<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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMCAST CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 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:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[COMCAST LOGO]
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 19, 1996
---------------
The Annual Meeting of Shareholders of Comcast Corporation (the
"Company") will be held on Wednesday, June 19, 1996 at 9:00 a.m. local time at
the offices of the Company, 1500 Market Street, 33rd Floor, Philadelphia,
Pennsylvania, for the following purposes:
1. To elect ten directors to serve for the ensuing year and until
their respective successors shall have been duly elected and qualified.
2. To consider a proposal to approve the Comcast Corporation 1996
Stock Option Plan.
3. To consider a proposal to amend the Company's Articles of
Incorporation to conform the requirements for class voting with those of the
Pennsylvania Business Corporation Law of 1988.
4. To consider a proposal to amend the Company's Articles of
Incorporation to provide for mirror spin-offs, mergers, and similar
transactions.
5. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 1996 fiscal year.
6. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The close of business on May 6, 1996 has been fixed as the record date
for the meeting. All shareholders of record at that time are entitled to notice
of, and all such holders of Class A Common Stock and Class B Common Stock (and,
in addition, with respect to the two proposals to amend the Company's Articles
of Incorporation, all such holders of Class A Special Common Stock) are entitled
to vote at, the meeting and any adjournment or postponement thereof. In the
event that the meeting is adjourned for one or more periods aggregating at least
fifteen days due to the absence of a quorum, those shareholders entitled to vote
who attend the adjourned meeting, although otherwise less than a quorum, shall
constitute a quorum for the purpose of acting upon any matter set forth in this
notice.
All shareholders are cordially invited to attend the meeting. The Board
of Directors urges you to date, sign and return promptly the enclosed proxy to
give voting instructions with respect to your shares of Class A Common Stock or
Class A Special Common Stock. The proxies are solicited by the Board of
Directors of the Company. The return of the proxy will not affect your right to
vote in person if you do attend the meeting. A copy of the Company's Summary
Annual Report is also enclosed.
STANLEY WANG
Secretary
May 17, 1996
<PAGE>
[COMCAST LOGO]
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
---------------
PROXY STATEMENT
---------------
The enclosed proxy is solicited by the Board of Directors of Comcast
Corporation (the "Company"), a Pennsylvania corporation, for use at the Annual
Meeting of Shareholders (the "meeting") to be held on Wednesday, June 19, 1996
at 9:00 a.m. local time at the offices of the Company, 1500 Market Street, 33rd
Floor, Philadelphia, Pennsylvania, and any adjournment or postponement thereof.
This proxy statement, the foregoing notice and the enclosed proxy are being
mailed to shareholders on or about May 17, 1996.
The Board of Directors does not intend to bring any matters before the
meeting other than the matters specifically referred to in the notice of the
meeting, nor does the Board of Directors know of any matter which anyone else
proposes to present for action at the meeting. However, if any other matters
properly come before the meeting, the persons named in the accompanying proxy or
their duly constituted substitutes acting at the meeting will be deemed
authorized to vote or otherwise act thereon in accordance with their judgment on
such matters.
When your proxy card is returned properly signed, the shares
represented will be voted in accordance with your directions. In the absence of
instructions, the shares represented at the meeting by the enclosed proxy will
be voted "FOR" each of the nominees for the Board of Directors in the election
of directors and "FOR" each of the other proposals submitted to shareholders in
accordance with the foregoing notice of meeting and as set forth in this Proxy
Statement. Any proxy may be revoked at any time prior to its exercise by
notifying the Secretary in writing, by delivering a duly executed proxy bearing
a later date or by attending the meeting and voting in person.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Outstanding Shares and Voting Rights
At the close of business on May 6, 1996, the record date, the Company
had outstanding [34,787,237] shares of Class A Common Stock, par value $1.00 per
share, 8,786,250 shares of Class B Common Stock, par value $1.00 per share, and
[192,679,255] shares of Class A Special Common Stock, par value $1.00 per share.
<PAGE>
On each matter voted upon at the meeting and any adjournment or
postponement thereof, the Class A Common Stock and Class B Common Stock will
vote together and each record holder of Class A Common Stock will be entitled to
one vote per share and each record holder of Class B Common Stock will be
entitled to fifteen votes per share, except that with respect to the two
proposals to amend the Company's Articles of Incorporation the Class A Common
Stock and Class B Common Stock will vote as separate classes. Holders of Class A
Special Common Stock shall be entitled to vote at the meeting only with respect
to the two proposals to amend the Company's Articles of Incorporation, in which
case the holders of Class A Special Common Stock will vote as a separate class
with one vote per share. References to voting classes of the Company's Common
Stock herein shall not include the Class A Special Common Stock. In the election
of directors, Class A Common Stock and Class B Common Stock shareholders shall
not have cumulative voting rights.
The presence, in person or by proxy, of shareholders entitled to cast a
majority of the votes which shareholders (or a class thereof) are entitled to
cast on each matter to be voted upon at the meeting will constitute a quorum as
to each such matter. In the event that the meeting is adjourned for one or more
periods aggregating at least fifteen days due to the absence of a quorum, those
shareholders entitled to vote who attend the adjourned meeting, although less
than a quorum as described in the preceding sentence, shall constitute a quorum
for the purpose of acting upon any matter set forth in the foregoing notice.
In the election of directors, the ten nominees receiving a plurality of
the votes cast at the meeting shall be elected. Approval of the two proposals to
amend the Company's Articles of Incorporation requires the separate affirmative
votes of a majority of the votes cast at the meeting by the holders of each of
the Class A Common Stock, Class A Special Common Stock, and Class B Common
Stock, voting as separate classes. Approval of all other proposals to be
submitted to shareholders in accordance with the foregoing notice of the meeting
and as set forth in this Proxy Statement requires the affirmative vote of a
majority of the votes cast at the meeting. For purposes of determining the
number of votes cast with respect to any voting matter, only those cast "For" or
"Against" are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the meeting.
The holder of all of the Class B Common Stock has indicated that it
will vote its shares "FOR" each of the nominees for director listed below and
"FOR" each of the other proposals submitted to shareholders in accordance with
the foregoing notice of the meeting and as set forth in this Proxy Statement.
Consequently, the election of each of the nominees for director listed below and
approval of each of the other proposals submitted to shareholders in accordance
with the foregoing notice of meeting and as set forth in this Proxy Statement,
other than the two proposals to amend the Company's Articles of Incorporation,
are assured, and the approval by the Class B Common Stock, as a separate class,
of the two proposals to amend the Company's Articles of Incorporation is
assured.
-2-
<PAGE>
Principal Shareholders
The following table sets forth certain information regarding the
holdings of each shareholder who was known to the Company to be the beneficial
owner, as defined in Rule 13d-3 of the Securities Exchange Act of 1934 (the
"Exchange Act"), of more than 5% of any voting class of the Company's Common
Stock at the close of business on February 29, 1996. So far as is known to the
Company, the persons named in the table below as beneficially owning the shares
set forth therein have sole voting power and sole investment power with respect
to such shares, unless otherwise indicated.
<TABLE>
<CAPTION>
Amount Percent
Title of Name and Address of Beneficially of
Voting Class Beneficial Owner Owned Class
- ------------ ---------------- ----- -----
<S> <C> <C> <C>
Class A Common Stock Ralph J. Roberts 2,164,107(1)(2) 5.8%
1500 Market Street
Philadelphia, PA 19102-2148
LGT Asset Management, Inc. 3,040,900(3) 8.1%
50 California Street
San Francisco, California 94111
The Capital Group 3,037,500(4) 8.1%
Companies, Inc.
333 South Hope Street
Los Angeles, CA 90071
American Express 2,050,000(5) 5.5%
Financial Advisors, Inc.
IDS Tower 10
Minneapolis, MN 55440
Class B Common Stock Ralph J. Roberts 9,343,125(2) 100.0%
1500 Market Street
Philadelphia, PA 19102-2148
</TABLE>
- ------------------
(1) At February 29, 1996, Sural Corporation ("Sural"), a Delaware corporation,
owned 1,845,037 shares of Class A Common Stock. Mr. Roberts, Chairman of
the Board of Directors of the Company, and members of his family own all of
the voting securities of Sural. Pursuant to Rule 13d-3 of the Exchange Act,
Mr. Roberts is deemed to be the beneficial owner of the shares of Class A
Common Stock owned by Sural. Also includes 319,070 shares owned directly by
Mr. Roberts. See also the last sentence of note (2) below.
(2) At February 29, 1996, Sural was the sole owner of the Company's Class B
Common Stock. Pursuant to Rule 13d-3 of the Exchange Act, Mr. Roberts is
deemed to be the beneficial owner of the shares of Class B Common Stock
owned by Sural. In addition to the shares owned by Sural, Mr. Roberts has
options to purchase 658,125 shares of Class B Common Stock, of which
556,875 options are currently exercisable or are exercisable within 60 days
of February 29, 1996. Since each share of Class B Common Stock is entitled
to fifteen votes, the shares of Class A Common Stock and Class B Common
Stock owned by Sural constitute approximately 79% of the voting power of
the two classes of the Company's voting Common Stock combined (80% if all
other shares of Class A Common Stock which he is deemed to beneficially own
and shares underlying his options to purchase Class B Common Stock
currently exercisable or exercisable within 60 days of February 29, 1996
are included). The Class B Common Stock is convertible on a share-for-share
-3-
<PAGE>
basis into Class A Common Stock or Class A Special Common Stock. If Sural
and Mr. Roberts were to convert the Class B Common Stock which they are
deemed to beneficially own into Class A Common Stock, Mr. Roberts would
beneficially own 11,507,232 shares of Class A Common Stock (approximately
24.6% of the Class A Common Stock).
(3) The information contained in this table with respect to LGT Asset
Management, Inc. is based upon information as of April 9, 1996, provided
to the Company directly by LGT Asset Management, Inc.
(4) The information contained in this table with respect to The Capital Group
Companies, Inc. ("TCG") is based upon a joint filing made on Schedule 13G
by TCG and its wholly owned subsidiary, Capital Research and Management
Company ("Capital Research"), setting forth information as of December 31,
1995. Based upon such filing, 2,450,000 of these shares are beneficially
owned by Capital Research.
(5) The information contained in this table with respect to American Express
Financial Advisors, Inc. ("AEFA"), is based upon a joint filing made on
Form 13F by AEFA, its parent American Express Company, and other affiliates
of both, setting forth information as of December 29, 1995. The Form 13F
indicates that AEFA has shared dispositive power and sole voting power as
to 2,050,000 shares.
-4-
<PAGE>
Security Ownership of Management
The following table sets forth certain information regarding
the Class A Common Stock (one vote per share) and Class A Special Common Stock
(generally non-voting) beneficially owned by each director and nominee for
director of the Company, by Mr. Ralph J. Roberts (the "Chief Executive
Officer"), and by each of the Company's other four most highly compensated
executive officers during 1995 and by all directors and executive officers of
the Company as a group, at the close of business on February 29, 1996. Each of
the persons named in the table below as beneficially owning the shares set forth
therein has sole voting power and sole investment power with respect to such
shares, unless otherwise indicated.
<TABLE>
<CAPTION>
Amount Beneficially Owned(2) Percent of Class(2)
---------------------------- -------------------
Class A Class A
Name of Beneficial Owner Class A Special Class A Special
- ------------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Daniel Aaron.............. 204,947 671,638 (3) (3)
John R. Alchin............ - 148,358 (3) (3)
Gustave G. Amsterdam...... 25,269 135,618 (3) (3)
Sheldon M. Bonovitz....... 17,705(4) 229,463(5) (3) (3)
Julian A. Brodsky......... 296,058(6) 1,549,308 (3) (3)
Joseph L. Castle, II...... 375 19,897 (3) (3)
Brian L. Roberts.......... 9,582(7) 311,976(8) (3) (3)
Ralph J. Roberts(1)....... 2,164,107(9) 10,190,926(10) 5.8% 5.2%
Lawrence S. Smith......... - 201,505 (3) (3)
Bernard C. Watson......... - 17,400 (3) (3)
Irving A. Wechsler........ 122,763 502,492 (3) (3)
Anne Wexler............... - 18,150 (3) (3)
All directors and
executive officers
as a group (13 persons)... 2,887,751(4)(6)(7)(9) 14,162,908(5)(8)(10) 7.7% 7.1%
</TABLE>
- ---------------------
(1) Pursuant to Rule 13d-3 of the Exchange Act, Mr. Ralph J. Roberts is also
deemed to be the beneficial owner of 100% of the outstanding shares of the
Company's Class B Common Stock owned by Sural. See notes (1) and (2) to the
table under the caption "Principal Shareholders."
(2) With respect to each beneficial owner, the shares issuable upon exercise of
his or her currently exercisable options and options exercisable within 60
days of February 29, 1996 are deemed to be outstanding for the purpose of
computing the percentage of the class of Common Stock owned. Includes the
following shares of Class A Common Stock and Class A Special Common Stock,
respectively, for which the named individuals, and all directors and
executive officers as a group, hold currently exercisable options or
options exercisable within 60 days of February 29, 1996: Mr. Aaron, none
and 8,400 shares; Mr. Alchin, none and 100,335 shares; Mr. Amsterdam, none
and 17,400 shares; Mr. Bonovitz, none and 17,400 shares; Mr. Brodsky,
65,601 and 714,660 shares; Mr. Castle, none and 17,400 shares; Mr. Brian L.
Roberts, 7,697 and 209,121 shares; Mr. Ralph J. Roberts, none and 4,029,829
shares; Mr. Smith, none and 161,604 shares; Mr. Watson, none and 17,400
shares; Mr. Wechsler, none and 8,400 shares; Ms. Wexler, none and 17,400
shares; and all directors and executive officers as a group, 96,338 and
5,424,161 shares.
(3) Less than one percent of the applicable class.
(4) Includes 5,486 shares of Class A Common Stock held in trust or as a
custodian for his children, 6,425 shares owned by his wife, and 2,636
shares held by him as trustee for a testamentary trust, as to all of which
shares he disclaims beneficial ownership.
-5-
<PAGE>
(5) Includes 11,189 shares of Class A Special Common Stock held in trust or as
a custodian for his children, 16,044 shares owned by his wife, 164,946
shares held by him as trustee for a testamentary trust, and 6,738 shares
owned by a charitable foundation of which his wife is a trustee, as to all
of which shares he disclaims beneficial ownership.
(6) Includes 20,000 shares of Class A Common Stock owned by a charitable
foundation of which he and members of his family are directors and
officers, as to which he disclaims beneficial ownership.
(7) Includes 1,356 shares of Class A Common Stock owned by his wife, as to
which shares he disclaims beneficial ownership.
(8) Includes 678 shares of Class A Special Common Stock owned by his wife and
20,541 shares owned by a charitable foundation of which he and his wife are
directors and officers, as to all of which shares he disclaims beneficial
ownership.
(9) Includes 1,845,037 shares of Class A Common Stock owned by Sural. See note
(1) to the table under the caption "Principal Shareholders."
(10) Includes 5,315,772 shares of Class A Special Common Stock owned by Sural,
and 47,005 shares owned by two charitable foundations of which he and his
wife are trustees and as to which shares he disclaims beneficial ownership.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company's
executive officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities (collectively, the
"reporting persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and to furnish the Company with copies of
these reports. Based on the Company's review of the copies of these reports
received by it, and written representations received from reporting persons, the
Company believes that all filings required to be made by the reporting persons
for the period January 1, 1995 through December 31, 1995 were made on a timely
basis, except for one report of a grant of options to Mr. Brodsky, for which a
Form 5 was inadvertently filed late.
-6-
<PAGE>
MANAGEMENT COMPENSATION
Summary Compensation Table
The following table sets forth, for the Company's last three fiscal years,
certain information concerning the annual and long-term compensation paid to or
for the Chief Executive Officer and each of the Company's other four most highly
compensated executive officers:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards
------------------- ----------------------
Number of
Other Annual Restricted Securities All Other
Name and Bonus Compensation Stock Underlying Compensation
Principal Position Year Salary ($) ($)(2) ($) Awards($)(5) Options(#)(6) ($)(7)
- ------------------ ---- ---------- -------- ---------------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ralph J. Roberts ........ 1995 $821,360 $ -- $ 499,334(3) $ -- -- $3,286,173
Chairman of the ......... 1994 800,000 -- 669,619(3) -- 2,220,000 3,881,881
Board of ............... 1993 800,672 -- 3,871,054(3)(4) -- 375,000 1,272,995
Directors (1)
Julian A. Brodsky ....... 1995 $625,000 $ -- $ 24,705(3) $ -- 250,000 $1,285,803
Vice Chairman .......... 1994 561,750 -- 88,663(3) -- 805,000 742,466
of the Board of ........ 1993 525,654 -- 1,039,821(4) 906,250 112,500 102,576
Directors
Brian L. Roberts ........ 1995 $625,000 $242,000 $ 96,881 $ -- 500,000 $ 32,383
President .............. 1994 535,000 126,000 142,755(4) 308,000 535,000 34,589
1993 500,835 -- 76,192(4) 634,375 75,000 30,080
Lawrence S. Smith ....... 1995 $600,000 $ 61,000 $ 39,755 $ -- 400,000 $ 33,924
Executive Vice ......... 1994 380,000 68,000 18,882 110,688 200,000 37,041
President .............. 1993 355,546 -- 4,782 271,875 45,000 32,298
John R. Alchin .......... 1995 $502,000 $ 29,000 $ 56,844 $ -- 300,000 $ 34,531
Senior Vice ............ 1994 355,000 31,000 20,140 -- 135,000 38,318
President- ............. 1993 335,446 -- 9,166 271,875 45,000 33,256
Treasurer
</TABLE>
- ----------
(1) The Company's by-laws do not provide for the position of "Chief Executive
Officer." For purposes of this Proxy Statement, the Company has determined
that Mr. Ralph J. Roberts should be deemed to be the Company's Chief
Executive Officer.
