<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 Rule 14a-11(c) or Rule 14a-12
INSIGHT COMMUNICATIONS COMPANY, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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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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<PAGE>
INSIGHT COMMUNICATIONS COMPANY, INC.
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 16, 2000
____________________
The Annual Meeting of Stockholders of Insight Communications Company, Inc.
(the "Company") will be held at The Plaza Hotel, Fifth Avenue at Central Park
South, New York, New York at 9:00 a.m. on Tuesday, May 16, 2000, for the
following purposes:
1. To elect seven directors of the Company to serve for a term of
one year.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only holders of record of shares of the Company's Class A Common Stock and
Class B Common Stock at the close of business on March 28, 2000 are entitled to
notice of, and to vote at, the meeting and any adjournment thereof.
By Order of the Board of Directors,
/s/ Kim D. Kelly
Kim D. Kelly
Secretary
April 20, 2000
- -------------------------------------------------------------------------------
All persons to whom the accompanying proxy is addressed are requested to date,
execute and return it promptly in the enclosed, self-addressed envelope. No
postage is required if mailed within the United States.
- --------------------------------------------------------------------------------
<PAGE>
INSIGHT COMMUNICATIONS COMPANY, INC.
____________________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held
May 16, 2000
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Insight Communications Company, Inc. (the "Company")
of proxies and voting instructions in the accompanying form for use at the
Annual Meeting of Stockholders to be held at The Plaza Hotel, Fifth Avenue at
Central Park South, New York, New York, at 9:00 a.m. on Tuesday, May 16, 2000,
and at all adjournments thereof. The shares represented by proxies solicited by
the Board of Directors of the Company will be voted in accordance with the
directions given therein. If no direction is indicated, the proxy will be voted
in favor of the proposals set forth in the notice attached to this proxy
statement. Any stockholder may revoke his proxy at any time prior to the voting
thereof by giving notice in writing to the Secretary of the Company, by granting
a proxy bearing a later date or by voting in person at the meeting.
Holders of record of shares of the Company's Class A Common Stock and
Class B Common Stock at the close of business on March 28, 2000 are entitled to
vote at the meeting. As of such record date, there were 49,157,180 shares of
Class A Common Stock and 10,226,050 shares of Class B Common Stock outstanding.
The presence, in person or by proxy, of stockholders entitled to cast a
majority of the votes entitled to be cast by all stockholders will constitute a
quorum for the transaction of business at the meeting. Holders of shares of
Class A Common Stock and Class B Common Stock will vote as a single class on all
matters submitted to a vote of the stockholders. Each share of Class A Common
Stock will be entitled to one vote and each share of Class B Common Stock will
be entitled to ten votes.
Directors will be elected by a plurality of the votes cast at the
meeting. Approval of each other matter will require the affirmative vote of a
majority of the votes cast thereon. Sidney R. Knafel and trusts for the benefit
of his children, Michael S. Willner and Kim D. Kelly collectively beneficially
own approximately 63.2% of the aggregate votes that may be cast at the meeting.
Accordingly, the affirmative vote of such persons alone is sufficient to adopt
each of the proposals to be submitted to the stockholders at the meeting. Such
persons have advised the Company that they will vote all of their shares in
favor of the proposals set forth in the notice attached to this proxy statement.
Abstentions will be counted in tabulations of the votes cast on each
of the proposals presented at the meeting, whereas broker nonvotes will not be
counted for purposes of determining whether a proposal has been approved.
"Broker nonvotes" are proxies received from brokers who, in the absence of
specific voting instructions from beneficial owners of shares held in brokerage
name, have declined to vote such shares in those instances where discretionary
voting by brokers is permitted.
The cost of soliciting these proxies will be borne by the Company.
Proxies may be solicited by directors, officers or employees of the Company in
person or by telephone.
A list of stockholders entitled to vote at the meeting will be available
at the Company's executive offices located at 126 East 56/th/ Street, New York,
New York 10022. This proxy statement and the form of proxy are being mailed to
stockholders on or about April 20, 2000.
2
<PAGE>
ELECTION OF DIRECTORS
It is proposed to elect seven directors of the Company to hold office for
terms of one year and until their successors shall be elected and shall qualify.
Each nominee is currently a director of the Company. Messrs. Knafel and Willner
and Ms. Kelly have been directors of the Company since its organization in March
1999. Such individuals were officers of the ultimate general partner of Insight
Communications Company, L.P. ("Insight L.P.") until the Company's initial public
offering in July 1999, at which time all of Insight L.P.'s partners exchanged
their partnership interests for shares in the Company. Accordingly, references
to the "Company" in the biographies that follow for periods prior to the
offering mean such general partner of Insight L.P. Messrs. Kempner, Marcus,
Melwani and O'Connell became directors of the Company upon completion of the
initial public offering. The Company, Mr. Knafel and trusts for the benefit of
his children, Mr. Willner, Ms. Kelly and all of the members of management
holding shares of Class B Common Stock have agreed to cause the election of two
directors designated by Vestar Capital Partners III, L.P. ("Vestar") so long as
Vestar continues to own at least 25% of the Common Stock it currently owns, and
one such director so long as Vestar continues to own at least 15% of such Common
Stock.
