<PAGE>
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 [_] 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 Section 240.14a-11(c) or Section 240.14a-12
METRO NETWORKS, 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)(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 (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:
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Notes:
<PAGE>
METRO NETWORKS, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 6, 1997
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of METRO
NETWORKS, INC. a Delaware corporation (the "Company"), will be held at Transco
Tower, 2nd Floor Auditorium, 2800 Post Oak Boulevard, Houston, Texas 77056, on
Friday, June 6, 1997, at 10:00 a.m., Central Time, for the following purposes:
1. To elect three Class 1 Directors;
2. To ratify and approve the Company's independent public accountants for
fiscal 1997; and
3. To consider and act upon any other matters which may properly come
before the Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on Monday, April 28,
1997 as the record date for the determination of the holders of capital stock
entitled to notice of and to vote at the Annual Meeting.
A list of stockholders entitled to vote at the Annual Meeting will be open
for examination by any stockholder for any purpose germane to the meeting
during ordinary business hours for a period of ten days prior to the Annual
Meeting at the offices of the Company, 2800 Post Oak Boulevard, Suite 4000,
Houston, Texas, 77056, and will also be available for examination at the
Annual Meeting until its adjournment.
YOUR ATTENTION IS DIRECTED TO THE ACCOMPANYING PROXY STATEMENT. WE INVITE
ALL STOCKHOLDERS TO ATTEND THE ANNUAL MEETING. TO ENSURE THAT YOUR SHARES WILL
BE VOTED AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN IF YOU HAVE
PREVIOUSLY SUBMITTED A PROXY.
By Order of the Board of Directors
/s/ David I. Saperstein
David I. Saperstein
Chairman of the Board and Chief
Executive Officer
Houston, Texas
May 2, 1997
IMPORTANT
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT
IN THE ENVELOPE PROVIDED TO THE COMPANY'S TRANSFER AGENT AT AMERICAN STOCK
TRANSFER & TRUST COMPANY, ATTENTION: PROXY TABULATION DEPARTMENT, TO BE
RECEIVED NO LATER THAN JUNE 5, 1997. IN ORDER TO AVOID THE ADDITIONAL
EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
PROXY STATEMENT
METRO NETWORKS, INC.
2800 POST OAK BOULEVARD
SUITE 4000
HOUSTON, TEXAS 77056
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 6, 1997
----------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of METRO NETWORKS, INC., a Delaware corporation (the "Company"), for use at
the Company's 1997 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on Friday, June 6, 1997 at 10:00 a.m., Central Time, at Transco Tower,
2nd Floor Auditorium, 2800 Post Oak Boulevard, Houston, Texas 77056, and at
any and all adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted. A proxy may be revoked by delivering written notice of revocation
to the Company at its office at 681 Fifth Avenue, 10th Floor New York, New
York, 10022, Attention: Gary L. Worobow, Corporate Secretary, by a subsequent
proxy executed by the person executing the prior proxy and presented at the
meeting, or by attendance at the Annual Meeting and voting in person by the
person executing the proxy. If not revoked, the proxy will be voted at the
Annual Meeting in accordance with the instructions indicated on the proxy card
by the stockholder or, if no instructions are indicated, will be voted FOR the
slate of directors nominated herein and FOR the ratification and approval of
KPMG Peat Marwick LLP as the Company's independent public accountants, and as
to any other matter that may properly be brought before the Annual Meeting, in
accordance with the judgment of the proxy holder. Abstentions and broker non-
votes are each included in the determination of the number of shares present
and voting for the purpose of determining whether a quorum is present, and
each is tabulated separately. In determining whether a proposal has been
approved, abstentions are counted as votes against a proposal and broker non-
votes are not counted as votes for or against a proposal or as votes present
and voting on a proposal.
In addition to solicitation by mail, officers, directors and regular
employees of the Company, who will receive no additional compensation for
their services, may solicit proxies by mail, telegraph or personal calls. All
costs of solicitation will be borne by the Company. The Company has requested
brokers and nominees who hold stock in their name to furnish this proxy
material to their customers and the Company will reimburse such brokers and
nominees for their related out-of-pocket expenses. This Proxy Statement of the
Company is being mailed on or about May 2, 1997 to each stockholder of record
as of the close of business on April 28, 1997.
VOTING AT THE MEETING
As of April 28, 1997, the Company had outstanding 16,550,357 shares of
Common Stock, par value $.001 per share (the "Common Stock"), and 2,549,750
shares of Series A Preferred Stock, par value $.001 per share (the "Preferred
Stock"). Holders of record of shares of Common Stock and Preferred Stock at
the close of business on April 28, 1997 will be entitled to notice of and to
vote at the Annual Meeting and will be entitled to one vote for each such
share so held of record.
<PAGE>
NOMINATION AND ELECTION OF CLASS 1 DIRECTORS
(PROPOSAL 1)
The persons named in the enclosed proxy will vote to elect the three
nominees named below under "Nominees for Class 1 Director" unless instructed
otherwise in the proxy. The persons receiving the greatest number of votes, up
to the number of directors to be elected, shall be the persons elected as the
Class 1 Directors. Shares represented by proxies which are marked "withhold
authority" will have the same effect as a vote against the nominees. The Class
1 Directors are to hold office until the 2000 Annual Meeting of Stockholders
and until their respective successors are duly qualified and elected.
