SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]
|
Preliminary Proxy Statement
|
[ ]
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
[X]
|
Definitive Proxy Statement
|
[ ]
|
Definitive Additional Materials
|
[ ]
|
Soliciting Material Under Rule 14a-12
|
Iowa
Telecommunications Services, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ]
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
1)
|
Title of each class of securities to which transaction applies:
|
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:
|
[ ]
|
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.:
|
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 2009
To Our Shareholders:
The 2009 annual
meeting of shareholders of Iowa Telecommunications Services, Inc. (Iowa Telecom) will be held at the offices of the Company, 403 W. Fourth Street North, Newton, Iowa 50208 on Thursday, June 11, 2009 at 10:00 AM central time. At the
meeting, shareholders will act on the following matters:
|
1.
|
Election of three directors to serve as Class II directors whose terms will expire in 2012 (Proposal No. 1);
|
|
2.
|
Approval of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm, hereinafter referred to as independent auditors, for the year
ending December 31, 2009 (Proposal No. 2); and
|
|
3.
|
Any other matters that properly come before the meeting.
|
Only shareholders of record at the close of business on April 28, 2009 are entitled to vote at the meeting or at any postponement or adjournment of
the meeting.
We hope that as many shareholders as possible
will personally attend the meeting. Whether or not you plan to attend the meeting, please complete the enclosed proxy card and sign, date and return it promptly so that your shares will be represented. Sending in your proxy will not prevent you from
voting in person at the meeting.
|
By Order of the Board of Directors,
|
|
|
Donald G. Henry
|
Vice President, General Counsel and Secretary
|
April 28, 2009
Important Notice Regarding the Availability of
Proxy Materials for the Annual Meeting of Shareholders to be held on June 11, 2009
This Notice of Annual Meeting of Shareholders is accompanied by and is a part of our proxy statement. Financial and other information
concerning Iowa Telecom is contained in our 2008 Annual Report to Shareholders, which also accompanies this proxy statement. The 2008 Annual Report to Shareholders includes a copy of our Annual Report on Form 10-K for the year ended
December 31, 2008. A proxy card is also enclosed.
This proxy statement and our 2008 Annual Report to Shareholders are available on our website at www.iowatelecom.com. You may obtain assistance with directions to attend the annual meeting and vote in person from our investor relations
department by calling (641) 787-2089, by sending an e-mail request from our website at
www.iowatelecom.com
or directly to
InvestorRelations@iowatelecom.com
, or by writing to Investor Relations at Iowa Telecommunications Services,
Inc., 403 W. Fourth Street North, P.O. Box 1046, Newton, Iowa 50208-1046.
TABLE OF CONTENTS
i
ii
Iowa Telecommunications Services, Inc.,
403 W. Fourth Street North,
Newton, Iowa 50208
PROXY STATEMENT
This proxy statement contains information related to the annual meeting of
shareholders of Iowa Telecommunications Services, Inc. (Iowa Telecom or the Company) to be held on Thursday, June 11, 2009, beginning at 10:00 AM central time, at the offices of the Company, 403 W. Fourth Street North,
Newton, Iowa 50208, and at any postponement or adjournment of the meeting. The approximate date of mailing for this proxy statement and proxy card as well as a copy of Iowa Telecoms 2008 Annual Report is April 28, 2009.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At Iowa Telecoms annual meeting, shareholders will act upon the
matters outlined in the accompanying notice of meeting, including:
|
|
|
the election of three directors to serve as Class II directors whose terms will expire in 2012; and
|
|
|
|
the approval of the appointment of Deloitte & Touche LLP as our independent auditors.
|
In addition, management will report on our performance during 2008 and
respond to questions from shareholders.
Who is
entitled to vote?
Only shareholders of record at the
close of business on the record date, April 28, 2009, are entitled to receive notice of the annual meeting and to vote the shares of common stock that they held on that date at the meeting, or any postponement or adjournment of the meeting.
Each outstanding share entitles its holder to cast one vote on each matter to be voted upon.
Who can attend the meeting?
All shareholders as of the record date, or their duly appointed proxies, may attend the meeting. Cameras, recording devices and other electronic devices will not be permitted at the meeting. If you hold your shares in
street name (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date and check in at the registration desk at the meeting.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will constitute a quorum, permitting the meeting to conduct its business. As of April 28, 2009, the record date, 32,699,735 shares of Iowa Telecoms common stock were
outstanding. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered present at the meeting.
1
How do I vote?
The proxy card delivered to you with this proxy statement will be voted at the annual meeting as you direct on the card if
you sign the card in the manner indicated on the card and return it to us in the envelope provided for that purpose. If you are a registered shareholder as of the record date and attend the meeting, you may deliver your completed proxy card in
person. If you are a street name shareholder, you should refer to the information forwarded by your bank, broker or other holder of record to see the procedures for voting your shares. If you are a street name shareholder and
you wish to vote in person at the meeting, you will need to obtain a proxy from the institution that holds your shares and present it to the inspector of elections with your ballot when you vote at the annual meeting.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may
change your vote at any time before the proxy is exercised by filing with Iowa Telecoms Secretary either a notice of revocation or a duly executed proxy bearing a later date. If you are a street name shareholder, you may vote in
person at the annual meeting if you obtain a proxy as described in the answer to the previous question. The powers of the proxy holders with regard to your shares will be suspended if you attend the meeting in person and so request, although
attendance at the meeting will not by itself revoke a previously granted proxy.
Can I vote by telephone or electronically?
No. We have not instituted any mechanism for telephone or electronic voting. Street name shareholders, however, may be able to vote electronically through their bank, broker or other holder of record. If
so, instructions regarding electronic voting will be provided by the broker as part of the package which includes this proxy statement.
What are the boards recommendations?
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the
recommendations of the board of directors. The boards recommendation is set forth together with the description of each proposal in this proxy statement. In summary, the board recommends a vote:
|
|
|
for the election of the nominated slate of directors (see page 11 of this proxy statement); and
|
|
|
|
for the approval of the appointment of Deloitte & Touche LLP as Iowa Telecoms independent auditors (see page 36 of this proxy statement).
|
Pursuant to the provisions of Rule 14a-4(c)
promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), with respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the board of directors or, if no
recommendation is given, in their own discretion.
What vote is required to approve each item?
Election of directors
. The affirmative vote of a plurality of the votes cast at the meeting at which a quorum is present is required for the election of directors. A properly executed proxy card marked
WITHHOLD AUTHORITY or FOR ALL EXCEPT with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether
there is a quorum.
Other proposals
. For each other
proposal, the affirmative vote of the holders of a majority of the shares actually voting on the proposal will be required for approval. A properly executed proxy card marked
2
ABSTAIN with respect to any such matter will not be voted on such matter and will not affect the outcome of any matter, although it will be
counted for purposes of determining whether there is a quorum.
Broker non-votes
. Where brokers are prohibited from exercising discretionary authority for beneficial owners who have not provided voting instructions (commonly referred to as broker non-votes), such broker non-votes will
be treated as shares that are present for purposes of determining the presence of a quorum. Broker non-votes will not affect the outcome of any matter.
3
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and footnotes set forth the beneficial ownership of
Iowa Telecom common stock held by (i) each person or group of persons known to Iowa Telecom to beneficially own more than five percent (5%) of the outstanding shares of our common stock, (ii) each Iowa Telecom director,
(iii) each executive officer of Iowa Telecom named in the Summary Compensation Table on page 24 of this proxy statement, and (iv) Iowa Telecoms executive officers and directors as a group. The amounts and percentages of common stock
beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission (SEC) governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a
beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or
direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. The information in the following table and footnotes is
taken from or is based upon filings made by such persons with the SEC, or upon information provided by such persons. All information is as of April 28, 2009 unless otherwise noted.
|
|
|
|
|
|
Name and address of beneficial owner or identity of group
(1)
|
|
Aggregate
number of
shares
beneficially
owned
(2)
|
|
Percent of
shares
outstanding
(3)
|
|
Barclays Global Investors, N.A.
(4)
|
|
1,923,390
|
|
5.88
|
%
|
Kenneth R. Cole
|
|
2,000
|
|
*
|
|
Norman C. Frost
|
|
8,000
|
|
*
|
|
Brian G. Hart
|
|
5,000
|
|
*
|
|
H. Lynn Horak
|
|
2,000
|
|
*
|
|
Craig A. Lang
|
|
2,000
|
|
*
|
|
Kendrik E. Packer
|
|
20,078
|
|
*
|
|
Alan L. Wells
|
|
381,735
|
|
1.17
|
%
|
Craig A. Knock
|
|
148,383
|
|
*
|
|
Brian T. Naaden
|
|
69,609
|
|
*
|
|
Donald G. Henry
|
|
87,545
|
|
*
|
|
Dennis R. Kilburg
|
|
91,639
|
|
*
|
|
All executive officers and directors as a group (16 persons)
|
|
1,129,097
|
|
3.43
|
%
|
*
|
Represents less than 1% of Iowa Telecoms outstanding common stock.
|
(1)
|
Unless otherwise indicated below, the persons in the above table have sole voting and investment power with respect to all shares set forth opposite their names. The address of all
executive officers and directors is c/o Iowa Telecommunications Services, Inc., 403 W. Fourth Street North, Newton, Iowa 50208.
|
(2)
|
Includes the following numbers of shares subject to options to purchase common stock of Iowa Telecom which are currently exercisable or exercisable within 60 days of April 28,
2009 and shares of unvested restricted stock:
|
|
|
|
|
|
Name
|
|
Unexercised
Options (#)
|
|
Restricted
Stock (#)
|
Alan L. Wells
|
|
|
|
154,750
|
Craig A. Knock
|
|
25,000
|
|
105,125
|
Brian T. Naaden
|
|
11,232
|
|
48,750
|
Donald G. Henry
|
|
15,195
|
|
64,750
|
Dennis R. Kilburg
|
|
55,232
|
|
29,925
|
(3)
|
The applicable percentage of shares outstanding for each beneficial owner is calculated by dividing (i) the number of shares deemed to be beneficially owned by
such person as of April 28, 2009 by (ii) the sum of (A) the number of shares of common stock outstanding as of April 28, 2009 plus (B) the number of shares
|
4
|
issuable upon exercise of options held by such shareholder which were exercisable as of April 28, 2009 or which will become exercisable within 60 days
after April 28, 2009.
|
(4)
|
The address of Barclays Global Investors, N.A. (Barclays Investors) and of Barclays Global Fund Advisors (Barclays Advisors) is 400 Howard Street, San
Francisco, CA 94105. The information set forth in the table pertaining to Barclays Investors and in this footnote is as reported on a statement on Schedule 13G jointly filed on February 5, 2009 by Barclays Investors, Barclays Advisors, Barclays
Global Investors, LTD, Barclays Global Investors Japan Limited, Barclays Global Investors Canada Limited, Barclays Global Investors Australia Limited and Barclays Global Investors (Deutschland) AG (collectively, the Barclays Entities).
In their Schedule 13G, the Barclays Entities informed us that (a) they may be deemed the beneficial owners of shares of our common stock held by them in trust accounts for the economic benefit of the beneficiaries of those accounts,
(b) Barclays Investors has sole voting power over 760,458 shares and sole dispositive power over 807,143 shares of our common stock and (c) Barclays Advisors has sole voting power and sole dispositive power over 1,116,247 shares
of our common stock.
|
Section 16(a) beneficial ownership reporting compliance
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our common stock to file reports of
ownership and changes in ownership with the SEC. To Iowa Telecoms knowledge, based solely upon a review of filings with the SEC and written representations that no other reports were required, we believe that all of our executive officers,
directors and 10% shareholders complied during 2008 with the reporting requirements of Section 16(a) of the Exchange Act.
5
CORPORATE GOVERNANCE AND BOARD COMMITTEES
Are a majority of the directors independent?
The board of directors has determined that Messrs. Cole, Packer, Frost,
Lang, Horak and Hart are independent directors in accordance with Section 303A of the New York Stock Exchange (NYSE) corporate governance listing standards because none of them is believed to have any direct or indirect material
relationships that, in the opinion of the board, would interfere with the exercise of independent judgment in carrying out their responsibilities as a director. In addition, the board has adopted Corporate Governance Guidelines which conform to or
are more exacting than the NYSE listing standards and has determined that Messrs. Cole, Packer, Frost, Lang, Horak and Hart are independent under these guidelines. A copy of our Corporate Governance Guidelines may be found on our website at
www.iowatelecom.com
and is available in print to any shareholder who requests it. Mr. Wells is not considered independent under the NYSE listing standards because he currently serves as an executive officer of Iowa Telecom.
How are directors compensated?
We pay our non-employee directors an annual retainer consisting of a $25,000
cash payment and 1,000 shares of our common stock. Each non-employee director may elect to receive up to one-half of the cash payment in shares of our common stock. Non-employee directors also are paid $1,000 for each board meeting attended in
person, $500 for each board committee meeting attended in person and $500 for each board or board committee meeting attended by means of a telephone conference call. In addition, our lead director and the Chairman of the Audit Committee each receive
an additional annual retainer of $10,000, and all other members of the Audit Committee receive an additional annual retainer of $5,000. We reimburse all non-employee directors for reasonable expenses incurred to attend board or board committee
meetings. Under our director compensation policy, a director who also serves as an executive officer receives no additional compensation for serving as a director.
