<PAGE>
SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by Registrant [X]
Filed by a Party other than 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 Rule 14a-11(c) or Rule 14a-12:
FOUR MEDIA COMPANY
----------------------
Payment of filing fee (check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
{ } Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing party:
---------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------
<PAGE>
[LOGO OF FOUR MEDIA COMPANY]
2813 WEST ALAMEDA AVENUE
BURBANK, CALIFORNIA 91505
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 15, 1998
_______________
To the Stockholders of Four Media Company:
The Annual Meeting of Stockholders of Four Media Company (the "Company")
will be held at the Burbank Hilton Hotel, 2500 N. Hollywood Way, Burbank,
California 91505 on Thursday, January 15, 1998 at 10:00 A.M. for the following
purposes:
(1) To elect three directors to the Board of Directors for the Company to
serve for three years until the third subsequent Annual Meeting of Stockholders
and until their respective successors shall be elected and qualified;
(2) To consider and ratify the appointment of Coopers & Lybrand LLP as
independent certified public accountants for fiscal year 1998; and
(3) To consider and to transact such other business as may properly be
brought before the meeting.
The foregoing proposals are more fully described in the accompanying Proxy
Statement to which your attention is invited.
Only stockholders of record at the close of business on November 26, 1997
are entitled to notice of, and to vote at, this meeting and any continuation or
adjournments thereof. For ten days prior to the meeting, a complete list of
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose germane to the meeting during ordinary
business hours at the principal executive offices of Four Media Company 2813
West Alameda Avenue, Burbank, California 91505.
/s/ ROBERT T. WALSTON
Robert T. Walston, Chairman
Burbank, California
December 1, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK
MAY BE REPRESENTED AT THE MEETING.
<PAGE>
FOUR MEDIA COMPANY
2813 WEST ALAMEDA AVENUE
BURBANK, CALIFORNIA 91505
(818) 840-7000
______________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held January 15, 1998
10:00 a.m.
_______________
The accompanying proxy is solicited by the Board of Directors of Four Media
Company, a Delaware corporation (the "Company"), for use at the Annual Meeting
of Stockholders to be held Thursday, January 15, 1998, or any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. The date of this Proxy Statement is December 1, 1997, the approximate
date on which this Proxy Statement and the accompanying form of proxy were first
sent or given to stockholders.
GENERAL INFORMATION
ANNUAL REPORT. The Annual Report on Form 10-K for the fiscal year ended
August 3, 1997, is enclosed with this Proxy Statement.
VOTING SECURITIES. Only stockholders of record as of the close of business
on November 26, 1997, will be entitled to vote at the meeting and any
adjournment thereof. As of that date, there were 9,552,502 shares of Common
Stock of the Company, par value $0.01 per share, issued and outstanding.
Stockholders may vote in person or by proxy. Each holder of shares of Common
Stock is entitled to one (1) vote for each share held on the proposals presented
in this Proxy Statement. The Company's Bylaws provide that a majority of all of
the shares of stock entitled to vote, whether present in person or represented
by proxy, shall constitute a quorum for the transaction of business at the
meeting.
SOLICITATION OF PROXIES. The cost of soliciting proxies will be borne by
the Company. In addition, the Company will solicit stockholders by mail through
its regular employees, and will request banks and brokers, and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the
Company registered in the names of such persons and will reimburse them for
their reasonable, out-of-pocket costs. The Company may use the services of its
officers, directors, and others to solicit proxies, personally or by telephone,
without additional compensation.
VOTING OF PROXIES. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a stockholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A stockholder giving a proxy has the power to revoke his or her proxy,
at any time prior to the time it is voted, by delivery to the Secretary of the
Company of a written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the meeting and voting in person.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The
following table contains information as of August 31, 1997 regarding the
ownership of the Common Stock of the Company by all persons who, to the
knowledge of the Company, were (i) the beneficial owners of 5% or more of the
outstanding shares of Common Stock of the Company, (ii) each director and
director nominee of the Company, (iii) the Chief Executive Officer and the four
other most highly compensated executive officers of the Company as of August 3,
1997 whose salary and bonus for the year ended August 3, 1997 exceeded $100,000
and (iv) all current executive officers and directors of the Company as a group.