The names and certain information concerning the persons nominated to be
elected as Class 1 Directors by the Board of Directors at the Annual Meeting
are set forth below. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE ELECTION OF THE NOMINEES NAMED BELOW UNDER "NOMINEES FOR CLASS 1
DIRECTOR". It is intended that shares represented by the proxies will be voted
FOR the election to the Board of Directors of the persons named below unless
authority to vote for the nominees has been withheld in the proxy. Although
the persons nominated have consented to serve as directors if elected, and the
Board of Directors has no reason to believe that the nominees will be unable
to serve as directors, if any nominee withdraws or otherwise becomes
unavailable to serve, the persons named as proxies will vote for any
substitute nominee designated by the Board of Directors. The following
information regarding the Company's directors and executive officers,
including nominees, is relevant to your consideration of the slate proposed by
your Board of Directors:
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<C> <C> <S>
David I. Saperstein................... 56 Chairman of the Board of Directors
and Chief Executive Officer
Charles I. Bortnick................... 43 President and Director
Shane E. Coppola(1)................... 31 Executive Vice President and
Director
Curtis H. Coleman..................... 47 Senior Vice President, Chief
Financial Officer and Director
Gary L. Worobow....................... 32 Senior Vice President, General
Counsel, Secretary and Director
Ivan N. Shulman....................... 34 Senior Vice President, Marketing
D. Patrick LaPlatney.................. 37 Senior Vice President, Television
James A. Arcara(1)(2)................. 62 Director
Dennis F. Holt(2)..................... 60 Director
Robert M. Miggins(1)(2)............... 69 Director
Kenin M. Spivak....................... 39 Director
</TABLE>
- --------
(1) Member of Compensation Committee
(2) Member of Audit Committee
The Board of Directors is divided into three classes, with each class
holding office for staggered three-year terms. The terms of Class 1 Directors
David I. Saperstein, Kenin M. Spivak and Gary L. Worobow expire in 1997, the
terms of Class 2 Directors Charles I. Bortnick, Curtis H. Coleman and Robert
M. Miggins expire in 1998 and the terms of Class 3 Directors Shane E. Coppola,
James A. Arcara and Dennis F. Holt expire in 1999. All executive officers of
the Company are chosen by the Board of Directors and serve at the Board's
discretion.
2
<PAGE>
ATTENDANCE AT MEETINGS AND BOARD COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors did
not hold any meetings.
The standing committees of the Board of Directors are the Compensation
Committee and the Audit Committee. The Board of Directors has no nominating
committee or committee performing a similar function.
The Compensation Committee, which did not meet in fiscal 1996, is
responsible for determining the compensation of executive officers and the
Company's non-executive officer employee compensation structure. The
Compensation Committee currently consists of James A. Arcara, Shane E. Coppola
and Robert M. Miggins.
The Audit Committee, which did not meet in fiscal 1996, is responsible for
(i) reviewing the Company's financial results and the scope and results of
audits; (ii) evaluating the Company's system of internal controls and meeting
with independent auditors and appropriate Company financial personnel
concerning the Company's system of internal controls; (iii) recommending to
the Board of Directors the appointment of the independent auditors; and (iv)
evaluating the Company's financial reporting activities and the accounting
standards and principles followed. The Audit Committee currently consists of
James A. Arcara, Dennis F. Holt and Robert M. Miggins.
NOMINEES FOR CLASS 1 DIRECTOR
The following persons' names will be placed in nomination for election to
the Board of Directors. The shares represented by the proxy cards returned
will be voted FOR the election of these nominees unless you specify otherwise.
DAVID I. SAPERSTEIN founded the Company in 1978. Since 1978, Mr. Saperstein
has been the Chief Executive Officer and a Director of the Company. Mr.
Saperstein served as President of the Company from 1978 through June 1996. Mr.
Saperstein serves on the Boards of Directors for the Business Arts Fund, the
Houston Symphony and the Toxoplasmosis Research Institute of the Michael Reese
Hospital in Chicago. Mr. Saperstein serves on the Board of Trustees for the
local chapter of the United Way and is a member of the Dean's Advisory Council
for Touro College of Law in New York. Prior to 1978, Mr. Saperstein owned and
operated several Ford automobile dealerships in Baltimore, Maryland.
GARY L. WOROBOW has served as General Counsel and Secretary of the Company
since May 1995, as a Senior Vice President and a Director of the Company since
June 1996. From August 1991 until joining the Company, Mr. Worobow was an
attorney with the New York law firm of Stursberg & Veith. Mr. Worobow earned a
Juris Doctorate from Fordham Law School in 1991, a Masters of Business
Administration from the William E. Simon School of Business Administration in
1989 and a Bachelor of Arts from the University of Rochester in 1987.
KENIN M. SPIVAK has served as a Director of the Company since March 1997.
Mr. Spivak has served as President and Co-Chief Executive Officer of Archon
Communications, Inc., a media company of which The NewsCorporation Limited is
the principal shareholder, since its formation in January 1995. Since July
1995, Mr. Spivak has also served as a director and co-chairman of the
executive committee of Premiere Radio Networks, Inc., a leading syndicator of
radio programs and services of which Archon is the principal shareholder. From
1991 until 1994, Mr. Spivak was Managing Director of Island World B.V. and
President of the Island World Group, companies engaged in the production and
distribution of feature films and television programming. From 1988 until
November 1990, Mr. Spivak served as Executive Vice President and functioned as
chief operating officer of MGM/UA Communications Co., a leading motion picture
and television studio. Since 1995, Mr. Spivak has served as Chairman of
Knowledge Exchange, LLC, a publishing company. Since 1993, Mr. Spivak has been
a director and since 1996, Vice Chairman, of John Paul Mitchell Systems, a
leading hair products company. From 1991 until 1995, Mr. Spivak was Vice
Chairman of Diversified Industries Inc., which
3
<PAGE>
successfully reorganized under Chapter 11 of the United States Bankruptcy
Code. From 1991 until 1993, Mr. Spivak was a Special Director of Westfed
Holdings, Inc., elected by the preferred shareholders following a default
caused by Westfed's subsidiary, a thrift seized by banking regulators. Mr.
Spivak holds an A.B., M.B.A. and J.D. from Columbia University.
OTHER DIRECTORS AND EXECUTIVE OFFICERS
CHARLES I. BORTNICK has been President and a Director of the Company since
June 1996. From April 1994 to May 1996, Mr. Bortnick served as Executive Vice
President/General Manager of the Company. Mr. Bortnick joined the Company in
March 1993 as Vice President/General Manager,Midwest Region based in Chicago.
Prior to joining the Company, Mr. Bortnick had 17 years of experience in the
radio broadcasting industry. From November 1987 through March 1993, Mr.