(2) The bonuses paid to executive officers in 1995 and 1994 relate to
termination of the Company's discretionary bonus plan, except for $125,000
of the bonus paid to Mr. Brian L. Roberts in 1995. See "Report of the
Compensation Committee and Subcommittee on Performance-Based Compensation
on Executive Compensation - Base Salary."
-7-
<PAGE>
(3) Includes amounts paid to offset tax liabilities incurred in connection with
Company payments to cover the premiums attributable to the term life
insurance portion of the split-dollar life insurance policies (see note
(7)(c) below). Such amounts are calculated based upon the amount of tax
payable by the executive officers in accordance with the highest individual
income tax bracket.
(4) Includes amounts paid to offset tax liabilities incurred in connection with
the exercise of stock options. The plan pursuant to which these bonuses
were paid was terminated by the Board of Directors as of December 31, 1993.
See "Report of the Compensation Committee and the Subcommittee on
Performance-Based Compensation on Executive Compensation - Effect of
Internal Revenue Code Section 162(m)."
(5) This column represents the dollar value of the shares of restricted stock
awarded to the named persons as of the date such shares were awarded. The
awards of restricted stock are made in shares of Class A Special Common
Stock ("Restricted Stock") pursuant to the Company's 1990 Restricted Stock
Plan. Under the awards generally, subject to certain conditions and
restrictions, 15% of the shares awarded vest on January 2 of each of the
first four years following the date of grant, and the remaining 40% vest on
January 2 of the fifth year, provided, however, that each recipient may
elect to defer the portion that vests in any year for five years. The award
to Mr. Brian L. Roberts in 1994 vests 30% on January 2 of the first year
after grant, 15% on January 2 of each of the next two years, and the
balance on the following January 2. The award to Mr. Smith in 1994 vested
in its entirety on January 2, 1995. At December 31, 1995, the Restricted
Stock holdings for Mr. Brodsky were 52,500 shares (with a market value at
that date of $954,844); for Mr. Brian L. Roberts were 130,450 shares (with
a market value at that date of $2,372,559); for Mr. Smith were 51,750
shares (with a market value at that date of $941,203); and for Mr. Alchin
were 51,750 shares (with a market value at that date of $941,203). Mr.
Ralph J. Roberts does not hold any shares of Restricted Stock. Dividends
are not payable and do not accrue on unvested shares of Restricted Stock.
(6) The number of securities underlying options granted prior to January 12,
1994 have been retroactively adjusted for the three-for-two stock split in
the form of a 50% stock dividend paid on February 2, 1994 to shareholders
of record on January 12, 1994.
(7) Includes (with respect to amounts applicable to 1995): (a) Company
contributions to its 401(k) Retirement-Investment Plan in the amount of
approximately $5,390 for each of the named executive officers; (b) the
dollar value, on a term loan approach, of the benefit of the whole-life
portion of the premiums for split-dollar life insurance policies paid by
the Company projected on an actuarial basis (Messrs. Ralph J. Roberts
$2,904,884; Brodsky $1,266,584; Brian L. Roberts $25,253; Smith $26,734;
and Alchin $27,431), although the Company believes that a more realistic
determination of the economic value of the benefit would be based on an
approach which calculates the time value of money (using the applicable
short-term federal funds rate) of the premiums paid by the Company through
1995 (Messrs. Ralph J. Roberts $1,067,131; Brodsky $197,632; Brian L.
Roberts $9,532; Smith $12,596; and Alchin $12,417); (c) Company payments on
behalf of the named executive officers to cover the premiums attributable
to the term life insurance portion of the split-dollar life insurance
policies (Messrs. Ralph J. Roberts $375,899; Brodsky $13,339; Brian L.
Roberts $1,250; Smith $1,310; Alchin $1,220); and (d) Company payments to
its long-term disability plan in the amount of $490 for each of the named
executive officers (other than Mr. Ralph J. Roberts, who is not eligible to
participate in such plan).
In accordance with the terms of the split-dollar life insurance policies
referred to above, the Company will recover all of the cumulative premiums
paid by the Company for the whole-life portion of such policies.
-8-
<PAGE>
Stock Option Grants
The following table contains information concerning grants of stock options
under the Company's 1987 Stock Option Plan to the Chief Executive Officer and to
each of the Company's other four most highly compensated executive officers
during 1995. The Company does not have any plan pursuant to which stock
appreciation rights ("SARs") may be granted.
Option Grants in 1995
---------------------
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Terms(1)
--------------------------------------------------------------- ---------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) 1995 ($/Sh) Dates(2) 0% 5% 10%
- ---------------- ----------- ------------ ----------- ---------- --- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ralph J. Roberts - - N/A N/A $- $ - $ -
Julian A. Brodsky 5,333 * $18.7500 01/13/05 $0 $ 59,460 $ 148,817
244,667 9% 18.7500 12/21/05 0 3,070,105 7,893,700
Brian L. Roberts 7,329(3) * $16.5000 01/13/00 $0 $ 19,380 $ 56,123
492,671 17% 15.0000 07/13/05 0 4,942,370 12,705,552
Lawrence S. Smith 6,666 * $15.0000 01/13/05 $0 $ 62,883 $ 159,358
393,334 14% 15.0000 07/13/05 0 3,945,842 10,143,738
John R. Alchin 6,666 * $15.0000 01/13/05 $0 $ 62,883 $ 159,358
293,334 10% 15.0000 07/13/05 0 2,942,664 7,564,826
All Outstanding N/A N/A N/A N/A $2,495,142,149 $6,411,351,186
Common Shares (4)
</TABLE>
- ----------
* Less than one percent of total options granted to employees in 1995.
(1) Illustrates, as to options, value that might be realized upon exercise of
options immediately prior to the expiration of their term, assuming
specified compounded rates of appreciation on the Class A Special Common
Stock over the term of the options, based on the market prices for the
Class A Special Common Stock when the options were granted. The 0%, 5% and
10% assumed rates of appreciation are not necessarily indicative of future
stock performance.
(2) All of the options to purchase Class A Special Common Stock were granted
under the Company's 1987 Stock Option Plan. All options were granted on
January 13, 1995 (except for the options granted to Mr. Brodsky, which were
granted June 21, 1995). Except as described in note (3) below, all options
granted in 1995 have exercise prices equal to the fair market value on the
date of grant and generally become exercisable at the rate of 20% of the
shares covered thereby on the second anniversary of the date of grant and
the balance in equal increments over the remaining term of the options. The
options that expire on January 13, 2000 and 2005 are incentive stock
-9-
<PAGE>
options and the options that expire on July 13 and December 21, 2005 are
nonqualified stock options.
(3) In accordance with the tax rules governing incentive stock options, these
options were granted at an exercise price equal to 110% of the fair market
value on the date of grant. The options become exercisable into shares of
the Company's Class A Special Common Stock at the rate of 40% of the shares
covered thereby on the second anniversary of the date of grant, another 20%
on each of the third and fourth anniversaries of the date of grant, and the
remaining 20% six months prior to the fifth anniversary of the date of
grant.
(4) Illustrates the aggregate appreciation in value of all shares of common
stock of the Company outstanding on December 31, 1995, based on the assumed
5% and 10% rates of appreciation that produced the realizable values of
options granted to executive officers shown in this table (measured from
the dates of grant of the options to their expiration, on a weighted
average basis).
-10-
<PAGE>
Stock Option Exercises and Holdings
The following table sets forth information related to options exercised
during 1995 by the Chief Executive Officer and each of the Company's other four
most highly compensated executive officers during 1995, and the number and value
of options held at December 31, 1995 by such individuals. The Company does not
have any plan pursuant to which SARs may be granted.
Aggregated Option Exercises in 1995
and Option Values at December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Dec. 31, 1995 (#) Dec. 31, 1995 ($)
Acquired -------------------------- -----------------
on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ralph J. Roberts
Class A Special Common Stock 990 $ 9,735 4,029,829 1,150,730 $19,422,955 $7,866,787
Class B Common Stock - - 556,875 101,250 6,780,125(1) 1,068,134(1)
Julian A. Brodsky
Class A Special Common Stock 13,500 $ 191,813 634,950 1,374,053 $ 3,577,867 $5,528,678
Class A Common Stock 10,332 164,382 65,601 - 838,721 -
Brian L. Roberts
Class A Special Common Stock 12,987 $ 137,720 98,399 1,134,392 $ 405,740 $2,616,358
Class A Common Stock - - 7,697 - 98,409 -
Lawrence S. Smith
Class A Special Common Stock 24,542 $ 273,626 124,388 681,070 $ 775,090 $2,223,542
John R. Alchin
Class A Special Common Stock - $ - 60,306 516,681 $ 410,654 $1,680,188
</TABLE>
- ----------
(1) Each share of Class B Common Stock is convertible into one share of Class A
Common Stock or Class A Special Common Stock, at the option of the holder,
and entitles the holder to fifteen votes per share. Each record holder of
Class A Common Stock is entitled to one vote per share. The illustrated
value of these options is based on the closing price of a share of Class A
Common Stock on December 31, 1995. In addition, in accordance with the
Compensation Agreement (see "Agreements with Executive Officers -
Compensation Agreement with the Chief Executive Officer" elsewhere in this
Proxy Statement), the Chief Executive Officer is entitled to certain
bonuses payable upon exercise of his Class B options to offset tax
liabilities incurred in connection with the exercise of such options. At
December 31, 1995, the Company's potential liability relating to such
bonuses (based upon the market price of the Class A Common Stock on such
date) was approximately $6.0 million and fluctuates based on the market
value of the Company's Class A and Class B Common Stock. For more detail
regarding the bonuses, see "Agreements with Executive Officers -
Compensation Agreement with the Chief Executive Officer."
-11-
<PAGE>
Pension Plans
Under the Company's Supplemental Executive Retirement Plan (the "Plan"),
adopted July 31, 1989, supplemental retirement, death and disability benefits
may be paid to or in respect of certain senior executives employed by the
Company and its affiliated companies, as selected by the Company's Board of
Directors. The Plan contemplates the payment of various percentages of a
participant's Final Average Compensation (as actuarially reduced, in certain
circumstances and as defined below) in the event that the participant (i) elects
to retire early, after the later of the participant's 55th birthday or 20 years
of service with the Company; (ii) retires at age 65 or after; (iii) suffers a
permanent disability which renders the participant incapable of employment in
the same or a similar occupation; or (iv) dies. A participant may elect a
reduction in lifetime benefits in exchange for the continuation of payments to a
surviving spouse. As of the date of this Proxy Statement, Messrs. Ralph J.
Roberts and Brodsky (who were each credited as of April 1, 1996 with 32 years of
service under the Plan) are the only current employees selected by the Board of
Directors to participate in the Plan.
The following table shows the annual single life annuity retirement benefit
which Messrs. Ralph J. Roberts and Brodsky, respectively, would receive based on
remuneration covered by, and years of service credited under, the Plan if he had
retired on January 1, 1996 at age 65. The benefits shown below are subject to
reduction for Social Security benefits.
Pension Plan Table
------------------
Final
Average Years of Service
Compensation(1) 30 or More(2)
--------------- -------------
$300,000 $180,000
400,000 240,000
500,000 300,000
600,000 360,000
700,000 420,000
800,000 480,000
900,000 540,000
- ---------------
(1) Final Average Compensation equals one-fifth of the total compensation for
the five years preceding retirement. Compensation includes salary, bonus
(including any deferred bonus) and any other supplementary remuneration,
but excludes discretionary payments made to participants to offset tax
liabilities incurred upon the exercise of non-qualified stock options and
split-dollar life insurance bonuses.
(2) This column represents the maximum benefits payable under the Plan.
The Company also has an agreement with Mr. Brodsky pursuant to which he is
entitled to a $30,000 payment each year for 15 years commencing upon his
termination of employment at or after attaining age 65, subject to a vesting
-12-
<PAGE>
schedule. Any benefits received under this agreement reduce the benefits to
which Mr. Brodsky is entitled under the Plan.
Agreements with Executive Officers
Compensation Agreement with the Chief Executive Officer
A Compensation and Deferred Compensation Agreement and Stock Appreciation
Bonus Plan with the Chief Executive Officer (the "Compensation Agreement") was
approved by the Company's shareholders on June 22, 1994.
The Compensation Agreement provides that the Chief Executive Officer will
continue to serve as Chairman of the Board of Directors of the Company until
December 31, 1997, and will continue to devote substantially all of his working
time to the Company, on the terms and conditions summarized below. In addition,
for a five year period following termination of the Compensation Agreement, he
is required to perform certain functions, as the Company may request from time
to time, to promote the interests and goodwill of the Company.
Base Salary. The Chief Executive Officer will receive an annual base salary
of $800,000 beginning in 1993, as adjusted (but never reduced) in order to
reflect increases in the consumer price index subsequent to 1993.
Split-Dollar Life Insurance. The Compensation Agreement requires the
Company to provide and maintain insurance protection under the Company's
Split-Dollar Life Insurance Plan for the Chief Executive Officer and his spouse
in an amount which represented a total net after-tax cost to the Company of
approximately $6.6 million at the time of implementation of the Compensation
Agreement. Under the Split-Dollar Life Insurance Plan generally, the Company
pays a portion of the annual premiums for joint-and-survivor life insurance
policies for certain senior executive officers, and upon payment of the policies
at death (or in the case of the Chief Executive Officer, of him and his spouse),
the Company recovers all of the cumulative premiums previously paid by the
Company for the whole-life portion of such policies. The Company will also
continue to pay the Chief Executive Officer an annual cash bonus in an amount
equal to the portion of the annual premium for such life insurance protection
that he is required to pay under the Split-Dollar Life Insurance Plan, i.e., the
portion of the premium representing the cost of term insurance; in addition, for
the insurance required to be maintained under the Compensation Agreement the
Company will increase the bonus by an amount sufficient to pay any income tax
liability incurred in connection with payment of the bonus (collectively, the
"Split-Dollar Bonus").
Tax Grossed-Up Bonus and Stock Appreciation Bonus. The Company will pay
mandatory cash bonuses to the Chief Executive Officer to offset income tax
liability on certain of the income recognized upon exercise of his current
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<PAGE>
nonqualified stock options for Class B Common Stock of the Company, to the
extent such income is recognized due to appreciation in the value of such stock
prior to September 9, 1993, the date of the Compensation Agreement (the "Tax
Grossed-Up Bonus"), and a separate stock appreciation bonus essentially
duplicating the Tax Grossed-Up Bonus for appreciation subsequent to the date of
the Compensation Agreement, subject to a maximum of 125% of the appreciation of
the Class A Common Stock in excess of $20.583 per share times the number of
options for Class B Common Stock exercised (the "Stock Appreciation Bonus"). The
requirement that the Company pay a Tax Grossed-Up Bonus or Stock Appreciation
Bonus will apply notwithstanding termination of the Company's discretionary
bonus plan effective December 31, 1993.
Stock Option Grants. The Compensation Agreement provided for the award to
the Chief Executive Officer of nonqualified options to purchase 2,220,000 shares
of the Company's Class A Special Common Stock at the closing market price for
such stock on March 15, 1994. This one-time option grant represented
approximately 75% of the unexercised nonqualified options to purchase Class A
Special Common Stock previously awarded to him, and the new options generally
vest and expire at the same times as, and in proportion to, the vesting and
expiration dates of the previously outstanding options. The purpose of the
special option grant in the Compensation Agreement was to replace, in part, the
potential benefits provided by the Company's terminated discretionary bonus
plan.
The Compensation Agreement provides that the Chief Executive Officer will
not receive further option grants through December 31, 1995. The Compensation
Agreement also provides that the Company will consider means of replacing the
potential benefits represented by the terminated discretionary bonus plan with
respect to the appreciation through March 15, 1994, in the options for Class A
Special Common Stock previously awarded to the Chief Executive Officer, taking
into account the financial position of the Company and the tax deductibility of
any such payments. See "Report of the Compensation Committee and Subcommittee on
Performance-Based Compensation on Executive Compensation."
Termination. The Compensation Agreement will terminate upon the Chief
Executive Officer's death, at the Company's option upon his disability, or for
cause (as such terms are defined in the Compensation Agreement) upon a vote of
not less than two-thirds of the entire membership of the Company's Board of
Directors. If his employment is terminated by reason of his death or disability,
the Company shall continue to pay his annual base salary on a monthly basis to
him or his spouse, during their lifetimes, for a maximum of five years, and the
Split-Dollar Bonus, the Stock Appreciation Bonus, and the Tax Grossed-Up Bonus
will continue to be payable. In the event of death, all of his outstanding
options will vest fully and remain exercisable for their remaining terms. If his
employment is terminated by the Company in violation of the Compensation
Agreement, he shall remain entitled to substantially all of the benefits under
the Compensation Agreement.
-14-
<PAGE>
Employment Agreements with Messrs. Smith and Alchin.
During 1995, the Company entered into employment agreements with two
executive officers of the Company, Lawrence S. Smith, the Company's Executive
Vice President, and John R. Alchin, the Company's Senior Vice President and
Treasurer. The following is a description of the material terms of such
agreements.
The term of such agreements is from January 1, 1995 through December 31,
1999 (the "Employment Period"). Mr. Smith and Mr. Alchin each agree to work full
time for the Company during the Employment Period.
The agreement with Mr. Smith provides for a base salary of $600,000 in
1995, and the agreement with Mr. Alchin provides for a base salary of $500,000
in 1995. In each case, for each year in the Employment Period subsequent to 1995
the base salary will be increased by the greater of five percent or the
percentage increase during the previous year in the consumer price index.
