<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-2
KING WORLD PRODUCTIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
KING WORLD PRODUCTIONS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing the Information Statement)
Payment of filing fee (check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), or 14c-5(g).
[ ] Fee computed on table below per Exchange Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
KING WORLD PRODUCTIONS, INC.
1700 BROADWAY
NEW YORK, NEW YORK 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 13, 1997
The Annual Meeting of Stockholders of King World Productions, Inc. ("King
World" or the "Company") will be held at the Hotel InterContinental, 444 St.
Charles Street, New Orleans, Louisiana 70130, on the 13th day of January, 1997,
at 10:00 a.m. (local time), for the following purposes:
1. to elect three directors to the Company's Board of Directors;
2. to consider and vote upon a proposal to approve amendments to the
Company's 1995 Amended and Restated Stock Option and Restricted Stock
Purchase Plan;
3. to consider and vote upon the selection of Arthur Andersen LLP,
independent public accountants, as the auditors of the Company for the
fiscal year ending August 31, 1997; and
4. to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 29, 1996
as the record date for the determination of the stockholders of the Company
entitled to notice and to vote at the Annual Meeting of Stockholders. Each share
of the Company's Common Stock is entitled to one vote on all matters presented
at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO ATTEND
THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN
PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
Diana King
Corporate Secretary
December 5, 1996
<PAGE> 3
KING WORLD PRODUCTIONS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 13, 1997
INTRODUCTION
This Proxy Statement is being furnished to stockholders of record of King
World Productions, Inc. ("King World" or the "Company") as of November 29, 1996
in connection with the solicitation by the Board of Directors of King World of
proxies for the 1997 Annual Meeting of Stockholders to be held at the Hotel
InterContinental, 444 St. Charles Street, New Orleans, Louisiana 70130, on
January 13, 1997 at 10:00 am. (local time), or at any adjournments thereof, for
the purposes stated in the Notice of Annual Meeting. The approximate date of
mailing of this Proxy Statement and enclosed form of proxy to stockholders is
December 5, 1996.
As of the close of business on November 29, 1996, the Company had
outstanding 37,360,196 shares of Common Stock, $.01 par value ("Common Stock").
Each share of Common Stock is entitled to one vote on all matters presented at
the Annual Meeting. The presence, either in person or by properly executed
proxy, of the holders of a majority of the shares of Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting.
If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
stockholder signing it, either by a written notice of revocation received by the
person or persons named therein or by voting the shares covered thereby in
person or by another proxy dated subsequent to the date thereof.
Proxies in the accompanying form will be voted in accordance with the
instructions indicated thereon, and, if no such instructions are indicated, will
be voted in favor of the nominees for election as directors named below and for
the other proposals referred to below.
The vote required for approval of each of the proposals before the
shareholders at the Annual Meeting is specified in the description of such
proposal below. For the purpose of determining whether a proposal has received
the required vote, abstentions, where permitted, will be included in the vote
total, with the result that an abstention will have the same effect as a
negative vote. Under the rules of the New York Stock Exchange, Inc. ("NYSE"),
brokers who hold shares in "street name" for customers have the authority to
vote on certain items in the absence of instructions from their customers, the
beneficial owners of the shares. Under these rules, brokers that do not receive
instructions are entitled to vote on the election of the three nominees for
director, the approval of the amendments to the 1995 Amended and Restated Stock
Option and Restricted Stock Purchase Plan, and the selection of Arthur Andersen
LLP as auditors for the Company.
1. ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a Board of
Directors classified into three classes, as nearly equal in number as possible,
each with a term of office of three years, expiring sequentially at successive
annual meetings of stockholders. The entire Board of Directors is comprised of
seven directors. On October 10, 1996, the size of the Board of Directors was
decreased to seven from eight Directors following the resignation of Stephen W.
Palley from the Board of Directors on August 31, 1996. Three directors will be
elected at the 1997 Annual Meeting of Stockholders for terms of three years each
and until their respective successors are elected and qualified.
The shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the three nominees for the Board of
Directors named below. If, as a result of circumstances not known or unforeseen,
any of such nominees shall be unavailable to serve as a director, proxies will
be voted for the election of such other person or persons as the Board of
Directors may select. Each nominee for director will
<PAGE> 4
be elected by a plurality of votes cast at the Annual Meeting of Stockholders.
Proxies will be voted "for" the election of the three nominees unless
instructions to "withhold" votes are set forth on the proxy card. Withholding
votes will not influence voting results. Abstentions may not be specified as to
the election of directors. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE TO ELECT THE THREE NOMINEES FOR THE BOARD OF DIRECTORS NAMED BELOW.
NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
- -------------------- ------------------------------------------------------------ ---------
<S> <C> <C>
Roger King.......... Chairman of the Board, King World 1977
Michael King........ President, Chief Executive Officer and Interim Chief
Operating Officer, King World 1973
Richard King........ Real estate developer 1988
CONTINUING DIRECTORS
Ronald S. Konecky... Of counsel, law firm of Frankfurt, Garbus, Klein & Selz 1984
James M. Rupp....... President and Chief Executive Officer, JR Communications,
Inc. 1986
Diana King.......... Vice President and Corporate Secretary, King World 1976
Joel Chaseman....... Chairman, Chaseman Enterprises International, Inc. 1990
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the nominees
for the office of director, each director whose term of office will continue
after the 1997 Annual Meeting of Stockholders, and each other executive officer
of King World:
NOMINEES
Roger King, 52, has been an executive officer and a director of the Company
since 1977 and has served as Chairman of the Board of the Company since August
1984.
Michael King, 48, has been an executive officer and a director of the
Company since 1973 and has served as President and Chief Executive Officer of
the Company since August 1984. Mr. King was named Interim Chief Operating
Officer on September 1, 1996, as successor to Stephen W. Palley, whose
employment agreement as Executive Vice President and Chief Operating Officer
expired on August 31, 1996.
Richard King, 55, is a major stockholder of King World and acted as a
consultant to the Company from 1984 through the end of the 1996 fiscal year. He
is principally engaged in real estate development in Florida. Mr. King has
served as a director of the Company since 1988.
CONTINUING DIRECTORS
Ronald S. Konecky, 66, has been a director of the Company since August
1984. Since August 1985, Mr. Konecky has been of counsel to the law firm of
Frankfurt, Garbus, Klein & Selz, where he practices with emphasis on matters in
the entertainment field, including the representation of individuals and
companies in the television industry. Mr. Konecky's current term as a director
will expire in 1998.
James M. Rupp, 60, has been a director of the Company since 1986. Mr. Rupp
is President and Chief Executive Officer of JR Communications, Inc., which is
based in Minneapolis, Minnesota. JR Communications, Inc. was founded by him in
February 1992 after Midwest Communications, Inc. ("Midwest") was sold to CBS,
Inc. Mr. Rupp was, at the time of such sale, President and Chief Executive
Officer and one of the largest shareholders of Midwest. In that capacity, he was
responsible for all the operations of Midwest, which encompassed five television
stations, two radio stations and Midwest Cable & Satellite, Inc., which includes
Midwest Sports Channel. Mr. Rupp's current term as a director will expire in
1998.
Diana King, 46, has been a director of the Company since 1976, has served
as Vice President -- Special Projects since March 1984 and as Corporate
Secretary of the Company since February 1986. Ms. King's current term as a
director will expire in 1999.
2
<PAGE> 5
Joel Chaseman, 70, has served as a director since 1990. Mr. Chaseman is
currently Chairman of Chaseman Enterprises International, Inc. He was a Vice
President of The Washington Post Company from June 1973 until January 1991. From
June 1973 until January 1990, Mr. Chaseman also served as Chief Executive
Officer of Post-Newsweek Stations, Inc., a subsidiary of The Washington Post
Company that operated four television stations. In addition, from March 1988
until January 1990, Mr. Chaseman served as Chairman of Post-Newsweek Stations,
Inc. Mr. Chaseman's current term as a director will expire in 1999.
OTHER EXECUTIVE OFFICERS
King World's executive officers, in addition to Michael King, Roger King
and Diana King are as follows:
Steven R. Hirsch, 47, was named President of the Company's wholly-owned
subsidiary, Camelot Entertainment Sales, Inc., in July 1987. He joined Camelot
in February 1984 as Vice President -- Sales.
Michael Spiessbach, 53, was named President of King World Ventures, the
newly formed division of the Company, with responsibility for its investment and
acquisition program, in September 1996. For the two years prior to joining King
World Ventures, he had been Chairman of his own international consulting firm,
Marketing Financial Services International, and for three years prior to that he
was the President of Printon Kane International, an affiliate of a broker
dealer. Prior to these appointments he had been President of the entrepreneurial
group which established the first private regional satellite system in Asia.
Robert V. Madden, 48, was named Senior Vice President, Administration, of
the Company in September 1996. For more than five years prior to joining the
Company, Mr. Madden practiced law in his own law firm.
Jonathan Birkhahn, 43, was named Senior Vice President, Business Affairs
and General Counsel in September 1993. He joined the Company in 1988 as Vice
President, Legal and Business Affairs, and was named Vice President, Business
Affairs and General Counsel in 1991.
Steven A. LoCascio, 38, was named Interim Chief Financial Officer in May
1995. He has been a Vice President of the Company since May 1991, and has served
as Controller since joining the Company in September 1989.
Michael King, Roger King, Diana King and Richard King are parties to an
agreement pursuant to which each has agreed that, in the event he or she desires
to sell any shares of the Company's capital stock, he or she will first offer
such shares to the Company. The purchase price of the shares, in the case of a
public sale, is the fair market value of such shares as of the date of the
stockholder's offer to the Company or, in the case of a private sale, is the
purchase price proposed to be paid by the buyer. The agreement also limits the
number of shares that any party may sell in the public securities markets during
any calendar year. Under certain circumstances, such agreement may prevent a
takeover of the Company.
Michael King, Roger King, Diana King and Richard King are children of the
late Charles and Lucille King, King World's founders.
During fiscal 1996, the Board of Directors of the Company held three
meetings. The only standing committees of the Board of Directors are the Audit
Committee and the Compensation Committee. The current members of the Audit
Committee and the Compensation Committee are Messrs. Chaseman, Konecky and Rupp.
The Audit Committee periodically consults with the Company's management and
independent public accountants on financial matters, including the Company's
internal financial controls and procedures. The Audit Committee held one meeting
in fiscal 1996. The Compensation Committee approves compensation arrangements
for the Company's executive officers and administers the Company's 1995 Amended
and Restated Stock Option and Restricted Stock Purchase Plan. The Compensation
Committee held ten meetings in fiscal 1996.
Each Director of the Company who is not also an employee of or a consultant
to the Company or any of its subsidiaries (currently Messrs. Richard King,
Chaseman, Konecky and Rupp) is entitled to receive an annual fee of $45,000, as
well as $1,000 for each meeting of the Board of Directors or any committee
thereof attended by such director. In the 1996 fiscal year, Richard King
received annual compensation of $15,600 for serving as a consultant to the
Company and did not receive any director's fees. As of August 31, 1996, the
Company terminated the consulting arrangement with Mr. King, and thereafter Mr.