Bortnick served as Vice President/General Manager for Malrite Communications
at its WMMS-FM/WHK-AM radio station in Cleveland, Ohio and its KKHT-FM radio
station in Houston, Texas. From September 1984 to October 1987, Mr. Bortnick
served as Vice President/General Manager for TK Communications at its WSHE-
FM/WSRF-AM radio stations in Miami/Ft. Lauderdale.
SHANE E. COPPOLA has served as Executive Vice President and a Director of
the Company since June 1996. From April 1992 through May 1996, Mr. Coppola was
Vice President,Corporate Development of the Company. From August 1989 through
March 1992, Mr. Coppola was a member of the Communications Finance Group at
The Toronto-Dominion Bank. Mr. Coppola earned a Masters of Business
Administration from the William E. Simon School of Business Administration in
1989 and a Bachelor of Arts from the University of Rochester in 1988. Mr.
Coppola is the son-in-law of Mr. Saperstein.
CURTIS H. COLEMAN has served as Chief Financial Officer of the Company since
September 1995, as a Senior Vice President and a Director of the Company since
June 1996. Mr. Coleman served as Vice President-Treasurer and Vice President-
Controller of the Company from March 1990 through September 1995. Prior to
joining the Company, Mr. Coleman served in various financial and accounting
positions with Energy Service Company, Inc., Crutcher Resources Corporation
and Arthur Young & Company. Mr. Coleman is a certified public accountant.
IVAN N. SHULMAN has served as Senior Vice President of Marketing of the
Company since January 1997. From July 1995 through December 1996, Mr. Shulman
was Vice President of Marketing of the Company. From July 1994 through July
1995, he was Vice President,Merchandising of the Company; and from January
1991 through June 1994, Mr. Shulman was National Merchandising Manager of the
Company. Mr. Shulman joined the Company in October 1987. Prior to joining the
Company, Mr. Shulman worked in the consumer products industry with Carnation
Company.
D. PATRICK LAPLATNEY has served as Senior Vice President of Television of
the Company since March 1997. From May 1994 to March 1997, Mr. LaPlatney was a
Senior Vice President of Programming and Distribution at Raycom, Inc. From
June 1991 until May 1994, he was Vice President of Affiliate Relations at
Raycom, Inc. From January 1989 until May 1991 he held the positions of Manager
of the Northeast Region and Manager of Southeast Region Advertising Sales,
also for Raycom, Inc. Mr. LaPlatney worked for Blair Television, Inc. from
February 1982 through December 1988, where he held the positions of Account
Executive, Senior Account Executive and Sales Manager. He earned his BBA in
Accountancy from the University of Notre Dame in 1981.
JAMES A. ARCARA became a Director of the Company in October 1996. Mr. Arcara
is Chairman of Radio Enterprises Incorporated, a company that he founded in
1996 to acquire and operate radio stations. Mr. Arcara served as President of
Capital Cities/ABC Radio, a division of Capital Cities/ABC, Inc., from 1986
until April 1996. From 1980 until 1986, prior to the merger of Capital Cities
Communications, Inc. with ABC, Inc., Mr. Arcara served as Executive Vice
President for Capital Cities Radio. Mr. Arcara is a past President of the
Radio Advertising Bureau and a past Director of the National Association of
Broadcasters. From 1970 until 1980, Mr. Arcara served as Vice
President/General Manager for WPAT-AM/FM radio in Clifton, New Jersey. From
1967
4
<PAGE>
until 1970, Mr. Arcara served as Vice President/General Manager for WPRO-AM
radio in Providence, Rhode Island. From 1961 until 1967, Mr. Arcara served as
General Sales Manager for WKBW-AM radio in Buffalo, New York.
DENNIS F. HOLT became a Director of the Company in October 1996. Mr. Holt
has been the President and Chief Executive Officer of Western International
Media Corporation since founding the company in 1969. Western International
Media is the largest media-buying organization in the United States. Mr. Holt
serves as a member of Skull and Dagger, Blue Key, the Silver Shield
Foundation, the Board of Counselors for the University of Southern California
School of Public Administration, the Board of Directors of Aames Home Loan,
St. John's Hospital, the SKIRBALL Cultural Center and the United States
Information Agency. Mr. Holt received the Los Angeles AD Club's Silver Medal,
and the Hollywood Radio and Television Society's Advertising Executive of the
Year Award. Mr. Holt was named Man of the Year in Advertising in 1993 and was
awarded the Advertising Industry Emergency Fund's Golden Life Savers Award in
1994.
ROBERT M. MIGGINS became a Director of the Company in October 1996. Mr.
Miggins served as Vice President/Western Region Manager for TeleRep, Inc. a
leading national television station representation company, from 1988 until
his retirement in December 1995. TeleRep is the National Sales division of Cox
Broadcasting Co. Prior to 1988, Mr. Miggins served as a principal and Vice
President and Regional Area Manager for Petry Television. Mr. Miggins also
served as Vice President of TeleRep from its formation in 1969 to 1980. Mr.
Miggins formed the Los Angeles Television Representative Association and was
President of the Association for nearly 5 years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 28, 1997, by all persons
known by the Company to own beneficially more than five percent (5%) of the
Company's Common Stock, each director, the Chief Executive Officer of the
Company, the three most highly compensated executive officers of the Company
whose total salary and bonus exceed $100,000 at December 31, 1996 and two
additional executive officers of the Company, and all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-----------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ --------------- -------------
<S> <C> <C>
David I. Saperstein........................ 8,300,357(1)(2) 50.2%
Metro Networks, Inc.
2800 Post Oak Boulevard
Suite 4000
Houston, Texas 77056
BAMCO, Inc./Baron Capital Management, Inc.. 1,535,000(3) 9.9%
767 Fifth Avenue
24th Floor
New York, New York 10153
Charles I. Bortnick........................ 1,000(4) *
Shane E. Coppola........................... 211,050(5)(6) 1.3%
Curtis H. Coleman.......................... 1,000(7) *
Gary L. Worobow............................ 500(8)(9) *
James A. Arcara............................ 2,000(10) *
Dennis F. Holt............................. 50,000(11) *
Robert M. Miggins.......................... 500(12) *
Kenin M. Spivak............................ --(13) *
All executive officers and directs as a
group (9 persons)......................... 8,567,807 51.8%
</TABLE>
- --------
* Less than 1%.
