<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
TURNER BROADCASTING SYSTEM, INC.
- - - - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
TURNER BROADCASTING SYSTEM, INC.
- - - - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
TURNER BROADCASTING SYSTEM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JULY 26, 1994
The Annual Meeting of the Shareholders of Turner Broadcasting System, Inc.
will be held at the Marble Palace, Millionnaya ulitsa 5/1 in St. Petersburg,
Russia, on Tuesday, July 26, 1994, commencing at 9:00 a.m., local time.
At the meeting, the shareholders will be asked to:
1. Elect fifteen directors to serve for the ensuing year or until
their successors are duly elected and have qualified;
2. Consider and act upon a proposal to ratify the selection of Price
Waterhouse as the Company's independent accountants for the fiscal year
ending December 31, 1994;
3. Consider and act upon a proposal to approve the Turner Incentive
Plan;
4. Consider and act upon a proposal to approve the Company's Long-Term
Incentive Plan;
5. Consider and act upon a proposal to approve amendments to the
Turner Broadcasting System, Inc. 1988 Stock Option Plan;
6. Consider and act upon a proposal to approve the Turner Broadcasting
System, Inc. 1993 Stock Option and Equity-Based Award Plan;
7. Consider and act upon a shareholder proposal, if properly presented
at the meeting, concerning the adoption of cumulative voting by
shareholders in the election of the directors of the Company; and
8. Transact any other business which may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on May 25, 1994 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting. Please mark, sign and date the enclosed proxy form and
mail it promptly in the accompanying envelope.
By Order of the Board of Directors
STEVEN W. KORN
Secretary
Atlanta, Georgia
June 17, 1994
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN
PROVIDED. IN THE EVENT YOU ARE ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
TURNER BROADCASTING SYSTEM, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 26, 1994
This proxy statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of Turner
Broadcasting System, Inc. (the "Company") for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on Tuesday, July
26, 1994, at the Marble Palace, Millionnaya ulitsa 5/1 in St. Petersburg,
Russia, at 9:00 a.m. local time, and any adjournments thereof. All shareholders
are encouraged to attend the Annual Meeting. Your proxy is requested, however,
whether or not you attend in order to assure maximum participation and to
expedite the proceedings.
At the Annual Meeting, shareholders will be requested to act upon the
matters set forth in this proxy statement. If you are not present at the
meeting, your shares can be voted only when represented by proxy. The shares
represented by your proxy will be voted in accordance with your instructions if
the proxy is properly signed and returned to the Company before the Annual
Meeting. You may revoke your proxy at any time prior to its being voted at the
Annual Meeting by delivering a new duly executed proxy with a later date or by
delivering written notice of revocation to the Secretary of the Company prior to
the day of the Annual Meeting, or by appearing and voting in person at the
Annual Meeting. It is anticipated that this proxy statement and accompanying
proxy will first be mailed to the Company's shareholders on or about June 20,
1994. The Company's 1993 Annual Report to its shareholders is also enclosed and
should be read in conjunction with the matters set forth herein. The expenses
incidental to the preparation and mailing of this proxy material are being paid
by the Company. No solicitation is planned beyond the mailing of this proxy
material to shareholders.
The principal executive offices of the Company are located at One CNN
Center, Atlanta, Georgia 30303.
VOTING SHARES
Only shareholders of record as of the close of business on May 25, 1994
will be entitled to notice of and to vote at the Annual Meeting. As of the close
of business on May 25, 1994, the Company had outstanding 68,330,388 shares of
its Class A Common Stock, par value $.0625 per share (the "Class A Common
Stock"), 137,306,494 shares of its Class B Common Stock, par value $.0625 per
share (the "Class B Common Stock"), and 12,396,976 shares of its Class C
Convertible Preferred Stock, par value $.125 per share (the "Class C Preferred
Stock"). Holders of the Class A Common Stock, the Class B Common Stock and the
Class C Preferred Stock are entitled to vote on every matter submitted to the
shareholders, voting together as a single class except as to matters on which
separate class voting is required by law or by the Company's Restated Articles
of Incorporation, as amended (hereinafter, the "Articles of Incorporation" or
the "Articles"). Each share of Class A Common Stock entitles the holder thereof
to two votes, each share of Class B Common Stock entitles the holder thereof to
one-fifth vote and each share of Class C Preferred Stock entitles the holder
thereof to vote as though they held the six shares of the Class B Common Stock
currently underlying each share of the Class C Preferred Stock (i.e., one and
one-fifth votes per share of Class C Preferred Stock).
Directors are elected by a plurality of the votes cast (see "I. Election of
Directors" regarding separate class voting for the two classes of the Company's
directors). Holders of the Class A Common Stock, the Class B Common Stock and
the Class C Preferred Stock will vote together as a single class on all other
matters coming before the Annual Meeting. Action on the ratification of the
Company's independent accountants (Item II hereof), approval of the Turner
Incentive Plan and the Company's Long-Term Incentive Plan (Items III and IV
hereof) and approval of a shareholder-proposed resolution (Item VII hereof) will
be approved if the votes cast in favor of each such action exceed the votes cast
opposing the action. To comply with the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the proposed amendments to the
Turner Broadcasting System, Inc. 1988 Stock Option Plan (Item V hereof) and the
<PAGE> 4
adoption of the Turner Broadcasting System, Inc. 1993 Stock Option and
Equity-Based Award Plan (Item VI hereof) must be approved by the affirmative
vote of the holders of a majority of the shares of stock present in person or
represented by proxy at the Annual Meeting and entitled to vote. Except with
respect to these two items, abstentions and broker non-votes will not be
included in the total number of votes cast and therefore will have no effect on
the outcome of the vote. With respect to the proposals set forth in Items V and
VI hereof, shares voted as abstaining will, pursuant to Rule 16b-3, be treated
as present and entitled to vote, thus having the effect of "No" votes, while
broker non-votes will have no effect on the outcome of the vote on these
matters.
I. ELECTION OF DIRECTORS
Under the terms of the Company's Articles of Incorporation, so long as at
least four million shares of the Class C Preferred Stock are outstanding, the
Company's Board of Directors shall consist of fifteen members, except that such
number is subject to automatic adjustment under those circumstances and during
those time periods that holders of any other class or series of the Company's
preferred stock have rights to elect members of the Board of Directors. Other
than the Class C Preferred Stock, there are no classes or series of preferred
stock outstanding which provide a present right to the holders thereof to elect
directors. Holders of the Class A Common Stock and holders of the Class B Common
Stock (such two classes hereinafter referred to collectively as the "Common
Stock") are entitled to vote as a separate class for the election of eight of
the fifteen directors (the "Common Stock Directors"), and holders of the Class C
Preferred Stock are entitled to vote as a separate class for the election of the
remaining seven directors (the "Class C Directors").
NOMINATION AND VOTING ARRANGEMENTS
Certain agreements which were entered into in connection with the Company's
issuance and sale in June 1987 of units of its securities comprised of shares of
the Class B Cumulative Preferred Stock and the Class C Preferred Stock (the
"Units Offering") contain provisions with respect to the selection of and voting
for nominees for election as directors of the Company. Pursuant to the terms of
a Shareholders' Agreement dated as of June 3, 1987, as amended as of April 15,
1988 (the "Shareholders' Agreement"), among the investors in the Units Offering
(the "Units Investors"), Mr. R. E. Turner and the Company, the Units Investors
and Mr. Turner have agreed to vote their respective shares of Common Stock, if
any, for the election of the Common Stock Directors nominated by the Board of
Directors. The Shareholders' Agreement terminates as to any Units Investor upon
that investor's sale of all of its shares of the Class C Preferred Stock, and
terminates as to all parties upon the first to occur of (i) the date on which
one or more of the Units Investors purchases Mr. Turner's interest in the
Company, (ii) the date on which less than four million shares of Class C
Preferred Stock remain outstanding (the "Termination Date"), and (iii) with
respect to the voting provisions, the twentieth anniversary of the date of the
Shareholders' Agreement (unless extended by the parties).
The following Units Investors, who in the aggregate held approximately 91%
of the outstanding shares of Class C Preferred Stock at February 28, 1994, are
also parties to a Voting Agreement dated as of June 3, 1987 (the "Voting
Agreement"): Liberty Broadcasting, Inc. (a subsidiary of Tele-Communications,
Inc., which is hereinafter referred to as "TCI"), Time TBS Holdings, Inc. (a
subsidiary of Time Warner Inc., which, together with its predecessor, is
hereinafter referred to as "TWI"), United Artists Investments, Inc., United
Cable Television Corporation (hereinafter referred to collectively as the
"TWI/TCI Group"), Warner Cable Communications, Inc. ("Warner Cable") and
Continental Cablevision, Inc. ("Continental"). Under the terms of the Voting
Agreement, which terminates upon the earlier of the Termination Date and the
twentieth anniversary of the date of the agreement, the TWI/TCI Group is
entitled to nominate in the aggregate five of the seven Class C Directors, and
Warner Cable and Continental are each entitled to nominate one Class C Director.
Subsequent to the date of the Voting Agreement, Warner Cable has become an
affiliate of TWI and both United Artists Investments, Inc. and United Cable
Television Corporation have become direct wholly-owned subsidiaries of United
Artists Entertainment Company ("UAE"). Additionally, each of the parties to the
Voting Agreement has agreed to vote all of the Class C Preferred Stock owned by
it for the election of the Class C Directors so nominated (and, if so requested
by the nominating party, to vote
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for, or cause its nominees who serve as Class C Directors to vote for, the
removal of any Class C Director nominated by such requesting party).
TWI, Time TBS Holdings, Inc., TCI, Liberty Broadcasting, Inc., United
Artists Investments, Inc. and United Cable Television Corporation are also
parties to an agreement dated as of June 3, 1987 (the "TWI/TCI Agreement"),
which, among other things, provides that of the five Class C Directors nominated
by the TWI/TCI Group, two are to be nominated by TWI and its controlled
affiliates (the "TWI Group") and three by TCI, United Artists Investments, Inc.
and United Cable Television Corporation and their respective controlled
affiliates (the "TCI Group") until parity is reached as between these groups in
the ownership of the Class C Preferred Stock, at which time these groups shall
each nominate the same number of Class C Directors. The TWI/TCI Agreement
terminates in its entirety upon the earliest of (i) such date as either the TWI
Group or the TCI Group no longer owns any voting securities of the Company, (ii)
the twentieth anniversary of the date of the agreement, (iii) the date Mr.
Turner sells his interest in the Company to a third party and (iv) the
Termination Date.
NOMINEES FOR COMMON STOCK DIRECTORSHIPS
The Common Stock Directors of the Board of Directors have nominated the
eight individuals named below for election as Common Stock Directors of the
Company. It is the present intention of the persons named in the accompanying
form of proxy to vote such proxy (unless authority to so vote is withheld) for
the election of the eight nominees named below as Common Stock Directors of the
Company, each to serve until the next annual meeting of shareholders and until
his or her respective successor shall be duly elected and shall qualify. As
previously noted under the caption "Nomination and Voting Arrangements," R. E.
Turner and those Units Investors who hold Common Stock have agreed to vote their
shares of Common Stock for the election of such nominees, thereby assuring the
election of such nominees.
The Board of Directors expects that each of the nominees will be available
to stand for election and serve as director. However, in the event a vacancy
among the original nominees occurs prior to the Annual Meeting, the proxies will
be voted for a substitute nominee or nominees named by the Common Stock
Directors and for the remaining nominees.
The following is a brief description of the business experience of each of
the nominees for Common Stock directorships during the past five years:
R. E. Turner, age 55, has been Chairman of the Board, President and
controlling shareholder of the Company since 1970.
Henry L. (Hank) Aaron, age 60, served as Vice President -- Director of
Player Development of Atlanta National League Baseball Club, Inc. ("ANLBC")
from 1976 until December 1989, at which time he became Senior Vice
President of ANLBC. Mr. Aaron has been Vice President -- Community
Relations and a director of the Company since 1980. He was previously a
professional baseball player.
W. Thomas Johnson, age 52, was appointed as a Common Stock Director in
September 1990. He joined the Company in 1990 as Vice President -- News and
as President of Cable News Network, Inc. Previously, Mr. Johnson was
Chairman of the Los Angeles Times from 1989 until joining the Company, and
also Vice Chairman of the Times Mirror Company from 1987 until joining the
Company. From 1980 until 1989, he served as Publisher and Chief Executive
Officer of the Los Angeles Times.
Rubye M. Lucas, age 58, has been a director of the Company since 1981.
She is President of the William D. Lucas Fund, Inc., established in 1979 to
honor her late husband Bill Lucas, a former general manager of the Atlanta
Braves, by providing college scholarships to high school seniors who plan
to play baseball, and assists in fund raising for the National Association
for the Advancement of Colored People and the United Negro College Fund. In
addition, she serves as Director of the Atlanta Project for the Company.
Previously, she was employed as a teacher by the Atlanta Board of Education
from 1965 to 1990.
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Terence F. McGuirk, age 42, has served as Executive Vice President of
the Company since 1990, as a director since 1987 and as President of the
Company's Turner Sports division since 1989. Previously, he was a Vice
President of the Company from 1979 to 1990. Mr. McGuirk joined the Company
in 1972 as an account executive.
Brian L. Roberts, age 34, has been a Common Stock Director of the
Company since January 1989. Mr. Roberts has served as President of Comcast
Corporation ("Comcast") since February 1990 and as a director of Comcast
since June 1988. From June 1987 he had served as Executive Vice President
of Comcast. Prior to becoming Executive Vice President, he served as a Vice
President of Operations for a division of Comcast from November 1984 to May
1987. Mr. Roberts also serves as a director of QVC Network, Inc., Comcast
Cablevision of Philadelphia, Inc. and Storer Communications, Inc.
Scott M. Sassa, age 35, has been a Common Stock Director of the
Company since September 1992. Mr. Sassa has served as Vice
President -- Entertainment Networks of the Company since 1990, having
previously served as Executive Vice President of Turner Network Television,
Inc. from 1988 until 1990. Prior to that time, he served as Vice President
of New Business Development of Ohlmeyer Communications Company from 1987
until 1988.
Robert Shaye, age 54, has been a Common Stock Director of the Company
since April 1994, filling the vacancy created by the resignation of William
C. Bartholomay. Mr. Shaye serves as Chairman and Chief Executive Officer of
New Line Cinema Corporation ("New Line"), a wholly-owned subsidiary of the
Company since January 28, 1994. Mr. Shaye has served as President or
Chairman and Chief Executive Officer of New Line since its inception in
1967.
NOMINEES FOR CLASS C DIRECTORSHIPS
The Class C Directors of the Board of Directors of the Company have
nominated the seven individuals named below for election as Class C Directors of
the Company. See "Nomination and Voting Arrangements" with respect to the
selection of these nominees and agreements among certain holders of the Class C
Preferred Stock with respect to the election thereof. It is the present
intention of the persons named in the accompanying form of proxy to vote such
proxy (unless authority to so vote is withheld) for the election of the seven
nominees named below as Class C Directors of the Company, each to serve until
the next annual meeting of shareholders and until his respective successor shall
be duly elected and shall qualify.
The Board of Directors expects that each of the nominees will be available
to stand for election and to serve as director. However, in the event a vacancy
among the original nominees occurs prior to the Annual Meeting, the proxies will
be voted for a substitute nominee or nominees named by the Class C Directors and
for the remaining nominees.
Of the nominees for Class C directorships, Messrs. Fuchs, Malone and Neher
have served as Class C Directors since June 3, 1987. The following is a brief
description of the business experience of each of the nominees for Class C
directorships during the past five years:
Peter R. Barton, age 43, has served as a Class C Director since April
1994, filling the vacancy created by the resignation of Bob Magness. Mr.
Barton has served as President of Liberty Media Corporation since 1990.
Prior to that time, he served as Senior Vice President of TCI from 1988
until March 1991 and President of Cable Value Network from 1986 to 1988.
Mr. Barton is also a director of QVC Network, Inc. and BET Holdings, Inc.
Joseph J. Collins, age 49, has served as a Class C Director since June
1988. Mr. Collins has served as Chairman of the Board and Chief Executive
Officer of Time Warner Cable, now a division of Time Warner Entertainment
Company, L.P. ("TWE"), since September 1989. TWE is a limited partnership
in which TWI holds an 87.5% equity interest. Mr. Collins previously served
as Chairman of the Board and Chief Executive Officer of American Television
and Communications Corporation, a TWI subsidiary which was a predecessor of
Time Warner Cable, from June 1988 until November 1992. He formerly served
as President of Home Box Office ("HBO"), a former TWI subsidiary and now a
division of TWE,
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from October 1984 until June 1988. Mr. Collins also served as a Vice
President of TWI from December 1982 to 1988.
Michael J. Fuchs, age 48, joined HBO in 1976, and has served as
Chairman and Chief Executive Officer of HBO since October 1984. Mr. Fuchs
is also a director of Marvel Entertainment Group, Inc.
Gerald M. Levin, age 54, has served as a Class C Director since
February 1992. Mr. Levin has served as Chairman, President and Chief
Executive Officer of TWI since January 1993, having served as President and
Co-Chief Executive Officer of TWI from February 1992 until assuming his
present positions. He had previously served as the Vice Chairman of the
Board of TWI since July 1988 and as Chief Operating Officer of TWI since
May 1991. Mr. Levin served as the Executive Vice President of TWI from
April 1984 until July 1988. Mr. Levin has served as a director of TWI since
1983.
John C. Malone, age 53, has served as President and Chief Executive
Officer and as a director of TCI since 1973. Mr. Malone also serves as a
director of The Bank of New York Company, Inc., BET Holdings, Inc. and The
Discovery Channel.
Timothy P. Neher, age 46, has served as Vice Chairman of the Board of
Continental since January 1991 and as a director of Continental since 1982.
Previously, he had served as President and Chief Operating Officer of
Continental from 1985 through 1990, as Executive Vice President from 1982
to 1985 and as Vice President and Treasurer from 1980 to 1982.
