<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
CMP MEDIA INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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 0-12.
(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> 2
[CMP LOGO]
CMP MEDIA INC.
600 COMMUNITY DRIVE
MANHASSET, NEW YORK 11030
Dear Fellow Stockholders:
On behalf of the Board of Directors and management of CMP Media Inc., I
cordially invite you to attend the Annual Meeting of Stockholders which will be
held on Thursday, May 28, 1998, at 10:00 a.m. at the Garden City Hotel, 45
Seventh Street, Garden City, New York.
At the Meeting we will elect eight directors and vote on the CMP Media Inc.
1998 Annual Incentive Compensation Plan. In the pages that follow you will find
the Notice of Meeting and the proxy statement which discusses these matters in
detail.
You will also find enclosed a proxy card appointing proxies to vote your
shares at the Meeting. After filling in the appropriate boxes on the proxy card,
please sign, date and return it in the prepaid envelope provided. Promptly
returning the proxy card will help ensure that as many shares as possible are
represented at the Meeting. If you attend the Meeting, you may still vote in
person if you so wish.
Sincerely,
/s/ Michael S. Leeds
Michael S. Leeds
President and Chief Executive Officer
<PAGE> 3
CMP MEDIA INC.
600 COMMUNITY DRIVE
MANHASSET, NEW YORK 11030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1998
To our Stockholders:
The Annual Meeting of Stockholders of CMP Media Inc. will be held on
Thursday, May 28, 1998, at 10:00 a.m. at the Garden City Hotel, 45 Seventh
Street, Garden City, New York, for the following purposes:
1. The election of directors;
2. The approval of the CMP Media Inc. 1998 Annual Incentive
Compensation Plan; and
3. The transaction of such other business as may properly come before
the meeting.
These items are more fully described in the accompanying Proxy Statement.
Stockholders of record at the close of business on March 30, 1998 will be
entitled to vote at the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, you may ensure your representation by
promptly completing, signing, dating and returning the enclosed proxy card. A
return envelope, which requires no postage if mailed in the United States, has
been provided for your use.
By order of the Board of Directors
/s/ Robert D. Marafioti
Robert D. Marafioti
Vice President, General Counsel and
Secretary
Manhasset, New York
April 23, 1998
<PAGE> 4
PROXY STATEMENT
This proxy statement is being furnished in connection with the solicitation
on behalf of the Board of Directors of CMP Media Inc., a Delaware corporation
(the "Company"), of proxies for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 10:00 a.m. on May 28, 1998 at the Garden City
Hotel, 45 Seventh Street, Garden City, New York. Stockholders of record at the
close of business on March 30, 1998 will be entitled to vote at the Annual
Meeting. The approximate date on which this proxy statement and the accompanying
form of proxy are first being sent to stockholders is April 23, 1998.
On March 30, 1998, there were 7,060,312 shares of the Company's Class A
Common Stock outstanding and 16,050,074 shares of the Company's Class B Common
Stock outstanding. Each holder of Class A Common Stock is entitled to one vote
for each share of such stock held by such holder, and each holder of Class B
Common Stock is entitled to ten votes for each share of such stock held by such
holder. Any person giving a proxy may revoke it at any time before its exercise
by delivering to the Secretary of the Company an instrument of revocation or a
duly executed proxy bearing a later date. Attendance at the Annual Meeting will
not in itself constitute revocation of a proxy.
The holders of a majority of the votes entitled to be cast by the
stockholders entitled to vote generally, present in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. All
corporate actions to be taken by vote of the stockholders will require the
approval of a majority of the votes cast by the stockholders of both Class A
Common Stock and Class B Common Stock (collectively, the "Common Stock") present
in person or by proxy at the Annual Meeting, voting together as a single class.
Stockholders may cast their votes in favor of the election of directors or may
withhold authority to vote for one or more nominees. Stockholders withholding
authority will be deemed present at the Annual Meeting for the purpose of
determining whether a quorum has been constituted, but votes withheld will have
no effect on the outcome of the vote. Stockholders may cast their votes in favor
of or against the proposal to approve the CMP Media Inc. 1998 Annual Incentive
Compensation Plan, or stockholders may abstain from voting. Stockholders
abstaining will be deemed present at the Annual Meeting for the purpose of
determining whether a quorum has been constituted. An abstention on such
proposal will have the effect of a negative vote because approval of the
proposal requires a majority of the votes cast to be cast affirmatively for the
proposal. Broker non-votes will be counted for the purpose of determining
whether a quorum has been constituted but will be disregarded for voting
purposes and will have no effect on the outcome of the vote on such proposal.
ELECTION OF DIRECTORS
The Board of Directors has nominated the individuals named below for
election as directors at the Annual Meeting, to hold office until the next
Annual Meeting of Stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Shares represented by
the accompanying proxy will be voted for the election of all the nominees unless
authority to vote for one or more of them is withheld. The Board of Directors
has no reason to believe that any of the nominees will not serve if elected but,
if for any reason one or more of them become unavailable for election, shares
represented by the accompanying proxy will be voted for the election of such
substitute nominee or nominees as the Board of Directors may recommend.
Information with respect to each of the nominees is provided below.
1
<PAGE> 5
RICHARD W. ANDERSON
Mr. Anderson, age 60, is the Chief Executive Officer, the Chairman of the
Executive Committee and a director of Microelectronics Technology Incorporated.
He was elected a director of the Company in October 1997 and is the Chairperson
of the Audit Committee and a member of the Compensation Committee of the Board.
Mr. Anderson retired in 1997 as Vice President and General Manager of the
Microwave and Communications Group of Hewlett-Packard Company after having been
employed by that company for 38 years. Mr. Anderson is also a director of
Wireless Data Corporation and ScyTek Laboratories, Inc.
KENNETH D. CRON
Mr. Cron, age 41, is an Executive Vice President of the Company and has
been its President of Publishing since 1994. He joined the Company in 1978 and
held various sales, publishing and group publishing positions in its technology
publications business prior to assuming his present responsibilities. He was
elected a director of the Company in October 1997.
DANIEL H. LEEDS
Mr. Leeds, age 42, is an Executive Vice President of the Company and has
been the President of International of the Company since 1992. He joined the
Company in 1985 and held positions in its printing and electronic publishing
businesses prior to assuming his present responsibilities. He has served as a
director of the Company since 1987.
GERARD G. LEEDS
Mr. Leeds, age 75, has been a director since 1971 when he and his wife,
Lilo Leeds, founded the Company. Mr. Leeds served as the President and Chief
Executive Officer of the Company until 1988 when he assumed his current position
as Co-Chairperson of the Board. Mr. Leeds also serves as Co-Chairperson and a
director of Institute for Student Achievement, Inc., a not-for-profit public
charity.
LILO J. LEEDS
Mrs. Leeds, age 70, has been a director since 1971 when she and her
husband, Gerard Leeds, founded the Company. Mrs. Leeds served as a Senior Vice
President of the Company until 1987 when she was appointed Chairperson of the
Board. Mrs. Leeds also serves as Co-Chairperson and a director of Institute for
Student Achievement, Inc., a not-for-profit public charity.
MICHAEL S. LEEDS
Mr. Leeds, age 45, has been the President and Chief Executive Officer of
the Company since 1988. He joined the Company in 1984 and, prior to assuming his
present responsibilities, held publishing and group publishing positions in its
travel publications business and led the Company's entry into international
publishing. He has served as a director of the Company since 1987.
2
<PAGE> 6
RICHARD A. LEEDS
Mr. Leeds, age 44, is the President of Computer Product Introductions Corp.
Mr. Leeds has served as a director of the Company since February 1997 and
previously served as a director from December 1991 to February 1993 and from
February 1995 to February 1996.
