<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
JUNE 9, 1995
The Annual Meeting of the Shareholders of Turner Broadcasting System, Inc.
will be held in the Rutherford Room of the Omni Hotel in Atlanta, Georgia, on
Friday, June 9, 1995, 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 LLP as the Company's independent accountants for the fiscal year
ending December 31, 1995;
3. Consider and act upon a proposal to amend the Turner Broadcasting
System, Inc. 1993 Stock Option and Equity-Based Award Plan to increase the
number of shares of the Company's Class B Common Stock as to which stock
options and other equity-based awards may be granted;
4. Consider and act upon a shareholder proposal, if properly presented
at the meeting, concerning the limitation of the location of annual
meetings of shareholders of the Company; and
5. Transact any other business which may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on April 24, 1995 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. If you plan to attend the meeting
and your shares are held in the name of a broker or other nominee, please bring
a proxy or letter from the broker or nominee confirming your ownership of
shares.
By Order of the Board of Directors
STEVEN W. KORN
Secretary
Atlanta, Georgia
April 28, 1995
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 JUNE 9, 1995
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 Friday, June 9,
1995, in the Rutherford Room of the Omni Hotel in Atlanta, Georgia, 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 May 1,
1995. The Company's 1994 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 April 24, 1995
will be entitled to notice of and to vote at the Annual Meeting. As of the close
of business on April 24, 1995, the Company had outstanding 68,330,388 shares of
its Class A Common Stock, par value $.0625 per share (the "Class A Common
Stock"), 137,484,790 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 (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), and approval of a
shareholder-proposed resolution (Item IV 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 amendment to the Turner Broadcasting System, Inc.
1993 Stock Option and Equity-Based Award Plan (Item III hereof) must be approved
by the affirmative vote of the holders of a majority of the shares of all three
of the Company's outstanding classes of stock, voting as a single class, present
in person or represented
<PAGE> 4
by proxy at the Annual Meeting and entitled to vote. Except with respect to Item
III, 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 proposal set forth in Item III 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 (or their successors in interest), who in the
aggregate held approximately 92% of the outstanding shares of Class C Preferred
Stock at February 28, 1995, 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"), which is an affiliate of TCI.
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
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).
2
<PAGE> 5
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 56, has been Chairman of the Board, President and
controlling shareholder of the Company since 1970. Mr. Turner also serves
as a director of TCI.
Henry L. (Hank) Aaron, age 61, 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 also served as Assistant to the President
of ANLBC since September 1989, and as Vice President -- Business
Development of the CNN Airport Network since August 1992. 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 53, 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 59, 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 is employed by the Company to serve 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.
3
<PAGE> 6
Terence F. McGuirk, age 43, has served as Executive Vice President of
the Company since 1990 and as a director since 1987. 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 35, 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 36, 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 and in 1994,
his title was changed to Vice President -- Turner Entertainment Group. Mr.
Sassa also serves as President of Turner Entertainment Group, Inc., 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 55, has been a Common Stock Director of the Company
since April 1994. 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 44, has served as a Class C Director since April
1994. 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 also serves as a director of QVC Network, Inc. and BET
Holdings, Inc.
Joseph J. Collins, age 50, has served as a Class C Director since June
1988. Mr. Collins has served as Chairman 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 a 63.27% 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 September 1992.
Michael J. Fuchs, age 49, joined Home Box Office ("HBO"), a former TWI
subsidiary and now a division of TWE, in 1976, and has served as Chairman
and Chief Executive Officer of HBO since October 1984. Mr. Fuchs also
serves as a director of Marvel Entertainment Group, Inc.
4
<PAGE> 7
Gerald M. Levin, age 55, has served as a Class C Director since
February 1992. Mr. Levin has served as Chairman 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 is a director of TWI and a member of the Board of Representatives
of TWE.
John C. Malone, age 54, 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. and BET Holdings, Inc.
Timothy P. Neher, age 47, 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 63, has served as a Class C Director since January
1992. Mr. Vierra has served as the Executive Vice President of TCI since
December 1991, and since 1994 has also served as Chairman and Chief
Executive Officer of TCI International Holdings. Prior to that time, he
served as the President and Chief Operating Officer of United Artists
Entertainment 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 also serves as 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 February 28, 1995
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 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
- -------------------------------------------------- ---------- ------------ ----- --------
<S> <C> <C> <C> <C>
R. E. Turner...................................... Class A 55,092,254(1) 80.6 61.5
Class B 30,634,968(1) 22.3 3.4
Henry L. Aaron.................................... Class B 333(2) * *
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
% OF
SHARES COMBINED
TITLE OF BENEFICIALLY % OF VOTING
NAME OF BENEFICIAL OWNER SECURITIES OWNED CLASS POWER
- -------------------------------------------------- ---------- ------------ ----- --------
<S> <C> <C> <C> <C>
Peter R. Barton................................... Class A 600(3) * *
Class B 300(3) * *
Joseph J. Collins................................. NA NA NA NA
Michael J. Fuchs.................................. NA NA NA NA
W. Thomas Johnson................................. Class B 233,799(4) * *
Gerald M. Levin................................... NA NA NA NA
Rubye M. Lucas.................................... Class A 400 * *
Class B 386(5) * *
John C. Malone.................................... NA NA NA NA
Terence F. McGuirk................................ Class B 372,466(6) * *
Timothy P. Neher.................................. Class A 5,000(7) * *
Class B 15,000(7) * *
Brian L. Roberts.................................. NA NA NA NA
Scott M. Sassa.................................... Class B 188,395(8) * *
Robert Shaye...................................... Class B 4,925,961(9) 3.6 *
Fred A. Vierra.................................... Class A 950 * *
All directors and executive officers as a group
(24 persons).................................... Class A 55,099,426 80.6 61.6
Class B 36,614,690(10) 26.6 4.1
</TABLE>
- ---------------
* Indicates beneficial ownership of less than 1.0%.
