<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Capital Cities/ABC, 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was 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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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CAPITAL CITIES/ABC, INC.
77 West 66th Street
New York, New York 10023-6298
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 18, 1995
----------
To The Shareholders:
The Annual Meeting of Shareholders of Capital Cities/ABC, Inc. (the "Company")
will be held at 11:00 A.M. on Thursday, May 18, 1995 in Studio TV-1 at 7 West
66th Street, New York, New York for the following purposes:
1. To elect a Board of Directors of 14 members to serve until the next
Annual Meeting of Shareholders or until their successors are elected and
qualified.
2. To consider and act upon a proposal to ratify the appointment of Ernst
& Young LLP as the Company's independent auditors for 1995.
3. To consider and act upon a shareholder proposal concerning minimum
share ownership by members of the Board of Directors.
4. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 29, 1995 will be
entitled to vote at the meeting and any adjournment thereof.
Whether or not you plan to attend the meeting, we urge you to date, execute and
mail the enclosed proxy/voting instruction card in order to assure
representation of your shares. For this purpose, and for your convenience, a
business reply envelope is enclosed. A shareholder who attends the meeting in
person may, if he wishes, vote at the meeting, thereby canceling any proxy vote
previously given.
Attendance at the meeting will be limited to shareholders of record as of the
record date or their authorized representatives, not to exceed two per
shareholder, and to guests of the Company.
By Order of the Board of Directors,
Philip R. Farnsworth
Secretary
March 31, 1995
All persons to whom the accompanying proxy/voting instruction card 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>
CAPITAL CITIES/ABC, INC.
77 West 66th Street
New York, New York 10023-6298
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Capital Cities/ABC, Inc. (the "Company") of proxies and
voting instructions in the accompanying form for use at the Annual Meeting of
Shareholders to be held in Studio TV-1 at 7 West 66th Street, New York, New York
at 11:00 A.M. on Thursday, May 18, 1995, and at all adjournments thereof. Any
shareholder may revoke his proxy at any time prior to the meeting by filing with
the Company a written notice to that effect or a duly executed proxy/voting
instruction card bearing a date later than his previously executed proxy/voting
instruction card, and, in the event that he attends the meeting, he may, if he
so desires, vote in person.
The enclosed proxy/voting instruction card also serves as voting instructions to
Fidelity Management Trust Company, as Trustee under the Capital Cities/ABC, Inc.
Savings & Investment Plan (the "SIP"), for voting of the shares of the Company's
common stock equivalent to the value of the interest credited to the account of
each member in the SIP as of the record date. The Trustee will vote the number
of equivalent shares credited to each member's account as instructed by each
member who returns an executed proxy/voting instruction card in a timely manner
(prior to May 12, 1995). If a SIP member's executed proxy/voting instruction
card is not timely received, the number of equivalent shares credited to that
account will not be voted. Any SIP member may revoke his voting instructions
prior to May 12, 1995 by filing with the Trustee a written notice to that effect
or a duly executed proxy/voting instruction card bearing a date later than his
previously executed proxy/voting instruction card.
The shares represented by all proxies and voting instructions delivered pursuant
to this solicitation, if not revoked, will be voted at the meeting as directed
by the shareholders and the SIP members. The voting instruction of each SIP
member is confidential. Neither the Trustee nor the tabulator of the votes at
the shareholders meeting, Harris Trust Company of New York, will reveal to the
Company how an individual member votes his SIP interest. In addition, the same
confidentiality is given to the votes of any shares of the Company's common
stock owned by a SIP member outside of the SIP and registered in his own name.
The cost of soliciting proxies and voting instructions will be borne by the
Company, which will reimburse brokerage firms, custodians, nominees and
fiduciaries for their expenses in forwarding proxy material to the beneficial
owners of the Company's common stock. Officers and other employees of the
Company may solicit proxies personally and by telephone. In addition, the
Company has retained Georgeson & Company Inc. to aid in the solicitation of
proxies at a fee of $7,500 plus out-of-pocket expenses.
On all matters that may come before the meeting, each shareholder, or his proxy,
will be entitled to one vote for each share of common stock, $.10 par value
("Common Stock"), of which such shareholder was the holder of record on March
29, 1995. On such date there were outstanding and entitled to vote 154,061,655
shares of Common Stock, not including 29,873,305 shares held by the Company as
treasury shares.
All disclosure of shares of the Company's Common Stock in this proxy statement
reflects the Company's ten-for-one stock split effective June 3, 1994.
The proxy statement and the proxy/voting instruction card are being mailed to
shareholders and SIP members on or about March 31, 1995.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1994, including
financial statements, is being mailed to shareholders together with this proxy
statement, and to SIP members under separate cover. 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.
<PAGE>
ELECTION OF DIRECTORS
It is proposed to elect 14 directors of the Company to hold office for one
year and until their successors shall be elected and shall qualify. At the
meeting, the persons named in the enclosed proxy/voting instruction card intend
to vote the shares covered thereby for the election of the nominees to the Board
of Directors named below unless instructed to the contrary. Each nominee is
currently a director of the Company.
<TABLE>
<CAPTION>
Director Principal occupation and business experience
Nominee Age since during the past five years
------- --- -------- --------------------------------------------
<S> <C> <C> <C>
Robert P. Bauman 64 1985 Chairman of the Compensation Committee of the Company.
Chairman, British Aerospace PLC (manufacturer of
aerospace and other defense systems and commercial
aircraft) since 1993. Chief Executive of SmithKline
Beecham p.l.c. (manufacturer of consumer products
and pharmaceuticals) from 1989 to 1993, and
Chairman of the Board, Beecham Group p.l.c. prior
thereto. Director of CIGNA Corporation, Reuters
Holdings PLC and Union Pacific Corporation.
Nicholas F. Brady 64 1993 Member of the Compensation Committee of the Company.
Chairman and Chief Executive Officer of Darby
Overseas Investments, Ltd., Darby Emerging Markets
Investments LDC and Darby Advisors, Inc.
(investment firms) since February 1994, November
1994 and January 1993, respectively. Secretary of
the United States Department of the Treasury from
1988 to January 1993. Chairman of the Board of
Dillon, Read & Co. Inc. (investment banking) prior
thereto. Director of Amerada Hess Corporation,
Christiana Companies, Inc., H. J. Heinz Company and
certain Templeton Investment Companies.
Warren E. Buffett 64 1986 Chairman of the Finance Committee of the Company.
Chairman of the Board and Chief Executive Officer
of Berkshire Hathaway Inc. (insurance underwriting,
newspaper publishing and various manufacturing and
marketing activities). Director of Berkshire
Hathaway Inc., The Coca-Cola Company, The Gillette
Company, Salomon Inc and USAir Group, Inc.
Daniel B. Burke 66 1967 Member of the Executive and Finance Committees of
the Company. Retired President, Chief Executive
Officer and Chief Operating Officer of the
Company; offices held from 1990 to February
1994. President and Chief Operating Officer
prior thereto. Director of Avon Products, Inc.,
Consolidated Rail Corporation, Morgan Stanley
Group Inc. and Rohm and Haas Company.
Frank T. Cary 74 1986 Member of the Audit Committee of the Company.
