CLEAR CHANNEL COMMUNICATIONS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 29, 1997
As a shareholder of Clear Channel Communications, Inc. ("the
Company"), you are hereby given notice of and invited to attend, in
person or by proxy, the Annual Meeting of Shareholders of the
Company to be held at 200 Concord Plaza (Merrill Lynch Conference
Room-1st Floor), San Antonio, Texas on April 29, 1997, at 11:00
a.m., for the following purposes:
1. To elect directors for the coming year;
2. To select independent auditors for the year ending December
31, 1997;
3. To amend the Articles of Incorporation to increase the number
of authorized shares of Common Stock of the Company from 100
million to 150 million shares;
4. To transact any other business which may properly come before
the meeting.
Only shareholders of record at the close of business on March 3,
1997 are entitled to notice of and to vote at the meeting.
Your attention is invited to the accompanying Proxy Statement. In
addition, although mere attendance at the meeting will not revoke
the proxy, a shareholder present at the meeting may revoke his or
her proxy and vote in person. To assure that your shares are
represented at the meeting, please complete, date, sign and mail
the enclosed Proxy card in the return envelope provided for that
purpose.
By Order of the Board of Directors
Kenneth E. Wyker
Secretary
San Antonio, Texas
March 19, 1997
PROXY STATEMENT
Clear Channel Communications, Inc.
P.O. Box 659512
San Antonio, Texas 78265-9512
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 29, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation by the Board of the Directors (the "Board") of Clear
Channel Communications, Inc. ("the Company") of proxies for use at
the Annual Meeting of Shareholders to be held on April 29, 1997, or
at any adjournment thereof, as set forth in the accompanying
notice. A shareholder giving a proxy may revoke it at any time
before it is exercised by so notifying the Secretary of the Company
in writing or in person. Any proxy which is not revoked will be
voted at the meeting. The Proxy Statement is first being sent to
shareholders on or about March 19, 1997.
On March 3, 1997, the record date for determination of shareholders
entitled to notice of and to vote at the meeting, there were
77,256,347 shares of Common Stock outstanding. On all matters, each
share has one vote.
Votes cast by proxy or in person at the Annual Meeting will be
counted by the persons appointed by the Company to act as election
inspectors at the meeting. The election inspectors will treat
shares represented by proxies that reflect abstentions as shares
that are present and entitled to vote for purposes of determining
the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the shareholders for a vote.
Abstentions, however, do not constitute a vote for or against
any matter and thus will be disregarded in the calculation of a
plurality or of votes cast.
The election inspectors will treat shares referred to as broker
non-votes (i.e., shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or
persons entitled to vote that the broker or nominee does not have
discretionary power to vote on a particular matter) as shares that
are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the
outcome of any matter as to which the broker has physically
indicated on the proxy that it does not have discretionary
authority to vote, those shares will be treated as not present and
not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may
be entitled to vote on other matters).
In the election of directors, shares present but not voting will
be disregarded (except for quorum purposes). The election of
directors requires an affirmative vote by a majority of the
outstanding shares present and entitled to vote at the meeting.
In the vote to approve the proposal to amend the Company's
Articles of Incorporation, shares present but not voting will be
disregarded (except for quorum purposes). Approval of the
proposal requires an affirmative vote by at least two-thirds of
the outstanding shares present and entitled to vote at the
meeting.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The table below sets forth certain information about the persons
and entities known to the Company to own beneficially more than 5%
of the Company's outstanding stock. Such information is based upon
required notices previously filed with the Company. Such shares are
held in each shareholder's name or in a nominee account.
Shares of
Common Stock
Beneficially Percent
Owned at of
Name February 15, 1997 Class
L. Lowry Mays 15,099,919(1) 19.3%
500 Alameda Circle
San Antonio, TX 78212
B. J. McCombs 11,302,936(2) 14.5%
825 Contour
San Antonio, TX 78212
Putnam Investments 8,950,113 11.5%
One Post Office Square
Boston, Massachusetts
Pilgrim Baxter Associates 5,351,900 6.9%
1255 Drummers Lane #300
Wayne, Pennsylvania 19807-1590
(1) Includes presently exercisable options to acquire 560,000
shares and 108,680 shares held by trusts of which he is trustee,
but not beneficiary.
