<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
COX COMMUNICATIONS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[COX COMMUNICATIONS LOGO APPEARS HERE]
To the Stockholders of
Cox Communications, Inc.
You are invited to attend the Annual Meeting of Stockholders of Cox
Communications, Inc. to be held at Corporate Headquarters, 1400 Lake Hearn
Drive, NE, Atlanta, Georgia 30319, on Thursday, April 17, 1997, at 9:00 a.m.,
local time.
Information concerning matters to be considered and acted upon at the
meeting is set forth in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement.
Please read the enclosed Notice of Annual Meeting and Proxy Statement so you
will be informed about the business to come before the meeting. Your vote is
important, regardless of the number of shares you own. On behalf of the Board
of Directors, I urge you to mark, sign and return the enclosed proxy card as
soon as possible, even if you plan to attend the Annual Meeting. You may, of
course, revoke your proxy by notice in writing to the Corporate Secretary at
any time before the proxy is voted.
Sincerely,
/s/ James O. Robbins
-------------------------------
James O. Robbins
President and Chief Executive
Officer
Atlanta, Georgia
March 17, 1997
<PAGE>
COX COMMUNICATIONS, INC.
1400 LAKE HEARN DRIVE, NE
ATLANTA, GEORGIA 30319
(404) 843-5000
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 1997
----------------
To the Stockholders of Cox Communications, Inc.
The Annual Meeting of the holders of Class A Common Stock and Class C Common
Stock of Cox Communications, Inc. (the "Company") will be held at Corporate
Headquarters, 1400 Lake Hearn Drive, NE, Atlanta, Georgia on Thursday, April
17, 1997, at 9:00 a.m., local time, for the following purposes:
1. To elect a Board of Directors of seven members to serve until the 1998
Annual Meeting of Stockholders or until their successors are duly elected
and qualified;
2. To ratify the appointment by the Board of Directors of Deloitte & Touche
LLP, independent certified public accountants, as the Company's
independent auditors for the year ending December 31, 1997;
3. To approve the proposed amendment to the Company's Certificate of
Incorporation to increase the number of shares of the Company's Class A
Common Stock authorized for issuance thereunder from 286,000,000 to
316,000,000 shares;
4. To approve the adoption of the Cox Communications, Inc. 1997 Employee
Stock Purchase Plan; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed March 6, 1997 as the record date for the
Annual Meeting with respect to this solicitation. Only holders of record of
Class A Common Stock and Class C Common Stock at the close of business on that
date are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof as set forth in the Proxy Statement.
The Company's Annual Report to stockholders for the year ended December 31,
1996 is enclosed herewith.
By Order of the Board of Directors
/s/ Andrew A. Merdek
----------------------------------
Andrew A. Merdek
Corporate Secretary
Atlanta, Georgia
March 17, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE AS
PROMPTLY AS POSSIBLE. A PROXY MAY BE REVOKED BY A STOCKHOLDER ANY TIME PRIOR
TO ITS USE AS SPECIFIED IN THE ENCLOSED PROXY STATEMENT.
<PAGE>
COX COMMUNICATIONS, INC.
1400 LAKE HEARN DRIVE, NE
ATLANTA, GEORGIA 30319
(404) 843-5000
----------------
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
----------------
SOLICITATION OF PROXIES
The Board of Directors of Cox Communications, Inc. (the "Company") is
furnishing this Proxy Statement in connection with its solicitation of proxies
for use at the Company's 1997 Annual Meeting of Stockholders, to be held on
April 17, 1997, at 9:00 a.m., local time, at Corporate Headquarters, 1400 Lake
Hearn Drive, NE, Atlanta, Georgia 30319, and at any adjournment thereof. Each
valid proxy received in time will be voted at the meeting and, if a choice is
specified, it will be voted in accordance with such specification. A proxy may
be revoked by notice in writing to the Corporate Secretary at the address set
forth above at any time before the proxy is voted.
This Proxy Statement and the proxies solicited hereby are being first sent
for delivery to stockholders of the Company on or about March 18, 1997. The
cost of solicitation of proxies, including the reimbursement to banks and
brokers for reasonable expenses for sending proxy materials to their
principals, will be borne by the Company.
The shares of Class A Common Stock and Class C Common Stock represented by
valid proxies received by the Company in time for the Annual Meeting will be
voted as specified in such proxies. Executed but unvoted proxies will be
voted:
(1) FOR the election of the Board of Directors' nominees for directors;
(2) FOR the ratification of the appointment of Deloitte & Touche LLP,
independent certified public accountants, as the Company's independent
auditors for the year ending December 31, 1997;
(3) FOR the approval of the proposed amendment to the Company's Certificate
of Incorporation to increase the number of shares of the Company's Class A
Common Stock authorized for issuance thereunder from 286,000,000, to
316,000,000 shares; and
(4) FOR the approval of the Cox Communications, Inc. 1997 Employee Stock
Purchase Plan.
If any other matters properly come before the Annual Meeting, the persons
named on such proxies will, unless the stockholder otherwise specifies in the
proxy, vote upon such matters in accordance with their best judgment.
<PAGE>
VOTING SECURITIES
The Company has two classes of outstanding voting securities, Class A Common
Stock, $1.00 par value per share (the "Class A Common Stock"), and Class C
Common Stock, $1.00 par value per share (the "Class C Common Stock"). As of
March 6, 1997, there were outstanding 256,511,695 shares of Class A Common
Stock and 13,798,896 shares of Class C Common Stock. Only holders of record of
shares of Class A Common Stock or shares of Class C Common Stock at the close
of business on March 6, 1997, which the Company's Board of Directors has fixed
as the record date, are entitled to vote at the meeting.
The Class A Common Stock and Class C Common Stock will vote together as a
single class, with each share of Class A Common Stock being entitled to one
vote, and each share of Class C Common Stock being entitled to ten votes. The
presence in person or by proxy of holders of a majority of the issued and
outstanding shares of Class A Common Stock and Class C Common Stock entitled
to vote at the Annual Meeting will constitute a quorum. The affirmative vote
of a majority of the voting power of the Class A Common Stock and Class C
Common Stock, voting together as a single class, present at the Annual Meeting
in person or by proxy, and entitled to vote, is required for the election of
directors, the ratification of appointment of independent auditors, the
approval of an amendment to the Company's Certificate of Incorporation that
increases the number of authorized shares of the Company's capital stock and
the approval of the 1997 Employee Stock Purchase Plan.
Shares as to which a stockholder abstains are considered shares entitled to
vote on the applicable proposal and are included in determining whether such
proposal is approved (i.e., an abstention would have the effect of a vote
against the applicable proposal). On the other hand, broker non-votes are not
considered shares entitled to vote on the applicable proposal and are not
included in determining whether such proposal is approved. A broker non-vote
occurs when the nominee of a beneficial owner with the power to vote on at
least one matter does not vote on another matter because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner with respect to such matter. Accordingly, broker non-votes
have no effect on the outcome of a vote on the applicable proposal.
Stockholders will not have appraisal rights with respect to any of the
proposals to be voted upon at the Annual Meeting.
As of March 6, 1997, Cox Enterprises, Inc., a Delaware corporation ("CEI"),
through wholly-owned subsidiaries, held approximately 83.0% of the combined
voting power of the Class A Common Stock and Class C Common Stock.
Accordingly, CEI will have sufficient voting power to elect all members of the
Board of Directors, to ratify the appointment of independent auditors, to
approve the amendment to the Company's Certificate of Incorporation that
increases the number of authorized shares of the Company's capital stock, to
approve the 1997 Employee Stock Purchase Plan and to control substantially all
other actions that may come before the Annual Meeting.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the meeting, seven directors are to be elected to hold office until the
1998 Annual Meeting of Stockholders or until their respective successors have
been elected and qualified. All of the nominees currently are directors of the
Company.
The seven directors nominated for election at the 1997 Annual Meeting of
Stockholders are: James C. Kennedy; Janet Morrison Clarke; John R. Dillon;
David E. Easterly; Robert F. Erburu; James O. Robbins; and Andrew J. Young
(collectively, the "Nominees"). The persons named as proxies intend (unless
authority is withheld) to vote for the election of all of the Nominees as
directors.
The Board of Directors knows of no reason why any Nominee for director would
be unable to serve as director. If at the time of the Annual Meeting any of
the Nominees are unable or unwilling to serve as a director of the Company,
the persons named in the proxy intend to vote for such substitutes as may be
nominated by the Board of Directors.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES.