King was eligible to receive director's fees on the same basis as the other
non-employee directors.
3
<PAGE> 6
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the Company's knowledge, except for Michael King, Roger King, Diana King
and Richard King, the only persons or groups that may be deemed to own
beneficially 5% or more of the Company's outstanding Common Stock are the
following:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS
------------------------------------------------------------- ------------ --------
<S> <C> <C>
Goldman, Sachs & Co.......................................... 2,024,716(1) 5.4%
85 Broad Street
New York, NY 10004
State Street Bank and Trust Company.......................... 2,103,601(2) 5.6%
Post Office Box 1389
Boston, MA 02104
GSB Investment Mgmt., Inc.................................... 1,875,557(3) 5.0%
301 Commerce Street
Suite 1501
F. Worth, TX 76102
Mellon Bank Corporation...................................... 2,174,000(4) 5.8%
One Mellon Bank Center
Pittsburgh, PA 15258
</TABLE>
- ---------------
(1) According to the Schedule 13G filed by Goldman, Sachs & Co. on February 14,
1996.
(2) According to the Schedule 13G filed by State Street Bank and Trust Company
on February 13, 1996.
(3) According to the Schedule 13G filed by GSB Investment Mgmt., Inc. on
February 1, 1996.
(4) According to the Schedule 13G filed by Mellon Bank Corporation on January
22, 1996.
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of November 29, 1996, by (i) each of
the Company's directors, (ii) each of the Company's executive officers named in
the compensation table below and (iii) the Company's executive officers and
directors as a group. Except as otherwise indicated, each nominee named in the
table has sole voting and investment power with respect to the shares shown as
beneficially owned by him or her.
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME OF SHARES OF CLASS
------------------------------------------------------------- ------------- --------
<S> <C> <C>
Roger King................................................... 2,324,900(1) 6.1%
Michael King................................................. 2,458,150(2) 6.5%
Richard King................................................. 1,939,131 5.2%
Diana King................................................... 2,120,700(3) 5.7%
Joel Chaseman................................................ 22,500(4) *
Ronald S. Konecky............................................ 5,000 *
James M. Rupp................................................ 17,868(5) *
Stephen W. Palley............................................ 150,000(4) *
Steven R. Hirsch............................................. 72,000(4) *
Steven A. LoCascio........................................... 32,000(4) *
Executive officers and directors as a group (10 persons)..... 9,142,249(6) 23.6%
</TABLE>
- ---------------
(1) Includes 540,000 shares issuable upon exercise of currently exercisable
stock options, and excludes 5,750 shares held by Mrs. Roger King.
(2) Includes 540,000 shares issuable upon exercise of currently exercisable
stock options, and excludes 600 shares of Common Stock held by Mrs. Michael
King in trust for the benefit of her nephews.
(3) Includes 35,000 shares held by a charitable foundation of which Ms. King is
a director. Ms. King disclaims beneficial ownership of such shares and
shares voting right with respect to such shares with the other directors of
the foundation.
(4) Shares issuable upon exercise of currently exercisable stock options.
(5) Includes 7,500 shares issuable upon exercise of currently exercisable stock
options.
(6) Includes an aggregate 1,364,000 shares issuable upon exercise of currently
exercisable stock options.
* Less than 1%.
4
<PAGE> 7
CERTAIN TRANSACTIONS
Robert King has served as Senior Vice President -- Strategic
Planning/Acquisitions of the Company since April 1994. Mr. King has an
employment agreement with the Company that provides for salary compensation at
the rate of $400,000 per annum through the year 2000, and an option under the
Company's 1995 Amended and Restated Stock Option and Restricted Stock Plan to
purchase 100,000 shares of Common Stock at an exercise price per share equal to
the closing price of the Common Stock on April 22, 1994 ($34.25), the date of
his employment agreement. Mr. King's right to exercise such option is subject to
vesting over a five-year period (at the rate of 20% per year for the first three
years and 40% in the fifth year). Prior to assuming his current position, Mr.
King had been employed by the Company since December 1991, assisting in
strategic planning, and received salary compensation at the rate of $400,000 per
annum. Mr. King had formerly served as President of television distribution for
Orion Pictures, Coca Cola Telecommunications and Columbia Pictures Television.
He was President and a director of the Company from 1973 until March 1984. Mr.
King is a brother of Michael, Roger, Diana and Richard King.
Ronald S. Konecky, a director of the Company, is of counsel to the law firm
of Frankfurt, Garbus, Klein & Selz, which has been retained by the Company in
connection with certain legal matters.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
To the Company's knowledge, all statements of beneficial ownership required
to be filed with the Securities and Exchange Commission in fiscal 1995 were
timely filed.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information as to the
Chief Executive Officer and the four other highest paid executive officers of
the Company for the fiscal years ended August 31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
AWARDS
--------------
ANNUAL COMPENSATION (G) PAYOUTS
-------------------------------------- SECURITIES ------------- (I)
(A) (E) UNDERLYING (H) ALL OTHER
NAME AND (B) (C) (D) OTHER ANNUAL OPTIONS/SARS LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION (#) PAYOUTS($) ($)
- --------------------------- ---- ---------- ---------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael King............... 1996 $1,100,000 $5,627,000 -- 1,500,000/0 -- $159,000(7)(6)
President and Chief 1995 $1,050,000 $1,760,000 -- -- $4,228,000(3) $ 9,000(6)
Executive Officer 1994 $1,000,000 $2,268,000 120,000(1) 0/270,000(2) -- $ 10,000(6)
Roger King................. 1996 $1,100,000 $5,627,000 -- 1,500,000/0 -- $ 69,000(8)(6)
Chairman of the Board 1995 $1,050,000 $1,760,000 -- -- $4,228,000(3) $ 9,000(6)
1994 $1,000,000 $2,268,000 120,000(1) 0/270,000(2) -- $ 10,000(6)
Stephen W. Palley.......... 1996 $ 500,000 $1,108,000 -- -- -- $ 9,000(6)
Executive Vice President 1994 $ 500,000 $ 895,000 -- -- -- $ 9,000(6)
and Chief Operating 1995 $ 500,000 $ 802,000 -- 250,000/0(5) -- $ 10,000(6)
Officer(4)
Steven R. Hirsch........... 1996 $ 475,000 $ 249,000 -- -- -- $ 9,000(6)
President, Camelot 1995 $ 450,000 $ 280,000 -- -- -- $ 9,000(6)
Entertainment Sales, Inc. 1994 $ 450,000 $ 296,000 -- 100,000/0 -- $ 10,000(6)
Steven A. LoCascio......... 1996 $ 172,500 $ 50,000 -- -- -- $ 9,000(6)
Interim Chief Financial 1995 $ 160,000 $ 30,000 -- -- -- $ 7,700(6)
Officer, Vice President 1994 $ 146,000 $ 20,000 -- 50,000/0 -- $ 7,400(6)
and Controller
</TABLE>
- ---------------
(1) Represents the grant of 120,000 phantom stock units, of which 40,000 became
eligible for redemption on the last day of the 1994 fiscal year and 20,000
of which became eligible for redemption on the last day of each of the
quarters of the 1995 fiscal year, subject to the achievement of certain
specified target prices for the Common Stock.
(2) Represents the grant of 270,000 phantom stock appreciation units, of which
90,000 became eligible for redemption on the last day of the 1994 fiscal
year and 45,000 of which became eligible for redemption on the last day of
each of the quarters of the 1995 fiscal year, conditioned upon the average
price of the Common Stock during specified measurement periods exceeding the
fair market value of the Common Stock on the date the stock appreciation
units were granted. 225,000 of the phantom stock appreciation units were
redeemed on May 31, 1995 for $768,000. The 45,000 unredeemed phantom stock
appreciation units expired on August 31, 1995.
(3) Represents the payout from 100,000 of the phantom stock units, which were
redeemed on May 31, 1995. All of the unredeemed phantom stock units expired
on August 31, 1995.
(4) Mr. Palley was employed as Chief Operating Officer and a Director from
October 1987 to August 1996 and was employed as Executive Vice President
from March 1989 to August 1996.
(5) Mr. Palley's option to purchase 100,000 shares of the Company's Common Stock
lapsed unexercised upon the termination of his employment with the Company.
The term of Mr. Palley's option to purchase the remaining 150,000 shares
under such option will expire on August 31, 1997.
(6) Represents Company contributions to the King World Productions, Inc.
Retirement Savings Plan.
(7) Represents a $150,000 payment for that portion of an annual premium for life
and disability insurance coverage that the Company is obligated to reimburse
Michael King pursuant to his Employment Agreement.
(8) Represents a $60,000 payment for that portion of an annual premium for life
and disability insurance coverage that the Company is obligated to reimburse
Roger King pursuant to his Employment Agreement.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options to the named executive officers during the fiscal year ended
August 31, 1996:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
(A) (B) (C) (D) (E) (F) (G)
- -------------------------------- ------------ ------------ -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael King.................... 1,500,000(1) 43.7% $39.50 12/20/05 $37,262,029 $94,429,214
Roger King...................... 1,500,000(1) 43.7% $39.50 12/20/05 $37,262,029 $94,429,214
Stephen W. Palley............... -- -- -- -- -- --
Steven R. Hirsch................ -- -- -- -- -- --
Steven A. LoCascio.............. -- -- -- -- -- --
</TABLE>
- ---------------
(1) See "Employment Agreements -- Michael King and Roger King".
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth the number of options exercised and the
value realized upon exercise by the named executive officers during the fiscal
year ended August 31, 1996 and the value of outstanding options held by such
executive officers as of August 31, 1996:
<TABLE>
<CAPTION>
(D)
--------------------- (E)
(B) NUMBER OF --------------------
----------- SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER UNEXERCISED IN-THE-MONEY
OF SHARES OPTIONS AT OPTIONS AT
(A) ACQUIRED (C) FISCAL YEAR END FISCAL YEAR END
- ----------------------------------------- ON EXERCISE -------------- EXERCISABLE/ EXERCISABLE/
NAME OF OPTIONS VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- -------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Michael King............................. -- -- 540,000/1,200,000 $5,388,300/0
Roger King............................... -- -- 540,000/1,200,000 $5,388,300/0
Stephen W. Palley........................ -- -- 180,000/0 $ 679,440/0
Steven R. Hirsch......................... 30,000 $841,295 72,000/40,000 $ 233,040/0
Steven A. LoCascio....................... 1,500 $ 12,000 32,000/30,000 $ 129,000/0
</TABLE>
The market value of the Company's Common Stock as of the close of business
on August 31, 1996, as reflected by the closing price of the Common Stock on the
NYSE, was $35.25 per share.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of the
executive officers named in the table above. The following describes those
employment agreements.