(1) Includes (a) 559,962 shares of Class A Common Stock and 559,962 shares of
Class B Common Stock owned by Turner Outdoor, Inc., an affiliated
corporation which is wholly-owned by Mr. Turner, (b) 3,000,000 shares of
Class B Common Stock as to which Mr. Turner has voting control but not
dispository control, (c) 2,180,894 shares of Class B Common Stock held by a
charitable remainder unitrust, as to which shares Mr. Turner shares voting
and dispositive control, (d) 500,000 shares of Class B Common Stock owned
by Mr. Turner's wife and (e) 5,000,000 shares of Class B Common Stock held
by the Turner Foundation, Inc. Mr. Turner disclaims beneficial ownership of
those shares which are held by his spouse and the Turner Foundation, Inc.
(2) Represents 333 shares which are subject to purchase upon exercise of
options.
(3) All of such shares are held in trust for the benefit of Mr. Barton's
children.
(4) Includes 219,999 shares which are subject to purchase upon exercise of
options.
(5) Includes 333 shares which are subject to purchase upon exercise of options.
(6) Includes 314,999 shares which are subject to purchase upon exercise of
options.
(7) Includes 2,500 shares of Class A Common Stock and 2,500 shares of Class B
Common Stock held in trust for the benefit of Mr. Neher's children.
(8) Includes 171,666 shares which are subject to purchase upon exercise of
options.
(9) Includes (a) 107,348 shares held in trusts for Mr. Shaye's family which are
subject to voting control by Mr. Shaye, (b) 214,696 shares held in trust by
Mr. Shaye for his children, (c) 176,544 shares owned by Mr. Shaye's spouse,
(d) 49,637 shares held by a private foundation, (e) 31,295 shares held by
the 401(k) defined contribution plan of New Line in which Mr. Shaye has a
vested interest and (f) 2,058,088 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 2,995,385 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 February 28, 1995, 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.
6
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains certain information as of February 28, 1995
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
- ----------------------------------- --------- ----- ---------- ----- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Tele-Communications, Inc.(1)....... 6,087,080(2) 49.1 % 30,111,320(2) 21.9 % 31.5% 7.7%(3)
5619 DTC Parkway
Englewood, Colorado 80111
Time Warner Inc.(1)................ 4,890,457(4) 39.4 % 25,349,085(5) 18.4 % 25.8% 6.4%(6)
Time & Life Bldg.
Rockefeller Center
New York, New York 10022
The Capital Group Companies, -- -- 16,947,930(7) 12.3 % NA 1.9%
Inc..............................
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- ---------------
(1) 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 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).
(2) Consists of shares (Class C Preferred Stock and Class B Common Stock,
respectively) held by entities in which TCI claims beneficial ownership,
including United Cable Turner Investment, Inc. (5,820,452 and none),
Communication Capital Corporation (none and 29,237,671), TCI Turner
Preferred, Inc. (119,099 and 47,100), TCI TKR of Southern Kentucky, Inc.
(none and 372,711), and TKR Cable Company (147,529 and 453,838).
7
<PAGE> 10
(3) The percentage of combined voting power includes 225,000 shares of Class A
Common Stock held by TCI Turner Preferred, Inc.
(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
(17,010,889), Time Warner Operations, Inc. (4,881,687), Warner Cable
Communications Inc. (1,991,310) and Warner Communications, 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) Certain operating subsidiaries of The Capital Group, Inc. exercised
investment discretion over various institutional accounts which held, as of
December 31, 1994, 16,947,930 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 6,942,250 of said shares.
Capital Research and Management Company and Capital International, Inc.,
registered investment advisors, and Capital International Limited and
Capital International, S.A., other operating subsidiaries, had investment
discretion with respect to 8,371,590, 111,140, 1,425,640 and 97,280 shares,
respectively, of the above-referenced shares.
BOARD MEETINGS
The Board of Directors met on four occasions during 1994 and took action by
unanimous written consent in lieu of meeting on five occasions. Each of the
directors with the exception of Fred Vierra and 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.
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 1994. The
present members of this committee are Messrs. R. E. Turner, Gerald M. Levin and
John C. Malone.
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. Peter R. Barton, Joseph J. Collins and Brian L. Roberts. This committee
met three times in 1994.
The Stock Option and Compensation Committee, which met twice and took
action by unanimous written consent in lieu of meeting four times in 1994, 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. Michael J. Fuchs, Timothy P. Neher, Brian L. Roberts and Fred A.
Vierra.
The Planning Committee, which took action by unanimous written consent in
lieu of meeting seven times during 1994, 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, Fred A. Vierra and Robert Shaye, and Mrs. Rubye M. Lucas.
8
<PAGE> 11
The Finance Committee, which met once and took action by unanimous written
consent in lieu of meeting seven times during 1994, 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
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 which are non-employee directors 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. A
significant portion of the executive compensation is directly related to the
financial results of the Company, although individual contributions and
accomplishments are also considered in the determination of compensation.
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 ("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
currently administered under the Company's Long-Term Incentive Plan (the
"LTIP").