Former Chairman of the Board and Chief
Executive Officer of International Business
Machines Corporation. Director of Celgene
Corporation, Cygnus Therapeutic Systems, ICOS
Corporation, Lincare Holdings Inc. and SPS
Transaction Services, Inc.
John B. Fairchild 68 1968 Executive Vice President of the Company and
Chairman of the Company's Fairchild Publications.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Director Principal occupation and business experience
Nominee Age since during the past five years
------- --- -------- --------------------------------------------
<S> <C> <C> <C>
Leonard H. Goldenson 89 1986 Chairman of the Executive Committee of the Company.
Retired Chairman of the Board and Chief Executive
Officer of American Broadcasting Companies, Inc.
Robert A. Iger 44 1994 President and Chief Operating Officer of the
Company. Executive Vice President, and
President of the ABC Television Network Group
from 1993 to September 1994. President of ABC
Entertainment prior thereto.
Frank S. Jones 66 1988 Member of the Audit Committee of the Company.
Ford Professor of Urban Affairs, Emeritus,
Massachusetts Institute of Technology since 1992.
Ford Professor of Urban Affairs at MIT prior
thereto. Director of CIGNA Corporation,
Polaroid Corporation and Scientific Games Holdings
Corp.
Ann Dibble Jordan 60 1988 Member of the Audit Committee of the Company.
Former Director of Social Service Department,
University of Chicago Medical School; former
Assistant Field Work Professor, University
of Chicago School of Social Service Admin-
istration; former Director of Social Service,
Chicago Lyingin Hospital, University of
Chicago Medical Center. Director of
Automatic Data Processing, Inc., Hechinger
Company, Johnson & Johnson, National Health
Laboratories Incorporated, Salant
Corporation and The Travelers Inc.
John H. Muller, Jr. 70 1971 Chairman of the Audit Committee and member of the
Executive and Compensation Committees of the
Company. Chairman of the Executive Committee of
General Housewares Corp. (manufacturer and
marketer of cookware and cutlery products) since
1992; Chairman of the Board from 1990 to 1992;
Chairman of the Board and Chief Executive
Officer thereof prior thereto. Director of
General Housewares Corp.
Thomas S. Murphy 69 1957 Chairman of the Board and Chief Executive Officer
of the Company. Chairman of the Board from 1990
to February 1994. Chairman of the Board and
Chief Executive Officer prior thereto. Member of
the Executive and Finance Committees of the
Company. Director of Johnson & Johnson and
Texaco Inc.
Wyndham Robertson 57 1990 Member of the Audit Committee of the Company. Vice
President for Communications, The University of
North Carolina. Director of The Equitable
Companies Incorporated and Wachovia Bank of North
Carolina, N.A.
M. Cabell Woodward, Jr. 66 1982 Member of the Executive and Audit Committee of the
Company. Retired Vice Chairman and Chief
Financial Officer of ITT Corporation (diversified
multi-national enterprise). Director of The Black
& Decker Corporation and Melville Corporation.
</TABLE>
3
<PAGE>
Compensation of Directors
Nonemployee directors receive an annual retainer of $30,000 and a fee of $1,000
for each Board and committee meeting attended. Nonemployee directors who retire
with at least five years of service on the Board (including service on the Board
of American Broadcasting Companies, Inc.) are eligible to receive an annual
retirement benefit equal to the cash amount of the annual retainer, which will
be paid to the director or the director's surviving spouse for the number of
years of Board service by the director.
Meetings and Committees
The Board of Directors had a total of four meetings during 1994. Mr. Goldenson
attended fewer than 75% of the total number of meetings of the Board of
Directors. The Board of Directors has no Nominating Committee.
The Executive Committee consists of five directors: Mr. Goldenson, Chairman, and
Messrs. Burke, Muller, Murphy and Woodward. The committee meets on call or acts
by unanimous written consent and has authority to act on most matters during the
intervals between Board meetings. All matters approved by the committee during
1994 were by unanimous written consent.
The Audit Committee consists of six nonemployee directors: Mr. Muller, Chairman,
and Messrs. Cary, Jones and Woodward and Mses. Jordan and Robertson. The
committee reviews and evaluates the scope of the independent audit, internal
controls, security procedures, policies as to business ethics and other matters
deemed appropriate. There were two committee meetings during 1994.
The Compensation Committee consists of three nonemployee directors: Mr. Bauman,
Chairman, and Messrs. Brady and Muller. The committee establishes the
compensation structure of the Company and determines the compensation of the
executive officers. In so doing, it is empowered to make awards under the
Company's Incentive Compensation Plan and the Company's 1991 Stock Option Plan.
See the "Report of the Compensation Committee" under "Executive Compensation and
Other Information" below for information on the committee's 1994 compensation
determinations for executive officers. There were two committee meetings during
1994 and all additional matters approved by the committee during 1994 were by
unanimous written consent.
The Finance Committee consists of three directors: Mr. Buffett, Chairman, and
Messrs. Burke and Murphy. The committee's primary responsibilities are to
review periodically the Company's long-term financial strategies, policies and
structure, and to review significant potential corporate acquisitions.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At February 28, 1995, the only persons, as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, known to the Company to be
the beneficial owners of more than 5% of the outstanding Common Stock are:
<TABLE>
<CAPTION>
Common Stock
beneficially Percent
owned of class
------------- --------
<S> <C> <C>
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131................. 20,000,000(1) 12.98
State Farm Mutual Automobile Insurance
Company and related entities
One State Farm Plaza
Bloomington, Illinois 61710........... 9,041,000(2) 5.87
</TABLE>
-----------
(1) Berkshire Hathaway Inc. ("Berkshire") owns these shares through certain of
its subsidiaries ("Berkshire Subsidiaries"). Mr. Buffett owns 40.7% of the
outstanding stock of Berkshire and therefore may be deemed to control the
stock of Berkshire and be the beneficial owner of these 20,000,000 shares.
While each of the Berkshire Subsidiaries owning the shares of Common Stock
has both voting and investment power with respect thereto, Mr. Buffett,
through his stock ownership of Berkshire, may be deemed to be in control of
such Berkshire Subsidiaries and therefore to direct the voting and
investments of such subsidiaries. However, pursuant to agreements dated
March 18, 1985, January 2, 1986 and October 29, 1993 (collectively, the
"Stock Purchase Agreement"), Berkshire and each of such Berkshire
Subsidiaries executed and delivered to the Company an irrevocable proxy to
vote all shares of the Company's Common Stock owned by them, and named as
their attorney and proxy Thomas S. Murphy so long as he shall be Chief
Executive Officer of the Company, or Daniel B. Burke so long as he shall be
Chief Executive Officer of the Company. Such proxies will expire upon such
date as neither Mr. Murphy nor Mr. Burke shall be Chief Executive Officer
of the Company, or January 2, 1997, whichever shall first occur. Mr.
Murphy was Chief Executive Officer of the Company until June 1, 1990, on
which date Mr. Burke became Chief Executive Officer of the Company until
February 14, 1994, on which date Mr. Murphy resumed the position of Chief
Executive Officer. In connection with the irrevocable proxy from Berkshire
and the Berkshire Subsidiaries, Mr. Murphy or Mr. Burke may be deemed to
have sole voting power but no investment power with respect to the shares
covered thereby, and Mr. Buffett may be deemed to have sole investment
power but no voting power with respect to such shares. However, Mr.
