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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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NIELSEN MEDIA RESEARCH, INC.
(NAME OF SUBJECT COMPANY)
NIELSEN MEDIA RESEARCH, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
653929307
(CUSIP NUMBER OF CLASS OF SECURITIES)
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STEPHEN J. BOATTI
SENIOR VICE PRESIDENT,
CHIEF LEGAL OFFICER AND SECRETARY
NIELSEN MEDIA RESEARCH, INC.
299 PARK AVENUE
NEW YORK, NEW YORK 10171
(212) 708-7500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS ON
BEHALF OF THE PERSON(S) FILING STATEMENT)
COPY TO:
JOEL S. HOFFMAN, ESQ.
JOHN G. FINLEY, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Nielsen Media Research, Inc., a Delaware
corporation (the "Company"), and the address of its principal executive offices
is 299 Park Avenue, New York, New York 10171. The title of the equity securities
to which this Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Statement") relates is the common stock, par value $0.01 per share (the "Common
Stock"), of the Company, including the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
October 15, 1996, between the Company and First Chicago Trust Company of New
York (the "Rights Agent"), as amended by the amendment thereto dated as of
August 15, 1999 (as so amended, the "Rights Agreement"). References herein to
the "Shares" mean the outstanding shares of the Common Stock and the associated
Rights.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") disclosed in a
Tender Offer Statement on Schedule 14D-1 dated August 20, 1999 (the "Schedule
14D-1") by Niner Acquisition, Inc., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of VNU USA, Inc., a Delaware corporation ("Parent"), to
purchase all outstanding Shares at a price of $37.75 per share (the "Offer
Consideration"), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
August 20, 1999 (the "Offer to Purchase") and the related Letter of Transmittal
(which Schedule 14D-1, Offer to Purchase, Letter of Transmittal and other
documents, together with any supplements or amendments thereto, are referred to
herein collectively as the "Offer Documents").
According to the Schedule 14D-1, the principal executive offices of Parent
and Purchaser are located at 1515 Broadway, New York, New York 10036.
The Offer is being made pursuant to (i) the Agreement and Plan of Merger,
dated as of August 15, 1999 (the "Merger Agreement"), among the Company, Parent
and Purchaser and (ii) the Guarantee of VNU NV, the parent company of Parent
(the "Guarantee"). Copies of the Merger Agreement and the Guarantee are filed as
Exhibits to this Statement and are incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above.
(b) Except as set forth in this Statement, to the knowledge of the Company,
as of the date hereof, there are no material contracts, agreements, arrangements
or understandings and no actual or potential conflicts of interest between the
Company or its affiliates and (i) the Company, its executive officers, directors
or affiliates or (ii) Parent or Purchaser or their respective executive
officers, directors or affiliates.
EXECUTIVE AND EMPLOYEE RELATED ARRANGEMENTS
The Company, Purchaser and Parent have agreed, pursuant to the Merger
Agreement, that certain actions will be taken with respect to stock options held
by directors and employees of the Company. Immediately prior to the Merger, each
outstanding vested employee option to purchase Shares will be canceled by the
Company and, in consideration, the Company will pay to the holder of the option
an amount equal to the product of (A) the excess of the Merger Consideration (as
defined below) over the exercise price per Share and (B) the number of Shares
subject to such option. All vested and unvested stock options and stock units
under the 1996 Nielsen Media Research, Inc. Non-Employee Directors' Plan and all
vested and unvested stock options under the 1996 Nielsen Media Research, Inc.
Replacement Plan for Certain Employees Holding The Dun & Bradstreet Corporation
Equity Based Awards will be similarly canceled and cashed out. In addition,
stock options held by William Jacobi, Chairman of the Company, under other
option plans of the Company will be similarly canceled and cashed out.
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All unvested employee stock options will be similarly canceled and cashed
out, except that payments will be, with certain exceptions, subject to continued
employment of the employee and deferred as follows:
- all unvested options granted in November 1996 that would otherwise vest in
November 1999 will be paid out in November 1999; and
- other unvested options will be paid out in four equal installments over a
two year period commencing at the closing of the Merger.
The employees will be entitled to receive the entire deferred amounts under
their unvested options upon death, disability or termination by the Company
without cause or, for the Executives (as defined below) only, by the employee
with good reason.
The deferred amounts for the 20 executives who have entered into change in
control agreements (which includes John Dimling, a director of the Company, the
"Executives") with the Company will be deposited in an escrow account and accrue
interest for the benefit of the Executives. The deferred amounts for all
employees will be guaranteed by VNU NV, the ultimate corporate parent of Parent.
The deferral of these payments with respect to the Executives requires their
consent, which the Company will use reasonable best efforts to obtain. Nineteen
of the Executives have already signed such consents.
As part of the consents referred to in the previous paragraph, the
consenting Executives will be subject to a noncompetition and nonsolicitation
provision for an 18-month period after the termination of their employment. If
such Executive remains employed by the Company for 15 months after the Merger,
he or she will be entitled to receive the payment contemplated by his or her
change in control agreement.
Until the first anniversary of the Merger, Parent has agreed pursuant to the
Merger Agreement to (a) provide each employee with employee benefits that are no
less favorable, in the aggregate, than those provided immediately prior to the
Merger and (b) maintain a severance package for each employee that is no less
favorable than that maintained immediately prior to the Merger.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement filed with the Commission as an exhibit to the Schedule
14D-9 and is incorporated herein by reference. Capitalized terms not otherwise
defined below shall have the meanings set forth in the Merger Agreement.
THE OFFER On the fifth business day after the public announcement by Parent
and Company of the execution and delivery of the Merger Agreement, Purchaser is
required to commence an offer to purchase any and all outstanding Shares, at a
price of $37.75 per share, net to the seller in cash (the "Offer
Consideration"). The obligation of Parent and Purchaser to commence the Offer,
to consummate the Offer and to accept for payment and pay for Shares validly
tendered in the Offer and not withdrawn shall be subject to the conditions set
forth in Section 14 of the Purchaser's Offer to Purchase dated August 20, 1999.
The Merger Agreement provides that, without the prior written consent of the
Company, Purchaser shall not (i) change the form of the consideration to be paid
in the Offer, decrease the amount of the consideration to be paid in the Offer
or decrease the number of Shares sought pursuant to the Offer, (ii) extend the
expiration date of the Offer beyond the initial expiration date of the Offer,
except (A) as required by applicable law, (B) that if, immediately prior to the
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer constitute at least 80% but less than 90% of
the outstanding Shares, Purchaser may, in its sole discretion, extend the Offer
for one or more periods not to exceed an aggregate of five business days,
notwithstanding that all conditions to the Offer
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are satisfied as of such expiration date of the Offer, (C) that if any condition
to the Offer has not been satisfied or waived, Purchaser may, in its sole
discretion, extend the expiration date of the Offer for one or more periods (not
in excess of 10 business days each), but in no event later than December 22,
1999, (D) that if Parent reasonably and in good faith believes, based on the
written advice of counsel to Parent, that legislation, Treasury regulations or
any other authoritative pronouncement (in proposed form or otherwise) is about
to be issued or enacted with a retroactive effective date, and such legislation,
regulations or pronouncement would have a Material Adverse Effect (as defined
below) on the Company as a result of the transactions contemplated by the Merger
Agreement, Purchaser may, in its sole discretion, pending the issuance of such
legislation, regulations or pronouncement, extend the expiration date of the
Offer for one or more periods (not in excess of 10 business days each) until the
earlier of (x) the date Parent notifies the Company of its intent to proceed
with the Offer notwithstanding that such regulations or pronouncement have not
been issued, (y) five business days after the issuance of such regulations or
pronouncement or (z) December 15, 1999, or (E) as provided in the following
paragraph, (iii) waive the condition (the "Minimum Condition") that there shall
be validly tendered and not withdrawn prior to the time the Offer expires a
number of Shares which, together with the Shares then owned by Parent,
constitutes at least a majority of the Shares outstanding on a fully-diluted
basis on the date of purchase, (iv) waive the condition relating to the
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act (the "HSR Act") the condition relating to the opinion of
counsel to be delivered to the Company and IMS Health Incorporated relating to
certain tax matters or the condition relating to the non-termination of the
Merger Agreement, (v) amend any term or other condition of the Offer in any
manner adverse to holders of Shares, or (vi) impose any additional condition to
the Offer; provided, however, that, except as set forth above and subject to
applicable legal requirements, Purchaser may waive any condition to the Offer in
its sole discretion; and provided, further, that the Offer may be extended in
connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the Securities
and Exchange Commission.
If certain of the conditions to the Offer, including (i) the expiration or
termination of any applicable waiting period under the HSR Act; (ii) the absence
of any statute, regulation, judgment, order or injunction that is enacted,
entered, enforced, promulgated or deemed applicable to the Offer or the Merger,
other than the applicable waiting periods under the HSR Act, that would prohibit
or impose any material limitations on Parent's or Purchaser's acquisition of the
Shares or ownership or operation of all or a material portion of the Company's
business or assets; and (iii) the absence of certain disruptions in the
securities or banking markets, shall not have been satisfied or waived at the
initial expiration date of the Offer, Parent will, at the request of the
Company, cause Purchaser to extend the expiration date of the Offer for one or
more periods (not in excess of 10 business days each) but in no event later than
December 22, 1999. If the Offer shall not have been consummated on the scheduled
expiration date of the Offer due to the failure to satisfy the condition
relating to the Central Works' Council of VNU (the "Works' Council"), Parent
will, at the request of the Company, cause Purchaser to extend the expiration
date of the Offer for one or more periods (not in excess of 10 business days
each), but in no event later than April 7, 2000. If the Company reasonably and
in good faith believes, based on written advice of counsel to the Company, that
legislation, Treasury regulations or any other authoritative pronouncement (in
proposed form or otherwise) is about to be issued or enacted with a retroactive
effective date, and such regulations or pronouncement would have a Material
Adverse Effect on the Company as a result of the transactions contemplated by
the Merger Agreement, Parent will, at the request of the Company, cause
Purchaser to extend the expiration date of the Offer for one or more periods
until the earlier of (i) the date the Company notifies Parent of the Company's
intent to proceed with the Offer notwithstanding that such regulations or
pronouncement has not been issued, or (ii) five business days after the issuance
of such regulations or pronouncement, but in no event shall the Company be
entitled, pending the issuance of such legislation, regulations or
pronouncement, to request that Parent cause Purchaser to extend the expiration
date of the Offer beyond December 15, 1999.
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THE MERGER Pursuant to the Merger Agreement, after the completion of the
Offer and satisfaction or waiver, if permissible, of all conditions to the
Merger, Purchaser will be merged with and into the Company (the "Merger") and
the Company will be the surviving corporation (the "Surviving Corporation") in
the Merger in accordance with the Delaware General Corporation Law (the "DGCL").
At the effective time of the Merger (the "Effective Time"), each Share then
outstanding (other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries, including Purchaser, and
(iii) stockholders who properly perfect their appraisal rights under the DGCL)
will be converted into the right to receive $37.75 in cash (the "Merger
Consideration"), without interest.
CONDITIONS TO THE MERGER. The respective obligations of each party to
effect the Merger are subject to the satisfaction or written waiver of the
following conditions: (i) Purchaser shall have accepted for payment and paid for
all Shares validly tendered in the Offer and not withdrawn; provided, that the
condition contained in this clause may not be invoked by Parent or Purchaser if
Purchaser shall have failed to purchase Shares so tendered and not withdrawn in
violation of the terms of the Merger Agreement or the Offer; (ii) the Merger
Agreement shall have been adopted by the affirmative vote of the holders of the
requisite number of shares of capital stock of the Company if such vote is
required pursuant to the Company's certificate of incorporation, the DGCL or
other applicable law; (iii) no temporary restraining order, injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition the party so invoking
this condition shall have used its best efforts to lift or remove such order,
injunction, restraint or prohibition; and (iv) all necessary waiting periods
under the HSR Act applicable to the Merger shall have expired or been earlier
terminated.
DIRECTORS. Promptly after the purchase of and payment for any Shares by
Purchaser pursuant to the Offer, Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Company's Board
of Directors as is equal to the product of the total number of directors (after
giving effect to any increase in the size of such Board) multiplied by the
percentage that the number of Shares beneficially owned by Purchaser at such
time (including Shares so accepted for payment) bears to the total number of
Shares then outstanding; provided that the Parent designees will constitute a
majority of the entire Board of Directors. In furtherance thereof, the Company
shall, upon request of Parent, use its reasonable best efforts promptly either
to increase the size of its Board of Directors or to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable such
designees of Parent to be so elected or appointed to the Board of Directors, and
the Company shall take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. At such time, the Company
shall, if requested by Parent, also take all action necessary to cause persons
designated by Parent to constitute at least the same percentage (rounded up to
the next whole number) as Parent is entitled to designate on the Company's Board
of Directors of (i) each committee of the Company's Board of Directors, (ii)
each board of directors (or similar body) of each subsidiary of the Company and
(iii) each committee (or similar body) of each such board.
Notwithstanding the foregoing, the parties to the Merger Agreement shall use
their respective best efforts to ensure that at least two of the members of the
Board of Directors shall, at all times prior to the Effective Time, be directors
of the Company who were directors of the Company on the date of the Merger
Agreement (the "Continuing Directors"), provided, that, if there shall be in
office less than two Continuing Directors for any reason, the Board of Directors
shall cause the person designated by the remaining Continuing Director to fill
such vacancy who shall be deemed to be a Continuing Director for all purposes of
the Merger Agreement, or if no Continuing Directors then remain, the other
directors of the Company then in office shall designate two persons to fill such
vacancies who will not be officers or employees or affiliates of the Company,
Parent, VNU NV or any of their respective subsidiaries and such persons shall be
deemed to be Continuing Directors for all purposes of the Merger Agreement. From
and after the time, if any, that Parent's designees constitute a majority of the
Board of Directors and prior to the Effective Time, any amendment or
modification of the Merger Agreement, any amendment to the
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Company's certificate of incorporation or by-laws, any termination of the Merger
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser under the Merger Agreement, any waiver of any
condition to the Company's obligations under the Merger Agreement or any of the
Company's rights under the Merger Agreement or other action by the Company under
the Merger Agreement which adversely affects the holders of shares other than
Parent or Purchaser be effected only if there are in office one or more
Continuing Directors and such action is approved by the action of unanimous vote
of the entire Board of Directors.
