GRAHAM & DUNN PC
1420 Fifth Avenue, 33rd Floor
Seattle, Washington 98101-2390
(206) 624-8300
Facsimile: (206) 340-9599
March 17, 1998
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street N.W.
Washington, D.C. 20549
Re: The Ackerley Group, Inc.;
Schedule 14A Preliminary Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Dear Sir or Madam:
On behalf of The Ackerley Group, Inc., a Delaware corporation ("Company"),
we are transmitting the Company's Schedule 14A Preliminary Proxy Statement,
prepared pursuant to Section 14(a) of the Securities Exchange Act of 1934, which
is being filed electronically via the EDGAR system.
In the event there are any questions concerning the enclosed Preliminary
Proxy Statement, please feel free to contact me at (206) 340-9642.
Very truly yours,
GRAHAM & DUNN
/s/ Carmen L. Smith
Carmen L. Smith
Enclosures
cc: The Ackerley Group, Inc. (w/ Encl)
New York Stock Exchange, Inc. (w/ Encl)
Ernst & Young LLP (w/ Encl)
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a.11(c) or ss. 240.14a-12
THE ACKERLEY GROUP, INC.
(Name of Registrant as Specified in Charter)
N/A
(Name of Persons Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
/ / 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:
N/A
(2) Form, Schedule or Registration Statement No.:
N/A
(3) Filing Party:
N/A
(4) Date Filed:
N/A
<PAGE>
March 27, 1998
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
The Ackerley Group, Inc. ("Company"), which will be held at 9:00 a.m., Pacific
Daylight Savings Time on Monday, May 4, 1998, at The Rainier Club, 820 Fourth
Avenue, Seattle Washington 98104-1653. For your use in preparation for the
Annual Shareholders Meeting, we have enclosed a Notice of Annual Meeting, a
Proxy Statement, a Proxy form and a copy of our Annual Report on Form 10-K.
At the Annual Meeting, you will be asked to elect directors, and to approve
an amendment to and the restatement of our Certificate of Incorporation. If you
do not plan to attend this meeting, we request that you return the enclosed
Proxy as soon as possible. We have provided a return envelope for your
convenience. If you attend the meeting, you may vote in person.
Sincerely,
Denis M. Curley
Co-President and Chief Financial Officer,
Treasurer and Secretary
<PAGE>
Notice of Annual Shareholders Meeting
The Annual Meeting of Shareholders of The Ackerley Group, Inc. will be held
at The Rainier Club, 820 Fourth Avenue, Seattle, Washington 98104-1653, on
Monday, May 4, 1998 at 9:00 a.m., Pacific Daylight Savings Time, for the purpose
of considering and voting upon the following matters:
1. Election of Directors. Electing a Board of Directors to hold
office until the next Annual Shareholders Meeting and until their
successors have been elected and qualified.
2. Amendment and Restatement of Certificate of Incorporation.
Approving the amendment and restatement of our Certificate of
Incorporation.
3. Other business that may properly be brought before the meeting or
any adjournment of the Meeting.
Shareholders of record of Common Stock and Class B Common Stock at the
close of business on March 25, 1998 are entitled to notice of and to vote at the
Annual Shareholders Meeting. We will prepare a complete list of shareholders
entitled to vote at the Annual Shareholders Meeting, which you can examine at
our headquarters, located at 1301 Fifth Avenue, Suite 4000, Seattle, Washington
98101, or at the meeting. The list will be available at our headquarters
beginning ten days before the meeting.
By Order of the Board of Directors
Seattle, Washington Denis M. Curley
March 27, 1998 Co-President and Chief Financial Officer,
Secretary and Treasurer
===============================================================================
YOUR VOTE IS IMPORTANT
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Annual Shareholders Meeting in
person. If you do attend the Annual Shareholders Meeting, you may then
withdraw your proxy. Any person giving a proxy may revoke it prior to its
exercise.
================================================================================
<PAGE>
Proxy Statement
This Proxy Statement and the accompanying Proxy are being first sent or
given to our shareholders on or about March 27, 1998, for use in connection with
the Annual Meeting of Shareholders of The Ackerley Group, Inc. to be held on
Monday, May 4, 1998 at 9:00 a.m., Pacific Daylight Savings Time.
Voting Shares
The record date for the Annual Shareholders Meeting is March 25, 1998.
Thus, only persons who owned shares of our voting common stock, par value $.01
per share (including Common Stock and Class B Common Stock), of record at the
close of business on March 25, 1998 will be entitled (i) to notice of the Annual
Shareholders Meeting, and (ii) to vote at the Annual Shareholders Meeting.
At the close of business on March 25, 1998, there were ____________ shares
of Common Stock and ____________ shares of Class B Common Stock issued and
outstanding. Holders of shares of our Common Stock are entitled to one (1) vote
per share; holders of shares of our Class B Common Stock are entitled to ten
(10) votes per share.
Shareholders are not entitled to cumulate their votes in the election of
directors. This means that shareholders cannot cumulate all of their votes for
one director nominee and not vote in the elections of other nominees.
Solicitation of Proxies
The enclosed Proxy is solicited by and on behalf of our Board of Directors.
We will bear the cost of solicitation, including costs for printing and
distributing this Proxy Statement and the enclosed Proxy. In addition to our
distribution of this Proxy Statement and other materials via the mails,
solicitation may be made, without additional compensation, by our directors,
officers and regular employees by telephone, telegraph and personal interview.
Some shares of our Common Stock are held by brokers, nominees and others on
behalf of other persons and entities. Such brokers, nominees and similar record
holders will incur expenses in forwarding this Proxy Statement and related
materials to beneficial owners. We will reimburse such parties for those
expenses, so long as those expenses are reasonable.
Appointment of Proxies
You can appoint a proxy by completing and returning the Proxy form included
with this Proxy Statement. Your Proxy, if returned to us, will be voted in the
following manners:
o If you direct that your shares be voted in any particular manner -
either "FOR" or "AGAINST" the matters being submitted to our
shareholders - your shares will be voted as you direct.
<PAGE>
o If you do not direct that your shares be voted in any particular
manner, the persons named in the Proxy intend to vote your shares as
follows:
* With regard to (i) the election of our Board of Directors, and
(ii) the amendment and restatement of our Certificate of
Incorporation, the persons named in the Proxy intend to vote your
shares "FOR" the election of the nominated directors, and "FOR"
the amendment and restatement of our Certificate of
Incorporation.
* With regard to any other matters that may properly be brought at
the Annual Shareholders Meeting, the persons named in the Proxy
intend to vote your shares as recommended by our management.
Revocation of Proxies
You can revoke your Proxy at any time before it is exercised at the Annual
Shareholders Meeting. In order to revoke your Proxy, you must deliver written
notice to the Company's Secretary or Assistant Secretary before the Proxy is
voted on any matter at the Annual Shareholders Meeting.
Annual Report
Along with this Proxy Statement, we are delivering to you our Annual
Report, for the fiscal year ended December 31, 1997.
* * * * * * * *
Business of the Meeting
We are submitting the following matters to you for approval at the Annual
Shareholders Meeting:
Item 1 - Election of Directors
At the Annual Shareholders Meeting, we will ask you to elect a Board of
Directors to serve until our next Annual Shareholders Meeting in 1999, and until
their successors are elected and qualified.
Board of Directors
Our Board of Directors cannot consist of less than one (1) director and
cannot consist of more than eight (8) directors. Our Certificate of
Incorporation provides that the presently-sitting Board may change the number of
directors from time to time. Once elected, Board members serve terms of one (1)
year, and until their successors are elected and qualified.
2
<PAGE>
Nominees
The Board of Directors has fixed the number of directors to be elected at
this Annual Shareholders Meeting at five (5), and has nominated the following
persons for election as directors, all of whom are the current members of the
Board of Directors:
<TABLE>
<CAPTION>
Company
Director
Nominee Age Since Principal Occupation and Professional Experience
------- --- ----- ------------------------------------------------
<S> <C> <C>
Barry A. Ackerley 63 1975 Mr. Ackerley is our founder. He currently serves as Co-Chair
and Chief Executive Officer of The Ackerley Group, Inc.