Buffett's investment power may be deemed to be restricted in that, pursuant
to the Stock Purchase Agreement, during the period ending on January 2,
1997, neither Berkshire nor any of the Berkshire Subsidiaries may dispose
of any Common Stock without first offering such stock to the Company, or
knowingly sell any Common Stock to any entity or group if such a sale would
give the entity or group more than 5% of all outstanding voting stock of
the Company. At the forthcoming Annual Meeting, Mr. Murphy will have the
power to vote these shares beneficially owned by Mr. Buffett.
(2) As reported to the Company on a Schedule 13G as of December 31, 1994, State
Farm Mutual Automobile Insurance Company and related entities have sole
power to vote or to direct the vote and to dispose or to direct the
disposition of all of the shares beneficially owned by them.
5
<PAGE>
At February 28, 1995, the following shares of Common Stock, and units under the
Company's Incentive Compensation Plan ("Shadow Stock units") were owned by all
directors and nominees, each executive officer named in the Summary Compensation
Table on page 10, and all directors and executive officers as a group:
<TABLE>
<CAPTION>
Common Stock Percent Shadow Stock
beneficially owned (1) of class units owned (2)
---------------------- -------- ---------------
<S> <C> <C> <C>
Robert P. Bauman 2,000 (3) (4) -0-
Nicholas F. Brady 4,000 (4) -0-
Warren E. Buffett 20,000,000 (5) 12.98 -0-
Daniel B. Burke 428,630 (6) .28 -0-
Frank T. Cary 3,000 (3) (4) -0-
John B. Fairchild 131,140 (6) .09 -0-
Leonard H. Goldenson 10,000 (4) -0-
Robert A. Iger 12,585 (6)(7) (4) 145,000
Frank S. Jones 250 (4) -0-
Ann Dibble Jordan 1,000 (4) -0-
John H. Muller, Jr. 2,000 (4) -0-
Thomas S. Murphy 999,260 (3)(5)(8) .65 -0-
Wyndham Robertson 3,000 (9) (4) -0-
M. Cabell Woodward, Jr. 11,000 (3) (4) -0-
Ronald J. Doerfler 108,020 (3)(6) .07 110,000
Michael P. Mallardi 17,719 (6)(7) .01 120,000
Stephen A. Weiswasser 7,000 (6)(10) (4) 80,000
All directors and executive officers
as a group 21,899,873 (6)(7) 14.22 810,000
</TABLE>
-------------
(1) Each director and executive officer has sole voting and investment power
with respect to the shares of Common Stock beneficially owned, except as
noted on page 5 regarding Mr. Buffett and Berkshire Hathaway Inc., and as
noted in footnotes (7), (9) and (10) below.
(2) See "Incentive Compensation" under "Executive Compensation and Other
Information" below for a description of the Shadow Stock units under the
Incentive Compensation Plan.
(3) Shares of Common Stock shown do not include the following shares owned by
or for the benefit of family members, as to which stock the persons
disclaim any beneficial ownership: Mr. Bauman, 4,000; Mr. Cary, 1,020; Mr.
Murphy, 420; Mr. Woodward, 5,000; and Mr. Doerfler, 300.
(4) Less than .01%.
(5) See page 5 regarding Berkshire Hathaway Inc. and the voting of the
20,000,000 shares of Common Stock beneficially owned by Mr. Buffett.
(6) Shares of Common Stock shown include the following shares subject to
employee stock options exercisable within 60 days after February 28, 1995:
Mr. Burke, 54,900; Mr. Fairchild, 7,500; Mr. Iger, 7,500; Mr. Doerfler,
6,250; Mr. Mallardi, 5,000; Mr. Weiswasser, 5,000; and all other executive
officers, 22,000.
(7) Includes shares of Common Stock equivalent to the value of the interest
credited to the respective participants' accounts in the Savings &
Investment Plan. Information with respect to these equivalent shares is as
of December 31, 1994.
(8) Does not include 17,390 shares of Common Stock held by a trust for the
benefit of a non-family member, with respect to which stock Mr. Murphy, in
his capacity as trustee, shares voting power and investment power (which
may be exercised by him only with the approval of another trustee) but as
to which Mr. Murphy disclaims any beneficial ownership.
(9) These shares of Common Stock are held by a trust of which Ms. Robertson is
beneficiary, but with respect to which stock she has no voting power or
investment power.
(10) Mr. Weiswasser shares with his wife voting and investment power with
respect to 2,000 shares of Common Stock he beneficially owns.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Report of the Compensation Committee
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for determining the compensation of the key executive officers. Set
forth below are the factors and criteria used by the Committee in establishing
that compensation.
Compensation of All Executive Officers. In order to achieve the best corporate
performance, the Company must be able to attract, motivate and retain persons of
outstanding talent and ability who will make a substantial contribution to the
growth and success of the Company and its subsidiaries. The Committee endeavors
to reach this goal by providing executive officers with competitive compensation
programs of salary and bonus, and by linking long-term incentive compensation to
the growth of the market price of the Company's Common Stock, thereby aligning
the interests of executive officers and all shareholders. The Committee also
endeavors to provide an executive officer compensation package that recognizes
individual contributions as well as corporate results.
In the Committee's establishment of the Company's compensation structure, it
reviews in detail the compensation of the nine most highly compensated executive
officers, including the individuals whose compensation is detailed in this proxy
statement, and sets policies for and reviews in general the compensation of
approximately 50 other members of senior management. These reviews are designed
to ensure consistency for all key executives throughout the compensation
program.
The Committee reviews the total compensation package for the Company's key
executives, such total compensation package consisting of two basic
elements--annual compensation and long-term incentive compensation. In setting
executive officers' total compensation package the Committee does not use a
precise formula that would "peg" the executive officers' compensation at an
exact level of comparability with executives at other companies. However, in
establishing the executives' total compensation package the Committee looks to
the competitive marketplace for executive talent, with specific comparative
reference to executives in similar positions as provided by the 1994 Towers
Perrin Media Industry Compensation Survey (which includes the companies in the
stock performance graphs on page 15) and the 1994 Towers Perrin Entertainment
Industry Survey. These surveys are widely used by media and entertainment
businesses, respectively, for comparisons of executive compensation. The
Committee places the Company's executives' base salaries in the median of the
comparative scale of base salaries of executives in similar positions as set
forth in each of these surveys, and the Company's "at risk" bonuses and long-
term incentive awards at the higher end of the comparative scale when the
Company, the operating unit and the individual have met certain generalized
performance targets as judged by the Committee. For each executive's total
compensation package, the Committee provides a level of compensation that, in a
comparison with other companies, is in the middle range or higher depending upon
performance.
Annual compensation. The annual compensation package is also divided into two
parts--base salary and annual bonus. Base salary of an executive officer is
determined subjectively and is not subject to specific measurable factors and
criteria but rather the Committee's general assessment of the responsibilities
of the position held, the experience of the individual, and the executive's
performance in his job. In setting executive officers' base salaries, the
Committee compares executive salaries as set forth in the preceding paragraph.