(2) Includes presently exercisable nonqualified options to acquire
40,000 shares and 3,201,726 shares held by trusts of which he is
trustee, but not beneficiary.
ELECTION OF DIRECTORS
AND DIRECTOR COMPENSATION
One of the purposes of the meeting is the election of directors.
The number of directors expected to constitute the entire board
following the election is five. Unless you indicate to the
contrary, the persons named in the accompanying proxy will vote
your shares for the election of the nominees named below as
directors. Although it is not envisioned that any nominee will
decline or be unable to serve, the proxies will be voted by the
proxy holders at their discretion for another person, or for a
lesser number of persons, if such a contingency should arise. The
term of each person elected as a director will continue until the
next annual meeting and until his successor is elected and
qualified. Outside directors are paid $5,000 for each meeting of
the Board they attend, plus members of the compensation committee
are paid $500 for each meeting of the compensation committee they
attend. In addition, in February 1993, each outside director was
granted options to purchase 31,250 shares of Common Stock of the
Company, 25,000 (except for John Williams, who presently has 10,000
options) of which are exercisable as of the date of this Proxy
Statement. In February 1994, each outside director was granted
options to purchase 25,000 shares of Common Stock of the Company,
15,000 of which are exercisable as of the date of this Proxy
Statement. The election of directors requires an affirmative vote
by a majority of the outstanding shares present and entitled to
vote at the meeting.
The table on the following page reflects the number of shares of
Common Stock beneficially owned by the directors of the Company as
of February 15, 1997, and the number of shares beneficially owned
by each of the named executive officers and the number of shares
beneficially owned by all directors and officers of the Company as
a group.
Shares of
Common Stock
Principal Year First Beneficially
Occupation Became Owned at
Name Age or Employment a Director February
Percent
15, 1997
of Class
L. Lowry Mays
(1)(5)(7) 61 Chairman & Chief 1972 15,099,919
19.3%
500 Alameda Circle Executive Officer
San Antonio, TX 78212 of the Company
Alan D. Feld
(a)(2)(3)(5) 60 Attorney with
4235 Bordeaux the law firm 1984 48,000
*
Dallas, TX 76205 Akin, Gump,
Strauss, Hauer
& Feld, L.L.P.
B. J. McCombs
(a)(3)(5) 69 Private Investor 1972 11,302,936
14.5%
825 Contour
San Antonio, TX 78212
Theodore H. Strauss
(a)(b)(c)(3)(5) 72 Senior Managing
5100 Park Lane Director 1984 128,743
*
Dallas, TX 75220 Bear, Stearns
& Co., Inc.
John H. Williams
(a)(b)(c)(4)(5) 63 Senior
7810 Glen Albens Vice President 1984 41,100
*
Circle Everen
Dallas, TX 75225 Securities, Inc.
Mark P. Mays
(7)(8) 33 President &
120 Primrose Chief Operating
San Antonio, TX 78209 Officer n/a 483,948
*
of the Company
W. Ripperton
Riordan 40 Executive Vice n/a 17,132
*
1701 Broadway President/COO
Street NE Clear Channel
Minneapolis, MN 55413 Television
Dave Ross 46 Vice President n/a 30,868
1975 E. Sunrise Blvd. Clear Channel
*
Ft. Lauderdale, FL 33304 Metroplex
J. Stanley Webb 53 Senior
3112 Brightwood Vice President n/a 91,850
*
Austin, TX 78746 Clear Channel
Radio and
Metroplex
All officers
and directors
as a group (15 persons) (6)
27,647,607 35.4%
Percentage of shares beneficially owned by such persons does not
exceed one percent of the class so owned
(a) Member of Compensation Committee
(b) Member of Audit Committee
(c) Member of Compensation Sub Committee
(1) Includes presently exercisable options to acquire 560,000
shares and 108,680 shares held by trusts of which he is
trustee, but not beneficiary.
(2) Does not include 32,480 shares of Common Stock owned by Mr.
Feld's wife, as to which he disclaims beneficial ownership.
(3) Includes presently exercisable nonqualified options to
acquire
40,000 shares and 3,201,726 shares held by trusts of which he
is trustee but not beneficiary.
(4) Includes presently exercisable nonqualified options to
acquire
25,000 shares.
(5) Nominee for Director.