Gail A. Ackerley 60 1995 Ms. Ackerley is the Co-Chair and Co-President of The Ackerley
Group, Inc. She also serves as Chair of Ackerley Corporate
Giving, supervising our charitable activities.
Richard P. Cooley 74 1995 Mr. Cooley is the former Chairman and Chief Executive Officer of
Seattle First National Bank. He served as Chairman from 1988
through April 1994, and served as Chief Executive Officer from
1988 through 1991. He is presently a member of the Board of
Directors of Egghead Inc.
M. Ian G. Gilchrist 48 1995 Mr. Gilchrist is the Managing Director of Salomon Smith Barney,
an investment banking firm. Prior to joining that company in
May 1995, Mr. Gilchrist was Managing Director of CS First Boston
Corporation.
Michel C. Thielen 63 1979 Mr. Thielen is Chairman and President of Thielen & Associates,
an advertising agency. He is also Vice President with Executive
Wings, Inc., an airport operations company.
</TABLE>
Barry A. Ackerley and Gail A. Ackerley are husband and wife. Additional
information regarding transactions involving our operations and the Ackerley
family is set forth under "Certain Relationships and Transactions" below.
Additional information concerning the director nominees' stock ownership,
compensation and related matters are discussed under "Board of Directors,"
"Executive Officers," and "Share Ownership" below.
Voting
Directors are elected separately for the five Board positions. In order to
be elected as a director at the Annual Shareholders Meeting, a nominee must
receive a plurality of the votes present at the meeting.
3
<PAGE>
If you abstain from voting, either by Proxy or in person at the Annual
Shareholders Meeting, you will effectively vote "AGAINST" a nominee, because
your votes cannot be deemed voted "FOR" a nominee.
In addition, "broker non-votes" will have no effect because they are not
considered "shares present" for voting purposes. Proxies cannot be voted for
more than five persons.
Withdrawal of Nominees
Prior to his or her election, a nominee may decide to withdraw his or her
nomination, or may become unable to serve as a director for other reasons. If
that occurs, the shares represented by your Proxy will be voted "FOR" a nominee
designated by our Board of Directors to replace the withdrawing nominee. Our
Board of Directors presently has no knowledge that any of the nominees will
refuse or be unable to serve.
================================================================================
The Board of Directors recommends that you vote FOR the nominees
for the Board of Directors listed above.
================================================================================
Item 2 - Fourth Restated Certificate of Incorporation and
Amendment of Article Fourth, Part 7
At the Annual Shareholders Meeting, we will ask you to approve our Fourth
Restated Certificate of Incorporation, including an amendment to Article Fourth,
Part 7, of the Certificate.
Reason for Amendment and Restatement
We are amending our Certificate of Incorporation in accordance with our
listing agreement with the New York Stock Exchange, Inc. Effective December 15,
1997, shares of our Common Stock began trading on the New York Stock Exchange.
Under our agreement with the New York Stock Exchange, we are required to amend
our Certificate of Incorporation in order to add the provision set forth below.
Coincidentally with the amendment, we are restating our Certificate of
Incorporation in order to assemble all of the amendments that have been made
since July 27, 1990, when we last restated our Certificate of Incorporation, and
restate them in a single document.
Proposed Amendment and Restatement
On January 20, 1998, our Board of Directors found the following amendment
to our Certificate of Incorporation to be advisable in order to meet our
agreement with the New York Stock Exchange, and approved the amendment of
Article Fourth, Part 7 to our Certificate of Incorporation to read as follows:
4
<PAGE>
Part 7. New York Stock Exchange, Inc.
Nothing contained in this Certificate shall impair the settlement of
transactions entered into through the facilities of the New York Stock
Exchange, Inc.
In addition, the Board of Directors found the fourth restatement of our
Certificate of Incorporation, including the amendment to Article Fourth, Part 7
as set forth above, to be advisable and recommended the proposed Fourth Restated
Certificate of Incorporation to our shareholders for approval.
The Fourth Restated Certificate of Incorporation incorporates all
amendments made to the Certificate of Incorporation since July 27, 1990, when
the Company's Third Restated Certificate of Incorporation was filed with the
Secretary of State of Delaware. The full text of the Fourth Restated Certificate
of Incorporation, including the amendment to Article Fourth, Part 7, as set
forth above, is attached as Exhibit A to this Proxy Statement.
Procedure for Amendment and Restatement
Our company was reincorporated on June 9, 1978, when we filed our
Certificate of Incorporation with the Secretary of State of Delaware. (Prior to
then, we were incorporated under the laws of the state of Washington.) Our
Certificate of Incorporation sets forth detailed provisions governing our
organization, operations and, in particular, the rights of our shareholders.
Because we are now incorporated under the laws of the State of Delaware, we
are governed by Delaware's General Corporation Law. The General Corporation Law
permits us to amend, from time to time, our Certificate of Incorporation. In
general, all amendments to our Certificate of Incorporation must first be
approved by our Board of Directors, then approved by shareholders holding a
majority of the votes of the issued and outstanding shares of our Common Stock
and Class B Common Stock.
In addition, the Delaware General Corporation Law permits us to restate our
Certificate of Incorporation. By restating our Certificate of Incorporation, we
are able to assemble all of the amendments that have been made to date and
restate them in a single document. To date, we have restated our Certificate of
Incorporation three times.
Effect Upon Shareholders Rights
Approval of the Fourth Restated Certificate of Incorporation, including the
amendment to Article Fourth, Part 7, will, as a practical matter, have no effect
upon the rights of our shareholders. The amendment relates only to the New York
Stock Exchange's ability to settle transactions in our Common Stock.
5
<PAGE>
Voting
In any circumstance, if you do not vote "FOR" the amendment and restatement
of our Certificate of Incorporation, either in person or by Proxy, you will
effectively vote "AGAINST" that action. The amendment and restatement of our
Certificate of Incorporation can only be approved by a majority of votes of our
issued and outstanding Common Stock and Class B Common Stock. Thus, shares that
are (i) not present at the meeting, (ii) present but not voted, or (iii) voted
"AGAINST" that action, will effectively constitute votes "AGAINST" the amendment
and restatement.
===============================================================================
The Board of Directors recommends that you vote FOR the Fourth Restated
Certificate of Incorporation, including the amendment of Article Fourth, Part 7.
================================================================================
Item 3 - Other Matters
Our Board of Directors knows of no other matters to be brought before this
Annual Shareholders Meeting. However, if other matters should properly come
before the meeting, the persons named in the Proxy intend to vote the Proxy in
accordance with our management's recommendations on such matters.
* * * * * * * *
Company Information
The following sections set forth information that you may find useful in
preparing for the Annual Shareholders Meeting. For additional information
regarding our business and operations, please refer to our Annual Report on Form
10-K, which accompanies this Proxy Statement.
Board of Directors
Directors Information
Biographical and professional information regarding our directors and the
director nominees is set forth under "Item 1 - Election of Directors" above.
Meetings
Our Board of Directors met one (1) time during 1997. All of the directors
attended that meeting.
In addition to taking actions at meetings, our Board of Directors is
authorized, pursuant to the Delaware General Corporation Law, to take action
without meetings by executing unanimous written consents. Most of the corporate
actions approved by our Board of Directors during 1997 were taken by unanimous
written consents in lieu of full meetings.
6
<PAGE>
Audit Committee
Our Board of Directors established an Audit Committee on September 13,
1995, comprised of Messrs. Cooley, Gilchrist and Thielen. The Audit Committee
reviews, with the auditors, the scope of the audit and the financial statements.
The Committee also is responsible for recommending to the Board a firm of
independent auditors to act as our independent auditor. The Audit Committee met
one (1) time during 1997.
Other Committees
Our Board of Directors has not designated either a compensation committee
or a nomination committee. Thus, all compensation matters and nominations for
our Board of Directors are considered by our Board of Directors as a whole.
Directors' Fees
Those directors who we do not employ as officers receive a quarterly fee of
$5,000. In addition, we reimburse each nonemployee director up to $1,500 per
quarter for his or her out-of-pocket expenses in connection with attendance at
meetings of the Board of Directors. Nonemployee directors are eligible to
receive their directors' fees in the form of shares of our Common Stock, as
discussed in "Nonemployee Directors Equity Compensation Plan" below.