The annual bonus of an executive officer is dependent upon individual and
Company performance, and for an executive officer with responsibilities in a
particular operating unit of the Company, the performance of that operating
unit. The business performance measures that are considered in establishing
annual bonuses are the overall operating income and net income of the Company,
and with respect to individual operating units, operating income, cost
performance compared to the annual budget and the prior year, market and
audience shares and long-term strategic growth and market position. Performance
evaluations are made annually, and adjustments are made where warranted;
adjustments also take into account new responsibilities of an executive. The
Committee's annual performance evaluation of each executive is subjective, and
not based upon an exact formula for determining the relative importance of each
of the factors considered, nor is there a precise measure of how each of the
individual factors relates to the Committee's determination of each executive's
ultimate annual compensation.
7
<PAGE>
Long-term incentive compensation. The "at risk" long-term incentive
compensation is also divided into two parts--awards under the Incentive
Compensation Plan and awards of stock options. These awards are designed to
provide a greater community of interest between the Company's shareholders and
key employees through gains in the price of the Common Stock over an extended
period, and to encourage such employees to remain in the employ of the Company.
Long-term incentive compensation awards have historically represented the
largest portion of executive officers' overall compensation. Long-term
incentive compensation awards are dependent upon the Committee's general
assessment of the responsibilities of the position held, individual and Company
performance, and for an executive officer with responsibilities in a particular
operating unit of the Company, the performance of that operating unit. The
performance measures that are considered in establishing these long-term
incentive compensation awards are the overall operating income and net income of
the Company, and with respect to individual operating units, operating income,
cost performance compared to the annual budget and the prior year, market and
audience shares and long-term strategic growth and market position. The
Committee's performance evaluation for long-term compensation awards purposes is
subjective, and not based upon an exact formula for determining the relative
importance of each of the factors considered, nor is there a precise measure of
how each of the individual factors relates to the Committee's determination of
each executive's ultimate long-term compensation awards. In the Committee's
periodic determination of awards under the Incentive Compensation Plan and
awards of stock options to individual executives, the Committee decides on a
case-by-case basis also taking into consideration the amount and terms of
Incentive Compensation Plan awards and stock option awards the executive has at
that time.
The Committee grants "units" under the Incentive Compensation Plan to executive
officers and other key employees of the Company. Each unit bears a value equal
to the excess of the market price of one share of the Company's Common Stock
over a specified dollar floor, plus an interest component. These awards have
been granted historically to executive officers and other key employees
approximately every two and one-half years. Each recipient of such an award
gains vested rights in the award on a graduated basis over the five-year period
of employment following the grant, and an award recipient is only entitled to
the annually credited interest on that award upon completion of the full five-
year period of employment. Awards are paid after those five years in cash or in
part in Common Stock, at the discretion of the Committee. The latest Incentive
Compensation Plan was approved by shareholders in 1988, with shareholder
approval in 1993 of additional units authorized for granting thereunder.
The Committee also grants options to executive officers and other key employees
of the Company under the shareholder-approved 1991 Stock Option Plan. All
options presently outstanding permit each recipient to exercise an option
commencing one year after grant and then only in cumulative annual portions at
the rate of 25% of the total number of shares subject to the option. The
exercise price of an option is equal to the market price of the Common Stock on
the date of grant.
Compensation of the Current and Former Chief Executive Officers. On February
14, 1994 Mr. Murphy was elected Chairman and Chief Executive Officer, upon the
retirement of Mr. Burke as President, Chief Executive Officer and Chief
Operating Officer (Mr. Murphy had been Chairman of the Board from June 1990 to
February 14, 1994, and Chairman and Chief Executive Officer prior thereto). Mr.
Murphy's 1994 salary as Chief Executive Officer as set forth in the Summary
Compensation Table on page 10, commenced on March 1, 1994 and was established by
the Committee in December 1993, and his 1994 bonus was established by the
Committee in December 1994. Mr. Burke's Chief Executive Officer compensation
for the first two months of 1994, as set forth in the Summary Compensation Table
on page 10, was determined by the Compensation Committee in December 1993. The
compensation of each respective Chief Executive Officer during 1994 was
determined subjectively. The Committee did not base the Chief Executive Officer
salary of either Mr. Murphy or Mr. Burke upon specific, individually calculable
performance measures, nor upon a precise level of comparability with Chief
Executive Officers of other companies, but generally established its salary
decisions upon figures compiled by management that compared salaries of Chief
Executive Officers of other advertiser-supported media and entertainment
companies (CBS Inc., Dow Jones & Company, Inc., Gannett Co., Inc., Tribune
Company and The Washington Post Company) as set forth in the stock performance
graphs on page 15, plus The Walt Disney Company, Paramount Communications Inc.
(in December 1993), Tele-Communications, Inc., Time Warner Inc. and Viacom Inc.
In establishing Mr. Murphy's 1994 Chief Executive Officer salary and his
1994 bonus, and Mr. Burke's 1994 Chief Executive Officer salary and his
8
<PAGE>
1993 bonus, the Committee provided to each respective person total compensation
packages in the middle range of comparability with the then-current information
of the other companies mentioned above.
Mr. Murphy's 1994 salary as Chief Executive Officer was established by the
Committee in December 1993, and was an increase over his former salary to
reflect his increased responsibilities. The Committee's determination of this
new salary was based upon the Committee's subjective consideration of Mr.
Murphy's outstanding business record when he had been Chairman and Chief
Executive "fficer prior to June 1990, and his leadership as Chairman of the
Board from June 1990 to February 1994. The Committee also recognized that for
1993 and 1992 Mr. Murphy had, at his request to the Committee, received no
bonuses.
The Committee's determination of Mr. Murphy's 1994 bonus and stock option grant
in December 1994 was not based upon specifically calculable performance measures
but upon the general assessment of the Company's performance under Mr. Murphy's
guidance since he reassumed the position of Chief Executive Officer in February
1994. The Committee's subjective decision was not based upon an exact formula
for determining the relative importance of each of the factors considered, nor
was there a precise measure of how the individual factors related to the
Committee's determination of Mr. Murphy's ultimate compensation. The
performance criteria considered in the Committee's evaluation of Mr. Murphy for
the determination of his 1994 bonus were: the Company's operating income for
1994 was a record $1,239,000,000, an increase of 44% over 1993 on a 12% revenue
gain to $6,379,000,000, and 1994 income per share on a comparable basis before
an extraordinary charge in 1993 was a record $4.42, an increase of 55% from
1993; revenue and operating income in 1994 were favorable compared to the annual
budget; and market and audience shares for most of the Company's operating units
grew or were maintained in 1994.
Mr. Burke's January and February 1994 salary as Chief Executive Officer was
determined by the Committee in December 1993, and was based upon a decision to
continue his 1993 salary with no increase for the short period in 1994 during
which he would serve as Chief Executive Officer. Mr. Burke's 1994 bonus was
determined by the Committee in December 1994 and was based upon its general
assessment of the Company's performance in 1994, as set forth above, and the
Committee's subjective determination that, since his retirement as Chief
Executive Officer in February 1994, Mr. Burke had made a major contribution of
advice and assistance to the current Chief Executive Officer.