5
<PAGE>
(1) Does not include shares held by the Trusts (as defined below), beneficial
ownership of which Mr. Saperstein disclaims. In addition, the number of
shares beneficially owned does not include 2,549,750 shares of Series A
Convertible Preferred Stock owned by Mr. Saperstein and pledged to the
Company in connection with the stock loan under the Stock Loan and Pledge
Agreement. See "Certain Transactions." Such shares have not been included
because they can only be converted into Common Stock upon repayment of
such stock loan; repayment may be achieved either through the acquisition
of shares of Common Stock in the open market and delivery of such shares
to the Company or the delivery of shares of Series A Convertible Preferred
Stock. Mr. Saperstein retains the voting rights to all pledged shares of
Series A Convertible Preferred Stock.
(2) Does not include stock options to purchase 100,000 shares of Common Stock
granted under the 1996 Plan on October 16, 1996.
(3) BAMCO, Inc. ("BAMCO") and Baron Capital Management, Inc. ("Baron") have
filed with the Securities and Exchange Commission a Schedule 13G dated
February 7, 1997 reporting that BAMCO and Baron may be deemed to
beneficially own 1,270,000 and 265,000 shares, respectively, of the Common
Stock. BAMCO and Baron have filed the Schedule 13G as a group, pursuant to
Rule 13d-1(b)(1)(ii) (F) of the Securities Exchange Act of 1934, as
amended.
(4) Does not include stock options to purchase 75,000 shares of Common Stock
granted under the 1996 Plan on October 16, 1996.
(5) Includes 210,050 shares beneficially owned through the Michelle Joy
Coppola Trust. Mrs. Coppola, the beneficiary of the trust, is Mr.
Coppola's wife. These shares have been loaned to the Selling Stockholder
in connection with the initial public offering.
(6) Does not include stock options to purchase 75,000 shares of Common Stock
granted under the 1996 Plan in October 1996.
(7) Does not include stock options to purchase 55,000 shares of Common Stock
granted under the 1996 Plan in October 1996.
(8) Does not include stock options to purchase 45,000 shares of Common Stock
granted under the 1996 Plan in October 1996.
(9) Includes 200 shares owned by Mr. Worobow's minor child for which Mr.
Worobow is custodian.
(10) Does not include stock options to purchase 10,000 shares of Common Stock
granted pursuant to a Nonqualified Stock Option Agreement between Mr.
Arcara and the Company dated October 1996.
(11) Does not include stock options to purchase 10,000 shares of Common Stock
granted pursuant to a Nonqualified Stock Option Agreement between Mr.
Holt and the Company dated October 1996.
(12) Does not include stock options to purchase 10,000 shares of Common Stock
granted pursuant to a Nonqualified Stock Option Agreement between Mr.
Miggins and the Company dated October 1996.
(13) Does not include stock options to purchase 10,000 shares of Common Stock
granted pursuant to a Nonqualified Stock Option Agreement between Mr.
Spivak and the Company dated March 1997.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation. The following table provides
certain summary information concerning compensation paid by the Company to or
on behalf of the Company's Chief Executive Officer and the three executive
officers of the Company who received an annual salary and bonus in excess of
$100,000 (the "Named Executive Officers") for the year ended December 31,
1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
SALARY BONUS COMPENSATION STOCK
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) OPTIONS (#)
--------------------------- ---- ------- ------- ------------ -----------
<S> <C> <C> <C> <C> <C>
David I. Saperstein............ 1996 858,333 -- 117,286(1) 100,000
Chairman of the Board of Direc- 1995 960,000 -- 84,438(2) --
tors and Chief Executive
Officer
Charles I. Bortnick............ 1996 267,708 153,192 8,517(3) 75,000
President 1995 253,980 58,303 2,310(4) --
Shane E. Coppola............... 1996 384,583 -- 20,389(5) 75,000
Executive Vice President 1995 247,917 -- -- --
Curtis H. Coleman.............. 1996 150,000 -- 57,541(6) 55,000
Senior Vice President and Chief 1995 131,042 -- 938(4) --
Financial Officer
Gary L. Worobow................ 1996 101,979 -- 995(7) 45,000
Senior Vice President, General 1995 46,643 -- -- --
Counsel and Secretary
</TABLE>
- --------
(1) Includes expenses related to automobiles of $90,880, certain medical
benefits of $22,231, the Company's contributions on behalf of the named
individual under the 401(k) Plan of $2,375 and group term life insurance
premiums of $1,800.
(2) Includes expenses related to automobiles of $58,982, the Company's
contributions on behalf of the named individual under the 401(k) Plan of
$2,310 and a non-taxable shareholder distribution of $23,081.
(3) Includes expenses related to automobiles of $3,453, fringe benefits of
$2,281, the Company's contributions on behalf of the named individual
under the 401(k) Plan of $2,375 and group term life insurance premiums of
$408.
(4) Represents the Company's contributions on behalf of the named individual
under the 401(k) Plan.
(5) Includes expenses related to automobiles of $3,690, fringe benefits of
$16,482 and group term life insurance premiums of $216.
(6) Includes expenses related to automobiles of $1,494, fringe benefits of
$52,976, the Company's contributions on behalf of the named individual
under the 401(k) Plan of $2,375 and group term life insurance premiums of
$696.
(7) Includes fringe benefits of $75, the Company's contributions on behalf of
the named individual under the 401(k) Plan of $754 and group term life
insurance premiums of $166.
7
<PAGE>
Stock Options. The following table contains information concerning the stock
options granted during 1996 to the Named Executive Officers. All grants were
made under the Company's 1996 Incentive Stock Option Plan (the "1996 Plan").
