<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
TICKETMASTER GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[TICKETMASTER LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of
Ticketmaster Group, Inc., an Illinois corporation (the "Company"), will be held
at The Park Hyatt Hotel located at 2151 Avenue of the Stars, Century City,
California, 90067 on Tuesday, June 10, 1997 at 10:00 a.m., local time, for the
following purposes:
(1) to elect seven directors to serve until the next Annual Meeting of
Shareholders or until their successors are duly elected and qualified;
(2) to consider and vote upon proposed amendments to the Ticketmaster Stock
Plan (as amended and restated); and
(3) to transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on May 5, 1997 are entitled
to notice of and to vote at the meeting and any postponements or adjournments
thereof. A complete list of the shareholders entitled to vote at the meeting
will be subject to inspection by any shareholder at the Company's principal
executive offices located at 8800 Sunset Boulevard, West Hollywood, California
90069, during ordinary business hours, for a period of ten days prior to the
meeting. The Company's Board of Directors extends a cordial invitation to all
shareholders to attend the meeting.
By Order of the Board of Directors,
/s/ FREDRIC D. ROSEN
Fredric D. Rosen,
President and Chief Executive Officer
West Hollywood, California
May 14, 1997
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
REPLY ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON.
<PAGE> 3
TICKETMASTER GROUP, INC.
8800 SUNSET BOULEVARD
WEST HOLLYWOOD, CALIFORNIA 90069
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 10, 1997
------------------------
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors of
Ticketmaster Group, Inc., an Illinois corporation (the "Company" or
"Ticketmaster"), for use at the Annual Meeting of Shareholders of the Company to
be held on the date, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and at any postponements
or adjournments thereof. The Company's principal executive offices are located
at 8800 Sunset Boulevard, West Hollywood, California 90069, and its telephone
number is (310) 360-6000. As used in this Proxy Statement, references to a
"fiscal" year refer to the 12-month period ending on January 31 of each year
(e.g., "fiscal 1997" shall mean the Company's fiscal year ended January 31,
1997). Shareholders of record at the close of business on May 5, 1997 are
entitled to notice of and to vote at the meeting. This Proxy Statement and the
accompanying proxy are first being mailed to shareholders on or about May 14,
1997.
THE MEETING
VOTING AT THE MEETING
On May 5, 1997, there were 24,739,715 shares of common stock of the
Company, no par value per share (the "Common Stock"), issued and outstanding.
Each share of Common Stock issued and outstanding on May 5, 1997 entitles the
holder thereof to one vote on all matters submitted to a vote of shareholders at
the meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock will constitute a quorum. The affirmative
vote of a majority of the shares represented at the meeting, in person or by
proxy, will be necessary for (i) the election of directors, (ii) the approval of
the proposed amendments to the Ticketmaster Stock Plan (as amended and restated)
(the "Stock Plan"), and (iii) the taking of all other actions that may properly
come before the meeting. Each of the directors, executive officers and greater
than 10% beneficial owners of the Company, who beneficially own in the aggregate
61.3% of the issued and outstanding shares of Common Stock, has indicated his or
its intent to vote FOR all nominees proposed for election to the Company's Board
of Directors and FOR the approval of the proposed amendments to the Stock Plan.
PROXIES AND PROXY SOLICITATION
All shares of Common Stock represented by properly executed proxies will be
voted at the meeting in accordance with the directions marked on the proxies,
unless such proxies previously have been revoked. If no directions are indicated
on such proxies, they will be voted FOR the election of each nominee named below
under "Election of Directors" and FOR each other proposal described herein
submitted by the Board of Directors for a vote of the shareholders. If any other
matters not described herein are properly presented at the meeting for action,
which is not presently anticipated, the persons named in the enclosed proxy will
vote all proxies (which confer discretionary authority upon such holders to vote
on such matters) in accordance with their best judgment. Each shareholder who
executes and returns a proxy may revoke the proxy at any time before it is voted
at the meeting by timely submission, to the Assistant Secretary of the Company,
of a written
<PAGE> 4
notice of revocation or a duly executed proxy bearing a later date. In addition,
if a shareholder is present at the meeting, he or she may elect to revoke his or
her proxy and vote his or her shares personally.
Proxies marked "ABSTAIN" or marked "WITHHOLD AUTHORITY" will be treated as
shares present and entitled to vote, which will have the same effect as a vote
against any matter submitted for a vote of the shareholders. If a broker
indicates on a proxy that it does not have discretionary authority to vote on a
particular matter as to certain shares, those "non-voted" shares will be
considered shares not present and, therefore, not entitled to vote on any such
matter and will not affect the determination of the outcome of the vote on any
such matter.
The costs of soliciting proxies will be paid by the Company. Certain
directors, officers and other employees of the Company, not specially employed
for this purpose, may solicit proxies, without additional remuneration therefor,
by personal interview, mail, telephone or other means of communication. The
Company will request brokers and other fiduciaries to forward proxy soliciting
material to the beneficial owners of shares of Common Stock that are held of
record by such brokers and fiduciaries and will reimburse such persons for their
reasonable out-of-pocket expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of May 5, 1997, the ownership of Common
Stock by (i) each person who is known by the Company to own more than 5% of the
outstanding Common Stock, (ii) each director and nominee for director of the
Company, (iii) each executive officer of the Company named in the Summary
Compensation Table appearing elsewhere herein, and (iv) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES APPROXIMATE
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) PERCENT OF CLASS
------------------- --------------------- ----------------
<S> <C> <C>
Paul G. Allen.............................. 12,283,014 49.7%
HG, Inc.(3)................................ 2,544,526 10.3
Fredric D. Rosen(4)(5)..................... 1,471,129 5.7
New East Associates, LLC(6)................ 1,862,069 7.5
Charles Evans Gerber(5)(7)................. 30,000 *
David Liddle(5)............................ 25,000 *
John A. Pritzker(5)(8)..................... 30,000 *
William D. Savoy(5)........................ 25,000 *
Terence M. Strom(5)........................ 35,000 *
Ned S. Goldstein(5)........................ 89,863 *
Peter B. Knepper(5)........................ 89,863 *
Stuart W. DePina(5)........................ 7,501 *
All officers and directors as a Group
(12 persons)(5).......................... 14,128,036 53.8
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Unless otherwise indicated, the address of each shareholder is in care of
the Company, 8800 Sunset Boulevard, West Hollywood, California 90069.
(2) Unless otherwise indicated in the footnotes to this table, the Company
believes the individuals named in this table have sole voting and investment
power with respect to all shares of Common Stock reflected in this table.
(3) HG, Inc. is a Delaware corporation, the indirect beneficial owners of which
are various trusts for the benefit of certain members of the Pritzker
family. Excludes 23,438 shares owned by Rockwood & Co., a Delaware
corporation, the common stock of which is indirectly owned by various other
trusts for the
2
<PAGE> 5
benefit of certain members of the Pritzker family (see Note 7). As used
herein, the "Pritzker family" refers to the lineal descendants of Nicholas
J. Pritzker, deceased.
(4) Includes 50,000 shares owned by Mr. Rosen as trustee of trusts for the
benefit of his minor children.
(5) Includes (i) 1,164,921, 89,863, 89,863 and 7,501 shares covered by options
granted to Messrs. Rosen, Goldstein, Knepper and DePina, respectively, which
are currently exercisable or exercisable within 60 days of the date hereof
and (ii) 25,000 shares covered by options granted to each of Messrs. Gerber,
Liddle, Pritzker, Savoy and Strom as director options under the Stock Plan,
which are currently exercisable. Excludes (i) 166,419, 95,833, 95,833 and
37,499 shares covered by options granted to Messrs. Rosen, Goldstein,
Knepper and DePina, respectively, which are not exercisable within 60 days
of the date hereof and (ii) 528,918 shares covered by options granted to all
officers and directors as a group which are not exercisable within 60 days
of the date hereof.
