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:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE TODD-AO CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box:
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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 identity the filing for which the offsetting fee
was paid previously, Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY COPY 02/01/96
THE TODD-AO CORPORATION
900 N. Seward Street
Los Angeles, California 90038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 19, 1996
To the Stockholders:
The Annual Meeting of Stockholders of The Todd-AO Corporation, a
Delaware corporation, will be held at Todd-AO Studios, 900 N. Seward Street,
Los Angeles, CA 90038 on March 19, 1996, at 10:30 a.m. for the following
purposes:
1. To elect a Board of Directors.
2. To extend the expiration date of the 1986 Option Plan from August 31,
1996: (i) to August 31, 1997 with respect all outstanding non-qualified stock
options presently scheduled to expire on 08/31/96 (relating to an aggregate of
167,960 Class A Shares); and (ii) to August 31, 1998 with respect to one half
of such options.
3. To increase the number of shares reserved for issuance under the 1995
Stock Option Plan from 440,000 to 770,000.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on February 9, 1996
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
DATED: February , 1996
/s/ Dan Malstrom
Dan Malstrom
Secretary
THE TODD-AO CORPORATION
PROXY STATEMENT FOR 1996 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
Description Page
Information Concerning the Meeting 1
Record Date and Voting Rights 1
Voting of Proxies; Revocability 1
Ownership by Naify Interests 1
Solicitation of Proxies 1
Beneficial Ownership of Certain Persons 2
Election of Directors 2
Director Nominees 2
Meetings 5
Committees 5
Compensation Committee Interlocks
and Insider Participation 5
Other Officers 6
Executive Compensation 6
Summary Compensation Table 6
Option/SAR Grants Table 7
Option/SAR Exercises and Value Table 7
Employment Agreements 8
Report of the Compensation Committee 8
Report of the Stock Option/SAR Committee 9
Section 16(a) Reporting 9
Stock Performance Graph 9
Stock Options and Stock Appreciation Rights 10
1986 Stock Option Plan 10
1991 Stock Appreciation Rights Plan 10
1994 Stock Option Plan 11
1995 Stock Option Plan 11
Proposal to Extend and Amend
the 1986 Stock Option Plan 11
General 11
Purpose for Amendment 11
Description of Amendment 12
New Plan Benefit Table 12
Additional Information 13
Proposal to Amend the 1995 Stock Option Plan 13
General 13
Purpose for Amendment 13
Description of Amendment 13
Additional Information 13
Independent Auditors 14
Stockholder Proposals 14
Transaction of Other Business 14
PAGE 1
THE TODD-AO CORPORATION
900 N. Seward Street
Los Angeles, California 90038
The accompanying proxy is solicited by the Board of Directors of The
Todd-AO Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held on March 19, 1996 at 10:30 a.m., and at any
adjournment of the meeting, for the purposes set forth in the accompanying
notice.
INFORMATION CONCERNING THE MEETING
Record Date and Voting Rights
Only stockholders of record as of the close of business on February 9,
1996 are entitled to notice of and to vote at the meeting. On that date there
were outstanding 6,378,027 shares of Class A Stock and 1,703,639 shares of
Class B Stock. The holders of shares of Class A and Class B Stock are
entitled to, respectively, one vote and ten votes for each share held.
Stockholders are not entitled to cumulate their votes in connection with the
election of directors.
Voting of Proxies; Revocability
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, they will be voted FOR the election of
management nominees for directors and FOR Proposals 2, 3 and 4. Any
stockholder may revoke his or her proxy at any time before it has been
exercised by written notice to the Company, by submission of a proxy bearing
a later date or by voting in person at the meeting.
Ownership by Naify Interests
On the record date for this meeting, the Naify Interests owned of
record and beneficially 3,067,871 shares of Class A Stock (43.77% of the total
outstanding Class A Stock) and 1,703,639 shares of Class B Stock (97.51% of
the total outstanding Class B Stock) and have over 80% of the combined voting
power of both classes of stock. As a result, stockholder approval of the
proposals is virtually assured, notwithstanding negative votes by other
stockholders.
Solicitation of Proxies
Solicitation of proxies in the accompanying form is made by the Board of
Directors and the cost thereof will be borne by the Company. In addition to
the use of the mails, management may solicit proxies by telephone, telegraph
and personal interview. Brokers, nominees and other similar record holders
will be requested to forward soliciting material to persons who have a
beneficial interest in the Class A Stock registered in the name of such
nominees and will be reimbursed for their reasonable out-of-pocket expenses
by the Company.