(6) Includes presently exercisable options to acquire 846,199
shares and 3,353,570 shares held in trusts.
(7) Mark P. Mays, President and Chief Operating Officer of the
Company, and Randall T. Mays, Executive Vice President &
Chief
Financial Officer of the Company, are the sons of L. Lowry
Mays.
(8) Includes presently exercisable options to acquire 45,367
shares and 37,696 shares held by trusts of which he is
trustee, but not beneficiary
Each of the nominees has held the position listed above, or a
similar position with the same organization, for at least five
years.
The nominees for directors of the Company serve as directors for
the following corporations, some of which have a class of
securities registered pursuant to Section 12 or Section 15 of the
Securities Exchange Act of 1934: Mr. Feld is a director of
Centerpoint Properties, Inc.; Mr. Strauss is a director of Sizeler
Property, Inc. and Hollywood Casino; Mr. Williams is a director of
GAINSCO, Inc.
The Company's executive compensation program is administered by the
Compensation Committee of the Board which is composed of four
independent, non-employee directors and L. Lowry Mays, the Chief
Executive Officer ("CEO") of the Company. The Compensation
Committee ("the Committee"), which met once in 1996, recommends to
the Board compensation arrangements for all officers and directors
of the Company other than the CEO and for other key personnel of
its subsidiaries. Two of the independent, non-employee
directors ---
Messrs. Williams and Strauss --- serve as a separate subcommittee
of the Committee which determines the salary and incentive bonuses
to be paid to the CEO. L. Lowry Mays does not participate in this
subcommittee's evaluation and recommendation of the CEO's
compensation. The Committee annually evaluates the Company's
corporate performance, actual compensation and share ownership of
the executive officers, compared with both the Company's own
industry and a broader group of companies such as the S&P 500.
Please see the attached Board Compensation Committee Report which
details the basis on which the Committee determines executive
compensation.
The Audit Committee of the Board, which met once in 1996, reviews
the independent auditors' examination report.
During 1996, the Board held nine meetings. Each of the nominees
named above attended at least 75% of the aggregate of the total
number of meetings of the Board and the total number of meetings
held by committees of the Board on which that director served.
Compensation Committee Interlocks and Insider Participation
During 1996, the members of the Committee, which included Messrs.
Williams, Feld, Strauss and McCombs, were primarily responsible for
determining executive compensation, including decisions related to
stock option grants to executive officers. L. Lowry Mays, the
Company's Chief Executive Officer, is also a member of the
Compensation Committee and participated in deliberations concerning
executive officer compensation other than his own.
The Company paid fees in 1996 to the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. Alan Feld, a director of the Company,
is the sole shareholder of a professional corporation which is a
partner of such firm. The Company purchased in 1996 various forms
of insurance from Primera Insurance Company ("Primera"). B. J.
McCombs, a director of the Company, owns 75% of Primera. As part of
its operations, the Company leases certain office space in San
Antonio, Texas from the trusts of the children of L. Lowry Mays and
B. J. McCombs. This lease expires on December 31, 1997 with current
monthly rentals of $16,724. The Company believes all of the
transactions described above are no less favorable to the Company
than could be obtained with nonaffiliated parties.
EXECUTIVE COMPENSATION
The Company believes that compensation of its executive officers
and others should be directly and materially linked to operating
performance. For Fiscal Year 1996, the executive compensation
program consisted of the base salary, a bonus plan based on Company
profitability and individual performance and stock options that
generally become exercisable over a five year period.
The Company entered into a five-year employment agreement with L.
Lowry Mays, to serve as Chairman and CEO effective February 10,
1997. The employment agreement provides for a minimum annual base
salary of $750,000. The salary amount is subject to review by the
Compensation Committee of the Board and may be increased on an
annual basis at the beginning of each fiscal year. The term of the
employment agreement is automatically extended at the end of each
year by one additional year, in the absence of a notice of non-
extension from L. Lowry Mays. The employment agreement
contemplates that L. Lowry Mays will be awarded bonus compensation
as determined by the Compensation Committee of the Board. The
employment agreement also provides for severance compensation
payable as a lump sum in an amount equal to the amount of annual
salary that would have been paid over the remaining term of the
agreement, if termination occurs for any reason other than for
cause or resignation for other than "Good Reason," as defined in
the agreement. L. Lowry Mays was awarded a bonus for services
rendered in 1996 of $2,000,000, which was paid in 1997. The
compensation levels of the remaining four executives were based
primarily on the achievement of specific quantitative and
qualitative goals set at the beginning of the period.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned or paid by
the Company to the CEO and each of its other four highest
compensated executive officers whose total cash compensation
exceeded $100,000 for services rendered in all capacities for the
years ended December 31, 1996, 1995 and 1994.