The Committee reviews the level of total compensation for the Company's
executives annually as well as when circumstances require a more frequent
review, such as when an executive's duties and responsibilities substantially
change. The Committee in general has attempted to set annual compensation for
the Company's executives at substantially the median level for similarly
situated executives in the entertainment industry; however, the Committee has
deemed it necessary in certain cases and with respect to the named executive
officers (other than Mr. Turner and Mr. Shaye) to pay higher compensation to
retain executives who can contribute greatly to the Company's long-term plans.
On the basis of an annual survey conducted by the Company's outside executive
compensation consultants, the Committee has compared the Company's executives'
base salaries, short-term and long-term incentive compensation and stock option
grants with the compensation awarded to executives of fourteen companies in the
media and entertainment business. Six of the fourteen companies are among the
peer group companies used in the comparative performance graphs appearing after
this report (two of the peer group companies did not participate in the survey
in 1994). 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 graphs. 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 graphs.
Base Salaries
The base salaries of the named executive officers of the Company other than
Mr. Turner were increased in 1994 in connection with the execution by these
executives of employment agreements with the Company or, in the case of Mr.
Shaye, a subsidiary of the Company. In 1993, the Committee determined it to be
in the best interest of the Company to secure the employment of certain of its
key executive officers through the execution of employment agreements with such
officers. By the beginning of 1994, the Company had entered into four-year
employment contracts with Messrs. McGuirk, Sassa and Johnson. The base
compensation paid
9
<PAGE> 12
to Messrs. McGuirk, Sassa and Johnson under their employment agreements in 1994
was in approximately the upper third of the pay range for similarly situated
executives in the entertainment industry and it will be increased by
approximately five percent each year during the four-year employment term for
each executive. The base salary of Mr. Shaye was negotiated in connection with a
new five-year employment contract which he signed with New Line Cinema
Corporation ("New Line") upon the Company's acquisition of New Line in January
1994. The base salary paid to Mr. Shaye in 1994 is competitive with similarly
situated executives in the film production and distribution business. Mr.
Shaye's employment agreement provides for a five percent increase in base
compensation each year during the term. While 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, the Committee will maintain the flexibility to pay
higher compensation to retain executives who are important to the Company's
long-term success.
Annual Incentive Compensation
The second major component of executive compensation is annual incentive
compensation which is paid under the TIP. Under this plan, the Company's
executive officers and other key employees have the opportunity to earn
performance bonuses. The Committee establishes target bonuses each year which
are expressed as a percentage of the base salary of the respective employee. The
amount of the performance bonus that was paid in 1994 to the named executive
officers other than Mr. Shaye was based upon the Company's actual operating
income results as compared to the budgeted level for the year. The Committee
elected to use operating income (which is defined as income before amortization
of purchased programming, depreciation and amortization of goodwill and other
intangibles, non-cash amortization of certain acquisition purchase adjustments,
interest expense, interest income, income taxes, extraordinary items and the
cumulative effect of a change in accounting for income taxes) as the relevant
annual target because it is a measure which can be affected by the performance
of the executive officers of the Company. For an executive officer of the
Company, other than the named executive officers, the bonus opportunity is also
based, in part, on the achievement of certain annual goals by the operating unit
managed by that executive officer. Despite the revenue and income increases for
the Company in 1994, the performance bonuses paid to all executive officers
under the TIP for 1994 were slightly less than the targeted amounts as the
Company's actual operating income for the year fell short of the budgeted goal
established by the Committee.
In 1994, Mr. Shaye's annual performance bonus was based in part on the
operating income results of the Company for the year and in part on the
operating income results of New Line. The bonus payment to Mr. Shaye in 1994 was
slightly less than the maximum bonus which he could have earned; New Line
achieved its budgeted operating income goal for 1994 but the Company's actual
operating income for 1994 was less than the budgeted goal established by the
Committee.
As an executive officer's level of responsibility increases, a greater
portion of his or her total annual compensation is based upon incentive
compensation under the TIP (or a similar arrangement pursuant to an employment
agreement) and less is derived from base salary. The bonus opportunity for the
executive officers other than Mr. Turner and Mr. Shaye can range from 20 to 80
percent of their base salaries, with a majority of the target bonuses in the 20
to 30 percent range. Under his employment agreement, Mr. Shaye's bonus
opportunity can range from 25 to 125 percent of his base salary, depending upon
the financial performance of New Line and the Company. Mr. Turner's annual bonus
is discussed below.
Long-Term Incentive Compensation
The Company's long-term incentive compensation for its executives currently
consists of (i) a cash opportunity payable for succeeding three-year cycles and
(ii) annual grants of stock options or other equity-based awards. In fixing
these long-term incentive opportunities under the LTIP, the Committee has worked
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
10
<PAGE> 13
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 LTIP cash opportunity in 1994 was based upon the Company's operating
performance during the years 1992 through 1994. The cash award, which was
established to comprise approximately 25% of the long-term incentive opportunity
for each executive officer, including Mr. Turner but excluding Mr. Shaye, was
paid upon completion of the Company's 1994 financial results. The projected cash
award was payable only to the extent that the Company met or exceeded benchmark
goals set by the Committee for compounded growth in operating income and in
revenue over the three-year cycle, with 75% of such cash compensation based upon
the achievement of benchmark operating income levels, and the remaining 25%
based upon the achievement of targeted revenue levels. The benchmark goals were
determined by the Committee on the basis of the Company's three-year strategic
plan for the years 1992 through 1994. At the end of the three-year period in
1994, the Company had achieved a compounded growth in operating income for that
period just below the maximum goal and a compounded growth in revenue for that
period which exceeded the maximum target. The resulting cash awards for the
executive officers of the Company were near the maximum of 50 percent above the
target awards.