Pursuant to the agreements, each of the executives is eligible to receive an
annual performance bonus, commencing in 1996, of up to 50% of his base salary
for the applicable year. The amount of the bonus will be determined annually by
the Subcommittee on Performance-Based Compensation of the Board of Directors of
the Company (the "Compensation Subcommittee"), based on the performance of the
Company and of the applicable executive during such year, and is payable in cash
or in shares of Class A Special Common Stock of the Company, in the discretion
of the Compensation Subcommittee. No precise performance standards, goals, or
targets are included in the agreements. The agreements provide that, in the
event any portion of the bonus for a particular year would not be deductible to
the Company under Section 162(m) of the Internal Revenue Code of 1986, as
amended (which generally limits the deductibility of compensation to a named
executive officer to $1.0 million per year), such portion will be deferred
pursuant to the Company's Deferred Compensation Plan and paid in a year in which
it will be fully deductible to the Company for federal income tax purposes.
Each agreement provides that the applicable executive's employment may be
terminated without cause by the Company and that he may resign voluntarily. If
the executive's employment is terminated without cause, he is entitled to
receive his then-current base salary and all insurance, medical, or other
similar benefits for a period of one year from the date of discharge, subject to
offset by other compensation or benefits earned by the executive during such
period, and he is entitled to receive his bonus for the year of discharge. If
the executive resigns, or is terminated for cause (as defined in the agreement),
he is entitled only to his base salary for days actually worked and any amounts
due to him under the Deferred Compensation Plan.
Under each of the agreements, the executive agrees not to compete with the
Company during his employment and for one year after termination of his
employment. The agreements also require each executive to maintain the
confidentiality of certain information of the Company, and not to use such
-15-
<PAGE>
information except for the benefit of the Company, at all times during his
employment and after termination of his employment. Breach by the executive of
any of such obligations constitutes cause for termination of the applicable
agreement, and terminates the Company's obligations for payments subsequent to
any discharge of the executive without cause.
Each of the agreements provides that it shall continue in effect upon the
merger of the Company into another entity, or in similar events.
-16-
<PAGE>
Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total shareholder return on each of the Company's Class A Common Stock and Class
A Special Common Stock during the five years ended December 31, 1995 with the
cumulative total return on the Standard & Poor's 500 Stock Index and with a
selected peer group consisting of the Company and five other companies engaged
in the cable communications industry: Cablevision Systems Corporation (Class A);
Jones Intercable, Inc.; TCA Cable TV, Inc.; TeleCommunications, Inc. (Class A);
and Time Warner, Inc. The comparison assumes $100 was invested on December 31,
1990 in the Company's Class A Common Stock and Class A Special Common Stock and
in each of the foregoing indices and assumes the reinvestment of dividends.
300|----------------------------------------------------------|
| *& |
| |
250|----------------------------------------------------------|
| @ |
| &# |
200|---------------------------------------------------*@-----|
| *&@ |
| @ # # |
150|--------------*-------------------------------------------|
| *&# &# |
D | @ |
O 100|----------------------------------------------------------|
L | |
L | |
A 80|----------------------------------------------------------|
R | |
S | |
60|----------------------------------------------------------|
| |
| |
40|----------------------------------------------------------|
| |
| |
20|----------------------------------------------------------|
| |
| |
0|----|----------|---------|-----------|-----------|--------|
1991 1992 1993 1994 1995
*=Comcast Class A &=Comcast Class A Special #=S&P 500 @=Industry Group
Cumulative Total Return
---------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Comcast Class A * 129 150 284 181 208
Comcast Class A Special & 130 143 286 188 219
S&P 500 # 130 140 155 157 215
Industry Group @ 122 156 239 179 205
-17-
<PAGE>
Report of the Compensation Committee and the Subcommittee on Performance-Based
Compensation on Executive Compensation
Compensation Policy. The Compensation Committee (the "Compensation
Committee") is responsible for making recommendations to the Board of Directors
on executive compensation. The Subcommittee on Performance-Based Compensation
(the "Compensation Subcommittee") is responsible for establishing
performance-based criteria and goals for compensation to senior executives and,
beginning in 1994, for administering the Company's 1987 Stock Option Plan, the
1990 Restricted Stock Plan and bonus plans. As used in this Report, the term
"Committee" shall refer to the Compensation Committee and the Compensation
Subcommittee, regardless of whether they acted separately or together.
The goal of the Committee is to attract and retain highly qualified
executive officers and key employees in an effort to enhance shareholder value.
The Company attempts to realize these goals by providing competitive
compensation and permitting executive officers to take an ownership stake in the
Company commensurate with their relative levels of seniority and
responsibilities. The members of the Compensation Committee and the Compensation
Subcommittee are disinterested non-employee directors and the members of the
Compensation Subcommittee are "outside directors" (as defined in Section 162(m)
of the Internal Revenue Code).
Each year the Committee conducts a full review of the Company's executive
compensation, except for the compensation of the Chief Executive Officer, which
is determined under the Compensation Agreement. In 1995, this review included a
comprehensive report from an independent compensation consultant which prepared
a competitive analysis/survey of the Company's executive compensation program in
comparison to programs maintained by approximately 85 media companies, including
20 substantial competitors in the cable industry. These companies represent a
broad sampling of the Company's most direct competitors for executive talent and
include the principal companies included in the peer group index in the Stock
Performance Graph included elsewhere in this Proxy Statement. In light of the
nature of their responsibilities, particularly the fact that the executive
officers have overall corporate policy making, management and administrative
responsibilities and are not directly responsible for the operating units of the
Company, a key factor in the Committee's assessment of such officers is the
Company's overall performance.
The principal forms of executive compensation in 1995 were base salary,
bonuses, stock options, and split-dollar (whole) life insurance policies. The
Company seeks to achieve a mix of these various forms of compensation which will
properly compensate and motivate its executives on an individual basis and
commensurate with their relative levels of seniority and responsibility.
As discussed below, the Committee considers a variety of factors in
arriving at the compensation paid to the Company's executive officers other than
the Chief Executive Officer. No specific weighting was assigned by the Committee
-18-
<PAGE>
to any of the factors considered in determining the remuneration paid to the
named executive officers for 1995.
Base Salary and Bonus. The Company's philosophy with respect to setting
base salary is to compensate its executive officers with reasonable current
income on a competitive basis. For 1995, in accordance with the recommendations
of the independent compensation consultant retained by the Company, the
Committee approved increases in base salary for the executive officers (other
than the Chief Executive Officer). Such salary increases were based in part on
competitive factors within the industries in which the Company participates, in
part on the increasing complexity of the executives' jobs given the rapid growth
of the Company and its expansion into new areas of activity, in part on
maintaining appropriate relative opportunities for compensation for the
executive officers of the Company compared to employees operating at the
divisional level, and, with respect to Messrs. Smith and Alchin, in part on
their willingness to enter into long term employment contracts containing
obligations not to compete with the Company after termination of their
employment, see "Agreements with Executive Officers." Based on the same
considerations, the Committee awarded an annual performance bonus to Mr. Brian
L. Roberts in 1995, and approved employment agreements with Messrs. Smith and
Alchin providing for annual bonuses in the discretion of the Compensation
Subcommittee beginning in 1996. In 1995, base salary and annual bonuses for the
executive officers was generally at or below the median of total salary and
annual cash incentive compensation for executive officers in comparable
positions at peer companies, as confirmed by the independent compensation
consultant retained by the Company.
Of the bonuses paid to executive officers (other than the Chief Executive
Officer and Mr. Brodsky) in 1995, all but $125,000 of the bonus to Mr. Brian L.
Roberts related to termination of the Company's discretionary bonus plan, as
discussed below. The bonus awarded to Mr. Brian L. Roberts for 1995 included
an annual performance bonus of $125,000.
Equity-Based Incentive Compensation. The Company's equity-based incentive
compensation is in the form of stock option grants and restricted stock awards.
In 1995, consistent with its overall compensation policy, the Committee
emphasized equity-based incentives to each of the named executive officers. The
Committee believes that reliance upon such incentives is advantageous to the
Company because it fosters a long-term commitment by the recipients to the
Company and motivates these executives to seek to improve the long-term market
performance of the Company's stock. Stock options produce value to executives
only if the price of the Company's stock appreciates, thereby directly linking
the interests of the executives with those of its shareholders.
The stock options granted in January 1995 (June 1995 with respect to Mr.
Brodsky) were based on the level of the respective executive's position and the
level of such compensation paid to officers at comparably sized public companies
-19-
<PAGE>
in the media industry. The size of previous option grants and restricted stock
awards and the number of options or restricted shares held by an executive is
not taken into account in determining the number of options or shares of
restricted stock awarded. The options granted in 1995 generally vest 20% on the
second anniversary of the date of grant and the balance in equal increments over
the remaining term of the options.
In determining that the levels of the equity-based incentive compensation
were appropriate and reasonable in 1995, the Committee reviewed the competitive
analysis conducted by the independent compensation consultant which stated that
such compensation on the average was consistent with opportunities within the
75th percentile of such companies.
Compensation of Chief Executive Officer. The Company's by-laws do not
provide for a "Chief Executive Officer" of the Company. The Company has
determined that, for 1995, Mr. Ralph J. Roberts, the Chairman of the Company's
Board of Directors, was its chief executive officer for purposes of this Proxy
Statment.
The Chief Executive Officer's compensation for 1995 was determined under
the terms of the Compensation Agreement. The Compensation Agreement was entered
into effective September 9, 1993, as amended March 16, 1994, and approved by
shareholders at the annual meeting of shareholders on June 22, 1994. See
"Agreements with Executive Officers - Compensation Agreement with the Chief
Executive Officer." The Committee did not take any specific action with respect
to the Chief Executive Officer's compensation for 1995.
Effect of Internal Revenue Code Section 162(m). Effective January 1, 1994,
Section 162(m) of the Internal Revenue Code provides that certain compensation
in excess of $1.0 million paid to the chief executive officer and the four most
highly compensated executive officers of a public company (determined as of the
last day of the company's tax year) will not be deductible for federal income
tax purposes.
The Committee is engaged in an ongoing review of the Company's compensation
practices for purposes of obtaining the maximum continued deductibility of
compensation paid by the Company consistent with its existing commitments and
ongoing competitive needs. Certain forms of compensation are not included in
determining whether the $1.0 million limit under Section 162(m) has been
exceeded, such as certain "performance based" compensation adopted by a
committee of at least two outside directors and approved by shareholders,
compensation paid under binding written contracts (including nonqualified stock
options) in effect prior to the proposal of the new provision, and compensation
paid pursuant to certain plans approved by shareholders prior to enactment of
the new provision. These forms of compensation continue to be deductible without
regard to Section 162(m). In general, compensation pursuant to nonqualified
options granted to date under the Company's 1987 Stock Option Plan will continue
to be deductible for federal income tax purposes when the options are exercised.
-20-
<PAGE>
Certain compensation was awarded during 1995 after consideration of the
termination of a plan (approved by shareholders on September 17, 1986) under
which the Board of Directors had discretion to award cash bonuses to employees
or directors exercising nonqualified options to reimburse such persons for the
income taxes payable by them upon exercise of the options and receipt of the
bonus. The Committee determined that the discretionary bonus plan did not come
within any of the exceptions to Section 162(m), and that if bonuses were to be
awarded under such plan in 1994 or thereafter, they might not be deductible. In
addition, in light of the appreciation in the Company's Common Stock over the
period 1987-1993, the Board determined that continuation of the bonus plan could
impose significant cash burdens on the Company in future years. Accordingly, the
Board of Directors terminated the discretionary bonus plan as of December 31,
1993.
In an effort to replace the potential benefits provided by the Company's
terminated discretionary bonus plan, two types of compensation were awarded to
senior executive officers in 1995. The Committee awarded lump-sum bonuses, or,
in the cases of the Chief Executive Officer and Mr. Brodsky, additional
split-dollar life insurance benefits, in an amount generally calculated
(together with similar compensation awarded in 1994) to produce the same
after-tax cost to the Company as the potential benefits under the terminated
discretionary bonus plan with respect to appreciation in such persons'
previously awarded nonqualified options prior to March 15, 1994. Such additional
split-dollar insurance benefits generally correspond to the benefits subject to
the Compensation Agreement, except that they include for the Chief Executive
Officer an additional bonus to offset federal gift taxes on the portion of the
annual insurance premiums representing the cost of term insurance, which are
imposed because the Chief Executive Officer's life insurance benefits would be
received by a trust for the benefit of his children. The Company's compensation
consultant advised the Committee that its actions terminating the discretionary
bonus plan and awarding the compensation described above were appropriate and
reasonable.
The bonus programs instituted by the Committee beginning in 1996 will not
be excluded from calculation of the amount of compensation potentially limited
by Section 162(m), because they do not contain objective performance standards
and have not been approved by shareholders. The bonus programs have been
structured, however, so as to preserve the Company's ability to deduct the full
amount of the bonuses awarded. See "Agreements with Executive Officers."
With respect to the Compensation Agreement, a portion of the compensation
paid to the Chief Executive Officer will not or may not be deductible under
Section 162(m) to the extent it is paid during the course of his employment as
an executive officer of the Company. While no portion of the compensation paid
to the Chief Executive Officer in 1995 was nondeductible, the nonexempt
compensation for federal income tax purposes in years subsequent to 1995 is
expected to exceed $1.0 million. In addition, the Compensation Agreement
provides for payment of a mandatory Tax Grossed-Up Bonus upon exercise of any of
the Chief Executive Officer's options to acquire Class B Common Stock of the
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<PAGE>
Company, which, if paid during the course of his employment as one of the five
most highly paid executive officers of the Company, would not be deductible
under Section 162(m). See "Agreements with Executive Officers -- Compensation
Agreement with the Chief Executive Officer."
The Committee determined to provide the above-described compensation
regardless of its nondeductibility or potential nondeductibility, based on,
among other things (1) its determination of a fair and competitive compensation
level for the Chief Executive Officer taking into account his unique and
invaluable contributions to the Company over the course of the Company's
history, (2) the benefits to the Company if the Chief Executive Officer's
incentive to retain Class B Common Stock obtained upon exercise of options is
maximized, (3) the relatively minimal effect on the Company of forgoing
deductibility of the specific annual compensation (other than the Tax Grossed-Up
Bonus) in excess of $1.0 million, and (4) the possibility that the Tax
Grossed-Up Bonus would not be required to be paid at a time when payment would
be nondeductible. In addition, the Committee believes that the Company's former
discretionary bonus plan which was terminated effective December 31, 1993
(and pursuant to which bonuses had generally been granted in an amount
sufficient to reimburse persons exercising nonqualified stock options for tax
liabilities incurred in connection with the exercise of such options and receipt
of the bonus), despite technically failing to come within any of the exceptions
to Section 162(m)'s nondeductibility rule, represented an appropriate potential
benefit to him based on appreciation in the Company's stock subsequent to the
dates on which the Chief Executive Officer was awarded nonqualified options. In
entering into the Compensation Agreement, it determined not to deprive him of
the opportunity to receive such compensation in connection with exercise of his
options to purchase Class B Common Stock solely because of the possibility that
all or a portion of such benefit would not be deductible for federal income tax
purposes.
Members of the Compensation Committee
Gustave G. Amsterdam (Chairman)*
Sheldon M. Bonovitz
Joseph L. Castle*
* Members of the Subcommittee
Compensation of Directors
Each member of the Board of Directors who is not an employee of the Company
(a "non-employee director") receives an annual fee of $20,000, plus $1,500 for
each meeting of the Board of Directors attended and $750 for each meeting of any
committee of the Board of Directors attended which is not held in conjunction
with a meeting of the Board of Directors. In addition, any outside director who
serves as the chairperson of a committee of the Board of Directors receives an
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<PAGE>
annual fee of $1,000. Each director is also reimbursed for incidental travel
expenses for meetings attended. Mr. Amsterdam also receives $750 as compensation
for each meeting attended as the designee of the Board of Directors on a
committee of the Company's management.
The Company's 1987 Stock Option Plan provides that each non-employee
director will be granted annually, on each February 1, an option to purchase
5,400 shares of Class A Special Common Stock (except that the first such grant
to a new non-employee director will be an option to purchase 9,000 shares) at an
exercise price per share equal to the fair market value of a share of Class A
Special Common Stock on the date of grant. Each such option becomes exercisable
six months after the date of grant and generally expires five years from the
date of grant.
Mr. Daniel Aaron, a director of the Company and its former Vice Chairman of
the Board of Directors, serves as a consultant to the Company on an as needed
basis. Pursuant to this arrangement, Mr. Aaron received $86,250 during 1995.
During 1995, Mr. Aaron also received the following amounts related to his prior
service as a full-time executive officer of the Company: $47,644 under the
Company's Supplemental Executive Retirement Plan, $30,000 under the Company's
Executive Deferred Compensation Plan, and bonuses aggregating $42,461 under a
split-dollar life insurance arrangement pursuant to which, in 1994, Mr. Aaron
had exchanged certain of his rights to receive deferred compensation for
life insurance benefits with an equivalent after-tax cost to the Company on a
present value basis.
Compensation Committee Interlocks and Insider Participation
Messrs. Ralph J. Roberts, Brodsky, and Brian L. Roberts, none of whom serve
on the Compensation Committee of the Company, are also executive officers and
directors of Storer Communications, Inc., and Comcast UK Cable Partners Limited,
each a subsidiary of the Company, and in such capacities have participated in
decisions regarding the compensation of executive officers of the respective
corporations. Messrs. Ralph J. Roberts, Brodsky, and Brian L. Roberts do not,
however, receive any additional compensation for serving as such executive
officers or directors. Mr. Brian L. Roberts is the son of Mr. Ralph J. Roberts.