Michael King and Roger King
Employment agreements with each of Michael King and Roger King, as the
Company's President and Chief Executive Officer, and Chairman of the Board,
respectively, were entered into on December 20, 1995 and provide for employment
by the Company from December 1, 1995 through August 31, 2000. The employment
agreements provide for a base salary in the Company's 1997 fiscal year for each
of the two
7
<PAGE> 10
executive officers of $1,200,000, with an increase of $100,000 in each
subsequent fiscal year. From September 1, 1995 through November 30, 1995, prior
to the execution of their current employment agreements, each of Michael and
Roger King was paid a base salary based upon an annual rate of $1,100,000, the
rate of their salaries for the remainder of the 1996 fiscal year.
In addition, the employment agreements provide for a "Net Income Bonus" for
each of Michael and Roger King equal to 1.5% of the Company's first $50,000,000,
2.0% of the next $50,000,000 and 2.5% of the excess over $100,000,000, of the
Company's Modified Consolidated Net Income. The bonus was paid for an initial
period commencing on December 1, 1995 and ending on August 31, 1996, and
thereafter is to be determined and paid for each full fiscal year of the Company
ending August 31, 2000 (unless the employment agreements are earlier
terminated).
For the purpose of determining the Net Income Bonus, "Modified Consolidated
Net Income" means the net income of King World and its consolidated subsidiaries
after taxes but before extraordinary items, except that, to the extent that any
revenues and expenses are includable in "New Show Profits" for purposes of
determining the "New Show Profits Bonus" for any fiscal period (as described
below), they will be excluded in the determination of the Net Income Bonus for
such fiscal period (whether or not a New Show Profits Bonus is in fact payable
with respect to such fiscal period).
At the end of each fiscal quarter of each fiscal year during the term of
the employment agreements, the Compensation Committee will cause the Modified
Consolidated Net Income and the Net Income Bonus payable through the end of such
fiscal quarter to be determined. To the extent that the amount of the Net Income
Bonus payable through the end of such fiscal quarter exceeds the sum of all Net
Income Bonus payments theretofore made to Michael King or Roger King, as the
case may be, in respect of prior fiscal quarters of the fiscal year to which
such Net Income Bonus relates, the excess will be paid to such executive as soon
as practicable after such determination is made; and to the extent that the
amount of all payments theretofore made to Michael King or Roger King, as the
case may be, in respect of prior fiscal quarters of the fiscal year to which
such Net Income Bonus relates exceeds the amount of the Net Income Bonus payable
to such executive through the end of such fiscal quarter, such executive shall
repay such excess to the Company promptly after such determination is made. To
the extent that either Michael King or Roger King is required to repay any such
amount to the Company, and he does not do so promptly, the Company may set off
or deduct such amount from any sum owed to him by the Company under his
employment agreement. The fact that the Company cannot or does not make such
set-offs or deductions will not relieve Michael or Roger King, as the case may
be, of any liability for the repayment of any amounts owed by him to the
Company.
The Company made a $2,000,000 bonus payment to each of Michael and Roger
King under the terms of their respective employment agreements upon their
execution thereof. If either Michael or Roger King terminates his employment
with the Company on his own initiative prior to September 1, 1998, he must
promptly repay a portion of the bonus equal to the product of $2,000,000 and a
fraction, the numerator of which is the number of months prior to September 1,
1998 following such termination (and including the month in which such
termination occurred) and the denominator of which is 36.
In addition, under their respective employment agreements, Michael King and
Roger King are each entitled to a "New Series Bonus" of $750,000 for each new
each first-run "strip" (i.e., Monday through Friday) syndicated series (each a
"New Series") that (i) is developed, or the distribution rights to which are
acquired, by King World during the term of the employment agreements, (ii)
premieres in a television season that commences after the 1995-1996 television
season but before eighteen months after the termination of the employment
agreements, (iii) is produced, co-produced or distributed by King World and (iv)
is cleared over the course of any such season in domestic television markets
covering at least 70% of the domestic television viewing households, based on
Nielsen ratings. The New Series Bonus will be payable, if at all, only one time
with respect to each New Series, no matter during how many television seasons
such New Series is aired. A New Series Bonus will be payable if the criteria set
forth above are satisfied, even if the New Series is canceled during the
television season in which it has been cleared in 70% of the domestic television
viewing households.
The employment agreements of Michael and Roger King also provide that the
Company shall pay each of Michael and Roger King a "New Show Profits Bonus" for
each new show (including, but not limited to,
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each show as to which a New Series Bonus has been paid, if any) that is
developed, or the distribution rights to which are acquired, by King World
during the term of the employment agreements, premieres before eighteen months
after the termination of the employment agreements, and is produced, co-produced
or distributed by King World (each, a "New Show"). The New Show Profits Bonus
payable to Michael and Roger King with respect to any New Show for any fiscal
year of the Company shall equal the excess, if any, of (i) 5% of the excess of
the cumulative revenues derived by the Company from such New Show (and from any
and all ancillary rights derived from such New Show, including merchandising,
theatrical and other commercial rights) through the end of the fiscal year for
which the determination is being made over the cumulative production and
development costs, including producers' fees, direct selling, marketing,
promotional and other distribution expenses, all third-party participations and
other payments, and all other direct out-of-pocket costs, in all cases to the
extent attributable to the New Show; over (ii) all payments of the New Show
Profits Bonus made with respect to such New Show for all prior fiscal years,
provided that the payment of a New Series Bonus with respect to such New Show
(if any) will be treated as an expense of such New Show but will not be an
offset against the New Show Profits Bonus. Any New Show Profits Bonus owed to
Michael or Roger King for any fiscal year will be paid as soon as practicable
after such audited financial statements for such fiscal year become available.
The New Show Profits Bonus for any New Show will be payable by the Company only
for so long as the Company or any of its consolidated subsidiaries derives any
revenues from the New Show, but the Company's profit realized upon any direct or
indirect disposition of a New Show will be subject to the New Show Profits
Bonus. After termination of Michael King's or Roger King's employment, the New
Show Profits Bonus will continue to be payable to such executive, but only with
respect to New Shows that were developed or produced primarily by the Company,
unless the former executive engages in certain specified competitive activities
prior to August 31, 2000.
The employment agreements also provide for a "Supplemental Bonus" to be
paid to each of Michael and Roger King each year of their respective employment
agreements, provided that the Compensation Committee determines that the average
daily closing price of the Common Stock for such fiscal year (the "Average
Yearly Price") exceeded $38.00. In no event may the total of all Supplemental
Bonus payments to either executive over the five year terms of their respective
employment agreements exceed $2.55 million.
If the Average Yearly Price for any such fiscal year equals or exceeds
$39.50, the fair market value of the Common Stock on December 20, 1995 (the date
the employment agreements were executed), the Supplemental Bonuses for such
fiscal year shall for each executive be equal to 1.0% of the Company's Modified
Consolidated Net Income for such fiscal year. If such Average Yearly Price
exceeds $38.00 but is less than $39.50, the Supplemental Bonuses for such year
shall for each executive be equal to 1.0% of Modified Consolidated Net Income
for such year multiplied by a fraction, the numerator of which is the excess of
such Average Yearly Price over $38.00, and the denominator of which is $1.50.
The full amount by which any Supplemental Bonus payments were so reduced
below 1.0% of Modified Consolidated Net Income for any fiscal year (after taxes
but before extraordinary items) will be payable if and only if the Average
Yearly Price for any subsequent fiscal year within the term of their respective
employment agreements equals or exceeds $39.50. A portion of the amount by which
any Supplemental Bonus payment was so reduced shall be payable to Michael or
Roger King, as applicable, if the Average Yearly Price for any subsequent fiscal
year or years during the term of their respective employment agreements is less
than $39.50 but greater than the Average Yearly Price for the year in which such
reduction was made, and the portion of such reduction that shall be payable in
such fiscal year shall be equal to the full amount of such reduction (or the
portion thereof that was not previously recouped), multiplied by a fraction, the
numerator of which is the excess of the Average Yearly Price for such subsequent
year over the Average Yearly Price for the year in which such reduction was made
and the denominator of which is the excess of $39.50 over the Average Yearly
Price for the year in which such reduction was made. To the extent that a
partial recoupment is made in a subsequent fiscal year, any amounts not recouped
by Michael or Roger King under the foregoing formula will remain available for
recoupment in subsequent years during the term of their respective employment
agreements. Any amounts not recouped by Michael or Roger King on or prior to the
making of the Supplemental Bonus payment in respect of the fiscal year ending
August 31, 2000 will no longer be subject to recoupment and will not be paid.
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<PAGE> 12
In accordance with their employment agreements, each of Michael and Roger
King has also been granted a non-qualified stock option to purchase 1,500,000
shares of Common Stock. The options vest at the rate of 20% per year on the last
day of each of the Company's 1996 through 2000 fiscal years (subject to the
conditions described below, except as otherwise noted). The exercise price of
such options is $39.50 per share, the fair market value on the date the
employment agreements of Michael and Roger King were executed and the options
were granted. Each such option has a term of ten years.
In the event that either Michael King's or Roger King's full-time
employment with the Company is terminated prior to the end of the term of his
employment agreement, other than after a "Change of Control" or on account of
his death, disability or incapacity, he will be entitled to exercise his option
with respect to all shares of Common Stock subject thereto which had vested as
of the date of such termination during the one-month period commencing on the
date his employment so terminated. In the event that either Michael King's or
Roger King's full-time employment with the Company terminates on account of his
death or disability (within the meaning of Section 22(e)(3) of the Internal
Revenue code of 1986, as amended (the "Code")), he (or his heirs, administrators
or legal representatives) will be entitled to exercise his option during the
one-year period commencing as of the date his employment so terminated to the
extent the option was vested at the time of his death or disability. In the
event that either Michael King's or Roger King's fulltime employment with the
Company is terminated after a "Change in Control", all shares subject to his
option that were not then vested will immediately vest, and he will be entitled
to exercise such option during the one-year period commencing as of the date his
employment so terminated.
For this purpose, a "Change in Control" means the occurrence of any one of
the following events: (i) a majority of the Board of Directors of the Company
consists of individuals other than "Incumbent Directors", which term means the
members of the Board of Directors on December 20, 1995, provided, that any
person becoming a director subsequent to such date whose election or nomination
for election was approved by at least two-thirds of the directors who then
comprised the Incumbent Directors shall be considered to be an Incumbent
Director; (ii) the Company, without the approval of Michael or Roger King, as
applicable, adopts any plan of liquidation providing for the distribution of all
or substantially all of its assets; or (iii) all or substantially all of the
assets or business of the Company and its consolidated subsidiaries are disposed
of pursuant to a merger, consolidation, reorganization, share exchange or other
transaction (unless the stockholders of the Company immediately prior to such
merger, consolidation, reorganization, share exchange or other transaction,
beneficially own, directly or indirectly, more than 50% of all the voting stock
or other ownership interests of the entity or entities, if any, that succeed to
the business of the Company).