SHARON LEE PATRICK
Ms. Patrick, age 55, is the President and a director of Martha Stewart
Living Omnimedia LLC. She was elected a director of the Company in October 1997
and is a member of the Audit Committee and the Chairperson of the Compensation
Committee of the Board. Prior to joining Martha Stewart Living Omnimedia in
1997, she was engaged in independent strategy consulting and worked for
Cablevision Systems Corporation and McKinsey & Company, Inc.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES.
Certain Relationships and Related Transactions
Each nominee named above is currently a director of the Company. Nominees
Michael Leeds, Daniel Leeds and Richard Leeds are children of nominees Gerard
and Lilo Leeds, the founders of the Company. Gerard and Lilo Leeds, Michael
Leeds, Daniel Leeds and Richard Leeds have all been nominated pursuant to the
provisions of a stockholders' agreement among Gerard and Lilo Leeds and all of
their children (the "Founding Family"), who collectively control all of the
Company's Class B Common Stock. Under such agreement, the parties are required
to vote all their shares of Class B Common Stock to elect as directors Gerard
and Lilo Leeds, all members of the Founding Family who are full-time senior
executive employees of the Company (currently Michael Leeds and Daniel Leeds)
and one of the three other children of Gerard and Lilo Leeds (a "Sibling").
Richard Leeds has been re-nominated to serve as the Sibling director for the
upcoming one-year term.
Gerard and Lilo Leeds are the founders and Co-Chairpersons of Institute for
Student Achievement, Inc. (the "Institute"), a not-for-profit public charity to
which the Company provides office space and services. The fair market value of
such office space and services provided in 1997 was approximately $623,000.
Prior to the Company's initial public offering in July 1997 (the "IPO"), the
Board of Directors adopted a resolution limiting the aggregate annual cash and
in-kind contributions by the Company to public or private charities or
foundations (including the Institute) to 3% of the Company's consolidated income
before provision for income taxes for the preceding fiscal year.
During 1997, the Founding Family held a 15% ownership interest in the
facility which the Company leases as its principal offices. The Company's rental
expense for such facility in 1997 was approximately $4,600,000. The Founding
Family disposed of its interest in such facility effective January 1, 1998.
At December 31, 1997, Kenneth Cron was indebted to the Company in the
principal amount of $760,000. The Company holds a note receivable for such debt,
which bears interest at a rate approximating LIBOR and on which interest
payments are due quarterly and principal payments annually. Full payment of the
note is due in 2023, subject to acceleration under certain conditions.
3
<PAGE> 7
The Company is the guarantor of a bank loan to Michael Leeds in the
principal amount of $3,000,000 and a bank loan to Daniel Leeds in the principal
amount of $1,700,000. Both loans are due and payable in full on November 14,
2001, but under agreements dated April 15, 1997, the Company is required to
extend the guarantee of Michael Leeds' loan until December 31, 2005 and the
guarantee of Daniel Leeds' loan until December 31, 2007.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
The Board of Directors has a standing Audit Committee and Compensation
Committee. It does not have a nominating committee or a committee performing
similar functions. The Audit Committee was constituted in October 1997 following
the Company's IPO in July 1997, and the Committee held no meetings during 1997.
It consists solely of Mr. Anderson and Ms. Patrick. Prior to the IPO, the
Compensation Committee consisted of Gerard Leeds, Lilo Leeds, Michael Leeds and
Richard Leeds, and it held one meeting during 1997. The Compensation Committee
was re-constituted in October 1997 with Mr. Anderson and Ms. Patrick as its sole
members and, as re-constituted, it held no meetings during 1997.
The Board of Directors held a total of four meetings during 1997 (including
regularly scheduled and special meetings). Each incumbent director attended all
of the meetings of the Board of Directors held during the period of 1997 in
which he or she was a director and all of the meetings held by the committees of
the Board of Directors on which he or she served during the period of 1997 in
which he or she served.
Audit Committee. The functions of the Audit Committee include recommending
to the Board of Directors the appointment of the Company's independent
accountants; reviewing with the independent accountants and the Company's
internal auditors their annual audit plans; reviewing management's plans for
engaging the independent accountants to perform management advisory services;
discussing with management, the independent accountants and the internal
auditors the adequacy of the Company's internal controls and financial reporting
process; monitoring significant accounting and reporting issues; reviewing the
Company's policies and procedures concerning officers' expenses; and monitoring
compliance with the Company's policies relating to ethics and conflicts of
interest. Both the independent accountants and the internal auditors have
unrestricted access to the Audit Committee, including the opportunity to meet
with the Audit Committee alone.
Compensation Committee. The functions of the Compensation Committee
include overseeing the administration of the Company's compensation policies and
practices; establishing and administering the compensation plans of members of
senior management and authorizing any adjustments thereto; administering the
Company's Stock Incentive Plan and authorizing all awards granted thereunder;
and reporting annually to the stockholders of the Company on matters concerning
the compensation of executives of the Company.
Each non-employee director currently receives an annual retainer of $20,000
for serving as a member of the Board of Directors, a fee of $2,500 for each
meeting of the Board attended and a fee of $1,000 for each meeting of a
committee of the Board held on a date not coinciding with a meeting of the
Board. The annual retainer of each non-employee director owning less than 1% of
the Company's outstanding Common Stock is paid 50% in cash and 50% in the form
of options to purchase shares of the Company's Class A Common Stock. The
per-share exercise price of such options is equal to the fair market value of a
share of Class A
4
<PAGE> 8
Common Stock on the date of grant; the number of options granted is determined
using the Black-Scholes option-pricing model; and options vest in installments
of one-third on each anniversary of the grant date. Each non-employee director
has the right to waive the payment of all or any portion of his or her annual
cash retainer in exchange for options to purchase Class A Common Stock.
Following initial election and qualification to the Board, each non-employee
director who is not a member of the Founding Family receives a grant of
restricted shares of Class A Common Stock with a fair market value of $10,000.
Such restricted shares vest over a period of five years.
Directors who are also employees of the Company receive no compensation for
their service as directors of the Company.
Prior to the Company's IPO, each non-employee director received an annual
retainer of $10,000 for serving as a member of the Board of Directors and a fee
of $2,500 for each meeting of the Board attended by such director.
5
<PAGE> 9
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table furnishes certain information as of December 31, 1997
as to the Common Stock beneficially owned by each of the directors and nominees,
by each of the executive officers named in the Summary Compensation Table, by
all directors and executive officers as a group, and by all other persons known
to the Company to be the beneficial owners of more than 5% of either class of
the Company's Common Stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
--------------------- --------------------
NAME OF BENEFICIAL OWNER NUMBER % NUMBER %
------------------------ ---------- ------ ---------- -----
<S> <C> <C> <C> <C>
Richard W. Anderson.............................. 408 *
Kenneth D. Cron(1)............................... 377,620 5.35%
Greg Jobin-Leeds(2).............................. 120,000 1.70% 1,763,240 10.99%
Daniel H. Leeds(3)............................... 392,620 5.56% 1,987,640 12.38%
Jennifer Leeds(4)................................ 1,927,640 12.01%
Gerard G. Leeds(5)............................... 6,456,274 40.22%
Lilo J. Leeds(5)................................. 6,456,274 40.22%
Michael S. Leeds(6).............................. 526,280 7.45% 1,987,640 12.38%
Richard A. Leeds(7).............................. 8,000 * 1,927,640 12.01%
Sharon Lee Patrick............................... 408 *
John Russell..................................... 450 *
Jeffrey L. Strief................................ 450 *
All directors and executive officers as a group
(19 persons)................................... 1,308,436 18.53% 12,359,194 77.00%
J.&W. Seligman & Co. Incorporated(8)............. 1,108,600 15.70%
100 Park Avenue
New York, NY 10017
Stein Roe & Farnham Incorporated(9).............. 395,200 5.60%
One S. Wacker Drive
Chicago, IL 60606
T. Rowe Price Associates, Inc.(10)............... 978,300 13.86%
100 East Pratt Street
Baltimore, MD 21202
</TABLE>
- ---------------
* Represents less than 1.0% of the outstanding shares of Class A Common
Stock.
