<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CABLEVISION SYSTEMS CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
CABLEVISION SYSTEMS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
To the Stockholders:
The annual meeting of the stockholders of Cablevision Systems Corporation
will be held at the Company's executive offices, One Media Crossways, Woodbury,
New York 11797, on Wednesday, June 10, 1998 at 10:00 a.m. for the following
purposes:
1. To elect fifteen (15) directors, each to serve for a term of one year
and until their respective successors shall have been duly elected and
qualified;
2. To authorize and approve the Cablevision Systems Corporation Executive
Performance Incentive Plan;
3. To authorize and approve Amendment No. 1 to the CSC Parent Employee
Stock Plan;
4. To ratify and approve the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year 1998; and
5. To transact such other business as may properly come before the meeting,
or any adjournment thereof.
Pursuant to the By-Laws, the Board of Directors has fixed the time and date
for the determination of stockholders entitled to notice of and to vote at the
meeting as of the close of business on May 11, 1998. Accordingly, only holders
of record of issued and outstanding Common Stock of the Company on such date and
at such time will be entitled to vote at the meeting, notwithstanding any
transfer of any stock on the books of the Company thereafter.
By order of the Board of Directors,
CABLEVISION SYSTEMS CORPORATION
Robert S. Lemle
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Woodbury, New York
May 18, 1998
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR STOCK TO BE
VOTED, PLEASE DATE, SIGN AND MAIL THE ACCOMPANYING FORM OF PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE>
CABLEVISION SYSTEMS CORPORATION
EXECUTIVE OFFICES
ONE MEDIA CROSSWAYS
WOODBURY, NEW YORK 11797
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Cablevision Systems Corporation (the "Company") for use at the
annual meeting of its stockholders to be held at the Company's executive
offices, on June 10, 1998 at 10:00 a.m. and at any and all adjournments thereof.
The shares represented by the proxy will be voted at the annual meeting and
will be voted as specified on the proxy with respect to the election of
directors and with respect to Proposals (2), (3) and (4) or, if no direction is
indicated, will be voted in favor of the election as directors of the nominees
listed below and in favor of Proposals (2), (3) and (4). The person giving the
proxy has the power to revoke it at any time before it is voted at the annual
meeting by written notice to the Secretary of the Company, or upon request if
such person is present at the annual meeting.
The cost of solicitation will be borne by the Company.The Company may use
the services of its directors, officers and other regular employees to solicit
proxies personally or by telephone, and may request brokers, fiduciaries,
custodians and nominees to send proxies, proxy statements and other material to
their principals at the expense of the Company. This proxy statement and the
accompanying proxy are being sent to the stockholders of the Company on or about
May 18, 1998. The Company's Annual Report to Stockholders for the Company's
fiscal year ended December 31, 1997 is enclosed herewith.
The Company is a Delaware corporation which was organized in 1997. Until
March 4, 1998, the Company was known as CSC Parent Corporation and was a
wholly-owned subsidiary of CSC Holdings, Inc. (formerly known as Cablevision
Systems Corporation). On that date, the Company completed a reorganization in
which CSC Holdings, Inc. merged into a subsidiary of the Company and the Company
became the parent holding company of CSC Holdings, Inc. This transaction is
referred to herein as the "Reorganization". In connection with the
Reorganization, all outstanding common shares of CSC Holdings, Inc. were
converted into a like number of shares of the Company.
On March 30, 1998, the Company effected a two-for-one stock split (the
"Stock Split") in the form of a stock dividend on the outstanding Class A Common
Stock and Class B Common Stock of the Company. All share amounts of the Company
and, for periods prior to March 4, 1998, CSC Holdings, Inc., have been restated
to reflect the Stock Split.
VOTING RIGHTS
Pursuant to the By-Laws, the Board of Directors has fixed the time and date
for the determination of stockholders entitled to notice of and to vote at the
meeting as of the close of business on May 11, 1998. Accordingly, only holders
of record of Common Stock of the Company on such date and at such time will be
entitled to vote at the meeting, notwithstanding any transfer of any stock on
the books of the Company thereafter. On March 31, 1998, the Company had
outstanding 52,676,806 shares of Class A Common Stock, par value $.01 per share,
each of which entitled the holder to one vote, and 22,193,418 shares of Class B
Common Stock, $.01 par value per share, each of which entitled the holder to ten
votes.
Charles F. Dolan, the Chairman of the Company, and trusts for the benefit of
members of his family, together beneficially own shares of capital stock of the
Company having the power to elect as directors the eleven persons nominated by
the Board of Directors for election by holders of Class B Common Stock, which
directors would constitute a majority of the Board of Directors, and to
authorize and approve Proposals (2), (3) and (4).
<PAGE>
In accordance with the Company's confidential voting policy, all
stockholder's proxies, ballots and voting materials will be confidentially
inspected and tabulated by independent inspectors of election and will not be
disclosed to the Company except under certain limited circumstances.
BOARD OF DIRECTORS
The Board of Directors of the Company met, or acted by written consent in
lieu of meeting, one time in 1997 and presently consists of 15 members, 9 of
whom are officers of the Company or its subsidiaries. The Board of Directors of
CSC Holdings, Inc. met, or acted by written consent in lieu of meeting,
seventeen times in 1997 and has the same membership as the Company's Board of
Directors.
BOARD COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee. The Board of Directors does not have a nominating
committee.
The committees of the Board of Directors of the Company were constituted on
March 3, 1998. The Executive Committee was reconstituted on April 20, 1998.
Meetings of committees of the Board of Directors referred below were meetings of
the equivalent committees of the Board of Directors of CSC Holdings, Inc.
The Executive Committee consists of Messrs. James L. Dolan, John Tatta,
William J. Bell, Marc A. Lustgarten, Robert S. Lemle, John C. Malone and Richard
H. Hochman. The Executive Committee is authorized to exercise, between meetings
of the Board of Directors, all the powers thereof except as limited by Delaware
law and except for certain specified exceptions. The Executive Committee met, or
acted by written consent in lieu of meeting, two times in 1997.
The Audit Committee of the Board of Directors consists of Messrs. Richard H.
Hochman and Victor Oristano. The functions of the Audit Committee are to review
and report to the Board of Directors with respect to selection and the terms of
engagement of the Company's independent public accountants, and to maintain
communications among the Board of Directors, such independent public accountants
and the Company's internal accounting staff with respect to accounting and audit
procedures, the implementation of recommendations by such independent public
accountants, the adequacy of the Company's internal audit controls and related
matters. The Audit Committee met, or acted by written consent in lieu of
meeting, two times in 1997.
The Compensation Committee consists of Messrs. Victor Oristano, Richard H.
Hochman and John Tatta. The functions of the Compensation Committee are (i) to
represent the Board in discharging its responsibilities with respect to the
Company's employee stock plans and, in doing so, to administer such plans with
regard to, among other things, the determination of eligibility of employees,
the granting of stock, SARs and/or options, and the termination of such plans
and (ii) to determine the appropriate levels of compensation, including
salaries, bonuses, stock and option rights and retirement benefits for members
of the Company's senior management, subject to the approval of the Board of
Directors. A subcommittee of the Compensation Committee consisting of Messrs.
Oristano and Hochman, has exclusive authority and responsibility for, and with
respect to, any grants or awards under the Company's employee stock plans to any
executive officer of the Company, and to the Company's other most senior
employees. The Compensation Committee met, or acted by written consent in lieu
of meeting, eight times in 1997.
In addition to its standing committees, the Board of Directors from time to
time convenes a Special Committee, in accordance with the Company's By-laws, to
consider any proposed investment in, or advance to, a Dolan Affiliate (as
defined below). The Special Committee is comprised of (a) two directors who are
neither (i) officers or employees of the Company, (ii) officers or directors of
the Dolan Affiliate which is a party to the transaction at issue, nor (iii)
directors nominated by Tele-Communications, Inc. ("TCI"), and (b) for so long as
TCI is entitled to nominate two directors to the Company's Board of Directors,
two directors nominated by TCI. A "Dolan Affiliate" is defined in the by-laws to
include
2
<PAGE>
Charles F. Dolan, certain members of Charles F. Dolan's family and certain
trusts for members of Charles F. Dolan's family, and any other corporation,
partnership, association or other organization owned or controlled by Charles F.
Dolan, other than any entity which is a subsidiary of the Company. The Special
Committee currently consists of Messrs. John Malone, Leo J. Hindery, Jr., Victor
Oristano and Vincent Tese.
Each member of the Board of Directors participated in not less than 75% of
the aggregate number of meetings or consents in lieu of meeting of the Board of
Directors of the Company or CSC Holdings, Inc. and of each Board committee of
which he or she was a member, during 1997.
COMPENSATION OF DIRECTORS
Directors who are not employees are paid a fee of $20,000 per year for
services rendered in that capacity, a fee of $1,000 for each meeting attended in
person and a fee of $500 for each meeting participated in by telephone. Members
of the Audit Committee and the Special Committee and members of the Compensation
Committee and the Executive Committee who are not officers of the Company are
paid an annual fee of $2,500 ($5,000 in the case of the Chairman of each such
committee), and a fee of $1,000 for each meeting attended in person and a fee of
$500 for each meeting participated in by telephone. Non-employee members of the
Board of Directors who serve on the Cablevision Employee Benefit Plans
Investment Committee receive a fee of $1,000 for each meeting attended in person
and a fee of $500 for each meeting participated in by telephone.
John Tatta, a non-employee director, has a consulting agreement with the
Company dated January 27, 1998, expiring in 2001, which continues Mr. Tatta's
consulting arrangement with the Company. The agreement provides for an annual
consulting fee of $350,000, reimbursement of certain expenses and the
continuation of certain life insurance and supplemental pension benefits
provided to him when he was an employee. Pursuant to this consulting agreement,
under which Mr. Tatta assists senior management of the Company in strategic
planning and performs special projects relating to the Company's business, Mr.
Tatta is to provide not more than 50 percent of his professional time to the
Company.
(1) ELECTION OF DIRECTORS
With respect to the election of directors, the Certificate of Incorporation
of the Company provides that holders of Class A Common Stock, voting as a
separate class, are entitled to elect 25% of the total number of directors
constituting the whole Board and, if such 25% is not a whole number, then the
holders of Class A Common Stock are entitled to elect the nearest higher whole
number of directors that is at least 25% of the total number of directors.
Holders of Class B Common Stock, voting as a separate class, are entitled to
elect the remaining directors. Under the Company's By-Laws, the Board of
Directors is to consist of at least three members, the exact number to be fixed
by the Board. The Board has set the number of Directors to be elected at the
annual meeting at fifteen directors, four of whom are to be elected by the
holders of Class A Common Stock and eleven of whom are to be elected by the
holders of Class B Common Stock, to hold office until the next annual meeting of
stockholders and until their respective successors have been duly elected and
qualified. The four Class A Directors of the Company are elected by the
favorable vote of a plurality of the shares of Class A Common Stock present in
person or represented by proxy at the meeting and entitled to vote on the
election of Directors. The eleven Class B Directors of the Company are elected
by the favorable vote of a plurality of the shares of Class B Common Stock
present in person or represented by proxy at the meeting and entitled to vote on
the election of Directors. Pursuant to a Stockholders Agreement, dated as of
March 4, 1998 among TCI, the Company and certain holders of Class B Common Stock
(i) such Class B stockholders agreed to vote their shares to elect two Class B
Directors nominated by TCI, and (ii) TCI agreed to vote its shares with respect
to the election of Class A directors, in direct proportion to the votes of the
Company's stockholders that are not affiliates of TCI or a Class B stockholder.
3
<PAGE>
All proxies received by the Board of Directors from holders of Class A
Common Stock and Class B Common Stock will be voted for the election of the
respective directors hereinafter shown as the nominees of each such respective
class of Common Stock, if no direction to the contrary is given. In the event
that any nominee is unable or declines to serve, the proxy solicited herewith
may be voted for the election of another person in his or her stead. The Board
of Directors knows of no reason to anticipate that this will occur. Abstentions
from voting and broker non-votes (that is, shares held for customers of a broker
but not voted because of a lack of instructions from the broker's customers)
will have no effect on the outcome of the election of directors.
The following table sets forth information at April 1, 1998 as to the
nominees for election as directors of the Company.
NOMINEES FOR ELECTION BY HOLDERS OF CLASS A COMMON STOCK
<TABLE>
<CAPTION>
DIRECTOR OF THE
COMPANY OR CSC
PRINCIPAL OCCUPATION AND HOLDINGS, INC.
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY CONTINUOUSLY SINCE
- - ------------------------------------------- --- ------------------------------------------- ---------------------
<S> <C> <C> <C>
Charles D. Ferris.......................... 64 Director, Member, Mintz, Levin, Cohn, 1985
Ferris, Glovsky & Popeo, P.C., Attorneys
Richard H. Hochman(1)(2)(3)................ 52 Director, Managing Partner of Regent 1986
Capital Partners, L.P.
Victor Oristano(1)(2)(4)................... 81 Director, Chairman of Alda Limited Partners 1985
Vincent Tese(4)............................ 55 Director; Director of The Bear Stearns 1996
Companies, Inc.