STOCKHOLDERS' MEETING. The Merger Agreement provides that, if required by
applicable law to consummate the Merger, the Company shall: (i) as soon as
practicable following the purchase of Shares by Purchaser pursuant to the Offer,
with the cooperation of Parent take all action necessary to convene and hold a
special meeting of the stockholders of the Company (the "Stockholders Meeting")
for the purposes of considering and voting upon the Merger Agreement and to
solicit proxies pursuant to the Proxy Statement (as defined below) in connection
therewith, and (ii) if requested by Parent, promptly prepare and file with the
Commission a proxy statement or information statement (together with any
amendment or supplement thereto, the "Proxy Statement") relating to the
Stockholders Meeting in accordance with the Exchange Act and the rules and
regulations thereunder. The Company shall (x) use its best efforts to respond to
all comments made by the Commission with respect to the Proxy Statement and,
subject to compliance with Commission rules and regulations, cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable date, and
(y) recommend that the stockholders of the Company vote in favor of the adoption
of the Merger Agreement at the Stockholders Meeting and cause such
recommendation to be included in the Proxy Statement. Notwithstanding the
foregoing, in the event that Purchaser shall acquire at least 90% of the
outstanding Shares in the Offer, Parent and Purchaser shall take all necessary
actions to cause the Merger to become effective, as soon as practicable after
the expiration of the Offer, without a meeting of stockholders of the Company,
in accordance with Section 253 of the DGCL.
STOCK OPTIONS. The Merger Agreement provides that (i) vested stock options
under the Company's benefit plans shall, immediately prior to the Effective
Time, be cancelled by the Company and in consideration of such cancellation, the
Company shall pay to holders thereof an amount equal to the product of (a) the
excess, if any, of the Merger Consideration over the exercise price per share
subject to such stock option and (b) the number of shares subject to such stock
options immediately prior to its cancellation (such payment shall be less any
withholding taxes and without interest); and (ii) unvested stock options under
the Company's benefit plans shall, immediately prior to the Effective Time but
subject to the Company's obtaining any necessary waivers, be cancelled by the
Company and in consideration of such cancellation, the Company shall pay to
holders thereof an amount equal to the product of (a) the excess, if any, of the
Merger Consideration over the exercise price per share subject to such stock
option and (b) the number of shares subject to such stock options immediately
prior to its cancellation (such payment shall be less any withholding taxes and
without interest), provided that such payments shall be payable in four equal
installments over a two-year period following the Effective Time, subject to
certain continuing employment requirements, except that (x) the payment with
respect to stock options granted in November 1996 that would otherwise vest in
November 1999 will be paid in November 1999 and (y) the payment with respect to
the stock options granted under the 1996 Replacement Plan for Certain Employees
Holding The Dun & Bradstreet Corporation Equity Based Awards and the 1996
Non-Employee Directors' Stock Incentive Plan will be paid immediately prior to
the Effective Time.
EMPLOYEE BENEFIT MATTERS. The Merger Agreement provides that for a period
of twelve months following the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, provide each individual who is employed by the Company
or its subsidiaries immediately prior to the Effective Time (each, an "Affected
Employee") with employee benefits that are no less favorable in the aggregate
than those provided to each such Affected Employee immediately prior to the
Effective Time, provided that Parent shall not be required to provide
equity-based compensation to any employees. Parent shall, for a
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period of twelve months following the Effective Time, maintain (or cause it
subsidiaries to maintain) a severance pay practice, program or arrangement for
the benefit of each Affected Employee that is no less favorable than such
practice, program or arrangement in effect immediately prior to the Effective
Time with respect to such Affected Employee.
Parent shall, or shall cause the Surviving Entity to, give Affected
Employees full credit for purposes of eligibility, vesting and benefit accrual
(except benefit accruals under any defined benefit pension plan) under such
employee benefit plans or arrangements maintained by the Parent or the Surviving
Corporation in which such Affected Employees participate for such Affected
Employees' service with the Company or any subsidiary of the Company to the same
extent recognized by the Company or such subsidiary immediately prior to the
Effective Time.
Parent shall, or shall cause the Surviving Entity to, (i) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans in which such Affected Employees may
be eligible to participate after the Effective Time, other than limitations or
waiting periods that are already in effect with respect to such Affected
Employees and that have not been satisfied as of the Effective Time under any
welfare plan maintained for the Affected Employees immediately prior to the
Effective Time, and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such Affected Employees are eligible to participate in after the Effective Time.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries, authority
to enter into the Merger Agreement, no conflicts between the Merger Agreement
and the Company's organizational documents, agreements or applicable law, the
receipt of required consents, capital structure, filings with the Commission,
financial statements, absence of certain changes or events, undisclosed
liabilities, real property, Year 2000 computer system preparedness, intellectual
property, material contracts, litigation, compliance with applicable laws,
environmental matters, tax matters, benefit plans, labor matters, brokers' and
finders' fees, receipt of the financial advisor opinion, votes required to
approve the Merger Agreement and actions necessary under the Rights Agreement.
Notwithstanding anything to the contrary contained in the Merger Agreement, the
Company makes no representation nor warranty with respect to any matter which is
covered by an indemnification obligation of IMS Health Incorporated pursuant to
the Distribution Agreement, dated as of June 30, 1998, between the Company and
IMS Health Incorporated.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement, no
conflicts between the Merger Agreement and Parent's and Purchaser's
organizational documents, agreements or applicable law, the receipt of required
consents, availability of funds and non-ownership of Shares.
Certain representations and warranties in the Merger Agreement are qualified
as to "materiality" or "Material Adverse Effect". "Material Adverse Effect" with
respect to any person means a material adverse effect on (i) the ability of such
person to perform its obligations under the Merger Agreement or to consummate
the transactions contemplated thereby or (ii) the financial condition, business
or results of operations of such person and its subsidiaries taken as a whole,
other than any change, circumstance or effect relating to (w) the economy or
securities markets in general, (x) the industries in which such person operates
and not specifically relating to such person, (y) the performance of the Merger
Agreement or the transactions contemplated thereby and (z) the failure of any
stockholder of NetRatings, Inc. to enter into certain agreements with NetRatings
and the Company.
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INTERIM OPERATIONS. The Merger Agreement provides that subject to certain
exceptions, the Company shall, and shall cause each of its subsidiaries to, act
and carry on its business in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, use its reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current key officers and employees and preserve the goodwill
of those engaged in material business relationships with the Company. Without
limiting the generality of the foregoing, subject to certain exceptions, the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior consent of Parent:
(1) (a) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, securities or other property) in respect
of, any of its outstanding capital stock (other than, with respect to a
subsidiary of the Company, to its corporate parent), (b) split, combine
or reclassify any of its outstanding capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, or (c)
purchase, redeem or otherwise acquire any shares of outstanding capital
stock or any rights, warrants or options to acquire any such shares,
except, in the case of this clause (c), for the acquisition of Shares
from holders of stock options in full or partial payment of the exercise
price payable by such holder upon exercise of stock options;
(2) issue, sell, grant, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible
into or exchangeable for, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible or exchangeable
securities, other than (A) upon the exercise of vested stock options
outstanding on the date of the Merger Agreement and (B) the sale of up to
60,000 Shares in accordance with the terms of the Employee Stock Purchase
Plan consistent with past practice but only to the extent such Shares are
sold pursuant to elections made on or before June 30, 1999;
(3) amend its certificate of incorporation, by-laws or other comparable
charter or organizational documents;
(4) directly or indirectly acquire, make any investment (other than
investments not exceeding $1,000,000 in the aggregate) in, or make any
capital contributions to, any person (other than a subsidiary of the
Company) other than in the ordinary course of business;
(5) make any new capital expenditure or expenditures in excess of $1,000,000
in the aggregate, other than as set forth in the Company's budget for
capital expenditures made available to Parent;
(6) enter into, amend or terminate any material contract involving expenses
of at least $1,000,000 per year other than in the ordinary course of
business consistent with past practice;
(7) directly or indirectly sell, pledge or otherwise dispose of or encumber
any of its properties or assets that are material to its business, except
for sales, pledges or other dispositions or encumbrances in the ordinary
course of business consistent with past practice;
(8) (a) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, other than indebtedness owing to or
guarantees of indebtedness owing to the Company or any direct or indirect
wholly owned subsidiary of the Company or (b) make any loans or advances
to any other person, other than to the Company or to any direct or
indirect wholly owned subsidiary of the Company and other than routine
advances to employees consistent with past practice, except, in the case
of clause (a), for borrowings under the Company's existing credit
facilities in the ordinary course of business;
(9) grant or agree to grant to any director or employee (other than
officers, employees and consultants who receive less than $200,000 in
total annual cash compensation) any increase in wages or bonus,
severance, profit sharing, retirement, deferred compensation, insurance
or other compensation or benefits to such officers and employees, or
establish any new compensation or benefit plans or arrangements, or amend
or agree to amend any existing benefit plans;
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(10) except as set forth in the Merger Agreement and except as required
under the existing benefit plans, accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing, retirement,
deferred compensation, stock option, insurance or other compensation or
benefits;
(11) enter into or amend any employment, consulting, severance or similar
agreement with any existing officers or employees (other than officers
and employees who receive less than $200,000 in total annual cash
compensation);
(12) make or rescind any tax election or settle or compromise any income tax
liability of the Company or its subsidiaries with any governmental entity
or settle any action, suit, claim, investigation or proceeding with any
governmental entity (legal, administrative or arbitrative) in an amount
in excess of $500,000;
(13) pay, discharge or satisfy any claims, liabilities or obligations, other
than the payment, discharge or satisfaction (a) of any such claims,
liabilities or obligations in the ordinary course of business or (b) of
claims, liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries or (c) other
than settlements which involve solely the payment of money that would not
result in an uninsured or underinsured payment by or liability of the
Company in excess of $2,000,000 in the aggregate above reserves
established therefor on the books of the Company;
(14) except as disclosed in the Company's publicly filed documents or
required by a governmental entity or generally accepted accounting
principles, make any change in any method of accounting or accounting
practice or policy, except as required by generally accepted accounting
principles;
(15) enter into any agreement, understanding or commitment that materially
restrains, limits or impedes the Company's ability to compete with or
conduct any material line of business, including, but not limited to,
geographic limitations on the Company's activities;
(16) plan, announce, implement or effect any reduction in force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or
its subsidiaries (excluding routine employee terminations);
(17) amend or modify in any material respect, waive any rights under or
terminate any agreements existing as of the date of the Merger Agreement
between the Company and NetRatings; or
(18) authorize any of, or commit or agree to take any of, the foregoing
actions, except to the extent such action is otherwise expressly
contemplated by the Merger Agreement.
NO SOLICITATION. The Merger Agreement provides that the Company shall not,
and the Company shall use its reasonable best efforts to cause its officers,
directors, advisors, representatives and other agents not to, directly or
indirectly, (i) solicit, initiate or knowingly encourage any inquiries relating
to, or the submission of, any Acquisition Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal, or, in connection with any Acquisition Proposal, furnish to any person
any information or data with respect to or access to the properties of the
Company or any of its subsidiaries, or take any other action to facilitate the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal or (iii) enter into any agreement with respect to
any Acquisition Proposal or approve or resolve to approve any Acquisition
Proposal; provided that, if the Board of Directors of the Company has concluded
in good faith, based on the advice of outside counsel, that such action is
reasonably necessary for the Board of Directors to act in a manner consistent
with its fiduciary duties under applicable law, then the Company may furnish
information with respect to the Company and its subsidiaries and participate in
discussions or negotiations regarding such Acquisition Proposal, in which case
the Company will not disclose any information to such person without entering
into a confidentiality agreement substantially identical to the confidentiality
agreement previously executed by the Company and VNU NV (it being understood
that the Company may enter into a confidentiality agreement without a standstill
or with a standstill provision less favorable to the Company if it waives or
similarly modifies the standstill provision in the confidentiality agreement
with VNU NV). The Company
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will promptly (but in no case later than 24 hours after receipt) provide Parent
with a copy of any written Acquisition Proposal received and a written statement
with respect to any non-written Acquisition Proposal received, which statement
shall include the identity of the parties making the Acquisition Proposal and
the material terms thereof. The Company shall keep Parent informed on a current
basis of the status and content of any discussions regarding any Acquisition
Proposal with a third party.
For purposes of the Merger Agreement, "Acquisition Proposal" means any offer
or proposal for a merger, consolidation, share exchange, recapitalization,
liquidation or other business combination involving the Company or any of its
subsidiaries or the acquisition or purchase of 20% or more of any class of
equity securities of the Company or any of its subsidiaries, or any tender offer
(including self-tenders) or exchange offer that if consummated would result in
any person beneficially owning 20% or more of any class of equity securities of
the Company or any of its subsidiaries, or a substantial portion of the assets
of, the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement.
A "Superior Proposal" is defined as an Acquisition Proposal which the Board
of Directors determines, in good faith after consultation with an independent,
nationally recognized investment banking firm, (i) if consummated would result
in a transaction more favorable to the Company's stockholders, from a financial
point of view, than the transactions contemplated by the Merger Agreement and
(ii) is reasonably capable of being financed by the person making such
Acquisition Proposal.
Nothing contained in the Merger Agreement shall prohibit the Company or the
Company's Board of Directors from taking and disclosing to the Company's
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act (or any similar communications in connection with the
making or amendment of a tender offer or exchange offer) or from making any
disclosure required by applicable law or, prior to the consummation of the
Offer, from taking any action contemplated by paragraph 8.1(d)(i) under
"Termination" below, including having the Board of Directors take such actions
as are necessary to approve or resolve to approve the intention to enter into an
agreement with respect to a Superior Proposal (or any announcement in connection
therewith) or enter into an agreement with respect to a Superior Proposal
concurrently with termination pursuant to paragraph 8.1(d)(i) under
"Termination" below.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time:
(a) By the mutual written consent of Parent and the Company; provided that
if Parent shall have nominated a majority of the directors of the
Company's Board of Directors, such consent of the Company may only be
given if unanimously approved by the entire Board of Directors.
(b) By either of Parent or the Company if (i) a statute, rule or executive
order shall have been enacted, entered or promulgated prohibiting the
transactions contemplated by the Merger Agreement or (ii) any
governmental entity shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties
hereto shall use their reasonable best efforts (or, in connection with
obtaining antitrust approval from any governmental entity, best efforts)
to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the Merger Agreement and
such order, decree, ruling or other action shall have become final and
non-appealable.
