the Annual Meeting
by filing a written notice of revocation dated after the date you
voted your original proxy, and either:
|
● |
|
submitting a duly executed proxy for the same shares of common
stock bearing a later date than the original proxy, which must be
received by the Company at the address listed below no later than
1:00 p.m. Alaska daylight time on May 28, 2019; or
|
|
● |
|
obtaining a valid legal proxy from your broker, bank or other
nominee, as instructed above under the section heading “Voting Your
Proxy” and attending the Annual Meeting and voting in person
at the Annual Meeting.
|
Attendance at the Annual 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: Corporate Secretary, 600 Telephone Avenue, MS 65,
Anchorage, Alaska 99503-6091.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|1 |
|
|
|
SUMMARY
INFORMATION |
|
 |
This summary is intended to highlight certain information contained
elsewhere in this Proxy Statement. This summary does not contain
all of the information that you should consider, and we encourage
you to review the entire Proxy Statement and our Annual Report on
Form 10-K for the year
ended December 31, 2018 for more complete information before
voting.
Summary of Proposals for Stockholder Consideration
Election of Directors (Proposal 1)
Six director nominees are standing for election, each for a
one-year term expiring at
the 2020 annual meeting of stockholders and until his or her
respective successor is duly elected and qualified or until his or
her death, resignation, disqualification or removal, if earlier.
The Nominating and Corporate Governance Committee of the Board
(“Nominating Committee”) performs an annual assessment to ensure
that director nominees have the skills and experience to
effectively oversee the Company. All nominees are current
directors.
|
|
|
Peter D. Aquino
|
|
Wayne Barr,
Jr. |
|
|
David W. Karp
|
|
Peter D.
Ley |
|
|
Brian A. Ross
|
|
Anand
Vadapalli |
The uncontested election of each director nominee is decided by the
affirmative vote of a majority of the votes cast.
Advisory Vote on Executive Compensation (Proposal 2)
You are being asked to cast a non-binding, advisory vote to approve
the compensation paid to the named executive officers (“NEOs”) as
disclosed in this Proxy Statement beginning on page 20. Last year
approximately 72% of the votes cast (excluding abstentions and
broker non-votes) supported
our executive compensation program.
For this advisory proposal to be approved, it must receive the
affirmative vote of a majority of the votes cast.
Ratification of Appointment of Independent Registered Public
Accounting Firm (Proposal 3)
The Audit Committee of the Board (“Audit Committee”) has appointed
Moss Adams LLP as our independent registered public accounting firm
for the fiscal year ending December 31, 2019, and you are
being asked to ratify the appointment.
For this proposal to be approved, it must receive the affirmative
vote of a majority of the votes cast.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|2 |
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND M ANAGEMENT
|
The following table provides information about beneficial owners of
more than five percent of the Company’s common stock outstanding as
of April 5, 2019.
|
|
|
|
|
|
|
Name and Address
|
|
Amount and nature
of beneficial
ownership |
|
|
|
Percent of
class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aegis Financial Corporation
6862 Elm Street, Suite 830, McLean, VA 22101 |
|
2,842,018 |
|
(1) |
|
5.3% |
|
|
|
|
|
|
|
|
|
|
|
Karen Singer
212 Vaccaro Drive, Cresskill, NJ, 07626 |
|
2,719,300 |
|
(2) |
|
5.1% |
|
(1) |
Based solely on a Schedule 13D/A filed with the SEC on
February 8, 2019 by Aegis Financial Corporation. The Schedule
13D/A indicates that Aegis Financial Corporation has shared
dispositive and shared voting power with Scott L. Barbee with
respect to 2,842,018 shares.
|
|
(2) |
Based solely on a Schedule 13D/A filed with the SEC on
May 15, 2018 by Karen Singer. The Schedule 13D/A indicates
that Karen Singer has sole dispositive and sole voting power with
respect to 2,719,300 shares and that TAR Holdings LLC has sole
dispositive and sole voting power with respect to 2,719,300
shares.
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|3 |
The following tables set forth the number of shares of the
Company’s common stock beneficially owned as of April 5, 2019,
by our current directors and director nominees; NEOs; and all the
directors and executive officers as a group.
Beneficial ownership is determined in accordance with Rule
13d-3 of the Securities
Exchange Act of 1934, as amended (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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of beneficial owner
|
|
Shares
owned |
|
|
|
Other
beneficial
ownership |
|
|
|
Acquirable
within 60
days |
|
|
|
Total |
|
Percent
of class
(4) |
Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward (Ned) J. Hayes, Jr.
|
|
|
275,419 |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
275,419 |
|
|
* |
|
|
Peter D. Aquino
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
* |
|
|
Wayne Barr, Jr.
|
|
|
28,974 |
|
|
(1) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
28,974 |
|
|
* |
|
|
Margaret L. Brown
|
|
|
- |
|
|
|
|
|
147,816 |
|
|
(2) |
|
|
- |
|
|
|
|
|
147,816 |
|
|
* |
|
|
David W. Karp
|
|
|
1,000 |
|
|
|
|
|
158,978 |
|
|
(2) |
|
|
- |
|
|
|
|
|
159,978 |
|
|
* |
|
|
Peter D. Ley
|
|
|
31,340 |
|
|
|
|
|
159,705 |
|
|
(2) |
|
|
- |
|
|
|
|
|
191,045 |
|
|
* |
|
|
Robert M. Pons
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
* |
|
|
Brian A. Ross
|
|
|
133,330 |
|
|
|
|
|
22,609 |
|
|
(2) |
|
|
- |
|
|
|
|
|
155,939 |
|
|
* |
|
|
Anand Vadapalli
|
|
|
1,703,324 |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,703,324 |
|
|
3.18% |
|
|
|
|
|
|
|
|
|
Named Executive
Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
Laurie M. Butcher
|
|
|
201,917 |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
201,917 |
|
|
* |
|
|
Leonard A. Steinberg
|
|
|
604,792 |
|
|
|
|
|
- |
|
|
|
|
|
38,366 |
|
|
(3) |
|
|
643,158 |
|
|
1.20% |
|
|
Randy M. Ritter
|
|
|
209,876 |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
209,876 |
|
|
* |
|
|
William H. Bishop
|
|
|
163,560 |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
163,560 |
|
|
* |
|
(1) |
These shares are held by CCUR Holdings, Inc., of which
Mr. Barr is Chairman, President and CEO. Mr. Barr
disclaims beneficial ownership of these securities except to the
extent of his pecuniary interest therein.
|
|
(2) |
Includes deferred units and equivalents awarded as
non-employee director
compensation, which have been deferred until the director’s
retirement from the Board.
|
|
(3) |
Includes unvested restricted stock units (“RSUs”) that
are subject to acceleration and vesting upon Mr. Steinberg’s
retirement from the Company.
|
|
(4) |
An asterisk indicates beneficial ownership of less
than 1%, based on the number of shares outstanding as of
April 5, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
owned |
|
Other
beneficial
ownership |
|
Acquirable
within 60
days |
|
Total |
|
Percent
of class |
Total directors & executive officers as a group (13
persons)
|
|
3,353,532 |
|
489,108 |
|
38,366 |
|
3,881,006 |
|
7.24% |
Section 16(a) Beneficial Ownership Reporting
Compliance
Federal securities laws require executive officers, directors, and
owners of more than 10% of our common stock to file reports (Forms
3, 4 and 5) with the SEC. 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 2018.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|4 |
|
|
|
PROPOSAL 1: ELECTION OF
DIRECTORS |
|
 |
Upon the recommendation of our Nominating Committee, the Board has
nominated each of Peter D. Aquino, Wayne Barr, Jr., David W. Karp,
Peter D. Ley, Brian A. Ross, and Anand Vadapalli for election at
the Annual Meeting to hold office until the 2020 annual meeting of
stockholders and until his respective successor is duly elected and
qualified or until his death, resignation, disqualification or
removal, if earlier. The Board voted to increase the size of the
Board from eight to nine members and appointed Peter D. Aquino to
the Board, effective on March 18, 2019. As of the conclusion
of this Annual Meeting, the Board has voted to reduce the size of
the Board from nine to six members.
The Board acknowledges with gratitude the service of the Directors
who are retiring from the Board effective this Annual Meeting.
All of the nominees recommended by the Board are currently serving
as directors, and each nominee has consented to serve as a nominee
for election to the Board, to being named in this Proxy Statement
and to serve as a member of the Board if elected by the Company’s
stockholders. As of the date of this Proxy Statement, the Company
has no reason to believe that any nominee will be unable or
unwilling to serve if elected as a director. However, if for any
reason a nominee becomes unable or unwilling to serve, the Board,
upon the recommendation of its Nominating Committee, may designate
substitute nominees, in which event the shares represented by
proxies returned to us will be voted for the substitute nominees.
If any substitute nominees are so designated, the Company will file
an amended proxy statement or additional soliciting material that,
as applicable, identifies the substitute nominees and includes
certain biographical and other information about such nominees
required by SEC rules.
The accompanying proxy card will not be voted for anyone other than
the Board’s recommended nominees or designated substitutes.
Nominees for Director
Set forth in the following section is certain information furnished
to us by the director nominees. All of the nominees, with the
exception of our Chief Executive Officer, Mr. Vadapalli,
qualify as independent directors in accordance with Nasdaq rules
and the standards established in our Corporate Governance
Principles and Guidelines. There are no family relationships among
any of our current directors or executive officers.
None of the corporations or other organizations referenced in the
biographical information below is a parent, subsidiary or other
affiliate of Alaska Communications.
The specific experience, qualifications, attributes, and skills of
each nominee that led to the nomination for director are noted
below with each individual biography.
Nominated Directors and Their Business Experience
|
|
|
|
|
Peter D. Aquino
Director
Age: 57
Director Since: 2019
|
|
|
|
Skills, Qualifications and Factors
• President, CEO and Director of a technology company;
• long history of leadership experience in the telecommunications
industry;
• previous public company board experience, including serving on
audit committees; and
• MBA from George Washington University.
|
Peter D. Aquino is president and CEO of Internap Corporation
(Nasdaq: INAP) and also serves as a member of INAP’s board of
directors. He is a veteran of the technology, media and
telecommunications (TMT) industries, with a track record of
successfully guiding major expansion efforts, turnarounds and
strategic partnerships and transactions at both public and private
companies. Prior to assuming his role at INAP, Mr. Aquino
served as chairman and CEO, and later as executive chairman, of
Primus Telecommunications Group, Incorporated (NYSE: PTGI) from
2010 until 2013. Under his leadership, PTGI grew into an integrated
telecommunications company serving consumer and business customers
with voice, data, high-capacity fiber and data center services
globally. Prior to this, he was the president and CEO of RCN
Corporation from 2004 until 2010 where he built the company
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|5 |
into an all-digital HDTV
cable multiple system operator and created an advanced fiber-based
commercial network through organic and acquisition strategies. He
is also the founder of Broad Valley Capital, LLC, where he provided
consulting services and capital to improve companies’ business
operations, productivity and asset value. He began his career at
Bell Atlantic (now Verizon) in 1983. Mr. Aquino recently
served on the board of directors of Lumos Networks (Nasdaq: LMOS)
and FairPoint Communications, Inc. (Nasdaq: FRP), prior to both
being sold in 2017, and of TiVo, Inc. (Nasdaq: TIVO) until
September 8, 2016. Mr. Aquino holds a B.A. from Montclair
State University and an M.B.A. from George Washington
University.
|
|
|
|
|
Wayne Barr, Jr.
Director
Age: 55
Director Since: 2018
Alaska Communications Committees
• Compensation and Personnel
|
|
|
|
Skills, Qualifications and Factors
• Chairman, President and CEO of diversified holding company;
• experience as principal of company through which he provides
assistance in areas including corporate strategy and planning,
mergers and acquisitions;
• current board member of public company, including service on
audit, nominating and governance, and compensation committees;
• previous board experience in the field of telecommunications;
and
• JD degree from Albany Law School of Union University and admitted
to practice in New York.
|
Mr. Barr is the Chairman, President and CEO of CCUR Holdings,
Inc. (OTCQB: CCUR), a diversified holding company. From January
2013 until September 2018, Mr. Barr was managing director of
Alliance Group of NC, LLC, a full service real estate firm
providing brokerage, planning and consulting services throughout
North Carolina. Mr. Barr is also the principal of Oakleaf
Consulting Group LLC, a management consulting firm focusing on
technology and telecommunications companies, which he founded in
2001. Mr. Barr co-founded and was president from 2003
to 2008 of Capital & Technology Advisors, a management
consulting and restructuring firm, where he oversaw the
day-to-day operations of a
20-person consulting firm
focusing on telecommunications operations and restructurings. As
president, Mr. Barr managed employees and independent
contractors and was one of two lead contacts for all of the firm’s
clients. This wide-ranging experience, coupled with his legal
background, has provided Mr. Barr with a skill set
particularly suited to assisting with deal structure and execution,
as well as operational assistance across several industries.
Mr. Barr currently serves on the board of directors of HC2
Holdings, Inc. (NYSE: HCHC). Mr. Barr has previously served on
the boards of directors of Aviat Networks, Inc., Anacomp, Leap
Wireless International, NEON Communications and Globix Corporation.
He has also served as a Trustee of the New York Racing Association.
Mr. Barr holds a J.D. from Albany Law School of Union
University and is admitted to practice law in New York State. He is
also a licensed real estate broker in the state of North
Carolina.
|
|
|
|
|
David W. Karp
Director
Age: 52
Director Since: 2011
Alaska Communications Committees
• Compensation and Personnel
• Nominating and Corporate Governance (Chair)
|
|
|
|
Skills, Qualifications and Factors
• Serves as leader of a service-based firm operating across Alaska,
the remainder of the United States, Canada and Mexico;
• experience leading a business expanding into the contiguous 48
states;
• background in the Alaska tourism business and as a business buyer
of the services that are key to the Company’s growth; and
• reputation as a motivational leader, manager and respected member
of the Alaska community.
|
Mr. Karp is the senior vice president and managing director of
Alaska for Saltchuk, a Seattle based company with multiple
operating companies in Alaska, including Northern Air Cargo, Tote
Maritime, Carlile Transportation, Delta Western, Inlet Energy and
Cook Inlet Tug and Barge. The company provides transportation and
energy solutions throughout Alaska and the region. Mr. Karp
resides in Anchorage, Alaska with his family and is involved in
supporting many nonprofit organizations in the community.
Mr. Karp also serves as a member of the board of directors for
Anchorage based Northrim BanCorp, Inc. (Nasdaq: NRIM). He holds a
B.A. from the University of Oregon and has completed the Owner
President Manager Program at the Harvard School of Business.
Mr. Karp is also a Board Leadership Fellow with the NACD.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|6 |
|
|
|
|
|
Peter D. Ley
Director
Age: 59
Director Since: 2008
Alaska Communications Committees
• Audit (Chair)
• Nominating and Corporate Governance
|
|
|
|
Skills, Qualifications and Factors
• Extensive executive, finance and communications industry
experience;
• previous employment as CFO of technology and telecommunications
companies;
• an audit committee financial expert as that term is defined by
SEC rules;
• provide Audit Committee continuity for chair transition; and
• significant M&A background as an investment banker.
|
Mr. Ley is currently a private investor. In June 2015, he
retired from the position of CFO of Hargray Holdings, LLC, a
provider of cable television and telecommunications services
serving the coastal regions of South Carolina and Georgia. He held
this position from 2012 to 2015. Prior to joining Hargray,
Mr. Ley served as CFO of Connexion Technologies, an operator
of residential communications networks for gated communities and
high-rise towers. In April of 2012, Connexion filed for voluntary
reorganization under Chapter 11 of the U.S. Bankruptcy Code. 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. Mr. Ley holds
an M.B.A. from Harvard University and a B.A. from Dartmouth
College.
|
|
|
|
|
Brian A. Ross
Director
Age: 61
Director Since: 2011
Alaska Communications Committees
• Audit
• Compensation and Personnel (Chair)
|
|
|
|
Skills, Qualifications and Factors
• Extensive prior experience as CFO and COO of a large regional
telecommunications company providing services outside of
Alaska;
• other public company board experience in telecommunications,
publishing and healthcare;
• an audit committee financial expert as that term is defined by
SEC rules; and
• strategic transactions experience including the sale of Journal
Media as a director.
|
Mr. Ross is both the principal of Mid-Market Growth Partners, which
assists clients to align their strategic objectives with operating
performance, and an advisor with the Center for Business Transition
at RSM, LLP. The Center for Business Transition helps owners plan
to successfully transition their businesses. Previously,
Mr. Ross served as president and CEO of KnowledgeWorks, an
educational non-profit that
provides innovative teaching pedagogies, and as the COO and CFO as
part of his 13-year-tenure
at Cincinnati Bell. He is also a member of the board of directors
of Otelco, Inc. (Nasdaq: OTEL), a telecommunications firm with
rural properties. Mr. Ross served as a member of the board of
directors of HealthWarehouse.com (OTCQB: HEWA), a national,
on-line pharmacy from
September 2016 to March 2017, and as a member of the board of
directors of Journal Media Group, Inc. (formerly NYSE: JMG), from
its inception in April 2015 to its sale to Gannett in April 2016.