Principal occupation and business
Name of Nominee Age experience during the past five years
- --------------- --- -------------------------------------
Sidney R. Knafel 69 Chairman of the Board of the Company since 1985. He was
the founder, Chairman and an equity holder of Vision
Cable Communications, Inc. from 1971 until its sale in
1981. Mr. Knafel is presently the managing partner of
SRK Management Company, a private investment company,
and also serves as Chairman of BioReliance Corporation,
a biological testing company. He is a director of NTL
Incorporated, CoreComm Limited, General American
Investors Company, Inc., IGENE Biotechnology, Inc. and
Source Media, Inc., as well as several private
companies. Mr. Knafel is a graduate of Harvard College
and Harvard Business School.
Michael S. Willner 48 Co-founded and has served as President of the Company
since 1985. Mr. Willner has also been Chief Executive
Officer of the Company since January 1998. Previously,
Mr. Willner served as Executive Vice President and
Chief Operating Officer of Vision Cable from 1979
through 1985, Vice President of Marketing for Vision
Cable from 1977 to 1979 and General Manager of Vision
Cable's Bergen County, New Jersey cable television
system from 1975 to 1977. Currently, Mr. Willner is a
director of NTL Incorporated. He is also a director of
Source Media, Inc. He serves on the boards of C-SPAN
and the National Cable Television Association where he
is a member of the Executive Committee and serves as
Treasurer. Mr. Willner is a graduate of Boston
University's College of Communication and serves on the
school's Executive Committee.
Kim D. Kelly 43 Executive Vice President and Chief Financial Officer of
the Company since 1990. Ms. Kelly has also been Chief
Operating Officer of the Company since January 1998.
Prior thereto, she served from 1982 to 1990 with Marine
Midland Bank, becoming its Senior Vice President in
1988, with primary responsibility for media lending
activities. Ms. Kelly serves as a member of the
National Cable Television Association Subcommittee for
Telecommunications Policy, as well as the National
Cable Television Association Subcommittee for
Accounting. She also serves as a director of Bank of
New York Hamilton Funds and Source Media, Inc. and
serves on the boards of Cable in the Classroom and
Cable Advertising Bureau. Ms. Kelly is a graduate of
George Washington University.
3
<PAGE>
Thomas L. Kempner 72 Chairman of the Compensation and Stock Option
Committees of the Company. Mr. Kempner has been
Chairman and Chief Executive Officer of Loeb Partners
Corporation, investment bankers, and its predecessors
since February 1978. He is currently a director of
Alcide Corporation, CCC Information Services Group,
Inc., FuelCell Energy, Inc., IGENE Biotechnology, Inc.,
Intermagnetics General Corp., Northwest Airlines, Inc.
(Emeritus), Evercel, Inc. and Roper Starch Worldwide,
Inc. Mr. Kempner is a graduate of Yale University.
James S. Marcus 70 Member of the Audit Committee of the Company. Mr.
Marcus is a retired partner of The Goldman Sachs Group,
L.P. (predecessor of The Goldman Sachs Group, Inc.),
investment bankers. He is currently a director of
American Biltrite Inc. and Kellwood Company. Mr. Marcus
is a graduate of Harvard College and Harvard Business
School.
Prakash A. Melwani 41 Chairman of the Audit Committee of the Company. Mr.
Melwani is a Managing Director of Vestar Capital
Partners, manager of over $3.5 billion in private
equity capital, and was a founding partner of Vestar at
inception in 1988. Mr. Melwani has been designated as a
director by Vestar pursuant to a Securityholders
Agreement between Vestar, the Company and other
parties. Mr. Melwani is a graduate of Cambridge
University and Harvard Business School.
Daniel S. O'Connell 46 Member of the Compensation, Audit and Stock Option
Committees of the Company. Mr. O'Connell was a founder
in 1988 of Vestar. He is currently the Chief Executive
Officer of Vestar. Mr. O'Connell has been designated as
a director by Vestar pursuant to a Securityholders
Agreement between Vestar, the Company and other
parties. Mr. O'Connell is a director of Aearo
Corporation, Cluett American Corp., Remington Products
Company L.L.C., Russell-Stanley Holdings, Inc.,
Siegelgale, Inc., Sheridan Healthcare, Inc. and St.
