SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. n/a)
Filed by the Registrant [X]
Filed by a Party other than 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 Pursuant to ss.240.14a-11(c) or ss.240.14a-12
General Communication, Inc.
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
(Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fees is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee if offset as provided by
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offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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LETTER TO SHAREHOLDERS
May 15, 2006
Re: 2006 Annual Meeting of Shareholders
of General Communication, Inc.
Dear Shareholder:
The board of directors of General Communication, Inc. cordially invites
and encourages you to attend our annual meeting of shareholders. The meeting
will be held at Josephine's Restaurant on the 15th floor in the Sheraton Hotel
at 401 East 6th Avenue in Anchorage, Alaska at 6:00 p.m. (Alaska Daylight Time)
on Monday, June 26, 2006. Our board has chosen the close of business on April
28, 2006 as the record date for determining the shareholders entitled to notice
of, and to vote at, the meeting. Please join us for a reception preceding the
meeting, commencing at 5:00 p.m.
Copies of the Notice of Annual Meeting of Shareholders, Proxy and Proxy
Statement are enclosed covering the formal business to be conducted at the
meeting. Also enclosed for your information is a copy of our annual report to
shareholders in the form of our Form 10-K for the year ended December 31, 2005
as filed with the Securities and Exchange Commission.
At the meeting, our shareholders will be asked to elect individuals to
fill positions on our board of directors, as a classified board required by our
revised Bylaws and to conduct other business as described more fully in the
Proxy Statement and as may properly come before the meeting. Regardless of the
number of shares you own, your careful consideration of, and vote on, these
matters is important.
In order to ensure that we have a quorum and that your shares are voted
at the meeting, please complete, date and sign the enclosed Proxy and return it
promptly in the enclosed addressed and stamped envelope.
In addition to conducting the formal business at the meeting, we shall
also review our activities over the past year and our plans for the future. I
hope you will be able to join us.
Sincerely,
/s/ Ronald A. Duncam
Ronald A. Duncan
President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 26, 2006
May 15, 2006
To the Shareholders of
General Communication, Inc.
You are cordially invited to attend the annual meeting of shareholders
of General Communication, Inc. ("Company", "we", "our", "us"). The meeting will
be held at Josephine's Restaurant on the 15th floor in the Sheraton Hotel at 401
East 6th Avenue in Anchorage, Alaska at 6:00 p.m. (Alaska Daylight Time) on
Monday, June 26, 2006. At the meeting, our shareholders will consider and vote
upon the following matters:
o Electing three directors, each for a three year term, as part of Class
II of our classified board of directors; and electing one director to
complete the remaining one year of the three-year term in Class III of
the classified board
o Transacting such other business as may properly come before the annual
meeting and any adjournment or adjournments of it
The above matters are more fully described in the accompanying Proxy
Statement. Please join us for a reception preceding the annual meeting,
commencing at 5:00 p.m.
The close of business on April 28, 2006 has been fixed as the record
date for the annual meeting. Only holders of shares of our Class A common stock
and Class B common stock of record as of that date will be entitled to notice
of, and to vote at, the annual meeting or any adjournment or adjournments of it.
The accompanying form of Proxy is solicited by our board. The enclosed
Proxy Statement contains further information with regard to the business to be
transacted at the meeting. A list of our shareholders as of the record date will
be kept at the offices of the Company at 2550 Denali Street, Suite 1000,
Anchorage, Alaska 99503 for a period of 30 days prior to the meeting and will be
subject to inspection by any of our shareholders at any time during normal
business hours.
In order to ensure that we have a quorum and that your shares are voted
at the annual meeting, please sign and date the enclosed Proxy and mail it to
our transfer agent (Mellon Investor Services LLC) in the enclosed, addressed and
stamped envelope. If you send in your Proxy and later do attend the meeting, you
may then withdraw your Proxy should you desire to do so. However, in this case,
you must revoke your Proxy in writing and present the written revocation at the
meeting. Thereafter, you may vote in person if you wish. The Proxy may be
revoked at any time prior to its exercise.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John M. Lowber
John M. Lowber, Secretary
GENERAL COMMUNICATION, INC.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Telephone: 907.868.5600
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 26, 2006
We are sending this Proxy Statement with the enclosed form Proxy and
Notice of Annual Meeting of Shareholders of General Communication, Inc. (unless
the context otherwise requires, includes its direct and indirect subsidiaries
and is referred to as "Company," "we," "us" or "our") in conjunction with the
2006 annual meeting of our shareholders. The meeting will be held at Josephine's
Restaurant on the 15th floor in the Sheraton Hotel at 401 East 6th Avenue in
Anchorage, Alaska at 6:00 p.m. (Alaska Daylight Time) on Monday, June 26, 2006.
We invite you to attend the annual meeting and request that you vote on
the proposals described in this Proxy Statement. However, you do not need to
attend the meeting to vote your shares. Instead, you may simply complete, date,
sign and return the enclosed form Proxy.
This Proxy Statement, the Letter to Shareholders, Notice of Annual
Meeting, and the accompanying Proxy are first being sent or delivered to you and
other shareholders of the Company on or about May 15, 2006. A copy of the
Company's Annual Report, in the form of the Company's Form 10-K for the year
ended December 31, 2005 ("Annual Report"), accompanies this Proxy Statement.
See, "Annual Report."
DATED: May 15, 2006
TABLE OF CONTENTS
Page
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COMPANY ANNUAL MEETING.......................................................1
MANAGEMENT OF COMPANY........................................................6
CODE OF BUSINESS CONDUCT AND ETHICS..........................................27
CERTAIN TRANSACTIONS.........................................................28
OWNERSHIP OF COMPANY.........................................................32
LITIGATION AND REGULATORY MATTERS............................................35
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS.............................35
ANNUAL REPORT................................................................37
SHAREHOLDER COMMUNICATIONS...................................................37
FUTURE SHAREHOLDER PROPOSALS AND RECOMMENDATIONS.............................38
Page i
COMPANY ANNUAL MEETING
Voting Procedure
Overview. This Proxy Statement is furnished to you and our other
shareholders because our board of directors is soliciting shareholder proxies to
vote at our 2006 annual meeting of shareholders.
Time and Place. Our annual meeting will be held at Josephine's
Restaurant on the 15th floor in the Sheraton Hotel at 401 East 6th Avenue in
Anchorage, Alaska at 6 p.m. (Alaska Daylight Time) on Monday, June 26, 2006. A
reception for our shareholders will commence at 5 p.m. at that location.
Delivery. The Proxy Statement, Letter to Shareholders, Notice of Annual
Meeting and accompanying board proxy ("Proxy") are first being sent or delivered
to our shareholders on or about May 15, 2006. A copy of our Annual Report
accompanies this Proxy Statement.
Exhibits to that Form 10-K are not enclosed. However, that form
includes a list briefly describing all of those exhibits. In addition, we will
furnish a copy of an exhibit to a shareholder upon written request to us and
payment of a fee to cover our expenses in furnishing that exhibit.
Purpose. As indicated in the Notice of Annual Meeting, the following
matters will be considered and voted upon at our annual meeting:
o Electing three directors in Class II of our classified board each for a
three-year term and electing one director to complete the remaining one
year of the three-year term in Class III of the classified board.
o Transacting such other business as may properly come before the meeting
and any adjournment or adjournments of it.
Outstanding Voting Securities. Our board has chosen the close of
business on April 28, 2006 as the record date for our annual meeting ("Record
Date"). Only holders of our Class A and Class B common stock as of the Record
Date will be entitled to notice of, and to vote at, that meeting. As of the
Record Date and under our current Restated Articles of Incorporation
("Articles"), our outstanding stock was divided into two categories:
o Class A common stock, for which the holder of a share is entitled to
one vote.
o Class B common stock, for which the holder of a share is entitled to
ten votes.
On the Record Date, there were 50,826,668 shares of our Class A common
stock and 3,381,564 shares of our Class B common stock outstanding and entitled
to be voted at our annual meeting.
Voting Rights, Votes Required for Approval. At our annual meeting, a
simple majority of our issued and outstanding common stock entitled to be voted
as of the Record Date, represented in person or by proxy, will constitute a
quorum. As an example and based upon the shareholdings as of the Record Date, a
quorum would be established by the presence
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of shareholders, directly or by proxy, holding at least 8,505,515 shares of our
Class A common stock and all 3,381,564 shares of our Class B common stock.
Because of the ten-for-one voting power of our Class B common stock,
shares of that stock have a substantial impact on the voting power for purposes
of taking votes on matters addressed at our annual meeting. The total number of
votes to which our Class A common stock and our Class B common stock were
entitled as of the Record Date were 50,826,668 and 33,815,640, respectively.
With a quorum present, adoption of our annual meeting proposals
pertaining to electing directors, and approving other matters to be addressed at
the annual meeting will each require an affirmative vote by the holders of at
least a simple majority of the voting power of our issued and outstanding Class
A common stock and our Class B common stock entitled to vote as of the Record
Date and represented in person or by proxy at the meeting. Under the Articles,
voting on these items must be by our Class A and Class B common stock, all
voting as a group.
The Articles expressly provide for non-cumulative voting in the
election of directors.
As of the Record Date, the number and percentage of outstanding shares
entitled to vote held by our directors and executive officers and their
affiliates were 2,580,666 shares of our Class A common stock, constituting
approximately 5.0% of our outstanding stock in that class, and 2,056,093 shares
of our Class B common stock, constituting approximately 60.8% of the outstanding
stock in that class.
Voting Methods. By Mail - By signing and returning the enclosed form
Proxy according to the instructions provided, you are enabling the individuals
named on the Proxy to vote your shares at the annual meeting in the manner you
indicate. We encourage you to sign and return the Proxy even if you plan to
attend the meeting. In this way, your shares will be voted even if you are
unable to attend the meeting.
By Telephone or Internet - Instructions for voting by telephone and
over the Internet are included with this Proxy Statement. If you vote by
telephone or over the Internet, you do not need to complete and mail your Proxy
to us.
In Person at the Annual Meeting - In the event you shall plan to attend
the annual meeting and vote in person, we will provide you with a ballot at the
meeting. If your shares are registered directly in your name, you are considered
the shareholder of record, and you have the right to vote in person at the
meeting. If your shares are held in the name of your broker or other nominee,
you are considered the beneficial owner of shares held in your name. In that
case, and if you wish to vote at the meeting, you must bring with you to the
meeting a legal proxy from your broker or other nominee authorizing you to vote
those shares.
Proxies. The accompanying form Proxy is being solicited on behalf of
our board for use at our annual meeting.
Subject to the conditions described in this section, the shares
represented by each Proxy executed in the accompanying form of Proxy will be
voted at our annual meeting in accordance with the instructions in that Proxy.
The Proxy will be voted for our board's nominees for directors as a classified
board and as otherwise specified in the Proxy, unless a contrary
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choice is specified. The form Proxy also gives discretionary authority to the
holder on other matters. See, within this section, "- Other Business."
All votes cast by our shareholders, directly or by Proxy completed and
executed in accordance with the instructions on the Proxy, will be counted at
our annual meeting. A Proxy having no clear indication of a vote on a proposal
to be addressed at our annual meeting will be voted "for" the corresponding
proposal, as the case may be. A proxy having conflicting indications or more
than one selection on a proposal to be addressed at our annual meeting will not
be voted on that matter but will be used for purposes of establishing a quorum.
A Proxy clearly marked as withholding authority to elect a nominee or
otherwise as abstaining on a proposal to be addressed at our annual meeting will
be honored and not voted (although present and entitled to vote). Similarly, a
broker holding shares of record for their beneficial owner generally is not
entitled to vote on matters before our annual meeting unless the owner gives
that broker specific voting instructions. The votes that the broker would have
cast should that owner have given those specific instructions (commonly called
"broker non-votes") are not considered as votes cast for purposes of the
proposals and other matters addressed at our meeting. However, such withholding
of, or abstaining from, voting and broker non-votes will be counted as present
for purposes of establishing a quorum for our meeting, and they will have the
effect of votes against approval of the proposals and other matters addressed at
our meeting.
Voting by Employees Participating in Our Stock Purchase Plan. Our
Qualified Employee Stock Purchase Plan ("Stock Purchase Plan") provides that
each participant in the plan is entitled to vote the pro rata portion of shares
of our common stock held by the plan and allocated to the participant. Should a
participant in the Stock Purchase Plan decline or otherwise not respond to an
opportunity to vote those shares, the plan provides that the shares are to be
voted by the Plan Committee, which administers the Stock Purchase Plan. These
shares would also be counted for purposes of establishing a quorum.
Revocability of Proxies. A Proxy executed in the form enclosed may be
revoked by the shareholder signing the Proxy at any time before the authority
granted under the Proxy is exercised by giving written notice to the Secretary
of our board at the principal executive offices of the Company as identified on
the cover page of this Proxy Statement. The notice may also be delivered to the
Secretary at our annual meeting prior to a vote using the Proxy. Thereafter, a
shareholder revoking the Proxy may vote in person or by other proxy as provided
by our Bylaws, as revised and in effect as of the Record Date ("Bylaws"). A
shareholder wishing to revoke the Proxy may do so by executing another valid
proxy bearing a later date.