</TABLE>
NOMINEES FOR ELECTION BY HOLDERS OF CLASS B COMMON STOCK
<TABLE>
<S> <C> <C> <C>
Charles F. Dolan........................... 71 Chairman and Director 1985
James L. Dolan(3).......................... 42 Chief Executive Officer and Director 1991
William J. Bell(3)......................... 58 Vice Chairman and Director 1985
Marc A. Lustgarten(3)...................... 51 Vice Chairman and Director 1985
Robert S. Lemle(3)......................... 45 Executive Vice President, General Counsel, 1988
Secretary and Director
Sheila A. Mahony........................... 56 Senior Vice President and Director 1988
Patrick F. Dolan........................... 47 Director and Vice President of News 1991
Thomas C. Dolan............................ 45 Director and Senior Vice President and 1998
Chief Information Officer
John Tatta(2)(3)........................... 78 Chairman of the Executive Committee and 1985
Director
John C. Malone(3)(4)....................... 57 Director; Chairman of the Board of 1998
Directors of Tele-Communications, Inc.
Leo J. Hindery, Jr.(4)..................... 50 Director; President and Chief Executive 1998
Officer of Tele-Communications, Inc.
</TABLE>
- - ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Special Committee
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the directors and executive officers of the
Company as of April 1, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---------------------------------------------------- ----- ----------------------------------------------------
<S> <C> <C>
Charles F. Dolan.................................... 71 Chairman and Director
James L. Dolan...................................... 42 Chief Executive Officer and Director
William J. Bell..................................... 58 Vice Chairman and Director
Marc A. Lustgarten.................................. 51 Vice Chairman and Director
Robert S. Lemle..................................... 45 Executive Vice President, General Counsel, Secretary
and Director
Andrew B. Rosengard................................. 40 Executive Vice President, Financial Planning and
Controller
Thomas C. Dolan..................................... 45 Senior Vice President and Chief Information Officer
and Director
Margaret Albergo.................................... 44 Senior Vice President, Planning and Performance
Joseph W. Cece...................................... 45 Senior Vice President, Strategic Planning
Sheila A. Mahony.................................... 56 Senior Vice President and Director
Barry J. O'Leary.................................... 54 Senior Vice President, Finance and Treasurer
Patrick F. Dolan.................................... 47 Vice President of News and Director
John Tatta.......................................... 78 Director
Charles D. Ferris................................... 64 Director
Richard H. Hochman.................................. 52 Director
Victor Oristano..................................... 81 Director
Vincent Tese........................................ 55 Director
John C. Malone...................................... 57 Director
Leo J. Hindery, Jr. ................................ 50 Director
</TABLE>
All directors hold office until the annual meeting of stockholders of the
Company next following their election and until their successors are elected and
qualified. All executive officers are elected to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
their successors have been elected and qualified.
Information with respect to the business experience and affiliations of the
directors and executive officers of the Company is set forth below. As used
below, positions with the Company refer to, for periods prior to March 4, 1998,
positions with the Company's subsidiary, CSC Holdings, Inc. ("CSC Holdings"),
and for periods from and after March 4, 1998, positions with both the Company
and CSC Holdings.
Charles F. Dolan--Chairman and Director of the Company since 1985. Chief
Executive Officer of the Company from 1985 to October 1995. Founded and acted as
the General Partner of the Company's predecessor from 1973 until 1985.
Established Manhattan Cable Television in 1961 and Home Box Office in 1971.
Charles F. Dolan is the father of James L. Dolan, Patrick F. Dolan and Thomas C.
Dolan.
James L. Dolan--Chief Executive Officer of the Company since October 1995
and Director of the Company since 1991. Chief Executive Officer of Rainbow
Programming Holdings, Inc., a subsidiary of the Company, from September 1992 to
October 1995. Vice President of the Company from 1987 to September 1992. James
L. Dolan is the son of Charles F. Dolan and the brother of Patrick F. Dolan and
Thomas C. Dolan.
William J. Bell--Vice Chairman and Director of the Company since 1985.
Joined the Company's predecessor in 1979. Mr. Bell is a member of the Board of
Governors of the American Stock Exchange.
5
<PAGE>
Marc A. Lustgarten--Director of the Company since 1985. Vice Chairman of the
Company since 1989. Executive Vice President of the Company from 1985 to 1989.
Robert S. Lemle--Director of the Company since 1988. Executive Vice
President, General Counsel and Secretary of the Company since February 1994.
Senior Vice President, General Counsel and Secretary of the Company from 1986 to
February 1994 .
Andrew B. Rosengard--Executive Vice President, Financial Planning and
Controller of the Company since November 1997. Senior Vice President and
Controller of the Company from February 1996 to November 1997. Senior Vice
President, Finance for Rainbow Programming Holdings, Inc., a subsidiary of the
Company, from 1990 to February 1996.
Margaret Albergo--Senior Vice President, Planning and Performance of the
Company since October 1996. Senior Vice President, Operations of Rainbow
Programming Holdings, Inc., a subsidiary of the Company from August 1995 to
October 1996. Vice President, Corporate Development of Rainbow Programming
Holdings, Inc. from 1993 until August 1995. Director of Operations and
Administration of News 12 Long Island from 1991 to 1993.
Joseph W. Cece--Senior Vice President, Strategic Planning of the Company
since February 1996. President and Chief Operating Officer of Cablevision
Lightpath, Inc., a subsidiary of the Company, from January 1994 to February
1996. Vice President, New Business Development of the Company from September
1993 to January 1994. President and Publisher of T.V. Guide from October 1988 to
August 1993.
Thomas C. Dolan--Director of the Company since January 12, 1998. Senior Vice
President and Chief Information Officer of the Company since February 1996. Vice
President and Chief Information Officer of the Company from July 1994 to
February 1996. General Manager of the Company's East End Long Island cable
system from November 1991 through July 1994. Thomas C. Dolan is the son of
Charles F. Dolan and the brother of Patrick F. Dolan and James L. Dolan.
Sheila A. Mahony--Director of the Company since 1988. Senior Vice President
of the Company since June 1995. Vice President of Government Relations and
Public Affairs of the Company and its predecessor from 1980 to June 1995.
Barry J. O'Leary--Senior Vice President, Finance of the Company since 1986.
Vice President of the Company from 1985 to 1986 and Treasurer of the Company
since December 1985. Prior to joining the Company's predecessor in 1984, Mr.
O'Leary spent sixteen years with Toronto-Dominion Bank.
Patrick F. Dolan--Director of the Company since August 1991. Vice President
of News of the Company since September 1995. News Director of News 12 Long
Island, a subsidiary of the Company, from December 1991 to September 1995.
Patrick F. Dolan is the son of Charles F. Dolan and the brother of James L.
Dolan and Thomas C. Dolan.
John Tatta--Director of the Company since 1985. Consultant to the Company
since January 1992. President of the Company from 1985 through December 1991.
Chief Operating Officer of the Company from 1985 to 1989.
Charles D. Ferris--Director of the Company since 1985. Member of the law
firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. since 1981. Chairman
of the FCC from October 1977 until April 1981.
Richard H. Hochman--Director of the Company since 1986. Managing Partner of
Regent Capital Partners, L.P. since April 1995. Managing Director of PaineWebber
Incorporated from 1990 to April 1995. Mr. Hochman is also a director of Talton
Holding, Inc. and R.A.B. Enterprises, Inc.
Victor Oristano--Director of the Company since 1985. Chairman of Alda
Limited Partners, a holding company which has built and operated cable
television systems in Connecticut, Florida, New Jersey,
6
<PAGE>
Pennsylvania and England since 1966. Mr. Oristano is also a member of the Board
of Directors of People's Choice TV, Corp.
Vincent Tese--Director of the Company since July 1996. Director of The Bear
Stearns Companies, Inc. since December 1994. Chairman of Wireless Cable
International, Inc. since July 1995. Chairman of Cross Country Wireless from
December 1994 to July 1995. Mr. Tese served as Chairman and Chief Executive
Officer of the New York State Urban Development Corporation from 1985 to 1987,
and as Director of Economic Development for New York State from 1987 to December
1994. Mr. Tese also serves on the Board of Directors of Quintel Entertainment,
Inc., Custodial Trust Company and Bowne & Co., Inc.
John C. Malone--Director of the Company since March 4, 1998. Director of
Tele-Communications, Inc. since June 1994. Chairman of the Board of
Tele-Communications, Inc. since November 1996. Chief Executive Officer of
Tele-Communications, Inc. since January 1994. President of Tele-Communications,
Inc. from January 1994 through March 1997. Chief Executive Officer and President
of TCI Communications, Inc. from 1973 to October 1994. Chairman of the Board of
Directors of Tele-Communications International, Inc. since May 1995. Director of
TCI Pacific Communications, Inc. since July 1996. Director of BET Holdings,
Inc., The Bank of New York and TCI Satellite Entertainment, Inc. Director of TCI
Communications, Inc. since 1973.
Leo J. Hindery, Jr.--Director of the Company since March 4, 1998. Director
of Tele-Communications, Inc. since May 1997. President and Chief Operating
Officer of Tele-Communications, Inc. since March 1997. President, Chief
Executive Officer and Director of TCI Communications, Inc. since March 1997.
Founder, Managing General Partner and Chief Executive Officer of InterMedia
Partners and its affiliated entities since 1988 and a Director and Chairman of
the Board of TCI Music, Inc. and director of TCI Pacific Communications, Inc.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth (i) the number and percent of shares of Class
A and Class B Common Stock owned of record and beneficially as of March 31, 1998
by each director and each executive officer of the Company named in the summary
compensation table below and (ii) the name, address and the number and percent
of shares of Class A and Class B Common Stock owned of record and beneficially
by persons beneficially owning more than five (5%) percent of any class.
<TABLE>
<CAPTION>
COMBINED VOTING
CLASS A CLASS B POWER OF
COMMON COMMON CLASS A & CLASS B CLASS A & CLASS B
STOCK STOCK COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED(1) OWNED(1)(2) OWNED(1)(2) OWNED(1)(2)
- - ------------------------------ ---------------------- ----------------------- ---------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan(3)(4)(5)
One Media Crossways
Woodbury, NY 11797............ 797,616 1.5% 12,198,562 55.0% 12,996,178 17.4% 44.7%
Charles F. Dolan
1997 Grantor Retained
Annuity Trust(5).............. -- -- 2,267,012 3.0% 2,267,012 3.0% 8.3%
The Capital Group
Companies, Inc.(6)
Capital Research and
Management Company(6)
Capital Guardian Trust
Company(6)
333 South Hope Street
Los Angeles, CA 90071......... 4,812,820 9.1% -- -- 4,812,820 6.4% 1.8%
Gabelli Funds, Inc.(7)
GAMCO Investors, Inc.(7)
One Corporate Center
Rye, NY 10580................. 7,982,850 15.2% -- -- 7,982,850 10.7% 2.9%
Harris Associates L.P.(8)
Harris Associates Inc.(8)
Two Lasalle Street, Suite 500
Chicago, IL 60602-3790........ 2,899,000 `5.5% -- -- 2,899,000 3.9% 1.1%
Tele-Communications, Inc.(9)
Country Cable III, Inc.(9)
TCI CSC II, Inc.(9)
5619 DTC Parkway
Englewood, CO 80111........... 24,991,286 47.4% -- -- 24,991,286 33.4% 9.1%
John Tatta(10)................ 40,000 * -- -- 40,000 * *
William J. Bell(11)(12)....... 151,530 * -- -- 151,530 * *
Robert S. Lemle(11)(12)....... 133,780 * -- -- 133,780 * *
Marc Lustgarten(11)(12)....... 154,624 * -- -- 154,624 * *
Sheila A. Mahony(12).......... 39,758 * -- -- 39,758 * *
Charles D. Ferris(13)......... 19,000 * -- -- 19,000 * *
Richard H. Hochman(13)........ 21,188 * -- -- 21,188 * *
Victor Oristano(13)(14)....... 19,000 * -- -- 19,000 * *
James L. Dolan
(12)(15)(23)(24).............. 38,500 * 1,490,482 6.7% 1,528,982 2.0% 5.4%
Patrick F. Dolan
(12)(16)(21)(25).............. 11,750 * 1,634,820 7.4% 1,646,570 2.2% 6.0%
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
COMBINED VOTING
CLASS A CLASS B POWER OF
COMMON COMMON CLASS A & CLASS B CLASS A & CLASS B
STOCK STOCK COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED(1) OWNED(1)(2) OWNED(1)(2) OWNED(1)(2)
- - ------------------------------ ---------------------- ----------------------- ---------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas C. Dolan
(12)(17)(22)(26)(27).......... 11,800 * 1,287,372 1.7% 1,299,172 1.7% 4.7%
Vincent Tese(13).............. 6,000 * -- -- 6,000 * *
Leo J. Hindery, Jr.(9)........ -- * -- -- -- * *
John C. Malone(9)............. -- * -- -- -- * *
All executive officers
and directors as a group
(19
persons)(3)(4)(5)(9)(10)(11)
(12)(13)(14)(15)(16)(17)(21)
(22)(23)(24)(25)(26)(27)...... 1,526,202 2.9% 16,611,236 74.8% 18,137,438 24.2% 61.0%
Paul J. Dolan(18)(23)(24)
(25)(26)(27)
100 Corporate Place Suite 150
Chardon, OH 44024............. 3,700 * 3,748,104 16.9% 3,750,304 5.0% 13.6%
Kathleen M. Dolan(18)(25)(28)
One Media Crossways
Woodbury, NY 11797............ 272,000 * 1,433,482 6.5% 1,469,482 2.1% 5.3%
Mary S. Dolan(19)(21)
300 So. Riverside Plaza
Suite 1480
Chicago, IL 60606............. 3,000 * 1,194,802 5.4% 1,196,302 1.6% 4.4%
Deborah A. Dolan(19)(25)(28)
One Media Crossways
Woodbury, NY 11797............ 272,000 * 1,633,482 7.4% 1,769,482 2.4% 6.0%
Matthew J. Dolan(20)(22)
231 Main Street
Court House Annex
Chardon, OH 44024............. 3,000 * 1,194,802 5.4% 1,196,302 1.6% 4.4%
Marianne E.