Mr. Ross holds a B.A. in economics, mathematics and statistics
from Miami University and an M.A. in statistics from the University
of California.
|
|
|
|
|
Anand Vadapalli
President and Chief Executive Officer
Age: 53
Director Since: 2011
|
|
|
|
Skills, Qualifications and Factors
• Strategic vision and wide-ranging, in-depth knowledge of our
business operations and the competitive landscape in which our
Company operates;
• extensive experience in the industry; and
• comprehensive knowledge of our Company’s many competitive
challenges and opportunities.
|
Mr. Vadapalli was appointed by the Board in February 2011, to
serve as President and CEO of the Company. Prior to that,
Mr. Vadapalli served as Executive Vice President and COO of
the Company beginning in October 2009, with responsibility for all
operational facets of our business, including network operations,
technology, sales and service. Mr. Vadapalli served as our
Executive Vice President, Operations and Technology, from December
2008 until October 2009 and previously was our Senior Vice
President, Network and Information Technology beginning in August
2006, when he joined the Company. Before joining us,
Mr. Vadapalli had most recently served as Vice President of
Information Technology at Valor Telecom since February 2004. Prior
to Valor, from
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|7 |
January 2003 to February 2004, he served as Executive Vice
President and Chief Information Officer at Network Telephone
Corporation, and from January 1996 through January 2003, he served
in various positions at Broadwing / Cincinnati Bell, including as
Vice President, Information Technology. Mr. Vadapalli holds a
B.S.E. in Mechanical Engineering from Osmania University in
Hyderabad, India as well as a Post Graduate Diploma in Management
from the Indian Institute of Management in Calcutta, India. He
currently serves as a member of the board of directors of Premera
Blue Cross. In addition, Mr. Vadapalli is an active
participant in industry associations, and currently chairs the
board of directors of USTelecom Association.
Recommendation of the Board
The Board recommends a vote FOR the election of all six of the
Board’s nominees: Peter D. Aquino, Wayne Barr, Jr., David W. Karp,
Peter D. Ley, Brian A. Ross and Anand Vadapalli.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|8 |
Corporate Governance
The Board is committed to strong corporate governance and believes
it supports our success and helps us build long-term stockholder
value. We have adopted a Code of Ethics that applies to all
employees, including the CEO and President, the Senior Vice
President of Finance, and directors. We have also adopted Corporate
Governance Principles and Guidelines, that in conjunction with our
By-laws and charters of the
committees of the Board form the framework of our corporate
governance. The Board periodically reviews these governance
documents as well as the rules, regulations and listing standards,
and best practices suggested by recognized governance authorities.
Our Corporate Governance documents are all available on our website
at www.alsk.com under Corporate Governance. We will post
amendments to, or waivers from, the provisions of our Code of
Ethics, if any exist, applicable to our directors and executives on
the same website. You can also obtain a printed copy of our Code of
Ethics, Corporate Governance Principles and Guidelines and
committee charters at no charge by sending inquiries to
investors@acsalaska.com or Investor Relations, 600 Telephone Avenue,
Anchorage, Alaska 99503-6091.
The Board conducts a self-evaluation of its performance annually
that includes a review of the Board’s composition,
responsibilities, leadership, committee structure, processes and
effectiveness. Each committee of the Board conducts a similar
self-evaluation with respect to that committee.
Board Independence
|
● |
|
All members of our Board, other than Mr. Vadapalli, our
President and CEO, satisfy the independence requirements of SEC and
Nasdaq rules.
|
|
● |
|
Our presiding director and Board Chair is an independent
director.
|
|
● |
|
All members of the Audit, Compensation, and Nominating Committees
are independent directors.
|
|
● |
|
Directors are required by our Corporate Governance Principles and
Guidelines to immediately tender a resignation in the event of a
conflict of interest or change of circumstances that would
interfere with their fiduciary duties owed to the Company and our
stockholders.
|
Director Nomination Process
The Nominating Committee strives to maintain an engaged,
independent board with broad and diverse experience and judgment
that is committed to representing the long-term interests of our
stockholders. Each year the Nominating Committee assesses all
director candidates, whether submitted by members of the Board,
management or a stockholder, and recommends nominees for election
to the Board. All recommendations for nomination are based upon the
factors described beginning on page 12, under the heading:
“Nominating and Corporate Governance Committee,” and in this
section.
Stockholders recommending candidates for director positions should
submit the candidate’s name, qualifications, and other information
required in our By-laws, to
the Nominating and Corporate Governance Committee, Attention:
Corporate Secretary, 600 Telephone Avenue, MS 65, Anchorage, Alaska
99503-6091. Except as required by applicable law, the Nominating
Committee has no obligation to nominate stockholder-recommended
candidates for election as a director.
The Nominating Committee recommended, and the Board determined to
nominate six of the current incumbent directors who have consented
to stand for election at the 2019 Annual Meeting. Mr. Aquino
was recommended to the Nominating Committee by a stockholder,
Mr. Barr was originally appointed to the Board pursuant to a
settlement agreement with a stockholder and all other director
nominees are standing for re-election. The Nominating Committee
and the Board concluded that each of these nominees should be
nominated based on their performance on the Board, and the extent
of their experience, qualifications, attributes and skills, as
identified in the biographical information contained under the
heading: “Nominated Directors and Their Business Experience,”
beginning on page 5.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|9 |
Board Meetings and Committee Meetings During 2018; Annual
Meeting Attendance
|
● |
|
Full Board meetings held - 21
|
|
● |
|
Executive sessions with only independent directors – 8
|
|
● |
|
Audit Committee meetings held - 6
|
|
● |
|
Compensation and Personnel Committee (“Compensation Committee”)
meetings held - 9
|
|
● |
|
Nominating Committee meetings held - 6
|
Each of the directors serving in 2018 attended at least 75% of the
aggregate of the total number of meetings of the Board and all
committees on which each director served during the period each
director was serving on the Board and any applicable committee.
While the Company has no formal policy regarding director
attendance at the annual meeting of stockholders, the Company
encourages all directors to attend. All of the directors then
serving attended the 2018 annual meeting of stockholders. The table
below represents the committees of the Board and the directors that
served on those committees in 2018.
2018 COMMITTEE STRUCTURE AND
INDEPENDENT DIRECTOR MEMBERSHIP

Effective upon the conclusion of the 2019 Annual Meeting, and
subject to the re-election
of each Director appointed, the Board has refreshed the committee
appointments as described in more detail in the section entitled
Committees of the Board beginning on the next page.
Board Leadership Structure
Our Board’s independent leadership is strengthened by separation of
the CEO and Board Chair functions. The Board has determined that
its leadership structure is appropriate given its judgment that
there are advantages to having a non-executive Board Chair to provide
independent oversight and to engage in communications and relations
between the Board, the CEO, and other senior management; to assist
the Board in reaching consensus on certain strategies and policies;
and to facilitate a robust director, Board, and CEO evaluation
process. The Board believes that because of this separated
structure, the Board’s advisory and oversight roles are effectively
focused on assisting the CEO and senior management in developing
and adopting successful business strategies and risk management
policies, and in making successful choices in management
succession. Our current Board
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|10 |
Chair is an independent director, Edward (Ned) J. Hayes, Jr.
Subject to his re-election
to the Board, the Board has elected David Karp as the independent
Board Chair effective upon the conclusion of the 2019 Annual
Meeting.
Succession Planning
Our Board is actively involved in talent management. The Board
reviews the Company’s “people strategy” in support of its business
strategy at least annually. This includes a detailed discussion of
the Company’s leadership bench and succession plans with a focus on
key positions at the senior officer level. The Board recently, in
April 2019, supported the CEO in promoting one of our senior
officers to the new role of Chief Operations Officer, demonstrating
our commitment to effective succession planning.
In addition, the committees of the Board regularly discuss the
talent pipeline for specific critical roles. Highly qualified
potential leaders are given exposure and visibility to Board
members through formal presentations and informal events. More
broadly, the Board is regularly updated on key talent indicators
for the overall workforce, including diversity, recruiting and
development programs.
Committees of the Board
Our Board currently has three committees: Audit, Compensation, and
Nominating Committees. All members of these committees are required
to be independent directors.
Audit Committee
The Audit Committee assists our Board in overseeing the quality and
integrity of our accounting, auditing and reporting practices. The
Audit Committee’s role includes overseeing the work of the
Company’s accounting function and internal control over financial
reporting, and the quality and integrity of the Company’s financial
reports. The Audit Committee is responsible for the appointment,
compensation, retention and oversight of the independent auditor
engaged to issue audit reports on our financial statements and
internal control over financial reporting. The Audit Committee also
monitors and evaluates the Company’s compliance with
Section 404 of the Sarbanes-Oxley Act of 2002, including the
risk assessment procedures as required.
The Audit Committee, in conjunction with the Board, has primary
responsibility for oversight of the Company’s management of risks
inherent in its financial reporting and financial controls, the
options to mitigate such risks and the Company’s approach to such
risks. The Board retains oversight of the broader risks to the
Company and its operations.
The Audit Committee operates pursuant to a written charter adopted
by the Board, that the Audit Committee reviews annually, and is
available at www.alsk.com . The Audit Committee currently consists of
Mr. Ley (Chair), Mr. Hayes, Mr. Pons and
Mr. Ross. The Board has determined that all of the members of
the Audit Committee are independent directors and that each of the
members has sufficient knowledge in financial and auditing matters
to serve on the Audit Committee. In addition, the Board has also
determined that Mr. Ley, Mr. Hayes, Mr. Pons and
Mr. Ross each qualify as an “audit committee financial expert”
as defined under SEC rules. The report of the Audit Committee is
included in this Proxy Statement, on page 42. Effective as of the
conclusion of the 2019 Annual Meeting, and subject to their
re-election to the Board,
the Audit Committee structure is being revised to include
Mr. Ross (Chair), Mr. Aquino and Mr. Ley. With the
current Chair of the Audit Committee, Mr. Ley, continuing to
serve on the Audit Committee after the Annual Meeting, we believe
we are providing an effective transition of responsibilities in
leadership.
Compensation and Personnel Committee
The purpose of the Compensation Committee is to discharge the
Board’s responsibilities relating to Company compensation plans,
policies and procedures including: (i) evaluate and establish
director and executive officer compensation and performance
requirements; (ii) approve equity and cash incentive programs
for all employees of the Company; (iii) oversee succession
planning for directors, executive officers and other management, as
appropriate; and (iv) produce an annual executive compensation
report to be included in the Company’s proxy statement.
The Compensation Committee operates pursuant to a written charter
adopted by the Board that the Compensation Committee reviews
annually, and is available at www.alsk.com . The Compensation Committee currently consists
of Mr. Ross (Chair), Mr. Barr, Ms. Brown, and
Mr. Karp. The Board has determined that all of
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|11 |
the members of the Compensation Committee are independent
directors. Effective as of the conclusion of the 2019 Annual
Meeting, and subject to their re-election to the Board, the
Compensation Committee structure is being revised to include
Mr. Barr (Chair), Mr. Ross and Mr. Ley. With the
current Chair of the Compensation Committee, Mr. Ross,
continuing to serve on the Compensation Committee, we believe we
are providing an effective transition of responsibilities in
leadership.
Nominating and Corporate Governance Committee
The Nominating Committee assists the Board in discharging its
duties by identifying, assessing and recommending director nominees
for the Board, and it also has primary responsibility for matters
of corporate governance. The Nominating Committee currently
consists of Mr. Karp (Chair), Ms. Brown, and
Mr. Ley. The Board has determined that all of the members of
the Nominating Committee are independent directors. Effective as of
the conclusion of the 2019 Annual Meeting, and subject to their
re-election to the Board,
the Nominating Committee structure is being revised to include
Mr. Aquino (Chair), Mr. Barr and Mr. Karp. With the
current Chair of the Nominating Committee (Mr. Karp)
continuing to serve on the Nominating Committee, we believe we are
providing an effective transition of responsibilities in
leadership.
For director nominations, the Nominating Committee does not require
director candidates to meet any specific set of minimum
qualifications other than those set forth in our By-laws regarding age, legal
compliance, and validity of nomination and election. As referenced
in our Corporate Governance Principles and Guidelines available at
www.alsk.com , the Nominating Committee considers a wide
variety of qualifications, attributes and other factors in
evaluating director candidates. Some of the factors used in
evaluating candidates include:
|
● |
|
ethical character and integrity;
|
|
● |
|
proven business judgment and competence;
|
|
● |
|
professional skills or management experience in dealing with a
large, complex organization or complex problems similar or
complementary to those encountered by our Company;
|
|
● |
|
knowledge of the Company’s various constituencies such as
employees, customers, vendors, and the business community in
Alaska;
|
|
● |
|
expertise in particular areas such as technology, finance, or
marketing;
|
|
● |
|
diversity of professional experience and viewpoints;
|
|
● |
|
demonstrated ability to act independently and to represent the
interests of all stockholders; and
|
|
● |
|
willingness and ability to devote the necessary time to fulfill a
director’s responsibilities to the Company and our
stockholders.
|
Our Board has adopted a retirement policy that specifies that a
director will not be nominated for election to the Board after
reaching the age of 72, unless the Board determines that
circumstances warrant the continue service of a director.
In April of 2019, on the recommendation of the Nominating
Committee, our Board established a director tenure policy that
provides that a director will not be nominated for election to the
Board after the tenth anniversary of the date the director joined
the Board, unless the Board determines that circumstances warrant
the continued service of a director.
While the Company does not have a formal policy on Board diversity,
the Board recognizes that a diversity of viewpoints and practical
experiences can enhance the effectiveness of the Board as a whole.
In particular, the Board affirms its commitment to prioritize
diverse candidates for the next vacancy on the Board pursuant to
either the Board tenure or retirement policy. Accordingly, as part
of its evaluation of each candidate, the Nominating Committee will
take into account diversity as an important consideration in
assessing how a candidate’s background, experience, qualifications,
and skills add value to the Board as a whole. We believe a diverse
group can best perpetuate the success of our business and represent
stockholder interests through the exercise of sound judgment.
As a part of its corporate governance function, the Nominating
Committee specifically reviews the qualifications of each candidate
for the Board, his or her performance and contributions as a Board
member whether an incumbent or not, his or her understanding of our
business and the competitive environment in which we operate. In
addition, factors evaluated for incumbent nominees include:
attendance and participation at meetings of the
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|12 |
Board and relevant Board committees, independence and any ties to
our Company. Prior to nomination, each candidate for election or
re-election must consent to
stand for election to the Board.
The Nominating Committee operates pursuant to a written charter
adopted by the Board, that the Nominating Committee reviews
annually and is available at www.alsk.com .
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|13 |
|
CERTAIN RELATIONSHIPS AND
RELATED PARTY TRANSACTIONS
|
The Board has adopted a written Conflicts of Interest and Related
Party Transaction Approval Policy, which is available at
www.alsk.com . A “related party” is defined under the
applicable SEC rule and includes our directors, executive officers,
beneficial owners of 5% or more of our common stock and each of
their immediate family members. A transaction involving a related
party and the Company or its subsidiary that individually or taken
together with other related transactions exceeds, or is reasonably
likely to exceed, $120,000 is subject to review.
Under the written policy, our Nominating Committee generally is
responsible for reviewing, approving or ratifying any related party
transaction covered by SEC rules. The Nominating Committee will
consider all the relevant facts and circumstances in determining
whether to approve or ratify such a transaction, including:
|
● |
|
whether the terms of the transaction are fair to the Company and
would apply on the same basis if the transaction did not involve a
related party;
|
|
● |
|
whether there are any compelling business reasons for the Company
to enter into the transaction;
|
|
● |
|
whether the transaction would impair the independence of an
otherwise independent director or nominee for director;
|
|
● |
|
whether the Company was notified about the transaction before its
commencement and if not, why pre-approval was not sought and whether
subsequent ratification would be detrimental to the Company;
and
|
|
● |
|
whether the transaction would present an improper conflict of
interest for any director, nominee for director or executive
officer of the Company.
|
The Nominating Committee will approve or ratify only those
transactions that are, in the Nominating Committee’s judgment,
appropriate or desirable under the circumstances. There have been
no related party transactions since the beginning of the 2018
fiscal year, nor are there any such transactions proposed.
