<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
United States Satellite Broadcasting Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
UNITED STATES SATELLITE BROADCASTING COMPANY, INC.
3415 UNIVERSITY AVENUE
ST. PAUL, MINNESOTA 55114
------------------------
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 20, 1996
------------------------
To the Shareholders:
The 1996 Annual Meeting of Shareholders of United States Satellite
Broadcasting Company, Inc., a Minnesota corporation (the "Company"), will be
held at the Marriott City Center Hotel, 30 South 7th Street, Minneapolis,
Minnesota 55402 on November 20, 1996 at 9:00 a.m., local time, to consider and
act upon the following matters:
1. To elect fourteen Directors, including three directors to be elected by
the holders of Class A Common Stock, voting separately as a class, for
the ensuing year or until their successors are elected and qualified;
2. To adopt the United States Satellite Broadcasting Company, Inc. 1996
Non-Employee Director Stock Option Plan;
3. To ratify the selection by the Board of Directors of Arthur Andersen LLP
as the Company's independent auditors for its 1997 fiscal year; and
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Shareholders of record at the close of business on September 30, 1996 are
entitled to notice of, and to vote at, the Annual Meeting. For a period of ten
days prior to the Annual Meeting, a complete list of the shareholders entitled
to vote at the Annual Meeting will be available at the offices of the Company
for inspection by any shareholder of record for any purpose germane to the
Annual Meeting.
By order of the Board of Directors
/s/ Gerald D. Deeney
Gerald D. Deeney
SECRETARY
St. Paul, Minnesota
October 10, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD(S) AND PROMPTLY MAIL THE PROXY CARD(S) IN
THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE
ANNUAL MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED WITHIN
THE UNITED STATES.
<PAGE>
UNITED STATES SATELLITE BROADCASTING COMPANY, INC.
------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 20, 1996
---------------------
INTRODUCTION
Your Proxy is solicited by the Board of Directors of United States Satellite
Broadcasting Company, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held on November 20, 1996, at 9:00 a.m., local time, at the
Marriott City Center Hotel, 30 South 7th Street, Minneapolis, Minnesota 55402,
and at any adjournment thereof, for the purposes set forth in the attached
Notice of Annual Meeting.
The cost of soliciting Proxies, including preparing, assembling and mailing
the Proxies and soliciting material, will be borne by the Company. Directors,
officers and employees of the Company may, without compensation other than their
regular compensation, solicit Proxies personally or by telephone. Brokers,
custodians, and fiduciaries will be requested to forward proxy soliciting
material to the owners of shares held in their names, and the Company will
reimburse them for their reasonable out-of-pocket expenses incurred in
connection with the distribution of such proxy materials.
Any shareholder giving a Proxy may revoke it at any time prior to its use at
the Annual Meeting by giving written notice of such revocation to the Secretary
of the Company. In the absence of such specification, the Proxies will be voted
in favor of the proposals set forth in the Notice of Annual Meeting and in favor
of the number and slate of directors proposed by the Board of Directors and
listed herein.
The mailing address of the Company's principal executive office is 3415
University Avenue, St. Paul, Minnesota 55114. The Company expects that this
Proxy Statement and the related Proxy and Notice of Annual Meeting will first be
mailed to Shareholders on or about October 10, 1996.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed September 30, 1996 as the
record date for determining shareholders entitled to vote at the Annual Meeting.
Persons who were not shareholders on such date will not be allowed to vote at
the Annual Meeting. At the close of business on September 30, 1996, 14,823,200
shares of the Company's Class A Common Stock were issued and outstanding and
74,987,575 shares of the Company's Common Stock were issued and outstanding.
Each share of Class A Common Stock is entitled to one vote on each matter with
respect to which the Class A Common Stock has the right to vote at the Annual
Meeting and each share of Common Stock is entitled to ten votes on each matter
with respect to which the Common Stock has the right to vote at the Annual
Meeting. The Class A Common Stock and the Common Stock vote together, as a
single class, on all matters submitted to a vote of the shareholders, except
with respect to the election of directors. The Company's Articles of
Incorporation provide that the holders of the Class A Common Stock, voting as a
class, are entitled to elect that number of directors which is not less than
twenty percent of the total number of directors (with all fractions rounded to
the next whole number). As the Board of Directors currently consists of 14
members, the holders of the Class A Common Stock are entitled to elect three
directors (the "Class A Directors"). The remaining 11 directors are elected by
the holders of the Class A Common Stock and the Common Stock, voting as a single
class. There are no classes of stock of the Company outstanding other than the
Common Stock and the Class A Common Stock. Holders of the Class A Common Stock
and holders of the Common Stock are not entitled to cumulative voting rights in
the election of directors.
1
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The affirmative vote of a majority of the voting power represented by the
shares of Class A Common Stock and Common Stock present, in person or by proxy,
and entitled to vote at the Annual Meeting, is required to approve the matters
mentioned in the foregoing Notice of Annual Meeting, except with respect to the
election of directors. The affirmative vote of a majority of the shares of Class
A Common Stock present, in person or by proxy, and entitled to vote at the
Annual Meeting, is required to approve the election of the three Class A
directors. The affirmative vote of a majority of the voting power represented by
the shares of Class A Common Stock and Common Stock present, in person or by
proxy, and entitled to vote at the Annual Meeting, is required to approve the
election of all other directors. Proxies indicating abstention from a vote and
broker non-votes will be counted toward determining whether a quorum is present
at the Annual Meeting; however, abstentions and broker non-votes will not be
counted toward determining if a majority of the shares of Class A Common Stock
and/or Common Stock present has voted affirmatively. Broker non-votes are
proxies with respect to shares held in record name by brokers or nominees, as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote, (ii) the broker or nominee does not have discretionary
voting power under applicable national securities exchange rules or the
instrument under which it serves in such capacity, and (iii) the record holder
has indicated on the proxy card or otherwise notified the Company that it does
not have authority to vote such shares on that matter.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information known to the Company with
respect to beneficial ownership of Class A Common Stock and Common Stock by (i)
each shareholder known by the Company to be the beneficial owner of more than 5
percent of either class, (ii) each nominee for director, (iii) each executive
officer and (iv) all executive officers and directors of the Company as a group.
Such information is presented as of September 30, 1996.