The following information regarding the Nominees, their principal
occupations, employment history, and directorships in certain companies is as
reported by the respective Nominees.
James C. Kennedy, 49, has served as Chairman of the Board of Directors and
Chief Executive Officer of CEI since January 1988, and prior to that time was
CEI's President and Chief Operating Officer. Mr. Kennedy was elected the
Chairman of the Board of Directors of the Company in May 1994. Mr. Kennedy
joined CEI in 1972, and initially worked with CEI's Atlanta Newspapers. Mr.
Kennedy serves on the Board of Governors and the Executive Board of the
Newspaper Association of America, and is a director of Cox Radio, Inc., a
majority owned subsidiary of CEI ("Cox Radio"), National Service Industries,
Inc., Flagler Systems, Inc. and Texas Commerce Bankshares N.A. Mr. Kennedy
holds a B.A. from the University of Denver.
James O. Robbins, 54, has served as President of the Company since September
1985, and as President and Chief Executive Officer since May 1994. Mr. Robbins
was elected a director of the Company in May 1994. Mr. Robbins joined the
Company in September 1983 and has served as Vice President, Cox Cable New York
City and as Senior Vice President, Operations of the Company. Prior to joining
the Company, he held management and executive positions with Viacom
Communications, Inc. and Continental Cablevision. Mr. Robbins is a member of
the Executive Committee of the National Cable Television Association. Mr.
Robbins holds a B.A. from the University of Pennsylvania and an M.B.A. from
Harvard Business School. Mr. Robbins serves as a director of Teleport
Communications Group Inc., TeleWest Communications plc and NCR Corporation and
as a Representative on the Partnership Board of Sprint Spectrum, L.P., an SEC
reporting company.
Janet Morrison Clarke, 44, has served as a director of the Company since
March 1995. Ms. Clarke is a Senior Vice President of R.R. Donnelley & Sons
Company. Since joining R.R. Donnelley in 1978 as a Sales Representative, she
has served as Manager, National Accounts; Vice President and Director of the
OEM Sales Division; and Senior Vice President of Manufacturing. She is
currently Senior Vice President of Information Technology Sector. Ms. Clarke
also serves as a director of Stanhome Corporation and 77 Capital Corporation,
R.R. Donnelley's Venture Fund. Ms. Clarke earned a bachelor's degree from
Princeton University and completed the Advanced Management Program at the
Harvard Business School.
John R. Dillon, 55, was elected a director of the Company in May 1994. Mr.
Dillon became Managing Director of Cravey, Green and Whalen in January 1997.
Mr. Dillon served as Senior Vice President and Chief Financial Officer of CEI
from May 1990 until his retirement on December 31, 1996, and he continues to
serve as a consultant to CEI. He was Vice President and Chief Financial
Officer of CEI from September 1985 through May 1990. Mr. Dillon joined CEI in
1982, and prior to that time, was President of Fuqua National, a privately
held energy, communications and investment firm in Atlanta. He was previously
with Scientific-Atlanta as Treasurer and General Manager of its cable
television division. Mr. Dillon serves on the Board of Directors and
Compensation Committee of Teleport Communications Group Inc. Mr. Dillon holds
a B.S.E.E. from Georgia Institute of Technology and an M.B.A. from Harvard
Business School.
David E. Easterly, 54, has served as President and Chief Operating Officer
of CEI since October 1994 and was President of Cox Newspapers, Inc. ("Cox
Newspapers"), a subsidiary of CEI, from May 1986 through October 1994. Mr.
Easterly was elected a director of the Company in May 1994. Mr. Easterly
joined CEI in 1970 at the Dayton Daily News, transferring to Atlanta in 1981
as Vice President of Operations for Cox Newspapers. He was named Publisher of
The Atlanta Journal/Constitution in April 1984. Mr. Easterly is a member of
the Board of Directors of the Associated Press. Mr. Easterly also serves as a
director of CEI and of Cox Radio. Mr. Easterly holds a B.A. from Austin
College.
3
<PAGE>
Robert F. Erburu, 66, has served as a director of the Company since March
1995. Mr. Erburu is Chairman of the Board (Retired) of Times Mirror. He has
served as a director of Times Mirror since 1968 and served as Chairman of the
Board from 1986 to December 31, 1995. From 1981 through May 1, 1995, Mr.
Erburu served as Chief Executive Officer of Times Mirror. Mr. Erburu graduated
from the University of Southern California with a B.A. degree in Journalism
and holds a J.D. degree from Harvard Law School. He is also a director of
Tejon Ranch Company and Marsh & McLennan Companies, Inc. Mr. Erburu is
Chairman of the Board of Trustees of the Huntington Library, Art Collections
and Botanical Gardens and of the J. Paul Getty Trust. He is a director of the
National Gallery of Art, as well as trustee of The Ahmanson Foundation, and
several other charitable foundations. He is a director of the Council on
Foreign Relations and the Tomas Rivera Center. In addition, he is a member of
the Business Council.
Andrew J. Young, 64, has served as a director since March 1995. Mr. Young
has served as Vice Chairman of Law Companies Group, Inc., an engineering and
environmental consulting company since February 1993, and was Chairman of one
of its subsidiaries, Law International, Inc. from 1989 to February 1993. From
1981 to 1989, Mr. Young was Mayor of Atlanta, Georgia, and prior thereto
served as U.S. Ambassador to the United Nations under President Jimmy Carter
and as a member of the U.S. House of Representatives. Mr. Young is a member of
several Boards of Directors, including Delta Airlines, Thomas Nelson
Publishing Company and Host Marriott Corporation. Mr. Young holds degrees from
Howard University and Hartford Theological Seminary.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides information as of March 6, 1997, with respect
to the shares of Class A Common Stock and Class C Common Stock beneficially
owned by each person known by the Company to own more than 5% of any class of
the outstanding voting securities of the Company.
<TABLE>
<CAPTION>
PERCENT OF
CLASS A CLASS C VOTE OF ALL
NAME OF COMMON PERCENT COMMON PERCENT CLASSES OF
BENEFICIAL OWNER STOCK OF CLASS STOCK OF CLASS COMMON STOCK
- - ------------------------- ----------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Cox Enterprises, Inc. (a)
(b) (c).................. 189,595,588 73.9% 13,798,896 100.0% 83.0%
Mutuelles AXA et al. (d). 13,966,614 5.4 0 0 3.5
</TABLE>
- - --------
(a) The business address for CEI is 1400 Lake Hearn Drive, N.E., Atlanta,
Georgia 30319.
(b) Of the shares of Common Stock of the Company that are beneficially owned
by CEI, 177,105,323 shares of Class A Common Stock and 12,848,235 shares
of Class C Common Stock are held of record by Cox Holdings, Inc. The
remaining 12,490,265 shares of Class A Common Stock and 950,661 shares of
Class C Common Stock beneficially owned by CEI are held of record by Cox
Discovery, Inc. All of the outstanding capital stock of Cox Holdings, Inc.
is beneficially owned by CEI. All of the outstanding capital stock of Cox
Discovery, Inc. is beneficially owned by Cox Investment Company, Inc., and
all of the outstanding capital stock of Cox Investment Company, Inc. is
beneficially owned by CEI. The beneficial ownership of the outstanding
capital stock of CEI is described in footnote (c) below.
(c) There are 202,601,949 shares of Common Stock of CEI outstanding, with
respect to which (i) Barbara Cox Anthony, as trustee of the Anne Cox
Chambers Atlanta Trust, exercises beneficial ownership over 58,316,422
shares (28.8%), (ii) Anne Cox Chambers, as trustee of the Barbara Cox
Anthony Atlanta Trust, exercises beneficial ownership over 58,316,422
shares (28.8%), (iii) Barbara Cox Anthony, Anne Cox Chambers and Marion H.
Allen, III, as trustees of the Dayton Cox Trust A, exercise beneficial
ownership over 82,745,685 shares (40.8%), and (iv) 222 individuals and
trusts exercise beneficial ownership over the remaining 3,223,420 shares
(1.6%). Thus, Barbara Cox Anthony and Anne Cox Chambers, who are sisters,
together exercise sole or shared beneficial ownership over 199,378,529
shares (98.4%) of Common Stock of CEI. In addition, Garner Anthony, the
husband of Barbara Cox Anthony, holds beneficially and of record 14,578
shares of Common Stock of CEI. Barbara Cox Anthony disclaims beneficial
ownership of such shares. Barbara Cox Anthony and Anne Cox Chambers are
the mother and aunt, respectively, of James C. Kennedy, the Chairman of
the Board of Directors and Chief Executive Officer of CEI and the Chairman
of the Board of Directors of the Company.