We believe the current leadership structure of the Board supports
the risk oversight functions described below. While the Board and
its committees oversee risk management strategy, management is
responsible for implementing and supervising day-to-day risk management
processes. We believe this division of risk management
responsibilities is the most effective approach for addressing the
risks that the Company faces.
|
● |
|
Full Board : is actively involved in the oversight of the
risks inherent in the operation of our Company’s lines of business
and implementation of its business plans, including specific
oversight of cyber risk. The Board reviews the operation of the
business and corporate functions and addresses the primary risks
associated with the Company’s business. In addition, the Board
reviews the risks associated with the Company’s business plans at
its annual strategic planning session and periodically throughout
the year as part of its continuing consideration of the tactical
performance against this business plan. Finally, as part of the
preparation and filing of the Company’s Annual Report on Form
10-K, the Board performs a
review of the Company’s risk profile and advises management on how
best to reflect those concerns in the Company’s reporting. The
Company has an Enterprise Risk Management program which operates to
identify key risks within the Company. An Executive Risk Committee
(“ERC”), made up of the CEO and his direct reports, oversees the
program and provides periodic reporting to the Board on all areas
of risk within the Company. The Board reviews the corporate risk
profile and proposed risk management strategies reported by the ERC
and provides insight and guidance on risk exposure. The Board pays
particular attention to the Company’s plans pertaining to cyber
security, receiving regular updates in this regard as part of its
overall risk management oversight.
|
|
● |
|
Audit Committee : oversees the Company’s management of risks
inherent in its financial reporting and financial controls, the
options to mitigate such risks and the Company’s approach to such
risks. The Company’s principal financial officer reports to the
Audit Committee regarding the Company’s business and financial
risks. The Audit Committee assists management in identifying and
evaluating risk management controls and methodologies to address
identified risks.
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|14 |
|
● |
|
Nominating Committee: establishes and reviews the Company’s
Code of Ethics, monitors compliance with the Code of Ethics and
addresses risk by adopting appropriate rules for corporate
governance and monitoring the Company’s compliance with our
Corporate Governance Principles and Guidelines.
|
|
● |
|
Compensation Committee: considers the impact on the
Company’s risk profile of the Company’s executive compensation
program and the incentives created by the compensation awards that
it administers. In addition, the Compensation Committee regularly
evaluates the Company’s compensation policies and procedures to
determine whether they present a significant risk to the
Company.
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|15 |
The compensation of directors is determined by the Board with the
advice of the Compensation Committee. Under its charter (available
on our website at www.alsk.com ), the Compensation Committee periodically
reviews the compensation provided to non-employee directors for their
service and makes recommendations to the Board regarding any
changes. The Compensation Committee’s charter authorizes it to
employ independent compensation and other consultants to assist in
fulfilling its duties. From time to time the Compensation Committee
engages a compensation consultant to advise and provide information
regarding director compensation paid by other public companies,
which may be used by the Compensation Committee to make
compensation recommendations to the Board.
During 2018, at the recommendation of the Compensation Committee,
the Board revised the Non-Employee Director Compensation and
Reimbursement Policy (“Director Compensation Policy”). The Director
Compensation Policy was revised to provide that for the last three
quarters of 2018 and all of 2019, quarterly installments of
non-employee director
compensation that would have been provided in shares of common
stock would be converted to cash payments. This change was made in
recognition of the Company’s need to preserve shares of common
stock for management incentive compensation
The following table contains information regarding compensation
provided to each person who served as a director during 2018
(excluding Mr. Vadapalli, whose compensation is included in
the Summary Compensation Table and related tables and
disclosure).
2018 Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or
Paid in Cash
($) |
|
Stock Awards (1)
($) |
|
Total
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward (Ned) J. Hayes, Jr. |
|
|
160,000 |
|
|
|
20,000 |
|
|
|
180,000 |
|
Wayne Barr,
Jr. (2) |
|
|
69,375 |
|
|
|
- |
|
|
|
69,375 |
|
Margaret L. Brown |
|
|
80,000 |
|
|
|
12,500 |
|
|
|
92,500 |
|
David W.
Karp |
|
|
85,000 |
|
|
|
12,500 |
|
|
|
97,500 |
|
Peter D. Ley |
|
|
97,500 |
|
|
|
12,500 |
|
|
|
110,000 |
|
Shawn F.
O’Donnell (3) |
|
|
10,626 |
|
|
|
12,499 |
|
|
|
23,125 |
|
Robert M. Pons (2) |
|
|
71,250 |
|
|
|
|
|
|
|
71,250 |
|
Brian A.
Ross |
|
|
97,501 |
|
|
|
12,499 |
|
|
|
110,000 |
|
|
(1) |
The amounts in this column reflect the grant date fair
value of the stock awards, computed in accordance with Financial
Accounting Standards Board (“FASB”) ASC Topic 718 (“FASB ASC 718”),
based on our stock price on the grant date. All awards are vested
upon grant and there are no outstanding unvested stock awards.
Stock awards are rounded down to a whole share when issued and any
residual partial share amounts are paid in cash.
|
|
(2) |
Mr. Barr and Mr. Pons were appointed to the
Board on May 9, 2018 and received pro-rata compensation as non-employee directors during fiscal
year 2018.
|
|
(3) |
Mr. O’Donnell resigned from the Board
January 8, 2018 and received compensation as a non-employee director for one quarter
of fiscal year 2018.
|
Under our Board-approved Director Compensation Policy, which
governed compensation for our non-employee directors for 2018, we
provided compensation to our independent directors consisting of
annual cash and equity retainers (for 2018, equity retainers were
converted to cash for the last three quarters of the year) that
were payable in quarterly installments, as shown in the table on
the next page. Except for deferred stock, all non-
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|16 |
employee director stock and cash compensation is paid in equal
quarterly installments for each quarter or partial quarter of
service, without proration, within 30 days of the close of the
calendar quarter.
|
|
|
|
|
|
|
Compensation
Type |
|
Amount ($) |
|
Annual Board Cash Retainer: |
|
|
|
|
|
|
|
|
|
Board Chair (1) |
|
|
$100,000 |
|
|
|
Audit Committee
Members |
|
|
$45,000 |
|
|
|
Other Independent
Directors |
|
|
$42,500 |
|
|
|
Annual Shares or Equivalents: (2) |
|
|
|
|
|
|
|
|
|
Board Chair (1) |
|
|
$80,000 |
|
|
|
Other Independent
Directors |
|
|
$50,000 |
|
|
|
Committee Chair Retainers: |
|
|
|
|
|
|
|
|
|
Audit and Compensation Committee
Chairs |
|
|
$15,000 |
|
|
|
Nominating Committee
Chair |
|
|
$5,000 |
|
|
(1) |
Effective following the 2019 Annual Meeting, Board
Chair compensation will be reduced to $92,500 in annual cash
retainer and $50,000 in annual shares or equivalents.
|
|
|
(2) |
For the last three quarters of 2018 and all of 2019,
equity compensation was converted to cash.
|
|
Our independent directors are also reimbursed for reasonable
out-of-pocket expenses incurred
for serving as directors.
Our Board has adopted minimum share ownership requirements for
directors because we believe the Board will more effectively pursue
the long-term interests of stockholders if the directors are
stockholders themselves. Our Director Compensation Policy requires
each non-employee director
to accumulate and hold common stock or common stock equivalents
issued by the Company equal to at least three times his or her
annual cash retainer. Each non-employee director must comply with
the policy by the fifth anniversary of the director’s continuous
service to our Board. All of our directors who have met their fifth
anniversary have met the holding requirement.
Vote Required. The Company’s By-laws require that at an uncontested
meeting of stockholders, director nominees be elected by the
affirmative vote of a majority of the votes cast. Any incumbent
that fails to be elected is required to submit a resignation that
will be considered by the Board and accepted absent a compelling
reason for the director to remain on the Board.
Recommendation of the Board
The Board believes that Proposal 1 is in the Company’s best
interest and unanimously recommends that stockholders vote FOR the
election of each of the Board’s director nominees in Proposal
1.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|17 |
The table below sets forth certain information as of April 5,
2019, about those persons currently serving as executive officers
of the Company. Biographical information on Anand Vadapalli, our
President and CEO, is included above in the section “Nominees for
Directors.”
|
|
|
|
|
Name
|
|
Age
|
|
Title
|
Anand Vadapalli |
|
53 |
|
President and Chief Executive
Officer |
Laurie M.
Butcher |
|
56 |
|
Senior Vice
President, Finance |
Leonard A. Steinberg |
|
65 |
|
Senior Vice President, Legal,
Regulatory & Government Affairs and Corporate
Secretary |
Randy M.
Ritter |
|
59 |
|
Senior Vice
President, Shared Services |
William H. Bishop |
|
53 |
|
Senior Vice President, Customer and Revenue
Management |
Laurie E. Butcher serves as our Senior Vice President,
Finance, leading the Company’s revenue, treasury and finance
departments. Ms. Butcher joined Alaska Communications in 1997,
and has served in several leadership roles, most recently as Vice
President, Finance and Controller, before taking her current role
in November of 2015. She is responsible for accounting, budgeting,
and forecasting for Alaska Communications, in addition to leading
strategy for free cash flow growth and EBITDA margin expansion.
Ms. Butcher brings more than 28 years of finance expertise to
Alaska Communications, including roles in public accounting at
PricewaterhouseCoopers and Deloitte & Touche and as
controller for Teamsters Local 959. Ms. Butcher serves as a
management trustee for the Alaska Electrical Pension Fund and is on
the board of directors for the United Way of Anchorage. A lifelong
Alaskan, she holds a B.B.A. in accounting from the University of
Alaska and is a licensed Certified Public Accountant.
Leonard A. Steinberg serves as our Senior Vice President,
Legal, Regulatory and Government Affairs and Corporate Secretary.
Mr. Steinberg is responsible for the Company’s legal affairs,
risk management and other functions. Mr. Steinberg’s legal
responsibilities include all of the legal affairs for the Company
and its subsidiaries, corporate governance, corporate
communications, and regulatory compliance. In addition,
Mr. Steinberg is responsible for contract review and
administration, real estate and facilities management,
cybersecurity and data privacy, and emergency planning. He also
serves as the Company’s Chief Ethics Officer. He previously served
as our Vice President, General Counsel and Corporate Secretary from
2001 through 2011 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 at 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 firm’s Anchorage office from
1996 to 1998 and in the firm’s San Francisco office from 1988 to
1996 where he primarily represented large clients in oil and gas
royalty and tax disputes. Mr. Steinberg holds a J.D. from the
University of California’s Hastings College of Law, an M.P.A. from
Harvard University’s Kennedy School of Government, an M.B.A. from
the University of California Berkeley’s Haas School of Business,
and a B.A. from the University of California at Santa Cruz.
Randy M. Ritter serves as our Senior Vice President, Shared
Services. Effective May 3, 2019, Mr. Ritter will retire
from the Company. Mr. Ritter joined Alaska Communications in
September of 2013 to lead our growth in managed IT services and
oversaw network strategy and planning, engineering, service
activation, network management, field services and capital project
management to provide a great customer service experience for
Alaska businesses and consumers. He brought more than 20 years of
telecommunications experience to the Company and previously served
as Vice President, Product Management at Sprint, Vice President,
Product Marketing at Sprint-Nextel, Senior Vice President, Sales
and Marketing at One Communications and Chief Operating Officer at
MacroSolve, Inc. His expertise and strong track record in building
teams and defining, launching and growing telecommunications and IT
services brought great value to our customers, employees and
stockholders. Mr. Ritter holds a B.S. in accounting from the
University of South Alabama. He is also a Certified Public
Accountant (inactive) and a Chartered Global Management
Accountant.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|18 |
William H. Bishop serves as our Senior Vice President,
Customer and Revenue Management. Effective April 9, 2019, he
was promoted to Senior Vice President and Chief Operations Officer.
He joined Alaska Communications in August 2004, and has served in
several leadership roles for both consumer and business sales and
operations, most recently as Senior Vice President, Customer and
Revenue Management. Mr. Bishop provides executive level
leadership to all operations of the business. Mr. Bishop has
over 25 years of experience in telecommunications and business
leadership including positions at AT&T and McCaw Communications
as well as at a federal government logistic contracting company.
Originally from Fairbanks, Mr. Bishop is active in the Alaska
community. He is a past board member for the Alaska Chamber of
Commerce and current board member for Alaska Business Week.
Mr. Bishop holds a B.S. in Natural Sciences from the
University of Alaska Anchorage and is completing his M.B.A. in
Strategic Leadership at Alaska Pacific University
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|19 |
|
|
|
PROPOSAL 2: ADVISORY VOTE ON
EXECUTIVE COMPENSATION |
|
 |
In this Proposal 2, we are asking for your vote to approve, on an
advisory basis, the compensation of our Named Executive Officers
(“NEOs”) as reported in this Proxy Statement (commonly referred to
as a “Say-on-Pay” resolution). As
part of our corporate governance practices, we have held our
Say-on-Pay vote every year. This
vote is not intended to address any specific item of compensation,
but rather the overall compensation of our NEOs as described in
this Proxy Statement.
As described in more detail in the “Executive Compensation
Narrative” section of this Proxy Statement beginning on page 21,
the Compensation Committee continued its engagement regarding our
executive compensation plan design. The Compensation Committee made
specific and directed changes to our compensation plan to address
the concerns we heard and to more closely align each NEO’s
individual compensation with the Company’s short-term and long-term
performance goals.
In accordance with Section 14A of the Exchange Act, and as a
matter of good corporate governance, we are asking stockholders to
approve the following advisory resolution at the Annual
Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory
basis, the overall compensation of the Company’s Named Executive
Officers, as disclosed in the Company’s Proxy Statement for the
2019 Annual Meeting of Stockholders, and pursuant to the disclosure
rules of the SEC, including the Executive Compensation Narrative,
the Summary Compensation Table for 2018 and the other related
tables and the accompanying narrative disclosure.”
Vote Required. Although the vote is non-binding, the Board and the
Compensation Committee will review the voting results and consider
the voting results when making future compensation decisions for
our NEOs. For this advisory proposal to be approved, it must
receive the affirmative vote of a majority of the votes cast.
Recommendation of the Board
The Board believes that Proposal 2 is in the Company’s best
interest and unanimously recommends that stockholders vote FOR
approval, on a non-binding,
advisory basis, of the compensation paid to our NEOs in 2018 as
disclosed in this Proxy Statement.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|20 |
|
|
|
EXECUTIVE COMPENSATION
NARRATIVE |
|
 |
This Executive Compensation Narrative is organized into five
sections:
|
● |
|
Stockholder Engagement and Say-on-Pay Results
|
|
● |
|
Executive Compensation Program Philosophy and Objectives
|
|
● |
|
2018 Executive Compensation Program Elements
|
|
● |
|
Compensation Governance
|
Executive Summary
Our compensation philosophy is to pay for performance over the
long-term, as well as on an annual basis. Performance measures
include both financial and market factors for the Company. Our
compensation program provides a mix of salary, incentives and
benefits paid over time to align executive officer and stockholder
interests. Our Compensation Committee has the primary
responsibility for approving our compensation strategy and
philosophy and the compensation programs applicable to our NEOs
listed below. With respect to Mr. Vadapalli’s compensation,
our Compensation Committee makes a recommendation that is further
reviewed and approved by the independent members of the Board.
|
|
|
Named Executive Officers
|
Anand Vadapalli |
|
President and Chief Executive
Officer |
Laurie M.
Butcher |
|
Senior Vice
President, Finance |
Leonard A. Steinberg |
|
Senior Vice President, Legal,
Regulatory & Government Affairs and Corporate
Secretary |
Randy M.
Ritter |
|
Senior Vice
President, Shared Services |
William H. Bishop |
|
Senior Vice President and Chief Operations
Officer |
Our results for 2018 were strong and reflect solid management
execution of the strategy set by the Board. We have a long track
record of revenue growth and cost management supporting consistent
Adjusted EBITDA and cash flow performance. Specific to some of the
financial metrics set by our Compensation Committee for incentive
compensation of executives, Total Revenue for 2018 grew 2.5% over
2017, driven by wholesale broadband revenues and increases in
business voice and managed IT services. Regulatory and consumer
revenue were essentially unchanged from the prior year. Adjusted
EBITDA increased 5% over 2017 due to the revenue increase and lower
operating expenses.
For more information about our business, please see the sections
“Business” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our Annual Report on Form
10-K for the year ended
December 31, 2018.