Director Compensation
The following table details compensation to our non-employee directors in 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or Paid in
Cash ($)
(1)
|
|
Stock
Awards
($)
(2)
|
|
Option
Awards ($)
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
|
Change in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
All Other
Compensation ($)
|
|
Total
($)
|
Kenneth R. Cole
|
|
$
|
32,000
|
|
$
|
16,430
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
48,430
|
Norman C. Frost
|
|
|
34,000
|
|
|
15,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,370
|
Brian G. Hart
|
|
|
45,500
|
|
|
15,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,870
|
H. Lynn Horak
|
|
|
40,000
|
|
|
15,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,370
|
Craig A. Lang
|
|
|
45,500
|
|
|
15,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,870
|
Kendrik E. Packer
|
|
|
39,500
|
|
|
15,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,870
|
(1)
|
Fees include the annual cash retainer, as well as meeting and other fees.
|
(2)
|
Represents the value of 1,000 shares of our Common Stock on the day granted by the Compensation Committee. The shares are fully vested.
|
How often did the board meet during 2008?
The board met ten times during 2008. Each director attended at least 75% of
the total number of meetings of the board and committees on which he served. In 2008, the non-employee directors of the board met four times in executive session.
6
How many directors attended the 2008 annual meeting of shareholders?
Each director is expected to make a reasonable effort to attend all board
meetings and all meetings of board committees of which such director is a member. Iowa Telecom does not require directors to attend the annual meeting of shareholders. The 2008 annual meeting was attended by two directors.
What committees has the board established?
The board of directors has standing Audit, Nominating and Governance, and
Compensation committees. The membership of the standing committees is as follows:
|
|
|
|
|
|
|
Name
|
|
Audit
Committee
|
|
Nominating and
Governance
Committee
|
|
Compensation
Committee
|
Kendrik E. Packer
|
|
*
|
|
Chair*
|
|
|
Norman C. Frost
|
|
*
|
|
|
|
|
Craig A. Lang
|
|
|
|
*
|
|
*
|
Brian G. Hart
|
|
Chair*
|
|
|
|
|
H. Lynn Horak
|
|
*
|
|
|
|
*
|
Kenneth R. Cole
|
|
|
|
*
|
|
Chair*
|
Alan L. Wells
|
|
|
|
|
|
|
Audit Committee
. The Audit Committee consists of Messrs. Hart, Packer, Frost and Horak, with Mr. Hart serving as Chair. The board has determined that all members of the Audit Committee are independent, as
defined in Section 303A of the NYSE corporate governance listing standards and Section 10A(m)(3) of the Exchange Act. Each of the members is able to read and understand financial statements, including a balance sheet, income statement and
statement of cash flow, and is financially literate as determined by Iowa Telecoms board in its business judgment. The board has determined that in addition to being independent, each of Messrs. Hart, Packer, Frost and Horak is an audit
committee financial expert as such term is defined under the applicable SEC rules. The Audit Committee met four times in 2008. The board has adopted an Audit Committee Charter, which may be found on our website at
www.iowatelecom.com
and is available in print to any shareholder who requests it. The charter describes the primary functions of the Audit Committee, which are to assist the board of directors in its oversight of:
|
|
|
the financial reporting process and internal control system;
|
|
|
|
the independent registered public accounting firms qualifications and independence;
|
|
|
|
compliance with legal, ethical and regulatory matters; and
|
|
|
|
the performance of our internal audit function and our independent registered public accounting firm.
|
Our Audit Committee is also responsible for the following:
|
|
|
conducting an annual performance evaluation of the Audit Committee;
|
|
|
|
compensating, retaining and overseeing the work of our independent registered public accounting firm; and
|
|
|
|
establishing procedures for (a) receipt and treatment of complaints on accounting and other related matters and (b) submission of confidential employee
concerns regarding questionable accounting or auditing matters.
|
The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
7
The Report of the Audit Committee of the Board of Directors is presented on page 28 of this
proxy statement.
Nominating and Governance Committee.
The Nominating and Governance Committee consists of Messrs. Packer, Lang, and Cole, with Mr. Packer serving as Chair. The board has determined that all members of the Nominating and Governance Committee are independent, as defined in
Section 303A of the NYSE corporate governance listing standards. The Nominating and Governance Committee met two times in 2008. The purpose of the Nominating and Governance Committee is to:
|
|
|
establish criteria for board and committee membership and recommend to our board of directors proposed nominees for election to the board of directors and for
membership on committees of the board of directors;
|
|
|
|
make recommendations regarding proposals submitted by our shareholders;
|
|
|
|
make recommendations to our board of directors regarding corporate governance matters and practices; and
|
|
|
|
oversee the evaluation of our board of directors and management.
|
The board has adopted a Nominating and Governance Committee Charter, a copy of which may be found on our website at
www.iowatelecom.com
and is available in print to any shareholder who requests it. The Nominating and Governance Committee will consider candidates for board membership that shareholders recommend. Shareholders may recommend candidates for
consideration by the Nominating and Governance Committee by mailing a written notice to the Nominating and Governance Committee in care of the Secretary of Iowa Telecom. Such recommendations for the annual meeting of shareholders to be held in 2010
must be received by Iowa Telecom no later than December 29, 2009. The written notice must include the following information regarding each person whom the shareholder recommends for election or reelection as a director: the name, age, business
address and, if known, the residential address of such person; the principal occupation or employment of such person; the class, series and number of Iowa Telecom shares which are owned beneficially and of record by such person; all other
information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to the Exchange Act and the rules and regulations
promulgated thereunder; and such persons written consent to being named in the proxy statement as a nominee and to serving as a director if elected. In addition, the written notice must include the following information regarding the
shareholder giving the notice and the beneficial owner, if any, on whose behalf the recommendation is made: the name and address of such shareholder, as they appear on the corporations books, and of such beneficial owner; the class, series and
number of shares of the corporation which are owned beneficially and of record by such shareholder and such beneficial owner; a representation that such shareholder is a shareholder of record and intends to appear in person or by proxy at the
meeting; and any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the
Exchange Act and the rules and regulations promulgated thereunder.
The charter of the Nominating and Governance Committee sets forth the criteria for identifying and recommending new candidates to serve as directors. In considering potential candidates for the board, the Nominating and Governance Committee
will give consideration to director candidates recommended by shareholders and the Nominating and Governance Committees own candidates, provided that the shareholder recommendations are made in accordance with the procedures described above.
Candidates will be interviewed by the Nominating and Governance Committee to evaluate the following:
|
|
|
experience as a board member of other publicly-traded corporations, experience in industries or with technologies relevant to Iowa Telecom, accounting or financial
reporting experience, or such other professional experience which the Nominating and Governance Committee determines qualifies an individual for board service;
|
8
|
|
|
the candidates business judgment and even temperament, high ethical standards, a healthy view of the relative responsibilities of a board member and
management, independent thinking, articulate communication and intelligence; and
|
|
|
|
any other factors the Nominating and Governance Committee deems appropriate, including judgment, skill, diversity, experience with businesses and other
organizations of comparable size, the interplay of the candidates experience with the experience of other board members, and the extent to which the candidate would be a desirable addition to the board and any committees of the board.
|
Current directors standing for reelection
are not required to participate in an interview process. All of the directors named on the proxy card are standing for reelection.
Compensation Committee
. The Compensation Committee consists of Messrs. Cole, Lang, and Horak, with Mr. Cole serving as Chair. The board has
determined that all members of the Compensation Committee are independent, as defined in Section 303A of the NYSE corporate governance listing standards.
The Compensation Committee is charged with:
|
|
|
reviewing and approving goals and objectives relating to the compensation of our Chief Executive Officer and determining and approving the compensation of the Chief
Executive Officer;
|
|
|
|
reviewing and approving the evaluation process and compensation structure for our executive officers; and
|
|
|
|
overseeing preparation of the discussion and analysis of executive compensation to be included in our public filings with the SEC.
|
The Compensation Committee met seven times in 2008. The board has adopted a
Compensation Committee Charter, a copy of which may be found on our website at
www.iowatelecom.com
and is available in print to any shareholder who requests it.
The Compensation Committee Charter grants the Committee the power to retain and terminate compensation consultants and the sole authority
to approve a consultants fees and other terms of engagement. Since October 2006, the Committee has retained Frederic W. Cook & Co. (Cook), a consulting firm specializing in executive compensation, as its
independent advisor. Cook provides the Committee with information on industry pay practices and general advice on compensation design and levels. Cook had performed no prior services to the Company and does no other work with the Company
or its management.
Generally, the only executive officer that
attends the meetings of the Compensation Committee is Mr. Wells. Mr. Wells is not, however, a member of the committee. Mr. Wells assists with the administrative aspects of the Companys relationship with its compensation
consultant, and with the calculation and presentation to the Compensation Committee of current and proposed compensation for executive officers other than himself. Mr. Wells also occasionally relies on Mr. Knock, our Vice President, Chief
Financial Officer and Treasurer, to calculate and review the Companys Adjusted EBITDA and other business metrics, which are relevant performance measures under our annual incentive program. Decisions regarding Mr. Wells compensation
are made by the Compensation Committee in executive session, excluding all members of management. Decisions regarding the compensation of Mr. Wells are communicated by the Compensation Committee to Mr. Wells. Decisions regarding the
compensation of other executive officers are communicated by the Committee through Mr. Wells to the other officers. Mr. Henry, Vice President, General Counsel and Corporate Secretary, is involved with respect to legal and disclosure
matters relating to executive compensation.
The Report
of the Compensation Committee of the Board of Directors is presented on page 23 of this proxy statement.
9
Executive Sessions
Executive sessions or meetings of outside (non-management) directors without management present were held four times in
2008. Mr. Craig A. Lang, our lead director, serves as the presiding director of the executive sessions. The matters discussed at these sessions included the following: the report of the independent auditor, the criteria upon which the
performance of the Chief Executive Officer and other senior managers were evaluated, the performance of the Chief Executive Officer against such criteria, the compensation of the Chief Executive Officer and other senior managers, and any other
relevant matters. Meetings were also held from time to time with the Chief Executive Officer for a general discussion of relevant subjects.
Communications with Directors
The board has implemented a process by which our shareholders or other interested parties may send written communications to the boards
attention. Any shareholder desiring to communicate with our board, our lead director, or one or more of our directors may send a letter addressed to the Iowa Telecom Board of Directors c/o Donald G. Henry, Vice President, General Counsel and
Secretary, Iowa Telecommunications Services, Inc., 403 W. Fourth Street North, P.O. Box 1046, Newton, Iowa 50208-1046. The Secretary has been instructed by the board to promptly forward all communications so received to the full board or the
individual board member(s) specifically addressed in the communication.
Communications will be distributed to the board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, our board of directors has requested that
certain items that are unrelated to the duties and responsibilities of the board should be excluded, including spam, junk mail and mass mailings, consumer complaints and inquiries, resumes and other forms of job inquiries, surveys, and business
solicitations or advertisements. In addition, material deemed by the Secretary to be unduly hostile, threatening, illegal or similarly unsuitable will be excluded.
Code of Business Conduct and Ethics
The board has adopted a Code of Business Conduct and Ethics (the Code), a copy of which may be found on our
website at
www.iowatelecom.com
and is available in print to any shareholder who requests it. Under the Code, we insist on honest and ethical conduct by all of our directors, officers, employees and other representatives, including the
following:
|
|
|
our directors, officers and employees are required to deal honestly and fairly with our customers, collaborators, competitors and other third parties;
|
|
|
|
our directors, officers and employees should not be involved in any activity that creates or gives the appearance of a conflict of interest between their personal
interests and the interests of Iowa Telecom; and
|
|
|
|
our directors, officers and employees should not disclose any confidential information of Iowa Telecom or its suppliers, customers or other business partners.
|
We also are committed to providing our
shareholders and investors with full, fair, accurate and understandable disclosure in the reports that we file with the SEC. We will comply with all laws and governmental regulations that are applicable to our activities, and expect all of our
directors, officers and employees to do the same.
Our board of
directors and Audit Committee have established the standards in the Code and oversee compliance with the Code. The board has also created the position of Ethics Officer to assist in the administration of the Code and adherence to the Code. Donald G.
Henry has been appointed as the Ethics Officer, and as Ethics Officer he reports directly to the board. Directors, officers and employees must report any known or suspected violations of the Code to the Ethics Officer or the Chairman of the Audit
Committee or our board of directors. If it is determined that the Code has been violated, Iowa Telecom will take necessary corrective action reasonably calculated to address and correct the alleged violation.
10
PROPOSAL NO. 1ELECTION OF DIRECTORS
Our restated articles of incorporation provide that our board of directors is
divided into three classes of directors, designated Class I, Class II and Class III, as nearly equal in size as is practicable, serving staggered three-year terms. One class of directors is elected each year to hold office for a three-year term and
until successors of such directors are duly elected and qualified. The class that will stand for election in 2009 is Class II.
The Nominating and Governance Committee has recommended, and the board also recommends, that the shareholders elect the nominees designated below to serve
as directors. More specifically, it is recommended that Kenneth R. Cole, Norman C. Frost and Kendrik E. Packer be elected at this years Annual Meeting to serve as Class II directors whose terms will expire at the 2012 annual meeting of
shareholders or when their successors are duly elected and qualified.