(1) Includes 106,356 shares of Class A Common Stock held in trust by Kenneth D.
Cron as trustee for certain members of his family.
(2) Includes 372,838 shares of Class B Common Stock held in trust by Greg
Jobin-Leeds as trustee for certain members of his family.
(3) Includes 392,520 shares of Class A Common Stock and 704,590 shares of Class
B Common Stock held in trust by Daniel H. Leeds as trustee for certain
members of his family.
(4) Includes 27,586 shares of Class B Common Stock held by a private foundation
of which Jennifer Leeds is the sole director.
6
<PAGE> 10
(5) 3,228,137 shares of Class B Common Stock are held in trust by Gerard G.
Leeds as trustee for certain members of his family, and 3,228,137 shares of
Class B Common Stock are held in trust by Lilo J. Leeds as trustee for
certain members of her family. As husband and wife, Gerard and Lilo Leeds
are each deemed to be the beneficial owner of shares held in trust by the
other and, therefore, their combined beneficial ownership is shown in the
table. Gerard and Lilo Leeds each disclaim beneficial ownership of the
shares held in trust by the other.
(6) Includes 298,140 shares of Class A Common Stock and 529,630 shares of Class
B Common Stock held in trust by Michael S. Leeds as trustee for certain
members of his family.
(7) Includes 1,131,060 shares of Class B Common Stock held in trust by Richard
A. Leeds as trustee for certain members of his family, and 30,000 shares of
Class B Common Stock held by a private foundation of which he and his
spouse constitute the majority of directors.
(8) The information in this table is based on a Schedule 13G/A filed by J&W
Seligman & Co. on February 12, 1998.
(9) The information in this table is based on a Schedule 13G filed by Stein Roe
& Farnham Incorporated on February 11, 1998.
(10) The information in this table is based on a Schedule 13G/A filed by T. Rowe
Price Associates, Inc. on February 9, 1998.
EXECUTIVE COMPENSATION
The following table provides information concerning all compensation
awarded to, earned by or paid to the Company's Chief Executive Officer and the
four other most highly compensated executive officers of the Company who were
serving as executive officers at December 31, 1997 (collectively, the "Named
Executive Officers") for all services rendered in all capacities to the Company
in 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- -----------------------
OTHER RESTRICTED SECURITIES ALL
NAME AND ANNUAL STOCK UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS COMPENSATION(3)
------------------ ---- -------- ---------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael S. Leeds.................. 1997 $600,000 $1,092,458 -- $ -- -- $14,481
President and Chief Executive 1996 600,000 1,908,062 -- 6,606,000 755,040 13,236
Officer
Kenneth D. Cron................... 1997 500,000 900,727 -- -- -- 17,562
President of Publishing 1996 500,000 1,727,316 -- 4,404,000 943,800 17,888
Daniel H. Leeds................... 1997 400,000 376,605 $121,000 -- -- 13,967
President of International 1996 400,000 506,814 121,000 4,404,000 943,800 12,461
Jeffrey L. Strief................. 1997 375,000 625,000 -- -- 67,925 22,338
Senior Vice President, 1996 325,000 675,001 -- -- -- 14,711
Technology Buyers
John Russell...................... 1997 300,000 325,000 -- -- 51,123 24,685
Vice President, 1996 275,000 300,462 -- -- -- 16,262
Channel
</TABLE>
- ---------------
(1) The amounts shown for Daniel Leeds, who is based in Europe, reflect a cost
of living allowance of $80,000, reimbursement of educational expenses of
$35,000 and a car allowance of $6,000. The Company has not included in the
Summary Compensation Table the value of incidental personal perquisites
7
<PAGE> 11
furnished by the Company to any of the other Named Executive Officers, since
such value did not exceed the lesser of $50,000 or 10% of the total of
annual salary and bonus reported for any such Named Executive Officers.
(2) The amounts shown represent the fair market value of the restricted stock on
the date of purchase (as determined by an independent appraisal) less the
amount paid by each Named Executive Officer for such stock. Holders of
restricted stock are entitled to dividends, if any, paid on the Company's
Common Stock. Such stock is subject to restrictions on resale until December
31, 2003 in the case of Michael Leeds and December 31, 2005 in the case of
Kenneth Cron and Daniel Leeds, except that beginning January 1, 1998, a
limited number of shares of restricted stock may be sold each year provided
that the Company's market capitalization is a certain amount on the business
day preceding the date of sale of such shares. Michael Leeds purchased a
total of 566,280 shares of restricted stock with an appraised aggregate fair
market value at the date of purchase of $7,200,000; Kenneth Cron purchased a
total of 377,520 shares of restricted stock with an appraised aggregate fair
market value at the date of purchase of $4,800,000; and Daniel Leeds
purchased a total of 377,520 shares of restricted stock with an appraised
aggregate fair market value at the date of the purchase of $4,800,000. At
December 31, 1997, the aggregate fair market value of the restricted stock
held by Michael Leeds, Kenneth Cron and Daniel Leeds was $9,768,330,
$6,512,220 and $6,512,220, respectively.
(3) For 1997, amounts reported under "All Other Compensation" include: (a)
compensation expense recognized by the Company in connection with a gift of
shares of Class A Common Stock by certain members of the Founding Family of
the Company to substantially all employees (other than Michael Leeds,
Kenneth Cron and Daniel Leeds) at the time of the Company's IPO (Jeffrey
Strief, $8,140; and John Russell, $9,460); (b) contributions made by the
Company on behalf of each Named Executive Officer under the Company's Profit
Sharing and Retirement Savings Plan (Michael Leeds, $14,250; Kenneth Cron,
$17,331; Daniel Leeds, $13,736; Jeffrey Strief, $13,967; and John Russell,
$14,994); and (c) for each of the Named Executive Officers, $231 for life
insurance premiums paid by the Company for the benefit of each Named
Executive Officer under the Company's group life insurance benefit plan.
The following table provides information concerning individual grants of
stock options made during 1997 to each of the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------------- ----------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES PRICE PER EXPIRATION PRESENT
NAME GRANTED(1) IN FISCAL YEAR SHARE(2) DATE VALUE(3)
- ---- ------------ ---------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Jeffrey L. Strief..................... 67,925 8% $12.72 1/10/07 $51,963
John Russell.......................... 51,123 6% 12.72 1/10/07 39,109
</TABLE>
- ---------------
(1) Options were granted on January 10, 1997 and vest over six years.
8
<PAGE> 12
(2) The per-share exercise price is equal to the fair market value of a share of
the underlying Class A Common Stock as of the date of grant. Fair market
value as of the date of grant was determined by an independent appraisal.
(3) The present value of the options granted at the date of grant was estimated
using the Black-Scholes option-pricing model with the following assumptions:
dividend yield of 5%, volatility of 0%, risk-free interest rate of 6.5% and
an expected life of six years.
The following table provides information concerning the exercise of stock
options during 1997 by each of the Named Executive Officers and the 1997
year-end value of unexercised options and SARs held by the Named Executive
Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END (1)(2) FISCAL YEAR-END(1)(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael S. Leeds........................... 20,000 835,040 $336,800 $4,767,531
Kenneth D. Cron............................ 67,190 976,610 550,571 5,408,843
Daniel H. Leeds............................ 20,000 1,023,800 336,800 5,622,614
Jeffrey L. Strief.......................... -- 67,925 -- 307,700
John Russell............................... -- 51,123 -- 231,587
</TABLE>
- ---------------
(1) Options held by Michael Leeds, Kenneth Cron and Daniel Leeds were granted in
1996. As of December 31, 1997, Michael Leeds held 755,040 options, all of
which were unexercisable; Kenneth Cron held 943,800 options, 47,190 of which
were exercisable and 896,610 of which were unexercisable; and Daniel Leeds
held 943,800 options, all of which were unexercisable. The value of
exercisable and unexercisable options as included in the above table was
calculated as the difference between the exercise price of the options and
the fair market value of the Company's Class A Common Stock as of December
31, 1997.