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------ ANNUAL RATES OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS EXERCISE FOR OPTION TERM(2)
UNDERLYING GRANTED TO OR BASE ----------------------------
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED (#) FISCAL YEAR ($/SH)(1) DATE ($) ($)
---- ----------- ------------ --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
David I. Saperstein..... 100,000 18.5% $17.60 10/16/01 $2,470,000 $4,658,000
Charles I. Bortnick..... 75,000 13.9% 16.00 10/16/06 $1,852,500 $3,613,500
Shane E. Coppola........ 75,000 13.9% 16.00 10/16/06 $1,852,500 $3,613,500
Curtis H. Coleman....... 55,000 10.2% 16.00 10/16/06 $1,358,500 $2,649,900
Gary L. Worobow......... 45,000 8.3% 16.00 10/16/06 $1,111,500 $2,168,100
</TABLE>
- --------
(1) All options other than those granted to a participant who owns more than
10% of the combined voting power of all classes of outstanding stock of
the Company (a "Ten Percent Stockholder") were granted at market value at
the date of grant for a term of ten years. Options granted to Ten Percent
Stockholders were granted at 110% of the market value at the date of grant
for a term of five years. All options granted under the 1996 Plan are
subject to vesting and to earlier termination in certain instances
relating to termination of employment.
(2) Calculation of potential realizable value is based on the closing price of
the Common Stock at December 31, 1996 ($25.25) minus the exercise price
per share, times the number of options held by the named executive
officer, increased at the indicated rate and compounded annually through
the stated expiration date.
Options Exercised and Holdings. The following table sets forth information
concerning the exercise of options during the last fiscal year and unexercised
options held as of December 31, 1996 by the Named Executive Officers.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
ON REALIZED ------------------------- -------------------------
NAME EXERCISE(#) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David I. Saperstein..... 0 0 0 100,000 0 $765,000
Charles I. Bortnick..... 0 0 0 75,000 0 693,750
Shane E. Coppola........ 0 0 0 75,000 0 693,750
Curtis H. Coleman....... 0 0 0 55,000 0 508,750
Gary L. Worobow......... 0 0 0 45,000 0 416,250
</TABLE>
- --------
(1) Calculation of value realized is based on the closing price of the Common
Stock at December 31, 1996 ($25.25) minus the exercise price per share,
times the number of shares acquired upon the exercise of stock options by
the Named Executive Officer.
(2) Calculation of the value of unexercised in-the-money options at December
31, 1996 is based on the closing price of the Common Stock at December 31,
1996 ($25.25) minus the exercise price per share of the options granted,
times the number of options held by the Named Executive Officer.
8
<PAGE>
1996 INCENTIVE STOCK OPTION PLAN
The Company's Board of Directors adopted the 1996 Incentive Stock Option
Plan (the "1996 Plan") for the Company's officers and employees. The Board of
Directors has discretionary authority, subject to certain restrictions, to
administer the 1996 Plan, including but not limited to determining the
individuals to whom, the times at which, and the exercise price for which
options will be granted. The total number of shares reserved for issuance
under the 1996 Plan is 1,000,000, of which approximately 540,000 were issued
during 1996. The exercise price of options granted under the 1996 Plan may not
be less than 100% of the fair market value (or not less than 110% of the fair
market value as to any individual who, at the time the option is granted,
owned more than 10% of the total combined voting power of all classes of stock
of the Company) of the Common Stock on the date such option was granted.
Options granted under the 1996 Plan are not transferable by the optionholders
except by will or by the laws of descent and distribution. Options granted
under the 1996 Plan typically become vested and exercisable for up to 33 1/3%
of the total optioned shares upon the first anniversary of the grant of the
option and for an additional 33 1/3% of the total optioned shares upon each
succeeding anniversary until the option is fully exercisable at the end of the
third year. Generally, the unexercised portion of any option automatically
terminates upon the earlier of (i) termination of the optionee's employment
with the Company, (ii) the expiration of 90 days from the date his employment
with the Company terminates for any reason other than cause, death, or
disability (iii) the expiration of one year after the optionee's death or (iv)
the expiration of the option. Upon the sale, merger or liquidation of the
Company, outstanding options may be exercised immediately prior to the
consummation of such a transaction, whether or not vested as of such date of
consummation.
EMPLOYEE STOCK PURCHASE PLAN
A total of 1,500,000 shares of the Company's Common Stock have been reserved
for issuance under the Company's 1996 Employee Stock Purchase Plan (the
"Purchase Plan"). None of such shares have been issued. The Purchase Plan
permits an eligible employee of the Company to purchase common stock at a
discount through payroll deductions not to exceed 10% of the compensation
received by such employee during such pay period ("Employee Purchases"). An
employee's right to purchase shares under the Purchase Plan will be granted at
the beginning of each six month period based on payroll deductions made in the
prior six month period. All purchases will be made automatically at the end of
each six month period. Employee Purchases cannot exceed $25,000 in any plan
year. The price at which the Common Stock is purchased under the Purchase Plan
as set by the Board of Directors is the lesser of 95% of the fair market value
of the Common Stock at the time an employee's right to purchase the stock is
granted, or the fair market value of the Common Stock on the date of purchase.
DEFINED CONTRIBUTION PLAN
Effective in April 1995, the Company established a profit sharing plan under
Section 401(k) of the Internal Revenue Code (the "401(k) Plan") for all
eligible employees. Under the 401(k) Plan, all eligible employees are
permitted to defer compensation up to a maximum of 10% of their income. The
401(k) Plan provides for a matching contribution by the Company equal to 25%
of the amount contributed by the employee, up to 6% of the employee's total
compensation. These contributions amounted to $274,294 in 1996. The employee's
contribution is immediately vested and 20% of the Company's matching
contribution vests every year after the second year of the employee's
participation in the plan. Accordingly, the matching contribution is fully
vested six years after such contribution.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of the Named
Executive Officers. Such employment agreements prohibit each of the Named
Executive Officers from competing with the Company for a period of one year
after termination of employment.