Fred A. Vierra, age 62, has served as a Class C Director since January
1992. Mr. Vierra has served as the Executive Vice President of TCI since
December 1991. Prior to that time, he served as the President and Chief
Operating Officer of UAE from May 1989 through December 1991, and as
President and Chief Operating Officer of United Cable Television
Corporation from 1982 to May 1989. Mr. Vierra is also a director of
Boettcher Venture Capital, L.P.
The individuals above were nominated in accordance with the provisions set
forth in the Voting Agreement and the TWI/TCI Agreement previously discussed
under the caption "Nomination and Voting Arrangements," as follows: TCI Group
nominees -- Peter R. Barton, John C. Malone and Fred A. Vierra; TWI Group
nominees -- Joseph J. Collins and Michael J. Fuchs; Warner Cable
nominee -- Gerald M. Levin; and Continental nominee -- Timothy P. Neher.
ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT
The following table contains certain information as of March 31, 1994
concerning shares of the Company's Class A Common Stock and Class B Common Stock
owned by (i) all the directors and nominees, (ii) the named executive officers
listed in the Summary Compensation Table, and (iii) all directors, nominees and
executive officers of the Company as a group. Under the rules of the Securities
and Exchange Commission (the "SEC"), generally a person is deemed to be a
"beneficial owner" of a security if he or she has or shares the power to vote or
direct the voting of such security, or the power to dispose or to direct the
disposition of such security. Thus, more than one person may be deemed a
beneficial owner of the same security. Because holders of the Class A Common
Stock, holders of the Class B Common Stock and holders of the Class C Preferred
Stock generally vote together on matters other than the election of directors,
with each share of Class A Common Stock having two votes, each share of Class B
Common Stock having one-fifth vote and each share of Class C Preferred Stock
having one and one-fifth votes, the percentages of such combined voting power
held by the persons listed in the table below are reflected in a separate
column. Except
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as otherwise noted, the persons referred to below had sole voting and investment
power with respect to the shares set forth as beneficially owned by them.
<TABLE>
<CAPTION>
% OF
SHARES COMBINED
TITLE OF BENEFICIALLY % OF VOTING
NAME OF BENEFICIAL OWNER SECURITIES OWNED CLASS POWER(2)
- - - - - ------------------------------------------------- ---------- ------------ ----- --------
<S> <C> <C> <C> <C>
R. E. Turner..................................... Class A 55,224,754(1) 80.8 61.7
Class B 30,529,968(1) 22.2 3.4
Henry L. Aaron................................... NA NA NA NA
William C. Bartholomay (3)....................... Class A 458,865 * *
Class B 322,764 * *
Peter R. Barton.................................. Class A 600 * *
Class B 300 * *
Joseph J. Collins................................ NA NA NA NA
Michael J. Fuchs................................. NA NA NA NA
William H. Grumbles.............................. Class B 38,336(4) * *
W. Thomas Johnson................................ Class B 102,133(5) * *
Gerald M. Levin.................................. NA NA NA NA
Rubye M. Lucas................................... Class A 400 * *
Class B 53 * *
Bob Magness (6).................................. NA NA NA NA
John C. Malone................................... NA NA NA NA
Terence F. McGuirk............................... Class B 150,800(7) * *
Timothy P. Neher................................. Class A 5,000 * *
Class B 10,000 * *
Brian L. Roberts................................. NA NA NA NA
Scott M. Sassa................................... Class B 23,396(8) * *
Robert Shaye..................................... Class B 4,572,579(9) 3.3 *
Fred A. Vierra................................... Class A 950 * *
All directors and executive officers as a group
(25 persons)................................... Class A 55,690,815 81.5 62.2
Class B 35,874,890(10) 26.1 4.0
</TABLE>
- - - - - ---------------
* Indicates beneficial ownership of less than 1.0%.
(1) Includes 559,962 shares owned by Turner Outdoor, Inc., an affiliated
corporation which is wholly-owned by Mr. Turner, 3,000,000 shares of Class
B Common Stock as to which Mr. Turner has voting control but not
dispository control and 2,353,000 shares of Class B Common Stock held by a
charitable remainder unitrust, as to which shares Mr. Turner shares voting
and dispositive control. Also includes 500,000 shares of Class B Common
Stock owned by Mr. Turner's wife, as to which shares Mr. Turner disclaims
beneficial ownership, and 540,000 shares of Class B Common Stock held by
the Turner Foundation, Inc., as to which shares Mr. Turner disclaims
beneficial ownership.
(2) The percentage of combined voting power was calculated on the basis of each
share of Class A Common Stock having two votes per share. The voting power
of each share of Class A Common Stock was increased from one vote per share
to two votes per share pursuant to an amendment to the Company's Articles
of Incorporation which was approved by shareholders and filed with the
requisite authorities in the State of Georgia on June 14, 1994.
(3) Mr. Bartholomay served as a director of the Company during 1993 and until
April 15, 1994.
(4) Consists of shares which are subject to purchase upon exercise of options
and includes options with respect to 3,336 shares owned by Mr. Grumbles's
wife, as to which shares Mr. Grumbles disclaims beneficial ownership.
(5) Includes 88,333 shares which are subject to purchase upon exercise of
options.
(6) Mr. Magness served as a director of the Company during 1993 and until April
15, 1994.
(7) Includes 113,333 shares which are subject to purchase upon exercise of
options.
(8) Includes 6,667 shares which are subject to purchase upon exercise of
options.
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(9) Includes (a) 107,349 shares owned by trusts for Mr. Shaye's family which
are subject to voting control by Mr. Shaye, (b) 214,698 shares held in
trust by Mr. Shaye for his children, (c) 176,544 shares owned by Mr.
Shaye's spouse, (d) 96,614 shares owned by Mr. Shaye's children, (e) 49,638
shares held by a private foundation, (f) 31,295 shares held by the 401(k)
defined contribution plan of New Line in which Mr. Shaye has a vested
interest and (g) 1,658,088 shares which are subject to purchase upon
exercise of options. Mr. Shaye disclaims beneficial ownership of those
shares which are held of record by his spouse, his children, by trusts for
the benefit of family members and the private foundation.
(10) Includes an aggregate of 2,024,392 shares which are subject to purchase
upon the exercise of options held by directors and executive officers of
the Company.
Except as discussed below under the caption "Security Ownership of Certain
Beneficial Owners," the Company knows of no person other than Mr. Turner who, as
of March 31, 1994, owns beneficially more than 5% of any class of the Company's
outstanding Common Stock. Mr. Turner's address is One CNN Center, Atlanta,
Georgia 30303.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains certain information as of March 31, 1994
concerning shares of the Company's Class C Preferred Stock and Class B Common
Stock beneficially owned by each person (other than the person set forth in the
preceding table under the caption "Security Ownership of Management") known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of either of these classes of securities, and reflects information presented in
each such person's Schedule 13D or Schedule 13G and amendments (if any) thereto
as filed with the SEC and provided to the Company. Because holders of the Class
C Preferred Stock generally vote together with the holders of the Common Stock
on matters other than election of directors, the percentages of the combined
voting power represented by the persons listed in the table below are reflected
in a separate column. Because the Class C Preferred Stock is convertible into
Class B Common Stock at a present conversion rate of six shares of Class B
Common Stock for each share of Class C Preferred Stock, the percentages of Class
B Common Stock which would be held by the persons listed below if their
presently outstanding shares of Class C Preferred Stock were presently converted
are reflected in a separate column. Except as otherwise noted, the persons
referred to below had sole voting and investment power with respect to the
shares set forth as beneficially owned by them.
<TABLE>
<CAPTION>
CLASS C CLASS B % OF
PREFERRED STOCK COMMON STOCK CLASS B % OF
------------------- -------------------- COMMON COMBINED
BENEFICIAL % OF BENEFICIAL % OF UPON VOTING
ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS OWNERSHIP CLASS CONVERSION POWER(1)
- - - - - ----------------------------------- --------- ----- ---------- ----- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Tele-Communications, Inc.(2)....... 5,889,551(3) 47.5 % 29,723,758(3) 21.7 % 30.7% 7.3%
5619 DTC Parkway
Englewood, Colorado 80111
Time Warner Inc.(2)................ 4,890,457(4) 39.4 % 25,349,085(5) 18.5 % 25.8% 6.4%(6)
Time & Life Bldg.
Rockefeller Center
New York, New York 10022
The Capital Group, Inc............. -- -- 12,979,320(7) 9.5 % NA 1.5%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- - - - - ---------------
(1) The percentage of combined voting power was calculated on the basis of each
share of Class A Common Stock having two votes per share. The voting power
of each share of Class A Common Stock was increased from one vote per share
to two votes per share pursuant to an amendment to the Company's Articles
of Incorporation which was approved by shareholders and filed with the
requisite authorities in the State of Georgia on June 14, 1994.
(2) These entities are, directly or through subsidiaries, Units Investors and
are parties to certain agreements entered into in connection with the Units
Offering, including (a) the Shareholders' Agreement, which provides for
certain voting and disposition arrangements with respect to the parties'
respective equity
7
<PAGE> 10
interests in the Company, and (b) an Investors' Agreement, which provides
for certain conversion and disposition arrangements with respect to the
Class C Preferred Stock held by the Units Investors. By virtue of such
agreements and certain other agreements hereinafter referenced in this
footnote, such entities may be deemed, together with the other parties to
such respective agreements, to constitute "groups" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) for
purposes of determining beneficial ownership of the Class C Preferred Stock
and the Class B Common Stock. Except as set forth in the table above and as
otherwise acknowledged in these footnotes, each of the above entities
disclaims beneficial ownership of the shares owned by any other persons in
such "groups." These entities may also be deemed to constitute a group for
purposes of Section 13(d)(3) by virtue of an agreement entered into by
these and certain other parties in connection with the Units Offering,
which contains provisions relating to the acquisition, disposition and
voting of the Company's securities. In addition, by virtue of a Voting
Agreement entered into in connection with the Units Offering among
subsidiaries of these entities and certain other Units Investors, such
companies might constitute a group for the purposes of Section 13(d)(3).
(3) Consists of shares (Class C Preferred Stock and Class B Common Stock,
respectively) held by entities in which TCI claims beneficial ownership,
including United Artists Investments, Inc. (5,820,452 and 5,355,882),
Communication Capital Corporation (none and 23,806,257), Heritage
Communications, Inc. (34,854 and 113,376), TCI Turner Preferred, Inc.
(34,245 and none), TCI TKR of Southern Kentucky, Inc. (none and 372,711),
and WestMarc Development Joint Venture (none and 75,532).
(4) Consists of shares held by entities in which TWI claims beneficial
ownership, including Time TBS Holdings, Inc. (4,221,619) and Warner Cable
Communications, Inc. (668,838).
(5) Consists of shares held by entities in which TWI claims beneficial
ownership, including American Television and Communications Corporation
(15,678,147), Capital Cablevision Systems Inc. (291,532), Memphis CATV,
Inc. (902,606), Peoples Cable Corp. (138,604), SIFTA Milwaukee Cable Corp.
(34,172), TA Milwaukee Cable Co., Inc. (72,614), Time Warner Operations,
Inc. (4,881,687), WCCI (1,735,650), Warner Cable of NY Inc. (148,874) and
Warner Cable Operating Inc. (1,465,199).
(6) The percentage of combined voting power includes 254,100 shares of Class A
Common Stock held by Warner Communications Inc.
(7) The number of shares in the table is based upon a Schedule 13G, dated
February 23, 1994, filed by The Capital Group, Inc. Certain operating
subsidiaries of The Capital Group, Inc. exercised investment discretion
over various institutional accounts which held, as of December 31, 1993,
12,979,320 shares of the Company's Class B Common Stock. Capital Guardian
Trust Company, a bank, and one of such operating companies, exercised
investment discretion over 4,303,220 of said shares. Capital Research and
Management Company and Capital International, Inc., registered investment
advisers, and Capital International Limited and Capital International,
S.A., other operating subsidiaries, had investment discretion with respect
to 7,572,880, 15,140, 1,059,080 and 29,000, respectively, of the
above-referenced shares.
BOARD MEETINGS
The Board of Directors met on five occasions during 1993 and took action by
unanimous written consent in lieu of meeting on seven occasions. Each of the
directors with the exception of John C. Malone attended at least 75% of the
aggregate of (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by all committees of the Board on which he or
she served, in each case during the periods that he or she served.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company is paid an annual retainer fee of
$5,000. All directors receive a fee of $500 for each meeting of the Board of
Directors attended and a fee of $300 for each committee meeting attended.
8
<PAGE> 11
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee may exercise the full powers of the Board of
Directors during the intervals between meetings of the Board, except as
otherwise provided by law, the Company's By-Laws, or resolution of the full
Board of Directors. The Executive Committee did not meet during 1993. The
present members of this committee are Messrs. R. E. Turner and Gerald M. Levin.
The Audit Committee is responsible for overseeing the financial reporting
process, including the Company's internal controls. Additionally, the committee
is responsible for recommending the independent accountants for appointment by
the Board, subject to ratification by the shareholders, and for reviewing the
scope and results of the Company's audits with the Company's internal auditors
and independent accountants. The present members of the Audit Committee are
Messrs. Joseph J. Collins and Brian L. Roberts. This committee met three times
in 1993.
The Stock Option and Compensation Committee, which met twice and took
action by unanimous written consent in lieu of meeting once in 1993, is
responsible for reviewing matters relative to and making recommendations to the
Board concerning compensation of the Company's officers, directors and
employees. The present members of the Stock Option and Compensation Committee
are Messrs. Joseph J. Collins, Michael J. Fuchs, Timothy P. Neher, Brian L.
Roberts and Fred A. Vierra.
The Planning Committee, which met once and took action by unanimous written
consent in lieu of meeting five times during 1993, is responsible for studying
and making recommendations to the Board with respect to the Company's
development and future business objectives. The present members of the Planning
Committee are Messrs. R. E. Turner, Michael J. Fuchs, W. Thomas Johnson, Terence
F. McGuirk, Scott M. Sassa and Fred A. Vierra and Mrs. Rubye M. Lucas.
The Finance Committee, which met five times and took action by unanimous
written consent in lieu of meeting three times during 1993, is responsible for
examining the Company's financial position and policies and making reports and
recommendations to the Board with respect thereto. The present members of the
Finance Committee are Messrs. Joseph J. Collins, John C. Malone, Terence F.
McGuirk and Timothy P. Neher.
EXECUTIVE COMPENSATION
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
In accordance with the proxy statement rules adopted in 1992 by the SEC, as
amended in 1993, the Stock Option and Compensation Committee of the Company's
Board of Directors provides this report on compensation policies for executive
officers and the Chief Executive Officer of the Company.
The Company's compensation policies applicable to its executive officers
and specifically Mr. R. E. Turner, the Company's Chairman, President and Chief
Executive Officer, are administered by the Stock Option and Compensation
Committee (the "Committee") of the Company's Board of Directors. The current
members of the Committee are not only non-employee directors of the Company but
are also specifically nominated to serve on the Company's Board of Directors by
non-management shareholders of the Company. The compensation policies adopted by
the Committee are designed to enhance the overall strength and financial
performance of the Company, both by aligning the financial interests of the
Company's executive officers with those of its shareholders and by retaining and
rewarding talented executives who are critical to the long-term success of the
Company's complex and globally competitive businesses. In this regard, executive
compensation is variable in that compensation awards are directly related to the
financial results of the Company and/or to individual contributions and
accomplishments such that higher performance leads to higher pay and lower
performance results in lower pay.
The Company's executive compensation program as administered by the
Committee consists primarily of (i) annual cash compensation, the components of
which are base salary and an annual variable cash incentive
9
<PAGE> 12
("bonus") which is currently paid pursuant to the Turner Incentive Plan (the
"TIP"), and (ii) long-term incentive compensation consisting of stock options
and a long-term incentive opportunity payable in cash at the end of a three-year
period which is currently paid pursuant to the Company's Long-Term Incentive
Plan (the "LTIP").
Annual Cash Compensation
The Committee reviews the level of the Company's executives' base salary
and bonus compensation annually and when circumstances require a more frequent
review, such as when an executive's duties and responsibilities substantially
change or when there is a material change in the competitive pay levels in
effect in the industries in which the Company competes. The Committee in general
has attempted to set annual cash compensation for the Company's executives at
substantially the median level for similarly situated executives in the
entertainment industry as ascertained from an annual survey conducted by the
Company's outside executive compensation consultants of thirteen large companies
competing primarily in the television and film entertainment business. Each of
the peer companies used in the five-year comparative performance graph appearing
after this report is a participant in this survey. In order to review a broad
range of compensation packages for executives in the entertainment business, the
Committee elected to review companies in addition to those included in the
performance graph. Certain of those additional companies are either divisions of
larger entities or internationally-based companies and could not be included in
the Company's peer group for purposes of the performance graph. Even though, as
shown in such graph, the Company's return to its shareholders has significantly
exceeded those of peer companies in its industry, the Committee has set Mr.
Turner's annual cash compensation opportunity at slightly below the median level
for industry Chief Executive Officers. This is primarily due to Mr. Turner's
status, unusual in the industry, as the Company's largest shareholder (thus
entitling him, among other things, to certain dividend income) and is consistent
with his long-standing desire to leave value in the Company. Mr. Turner's base
salary was increased by 5% in 1993 in order to maintain his base compensation
within the median range of base salaries received by Chief Executive Officers of
companies in the television and film entertainment industry. One-third of Mr.
Turner's annual cash compensation opportunity is based entirely on the extent to
which the Company reaches its operating results for the year based upon the
Company's annual budget as adopted by the Board of Directors. Mr. Turner's bonus
for 1993 was based upon an increase in the Company's operating income in 1993
over the previous year to an amount equal to the targeted amount for 1993 under
the TIP. Excluding the effects of operating losses in 1993 associated with
investments in new businesses, the Company's operating income would have
increased 13 percent in 1993.
The base salaries of the executive officers of the Company other than Mr.