During the term of the employment agreements, the Company is also obligated
to provide Michael and Roger King with life insurance coverage, each in the face
amount of $15,000,000, and disability insurance, if such coverage is available
at standard rates, upon terms to be agreed upon by the executives and the
Company.
Stephen W. Palley
Mr. Palley served as Executive Vice President and Chief Operating Officer
under an employment agreement entered into on December 21, 1993 and covering the
employment period from September 1, 1993 through August 31, 1996. Mr. Palley's
employment agreement provided for a base salary of $500,000 per year. Mr. Palley
was also entitled to receive an annual cash bonus of 0.4% of the Company's net
income after taxes but before extraordinary items, and a supplemental cash bonus
of an additional 0.4% of the Company's net income after taxes but before
extraordinary items (not to exceed $1.33 million over the three-year term of his
employment agreement), subject to the satisfaction of a performance condition
(the "S&P Performance Condition"), which required that the Company's return on
equity exceed the average return on equity of the companies comprising the
Standard & Poor's Composite Index of 500 Stocks (the "S&P 500 Index") (based on
the most recently published information available to the Company). Mr. Palley's
supplemental bonus was fully payable for any year during the term of his
employment agreement only if the average of the closing prices of the Common
Stock for such year (the "Average Yearly Price") was greater than or equal to
$38.875, the closing price of the Common Stock on December 21, 1993, the date of
Mr. Palley's employment agreement (the "Contract Date Price"). To the extent
that the Average Yearly Price was less than his Contract Date Price in any such
year, the supplemental bonus payable to Mr. Palley was reduced by
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<PAGE> 13
multiplying the full amount of the supplemental bonus otherwise payable by a
fraction, the numerator of which was the excess, if any, of the Average Yearly
Price over Mr. Palley's "Base Price" ($30) and the denominator of which was the
excess, if any, of his Contract Date Price over his Base Price. No supplemental
bonus was payable if the Average Yearly Price was less than his Base Price.
In addition, pursuant to the terms of his employment agreement, Mr. Palley
was granted a non-qualified stock option under the Company's 1995 Amended and
Restated Stock Option and Restricted Stock Purchase Plan to purchase 250,000
shares of Common Stock, at an exercise price equal to $38.875, the closing price
of the Common Stock on December 21, 1993, the date of grant. 20% of the shares
subject to such option vested on each of August 31, 1994, August 31, 1995 and
August 31, 1996, and may be exercised by Mr. Palley until August 31, 1997, one
year after the termination of his employment. The remaining 100,000 shares
subject to the option had not yet vested and lapsed on August 31, 1996 upon the
termination of Mr. Palley's employment with the Company.
Upon the termination of Mr. Palley's employment with the Company and his
service as a director, the Company and Mr. Palley entered into a termination and
consulting agreement pursuant to which the Company engaged Mr. Palley as a
consultant for a period ending December 31, 1996. Under the terms of such
agreement, Mr. Palley agreed to provide the Company with advice regarding the
transfer of his functions to his successor (and to those temporarily performing
the functions of the chief operating officer of the Company pending the
appointment of a successor) and to provide advice and information with respect
to certain projects that were in process as of the end of his employment tenure.
In consideration of such services, the Company agreed to pay Mr. Palley $250,000
and to provide him with health and hospitalization benefits through the end of
the consulting period.
Steven R. Hirsch
Mr. Hirsch serves as the President of Camelot Entertainment Sales, Inc.,
the wholly-owned barter advertising subsidiary of the Company, under an
employment agreement having a term that commenced on September 1, 1996 and ends
on August 31, 1999, with an option for the Company to extend the term an
additional two years, and provides for a base salary of $500,000 per year in the
first year, $525,000 in the second year, $550,000 in the third year and $600,000
in each year the Company exercises its option to extend the agreement. In each
of the Company's fiscal years under the agreement, Mr. Hirsch is also entitled
to an annual cash bonus equal to 1% of Camelot's net revenues (not to exceed
$200,000 in any of the first three years of the agreement or $250,000 during
either year the Company exercises its option to extend the agreement), and a
supplemental cash bonus (not to exceed $150,000 per year or $250,000 over the
term of his employment agreement), subject to the satisfaction of the S&P
Performance Condition. Mr. Hirsch's supplemental cash bonus is fully payable for
any year during the term of his employment agreement only if the Average Yearly
Price is greater than or equal to $38.875. To the extent that the Average Yearly
Price is less than $38.875 in any such year, the supplemental cash bonus payable
to Mr. Hirsch is reduced by multiplying the full amount of the supplemental cash
bonus otherwise payable by a fraction, the numerator of which is the excess, if
any, of the Average Yearly Price over Mr. Hirsch's "Base Price" ($32.625) and
the denominator of which is the excess, if any, of $38.875 over his Base Price.
No supplemental bonus is payable if the Average Yearly Price is less than his
Base Price.
In addition, pursuant to the terms of his employment agreement, Mr. Hirsch
has been granted a non-qualified stock option to purchase 150,000 shares of
Common Stock, pursuant to the Company's 1995 Amended and Restated Stock Option
and Restricted Stock Purchase Plan at an exercise price equal to $34.75, the
closing price of the Common Stock on September 3, 1996, the date of grant. 20%
of the shares subject to such options will vest on each of August 31, 1997,
August 31, 1998 and August 31, 1999, and the remainder will vest on August 31,
2001, subject to Mr. Hirsch's continued employment with the Company on that
date. The term of such option is ten years. If Mr. Hirsch ceases to be a
full-time employee of the Company or any of its subsidiaries or affiliates, he
will have the right to exercise the unexercised portion of such option only
within the one-month period following the date on which he ceased to be a
full-time employee, and then only to the extent that it was exercisable on the
date his employment ceased, except that if his employment ceased by reason of
his death or disability (within the meaning of sec. 22(e)(3) of the Code), such
one month period will instead be the one year period following the cessation of
his full-time employment.
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Steven A. LoCascio
Mr. LoCascio serves as Interim Chief Financial Officer, Vice President and
Controller of the Company under an amended employment agreement that commenced
on September 1, 1994, and had a term of two years, which at the Company's option
was extended for an additional one-year period. The employment agreement
provides for an annual salary of $160,000 for the first year, $172,500 for the
second year and $185,000 for the third year. Mr. LoCascio was granted a
non-qualified stock option to purchase 50,000 shares of Common Stock, pursuant
to the Company's 1995 Amended and Restated Stock Option and Restricted Stock
Purchase Plan, at an exercise price equal to $37.125 per share, the closing
price of the Common Stock on the date of grant. 20% of the shares subject to
such option vested on each of August 31, 1995 and August 31, 1996, 20% will vest
on August 31, 1997 and 40% will vest on August 31, 1999, subject to Mr.
LoCascio's continued employment with the Company on that date. If Mr. LoCascio
ceases to be a full-time employee of the Company or any of its subsidiaries or
affiliates, he will have the right to exercise the unexercised portion of such
option only within the one-month period following the date on which he ceased to
be a full-time employee, and then only to the extent it was exercisable on the
date his full-time employment ceased, except that if his employment ceased by
reason of his death or disability, then such one-month period will instead be
the one-year period following the cessation of his full-time employment. Mr.
LoCascio may also be entitled to a cash bonus if the Board of Directors of the
Company so determines.
In general, sec. 162(m) of the Code limits the Company's federal income tax
deduction for compensation paid in any year to its Chief Executive Officer and
to each of its four highest paid executive officers, other than the Chief
Executive Officer, to $1 million, unless such compensation is "performance based
compensation" within the meaning of sec. 162(m). To the extent that compensation
paid by the Company in any fiscal year to any of such executive officer exceeds
such amount and is not "performance based compensation" within the meaning of
sec. 162(m), it will not be deductible by the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors, whose members are
Messrs. Chaseman, Konecky and Rupp, was constituted in July 1993. The
Compensation Committee recommends compensation arrangements for the Company's
executive officers. Since January 1994, the members of the Compensation
Committee also have been responsible for determining the timing, amount,
exercise price and other terms of options granted under the Company's Amended
and Restated Stock Option and Restricted Stock Purchase Plan.
Ronald S. Konecky, a director of the Company, is of counsel to the law firm
of Frankfurt, Garbus, Klein & Selz, which has been retained by the Company in
connection with certain legal matters.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee recommends compensation arrangements for the
Company's executive officers and administers the Company's 1995 Amended and
Restated Stock Option and Restricted Stock Purchase Plan.
The Company's executive compensation program is structured to help the
Company achieve its business objectives by:
- setting levels of compensation designed to attract and retain superior
executives in a highly competitive environment;
- designing equity-related and other performance-based incentive
compensation programs to align the interests of management with the
ongoing interests of stockholders;
- providing incentive compensation that varies directly with both Company
financial performance and individual contributions to that performance;
and
- linking compensation to elements that affect short- and long-term stock
price performance.
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The Company has used a combination of salary and incentive compensation,
including cash bonuses and equity-based incentives (stock options and, in fiscal
1994, "phantom" stock and "phantom" stock appreciation units), to achieve its
compensation goals.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
For the 1996 fiscal year, the Company paid its executives and employees
several forms of compensation designed to motivate and reward executive
performance while aligning executive and shareholder interests. The primary
components of executive compensation in the 1996 fiscal year were salary,
performance-based compensation and stock options.
Salary
The salary levels of the Company's executive officers are intended to
reflect the duties and levels of responsibility inherent in the positions in
question. Comparisons of the salaries paid by other companies in the television
syndication industry and related industries to executives holding comparable
positions are considered in establishing the salary level for each position. The
particular qualifications of the individual holding the position, his or her
relevant experience and the importance to the Company of his or her expected
contribution are also considered in establishing salaries.
Performance-Based Compensation
Net Income and Profit Bonuses. Arrangements for bonus compensation for the
Company's executive officers are also negotiated individually with each
executive officer and are generally fixed by contract. Bonus compensation
arrangements take various forms, but generally are based on factors such as the
Company's financial performance, as measured by net income in the fiscal year,
and individual performance.
Certain of the Company's executive officers have a direct participation in
the Company's net income or the profits of a particular part of the Company's
business, depending on the executive's particular responsibilities. (The Company
has similar profit sharing arrangements with independent producers of the
Company's programming.) In some cases, executive officers have been awarded
supplemental cash bonuses with maximum dollar limits, the payout of which varies
depending on the average price of the Common Stock relative to a negotiated base
level.
Generally, the payment of cash bonuses is subject to performance conditions
designed to align the interests of the Company's executive officers with those
of its stockholders by ensuring that the amount of the bonuses paid to the
Company's executive officers is dependent upon the Company's achieving certain
performance conditions.