Annual CompensationLong-term Compensation
_________________________________________________________________
____
Other
Annual Restricted
All Other
Compen- Stock LTIP
Compen-
Salary Bonussation AwardsOption/ Payout
sation
Name/Title Year ($) ($) ($) ($) SARs ($)
($)
L. Lowry Mays 1996 601,553 2,000,000 --- --- 60,000 ---
237,577(1)
Chairman 1995 598,217 1,500,000 --- --- --- ---
154,890(1)
and CEO 1994 577,396 1,000,000 --- --- 250,000 ---
202,282(1)
of the
Company
Mark P. Mays 1996 170,697 175,000 --- --- 13,704 ---
2,625(2)
President 1995 145,921 25,000 --- --- 27,408 ---
2,592(2)
and COO 1994 132,012 32,000 --- --- 12,308 ---
2,348(2)
of the
Company
W. Ripperton
Riordan 1996 199,278 25,000 --- --- --- ---
2,625(2)
Exec. VP/COO 1995 171,541 123,523 --- --- 10,000 ---
2,844(2)
Clear Channel 1994 157,845 45,000 --- --- 5,000 ---
2,762(2)
Television
Dave Ross 1996 157,956 66,111 --- --- 6,000 ---
2,625(2)
Vice President 1995 159,558 100,000 --- -- ---
2,771(2)
Clear Channel 1994 33,130 --- --- --- 6,000 ---
---
Metroplex
J. Stanley Webb1996 146,262 70,000 --- --- 10,000 ---
2,480(2)
Senior Vice 1995 101,949 55,000 --- --- 4,800 ---
1,750(2)
President 1994 101,984 37,000 --- --- --- ---
1,750(2)
Clear Channel
Radio
& Metroplex
(1)Represents $234,952, $151,656 and $199,048 paid by the Company
in 1996, 1995, and 1994, respectively, on a split-dollar life
insurance policy for L. Lowry Mays. Such amounts include the
entire dollar amount of the term life portion and the present
value to L. Lowry Mays of the interest-free use of the non-
term portion of each premium payment. The remainder represents
the amount of matching contributions paid by the Company under
the 401(k) plan.
(2) Represents the amount of 401(k) matching contributions paid by
the Company.
OPTIONS GRANTED DURING THE 1996 FISCAL YEAR
The following table discloses, for the CEO and other named
executives, information on options on the Company's Common Stock
(Options) granted to these executives during the Fiscal Year ended
December 31, 1996.
OPTION/SAR GRANTS TABLE
Individual Grants Option Value
___________________________________________________________________
Potential Realizable
Value at Assumed
Annual Rates of
% of Stock Price
Total Appreciation for
Options/ Option Term
SARs
Granted
to Exercise
Options Employees or
SARs in Base
Name/Title Granted Fiscal Price Expiration 5%
10%
(#) Year ($/share) Date ($)
($)
_________ ______ __________ ________ ________________
_________
L. Lowry Mays 60,000 26% 23.13 2/13/03 564,960
1,316,640
Chairman and CEO
of the Company
Mark P. Mays 13,704 6% 23.75 2/13/03 132,504
308,751
President and COO
of the Company
W. Ripperton
Riordan --- --- --- n/a ---
---
Exec. VP/COO
Clear Channel Television
Dave Ross 6,000 3% 23.13 2/13/03 56,496
131,664
Vice President
Clear Channel
Metroplex
J. Stanley Webb10,000 4% 32.56 4/25/03 94,160
219,440
Senior Vice
President
Clear Channel Radio
& Metroplex
OPTIONS EXERCISED DURING THE 1996 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table discloses, for the CEO and other named
executives, individual exercises of Options in the last fiscal year
and the number and value of Options held by such named executive at
December 31, 1996.