For Mr. Murphy as Chief Executive Officer, and for Mr. Burke while he was Chief
Executive Officer, as for all executive officers, the largest portion of total
compensation is comprised of performance-based variable elements. The Committee
intends to continue this link between executive compensation and performance.
Other Compensation Matters. Section 162(m) of the Internal Revenue Code
generally disallows an income tax deduction to public companies for compensation
over $1,000,000 paid in a year to any one of the Chief Executive Officer or the
four most highly compensated other executive officers, to the extent that this
compensation is not "performance based" within the meaning of Section 162(m).
While a portion of the current annual compensation of certain of the named
executive officers would appear not to qualify for deductibility, the Committee
believes that recent grants under the Company's long-term incentive plans will
result in such grants being treated as performance-based compensation within the
meaning of Section 162(m). It is the Committee's intention that, under normal
circumstances, future grants under the Company's long-term incentive plans to
those persons whose compensation would be subject to the application of Section
162(m) will be made with the limitation of that section in mind.
For shareholder assistance in a review of the Company's historical performance,
a ten-year performance comparison chart is presented in conjunction with the
five-year performance comparison chart on page 15. The Committee believes that
both comparisons are useful in understanding the Company's total shareholder
return. The ten-year performance comparison was not considered by the Committee
in its 1994 compensation decisions.
The Compensation Committee:
Robert P. Bauman, Chairman
Nicholas F. Brady
John H. Muller, Jr.
9
<PAGE>
Summary of Cash and Certain Other Compensation
The following table sets forth information with respect to the 1994 compensation
of the current and former Chief Executive Officers and the four most highly
compensated other executive officers of the Company at December 31, 1994, in
comparison with their compensation for 1993 and 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
compensation
-------------------------
Securities
Annual compensation under- Long-term
Name and --------------------------------------- lying incentive
principal position Other annual options plan All other
at December 31, 1994 Year Salary($) Bonus($) compensation(1) (#) payouts ($) compensation($)
-------------------- ---- -------- -------- --------------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas S. Murphy 1994 $709,200 $550,000 $102,279 100,000 $6,639,183(2) $179,631(3)
Chairman of the Board 1993 505,000 -0- 81,056 -0- -0- 70,439(3)
and Chief Executive 1992 505,000 -0- 63,674 -0- 2,310,172(4) 70,553(3)
Officer
Daniel B. Burke 1994 342,500(5) 250,000 - -0- 1,659,796(2) 82,965(3)
Former President, Chief 1993 555,000 600,000 - -0- -0- 164,689(3)
Executive Officer and 1992 555,000 330,000 - 100,000 2,310,172(4) 125,653(3)
Chief Operating Officer
Robert A. Iger 1994 742,300 475,000 - 50,000 -0- 18,381(7)
President and Chief 1993 625,000 325,000 - 30,000 435,978(6) 15,625(7)
Operating Officer 1992 575,000 250,000 - -0- -0- 14,376(7)
Ronald J. Doerfler 1994 500,000 475,000 - -0- -0- 138,427(3)
Senior Vice President and 1993 450,000 400,000 - 25,000 1,185,132(8) 120,464(3)
Chief Financial Officer 1992 450,000 330,000 - -0- -0- 110,427(3)
Michael P. Mallardi 1994 500,000 450,000 - -0- -0- 12,499(7)
Senior Vice President, 1993 465,000 400,000 - 20,000 1,185,132(8) 11,626(7)
and President of 1992 465,000 315,000 - -0- -0- 11,626(7)
Broadcast Group
Stephen A. Weiswasser 1994 450,000 390,000 - -0- -0- 118,852(3)
Senior Vice President, 1993 420,000 350,000 - 20,000 888,849(8) 108,864(3)
and President of 1992 420,000 290,000 - -0- -0- 94,477(3)
Multimedia Group
</TABLE>
---------------
(1) Except for the amounts set forth for Mr. Murphy, none of the executives
received perquisites or other personal benefits in an amount of $50,000 or
greater. The amounts reported for Mr. Murphy include $83,000, $61,000 and
$49,000 for financial planning services in 1994, 1993 and 1992,
respectively.
(2) These awards under the Incentive Compensation Plan were made in January
1989, became fully vested in December 1993, and an award was paid in full
to Mr. Murphy in January 1994 and a 25% installment was paid to Mr. Burke
in January 1994.
(3) This amount was allocated under the Company's Employee Profit Sharing Plan
(the "Profit Sharing Plan") and the Company's Supplemental Profit Sharing
Plan. The Supplemental Profit Sharing Plan provides to eligible
participants those amounts that would have been allocated to them under the
Profit Sharing Plan but for the limitations of: (i) Internal Revenue Code
Section 415--which imposes a limit on the amount of Company contributions
that may be allocated for the benefit of any Profit Sharing Plan
participant for any year; and (ii) Internal Revenue Code Section
401(a)(17)--which provides that no more than a given amount of any
10
<PAGE>
participant's compensation can be taken into account under the Profit
Sharing Plan for a particular year. For 1994 that amount was $150,000; for
1993 that amount was $235,840; and for 1992 that amount was $228,860.
(4) Under supplementary compensation agreements entered into with Mr. Murphy
and Mr. Burke in 1977, benefits became fully vested in 1981, and each
elected to defer receipt of his benefits until the year following the year
of his termination of employment. Interest was earned on these vested
benefits. In 1992, the Board of Directors amended these agreements,
providing for the payment in December 1992 of the vested benefits and the
earned interest.
(5) Following Mr. Burke's retirement as President, Chief Executive Officer and
Chief Operating Officer in February 1994, he has continued as an employee
of the Company to provide assistance and advice to Mr. Murphy as the
current Chief Executive Officer, in which capacity Mr. Burke is being
compensated at an annual rate of $300,000 and receives all standard
employee benefits.
(6) This amount consists of: (i) $148,142, representing an award under the
Incentive Compensation Plan that was made in July 1988, became fully vested
in June 1993, and was paid in December 1993; and (ii) $287,836,
representing an award under the same plan that was made in October 1988,
became fully vested in September 1993, and was paid in December 1993.
(7) This amount was the Company's matching contribution under the Savings &
Investment Plan, a qualified defined contribution retirement plan under
Section 401(k) of the Internal Revenue Code, including the Company's
matching contribution under the Company's Benefit Equalization Plan. See
"Retirement Benefits" below.
(8) This award under the Incentive Compensation Plan was made in July 1988,
became fully vested in June 1993, and was paid in December 1993.
Retirement Benefits
Individuals who become employees of the Company subsequent to 1988, and
employees of American Broadcasting Companies, Inc. ("ABC") and those of other
subsidiaries and divisions of the Company that were previously a part of or
affiliates of ABC, are entitled upon retirement to receive benefits under the
Company's Retirement Plan, as provided for therein. The following table sets
forth estimated annual pensions pursuant to the terms of the Retirement Plan,
including amounts attributable to the Benefit Equalization Plan (the "BEP")
based on indicated levels of average annual compensation assuming retirement at
age 65.
RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
Average annual Estimated annual pension based on
compensation on years of credited service indicated
which retirement ----------------------------------------------------------
benefits are based 15 years 20 years 25 years 30 years 35 years 40 years
------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 45,084 $ 60,112 $ 75,140 $ 90,168 $105,196 $121,196
250,000 57,084 76,112 95,140 114,168 133,196 153,196
300,000 69,084 92,112 115,140 138,168 161,196 185,196
350,000 81,084 108,112 135,140 162,168 189,196 217,196
450,000 105,084 140,112 175,140 210,168 245,196 281,196
550,000 129,084 172,112 215,140 258,168 301,196 345,196
650,000 153,084 204,112 255,140 306,168 357,196 409,196
800,000 189,084 252,112 315,140 378,168 441,196 505,196
950,000 225,084 300,112 375,140 450,168 525,196 601,196
1,100,000 261,084 348,112 435,140 522,168 609,196 697,196
1,300,000 309,084 412,112 515,140 618,168 721,196 825,196
1,500,000 357,084 476,112 595,140 714,168 833,196 953,196
</TABLE>
Compensation for pension purposes under the Retirement Plan consists of the
participant's wages, before giving effect to any elections by participants to
reduce their taxable compensation and have contributions made under the Savings
& Investment Plan (the "SIP") and other Company benefit programs in the amount
of such reductions, but excluding reimbursements and other expense allowances,
fringe benefits, amounts credited or
11
<PAGE>
paid under any welfare plan, restricted stock awards, stock option income, and
special bonuses paid to employees who are treated as highly compensated
employees for federal income tax purposes. Estimated annual pensions have been
computed on the basis of straight life annuity amounts, and are not reduced by
Social Security benefits. The BEP provides to eligible participants those
amounts that would have been allocated to them under the SIP or accrued for
their benefit under the Retirement Plan or the Company's Supplemental Pension
Plan but for the limitations of: (i) Internal Revenue Code Section 415--which
imposes a limit on the amount of Company contributions that may be allocated to
the account of any SIP participant for any year and limits the amount that may
be accrued for the benefit of any Retirement Plan or Supplemental Pension Plan
participant for any year; and (ii) Internal Revenue Code Section
401(a)(17)--which provides that no more than a given amount of any participant's
compensation can be taken into account in computing SIP, Retirement Plan or
Supplemental Pension Plan benefits for a particular year. For 1995 that amount
is $150,000. Mr. Iger and Mr. Mallardi participate in the Retirement Plan and
are presently credited for pension purposes with 19 and 26 years of service,
respectively.
Messrs. Murphy, Burke, Doerfler and Weiswasser are covered under the
Supplemental Pension Plan. The normal retirement benefit formula of the
Supplemental Pension Plan (taking into account the BEP) is the same as the
normal retirement benefit formula of the Retirement Plan (taking into account
the BEP), as set forth in the Retirement Plan Table above. However, a
participant's retirement benefit under the Supplemental Pension Plan is offset
by the amount of his benefit under the Profit Sharing Plan and the Supplemental
Profit Sharing Plan. It is estimated that the following annual benefits would
be payable under the Supplemental Pension Plan (including amounts attributable
to the BEP), based upon a retirement at normal retirement age 65 or current age
if greater, after the Profit Sharing Plan and the Supplemental Profit Sharing
Plan offsets are taken into account: Mr. Murphy, $218,789; Mr. Burke, $99,016;
Mr. Doerfler, $244,166; and Mr. Weiswasser, $4,608.
The BEP and the Supplemental Profit Sharing Plan provide that each participating
employee would be entitled to receive immediate payment of his benefits upon the
occurrence of an OAccelerating EventO. An Accelerating Event shall be deemed to
have occurred if (i) any person or group, other than Berkshire and the Berkshire
Subsidiaries, shall have acquired beneficial ownership of 20% or more of the
outstanding Common Stock, or if Berkshire and the Berkshire Subsidiaries shall
have acquired beneficial ownership of more than 30% of the outstanding Common
Stock; (ii) more than 50% of the membership of the Board of Directors shall have
been replaced without the approval of a majority of the incumbent Directors; or
(iii) the shareholders of the Company shall have approved a complete
reorganization, merger or consolidation, liquidation or dissolution of the
Company, or the sale or other disposition of all or substantially all of the
assets of the Company, other than in certain specified circumstances which do
not constitute a change in control of the management or the equity ownership of
the Company. See "Security Ownership of Certain Beneficial Owners and
Management" above.
Upon the occurrence of an Accelerating Event, all benefits under the BEP and the
Supplemental Profit Sharing Plan would be deemed to be fully vested and
nonforfeitable and each participant would be entitled to receive immediate
payment of his benefits thereunder in a single lump-sum distribution. This
provision and similar provisions in the Incentive Compensation Plan and the
1991 Stock Option Plan are designed to ensure that, notwithstanding the
occurrence of an Accelerating Event, the Company's management and employees
would receive the benefits previously awarded to them. See "Incentive
Compensation" and "Stock Options" below.
Incentive Compensation
The following table provides information concerning awards made in 1994 to the
named executives under the Incentive Compensation Plan. As provided in this
plan, each unit bears a value equal to the excess of the market price of one
share of Common Stock as at the earlier of the date of the employee's
termination of employment or the fifth anniversary of the date of grant of the
unit to him, over a specified dollar floor. Each employee's units are credited
with 6% interest for the portion of the year during which his units were
outstanding, computed on the basis of the fair market value of the Common Stock
in excess of the specified dollar floor at December 31 of the year for which the
computation was made. An employee gains vested rights in his units on a
graduated basis over the five-year period following the grant of the units to
him. However, he only becomes entitled to the accumulated interest
12
<PAGE>
credits upon completion of the full five-year period of employment from the date
of the grant. An employee's vested benefits may be paid to him in a lump sum or
in installments following his completion of the vesting period or, if he so
elects, payment of such amounts can be deferred until after termination of his
employment. Unpaid benefits earn interest at 75% of prime rate. At the
discretion of the Compensation Committee of the Board of Directors, benefits may
be paid in whole or in part in shares of Common Stock. The units granted in 1994
in the following table have a $50 floor for Mr. Iger and $55 floor for each of
the others.
LONG-TERM INCENTIVE PLAN AWARDS IN 1994
<TABLE>
<CAPTION>
Period until
Number of maturation
Name units (#) of grant
---- --------- ------------
<S> <C> <C>
Thomas S. Murphy -0-
Daniel B. Burke -0-
Robert A. Iger 50,000 5 years
Ronald J. Doerfler 30,000 5 years
Michael P. Mallardi 30,000 5 years
Stephen A. Weiswasser 20,000 5 years
</TABLE>
The Incentive Compensation Plan provides that, upon the occurrence of an
Accelerating Event (see "Retirement Benefits" above), all benefits with respect
to units which had not yet vested under the five-year graduated schedule would
be deemed to be fully vested and nonforfeitable (the "Accelerated Units"). The
amount of benefits which an employee would receive with respect to his
Accelerated Units would be equal to the excess of the "Accelerating Event fair
market value" of one share of Common Stock over its specified dollar floor,
rather than the market price valuation applicable to vested units. "Accelerating
Event fair market value" would be the higher of (i) the highest reported
principal securities exchange-reported market price of a share of Common Stock
during the 60-day period prior to the occurrence of the Accelerating Event and
(ii) if the Accelerating Event occurs as a result of any transaction other than
a change in more than 50% of the membership of the Board of Directors without
the approval of a majority of the incumbent directors, the highest price per
share of Common Stock paid in such transaction or series of transactions. Each
employee would be entitled to receive immediate payment of his benefits under
the Incentive Compensation Plan (whether accruing from vested units or
Accelerated Units), as well as the accumulated interest credits with respect to
his units, in a single lump-sum distribution in cash.
