SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement [ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Clear Channel Communications, Inc.
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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<PAGE>
Clear Channel Communications, Inc.
P.O. Box 659512
San Antonio, Texas 78265-9512
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 5, 1998
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
(Paine Webber Conference Room-3rd Floor), San Antonio, Texas on May 5, 1998, at
11:00 a.m., for the following purposes:
1. To elect seven directors to serve for the coming year;
2. To approve the Clear Channel Communications, Inc. 1998 Stock Incentive
Plan;
3. To amend the Articles of Incorporation to increase the number of
authorized shares of Preferred Stock from 2 million shares to 10
million shares and the number of authorized shares of Common Stock from
150 million shares to 600 million shares;
4. To ratify the selection of Ernst & Young LLP as independent auditors
for the year ending December 31, 1998; and
5. To transact any other business which may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 6, 1998
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
by: /s/ Kenneth E. Wyker
Kenneth E. Wyker
Secretary
San Antonio, Texas
March 24, 1998
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC.
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1998
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy card 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 (the "Meeting") to be held on May 5, 1998, or at
any adjournment thereof, as set forth in the accompanying Notice of Annual
Meeting of Shareholders. Proxies are solicited to give all shareholders of
record at the close of business on March 6, 1998, an opportunity to vote on
matters that come before the meeting. Shares can be voted only if the
shareholder is present in person or is represented by proxy.
When your proxy card is returned properly signed, the shares
represented will be voted in accordance with your directions. You can specify
your choices by marking the appropriate boxes on the enclosed proxy card. If
your proxy card is signed and returned without specifying choices, the shares
will be voted as recommended by the directors. You may revoke your proxy at any
time before it is exercised by so notifying the Secretary of the Company in
writing or in person. Any proxy that is not revoked will be voted at the
meeting. This Proxy Statement and the accompanying proxy card are being sent to
the shareholders of the Company on or about March 24, 1998.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of the Company's Common Stock is necessary to constitute
a quorum at the Meeting. Only votes cast "for" a matter constitute affirmative
votes. Votes "withheld" or abstaining from voting are counted for quorum
purposes, but since they are not cast "for" a particular matter, they will have
the same effect as negative votes or vote "against" a particular matter. The
votes required with respect to the Items set forth in the accompanying Notice of
Annual Meeting of Shareholders are set forth in the discussion of each Item
herein. In deciding all questions, a holder of Common Stock is entitled to one
vote, in person or by proxy, for each share held in his name on the record date.
Proxies in the form enclosed will be voted at the Meeting, if properly signed,
returned to the Company prior to the Meeting and not revoked. A proxy may be
revoked at any time before it is voted by giving written notice to the Secretary
of the Company prior to the convening of the Meeting, or by presenting another
proxy card with a later date. If you attend the Meeting and desire to vote in
person, you may request that your previously submitted proxy card not be used.
Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the meeting.
On March 6, 1998, the record date for determination of shareholders
entitled to notice of and to vote at the meeting, there were 98,387,626 shares
of Common Stock issued and outstanding and entitled to vote at the Meeting.
<PAGE>
THE BOARD OF DIRECTORS
The Board is responsible for the management and direction of the
Company and for establishing broad corporate policies. However, in accordance
with corporate legal principles, it is not involved in day-to-day operating
details. Members of the Board are kept informed of the Company's business
through discussions with the Chairman and other officers, by reviewing analyses
and reports sent to them, and by participating in board and committee meetings.
Compensation of Directors
Outside directors are paid $20,000 annual retainer with an additional
$2,500 for each meeting of the Board they attend. In addition, members of the
Compensation Committee are paid $500 for each meeting of the Compensation
Committee they attend. In addition, in February 1993, February 1994 and April
1997 each outside director was granted options to purchase 31,250, 25,000 and
5,000 shares of Common Stock, respectively. These options vest 20% per year
beginning one year from the date of grant.
Board Meetings
During 1997, the Board held nine meetings. Each of the nominees, except
Mark P. Mays, who did not serve as a director during 1997, 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.
Committees of the Board
The Board has two committees: the Audit Committee and the Compensation
Committee. The Audit Committee, currently composed of Mssrs. Strauss and
Williams, is responsible for reviewing the Company's accounting practices and
audit procedures. The Company's Compensation Committee, currently composed of
Mssrs. Strauss and Williams, administers the Company's stock option plans and
performance-based compensation plans and makes recommendations to the Board
concerning compensation arrangements for all officers and directors of the
Company and its subsidiaries. The Compensation Committee annually evaluates the
Company's performance and the 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. See the attached Board Compensation
Committee Report, which details the basis on which the Compensation Committee
determines executive compensation. Each of the Audit Committee and the
Compensation Committee met once in 1997.
Compensation Committee Interlocks and Insider Participation
During 1997, members of the Compensation Committee included B. J. McCombs, Alan
D. Feld, Theodore H. Strauss and John H. Williams. In 1997, the Company paid
fees to the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. Alan D. Feld,
a director of the Company, is the sole shareholder of a professional corporation
which is a partner of such firm. In 1997, the Company purchased 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 expired on December 31, 1997, however the office space is
being rented on a month to month basis 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.
Also during 1997, L. Lowry Mays, the Company's Chairman and Chief
Executive Officer, served as a member of the Compensation Committee and
participated in deliberations concerning executive officer compensation other
than his own.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board intends to nominate at the Meeting the seven persons listed
as nominees below. Each of the directors elected at the Meeting will serve until
the next annual meeting of shareholders or until his successor shall have been
elected and qualified, subject to earlier resignation and removal. The directors
are to be elected by a plurality of the votes cast by the holders of the shares
of Common Stock represented and entitled to be voted at the Meeting. Unless
authority to vote for directors is "withheld" in the proxy, the persons named
therein intend to vote "for" the election of the seven nominees listed. Each
nominee has indicated a willingness to serve as director if elected. Should any
nominee become unavailable for election, discretionary authority is conferred to
vote for a substitute. Management of the Company has no reason to believe that
any of the nominees will be unable or unwilling to serve if elected. Except as
otherwise noted, nominees who are shown as officers or partners of other
corporations, institutions or firms have held the positions indicated, or have
been officers of the organizations indicated, for more than the last five years.
Nominees for Director
The nominees for director are L. Lowry Mays, Karl Eller, Mark P. Mays,
Alan D. Feld, B. J. McCombs, Theodore H. Strauss and John H. Williams.
L. Lowry Mays, age 62, is the founder of the Company and currently
serves as Chairman of the Board and Chief Executive Officer. He has served as a
director of the Company since its inception.
Karl Eller, age 69, was the founder of Eller Media Company, a
subsidiary of the Company, and has served as its Chairman and Chief Executive
Officer since 1995. Mr. Eller has over 40 years of experience in the outdoor
advertising industry. He was appointed as a director of the Company in April
1997 in connection with the Company's acquisition of Eller Media Company.
Mark P. Mays, age 34, serves as the President and Chief Operating
Officer of the Company. Mr. Mays is the son of L. Lowry Mays, the Company's
Chairman and Chief Executive Officer and the brother of Randall T. Mays, the
Company's Senior Vice President and Chief Financial Officer.
Alan D. Feld, age 61, is the sole shareholder of a professional
corporation which is partner in the law firm of Akin, Gump, Strauss, Hauer &
Feld, L.L.P. He has served as a director of the Company since 1984. Mr. Feld
also serves on the board of directors of Centerpoint Properties, Inc.
B. J. McCombs, age 70, is a private investor with interests in
automobile dealerships and other investments. He has served as a director of
the Company since its inception.
Theodore H. Strauss, age 73, is the Senior Managing Director of Bear,
Stearns & Co., Inc. He has served as a director of the Company since 1984. Mr.
Strauss also serves on the boards of directors of Sizeler Properties, Inc. and
Hollywood Casinos, Inc.
John H. Williams, age 64, is the Senior Vice President of Everen
Securities, Inc. He has served as a director of the Company since 1984. Mr.
Williams also serves of the board of directors of GAINSCO, Inc.
Management recommends that the shareholders vote "FOR" the director
nominees named above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below sets forth information concerning the beneficial
ownership of the Company's Common Stock as of February 15, 1998, for each
director serving on the Board in 1997 and each of the nominees for director;
each of the named executive officers not listed as a director; the directors and
executive officers as a group; and each person known to the Company to own
beneficially more than 5% of the Company's outstanding Common Stock. Except as
otherwise noted, each shareholder has sole voting and investment power with
respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
<S> <C> <C>
L. Lowry Mays 15,225,668 (1) 15%
Karl Eller 2,205,525 (2) 2%
Mark P. Mays 480,756 (3) *
Alan D. Feld 59,250 (4) *
B. J. McCombs 11,189,186 (5) 11%
Theodore H. Strauss 133,037 (6) *
John H. Williams 34,400 (7) *
Randall T. Mays 323,037 (8) *
W. Ripperton Riordan 17,132 (9) *
Putnam Investments (10) 10,790,769 11%
All Directors and Executive Officers
as a Group (20 persons) 30,071,969 (11) 30%
</TABLE>
*Percentage of shares beneficially owned by such person does not exceed one
percent of the class so owned.
(1) Includes 810,000 shares subject to options held by Mr. Mays and
50,456 shares held by trusts of which Mr. Mays is trustee,
but not beneficiary.
(2) Includes 1,124,056 shares subject to options held by Mr. Eller. In
addition, pursuant to that certain Stockholders Agreement between the
Company and EM Holdings LLC dated as of April 10, 1997, Mr. Eller is
deemed to beneficially own 1,081,469 shares subject to a put right.
(3) Includes 19,788 shares subject to options held by Mr. Mays and
62,316 shares held by trusts of which Mr. Mays is trustee,
but not beneficiary.
(4) Includes 51,250 shares subject to options held by Mr. Feld. Excludes
31,180 shares owned by Mr. Feld's wife, as to which Mr. Feld disclaims
beneficial ownership.
(5) Includes 3,076,726 shares held by trusts of which Mr. McCombs is
trustee, but not beneficiary.
(6) Includes 51,250 shares subject to options held by Mr. Strauss.
(7) Includes 32,500 shares subject to options held by Mr. Williams.
(8) Includes 19,788 shares subject to options held by Mr. Mays and 3,516
shares held by trusts of which Mr. Mays is trustee, but
not beneficiary.