John Knits, all companies in which Vestar has a
significant equity interest. Mr. O'Connell is a
graduate of Brown University and the Yale University
School of Management.
The Board of Directors of the Company has an Audit Committee, a
Compensation Committee and a Stock Option Committee. The Board of Directors has
no nominating committee; nominees for election as directors of the Company are
selected by the Board of Directors. The Committees were formed in July 1999 upon
completion of the Company's initial public offering. During 1999, there was one
meeting of the Audit Committee, no meetings of the Compensation Committee and
one meeting of the Stock Option Committee. All of the respective Committee
members attended each of the Committee meetings.
The Audit Committee consists of three directors, all of whom are
independent directors. The current members of the Audit Committee are Prakash
Melwani, James Marcus and Daniel O'Connell. Its functions include the following:
(i) recommend the appointment of independent accountants, (ii) review the
arrangements for and scope of the audit by independent accountants, (iii) review
the independence of the independent accountants, (iv) consider the adequacy and
effectiveness of the system of internal accounting and financial controls and
review any proposed corrective actions, (v) review and monitor the Company's
policies regarding business ethics and conflicts of interest and (vi) discuss
with management and the independent accountants the Company's draft quarterly
interim and annual financial statements and key accounting and reporting
matters.
The Compensation Committee consists of three directors, Thomas Kempner,
Daniel O'Connell and Michael Willner. The Compensation Committee has authority
to review and make recommendations to the Board of Directors with respect to the
compensation of executive officers of the Company.
4
<PAGE>
The Stock Option Committee consists of two directors, each of whom is a
"non-employee" director (as defined in Rule 16b-3 under the Securities Exchange
Act of 1934). The current members of the Stock Option Committee are Thomas
Kempner and Daniel O'Connell. The Stock Option Committee administers the
Insight Communications Company, Inc. 1999 Stock Option Plan (the "Plan") and
determines, among other things, the time or times at which options will be
granted, the recipients of grants, whether a grant will consist of incentive
stock options, nonqualified stock options and stock appreciation rights (in
tandem with an option or free-standing) or a combination thereof, the option
periods, whether an option is exercisable for Class A Common Stock or Class B
Common Stock, the limitations on option exercise and the number of shares to be
subject to such options, taking into account the nature and value of services
rendered and contributions made to the success of the Company. The Stock Option
Committee also has authority to interpret the Plan and, subject to certain
limitations, to amend provisions of the Plan as it deems advisable.
During 1999, the Board of Directors of the Company held two meetings and
took action eight times by unanimous written consent. All of the directors
attended at least 75% of the aggregate number of meetings of the Board.
The Board of Directors recommends a vote FOR the election of the nominees
herein.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 21, 2000 with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to beneficially own more than 5% of the
Company's Common Stock; (ii) each of the Company's directors; and (iii) all
directors and executive officers of the Company as a group.
Unless otherwise indicated, the address of each person named in the table
below is Insight Communications Company, Inc., 126 East 56th Street, New York,
New York 10022. The amounts and percentage of Common Stock beneficially owned
are reported on the basis of regulations of the Securities and Exchange
Commission ("SEC") governing the determination of beneficial ownership of
securities. Under the rules of the SEC, a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power," which includes
the power to vote or to direct the voting of such security, or "investment
power," which includes the power to dispose of or to direct the disposition of
such security. A person is also deemed to be a beneficial owner of any
securities of which that person has a right to acquire beneficial ownership
within 60 days. Under these rules, more than one person may be deemed a
beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which such person has no economic interest.
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock Percent of
-------------------- -------------------- Vote as a
Beneficial Owner Number % Number % Single Class(1)
- ---------------- ------ --- ------ --- ---------------
<S> <C> <C> <C> <C> <C>
Sidney R. Knafel (2) -- -- 3,897,432 38.1 25.7
Michael S. Willner (3) -- -- 1,481,514 14.5 9.8
Kim D. Kelly (4) -- -- 838,420 8.2 5.5
Thomas L. Kempner (5) 3,876,455 7.9 -- -- 2.6
James S. Marcus -- -- 132,779 1.3 *
Prakash A. Melwani (6) 9,921,723 20.2 -- -- 6.6
Daniel S. O'Connell (6) 9,921,723 20.2 -- -- 6.6
Vestar Capital Partners III, L.P. (6) 9,921,723 20.2 -- -- 6.6
Loeb Investors Co. (5) 3,876,455 7.9 -- -- 2.6
Andrew G. Knafel, Joshua Rubenstein 45,369 * 3,354,737 32.8 22.2
and William L. Scherlis, as trustees
under Trusts F/B/O Knafel children (7)
All directors and executive officers 13,799,178 28.1 6,350,145 62.1 51.1
As group (8 persons)
</TABLE>
________________________________
* Less than 1%.