The Company has favored net income bonuses and profit participations, as
well as bonuses that vary with stock performance, because it believes that they
encourage executives to work harder and afford executives a direct pecuniary
interest in the portion of the Company's business for which they are
responsible. It is the Committee's understanding that net income and profit
participations are commonly employed in the television syndication and related
entertainment industries to encourage performance of talent and executive
personnel; indeed, such arrangements have been a feature of the Company's
compensation arrangements with its senior executives for the past several years.
In fiscal 1996, the persons named in the Summary Compensation Table above
received approximately $12.7 million in cash bonus compensation, of which
approximately $5.7 million was paid pursuant to the net income bonuses of
Michael King, Roger King and Stephen W. Palley and approximately $2.7 million
was paid pursuant to the supplemental bonus arrangements with Michael King,
Roger King, Stephen W. Palley and Steven R. Hirsch. Steven R. Hirsch was paid
$150,000 pursuant to a cash bonus based upon the net revenues of Camelot
Entertainment Sales, Inc., the wholly-owned barter subsidiary of the Company,
and Steven A. LoCascio was paid a $50,000 discretionary cash bonus.
New Show and Series Bonuses. The Company's President and Chief Executive
Officer and its Chairman of the Board of Directors also have arrangements for
bonuses to be paid upon the development or
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distribution of certain new shows and series. These bonuses are designed to
encourage the continued development of new programming by the Company and are
dependent upon the success of such programming.
Equity-Related Incentives
The Company's primary method of compensating senior executives has been
through the grant of stock options granted at the commencement of their
employment agreements. (To date, no mid-term grants have been made.) Stock
options granted to executive officers are generally long-term (10 years) and
vest over a five-year period in most cases. The Company has favored stock
options as a way of aligning management's interests with the long-term interests
of the Company's shareholders and inducing executives to remain with the Company
on a long-term basis. Individual awards for executives and employees, other than
the Company's President and Chief Executive Officer and Chairman of the Board of
Directors, are initially proposed by the Company's senior management. The
ultimate size of each award is made by the Compensation Committee, and the size
of an award reflects the Committee's judgment as to the extent to which the
executive can contribute to the Company's performance. With respect to this
component of compensation, the focus is not on rewarding an executive for his or
her current or past contributions, but rather on the impact the executive is
expected to have on the Company's future performance.
PRESIDENT AND CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS
Compensation arrangements for the Company's President and Chief Executive
Officer, Michael King, and its Chairman of the Board, Roger King, for the 1996
fiscal year were governed by the employment agreements entered into by the
Company and such executives during fiscal 1996. The employment agreements
provide for the payment of higher levels of compensation than previous
arrangements. In negotiating and approving the terms of the agreements, the
Committee considered proposals submitted by the executives, and its approval of
the overall compensation packages was influenced primarily by the success of the
Company's distribution and production operations over the past several years and
the unique contribution of these two executives to the Company's long- and
short-term profitability, including the Company's ability to obtain new
distribution properties, to develop and produce new programming and to
successfully distribute new and existing programming. During the course of its
negotiations with the executives, the Committee considered the previous levels
of compensation paid to Michael King, the President and Chief Executive Officer,
and Roger King, the Chairman of the Board, as well as compensatory benefits paid
to the chief executive officers and chairmen of other companies in the
television syndication and related entertainment industries whose profitability
was similar to that of the Company. The Committee also engaged an independent
compensation consultant.
The employment agreements provided for each of Michael and Roger King to
receive a base salary in the Company's 1996 fiscal year of $1.1 million, an
increase of 4.8% over the salary of each for the Company's 1995 fiscal year.
Under the terms of their respective employment agreement, each of Michael and
Roger King will receive a salary increase of $100,000 in each subsequent fiscal
year over the balance of the five-year term of such employment agreement.
Each of the employment agreements between the Company and Michael King and
Roger King provide for several forms of performance-based bonus compensation.
Under the agreements, Michael King, who is in charge of the Company's overall
programming acquisition, development and production activities, and Roger King,
the head of the Company's sales department, are each entitled to a cash bonus in
the form of a percentage of the Company's net income (after taxes but before
extraordinary items) ranging from 1.5 to 2.5%, depending on the level of such
net income. Each of Michael and Roger King received approximately $2,564,000 in
payment of such bonus in respect of fiscal year 1996. Each of the employment
agreements between the Company and Michael and Roger King also provide for the
payment of a "Supplemental Bonus" each year that the average daily closing price
of the Common Stock of the Company exceeds $38.00, with an additional bonus paid
each year such price exceeds $39.50. During fiscal 1996, the Supplemental Bonus
was payable to Michael and Roger King only for the period from December 1, 1995
to August 31, 1996. Because the average daily closing price of the Common Stock
of the Company exceeded $39.50 for the period of fiscal year 1996 covered by
their respective employment agreements, each of Michael and Roger King received
a
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Supplemental Bonus of approximately $1,063,000 for fiscal 1996. In no event may
the total of all Supplemental Bonus payments to either Michael or Roger King
over the five year terms of their respective employment agreements exceed $2.55
million.
The employment agreements of each of Michael King and Roger King include a
"New Series Bonus" of $750,000 for each new first-run "strip" (i.e.,
Monday-Friday) syndicated series that premieres in a television season that
commences after the 1995-1996 television season and that is cleared in any such
season in domestic television markets covering at least 70% of the domestic
television viewing households. No New Series Bonus was paid to either Michael
King or Roger King in fiscal 1996 as no new series were debuted by the Company
in that year.
The employment agreements of each of Michael King and Roger King also
include a "New Show Profits Bonus" based on the revenues generated by each new
show that is developed, or the distribution rights to which are acquired, by the
Company during the term of the employment agreements and that is produced, co-
produced or distributed by King World. After termination of Michael King's or
Roger King's employment, the New Show Profits Bonus will continue to be payable
unless the former executive engages in certain specified activities in
competition with the Company prior to August 31, 2000. No New Show Profits Bonus
was paid to either Michael King or Roger King in fiscal 1996 as no new
qualifying series have been introduced by the Company during the term of the
current employment agreements.
The compensation arrangements with the Company's President and Chief
Executive Officer and Chairman of the Board also provide for the issuance to
each of them of a non-qualified stock option to purchase 1,500,000 shares of
Common Stock. The options vest at the rate of 20% per year on the last day of
each of the Company's 1996 through 2000 fiscal years (subject to certain
conditions). The exercise price of such options is $39.50 per share, the fair
market value on the date the employment agreements of Michael and Roger King
were executed and the options were granted. Each such option has a term of ten
years.
The employment agreements of Michael and Roger King also provide for a
$2,000,000 payment to be paid by the Company to each of them within ten days
following the execution of their respective employment agreements. If either
Michael or Roger King terminates his employment with the Company on his own
initiative prior to September 1, 1998, he must promptly repay a pro-rated
portion of such bonus to the Company. The full $2,000,000 bonus was paid to each
of Michael and Roger King in fiscal 1996.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Code generally limits the Company's federal income
tax deduction for compensation paid in any year to its Chief Executive Officer
and to each of its four highest paid executive officers, other than the Chief
Executive Officer, to $1 million, to the extent that such compensation is not
"performance based compensation" within the meaning of sec. 162(m). Accordingly,
in structuring the Company's compensation arrangements with its President and
Chief Executive Officer and Chairman of the Board and its three other highest
paid executive officers, the Committee designed incentive formulas that may
qualify as "performance based compensation" in order to decrease the after-tax
cost of such arrangements to the Company. However, there can be no assurance
that the various incentive and performance related elements of the Company's
compensation arrangements with its five highest paid executive officers will in
fact qualify as "performance based compensation" under sec. 162(m) of the Code
or that the tax deductibility of compensation paid pursuant thereto will not in
fact be limited by the $1 million statutory cap on deductible executive
compensation.
Joel Chaseman
Ronald S. Konecky
James M. Rupp
15
<PAGE> 18
STOCK PERFORMANCE GRAPHS
The following graphs compare the cumulative total stockholder returns, over
the periods presented, on the Company's Common Stock, the Standard & Poor's
Composite Index of 500 Stocks and the capital stocks of a representative group
of companies1 whose operations include television programming. The fiscal
year-end values of each investment are based on share price appreciation plus
reinvested dividends, and assume an initial investment of $100.
As indicated in the charts, the market price of the Company's Common Stock
(adjusted for stock splits and dividends) has increased from $1.11 in December
1984, the time of the Company's initial public offering of Common Stock, to
$28.00 on August 31, 1991 and $35.25 on August 31, 1996. This represents stock
price appreciation of almost 3100% since the initial public offering and 26%
over the Company's last five fiscal years.
FIVE YEAR CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) KING WORLD S & P 500 PEER GROUP
<S> <C> <C> <C>
8/31/91 100 100 100
8/31/92 88 108 114
8/31/93 133 124 181
8/31/94 135 131 155
8/31/95 136 159 190
8/31/96 126 189 144
</TABLE>
- ---------------
1In calculating the returns for August 31, 1996, the peer group of
companies includes the following: All American Communications, dick clark
productions, Kushner-Locke, Spelling Entertainment, Time-Warner, Inc., Tribune
Co. and Viacom, Inc. For the group returns calculated prior to August 31, 1996,
Samuel Goldwyn Company and Multimedia were also included in the peer group. For
group returns calculated on and prior to August 31, 1993, Paramount
Communications, Pathe Communications and RHI Communications were included in the
peer group, but Viacom, Inc. was not included. Changes in the peer group
composition were caused by mergers and consolidations within the television
programming industry.
16
<PAGE> 19
CUMULATIVE TOTAL RETURNS SINCE THE COMPANY'S INITIAL PUBLIC OFFERING
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) KING WORLD S & P 500 PEER GROUP
<S> <C> <C> <C>
12/5/84 100 100 100
8/31/85 425 119 146
8/31/86 936 166 194
8/31/87 1914 223 247
8/31/88 1291 183 219
8/31/89 1967 255 351
8/31/90 1802 242 217
8/31/91 2523 308 269
8/31/92 2219 332 301
8/31/93 3345 382 474
8/31/94 3401 403 409
8/31/95 3423 490 502
8/31/96 3175 582 380
</TABLE>
The above report of the Compensation Committee and the Stock Performance
Graph will not be deemed to be soliciting material or to be filed with or
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934 (the "Exchange Act"), except
to the extent that the Company specifically incorporates such report or graph by
reference.
2. APPROVAL OF AMENDMENTS TO THE COMPANY'S 1995 AMENDED AND RESTATED STOCK
OPTION AND RESTRICTED STOCK PURCHASE PLAN
At the Annual Meeting, the stockholders will be asked to approve amendments
to the Company's 1995 Amended and Restated Stock Option and Restricted Stock
Purchase Plan (the "Plan"). The Plan, adopted in fiscal 1989 and amended on
fiscal years 1994 and 1995, provides for the granting of "nonqualified stock
options" and "incentive stock options" to acquire Common Stock and/or the
granting of rights to purchase Common Stock on a "restricted stock" basis.