OPTION/SAR EXERCISES
AND YEAR-END VALUE TABLE
Value of
Number of Unexercised
Unexercised In-The-Money
Option/SARs Option/SARs
Shares at FY-End (#) at FY-End
($)
Acquired Value
on ExerciseRealized Non
Non
Name/Title (#) ($) Vested Vested Vested
Vested
L. Lowry Mays ------ ------ 677,187 ------ 19,642,186
---
Chairman and CEO
of the Company
Mark P. Mays ------ ------ 100,002 53,492 3,370,316
1,140,378
President and COO
of the Company
W. Ripperton
Riordan ------ ------ ------ 15,000 ---
303,375
Exec. VP/COO
Clear Channel
Television
Dave Ross ------ ------ ------ 12,000 ---
222,750
Vice President
Clear Channel
Metroplex
J. Stanley Webb ------ ------ 23,438 14,800 801,322
144,825
Senior Vice
President
Clear Channel Radio
& Metroplex
STOCK PERFORMANCE CHART / TABLE
The following table shows a five year comparison of the cumulative
total returns, adjusted for stock splits and dividends, for the Company,
the Paul Kagan Associates, Inc. Broadcasting Average, and the S&P 500
Composite Index. December 31, 1991 = 1.0
INDEXED YEARLY STOCK PRICE CLOSE
S&P 500 Paul Kagan Clear Channel
1991 1.0 1.0 1.0
1992 1.0 1.2 1.8
1993 1.1 1.6 5.1
1994 1.1 1.8 7.0
1995 1.5 2.5 12.2
1996 1.8 2.9 20.0
RETIREMENT PLAN
On March 1, 1987, the Company adopted the Clear Channel
Communications, Inc. 401(k) Savings Plan for the purpose of
providing retirement benefits for substantially all employees.
Employees eligible for this plan may defer as much as 10% of
their compensation per year, up to $9,500, for which the Company
contributes 35% of the first 5% of the employee's deferred
compensation. Company matched contributions vest to the employees
based on their number of years of service to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers
and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC and the
New York Stock Exchange. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that
no Form 5 disclosing delinquently reported transactions were
required for those persons, the Company believes that, during the
year ended December 31, 1996, all of its officers and directors
were in compliance with the applicable filing requirements.
SELECTION OF INDEPENDENT AUDITORS
Independent auditors are to be selected at the meeting, and unless
indicated to the contrary on the proxy, the persons named in the
accompanying proxy will vote for Ernst & Young LLP, who have served
as auditors of the Company for the most recent fiscal year.
Representatives of Ernst & Young LLP are expected to be present at
the meeting to respond to appropriate questions and will have an
opportunity to make a statement if they so desire. The Annual
Report to Shareholders of the Company, including financial
statements for fiscal year ended December 31, 1996, has preceded or
accompanies this proxy statement. The Annual Report to Shareholders
is not to be deemed part of this proxy statement.
PROPOSAL TO AMEND
ARTICLES OF INCORPORATION
The current authorized capital stock of the Company consists of
2,000,000 shares of preferred stock $1.00 par value ("Preferred
Stock"), and 100,000,000 shares of Common Stock, $.10 par value, of
which no shares of Preferred Stock and 77,256,347 shares of Common
Stock were issued and outstanding at March 3, 1997. The Board of
Directors, on February 10, 1997, adopted a proposed amendment to
Article IV of the Company's Articles of Incorporation increasing
the authorized number of shares of Common Stock from 100,000,000 to
150,000,000, for submission to the shareholders at the Annual
Meeting.
Holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders of the Company and
ratably to receive dividends, if any, as may be declared from time
to time by the Board of Directors from funds legally available
therefore, subject to the payment of any outstanding preferential
dividends declared with respect to any Preferred Sock that from
time to time may be outstanding.
Upon liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in any
assets available for distribution to shareholders after payment
of all obligations of the Company, subject to the rights to
receive preferential distributions of the holders of any
Preferred Stock then outstanding.
If the proposed amendment is approved, all or any part of the
authorized but unissued shares of Common Stock may thereafter be
issued without further approval from the shareholders, except as
may be required by law or the policies of any stock exchange on
which the shares of stock of the Company may be listed, for such
purposes and on such terms as the Board of Directors may
determine. Holders of the capital stock of the Company do not
have any preemptive rights to subscribe for the purchase of any
shares of Common Stock, which means that current shareholders do
not have a prior right to purchase any new issue of Common Stock
in order to maintain their proportionate ownership.