2018 Compensation Plan Highlights
The Compensation Committee implemented a number of compensation
plan design changes for 2018 to more closely align executive
compensation with stockholder returns and continue to address
concerns expressed by our stockholders. The following is a summary
of compensation decisions for 2018:
|
● |
|
Base Salaries . Base salary levels for 2018 were reduced by
8% for the CEO and 7% for the other NEOs as part of broader efforts
to reduce cost structures and improve profitability. In light of
the Company’s solid performance in 2018, the Compensation Committee
increased the base salary levels of NEOs other than the CEO for
2019.
|
|
● |
|
Annual Incentive Awards. The target level of annual cash
incentive available for each NEO is based on a percentage of base
salary, and therefore was also reduced as a function of the reduced
base salaries. For 2018, the Compensation Committee selected Total
Revenue per share and Adjusted EBITDA per share as performance
metrics. The Compensation Committee believes these are important
indicators of
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|21 |
|
the Company’s overall success, promoting both growth and capital
efficiency, and operate to increase management’s focus on the
dilutive impact to stockholders of growth strategies. For 2018
performance, a total of $1,034,746 was paid to our NEOs in annual
cash incentives, which is 102.5% of target.
|
|
● |
|
Long-Term Performance Incentive Awards. The Compensation
Committee established performance metrics based on share price
appreciation suggested by a stockholder for long-term performance
stock unit awards further aligning incentive compensation with the
return to our stockholders. These awards will vest if earned in
three tranches based on target share price achievement during each
of the three subsequent years. The Compensation Committee also
granted long-term cash incentive awards to NEOs that will be paid,
if earned, based on achievement of a Free Cash Flow average target
over the entire performance period of 2018 – 2020.
|
|
● |
|
Long-Term Retention Incentive Awards. The Compensation
Committee granted restricted stock unit awards and time-based cash
incentives to each NEO that will vest or payout, as appropriate, in
three equal tranches over the following three years based on
continued employment.
|
|
● |
|
Prior Year Equity Incentive Awards. No performance stock
units under prior year grants vested based on 2018 performance.
|
More information about the 2018 executive compensation plan and
performance against plan metrics can be found on the following
pages of this Executive Compensation Narrative.
Stockholder Engagement and Say-on-Pay Results
We conduct stockholder engagement throughout the year and provide
stockholders with an annual opportunity to cast an advisory
Say-on-Pay vote. At our 2018
Annual Meeting, 72% of votes cast (excluding broker non-votes and abstentions), supported
our Say-on-Pay proposal.
Over the past two years, we have engaged with stockholders related
to their concerns about our executive compensation program, and we
have implemented a number of compensation plan design changes to
strengthen alignment with stockholders’ interests. We engage in
dialogue with stockholders because we believe that fostering
long-term relationships with stockholders is an important
objective. Our engagement team is comprised of senior leaders and
three independent members of the Board, Ned Hayes, Board Chair;
Brian Ross, Compensation Committee Chair; and David Karp,
Nominating and Corporate Governance Committee Chair, as well as our
President and CEO, Anand Vadapalli.
Since our 2018 Annual Meeting of Stockholders, we contacted 20
stockholders representing approximately 39% of our shares
outstanding. Of those contacted, we met with stockholders
representing approximately 23% of shares outstanding in 26 meetings
with 13 different stockholders either in person or by telephone and
discussed our executive compensation program and other matters.
In our 2018 Proxy Statement, we introduced a framework for
executive compensation plan changes the Compensation Committee was
working on for 2018. To facilitate greater engagement with
stockholders on these matters, we provided more information on our
2018 executive compensation program through a Current Report on
Form 8-K filed on
October 11, 2018.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|22 |
The following chart lists some of the changes we have made to our
executive compensation program over the past two years, and how we
believe these changes address concerns expressed by
stockholders.
|
|
|
Change |
|
Reason for
Change |
We reduced the number of restricted stock unit (“RSU”) awards
granted to executives.
The number of RSUs for Mr. Vadapalli by year:
2016
2017
2018
353,136 250,021
131,291
|
|
● Reduces
stockholder dilution.
|
Established Adjusted Free Cash Flow per share
as a metric for a portion of long-term incentive
awards. |
|
● We believe
that cash flow growth is a significant determinant of long-term
stockholder value creation. The per share metric provides a
dimension of capital efficiency and incentivizes management to use
capital to generate cash flow growth.
|
For the 2017 and 2018 long-term equity grants, market related
metrics were used. Relative Total Shareholder Return is the metric
for 50% of long-term PSU awards in 2017 and stock price hurdles set
the vesting criteria for the 2018 PSU awards.
|
|
● Aligns
management compensation more closely with stockholder returns.
● Recognizes
the perceived low share price by requiring the Company to achieve
increases in stock price.
|
In 2018, decreased base salary level for the CEO.
|
|
● Reduces the
target compensation level for CEO
|
Increased the minimum threshold for payout of annual cash
incentives from 75% of the Adjusted EBITDA target to 90% beginning
in 2017.
|
|
● Increases the
threshold to receive payment of annual cash awards.
|
Discontinued the use of Net Promoter Score ® as an incentive
compensation measure for our long-term incentive program beginning
in 2017.
|
|
● Although we
compete on customer service rather than price, we substituted
metrics that provide greater assurance of performance to our
investors.
|
Modified the individual NEO performance metric
in our annual cash incentive plan to be a modifier of company
financial performance beginning in 2017. |
|
● This requires
company financial performance to be preeminent to an executive’s
individual performance and restricts payout for individual
performance if the company does not achieve its annual financial
goals
|
In addition to individual stockholder engagement, quarterly, we
participate in industry conferences and conduct conference calls
both telephonically and online to discuss financial results with
stockholders. We met with investors around the country, inside and
outside Alaska, in Arizona, New York, Illinois, California and
Washington D.C. Our website at www.alsk.com provides contact information so stockholders
can call, write or email us with questions. Stockholder engagement
and the outcome of Say-on-Pay vote results will
continue to inform future compensation decisions.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|23 |
Executive Compensation Program Philosophy and Objectives
The qualities, abilities, and commitment of our NEOs are
significant contributing factors to the proper leadership of our
Company and the driving force for the success of the Company’s
strategic plan. The Compensation Committee believes that our
compensation program is balanced and reasonable and helps us
achieve the objectives we have identified in the table below.
|
|
|
Objective
|
|
Features of Compensation Program Aligned to Objective
|
Attract and Retain Top Caliber
Executives |
|
Base salaries, benefits packages, and award opportunities are
designed to position us to compete effectively for executive talent
and recognize the unique characteristics and challenges of our
location in Alaska.
|
Pay for Performance |
|
Our program emphasizes at-risk incentive award opportunities,
both annual and long-term, tied to financial and market
objectives.
|
Stockholder Alignment |
|
We align the long-term financial interests of our NEOs and
stockholders through performance share units and restricted stock
units with multi-year vesting periods. Pursuant to stock ownership
guidelines, NEOs own significant amounts of our stock throughout
the term of their employment.
|
Compensation Committee Oversight of the Executive Compensation
Program
The Compensation Committee is responsible for overseeing the
development and administration of our compensation and benefits
policies and programs. The Compensation Committee devotes
substantial time and attention throughout the year to executive
compensation matters to ensure that our program aligns with our
fundamental objectives. The Compensation Committee works with the
Board as a whole to support the strategic plan they have
established for the Company through the executive compensation
program structure and goals.
The Compensation Committee is made up of four independent directors
who are responsible for the review and approval of all aspects of
our executive compensation program, including:
|
● |
|
Determination, review and approval of the Company’s incentive
compensation plan goals and objectives;
|
|
● |
|
Evaluation of individual performance results in light of the goals
and objectives;
|
|
● |
|
Evaluation of the competitiveness of individual total compensation
packages; and
|
|
● |
|
Approval of changes to and the payment of total compensation
packages.
|
The Compensation Committee considers the recommendation of the CEO
in determining the compensation, individual performance goals and
objectives for the executive officers who report directly to him.
The CEO provides his assessment of each NEO’s responsibilities and
the performance of each NEO’s area of oversight. The Compensation
Committee has the ultimate authority to approve or modify
management’s recommended compensation packages including the right
to use discretion to reduce final vesting and payouts when
evaluating NEO performance. The Compensation Committee recommends
the compensation package for our President and CEO for approval by
all independent members of our Board.
Role of the Compensation Consultant. The Compensation
Committee has the sole authority to select, retain and terminate
compensation consultants as well as the sole authority to direct
any compensation consultant’s work and approve fees. The
Compensation Consultant advises the Compensation Committee in
connection with its review of executive and director compensation
matters, including the level of total compensation packages
provided to executive officers. Korn Ferry has been the
Compensation Committee’s independent executive compensation
consulting firm since 2016. The compensation consultant attended
meetings of the Compensation Committee, as requested, and
communicated with the Compensation Committee Chair between
meetings; however, the Compensation Committee makes all decisions
regarding the compensation of our executives.
In connection with its engagement and retention of Korn Ferry, the
Compensation Committee has considered various factors related to
the independence of Korn Ferry as required by SEC regulations and
Nasdaq rules. After reviewing these factors, the Compensation
Committee determined that its engagement of Korn Ferry did not
present any conflicts of interest that prevented Korn Ferry from
providing independent compensation advice to the Compensation
Committee.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|24 |
Korn Ferry provides various executive compensation services to the
Compensation Committee including advising the Compensation
Committee on the principal aspects of our executive compensation
program design and evolving trends as well as providing market
information and analysis regarding the competitiveness of our
program design and our award values in relationship to the
Company’s performance. Total fees paid to Korn Ferry for 2018 in
connection with its services for the Compensation Committee were
$86,440; Korn Ferry did not receive any other compensation from the
Company for work performed in 2018.
In benchmarking compensation paid to our NEOs and directors, the
Compensation Committee worked with Korn Ferry in 2016 to develop
two separate peer groups to determine the best market approaches to
compensation. The primary peer group reviewed by Korn Ferry focused
on companies within our industry -- including managed IT companies
to reflect our focus on expanding in this business segment -- that
fell within a specific range of the Company’s revenues and market
capitalization while creating a balanced peer group in terms of
profitability (Operating Income, Net Income, EBITDA, EBITDA
Margin), cash flow, balance sheet assets (Total Assets, Total Debt)
and market performance (3-Year Total Shareholder Return
(“TSR”)). The primary peer group was used to benchmark the amount
of compensation paid to our NEOs and non-employee directors and the mix of
pay for our NEOs for purposes of reviewing 2018 compensation
decisions. The primary peer group included the following
companies:
|
|
|
|
|
|
|
|
|
LICT |
|
Otelco |
|
|
|
|
|
|
|
|
Hawaiian Telcom |
|
General Communication,
Inc. |
|
|
|
|
|
|
|
|
Broadview Networks |
|
Internap Corporation |
|
|
|
|
|
|
|
|
Lumos Networks |
|
Limelight Networks,
Inc. |
|
|
|
|
|
|
|
|
GTT Com |
|
NCI, Inc. |
|
|
|
|
|
|
|
|
Intelliquent |
|
Ooma, Inc. |
|
|
|
|
|
|
|
|
Shoretel |
|
Fusion Telecom |
|
|
There has been significant consolidation in our industry and this
impacted the peer group that the Compensation Committee approved in
2016. The following primary peers have been acquired or are
expected to be acquired:
|
● |
|
Broadview Networks – Acquired by Windstream Holdings
|
|
● |
|
General Communication – Acquired by Liberty Ventures
|
|
● |
|
Hawaiian Telecom – Acquired by Cincinnati Bell
|
|
● |
|
Intelliquent – Acquired by private equity firm, GTCR
|
|
● |
|
Lumos Networks – Acquired by EQT Infrastructure
|
|
● |
|
NCI – Acquired by private equity firm, HIG
|
|
● |
|
Shoretel – Acquired by Mitel
|
In evaluating market incentive plan designs, the Compensation
Committee worked with Korn Ferry to identify companies that have
similar business models to the Company and/or that have similar
capital allocation strategies to the Company. This secondary peer
group includes telecommunications companies that do not emphasize
wireless communications, but instead focus on and/or are expanding
their managed IT/cloud offerings (primarily business to business)
and do not pay dividends. The Compensation Committee did not use
this secondary peer group to benchmark compensation levels, but
rather reviewed the incentive plan structures. The Compensation
Committee’s goal was to obtain data on short-term incentive and
long-term incentive compensation practices to provide a data point
as the Compensation Committee evaluated incentive plan design.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|25 |
This secondary peer group was approved by the Compensation
Committee in 2016 and included the following companies:
|
|
|
|
|
|
|
|
|
Windstream Holdings |
|
Hawaiian Telecom |
|
|
|
|
|
|
|
|
Frontier
Communications |
|
Zayo Group |
|
|
|
|
|
|
|
|
Cincinnati Bell |
|
Broadview Networks |
|
|
|
|
|
|
|
|
General Communication,
Inc. |
|
Lumos Networks |
|
|
|
|
|
|
|
|
Fairpoint
Communications |
|
Datalink |
|
|
|
|
|
|
|
|
Consolidated Comm
Holdings |
|
Earthlink Holdings |
|
|
As with the primary peer group, the secondary peer group was
impacted by consolidations subsequent to the Compensation Committee
approving the peer group in 2016. The following secondary peers
have been acquired in addition to those noted above:
|
● |
|
Datalink - Acquired by Insight Enterprises - January 2018
|
|
● |
|
Earthlink Holdings - Acquired by Windstream Holdings - February
2018
|
|
● |
|
Fairpoint Communications - Acquired by Consolidated Communications
- July 2018
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|26 |
2018 Executive Compensation Program Elements
The Compensation Committee chose a mix of cash and equity
compensation NEOs based on long-term value drivers of company
performance over one-year
and multi-year periods, and also based on individual performance.
Our executive compensation program is designed to reinforce the
link between the interests of our NEOs and our stockholders. The
table below provides a summary for each element of compensation for
the 2018 program.
|
|
|
|
|
|
|
|
|
|
|
Elements |
|
Compensation
Mix
|
|
Key Characteristics |
|
Overview |
|
CEO |
|
Other
NEOs
(Average)
|
|
|
|
|
 |
|
Base Salary |
|
21% |
|
41% |
|
Fixed compensation delivered in cash.
Reviewed annually and adjusted if and when appropriate.
|
|
Base salaries are generally set based on the following factors:
● Nature and
responsibility of position
●
Qualifications, experience and expertise
●
Competitiveness of the market
● Potential to
drive company success
● Individual
performance and evaluation of peer group compensation
● Internal
parity with peers in similar reporting structure and scope of
responsibility
|
|
|
Long-Term Cash (Time
Based) |
|
12% |
|
10% |
|
Multi-year time-based opportunity
delivered in cash. |
|
These long-term awards are paid
ratably over three years beginning in 2019 if the NEO remains
continuously employed with the Company. |
 |
|
Annual Cash Incentive
(Performance Based) |
|
21% |
|
25% |
|
Annual performance-based opportunity delivered in cash.
Based on company performance and individual performance.
|
|
● The target
level of annual cash incentives for our NEOs was 60% of base salary
except for our CEO, whose target is set at 100% of base salary.
● Metrics:
➣
Adjusted EBITDA per share
➣
Total Revenue per share
● Minimum
threshold for any payout is 90% of Adjusted EBITDA goal.
|
|
Performance Stock Units
(Performance Based) |
|
18% |
|
11% |
|
Multi-year performance-based opportunity delivered in shares.
Based on company stock price targets.
|
|
These long-term incentive awards are tied to company stock
price.
Awards vest in three tranches over three years based on achieving
increasing price thresholds.
|
|
Restricted Stock Units
(Time Based)
|
|
11% |
|
7% |
|
Multi-year time-based opportunity
delivered in shares. |
|
These long-term awards vest
ratably over three years beginning in 2019 if the NEO remains
continuously employed with the Company. |
|
|
Long-Term Cash
(Performance-Based) |
|
17% |
|
6% |
|
Multi-year performance-based
opportunity delivered in cash. Based on company performance
measured by financial goals. |
|
These long-term awards pay out, if
earned, following the end of the performance period in 2021. The
metric is Average Free Cash Flow per share over the
period. |
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|27 |
Annual Salary and Incentive Compensation
Base Salaries
Base salaries are set to compensate our NEOs fairly for the
responsibilities of the positions they hold. The following table
shows base salary levels for each NEO as of December 31, 2018
and 2017. NEOs’ base salaries were reduced as part of broader
efforts to reduce cost structures and improve profitability.
|
|
|
|
|
|
|
|
|
Base Salary
|
|
|
Named Executive Officer |
|
2018 |
|
2017 |
|
% Change |
Anand Vadapalli |
|
$414,000 |
|
$450,000 |
|
-8% |
Laurie M.
Butcher (1) |
|
$255,000 |
|
$240,000 |
|
6% |
Leonard A. Steinberg |
|
$267,840 |
|
$288,000 |
|
-7% |
Randy M.
Ritter |
|
$246,450 |
|
$265,000 |
|
-7% |
William H. Bishop |
|
$246,450 |
|
$265,000 |
|
-7% |
(1)
Ms. Butcher’s base salary was $223,200 for the first three
quarters of 2018, which was a seven percent reduction from her 2017
base salary level. Effective October 1, 2018, Ms.
Butcher received a performance-based salary increase to
$255,000.
2018 Annual Cash Incentive Plan
The annual cash incentive for each NEO is based on a percentage of
base salary that has remained the same for several years.
Mr. Vadapalli’s target annual cash incentive for 2018 is equal
to 100% of his base salary, and the other NEOs’ target levels were
equal to 60% of their base salary.