Mr. Bonovitz, a member of the Compensation Committee, is a partner in the
law firm of Duane, Morris & Heckscher, which provides services to the Company
from time to time.
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<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
At the meeting, the shareholders will elect ten directors to hold office
for the ensuing year and until their respective successors have been duly
elected and qualified. Should any one or more of these nominees become
unavailable to accept nomination or election as a director, the persons named in
the enclosed proxy will vote the shares which they represent for the election of
such other persons as the Board of Directors may recommend, unless the Board of
Directors reduces the number of directors. Each of the nominees currently is
serving as a director of the Company.
The following sets forth certain information about each nominee:
Ralph J. Roberts, 76, has served as a director and Chairman of the Board of
Directors of the Company for more than five years. He is the President and a
director of Sural. Mr. Roberts devotes the major portion of his time to the
business and affairs of the Company. Mr. Roberts is also a director of Storer
Communications, Inc., and Comcast UK Cable Partners Limited.
Julian A. Brodsky, 62, has served as a director and Vice Chairman of the
Board of Directors of the Company for more than five years. He serves as
Treasurer and a director of Sural. Mr. Brodsky devotes the major portion of his
time to the business and affairs of the Company. He is also a director of Storer
Communications, Inc., RBB Fund, Inc., and Comcast UK Cable Partners Limited.
Brian L. Roberts, 36, has served as President of the Company and a director
for more than five years. Mr. Roberts serves as Vice President and a director of
Sural. Mr. Roberts devotes the major portion of his time to the business and
affairs of the Company. He is the son of Mr. Ralph J. Roberts. Mr. Roberts is
also a director of Turner Broadcasting System, Inc., Storer Communications,
Inc., and Comcast UK Cable Partners Limited.
Daniel Aaron, 70, has served as a director of the Company for more than
five years. He served as Vice Chairman of the Board of Directors for more than
five years until his retirement in February 1991. He continues to serve as a
consultant to the Company.
Gustave G. Amsterdam, 87, has been a director of the Company for more than
five years. Mr. Amsterdam was, for more than five years before his retirement,
Chairman of the Board of Bankers Securities Corporation, a mercantile, real
estate management and operating company.
Sheldon M. Bonovitz, 59, has been a director of the Company for more than
five years. Mr. Bonovitz has been a partner specializing in tax matters with the
law firm of Duane, Morris & Heckscher for more than five years. Mr. Bonovitz is
a nephew by marriage of Ralph J. Roberts and a cousin by marriage of Brian L.
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Roberts. Mr. Bonovitz is also a director of Castle Energy Corporation and
Surgical Laser Technologies, Inc.
Joseph L. Castle, II, 63, has been a director of the Company for more than
five years. Mr. Castle has been, for more than five years, a financial
consultant and is the Chairman and Chief Executive Officer and a director of
Castle Energy Corporation, an independent oil and gas refining, exploration and
production company which also manages oil and gas limited partnerships. Mr.
Castle is also a director of Charming Shoppes, Inc., and Marks Center Trust.
Bernard C. Watson, 68, has been a director of the Company for more than
five years. Dr. Watson has been President and Chief Executive Officer of the
William Penn Foundation for more than five years.
Irving A. Wechsler, 75, has been a director of the Company for more than
five years. Mr. Wechsler has been, for more than five years, a partner in the
firm of Wechsler, Wolsh and Associates, Certified Public Accountants, in
Pittsburgh, Pennsylvania.
Anne Wexler, 66, has been a director of the Company for more than five
years and has been for more than five years Chairman of the Wexler Group, a
consulting firm specializing in government relations and public affairs, which
is an operating unit of Hill and Knowlton Public Affairs Worldwide. The Wexler
Group and Hill and Knowlton Public Affairs Worldwide provide services to the
Company and received payments for such services from the Company of
approximately $343,000 in 1995. Ms. Wexler is also a director of Alumax, Inc.,
The Continental Corporation, The Dreyfus Corporation Index Funds, The Dreyfus
Corporation Mutual Funds, New England Electric System, and Nova Corporation.
Committees and Meetings of the Board of Directors
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee. The Compensation Committee
has a Subcommittee on Performance-Based Compensation.
Messrs. Ralph J. Roberts (Chairman), Amsterdam and Bonovitz serve as
members of the Executive Committee, which held seven meetings during 1995. The
Committee acts for the directors in the intervals between meetings of the Board.
Messrs. Amsterdam, Bonovitz, Castle, Watson and Wechsler (Chairman) serve
as members of the Audit Committee, which held three meetings during 1995. The
Committee meets with the Company's independent public accountants, counsel,
internal audit department and management to discuss the scope and results of the
annual audit, internal accounting procedures and certain other questions of
accounting policy.
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<PAGE>
Messrs. Amsterdam (Chairman), Bonovitz and Castle serve as members of the
Compensation Committee, which held five formal meetings during 1995. The
Committee considers and determines all compensation matters relating to the
Company's executive officers (other than matters which are handled by the
Subcommittee as described below). Messrs. Amsterdam and Castle serve as members
of the Subcommittee on Performance-Based Compensation, which held five meetings
during 1995. The Subcommittee's functions include administrating the Company's
stock option, restricted stock and bonus plans and establishing
performance-based criteria and goals for compensation to senior executive
officers.
Messrs. Aaron, Castle and Watson and Ms. Wexler (Chairperson) serve as
members of the Nominating Committee, which met one time during 1995. The
Committee reviews the size and composition of the Board of Directors and is
responsible for recommending nominees to serve on the Board of Directors. In
carrying out its responsibilities, the Nominating Committee will consider
candidates recommended by other directors, employees and shareholders. Written
suggestions for candidates to serve as directors if nominated and elected should
be sent to the President of the Company at Comcast Corporation, 1500 Market
Street, Philadelphia, Pennsylvania 19102-2148. The Company's by-laws require
that written notice of the intent to make a nomination at a meeting of
shareholders must be received by the President of the Company (a) with respect
to an election to be held at an annual meeting, not less than 90 days in advance
of the date which is the one year anniversary of the prior year's annual meeting
of shareholders, and (b) with respect to an election to be held at a special
meeting, the close of business on the seventh day following the day on which
notice of a special meeting of shareholders for the election of directors is
given to shareholders. The notice must contain: (a) the name and address of the
shareholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the shareholder is a holder of record of
the Company's stock entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; (c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated, or intended to be nominated, by the Board of
Directors; and (e) the consent of each nominee to serve as a director of the
Company if so elected.
The Board of Directors held six meetings in 1995. No member of the Board of
Directors attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which such director served.
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PROPOSAL TWO
APPROVAL OF THE COMCAST CORPORATION
1996 STOCK OPTION PLAN
On March 13, 1996, the Company's Board of Directors adopted the Comcast
Corporation 1996 Stock Option Plan (the "1996 Plan"), subject to approval by the
Company's shareholders at the 1996 Annual Meeting. The Plan was adopted to
replace the Comcast Corporation 1987 Stock Option Plan (the "1987 Plan"), which
expires by its terms in January 1997. No options have been granted under the
1996 Plan, and future option grants under the 1996 Plan are not determinable,
except with respect to non-employee directors who will receive annual grants of
options to purchase 5,400 shares of Class A Special Common Stock, see
"Description of the 1996 Plan - Eligibility" below. For information on option
grants in 1995 under the 1987 Plan, see "Stock Option Grants" elsewhere in this
Proxy Statement.
Description of the 1996 Plan
The following is a summary of the material features of the 1996 Plan.
The 1996 Plan provides for the grant of options to purchase shares of the
Company's Class A Special Common Stock to employees (whether or not members of
the Board of Directors) of the Company and its parents or subsidiaries
("Affiliates") within the meaning of Sections 424(e) and (f) of the Internal
Revenue Code of 1986, as amended (the "Code"), as designated by the Company's
Board of Directors or a committee of two or more of its non-employee members
appointed by the Board of Directors, and for the grant of options to
non-employee directors of the Company. Except to the extent an option granted
under the 1996 Plan is specifically designated as a nonqualified option (as
defined below) or otherwise becomes a nonqualified option after grant, options
granted to employees of the Company or its Affiliates under the 1996 Plan are
intended to qualify as qualified stock options (sometimes hereinafter referred
to as "ISOs") within the meaning of Section 422(b) of the Code. Options granted
under the 1996 Plan to non-employee directors of the Company, options granted to
employees under the 1996 Plan which are specifically designated as nonqualified
options, and options otherwise ineligible for treatment as an ISO are
hereinafter referred to as "nonqualified options."
No Options may be granted under the 1996 Plan after March 12, 2006.
The 1996 Plan is intended as an additional incentive to employees and
non-employee directors to enter into or remain in the employ of the Company or
its Affiliates or to serve on the Board of Directors of the Company or any of
its Affiliates and to devote themselves to the Company's success by providing
them with an opportunity to acquire or increase their proprietary interest in
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<PAGE>
the Company through the receipt of options to purchase the Company's Class A
Special Common Stock.
ISOs and nonqualified options are sometimes hereinafter collectively
referred to as "Options." Recipients of Options are hereinafter referred to as
"Optionees." Shares of the Company's Class A Special Common Stock are sometimes
hereinafter referred to as "Shares." Shares which may be issued upon exercise of
Options are hereinafter referred to as "Option Shares." The members of the
committee or subcommittee of the Board of Directors administering the 1996 Plan
is sometimes referred to, with respect to the Plan subject to their
administration, as the "Committee."
Eligibility
-----------
All employees of the Company and its Affiliates are eligible to receive
ISOs under the 1996 Plan. All employees, officers and non-employee directors of
the Company and its Affiliates are eligible to receive nonqualified options
under the 1996 Plan. An employee may receive more than one Option under the 1996
Plan but only on the terms and subject to the restrictions of the 1996 Plan.
In determining the eligible participants to whom Options are granted under
the 1996 Plan and the number of Shares covered by such Options, the Committee
may take into account the nature of such participant's services and
responsibilities, his or her present and potential contributions to the
Company's success and such other factors as the Committee may deem relevant.
The 1996 Plan provides that the maximum number of shares of the Class A
Special Common Stock for which Options may be issued to any single individual in
any calendar year is 1,000,000 shares, subject to adjustment as described under
"Purchase of Shares Under the 1996 Plan." The 1996 Plan provides that each
non-employee director of the Company shall receive a grant of Options to
purchase 5,400 shares of Class A Special Common Stock on each February 1, except
that any non-employee director first elected to the Board of Directors after
March 13, 1996, shall receive a grant of Options to purchase 9,000 shares of
Class A Special Common Stock on February 1 of such newly elected director's
first year as a member of the Board of Directors.
Shares Covered By The 1996 Plan
-------------------------------
The 1996 Plan provides for the grant of Options to purchase up to an
aggregate of 20,000,000 shares of the Company's Class A Special Common Stock. As
of the close of business on May 6, 1996, the aggregate market value of such
shares was [$355,000,000].
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If an Option granted under the 1996 Plan expires or terminates without
having been exercised in full, the Option Shares allocable to the unexercised
portion of such Option will be available for the grant of additional Options
under the 1996 Plan, to the extent additional Options thereunder may be granted.
Administration
--------------
The 1996 Plan provides that it will be administered by the Subcommittee on
Performance-Based Compensation of the Compensation Committee of the Board of
Directors, or any other committee or subcommittee designated by the Board of
Directors of the Company, provided it is composed of two or more non-employee
members of the Board of Directors of the Company, each of whom is an "outside
director" within the meaning of the Code. Currently, the Subcommittee on
Performance-Based Compensation of the Compensation Committee of the Board of
Directors administers the 1996 Plan.
The Committee is authorized under the 1996 Plan to determine the Optionees
to whom and the times at which the Options are granted and become exercisable.
Subject to the provisions of the Plan, the Committee also is authorized to
determine the number of Shares issuable upon exercise of each Option and other
terms and conditions of the Option. In addition, the 1996 Plan provides that the
Committee may determine whether an Option is intended to be an ISO. Under
certain circumstances, the Committee may have the power to accelerate or extend
the exercise date of outstanding Options. See "Amendments," "Methods of
Exercise" and "Termination."
The individual option document (the "Option Document") for each Option sets
forth the terms of such Option. The Option Documents are in such form as the
Committee shall from time to time approve. The interpretation and construction
by the Committee of any provision of the 1996 Plan, or of any Option Document,
is final, binding and conclusive.
Purchase of Shares Under the 1996 Plan
------------------------------------------
Under the 1996 Plan, the Committee sets forth in each Option Document the
exercise price for the Option Shares covered thereby (the "Option Price"),
provided that the Option Price may not be less than 100% of the fair market
value of such Shares on the date or at the time that the Option is granted. In
addition, if an ISO is granted to an Optionee who then owns, directly or by
attribution under Section 424(d) of the Code, shares possessing more than 10% of
the total combined voting power of all classes of stock of the Company or an
Affiliate, the Option Price must be at least 110% of the fair market value of
such Shares on the date the Option is granted. The 1996 Plan provides that "fair
market value" shall generally be determined based on the last reported sale
price of Shares on the last trading day prior to the date on which such value is
determined.
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The number of Shares of Class A Special Common Stock for which Options may
be granted under the 1996 Plan, and the number of Shares of Class A Special
Common Stock issuable upon exercise of Options granted under the 1996 Plan, and
the exercise price for such Options, are subject to adjustment in the event of a
stock dividend, stock split or certain other capital adjustments. No adjustment
will be made in respect of the issuance of Shares on the conversion of other
securities of the Company that are convertible into such class or classes of
Shares.
Amendments
----------
The Committee, with the consent of an Optionee, may amend the provisions of
Option Documents under the 1996 Plan. Under the 1996 Plan, consent of the
Optionee is not required for acceleration of the expiration date of an Option in
the event of the dissolution or liquidation of the Company or upon the
occurrence of certain other corporate transactions. See "Termination." The
Committee, with the consent of the Optionee, may amend the provisions of the
Incentive Plan to the extent necessary to maintain Options as ISOs within the
meaning of the Code.
The Committee may amend the 1996 Plan from time to time in such manner as
it may deem advisable. However, the 1996 Plan may be amended without obtaining
shareholder approval within twelve months before or after such action, to change
the class of individuals eligible to receive ISOs under the 1996 Plan, extend
the expiration date of the 1996 Plan, decrease the minimum Option Price of an
ISO granted under the 1996 Plan or increase the maximum number of Shares for
which Options may be granted (other than as a result of adjustments in the event
of a stock dividend, stock split or certain other capital adjustments). In
addition, provisions of the 1996 Plan relating to grants of Options to
non-employee directors that determine (i) which directors are granted Options
pursuant to such provisions; (ii) the number of Shares subject to Options
granted under such provisions; (iii) the Option Price of such Shares; and (iv)
the timing of grants of Options pursuant to such provisions may not be amended
more than once every six months, other than to comport with the Code or the
Employee Retirement Income Security Act of 1974, if applicable.
The power of the Board of Directors or the Committee to amend Option
Documents or the Plans may be subject to limitations contained in applicable
provisions of the Code and federal securities laws and regulations.
Methods of Exercise
-------------------
An Option granted under the 1996 Plan may be exercised by the Optionee only
by written notice to the Company. The notice required under the 1996 Plan must
specify the number of Shares to be purchased and must be accompanied by payment
in full of the purchase price. Payment may be made in cash, by certified check
payable to the order of the Company, or by a combination of the foregoing. In
addition, if the Committee so provides in an Option Document, payment may be
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made all or in part in shares of the Class A Special or Class A Common Stock
held for more than six months or such shorter period of time as shall not, in
the Committee's sole discretion, have an adverse effect on the Company's
financial statements; provided, however, that the Option Shares may not be paid
for in shares of Class A Special or Class A Common Stock if such method of
payment would result in liability under Section 16(b) of the Securities Exchange
Act of 1934.
The 1996 Plan does not require any contributions to be made by the Company,
and Optionees are under no obligation to exercise any Option granted under the
1996 Plan.
There is no limitation on the number of Shares an Optionee may acquire
under the 1996 Plan in any given year through the exercise of outstanding
Options, except as may be provided by the Committee in an Option Document.
Termination
-----------
The term during which an Option may be exercised is set out in the
individual Option Document, but may not exceed (i) ten years from the date of
grant or (ii) with respect to ISOs, five years from the date of grant if the
Optionee on the date of grant owns, directly or by attribution under Section
424(d) of the Code, shares possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of an Affiliate.
An Optionee's right to exercise any part of an Option granted pursuant to
the 1996 Plan terminates on the first to occur of: (i) expiration of the Option
term specified in the Option Document, which is subject to the limitations
described in the preceding paragraph; (ii) expiration of three months from the
date when the Optionee ceases to be an employee of the Company or an Affiliate
for any reason other than disability (as defined in Section 22(e)(3) of the
Code), death or a finding of the Committee that the employee has breached his or
her employment contract with, or has been engaged in any sort of disloyalty to,
or has disclosed trade secrets of, the Company or an Affiliate, provided that
the Committee may specify in an Option Document that an Option may be
exercisable during a longer period after the Optionee ceases to be an employee,
but in no event later than the expiration of the Option term specified in the
Option Document; (iii) expiration of one year from the date the Optionee's
employment with the Company or an Affiliate terminates as a result of an
Optionee's death or disability; (iv) the date set by the Committee as an
accelerated expiration date in the event of the dissolution or liquidation of
the Company or any other transaction in which an unaffiliated third party
acquires more than 50% of the voting power for election of directors of the
Company; or (v) the date of a finding by the Committee that the Optionee has
breached his or her employment contract with the Company or an Affiliate, has
been engaged in any sort of disloyalty to the Company or an Affiliate,
including, without limitation,
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<PAGE>
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his or her employment, or has disclosed trade secrets of the Company
or an Affiliate. In the event of such a finding by the Committee, in addition to
immediate termination of the Option, the Optionee, upon a determination by the
Committee, will forfeit all Option Shares for which the Company has not yet
delivered stock certificates representing the Option Shares, upon refund by the
Company of the exercise price of the Option.