Mr. Saperstein is a party to an employment agreement with the Company
pursuant to which he serves as Chief Executive Officer of the Company. Under
the terms of Mr. Saperstein's employment agreement, he is
9
<PAGE>
entitled to receive an annual base salary of $350,000. Such base salary will
increase by 5% during each year term of the employment agreement. The
employment agreement provides that Mr. Saperstein may receive a bonus of up to
$150,000 per annum at the discretion of the Board of Directors or the
Compensation Committee. The bonus potential will increase by 5% during each
year of the term of the employment agreement. Pursuant to the employment
agreement, Mr. Saperstein was granted stock options under the 1996 Plan to
purchase up to 100,000 shares of the Company's Common Stock at an exercise
price equal to 110% of the initial public offering price. Subsequent grants of
options to Mr. Saperstein during the term of the employment agreement will be
at the discretion of the Board of Directors or the Compensation Committee. Mr.
Saperstein's employment agreement became effective as of October 16, 1996, and
has a two year term subject to automatic renewal at the end of the second year
for an additional period of one year, unless the Company gives written notice
at least 90 days prior to the end of such second year of its election to
terminate such employment agreement at the end of such second year
(hereinafter, a "Non-Renewal").
Mr. Bortnick is a party to an employment agreement with the Company pursuant
to which he serves as President of the Company. Under the terms of Mr.
Bortnick's employment agreement he is entitled to receive an annual base
salary of $275,000. Such base salary will increase by 5% upon each anniversary
of the closing during the term of the employment agreement. The agreement
provides that Mr. Bortnick may receive a bonus of up to $100,000 per annum at
the discretion of the Board of Directors or the Compensation Committee. The
bonus potential increases by 5% during each year of the term of the employment
agreement. Pursuant to the employment agreement, Mr. Bortnick was granted
stock options under the 1996 Plan to purchase up to 75,000 shares of the
Company's Common Stock at an exercise price equal to the initial public
offering price. Subsequent grants during the term of the employment agreement
will be at the discretion of the Board of Directors or the Compensation
Committee. Mr. Bortnick's employment agreement has a two year term from
October 16, 1996 with an automatic renewal provision of one year, subject to
Non-Renewal. Mr. Bortnick currently receives a base salary of $275,000. Mr.
Bortnick's agreement also provides that upon the termination of such agreement
by the Company or Mr. Bortnick under certain circumstances, Mr. Bortnick will
continue to receive the salary provided for under his employment agreement for
three months following termination of employment. Additionally, upon a change
of control (as defined in the employment agreement) of the Company, if Mr.
Bortnick's employment does not continue for a minimum of one year, he would be
entitled to receive two (2) times his then current base salary.
Mr. Coppola is a party to an employment agreement with the Company pursuant
to which he serves as Executive Vice President of the Company. Under the terms
of Mr. Coppola's employment agreement he is entitled to receive an annual base
salary of $200,000. Such base salary will be increased by 5% during each year
of the term of the employment agreement. The employment agreement provides
that Mr. Coppola may receive a bonus of up to $100,000 per annum at the
discretion of the Board of Directors or the Compensation Committee. The bonus
potential will increase by 5% during each year of the term of the employment
agreement. Pursuant to the employment agreement, Mr. Coppola was granted stock
options under the 1996 Plan to purchase up to 75,000 shares of the Company's
Common Stock at an exercise price equal to the initial public offering price.
Subsequent grants during the term of the employment agreement will be at the
discretion of the Board of Directors or the Compensation Committee. Mr.
Coppola's employment agreement became effective as of October 16, 1996, and
has a two year term with an automatic renewal provision of one year, subject
to Non-Renewal.
Mr. Coleman is a party to an employment agreement with the Company pursuant
to which he will serve as Senior Vice President and Chief Financial Officer of
the Company. Under the terms of Mr. Coleman's employment agreement he is
entitled to receive an annual base salary of $150,000. Such base salary will
increase by 5% during each year of the term of the employment agreement. The
employment agreement provides that Mr. Coleman may receive a bonus of up to
$50,000 per annum at the discretion of the Board of Directors or the
Compensation Committee. The bonus potential will increase by 5% during each
year of the term of the employment agreement. Pursuant to the employment
agreement, Mr. Coleman was granted stock options under the 1996 Plan to
purchase up to 55,000 shares of the Company's Common Stock at an exercise
price equal to the initial public offering price. Subsequent grants during the
term of the employment agreement will be at the
10
<PAGE>
discretion of the Board of Directors or the Compensation Committee. Mr.
Coleman's employment agreement became effective as of October 16, 1996, and
has a two year term with an automatic renewal provision of one year, subject
to Non-Renewal.
Mr. Worobow is a party to an employment agreement with the Company pursuant
to which he serves as Senior Vice President, General Counsel and Secretary of
the Company. Under the terms of Mr. Worobow's employment agreement he is
entitled to receive an annual base salary of $117,500. Such base salary will
increase by 5% during each year of the term of the employment agreement. The
employment agreement provides that Mr. Worobow may receive a bonus of up to
$37,500 per annum at the discretion of the Board of Directors or the
Compensation Committee. The bonus potential will increase by 5% during each
year of the term of the employment agreement. Pursuant to the employment
agreement, Mr. Worobow was granted stock options under the 1996 Plan to
purchase up to 45,000 shares of the Company's Common Stock at an exercise
price equal to the initial public offering price. Subsequent grants during the
term of the employment agreement will be at the discretion of the Board of
Directors or the Compensation Committee. Mr. Worobow's employment agreement
became effective as of October 16, 1996, and has a two year term with an
automatic renewal provision of one year, subject to Non-Renewal.
INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation and Bylaws
require the Company to indemnify each officer, director or employee in respect
of claims made by reason of his or her status with the Company, including
stockholder derivative suits, provided he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the Company and, with respect to any criminal act or proceeding,
had no reasonable cause to believe his or her conduct was unlawful. Expenses
incurred in the defense of any such action may be paid by the Company in
advance of final disposition upon receipt of an undertaking from the officer,
director or employee to repay the advances if there is an ultimate
determination that he or she is not entitled to be indemnified.