Additional information regarding our directors' and director nominees'
stock ownership, compensation and related matters is set forth under "Share
Ownership" and "Executive Compensation" below.
Nonemployee-Directors' Equity Compensation Plan
Our Nonemployee-Directors' Equity Compensation Plan was approved by our
Board of Directors in 1995 and by our shareholders in 1996. Directors who do not
also serve as employees are eligible to participate in the plan. The plan's
purpose is to allow nonemployee directors to elect to receive directors' fees in
the form of shares of our Common Stock instead of in cash. There are a total of
100,000 shares of Common Stock authorized and reserved for issuance under the
plan.
Nonemployee directors who want to receive their directors' fees in shares
of Common Stock must submit a written election to us before their quarterly
directors' fees become due and payable for a given quarter. We issue a number of
shares to each nonemployee director as calculated against the closing price on
the last trading day of the quarter, as quoted on the New York Stock Exchange.
Thus, a nonemployee director receives the number of shares that he could have
purchased for $5,000 on the open market as of closing on the last trading day of
the quarter.
As of December 31, 1997, Richard P. Cooley, M. Ian G. Gilchrist, and Michel
C. Thielen have each received 2,303 shares of Common Stock (including 1,570
shares issued during 1997) pursuant to their respective elections under the
plan. Detailed information concerning our directors' stock ownership is included
under "Share Ownership" below.
7
<PAGE>
Executive Officers
Biographical and Professional Information
Biographical and professional information regarding our executive
officers is set forth in the share ownership table under "Share Ownership"
below.
Compensation
All of our executive officers receive compensation for their services.
The Securities and Exchange Commission requires us to disclose, in this Proxy
Statement, compensation information concerning those executive officers who
received aggregate cash compensation in excess of $100,000 during the last
fiscal year.
The following table sets forth that information, which covers
compensation paid or accrued during the fiscal years ended December 31, 1997,
1996 and 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
----------------------- All Other Compensation
----------------------
Annual Compensation Awards Payouts
-------------------------------------------- ---------- --------
Securities Savings
Other Annual Underlying LTIP and
Name and Principal Compensation Options Payouts Retirement Other($)
Position Year Salary ($) Bonus ($) ($)(1) (#) ($)(2) Plan ($)(3) (4)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barry A. Ackerley, 1997 $500,016 $200,000 N/A -0- $-0- $ 6,400 $ 13,182
Co-Chair of the 1996 $500,016 $200,000 N/A -0- $-0- $ 6,000 $ 6,318
Board and Chief 1995 $500,016 $200,000 N/A -0- $-0- $ 6,000 $ 18,706
Executive Officer
Gail A. Ackerley, 1997 $200,000 $ 30,000 N/A -0- $-0- $-0- $ 4,050
Co-Chair of the 1996 N/A N/A N/A -0- N/A N/A N/A
Board and 1995 N/A N/A N/A -0- N/A N/A N/A
Co-President (5)
William N. Ackerley, 1997 $300,000 $ 45,000 N/A -0- $420,975 $ 6,400 $ 594
Co-President and 1996 $216,010 $ 25,489 N/A -0- $-0- $ 6,000 $ 594
Chief Operating 1995 $208,200 $ 30,731 N/A 20,000 $-0- $ 6,000 $ 486
Officer
Denis M. Curley, 1997 $259,992 $ 47,802 N/A -0- $561,300 $ 6,400 $ 2,484
Co-President and 1996 $200,000 $ 23,600 N/A -0- $-0- $ 4,863 $ 1,566
Chief Financial 1995 $192,500 $ 28,248 N/A 30,000 $-0- $ 6,000 $ 1,566
Officer, Treasurer
and Secretary
Keith W. Ritzmann 1997 $115,440 $ 9,628 N/A -0- $140,325 $ 4,618 $ 1,031
Senior Vice 1996 $111,000 $ 10,268 N/A -0- $-0- $ 4,440 $ 577
President and Chief 1995 $106,800 $ 10,168 N/A 5,000 $-0- $ 4,272 $ 552
Information Officer,
Controller and
Assistant Secretary
- --------------------------------------
</TABLE>
(1) None of the Named Executives received perquisites or other personal
benefits, in any of the years shown, in an aggregate amount equal to or
exceeding the lesser of (i) $50,000 or (ii) 10% of the executive's total
annual salary and bonus for each year.
(2) The amounts appearing in this column are the value as of December 31, 1997,
1996 and 1995, respectively, difference between the market price and the
exercise price for shares exercised under our Employees Stock Option Plan.
8
<PAGE>
(3) The amounts appearing in this column are our contributions and credits on
behalf of each named executive under our Savings and Retirement Plan.
(4) Includes value of life insurance in excess of $50,000 for each of the Named
Executives and imputed interest on indebtedness to us incurred by Barry
Ackerley for the years 1997 and 1995.
(5) Ms. Ackerley was elected Co-President on November 3, 1997.
Stock Option Grants & Exercises
Our executive officers are eligible to receive options to acquire shares of
our Common Stock pursuant to our Employee Stock Option Plan. The Board of
Directors did not grant any options to executive officers during 1997. Some of
our executive officers did, however, exercise options that had previously been
granted to them during 1997. Information concerning our Employee Stock Option
Plan and options exercised during 1997 is set forth under "Stock Options" below.
Long Term Incentive Plans
We did not grant any long-term incentive compensation to any of our
executive officers during 1997.
Board of Directors Interlocks and Insider Participation
As noted above, our Board of Directors has no separate compensation
committee. Thus, the Board as a whole determines the compensation to be paid to
our executive officers as well as the options to be granted to any executive
officer at any time. Barry A. Ackerley, our Chief Executive Officer, and his
wife, Gail A. Ackerley, one of our Co-Presidents, served on the Board of
Directors during the past fiscal year.
Board Report of Executive Compensation
In determining the compensation paid to our executive officers in 1997, the
Board employed compensation policies designed to align the compensation with our
overall business strategy, values and management initiatives. These policies are
intended to reward executives for enhancing the long-term value of our assets,
to support a performance-oriented environment that rewards achievement of
internal goals and recognizes our performance compared to performance levels of
companies in its industries, and to attract and retain executives whose
abilities are critical to the long-term success and competitiveness of our
operations. The Board believes that by striving to best obtain these goals the
executive officers should enhance shareholder value for the long-term.
The key components of executive officer compensation are (i) salary, which
is based on factors such as the individual officer's level of responsibility and
comparisons to similar positions in our subsidiaries and comparable media and
advertising companies; (ii) cash bonus awards, which are based on individual
performance and the performance of our operations, measured primarily in terms
of increases in our Operating Cash Flow and accomplishment of our strategic
goals; and (iii) stock option awards which are intended to increase the
motivation for an interest in our long-term success as measured by our share
price.
9
<PAGE>
The Board based the 1997 compensation of the executive officers on the
policies described above. The executives' salaries in 1997 were based on a
variety of factors including the salaries of the executive officers of
comparable media advertising companies. Cash bonuses were paid to executive
officers at year-end, primarily in recognition of our progress during the year
in improving our Operating Cash Flow, achieving a record level of sales and net
income and pursuing our overall strategic goals. Individual performance was also
taken into account.
The Board based the 1997 compensation of the Chief Executive Officer on the
policies described above. The Chief Executive Officer's salary in 1997 remained
at the same level as last year's and is believed to be in the lower range of
salaries of the chief executive officers of comparable media advertising
companies. The cash bonus which was paid to the Chief Executive Officer for 1997
was primarily in recognition of another year of record-level sales and net
income as well as our substantial progress, as determined by the Board of
Directors, during the year toward pursuing our overall strategic goals and
attaining our long-term goal of increasing our earnings per share.
Barry A. Ackerley, Director M. Ian G. Gilchrist, Director
Gail A. Ackerley, Director Michel C. Thielen, Director
Richard P. Cooley, Director
Share Ownership
Directors, Executive Officers and Principal Shareholders
All of our directors and executive officers own shares of our Common Stock;
some of our directors and executive officers also own shares of our Class B
Common Stock. Barry A. Ackerley and Gail A. Ackerley together beneficially own
in excess of five percent (5%) of the outstanding shares of our Common Stock and
Class B Common Stock. In addition, there are two (2) other shareholders, Gabelli
Funds, Inc. and the Capital Group Companies, Inc., who own in excess of five
percent (5%) of the outstanding shares of our Common Stock.