Weber(20)(26)(27)(28)
One Media Crossways
Woodbury, NY 11797............ 272,000 * 1,269,710 5.7% 1,405,710 1.9% 4.7%
John MacPherson(29)
21 Old Town Lane
Halesite, NY 10019............ 76,000 * 3,780,148 17.0% 3,823,148 5.1% 13.8%
</TABLE>
- - ------------------------
(1) Beneficial ownership of a security consists of sole or shared voting power
(including the power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the disposition)
with respect to the security through any contract, arrangement,
understanding, relationship or otherwise. Unless indicated, beneficial
ownership disclosed consists of sole voting and investment power. Beneficial
ownership of Class A Common Stock is exclusive of the shares of Class A
Common Stock that are issuable upon conversion of shares of Class B Common
Stock.
(2) Class B Common Stock is convertible into Class A Common Stock at the option
of the holder on a share for share basis. The holder of one share of Class A
Common Stock is entitled to one vote at a meeting of stockholders of the
Company, and the holder of one share of Class B Common Stock is entitled to
ten votes at a meeting of stockholders of the Company except in the election
of directors.
9
<PAGE>
(3) Includes 369,660 shares of Class A Common Stock owned by the Dolan Family
Foundation, a New York not-for-profit corporation, the sole members of which
are Charles Dolan and his wife, Helen A. Dolan. Neither Mr. Dolan nor Mrs.
Dolan has an economic interest in such shares, but Mr. Dolan and his wife
share the ultimate power to vote and dispose of such shares. Under certain
rules of the Securities and Exchange Commission, so long as Mr. Dolan and
his wife retain such powers, each of Mr. Dolan and his wife is deemed to
have beneficial ownership thereof. Also includes 10,000 shares of Class A
Common Stock owned directly by Mrs. Dolan. The number of shares held as
indicated includes 135,676 shares resulting from the assumed conversion of
183,000 shares of 8.5% Series I Convertible Exchangeable Preferred Stock
("Series I Preferred Stock") (0.7414 shares of Common Stock for each share
of Series I Preferred Stock).
(4) Does not include an aggregate 9,917,856 shares of Class B Common Stock held
by trusts for the benefit of Dolan family interests (the "Dolan Family
Trusts"). Mr. Dolan disclaims beneficial ownership of the shares owned by
the Dolan Family Trusts, in that he has neither voting nor investment power
with respect to such shares.
(5) Includes 2,267,012 shares of Class B Common Stock by the Charles F. Dolan
1997 Grantor Retained Annuity Trust (the "GRAT"). The GRAT was established
on April 30, 1997 by Charles F. Dolan for estate planning purposes. The
GRAT, through its trustees, has the sole power to vote and dispose of such
shares. The two co-trustees of the trust are Charles F. Dolan and his wife,
Mrs. Dolan. For three years, the GRAT will pay to Charles F. Dolan, and in
the event of his death, to Mrs. Dolan, a certain percentage of the fair
market value of the property initially contributed to the GRAT (the
"Annuity"). If Mr. Dolan is living at the expiration of the term of the
GRAT, the remainder will pass into another trust for the benefit of Mrs.
Dolan and the descendants of Charles F. Dolan. If Mr. Dolan is not living at
the expiration of the term of the GRAT, the then principal of the GRAT will
pass to his estate or to Mrs. Dolan.
(6) The Company has been informed that certain operating subsidiaries of The
Capital Group Companies, Inc. exercised investment discretion over various
institutional accounts which held as of March 31, 1998, 4,812,820 shares of
Class A Common Stock. Capital Research and Management Company, a registered
investment adviser has investment discretion with respect to 3,003,460 of
such shares. The number of shares held as indicated includes 877,820 shares
resulting from the assumed conversion of 1,184,000 shares of Series I
Preferred Stock.
(7) The Company has been informed that certain operating subsidiaries of Gabelli
Funds, Inc. ("GFI") beneficially held, or exercise investment discretion
over various institutional accounts which beneficially held as of March 27,
1998, an aggregate of 7,692,060 shares of Class A Common Stock, including
approximately 32,572 shares of Class A Common Stock that may be obtained
upon conversion of shares of Series I Preferred Stock held by such entities
on such date. The Company has been informed that GAMCO Investors, Inc., an
investment advisor registered under the Investment Advisors Act of 1940 and
a wholly-owned subsidiary of GFI, held sole dispositive power over 6,177,402
of such shares and sole voting power over 5,988,802 of such shares.
(8) The Company has been informed that Harris Associates L.P. and Harris
Associates, Inc. have shared voting power over 2,899,000 shares of Class A
Common Stock, sole dispositive power over 58,400 shares of Class A Common
Stock, and shared dispositive power over 2,840,600 shares of Class A Common
Stock.
(9) The Company has been informed that TCI beneficially owned, through
subsidiaries, an aggregate of 24,991,286 shares of Class A Common Stock on
March 2 ,1998. These shares include 8,959,012 shares held directly by
Country Cable III, Inc. and 13,397,096 shares held directly by TCI CSC II,
Inc. Each of Country Cable III, Inc. and TCI CSC II, Inc. is an indirect
wholly owned subsidiary of TCI. TCI or its subsidiaries have sole voting and
investment power with respect to all such shares. TCI is a party to a
Stockholders Agreement with the Company and holders of Class B Common Stock,
which agreement, among other things, requires the Class B Stockholders to
vote to elect for director, up to two person nominated by TCI, and requires
TCI to vote its shares of Class A Common Stock in proportion to the vote of
the other, non-affiliated Class A Stockholders, on certain matters. Each of
Messrs. John Malone and Leo Hindery, each a Director and Nominee for
Director of the Company, is an officer and a director of TCI. Each of
Messrs. Malone and Hindery disclaim any beneficial ownership interest in
these shares.
(10) Does not include 40,000 shares of Class A Common Stock held by the Tatta
Family Group. The Tatta Family Group is a New York limited partnership, the
general partners of which are six trusts for the benefit of Tatta family
interests (the co-trustees of each of which are Stephen A. Carb, Esq. and
either Deborah T. DeCabia or Lisa T. Crowley, each a daughter of John Tatta
who has been a director since 1985 and was the President of CSC Holdings
from 1985 until 1991), and the limited partners of which are trusts for the
benefit of Mr. Tatta and Tatta family interests (the trustee of each of
which is Stephen A. Carb, Esq.). Mr. Tatta, who, as of March 31, 1998, was
the holder of 40,000 shares of Class A Common Stock, disclaims beneficial
ownership of the stock beneficially owned by trusts for the benefit of his
family, in that he has neither voting nor investment power with respect to
such shares.
(11) Includes shares owned by children of the individuals listed, which shares
represent less than 1% of the outstanding Class A Common Stock.
(12) Includes shares of Class A Common Stock issuable upon the exercise of
options granted pursuant to CSC Holdings' First Amended and Restated 1996
Employee Stock Plan or its predecessor plans which on April 1, 1998 were
unexercised but were exercisable within a period of 60 days from that date.
These amounts include the following number of shares for the following
10
<PAGE>
individuals: Mr. James Dolan 36,500; Mr. Bell 150,932; Mr. Lemle 133,332;
Mr. Lustgarten 152,598; Ms. Mahony 39,466; Mr. Patrick Dolan 7,950 and Mr.
Thomas Dolan 9,800; all executive officers and directors as a group 688,102.
(13) Includes shares of Class A Common Stock issuable upon the exercise of
options granted pursuant to CSC Holdings' 1996 Stock Option Plan for
Non-Employee Directors, which on April 1, 1998 were unexercised but were
exercisable within a period of 60 days from that date. These amounts include
the following number of shares for the following individuals: Mr. Ferris
17,000; Mr. Hochman 17,000; Mr. Oristano 17,000; Mr. Tese 6,000.
(14) The shares listed are owned by the Oristano Foundation, a charitable trust
the trustees of which are members of the Oristano family.
(15) Includes 57,000 shares of Class B Common Stock owned by trusts for minor
children as to which James L. Dolan disclaims beneficial ownership. Also
includes 1,433,482 shares of Class B Common Stock held by two family trusts
of which James L. Dolan is a contingent beneficiary and a co-trustee, as to
which James L. Dolan disclaims beneficial ownership, which shares are also
described in footnotes (23) and (24).
(16) Includes 19,000 shares of Class B Common Stock owned by trust for a minor
child as to which Patrick F. Dolan disclaims beneficial ownership. Also
includes 1,615,820 shares of Class B Common Stock held by two family trusts
of which Patrick F. Dolan is a contingent beneficiary and a co-trustee, as
to which Patrick F. Dolan disclaims beneficial ownership, which shares are
also described in footnotes (21) and (25).
(17) Includes 663,686 shares of Class B Common Stock held by three family trusts
of which Thomas C. Dolan is a contingent beneficiary and a co-trustee, as to
which Thomas C. Dolan disclaims beneficial ownership, which shares are also
described in footnotes (21) (25) and (26).
(18) Includes 606,232 shares of Class B Common Stock held by the DC Kathleen
Trust, the co-trustees of which are Kathleen Dolan and Paul Dolan.
(19) Includes 606,232 shares of Class B Common Stock held by the DC Deborah
Trust, the co-trustees of which are Deborah Dolan and Mary Dolan.
(20) Includes 588,570 shares of Class B Common Stock held by the DC Marianne
Trust, the co-trustees of which are Marianne E. Weber and Matthew Dolan.
(21) Includes 588,570 shares of Class B Common Stock held by the DC Patrick
Trust, the co-trustees of which are Patrick Dolan and Mary Dolan.
(22) Includes 606,232 shares of Class B Common Stock held by the DC Thomas
Trust, the co-trustees of which are Thomas Dolan and Matthew Dolan.
(23) Includes 606,232 shares of Class B Common Stock held by the DC James Trust,
the co-trustees of which are James Dolan and Paul Dolan.
(24) Includes 827,250 shares of Class B Common Stock held by the Dolan
Descendants Trust, the co-trustees of which are James Dolan, Kathleen Dolan
and Paul Dolan.
(25) Includes 1,027,250 shares of Class B Common Stock held by the Dolan Progeny
Trust, the co-trustees of which are Patrick Dolan, Deborah Dolan and Paul
Dolan.
(26) Includes 595,250 shares of Class B Common Stock held by the Dolan
Grandchildren Trust, the co-trustees of which are Thomas
Dolan, Marianne E. Weber and Paul Dolan.
(27) Includes 85,890 shares of Class B Common Stock held by the Dolan Spouse
Trust, the co-trustees of which are Thomas Dolan, Marianne E. Weber and Paul
Dolan.
(28) Includes 270,000 shares of Class A Common Stock owned by the Dolan
Children's Foundation, a New York not-for-profit corporation, the sole
members of which are Marianne Dolan Weber, Kathleen M. Dolan and Deborah
Dolan Sweeney. Each of which do not have an economic interest in such
shares, but each share the ultimate power to vote and dispose of such
shares.
(29) Includes an aggregate of 3,780,148 shares of Class B Common Stock held by
various trusts for the benefit of family members of Charles F. Dolan's
family for which Mr. John MacPherson serves as Trustee and, in such
capacity, exercises sole voting power and dispositive power with respect to
such shares.
------------------------
The Dolan family interests (other than Charles Dolan) have agreed with the
Company that in the case of any sale or disposition by Dolan family interests
(other than Charles Dolan) of shares of Class B Common Stock to a holder other
than Charles Dolan or Dolan family interests, the Class B Common
11
<PAGE>
Stock will be converted on the basis of one share of Class A Common Stock for
each share of Class B Common Stock.
Charles Dolan and trusts for the benefit of members of his family, by virtue
of their ownership of Class B Common Stock, are able collectively to control
stockholder decisions on matters in which holders of Class A and Class B Common
Stock vote together as a class, and to elect up to 75% of the Company's Board of
Directors.