Subject to stockholder approval of the amendments described below, the Plan has
been amended and restated in its entirety and redesignated as the "1996 Amended
and Restated Stock Option and Restricted Stock Purchase Plan". The amendments
will (i) increase the number of shares of the Company's Common Stock available
for the grant of options and rights to purchase Common Stock under the Plan by
500,000 shares; and (ii) adopt a formula-based grant of options to Non-Employee
Directors under the Plan. The Plan defines a "Non-Employee Director" as a
Non-Employee Director within the meaning of Rule 16b-3 of the Exchange Act.
(i) INCREASE IN THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK
AVAILABLE FOR THE GRANT OF OPTIONS AND RIGHTS TO PURCHASE COMMON STOCK UNDER THE
PLAN. The Plan amendments provide for an increase in the number of shares of
Common Stock available for the grant of options and for issuance under
restricted stock awards by 500,000 shares. Previously, an aggregate 7,800,000
shares of Common Stock had been authorized for issuance under the Plan (and
predecessor plans) and an aggregate 2,550,000 shares had been authorized for
issuance (and were issued) to the Company's senior executives under the
Company's Incentive Equity Plan for Senior Executives. As of November 29, 1996,
310,698 shares of Common Stock remained available for issuance under the Plan.
17
<PAGE> 20
The Company has in the past used, and intends in the future to use, stock
options as an important incentive device to motivate and reward its employees,
and believes that equity incentives represented by stock options enhance the
Company's ability to attract and retain needed personnel.
(ii) FORMULA-BASED GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS. The
Company believes that a stock-based plan that provides long-term rewards to
Non-Employee Directors which coincide with the long-term stock price
appreciation realizable by the stockholders is an appropriate device to align
the interests of the Non-Employee Directors with those of the stockholders, as
well as to attract and retain as directors the most capable persons available.
The amendments to the Plan provide for a formula-based grant of options to
the Non-Employee Directors. The options so granted will be "non-qualified stock
options", will have a term of ten years (subject to continued service as a
director of the Company or any of its subsidiaries) and will have an exercise
price equal to the fair market value of the Common Stock on the date of grant.
The granting formula provides that, three business days after the adoption of
the amendments to the Plan by the stockholders, each current Non-Employee
Director will automatically be granted an option to purchase 5,000 shares of
Common Stock, which will become exercisable six months after the date of grant.
In addition, under the formula, three business days after each annual meeting of
the Company's Stockholders, each Non-Employee Director reelected at such meeting
will automatically receive an option to purchase 5,000 shares of Common Stock,
which will vest ratably and on an annual basis over such Director's three-year
term. The current Non-Employee Directors who are not eligible to receive such
grants in fiscal 1997 (because they will not be reelected at the 1997 Annual
Meeting of Stockholders) will instead receive grants that are proportionate to
(and will become exercisable, ratably on an annual basis, over) the number of
years remaining in their current terms as directors (i.e., 3,333 shares for Mr.
Chaseman and 1,667 shares for each of Messrs. Rupp and Konecky). Finally,
pursuant to the amendment, a Non-Employee Director who is initially appointed or
elected to serve out the remainder of an unexpired term, or to fill a newly
created directorship the initial term of which is less than three years, will
receive an option to purchase 5,000 shares of Common Stock (becoming exercisable
six months after the date of grant) and an option to purchase 1,667 shares of
Common stock for each year remaining in such term (being exercisable ratably on
an annual basis).
If the proposed amendment to the Plan is approved and Richard King is
elected a director at the annual meeting, the Non-Employee Directors will
receive the following option grants under the Plan automatically: Richard King:
10,000 shares; Joel Chaseman: 8,333 shares; Ronald S. Konecky: 6,667 shares; and
James M. Rupp: 6,667 shares.
The foregoing amendments to the Plan have been adopted by the Board of
Directors and are subject to approval by the holders of a majority of the shares
of Common Stock present and entitled to vote at the Annual Meeting.
The primary features of the Plan are summarized below. A copy of the Plan
is attached to this proxy statement as Exhibit A. The Company intends to file a
registration statement on Form S-8 under the Securities Act of 1933, as amended,
and a listing application with the NYSE with respect to the additional shares
issuable under options and awards granted under the Plan.
DESCRIPTION OF THE PLAN
The Plan provides an opportunity for employees, officers and directors of
the Company to purchase Common Stock. By encouraging such stock ownership, the
Company seeks to attract, retain and motivate such employees and persons and to
encourage such employees and persons to devote their best efforts to the
business and financial success of the Company.
The Plan provides for the granting of "non-qualified stock options" and
"incentive stock options" ("Options") to acquire Common Stock and/or the
granting of rights ("Awards") to purchase Common Stock on a "restricted stock"
basis. The terms and conditions of individual option agreements may vary,
subject to the following guidelines: (i) the option price of incentive stock
options may not be less than market value on the date of grant and the term of
each incentive stock option may not exceed ten years from the date of grant
18
<PAGE> 21
thereof; (ii) the option price of nonqualified options may be less than market
value on the date of grant and the term of non-qualified stock options may
exceed ten years; and (iii) no Options may be granted after May 3, 1999.
The Plan is administered by the Compensation Committee of the Board of
Directors, except that the Board of Directors (excluding Non-Employee Directors)
administers the Plan with respect to Options granted to Non-Employee Directors.
The Compensation Committee's authority to administer the Plan includes the
authority to (i) select the persons to whom Options and Awards may be granted
thereunder, (ii) establish the number of shares of Common Stock that may be
issued under each Option and Award and establish the option or purchase price
therefor, (iii) determine the time and the conditions subject to which Options
may be exercised in whole or in part, (iv) determine the form of consideration
that may be used to purchase shares of Common Stock upon exercise of any Option
(including the circumstances under which the Company's issued and outstanding
shares of Common Stock may be used by an optionee to exercise an Option) or
pursuant to an Award, (v) determine the circumstances stock acquired upon
exercise under which shares of Common Stock acquired upon exercise of an Option
or pursuant to an Award may be subject to forfeiture to the Company, (vi)
accelerate the time when outstanding Options may be exercised or when shares
purchased pursuant to an Award become vested, (vii) interpret the Plan and
decide any matters arising thereunder, (viii) fix the term of all Options
granted under the Plan (including the date on which such Options will expire and
terminate) and (ix) establish any other terms and conditions applicable to any
Option or Award not inconsistent with the provisions of the Plan.
The Board of Directors has the authority to amend the Plan at any time,
provided that stockholder approval is required (i) to increase the aggregate
number of shares of Common Stock as to which Options or Awards may be granted
(except for increases due to certain adjustments), (ii) to decrease the minimum
exercise price specified by the Plan in respect of incentive stock options,
(iii) to change the class of employees eligible to receive incentive stock
options under the Plan or (iv) if necessary to comply with Section 422 of the
Code with respect to incentive stock options or Section 16 of the Securities
Exchange Act and the rules promulgated thereunder.
Options have been granted under the Plan (and its predecessor plans), since
inception in 1984, to Messrs. Michael and Roger King to purchase 1,500,000
shares of Common Stock each; to Messrs. Palley, Hirsch and LoCascio to purchase
384,999, 401,185 and 80,000 shares of Common Stock, respectively; to Messrs.
Konecky, Rupp and Chaseman, the Company's non-employee Directors, for 75,000,
30,000, and 22,500 shares, respectively; and to all employees as a group (other
than the aforementioned individuals) to purchase 3,843,118 shares of Common
Stock (net of forfeitures). Under the Company's Incentive Equity Plan for Senior
Executives, in fiscal year 1989 the Company granted options to Michael King and
Roger King to purchase 1,200,000 shares of Common Stock each, and to Mr. Palley
to purchase 150,000 shares of Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of incentive stock options, non-qualified options and
restricted stock awards are quite complex. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change, as
are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.
Incentive stock options granted pursuant to the Plan are intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Code. If an optionee makes no disposition of the shares acquired pursuant to
exercise of an incentive stock option within one year after the transfer of
shares to such optionee and within two years from grant of the option, such
optionee will realize no taxable income as a result of the grant or exercise of
such option; any gain or loss that is subsequently realized may be treated as
long-term capital gain or loss, as the case may be. (However, the optionee will
recognize an item of tax preference in the amount of the difference between the
fair market value of the shares received upon exercise and the exercise price
for alternative minimum tax purposes.) Under these circumstances, the Company
will not be entitled to
19
<PAGE> 22
a deduction for federal income tax purposes with respect to the issuance of such
incentive stock options, the transfer of shares upon their exercise or the
ultimate disposition of such shares.
If shares subject to incentive stock options are disposed of prior to the
expiration of the above time periods, the optionee will recognize ordinary
income in the year in which the disqualifying disposition occurs, the amount of
which will generally be the lesser of (i) the excess of the market value of the
shares on the date of exercise over the option price, and (ii) the gain
recognized on such disposition. Such amount will ordinarily be deductible by the
Company for federal income tax purposes in the same year, provided that the
Company satisfies certain federal income tax information reporting requirements.
In addition, the excess, if any, of the amount realized on a disqualifying
disposition over the market value of the shares on the date of exercise will be
treated as capital gain.
Non-qualified options may be granted under the Plan. An optionee who
exercises a non-qualified option will recognize as taxable ordinary income, at
the time of exercise, an amount equal to the excess of the fair market value of
the shares on the date of exercise over the exercise price. Such amount will
ordinarily be deductible by the Company in the same year, provided that the
Company satisfies certain federal income tax information reporting requirements.
Restricted stock purchase awards may also be granted pursuant to the Plan.
A recipient of a restricted stock purchase award generally will not recognize
taxable income upon the purchase of shares of restricted stock, unless he or she
makes a timely election under Section 83(b) of the Code. Such a recipient,
however, would recognize ordinary income at the time that such shares become
vested in an amount equal to the excess of the fair market value of the shares
at that time over the purchase price paid for such shares. If, on the other
hand, the recipient makes a timely election under Section 83(b), he or she would
recognize ordinary income equal to the excess of the fair market value of the
shares at the time of purchase (determined without regard to any transfer
restrictions imposed on the shares, the vesting provisions or any restrictions
imposed by the securities laws) over the purchase price paid for such shares. In
either case, the Company should be entitled to a deduction in an amount equal to
the amount of ordinary income recognized by the recipient in the same year that
the recipient recognized such ordinary income, provided that the Company
satisfies certain federal income tax information reporting requirements.
Section 162(m) of the Code generally limits the Company's federal income
tax deduction for compensation paid in any year to each of its chief executive
officer and its four highest paid executive officers, other than its Chief
Executive Officer, to $1 million per year, to the extent that such compensation
is not "performance based". Under Treasury regulations, a stock option will, in
general, qualify as "performance based" compensation if (i) it has an exercise
price of not less than the fair market value of the underlying stock on the date
of grant, (ii) it is granted under a plan that limits the number of shares for
which options may be granted to any participant during a specified period, which
plan is approved by a majority of the stockholders entitled to vote thereon, and
(iii) it is granted by a compensation committee consisting solely of at least
two independent directors. If a stock option grant to an executive referred to
above is not "performance based," the amount that would otherwise be deductible
by the Company in respect of the grant of such option will be disallowed to the
extent that the executive's aggregate non-performance based compensation in the
relevant year exceeds $1 million.