Stock Options
The following table sets forth information on stock options awarded in 1994
under the 1991 Stock Option Plan. These options awarded are nonqualified
options, and upon exercise the Company will be entitled to an income tax
deduction and the employee will have taxable ordinary income equal to the excess
of the fair market value of the shares acquired over the option exercise price.
In accordance with the provisions of the 1991 Stock Option Plan, unless an
Accelerating Event occurs (see "Retirement Benefits" above), the options may not
be exercised earlier than one year from the grant date, and are exercisable in
cumulative annual portions at the rate of 25% of the total number of shares
subject to the options. The options shall be exercisable in full if an
Accelerating Event occurs more than six months after the grant date. The 1991
Stock Option Plan also provides that options may be exercised within three
months after an optionee's termination of employment (or within 12 months after
that date if the optionee's termination of employment was on account of his
death or disability), but only to the extent the options are otherwise
exercisable on the date of termination. The 1991 Stock Option Plan further
provides that the exercise price of an option may be paid, at the optionee's
election, either in cash or by his delivery of shares of Common Stock previously
held by him at their fair market value. In the table below, the amounts shown as
"potential realizable value" are based on arbitrarily assumed annualized rates
of Common Stock price appreciations of five percent and ten percent over the
full term of the options, as required by Securities and Exchange Commission
regulations. Actual gains, if any, upon option exercise will depend on the fair
market value of the Common Stock on the date of exercise.
13
<PAGE>
OPTIONS GRANTED IN 1994
<TABLE>
<CAPTION>
Individual grant Potential realizable
---------------------------------------------------------- value at assumed
Number of annual rates of stock
securities price appreciation
underlying % of total options Exercise for option term
options granted to price ($) Expiration -------------------------
Name granted (#) employees in 1994 per share date 5% ($) 10% ($)
---- ------------ ----------------- --------- ---------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Murphy 100,000 38% $83.00 12/19/00 $2,823,000 $6,403,956
Daniel B. Burke -0-
Robert A. Iger 50,000 19% 77.00 10/19/04 2,421,244 6,135,908
Ronald J. Doerfler -0-
Michael P. Mallardi -0-
Stephen A. Weiswasser -0-
</TABLE>
The following table provides information concerning stock options exercised in
1994 under the Employee Stock Option Plan (the "ESO Plan"), and stock options
held at year-end under the ESO Plan and the 1991 Stock Option Plan, by the named
executives. All options outstanding under the ESO Plan (which plan was adopted
in 1981) are fully exercisable. Value realized for stock options exercised
represents the difference between the market price of the Common Stock on the
date of exercise and the exercise price of such options. Value of "in-the-
money" outstanding stock options represents the spread between the exercise
price of such options and the closing price of the Common Stock on December 31,
1994. These values, unlike the amount set forth in the column headed "Value
realized", have not been realized. Actual gains, if any, upon option exercise
will depend on the fair market value of the Common Stock on the date of
exercise. "Unexercisable" options are those that are not able to be exercised
in whole or in part because they have not been held long enough to meet the
vesting requirements set forth in the option plan.
AGGREGATED OPTION EXERCISES IN 1994 AND OPTION VALUES AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
Number of Value of
securities underlying unexercised
unexercised in-the-money
options at options at
Shares December 31, 1994 (#) December 31, 1994 ($)
acquired on Value -------------------------- --------------------------
Name exercise (#) realized ($) exercisable unexercisable exercisable unexercisable
---- ------------ ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Murphy 13,400 $841,520 -0- 100,000 -0- $ 225,000
Daniel B. Burke 8,500 533,800 54,900 50,000 $2,128,899 1,802,500
Robert A. Iger -0- 7,500 72,500 163,313 902,438
Ronald J. Doerfler -0- 6,250 18,750 136,094 408,281
Michael P. Mallardi -0- 5,000 15,000 108,875 326,625
Stephen A. Weiswasser -0- 5,000 15,000 108,875 326,625
</TABLE>
14
<PAGE>
Five-Year and Ten-Year Performance Comparisons
The following graphs compare the cumulative total shareholder returns on the
Company's Common Stock, the Standard & Poor's Composite Index of 500 Stocks, and
the capital stocks of a representative group of advertiser-supported media and
entertainment companies (CBS Inc., Dow Jones & Company, Inc., Gannett Co., Inc.,
Tribune Company and The Washington Post Company). The year-end values of each
investment are based on share price appreciation plus dividends, with the
dividends reinvested at the ex-dividend date for each quarter.
FIVE-YEAR CUMULATIVE TOTAL RETURNS
Value of $100 Invested on December 31, 1989
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Capital Cities/ABC, Inc. $100 $81 $ 77 $ 90 $110 $152
S&P 500 Index 100 97 126 136 150 152
Representative group 100 82 91 107 135 128
</TABLE>
TEN-YEAR CUMULATIVE TOTAL RETURNS
Value of $100 Invested on December 31, 1984
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Cities/ABC, Inc. $100 $137 $163 $210 $221 $344 $280 $264 $310 $378 $521
S&P 500 Index 100 132 156 164 191 252 244 319 343 377 382
Representative group 100 141 168 189 192 235 193 215 252 316 300
</TABLE>
15
<PAGE>
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors is seeking shareholder ratification of the appointment of
Ernst & Young LLP as its independent auditors for 1995.
The Audit Committee of the Board of Directors has reviewed and evaluated all
relevant criteria in assessing the performance of Ernst & Young LLP, such as the
quality of its audit work, its knowledge of the industry and the Company's
affairs, its understanding of the Company's system of operational autonomy, the
availability of its professional advice on a timely basis, and the
reasonableness of its fees. Based upon such review and evaluation, the
engagement of Ernst & Young LLP as independent auditors has been approved. If
shareholders do not ratify the appointment of Ernst & Young LLP, the appointment
of independent auditors will be reconsidered by the Audit Committee. Even if
the appointment is ratified, the Audit Committee in its discretion may
nevertheless appoint another firm of independent auditors at any time during the
year if the Audit Committee determines that such a change would be in the best
interests of the shareholders and the Company.
Ernst & Young LLP has audited the Company's financial statements annually since
1968. A representative of Ernst & Young LLP is expected to attend the
shareholders meeting, and will have the opportunity to make a statement if he
desires to do so and will be able to respond to appropriate questions from
shareholders.
The Board of Directors recommends a vote FOR ratification of the appointment of
Ernst & Young LLP.