(6) The address of New East Associates, LLC is in care of Mr. Herbert Simon,
Simon DeBartolo Group, 115 West Washington, Indianapolis, Indiana 46204.
(7) Includes 3,000 shares owned by Mr. Gerber's wife and 2,000 shares held by a
trust of which he is the beneficiary but holds no voting or investment
power. Excludes shares owned by Rockwood & Co. A nominal indirect non-voting
interest in Rockwood & Co. is owned by various trusts for the benefit of
certain members of the Pritzker family, of which Mr. Gerber is a co-trustee.
(8) Does not include shares owned by HG, Inc. and Rockwood & Co.
PROPOSAL 1: ELECTION OF DIRECTORS
At the meeting, seven directors are to be elected to the Board of
Directors, to hold office until the next Annual Meeting of Shareholders of the
Company and until their respective successors are duly elected and qualified.
The Board of Directors has nominated and it is the intention of the persons
named in the enclosed proxy to vote FOR the election of each nominee named
below, each of whom currently is serving as a director and has consented to
continue serving as a director if re-elected. Each of the directors, executive
officers and greater than 10% beneficial owners of the Company, who beneficially
own in the aggregate 61.3% of the issued and outstanding shares of Common Stock,
has indicated his or its intent to vote FOR all nominees proposed for election
to the Company's Board of Directors.
INFORMATION CONCERNING THE NOMINEES FOR ELECTION AS DIRECTORS
Information concerning the seven nominees for election as directors,
including their principal occupations and employment, is set forth below.
Paul G. Allen, 44, has served as a director and Chairman of the Board since
December 1993. Mr. Allen has been a private investor for more than five years,
with interests in a wide variety of companies, many of which focus on multimedia
digital communications such as Asymetrix Corp. and Interval Research
Corporation, of which Mr. Allen is the controlling shareholder and a director.
In addition, Mr. Allen is the Chairman of the Board of Trail Blazers Inc. of the
National Basketball Association and The Paul Allen Group, a venture capital
firm. Mr. Allen currently serves as a director of Microsoft Corporation and also
serves as a director of various private corporations.
Fredric D. Rosen, 53, has served as a director since January 1988 (the date
of formation), and was Chairman of the Board until December 1993. Mr. Rosen was
the Chairman of the Board and Chief Executive Officer of Ticketmaster
Corporation from September 1982 until December 1993, at which time he became
President and Chief Executive Officer of the Company.
Charles Evans Gerber, 55, served as a director of the Company from January
1993 through December 1993 and then was re-elected as a director in September
1994. Since February 1986, Mr. Gerber has been a senior partner at the law firm
of Neal, Gerber & Eisenberg. Mr. Gerber is a director of Little City Foundation,
a not-for-profit corporation, and various privately-held corporations.
3
<PAGE> 6
David E. Liddle, Ph.D., 52, has served as a director since September 1994.
Mr. Liddle has served as Chief Executive Officer of Interval Research
Corporation, a research and development company, since March 1992. From November
1991 until March 1992, Mr. Liddle was a Vice President of IBM Corporation. Mr.
Liddle currently serves as a director of Sybase, Inc.
John A. Pritzker, 43, has served as a director since July 1992. Since July
1988, Mr. Pritzker has served as the Chief Executive Officer of the Red Sail
Companies which provide ad specialty and catalogue fulfillment services and
operate water sports and retail facilities at resorts worldwide. Mr. Pritzker is
a director of International Flight Technologies, Inc. and a trustee of the U.S.
Ski Team Foundation, San Francisco Museum of Modern Art, San Francisco Day
School and Children Now. Mr. Pritzker serves on the Board of Directors as the
designee of certain shareholders of the Company pursuant to a right granted to
those shareholders in an existing shareholders' agreement. See "Certain
Transactions."
William D. Savoy, 32, has served as a director since September 1994. Mr.
Savoy has served as the President of Vulcan Northwest Inc., a venture capital
firm, since January 1990. Mr. Savoy is a director of c/net, Inc., Harbinger
Corporation, Telescan, Inc. and U.S. Satellite Broadcasting, Inc.
Terence M. Strom, 53, has served as a director since September 1994. Since
February 1997, Mr. Strom has served as a consultant to Egghead, Inc., a retail
software reseller, and served as the President and Chief Executive Officer of
Egghead, Inc. from June 1993 until February 1997. From July 1989 until June
1993, Mr. Strom was a Vice President -- Merchandising and Senior Vice President
of Best Buy Company, Inc., a discount retail chain.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
The Board of Directors has established an Audit Committee and a
Compensation Committee. Each committee is composed of at least two "Non-Employee
Directors" as defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), who together constitute a majority of each committee. The
current members of the Audit Committee are Charles Evans Gerber, William D.
Savoy and Terence M. Strom. The current members of the Compensation Committee
are David E. Liddle, John A. Pritzker and William D. Savoy.
The functions of the Audit Committee are to recommend annually to the Board
of Directors the appointment of the independent public accountants of the
Company, discuss and review the scope and the fees of the prospective annual
audit and review the results thereof with the independent public accountants,
review and approve non-audit services of the independent public accountants,
review compliance with existing major accounting and financial policies of the
Company, review the adequacy of the financial organization of the Company and
review management's procedures and policies relative to the adequacy of the
Company's internal accounting controls.
The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all executive officers (consistent with the
terms of all applicable employment agreements), review, approve and recommend to
the Board of Directors the terms and conditions of all employee benefit plans or
changes thereto and administer the Stock Plan and such other employee benefit
plans as may be adopted by the Company from time to time.
The Board of Directors may also establish other committees from time to
time to assist in the discharge of its responsibilities.
During fiscal 1997, the Board of Directors held five meetings and took
action by written consent three times, the Audit Committee held no meetings (but
subsequently held a meeting during the first quarter of fiscal 1998) and the
Compensation Committee held one meeting and took action by written consent once.
Each director attended or participated in at least 75% of the aggregate number
of meetings held by the Board of Directors and the committees, if any, on which
he served during fiscal 1997.
4
<PAGE> 7
COMPENSATION OF DIRECTORS
Prior to August 21, 1996, directors were not paid fees, but were reimbursed
for travel expenses incurred in attending Board and committee meetings. On
August 21, 1996, each director who was not an employee of the Company or the
beneficial owner of 5% or more of the outstanding Common Stock was granted
options to purchase 25,000 shares of Common Stock in consideration for services
rendered through such date. In addition, commencing on August 21, 1996, each
director who is not an employee of the Company or the beneficial owner of 5% or
more of the outstanding Common Stock will be paid an annual fee of $6,000
payable in equal quarterly installments, and on the date of each scheduled
annual meeting of the shareholders of the Company, commencing in 1997 and
annually thereafter, each director will automatically be granted options to
purchase 10,000 shares of Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and beneficial owners of more than 10% of the outstanding
Common Stock (collectively, "insiders"), to file reports with the Securities and
Exchange Commission (the "Commission") disclosing their ownership of Common
Stock and changes in such ownership. The rules of the Commission require the
insiders to provide the Company with copies of all Section 16(a) reports filed
with the Commission.