The following table sets forth information regarding the share ownership of
our nominees for director, current directors, executive officers and principal
shareholders, as well as information for our directors and executive officers as
a group. The information in the following table is current as of March 13, 1998,
except for the share ownership of Gabelli Funds, Inc. and The Capital Group
Companies, Inc., which is current as of March 13, 1998 and February 10, 1998,
respectively.
10
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- -----------------------------------------------------------------
Name, Age and Shares of the Company's Common Stock
Principal Occupation and Class B Common Stock and Percent
During Past Five Years of Class Beneficially Owned (1)
------------------------------------------------- -----------------------------------------------------------------
Class B
Common Stock Percent Common Stock Percent
------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Barry A. Ackerley, 63 10,194,043(2) 49.6% 10,960,029(2) 99.2%
Co-Chair and Chief Executive Officer of the
Company;
Company Director since 1975
Gail A. Ackerley, 60 10,194,043(3) 49.6% 10,960,029(3) 99.2%
Co-Chair and Co-President of the Company
Chairman of Ackerley Corporate Giving
(Company's charitable activities);
Company Director since 1995
Richard P. Cooley, 74 6,100 * -0- *
Retired, Chairman (1988-April 1994)
and Chief Executive Officer (1988-1991),
Seattle-First National
Bank; director, Egghead Software Inc.;
Company Director since 1995
M. Ian G. Gilchrist, 48 1,180 * -0- *
Managing Director (May 1995-present), Salomon
Smith Barney (formerly Salomon Brothers, Inc.);
Managing Director (February 1992-May 1995), CS
First Boston Corporation (investment banking -
media/telecommunications);
Company Director since 1995
Michel C. Thielen, 63 2,960 * -0- *
Chairman of the Board and President, Thielen &
Associates (advertising agency);
Vice President, Executive Wings, Inc. (airport
operations company);
Company Director since 1979
William N. Ackerley, 37 52,029 * 30,578(4) *
Co-President and Chief Operating Officer of the
Company
Denis M. Curley, 50 40,002 * -0- *
Co-President and Chief Financial Officer,
Treasurer and Secretary
of the Company
Keith W. Ritzmann, 45 10,802 * 200 *
Senior Vice President and Chief Information
Officer, Controller and Assistant Secretary
of the Company
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Shares of the Company's Common Stock
Principal Occupation and Class B Common Stock and Percent
During Past Five Years of Class Beneficially Owned (1)
------------------------------------------------- -----------------------------------------------------------------
Class B
Common Stock Percent Common Stock Percent
------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Gabelli Funds, Inc. 2,521,900 12.3% -0- *
One Corporate Center
Rye, NY 10580-1434
The Capital Group Companies, Inc. 1,285,000 6.2% -0- *
(5% shareholder)
333 South Hope St., 52nd Floor
Los Angeles, CA 90071
All Directors and Executive 10,307,116 50.1% 10,990,807 99.4%
Officers as a group (8 persons)
</TABLE>
- ----------
(1) Unless otherwise indicated, represents shares over which each nominee
exercises sole voting or investment power.
(2) Barry Ackerley and Gail Ackerley are husband and wife. Includes 7,264
shares of Common Stock and 264 shares of Class B Common Stock held by Gail
A. Ackerley, of which Mr. Ackerley disclaims beneficial ownership.
(3) Barry Ackerley and Gail Ackerley are husband and wife. The amount shown
includes 10,186,779 shares of Common Stock and 10,959,765 shares of Class
B Common Stock held by Barry A. Ackerley, of which Ms. Ackerley disclaims
beneficial ownership.
(4) Includes 18,966 shares of Class B Common Stock held by his minor children,
for which William Ackerley exercises sole voting and investment power as
custodian under the Washington Uniform Transfer to Minor Act.
* Indicates amounts equal to less than 1% of the outstanding shares.
Section 16(a) - Beneficial Ownership Compliance
Our directors and executive officers, and persons holding more than ten
percent (10%) of our outstanding Common Stock and Class B Common Stock, are
required to report their share ownership to the Securities and Exchange
Commission. In general, those parties must report their share ownership (1) when
they become directors, executive officers or ten percent shareholders, and (2)
whenever they engage in share transactions involving our Common Stock and Class
B Common Stock.
Federal securities laws impose strict deadlines for filing such reports. In
addition, we are required to disclose, in this Proxy Statement, any failure by
our directors and executive officers to file reports in accordance with
deadlines.
Based upon the written representations of our directors and executive
officers, and copies of the reports that they have filed with the Securities and
Exchange Commission, we have determined that our directors and executive
officers have timely filed all of the reports that they were required to file
during 1997, with the exception of M. Ian G. Gilchrist who failed to report his
gift of 1,780 shares of Common Stock effected on December 4, 1997 on Form 5 by
February 14, 1998. Mr. Gilchrist subsequently reported the transaction on Form
5, filed on March 16, 1998.
12
<PAGE>
Stock Purchase Agreements
In 1981, we entered into various Stock Purchase Agreements with several key
employees. Under the Stock Purchase Agreements, we became obligated to sell
shares of our Common Stock and Class B Common Stock to various parties at a
price per share equal to the fair market value of the stock when the agreements
were executed.
In 1989, we entered into amendments to some of the Stock Purchase
Agreements. Under those agreements, as amended, the holders may purchase shares
at any time within ten years from the date of the amendment. The holders can
purchase the shares with funds which have been credited to escrow accounts,
which are subject to certain earlier termination provisions.
Under certain circumstances, we may have a right of first refusal on the
sale of any shares of Common Stock and Class B Common Stock acquired pursuant to
the Stock Purchase Agreements. In connection with the Class B Common Stock
dividend in June 1987, we amended the Stock Purchase Agreements to provide for
the distribution of one share of Class B Common Stock at no extra cost to the
holder for each share of Common Stock subject to the Stock Purchase Agreement at
the time such Common Stock is purchased.
As of December 31, 1997, there was an aggregate of 52,500 shares of Common
Stock and an equal number of shares of Class B Common Stock subject to Stock
Purchase Agreements, at a weighted average purchase price per share of $2.00 per
share of Common Stock. During 1997, no rights to purchase Common Stock or Class
B Common Stock under any Stock Purchase Agreement were exercised. No executive
officers hold outstanding Stock Purchase Agreements.
Stock Options
Stock Option Plan
From time to time, we issue stock options to certain employees eligible to
receive such options pursuant to our Employees Stock Option Plan. The plan was
approved by our Board of Directors and our stockholders in 1983. In 1994, the
plan was amended, with the approval of the shareholders, to, among other things,
extend the plan's term and to increase the number of shares available for stock
option grants. A total of 1,000,000 shares of Common Stock have been authorized
and reserved for issuance under the plan. The terms of all options granted under
the plan, other than options granted to a 10% shareholder, may not exceed ten
years.
The plan allows us to grant both "incentive stock options" and
"nonqualified stock options" to our employees, including our corporate officers.
"Incentive stock options" are options which, as required by Section 422 of the
Internal Revenue Code of 1986, as amended, must have exercise prices equal to or
greater than the fair market value of the Common Stock on the date the options
are granted. The exercise price of any incentive stock options granted to
employees who own more than 10% of the voting rights of our outstanding capital
stock, however, must equal at least 110% of the fair market value on the grant
date and the maximum term of the option must not exceed five years.
13
<PAGE>
Nonstatutory stock options are not subject to the special exercise price
restriction imposed upon incentive stock options by the Internal Revenue Code.
The exercise price of all nonstatutory stock options granted under the plan is
determined by our Board of Directors in its sole discretion.
Our Board of Directors administers the plan, and determines employees who
are granted options and the terms of those options (including the term of the
option, exercise price, number of shares subject to the option and the
exercisability of the option). Options cannot be transferred other than by will
or the laws of descent and distribution. Only the holder can exercise the
options granted to him or her during his or her lifetime.