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED (1)
----------------------
NAME OF BENEFICIAL OWNERS NUMBER PERCENT
------------------------- ------ -------
<S> <C> <C>
Technical Services Partners, L.P. (2) .............................. 4,552,502 47.7
Robert T. Walston (3) .............................................. 1,432,875 15.0
John H. Donlon (4) ................................................. 118,707 1.2
John H. Sabin (5) .................................................. 97,125 *
Gavin W. Schutz (6) ................................................ 97,125 *
Robert Bailey (7) .................................................. 97,125 *
Shimon Topor (2)(8)(10) ............................................ 4,552,502 47.7
Edward Kirtman (2)(8)(10) .......................................... 4,552,502 47.7
Paul Bricault (10) ................................................. -- --
Thomas Wertheimer (10) ............................................. -- --
All directors and executive officers as a
group (8 persons)(9)(10) ........................................... 4,962,584 49.8
</TABLE>
- ------------------------
* Less than 1% of outstanding shares.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of August 31, 1997 at a
price less than or equal to the market price are deemed outstanding. Such
shares, however, are not deemed outstanding for the purposes of computing
the percentage ownership of any other person. Except as indicated in the
footnotes to this table and pursuant to applicable community property laws,
each stockholder named in the table has sole voting and investment power
with respect to the shares set forth opposite such stockholder's name.
(2) Technical Services Partners, L.P. ("TSP") is a limited partnership the
general partner of which is Technical Services Holdings Inc.
("Holdings"), a corporation, all of the voting capital stock of which is
owned by Steinhardt Partners, L.P. The non-voting capital stock of Holdings
is owned by Institutional Partners, L.P., S.P. International S.A.,
Steinhardt Overseas Fund, Ltd. The managing general partner of Steinhardt
Partners, L.P. is Michael Steinhardt. The principal business address of
Steinhardt Partners, L.P. and Messrs. Steinhardt, Topor and Kirtman is 605
Third Avenue, New York, New York 10158. Totals include shares beneficially
owned by Robert T. Walston reflecting his profit interest in TSP.
(3) Mr. Walston's address is c/o Four Media Company, 2813 West Alameda Avenue,
Burbank, California 91505. As a result of his profit interest in TSP, Mr.
Walston beneficially owns 1,432,875 shares of the Company's Common Stock.
(4) Represents 118,707 shares issuable upon exercise of vested options.
(5) Represents 97,125 shares issuable upon exercise of vested options.
(6) Represents 97,125 shares issuable upon exercise of vested options.
(7) Represents 97,125 shares issuable upon exercise of vested options.
(8) These shares are owned by TSP. Messrs. Topor and Kirtman are executive
officers of the general partner of TSP, and general partners of Steinhardt
Partners, L.P., the owner of all the voting capital stock of Holdings.
Neither Mr. Topor nor Mr. Kirtman own any shares of Common Stock directly,
but may be considered the beneficial owner of the securities listed above.
However, Messrs. Topor and Kirtman disclaim beneficial ownership of such
shares.
(9) Includes 410,082 shares issuable upon exercise of vested options.
(10) Excludes 100,000 shares of Common Stock issuable upon exercise of stock
options granted pursuant to the Director Plan to each of Messrs. Topor,
Kirtman, Bricault and Wertheimer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company officers
and directors, and persons who own more than ten percent of its common stock, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
stockholders are required by regulation of the Commission to furnish the Company
with copies of all Section 16(a) forms they file.
Page 2
<PAGE>
Based solely on its review of forms furnished to the Company and written
representations from certain of the directors and officers that no form is
required to be filed, the Company believes that no director, officer or
beneficial owner of more than ten percent of its Common Stock failed to file on
a timely basis reports required pursuant to Section 16(a) of the Securities
Exchange Act with respect to the fiscal year ended August 3, 1997.
CERTAIN TRANSACTIONS
REPAYMENT OF NOTE
The Company repaid TSP $9.0 Million principal amount of, and accrued
interest on, the November 1994 note, using a portion of the proceeds from the
Company's initial public offering.
INDEMNITY AGREEMENTS
The Company has entered into separate but identical indemnity agreements
(the "Indemnity Agreements") with each director and executive officer of the
Company (the "Indemnitees). The Indemnity Agreements provide that the Company
will indemnify each Indemnitee against payment of and liability for any and all
expenses actually and reasonably incurred by the Indemnitee in defending or
investigating a claim, by reason of the fact that the Indemnitee is or was a
director and/or officer of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, or other enterprise, provided it is determined that the Indemnitee
acted in good faith and reasonably believed his actions to be in the best
interests of the Company.