Based solely upon a review of copies of Section 16(a) reports received by
the Company, and written representations, in certain instances, that no such
reports were required to be filed with the Commission, the Company believes that
its insiders have complied with all Section 16(a) filing requirements applicable
to them since the Company's initial public offering in November 1996 (the
"Initial Public Offering"), except that the insiders were two days late in
filing their initial statements of beneficial ownership. The Company believes
these late filings were a result of the Company's transition in 1996 from a
private to a public company and the insiders' lack of timely information
regarding their Section 16 reporting obligations.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are David E. Liddle, John
A. Pritzker and William D. Savoy, none of whom is either a current or former
officer or employee of the Company or any of the Company's subsidiaries. Certain
other information with respect to Messrs. Liddle, Pritzker and Savoy is set
forth below under "Certain Transactions."
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Paul G. Allen(1) 44 Chairman of the Board
Fredric D. Rosen(1) 53 President and Chief Executive Officer
John J. Ruscin 46 Senior Executive Vice President
Ned S. Goldstein 42 Senior Vice President and General Counsel
Peter B. Knepper 48 Senior Vice President and Chief Financial Officer
Layne Leslie Britton 41 Executive Vice President
Stuart W. DePina 36 Vice President -- Finance and Treasurer
</TABLE>
- ---------------
(1) See "Proposal 1: Election of Directors -- Information Concerning the
Nominees for Election of Directors" above for biographical information
concerning Messrs. Allen and Rosen.
Information concerning the executive officers of the Company, including
their principal occupations and employment, is set forth below:
John J. Ruscin has served as Senior Executive Vice President of the Company
and President and Chief Operating Officer of Ticketmaster Direct, Inc., a
wholly-owned subsidiary of the Company, since March 1997 and, in addition, has
served as a director of certain of the Company's subsidiaries from time to time.
From November 1994 to March 1997, Mr. Ruscin served as President and Chief
Executive Officer of the
5
<PAGE> 8
CBS/FOX Company, a joint venture home entertainment company between CBS Inc. and
Twentieth Century Fox Film Corp. From October 1992 to October 1994, Mr. Ruscin
was Executive Vice President of Marketing and Distribution for Ticketmaster
Corporation. From July 1987 until October 1992, Mr. Ruscin was Senior Vice
President of Acquisitions for Twentieth Century Fox Film Corp.
Ned S. Goldstein has served as a Senior Vice President of the Company since
February 1995 and as General Counsel of the Company since January 1988. From
January 1988 until January 1995, Mr. Goldstein also served as a Vice President
of the Company. In addition, Mr. Goldstein has served as an executive officer of
Ticketmaster Corporation since June 1987.
Peter B. Knepper has served as a Senior Vice President of the Company since
February 1995 and as Chief Financial Officer of the Company since May 1988. From
May 1988 until November 1995, Mr. Knepper also served as Treasurer of the
Company. In addition, Mr. Knepper has served as an executive officer of
Ticketmaster Corporation since May 1988.
Layne Leslie Britton has served as an Executive Vice President of the
Company and as President and Chief Operating Officer of Ticketmaster Ventures,
Inc., a wholly-owned subsidiary of the Company, since December 1996. From May
1987 to December 1996, Mr. Britton served as Vice President of Business Affairs
of CBS Inc., an entertainment and broadcasting company.
Stuart W. DePina has served as Vice President -- Finance and Treasurer of
the Company since November 1995. From August 1984 to November 1995, Mr. DePina
was employed by the public accounting firm of KPMG Peat Marwick, LLP serving in
various capacities including, most recently, a partner.
Officers are appointed by and serve at the discretion of the Board of
Directors.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain summary information with respect to
all compensation paid by the Company during the three fiscal years ended January
31, 1995, 1996 and 1997 to each of the Company's Chief Executive Officer and its
three other most highly paid executive officers during fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND FISCAL ----------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION
- ---------------------------------------- ------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Fredric D. Rosen........................ 1997 $1,800,000 $2,248,000 -- $ 40,905(2)
President & Chief 1996 1,800,000 576,000 -- 12,989
Executive Officer 1995 1,800,000 2,354,000 -- 9,476
Ned S. Goldstein........................ 1997 270,000 190,000 115,000 3,741(3)
Senior Vice President 1996 250,000 140,000 -- 3,695
and General Counsel 1995 225,000 100,000 70,696 2,681
Peter B. Knepper........................ 1997 285,000 195,000 115,000 4,207(4)
Senior Vice President 1996 275,000 140,000 -- 3,706
and Chief Financial Officer 1995 245,000 100,000 70,696 2,605
Stuart W. DePina(1)..................... 1997 200,000 30,000 45,000 994(5)
Vice President -- Finance and 1996 45,065 5,000 -- 174
Treasurer
</TABLE>
- ---------------
(1) Mr. DePina became an executive officer of the Company in November 1995.
(2) Represents cash payments for life insurance premiums of $40,905.
(3) Includes $2,375 contributed by the Company to the 401K Plan and $1,366 for
life insurance premiums.
6
<PAGE> 9
(4) Includes $2,291 contributed by the Company to the 401K Plan and $1,916 for
life insurance premiums.
(5) Represents cash payments for life insurance premiums of $994.
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENTAGE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES
SHARES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM (1)
GRANTED IN FISCAL PRICE PER EXPIRATION -----------------------
NAME (#) YEAR SHARE DATE 5% 10%
- --------------------- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Fredric D. Rosen..... -- -- -- -- -- --
Ned S. Goldstein..... 115,000 4.1% $ 14.50 10/21/06 $1,048,682 $2,657,566
Peter B. Knepper..... 115,000 4.1 14.50 10/21/06 1,048,682 2,657,566
Stuart W. DePina..... 45,000 1.6 14.50 10/21/06 410,354 1,039,917
</TABLE>
- ---------------
(1) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the Commission and are not
intended to forecast future appreciation of Ticketmaster Common Stock.
FISCAL YEAR-END OPTIONS/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END AT FISCAL YEAR-END
----------------------------------- -------------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- --------------------- ----------------------------------- -------------------------
<S> <C> <C>
Fredric D. Rosen..... 1,026,241 / 305,099 $0/$0
Ned S. Goldstein..... 70,696 / 115,000 0/ 0
Peter B. Knepper..... 70,696 / 115,000 0/ 0
Stuart W. DePina..... 0 / 45,000 0/ 0
</TABLE>
- ---------------
(1) None of the named executive officers of the Company exercised options or
SARs during the last completed fiscal year. Accordingly, columns in this
table pertaining to the exercise of options/SARs have been omitted.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement, dated as of December 15,
1993, with Fredric D. Rosen for an initial term ending on January 31, 1999. The
Company and Mr. Rosen have agreed that they will negotiate a three-year
extension to the employment agreement during the last year of the initial term
upon terms and conditions no less favorable to Mr. Rosen than the terms and
conditions applicable during the last year of the initial term, unless either
party gives notice to the other of its or his desire not to extend the term of
the employment agreement. Pursuant to the employment agreement, Mr. Rosen is
entitled to receive an annual base salary in the amount of $1.8 million
increasing to $2.1 million and $2.3 million, respectively, during the fourth and
fifth years of the initial term. Mr. Rosen is also entitled to receive an annual
performance bonus in an amount equal to a percentage (15% for fiscal 1995, 12.5%
for fiscal 1996 and 10% for all subsequent years) of the excess, if any, of the
Company's consolidated earnings before interest, taxes, depreciation and
amortization, with certain adjustments ("Adjusted EBITDA"), for the relevant
year over (i) for fiscal 1995, Adjusted EBITDA for fiscal 1994; (ii) for fiscal
1996, the average of Adjusted EBITDA for fiscal 1994 and 1995; and (iii) for all
subsequent years, the average of Adjusted EBITDA for the three prior fiscal
years. The annual performance bonus is subject to a cap of 50% of the base
salary for the relevant year if the increase in Adjusted EBITDA for such year
does not exceed specified percentages ranging from 12.5% to 15%. The Company
shall also pay Mr. Rosen such other bonuses as may be granted by the
7
<PAGE> 10
Company's Board of Directors in its discretion. The employment agreement also
entitles Mr. Rosen to participate in benefit programs, to receive full
reimbursement of medical expenses and to receive a $10 million life insurance
policy payable to Mr. Rosen's estate or named beneficiaries. Pursuant to the
employment agreement, the Company has granted Mr. Rosen options to purchase
1,331,340 shares of Common Stock at an exercise price of $14.14 per share, 25%
of which vested on the grant date and 75% of which vest monthly on a pro rata
basis over a 36-month period beginning January 1, 1995. If requested by Mr.