This Proxy Statement was first mailed to stockholders on or about February
16, 1996.
PAGE 2
BENEFICIAL OWNERSHIP OF CERTAIN PERSONS
The following table sets forth certain information as of February 9, 1996
with respect to the beneficial ownership of the Company's Class A and Class B
Stock by each person who is known to the Company to own beneficially more
than 5% of the outstanding shares, based on share amounts furnished by the
respective persons:
<TABLE>
<CAPTION>
Class A and B Stock Beneficially Owned
as of February 9, 1996:
Number of Shares(1) Percent(1)
Name and Address Class A Class B Class A Class B
<S> <C> <C> <C> <C>
Heine Securities (2) 652,442 -- 9.30% --
Corporation
51 JFK Parkway
Short Hills, NJ 07078
Salah M. Hassanein 500,443 -- 7.14% --
514 Via de la Valle
Suite 300A
Solana Beach, CA 92075
Naify Interests (3) 3,067,871 1,703,639 43.77% 97.51%
172 Golden Gate Avenue
San Francisco, CA 94102
</TABLE.>
Notes:
(1) All share and percentage amounts assume the issuance of 631,060 Class A
Shares underlying stock options exercisable within 60 days which are deemed
beneficially owned by the optionees.
(2) Schedule 13G filed on 2/10/95 by Heine Securities Corporation and
Michael F. Price indicates that Heine Securities Corporation has sole
investment discretion and voting authority with respect to the Class A
shares, which are legally owned by one or more of its investment advisory
clients.
(3) The Naify Interests (consisting of Marshall Naify, Robert A. Naify,
various members of their families and trusts for the benefit of such members)
may be deemed to constitute a "group" for purposes of Section 13(d) of the
Securities Exchange Act of 1934. Additional information concerning the
beneficial ownership of Marshall Naify and Robert Naify is set forth in the
table contained in the next section.
ELECTION OF DIRECTORS
At the meeting a Board of twelve directors will be elected to hold
office until the next annual meeting of stockholders and until their
respective successors are duly elected and qualified. Each of the nominees
was elected at the Annual Meeting of Stockholders on February 7, 1995.
Election of each nominee requires the affirmative votes of a majority of the
total combined votes of the Class A and Class B shares.
Director Nominees
Set forth on the following pages is certain information concerning
director nominees which is based on data furnished by them. Messrs. A. C.
Childhouse, Richard Hassanein, Salah Hassanein, Marshall Naify and Robert
A. Naify were formerly associated in various capacities with United Artists
Communications, Inc., which has since been acquired by Tele-
Communications, Inc.
PAGE 3
</TABLE>
<TABLE>
<CAPTION>
Company Position; Class A and B Stock Beneficially Owned
Business Experience During as of February 9, 1996:
Nominees for During Past Five Years; Number of Shares Percent
Directors Age and Other Information Class A Class B Class A Class B
<S> <C> <C> <C> <C> <C>
A.C. Director of the Company. 41,087 -- .59% --
Childhouse Mr. Childhouse, age 86, is an
investor and has been a
director of the Company
since 1964.
J. R. DeLang Executive Vice President of the 52,800(1) -- .75% --
Company's Todd-AO Studios
division. Mr. DeLang, age 40,
was previously Todd-AO Studios'
Vice President of Sales and
Marketing (1988-90) and its
Director of Sales and Marketing
(1987-88). He was first elected
a director of the Company in 1993.
Richard C. Executive Vice President of 15,400(1) -- .22% --
Hassanein the Company's Todd-AO Studios
West subsidiary since 1995.
Mr. Hassanein, age 44, was
previously the Executive Vice
President of the Company's
Todd-AO Studios East subsidiary
and an independent representative
for film and television producers.
He is the son of Salah M. Hassanein
and was first elected a director
of the Company in 1993.
Salah M. President and Chief Operating 500,443(1) -- 7.14% --
Hassanein Officer of the Company and a director
since 1962. Mr. Hassanein, age 74, was the
President of Warner Bros. International
Theatres Co. until June 30, 1994. He is also a
principal in SMH Entertainment, Inc. and
a director of Laser Video Network.
Herbert L. Director of the Company. 26,386 -- .38% --
Hutner Mr. Hutner, age 87, is a
financial consultant and
has been a director of the
Company since 1987.
Christopher President of Todd-AO Studios 59,400(1) -- .85% --
D. Jenkins (since 1990) and previously its
Vice President. Mr. Jenkins, age 41,
has been a director of the Company
since 1987.