4
<PAGE>
(d) The information contained in this table with respect to Mutuelles AXA
(as defined below) et al. is based on a joint filing on Schedule 13G reporting
ownership as of December 31, 1996 by the following: Alpha Assurances I.A.R.D.
Mutuelle (100-101 Terrasse Boieldieu, 92042 Paris La Defense France); Alpha
Assurances Vie Mutuelle (100-101 Terrasse Boieldieu, 92042 Paris La Defense
France); AXA Assurances I.A.R.D. Mutuelle (21 rue de Chateaudun, 75009 Paris
France); AXA Assurances Vie Mutuelle (21, rue de Chateaudun, 75009 Paris
France); AXA Courtage Assurance Mutuelle (26, rue Louis le Grand, 75002 Paris
France) (the foregoing, collectively the "Mutuelles AXA," filed as a group);
AXA (23, Avenue Matignon, 75008 Paris France); and The Equitable Companies
Incorporated, (787 Seventh Avenue, New York, New York 10019). In the above-
referenced Schedule 13G, the reporting parties reported their percentage of
the Class A Common Stock as 5.1%. Based on the number of shares of Class A
Common Stock reported in the Schedule 13G as owned by the reporting parties,
the Company believes that the correct percentage should be 5.4%, as indicated
in the table.
SECURITY OWNERSHIP OF MANAGEMENT
"Beneficial ownership" of the Class A Common Stock of the Company and the
Common Stock of CEI, by the Company's directors and the Named Executive
Officers, and by all directors and executive officers as a group at March 6,
1997, is shown in the following table. None of such persons, individually or
in the aggregate, owns 1% or more of the Common Stock of the Company or CEI.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COX
CLASS A COMMON STOCK NUMBER OF SHARES OF CEI
NAME OF BENEFICIAL OWNER OWNED COMMON STOCK OWNED
------------------------ ----------------------- -----------------------
<S> <C> <C>
Margaret A. Bellville..... 0 0
Ajit M. Dalvi............. 12,821 7,299
John R. Dillon............ 1,502 56,947
David E. Easterly......... 2,000 111,049
Barry R. Elson............ 18,226 8,108
Jimmy W. Hayes............ 15,257 5,887
James C. Kennedy.......... 34,200 0(a)
James O. Robbins.......... 106,999 30,404
David M. Woodrow.......... 14,130 3,908
Janet Morrison Clarke..... 1,605 0
Robert F. Erburu.......... 171,038 0
Andrew J. Young........... 3,605 0
All directors and
executive officers as a
group
(16 persons, including
those named above)....... 407,927 233,795
</TABLE>
- - --------
(a) Mr. Kennedy owns of record no shares of Common Stock of CEI. Sarah K.
Kennedy, Mr. Kennedy's wife and trustee of the Kennedy Trusts, exercises
beneficial ownership over an aggregate of 7,380 shares of Common Stock of
CEI. In addition, as described above, Barbara Cox Anthony and Anne Cox
Chambers, the mother and aunt, respectively, of Mr. Kennedy, together
exercise sole or shared beneficial ownership over 199,378,529 shares of
Common Stock of CEI. Mr. Kennedy disclaims beneficial ownership of all
such shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of the Company's Class A
Common Stock to file reports of ownership and changes in ownership of the
Company's Class A Common Stock with the Securities and Exchange Commission and
the New York Stock Exchange. Based solely on a review of copies of such
reports and written representations from the reporting persons, the Company
believes that from January 1996 through the date of this Proxy Statement,
except as set forth below, its executive officers, directors and greater than
ten percent stockholders filed on a timely basis all reports due under Section
16(a) of the Exchange Act. One Form 4 was inadvertently filed late reporting
the acquisition by Mr. Young and his spouse of 1,000 shares each of Class A
Common Stock.
5
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors had five regular meetings in 1996. During 1996, the
Executive Committee approved actions by unanimous written consent seven times.
The current members of the Executive Committee are Messrs. Kennedy (Chair),
Dillon, Erburu and Robbins.
The Board of Directors also has an Audit Committee and a Compensation
Committee. The Audit Committee approves the selection of the independent
auditors for the Company, reviews the scope and results of the annual audit,
approves the services to be performed by the independent auditors, reviews the
independence of the auditors, reviews the performance and fees of the
independent auditors, reviews the adequacy of the system of internal
accounting controls and reviews the scope and results of internal auditing
procedures. In addition, the Audit Committee has special meetings to review
related party transactions. The Audit Committee met three times in 1996. The
current members of the Audit Committee are Ms. Clarke (Chair), Mr. Erburu and
Mr. Young.
The Compensation Committee adopts and oversees the administration of
compensation plans for executive officers and senior management of the
Company, determines awards granted to executive officers under such plans, and
reviews the reasonableness of such compensation. The Compensation Committee
met twice in 1996. On October 15, 1996, Mr. Erburu and Mr. Young replaced Mr.
Kennedy and Mr. Easterly as members of the Compensation Committee. The current
members of the Compensation Committee are Mr. Erburu (Chair), Ms. Clarke and
Mr. Young.
During 1996, each director has attended at least 75% of the total number of
meetings of the Board of Directors and meetings of the committees on which
such director serves, except that Mr. Young, who during 1996, in addition to
other global responsibilities, served as the Co-Chairman of the Atlanta
Committee for the Olympic Games, was unable to attend two Board meetings,
three Audit Committee meetings and one Compensation Committee meeting.
COMPENSATION OF DIRECTORS
The directors of the Company who are not affiliates of the Company, Janet
Morrison Clarke, Robert F. Erburu and Andrew J. Young, are reimbursed for
expenses and paid an annual fee of $30,000. The annual fee is paid as follows:
(a) one-half in shares of Class A Common Stock pursuant to the Cox
Communications, Inc. Restricted Stock Plan for Non-Employee Directors (the
"Directors' Restricted Stock Plan") plus (b) one-half in cash. In addition,
the non-affiliate directors receive a meeting fee of $1,000 for every board
meeting and committee meeting attended. The directors of the Company who are
affiliates of the Company do not receive any compensation for serving on the
Company's board.
Pursuant to the Directors' Restricted Stock Plan, directors who are not
employees of the Company or any of its subsidiaries or affiliates receive 50%
of any annual Board retainer fee in the form of Class A Common Stock, subject
to certain restrictions and forfeitures prior to the expiration of the period
ending five years after the date of the grant of the award or, if earlier, the
date of death or disability in certain circumstances. The maximum number of
shares of Class A Common Stock that may be granted pursuant to restricted
stock awards under the Directors' Restricted Stock Plan is 50,000.
EXECUTIVE OFFICERS
The executive officers of the Company who are not directors of the Company
are set forth below. Executive officers of the Company are elected to serve
until they resign or are removed, or are otherwise disqualified to serve, or
until their successors are elected and qualified.
Alex B. Best, 56, has served as Senior Vice President, Engineering since
January 1989. Mr. Best joined the Company as Vice President, Engineering in
April 1986, following 20 years with Scientific-Atlanta's cable television
business. Mr. Best holds a B.S.E.E. and an M.S.E.E. from the Georgia Institute
of Technology.
6
<PAGE>
Ajit M. Dalvi, 54, has served as Senior Vice President, Programming &
Strategy since October 1996. Prior to that he served as Senior Vice President,
Marketing and Programming since April 1987. Mr. Dalvi joined the Company in
February 1982 as Director, Marketing, and later served as Vice President,
Marketing Planning and Development and Vice President, Marketing and
Programming. Prior to joining the Company, Mr. Dalvi held a series of
marketing positions with Coca-Cola USA. Mr. Dalvi serves as a director of
StarSight Telecast, Inc. Mr. Dalvi holds a B.A. from Bombay University and an
M.B.A. from the Indian Institute of Management, an affiliate of Harvard
Business School.
Jimmy W. Hayes, 44, has served as Senior Vice President, Finance and Chief
Financial Officer of the Company since January 1992. Mr. Hayes joined CEI in
1980 as Accounting Manager, was promoted to Assistant Controller in May 1981,
and Controller in January 1982. Mr. Hayes was named Vice President, Finance of
the Company in September 1989. Prior to joining CEI, Mr. Hayes was an Audit
Manager with Price Waterhouse & Company. Mr. Hayes serves on the Board of
Directors of Teleport Communications Group Inc. Mr. Hayes holds a B.A. and an
M.A.C.C. from the University of Georgia.