For purpose of future long-term incentive compensation awards under the
LTIP, the Committee has established goals for compounded growth in operating
income and revenue for the 1995 through 1997 LTIP cycle. The goals are based
upon the Company's preliminary strategic plan for that three-year period.
The Committee believes that through the use of stock options or other
equity-based awards, executives' interests are directly tied to enhancing
shareholder value. Stock options are granted at the fair market value of the
underlying stock as of the date of grant and, with only certain exceptions,
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 May 1994, the
Committee granted stock options to executive officers as well as to other
executives and key employees at the Company. With respect to the Company's
executives, the Committee, with the assistance of its outside consultant, used
the Black-Scholes option pricing method to calculate the aggregate value of each
option grant in order 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 stock options is 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 1994. The Committee approved an option grant
schedule for 1994 awards based on the estimated requirements 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.
In connection with Mr. Shaye's execution of an employment agreement with
New Line at the time of the Company's acquisition of New Line in January of
1994, the Company made a special grant of stock options to Mr. Shaye. Such grant
was made, in part, to ensure Mr. Shaye's continued employment with New Line
through the execution of an employment agreement. Approximately one-half of the
stock options granted to Mr. Shaye in 1994 will vest only if certain annual
performance goals are met by New Line. In 1994, the Company also awarded Mr.
Shaye 50,000 shares of the Company's Class B Common Stock which are restricted
and thus subject to forfeiture in certain circumstances until the restrictions
lapse on December 31, 1995.
Chairman and Chief Executive Officer Compensation
Mr. Turner's compensation consists of three components: base salary, an
annual bonus under the TIP and cash payments under the LTIP. The Committee has
set Mr. Turner's base salary 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. Rather than increase
11
<PAGE> 14
Mr. Turner's base salary in 1994, his target bonus opportunity was increased so
that more of his annual compensation was "at risk" and based upon the financial
results of the Company. Mr. Turner's targeted annual bonus was increased to 67
percent of his base salary in 1994, resulting in an annual compensation package
40% of which is based upon the Company's achievement of the operating income
goal established under the TIP. As discussed above, payments under the TIP to
the Company's executive officers were slightly below the targeted level for
1994.
The Committee excluded Mr. Turner from the stock option grant program under
the LTIP because of his position as the controlling shareholder of the Company.
Mr. Turner did participate in the LTIP for the 1992 through 1994 cycle for
purposes of the cash opportunity thereunder. He received a payout under the LTIP
based upon the Company's compounded growth in operating income and revenue for
the years 1992 through 1994 as previously described. At the end of such period,
the Company had achieved a compounded growth in operating income for the period
just below the maximum goal established by the Committee and a compounded growth
in revenue for the period which exceeded the maximum goal established by the
Committee. Mr. Turner's payment under the LTIP was nearly 50 percent above the
target award level.
Corporate Tax Deduction for Executive Compensation
During 1993, Section 162(m) of the Internal Revenue Code was enacted to
limit to $1 million per year the corporate deduction for compensation paid to
each of a corporation's chief executive officer and the four other most highly
compensated executive officers, 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.
In an effort to preserve the deductibility of compensation paid to the
Company's executive officers, the Company's executive compensation plans and
performance criteria used for payments thereunder were approved by the Company's
shareholders in 1994. 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 1994, as well as the payments under the Company's
long-term incentive plan, stock option grants and awards of restricted stock,
were appropriate and consistent with the Company's compensation policies.
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>
Michael J. Fuchs Brian L. Roberts
Timothy P. Neher Fred A. Vierra
</TABLE>
12
<PAGE> 15
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, 1994 (these individuals, collectively the "named executive officers"), for
the fiscal years ended December 31, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ -----------------------------------------
RESTRICTED SECURITIES ALL OTHER
NAME AND OTHER ANNUAL STOCK UNDERLYING LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION($) AWARDS($) OPTIONS (#) PAYOUTS($)(1) ($)(2)
- ---------------------- ---- ---------- ---------- ----------------- ---------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. E. Turner.......... 1994 945,000 596,030 -- -- 0 810,219 105,400
Chairman of the 1993 925,096 471,685 -- -- 0 141,621
Board, President and 1992 765,554 341,921 -- -- 0 136,631
Chief Executive
Officer
Terence F. McGuirk.... 1994 856,298 596,030 -- -- 40,000 699,735 97,867
Executive Vice 1993 770,913 1,388,230(3) -- -- 500,000 111,555
President 1992 683,779 252,723 -- -- 40,000 112,022
Scott M. Sassa........ 1994 805,000 596,030 -- -- 35,000 338,819 86,369
Vice President -- 1993 513,942 1,000,445(4) -- -- 500,000 71,467
Turner Entertainment 1992 432,365 127,057 -- -- 25,000 65,006
Group
W. Thomas Johnson..... 1994 704,495 323,427 -- -- 30,000 456,669 79,269
Vice President -- 1993 456,431 813,115(5) -- -- 300,000 63,057
News 1992 434,553 127,511 -- -- 25,000 66,100
Robert Shaye(6)....... 1994 1,384,615 1,512,482 106,027(7) 1,000,000(8) 2,100,000 -- 201,284
Chairman and Chief
Executive Officer,
New Line Cinema
Corporation
</TABLE>
- ---------------
(1) The amounts shown in this column represent payouts under the Long-Term
Incentive Plan for the period January 1, 1992 through December 31, 1994.