(2) Under the Company's Equity Appreciation Plan (the "EAP"), certain Named
Executive Officers hold share appreciation rights ("SARs"), the value of
which are determined annually by a formula based on the Company's net sales
and pre-tax earnings for the year. Participants in the EAP must redeem 20%
of their SARs by June 30 of each of the years 1998 through 2002. All
payments under the EAP are in the form of cash. As of December 31, 1997,
Michael Leeds, Kenneth Cron and Daniel Leeds each held 100,000 SARs under
the EAP, 20,000 of which are redeemable in 1998 for $336,800 (which are
therefore included as exercisable above) and 80,000 of which are redeemable
in 1999 through 2002 (which are therefore included as unexercisable above).
The value of 100,000 SARs at December 31, 1997 was $1,684,000.
9
<PAGE> 13
PENSION PLAN
The Company's Pension Plan was frozen as of December 31, 1992. No
additional benefits have accrued since that date or will accrue in the future.
The fixed benefit payable monthly under that Plan for the life of each of the
Named Executive Officers after retirement at age 65 is as follows:
<TABLE>
<CAPTION>
NAME MONTHLY BENEFIT
---- ---------------
<S> <C>
Michael S. Leeds............................................ $ 728
Kenneth D. Cron............................................. 1,002
Daniel H. Leeds............................................. 530
Jeffrey L. Strief........................................... 592
John Russell................................................ 435
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
comprised solely of two outside directors, neither of whom is a current or
former employee or officer of the Company and neither of whom receives
remuneration from the Company in any capacity other than as a director. Prior to
the Company's IPO, the Compensation Committee consisted of four directors, three
of whom were employees and officers of the Company and one of whom was a
relative of such employees and officers.
Compensation Policies
It has been the long-standing policy of the Company to link the
compensation of each of its executive officers to the financial performance of
the Company or of the business unit or function for which the executive officer
is directly responsible. Beginning in 1997 with the first widespread grant of
stock options, the Company has also linked executive compensation to growth in
the value of the Company's equity. The Company endeavors to attract, motivate,
retain and reward highly qualified personnel by providing fully competitive
total compensation opportunities based on performance. The Compensation
Committee believes that a significant portion of an executive officer's total
compensation should be at risk, contingent upon annual and long-term financial
performance and an increase in stockholder value. The Compensation Committee
also believes that the more highly compensated the executive officer, the
greater the portion of his or her compensation that should be at risk and
equity-based.
The Company's executive officers are compensated through both cash and
equity-based programs.
Cash Compensation
In establishing cash compensation packages, the Company considers
compensation data derived from third-party surveys of competitive technology
media companies as well as other companies with whom the Company competes for
executive personnel. These companies include some of the peer companies used by
the Company in the Performance Graph on page 13 but are not limited to such
group because the Company believes such group is too narrow to reflect the full
executive labor market. The Company endeavors to provide cash compensation
levels that are within the upper half of competitive practice.
10
<PAGE> 14
BASE SALARY. Each executive officer of the Company receives a base salary
the amount of which is determined on the basis of his or her relative
responsibilities, level of experience, overall performance and contributions to
the Company's business.
ANNUAL INCENTIVE BONUS. Each executive officer of the Company has the
opportunity to earn an annual incentive bonus based on the degree to which the
Company and/or the business unit or function of the Company for which such
executive officer is responsible achieves or exceeds specific performance goals.
Most performance goals are based on objective financial measures and typically
take the form of a specified percentage of revenue, revenue growth, pre-tax
profit and/or pre-tax profit growth. Performance goals also include the
achievement of specified objectives, such as the launch of a new publication.
The potential size of the annual incentive bonus for executive officers
responsible for a particular business unit or function of the Company generally
bears a relationship to the size of that business unit or function relative to
the Company as a whole.
Equity-Based Compensation
STOCK INCENTIVE PLAN. In 1996, the Company established a stock option plan
which was subsequently amended, restated and renamed the CMP Media Inc. Stock
Incentive Plan (the "SIP"). The purpose of the SIP is to align the interests of
Company executive officers and other key employees with the interests of
stockholders and to encourage the executive officers to manage the Company from
the stockholders' perspective. Awards to each executive officer are based on his
or her level of responsibility, individual performance and potential to make
significant contributions to the Company's success.
Options to purchase 808,905 shares of the Company's Class A Common Stock
were issued to executive officers and other key employees in 1997 (net of
subsequently forfeited options to purchase 5,750 shares). The per-share exercise
price was equal to the fair market value of a share of Class A Common Stock as
of the date of grant. The options generally vest over a periods ranging from
four to seven years. All options expire on the tenth anniversary of their date
of grant.
No options were granted to Michael Leeds, Kenneth Cron or Daniel Leeds in
1997 because the Company had granted them options in 1996 to purchase shares of
Class A Common Stock and those individuals are not eligible to receive options
under the SIP. The per-share exercise price for their options was equal to the
appraised fair market value of a share of Class A Common Stock as of the date of
grant. The options vest on December 31, 2003 in the case of Michael Leeds and on
December 31, 2005 in the case of Kenneth Cron and Daniel Leeds, although vesting
will accelerate if certain performance goals are reached prior to those dates.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code provides, in relevant part,
that remuneration paid for any taxable year to the chief executive officer and
any of the other four highest compensated officers of a publicly held
corporation such as the Company is not deductible for federal income tax
purposes to the extent it exceeds $1,000,000, unless the remuneration is
contingent on the attainment of pre-established performance goals and meets
certain other conditions, one of which is that the material terms under which
the remuneration is to be paid are disclosed to and approved by the
stockholders. The Company's policy is to qualify such remuneration for
tax-deductibility to the extent practicable, although the Company retains the
11
<PAGE> 15
discretion to provide compensation programs that may not be fully deductible if
it believes that is in the best interests of the Company and its stockholders.
The Company expects that any remuneration in excess of $1,000,000 paid in 1997
will be exempt from the deduction limit of Section 162(m) because it was paid
pursuant to agreements which existed before the Company became publicly held and
which have not been materially modified and because the information about such
agreements that was disclosed in the prospectus accompanying the Company's IPO
satisfied all applicable securities laws then in effect. However, to enable the
Company to obtain a federal income tax deduction for remuneration in excess of
$1,000,000 paid in years subsequent to 1997, the stockholders of the Company
will be asked at the Annual Meeting to approve the CMP Media Inc. 1998 Annual
Incentive Compensation Plan which has been designed to comply with the
requirements of Section 162(m) and the regulations thereunder (see Approval of
CMP Media Inc. 1998 Annual Incentive Compensation Plan below).
1997 Compensation of Chief Executive Officer
In 1996 Michael Leeds entered into an Employment Agreement with the Company
which provides for the payment of a base salary and an annual incentive bonus as
well as the right to participate in benefit plans in effect for Company
employees generally. The Employment Agreement was approved by the Board of
Directors and the stockholders of the Company at the time it was made. The
Compensation Committee as it was then constituted, with Mr. Leeds abstaining,
established his base salary and an annual incentive bonus plan (an "Annual
Plan") for each of the years 1996, 1997 and 1998. Mr. Leeds' compensation for
1997 has been paid in accordance with the terms of his Employment Agreement and
his 1997 Annual Plan.