Turner were also increased in 1993 in order to maintain the base compensation of
such executives within the median range of base salaries paid to similarly
situated officers of television and film entertainment companies. The bonus
opportunity for the executive officers other than Mr. Turner varies between 20%
and 40% of their base salaries and is based in significant part on the Company
meeting annual budgeted operating income results. The Committee determined to
use operating income as the relevant annual target because it is a measure which
can be effected by the performance of executive officers of the Company. In
addition, the bonus opportunity, to a lesser degree, is based on the individual
executive or his or her operating unit meeting specifically set annual goals. As
an executive's level of responsibility increases, a larger portion of his or her
total annual cash compensation is based on this incentive opportunity and less
on salary and the more this incentive opportunity is based upon the Company's
overall performance in meeting budgeted operating income results. In 1993, the
Company achieved the operating income target established for purposes of such
officers' bonuses and bonus payments based upon such achievement were made
accordingly.
In 1993, the Committee determined it advisable for the Company to secure
the employment of certain of its key executive officers through the execution of
employment agreement with such officers. By the end of December 1993 (or, in the
case of Mr. Sassa, January 1, 1994), the Company had entered into four-year
employment contracts with Messrs. McGuirk, Sassa and Johnson. As an inducement
to enter into such agreements, the Company granted to each of these executive
officers a special bonus in the form of shares of the Company's Class B Common
Stock and a cash award to defray the tax liability associated with such stock
10
<PAGE> 13
grant. The Committee determined that such awards were within the range of
signing bonuses paid to similarly-situated executives in the television and film
entertainment industry in connection with the execution of long-term employment
agreements. The base compensation to be paid to Messrs. McGuirk, Sassa and
Johnson under their employment agreements in 1994 was increased over the amounts
paid to such officers in 1993, largely in recognition of their execution of
four-year employment agreements with the Company. The base salaries for these
executives in 1994 will be within the higher range of base compensation paid to
similarly situated officers in the entertainment industry. The Company intends
to continue its practice of establishing annual cash compensation for its
executives at substantially the median level for similarly-situated executives
in the entertainment industry, but the Committee will maintain the flexibility
to pay higher compensation to retain executives who are important to the
Company's long-term success.
Long-Term Incentive Compensation
The Company's long-term incentive compensation for its executives currently
consists of (i) a cash opportunity payable for the three-year cycle which
commenced in 1992 and ends in 1994 and (ii) annual grants of stock options. In
fixing these long-term incentive opportunities, the Committee has consulted with
its outside executive compensation consultant and reviewed the published
long-term incentive compensation survey conducted by that consultant for
approximately 270 participating companies across a broad spectrum of industries.
Due to the small number of companies in the entertainment industry and the
possibility of one company having undue influence on the comparative results,
the Committee reviewed the long-term incentive compensation awards of companies
in a wide variety of industries. This also allowed the Committee to analyze a
broad range of approaches to long-term incentive compensation.
The current long-term incentive plan cash opportunity covers the Company's
operating performance during the years 1992 through 1994. The cash award, which
was set to approximate 25% of the long-term incentive opportunity for each
executive officer, including specifically Mr. Turner, will be payable after the
1994 financial results are available. The projected cash award is payable only
to the extent that the Company meets or exceeds benchmark goals set by the
Committee for compounded growth in operating income and in revenue, with 75% of
such cash compensation being dependent upon meeting the benchmark operating
income levels, and the remaining 25% being dependent upon meeting targeted
revenue levels. The benchmarks goals were determined by the Committee on the
basis of the Company's three-year strategic plan for the years 1992 through 1994
and the operating income and revenue levels projected therein. In 1993, the
Company achieved the operating income and revenue targets established for
purposes of long-term incentive compensation and the cash awards for the
executive officers of the Company conditioned upon such achievement were earned
accordingly.
The Committee believes that through the use of stock options, executives'
interests are directly tied to enhancing shareholder value. With only certain
exceptions, stock options are granted at fair market value as of the date of
grant, become exercisable over a four-year vesting schedule, and have a term of
ten years. The stock options provide value to the recipients only when the price
of the Company's stock increases above the option grant price. In December 1993,
the Committee granted stock options to executive officers as well as to other
executives and key employees across the Company. The Committee excluded Mr.
Turner from the stock option grant program because of Mr. Turner's position as
the controlling shareholder of the Company. The Committee made a special grant
of stock options to Messrs. McGuirk, Johnson and Sassa subject to their
execution of employment agreements with the Company at the end of 1993 (or, in
the case of Mr. Sassa, at the beginning of 1994). Such grants were made to these
executives to ensure their continued employment with the Company through the
execution of employment agreements. With respect to the other executives, the
Committee, with the assistance of its outside consultant, used the Black-Scholes
option pricing method to calculate the aggregate exercise price of such option
grants and to place the Company's executives close to median levels of long-term
incentive compensation in effect at the 270 surveyed companies. The Committee's
objective in granting such options was to provide recipients with a competitive
award opportunity, based on the aggregate exercise price of the shares subject
to the stock option. The Committee did not consider the number of stock options
currently held by an executive or employee in determining individual stock
option awards in 1993. The Committee approved an option grant schedule for 1993
awards based on the estimated require-
11
<PAGE> 14
ments for competitive long-term compensation opportunities and an employee's
base salary. The schedule was used as a guide in determining a "typical" award
for each eligible employee (including the named executive officers). Each award
may vary based upon experience, achievements and anticipated future
contributions to the Company of each individual.
Corporate Tax Deduction for Executive Compensation
During 1993, Section 162(m) of the Internal Revenue Code was enacted to
limit the corporate deduction for compensation paid to each of a corporation's
chief executive officer and the four other most highly compensated executive
officers to $1 million per year, unless certain requirements are met. To the
extent compensation is "performance-based" as defined by the Internal Revenue
Code, it is excluded from the calculation of the amount of deductible
compensation.
The Committee has reviewed the Company's compensation policies and plans in
light of this new tax regulation. On the basis of such review and in an effort
to preserve the deductibility of compensation paid to the Company's executive
officers, the Committee is taking steps to modify and/or submit for shareholder
approval pursuant to this proxy statement the Company's executive compensation
plans to minimize the possibility of lost deductions. In the future, the
Committee will try to structure compensation plans to ensure deductibility while
still preserving the Company's ability to attract and retain qualified
executives and the Committee's discretion in balancing the effectiveness of the
Company's compensation plans against the broader issue of achieving its
strategic plans, as well as the materiality of any lost deduction.
Summary
Each Committee member is personally familiar with compensation levels in
the entertainment and communications fields, and based on this familiarity,
bolstered by the various survey results provided by the Company's outside
executive compensation consultants, the Committee is satisfied that the annual
cash compensation levels for 1993, as well as the granting practices used for
the Company's long-term incentive opportunity and stock option grants are
appropriate, given other companies' practices, and are consistent with the
Company's compensation policies. The tables that follow reflect the decisions
described in this report.
This report has been provided by the Stock Option and Compensation
Committee of the Company's Board of Directors, the members of which are as
follows:
<TABLE>
<S> <C>
Joseph J. Collins Brian L. Roberts
Michael J. Fuchs Fred A. Vierra
Timothy P. Neher
</TABLE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company serving as of December
31, 1993 (these individuals, collectively, the "named executive officers"), for
the fiscal years ended December 31, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION ALL OTHER
------------ COMPEN-
ANNUAL COMPENSATION SECURITIES SATION
NAME AND ----------------------- UNDERLYING ($)
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) (1)(2)
- - - - - ----------------------------------------- ---- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
R. E. Turner............................. 1993 925,096 471,685 0 141,621
Chairman of the Board, President and 1992 765,554 341,921 0 136,631
Chief Executive Officer 1991 666,923 331,546 0 --
Terence F. McGuirk....................... 1993 770,913 1,388,230(3) 500,000 111,555
Executive Vice President 1992 683,779 252,723 40,000 112,022
1991 582,346 232,930 40,000 --
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION ALL OTHER
------------ COMPEN-
ANNUAL COMPENSATION SECURITIES SATION
NAME AND ----------------------- UNDERLYING ($)
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) (1)(2)
- - - - - ----------------------------------------- ---- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Scott M. Sassa........................... 1993 513,942 1,000,445(4) 500,000(5) 71,467
Vice President -- Entertainment 1992 432,365 127,057 25,000 65,006
Networks 1991 365,096 110,363 20,000 --
W. Thomas Johnson........................ 1993 456,431 813,115(6) 300,000 63,057
Vice President -- News 1992 434,553 127,511 25,000 66,100
1991 411,442 124,091 25,000 --
William H. Grumbles...................... 1993 411,153 128,429 100,000 55,476
Vice President -- Worldwide 1992 346,651 70,178 15,000 43,134
Distribution 1991 273,269 26,923 30,000 --
</TABLE>
- - - - - ---------------
(1) In accordance with the revised rules of the SEC applicable to the disclosure
of executive officer and director compensation, amounts of All Other
Compensation are not provided for years prior to 1992.
(2) The amounts shown in this column for 1993 represent Company contributions in
1993 to the Retirement Savings Plan, the Supplemental Benefit Plan (ERISA
excess plan under which accruals are made to offset Internal Revenue Code
imposed limitations under the Retirement Savings Plan), the Supplemental
Executive Retirement Plan (defined contribution plan for a select group of
management and highly compensated individuals), and the Life Insurance
Program, respectively, as follows: Mr. Turner -- $14,115, $70,204, $56,096
and $1,206; Mr. McGuirk -- $14,115, $52,164, $44,070 and $1,206; Mr.
Sassa -- $14,115, $28,111, $28,035 and $1,206; Mr. Johnson -- $14,115,
$23,065, $24,671 and $1,206; and Mr. Grumbles -- $14,115, $18,517, $21,638
and $1,206.
(3) This bonus amount includes 22,000 shares of Class B Common Stock valued at
$27.125 per share granted in connection with Mr. McGuirk's execution of an
employment agreement with the Company and a special cash bonus to defray
the tax liability associated with such stock grant. Mr. Sassa's employment
agreement was intended to be executed in 1993 at the time that Messrs.
McGuirk and Johnson also entered into employment agreements with the
Company. Mr. Sassa's employment agreement was executed as of January 1,
1994. See "Executive Compensation -- Employment Agreements".
(4) This bonus amount includes 16,700 shares of Class B Common Stock valued at
$27.125 per share granted in connection with Mr. Sassa's execution of an
employment agreement with the Company and a special cash bonus to defray
the tax liability associated with such stock grant. See "Executive
Compensation -- Employment Agreements".
(5) Mr. Sassa was granted these stock options in connection with his execution
of an employment agreement with the Company which was intended to be
executed in 1993 at the time that Messrs. McGuirk and Johnson also entered
into employment agreements with the Company. Mr. Sassa's employment
agreement was executed as of January 1, 1994. See "Executive
Compensation -- Employment Agreements".
(6) This bonus amount includes 13,800 shares of Class B Common Stock valued at
$27.125 per share granted in connection with Mr. Johnson's execution of an
employment agreement with the Company and a special cash bonus to defray
the tax liability associated with such stock grant. See "Executive
Compensation -- Employment Agreements".
13
<PAGE> 16
STOCK OPTION GRANTS IN 1993
The following table sets forth information concerning stock option grants
during 1993 to the named executive officers.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME (#)(1) IN 1993 ($/SH)(1) DATE PRESENT VALUE ($)(2)
- - - - - ---------------------------------- --------- ----------- --------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
R. E. Turner...................... 0 -- -- --
Terence F. McGuirk................ 500,000 19.85 27.125 12/20/03 5,332,100(3)
Scott M. Sassa.................... 500,000(4) 19.85 27.125 01/01/04 5,998,350(5)
W. Thomas Johnson................. 300,000 11.91 27.125 12/20/03 3,199,260(3)
William H. Grumbles............... 100,000 3.97 25.625 12/23/03 1,126,000(6)
</TABLE>
- - - - - ---------------
(1) These grants were made pursuant to the 1988 Stock Option Plan. Grants to
Messrs. McGuirk, Sassa and Johnson were approved by the Stock Option and
Compensation Committee and the Board of Directors of the Company on
November 15, 1993, subject to the execution by each such officer of an
employment agreement with the Company. Grants were made to Messrs. McGuirk
and Johnson on December 20, 1993 and to Mr. Sassa on January 1, 1994. Such
grants vest annually, commencing on the first anniversary of the grant
date, at a rate of 25% of the grant. The exercise price is the closing
price of the Class B Common Stock on the American Stock Exchange on
November 15, 1993, which was higher than the closing price of the Class B
Common Stock on the American Stock Exchange on the respective dates of
grant. The grant to Mr. Grumbles was made on December 23, 1993 and vests
annually, commencing on the second anniversary of the grant date, at a rate
of 33 1/3% of the grant. The exercise price is the closing price of the
Class B Common Stock on the American Stock Exchange on the date of grant.
(2) This calculation is based on the Black-Scholes option pricing model adapted
for use in valuing stock options. The actual value, if any, an executive
officer may realize ultimately depends on the market value of the Class B
Common Stock at a future date. There is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on the
assumptions described in footnotes 3, 5 and 6 to the above table.
(3) The estimated value of the options granted to Messrs. McGuirk and Johnson
were based upon a grant date of December 20, 1993, using both the exercise
price of $27.125 and the market value of the Class B Common Stock on the
date of grant of $25.375. The following assumptions were used in such
calculation: expected stock volatility of 0.3288 based upon the weekly
closing prices of the Class B Common Stock over the two-year period ending
on the date of grant, a dividend yield of 0.27% based upon the annualized
dividend divided by the stock price of the Class B Common Stock on the date
of grant, a risk free interest rate of 5.63% based upon the yield as of the
date of grant on a U.S. Government Zero Coupon Bond with a maturity equal
to the term of the option, and an expected time of exercise of seven years
after the date of grant and a 3% per year forfeiture rate, both based upon
the Company's experience over the last six years.
(4) Mr. Sassa was granted stock options in connection with his execution of an
employment agreement with the Company which was intended to be executed in
1993 at the time that Messrs. McGuirk and Johnson also entered into
employment agreements with the Company. Mr. Sassa's employment agreement
was executed as of January 1, 1994. See "Executive
Compensation -- Employment Agreements".
(5) The estimated value of the options granted to Mr. Sassa was based upon a
grant date of January 1, 1994, using both the exercise price of $27.125 and
the market value of the Class B Common Stock on January 1, 1994 of $27.00.
The following assumptions were used in such calculation: expected stock
volatility of 0.3296 based upon the weekly closing prices of the Class B
Common Stock over the two-year period ending on the date of grant, a
dividend yield of 0.25% based upon the annualized dividend divided by the
stock price of the Class B Common Stock on the date of grant, a risk free
interest rate of 5.76%
14
<PAGE> 17
based upon the yield as of the date of grant on a U.S. Government Zero
Coupon Bond with a maturity equal to the term of the option, and an
expected time of exercise of seven years after the date of grant and a 3%
per year forfeiture rate, both based upon the Company's experience over the
last six years.
(6) The estimated value of the options granted to Mr. Grumbles was based upon a
grant date of December 23, 1993, using both the exercise price and market
value of the Class B Common Stock on December 23, 1993 of $25.625. The
following assumptions were used in such calculation: stock volatility of
0.3288 based upon the weekly closing prices of the Class B Common Stock
over the two-year period ending on the date of grant, a dividend yield of
0.27% based upon the annualized dividend divided by the stock price of the
Class B Common Stock on the date of grant, a risk free interest rate of
5.51% based upon the yield as of the date of grant on a U.S. Government
Zero Coupon Bond with a maturity equal to the term of the option, and an
expected time of exercise of seven years after the date of grant and a 3%
per year forfeiture rate, both based upon the Company's experience over the
last six years.
AGGREGATED STOCK OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during 1993 by the named executive officers and the value of unexercised options
held by them as of December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
SHARES OPTIONS AT FISCAL OPTIONS AT
ACQUIRED YEAR-END (#) FISCAL YEAR-END ($)(2)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - - - --------------------- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. E. Turner......... 0 -- 0 0 -- --
Terence F. McGuirk... 0 -- 113,333 616,667 1,482,998 1,206,503
Scott M. Sassa....... 25,000 230,125 6,667 563,333 50,003 642,623
W. Thomas Johnson.... 0 -- 88,333 381,667 1,168,898 875,078
William H.
Grumbles........... 30,000 249,990 33,336(3) 184,667(4) 419,795 964,377
</TABLE>
- - - - - ---------------
(1) These amounts represent the excess of the fair market value of the Class B
Common Stock at the time of exercise above the exercise price of the
options.
(2) These amounts represent the excess of the fair market value of the Class B
Common Stock of $27.00 per share as of December 31, 1993, above the
exercise price of the options.
(3) Includes options with respect to 3,336 shares of Class B Common Stock owned
by Mr. Grumbles's wife, as to which shares Mr. Grumbles disclaims
beneficial ownership.
(4) Includes options with respect to 39,667 shares of Class B Common Stock owned
by Mr. Grumbles's wife, as to which shares Mr. Grumbles disclaims
beneficial ownership.
LONG-TERM INCENTIVE PLANS-AWARDS IN 1993
The following table sets forth information concerning the long-term
incentive plan awards made to the named executive officers under the Company's
Long-Term Incentive Plan during 1993.
<TABLE>
<CAPTION>
NUMBER ESTIMATED FUTURE
OF SHARES, PAYOUTS UNDER NON-STOCK
UNITS OR PERFORMANCE OR PRICE-BASED PLANS(2)
OTHER RIGHTS OTHER PERIOD UNTIL ------------------------------------------
NAME (#)(1) MATURATION OR PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- - - - - --------------------- ------------ ----------------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
R. E. Turner......... 550,000 3 Yrs. Ending 12/31/94 412,500 550,000 825,000
Terence F. McGuirk... 475,000 3 Yrs. Ending 12/31/94 356,250 475,000 712,500
Scott M. Sassa....... 230,000 3 Yrs. Ending 12/31/94 172,500 230,000 345,000
W. Thomas Johnson.... 310,000 3 Yrs. Ending 12/31/94 232,500 310,000 465,000
William H. Grumbles.. 125,000 3 Yrs. Ending 12/31/94 93,750 125,000 187,500
</TABLE>
- - - - - ---------------
(1) A performance unit is a method of assigning a dollar value to a performance
award opportunity. The actual number of units granted to a participant is
determined such that, when taken together with a participant's stock option
grants under the Company's 1988 Stock Option Plan, the performance award
15
<PAGE> 18
will provide the participant with a total long-term incentive award
commensurate with that participant's responsibilities.