Transferability of Options
--------------------------
In general, Options granted under the Plans are not transferable by the
Optionee except by will or by the laws of descent and distribution, and during
the lifetime of the Optionee, Options may be exercised only by the Optionee.
However, the 1996 Plan provides that the Committee may, in its discretion,
provide in an Option Document or an amendment thereto that such Options may be
transferred to members of the Optionee's immediate family, or trusts or
partnerships the sole beneficiaries or partners of which are members of the
Optionee's immediate family or the Optionee, provided that such transfer is
without consideration. Any Options so transferred will remain subject to all
conditions applicable to the Options, as set forth in the 1996 Plan or the
relevant Option Documents, except that the consent of the transferee of the
Options (rather than that of the original Optionee) will be required in order to
amend the transferred Options. See "Amendments." Any Option which is made
transferable to the extent provided in the 1996 Plan will be a nonqualified
option.
Withholding of Taxes
--------------------
Whenever the Company proposes or is required to deliver or transfer Shares
of Class A Special Common Stock in connection with the exercise of an Option
under the 1996 Plan, the Company has the right to require the Optionee to remit
or otherwise make available to the Company an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the delivery
or transfer of any certificate or certificates for such shares or to take
whatever action it deems necessary to protect its interests with respect to tax
liabilities in connection with the issuance of such shares.
Under the 1996 Plan, tax liabilities incurred in connection with the
exercise of an Option (other than an ISO) will be satisfied by the Company's
withholding a portion of the Option Shares underlying the Option that have a
fair market value approximately equal to the minimum amount of taxes required to
be withheld by the Company under applicable law, unless otherwise determined by
the Committee with respect to any Optionee. However, the Committee may permit an
Optionee to elect to have taxes withheld in excess of the minimum amount
required to be withheld by the Company, or to pay to the Company in cash all or
a portion of the taxes to be withheld upon the exercise of an Option. Persons
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subject to the reporting requirements under Section 16 of the Securities
Exchange Act of 1934 must make the election at least six months prior to the
date the amount of tax to be withheld or paid is determined, and the election
will remain in effect with regard to all future exercises of Options following
such six month period unless revoked upon six months prior notice. The Committee
may add such other requirements and limitations regarding these elections as it
deems appropriate.
Federal Income Taxation
-----------------------
The following discussion is intended to point out the general principles of
current federal income tax law applicable to the Options issued under the 1996
Plan.
Incentive Stock Options. For the purposes of the regular income tax
currently imposed under the Code, the holder of an Option under the 1996 Plan
which is an ISO will not recognize taxable income upon either the grant or
exercise of the Option.
The Optionee will recognize long-term capital gain or loss on a disposition
of the Option Shares acquired upon exercise of an ISO provided the Optionee does
not dispose of the Option Shares within two years from the date the ISO was
granted and within one year after the Option Shares were transferred to
Optionee. For purposes of determining such gain or loss, the Optionee's basis in
such Shares will, in general, be the Optionee's Option Price. Under present law,
long-term capital gain is subject to a effective tax rate of 28%, while ordinary
income may be taxed at a maximum effective rate of 39.6%. If the Optionee
satisfies both of the holding periods described above, then the Company will not
be allowed a deduction by reason of the exercise of the ISO.
The amount, if any, by which the fair market value of an Option Share at
the time of exercise (determined without regard to certain transfer
restrictions) exceeds the Option Price will be included in the computation of
the Optionee's "alternative minimum taxable income," generally in the year he or
she exercises the ISO, for purposes of the "alternative minimum tax" imposed by
Section 55 of the Code. If an Optionee pays alternative minimum tax, the amount
of such tax paid that is attributable to the exercise of ISOs will be allowed as
a credit against regular tax liability in subsequent years in which the
Optionee's regular tax liability (reduced by certain other tax credits) exceeds
his or her tentative minimum tax. Further, the Optionee's basis in Option Shares
acquired through exercise of an ISO will, for alternative minimum tax purposes,
equal the fair market value of the Option Shares taken into account in
determining the Optionee's alternative minimum taxable income.
As a general rule, if the Optionee disposes of the Option Shares before
satisfying the holding period requirements discussed above (a "disqualifying
disposition"), his or her gain recognized on the disqualifying disposition will
be taxed as ordinary income to the extent of the difference between the fair
market value of the Option Shares on the date of exercise and the adjusted basis
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of the Option Shares (or, in certain cases, the excess of the amount realized on
disposition over the adjusted basis, if such excess is less than the amount
arrived at by the former calculation), and the Company will be entitled to a
deduction in that amount. If the Option Shares received by the Optionee upon
exercise of the Option are subject to a substantial risk of forfeiture and are
non-transferable ("substantially nonvested"), within the meaning of the
regulations under Section 83 of the Code, and the Optionee makes a disqualifying
disposition of the Option Shares once they become substantially vested, the
portion of the gain which will be taxed as ordinary income on the disqualifying
disposition is the excess of the fair market value of the Option Shares on the
date the Option Shares become substantially vested (or the amount realized on
the disposition, if such amount is less) over the Option Price of the Option
Shares. The Company will be entitled to a corresponding deduction. However,
pursuant to Section 83(b) of the Code, Optionees may elect, generally within 30
days of exercise of the Option, to recognize ordinary income from a
disqualifying disposition as if the Shares had been substantially vested on the
date of exercise.
The gain (if any) in excess of the amount recognized as ordinary income on
a disqualifying disposition will be long-term or short-term capital gain,
depending upon the length of time the recipient held the Option Shares prior to
the disposition. However, if the Option Shares were substantially nonvested and
the recipient did not make the election pursuant to Section 83(b) of the Code,
the Optionee's capital gain holding period begins on the date the Option Shares
become substantially vested rather than the date the Option Shares were
acquired.
Optionees may be permitted to exercise ISOs by transferring to the Company
shares of the Company's Class A Special Common Stock or Class A Common Stock
then held by the Optionee ("Prior Shares") having a market value equal to the
Option Price of the Shares to be purchased (see "Method of Exercise"). If the
Optionee acquired the Prior Shares by exercise of an ISO and the Optionee has
not satisfied the holding period requirements described above for the Prior
Shares, then the transfer will be treated as a disqualifying disposition by the
Optionee of the Prior Shares. However, if the Optionee did not acquire Prior
Shares by exercise of an ISO or if the Optionee has satisfied the holding period
requirements applicable to Options, then the Optionee will not recognize gain or
loss upon the exchange. In that case, the Optionee's basis and holding period
(for purposes other than the Option holding period rules) in the Prior Shares
will carry over to a corresponding number of Option Shares received. The
Optionee's basis in any additional Option Shares received will be zero and his
or her holding period will begin on the date the Optionee becomes the owner of
such Shares.
If an Option granted under the 1996 Plan which is intended to be an ISO
fails to qualify as such under applicable rules and regulations of the Code,
such Option will be subject to the general principles of Federal income tax law
discussed below with respect to nonqualified options.
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Nonqualified Options. For Federal income tax purposes, the holder of an
option that is not an ISO (a "nonqualified option") will not recognize taxable
income at the time of grant, and the Company will not be allowed a deduction by
reason of the grant of a nonqualified option. The Optionee will in general
recognize ordinary income upon exercise of the nonqualified option, in an
amount equal to the excess of the fair market value of the Option Shares
received at the time of exercise (including Option Shares withheld by the
Company to satisfy tax withholding obligations) over the exercise price of the
nonqualified option, and the Company will be allowed a deduction in that amount.
If, however, the Option Shares received upon the exercise of the nonqualified
option are "substantially nonvested" within the meaning of the regulations under
Section 83 of the Code, the Optionee will not recognize income and the Company
will not be entitled to a deduction until the Option Shares become
"substantially vested," in which case the amount of ordinary income recognized
by the Optionee will be the excess of the fair market value of the Option Shares
when they become substantially vested over the exercise price of the
nonqualified option, and the Company will be entitled to a corresponding
deduction. However, pursuant to Section 83(b) of the Code, an Optionee may
elect, generally within 30 days of exercise of the Option, to recognize ordinary
income upon exercise of the Option as if the Option Shares were substantially
vested on the date of exercise.
Upon disposition of the Option Shares, the Optionee will recognize
long-term or short-term capital gain or loss, depending upon the length of time
he or she held the Option Shares prior to disposition. However, if the Option
Shares were substantially nonvested and the recipient did not make the election
pursuant to Section 83(b) of the Code, the Optionee's capital gain holding
period begins on the date the Option Shares become substantially vested rather
than the date the Option Shares were acquired. The amount of long-term or
short-term capital gain recognized by the Optionee upon disposition of the
Option Shares will be an amount equal to the difference between the amount
realized on the disposition and the Optionee's basis in the Option Shares (which
basis is ordinarily the fair market value of the Option Shares on the date the
Option was exercised or became substantially vested).
Optionees may be permitted to exercise nonqualified options by transferring
to the Company Prior Shares having a market value equal to the Option Price of
the Shares to be purchased (see "Methods of Exercise"). In that case, no income
will be recognized on the receipt of a corresponding number of Option Shares,
and the Optionee's basis and holding period in the Prior Shares will carry over
to the corresponding number of Option Shares received. The Optionee will
recognize ordinary income on the receipt of any additional Option Shares which
are substantially vested (including Option Shares withheld by the Company to
satisfy tax withholding requirements) in an amount equal to their fair market
value at the time of exercise. The Optionee's basis in such additional Option
Shares received will equal the amount includable in the Optionee's income and
his or her holding period will begin on the date the Optionee becomes the owner
of such shares or, if later, the date such shares become substantially vested.
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Certain optionees may be permitted to transfer nonqualified options to
members of their immediate family, or certain trusts or partnerships, without
consideration. See "Transferability of Options." In the case of any nonqualified
option so transferred, the original optionee will recognize income upon the
exercise of the option by the transferee (or, if applicable, upon the
substantial vesting of the option shares) to the same extent as if the original
optionee had exercised the option, and the Company's concurrent deduction will
also be the same. The transferee's basis and holding period in the stock
received upon exercise of the transferred option will be the same basis and
holding period as would have applied had the original optionee exercised the
option in the same manner used by the transferee to exercise the option.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE COMCAST CORPORATION 1996 STOCK OPTION PLAN.
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PROPOSAL THREE
ADOPTION OF AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO CONFORM CLASS VOTING REQUIREMENTS
TO THE PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988
The Board of Directors, by unanimous vote, has approved a proposal to amend
the Articles of Incorporation of the Company to provide that holders of the
Company's stock shall have class voting rights only to the extent provided by
the Pennsylvania Business Corporation Law of 1988, as amended (the "Pennsylvania
BCL").
Currently, Article 5(f) of the Company's Articles of Incorporation provides
. . . . There shall be no class voting on any [amendment to the Articles of
Incorporation] or on any other matter except with respect to certain
amendments to the Articles of Incorporation regarding conversion rights of
Class B Common Stock set forth in paragraph (d) of this Article Five or as
shall be required by applicable law, in which such case there shall be
required the affirmative vote of the holders of at least a majority of the
outstanding shares of each of Class A Common Stock, Class A Special Common
Stock and Class B Common Stock, voting as separate classes.
Articles 5(a) and 5(e) refer to this provision of Article 5(f) in addressing the
voting rights of the holders of the Company's common stock.
Article 5(f) as currently written differs from the Pennsylvania BCL in two
respects. First, it provides for separate class votes of all three classes of
common stock whenever one of the classes is required to be given a class vote by
the Pennsylvania BCL. Second, it provides for such class votes whenever the
conversion provisions in Article 5(d) applicable to the Class B Common stock are
amended, regardless of whether the changes are adverse to each of the classes.
Under the Pennsylvania BCL, the requirement that one class receive a class vote
does not also require separate votes of all classes, and the Class A or Class A
Special Common Stock classes would receive a class vote with respect to changes
in the conversion provisions of the Class B Common stock only if such changes
were adverse to the relevant class.
The Board of Directors determined that the current provisions of the
Company's Articles of Incorporation could, under some circumstances, require the
Company to overcome unnecessary obstacles and to undertake the additional
expense of providing separate class votes to all classes of common stock,
including the Class A Special Common Stock which does not ordinarily vote and
which is the Company's largest class of stock, without any corresponding benefit
to shareholders. Such circumstances would include, for example, amendments to
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reduce or eliminate conversion rights of the Class B Common Stock (which under
the Pennsylvania BCL could be accomplished by a general vote of all voting stock
and a separate class vote of the Class B Common Stock only), or amendments to
provide for convertibility of the Class B Common Stock into a new class of stock
on a basis equivalent to the Class A and Class A Special Common Stock classes
(which under the Pennsylvania BCL would not require a class vote of any class).
Any amendment to increase the conversion rights of the Class B stock to the
detriment of any other class of stock would continue to require a class vote of
the class of stock adversely affected. The amendment would also eliminate the
need for class votes by all classes if, pursuant to Section 1906 of the
Pennsylvania BCL, in a merger or other similar transaction all holders of stock
of the same class were not to be treated in the same manner. Section 1906
authorizes such differential treatment within a class if approved by a separate
class vote of the affected class, but does not require separate class votes of
unaffected classes. The Board of Directors has no plans at this time to propose
any amendment to the Company's Articles of Incorporation affecting the
conversion rights of the Class B Common Stock or otherwise requiring a separate
vote of any class, except for the amendments proposed in this Proxy Statement,
or any transaction involving a need for a class vote of any class under Section
1906. However, the Company is constantly evaluating possible transactions, some
of which could require amendments to the Company's Articles of Incorporation
(including authorization of a new class or classes of stock), and the Board of
Directors may propose an amendment to the Company's Articles of Incorporation,
or propose a plan requiring a separate class vote of one or more classes under
Section 1906, in connection with such a transaction should it determine that
such a transaction would be in the Company's best interest.
Accordingly, the Board of Directors has approved a resolution amending
Articles 5(a), 5(e), and 5(f) as follows (deleted language indicated by
brackets; additional language indicated by italics):
Article 5(a):
Each Share of Class A Common Stock shall entitle the holder thereof to
one (1) vote. Each share of Class B Common Stock shall entitle the holder
thereof to fifteen (15) votes. Holders of shares of Class A Special Common
Stock shall not be entitled to vote for the election of directors or any
other matter except as may be required by applicable law[ or by paragraph
(f) of this Article 5], in which case each share of Class A Special Common
Stock shall entitle the holder thereof to one (1) vote.
Article 5(e):
Except [as provided in paragraph (f) of this Article 5, or] where
holders of Class A Special Common Stock are expressly required to vote
under applicable law, only the holders of Class A Common Stock and holders
of Class B Common Stock shall be entitled to vote and shall vote as a
single class on all matters with respect to which a vote of the
shareholders of this Corporation is required or permitted under applicable
law, the Articles of Incorporation of this Corporation, or the By-Laws of
this Corporation including, but not limited to, matters concerning the
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sale, lease or exchange of all or substantially all of the property and
assets of this Corporation, mergers or consolidations with another
corporation or corporations, dissolutions of this Corporation, or
amendments to the Articles of Incorporation of this Corporation. Except as
provided in paragraph (f) of this Article Five, whenever applicable law,
the Articles of Incorporation of this Corporation or the By-Laws of this
Corporation provide for the necessity of an "affirmative vote of the
shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast thereon," or "a majority of the voting
stock," or language of similar effect, any and all such language shall mean
that the Class A Common Stock and the Class B Common Stock shall vote as
one class and that a majority consists of a majority of the total number of
votes entitled to be cast in accordance with the provisions of paragraph
(a) of this Article Five, so that each share of Class A Common Stock shall
entitle the holder thereof to one (1) vote and that each share of the Class
B Common Stock shall entitle the holder thereof to fifteen (15) votes.
Article 5(f):
Each and any provision of the Articles of Incorporation of this
Corporation may from time to time, when and as desired, be amended by a
resolution of the Board of Directors and the affirmative vote of a majority
of the votes cast by all shareholders entitled to vote thereon, as
determined in accordance with the provisions of paragraph (a) of this
Article Five, so that each share of Class A Common Stock shall entitle the
holder thereof to one (1) vote and that each share of the Class B Common
Stock shall entitle the holder thereof to fifteen (15) votes. There shall
be no class voting on any such amendments or on any other matter except
[with respect to certain amendments to the Articles of Incorporation
regarding conversion rights of Class B Common Stock as set forth in
paragraph (d) of this Article Five or] as shall be required by applicable
law, in which case there shall be required the affirmative vote of a
majority of the votes cast by the holders of the outstanding shares of each
[of Class A Common Stock, Class A Special Common Stock and Class B Common
Stock , voting as separate classes ] CLASS ENTITLED TO VOTE BY APPLICABLE
LAW, VOTING AS A SEPARATE CLASS.