The proposed amendment will not affect the rights of existing
holders of Common Stock except to the extent that future
issuances of Common Stock will reduce each existing shareholders'
proportionate ownership.
If the proposed amendment is adopted, Section 1 of Article IV of
the Articles of Incorporation would be amended to read as
follows:
Authorized Shares. The aggregate number of shares which the
Corporation shall have the authority to issue is 152,000,000
shares, 150,000,000 of which shall be Common Stock ("Common
Stock"), par value of $.10 each, and 2,000,000 of which shall be
Preferred Stock ("Preferred Stock"), par value of $1.00 each.
The proposed amendment to Article IV will not change any other
aspect of Article IV.
The Board of Directors has determined that it would be
appropriate for the Company to increase the number of its
authorized shares of Common Stock in order to have additional
shares available for possible future acquisition or financing
transactions and other issuances, or to satisfy requirements for
additional reservations of shares by reason of future
transactions which might require increased reservations. The
Company plans to issue or reserve for issuance approximately nine
million shares of Common Stock upon the consummation of the
acquisition of Eller Media Corporation. Consummation of the
acquisition is subject to the terms and conditions set forth in
the agreement between the parties and to various regulatory
approvals and there can be no assurance that such acquisition
will ultimately be consummated. Other than this transaction, the
Company has no present plans, agreements, understandings or
arrangements regarding transactions expected to require issuance
of any additional shares of Common Stock.
The Board of Directors unanimously recommends that the
shareholders adopt the proposed amendment. The affirmative vote
of holders of at least two-thirds of the outstanding Common Stock
present at the meeting in person or by proxy is required in order
to adopt the proposed amendment. Unless indicated to the
contrary, the enclosed proxy will be voted FOR the proposed
amendment.
CERTAIN TRANSACTIONS
The Company paid fees in 1996 to the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. Alan Feld, a director of the Company,
is the sole shareholder of a professional corporation which is a
partner of such firm. The Company purchased in 1996 various forms
of insurance from Primera. B. J. McCombs, a director of the
Company, owns 75% of Primera. As part of its operations, the
Company leases certain office space in San Antonio, Texas from the
trusts of the children of L. Lowry Mays and B. J. McCombs. This
lease expires on December 31, 1997 with current monthly rentals of
$16,724. The Company believes all of the transactions described
above are no less favorable to the Company than could be obtained
with nonaffiliated parties.
The Company's wholly-owned subsidiary, Clear Channel Television,
Inc. ("CCTV"), adopted its 1991 Non-Qualified Stock Option Plan
(the "CCTV Non-Qualified Stock Option Plan"), providing for the
grant to eligible CCTV employees of options to purchase up to
50,000 shares of CCTV Common Stock. The CCTV Non-Qualified Stock
Option Plan is currently administered by the Stock Option Committee
of the Board of Directors of CCTV. In February 1993, CCTV elected
to discontinue the granting of options pursuant to this plan. Under
the terms of the CCTV Non-Qualified Stock Option Plan, the CCTV
Stock Option Committee is authorized to determine the date upon
which options granted thereunder become exercisable, the exercise
price of such options and other terms and conditions thereof. At
December 31, 1996, options to purchase 9,500 shares of CCTV Common
Stock had been granted and were outstanding under the CCTV Non-
Qualified Stock Option Plan. The exercise price of such options is
$1.00 per share. Pursuant to the CCTV Non-Qualified Stock Option
Plan, each participant therein will be required to enter into a
Buy-Sell Agreement with CCTV with respect to the shares of CCTV
Common Stock acquired by such participant upon the exercise of any
options granted thereunder. Executive officers Mark P. Mays,
Randall T. Mays, W. Ripperton Riordan and Herbert W. Hill Jr. hold
4,000; 1,000; 2,500 and 2,000 options respectively. All such
options vest in January 1999.
In May 1977, the Company and its shareholders, including L. Lowry
Mays and B.J. McCombs, entered into a Buy-Sell Agreement ("the
Repurchase Agreement") restricting the disposition of the
outstanding shares of Common Stock owned by L. Lowry Mays and B.J.