</TABLE>
PAGE 4
<TABLE>
<CAPTION>
Company Position; Class A and B Stock Beneficially Owned
Business Experience During as of February 9, 1996:
Nominees for During Past Five Years; Number of Shares Percent
Directors Age and Other Information Class A Class B Class A Class B
<S> <C> <C> <C> <C> <C>
Robert I. Consultant to the Company. 72,789(1) -- 1.04% --
Knudson Mr. Knudson, age 70, served as
President of Todd-AO/Glen Glenn
Studios until 1990 and has been
a director of the Company since
1983.
Marshall Co-Chairman and Co-CEO of the 1,040,302 678,839 14.84% 38.85%
Naify Company and a director since 1974 (1)(2) (2)
Mr. Naify, age 75, is an investor and
the brother of Robert A. Naify.
Michael S. Director of the Company. 210,963(4) -- 3.01% --
Naify Mr. Naify, age 33, was previously
a Vice President of the Company.
Prior thereto, he was a student
and the owner of an import/export
business. He is the son of Marshall
Naify and was first elected a
director of the Company in 1993.
Robert A. Co-Chairman and Co-CEO of the 1,065,914 906,290 15.21% 51.87%
Naify Company and a director since 1959. (1)(3) (3)
Mr. Naify, age 73, has a variety of
business interests and is a director
of Tele-Communications, Inc.
Robert J. Mr. Naify, age 32, is a Vice President 100,053(4) -- 1.43% --
Naify of Excelsior Management
Corporation, which is owned by
the Naify Interests and administers
certain of their investments.
From 1990-92, he was involved
in operations at Todd-AO/Glen Glenn
Studios and prior thereto participated
in the construction and operation of
a Spanish golf course. Mr. Naify
is the son of Robert A. Naify and was
first elected a director of the Company
in 1993.
Zelbie Director of the Company. 4,400 -- .06% --
Trogden Mr. Trogden, age 59, has been a
financial consultant and a director of
Citadel Holding Corporation and Fidelity
Federal Bank since 1993. Prior thereto, he held
various executive positions with Bank of
America and Security Pacific National Bank.
He was first elected a director of the
Company in 1994.
All Directors
and Executive
Officers as a
Group
(15 Persons) 3,211,437 1,585,129 45.82% 90.72%
</TABLE>
PAGE 5
Notes on Stock Ownership:
(1) Includes stock options exercisable within 60 days by Messrs. DeLang,
R. Hassanein, S. M. Hassanein, Jenkins, Knudson, Marshall Naify, R. A. Naify,
Trogden and other executive officers as a group to purchase, respectively,
52,800, 14,300, 110,000, 59,400, 40,700, 50,050, 50,050, 4,400 and 12,100
Class A Shares.
(2) Includes 30,166 Class A Shares held by a trust for which Mr. Naify is
both a trustee and a beneficiary. Excludes 106,092 Class A Shares held by an
independent trustee for the benefit of three of Mr. Naify's children. Mr.
Naify disclaims ownership of the shares held by the independent trustee.
(3) Excludes 461,212 Class A Shares held of record or beneficially by Mr.
Naify's adult children and grandchildren as to which he disclaims beneficial
ownership.
(4) Includes 40,062 and 21,439 Class A Shares held by trusts of which Michael
S. Naify and Robert J. Naify are the respective beneficiaries.
Additional information concerning the beneficial ownership of Marshall
Naify and Robert A. Naify and their families is set forth under the caption
"BENEFICIAL OWNERSHIP OF CERTAIN PERSONS." By reason of their
stock ownership and their positions with the Company, Robert A. Naify and
Marshall Naify may be deemed to be "control persons" of the Company within
the meaning of the rules and regulations of the Securities and Exchange
Commission.
Meetings
During the fiscal year ended August 31, 1995, the Board of Directors
held five meetings. The only directors who failed to attend at least 75% of the
meetings of the Board of Directors were Robert A. Naify and Robert J. Naify.
Committees
The Company has an Executive Committee composed of Messrs. Salah
Hassanein, Marshall Naify and Robert A. Naify. The functions of the
Executive Committee include acting on matters which by reason of time
limitations cannot be acted upon by the Board of Directors and studying
matters which are anticipated to be considered by the Board in the future.
During the fiscal year ended August 31, 1995, the Executive Committee held
no formal meetings, but met informally on a number of occasions.