Rosen, the Company will loan Mr. Rosen the amount necessary to purchase the
shares of Common Stock issuable upon exercise of the options, together with the
amount necessary to pay all Federal and state income taxes thereon. In addition,
Mr. Rosen is prohibited from competing with the Company, subject to certain
exceptions, or soliciting the employment of any employee of the Company or any
customer of the Company for a period of two years after termination of Mr.
Rosen's employment with the Company.
The employment agreement provides that if Mr. Rosen's employment by the
Company is terminated by virtue of Mr. Rosen's death, the Company shall pay to
Mr. Rosen's estate or designee in a lump sum an amount equal to what would have
been his annual base salary for the one-year period following such termination,
plus any annual performance bonus amounts, annual base salary and benefits
accrued up to the date of termination. In the event Mr. Rosen's employment by
the Company is terminated by reason of disability, the Company shall pay to Mr.
Rosen an amount equal to what would have been his annual base salary for the
two-year period following such termination and all annual performance bonus
amounts accrued up to the date of termination, and the Company will for a
two-year period continue to provide, subject to certain conditions, those
benefit plans (including life insurance) in effect immediately prior to such
termination. If the Company terminates Mr. Rosen's employment for good reason
(which includes a determination by the Board of Directors that Mr. Rosen has
failed to perform his duties), the Company shall pay to Mr. Rosen in a lump sum
an amount equal to what would have been his annual base salary and amounts
payable under benefit plans for the two-year period following such termination,
plus an amount equal to annual performance bonuses, annual base salary and
benefits accrued up to such termination. If Mr. Rosen terminates his employment
for good reason at any time, the Company shall pay him the amounts described in
the immediately preceding sentence over the two-year period following
termination. The Company is also required to gross-up the payments made to Mr.
Rosen for any excise taxes which he may incur as a result of receiving payments
from the Company in connection with a change of control. In the event the
Company terminates Mr. Rosen's employment for any reason, the Company is
obligated to repurchase from Mr. Rosen 306,208 shares of Common Stock at a
purchase price to be determined in the manner set forth in the Shareholders
Agreement described below, but in no event for less than $4.3 million. See
"Certain Transactions."
The Company entered into employment agreements with Ned S. Goldstein and
Peter B. Knepper (as of February 1, 1994) and Stuart W. DePina (as of November
1, 1995), all of which will expire on January 31, 1999 and all of which provide
for negotiation of an extension of the initial term during the last year of the
initial term. Each executive is entitled to receive an annual base salary amount
ranging from $225,000 to $300,000 in the case of Mr. Goldstein, $245,000 to
$310,000 in the case of Mr. Knepper and $200,000 to $240,000 in the case of Mr.
DePina. Each executive is also entitled to receive an annual performance bonus
in an amount determined by the Board of Directors of the Company; provided,
however, that the amount of such bonus for any full contract year shall not be
less than $50,000 in the case of each of Mr. Goldstein and Mr. Knepper and
$20,000 in the case of Mr. DePina. The employment agreements also entitle the
executives to participate in benefit programs, to receive life insurance
policies ($3,000,000 in the case of Messrs. Goldstein and Knepper and $750,000
in the case of Mr. DePina) payable to their estates or named beneficiaries.
Pursuant to the employment agreements (except for Mr. DePina's), the Company has
granted options to purchase shares of Common Stock (70,696 shares in the case of
each of Messrs. Goldstein and Knepper) at an exercise price of $14.14 per share,
vesting over a 36-month period, in each case under the Company's Stock Plan. In
addition, the executives are prohibited from competing with the Company (subject
to certain exceptions) or soliciting the employment of any employee of the
Company or any customer of the Company for a period of two years after
termination of their employment with the Company. Pursuant to the employment
agreements, each executive agrees to serve without further compensation as an
officer or a
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<PAGE> 11
director of any of the Company's domestic and foreign subsidiaries and
affiliates if elected or appointed thereto.
If the Company terminates the employment of any of the persons named in the
immediately preceding paragraph for any reason other than for cause, death or
disability, the Company shall pay to such executive his annual base salary and
minimum annual performance bonus for the remainder of the term of the employment
agreement, subject to certain mitigation and other requirements. For a two-year
period following termination of employment for any reason other than the
executive's death, the executive shall be available to the Company as a
consultant. In consideration for such consulting services (and agreements not to
compete and solicit employees and customers) the executives will receive annual
compensation of $30,000 in the case of each of Messrs. Goldstein and Knepper and
$10,000 in the case of Mr. DePina.
CERTAIN TRANSACTIONS
In addition to the transactions described under "Employment Agreements,"
above, the Company has had during its last fiscal year, or contemplates having,
the transactions described below.
On December 15, 1993, the Company issued 12,233,014 shares of Common Stock
to Paul G. Allen for $173 million in cash. On December 15, 1993, the Company
also acquired all shares of capital stock of the Company's subsidiary, TM Movie
Tix, Inc., held by Fredric D. Rosen and the Rosen Family Foundation (who owned,
in the aggregate, a 20% interest in such entity), for an aggregate cash purchase
price of $6.3 million and 306,208 shares of Common Stock.
Concurrently with the sale of 12,233,014 shares of Common Stock by the
Company to Mr. Allen, the shareholders listed in the table under "Security
Ownership of Certain Beneficial Owners and Management," above, exclusive of New
East Associates, LLC (the "Original Shareholders"), entered into a shareholders
agreement (the "Shareholders Agreement") on December 15, 1993. The Shareholders
Agreement, among other things, (i) grants the Original Shareholders (other than
Mr. Allen) as a group the right to designate one member for election to the
Company's Board of Directors, subject to the approval of Mr. Allen, which
approval will not be reasonably withheld or delayed, (ii) restricts the ability
of Mr. Allen to transfer shares of Common Stock owned by him other than pursuant
to transfers to relatives, affiliates, charities and other shareholders, pledges
and sales pursuant to Rule 144 ("Rule 144") under the Securities Act of 1933, as
amended (the "Securities Act") or a public offering ("Exempt Transfers"), (iii)
restricts the ability of the Original Shareholders (other than Mr. Allen) to
sell shares of Common Stock owned by them in a public offering unless such
Original Shareholders shall have afforded Mr. Allen the right of first refusal
to acquire such shares, (iv) affords the Original Shareholders (other than Mr.
Allen) the right to participate in any sale of shares of Common Stock by Mr.