REGISTRATION RIGHTS. The Company has granted to each of Charles Dolan,
certain Dolan family interests and the Dolan Family Foundation the right to
require the Company to register, at any time prior to the death of both Mr.
Dolan and his wife, the shares of Class A Common Stock held by them provided
that the shares requested to be registered shall have an aggregate market value
of at least $3,000,000. There is no limitation on the number or frequency of the
registrations that such parties can demand pursuant to the preceding sentence.
After the death of both Mr. Dolan and his wife, such parties will be permitted
one additional registration. In addition, the Company has granted such parties
"piggyback" rights pursuant to which they may require the Company to register
their holdings of Class A Common Stock on any registration statement under the
Act with respect to an offering by the Company or any security holder thereof
(other than a registration statement on Form S-8 and S-4 or any successor form
thereto).
The Company has granted Mr. Tatta and certain Tatta family interests the
right to require the Company, on any date, with the consent of Charles Dolan,
his widow or the representative of the estate of Mr. Dolan or his wife, to
register the shares of Class A Common Stock held by them provided that the
shares requested to be registered have an aggregate market value of at least
$3,000,000. After the death of both Charles Dolan and his wife, such parties
will be permitted to demand only one registration. Such parties have also been
granted piggyback registration rights identical to those described above,
provided that in certain instances they receive written consent of Mr. Dolan,
his widow or the representative of the estate of Mr. Dolan or his wife.
Pursuant to the Stockholders Agreement, dated as of March 4, 1998, among the
Company, TCI and certain holders of Class B Common Stock, the Company granted to
TCI certain registration rights with respect to shares of Class A Common Stock
held by TCI or certain of its affiliates. TCI is permitted to request that the
Company file a registration statement registering not less than 2,000,000
shares, on a demand basis, not more than once each year. In addition, TCI was
granted "piggy-back" registration rights on any registration of at least
$100,000,000 of shares of Class A Common Stock (based on the market value
thereof on the date of filing) by the Company, subject to certain limitations.
The demand and piggyback registration rights described above are subject to
certain limitations which are intended to prevent undue interference with the
Company's ability to distribute securities.
12
<PAGE>
CONFLICTS OF INTEREST
Charles Dolan and certain other principal officers of the Company and
various affiliates of the Company are subject to certain conflicts of interest.
These conflicts include, but are not limited to, the following:
BUSINESS OPPORTUNITIES. Charles Dolan may from time to time be presented
with business opportunities which would be suitable for the Company and
affiliates of the Company in which Mr. Dolan and his family have varying
interests. Mr. Dolan has agreed that he will own and operate cable television
systems only through the Company, except for cable television systems which the
Company elects not to acquire under its right of first refusal. Mr. Dolan will
offer to the Company the opportunity to acquire or invest in any cable
television system or franchise therefor or interest therein that is offered or
available to him or his family interests. If a majority of the members of the
Board of Directors, who are not employees of the Company or any of its
affiliates (the "Independent Directors") rejects such offer, Mr. Dolan or such
family interests may acquire or invest in such cable television system or
franchise therefor or interest therein individually or with others on terms no
more favorable to Mr. Dolan than those offered to the Company. Mr. Dolan's
interests in companies other than the Company, may conflict with his interest in
the Company.
Except for the limitations on the ownership and operation of cable
television systems as described above, Mr. Dolan is not subject to any
contractual limitations with respect to his other business activities and may
engage in programming and other businesses related to cable television. A
significant portion of Mr. Dolan's time may be spent, from time to time, in the
management of such affiliates. Mr. Dolan will devote as much of his time to the
business of the Company as is reasonably required to fulfill the duties of his
office. During 1997, substantially all of Mr. Dolan's professional time was
devoted to the business of the Company.
In the event that Charles Dolan or any Dolan family interest decides to
offer (other than to any Dolan family interest or an entity affiliated with Mr.
Dolan) for sale for his, her or its account any of his, her or its ownership
interest in any cable television system or franchise therefor, he, she or it
will (subject to the rights of third parties existing at such time) offer such
interest to the Company. Mr. Dolan or such Dolan family interest may elect to
require that, if the Company accepts such offer, up to one-half of the
consideration for such interest would consist of shares of Class B Common Stock,
which shares will be valued at the prevailing market price of the Class A Common
Stock and the remainder would consist of shares of Class A Common Stock and/or
cash. If a majority of the Independent Directors rejects such offer, Mr. Dolan
or such Dolan family interest may sell such interest to third parties on terms
no more favorable to such third parties than those offered to the Company.
The Company's by-laws provide that the Company shall make any investment in
or advance, other than any investment or advance that constitutes compensation
for services rendered to the Company, to Charles Dolan and affiliates of Charles
Dolan (as defined therein) only if such investment or advance is approved by a
Special Committee of the Board of Directors comprised of two non-employee
directors and, subject to the provisions of the TCI Stockholders Agreement, two
directors nominated by TCI.
As described under "Compensation Committee Interlocks and Insider
Participation" below, (i) Atlantic Publishing holds an interest in a company
that publishes a weekly cable television guide that is sold to the Company's
subscribers, (ii) the Company has entered into agreement with, and contributed
funds to, a joint venture formed with a relative of Charles Dolan for the
purpose of operating a personal communications service business and (iii) TCI
has certain contractual rights under the Stockholders Agreement, including right
of consultation concerning certain transactions, including transfers of stock by
Class B stockholders and transfers of assets by the Company.
13
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
comprised of Richard H. Hochman, Victor Oristano and John Tatta. Mr. Tatta, the
former President of CSC Holdings, is not currently an employee of the Company
but is a consultant to the Company (see "Board of Directors-- Compensation of
Directors", above). Messrs. Hochman and Oristano are not employees of the
Company. The role of the Compensation Committee involves overseeing and
directing the development of executive compensation policies and programs which
are consistent with, explicitly linked to, and supportive of the strategic
objectives of growing the Company's businesses and maximizing stockholder value.
The Committee's specific responsibilities include determining the appropriate
levels of compensation for members of the Company's senior management, including
salaries, bonuses, stock and option rights, performance awards and employee
benefits. The Senior Officer Compensation Subcommittee of the Compensation
Committee, consisting of Messrs. Hochman and Oristano, has exclusive authority
and responsibility for, and with respect to, any grants or awards under the
Company's stock plans and Long-Term Incentive Plan to any executive officer of
the Company and to the Company's other most senior employees. The Company
believes that a strong link should exist between executive compensation and
management's ability to maximize stockholder value. This belief is adhered to by
developing both short-term and long-term incentive compensation programs that
provide competitive compensation and reflect Company performance.
COMPENSATION PHILOSOPHY
The four fundamental principles to which the Committee and the Subcommittee
adhere in discharging their responsibilities are as follows: First, the majority
of the annual and long-term compensation for the Company's senior executive
officers should be at risk, with actual compensation levels correlating with the
Company's actual performance in certain key areas determined by the Committee.
Second, over time, incentive compensation of the Company's senior executive
officers should focus more heavily on long-term rather than short-term
accomplishments and results. Third, equity-based compensation and equity
ownership requirements should be used on an increasing basis so as to provide
executive officers with clear and direct links to the stockholders' interests.
Fourth, the overall executive compensation program should be competitive,
equitable and structured so as to ensure the Company's ability to attract,
retain, motivate and reward the talented executives who are essential to the
Company's continuing success. Total compensation, rather than individual
compensation elements, is the focus of the Company's intent to provide
competitive compensation opportunities.
The Committee believes that continued revenue growth as well as continued
improvements in cash flow should be recognized in considering compensation
levels along with improvements in overall effectiveness, productivity, return on
investment and success of strategic alliances and business acquisitions and
combinations.
The Committee meets with an outside compensation consultant at least
annually to evaluate how well the Company's executive compensation program
adheres to this philosophy and to evaluate the level and mix of salary, annual
bonuses and long-term incentives.
COMPENSATION ELEMENTS
The Company's compensation program for executives consists of four principal
elements, each of which is vitally important in meeting the Company's need to
attract, retain, motivate and reward highly-qualified executives.
14
<PAGE>
The four principal compensation elements are:
BASE SALARIES
Base salaries for executives are set at levels which are intended to reflect
the competitive marketplace for companies that are of comparable size and
complexity and would be considered competitors of the Company in attracting and
retaining quality executives. The salaries of the named officers are reviewed
and approved by the Compensation Committee based on its assessment of each
executive's experience and performance and a comparison to salaries of peers in
other companies. The employment agreements for Messrs. Charles Dolan, Bell,
Lustgarten and Lemle set minimum salary levels for such officers.
ANNUAL INCENTIVES
Annual incentive awards have been made to selected executives pursuant to
the Management Performance Incentive Plan (MPIP) on the basis of the Company,
business unit and individual performance relative to budget in such areas as
revenue, cash flow, operating income, operating margin, customer satisfaction
and the like. The Company intends to continue providing annual incentives in
concert with other compensation elements in order to maintain a competitive
total compensation program for its executives. Stockholders are being asked to
approve the Executive Performance Incentive Plan (EPIP). The EPIP is predicated
on the same principles as the MPIP and will conform to the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") to
ensure the tax deductibility of annual incentive or bonus payments made to
senior executives of the Company. The Committee reviews and approves all
performance measures and goals established under the MPIP and reviews and
approves all annual incentive payments to executives covered under the MPIP. The
Senior Officer Compensation Subcommittee reviews and approves all performance
measures and goals established under the EPIP and reviews and approves all
annual incentive payments to executives covered under the EPIP. The bonuses
awarded to Messrs. Charles Dolan, William Bell, Marc Lustgarten, Robert Lemle
and Andrew Rosengard for 1997 reflect the Company's performance in exceeding
virtually all of its plans and budgets for the year, completing several
transactions that greatly enhanced the Company's asset values, and achieving
significant improvement in the Company's stock price and stockholder returns.
LONG-TERM INCENTIVES
The Company has granted stock options, restricted stock and stock
appreciation rights to executives under several stock option plans which were in
place prior to 1996. Stock options, restricted stock and stock appreciation
rights have been, and will continue to be, granted under the Company's Employee
Stock Plan. Stock option and SAR awards granted during 1997 to the named
executive officers are described in the Option/SAR Grants Table below. In
addition, the Company has granted Performance Awards to selected executives
under the Company's Long-Term Incentive Plan (LTIP) which was approved by
stockholders last year. Under the LTIP, the Company makes contingent cash
performance awards to selected executives to be earned on the basis of long-term
performance relative to pre-established goals. Stock options and other long-term
incentives are intended both to join the interests of executives with the
interests of stockholders by facilitating the ownership of stock and to provide
competitive long-term incentive opportunities to executives. Among the
performance measures that the Subcommittee may use to govern the earnout of
contingent performance awards are earnings per share, total return to
stockholders, return on investment, operating income or net income, costs,
results relative to budget, cash flow, cash flow margin, and growth in the
Company's market value.
Charles F. Dolan does not participate in the Employee Stock Plan or the
LTIP. James L. Dolan has not participated in the Employee Stock Plan but may in
the future. James L. Dolan has participated in CSC Holdings' prior stock plans
and does participate in the LTIP.
15
<PAGE>
BENEFITS
Benefits offered to executives serve a different purpose than do other
elements of the total compensation program. In general, they provide for
retirement income and serve as a safety net against problems which can arise
from illness, disability or death. Benefits offered to senior executive officers
are basically those offered to other employees of the Company.
EVALUATION PROCEDURE
In determining matters regarding executive officer compensation (other than
the Chief Executive Officer), the Committee reviews with the Chairman, the Chief
Executive Officer, the Vice Chairmen, the Executive Vice Presidents and the
independent compensation consultant the respective areas of authority and
responsibility of the various executive officers and the performance and
contribution of each to the efforts of the Company in meeting its goals.
The Company's independent compensation consultant has confirmed that
compensation paid in 1997 to the named officers is consistent with the Company's
compensation philosophy and objectives.
CEO COMPENSATION
Decisions regarding the compensation of the Chief Executive Officer, James
L. Dolan, are the responsibility of the Senior Officer Compensation Subcommittee
of the Compensation Committee. James L. Dolan's base salary for 1997 was
$550,000. Mr. Dolan was awarded a bonus for 1997 of $2,750,000, which was
significantly greater than his target bonus level. This bonus reflected the
Company's performance in exceeding virtually all of its plans and budgets for
the year, completing several transactions that greatly enhanced the Company's
asset values, and achieving significant improvement in the Company's stock price
and stockholder returns. In evaluating and determining Mr. Dolan's compensation,
the Senior Officer Compensation Subcommittee and its compensation consultant
compared the Company's compensation practices and levels to those of other
companies involved in similar businesses, including but not limited to, the
companies included in the Peer Group Index contained in the Stock Price
Performance Graph. Based on this review, the Subcommittee determined that the
compensation paid to Mr. Dolan for 1997 was appropriate.
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION
Beginning in 1994, the Omnibus Reconciliation Act of 1993 (the "Act") limits
to $1 million the amount that may be deducted by a publicly held corporation for
compensation paid to each of its named executives in a taxable year, unless the
compensation in excess of $1 million is "qualified performance-based
compensation". The Committee and the Company have determined that the Company's
policy is to design its short-term and long-term compensation plans to qualify
for the exemption from the deduction limitations of Section 162(m) of the Code
and to be consistent with providing appropriate compensation to executives.