The Company also has Compensation and Audit Committees each consisting
of Messrs. Childhouse, Hutner and Trogden. The principal functions of the
Compensation Committee are to review and make recommendations to the
Board of Directors concerning executive compensation. The Compensation
Committee acted once during the fiscal year ended August 31, 1995. The
Audit Committee makes recommendations to the Board concerning the
engagement of independent auditors, reviews the auditing engagement, its
results and the Company's internal accounting controls, and directs
investigations into matters within the scope of its functions. The Audit
Committee met once during the fiscal year ended August 31, 1995.
A Committee consisting of Messrs. Childhouse and Hutner administers
the Company's Stock Option Plans and its Stock Appreciation Rights Plan.
This Committee acted three times during the fiscal year ended August 31,
1995.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is an employee of
the Company.
PAGE 6
Other Officers
Information concerning the officers of the Company who are not also
directors is incorporated by reference from pp. 8-9 of the Annual Report on
Form 10-K which was mailed concurrently with this Proxy Statement.
EXECUTIVE COMPENSATION
Summary Compensation Table
Directors receive no cash compensation for their services as directors.
The following table shows, for the years ended August 31, 1995, 1994 and
1993, all forms of compensation for the Chief Executive Officer and each of
the most highly compensated executive officers of the Company whose total
annual salary and bonus exceeded $100,000 for the year ended August 31,
1995.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Other Restricted LTIP
Annual Stock Pay-
Name and Bonus Comp. Awds. Options/ outs All Other
Principal Position Year Salary($) ($) ($) ($) SARs (#) ($ ) Compensation ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert A. Naify 1995 5,000 -- -- -- 66,000 -- --
Co-Chairman of 1994 -- -- -- -- 110,000 -- --
the Board and 1993 -- -- -- -- -- -- --
Co-Chief Executive
Officer
The Todd-AO
Corporation
Marshall Naify 1995 5,000 -- -- -- 66,000 -- --
Co-Chairman of 1994 -- -- -- -- 110,000 -- --
the Board and 1993 -- -- -- -- -- -- --
Co-Chief Executive
Officer
The Todd-AO
Corporation
Salah M. Hassanein 1995 100,001(1) -- -- -- 66,000 -- --
President and COO 1994 100,000(1) -- -- -- 110,000 -- --
The Todd-AO 1993 100,000(1) -- -- -- -- -- --
Corporation
J.R. DeLang (1) 1995 293,942 -- -- -- 44,000 -- 19,168(2)
Executive Vice 1994 203,876 -- -- -- -- -- 3,073(2)
Todd-AO Studios 1993 192,347 -- -- -- -- -- 3,229(2)
Christopher D. Jenkins 1995 465,981(3) -- -- -- 44,000 -- 3,385(3)
President 1994 471,920(3) -- -- -- -- -- 4,146(3)
Todd-AO Studios 1993 296,506(3) -- -- -- -- -- 3,632(3)
</TABLE>
PAGE 8
Notes to Summary Compensation Table:
(1) Amounts shown as salary include professional fees of $80,000 for 1995,
1994 and 1993.
Notes to Summary Compensation Table (Continued):
(2) Amounts shown as "All Other Compensation" represent contributions made
by the Company under a collective bargaining agreement to the Motion Picture
Industry Pension Plan on Mr. DeLang's behalf.
(3) Amounts shown as salary include compensation of $365,981, $388,586 and
$246,506 for 1995, 1994 and 1993 respectively attributable to services as a
sound mixer. Amounts shown as "All Other Compensation" represent
contributions made by the Company under a collective bargaining agreement to
the Motion Picture Industry Pension Plan on Mr. Jenkins' behalf.