SHARES OF CLASS A COMMON STOCK AND COMMON STOCK
BENEFICIALLY OWNED(1)
<TABLE>
<CAPTION>
PERCENT PERCENT OF PERCENT OF
NAME AND ADDRESS OF COMMON TOTAL VOTING
OF BENEFICIAL OWNER(2) NUMBER CLASS A STOCK POWER
- --------------------------------------------- ----------------------------------- ------- ---------- ------------
<S> <C> <C> <C> <C>
Hubbard Broadcasting, Inc. ("HBI") .......... 11,790 (Class A) * 62.0 60.8
3415 University Avenue 46,522,825 (Common Stock)(3)
St. Paul, Minnesota 55114
Stanley S. Hubbard........................... 7,740 (Class A) * 62.0 60.8
46,522,825 (Common Stock)(4)
Stanley E. Hubbard........................... 2,025 (Class A) * 61.4 60.2
46,051,225 (Common Stock)(5)
Robert W. Hubbard............................ 2,025 (Class A) * 61.4 60.2
46,051,225 (Common Stock)(5)
Nationwide Mutual Insurance Company ......... 5,065,500 -- 6.8 6.6
One Nationwide Plaza (Common Stock)
Columbus, Ohio 43216
Quantum Industrial Partners, L.D.C. ......... 4,941,150 -- 6.6 6.5
Kaya Flamboyan 9 (Common Stock)
Willemstad, Curacao
Netherlands Antilles
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PERCENT PERCENT OF PERCENT OF
NAME AND ADDRESS OF COMMON TOTAL VOTING
OF BENEFICIAL OWNER(2) NUMBER CLASS A STOCK POWER
- --------------------------------------------- ----------------------------------- ------- ---------- ------------
<S> <C> <C> <C> <C>
Peter G. Skinner ............................ 1,000 (Class A) -- 5.9 5.8
200 Liberty Street 4,411,800 (Common Stock)(6)
New York, New York 10281
Dow Jones & Company ......................... 4,411,800 -- 5.9 5.8
200 Liberty Street (Common Stock)
New York, New York 10281
Pittway Corporation ......................... 4,167,375 -- 5.6 5.4
200 South Wacker Drive (Common Stock)
Chicago, Illinois 60606
Vulcan Ventures, Inc. ....................... 3,529,425 -- 4.7 4.6
110 110th Avenue Northeast (Common Stock)
Bellevue, Washington 98004
William D. Savoy ............................ 3,529,425 (Common Stock)(7) -- 4.7 4.6
110 110th Avenue Northwest
Bellevue, Washington 98004
John W. Marvin............................... 1,323,525 (Common Stock) * 1.8 1.7
96,200 (Class A)(8)
Frank N. Magid............................... 540,000 (Common Stock) -- * *
Dennis J. Brownlee........................... 2,000 (Class A) * * *
471,600 (Common Stock)
David S. Allen............................... 286,650 (Common Stock) -- * *
Kenneth G. Langone........................... 176,475 (Common Stock)(9) -- * *
Gerald D. Deeney............................. 122,550 (Common Stock) -- * *
Ward L. Quaal................................ 94,350 (Common Stock) -- * *
Herbert S. Schlosser......................... 83,775 (Common Stock) -- * *
Raymond Conover.............................. 20,000 (Class A) * -- *
75,000 (Common Stock)(10)
Mary Pat Ryan................................ 75,000 (Class A)(11) * -- *
Robert Pacek................................. 21,700 (Class A)(12) -- *
Bernard J. Weiss............................. 20,500 (Class A)(13) * -- *
Joseph G. Ducey.............................. 20,090 (Class A)(14) * -- *
Carl Wegener................................. 20,000 (Class A)(15) * -- *
Thomas W. French............................. 11,000 (Class A)(16) * -- *
Peter F. Frenzer............................. 1,000 (Class A) -- -- --
Louis G. Zachary, Jr......................... -- -- -- --
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PERCENT PERCENT OF PERCENT OF
NAME AND ADDRESS OF COMMON TOTAL VOTING
OF BENEFICIAL OWNER(2) NUMBER CLASS A STOCK POWER
- --------------------------------------------- ----------------------------------- ------- ---------- ------------
<S> <C> <C> <C> <C>
All directors and executive officers
as a group (22 persons)...................... 300,280 (Class A) 2.0 76.9 75.4
57,637,975 (Common Stock)(17)
</TABLE>
- ------------------------
* Less than one percent
(1) Each share of Common Stock is convertible into one share of Class A Common
Stock at the option of the holder.
(2) Unless otherwise noted, the address is 3415 University Avenue, St. Paul,
Minnesota 55114.
(3) Includes (i) 2,025 shares of Class A Common Stock held by each of Stanley
S. Hubbard, Stanley E. Hubbard and Robert W. Hubbard and (ii) 471,600 shares
of Common Stock held in trust for certain employees of HBI, for which
Stanley S. Hubbard acts as trustee.
(4) Includes (i) 46,051,225 shares of Common Stock held by HBI, (ii) 471,600
shares of Common Stock held in trust for certain employees of HBI, for which
Stanley S. Hubbard acts as trustee, and (iii) 5,715 shares of Class A Common
Stock held by HBI.
(5) Includes 46,051,225 shares of Common Stock held by HBI.
(6) Includes 4,411,800 of shares of Common Stock held by Dow Jones & Company,
of which Mr. Skinner is General Counsel, Secretary, Senior Vice President
and President of Television Operations.
(7) Consists of shares held by Vulcan Ventures, Inc., of which Mr. Savoy is
Vice President.
(8) Includes 1,323,525 shares of Common Stock and 96,200 shares of Class A
Common Stock held by Marvin Lumber and Cedar Company, of which Mr. Marvin is
Chief Operating Officer.
(9) Consists of shares held by Invemed Associates, Inc. of which Mr. Langone
is Chairman of the Board, Chief Executive Officer and President as well as
the majority owner.
(10) Includes options to purchase 20,000 shares of Class A Common Stock, none
of which are currently exercisable.
(11) Consists of options to purchase 75,000 shares, none of which are currently
exercisable.
(12) Includes options to purchase 21,200 shares, none of which are currently
exercisable.
(13) Includes options to purchase 20,000 shares, none of which are currently
exercisable.
(14) Includes options to purchase 20,000 shares, none of which are currently
exercisable.
(15) Consists of options to purchase 20,000 shares, none of which are currently
exercisable.
(16) Includes options to purchase 10,000 shares, none of which are currently
exercisable.
(17) Footnotes (4)-(16) are incorporated herein by reference.