Stockholder approval of incentive compensation plans and various provisions
thereunder has been sought and obtained, is being sought this year for the
Executive Performance Incentive Plan (referenced above), and will be sought in
the future to continue to qualify performance-based compensation for the
exemption.
MEMBERS OF THE COMPENSATION COMMITTEE
RICHARD H. HOCHMAN VICTOR ORISTANO JOHN TATTA
16
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1997,
1996 and 1995, the cash compensation paid by CSC Holdings, and a summary of
certain other compensation paid or accrued for such years, to Charles F. Dolan,
James L. Dolan and to each of CSC Holdings' and the Company's four other most
highly compensated executive officers who were serving as executive officers at
the end of 1997 (the "named executive officers") for service in all capacities
with CSC Holdings and the Company.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARD COMPENSATION AWARDS ALL OTHER
-------------------------------- OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) SATION($)(1)
- - ------------------------------------------------------ --------- --------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Charles F. Dolan...................................... 1997 1996 525,000 525,000 0 315,962
Chairman and Director 1995 525,000 225,000 0 150,934
516,667 390,000 0 150,796
James L .Dolan........................................ 1997 1996 550,000 2,750,000 0 213,684
Chief Executive Officer and Director 1995 555,206 225,000 0 43,188
360,000 275,000 0 5,425
William J. Bell....................................... 1997 1996 525,000 2,150,000 350,000 0 117,275
Vice Chairman and Director 1995 500,000 330,000 0 100,239
500,000 390,000 94,092
Marc A. Lustgarten.................................... 1997 1996 525,000 2,250,000 360,000 0 64,386
Vice Chairman and Director 1995 525,000 330,000 0 58,635
500,000 390,000 52,866
Robert S. Lemle....................................... 1997 1996 475,000 1,250,000 287,600 0 51,753
Executive Vice President, General Counsel, Secretary 1995 475,000 315,000 15,200 49,999
and Director 425,000 372,000 43,271
Andrew B. Rosengard................................... 1997 1996 348,154 800,000 70,000 0 15,588 0
Executive Vice President, Financial Planning and 1995 278,876 226,250 0 0
Controller 214,389 140,000
</TABLE>
- - ------------------------
(1) For 1997, represents the sum of (i) for each individual, $2,400 contributed
by CSC Holdings on behalf of such individual under CSC Holdings' Money
Purchase Pension Plan (the "Pension Plan"), (ii) for each individual,
$25,200 credited to such individual (other than Mr. James Dolan and Mr.
Rosengard) on the books of CSC Holdings pursuant to the defined contribution
portion of CSC Holdings' Supplemental Benefit Plan (the "Supplemental
Plan"), (iii) for each individual, $2,400 contributed by CSC Holdings on
behalf of such individual as a basic company contribution under CSC
Holdings' 401(k) Plan, (iv) for each individual, the following amounts
contributed by CSC Holdings on behalf of such individual as a matching
contribution under CSC Holdings' 401(k) Plan: Mr. Charles Dolan $1,063, Mr.
James Dolan $952; Mr. Bell $875; Mr. Lustgarten $1,063; Mr. Lemle $792 and
Mr. Rosengard $713, (v) for each individual, the following amounts paid as a
premium on individual life insurance policies purchased by CSC Holdings for
the executive officer to replace coverage under the integrated policy
previously provided by CSC Holdings: Mr. Charles Dolan $164,983; Mr. James
Dolan $39,847; Mr. Bell $86,400; Mr. Lustgarten $33,323; Mr. Lemle $20,961
and Mr. Rosengard $10,075, and (vi) for Mr. Charles Dolan and Mr. James
Dolan, $119,916 and $168,085, respectively, representing the value of
personal use of CSC Holdings' aircraft, determined in accordance with the
Standard Industry Fare Level as promulgated by the Internal Revenue Service.
17
<PAGE>
OPTION/SAR GRANTS TABLE
The following table contains certain information with respect to stock
options and SAR's granted to the named executive officers in 1997 under CSC
Holdings' First Amended and Restated 1996 Employee Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS/SARS STOCK PRICE
GRANTED TO APPRECIATION FOR
EMPLOYEES EXERCISE OR MARKET PRICE OPTION TERM(1)
OPTION/SARS IN FISCAL BASE PRICE ON DATE OF EXPIRATION --------------------
GRANTED(#) YEAR 1997 ($/SHARE) GRANT($) DATE 5%($) 10%($)
------------- ----------------- ------------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan...... -- -- -- -- -- -- --
James L. Dolan........ -- -- -- -- -- -- --
William J. Bell....... 350,000(2)(3) 15.8% 14.25 14.25 04/17/07 3,136,000 7,948,500
Marc A. Lustgarten.... 360,000(2)(3) 16.2% 14.25 14.25 04/17/07 3,225,600 8,175,600
Robert S. Lemle....... 287,600(2)(3) 13.6% 14.25 14.25 04/17/07 2,576,896 6,531,396
Andrew B. Rosengard... 70,000(2)(3) 3.2% 14.25 14.25 04/17/07 627,200 1,589,700
</TABLE>
- - ------------------------
(1) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates set by the SEC, and therefore are not intended to forecast
possible future appreciation of the Company's stock price. In all cases the
appreciation is calculated from the award date to the end of the option
term.
(2) Options and SARs granted on April 17, 1997 under CSC Holdings' Amended and
Restated 1996 Employee Stock Plan and assumed by the Company under the
Company's Employee Stock Plan. Such options and SARs become exercisable in
annual installments of 33 1/3 percent per year, beginning on December 31,
1997 and on each of the first two anniversaries of that date. One half of
the amounts set forth are options and one half are SARs. Options and SARs
may be independently exercised. Vesting of options and SARs may be
accelerated upon a change of control of the Company (see "Employee Contracts
and Severance and Change-In-Control Arrangements" below).
(3) Includes options and SARs granted in connection with the cancellation of
previously granted options and SARs. See, Report on Repricing of
Options/SARs on page 20.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE TABLE
The following table shows certain information with respect to the named
executive officers concerning (i) each exercise of stock options or SARs during
1997, and (ii) unexercised stock options and SARs held as of December 31, 1997.
18
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNDERLYING UNEXERCISED
IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT 12/31/97 OPTIONS/SARS AT
SHARES VALUE (#) 12/31/97 ($)
ACQUIRED ON REALIZED ------------------------------------- ---------------------
NAME EXERCISE (#) ($) EXERCISABLE / UNEXERCISABLE EXERCISABLE /
- - -------------------------------------- ------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan...................... -- -- -- -- --
James L. Dolan........................ -- -- 54,750 18,250 1,471,406
William J. Bell....................... 75,000(1) 1,047,656 280,864 254,336 9,151,202
Marc A. Lustgarten.................... 75,000(1) 1,047,656 280,864 261,004 9,263,240
Robert S. Lemle....................... 52,500(1) 718,125 245,796 212,804 7,921,681
Andrew B. Rosengard................... 37,532(2) 691,339 23,332 55,236 784,538
<CAPTION>
NAME UNEXERCISABLE
- - -------------------------------------- -------------
<S> <C>
Charles F. Dolan...................... --
James L. Dolan........................ 490,469
William J. Bell....................... 8,410,298
Marc A. Lustgarten.................... 8,634,509
Robert S. Lemle....................... 6,987,669
Andrew B. Rosengard................... 1,790,464
</TABLE>
- - ------------------------
(1) Exercise of SARs granted under CSC Holdings' Amended and Restated Employee
Stock Plan.
(2) Exercise of stock options and SARs granted under CSC Holdings' Amended and
Restated Employee Stock Plan and CSC Holdings' First Amended and Restated
1996 Employee Stock Plan.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table contains certain information with respect to awards
granted to the named executive officers in 1997 under the CSC Holdings 1997
Long-Term Incentive Plan.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
NUMBER OF OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
SHARES, UNITS PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
OR OTHER RIGHTS MATURATION OR ----------------------------------------
NAME (#) PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- - ------------------------------------------------ --------------- ------------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Charles F. Dolan................................ N/A N/A -- -- --
James L. Dolan(1)............................... N/A 12-36 mos. -- 4,000,000 --
Marc A. Lustgarten(2)........................... N/A 12-36 mos. -- 2,250,000 --
William J. Bell(2).............................. N/A 12-36 mos. -- 2,000,000 --
Robert S. Lemle(2).............................. N/A 12-36 mos. -- 1,650,000 --
Andrew B. Rosengard(3).......................... N/A 12-72 mos. -- 1,200,000 --
</TABLE>
- - ------------------------
(1) Such individual received a contingent cash award, granted as of January 1,
1997, under the CSC Holdings 1997 Long-Term Incentive Plan, in the amount
indicated. The indicated amount is payable in full upon the attainment of
specified performance objectives, including (a) incremental cash flow in
respect of calendar years 1997, 1998 and 1999 in excess of specified
targets, and (b) private market value of the Company at the end of any
calendar quarter starting with the fourth quarter of 1997, in excess of
specified targets.
(2) Each individual received a contingent cash award, granted as of January 1,
1997, under the CSC Holdings 1997 Long-Term Incentive Plan, in the amount
indicated. These awards were granted in conjunction with certain stock
option awards and SARs granted during 1997, as described in the Option/SAR
Grants Table. The indicated amount is payable in full upon the attainment of
specified "minimum performance objectives" or of specified "exemplary
performance objectives." If the recipient elects to receive payment of the
award following attainment of the minimum performance objectives but prior
to the attainment of the exemplary performance objectives, then the related
stock
19
<PAGE>
options and SARs are canceled. Minimum performance objectives include growth
in cash flows and revenues in respect of calendar years 1997, 1998 and 1999
in excess of specified targets. Exemplary performance objectives include (a)
incremental cash flows in respect of calendar years 1997, 1998 and 1999 in
excess of specified targets, and (b) private market value of the Company at
the end of any calendar quarter starting with the fourth quarter of 1997, in
excess of specified targets.
(3) The amount indicated includes (a) a $700,000 contingent cash award payable
upon the terms described in footnote (2) above, and (b) a $500,000 cash
award, increased annually through and including December 31, 2003 by an
amount equal to 20% of the recipient's base salary earned during such
calendar year, and accruing interest at 6.75% per annum. The award described
in (b) above, is payable 50% on January 1, 2002 and 50% on January 1, 2004,
so long as the recipient has remained in the continuous employ of the
Company through such date.
REPORT ON REPRICING OF OPTIONS/SARS
On April 17, 1997, the Compensation Committee granted to certain key
employees of the Company, including Messrs. Bell, Lustgarten, Lemle and
Rosengard, certain stock options and SARs, as described above under the heading
"Option/SAR Grants in Last Fiscal Year". These awards were made at the then
current market price for the Company's Class A Common Stock. In connection with
the grant of these awards, certain options and SARs previously granted to the
recipients, with exercise prices greater than the then current market price of
the Company's Class A Common Stock, were canceled. The Compensation Committee
determined that the retention value of the executive's Option/SAR package would
be significantly enhanced if a greater portion of their unvested Option/SAR's
were at exercise prices not below the current market value of the underlying
Class A Common Stock.
Set forth below is a table showing adjustments or amendments to the exercise
price of stock options or SARs for the named executive officers during the last
ten completed fiscal years.
TEN-YEAR OPTION / SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
SECURITIES MARKET ORIGINAL OPTION
UNDERLYING PRICE OF EXERCISE TERM
NUMBER OF STOCK AT PRICE AT TIME REMAINING AT
OPTIONS/SARS TIME OF OF REPRICING NEW DATE OF
REPRICED OR REPRICING OR OR AMENDMENT EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) PRICE AMENDMENT
- - ------------------------------ --------- ------------- ------------- ------------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Dolan.............. -- -- -- -- -- --
James L. Dolan................ -- -- -- -- -- --
William J. Bell(1)............ 4/17/97 150,000 14.25 28.25 14.25 91 months
Marc A. Lustgarten (2)........ 4/17/97 160,000 14.25 28.25 14.25 91 months
Robert S. Lemle(3)............ 4/17/97 127,600 14.25 28.25/26.0625(5) 14.25 91/103 mos.(2)
Andrew B. Rosengard(4)........ 4/17/97 70,000 14.25 24.75 14.25 119 months
</TABLE>
- - ------------------------
(1) Includes 75,000 options and 75,000 SARs granted in replacement of 150,000
options and 150,000 SARs granted on November 18, 1994 at an exercise price
of $28.25 (adjusted for the Stock Split).
(2) Includes 80,000 options and 80,000 SARs granted in replacement of 160,000
options and 160,000 SARs granted on November 18, 1994 at an exercise price
of $28.25 (adjusted for the Stock Split).
(3) Includes 63,800 options and 63,800 SARs granted in replacement of 120,000
options and 120,000 SARs granted on November 18, 1994 at an exercise price
of $28.25 (adjusted for the Stock Split), and 7,600 options and 7,600 SARs
granted on November 2, 1995 at an exercise price of $26.0625 (adjusted for
the Stock Split).