Mr. Leeds' base salary for 1997 was $600,000 -- the same base salary that
he received in 1996 and the same that he will be entitled to receive in 1998
pursuant to his 1998 Annual Plan. Mr. Leeds' incentive compensation under his
1997 Annual Plan consisted of two components, one based on the Company's 1997
net sales and the other based on the Company's 1997 pre-tax profits. Each
component provided for a sliding scale payment calculated as a percentage of net
sales or pre-tax profits. Nearly 80% of Mr. Leeds' 1997 incentive compensation
was based on the pre-tax profit component and the balance was based on the net
sales component. Mr. Leeds' 1997 Annual Plan also provided for a minimum level
of 1997 compensation, although such minimum did not affect the amount that he
actually earned under his 1997 Annual Plan. The amount he earned for 1997 is
shown above in the Summary Compensation Table on page 7. The Company expects
that the full amount of Mr. Leeds' 1997 compensation will be deductible by the
Company for tax purposes under Section 162(m) of the Internal Revenue Code
because it was paid pursuant to an agreement which existed before the Company
became publicly held in July 1997. See Tax Deductibility of Executive
Compensation, above.
COMPENSATION COMMITTEE
Sharon Lee Patrick, Chairperson
Richard W. Anderson
Former Members: Gerard G. Leeds
Lilo J. Leeds
Michael S. Leeds
Richard A. Leeds
12
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Class A Common Stock with the cumulative total return of the Nasdaq
Market Index and the cumulative total return of a group of peer companies for
the period commencing July 25, 1997 (the date of the Company's IPO) and ending
on March 31, 1998. The companies comprising the peer group are: The McGraw-Hill
Companies, Inc.; Mecklermedia Corporation; Meredith Corporation; Primedia Inc.;
The Reader's Digest Association, Inc.; and Scholastic Corporation.
(Line Chart Graph Omitted)
<TABLE>
<CAPTION>
CMP MEDIA NASDAQ PEER GROUP
Measurement Period INC. MARKET INDEX INDEX
<S> <C> <C> <C>
7/25/97-Base Period $100.00 $100.00 $100.00
9/30/97 100.50 105.60 105.41
12/31/97 69.35 99.06 107.89
3/31/98 101.01 115.16 117.50
</TABLE>
The graph assumes that $100 was invested on July 25, 1997 in the Company's
Class A Common Stock, the Nasdaq Market Index and Peer Group Index and assumes
reinvestment of any dividends.
13
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Company's IPO in July 1997, the Compensation Committee of the
Board consisted of directors Gerard Leeds, Lilo Leeds, Michael Leeds and Richard
Leeds. Gerard and Lilo Leeds were and are Co-Chairpersons of the Board, and
Michael Leeds was and is the President and Chief Executive Officer of the
Company. Following the Company's IPO, the Compensation Committee was
re-constituted, and directors Richard Anderson and Sharon Patrick were
designated as the sole members of the Compensation Committee of the Board.
See Certain Relationships and Related Transactions above for a description
of certain relationships that the Company has with Gerard and Lilo Leeds and
Michael Leeds.
APPROVAL OF CMP MEDIA INC. 1998 ANNUAL INCENTIVE COMPENSATION PLAN
The Compensation Committee has adopted and the Board of Directors has
ratified and approved the CMP Media Inc. 1998 Annual Incentive Compensation Plan
(the "Plan"), the full text of which is set forth in the Annex to this proxy
statement. At the Annual Meeting, the stockholders will be asked to approve the
Plan solely for the purpose of qualifying compensation paid pursuant to the Plan
as fully deductible for U.S. federal income tax purposes under Section 162(m) of
the Internal Revenue Code.
Summary of Plan. The material features of the Plan are summarized below,
although such summary is qualified by reference to the full text set forth in
the Annex.
Purposes. The purposes of the Plan are to link the annual cash
incentive compensation of senior executive officers directly to their
performance in the achievement of objective business goals that contribute
to the Company's success and to qualify payments made under the Plan as
fully deductible for U.S. federal income tax purposes.
Administration. The Plan will be administered by the Compensation
Committee (the "Committee"). All determinations made by the Committee will
be final and binding on all persons.
Participation. Participants in the Plan will be those senior
executive officers of the Company designated by the Committee.
Participation is on an annual basis, and participation in one year does not
entitle an officer to participate in any other year. It is expected that
fewer than fifteen officers will be participants in any single year.
Performance Goals. The Committee will establish written performance
goals for each participant no later than 90 days after the beginning of the
period of service to which the performance relates (or, if earlier, before
25% of such period has elapsed). The performance goals must be based on one
or more of the following business criteria: revenue; pre-tax income;
earnings before interest, taxes, depreciation and amortization; net income;
operating income; return on revenue; operating income as a percent of
revenue; return on equity; return on assets; market share; free cash flow;
cost control; working capital; diluted earnings per share; or stock price;
each of which may be measured on a Company-wide basis or measured with
respect to one or more of the Company's operating units, divisions,
functions, acquired businesses, partnerships or joint ventures.
Concurrently with the establishment of the performance goals, the Committee
will establish, in terms of an objective formula or standard, a method for
computing the
14
<PAGE> 18
amount of the incentive compensation payable to the participant upon
attainment of the performance goals. In establishing a performance goal,
the Committee may provide that the effect of any acquisition, disposition,
launch, discontinuation or merger of any product or service will be
disregarded if such event is not foreseen or taken into account at the time
the performance goal is established and if the effect of such event would
be to reduce the amount that would otherwise be payable under the
performance goal.
Adjustments. No performance goal may be adjusted after it has been
established, except that the Committee will disregard changes in accounting
standards required by the Financial Accounting Standards Board if such
changes were not foreseen or taken into account at the time the performance
goal was established.
Payment. Before any payments may be made to a participant, the
Committee must certify in writing that the participant's performance goals
were attained. The Committee may, in its business judgment based on
performance, authorize the payment of less (but not more) than the amount
of the incentive compensation established under the Plan. The maximum
amount payable under the Plan to any participant for any fiscal year may
not exceed $7 million.
Change in Control. In the event of a change in control of the
Company, all incentive compensation will become due and payable under the
Plan as if the outstanding performance goals had been fully attained.
("Change in control" means a transfer of 50% or more of the voting control
of the Company or the sale of substantially all its assets to any person
who is not a member of the Founding Family, or one of their spouses,
children or grandchildren, or any entity which is not controlled by any of
them.)
Amendment; Termination. The Committee may amend, modify, suspend or
terminate the Plan at any time and for any reason (other than in the event
of a change in control of the Company), except that no amendment may be
made without stockholder approval if such approval is required in order for
payments to any participant under the Plan to be fully deductible for U.S.
federal income tax purposes under Section 162(m) of the Internal Revenue
Code, or if such amendment would increase the maximum amount payable under
the Plan to any participant for any fiscal year or change the class of
persons eligible to participate in the Plan or the business criteria upon
which performance goals may be based.
Federal Income Tax Considerations. All amounts paid pursuant to the Plan
will be taxable income to the employee when paid. The Plan has been designed to
comply with the requirements of Section 162(m) of the Internal Revenue Code and
the regulations thereunder, and the Company expects to be entitled to a U.S.
federal income tax deduction for all amounts paid under the Plan if it is
approved by the stockholders.
Amounts Received under the Plan. The amounts that will be received under
the Plan are not presently determinable since they will depend upon the extent
to which participants' future performances actually meet their pre-established
performance goals and may be subject to reduction by the Compensation Committee.
The Company believes that, if the Plan had been in effect in 1997, no officer,
executive officer or employee of the Company would have received a cash bonus
for 1997 different from the bonus he or she actually received. No current
directors who are not executive officers are eligible to participate in the
Plan.
15
<PAGE> 19
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE CMP MEDIA
INC. 1998 ANNUAL COMPENSATION PLAN.
INDEPENDENT ACCOUNTANTS
The Board of Directors has re-appointed Coopers & Lybrand L.L.P. as the
independent public accounting firm to audit the Company's financial statements
for the year 1998. Representatives of Coopers & Lybrand are expected to be
present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so, and they are expected to be available to
respond to appropriate questions.