David M. Woodrow, 51, has served as Senior Vice President, Broadband
Services since April 1994. Mr. Woodrow joined the Company in 1982 as Director,
Business Development, and was promoted to Western Regional Manager in July
1984, to Vice President and General Manager of Cox Cable Santa Barbara, Inc.
in September 1985, and Senior Vice President, Operations in August 1989. Prior
to joining the Company, Mr. Woodrow was employed by the Technology Components
Group of Exxon Enterprises and Pitney Bowes, Inc. Mr. Woodrow serves on the
Board of Directors of Teleport Communications Group Inc. and is a director of
the Cellular Telephone Industry Association. Mr. Woodrow holds a B.S. and an
M.S. from Purdue University, and an M.B.A. from the University of Connecticut.
Claus F. Kroeger, 45, has served as Vice President, Operations since October
1994. Mr. Kroeger joined the Company in 1976 as a manager trainee. He has held
various positions in the field and served as Director of Operations and
Director of Business Development of the Company. From 1990 to 1994, he served
as Vice President and General Manager of Cox Cable Middle Georgia. Mr. Kroeger
holds a B.A. from the University of Alabama and an M.S. in telecommunications
from the University of Colorado.
James A. Hatcher, 45, Vice President, Legal and Regulatory Affairs since
January 1995, was named Vice President and General Counsel of the Company in
1992. He joined the Company in 1979 and held various positions, including
Secretary and General Counsel for the Company and CEI prior to 1992. Mr.
Hatcher is a director of Graphic Industries, Inc. Mr. Hatcher holds a B.A.
from Furman University and a J.D. from the South Carolina School of Law.
Margaret A. Bellville, 43, has served as Vice President, Operations since
August 1995. From 1993 to 1995, she served as Vice President of Century
Communications. From 1986 to 1993 she served as Vice President of Contel
Cellular. Ms. Bellville holds a B.A. from the State University of New York at
Binghamton.
Jayson R. Juraska, 40, has served as Vice President, Operations since
January 1997. He joined the Company in 1983 as Corporate Business Manager,
Development Division and subsequently served as Director of Finance and
Administration for the Company's Eastern Division and Vice President and
General Manager for the Company's Greater Hartford system before becoming Vice
President and General Manager for New England operations in 1995. Mr. Juraska
holds a B.A. from the University of Pennsylvania and an M.B.A. from the
Wharton School of Business.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information for the years ended
December 31, 1994, 1995, and 1996, respectively, concerning the cash and non-
cash compensation earned by or awarded to the Chief Executive Officer and the
four most highly compensated executive officers of the Company whose combined
salary and bonus exceeded $100,000 in such periods who were executive officers
as of December 31, 1996 and Barry R. Elson, who served as an executive officer
until October 4, 1996 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------- -------------------------------------
AWARDS PAYOUTS
------------------------- -----------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(A)(B) OPTIONS(C) PAYOUTS (D) COMPENSATION (E)
- - --------------------------- ---- -------- -------- ------------ ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
James O. Robbins 1996 $600,000 $ 0(f) $ 513,744(g) 170,000 $ 6,000
President and Chief 1995 527,500 227,000 1,228,725 283,269 6,000
Executive Officer 1994 453,550 270,550 $169,650 4,620
Ajit M. Dalvi 1996 295,000 110,580 $ 121,804(h) 19,000 6,000
Senior Vice President, 1995 265,000 98,000 249,000 74,010 6,000
Programming and Strategy 1994 220,000 82,000 52,592 67,120(i)
Jimmy W. Hayes 1996 270,000 100,510 18,000 6,000
Senior Vice President, 1995 210,000 151,000 228,855 66,597 6,000
Finance and Chief 1994 180,000 110,000 37,323 4,620
Financial Officer
David M. Woodrow 1996 245,000 86,485 17,500 6,000
Senior Vice President 1995 205,000 78,000 211,950 66,140 6,000
Broadband Services 1994 185,000 76,000 21,206 4,620
Margaret A. Bellville 1996 210,000 75,415 15,000 6,000
Vice President 1995(j) 69,910 25,780 13,000 2,077
Operations
Barry R. Elson(k) 1996 372,000 130,200 22,500 6,000
(Former) Executive Vice 1995 310,000 165,000 273,390 78,126 6,000
President, Operations 1994 222,167 123,000 57,681 4,620
</TABLE>
- - --------
(a) The aggregate number of restricted shares held by each Named Executive
Officer and the aggregate value of such restricted shares, based on the
closing price of Class A Common Stock as of December 31, 1996 ($23.125),
are:
<TABLE>
<CAPTION>
NUMBER
OF VALUE AT
SHARES 12/31/96
------- ----------
<S> <C> <C>
Mr. Robbins............................................... 105,499 $2,439,664
Mr. Dalvi................................................. 29,461 681,286
Mr. Hayes................................................. 15,257 352,818
Mr. Woodrow............................................... 14,130 326,756
Ms. Bellville............................................. 0 0
Mr. Elson................................................. 18,226 421,476
</TABLE>
Dividends are payable to the Named Executive Officers with respect to
shares of restricted stock if and when dividends are declared on the
Company's Class A Common Stock.
(b) 1995 restricted stock awards represent units awarded in 1992 under the Cox
Enterprises Unit Appreciation Plan (the "UAP") which were converted to an
equivalent award of restricted stock. These shares of restricted stock
vested on January 1, 1997, except in the case of Mr. Elson's shares which
vested on December 31, 1996 pursuant to his separation agreement (See
Separation Agreement). The value of the awards as stated above is based on
the closing price of Class A Common Stock on April 24, 1995, the date of
grant, which was $15.00. The number of shares of restricted stock awarded
to each Named Executive Officer in 1995 is as follows: Mr. Robbins 81,915
shares; Mr. Dalvi 16,640 shares; Mr. Hayes 15,257 shares; Mr. Woodrow
14,130; Ms. Bellville 0 shares; and Mr. Elson 18,226 shares.
8
<PAGE>
(c) 1995 option awards include units awarded in 1994 under the UAP which were
converted to an equivalent award of options for Class A Common Stock.
(d) Reflects cash payouts and the value as of the date of issuance of awards
of CEI stock under the UAP.
(e) Reflects amounts contributed pursuant to the Cox Communications, Inc.
Savings and Investment Plan (the "401(k) Plan") and amounts credited under
the Cox Communications, Inc. Executive Savings Plus Restoration Plan (the
"Restoration Plan").
(f) Mr. Robbins elected to forego his 1996 bonus in exchange for an award of
restricted stock made on January 1, 1997. See footnote (g) below.
(g) Reflects the value of 8,000 shares of restricted stock awarded to Mr.
Robbins on January 23, 1996, based on the closing price of Class A Common
Stock on such date, or $20.875, which award was made to reward 1995
performance. These shares of restricted stock vest on January 23, 2001,
provided Mr. Robbins remains employed by the Company as of such date.
Also, this amount reflects the value based on the closing price of Class A
Common Stock on the trading date next following the date of grant, or
$22.25, of 15,584 shares of restricted stock awarded to Mr. Robbins on
January 1, 1997, which award was made pursuant to Mr. Robbins' election to
forego his bonus for 1996 in exchange for shares of restricted stock under
the LTIP (as defined below). These shares of restricted stock vest on
January 1, 2002, provided Mr. Robbins remains employed by the Company as
of such date.
(h) Mr. Dalvi received an award of 12,821 shares of restricted stock on
January 1, 1996 in exchange for his agreement with the Company to cancel
the Company's obligation to pay him $250,000 of deferred compensation, 50%
of which was vested, pursuant to the Executive Incentive Agreement, dated
as of January 2, 1991, between Mr. Dalvi and CEI. See footnote (i) below.
The value of this award indicated is net of the consideration paid by Mr.
Dalvi in the form of this foregone vested deferred compensation. Without
taking into account Mr. Dalvi's consideration for the restricted stock
award, the value of the award as of the date of grant is $246,804, which
is based on the closing price of the Class A Common Stock on the trading
day next following the date of grant, or $19.25. Mr. Dalvi's restricted
stock award vests on January 1, 2001, provided he remains employed by the
Company as of such date.