20
<PAGE>
(4) Includes 35,000 options and 35,000 SARs granted in replacement of 27,500
options and 27,500 SARs granted on May 1, 1996 at an exercise price of
$24.75 (adjusted for the Stock Split).
(5) Includes 240,000 Options/SARs with an exercise price of $28.25 which would
have expired 91 months from grant of replacement awards, and 15,200
Options/SARs will have expired 103 months from grant of replacement awards.
MEMBERS OF THE COMPENSATION COMMITTEE
RICHARD H. HOCHMAN VICTOR ORISTANO JOHN TATTA
DEFINED BENEFIT PENSION PLAN
The Company's, Nonqualified Supplemental Benefit Plan provides
actuarially-determined pension benefits, among other types of benefits, for 21
employees of the Company or its subsidiaries who were previously employed by
Cablevision Systems Services Corporation ("CSSC"). CSSC, which is wholly-owned
by Charles Dolan, provided management services to Cablevision Company (the
Company's predecessor) and to certain affiliates of the Company. The
Supplemental Plan is designed to provide these employees, in combination with
certain qualified benefit plans maintained by the Company and certain qualified
retirement plans formerly maintained by CSSC, with the same retirement benefit
formulae they would have enjoyed had they remained employees of CSSC and
continued to participate in the former CSSC qualified plans. The Supplemental
Plan provides that the Company may set aside assets for the purpose of paying
benefits under the Supplemental Plan, but that any such assets remain subject to
the claims of general creditors of the Company.
The defined benefit feature of the Supplemental Plan provides that, upon
attaining normal retirement age (the later of age 65 or the completion of five
years of service), a participant will receive an annual benefit equal to the
lesser of 75% of his or her average compensation (not including bonuses and
overtime) for his or her three most highly compensated years and the maximum
benefit permitted by the Code (the maximum in 1997 is $120,000 for employees who
retire at age 65), reduced by the amount of any benefits paid to such individual
pursuant to the qualified defined benefit plan formerly maintained by CSSC. This
benefit will be reduced proportionately if the participant retires or otherwise
terminates employment before reaching normal retirement age.
The following sets forth the estimated annual benefits payable upon normal
retirement under the defined benefit portion of the Supplemental Plan (reduced
by any retirement benefits paid in connection with the termination of the CSSC
Defined Benefit Pension Plan) to the following persons: Mr. Charles Dolan,
$144,463; Mr. James Dolan, $0; Mr. Bell, $101,765, Mr. Lustgarten, $109,330; Mr.
Lemle, $114,484 and Mr. Rosengard $0.
PERFORMANCE GRAPH
The chart below compares the performance of the Company's Class A Common
Stock with the performance of the Russell 3000 Index and a Peer Group Index by
measuring the changes in Class A Common Stock prices from December 31, 1992
through December 31, 1997. The Russell 3000 Index is included in this year's
Performance Graph in lieu of the AMEX Value Index used in CSC Holdings' prior
Proxy Statements, because the AMEX Value Index is no longer published. As
required by the SEC, the values shown assume the reinvestment of all dividends.
Because no published index of comparable media companies currently reports
values on a dividends-reinvested basis, the Company has created a Peer Group
Index for purposes of this graph in accordance with the requirements of the SEC.
The Peer Group Index is made up of companies that engage in cable television
operations as a significant element of their business, although not all of the
companies included in the Peer Group Index participate in all of the lines of
business in which the Company is engaged and some of the companies included in
the Peer Group Index also engage in lines of business in which the Company does
not participate. Additionally, the market
21
<PAGE>
capitalization's of many of the companies included in the Peer Group are quite
different from that of the Company. The Common Stocks of the following companies
have been included in the Peer Group Index: Adelphia Communications Corporation,
Comcast Corporation, Century Communications Corporation, Falcon Cable Systems
Company, TCA Cable TV, Inc., Tele-Communications, Inc., The Times Mirror Company
and Time Warner Inc. The chart assumes $100 was invested on December 31, 1992 in
each of the Company's Class A Common Stock, the Russell 3000 Index and the Peer
Group Index and reflects reinvestment of dividends on a quarterly basis and
market capitalization weighting.
22
<PAGE>
FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN
FOR CSC HOLDINGS, INC./CABLEVISION SYSTEMS CORPORATION,
RUSSELL 3000 INDEX AND PEER GROUP.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FIVE YEAR CUMULATIVE TOTAL STOCKHOLDERS RETURN FOR CSC
HOLDINGS
<S> <C> <C> <C>
Cablevision Systems Russell 3000 Peer Group
1992 100 100 100
1993 194 108 148
1994 144 105 113
1995 155 143 133
1996 88 174 123
1997 274 229 215
</TABLE>
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Charles Dolan has an employment agreement with the Company expiring in
January 1999 with automatic renewals for successive one-year terms unless
terminated by either party at least three months prior to the end of the then
existing term. The agreement provides for annual compensation of not less than
$400,000 per year to Mr. Dolan. The agreement also provides for payment to Mr.
Dolan's estate in the event of his death during the term of such agreement, of
an amount equal to the greater of one year's base salary or one-half of the
compensation that would have been payable to Mr. Dolan during the remaining term
of such agreement.
Under the applicable award agreements, the vesting of the bonus award
shares, stock options and SARs granted to employees, including Messrs. James
Dolan, Bell, Lustgarten, Lemle and Rosengard, under the CSC Holdings Amended and
Restated Employee Stock Plan and its predecessor plans, may be accelerated, in
certain circumstances, upon a "change of control" of the Company. A "change of
control" is defined as the acquisition by any person or group, other than
Charles Dolan or members of his immediate family (or trusts for the benefit of
Charles Dolan or his immediate family) or any employee benefit plan sponsored or
maintained by the Company, of (1) the power to direct the management of
substantially all of the cable television systems then owned by the Company in
the New York City metropolitan area, or (2) after any fiscal year of the Company
in which the Company's cable television
23
<PAGE>
systems in the New York City metropolitan area contributed in the aggregate less
than a majority of the net revenues of the Company and its consolidated
subsidiaries, the power to direct the management of the Company or substantially
all of its assets. Upon such a change in control, the bonus award shares, stock
options and SARs may be converted into either a right to receive an amount of
cash based upon the highest price per share of Common Stock paid in the
transaction resulting in the change of control, or into a corresponding award
with equivalent profit potential in the surviving entity, at the election of the
Compensation Committee.
The Company adopted as of May 1, 1994, a severance pay plan pursuant to
which an employee whose employment is involuntary terminated (other than for
cause) or who resigns with the approval of the Company, may receive a benefit in
an amount determined by the Company.
In March 1998, the Company entered into employment agreements with each of
Messrs. Bell, Lustgarten and Lemle, which agreements replaced previous
employment agreements. The agreements are each for a three year term ending
December 31, 2000 and may each be extended for additional one-year periods up
until December 31, 2000, unless the Company or the executive notifies the other
of its election not to extend by the preceding October 31. Under their
respective agreements, these executives are to receive annual salaries of not
less then $700,000 in the case of Mr. Bell, $750,000 in the case of Mr.
Lustgarten, and $525,000 in the case of Mr. Lemle. Each agreement also provides
that in the event that the executive leaves the Company involuntarily (other
than for cause), following a change of control (as defined above), or because
such executive's compensation, title or responsibilities are reduced without his
consent, such executive shall be entitled to receive (1) a severance payment of
not less than the salary due for the remainder of the employment agreement or
one year's annual salary (or three times the sum of his annual salary plus his
prior year's annual bonus in the event of a change of control), whatever is
greater, (2) an annual bonus of not less than 100% of annual salary for Messrs.
Bell and Lustgarten and 65% of annual salary for Mr. Lemle, pro rated for the
months worked during such year, (3) the right to receive payment of all bonus
shares and deferred compensation awards, and to exercise all stock option and
conjunctive rights awards for the remainder of the term of the agreement, or a
period of 180 days, if greater, whether or not such awards are due or
exercisable at the time, (4) the right to receive payment of all outstanding
long-term performance awards, at such time, if any, as such awards shall be
earned (as if such employee remained in the continuous employ of the Company
through the payment date), (5) three years payment of life insurance premiums
and (6) the right to participate in the Company's health plan for retired
executives.
In February 1996, the Compensation Committee adopted the Cablevision Systems
Corporation Supplemental Life Insurance Premium Payment Plan (the "Supplemental
Life Insurance Premium Payment Plan"). Under the Supplemental Life Insurance
Premium Payment Plan, at all times following a change of control (as detailed
above) the Company would pay on behalf of certain executive officers of the
Company, including Messrs. James Dolan, Bell, Lustgarten, Lemle and Rosengard,
all premiums on life insurance policies purchased by the Company for such
executive officers, up to the aggregate amount of additional premiums, if any,
necessary to fund fully the face amount of such executive officer's policy as in
effect immediately prior to the change of control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As disclosed above, the Compensation Committee of the Board of Directors is
comprised of Messrs. Oristano, Tatta and Hochman. (See "Report of Compensation
Committee," above.) Mr. Tatta, the former President of CSC Holdings is currently
a consultant to the Company. Mr. Oristano and Mr. Hochman are not employees of
the Company.
The Company has made investments in and advances to certain affiliates of
which Charles Dolan is the managing general partner or in which Mr. Dolan or
Dolan family interests had or have ownership interests.
24
<PAGE>
Cablevision of Boston Limited Partnership, a Massachusetts limited
partnership ("Cablevision Boston"), is engaged in the construction, ownership
and operation of cable television systems in Boston and Brookline,
Massachusetts. On December 15, 1995, CSC Holdings acquired the interests in
Cablevision Boston that it did not previously own pursuant to an agreement
entered into by CSC Holdings and Cablevision Boston. In connection with the
acquisition, the limited partners (other than CSC Holdings) of Cablevision
Boston received 682,454 shares (of which 680,266 shares were issued by December
31, 1995) of Class A Common Stock and CSC Holdings paid approximately $83
million (including fees and expenses), primarily with funds borrowed under CSC
Holdings' credit agreement, to repay existing Cablevision Boston indebtedness
and to make certain payments to Charles F. Dolan, referred to below. Upon
consummation of the acquisition of Cablevision Boston, all outstanding
subordinated advances made by CSC Holdings to Cablevision Boston became
intercompany indebtedness. Mr. Dolan, a former general partner of Cablevision
Boston and the Chairman of the Board of the Company, received 7,357 shares of
the Company's Class A Common Stock and approximately $20.8 million in cash to
repay a portion of Cablevision Boston's indebtedness to him in connection with
the acquisition. CSC Holdings and its affiliates (other than Cablevision
Boston's former general partners and their affiliates) received 1,041,553 shares
of Class A Common Stock, which have been subsequently retired and assumed
approximately $42.9 million of intercompany indebtedness referred to above. As
part of the acquisition of Cablevision Boston, CSC Holdings entered into an
agreement with Mr. Dolan with respect to his 0.5% general partnership interest
in Cablevision of Brookline Limited Partnership ("Cablevision Brookline"), a
partnership affiliated with Cablevision Boston. CSC Holdings acquired the
remaining 99.5% of the partnership interests in Cablevision Brookline in the
acquisition of Cablevision Boston. Under the Agreement, CSC Holdings has a right
of first refusal to acquire Mr. Dolan's general partnership interest and a right
to acquire such interest on the earlier to occur of Mr. Dolan's death or January
1, 2002 at the greater of $10,000 or the book value of such interest,. Mr.
Dolan's estate has the right to put the interest to CSC Holdings at the same
price. Additionally, in the event of a change of control of the Company or
Cablevision Brookline, Mr. Dolan will have the right to put his general
partnership interest in Cablevision Brookline to the Company at the greater of
(i) prices declining from $3.9 million for the year ended December 15, 1996 to
$10,000 for the year ended December 15, 2002 and (ii) the book value of such
interest.
Atlantic Publishing holds a minority equity interest in a company that
publishes a cable television guide which is offered to the Company's subscribers
and to unaffiliated cable television operators. As of December 31, 1997, CSC
Holdings had advanced an aggregate of approximately $16.2 million to Atlantic
Publishing, reflecting approximately $6.1 million, $0.1 million, $1.0 million
and $0.6 million, net, paid back during 1997, 1996, 1995 and 1994, respectively.
CSC Holdings has written off all of its advances to Atlantic Publishing other
than $2.4 million. Atlantic Publishing is owned by a trust for certain Dolan
family members; however, CSC Holdings has the option to purchase Atlantic
Publishing for an amount equal to the owner's net investment therein plus
interest. The current owner has made only a nominal investment in Atlantic
Publishing to date.
On November 25, 1997, Charles F. Dolan and CSC Holdings entered into a
letter agreement (i) to defer the commencement of the period during which Mr.