(c) By either of Parent or the Company if the consummation of the Offer
shall not have occurred on or before December 22, 1999 (the "Termination
Date"); provided that the party seeking to terminate the Merger Agreement
has not breached in any material respect its obligations under the Merger
Agreement. The Termination Date will be extended to such later date (but
in no event later than April 17, 2000) as the Offer shall have been
extended by Purchaser at the request of the Company in connection with
the failure of the condition relating to the Works' Council to have been
satisfied, unless another condition shall not have been satisfied and
either (x) Parent
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can reasonably demonstrate that such failure to be satisfied resulted
from a reason other than the failure of the condition relating to the
Works' Council to be satisfied or (y) such condition failed to be
satisfied as a result of a material breach by the Company of its
obligations under the Merger Agreement.
(d) By the Company:
(i) if, prior to the purchase of the Shares pursuant to the Offer, (A)
the Board of Directors of the Company directs the Company to notify
Parent in writing that it intends to enter into an agreement with
respect to a Superior Proposal attaching the most current version of
such agreement to such notice, (B) Parent does not make, within four
business days of receipt of the Company's written notification of its
intention to enter into a binding agreement for a Superior Proposal,
an offer that the Board of Directors of the Company determines, in
good faith after consultation with its financial advisors, is at
least as favorable to the stockholders of the Company as such
Superior Proposal and (C) the Company prior to such termination
pursuant to this paragraph (d)(i) pays to Parent in immediately
available funds the Termination Fee (as defined below); or
(ii) if Parent or Purchaser shall have terminated the Offer or the Offer
expires without Parent or Purchaser purchasing any Shares pursuant
thereto; provided that the Company may not terminate the Merger
Agreement pursuant to this paragraph (d)(ii) if it is in material
breach of the Merger Agreement; or
(iii) prior to the consummation of the Offer, if (A) there shall be a
breach of any representation or warranty of Parent or Purchaser in
the Merger Agreement that is qualified as to Material Adverse Effect,
(B) there shall be a breach in any material respect of any
representation or warranty of Parent or Purchaser in the Merger
Agreement that is not so qualified, other than any such breaches
which, in the aggregate, have not had or would not reasonably be
likely to have a Material Adverse Effect on Parent and Purchaser,
taken as a whole, or (C) there shall be a material breach by Parent
or Purchaser of any of its covenants or agreements contained in the
Merger Agreement, which breach, in the case of clause (A), (B) or
(C), either is not reasonably capable of being cured or, if it is
reasonably capable of being cured, has not been cured within the
earlier of (x) 10 days after giving of notice to Parent of such
breach and (y) the expiration of the Offer, provided that the Company
may not terminate the Merger Agreement pursuant to this paragraph
(d)(iii) if it is in material breach of the Merger Agreement.
(e) By Parent or Purchaser:
(i) if, prior to the purchase of the Shares pursuant to the Offer, the
Board of Directors of the Company shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser, its approval
or recommendation of the Offer, the Merger Agreement or the Merger or
shall have recommended or approved an Acquisition Proposal, it being
understood and agreed that neither a notice of the Company's intent
to terminate the Merger Agreement pursuant to paragraph (d)(i) above
and any subsequent public announcement of such notice nor any
communication by the Board of Directors of the Company to the
stockholders of the Company pursuant to Rule 14d-9(e)(3) under the
Exchange Act (or any similar communication to the stockholders of the
Company in connection with the making or amendment of a tender offer
or exchange offer) shall entitle Parent to terminate the Merger
Agreement pursuant to this paragraph (e)(i), unless the Company
enters into a definitive agreement with respect to an Acquisition
Proposal; or
(ii) if there shall have been a material breach by the Company of any
provision described under "No Solicitation"; or
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(iii) if the Offer has expired or terminated without Parent or Purchaser
purchasing any Shares thereunder and Purchaser is neither required to
accept and pay for the Shares tendered in the Offer nor extend the
expiration date of the Offer, provided that Parent or Purchaser may
not terminate the Merger Agreement pursuant to this paragraph
(e)(iii) if Parent or Purchaser is in material breach of the Merger
Agreement; or
(iv) if the Company shall have (i) exempted for purposes of Section 203
of the DGCL any acquisition of Shares by any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act), other than Parent,
Purchaser or their affiliates, or (ii) amended (or agreed to amend)
its Rights Agreement or redeemed (or agreed to redeem) its
outstanding Rights thereunder for the purpose of exempting an
acquisition of Shares from such Rights Agreement and Rights; or
(v) prior to the consummation of the Offer if (A) there shall be a breach
of any representation or warranty of the Company in the Merger
Agreement that is qualified as to Material Adverse Effect, (B) there
shall be a breach in any material respect of any representation or
warranty of the Company in the Merger Agreement that is not so
qualified other than any such breaches which, in the aggregate, have
not had or would not reasonably be likely to have a Material Adverse
Effect on the Company, or (C) there shall be a material breach by the
Company of any of its covenants or agreements contained in the Merger
Agreement, which breach, in the case of clause (A), (B) or (C),
either is not reasonably capable of being cured or, if it is
reasonably capable of being cured, has not been cured within the
earlier of (x) 10 days after giving of written notice to the Company
of such breach and (y) the expiration of the Offer; provided,
further, that Parent or Purchaser may not terminate the Merger
Agreement pursuant to this paragraph (e)(v) if Parent or Purchaser is
in material breach of the Merger Agreement.
TERMINATION FEE. If (i) Parent or Purchaser terminates the Merger Agreement
pursuant to paragraph (e)(i) or (iv) under the heading "Termination" above or
(ii) the Company terminates the Merger Agreement pursuant to paragraph (d)(i)
under the heading "Termination" above, then in each case, the Company shall pay,
or cause to be paid to Parent, an amount equal to $70 million (the "Termination
Fee"). In addition, if (i) the Merger Agreement is terminated pursuant to
paragraph (e)(ii), (e)(iii), or (d)(ii) under the heading "Termination" above
(unless (A) the only conditions to the Offer that were not satisfied were the
condition relating to tax opinions and those conditions that either (x) the
Company can reasonably demonstrate were not satisfied due to the failure of the
condition relating to tax opinions to be satisfied or (y) were not satisfied as
a result of a material breach by Parent or Purchaser of its obligations under
the Merger Agreement and (B) the condition relating to tax opinions was not
satisfied solely because of the occurrence of an event set forth in clause (x)
of paragraph (iii) under "Conditions to the Offer" in Section 14 of the Offer to
Purchase and/or the failure of Parent to deliver the representation letter
referred to in clause (y) of paragraph (iii) under "Conditions to the Offer" in
Section 14 of the Offer to Purchase); (ii) on the date of such termination no
condition to the Offer has failed to be satisfied as a result of a material
breach of the Merger Agreement by Parent or Purchaser and prior thereto there
shall have been publicly announced, and not withdrawn in good faith, an
Acquisition Proposal; and (iii) within fifteen months after such termination,
the Company shall enter into an agreement with respect to any Acquisition
Proposal, then the Company shall pay the Termination Fee concurrently with
entering into any such agreement. If the condition relating to the Works'
Council is not satisfied and the Merger Agreement is terminated pursuant to
paragraph (c) under the heading "Termination" above, unless another condition to
the Offer shall not have been satisfied and either (x) Parent can reasonably
demonstrate that such failure to be satisfied resulted from a reason other than
the failure of the condition relating to the Works' Council to be satisfied or
(y) such condition failed to be satisfied as result of a material breach by the
Company of its obligations under the Merger Agreement, then Parent shall pay, or
cause to be paid, to the Company an amount equal to $70 million which shall be
paid (x) at or prior such termination by Parent
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and as a condition to such termination or (y) not later than two business days
following such termination by the Company.
INDEMNIFICATION. Pursuant to the Merger Agreement, Parent and Purchaser
have agreed that, for a period of six years after the Effective Time, the
provisions with respect to indemnification, exculpation, and advancement of
expenses set forth in the certificate of incorporation and by-laws of the
Company as in effect on the date of the Merger Agreement shall not be amended,
repealed or otherwise modified in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including without limitation the
transactions contemplated by the Merger Agreement), unless such modification is
required by law.
The Merger Agreement also provides that, from and after the Effective Time,
Parent shall cause the Surviving Corporation to, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date of
the Merger Agreement or who becomes prior to the Effective Time, an officer or
director of the Company (the "Covered Parties") against all losses, claims,
damages, costs, expenses (including reasonable attorneys' fees and expenses),
liabilities or judgments or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld or delayed) incurred in connection with any threatened or actual
action, suit or proceeding based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of the
Company ("Indemnified Liabilities"), including all Indemnified Liabilities based
in whole or in part on, or arising in whole or in part out of, the Merger
Agreement or the transactions contemplated thereby, in each case, to the full
extent that a corporation is permitted under the DGCL to indemnify its own
directors or officers, as the case may be. In the event any such claim, action,
suit, proceeding or investigation is brought against any Covered Party, the
indemnifying party shall assume and direct all aspects of the defense thereof,
including settlement, and the Covered Party shall cooperate in the vigorous
defense of any such matter. The Covered Party shall have a right to participate
in (but not control) the defense of any such matter with its own counsel and at
its own expense. The indemnifying party shall not settle any such matter unless
(i) the Covered Party gives prior written consent, which shall not be
unreasonably withheld or delayed, or (ii) the terms of the settlement provide
that the Covered Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Covered Party
and the settlement discharges all rights against the Covered Party with respect
to such matter. In no event shall the indemnifying party be liable for any
settlement effected without its prior written consent. Any Covered Party wishing
to claim indemnification under the Merger Agreement, upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly notify Parent
and the Surviving Corporation (but the failure so to notify shall not relieve
the indemnifying party from any liability which it may have under the Merger
Agreement except to the extent such failure materially prejudices such
indemnifying party), and shall deliver to Parent and the Surviving Corporation
the undertaking contemplated by Section 145(e) of the DGCL. The Covered Parties
as a group will be represented by a single law firm (plus no more than one local
counsel in any jurisdiction) with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Covered Parties. The
rights to indemnification under the Merger Agreement shall continue in full
force and effect for a period of six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Indemnified
Liabilities asserted or made within such period shall continue until the
disposition of such Indemnified Liabilities.
The Merger Agreement provides that, for a period of six years after the
Effective Time, Parent shall cause to be maintained in effect policies of
directors' and officers' liability insurance, for the benefit of those persons
who are covered by the Company's directors' and officers' liability insurance
policies at the Effective Time, providing coverage with respect to matters
occurring prior to the Effective Time that is at least equal to the coverage
provided under the Company's current directors' and officers' liability
insurance policies, to the extent that such liability insurance can be
maintained at an annual cost to Parent not greater than 200 percent of the
premium for the current Company directors' and officers' liability
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insurance; provided that if such insurance cannot be so maintained at such cost,
Parent shall maintain as much of such insurance as can be so maintained at a
cost equal to 200 percent of the current annual premiums of the Company for such
insurance.
GUARANTEE. Pursuant to a Guarantee, dated as of August 15, 1999, VNU NV has
unconditionally, absolutely and irrevocably guaranteed to the Company and any
third party beneficiaries under the Merger Agreement (to the extent of their
third party beneficiary rights thereunder) the full payment and performance of
all covenants, agreements, obligations and liabilities of Parent, Purchaser and
the Surviving Corporation contained in the Merger Agreement, including the
provisions described above under "Stock Options" and "Indemnification."
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
The Board of Directors, at a meeting duly called and held on August 15,
1999, unanimously determined that the Offer, the Merger and the other
transactions to be effected pursuant to the Merger Agreement are fair to and in
the best interests of the stockholders of the Company, and declared advisable
and approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger.
THE BOARD OF DIRECTORS RECOMMENDS THE ACCEPTANCE OF THE OFFER AND THE
ADOPTION OF THE MERGER AGREEMENT BY THE STOCKHOLDERS OF THE COMPANY. See
"Background of the Offer; Reasons for the Recommendation--Reasons for the
Recommendation; Factors Considered by the Board" for a discussion of the factors
considered by the Board in making its recommendation.
A copy of the press release issued by the Company announcing signing of the
Merger Agreement is filed as Exhibit 7(b) to this Statement and is incorporated
herein by reference.
(b) BACKGROUND OF THE OFFER; FACTORS CONSIDERED BY THE BOARD
(1) BACKGROUND OF THE OFFER
Early in 1999, Gerald Hobbs, the chief executive officer of Parent, met with
John Dimling, the chief executive officer of the Company, to discuss their
respective businesses and VNU's United States strategy. Mr. Hobbs had first been
introduced to Mr. Dimling in December 1998, at which time they had discussed
their respective businesses. At the early 1999 meeting, Mr. Hobbs also inquired
as to whether Mr. Dimling would support an acquisition of the Company by Parent
if such proposal were authorized by VNU in the future. Mr. Dimling informed Mr.
Hobbs that the Company was not for sale.
On July 14, 1999, Mr. Hobbs met with Mr. Dimling and indicated that Parent
was prepared to make an offer to acquire the Company for $36 per share in cash.
Mr. Hobbs indicated that the offer would not be subject to a financing condition
and would be made on a friendly basis only. Mr. Hobbs also insisted that
discussions between the Company and Parent be conducted on an exclusive basis.
Mr. Dimling again responded that the Company was not for sale but that he would
discuss the proposal with the Company's Board of Directors and its financial and
legal advisors.
Meetings of the Board of Directors had been scheduled on July 21 and 22,
1999 to review and discuss the management's strategic plan for the Company.
Since the purpose of the meetings provided an opportunity to compare the
Company's strategic plan to the alternative of a sale of the Company, there was
a review of Parent's proposal early in the meetings. This included a
presentation by representatives of Morgan Stanley & Co. Incorporated, the
Company's financial advisor ("Morgan Stanley"), which included, among other
matters, an overview of the historical performance of the Shares, valuations of
the Company based on various methodologies and a review of valuation parameters
for the Company's contemplated joint venture with NetRatings, Inc.
("NetRatings"). At the meeting, representatives of Simpson Thacher & Bartlett,
the Company's outside legal counsel, also provided a review of the Board's legal
duties with respect to a possible sale of the Company. The Company's management
then presented its strategic plan.
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The Board then discussed, among other matters, their evaluation of the strategic
plan and the execution risk in achieving that plan. The Board also discussed
whether this was an opportune time to sell the Company and, with management's
assistance, compared the Parent's proposal with the values that could be
obtained for stockholders pursuant to the strategic plan.