VOTE REQUIRED FOR APPROVAL
The foregoing amendments to the Plan will be submitted to stockholders for
their approval at the Annual Meeting. Approval of the amendments requires the
vote of the holders of a majority of the shares of Common Stock present or
represented and entitled to vote at the Annual Meeting. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE AMENDMENTS TO THE 1995 AMENDED
AND RESTATED STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN.
20
<PAGE> 23
3. APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent public accountants, as the auditors of the Company for the fiscal
year ending August 31, 1997, subject to the approval of such appointment by
stockholders at the Annual Meeting. Arthur Andersen LLP has audited the
Company's financial statements since the Company's 1982 fiscal year.
The ratification of the appointment of the firm of Arthur Andersen LLP will
be determined by the vote of the holders of a majority of the shares present in
person or represented by proxy at the Annual Meeting.
If the foregoing appointment of Arthur Andersen LLP is not ratified by
stockholders, the Board of Directors will appoint other independent accountants
whose appointment for any period subsequent to the 1997 Annual Meeting of
Stockholders will be subject to the approval of stockholders at that meeting. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement should he so desire and
to respond to appropriate questions. THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE TO RATIFY THE APPOINTMENT OF THE FIRM OF ARTHUR ANDERSEN LLP.
* * *
GENERAL
OTHER MATTERS
The Board of Directors does not know of any matters that are to be
presented at the Annual Meeting other than those stated in the Notice of Annual
Meeting and referred to in this Proxy Statement. If any other matters should
properly come before the Meeting, it is intended that the proxies in the
accompanying form will be voted as the persons named therein may determine in
their discretion.
The Company's Annual Report to Stockholders for the fiscal year ended
August 31, 1996 was mailed to stockholders concurrently with this Proxy
Statement.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to solicitation of proxies by mail, directors,
officers and employees of the Company (who will receive no additional
compensation therefor) may solicit the return of proxies by telephone, telegram
or personal interview. Arrangements have also been made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be present
at the Annual Meeting or who plans to attend but who does not wish to vote in
person is urged to fill in, date and sign the proxy and return it promptly in
the enclosed return envelope.
STOCKHOLDER PROPOSALS
If any stockholder of the Company intends to present a proposal for
consideration at the 1998 Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's principal executive offices, 1700 Broadway, New York,
New York 10019, Attention: Assistant Secretary, not later than August 7, 1997.
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<PAGE> 24
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED AUGUST 31, 1996, FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, WITHOUT EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY PERSON
REQUESTING A COPY THEREOF IN WRITING AND STATING THAT SUCH PERSON IS A
BENEFICIAL HOLDER OF SHARES OF COMMON STOCK OF THE COMPANY ON THE RECORD DATE
FOR THE ANNUAL MEETING OF STOCKHOLDERS. REQUESTS AND INQUIRIES SHOULD BE
ADDRESSED TO KING WORLD PRODUCTIONS, INC., C/O KING WORLD CORPORATION, 830
MORRIS TURNPIKE, SHORT HILLS, NEW JERSEY 07078, ATTENTION: STEVEN A. LOCASCIO,
INTERIM CHIEF FINANCIAL OFFICER, VICE PRESIDENT AND CONTROLLER.
By Order of the Board of Directors
DIANA KING
Corporate Secretary
22
<PAGE> 25
EXHIBIT A
KING WORLD PRODUCTIONS, INC.
1996 AMENDED AND RESTATED STOCK OPTION
AND RESTRICTED STOCK PURCHASE PLAN
SECTION 1. Purpose. The purpose of the King World Productions, Inc. 1996
Amended and Restated Stock Option and Restricted Stock Purchase Plan (the
"Plan") is to promote the interests of King World Productions, Inc., a Delaware
corporation (the "Company"), and any Subsidiary thereof, and its stockholders,
by providing an opportunity to selected employees, officers and directors of the
Company or any Subsidiary thereof as of the date of the adoption of this Plan or
at any time thereafter to purchase Common Stock of the Company. By encouraging
such stock ownership, the Company seeks to attract, retain and motivate such
employees and persons and to encourage such employees and persons to devote
their best efforts to the business and financial success of the Company. It is
intended that this purpose will be effected by the granting of "non-qualified
stock options" and/or "incentive stock options" to acquire the common stock of
the Company and/or by the granting of rights to purchase the common stock of the
Company on a "restricted stock" basis. Under the Plan, the Board of Directors
(or the Committee) shall have the authority (in its sole discretion) to grant
"incentive stock options" within the meaning of Section 422(b) of the Code,
"nonqualified stock options" as described in Treasury Regulation Section 1.83-7
or any successor regulation thereto, or "restricted stock" awards. The Plan
amends and restates the Company's 1989 Amended and Restated Stock Option and
Restricted Stock Purchase Plan (the "1989 Stock Plan"), adopted by the Company
on May 4, 1989, as amended and restated by the Company on January 24, 1994 and
January 19, 1996. The 1989 Stock Plan amended and restated, and incorporated
into one document, the Incentive Stock Option Plan and the Non-Qualified Stock
Option Plan, both adopted by the Company on October 24, 1984 (collectively, the
"1985 Stock Plans").
SECTION 2. Definitions. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
"Award" shall mean an award of the right to purchase Common Stock granted
under the provisions of Section 7 of the Plan.
"Board of Directors" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the committee of the Board of Directors referred to
in Section 5 hereof.
"Common Stock" shall mean the Common Stock, $.01 par value, of the Company.
"Employee" shall mean (i) with respect to an ISO, any person including an
officer or director of the Company, who, at the time an ISO is granted to such
person hereunder, is employed on a full-time basis by the Company or any
Subsidiary of the Company, and (ii) with respect to a Non-Qualified Option
and/or an Award, any person employed by, or performing services for, the Company
or any Subsidiary of the Company, including, without limitation, directors and
officers.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"ISO" shall mean an Option granted under the Plan which constitutes and
shall be treated as an "incentive stock option" as defined in Section 422(b) of
the Code.
"Non-Employee Director" shall mean any director who is a "Non-Employee
Director" within the meaning of Rule 16b-3 of the Exchange Act.
"Non-Qualified Option" shall mean an Option granted to a Participant
pursuant to the Plan which is intended to be, and qualifies as, a "non-qualified
stock option" as described in Treasury Regulation Section 1.83-7 and which shall
not constitute or be treated as an ISO.
23
<PAGE> 26
"Option" shall mean any ISO or Non-Qualified Option granted to a
Participant pursuant to this Plan.
"Participant" shall mean any Employee (including a Non-Employee Director)
to whom an Award and/or an Option is granted under this Plan.
"Parent of the Company" shall have the meaning set forth in Section 424(e)
of the Code.
"Subsidiary of the Company" shall have the meaning set forth in Section
424(f) of the Code.
SECTION 3. Eligibility. Awards and/or Options may be granted to any
Employee. The Board of Directors (or the Committee) shall have the sole
authority to select the persons to whom Awards and/or Options are to be granted
hereunder, and to determine whether a person is to be granted a Non-Qualified
Option, an ISO or an Award or any combination thereof. No person shall have any
right to participate in the Plan. Any person selected by the Board of Directors
(or the Committee) for participation during any one period will not by virtue of
such participation have the right to be selected as a Participant for any other
period.
SECTION 4. Common Stock Subject to the Plan.
4.1 The total number of shares of Common Stock for which Options and/or
Awards may be granted under this Plan shall not exceed in the aggregate eight
million three hundred thousand (8,300,000) shares of Common Stock, including
shares of Common Stock reserved under the 1989 Stock Plan and the 1985 Stock
Plans.
4.2 The shares of Common Stock that may be subject to Options and/or Awards
granted under this Plan may be either authorized and unissued shares or shares
reacquired at any time and now or hereafter held as treasury stock as the Board
of Directors may determine. In the event that any outstanding Option or Award
expires, is terminated or is forfeited for any reason, the shares allocable to
the unexercised portion of such Option or Award may again be subject to an
Option and/or Award granted under this Plan, except that the shares allocable to
the forfeited portion of any such Award shall not again be subject to an Option
and/or Award granted under this Plan if the Participant received any of the
benefits of ownership of the Common Stock underlying the unexercised or
forfeited portion of such Award.
4.3. Special ISO Limitations.
(a) The aggregate fair market value (determined as of the date an ISO is
granted) of the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all Incentive Stock Option Plans of the Company or any Parent or Subsidiary of
the Company) shall not exceed $100,000.
(b) No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company, unless the option price is at least 110% of the fair market value
(determined as of the time the ISO is granted) of the shares of Common Stock
subject to the ISO and the ISO by its terms is not exercisable more than five
years from the date it is granted.
4.4. Notwithstanding any other provision of the Plan, the provisions of
Sections 4.3(a) and (b) shall not apply, nor shall they be construed to apply,
to any Non-Qualified Option or Award granted under the Plan.
4.5. Notwithstanding any other provision of this Plan, no person shall be
granted Options and/or Awards for more than 1,500,000 shares of Common Stock in
any period of five fiscal years.
SECTION 5. Administration of the Plan.
5.1 The Plan shall be administered by (i) the Board of Directors or (ii) by
a committee of two or more directors (the "Committee"), each of whom is a
Non-Employee Director, established by the Board of Directors. The Committee
shall be appointed from time to time by, and shall serve at the pleasure of, the
Board of Directors.
24
<PAGE> 27
5.2. (a) Options. The Board of Directors (or the Committee) shall have the
sole authority and discretion under this Plan (i) to select the Participants who
are to be granted Options hereunder; (ii) to designate whether any Option to be
granted hereunder is to be an ISO or a Non-Qualified Option; (iii) to establish
the number of shares of Common Stock that may be issued under each Option; (iv)
to determine the time and the conditions subject to which Options may be
exercised in whole or in part; (v) to determine the form of the consideration
that may be used to purchase shares of Common Stock upon exercise of any Option
(including the circumstances under which the Company's issued and outstanding
shares of Common Stock may be used by a Participant to exercise an Option); (vi)
to impose restrictions and/or conditions with respect to shares of Common Stock
acquired upon exercise of an Option; (vii) to determine the circumstances under
which shares of Common Stock acquired upon exercise of any Option may be subject
to repurchase by the Company; (viii) to determine the circumstances and
conditions subject to which shares acquired upon exercise of an Option may be
sold or otherwise transferred, including, without limitation, the circumstances
and conditions subject to which a proposed sale of shares of Common Stock
acquired upon exercise of an Option may be subject to the Company's right of
first refusal (as well as the terms and conditions of any such right of first
refusal); (ix) to establish a vesting provision for any Option relating to the
time (or the circumstance) when the Option may be exercised by a Participant,
including vesting provisions which may be contingent upon the Company meeting
specified financial goals; (x) to accelerate the time when outstanding Options
may be exercised, provided, however, that any ISOs shall be "accelerated" within
the meaning of Section 424(h) of the Code; and (xi) to establish any other
terms, restrictions and/or conditions applicable to any Option not inconsistent
with the provisions of this Plan.