(1) Holders of Class A Common Stock are entitled to one vote per share and
holders of Class B Common Stock are entitled to ten votes per share.
Holders of both classes of Common Stock vote together as a single class on
all matters presented for a vote, except as otherwise required by law.
(2) Represents 3,471,477 shares held by ICI Communications, Inc., of which Mr.
Knafel is the sole stockholder, and 425,955 shares held by the estate of
Mr. Knafel's deceased wife. All of the indicated shares are subject to an
agreement with Vestar not to sell any such shares until January 25, 2001.
Does not include 562,500 shares of Class B Common Stock underlying options
granted pursuant to the Plan, as they will not be exercisable within 60
days.
(3) Includes 6,448 shares of Class B Common Stock held in trust for the benefit
of his minor children. Does not include 843,750 shares of Class B Common
Stock underlying options granted pursuant to the Plan, as they will not be
exercisable within 60 days.
(4) Does not include 843,750 shares of Class B Common Stock underlying options
granted pursuant to the Plan, as they will not be exercisable within 60
days.
(5) Represents 2,146,541 shares held by Loeb Investors Co. LIX and 1,729,914
shares held by Loeb Investors Co. XXXVI, each of which may be deemed
beneficially owned by Mr. Kempner. Loeb Investor Co.'s address is 61
Broadway, New York, New York.
(6) Each of Mr. Melwani, a managing director of Vestar, and Mr. O'Connell, the
Chief Executive Officer of Vestar, may be deemed to beneficially own the
shares held by Vestar. Vestar's address is 245 Park Avenue, 41st floor, New
York, New York 10167.
(7) Includes 386,413 shares of Class B Common Stock held individually by Andrew
G. Knafel and 45,369 shares of Class A Common Stock held individually by
William L. Scherlis. The indicated shares are subject to the agreement with
Vestar discussed in footnote (2) above. Sidney Knafel expressly disclaims
beneficial ownership of the shares.
6
<PAGE>
EXECUTIVE COMPENSATION
Report of the Compensation Committee
The base salaries and bonuses for the Company's executive officers during
1999 were determined prior to the completion of the Company's initial public
offering on July 26, 1999. Prior to the offering, the Company operated as a
limited partnership known as Insight Communications Company, L.P. ("Insight
L.P."), and the business and affairs of the Company were managed by its ultimate
general partner, ICI Communications, Inc. ("ICI"). Executive officer salaries
were paid by ICI and reimbursed by Insight L.P. Executive officer compensation
decisions were made by consensus between Michael Willner, ICI's President and
Chief Executive Officer, and Sidney Knafel, ICI's Chairman of the Board who is
the sole shareholder and director of ICI, without any formal action. Mr. Willner
determined for each executive officer a salary that he believed to be reasonable
based upon such officer's compensation during the previous year, Insight L.P.'s
performance during the previous year as compared to earlier years and such
officer's contribution to such performance. These salaries were then discussed
with and agreed to by Mr. Knafel.
As one of the Company's principal stockholders, Mr. Willner's financial
interests are directly tied to the overall performance of the Company as
reflected in the price per share of common stock. For his services as the
Company's chief executive officer, Mr. Willner's future compensation will be
determined in accordance with the compensation policies outlined below.
However, before the Company completed its initial public offering, his 1999
compensation was determined informally in consultation with Mr. Knafel.
The Company's Board of Directors established its Compensation Committee
(the "Committee") upon completion of its initial public offering. The Committee,
which is composed of two independent directors (Thomas L. Kempner and Daniel S.
O'Connell) and one inside director (Michael Willner), is responsible for
reporting to the Company's Board of Directors concerning the compensation
policies followed by the Committee in recommending to the Board compensation for
executive officers.
The Committee intends to utilize a program designed to attract, motivate
and retain highly skilled and effective executives who can achieve long-term
success in an increasingly competitive business environment and whose services
the Company needs to maximize its return to stockholders. The program is
premised on the belief that an executive's compensation should reflect his
individual performance and the overall performance of the Company, with an
appropriate balance maintained among the weightings of these potentially
disparate performance levels. The program will require flexibility in order to
ensure that the Company can continue to attract and retain executives with
unique and special skills critical to the Company's success. Flexibility is also
necessary to permit adjustments in compensation in light of changes in business
and economic conditions. The compensation of each executive officer will be
reviewed annually by the Committee.