Compounded growth in the Company's operating income determines 75% of the
cash award and the remaining 25% is based upon targeted revenue levels. The
benchmark goals were determined by the Stock Option and Compensation
Committee on the basis of the Company's three-year strategic plan for 1992
through 1994. For the three-year cycle, the Company exceeded the
established benchmark goals. Actual cash payments for the three-year period
ending December 31, 1994 were made in the first quarter of 1995, after 1994
financial results were available.
(2) The amounts shown in this column for 1994 represent Company contributions in
1994 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 -- $9,270, $53,110, $41,814
and $1,206; Mr. McGuirk -- $9,270, $46,703, $37,543 and $4,351; Mr.
Sassa -- $9,270, $40,487, $33,399 and $3,213; Mr. Johnson -- $9,270,
$35,268, $29,920 and $4,811; and Mr. Shaye -- $8,333, $72,365, $55,231 and
$65,355.
(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. 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) 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".
(6) In accordance with the rules of the Securities Exchange Act of 1934, as
amended, no compensation information is provided with respect to Mr. Shaye
for the years 1993 and 1992 which were prior to the acquisition by the
Company of New Line. Compensation information with respect to Mr. Shaye for
1994
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<PAGE> 16
does not include any compensation paid to Mr. Shaye by New Line in 1994
prior to the Company's acquisition of New Line on January 28, 1994.
(7) This amount includes an aggregate of $32,200 received by Mr. Shaye in
respect of a per diem allowance for certain business travel and $33,536 of
imputed interest on an interest-free loan made by New Line to Mr. Shaye.
See "Executive Compensation -- Certain Relationships and Related
Transaction -- Other Transactions".
(8) The Company granted Mr. Shaye 50,000 shares of Class B Common Stock on
September 30, 1994 under the Company's 1993 Stock Option and Equity-Based
Award Plan. Such shares are subject to forfeiture if Mr. Shaye's employment
with New Line is terminated under certain circumstances until the
restrictions lapse on December 31, 1995. Dividends on such shares are paid
to Mr. Shaye. The value of the restricted stock award on December 31, 1994
was $818,750 on the basis of a closing price of the Company's Class B
Common Stock of $16.375 per share.
STOCK OPTION GRANTS IN 1994
The following table sets forth information concerning stock option grants
during 1994 to the named executive officers.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME (#)(1) IN 1994 ($/SH)(1) DATE PRESENT VALUE ($)(2)
- ------------------------------- --------- ----------- --------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
R. E. Turner................... 0 -- -- -- --
Terence F. McGuirk............. 40,000 0.77 17.625 05/23/04 304,400(3)
Scott M. Sassa................. 35,000 0.67 17.625 05/23/04 266,350(3)
W. Thomas Johnson.............. 30,000 0.58 17.625 05/23/04 228,300(3)
Robert Shaye................... 2,100,000(4) 40.41 26.250(4) 07/27/99 18,921,000(5)
</TABLE>
- ---------------
(1) The grants to Messrs. McGuirk, Sassa and Johnson were made under the
Company's 1988 Stock Option Plan. The grant to Mr. Shaye was made under the
Company's 1993 Stock Option and Equity-Based Award 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 May 23,
1994. Such grants vest 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 the 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 and 5 to the above table.
(3) The estimated value of the options granted to Messrs. McGuirk, Sassa and
Johnson were based upon a grant date of May 23, 1994, using both the
exercise price and the market value of the Class B Common Stock on the date
of grant of $17.625. The following assumptions were used in such
calculation: expected stock volatility of 0.3109 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 0.40% 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 7.09% based upon the yield as of the
date of grant on a U.S. Government Zero Coupon Bond with a maturity equal
to the expected 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.
(4) This grant was made to Mr. Shaye in connection with his execution of an
employment agreement with New Line at the time of the Company's acquisition
of New Line. One million options of such grant vest annually, commencing on
December 31, 1994, at a rate of 20% of the grant. The remaining 1.1 million
14
<PAGE> 17
options of such grant vest annually, commencing on March 15, 1995, provided
that New Line meets certain performance goals, at a rate of 200,000 options
per year for each of four years and 300,000 options in the fifth year. To
the extent that certain performance goals are not met in any year and the
related options do not vest, such options may vest in subsequent years if
performance goals are exceeded to the extent of past shortfalls in
performance.
(5) The estimated value of the options granted to Mr. Shaye was based upon a
grant date of January 28, 1994, using both the exercise price of $26.25 and
the opening market value of the Class B Common Stock on January 28, 1994 of
$26.25. The following assumptions were used in such calculation: expected
stock volatility of 0.3051 based upon the weekly closing prices of the
Class B Common Stock over the two-year period ending on the date of grant,
a dividend yield of 0.27% based upon the annualized dividend divided by the
stock price of the Class B Common Stock on the date of grant, a risk free
interest rate of 5.13% based upon the yield as of the date of grant on a
U.S. Government Zero Coupon Bond with a maturity equal to the term of the
option, and a 3% per year forfeiture rate, based upon the Company's
experience. Given the 5 1/2 year term of the stock option grant, no early
exercise assumption was used to determine the value of the option grant.