The nominees for election to the office of director, and certain information with respect to their backgrounds and the background of the non-nominee directors, are set forth below. It is the intention of the persons named in the
accompanying proxy card, unless otherwise instructed, to vote to elect the nominees named herein as directors. Each of the nominees named herein presently serves as a director of the Company. In the event any of the nominees named herein is unable
to serve as a director, discretionary authority is reserved to the board to vote for a substitute. The board has no reason to believe that any of the nominees named herein will be unable to serve if elected.
Nominees standing for election to the board
|
|
|
|
|
Name
|
|
Age
|
|
Current Position With Company
|
Kenneth R. Cole
|
|
61
|
|
Class II Director
|
Norman C. Frost
|
|
54
|
|
Class II Director
|
Kendrik E. Packer
|
|
47
|
|
Class II Director
|
Non-nominees continuing to serve in the office of director
|
|
|
|
|
Name
|
|
Age
|
|
Current Position With Company
|
Brian G. Hart
|
|
53
|
|
Class I Director
|
H. Lynn Horak
|
|
63
|
|
Class III Director
|
Craig A. Lang
|
|
57
|
|
Class III Director
|
Alan L. Wells
|
|
49
|
|
Class I Director, Chairman, President and Chief Executive Officer
|
Business
experience of nominees to the board
Kenneth R.
Cole.
Mr. Cole has served on the board of directors of Iowa Telecom since April 2008. He is a retired telecommunications executive, with 33 years of experience in the telecom industry. He held several senior positions within CenturyTel, a
Fortune 500 telecommunications company, prior to helping establish Valor Telecommunications in 2000. As a founding member of Valor Telecommunications, he served as President and Chief Operating Officer, as well as Chief Executive Officer and Vice
Chairman of the Board. He has previously served on the board of directors and the Audit Committee for Occam Networks, Inc., a publicly traded telecom equipment manufacturer. Prior to his telecom experience, Mr. Cole served in the U.S. Navy and
attended Northeast Louisiana University.
Norman C. Frost.
Mr. Frost has served on the board of directors of Iowa Telecom since March 2006. He currently is a private investor. He was a Managing Director of Legg Mason Wood Walker, Inc. and head of that firms Technology sector in the Investment
Banking Department from 1998 to 2005. Mr. Frost worked as an
11
investment banker for over 25 years, focusing primarily on the telecommunications industry, where he executed a wide range of assignments for his clients
including international and domestic merger and acquisition advisories, valuations, public and private equity and debt offerings, and project financings. Mr. Frost began his investment-banking career at The First Boston Corporation, spent
several years as a Managing Director in the Communications Group at Bear, Stearns & Co. Inc. and prior to joining Legg Mason, was a Managing Director in the Telecommunications Group at Smith Barney, Inc. Mr. Frost also serves on The
Maryland Zoological Society Board of Trustees, Tissue Banks International Board of Trustees, and as an Anthem Capital II, L.P. Advisory Board Member.
Kendrik E. Packer.
Mr. Packer has served on the board of directors of Iowa Telecom since August 2005. He is a Managing Partner with Financial
Advisory Partners, Inc., which he founded in 1997, where he consults with clients on merger and acquisition transactions and private financings. Prior to forming Financial Advisory Partners, Mr. Packer held several positions in corporate
finance since 1984, including senior vice president with Everen Securities, Kemper Securities and R.G. Dickinson & Company.
Business experience of continuing directors
Craig A. Lang.
Mr. Lang has served on the board of directors of Iowa Telecom since August 2005 and serves as our lead director. He has been
the president of the Iowa Farm Bureau Federation (IFBF) since 2001 and has been affiliated with the IFBF board since 1992 when he was elected as a district representative. In addition, he also serves as chairman of the board of FBL Financial Group,
Inc. (NYSE: FFG) and as president of Farm Bureau Life Insurance Company. Mr. Lang also serves on the Board of Regents for the State of Iowa, the American Farm Bureau Federation board of directors, representing the Midwest Region, and is
director of Farm Bureau Bank. For six years, he served as a director on the GROWMARK board and three years as a director on the Cattlemens Beef Board. He is also past chairman of the Iowa Values Fund Board and past vice chairman of the Iowa
Economic Development Board.
H. Lynn Horak
.
Mr. Horak has served on the board of directors of Iowa Telecom since April 2007. He is a past regional chairman for Wells Fargo Regional Banking, and held many positions with Wells Fargo Bank since 1972, including executive vice president and
chief financial officer from 1981 to 1986 and president and chief operating officer from 1986 to 2003. He serves or has served on the Drake University Board of Trustees and the United Way of Central Iowa Board. Mr. Horak is also active in his
support of many civic organizations, including the March of Dimes, Children & Families of Iowa, the Juvenile Diabetes Foundation, and the United Negro College Fund. Mr. Horak was elected to the Iowa Business Hall of Fame and is a past
recipient of the Drake University College of Business community leadership award. Mr. Horak is also a director of four privately held businesses.
Brian G. Hart.
Mr. Hart has served on the board of directors of Iowa Telecom since November 2005. He currently is President of Hart Financial,
LLC, a registered investment advisor providing financial planning and investment advisory services. Mr. Hart previously served as Vice President and Chief Financial Officer of Pioneer Hi-Bred International, Inc. and has held various other
accounting, finance and auditing positions, including Partner at McGladrey & Pullen. Mr. Hart is a certified public accountant and a registered investment advisor. Mr. Hart also serves on the Des Moines University Board of
Trustees, on the Executive Committee of the Board of the Civic Center of Greater Des Moines, on the Luther College Board Investment Committee, and on the Greater Des Moines Community Foundation Investment Committee. Previously, he served on many
community boards and organizations. Mr. Hart is also a director of two privately held businesses.
Alan L. Wells
. Mr. Wells is President and Chief Executive Officer of Iowa Telecom, and Chairman of our board of directors. He joined us in
1999 as President and Chief Operating Officer, and was appointed to the role of President and Chief Executive Officer in 2002. Prior to joining Iowa Telecom, Mr. Wells was Senior Vice President and Chief Financial Officer at MidAmerican Energy
Holdings Company (MidAmerican), a Des Moines, Iowa-based electric and gas utility holding company, from 1997 until 1999. During the same period,
12
Mr. Wells also served as President of MidAmericans non-regulated businesses. Mr. Wells held various executive and management positions with
MidAmerican, its subsidiaries, and Iowa-Illinois Gas and Electric, one of its predecessors, from 1993 through 1999. Prior to that, Mr. Wells was with Deloitte Consulting (previously Deloitte & Touche Consulting) and previously held
various positions with the Public Utility Commission of Texas and Illinois Power Company. Mr. Wells is a certified public accountant, and serves on the board of directors of the United States Telecommunications Association, the Newton
Development Corporation, Jasper County United Way, and Progress Industries.
Board recommendation and shareholder vote required
The board of directors recommends a vote FOR the election of each of the nominees named above (Proposal No. 1 on the proxy card). The affirmative vote of a plurality of the votes cast at the meeting at which a
quorum is present is required for the election of directors.
13
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
The following is a description of the background of the executive officers of
Iowa Telecom who are not directors:
David M. (Mike)
Anderson.
Mr. Anderson is our Vice PresidentExternal Affairs. Mr. Anderson is responsible for all of our state and federal regulatory and legislative activities. His responsibilities also include the operation of our wholesale
services group, which manages and services our business relationships with competitive local carriers and wireless carriers. In addition, he is responsible for the activities of our corporate communications group. Prior to joining Iowa Telecom in
2000 in conjunction with the GTE Midwest Incorporated acquisition, Mr. Anderson spent 21 years with GTE Midwest Incorporated in various management positions involving regulatory and legislative policy development and implementation. From 1989
to 2000, Mr. Anderson was Director of External Affairs for GTE Midwest Incorporateds Midwest operations group. In that position he managed GTE Midwest Incorporateds regulatory and legislative activities in Iowa, Missouri, Nebraska
and Minnesota. He is a past President and past Director of the Iowa Telecommunications Association. He has also served on the board of directors of the Nebraska, Minnesota and Missouri Telephone Associations. He is currently a member of the Board of
the Universal Service Administration Company (USAC).
Charles J. Bruggemann.
Mr. Bruggemann is our Vice PresidentOperations. Mr. Bruggemann is responsible for our field force operations, including our central office, service provisioning, dispatch and repair activities.
He is also responsible for external contract labor associated with outside plant activities, and for buildings, fleet and supply operations. Prior to joining Iowa Telecom in 2000 in conjunction with the GTE Midwest Incorporated acquisition,
Mr. Bruggemann held several positions with GTE Midwest Incorporated. From 1997 to 2000, he was General Manager, Customer Operations for the Midwest Division and had overall responsibility for service operations in the states of Iowa, Nebraska
and Minnesota. Prior to that assignment, Mr. Bruggemann held various technical and managerial positions with GTE Midwest Incorporated. Mr. Bruggemann has over 37 years of telecommunications operations experience. Mr. Bruggemann
currently serves as a director of Iowa One Call, a non-profit organization.
Donald G. Henry.
Mr. Henry is our Vice President, General Counsel and Secretary. From 1999 until he joined Iowa Telecom in 2003, Mr. Henry represented the Office of Consumer Advocate in administrative
proceedings before the Iowa Utilities Board relating to telecommunications law and policy and in various judicial proceedings. Between 1992 and 1999, Mr. Henry served as administrative law judge for the Utilities Division of the Iowa Department
of Commerce, on behalf of the Iowa Utilities Board. Prior to that time, Mr. Henry was in private law practice. Mr. Henry received his law degree from the University of Michigan and holds a masters degree in economics from the University of
Iowa.
Lon M. Hopkey.
Mr. Hopkey is our Vice
PresidentCorporate Development. Mr. Hopkey is responsible for our competitive local exchange carrier operations and for growth initiatives including strategic acquisitions and divestitures. Prior to joining Iowa Telecom in 1999,
Mr. Hopkey held several positions with MidAmerican Energy Company. From 1996 to 1999, Mr. Hopkey was Manager Corporate Development for MidAmerican, with responsibilities for completing purchase and sale transactions for various
non-regulated entities and for evaluating business combinations for MidAmerican. From 1997 to 1999, Mr. Hopkey was responsible for running several nonregulated entities of MidAmerican. From 1990 through 1996, Mr. Hopkey held various
corporate finance positions with MidAmerican and its predecessor companies. Mr. Hopkey has a Masters of Business Administration degree and a Bachelor of Science degree in Biomedical Engineering from the University of Iowa.
Dennis R. Kilburg.
Mr. Kilburg is our Vice
PresidentEngineering. Mr. Kilburg is responsible for all network planning, all capital expenditures related to network infrastructure and all network technical support. Prior to joining Iowa Telecom in 1999, Mr. Kilburg was the
Director of Advanced Network Products at Iowa Network Services, Inc. From 1994 until 1998, Mr. Kilburg managed Hickory Tech Corporations
14
telecommunications operations within Iowa. Prior to joining Hickory Tech, Mr. Kilburg worked in various management roles for GTE Midwest Incorporated
and Contel Corporation from 1985 until 1994, and with the Preston Telephone Co. from 1971 until 1985. Mr. Kilburg has over 37 years of experience in telecommunications operations and engineering.
Craig A. Knock.
Mr. Knock is our Vice President, Chief Financial
Officer and Treasurer. From 1998 until he joined us in January 2000, he served as the Vice President and Chief Financial Officer for Racom Corporation, a wireless telecommunications company in Iowa. From 1993 until 1998, he was the Vice President
and Chief Financial Officer and Treasurer for Atlantic Tele-Network, Inc., a publicly-held telecommunications company headquartered in the U.S. Virgin Islands. He also served as the Controller for Atlantic Tele-Network from 1992 until 1993. Prior to
joining Atlantic Tele-Network, Mr. Knock worked as an audit manager with Deloitte & Touche. Mr. Knock is a certified public accountant and has a Bachelor of Business Administration degree in Accounting from the University of Iowa.
Timothy D. Lockhart.
Mr. Lockhart is our Vice
PresidentCustomer Services and Human Resources. Mr. Lockhart is responsible for all customer service accountabilities for our residential, business and competitive markets. Additionally, he is accountable for all human resource functions
within the company. Prior to joining Iowa Telecom in 2000, Mr. Lockhart held human resource positions with the Menasha Corporation from 1993 through 1999. From 1988 to 1992, Mr. Lockhart served in various human resource and operational
roles with the Weyerhaeuser Corporation. Mr. Lockhart has a Bachelor of Science degree in Communications from Toccoa Falls College and a Masters of Arts degree in Organizational Development from Arizona State University.
Brian T. Naaden.
Mr. Naaden is our Vice President and Chief
Information Officer. Mr. Naaden is responsible for our information systems and for our Internet service and our data subsidiary. Prior to joining Iowa Telecom in 2000, Mr. Naaden served as Vice President of Technical Services for
McLeodUSA, a communications provider based in Cedar Rapids, Iowa, from 1996 to 2000. From 1984 to 1996, Mr. Naaden held various directorial and managerial positions with MCI, TelecomUSA and Teleconnect. Mr. Naaden has over 24 years of
experience in the telecommunications industry, and currently serves on the board of the Technology Association of Iowa.
Michael A. Struck.