McCombs and their heirs, legal representatives, successors and
assigns (collectively, "the Restricted Parties"). The Repurchase
Agreement provides that in the event that a Restricted Party
desires to dispose of his shares, other than by disposition by will
or intestacy or through gifts to such Restricted Party's spouse or
children, such shares must by offered for a period of 30 days to
the Company. Any shares not purchased by the Company must then be
offered for a period of 30 days to the other Restricted Parties. If
all of the offered shares are not purchased by the Company or the
other Restricted Parties, the Restricted Party offering his or her
shares may sell them to a third party during a period of 90 days
thereafter at a price and on terms not more favorable than those
offered to the Company and the other Restricted Parties. In
addition, a Restricted Party may not individually, or in concert
with others, sell any shares so as to deliver voting control to a
third party without providing in any such sale that all Restricted
Parties will be offered the same price and terms for their shares.
SHAREHOLDER PROPOSALS
A proper proposal submitted by a Company shareholder for
consideration at the Company's 1998 Annual Meeting of Shareholders
and received at the Company's executive offices no later than
December 30, 1997 will be included in the Company's Proxy Statement
and form of Proxy relating to such Annual Meeting. If the proposal
is adopted, it will be included in the information statements
distributed to shareholders.
GENERAL
Neither management nor the Board of Directors knows of any matter
to be acted upon at the meeting other than the matters described
above. If any other matter properly comes before the meeting,
however, the proxy holders will vote thereon in accordance with
their best judgment.
The cost of soliciting proxies will be borne by the Company.
Following the original mailing of the proxy soliciting material,
regular employees of the Company may solicit proxies by mail,
telephone, telegraph and personal interview. Proxy cards and
materials will also be distributed to beneficial owners of stock,
through brokers, custodians, nominees and other like parties, and
the Company expects to reimburse such parties for their charges and
expenses connected therewith.
A copy of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission will be available when filed
without charge to shareholders upon written request to Clear
Channel Communications, P.O. Box 659512, San Antonio, Texas-78265-
9512.
Kenneth E. Wyker
Secretary
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee consists of four outside Board members
and the CEO.
Overall Policy
The financial success of the Company is linked to the ability of
its executive officers and managers to direct the Company's current
operations and to assess the advantages of potential acquisitions
and realign the operations of the acquired entities with the
operating policies of the Company. A major objective of the
Company's compensation strategy is to attract and retain top
quality executives and operating managers. Another objective of the
Company's compensation strategy is to reward managers based on the
financial performance of operations under their control. Financial
incentives are used to motivate those responsible to achieve the
Company's financial goals and to align the interests of the
Company's managers with the interests of the Company's
shareholders.
In order to achieve the foregoing objectives, the Company's
compensation includes both a base salary component and incentive
compensation. Incentive compensation includes both annual bonuses
and stock options.
Compensation
Base salaries of executive officers are set with respect to
comparable salaries paid by the radio and television broadcast
industry in those markets in which the Company operates. The
salaries of all executive officers except the CEO are determined
through mutual negotiations between the executive and the CEO and
are based on both past performance and expected future performance.
The performance bonuses for 1996 for the executive officers were
based upon the executives achieving an increase in cash flow over
the prior year and on a subjective evaluation of whether the
executive achieved budgeted goals. Budgeted goals are set for each
such executive officer pursuant to an extensive annual operating
plan established by the Company and the CEO. Past and expected
future performance was considered on a subjective basis in
determining these budgeted goals, based on the varied circumstances
impacting each operating division. Similarly, in determining option
grants, the sole factor weighed was success in achieving budgeted
goals as determined on a subjective basis after consideration of
the varied circumstances impacting each operating division. The CEO
reports to the Compensation Committee as to the compensation levels
and performance goals which he sets for the Company's executive
officers.
CEO Compensation
Two members of the Compensation Committee, John H. Williams and
Theodore H. Strauss, serve on the Performance-Based Compensation
Committee, a subcommittee of the Compensation Committee (the
Subcommittee). John H. Williams and Theodore H. Strauss are both
outside directors within the meaning of Section 162(m) of the
Internal Revenue Code. The Subcommittee establishes the CEO's
performance goals and determines the amount of incentive bonus.
The Company entered into a five-year employment agreement with L.