Option/SAR Grants Table
The following table shows all individual grants of stock options and
stock appreciation rights ("SARs") during the fiscal year ended August 31,
1995 to each of the executive officers named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
% of
Total
Options/
SARs
Options/ Granted to Exercise
SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Robert A. Naify 66,000 11.38% 4.95 4/18/2000 90,261 199,454
Marshall Naify 66,000 11.38% 4.95 4/18/2000 90,261 199,454
Salah M. Hassanein 66,000 11.38% 5.06 8/31/2004 193,787 482,831
J. R. DeLang 22,000 3.79% 4.73 8/31/2004 65,015 164,580
J. R. DeLang 22,000 3.79% 5.06 8/31/2004 64,596 160,944
Christopher D. Jenkins 11,000 1.90% 4.73 8/31/2004 32,508 82,290
Christopher D. Jenkins 33,000 5.69% 5.06 8/31/2004 96,894 241,415
</TABLE>
Option/SAR Exercises and Value Table
The table on the following page shows each exercise of stock options and SARs
during the fiscal year ended August 31, 1995 by each of the executive officers
named in the Summary Compensation Table, together with the respective
aggregate values of unexercised options and SARs as at August 31, 1995:
PAGE 8
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Robert A. Naify -- $ 75,000 28,050/147,950 $171,595/$866,916
Marshall Naify -- $ 75,000 28,050/147,950 $171,595/$866,916
Salah M. Hassanein -- $112,500 74,800/101,200 $408,962/$658,126
J. R. DeLang -- $ 35,000 44,000/22,000 $273,194/$114,567
Christopher D. Jenkins -- $ 53,750 50,600/15,400 $317,418/$79,011
</TABLE>
Employment Agreements
The Company has Employment Agreements with Messrs. Jenkins and
DeLang. Under Mr. Jenkins' agreement (dated January 1, 1994 and expiring
December 31, 1996) compensation for sound mixing services is paid on an
hourly basis at 300% of the minimum union rate. Mr. Jenkins receives an
additional $100,000 per year for management and administrative services. The
agreement with Mr. DeLang (dated October 1, 1994 and expiring September
30, 1997) provides for a salary of $285,000 for the twelve months ending
09/30/95, $300,000 for the twelve months ending 09/30/96 and $320,000 for
the twelve months ending 09/30/97.
Neither of the foregoing agreements involve any termination or
change-in-control payments. The Company's Stock Option Plans provide that
the unvested portion of the awards will become vested and exercisable in
connection with a change-in-control.
REPORT OF THE COMPENSATION COMMITTEE
Securities and Exchange Commission rules require a disclosure of the
Compensation Committee's policies applicable to the Company's executive
officers with respect to compensation reported for the fiscal year ending
August 31, 1995. During the fiscal year, the Compensation Committee
approved a new employment agreement with J. R. DeLang. Mr. DeLang's
compensation is commensurate with his responsibilities and consistent with
that earned by other executives of comparable experience. Compensation
levels for the Company's full time executives are generally determined
primarily by reference to competitive levels for individuals of like
experience in similar positions and by prior performance with the
Company rather than by relationship to corporate performance.
PAGE 9
The Company's compensation policy is to provide a reasonably
competitive level of current compensation to its executives together with
long term equity incentives, the value of which depends upon performance that
increases value to the stockholders. The Company does not presently pay cash
bonuses to its executives and the equity incentives consist solely of stock
options vesting over five year periods, which the Committee believes
encourages commitment and provides benefits directly related to corporate
performance.
COMPENSATION COMMITTEE
A. C. Childhouse
Herbert L. Hutner
Zelbie Trogden
REPORT OF THE STOCK OPTION/SAR COMMITTEE
During fiscal 1995 the Committee approved the grant of replacement
stock options for an aggregate of 385,990 Class A Shares in connection with
the exercise of a like number of Stock Appreciation Rights ("SARs")
outstanding under the Company's 1991 SAR Plan, including 66,000 shares each
for Messrs. Marshall Naify, Robert A. Naify and Salah M. Hassanein, 44,000
Class A Shares each to Messrs. Chris Jenkins and J. R. DeLang and an
aggregate of 24,750 shares to other officers and directors. The replacement
options were issued to encourage the exercise of existing SARs, in order to
reduce the Company's cash compensation expense and to minimize the impact
of fluctuations in the Company's stock price upon corporate earnings. In
addition to the replacement options, the Committee approved the issuance of
new options to Messrs. Christopher Jenkins and J. R. DeLang (relating to
11,000 and 22,000 shares respectively) in view of their performance and
consistent with the Company's policy of providing long term equity
incentives which correspond to the performance of the Class A Stock.
STOCK OPTION/SAR COMMITTEE
A. C. Childhouse
Herbert L. Hutner
SECTION 16(a) REPORTING
Section 16(a) of the Exchange Act requires the Company's officers,
directors and 10% shareholders to file reports of ownership with the SEC and
to provide the Company with copies of such filings. Based upon inquiries
made and a review of the copies received, the Company believes that its
executive officers, directors and 10% shareholders were in compliance with
Section 16(a) for the fiscal year ended August 31, 1995, except for Messrs.
Coburn Haskell (Form 3 filing reporting appointment as Vice
President/Controller) and Silas Cross (Form 4 filing reporting exercise of
stock option).
STOCK PERFORMANCE GRAPH
The graph on the following page compares the yearly percentage change in
the cumulative total shareholder return on the Company's Class A Common
Stock during the five years ended August 31, 1995 with the cumulative total
return on the NASDAQ Stock Market Index (U. S. Companies) and a selected
peer group index consisting of NASDAQ stocks with a Standard Industrial
Classification similar to the Company's.