Mr. Struck is our Vice PresidentSales. Prior to joining Iowa Telecom in 2001, Mr. Struck held various positions
with MCI WorldCom. From 1998 to 2001, Mr. Struck was responsible for National Account voice and data sales in nine Midwestern states. From 1991 through 1997, Mr. Struck held various MCI sales and service management roles in Iowa, Nebraska
and South Dakota. From 1983 through 1990, Mr. Struck held various positions within the sales, marketing and engineering departments at Telecom USA and one of its predecessors, Teleconnect Company. Mr. Struck began his career with
Northwestern Bell as an Account Executive in 1980. Mr. Struck has a Bachelor of Science degree with a major in Marketing from the University of Iowa.
15
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Objectives and Practices
It is our objective to motivate and retain talented and dedicated executive
officers capable of leading the Company to the successful attainment of its goals and objectives. The Companys executive compensation programs play an important role in the motivation and retention of management. These compensation programs
are administered by the Compensation Committee, which determines the total compensation paid to our principal executive officer and to each of our other executive officers. The Compensation Committee strives to administer each compensation program
in a manner that will provide the Company with effective leadership while also making efficient use of the Companys resources.
The Companys compensation programs are intended to motivate our executive officers to meet or exceed our expectations of their performance, align
their goals and interests with those of our shareholders, retain their talents and services for our benefit in future periods, and attract potential executive officers possessing comparable characteristics should it become necessary or desirable to
replace a member of our executive team or supplement our executive capabilities.
Overview of Compensation Components
Compensation for our executive officers has three primary elements: annual base salaries, short-term incentives in the form of cash bonuses, and long-term
incentives awarded pursuant to our stock incentive plan. An executive officers total compensation thus has both fixed and variable, or at-risk, elements. Base salary is the primary fixed element of total compensation. The
Compensation Committee includes base salary as an element of total executive officer compensation given its prevalence in the marketplace and as a means of achieving balance between the fixed and at-risk elements of compensation.
The at-risk elements of an executive
officers total compensation consist of short-term incentive compensation in the form of an annual cash bonus and long-term incentive compensation in the form of awards of restricted stock that vest over several years.
The payment of short-term incentive compensation is dependent upon the
attainment of performance goals. The goals for each executive officer are established annually near the beginning of each fiscal year. While the number of goals established for each executive officer varies, at least one-half of the annual cash
bonus payable to each executive officer depends on the Companys attainment of target levels of an adjusted measure of company-wide earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA). The balance of the
annual cash bonus payable to each executive officer depends on the attainment of other quantitative or qualitative goals.
All of an executive officers short-term incentive compensation is at-risk in that failure to attain either the company-wide or
executive-specific goals for the period will reduce or eliminate the annual cash bonus paid to the executive for that period. The Compensation Committee chooses to include short-term incentive compensation as an element of total executive officer
compensation because the committee believes performance-based short-term incentive compensation is an effective means of aligning the personal interests of our executive officers with the financial and other interests of our shareholders.
Long-term incentive compensation in the form of awards of
restricted stock that vest over several years is paid only if an executive officer remains in the employ of the Company until the restrictions lapse. Its value to an executive officer depends on the value of the Companys common stock at the
time the restrictions lapse and on the amounts of dividends paid to shareholders. The Compensation Committee chooses to include long-term incentive compensation as an element of total executive officer compensation because the committee believes
that restricted stock aligns the personal interests of our executive officers with the interests of our shareholders over the longer-term and promotes their retention.
16
Review Process
All three elements of an executives total compensation are reviewed
annually. Our chief executive officer evaluates the performance of the other executive officers and the Compensation Committee directly evaluates the performance of the chief executive officer. The Compensation Committee determines the short-term
incentive compensation for the previous period and all elements of future compensation for all executive officers, after considering the chief executive officers report and recommendations as to all other executive officers. The Compensation
Committee also establishes the performance goals upon which short-term incentive compensation for all executive officers for the following year is dependent.
In determining the total compensation for each executive officer, the Compensation Committee considers numerous factors, including the responsibilities
assigned for the period in question, total compensation paid by comparable companies to their officers with similar responsibilities, and performance. Consideration of performance includes review and assessment of the extent to which individual and
company-wide goals were attained.
Market Benchmarking
Market pay levels are one of many factors considered in setting compensation levels for our executive officers. To provide a frame of reference, information on market pay levels is obtained from various sources including published
compensation surveys and information filed with by Securities and Exchange Commission by publicly traded telecom and utility companies.
The Compensation Committee has retained the services of consulting firms with expertise in executive compensation matters to assist with benchmarking pay
levels and with the execution of its duties generally. These consulting firms have provided the committee with information on industry pay practices and general advice on compensation design and levels.
In determining total executive compensation for 2006, the Compensation
Committee considered the information from various published compensation surveys gathered with the assistance of Mercer Consulting along with its own collective knowledge of the industry in which the Company operates and the responsibilities
assigned to the executive officers. Since late 2006, the Compensation Committee has engaged Frederic W. Cook & Co. to assist in similar benchmarking exercises.
For 2007, this analysis included information from various published compensation surveys as well as information for a
benchmark group of the following publicly traded telecom companies: Alaska Communications Systems, Centurytel, Cincinnati Bell, Frontier Communications (formerly Citizens Communications), Commonwealth Telephone, Consolidated Communications, CT
Communications, D & E Communications, Eschelon Telecommunications, Fairpoint Communications, North Pittsburgh Systems, Shenandoah Telecommunications, and Surewest Communications. The benchmark telecom company analysis included total
compensation for the top five officers at each company (salary, annual bonuses, and long-term incentives), retirement benefit practices, and the usage of equity for compensation programs.
The peer group was reviewed for 2008 and three companies were deleted due to acquisition (Commonwealth Telephone, CT
Communications, and North Pittsburgh Systems) and six publicly traded telecom companies were added to replace the acquired companies and to provide a broader perspective of the telecom industry (Embarq, Hickory Tech, Otelco, Shenandoah
Telecommunications, and Telephone & Data Systems). Iowa Telecom was generally in the middle of the reconfigured peer group in terms of size. Retirement benefit and equity usage practices among the peer companies were not reviewed in 2008.
We do not have formal policies or practices regarding specific
relationships between compensation for our executives and statistics on market pay levels. Market pay information is intended to provide a frame of reference to ensure that the compensation we provide to our executive officers is reasonable in
comparison to the
17
companies we consider comparable. Our goal is to ensure that compensation is sufficiently competitive to allow us to attract and retain capable executives.
Market pay levels are only one factor considered by the Compensation Committee in evaluating the supply of and demand for executives, with the decision ultimately reflecting an evaluation of individual contribution and value to the Company.
Executive Compensation Analysis
This section discusses and analyzes the compensation actions that were
taken for our named executive officers in 2008, as summarized in the compensation tables that follow.
Base Salary
. Adjustments to base salary generally are considered at the Compensation Committees meeting in the first quarter of each year.
Each year the committee considers an executive officers performance, the Companys overall performance, and how the executive officers total compensation compares with that of similar executives at comparable companies. Based on a
review of these factors, salaries for the named executive officers for 2008 were established as shown in the table below, along with the 2007 salaries for the same named executive officers.
|
|
|
|
|
|
|
Name
|
|
2007 Base
Salary
|
|
2008 Base
Salary
|
Alan L. Wells
|
|
$
|
400,000
|
|
$
|
420,000
|
Craig A. Knock
|
|
|
260,000
|
|
|
270,000
|
Brian T. Naaden
|
|
|
206,000
|
|
|
216,000
|
Donald G. Henry
|
|
|
211,000
|
|
|
225,000
|
Dennis R. Kilburg
|
|
|
180,000
|
|
|
185,000
|
Short-Term Cash
Incentive Payments
. The Company maintains a cash bonus plan that is designed to reward achievement of annual, short-term Company performance levels, the consistent attainment of which the Company believes are critical to its long term success.
Each of the named executive officers is eligible to participate in the bonus plan, which provides them with the opportunity to earn a cash bonus payment. The payment, if any, is measured as a percentage of the executive officers salary and is
based on the achievement of certain criteria established by the Compensation Committee.
For 2008, the Compensation Committee established the bonus opportunities, as a percentage of 2008 salary levels, based on its assessment of the appropriate balance between base salary and short-term bonus in
determining the total cash to be paid to each executive. In accordance with our contract with Mr. Wells, he is eligible to receive a potential bonus equal to 100% of his base salary if the target levels of the performance objectives are
achieved, and up to 200% of his base salary if maximum levels are achieved. The bonus opportunities as a percentage of salary for the named executive officers are shown in the table below. The Compensation Committee had full discretion to increase
or decrease the amount of any actual payout, including discretion to pay no bonus if certain threshold objectives were not met.
|
|
|
|
|
|
|
|
|
|
|
|
Bonus as a Percentage of Salary
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Alan L. Wells
|
|
50
|
%
|
|
100
|
%
|
|
200
|
%
|
Craig A. Knock
|
|
15
|
%
|
|
30
|
%
|
|
45
|
%
|
Brian T. Naaden
|
|
12.5
|
%
|
|
25
|
%
|
|
37.5
|
%
|
Donald G. Henry
|
|
12.5
|
%
|
|
25
|
%
|
|
37.5
|
%
|
Dennis R. Kilburg
|
|
12.5
|
%
|
|
25
|
%
|
|
37.5
|
%
|
18
For 2008, the total bonus opportunity for the named executive officers was divided into a performance and
discretionary portion, as summarized below, which the Compensation Committee believes effectively promotes the Companys primary short-term goals:
|
|
|
Performance based targets. The performance portion of the annual bonus for 2008 was tied to the Companys Adjusted EBITDA with the target performance set at
$126.2 million. The threshold and maximum performance goals were approximately 3% lower and 2% higher than the target level. Bonuses for performance between target and threshold and maximum are interpolated on a straight-line basis. The portion
of the named executive officers total potential bonus tied to Adjusted EBITDA for 2008 was 60%.
|
|
|
|
Discretionary based targets. The remainder of the bonus opportunity for the named executive officers is subject to the sole discretion of the Compensation
Committee, which exercised its discretion by assessing the extent to which the named executive officers accomplished quantitative and qualitative objectives established by the Compensation Committee. The portion of the named executive officers
total potential bonus that was discretionary for 2008 was 40%.
|
The total cash bonus the Compensation Committee awarded to each of the named executive officers for 2008 pursuant to the Companys bonus plan is reflected in two places in the Summary Compensation Table:
|
(1)
|
The Bonus column which represents the discretionary portion of the short-term cash incentive plan; and
|
|
(2)
|
The Non-Equity Incentive Plan Compensation column, which represents the performance portion of the short-term cash incentive plan. For 2008, the Company achieved the
performance target of 89% of the target for each of the named executive officers, based on our actual Adjusted EBITDA of $128.3 million, as adjusted at the discretion of the Compensation Committee.
|
The bonuses, all of which were paid in March 2009, are summarized below and
the total is compared to each named executive officers respective 2008 year-end annual salary level.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Bonus
|
|
Non-Equity
Incentive Plan
Compensation
|
|
Total Cash
Bonus
|
|
2008 Bonus Payout as a
Percentage of 2008 Salary
|
|
|
|
|
|
Actual
|
|
|
Target
|
|
Alan L. Wells
|
|
$
|
195,720
|
|
$
|
224,280
|
|
$
|
420,000
|
|
100.0
|
%
|
|
100.0
|
%
|
Craig A. Knock
|
|
|
36,450
|
|
|
43,254
|
|
|
79,704
|
|
29.5
|
%
|
|
30.0
|
%
|
Brian T. Naaden
|
|
|
20,520
|
|
|
28,836
|
|
|
49,356
|
|
22.9
|
%
|
|
25.0
|
%
|
Donald G. Henry
|
|
|
26,719
|
|
|
30,038
|
|
|
56,756
|
|
25.2
|
%
|
|
25.0
|
%
|
Dennis R. Kilburg
|
|
|
15,032
|
|
|
24,698
|
|
|
39,729
|
|
21.5
|
%
|
|
25.0
|
%
|
Equity-Incentive
Awards
. The Company maintains an equity-compensation program for executive officers to provide long-term incentives, which aligns the interests of executives with stockholders, and provides a retention incentive. The Compensation Committee has
implemented its equity compensation program as part of its goal to make a portion of total direct compensation at risk. The Compensation Committee also prefers equity incentives to cash as a method of providing long-term compensation
incentives.
For 2008, all executive officer equity
compensation awards have been issued as restricted stock under the Iowa Telecom 2005 Stock Incentive Plan. Under this Plan, Iowa Telecom has not issued any stock options or forms of equity compensation other than restricted stock to its executive
officers or other employees. The Compensation Committee believes that restricted stock awards are a preferred mechanism of equity compensation compared to stock options or other devices that derive value from future stock price appreciation due to
the high-dividend profile of Iowa Telecom.
The Iowa Telecom
Board of Directors has delegated responsibility for administration of the 2005 Stock Incentive Plan, including the authority to approve awards, to the Compensation Committee. The Compensation
19
Committee approved all equity-based compensation awards to named executive officers for 2008 at its meeting in March 2008. In determining the amount of
long-term incentive awards to be made, the Compensation Committee considered each named executive officers position, scope of responsibility, base salary, performance, market compensation information for executives in similar positions in
similar companies, prior awards, and the recommendation of the chief executive officer (except in regard to his own award). In determining the number of shares of restricted stock or performance-based restricted stock to award to any individual
under the 2005 Stock Incentive Plan, the Compensation Committee divides the approved grant value for such individual by the closing stock price of Iowa Telecom common stock on the date that the Compensation Committee approves the award (rounded down
to the nearest whole share).