(9) Includes 5,000 shares subject to options held by Mr. Riordan.
(10) Address: One Post Office Square, Boston, Massachusetts 02109
(11) Includes 3,424,116 shares subject to options held by such persons and
3,304,899 shares held by trusts of which such persons are trustees,
but not beneficiaries.
<PAGE>
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 1997, 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.
Employment Agreements
The Company entered into a five-year employment agreement with L. Lowry
Mays, to serve as Chairman and Chief Executive Officer of the Company 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.
Prior to its acquisition by the Company, Eller Media Corporation, a
subsidiary of the Company ("Eller Media") entered into an employment agreement
with Karl Eller dated August 18, 1995 which is still in full force and effect.
The agreement provides that Mr. Eller will serve as the Chairman and Chief
Executive Officer of Eller Media for a term of four years. Pursuant to the terms
of the agreement, Mr. Eller is paid an initial base salary of $400,000 per year.
Mr. Eller's initial base salary is increased annually by the percentage increase
in the Consumer Price Index, if any. In addition, Mr. Eller may be granted bonus
compensation at the discretion of the Compensation Committee. Pursuant to the
terms of the agreement, Mr. Eller's employment is terminable by the Company at
any time for "Cause," as defined in the agreement. Pursuant to the terms of the
agreement, Mr. Eller may terminate his employment for "Good Reason," as defined
in the agreement, by giving thirty days' written notice. If Mr. Eller terminates
his employment for Good Reason or if the Company terminates Mr. Eller's
employment without Cause, Mr. Eller is entitled to receive all compensation and
benefits owed for the remainder of the term of the agreement. The employment
agreement obligates Mr. Eller for one year following termination of his
employment with the Company, to refrain from engaging in competition with the
Company and from influencing any person to give up an employment or business
relationship with the Company.
<PAGE>
Summary Compensation Table
The Summary Compensation Table shows certain compensation information
for the years ended December 31, 1997, 1996 and 1995, for the Chief Executive
Officer and each of the other four most highly compensated executive officers
whose total cash compensation exceeded $100,000 for services rendered in all
capacities for the years ended December 31, 1997 (hereinafter referred to as the
"named executive officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------ ---------------------------------
Awards Payouts
----------------------- ---------
Other Restricted
Annual Stock LTIP All Other
Name And Principal Salary Compen-satAwards Options Payout Compen-sation
--- ------
Position Year ($) Bonus ($) ($) ($) (#) ($) ($)
-------- ---- --- --------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. Lowry Mays 1997 726,014 2,000,000 - - 50,000 - 236,148(1)
Chairman and CEO 1996 601,553 2,000,000 - - 60,000 - 237,577(1)
of the Company 1995 598,217 1,500,000 - - - - 154,890(1)
Mark P. Mays 1997 231,910 500,000 - - 17,300 - 3,325(2)
President and COO of 1996 170,697 175,000 - - 13,704 - 2,625(2)
the Company 1995 145,921 25,000 - - 27,408 - 2,592(2)
Randall T. Mays 1997 160,773 500,000 - - 17,300 - 2,994(2)
Senior Vice President 1996 157,956 66,111 - - 13,704 - 2,265(2)
and CFO of the Company 1995 159,558 35,000 - - 27,408 - 1,549(2)
Karl Eller 1997(3) 300,342 250,000 - - 1,199,056(4) - -
CEO of Eller Media
Company
W. Ripperton Riordan 1997 189,762 100,000 - - 2,000 - 3,325(2)
Exec. VP and COO of 1996 199,278 25,000 - - - - 2,625(2)
Clear Channel 1995 171,541 123,523 - - 10,000 - 2,844(2)
Television, Inc.
</TABLE>
(1) Represents $232,823, $234,952 and $151,656 paid by the Company
in 1997, 1996 and 1995 respectively, on a split-dollar life
insurance policy for L. Lowry Mays. Such amounts include the
entire dollar amount of the term life portion and the present
value to L. Lowry Mays of the interest-free use of the
non-term portion of each premium payment. The remainder
represents the amount of matching contributions paid by the
Company under the 401(k) Plan.
(2) Represents the amount of matching contributions paid by the
Company under the 401(k) Plan.
(3) Represents partial year compensation.
(4) In connection with the completion of the Company's acquisition
of Eller Media, the Company issued these options to Mr. Eller
upon the assumption of Mr. Eller's existing options to acquire
shares of Eller Media common stock.
<PAGE>
Stock Option Grant Table
The following table sets forth certain information concerning options
granted to the named executive officers during the year ended December 31, 1997.
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates of Stock
Individual Grants Price Appreciation For Option
Term
----------------------------------------------- ---------------------------------
Percent
of Total
Number of Options
Securities Granted Exercise
Underlying to or Base
Options Employees Price Expiration
Name Granted (#) in Fiscal ($/share) Date 5% ($) 10% ($)
---- ----------- --------- ---- ------ -------
Year
----
<S> <C> <C> <C> <C> <C> <C>
L. Lowry Mays 50,000 3% 39.50 2/10/04 804,023 1,873,716
Mark P. Mays 15,000 1% 39.50 2/10/04 241,207 562,115
2,300 - 43.45 2/10/02 27,610 61,011
Randall T. Mays 15,000 1% 39.50 2/10/04 241,207 562,115
2,300 - 43.45 2/10/02 27,610 61,011
Karl Eller 1,199,056 66% 12.99 3/31/02 57,497,666 76,633,890
W. Ripperton Riordan 2,000 - 39.50 2/10/04 32,161 74,949
</TABLE>
Stock Option Exercises and Holding Table
The following table set forth certain information regarding stock
options exercised by the named executive officers during the year ended December
31, 1997, including the aggregate value of gains on the date of exercise. In
addition, the table sets forth the number of shares covered by both exercisable
and nonexercisable stock options as of December 31, 1997. Also reported are the
values of "in the money" options that represent the positive spread between the
exercise price of any existing stock options and the Common Stock price as of
December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying In-the-Money Options
Acquired on Unexercised Options at Fiscal Year-End
Exercise Value at Fiscal Year End ($)
Name (#) Realized ($) (#) Exercisable/Unexercisable
---- --- --- -------------------------
Exercisable/Unexercisable
<S> <C> <C> <C> <C>
L. Lowry Mays 117,187 4,481,817 610,000 / 0 42,010,274 / 0
Mark P. Mays 100,002 4,615,941 12,380 / 58,412 883,468 / 3,255,614
Randall T. Mays - - 43,055 / 58,412 3,220,213 / 3,255,614
Karl Eller 40,000 2,165,400 1,159,056 / 0 77,016,374 / 0
W. Ripperton Riordan - - 5,000 / 12,000 356,813 / 676,120
</TABLE>
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee currently consists of two outside Board
members, Theodore H. Strauss and John H. Williams.
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 and outdoor industries in
those markets in which the Company operates. The salaries of all executive
officers except the Chief Executive Officer are determined through mutual
negotiations between the executive and the Chief Executive Officer and are based
on both past performance and expected future performance. However, under certain
circumstances, the Company may enter into employment agreements with executive
officers.
The performance bonuses for 1997 for the executive officers were based
upon the executives achieving certain budgeted goals, including an increase in
cash flow over the prior year, other selected performance criteria or other
subjective measures of performance. Budgeted goals are set for each such
executive officer pursuant to an extensive annual operating plan established by
the Company and the Chief Executive Officer. 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 Chief
Executive Officer reports to the Compensation Committee as to the compensation
levels and performance goals, which he sets for the Company's executive
officers.
Chief Executive Officer Compensation
During 1997, two members of the Compensation Committee, John H.
Williams and Theodore H. Strauss, served 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
established the Chief Executive Officer'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 Chief Executive Officer 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 1997, the Chief Executive Officer's annual salary was $750,000
pursuant to his employment contract with the Company. He was paid a cash bonus
of $2,000,000 in February of 1998 that, while paid in 1998, rewarded the Chief
Executive Officer for performance in 1997. Options were granted to the Chief
Executive Officer in 1997 for the purchase of 50,000 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 Chief Executive Officer'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 Chief Executive Officer'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
Chief Executive Officer, the Subcommittee reviewed the financial performance of
the Company over the 1997 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 Chief Executive
Officer was entitled to an incentive bonus of up to 20% of the increase in the
after-tax cash flow from the 1996 fiscal year to the 1997 fiscal year. In 1997,
after-tax cash flow increased from $107 million to $213 million, or 99%. The
Subcommittee determined that it was in the best interest of the Company to award
the Chief Executive Officer an incentive bonus of $2,000,000 for 1997 under the
Performance-Based Compensation Plan.
The Subcommittee also noted that the market value of the Company's
outstanding Common Stock at December 31, 1997 was $7.8 billion, a 181% increase
over the market value at December 31, 1996, while the number of shares
outstanding increased by less than 28 percent. Total assets grew by 161% to $3.5
billion in 1997 mainly through acquisitions, while total shareholders' equity at
December 31, 1997 to support that asset base grew to $1.7 billion, a 240%
increase. Many factors contributed to this exceptional performance, but
paramount was the financial and management skills employed by the Chief
Executive Officer 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 Chief
Executive Officer's 1997 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 of 1986, as amended (the
"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 Chief
Executive Officer, as discussed above. The Committee's present intention is to
continue to comply with the requirements of Section 162(m).
Respectfully submitted,
THE COMPENSATIONCOMMITTEE
John Williams and
Theodore H. Strauss
<PAGE>
STOCK PERFORMANCE CHART
The following chart demonstrates 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
Clear Channel Communications
Stock Performance Table
Indexed Yearly Stock Price Close
(Prices Adjusted for Stock Splits and Dividends)
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Clear Channel 1,000 2,822 3,892 6,768 11,081 24,67
Paul Kagan
Broadcasting 1,000 1,341 1,484 2,059 2,452 3,817
Index
S&P 500 Index 1,000 1,070 1,054 1,414 1,700 2,227
<PAGE>
COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and beneficial owners of
more than 10% of any class of securities of the Company to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Directors, executive officers and greater than
10% shareholders are required 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 such forms
were required to be filed by those persons, the Company believes that, during
the year ended December 31, 1997, all of its directors and executive officers
were in compliance with the applicable filing requirement, except that one
report covering one transaction was filed late by each of L. Lowry Mays, Mark P.