Dolan could elect, pursuant to CSC Holdings' pre-existing obligations under the
Purchase and Reorganization Agreement, dated as of December 20, 1991, as
amended, between Mr. Dolan and CSC Holdings, to require CSC Holdings to purchase
Mr. Dolan's remaining partnership interests in Cablevision of New York City
- - -Master, L.P., from December 1, 1997 to the date of the consummation of the
Merger and the Contribution Agreement with TCI and (ii) to provide for cash
payment for such partnership interests of approximately $190 million. On March
4, 1998, CSC Holdings acquired Charles F. Dolan's remaining 1% interest in
Cablevision of New York City-- Master, L.P. and satisfied certain payment
obligations for a cash payment of $194 million.
On August 23, 1996, CSC Holdings entered into an agreement with Northcoast
Operating Co., Inc. ("Northcoast") and certain of its affiliates, to form a
limited liability company (the "LLC") to participate in the auctions conducted
by the Federal Communications Commission ("FCC") for certain licenses to
25
<PAGE>
conduct a personal communications service ("PCS") business. CSC Holdings has
contributed an aggregate of approximately $31 million to the LLC (either
directly or through a loan to Northcoast) and holds a 49.9% interest in the LLC
and certain preferential distribution rights. Northcoast is a Delaware
corporation controlled by John Dolan. John Dolan is a nephew of Charles F. Dolan
and cousin of James Dolan.
The Company's By-Laws prohibit the making of further investments in or
advances to entities owned or controlled by Charles Dolan without the approval
of a majority of the members of the Board of Directors who are not employees of
the Company or any of its affiliates.
Richard H. Hochman, a director and a nominee for director, was, until April,
1995, a Managing Director of PaineWebber Incorporated. PaineWebber Incorporated
has performed investment banking services for entities affiliated with Charles
Dolan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH OTHER DIRECTORS
Charles D. Ferris, a director and a nominee for director, is a partner in
the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provides legal services to the
Company and certain of its subsidiaries.
Vincent Tese, a director and a nominee for director, is a director of The
Bear Stearns Companies, Inc. Bear Stearns has performed investment banking
services for the Company.
Each of John C. Malone and Leo J. Hindery, Jr., each a director and a
nominee for director, is an officer and a director of TCI. As described above,
TCI holds approximately 33% of the Company's Common Stock and has certain
contractual rights under the Stockholders Agreement, including rights of
consultation concerning certain transactions including transfers of stock by
Class B stockholders and transfers of assets by the Company. TCI also owns, or
holds ownership interests in, various companies that transact business with the
Company on a regular basis.
(2) AUTHORIZATION AND APPROVAL OF THE
EXECUTIVE PERFORMANCE INCENTIVE PLAN
On April 20, 1998, the Company's Board of Directors adopted, subject to
stockholder approval, the Cablevision Systems Corporation Executive Performance
Incentive Plan (the "Plan"). The text of the Plan is set forth in Exhibit A
hereto, and the following discussion is qualified in its entirety by reference
thereto.
The Plan will be administered by the Compensation Committee or a
subcommittee of the Compensation Committee. Awards may be granted under the Plan
to key executives of the Company and its subsidiaries consisting of the
Company's Chief Executive Officer, any other executive who the Compensation
Committee determines is likely to be among the four other highest compensated
officers for the Company's fiscal year for which an award is made, and any other
executive designated by the Compensation Committee (or subcommittee) in its
discretion.
The Compensation Committee (or subcommittee) will specify one or more of the
following performance criteria which must be met during the Company's fiscal
year in which the award is made in order for the participant to be entitled to
the payment of an award granted under the Plan: (i) earnings per share, (ii)
total return to shareholders, (iii) return on investment, (iv) operating income
or net income, (v) costs, (vi) cash flow, (vii) cash flow margin, (viii) cash
flow per subscriber, (ix) revenues, (x) revenues per subscriber, (xi) subscriber
growth, (xii) a specified increase in the publicly traded price of the Company's
Class A Common Stock, or (xv) a specified increase in the private market value
of the Company.
The Compensation Committee (or a subcommittee) may in its discretion grant
target awards to eligible participants which range from 10% to 100% of the
participant's salary for the Company's fiscal year. The maximum earned award if
the applicable performance criteria are met is two times the target award. The
Compensation Committee (or subcommittee) may in its discretion reduce or
eliminate the
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<PAGE>
amount otherwise payable as an earned award. In no event may any participant
receive an annual payment under the Plan in an amount exceeding $5,000,000. All
awards granted under the Plan are payable solely in cash. No awards may be made
under the Plan after December 31, 2007.
The Plan may be amended by the Board of Directors or the Compensation
Committee, as permitted by applicable law.
The affirmative vote of a majority of the votes cast at the annual meeting,
in person or by proxy, by holders of the Class A Common Stock and the Class B
Common Stock, voting together as a single class, is required to authorize and
approve the Plan. Abstentions from voting will have the same effect as voting
against the proposal. Broker non-votes will have no effect on the outcome of the
vote on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION AND APPROVAL OF THE
EXECUTIVE PERFORMANCE INCENTIVE PLAN.
(3) AUTHORIZATION AND APPROVAL OF AMENDMENT NO. 1
TO THE EMPLOYEE STOCK PLAN
On April 20, 1998, Compensation Committee of the Board of Directors adopted,
and the Company's Board of Directors ratified, subject to stockholder approval,
an amendment to the CSC Parent Employee Stock Plan (the "Stock Plan"), changing
the name of the Stock Plan to the "Cablevision Systems Corporation 1998 Employee
Stock Plan" and increasing the number of shares that may be issued pursuant to
grants made thereunder to 6,500,000. The text of the Amendment No. 1 to the
Stock Plan is set forth in Exhibit B hereto, and the following discussion is
qualified in its entirety by reference thereto.
DESCRIPTION OF PROPOSED AMENDMENT
The Stock Plan was adopted by the Company's stockholders at a Special
Meeting of Stockholders held on February 12, 1998. The Stock Plan currently
provides that the Compensation Committee of the Board of Directors may make
awards under the Stock plan for up to an aggregate number of shares equal to the
sum of (i) 1,500,000 shares, and (ii) the number of restricted shares, if any
purchased from employees by the Company. Additionally, if an award is paid or
settled in cash, or expires, lapses, terminates or is canceled without the
issuance of shares, than the Compensation Committee may grant awards with
respect to shares subject to such prior awards. In the event of any stock
dividend, stock split, spin-off, reclassification, recapitalization, or smaller
event resulting in dilution of the Company's Class A Common Stock, then the
number of shares of Class A Common Stock issuable under the Stock Plan is
proportionately adjusted to reflect such transaction. As a result of the Stock
Split effected on March 30, 1998, the number of shares issuable under the Stock
Plan was adjusted to reflect such Stock Split.
Because the Company assumed the Stock Plan from CSC Holdings, and is to be
treated as a successor to CSC Holdings thereunder, grants of awards under CSC
Holdings' First Amended and Restated 1996 Stock Plan are "counted against" the
awards available under the Stock Plan. As of March 31, 1998, approximately
940,650 shares remained available for grant under the Stock Plan, after giving
effect to shares issued under the Stock Plan or its predecessor plan, awards
granted and currently outstanding under the Stock Plan or its predecessor plan,
and the Stock Split.
The proposed amendment would increase the number of shares issuable under
the Stock Plan by an additional 3,500,000 shares by increasing the maximum
number of shares issuable under the Stock Plan from 1,500,000 (3,000,000 post
Stock Split) to 6,500,000.
The amendment also changes the name of the Stock Plan to the "Cablevision
Systems Corporation 1998 Employee Stock Plan" to reflect the change of the
Company's name affected on March 4, 1998.
The affirmative vote of a majority of the votes cast at the annual meeting,
in person or by proxy, by holders of the Class A Common Stock, and the Class B
Common Stock, voting together as a single class, is
27
<PAGE>
required to authorize and approve the amendment to the Stock Plan. Abstentions
from voting will have the same effect as voting against the proposal. Broker
non-votes will have no effect on the outcome of the vote on this proposal.
DESCRIPTION OF THE STOCK PLAN
Under the Stock Plan, the Company may grant "incentive stock options", as
defined in Section 422 of the Code, non-qualified stock options, restricted
stock and bonus award shares. Bonus award shares are restricted shares that are
payable upon vesting in cash and/or stock at the Company's election. The option
exercise price of stock options may not be less than the fair market value per
share of Class A Common Stock on the date the option is granted. Other than in
the case of death of an award recipient, such options may be exercised for a
term no longer than ten years. The Stock Plan provides that, in conjunction with
the grant of an option, the Company may grant stock appreciation rights ("SARs")
pursuant to which the employee may elect to receive payment, either in lieu of
the right to exercise such option or in addition to the stock received upon the
exercise of such option, as the Compensation Committee may determine at the time
the SAR is granted, equal to the difference between the fair market value of the
stock as of the date the SAR is exercised and the option exercise price. The
Stock Plan permits the granting of restricted shares and bonus award shares at
prices determined by the Compensation Committee.
Under the Stock Plan, the Compensation Committee would have the authority,
in its discretion, to add performance criteria as a condition to any employee's
exercise of a stock option or SAR, or the vesting or payment of any bonus award
shares or restricted shares, granted under the Stock Plan. Additionally, the
Stock Plan specifies certain performance criteria that may, in the case of
certain executive officers of the Company, be conditions precedent to the
vesting of bonus award shares or restricted shares granted to such executives
under the Company Stock Plan. These performance criteria include: (i) earnings
per share, (ii) total return to stockholders, (iii) return on equity, (iv)
operating income or net income, (v) return on capital, (vi) costs, (vii) results
relative to budget, (viii) cash flow, (ix) cash flow margin, (x) cash flow per
subscriber, (xi) revenues, (xii) revenues per subscriber, (xiii) subscriber
growth, (xiv) results relative to quantitative customer service standards, (xv)
results relative to quantitative customer satisfaction standards, (xvi)
specified increase in the Fair Market Value of Class A Common Stock. Application
of the performance criteria may be by reference to the performance of the
Company or an affiliate of the Company or a subdivision or other business unit
of either, or any combination of the foregoing, or based on comparative
performance relative to other companies. Restricted shares, bonus award shares
and shares issuable upon the exercise of an option are paid, at the specified
vesting or exercise date, as the case may be, in shares of Class A Common Stock
unless satisfied or settled in cash pursuant to the terms of the Stock Plan.
The Board of Directors or the Compensation Committee may discontinue the
Stock Plan at any time and from time to time may amend or revise the terms of
the Stock Plan, as permitted by applicable law, except that it may not revoke or
alter, in any manner unfavorable to the recipient of an outstanding award under
the Stock Plan, any award made under the Stock Plan, without the consent of the
recipient of that award, nor may it amend the Stock Plan without the approval of
the stockholders of the Company if such approval is required by Rule 16b-3 under
the 1934 Act for transactions pursuant to the Stock Plan to continue to be
exempt thereunder.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary generally
describes the principal Federal (but not state and local) income tax
consequences of the issuance and exercise of options under the Stock Plan. It is
general in nature and is not intended to cover all tax consequences that may
apply to a particular participant or the Company. The provision of the Code and
the regulations thereunder relating to these matters are complex and their
impact in any one case may depend upon the particular circumstances.
28
<PAGE>
An employee will not realize income when an incentive stock option is
granted under the Stock Plan or when such an option is exercised, and the
Company will not be entitled to a deduction with respect to the grant or
exercise of such an option. The difference between the exercise price of an
incentive stock option and the fair market value of Class A Common Stock subject
to the option at the time of exercise is an item of tax preference which may
result in the employee being subject to the alternative minimum tax. If the
employee holds the Class A Common Stock acquired under an incentive stock option
for at least two years from the date the option is granted and at least one year
from the date of exercise of the option, any gain realized by the employee when
the Class A Common Stock is sold will be taxable as capital gain. If the holding
periods are not satisfied, the employee will realize ordinary income in the year
of the disposition of the Class A Common Stock in an amount equal to the excess
of the fair market value of such Class A Common Stock on the date of exercise
(or the proceeds of the disposition, if lower) over the option price, and the
Company will be entitled to a corresponding deduction. Any remaining gain will
be capital gain. If an incentive stock option is settled by cash, Class A Common
Stock or a combination thereof, the employee will recognize ordinary income at
the time of settlement equal to the fair market value of such cash, Class A
Common Stock or combination thereof and the Company shall be entitled to a
corresponding deduction.
An employee will not realize any income, and the Company will not be
entitled to a deduction, at the time that a non-qualified stock option is
granted under the Stock Plan. Upon exercising a non-qualified stock option, an
employee will realize ordinary income, and the Company will be entitled to a
corresponding deduction, in an amount equal to the excess of the fair market
value on the exercise date of the Class A Common Stock subject to the option
over the exercise price of the option. The employee will have a basis in the
Class A Common Stock received as a result of the exercise, for purposes of
computing gain or loss, equal to the fair market value of such Class A Common
Stock on the exercise date and the employee's holding period in the Class A
Common Stock received on the date of exercise. If a non-qualified stock option
is settled by the Company in cash, Class A Common Stock or a combination
thereof, the employee will recognize ordinary income at the time of settlement
equal to the fair market value of such cash, Class A Common Stock or combination
thereof and the Company shall be entitled to a corresponding deduction.