During 2008, the Compensation
Committee approved the following restricted stock awards to the named executive officers. All of the restricted shares were granted on March 5, 2008 pursuant to the Companys 2005 Stock Incentive Plan. Under the terms of a restricted stock
agreement, each award vests at a rate of 25% of the total number of shares awarded per year commencing on April 1, 2010, subject to certain forfeiture provisions.
|
|
|
Name
|
|
Restricted
Stock
Awards (#)
|
Alan L. Wells
|
|
40,000
|
Craig A. Knock
|
|
22,500
|
Brian T. Naaden
|
|
11,000
|
Donald G. Henry
|
|
15,000
|
Dennis R. Kilburg
|
|
8,000
|
During the vesting
period, the named executive officers have the rights of a shareholder to vote the restricted stock. Additionally, holders of our restricted shares are entitled to receive dividends and other distributions, if any, as and when declared by the board
of directors in an effort to reinforce the alignment of the interests of the holders of restricted stock with the interests of our other shareholders. These cash dividends are considered in the Compensation Committees assessment of total
executive officer compensation.
The Company also maintains the
2002 Stock Incentive Plan, which allows for the issuance of incentive stock options or nonqualified stock options, although the board of directors has determined that no new options will be granted under the 2002 Incentive Plan. All awards under
this Plan were made prior to the Companys initial public offering in November 2004. Under the 2002 Incentive Plan, options were granted for the purchase of 2,227,714 shares, of which 1,031,795 were redeemed for cash in 2004 in conjunction with
the Companys initial public offering, 518,340 have been exercised and 677,579 remain outstanding as of December 31, 2008. The term of each option did not exceed 10 years from the date of grant. Options granted to employees vested over 3
to 5 years from the date of the grant. All unvested options outstanding at the time of the closing of the initial public offering vested pursuant to the terms of the 2002 Incentive Plan. The exercise price for unexercised options is automatically
decreased by the amount of dividends that would have been paid on the shares issuable upon exercise. These dividend equivalent rights are non-cash in nature and, as such, executives do not actually receive the dividend payments.
Retirement Plans
. Iowa Telecom maintains a defined benefit pension for
certain of its employees that were former GTE employees prior to the GTE Acquisition in 2000. For 2008, none of the named executive officers participated in the plan. Iowa Telecom also maintains a qualified 401(k) defined contribution plan
(Iowa Telecom Savings Plan) for its executive officers and employees. In addition, the Company contributed 3% of salary to the plan, subject to applicable limits under Code section 401(a)(17), which limit was $230,000 for 2008.
20
Deferred Compensation Plan
. The Companys executive officers may elect to participate in a
Deferred Compensation Plan. The Companys liability to participating officers is an unsecured general obligation of the Company. The earnings credited to the participants account are based on their individual election of one, or more, of
the following investments (a) Standard and Poors 500 Stock Index (including dividends reinvested), (b) Barclays (Lehman Brothers) Aggregate Bond Index, and (c) a one-year U.S. Treasury Bill. The Companys Deferred
Compensation Plan provides for the following:
|
|
|
The Company will credit the eligible participants deferred compensation account with the difference between 3% of the participants base salary and
annual cash bonus compensation for that calendar year, and the amount of the Companys contributions (other than matching contributions and elective deferrals) made to the participants account under the Iowa Telecom Savings Plan for that
calendar year.
|
|
|
|
The Company also credits the eligible participants deferred compensation account with the matching contribution that the eligible participant would have
received if the participants deferrals under the Companys Deferred Compensation Plan had instead been made to the Iowa Telecom Savings Plan, without regard to the annual compensation limits then in effect under Code section 401(a)(17) or
any other Code section or rule.
|
|
|
|
Additionally, in accordance with the Employment Agreement with Mr. Wells, the Company also credits Mr. Wells deferred compensation account in a
dollar amount equal to five percent (5%) of the sum of Mr. Wells base salary and annual cash bonus. Such deferrals are credited to Mr. Wells deferred compensation account during the year in accordance with the
Companys payroll cycles, and vest immediately. In accordance with the Employment Agreement with Mr. Wells, the amount of the Companys matching and discretionary contributions for Mr. Wells account under the Companys
defined contribution retirement plans and deferred compensation plans shall not exceed $100,000 per year.
|
In the event of a Change of Control, as defined, the Company shall create and fund an irrevocable trust for the payment of the benefits.
Severance and Change-in-Control Benefits
. To assist in the recruitment
and retention of named executive officers, and to provide for management continuity in the event of a change in control, we provide limited severance and change-in-control benefits to our named executive officers.
We have entered into an employment agreement with Mr. Wells that
provides for certain benefits if we terminate Mr. Wells employment without cause or if Mr. Wells terminates his employment for good reason. The agreement is described in more detail under the caption
Employment Agreement on page 23. We do not have employment agreements or change-in-control agreements with any other executive officers.
The restricted stock agreements with our named executive officers provide for the vesting of restricted shares granted to our named executive officers
upon a termination of employment by the Company without cause or upon a termination of employment by the named executive officer for good reason within 12 months after a change of control, as such terms are
defined in the 2005 Stock Incentive Plan.
None of our named
executive officers is entitled to severance or change-in-control benefits in the event of a voluntary resignation or involuntary termination for cause. In a change-of-control situation, the named executive officers employment must be
involuntarily terminated without cause or voluntarily terminated with good reason. We have adopted this double trigger approach, rather than providing benefits solely upon a change in control (single trigger), because we
believe that the double trigger provides adequate employment protection and reduces associated costs in the event of a possible acquisition of the Company.
We view the potential severance and change-in-control benefits as a separate compensation element because the related benefits are not expected to be paid
in a particular year and serve a different purpose for the executive than other elements of compensation. Therefore, the severance and change-in-control benefits do not affect decisions regarding other elements of compensation.
21
Perquisites and Other Personal Benefits
. We do not provide substantial perquisites to executives
that are not available to substantially all other salaried employees. We do provide executives with personal use of Company provided vehicles and, in one instance, a social club membership to foster business relationships. Our Compensation Committee
believes these limited perquisites are reasonable and consistent with its overall compensation program to better enable us to attract and retain superior executives. The Committee periodically reviews the levels of perquisites and other personal
benefits provided to executive officers.
Other
Matters
Indemnity Agreements
. Iowa Telecoms
charter and bylaws provide indemnification for its officers and directors to the maximum extent permitted by law. In general, the Company will pay the costs of legal defense, settlements or judgments on behalf of the officer or director relating to
actions taken in the course of employment or service with Iowa Telecom, as long as such conduct meets applicable standards.
22
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
We have reviewed and discussed the Compensation Discussion
and Analysis with management. Based on such review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in the Companys annual report on Form 10-K and this proxy statement on Schedule 14A.
|
MEMBERS OF THE COMPENSATION COMMITTEE
|
|
Kenneth R. Cole, Chair
|
Craig A. Lang
|
H. Lynn Horak
|
23
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation of each of our named
executive officers for the fiscal years ended December 31, 2006, 2007 and 2008. The named executive officers are the Companys Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers
ranked by their total compensation in the table below (collectively the named executive officers).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
Salary
(1)
($)
|
|
Bonus
(2)
($)
|
|
Stock
Awards
(3)
($)
|
|
Option
Awards
(4)
($)
|
|
Non-Equity
Incentive Plan
Compensation
(5)
($)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(6)
($)
|
|
All Other
Compensation
(7)
($)
|
|
Total
($)
|
Alan L. Wells
|
|
2008
|
|
$
|
416,923
|
|
$
|
195,720
|
|
$
|
621,132
|
|
$
|
648,022
|
|
$
|
224,280
|
|
$
|
|
|
$
|
108,614
|
|
$
|
2,214,691
|
Chairman and Chief Executive Officer
|
|
2007
|
|
|
396,154
|
|
|
144,960
|
|
|
474,309
|
|
|
602,251
|
|
|
455,040
|
|
|
|
|
|
88,794
|
|
|
2,161,508
|
|
2006
|
|
|
371,154
|
|
|
209,700
|
|
|
400,071
|
|
|
671,249
|
|
|
172,800
|
|
|
|
|
|
96,394
|
|
|
1,921,368
|
Craig A. Knock
|
|
2008
|
|
|
268,462
|
|
|
36,450
|
|
|
318,856
|
|
|
73,648
|
|
|
43,254
|
|
|
|
|
|
27,752
|
|
|
768,422
|
Vice President, Chief Financial Officer, and Treasurer
|
|
2007
|
|
|
258,462
|
|
|
33,790
|
|
|
231,164
|
|
|
68,608
|
|
|
67,766
|
|
|
|
|
|
26,512
|
|
|
686,302
|
|
2006
|
|
|
242,308
|
|
|
35,748
|
|
|
156,785
|
|
|
72,303
|
|
|
41,472
|
|
|
|
|
|
16,500
|
|
|
565,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian T. Naaden
|
|
2008
|
|
|
214,462
|
|
|
20,520
|
|
|
180,757
|
|
|
37,009
|
|
|
28,836
|
|
|
|
|
|
17,250
|
|
|
498,834
|
Vice President and Chief Information Officer
|
|
2007
|
|
|
205,077
|
|
|
22,001
|
|
|
137,225
|
|
|
36,306
|
|
|
44,743
|
|
|
|
|
|
16,875
|
|
|
462,227
|
|
2006
|
|
|
193,846
|
|
|
20,002
|
|
|
98,547
|
|
|
57,847
|
|
|
27,648
|
|
|
|
|
|
16,500
|
|
|
414,390
|
Donald G. Henry
|
|
2008
|
|
|
222,846
|
|
|
26,719
|
|
|
154,407
|
|
|
22,808
|
|
|
30,038
|
|
|
|
|
|
17,250
|
|
|
474,067
|
Vice President, General Counsel and Secretary
|
|
2007
|
|
|
209,308
|
|
|
23,142
|
|
|
99,905
|
|
|
20,635
|
|
|
45,829
|
|
|
|
|
|
16,875
|
|
|
415,694
|
|
2006
|
|
|
190,769
|
|
|
37,882
|
|
|
61,227
|
|
|
17,389
|
|
|
22,118
|
|
|
|
|
|
16,500
|
|
|
345,885
|
Dennis R. Kilburg
|
|
2008
|
|
|
184,231
|
|
|
15,032
|
|
|
115,557
|
|
|
87,985
|
|
|
24,698
|
|
|
|
|
|
17,250
|
|
|
444,752
|
Vice President
Engineering
|
|
2007
|
|
|
179,231
|
|
|
23,184
|
|
|
83,965
|
|
|
81,964
|
|
|
39,096
|
|
|
|
|
|
16,774
|
|
|
424,214
|
|
2006
|
|
|
169,615
|
|
|
20,227
|
|
|
55,549
|
|
|
93,415
|
|
|
24,192
|
|
|
|
|
|
16,246
|
|
|
379,244
|
(1)
|
Includes amounts deferred under the Iowa Telecommunications Services, Inc. Deferred Compensation Plan. For additional information about deferred compensation in 2008, see the
Nonqualified Deferred Compensation table and accompanying footnotes and narrative.
|
(2)
|
Represents the discretionary cash bonus award for each of the named executive officers. See the Short-Term Cash Incentive Payments section in the accompanying Compensation
Discussion and Analysis. The Company paid all 2008 amounts in March 2009.
|
(3)
|
Represents the compensation costs of equity grants for financial reporting purposes for the year under FAS 123R, rather than an amount paid to or realized by the named executive
officer. See the Companys Annual Report on Form 10-K for the assumptions made in determining FAS 123R values. The FAS 123R value as of the grant date for equity grants is expensed over the number of months of service required for the grant to
become non-forfeitable. For additional information about stock-based grants made in 2008, see the Grants of Plan-Based Awards and Outstanding Equity Awards at Fiscal Year-End tables and accompanying footnotes and narrative. Certain amounts included
in this column in 2006, 2007 and 2008, and in the future, will be double counted in the Option Exercises and Stock Vested table, to the extent any restricted stock vested in the current period.
|
(4)
|
Represents the non-cash compensation costs of the dividend equivalent rights that are accrued on options for financial reporting purposes for the year under FAS 123R, rather than an
amount paid to or realized by the named executive officer. Pursuant to the Companys 2002 Stock Incentive Plan, the per share exercise price of each outstanding option is reduced by the amount of dividends paid on our Common Stock. See the
Companys Annual Report on Form 10-K for the assumptions made in determining FAS 123R values. For additional information about the non-cash dividend equivalent rights, see the Equity Incentive Awards section in the accompanying Compensation
Discussion and Analysis. Certain amounts included in this column in 2006, 2007 and 2008, and in the future, will be double counted in the Option Exercises and Stock Vested table, to the extent any named executive officer exercised options in the
current period.
|
(5)
|
Represents the performance-based cash bonus award for each of the named executive officers. The Company paid the 2008 amounts in March 2009. See the Short-Term Cash Incentive
Payments section in the accompanying Compensation Discussion and Analysis for further information about the performance bonus based on Adjusted EBITDA.
|
(6)
|
None of the named executive officers participates in the Companys Pension Plan. The Change in Pension Value and Non-qualified Deferred Compensation Earnings column also
reports the amount of above market earnings on compensation that is deferred outside of tax-qualified plans. No amount is reported because above market rates are not permitted under the Iowa Telecommunications Services, Inc. Deferred Compensation
Plan and similar investments are available to all participants in the Companys tax qualified plans. For additional information about deferred compensation in 2008, see the Nonqualified Deferred Compensation table and accompanying footnotes and
narrative.