ELECTION OF DIRECTORS
The Board of Directors consists of fourteen (14) members.
In the election of directors, (a) each Proxy submitted by a holder of Class
A Common Stock will be voted for (i) each of the nominees listed below under the
heading "Class A Directors" and (ii) each of the nominees listed under the
heading "Other Directors" and (b) each Proxy submitted by a holder of Common
Stock will be voted for each of the nominees listed under the heading "Other
Directors," in each case unless the Proxy withholds a vote for one or more of
such nominees. Each person elected as a director
4
<PAGE>
shall serve for a term which expires as of the 1997 Annual Meeting or until his
successor is duly elected and qualified. All of the nominees are members of the
present Board of Directors. If any of the nominees should be unable to serve as
a director by reason of death, incapacity or other unexpected occurrence, the
Proxies solicited by the Board of Directors shall be voted by the proxy
representative for such substitute nominee as is selected by the Board or, in
the absence of such selection, for such fewer number of directors as results
from such death, incapacity or other unexpected occurrence.
The following table provides certain information with respect to the
nominees for director.
<TABLE>
<CAPTION>
NOMINEE AGE POSITION WITH THE COMPANY
- ------------------------- --- -----------------------------------------------
<S> <C> <C>
CLASS A DIRECTORS
- -------------------------
Kenneth G. Langone....... 61 Director
Louis G. Zachary, Jr..... 37 Director
Peter F. Frenzer......... 62 Director
OTHER DIRECTORS
- -------------------------
Stanley S. Hubbard....... 63 Chairman of the Board
Stanley E. Hubbard....... 35 Chief Executive Officer, President and Director
Robert W. Hubbard........ 31 Executive Vice President and Director
Herbert S. Schlosser..... 70 Director
David S. Allen........... 66 Director
Dennis J. Brownlee....... 44 Director
Frank N. Magid........... 65 Director
Peter G. Skinner......... 52 Director
William D. Savoy......... 32 Director
John W. Marvin........... 48 Director
Ward L. Quaal............ 77 Director
</TABLE>
STANLEY S. HUBBARD is the founder of the Company and serves as its Chairman
of the Board. Mr. Hubbard served as Chief Executive Officer of the Company from
its inception to November 1995. Mr. Hubbard is also the Chairman of the Board,
President and Chief Executive Officer of HBI and divides his professional time
between the Company and HBI and its affiliates. Mr. Hubbard is an executive with
several other entities affiliated with HBI, including Conus, a satellite news
gathering firm. Mr. Hubbard, a graduate of the University of Minnesota, joined
HBI in 1951. He and his father, the founder of HBI, were co-recipients of the
Distinguished Service Award from the National Association of Broadcasters in
1995. Stanley S. Hubbard is the father of Stanley E. Hubbard and Robert W.
Hubbard. Mr. Hubbard is also a director of Fingerhut, Inc.
STANLEY E. HUBBARD was elected Chief Executive Officer of the Company in
November 1995. From February 1993 until November 1995, Mr. Hubbard served as
President and Chief Operating Officer of the Company. Prior thereto, he served
as Vice President of the Company. He has been a director of the Company since
1991. Mr. Hubbard has also been a Vice President of HBI for more than five years
and has a broad range of television experience. He holds positions in other
Hubbard companies, including director of HBI. Mr. Hubbard is also a director of
First Team Sports, Inc.
ROBERT W. HUBBARD was elected Executive Vice President of the Company in
February 1993 and elected a director of the Company in September 1992. Mr.
Hubbard has a broad range of television
5
<PAGE>
experience with various HBI affiliates and divides his professional time between
the Company and HBI and its affiliates. Mr. Hubbard is also a director of HBI
and serves as President of its television group.
HERBERT S. SCHLOSSER was elected a director of the Company in March 1994.
Since 1986, Mr. Schlosser has served as Senior Advisor, Broadcasting and
Entertainment with Schroder Wertheim & Co. Incorporated. Mr. Schlosser was
Executive Vice President of RCA Corporation from 1978 until 1985 and prior to
that was President of the National Broadcasting Company. Mr. Schlosser is also a
director of Data Broadcasting Corporation, an international data communications
company, and Central European Media Enterprises Ltd., a company which holds
interests in private commercial television stations in central and eastern
Europe.
DAVID S. ALLEN has been a director of the Company since 1994. Mr. Allen is
currently President and Chief Executive Officer of The Boatworks, a boat sales
and service company, and a director of Petry Media, Inc. From 1980 through March
1993, Mr. Allen served as Chairman, President and Chief Executive Officer of
Petry, Inc., which provides services to HBI relating to the sale of HBI's
commercial time. Petry, Inc. is one of the largest sales organizations of
national television advertising in the U.S.
DENNIS J. BROWNLEE was elected a director in March 1994. Since 1980, Mr.
Brownlee has been Chairman, President and Chief Executive Officer of Advance,
Inc., a company specializing in computer systems integration, telecommunications
and multimedia services. Mr. Brownlee served as Vice President, Government
Relations of the Company from January 1990 to September 1996.
FRANK N. MAGID was elected a director of the Company in 1994. Mr. Magid has
been the Chairman and Chief Executive Officer of Frank N. Magid Associates, a
television industry research and consulting firm since 1957.
PETER G. SKINNER was elected a director of the Company in March 1994. Since
1985, Mr. Skinner has been General Counsel, Secretary, Senior Vice President
(since 1989) and President of Television Operations (since 1995) for Dow Jones &
Company, Inc. ("Dow Jones").
WILLIAM D. SAVOY was elected a director of the Company in March 1994. Since
1990, Mr. Savoy has served as Vice President of Vulcan Ventures, Inc.
("Vulcan"), a venture capital firm owned by Paul Allen, a co-founder of
Microsoft, Inc. From 1987 until November 1990, Mr. Savoy was employed by
Layered, Inc., a company controlled by Mr. Allen, and became its President in
1988. Mr. Savoy has served as President for Vulcan Northwest, Inc., a company
wholly-owned by Mr. Allen, from November 1990 until the present. Mr. Savoy
serves on the Advisory Board of Directors of DreamWorks SKG and the Board of
Directors of CINET, Inc., Harbinger Corporation and Telescan Inc.
JOHN W. MARVIN was elected a director of the Company in March 1994. Since
1974, Mr. Marvin has held various positions with Marvin Lumber and Cedar
Company, including Plant Manager, Board Member and Chief Operating Officer.