REORGANIZATION
On October 1, 1996, the Company sold 100,000 shares of Common Stock to TSP
in consideration for $1,000. On October 17, 1996, the Company completed a
reorganization pursuant to which it issued 5,900,000 shares of Common Stock to
TSP in exchange for 1,000 shares of 4MC Burbank common stock, representing 100%
of the issued and outstanding shares of the corporation, and as a result 4MC
Burbank became a wholly owned subsidiary of the Company. In connection with the
reorganization, 4MC Burbank's interests in its wholly owned subsidiaries, DMC
and 4MC Asia were transferred to the Company in the form of a dividend
distribution. The purpose of the reorganization was to facilitate future
financing transactions and acquisitions. On November 19, 1996, the Company
distributed a stock dividend of 475,000 shares of Common Stock to TSP.
PROPOSAL 1
ELECTION OF DIRECTORS
Management's nominees for election to the Board of Directors at the Annual
Meeting of Stockholders to serve as Class III members are Robert Bailey, Paul
Bricault and Thomas Wertheimer. If elected, each nominee will hold office for
three years until the third subsequent annual meeting of stockholders or until
his successor is elected and qualified unless he shall resign or his office
becomes vacant by death, removal, or other cause in accordance with the Bylaws
of the Company. If a quorum is present and voting, the nominees for director
receiving the highest number of votes will be elected as directors. Abstentions
and shares held by brokers that are present, but not voted because the brokers
were prohibited from exercising discretionary authority, i.e., "broker non-
----
votes," will be counted as present in determining if a quorum is present.
It is intended that votes pursuant to the Proxies will be cast for the
named nominees. The persons named in the accompanying form of proxy will vote
the shares represented thereby for the named nominees. Management knows of no
reason why any of the named nominees should be unable or unwilling to serve.
However, if any named nominee(s) should for any reason be unable or unwilling to
serve, the Proxies will be voted for the election of such other person(s) for
the office of director as management may recommend in the place of such
nominee(s).
Page 3
<PAGE>
At the 1998 Annual Meeting of Stockholders, three (3) directors of the
Company are to be elected for the ensuing three years and until their successors
are elected and qualified. Proxies cannot be voted for a greater number of
persons than the number of nominees named. The nominees for election to the
office of director, and certain information with respect to their age and
background, are set forth below. Messrs. Bricault and Wertheimer were elected to
their present terms of office effective upon completion of the Company's initial
public offering. Mr. Bailey was elected a Director in September 1996.
<TABLE>
<CAPTION>
NOMINEE POSITIONS WITH THE COMPANY AGE DIRECTOR SINCE
- ------- -------------------------- --- --------------
<S> <C> <C> <C>
Robert Bailey Vice President, Director of Marketing and Director 40 1996
Paul Bricault Director 35 1997
Thomas Wertheimer Director 60 1997
</TABLE>
Robert Bailey has served as Vice President and Director of Marketing of the
Company since August 1996, and was elected a Director of the Company in
September 1996. From 1993 to 1996 he served as Vice President and Director of
Marketing for the Company's studio and television services divisions. Prior to
joining the Company he was a Vice President of Image Transform, Inc., from 1985
to 1993. From 1977 to 1985, he was creator/producer of "Hollywood Detective"
for the A&E Channel, Producer/Director of "Eye on L.A." for ABC and Producer
of "Remmington Steele" for MTM Productions. Mr. Bailey received a BA from the
University of Southern California.
Paul Bricault began serving as a Director of the Company upon the
completion of the Company's initial public offering. Since 1994, he has served
as an agent in corporate consulting on emerging technologies for the William
Morris Agency. From 1989 to 1994, he served as a Senior Media Analyst for Paul
Kagan Associates, where he was responsible for the firm's coverage of worldwide
film, television and new media markets. Mr. Bricault currently teaches a course
in new technologies and their impact on the motion picture industry for the
graduate program of the University of Southern California's School of Cinema-
Television. Mr. Bricault received a BA from the University of Western Ontario
and an MA in Communications Management from the Annenberg School of
Communication at the University of Southern California.
Thomas Wertheimer began serving as a Director of the Company upon the
completion of the Company's initial public offering. From 1964 to 1972, he
worked for ABC where he became Vice President of Business Affairs. From 1972 to
1976 he was Vice President of Business Affairs of Universal Television. From
1976 to 1991, he served as a Director of MCA, Inc. ("MCA") and was a Member of
MCA's three person Executive Committee from 1977 to 1991. From 1983 to 1996, he
served as Executive Vice President of MCA, and from 1991 to 1996 he took on the
additional positions of Chairman of both the Television and Home Entertainment
Groups. Since January 1996, Mr. Wertheimer has been consulting for MCA and
serving as Chairman of the Board of the KCRW Foundation, the UCLA Extension TV
and Film Advisory Board, and the Columbia Law School Board of Visitors. Mr.
Wertheimer received a BA from Princeton University and an LLB from Columbia Law
School.