PAGE 10
(GRAPH)
<TABLE>
<CAPTION>
The Todd-AO Corporation
Five Year Performance Comparison
Year End Data
08/31/90 08/31/91 08/31/92 08/31/93 08/31/94 08/31/95
<S> <C> <C> <C> <C> <C> <C>
The Todd-AO Corporation 100.0 95.6 92.7 84.0 146.8 237.3
NASDAQ Stock Market 100.0 141.9 153.9 203.0 211.4 284.4
NASDAQ Peer Group 100.0 65.5 74.8 163.8 118.8 131.6
(SIC 7810-7819 US + Foreign)
Motion Picture Production
and Allied Services
</TABLE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company presently has three stock option plans (the 1986 Stock
Option Plan, the 1994 Stock Option Plan and the 1995 Stock Option Plan), and
a recently terminated stock appreciation rights plan (the 1991 Stock
Appreciation Rights Plan). All plans relate solely to Class A shares.
1986 Stock Option Plan
The Company's 1986 Stock Option Plan (the "1986 Plan") was approved by
the shareholders in July 1987. The 1986 Plan provides for the grant of
incentive stock options (at not less than 100% of fair market value on the date
of the grant), non-qualified stock options (at not less than 85% of fair market
value on the date of the grant) or a combination thereof. An aggregate of
660,000 Class A Shares was originally reserved for issuance under the 1986
Plan, which is administered by the Stock Option/SAR Committee. Options to
purchase an aggregate of 375,035 shares were outstanding under the 1986 Plan
at February 9, 1996 as incentive and non-qualified options at exercise prices
ranging from $2.03 to $5.06 per share. On February 7, 1995, the
shareholders approved an extension of the termination date of the 1986 Plan
until August 31, 2004 with respect to options for an aggregate of 213,675
shares granted on September 26, 1994. Nonqualified options to purchase an
aggregate of 167,960 shares are fully vested and presently scheduled to expire
on August 31, 1996. If Proposal No. 1 is approved, the termination date of the
1986 Plan with respect to these options will be extended in increments until
August 31, 1997 and August 31, 1998.
1991 Stock Appreciation Rights Plan
The Company's 1991 Stock Appreciation Rights Plan (the "1991 Plan") was
approved by the shareholders in July 1991. The 1991 Plan provides for the
grant to Company employees, directors and consultants of up to 660,000
stock appreciation rights ("SARs") which upon exercise entitle the grantee
to receive cash equal to the difference between the fair market value of
the stock at the date of exercise and the appreciation base, which in turn
is usually the fair market value of the stock on the grant date. The 1991
Plan is also administered by the Stock Option/SAR Committee. An aggregate
of 385,990 SARs were exercised during April and May of 1995 and a like
number of stock options were issued under the 1995 Stock Option Plan. The
remaining 11,000 SARs were exercised in January 1996, terminating the 1991
Plan.
PAGE 11
1994 Stock Option Plan
The Company's 1994 Stock Option Plan (the "1994 Plan") was approved by the
shareholders in August 1994. The 1994 Plan provides for the grant of
incentive stock options (at not less than 100% of fair market value on the
date of the grant), non-qualified stock options (at not less than 85% of fair
market value on the date of the grant) or a combination thereof. An
aggregate of 330,000 shares has been reserved for issuance under the 1994
Plan. All of those shares have been awarded to Salah Hassanein (at an
exercise price of $3.26 per share) and Marshall Naify and Robert A. Naify
(at an exercise price of $3.59 per share) as incentive options to purchase
110,000 Class A Shares each. The options vest over a five year period
commencing on September 1, 1994 and once vested terminate on August 31,
2003 (in the case of Mr. Hassanein) and 06/23/99 (in the case of Messrs.
Naify and Naify). As of February 9, 1996, there were no options available
for grant under the 1994 Plan and absent forfeitures it is not expected that
any additional options will be awarded. The 1994 Plan is administered by
the Stock Option/SAR Committee.
1995 Stock Option Plan
The Company's 1995 Stock Option Plan (the "1995 Plan") was
approved by the shareholders in February 1995. The 1995 Plan provides for
the grant of incentive stock options (at not less than 100% of fair market
value on the date of the grant), non-qualified stock options (at not less
than 85% of fair market value on the date of the grant) or a combination
thereof. An aggregate of 440,000 shares was originally reserved for
issuance under the 1995 Plan. Options to purchase an aggregate of 421,960
shares were outstanding under the 1995 Plan at February 9, 1996 as incentive
and non-qualified options at exercise prices ranging from $4.50 to $5.29 per
share. The options vest over a five year period commencing on or near the
date of grant and once vested terminate on August 31, 2004. As of February
9, 1996, there were 18,040 options available for grant under the 1995 Plan.