WARD L. QUAAL was elected a director of the Company in September 1982. Mr.
Quaal has been President of Ward L. Quaal Company, management consultants to the
broadcasting industry, since October 1974. Previously, he was President of
Tribune Broadcasting Company. Mr. Quaal is a recipient of the Distinguished
Service Award from the National Association of Broadcasters.
KENNETH G. LANGONE has served as a director of the Company since September
1994. In 1974, Mr. Langone founded Invemed Associates, Inc., a New York Stock
Exchange member firm engaged in investment banking and brokerage services, and
has served as its Chairman of the Board, Chief Executive Officer and President
since that time and is the principal shareholder of its corporate parent. Mr.
Langone serves on the Board of Directors of The Home Depot, Inc., Unifi, Inc.,
GMIS, Inc., St. Jude Medical, Inc., Baby Superstore, Inc. and DBT Online, Inc.
LOUIS G. ZACHARY, JR. was elected to the Board of Directors of the Company
in July 1996. Mr. Zachary is a Managing Director in the investment banking
department of CS First Boston, Inc. which he joined in 1981.
6
<PAGE>
PETER F. FRENZER was elected to the Board of Directors in July 1996. Mr.
Frenzer recently retired from Nationwide Insurance Enterprise after 21 years of
service. From 1991 to 1996, he was President of Nationwide Life Insurance
Company and, from 1981 to 1995, he was Chief Investment Officer of Nationwide
Insurance Enterprise.
COMMITTEE AND BOARD MEETINGS
The Company's Board of Directors has an Audit Committee which (i) reviews
the Company's quarterly and annual financial statements, its filings on Forms
10-K and 10Q and press releases regarding financial results, (ii) makes
recommendations regarding the Company's independent public accountants and scope
of their services, (iii) reviews the adequacy of accounting policies, compliance
assurance procedures and internal controls, (iv) reviews auditors' independence
and (v) reports to the Board on the adequacy of disclosures and adherence to
accounting principles. Messrs. Marvin, Skinner and Savoy comprise the Audit
Committee. The Audit Committee met two times during the fiscal year ended June
30, 1996.
The Company's Board of Directors has a Compensation Committee which (i)
reviews compensation philosophy and major compensation benefits for executives,
(ii) administers the Company's Stock Option Plan and (iii) approves executive
officers' compensation. Messrs. Langone, Quaal and Schlosser comprise the
Compensation Committee. The Compensation Committee met two times during the
fiscal year ended June 30, 1996.
The Company's Board of Directors has a Nominating Committee, which makes
recommendations to the Board of Directors as to nominees for election to the
Board. The Nominating Committee members currently are Messrs. Stanley S.
Hubbard, Brownlee, Magid and Allen. The Nominating Committee met one time during
the fiscal year ended June 30, 1996.
The Board of Directors also has an Executive Committee, consisting of
Messrs. Stanley S. Hubbard, Stanley E. Hubbard, Robert W. Hubbard and Schlosser.
Between meetings of the Board of Directors, the Executive Committee exercises
all the powers of the Board of Directors in the management and direction of the
business and affairs of the Company, except as provided otherwise by law,
resolutions of the Board of Directors, the Company's By-laws, or its Articles of
Incorporation.
During fiscal 1996, the Board held six meetings. Each director attended 75%
or more of the meetings of the Board held while each was a director during such
fiscal year and of the meetings of Committees of which he was a member during
such fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was, during the 1996 fiscal year or
previously, an officer or employee of the Company.
Mr. Quaal is the President of Ward L. Quaal Company, which performs
government relations work for both the Company and HBI. The Company has paid
$277,300, $316,000 and $153,128 in fiscal 1994, fiscal 1995 and fiscal 1996,
respectively, to such company.
7
<PAGE>
CERTAIN TRANSACTIONS
The Company was organized in 1981 by HBI. From the Company's inception until
June 30, 1991, the Company's operations were financed through advances from HBI
and the provision of personnel, office space and other services. HBI's aggregate
advances to the Company were approximately $31.2 million, all of which were
converted into equity prior to and during fiscal 1994.
Pursuant to a Management Services Agreement between the Company and HBI, HBI
provided virtually all administrative and management services to the Company
during fiscal 1992 through fiscal 1994. The Company accrued $10.0 million with
respect to such services. None of such amount has been paid to date. The Company
has no obligation to do so until the Company's Board of Directors determines
that it has adequate working capital to do so.
Pursuant to an Administrative Services Agreement between HBI and the
Company, HBI charges the Company a portion of the expenses of the HBI
departments (including the services of HBI executives) that provide services to
the Company, namely legal, management information systems, tax, risk management,
payroll and accounts payable. Pursuant to this Agreement, the Company paid
$844,000 to HBI in fiscal 1995 and $960,000 in fiscal 1996 and expects to pay
HBI $996,000 in fiscal 1997.
The Company and HBI have filed combined state tax returns as required in
Minnesota and New Mexico. Utilizing the Company's net operating loss
carryforwards, HBI realized benefits as to the state returns of approximately
$1.3 million in fiscal 1994, $1.5 million in fiscal 1995 and $1.2 million in
fiscal 1996. HBI and the Company have entered into a Tax Sharing Agreement
relating to such filings. Under this Agreement, HBI will reimburse the Company
for such benefits in the year they would otherwise be realized by the Company.
The Company leases 9,400 square feet of office and administrative space in
St. Paul, Minnesota from HBI under a lease expiring on June 30, 1997. The
Company expects to lease approximately 1,160 additional square feet under the
lease in the near future. Under such lease, the Company paid HBI $0, $60,323 and
$79,065 in fiscal 1994, 1995 and 1996, respectively, and expects to pay
approximately $93,000 in fiscal 1997.
The Company owns its National Broadcast Center in Oakdale, Minnesota, which
consists of 20,500 square feet. The land for the facility was purchased in May
1993, from Minnesota Mining and Manufacturing Company, and the Company and HBI
agreed to provide advertising time on USSB programming and/ or HBI's television
stations in value equal to the purchase price of $340,000. HBI has agreed to
provide all of such advertising time at no cost to the Company.
The Company has entered into various agreements with Conus Communications
Limited Partnership ("Conus") for the provision of engineering and other
services. HBI and Stanley S. Hubbard, the Chairman of the Board of the Company,
are each general partners of Conus. For such services, the Company paid Conus
$466,000 in fiscal 1994, $888,000 in fiscal 1995 and $205,000 in fiscal 1996.