The Committee will establish base salaries and award bonuses to executive
officers by measuring individual and Company performance. The Committee's annual
performance evaluation of each executive officer is subjective, will rely
heavily on the performance evaluation presented to the Committee by the
Company's President, and not upon an exact formula for determining the relative
importance of each of the factors considered, nor will there be a precise
measure of how each of the individual factors relates to the Committee's
recommendation with respect to each executive officer's ultimate annual
compensation.
7
<PAGE>
Section 162(m) of the Internal Revenue Code limits deductions for certain
executive compensation in excess of $1 million. Certain types of compensation
in excess of $1 million are deductible only if (i) performance goals are
specified in detail by a compensation committee comprised solely of two or more
outside directors, (ii) payments are approved by a majority vote of the
stockholders prior to payment of such compensation, (iii) the material terms of
the compensation are disclosed to the stockholders and (iv) the compensation
committee certifies that the performance goals were in fact satisfied. While the
Committee will give due consideration to the deductibility of compensation
payments on future compensation arrangements with the Company's executive
officers, the Committee will make its compensation decisions based upon an
overall determination of what it believes to be in the best interests of the
Company and its stockholders, and deductibility will be only one among a number
of factors used by the Committee in making its compensation decisions.
Compensation Committee of the Board of Directors
Thomas L. Kempner, Chairman
Daniel S. O'Connell
Michael S. Willner
8
<PAGE>
Performance Graph
The following line graph compares the annual percentage change in the
cumulative total stockholder return on the Company's Class A Common Stock with
the cumulative total return of The Nasdaq Stock Market Index and the cumulative
total return of the Nasdaq Telecommunications Stocks Index (an index containing
performance data of radio, telephone, telegraph, television and cable television
companies) from July 21, 1999, the date the Company's Class A Common Stock
commenced trading, through December 31, 1999. The performance graph assumes
that an investment of $100 was made in the Class A Common Stock and in each
Index on July 21, 1999, and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Value of $100 Invested on July 21, 1999
---------------------------------------
[STOCK PRICE PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
7/21/99 12/31/99
-------- ---------
<S> <C> <C>
Insight Communications Company, Inc. $ 100 $ 99
The Nasdaq Stock Market Index 100 143
Nasdaq Telecommunications Stocks Index 100 126
</TABLE>
The Company believes that the foregoing information provided has only
limited relevance to an understanding of the Company's compensation policies
during the indicated periods and does not reflect all matters appropriately
considered in developing its compensation strategy. In addition, the stock price
performance shown on the graph is not necessarily indicative of future price
performance.
9
<PAGE>
The following table summarizes the compensation for services rendered to
the Company paid in 1998 and 1999 to the Chief Executive Officer and the
Company's other executive officers (collectively, the "Named Executive
Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------ --------------------------------
Securities
Restricted Underlying All Other
Name and Salary Bonus Stock Awards Options Compensation
Principal Position Year ($) ($) ($) (#) ($)(2)
- --------------------- ---- ------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sidney R. Knafel 1999 250,000 -- -- 562,500 7,605
Chairman of the Board 1998 248,664 -- -- -- 1,615
Michael S. Willner 1999 500,000 100,000 -- 843,750 5,538
President and Chief 1998 435,616 30,000 -- -- 1,646
Executive Officer
Kim D. Kelly 1999 450,000 90,000 5,559,951(1) 843,750 6,417
Executive Vice 1998 386,927 25,000 -- -- 3,828
President and Chief
Financial and
Operating Officer
</TABLE>
_______________________
(1) Upon joining Insight L.P. in 1990, Ms. Kelly entered into agreements with
the then general partner of Insight L.P. (ICC Associates, L.P.) and its
principal equity owners Sidney Knafel and Michael Willner. Pursuant to
these agreements, Ms. Kelly became entitled to an equity interest in the
general partner. Upon completion of the Company's initial public offering,
the general partner exchanged its partnership interests in Insight L.P. for
shares of Common Stock, and distributed to Ms. Kelly a number of shares of
such Common Stock representing her percentage equity interest in the
general partner. The above table reflects shares issued to Ms. Kelly by
virtue of an agreement between the general partner and Vestar pursuant to
which the general partner received additional partnership interests in
Insight L.P. upon completion of the public offering. The table does not
include other shares issued to Ms. Kelly by virtue of the general partner's
exchange of partnership interests for shares of Common Stock. Pursuant to
Item 402 of Regulation S-K, the issuance of shares is reported for purposes
of the above table as compensation in 1999, the year in which the shares
were issued.
(2) Amounts for 1999 include: (i) contributions made by the Company on behalf
of the Named Executive Officers to the Company's 401(k) Plan (Sidney
Knafel: $1,875; Michael Willner: $1,667; and Kim Kelly: $3,750) and (ii)
life insurance premiums and group term life insurance premiums paid by the
Company on behalf of the Named Executive Officers (Sidney Knafel: $5,730;
Michael Willner: $3,871; and Kim Kelly: $2,667).