Adjusted EBITDA and Total Revenue were used to measure performance
for annual cash incentives in 2017, and, in 2018, the Compensation
Committee used the same metrics, but converted them to per share
metrics. The Compensation Committee believes these per share
metrics focus management on strategies that are not dilutive to
stockholders. It is the Compensation Committee’s belief that
Adjusted EBITDA is an indicator of the Company’s overall success
because it measures the effects of management’s actions at the
current level of capital investments, capital structure, and
intangible assets, which management cannot easily change in the
short-term. Total Revenue is important in generating future
Adjusted EBITDA, and as a measure of annual performance, it
supports our belief in the market opportunity for business
broadband as a key component of revenue. Based on uncertainties
surrounding the Federal Communications Commission’s Rural Health
Care program, the Compensation Committee provided for further
adjustment of actual Adjusted EBITDA and Total Revenue results for
purposes of calculating achievement of the associated per share
metrics. Budgeted revenue and budgeted bad debt expense associated
with the Rural Health Care program were substituted for the
relevant actual results. Additionally, cash based long-term
incentive payments and Board compensation expense resulting from
the conversion of equity to cash were excluded from the calculation
of Adjusted EBITDA achieved for purposes of the annual cash
incentive.
For further information on these metrics, see “Non-Generally
Accepted Accounting Principle (“GAAP”) Financial Measures and
Performance Metrics” on page 45.
Payout for annual cash incentive compensation is conditioned on
reaching a minimum threshold of not less than 90% of the Adjusted
EBITDA per share goal and may not exceed 150% of the annual target
amounts.
For all NEOs, the annual incentive award calculation is as
follows:

|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|28 |
The following table includes the annual cash incentive metrics, and
goals for the Company performance portion of the awards:
|
|
|
|
|
|
|
|
|
Performance Metrics/Weight |
|
Min - 50%
Payout
90% of Goal
|
|
100 % Payout
100% of goal
|
|
Max - 150%
Payout
110% of goal
|
|
Actual 2018
Performance |
Adjusted EBITDA/Share 50% |
|
.99 |
|
1.10 |
|
1.21 |
|
1.11 |
Total Revenue/Share 50% |
|
3.89 |
|
4.32 |
|
4.75 |
|
4.34 |
Performance Determination. The
Company’s actual results for 2018 compared to the preset goals
resulted in a Company achievement factor of 103.43%
Our NEOs’ target opportunities and payouts earned under the 2018
annual incentive compensation program were as follows:
|
|
|
|
|
Annual Cash
Incentive |
Named Executive Officer |
|
Target |
|
Annual Payout |
Anand Vadapalli |
|
$414,000 |
|
$423,918 |
Laurie M.
Butcher |
|
$153,000 |
|
$143,447 |
Leonard A. Steinberg |
|
$160,704 |
|
$164,555 |
Randy M.
Ritter |
|
$147,870 |
|
$151,413 |
William H. Bishop |
|
$147,870 |
|
$151,413 |
Individual achievement factors for each NEO were determined based
on the following:
Anand Vadapalli 99%: Provided overall leadership that delivered on
strong operating performance results for 2018 that included revenue
and Adjusted EBITDA growth, combined with strong free cash flow
performance despite increased capital expenditures. Additionally,
he led the shareholder friendly refinancing activity that closed in
January 2019.
Laurie Butcher 100%: Specific contributions include strong expense
management through the year, leading the implementation of new
revenue and lease accounting pronouncements, substantial modeling
and diligence work related to the strategic process conducted by
the Company, supporting the documentation and audit requirements
related to the RHC program, and leading a very successful balance
sheet refinance that closed in early January 2019.
Leonard Steinberg 99%: Specific contributions include leading the
program effort related to all FCC interactions for the RHC program
resulting in FY17 and FY18 rate approvals, meeting CAF II build
obligations for the year, leading the legal matters related to the
shareholder activism in the first half of the year, advancing the
ball on de-tariffing at the State level, improvements in cyber
security capabilities, and leading the facilities team in response
and recovery efforts related to the 7.0 magnitude earthquake.
Randy M. Ritter 99% : Specific contributions include significant
network advancements with Multi Dwelling Units enablement with
about 3000 locations passed, deployment of Fixed Wireless in the
network with about 6000 locations passed, deployment of satellite
capabilities with about 15 sites installed and enabling the largest
sales opportunity for the year, enabling the Software Defined
Network infrastructure trial and proof of concept leading to two
customer wins; all while improving service metrics despite rolling
furloughs in the first nine months of the year.
William H. Bishop 99%: Specific contributions include meeting
overall revenue expectations, stellar results for Enterprise and
Carrier exceeding revenue and sales (both recurring and one time)
targets, managing the market and customer expectations as we worked
through the RHC funding delays with the FCC, taking
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|29 |
responsibility for all revenue and customer management later in the
year, developing the next layer of leadership talent on the
Enterprise and Carrier sales front.
2018 Long-Term Compensation Plan
In July 2018, the Compensation Committee granted long-term equity
and cash awards as follows:
Performance-Based Compensation
Price-appreciation performance share units (PSUs) were granted to
our NEOs with no more than a three-year vesting period. These
awards will vest in three tranches only upon achieving increased
stock prices measured over any 20 consecutive trading days on a
Volume Weighted Average Price (VWAP) basis during each performance
period, with vesting, if achieved, following the performance
period. The following are the VWAP stock price hurdles that must be
achieved for each tranche:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium to |
|
|
Performance |
|
Performance |
|
VWAP |
|
Grant Date |
Tranch |
|
Period Start |
|
Period End |
|
Vesting $ (1) |
|
Price (2) |
Tranche 1 |
|
7/20/2018 |
|
7/20/2019 |
|
$2.65 |
|
57.7% |
Tranche 2 |
|
7/20/2018 |
|
7/20/2020 |
|
$2.90 |
|
72.6% |
Tranche 3 |
|
7/20/2018 |
|
7/20/2021 |
|
$3.15 |
|
87.5% |
|
(1) |
Volume Weighted Average Price measured over 20
consecutive trading days.
|
|
(2) |
Premium to Grant Date Price represents the difference
between the VWAP Vesting Price and the grant date price of
$1.68.
|
Long-term performance cash awards were also granted to our NEOs in
2018 that will pay out, if earned, at the end of the three-year
performance period based on a Free Cash Flow per Share goal of
$0.19. To calculate performance against this per share metric, Free
Cash Flow results will be averaged over the three years (2018, 2019
and 2020) and divided by the average of the shares outstanding. The
Compensation Committee believes that this metric incentivizes
management to make capital allocation decisions that maximize
long-term stockholder value.
The grant date value of each of the PSU awards are reflected in the
2018 Summary Compensation Table included in this Proxy Statement.
The value of long-term performance cash awards, if earned, will be
reflected in the 2020 Summary Compensation Table.
Time-Based Compensation
Restricted share units (RSUs) were granted to our NEOs that will
vest in three equal tranches in the first quarter of 2019, 2020 and
2021 if the NEO remains employed until the date of vesting.
Time-based cash awards were granted to our NEOs that will pay out
in three equal tranches in the first quarter of 2019, 2020 and 2021
if the NEO remains employed until the payment date.
Grants under the 2018 long-term compensation plan are summarized in
the chart below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer |
|
PSU (Units) |
|
PSU Grant
Date Value
|
|
RSU
(Units) |
|
RSU Grant
Date Value |
|
Performance Cash |
|
Time-Based Cash |
Anand Vadapalli |
|
642,377 |
|
$352,696 |
|
131,291 |
|
$220,569 |
|
$320,394 |
|
$236,846 |
Laurie M. Butcher |
|
99,736 |
|
$54,760 |
|
20,384 |
|
$34,245 |
|
$31,886 |
|
$54,628 |
Leonard A. Steinberg |
|
149,602 |
|
$82,139 |
|
30,576 |
|
$51,368 |
|
$47,830 |
|
$81,942 |
Randy Ritter |
|
115,629 |
|
$63,486 |
|
23,633 |
|
$39,703 |
|
$36,969 |
|
$63,333 |
William H. Bishop |
|
110,124 |
|
$60,463 |
|
22,507 |
|
$37,812 |
|
$35,208 |
|
$60,318 |
Long-Term Incentive Awards under Prior Year Grants
Long-term PSU awards granted in 2017
Long-term incentive awards in granted 2017 in the form of PSUs will
vest, if earned, following the full performance period,
July 1, 2017 to December 31, 2019, measured on Company
performance based on Adjusted Free Cash Flow per share (50%) and
relative TSR (50%). To better ensure that incentive plan awards are
paid consistent
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|30 |
with company operating performance, no level of long-term PSUs
granted in 2017 will vest unless a threshold level of $120,960,000
of cumulative Adjusted EBITDA is achieved for the period
July 1, 2017 to December 31, 2019.
Adjusted Free Cash Flow is divided by the weighted average shares
outstanding. The Compensation Committee established an initial
period goal of $0.18 for July 1, 2017 to December 31,
2017, $0.16 for the year ended December 31, 2018, and $0.19
for the year ended December 31, 2019. The three goals were
averaged with over the three periods (July 1, 2017 to
December 31, 2017 prorated, and full years in 2018 and 2019)
and the target goal is shown in the table below. Because the full
performance period goal had not been set at the date these awards
were made in 2017, the PSU awards based on Adjusted Free Cash Flow
per Share did not appear in the related executive compensation
tables for 2017, the year they were awarded by the Compensation
Committee. Rather, with the final performance goal established in
2019, these awards, based on Adjusted Free Cash Flow per share,
will appear, at grant date value, in the appropriate 2019
compensation tables in our Proxy Statement issued in 2020.
Relative TSR is measured against the Russell 2000 Index as
constituted at the beginning of the performance period. In order
for NEOs to receive the target award under this Relative TSR
metric, the Compensation Committee established the target goal,
minimum and maximum vesting levels shown in the following table for
the TSR metric. The PSUs granted in 2017 based on Relative TSR
appeared in the appropriate 2017 Compensation tables in our Proxy
Statement issued in 2018.
|
|
|
|
|
|
|
|
|
Performance
Measure
|
|
Weight |
|
Min - 50%
Vesting |
|
Target
100 % Vesting
|
|
Max - 150%
Vesting |
Relative TSR |
|
50% |
|
40% |
|
60% |
|
80% |
Adj. Free Cash Flow/Share |
|
50% |
|
90% of Target |
|
.175 |
|
110% of Target
|
As shown in the preceding table, there is an incrementally lower
vesting for achievement below goal and vesting is linear up to a
maximum of 150% vesting for overachievement.
Long-term PSU awards granted in 2016
The 2016 PSU grants are based on two performance measures –
two-thirds of the awards
based on Adjusted Operating Cash Flow (AOCF) 1 and one-third on customer satisfaction
measured through Net Promoter Score ® (NPS) 2 .
The 2016 awards provide for vesting, if earned, in three equal
annual installments, with the vesting of each installment subject
to the Company’s attainment of the Adjusted Operating Cash Flow and
NPS goals set by the Compensation Committee. Achievement in excess
of 100% of the combined achievement of both goals for each
performance period, if earned, will be paid in cash. No vesting or
payout occurs for actual achievement levels below the minimum for
each goal. Vesting or payout is measured on a linear scale based on
performance between the minimum and the maximum levels.
1 Adjusted
Operating Cash Flow for purposes of incentive compensation, is
calculated as annual Adjusted EBITDA less cash interest expense.
(For more information on this metric, see “Non-GAAP Financial Measures and
Performance Metrics” on page 45)
2 NPS is
determined through customer satisfaction surveys, conducted and
reported by a third-party vendor, that ask business customers, on a
scale from zero to ten, how likely they are to recommend Alaska
Communications to a friend or colleague. (For more information on
this metric, see “Non-GAAP
Financial Measures and Performance Metrics” on page 45)
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|31 |
2016 PSU award goals and actual performance for the 2018
performance year were as follows ($ millions):
|
|
|
|
|
|
|
|
|
|
|
Performance
Measure
|
|
Weight |
|
50% Vesting
Minimum |
|
100% Vesting
Target |
|
150%
Vesting/Payout
Maximum
|
|
Actual
2018
Performance |
AOCF |
|
67% |
|
$56.610 |
|
$62.900 |
|
$69.190 |
|
$45.907 |
NPS |
|
33% |
|
22 |
|
26 |
|
32 |
|
19 |
As shown above, both Adjusted Operating Cash Flow and NPS results
were below the minimum threshold for vesting, therefore PSUs under
this final tranche of the grant did not vest and are forfeited.
These PSU awards were included at grant date value in the 2016
Summary Compensation Table, and as provided under SEC rules, no
adjustment is made for their value in the Summary Compensation
Table when forfeited.
For more information on the metrics referred to in this Executive
Compensation Narrative, see “Non-GAAP Financial Measures and
Performance Metrics” on page 45.
Other NEO Benefits, Perquisites and Severance
Our NEOs participate in the broad-based benefit and welfare plans
that are generally available to the Company’s employees. There are
no special or supplemental retirement benefits provided to our NEOs
under our executive compensation program.
Severance and other benefits are explained in detail beginning on
page 38.
Compensation Governance
What We Do :
Multiple Performance Metrics for Both Short-term and Long-term
Incentives. We mitigate compensation-related risk in a number
of ways, including by using multiple performance measures across
the short-and long-term incentive plans.
Minimum Stock Ownership Requirements for all NEOs. We have
adopted minimum stock ownership requirements for our NEOs because
we believe that management will more effectively pursue the
long-term interests of our stockholders if they are stockholders
themselves. The Compensation Committee reviews our stock ownership
requirements and makes changes, as needed, to bring our policy in
line with evolving market practice. Our policy requires each NEO
other than the CEO to accumulate and hold shares of our common
stock having a value of at least one-and-a-half times the
NEO’s annual base salary. The CEO is expected to hold shares of
common stock equal to at least three times his base salary. Each of
our NEOs has five years from his or her appointment to the position
to achieve the prescribed ownership levels. All our NEOs either are
in full compliance with this requirement or have more time under
the policy to reach the requirement.
Independent Compensation Consultant. The Compensation
Committee has retained Korn Ferry to advise on our executive
compensation programs. Aside from the services to the Compensation
Committee, Korn Ferry performs no other services for us.
Limited Perquisites. We provide the following perquisites to
NEOs: automobile allowance, travel and housing costs to NEOs who
live outside of Alaska, and moving expenses. We do not provide any
tax gross-ups with respect
to perquisites.
Deductibility of Executive Compensation
The Compensation Committee considers the tax and accounting
treatment associated with cash and equity awards it makes, although
these considerations are not the overriding factor the Compensation
Committee uses in making its decisions. Section 162(m) of the
Internal Revenue Code places a limit of $1 million on the
compensation that the Company may deduct in any one year with
respect to each of its most highly compensated executive officers,
unless certain conditions are met. There is an exception to the
$1 million limitation for performance-based compensation
meeting certain requirements; however, with the exception of
certain
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|32 |
grandfathered awards made pursuant to written binding contracts in
effect on November 2, 2017, comprehensive tax reform
eliminated the performance-based compensation exception effective
January 1, 2018.
Incentive Compensation “Clawback” Reimbursement
Our incentive award plan and award agreements provide that awards
under the plan are subject to applicable clawback laws, rules or
regulations. Additionally, our Officer Severance Policy includes a
clawback provision. This provides that any compensation paid that
is subject to recovery under any law, government regulation or
stock exchange listing requirement will be subject to repayment to
the Company.
What We Don’t Do :
Guaranteed Incentive-Based Bonuses or Salary Increases. None
of our NEOs has an employment arrangement or other contractual
right, other than the long-term awards as described above,
guaranteeing any annual incentive payments or any salary increases.
Base salary increases are at the discretion of the Compensation
Committee.
Single Trigger Change in Control Benefits. Change in control
severance provisions apply to Mr. Vadapalli through the terms
of his individual employment agreement, and to our other NEOs
through the Company’s Officer Severance Policy that is expressly
applicable to our NEOs. The primary purpose of these change in
control protections is to align executive and stockholder interests
by enabling our NEOs to assess possible corporate transactions
without regard to the effect such transactions could have on their
employment with the Company. In seeking to adhere to best
compensation practices, the change in control provisions currently
applicable to all our NEOs avoid excessive payments or “single
triggers” for receipt of severance benefits in the event of a
change in control. Double triggers are required for receipt of any
change in control benefits. There are no tax gross-ups included in severance
arrangements. The Compensation Committee set the amount of change
in control benefits provided for our executives at amounts that the
Compensation Committee believes are reasonable in the event of the
occurrence of the circumstances specified. The specific change in
control severance provisions applicable to each NEO are discussed
in more detail following the executive compensation tables under
the heading: “Employment Arrangements and Potential Payments upon
Termination or Change in Control.”