The Company anticipates that it will pay Conus approximately $140,000 in fiscal
1997 for such services.
The ALL NEWS CHANNEL is a joint venture of Viacom Satellite News, Inc. and
Conus. Pursuant to its programming agreement with the ALL NEWS CHANNEL, the
Company paid such joint venture $607,000 in fiscal 1995 and $2,348,000 in fiscal
1996. The agreement is in effect for fiscal 1997. Although the Company is unable
to predict the amount of payments which will be made in fiscal 1997, as such
payments are related to the number of subscribers, it expects such amount to be
substantially higher in fiscal 1997 due to the growth in subscribers the Company
has been experiencing.
The Company has entered into programming development agreements with certain
of its shareholders. It has agreed with Vulcan that in the event Vulcan can
develop viable specialty programming related to computers, and the Company has
sufficient transponder capacity, Vulcan shall be the exclusive provider of such
programming, other than such programming as may be included as incidental
programming by the
8
<PAGE>
Company's other programming providers. The Company has agreed to broadcast up to
ten hours of such programming per week. At present, the Company is unaware of
any such programming being developed by Vulcan. William D. Savoy, a director of
the Company, is Vice President of Vulcan.
The Company has also agreed with Dow Jones that Dow Jones shall have
development rights with respect to business and financial programming and shall
be the exclusive third-party provider of business and financial programming
carried on the Company's programming other than such as may be included as
incidental programming by the Company's other programmers. Dow Jones has the
right to require the Company to broadcast up to six hours per weekday of such
programming if such programming becomes available. Peter G. Skinner, a director
of the Company, is General Counsel, Secretary and President of Television
Operations of Dow Jones.
Certain directors of the Company perform consulting services for the
Company. Mr. Brownlee is President of Advance, Inc., which provides consulting
services to the Company relating to computers, customer service data bases and
information systems. The Company paid $5,800, $171,000, and $696,163,
respectively to Advance, Inc. in fiscal 1994, fiscal 1995 and fiscal 1996. The
Company expects to pay Advance, Inc. approximately $670,000 in fiscal 1997.
Frank N. Magid Associates, Inc., of which Mr. Magid is President, performs
research for both the Company and HBI. The Company has paid $31,400, $142,900
and $634,375 in fiscal 1994, fiscal 1995 and fiscal 1996, respectively, to such
company, and anticipates payments of approximately $800,000 in fiscal 1997.
Mr. Quaal is the President of Ward L. Quaal Company, which performs
government relations work for both the Company and HBI. The Company has paid
$277,300, $316,000 and $153,128 in fiscal 1994, fiscal 1995 and fiscal 1996,
respectively, to such company. The Company expects to pay such company
approximately $175,000 in fiscal 1997.
The Company believes that all of the foregoing transactions have been on
terms no less favorable to the Company than could have been obtained from
unaffiliated third parties.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent shareholders
are required by SEC regulation to furnish the Company with all Section 16(a)
forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to
officers, directors and greater than ten percent shareholders were satisfied,
except that certain persons submitted Forms 4 subsequent to the filing deadline
when their shares of Common Stock were automatically converted to an equal
number of shares of Class A Common Stock, pursuant to the Plan of
Recapitalization adopted by the Company's shareholders in December 1996 in
connection with the Company's initial public offering in January 1996 (Stanley
S. Hubbard, Stanley E. Hubbard, Robert W. Hubbard) and there was one late filing
with respect to a DE MINIMUS acquisition of shares of Class A Common Stock
(HBI).
9
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
------------------------- --- ------------------------------------
<S> <C> <C>
Stanley S. Hubbard....... 63 Chairman of the Board
Stanley E. Hubbard....... 35 Chief Executive Officer and
President
Robert W. Hubbard........ 31 Executive Vice President
Gerald D. Deeney......... 72 Treasurer, Chief Financial Officer
and Secretary
Mary Pat Ryan............ 40 Senior Vice President, Marketing
Bernard J. Weiss......... 42 Vice President, Finance and
Administration
Raymond Conover.......... 46 Vice President, Engineering
Carl Wegener............. 43 Vice President, Dealer Marketing
Joseph G. Ducey.......... 37 Vice President, Operations
Robert Pacek............. 53 Vice President, Information Services
Thomas W. French......... 38 Vice President, Consumer Marketing
</TABLE>
Executive Officers serve at the discretion of the Board of Directors.
Information regarding Messrs. Stanley S. Hubbard, Stanley E. Hubbard and Robert
W. Hubbard may be found under the caption "Election of Directors."
GERALD D. DEENEY was elected Treasurer of the Company in June 1981, Chief
Financial Officer of the Company in September 1995 and Secretary in January
1996. Mr. Deeney has been with HBI for more than thirty four years and has been
Vice President and Treasurer of HBI for more than twenty five years. In 1992,
Mr. Deeney was elected a director of HBI.
MARY PAT RYAN joined the Company as Vice President, Marketing in February
1994 and now is Senior Vice President, Marketing. From 1983 to 1993, Ms. Ryan
was at Kobs & Draft, the fourth largest direct marketing agency in the world,
and served as Executive Vice President and Director of Client Services. At Kobs
& Draft, Ms. Ryan managed marketing programs for HBO's Cable and Satellite
Divisions, Time Warner Cable, The Sega Channel and American Express Travelers
Cheque Group, and oversaw all administrative, business development and training
functions for client services.
BERNARD J. WEISS joined the Company in January 1994 and has been Vice
President of Finance and Administration of the Company since January 1995. From
April 1990 until January 1994, Mr. Weiss served in various financial and
operating positions at Northwest Airlines Inc., including Director of Budgets
and Analysis. From June 1986 to 1990, Mr. Weiss served as Vice President and
acting division head of the media and communications division of First Banks.
Mr. Weiss is a Certified Public Accountant.
RAYMOND CONOVER has been Vice President of Engineering of the Company since
March 1994. Mr. Conover has held various positions with HBI and its affiliates
since 1972, most recently as Vice President and Director of Engineering of
Conus.
CARL WEGENER joined the Company in 1993 as Director of Consumer Electronics
Marketing and was promoted to Vice President, Dealer Marketing, in December
1994. Mr. Wegener has 20 years of experience in the consumer electronics
industry, including positions with RCA and Philips N.V.