The Board of Directors is divided into three classes. Class I, with terms
expiring in 1999, is comprised of Messrs. Robert T. Walston, Shimon Topor and
Edward Kirtman. Class II, with the terms expiring in 1998, was comprised of
Messrs. John H. Donlon, John H. Sabin and Gavin W. Schutz. Information regarding
those directors is shown below, except for Mr. John Sabin, who resigned as
officer and director, for health reasons as of August 31, 1997. Accordingly,
there is currently a vacancy on the Board of Directors. Class III, with terms
expiring in 1997, is currently comprised of Messrs. Bailey, Bricault and
Wertheimer. There are no family relationships among any of the executive
officers or directors of the Company.
CLASS I DIRECTORS
Robert T. Walston is the founder of the Company and has served as Chairman
and Chief Executive Officer since August 1993. From 1991 until he founded the
Company, Mr. Walston served as a Vice President and Director of Steinhardt
Group, Inc. where he directed the firm's sourcing and financial analysis of
acquisitions of middle market companies. From 1988 to 1991, Mr. Walston was a
Vice President of Dean Witter Reynolds, Inc. where he worked on merger and
acquisition assignments and debt and equity offerings. Mr. Walston received a
BBA from Baylor University and an MBA from the University of Texas at Austin.
Shimon Topor has served as a Director of the Company since August 1993. He
has been a general partner in all of the private investment partnerships
controlled by Michael H. Steinhardt since 1985. Prior to joining the
Page 4
<PAGE>
Steinhardt organization, he managed the international operations of Bank
Hapoalim, served as Chairman and Chief Executive Officer of Israel Continental
Bank, and Senior Vice President of the Ampal Corporation. Mr. Topor received a
law degree from Hebrew University Law School.
Edward Kirtman has served as a Director of the Company since August 1993.
He has been a general partner in all of the private investment partnerships
controlled by Michael H. Steinhardt since 1995. From 1986 to 1994 he served as
the Chief Financial Officer of the Steinhardt organization's real estate
investment corporations and partnerships. Prior to joining the Steinhardt
organization, Mr. Kirtman was an Assistant Vice President of Heller Financial,
Inc. Mr. Kirtman received a BBA from Baruch College.
CLASS II DIRECTORS
John H. Donlon has served as President and a Director of the Company since
August 1993. Prior to joining the Company, Mr. Donlon was President and Chief
Executive Officer of Compact Video Group, Inc., a provider of post-production
services to the television industry, from 1984 to 1993. From 1981 to 1984, Mr.
Donlon was employed by Technicolor, Inc. as President of Technicolor's
videocassette subsidiary and from 1977 to 1981 as Vice President and Director of
Technicolor's Laboratory Operations. Mr. Donlon received a BA degree from the
University of Florida.
Gavin W. Schutz has served as Vice President and Chief Technology Officer
of the Company since August 1993, and was elected a Director of the Company in
September 1996. Prior to joining the Company he was Director of Engineering of
Image Transform, Inc., a provider of feature mastering and standards conversion
services to the entertainment industry, from 1980 to 1993. Mr. Schutz is
responsible for the design of digital video standards converters, time and smear
correctors and video noise reduction using four field non-recursive digital
filtering algorithms. Mr. Schutz received a BS degree in Electronic Engineering
from the South Australia Institute of Technology.
BOARD AND COMMITTEE MEETINGS
During the fiscal year ended August 3, 1997, the Board held two meetings
and took action by unanimous written consent twenty-two times. No director
serving on the Board in fiscal year 1997 attended fewer than 75% of such
meetings of the Board and the Committee on which he serves.
The Company's Compensation Committee was formed to review and approve the
compensation and benefits for the Company's executive officers, administer the
Company's stock option and other benefit plans and make recommendations to the
Board of Directors regarding such matters. The Committee is currently composed
of Messrs. Topor and Kirtman. Prior to formation of the Compensation Committee,
the entire Board of Directors administered executive compensation programs.
During the fiscal year ended August 3, 1997, the Compensation Committee
held no meetings and took action by unanimous written consent two times. For
additional information concerning the Compensation Committee, see "REPORT OF THE
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION".
The Company's Audit Committee recommends the selection of auditors for the
Company and reviews the results of the audits and other reports and services
provided by the Company's independent auditors. The Audit Committee is composed
of Messrs. Bricault and Topor. During the fiscal year ended August 3, 1997 the
audit committee held no meetings, but is scheduled to meet between the date of
this proxy and the annual meeting of stockholders.