(2) The threshold, target and maximum value of a unit is $.75, $1.00 and $1.50,
respectively, and can vary based on the Company's attainment of operating
income and revenue objectives, as specified in the plan, over the
three-year cycle. If a participant's employment is terminated during a
three-year cycle (for reasons other than approved retirement, death or
disability), that participant is not entitled to any cash payment under the
plan for that cycle. To date, no benefits have been distributed under the
plan.
EMPLOYMENT AGREEMENTS
The Company has entered into four-year employment agreements with Messrs.
McGuirk, Sassa and Johnson. Under Mr. McGuirk's employment agreement dated
December 20, 1993, he will serve as Executive Vice President of the Company for
a minimum annual base salary of $855,000 and a minimum annual bonus of $645,000
under the Turner Incentive Plan (provided certain Company performance targets
are met). Under Mr. Sassa's employment agreement dated January 1, 1994, he will
serve as Vice President-Entertainment Networks of the Company for a minimum
annual base salary of $805,000 and a minimum annual bonus of $645,000 under the
Turner Incentive Plan (provided certain Company performance targets are met).
Under Mr. Johnson's employment agreement dated December 20, 1993, he will serve
as Vice President-News of the Company for a minimum annual base salary of
$700,000 and a minimum annual bonus of $350,000 under the Turner Incentive Plan
(provided certain Company performance targets are met). In connection with the
execution of his employment agreement, Mr. McGuirk was granted 22,000 shares of
Class B Common Stock, a special bonus of $476,000 to defray tax liability
associated with such stock grant and stock options for 500,000 shares of Class B
Common Stock. In connection with the execution of his employment agreement, Mr.
Sassa was granted 16,700 shares of Class B Common Stock, a special bonus of
$383,555 to defray tax liability associated with such stock grant and stock
options for 500,000 shares of Class B Common Stock. In connection with the
execution of his employment agreement, Mr. Johnson was granted 13,800 shares of
Class B Common Stock, a special bonus of $299,000 to defray tax liability
associated with such stock grant and stock options for 300,000 shares of Class B
Common Stock. During the term of their respective employment with the Company,
each of Messrs. McGuirk, Sassa and Johnson will be eligible to participate in
the Company's LTIP, Retirement Savings Plan, Supplemental Benefit Plan,
Supplemental Executive Retirement Plan and health benefit plans. Under each such
employment agreement, the executive officer's employment with the Company may
not be terminated except for "cause" as defined therein. Upon a change of
control of the Company, each of Messrs. McGuirk, Sassa and Johnson will be
entitled to terminate his employment with the Company and receive all earned and
vested compensation (including annual bonus and payments under the Company's
LTIP) as of the date of such termination. Under their respective employment
agreements, Messrs. McGuirk, Sassa and Johnson have agreed not to compete with
the Company for 12 months following the termination of their respective
employment under certain circumstances.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related party
transactions involving entities with which members of the Company's Stock Option
and Compensation Committee are affiliated is set forth below under the caption
"Compensation Committee Interlocks and Insider Participation," and comparable
information with respect to entities with which other members of the Company's
Board of Directors are affiliated is set forth below under the caption "Other
Transactions."
Compensation Committee Interlocks and Insider Participation
The Stock Option and Compensation Committee is currently comprised of four
Class C Directors and one Common Stock Director who are all identified in the
next succeeding paragraph. The members of the Committee, as well as the three
other Class C Directors, are affiliated with entities which were investors in
the Company's 1987 Units Offering and which have ongoing business relationships
with the Company, primarily as operators, directly or through affiliates, of
cable television systems which receive and distribute to their subscribers
programming provided by the Company's cable television operations. For purposes
of the following
16
<PAGE> 19
discussion, Comcast, Continental, and the other entities previously reflected in
the table set forth under the caption "Security Ownership of Certain Beneficial
Owners" are collectively referred to as the "Affiliated Holders."
The present members of the Stock Option and Compensation Committee have the
following relationships with the Affiliated Holders: Joseph J. Collins is
Chairman of the Board and Chief Executive Officer of Time Warner Cable, a
division of TWE, which is 87.5% owned by TWI; Michael J. Fuchs is Chairman of
the Board and Chief Executive Officer of HBO, another division of TWE; Timothy
P. Neher is Vice Chairman of the Board of Directors of Continental; Brian L.
Roberts is President of Comcast; and Fred A. Vierra is the Executive Vice
President of TCI.
During 1993, the Company recorded subscription fees from the Affiliated
Holders (directly or through affiliated entities) for their receipt of the
Company's cable services (Cable News Network ("CNN"), Turner Network Television
("TNT"), Headline News and the Cartoon Network), before deductions for
advertising allowances, as follows: TCI -- $103,099,000; TWI -- $62,223,000;
Continental -- $21,128,000; and Comcast -- $18,619,000. These amounts
constituted approximately 38% of the Company's total subscription fees recorded
during 1993. Advertising revenues received by the Company during 1993 were also
indirectly dependent to a substantial degree on cable television systems
operated by the Affiliated Holders or their affiliates since subscribers to
those systems constitute approximately 67%, 66%, 66%, 67% and 63% of the current
cable audience coverage for TBS SuperStation, TNT, CNN, Headline News and the
Cartoon Network, respectively.
Pursuant to a film license agreement entered into in February 1985 and
running through 1997, HBO may select and exhibit on its cable programming
services certain of the motion pictures in the Turner Entertainment Co. ("TEC")
film library owned by the Company. The Company received approximately $3,460,000
during each year ended December 31, 1993, 1992 and 1991 under this agreement.
In 1992, the Company entered into a reciprocal advertising agreement with
TWI that has a fair value of approximately $3,550,000. The Company provided
advertising time on certain of its networks in exchange for advertising in TWI's
magazines during the period July 1992 through June 1993. Also, pursuant to an
agreement entered into in October 1986, Lorimar Telepictures Corporation, a
wholly-owned subsidiary of TWI, has an eight-year commitment with the Company to
purchase $4,500,000 per year in advertising time on the Company's networks. In
addition, TWI placed advertising on the Company's networks which was not
pursuant to any of the agreements discussed above. In total, the Company
recorded advertising revenues, excluding reciprocal advertising agreements, of
approximately $7,516,000, $9,388,000 and $8,830,000 in the years ended December
31, 1993, 1992 and 1991, respectively, for advertising placed on the Company's
services by related parties.
Pursuant to a 1986 agreement with the predecessor of Metro-Goldwyn-Mayer,
Inc. ("MGM"), MGM became the designated distributor in the home video market of
most MGM and pre-1950 Warner Bros. films in the TEC film library, both
domestically and internationally, and certain RKO films internationally. The
distribution agreement (the "Home Video Agreement") provides for a fifteen-year
term commencing June 6, 1986 with distribution fees payable based primarily on
the suggested retail price of the films sold. In November 1990, MGM entered into
an agreement with Warner Home Video ("WHV"), a former subsidiary of TWI and now
a division of TWE, wherein WHV agreed to service certain of MGM's obligations
under the Home Video Agreement. Revenues recorded in 1993, 1992 and 1991
pursuant to this agreement were $81,723,000, $105,729,000 and $36,500,000,
respectively.
TWI and its subsidiaries have entered into license agreements with the
Company pursuant to which the Company has acquired broadcast rights to certain
television and theatrical product. The Company paid an aggregate of
approximately $13,933,000, $13,196,000 and $6,800,000 for license fees during
1993, 1992 and 1991, respectively, under these agreements and is committed to
pay $37,417,000 through 2001 under these agreements. TWI also has an investment
in n-tv, a 24-hour German language news channel in which the Company owned a
25.8% limited partnership interest as of December 31, 1993.
17
<PAGE> 20
In February 1989, the Company entered into a joint venture arrangement with
HBO to purchase satellite transponders. The joint venture is structured so that
the purchased transponders are allocated by agreement between the Company and
HBO, and the Company's obligations are limited solely to those transponders and
ancillary service arrangements which are to be allocated to and used by the
Company and its subsidiaries.
Pursuant to a lease agreement entered into in 1993 relating to a satellite
transponder, the Company received approximately $1,920,000 from HBO in 1993. HBO
is committed to pay approximately $160,000 through 1994 under such lease. In
addition, pursuant to a lease agreement entered into in 1992 relating to a
satellite transponder, the Company received from Liberty Media Corporation
$1,826,000 and $1,163,000 in 1993 and 1992, respectively. Liberty Media
Corporation is committed to pay approximately $12,616,000 through 2000 under
such lease.
The Company received approximately $654,000 in licensing fees in 1993 from
a subsidiary of Liberty Media Corporation for the exhibition of certain of the
motion pictures in the TEC film library owned by the Company.
Other Transactions
Mr. Henry L. Aaron, Vice President -- Community Relations and a director of
the Company since 1980, is indebted to the Company for a non-interest bearing
advance secured by and payable out of deferred compensation, payable in 240
monthly installments which began in January 1983. The largest amount of such
indebtedness outstanding since January 1, 1993 was approximately $128,000, with
a balance of $112,000 remaining outstanding on December 31, 1993.
Mr. Shaye has entered into an employment agreement with New Line, a
subsidiary of the Company, with a term which began on January 28, 1994 and
expires on December 31, 1998. Mr. Shaye's employment agreement provides for,
among other things, a minimum annual base salary of $1.5 million, annual bonus
compensation ranging from a minimum of 25% of base salary to a maximum bonus of
125% of base salary, determined on the basis of the achievement of certain
performance goals by New Line and the Company, and a grant of 50,000 shares of
Class B Common Stock and stock options for 2.1 million shares of Class B Common
Stock (1.1 million of which vest on the basis of the achievement by New Line of
certain performance goals). Prior to the execution of such employment agreement,
New Line had lent to Mr. Shaye $750,000 in connection with the purchase and
renovation of a residence in California. Such loan is unsecured and does not
bear interest. Under the terms of the Mr. Shaye's employment agreement with New
Line, the loan shall be repaid in four equal installments on December 31, 1994,
1995, 1996 and June 30, 1997, provided that if the residence is sold or if Mr.
Shaye's employment agreement is terminated for any reason, then the remaining
unpaid indebtedness under the loan shall become immediately due and payable.
The TBS SuperStation signal is retransmitted by a common carrier, Southern
Satellite Systems, Inc. ("Southern"), which is controlled by an indirect
wholly-owned subsidiary of Liberty Media Corporation. Mr. Peter R. Barton is
President of Liberty Media Corporation. Mr. Bob Magness, who was a director of
the Company from 1992 until April 1994, and Mr. John C. Malone hold shares
representing approximately 23.1% and 60.7%, respectively, of the voting power of
that corporation, which is a former subsidiary of TCI. The Company does not have
a contract with Southern and does not receive compensation for such
transmission. This retransmission of the TBS SuperStation signal by Southern
could be discontinued by the carrier, subject to Southern's contracts with the
local cable systems. In view of the substantial aggregate fees received by
Southern from the local cable systems for the TBS SuperStation signal, the
Company considers voluntary discontinuance of such retransmission by Southern to
be unlikely.
Turner Sports Programming, Inc., a wholly-owned subsidiary of the Company,
has a 44% interest in SportSouth Network, Ltd. ("SportSouth"), a limited
partnership in which Liberty Media Corporation also has an interest. SportSouth
operates SportSouth Network, a regional sports network serving the Southeast
United States, the revenues of which are principally derived from the sale of
advertising time and the subscription sale of its service to cable operators.
18
<PAGE> 21
All of the Affiliated Holders and Liberty Media Corporation have interests
in cable programming services which compete with the services offered by the
Company for cable system viewers, for channel space on low channel capacity
cable systems and, in several cases, for advertising funds. Among the
significant competing services are HBO and Cinemax, which are operated by an
affiliate of TWI, The Discovery Channel, in which TCI has an interest, and
American Movie Classics and The Black Entertainment Network, in which Liberty
Media Corporation has interests.
In addition to the relationships of the members of the Stock Option and
Compensation Committee with the Affiliated Holders, as previously described (see
"Compensation Committee Interlocks and Insider Participation"), the remaining
Class C Directors have the following relationships with the Affiliated Holders:
Gerald M. Levin is the Chairman, President and Chief Executive Officer of TWI;
John C. Malone is the President and Chief Executive Officer and a director of
TCI; and Peter R. Barton is the President of Liberty Media Corporation.
19
<PAGE> 22
PERFORMANCE GRAPH
The following graph compares the cumulative, five-year shareholder returns
on the Company's Class A Common Stock and Class B Common Stock with the
comparable cumulative returns of the S&P 500 Index and a peer group index
comprised of the common stock of the companies listed below, excluding the
Company. The peer group index is based on a selection of companies operating in
the television and film entertainment business. The annual return for the peer
group index is weighted based on the capitalization of each of the companies
within the peer group at the beginning of each period for which a return is
indicated. The graph assumes that the value of the investment in the Class A
Common Stock and the Class B Common Stock and each index was $100 on December
31, 1988, and that all dividends were reinvested.
CUMULATIVE TOTAL SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TURNER CLASS TURNER CLASS
(FISCAL YEAR COVERED) A B S&P 500 PEER GROUP
<S> <C> <C> <C> <C>
1988 100.00 100.00 100.00 100.00
1989 299.26 341.88 131.59 142.82
1990 202.22 230.77 127.49 117.59
1991 411.11 474.36 166.17 138.90
1992 380.93 434.47 178.81 184.64
1993 487.04 556.91 196.75 238.47
</TABLE>
The following companies comprise the peer group used in the performance
graph:
Capital Cities/ABC, Inc., CBS Inc., Comcast Corporation (Class A Common
Stock), Paramount Communications, Inc., Tele-Communications, Inc. (Class A
Common Stock), The Walt Disney Company, Time Warner Inc. and Viacom, Inc.
(Class A Common Stock).
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Performance
Graph and the Report of the Stock Option and Compensation Committee of the Board
of Directors on Executive Compensation shall not be incorporated by reference
into any such filings.
20
<PAGE> 23
II. RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee of the Board of Directors,
the Board of Directors has selected Price Waterhouse as the Company's
independent public accountants for the fiscal year ending December 31, 1994,
subject to ratification by the shareholders. Price Waterhouse served in such
capacity for the fiscal year ended December 31, 1993 and previously. A
representative of Price Waterhouse is expected to be present at the Annual
Meeting and will have the opportunity to make a statement if he or she so
desires and to respond to appropriate questions from shareholders.
The Board of Directors recommends a vote FOR ratification of the selection
of Price Waterhouse as the Company's independent public accountants for the
fiscal year ending December 31, 1994.
III. APPROVAL OF TURNER INCENTIVE PLAN
The Board of Directors of the Company, upon recommendation of its Stock
Option and Compensation Committee (the "Compensation Committee"), adopted the
Turner Incentive Plan (the "TIP"), effective January 1, 1992. The TIP is
designed to enable the Company to attract and retain key employees by providing
a competitive total compensation package and to assist in focusing those
employees on critical goals and strategies that are crucial for the Company's
continued success. The TIP is administered by the Turner Incentive Plan
Committee (the "TIP Committee") and the Compensation Committee, which select
participants and determine awards under the TIP on an annual basis. The
selection process and guidelines are established solely by the TIP Committee. In
general, participation in the TIP is limited to key employees who can
significantly and directly affect the Company's performance. The Compensation
Committee, in its discretion, may approve any employee of the Company as a TIP
participant. Currently, approximately 50 of the Company's employees participate
in the TIP.
Awards, up to a specified percentage of a participant's base salary, are
granted under the TIP with the maximum allowable percentage being determined by
the participant's position vis-a-vis his or her target goals and the Company's
target goals. Awards for most participants are comprised of two components: a
corporate performance component, which rewards the achievement of corporate
objectives, and a unit/individual performance component, which rewards the
achievement of operating unit and individual participant goals. Awards for
certain executive officers of the Company, including the named executive
officers, are comprised only of a corporate performance target. The
participant's actual cash award under the TIP is a percentage of the award
ranging from 0% to 150% depending upon the level of attainment of (1) the
participant's unit/individual performance component and (2) the Company's
attainment of the corporate performance component.
The percentage allocation between the two components of a participant's
maximum potential award varies according to that participant's position.
Satisfaction of the corporate performance component is based solely upon the
Company's attainment of specified objectives based upon any one or a combination
of the following: operating income, cash flow, net income, operating expense,
revenues and pre-tax income. Satisfaction of the unit/individual component is
determined by the individual participant's level of performance toward his or
her goals.
Award payments are made to participants as soon as practicable following
the end of a plan year and will be limited per person to up to 200% of his or
her base salary per year. Under the TIP, unless otherwise provided in a
participant's employment agreement, if a participant's employment is terminated
during a plan year, that participant is not entitled to any payment under the
TIP. Termination of employment due to approved retirement, death or disability
will result in a pro-rated award payment for the portion of the plan year in
which the participant was employed.
The Board of Directors has directed that the material terms of the TIP be
submitted to the Company's shareholders for approval at the Annual Meeting.
Shareholder approval of the material terms of the TIP is required in order for
the Company to comply with the performance-based compensation exception set
forth in Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations
21
<PAGE> 24
thereunder, so that, to the extent possible, compensation paid under the TIP
will be fully deductible by the Company. If the TIP is approved by the Company's
shareholders at the Annual Meeting, such approval shall be effective until the
earlier of (i) the 1999 Annual Meeting, or (ii) material modification of the
performance goals under the TIP.
Approval of the TIP requires that the number of shares voted in favor of
the approval of the TIP exceeds the number of shares voted in opposition to such
approval. Abstentions and broker non-votes will not be included in the total
number of votes cast and thus will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
TIP.