Mays, Randall T. Mays, Herbert W. Hill, Jr., and Kenneth E. Wyker, one report
covering three transactions was filed late by Karl Eller, one report covering
eleven transactions was filed late by Timothy J. Donmoyer, and one report
covering eight transactions was filed late by Paul J. Meyer.
CERTAIN TRANSACTIONS
The Company paid fees in 1997 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 that is a partner of such firm. The
Company purchased in 1997 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
expired on December 31, 1997, however the office space is being rented on a
month to month basis 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, 1997, 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.
Karl Eller, a director and executive officer of the Company, and Scott
Eller, the son of Karl Eller and also an executive officer of the Company,
beneficially own a minority interest of approximately 7% of the outstanding
capital stock of Eller Media. Pursuant to a Stockholders Agreement between the
Company and EM Holdings LLC, dated April 10, 1997, Karl Eller and Scott Eller
have the right, until April 10, 2002, to require the Company to acquire such
stock for 1,081,469 shares of the Company's Common Stock. From and after April
10, 2004 (or before such date upon the occurrence of certain events), the
Company will have the right to acquire the minority interest stake in Eller
Media for 1,081,469 shares of its Common Stock.
PROPOSAL 2: APPROVAL OF THE
CLEAR CHANNEL COMMUNICATIONS, INC.
1998 STOCK INCENTIVE PLAN
On February 10, 1998, the Board adopted the Clear Channel
Communications, Inc. 1998 Stock Incentive Plan (the "Plan") for the purpose of
providing the Company an effective means to attract, retain and encourage
qualified individuals to serve the Company with a high degree of commitment. A
brief description of the major provisions of the Plan is set forth below to
facilitate an informed decision by the Shareholders entitled to vote on the
approval of the Plan. However, the summary description is qualified in its
entirety by the full text of the Plan, a copy of which is attached hereto as
Appendix A.
Overview of Awards
The following types of awards may be granted under the Plan: (i)
incentive stock options ("Incentive Options"), (ii) nonqualified stock options
("Nonqualified Options"), (iii) rights to receive all or some portion of the
increase in value of the Common Stock ("Stock Appreciation Rights"), (iv) the
right to receive all or some portion of cash dividends with respect to the
Common Stock ("Dividend Equivalent Rights"), (v) rights to receive cash and/or
Common Stock contingent upon the attainment of defined performance goals
("Performance Awards"), and (vi) shares of Common Stock subject to temporary
restrictions on transfer ("Restricted Stock") (collectively, "Awards"). Eligible
individuals under the Plan include employees, officers and directors of the
Company or a subsidiary of the Company or consultants or advisors receiving cash
compensation from the Company or a subsidiary of the Company. In addition, the
Plan provides that directors of the Company may receive some or all of their
annual director compensation in the form of shares of Common Stock.
<PAGE>
Administration
Except for Awards of Nonqualified Options to nonemployee directors
("Director Options"), the Plan will be administered by a committee which shall
consist of at least two directors and may consist of the entire Board (the "Plan
Committee"). The Board will grant Director Options. The Plan Committee will have
broad discretion, subject to the terms of the Plan, to designate the recipients
of Awards, prescribe the terms and conditions of Awards and establish rules and
regulations for administration of the Plan.
Under the Plan, members of the Plan Committee are not liable for their
actions taken in a good faith attempt to administer the Plan and are entitled to
indemnification from the Company to the extent permitted by law in connection
with claims asserted in regard to administration of the Plan.
Stock Subject to the Plan
The maximum number of shares of Common Stock that may be the subject of
Awards under the Plan is 7,500,000. Furthermore, within the period of one year,
no individual may receive with respect to Awards more than 1,000,000 shares or
$5,000,000 in cash or shares with an equivalent fair market value. However, the
ceilings may be adjusted by the Plan Committee upon the occurrence of certain
events affecting the capitalization of the Company. See "Adjustments" below.
Upon the expiration, cancellation or termination of an Award (other than by
reason of exercise), the shares previously subject to such Award may again be
the subject of Awards granted under the Plan.
Summary of Incentive Options and Nonqualified Options
The exercise price for Incentive Options and Nonqualified Options will
be determined by the Plan Committee, other than for Director Options, which will
be determined by the Board; provided, however, the exercise price for each
Incentive Option may not be less than 100% of the fair market value of the
Common Stock on the date the option is granted (110% in the case of an Incentive
Option granted to an individual owning more than 10% of the voting stock of the
Company or a parent or subsidiary of the Company (a "10% Shareholder"). The
aggregate fair market value (determined at the time an Incentive Stock Option is
granted) of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an employee during any calendar year (under
all stock option plans of the Company) will not exceed $100,000, or such other
amount as may be prescribed under the Code or applicable regulations and rulings
from time to time. Incentive Stock Options may not be granted under the Plan
subsequent to February 10, 2008.
Each Option granted under the Plan other than Director Options will be
exercisable according to the terms established by the Plan Committee. In the
case of Directors Options, the Board will grant the options and such Director
Options will be exercised according to the terms established by the Board. In no
event, however, will an Option, including a Directors Option, be exercisable
after the expiration of ten years from the date of grant (five years for a 10%
Shareholder).
Options are not transferable except by will or the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 under the Exchange Act), and are exercisable only by the optionee or
his or her legal guardian or legal representative.
The purchase price payable upon the exercise of an Option is payable in
cash, by delivery of an equivalent fair market value of Common Stock, by
cashless exercise procedures or by a combination of the foregoing, as determined
by the Plan Committee. No fractional shares will be issuable upon exercise of an
Option, and the number of shares issuable will be rounded to the nearest whole
number.
Summary of Stock Appreciation Rights
A Stock Appreciation Right is the right to receive an amount equal to
the excess of the fair market value of a share of the Company's Common Stock on
the date of exercise over the fair market value of a share of Common Stock on
the date of grant (in the case of Stock Appreciation Rights granted independent
of a Stock Option) or the exercise price of the related Stock Option (in the
case of a Stock Appreciation Right granted in tandem with a Stock Option). Stock
Appreciation Rights may be granted in connection with Stock Options or as a
separate award unrelated to Stock Options. The exercisability of Stock
Appreciation Rights granted in connection with Stock Options will be governed by
the exercisability of the related Options. The amount payable to the holder upon
the exercise of a Stock Appreciation Right is based on the difference between
the fair market value of the Company's Common Stock on the date preceding
exercise and the exercise price of the Option in connection with which the Stock
Appreciation Right was granted (or the fair market value of Common Stock on the
date the Stock Appreciation Right was granted if it was not granted in
connection with an Option). However, the Plan Committee may establish a maximum
amount payable upon the exercise of a Stock Appreciation Right. The amount
payable to a holder upon the exercise of a Stock Appreciation Right may be paid
in the form of Common Stock or cash or a combination thereof, as determined by
the Plan Committee.
Summary of Dividend Equivalent Rights
Dividend Equivalent Rights may be granted in conjunction with other
Awards or as a separate Award. The Plan Committee will determine the terms and
conditions of the Dividend Equivalent Rights and, specifically, will determine
whether amounts payable will be paid on a current or deferred basis and whether
they will be settled in cash or stock in single or multiple installments.
Summary of Restricted Stock
Restricted Stock is the grant of shares of Common Stock or the right to
purchase Common Stock at a price determined by the Plan Committee, which is
nontransferable and subject to substantial risk of forfeiture until specific
conditions are met. Restricted Stock granted under the Plan will be subject to
restrictions on transfer and such other restrictions imposed by the Plan
Committee. No stock certificate representing Restricted Stock may be issued in
the name of the grantee until the grantee executes a written agreement, blank
stock powers and an escrow agreement or other documents required by the Plan
Committee. Restricted Stock may not be delivered to the grantee or sold,
transferred or pledged until the restrictions imposed by the Plan Committee have
lapsed according to the terms established by the Plan Committee. The Plan
Committee will determine whether dividend payments in respect of Restricted
Stock will be made currently or deferred until the lapsing of restrictions. Upon
lapse of the restrictions, the certificates representing the Restricted Stock
will be delivered to the grantee, in addition to any deferred dividends with
interest accrued thereon. All restrictions lapse upon a change in control of the
Company unless the Plan Committee specifies otherwise in the written agreement.
Summary of Performance Awards
Awards contingent upon the attainment of certain financial or other
objectives within a designated period of time may be granted by the Plan
Committee in the form of shares of Common Stock ("Performance Shares") or other
Awards ("Performance Units"). The performance objectives to be established in
writing by the Plan Committee may be expressed in terms of earnings per share,
share price, pre-tax profits, net earnings, return on equity or assets,
revenues, EBITDA, market share, or a combination of the foregoing with regard to
the Company or a subsidiary. The Plan Committee may establish a ceiling on the
amount payable under a Performance Award.
A grantee becomes vested in Performance Awards to the extent that the
established objectives are achieved during the designated measurement period,
and immediately following the end of such period the Company must pay any
amounts due in cash or Common Stock or a combination thereof.
Issuance of certificates representing Performance Shares may not occur
until the grantee executes a written agreement, blank stock powers and an escrow
agreement or such other documents required by the Plan Committee. Certificates
representing Performance Shares may not be delivered to the grantee or sold,
transferred or pledged prior to the attainment of the designated objectives and
fulfillment of other conditions established by the Plan Committee. The Plan
Committee may determine whether dividends in respect of issued but undelivered
Performance Shares will be paid currently or deferred and paid with interest
upon lapsing of the restrictions.
Adjustments
Upon the termination or change in status of employment of a grantee,
adjustments to the terms and conditions of Awards held by such grantee will be
made according to the terms established by the Plan Committee in the written
agreement respecting such Award.
Each Award granted by the Plan Committee must be evidenced by a written
agreement. Although the Plan Committee has the discretion to amend the terms of
an Award subsequent to the date of grant, it may not do so in a way that
adversely affects rights previously granted under the Plan.