Generally, options vest and become exercisable five years from the date of
grant and terminate ten years from the date of grant. Options may terminate
earlier, however, if the holder's employment is terminated. If we merge with
another corporation, or if we sell substantially all of our assets, then (i)
each option outstanding at that time must be assumed by the surviving
corporation, (ii) an equivalent substitute option must be provided by the
surviving corporation, or (iii) our Board of Directors may take other action,
including authorizing unvested options to become exercisable at an earlier time.
As of December 31, 1997, we had granted options to purchase an aggregate of
320,600 shares of Common Stock and all of which remain outstanding at a weighted
average exercise price of $4.75 per share, leaving 230,250 shares of Common
Stock available for future grants under the plan. During 1997, stock options for
367,400 shares of Common Stock were exercised.
Option Grants in Last Fiscal Year
Pursuant to our Stock Option Plan, we have, from time to time, granted
options to acquire shares of our Common Stock to some of our officers. No
options were granted, to any of our officers during 1997.
Option Exercises in Last Fiscal Year
This table includes the number of shares covered by both exercisable and
non-exercisable stock options held by each of our executive officers as of
December 31, 1997. Also reported are the values for "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
14
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
- -------------------------------------------------------------------------------------------------------------------
No. of Shares
Underlying Value of
Unexercised Options Unexercised
at Fiscal In-the-Money Options
Year-End at Fiscal Year-End
Shares Acquired Value exercisable/ exercisable/
Name on Exercise Realized ($) unexercisable (#) unexercisable ($)
- -------------------------- ----------------------- ------------ ---------------------- ---------------------
<S> <C> <C> <C> <C>
Barry A. Ackerley N/A N/A N/A N/A
Gail A. Ackerley N/A N/A N/A N/A
William N. Ackerley 30,000 421,875 -0-/20,000 -0-/186,200
Denis M. Curley 40,000 562,500 -0-/30,000 -0-/363,125
Keith W. Ritzmann 10,000 140,625 -0-/ 5,000 -0-/ 46,563
</TABLE>
Repricing, Replacement or Cancellation and Regrant of Options
No adjustments or amendments to the exercise price of stock options
previously awarded to any of our executive officers were made at any time during
1997.
Savings and Retirement Plan
In 1978, we adopted our Savings and Retirement Plan. The Savings and
Retirement Plan was amended, effective January 1, 1985, to convert it to a plan
qualified under Section 401(k) of the Internal Revenue Code, as amended.
All employees who have served at least three months as of the beginning of
a calendar quarter, including employees of our subsidiaries who are not covered
by a collective bargaining agreement, may participate in the plan. We may waive
the exclusion of employees subject to collective bargaining agreements in
individual cases. As of December 31, 1997, all of our subsidiaries were
participating in the plan.
The plan allows eligible employees to elect to have their base salary
reduced from 2% to 15%, up to limit imposed by the Internal Revenue Code. We
then contribute that amount, plus an equal amount provided by us (up to a
maximum of 4% of the employee's pre-reduction monthly salary), to an
independently managed trust. We also may make an additional voluntary
contribution, which is allocated pro rata among all participating employees
based on the amount of their contributions during a particular year.
Our obligation to provide additional compensation vests over a period of 5
years. Once an employee has completed 3 years of service, we begin contributing
a portion of the additional contribution. Once an employee has completed 5 years
of service, we contribute 100% of the additional contribution. We may be
obligated to contribute 100% before an employee completes 5 years of service if
he or she turns 65, becomes totally disabled or dies.
15
<PAGE>
All amounts contributed by an employee, and those portions of the amounts
contributed by us that have vested, are payable in a single lump sum or a
qualified joint and survivor annuity upon retirement, total disability, death or
termination of employment. The amounts that we contributed on behalf of our
named executive officers during 1997 is disclosed in the Summary Compensation
Table under the column entitled "All Other Compensation."
Shareholder Return Performance Presentation
The SEC requires us to include in this Proxy Statement a line-graph
presentation comparing cumulative, five-year shareholder returns on an indexed
basis with the S&P 500 Stock Index or other broad market index performance and
either a nationally recognized industry standard or an index of peer companies
that we select. We have selected the S&P 500 Stock Index and the mutual fund,
Fidelity Select Multimedia Portfolio, as an index of peer companies.
The following chart compares total cumulative shareholder return for $100
invested in the Common Stock of The Ackerley Group, Inc. on December 31, 1992
with the cumulative total return of the S&P 500 Stock Index and Fidelity Select
Multimedia Portfolio for the five most recently completed fiscal years.
Comparison of Five Year Cumulative Total Return
Among The Ackerley Group, Inc., S&P 500 Index Abd
Fidelity Select Multimedia Portfolio
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Base 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
The Ackerley Group, Inc. $100 $205 $257 $581 $895 $1,290
S&P 500 Index $100 $100 $105 $141 $170 $223
Fidelity Select Multimedia $100 $138 $143 $192 $194 $246
16
<PAGE>
Certain Relationships and Related Transactions
Aircraft Transaction
In June 1990, a corporation owned by our Co-Chair and Chief Executive
Officer, Barry A. Ackerley, and our Co-Chair and one of our Co-Presidents, Gail
A. Ackerley, entered into an agreement with one of our subsidiaries to provide
air transportation services for the Seattle SuperSonics and other purposes. The
agreement called for monthly fees of approximately $63,000 for such services.
This agreement terminates in Mid-1998.
Family Relationships
During 1997, we employed William N. Ackerley and Kimberly Cleworth, both of
whom are the children of Barry A. Ackerley and Gail A. Ackerley. William
Ackerley serves as our Co-President and Chief Operating Officer. Details
regarding his compensation, stock ownership, and related matters is set forth
above. Kimberly Cleworth served as our Vice President of Marketing through June
13, 1997, when her employment terminated. She was paid a total of $63,489 during
1997 as compensation.
Advances
From time to time we have advanced funds to certain executive officers for
their personal use. Interest on that indebtedness accrues at the same rate as
that charged to us on our senior bank debt, which is presently 7.5%.
Since January 1, 1995, the highest aggregate amount of such loans to Barry
A. Ackerley was $1,025,000. For the years ended December 31, 1997, 1996 and
1995, the aggregate outstanding principal amounts of such loans were $1,025,000,
$-0- and $-0-, respectively. In August 1997, we advanced $123,977 to William N.
Ackerley, and $165,303 to Denis Curley.
Relationship with Independent Public Accountant
The firm of Ernst & Young LLP performed the audit of our consolidated
financial statements for the year ended December 31, 1997. The Board of
Directors has appointed Ernst & Young LLP as our independent auditors for the
current year. Shareholders are not required to take action on this selection.
Representatives of Ernst & Young LLP will be present at the Annual Meeting. They
will be given the opportunity to present a statement if they so desire and will
be available to respond to appropriate questions.
17
<PAGE>
Information Concerning Shareholder Proposals
Proposals of shareholders intended to be presented at the Annual Meeting of
Shareholders scheduled to be held May 3, 1999 must be received for inclusion in
the Proxy Statement and form of Proxy relating to that meeting by November 30,
1998.
By Order of the Board of Directors
-----------------------------------------
Seattle, Washington Denis M. Curley
March 27, 1998 Co-President and Chief Financial Officer,
Secretary and Treasurer
===============================================================================
YOUR VOTE IS IMPORTANT
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Annual Shareholders Meeting in person. If
you do attend the Annual Shareholders Meeting, you may then withdraw your proxy.
Any person giving a proxy may revoke it prior to its exercise.
===============================================================================
18
<PAGE>
FOURTH RESTATED
CERTIFICATE OF INCORPORATION
OF
THE ACKERLEY GROUP, INC.
The present name of this corporation is The Ackerley Group, Inc. (the
"Corporation"). The Corporation was incorporated under the name Ackerley
Incorporated. By adopting this Fourth Restated Certificate of Incorporation, the
Third Restated Certificate of Incorporation is being further amended by adding
Article FOURTH, Part 7. The original Certificate of Incorporation of the
Corporation was filed on June 9, 1978. This Fourth Restated Certificate of
Incorporation was duly proposed by the directors and adopted by the stockholders
of the Corporation in accordance with the provisions of accordance with the
provisions of Sections 245, 242, and 228 of the Delaware General Corporation
Law.