IV. APPROVAL OF THE COMPANY'S LONG-TERM
INCENTIVE PLAN
The Board of Directors of the Company, upon recommendation of its
Compensation Committee, adopted the Turner Broadcasting System, Inc. Long-Term
Incentive Plan (the "LTIP"), effective January 1, 1992. The LTIP is designed to
enable the Company to attract and retain key executives by providing a
competitive and diversified total compensation package and to help focus
executives' attention on the long-term performance of the Company as reflected
by growth in operating income over a three-year period. The LTIP is administered
by the Compensation Committee which selects participants and determines the
awards under the LTIP on a three-year cycle basis. In general, participation in
the LTIP is limited to officers and other key executives who can significantly
and directly affect the Company's long-term performance; however, the
Compensation Committee, in its discretion, may approve any employee of the
Company as an LTIP participant. Currently, approximately 15 of the Company's
employees participate in the LTIP.
The LTIP's award opportunities are based on a competitive market analysis
of long-term incentive award opportunities in other entertainment companies.
Under the LTIP, a target cash award is established for each participant. The
target cash award, taken together with a participant's stock option grants, is
structured to provide the participant with a total long-term incentive award
commensurate with the participant's responsibilities.
The LTIP's performance measures for the Company for the current three-year
cycle ending December 31, 1994 have been established as compounded growth in
operating income and revenues during the performance cycle over target levels
set at the beginning of each cycle. Growth in operating income will provide 75%
of the award opportunity, with the remaining 25% relating to growth in revenues.
To recognize a range of Company performance around the "target,"
participants may earn up to 150% of their target award opportunities based on
actual Company performance compared to the specified LTIP goals. The threshold
level of performance is designed to be the minimal level of performance for
which any cash LTIP award will be earned. At threshold, 75% of the target award
opportunity will be earned. Performance below threshold will not generate any
award payment. The maximum level of performance is the highest reasonable level
of performance that may be achieved. Maximum performance will result in an award
of 150% of the target opportunity.
In determining the Company's performance goals for future three-year cycles
under the LTIP, the Compensation Committee may use any one or a combination of
the following criteria: compounded growth in operating income, compounded growth
in gross revenues, net income, return on equity, cash flow and total shareholder
return.
Cash award payments will be made to participants as soon as practicable
following the end of a plan cycle, and will be limited per person to up to 100%
of his or her base salary per year. Unless otherwise provided in such
participant's employment agreement, if a participant's employment is terminated
during a three-year cycle, that participant is not entitled to any cash payment
under the LTIP for that cycle. Termination of employment due to approved
retirement, death or disability will result in a pro-rated award payment for the
portion of the three-year cycle during which the participant was employed. To
date, no benefits have been distributed under the LTIP.
22
<PAGE> 25
The Board of Directors has directed that the material terms of the LTIP be
submitted to the Company's shareholders for approval at the Annual Meeting.
Shareholder approval of the material terms of the LTIP is required in order for
the Company to comply with the performance-based compensation exception set
forth in Section 162(m) of the Code and the regulations thereunder, so that, to
the extent possible, compensation paid under the LTIP will be fully deductible
by the Company. If the LTIP is approved by the Company's shareholders at the
Annual Meeting, such approval shall be effective until the earlier of (i) the
1999 Annual Meeting, or (ii) material modification of the performance goals
under the LTIP.
Approval of the LTIP requires that the number of shares voted in favor of
the approval of the LTIP exceeds the number of shares voted in opposition to
such approval. Abstentions and broker non-votes will not be included in the
total number of votes cast and thus will have no effect on the outcome of the
vote.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
LTIP.
V. APPROVAL OF AMENDMENTS TO THE COMPANY'S
1988 STOCK OPTION PLAN
Effective January 15, 1988, the Board of Directors of the Company adopted
the Turner Broadcasting System, Inc. 1988 Stock Option Plan (the "1988 Plan")
for the purpose of granting options to purchase shares of the Company's Class B
Common Stock (the "Common Stock") to key employees of the Company and its
subsidiaries. The 1988 Plan was approved by the shareholders of the Company on
July 15, 1988. The Board believes that the 1988 Plan has strengthened the
Company's ability to attract capable management personnel and encourage key
employees to remain in the employ of the Company.
The Board of Directors has now directed that the 1988 Plan be amended to
limit to 1,000,000 the number of shares of Common Stock for which options may be
granted to an individual under the 1988 Plan during any calendar year, subject
to adjustment. In addition, the 1988 Plan is being amended to permit the
Compensation Committee in its sole and absolute discretion the authority to
establish different terms and conditions pertaining to the effect on a stock
option of the death, disability or other termination of employment of an
optionee, to the extent permitted by applicable federal and state law. The
foregoing description of the proposed amendments to the 1988 Plan is qualified
in its entirety by reference to the text of such amendments which is attached to
this proxy statement as Exhibit A.
DESCRIPTION OF THE 1988 PLAN
The following description of the 1988 Plan incorporates the aforementioned
proposed amendments as if such proposed amendments had been approved by the
requisite number of shares of the stock of the Company.
The 1988 Plan provides for the grant of options to purchase up to a maximum
of 10,500,000 shares of Common Stock. The 1988 Plan is administered by the
Compensation Committee which consists of directors who are not eligible to
participate in the 1988 Plan.
The Committee may grant either Incentive Stock Options or Non-Qualified
Stock Options under the 1988 Plan. Incentive Stock Options are intended to be
treated as such within the meaning of Section 422a of the Code. Non-Qualified
Stock Options are, in general, options which do not have the special income tax
advantages associated with Incentive Stock Options.
The Committee, in its discretion, may grant surrender rights in connection
with an option. Upon exercise of a surrender right an optionee will receive that
number of shares of Common Stock having a fair market value equal to the excess
of the fair market value of the shares covered by the surrendered portion of the
option over the exercise price of such shares. The Committee may grant surrender
rights simultaneously with the grant of an option or, with respect to
Non-Qualified Stock Options only, at any time during the option's term.
The Committee will determine which employees of the Company and its
subsidiaries will be granted options, the number of shares of Common Stock
subject to an option granted to any employee, whether the option is an Incentive
Stock Option or Non-Qualified Stock Option, whether the option will be
accompanied
23
<PAGE> 26
by surrender rights and the other terms and conditions governing the option. Key
employees, including officers and directors, of the Company and its subsidiaries
are eligible to receive options, but directors of the Company or its
subsidiaries who are not employees and directors serving on the Committee are
not eligible. An employee may be granted options to purchase a maximum of
1,000,000 shares of Common Stock in a given year under the 1988 Plan. Currently,
approximately 600 employees of the Company and its subsidiaries participate in
the 1988 Plan.
No options granted under the 1988 Plan are transferable by the optionee
other than by will or by the laws of descent and distribution, and each option
is exercisable, during the lifetime of the optionee, only by the optionee. An
optionee may designate a beneficiary to receive his option in the event of the
optionee's death prior to exercise of the option. An option will terminate upon
an optionee's termination of employment for cause or by the voluntary action of
the optionee without the consent of the Company or the subsidiary (a
"Terminating Event"). Upon an optionee's death while an employee of the Company
or a subsidiary or within three months of the termination of such employment
(other than with respect to a Terminating Event), an option will terminate one
year from the date of death or upon the expiration of the option, whichever is
earlier. Upon the termination of an optionee's employment because of permanent
disability, an option will terminate one year after the date of termination or
upon the expiration of the option, whichever is earlier. Upon an optionee's
termination of employment other than by death or permanent disability and other
than in connection with a Terminating Event, an option will terminate ninety
days after the date of termination or upon the expiration of the option,
whichever is earlier. The Committee, at its discretion, may establish different
terms and conditions pertaining to the effect on an option of the death,
disability or other termination of employment of a grantee to the extent
permitted by applicable federal and state law.
The exercise price of all Incentive Stock Options granted under the 1988
Plan must be at least equal to the greater of the fair market value of the
Common Stock subject to the option on the date of grant and the par value per
share of the Common Stock. The exercise price of all Non-Qualified Stock Options
shall be determined by the Committee at the time of grant but shall not be less
than the aggregate par value of the shares of Common Stock subject to the
option. The term of each option will be as determined by the Committee but will
in no event be greater than ten years from the date of grant.
Set forth below are the number of options granted under the 1988 Plan as of
March 31, 1994, to certain specified groups of individuals:
Named executive officers:
<TABLE>
<S> <C>
R.E. Turner.......................................................... 0
Terence F. McGuirk................................................... 850,000
Scott M. Sassa....................................................... 664,250
W. Thomas Johnson.................................................... 470,000
William H. Grumbles.................................................. 205,000
All current executive officers as a group: ............................... 2,958,150
All current directors who are not executive officers as a group: ......... 1,000
Each nominee for election as a director:
Terence F. McGuirk................................................... 850,000
Scott M. Sassa....................................................... 664,250
W. Thomas Johnson.................................................... 470,000
Rubye M. Lucas....................................................... 1,000
(No other nominees for director have been granted options under the
1988 Plan)
Each associate of any of such directors, executive officers or
nominees: .............................................................. 0
Each other person who received 5% of such options: ....................... 0
All employees, including all current officers who are not executive
officers, as a group: .................................................. 9,516,100
</TABLE>
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<PAGE> 27
Awards under the 1988 Plan are based upon the Company's performance.
Accordingly, future awards under the 1988 Plan are not determinable at this
time.
The closing price of the Common Stock on the American Stock Exchange on
June 15, 1994 was $19 1/8.
SECTION 162(M) REQUIREMENTS
The 1988 Plan, as amended by the proposed amendments, is intended to
preserve the Company's tax deduction for certain awards granted under the 1988
Plan by complying with the terms of Section 162(m) of the Code and the
regulations thereunder. The material terms of the 1988 Plan, including the
proposed amendments to the 1988 Plan, must be approved by the Company's
shareholders in order for the compensation paid thereunder to qualify as
performance-based compensation. Any such performance-based compensation is
exempt from the $1 million limitation on the deductibility of compensation paid
to certain executive officers under Section 162(m).
VOTE REQUIRED FOR APPROVAL
Approval of the amendments to the 1988 Plan requires the affirmative vote
of the holders of a majority of the shares of the Class A Common Stock, the
Class B Common Stock and the Class C Preferred Stock, voting together as a
single class, present in person or represented by proxy at the Annual Meeting
and entitled to vote. Shares voted as abstaining will be treated as present and
entitled to vote, thus having the effect of a vote in opposition of approval of
the amendments, while broker non-votes will have no effect on the outcome of the
vote on the amendments.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE 1988 PLAN.
VI. APPROVAL OF THE COMPANY'S 1993 STOCK OPTION
AND EQUITY-BASED AWARD PLAN
On November 15, 1993, the Board of Directors of the Company approved the
Turner Broadcasting System, Inc. 1993 Stock Option Plan. Upon recommendation of
the Compensation Committee, on April 15, 1994, the Board of Directors of the
Company approved an amended and renamed version of such plan, the Turner
Broadcasting System, Inc. 1993 Stock Option and Equity-Based Award Plan ("1993
Plan"), which provides for a wider variety of equity-based awards. The Board of
Directors also approved the 1993 Plan for submission for approval to the
shareholders of the Company. The purpose of the 1993 Plan is to promote the
interests of the Company and its shareholders by providing a means for selected
key employees to acquire a proprietary interest in the Company, thereby
strengthening the Company's ability to attract capable management personnel and
providing an inducement for key employees to remain in the employ of the Company
and to perform at their maximum levels. Awards may be granted under the 1993
Plan from November 15, 1993 until November 14, 2003.
DESCRIPTION OF THE 1993 PLAN
The following is a summary of the material features of the 1993 Plan. The
description which follows is qualified in its entirety by reference to the 1993
Plan, a copy of which is attached to this proxy statement as Exhibit B.
The 1993 Plan provides for the grant of options and other awards relating
to up to an aggregate of 5,000,000 shares of the Company's Common Stock. The
1993 Plan is administered by the Compensation Committee which consists of
directors who are not eligible to participate in the 1993 Plan.
The Compensation Committee under the 1993 Plan may grant at its discretion
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
Tandem Stock Appreciation Rights, Non-Tandem Stock Appreciation Rights,
Restricted Stock and Other Equity-Based Awards (collectively, "Awards").
Incentive Stock Options are intended to be treated as such within the meaning of
Section 422a of the Code.
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<PAGE> 28
Nonqualified Options are, in general, options which do not have the special
income tax advantages associated with Incentive Stock Options. Stock
Appreciation Rights are rights that, upon exercise, entitle the holder to
receive in cash or Common Stock the excess of the fair market value of the
underlying Common Stock on the date of exercise over its value on the date it
was granted. Tandem Stock Appreciation Rights are Stock Appreciation Rights that
are granted in conjunction with Nonqualified Options and Incentive Stock
Options. Non-Tandem Stock Appreciation Rights are Stock Appreciation Rights that
are granted without reference to any option. Restricted Stock is Common Stock
subject to a restriction period during which the grantee is not permitted to
transfer shares of Restricted Stock awarded under the 1993 Plan. Other
Equity-Based Awards are awards under the 1993 Plan that are valued in whole or
in part by reference to or are payable in or otherwise based on Common Stock.
The Compensation Committee will determine which employees of the Company
and its subsidiaries will be granted Awards, the time or times when an Award may
be granted, the number of shares of Common Stock subject to an Award granted to
any employee, the type of Award granted, the option price of an Award and the
other terms and conditions governing the Award. An employee may be granted
Awards with respect to a maximum of 2,500,000 shares in any calendar year. Key
employees, including officers and directors, of the Company and its subsidiaries
will be eligible to receive Awards, but directors of the Company or its
subsidiaries who are not employees and directors serving on the Committee will
not be eligible. Shares subject to an Award which terminates, expires or is
cancelled with the consent of the grantee will again be available for the grant
of Awards under the 1993 Plan. Shares granted under the 1993 Plan may be
authorized but unissued shares, shares issued and reacquired by the Company or
any combination thereof.
No Awards granted under the 1993 Plan are transferable by the grantee other
than by will or by the laws of descent and distribution, and each Award is
exercisable, during the lifetime of the grantee, only by the grantee. A grantee
may designate a beneficiary to receive his Award in the event of the grantee's
death prior to exercise of the Award. An Award will terminate upon the grantee's
termination of employment for cause or by the voluntary action of the grantee
without the consent of the Company or the subsidiary (a "Terminating Event").
Upon a grantee's death while an employee of the Company or a subsidiary or
within three months of the termination of such employment (other than with
respect to a Terminating Event), an Award will terminate one year from the date
of death or upon the expiration of the Award, whichever is earlier. Upon
termination of a grantee's employment because of permanent disability, an Award
will terminate one year after the date of termination or upon the expiration of
the Award, whichever is earlier. Upon a grantee's termination of employment
other than by death or permanent disability and other than in connection with a
Terminating Event, an Award will terminate ninety days after the date of
termination or upon the expiration of the Award, whichever is earlier. The
Compensation Committee, at its discretion, may establish different terms and
conditions pertaining to the effect on an Award of the death, disability or
other termination of employment of a grantee to the extent permitted by
applicable federal and state law.
The exercise price of all Incentive Stock Options granted under the 1993
Plan is determined by the Compensation Committee but must be at least equal to
the greater of the fair market value of the Common Stock subject to the option
on the date of grant or the par value per share of the Common Stock. The
exercise price of all Nonqualified Options shall be determined by the
Compensation Committee at the time of grant but shall not be less than the
aggregate par value of the shares of Common Stock subject to the option. The
term of each Incentive Stock Option will be as determined by the Compensation
Committee but will in no event be greater than ten years from the date of grant.
With respect to any Incentive Stock Option granted to a participant who owns
stock possessing more than 10% of the voting rights of the Company's outstanding
capital stock on the date of the grant, the exercise price of the option must be
at least equal to the greater of 110% of the fair market value of the Common
Stock subject to the option on the date of grant or the par value of the Common
Stock and the option may not be exercisable more than five years after the date
of grant. The Company will receive no consideration upon the grant of options.
The aggregate fair market value of the Common Stock (determined at the time
of grant) for which Incentive Stock Options granted under the 1993 Plan and any
other plan of the Company or a subsidiary may be exercisable for the first time
by any employee during any calendar year, cannot exceed $100,000. In addition,
no option granted under the 1993 Plan is exercisable within six months from the
date it is granted.
26
<PAGE> 29
The 1993 Plan permits the exercise of options either by a cash payment or, with
the approval of the Compensation Committee, by surrender of shares of Common
Stock owned by the grantee for at least six months and having a fair market
value equal to the exercise price, by a combination of cash and such shares, or
by any other method approved by the Compensation Committee.
Tandem Stock Appreciation Rights may be granted in conjunction with all or
a portion of an option. With respect to a Nonqualified Stock Option, Tandem
Stock Appreciation Rights may be granted either at or after the time of such
grant. With respect to an Incentive Stock Option, Tandem Stock Appreciation
Rights may be granted only at the time the Incentive Stock Option is granted. A
Tandem Stock Appreciation Right terminates upon the termination of the related
option and is only exercisable at such times and to the extent the related
option is exercisable.
The Compensation Committee determines the term of Non-Tandem Stock
Appreciation Rights but such term cannot exceed ten years. Non-Tandem Stock
Appreciation Rights are exercisable at such times as provided by the
Compensation Committee, except that Non-Tandem Stock Appreciation Rights are not
exercisable during the first six months of the term thereof except in the event
of the grantee's death or disability during such six month period.
Shares of Restricted Stock may be issued alone or in addition to other
Awards under the 1993 Plan. The Compensation Committee determines to whom and at
what times grants of Restricted Stock will be made, the number of shares to be
awarded, the price, if any, to be paid for Restricted Stock, the vesting
schedule and all other terms and conditions relating to awards of Restricted
Stock. The Compensation Committee also establishes the period during which
Restricted Stock cannot be transferred, provided that such period cannot be less
than six months.