10
<PAGE>
The following table sets forth information concerning individual grants of
stock options made during 1999 to the Named Executive Officers in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Individual Grants
- ---------------------------------------------------------------------------------------
Potential Realizable Value
Number of Percent of at Assumed Annual Rates
Securities Total Options of Stock Price Appreciation
Underlying Granted to Exercise for Option Term(2)
Options Employees in Price Expiration -----------------------------
Name Granted(1) Fiscal Year Per Share($) Date 5%($) 10%($)
- --------------------- ---------- ------------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Sidney R. Knafel 542,095 18.8% 24.50(3) 7/20/09 8,352,556 21,167,016
20,405 0.7 26.95(4) 7/20/04 138,119 305,208
Michael S. Willner
823,345 28.6 24.50(3) 7/20/09 12,686,033 32,148,897
20,405 0.7 26.95(4) 7/20/04 138,119 305,208
Kim D. Kelly 843,750 29.3 24.50(3) 7/20/09 13,000,431 32,945,645
</TABLE>
______________________
(1) The options become exercisable for shares of the Company's Class B Common
Stock over a five-year vesting schedule.
(2) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's Class A Common Stock increasing to $39.91 and
$63.55, respectively, for the options expiring July 20, 2009, and $31.27
and $39.46, respectively, for the options expiring July 20, 2004. For the
period from July 21, 1999, the commencement of trading of the Company's
Class A Common Stock, through December 31, 1999, the cumulative total
return of the Company's Class A Common Stock had increased 21%.
(3) The exercise price was established at the initial public offering price.
(4) The exercise price was established at 110% of the market price on the date
of grant, as this option is an "incentive" stock option and such Named
Executive Officer possesses more than 10% of the total voting power of the
Company's Common Stock.
11
<PAGE>
The following table sets forth information at fiscal year-end 1999
concerning stock options held by the Named Executive Officers in the Summary
Compensation Table. No options held by such individuals were exercised during
1999.
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options At Fiscal Year-End(#) At Fiscal Year-End($)(1)
------------------------------ ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
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<S> <C> <C> <C> <C>
Sidney R. Knafel -- 562,500 -- 2,832,820
Michael S. Willner -- 843,750 -- 4,274,227
Kim D. Kelly -- 843,750 -- 4,324,219
</TABLE>
__________________
(1) As of December 31, 1999, all options held by the Named Executive Officers
were unexercisable. The value of the unexercisable options was calculated
as the difference between the exercise price of the options and $29.63, the
fair market value of the Company's Common Stock as of December 31, 1999,
multiplied by the number of options outstanding.
Compensation of Directors
Those directors who are not also employees of the Company receive an annual
retainer fee of $25,000, which may, at the election of the director, be in the
form of cash or five-year options to purchase the Company's Class A Common
Stock. Nonemployee directors receive reimbursement of out-of-pocket expenses
incurred for each Board or committee meeting attended.
1999 Stock Option Plan
The Board of Directors adopted the Insight Communications Company, Inc.
1999 Stock Option Plan as of June 24, 1999. The Company reserved 5,000,000
shares of common stock with respect to which options and stock appreciation
rights ("SARs") may be granted under the Plan. The purpose of the Plan is to
promote the interests of the Company and its stockholders by strengthening the
Company's ability to attract and retain competent employees, to make service on
the Company's Board of Directors more attractive to present and prospective non-
employee directors and to provide a means to encourage stock ownership and
proprietary interest in the Company by officers, non-employee directors and
valued employees and other individuals upon whose judgment, initiative and
efforts the financial growth of the Company largely depends.
The Plan may be administered by either the entire Board of Directors or a
committee consisting of two or more members of the Board of Directors, each of
whom is a "non-employee director" (as defined in Rule 16b-3 under the Securities
Exchange Act of 1934). The Plan is currently administered by a stock option
committee of the Board of Directors consisting of two non-employee directors,
Thomas L. Kempner and Daniel S. O'Connell.
Incentive stock options ("ISOs") may be granted only to officers and key
employees of the Company and its subsidiaries. Nonqualified stock options and
SARs may be granted to such officers and employees as well as to agents and
directors of and consultants to the Company. In determining the eligibility of
an individual for grants under the Plan, as well as in determining the number of
shares to be optioned to any individual, the stock option committee takes into
account the recommendations of the Company's Chairman of the Board, Sidney R.