THOMAS W. FRENCH joined the Company in May of 1994 as Director of Consumer
Marketing and served in that position until July 1996, when he was appointed
Vice President, Consumer Marketing. From June 1990 to May 1994, he was a Senior
Brand Manager for Hiram Walker.
10
<PAGE>
JOSEPH G. DUCEY was appointed Vice President, Operations in July 1996. From
June 1991 to July 1996, he had been employed by HBI and affiliates in a number
of engineering/research positions, including Engineering Program Manager for
Conus and Director of Technical Operations.
ROBERT PACEK joined the Company as Vice President, Information Services in
March 1996. From September 1992 to March 1996, Mr. Pacek was Vice President,
Operations, of Advance, Inc., a consulting firm retained by the Company in the
area of information services. For three years prior thereto, he was Director of
Information Services in the United States Navy.
Messrs. Stanley S. Hubbard, Robert W. Hubbard, Deeney and Conover are also
employed by, and spend a significant portion of their time on, the businesses of
HBI and its affiliates other than the Company. Mr. Stanley E. Hubbard devotes
his professional time primarily to the business of the Company, but does hold
positions with HBI and its affiliates which will require a certain amount of his
time. The Company does not anticipate any material change in the relative amount
of time such persons will spend on the Company's matters. Each of such persons
who is a director has indicated to the Company that, should a conflict of
interest arise, he will promptly disclose such conflict to the Company's Board
of Directors and refrain from voting on such matter as a director.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following Summary Compensation Table shows certain compensation
information for the Chief Executive Officer and other executive officers who
received total annual salary and bonuses in excess of $100,000 in fiscal 1996.
This information includes the dollar value of base salaries and bonus awards,
number of shares of restricted stock granted and certain other compensation, if
any.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows compensation information for the
Company's Chief Executive Officer and the four most highly compensated executive
officers of the Company for services rendered in all capacities during the
fiscal years ended June 30, 1994, 1995, and 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------ ALL OTHER
FISCAL SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
- ---------------------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Stanley E. Hubbard ..................... 1996 100,000 -- --
CEO, President 1995 100,000 -- --
1994 -- -- --
Robert W. Hubbard ...................... 1996 100,000 -- --
Executive V.P. 1995 100,000 -- --
1994 -- -- --
Mary Pat Ryan .......................... 1996 224,000 100,000 29,000(1)
Sr. V.P., Marketing 1995 200,000 75,000 30,000(2)
1994 70,000 --
Carl Wegener ........................... 1996 125,000 25,000 (1)
V.P. Dealer Marketing 1995 119,000 17,000
1994 110,000 15,000 25,000
Bernard J. Weiss ....................... 1996 130,000 50,000 --
V.P. Finance and Administration 1995 120,000 25,000
1994 55,000
</TABLE>
- ------------------------
(1) Consists of payment of moving expenses.
(2) Consists of reimbursement for purchase of automobile.
11
<PAGE>
DIRECTOR COMPENSATION
In fiscal 1996, the Company did not pay any director fees, but reimbursed
non-employee directors for their out-of-pocket expenses for attending meetings.
The Compensation Committee retained Towers Perrin, an executive compensation
consulting firm, in July 1996. Towers Perrin recommended that non-employee
directors be paid an annual retainer of $15,000 and that they receive $500 for
each Board of Directors or committee meeting which they attend (with committee
chairpersons receiving $750 per committee meetings). The Board of Directors
approved this compensation plan for fiscal 1997. Towers Perrin also recommended
the adoption of a non-employee director option plan. The Board of Directors has
adopted such a plan and, as described elsewhere herein, has submitted such plan
for shareholder approval.
EMPLOYMENT AGREEMENTS
The Company does not have employment agreements with any of its executive
officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
PERCENT OF RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/ SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/ SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- -------------------------- ------------- --------------- ----------- ------------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mary Pat Ryan............. 75,000 16.7 $ 27.00 January 29, 2001 560,000 1,236,000
Carl Wegener.............. 20,000 4.5 $ 27.00 January 29, 2001 149,000 330,000
Bernard J. Weiss.......... 20,000 4.5 $ 27.00 January 29, 2001 149,000 330,000
</TABLE>
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is designed to attract,
motivate, reward and retain the management talent needed to achieve its business
objectives and maintain its position of leadership in the satellite broadcasting
industry.
It does this by providing incentives to achieve Company objectives, by
rewarding executives for exceptional performance by the Company, by recognizing
superior individual achievement and by utilizing competitive base salaries.
Accordingly, assessments of both individual and corporate performance
influence executives' compensation levels. This includes the ability to
implement the Company's business plans as well as to react to unanticipated
external factors that can have a significant impact on corporate performance.
Compensation decisions for all executives, including the Chief Executive
Officer, are based on the same criteria.
There are three major components of the Company's compensation program: Base
Salary, Short Term Incentive Awards and Long Term Incentive Compensation.
BASE SALARY
A competitive base salary is vital to support the philosophy of management
development and career orientation of executives and is consistent with the
long-term nature of the Company's business.
Salary levels and adjustments to salaries are a result of annual reviews of
competitive positioning (how the Company's salary structure for comparable
positions compares with that of other companies), business performance and
general economic factors. There is no specific weighting of these factors, which
are
12
<PAGE>
assessed subjectively by the Compensation Committee. Although the Compensation
Committee determined that the executive base salaries were generally
competitive, it also determined that the base salaries of the Company's Chief
Executive Officer and Executive Vice President were substantially below
competitive levels. Consequently, effective July 1, 1996, the Chief Executive
Officer received an increase in base salary from $100,000 to $350,000 per annum
and the Executive Vice President received an increase in base salary from
$100,000 to $250,000 per annum. All executive officers receive an annual
performance review and, based upon such review, may receive an adjustment in
base salary.
SHORT TERM INCENTIVE AWARDS
Short term incentive awards to executives are granted in cash to recognize
significant contributions to the business.
The specific bonus an executive receives is dependent on overall Company
performance as well as assessment of an individual's relative performance.
Factors include initiative, business judgment, technical expertise and
management skills, but there is no specific weighting of such factors. In fiscal
1996, an aggregate of $272,000 in cash bonuses was paid to employees of the
Company. The current executive officers received an aggregate of $175,000 of
such bonus payments. The Chief Executive Officer and the Executive Vice
President were not granted any bonuses, in light of the fact that the Company,
due to its start-up nature, incurred losses in fiscal 1996.