The Board of Directors is submitting such amendment to a separate class
vote of each class of the Company's shareholders, because such class votes are
required under Section 1914(e) of the Pennsylvania BCL, which provides that
whenever the articles of a corporation require for the taking of any action by
the shareholders or a class of shareholders a specific number or percentage of
votes, the provision of the articles setting forth that requirement shall not be
amended or repealed by any lesser number or percentage of votes of the
shareholders or of the class of shareholders. Therefore, in addition to
receiving the affirmative vote of a majority of the votes cast by all holders of
Class A Common Stock and all holders of Class B Common Stock, voting as a single
class, to be adopted the amendment must also receive the affirmative vote of a
majority of votes cast by the holders of the Class A Common Stock, the holders
of the Class A Special Common Stock, and the holders of the Class B Common
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Stock, voting as separate classes. Each share of Class A Special Common Stock is
entitled to one vote in connection with the separate class vote of the Class A
Special Common Stock on such proposed amendment, notwithstanding that the Class
A Special Common Stock is not generally entitled to vote on matters submitted to
the Company's shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CONFORM CLASS
VOTING REQUIREMENTS TO PENNSYLVANIA CORPORATE LAW.
PROPOSAL FOUR
ADOPTION OF AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO AUTHORIZE MIRROR SPIN-OFFS, MERGERS
AND OTHER SIMILAR TRANSACTIONS
The Board of Directors, by unanimous vote, has approved a proposal to amend
the Articles of Incorporation of the Company to permit the Company (in the
discretion of the Board of Directors), by means of a dividend, rights
distribution, merger, statutory division, recapitalization, or other means to
distribute different classes of equity interests in the Company or a successor
corporation (e.g., different classes of stock in a subsidiary being spun off to
the Company's shareholders, or different classes of tracking stock)
substantially replicating the relative rights of the three existing classes of
stock of the Company.
Article 5(j) of the Company's Articles of Incorporation provides that
"Except as expressly set forth herein, the rights of the holders of Class A
Common Stock, the rights of the holders of Class A Special Common Stock, and the
rights of the holders of Class B Common Stock shall be in all respects
identical." Section 1521(d) of the Pennsylvania BCL also provides that, except
as expressly set forth in a corporation's articles of incorporation, all shares
of any class shall be in all respects equal to the shares of any other class.
The Articles of Incorporation currently provide for only a limited number of
circumstances in which the shares of Class A Common Stock, Class A Special
Common Stock, and Class B Common Stock do not have identical rights: (1) voting
rights (Class A Special Common Stock does not have voting rights except in
certain circumstances), (2) stock dividends may be declared either in shares of
Class A Common Stock or Class A Special Common Stock, or as class-on-class stock
dividends (in which holders of Class A Common Stock would receive Class A Common
Stock, holders of Class A Special Common Stock would receive Class A Special
Common Stock, and holders of Class B Common Stock would receive Class B Common
Stock, and (3) the Class B Common Stock is convertible at the option of the
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holder into either Class A Common Stock or Class A Special Common Stock on a
share-for-share basis, and such conversion rights are subject to anti-dilution
protection. In addition, Articles 5(b) and 5(c) of the Company's Articles of
Incorporation, which address cash dividends and stock dividends respectively,
make no provision for non-cash distributions to shareholders other than
distributions of common stock of the Company.
The Board of Directors is aware that, from time to time, other companies in
the industries in which the Company participates have considered or undertaken
transactions such as the distribution to shareholders of the stock of a
subsidiary engaged in a separate line of business, or the creation and
distribution to shareholders of so-called "tracking stock" which affords rights
to dividends and liquidation rights which may be dependent on the results of
specified lines of business or assets of the issuing company, or reincorporation
of a company under the laws of a different jurisdiction (such as a change in a
company's state of incorporation to Delaware). The Board of Directors is also
aware that, in connection with a merger or other transaction, it may be in the
best interest of the Company that the Company not be the surviving corporation,
even if the transaction in effect represents an acquisition by the Company and
the Company's shareholders continue to control and to represent the dominant
economic interest in the surviving entity. Under the Company's current Articles
of Incorporation, it may not be possible to effect any such transaction without
effectively combining the Company's three existing classes of stock into one
class. The Board of Directors has been advised that, without amending the
Company's Articles of Incorporation, the Company could not distribute different
classes of subsidiary or tracking stock to the holders of its existing classes
of stock, even if the different classes of subsidiary or tracking stock
conferred rights in the applicable subsidiary which were equivalent to the
rights in the Company represented by its existing classes of stock, or undertake
a merger or other acquisitive transaction in which, as a formal matter, the
Company was not the surviving entity, and in which the shareholders of the
Company received stock of different classes which were equivalent to their
existing stock.
The Board of Directors has concluded that such absolute restrictions are
not in the best interest of the Company and its shareholders. While the rights
of the Class A Common Stock, the Class A Special Common Stock, and the Class B
Common Stock with respect to dividends and the proceeds of liquidation of the
Company should remain equal, the Board of Directors should have the flexibility
to propose transactions in which the shareholders of the Company essentially
continue their investment in the Company while preserving the current capital
structure of the Company and the existing differences among the three classes of
common stock.
Accordingly, the Board of Directors has approved a proposal amending
Article 5(c) of the Company's Articles of Incorporation to give the Board of
Directors authority to make distributions to shareholders of equity interests in
the Company or other entities in which the holders of Class A Common Stock,
Class A Special Common Stock, and Class B Common Stock would receive different
classes of such equity interests with relative rights equivalent to the existing
relative rights of the three existing classes, and to adopt plans of merger,
asset transfer, division, share exchange, or recapitalization accomplishing the
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same result. Each of such potential transactions would involve continuation of
the existing shareholders' equity interest in the Company or a successor (or in
the Company and a successor), without changing the existing relative rights of
the Company's classes of stock. The proposal expressly requires that all such
transactions be accomplished so that holders of all shares of Common Stock,
regardless of class, receive the same benefits except to the extent of relative
differences among classes of equity interests that are substantially equivalent
to the relative differences among the existing classes. For instance, holders of
the Company's Class A Common Stock and Class B Common Stock could receive voting
stock and holders of Class A Special Common Stock could receive nonvoting stock.
The proposal would not authorize the distribution to the holders of one class of
common stock of (i) different amounts of cash or debt securities, (ii) equity
interests affording a different right to dividends (other than stock dividends,
to the extent currently provided with respect to the Company's classes of common
stock) or liquidation proceeds compared to the holders of any other class of
common stock, (iii) any equivalent distribution in a merger or similar
transaction, and any differences in voting rights in the Company, or (iv) any
different voting rights in the Company or any other entity that are not the same
as the relative voting rights of the Company's existing stock.
The Board of Directors believes that the proposed amendment is in the best
interest of the Company and its shareholders because it removes a potential
impediment to accomplishing one or more transactions that could increase the
value of the Company's stock and otherwise benefit shareholders. The Board of
Directors has no plans at this time to propose any such transaction. However,
the Company is constantly evaluating possible transactions, some of which could
require distributing different classes of equity securities (or rights to
acquire such different classes) to the Company's shareholders, and the Board of
Directors may propose (or, if shareholder approval is not otherwise required,
may adopt) such a transaction should it determine that such a transaction would
be in the best interest of the Company and its shareholders.
Pursuant to the proposal, Article 5(c) of the Company's Articles of
Incorporation would be amended to read as follows (deleted language indicated by
brackets; additional language indicated in italics):
The holders of Class A Common Stock, the holders of Class A Special
Common Stock, and the holders of Class B Common Stock, shall be entitled to
receive, from time to time, when and as declared by the Board of Directors,
such [stock] dividends OF STOCK OF THIS CORPORATION OR OTHER PROPERTY as
the Board of Directors may determine, out of such funds as are legally
available [therefore] THEREFOR. Stock dividends on, or stock splits of, any
class of Common Stock shall not be paid or issued unless paid or issued on
all classes of Common Stock, in which case they shall be paid or issued
only in shares of that class; provided, however, that stock dividends on,
or stock splits of, Class A Common Stock, Class A Special Common Stock, or
Class B Common Stock may be paid or issued in shares of either Class A
Common Stock or Class A Special Common Stock. Any decrease in the number of
shares of any class of Common Stock resulting in a combination or
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consolidation of shares or other capital reclassification shall not be
permitted unless parallel action is taken with respect to each other class
of Common Stock, so that the number of shares of each class of Common Stock
outstanding shall be decreased proportionately. NOTWITHSTANDING ANYTHING TO
THE CONTRARY CONTAINED HEREIN, IN THE EVENT OF A DISTRIBUTION OF PROPERTY,
PLAN OF MERGER OR CONSOLIDATION, PLAN OF ASSET TRANSFER, PLAN OF DIVISION,
PLAN OF EXCHANGE, OR RECAPITALIZATION PURSUANT TO WHICH HOLDERS OF CLASS A
COMMON STOCK, HOLDERS OF CLASS A SPECIAL COMMON STOCK, AND HOLDERS OF CLASS
B COMMON STOCK WOULD BE ENTITLED TO RECEIVE EQUITY INTERESTS OF ONE OR MORE
CORPORATIONS (INCLUDING, WITHOUT LIMITATION, THIS CORPORATION) OR OTHER
ENTITIES, OR RIGHTS TO ACQUIRE SUCH EQUITY INTERESTS, THEN THE BOARD OF
DIRECTORS OF THIS CORPORATION MAY, BY RESOLUTION DULY ADOPTED, PROVIDE THAT
THE HOLDERS OF CLASS A COMMON STOCK, THE HOLDERS OF CLASS A SPECIAL COMMON
STOCK, AND THE HOLDERS OF CLASS B COMMON STOCK, RESPECTIVELY AND AS
SEPARATE CLASSES, SHALL RECEIVE WITH RESPECT TO THEIR CLASS A COMMON STOCK,
CLASS A SPECIAL COMMON STOCK, OR CLASS B COMMON STOCK (WHETHER BY
DISTRIBUTION, EXCHANGE, REDEMPTION OR OTHERWISE), IN PROPORTION TO THE
NUMBER OF SHARES HELD BY THEM, EQUITY INTERESTS (OR RIGHTS TO ACQUIRE SUCH
EQUITY INTERESTS) OF SEPARATE CLASSES OR SERIES HAVING SUBSTANTIALLY
EQUIVALENT RELATIVE DESIGNATIONS, PREFERENCES, QUALIFICATIONS, PRIVILEGES,
LIMITATIONS, RESTRICTIONS AND RIGHTS AS THE RELATIVE DESIGNATIONS,
PREFERENCES, QUALIFICATIONS, PRIVILEGES, LIMITATIONS, RESTRICTIONS AND
RIGHTS OF THE CLASS A COMMON STOCK, CLASS A SPECIAL COMMON STOCK, AND CLASS
B COMMON STOCK. EXCEPT AS PROVIDED ABOVE, IF THERE SHOULD BE ANY
DISTRIBUTION OF PROPERTY, MERGER, CONSOLIDATION, PURCHASE OR ACQUISITION OF
PROPERTY OR STOCK, ASSET TRANSFER, DIVISION, SHARE EXCHANGE,
RECAPITALIZATION OR REORGANIZATION OF THE CORPORATION, THE HOLDERS OF CLASS
A COMMON STOCK, THE HOLDERS OF CLASS A SPECIAL COMMON STOCK, AND THE
HOLDERS OF CLASS B COMMON STOCK SHALL RECEIVE THE SHARES OF STOCK, OTHER
SECURITIES OR RIGHTS OR OTHER ASSETS AS WOULD BE ISSUABLE OR PAYABLE UPON
SUCH DISTRIBUTION, MERGER, CONSOLIDATION, PURCHASE OR ACQUISITION OF SUCH
PROPERTY OR STOCK, ASSET TRANSFER, DIVISION, SHARE EXCHANGE,
RECAPITALIZATION OR REORGANIZATION IN PROPORTION TO THE NUMBER OF SHARES
HELD BY THEM, RESPECTIVELY, WITHOUT REGARD TO CLASS.
The Board of Directors is submitting such amendment to a separate class
vote of each class of the Company's shareholders, because such class votes are
required under Section 1914(b)(2) of the Pennsylvania BCL. Therefore, in
addition to receiving the affirmative vote of a majority of the votes cast by
all holders of Class A Common Stock and all holders of Class B Common Stock,
voting as a single class, to be adopted the amendment must also receive the
affirmative vote of a majority of votes cast by the holders of the Class A
Common Stock, the holders of the Class A Special Common Stock, and the holders
of the Class B Common Stock, voting as separate classes. Each share of Class A
Common Stock is entitled to one vote in connection with the separate class vote
of the Class A Special Common Stock on such proposed amendment, notwithstanding
that the Class A Special Common Stock is not generally entitled to vote on
matters submitted to the Company's shareholders.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO PROVIDE FOR
MIRROR SPIN-OFFS, MERGERS, AND OTHER SIMILAR TRANSACTIONS.
PROPOSAL FIVE
TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
Subject to approval by the shareholders, the Board of Directors, upon the
recommendation of the Audit Committee, has appointed the firm of Deloitte &
Touche LLP, which served as the Company's independent auditors for the last
fiscal year, to serve as the Company's independent auditors with respect to the
consolidated financial statements of the Company and its subsidiaries for the
current fiscal year.
A representative of Deloitte & Touche LLP is expected to be present at the
meeting and will have the opportunity to make a statement if he or she desires
to do so. The representative is also expected to be available to respond to
appropriate questions of shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE ABOVE PROPOSAL.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Annual Meeting of
Shareholders in 1997 must be received by January 20, 1997 in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. Shareholder proposals should be directed to Stanley
Wang, Senior Vice President and Secretary, at the address of the Company set
forth on the first page of this Proxy Statement. Notwithstanding the foregoing,
shareholders with suggestions on the nomination of directors must comply with
the procedures set forth under the caption "Committees and Meetings of the Board
of Directors."
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The expenses of solicitation of proxies for the
meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or telegraph
by directors, officers or regular employees of the Company or its subsidiaries.
The Company has also retained Corporate Investors Communications, Inc. ("CIC")
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to assist in the solicitation of proxies as described above. CIC will receive a
fee from the Company of $6,000 for its services, plus reimbursement of its
out-of-pocket expenses. The Company and CIC intend to request persons holding
stock in their name or custody, or in the name of nominees, to send proxy
materials to their principals and to request authority for the execution of the
proxies, and the Company will reimburse such persons for their expense in so
doing.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS MOST
RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO INVESTOR
RELATIONS, AT THE ADDRESS OF THE COMPANY SET FORTH ON THE FIRST PAGE OF THIS
PROXY STATEMENT.
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<PAGE>
[FORM OF PROXY -- CLASS A]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF COMCAST CORPORATION
The undersigned, a holder of Class A Common Stock of COMCAST CORPORATION,
hereby constitutes and appoints RALPH J. ROBERTS and STANLEY WANG, and each of
them acting individually, as the attorney and proxy of the undersigned, with
full power of substitution, for and in the name and stead of the undersigned, to
attend the Annual Meeting of Shareholders of the Company to be held on
Wednesday, June 19, 1996 at 9:00 a.m., at the offices of the Company, 1500
Market Street, 33rd Floor, Philadelphia, Pennsylvania, and any adjournment or
postponement thereof, and thereat to vote all shares of CLASS A COMMON STOCK
which the undersigned would be entitled to vote if personally present, as
follows:
1. [ ] FOR all ten nominees for director listed below.
[ ] WITHHOLD AUTHORITY to vote for all ten nominees for director
listed below.
[ ] FOR all ten nominees for director listed below, EXCEPT
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S) WHOSE
NAME(S) IS (ARE) LINED THROUGH. Nominees: Ralph J. Roberts,
Julian A. Brodsky, Brian L. Roberts, Daniel Aaron, Gustave G.
Amsterdam, Sheldon M. Bonovitz, Joseph L. Castle, II, Bernard
C. Watson, Irving A. Wechsler, and Anne Wexler.
2. To approve the Comcast Corporation 1996 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the amendment to the Company's Articles of
Incorporation to conform class voting to the requirements of the Pennsylvania
Business Corporation Law of 1988.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve the amendment to the Company's Articles of
Incorporation to provide for mirror spin-offs, mergers, and other similar
transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To vote on such other business which may properly come before
the meeting.
Unless otherwise specified, the shares will be voted "FOR" the election of
all ten nominees for director and "FOR" the other proposals set forth above.
This Proxy also delegates discretionary authority to vote with respect to any
other business which may properly come before the meeting and any adjournment or
postponement thereof.
(Please sign and date on reverse side)
<PAGE>
(Continued from other side)
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING, PROXY STATEMENT AND SUMMARY ANNUAL REPORT OF COMCAST CORPORATION.
Date: _______________, 1996
__________________________
Signature of Shareholder
__________________________
Signature of Shareholder
NOTE: Please sign this Proxy exactly as name(s) appear(s) in address. When
signing as attorney-in-fact, executor, administrator, trustee or
guardian, please add your title as such, and if signer is a
corporation, please sign with full corporate name by duly authorized
officer or officers and affix the corporate seal. When stock is issued
in the name of two or more persons, all such persons should sign.
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
<PAGE>
[FORM OF PROXY -- CLASS A SPECIAL]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF COMCAST CORPORATION
The undersigned, a holder of Class A Special Common Stock of COMCAST
CORPORATION, hereby constitutes and appoints RALPH J. ROBERTS and STANLEY WANG,
and each of them acting individually, as the attorney and proxy of the
undersigned, with full power of substitution, for and in the name and stead of
the undersigned, to attend the Annual Meeting of Shareholders of the Company to
be held on Wednesday, June 19, 1996 at 9:00 a.m., at the offices of the Company,
1500 Market Street, 33rd Floor, Philadelphia, Pennsylvania, and any adjournment
or postponement thereof, and thereat to vote all shares of CLASS A SPECIAL
COMMON STOCK which the undersigned would be entitled to vote if personally
present, as follows:
1. To approve the amendment to the Company's Articles of
Incorporation to conform class voting to the requirements of the Pennsylvania
Business Corporation Law of 1988.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To approve the amendment to the Company's Articles of
Incorporation to provide for mirror spin-offs, mergers, and other similar
transactions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Unless otherwise specified, the shares will be voted "FOR" the two
proposals set forth above. This Proxy also delegates discretionary authority to
vote with respect to any other business which may properly come before the
meeting and any adjournment or postponement thereof.