At the conclusion of the meetings, the Board authorized management and
Morgan Stanley, as a starting point for negotiations, to communicate that the
Company was seeking a sale price of $40 per share or more. Morgan Stanley was
further instructed to convey that, in any event, the Company would not be
interested in pursuing discussions unless Parent was prepared to minimize
uncertainty as to the consummation of a transaction, including risks relating to
the absence of binding agreements relating to NetRatings. The Board of Directors
also considered with the Company's management and its financial and legal
advisors the advantages and disadvantages of satisfying Parent's precondition of
negotiating on an exclusive basis, including Morgan Stanley's advice that a
solicitation of other parties could potentially jeopardize discussions with
Parent.
On July 23, representatives of Morgan Stanley contacted Mr. Hobbs to convey
the Company's position with respect to price and other matters. On July 26,
representatives of Merrill Lynch & Co., Parent's financial advisor ("Merrill
Lynch"), responded to Morgan Stanley that Parent was not prepared to pay $40 per
share and that, only with additional due diligence and satisfactory resolution
of certain issues, could Parent consider meaningfully raising the price of its
offer. Merrill Lynch also indicated that Parent was willing to address the
Company's concerns with respect to certainty of closing. At the direction of the
Company's management, Morgan Stanley responded that preliminary discussions
between the companies could proceed based upon Parent's willingness to meet the
Company's other conditions and subject to the understanding that price would
ultimately have to be meaningfully increased.
On July 28, the Company and VNU entered into a confidentiality and
standstill agreement. On that date, Mr. Dimling and Mr. Thomas Young, the chief
financial officer of the Company, and representatives of Morgan Stanley met with
Mr. Hobbs, Mr. Thomas Mastrelli, the chief operating officer of Parent, and
other executives of VNU and Parent and representatives of Merrill Lynch to
discuss the Company's strategic plan and its business affairs and prospects as a
prelude to further due diligence.
At a subsequent meeting held on August 2 attended by management and
financial advisors of the two parties, Mr. Hobbs stated that Parent was prepared
to offer $38 per share in a two-step tender offer and merger transaction,
subject to finalizing due diligence and satisfactorily resolving other issues.
Mr. Hobbs also indicated that a transaction would need to address Parent's
concern regarding the number of outstanding management stock options and the
possible impact on management retention and that Parent would like the Company
to use reasonable best efforts to execute agreements with NetRatings. Mr. Hobbs
also indicated that Parent and its representatives would like to commence
confirmatory due diligence of the Company.
That evening a telephonic meeting of the Board of Directors was convened.
Messrs. Dimling and Young and representatives of Morgan Stanley and Simpson
Thacher & Bartlett reported the status of discussions between Parent and the
Company and responded to questions from the Board. The Board of Directors
instructed management and its advisors to continue discussions, particularly
with regard to seeking a higher price.
On August 3, representatives of Morgan Stanley conveyed to representatives
of Merrill Lynch that Parent's proposal was insufficient and that the Company
was seeking to have Parent increase its offer to $40 per share or more. After
consultation with Parent, Merrill Lynch advised Morgan Stanley that Parent was
not prepared to pay $40 per share but might be prepared to pay more than $38 per
share after conducting further due diligence and resolving the principal terms
of the merger agreement.
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Beginning on August 3, Parent conducted a due diligence review of the
Company, which included additional meetings with various Company executives and
a review of documents provided by the Company.
On August 4, Simpson Thacher & Bartlett delivered a draft merger agreement
to Parent and its advisors providing for a single-step merger transaction
(without a tender offer) and reflecting the Company's position relating to a
number of matters, including NetRatings and other matters relating to certainty
of closing and the flexibility to explore third party offers. Later that day,
Parent's outside legal counsel, Skadden, Arps, Slate, Meagher and Flom LLP,
delivered to the Company and its advisors a draft merger agreement, which
contemplated a two-step transaction with a tender offer and Parent's position on
a number of issues.
On August 5, the parties and their advisors met to discuss the principal
differences between the two drafts of the merger agreement. The Company's legal
advisors indicated that, while they were prepared to work with Parent's draft
merger agreement, Parent must be prepared to give up the two-step transaction
structure or extend the tender offer period to more than 20 business days. The
Company's legal advisors further indicated that Parent must be prepared to
accept the Company's terms with respect to NetRatings, limited conditionality
and flexibility to entertain other offers. Parent's advisors stated that Parent
was not prepared to accept a tender offer period in excess of 20 business days
because Parent wanted to close the transaction quickly. Parent's advisors stated
further that they believed that Parent and the Company would be able to reach a
mutually satisfactory resolution on the other significant issues identified by
the Company's advisors.
Between August 5 and August 10, the outside legal counsel of the Company and
Parent, in consultation with respective management and financial advisors,
continued to negotiate the terms of the merger agreement.
On August 9, representatives of Morgan Stanley inquired of Merrill Lynch
whether, in light of the progress made with respect to due diligence and
negotiation of the merger agreement, Parent was prepared to increase its offer.
After consultation with Parent's management, its financial advisors replied
that, subject to resolving certain open items including the status of NetRatings
documents, Parent was prepared to enter into a two-step merger agreement at a
price of $38.50 per share with a $85 million termination fee and a 20 business
day tender offer period. After consultation with the Company's management,
Morgan Stanley indicated that the Company would schedule a Board meeting on
August 10 to consider the transaction and that the parties should continue to
negotiate these and other terms of the merger agreement.
On August 10, Messrs. Dimling and Young attended a previously scheduled
meeting with the management of NetRatings and were informed that NetRatings was
no longer willing to accept the Company's planned joint venture investments on
the terms contemplated by a previously negotiated term sheet between the Company
and NetRatings. Based on this uncertainty, management of the Company decided
that the scheduled Board meeting should be used to inform the Board of recent
developments relating to NetRatings and the merger negotiations but that it
would not be possible to request the Board to approve the transaction with
Parent at such time.
That evening, a meeting of the Board of Directors was convened. The
Company's management reported to the Board on the development with respect to
NetRatings and the status of negotiations with Parent. The representatives of
Simpson Thacher & Bartlett outlined the Board's legal duties in light of a
possible sale of the Company and reviewed with the Board the principal terms and
conditions of the then current draft of the merger agreement, as well as tax,
regulatory and other legal matters relating to the transaction with Parent.
Representatives of Morgan Stanley reviewed the potential impact of the
NetRatings developments on the transaction with Parent, including price
negotiations. At the request of the Board of Directors, management gave its
evaluation of the Company's prospects for developing an internet
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business using its rights under its existing license agreement with NetRatings
but without NetRatings' further participation. After the Company's management
and financial and legal advisors responded to additional questions from the
Board and after additional discussion among the directors, the Board authorized
management to continue discussions with representatives of NetRatings and
Parent.
On August 11, the respective management and financial and legal advisors of
the Company and Parent met to discuss the developments with respect to
NetRatings and its potential implications on the transaction with Parent. At the
conclusion of this meeting, Parent requested that the Company attempt to clarify
its understanding with NetRatings and indicated that, once such understanding
was clarified, Parent would determine at what price and other terms it would be
prepared to proceed.
Between August 11 and August 14, the respective management and legal and
financial advisors of the Company and NetRatings met to negotiate a definitive
agreement with respect to the Company's investment in NetRatings. On August 14,
the Company and NetRatings entered into a definitive agreement which
contemplated a series of investments by which the Company could acquire a
majority of the common stock of NetRatings at the time of an initial public
offering of NetRatings. This agreement addressed the Company's primary objective
of having the ability to obtain majority ownership over a period of time and
NetRatings' desire for a higher valuation and near-term operating and financial
independence.
On August 13, based on the progress of the Company's discussions with
NetRatings, Merrill Lynch, after consultation with Parent, communicated that
Parent was prepared to enter into a two-step transaction at $37.50 per share
pursuant to a merger agreement contemplating an $85 million termination fee, a
20 business day tender offer period and the execution of an agreement with
NetRatings as a precondition to the execution of the merger agreement. Merrill
Lynch explained Parent's view that the restructured NetRatings transaction
diminished Parent's valuation of the Company by over $2.50 per share but, that
notwithstanding, Parent was prepared to proceed at a price of $37.50 per share
($1.00 below its earlier offer). Representatives of Morgan Stanley countered
with a price of $38 per share and various other conditions. After additional
discussions, the Company's management agreed to present to the Board of
Directors a price of $37.75. As part of these negotiations, Merrill Lynch, after
consultation with Parent, agreed to a termination fee of $70 million and agreed
not to commence the Offer until the fifth business day after the announcement of
the transaction. Between August 13 and August 15, the management and financial
and legal advisors of the two parties completed the negotiation of the remaining
issues in the merger agreement.
On the evening of August 15, 1999, a meeting of the Board of Directors was
convened. Mr. Dimling reported on the progress with respect to Parent and
NetRatings and made a presentation with respect to management's recommendation
that the Board approve the transaction with Parent. Representatives of Simpson
Thacher & Bartlett updated the Board on the final terms and conditions of the
Merger Agreement and reviewed for the Board, among other things, the conditions
of the Offer relating to tax opinions and the Dutch workers council.
Representatives of Morgan Stanley delivered its opinion that the consideration
to be received by the stockholders in the Offer and the Merger was fair from a
financial point of view and its underlying analysis. The Board discussed the
proposed transaction and posed questions to the Company's management and its
financial and legal advisors. The Board then unanimously approved and declared
the advisability of the terms and conditions of the Merger Agreement and all of
the transactions contemplated thereby and recommended that the stockholders of
the Company tender their Shares in the Offer.
17
<PAGE>
(2) FACTORS CONSIDERED BY THE BOARD
In making the determination and recommendation described above, the Board of
Directors of the Company considered a number of factors, including, without
limitation, the following:
- the Company's business, its current financial condition and results of
operations, and its future prospects, and the Board's belief, on the basis
of their familiarity with these matters, that the consideration to be
received by the Company's stockholders in the transaction fairly reflects
the Company's intrinsic value, including its potential for future growth;
- the recent evaluation by the Board of the Company's strategic plan and the
execution risks related to achieving the plan, compared to the risks and
benefits of the transaction;
- the price being paid for the Shares in the transaction represents
- a 37.3% premium over the $27.50 closing sale price on the New York
Stock Exchange on June 16, 1999 (the date on which press reports
regarding a potential takeover of the Company were published),
- a 31.8% premium over the $28.63 three month average price as of August
13, 1999, and
- a 15.0% premium over the $32.81 closing sale price on August 13, 1999;
- the price being paid in the transaction represents a meaningful premium
over the all-time high of $33 for historical market prices for the Shares;
- the Offer allows holders of Shares to receive cash for their Shares as
early as 20 business days from the commencement of the Offer;
- the opinion of Morgan Stanley to the effect that the consideration to be
received by the Company's stockholders in the Offer and the Merger, taken
together, is fair to the stockholders from a financial point of view (a
copy of such opinion setting forth assumptions made and matters considered
by Morgan Stanley is included as Annex A to this Statement and should be
read in its entirety);
- the views expressed by Morgan Stanley that, based upon the nature of the
Company's business and other factors, the likelihood of receiving a third
party acquisition proposal (in cash or stock) that was financially
superior to the consideration to be received pursuant to the Merger
Agreement was, in its judgment, remote;
- Morgan Stanley's advice that the price being paid in the transaction
represents a multiple of 17.3x the estimated 1999 EBITDA (earnings before
interest, taxes, depreciation and amortization) which compares favorably
to the multiple of EBITDA paid in other transactions in the market
research, database and direct marketing industries;
- the fact that no party other than VNU had made or expressed any interest
in making a takeover proposal or made related inquiries since June 16,
1999, the date on which press reports regarding a potential takeover of
the Company were published;
- that while the Company is prohibited from soliciting or encouraging
acquisition proposals, the Company is permitted to furnish information
concerning the Company to a third party who contacts the Company on an
unsolicited basis and may engage in discussions or negotiations with a
third party to the extent the Board concludes in good faith, based on the
advice of outside counsel, that such action is reasonably necessary for
the Board to act in a manner consistent with its fiduciary obligations;
18
<PAGE>
- the ability of the Company to terminate the Merger Agreement in order to
accept a Superior Proposal;
- the $70 million termination fee demanded by Parent and the Board's
conclusion that, based on the advice of Morgan Stanley, such amount should
not significantly deter any third party with serious interest in bidding
for the Company and is reasonable in light of the benefits of the Offer
and the Merger;
- the limited number of instances in which a termination fee is payable by
the Company;
- the agreement of Parent not to commence the Offer prior to the fifth
business day after the announcement of the Merger Agreement, which would
permit any party interested in acquiring the Company up to 25 business
days to prepare and communicate an acquisition proposal following
announcement of the transaction;
- the favorable timing of a sales transaction in light of the equity markets
being close to an all-time high;
- the fact that various provisions of the Merger Agreement impose
obligations on Parent that improve the certainty of closing the
transaction;
- the price ultimately obtained in the Merger Agreement when considered in
the context of the recent developments and agreements with respect to
NetRatings and remaining uncertainties relating to the internet business;
- the absence of a financing condition on Parent's obligation to consummate
the Offer;
- the agreement of Parent to pay $70 million to the Company if the Offer is
not consummated due to Parent's condition relating to the Workers' council
not being satisfied;
- the limited number and nature of other conditions to Parent's obligation
to consummate the Offer and the risk of non-satisfaction thereof,
including the delivery of tax opinions;
- the obligations of Parent and Purchaser under the Merger Agreement being
guaranteed by VNU NV; and
- the other terms and conditions of the Offer and the Merger.
The Board of Directors did not assign relative weights to the above factors
or determine that any factor was of particular importance. Rather, the Board
viewed its position and recommendations as being based on the totality of the
information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to the terms of the engagement letter dated July 27, 1999, the
Company has retained Morgan Stanley to render financial advisory services to the
Company, and in accordance with such engagement, Morgan Stanley has advised the
Company with respect to the Offer and related matters.
Morgan Stanley will be entitled to receive a fee equal to .65% of the
aggregate value of the transaction (including assumed debt) in connection with
any business combination transaction, such as the Offer and the Merger, such fee
to be contingent upon the consummation of the transaction and payable at the
closing thereof.
The Company has also agreed to reimburse Morgan Stanley for its reasonable
expenses, including travel and out-of-pocket expenses, and also including the
reasonable fees and disbursements of outside
19
<PAGE>
counsel, and to indemnify Morgan Stanley and certain related persons against
certain liabilities in connection with their engagement, including certain
liabilities under the federal securities laws.
In the ordinary course of its business, Morgan Stanley may from time to time
effect transactions and hold positions in securities of the Company and Parent.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to others with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth below, there have been no transactions in Shares
that were effected during the past 60 days by the Company, or to the best
knowledge of the Company, by any executive officer, director, affiliate or
subsidiary of the Company.