(i) This amount includes $62,500 which vested on December 31, 1994 pursuant to
the Executive Incentive Agreement, dated as of January 2, 1991, between
Mr. Dalvi and CEI. Pursuant to the Executive Incentive Agreement,
Mr. Dalvi was granted a deferred payment award of $250,000. Such award was
scheduled to vest over five years, with 25% vesting on December 31, 1993
and 25% vesting on December 31, 1994. The remaining amount was scheduled
to vest on December 31, 1995. However, in exchange for future compensation
awards to be determined by the Compensation Committee in 1996, Mr. Dalvi
and the Compensation Committee agreed to defer the vesting of the amount
scheduled to vest on December 31, 1995. Effective January 1, 1996, Mr.
Dalvi and the Company entered into an agreement pursuant to which the
Executive Incentive Agreement and all obligations thereunder were canceled
in exchange for an award to Mr. Dalvi of 12,821 shares of restricted stock
under the LTIP. See footnote (h) above.
(j) Reflects compensation earned from Ms. Bellville's date of hire, August 21,
1995, through December 31, 1995.
(k) Mr. Elson resigned from his position as Executive Vice President as of
October 4, 1996, and from his employment with the Company as of December
31, 1996.
Long-Term Incentive Plan
Prior to 1995, the Named Executive Officers participated in the Cox
Enterprises, Inc. Unit Appreciation Plan (the "UAP") which provides incentive
compensation to key employees of CEI and its divisions and subsidiaries. The
beginning base price of each unit awarded under the UAP is equal to the
appraised fair market value of a share of common stock of CEI on the date of
the award, as determined by an independent appraisal firm or firms selected by
CEI. In April 1995, employees of the Company who held outstanding units under
the UAP, including the Named Executive Officers, were given the option to
cancel and convert such units to equivalent awards of restricted stock and
stock options under the Cox Communications, Inc. Long-Term Incentive Plan (the
"LTIP"). All of the Named Executive Officers exercised this conversion option.
The LTIP provides for various forms of equity-based incentive compensation
with respect to Class A Common Stock,
9
<PAGE>
including stock options, stock appreciation rights, stock bonuses, restricted
stock awards, performance units and phantom stock and awards consisting of
combinations of such incentives. The LTIP is administered by the Compensation
Committee of the Company which has the discretion to determine the type of
awards to grant, when, if and to whom awards are granted, the number of shares
covered by each award and the terms and conditions of each award. The
Compensation Committee has delegated to a management committee the
administration of grants to eligible individuals who are not "insiders" for
purposes of reporting obligations under Section 16 of the Securities Exchange
Act of 1934 (the "Exchange Act"). See "Security Ownership of Management."
The following table discloses for the six Named Executive Officers
information regarding options granted pursuant to the LTIP during the fiscal
year ended December 31, 1996:
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED EXERCISE PRICE APPRECIATION
UNDERLYING TO PRICE FOR OPTION TERM(B)
OPTIONS EMPLOYEES PER EXERCISE ---------------------
NAME GRANTED(A) IN 1996 SHARE DATE 5% 10%
---- ---------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James O. Robbins(c)..... 170,000 24.05% $20.9375 1/23/2006 $2,238,472 $5,672,727
Ajit M. Dalvi........... 19,000 2.69 20.9375 1/23/2006 250,182 634,011
Jimmy W. Hayes.......... 18,000 2.55 20.9375 1/23/2006 237,015 600,642
David M. Woodrow........ 17,500 2.48 20.9375 1/23/2006 230,431 583,957
Margaret A. Bellville... 15,000 2.12 20.9375 1/23/2006 197,512 500,535
Barry R. Elson.......... 22,500 3.18 20.9375 12/31/2001(d) 296,268 750,802
</TABLE>
- - --------
(a) Stock options become exercisable over a five year period, with 60%
becoming exercisable three years from the date of grant and an additional
20% becoming exercisable each year thereafter. In addition, all options
will become immediately and fully exercisable if the stock price achieves,
and maintains for a period of 10 consecutive trading days, a level equal
to or greater than 140% of the option exercise price.
(b) The dollar amount under the columns are the 5% and 10% rates of
appreciation prescribed by the Securities and Exchange Commission. The 5%
and 10% rates of appreciation would result in per share prices of $34.105
and $54.306, respectively. The Company expresses no opinion regarding
whether this level of appreciation will be realized and expressly
disclaims any representation to that effect.
(c) A portion of the options granted reflect an award granted on January 23,
1996 that was related to the consummation of the Times Mirror cable
television merger and additional responsibilities related to the
integration of the new systems assumed by Mr. Robbins thereafter.
(d) Pursuant to Mr. Elson's separation agreement with the Company, options
granted to him in 1996 vested upon his resignation from employment with
the Company and will expire five years from that date. (See--Separation
Agreement).
10
<PAGE>
The following table sets forth information related to the number and value
of options held at December 31, 1996 by the Named Executive Officers, none of
whom exercised options in 1996.
1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS/SARS AT
OPTIONS AT DECEMBER 31, 1996 DECEMBER 31, 1996
-------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(A) UNEXERCISABLE(A)
---- -------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
James O. Robbins........ 0 453,269 $ 0 $2,113,979
Ajit M. Dalvi........... 0 93,010 0 496,724
Jimmy W. Hayes.......... 0 84,597 0 448,947
David M. Woodrow........ 0 83,640 0 445,042
Margaret A. Bellville... 0 28,000 0 67,757
Barry R. Elson.......... 100,626 0 $529,694(b)
</TABLE>
- - --------
(a) The exercisable/unexercisable value represents the number of the
exercisable/unexercisable options times the difference between the closing
price, on December 31, 1996 ($23.125) and the exercise price of $16.975
for all 1995 options (except that Ms. Bellville's were granted at an
exercise price of $20.437) and $20.937 for all 1996 options.
(b) Pursuant to Mr. Elson's separation agreement, all of his outstanding
options became fully vested as of his resignation from employment with the
Company.
Retirement Plans
Cox Communications, Inc. Pension Plan. The Cox Communications, Inc. Pension
Plan (the "Pension Plan") is a tax-qualified defined benefit pension plan. The
Pension Plan covers all eligible employees of the Company and any of its
affiliates who have adopted the Pension Plan (including the Named Executive
Officers). The Pension Plan is funded through a tax-exempt trust, into which
contributions are made as necessary based on actuarial funding analysis.
The Pension Plan provides for the payment of benefits upon retirement, early
retirement, death, disability and termination of employment. Participants
become vested in their benefits under the Pension Plan after completing five
years of vesting service. The Pension Plan benefit is determined under a
formula based on a participant's compensation and years of benefit accrual
service. Participants may elect from several optional forms of benefit
distribution, although special rules restrict the choices of married
participants without spousal consent.
Cox Executive Supplemental Plan. The Cox Executive Supplemental Plan (the
"CESP") is a non-qualified defined pension plan providing supplemental
retirement benefits to certain CEI management employees and those of certain
of its affiliates (including the Named Executive Officers). The CESP is
administered by the Management Committee of CEI whose members are appointed by
the CEI Board of Directors. The Management Committee of CEI designates
management employees to participate in the CESP.
The CESP monthly benefit formula, payable at normal retirement, is 2.5% of a
participant's average compensation, as calculated in the CESP multiplied by
the participant's years of benefit accrual service credited under the CESP.
The normal retirement benefit will not exceed 50% of a participant's average
compensation at retirement. Benefits payable with respect to early retirement
are reduced to reflect an earlier commencement date. Special disability,
termination of employment and death benefits also are provided. All benefits
payable under the CESP are reduced by benefits payable to the participant
under the Pension Plan. Participants may elect among several forms of benefit
distributions.
The CESP is not funded currently by CEI. All payments of benefits are made
from the general funds of CEI.
11
<PAGE>
The following table provides estimates of annual retirement income benefits
payable to certain executives under the Pension Plan and the CESP:
PENSION PLAN AND CESP TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE --------------------------------------------------------------
COMPENSATION (5 YEARS) 5 10 15 20 OR MORE
- - ---------------------- ------- ------- ------- ----------
<S> <C> <C> <C> <C>
$150,000 $18,750 $37,500 $56,250 $75,000
250,000 31,250 62,500 93,750 125,000
350,000 43,750 87,500 131,250 175,000
450,000 56,250 112,500 168,750 225,000
550,000 68,750 137,500 206,250 275,000
650,000 81,250 162,500 243,750 325,000
750,000 93,750 187,500 281,250 375,000
</TABLE>
The Named Executive Officers have been credited with the following years of
service: Mr. Robbins, 13 years; Mr. Dalvi 14 years; Mr. Hayes, 16 years; Mr.