Prior to September 1996, when Coopers & Lybrand was first appointed,
Miller, Ellin & Company had been the Company's independent accountants. The
decision to change independent accountants was approved by the Company's Board
of Directors. There had been no disagreements with Miller, Ellin & Company
regarding any matter with respect to accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Miller, Ellin & Company,
would have caused it to make reference to the subject matter of the disagreement
in connection with any of its reports.
STOCKHOLDER PROPOSALS
If any stockholder wishes to present a proposal at the 1999 Annual Meeting
of Stockholders, the proposal must be received by the Company at its principal
executive offices no later than February 15, 1999 in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
Annual Meeting. Proposals must be in writing and sent via registered, certified
or express mail, addressed to the attention of the Secretary of the Company.
OTHER BUSINESS
The Board of Directors knows of no other matter to be presented at the 1998
Annual Meeting. If any other matter requiring a vote of the stockholders
properly comes before the Annual Meeting, the individuals named in the
accompanying form of proxy will vote and act with respect to such matter in
accordance with their judgment.
SOLICITATION OF PROXIES
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. Brokers and other persons holding shares of the
Company's Common Stock in their names or in the names of nominees will be
reimbursed by the Company for their reasonable expenses in forwarding the
solicitation materials to the beneficial owners of such shares. The solicitation
of proxies will be made by the use of the mails, although certain officers and
employees of the Company may, for no additional compensation, solicit proxies of
certain stockholders or their representatives in person or by telephone,
facsimile or electronic mail.
16
<PAGE> 20
Stockholders are requested to complete, date, sign and return the enclosed
proxy card promptly in the enclosed postage prepaid envelope.
By order of the Board of Directors
/s/ Robert D. Marafioti
Robert D. Marafioti
Vice President, General Counsel
and Secretary
Manhasset, New York
April 23, 1998
17
<PAGE> 21
ANNEX
CMP MEDIA INC.
1998 ANNUAL INCENTIVE COMPENSATION PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
This plan shall be known as the CMP MEDIA INC. 1998 ANNUAL INCENTIVE
COMPENSATION PLAN (the "Plan"). The purposes of CMP Media Inc. (the "Company")
in establishing and maintaining the Plan are to link the annual cash incentive
compensation of senior executive officers directly to their performance in the
achievement of objective business goals that contribute to the Company's success
and to qualify payments under the Plan as fully deductible for U.S. federal
income tax purposes.
ARTICLE II
DEFINITIONS
"Board of Directors" shall mean the Board of Directors of the Company.
"Change In Control" shall mean a transfer of 50% or more of the voting
control of the Company or the sale of substantially all its assets to any person
who is not a member of the Founding Family (as hereinafter defined), or one of
their spouses, children or grandchildren, or any entity which is not controlled
by any of the foregoing.
"CMP Group" shall mean the Company or any of its Subsidiaries.
"Diluted EPS" shall mean Net Income divided by the weighted-average number
of shares of the Company's common stock outstanding and any dilutive securities,
determined in accordance with GAAP.
"Disability" shall mean a physical or mental impairment, as a result of
which a Participant shall have been unable, with or without reasonable
accommodation, to perform the essential functions of his or her employment
position for a period of at least sixteen (16) weeks during any 12-month period.
"Dismissal Without Cause" shall mean the involuntary termination of a
Participant's employment by the CMP Group on any grounds other than "cause" or
the death or Disability of the Participant. For the purposes hereof, "cause"
shall mean (a) the willful and continued failure of the Participant
substantially to perform his or her duties as an employee of the CMP Group or
comply with the written policies of the CMP Group after the Company (or the
Subsidiary employing the Participant) has delivered to him or her a written
demand for substantial performance or compliance that specifies such failure in
reasonable detail; (b) illegal conduct or gross misconduct by the Participant,
in either case that is willful and results (or is reasonably likely to result)
in material damage to the business or reputation of the CMP Group; or (c) the
resignation by the Participant from his or her employment following his or her
act or omission which would constitute grounds for dismissal for "cause"
hereunder. No act or failure to act on the part of a Participant (other than
non-compliance with lawful instructions given to him or her by the CMP Group)
shall be considered "willful" unless it is done or omitted to be done by him or
her in bad faith or without reasonable belief that such action or omission was
in the best interests of the Company.
A-1
<PAGE> 22
"Division" shall mean any business unit, division, function, acquired
business, partnership or joint venture of the CMP Group.
"Division Financial Statements' shall mean the financial statements of a
Division prepared by the Company in accordance with its standard accounting
policies and practices as in effect as of the date on which the relevant
performance goal is established and including all general and administrative
expenses allocated by the Company to such Division.
"EBITDA" shall mean income before interest, taxes, depreciation and
amortization determined in accordance with GAAP for the relevant Performance
Period.
"Financial Statements" shall mean consolidated financial statements of the
Company prepared in accordance with GAAP and, in the case of the Company's
annual consolidated financial statements, audited by the Company's independent
certified public accountants.
"Founding Family" shall mean Gerard G. Leeds, Lilo J. Leeds, Michael S.
Leeds, Richard A. Leeds, Daniel H. Leeds, Greg Jobin-Leeds and Jennifer Leeds.
"Free Cash Flow" shall mean the Net Income of the Company, adjusted so as
(a) to exclude the amount, if any, that, in determining such Net Income,
represented (i) an expense for depreciation and/or amortization or (ii) a
provision or credit for federal, state, local or foreign income taxes; and (b)
to include the amount, if any, of cash payments that the Company actually made
(i) for federal, state, local and foreign income taxes owed by the Company, (ii)
for capital expenditures, or (iii) as required under the terms of the Company's
then-existing financing arrangements to reduce the principal amount of its
indebtedness.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Net Income" shall mean the consolidated net income of the Company as
reflected in the Financial Statements for the relevant Performance Period.
"Operating Income" shall mean: (i) if measured with respect to the Company,
Revenue less operating costs and expenses as reflected in the Financial
Statements for the relevant Performance Period; and (ii) if measured with
respect to a Division, Revenue less operating costs and expenses as reflected in
the Division Financial Statements for the relevant Performance Period.
"Operating Income as a Percent of Revenue" shall mean Operating Income
divided by Revenue for the relevant Performance Period.
"Participant" shall mean a Senior Executive Officer who has been granted
the opportunity to earn incentive compensation under the Plan.
"Performance Period" shall mean the period of service to which a
performance goal of a Participant relates.
"Pre-tax Income" shall mean: (i) if measured with respect to the Company,
the income of the Company before provision for income taxes, as reflected in the
Financial Statements for the relevant Performance Period; and (ii) if measured
with respect to a Division, the income of the Division before provision for
income taxes, as reflected in the Division Financial Statements for the relevant
Performance Period.
A-2
<PAGE> 23
"Retirement" shall mean the retirement of a Participant from employment
with the Company upon or after attaining the age of sixty-five (65), or such
earlier age as the Committee may in its sole discretion approve on or before the
date on which the relevant performance goal is established.
"Return on Assets" shall mean Net Income divided by total assets as
reflected in the Financial Statements for the relevant Performance Period.
"Return on Equity" shall mean Net Income divided by total stockholders'
equity as reflected in the Financial Statements for the relevant Performance
Period.
"Return on Revenue" shall mean Net Income divided by Revenue as reflected
in the Financial Statements for the relevant Performance Period.
"Revenue" shall mean: (i) if measured with respect to the Company, the net
revenue of the Company as reflected in the Financial Statements for the relevant
Performance Period; and (ii) if measured with respect to a Division, the net
revenue of the Division as reflected in the Division Financial Statements for
the relevant Performance Period. In calculating Revenue hereunder with respect
to any Division, appropriate accounting entries shall be made in accordance with
GAAP to eliminate intercompany or intracompany transactions. Any Revenue derived
from international operations shall be measured in United States dollars as
determined in accordance with GAAP.