The following purchases were made by executive officers pursuant to the
Discounted Global Employee Stock Purchase Plan on June 30, 1999:
<TABLE>
<S> <C>
214.7166
John Dimling............................................... Shares
161.2087
Anita Rubino............................................... Shares
Stephen Boatti............................................. 75.0641 Shares
Thomas Young............................................... 97.8994 Shares
</TABLE>
(b) To the best knowledge of the Company, (i) its executive officers,
directors, affiliates and subsidiaries currently owning Shares presently intend
to tender such Shares to the Purchaser pursuant to the Offer and (ii) none of
its executive officers, directors, affiliates or subsidiaries presently intend
to otherwise sell any Shares that are owned beneficially or held of record by
such persons. The foregoing does not include any Shares over which, or with
respect to which, any such executive officer, director or affiliate or
subsidiary acts in a fiduciary or representative capacity or is subject to
instructions from a third party with respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Statement, no negotiation is being
undertaken or is underway by the Company in response to the Offer that relates
to or would result in (i) an extraordinary transaction such as a merger or
reorganization involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as set forth in this Statement, there are no transactions, Board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to in
Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached as Annex B hereto is being furnished in
connection with the possible designation by Purchaser pursuant to the Merger
Agreement of certain persons to be appointed to the Board of Directors of the
Company other than at a meeting of the Company's stockholders.
20
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
<TABLE>
<S> <C>
Exhibit 2.1 Agreement and Plan of Merger dated as of August 15, 1999 among Parent,
Purchaser and the Company (incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed with the Commission on August 19,
1999).
Exhibit 99.1 Guarantee of VNU NV dated as of August 15, 1999 (incorporated by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K filed with the
Commission on August 19,1999).
Exhibit 99.2 Letter to Stockholders dated August 20, 1999.+
Exhibit 99.3 Press Release dated August 16, 1999 (incorporated by reference to Exhibit
99.1 to the Company's Current Report on Form 8-K filed with the Commission on
August 19, 1999).
Exhibit 99.4 Rights Agreement dated as of October 15, 1996 between the Company and First
Chicago Trust Company of New York (incorporated by reference to Exhibit 1 to
the Company's Current Report on Form 8-K filed with the Commission on October
15, 1996).
Exhibit 99.5 Amendment to the Rights Agreement dated as of August 15, 1999 (incorporated
by reference to Exhibit 2 to the Form 8-A/A of the Company filed with the
Commission on August 17, 1999).
Exhibit 99.6 Opinion of Morgan Stanley & Co. Incorporated dated August 15, 1999.++
Exhibit 99.7 Information Statement Pursuant to Section 14(f) of the Securities Exchange
Act of 1934 and Rule 14f-1 thereunder.+++
</TABLE>
- ------------------------
+ Included in copy mailed to stockholders.
++ Included as Annex A in copy mailed to stockholders.
+++ Included as Annex B in copy mailed to stockholders.
21
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
NIELSEN MEDIA RESEARCH, INC.
By: /s/ STUART J. GOLDSHEIN
-----------------------------------------
Name: Stuart J. Goldshein
Title: Vice President and Controller
</TABLE>
Dated: August 20, 1999
22
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit 2.1 Agreement and Plan of Merger dated as of August 15, 1999 among Parent,
Purchaser and the Company (incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed with the Commission on August 19,
1999).
Exhibit 99.1 Guarantee of VNU NV dated as of August 15, 1999 (incorporated by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K filed with the
Commission on August 19,1999).
Exhibit 99.2 Letter to Stockholders dated August 20, 1999.+
Exhibit 99.3 Press Release dated August 16, 1999 (incorporated by reference to Exhibit
99.1 to the Company's Current Report on Form 8-K filed with the Commission on
August 19, 1999).
Exhibit 99.4 Rights Agreement dated as of October 15, 1996 between the Company and First
Chicago Trust Company of New York (incorporated by reference to Exhibit 1 to
the Company's Current Report on Form 8-K filed with the Commission on October
15, 1996).
Exhibit 99.5 Amendment to the Rights Agreement dated as of August 15, 1999 (incorporated
by reference to Exhibit 2 to the Form 8-A/A of the Company filed with the
Commission on August 17, 1999).
Exhibit 99.6 Opinion of Morgan Stanley & Co. Incorporated dated August 15, 1999.++
Exhibit 99.7 Information Statement Pursuant to Section 14(f) of the Securities Exchange
Act of 1934 and Rule 14f-1 thereunder.+++
</TABLE>
- ------------------------
+ Included in copy mailed to stockholders.
++ Included as Annex A in copy mailed to stockholders.
+++ Included as Annex B in copy mailed to stockholders.
<PAGE>
NIELSEN MEDIA RESEARCH, INC.
299 Park Avenue
New York, New York 10171
August 20, 1999
Dear Stockholder:
I am pleased to inform you that our Company has entered into an Agreement
and Plan of Merger, dated as of August 15, 1999 (the "Merger Agreement"), with
VNU USA, Inc. ("Parent") and Niner Acquisition, Inc., a wholly-owned subsidiary
of Parent ("Purchaser"). Pursuant to the Merger Agreement, Purchaser has today
commenced a cash tender offer (the "Offer") to purchase all of the outstanding
shares (the "Shares") of common stock of the Company at a purchase price of
$37.75 per share, net to the stockholder in cash. The Offer will be followed by
a merger (the "Merger") of Purchaser with and into the Company, pursuant to
which any remaining Shares will be converted into the right to receive $37.75
per share in cash, without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE OFFER AND DETERMINED THAT THE OFFER IS FAIR TO AND IN THE BEST INTERESTS OF,
THE STOCKHOLDERS OF THE COMPANY. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
ACCEPT THE OFFER AND TENDER YOUR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached Schedule 14D-9 that is
being filed today with the Securities and Exchange Commission, including, among
other things, the opinion of Morgan Stanley & Co. Incorporated, the Company's
financial advisor, that the consideration to be received by the stockholders in
the Offer and the Merger is fair from a financial point of view.
In addition to the attached Schedule 14D-9, enclosed is the Offer to
Purchase together with related materials, including a Letter of Transmittal, to
be used for tendering your Shares pursuant to the Offer. These documents state
the terms and conditions of the Offer, provide detailed information about the
transactions and include instructions as to how to tender your Shares. I urge
you to read these documents carefully in making your decision with respect to
tendering your Shares pursuant to the Offer.
Sincerely,
[LOGO]
John A. Dimling
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
ANNEX A
August 15, 1999
Board of Directors
Nielsen Media Research, Inc.
299 Park Avenue
New York, NY 10171
Members of the Board:
We understand that Nielsen Media Research, Inc. ("Target" or the "Company"), VNU
USA, Inc. ("Buyer") and Niner Acquisition, Inc., a wholly owned subsidiary of
Buyer ("Acquisition Sub"), propose to enter into the Agreement and Plan of
Merger dated as of August 15, 1999 (the "Merger Agreement"), which provides,
among other things, for (i) the commencement by Acquisition Sub of a tender
offer (the "Tender Offer") for all outstanding shares of common stock, par value
$0.01 per share (the "Common Stock"), of Target for $37.75 per share net to the
seller in cash, and (ii) the subsequent merger (the "Merger") of Acquisition Sub
with and into Target. Pursuant to the Merger, Target will become a wholly owned
subsidiary of Buyer and each outstanding share of Common Stock, other than
shares held in treasury or held by Buyer or any subsidiary of Buyer or as to
which dissenters' rights have been perfected, will be converted into the right
to receive $37.75 per share in cash. The terms and conditions of the Tender
Offer and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Common Stock pursuant to the Tender Offer and the
Merger, as provided in the Merger Agreement, is fair from a financial point of
view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of the
Company;
(iii) analyzed certain financial forecasts prepared by the management of the
Company;
(iv) discussed the past and current operations and financial condition and
the prospects of the Company with senior executives of the Company;
(v) reviewed the reported prices and trading activity for the Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives of
the Company, Buyer and their financial and legal advisors;
(ix) reviewed the Merger Agreement and certain related documents;
(x) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial forecasts, we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
A-1
<PAGE>
estimates and judgments of the future financial performance of the Company. In
addition, we have assumed that the Tender Offer and Merger will be consummated,
in all material respects, in accordance with the terms of the Merger Agreement.
We have not made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any such appraisals.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Company
or any of its assets.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and have received fees
for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company, except that this opinion may be included in its
entirety in any filing made in respect of the Tender Offer or the Merger with
the Securities and Exchange Commission and delivered to shareholders. This
letter does not constitute a recommendation to any shareholder as to how such
shareholder should respond to the Tender Offer.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of shares of Common
Stock pursuant to the Tender Offer and the Merger as provided in the Merger
Agreement is fair from a financial point of view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Stuart J. Epstein
--------------------------------------
Stuart J. Epstein
Managing Director
A-2
<PAGE>
ANNEX B
NIELSEN MEDIA RESEARCH, INC.
299 PARK AVENUE
NEW YORK, NEW YORK 10171
(212) 708-7500
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement ("Information Statement") is being mailed on or
about August 20, 1999, as part of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to the holders of shares of
common stock, $.01 par value per share, of the Company (the "Shares"). You are
receiving this Information Statement in connection with the possible election of
persons designated by Parent to a majority of the seats on the Company's Board
of Directors. Pursuant to the Merger Agreement, Purchaser commenced the Offer on
August 20, 1999. The Offer is scheduled to expire at 12:00 midnight, New York
City time, on Friday, September 17, 1999, unless the Offer is extended. You are
urged to read this Information Statement carefully. You are not, however,
required to take any action. Capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9. The
information contained in this Information Statement or incorporated by reference
herein concerning Parent, Purchaser, or their respective officers, directors,
representatives or affiliates or actions or events with respect to any of them,
was provided by Parent or Purchaser, and the Company takes no responsibility for
such information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. The holders of a majority of the outstanding Shares represented in
person or by proxy will constitute a quorum. Each stockholder is entitled to one
vote per share assuming the presence of a quorum, the affirmative vote of a
plurality in interest of the stockholders present in person or by proxy and
entitled to vote thereon is required to elect directors. As of August 18, 1999,
there were 57,688,294 Shares outstanding and 20,925,842 Shares were reserved
pursuant to the exercise of options (of which there are options to purchase
12,667,686 Shares outstanding).
PARENT'S DESIGNEES
The Merger Agreement provides that, promptly upon the consummation of the
Offer, Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Company's Board as is equal to the product
of the total number of directors on the Company's Board (determined after giving
effect to any increase in the size of such Board pursuant to this sentence)
multiplied by the percentage that the number of Shares beneficially owned by
Purchaser at such time bears to the total number of Shares then outstanding;
provided that in no event shall Parent's designees (the "Designees") constitute
less than a majority of the entire Board of Directors. In futherance thereof,
the Company shall, upon the request of Parent, promptly use its reasonable best
efforts to secure the resignations of such number of its existing directors or
increase the size of the Company's Board; PROVIDED, HOWEVER, that prior to the
Effective Time the Company and Parent shall use their respective best efforts to
ensure that at least two of the members of the Board shall at all times prior to
the consummation of the Merger be directors of the Company who were directors of
the Company on August 15, 1999.
B-1
<PAGE>
Parent has informed the Company that it will choose the Designees from the
directors and executive officers of certain affiliates of Parent listed in
Schedule I attached hereto. Parent has informed the Company that each of the
directors and executive officers listed in Schedule I has consented to act as a
director if so designated. The business address of Parent and Purchaser is 1515
Broadway, New York, New York 10036.
It is expected that the Designees may assume office at any time following
the purchase by Purchaser pursuant to the Offer of such number of Shares
representing not less than a majority of the outstanding shares of Common Stock
on a fully-diluted basis and that upon assuming office Designees will thereafter
constitute at least a majority of the Company's Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
THE CURRENT MEMBERS OF THE BOARD
The Company's Board of Directors currently consists of eight members. The
names of the current directors, their ages as of August 15, 1999 and certain
other information about them are set forth below. As indicated above, some of
the current directors may resign effective immediately following the purchase of
the Shares by the Purchaser pursuant to the Offer.
<TABLE>
<CAPTION>
POSITIONS DIRECTOR PRINCIPAL OCCUPATIONS
NAME WITH NMR SINCE DURING LAST FIVE YEARS AGE
- --------------------- --------------------- ----------- ------------------------------------------ ---
<S> <C> <C> <C> <C>
William G. Jacobi Chairman; 1998 Chairman, 11/96 to present 55
Director Chairman, IMS International,
Westport, CT (health care information
services), 2/95 to 12/97
Executive Vice President,
Cognizant Corporation, Westport, CT
(information services), 9/96 to 12/97
Executive Vice President, The Dun &
Bradstreet Corporation, Wilton, CT
(information services), 2/95 to 10/96
Senior Vice President, The
Dun & Bradstreet Corporation, 7/93 to
2/95
John A. Dimling President and 1998 President and 61
Chief Executive Chief Executive Officer, 7/98 to present
Officer; Director President and Chief Operating Officer,
7/93 to 7/98
<CAPTION>
OTHER
NAME DIRECTORSHIPS
- --------------------- ---------------------
<S> <C>
William G. Jacobi R.H. Donnelley
Corporation
John A. Dimling None
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
POSITIONS DIRECTOR PRINCIPAL OCCUPATIONS
NAME WITH NMR SINCE DURING LAST FIVE YEARS AGE
- --------------------- --------------------- ----------- ------------------------------------------ ---