Cost of the Proxy Solicitation. The expenses of the Proxy solicitation
made by our board for our annual meeting, including the cost of preparing,
assembling and mailing the Notice of Annual Meeting, Proxy, Proxy Statement, and
return envelopes, the handling and tabulation of proxies received, and charges
of brokerage houses and other institutions, nominees or fiduciaries for
forwarding such documents to beneficial owners, are to be paid by us. In
addition to the mailing of these proxy materials, solicitation may be made in
person or by telephone, telecopy, telegraph, or electronic mail by our officers,
directors, or regular employees, none of whom are to receive additional
compensation for that effort.
Page 3
Director Elections
Overview. As of the Record Date, our board was composed of seven
directors classified into the following three classes with the number of members
as indicated: Class I (one member), Class II (three members), and Class III
(three members).
Therefore, at our annual meeting, three individuals will be elected in
Class II of our board each for a three-year term. In addition, one individual
will be elected in Class III of our board to complete the remaining one year of
the three-year term of that class. The individuals so elected will serve subject
to the provisions of the Bylaws and until the election and qualification of
their respective successors.
Our Nominating and Corporate Governance Committee ("Nominating and
Corporate Governance Committee") has as one of its responsibilities to seek out,
from time to time, candidates as prospective board members. These candidates may
be identified through the efforts of individual members of the Nominating and
Corporate Governance Committee, members of our board, generally, shareholder
recommendations accepted by the committee, and, in the committee's discretion,
through consultants as otherwise provided in our Nominating and Corporate
Governance Committee Charter ("Nominating and Corporate Governance Committee
Charter"). See "Future Shareholder Proposals and Recommendations:
Recommendations."
Prospective candidates must meet the minimum criteria set forth in the
Nominating and Corporate Governance Committee Charter taking into consideration
the appropriate size of our board, the committee's understanding of our
strategic direction requirements, and the specific compositional needs of our
board. In addition, in reviewing and making recommendations regarding existing
board members, the committee takes into consideration results of evaluations of
existing board members and the wishes of an affected existing board member to be
re-nominated.
The minimum criteria set forth in the Nominating and Corporate
Governance Committee Charter for selection as a committee-recommended nominee
for a position on the board are as follows:
o Be between and including 21 and 70 years of age (although, in the event
a person reaches the upper limit of that age while a director, that
person's term as director immediately terminates and the director is
required by our Bylaws to resign from the board).
o Possess basic skills and characteristics required as prerequisites for
each member, unless otherwise specified, on the board which must
include, but are not limited to, the following -
o Knowledge, skills and experience in at least one of the primary
industries in which we operate.
o Ability to read and understand fundamental financial statements,
including our balance sheet, income statement and cash flow
statement, and have at least familiarity with the underlying
accounting rules and practices.
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o Ability to understand our key business and financial risks.
o Appreciation of the relationship of our business to changing needs
of society.
o With respect to at least one member of our board, skills,
attributes, and financial sophistication of an audit committee
financial expert as the term is defined in the charter.
o With respect to at least a simple majority of the authorized
members of our board, each be an independent director as the term
is defined in the Nasdaq Stock Market corporate governance listing
standards (to which we are subject) and incorporated into the
charter, i.e., an individual other than one of our officers or
employees or any other individual having a relationship which in
the opinion of our board would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director ("Independent Director").
o Other skills and characteristics specifically identified and
approved by the committee.
We believe that the nominees proposed for election as directors are
willing to serve as such. Our board intends that the proxyholders named in the
accompanying form of Proxy or their substitutes will vote for the election of
these nominees unless specifically instructed to the contrary. However, in the
event any nominee at the time of the election shall be unable or unwilling or
shall otherwise be unavailable for election and as a consequence, other nominees
shall be designated, those proxyholders or their substitutes will have
discretion and authority to vote or refrain from voting in accordance with their
judgment with respect to other nominees.
Director Independence. Messrs. Edgerton and Mooney, members of our
board, are officers of Verizon Communications, Inc. ("Verizon"). In January 2006
Verizon acquired MCI, Inc. ("MCI") including its ownership interest in us. As of
the Record Date, Verizon was the holder of in excess of 5% of the Company's
outstanding shares of Class B common stock. Mr. Brett, our Chairman of the
Board, while in that capacity an officer under our Bylaws and responsible for
the conduct of our board meetings and shareholder meetings when present, is
considered by our board to have no greater influence on our affairs or authority
to act on behalf of us than any of the non-executive directors on our board.
Our board believes each of its members satisfies that definition of an
Independent Director, with the exception of Mr. Duncan who is an officer and
employee of the Company. That is, in the case of all other board members, our
board believes each of them is an individual having a relationship which would
not interfere with the exercise of independent judgment in carrying out the
member's responsibilities to us.
Page 5
Recommendation of Board. Our board recommends to our shareholders a
vote "FOR" the slate of four individuals, each as director in a position up for
election at our annual meeting, i.e., a vote for proposal number 1 of the Proxy.
This slate is as follows:
o Stephen M. Brett (Class II)
o Ronald A. Duncan (Class II)
o Stephen R. Mooney (Class II)
o Scott M. Fisher (Class III)
These nominees have been recommended by the Nominating and Corporate Governance
Committee. Background and other information on the nominee are provided
elsewhere in this Proxy Statement. See, "Management of Company."
Other Business
Other matters, beyond the election of directors and the Plan Amendment,
which may be addressed at our annual meeting consist of approval (but not the
ratification) of the minutes of our past annual shareholder meeting held on June
27, 2005, matters incident to the conduct of our annual meeting, and other
business as may properly come before our shareholders at that meeting. A vote
for the adoption of those minutes will be an affirmation that the minutes, as
written, properly reflect the proceedings of that meeting and the action taken
at that meeting. However, such a vote will not be an action constituting
approval or disapproval of the matters referred to in those minutes.
While we were, as of the Record Date, unaware of other matters of
business to come before the meeting, they could include election of a person to
our board for which a bona fide nominee is named in this Proxy Statement and
where that nominee is unable to serve or for good cause refuses to serve, and
matters proposed by our shareholders for which we have not received timely
notice. Our board intends to use discretionary voting authority given it under
the Bylaws and in compliance with Rule 14a-4(c) adopted under the Exchange Act
of 1934, as amended ("Exchange Act") should any of these matters come before our
annual meeting.
Other than these matters, our board does not intend to bring business
before our annual meeting and does not know of any other matter which anyone
else proposes to present for action at our annual meeting. However, in the event
any other matters shall properly come before our annual meeting, the persons
named in the accompanying form Proxy or their duly constituted substitutes
acting at the meeting will be deemed authorized to vote or otherwise act upon
those matters in accordance with their judgment.
MANAGEMENT OF COMPANY
Directors and Executive Officers
As of the Record Date, our board consisted of seven director positions,
divided into three classes of directors serving staggered three-year terms.
Page 6
A director on our board is elected at an annual meeting of shareholders
and serves until the earlier of his or her resignation or removal, or his or her
successor is elected and qualified. Our executive officers generally are
appointed at our board's first meeting after each annual meeting of shareholders
and serve at the discretion of the board.
The following table sets forth certain information about our directors
and executive officers as of the Record Date.
Name Age Position
---- --- --------
Stephen M. Brett(1,2,3,4) 65 Chairman, Director
Ronald A. Duncan(1,3) 53 President, Chief Executive Officer and Director
John M. Lowber(5) 56 Senior Vice President, Chief Financial Officer, Secretary, and
Treasurer
G. Wilson Hughes 60 Executive Vice President and General Manager
William C. Behnke 48 Senior Vice President - Strategic Initiatives
Gina R. Borland 43 Vice President, Product Management - Voice and Messaging
Marsha E. Burns 53 Vice President - General Manager, Network Solutions
Martin E. Cary 41 Vice President - General Manager, Managed Broadband Services
Richard P. Dowling 62 Senior Vice President - Corporate Development
Paul E. Landes 48 Vice President and General Manager, Consumer Services
Terry J. Nidiffer 55 Vice President, Product Management - Data and Entertainment
Gregory W. Pearce 43 Vice President and General Manager, Commercial Services
Dana L. Tindall 44 Senior Vice President - Legal, Regulatory and Governmental
Affairs
Richard D. Westlund 62 Senior Vice President and General Manager, Network Access
Services
Jerry A. Edgerton(1,2,4) 64 Director
Scott M. Fisher(1,2,4,5) 40 Director
William P.
Glasgow(1,2,3,4,5,6) 47 Director
Stephen R.
Mooney(1,2,3,4,6) 46 Director
James M.
Schneider(1,2,4,6) 53 Director
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(1) The present classification of our board is as follows: (1) Class I -
Mr. Edgerton, whose present term expires at the time of our 2008 annual
meeting; (2) Class II - Messrs. Brett, Duncan and Mooney whose present
terms expire at the time of our present annual meeting; and (3) Class
III - Messrs. Fisher, Glasgow, and Schneider, whose present terms
expire at the time of the 2007 annual meeting, although Mr. Fisher as a
recently appointed member is to stand for election in 2006.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Nominating and Corporate Governance Committee.
(5) Member of Finance Committee.
(6) Member of the Audit Committee.
- -------------------
Page 7
Stephen M. Brett. Nominee. Mr. Brett has served as Chairman of our
board since June 2005 and as a director on our board since January 2001. He has
been of counsel to Sherman and Howard, a law firm, since January 2001. He served
as Senior Executive Vice President for AT&T Broadband from March 1999 to April
2000. His present term as a director on our board expires in 2006.
Ronald A. Duncan. Nominee. Mr. Duncan is a co-founder of the Company
and has served as a director on our board since 1979. Mr. Duncan has served as
our President and Chief Executive Officer since January 1989. His present term
as director on the board expires in 2006.
John M. Lowber. Mr. Lowber has served as our Chief Financial Officer
since January 1987, as our Secretary and Treasurer since July 1988 and as our
Senior Vice President since December 1989.
G. Wilson Hughes. Mr. Hughes has served as our Executive Vice President
and General Manager since June 1991.
William C. Behnke. Mr. Behnke has served as our Senior Vice President -
Strategic Initiatives since January 2001. Prior to that, he had served as our
Senior Vice President - Marketing and Sales from January 1994.
Richard P. Dowling. Mr. Dowling has served as our Senior Vice President
- - Corporate Development since December 1990.
Dana L. Tindall. Ms. Tindall has served as our Senior Vice President -
Legal, Regulatory, and Governmental Affairs since January 1994.
Gina R. Borland. Ms. Borland has served as our Vice President, Product
Management - Voice and Messaging since September 2005. Prior to that, she had
served as our Vice President-General Manager, Local Services beginning in
January 2001. Prior to that, she was a member of our Corporate Development
Department serving in various capacities generally involving business
development from September 1996 through December 2000.
Marsha E. Burns. Ms. Burns has served as our Vice President - General
Manager, Network Solutions since 1998.
Martin E. Cary. Mr. Cary has served as our Vice President - General
Manager, Managed Broadband Services since September 2004. Prior to that Mr. Cary
was our Vice President - Broadband Services from June 1999 to September 2004.
Paul E. Landes. Mr. Landes has served as our Vice President and General
Manager, Consumer Services since September 2005. Prior to that, he was our Vice
President - Marketing and Sales, Chief Marketing Officer beginning in 2002.
Prior to that, he was our Vice President - Marketing from 1999 to 2002.
Page 8
Terry J. Nidiffer. Mr. Nidiffer has served as our Vice President,
Product Management - Data and Entertainment since September 2005. Prior to that,
he served as our Vice President - General Manager, Internet Services beginning
in February 2000.
Richard D. Westlund. Mr. Westlund has served as our Senior Vice
President and General Manager, Network Access Services since September 2005.
Prior to that, he was our Vice President-General Manager, Long Distance and
Wholesale Services beginning in January 2001. He was our Vice President -
General Manager, Wholesale and Carrier Services from January 1999 through
December 2000.
Jerry A. Edgerton. Mr. Edgerton has served as a director on our board
since June 2004. He has since January 2006 served as Group President of Verizon
Federal. Prior to that, he had since November 1996 served as Senior Vice
President - Government Markets for MCI Communications Corporation, an affiliate
of MCI, Inc. (collectively, "MCI"; however, in January 2006 MCI was acquired by
Verizon Communications, Inc., and the resulting entity is referred to in this
document as "Verizon"). His present term as a director on our board expires in
2008.
Scott M. Fisher. Nominee. Mr. Fisher was appointed to our board in
December 2005 to fill a vacancy caused by the retirement of his father (Donne F.
Fisher) as former Chairman and a board member. He has since 1998 been a partner
of Fisher Capital Partners, Ltd., a private equity and real estate investment
company located in Denver, Colorado. Prior to that from June 1990 to April 1998,
he was Vice President at The Bank of New York and BNY Capital Resources
Corporation, an affiliate of The Bank of New York, where he worked in the
corporate lending and commercial leasing departments. Mr. Fisher has been
temporarily serving on our Audit Committee while Mr. Mooney is recuperating from
major surgery. While the term of director position to which he was appointed
expires in 2007, Mr. Fisher is to stand for election at the 2006 annual
shareholder meeting in accordance with existing policy of the Company.