Allen, other than the sale of shares of Common Stock by Mr. Allen pursuant to
Exempt Transfers, (v) affords Mr. Allen the right to cause the Original
Shareholders (other than Mr. Allen) to sell their shares of Common Stock to a
bona fide unaffiliated third person to whom Mr. Allen has agreed to sell shares
of Common Stock where such sale results in Mr. Allen owning less than 50% of the
outstanding Common Stock of the Company, and (vi) requires Mr. Allen to engage
in any business that would otherwise be competitive with the Company (subject to
certain exceptions) through the Company. With respect to Mr. Allen's right of
first refusal to purchase shares of Common Stock in a transaction of the type
described in clause (iii) above, the purchase price for the purchased shares
shall be (if the Company's Common Stock is then publicly traded) a price equal
to the average of the closing prices for such stock during a specified
ten-business-day period. The Shareholders Agreement shall terminate upon the
voluntary agreement of all the parties thereto or at such time as the Original
Shareholders (other than Mr. Allen) collectively own less than 10% of the Common
Stock of the Company outstanding as of December 15, 1993. The Shareholders
Agreement shall also terminate as to any Original Shareholder when such
shareholder owns less than 1% of the Common Stock of the Company outstanding as
of December 15, 1993.
Concurrently with the execution of the Shareholders Agreement, the Company
also entered into a Registration Rights Agreement with Mr. Allen and a
Registration and Exchange Rights Agreement with the Original Shareholders other
than Mr. Allen pursuant to which they are granted rights to require the Company,
subject to certain qualifications, to effect the registration under the
Securities Act of all or a specified number
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<PAGE> 12
of their shares of Common Stock or have such shares included in a registration
statement filed with respect to the offering of Common Stock by the Company or
any other shareholder. The Company has agreed to bear all expenses relative to
such registrations, except fees and expenses of any counsel for the selling
shareholders and the underwriters' commissions. The Original Shareholders (other
than Mr. Allen), on the one hand, and Mr. Allen, on the other hand, shall have
no further rights under such Registration Rights Agreement or such Registration
and Exchange Rights Agreement, as applicable, at any time after either of them
fails to own at least 5% of the Common Stock of the Company outstanding as of
December 15, 1993.
On November 18, 1994, Paul G. Allen entered into a Third Party Pledge
Agreement whereby Mr. Allen agreed to secure the Company's payment obligations
with respect to a Term Loan under the Credit Agreement by granting the lenders
thereunder a security interest in shares of publicly traded common stock and/or
investment grade bonds owned by Mr. Allen having an aggregate market value equal
to no less than $90 million or such amount as will cause the ratio of the
outstanding principal amount of the Term Loan to such stock and bonds to equal
no more than 83.33%. No consideration was paid to Mr. Allen in connection with
his entering into the Third Party Pledge Agreement. Concurrent with the
Company's completion of the Initial Public Offering, Mr. Allen was released from
his obligation under the Third Party Pledge Agreement.
Pursuant to a Development and Services Agreement dated as of June 28, 1996
(the "Starwave Agreement"), Ticketmaster Multimedia Holdings, Inc. ("TMHI"), a
wholly-owned subsidiary of the Company, retained Starwave Corp. ("Starwave"), an
affiliate of Mr. Allen, to provide consulting, creative, writing, design and
computer programming services in connection with the development of Ticketmaster
branded Web sites and web pages available for informational and retail sales
purposes on the World Wide Web portion of the Internet. In consideration of the
services provided by Starwave under the Starwave Agreement, TMHI has agreed that
during the seven-year period beginning with the first commercial online
transaction consummated through the Ticketmaster retail Web site, Ticketmaster
will compensate Starwave as follows: (i) royalty payments of 5% of gross service
charge revenues received by Ticketmaster from consumers in connection with
online sales of tickets on the Ticketmaster retail Web site, less certain
enumerated deductions, (ii) royalty payments of 10% of the net profits of
Ticketmaster derived directly from the online sale of merchandise to consumers
through the Ticketmaster retail Web site and (iii) royalty payments of 20% of
the service charges, not to exceed $0.75 per ticket, for all tickets to sporting
events sold online in Starwave's web site. Ticketmaster has further agreed to
pay Starwave a minimum annual royalty of $100,000 (prorated for 1996), which
amount is credited against amounts otherwise payable to Starwave pursuant to
clauses (i) and (ii). Payments under the Starwave Agreement during fiscal 1997
aggregated approximately $50,000. During fiscal 1998, TMHI anticipates making
payments of approximately $100,000 to Starwave. The Board of Directors of the
Company has determined that the terms of the Starwave Agreement are fair and in
the best interests of the Company and its shareholders.
From time to time, the Company purchases products from Red Sail
Merchandising ("Red Sail"). Red Sail is indirectly owned by various trusts for
the benefit of certain members of the Pritzker family, including John A.
Pritzker, a director of the Company. During fiscal 1997, purchases from Red Sail
aggregated approximately $200,000. It is anticipated that purchases from Red
Sail during fiscal 1998 will be less than $100,000. The Company believes that
all purchases from Red Sail are upon terms no less favorable to the Company than
could be obtained from third parties.
In addition, trusts for the benefit of certain members of the Pritzker
family, including John A. Pritzker, a director of the Company, beneficially own
a one-third equity interest in Spectacor Management Group ("Spectacor"), a venue
management company, and have two designees on Spectacor's Management Committee.
During fiscal 1997, the Company derived revenues of approximately $9.2 million
from contracts with certain venues under Spectacor's management. During fiscal
1998, revenues attributable to venues under Spectacor's management are
anticipated to be approximately $11.0 million. The Company believes that its
contracts with Spectacor-managed venues are upon terms no less favorable to the
Company than similar contracts with third parties.
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<PAGE> 13
During fiscal 1996, the Company made an interest-free loan maturing January
10, 1997 in the amount of $75,000 to Ned S. Goldstein, an officer of the
Company. In January 1997, Mr. Goldstein repaid the loan in full.
On April 28, 1997, Ticketmaster Corporation filed a complaint against
Microsoft Corporation ("Microsoft"), of which Mr. Allen is a 9.0% shareholder,
in the United States District Court for the Central District of California.
Ticketmaster Corporation alleges that Microsoft wrongfully appropriated and
misused Ticketmaster's world wide web site by unlawfully linking its own web
site to and associating it with the Ticketmaster web site. Ticketmaster
Corporation seeks declaratory judgment in its favor, seeks to permanently enjoin
Microsoft from making any commercial use of Ticketmaster's web site and seeks
unspecified damages.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act or the Exchange Act, that might
incorporate future filings, including this Proxy Statement, in whole or in part,
the report presented below and the Performance Graph, the following report and
the Performance Graph shall not be incorporated by reference into any such
filings.
REPORT OF THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. Included in the functions of
the Compensation Committee are review and approval of base annual salaries and
annual bonuses for all executive officers (consistent with the terms of all
applicable employment agreements), and administration of the Stock Plan and such
other employee benefit plans as may be adopted by the Company from time to time.
GENERAL COMPENSATION POLICIES
The Company's compensation program for executive officers currently
consists, in general, of three principal components: a base annual salary, a
performance-based annual bonus and periodic grants of stock options. The
Compensation Committee believes that this approach best serves the interests of
shareholders by enabling the Company to structure compensation in a manner
necessary to attract and retain executives in a highly competitive environment,
while ensuring that the Company's executives are compensated in a manner that
advances both the short-term and long-term interests of shareholders.
Accordingly, compensation for executives involves a high proportion of pay which
is at risk: the variable annual bonus (which permits individual performance to
be recognized on an annual basis, and which is based, in significant part, on
either specified formulas or an evaluation of the contribution made by the
executive to Company performance) and stock options (which create a direct link
between the executive's long-term remuneration and stock price appreciation
realized by the Company's shareholders).