<S> <C> <C> <C> <C>
M. Bernard Puckett Director 1998 Private Investor, 1/96 to present 54
President and Chief
Executive Officer, Mobile
Telecommunication Technologies Corp.,
Jackson, MS (telecommunications), 5/95
to 1/96
President and
Chief Operating Officer, Mobile
Telecommunication Technologies Corp.,
1/94 to 5/95
James R. Craigie Director 1998 President and 45
Chief Executive Officer, Spalding Sports
Worldwide, Inc., Chicopee, MA (sporting
goods), 12/98 to present
Executive Vice President
and President, Beverage and Desserts
Division, Kraft Foods, Rye Brook, NY
(food services), 10/97 to 12/98
Executive Vice President
and General Manager, Beverage Division,
Kraft Foods, 11/94 to 9/97
Executive Vice President
and General Manager, Dinners and
Enhancers Division, Kraft Foods, 2/94 to
10/94
Vice President and
General Manager, Pollio Dairy Products,
Mineola, NY (food services), 3/93 to
1/94
Peter A. Lund Director 1998 Private Investor, 6/97 to present 58
President and
Chief Executive Officer, CBS Television
and Cable Group, New York, NY
(broadcasting), 1/97 to 6/97
President and
Chief Executive Officer, CBS Inc., New
York, NY (broadcasting), 11/95 to 1/97
Executive Vice President,
CBS Broadcast Group, and President, CBS
Television Network, New York, NY
(broadcasting), 10/90 to 11/95
<CAPTION>
OTHER
NAME DIRECTORSHIPS
- --------------------- ---------------------
<S> <C>
M. Bernard Puckett P-Com, Inc.; R.R.
Donnelley & Sons
Company; IMS Health
Incorporated
James R. Craigie None
Peter A. Lund None
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS DIRECTOR PRINCIPAL OCCUPATIONS
NAME WITH NMR SINCE DURING LAST FIVE YEARS AGE
- --------------------- --------------------- ----------- ------------------------------------------ ---
<S> <C> <C> <C> <C>
Michael D. Moore Director 1998 Media Consultant, 1/99 to 61
present
Executive Vice President and Director of
Media Development, The MacManus Group,
Inc., New York, NY (communications
holding company, with D'Arcy Masius
Benton & Bowles, Inc. a major holding),
1/98 to 12/98
Executive Vice President and
Worldwide Media Director, D'Arcy Masius
Benton & Bowles, Inc., New York, NY
(advertising agency), 1993 to 12/97
Ronald Townsend Director 1999 Consultant, 10/96 to present 57
President Gannett Television Group,
Arlington, VA (broadcasting),
5/89 to 10/96
Robert E. Weissman Director 1998 Chairman and 59
Chief Executive Officer, IMS Health
Incorporated, Westport, CT (health care
information services), 6/98 to present
Chairman and
Chief Executive Officer, Cognizant
Corporation, Westport, CT (information
services), 9/96 to 6/98
Chairman and
Chief Executive Officer, The Dun &
Bradstreet Corporation, Wilton, CT
(information services), 4/95 to 10/96
President and
Chief Executive Officer, The Dun &
Bradstreet Corporation, 1/94 to 3/95
<CAPTION>
OTHER
NAME DIRECTORSHIPS
- --------------------- ---------------------
<S> <C>
Michael D. Moore None
Ronald Townsend BankAmerica
Corporation; ALLTEL
Corporation
Robert E. Weissman State Street
Corporation;
IMS Health
Incorporated
</TABLE>
COMMITTEES OF THE BOARD AND MEETINGS
The Audit Committee of the Board of Directors reviews the scope of the
internal audit activities of the Company's independent public accountants and
the auditors' evaluation of internal controls and receives an annual summary of
the results of such audits. It also reviews the scope of the audit of the
Company's consolidated financial statements by the independent public
accountants and their report on the audit. The Committee also recommends the
appointment of the Company's independent public accountants to the full Board.
The Committee consists of Messrs. Lund (Chairman), Craigie and Moore. The Audit
Committee held one meeting during 1998. Mr. Townsend was appointed to the Audit
Committee in 1999.
The Compensation and Benefits Committee of the Board of Directors
establishes and revises all compensation arrangements for certain executives of
the Company consistent with the executive compensation philosophy adopted by the
Board of Directors. The Committee also has authority to administer the Company's
executive benefit plans and to establish and review the policies regarding
executive and all other benefit programs. The
B-4
<PAGE>
Committee consists of Messrs. Puckett (Chairman), Craigie and Moore. The
Compensation and Benefits Committee held two meetings during 1998.
While the Board has no nominating committee, stockholders' recommendations
for nominees will be considered by the full Board. You may recommend nominees by
submitting the names in writing to: Stephen J. Boatti, Senior Vice President,
Chief Legal Officer and Secretary, Nielsen Media Research, Inc., 299 Park
Avenue, New York, New York 10171. The Company's By-laws specify certain time
limitations, notice requirements and other procedures applicable to the
submission of nominations before an Annual or Special Meeting.
Three meetings of the Board of Directors were held during 1998. No director
attended fewer than 75% of the total number of meetings of the Board of
Directors and of the Committees of the Board on which the director serves,
except for Mr. Craigie, who attended 2 of 6 Board and Committee meetings.
INFORMATION ABOUT EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST FIVE
NAME POSITION YEARS AND DIRECTORSHIPS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
John A. Dimling....................... President and Chief Executive President and Chief Executive Officer,
Officer; Director July 1998 to present; President and
Chief Operating Officer, July 1993 to
June 1998
Thomas W. Young....................... Executive Vice President and Executive Vice President and Chief
Chief Financial Officer Financial Officer, February 1998 to
present; Senior Vice President and
Controller, The Dun & Bradstreet
Corporation, April 1992 to October
1996
Barry P. Cook......................... Senior Vice President and Chief Senior Vice President and Chief
Research Officer Research Officer, November 1990 to
present
Stuart J. Goldshein................... Vice President and Controller Vice President and Controller, July
1998 to present; Assistant Controller,
Cognizant Corporation, November 1996
to June 1998; Assistant Controller,
The Dun & Bradstreet Corporation, 1991
to October 1996
Stephen J. Boatti..................... Senior Vice President, Chief Senior Vice President, Chief Legal
Legal Officer and Secretary Officer and Secretary, July 1998 to
present; Associate General Counsel,
Cognizant Corporation, November 1996
to June 1998; Associate General
Counsel, The Dun & Bradstreet
Corporation, 1993 to October 1996
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST FIVE
NAME POSITION YEARS AND DIRECTORSHIPS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Robert A. Lane........................ Vice President Finance and Vice President-Finance and Treasurer,
Treasurer July and Treasurer 1998 to present;
Vice President-- Finance and Planning,
July 1992 to June 1998
Anita M. Rubino....................... Senior Vice President and Chief Senior Vice President and Chief Human
Human Resources Officer Resources Officer, July 1998 to
present; Vice President-- Human
Resources, May 1994 to June 1998; Vice
President-- Organizational
Development, Marketing Information
Services Division, The Dun &
Bradstreet Corporation, May 1993 to
May 1994
John A. Loftus........................ Senior Vice President and Chief Senior Vice President and Chief
Communications Officer Communications Officer, July 1998 to
present; Vice President--
Communications, April 1990 to June
1998
William G. Jacobi..................... Chairman; Director Chairman, November 1996 to present;
Chairman, IMS International, February
1995 to December 1997; Executive Vice
President, Cognizant Corporation,
September 1996 to December 1997;
Executive Vice President, The Dun &
Bradstreet Corporation, February 1995
to October 1996; Senior Vice
President, The Dun & Bradstreet
Corporation, July 1993 to February
1995; Director R.H. Donnelly
Corporation
</TABLE>
B-6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE ON EXECUTIVE COMPENSATION
This report provides an explanation of the philosophy underlying the
Company's Executive Compensation Program and also describes how decisions were
implemented regarding the compensation paid by the Company to John Dimling,
President and Chief Executive Officer. The Compensation and Benefits Committee
(the "Committee") of the Board of Directors reviews and approves compensation
for senior executives of the Company, including the Chief Executive Officer and
the other executives whose compensation is described in this Information
Statement. The Committee is composed entirely of outside directors and has been
advised by independent experts experienced in the design and implementation of
executive compensation arrangements.
Prior to July 1, 1998, the Company was a subsidiary of Cognizant Corporation
("Cognizant") and compensation decisions were based on Cognizant's executive
compensation philosophy. This report describes the compensation philosophy
implemented by the Company since it became an independent public company on July
1, 1998.
EXECUTIVE COMPENSATION PHILOSOPHY
The Committee and the Board of Directors of the Company believe that a key
to building stockholder value is to closely align the financial interests of the
Company's executives and employees with those of stockholders and potential
investors. Moreover, we believe that top-caliber executives and employees who
can develop and deliver high-quality, innovative and accurate products and
services, and deliver customer satisfaction, will ultimately drive increased
stockholder value.
The Company has developed compensation and benefits programs for executives
and employees within a total compensation framework. Total compensation
opportunities are weighted heavily towards short-term cash incentives and
long-term stock option incentives. These incentives place a major portion of
senior executives' compensation at risk, to assure a sharp and continuing focus
on building stockholder value.
Annual cash incentives are variable and are tied to corporate financial
performance. Stock options focus on creating and sustaining stockholder value
long-term and serve as the primary source of future compensation growth
opportunity for executives. Executives will be expected to hold stock, and the
Company's stock option program is intended to help accomplish that objective.
Total compensation opportunities for the Company's executives are
established based on practices of companies that are likely to compete for the
services of our executives. This enables the Company to attract and retain high
quality executives, who are critical to the future success of the business, in
an increasingly competitive market.
The Committee's judgments about the appropriate levels of compensation
opportunities and payments to executives are considered in the context of
competitive practices among a comparison group of companies. The companies used
for compensation comparison purposes are primarily media companies and, for the
CEO, a comparison is also done against a broad cross-section of
non-manufacturing companies. The non-manufacturing comparison group includes
most of the Company's peer group competitors shown in the Total Stockholder
Return graph on page B-9, as well as other companies that are engaged in the
media industry and information research business.
Using this comparison data, the Committee generally positions executive pay
opportunities halfway between the median and 75th percentile of the media
industry, which is the Company's primary source for talent and retention. The
CEO is benchmarked against the media industry and non-manufacturing company
medians, since the CEO labor market is broader than the media industry.
B-7
<PAGE>
COMPONENTS OF THE COMPENSATION PROGRAM
The compensation package for executives comprises base salary, annual cash
incentives and long-term incentives in the form of stock options.
BASE SALARY. The base salaries of executives compensate for ongoing
performance of assigned responsibilities. In determining whether to adjust the
base salary of an executive, including the Chief Executive Officer, the
Committee takes into account salaries paid for comparable positions at the other
compensation comparator companies, changes in the executive's responsibilities,
the individual performance of the executive and the Company's compensation
philosophy.
ANNUAL INCENTIVES. The Annual Incentive Plan rewards the executives listed
in the Summary Compensation Table for the financial results achieved for the
year. Incentive payouts are dependent on the level of achievement of financial
targets set at the beginning of the plan year. Financial targets for 1998 were
based on the Company's revenue, operating earnings and cash flow. Prospectively,
qualitative goals such as customers' satisfaction or new product delivery may be
included as measures of executive performance. No award is earned with respect
to a performance measure unless a performance "floor" for that measure is
exceeded; the award opportunity with respect to a measure is earned if the
performance target is achieved; achievement between the floor and the target
results in a lower award with respect to that performance measure. An amount
larger than the award opportunity for each performance measure can be earned, up
to a specified limit, for exceeding the target for that measure. In 1998, the
Company's overall performance exceeded financial targets; accordingly, incentive
awards paid in early 1999 exceeded target award opportunities.
STOCK OPTIONS. Stock options serve to reward executives in the same manner
as our stockholders benefit, because options only have value to executives when
the Company's stock price increases. In 1998, executives were granted options
with a life of ten years that vest proportionately over three years, and have an
exercise price equal to the fair market value of the Common Stock on the grant
date. The number of options granted in 1998 was determined based primarily on
the competitive practices of our compensation comparator companies but also
reflected individual performance and expected future contributions.
CEO COMPENSATION. Mr. Dimling participates in the executive compensation
program described in this Report of the Compensation and Benefits Committee. In
1998, Mr. Dimling's base salary was increased to reflect his new position as the
Chief Executive Officer of a publicly-traded company and the higher competitive
salary levels for positions comparable to his new position paid in our
compensation comparator companies. Mr. Dimling's financial targets for earning
his annual incentive, as determined by the Committee, were based on the same
three measures as for the other senior executives with overall corporate
responsibility--the Company's consolidated revenue, operating income and cash
flow for 1998. The Committee gave different weights to each measure in
determining the bonus to be earned, based on how it viewed their relative
importance in rewarding improvement in annual results. Because the Company's
results for 1998 were above the annual incentive targets established at the
beginning of the year, the incentive payment to Mr. Dimling shown in the Summary
Compensation Table was higher than his target award opportunity. Mr. Dimling and
the other senior corporate executives also received a payment in addition to the
incentive opportunity based on the Company's achievement of an
earnings-per-share target established at the beginning of 1998. Mr. Dimling
received a grant of 75,000 stock options in 1998.
The Committee believes Mr. Dimling's current compensation is fully
consistent with our philosophy on executive compensation, and appropriate in
view of our performance as indicated in the Total Stockholder Return graph on
page B-9. The graph compares the Company's cumulative total return since the
Company's shares began trading independently in June of 1998 to a performance
peer group of five information and service providers and to the Standard &
Poor's Midcap 400 Index.
TAX DEDUCTIBILITY. Under Section 162(m) of the Internal Revenue Code (the
"Code"), the Company may not deduct certain forms of compensation in excess of
$1,000,000 paid to its Chief Executive Officer
B-8
<PAGE>
and the other four most highly compensated senior executives. For 1998 and 1999,
none of the compensation paid to these executives (other than amounts to be paid
as a result of the transactions contemplated by the Merger Agreement) is
expected to exceed the Code limitations. The Committee intends to maximize the
deductibility of executive compensation, but also to compensate executive
officers in a manner commensurate with performance and the competitive
environment for executive and creative talent. As a result, some portion of
compensation paid to an executive officer whose compensation is subject to the
deduction limits described above may not be deductible by the Company in the
future.
COMPENSATION AND BENEFITS COMMITTEE
M. Bernard Puckett, Chairman
James R. Craigie
Michael D. Moore
COMPARISON OF TOTAL STOCKHOLDER RETURN OF THE COMPANY,
S&P MIDCAP 400 INDEX AND THE COMPANY'S PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
6/23/98 6/30/98 7/31/98 8/31/98 9/30/98 10/31/98 11/30/98 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Company 100 101.36 90.4 65.75 74.88 103.65 109.58 131.49
S&P Midcap 400 Index 100 95.13 91.44 74.42 81.37 88.64 93.06 104.3
Peer Group 100 102.99 89.7 72.18 79.48 80.94 85.76 88.57
</TABLE>
<TABLE>
<CAPTION>
6/23/98 6/30/98 7/31/98 8/31/98 9/30/98 10/31/98 11/30/98
----------- --------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
The Company........................... 100 101.36 90.40 65.75 74.88 103.65 109.58
S&P Midcap 400 Index.................. 100 95.13 91.44 74.42 81.37 88.64 93.06
Peer Group............................ 100 102.99 89.70 72.18 79.48 80.94 85.76
<CAPTION>
12/31/98
-----------
<S> <C>
The Company........................... 131.49
S&P Midcap 400 Index.................. 104.30
Peer Group............................ 88.57
</TABLE>
This graph compares the total stockholder return of the Company, the
Standard & Poor's Midcap 400 Index and a group of the Company's peer companies
from June 23, 1998, the first day of when-issued trading in the Company's Common
Stock, until December 31, 1998. The calculation assumes $100 was invested on
June 23, 1998 and that any dividends were reinvested. Since there is no widely
recognized standard industry group comprising the Company and peer companies, a
group of companies representing a range of proprietary data providers was used.