NON-EMPLOYEE DIRECTOR COMPENSATION
Each member of the Board of Directors who is not an officer or an owner, or
the representative of an owner, of more than 5% of the outstanding Common
Stock of the Company receives compensation of $1,000 per meeting for serving
on the Board of Directors. The Company also reimburses Directors for any
expenses incurred in attending meetings of the Board of Directors and the
committees thereof. Upon their election to the Board of Directors, each non-
employee Board member was granted options to purchase 10,000 shares of the
Company's Common Stock. Such options will be exercisable at the fair market
value of the common stock at the date of grant. These options will become
vested and exercisable for up to 33 1/3% of the total optioned shares upon the
first anniversary of the grant of the options and for an additional 33 1/3% of
the total optioned shares upon each succeeding anniversary until the option is
fully exercisable at the end of the third year.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of James A. Arcara, Shane E. Coppola and Robert M. Miggins. The
Committee is charged with reviewing and approving compensation of the
Company's executives. The Company's executive compensation program consists of
three main components: base salary, potential for an annual bonus based on
performance, and the opportunity to receive stock options exercisable for the
purchase of Common Stock of the Company. The Committee is charged with the
responsibility of granting stock options to employees.
The Company has previously entered into employment agreements with each of
the Named Executive Officers covered in the Summary Compensation Table above.
See "Executive Compensation--Employment Agreements." Each of such persons
receives a base salary with increases at the discretion of the Committee and
11
<PAGE>
is eligible to receive a bonus in accordance with such contracts at the
discretion of the Committee. In general, bonuses are calculated using as
criteria the Company's performance and the performance of the executive during
the relevant year.
The Company's executives are eligible to receive stock options in accordance
with the Company's stock option plans. The objectives of such participation
are to align the long-term interests of executives and stockholders by
encouraging executives to develop and maintain a significant, long-term stock
ownership position in the Company. The Committee has the responsibility of
granting stock options to executives and other employees. In granting stock
options, the Committee takes into account Company performance and individual
performance. Company performance is measured by increases in earnings and, to
a lesser extent, increases in revenues, and individual performance is measured
by the individuals' contributions to such enhanced performance.
The Company's Chairman of the Board and Chief Executive Officer, David I.
Saperstein, received compensation in 1996 determined in accordance with the
provisions of his employment agreement with the Company. See "Executive
Compensation--Employment Agreements."
James A. Arcara
Shane E. Coppola
Robert M. Miggins
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total return to
stockholders since the Company's initial public offering on October 17, 1996,
with that of the Standard & Poor's 500 Stock Index (the "S&P 500 Index") and a
peer group index (the "Peer Group Index") consisting of those public companies
traded on an exchange and listed under the same standard industry
classification code as the Company (SIC No. 4899,Communications Services, Not
Elsewhere Classified). The total return calculations set forth below assume
$100 invested on October 17, 1996, in each of the Company, the S&P 500 Index
and the Peer Group Index, with reinvestment of dividends into additional
shares of the same class of securities at the frequency with which dividends
were paid on such securities through December 31, 1996. Historical results are
not necessarily indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE S&P 500 INDEX
AND THE PEER GROUP INDEX
[GRAPH APPEARS HERE]
FISCAL YEAR ENDING
OCT 17, OCT 31, NOV 30, DEC 31,
COMPANY 1996 1996 1996 1996
- ------- ------- ------- ------- -------
METRO NETWORKS, INC. 100.00 98.78 118.29 123.17
PEER GROUP INDEX 100.00 100.00 104.79 102.87
S&P 500 INDEX 100.00 100.00 107.56 105.43
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and 10%
stockholders to file reports regarding initial ownership and changes in
ownership with the Securities and Exchange Commission and the Nasdaq Stock
Market. Executive officers, directors and 10% stockholders are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. The Company's information
regarding compliance with Section 16(a) is based solely on a review of the
copies of such reports furnished to the Company by the Company's executive
officers, directors and 10% stockholders. The Company is not aware of any
noncompliance with the requirements of Section 16(a) to file reports during
1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996, the Company leased certain real property in Vail, Colorado and
in Malibu, California from Five S Properties, Ltd., a limited partnership of
which a company owned by Mr. Saperstein is the general partner ("Five S").
Such properties were used for affiliate relations and for other Company
business-related purposes. The annual lease payments on these properties are
$60,000 and $240,000, respectively. The amounts of such lease payments were
determined by the Company based on its estimate of the value of the leased
properties but without reference to outside sources of valuation. Because the
Company did not make full-time use of these properties, such leases were
terminated as of October 1996, and the Company has no intention to enter into
similar leases. Prior to October 1996, the Company incurred certain operating
and interest expenses on behalf of Five S. In October 1996, the Company
distributed a note receivable from Five S to Mr. Saperstein in the amount of
$832,495, representing the amounts incurred on behalf of Five S net of the
lease payments.
During 1996, the Company entered into certain reciprocal arrangements with
unrelated third parties as a result of which the Company received or will
receive goods and services for the benefit of Mr. Saperstein. The reciprocal
arrangements obligate the Company to provide commercial airtime, provide other
goods and services, and make cash disbursements to such third parties in
exchange for the goods and services received by the Company. The dollar values
of such arrangements have typically been calculated based upon the Company's
estimate of the fair market value of the commercial airtime inventory involved
and the Company believes that its estimates have been made on a basis similar
to the basis on which estimates are made by others in the broadcast industry.
As of December 31, 1996, the Company was obligated to provide approximately
$3.4 million of commercial airtime, goods and services and cash under these
reciprocal arrangements. The Company has entered into an agreement with Mr.
Saperstein pursuant to which Mr. Saperstein has been distributed the goods and
services the Company holds for Mr. Saperstein's benefit. The Company also
distributed to Mr. Saperstein all of its rights to the goods and rights to
services that are the subject of existing reciprocal arrangements but which
have not yet been delivered to the Company. The value of such goods and
services was approximately $4.1 million.
During 1996, the Company entered into certain transactions with Pro Journey
Travel, Inc., a company owned by Mr. Saperstein ("Pro Journey"). The total
value of such transactions was approximately $80,000. As of October 1996, Pro
Journey owed the Company approximately $57,582. In October 1996, the Company
forgave this receivable. As of December 31, 1996, the Company ceased all
transactions and arrangements with Pro Journey.