|
(7)
|
See All Other Compensation table and accompanying footnotes and narrative below.
|
24
All Other Compensation Table
The following table describes each component of the All Other Compensation
column in the Summary Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Matching
contribution to
401(k) Plan
(1)
|
|
Discretionary
contribution to
401(k) Plan
(2)
|
|
Company Contribution
to Deferred
Compensation Plan
(3)
|
|
Total
(4)
|
Alan L. Wells.
|
|
2008
|
|
$
|
10,350
|
|
$
|
6,900
|
|
$
|
91,364
|
|
$
|
108,614
|
|
|
2007
|
|
|
10,125
|
|
|
6,750
|
|
|
71,919
|
|
|
88,794
|
|
|
2006
|
|
|
9,900
|
|
|
6,600
|
|
|
79,894
|
|
|
96,394
|
Craig A. Knock
|
|
2008
|
|
|
10,350
|
|
|
6,900
|
|
|
10,502
|
|
|
27,752
|
|
|
2007
|
|
|
10,125
|
|
|
6,750
|
|
|
9,637
|
|
|
26,512
|
|
|
2006
|
|
|
9,900
|
|
|
6,600
|
|
|
|
|
|
16,500
|
Brian T. Naaden
|
|
2008
|
|
|
10,350
|
|
|
6,900
|
|
|
|
|
|
17,250
|
|
|
2007
|
|
|
10,125
|
|
|
6,750
|
|
|
|
|
|
16,875
|
|
|
2006
|
|
|
9,900
|
|
|
6,600
|
|
|
|
|
|
16,500
|
Donald G. Henry
|
|
2008
|
|
|
10,350
|
|
|
6,900
|
|
|
|
|
|
17,250
|
|
|
2007
|
|
|
10,125
|
|
|
6,750
|
|
|
|
|
|
16,875
|
|
|
2006
|
|
|
9,900
|
|
|
6,600
|
|
|
|
|
|
16,500
|
Dennis R. Kilburg
|
|
2008
|
|
|
10,350
|
|
|
6,900
|
|
|
|
|
|
17,250
|
|
|
2007
|
|
|
10,064
|
|
|
6,710
|
|
|
|
|
|
16,774
|
|
|
2006
|
|
|
9,748
|
|
|
6,498
|
|
|
|
|
|
16,246
|
(1)
|
Represents the Company matching contribution to the 401(k) Plan for each of the named executive officers.
|
(2)
|
Represents the Company discretionary contribution to the 401(k) Plan for each of the named executive officers.
|
(3)
|
Represents the Company credit to the Iowa Telecommunications Services, Inc. Deferred Compensation Plan for each of the named executive officers. For additional information about
deferred compensation in 2008, see the Nonqualified Deferred Compensation table and accompanying footnotes and narrative.
|
(4)
|
The Company provides perquisites to certain of the named executive officers as described in the Compensation Discussion and Analysis section under the caption Perquisites and
Other Personal Benefits. For 2008, the value of such perquisites to each of the named executive officers was less than $10,000 in the aggregate.
|
Grants of Plan-Based Awards
The following table sets forth information for each named executive officer with respect to estimated possible payouts under non-equity
incentive plan awards that could have been earned for 2008 and the Stock Awards and Grant Date Fair Value of such awards granted in 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Estimated Possible Payouts
Under
Non-Equity Incentive
Plan Awards
(1)
|
|
Estimated Future Payouts
Under
Equity Incentive
Plan Awards
|
|
All Other
Stock
Awards
Number of
Shares of
Stock or
Units (#)
(2)
|
|
All Other
Option
Awards
Number of
Securities
Underlying
Options (#)
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
|
Grant Date
Fair Value
of
Stock
and Option
Awards
($)
(3)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
|
|
Alan L. Wells
|
|
$
|
126,000
|
|
$
|
252,000
|
|
$
|
504,000
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
$
|
669,200
|
Craig A. Knock
|
|
|
24,300
|
|
|
48,600
|
|
|
72,900
|
|
|
|
|
|
|
|
22,500
|
|
|
|
|
|
|
376,425
|
Brian T. Naaden
|
|
|
16,200
|
|
|
32,400
|
|
|
48,600
|
|
|
|
|
|
|
|
11,000
|
|
|
|
|
|
|
184,030
|
Donald G. Henry
|
|
|
16,875
|
|
|
33,750
|
|
|
50,625
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
250,950
|
Dennis R. Kilburg
|
|
|
13,875
|
|
|
27,750
|
|
|
41,625
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
|
|
133,840
|
(1)
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards. Payouts under this portion of the bonus plan were based on performance in 2008. The performance targets and the
related named executive officer threshold, target and maximum amounts were set on March 5, 2008, as described in the Compensation Discussion and Analysis section under the caption Short-Term Cash Incentive Payments. The amounts
actually paid under that portion of the bonus plan for 2008 appear in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
|
(2)
|
Represents restricted shares granted on March 5, 2008 pursuant to the Companys 2005 Stock Incentive Plan to the named executive officers. Under the terms of the
restricted stock agreement, each award vests at a rate of 25% per year commencing on April 1, 2010, subject to certain forfeiture provisions. Holders of our restricted shares are entitled to receive dividends and other distributions, if
any, as and when declared by the board of directors.
|
(3)
|
The Grant Date Fair Value of the individual Award is calculated using a Grant Date Fair Value per Share amount of $16.73, the closing price per share on March 5, 2008.
|
25
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
(1)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)
(2)
|
|
Market
Value of
Shares or Units
of Stock That
Have Not
Vested
($)
(3)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
Rights
That Have
Not Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($)
|
Alan L. Wells
|
|
333,671
|
|
|
|
|
|
$
|
1.31
|
|
4/25/2012
|
|
115,000
|
|
$
|
1,642,200
|
|
|
|
|
|
|
73,445
|
|
|
|
|
|
|
1.86
|
|
12/12/2012
|
|
|
|
|
|
|
|
|
|
Craig A. Knock
|
|
46,232
|
|
|
|
|
|
|
1.31
|
|
4/25/2012
|
|
62,500
|
|
|
892,500
|
|
|
|
|
Brian T. Naaden
|
|
23,232
|
|
|
|
|
|
|
1.31
|
|
4/25/2012
|
|
34,000
|
|
|
485,520
|
|
|
|
|
Donald G. Henry
|
|
15,195
|
|
|
|
|
|
|
4.44
|
|
1/27/2014
|
|
33,000
|
|
|
471,240
|
|
|
|
|
Dennis R. Kilburg
|
|
55,232
|
|
|
|
|
|
|
1.31
|
|
4/25/2012
|
|
22,550
|
|
|
322,014
|
|
|
|
|
(1)
|
Pursuant to the Companys 2002 Stock Incentive Plan, the exercise price per share of Common Stock covered by each outstanding option is reduced by the amount of dividends paid,
if any, as and when declared by the board of directors. For 2008 amounts expensed for the dividend equivalent rights on vested options, see the Options Award column included in the Summary Compensation Table. Additionally in the future, as a result
of reducing the exercise price for the dividend equivalent rights, certain amounts will be double counted in the Option Exercises table, to the extent any named executive officer exercised options in such period.
|
(2)
|
Represents previously granted restricted shares that have not vested pursuant to the Companys 2005 Stock Incentive Plan to the named executive officers. Holders of our
restricted shares are entitled to receive dividends and other distributions, if any, as and when declared by the board of directors. The restricted shares generally become vested in full upon a termination of employment by the Company without
cause, or upon a termination of employment by the named executive officer for good reason, within 12 months after a change of control. Otherwise, the shares remain forfeitable until the risks of forfeiture lapse
according to the following vesting schedule:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
Total
Shares
(f)
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Alan L. Wells
|
|
|
|
50,000
|
|
|
|
25,000
|
|
40,000
|
|
115,000
|
Craig A. Knock
|
|
15,000
|
|
|
|
7,500
|
|
17,500
|
|
22,500
|
|
62,500
|
Brian T. Naaden
|
|
10,000
|
|
|
|
4,000
|
|
9,000
|
|
11,000
|
|
34,000
|
Donald G. Henry
|
|
5,000
|
|
|
|
4,000
|
|
9,000
|
|
15,000
|
|
33,000
|
Dennis R. Kilburg
|
|
5,000
|
|
|
|
3,050
|
|
6,500
|
|
8,000
|
|
22,550
|
|
a.
|
All of the restricted shares were granted on August 2, 2005 pursuant to the Companys 2005 Stock Incentive Plan. Under the terms of a restricted stock agreement, each
award vests at a rate of 25% per year commencing on August 2, 2007, subject to certain forfeiture provisions. Accordingly, the expected share amounts that will vest annually for Mr. Knock, Naaden, Henry, and Kilburg will be 7,500,
5,000, 2,500 and 2,500, respectively.
|
|
b.
|
The restricted shares were granted on August 3, 2005, pursuant to the Companys 2005 Stock Incentive Plan. Under the terms of a restricted stock agreement, these shares
will vest at the rate of 25,000 shares per year commencing on April 1, 2007, subject to certain forfeiture provisions.
|
|
c.
|
All of the restricted shares were granted on May 9, 2006 pursuant to the Companys 2005 Stock Incentive Plan. Under the terms of a restricted stock agreement, each award
vests at a rate of 25% per year commencing on May 9, 2007, subject to certain forfeiture provisions. Accordingly, the expected share amounts that will vest annually for Mr. Knock, Naaden, Henry, and Kilburg will be 3,750, 2,000,
2,000, and 1,525, respectively.
|
|
d.
|
All of the restricted shares were granted on May 9, 2007 pursuant to the Companys 2005 Stock Incentive Plan. Under the terms of a restricted stock agreement, each award
vests at a rate of 25% per year commencing on April 1, 2009, subject to certain forfeiture provisions. Accordingly, the expected share amounts that will vest annually for Mr. Wells, Knock, Naaden, Henry, and Kilburg will be 6,250,
4,375, 2,250, 2,250, and 1,625, respectively.
|
|
e.
|
All of the restricted shares were granted on March 5, 2008 pursuant to the Companys 2005 Stock Incentive Plan. Under the terms of a restricted stock agreement, each award
vests at a rate of 25% per year commencing on April 1, 2010, subject to certain forfeiture provisions. Accordingly, the expected share amounts that will vest annually for Mr. Wells, Knock, Naaden, Henry, and Kilburg will be 10,000,
5,625, 2,750, 3,750, and 2,000, respectively.
|
|
f.
|
Holders of our restricted shares are entitled to receive dividends and other distributions, if any, as and when declared by the board of directors.
|
(3)
|
Represents the market value of restricted shares that have not vested using the December 31, 2008 closing stock price of $14.28 per share.
|
26
Option Exercises and Stock Vested
The following table provides information for each of our named executive
officers on Option Exercises and Stock Awards realized in 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
(1)
|
|
Stock Awards
(2)
|
Name
|
|
Number
of Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number
of Shares
Acquired on
Vesting
(#)
|
|
Value
Realized
on Vesting
($)
|
Alan L. Wells
|
|
|
|
$
|
|
|
25,000
|
|
$
|
443,250
|
Craig A. Knock
|
|
|
|
|
|
|
11,250
|
|
|
199,800
|
Brian T. Naaden
|
|
|
|
|
|
|
7,000
|
|
|
124,240
|
Donald G. Henry
|
|
|
|
|
|
|
4,500
|
|
|
80,040
|
Dennis R. Kilburg
|
|
|
|
|
|
|
4,025
|
|
|
71,528
|
(1)
|
The Option Exercises table includes the number of options under our 2002 Stock Incentive Plan that were exercised in 2008 and the value realized before payment of any applicable
withholding taxes and broker commissions. As noted in the Summary Compensation Table under Option Awards, pursuant to the Companys 2002 Stock Incentive Plan, the per share exercise price of each outstanding option is reduced by the amount of
dividends paid, if any, as and when declared by the board of directors. For additional information about the non-cash dividend equivalent rights, see the Equity Incentive Awards section in the accompanying Compensation Discussion and Analysis.
Certain amounts included under Option Awards in the Summary Compensation Table in 2006, 2007 and 2008, and in the future, will be double counted in the Option Exercises table when realized, to the extent any named executive officer exercised options
in the current period.
|
(2)
|
The Stock Awards table includes the number of shares under our 2005 Stock Incentive Plan that were vested in 2008 and the value realized on the date of vesting before payment of any
applicable withholding taxes. Certain amounts included under Stock Awards in the Summary Compensation Table in 2006, 2007 and 2008, and in the future, will be double counted in the Stock Awards table when realized, to the extent any restricted stock
vested in the current period.
|
Pension Benefits
None of the named executive officers are eligible to participate in the Company sponsored Iowa Telecom Pension Plan.