COMPENSATION OF DIRECTORS
The Company's non-employee directors are not paid a fee for attending board
or committee meetings; however, all directors are reimbursed for reasonable
expenses incurred in attending such meetings. The Company's Director Plan
provides for automatic stock option grants to non-employee directors.
The Director Plan provides for an automatic grant of an option to purchase
100,000 shares of Common Stock to each non-employee director upon his becoming a
non-employee director. One-quarter of the shares subject
Page 5
<PAGE>
to the option will vest one year after the date of grant and each additional
one-quarter will vest at the end of each year thereafter, provided that the
optionee continues to serve as a director on such dates. The exercise price of
the option will be 100% of the fair market value per share of the Company's
Common Stock on the date of the grant of the option.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
CLASS III NOMINEES, I.E. ROBERT BAILEY, PAUL BRICAULT AND THOMAS WERTHEIMER.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
during fiscal years ended August 3, 1997, August 4, 1996 and July 30, 1995 of
the Chief Executive Officer and the four other most highly compensated executive
officers of the Company as of August 3, 1997 whose salary and bonus for the year
ended August 3, 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- -----------------
OTHER ANNUAL ALL OTHER AWARDS OPTION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION SHARES
- ---------------------------------------- ---- ------ ----- ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Walston,...................... 1997 $240,000 $ -- $(1) $-- $
Chairman and Chief Executive Officer 1996 240,000 -- (1) --
1995 240,000 -- (1) --
John H. Donlon,...................... 1997 253,493 -- (1) --
President 1996 253,493 -- (1) --
1995 253,493 -- (1) --
John H. Sabin,...................... 1997 174,965 -- (1) --
Vice President and Chief 1996 174,965 -- (1) --
Financial Officer 1995 174,965 -- (1) --
Gavin W. Schutz,...................... 1997 175,000 -- (1) --
Vice President and Chief Technology 1996 175,000 40 ,000 (1) --
Officer 1995 175,000 -- (1) --
Robert Bailey,...................... 1997 145,673 -- (1) --
Vice President and Director 1996 125,000 40,000 (1) --
of Marketing 1995 118,269 -- (1) --
</TABLE>
- ----------------------------
(1) Total amount of personal benefits paid to this executive officer during the
fiscal year was less than the lessor of (i) $50,000 or (ii) 10% of such
executive officer's total reported salary and bonus.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Messrs. Walston,
Donlon, Sabin, Schutz and Bailey. Each of the employment agreements with Messrs.
Donlon, Sabin and Bailey is for a term extending through September 1999. The
employment agreements with Messrs. Walston and Schutz each have a term extending
through the earlier of repayment of the Term Loan Facility with the Hongkong and
Shanghai Banking Corporation or April 2002, the maturity date of the Term Loan
Facility. Messrs. Walston, Donlon, Sabin, Schutz and Bailey are entitled to
receive annual salaries of $260,000, $262,000, $175,000, $175,000 and $175,000,
respectively. In the event of termination without cause, Messrs. Walston,
Donlon, Sabin, Schutz and Bailey are entitled to receive the full amount of
compensation payable under the original terms of their respective employment
agreements for the remaining term of such agreements, and in the event of
disability, the full amount of compensation payable for the lesser of six months
or the remaining term of such agreements. Mr. Sabin resigned as an officer and
director of the Company effective August 31, 1997 due to disability and his
employment agreement terminated effective as of such date.
Page 6
<PAGE>
STOCK OPTIONS GRANTED IN FISCAL 1997
During fiscal 1997, no options were granted to the persons named in the
Summary Compensation Table.
OPTION EXERCISES AND FISCAL 1997 YEAR-END VALUES
The following table provides the specified information concerning exercises
of options to purchase the Company's Common Stock in the fiscal year ended
August 3,1997 and unexercised options held as of August 3, 1997, by the persons
named in the Summary Compensation Table. A portion of the shares subject to
these options are not yet vested, and thus would be subject to repurchase by the
Company as a price equal to the option exercise price, if the corresponding
options were exercised before these shares had vested.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE IN DOLLARS OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 8/3/97 OPTIONS AT 8/3/97
NAME ACQUIRED VALUE ------------------------------------ -------------------------------
---- ON EXERCISE REALIZED($) EXERCISABLE(1)(2) UNEXERCISABLE(3) EXERCISABLE(2) UNEXERCISABLE(4)
----------- ----------- ----------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Walston -- -- -- -- $ -- $ --
John H. Donlon -- -- 118,707 59,354 790,589 395,298
--
John H. Sabin -- -- 97,125 48,563 646,853 323,430
Gavin W. Schutz -- -- 97,125 48,563 646,853 323,430
Robert Bailey -- -- 97,125 48,563 646,853 323,430
</TABLE>
- -------------------------
(1) Options granted in fiscal 1994 under the 1993 Stock Option Plan vest over a
six year period at a rate of 16.7% per year.