William P. Glasgow. Mr. Glasgow has served as a director on our board
since 1996. From 2005 to the present, Mr. Glasgow has been Chief Executive
Officer of AmericanWay Education. From 1999 to December 2004, he was
President/CEO of Security Broadband Corp. From 2000 to the present Mr. Glasgow
has been President of Diamond Ventures, L.L.C., a Texas limited liability
company and sole general partner of Prime II Management, L.P., and Prime II
Investments, L.P., both of which are Delaware limited partnerships. Since 1996,
he has been President of Prime II Management, Inc., a Delaware corporation,
which was formerly the sole general partner of Prime II Management, L.P. His
present term as a director on our board expires in 2007.
Stephen R. Mooney. Nominee. Mr. Mooney has served as a director on our
board since January 1999. Since January 2006 he has served as Vice President,
Business Development of VerizonBusiness. Prior to that, he had served as Vice
President, Corporate Development and Treasury Services at MCI beginning in 2002.
From 1999 to 2002, he was Vice President of WorldCom Ventures Fund, Inc. His
present term as a director on our board expires in 2006.
Page 9
Gregory W. Pearce. Mr. Pearce has served as our Vice President and
General Manager, Commercial Services since September 2005. Prior to that, he was
our Vice President /Director of Long Distance Products beginning in January
1998. Prior to that, Mr. Pearce served us in various engineering management
functions beginning with his joining us in November 1990.
James M. Schneider. Mr. Schneider has served as a director on our board
since July 1994. He has been Senior Vice President and Chief Financial Officer
for Dell, Inc. since March 2000. Prior to that, he was Senior Vice President -
Finance for Dell Computer Corporation from September 1998 to March 2000. He
presently serves on the board of directors of, and is a member of the audit
committee of, GAP, Inc. He also serves on the board of, and is a member of, the
audit and management development and compensation committees of, Lockheed Martin
Corporation. His present term as a director on our board expires in 2007.
Board and Committee Meetings
During 2005 and as of the Record Date, our board had the following
committees:
o Audit Committee.
o Compensation Committee.
o Executive Committee.
o Finance Committee.
o Nominating and Corporate Governance Committee.
Audit Committee. Our Audit Committee is composed of Messrs. Glasgow,
Mooney, and Schneider. All three of them are considered by our board to be
Independent Directors. In addition, they are all considered by our board to be
audit committee financial experts ("Audit Committee Financial Experts").
However, Mr. Fisher has been temporarily serving on our Audit Committee while
Mr. Mooney is recuperating from major surgery. He is considered by our board to
be an Independent Director but is not considered by our board to be an Audit
Committee Financial Expert.
The Nasdaq Stock Market corporate governance listing standards require
that at least one member of our Audit Committee must have past employment
experience in finance or accounting, requisite professional certification in
accounting, or comparable experience or background which results in the
individual's "financial sophistication." This financial sophistication may
derive from the person being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Our board believes that Messrs. Glasgow, Mooney and Schneider,
as Audit Committee Financial Experts, also meet the Nasdaq Stock Market
requirements for financial sophistication.
Under rules of the Securities and Exchange Commission ("SEC"), an Audit
Committee Financial Expert is defined as a person who has all of the following
attributes:
o Understanding of generally accepted accounting principles and
financial statements.
Page 10
o Ability to assess the general application of such principles in
connection with accounting for estimates, accruals and reserves.
o Experience in preparing, auditing, analyzing or evaluating
financial statements that present a breadth and level of complexity
of accounting issues that are generally comparable to the breadth
and complexity of issues that can reasonably be expected to be
raised by our financial statements, or experience actively
supervising one or more persons engaged in such activities.
o Understanding of internal control over financial reporting.
o Understanding of audit committee functions.
Our Audit Committee acts on behalf of our board and generally carries
out specific duties including the following, all of which are described in
detail in our Audit Committee Charter as adopted and amended from time to time
by our board ("Audit Committee Charter"):
o Independent Auditor Selection, Qualification - Is directly
responsible for appointment, compensation, retention, oversight,
qualifications and independence of our independent certified public
accountants ("External Auditor").
o Financial Statements - Assists in our board's oversight of
integrity of the Company financial statements.
o Financial Reports, Internal Control - Is directly responsible for
oversight of the audit by the External Auditor of our financial
reports and the reports on internal control.
o Annual Reports - Prepares reports required to be included in our
annual proxy statement. See, within this section "- Audit Committee
Report."
o Complaints - Receives and responds to certain complaints relating
to internal accounting controls, and auditing matters,
confidential, anonymous submissions by our employees regarding
questionable accounting or auditing matters, and certain alleged
illegal acts or behavior-related conduct in violation of our Code
of Business Conduct and Ethics ("Ethics Code"). See, "Code of
Business Conduct and Ethics."
o External Auditor Disagreements - Resolves disagreements, if any,
between our External Auditor and us regarding financial reporting.
o Non-Audit Services - Reviews and pre-approves any non-audit
services offered to us by our External Auditor ("Non-Audit
Services").
o Attorney Reports - Addresses certain attorney reports, if any,
relating to violation of securities law or fiduciary duty by one of
our officers, directors, employees or agents.
Page 11
o Related Party Transactions - Reviews certain related party
transactions as described elsewhere in this Proxy Statement. See,
"Certain Transactions."
o Other - Carries out other assignments as designated by our board.
The Audit Committee Charter sets forth parameters for the operation of
the Audit Committee incorporating recent changes in federal securities law and
SEC rules which impact the responsibilities of the committee. The charter sets
forth the purpose of the Audit Committee and its membership prerequisites,
operating principles, relationship with the External Auditor, and primary
responsibilities. A copy of our Audit Committee Charter is available to our
shareholders on our Internet website: www.gci.com (click on "About GCI," then
click on "Corporate Governance," and then click on "Audit Committee Charter").
Our Audit Committee met five times during 2005. See within this
section," - Audit Committee Report."
Compensation Committee. Our Compensation Committee is composed of
Messrs. Brett, Edgerton, Fisher, Glasgow, Mooney, and Schneider. All six members
are considered by our board to be Independent Directors. This committee
establishes compensation policies regarding our chief executive officer and
other executive officers of the Company, makes recommendations to our board
regarding such compensation, including establishing an overall cap on executive
compensation and setting performance standards for executive officer
compensation, and administers our Stock Option Plan and approves grants of
options pursuant to the plan. Our Compensation Committee met two times during
2005. See within the section, "- Compensation Committee Report on Executive
Compensation."
Executive Committee. Our Executive Committee is composed of Messrs.
Brett, Duncan, Glasgow and Mooney. The committee was established to manage and
operate the affairs of the Company between our board meetings, except to the
extent shareholder authorization is required by law, our Articles or our Bylaws.
The Executive Committee has the power to perform or authorize any act that could
be done or accomplished by majority action of all the directors of our board,
except as set forth in Section 5(b) of our Bylaws. Those exceptions are
responsibilities expressly reserved to our board by state law. Our Executive
Committee did not meet during 2005.
Finance Committee. Our Finance Committee is composed of Messrs. Fisher,
Glasgow, and Lowber. It is responsible for reviewing Company finance matters
from time to time and providing guidance to our chief financial officer
regarding these matters. The Finance Committee did not meet during 2005.
Nominating and Corporate Governance Committee. Our Nominating and
Corporate Governance Committee is composed of Messrs. Brett, Edgerton, Fisher,
Glasgow, Mooney, and Schneider. All six members are considered by our board to
be Independent Directors. The committee acts on behalf of our board and
generally carries out its responsibilities as set forth in our Nominating and
Corporate Governance Committee Charter as adopted and amended form time to time
by our board. Our Nominating and Corporate Governance Committee is principally
responsible for carrying out the following, all of which are described in detail
in the Nominating and Corporate Governance Committee Charter:
Page 12
o Nominations - Identifies and recommends nominees for our board and
its committees.
o Corporate Governance - Reviews and recommends to our board, or
independently takes, action on various corporate governance issues.
o Complaints - Receives and responds to certain complaints raised by
our employees, and not otherwise addressed by our Audit Committee,
regarding alleged illegal acts or behavior-related conduct by our
board members in violation of our Ethics Code.
o Supervision - Supervises our chief financial officer in the context
of our Ethics Code.
o Other - Carries out other assignments as designated by our board.
In addition to setting forth the purpose of the committee, as
previously outlined, the Nominating and Corporate Governance Committee Charter
establishes committee membership qualifications, terms, definition of
Independent Director (same as that described in the previous discussion of our
Audit Committee), and operating principles. In the context of its corporate
governance responsibilities, our committee is to develop and recommend to our
board, from time to time, a set of corporate governance principles applicable to
us, review and recommend changes, if any, to our Ethics Code, review on an
annual basis our board's committee structure and recommend changes, if any, to
it, establish criteria and processes for, and lead our board and each of its
committees in, its annual performance self-evaluation, and work with the chair
of our Compensation Committee on issues of management objectives, evaluation of
our chief executive officer and management development and succession.
A copy of the Nominating and Corporate Governance Committee Charter is
available to our shareholders on our Internet website: www.gci.com (click on
"About GCI," then click on "Corporate Governance," and then click on "Nominating
and Corporate Governance Committee Charter").
Our Nominating and Corporate Governance Committee met three times
during 2005.
Board, Committee Attendance. Our board held six meetings during 2005.
All incumbent directors, as disclosed in this Proxy Statement, attended 75% or
more of the meetings of our board and of committees of the board for which they
individually were seated as directors.
Meetings of Independent Directors. The Independent Directors seek to
meet at least two times per year. The Independent Director meetings are held
without any of our management directors or employees present. The presiding
director at this meeting is the Chairman of the Board. During 2005, the
Independent Directors met three times.
Page 13
Director Compensation
In 2004 the board adopted a director compensation plan ("Director
Compensation Plan") to acknowledge and compensate, from time to time, directors
on our board for ongoing dedicated service. The plan compensation consists of
stipends in the form of cash and Company Class A common stock. The cash
compensation consists of $24,000 per year (prorated for days served and paid
quarterly) plus $2,000 for each meeting attended either in person or
telephonically. The cash compensation portion of the Director Compensation Plan
applied throughout 2005 and continued through the Record Date.
Under the Director Compensation Plan and for 2005 and through the
Record Date, the directors earned the following cash stipends: (1) Mr. Fisher -
$18,000; (2) Mr. Duncan - $58,000; (3) Mr. Brett - $48,000; (4) Mr. Edgerton -
none; (5) Mr. Glasgow - $56,000; (6) Mr. Mooney - none; and (7) Mr. Schneider -
$62,000.
The stock compensation portion of the Director Compensation Plan
consists of a grant of 3,330 shares to a director for each year of service, or a
portion of a year of service. Grants are made and vest annually under the plan
on June 1 of each year. For 2005, grants of awards were made under the Director
Compensation Plan as of June 1, 2005. As of the Record Date, our board
anticipated that grants of awards would be made under the plan as of June 1,
2006. When the shares vest, they are subject to taxation based on the then fair
market value of the vested shares. Accordingly, at the time of vesting, the
Company will make a supplemental payment equal to 40% of the value of the vested
shares to each director in order to facilitate the payment by the director of
the taxes that may result from the vesting of the shares.
Under the Director Compensation Plan, compensation will be paid to
those directors who are to receive the benefit individually, whether or not they
are our employees. Because of their employment by Verizon and resultant
inability to receive compensation from us, neither Mr. Edgerton nor Mr. Mooney
participates in the Director Compensation Plan, although they may be entitled to
do so in the future.
Except for the Director Compensation Plan, during 2005, the directors
on our board received no other direct compensation for serving on the board and
its committees. However, they were reimbursed for travel and out-of-pocket
expenses incurred in connection with attendance at meetings of the board and its
committees. The director fee structure as described in this section continued
unchanged through the Record Date.
Executive Compensation
Summary Compensation. The following table sets forth certain
information concerning the cash and non-cash compensation earned during fiscal
years 2003, 2004 and 2005 by our chief executive officer and by each of our four
other most highly compensated executive officers whose individual combined
salary and bonus each exceeded $100,000 during 2005 (collectively, "Named
Executive Officers").
Page 14
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards
------------------------------------ ---------------------------
Restricted
Other Annual Stock Securities All Other
Compensation Awards Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($) ($) Options/SARs(#) ($)(1,2)
- --------------------------- ---- ---------- --------- ------------ ---------- --------------- ------------
Gina R. Borland
Vice President, Product 2005 134,688 501,677(3) -0- -0- 50,000 15,300
Management - Voice and 2004 132,500 167,484 -0- -0- -0- 14,427
Messaging 2003 132,500 80,841 -0- -0- 20,000 13,300
Ronald A. Duncan 2005 345,000 157,500 -0- 27,805 -0- 75,460
President and Chief 2004 345,000 131,250 -0- 36,763 250,000 51,267
Executive Officer 2003 295,000 105,000 -0- -0- -0- 21,338
G. Wilson Hughes 2005 175,000 1,138,349(3) -0- -0- -0- 294,071(4)
Executive Vice President and 2004 175,000 67,724 -0- -0- -0- 192,402
General Manager 2003 175,000 53,682 -0- -0- -0- 162,773
John M. Lowber
Senior Vice President, Chief 2005 227,886 79,937 -0- -0- -0- 155,048
Financial Officer and 2004 223,884 85,281 -0- -0- 100,000 142,017
Secretary/Treasurer 2003 222,050 53,682 -0- -0- -0- 129,257
Dana L. Tindall
Senior Vice President - 2005 275,000 467,937(3) -0- -0- -0- 21,343
Legal, Regulatory and 2004 250,000 90,281 -0- -0- -0- 21,760
Governmental Affairs 2003 250,000 63,682 -0- -0- -0- 21,521
- -------------------
(1) The amounts reflected in this column include deferrals and accrued
earnings under deferred compensation agreements between us and the
named individuals as follows: Mr. Hughes, $137,474 in 2003, $170,444 in
2004 and $271,475 in 2005; Mr. Lowber, $95,912 in 2003, $108,052 in
2004 and $122,441 in 2005; Mr. Hughes received a partial distribution
of his deferred compensation account during 2003 and 2004. Does not
include bonus agreement granted to Mr. Hughes in 2002. See, within this
section, "-Hughes Bonus Agreement." The distribution in 2003 included
$60,720 of the $137,474 which was credited to Mr. Hughes' account
during 2003. The distribution in 2004 included $35,000 of the $170,444
which was credited to Mr. Hughes' account during 2004.