The performance peer group consists of ACNielsen Corporation, The Dun &
Bradstreet Corporation, Gartner Group, Inc., Information Resources, Inc. and
Primark Corporation.
B-9
<PAGE>
EXECUTIVE COMPENSATION TABLES
In addition to the annual compensation of the Company's five most highly
compensated executive officers, the following tables show six months of 1998 and
full-year 1997 compensation for certain executives who resigned from Cognizant,
the former name of the Company, upon Cognizant's spin-off of certain businesses
on July 1, 1998 (the "Spin-Off"), in accordance with rules of the Securities and
Exchange Commission.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------- --------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
COMPEN- AWARD(S) OPTIONS/
SALARY BONUS(1) SATION(2) (3) SARS(4)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)
- ---------------------------------------- --------- --------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. Dimling......................... 1998 336,800 254,102 0 0 75,000
President and Chief Executive Officer... 1997 303,000 181,662 0 0 0
Thomas W. Young(6)...................... 1998 256,667 165,462 0 0 30,000
Executive Vice President and Chief
Financial Officer..................... 1997 0 0 0 0 0
Barry P. Cook........................... 1998 231,750 125,633 0 0 30,000
Senior Vice President and Chief
Research Officer........................ 1997 212,167 109,165 0 0 0
Stuart J. Goldshein..................... 1998 216,800 96,323 0 0 15,000
Vice President and Controller........... 1997 211,500 105,746 0 0 0
Stephen J. Boatti....................... 1998 199,700 101,641 0 0 20,000
Senior Vice President, Chief Legal
Officer and Secretary................. 1997 188,100 98,226 0 0 0
<CAPTION>
PAYOUTS
---------------
LONG-
TERM ALL OTHER
INCENTIVE COMPEN-
PAYOUTS SATION(5)
NAME AND PRINCIPAL POSITION ($) ($)
- ---------------------------------------- --------------- -----------
<S> <C> <C>
John A. Dimling......................... 0 10,537
President and Chief Executive Officer... 0 19,682
Thomas W. Young(6)...................... 0 3,750
Executive Vice President and Chief
Financial Officer..................... 0 0
Barry P. Cook........................... 0 7,163
Senior Vice President and Chief
Research Officer........................ 0 11,454
Stuart J. Goldshein..................... 0 7,116
Vice President and Controller........... 0 10,508
Stephen J. Boatti....................... 0 6,314
Senior Vice President, Chief Legal
Officer and Secretary................. 0 9,585
</TABLE>
The following officers resigned from the Company's predecessor, Cognizant,
in connection with the Spin-Off on July 1, 1998. The 1998 amounts shown are for
compensation through June 30, 1998.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Robert E. Weissman...................... 1998 387,500 561,715 0 0 0 0
Former Chairman and Chief
Executive Officer..................... 1997 750,000 1,007,100 1,006 0 0 0
Victoria R. Fash........................ 1998 300,000 250,446 75,700 0 0 0
Former Executive Vice President
and Chief Financial Officer........... 1997 375,000 349,128 0 268,938 0 0
Alan J. Klutch.......................... 1998 162,500 177,888 0 0 0 0
Former Senior Vice President-Finance.... 1997 325,000 303,473 0 0 0 0
<CAPTION>
Robert E. Weissman...................... 28,534
Former Chairman and Chief
Executive Officer..................... 72,568
Victoria R. Fash........................ 13,513
Former Executive Vice President
and Chief Financial Officer........... 19,655
Alan J. Klutch.......................... 11,538
Former Senior Vice President-Finance.... 22,637
</TABLE>
- ------------------------------
(1) The bonus (annual incentive) awards were earned in the year indicated and
paid in the following year.
(2) The value of certain personal benefits is not included since it does not
exceed $50,000 for any named executive officer. The amount shown for Ms.
Fash represents an allowance for incidentals associated with an
international assignment.
(3) The amount shown for Ms. Fash represents the dollar value of restricted
stock on the date of the grant. This grant was a special one-time award made
by Cognizant and was forfeited upon Ms. Fash's resignation.
(4) All the options in this table are without tandem stock appreciation rights.
(5) Amounts shown represent aggregate annual company contributions for the
account of each named executive officer under the Nielsen Media Research,
Inc. Savings Plan (the "Savings Plan") and Savings Benefit Equalization Plan
(the "SBEP"), plans that are open to employees of the Company and certain
subsidiaries. The Savings Plan is a tax-qualified defined contribution plan
and the SBEP is a non-qualified plan that provides a benefit to participants
in the Savings Plan equal to the amount of Company contributions that would
have been made to the participant's Savings Plan accounts but for certain
Federal tax laws.
(6) Mr. Young joined the Company in February 1998.
B-10
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS GRANT DATE
OPTIONS/SARS GRANTED TO EXERCISE OR PRESENT
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION VALUE(2)
NAME (#) FISCAL YEAR ($/SHARE) DATE ($)
- ---------------------------------------------- --------------- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
John A. Dimling............................... 75,000 6.29 16.4375 12/15/08 291,650
Thomas W. Young............................... 30,000 2.52 16.4375 12/15/08 27,099
Barry P. Cook................................. 30,000 2.52 16.4375 12/15/08 27,099
Stuart J. Goldshein........................... 15,000 1.26 16.4375 12/15/08 13,549
Stephen J. Boatti............................. 20,000 1.68 16.4375 12/15/08 18,066
</TABLE>
The following officers resigned from the Company's predecessor, Cognizant,
in connection with the Spin-Off on July 1, 1998. Amounts shown are for grants
through June 30, 1998.
<TABLE>
<S> <C> <C> <C> <C> <C>
Robert E. Weissman............................ 0 N/A N/A N/A N/A
Victoria R. Fash.............................. 0 N/A N/A N/A N/A
Alan J. Klutch................................ 0 N/A N/A N/A N/A
</TABLE>
- ------------------------------
(1) Amount shown represents the number of non-qualified stock options, without
tandem stock appreciation rights ("SARs"), granted in 1998. The options may
not be exercised for at least one year after grant and may then be exercised
in installments of one-third of the grant amount each year until they are
100% vested. Payment must be made in full upon exercise in cash or Common
Stock. The option holder may elect to have shares of Common Stock issuable
upon exercise withheld by NMR to pay withholding taxes due.
(2) Grant date present value is based on the Black-Scholes option valuation
model, which makes the following material assumptions for the December 16,
1998 grant: an expected stock-price volatility factor of 30%, a risk-free
rate of return of 4.63%, an annual dividend yield of 0%, an assumed time of
exercise of three years from grant date, and a reduction of approximately
9.7% to reflect the probability of forfeiture due to termination prior to
vesting. These assumptions may or may not be fulfilled. The amounts shown
cannot be considered predictions of future value. In addition, the option
will gain value only to the extent the stock price exceeds the option
exercise price during the life of the option.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information as to option exercises by each of
the named executive officers during 1998 and the value of unexercised
in-the-money stock options at year-end.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS
ACQUIRED VALUE FISCAL YEAR-END(1)(#) AT FISCAL YEAR-END(2)($)
UPON REALIZED -------------------------- --------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. Dimling.............................. 244,672 $ 922,644 184,522 706,643 $1,819,823 $ 6,353,236
Thomas W. Young.............................. 0 0 0 235,458 0 $ 1,307,606
Barry P. Cook................................ 124,564 $ 676,076 62,241 252,576 $ 616,590 $ 2,243,823
Stuart J. Goldshein.......................... 107,607 $ 446,137 63,158 223,447 $ 626,851 $ 2,079,734
Stephen J. Boatti............................ 9,060 $ 48,287 220,808 212,008 $2,335,463 $ 1,925,165
</TABLE>
The following officers resigned from the Company's predecessor, Cognizant,
in connection with the Spin-Off on July 1, 1998. Amounts shown are for exercises
through June 30, 1998.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Robert E. Weissman(3)........................ 796,602 $5,640,886 0 6,666 0 $ 26,871
Victoria R. Fash............................. 0 0 0 0 0 0
Alan J. Klutch............................... 0 0 0 0 0 0
</TABLE>
- ------------------------------
(1) No SARs were outstanding at December 31, 1998.
(2) The values shown equal the difference between the exercise price of
unexercised in-the-money options and the fair market value of the underlying
Company's Common Stock at December 31, 1998. Options are in-the-money if the
fair market value of the Company's Common Stock exceeds the exercise price
of the option.
(3) The amount of unexercised options shown for Mr. Weissman represents options
granted to him after the Spin-Off as a director of the Company.
B-11
<PAGE>
RETIREMENT BENEFITS
Retirement benefits for the named executive officers are determined under
the the Company's Retirement Plan and the the Company's Retirement Excess Plan.
Under these plans, the Company contributes 6% of the participant's compensation
monthly to the participant's cash balance in the plan. The cash balance earns
monthly investment credits based on the yield on 30-year Treasury bonds from
time to time. Compensation, for the purpose of determining retirement benefits,
consists of base salary, annual bonuses, commissions and overtime pay. Severance
pay, income derived from equity-based awards, contingent payments and other
forms of special remuneration are excluded. Bonuses included in the Summary
Compensation Table above are normally not paid until the year following the year
in which they are accrued and expensed; therefore, compensation for purposes of
determining retirement benefits varies from the Summary Compensation Table
amounts in that bonuses expensed in the previous year but paid in the current
year are part of retirement compensation in the current year and current year's
bonuses accrued and included in the Summary Compensation Table are not. For
1998, compensation for purposes of determining retirement benefits for the named
executive officers differed by less than 10% from the amounts shown in the
Summary Compensation Table.
These plans also include a minimum monthly benefit for certain employees who
had attained age 50 and had earned five years of service as of October 31, 1996,
including Messrs. Dimling and Cook. The minimum benefit is equal to the excess
of (i) 1.7% of final average compensation multiplied by years of credited
service not in excess of 25, plus 1.0% of average final compensation multiplied
by years of credited service in excess of 25, over (ii) 1.7% of the primary
Social Security insurance benefits multiplied by years of credited service not
in excess of 25, plus 0.5% of the primary Social Security insurance benefits
multiplied by years of credited service in excess of 25. Final average
compensation is defined as the highest average annual compensation during five
consecutive twelve-month periods in the last 10 consecutive twelve-month periods
of the member's credited service. Members vest in their accrued retirement
benefit upon completion of five years of service.
The estimated annual benefits upon retirement at age 65 for Messrs. Dimling,
Cook, Goldshein and Boatti are $96,185, $34,361, $41,151 and $29,122,
respectively. These amounts include benefits payable under predecessor qualified
plans of The Dun & Bradstreet Corporation that would be deducted from the amount
payable under these plans. The estimated annual retirement benefits payable at
age 65 are based on 1998 recognized earnings, assuming no future increases in
such earnings. For Messrs. Boatti and Goldshein, the assumed investment credit
on cash balances is 5.5417% per annum, and the assumed annuity conversion rate
at age 65 is 5.15%. The actual investment credit and annuity conversion rate may
vary from these rates. In 1998, Mr. Young was not eligible to participate in the
Retirement Plan or the Retirement Excess Plan.
B-12
<PAGE>
CHANGE-IN-CONTROL AGREEMENTS
The Company has entered into agreements with the executive officers named in
the Summary Compensation Table above (as well as with other officers and key
employees of the Company and its subsidiaries), providing for certain benefits
upon termination of employment in the event of a Change in Control (as defined
below) of the Company. If, following a Change in Control, the employment of a
named executive officer is terminated without cause or he or she terminates
employment for "good reason" (generally, an adverse change in employment status,
compensation or benefits, a required relocation or the lapse of 12 months
following the Change in Control), the officer will receive a lump sum payment
equal to three times (for Mr. Dimling and Mr. Young), two times (for Mr. Cook
and Mr. Boatti) and one and one-half times (for Mr. Goldshein) base salary and
annual target bonus, reimbursement for outplacement expenses, life and health
insurance coverage for 36 months (for Mr. Dimling and Mr. Young), 24 months (for
Mr. Cook and Mr. Boatti) and 18 months (for Mr. Goldshein) after termination,
retiree medical coverage, the accelerated vesting of stock options and the
accelerated payment of prorated annual and other bonuses. A Change in Control
will generally have occurred under the following circumstances: (i) an
acquisition by any person of 20% of the combined voting power of the Company's
securities, (ii) during any period of twenty-four months a majority of the Board
ceases to consist of (x) directors in office at the beginning of such period or
(y) directors whose election was approved by two-thirds of the directors in
office at the beginning of the period or by directors whose election was so
approved, (iii) the Company's merger or consolidation with another entity (other
than one in which the Company's shares outstanding prior to the merger represent
66- 2/3% of the voting power of the surviving company and no shareholder holds
20% or more of such remaining voting power) or (iv) the liquidation or sale of
substantially all of the Company's assets. The consummation of the transactions
contemplated by the Merger Agreement would constitute a Change in Control under
these agreements.
Pursuant to waivers signed in connection with the Merger Agreement, each
executive officer named in the Summary Compensation Table (as well as most of
the other officers and key employees with such change in control agreements) has
agreed to defer the receipt of the spread value under all currently unvested
stock options held by them over a period of two years and agreed to be subject
to a noncompetition and nonsolicitation provision for an 18-month period after
the termination of employment. In return, if such employee remains employed by
the Company for 15 months after the Merger, he or she will be entitled to
receive the payment contemplated by his or her change in control agreement.
SEVERANCE ARRANGEMENTS
The Company's Career Transition Plan and Executive Transition Plan provide
severance benefits to employees of the Company (including the executive officers
named in the Summary Compensation Table above) and certain of its subsidiaries.