Other Equity-Based Awards and Awards valued in whole or in part by
reference to or payable in or otherwise based on Common Stock may be granted
either alone or in tandem with other Awards. The Compensation Committee
determines to whom and at what times grants of Other Equity-Based Awards will be
made, the number of shares to be awarded and all other terms and conditions
relating to such awards.
The Compensation Committee may, within the limitations of the 1993 Plan,
modify, extend or renew outstanding Awards granted under the 1993 Plan, or
accept the surrender of outstanding Awards and authorize the granting of new
Awards in substitution therefor. No modification may, without the consent of the
grantee, alter or impair any rights or obligations theretofore granted to the
grantee.
The total number and character of shares subject to Awards and the number
and character of shares subject to outstanding Awards and the exercise price
will be appropriately adjusted by the Compensation Committee in the event of any
stock dividend, subdivision or combination of shares or reclassification. The
Compensation Committee may also make appropriate adjustments in the event of a
merger or consolidation of the Company or a tender offer for shares of Common
Stock.
The Board of Directors may from time to time amend, modify, suspend or
terminate the 1993 Plan, but may not, without the written consent of the
grantee, make any such alteration which would impair the rights of a holder of
an outstanding Award. Certain amendments to the 1993 Plan require shareholder
approval.
Approximately 600 employees of the Company and its subsidiaries are
currently eligible to participate in the 1993 Plan.
On June 15, 1994, the closing price of the Common Stock on the American
Stock Exchange was $19 1/8 per share.
FEDERAL INCOME TAX CONSEQUENCES
Under current federal income tax law, an employee will not realize taxable
income by reason of either the grant or the exercise of an Incentive Stock
Option, and the Company will not receive an income tax deduction at either such
time. However, any appreciation in share value since the date of grant will be
an item of adjustment at the time of exercise in determining liability for the
alternative minimum tax. If an employee exercises an Incentive Stock Option and
delivers shares of Common Stock as payment for part or all of the
27
<PAGE> 30
option price of the stock purchased ("Payment Stock"), no gain or loss will be
recognized with respect to the stock delivered and no tax will be payable with
respect to the Payment Stock or the stock purchased. However, if the Payment
Stock was acquired pursuant to the exercise of an Incentive Stock Option and the
required holding period in order to obtain favorable tax treatment to such stock
is not met as of the date such stock is delivered, the employee will be treated
as having sold the Payment Stock in an early disposition and will be subject to
the rules described below for early disposition with respect to the Payment
Stock. To the extent the number of shares received exceeds the number of shares
tendered, the employee's basis in such new Incentive Stock Option stock that he
receives upon exercise of the option in exchange for the Payment Stock is the
same as his basis in the Payment Stock increased by any amount included in gross
income as ordinary income due to any disqualifying disposition. The holding
period of these newly acquired shares will include the holding period of the
Payment Stock. The employee's basis in the additional new shares received upon
exercise of the Incentive Stock Option is zero and these shares have a holding
period that commences on the date of exercise of the Incentive Stock Option.
If an employee exercises an Incentive Stock Option and does not dispose of
the shares within two years from the date of grant and one year from the date of
exercise, the entire gain, if any, realized upon disposition will be taxable to
the employee as long-term capital gain, and the Company will not be entitled to
any deduction. If, however, an employee disposes of shares prior to the
expiration of the holding periods described above, the employee will generally
realize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the shares on the date of exercise
and the Company will be entitled to a deduction equal to the amount recognized
as ordinary income by the holder. Any additional appreciation will be treated as
a capital gain (long-term or short-term depending on how long the employee held
the shares prior to disposition) and the Company will not be entitled to any
further deductions for federal income tax purposes. If the amount realized by
the employee is less than the value of the shares upon exercise, then the amount
of ordinary income and the corresponding Company deduction is equal to the
excess of the amount realized over the option price.
As to the Nonqualified Stock Options, there will be no federal income tax
consequences to either the employee or the Company on the grant of the option.
Additionally, if an employee exercises a Nonqualified Stock Option and delivers
shares of Common Stock as payment for part or all of the option price of the
stock purchased, no gain or loss will be recognized with respect to the stock
delivered. To the extent an employee receives more shares of stock pursuant to
the exercise of the option than shares of stock delivered, the fair market value
of this excess, less any cash paid by the employee, will be taxed as ordinary
income and will be subject to applicable tax withholding. On the exercise of a
Nonqualified Stock Option, the employee (except as described below) recognizes
taxable ordinary income equal to the difference between the exercise price of
the shares and the fair market value of the shares on the exercise date. The
Company will be entitled to a tax deduction in an amount equal to the employee's
taxable ordinary income provided the Company undertakes applicable tax
withholding. Upon disposition of the stock by the employee, he will recognize
long-term or short-term capital gain or loss, as the case may be, equal to the
difference between the amount realized on such disposition and his basis for the
stock, which will include the amount previously recognized by him as ordinary
income. The holding period for capital gains purposes will commence on the day
the optionee acquires the shares pursuant to the option.
The exercise of a Stock Appreciation Right will result in ordinary income
to the holder in the year the Stock Appreciation Right is exercised. The amount
of income recognized will be equal to the total value of all cash and the fair
market value of the Common Stock received pursuant to the exercise of the Stock
Appreciation Right. The Company will be entitled to a corresponding income tax
deduction equal to such amount provided the Company undertakes applicable tax
withholding. The tax treatment of a Stock Appreciation Right is the same whether
the Stock Appreciation Right is exercised in conjunction with an Incentive Stock
Option or a Nonqualified Stock Option.
The receipt of Restricted Stock will result in ordinary income to the
grantee when the restriction lapses. The amount of income recognized will be
equal to the fair market value of the Common Stock. The Company will be entitled
to a corresponding income tax deduction equal to such amount provided the
Company undertakes applicable tax withholding. Upon disposition of the stock by
the employee, he will recognize long-
28
<PAGE> 31
term or short-term capital gain or loss, as the case may be, equal to the
difference between the amount realized on such disposition and his basis for the
stock, which will include the amount previously recognized by him as ordinary
income. The holding period for capital gains purposes will commence on the day
the grantee received the shares of Restricted Stock.
The foregoing federal income tax information is a summary only and does not
purport to be a complete statement of the relevant provisions of the Code.
SECTION 162(M) REQUIREMENTS
The 1993 Plan is intended to preserve the Company's tax deduction for
certain awards granted under the 1993 Plan by complying with the terms of
Section 162(m) of the Code and the regulations thereunder. The material terms of
the 1993 Plan must be approved by the Company's shareholders in order for the
compensation paid thereunder to qualify as performance-based compensation. Any
such performance-based compensation is exempt from the $1 million limitation on
the deductibility of compensation paid to certain executive officers under
Section 162(m).
VOTE REQUIRED FOR APPROVAL
Approval of the 1993 Plan requires the affirmative vote of the holders of a
majority of the shares of the Class A Common Stock, the Class B Common Stock and
the Class C Preferred Stock, voting together as a single class, present in
person or represented by proxy at the Annual Meeting and entitled to vote.
Shares voted as abstaining will be treated as present and entitled to vote, thus
having the effect of a vote in opposition of approval of the 1993 Plan, while
broker non-votes will have no effect on the outcome of the vote for the 1993
Plan.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
1993 PLAN.
VII. SHAREHOLDER PROPOSAL ON THE ADOPTION
OF CUMULATIVE VOTING FOR DIRECTORS OF
THE COMPANY
The Company has been advised that Mrs. Evelyn Y. Davis, Watergate Office
Building, 2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037, holder
of 300 shares of Class A Common Stock, proposes to submit the following
resolution at the 1994 Annual Meeting of Shareholders:
RESOLVED: "That the stockholders of Turner Broadcasting, assembled in
Annual Meeting in person and by proxy, hereby request the Board of
Directors to take the necessary steps to provide for cumulative voting in
the election of directors, which means each stockholder shall be entitled
to as many votes as shall equal the number of shares he or she owns
multiplied by the number of directors to be elected, and he or she may cast
all of such votes for a single candidate, or any two or more of them as he
or she may see fit."
REASONS: "Many states have mandatory cumulative voting, so do National
Banks." "In addition, many corporations have adopted cumulative voting."
"If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors recommends a vote AGAINST this proposal for the following
reasons:
In our opinion, cumulative voting in the election of directors is not in
the best interests of the Company or its shareholders. Currently, each director
of the Company is elected by the holders of a plurality of the class of shares
eligible to vote for the election of such director that are present or
represented by proxy at an annual meeting. The directors have a legal duty and
fiduciary obligation to manage the business and affairs of the Company in the
best interests of all shareholders. The cumulative voting system permits the
holders of relatively small numbers of shares or special groups of shareholders
to elect one or more directors to represent their particular interests on the
Board of Directors. Directors who are elected by special interest groups may
29
<PAGE> 32
consider themselves to be representatives of these groups, with an obligation to
act on their behalf, rather than on behalf of the general interests of the
shareholders as a whole. Cumulative voting may create the possibility of
partisanship or factionalism among directors and limit their ability to
effectively administer and manage the Company's business and affairs.
The directors of the Company are elected based upon their knowledge,
experience and ability, as well as their willingness and commitment to serve in
the best interests of all shareholders. In order to maintain the effective
administration and management of the Company's business and affairs, we believe
that the directors should continue to be elected by a plurality of the votes
cast.
VIII. OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the Annual Meeting other than as set forth in Items I, II, III, IV, V,
VI and VII of this proxy statement. If any other business should properly come
before the meeting, the persons named in the accompanying form of proxy intend
to vote thereon in accordance with their best judgement.
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wishes to present a proposal at the 1995
annual meeting of shareholders of the Company, and who wishes to have such
proposal included in the Company's proxy statement for that meeting, must
deliver a copy of such proposal to the Company at One CNN Center, Atlanta,
Georgia 30303, Attention: Corporate Secretary, no later than January 31, 1995;
however, if next year's annual meeting of shareholders is held on a date more
than 30 days before or after the corresponding date of the 1994 Annual Meeting,
any shareholder who wishes to have a proposal included in the Company's proxy
statement for that meeting must deliver a copy of the proposal to the Company a
reasonable time before the proxy solicitation is made. The Company reserves the
right to decline to include in the Company's proxy statement any shareholder's
proposal which does not comply with the rules of the SEC for inclusion therein.
You are encouraged to let us know your preference by marking the
appropriate boxes on the enclosed proxy.
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<PAGE> 33
EXHIBIT A
TURNER BROADCASTING SYSTEM, INC.
1988 STOCK OPTION PLAN
AMENDMENT NO. 2
WHEREAS, the Turner Broadcasting System, Inc. 1988 Stock Option Plan (as
heretofore amended, the "Plan") was approved by the Stock Option and
Compensation Committee (the "Committee") of the Board of Directors of Turner
Broadcasting System, Inc. (the "Corporation") and by the holders of a majority
of the outstanding shares of the stock of the Corporation entitled to vote
thereon at such time;
WHEREAS, the Plan does not currently limit the aggregate number of shares
of Common Stock of the Corporation for which Options may be granted to any
individual during any calendar year;
WHEREAS, the Plan does not currently provide the Committee the discretion
to establish different terms and conditions pertaining to the effect on an
Option granted under the Plan of the death, disability or other termination of
employment of the optionee thereof;
WHEREAS, the Committee in its administration of the Plan has determined
that it is in the best interest of the Corporation and the Optionees under the
Plan to amend the Plan as more fully described below, subject to the limitations
set forth in Section 20 of the Plan;
WHEREAS, the Plan shall be amended as follows:
1. Amendments. (a) Section 4 of the Plan is hereby amended by the insertion
of the following language at the end of the last sentence thereof:
"; provided, however, that the aggregate number of shares of Common Stock
for which Options may be granted to any individual during any calendar year
may not, subject to adjustment as provided in Section 14 hereof, exceed
1,000,000 shares of Common Stock reserved for the purposes of the Plan in
accordance with the provisions of Section 5 hereof"
(b) Subject to the approval of the shareholders of the Corporation, Section
10 of the Plan is hereby amended by the addition of a subsection (f) at the end
thereof as follows:
"(f) Committee Discretion. Notwithstanding the provisions of paragraphs
(a), (b) or (c) of this Section 10, the Committee, in its sole and absolute
discretion, may, at the date an Option is granted or thereafter, establish
different terms and conditions pertaining to the effect on that Option of
the death, disability or other termination of employment of the Optionee,
to the extent permitted by applicable federal and state law."
2. Effectiveness. The foregoing amendments to the Plan were approved on
April 15, 1994 by the Committee and were recommended for submission to the
shareholders of the Corporation for approval at the 1994 annual meeting of
shareholders. The amendment set forth in paragraph 1(a) above became effective
upon approval thereof by the Committee. The amendment set forth in paragraph
1(b) above shall become effective as of and only upon the approval by the
holders of a majority of the outstanding shares of the stock of the Corporation
represented at such annual meeting, provided that a quorum of shareholders is
present in person or by proxy.
3. Defined Terms. All capitalized terms used herein without definition
shall have the meanings assigned thereto in the Plan.
4. No Other Amendment. This Amendment No. 2 is limited precisely as
written and shall not constitute a modification of any other provision of the
Plan. Except as specifically modified or amended by this Amendment No. 2, the
Plan shall remain in full force and effect in accordance with its terms.
A-1
<PAGE> 34
EXHIBIT B
TURNER BROADCASTING SYSTEM, INC.
1993 STOCK OPTION AND EQUITY-BASED AWARD PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to promote the interests of the Company and its
shareholders by providing a means for selected Key Employees to acquire a
proprietary interest in the Company, thereby strengthening the Company's ability
to attract capable management personnel and providing an inducement for Key
Employees to remain in the employ of the Company or its Subsidiaries and to
perform at their maximum levels.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan, shall have the meanings set forth below:
(a) "Award" shall mean, individually and collectively, any Option,
Restricted Stock, Stock Appreciation Right, or Other Equity-Based Award
granted under the Plan.
(b) "Base Value" shall mean the Fair Market Value of a Stock
Appreciation Right on the date of its grant.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
(e) "Committee" shall mean the Stock Option and Compensation Committee
of the Board, appointed by the Board to administer the Plan and perform the
functions set forth in Section 3 of the Plan.
(f) "Common Stock" shall mean the Class B Common Stock, par value
$.0625 per share, of the Company, and any other stock or securities
resulting from the adjustment thereof or substitution therefor as described
in Section 15 of the plan.
(g) "Company" shall mean Turner Broadcasting System, Inc., a Georgia
corporation.
(h) "Fair Market Value" with respect to the Common Stock as of any
date shall mean (i) in the event the Common Stock is listed on a national
securities exchange, the closing price as reported for composite
transactions on that date, or, if no sales occurred on that date, then the
closing price on the next preceding date on which such sales of Common
Stock occurred; (ii) in the event the Common Stock is not listed on a
national securities exchange, the mean between the high bid and low asked
prices reported for shares of Common Stock traded over-the-counter on that
date, or, if no bid and asked prices were reported on that date, then the
mean between the high bid and low asked prices on the next preceding date
on which such prices were reported; or (iii) in the event there are no
over-the-counter prices for the Common Stock and it is not listed on a
national securities exchange, the fair market value as determined by the
Committee in its discretion.
(i) "Incentive Stock Option" shall mean an Option granted under the
Plan and designated as such by the Committee which meets the requirements
of Section 422 of the Code.
(j) "Key Employee" shall mean a regular employee, whether or not a
director, of the Company or a Subsidiary who is an officer or holds a
managerial or other key position, as determined by the Committee, and who,
in the judgment of the Committee, has demonstrated a capacity for making a
substantial contribution to the success of the business of the Company or a
Subsidiary.
(k) "Non-Tandem Stock Appreciation Right" shall mean a Stock
Appreciation Right that is granted without reference to an Option pursuant
to Section 8(c).
B-1
<PAGE> 35
(l) "Nonqualified Stock Option" shall mean an Option granted under the
Plan other than an Incentive Stock Option.
(m) "Option" shall mean, unless otherwise specifically limited under
any provision of the Plan, both an Incentive Stock Option and a
Nonqualified Stock Option granted pursuant to the Plan.
(n) "Option Price" shall mean the price at which Common Stock may be
purchased under an Option, as provided in Section 7(d) of the Plan.
(o) "Other Equity-Based Award" shall mean an Award under Section 10 of
the Plan that is valued in whole or in part by reference to, or is payable
in or otherwise based on, Common Stock.
(p) "Participant" shall mean a Key Employee granted an Award under the
Plan.
(q) "Parent" shall mean any corporation which qualifies as a parent
corporation of the Company within the meaning of Section 424(e) of the
Code.
(r) "Plan" shall mean the Turner Broadcasting System, Inc. 1993 Stock
Option and Equity-Based Award Plan.
(s) "Restricted Stock" shall mean an Award granted pursuant to Section
9.
(t) "Stock Appreciation Right" or "SAR" shall mean a right to any
appreciation in shares of Common Stock granted pursuant to Section 8.
(u) "Stock Option Agreement" or "Award Agreement" shall mean the
written agreement between a Participant and the Company evidencing the
grant of an Award and setting forth the terms and conditions of the grant.
(v) "Subsidiary" shall mean any corporation which qualifies as a
subsidiary corporation of the Company within the meaning of Section 424(f)
of the Code.
(w) "Tandem Stock Appreciation Right" shall mean a Stock Appreciation
Right granted in conjunction with an Option pursuant to Section 8(b).
(x) "Ten Percent Shareholder" shall mean a Participant who, at the
time an Incentive Stock Option is to be granted to him, owns stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of its Parent (if any) or
Subsidiaries (as such ownership is defined in Section 424(d) of the Code).
SECTION 3. ADMINISTRATION OF THE PLAN
(a) Committee. The Plan shall be administered by the Committee, which
shall consist of two or more directors of the Company appointed by the
Board. The members of the Committee shall be "outside directors" within the
meaning of Section 162(m)(4)(c)(i) of the Code who shall not be eligible to
receive, and during the twelve months prior to serving on the Committee
shall not have received, Awards under the Plan or any other plan of the
Company or its Subsidiaries and shall be "disinterested persons" as defined
in Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act"). The members of the Committee shall serve
at the pleasure of the Board, which shall have the power, at any time and
from time to time, to remove members from the Committee or to add members
thereto. Vacancies on the Committee shall be filled by action of the Board.