(2) The amounts reflected in this column also include matching
contributions under the Stock Purchase Plan as follows: Mr. Duncan,
$21,000, $20,500 and $20,000 in 2005, 2004 and 2003, respectively; Mr.
Hughes, $21,000, $20,500, and $20,000 in 2005, 2004 and 2003,
respectively; Mr. Lowber, $21,000, $20,500, and $20,000 in 2005, 2004
and 2003, respectively; Ms. Tindall, $20,083, $20,500, and $20,000 in
2005, 2004 and 2003, respectively; and Ms. Borland, $14,000, $13,000,
and $12,000 in 2005, 2004 and 2003, respectively. Amounts shown for Mr.
Duncan include premiums of $138 under a term life insurance policy paid
in each of 2005, 2004 and 2003. Amounts shown for Ms. Tindall include
premiums of $60 under a life insurance policy paid in each of 2005,
2004 and 2003. Amounts shown for Mr. Hughes include premiums of $396,
$258 and $258, under life insurance policies paid in each of 2005, 2004
and 2003, respectively. Amounts for Mr. Lowber include premiums of
$258, $258 and $138 under life insurance policies paid in each of 2005,
2004 and 2003, respectively. Amounts shown for Ms. Borland include
premiums of $100 under a life insurance policy paid in each of 2005,
2004 and 2003. Includes a waiver of accrued interest on a note owed to
us by Mr. Lowber in the amounts of $10,022 in January 2006 and $12,007
on each of January 1, 2005 and 2004.
Includes $261 for Ms. Tindall and $3,841 for Mr. Hughes, both for the
personal use of our leased aircraft in 2003. Includes $53,122 for 2005
and $29,328 for 2004 in director compensation for Mr. Duncan and a
longevity bonus valued at $101, for 2004. Includes a longevity bonus
valued at $127 for Mr. Lowber in 2005, and Ms. Borland in 2004. Amounts
in this column further include $1,200 of credit applied to services
purchased from us by each of the Named Executive Officers for each year
for their participation in our quality assurance program extended to
employees, generally.
(3) Includes $1,032,000 awarded to Mr. Hughes, $387,000 to Ms. Tindall, and
$120,900 to Ms. Borland paid or accrued in 2005 pursuant to our
Incentive Compensation Plan. See, "Performance Based EBITDA Incentive
Compensation Plan."
Page 15
(4) Excludes $150,000 paid in 2005 of a $550,000 retention agreement with
Mr. Hughes. The agreement vests in equal annual installments beginning
December 31, 2006 through December 31, 2009 and accrues interest on the
unpaid balance of $400,000 at 7.5% per annum.
- -------------------
Option/SAR Grants
The following table sets forth information on the individual grants of
stock options (whether or not in tandem with stock appreciation rights
("SARs")), and freestanding SARs made during 2005 to its Named Executive
Officers. We did not issue any tandem SARs or freestanding SARs during that
period.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
------------------------------------------------------------------------------- -----------------------
% of Total
Number of Optional
Securities SARs Exercise
Underlying Granted to or
Option/SARs Employees Base
Granted(1) in Fiscal Price(2) Expiration
Name (#) Year (%) ($/Share) Date 5% ($)(3) 10% ($)(3)
---- ----------- --------- --------- ---------- --------- ----------
Gina R. Borland 50,000 5.2 9.75 9/01/15 311,682 770,710
Ronald A. Duncan - - - - - - - - - - - - - - - - - -
G. Wilson Hughes - - - - - - - - - - - - - - - - - -
John M. Lowber - - - - - - - - - - - - - - - - - -
Dana L. Tindall - - - - - - - - - - - - - - - - - -
- -------------------
(1) Options in Class A common stock.
(2) The exercise price of the options was equal to the market price of the
Class A common stock at the time of grant.
(3) The potential realizable dollar value of a grant is calculated as the
product of (a) the difference between (i) the product of the per-share
market price at the time of grant and the sum of 1 plus the adjusted
stock price appreciation rate (the assumed rate of appreciation
compounded annually over the term of the option or SAR) and (ii) the
per-share exercise price of the option or SAR and (b) the number of
securities underlying the grant at fiscal year end.
- -------------------
Option Exercise and Fiscal Year-End Values
The following table sets forth information concerning each exercise of
stock options during 2005 by each of the Named Executive Officers and the fiscal
year-end value of unexercised options held by each of them.
Page 16
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTIONS/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs Options/SARs at
at Fiscal Year-End(#) Fiscal Year-End($)(1)
--------------------------- ----------------------------
Shares
Acquired
on
Exercise Value
Name (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- ----------- ----------- ------------- ----------- -------------
Gina R. Borland 1,900 13,500 62,064 62,000 273,663 80,960
Ronald A. Duncan -0- -0- 350,000 300,000 1,150,500 751,500
G. Wilson Hughes -0- -0- 200,000 200,000 766,000 616,000
John M. Lowber -0- -0- 390,000 260,000 1,367,700 731,800
Dana L. Tindall 105,787 441,956 200,000 100,000 641,000 308,000
- -------------------
(1) Represents the difference between the fair market value of the
securities underlying the options/SAR and the exercise price of the
options/SAR based upon the last trading price on December 31, 2005.
- -------------------
Non-Qualified, Unfunded Deferred Compensation Plan
In 1995, we established a non-qualified, unfunded, deferred
compensation plan to provide a means by which certain of our employees may elect
to defer receipt of designated percentages or amounts of their compensation and
to provide a means for certain other deferrals of compensation. Employees
eligible to participate in the plan are determined by our board. We may, at our
discretion, contribute matching deferrals in amounts as we select.
Participants immediately vest in all elective deferrals and all income
and gain attributable to that participation. Matching contributions and all
income and gain attributable to them vest on a case-by-case basis as determined
by us. Participants may elect to be paid in either a single lump-sum payment or
annual installments over a period not to exceed ten years. Vested balances are
payable upon termination of employment, unforeseen emergencies, death or total
disability of the participant, or change of control of us or our insolvency.
Participants become our general unsecured creditors with respect to deferred
compensation benefits of the plan.
During 2005 and up through the Record Date, none of the Named Executive
Officers had participated in this plan.
Long-Term Incentive Plan Awards
Other than the Stock Option Plan and restricted stock awards shown in
the Summary Compensation Table, we had no long-term incentive plan in operation
during 2005.
Performance Based EBITDA Incentive Compensation Plan
In 2002, we adopted a Performance Based EBITDA (earnings before
interest, taxes, depreciation, and amortization) Incentive Compensation Plan
("Incentive Compensation Plan")
Page 17
to encourage increasing EBITDA, i.e., earnings before income taxes, depreciation
and amortization (as defined in the plan), of our Alaska operations to a
specified target by the end of 2006. Participants are granted units which are
valued in terms of a share of our Class A common stock. If the target EBITDA is
achieved on or before the end of 2006, the awards vest. In this instance, each
participant will be entitled to receive, for each unit, the market value of a
share of our Class A common stock on the date that such payment is made.
Under the Incentive Compensation Plan, 40% of the payment will be made
in cash. The remaining 60% may, at our option, be paid either in cash or in our
restricted Class A common stock. However, if stock is to be issued in payment to
participants, we are required to obtain shareholder approval of the Incentive
Compensation Plan prior to any such payment. Participants must be employed by us
on the date of payment in order to receive any compensation pursuant to the
plan. The EBITDA target will be adjusted for any material acquisitions within
the Alaska market. The award may be paid out earlier if we are sold prior to the
earlier of the end of 2006 or achievement of the EBITDA target.
Specified individuals of three groups of employees are eligible to
participate in the plan. They are our chief executive officer, our general
managers and our senior officers. Any payments to the general manager group
pursuant to the plan are included in EBITDA for purposes of determining whether
the EBITDA target for the senior officer group has been met. One-half of the
vested amount is valued and paid on the last day of the first quarter of the
year following vesting, with the balance paid one year later.
The provisions of the Incentive Compensation Plan pertaining to the
chief executive officer are the same as for the other two groups, except any
payments to the general manager and senior officer groups under the plan are
included in EBITDA for purposes of determining whether the EBITDA target for the
chief executive officer has been met. One-half of the total amount earned will
be valued and paid on the last day of the first quarter of the year following
achievement of the target EBITDA goal. The remaining one-half will be paid as
deferred compensation. This amount will vest one-half on each of the first and
second anniversaries of the initial award. However, in the case of our chief
executive officer, the individual must be employed by us on such dates for
vesting to be effective. We charged $1,370,000 to expense during 2005 under the
Incentive Compensation Plan.
During 2005, Mr. Hughes, Ms. Tindall and Ms. Borland were the only
Named Executive Officers who participated in the Incentive Compensation Plan.
Our Compensation Committee determined that the performance requirements of the
Incentive Compensation Plan had been met during 2005 and authorized payments
pursuant to the plan and determined they would be made in cash. The committee
authorized payments of $1,032,000 to Mr. Hughes, $387,000 to Ms. Tindall and
$120,900 to Ms. Borland. The payment to Mr. Hughes represents the full amount he
is entitled to pursuant to the plan. Ms. Tindall's payment equaled 75% of the
value of her award and was paid in January 2006 with the remaining amount to be
valued and paid on March 31, 2007. Ms. Borland's award was valued and paid in
March and April 2006.
Stock Purchase Plan
In 1986, we adopted a qualified employee stock purchase plan which has
been subsequently amended from time to time and is in its present form the Stock
Purchase Plan. The plan is qualified under Section 401 of the Internal Revenue
Code ("Code"). All of our
Page 18
employees who have completed at least one year of service are eligible to
participate in the plan. Eligible employees may elect to reduce their taxable
compensation in any even dollar amount up to 12% of such compensation for
employees earning more than $90,000 per year and up to 50% of such compensation,
both up to a maximum per employee of $15,000 for 2006. Employees may contribute
up to an additional 10% of their compensation with after-tax dollars. Starting
in 2002, participants over the age of fifty may make additional elective
contributions to their accounts in the plan pursuant to a schedule set forth in
the Code.
Subject to certain limitations, we may make matching contributions of
our common stock for the benefit of employees. Such a contribution will vest in
increments over the first six years of employment. Thereafter, they are fully
vested when made. No more than 10% of any one employee's compensation will be
matched in any year. Except for additional elective contributions made by
participants over age 50, the combination of salary reductions, after-tax
contributions and our matching contributions for any employee cannot exceed the
lesser of $44,000 or 25% of such employee's compensation (determined after
salary reduction) for 2006.
Under the terms of the Stock Purchase Plan, participating eligible
employees may direct their contributions to be invested in common stock of the
Company, AT&T Inc. and Comcast Corporation, and shares of various identified
mutual funds.
The Stock Purchase Plan, on our behalf, may each year pay to the plan's
trust fund an amount up to 100% of each participating eligible employee's
elective deferral and voluntary contributions to the plan as determined by our
board. This employer contribution on behalf of the participating eligible
employee is to equal a stated percentage of each employee's contributions (both
voluntary contributions and elective deferrals) during any payroll period.
However, no such employee's elective deferral or voluntary contribution is to be
matched in an amount exceeding 10% of that employee's compensation during any
payroll period in which the employee participates in the plan. With limited
exception, the amount of our contribution under the plan must not exceed either
10% of the aggregate compensation of all participating eligible employees under
the plan in the year for which the contribution is being determined or the
annual addition limitations of the Code as provided in the plan.
The Stock Purchase Plan is administered through a plan administrator
(currently Alfred J. Walker, one of our Vice Presidents and our Chief Accounting
Officer), and a committee which is appointed by our board. The assets of the
plan are invested from time to time by the trustee at the direction of the
plan's committee, except that participants have the right to direct the
investment of their contributions to the Stock Purchase Plan. The plan
administrator and members of the plan's committee are all our employees. The
plan's committee has broad administrative discretion under the terms of the
plan.
As of March 31, 2006, there remained 926,686 shares of Class A and
464,005 shares of Class B common stock allocated to the plan and available for
issuance by us or otherwise acquisition by the plan for the benefit of
participants in the plan.
Stock Option Plan
In 1986, we adopted a stock option plan which has been amended from
time to time and presently is our Amended and Restated 1986 Stock Option Plan
("Stock Option Plan").