LONG TERM CAPITAL GAIN. The maximum rate of tax on long-term capital gain
for shares sold after July 28, 1997 is 20% if the shares have been held for more
than 18 months and 28% for shares held for more than 12 months but not more than
18 months. The 20% maximum rate is reduced to 18% with respect to options
granted after December 31, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION AND APPROVAL OF THE
AMENDMENT NO. 1 TO THE STOCK PLAN.
(4) APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP as
independent auditors for the fiscal year 1998. The stockholders are requested to
ratify and approve such appointment.
It is expected that a representative of KPMG Peat Marwick LLP will be
present at the annual meeting of stockholders. The representative will have an
opportunity to make a statement and is expected to be available to respond to
appropriate questions.
The affirmative vote of a majority of the votes cast at the annual meeting,
in person or by proxy, by holders of the Class A Common Stock and the Class B
Common Stock, voting together as a single class, is required to ratify and
approve appointment of KPMG Peat Marwick LLP as the Company's auditors for 1998.
Abstentions from voting and broker non-votes will have no effect on the outcome
of the vote on this proposal.
29
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION AND APPROVAL OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S AUDITORS FOR 1998.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Pursuant to regulations promulgated by the Securities and Exchange
Commission, the Company is required to identify, based solely on a review of
reports filed under Section 16(a) of the Securities Exchange Act of 1934, each
person who, at any time during the fiscal year ended December 31, 1996, was a
director, officer or beneficial owner of more than ten percent of the Company's
Class A Common Stock that failed to file on a timely basis any such reports.
Based on such review, the Company is aware of no such failure other than reports
on Form 4 filed by each Sheila A. Mahony, Andrew B. Rosengard and Margaret
Albergo in November 1997 with respect to the grant of certain employee stock
awards under the Company's Employee Stock Plan, in May 1997.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
Proposals of stockholders intended to be presented at the Company's 1999
annual meeting of stockholders must be received by the Company at its executive
offices shown on page 1 of this proxy statement on or prior to February 10, 1999
to be eligible for inclusion in the Company's proxy material to be used in
connection with the 1999 meeting.
The Company's Annual Report for the Company's fiscal year ended December 31,
1997, including financial statements, is enclosed herewith. THE COMPANY WILL
FURNISH (UPON PAYMENT OF A REASONABLE CHARGE FOR ANY EXHIBIT REQUESTED) TO ANY
STOCKHOLDER OF THE COMPANY WHO SO REQUESTS IN WRITING, A COPY OF THE COMPANY'S
ANNUAL REPORT OF FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. Any such request should be directed to
Barry J. O'Leary, One Media Crossways, Woodbury, NY 11797.
By order of the Board of Directors,
Robert S. Lemle
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Woodbury, New York
May 18, 1998
30
<PAGE>
EXHIBIT A
CABLEVISION SYSTEMS CORPORATION
EXECUTIVE PERFORMANCE INCENTIVE PLAN
1. PURPOSES. The purpose of the Cablevision Systems Corporation Executive
Performance Incentive Plan is to advance the interests of the Company and its
shareholders by providing incentive compensation opportunities that will serve
to attract, retain, motivate and reward key executives. Rewards under the Plan
will be based on performance achievement relative to preestablished goals and
objectives, thereby motivating participants to meet and exceed such goals and
objectives.
2. DEFINITIONS. When used in this Plan, unless the context otherwise
requires:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Committee" shall mean the Compensation Committee of the Board of
Directors, as described in Section 3.
(c) "Company" shall mean Cablevision Systems Corporation, a Delaware
corporation.
(d) "Covered Employee" means, for any Plan Year, the Company's Chief
Executive Officer (or an individual acting in such capacity), any executive
of the Company or its subsidiaries who, in the discretion of the Committee
for purposes of determining those employees who are "covered employees"
under Section 162(m) of the Internal Revenue Code, is likely to be among the
four other highest compensated officers of the Company for such Plan Year
and any other executive of the Company or its subsidiaries designated by the
Committee in its discretion.
(e) "Earned Incentive Award" shall mean the annual incentive
compensation deemed to have been earned (and, therefore, payable) at or
after the end of the Plan Year on the basis of actual performance relative
to the applicable Performance Criteria.
(f) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
(g) "Participant" shall mean a key executive of the Company who is
selected by the Committee to be eligible to receive an award of annual
incentive compensation under the Plan.
(h) "Performance Criteria" shall mean a goal or goals established by the
Committee and measured over the Plan Year, such goal(s) to constitute a
requirement that must be met prior to the payment, of any award of incentive
compensation under the Plan. The Performance Criteria to be used in
determining awards of annual incentive compensation shall include one or
more of the following: (i) earnings per share, (ii) total return to
shareholders, (iii) return on investment, (iv) operating or net income, (v)
costs, (vi) cash flow, (vii) cash flow margin, (viii) cash flow per
subscriber, (ix) revenues, (x) revenues per subscriber, (xi) subscriber
growth, (xii) customer service and/or satisfaction, (xiii) employee
satisfaction, (xiv) market share, (xv) a specified increase in the publicly
traded price of the Company's Class A common stock, or (xvi) a specified
increase in the private market value of the Company. Performance measures
may be relative to the Company or a subsidiary or a subdivision or other
business unit of either, may be based on actual performance relative to
budget or plan, or may be indexed to the performance of other companies.
(i) "Plan" shall mean the Cablevision Systems Corporation Executive
Performance Incentive Plan.
(j) "Plan Year" shall mean the Company's fiscal year.
(k) "Target Award" shall mean the percentage of a Participant's annual
salary (or the equivalent dollar amount) established by the Committee
pursuant to Section 4.
3. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee (or a subcommittee thereof), which shall consist of at least two
members of the Board of Directors each of whom shall be an "outside director"
within the meaning of Section 162(m) of the Internal Revenue Code.
The Committee shall have full authority, subject to the terms of the Plan,
to select the individuals who shall be eligible for awards of incentive
compensation under the Plan, to determine the Performance
A-1
<PAGE>
Criteria which will govern the earn-out of incentive compensation awards, to
determine whether such Performance Criteria have been achieved and to set any
other terms or conditions associated with incentive compensation awards. The
Committee also shall have the authority to establish such rules and regulations,
not inconsistent with the provisions of the Plan, for the proper administration
of the Plan and to make such determinations and interpretations under and in
connection with the Plan as it deems necessary or advisable. The Plan, and all
such rules, regulations, determinations and interpretations, shall be binding
and conclusive upon the Company, its shareholders and all Participants, and upon
their respective legal representatives, heirs, beneficiaries, successors and
assigns and upon all other persons claiming under or through any of them.
4. ELIGIBILITY AND TARGET AWARDS. Key executives of the Company and its
subsidiaries who are Covered Employees, as determined annually by the Committee
within 90 days after the beginning of each Plan Year, shall be eligible to
receive awards of incentive compensation under the Plan. Target Awards shall be
assigned by the Committee in conjunction with its determinations on eligibility.
Target Awards may range from 10 percent of salary to 100 percent of salary.
5. EARNED INCENTIVE AWARDS. Within 90 days after the beginning of each Plan
Year the Committee shall, in its sole discretion, establish Performance Criteria
which will govern the Earned Incentive Awards for such Plan Year. The maximum
Earned Incentive Award shall be equal to two times a Participant=s Target Award.
The Committee may, in its discretion, reduce or eliminate the amount otherwise
payable under an Earned Incentive Award as the Committee may deem appropriate.
In no event shall any Participant receive an annual payment under any Earned
Incentive Award in an amount exceeding $5 million.
6. PAYMENT OF EARNED INCENTIVE AWARDS. Earned Incentive Awards shall be
payable in cash as soon as practicable following the end of the Plan Year and
the determination by the Committee of the amount thereof. The Committee may, in
its discretion, permit Participants to elect to defer payment of all or part of
their Earned Incentive Awards.
7. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained herein or in any
Target Award or Earned Incentive Award shall be construed to confer on any
executive any right to continue in the employ of the Company or any subsidiary
or derogate from the right of the Company or any subsidiary to retire, request
the resignation of, or discharge such executive at any time, with or without
cause.
8. WITHHOLDING. If the Company or a subsidiary shall be required to withhold
any amount by reason of any federal, state or local tax laws, rules or
regulations in respect of the payment of an Earned Incentive Award, the Company
or a subsidiary shall be entitled to deduct or withhold such amounts from any
cash payments to be made to the holder.
9. NON-TRANSFERABILITY OF AWARDS. No Target Award or Earned Incentive Award
shall be assignable or transferable except by will or the laws of descent and
distribution, and except to the extent required by law, no right or interest of
any Participant shall be subject to any lien, obligation or liability of the
Participant.
10. ADMINISTRATION AND AMENDMENT OF THE PLAN. The Board of Directors or the
Committee may discontinue the Plan at any time and from time to time may amend
or revise the terms of the Plan, as permitted by applicable law.
11. EFFECTIVE DATE. This Plan shall become effective upon its adoption by
the Board of Directors and shall be submitted to the shareholders of the Company
for their approval. In the event that the Plan is not approved by shareholders
within 12 months of its adoption by the Board of Directors, the Plan and any
Target Awards or Earned Incentive Awards hereunder shall become null and void,
notwithstanding any other provisions of the Plan to the contrary.
12. FINAL ISSUANCE DATE. No awards of annual incentive compensation shall be
made under this Plan after December 31, 2007.
A-2
<PAGE>
EXHIBIT B
AMENDMENT NO. 1
TO THE
CSC PARENT CORPORATION EMPLOYEE STOCK PLAN
The CSC Parent Corporation Employee Stock Plan (the, "Plan") is hereby
amended as follows:
1. TITLE: The title of the Plan is amended by deleting the words "CSC
PARENT CORPORATION EMPLOYEE STOCK PLAN" , and inserting in lieu thereof,
the words "CABLEVISION SYSTEMS CORPORATION 1998 EMPLOYEE STOCK PLAN".
2. PURPOSE: Paragraph (1) of the Plan is amended by deleting the words "CSC
Parent Corporation Employee Stock Plan" on the first line thereof, and
inserting in lieu thereof, the words "Cablevision Systems Corporation
1998 Employee Stock Plan".
3. DEFINITIONS: Paragraph (2)(f) of the Plan is amended by deleting the
words "CSC Parent Corporation", and inserting in lieu thereof, the words
"Cablevision Systems Corporation". Paragraph (2) (l) of the plan is
amended by deleting the words "CSC Parent Corporation Employee Stock
Plan", and inserting in lieu thereof, the words, "Cablevision Systems
Corporation 1998 Employee Stock Plan".
4. SHARES: Paragraph (5) of the Plan is amended by the deleting the number
"1,500,000" in subsection (i) thereof, and inserting in lieu thereof, the
number "6,500,000".
B-1
<PAGE>
CLASS A PROXY
CABLEVISION SYSTEMS CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, JUNE 10, 1998
The undersigned hereby appoints WILLIAM J. BELL, MARC A. LUSTGARTEN, BARRY J.
O'LEARY and ROBERT S. LEMLE and each of them, jointly and severally, proxies
with full power of substitution, to vote all stock of CABLEVISION SYSTEMS
CORPORATION (the "Company") which the undersigned is entitled to vote at the
Company's Annual Meeting of Stockholders to be held at the Company's
executive offices, One Media Crossways, Woodbury, New York 11797, on
Wednesday, June 10, 1998, at 10:00 o'clock a.m., and at any adjournment
thereof, hereby ratifying all that said proxies or their substitutes may do
by virtue hereof, and the undersigned authorizes and instructs said proxies
to vote as follows:
Unless otherwise specified in the spaces provided, the undersigned's vote
is to cast FOR the election of the nominees for directors listed in Proposal
(1) and FOR approval of Proposals (2), (3) and (4) below, all as more fully
described in the accompanying Proxy Statement.
Receipt of the Notice of said annual meeting and of the Proxy Statement
and Annual Report of CABLEVISION SYSTEMS CORPORATION accompanying the same is
hereby acknowledged.
<PAGE>
<TABLE>
Please mark
your votes as
indicated in | X |
this example
<S> <C> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
/ / / /
1. Election of the following nominees as Class A Directors: Charles
D.Ferris, Richard H. Hochman, Victor Oristano and Vincent Tese
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
_________________________________________________________
2. Proposal to authorize and approve the Cablevision Systems FOR AGAINST ABSTAIN
Corporation Executive Performance Incentive Plan. / / / / / /
3. Proposal to authorize and approve Amendment No. 1 to the CSC Parent / / / / / /
Employee Stock Plan.
4. Proposal to ratify and approve the appointment of KPMG Peat Marwick / / / / / /
LLP, as independent auditors of the Company for the fiscal year 1998.
</TABLE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
Signature(s)_________________________________________ Date: ________________
NOTE: Your signature should appear the same as your name appears hereon. If
signing as attorney, executor, trustee or guardian, please indicate the
capacity in which signing. When signing as joint tenants, all parties to the
joint tenancy must sign. When the proxy is given by a corporation, it should
be signed by an authorized officer and the corporate seal affixed.