Knafel, the position and responsibilities of the individual being considered,
the nature and value to the Company or its subsidiaries of his or her service or
accomplishments, his or her present or potential contribution to the success of
the Company or its subsidiaries, the number and terms of options and SARs
already held by an individual and such other factors as the stock option
committee may deem relevant. In making recommendations to the stock option
committee, Mr. Knafel focuses upon individuals who would be motivated by a
direct economic stake in the equity of the Company. Options
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may provide for their exercise into shares of any class of the Company's common
stock, Class A or Class B. Under an agreement with Vestar Capital Partners III,
L.P., the Company has agreed not to grant options for Class B Common Stock
representing in excess of 6% of the fully-diluted shares.
The Plan provides for the granting of ISOs to purchase common stock at not
less than the fair market value on the date of the option grant and the granting
of nonqualified options and SARs with any exercise price. SARs granted in tandem
with an option have the same exercise price as the related option. The Plan
contains limitations applicable only to ISOs granted thereunder. To the extent
that the aggregate fair market value, as of the date of grant, of the shares to
which ISOs become exercisable for the first time by an optionee during the
calendar year exceeds $100,000, the option will be treated as a nonqualified
option. In addition, if an optionee owns more than 10% of the total voting power
of all classes of the company's capital stock at the time the individual is
granted an ISO, the option price per share cannot be less than 110% of the fair
market value per share and the term of the ISO cannot exceed five years. No
option or SAR may be granted under the Plan after June 25, 2009, and no option
or SAR may be outstanding for more than ten years after its grant.
Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash, check or, under certain
circumstances, in shares of any class of the Company's common stock, or any
combination thereof. SARs, which give the holder the privilege of surrendering
such rights for the appreciation in the common stock between the time of the
grant and the surrender, may be settled, in the discretion of the Board or
committee, as the case may be, in cash, common stock, or in any combination
thereof. The exercise of an SAR granted in tandem with an option cancels the
option to which it relates with respect to the same number of shares as to which
the SAR was exercised. The exercise of an option cancels any related SAR with
respect to the same number of shares as to which the option was exercised.
Generally, options and SARs may be exercised while the recipient is performing
services for the Company and within three months after termination of such
services.
The Plan may be terminated at any time by the Board of Directors, which may
also amend the Plan, except that without stockholder approval, it may not
increase the number of shares subject to the Plan or change the class of persons
eligible to receive options under the Plan.
Compensation Committee Interlocks and Insider Participation
Currently, the members of the compensation committee are Thomas L. Kempner,
Daniel S. O'Connell and Michael S. Willner, the Company's President and Chief
Executive Officer.
CERTAIN TRANSACTIONS
On November 17, 1999, Insight Interactive, LLC, a wholly-owned subsidiary
of the Company, formed a joint venture with Source Media, Inc. to conduct all
lines of business of Source Media relating to its VirtualModem and Interactive
Channel products and businesses. The Company capitalized the joint venture with
$13.0 million in exchange for its 50% equity interest. As part of the
transaction, Insight Interactive acquired 842,105 shares of Source Media's
common stock for $12.0 million and warrants to purchase up to an additional
4,596,786 shares at an exercise price of $20 per share.
Insight Interactive also received a share of non-participating preferred
stock which provides the Company with the right to designate three members of
the board of directors of Source Media. The Company's designees are Sidney R.
Knafel, the Company's Chairman of the Board, Michael S. Willner, the Company's
President and Chief Executive Officer, and Kim D. Kelly, the Company's Executive
Vice President, Chief Operating and Financial Officer.
The Company is currently providing the joint venture's interactive services
to customers of its systems under a letter of intent entered into on July 29,
1998. Pursuant to the letter of intent, the Company pays a monthly license fee
for the right to distribute LocalSource in an amount that is based on the number
of digital customers as adjusted for penetration. The Company and Source Media
share 50% of all revenues, other than advertising revenues, generated by
LocalSource.
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On March 3, 2000, the Company and Source Media sold all of the joint
venture's VirtualModem business to Liberate Technologies in exchange for the
issuance to each of Insight Interactive and Source Media of 886,000 shares of
Liberate common stock. The Company's joint venture with Source Media continues
to own and operate its programming assets, LocalSource and SourceGuide, and has
entered into preferred content and programming services agreements with
Liberate.
Insight L.P. receives a management fee for each twelve-month period equal
to 3% of substantially all revenue arising out of or in connection with the
operations of the Indiana and Kentucky systems of Insight Midwest, L.P., of
which the Company serves as the general partner and owns 50% of the partnership
interests.