Page 19
Under our present Stock Option Plan, we are authorized to grant
non-qualified options to purchase shares of Class A common stock to selected
officers, directors and other employees of, and consultants or advisors to, the
Company and its subsidiaries. The number of shares of Class A common stock
allocated to the Stock Option Plan was last increased by 2.5 million shares to
13.2 million shares at our 2004 annual meeting. The number of shares for which
options may be granted is subject to adjustment upon the occurrence of stock
dividends, stock splits, mergers, consolidations and certain other changes in
corporate structure or capitalization.
As of the Record Date, 5,766,302 shares were subject to outstanding
options under the Stock Option Plan, 39,960 share grants had been awarded,
6,287,123 shares had been issued upon the exercise of options under the plan and
1,106,615 shares remained available for additional grants under the plan.
As of the Record Date, the Stock Option Plan was administered by the
Compensation Committee composed of six members of our board. The members of that
committee are identified elsewhere in this Proxy Statement. See, "Management of
Company: Board and Committee Meetings."
The Compensation Committee selects optionees and determines the terms
of each option, including the number of shares covered by each option, the
exercise price and the option exercise period which, under the Stock Option
Plan, may be up to ten years from the date of grant. Options granted that have
not become exercisable terminate upon the termination of the employment or
directorship of the optionholder. Exercisable options terminate from one month
to one year after such termination, depending on the cause of such termination.
If an option expires or terminates, the shares subject to such option become
available for additional grants under the Stock Option Plan.
Equity Compensation Plan Information
The Stock Option Plan was initially approved by our shareholders in
1986. We do not have any current equity compensation plans approved by our
shareholders other than the Stock Option Plan.
The following table sets forth information regarding the number of
shares of our common stock that may be issued pursuant to our equity
compensation plans or arrangements as of December 31, 2005. The recipients of
these grants are selected officers, directors and employees of, and consultants
or advisors to, us in exchange for consideration in the form of goods or
services (as described in Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation).
Page 20
EQUITY COMPENSATION PLAN INFORMATION
AS OF DECEMBER 31, 2005
Number of Securities
Remaining Available for
Number of Securities to Weighted-Average Future Issuance Under
Be Issued Upon Exercise, Exercise Price of Equity Compensation
of Outstanding Options, Outstanding Options, Plans (Excluding Securities
Plan Category Warrants and Rights(a) Warrants and Rights($)(b) Reflected in Column(a))(c)
------------------------ ----------------------- ------------------------- ----------------------------
Equity compensation
plans approved by
security holders(1) 6,543,277 7.27 939,997
Equity compensation
plans not approved by
security holders(2) 250,000 6.50 -0-
Total(3) 6,793,277 7.24 939,997
- -------------------
(1) Stock Option Plan.
(2) Grant made in January 2001 separate from the Stock Option Plan of
options to a company owned by Mr. Duncan to acquire 250,000 shares of
our Class A common stock at $6.50 per share, exercisable up through
March 10, 2010. See below within this section, "- Ownership of Company:
Principal Shareholders."
(3) Mr. Duncan and three other of our employees have accumulated deferred
compensation account balances that have been denominated in shares of
our Class A common stock. We have acquired shares of our Class A common
stock in the open market or in private transactions over the years to
fund the ultimate payment of the deferred amounts. A total of 280,586
shares, of which all but 26,189 shares have vested, are owned in our
name and are being held in treasury pending distribution.
- -------------------
Hughes Bonus Agreement
In consideration for agreeing to continue his employment until December
31, 2004, in December 2002 we granted Mr. Hughes the right to use certain of our
real estate for two weeks each year from January 1, 2005 to December 31, 2034.
Mr. Hughes may elect at any time to receive a cash bonus in lieu of the
foregoing equal to $275,000 plus interest accrued at the rate of 3% per annum
for the period between January 1, 2002 and the date on which the option to elect
such cash payment is exercised. The bonus vested on December 31, 2004. Should we
intend to convey such real estate to a third party, Mr. Hughes would have the
right to acquire certain property adjoining that real estate or, unless he
should exercise the cash option previously described, be paid an amount equal to
$275,000 plus accrued interest at the rate of 3% per annum for the period from
January 1, 2002 to the date on which that option is exercised. As of December
31, 2005, $308,000 were accrued pursuant to this agreement, of which $8,250 were
accrued during 2005.
Report on Repricing of Options/SARs
During 2005, we did not adjust or amend the exercise price of stock
options or SARs previously awarded to any of the Named Executive Officers,
whether through amendment, cancellation or replacement grants, or any other
means.
Page 21
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Except as disclosed in this Proxy Statement, as of the end of 2005 and
the Record Date, there were no compensatory plans or arrangements, including
payments to be received from us, with respect to the Named Executive Officers
for that year. This statement is limited to situations where such a plan or
arrangement resulted in or may result from the resignation, retirement, or any
other termination of a Named Executive Officer's employment with us, or from a
change of control of us or a change in that officer's responsibilities following
such a change in control, and where the amount involved, including all periodic
payments or installments, exceeded $100,000.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee is composed of six members of our board as
identified elsewhere in this Proxy Statement. See, "Management: Board and
Committee Meetings - Compensation Committee." The relationships of them to us
are described elsewhere in this Proxy Statement. See, "Management of Company:
Directors and Executive Officers"; "Ownership of Company"; and "Certain
Transactions."
Compensation Committee Report on Executive Compensation
The duties of our Compensation Committee are as follows:
o Prepare, on an annual basis for the review of and action by our
board, a statement of policies, goals, and plans for executive
officer and board member compensation, if any --
o Statement is specifically to address expected performance and
compensation of and the criteria on which compensation is based
for the chief executive officer and such other of our executive
officers as our board may designate for this purpose.
o Monitor the effect of ongoing events on and the effectiveness of
existing compensation policies, goals, and plans --
o Events specifically include but are not limited to the status
of the premise that all pay systems correlate with our
compensation goals and policies.
o Report from time to time, its findings to our board.
o Monitor compensation-related publicity and public and private
sector developments on executive compensation.
o Familiarize itself with, and monitor the tax, accounting,
corporate, and securities law ramifications of, our compensation
policies, including but not limited to --
o Comprehending a senior executive officer's total compensation
package.
Page 22
o Comprehending the package's total cost to us and its total
value to the recipient.
o Paying close attention to salary, bonuses, individual insurance
and health benefits, perquisites, historical loans made by us,
special benefits to specific executive officers, individual
pensions, and other retirement benefits.
o Establish the overall cap on executive compensation and the measure
of performance for executive officers, either by predetermined
measurement or by a subjective evaluation.
o Strive to make our compensation plans simple, fair, and structured
so as to maximize shareholder value.
For 2005, the duties of our Compensation Committee in the area of
executive compensation specifically included addressing the reasonableness of
compensation paid to executive officers. In doing so, the committee took into
account how compensation compared to compensation paid by competing companies as
well as our performance and available resources.
Our compensation policy as established by our Compensation Committee is
that a portion of our annual compensation of our senior executive officers
relates to and is contingent upon our performance. In addition, executive
officers participating in deferred compensation agreements established by us
become, under those agreements, our unsecured creditors.
In 2005, our Compensation Committee, using as a guide the Incentive
Compensation Plan, established compensation levels for 2005 for all senior
corporate officers, including Mr. Duncan and certain of the Named Executive
Officers. Also at that time, our Compensation Committee established annual
incentive bonus agreements with Mr. Duncan and with each of several of its
senior executive officers, including those senior executive officers among the
Named Executive Officers.
These agreements included the premise that our performance, or that of
a division or subsidiary, as the case may be, for purposes of compensation would
be measured by our Compensation Committee against goals reviewed and approved by
our board. The goals included our targets for revenues and cash flow standards
of the relevant division or subsidiary of our business. Targeted objectives were
set and measured from time to time by our Compensation Committee. Our other
business achievements obtained through the efforts of an executive officer were
also taken into consideration in the evaluation of performance. Performances
were evaluated and bonuses were issued as described elsewhere in this section.
See within this section, "- Executive Compensation."
During 2005, our Compensation Committee monitored and provided
direction for the Stock Purchase Plan and Stock Option Plan. In addition, our
Compensation Committee reviewed compensation levels of members of management,
evaluated the performance of management, and considered management succession
and related matters.
Our Compensation Committee reviewed in detail all aspects of
compensation for senior officers among the Named Executive Officers and our
other senior executive officers. In
Page 23
particular, our Compensation Committee concluded that the performance of our
chief executive officer, Mr. Duncan, had met or surpassed the goals and
objectives set as the basis for his compensation for 2005. That is, the
Compensation Committee believes the salary and benefits paid to Mr. Duncan
during 2005 were commensurate with the Company's financial performance. The
Compensation Committee expects that any bonus compensation recommended to be
payable to Mr. Duncan in future years will also be based upon the Company's
growth and financial performance, and subject to approval by the Compensation
Committee.
The practice of our Compensation Committee in future years will likely
be to continue to review directly the compensation and performance of Mr. Duncan
as our chief executive officer. While our Compensation Committee may review
recommendations by Mr. Duncan for the compensation of other senior executive
officers, the committee in accordance with Nasdaq Stock Market corporate
governance listing standards rules has responsibility for recommending
compensation of such officers directly to our board for its determination.
Compensation Committee
Stephen M. Brett, Chair
Jerry A. Edgerton
Scott M. Fisher
William P. Glasgow
Stephen R. Mooney
James M. Schneider
Audit Committee Report
Our Audit Committee has reviewed and discussed with management our
audited financial statements for 2005. In addition, the committee has discussed
with KPMG LLP, our External Auditor for that year, the matters required to be
discussed by Statement of Accounting Standard 61. Those matters consisted of our
External Auditor discussing with the committee the External Auditor's judgment
about the quality, not just acceptability, of our financial reporting.
Our Audit Committee has received a letter dated March 15, 2006 from
KPMG LLP, as required by Independence Standards Board Standard No. 1, and
discussed with those auditors their independence from us. The letter addressed
all relationships with us that could affect KPMG LLP's independence and stated
that, for the period from January 1, 2005 through March 15, 2006, KPMG LLP
considered itself as independent accountants with respect to us. Our Audit
Committee has concluded that the services provided by KPMG LLP, other than for
the audit of our annual financial statement for 2005 and reviews of financial
statements included in our Forms 10-Q for that year, are compatible with
maintaining KPMG's independence regarding us and as our External Auditor.
Page 24
Based upon these reviews and discussions, our Audit Committee has
recommended to our board that the audited financial statements for 2005 should
be included in our annual Report on Form 10-K.
Audit Committee
James M. Schneider, Chair
William P. Glasgow
Stephen R. Mooney(1)
Performance Graph
The following graph includes a line graph comparing the yearly
percentage change in our cumulative total shareholder return on our Class A
common stock during the five-year period 2001 through 2005. This return is
measured by dividing (1) the sum of (a) the cumulative amount of dividends for
the measurement period (assuming dividend reinvestment, if any) and (b) the
difference between our share price at the end and the beginning of the
measurement period, by (2) the share price at the beginning of that measurement
period. This line graph is compared in the following graph with two other line
graphs during that five-year period, i.e., a market index and a peer index.
The market index is the Center for Research in Securities Price Index
for the Nasdaq Stock Market for United States companies. It presents cumulative
total returns for a broad based equity market assuming reinvestment of dividends
and is based upon companies whose equity securities are traded on the Nasdaq
Stock Market. The peer index is the Center for Research in Securities Price
Index for Nasdaq Telecommunications Stock. It presents cumulative total returns
for the equity market in the telecommunications industry segment assuming
reinvestment of dividends and is based upon companies whose equity securities
are traded on the Nasdaq Stock Market. The line graphs represent monthly index
levels derived from compounding daily returns.
In constructing each of the line graphs in the following graph, the
closing price at the beginning point of the five-year measurement period has
been converted into a fixed investment, stated in dollars, in our Class A common
stock (or in the stock represented by a given index, in the cases of the two
comparison indexes), with cumulative returns for each subsequent fiscal year
measured as a change from that investment. Data for each succeeding fiscal year
during the five-year measurement period are plotted with points showing the
cumulative total return as of that point. The value of a shareholder's
investment as of each point plotted on a given line graph is the number of
shares held at that point multiplied by the then prevailing share price.
Our Class B common stock is traded over-the-counter on a more limited
basis. Therefore, comparisons similar to those previously described for the
Class A common stock are not directly available. However, the performance of
Class B common stock may be analogized to that of the Class A common stock in
that the Class B common stock is readily convertible into Class A common stock
by request to us.
- -------------------
(1) Mr. Mooney's functions as a committee member have been temporarily assumed
by Mr. Fisher. See, "Management of Company: Board and Committee Meetings - Audit
Committee."
Page 25
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH FOR GENERAL
COMMUNICATION, INC., NASDAQ STOCK MARKET INDEX FOR
UNITED STATES COMPANIES, AND NASDAQ TELECOMMUNICATIONS STOCK (1,2,3,4)
-------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market Nasdaq
Measurement Period Index for U.S. Telecommunications
(Fiscal Year Covered) Company ($) Companies ($) Stock ($)
---------------------------- -------------------------- -------------------------- --------------------------
FYE 12/31/00 100.0 100.0 100.0
FYE 12/31/01 121.9 79.3 66.5
FYE 12/31/02 95.9 54.8 30.6
FYE 12/31/03 124.3 82.0 50.9
FYE 12/31/04 157.7 89.2 54.3
FYE 12/31/05 147.6 91.1 51.6
- -------------------
(1) The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
(2) The indexes are reweighted daily, using the market capitalization on the
previous trading day.