Lowry Mays, to serve as Chairman and CEO effective February 10,
1997. The employment agreement provides for a minimum annual base
salary of $750,000. The salary amount is subject to review by the
Compensation Committee of the Board and may be increased on an
annual basis at the beginning of each fiscal year. The term of the
employment agreement is automatically extended at the end of each
year by one additional year, in the absence of a notice of non-
extension from L. Lowry Mays. The employment agreement
contemplates that L. Lowry Mays will be awarded bonus compensation
as determined by the Performance-Based Compensation Committee of
the Board. The employment agreement also provides for severance
compensation payable as a lump sum in an amount equal to the amount
of annual salary that would have been paid over the remaining
term of the agreement, if termination occurs for any reason other
than for cause or resignation for other than "Good Reason," as
defined in the agreement.
In 1996, the CEO's annual salary was $600,000 pursuant to his
employment contract with the Company. He was paid a cash bonus of
$2,000,000 in February of 1997 that, while paid in 1997, rewarded
the CEO for performance in 1996. Options were granted to the CEO
in 1996 for the purchase of 60,000 shares of the Company's Common
Stock.
The Subcommittee utilized information gathered from its review of
compensation packages of ten comparable companies in the radio and
television broadcasting industry in determining the CEO's base
salary and overall compensation package. The amount of salary paid
and bonus awarded was judged to be deserving and balanced for the
value received by the shareholders from the CEO's efforts, based on
the overall increase in the Company's after-tax cash flow and the
increase in market value of the Company's Common Stock from year to
year.
In evaluating the incentive bonus compensation to be awarded to the
Company's CEO, the Subcommittee reviewed the financial performance
of the Company over the 1996 fiscal year. Based on the performance
goals established by the Subcommittee under the Performance-Based
Compensation Plan adopted by the shareholders at the 1995 Annual
Meeting, the CEO was entitled to an incentive bonus of up to 20% of
the increase in the after-tax cash flow from the 1995 fiscal year
to the 1996 fiscal year. In 1996, after-tax cash flow increased
from $71 million to $107 million, or 51%. The Subcommittee
determined that it was in the best interest of the Company to award
the CEO an incentive bonus of $2,000,000 for 1996 under the
Performance-Based Compensation Plan.
The Subcommittee also noted the market value of the Company's
outstanding Common Stock at December 31, 1996 was $2.8 billion, an
87% increase over the market value at December 31, 1995, while the
number of shares outstanding increased by less than twelve percent.
Total assets grew by 135% to $1.3 billion in 1996 mainly through
acquisitions, while total shareholders' equity at December 31, 1996
to support that asset base grew to $513 million, a 213% increase.
Many factors contributed to this exceptional performance, but
paramount was the financial and management skills employed by the
CEO and the management group he put in place.
As mentioned above, the Subcommittee gathered competitive
compensation data on ten radio and television broadcasting
companies. The companies were selected by the Subcommittee as the
most comparable to the Company in terms of the properties operated
and the markets served. The Subcommittee determined that these ten
companies provided more accurate compensation information relative
to the radio and television broadcasting industry than the entire
range of companies covered in the Paul Kagan Associates, Inc.
Broadcast Index used in the Stock Performance Chart included in
this Proxy Statement. Although the companies covered in this index
own radio and/or television properties, many of these companies
also own and/or operate businesses in such industries as radio and
television networks, newspaper and magazine publishing, film
production, financial services and manufacturing. In the
Subcommittee's opinion, the CEO's 1996 compensation corresponded to
the median to high end of the range paid by the ten companies
surveyed.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax
deduction for compensation paid to the named executive officers to
$1 million. However, performance-based compensation that has been
approved by shareholders is excluded from the $1 million limit if,
among other requirements, the compensation is payable only upon
attainment of pre-established, objective performance goals and the
board committee that establishes such goals consists only of
outside directors (as defined for purposes of Section 162 (m)).
At the 1995 Annual Meeting, the shareholders approved the
Performance-Based Compensation Plan, which meets the requirements
of Section 162(m) with respect to the performance-based
compensation paid to the CEO, as discussed above. The Committee's
present intention is to continue to comply with the requirements of
Section 162(m).
COMPENSATION COMMITTEE
John Williams
Alan D. Feld
B. J. McCombs
L. Lowry Mays
Theodore H. Strauss