Woodrow, 14 years; Ms. Bellville, 1 year; and Mr. Elson, 13 years. The Pension
Plan and the CESP define "compensation" generally to include all remuneration
to an employee for services rendered, including base pay, bonuses, special
forms of pay and certain employee deferrals. Certain forms of additional
compensation, including severance, moving expenses, extraordinary bonuses,
long-term incentive compensation and contributions to employee benefit plans,
are excluded from the definition of compensation. The Pension Plan credits
compensation only up to the limit of covered compensation under Section
401(a)(17) of the Code; the CESP does not impose this limit on covered
compensation. The definition of "covered compensation" under the Pension Plan
and the CESP, in the aggregate, is not substantially different from the amount
reflected in the Annual Compensation column of the Summary Compensation Table
set forth above. The estimates of annual retirement benefits reflected in such
table are based on payment in the form of a straight-life annuity and are
determined after offsetting benefits payable from Social Security as provided
under the terms of the Pension Plan and the CESP.
Separation Agreement
Pursuant to a separation agreement between Barry R. Elson and the Company
(the "Agreement"), effective October 4, 1996, Mr. Elson resigned from his
position as Executive Vice President, and, effective December 31, 1996, from
his employment with the Company. Under the Agreement, the Company has agreed
to provide Mr. Elson with (i) monthly salary continuation payments, based on
his annual 1996 base salary, for a four month period; (ii) a special monthly
retirement benefit of approximately $6,093, which shall be payable in the form
of a single life annuity with a 20-year certain guarantee commencing January
1, 1997; (iii) full vesting in option awards previously granted to Mr. Elson
and the right to exercise such options at any time within five years after
January 1, 1997; (iv) ownership of the Company vehicle used by Mr. Elson prior
to his resignation; (v) retiree health care coverage; and (vi) other employee
benefits on the same terms and conditions generally applicable to executive
employees of the Company and their dependents. Under the Agreement, Mr. Elson
released the Company of any and all claims he may have had against the Company
and agreed to keep confidential certain information and trade secrets
regarding the Company and its business.
Compensation Committee Interlocks and Insider Participation
Prior to October 15, 1996, the Compensation Committee of the Company
consisted of James C. Kennedy, David E. Easterly and Janet Morrison Clarke.
Mr. Kennedy is the Chairman of the Board of Directors and Chief Executive
Officer of CEI and Mr. Easterly is a director and the President and Chief
Operating Officer of CEI. As of October 15, 1996, Mr. Kennedy and Mr. Easterly
resigned from the Committee and were replaced with Mr. Erburu and Mr. Young,
both of whom are independent directors.
12
<PAGE>
Performance Graph
The following graph compares, for the period beginning on February 1, 1995,
the date the Company's stock first became publicly traded on the New York
Stock Exchange, and ending on December 31, 1996, the cumulative total return
of the Company's Class A Common Stock to the cumulative total returns on
Standard & Poor's 500 Stock Index and Standard & Poor's Broadcast Media Index.
The comparison assumes $100 was invested on February 1, 1995 in the Company's
Class A Common Stock and in each of the foregoing indices and that all
dividends were reinvested.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Comparison of Twenty-Three-Month Cumulative Total Return
Among Cox Communications, Inc., the S&P 500 Index and
the S&P Broadcast Media Index
- - --------------------------------------------------------------------------------
2/1/95 Jun-95 Dec-95 Jun-96 Dec-96
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cox Communications, Inc. $100.00 $102.65 $103.31 $114.57 $121.85
(Class A Common Stock)
- - --------------------------------------------------------------------------------
S&P 500 Index $100.00 $117.17 $134.10 $147.64 $164.89
- - --------------------------------------------------------------------------------
S&P Broadcast Media Index $100.00 $119.87 $133.22 $121.87 $109.20
- - --------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The Compensation Committee ("Committee") administers compensation for
executive officers. The Committee believes it serves the stockholders well by
administering executive pay programs that are competitive with cable industry
standards, variable with annual performance, and focused on stockholder value.
In developing compensation plans and reviewing compensation levels, the
Committee reviews competitive compensation data provided in the Towers Perrin
Annual Media Industry Survey: Cable Industry Segment. This survey is based
upon an examination of total compensation levels at sixteen companies with
which the Company competes for talent in the marketplace. Where necessary,
survey information is supplemented by proxy statement analysis. All the
companies included in the S&P Broadcast Media Index shown in the Performance
Graph are used in this competitive review.
EXECUTIVE OFFICERS' COMPENSATION
The total compensation of executive officers consists of three components:
1) base salary; 2) annual incentive compensation; and 3) long-term incentive
awards. The philosophy of the Committee is that a substantial portion of total
compensation should be at risk based on the financial and operational
performance of the Company. The at-risk components of total compensation are
progressively greater for higher level positions.
BASE SALARY
Base salary is designed to provide meaningful levels of compensation to
executives, while helping the Company manage its fixed costs. Salaries for top
executives are determined annually, and are based on the Committee's review
of: job scope and responsibilities; length of service; corporate, unit, and
individual performance; competitive rates for similar positions as indicated
by the Towers Perrin Media Industry Survey; and subjective factors. In
general, executive base salaries are targeted to the 75th percentile of the
competitive data. The 1996 base salaries for the Named Executive Officers were
approximately at the targeted 75th percentile of the competitive data.
ANNUAL INCENTIVE COMPENSATION
Short-term incentives for 1996 were provided for executive officers under
the "Annual Incentive Program." Participation in the Annual Incentive Program
is limited to a group of senior managers, including the Named Executive
Officers, who have a material impact on Company performance. Awards earned
under the Plan are contingent upon employment with the Company through the end
of the year, except for payments made in the event of death, retirement,
disability, or in the event of a change in control.
Payouts under the Annual Incentive Program are calculated under a formula
based on (a) annual base salary; (b) a specific percentage of base salary,
which increases for higher level positions commensurate with the greater
percentage of compensation at risk for those with greater responsibilities;
and (c) actual performance in the areas of earnings and customer service. In
addition, the Committee's judgment as to the participant's contribution to
results during the year is considered, and a discretionary award in the form
of restricted stock may be made.
Awards under the Annual Incentive Program are based on the achievement of
goals relating to performance in the fiscal year. Objective performance goals
are set to represent a range of performance, with the level of the associated
incentive award varying with different levels of performance achievement. The
"minimum" goal is set to reflect the minimum acceptable levels of performance
which will warrant payment of incentive awards. The "maximum" goal reflects an
ambitious level of performance which would only be attainable in an
outstanding year.
14
<PAGE>
LONG-TERM INCENTIVE COMPENSATION
Long-term incentives generally are provided through the issuance of non-
qualified stock options for the Company's Class A Common Stock under the LTIP.
A stock option permits the holder to buy Company stock at a specific price
during a specific period of time. As the price of Company stock rises, the
option increases in value. The intent of such awards is to provide the
recipient with an incentive to perform at levels that will result in better
Company performance and enhanced stock value. In general, stock option awards
are issued annually with an exercise price equal to the market price of the
Company's Class A Common Stock at the time of award.
All options issued in 1995 have a ten-year term. To encourage continued
employment with the Company, these options vest over a five-year period, with
60% becoming exercisable three years after the date of grant and an additional
20% becoming exercisable each year thereafter. However, if the stock price
achieves, and maintains for a period of ten consecutive trading days, a level
equal to or greater than 140 percent of the price on the grant date, vesting
will be accelerated and these options will be fully exercisable.
To ensure that executive officers and key management employees retain
significant holdings in the Company, the Committee encourages them to own
Company stock with a value equal to one to three times their base salary,
depending upon their position. For purposes of these guidelines, an employee's
holdings include the Company's Class A Common Stock (excluding restricted
stock and shares subject to unexercised options) and Cox Enterprises, Inc.'s
common stock received as prior UAP awards.
CHIEF EXECUTIVE OFFICER COMPENSATION
The executive compensation policy described above is applied in establishing
Mr. Robbins' compensation each year. Mr. Robbins participated in the same
executive compensation plans available to the Company's other executive
officers.