AGGREGATED STOCK OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during 1994 by the named executive officers and the value of unexercised options
held by them as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
SHARES OPTIONS AT FISCAL OPTIONS AT
ACQUIRED YEAR-END (#) FISCAL YEAR-END ($)(1)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. E. Turner............ 0 -- 0 0 -- --
Terence F. McGuirk...... 0 -- 314,999 455,001 480,750 --
Scott M. Sassa.......... 0 -- 46,666 558,334 80,125 --
W. Thomas Johnson....... 0 -- 219,999 280,001 384,600 --
Robert Shaye............ 0 -- 1,858,088(2) 1,900,000 8,524,817 --
</TABLE>
- ---------------
(1) These amounts represent the excess of the fair market value of the Class B
Common Stock of $16.375 per share as of December 31, 1994, above the
exercise price of the options.
(2) Includes 1,658,088 options granted to Mr. Shaye by New Line prior to the
Company's acquisition of New Line. Pursuant to such acquisition, the New
Line options were converted into options exercisable for shares of the
Company's Class B Common Stock. Also includes 200,000 options which vested
on December 31, 1994 in accordance with the terms of the 2.1 million option
grant which Mr. Shaye received in connection with his execution of an
employment agreement with New Line at the time of the Company's acquisition
of New Line.
EMPLOYMENT AGREEMENTS
By the beginning of 1994, the Company had entered into four-year employment
agreements with Messrs. McGuirk, Sassa and Johnson. Under Mr. McGuirk's
employment agreement dated as of December 20, 1993, he serves 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 as of January 1, 1994, he serves as Vice President-Turner
Entertainment Group 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 as of December 20, 1993, he serves 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). The employment agreements for Messrs. McGuirk,
Sassa and Johnson provide for annual increases in base salary of approximately
five percent. During their respective terms of employment with the Company,
Messrs. McGuirk, Sassa and Johnson will be eligible to participate in the
Company's LTIP, Retirement
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<PAGE> 18
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 employment under certain circumstances.
At the time of the Company's acquisition of New Line, Mr. Shaye entered
into an employment agreement with New Line 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). Mr. Shaye's employment agreement may be
terminated by New Line for "cause" (as defined therein) or terminated by Mr.
Shaye for "good reason" (as defined therein). In the event New Line terminates
Mr. Shaye's employment agreement without "cause" or Mr. Shaye terminates his
employment agreement for "good reason", Mr. Shaye will be entitled to the base
salary, bonus and stock options (each as if 100% of the performance goal had
been met for each year subsequent to the termination) due under his employment
agreement for the remainder of its term.
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 three
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 four
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 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: Michael J. Fuchs is
Chairman and Chief Executive Officer of HBO; 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 1994, 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, the Cartoon Network and Turner Classic Movies), before
deductions for advertising allowances, as follows: TCI -- $123,739,000;
TWI -- $69,604,000; Continental -- $29,192,000; and Comcast -- $25,598,000.
These amounts constituted approximately 40% of the Company's total subscription
fees recorded during 1994. Advertising revenues received by the Company during
1994 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 45%, 46%, 46%, 48% and 44% of
16
<PAGE> 19
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
$1,730,000, $3,460,000 and $3,460,000 during each year ended December 31, 1994,
1993 and 1992 under this agreement.
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 reciprocal
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 $3,213,000, $7,516,000 and
$9,388,000 in the years ended December 31, 1994, 1993 and 1992, 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 1994, 1993 and 1992
pursuant to this agreement were $104,080,000, $81,723,000 and $105,729,000,
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 $19,295,000, $13,933,000 and $13,196,000 for license fees during
1994, 1993 and 1992, respectively, under these agreements and is committed to
pay $69,405,000 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
30.3% limited partnership interest as of December 31, 1994.
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 $320,000 from HBO in 1994. In
addition, pursuant to a lease agreement entered into in 1992 relating to a
satellite transponder, the Company received from Liberty Media Corporation
$1,824,000, $1,826,000 and $1,163,000 in 1994, 1993 and 1992, respectively.
Liberty Media Corporation is committed to pay approximately $10,640,000 through
2000 under such lease.
Other Transactions
Prior to the Company's acquisition of New Line, New Line had provided to
Mr. Shaye a loan of $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 Mr. Shaye's current 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.
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
17
<PAGE> 20
indebtedness outstanding since January 1, 1994 was approximately $112,000, with
a balance of $97,000 remaining outstanding on December 31, 1994.
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, a wholly-owned subsidiary
of TCI. Mr. Peter R. Barton is President of Liberty Media Corporation. 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 a 44% 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.
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 and Chief Executive Officer of TWI; Joseph J.
Collins is Chairman and Chief Executive Officer of Time Warner Cable; 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.
18
<PAGE> 21
PERFORMANCE GRAPHS
The following graphs compare the cumulative 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, for the
five-year period commencing December 31, 1989 and ended December 31, 1994, and
the seven-year period commencing December 31, 1987 and ended December 31, 1994.
The peer group index is based on a selection of companies operating in the
television and filmed entertainment business (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)). 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 graphs assume 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, 1989 and December 31, 1987, respectively, and that all dividends
were reinvested. In 1987, there was a recapitalization of the Company which
resulted in the dual classes of common stock as well as the issuance of
preferred stock to the Units Investors (see "I. Election of
Directors -- Nomination and Voting Arrangements"). The seven-year performance
graph illustrates the relative performance of the Company since such
recapitalization.