The Corporation's Third Restated Certificate of Incorporation is amended
and restated to read in full as follows:
FIRST: The name of the Corporation is The Ackerley Group, Inc.
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, and the name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of all classes of stock which the
Corporation is authorized to issue is SIXTY-ONE MILLION FOUR HUNDRED SIX
THOUSAND FIVE HUNDRED TEN (61,406,510), divided into two (2) classes as follows:
(i) Fifty Million (50,000,000) shares of Common Stock with a par value of One
Cent ($.01) per share (the "Common Stock"); and (ii) Eleven Million Four Hundred
Six Thousand Five Hundred Ten (11,406,510) shares of Class B Common Stock with a
par value of One Cent ($.01) per share (the "Class B Common Stock").
A statement of the designations and the powers, preferences and rights and
the qualifications, limitation or restrictions shall be as to the Common Stock
and Class B Common Stock as set forth below:
COMMON STOCK
Except as otherwise provided herein, all shares of Common Stock and Class B
Common Stock will be identical and will entitle the holders thereof to the same
rights and privileges.
1
<PAGE>
Part 1. Voting Rights.
Except as otherwise required by law, the holders of Common Stock will be
entitled to one (1) vote per share on all matters to be voted on by the
Corporation's stockholders. The holders of Class B Common Stock will be entitled
to ten (10) votes per share on all matters to be voted on by the Corporation's
stockholders. Neither the Common Stock nor the Class B Common Stock shall have
cumulative voting rights, whether voting as separate classes or a single class.
Except as otherwise required by law, Common Stock and Class B Common Stock shall
vote as a single class on all matters presented for a vote of the stockholders
of the Corporation.
Part 2. Restrictions an Transfer of Class B Common Stock.
(a) No person holding shares of Class B Common Stock of record (a "Class B
Holder") may transfer, and the Corporation shall not register the transfer of,
any shares of Class B Common Stock, whether by sale, assignment, gift, bequest,
appointment, or otherwise, except to a Permitted Transferee (a "Permitted
Transfer"). The term Permitted Transferee has the following meanings with
respect to each Class B Holder:
(i) The following persons shall be "Permitted Transferees" of each
Class B Holder who is a natural person:
A. The spouse or former spouse of such Class B Holder; any
Original Holder (as defined in clause (c) of this Part 2) or the
spouse or former spouse of any Original Holder; any lineal descendant
of any Original Holder or of the spouse or former spouse of any
Original Holder; and any spouse or former spouse of such lineal
descendant (hereinafter such Class B Holder's "Family Members");
B. The trustee or trustees of a voting trust of which a
Controlling Number (as defined in clause (c) of this Part 2) of such
trustees are any of the following (each a "Qualified Persons"): (1)
such Class B Holder, (2) one of such Class B Holder's Family Members,
(3) an executive officer (as defined in Rule 3b-7 of the General Rules
and Regulations under the Exchange Act, as in effect on July 21, 1987,
the effective date of the Second Restated Certificate of
Incorporation) of the Corporation or any wholly owned subsidiary of
the Corporation, or (4) any person who is the duly designated initial
or subsequent successor of an Original Holder in accordance with the
terms of such voting trust;
C. The trustee or trustees of a trust (other than a voting trust)
solely for the benefit, of such Class B Holder or one or more of such
Class B Holder's Permitted Transferees described in each subclause of
this clause (a) other than subclause (b) or this subclause (c);
D. Any organization contributions to which are deductible for
federal income, estate or gift tax purposes or any split-interest
trust described in Section 664 of the Internal Revenue Code as it may
from time to time be amended, and of which a Controlling Number of the
members of the Board or Directors or other
2
<PAGE>
governing body or group having the ultimate authority, inter alia, to
vote, dispose or direct the voting or disposition of the shares of
Class B Common Stock held by such organization ("Governing Body") are
Qualified Persons (a "Charitable Organization");
E. A corporation of which a majority of the outstanding shares of
capital stock entitled to vote generally for the election of directors
is beneficially owned by, or a partnership of which a majority of the
partnership interests entitled to participate in the management of the
partnership are beneficially owned by, such Class B Holder or his or
her Permitted Transferees described in each subclause of this clause
(i) other than this subclause (E); and
F. If the Class B Holder is deceased, bankrupt or insolvent, the
estate of such Class B Holder.
(ii) In the case of one or more Class B Holders holding shares of
Class B Common Stock as trustees pursuant to a voting trust or any other
trust (other than a Charitable Organization or a trust described in clause
(d) below) as a result of a Permitted Transfer, "Permitted Transferee"
means, with respect to each share of Class B Common Stock so transferred to
such trustees, (A) any person who transferred such share of Class B Common
Stock to such trustees and (B) any Permitted Transferee of any such
transferor, and, with respect to each Subsequent Class B Share (as defined
in (c) of this Part 2) held by such trustees, any person who is a Permitted
Transferee with respect to the share of Class B Common Stock in respect of
which such Subsequent Class B Share was issued.
(iii) In the case of one or more Class B Holders holding shares of
Class B Common Stock as trustees pursuant to a trust (other than a voting
trust or a Charitable Organization) which was irrevocable on July 21, 1987,
the effective date of the Second Restated Certificate of Incorporation,
"Permitted Transferee" means any person to whom or for whose benefit
principal may be distributed either during or at the end of the term of
such trust whether by power of appointment or otherwise.
(iv) In the case of any Charitable Organization that is a Class B
Holder, "Permitted Transferee" means, (A) with respect to any share of
Class B Common Stock transferred to such Charitable Organization in a
Permitted Transfer, the transferor in such Permitted Transfer and any
Permitted Transferee of such transferor and (B) with respect to each
Subsequent Class B Share held by such Charitable Organization, any person
who is a Permitted Transferee with respect to the share of Class B Common
Stock in respect of which such Subsequent Class B share was issued.
(v) In the case of a Class B Holder that is a corporation or
partnership (other than a Charitable Organization) holding shares of Class
B Common Stock as a result of a Permitted Transfer, "Permitted Transferee"
means with respect to each share of Class B Common Stock so transferred to
such corporation or partnership (A) any person who transferred such share
are of Class B Common Stock to such corporation or partnership
3
<PAGE>
and (B) any Permitted Transferee of any such transferor, and, with respect
to each Subsequent Class B Share held by such corporation or partnership,
any person who is a Permitted Transferee with respect to the share of Class
B Common Stock in respect of which such Subsequent Class B Share was
issued.
(vi) In the case of a Class B Holder that is the estate of a deceased,
bankrupt or insolvent Class B Holder, "Permitted Transferee" means a
Permitted Transferee of such deceased, bankrupt or insolvent Class B
Holder.
(b) Notwithstanding anything to the contrary set forth herein, any Class B
Holder may pledge his shares of Class B Common Stock to a pledgee pursuant to a
bona fide pledge of such shares as collateral security for indebtedness due to
the pledgee, provided that such shares shall not be transferred to or registered
in the name of pledgee and shall remain subject to the provisions of this Part
2. In the event of foreclosure or other similar action with respect to such
shares by the pledgee, such pledges shares of Class B Common Stock may only he
transferred to a Permitted Transferee of the pledgor or converted into shares of
Common Stock, as the pledgee may elect.
(c) For purposes of this Part 2:
(i) The term "Controlling Number" means the minimum number of
trustees, in the case of a trust, or members of a Governing Body, in the
case of any other form of entity, whose affirmative vote is necessary to
take any action on, or whose negative vote, abstention or failure to attend
is sufficient to prevent any action with respect to the voting or
disposition of shares of capital stock held by such entity;
(ii) The term "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(iii) The term "Original Holder" means any person to whom or trust to
which shares of Class B Common Stock are issued in connection with the
first issuance of such shares as a part of the 1987 stock dividend of the
Corporation.
(iv) The term "Subsequent Class B Share" means any share of Class B
Common Stock issued by the Corporation to a Class B Holder in respect of an
existing share of Class B Common Stock held by such Class B Holder.
(v) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(vi) A minor for whom shares of Class B Common Stock are held pursuant
to the Uniform Gifts to Minors Act, as in effect in any state, or any
similar law, shall be considered a Class B Holder.