The Plan Committee will also determine the appropriate adjustments to
be made to the terms of the Plan and Awards previously granted thereunder upon
the occurrence of certain events affecting the capitalization of the Company
including, but not limited to, an increase or decrease in the number of issued
and outstanding shares of Common Stock or other changes in capitalization
resulting from a reclassification, recapitalization, merger, consolidation,
stock dividend, stock split or otherwise. Appropriate adjustments may be made to
the maximum number of shares and the class of shares or other securities with
respect to which Awards may be made, the maximum number of shares with respect
to which an individual may be granted Awards, the number and class of shares
subject to outstanding Awards, the exercise price of such outstanding Awards,
and the performance objectives upon which Performance Awards are based.
Upon a Change of Control (as defined in the Plan), (i) with respect to
all Stock Option Awards and Stock Appreciation Rights Awards, all of such Awards
shall become immediately exercisable, (ii) with respect to Restricted Stock
Awards, all restrictions upon such shares shall lapse, and (iii) with respect to
Performance Awards, such Awards will be treated in the manner determined by the
Plan Committee at the time such Performance Awards were granted. In addition, to
the extent set forth in the applicable agreement relating to a Stock Option
Award or Stock Appreciation Right Award, upon a Change of Control, (i) the
holder of a Stock Option Award will have the right to a cash payment within
sixty (60) days after such Change of Control equal to the excess of fair market
value of the shares subject to such Stock Option on the date preceding the date
of surrender over the aggregate purchase price of the shares subject to such
Stock Option, and (ii) the holder of a Stock Appreciation Right Award will be
entitled to receive a cash or stock payment from the Company with a value equal
to the fair market value on the date preceding the date of exercise over the
fair market value of the shares subject to such Stock Appreciation Award.
Following any liquidation, dissolution, merger or consolidation of the
Company, each holder of an Award is entitled to receive the same consideration
received in such transaction by each holder of Common Stock, subject to the
restrictions and other terms and conditions applicable to the Award.
Termination and Amendment of the Plan
The Plan has no automatic termination date. However, Incentive Stock
Options may not be granted under the Plan subsequent to February 10, 2008. In
addition, the Plan Committee may terminate, amend or suspend the Plan at any
time provided that such action does not adversely affect rights previously
granted under the Plan.
Federal Income Tax Consequences
An individual receiving Nonqualified Stock Options or Stock
Appreciation Rights will not recognize taxable income at the time the
Nonqualified Stock Options or Stock Appreciation Rights are granted. At the time
the Nonqualified Stock Options or Stock Appreciation Rights are exercised, the
individual will recognize ordinary taxable income in an amount equal to the
difference between the exercise price (or in the case of Stock Appreciation
Rights granted independent of Stock Options, the fair market value of the Common
Stock at the time of grant) and the fair market value of Common Stock on the
date of exercise. The Company will be entitled to a concurrent deduction equal
to the ordinary income recognized by the individual, provided that the Company
withholds taxes.
An individual granted an Incentive Stock Option will not recognize
taxable income at the time of grant or, subject to certain conditions, at the
time of exercise. The excess of the fair market value of the Common Stock
received over the exercise price is an item of tax preference income potentially
subject to the alternative minimum tax. If stock acquired upon exercise of an
Incentive Stock Option is held for a minimum of two years from the date of grant
and one year from the date of exercise, the gain or loss (in an amount equal to
the difference between the sales price and the exercise price) upon disposition
of the stock will be treated as long-term capital gain or loss, and the Company
will not be entitled to any deduction.
If the holding period requirement is not met, the Incentive Stock
Option will be treated as one which does not meet the requirements of the Code
for Incentive Stock Options and the individual will recognize ordinary income in
an amount equal to the lesser of (i) the excess of the fair market value of
Common Stock on the date of exercise over the exercise price or (ii) the amount
realized on the sale of such stock over the exercise price.
An individual receiving Restricted Stock will not recognize taxable
income at the time of grant. At the time the restrictions lapse, the individual
will recognize ordinary taxable income equal to the difference between the fair
market value of the Common Stock at the time the restrictions lapse and the
price, if any, paid for such Common Stock. Any dividends received before the
termination of restrictions will be taxed as ordinary income. The Company will
be entitled to a deduction equal to the ordinary income reported by the
individual, provided the Company withholds taxes. Upon the disposition of the
Common Stock, the individual will recognize taxable gain or loss equal to the
difference between the fair market value of the Common Stock at the time the
restrictions lapse and the amount realized upon the disposition of the Common
Stock. The gain or loss will be taxable as a capital asset.
An individual may elect to report and recognize income at the time of
grant or purchase of Restricted Stock by filing an election under Section 83(b)
of the Code (a "Section 83(b) election"). If the individual makes a Section
83(b) election, the Company will be entitled to a deduction equal to the
ordinary income reported by the individual in the year of the election, provided
the Company withholds taxes. However, dividends received before the restrictions
lapse will not be deductible by the Company. Upon the disposition of the Common
Stock, the individual will recognize gain or loss equal to the difference
between the amount realized and the sum of the income recognized by the
individual as a result of the Section 83(b) election and any amounts paid by the
individual for the Restricted Stock.
Special rules may apply with respect to individuals subject to Section
16(b) of the Securities Exchange Act of 1934. Other than in the case of an
Incentive Stock Option held in accordance with the specified holding period
requirements, the amount and timing of the recognition of income by an
individual subject to Section 16(b) (and the concurrent deduction by the
Company) on the exercise of a Stock Option or Stock Appreciation Right generally
will be based on the fair market value of the shares received when the
restrictions of Section 16(b) lapse, unless the individual elects otherwise by
making a Section 83(b) election.
Vote Required
The affirmative vote of a majority of the outstanding shares present
and entitled to vote at the Meeting is required to approve the Plan.
The Board recommends that the shareholders vote "FOR" the approval of
the Plan. Each of the directors may have an interest and may benefit from the
adoption of the Plan, since they are eligible to receive Awards under the terms
of the Plan.
PROPOSAL 3: AMENDMENT OF THE
COMPANY'S ARTICLES OF INCORPORATION
The current authorized capital stock of the Company consists of
2,000,000 shares of preferred stock, $1.00 par value (the "Preferred Stock"),
and 150,000,000 shares of Common Stock, $.10 par value, of which no shares of
Preferred Stock and 98,387,626 shares of Common Stock were issued and
outstanding at March 6, 1998. On February 10, 1998, the Board adopted a proposed
amendment to Article IV of the Company's Articles of Incorporation increasing
the authorized number of shares of Preferred Stock from 2,000,000 shares to
10,000,000 and the authorized number of shares of Common Stock from 150,000,000
shares to 600,000,000 shares for submission to the shareholders at the Meeting.
The Board is authorized to issue shares of Preferred Stock, in one or
more series, and to fix the rights, preferences, privileges and qualifications
thereof without any further vote or action by the shareholders. The issuance of
Preferred Stock could decrease the amount of earnings and assets available for
distribution to holders of Common Stock, and adversely affect the rights and
powers, including voting rights, of such holders and may have the effect of
delaying, deferring or preventing a change in control of the Company. No shares
of Preferred Stock have ever been issued.
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
from funds legally available therefore, subject to the payment of any
outstanding preferential dividends declared with respect to any Preferred Stock
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 Preferred Stock or 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 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 and that the terms of
any Preferred Stock issued in the future may be senior to the Common Stock.
If the proposed amendment is adopted, Section 1 of Article IV of the
Articles of Incorporation will be amended to read as follows:
"Authorized Shares. The aggregate number of shares which the
Corporation shall have the authority to issue is 610,000,000
shares, 600,000,000 of which shall be Common Stock ("Common
Stock"), par value of $.10 each, and 10,000,000 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 has determined that it would be appropriate for the Company
to increase the number of its authorized shares of Preferred Stock and Common
Stock in order to have additional shares available for possible future
acquisitions or financing transactions, stock splits, stock dividends 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 twenty million
shares of Common Stock upon the consummation of the merger between a subsidiary
of the Company and Universal Outdoor Holdings, Inc., pursuant to the Agreement
and Plan of Merger dated October 23, 1997 (the "Merger Agreement"). Consummation
of the merger is subject to the terms and conditions set forth in the Merger
Agreement between the parties and to various regulatory approvals. There can be
no assurance that such merger will ultimately be consummated. The Company
currently has enough shares of Common Stock authorized for issuance to
consummate the merger and other issuances of Common Stock that have been
previously reserved for issuance without amending its Articles of Incorporation.
The affirmative vote of holders of at least two-thirds of the
outstanding shares of Common Stock entitled to vote at the Meeting is required
in order to adopt the proposed amendment. Unless indicated to the contrary, the
enclosed proxy will be voted for the proposed amendment. Votes "withheld" or
abstaining from voting will have the same effect as a negative vote or a vote
"against" the proposed amendment.
The Board recommends that the shareholders vote "FOR" the proposed
amendment.
PROPOSAL 4: SELECTION OF
INDEPENDENT AUDITORS
The Company's financial statements for the year ended December 31, 1997
have been audited by Ernst & Young LLP, independent certified public
accountants. 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 an appropriate statement if they so desire.
The Board has appointed Ernst & Young LLP as independent auditors to
audit the financial statements of the Company for the year ending December 31,
1998. Unless otherwise directed, the persons named in the accompanying proxy
will vote in favor of the ratification of the appointment of Ernst & Young LLP.
The Board recommends that the shareholders vote "FOR" the ratification
of Ernst & Young LLP as auditors for the year ending December 31, 1998.
SHAREHOLDER PROPOSALS
A proper proposal submitted by a Company shareholder for consideration
at the Company's 1999 Annual Meeting of Shareholders and received at the
Company's executive offices no later than November 24, 1998 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.
<PAGE>
GENERAL
Neither management nor the Board 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.
by: /s/Kenneth E. Wyker
Kenneth E. Wyker
Secretary
<PAGE>
Appendix A
CLEAR CHANNEL COMMUNICATIONS, INC.
1998 STOCK incentive PLAN
1. Purpose.
The purpose of this Plan is to strengthen Clear Channel Communications,
Inc., a Texas corporation (the "Company"), by providing an incentive to its
employees, officers, consultants and directors and thereby encouraging them
to devote their abilities and industry to the success of the Company's
business enterprise. It is intended that this purpose be achieved by
extending to employees, officers, consultants and directors of the Company
and its Subsidiaries an added long-term incentive for high levels of
performance and unusual efforts through the grant of Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Dividend
Equivalent Rights, Performance Awards and Restricted Stock (as each term is
herein defined).
Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders
of the Shares in any transaction (or series of transactions)
constituting or resulting in a Change in Control or (ii) the highest
Fair Market Value of a Share during the ninety (90) day period ending
on the date of a Change in Control.
2.2 "Affiliate" means any entity, directly or indirectly, controlled by,
controlling or under common control with the Company or any corporation
or other entity acquiring, directly or indirectly, all or substantially
all the assets and business of the Company, whether by operation of law
or otherwise.
2.3 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and
setting forth the terms and conditions thereof.
2.4 "Award" means a grant of Restricted Stock, a Stock Appreciation Right,
a Performance Award, a Dividend Equivalent Right or any or all of them.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Cause" means (i) intentional failure to perform reasonably assigned
duties, (ii) dishonesty or willful misconduct in the performance of
duties, (iii) involvement in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (iv)
willful violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar
offenses).
2.7 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a
change in value) in the Shares or exchange of Shares for a different
number or kind of shares or other securities of the Company or another,
corporation, by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants
or rights or debentures, stock dividend, stock split or reverse stock
split, cash dividend, property dividend, combination or exchange of
shares, repurchase of shares, change in corporate structure or
otherwise.
<PAGE>
2.8 A "Change in Control" shall mean the occurrence during the term of the Plan
of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding L. Lowry Mays, B.J. McCombs or any of
their affiliates), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%) or
more of the then outstanding Shares or the combined voting
power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has
occurred, Shares or Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its voting
equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (ii) the Company or its Subsidiaries, or
(iii) any Person in connection with a "Non- Control Transaction"
(as hereinafter defined);
(b) The individuals who, as of February 10, 1998 are members of the
Board (the "Incumbent Board"), cease for any reason to constitute
at least a majority of the members of the Board; provided,
however, that if the election, or nomination for election by the
Company's common stockholders, of any new director was approved
by a vote of at least a majority of the Incumbent Board, such new
director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued,
unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall
mean a merger, consolidation or reorganization with or into
the Company or in which securities of the Company are issued
where:
(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own directly or
indirectly immediately following such merger,
consolidation or reorganization, at least fifty percent
(50%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least a majority of the members of the board
of directors of the Surviving Corporation, or a
corporation beneficially directly or indirectly owning a
majority of the Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company, (ii) any Subsidiary,
(iii) any employee benefit plan (or any trust forming a
part thereof) that, immediately prior to such merger,
consolidation or reorganization, was maintained by the
Company or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of thirty percent
(30%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of thirty percent (30%)
or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its
common stock.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer
to a Subsidiary). Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any Person
(the "Subject Person") acquired Beneficial Ownership of more
than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or
Voting Securities by the Company which, by reducing the number
of Shares or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the
Subject Persons, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result of
the acquisition of Shares or Voting Securities by the Company,
and after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Shares
or Voting Securities which increases the percentage of the
then outstanding Shares or Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall
occur. If an Eligible Individual's employment is terminated by
the Company without Cause prior to the date of a Change in
Control but the Eligible Individual reasonably demonstrates
that the termination (A) was at the request of a third party
who has indicated or intention or taken steps reasonably
calculated to effect a change in control or (B) otherwise
arose in connection with, or in anticipation of, a Change in
Control which has been threatened or proposed, such
termination shall be deemed to have occurred after a Change in
Control for purposes of this Plan provided a Change in Control
shall actually have occurred.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10"Committee" means a committee, as described in Section 3.1, appointed
by the Board from time to time to administer the Plan and to perform
the functions set forth herein.
2.11"Company" means Clear Channel Communications, Inc.
2.12"Director" means a director of the Company.
2.13"Director Option" means an Option granted pursuant to Section 6.1.
2.14"Director Stock" has the meaning set forth in Section 6.2.
2.15 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment with the
Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of
"Disability", the term "Disability" as used in this Plan or any
Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains
in effect; and
(b) in all other cases, the term "Disability" as used in this Plan or
any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform
substantially his or her duties for a period of one hundred eighty
(180) consecutive days.
2.16"Division" means any of the operating units or divisions of the Company
designated as a Division by the Committee.
2.17"Dividend Equivalent Right" means a right to receive all or some
portion of the cash dividends that are or would be payable with respect to
Shares.
2.18"Eligible Director" means a director of the Company who is not an
employee of the Company or any Affiliate of the Company.
2.19"Eligible Individual" means any director (other than an Eligible
Director), officer or employee of the Company or a Subsidiary, or
any consultant or advisor who is receiving cash compensation
from the Company or a Subsidiary, designated by the Committee as
eligible to receive Options or Awards subject to the conditions set
forth herein.
2.20"Employee Option" means an Option granted pursuant to Section 5.
2.21"Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.22"Fair Market Value" on any date means the closing sales prices of the
Shares on such date on the principal national securities exchange on
which such Shares are listed or admitted to trading, or, if such Shares
are not so listed or admitted to trading, the average of the per Share
closing bid price and per Share closing asked price on such date as
quoted on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked
quotations with respect to Shares on such date, the Fair Market Value
shall be the value established by the Board in good faith and, in the
case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.23"Grantee" means a person to whom an Award has been granted under the
Plan.
2.24"Incentive Stock Option" means an Option satisfying the requirements of
Section 422 of the Code as it may exist from time to time and
designated by the Committee as an Incentive Stock Option. Each
Incentive Stock Option granted hereunder shall comply with Section 422
of the Code as it may exist from time to time.
2.25"Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated
under the Exchange Act.
2.26"Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.
2.27"Option" means a Nonqualified Stock Option, an Incentive Stock Option,
a Director Option, or any or all of them.
2.28"Optionee" means a person to whom an Option has been granted under the
Plan.
2.29"Outside Director" means a director of the Company who is an "outside
director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.30"Parent" means any corporation that is a parent corporation (within the
meaning of Section 424(e) of the Code) with respect to the Company.
2.31"Performance Awards" means Performance Units, Performance Shares or
either or both of them.
2.32"Performance Cycle" means the time period specified by the Committee at
the time Performance Awards are granted during which the performance of
the Company, a Subsidiary or a Division will be measured.
2.33"Performance Objectives" has the meaning set forth in Section 11.
2.34"Performance Shares" means Shares issued or transferred to an Eligible
Individual under Section 11.
2.35"Performance Units" means Performance Units granted to an Eligible
Individual under Section 11.
2.36"Plan" means the Clear Channel Communications, Inc. 1998 Stock
Incentive Plan, as amended and restated from time to time.
2.37"Pooling Transaction" means an acquisition of the Company in a
transaction that is intended to be treated as a "pooling of interests"
under generally accepted accounting principles.
2.38"Restricted Stock" means Shares issued or transferred to an Eligible
Individual pursuant to Section 10.
2.39"Retained" has the meaning set forth in Section 6.2.
2.40"Shares" means the common stock, par value $0.10 per share, of the
Company.
2.41"Stock Appreciation Right" means a right to receive all or some portion
of the increase in the value of the Shares as provided in Section 8
hereof.
2.42"Subsidiary" means any corporation that is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the
Company.
2.43"Successor Corporation" means a corporation, or a parent or subsidiary
thereof within the meaning of Section 424(a) of the Code, which issues
or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.
2.44"Ten-Percent Stockholder" means an Eligible Individual, who, at the
time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1 Except for a grant of Director Options, the Plan shall be administered
by the Committee, which shall hold meetings at such times as may be
necessary for the proper administration of the Plan. With respect to a
grant of Director Options, such grants shall be determined by the
Board. The Committee shall keep minutes of its meetings. A quorum shall
consist of not fewer than two members of the Committee and a majority
of a quorum may authorize any action. Any decision or determination
reduced to writing and signed by a majority of all of the members of
the Committee shall be as fully effective as if made by a majority vote
at a meeting duly called and held. The Committee shall consist of at
least two (2) directors of the Company and may consist of the entire
Board; provided, however, that (A) if the Committee consists of less
than the entire Board, each member shall be a Nonemployee Director and
(B) to the extent necessary for any Option or Award intended to qualify
as performance-based compensation under Section 162(m) of the Code to
so qualify, each member of the Committee, whether or not it consists of
the entire Board, shall be an Outside Director. No member of the
Committee shall be liable for any action, failure to act, determination
or interpretation made in good faith with respect to this Plan or any
transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or
her duties. The Company hereby agrees to indemnify each member of the
Committee for all costs and expenses and, to the extent permitted by
applicable law, any liability incurred in connection with defending
against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising
in connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee Options
shall be granted under the Plan and the number of such Employee
Options to be granted and to prescribe the terms and conditions
(which need not be identical) of each such Employee Option,
including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Option
Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall be granted
under the Plan and to determine the number of Stock Appreciation
Rights, Performance Awards, Shares of Restricted Stock and/or
Dividend Equivalent Rights to be granted pursuant to eachAward,
the terms and conditions of each Award, including the restrictions
or Performance Objectives relating to Shares, the maximum value of
each Performance Share and make any amendment or modification to
any Award Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and Awards
granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not
limited to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Agreement, in
the manner and to the extent it shall deem necessary or advisable
so that the Plan complies with applicable law including Rule 16b-3
under the Exchange Act and the Code to the extent applicable, and
otherwise to make the Plan fully effective. All decisions and
determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its
Subsidiaries, the Optionees and Grantees, and all other persons
having any interest therein;
(d) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for
purposes of the Plan;
(e) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of Options
and Awards granted under the Plan is 7,500,000; provided, however, that
in the aggregate, not more than one-third of the number of allotted
Shares may be made the subject of Restricted Stock Awards under Section
10 of the Plan (other than shares of Restricted Stock made in
settlement of Performance Units pursuant to Section 11.2(b)). The
maximum number of Shares that an Eligible Individual may receive in any
calendar year period in respect of Options and Awards may not exceed
1,000,000 Shares. The maximum dollar amount of cash or the Fair Market
Value of Shares that any Eligible Individual may receive in any
calendar year during the term of the Plan in respect of Performance
Units denominated in dollars may not exceed $5,000,000. Upon a Change
in Capitalization, the maximum number of Shares referred to in the
first two sentences of this Section 4.1 shall be adjusted in number and
kind pursuant to Section 13. The Company shall reserve for the purposes
of the Plan, out of its authorized but unissued Shares or out of Shares
held in the Company's treasury, or partly out of each, such number of
Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further
Options and Awards shall be reduced as follows:
(a) In connection with the granting of an Option or an Award (other
than the granting of a Performance Unit denominated in dollars),
the number of Shares shall be reduced by the number of Shares in
respect of which the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit denominated
in dollars, the number of Shares shall be reduced by an amount
equal to the quotient of (i) the dollar amount in which the
Performance Unit is denominated, divided by (ii) the Fair Market
Value of a Share on the date the Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof expires, is
canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option
or Award, the Shares allocable to the expired, canceled or otherwise
terminated portion of the Option or Award may again be the subject of
Options or Awards granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, and the terms and
conditions of the grant to such Eligible Individuals shall be set forth
in an Agreement.