CUMULATIVE TOTAL SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDED DECEMBER 31, 1994
(GRAPH)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TURNER CLASS A TURNER CLASS B S&P 500 PEER GROUP
<S> <C> <C> <C> <C>
12/31/89 100.00 100.00 100.00 100.00
12/31/90 67.57 67.50 96.89 83.63
12/31/91 137.38 138.75 126.28 98.83
12/31/92 127.29 127.08 135.88 131.42
12/31/93 162.76 162.91 149.52 169.75
12/31/94 98.19 99.18 151.55 160.16
</TABLE>
19
<PAGE> 22
CUMULATIVE TOTAL SHAREHOLDER RETURN FOR
SEVEN-YEAR PERIOD ENDED DECEMBER 31, 1994
(GRAPH)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TURNER CLASS A TURNER CLASS B S&P 500 PEER GROUP
<S> <C> <C> <C> <C>
12/31/87 100.00 100.00 100.00 100.00
12/31/88 155.17 164.79 116.50 115.78
12/31/89 464.36 563.68 153.30 165.61
12/31/90 313.79 380.28 148.52 138.51
12/31/91 637.93 781.69 193.58 163.67
12/31/92 591.10 715.96 208.31 217.64
12/31/93 755.81 917.80 229.21 281.12
12/31/94 455.95 558.78 232.32 265.25
</TABLE>
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
Graphs 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 LLP ("Price Waterhouse") as
the Company's independent public accountants for the fiscal year ending December
31, 1995, subject to ratification by the shareholders. Price Waterhouse served
in such capacity for the fiscal year ended December 31, 1994 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, 1995.
III. PROPOSAL TO APPROVE AN AMENDMENT TO
THE TURNER BROADCASTING SYSTEM, INC.
1993 STOCK OPTION AND EQUITY-BASED AWARD PLAN
On November 15, 1993, the Board of Directors of the Company approved the
Turner Broadcasting System 1993 Stock Option Plan. Upon recommendation of the
Stock Option and Compensation Committee (the "Compensation Committee") of the
Board of Directors, 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 (the "1993 Plan"),
which provides for a wider variety of equity-based awards. The shareholders of
the Company approved the 1993 Plan on July 26, 1994. 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.
The 1993 Plan currently provides for the grant of stock options and other
equity-based awards relating to up to an aggregate of 5,000,000 shares of the
Company's Class B Common Stock ("Common Stock"). The Board of Directors has
authorized, subject to shareholder approval, a 10,000,000 share increase in the
number of shares of Common Stock as to which stock options and awards may be
granted under the 1993 Plan from 5,000,000 shares to 15,000,000 shares.
As a result of equity awards granted under both the 1993 Plan and the
Company's 1988 Stock Option Plan in connection with recent acquisitions and
employment agreements for certain executive officers, the number of shares of
Common Stock remaining available under these plans is not sufficient for the
Company to continue the granting of stock options and other equity-based awards
in accordance with past practice. The Board of Directors, in consultation with
the Compensation Committee, deems it to be in the best interest of the Company
and its shareholders to amend the 1993 Plan to increase the number of shares of
Common Stock subject to the grant of awards thereunder. This increase is
necessary to facilitate the Company's policies with respect to providing
long-term incentive compensation which aligns management's interest with those
of other shareholders and encourages meaningful stock ownership by executives.
DESCRIPTION OF THE 1993 PLAN
The following is a summary of the material features of the 1993 Plan and
incorporates the proposed amendment as if such amendment had been approved by
the requisite number of shares of the capital stock of the Company.
The 1993 Plan provides for the grant of options and other awards relating
to up to an aggregate of 15,000,000 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.
21
<PAGE> 24
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 Internal Revenue Code of 1986, as amended (the "Code").
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 optionee 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 a 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 the
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.
22
<PAGE> 25
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. 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 can not 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 the
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.
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 option price
of the stock purchased ("Payment Stock"), no gain or loss will be recognized
with respect to the
23
<PAGE> 26
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. 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 and any cash paid on the exercise. The holding
period of these newly acquired shares will include the holding period of the
Payment Stock. To the extent the number of shares received exceeds the number of
shares tendered, 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-term or short-term capital gain or loss, as
the case may be, equal to the difference between the amount
24
<PAGE> 27
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.
As of March 31, 1995, under the 1993 Plan, 2,150,000 Awards had been
granted to Robert Shaye, 1,000 Awards had been granted to each of Henry L. Aaron
and Rubye M. Lucas, who are each employees of the Company, current directors who
are not executive officers and nominees for election as directors, and 2,194,400
Awards had been granted to all other employees of the Company, including current
officers who are not executive officers, as a group. Except as noted above, no
other Award grants have been made under the 1993 Plan to any other persons,
including current executive officers (including the named executive officers),
current directors who are not executive officers, each nominee for election as a
director, each associate of any such executive officers, directors or nominees
and each other person receiving five percent of such options. Award grants have
been made to certain of the aforementioned persons under the Company's 1988
Stock Option Plan.
Awards under the 1993 Plan are based upon the Company's performance.
Accordingly, future awards under the 1993 Plan are not determinable at this
time.
On April 26, 1995, the closing price of the Common Stock was $17.875 per
share.
VOTE REQUIRED FOR APPROVAL
Approval of the amendment to 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
amendment to the 1993 Plan, while broker non-votes will have no effect on the
outcome of the vote on the amendment to the 1993 Plan.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE 1993 PLAN.