These plans generally provide for the payment of severance benefits if the
employment of a covered employee terminates by reason of a reduction in force,
job elimination, unsatisfactory job performance or a mutually acceptable
resignation. In the event of an eligible termination, executives with a base
salary between $150,000 and $200,000 will be paid three-quarters of a week of
salary continuation for each four weeks of service with the Company, up to a
maximum of 20 weeks, except that certain executives who had service with The Dun
& Bradstreet Corporation (a predecessor of the Company) receive benefits of 39
weeks. Executives with a base salary of more than $200,000 will be paid one week
of salary continuation for each two weeks of service, up to a maximum of 52
weeks. The Chief Executive Officer will be paid 104 weeks of salary and annual
bonus continuation. Lower amounts are paid in the event of termination for
unsatisfactory performance. In addition, unless termination occurs for
unsatisfactory performance, the executive will receive a portion of his or her
cash bonus opportunity for the year of termination, prorated based on the number
of months worked during that year.
In addition, the plans provide to eligible terminated executives continued
medical, dental and life insurance coverage throughout the salary continuation
period, and in certain instances, outplacement services and financial
counseling. The Chief Executive Officer may increase or decrease benefits for
executives other than the Chief Executive Officer, provided such decision is
reported to the Compensation
B-13
<PAGE>
and Benefits Committee of the Board, and that Committee may increase or decrease
benefits for the Chief Executive Officer.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. Beginning July 1, 1998, each director not employed by
the Company (other than Mr. Jacobi) was paid a retainer at an annual rate of
$25,000 in quarterly installments and each non-employee director who was
Chairman of a committee of the Board of Directors was paid an additional
retainer at an annual rate of $3,000 in quarterly installments. In addition,
each such non-employee director was paid a fee of $1,000 for each Board or
committee meeting attended in 1998. Directors who were employed by the Company
received no retainers or fees.
Each non-employee director may elect to have all or a specified part of the
retainer and fees deferred until he or she ceases to be a director. Deferred
amounts may be credited to the account of directors as deferred cash, which
bears interest at prescribed rates, or as deferred share units in an amount
equal to the amount of deferred compensation divided by the fair market value of
a share of Common Stock on the date the compensation would otherwise have been
paid. Deferred share units are credited with dividend equivalents, if any. Fair
market value is the average of the high and low trading prices of the Common
Stock on the date of determination. Deferred amounts and accrued interest and
dividend equivalents are paid in the form of cash or stock, as appropriate, on
the first business day of the calendar year following the date of the director's
termination of service on the Company's Board.
Upon the occurrence of a Change in Control (as defined above under
"Change-in-Control Agreements") of the Company, the Compensation and Benefits
Committee may take such action as it deems necessary or desirable with respect
to deferred amounts.
Mr. Jacobi received no retainer or fees for 1998. As of March 1, 1999, he is
paid a retainer for his services as Chairman at an annual rate of $300,000,
payable monthly.
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN. This plan provides for the
granting of stock options and restricted stock to non-employee directors of the
Company on such terms as are determined by the Compensation and Benefits
Committee of the Board of Directors. On July 8, 1998 the Committee granted each
non-employee director 2,147 shares of restricted Common Stock with a fair market
value on that date of $13.97, and a stock option to purchase 6,666 shares of
Common Stock at an exercise price of $13.97 per share. The restricted shares
vest five years after the date of grant. Until the shares vest, the director is
not able to sell or dispose of them but is entitled to vote them and receive
dividends. These restrictions lapse if the director dies or becomes disabled or,
at the Committee's discretion, if the director's service terminates in other
circumstances. The stock option expires 10 years after the grant date and vests
in six equal installments beginning one year after the grant date. The plan
provides for the accelerated vesting of options upon termination of service due
to death, disability or retirement.
Upon the occurrence of a Change in Control (as defined above under
"Change-in-Control Agreements") of the Company, the Compensation and Benefits
Committee may take such action as it deems necessary or desirable with respect
to directors' awards, including acceleration of an award, payment of cash in
exchange for cancellation of an award, and/or issuing substitute awards that
substantially preserve the value, rights and benefits of previously granted
awards. In connection with the Merger Agreement, the Compensation and Benefits
Committee approved the acceleration of vesting of all such awards and the
payment of cash in exchange for cancellation of such awards.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table shows the number of shares of the Company's Common Stock
beneficially owned by each director of the Company, each executive officer named
in the Summary Compensation Table below, all present directors and executive
officers as a group and each person known to the Company to beneficially own
more than 5% of the outstanding shares of Common Stock at August 15, 1999 (the
"5% Owners"). Stock ownership information is based upon (i) information
furnished by such directors and
B-14
<PAGE>
executive officers as of August 15, 1999, and (ii) a Schedule 13G filed by each
5% Owner with the Securities and Exchange Commission (the "SEC"). Please note
that, in certain cases, shares required under rules of the SEC to be shown as
beneficially owned are shares as to which the indicated person holds only rights
to acquire within 60 days through exercise of stock options. Unless otherwise
stated, the indicated persons have sole voting and investment power over the
shares listed. No director or executive officer of the Company owned more than
one percent of the Common Stock. The mailing address for each of the Company's
directors and executive officers listed herein is 299 Park Avenue, New York, New
York 10171.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL
OWNER POSITION NUMBER OF SHARES AND NATURE OF OWNERSHIP
- ----------------------- ------------------------------- ---------------------------------------------------
<S> <C> <C> <C>
Stephen J. Boatti Senior Vice President, 363 Direct
Chief Legal Officer and 220,808 Right to Acquire within 60 Days by
Secretary Exercise of Options
221,171
----------
----------
Barry P. Cook Senior Vice President 236 Direct
and Chief Research 62,241 Right to Acquire within 60 Days by
Officer Exercise of Options
62,477
----------
----------
James R. Craigie Director 2,147(1) Restricted Stock Grant
John A. Dimling President and Chief 897 Direct
Executive Officer; 184,522 Right to Acquire within 60 Days by
Director Exercise of Options
185,419
----------
----------
Stuart J. Goldshein Vice President and 291 Direct
Controller 63,158 Right to Acquire within 60 Days by
Exercise of Options
63,449
----------
----------
William G. Jacobi Chairman; Director 2,247 Direct
2,147 Restricted Stock Grant
4,394
----------
----------
Peter A. Lund Director 500 Direct
2,147 Restricted Stock Grant
2,647
----------
----------
Michael D. Moore Director 2,147 Restricted Stock Grant
M. Bernard Puckett Director 1,200 Direct
2,406 Restricted Stock Grant
3,606
----------
----------
Ronald Townsend Director 1,132 Restricted Stock Grant
Robert E. Weissman Director 58,865 Direct
2,147 Restricted Stock Grant
61,012
----------
----------
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
NAME OF BENEFICIAL
OWNER POSITION NUMBER OF SHARES AND NATURE OF OWNERSHIP
- ----------------------- ------------------------------- ---------------------------------------------------
<S> <C> <C> <C>
Thomas W. Young Executive Vice President 97 Direct
and Chief Financial Officer 34,340 Right to Acquire within 60 Days by
Exercise of Options
34,437
----------
----------
All directors and executive
officers as a group 859,354(1)
Morgan Stanley Dean Witter & Co.
1585 Broadway
New York, NY 10036 4,559,909(2)
First Manhattan Co.
437 Madison Avenue
New York, NY 10022 4,814,138(3)
FMR Corp.
82 Devonshire Street
Boston, MA 02109 8,343,895(4)
Arnhold and S. Bleichroeder, Inc.
1345 Avenue of the Americas
New York, NY 10105 3,517,332(5)
AXA Assurances I.A.R.D. Mutelle
21, rue de Chateaudun
75009 Paris France 5,853,216(6)
AXA Assurances Vie Mutuelle
21, rue de Chateaudun
75009 Paris France 5,853,216(6)
AXA Conseil Vie Assurance Mutuelle
100-101 Terrasse Boieldieu
92042 Paris La Defense France 5,853,216(6)
AXA Courtage Assurance Mutuelle
26, rue Louis le Grand
75002 Paris France 5,853,216(6)
AXA
9 Place Vendome
75001 Paris France 5,853,216(6)
The Equitable Companies Incorporated
1290 Avenue of the Americas
New York, New York 10104 5,805,022(6)
</TABLE>
- ------------------------
(1) Includes all shares beneficially owned regardless of nature of ownership,
and all rights to acquire shares within 60 days. Represents 1.49% of the
outstanding Common Stock as of August 18, 1999.
(2) Morgan Stanley Dean Witter & Co. ("Morgan") and its wholly owned subsidiary
Morgan Stanley Dean Witter Investment Management Inc. ("MSDW") jointly filed
a Schedule 13G with the SEC on February 8, 1999. This Schedule 13G states
that Morgan and MSDW, registered investment advisers, beneficially owned at
December 31, 1998, 4,559,909 shares, representing approximately 8.15% of the
Common Stock outstanding at that date. Morgan and MSDW have shared
dispositive power over all of the shares owned by them and shared voting
power over 3,765,580 of such shares.
(3) First Manhattan Co. filed a Schedule 13G with the SEC on February 11, 1999.
This Schedule 13G states that First Manhattan Co., a registered
broker-dealer and investment adviser, beneficially owned
B-16
<PAGE>
at December 31, 1998, 4,814,138 shares of Common Stock, representing
approximately 8.6% of the Common Stock outstanding at that date. This amount
includes 137,032 shares owned by family members of general partners of First
Manhattan Co. as to which First Manhattan Co. disclaims dispositive power
over 10,516 shares and disclaims beneficial ownership of 126,516 shares.
First Manhattan Co. has sole voting power over 65,515 shares, shared voting
power over 4,305,043 shares, sole dispositive power over 65,515 shares and
shared dispositive power over 4,748,623 shares.
(4) FMR Corp. ("FMR"), Edward C. Johnson 3d ("E.C. Johnson") and Abigail P.
Johnson ("A.P. Johnson") jointly filed a Schedule 13G with the SEC on
February 12, 1999. This Schedule 13G states that FMR, E.C. Johnson and A.P.
Johnson beneficially owned at December 31, 1998, 8,343,895 shares of Common
Stock, representing approximately 14.9% of the Common Stock outstanding at
that date. Of these shares, 7,187,406 shares are beneficially owned by FMR's
wholly-owned subsidiary Fidelity Management and Research Company
("Fidelity"), a registered investment adviser. E.C. Johnson, FMR and the
registered investment companies advised by Fidelity (the "Fidelity Funds")
each has the sole dispositive power over 7,186,606 of these shares, and the
Fidelity Funds have the sole voting power over these shares. FMR, Fidelity
International Limited ("FIL") and Fidelity American Special Situations
Trust, a unitrust advised by a subsidiary of FIL, each has the sole voting
and dispositive power over 1,400 of the 7,187,406 shares. Fidelity
Management Trust Company, a wholly owned subsidiary of FMR and a bank,
beneficially owns 1,108,924 shares, as to which E.C. Johnson and FMR each
has sole dispositive power, and as to 1,056,782 shares of which each has
sole voting power. FIL beneficially owns an additional 47,565 shares, over
which it has the sole voting and dispositive power. FIL, formerly a
subsidiary of FMR, was voluntarily included in FMR's Schedule 13G filing.
(5) Arnhold and S. Bleichroeder, Inc. ("A&SB") filed a Schedule 13G with the SEC
on February 16, 1999. This Schedule 13G states that A&SB, a registered
investment adviser, beneficially owned at December 31, 1998, 3,517,332
shares of Common Stock, representing approximately 6.29% of the Common Stock
outstanding at that date. A&SB has sole voting power over 3,515,832 shares,
shared voting power over 1,500 shares, and sole dispositive power over all
the shares owned by it.
(6) The Equitable Companies Incorporated ("Equitable"), AXA, which beneficially
owns a majority interest in Equitable and the Mutuelles AXA ("Mutuelles"),
which as a group control AXA, jointly filed a Schedule 13G with the SEC on
July 12, 1999. This schedule 13G states that AXA and Mutuelles beneficially
owned at June 30, 1999, 5,853,216 shares of Common Stock, representing 10.3%
of the Common Stock outstanding at that date. Of these shares 4,244,622 are
beneficially owned by Equitable's subsidiary, Alliance Capital Management
L.P., a registered investment adviser ("Alliance"). Alliance has the sole
dispositive power over these shares, and has the sole voting power over
2,394,800 of these shares. 1,483,600 of the shares are beneficially owned by
Equitable's subsidiary, The Equitable Life Assurance Society of the United
States, a registered investment adviser and a registered broker-dealer
("Equitable Life"). Equitable Life has the sole dispositive power over these
shares, and has the sole voting power over 1,200,500 of these shares. 68,150
of the shares are beneficially owned by Equitable's subsidiary, Wood,
Struthers & Winthrop Management Corporation, a registered investment
adviser. 8,650 of the shares are beneficially owned by Equitable's
subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation, a
registered investment adviser and a registered broker-dealer ("DLJ"). DLJ
has the sole dispositive power over 775 of these shares. 1,000 of the shares
are beneficially owned by AXA's subsidiary, Sun Life & Provincial Holdings
PLC (U.K.) ("Sun Life"). Sun Life has the sole dispositive and voting power
over these shares. 47,194 of the shares are beneficially owned by AXA's
subsidiary, AXA Rosenberg (U.S.) ("Rosenberg"). Rosenberg has the sole
voting power over 34,162 of these shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company knows of no person who did not file on a timely basis reports
required by Section 16(a) of the Securities Exchange Act of 1934 during 1998.
B-17
<PAGE>
SCHEDULE I
PARENT DESIGNEES
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME POSITIONS HELD DURING THE PAST FIVE YEARS
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Thomas A. Mastrelli..................................... Mr. Mastrelli is the sole director and President of
Purchaser. Mr. Mastrelli has been Chief Operating
Officer of Parent since January 1, 1999. From April 16,
1998 to December 31, 1998, Mr. Mastrelli served as
Executive Vice President and General Manager of Parent.
Beginning in 1981 he was a partner at the public
accounting and consulting firm of Leslie Sufrin and
Company.
James Ross.............................................. Mr. Ross is the Vice President and General Counsel of
Purchaser. Mr. Ross has been Vice President, General
Counsel and Secretary of Parent for the past five years.
Gerald S. Hobbs......................................... Mr. Hobbs has been Chairman of the Board of Directors
and Chief Executive Officer of Parent since 1994. Mr.
Hobbs has served as a member of the Executive Board of
Directors of VNU since 1998.
Mr. Rob F. Van Den Bergh................................ Member of Executive Board of Directors of Parent. Mr.
Van der Bergh has served as the Vice Chairman of the
Executive Board of Directors of VNU since 1998. During
the past five years, he has served on the Supervisory
Boards of Directors of Philips Nederland, CVI, Boompers
and Scoot UK.
</TABLE>
I-1