(vii) Unless otherwise specified, the term "person" means both natural
persons and legal entities.
4
<PAGE>
(viii) Without derogating from the election conferred upon the
Corporation pursuant to paragraph clause (d) below, each reference to a
corporation shall include any successor corporation resulting from merger
or consolidation, and each reference to a partnership shall include any
successor partnership resulting from the death or withdrawal of a partner.
(ix) The term "beneficial owner" has the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the Exchange Act,
as in effect on July 21, 1987, the effective date of the Second Restated
Certificate of Incorporation.
(d) If at any time after July 21, 1987, the effective date of the Second
Restated Certificate of Incorporation, any of the following events shall occur:
(i) A Controlling Number of the trustees of any voting trust that is a
Class B Holder shall cease to be Qualified Persons;
(ii) A Controlling Number of the Governing Body of any Charitable
Organization that is a Class B Holder shall cease to be Qualified Persons;
or
(iii) A corporation or partnership that first became a Class B Holder
as a result of a Permitted Transfer shall thereafter by reason of any
transfer of the beneficial ownership of the capital stock or partnership
interests thereof cease to be a Permitted Transferee of the transferor in
such Permitted Transfer;
then, at any time after the occurrence of any such event, upon the election of
the Corporation given by written notice to the trustees of such voting trust,
Charitable Organization, corporation or, partnership, as the case may be,
without further act on anyone's part, each share of Class B Common Stock held by
such entity shall be converted into one share of Common Stock, effective upon
the giving of such notice, and the stock certificates formerly representing the
shares of Class B Common Stock held by such entity shall thereupon and
thereafter be deemed to represent such shares of Common Stock.
(e) Anything contained in this Part 2 to the contrary notwithstanding:
(i) Shares of Class B Common Stock may be registered in the names of
more than one person only if each person in whose name the shares of Class
B Common Stock are to be registered is a Permitted Transferee of each such
other person. If shares of Class B Common Stock are registered in the names
of more than one person in accordance with this subclause (i), then any
transfer of such shares of Class B Common Stock to any Permitted Transferee
of any person in whose name such shares are registered shall he a Permitted
Transfer.
(ii) Any transfer of shares of Class B Common Stock to an employee
benefit plan established and maintained by the Corporation or any wholly
owned subsidiary of the Corporation or any trustee or fiduciary with
respect to any such plan in such capacity
5
<PAGE>
shall be a Permitted Transfer, and any such plan, trustee or fiduciary
shall be a Permitted Transferee of any Class B Holder.
(f) Any purported transfer of record or beneficial ownership of shares of
Class B Common Stock other than in accordance, with the terms of this Part 2
shall, without any act on anyone's part, result in the conversion of each share
of the purportedly transferred share of Class B Common Stock into one share of
Common Stock effective on the date of such purported transfer, and the stock
certificates formerly representing such shares of Class B Common Stock shall
thereupon and thereafter be deemed to represent such number of shares of Common
Stock.
(g) Shares of Class B Common Stock may be issued to, or registered in the
names of the beneficial owners thereof, or in "street" or "nominee" name. The
Corporation may, in connection with preparing a list of stockholders entitled to
vote at any meeting of stockholders, or as a condition to the transfer or the
registration of shares of Class B Common Stock on the Corporation's books,
require the furnishing of such affidavits or other proof as it deems necessary
to establish that the registered owner of such shares is in fact the beneficial
owner of such shares.
(h) The Corporation shall note on the certificates for shares of Class B
Common Stock that the shares represented by such certificates are subject to the
restrictions on transfer and registration of transfer imposed by this Part 2.
Part 3. Dividends. When and as dividends are declared thereon, whether
payable in cash, property or securities of the Corporation, the holders of the
Common Stock and Class B Common Stock will be entitled to share equally, share
for share, in such dividends.
Part 4. Conversion.
4.01 Conversion of Class B Common Stock. Each record holder of Class B
Common Stock is entitled, at any time to convert any or all of the shares of
such holder's Class B Common Stock into the same number of shares of Common
Stock; provided, that no holder of Class B Common Stock is entitled to convert
any share or shares of Class B Common Stock to the extent that, as a result of
such conversion, such holder or its affiliates would directly or indirectly own,
control, or have power to vote a greater quantity of securities of any kind
issued by the Corporation than such holder and its affiliates are permitted to
own, control or have power to vote under any law or under any regulation, rule
or other requirement of any governmental authority at any time applicable to
such holder and its affiliates. The Corporation shall at all times reserve and
keep available, solely for the purpose of issuance upon conversion of
outstanding shares of Class B Common Stock, such number of shares of Common
Stock as may be issuable upon the conversion of all such outstanding shares of
Class B Common Stock.
4.02 Conversion Procedure.
(a) Each conversion of shares of Class B Common Stock into shares of Common
Stock will be effected by the surrender of the certificate or certificates
representing the shares to be converted at the principal office of the
Corporation or, at the Corporation's election, at the
6
<PAGE>
office of the Corporation's designated transfer agent at any time during normal
business hours, together with a written notice by the holder of such Class B
Common Stock, stating that such holder desires to convert the shares, or a
stated number of shares, of Class B Common Stock represented by such certificate
or certificates into Common Stock and that upon such conversion such holder and
its affiliates will not directly or indirectly own, control or have the power to
vote a greater quantity of securities of any kind issued by the Corporation than
such holder and its affiliates are permitted to own, control or have the power
to vote under any applicable law, regulation, rule or other governmental
requirement (and the receipt of such statement will obligate the Corporation to
issue such Common Stock). Such conversion will be deemed to have been effected
on the date on which such certificate or certificates have been surrendered and
such notice has been received, and at such time the rights of the holder of the
converted Class B Common Stock as such holder will cease and the person or
persons in whose name or names the certificate or certificates for shares of
Common Stock are to be issued upon such conversion will be deemed to have become
the holder or holders of record of the shares of Common Stock represented
thereby.
(b) Promptly after such surrender and the receipt of such written notice,
the Corporation will issue, and deliver in accordance with the surrendering
holder's instructions (a) the certificate or certificates for the Common Stock
issuable upon such conversion and (b) a certificate representing any Class B
Common Stock which was represented by the certificate or certificates delivered
to the Corporation in connection with such conversion but which was not
converted.
(c) If the Corporation in any manner subdivides or combines the outstanding
shares of the class of Common Stock or Class B Common Stock, the outstanding
shares of the other class will be proportionately subdivided or combined.
(d) The issuance of certificates for Common Stock upon conversion of Class
B Common Stock, will be made without charge to the holders of such shares for
any issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such conversion and the related issuance of Common Stock.
(e) The Corporation will not close its books against the transfer of Class
B Common Stock or of Common Stock issued or issuable upon conversion of Class B
Common Stock in any manner which would interfere with the timely conversion of
Class B Common Stock.
Part 5. Registration of Transfer.
The Corporation will keep at its principal office (or such other place as
the Corporation reasonably designates) a register for the registration of shares
of Common Stock and Class B Common Stock. Upon the surrender of any certificate
representing shares of any such class at such place, the Corporation or its
designated transfer agent will, at the request of the registered holder of such
certificate, execute and deliver a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares of such class
represented by the surrendered certificate, and the Corporation forthwith will
cancel such surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of
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shares of such class as is requested by the holder of the surrendered
certificate and will be substantially identical in form to the surrendered
certificate. The issuance of new certificates will be made without charge to the
holders of the surrendered certificates for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such issuance.
Part 6. Replacement.
Upon receipt of evidence, reasonably satisfactory to the Corporation (an
affidavit of the registered holder will be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing one or
more shares of Common Stock or Class B Common Stock, and in the case of any such
loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to
the Corporation (provided that if the holder is an institutional investor its
own agreement will be satisfactory) or, in the case of any such mutilation upon
surrender of such certificate, the Corporation will (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the number of shares of such class represented by such lost, stolen, destroyed
or mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
Part 7. New York Stock Exchange, Inc.
Nothing contained in this Certificate shall impair the settlement of
transactions entered into through the facilities of the New York Stock Exchange,
Inc.