5.2 Purchase Price. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement;
provided, however, that the purchase price per Share under each
Incentive Stock Option shall not be less than 100% of the Fair Market
Value of a Share on the date the Employee Option is granted (110% in
the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).
5.3 Maximum Duration. Employee Options granted hereunder shall be for such
term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years
from the date it is granted (five (5) years in the case of an Incentive
Stock Option granted to a Ten-Percent Stockholder) and a Nonqualified
Stock Option shall not be exercisable after the expiration of ten (10)
years from the date it is granted. The Committee may, subsequent to the
granting of any Employee Option, extend the term thereof, but in no
event shall the term as so extended exceed the maximum term provided
for in the preceding sentence.
5.4 Vesting. Subject to Section 7.4, each Employee Option shall become
exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the
Agreement. To the extent not exercised, installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the Employee Option expires.
The Committee may accelerate the exercisability of any Employee Option
or portion thereof at any time.
5.5 Modification. No modification of an Employee Option shall adversely
alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
5.6 Limitation on Aggregate Value of Shares that May Become First
Exercisable During any Calendar Year Under an Incentive Stock Option.
Except as is otherwise provided in this Plan, with respect to any
Incentive Stock Option granted under this Plan, the aggregate Fair
Market Value of Shares subject to an Incentive Stock Option and the
aggregate Fair market Value of Shares or shares of stock of any
Subsidiary (or a predecessor of the Company or a Subsidiary) subject to
any other incentive stock option (within the meaning of Section 422 of
the Code) of the Company or its Subsidiaries (or a predecessor
corporation of any such corporation) that first become purchasable by a
holder in any calendar year may not (with respect to that holder)
exceed $100,000, or such other amount as may be prescribed under
Section 422 of the Code or applicable regulations or rulings from time
to time. As used in the previous sentence, Fair Market Value shall be
determined as of the date the Incentive Stock Option is granted. For
purposes of this Section 5.6 "predecessor corporation" means (a) a
corporation that was a party to a transaction described in Section
424(a) of the Code (or which would be so described if a substitution or
assumption under that Section had been effected) with the Company, (b)
a corporation which, at the time the new incentive stock option (within
the meaning of Section 422 of the Code) is granted, is a Subsidiary of
the Company or a predecessor corporation of any such corporations, or
(c) a predecessor corporation of any such corporations. Failure to
comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of
Shares to be reclassified in accordance with the Code.
6. Option Grants for Nonemployee Directors.
6.1 Discretionary Awards. From time to time the Board may elect to grant
Director Options to Eligible Directors. In making such grants the Board
shall take into consideration the contribution such Eligible Directors have
made or may make to the success of the Company and such other
considerations as the Board may from time to time specify. The Board shall
determine the number of shares subject to such Director Options, and,
subject to provisions of the Plan, the exercise price, vesting schedule and
terms of such Director Options.
6.2 Director Stock.
(a) The Company intends to pay each Eligible Director (and at the
discretion of the Board certain employee directors) an annual
retainer in the amount set from time to time by the Board (the
"Retainer"). Each Director shall be entitled to receive his or
her Retainer exclusively in cash, exclusively in shares of Stock
("Director Stock") or any portion in cash and any portion in
Director Stock. Each Director shall be given the opportunity,
during the month the Director first becomes a Director and during
the last month of each quarter thereafter, to elect among these
choices for the remainder of the quarter (in the case of the
election made when the Director first becomes a Director) and for
the following quarter (in the case of any subsequent election).
If the Director chooses to receive at least some of his or her
Retainer in Director Stock, the election shall also indicate
the percentage of the Retainer to be paid in Director Stock. If a
Director makes no election during his or her first opportunity to
make an election, the Director shall be assumed to have elected to
receive his or her entire Retainer in cash. If a Director makes
no election during any succeeding election month, the Director
shall be assumed to have remade the election then currently in
effect for that Director. An election by a Director to receive a
portion of his or her retainer in Director Stock shall either (i)
be approved by (A) the Committee or (B) the Board or (ii) provide
that Director Stock received by the Director pursuant to such
election shall be held by the Director for a period of at least
six months.
(b) The Company shall make the first issuance of shares of Director
Stock on the first trading day of the first full calendar quarter
after February 10, 1998. Subsequent issuances of Director Stock
shall be made on the first trading day of each subsequent calendar
quarter and shall be made to all Persons who are Directors on that
trading day except any Director whose Retainer is to be paid
entirely in cash. The number of shares of Stock is issuable to
those Directors on the relevant trading date indicated above shall
equal:
[ % multiplied by (R/4) ] divided by P
WHERE:
% = the percentage of the Director's Retainer that the Director
elected or is deemed to have elected to receive in the form of
Director Stock, expressed as a decimal;
R = the Director's Retainer for the year during which the issuance
occurs; and
P = the closing price, as quoted on the principal exchange on which
Shares are traded, on the date of issuance. Director Stock shall
not include any fractional shares. Fractions shall be rounded to
the nearest whole share.
7. Terms and Conditions Applicable to All Options.
7.1 Non-Transferability. Unless set forth in the Agreement evidencing the
Option (other than an Incentive Stock Option) at the time of grant or
at any time thereafter, an Option granted hereunder shall not be
transferable by the Optionee to whom granted except by will or the laws
of descent and distribution or pursuant to a domestic relations order
(within the meaning of Rule 16a-12 promulgated under the Exchange Act),
and an Option may be exercised during the lifetime of such Optionee
only by the Optionee or his or her guardian or legal representative.
The terms of such Option shall be final, binding and conclusive upon
the beneficiaries, executors, administrators, heirs and successors of
the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the
number of Shares to be purchased and accompanied by payment therefor
and otherwise in accordance with the Agreement pursuant to which the
Option was granted. The purchase price for any Shares purchased
pursuant to the exercise of an Option shall be paid, as determined by
the Committee in its discretion, in either of the following forms (or
any combination thereof): (i) cash or (ii) the transfer of Shares to
the Company upon such terms and conditions as determined by the
Committee. In addition, both Employee Options and Director Options may
be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures (other than Share withholding) which are,
from time to time, deemed acceptable by the Committee, and the
Committee may authorize that the purchase price payable upon exercise
of an Employee Option may be paid by having Shares withheld that
otherwise would be acquired upon such exercise. Any Shares transferred
to the Company (or withheld upon exercise) as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option. The Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the
Company who shall endorse thereon a notation of such exercise and
return such Agreement to the Optionee. No fractional Shares (or cash in
lieu thereof) shall be issued upon exercise of an Option and the number
of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
7.3 Rights of Optionees. Optionee shall not be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii)
the Company shall have issued and delivered Shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee shall have
full voting, dividend and other ownership rights with respect to such
Shares, subject to such terms and conditions as may be set forth in the
applicable Agreement.
7.4 Effect of Change in Control. In the event of a Change in Control, all
Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable. In addition, to the extent set forth
in an Agreement evidencing the grant of an Employee Option, an Optionee
will be permitted to surrender to the Company for cancellation within
sixty (60) days after such Change in Control any Employee Option or
portion of an Employee Option to the extent not yet exercised and the
Optionee will be entitled to receive a cash payment in an amount equal
to the excess, if any, of (x) (A) in the case of a Nonqualified Stock
Option, the greater of (1) the Fair Market Value, on the date preceding
the date of surrender, of the Shares subject to the Employee Option or
portion thereof surrendered or (2) the Adjusted Fair Market Value of
the Shares subject to the Employee Option or portion thereof
surrendered or (B) in the case of an Incentive Stock Option, the Fair
Market Value, on the date preceding the date of surrender, of the
Shares subject to the Employee Option or portion thereof surrendered,
over (y) the aggregate purchase price for such Shares under the
Employee Option or portion thereof surrendered. In the event an
Optionee's employment with, or service as a Director of, the Company
terminates following a Change in Control, each Option held by the
Optionee that was exercisable as of the date of termination of the
Optionee's employment or service shall remain exercisable for a period
ending not before the earlier of (A) the first anniversary of the
termination of the Optionee's employment or service or (B) the
expiration of the stated term of the Option.
8. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in connection with the
grant of an Employee Option, grant Stock Appreciation Rights in accordance
with the Plan, the terms and conditions of which shall be set forth in an
Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same Shares covered by the Option (or such lesser
number of Shares as the Committee may determine) and shall, except as
provided in this Section 8, be subject to the same terms and conditions as
the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at any
time if unrelated to an Option, or (ii) if related to an Option, either
at the time of grant, or at any time thereafter during the term of the
Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in connection with an
Option shall be exercisable at such time or times and only to the
extent that the related Options are exercisable, and will not be
transferable except to the extent the related Option may be
transferable. A Stock Appreciation Right granted in connection
with an Incentive Stock Option shall be exercisable only if the
Fair Market Value of a Share on the date of exercise exceeds the
purchase price specified in the related Incentive Stock Option
Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation Right
related to an Option, the Grantee shall be entitled to receive an
amount determined by multiplying (A) the excess of the Fair Market
Value of a Share on the date preceding the date of exercise of
such Stock Appreciation Right over the per Share purchase price
under the related Option, by (B) the number of Shares as to which
such Stock Appreciation Right is being exercised. Notwithstanding
the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including
such a limit in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted
in connection with an Option, the Option shall be canceled to the
extent of the number of Shares as to which the Stock Appreciation
Right is exercised, and upon the exercise of an Option granted in
connection with a Stock Appreciation Right, the Stock Appreciation
Right shall be canceled to the extent of the number of Shares as
to which the Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee may
grant to Eligible Individuals Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall contain
such terms and conditions as to exercisability (subject to Section
8.7), vesting and duration as the Committee shall determine, but in no
event shall they have a term of greater than ten (10) years. Upon
exercise of a Stock Appreciation Right unrelated to an Option, the
Grantee shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a Share on the
date preceding the date of exercise of such Stock Appreciation Right
over the Fair Market Value of a Share on the date the Stock
Appreciation Right was granted, by (B) number of Shares as to which the
Stock Appreciation Right is being exercised. Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable
with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it
is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee,
the Grantee shall deliver the Agreement evidencing the Stock
Appreciation Right being exercised and the Agreement evidencing any
related Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such Agreement to the
Grantee.