The Compensation Committee believes that it is important that the executive
officers of the Company hold equity positions in the Company. Stock option
grants to executives permit them to hold equity interests at more meaningful
levels than they could through other alternatives, such as stock purchase
arrangements. Accordingly, while the Compensation Committee is conscious of the
dilutive effects of stock options on shareholders, it believes that stock option
grants at reasonable levels are an important component of executive
compensation. In addition, because of the nature of the Company's operations,
the Company's management believes, and the Compensation Committee agrees, that
it is important that stock options be granted to a broad range of employees so
that the long-term interests of its executives and other employees are aligned
with those of its shareholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
As Chief Executive Officer, Mr. Rosen was compensated during fiscal 1997 in
accordance with his employment agreement described under "Executive
Compensation -- Employment Agreements," above. Pursuant to his employment
agreement, Mr. Rosen was entitled to receive an annual base salary in the amount
of $1.8 million during fiscal 1997, which is the same annual base salary that he
was entitled to receive during
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<PAGE> 14
fiscal 1995 and fiscal 1996. The Compensation Committee believes that Mr.
Rosen's base annual salary fairly reflects his tenure, experience and
responsibilities and the Company's historic operating performance. Mr. Rosen's
total compensation under his employment agreement was, and will be,
substantially related to the Company's performance because it provides for an
annual performance bonus in an amount calculated as a percentage of the excess
of the Company's Adjusted EBIDTA for each fiscal year over the average of
Adjusted EBIDTA for specified prior fiscal years. Although Mr. Rosen may also be
granted such other bonuses as the Company's Compensation Committee determines in
its discretion, Mr. Rosen's bonus for fiscal 1997 was comprised solely of
amounts calculated pursuant to the contractual formula. In addition, although
Mr. Rosen is entitled to participate in the Stock Plan, no stock options were
awarded to him during fiscal 1997. Mr. Rosen's employment agreement provides
that Mr. Rosen and the Company will negotiate a three-year extension during
fiscal 1999 upon terms and conditions no less favorable to Mr. Rosen than the
terms and conditions applicable during fiscal 1999, unless either party gives
notice to the other of its or his desire not to extend the term of the
employment agreement.
OTHER EXECUTIVE OFFICERS OF THE COMPANY
The base annual salaries and performance-based annual bonuses of the other
executive officers of the Company are determined in accordance with their
respective employment agreements. See "Executive Compensation -- Employment
Agreements," above. The Compensation Committee is authorized to determine the
actual amount of bonuses (subject to specified minimums) based upon such
guidelines and factual circumstances as the Compensation Committee deems
relevant, including the operating results of the Company during the applicable
fiscal year, the importance of the efforts of the executives in achieving such
operating results and the achievement by the Company and/or executives of
performance goals, if any, previously established by the Board of Directors for
such fiscal year. The executives are also entitled to participate in the Stock
Plan. Among the factors considered by the Compensation Committee in establishing
the amount of bonuses and stock option awards to executives were the
recommendations of the Chief Executive Officer. The Compensation Committee
believes that the total compensation paid to each executive during fiscal 1997,
inclusive of bonus and stock option awards, reflects that executive's individual
contributions and achievements during such fiscal year and the long-term
potential of the Company, or was necessary to attract an executive to initiate
and/or operate a business unit.
INTERNAL REVENUE CODE SEC.162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public corporations for
compensation over $1,000,000 for any fiscal year paid to the corporation's chief
executive officer and four other most highly compensated executive officers in
service at the end of any fiscal year. However, Section 162(m) also provides
that qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. The Compensation Committee
currently intends to structure compensation amounts and plans that meet the
requirements for deductibility, although the Compensation Committee also
reserves the authority to award non-deductible compensation in such
circumstances as they deem appropriate. Because of ambiguities and uncertainties
as to the application and interpretation of Section 162(m) and the regulations
issued thereunder, no assurance can be given, notwithstanding the efforts of the
Company in this area, that compensation intended by the Company to satisfy the
requirements for deductibility under Section 162(m) does in fact do so.
MEMBERS OF THE COMPENSATION COMMITTEE
David E. Liddle (Chairman)
John A. Pritzker
William D. Savoy
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<PAGE> 15
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock since consummation of the Company's Initial Public Offering in
November 1996 with the cumulative total return of the Nasdaq Total Return Index
(US) and of a peer group index over the same period (assuming the investment on
November 19, 1996 of $100 in each of the Company's Common Stock, the Nasdaq
Total Return Index (US) and the peer group and the reinvestment of dividends, if
any). The Company does not believe that the stock price performance shown on the
graph below is necessarily indicative of future price performance.
Because the Company is involved in a wide variety of services, no published
peer group accurately mirrors the Company's businesses or weighs those
businesses to match their relative contributions to the Company's overall
performance. Accordingly, the Company has created a special peer group index
that includes companies in the principal lines of businesses in which the
Company does business. The common stock of the following companies have been
included in the peer group index: APAC TeleServices, Inc., Automatic Data
Processing, First Data Corp., Fiserv, Inc., ICT Group, Inc., National Data
Corp., Precision Response Corp., Shop at Home, Inc., Sitel Corporation, TeleTech
Holdings, Inc., Total System Services, Inc., and ValueVision International, Inc.
The peer group weighs the constituent companies' stock performance on the basis
of market capitalization, measured at the beginning of each relevant time
period.
<TABLE>
<CAPTION>
Measurement Period Ticketmaster NASDAQ Total
(Fiscal Year Covered) Group Inc. Return (US) Peer Group Index
<S> <C> <C> <C>
11/19/96 100 100 100
1/31/97 100 110 92
</TABLE>
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<PAGE> 16
PROPOSAL 2: APPROVAL OF AMENDMENTS TO THE STOCK PLAN
General. The Stock Plan was initially adopted by the Company in 1994 and
was amended and restated on August 21, 1996. The Stock Plan provides for the
issuance of up to 3,250,000 shares of Common Stock to employees, directors and
officers of, and consultants to, the Company and permits the Company to grant
(i) Common Stock subject to transfer restrictions ("Restricted Stock"), (ii)
incentive stock options ("ISOs") within the meaning of Section 422 of the Code,
(iii) non-qualified stock options ("NSOs") ("ISOs" and "NSOs," individually, or
collectively, "Options"), (iv) stock appreciation rights ("SARs"), and (v)
phantom stock awards.
The Board of Directors has determined that it is in the best interests of
the Company to amend the Stock Plan (i) by increasing the number of authorized
shares thereunder from 3,250,000 shares to 3,750,000 shares and (ii) to comply
with certain recently enacted technical changes to Section 16(b) of the Exchange
Act and the rules and regulations promulgated thereunder. At this time, the
Board of Directors is not considering any other amendment or modification to the
Stock Plan, whether or not such amendment or modification would require
shareholder approval.
As of May 5, 1997, approximately 220,000 shares of Common Stock were
available under the Stock Plan for future awards. The Board of Directors
believes that the number of shares remaining available under the Stock Plan for
future awards will be insufficient to achieve the purpose of the Stock Plan, as
stated below, unless the amendment to increase the number of authorized shares
under the Stock Plan is approved. If such amendment is approved, the number of
shares of Common Stock available for future grants will be approximately
720,000.
Following is a brief description of the material features of the Stock Plan
as it will exist after the amendments set forth above.
Purpose. The purpose of the Stock Plan is to foster the interests of the
Company and its shareholders by enabling employees, directors and officers of,
and consultants to, the Company to acquire a proprietary interest in the Company
and to provide an additional incentive for such persons to promote the success
of the Company's business.
Administration. The Stock Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"), which selects the persons
who will receive grants of awards under the Stock Plan. The Committee is
comprised of two or more outside directors who are "non-employee directors" as
determined under Rule 16b-3(b)(3)(i) of the Exchange Act. The Board appoints the
members of the Committee, fills vacancies on the Committee and has the power to
replace members of the Committee with other eligible persons at any time. The
Committee is authorized to make grants under the Stock Plan, to determine the
terms and conditions thereof and to otherwise administer and interpret the Stock
Plan.