IV. SHAREHOLDER PROPOSAL TO LIMIT THE LOCATION
OF THE ANNUAL MEETING OF SHAREHOLDERS
The Company has been advised that Mrs. Evelyn Y. Davis, Editor, Highlights
and Lowlights, Watergate Office Building, 2600 Virginia Ave. N.W., Suite 215,
Washington, DC 20037, holder of 300 shares of Class A Common Stock, proposes to
submit the following resolution at the 1995 Annual Meeting of Shareholders:
"Resolved: "That the stockholders of Turner Broadcasting recommend that the
Board of Directors take the necessary steps to have future annual meetings take
place in the U.S.A. only."
"Reasons: "Last year's annual meeting took place in St. Petersburg
(formerly Leningrad) Russia."
"Most Company officers attended. Several outside directors did not attend."
"It would have been very costly for outside independent shareholders to
attend. While we do believe that the Company should rotate from time to time
outside of its Atlanta headquarters, this should only take place in the U.S.A."
"CNN has bureaus in cities such as New York, Los Angeles, Washington, D.C.
and many other U.S.A. locations. Such cities would be ideal for rotated annual
meetings."
"If you AGREE, please mark your proxy FOR this resolution."
25
<PAGE> 28
The Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
In the opinion of management and the Board of Directors, limiting the
location of the annual meeting of shareholders to within the United States is
not in the best interest of the Company. International markets are important to
the Company, both in terms of revenue and operations. For the year ended
December 31, 1994, $393 million, or approximately 14%, of the Company's revenues
were generated outside of the United States, a 64% increase from 1993. The
Company owns and operates five news and entertainment networks that are telecast
internationally -- CNN International, TNT Latin America, Cartoon Network Latin
America, TNT & Cartoon Network Europe and TNT & Cartoon Network Asia -- and such
networks reach an aggregate of approximately 113 million households worldwide.
In addition, Turner International operates sales offices in Europe, Asia and
Latin America; CNN operates 20 bureaus in various cities outside the United
States; and the Company's Entertainment Production and Distribution
companies -- Castle Rock Entertainment, New Line Cinema Corporation, Turner
Pictures Worldwide and Hanna-Barbera -- each produce films for international
distribution.
Only twice in the Company's history has the annual meeting of shareholders
been held outside of Atlanta, Georgia, the location of the Company's principal
place of business. In 1990, the annual meeting was held in Seattle, Washington
in connection with the 1990 Goodwill Games. Last year's annual meeting of
shareholders was held in St. Petersburg, Russia in conjunction with the 1994
Goodwill Games. The Company has elected to hold annual meetings at the various
sites of the Goodwill Games, in part, to demonstrate its support of and
commitment to the Games. The Company has been producing the Goodwill Games since
their inception in 1986, and has invested approximately $72 million to produce
and telecast the 1994 Goodwill Games. The Goodwill Games have evolved into a
major international sporting event, being telecast to 128 countries in 1994. The
Company views the international market and international events such as the
Goodwill Games as important sources for future revenue growth.
Article I, Section I of the Company's By-Laws specifically permits the
Board of Directors to determine the location of the annual meetings of
shareholders, and does not limit the locations that may be chosen. In addition,
Section 14-2-701(a) of the Georgia Corporation Code specifically permits annual
meetings of shareholders to be held "out of this state at the place stated in or
fixed in accordance with the bylaws," including outside of the United States. It
is the opinion of management that it has been and may be again in the future
appropriate and advantageous for the Company, as a competitor in the
international markets, to hold certain of its annual meetings outside of the
United States.
In the future, the Board of Directors may again determine that, in the best
interest of the Company and its shareholders, the annual meeting of shareholders
should be held in a location outside the United States. Accordingly, the Board
of Directors respectfully requests shareholders to vote against this proposal.
26
<PAGE> 29
V. 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 and IV
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 judgment.
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wishes to present a proposal at the 1996
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 3, 1996;
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 1995 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.
27
<PAGE> 30
APPENDIX A
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, JUNE 9, 1995
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 April 24, 1995,
at the Annual Meeting of Shareholders to be held in the Rutherford Room of the
Omni Hotel in Atlanta, Georgia, at 9:00 a.m., local time, on Friday, June 9,
1995, and any adjournments thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Common Stock Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except 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, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend the Turner Broadcasting System, Inc. 1993 Stock Option and
Equity-Based Award Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Shareholder proposal with respect to the limitation of the location of annual
meetings of the Company.
/ / FOR / / AGAINST / / ABSTAIN
5. 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, AND 3 AND "AGAINST" ITEM 4.
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> 31
APPENDIX B
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, JUNE 9, 1995
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 April 24, 1995,
at the Annual Meeting of Shareholders to be held in the Rutherford Room of the
Omni Hotel in Atlanta, Georgia, at 9:00 a.m., local time, on Friday, June 9,
1995, and any adjournments thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Common Stock Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except 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, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend the Turner Broadcasting System, Inc. 1993 Stock Option and
Equity-Based Award Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Shareholder proposal with respect to the limitation of the location of annual
meetings of the Company.
/ / FOR / / AGAINST / / ABSTAIN
5. 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, AND 3 AND "AGAINST" ITEM 4.
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> 32
APPENDIX C
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, JUNE 9, 1995
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
April 24, 1995, at the Annual Meeting of Shareholders to be held in the
Rutherford Room of the Omni Hotel in Atlanta, Georgia, at 9:00 a.m., local time,
on Friday, June 9, 1995, and any adjournments thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Class C Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except 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, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend the Turner Broadcasting System, Inc. 1993 Stock Option and
Equity-Based Award Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Shareholder proposal with respect to the limitation of the location of annual
meetings of the Company.
/ / FOR / / AGAINST / / ABSTAIN
5. 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, AND 3 AND "AGAINST" ITEM 4.
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