(3) If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
(4) The index level for all series was set to $100.0 on December 29, 2000.
- -------------------
Page 26
Legal Proceedings
As of the Record Date, our board was unaware of any legal proceedings
which may have occurred during the past five years in which one or more of our
directors, director nominees or executive officers were a party adverse to us,
or any legal proceeding which would be material to an evaluation of the ability
or integrity of one or more of our directors or executive officers.
Section 16(a) Beneficial Ownership Reporting Compliance
During 2005, there was a failure to file with the SEC a Form 4 (Change
in Beneficial Ownership Report) on a timely basis as required under Section
16(a) of the Exchange Act. That is, a former director failed to file Form 4 on a
transaction, dated May 25, 2005, until June 8, 2005.
CODE OF BUSINESS CONDUCT AND ETHICS
Our Ethics Code, i.e., our Code of Business Conduct and Ethics, was
adopted by our board in 2003. It applies to all of our officers, directors and
employees. The Ethics Code takes as its basis a set of business principles
adopted by our board several years ago. It also builds upon the basic
requirements for a code of ethics as required by federal securities law and
rules adopted by the SEC.
Through our Ethics Code, we reaffirm our course of business conduct and
ethics as based upon key values and characteristics and through adherence to a
clear code of ethical conduct. Our Ethics Code promotes honest and ethical
conduct, including ethical handling of actual or apparent conflicts of interest
between personal and professional relationships of our employees. It also
promotes full, fair, accurate, timely and understandable disclosure in our
reports and documents filed with, or submitted to, the SEC and other public
communications made by us. Our Ethics Code further promotes compliance with
applicable governmental laws, rules and regulations, internal reporting of
violations of the code to appropriate persons as identified in the code and
accountability for adherence to the code.
A copy of our Ethics Code is displayed on our Internet website at
www.gci.com (click on "About GCI," then click on "Corporate Governance," and
then click on "Code of Business Conduct and Ethics"). Also, a copy of the Ethics
Code may be obtained at no charge and upon written request to us at the
following address:
ATTN: Secretary (Ethics Code)
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Page 27
CERTAIN TRANSACTIONS
Verizon Agreements
As of the Record Date, we continued to have a significant business
relationship with Verizon (since its acquisition of MCI in January 2006, and,
prior to that, we had a similar relationship with MCI) including the following:
o Under the Verizon Traffic Carriage Agreement, we agreed to
terminate all Alaska-bound Verizon long distance traffic, to handle
its toll-free 800 traffic originating in Alaska and terminating in
the lower 49 states, its calling card customers when they are in
Alaska, and its Alaska toll-free 800 traffic, and to provide data
circuits to Verizon as required.
o Under a separate Company Traffic Carriage Agreement, Verizon agrees
to terminate certain of our long-distance traffic terminating in
the lower 49 states, excluding Washington, Oregon and Hawaii, to
originate calls for our calling card customers when they are in the
lower 49 states, to provide toll-free 800 service for our customer
requirements outside of Alaska, and to provide certain Internet
access services.
o Two officers and employees of Verizon (Messrs. Edgerton and Mooney)
serve as our directors. See, "Management of Company: Directors and
Executive Officers."
o In June 2000 we granted stock options to certain of our directors
or the company for which each may have been employed (options to
Mr. Mooney and another former director were granted to WorldCom
Ventures, Inc., a previously wholly-owned indirect subsidiary of
MCI). See, "Management of Company: Director Compensation."
o We are a party to registration rights agreements with Verizon
regarding our Class B common stock. See, "Certain Transactions:
Registration Rights Agreements."
On July 21, 2002 MCI and substantially all of its active U.S.
subsidiaries on a combined basis, filed voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court. On
July 22, 2003 the United States Bankruptcy Court approved the settlement
agreement for pre-petition amounts owed to us by MCI and affirmed all of our
existing contracts with MCI. MCI emerged from bankruptcy protection on April 20,
2004. The remaining balance owed by MCI to us after this settlement was $11.1
million which we have used as a credit against amounts payable for services
purchased from MCI. The full amount of that credit had been applied to those
services as of February 2006. The MCI settlement and release agreement are
further discussed in our Annual Report.
Revenues attributed to the Verizon Traffic Carriage Agreement in 2005
were approximately $85.4 million or approximately 19.3% of total revenues.
Payments by us to Verizon under the Company Traffic Carriage Agreement in 2005,
including $3.286 million in the form of credits applied to our receivables from
Verizon, were approximately $4.23 million or approximately 3.1% of total cost of
sales and services. The Verizon Traffic Carriage Agreement provides for a term
to July 2008.
Page 28
Duncan Leases
We entered into a long-term capital lease agreement ("Duncan Lease") in
1991 with a partnership in which Mr. Duncan held a 50% ownership interest. Mr.
Duncan sold his interest in the partnership in 1992 to Dani Bowman, who later
became Mr. Duncan's spouse. However, Mr. Duncan remains a guarantor on the note
which was used to finance the acquisition of the property subject to the Duncan
Lease. That property consists of a building presently occupied by us. The
original Duncan Lease term was 15 years with monthly payments of $14,400,
increasing in $800 increments at each two-year anniversary of the lease,
beginning in 1993.
As of the Record Date, the monthly payments were $20,860 per month on
the Duncan Lease. It further provides that, should the property not be sold
prior to the end of the tenth year of the lease, the partnership would pay to us
the greater of one-half of the appreciated value of the property over
$1,035,000, or $500,000. We received payment of $500,000 in the form of a note
in February 2002. The property subject to the Duncan Lease was capitalized in
1991 at the partnership's cost of $900,000, and the Duncan Lease obligation was
recorded in the consolidated financial statements of the Company. See, "Annual
Report."
On September 11, 1997, we purchased, for $150,000, a parcel of property
adjoining the property subject to the Duncan Lease. The parcel was purchased to
provide space for additional parking facilities for our use of the adjoining
property under the Duncan Lease. A portion of the parcel, valued at $87,900, was
simultaneously deeded to Dani Bowman in order to accommodate the platting
requirements of the Municipality of Anchorage necessary to allow use of the
parcel for parking facilities. In June 1999, we agreed, in exchange for a
payment of $135,000, to extend the lease term for an additional five-year term
expiring September 30, 2011 at a rental rate of $20,000 per month and to
incorporate the adjoining property into the lease agreement. The lease was
further amended in 2002 to increase the rental rate to $20,860 per month for the
period October 1, 2003 through September 30, 2006, and to increase the rental
rate to $21,532 per month for the period October 1, 2006 through September 30,
2011, the end of the base term.
In January 2001 we entered into an aircraft operating lease agreement
with a company owned by Mr. Duncan. The lease agreement is month-to-month and
may be terminated at any time upon 120 days written notice. Upon executing the
lease agreement, the lessor was granted an option to purchase 250,000 shares of
our Class A common stock at $6.50 per share, all of which were fully exercisable
as of the Record Date. We paid a deposit of $1.5 million to the lessor in
connection with the lease agreement. The deposit will be repaid to us upon the
earlier of six months after the lease terminates or nine months after the date
of a termination notice as provided in the lease agreement. Effective in January
2002 the lease payment was increased to $50,000 per month and the lessor agreed
to repay the deposit upon termination of the lease. We agreed to allow the
lessor, at its option, to repay the deposit with Company common stock, assuming
such repayment did not violate any covenants in our credit facilities.
On February 25, 2005 we amended the aircraft operating lease agreement
to accommodate the lessor's purchase of a replacement aircraft. The amendment
increases the monthly lease rate from $50,000 to $75,000 upon the earlier of the
sale of the aircraft covered by the original lease agreement or May 25, 2005.
Prior to the earlier of the sale of the aircraft
Page 29
covered by the original lease agreement or May 25, 2005, we paid a monthly lease
rate of $125,000. Other terms of the lease were not changed.
Indebtedness of Management
Federal securities law prohibits public companies, e.g., the Company,
from extending, maintaining or arranging credit to, for, or on behalf of its
executive officers and directors. Loans made before July 29, 2002 are
grandfathered, i.e., allowed to remain effective. However, material
modifications of grandfathered loans are prohibited. Loans to the Named
Executive Officers existing as of that date are subject to these provisions of
the act and must be paid off in accordance with their terms.
A significant portion of the compensation paid to our executive
officers is in the form of stock options. Because insider sales of our capital
stock upon exercise of such options might have a negative impact on the price of
our common stock, in the past our board had encouraged our executive officers
not to exercise stock options and sell the underlying stock to meet personal
financial requirements. We had instead extended loans to those executive
officers. As of the Record Date, total indebtedness of management was $5,185,280
(including accrued interest of $1,155,597), all of which was unsecured.
The largest aggregate principal amount of indebtedness owed by
executive officers since the beginning of 2005 through the Record Date, and the
amount of principal and accrued interest that remained outstanding as of the
Record Date were as follows (executive officers not listed had no indebtedness
to us during that period):
Largest Aggregate Principal Amount Interest Amount
Principal Amount Outstanding as of Outstanding as of
Name Outstanding ($) Record Date ($) Record Date ($)
---- ----------------- ----------------- -----------------
Ronald A. Duncan 3,666,890 2,913,697 931,590
G. Wilson Hughes 1,486,763 632,500 47,986
William C. Behnke 350,000 350,000 147,551
Richard P. Dowling 25,000 25,000 5,190
John M. Lowber 273,456 108,486 23,281
Mr. Duncan's loans were made for his personal use and to exercise
rights under stock option agreements. The loans accrue interest at the prime
rate as published in the Wall Street Journal and are unsecured. Mr. Duncan's
remaining loan balances are due and payable on February 8, 2007, together with
accrued interest. The loan agreement included a provision that allowed a
$500,000 payment, which would otherwise have been due on December 31, 2002, to
be extended to February 8, 2007 in exchange for a payment of $25,000. The
payment date was extended in return for Mr. Duncan's payment of $25,000 to us on
December 31, 2002. The amounts due may be paid in either cash or stock. Payments
in stock will be valued at the closing price of the stock on the date of
payment. Payments in stock are subject to the covenants in our credit
facilities.
Mr. Hughes' loans were made for his personal use and to exercise rights
under stock option agreements with us. The loans accrue interest at our variable
rate under our senior
Page 30
credit facility, are unsecured, and are due together with accrued interest
through December 3, 2006.
Mr. Behnke's loans were made for his personal use and to exercise
rights under stock option agreements with us. Mr. Behnke's notes are secured by
Class A common stock held by him. Mr. Behnke's loans bear interest at our
variable rate under our senior credit facility. The notes are due, together with
accrued interest, in November and December 2006.
The $25,000 owed by Mr. Dowling at the Record Date is unsecured, is
payable in full on December 31, 2006 and bears interest at our variable rate
under our senior credit facility.
The loans to Mr. Lowber were made for his personal use and to exercise
rights under stock option agreements with us. Notes in the principal amount of
$46,819 bear interest at our variable rate under our senior credit facility, and
the remaining principal amount of $61,667 bears interest at a rate of 6.49% per
annum. So long as Mr. Lowber remains in our employ, the accrued interest on the
$61,667 note is to be waived at the beginning of each year. The loans are
unsecured and are due on June 30, 2006.
Registration Rights Agreements
We are a party to a registration rights agreement ("Registration Rights
Agreement") with the Verizon regarding all shares it holds in our Class B common
stock.
Verizon is a significant shareholder of the indicated class of Company
stock. As of December 31, 2005, neither Verizon nor its affiliates, other than
those identified elsewhere in this Proxy Statement, were our directors,
officers, nominees for election as directors, or members of the immediate family
of such directors, officers, or nominees. See, "Company Annual Meeting: Director
Elections - Director Independence" and "Management of Company: Director and
Executive Officers."
The basic terms of the Registration Rights Agreement are as follows.
If, in the case of either agreement, we propose to register any of our
securities under the Securities Act for our own account or for the account of
one or more of our shareholders, we must notify all of the holders under the
agreement of that intent. In addition, we must allow the holders an opportunity
to include their shares ("Registerable Shares") in that registration.
Under the Registration Rights Agreement, each holder also has the
right, under certain circumstances, to require us to register all or any portion
of such holder's Registerable Shares under the Securities Act. The agreement is
both subject to certain limitations and restrictions, including our right to
limit the number of Registerable Shares included in the registration. Generally,
we are required to pay all registration expenses in connection with each
registration of Registerable Shares pursuant to this agreement.
The Registration Rights Agreement specifically requires us to make no
more than four demand registrations at the request of Verizon and an unlimited
number of opportunities to include its Registerable Shares in other of our
security registrations. However, each registration request by Verizon must
include Registerable Shares having an aggregate market value equal to or more
than $1.5 million.
Page 31
OWNERSHIP OF COMPANY
Principal Shareholders
The following table sets forth, as of the Record Date (unless otherwise
noted), certain information regarding the beneficial ownership of our Class A
common stock and Class B common stock by each of the following:
o Each person known by us to own beneficially 5% or more of the
outstanding shares of Class A common stock or Class B common stock.
o Each of our directors.
o Each of the Named Executive Officers.
o All of our executive officers and directors as a group.
All information with respect to beneficial ownership has been furnished to us by
the respective shareholders.