"Section 162(m)" shall mean Section 162(m) of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder.
"Senior Executive Officer" shall mean the Chief Executive Officer of the
Company, any elected Vice President or higher-level officer of the Company who
is in charge of a principal business unit, division or function of the Company ,
and any other officer who performs a policy-making function for the Company.
Officers of a Subsidiary shall be deemed officers of the Company if they perform
such policy-making functions for the Company.
"Stock Price" shall mean the price of one (1) share of Class A Common Stock
of the Company at the close of trading on such date as the Committee may have
designated.
"Subsidiaries" shall mean all corporations, partnerships, other entities
and affiliates which are controlled by the Company directly or indirectly
through one or more intermediaries and shall include any corporation,
partnership, other entity or affiliate in which the Company directly or
indirectly owns at least a fifty percent (50%) equity interest.
"Unforeseen Event" shall mean an acquisition, disposition, launch,
discontinuation or merger of a product or service of the Company at a time after
a performance goal has been established.
"Working Capital" shall mean current assets less current liabilities as
reflected in the Financial Statements for the relevant Performance Period.
A-3
<PAGE> 24
ARTICLE III
ADMINISTRATION
Section 3.1. The Committee.
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"), which shall be comprised solely of two (2) or
more "outside directors" within the meaning of Section 162(m).
Section 3.2. Authority of the Committee.
Except as limited by law or by the certificate of incorporation or bylaws
of the Company as amended from time to time, and subject to all the provisions
of the Plan, the Committee shall have full and discretionary power to administer
the Plan so that payments under the Plan qualify under Section 162(m) as
deductible for U.S. federal income tax purposes, including without limitation
the power (a) to select the Senior Executive Officers who shall become
Participants in the Plan; (b) to determine the terms and conditions upon which
each Participant may earn incentive compensation hereunder, consistent with all
of the provisions of the Plan; (c) to construe and interpret the provisions of
the Plan and any agreement or instrument entered into under the Plan; (d) to
establish, amend, rescind or waive rules and regulations for the Plan's
administration; (e) subject to the provisions of Section 8.2 and Article IX, and
pursuant to the provisions of Section 5.4, to adjust the terms and conditions of
any performance goal or method of computing incentive compensation hereunder to
the extent such adjustment does not disqualify payments under the Plan as
deductible under Section 162(m) or is otherwise inconsistent with the provisions
and purposes of the Plan; and (f) to take all such other actions and make all
such other determinations as may be necessary or advisable in order to
administer the provisions of the Plan and effectuate the purposes hereof.
Section 3.3. Conduct of Business.
The Committee shall hold its meetings at such times and places as it may
determine. Participation in any meeting may be in person or by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. The Committee may
delegate its authority and duties hereunder to the extent permitted by law.
Section 3.4. Decisions Binding.
All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of the Board of
Directors shall be final, conclusive and binding on all persons, including the
Company, its employees, officers, directors and stockholders, the Subsidiaries,
their respective employees, officers, directors and stockholders, the
Participants, and their estates, representatives and beneficiaries.
A-4
<PAGE> 25
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
Section 4.1. Eligibility.
Each Senior Executive Officer shall be eligible to participate in the Plan.
Section 4.2. Participation.
Participants in the Plan shall be those Senior Executive Officers whom the
Committee shall designate from time to time. Participation shall be on an annual
basis, and participation in one fiscal year shall not entitle a Senior Executive
Officer to participate in any other fiscal year.
ARTICLE V
PERFORMANCE GOALS
Section 5.1. Establishment of Performance Goals.
For each Participant the Committee shall establish one or more performance
goals and a Performance Period within which such performance goal or goals are
to be attained. The Committee shall also establish, in terms of an objective
formula or standard, a method for computing the amount of incentive compensation
payable to such Participant upon attainment of such performance goal or goals.
Each such performance goal and method of computation shall be established in
writing no later than ninety (90) days after the beginning of such Performance
Period (or, if a shorter period of time, before twenty-five percent (25%) of
such Performance Period has elapsed).
Section 5.2. Business Criteria.
Each performance goal established pursuant to Section 5.1 shall be based on
one or more of the following business criteria:
<TABLE>
<S> <C>
(i) Revenue
(ii) Pre-tax Income:
(iii) EBITDA;
(iv) Net Income;
(v) Operating Income;
(vi) Return on Revenue;
(vii) Operating Income as a Percent of Revenue;
(viii) Return on Equity;
(ix) Return on Assets;
(x) Market share;
(xi) Free Cash Flow;
(xii) Cost control;
</TABLE>
A-5
<PAGE> 26
<TABLE>
<S> <C>
(xiii) Working Capital;
(xiv) Diluted EPS; or
(xv) Stock Price.
</TABLE>
Each of the foregoing criteria may be measured with respect to the Company
as a whole or with respect to one or more of the Company's Divisions and may be
measured with respect to a fiscal year of the Company or with respect to a
longer or shorter period. In establishing any performance goal for a
Participant, the Committee may provide, as a term of the goal, that if the
Company consummates an Unforeseen Event and if the effect of such Unforeseen
Event is to reduce the amount that would otherwise have been payable under a
performance goal, the Committee shall disregard the effect of such Unforeseen
Event for the purpose of determining whether such performance goal has been
attained and the amount due and payable thereunder. The effect of an Unforeseen
Event shall be determined on the basis of the actual revenue, costs and expenses
arising from the underlying product or service or, in the case of a disposition
or discontinuation, on the basis of the revenue, costs and expenses projected in
the business plan or budget of the underlying product or service as approved by
the Board of Directors and as in effect at the time such performance goal was
established.
Section 5.3. Objectivity of Method and Substantial Uncertainty of Outcome.
(a) The method for computing the amount of incentive compensation payable
upon the attainment of any performance goal shall be such that a third party
having knowledge of the relevant facts could determine whether the performance
goal has been met.
(b) Each performance goal shall be designed so that, at the time of its
establishment, its attainment is "substantially uncertain" within the meaning of
Section 162(m).
Section 5.4. No Adjustment of Performance Goals.
Subject to Section 5.4, once a performance goal of a Participant has been
established with respect to a Performance Period, no adjustment or modification
may be made to such performance goal except that, if a change occurs in the
accounting standards that are required by the Financial Accounting Standards
Board with respect to a Performance Period and if such change was not foreseen
or was not taken into account at the time such performance goal was established
but is reasonably certain to affect the attainment of such performance goal, the
Committee shall disregard such change in accounting standards for the purpose of
determining whether such performance goal has been attained.
ARTICLE VI
PAYMENT OF INCENTIVE COMPENSATION
Section 6.1. Certification by Committee.
No payment shall be made to a Participant under the Plan with respect to
any performance goal unless and until the Committee has certified in writing
that such performance goal and any other material terms were in fact satisfied
for the Performance Period with respect to which such performance goal was
established.
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Section 6.2. Maximum Amount of Incentive Compensation.
Notwithstanding any other provision of this Plan, the maximum amount of
incentive compensation that can be paid to any Participant under the Plan for
any fiscal year shall in no event exceed $7 million.
Section 6.3. Reduction of Payments.
The Committee may, in its business judgment based on the performance of an
individual Participant, one or more of the Company's Divisions with respect to
which a performance goal of the Participant was established, or the Company as a
whole, authorize the payment of less (but not more) than the amount of the
incentive compensation that would otherwise have been due upon attainment of
such performance goal.
Section 6.4. Time of Payment.
Payment of incentive compensation under the Plan, less applicable
withholdings, shall be made in a single lump sum as soon as practicable after
certification by the Committee pursuant to Section 6.1.
ARTICLE VII
RIGHTS OF PARTICIPANTS
Section 7.1. No Right to Continued Employment.