Nonqualified Deferred Compensation
The following table provides information, for each of our named executive officers, on the participation in 2008 in the Iowa Telecommunications Services,
Inc. Deferred Compensation Plan. The Deferred Compensation Plan is a nonqualified and unfunded plan that allows eligible participants to voluntarily defer until retirement up to 50% of base salary and up to 100% of bonus in any given year. Earnings
for the participant are credited based on the participants election of certain investment indices authorized under the Deferred Compensation Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last FY
($)
(1)
|
|
Registrant
Contributions
in Last FY
($)
(2)
|
|
Aggregate
Earnings in
Last
FY ($)
(3)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)
(4)
|
Alan L. Wells
|
|
$
|
20,846
|
|
$
|
91,364
|
|
$
|
(278,230
|
)
|
|
$
|
|
|
$
|
479,652
|
Craig A. Knock
|
|
|
91,047
|
|
|
10,502
|
|
|
(48,743
|
)
|
|
|
|
|
|
108,783
|
Brian T. Naaden
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald G. Henry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis R. Kilburg
|
|
|
|
|
|
|
|
|
(1,901
|
)
|
|
|
|
|
|
8,042
|
27
(1)
|
All of the amounts reflected as executive contributions are included in the Summary Compensation Table as Salary or Bonus earned.
|
(2)
|
Amounts credited to Mr. Wells and Mr. Knock for 2008 are summarized below:
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess 3% Credit
(a)
|
|
Excess 401(k) Plan
contribution
(b)
|
|
Other
(c)
|
|
Total
(d)
|
Alan Wells
|
|
$
|
23,608
|
|
$
|
16,910
|
|
$
|
50,846
|
|
$
|
91,364
|
Craig Knock
|
|
|
4,201
|
|
|
6,301
|
|
|
|
|
|
10,502
|
|
a.
|
In accordance with the Companys Deferred Compensation Plan, the Company credits the eligible participants deferred compensation account with the difference between 3% of
the participants base salary and annual cash bonus compensation for that calendar year, and the amount of the Companys contributions (other than matching contributions and elective deferrals) made to the participants account under
the Iowa Telecom Savings Plan for that calendar year.
|
|
b.
|
In accordance with the Companys Deferred Compensation Plan, the Company also credits the eligible participants deferred compensation account with the matching
contribution that the eligible participant would have received if the participants deferrals under the Companys Deferred Compensation Plan had instead been made to the Iowa Telecom Savings Plan, without regard to the annual compensation
limits then in effect under Code section 401(a)(17) or any other Code section or rule.
|
|
c.
|
In accordance with the Employment Agreement with Mr. Wells, the Company also credits Mr. Wells deferred compensation account in a dollar amount equal to five percent
(5%) of the sum of Mr. Wells base salary and annual cash bonus. Such deferrals are credited to Mr. Wells deferred compensation account during the year in accordance with the Companys payroll cycles, and vest
immediately.
|
|
d.
|
In accordance with the Employment Agreement with Mr. Wells, the amount of the Companys matching or discretionary contributions for Mr. Wells account under the
Companys defined contribution pension plans and deferred compensation plans shall not exceed $100,000 per year.
|
(3)
|
The aggregate earnings credited to the participants account are based on their individual election of one, or more, of the following investments (a) Standard and
Poors 500 Stock Index (including dividends reinvested), (b) Barclays (Lehman Brothers) Aggregate Bond Index, and (c) a one-year U.S. Treasury Bill. The average earnings (loss) rate for Mr. Wells, Mr. Knock and
Mr. Kilburg was approximately (40%), (46%) and (19%), respectively. None of these earnings (loss) are included in the Summary Compensation Table because substantially similar investments are available to all participants under the tax
qualified Iowa Telecom Savings Plan.
|
(4)
|
The Plan is unfunded and any benefit due to the participants is an unsecured general obligation of the Company. In the event of a Change of Control, as defined, the Company shall
create and fund an irrevocable trust for the payment of the benefits.
|
Employment Agreement
The Company has entered into an employment agreement with Alan L. Wells, our Chairman, President and Chief Executive Officer. The employment agreement expires on December 31, 2010, and is subject to automatic extensions for successive
terms of one year unless either party delivers at least 120 days notice of non-renewal. For 2009, Mr. Wells receives a base salary of $420,000, which in the future may be increased following annual review by our board of directors.
Mr. Wells also receives an annual bonus equal to a percentage of his base salary, ranging from zero to 200% of base salary if certain goals are met or exceeded. Goals used to assess Mr. Wells performance are established by the
Compensation Committee in its sole discretion not later than the end of each first fiscal quarter, except that at least one-half of Mr. Wells potential bonus is based on the Companys Adjusted EBITDA. Bonus amounts in
excess of 100% of Mr. Wells base salary may, in the Compensation Committees sole discretion, be paid in the form of restricted stock issued under our 2005 Equity
28
Incentive Plan, valued at fair market value and vesting over three years, subject to accelerated vesting if Mr. Wells employment is terminated by
the Company without cause, by Mr. Wells for good reason, due to Mr. Wells death or disability, or due to expiration of the term of the agreement without renewal.
The employment agreement also provides various fringe benefits, including
vacation, use of a motor vehicle, participation in the Companys 401(k) plan, and certain minimum amounts to be credited to Mr. Wells account under the Companys Deferred Compensation Plan. Pursuant to the agreement,
Mr. Wells also received a one-time grant of 100,000 shares of restricted stock under our 2005 Equity Incentive Plan, vesting over five years, subject to acceleration if, in connection with a change of control of the Company,
Mr. Wells employment is terminated by the Company without cause or by Mr. Wells for good reason.
If we terminate Mr. Wells employment without cause, or if Mr. Wells terminates his employment for good reason,
then (1) Mr. Wells will receive a pro-rated bonus for the year in which such termination occurs based on the Companys actual results for such year but pro-rated based on the number of days employed during the year, and (2) Mr. Wells
will continue to receive his base salary, target bonus, and health insurance for 24 months. The agreement also restricts Mr. Wells from competing with the Company for up to 24 months after termination of his employment.
For purposes of Mr. Wells employment agreement, the following
terms have been given the meaning set forth below:
Cause shall mean only:
|
(i)
|
a conviction of Executive of, or a guilty or nolo contendere plea by Executive with respect to, any crime punishable as a felony or involving moral turpitude, or any bar against
Executive from serving as a director, officer or employee of any publicly-traded company;
|
|
(ii)
|
any act of dishonesty either involving his employment or which is harmful to the Company or any subsidiary, or to employees of the Company or any subsidiary;
|
|
(iii)
|
any failure of Executive to materially comply with this Agreement or with the reasonable policies, regulations and directives of the Company as in effect from time to time;
|
|
(iv)
|
any act or omission on the part of Executive which is clearly and materially harmful to the reputation or business of the Company, including, but not limited to, conduct which is
inconsistent with federal and state laws respecting harassment of, or discrimination against, one or more of the Companys employees;
|
|
(v)
|
any material violation by Executive of the provisions of any confidentiality and/or non-compete agreement between the Company and Executive; or
|
|
(vi)
|
any willful failure to perform the duties described in Section 2 hereof, unless occasioned by illness, injury or Disability as defined in Section 7.
|
Good Reason for the termination of
employment shall apply only if due to one or more of the following circumstances:
|
(i)
|
failure by the Company to pay any amount that is due under this Agreement or to take any action that is required under this Agreement;
|
|
(ii)
|
any action that materially diminishes Executives position, authority, duties or responsibilities as Chief Executive Officer of the Company (or of the ultimate parent company
in an unbroken chain of companies ending with the Company, each company other than the ultimate parent owning stock possessing fifty percent or more of the total combined power of all classes of stock in one of the other companies in the chain);
|
29
|
(iii)
|
any requirement that Executive regularly render his services at a location other than one that is within forty-five (45) miles of Des Moines, Iowa, other than necessary
business travel occasioned by the performance of the duties described in Section 2; provided, however, that Executive may refuse to render his services from such other location and need not actually render his services from such other location
in order to invoke the protection of this clause (iii), it being sufficient that the Company has required the Executive to perform his services from such other location; or
|
|
(iv)
|
any reduction in Executives Base Salary or in the bonus plan described in Section 3(b) of this Agreement, or any substantial reduction in the aggregate value of the
Companys non-stock related benefit plans provided to Executive.
|
We do not have employment agreements or change of control agreements with any other named executive officer.
30
POTENTIAL PAYMENTS DUE UPON TERMINATION OR A CHANGE OF CONTROL
Upon the termination of a named executive officer, such
person may be entitled to payments or the provision of other benefits, depending on the event triggering the termination. The events that would trigger a named executive officers entitlement to payments or other benefits upon termination, and
the value of the estimated payments and benefits, are described in the following table. The following table assumes a termination date and, where applicable, a change in control date of December 31, 2008, and a stock price of $14.28 per share,
which was the closing price of one share of our common stock on December 31, 2008 (the last trading day of 2008):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Reason
|
|
Alan L.
Wells
|
|
Craig A.
Knock
|
|
Brian T.
Naaden
|
|
Donald G.
Henry
|
|
Dennis R.
Kilburg
|
Voluntary Resignation
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Involuntary Termination for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination Without Cause
|
|
|
1,909,992
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination Without Cause, or Termination For Good Reason, within 1 year after a Change in Control
|
|
|
3,552,192
|
|
|
892,500
|
|
|
485,520
|
|
|
471,240
|
|
|
322,014
|
Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation and Involuntary Termination for Cause
In the
event of voluntary resignation and involuntary termination for cause, none of the named executive officers is entitled to any enhanced or further benefits from the Company.
Involuntary Termination Without Cause or Termination by the Executive For Good Reason
We have entered into an employment agreement with Mr. Wells pursuant to
which, in the event of involuntary termination without cause, or termination by Mr. Wells for good reason, he will be entitled to receive the following: (1) a pro-rated bonus for the year in which such termination occurs based on the
Companys actual results for such year but pro-rated based on the number of days employed during the year, and (2) Mr. Wells will continue to receive his base salary, target bonus, and health insurance for 24 months. The
agreement also restricts Mr. Wells from competing with the Company for up to 24 months after termination of his employment.
The other named executive officers are employees at will and, except in the case of a termination following a change in control, are not entitled to any
severance benefits upon involuntary termination or termination by the executive for good reason.
Termination Following a Change in Control
We have entered into an employment agreement with Mr. Wells that, in the event of a termination following a change in control, provide for the
following: (1) a pro-rated bonus for the year in which such termination occurs based on the Companys actual results for such year but pro-rated based on the number of days employed during the year, (2) Mr. Wells will continue to
receive his base salary, target bonus, and health insurance for 24 months, and (3) the immediate vesting of any unvested restricted stock under the Companys 2005 Stock Incentive Plan.
For purposes of Mr. Wells employment agreement and, as referenced
below, the 2005 Stock Incentive Plan, change in control has been given the meaning set forth below:
A Change of Control of the Company shall be deemed to have occurred if (1) any person (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the Exchange Act)) is or becomes
31
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power (with respect to the election of directors) of the Companys then outstanding securities; (2) at any time after the execution of this Agreement, individuals who as of the date of the execution of this
Agreement constitute the Board of Directors (and any new director whose election to the Board or nomination for election to the Board by the Companys shareholders was approved by a vote of at least two-thirds (2/3) of the members of the
Board of Directors then still in office) cease for any reason to constitute a majority of the Board; (3) the consummation of a merger or consolidation of the Company with or into any other corporation,
other than
a merger or
consolidation which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or a parent
company of the surviving entity) more than 50% of the combined voting power (with respect to the election of directors) of the securities of the Company or of such surviving entity or parent company thereof outstanding immediately after such merger
or consolidation; or (4) the consummation of a plan of complete liquidation of the Company or of an agreement for the sale or disposition by the Company of all or substantially all of the Companys business or assets.
For the remainder of the named executive officers, pursuant to the
Companys 2005 Stock Incentive Plan, the restricted shares become vested in full upon a termination of employment by the Company without cause, or upon a termination of employment by the named executive officer for good reason, within 12 months
of a change of control.
For purposes of the 2005 Stock
Incentive Plan, the following terms have been given the meanings set forth below:
Cause for the termination of Participants employment or other relationship with the Company or any Affiliate shall mean the occurrence of any of the following events and, with respect to clause
(iii) and (iv) below, Participants failure to cure such event within 30 days after notice thereof from the Company:
|
(i)
|
a conviction of Participant of, or a guilty or nolo contendere plea by Participant with respect to, any crime punishable as a felony or involving moral turpitude, or any bar against
Participant from serving as a director, officer or employee of any publicly-traded company;
|
|
(ii)
|
any act of dishonesty either involving Participants employment or other services to the Company or its Affiliate which is harmful to the Company or any Affiliate or to
employees of the Company or any Affiliate;
|
|
(iii)
|
any failure of Participant to materially comply with any agreement between Participant and the Company regarding the provision of such services by Participant; or
|
|
(iv)
|
any act or omission on the part of Participant which is clearly and materially harmful to the reputation or business of the Company, including, but not limited to, conduct which is
inconsistent with federal and state laws respecting harassment of, or discrimination against, one or more of the Companys employees.
|
Good Reason for the termination of Participants employment or other relationship with the Company or any Affiliate shall mean the
occurrence of any of the following events that the Company or such Affiliate fails to cure within 30 days after notice thereof from Participant:
|
(i)
|
failure by the Company to pay any amount that is indisputably due or to take any action that is indisputably required under any agreement between Participant and the Company
regarding the provision of services by Participant that is not remedied promptly after receipt of notice thereof from Participant;
|
|
(ii)
|
if Participant is an employee of the Company or any Affiliate, any action by the Company or such Affiliate that materially diminishes Participants position, authority, duties
or responsibilities as such employee;
|
32
|
(iii)
|
if Participant is an employee of the Company or any Affiliate, any requirement that Participant regularly render his employment services at a location other than one that is within
forty-five (45) miles of Newton, Iowa, other than necessary business travel occasioned by the performance of Participants duties; or
|
|
(iv)
|
if Participant is an employee of the Company or any Affiliate, any substantial reduction in the aggregate value of Participants base salary, bonus and other benefits provided
to Participant.
|
Payments Made Upon
Disability
In the event of a termination due to a
disability, none of the named executive officers is entitled to any enhanced or further benefits from the Company.
