UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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| The Companys burn rates (a measure of how much equity is awarded over time) have decreased for each of the past three consecutive calendar years. The unadjusted burn rate was 3.74%, 3.67% and 1.80% for calendar years 2008, 2009 and 2010, respectively. Further, the Board estimates that the 2011 unadjusted burn rate will be approximately 1.60%. | ||
| Approximately 73,000, 2,000 and 12,000 previously granted options and 289,000, 189,000 and 167,000 previously granted Restricted Stock Units (RSUs) were forfeited in 2010, 2009 and 2008, respectively. ISS nevertheless included these options and RSUs in its calculations of our burn rate. The Company also included forfeited shares in its burn rate calculation. However, the forfeited shares included in these calculations cannot be dilutive or transfer shareholder value, and the Board asks you to consider this point in evaluating our burn rate and shareholder value transfer. | ||
| A significant amount of Stock-Settled Stock Appreciation Rights (SARs) granted in 2008 have remained under-water (i.e., awards where the market value of the underlying stock is less than the grant price) since they were granted, but ISS included these under-water SARs in its calculation of burn rate. The Company also included under-water awards in its burn rate calculation. However, as under-water SARS have no present value and cannot be dilutive or transfer shareholder value, the Board asks you to consider this point as well in evaluating our burn rate. | ||
| Unlike ISS, ACS does not use an artificial multiplier in calculating the number of shares burned. The Board believes the use of such a multiplier may be misleading to shareholders because use of such a multiplier does not accurately reflect the number of shares burned. |
600 Telephone Ave., Anchorage, Alaska 99503 | tel 907.297.3000 fax 907.297.3100 | www.alaskacommunications.com |
| The Company has fully complied with the commitment it made to our shareholders in July 2009 to ensure that its burn rate remained under two percent of outstanding shares. In the period July 10, 2009 July 9, 2010, the Companys actual burn rate was 1.77%. The estimated burn rate for the period July 10, 2010 July 9, 2011 is approximately 1.72%. | ||
| As noted, shareholders are not being asked to approve the allocation of any new shares to the proposed Plan. All shares available for grant under the Companys existing 1999 Plans will be transferred to the new Plan. The Board believes that sufficient shares will be transferred from the existing 1999 plans to allow for an additional three years of equity incentive grants at 2010 levels. Shareholder approval will be required for the authorization of any new shares to the proposed Plan. | ||
| The proposed Plan includes a number of provisions that are more beneficial for shareholders than corresponding provisions of the 1999 plans, including provisions eliminating single triggers for change in control benefits (replacing them with double triggers, which are generally preferred from an investor standpoint), the addition of a clawback policy and provisions that do not allow certain shares that are withheld, not issued, or market purchased to replenish the available share pool. One purpose of the new Plan is to more closely align the terms of our equity incentive plans with what we believe are current best practices with respect to such plans. If the proposed Plan is not approved, the out-of-date provisions of our 1999 Plans will remain in effect. | ||
| The Board has determined that significant stock compensation is a valuable tool aligning the interests of our employees with those of our shareholders. In addition, the Board sees more value in retaining cash that would otherwise be used as compensation for Company use in operations and for other important business purposes. Finally, the Board understands the challenges the Company faces in attracting and retaining the most qualified and talented employees in its remote location in Alaska. We believe that shareholders should consider these factors that weigh in favor of approving the Plan notwithstanding the recommendations of one proxy advisory service. |
600 Telephone Ave., Anchorage, Alaska 99503 | tel 907.297.3000 fax 907.297.3100 | www.alaskacommunications.com |