8.5 Form of Payment. Payment of the amount determined under Sections 8.2(b)
or 8.3 may be made in the discretion of the Committee solely in whole
Shares in a number determined at their Fair Market Value on the date
preceding the date of exercise of the Stock Appreciation Right, or
solely in cash, or in a combination of cash and Shares. If the
Committee decides to make full payment in Shares and the amount payable
results in a fractional Share, payment for the fractional Share will be
made in cash.
8.6 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Stock Appreciation Rights or
accept the surrender of outstanding Awards of Stock Appreciation Rights
(to the extent not exercised) and grant new Awards in substitution for
them. Notwithstanding the foregoing, no modification of an Award shall
adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
8.7 Effect of Change in Control. In the event of a Change in Control, all
Stock Appreciation Rights shall become immediately and fully
exercisable. In addition, to the extent set forth in an Agreement
evidencing the grant of a Stock Appreciation Right unrelated to an
Option, a Grantee will be entitled to receive a payment from the
Company in cash or stock, in either case, with a value equal to the
excess, if any, of (A) the greater of (x) the Fair Market Value, on the
date preceding the date of exercise, of the underlying Shares subject
to the Stock Appreciation Right or portion thereof exercised and (y)
the Adjusted Fair Market Value, on the date preceding the date of
exercise, of the Shares over (B) the aggregate Fair Market Value, on
the date the Stock Appreciation Right was granted, of the Shares
subject to the Stock Appreciation Right or portion thereof exercised.
In the event a Grantee's employment with the Company terminates
following a Change in Control, each Stock Appreciation Right held by
the Grantee that was exercisable as of the date of termination of the
Grantee's employment shall remain exercisable for a period ending not
before the earlier of the first anniversary of (A) the termination of
the Grantee's employment or (B) the expiration of the stated term of
the Stock Appreciation Right.
9. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible Individuals and
Eligible Directors in tandem with an Option or Award or as a separate
award. The terms and conditions applicable to each Dividend Equivalent
Right shall be specified in the Agreement under which the Dividend
Equivalent Right is granted. Amounts payable in respect of Dividend
Equivalent Rights may be payable currently or deferred until the lapsing of
restrictions on such Dividend Equivalent Rights or until the vesting,
exercise, payment, settlement or other lapse of restrictions on the Option
or Award to which the Dividend Equivalent Rights relate. In the event that
the amount payable in respect of Dividend Equivalent Rights are to be
deferred, the Committee shall determine whether such amounts are to be held
in cash or reinvested in Shares or deemed (notionally) to be reinvested in
Shares. If amounts payable in respect of Dividend Equivalent Rights are to
be held in cash, there may be credited at the end of each year (or portion
thereof) interest on the amount of the account at the beginning of the year
at a rate per annum as the Committee, in its discretion, may determine.
Dividend Equivalent Rights may be settled in cash or Shares or a
combination thereof, in a single installment or multiple installments.
10. Restricted Stock.
10.1Grant. The Committee may grant Awards to Eligible Individuals of
Restricted Stock, which shall be evidenced by an Agreement between the
Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its
discretion, determine and (without limiting the generality of the
foregoing) such Agreements may require that an appropriate legend be
placed on Share certificates. Awards of Restricted Stock shall be
subject to the terms and provisions set forth below in this Section 10.
10.2Rights of Grantee. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the
Grantee has executed an Agreement evidencing the Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require as a
condition to the issuance of such Shares. If a Grantee shall fail to
execute the Agreement evidencing a Restricted Stock Award, the
appropriate blank stock powers and, in the discretion of the Committee,
an escrow agreement and any other documents which the Committee may
require within the time period prescribed by the Committee at the time
the Award is granted, the Award shall be null and void. At the
discretion of the Committee, Shares issued in connection with a
Restricted Stock Award shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by
the Committee. Unless the Committee determines otherwise and as set
forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares and to
receive all dividends or other distributions paid or made with respect
to the Shares.
10.3Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner
set forth in Section 10.4, such Shares shall not be sold, transferred
or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee.
10.4Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement
evidencing the Award shall set forth any such restrictions.
(b) Effect of Change in Control. Unless the Committee shall determine
otherwise at the time of the grant of an Award of Restricted
Stock, the restrictions upon Shares of Restricted Stock shall
lapse upon a Change in Control. The Agreement evidencing the Award
shall set forth any such provisions.
10.5Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Restricted Stock or accept
the surrender of outstanding Shares of Restricted Stock (to the extent
the restrictions on such Shares have not yet lapsed) and grant new
Awards in substitution for them. Notwithstanding the foregoing, no
modification of an Award shall adversely alter or impair any rights or
obligations under the Agreement without the Grantee's consent.
10.6Treatment of Dividends. At the time an Award of Shares of Restricted
Stock is granted, the Committee may, in its discretion, determine that
the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on such Shares by the Company shall be (i)
deferred until the lapsing of the restrictions imposed upon such Shares
and (ii) held by the Company for the account of the Grantee until such
time. In the event that dividends are to be deferred, the Committee
shall determine whether such dividends are to be reinvested in shares
of Stock (which shall be held as additional Shares of Restricted Stock)
or held in cash. If deferred dividends are to be held in cash, there
may be credited at the end of each year (or portion thereof) interest
on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its discretion, may determine. Payment of
deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together
with interest accrued thereon, if any, shall be made upon the lapsing
of restrictions imposed on the Shares in respect of which the deferred
dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares.
10.7Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all
restrictions hereunder.
11. Performance Awards.
11.1(a) Performance Objectives. Performance Objectives for Performance
Awards may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return
on equity or assets, (vi) revenues, (vii) EBITDA, (viii) market
share or market penetration or (ix) any combination of the
foregoing. Performance Objectives may be in respect of the
performance of the Company and its Subsidiaries(which may be on a
consolidated basis), a Subsidiary or a Division. Performance
Objectives may be absolute or relative and may be expressed in
terms of a progression within a specified range. The Performance
Objectives with respect to a Performance Cycle shall be
established in writing by the Committee by the earlier of (i) the
date on which a quarter of the Performance Cycle has elapsed or
(ii) the date which is ninety (90) days after the commencement of
the Performance Cycle, and in any event while the performance
relating to the Performance Objectives remain substantially
uncertain. At the time of the granting of a Performance Award and
to the extent permitted under Section 162(m) of the Code and the
regulations thereunder, the Committee may provide for the manner
in which the Performance Objectives will be measured to reflect
the impact of specified corporate transactions, extraordinary
events, accounting changes and other similar events.
(b) Determination of Performance. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any
Performance Award made to a Grantee who is subject to Section
162(m) of the Code, the Committee shall certify in writing that
the applicable Performance Objectives have been satisfied.
11.2Performance Units. The Committee, in its discretion, may grant Awards
of Performance Units to Eligible Individuals, the terms and conditions
of which shall be set forth in an Agreement between the Company and the
Grantee. Performance Units may be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified
Performance Objectives within the Performance Cycle, represent the
right to receive payment as provided in Section 11.2(b) of (i) in the
case of Share-denominated Performance Units, the Fair Market Value of a
Share on the date the Performance Unit was granted, the date the
Performance Unit became vested or any other date specified by the
Committee, (ii) in the case of dollar-denominated Performance Units,
the specified dollar amount or (iii) a percentage (which may be more
than 100%) of the amount described in clause (i) or (ii) depending on
the level of Performance Objective attainment; provided, however, that,
the Committee may at the time a Performance Unit is granted specify a
maximum amount payable in respect of a vested Performance Unit. Each
Agreement shall specify the number of Performance Units to which it
relates, the Performance Objectives which must be satisfied in order
for the Performance Units to vest and the Performance Cycle within
which such Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 11.1(b) and 11.4, a
Grantee shall become vested with respect to the Performance Units
to the extent that the Performance Objectives set forth in the
Agreement are satisfied for the Performance Cycle.
(b) Payment of Awards. Subject to Section 11.1(b), payment to Grantees
in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which
such Award relates unless the Agreement evidencing the Award
provides for the deferral of payment, in which event the terms and
conditions of the deferral shall be set forth in the Agreement.
Subject to Section 11.4, such payments may be made entirely in
Shares valued at their Fair Market Value as of the day preceding
the date of payment or such other date specified by the Committee,
entirely in cash, or in such combination of Shares and cash as the
Committee in its discretion shall determine at any time prior to
such payment; provided, however, that if the Committee in its
discretion determines to make such payment entirely or partially
in Shares of Restricted Stock, the Committee must determine the
extent to which such payment will be in Shares of Restricted Stock
and the terms of such Restricted Stock at the time the Award is
granted.
11.3Performance Shares. The Committee, in its discretion, may grant Awards
of Performance Shares to Eligible Individuals, the terms and conditions
of which shall be set forth in an Agreement between the Company and the
Grantee. Each Agreement may require that an appropriate legend be
placed on Share certificates. Awards of Performance Shares shall be
subject to the following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time an Award
of Performance Shares is made the time or times at which the actual
Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be
issued until the Grantee has executed an Agreement evidencing the
Award, the appropriate blank stock powers and, in the discretion of
the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such
Performance Shares. If a Grantee shall fail to execute the
Agreement evidencing an Award of Performance Shares, the
appropriate blank stock powers and, in the discretion of the
Committee, an escrow agreement and any other documents that the
Committee may require within the time period prescribed by the
Committee at the time the Award is granted, the Award shall be null
and void. At the discretion of the Committee, Shares issued in
connection with an Award of Performance Shares shall be deposited
together with the stock powers with an escrow agent (which may be
the Company) designated by the Committee. Except as restrictedby
the terms of the Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have, in the discretion of the
Committee, all of the rights of a stock-holder with respect to such
Shares, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the
Shares.