Amount and
Nature of % of Total
Beneficial Shares % Combined
Names and Address of Title of Ownership Outstanding Voting Power
Beneficial Owner(1) Class(2) (#) % of Class (Class A & B)(2) (Class A & B)(2)
----------------------- --------- ----------- ---------- ---------------- ----------------
Stephen M. Brett Class A 31,660(3,4) * * *
Class B - - - - - -
Ronald A. Duncan Class A 1,426,794(4,5) 2.8 3.4 7.1
Class B 460,021(5) 13.6
Gina R. Borland Class A 107,074(6) * * *
Class B 1,537(6) *
Jerry A. Edgerton Class A - - - - - - - - - - - -
Class B - - - - - -
Donne F. Fisher Class A 37,135(7) * * 2.6
Class B 212,688(7) 6.3
Scott M. Fisher Class A 306,960(8) * 1.0 3.0
Class B 225,000(8) 6.7
William P. Glasglow Class A 56,604(4,9) * * *
Class B - - - - - -
G. Wilson Hughes Class A 790,100(10) 1.5 1.4 1.0
Class B 2,765(10) *
John M. Lowber Class A 582,883(11) 1.1 1.1 *
Class B 6,287(11) *
Stephen R. Mooney Class A - - - - - - - - - - - -
Class B - - - - - -
James M. Schneider Class A 61,660(3,4) * * *
Class B - - - - - -
Dana L. Tindall Class A 178,129(12) * * *
Class B 3,835(12) *
Page 32
Amount and
Nature of % of Total
Beneficial Shares % Combined
Names and Address of Title of Ownership Outstanding Voting Power
Beneficial Owner(1) Class(2) (#) % of Class (Class A & B)(2) (Class A & B)(2)
----------------------- --------- ----------- ---------- ---------------- ----------------
GCI Qualified Employee Class A 4,459,432(13) 8.7 8.3 6.3
Stock Purchase Plan Class B 90,517(13) 2.7
2550 Denali St., Ste. 1000
Anchorage, AK 99503
Gary Magness Class A 137,996 * 1.0 5.3
c/o Raymond L. Sutton, Jr. Class B 433,924 12.8
303 East 17th Ave., Ste 1100
Denver, CO 80203-1264
Verizon Communications, Inc. Class A 50,000(14) * 2.4 15.1
140 West Street Class B 1,275,791 37.7
New York, NY 10007
Robert M. Walp Class A 101,149(15) * * 3.7
804 P Street, Apt. 4 Class B 303,457(15) 9.0
Anchorage, AK 99501
Boston, MA 02109
Wellington Management Class A 5,596,800(16) 10.9 10.2 6.6
75 State Street Class B - - - - - -
Westport Asset Management, Class A 3,212,590(16) 6.3 5.9 3.8
Inc. Class B - - - - - -
253 Riverside Avenue
Westport, CT 06880
All Directors and Executive Class A 4,907,643(17) 9.1 10.0 14.6
Officers As a Group Class B 780,302(17) 23.1
(18 Persons)
- -------------------
* Represents beneficial ownership of less than 1% of the corresponding
class or series stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Exchange Act. Shares of our stock that a person has the right to
acquire within 60 days of the Record Date are deemed to be beneficially
owned by such person and are included in the computation of the
ownership and voting percentages only of such person. Each person has
sole voting and investment power with respect to the shares indicated,
except as otherwise stated in the footnotes to the table. Addresses are
provided only for persons other than management who own beneficially
more than 5% of the outstanding shares of Class A or B common stock.
(2) "Title of Class" includes our Class A common stock and Class B common
stock. "Amount and Nature of Beneficial Ownership" and "% of Class" are
given for each class of stock. "% of Total Shares Outstanding" and "%
Combined Voting Power" are given for the combination of outstanding
Class A common stock and Class B common stock, and the voting power for
Class B common stock (10 votes per share) is factored into the
calculation of that combined voting power.
(3) Includes 25,000 shares of our Class A common stock subject to stock
options granted under the Stock Option Plan to each of Messrs. Brett
and Schneider in February 1997 which they each respectively have the
right to acquire within 60 days of the Record Date by exercise of the
respective stock options. The exercise price for each option is $7.50
per share.
(4) Includes 3,330 shares of our Class A common stock granted to each of
Messrs. Brett, Duncan, Glasgow and Schneider pursuant to the Director
Compensation Plan during 2005. Includes 3,330 shares of our Class A
common stock granted and issued to each of those persons pursuant to
the Director Compensation Plan for services performed during 2004. See,
"Management of Company: Director Compensation."
(5) Includes 136,804 shares of Class A common stock and 6,270 shares of
Class B common stock allocated to Mr. Duncan under the Stock Purchase
Plan as of December 31, 2005. Includes 100,000 shares of Class A common
stock subject to stock options granted under the Stock Option Plan to
Mr. Duncan which he has the right to acquire within 60 days of the
Page 33
Record Date by exercise of the stock options. Does not include 195,331
shares of Class A common stock held by us in treasury pursuant to
deferred compensation agreements with us. Does not include 29,453
shares of Class A common stock held by Amanda Miller, Mr. Duncan's
daughter, of which Mr. Duncan disclaims beneficial ownership. Does not
include 18,560 shares of Class A common stock or 8,242 shares of Class
B common stock held by the Amanda Miller Trust, with respect to which
Mr. Duncan has no voting or investment power. Does not include 50,650
shares of Class A common stock or 27,020 shares of Class B common stock
held by Dani Bowman, Mr. Duncan's wife, of which Mr. Duncan disclaims
beneficial ownership. Includes 250,000 shares of Class A common stock
which a company owned by Mr. Duncan has the right to acquire within 60
days of the Record Date by the exercise of stock options.
(6) Includes 66,064 shares of Class A common stock which Ms. Borland has
the right to acquire within 60 days of the Record Date by the exercise
of vested stock options. Includes 40,956 shares of Class A common stock
and 1,537 shares of Class B common stock allocated to Ms. Borland under
the Stock Purchase Plan, as of December 31, 2005.
(7) Does not include 300,200 shares of Class A and 225,000 shares of Class
B common stock owned by Fisher Capital Partners, Ltd., the corporate
general partner of which is affiliated with Mr. Fisher's spouse. Mr.
Fisher disclaims any beneficial ownership of these shares.
(8) Includes 300,200 shares of Class A and 225,000 shares of Class B common
stock owned by Fisher Capital Partners, Ltd. of which Mr. Fisher is a
partner.
(9) Does not include (i) 5,259 shares owned by Diamond Ventures, LLC of
which Mr. Glasgow is President and (ii) 158 shares owned by a daughter
of Mr. Glasgow. Mr. Glasgow disclaims any beneficial ownership of the
shares held by this entity or by his daughter.
(10) Includes 300,000 shares of Class A common stock which Mr. Hughes has
the right to acquire within 60 days of the Record Date by the exercise
of vested stock options. Includes 72,360 shares of Class A common stock
and 2,765 shares of Class B common stock allocated to Mr. Hughes under
the Stock Purchase Plan, as of December 31, 2005. See, "Management of
Company:
Executive Compensation - Hughes Bonus Agreement."
(11) Includes 390,000 shares which Mr. Lowber has the right to acquire
within 60 days of the Record Date by the exercise of vested stock
options. Includes 55,915 shares of Class A common stock and 6,017
shares of Class B common stock allocated to Mr. Lowber under the Stock
Purchase Plan, as of December 31, 2005.
(12) Includes 150,000 shares which Ms. Tindall has the right to acquire
within 60 days of the Record Date by the exercise of vested stock
options. Includes 27,857 shares of Class A common stock and 3,835
shares of Class B common stock allocated to Ms. Tindall under the Stock
Purchase Plan, as of December 31, 2005, net of a discretionary
disposition prior to the Record Date.
(13) Balance as of March 31, 2006.
(14) Includes 50,000 shares of Class A common stock which Verizon has a right
to acquire within 60 days of the Record Date by the exercise of vested
stock options.
(15) Includes 38,231 shares of Class A common stock and 2,408 shares of
Class B common stock allocated to Mr. Walp under the Stock Purchase
Plan. Includes 27,170 shares of Class A common stock which Mr. Walp has
the right to acquire within 60 days of the Record Date by the exercise
of vested stock options.
(16) Balance as of December 31, 2005.
(17) Includes 2,326,977 shares of Class A common stock which such persons
have the right to acquire within 60 days of the Record Date through the
exercise of vested stock options. Includes 499,887 shares of Class A
common stock and 27,253 shares of Class B common stock allocated to
such persons under the Stock Purchase Plan.
- -------------------
Changes in Control
Pledged Assets and Securities. Our obligations under our credit
facilities are secured by substantially all of our assets. Should there be a
default by us under such agreements, our lenders could gain control of our
assets. We have been at all times since January 1, 2005 and up through the
Record Date, in compliance with all material terms of these credit facilities.
These obligations and pledges are further described in our Annual Report. See,
"Annual Report."
Senior Notes. In February 2004 GCI, Inc., our wholly-owned subsidiary,
sold $250
Page 34
million in aggregate principal amount of senior debt securities, and
in December 2004 GCI, Inc. sold an additional $70 million in similar debt
securities, with the full complement of $320 million due in 2014 ("Senior
Notes"). The net proceeds from the Senior Notes were used to repay our then
existing $180 million in senior notes, to repay term and revolving portions of
our senior credit facility totaling $53.8 million, to repurchase equity from
Verizon (at the time of repurchase, MCI), and for other of our ongoing
operations. The initial offering of the Senior Notes (not including the
subsequent $70 million issue) was later registered under the Securities Act in
August 2004. We registered $70 million of the Senior Notes in May 2005.
The Senior Notes are subject to the terms of an indenture ("Indenture")
entered into by GCI, Inc. Upon the occurrence of a change of control, as defined
in the Indenture, GCI, Inc. is required to offer to purchase the Senior Notes at
a price equal to 101% of their principal amount, plus accrued and unpaid
interest. The Indenture provides that the Senior Notes are redeemable at the
option of GCI, Inc. at specified redemption prices commencing in 2009. The terms
of the Senior Notes contain limitations on the ability of GCI, Inc. and its
restricted subsidiaries to incur additional indebtedness, limitations on
investments, payment of dividends and other restricted payments and limitations
on liens, asset sales, mergers, transactions with affiliates and operation of
unrestricted subsidiaries. The Indenture also limits the ability of GCI, Inc.
and its restricted subsidiaries to enter into or allow to exist specified
restrictions on the ability of GCI, Inc. to receive distributions from
restricted subsidiaries.
For purposes of the Indenture and the Senior Notes, the restricted
subsidiaries consist of all of our direct or indirect subsidiaries, with the
exception of the unrestricted subsidiaries, none of which existed as of the
Record Date. Under the terms of the Indenture an unrestricted subsidiary is a
subsidiary of GCI, Inc. so designated from time to time in accordance with
procedures as set forth in the Indenture.
We and GCI, Inc. have since the issuance of the Senior Notes and up
through the Record Date, been in compliance with all material terms of the
Indenture including making timely payments on the obligations of GCI, Inc.
LITIGATION AND REGULATORY MATTERS
We were, as of the Record Date, involved in several administrative and
civil action matters primarily related to our telecommunications markets in
Alaska and the remaining 49 states and other regulatory matters. These actions
are discussed in our Annual Report. See, "Annual Report."
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Overview
Our Audit Committee has retained KPMG LLP as our External Auditor,
i.e., independent certified public accountants for us, during 2005. It is
anticipated that the Audit Committee will appoint KPMG LLP as our External
Auditor for 2006. A representative of KPMG LLP is expected to be present at our
annual meeting. The representative will have the opportunity to make a
statement, if so desired, and will be able to respond to appropriate questions.
Page 35
Pre-Approval Policies and Procedures
We have established as policy, through the adoption of the Audit
Committee Charter that, before our External Auditor is engaged by us to render
audit services, the engagement must be approved by the Audit Committee.
While our Audit Committee may, in the alternative, establish specific
additional pre-approval policies and procedures to be followed in selection and
engagement of an External Auditor and which are detailed as to the particular
service, require that the Audit Committee is informed of each service and
require that such policies and procedures do not include delegation of the
committee's responsibilities under the Exchange Act to our management, the
committee has not established such alternative to its direct pre-approval of our
External Auditor.
Our pre-approval policies and procedures with respect to Non-Audit
Services include as a part of the Audit Committee Charter that the Audit
Committee may choose any of the following options for approving such services:
o Full Audit Committee - The full Audit Committee can consider each
Non-Audit Service.
o Designee - The Audit Committee can designate one of its members to
approve a Non-Audit Service, with that member reporting approvals
to the full committee.
o Pre-Approval of Categories - The Audit Committee can pre-approve
categories of Non-Audit Services. Should this option be chosen, the
categories must be specific enough to ensure both of the following
-
o The Audit Committee knows exactly what it is approving and can
determine the effect of such approval on auditor independence.
o Management will not find it necessary to decide whether a
specific service falls within a category of pre-approved
Non-Audit Service.