If Proposal No 2 is adopted, the number of shares reserved for issuance
under the 1995 Plan will be increased by 330,000. The 1995 Plan is
administered by the Stock Option/SAR Committee.
PROPOSAL TO EXTEND AND AMEND
THE 1986 STOCK OPTION PLAN
General
The Board of Directors proposes to extend the 1986 Stock Option Plan
with respect to outstanding nonqualified options to purchase an aggregate of
167,960 shares, at exercise prices ranging from $2.03 to $2.96, which are
presently scheduled to expire on August 31, 1996 (the "Expiring Options").
The proposed amendment would extend the term of all Expiring Options until
August 31, 1997 and, with respect to 50% of the Expiring Options held by
each optionee, until August 31, 1998.
Purpose for Amendment
Generally, the holder of a non-qualified stock option is required to
recognize at the time of exercise ordinary income equal to the difference
between the fair market value of the shares on the date of exercise and the
exercise price, whether or not the underlying shares are resold. In order to
exercise the option the holder must make a cash payment equal to the sum
of the income tax iability (which increases with the market price of the
underlying shares) and exercise price. This is a significant cash outlay
and in the short term most optionees can finance the option exercise
only by simultaneously selling all or a part of the underlying shares.
PAGE 12
The Company encourages long term equity ownership by its employees
but recognizes that under present circumstances most of the holders of
Expiring Options will have no alternative but to sell a large proportion of the
underlying shares on or prior to August 31, 1996. Accordingly, Proposal
No. 1 would extend the exercise date for all Expiring Options until
August 31, 1997 and until August 31, 1998 with respect to 50% of the
Expiring Options held by each optionee. The extensions are intended to
provide the holders with additional time to plan the exercise of the
Expiring Options in installments, to establish financing arrangements
and in general to facilitate ongoing ownership of the underlying shares for
those employees who wish to retain a continuing equity interest in the
Company.
Description of Amendment
Article I, Paragraph 7 of the 1986 Plan presently provides as follows:
" 7. TERM OF PLAN
Awards may be made under the Plan until August 31, 1996, the date of
termination of the Plan. Notwithstanding the foregoing, all options granted
under the Plan shall remain in effect until such options have been satisfied
by the issuance of shares, or terminated in accordance with their terms and
the terms of the Plan. Notwithstanding anything to the contrary herein, all
options granted under the Plan after August 31, 1994 shall remain
exercisable until a date no later than August 31, 2004."
The proposed amendment would restate the last sentence of Article I,
Paragraph 7 as follows:
Notwithstanding anything to the contrary herein: (i) all non-qualified
options outstanding under the Plan as of March 19, 1996 shall remain
exercisable until August 31, 1997 and one half of such outstanding non-
qualified options held by each optionee shall remain exercisable until
August 31, 1998; and (ii) all options granted under the Plan after August
31, 1994 shall remain exercisable until a date no later than August 31,
2004."
New Plan Benefit Table
The foregoing amendments may be deemed equivalent to the creation of a
new stock option plan for those individuals whose nonqualified options are
being extended. The following table sets forth information regarding the
expected benefits arising from Proposal No. 1 for each person named in the
Summary Compensation Table and for the indicated groups:
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
EXTENSION OF 1986 STOCK OPTION PLAN
Name and Principal Position Dollar Value ($)(1) Number of Units
<S> <C> <C>
Robert A. Naify -- --
Marshall Naify -- --
Salah M. Hassanein -- --
J.R. DeLang -- 22,000
Christopher D. Jenkins -- 11,000
Executive Group (2) -- 33,000
Non-Executive -- 27,500(3)
Director Group
Non-Executive Officer -- 107,460
Employee Group
</TABLE>
PAGE 13
Notes to New Plan Benefit Table:
(1) Proposal No. 1 does not affect the exercise prices of the Expiring
Options and thus there is no readily determinable dollar value associated
with extended term.
(2) This group consists of all executive officers.
(3) This group consists solely of Robert I. Knudson.
Additional Information
Adoption of the extension to the 1986 Plan requires the affirmative
votes of a majority of the total combined votes of the Class A and Class B
shares. The Board of Directors recommends a vote FOR this proposal.