LONG TERM INCENTIVE PLANS
In fiscal 1996, the Company adopted a stock option plan as long term
incentive component to the compensation package for the Company's employees,
including executive officers. The Compensation Committee believes that it is
important for the Company's executive officers to focus not just on short term
achievements, but on the long term financial health and development of the
Company. Accordingly, in fiscal 1996, an aggregate of 186,200 incentive stock
options were awarded to the Company's executive officers. The Chief Executive
Officer and the Executive Vice President did not receive any options. The
Compensation Committee determined that equity-based incentives were not
appropriate for such officers in light of the size of the equity holdings of the
Hubbard family in the Company. The Compensation Committee intends to continue to
consider appropriate methods of providing appropriate compensation to executive
officers and, to that end, retained an executive compensation consulting firm to
assist the Compensation Committee in structuring compensation packages.
Kenneth G. Langone
Ward L. Quaal
Herbert S. Schlosser
SHARE INVESTMENT PERFORMANCE
The following graph shows, since January 31, 1996 (the effective date of the
Company's initial public offering), changes in the value of $100 invested in (1)
the Company's Class A Common Stock; (2) the NASDAQ Index; and (3) and an
industry group of thirteen companies. The industry group, which was determined
by the Company, consists of the eight companies (excluding the Company) which
comprise the "DBS/Wireless Cable" group of stocks followed by the industry
publication MULTICHANNEL NEWS, together with five major cable television
companies.
American Telecasting Inc.
British Sky Broadcasting Group
Cablevision Systems (Class A)
CAI Wireless Systems Inc.
Cellularvision U.S.A. Inc.
13
<PAGE>
Comcast (Special Stock)
Cox Communications Inc.
Echostar Communications Corp.
General Motors Corp. (Class H)
Heartland Wireless Communications
Peoples Choice TV Corp.
Tele-Communications Inc. (Series A)
Telewest Communications PLC (American Depository Receipts)
The ending values of each investment are based on the ending share price
plus dividends paid in cash, if any, assuming the reinvestment of dividends. The
calculations exclude trading commissions and taxes.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. SATELLITE BROADCASTING CO. PEER GROUP INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
02/01/96 100.00 100.00 100.00
02/29/96 93.53 98.81 103.76
03/31/96 94.24 94.10 103.98
04/30/96 98.56 92.92 112.39
05/31/96 100.72 94.18 117.05
06/30/96 108.63 91.74 111.94
</TABLE>
14
<PAGE>
APPROVAL OF THE UNITED STATES SATELLITE BROADCASTING COMPANY, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors of the Company recommends the adoption of the
proposed United States Satellite Broadcasting Company, Inc. 1996 Non-Employee
Director Stock Option Plan (the "Plan"). The Board of Directors adopted the Plan
in September 1996. The Plan provides for the automatic grant of options to
non-employee directors ("Automatic Options") and provides for discretionary
grants to new non-employee members of the Board upon initial election to the
Board ("Initial Options"). Subject to adjustment, as provided in the Plan, the
maximum number of shares of Class A Common Stock (the "Shares") for which
options can be exercised under the Plan is 150,000. In the event of a change in
corporate structure or capitalization affecting the Shares, the maximum number
of shares available under the Plan and subject to outstanding options will be
adjusted accordingly. Any unsold shares subject to an option under the Plan
which for any reason expires or otherwise terminates may again be subject to an
option under the Plan. The purpose of the Plan is to advance the interests of
the Company and its shareholders by allowing the Company to attract and retain
the best available persons for service as members of the Board of Directors of
the Company and to provide additional incentives to the non-employee directors
to continue to serve by affording them an opportunity to acquire a proprietary
interest in the Company. The Plan terminates on the earlier of: (i) November 1,
2001, or (ii) the decision of the Board of Directors to discontinue the Plan.
The Plan has the following features:
ADMINISTRATION
The Plan is to be administered by the Board of Directors of the Company. The
Board may authorize the Compensation Committee to exercise the powers conferred
under the Plan, other than the powers to amend or terminate the Plan or to grant
Initial Options.
Neither the Board nor the Compensation Committee may exercise any discretion
regarding to whom Automatic Options will be granted, when Automatic Options will
be granted, the number of Automatic Options to be granted or the duration
thereof.
ELIGIBILITY AND GRANTS
Each member of the Board of Directors is eligible to participate in the Plan
provided that the member is not currently, and has not during the previous
12-month period been, an employee of the Company or any of its subsidiaries and
the member does not hold any options to purchase Shares, except pursuant to
stock options previously granted under the Plan.
On the day after each Annual Meeting of Shareholders of the Company, each
non-employee director who has been elected or re-elected as a director of the
Company automatically receives an option to purchase 1,000 Shares.
Initial Options may be granted at the discretion of the Board of Directors,
upon the recommendation of the Nominating Committee in consultation with the
Chairperson of the Compensation Committee.
OPTION PRICE
The exercise price of all options under the Plan shall be 100% of the fair
market value of the Shares on the date of grant. The fair market value of a
Share is the closing price as reported in the Nasdaq Stock Market's National
Market.
VESTING
Options under the Plan vest and are exercisable immediately upon grant.
15
<PAGE>
DURATION OF OPTIONS
Each option expires on the earlier of (i) the ten-year anniversary of the
date of grant of such option or (ii) ninety days after the date the director
ceases to be a director of the Company. The options terminate and may no longer
be exercised if the Board of Directors determines that the director holding the
options has committed an act of dishonesty or breach of fiduciary duty to the
detriment of the Company.
TRANSFER
Options may not be transferred other than by will and the laws of descent
and distribution; pursuant to a qualified domestic relations order; or to a
corporate employer. During the lifetime of an optionee, options may be exercised
only by the optionee or a permitted transferee.
AMENDMENT
The Board of Directors may amend or discontinue the Plan at any time,
provided, however, such action cannot impair any options previously granted. In
addition, the Board may not take any action without shareholder approval if such
action would (i) change the eligibility requirements, (ii) decrease the minimum
option price, (iii) extend the maximum option term or (iv) materially increase
the benefits which may accrue to participants under the Plan.
OUTSTANDING DIRECTOR OPTIONS
As of the date hereof, no options have been granted under the Plan.