The Audit Committee's pre-approval of Non-Audit Services may be waived
under specific provisions of the Audit Committee Charter. The prerequisites for
waiver are as follows: (1) the aggregate amount of all Non-Audit Services
constitutes not more than 5% of the total amount of revenue paid by us to the
External Auditor during the fiscal year in which those services are provided;
(2) the service is originally thought to be a part of an audit by our External
Auditor; (3) the service turns out to be a Non-Audit Service; and (4) the
service is promptly brought to the attention of the Audit Committee and approved
prior to completion of the audit by the committee or by one or more members of
the committee who are members of our board to whom authority to grant such
approvals has been delegated by the committee.
During 2005, there were no waivers of our Audit Committee pre-approval
policy.
Fees and Services
KPMG LLP has provided certain audit, audit-related, and tax services.
The aggregate fees billed in each of these categories for each of the past two
fiscal years are as follows:
Page 36
o Audit Fees - Were $672,700 and $722,600 for 2005 and 2004,
respectively. Included in this category are fees for our annual
financial statement audit, quarterly financial statement reviews,
and reviews of other filings by us with the SEC.
o Audit-Related Fees - Were $13,500 and $12,500 for 2005 and 2004,
respectively. Included in this category are fees for the audit of
the Stock Purchase Plan and review of the related annual report on
Form 11-K filed with the SEC.
o Tax Fees - Were $30,520 and $29,525 for 2005 and 2004,
respectively. Included in this category are fees for review of our
state and federal income tax returns and consultation on various
tax matters.
o All Other Fees - None for 2005 and $244,469 for 2004.
ANNUAL REPORT
The Annual Report to our shareholders in the form of Form 10-K for 2005
is enclosed with this Proxy Statement, subject to the delivery provisions
described elsewhere in this Proxy Statement. See, "Company Annual Meeting:
Voting Procedure - Delivery." In addition, our Internet website provides a link
to the SEC website containing copies of our filings with the SEC, including our
Annual Report, recent quarterly reports on Form 10-Q and current reports on Form
8-K.
SHAREHOLDER COMMUNICATIONS
Our board follows a process of open communication with our
shareholders. We file various reports with the SEC and issue public releases to
the media through our board, from time to time, on matters relating to our
business and our shareholders.
In addition, our shareholders are encouraged to contact our board with
their questions, concerns, and comments. This communication can most efficiently
be accomplished by writing to our board, generally, or to specific board
members, individually, at the following mailing address:
ATTN: Secretary (Shareholder - Board Communication)
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
A copy of each shareholder communication will be forwarded to all
members of our board within no more than five business days of receipt. In the
event a shareholder communication shall be to one or more but not all of our
board members, copies of it shall be distributed to all board members for their
review or information, as the case may be. Each shareholder communication must
include the shareholder's full name and address as they appear in our records,
as well as an identification of the number of shares registered or beneficially
owned by the shareholder. Our board may, in its sole discretion, not respond to
a shareholder communication not containing this information.
Page 37
As a part of its open communication policy with our shareholders, our
board encourages shareholders to attend annual and special, if any, shareholder
meetings and to voice their questions, concerns and comments to management and
the board. A portion of each such meeting is set aside for such dialogue. Our
board members are encouraged to attend annual shareholder meetings to respond
directly to shareholder inquiries. Because of scheduling conflicts, other
commitments and selection of board members having requisite skills and
characteristics to promote our business but residing outside of Alaska, only
five of our board members (Messrs. Brett, Duncan, Edgerton, Glasgow and Mooney)
were present at the 2005 annual shareholder meeting.
FUTURE SHAREHOLDER PROPOSALS AND RECOMMENDATIONS
Proposals
Certain matters are required to be considered at an annual meeting of
our shareholders, e.g., the election of directors. In addition, from time to
time, our board may wish to submit to those shareholders other matters for
consideration. Furthermore, our shareholders may be asked to consider and take
action on a proposal of business submitted by other of our shareholders who are
not members of management and where the proposal covers a matter deemed proper
under SEC rules and applicable state law.
Under our Bylaws, should one or more of our shareholders wish to have a
proposal of business included in management's proxy statement and form proxy for
our 2007 annual meeting of shareholders, the proposal must be received by us at
the following address not earlier than December 15, 2006 and not later than
January 15, 2007:
ATTN: Secretary (2007 Annual Meeting Proposal)
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Under our Bylaws, a shareholder of ours wishing to make a proposal of a
nomination for director or wishing to introduce a proposal of any business at
our 2007 annual meeting must give us timely advance notice as described in our
Bylaws. To be timely, we must receive the nomination or other shareholder
proposal for the 2007 meeting at our offices as identified above not earlier
than December 15, 2006 and not later than January 15, 2007. Nominations for
director must describe various matters as specified in our Bylaws, including the
name and address of each nominee, his or her occupation and number of shares
held, and certain other information. The nomination must also be accompanied by
written consent by the nominee to being named in the proxy statement as a
nominee and to serving as a director if elected.
In addition to the timely submission of advance notice, a shareholder
of ours wishing to make a proposal at our 2007 annual meeting must include in
that notice a statement describing the proposal (which must otherwise be a
proper subject for action by our shareholders), the reasons for that other
business and other matters as specified in our Bylaws. Our board or the
presiding officer at the meeting may reject any such proposals that are not made
in accordance with these procedures or that are not a proper subject for
shareholder action in accordance with
Page 38
applicable law. Our Articles and Bylaws also set forth specific requirements and
limitations applicable to nominations and other shareholder proposals at special
meetings of our shareholders.
A shareholder of ours making a nomination or other shareholder proposal
of business for the 2007 annual meeting must be a person who is a shareholder of
record both at the time of giving of notice and at the time of the meeting and
who is entitled to vote at the meeting. In addition, such a shareholder must be
a person who has continuously held at least $2,000 in market value, or at least
1%, of our outstanding securities entitled to be voted on the matter at the
meeting for at least one year by the date of submission of the proposal to us
for inclusion on the agenda of the meeting. Any such notice must be given to our
Secretary at the address identified above. Any shareholder of ours who shall
desire a copy of our Articles or Bylaws will be furnished a copy without charge
upon written request to the Secretary at the above given address.
For any proposal by a shareholder of ours that is not submitted for
inclusion in the management proxy statement for our 2007 annual meeting but is
instead sought to be presented directly at that meeting, the SEC rules permit
our board to vote proxies in its discretion if we (i) receive notice of the
proposal during the time interval December 15, 2006 through January 15, 2007 and
we advise shareholders in the 2007 proxy statement about the nature of the
matter and how our board intends to vote on that matter, or (ii) do not receive
notice of the proposal during the time interval December 15, 2006 through
January 15, 2007. Our board intends to exercise this authority, if necessary, in
conjunction with the 2007 meeting.
Our board carefully considers all proposals from our shareholders. When
adoption of a proposal is clearly in the best interest of us and our
shareholders generally and does not require approval of our shareholders, it is
usually adopted by our board, if appropriate, rather than being included in
management's proxy statement.
Recommendations
As our policy, the Nominating and Corporate Governance Committee will,
for our 2007 shareholder annual meeting, consider director candidates
recommended by certain of our shareholders, subject to the shareholder
recommendation procedure set forth in the Nominating and Corporate Governance
Committee Charter. A copy of the charter is available as described elsewhere in
this Proxy Statement. See, "Management of Company: Board and Committee Meetings
- - Nominating and Corporate Governance Committee."
A shareholder of ours recommending such a candidate must submit the
recommendation to the Nominating and Corporate Governance Committee timely in
order to ensure committee consideration of it. To be timely, the recommendation
must be received at the following address not earlier than December 15, 2006 and
not later than January 15, 2007:
ATTN: Chair, Nominating and Corporate Governance
Committee (2007 Annual Meeting Recommendation)
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Page 39
The shareholder recommendation must be accompanied by a written
statement in support of it. The statement must describe various matters as
specified in the Nominating and Corporate Governance Committee Charter,
including the name and address of the recommended candidate, his or her
occupation and certain other information about him or her as well as about the
shareholder recommending the candidate. The recommendation and statement must
also be accompanied by written consents by the recommending shareholder and
recommended candidate, should the committee and our board accept the shareholder
recommendation, to being named in our 2007 management proxy statement as a
nominee and to serving as a director if elected.
Our Nominating and Corporate Governance Committee is only required to
consider a shareholder recommendation made by a shareholder of ours who, as of
the date of the shareholder recommendation and the record date for the 2007
annual meeting, is a beneficial owner of at least one share of our voting
securities. That is, the shareholder must be the holder of at least one share of
Class A common stock, one share of Class B common stock, or one share of
preferred stock which either has voting rights directly or indirectly on an
equivalent as-converted basis in our common stock.
Upon timely receipt of a recommendation and statement in support of it
satisfying the requirements of the Nominating and Corporate Governance Committee
Charter, our Nominating and Corporate Governance Committee shall review the
recommendation, subject to minimum qualifications, skills and characteristics
and other requirements of our board as set forth in the charter and as generally
described elsewhere in this Proxy Statement. See, "Management of Company: Board
and Committee Meetings - Nominating and Corporate Governance Committee." The
shareholder recommendation will be evaluated by the committee and the
committee's determination on that recommendation will be subject to those
criteria the same as will be the case for a determination by the committee on
existing board members standing for re-election.
With regard to each nominee, if any, approved by our Nominating and
Corporate Governance Committee for inclusion in our 2007 proxy (other than
executive officers or directors standing for re-election), the persons or
entities who recommended the nominee will be identified in the proxy statement
for that meeting as falling within one of the following categories: security
holder, non-management director, chief executive officer, other executive
officer, third-party search firm, or other specified source.
In the event our Nominating and Corporate Governance Committee shall
receive by a date not later than January 15, 2007 a shareholder recommendation
from a shareholder or group of shareholders that beneficially owned more than 5%
of our voting common stock for at least one year as of the date of the
recommendation, the committee shall identify in our 2007 proxy statement, the
recommended candidate and the shareholder or shareholder group recommending the
candidate, and disclose whether the committee chose to nominate the candidate,
with one limitation. Should those persons not give us written consent to
identify them, we would not be required to identify them in that proxy
statement.
Page 40
PROXY PROXY
GENERAL COMMUNICATION, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
JUNE 26, 2006
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated May 15, 2006 and holding Class A common stock or Class B common
stock of General Communication, Inc. ("Company") of record determined as of
April 28, 2006, hereby appoints Ronald A. Duncan, on behalf of the board of
directors of the Company, and each of them, the proxy of the undersigned, with
full power of substitution, to attend that annual meeting of shareholders, to be
held at Josephine's Restaurant on the 15th floor in the Sheraton Hotel at 401
East 6th Avenue in Anchorage, Alaska at 6:00 p.m. (Alaska Daylight Time) on
Monday, June 26, 2006 and any adjournment or adjournments of that meeting. The
undersigned further directs those holders of this Proxy to vote at that annual
meeting, as specified in this Proxy, all of the shares of stock of the
undersigned in the Company, which the undersigned would be entitled to vote if
personally present, as follows:
(1) To elect three directors, each for a three-year term, as part of
Class II of our seven member classified board of directors and to
elect one director to complete the remaining one year of the
three-year term in Class III of that board, as identified in this
Proxy:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominiees
contrary) listed below
Class II: Stephen M. Brett
Ronald A. Duncan
Stephen R. Mooney
Class III: Scott M. Fisher
INSTRUCTIONS:
To withhold authority under this Proxy to vote for
the individual nominee, draw a line through the name of the
nominee for which you wish the authority to be withheld.
(2) To transact in the proxyholder's discretion such other business as
may come before that annual meeting of shareholders, including the
approval (but not the ratification) of the minutes of the June 27,
2005 annual meeting of shareholders of the Company and other
matters as described in the Proxy Statement. As of the record date,
the Board was unaware of any other business to be brought at the
meeting other than the approval of those minutes.
Page 1
Should the undersigned choose to mark this Proxy as withholding
authority to vote for one or more nominees as listed above or otherwise as
abstaining from a vote on a proposal set forth above, this Proxy will,
nevertheless, be used for purposes of establishing a quorum at the annual
meeting of shareholders.
A proxy having conflicting indications of more than one selection on a
vote on a nominee or otherwise on a proposal to be addressed at the annual
meeting will not be voted on that matter but will be used for purposes of
establishing a quorum at the meeting. Voting by proxy is subject to other
conditions as set forth in the Proxy Statement. See within the Proxy Statement
"Company Annual Meeting: Voting Procedure."
The undersigned hereby ratifies and confirms all that the proxyholder
or the holder's substitute lawfully does or causes to be done by virtue of this
Proxy and hereby revokes any and all proxies given prior to this Proxy by the
undersigned to vote at the annual meeting of shareholders or any adjournments of
the meeting. The undersigned acknowledges receipt of the Notice of the Annual
Meeting and the Proxy Statement accompanying that notice.
DATED:
Signature of Shareholder
Print Name:
Signature of Shareholder
Print Name:
Please date this Proxy, sign it above as your name appears printed
elsewhere on this Proxy, and return it in the enclosed envelope which requires
no postage. Joint owners should each sign personally. When signing as attorney,
executor, trustee, guardian, administrator, or officer of a corporation or other
entity, please give that title.
The board recommends a vote "for" proposal no. (1). This Proxy, when
properly executed, will be voted as directed. If no clear direction is made, it
will be voted "for" proposal no. (1). If any other business shall be properly
presented at the annual meeting, this Proxy will be voted in accordance with the
best judgment and discretion of the proxyholder.
Page 2