(2) Represents shares that are immediately exercisable and/or vested. Based on
the closing price of $7.00 as reported on the Nasdaq National Market, on
August 1, 1997, less the exercise price.
(3) Represents shares which are unvested and not immediately exercisable.
(4) Based on the closing price of $7.00 as reported on the Nasdaq National
Market, on August 1, 1997, less the exercise price.
COMPARATIVE STOCK PERFORMANCE
The chart below sets forth line graphs comparing the performance of the
Company's Common Stock as compared with two peer group indices for the period
commencing February 7, 1997, the date of the Company's initial public offering,
and ending August 1, 1997. The first peer group index consists of the common
stock of companies that Management believes most similar in their operations to
that of the Company. This peer group includes CST Entertainment, Incorporated,
Millennia Incorporated, Laser Pacific Media Corporation, The Todd-AO
Corporation, Unitel Video, Incorporated and Video Services Corporation. The
second peer group index includes the broader category of all publicly traded
companies whose industry sector is defined or listed as motion picture services
and includes Carlton Communications PLC, Glenex Industries, Incorporated, Rank
Group PLC, Allied Digital Technologies Corporation, American Film Technologies,
Z-Axis Corporation, CST Entertainment, Incorporated, Digital Communications
Technology Corporation, Millennia Incorporated, Indenet Incorporated, Lancit
Media Entertainment Ltd., Laser Pacific Media Corporation, MPTV Incorporated,
MSH Entertainment Corporation, Pinnacle Systems, Incorporated, The Todd-AO
Corporation, Unitel Video, Incorporated, VDI Media, Vaughn Communications,
Incorporated and Video Services Corporation. The indices assume that the value
of the
Page 7
<PAGE>
investment in the Company's Common Stock and each index was $100 on February 7,
1997 and that dividends were reinvested.
INDEXED PRICES
####
Date FOUR Index 1 Index 2
2/7/97 100.00 100.00 100.00
2/10/97 98.77 101.00 100.50
2/11/97 98.77 97.20 101.96
2/12/97 98.77 97.07 100.94
2/13/97 98.77 99.24 102.74
2/14/97 98.77 96.57 101.19
2/18/97 98.77 98.80 100.03
2/19/97 98.77 102.11 100.03
2/20/97 98.77 103.39 101.44
2/21/97 98.77 101.47 102.48
2/24/97 98.77 100.68 102.43
2/25/97 98.77 101.82 103.25
2/26/97 98.77 100.26 101.51
2/27/97 98.77 99.28 101.21
2/28/97 100.00 97.69 98.17
3/3/97 98.77 96.23 100.23
3/4/97 100.00 95.50 100.27
3/5/97 103.70 96.10 101.01
3/6/97 98.77 95.63 101.80
3/7/97 98.77 97.36 100.20
3/10/97 100.00 94.70 100.09
3/11/97 98.77 92.80 100.47
3/12/97 98.77 92.16 100.02
3/13/97 98.77 96.55 99.56
3/14/97 79.01 94.19 100.44
3/17/97 77.78 89.40 99.14
3/18/97 75.31 94.87 97.91
3/19/97 76.54 96.17 97.83
3/20/97 70.37 95.45 97.42
3/21/97 76.54 96.75 97.20
3/24/97 79.01 96.43 98.14
3/25/97 79.01 94.62 97.56
3/26/97 79.01 93.98 97.71
3/27/97 79.01 95.93 98.39
3/31/97 79.01 96.09 98.17
4/1/97 76.54 95.21 98.11
4/2/97 79.01 93.72 98.89
4/3/97 71.60 90.06 98.75
4/4/97 71.60 92.12 100.73
4/7/97 71.60 92.90 100.50
4/8/97 74.07 91.62 98.08
4/9/97 71.60 93.09 99.03
4/10/97 70.37 91.81 97.55
4/11/97 69.14 91.17 96.32
4/14/97 69.14 87.51 94.85
4/15/97 69.14 91.93 95.70
4/16/97 69.14 94.52 96.89 =graphdialog!$V$2
4/17/97 69.14 93.31 97.94 =graphdialog!$A$1
4/18/97 69.14 92.15 97.54 =graphdialog!$A$1
4/21/97 67.90 92.10 98.22 =graphdialog!$V$1
4/22/97 67.90 91.02 98.35
4/23/97 64.20 90.39 98.15
4/24/97 59.26 89.76 98.65
4/25/97 60.49 87.80 97.83
4/28/97 51.85 90.63 96.47