(Please sign and date on reverse side)
<PAGE>
(Continued from other side)
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING, PROXY STATEMENT AND SUMMARY ANNUAL REPORT OF COMCAST CORPORATION.
Date: _______________, 1996
__________________________
Signature of Shareholder
__________________________
Signature of Shareholder
NOTE: Please sign this Proxy exactly as name(s) appear(s) in address. When
signing as attorney-in-fact, executor, administrator, trustee or
guardian, please add your title as such, and if signer is a
corporation, please sign with full corporate name by duly authorized
officer or officers and affix the corporate seal. When stock is issued
in the name of two or more persons, all such persons should sign.
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
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APPENDIX
COMCAST CORPORATION
1996 STOCK OPTION PLAN
1. Purpose of Plan
The purpose of the Plan is to assist the Company in retaining valued
employees, officers and directors by offering them a greater stake in the
Company's success and a closer identity with it, and to aid in attracting
individuals whose services would be helpful to the Company and would contribute
to its success.
2. Definitions
(a) "Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this definition, the
term "control," including its correlative terms "controlled by" and "under
common control with," mean, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
(b) "Board" means the board of directors of the Sponsor.
(c) "Cause" means:
(i) for an employee of a Company, a finding by the
Committee, after full consideration of the facts presented on behalf of
both the Company and the employee, that the employee has breached his
employment contract with a Company, has disclosed trade secrets of a
Company or has been engaged in any sort of disloyalty to a Company,
including, without limitation, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his employment.
(ii) for a Non-Employee Director, a finding by the
Committee, after full consideration of the facts presented on behalf of
both the Company and the Director, that such Non-Employee Director has
disclosed trade secrets of a Company, or has been engaged in any sort
of disloyalty to a Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the
course of his service as a Non-Employee Director.
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(d) "Change of Control" means any transaction or series of
transactions as a result of which any Person who was a Third Party immediately
before such transaction or series of transactions owns then-outstanding
securities of the Sponsor having more than 50 percent of the voting power for
the election of directors of the Sponsor.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means the committee described in Paragraph 5.
(g) "Common Stock" means the Sponsor's Class A Special Common
Stock, par value, $1.00.
(h) "Company" means the Sponsor and each of the Parent
Companies and Subsidiary Companies.
(i) "Date of Grant" means the date as of which an Option is
granted.
(j) "Disability" means a disability within the meaning of
section 22(e)(3) of the Code.
(k) "Election Date" means the date on which an individual is
first elected to the Board as a Non-Employee Director, or is elected to the
Board as a Non-Employee Director following a period of one year or more during
which such individual was not a member of the Board.
(l) "Fair Market Value. If Shares are listed on a stock
exchange, Fair Market Value shall be determined based on the last reported sale
price of a Share on the principal exchange on which Shares are listed on the
last trading day prior to the date of determination, or, if Shares are not so
listed, but trades of Shares are reported on the Nasdaq National Market, the
last quoted sale price of a Share on the Nasdaq National Market on the last
trading day prior to the date of determination.
(m) "Grant Date" means each February 1st after the date of
adoption of the Plan by the Board.
(n) "Immediate Family" means an Optionee's spouse and lineal
descendants, any trust all beneficiaries of which are any of such persons and
any partnership all partners of which are any of such persons.
(o) "Incentive Stock Option" means an Option granted under the
Plan, designated by the Committee at the time of such grant as an Incentive
Stock Option within the meaning of section 422 of the Code and containing the
terms specified herein for Incentive Stock Options; provided, however,
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that to the extent an Option granted under the Plan and designated by the
Committee at the time of grant as an Incentive Stock Option fails to satisfy the
requirements for an incentive stock option under section 422 of the Code for any
reason, such Option shall be treated as a Non-Qualified Option.
(p) "Non-Employee Director" means an individual who is a
member of the Board, and who is not an employee of a Company, including an
individual who is a member of the Board and who previously was an employee of a
Company.
(q) "Non-Qualified Option" means:
(i) an Option granted under the Plan, designated by
the Committee at the time of such grant as a Non-Qualified Option and
containing the terms specified herein for Non-Qualified Options; and
(ii) an Option granted under the Plan and designated
by the Committee at the time of grant as an Incentive Stock Option, to
the extent such Option fails to satisfy the requirements for an
incentive stock option under section 422 of the Code for any reason.
(r) "Option" means any stock option granted under the Plan and
described in either Paragraph 3(a) or Paragraph 3(b).
(s) "Optionee" means a person to whom an Option has been
granted under the Plan, which Option has not been exercised in full and has not
expired or terminated.
(t) "Outside Director" means a member of the Board who is an
"outside director" within the meaning of section 162(m)(4)(C) of the Code and
applicable Treasury Regulations issued thereunder.
(u) "Parent Company" means all corporations that, at the time
in question, are parent corporations of the Sponsor within the meaning of
section 424(e) of the Code.
(v) "Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or organization.
(w) "Plan" means the Comcast Corporation 1996 Stock Option
Plan.
(x) "Share" or "Shares" means:
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(i) for all purposes of the Plan, a share or shares
of Common Stock or such other securities issued by the Sponsor as may
be the subject of an adjustment under Paragraph 11.
(ii) solely for purposes of Paragraphs 7(d) and 8(d),
the term "Share" or "Shares" also means a share or shares of the
Sponsor's Class A Common Stock, par value, $1.00.
(y) "Sponsor" means Comcast Corporation, a Pennsylvania
corporation, including any successor thereto by merger, consolidation,
acquisition of all or substantially all the assets thereof, or otherwise.
(z) "Subsidiary Companies" means all corporations that, at the
time in question, are subsidiary corporations of the Sponsor within the meaning
of section 424(f) of the Code.
(aa) "Ten Percent Shareholder" means a person who on the Date
of Grant owns, either directly or within the meaning of the attribution rules
contained in section 424(d) of the Code, stock possessing more than 10% of the
total combined voting power of all classes of stock of his employer corporation
or of its parent or subsidiary corporations, as defined respectively in sections
424(e) and (f) of the Code, provided that the employer corporation is a Company.
(bb) "Terminating Event" means any of the following events:
(i) the liquidation of the Sponsor; or
(ii) a Change of Control.
(cc) "Third Party" means any Person other than a Company,
together with such Person's Affiliates.
(dd) "1933 Act" means the Securities Act of 1933, as amended.
(ee) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
3. Rights To Be Granted
(a) Types of Options Available for Grant. Rights that may be
granted under the Plan are:
(i) Incentive Stock Options, which give an Optionee
who is an employee of a Company the right for a specified time period
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to purchase a specified number of Shares for a price not less than the
Fair Market Value on the Date of Grant; and
(ii) Non-Qualified Options, which give the Optionee
the right for a specified time period to purchase a specified number of
Shares for a price not less than the Fair Market Value on the Date of
Grant.
(b) Limit on Grant of Options. The maximum number of Shares
for which Options may be granted to any single individual in any calendar year,
adjusted as provided in Section 11, shall be 1,000,000 Shares.
(c) Presumption of Incentive Stock Option Status. Each Option
granted under the Plan to an employee of a Company is intended to be an
Incentive Stock Option, except to the extent any such grant would exceed the
limitation of Paragraph 9 and except for any Option specifically designated at
the time of grant as an Option that is not an Incentive Stock Option.
4. Shares Subject to Plan
Subject to adjustment as provided in Paragraph 11, not more than
20,000,000 Shares in the aggregate may be issued pursuant to the Plan upon
exercise of Options. Shares delivered pursuant to the exercise of an Option may,
at the Sponsor's option, be either treasury Shares or Shares originally issued
for such purpose. If an Option covering Shares terminates or expires without
having been exercised in full, other Options may be granted covering the Shares
as to which the Option terminated or expired.
5. Administration of Plan
(a) Committee. The Plan shall be administered by the
Subcommittee on Performance Based Compensation of the Compensation Committee of
the Board or any other committee or subcommittee designated by the Board,
provided that the committee administering the Plan is composed of two or more
non-employee members of the Board, each of whom is an Outside Director.
Notwithstanding the foregoing, if Non-Employee Directors are granted Options in
accordance with the provisions of Paragraph 8, the directors to whom such
Options will be granted, the timing of grants of such Options, the Option Price
of such Options and the number of Option Shares included in such Options shall
be as specifically set forth in Paragraph 8. No member of the Committee shall
participate in the resolution of any issue that exclusively involves an Option
granted to such member.
(b) Meetings. The Committee shall hold meetings at such times
and places as it may determine. Acts approved at a meeting by a majority of the
members of the Committee or acts approved in writing by the unanimous consent of
the members of the Committee shall be the valid acts of the Committee.
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(c) Exculpation. No member of the Committee shall be
personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan or the
granting of Options thereunder unless (i) the member of the Committee has
breached or failed to perform the duties of his office, and (ii) the breach or
failure to perform constitutes self-dealing, wilful misconduct or recklessness;
provided, however, that the provisions of this Paragraph 5(c) shall not apply to
the responsibility or liability of a member of the Committee pursuant to any
criminal statute.
(d) Indemnification. Service on the Committee shall constitute
service as a member of the Board. Each member of the Committee shall be entitled
without further act on his part to indemnity from the Sponsor to the fullest
extent provided by applicable law and the Sponsor's By-laws in connection with
or arising out of any actions, suit or proceeding with respect to the
administration of the Plan or the granting of Options thereunder in which he may
be involved by reasons of his being or having been a member of the Committee,
whether or not he continues to be such member of the Committee at the time of
the action, suit or proceeding.
6. Eligibility
(a) Eligible individuals to whom Options may be granted shall
be employees, officers or directors of a Company who are selected by the
Committee for the grant of Options. The terms and conditions of Options granted
to individuals other than Non-Employee Directors shall be determined by the
Committee, subject to Paragraph 7. The terms and conditions of Options granted
to Non-Employee Directors shall be determined by the Committee, subject to
Paragraph 8.
(b) An Incentive Stock Option shall not be granted to a Ten
Percent Shareholder except on such terms concerning the option price and term as
are provided in Paragraph 7(b) and 7(g) with respect to such a person. An Option
designated as Incentive Stock Option granted to a Ten Percent Shareholder but
which does not comply with the requirements of the preceding sentence shall be
treated as a Non-Qualified Option. An Option designated as an Incentive Stock
Option shall be treated as a Non-Qualified Option if the Optionee is not an
employee of a Company on the Date of Grant.
7. Option Documents and Terms - In General
All Options granted to Optionees other than Non-Employee Directors
shall be evidenced by option documents. The terms of each such option document
shall be determined from time to time by the Committee, consistent, however,
with the following:
(a) Time of Grant. All Options shall be granted within 10
years from the earlier of (i) the date of adoption of the Plan by the Board, or
(ii) approval of the Plan by the shareholders of the Sponsor.
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(b) Option Price. The option price per Share with respect to
any Option shall be determined by the Committee but shall not be less than 100%
of the Fair Market Value of such Share on the Date of Grant; provided, however,
that with respect to any Incentive Stock Options granted to a Ten Percent
Shareholder, the option price per Share shall not be less than 110% of the Fair
Market Value of such Share on the Date of Grant.
(c) Restrictions on Transferability. No Option granted under
this Paragraph 7 shall be transferable otherwise than by will or the laws of
descent and distribution and, during the lifetime of the Optionee, shall be
exercisable only by him or for his benefit by his attorney-in-fact or guardian;
provided that the Committee may, in its discretion, at the time of grant of a
Non-Qualified Option or by amendment of an option document for an Incentive
Stock Option or a Non-Qualified Option, provide that Options granted to or held
by an Optionee may be transferred, in whole or in part, to one or more
transferees and exercised by any such transferee; provided further that (i) any
such transfer is without consideration and (ii) each transferee is a member of
such Optionee's Immediate Family; and provided further that any Incentive Stock
Option granted pursuant to an option document which is amended to permit
transfers during the lifetime of the Optionee shall, upon the effectiveness of
such amendment, be treated thereafter as a Non-Qualified Option. No transfer of
an Option shall be effective unless the Committee is notified of the terms and
conditions of the transfer and the Committee determines that the transfer
complies with the requirements for transfers of Options under the Plan and the
option document. Any person to whom an Option has been transferred may exercise
any Options only in accordance with the provisions of Paragraph 7(g) and this
Paragraph 7(c).
(d) Payment Upon Exercise of Options. Full payment for Shares
purchased upon the exercise of an Option shall be made in cash, by certified
check payable to the order of the Sponsor, or, at the election of the Optionee
and as the Committee may, in its sole discretion, approve, by surrendering
Shares with an aggregate Fair Market Value equal to the aggregate option price,
or by delivering such combination of Shares and cash as the Committee may, in
its sole discretion, approve; provided, however, that Shares may be surrendered
in satisfaction of the option price only if the Optionee has held such Shares
for more than six months (or such shorter period of time as shall not, in the
Committee's sole discretion, have an adverse effect on the Sponsor's financial
statements) as of the date the Option is exercised; provided further, however,
that the option price may not be paid in Shares if the Committee determines that
such method of payment would result in liability under section 16(b) of the 1934
Act to an Optionee. Except as otherwise provided by the Committee, if payment is
made in whole or in part in Shares, the Optionee shall deliver to the Sponsor
certificates registered in the name of such Optionee representing Shares legally
and beneficially owned by such Optionee, free of all liens, claims and
encumbrances of every kind and having a Fair Market Value on the date of
delivery that is not greater than the option price accompanied by stock powers
duly endorsed in blank by the record holder of the Shares represented by such
certificates. If the Committee, in its sole discretion, should refuse to accept
Shares in payment of the option price, any certificates representing Shares
which were delivered to the Sponsor shall be returned to the Optionee with
notice of the refusal of the Committee to accept such Shares in payment of the
option price. The Committee may impose such limitations and prohibitions on the
use of Shares to exercise an Option as it deems appropriate.
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(e) Issuance of Certificate Upon Exercise of Options; Payment
of Cash. Only whole Shares shall be issuable upon exercise of Options. Any right
to a fractional Share shall be satisfied in cash. Upon satisfaction of the
conditions of Paragraph 10, a certificate for the number of whole Shares and a
check for the Fair Market Value on the date of exercise of any fractional Share
to which the Optionee is entitled shall be delivered to such Optionee by the
Sponsor.
(f) Termination of Employment. For purposes of the Plan, a
transfer of an employee between two employers, each of which is a Company, shall
not be deemed a termination of employment. For purposes of Paragraph 7(g), an
Optionee's termination of employment shall be deemed to occur on the date of an
Optionee ceases to serve as an active, full-time employee of a Company, as
determined by the Committee in its sole discretion, or, if the Optionee is a
party to an employment agreement with a Company, on the effective date of the
Optionee's termination of employment as determined under such agreement.
(g) Periods of Exercise of Options. An Option shall be
exercisable in whole or in part at such time or times as may be determined by
the Committee and stated in the option document, provided, however, that if the
grant of an Option would be subject to section 16(b) of the 1934 Act, unless the
requirements for exemption therefrom in Rule 16b-3(c)(1), under such Act, or
any successor provision, are met, the option document for such Option shall
provide that such Option is not exercisable until not less than six months have
elapsed from the Date of Grant. Except as otherwise provided by the Committee in
its discretion, no Option shall first become exercisable following an Optionee's
termination of employment for any reason; provided further, that:
(i) In the event that an Optionee terminates
employment with the Company for any reason other than death or Cause,
any Option held by such Optionee and which is then exercisable shall be
exercisable for a period of 90 days following the date the Optionee
terminates employment with the Company (unless a longer period is
established by the Committee); provided, however, that if such
termination of employment with the Company is due to the Disability of
the Optionee, he shall have the right to exercise those of his Options
which are then exercisable for a period of one year following such
termination of employment (unless a longer period is established by the
Committee); provided, however, that in no event shall an Incentive
Stock Option be exercisable after five years from the Date of Grant in
the case of a grant to a Ten Percent Shareholder, nor shall any other
Option be exercisable after ten years from the Date of Grant.
(ii) In the event that an Optionee terminates
employment with the Company by reason of his death, any Option held at
death by such Optionee which is then exercisable shall be exercisable
for a period of one year from the date of death (unless a longer period
is established by the Committee) by the person to whom the rights of
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the Optionee shall have passed by will or by the laws of descent and
distribution; provided, however, that in no event shall an Incentive
Stock Option be exercisable after five years from the Date of Grant in
the case of a grant to a Ten Percent Shareholder, nor shall any other
Option be exercisable after ten years from the Date of Grant.
(iii) In the event that an Optionee's employment with
the Company is terminated for Cause, each unexercised Option held by
such Optionee shall terminate and cease to be exercisable; provided
further, that in such event, in addition to immediate termination of
the Option, the Optionee, upon a determination by the Committee shall
automatically forfeit all Shares otherwise subject to delivery upon
exercise of an Option but for which the Sponsor has not yet delivered
the Share certificates, upon refund by the Sponsor of the option price.