Mr. Saperstein has personally utilized the services of several of the
Company's employees. The total compensation paid to such employees was
$178,246 in 1996. Except for two individuals who provide security and
transportation services to Mr. Saperstein, these persons ceased to be
employees of the Company. The individuals remaining in the Company's employ
will be paid combined annual compensation of approximately $75,000.
As of October 1996, the Company and Mr. Saperstein entered into an agreement
pursuant to which Mr. Saperstein may seek reimbursement from the Company for
any income tax obligation attributable to any period
14
<PAGE>
prior to the Reorganization. Alternatively, in the event that the status of
any of Metro Video News, Inc., Metro Reciprocal, Inc., or Metro Traffic
Control, Inc. as a subchapter S corporation is not respected, the Company may
seek reimbursement from Mr. Saperstein, but only to the extent that Mr.
Saperstein receives a tax refund attributable to amounts he previously
included in income in his capacity as a shareholder of such corporations. The
Company does not anticipate that the subchapter S status of Metro Video News,
Inc., Metro Reciprocal, Inc., or Metro Traffic Control, Inc., will be
successfully challenged. In October 1996, the Company distributed to Mr.
Saperstein a non-interest bearing promissory note in the amount of $3.1
million representing the estimated tax obligation attributable to the period
prior to the Reorganization. Such note is payable on demand, but in all events
no later than December 31, 1997.
As of October 1996, the Company entered into a Stock Loan and Pledge
Agreement with Mr. Saperstein pursuant to which the Company loaned Mr.
Saperstein 2,549,750 shares of Common Stock. The loan is for a term of ten
years, although the Company has the right to require the return of the loaned
Common Stock (the "Loaned Stock") from Mr. Saperstein prior to that time upon
three days notice. As security for the loan, Mr. Saperstein pledged a number
of shares of Series A Convertible Preferred Stock of the Company which when
converted into common stock will be equal to the number of shares of Loaned
Stock. Mr. Saperstein is obligated to pay to the Company an annual fee over
the term of the loan of 0.1% of the average fair market value of the Loaned
Stock during the five day period immediately following the date of the Stock
Loan and Pledge Agreement. One-half of this fee is payable annually, and the
remaining one-half of this fee is payable upon the termination of the loan if
such termination occurs pursuant to an Event of Default (as defined in the
Stock Loan and Pledge Agreement) or at the end of the ten year term of the
Stock Loan and Pledge Agreement. The Company will forfeit this portion of the
fee if it calls the loan prior to the end of the ten year term. In addition,
Mr. Saperstein paid an upfront transaction fee of $2,550 to the Company and is
obligated to repay to the Company any dividends that are paid by the Company
on the Loaned Stock. The Series A Convertible Preferred Stock does not pay any
dividends.
RATIFICATION AND APPROVAL OF
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
The Board of Directors has selected KPMG Peat Marwick LLP to audit the
financial statements of the Company for the year ended December 31, 1997. KPMG
Peat Marwick LLP has audited the financial statements of the Company and its
predecessors, since 1995.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY AND APPROVE THE SELECTION OF KPMG PEAT MARWICK LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 1997.
It is expected that a representative of KPMG Peat Marwick LLP will be
present at the Annual Meeting to respond to any questions and to make a
statement on behalf of his or her firm, if such representative so desires.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters other than those set forth herein and in the Notice of Annual
Meeting of Stockholders that will come before the meeting. Should any other
matters arise requiring the vote of stockholders, it is intended that proxies
will be voted in respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
15
<PAGE>
FUTURE STOCKHOLDER PROPOSALS
The Company must receive at its principal office before January 2, 1998, any
proposal which a stockholder wishes to submit to the 1998 Annual Meeting of
Stockholders, if the proposal is to be considered by the Board of Directors
for inclusion in the proxy materials for that annual meeting.
----------------
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed prepaid return envelope. Please act promptly to
ensure that you will be represented at this important meeting.
THE COMPANY WILL PROVIDE WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS, A COPY WITHOUT EXHIBITS OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1996. REQUESTS SHOULD BE MAILED TO
THE DIRECTOR OF CORPORATE COMMUNICATIONS, METRO NETWORKS, INC., 2800
POST OAK BOULEVARD, SUITE 4000, HOUSTON, TEXAS 77056. THE ANNUAL
REPORT ON FORM 10-K IS NOT SOLICITING MATERIAL AND IS NOT INCORPORATED
IN THIS DOCUMENT BY REFERENCE.
By Order of the Board of Directors
LOGO
David I. Saperstein
Chairman of the Board and Chief
Executive Officer
May 2, 1997
16
<PAGE>
METRO NETWORKS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
JUNE 6, 1997
David I. Saperstein, Shane E. Coppola and Gary L. Worobow, and each of them,
with full power of substitution, are hereby authorized to represent and to vote
as directed on this proxy the shares of Common Stock and Preferred Stock of
Metro Networks, Inc. held of record by the undersigned on April 28, 1997, at the
Annual Meeting of Stockholders to be held on June 6, 1997, and at any
adjournments, as if the undersigned were present and voting at the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR EACH OF THE PROPOSALS SET FORTH ON THIS
PROXY.
Whether or not you expect to attend the meeting, you are urged to execute and
return this proxy, which may be revoked at any time prior to its use.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
WITHHELD
AUTHORITY
FOR to vote for
1. ELECTION OF all nominees all nominees FOR AGAINST ABSTAIN
NOMINEES [ ] [ ] NOMINEES: David I. Saperstein 2. RATIFICATION AND APPROVAL
AS CLASS 1 Gary L. Worobow OF KPMG PEAT MARWICK LLP [ ] [ ] [ ]
DIRECTORS OF THE COMPANY Kenin M. Spivak AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR FISCAL 1997
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE. VOTES MUST BE
INDICATED (X) IN BLACK OR BLUE INK.
SIGNATURE _______________________________ SIGNATURE __________________________________ DATED: _______________________________ 1997
NOTE: Signatures should agree with the names stencilled hereon. When signing as executor, administrator, trustee, guardian or
attorney, please give the title as such. For joint accounts or co-fiduciaries, all joint owners or co-managers should sign.
</TABLE>