EFFECT OF FEDERAL INCOME TAXATION
The options will not qualify as incentive stock options under the Internal
Revenue Code of 1986, as amended (the "Code"). Generally, with respect to
options that do not qualify as incentive options under the Code, the acquisition
of shares through the exercise of the options will result in ordinary income to
the optionee as of the date of exercise in an amount by which the fair market
value of the shares at such date exceeds the exercise price. Upon exercise, the
Company will generally be entitled to a deduction in an identical amount. When
an optionee disposes of such shares, the difference between the amount received
and the fair market value of the shares on the date of exercise will be treated
as long- or short-term capital gain, as the case may be, depending on the period
of time the optionee has held the shares.
The foregoing summary of the Plan does not purport to be complete and is
qualified in its entirety by reference to the Plan. The full text of the Plan is
available to any shareholder who desires a copy, upon written request to the
Company, Attention: Investor Relations, 3415 University Avenue, St. Paul,
Minnesota 55114.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE UNITED STATES SATELLITE
BROADCASTING COMPANY, INC. 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
The affirmative vote of a majority of the voting power represented by the
shares of Class A Common Stock and the shares of Common Stock present, in person
or by proxy, and entitled to vote at the Annual Meeting, voting as a single
class, is required to approve the proposed Plan.
RATIFICATION OF SELECTION OF PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders, the Board of Directors has
selected the firm of Arthur Andersen LLP as the Company's independent public
accountants for the current fiscal year. Arthur Andersen LLP has served as the
Company's independent public accountants since 1992.
16
<PAGE>
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of Arthur Andersen LLP to serve as the Company's
independent public accountants for the current fiscal year.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
meeting. If any other matter does properly come before the meeting, the
appointees named in the Proxies will vote the Proxies in accordance with their
best judgment.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1997 Annual Meeting must be received by the
Company at its office by June 12, 1997, to be considered for inclusion in the
Company proxy statement and related proxy for the 1997 Annual Meeting.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended June 30, 1996, including financial statements, accompanies this Notice of
Annual Meeting and Proxy Statement. No portion of the Annual Report is
incorporated herein or is to be considered proxy soliciting material, except for
such financial statements.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1996, TO ANY SHAREHOLDER OF THE
COMPANY UPON WRITTEN REQUEST.
REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS, UNITED STATES SATELLITE
BROADCASTING COMPANY, INC. 3415 UNIVERSITY AVENUE, ST. PAUL, MINNESOTA 55114.
Dated: October 10, 1996
St. Paul, Minnesota
17
<PAGE>
COMMON STOCK PROXY
UNITED STATES SATELLITE BROADCASTING COMPANY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 20, 1996
The undersigned hereby appoints STANLEY E. HUBBARD and GERALD D. DEENEY,
and each of them, with full power of substitution, as proxies to represent and
vote, as designated below, all shares of Common Stock of United States Satellite
Broadcasting Company, Inc. registered in the name of the undersigned at the
Annual Meeting of Shareholders of the Company to be held at the Marriott City
Center Hotel, 30 South Seventh Street Minneapolis, Minnesota at 9:00 a.m.
(Minneapolis time) on November 20, 1996, and at any adjournment thereof, and the
undersigned hereby revokes all proxies previously given with the respect to the
meeting.
The Board of Directors recommends that you vote for each proposal below.
1. Elect Directors: [Nominees: Stanley S. Hubbard, Stanley E. Hubbard, Robert
W. Hubbard, Herbert S. Schlosser, David S. Allen, Dennis J. Brownlee,
Frank N. Magid, Peter G. Skinner, William D. Savoy, John W. Marvin and
Ward L. Quaal]
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY to vote all
(except those whose names have nominees listed above.
been written in below).
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the line below.)
________________________________________________________________________________
2. Approve the United States Satellite Broadcasting Company, Inc. 1996
Non-Employee Director Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratify selection of Arthur Andersen LLP as the Company's independent
auditors for the 1997 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
The proxies are authorized, in their discretion, to vote upon such other
business as may properly come before the Meeting.
<PAGE>
[LOGO]
UNITED STATES SATELLITE
BROADCASTING COMPANY, INC.
Marriott City Center Hotel
30th South Seventh Street
Minneapolis, MN
NOVEMBER 20, 1996
9:00 A.M. (MINNEAPOLIS TIME)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Date: , 1996
--------------------------------------------
(Signature)
--------------------------------------------
(Signature)
PLEASE DATE AND SIGN ABOVE exactly as name
appears at the left, indicating, where
appropriate, office position or
representative capacity. For stock held in
joint tenancy, each joint owner should sign.
<PAGE>
CLASS A PROXY
UNITED STATES SATELLITE BROADCASTING COMPANY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 20, 1996
The undersigned hereby appoints STANLEY E. HUBBARD and GERALD D. DEENEY,
and each of them, with full power of substitution, as proxies to represent and
vote, as designated below, all shares of Class A Common Stock of United States
Satellite Broadcasting Company, Inc. registered in the name of the undersigned
at the Annual Meeting of Shareholders of the Company to be held at the Marriott
City Center Hotel, 30 South Seventh Street Minneapolis, Minnesota at 9:00 a.m.
(Minneapolis time) on November 20, 1996, and at any adjournment thereof, and the
undersigned hereby revokes all proxies previously given with the respect to the
meeting.
The Board of Directors recommends that you vote for each proposal below.
Elect Directors: [Nominees: Kenneth G. Langone, Louis G. Zachary, Jr.,
1. Peter F. Frenzer, Stanley S. Hubbard, Stanley E. Hubbard, Robert W.
Hubbard, Herbert S. Schlosser, David S. Allen, Dennis J. Brownlee, Frank
N. Magid, Peter G. Skinner, William D. Savoy, John W. Marvin and Ward L.
Quaal]
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY to vote all
(except those whose names have been nominees listed above.
written in below).
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line below.)
________________________________________________________________________________
2. Approve the United States Satellite Broadcasting Company, Inc. 1996
Non-Employee Director Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratify selection of Arthur Andersen LLP as the Company's independent
auditors for the 1997 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
The Proxies are authorized, in their discretion, to vote upon such other
business as may properly come before the Meeting.
<PAGE>
[LOGO]
UNITED STATES SATELLITE
BROADCASTING COMPANY, INC.
Marriott City Center Hotel
30th South Seventh Street
Minneapolis, MN
November 20, 1996
9:00 a.m. (Minneapolis time)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Date: , 1996
--------------------------------------------
(Signature)
--------------------------------------------
(Signature)
PLEASE DATE AND SIGN ABOVE exactly as name
appears at the left, indicating, where
appropriate, office position or
representative capacity. For stock held in
joint tenancy, each joint owner should sign.