In 1996, Mr. Robbins had a base salary of $600,000. On the basis of the
Company's performance versus established goals, and Mr. Robbins' individual
performance, the Committee determined that Mr. Robbins was entitled to an
annual cash bonus for performance in 1996. Mr. Robbins elected to forego this
cash bonus, and in exchange, the Committee granted Mr. Robbins a restricted
stock award of 15,584 shares of Class A Common Stock on January 1, 1997. On
January 23, 1996, Mr. Robbins, was also granted long-term incentive awards
under the LTIP in the form of options for 170,000 shares of Class A Common
Stock, in addition to 8,000 shares of restricted stock which were awards to
reward 1995 performance. A portion of the options granted to Mr. Robbins in
1996 was granted in consideration for the consummation of the Times Mirror
cable television merger and additional responsibilities related to the
integration of the new systems assumed by Mr. Robbins thereafter.
Tax Deductibility Considerations
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation in excess of $1 million paid to the executive officers named in
this proxy statement, unless certain requirements are met. It is the present
intention of the Compensation Committee of the Company to preserve the
deductibility of compensation under Section 162(m) to the extent the Committee
believes that doing so would be consistent with the best interests of
stockholders. As such, long-term incentive compensation awards, particularly
stock option awards, are designed to meet the requirements for deductibility
under Section 162(m).
Robert F. Erburu (Chair)
Janet Morrison Clarke
Andrew J. Young
15
<PAGE>
CERTAIN TRANSACTIONS
CEI performs day-to-day cash management services for the Company, with
settlements of debit or credit balances between the Company and CEI occurring
periodically at market interest rates. The amounts due to CEI are generally
due on demand and represent the net of various transactions. The amounts due
to CEI as of January 31, 1997 were approximately $49.5 million. CEI provides
certain other management services to the Company, including legal, corporate
secretarial, tax, cash management, internal audit, risk management, benefit
administration and other support services. The Company was allocated expenses
for the year ended December 31, 1996 of approximately $2.5 million related to
these services. The Company pays rent and certain other occupancy costs to CEI
for its home office facilities. Related rent and occupancy expense for the
year ended December 31, 1996 was approximately $3.0 million. Allocated
expenses are based on CEI's estimate of expenses relative to the services
provided to other subsidiaries of CEI. Rent and occupancy expense is allocated
based on occupied space. Management believes that these allocations were made
on a reasonable basis. However, the allocations are not necessarily indicative
of the level of expenses that might have been incurred had the Company
operated on a stand-alone basis. Management has not made a study or any
attempt to obtain quotes from third parties to determine what the cost of
obtaining such services from third parties would have been. The fees and
expenses to be paid by the Company to CEI are subject to change.
The Company pays fees to certain entities in which it has an ownership
interest in exchange for cable television programming. Programming fees paid
to such affiliates for the year ended December 31, 1996 were approximately
$24.5 million.
The Company's accounts will be included in the consolidated federal income
tax return of CEI so long as such consolidation is advantageous to both CEI
and the Company, and is permitted under applicable laws and regulations. The
Company has entered into a tax sharing agreement with CEI to, among other
things, provide that current federal (and, if applicable, state) income tax
expenses and benefits are allocated on a separate return basis to the Company
based on the current year tax effects of the inclusion of its income, expenses
and credits in the consolidated income tax returns of CEI (or, if applicable,
based on separate state income tax returns).
CEI and the Company have formed a partnership (the "Cox Pioneer
Partnership") to own the two companies' joint interest in a personal
communications services ("PCS") system in the Los Angeles-San Diego major
trading area ("MTA"). Upon FCC approval, the Company will contribute to Cox
Pioneer Partnership substantially all of its PCS license for the Los Angeles-
San Diego MTA. Cox Pioneer Partnership is owned approximately 78% by the
Company and approximately 22% by CEI. The Company and CEI will make capital
contributions to Cox Pioneer Partnership in proportion to their percentage
interests. The Company has joined Tele-Communications, Inc., Comcast
Corporation and Sprint Corporation to create a joint venture referred to as
"Sprint PCS." Cox Pioneer Partnership will contribute its interest in the PCS
license to a partnership with Sprint PCS.
Cox Communications Phoenix, Inc., a wholly owned subsidiary of the Company,
in December 1996 entered into an advertising agreement with Thomson
Newspapers, Inc. ("Thomson"). In connection with this advertising agreement,
the Company signed a noncompetition agreement with Thomson covering
competitive print products in the Phoenix area. The advertising agreement and
noncompetition agreement were ancillary to an asset exchange transaction
between Cox Newspapers, CEI's newspaper subsidiary, and Thomson (the "Exchange
Transactions"). These agreements, which were approved by the Company's Audit
Committee, were determined to represent foregone business opportunities with
an approximate value of $1,462,800. This amount was paid by Thomson to the
Company and a corresponding amount was deducted from the amount paid by
Thomson to Cox Newspapers in connection with the Exchange Transactions.
16
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent certified public accountants, as independent auditors of the
Company for the year ending December 31, 1997. Deloitte & Touche LLP has
audited the financial statements of the Company since the fiscal year ending
December 31, 1995. Deloitte & Touche LLP (or its predecessors) has audited the
financial statements of CEI for many years.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the voting power of the
Company's Class A Common Stock and Class C Common Stock present or represented
by proxy and entitled to vote at the Annual Meeting.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting, will be offered the opportunity to make a statement if he desires to
do so, and will be available to respond to appropriate questions. In the event
the appointment is not ratified, the Board of Directors will consider the
appointment of other independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF CLASS A COMMON STOCK
(PROPOSAL NO. 3)
On February 20, 1997, the Board of Directors of the Company, by unanimous
written consent, approved, subject to stockholder approval, an amendment to
the Company's Certificate of Incorporation (the "Certificate of
Incorporation") to increase the number of shares of the Company's Class A
Common Stock that the Company is authorized to issue from two hundred and
eighty-six million (286,000,000) to three hundred and sixteen million
(316,000,000) shares (the "Amendment"). The complete text of the Amendment is
set forth below in the form in which it was adopted by the Board of Directors,
subject to stockholder approval; however, such text is subject to change as
may be required by the Secretary of State of the State of Delaware. If the
Amendment is approved by an affirmative vote of the holders of a majority of
the outstanding shares of capital stock of the Company entitled to vote
generally in the election of directors of the Company, upon filing of the
Amendment with the Secretary of State of the State of Delaware, the number of
authorized shares of Class A Common Stock authorized by the Certificate of
Incorporation will be increased from 286,000,0000 to 316,000,000, and the
aggregate number of shares of authorized stock will be 335,000,000 shares,
consisting of 316,000,000 shares of Class A Common Stock, 14,000,000 shares of
Class C Common Stock and 5,000,000 shares of preferred stock, par value $1.00
per share (the "Preferred Stock"). The Board of Directors may make any and all
changes to the Amendment that it deems necessary to file the Amendment with
the Secretary of State of the State of Delaware.
The result of the Amendment will be to increase the number of shares of
Class A Common Stock that will be readily available, if more shares are
needed, for issuance in connection with corporate purposes including, but not
limited to, stock splits, stock dividends, financings, acquisitions and other
future developments where issuance would be desirable. The Board of Directors
believes that having such additional shares of Class A Common Stock available
for such purposes without delay or the necessity for a special stockholders'
meeting would be beneficial to the Company. The Company has no definitive
commitments, agreements or undertakings to issue any material amount of
additional shares of Class A Common Stock, other than in connection with
outstanding options or other securities convertible into Class A Common Stock.
The terms of the additional shares of Class A Common Stock for which
authorization is sought will be identical to the shares of Class A Common
Stock currently authorized, issued and outstanding, and the Amendment will not
affect the terms, or the rights of the holders of issued and outstanding
shares of Class A Common Stock. However, if such additional authorized shares
of Class A Common Stock are subsequently issued to other than existing
stockholders, the percentage interest of existing stockholders will be
diluted. The issuance of any additional shares of Class A Common Stock will be
on terms deemed to be in the interests of the Company and its stockholders.
17
<PAGE>
If the Amendment is approved by the requisite vote of the stockholders,
Article V, Section A of the Certificate of Incorporation will be amended to
read in its entirety as follows:
"A. Authorized Shares. The total number of shares of all classes of
capital stock that the Corporation shall have authority to issue is
three hundred thirty-five million (335,000,000) shares of which (i)
three hundred thirty million (330,000,000) shares of a par value of
$1.00 per share shall be Common Stock (the "Common Stock"), and (ii)
five million (5,000,000) shares of a par value of $1.00 per share shall
be Preferred Stock (the "Preferred Stock"). The Common Stock shall be
divided into classes as follows: three hundred sixteen million
(316,000,000) shares of Class A Common Stock ("Class A Stock") and
fourteen million (14,000,000) shares of Class C Common Stock ("Class C
Stock")";
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE APPROVAL OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF THE COMPANY
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
CLASS A COMMON STOCK.