SHAREHOLDER PROPOSAL CONCERNING DIRECTORS' MINIMUM STOCK OWNERSHIP
The Company has been informed that Evelyn Y. Davis, Watergate Office Building,
2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037, the owner of 100
shares of Common Stock, intends to propose at the meeting the adoption of the
following proposal:
Shareholder Proposal
Resolved: That the shareholders of Capital Cities/ABC assembled in annual
meeting in person and by proxy, hereby recommend that the Board of Directors
take the necessary steps to require all members of the Board of Directors to own
a minimum of 1,000 shares (after the stock split) of voting stock in Capital
Cities/ABC.
"Reasons: Stock ownership by directors makes them partners with other
shareholders.
"Certainly 1,000 shares (after the stock split) is a reasonable minimum amount
for ALL directors to own in view of the director fees and perks they receive.
"We congratulate the Company on the recent stock split.
"Last year the owners of 1,000,230 shares, representing approximately 8% of
shares voting, voted FOR this proposal.
"If you AGREE, please mark your proxy FOR this proposal."
The Board of Directors recommends a vote AGAINST this proposal for the following
reasons:
Requiring all directors to own a predetermined number of Company shares would
not improve the quality of the Board of Directors and could be
counterproductive. The Company looks for experience, ability and judgment in
selecting candidates to recommend to shareholders for election to the Board of
Directors. The ownership of stock would not enhance the qualifications of a
candidate, nor affect the performance of such person as a director. To impose a
stockholding requirement could limit the Company's ability to obtain the
services of the best qualified persons as directors.
The Board of Directors therefore recommends a vote AGAINST this proposal.
16
<PAGE>
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
On February 1, 1995, the Company renewed its directors' and officers' liability
insurance policy with Federal Insurance Company for a one-year period at a total
cost of $300,000. The policy insures up to an aggregate of $10,000,000 (a) the
directors and officers of the Company and its subsidiaries and officers of
certain divisions thereof against certain losses from claims against them in
their capacities as directors and officers to the extent such losses are not
indemnified by the Company or such subsidiaries and (b) the Company and such
subsidiaries to the extent they indemnify such directors and officers for losses
as permitted under applicable law. No payments have been made by the insurance
company under this policy or the prior policies as of the date hereof.
VOTE REQUIRED AND OTHER BUSINESS
Directors will be elected by a plurality of the votes cast at the shareholders
meeting. Approval of each other matter will require the affirmative vote of a
majority of the votes cast thereon, for which purpose only those votes cast
"for" or "against" will be included. On all matters to come before the meeting,
abstentions and broker non-votes will not be considered as votes cast, and will
be counted only for purposes of determining whether a quorum is present at the
meeting.
The Company has been notified that a shareholder intends at the shareholders
meeting to introduce two proposals that are not required to be included in this
proxy statement in accordance with regulations of the Securities and Exchange
Commission. If such shareholder proposals should properly come before the
meeting, the shares represented by the proxies solicited hereby will not be
voted with respect to such proposals, and approval of such matters will require
the affirmative vote of a majority of the votes cast thereon by shares
otherwise represented by persons in attendance at the meeting. As of the date
of this proxy statement, management knows of no other business that it intends
to present or that others will present at the meeting. If any other business
should properly come before the meeting, the shares represented by proxies and
voting instructions solicited hereby will be voted in accordance with the best
judgment of the persons named in the enclosed proxy/voting instruction card to
the extent permitted by the regulations of the Securities and Exchange
Commission.
ADDITIONAL INFORMATION
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own beneficially
more than 10% of the Common Stock, to file reports of ownership and changes in
ownership of the Common Stock with the Securities and Exchange Commission and
the New York Stock Exchange. The Company is required by regulations of the
Securities and Exchange Commission to identify anyone who did not timely file a
required report. President and Chief Operating Officer, and director, Robert A.
Iger filed (i) a late report to reflect the previously overlooked automatic
exercise, pursuant to the Company's Employee Stock Purchase Plan, of an option
that he had acquired prior to the date he became a Section 16(a) reporting
person, and which automatic exercise occurred 18 days after he became an
executive officer in 1993, and (ii) a late report to disclose a division of
marital property in 1994 involving shares of Common Stock, without any exchange
of consideration.
1996 SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission. In order for shareholder proposals for the 1996 Annual Meeting of
Shareholders 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 December 4, 1995.
By Order of the Board of Directors,
Philip R. Farnsworth
Secretary
March 31, 1995
17
<PAGE>
LOGO printed on recycled paper
<PAGE>
PROXY/VOTING
INSTRUCTION CARD
CAPITAL CITIES/ABC, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 18, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS THOMAS S. MURPHY, RONALD J. DOERFLER AND
PHILIP R. FARNSWORTH, AND EACH OF THEM, WITH ALL THE POWERS WHICH THE
UNDERSIGNED WOULD HAVE, IF PERSONALLY PRESENT THEREAT, TO VOTE WITH RESPECT TO
ALL SHARES REGISTERED IN THE NAME OR CREDITED TO THE ACCOUNT OF THE UNDERSIGNED
UPON ALL MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
OR ADJOURNMENTS THEREOF, INCLUDING THE MATTERS DESCRIBED IN THE PROXY STATEMENT
FURNISHED HEREWITH, SUBJECT TO ANY DIRECTIONS INDICATED ON THE REVERSE SIDE
HEREOF.
THIS CARD ALSO PROVIDES VOTING INSTRUCTIONS TO THE TRUSTEE, FIDELITY
MANAGEMENT TRUST COMPANY, FOR THE CAPITAL CITIES/ABC, INC. SAVINGS & INVESTMENT
PLAN (THE "SIP") FOR THE NUMBER OF EQUIVALENT SHARES CREDITED TO THE ACCOUNT OF
THE UNDERSIGNED, IF ANY, IN THE SIP, AS MORE FULLY DESCRIBED ON PAGE 1 OF THE
ACCOMPANYING PROXY STATEMENT.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE
<PAGE>
CAPITAL CITIES/ABC, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. LOGO
[ ]
1995
P
R
O
X
Y
For All
1. Election of Directors-- For Withheld Except
Nominees: R. P. Bauman, N. [_] [_] [_] _________________
F. Brady, W. E. Buffett, D. Nominee Exception
B. Burke, F. T. Cary, J. B.
Fairchild, L. H. Goldenson,
R. A. Iger, F. S. Jones, A.
D. Jordan, J. H. Muller,
Jr., T. S. Murphy, W.
Robertson, M. C. Woodward,
Jr.
2. Ratification of Appointment For Against Abstain
of Independent Auditors [_] [_] [_]
3. Shareholder Proposal For Against Abstain
Concerning Directors' [_] [_] [_]
Minimum Stock Ownership
A VOTE FOR ITEMS 1
---
AND 2, AND AGAINST
-------
ITEM 3 IS RECOMMENDED
BY THE BOARD OF
DIRECTORS
Dated__________________________________, 1995
______________________________________________________________________
Signature
______________________________________________________________________
Signature
NOTE: Please sign exactly as name appears hereon. For joint accounts
both owners should sign. When signing as executor, administrator, at-
torney, trustee or guardian, etc., please sign your full title.
UNLESS OTHERWISE DIRECTED, WHEN PROPERLY EXECUTED AND TIMELY RECEIVED, THIS
PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR PROPOSALS 1 AND 2, AND AGAINST
--- -------
PROPOSAL 3.