Eligibility. Employees, directors and officers of, and consultants to, the
Company and its subsidiaries are eligible to participate in the Stock Plan and
receive grants of awards thereunder. The selection of employees who will receive
grants under the Stock Plan (the "Participants") is in the sole discretion of
the Committee. The aggregate number of shares of Common Stock that may be issued
under Options, as restricted stock or upon which SARs or phantom stock may be
awarded to any Participant may not exceed 500,000.
Exercise Price of Options. The exercise price of any Option granted under
the Stock Plan is set in each case by the Committee; however, the exercise price
of any ISO may not be less than 100% of the fair market value of the shares of
Common Stock subject to the ISO on the date of grant (110% if the ISO is granted
to a greater than 10% shareholder of the Company).
Terms of Options. ISOs granted under the Stock Plan expire upon the earlier
to occur of (i) the date on which the Option is forfeited under the terms of the
Stock Plan due to termination of employment (e.g., 100% forfeiture if a
Participant's relationship with the Company is terminated for Cause (as that
term is defined in the Stock Plan)); (ii) ten years from the Option Date (as
that term is defined in the Stock Plan) (five years if the ISO is granted to a
greater than 10% shareholder of the Company), (iii) three months after the
Participant's termination of employment for any reason other than death, or (iv)
six months after the
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<PAGE> 17
Participant's death. The duration of NSOs granted under the Stock Plan are
identical to those of ISOs except that NSOs do not automatically expire ten
years after the Option Date.
Exercise of Awards. Unless the Committee establishes a different vesting
schedule and except with respect to the automatic director Options discussed
below, Options, Restricted Stock, SARs and phantom stock granted or awarded
under the Stock Plan shall become 25% vested after 12 months from the grant or
award date, and shall vest monthly pro rata over a period of 36 months
thereafter. Notwithstanding the foregoing, upon a Change in Control (as that
term is defined in the Stock Plan) all Options, Restricted Stock, SARs and
phantom stock shall become 100% vested and immediately exercisable. If a
Participant's employment with the Company, membership on the Board of Directors
or retention as a consultant terminates, all unvested grants and awards are
forfeited. Under the Stock Plan, upon the exercise of an Option, the optionee
may make payment either in cash, with shares of Common Stock having an aggregate
fair market value on the date of delivery equal to the exercise price, or by
delivery of an irrevocable commitment to use the proceeds of the sale of stock
acquired from exercise of the option. No Common Stock may be delivered upon the
exercise of an Option until full payment has been made for such shares.
Director Options. Each director who is not an employee of the Company or
the beneficial owner of 5% or more of the outstanding Common Stock and who was a
director of the Company on August 21, 1996 shall automatically be granted as of
that date NSOs to purchase 25,000 shares of Common Stock at an exercise price
per share of $14.50. In addition, commencing with the date of the annual meeting
of the shareholders of the Company scheduled to be held in 1997, and annually
thereafter, each director who is not an employee of the Company or the
beneficial owner of 5% or more of the outstanding Common Stock shall
automatically be granted NSOs to purchase 10,000 shares of Common Stock at an
exercise price per share equal to the fair market value of the shares of Common
Stock on the Option Date. Each automatic director NSO shall be 100% vested as of
the Option Date; provided, however, that such NSO may not be exercised at any
time prior to six months after the Option Date. Automatic director NSOs shall
expire ten years from the Option Date.
Stock Appreciation Rights (SARs). Under the terms of the Stock Plan, the
Committee may, in its discretion, grant naked SARs and/or tandem SARs to
eligible Participants. A tandem SAR is an SAR that is granted in connection with
an Option and is exercisable only if the fair market value of the Company's
Common Stock on the date of surrender exceeds the Option Price of the related
ISO or the fair market value of the Common Stock on the Option Date in the case
of an NSO, and only to the extent that the related NSO or ISO is exercisable. A
Participant who elects to exercise a tandem SAR may surrender the exercisable
portion of related Options in exchange for a number of shares of Common Stock
determined by a formula in the Stock Plan. A naked SAR is similar to a tandem
SAR but it is not granted in connection with an underlying Option and its terms
are governed by the Participant's SAR agreement.
Phantom Stock. Under the Stock Plan, the Committee may, in its discretion,
award phantom stock to eligible Participants and, in connection therewith, grant
the Participant the right to receive payments equal to dividends paid on the
Common Stock to which the phantom stock relates. Subject to certain terms and
limitations, an award of phantom stock entitles the Participant to surrender all
or part of the vested portion of such stock and to receive from the Company the
fair market value on the date of surrender of the Common Stock to which the
phantom stock relates.
Restricted Stock. In addition to Options, SARs and phantom stock, the
Committee may, in its discretion, make awards of Restricted Stock to eligible
Participants under the Stock Plan. A Participant may not sell or transfer shares
of Restricted Stock awarded under the Stock Plan and the shares are subject to
forfeiture in the event of the termination of the Participant's employment with
the Company or membership on the Board of Directors prior to the vesting
thereof. Notwithstanding the transfer restrictions, the holder of Restricted
Stock has the right to vote his or her shares of Restricted Stock and to receive
dividends in the same amount as dividends paid on non-restricted shares of
Common Stock.
Miscellaneous. The Stock Plan is not subject to any of the provisions of
the Employee Retirement Income Security Act of 1974, as amended.
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<PAGE> 18
Tax Consequences. The following is a brief summary of the principal
anticipated federal income tax consequences of grants under the Stock Plan to
Participants and the Company. This summary is not intended to be exhaustive and
does not describe all federal, state or local tax laws.
Options. ISOs are intended to meet the requirements of Section 422 of the
Code. The fair market value of shares of Common Stock for which any optionee may
be granted ISOs which are exercisable for the first time during any year may not
exceed $100,000. No income results to the holder of an ISO upon the grant of the
option or issuance of shares of Common Stock. The amount realized on the sale or
taxable exchange of such shares of Common Stock in excess of the option price
will be considered a capital gain, except that, if a disposition occurs within
one year after exercise of the ISO or two years after the grant of the ISO, the
optionee will realize compensation (and, subject to the discussion of Section
162(m) of the Code below, the Company may have a deduction), for federal income
tax purposes, on the amount by which the lesser of (i) the fair market value on
the date of exercise or (ii) the amount realized on the sale of the shares of
Common Stock exceeds the option price.
No income results to the holder of an NSO upon the grant of the option. In
connection with the exercise of an NSO, an optionee will generally realize
compensation (and, subject to the discussion of Section 162(m) of the Code
below, the Company may have a deduction), for federal income tax purposes, on
the difference between the option price and the fair market value of the shares
of Common Stock acquired.
Stock Appreciation Rights. The grant of an SAR should not give rise to
federal income tax consequences to the Participant or the Company. In the case
of an SAR that becomes exercisable (as opposed to an SAR that merely matures and
is paid out), exercisability alone should not give rise to federal income tax
consequences. Moreover, appreciation in the underlying stock, either before or
after the SAR becomes exercisable, should not trigger tax prior to payout. When
the holder of an SAR exercises the SAR or otherwise receives the payout, the
holder recognizes ordinary income (and, subject to the discussion of Section
162(m) of the Code below, the Company may have a deduction), subject to
withholding, in the amount of the payout. To the extent the payout is made in
shares of Common Stock, the holder's income is measured by the then fair market
value of the shares of Common Stock. The Company will be entitled to withhold
taxes on the value of the payout of an SAR. If the payout is made in shares of
Common Stock, satisfaction of the withholding may be accomplished by reducing
the number of shares of Common Stock to be issued to the employee.