APPROVAL OF THE
1997 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL NO. 4)
The Compensation Committee of the Board of Directors adopted the Cox
Communications, Inc. 1997 Employee Stock Purchase Plan ("Employee Stock
Purchase Plan") on March 6, 1997, subject to the approval by the stockholders
of the Company at the 1997 Annual Meeting. A total of 1,250,000 shares of
Class A Common Stock have been authorized for issuance under the Employee
Stock Purchase Plan. The Employee Stock Purchase Plan is intended to qualify
under Section 423 of the Code. Under the terms of the Employee Stock Purchase
Plan, eligible employees may subscribe to purchase shares of Class A Common
Stock in a designated amount ("Subscription Amount"). Eligible employees are
any employees who are regularly scheduled to work at least 20 hours per week
and have at least 6 months of service as of the Grant Date, which date shall
be determined at the discretion of the Management Committee (the "Committee")
of the Company, whose members are appointed by the Company's Board of
Directors. Approximately 6,000 employees will be eligible to participate in
the Employee Stock Purchase Plan. The price of the Class A Common Stock
offered to employees will be 85% of the market value of the Class A Common
Stock on the Grant Date. Shares will be offered to eligible employees for
subscription during the period beginning with the Grant Date and ending 45
days thereafter. In order to participate, employees will authorize the Company
to withhold the Subscription Amount from their pay in substantially equal
installments each during the 25-month period beginning on the first day of the
month following the close of the offering period. In no case shall an employee
subscribe for more than $12,500 in Class A Common Stock during the 25-month
period. An employee may elect to withdraw from the Employee Stock Purchase
Plan at any time and may request that his or her aggregate contributions be
paid in cash or in whole shares of Class A Common Stock, with any remaining
amount refunded in cash. In the event that the aggregate subscriptions exceed
the authorized 1,250,000 shares, each participant's subscription will be
reduced on a pro rata basis. The Employee Stock Purchase Plan will be
administered by the Committee.
Generally, no tax consequences arise at the time the employee purchases the
Class A Common Stock under the Employee Stock Purchase Plan. If an employee
disposes of the Class A Common Stock purchased under the Employee Stock
Purchase Plan less than one year after the Class A Common Stock is transferred
to him or her but within two years after the date of the Grant Date, he or she
will be deemed to have received compensation taxable as ordinary income in the
amount of the difference between the amount paid for the Class A Common Stock
and the value of the Class A Common Stock at the time of purchase. If the
Class A Common Stock is sold or exchanged, the amount of such ordinary income
is added to the employee's basis in his or her Class A Common Stock for
purposes of determining gain or loss.
If an employee does not dispose of the Class A Common Stock purchased under
the Employee Stock Purchase Plan for at least one year after the Class A
Common Stock is transferred to him or her and at least two
18
<PAGE>
years after the Grant Date, he or she will be deemed to have received
compensation taxable as ordinary income for the taxable year in which the
disposition occurs in an amount equal to the lesser of (a) 10% of the fair
market value of the Class A Common Stock on the Grant Date, or (b) the excess
of the fair market value of the stock on the date of sale, exchange or other
disposition over the purchase price paid by the employee. The amount of such
ordinary income is then added to the employee's basis in his or her Class A
Common Stock for purposes of determining capital gain or loss. If an employee
dies before disposing of the Class A Common Stock purchased under the Employee
Stock Purchase Plan, he or she will be deemed to have realized compensation
taxable as ordinary income in the taxable year closing with his or her death
in an amount equal to the lesser of clauses (a) and (b) as set forth in the
first sentence of this paragraph. The employee is deemed not to have realized
any capital gain or loss because of death. The Company generally will not be
entitled to a deduction with respect to the Class A Common Stock purchased
under the Employee Stock Purchase Plan unless the Class A Common Stock is
disposed of less than one year after the Class A Common Stock is transferred
to the employee, or less than two years after the Grant Date.
The Employee Stock Purchase Plan may be amended, suspended or terminated by
the Board of Directors in whole or in part at any time; provided that no such
amendment, suspension or termination of the Employee Stock Purchase Plan may
adversely affect the rights of or obligations to the participants without such
participants' consent and any such amendment, suspension or termination will
be subject to the approval of the stockholders to the extent required by any
federal or state law or regulation of any stock exchange.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1997
EMPLOYEE STOCK PURCHASE PLAN.
OTHER MATTERS
Management does not know of any other matters to be considered at the Annual
Meeting. If any other matters do properly come before the meeting, persons
named in the accompanying form of proxy intend to vote thereon in accordance
with their best judgment, and the discretionary authority to do so is included
in the Proxy.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission, is available free upon written request to: Finance
Department, Cox Communications, Inc., 1400 Lake Hearn Dr., N.E., Atlanta,
Georgia 30319.
SUBMISSION OF STOCKHOLDER PROPOSALS
It is anticipated that the 1998 Annual Meeting of Stockholders of the
Company will be held in April 1998. Any stockholders who intend to present
proposals at the 1998 Annual Meeting of Stockholders, and who wish to have
such proposal included in the Company's Proxy Statement for the 1998 Annual
Meeting, must ensure that such proposals are received by the Corporate
Secretary of the Company not later than November 17, 1997. Such proposals must
meet the requirements set forth in the rules and regulations of the Securities
and Exchange Commission in order to be eligible for inclusion in the Company's
1998 proxy materials.
By Order of the Board of Directors
/s/ Andrew A. Merdek
-----------------------------
Andrew A. Merdek
Corporate Secretary
Atlanta, Georgia
March 17, 1997
19
<PAGE>
- - --------------------------------------------------------------------------------
Please mark your 5249
[X] votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR proposals 1,2,3
and 4.
- - --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1, 2, 3 and 4.
- - --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of
Directors. [_] [_]
(see reverse)
For, except vote withheld from the following nominee(s):
- - ----------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of
appointment of [_] [_] [_]
independent
auditors.
3. Approval of
amendment of [_] [_] [_]
Certificate of
Incorporation
4. Approval of 1997
Employee Stock [_] [_] [_]
Purchase Plan
5. In the discretion of the Change of Address/
proxies named herein, the Comments on [_]
proxies are authorized Reverse Side
to vote upon other matters
as are properly brought
before the meeting. I plan to attend
the meeting. [_]
All as more particularly described in the Proxy Statement relating to such
meeting, receipt of which is hereby acknowledged.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- - ------------------------------------------
- - ------------------------------------------
SIGNATURE(S) DATE
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[LOGO OF COX COMMUNICATIONS APPEARS HERE]
<PAGE>
[LOGO OF COX COMMUNICATIONS APPEARS HERE]
Proxy Solicited on Behalf of the Board of Directors of Cox Communications, Inc.
for Annual Meeting on April 17, 1997
P
The UNDERSIGNED hereby appoints James O. Robbins, Andrew A. Merdek and
R Jimmy W. Hayes, or any of them, and any substitute or substitutes, to be the
attorneys and proxies of the undersigned at the Annual Meeting of
O Stockholders of Cox Communications, Inc. ("Cox") to be held at 9:00 a.m.
local time on Thursday, April 17, 1997, at Corporate Headquarters at 1400
X Lake Hearn Drive, NE, Atlanta, Georgia, or at any adjournment thereof, and
to vote at such meeting the shares of stock of Cox the undersigned held of
Y record on the books of Cox on March 6, 1997, the record date for the
meeting. The undersigned hereby revokes any previous proxies with respect to
the matters covered by this proxy.
(change of address/comments)
Election of Directors, Nominees:
-----------------------
James C. Kennedy, Janet Morrison Clarke,
-----------------------
John R. Dillon, David E. Easterly, Robert F. Erburu,
-----------------------
James O. Robbins, Andrew J. Young.
-----------------------
Independent Auditors: (if you have written in
Deloitte & Touche LLP the above space, please
mark the corresponding
box on the reverse side
of this card)
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations.
The proxies cannot vote your shares unless you sign and
return this card.
-------------
SEE REVERSE
SIDE
-------------