Special Executive Retirement or Benefit Packages. Our NEOs
participate in the broad-based retirement and benefit programs that
are generally available to the Company’s employees. There are no
special or supplemental retirement benefits provided to our NEOs
under our executive compensation program.
Hedging or Pledging of Company Stock. We have a policy
prohibiting all employees, including the NEOs and members of our
Board, from engaging in any hedging transactions with respect to
our equity securities held by them or pledging Company securities
as collateral.
Tax Gross-ups . We
do not provide tax gross-ups to any of our NEOs and the
Compensation Committee does not plan to include tax gross-ups in any future employment
arrangements.
|
COMPENSATION AND PERSONNEL
COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
|
During 2018, Mr. Ross, Ms. Brown, Mr. Karp and
Mr. Barr served on the Compensation Committee. None of the
directors serving on the Compensation Committee during 2018 are or
have been an officer or employee of the Company or have had any
relationship with us requiring disclosure pursuant to Item 404 of
Regulation S-K. No member
of the Compensation Committee is an executive officer of another
entity for which any of our executive officers serve as a
compensation committee member. In addition, none of our executive
officers served as a director for a company that employs, as an
executive officer, any of our directors.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|33 |
|
|
|
EXECUTIVE COMPENSATION
TABLES |
|
 |
In this section, we provide tabular information regarding the
compensation paid to our NEOs for the years ended December 31,
2018 and 2017.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Year |
|
Salary
($) |
|
|
Bonus
($) (1) |
|
|
Stock
Awards
($) (2) |
|
|
Non-Equity
Incentive Plan
Compensation
($) (3) |
|
|
Change
in
Pension
Value
($) (4) |
|
|
All Other
Compensation
($) (5) |
|
|
Total
($) |
|
Anand Vadapalli |
|
2018 |
|
|
415,388 |
|
|
|
78,949 |
|
|
|
573,265 |
|
|
|
423,918 |
|
|
|
8,491 |
|
|
|
71,270 |
|
|
|
1,571,281 |
|
President and Chief Executive
Officer |
|
2017 |
|
|
450,002 |
|
|
|
- |
|
|
|
881,204 |
|
|
|
34,726 |
|
|
|
7,899 |
|
|
|
74,947 |
|
|
|
1,448,778 |
|
Laurie M.
Butcher |
|
2018 |
|
|
229,470 |
|
|
|
18,209 |
|
|
|
89,005 |
|
|
|
143,447 |
|
|
|
42,338 |
|
|
|
|
|
|
|
522,469 |
|
Senior Vice
President, Finance |
|
2017 |
|
|
240,001 |
|
|
|
|
|
|
|
135,342 |
|
|
|
3,142 |
|
|
|
38,510 |
|
|
|
|
|
|
|
416,995 |
|
Leonard A. Steinberg |
|
2018 |
|
|
269,725 |
|
|
|
27,314 |
|
|
|
133,507 |
|
|
|
164,555 |
|
|
|
5,563 |
|
|
|
|
|
|
|
600,664 |
|
Senior Vice President, Legal,
Regulatory & Government Affairs and Corporate
Secretary |
|
2017 |
|
|
288,001 |
|
|
|
|
|
|
|
203,012 |
|
|
|
8,000 |
|
|
|
6,356 |
|
|
|
|
|
|
|
505,369 |
|
Randy M.
Ritter |
|
2018 |
|
|
247,164 |
|
|
|
21,111 |
|
|
|
103,189 |
|
|
|
151,413 |
|
|
|
13,431 |
|
|
|
16,190 |
|
|
|
552,498 |
|
Senior Vice
President, Shared Services |
|
2017 |
|
|
257,501 |
|
|
|
|
|
|
|
156,912 |
|
|
|
5,834 |
|
|
|
15,335 |
|
|
|
12,145 |
|
|
|
447,727 |
|
William H. Bishop |
|
2018 |
|
|
247,164 |
|
|
|
20,106 |
|
|
|
98,275 |
|
|
|
151,413 |
|
|
|
22,145 |
|
|
|
|
|
|
|
539,103 |
|
Senior Vice President and Chief Operations
Officer (6) |
|
2017 |
|
|
251,736 |
|
|
|
|
|
|
|
149,440 |
|
|
|
3,851 |
|
|
|
19,939 |
|
|
|
|
|
|
|
424,966 |
|
|
(1) |
Amounts represent the first tranche payment of
long-term time-based cash awards that were tied to 2018.
|
|
(2) |
Amounts reported for 2018 represent the grant date
fair value of RSU and PSU awards granted in 2018, as determined in
accordance with FASB ASC 718, excluding the effect of forfeitures.
The amounts shown include RSU and PSU awards that were granted in
2018. For the PSU awards, the amount is based on the fair value of
the awards on the grant date. Assumptions used in calculating these
amounts are included in Note 16 to our audited financial statements
included in our Annual Report on Form 10-K for the year ended
December 31, 2018, which was filed with the SEC on
March 11, 2019.
|
|
(3) |
Amounts represent annual cash incentive payments under
our 2018 annual cash incentive program. Amounts reported for each
year are based on performance in that year, even if paid subsequent
to year end.
|
|
(4) |
Amounts are based on vested benefits under the Alaska
Electrical Pension Plan (“AEPP”), a multi-employer defined benefit
plan. The Company does not administer the AEPP, and the amounts
provided are estimates based on the calculations of a third-party
actuary retained by the Company.
|
|
(5) |
Mr. Vadapalli received apartment rental payments
of $23,775, travel reimbursement of $14,489 for travel to the
Company headquarters in Anchorage from his principal residence
outside of Alaska, a 401K matching contribution of $22,506, and an
automobile allowance of $10,500 in 2018. Mr. Ritter received
an automobile allowance of $9,600 and reimbursement for travel to
and from his remote worksite of $6,590.
|
|
(6) |
Effective April 9, 2019, Mr. Bishop was
promoted to Senior Vice President and Chief Operations Officer.
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|34 |
2018 Outstanding Equity Awards at Fiscal
Year-End Table
The following table provides information regarding unvested RSUs
and PSUs held by our NEOs as of December 31, 2018. Our NEOs
did not hold any stock option awards as of December 31,
2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares or
Units of Stock That Have
Not Vested |
|
|
|
Market Value of
Shares or Units of
Stock That Have Not
Vested |
|
Equity Incentive Plan
Awards: Number of
Unearned Shares, Units or
Other Rights That Have
Not Vested |
|
|
|
Equity Incentive Plan Awards:
Market or Payout Value of
Unearned Shares, Units or
Other Rights That Have Not
Vested |
|
|
|
|
|
|
|
Name
|
|
(#)
|
|
|
|
($) (1)
|
|
(#)
|
|
|
|
($) (1)
|
Anand Vadapalli |
|
117,712 |
|
(2) |
|
169,505 |
|
- |
|
|
|
- |
|
|
166,681 |
|
(3) |
|
240,021 |
|
- |
|
|
|
- |
|
|
131,291 |
|
(4) |
|
189,059 |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
117,712 |
|
(5) |
|
169,505 |
|
|
- |
|
|
|
- |
|
137,073 |
|
(6) |
|
197,385 |
|
|
- |
|
|
|
- |
|
642,377 |
|
(7) |
|
925,023 |
Laurie M. Butcher |
|
18,079 |
|
(2) |
|
26,034 |
|
- |
|
|
|
- |
|
|
25,600 |
|
(3) |
|
36,864 |
|
- |
|
|
|
- |
|
|
20,384 |
|
(4) |
|
29,353 |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
18,079 |
|
(5) |
|
26,034 |
|
|
- |
|
|
|
- |
|
21,053 |
|
(6) |
|
30,316 |
|
|
- |
|
|
|
- |
|
99,736 |
|
(7) |
|
143,620 |
Leonard A. Steinberg |
|
26,270 |
|
(2) |
|
37,829 |
|
- |
|
|
|
- |
|
|
37,196 |
|
(3) |
|
53,562 |
|
- |
|
|
|
- |
|
|
29,652 |
|
(4) |
|
42,699 |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
27,120 |
|
(5) |
|
39,053 |
|
|
|
|
|
|
|
|
31,579 |
|
(6) |
|
45,474 |
|
|
- |
|
|
|
- |
|
149,602 |
|
(7) |
|
215,427 |
Randy M.
Ritter |
|
19,774 |
|
(2) |
|
28,475 |
|
- |
|
|
|
- |
|
|
29,680 |
|
(3) |
|
42,739 |
|
- |
|
|
|
- |
|
|
23,633 |
|
(4) |
|
34,032 |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
19,774 |
|
(5) |
|
28,475 |
|
|
- |
|
|
|
- |
|
24,408 |
|
(6) |
|
35,148 |
|
|
- |
|
|
|
- |
|
115,629 |
|
(7) |
|
166,506 |
William H.
Bishop |
|
18,079 |
|
(2) |
|
26,034 |
|
- |
|
|
|
- |
|
|
28,267 |
|
(3) |
|
40,704 |
|
- |
|
|
|
- |
|
|
22,507 |
|
(4) |
|
32,410 |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
18,079 |
|
(5) |
|
26,034 |
|
|
- |
|
|
|
- |
|
23,246 |
|
(6) |
|
33,474 |
|
|
- |
|
|
|
- |
|
110,124 |
|
(7) |
|
158,579 |
|
(1) |
The Market Value as of December 31, 2018 was
calculated using $1.44 which was the closing price per share of our
common stock as reported on the Nasdaq Global Market on that
date.
|
|
(2) |
Represents RSUs which vested in full in the first
quarter of 2019.
|
|
(3) |
Represents RSUs, of which 50% vested on March 1,
2019 and the remaining 50% will vest on March 1, 2020,
generally subject to continued employment.
|
|
(4) |
Represents RSUs granted in 2018 of which 33% vested on
March 1, 2019 and the remaining 67% will vest in substantially
equal portions on the first Company business date in March of 2020
and 2021, generally subject to continued employment.
|
|
(5) |
Represents PSUs that were outstanding as of
December 31, 2018 and all of which were forfeited in March of
2019, upon the Compensation Committee’s determination that the
Company did not achieve the minimum level for previously
established Company performance goals.
|
|
(6) |
Represents PSUs scheduled to vest in 2020. A portion
of these PSUs are based on achievement of Company performance goals
previously established by the Compensation Committee for relative
TSR.
|
|
(7) |
Represents the 2018 grants of PSUs with respect to the
applicable performance goals that were established in 2018. The
grants are eligible to vest over three years based on achievement
of performance goals.
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|35 |
|
EMPLOYMENT ARRANGEMENTS AND
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN
CONTROL
|
The following pages provide individual compensation narrative for
each of our NEOs.
Anand Vadapalli
We entered into an Amended and Restated Employment Agreement with
Anand Vadapalli, our President and CEO, effective August 5,
2015 (the “Agreement”). In 2017, the Agreement was amended to
extend the employment period through December 31, 2019. The
Agreement provides for successive, automatic extensions for
one-year periods thereafter
unless notice of an intention to terminate the Agreement is
provided by either party at least 180 days before the end of the
term. In 2018 the Agreement was further amended to reduce
Mr. Vadapalli’s annual base salary to $414,000.
Mr. Vadapalli is eligible for target annual cash incentive
compensation of not less than his base salary, with the actual
amount to be determined each year based on achievement of annual
performance objectives set by the Compensation Committee.
Mr. Vadapalli is also eligible to receive long-term incentive
compensation in the form of time-vested RSUs, PSUs or other
equity-based awards, or a combination of equity and
performance-based cash awards in addition to the annual cash
incentives. To align the interests of Mr. Vadapalli with those
of our stockholders, the annual long-term awards will be guided by
the principle that these awards are not less than twice the value
of his annual base salary. However, the specific quantity and type
of long-term awards will be determined annually by the Compensation
Committee on the terms and schedule approved by the Board, based on
accomplishment of performance objectives set by the Board and
subject to the terms of an individual grant award agreement.
The Agreement provides for reimbursement of reasonable travel
expenses between Mr. Vadapalli’s residence outside the state
of Alaska and the Company headquarters or other appropriate
business location. Mr. Vadapalli is also reimbursed for
reasonable living expenses while Mr. Vadapalli is working at
the Company headquarters up to $2,500 per month. The Agreement
includes a monthly automobile allowance.
Mr. Vadapalli’s Agreement provides that in the event of
termination by the Company “without cause” or resignation by
Mr. Vadapalli for “good reason,” as those terms are defined in
his Agreement, Mr. Vadapalli is entitled to receive
post-termination benefits as follows: (i) a cash payment equal
to the sum of his base annual salary plus his target annual cash
incentive; (ii) any unpaid cash incentive payment for the last
full year of his employment, plus a prorated cash incentive payment
for the last partial year of his employment; (iii) time-vested
cash or stock-based awards will continue to vest in accordance with
their scheduled vesting periods and performance-based awards will
continue to vest subject to satisfaction of the applicable
performance conditions; (iv) monthly payments for up to one
year equal to COBRA health insurance premiums in certain
circumstances; and (v) reimbursement for relocation expenses
up to $50,000 and reimbursement for realtor commissions on the sale
of his residence up to $50,000, subject to certain conditions.
In the event Mr. Vadapalli’s employment is terminated by the
Company “without cause” or he resigns for “good reason” in
connection with a change in control of the Company, severance
payments include: (i) a cash payment equal to two times the
sum of his base salary plus his target annual cash bonus;
(ii) any unpaid cash incentive payment for the last full year
of his employment, plus a prorated cash incentive payment for the
last partial year of his employment; (iii) accelerated vesting
of all unvested equity awards; (iv) monthly payments equal to
COBRA health insurance payments for up to 18 months, plus another
six months at the average rate paid for the prior 18 months under
certain circumstances; and (v) reimbursement for relocation
expenses up to $50,000 and reimbursement for realtor commissions on
the sale of his residence up to $50,000, subject to certain
conditions.
Should Mr. Vadapalli’s employment terminate due to death or
disability, as such terms are defined in his Agreement,
Mr. Vadapalli, or his estate, would be eligible to receive:
(i) his base salary prorated to the date of death or cessation
of active work due to disability; (ii) any unpaid cash
incentive payment for the last full year of his employment, plus a
prorated cash incentive payment for the last partial year of his
employment; and (iii) for awards granted in or after 2013,
time-vested awards will accelerate and vest upon termination and
performance-based awards will continue to vest subject to
satisfaction of the applicable performance conditions.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|36 |
Mr. Vadapalli is subject to customary non-competition and non-solicitation restrictive covenants
during his employment with the Company and for a period of two
years and one year, respectively, thereafter. The following table
sets forth the payments and benefits Mr. Vadapalli would have
received, assuming a termination of his employment in the following
scenarios on December 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Termination Without
Cause or Resignation
for Good Reason |
|
|
|
|
Death or Disability |
|
|
|
|
Termination without
Cause or Resignation
for Good Reason In
Connection with
Change in Control |
|
|
(6)
|
Anand Vadapalli |
|
Severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary Component
|
|
$ |
828,000 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
1,656,000 |
|
|
|
|
|
Annual Incentive Component
|
|
|
423,918 |
|
|
|
|
|
423,918 |
|
|
|
|
|
423,918 |
|
|
|
|
|
Long-Term
Performance Cash |
|
|
320,394 |
|
|
(1) |
|
|
320,394 |
|
|
(1) |
|
|
320,394 |
|
|
(1) |
|
|
Accelerated Vesting of Equity |
|
|
2,087,883 |
|
|
(2) |
|
|
2,087,883 |
|
|
(2) |
|
|
2,087,883 |
|
|
(2) |
|
|
Long-Term Time
Based Cash |
|
|
236,846 |
|
|
(3) |
|
|
236,846 |
|
|
(3) |
|
|
236,846 |
|
|
(3) |
|
|
Other Benefits |
|
|
122,027 |
|
|
(4) |
|
|
- |
|
|
|
|
|
144,053 |
|
|
(5) |
|
|
Total |
|
$ |
4,019,067 |
|
|
|
|
$ |
3,069,041 |
|
|
|
|
$ |
4,869,094 |
|
|
|
|
(1) |
Includes long-term performance cash awards estimated
to be payable pursuant to the terms of Mr. Vadapalli’s
Agreement based on achievement of Company goals for 2018.
|
|
(2) |
Includes RSU and PSU awards estimated be payable
pursuant to the terms of Mr. Vadapalli’s Agreement on
December 31, 2018. The amount was calculated using 100% of the
total number of unvested units, assuming the achievement of
performance goals would have been unknown, multiplied by the
closing price on December 31, 2018 (last trading day of 2018)
of $1.44 per share of our common stock as reported on the Nasdaq
Global Market. The actual amount payable under these awards can
only be determined at the time the award would be paid.
|
|
(3) |
Includes long-term time-based cash award estimated to
be payable pursuant to the terms of Mr. Vadapalli’s Agreement
on December 31, 2018.
|
|
(4) |
Assumes COBRA health insurance coverage is reimbursed
for the 12-month period
following termination and reimbursement of up to $50,000 each for
realtor commission and relocation costs within the contiguous
United States are paid.
|
|
(5) |
Assumes COBRA health insurance coverage is reimbursed
for the maximum period of 24-months following termination, and
reimbursement of $50,000 each for realtor commission and relocation
costs within the contiguous United States are paid.
|
|
(6) |
Upon a change in control, payments (or portions
thereof) to Mr. Vadapalli determined to constitute an “excess
parachute payment” may be reduced to the maximum amount that would
be tax deductible by the Company pursuant to Sections 280G and 4999
of the Code. Upon a hypothetical December 31, 2018 change in
control, this amount would have been reduced to reflect the maximum
amount that would be tax deductible by the Company pursuant to
Sections 280G and 4999 of the Code. Based upon our internal review
of the estimated payment amounts, we believe that no payments to
Mr. Vadapalli would have been subject to reduction under
Sections 280G and 4999 of the code.
|
Other NEOs
Laurie M. Butcher
Ms. Butcher serves as our Senior Vice President, Finance. Her
2018 compensation through September 31, 2018 included an
annual base salary of $223,200 and a target annual cash incentive
of $133,920. Effective October 1, 2018 Ms. Butcher’s
annual base salary was increased to $255,000 and a related increase
in annual cash incentive to $153,000. Ms. Butcher is also
eligible to receive long-term compensation consisting of equity and
cash awards with a total grant value equal to approximately 80% of
her base salary.