Payments Made Upon Death
In the event of death, none of the named executive officers spouses or dependents is entitled to any severance benefits upon death of the named
executive officer.
Payments Made Upon Retirement
In the event of normal retirement, none of the named
executive officers is entitled to any enhanced or further benefits from the Company.
Other
The amounts
shown above for each of the named executive officers do not include payments and benefits generally provided on a non-discriminatory basis to similarly situated salaried employees of the Company upon the termination of their employment with the
Company, including: (a) accrued salary, profit sharing, and unused vacation benefits, (b) distributions of account balances under the Companys qualified 401(k) plan, (c) accrued benefits under the Nonqualified Deferred
Compensation Plan, (d) vested stock options granted under the 2002 Stock Incentive Plan, and (e) any severance benefits made available to salaried employees generally.
33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to its charter, and with the assistance of our Chief Financial
Officer and General Counsel, our Audit Committee periodically reviews transactions, if any, between the Company and our officers, directors and beneficial owners to identify and address potential conflicts of interest. The creation or modification
of a contractual obligation running to or from a related party requires certification by the responsible business unit leader that the arrangement is no less favorable to the Company than could be obtained in a transaction with an unrelated
third-party dealing at arms-length. The requirement that the Audit Committee review transactions with related parties is set forth in writing in the committees charter. The procedures for certifying the fairness of the transaction are
not in writing but are communicated periodically to the Companys executive officers and other managers by our Chief Financial Officer and General Counsel.
There are no reportable transactions for the year ended December 31, 2008.
34
REPORT OF THE AUDIT
COMMITTEE OF THE BOARD OF DIRECTORS
The Board of Directors and the Audit Committee believe that the composition of the Audit Committee meets the requirements of the rules and regulations of
the Securities and Exchange Commission, New York Stock Exchange (the NYSE) and the Sarbanes-Oxley Act of 2002, including the requirement that all committee members be independent as defined in Section 303A of the NYSE
listing standards. The Audit Committee operates under a written charter adopted by the board of directors in October 2004, a copy of which is available on the Companys website.
The Audit Committee assists the Board of Directors with fulfilling its oversight responsibility regarding the quality and
integrity of the Companys accounting, auditing and financial reporting practices. In performing its oversight responsibilities regarding the audit process, the Audit Committee has reviewed and discussed the Companys consolidated
financial statements with management and with Deloitte & Touche LLP, the Companys independent registered public accounting firm. Management represented to the Audit Committee that the Companys consolidated financial statements
were prepared in accordance with generally accepted accounting principles generally accepted in the United States. The Audit Committee also discussed with the Companys independent registered public accounting firm matters required to be
discussed by Statement on Auditing Standards No. 114,
The Auditors Communication with Those Charged with Governance
.
The Companys independent registered public accounting firm also provided and discussed with the Audit Committee the written disclosure required by
applicable requirements of the Public Company Accounting Oversight Board (PCAOB) regarding the independent accountants communications with the audit committee concerning independence and has reviewed and discussed with the Companys
independent registered public accounting firm the accounting firms independence. Based on these discussions and input from management, the Audit Committee found that the non-audit services provided by the Companys independent registered
public accounting firm during the year ended December 31, 2008 were compatible with maintaining the independent accountants independence.
During 2008, management continued the documentation, testing and evaluation of the Companys system of internal control over financial reporting in
response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee met periodically, both independently and with management, to review and discuss the Companys progress on
complying with Section 404, including the PCAOBs Auditing Standard No. 5 regarding the audit of the internal control over financial reporting. The Audit Committee also met periodically with the Companys independent registered
public accounting firm to discuss the Companys internal controls and the status of its Section 404 compliance efforts. At the conclusion of the process, management provided the Audit Committee with a report on the effectiveness of the
Companys internal control over financial reporting. The Audit Committee continues to oversee the Companys efforts related to its internal controls.
Based upon the Audit Committees discussion with management and the Companys independent registered public accounting firm and the Audit
Committees review of the representation of management and on the report of the Companys independent registered public accounting firm to the Audit Committee, the Audit Committee recommended to the Companys Board of Directors that
the Companys audited consolidated financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission on March 2, 2009.
|
MEMBERS OF THE AUDIT COMMITTEE
|
|
Brian G. Hart, Chair
|
Norman C. Frost
|
H. Lynn Horak
|
Kendrik E. Packer
|
35
PRINCIPAL INDEPENDENT ACCOUNTANT FEES AND SERVICES
Pre-approval Policy
In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the Audit Committee Charter, all audit and
audit-related work and all non-audit work performed by the independent accountants, Deloitte & Touche LLP, must be submitted to the Audit Committee for specific approval in advance by the Audit Committee, including the proposed fees for
such work. The Audit Committee has not delegated any of its responsibilities under the Sarbanes-Oxley Act to management.
Audit Fees
The aggregate fees billed for professional services rendered by Deloitte & Touche LLP for fiscal 2008 and 2007 were $625,000 and $477,000,
respectively. The audit fees include the audit of our consolidated financial statements and the audit on the effectiveness of the Companys internal control over financial reporting in accordance with the PCAOB, along with additional services
associated with the acquisitions of Bishop Communications Corporation and Sherburne Tele Systems, Inc.
Audit-related Fees
The
aggregate fees billed for audit-related services rendered by Deloitte & Touche LLP during fiscal 2008 and 2007, which consisted principally of audits and related services of the employee benefit plans were $35,000 and $34,000, respectively.
Tax Fees
The aggregate fees billed for professional services rendered by Deloitte & Touche LLP during fiscal 2008 and 2007
for tax compliance, tax advice and tax planning in connection with our various tax returns was $40,000 and $38,000, respectively.
All Other Fees
None.
PROPOSAL NO. 2APPROVAL OF AUDITORS
The Audit Committee of the board of directors recommended the retention of Deloitte & Touche LLP as Iowa Telecoms independent auditors for
the year ending December 31, 2009, subject to shareholder approval. Deloitte & Touche LLP has served as Iowa Telecoms independent auditors since December 31, 2000. Representatives of Deloitte & Touche LLP will be
available to answer questions and make statements at the annual meeting.
Board recommendation and shareholder vote required
The Audit Committee of the board of directors recommends a vote FOR the approval of the appointment of Deloitte &
Touche LLP as Iowa Telecoms independent auditors for the year ending December 31, 2009 (Proposal No. 2 on the proxy card). The affirmative vote of the holders of a majority of the shares actually voting on the proposal will be
required for approval.
If the appointment is not approved, the
Audit Committee will select other independent auditors. If the appointment is approved, the Audit Committee reserves the right to appoint other independent auditors.
36
ANNUAL REPORT TO SHAREHOLDERS
Iowa Telecoms 2008 Annual Report to Shareholders accompanies this proxy
statement. It includes a copy of our Annual Report on Form 10-K for the year ended December 31, 2008, which includes a list of exhibits thereto. Iowa Telecom will furnish to shareholders a copy of any such exhibit(s) upon written request and
advance payment of reasonable fees related to furnishing such exhibit(s). Requests for copies of such exhibit(s) should be directed to our Secretary at Iowa Telecommunications Services, Inc., 403 W. Fourth Street North, P.O. Box 1046, Newton, Iowa
50208-1046.
SHAREHOLDERS
PROPOSALS
In order for a shareholder to have a proposal
included in the proxy statement for the 2010 annual meeting of shareholders, the proposal must comply with the procedures identified by Rule 14a-8 under the Exchange Act and be received in writing by Iowa Telecoms Secretary no later than
December 29, 2009. A proposal satisfying such requirements will be considered at the 2010 annual meeting of shareholders.
The following information must be provided regarding each proposal: a brief description of the business desired to be brought before the meeting; the
reasons for conducting such business at the meeting; and a statement of any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made. In addition, the following information must be
provided regarding the shareholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made: the name and address of such shareholder, as they appear on the corporations books, and of such beneficial owner; the
class, series and number of shares of the corporation which are owned beneficially and of record by such shareholder and such beneficial owner; a representation that such shareholder is a shareholder of record and intends to appear in person or by
proxy at the meeting to bring the business proposed in the notice before the meeting; and any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to the Exchange Act and the rules and regulations promulgated thereunder.
GENERAL
The expenses of preparing and mailing this proxy statement and the accompanying proxy card and the cost of solicitation of proxies, if any, will be borne
by Iowa Telecom. In addition to the use of mailings, proxies may be solicited by personal interview, telephone and telegraph, and by directors, officers and regular employees of Iowa Telecom without special compensation therefor. Iowa Telecom
expects to reimburse banks, brokers and other persons for their reasonable out-of-pocket expenses in handling proxy materials for beneficial owners of Iowa Telecoms common stock. Unless contrary instructions are indicated on the proxy card,
all shares of common stock represented by valid proxies received pursuant to this solicitation (and not revoked before they are voted) will be voted FOR all of the proposals described in this proxy statement.
We maintain a website at
www.iowatelecom.com
to provide information to
the general public and our shareholders about our products and services. Copies of the reports we file with the SEC are also available at our website, as are our press releases and other general information about the Company. A printed copy of our
Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Audit, Nominating and Governance, and Compensation committee charters is available to any shareholder who requests it from our investor relations department by calling
(641) 787-2089, by sending an e-mail request from our website at www.iowatelecom.com or directly to
InvestorRelations@iowatelecom.com
, or by writing to Investor Relations at Iowa Telecommunications Services, Inc., 403 W. Fourth Street
North, P.O. Box 1046, Newton, Iowa 50208-1046.
37
OTHER MATTERS
The board knows of no other matters to be brought before the annual meeting.
If matters other than the foregoing should arise at the annual meeting, it is intended that the shares represented by proxies will be voted in accordance with the judgment of the persons named in the proxy card.
Please complete, sign and date the enclosed proxy card, which is revocable as
described herein, and mail it promptly in the enclosed postage-paid envelope.
|
By Order of the Board of Directors,
|
|
|
Donald G. Henry
|
Vice President, General Counsel and Secretary
|
Dated: April 28, 2009
38
0
--------------- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
----------------
14475
IOWA TELECOMMUNICATIONS SERVICES, INC.
PROXY
COMMON STOCK
ANNUAL MEETING: JUNE 11, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Messrs. Craig A. Knock and Donald G. Henry, and each of them, as proxies, with full power of
substitution in each of them, are hereby authorized to represent and to vote, as designated below and on
the reverse side, upon the following proposals and in the discretion of the proxies on such other matters
as may properly come before the Annual Meeting of Shareholders of Iowa Telecommunications Services,
Inc. (Iowa Telecom) to be held at the offices of the Company, 403 W. Fourth Street North, Newton, Iowa
50208 on Thursday, June 11, 2009 at 10:00 AM central time or any adjournment(s), postponement(s)
or other delay(s) thereof (the Annual Meeting), all shares of common stock of Iowa Telecom to which the
undersigned is entitled to vote at the Annual Meeting. The following proposals are more fully described in
the Notice of Annual Meeting and Proxy Statement for the Annual Meeting dated April 28, 2009 (receipt of
which is hereby acknowledged).
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND
2 AND WILL BE
VOTED, EITHER FOR OR AGAINST, AT THE DISCRETION OF THE PROXIES, ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING. THE BOARD
OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSALS 1 AND 2.
(Continued and to be dated and signed on the reverse side.)
ANNUAL MEETING OF
SHAREHOLDERS OF
IOWA TELECOMMUNICATIONS SERVICES, INC.
June 11, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card
are available at http://phx.corporate-ir.net/phoenix.zhtml?c=182669&p=irol-Proxy
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Signature of Shareholder Date: Signature of Shareholder Date:
Note: Please sign exactly as your name or
names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
1. Election of three directors to serve as Class II directors whose terms will expire in
2012 (Proposal No.
1).
O Kenneth R. Cole Class II expires in 2012
O Norman C. Frost Class II expires in 2012
O Kendrik E. Packer Class II expires in 2012
2. Approval of the appointment
of Deloitte & Touche LLP as our
independent registered public accounting firm for the year
ending December 31, 2009 (Proposal No. 2).
3. Such other matters as may properly come before the Annual Meeting.
Only
shareholders of record at the close of business on April 28, 2009 are entitled
to vote at the meeting or at any
postponement or adjournment of the meeting.
PLEASE SIGN AND DATE AND RETURN YOUR PROXY TODAY
FOR AGAINST ABSTAIN
FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here:
NOMINEES:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
--------------- Please detach along perforated line and mail in the envelope provided. ----------------
20330000000000001000 8 061109
PLEASE CHECK THIS BOX IF YOU EXPECT TO
ATTEND THE ANNUAL MEETING IN PERSON.
Iowa Telecom (NYSE:IWA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Iowa Telecom (NYSE:IWA)
Historical Stock Chart
From Sep 2023 to Sep 2024