(h) Date of Exercise. The date of exercise of an Option shall
be the date on which written notice of exercise, addressed to the Sponsor at its
main office to the attention of its Secretary, is hand delivered, telecopied or
mailed first class postage prepaid; provided, however, that the Sponsor shall
not be obligated to deliver any certificates for Shares pursuant to the exercise
of an Option until the Optionee shall have made payment in full of the option
price for such Shares. Each such exercise shall be irrevocable when given. Each
notice of exercise must (i) specify the Incentive Stock Option, Non-Qualified
Option or combination thereof being exercised; and (ii) include a statement of
preference (which shall binding on and irrevocable by the Optionee but shall not
be binding on the Committee) as to the manner in which payment to the Sponsor
shall be made (Shares or cash or a combination of Shares and cash). Each notice
of exercise shall also comply with the requirements of Paragraph 15.
8. Option Documents and Terms - Non-Employee Directors
Options granted pursuant to the Plan to Non-Employee Directors shall be
granted, without any further action by the Committee, in accordance with the
terms and conditions set forth in this Paragraph 8. Options granted pursuant to
Paragraph 8(a) shall be evidenced by option documents. The terms of each such
option document shall be consistent with Paragraphs 8(b) through 8(g), as
follows:
(a) Grant of Options to Non-Employee Directors. Each Non-
Employee Director shall be granted, commencing on the Grant Date next following
the adoption of this Plan by the Board and on each successive Grant Date
thereafter, a Non-Qualified Option to purchase 5,400 Shares. Notwithstanding the
preceding sentence, each newly elected Non-Employee Director:
(i) shall be granted a Non-Qualified Option to
purchase 9,000 Shares on the Election Date; and
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(ii) shall not be entitled to the grant of an Option
hereunder on the Grant Date immediately following the Non-Employee
Director's Election Date if such Election Date is within ninety (90)
days of the Grant Date.
(b) Option Price. The option price per Share with respect to
any Option granted under this Paragraph 8 shall be 100% of the Fair Market Value
of such Share on the Grant Date.
(c) Restrictions on Transferability. No Option granted under
this Paragraph 8 shall be transferable otherwise than by will or the laws of
descent and distribution and, during the lifetime of the Optionee, shall be
exercisable only by him or for his benefit by his attorney-in-fact or guardian;
provided that the Committee may, in its discretion, at the time of grant of an
Option or by amendment of an option document for an Option, provide that Options
may be transferred, in whole or in part, to one or more transferees and
exercised by any such transferee; provided further that (i) any such transfer is
without consideration, and (ii) each transferee is a member of such Optionee's
Immediate Family. No transfer of an Option shall be effective unless the
Committee is notified of the terms and conditions of the transfer and the
Committee determines that the transfer complies with the requirements for
transfers of Options under the Plan and the option document. Any person to whom
an Option has been transferred may exercise any Options only in accordance with
the provisions of Paragraph 8(f) and this Paragraph 8(c).
(d) Payment Upon Exercise of Options. Full payment for Shares
purchased upon the exercise of an Option shall be made in cash, by certified
check payable to the order of the Sponsor, or, at the election of the Optionee
and as the Committee may, in its sole discretion, approve, by surrendering
Shares with an aggregate Fair Market Value equal to the aggregate option price,
or by delivering such combination of Shares and cash as the Committee may, in
its sole discretion, approve; provided, however, that Shares may be surrendered
in satisfaction of the option price only if the Optionee has held such Shares
for more than six months (or such shorter period of time as shall not, in the
Committee's sole discretion, have an adverse effect on the Sponsor's financial
statements) as of the date the Option is exercised; provided further, however,
that the option price may not be paid in Shares if the Committee determines that
such method of payment would result in liability under section 16(b) of the 1934
Act to an Optionee. Except as otherwise provided by the Committee, if payment is
made in whole or in part in Shares, the Optionee shall deliver to the Sponsor
certificates registered in the name of such Optionee representing Shares legally
and beneficially owned by such Optionee, free of all liens, claims and
encumbrances of every kind and having a Fair Market Value on the date of
delivery that is not greater than the option price accompanied by stock powers
duly endorsed in blank by the record holder of the Shares represented by such
certificates. If the Committee, in its sole discretion, should refuse to accept
Shares in payment of the option price, any certificates representing Shares
which were delivered to the Sponsor shall be returned to the Optionee with
notice of the refusal of the Committee to accept such Shares in payment of the
option price. The Committee may impose such limitations and prohibitions on the
use of Shares to exercise an Option as it deems appropriate.
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(e) Issuance of Certificate Upon Exercise of Options; Payment
of Cash. Only whole Shares shall be issuable upon exercise of Options granted
under this Paragraph 8. Any right to a fractional Share shall be satisfied in
cash. Upon satisfaction of the conditions of Paragraph 10, a certificate for the
number of whole Shares and a check for the Fair Market Value on the date of
exercise of any fractional Share to which the Optionee is entitled shall be
delivered to such Optionee by the Sponsor.
(f) Periods of Exercise of Options. An Option granted under
this Paragraph 8 shall not be exercisable for six months after the Date of
Grant, and shall then be exercisable in its entirety. No Option shall first
become exercisable following an Optionee's termination of service as a
Non-Employee Director for any reason; provided further, that:
(i) In the event that an Optionee terminates service
as a Non-Employee Director for any reason other than death or Cause,
any Option held by such Optionee and which is then exercisable shall be
exercisable for a period of 90 days following the date the Optionee
terminates service as a Non-Employee Director; provided, however, that
if such termination of employment with the Company is due to the
Disability of the Optionee, he shall have the right to exercise those
of his Options which are then exercisable for a period of one year
following the date the Optionee terminates service as a Non-Employee
Director; provided, however, that in no event shall an Option be
exercisable after five years from the Grant Date.
(ii) In the event that an Optionee terminates service
as a Non-Employee Director by reason of his death, any Option held at
death by such Optionee which is then exercisable shall be exercisable
for a period of one year from the date of death by the person to whom
the rights of the Optionee shall have passed by will or by the laws of
descent and distribution; provided, however, that in no event shall an
Option be exercisable after five years from the Grant Date.
(iii) In the event that an Optionee's service as a
Non-Employee Director is terminated for Cause, each unexercised Option
shall terminate and cease to be exercisable; provided further, that in
such event, in addition to immediate termination of the Option, the
Optionee shall automatically forfeit all Shares otherwise subject to
delivery upon exercise of an Option but for which the Sponsor has not
yet delivered the Share certificates, upon refund by the Sponsor of the
option price.
(g) Date of Exercise. The date of exercise of an Option
granted under this Paragraph 8 shall be the date on which written notice of
exercise, addressed to the Sponsor at its main office to the attention of its
Secretary, is hand delivered, telecopied or mailed first class postage prepaid;
provided, however, that the Sponsor shall not be obligated to deliver any
certificates for Shares pursuant to the exercise of an Option until the Optionee
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shall have made payment in full of the option price for such Shares. Each such
exercise shall be irrevocable when given. Each notice of exercise must (i)
specify the Option being exercised; and (ii) include a statement as to the
manner in which payment to the Sponsor shall be made (Shares or cash or a
combination of Shares and cash). Each notice of exercise shall also comply with
the requirements of Paragraph 15.
9. Limitation on Exercise of Incentive Stock Options.
The aggregate Fair Market Value (determined as of the time Options are
granted) of the Shares with respect to which Incentive Stock Options may first
become exercisable by an Optionee in any one calendar year under the Plan and
any other plan of the Company shall not exceed $100,000. The limitations imposed
by this Paragraph 9 shall apply only to Incentive Stock Options granted under
the Plan, and not to any other options or stock appreciation rights. In the
event an individual receives an Option intended to be an Incentive Stock Option
which is subsequently determined to have exceeded the limitation set forth
above, or if an individual receives Options that first become exercisable in a
calendar year (whether pursuant to the terms of an option document, acceleration
of exercisability or other change in the terms and conditions of exercise or any
other reason) that have an aggregate Fair Market Value (determined as of the
time the Options are granted) that exceeds the limitations set forth above, the
Options in excess of the limitation shall be treated as Non-Qualified Options.
10. Rights as Shareholders
An Optionee shall not have any right as a shareholder with respect to
any Shares subject to his Options until the Option shall have been exercised in
accordance with the terms of the Plan and the option document and the Optionee
shall have paid the full purchase price for the number of Shares in respect of
which the Option was exercised and the Optionee shall have made arrangements
acceptable to the Sponsor for the payment of applicable taxes consistent with
Paragraph 16.
11. Changes in Capitalization
(a) Except as provided in Paragraph 11(b), in the event that
Shares are changed into or exchanged for a different number or kind of shares of
stock or other securities of the Sponsor, whether through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split-up or other
substitution of securities of the Sponsor, the Board shall make appropriate
equitable anti-dilution adjustments to the number and class of shares of stock
available for issuance under the Plan, and subject to outstanding Options and to
the option prices. Any reference to the option price in the Plan and in option
documents shall be a reference to the option price as so adjusted. Any reference
to the term "Shares" in the Plan and in option documents shall be a reference to
the appropriate number and class of shares of stock available for issuance under
the Plan, as adjusted pursuant to this Paragraph 11. The Board's adjustment
shall be effective and binding for all purposes of this Plan.
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(b) Paragraph 11(a) shall not apply to the number of Shares
that become subject to the grant of Options under Paragraph 8(a). Paragraph
11(a) shall apply for the purpose of making appropriate equitable anti-dilution
adjustments to Options granted pursuant to Paragraph 8(a) before the effective
date of the relevant event giving rise to the adjustment under Paragraph 11(a).
12. Terminating Events
(a) The Sponsor shall give Optionees at least thirty (30)
days' notice (or, if not practicable, such shorter notice as may be reasonably
practicable) prior to the anticipated date of the consummation of a Terminating
Event. Upon receipt of such notice, and for a period of ten (10) days thereafter
(or such shorter period as the Board shall reasonably determine and so notify
the Optionees), each Optionee shall be permitted to exercise the Option to the
extent the Option is then exercisable; provided that, the Sponsor may, by
similar notice, require the Optionee to exercise the Option, to the extent the
Option is then exercisable, or to forfeit the Option (or portion thereof, as
applicable). The Committee may, in its discretion, provide that upon the
Optionee's receipt of the notice of a Terminating Event under this Paragraph
12(a), the entire number of Shares covered by Options shall become immediately
exercisable. Upon the close of the period described in this Paragraph 12(a)
during which an Option may be exercised in connection with a Terminating Event,
such Option (including such portion thereof that is not exercisable) shall
terminate to the extent that such Option has not theretofore been exercised.
(b) Notwithstanding Paragraph 12(a), in the event the
Terminating Event is not consummated, the Option shall be deemed not to have
been exercised and shall be exercisable thereafter to the extent it would have
been exercisable if no such notice had been given.
13. Interpretation
The Committee shall have the power to interpret the Plan and to make
and amend rules for putting it into effect and administering it. It is intended
that the Incentive Stock Options granted under the Plan shall constitute
incentive stock options within the meaning of section 422 of the Code, and that
Shares transferred pursuant to the exercise of Non-Qualified Options shall
constitute property subject to federal income tax pursuant to the provisions of
section 83 of the Code. The provisions of the Plan shall be interpreted and
applied insofar as possible to carry out such intent.
14. Amendments
The Committee may amend the Plan from time to time in such manner as it
may deem advisable. Nevertheless, the Committee may not, without obtaining
approval within twelve months before or after such action by such vote of
shareholders as may be required by Pennsylvania law for any action requiring
shareholder approval, or by a majority of votes cast at a duly held
shareholders' meeting at which a majority of all voting stock is present and
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voting on such amendment, either in person or in proxy (but not, in any event,
less than the vote required pursuant to Rule 16b-3(b) under the 1934 Act) change
the class of individuals eligible to receive an Incentive Stock Option, extend
the expiration date of the Plan, decrease the minimum option price of an
Incentive Stock Option granted under the Plan or increase the maximum number of
shares as to which Options may be granted, except as provided in Paragraph 11
hereof. In addition, the provisions of Paragraph 8 that determine (i) which
directors shall be granted Options; (ii) the number of Shares subject to
Options; (iii) the option price of Shares subject to Options; and (iv) the
timing of grants of Options shall not be amended more than once every six
months, other than to comport with changes in the Code or the Employee
Retirement Income Security Act of 1974, as amended, if applicable. No
outstanding Option shall be affected by any such amendment without the written
consent of the Optionee or other person then entitled to exercise such Option.
15. Securities Law
(a) In General. The Committee shall have the power to make
each grant under the Plan subject to such conditions as it deems necessary or
appropriate to comply with the then-existing requirements of the 1933 Act or the
1934 Act, including Rule 16b-3 (or any similar rule) of the Securities and
Exchange Commission.
(b) Acknowledgment of Securities Law Restrictions on Exercise.
To the extent required by the Committee, unless the Shares subject to the Option
are covered by a then current registration statement or a Notification under
Regulation A under the 1933 Act, each notice of exercise of an Option shall
contain the Optionee's acknowledgment in form and substance satisfactory to the
Committee that:
(i) the Shares subject to the Option are being
purchased for investment and not for distribution or resale (other than
a distribution or resale which, in the opinion of counsel satisfactory
to the Sponsor, may be made without violating the registration
provisions of the Act);
(ii) the Optionee has been advised and understands
that (A) the Shares subject to the Option have not been registered
under the 1933 Act and are "restricted securities" within the meaning
of Rule 144 under the 1933 Act and are subject to restrictions on
transfer and (B) the Sponsor is under no obligation to register the
Shares subject to the Option under the 1933 Act or to take any action
which would make available to the Optionee any exemption from such
registration;
(iii) the certificate evidencing the Shares may bear
a restrictive legend; and
(iv) the Shares subject to the Option may not be
transferred without compliance with all applicable federal and state
securities laws.
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(c) Delay of Exercise Pending Registration of Securities.
Notwithstanding any provision in the Plan or an option document to the contrary,
if the Committee determines, in its sole discretion, that issuance of Shares
pursuant to the exercise of an Option should be delayed pending registration or
qualification under federal or state securities laws or the receipt of a legal
opinion that an appropriate exemption from the application of federal or state
securities laws is available, the Committee may defer exercise of any Option
until such Shares are appropriately registered or qualified or an appropriate
legal opinion has been received, as applicable.
16. Withholding of Taxes on Exercise of Option
(a) Whenever the Company proposes or is required to deliver or
transfer Shares in connection with the exercise of an Option, the Company shall
have the right to (i) require the recipient to remit to the Sponsor an amount
sufficient to satisfy any federal, state and local withholding tax requirements
prior to the delivery or transfer of any certificate or certificates for such
Shares or (ii) take any action whatever that it deems necessary to protect its
interests with respect to tax liabilities. The Sponsor's obligation to make any
delivery or transfer of Shares on the exercise of an Option shall be conditioned
on the recipient's compliance, to the Sponsor's satisfaction, with any
withholding requirement. In addition, if the Committee grants Options or amends
option documents to permit Options to be transferred during the life of the
Optionee, the Committee may include in such option documents such provisions as
it determines are necessary or appropriate to permit the Company to deduct
compensation expenses recognized upon exercise of such Options for federal or
state income tax purposes.
(b) Except as otherwise provided in this Paragraph 16(b), any
tax liabilities incurred in connection with the exercise of an Option under the
Plan other than an Incentive Stock Option shall be satisfied by the Sponsor's
withholding a portion of the Shares underlying the Option exercised having a
Fair Market Value approximately equal to the minimum amount of taxes required to
be withheld by the Sponsor under applicable law, unless otherwise determined by
the Committee with respect to any Optionee. Notwithstanding the foregoing, the
Committee may permit an Optionee to elect one or both of the following: (i) to
have taxes withheld in excess of the minimum amount required to be withheld by
the Sponsor under applicable law, and (ii) to pay to the Sponsor in cash all or
a portion of the taxes to be withheld upon the exercise of an Option. In all
cases, the Shares so withheld by the Company shall have a Fair Market Value that
does not exceed the amount of taxes to be withheld minus the cash payment, if
any, made by the Optionee. Any election pursuant to this Paragraph 16(b) must be
in writing made prior to the date specified by the Committee, and in any event
prior to the date the amount of tax to be withheld or paid is determined. In
addition, with respect to persons subject to reporting requirements under
section 16(a) of the 1934 Act, such election must be made at least six months
prior to the date the amount of tax to be withheld or paid is determined (which
election will remain in effect with regard to the exercise of an Option and all
future exercises of Options unless revoked upon six months prior notice). An
election pursuant to this Paragraph 16(b) may be made only by an Optionee or, in
the event of the Optionee's death, by the Optionee's legal representative. No
Shares withheld pursuant to this Paragraph 16(b) shall be available for
subsequent grants under the Plan. The Committee may add such other requirements
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and limitations regarding elections pursuant to this Paragraph 16(b) as it deems
appropriate.
17. Effective Date and Term of Plan
The Plan shall become effective on the date on which the Plan is
adopted by the Board, and shall expire no later than the tenth anniversary of
the Board adoption, unless sooner terminated by the Board. Any Option granted
before the approval of the Plan by the Sponsor's shareholders shall be expressly
conditioned upon, and shall not be exercisable until, such approval. If such
shareholder approval is not received within 12 months before or after the date
of the adoption of the Plan by the Board, all Options granted under the Plan
shall expire.
18. General
Each Option shall be evidenced by a written instrument containing such
terms and conditions not inconsistent with the Plan as the Committee may
determine. The issuance of Shares on the exercise of an Option shall be subject
to all of the applicable requirements of the corporation law of the Sponsor's
state of incorporation and other applicable laws, including federal or state
securities laws, and all Shares issued under the Plan shall be subject to the
terms and restrictions contained in the Articles of Incorporation and By-Laws of
the Sponsor, as amended from time to time.
Executed this _____ day of _______________, 199_.
[CORPORATE SEAL] COMCAST CORPORATION
Attest: _____________________ By: _________________________
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