Leonard A. Steinberg
Mr. Steinberg serves as our Senior Vice President, Legal,
Regulatory and Government Affairs and Corporate Secretary. His 2018
compensation included an annual base salary of $267,840 and a
target annual cash incentive of $160,704. Mr. Steinberg is
eligible also to receive long-term incentive compensation
consisting of equity and cash awards with a total grant value of
approximately 100% of his base salary.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|37 |
Randy M. Ritter
Mr. Ritter served as our Senior Vice President, Shared
Services. His 2018 compensation included an annual base salary of
$247,164 and a target annual cash incentive of $148,298.
Mr. Ritter is also eligible to receive annual long-term
incentive compensation consisting of awards of equity and
performance cash with a total grant value of approximately 82% of
his base salary.
William H. Bishop
Mr. Bishop served as our Senior Vice President, Customer and
Revenue Management in 2018. Effective April 9, 2019, he was
promoted to Senior Vice President and Chief Operations Officer. His
2018 compensation included an annual base salary of $247,164 and a
target annual cash incentive of $148,298. Mr. Bishop is also
eligible to receive annual long-term incentive compensation
consisting of awards of equity and performance cash with a total
grant value of approximately 80% of his base salary.
Generally Available Benefits
The NEOs are also eligible to receive other benefits including paid
time off, participation in the Company’s health and welfare plans,
401(k) retirement investment plan, employee stock purchase plan and
pension plan that are generally available to substantially all of
our employees.
Severance and Other Benefits for our NEOs, other than the
CEO
Upon a termination by the Company “without cause” or resignation by
the NEO for “good reason”, our NEOs are entitled to
post-termination severance pay and benefits in accordance with the
Company’s Officer Severance Policy. Severance pay and benefits
include a cash payment of 1.6 times the NEO’s annual base salary
and reimbursement for federal COBRA health insurance coverage for
the NEO and the NEO’s family for up to one year. Unless otherwise
provided, NEOs are not eligible for vesting of any unvested equity
compensation.
In the event the NEO’s employment is terminated by the Company
“without cause” or the NEO resigns for “good reason” in connection
with a change in control of the Company, severance pay and benefits
include a cash payment of two times the NEO’s annual base salary,
reimbursement for federal COBRA health insurance coverage for the
NEO and the NEO’s family for up to one year under certain
circumstances, and accelerated vesting or pay out of all unvested
long-term incentive awards, whether equity or cash, held by the NEO
at the time of termination of the NEO’s employment. The receipt of
severance pay and benefits by the NEO is subject to compliance with
customary non-competition
and non-solicitation
covenants during the period that the NEO is entitled to receive
such benefits.
In the event of the death or disability of the NEO while employed
by the Company, the NEO or the NEO’s estate would be eligible to
receive a prorated annual cash incentive payment. For awards made
pursuant to the 2016, 2017 and 2018 PSU award agreements, following
a termination of employment due to death or disability, outstanding
unvested PSUs awarded shall continue to remain eligible to vest
based on the achievement of the applicable performance target as if
the NEO had remained employed over the applicable performance
vesting period. Additionally, under the RSU award agreements for
2016, 2017 and 2018, RSUs awarded shall be accelerated and vest
after termination of employment due to normal retirement, death or
disability.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|38 |
The following table sets forth the payments and benefits our NEOs,
other than Mr. Vadapalli, would have received, assuming a
termination of employment in the following scenarios on
December 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Termination Without
Cause or Resignation
for Good Reason |
|
|
|
|
Death or Disability |
|
|
|
|
Termination without
Cause or Resignation
for Good Reason In
Connection with
Change in Control |
|
|
|
Laurie M. Butcher |
|
Severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary Component
|
|
$ |
408,000 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
510,000 |
|
|
|
|
|
Annual Incentive Component
|
|
|
143,447 |
|
|
|
|
|
143,447 |
|
|
|
|
|
143,447 |
|
|
|
|
|
Long-Term
Performance Cash |
|
|
- |
|
|
|
|
|
31,886 |
|
|
(1) |
|
|
31,886 |
|
|
(1) |
|
|
Accelerated Vesting of Equity |
|
|
- |
|
|
|
|
|
322,536 |
|
|
(2) |
|
|
322,536 |
|
|
(2) |
|
|
Long-Term Time
Based Cash |
|
|
- |
|
|
|
|
|
54,628 |
|
|
(3) |
|
|
54,628 |
|
|
(3) |
|
|
Other Benefits |
|
|
22,090 |
|
|
(4) |
|
|
- |
|
|
|
|
|
22,090 |
|
|
(4) |
|
|
|
|
|
Total |
|
$ |
573,537 |
|
|
|
|
$ |
552,497 |
|
|
|
|
$ |
1,084,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard A.
Steinberg |
|
Severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary Component
|
|
$ |
428,545 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
535,682 |
|
|
|
|
|
Annual Incentive Component
|
|
|
164,555 |
|
|
|
|
|
164,555 |
|
|
|
|
|
164,555 |
|
|
|
|
|
Long-Term
Performance Cash |
|
|
47,830 |
|
|
(1) |
|
|
47,830 |
|
|
(1) |
|
|
47,830 |
|
|
(1) |
|
|
Accelerated Vesting of Equity |
|
|
479,517 |
|
|
(2) |
|
|
479,517 |
|
|
(2) |
|
|
479,517 |
|
|
(2) |
|
|
Long-Term Time
Based Cash |
|
|
81,942 |
|
|
(3) |
|
|
81,942 |
|
|
(3) |
|
|
81,942 |
|
|
(3) |
|
|
Other Benefits |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
Total |
|
$ |
1,202,389 |
|
|
|
|
$ |
773,843 |
|
|
|
|
$ |
1,309,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy M.
Ritter |
|
Severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary Component
|
|
$ |
394,320 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
492,900 |
|
|
|
|
|
Annual Incentive Component
|
|
|
151,413 |
|
|
|
|
|
151,413 |
|
|
|
|
|
151,413 |
|
|
|
|
|
Long-Term
Performance Cash |
|
|
- |
|
|
|
|
|
36,969 |
|
|
(1) |
|
|
36,969 |
|
|
(1) |
|
|
Accelerated Vesting of Equity |
|
|
- |
|
|
|
|
|
370,521 |
|
|
(2) |
|
|
370,521 |
|
|
(2) |
|
|
Long-Term Time
Based Cash |
|
|
- |
|
|
|
|
|
63,333 |
|
|
(3) |
|
|
63,333 |
|
|
(3) |
|
|
Other Benefits |
|
|
22,027 |
|
|
(4) |
|
|
- |
|
|
|
|
|
22,027 |
|
|
(4) |
|
|
|
|
|
Total |
|
$ |
567,760 |
|
|
|
|
$ |
622,236 |
|
|
|
|
$ |
1,137,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H.
Bishop |
|
Severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary Component
|
|
$ |
394,320 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
492,900 |
|
|
|
|
|
Annual Incentive Component
|
|
|
151,413 |
|
|
|
|
|
151,413 |
|
|
|
|
|
151,413 |
|
|
|
|
|
Long-Term
Performance Cash |
|
|
- |
|
|
|
|
|
35,208 |
|
|
(1) |
|
|
35,208 |
|
|
(1) |
|
|
Accelerated Vesting of Equity |
|
|
- |
|
|
|
|
|
350,708 |
|
|
(2) |
|
|
350,708 |
|
|
(2) |
|
|
Long-Term Time
Based Cash |
|
|
- |
|
|
|
|
|
60,318 |
|
|
(3) |
|
|
60,318 |
|
|
(3) |
|
|
Other Benefits |
|
|
7,819 |
|
|
(4) |
|
|
- |
|
|
|
|
|
7,819 |
|
|
(4) |
|
|
|
|
|
Total |
|
$ |
553,552 |
|
|
|
|
$ |
597,647 |
|
|
|
|
$ |
1,098,366 |
|
|
|
(1) |
Includes accelerated payment of long-term performance
cash awards estimated to be payable pursuant to the terms of the
Award Agreement or Officer Severance Agreement, based on
performance at target. The actual amount payable under these awards
can be determined only at the time the award would be paid.
|
(2) |
Includes RSU and PSU awards estimated to be payable in
connection with a change in control pursuant to the terms of the
Officer Severance Agreement on December 31, 2018. The amount
was calculated using 100% of the total number of unvested units,
assuming the achievement of performance goals would have been
unknown, multiplied by the closing price on December 31, 2018
(last trading day of 2018) of $1.44 per share of our common stock
as reported on the Nasdaq Global Market. The actual amount payable
under these awards can only be determined at the time the award
would be paid.
|
(3) |
Includes accelerated payment of long-term time-based
cash award estimated to be payable pursuant to the terms of the
Award Agreement or Officer Severance Agreement, as applicable, on
December 31, 2018.
|
(4) |
Assumes COBRA health insurance coverage is reimbursed
for the 12-month period
following termination.
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|39 |
|
|
|
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING
FIRM
|
|
 |
Our Audit Committee unanimously approved the appointment of Moss
Adams LLP (“Moss Adams”) to be our independent registered public
accounting firm for the fiscal year ending December 31, 2019.
Although it is not required to do so, the Board is submitting the
Audit Committee’s appointment of our independent registered public
accounting firm for ratification by the stockholders at the Annual
Meeting to ascertain the view of the stockholders regarding this
selection.
The Audit Committee is not required to take any action based on the
outcome of the vote on this Proposal 3; however, in the event the
stockholders fail to ratify the appointment, the Audit Committee
will reconsider its appointment of Moss Adams as the Company’s
independent registered public accounting firm for the fiscal year
ending December 31, 2019. Even if the appointment is ratified,
the Audit Committee may, in its discretion, direct the appointment
of a different independent registered public accounting firm at any
time during the year if the Audit Committee determines that such a
change would be in the best interests of the Company and its
stockholders.
The Company expects that a representative of Moss Adams will be
present at the 2019 Annual Meeting and will have the opportunity to
make a statement and be available to respond to appropriate
questions by stockholders.
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 Company’s independent registered public accounting
firm.
The following table summarizes the fees billed to us by Moss Adams
for services rendered in connection with fiscal years 2018 and
2017, respectively:
|
|
|
|
|
|
|
|
|
|
|
2018 (3) |
|
|
2017 (3) |
|
Audit Fees (1) |
|
$ |
646,570 |
|
|
$ |
709,398 |
|
Audit Related
Fees (2) |
|
|
18,665 |
|
|
|
19,000 |
|
Tax Fees |
|
|
- |
|
|
|
- |
|
All Other
Fees |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
665,235 |
|
|
$ |
728,398 |
|
|
|
|
|
|
|
|
|
|
|
(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, reviews and assessment of our
internal control over financial reporting, services for SEC
filings, and accounting consultations on matters reflected in the
financial statements.
|
|
(2) |
Audit-Related Fees consist of the audit of certain of
our post-retirement benefit plans.
|
|
(3) |
Fees in 2018 and 2017 included incremental charges
associated with the Company’s adoption of ASC 606, Revenue from
Contracts with Customers, and other items.
|
Audit Committee Pre-Approval Policies and
Procedures
The Audit Committee is responsible for appointing, setting
compensation for and overseeing the work of the independent
auditors. The Audit Committee has established a policy requiring
pre-approval of all audit
and permissible non-audit
services provided by the independent auditor. Before the
independent auditor is engaged by the Company or its subsidiaries
to render audit or non-audit services, the Audit Committee
pre-approves the
engagement. Audit Committee pre-approval of audit and non-audit services will not be required
if the engagement for the services is entered into pursuant to
pre-approval policies and
procedures established by the Audit Committee regarding the
Company’s engagement of the independent auditor, provided the
policies and procedures are detailed as to the particular service,
the Audit Committee is informed of each service provided and such
policies and procedures do not include delegation of the Audit
Committee’s responsibilities under the
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|40 |
Exchange Act to the Company’s management. The Audit Committee may
delegate authority to grant pre-approvals to one or more of its
designated members provided such approvals are presented to the
full Audit Committee at a subsequent meeting. If the Audit
Committee elects to establish pre-approval policies and procedures
regarding non-audit
services, the Audit Committee must be informed of each non-audit service provided by the
independent auditor. Audit Committee pre-approval of non-audit services (other than review
and attest services) will not be required if such services fall
within available exceptions established by the SEC.
Vote Required. For this proposal to be approved, it must
receive the affirmative vote of a majority of the votes cast.
Recommendation of the Board
The Board believes that Proposal 3 is in the Company’s best
interest and unanimously recommends a vote FOR the ratification of
the appointment of Moss Adams to serve as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2019.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|41 |
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 oversees the quality of the Company’s financial
reporting process on behalf of the Board. It assists the Board in
fulfilling its oversight responsibilities to the stockholders
relating to the Company’s 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 Company’s 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 Company’s
independent registered public accounting firm is responsible for
expressing an opinion as to the conformity of the Company’s audited
financial statements with accounting principles generally accepted
in the United States of America and the effectiveness of the
Company’s internal controls over financial reporting.
The Audit Committee has discussed and reviewed with its independent
registered public accounting firm, Moss Adams, for the fiscal year
ended December 31, 2018, all matters required to be discussed
under the rules adopted by the Public Company Accounting Oversight
Board (United States).
The Audit Committee has received from Moss Adams a formal written
statement describing all relationships between Moss Adams and the
Company that might bear on the auditor’s independence as required
by applicable requirements of the Public Company Accounting
Oversight Board and discussed with Moss Adams any relationships
that may impact their objectivity and independence and satisfied
itself as to Moss Adams’ independence.
The Audit Committee has met with Moss Adams, with and without
management present, as deemed appropriate, to discuss the overall
scope of Moss Adams’ quarterly reviews and annual audit of the
Company’s financial statements, the results of its examinations,
its evaluations of the Company’s internal controls and the overall
quality of its financial reporting. The Audit Committee has met and
discussed with management and Moss Adams the quarterly financial
information and statements and the annual audited financial
statements prior to the release of that information and the filing
of the Company’s 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 that the audited financial
statements be included in the Company’s Annual Report on Form
10-K for the year ended
December 31, 2018, filed with the SEC on March 11,
2019.
Submitted by,
Peter D. Ley, Chair
Edward (Ned) J. Hayes, Jr.
Robert M. Pons
Brian A. Ross
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|42 |
The following line graph compares the cumulative total stockholder
return on our common stock from December 31, 2013 through
December 31, 2018 with the cumulative total return of the
S&P 500, and the cumulative total return of the Nasdaq
Telecommunications Index. The graph assumes an initial investment
of $100 in our common stock and in each of the S&P 500, and
Nasdaq Telecommunications indices on December 31, 2013, and
assumes that dividends, if any, were reinvested.