Nothing in the Plan shall be deemed to confer upon any Participant the
right to continued employment with the CMP Group or to limit in any way the
right of the CMP Group or such Participant to terminate the employment of such
Participant at any time or for any reason. For the purposes of the Plan, the
transfer of a Participant's employment between the Company and a Subsidiary or
between Subsidiaries shall not be deemed a termination of employment.
Section 7.2. Rights upon Termination of Employment.
(a) Unless otherwise determined by the Committee and subject to the
provisions of Section 6.3, if a Participant's employment with the CMP Group
terminates as a result of his or her death, Disability, Dismissal Without Cause
or Retirement during a Performance Period, the Participant (or his or her legal
representative) shall be entitled to receive, after the conclusion of the
Performance Period, a pro rata portion of the incentive compensation that he or
she would have received, but for such termination of employment, with respect to
each performance goal in effect for such Participant during such Performance
Period, calculated by multiplying the aggregate of such incentive compensation
by a fraction, the numerator of which shall be the number of full months in the
Performance Period that the Participant was employed by the Company and the
denominator of which shall be the number of full months in the Performance
Period.
(b) Unless otherwise determined by the Committee, if a Participant's
employment with the CMP Group terminates for any reason other than death,
Disability, Dismissal Without Cause or Retirement, all rights of the Participant
in any incentive compensation under the Plan, to the extent it has not already
been paid, shall terminate and be extinguished immediately upon such termination
of employment.
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ARTICLE VIII
CHANGE IN CONTROL
Section 8.1. Acceleration.
In the event of a Change In Control of the Company, all incentive
compensation shall become immediately due and payable under the Plan as if all
outstanding performance goals of Participants had been fully attained for the
Performance Periods in effect on the date of such Change in Control.
Section 8.2. No Amendment.
Notwithstanding any other provision of the Plan, the provisions of Section
8.1 may not, without a Participant's prior written consent, be amended,
modified, suspended or terminated in a manner that adversely affects such
Participant's right with respect to incentive compensation based on performance
goals theretofore established under the Plan. In the event of a Change In
Control, no changes in the Plan and no adjustments, determinations or other
exercises of discretion that are made, pursuant to the Plan or otherwise, by the
Committee subsequent to such Change In Control shall be effective if and to the
extent that they would have the effect of diminishing the rights or benefits of
any Participant under the Plan.
ARTICLE IX
AMENDMENT; TERMINATION
Subject to the provisions of Section 8.2, the Committee may amend, modify,
suspend or terminate the Plan at any time and for any reason, except that no
amendment may be made without stockholder approval if such approval is required
in order for payments to any Participant under the Plan to be fully deductible
for U.S. federal income tax purposes under Section 162(m), including if such
amendment would increase the maximum amount payable under the Plan to any
Participant for any fiscal year or change the class of persons eligible to
participate in the Plan or the business criteria on which a performance goal may
be based as set forth in Section 5.2.
ARTICLE X
INDEMNIFICATION
Any claim under the Plan shall be solely the obligation of the Company. No
member of the Committee shall be personally liable by reason of any contract or
other instrument executed by or on behalf of such member in his or her capacity
as a member of the Committee or by reason of any mistake of judgment made by him
or her in good faith in such capacity. The Company shall indemnify each
employee, officer or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be allocated or
delegated and shall hold such person harmless against any loss, liability,
claim, cost or expense (including reasonable attorneys' fees and any sum paid in
settlement of a claim with the approval of the Board of Directors) incurred by
or asserted against such person as a result of or arising out of any act or
omission to act in connection with the Plan, unless arising out of such person's
fraud or bad faith. The right of indemnification provided for in this Article X
shall be in addition to any rights of indemnification to which such person may
be entitled under the certificate of incorporation or bylaws of the Company, as
a matter of
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law or otherwise, or any power that the Company may have to indemnify such
person or hold him or her harmless.
ARTICLE XI
DURATION OF PLAN
The Plan shall be effective on the date of its adoption by the Committee,
subject to ratification by the Board of Directors and approval by the
stockholders of the Company, and it shall remain in effect until terminated by
the Committee.
ARTICLE XII
SUCCESSORS
All obligations of the Company with respect to incentive compensation to be
paid under the Plan shall be binding on any successor to the Company and shall
survive any purchase, merger, consolidation or other disposition of all or
substantially all of the business and/or assets of the Company.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Applicable Law.
To the extent not preempted by federal law, the Plan shall be governed by
and construed and enforced in accordance with the laws of the State of New York,
without reference to its principles regarding choice or conflicts of law.
Section 13.2. Severability.
In the event that any provision of the Plan shall be held for any reason to
be illegal or invalid under applicable law, such provision shall be ineffective
to the extent of such illegality or invalidity without affecting the remainder
of such provision or any other provision of the Plan.
Section 13.3. Non-transferability of Benefits.
Unless otherwise designated by the Committee, no right of a Participant to
be paid incentive compensation under the Plan may be assigned, transferred,
sold, pledged, hypothecated, anticipated, alienated or otherwise disposed of,
other than by will or by the laws of descent and distribution. Any such
attempted action shall be void, and no such payment shall be in any manner
liable for or subject to debts, contracts, liabilities, engagements or torts of
any Participant or former Participant. This Section 13.3. shall not apply to
payments due after the death of a Participant to the Participant's legal
representative or beneficiary.
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Section 13.4. No Funding of Plan.
The Plan shall constitute an "unfunded" plan of the Company, and the
Company shall not be required to fund or otherwise segregate any cash or any
other assets which may at any time be payable to Participants under the Plan.
The Company shall not, by virtue of the Plan, be deemed to be a trustee of any
property. Any obligations of the Company to any Participant under the Plan shall
be those of a debtor, and any rights of any Participant or former Participant
shall be limited to those of a general unsecured creditor.
Section 13.5. Headings.
The headings of the Articles and Sections of the Plan are for convenience
of reference only and shall not be considered in interpreting or construing the
Plan.
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CMP MEDIA INC.
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael S. Leeds and Robert D. Marafioti, and
each of them, as proxies for the undersigned, with full powers of substitution,
to vote all shares of Common Stock of CMP Media Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on Thursday, May 28, 1998 at 10:00 a.m. at the Garden City
Hotel, 45 Seventh Street, Garden City, New York, and at any adjournment thereof,
upon the matters set forth in the Notice of Annual Meeting of Stockholders and
Proxy Statement dated April 23, 1998, a copy of which has been received by the
undersigned.
(Continued, and to be signed and dated, on reverse side)
/SEE REVERSE/
/ SIDE /
<PAGE> 32
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR WITHHOLD
all nominees listed AUTHORITY
(except as indicated to vote for all
to the contrary below) nominees listed
1. Election of
eight directors: / / / /
Instruction: To withhold authority to vote for any individual
nominee, print that nominee's name below.
------------------------------------------------------------
NOMINEES: Richard W. Anderson,
Kenneth D. Cron, Daniel H. Leeds,
Gerard G. Leeds, Lilo J. Leeds,
Michael S. Leeds, Richard A. Leeds,
Sharon Lee Patrick
FOR AGAINST ABSTAIN
2. Approval of the CMP Media Inc. 1998 / / / / / /
Annual Incentive Compensation Plan:
3. The proxies are each authorized to vote in their judgment upon such other
business as may properly come before the Annual Meeting and any adjournments
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED ABOVE OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR ITEMS 1 AND 2.
Signature Signature (if held jointly) Date 1998
---------------- -------------- ------
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON, THEN DATE AND MAIL THIS PROXY
CARD IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE. If stock is held jointly, each
owner should sign. If signing as attorney, administrator, executor, trustee or
guardian, please give full title as such. If executed by a corporation or
partnership, proxy should be signed by a duly authorized person, stating title
or authority.