4/29/97 56.79 90.60 96.46
4/30/97 54.32 92.29 96.09
5/1/97 58.02 90.83 96.41
5/2/97 56.79 92.32 95.17
5/5/97 59.26 90.95 96.78
5/6/97 59.26 87.23 98.68
5/7/97 58.02 89.49 99.09
5/8/97 59.26 91.38 100.40
5/9/97 61.73 92.96 100.62
5/12/97 61.73 91.61 100.18
5/13/97 59.26 91.02 100.82
5/14/97 59.26 92.04 100.40
5/15/97 58.02 91.83 101.50
5/16/97 58.02 90.43 100.21
5/19/97 58.02 90.93 97.58
5/20/97 58.02 90.97 98.76
5/21/97 58.02 85.79 99.32
5/22/97 58.64 87.35 99.86
5/23/97 59.26 90.35 99.05
5/27/97 60.49 86.58 99.47
5/28/97 58.02 88.32 98.39
5/29/97 62.96 87.09 99.20
5/30/97 60.49 85.76 98.61
6/2/97 62.96 89.74 98.79
6/3/97 69.14 90.27 100.03
6/4/97 79.01 87.33 99.44
6/5/97 79.01 90.73 99.19
6/6/97 74.07 90.63 101.74
6/9/97 70.37 87.71 99.93
6/10/97 76.54 94.24 100.21
6/11/97 76.54 93.11 97.82
6/12/97 77.78 91.96 98.97
6/13/97 75.31 95.72 93.15
6/16/97 66.67 92.72 92.01
6/17/97 70.37 95.93 92.06
6/18/97 80.25 95.75 92.09
6/19/97 76.54 90.28 94.12
6/20/97 78.40 94.63 92.20
6/23/97 79.01 94.11 92.75
6/24/97 80.25 95.19 94.10
6/25/97 85.19 92.40 94.34
6/26/97 77.78 93.05 96.95
6/27/97 80.25 93.11 94.42
6/30/97 76.54 93.97 93.92
7/1/97 79.01 91.91 93.52
7/2/97 82.72 91.21 93.37
7/3/97 82.72 91.71 96.51
7/7/97 76.54 93.89 93.61
7/8/97 80.25 92.33 93.87
7/9/97 76.54 90.55 92.76
7/10/97 72.84 92.33 91.68
7/11/97 74.07 91.09 95.13
7/14/97 75.31 91.88 95.43
7/15/97 80.25 92.84 92.58
7/16/97 77.78 91.77 90.33
7/17/97 76.54 91.31 90.33
7/18/97 72.84 91.07 88.63
7/21/97 75.31 89.53 87.74
7/22/97 74.07 92.64 88.19
7/23/97 70.37 88.27 89.32
7/24/97 70.37 87.80 86.94
7/25/97 67.90 88.53 89.26
7/28/97 70.37 88.09 87.99
7/29/97 66.67 88.36 87.20
7/30/97 67.28 87.99 88.36
7/31/97 70.37 89.77 87.02
8/1/97 69.14 88.10 88.88
_______________
1 Peer Group Index 1 includes: CST Entertainment, Incorporated, Millennia
Incorporated, Laser Pacific Media Corporation, The Todd-AO Corporation,
Unitel Video, Incorporated and Video Services Corporation.
2 Peer Group Index 2 includes: Carlton Communications PLC, Glenex Industries,
Incorporated, Rank Group PLC, Allied Digital Technologies Corporation,
American Film Technologies, Z-Axis Corporation, CST Entertainment,
Incorporated, Digital Communications Technology Corporation, Millennia
Incorporated, Indenet Incorporated, Lancit Media Entertainment Ltd., Laser
Pacific Media Corporation, MPTV Incorporated, MSH Entertainment
Corporation, Pinnacle Systems, Incorporated, The Todd-AO Corporation,
Unitel Video, Incorporated, VDI Media, Vaughn Communications, Incorporated
and Video Services Corporation.
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The performance graph will not be deemed
to be incorporated by reference by any general statement incorporating this
Proxy Statement into any filing by the Company under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed soliciting material or be deemed filed under such Act.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation. Such report will not be deemed to be
incorporated by reference in any general statement incorporating this Proxy
Statement into any filing by the Company under the Securities Act of 1933 or
under the
Page 8
<PAGE>
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or be deemed filed under such Act.
The Compensation Committee was formed to review and approve the
compensation and benefits of the Company's executive officers, administer the
Company's stock option and other benefit plans and make recommendations to the
Board of Directors regarding such matters.