(b) Duties and Powers of the Committee. The Committee shall have the
full power and authority, in its sole and absolute discretion, but subject
to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority
(i) to grant Awards which have received any requisite approval of the
Board, including the ability to determine which Options shall constitute
Incentive Stock Options and which Options shall constitute Nonqualified
Stock Options; (ii) to determine the employees to whom, and the time or
times at which, Awards shall be granted; (iii) to determine the number of
shares of Common Stock to be
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covered by each Option or other Award; (iv) to determine which Options
(if any) shall be accompanied by SAR's; (v) to determine the Option
Price of Common Stock subject to an Option; (vi) to determine the
duration of the exercise period of Awards and the time or times at
which Awards may be exercised and the extent of exercisability of
Awards; (vii) to determine the terms and provisions of Stock Option
Agreements or Award Agreements (which need not be identical) entered
into in connection with Awards granted under the Plan, including such
terms and provisions as shall in the judgment of the Committee be
necessary or advisable in order to conform to any applicable laws or
regulations, as the same may be amended from time to time; and (viii)
to make all other determinations necessary or advisable for the
administration of the Plan. Subject to the express provisions of the
Plan, the Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Stock Option
Agreement or Award Agreement in such manner and to the extent it shall
determine necessary or appropriate in order to carry out the purposes
of the Plan.
The Committee shall have full power and authority to construe and
interpret the Plan and the respective Stock Option or Award Agreements and
to establish, amend or rescind such rules, regulations and procedures as
the Committee deems necessary or appropriate for the proper administration
of the Plan.
The determinations of the Committee on the foregoing matters and any
other matters arising in connection with the construction, administration,
interpretation and effect of the Plan and of the Committee's rules and
regulations thereunder shall (except as otherwise specifically provided in
the Plan) be final, binding and conclusive.
(c) Committee Meetings and Actions. The Committee may select one of
its members as Chairman. The Committee shall hold its meetings at such
times and places as it shall determine. All decisions and determinations of
the Committee shall be made by not less than the affirmative vote of a
majority of its members. Actions may be taken by the Committee at a duly
convened meeting (including a meeting by telephone conference call) or by
unanimous written consent.
SECTION 4. ELIGIBILITY
Awards under the Plan may be granted only to Key Employees of the Company
and its Subsidiaries. A director of the Company or of a Subsidiary who is not
also a Key Employee shall not be eligible to receive an Award under the Plan.
More than one Award may be granted to the same Participant and be outstanding
concurrently hereunder; provided, however, that the aggregate number of shares
of Common Stock for which Awards may be granted to any individual during any
calendar year may not, subject to adjustment as provided in Section 15 hereof,
exceed 2,500,000 shares of Common Stock reserved for the purposes of the Plan in
accordance with the provisions of Section 5 hereof.
SECTION 5. SHARES SUBJECT TO THE PLAN
(a) Aggregate Number of Shares Available. Subject to the adjustments
provided for in Section 15 of the Plan, the aggregate number of shares of Common
Stock for which Awards may be granted under the Plan shall be 5,000,000 shares.
Shares delivered by the Company pursuant to exercises of Awards may be
authorized but unissued shares of Common Stock, issued shares of Common Stock
which have been reacquired by the Company, or a combination thereof, as the
Board or the Committee shall from time to time determine.
(b) Reduction in Available Shares. The total number of shares available
under Section 5(a) shall be reduced from time to time in the manner specified:
(1) Incentive Stock Options and Nonqualified Stock Options -- The
grant of an Incentive Stock Option or a Nonqualified Stock Option shall
reduce the available shares by the number of shares subject to such Option.
(2) Stock Appreciation Rights -- The grant of Stock Appreciation
Rights shall reduce the available shares by the number of SAR's granted;
provided, however, that if SAR's are granted in connection with
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an Option and the exercise of such Option would cancel the SAR's and
vice versa, then the grant of the SAR's will only reduce the amount of
shares available by the excess, if any, of the number of SAR's granted
over the number of shares subject to the related Option.
(3) Restricted Stock -- The grant of Restricted Stock shall reduce the
available shares by the number of shares of Restricted Stock granted.
(4) Other Equity-Based Award -- The grant of any Other Equity-Based
Award shall reduce the available shares by the number of shares of the
Other Equity-Based Award granted.
(c) The total number of shares available under Section 5(a) shall be
increased from time to time in the manner specified:
(1) Incentive Stock Options and Nonqualified Stock Options -- The
lapse or cancellation of an Incentive Stock Option or a Nonqualified Stock
Option shall increase the available shares by the number of shares released
from such Option; provided, however, that in the event the cancellation of
an Option is due to the exercise of SAR's related to such Option, the
cancellation of such Option shall only increase the amount of shares
available by the excess, if any, of the number of shares released from such
Option over the number of SAR's exercised.
(2) Stock Appreciation Rights -- The lapse or cancellation of Stock
Appreciation Rights shall increase the available shares by the number of
SAR's which lapse or are cancelled; provided, however, that in the event
the cancellation of such SAR's is due to the exercise of an Option related
to such SAR's, the cancellation of such SAR's shall only increase the
available shares by the excess, if any, of the number of SAR's cancelled
over the number of shares delivered on the exercise of such Option.
(3) Restricted Stock -- The reversion of Restricted Stock to the
Company due to the breach or occurrence of a restriction or condition
resulting in forfeiture of such shares shall increase the available shares
by the number of shares of Restricted Stock reverted.
(4) Other Equity-Based Award -- The lapse or cancellation of any Other
Equity-Based Stock Award shall increase the available shares by the number
of shares of the Other Equity-Based Award so lapsed or cancelled.
SECTION 6. STOCK OPTION OR AWARD AGREEMENTS
Each Award shall be evidenced by a written Stock Option Agreement or Award
Agreement, as applicable, which shall be executed by the Company and the
Participant, containing such terms and conditions, not inconsistent with the
Plan, as shall be determined by the Committee. Stock Option Agreements
evidencing Incentive Stock Options shall contain such terms and conditions,
among others, as may be necessary in the opinion of the Committee to qualify
them as incentive stock options under the Code.
SECTION 7. OPTIONS
Each Option granted under the Plan shall comply with and be subject to the
following terms and conditions, as well as such other terms and conditions as
may be determined by the Committee and specified in the related Stock Option
Agreement:
(a) Number of Shares. The number of shares of Common Stock to which
an Option relates shall be determined by the Committee and specified in the
related Stock Option Agreement.
(b) Type of Option. Each Stock Option Agreement shall specify whether
the Option granted and evidenced thereby is an Incentive Stock Option or a
Nonqualified Stock Option.
(c) Date of Grant; Exercise Period. The date of grant of any Option
shall be the date on which the Committee shall award the Option (or the
earlier date, if applicable, that the Board specifically approves such
grant) if an immediate grant of such Option is contemplated, or the date
contemplated as the date of grant if the Committee imposes a condition on
the granting of such Option. Options granted under the Plan shall be for
such periods as may be determined by the Committee and set forth in the
related Stock
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Option Agreements, subject to the provisions of Section 11 hereof
regarding early termination upon the occurrence of certain events and
subject to the further provisions of this paragraph (c). The exercise
period of an Incentive Stock Option shall not exceed ten (10) years
from the date of grant of such Option; provided, however, that in the
case of an Incentive Stock Option granted to a Ten Percent Shareholder,
such period shall not exceed five (5) years from the date of grant.
Subject to the further provisions of this paragraph (c) regarding
Incentive Stock Options, the Committee shall have authority to prescribe in
any Stock Option Agreement that the Option evidenced thereby may be
exercised in full or in part as to any number of shares subject thereto at
any time or from time to time during the term of the Option, or in such
installments at such times during said term as the Committee may prescribe;
provided however, that in any event no Option granted under the Plan may be
exercisable in whole or as to any part thereof within six (6) months from
the date of grant. The aggregate Fair Market Value (determined at the time
an Incentive Stock Option is granted) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under the Plan and all other plans of
the Company and its Parent (if any) and Subsidiaries) shall not exceed
$100,000.
Except as otherwise provided in Section 11 of the Plan, an Option may
not be exercised in whole or in part unless the Participant is, at the time
of such exercise, an employee of the Company or a Subsidiary.
(d) Option Price. The Option Price per share of the Common Stock
subject to an Option granted under the Plan shall be determined by the
Committee at the time the Option is granted, and shall be subject to the
following conditions:
(1) Nonqualified Stock Options -- The Option Price per share of
Common Stock subject to a Nonqualified Stock Option may be less than the
Fair Market Value per share of the Common Stock on the date of grant,
but shall not be less than the par value per share of Common Stock.
(2) Incentive Stock Options -- The Option Price per share of Common
Stock subject to an Incentive Stock Option shall not be less than the
greater of (a) 100% of the Fair Market Value per share of the Common
Stock on the date of grant, or (b) the par value per share of the Common
Stock; provided, however, that in the case of an Incentive Stock Option
granted to a Ten Percent Shareholder, the Option Price per share shall
not be less than the greater of (x) 110% of the Fair Market Value per
share of Common Stock on the date of grant, or (y) the par value per
share of the Common Stock.
(e) Method of Exercise. An Option may be exercised as to any or all
full shares of Common Stock as to which the Option has become exercisable
in accordance with the terms of the related Stock Option Agreement and the
provisions of the Plan by delivering to the Company written notice of such
exercise in the manner hereinafter specified in Section 20; provided,
however, that an Option may not be exercised at any one time as to less
than 1,000 shares (or such number of shares as to which the Option is then
exercisable if such number of shares is less than 1,000 shares). Such
written notice shall specify the number of shares of Common Stock with
respect to which the Option is being exercised and shall be accompanied by
payment in full of the Option Price for such shares. The date of exercise
of an Option or portion thereof shall be the date of receipt by the Company
of such written notice as determined in accordance with the provisions of
Section 20 of the Plan.
(f) Payment of Option Price. Payment for shares purchased upon
exercise of an Option may be made
(1) in cash (including a certified check, bank draft or money
order), or
(2) with the approval of the Committee, by delivering to the
Company shares of Common Stock already owned by the Participant and held
for a period of at least six (6) months ("Previously Held Shares")
having a Fair Market Value (determined as of the day preceding the date
on which
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the Option is exercised) equal to the cash Option Price of the shares
of Common Stock as to which the Option is being exercised, or
(3) with the approval of the Committee, by a combination of the
methods described in (1) and (2) above, or
(4) with the approval of the Committee, by any other method or in
any other form authorized by the Committee and reflected in the related
Stock Option Agreement or in any written notice relative thereto as may
be from time to time delivered by the Committee to the Participant.
SECTION 8. STOCK APPRECIATION RIGHTS
(a) Value of Stock Appreciation Rights. Stock Appreciation Rights are
rights, that upon exercise, entitle the Participant to receive the excess of (i)
Fair Market Value of Common Stock on the date of exercise over (ii) its Base
Value, multiplied by (iii) the number of SAR's exercised.
(b) Grant of Tandem Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be granted in conjunction with all or a portion of any Option
("Reference Option"). In the case of a Nonqualified Stock Option, Tandem Stock
Appreciation Rights may be granted either at or after the time of the grant of
the Reference Option. In the case of an Incentive Stock Option, such rights may
be granted only at the time of the grant of such Reference Incentive Stock
Option.
(1) Terms and Conditions of Tandem Stock Appreciation Rights. Tandem
Stock Appreciation Rights shall be subject to such terms and conditions,
not inconsistent with the terms of the Plan, as shall be determined from
time to time by the Committee, including the following:
(A) Term. A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Option shall terminate and
no longer be exercisable upon the termination or exercise of the
Reference Option, except that, unless otherwise determined by the
Committee, in its sole discretion, at the time of the grant, a Tandem
Stock Appreciation Right granted with respect to less than the full
number of shares covered by the Reference Option shall not be reduced
until and then only to the extent the exercise or termination of the
Reference Option causes the number of shares covered by the Tandem Stock
Appreciation Right to exceed the number of shares remaining available
and unexercised under the Reference Option.
(B) Exercisability. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the
Reference Option to which they relate shall be exercisable in accordance
with the provisions of Section 7; provided, however, that any Tandem
Stock Appreciation Rights granted subsequent to the grant of a Reference
Option shall not be exercisable during the first six (6) months of its
term, except that this special limitation shall not apply in the event
of death, or disability of the Participant prior to the expiration of
the six (6) month period.
(C) Method of Exercise. A Tandem Stock Appreciation Right may be
exercised by a Participant by surrendering the applicable portion of the
Reference Option. Reference Options which have been so surrendered, in
whole or in part, shall no longer be exercisable to the extent the
related Tandem Stock Appreciation Rights have been exercised.
(D) Payment. Upon the exercise of a Tandem Stock Appreciation
Right, a Participant shall be entitled to receive up to, but no more
than, an amount in cash and/or shares of Common Stock calculated in
accordance with the provisions of Section 8(a) above, with the Committee
having the sole right to determine the form of payment.
(E) Deemed Exercise of Reference Option. Upon the exercise of a
Tandem Stock Appreciation Right, the Reference Option or part thereof to
which such Tandem Stock Appreciation Right is related shall be deemed to
have been exercised for the purpose of the limitation set forth in
Section 5 on the number of shares of Common Stock to be issued under the
Plan.
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(c) Grant of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted under the Plan without reference to any
Option.
(1) Terms and Conditions of Non-Tandem Stock Appreciation
Rights. Non-Tandem Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the
following:
(A) Term. The term of each Non-Tandem Stock Appreciation Right
shall be fixed by the Committee, but shall not be greater than ten (10)
years after the date the Non-Tandem Stock Appreciation Right is granted.
(B) Exercisability. Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant; provided,
however, that any Non-Tandem Stock Appreciation Right shall not be
exercisable during the first six (6) months of its term, except that
this special limitation shall not apply in the event of the death or
disability of the Participant prior to expiration of the six (6) month
period. If the Committee provides, in its discretion, that any such
Non-Tandem Stock Appreciation Right is exercisable only in installments,
the Committee may waive such installment exercise provisions at any time
at or after grant in whole or in part, based on such factors, if any, as
the Committee shall determine in its sole discretion.
(C) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (B) above,
Non-Tandem Stock Appreciation Rights may be exercised in whole or in
part at any time during the option term, by giving written notice of
exercise to the Committee specifying the number of Non-Tandem Stock
Appreciation Rights to be exercised.
(D) Payment. Upon the exercise of a Non-Tandem Stock Appreciation
Right, a Participant shall be entitled to receive up to, but no more
than, an amount in cash and/or shares of Common Stock calculated in
accordance with the provisions of Section 8(a) above, with the Committee
having the sole right to determine the form of payment.
(d) Cash Settlements of Tandem and Non-Tandem Stock Appreciation
Rights. Notwithstanding any of the foregoing, a Participant who is required to
file reports under Section 16(a) of the Securities Exchange Act of 1934 with
respect to securities of the Company may receive cash in complete or partial
settlement of a Tandem or Non-Tandem Stock Appreciation Right only if any
election by such Participant to receive cash in full or partial settlement of
the Stock Appreciation Right, as well as any exercise by him of his Stock
Appreciation Right for such cash, is made (i) during the period beginning on the
third business day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of the Company and
ending on the twelfth business day following such date; or (ii) during any other
period in which an election or exercise may be made under the provisions of Rule
16b-3 promulgated pursuant to the Act.
SECTION 9. RESTRICTED STOCK
(a) Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the recipient (subject to Section
9(b)(1) below), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of a Restricted Stock Award.
(b) Awards and Certificates. A Participant selected to receive a
Restricted Stock Award shall not have any rights with respect to such an Award,
unless and until such Participant has delivered a fully executed copy
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of the Agreement evidencing such Award to the Company and has otherwise complied
with the applicable terms and conditions of such Award. Further, such Award
shall be subject to the following conditions:
(1) Purchase Price. The purchase price for shares of Restricted Stock
may be less than their par value and may be zero; provided, however, if
authorized but previously unissued shares of Common Stock are issued under
the Plan, such shares shall be issued for a consideration which shall not
be less than par value.
(2) Acceptance. Awards of Restricted Stock must be accepted within a
period of sixty (60) days (or such shorter period as the Committee may
specify at the time of grant) after the Award date, by executing a
Restricted Stock Award Agreement and by paying whatever price (if any) the
Committee has designated thereunder.
(3) Legend. Each Participant receiving a Restricted Stock Award shall
be issued a stock certificate in respect of such shares. Such certificate
shall be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award.
(4) Custody. The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock Award, the Participant shall have delivered a duly signed
stock power, endorsed in blank, relating to the Common Stock covered by
such Award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(1) Restriction Period. At the time of making a Restricted Stock
Award, the Committee shall, in its sole discretion, establish the
applicable restriction period, which, in any event, shall not be less than
six (6) months from the date of grant. During the restriction period, the
Participant shall not be permitted to transfer shares of Restricted Stock
awarded under the Plan. Within these limits, the Committee may, in its sole
discretion, provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions in whole, or in part, based on
service, performance and/or such other factors or criteria as the Committee
may determine in its sole discretion.
(2) Participant's Rights as a Shareholder. The Participant shall
have, with respect to the shares of Restricted Stock awarded hereunder, all
of the rights of a holder of shares of Common Stock of the Company
including the right to receive any dividends. The Committee, in its sole
discretion, may permit or require the payment of dividends to be deferred.
(3) Lapse of Restrictions. If and when the restriction period expires
without a forfeiture of the Restricted Stock, the certificates for such
shares shall be delivered to the Participant. All legends shall be removed
from said certificates at the time of delivery to the Participant.