Under distribution agreements with Excite@Home, the Company provides high-
speed Internet access to customers over the Company's distribution network in
certain of its cable television systems. In January 1999, the subsidiary holding
the Company's Kentucky systems entered into agreements with Excite@Home for the
issuance to the Kentucky subsidiary of warrants to purchase shares of
Excite@Home's Series A Common Stock ("Excite@Home Stock") at an exercise price
of $5.25 per share, as adjusted for a two-for-one stock split which occurred on
June 17, 1999. Under the provisions of the agreements, the Company estimates
that it may purchase up to 459,200 shares of Excite@Home Stock. The warrants
become vested and exercisable, subject to certain forfeiture and other
conditions, based on operational targets which include offering the Excite@Home
service by the Kentucky subsidiary in its service areas and obtaining specified
numbers of Excite@Home customers over the remaining six-year term of the
Excite@Home distribution agreement.
In connection with its initial public offering, the Company issued a total
of 1,412,181 shares of Common Stock to its employees, including its executive
officers and directors. In October 1999 and April 2000, the Company made loans
to certain of these employees, the proceeds of which were used to satisfy the
individual withholding obligations with respect to the receipt of these shares.
In the aggregate, these loans total approximately $14.5 million, including $9.5
million to executive officers and directors of the Company. These non-recourse
loans are represented by notes which are secured by the shares of Common Stock
received by the individuals. The loans bear interest at the rate of 6% per
annum. The loans made in October 1999 for an aggregate of approximately $13.9
million are payable upon their fifth anniversary, and the loans made in April
2000 for an aggregate of approximately $551,000 are payable on December 31,
2000. In each case, the loans are payable by employees 180 days following the
termination of their employment. The proceeds of any sales of the pledged shares
must be applied towards early prepayment of the loans.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Ernst & Young LLP as its independent auditors for 2000. Although
stockholder ratification of the Board of Directors' action in this respect is
not required, the Board of Directors considers it desirable for stockholders to
pass upon such appointment. If the stockholders do not ratify the appointment
of Ernst & Young LLP, the engagement of independent auditors will be reevaluated
by the Board of Directors.
A representative of Ernst & Young LLP is expected to attend the meeting and
will be available to respond to appropriate questions from stockholders.
The Board of Directors recommends a vote FOR ratification of the
appointment of Ernst & Young LLP.
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COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own beneficially more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership of
such Common Stock with the Securities and Exchange Commission, and to file
copies of such reports with the Company. Based solely upon a review of the
copies of such reports filed with the Company, the Company believes that during
1999 such reporting persons complied with the filing requirements of said
Section 16(a).
ANNUAL REPORT
The Company's 1999 Annual Report is being mailed to stockholders together
with this proxy statement. No part of such Annual Report shall be regarded as
proxy-soliciting material or as a communication by means of which any
solicitation is being or is to be made. The Company will provide without charge
to each of its stockholders, upon the written request of any such stockholders,
a copy of its Annual Report on Form 10-K for the year ended December 31, 1999,
exclusive of exhibits. Written requests for such Form 10-K should be sent to
Colleen Quinn, Senior Vice President of Corporate Relations, 126 East 56/th/
Street, New York, New York 10022.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. However, if other matters should come before the meeting, it is the
intention of each person named in the proxy to vote such proxy in accordance
with his or her judgment on such matters.
2001 STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. In order for stockholder proposals for the 2001 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement, they
must be received by the Secretary of the Company at the Company's principal
executive offices not later than January 17, 2001.
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THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR PROPOSALS 1 AND 2.
<TABLE>
<S> <C> <C>
1. Election of Directors FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] * EXCEPTIONS [_]
listed below for all nominees listed below
</TABLE>
The nominees for the board of directors are: Sidney R. Knafel, Michael S.
Willner, Kim D. Kelly, Thomas L. Kempner, James S. Marcus, Prakash A. Melwani,
Daniel S. O'Connell
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below).
*Exceptions ___________________________________________________________________
2. Selection of Independent Auditors
FOR [_] AGAINST [_] ABSTAIN [_] Address Change and
or Comments Mark Here [_]
Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee,
or Guardian, please give full title
as such.
Dated: ______________________, 2000
___________________________________
Signature
___________________________________
Signature
Sign, Date and Return the Proxy Card Votes MUST be indicated [X]
in the Enclosed Envelope. (x) in Black or Blue ink.
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INSIGHT COMMUNICATIONS COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Michael S. Willner and Kim D. Kelly as
proxies, each with the power of substitution, and hereby authorizes them to vote
all shares of Class A and Class B Common Stock of the undersigned at the 2000
Annual Meeting of the Company, to be held at The Plaza Hotel, Fifth Avenue at
Central Park South, New York, New York, at 9 a.m. on Tuesday, May 16, 2000, and
any adjournment or postponement thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" THE PROPOSALS SET FORTH ON THE REVERSE SIDE.
(Continued, and please sign, on reverse side)
INSIGHT COMMUNICATIONS COMPANY,
INC.
P.O. BOX 11440
NEW YORK, N.Y. 10203-0440
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