Restricted Stock. Generally, a Participant will not recognize income and
the Company will not be entitled to a deduction with respect to an award of
Restricted Stock until the first to occur of the vesting or the free
transferability of such shares. The amount to be included in the Participant's
income (and, subject to the discussion of Section 162(m) of the Code below,
which may be deductible by the Company) will equal the fair market value of the
Restricted Stock on the first day it is freely transferable or vested, not when
it is first issued to a Participant, over the amount, if any, paid for such
stock. The Company will be entitled to withhold tax from a Participant's salary
or from the shares that are no longer subject to restriction in order to satisfy
any tax withholding obligation arising from the taxability of the Restricted
Stock.
A Participant receiving Restricted Stock can elect to include the value of
the Restricted Stock, over the amount, if any, paid for such stock, in income at
the time it is awarded by making a "Section 83(b) Election" within 30 days after
the Restricted Stock is transferred to the Participant.
Phantom Stock. The grant of phantom stock should not give rise to federal
income tax consequences to the Participant or the Company. In the case of a
holding of phantom stock which the Participant can compel the Company to redeem
(as opposed to phantom stock that merely matures and is paid out), the ability
to compel redemption alone should not give rise to federal income tax
consequences. Moreover, appreciation in the underlying stock, either before or
after the phantom stock becomes redeemable, should not trigger tax consequences
to the holder prior to payout. When the holder of phantom stock causes the
phantom stock to be redeemed or otherwise receives the payout, the holder will
realize ordinary income (and, subject to the discussion of Section 162(m) of the
Code below, the Company may have a deduction) subject to withholding, in the
amount of the payout. To the extent the payout is made in shares of Common
Stock, the holder's income is measured by the then fair market value of the
shares of Common Stock. The Company will be entitled to withhold taxes on the
value of the payout of phantom stock. If the payout is made in shares of
16
<PAGE> 19
Common Stock, satisfaction of the withholding may be accomplished by reducing
the number of shares to be issued to the Participant.
Section 162(m). Section 162(m) of the Code generally disallows a federal
income tax deduction to any publicly held corporation for compensation paid in
excess of $1 million in any taxable year to the chief executive officer or any
of the four other most highly compensated executive officers who are employed by
the Company on the last day of the taxable year. The restrictions on
deductibility under Section 162(m) of the Code do not apply to certain
performance based compensation. Grants under the Stock Plan are intended to
satisfy the requirements for deductible compensation under Section 162(m) of the
Code. However, due to various factors, not all grants under the Stock Plan may
be deductible under Section 162(m) of the Code.
Stock Plan Benefits. The following table lists all the Options that have
been granted under the Stock Plan as of May 5, 1997 to (i) the persons named in
the Summary Compensation Table, (ii) all executive officers of the Company as a
group, (iii) all directors of the Company, other than those who are executive
officers, as a group, and (iv) all employees of the Company, excluding executive
officers, as a group.
<TABLE>
<CAPTION>
STOCK PLAN
-------------------------------------
NUMBER OF SHARES PER SHARE
NAME AND POSITION UNDERLYING OPTIONS EXERCISE PRICE
- -------------------------------------------------------------- ------------------ --------------
<S> <C> <C>
Fredric D. Rosen.............................................. -- --
President and Chief Executive Officer
Ned S. Goldstein.............................................. 70,696 $14.14
Senior Vice President and General Counsel................... 115,000 14.50
Peter B. Knepper.............................................. 70,696 14.14
Senior Vice President and Chief Financial Officer........... 115,000 14.50
Stuart W. DePina.............................................. 45,000 14.50
Vice President -- Finance and Treasurer
All executive officers as a group (seven persons)............. 141,392 14.14
450,000 14.50
All directors, excluding executive officers, as a group (five
persons).................................................... 125,000 14.50
All employees, excluding executive officers, as a group
(approximately 980 persons)................................. 123,719 14.14
2,226,700 14.50
</TABLE>
- ---------------
* Although no awards have been made to Mr. Rosen under the Stock Plan, the
Company has granted Mr. Rosen options to acquire 1,331,340 shares of Common
Stock. See "Executive Compensation -- Employment Agreements."
The Board of Directors recommends a vote FOR the approval of the proposed
amendments to the Stock Plan.
INDEPENDENT AUDITORS
During fiscal 1997, KPMG Peat Marwick, LLP served as the Company's
independent auditors and in that capacity rendered its report on the Company's
consolidated financial statements as of and for the fiscal year ended January
31, 1997. The Audit Committee annually reviews the selection of the Company's
independent auditors; no selection has yet been made for the current fiscal
year.
A representative of KPMG Peat Marwick, LLP is expected to attend the
meeting where he or she will have the opportunity to make a statement if he or
she so desires and will be available to respond to appropriate questions.
17
<PAGE> 20
GENERAL INFORMATION
ANNUAL MEETING OF SHAREHOLDERS
Any proposals of shareholders that are intended for inclusion in the
Company's Proxy Statement and form of proxy for its 1998 Annual Meeting of
Shareholders must be received by the Secretary of the Company no later than
January 13, 1998. Shareholder proposals must be in writing and delivered to the
Company's principal executive offices at 8800 Sunset Boulevard, West Hollywood,
California 90069.
ANNUAL REPORTS
The Company's fiscal 1997 Annual Report to Shareholders is being mailed to
the Shareholders together with this proxy statement; however, the report is not
part of the proxy solicitation materials. A copy of the Company's Annual Report
on Form 10-K for the year ended January 31, 1997 (excluding exhibits), as filed
with the Commission, may be obtained without charge upon request made to
Ticketmaster Group, Inc., 8800 Sunset Boulevard, West Hollywood, California
90069, Attention: Shareholder Services.
18
<PAGE> 21
TICKETMASTER GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TICKETMASTER GROUP, INC.
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby appoints Fredric D. Rosen, Ned S. Goldstein and Peter B.
Knepper, and each of them, proxies with full power of substitution, for and in
the name of the undersigned, to vote all shares of Common Stock of Ticketmaster
Group, Inc. owned of record by the undersigned at the 1997 Annual Meeting of
Shareholders to be held at the Park Hyatt Hotel located at 2151 Avenue of the
Stars, Century City, California, 90067, on Tuesday, June 10, 1997 at 10:00 a.m.,
local time, and any adjournments or postponements thereof, in accordance with
the directions marked on the reverse side hereof.
ELECTION OF DIRECTORS -- NOMINEES:
Paul G. Allen, Fredric D. Rosen, Charles Evans Gerber, David E. Liddle,
John A. Pritzker, William D. Savoy, Terence M. Strom
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name above.)
You are encouraged to specify your choices by marking the appropriate boxes (see
reverse side), but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors recommendations. The proxies cannot vote your shares
unless you sign and return this card.
<PAGE> 22
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
This Proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR all of the Board of
Directors nominees and FOR approval of amendments to the Ticketmaster Stock Plan
(as amended and restated).
1. Election of Directors (see reverse)
[ ] FOR ALL NOMINEES (except at indicated on the reverse) [ ] WITHHOLD
AUTHORITY to vote for all nominees.
2. Approval of Amendments to the Ticketmaster Stock Plan (as amended and
restated) FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board of Directors recommends a vote FOR all nominees and FOR these
proposals.
Do you plan to attend the Annual
Meeting? [ ] YES [ ] NO
Dated:
------------------------------------,
1997
------------------------------------
(Signature)
------------------------------------
(Signature)
Please sign exactly as name appears
on stock certificate(s). Joint
owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
(SEE REVERSE SIDE)