PROPOSAL TO AMEND THE 1995 STOCK OPTION PLAN
General
The Board of Directors proposes to amend the 1995 Stock Option Plan
by increasing the number of shares reserved for issuance from 440,000 to
770,000.
Purpose for Amendment
The 1995 Plan was approved by the shareholders on February 7, 1995.
During April and May 1995 options to purchase an aggregate of 385,990
shares were issued in connection with the exercise of outstanding SAR awards.
See "Report of the Stock Option/SAR Committee." Options for an aggregate
of 38,500 shares have also been issued under the 1995 Plan independently of
the SAR exercises. As of February 9, 1996, there were only 18,040 shares
available for grant. The Board of Directors believes that it is in the
Company's best interests to reserve an additional 330,000 shares for
potential issuance to key personnel.
Description of Amendment
Section 3 of the 1995 Plan presently provides as follows:
"3. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that may be
issued under the Plan shall be authorized and unissued or reacquired shares
of the Company's Class A Stock. The aggregate number of shares which may be
issued under the Plan shall not exceed 400,000 shares of Class A Stock,
unless an adjustment is required by Section 12. To the extent that options
granted under the Plan terminate, expire or are canceled prior to exercise,
new options may be granted with respect to such shares."
The proposed amendment would substitute the number "770,000" for the
number "400,000" in the second sentence of Section 3.
Additional Information
Adoption of the 1995 Plan requires the affirmative votes of a majority
of the total combined votes of the Class A and Class B shares. The Board
of Directors recommends a vote FOR this proposal.
PAGE 14
INDEPENDENT AUDITORS
Deloitte & Touche serves as the Company's principal auditors. The
Company does not presently intend to request a representative of this firm to
attend the Annual Meeting.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the
Company's Annual Meeting to be held in 1997 and wishes to have such
proposal set forth in management's proxy statement, such stockholder must
forward the proposal to the Company so that it is received on or before the
later of (i) August 31, 1996, or (ii) a reasonable time before the proxy
materials for the annual meeting are mailed to stockholders. Proposals
should be addressed to the Company at 900 N. Seward Street, Los Angeles,
CA 90038 (Attention: Corporate Secretary).
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, there are no other matters which
management intends to present or has reason to believe others will present
to the meeting. If other matters are presented, proxies will be voted in
accordance with management's judgment unless instructions to the contrary
are given.
Dated: February , 1996
By Order of the
Board of Directors
/s/ Dan Malstrom
Dan Malstrom, Secretary
Form of Proxy Card:
THE TODD-AO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MARCH 19, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints Robert A. Naify, Silas R. Cross and Dan
Malstrom, and each of them, with power of substitution, as proxies of the
undersigned, to attend the Annual Meeting of Stockholders of The
Todd-AO Corporation to be held at Todd-AO Studios, 900 N. Seward
Street, Los Angeles, CA 90038, on March 19, 1996, at 10:30 A.M., and any
adjournment(s) thereof, and to vote all shares of Class A or Class B Stock
of The Todd-AO Corporation which the undersigned would be entitled to
vote if personally present on the following:
(1) The election of twelve directors for the ensuing year.
FOR all nominees listed WITHOUT AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed
below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below)
A. C. Childhouse, J. R. DeLang, Richard C. Hassanein, Salah M.
Hassanein, Herbert L. Hutner, Christopher D. Jenkins, Robert I. Knudson,
Marshall Naify, Michael S. Naify, Robert A. Naify, Robert J. Naify and
Zelbie Trogden.
(2) The extension of the expiration date of the 1986 Option Plan from
August 31, 1996: (i) to August 31, 1997 with respect all outstanding non-
qualified stock options presently scheduled to expire on 08/31/96 (relating
to an aggregate of 167,960 Class A Shares); and (ii) to August 31, 1998
with respect to one half of such options.
FOR AGAINST ABSTAIN
(3) The increase in the number of shares reserved for issuance under
the 1995 Stock Option Plan from 440,000 to 770,000.
FOR AGAINST ABSTAIN
(3) In their discretion, upon any and all such other matters as may
properly come before the meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE
OF DIRECTIONS, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS NOMINATED BY MANAGEMENT AND
FOR PROPOSALS 2, 3 and 4.
Dated: , 1996
(Signature)
(Signature)
Please sign exactly as
name appears at left.
Joint owners should each
sign. Attorneys,
administrators, trustees,
etc. should so indicate
when signing.
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND
RETURN THIS PROXY PROMPTLY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