The Compensation Committee has not yet adopted an overall executive
compensation policy, nor has it made compensation decisions with respect to the
executive officers. The salaries of the executive officers are set by their
respective employment agreements. There have been no bonuses or stock options
granted to executive officers since the establishment of the Compensation
Committee.
It is anticipated that the Compensation Committee will generally adhere to
compensation policies which reflect the belief that (i) the Company must attract
and retain individuals with outstanding ability and motivate and reward such
individuals for sustained performance; (ii) a substantial portion of an
executive's compensation should be at risk based upon the executive's
performance and that of the Company; and (iii) within these parameters, levels
of compensation should generally be in line with that offered by comparable
companies.
The Compensation Committee's goal with respect to incentive compensation
will be to focus executive behavior on the fulfillment of annual and long-term
business objectives, and to create a sense of ownership in the Company that
causes executive decisions to be aligned with the best interests of the
Company's stockholders. The Compensation Committee expects to develop programs
designed to meet such goals.
It is anticipated that the Company's long-term incentive compensation will
be provided by grants of stock options under the Company's 1997 Stock Plan. The
Compensation Committee will assess various factors when considering option
grants under the 1997 Stock Plan. Such factors will include prevailing norms for
the ratio of options outstanding to total shares outstanding; the relative
influence each executive officer will have on building stockholder value over
the long term; and the amount, vesting and expiration date of each executive
officer's outstanding options.
EDWARD KIRTMAN
SHIMON TOPOR
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Coopers & Lybrand LLP
to serve as independent accountants to audit the financial statements of the
Company for the fiscal year ending August 2, 1998. Coopers & Lybrand LLP has
acted in such capacity since its appointment for fiscal 1994. A representative
of Coopers & Lybrand LLP will be present at the annual meeting, will be given
the opportunity to make a statement if the representative desires and will be
available to respond to appropriate questions.
In the event that ratification by the stockholders of the appointment of
Coopers & Lybrand LLP as the Company's independent accountants is not obtained,
the Board of Directors will reconsider said appointment.
The affirmative vote of a majority of the shares present or represented by
proxy and entitled to vote at the Annual Meeting of Stockholders, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present and voting, either in person or by proxy, is required for
approval of this proposal. Abstentions and broker non-votes will each be counted
as present for purposes of determining the presence of a quorum. Abstentions
will have the same effect as a negative vote on this proposal. Broker non-votes
will have no effect on the outcome of the vote on this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF COOPERS &
LYBRAND LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
AUGUST 2, 1998.
Page 9
<PAGE>
OTHER MATTERS
The solicitation of proxies is made on behalf of the Board of Directors of
the Company and the cost thereof will be borne by the Company. In addition to
soliciting proxies by mail, directors, officers and employees of the Company,
without receiving additional compensation therefor, may solicit proxies by
telephone, telegram, in person or by other means. Arrangements also will be made
with brokerage firms and other custodians, nominees and fiduciaries to forward
proxy soliciting material to the beneficial owners of Common Stock held of
record by such persons and the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders of the Company (i) must be received by the Company at
its offices at 2813 West Alameda Avenue, Burbank, California 91505 no later than
August 3, 1998, and (ii) must satisfy the conditions established by the
Securities and Exchange Commission for stockholder proposals to be included in
the Company's Proxy Statement for that meeting.
By Order of the Board of Directors
/s/ ROBERT T. WALSTON
Robert T. Walston
December 1, 1997 Chairman
FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended August
3, 1997, including the financial statements and schedules thereto, is included
in the Annual Report to Stockholders accompanying this Proxy Statement.
Page 10
<PAGE>
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PROXY FOUR MEDIA COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned hereby appoints Robert T. Walston and John H. Donlon
proxies with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote all the share of stock of Four
Media Company standing in the name of the undersigned with all powers which the
undersigned would possess if present at the Annual Meeting of Stockholders of
the Company to be held January 15, 1998, or any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
Unless contrary instructions are given below, this Proxy shall be voted
according to the recommendations of the Board of Directors.
WITHHELD
PROPOSAL 1: ELECTION OF DIRECTORS FOR FOR ALL
Robert Bailey [_] [_]
Paul Bricault
Thomas Wertheimer
WITHHELD FOR (Write that nominee's name)______________________
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PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS FOR AGAINST ABSTAIN
[_] [_] [_]
I PLAN TO ATTEND THE MEETING [_]
Dated: ______________________________
-------------------------------------
Signature
Note: Please sign as name appears
hereon. Joint Owners must each sign.
When signing as attorney-in fact,
executor, administrator, trustee or
guardian, please give full title as
such.
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