SECTION 10. OTHER EQUITY-BASED AWARDS
(a) Other Equity-Based Awards. Other Equity-Based Awards of Common Stock
and other Awards that are valued in whole or in part by reference to, or are
payable in or otherwise based on, Common Stock may be granted either alone or in
tandem with Options, Stock Appreciation Rights, or Restricted Stock. The
Committee shall have authority to determine the persons to whom and the time or
times at which such Awards shall be made, the number of shares of Common Stock
to be awarded pursuant to such Awards and all other conditions of the Awards.
(b) Dividends. Unless otherwise determined by the Committee at the time of
the Award, subject to the provisions of the Award Agreement and the Plan, a
Participant holding an Other Equity-Based Award shall be entitled to receive,
currently or on a deferred basis, dividends or dividend equivalents with respect
to the number of shares of Common Stock covered by the Other Equity-Based Award.
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(c) Vesting. An Other Equity-Based Award shall vest and be forfeited to
the extent provided in the Award Agreement, as determined by the Committee in
its sole discretion.
(d) Price. An Other Equity-Based Award may be, but is not required to be,
issued for no cash consideration.
SECTION 11. DEATH, DISABILITY OR OTHER TERMINATION OF EMPLOYMENT
(a) Death. In the event a Participant dies (i) while in the employ of the
Company or a Subsidiary or (ii) within three (3) months of the termination of
such employment (other than termination for cause or voluntary termination
without the consent of the Company or the Subsidiary, as the case may be), his
Award may be exercised, solely to the extent that the Participant was entitled
to exercise the Award at the date of his death or, if earlier, the date of his
termination, by his beneficiary as designated in writing by the Participant
pursuant to Section 16 of the Plan, or, if no such designation has been made, by
the person or persons to whom the Participant's rights under the Award shall
pass by will or the laws of descent and distribution, at any time or from time
to time within one (1) year after the date of the Participant's death or prior
to the expiration of the period for which the Award was granted, whichever is
the shorter period.
(b) Disability. In the event a Participant's employment by the Company or
a Subsidiary is terminated because of the Participant's permanent disability,
the Participant may exercise his Award, solely to the extent that he was
entitled to do so at the date of termination of his employment, at any time or
from time to time within one (1) year after the date of such termination of
employment or prior to the expiration of the period for which the Award was
granted, whichever is the shorter period.
(c) Other Termination of Employment. In the event a Participant's
employment by the Company or a Subsidiary is terminated other than by death or
permanent disability as provided by paragraphs (a) and (b), respectively, of
this Section 11 and other than for cause or by the voluntary action of the
Participant without the consent of the Company or Subsidiary employing the
Participant, the Participant may exercise his Award, solely to the extent that
he was entitled to do so at the date of termination of his employment, at any
time or from time to time within ninety (90) days after the date of such
termination of employment or prior to the expiration of the period for which the
Award was granted, whichever is the shorter period. In the event the
Participant's employment by the Company or a Subsidiary is terminated for cause
or by the voluntary action of the Participant without the consent of the Company
or Subsidiary employing the Participant, his Award shall terminate at the date
of termination of his employment.
(d) Committee Discretion. Notwithstanding the provisions of paragraphs
(a), (b) or (c) of this Section 11, the Committee, in its sole and absolute
discretion, may, at the date an Award is granted or thereafter, establish
different terms and conditions pertaining to the effect on that Award of the
death, disability or other termination of employment of the Participant, to the
extent permitted by applicable federal and state law.
(e) Failure to Exercise. To the extent an Award or any portion thereof is
not exercised within the limited period provided in paragraphs (a), (b), (c) or
(d) of this Section 11, whichever is applicable, all rights pursuant to such
Award will cease and terminate at the expiration of such period.
(f) Matters Relating to Termination of Employment. The Committee in its
absolute discretion shall determine the effect of all matters and questions
relating to the termination of employment of a Participant, including, but not
limited to, questions as to whether a termination of employment resulted from
permanent disability or was voluntary or involuntary on the part of the
Participant and questions of whether particular leaves of absence constitute
terminations of employment.
SECTION 12. MODIFICATION, EXTENSION AND RENEWAL OF AWARDS
Subject to the terms and conditions and within the limitations of the Plan,
the Committee in its discretion may modify, extend, or renew outstanding Awards
granted under the Plan, or accept the surrender of outstanding Awards (to the
extent not theretofore exercised) and authorize the granting of new Awards
hereunder in substitution therefor. No modification (other than adjustments as
provided by Section 15 hereof)
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of an Award shall, without the consent of the Participant, alter or impair any
rights or obligations under any Award theretofore granted to such Participant.
SECTION 13. WITHHOLDING TAXES
The Company shall be entitled to require, as a condition to its delivery of
shares of Common Stock upon the exercise of an Award, that the Participant pay
to the Company an amount sufficient to satisfy all present or estimated future
federal, state and local withholding tax requirements related thereto.
Subject to the further provisions of this Section 13 and to the disapproval
of the Committee, a Participant may elect to satisfy applicable withholding tax
liabilities by (i) paying the amount of such tax liabilities to the Company in
cash or by check payable to the Company, (ii) having the Company withhold from
the shares of Common Stock otherwise issuable to the Participant upon his
exercise of an Award that number of shares of Common Stock having a Fair Market
Value on the day preceding the date of such exercise sufficient to satisfy the
amount of such tax liabilities, or (iii) delivering to the Company that number
of Previously Held Shares having a Fair Market Value on the day preceding the
date of such exercise sufficient to satisfy the amount of such tax liabilities.
Any such election will be irrevocable and must be made prior to the date the
Award exercise becomes taxable. Notwithstanding the above, if the Participant is
a director or an officer of the Company within the meaning of Section 16(b) of
the 1934 Act, such Participant shall only be entitled to have the Company reduce
the amount of Common Stock to be delivered to such Participant pursuant to
subclause (ii) above.
The Company intends that this Section 13 shall comply with the requirements
of Rule 16b-3 under the 1934 Act, as the same may be interpreted or amended from
time to time during the term of the Plan. Should any provision of this Section
13 not be necessary to comply with the requirements of the Rule or should any
additional provisions be necessary for this Section 13 to so comply, the
Committee may amend the Plan to add to or modify the provisions of the Plan
accordingly.
SECTION 14. INVESTMENT REPRESENTATION
Each Stock Option Agreement or Award Agreement shall provide that the
Committee may require the Participant (or any person exercising the
Participant's rights pursuant to Section 11(a) of the Plan) to furnish to the
Company, as a condition precedent to any exercise of the Award, a written
agreement in such form as the Committee shall prescribe in which the Participant
or such other person represents and agrees that any and all shares of Common
Stock to be acquired upon such exercise are being acquired for investment and
not with a view to the resale or distribution thereof and makes such further
representations as may in the judgment of the Committee be necessary or
appropriate to ensure compliance with applicable federal or state securities
laws. Certificates for shares of Common Stock to be delivered to a Participant
upon his exercise of an Award may, when issued, bear such legends or statements
referring to the foregoing representations and agreements as the Committee, in
its discretion, shall deem necessary or appropriate.
SECTION 15. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
The total number and character of shares available for Awards under the
Plan, the number and character of shares subject to outstanding Awards and the
Award price shall be appropriately adjusted by the Committee in the event of any
change in the number or character of outstanding shares of Common Stock
resulting from a stock dividend, subdivision or combination of shares, or
reclassification. In the event of a merger or consolidation of the Company or a
tender offer for shares of Common Stock, the Committee may make such adjustments
with respect to Options under the Plan and take such other action as it deems
necessary or appropriate to reflect, or in anticipation of, such merger,
consolidation or tender offer, including without limitation the substitution of
new Awards, the adjustment of outstanding Awards, the acceleration of Awards, or
the removal of limitations or restrictions on outstanding Awards.
B-10
<PAGE> 44
SECTION 16. NONTRANSFERABILITY
No Award granted under the Plan shall be transferable by a Participant
otherwise than by will or by the laws of descent and distribution, and an Award
may be exercised, during the lifetime of the Participant, only by the
Participant. A Participant may during his lifetime designate in writing a
beneficiary to receive his Award in the event of the Participant's death prior
to exercise of the Award.
SECTION 17. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan or in any Award granted hereunder shall confer upon a
Participant any right to continue in the employ of the Company or a Subsidiary
nor interfere or affect in any way the right of the Company or a Subsidiary to
terminate a Participant's employment at any time for any reason.
SECTION 18. RIGHTS AS A SHAREHOLDER
Except as otherwise provided herein, a Participant shall have no rights as
a shareholder with respect to any shares of Common Stock subject to his Award
until the date of issuance to him of a stock certificate or certificates for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 15 hereof.
SECTION 19. COMPLIANCE WITH LAW AND OTHER CONDITIONS
The obligation of the Company to issue or deliver shares of Common Stock
upon the exercise of Awards shall be subject to all applicable laws,
regulations, rules and approvals of applicable governmental and regulatory
authorities. Notwithstanding any other provisions of the Plan, any Stock Option
Agreements or any other Award Agreement, the Company shall not be required to
issue or deliver any certificate or certificates for shares of Common Stock
purchased upon the exercise of an Award prior to the fulfillment of the
following conditions:
(a) The listing, or approval for listing upon notice of issuance, of
such shares on the American Stock Exchange, Inc. or such other securities
exchange on which the Common Stock is then listed;
(b) The registration or other qualification of such shares under any
state or federal securities law or regulation which the Committee shall, in
its absolute discretion upon the advice of counsel, deem necessary or
advisable; and
(c) The obtaining of any other consent, approval, permit or other
clearance from any state or federal governmental or regulatory agency which
the Committee shall, in its absolute discretion upon the advice of counsel,
determine to be necessary or advisable.
With respect to Awards granted to any Participant who is an officer of the
Company or is otherwise subject to Section 16 of the 1934 Act, the Committee
may, in its absolute discretion at the time of the granting of an Award or the
exercise thereof, make such provisions as may be necessary to assure compliance
with Rule 16b-3 under the 1934 Act.
SECTION 20. NOTICES
Whenever any notice is required or permitted to be given under the Plan or
any Stock Option or Award Agreement, such notice must be in writing and
personally delivered or sent by courier or by mail. Any such notice shall be
deemed effectively given or delivered upon personal delivery or twenty-four
hours after delivery to a courier service which guarantees overnight delivery or
five (5) days after deposit with the U.S. Post Office, by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
person who is to receive such notice at the address which such person has
theretofore specified by written notice delivered in accordance herewith. The
Company or a Participant may change, at any time and from time to time, by
written notice to the other, the address which it or he had theretofore
specified for receiving notices. Until changed in accordance herewith, the
Company and each Participant shall specify as its or his address for
B-11
<PAGE> 45
receiving notices the address set forth in the Stock Option or Award Agreement
pertaining to the shares of Common Stock to which such notice relates.
SECTION 21. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board or by the
Committee with the approval of the Board; provided, however, that, without the
approval of the shareholders of the Company entitled to vote thereon, no
amendment may be made which would, absent such shareholder approval, disqualify
the Plan for coverage under Rule 16b-3, as promulgated by the Securities and
Exchange Commission under the 1934 Act, as that Rule may be amended from time to
time, including an amendment which would (i) materially increase the benefits
accruing to Participants under the Plan, (ii) materially increase the aggregate
number of shares as to which Awards may be granted under the Plan (except by
operation of Section 15 hereof); or (iii) materially modify the requirements as
to eligibility for participation in the Plan.
Further, no such amendment, suspension or termination, other than
adjustments for changes in capitalization as provided in Section 15 hereof,
shall adversely affect or impair any outstanding Award without the written
consent of the Participant affected thereby.
SECTION 22. EFFECTIVE DATE; DURATION
(a) Effective Date. The Plan shall become effective upon the date of its
adoption by the Board.
(b) Duration. Unless earlier terminated by the Board or the Committee
pursuant to the provisions of the Plan, the Plan shall terminate on the tenth
anniversary of its effective date as hereinbefore specified. No Awards shall be
granted under the Plan after such termination date.
SECTION 23. GOVERNING LAW
The plan and all rights hereunder shall be construed and interpreted in
accordance with the laws of the State of Georgia, to the extent not superseded
by the laws of the United States.
IN WITNESS WHEREOF, the Company has caused the Turner Broadcasting System,
Inc. 1993 Stock Option and Equity-Based Award Plan to be executed by its duly
authorized officers pursuant to resolutions of the Board of Directors this 15th
day of April, 1994, to be effective as of the date of adoption by the Board of
Directors.
TURNER BROADCASTING SYSTEM, INC.
By: /s/ STEVEN W. KORN
----------------------------------
Its: Vice President and General Counsel
ATTEST:
By: /s/ LOUISE S. SAMS
-------------------
Its: Assistant Secretary
B-12
<PAGE> 46
TURNER BROADCASTING SYSTEM, INC.
ONE CNN CENTER, ATLANTA, GEORGIA 30303
CLASS A COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, JULY 26, 1994
The undersigned hereby appoints R. E. TURNER, STEVEN W. KORN, and WAYNE H.
PACE, and each of them, proxies with full power of substitution, to represent
and to vote as set forth herein all the shares of Class A Common Stock of Turner
Broadcasting System, Inc. held of record by the undersigned on May 25, 1994, at
the Annual Meeting of Shareholders to be held at the Marble Palace, Millionnaya
ulitsa 5/1 in St. Petersburg, Russia, at 9:00 a.m., local time, on Tuesday, July
26, 1994, and any adjournments thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Common Stock Directors / / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote
as written to the contrary below) for all nominees listed below
R. E. Turner; Henry L. Aaron; W. Thomas Johnson; Rubye M. Lucas; Terence F. McGuirk; Brian L. Roberts; Scott M. Sassa; Robert Shaye.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.)
- - - - - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. Proposal to ratify the selection of Price Waterhouse as the Company's
independent accountants for the fiscal year ending December 31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the Turner Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to approve the Company's Long Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
5. Proposal to approve amendments to the Company's 1988 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
6. Proposal to approve the Company's 1993 Stock Option and Equity-Based Award
Plan.
/ / FOR / / AGAINST / / ABSTAIN
7. Shareholder proposal with respect to the adoption of cumulative voting by
shareholders in the election of the directors of the Company.
/ / FOR / / AGAINST / / ABSTAIN
8. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1, 2, 3, 4, 5 AND 6 AND "AGAINST" ITEM 7.
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
If stock is held in the name of two
or more persons, all must sign. When
signing as attorney, executor,
administrator, trustee, or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated:
------------------------------
------------------------------------
Signature
------------------------------------
Signature If Held Jointly
<PAGE> 47
TURNER BROADCASTING SYSTEM, INC.
ONE CNN CENTER, ATLANTA, GEORGIA 30303
CLASS B COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, JULY 26, 1994
The undersigned hereby appoints R. E. TURNER, STEVEN W. KORN, and WAYNE H.
PACE, and each of them, proxies with full power of substitution, to represent
and to vote as set forth herein all the shares of Class B Common Stock of Turner
Broadcasting System, Inc. held of record by the undersigned on May 25, 1994, at
the Annual Meeting of Shareholders to be held at the Marble Palace, Millionnaya
ulitsa 5/1 in St. Petersburg, Russia, at 9:00 a.m., local time, on Tuesday, July
26, 1994, and any adjournments thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Common Stock Directors / / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote
as written to the contrary below) for all nominees listed below
R. E. Turner; Henry L. Aaron; W. Thomas Johnson; Rubye M. Lucas; Terence F. McGuirk; Brian L. Roberts; Scott M. Sassa; Robert Shaye.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.)
- - - - - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. Proposal to ratify the selection of Price Waterhouse as the Company's
independent accountants for the fiscal year ending December 31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the Turner Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to approve the Company's Long Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
5. Proposal to approve amendments to the Company's 1988 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
6. Proposal to approve the Company's 1993 Stock Option and Equity-Based Award
Plan.
/ / FOR / / AGAINST / / ABSTAIN
7. Shareholder proposal with respect to the adoption of cumulative voting by
shareholders in the election of the directors of the Company.
/ / FOR / / AGAINST / / ABSTAIN
8. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1, 2, 3, 4, 5 AND 6 AND "AGAINST" ITEM 7.
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
If stock is held in the name of two
or more persons, all must sign. When
signing as attorney, executor,
administrator, trustee, or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated:
------------------------------------
------------------------------------
Signature
------------------------------------
Signature If Held Jointly
<PAGE> 48
TURNER BROADCASTING SYSTEM, INC.
ONE CNN CENTER, ATLANTA, GEORGIA 30303
CLASS C CONVERTIBLE PREFERRED STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, JULY 26, 1994
The undersigned hereby appoints R. E. TURNER, STEVEN W. KORN, and WAYNE H.
PACE, and each of them, proxies with full power of substitution, to represent
and to vote as set forth herein all the shares of Class C Convertible Preferred
Stock of Turner Broadcasting System, Inc. held of record by the undersigned on
May 25, 1994, at the Annual Meeting of Shareholders to be held at the Marble
Palace, Millionnaya ulitsa 5/1 in St. Petersburg, Russia, at 9:00 a.m., local
time, on Tuesday, July 26, 1994, and any adjournments thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Class C Directors / / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote
as written to the contrary below) for all nominees listed below
Peter R. Barton; Joseph J. Collins; Michael J. Fuchs; Gerald M. Levin; John C. Malone; Timothy P. Neher; Fred A. Vierra.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.)
- - - - - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. Proposal to ratify the selection of Price Waterhouse as the Company's
independent accountants for the fiscal year ending December 31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the Turner Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to approve the Company's Long Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
5. Proposal to approve amendments to the Company's 1988 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
6. Proposal to approve the Company's 1993 Stock Option and Equity-Based Award
Plan.
/ / FOR / / AGAINST / / ABSTAIN
7. Shareholder proposal with respect to the adoption of cumulative voting by
shareholders in the election of the directors of the Company.
/ / FOR / / AGAINST / / ABSTAIN
8. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1, 2, 3, 4, 5 AND 6 AND "AGAINST" ITEM 7.
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
If stock is held in the name of two
or more persons, all must sign. When
signing as attorney, executor,
administrator, trustee, or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated:
------------------------------
------------------------------------
Signature
------------------------------------
Signature If Held Jointly