(b) Non-transferability. Until any restrictions upon the Performance
Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 11.3(c) or 11.4, such Performance Shares shall
not be sold, transferred or otherwise disposed of and shall not be
pledged or otherwise hypothecated, nor shall they be delivered to
the Grantee. The Committee may also impose such other restrictions
and conditions on the Performance Shares, if any, as it deems
appropriate.
(c) Lapse of Restrictions. Subject to Sections 11.1(b) and 11.4,
restrictions upon Performance Shares awarded hereunder shall lapse
and such Performance Shares shall become vested at such time or
times and on such terms, conditions and satisfaction of
Performance Objectives as the Committee may, in its discretion,
determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of Performance
Shares is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on actual Shares represented by
such Award which have been issued by the Company to the Grantee
shall be (i) deferred until the lapsing of the restrictions
imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in shares of Stock
(which shall be held as additional Performance Shares) or held in
cash. If deferred dividends are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on
the amount of the account at the beginning of the year at a rate
per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Performance Shares
(whether held in cash or in additional Performance Shares),
together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Performance Shares in
respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon)in
respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a
stock certificate to be delivered to the Grantee with respect to
such Shares, free of all restrictions hereunder.
11.4Effect of Change in Control. In the event of a Change in Control:
(a) With respect to Performance Units, the Grantee shall (i) become
vested in a percentage of Performance Units as determined by the
Committee at the time of the Award of such Performance Units and
as set forth in the Agreement and (ii) be entitled to receive in
respect of all Performance Units, which become vested as a result
of a Change in Control a cash payment within ten (10) days after
such Change in Control in an amount as determined by the Committee
at the time of the Award of such Performance Unit and as set forth
in the Agreement.
(b) With respect to Performance Shares, restrictions shall lapse
immediately on all or a portion of the Performance Shares as
determined by the Committee at the time of the Award of such
Performance Shares and as set forth in the Agreement.
(c) The Agreements evidencing Performance Shares and Performance Units
shall provide for the treatment of such Awards (or portions
thereof) which do not become vested as the result of a Change in
Control, including, but not limited to, provisions for the
adjustment of applicable Performance Objectives.
11.5Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Performance Awards or accept the
surrender of outstanding Performance Awards and grant new Performance
Awards in substitution for them. Notwithstanding the foregoing, no
modification of a Performance Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's
consent.
12. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each Award shall set forth
the terms and conditions applicable to such Option or Award upon a termination
or change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), which, except for Director Options,
shall be as the Committee may, in its discretion, determine at the time the
Option or Award is granted or thereafter.
13. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under the Plan, (ii)
the maximum number and class of Shares or other stock or securities
with respect to which Options or Awards may be granted to any Eligible
Individual during the term of the Plan, (iii) the number and class of
Shares or other stock or securities which are subject to outstanding
Options or Awards granted under the Plan and the purchase price
therefor, if applicable, (iv) the number and class of Shares or other
securities in respect of which Director Options are to be granted under
Section 6 and (v) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or securities subject
to outstanding Incentive Stock Options (including any adjustments in
the purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to
the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new, additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria
that were applicable to the Shares subject to the Award or Option, as
the case may be, prior to such Change in Capitalization.
14. Effect of Certain Transactions.
Subject to Sections 7.4, 8.7, 10.4(b) and 11.4 or as otherwise provided in
an Agreement, in the event of (i) the liquidation or dissolution of the
Company or (ii) a merger or consolidation of the Company (a "Transaction"),
the Plan and the Options and Awards issued hereunder shall continue in
effect in accordance with their respective terms, except that following a
Transaction each Optionee and Grantee shall be entitled to receive in
respect of each Share subject to any outstanding Options or Awards, as the
case may be, upon exercise of any Option or payment or transfer in respect
of any Award, the same number and kind of stock, securities, cash, property
or other consideration that each holder of a Share was entitled to receive
in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain
subject to all of the conditions, restrictions and performance criteria
that were applicable to the Options and Awards prior to such Transaction.
15. Interpretation.
Following the required registration of any equity security of the Company
pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant Agreement, each
Option, Stock Appreciation Right and Performance Award granted under
the Plan is intended to be performance-based compensation within the
meaning of Section 162(m)(4)(C) of the Code. The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options or Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options or Awards to fail to qualify
as performance-based compensation.
16. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee may take such actions, if
any, as are specifically recommended by an independent accounting firm
retained by the Company to the extent reasonably necessary in order to
assure that the Pooling Transaction will qualify as such, including but not
limited to (i) deferring the vesting, exercise, payment, settlement or
lapsing of restrictions with respect to any Option or Award, (ii) providing
that the payment or settlement in respect of any Option or Award be made in
the form of cash, Shares or securities of a successor or acquirer of the
Company, or a combination of the foregoing, and (iii) providing for the
extension of the term of any Option or Award to the extent necessary to
accommodate the foregoing, but not beyond the maximum term permitted for
any Option or Award.
17. Termination and Amendment of the Plan.
The Plan does not have a fixed termination date, provided that no Incentive
Stock Option shall be granted hereunder subsequent to February 10, 2008.
The Board may terminate the Plan and the Board may at any time and from
time to time amend, modify or suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or termination shall impair
or adversely alter any Options or Awards theretofore granted under the
Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee
or Grantee of any Shares which he or he may have acquired through or as
a result of the Plan; and
(b) to the extent necessary under applicable law, no amendment shall be
effective unless approved by the stockholders of the Company in
accordance with applicable law.
18. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in
specific cases.
19. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed
to:
(i) give any person any right to be granted an Option or Award other than
at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any Subsidiary to
terminate the employment of any person at any time; or
(iv)be evidence of any agreement or understanding, expressed or implied,
that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
20. Regulations and Other Approvals; Governing Law.
20.1Except as to matters of federal law, the Plan and the rights of all
persons claiming here-under shall be construed and determined in
accordance with the laws of the State of Texas without giving effect to
conflicts of laws principles thereof.
20.2The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.
20.3The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or
to obtain for Eligible Individuals granted Incentive Stock Options the
tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
20.4Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan
is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the
grant of an Option or Award or the issuance of Shares, no Options or
Awards shall be granted or payment made or Shares issued, in whole or
in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions as
acceptable to the Committee.
20.5Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
and is not otherwise exempt from such registration, such Shares shall
be restricted against transfer to the extent required by the Securities
Act and Rule 144 or other regulations thereunder. The Committee may
require any individual receiving Shares pursuant to an Option or Award
granted under the Plan, as a condition precedent to receipt of such
Shares, to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pu
rsuant to an exemption applicable under the Securities Act or the rules
and regulations promulgated thereunder. The certificates evidencing any
of such Shares shall be appropriately amended to reflect their status
as restricted securities as aforesaid.
21. Miscellaneous.
21.1Multiple Agreements. The terms of each Option or Award may differ from
other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Individual during the term of the Plan, either in addition
to, or in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.
21.2Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes taxable income
in connection with the receipt of Shares or cash hereunder (a
"Taxable Event"), the Optionee or Grantee shall pay to the
Company an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld
by the Company in connection with the Taxable Event (the "With-
holding Taxes") prior to the issuance, or release from escrow, of
such Shares or the payment of such cash. The Company shall have
the right to deduct from any payment of cash to an Optionee or
Grantee an amount equal to the Withholding Taxes in satisfaction
of the obligation to pay Withholding Taxes. In satisfaction of
the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion
of the Committee, to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value equal
to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any
Share or Shares issued to such Optionee pursuant to the exercise
of an Incentive Stock Option within the two-year period commencing
on the day after the date of the grant or within the one-year
period commencing on the day after the date of transfer of such
Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify
the Company thereof, by delivery of written notice to the Company
at its principal executive office.
21.3Effective Date. The effective date of this Plan shall be as determined
by the Board, subject only to the approval by the affirmative vote of
the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly
held in accordance with the applicable laws of the State of Texas
within twelve (12) months of the adoption of the Plan by the Board.
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC.
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Shareholders to be held May 5, 1998
The undersigned hereby appoints L. Lowry Mays and Alan D. Feld, and
each of them, proxies of the undersigned with full power of substitution for and
in the name, place and stead of the undersigned to appear and act for and to
vote all shares of CLEAR CHANNEL COMMUNICATIONS, INC. standing in the name of
the undersigned or with respect to which the undersigned is entitled to vote and
act at the Annual Meeting of Shareholders of said Company to be held in San
Antonio, Texas on May 5, 1998 at 11:00 A.M., central time, or at any
adjournments or postponements thereof, with all powers the undersigned would
possess of then personally present, as indicated on the reverse side.
This undersigned acknowledges receipt of notice of said meeting and
accompanying Proxy Statement and of the 1997 Annual Report and ratifies and
confirms all acts that any of the said proxy holders or their substitutes may
lawfully do or cause to be done by virtue hereof.
(Continued and to be dated and signed on the reverse side.)
CLEAR CHANNEL COMMUNICATIONS, INC.
P.O. BOX 11181
NEW YORK, N.Y. 10203-0181
<PAGE>
1. Election of Directors FOR all seven nominees listed below [ ]
WITHHOLD AUTHORITY to vote for all seven
nominees below [ ] EXCEPTIONS* [ ]
Nominees: L. Lowry Mays Karl Eller Mark P. Mays Alan D. Feld
B.J. McCombs Theodore H. Strauss John H. Williams
(INSTRUCTIONS: To withhold authority to vote for any individual nominee
mark the "EXCEPTIONS" box and write that nominee's name in the space
provided below.)
*Exceptions: _______________________________________________________
2. Approval of the Clear Channel Communications, Inc. 1998 Stock Incentive
Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Amendment of the Company's Articles of Incorporation to increase the
number of authorized shares of Preferred Stock and Common Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Ratification of the selection of Ernst & Young LLP as independent
auditors for the year ending December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment(s)
thereof.
Change of Address and/or Comments: [ ]
Please sign your name exactly as it appears hereon. Joint owners should
sign personally. Attorney, Executor, Administrator, Trustee or Guardian should
indicate full title.
Dated:____________________________________, 1998
_________________________________________
Shareholder's signature
_________________________________________
Shareholder's signature if stock held jointly
Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope.
Votes MUST be indicated (X) in Black or Blue Ink.