|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
Alaska
Communications Systems Group, Inc. |
|
Cum $ |
|
|
|
|
100.00 |
|
|
|
84.43 |
|
|
|
82.55 |
|
|
|
77.36 |
|
|
|
126.41 |
|
|
|
67.92 |
|
|
|
|
|
|
|
|
|
S&P 500 Index
- Total Returns |
|
Cum
$ |
|
|
|
|
100.00 |
|
|
|
113.69 |
|
|
|
115.26 |
|
|
|
129.05 |
|
|
|
157.22 |
|
|
|
150.32 |
|
|
|
|
|
|
|
|
|
NASDAQ
Telecommunications Index |
|
Cum
$ |
|
|
|
|
100.00 |
|
|
|
105.16 |
|
|
|
101.98 |
|
|
|
116.62 |
|
|
|
135.40 |
|
|
|
119.21 |
|
Other Business Matters
We do not know of any matters that will 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 on those matters at
their discretion.
|
STOCKHOLDER PROPOSALS AND
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
|
If you wish to submit a proposal to be considered for inclusion in
our 2020 Proxy Statement and acted upon at the 2020 annual meeting
of stockholders pursuant to SEC Rule 14a-8, materials must be received by
the Corporate Secretary of Alaska Communications Systems Group,
Inc. at 600 Telephone Avenue, MS 65, Anchorage, Alaska 99503, by
registered, certified, or express mail no later than
December 21, 2019. Stockholder proposals outside the process
of Rule 14a-8 and
stockholder nominees for director must be received by the Company
on or after December 31, 2019 and on or before
January 30, 2020. If the date of the 2020 annual meeting of
stockholders is advanced by more than 30 days from the anniversary
date of the Annual Meeting, notice by the stockholder to be timely
must be delivered by the Company not later than the close of
business on the later of (i) the 120th day prior to such 2020
annual meeting of the stockholders or (ii) the 10th day
following the day on which the Public
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|43 |
Disclosure (as defined in the Company’s By-laws) of the date of such Annual
Meeting is first made. The requirements for such notice are set
forth in our By-laws found
on our website at www.alsk.com .
Stockholders may communicate with the Company’s directors at any
time by U.S. mail addressed to one or more directors, the Board, or
any committee of the Board, c/o Corporate Secretary; 600 Telephone
Avenue, MS 65; 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.
Annual Report to Stockholders
We are providing a copy of our Annual Report on Form 10-K for the year ended
December 31, 2018, together with this Proxy Statement to
stockholders of record as of April 5, 2019. Our Annual Report
on Form 10-K together with
this Proxy Statement, forms our annual report to security holders
within the meaning of SEC rules. Any stockholder who desires an
additional copy 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, MS 65,
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.
Quorum and Effect of Abstentions and Broker Non-Votes
The presence, in person or by proxy, of stockholders holding shares
constituting a majority of the voting power of all the then
outstanding shares of common stock of the Company entitled to vote
generally in the election of directors shall constitute a quorum.
If a quorum is not present at the Annual Meeting, the chair of the
Annual Meeting 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 and it does not have the discretionary authority to vote
without instructions on a particular matter because the matter is
not a routine matter under Nasdaq rules.
In tabulating the voting result for any particular proposal, shares
that constitute broker non-votes or abstentions are not
considered votes cast on a proposal, and therefore, broker
non-votes and abstentions
will not affect the outcome of any matter being voted on at the
Annual Meeting.
About this Proxy Statement
Our Board has made this Proxy Statement available to you to solicit
your vote at the Annual Meeting including any adjournment(s) or
postponement(s) or adjourned meeting held thereafter. This Proxy
Statement contains summarized information required to be provided
to stockholders under rules promulgated by the SEC and is designed
to assist stockholders in voting their shares.
The SEC’s rules permit us to deliver a single Notice of Internet
Availability or set of Annual Meeting materials to one address
shared by two or more of our stockholders. This procedure is known
as “householding.” Although we do not “household” for registered
stockholders, a number of brokerage firms have instituted
householding for shares held in street name. This procedure reduces
our printing and mailing costs and fees. Stockholders who
participate in householding will continue to receive separate proxy
cards, and householding will not affect the mailing of account
statements or special notices in any way. If you share an address
with another stockholder and received only a single copy of our
Annual Report, Proxy Statement or Notice of Internet Availability,
we will deliver a separate copy upon request to: Corporate
Secretary, Alaska Communications Systems Group, Inc., 600 Telephone
Avenue, MS 65, Anchorage, Alaska 99503. If you wish to receive
separate copies of our Annual Report, Proxy Statement or Notice of
Internet Availability in the future, please contact the bank,
broker or other nominee through which you hold your shares. If you
share an address and wish to receive a single copy of our Annual
Report, Proxy Statement or Notice of Internet Availability in the
future, please contact the bank, broker, or other nominee through
which you hold your shares.
The Inspector of Elections appointed for the Annual Meeting will
act as tabulator of the votes and will determine whether a quorum
is present.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|44 |
Attending the Annual Meeting
If you attend the Annual Meeting, you will be asked to present
photo identification, such as a driver’s license. If you are a
holder of record, the top half of your proxy card or your Notice of
Internet Availability is your admission ticket. If you hold your
shares in street name, you will need proof of ownership to be
admitted to the Annual Meeting. A recent brokerage statement or a
letter from your bank or broker are examples of proof of ownership.
If you want to vote your shares held in street name in person, you
must get a legal proxy in your name from the broker, bank or other
nominee that holds your shares.
Costs of Proxies
Alaska Communications Systems Group, Inc. is soliciting proxies and
will bear the cost of solicitation. In addition to mailing a
Notice of Internet Availability or this Proxy Statement to
you, we may also make additional solicitations by telephone,
facsimile or other forms of communication. Proxies may be solicited
on behalf of the Board by the Company’s directors and certain
executive officers, without additional compensation.
Incorporation by Reference
To the extent that this Proxy Statement has been or will be
specifically incorporated by reference into any other filing of
Alaska Communications Systems Group, Inc. under the Securities Act
of 1933, as amended, or the Exchange Act, the sections of this
Proxy Statement entitled “Audit Committee Report” (to the extent
permitted by the rules of the SEC) shall not be deemed to be so
incorporated, unless specifically provided otherwise in such
filing.
Non-GAAP Financial
Measures and Performance Metrics
The following is a summary of certain of our non-GAAP financial measures and
performance metrics.
|
● |
|
Adjusted EBITDA is a non-GAAP measure and our measurement of
Adjusted EBITDA may differ from other companies. Adjusted EBITDA
eliminates the effects of period to period changes in costs that
are not directly attributable to the underlying performance of the
Company’s business operations and is used by management and the
Board to evaluate current operating financial performance. For the
calculation of Adjusted EBITDA and a reconciliation of Adjusted
EBITDA to the GAAP measure of net income, please refer to our
Annual Report on Form 10-K
for the year ended December 31, 2018. Further adjustments to
Adjusted EBITDA for purposes of calculating achievement include the
following: budgeted revenue and budgeted bad debt expense
associated with the Rural Health Care program were substituted for
the relevant actual results. Additionally, cash based long-term
incentive payments and Board compensation expense resulting from
the conversion of equity to cash were excluded from the calculation
of Adjusted EBITDA achieved for purposes of the annual cash
incentive.
|
|
● |
|
Adjusted EBITDA per share is a non-GAAP measure and is calculated as
Adjusted EBITDA (further adjusted in 2018 as described above)
divided by weighted average shares outstanding.
|
|
● |
|
Adjusted Free Cash Flow is a non-GAAP measure and is calculated as
Adjusted EBITDA, less recurring operating cash requirements. For
the calculation of Adjusted Free Cash flow and a reconciliation of
Adjusted Free Cash Flow to the GAAP measure of net cash provided by
operating activities, please refer to our Annual Report on Form
10-K for the year ended
December 31, 2018.
|
|
● |
|
Adjusted Free Cash Flow per share is a non-GAAP measure and is calculated as
Adjusted Free Cash Flow divided by weighted average shares
outstanding.
|
|
● |
|
Adjusted Operating Cash Flow is a non-GAAP measure and is calculated as
Adjusted EBITDA less cash interest expense.
|
|
● |
|
Net Promoter Score ® (“NPS”) is a
measure of customer satisfaction determined through customer
satisfaction surveys that ask business customers, on a scale of
zero to ten, how likely they are to recommend Alaska Communications
to a friend or colleague. Business NPS is calculated using
responses from enterprise and small and medium business customers
equally weighted. We use a third-party vendor to conduct the
surveys and report customer responses.
|
|
● |
|
Total Revenue is a GAAP measure as reported in our Annual
Report on Form 10-K for the
year ended December 31, 2018 and includes business and
wholesale revenue, consumer revenue, and regulatory revenue.
Further adjustment of Total Revenue results for purposes of
calculating achievement included
|
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|45 |
|
the following: budgeted revenue associated with the Rural Health
Care program was substituted for the relevant actual results.
|
|
● |
|
Total Revenue per share is calculated as Total Revenue
(further adjusted in 2018 as described above) divided by weighted
average shares outstanding.
|
Caution Concerning Forward-Looking Statements
This document contains “forward-looking statements” that are
statements related to future events that by their nature address
matters that are, to different degrees, uncertain. For details on
the uncertainties that may cause our actual future results to be
materially different than those expressed in our forward-looking
statements, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. This document may
also include certain forward-looking projected financial
information that is based on current estimates and forecasts.
Actual results could differ materially.
|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|46 |
|
DIRECTIONS TO THE ANNUAL
MEETING
|
The 2019 Annual Meeting of Stockholders of Alaska Communications
Systems Group, Inc. will be held on May 29, 2019, beginning at
9:00 a.m. Alaska daylight time, at the Alaska Communications
Business Technology Center located at 600 East 36 th Avenue, Anchorage,
Alaska. Doors to the Annual Meeting will open at 8:30 a.m.
Directions from Ted Stevens International Airport to the Annual
Meeting at 600 East 36th Avenue:
|
1. |
From the Airport (marked on map with an airplane),
head East on W. International Airport Road.
|
|
2. |
Continue along W. International Airport Road for 2.2
miles
|
|
3. |
Use the right lane to take the Minnesota Drive N. ramp
toward downtown.
|
|
4. |
Merge onto Minnesota Drive/Walter J. Hickel
Parkway.
|
|
5. |
Turn right onto W. Tudor Road.
|
|
6. |
Use the left 2 lanes to turn left onto C street.
|
|
7. |
Continue as C street becomes A street.
|
|
8. |
Turn right into E. 36 th Avenue.
|
|
9. |
Arrive at the Alaska Communications Business
Technology Center on your right, at 600 East 36 th Avenue.
|

|
Notice of Annual Meeting of
Stockholders and 2019 Proxy Statement|47 |

|
|
|
ANNUAL MEETING OF STOCKHOLDERS OF
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
Date: |
|
May 29, 2019 |
Time: |
|
9:00
A.M. (Alaska Daylight Time) |
Place: |
|
Alaska
Communications Business Technology Center |
|
|
600
East 36 th
Avenue Anchorage, Alaska 99503 |
See Voting Instructions on Reverse Side.
|
Please make your marks like this: ☒ Use dark
black pencil or pen only
Board of Directors recommends a vote FOR ALL of the listed
nominees:
|
|
|
|
|
|
|
|
|
|
|
1:
|
|
Election of Directors.
The nominees are: |
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
Directors
Recommend
Ü
|
|
|
01
Peter D. Aquino |
|
☐ |
|
☐ |
|
☐ |
|
For |
|
|
02
Wayne Barr, Jr. |
|
☐ |
|
☐ |
|
☐ |
|
For |
|
|
03
David W. Karp |
|
☐ |
|
☐ |
|
☐ |
|
For |
|
|
04
Peter D. Ley |
|
☐ |
|
☐ |
|
☐ |
|
For |
|
|
05
Brian A. Ross |
|
☐ |
|
☐ |
|
☐ |
|
For |
|
|
06
Anand Vadapalli |
|
☐ |
|
☐ |
|
☐ |
|
For |
Board of Directors recommends a vote FOR Proposals 2 &
3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
|
|
|
2:
|
|
Advisory vote to approve executive
compensation. |
|
☐ |
|
☐ |
|
☐ |
|
|
|
For |
3:
|
|
Ratification of the appointment of Moss
Adams LLP as our independent registered public accounting firm for
the year ending December 31, 2019. |
|
☐ |
|
☐ |
|
☐ |
|
|
|
For |
|
|
|
|
|
|
To consider any other business properly
brought before the Annual Meeting or any adjournment or
postponement. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized Signatures - This section must be
completed for your instructions to be executed.
|
|
|
|
|
|
Please Sign Above |
|
Please Date Above |
|
|
|
Please Sign Above
(Joint Owners)
|
|
Please Date Above |
Please sign exactly as your name(s) appears on your stock
certificate. 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 officer signing the proxy.


Annual Meeting of Stockholders
to be held on Tuesday, May 29, 2019
for Stockholders as of April 5, 2019
This proxy is being solicited on behalf of the
Board of Directors
|
|
|
|
|
|
|
|
|
VOTE BY: |
|

|
|
|
INTERNET
|
|
|
|
TELEPHONE
|
|
|
|
|
Go To |
|
|
|
|
|
|
www.proxypush.com/alsk |
|
|
|
866-390-5401
|
|
|
|
|
|
• Cast your vote online.
|
|
OR |
|
• Use any touch-tone telephone.
|
• View Meeting Documents.
|
|
|
|
• Have your Proxy Card/Voting Instruction Form ready.
|
|
|
|
|
• Follow the simple recorded instructions.
|
|
|
|
|
|
MAIL |
|
|
|
|
|
OR |
|
• Mark, sign and date your Proxy Card/Voting Instruction Form.
|
|
|
• Detach your Proxy Card/Voting Instruction Form.
|
|
|
• Return your Proxy Card/Voting Instruction Form in the
postage-paid envelope provided.
|
By signing, dating and returning this proxy card,
the undersigned appoints Leonard A. Steinberg and Laurie M.
Butcher, or either of them, as proxies, each with the power to
appoint his or her substitute, and hereby authorizes them, or
either of them, to represent and to vote, and otherwise act on
behalf of the undersigned with all powers that the undersigned
would have if personally present thereat, with respect to, all of
the shares of common stock of Alaska Communications Systems Group,
Inc., a Delaware corporation (the “Company”), that the undersigned
is entitled to vote at the 2019 Annual Meeting of Stockholders (the
“2019 Annual Meeting”) to be held at 9:00 A.M. Alaska Daylight Time
on May 29, 2019 and any adjournment, postponement, continuation or
rescheduling thereof. The undersigned hereby revokes any other
proxy heretofore given by the undersigned for the 2019 Annual
Meeting, including any proxy previously given by telephone or
internet, and acknowledges receipt of the Notice of the 2019 Annual
Meeting and proxy statement dated April 19, 2019.
All proxies must be received by 5:00 P.M.,
Eastern Daylight Time Tuesday, May 28, 2019.
All proxies for Alaska Communications plan
participants must be received by 5:00 P.M.,
Eastern Daylight Time Wednesday, May 22,
2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
PROXY TABULATOR FOR |
|
|
|
|
|
|
ALASKA COMMUNICATIONS |
|
|
|
|
|
|
P.O. BOX 8016 |
|
|
|
|
|
|
CARY, NC 27512-9903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|

Revocable Proxy — Alaska Communications Systems Group,
Inc.
Annual Meeting of Stockholders on May 29, 2019
beginning at 9:00 A.M. (Alaska Daylight Time)
This Proxy is Solicited on Behalf of the Board of
Directors.
By signing, dating and returning this proxy card, the undersigned
appoints Leonard A. Steinberg and Laurie M. Butcher, or either of
them, as proxies, each with the power to appoint his or her
substitute, and hereby authorizes them, or either of them, to
represent and to vote, and otherwise act on behalf of the
undersigned with all powers that the undersigned would have if
personally present thereat, with respect to, all of the shares of
common stock of Alaska Communications Systems Group, Inc., a
Delaware corporation (the “Company”), that the undersigned is
entitled to vote at the 2019 Annual Meeting of Stockholders (the
“2019 Annual Meeting”) to be held at 9:00 A.M. Alaska Daylight Time
on May 29, 2019 and any adjournment, postponement, continuation or
rescheduling thereof. The undersigned hereby revokes any other
proxy heretofore given by the undersigned for the 2019 Annual
Meeting, including any proxy previously given by telephone or
internet, and acknowledges receipt of the Notice of the 2019 Annual
Meeting and proxy statement dated April 19, 2019.
The proxy holder is authorized to act, in accordance with his or
her discretion, upon all matters incident to the conduct of the
meeting and upon other matters that properly come before the 2019
Annual Meeting, subject to compliance with Rule 14a-4(c) of the
Securities Exchange Act of 1934, as amended. Subject to the
conditions set forth in the proxy statement, if any nominee named
on the reverse side declines or is unable to serve as a director,
the persons named as proxies shall have the authority to vote for
any other person who may be nominated at the instruction and
discretion of the Board of Directors or an authorized committee
thereof. This proxy, when properly executed, will be voted in the
manner directed herein. Unless a contrary direction is given, the
shares represented by this proxy will be voted “FOR” all nominees
listed in Proposal 1, “FOR” Proposal 2 and “FOR” Proposal 3.
Continued and to be signed on reverse side
Alaska Communications Sy... (NASDAQ:ALSK)
Historical Stock Chart
From Dec 2020 to Jan 2021
Alaska Communications Sy... (NASDAQ:ALSK)
Historical Stock Chart
From Jan 2020 to Jan 2021