FIFTH: So long as the Corporation or any of its subsidiaries hold authority
from the Federal Communications Commission (or any successor thereto) to operate
any television or radio broadcast station, if the Corporation has reason to
believe that the ownership, or proposed ownership, of shares of capital stock of
the Corporation by any stockholder or any person presenting any shares of
capital stock of the Corporation for transfer into his name (a "Proposed
Transferee") may be inconsistent with, or in violation of, any provision of the
Federal Communications Laws (as hereinafter defined) such stockholder or
Proposed Transferee, upon request of the Corporation, shall furnish promptly to
the Corporation such information (including without limitation, information with
respect to citizenship, other ownership interests and affiliations) as the
Corporation shall reasonably request to determine whether the ownership of, or
the exercise of any rights with respect to, shares of capital stock of the
Corporation by such stockholder or Proposed Transferee is inconsistent with, or
in violation of, the Federal Communications Laws. For purposes of this Article
FIFTH, the term "Federal Communications Laws" shall mean any law of the United
States now or hereafter in effect (and any regulation thereunder) pertaining to
the ownership of, or the exercise of rights of ownership with respect to capital
stock of corporations holding, directly or indirectly, television or radio
station authorizations, including, without limitation, the Communications Act of
1934, as amended (the "Communications Act") , and regulations thereunder
pertaining to the ownership, or the exercise of the rights of ownership, of
capital stock of corporations holding, directly or indirectly, television or
radio station authorizations, by (i) aliens, as defined in or under the
Communications Act, as it may be amended from time to time, (ii) persons and
entities having interests in television or radio stations, newspapers and cable
television systems or (iii) persons
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or entities, unilaterally or otherwise, seeking direct or indirect control of
the Corporation, as construed under the Communications Act, without having
obtained any requisite prior Federal regulatory approval to such control.
If any stockholder or Proposed Transferee from whom information is
requested should fail to respond to such request pursuant to the first paragraph
of this Article or the Corporation shall conclude that the ownership of, or the
exercise of any rights of ownership with respect to, shares of capital stock of
the Corporation, by such stockholder or Proposed Transferee, could result in any
inconsistency with, or violation of, the Federal Communications Laws, the
Corporation may refuse to permit the transfer of shares of capital stock of the
Corporation to such Proposed Transferee, or may suspend those rights of stock
ownership the exercise of which would result in any inconsistency with, or
violation of, the Federal Communications Laws, such refusal of transfer or
suspension to remain in effect until the requested information has been received
or until the Corporation has determined that such transfer, or the exercise of
such suspended rights, as the case may be, is permissible under the Federal
Communications Laws, and the Corporation may exercise any and all appropriate
remedies, at law or in equity, in any court of competent jurisdiction, against
any such stockholder or Proposed Transferee, with a view towards obtaining such
information or preventing or curing any situation which would cause any
inconsistency with, or violation of, any provision of the Federal Communications
Laws.
The Corporation may note on the certificates of its capital stock that the
shares represented by such certificates are subject to the restrictions set
forth in this Article.
For purposes of this Article, the word "person" shall include not only
natural persons but partnerships, associations, corporations, joint ventures and
other entities and the word "regulation" shall include not only regulations but
rules, published policies and published controlling interpretations by an
administrative agency or body empowered to administer a statutory provision of
the Federal Communications Laws.
SIXTH: Provisions for the management of the business and for the conduct of
the affairs of the Corporation and provisions creating, defining, limiting and
regulating the powers of this Corporation, the directors and stockholders are as
follows:
(1) The board of directors shall have the power to make, adopt, alter,
amend and repeal the bylaws of the Corporation without the assent or vote of the
stockholders, including, without limitation, the power to fix, from time to
time, the number of directors which shall constitute the whole board of
directors of the Corporation subject to the right of the stockholders to alter,
amend and repeal the bylaws made by the board of directors,
(2) Election of directors of the Corporation need not be written ballot
unless the bylaws so provide.
(3) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the board of directors of the Corporation are
hereby expressly empowered to exercise all such powers and to do all such acts
and things as may be exercised or done by the
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Corporation; subject, nevertheless, to the provisions of the statutes of the
State of Delaware and of the Certificate of Incorporation as they may be
amended, altered or changed from time to time and to any bylaws from time to
time made by the directors or stockholders; provided, however, that no bylaws so
made shall invalidate any prior act of the board of directors which would have
been valid if such bylaw had not been made.
SEVENTH: The Corporation shall, to the full extent permitted by law,
including, without limitation, Section 145 of the Delaware General Corporation
Law, indemnify all directors, officers, employees, agents and other persons whom
it may indemnify pursuant thereto against any liability, and the expenses
incurred in defense of such liability, that may be asserted, against or incurred
by such person arising out of such person's status with or service to or at the
request of the Corporation. The Corporation shall pay the expenses of any
director or officer in defense of such liability in advance of the final
disposition of the matter upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation. Nothing contained
herein shall be deemed to require or make mandatory the purchase and maintenance
of insurance as may be permitted under Section 145(g) of the Delaware General
Corporation Law.
EIGHTH: No director or former director of the Corporation shall be
personally liable to this Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (a) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) pursuant to Section
174 of the Delaware General Corporation Law, (d) for any transaction from which
the director derived an improper personal benefit, or (e) for any act or
omission occurring prior to the date this Article EIGHTH became effective. Any
repeal or modification of this Article EIGHTH shall not adversely affect any
right or protection of a director or former director of the Corporation existing
at the time of such repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification.
DATED: May 14, 1998.
THE ACKERLEY GROUP, INC.
--------------------------------------
Barry A. Ackerley
Co-Chair and Chief Executive Officer
ATTEST:
- -----------------------------------------
Denis M. Curley
Co-President and Chief Financial Officer,
Secretary and Treasurer
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PROXY
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE ACKERLEY GROUP, INC.
PLEASE SIGN AND RETURN IMMEDIATELY
The undersigned hereby appoints Keith W. Ritzmann and Carmen L. Smith, and each
of them (with full power to act alone), proxies, with the powers the undersigned
would possess if personally present, and with full power of substitution, to
vote all shares of the voting common stock (including Common Stock and Class B
Common Stock) of The Ackerley Group, Inc., Seattle, Washington ("Company")
standing in my name as of March 25, 1998, at the Annual Shareholders Meeting to
be held at The Rainier Club, 820 Fourth Avenue, Seattle, Washington, on Monday,
May 4, 1998, at 9:00 a.m. Pacific Daylight Time, or at any adjournments thereof,
with all the powers the undersigned would possess if personally present, as
follows:
1. ELECTION OF DIRECTORS. In the election of a new Board of Directors, I
direct that my Shares be voted as follows:
FOR all of the nominees listed below (except for those nominees listed
in the following space):
----------------------------------------------------------
AGAINST the nominees listed below.
ABSTAIN from voting my shares for all nominees.
Barry A. Ackerley - Gail A. Ackerley - Richard P. Cooley
M. Ian G. Gilchrist - Michel C. Thielen
2. AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION. I direct that my
shares be voted as follows in the restatement of the Company's Certificate
of Incorporation, including the amendment of Article Fourth, Part 7:
FOR the amendment and restatement of the Company's Certificate of
Incorporation
AGAINST the amendment and restatement of the Company's Certificate of
Incorporation
ABSTAIN from voting my shares for the amendment and restatement of the
Company's Certificate of Incorporation
3. WHATEVER OTHER BUSINESS may properly be brought before the meeting or any
adjournment thereof.
===============================================================================
YOUR VOTE IS IMPORTANT
We urge you to sign and return this proxy as promptly as possible, whether
or not you plan to attend the Annual Shareholders Meeting in person. If you
do attend the Annual Shareholders Meeting, you may then withdraw your
proxy. Any person giving a proxy may revoke it prior to its exercise.
===============================================================================
We are aware of no other matters that may properly be, or which are likely to
be, brought before the meeting. However, if any other matters are properly
presented at the meeting, this proxy will be voted in accordance with the
recommendations of the management.
PLEASE SIGN AND DATE HERE:
-----------------------------------------------------------
Dated: ____, 1998 -----------------------------------------------------------
When signing as attorney, executor, administrator, trustee
or guardian, please give full title. If more than one
trustee, all should sign. Joint owners must sign.