(b) Awards. The Board of Directors (or the Committee) shall have the sole
authority and discretion under this Plan (i) to select the Participants who are
to be granted Awards hereunder; (ii) to determine the amount to be paid by a
Participant to acquire shares of Common Stock pursuant to an Award, which amount
may be equal to, more than or less than 100% of the fair market value of such
shares on the date the Award is granted (but in no event less than the par value
of such shares); (iii) to determine the time or times and the conditions subject
to which Awards may be made; (iv) to determine the time or times and the
conditions subject to which the shares of Common Stock subject to an Award are
to become vested and no longer subject to repurchase by the Company; (v) to
establish transfer restrictions and the terms and conditions on which any such
transfer restrictions with respect to an Award shall lapse; (vi) to establish
vesting provisions with respect to any shares of Common Stock subject to an
Award, including vesting provisions which may be contingent upon the Company
meeting specified financial goals; (vii) to determine the circumstances under
which shares of Common Stock acquired pursuant to an Award may be subject to
repurchase by the Company; (viii) to determine the time or times and the
conditions subject to which any shares of Common Stock subject to an Award may
be repurchased by the Company (as well as the terms and conditions of any such
repurchase); (ix) to determine the circumstances and conditions subject to which
a proposed sale of shares of Common Stock subject to an Award may be subject to
the Company's right of first refusal (as well as the terms and conditions of any
such right of first refusal); (x) to determine the form of consideration that
may be used to purchase shares of Common Stock pursuant to an Award (including
the circumstances under which the Company's issued and outstanding shares of
Common Stock may be used by a Participant to purchase the Common Stock subject
to an Award); (xi) to accelerate the time at which any or all restrictions
imposed with respect to any shares of Common Stock subject to an Award will
lapse or otherwise remove any and all such restrictions; and (xii) to establish
any other terms, restrictions and/or conditions applicable to any Award not
inconsistent with the provisions of this Plan.
5.3. The Board of Directors (or the Committee) shall be authorized to
interpret the Plan and may, from time to time, adopt such rules and regulations,
not inconsistent with the provisions of the Plan, as it may deem advisable to
carry out the purpose of this Plan.
5.4. The interpretation and construction by the Board of Directors (or the
Committee) of any provision of the Plan, any Option and/or Award granted
hereunder or any agreement evidencing any such Option and/or Award shall be
final and conclusive upon all parties.
5.5. Directors (or members of the Committee, if established) may vote on
any matter affecting the administration of the Plan or the granting of Options
or Awards under the Plan.
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5.6. All expenses and liabilities incurred by the Board of Directors (or
the Committee) in the administration of the Plan shall be borne by the Company.
The Board of Directors (or the Committee) may employ attorneys, consultants,
accountants or other persons in connection with the administration of the Plan.
The Company, and its officers and directors, shall be entitled to rely upon the
advice, opinions or valuations of any such persons. No member of the Board of
Directors (or the Committee) shall be liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan or any
Option and/or Award granted hereunder.
SECTION 6. Terms and Conditions of Options.
6.1. ISOs. The terms and conditions of each ISO granted under the Plan
shall be specified by the Board of Directors (or the Committee) and shall be set
forth in an ISO agreement between the Company and the Participant in such form
as the Board of Directors (or the Committee) shall approve. The terms and
conditions of each ISO shall be such that each ISO issued hereunder shall
constitute and shall be treated as an "incentive stock option" as defined in
Section 422 of the Code. The terms and conditions of any ISO granted hereunder
need not be identical to those of any other ISO granted hereunder.
The terms and conditions of each ISO shall include the following:
(a) The option price shall be fixed by the Board of Directors (or the
Committee) but shall in no event be less than 100% (or 110% in the case of
an Employee referred to in Section 4.3(b) hereof) of the fair market value
of the shares of Common Stock subject to the ISO on the date the ISO is
granted. For purposes of this Plan, the fair market value per share of
Common Stock as of any day shall mean the average of the closing prices of
sales of shares of Common Stock on all national securities exchanges on
which the Common Stock may at the time be listed or, if there shall have
been no sales on any such day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or, if on any
day the Common Stock shall not be so listed, the average of the
representative bid and asked prices quoted in the NASDAQ system as of the
3:30 p.m., New York time, on such day, or, if on any day the Common Stock
shall not be quoted in the NASDAQ system, the average of the high and low
bid and asked prices on such day in the over-the-counter market as reported
by National Quotation Bureau Incorporated, or any similar successor
organization. If at any time the Common Stock is not listed on any national
securities exchange or quoted in the NASDAQ system or the over-the-counter
market, the fair market value of the shares of Common Stock subject to an
Option on the date the ISO is granted shall be the fair market value
thereof determined in good faith by the Board of Directors (or the
Committee).
(b) ISOs, by their terms, shall not be transferable otherwise than by
will or the laws of descent and distribution, and, during an Optionee's
lifetime, an ISO shall be exercisable only by the Optionee.
(c) The Board of Directors (or the Committee) shall fix the term of
all ISOs granted pursuant to the Plan (including the date on which such ISO
shall expire and terminate), provided, however, that such term shall in no
event exceed ten years from the date on which such ISO is granted (or, in
the case of an ISO granted to an Employee referred to in Section 4.3(b)
hereof, such term shall in no event exceed five years from the date on
which such ISO is granted). Each ISO shall be exercisable in such amount or
amounts, under such conditions and at such times or intervals or in such
installments as shall be determined by the Board of Directors (or the
Committee) in its sole discretion.
(d) In the event that the Company or any Parent or Subsidiary of the
Company is required to withhold any Federal, state or local taxes in
respect of any compensation income realized by the Participant as a result
of any "disqualifying disposition" of any shares of Common Stock acquired
upon exercise of an ISO granted hereunder, the Company shall deduct from
any payments of any kind otherwise due to such Participant the aggregate
amount of such Federal, state or local taxes required to be so withheld or,
if such payments are insufficient to satisfy such Federal, state or local
taxes, such Participant will be required to pay to the Company, or make
other arrangements satisfactory to the Company regarding payment to the
Company of, the aggregate amount of any such taxes. A Participant may use
issued and outstanding Common Stock for the payment of taxes. All matters
with respect to the
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<PAGE> 29
total amount of taxes to be withheld in respect of any such compensation
income shall be determined by the Board of Directors in its sole
discretion.
(e) In the sole discretion of the Board of Directors (or the
Committee), the terms and conditions of any ISO may (but need not) include
any of the following provisions:
(i) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis
for any reason other than as a result of his death or "disability"
(within the meaning of Section 22(e)(3) of the Code), the unexercised
portion of any ISO held by such Participant at that time may only be
exercised within one month after the date on which the Participant
ceased to be so employed, and only to the extent that the Participant
could have otherwise exercised such ISO as of the date on which he
ceased to be so employed.
(ii) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis
by reason of his "disability" (within the meaning of Section 22(e)(3) of
the Code), the unexercised portion of any ISO held by such Participant
at that time may only be exercised within one year after the date on
which the Participant ceased to be so employed, and only to the extent
that the Optionee could have otherwise exercised such ISO as of the date
on which he ceased to be so employed.
(iii) In the event a Participant shall die while in the full-time
employ of the Company or a Parent or Subsidiary of the Company (or
within a period of one month after ceasing to be an Employee for any
reason other than such "disability" or within a period of one year after
ceasing to be an Employee by reason of such "disability"), the
unexercised portion of any ISO held by such Participant at the time of
his death may only be exercised within one year after the date of such
Participant's death, and only to the extent that the Participant could
have otherwise exercised such ISO at the time of his death. In such
event, such ISO may be exercised by the executor or administrator of the
Participant's estate or by any person or persons who shall have acquired
the ISO directly from the Participant by bequest or inheritance.
6.2. Non-Qualified Options. Except as otherwise provided in Section 8, the
terms and conditions of each Non-Qualified Option granted under the Plan shall
be specified by the Board of Directors (or the Committee), in its sole
discretion, and shall be set forth in a written option agreement between the
Company and the Participant in such form as the Board of Directors (or the
Committee) shall approve. The terms and conditions of each Option will be such
that each Option issued hereunder shall not constitute or be treated as an
"incentive stock option", as defined in Section 422 of the Code, and will be a
"non-qualified stock option" for Federal income tax purposes. The terms and
conditions of any Option granted hereunder need not be identical to those of any
other Option granted hereunder.
The terms and conditions of each Non-Qualified Option Agreement shall
include the following:
(a) The option (exercise) price shall be fixed by the Board of
Directors (or the Committee) and may be equal to more than or less than
100% of the fair market value of the shares of Common Stock subject to the
Non-Qualified Option on the date such Non-Qualified Option is granted.
(b) The Board of Directors (or the Committee) shall fix the term of
all Non-Qualified Options granted pursuant to the Plan (including the date
on which such Non-Qualified Option shall expire and terminate). Such term
may be more than ten years from the date on which such Non-Qualified Option
is granted. Each NonQualified Option shall be exercisable in such amount or
amounts, under such conditions and at such times or intervals or in such
installments as shall be determined by the Board of Directors (or the
Committee) in its sole discretion.
(c) Non-Qualified Options shall not be transferable otherwise than by
will or the laws of descent and distribution, and during a Participant's
lifetime a Non-Qualified Option shall be exercisable only by the
Participant.
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(d) In the event that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by the
Participant in respect of a Non-Qualified Option granted hereunder or in
respect of any shares of Common Stock acquired upon exercise of a
NonQualified Option, the Company shall deduct from any payments of any kind
otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, or if no such
payments are due or to become due to such Participant then such Participant
will be required to pay to the Company, or make other arrangements
satisfactory to the Company regarding payment to the Company of, the
aggregate amount of any such taxes. All matters with respect to the total
amount of taxes to be withheld in respect of any such compensation income
shall be determined by the Board of Directors in its sole discretion.
SECTION 7. Terms and Conditions of Awards.
The terms and conditions of each Award granted under the Plan shall be
specified by the Board of Directors (or the Committee), in its sole discretion,
and shall be set forth in a written agreement between the Participant and the
Company, in such form as the Board of Directors (or the Committee) shall
approve. The terms and provisions of any Award granted hereunder need not be
identical to those of any other Award granted hereunder.
The terms and conditions of each Award shall include the following:
(a) The amount to be paid by a Participant to acquire the shares of
Common Stock pursuant to an Award shall be fixed by the Board of Directors
(or the Committee) and may be equal to more than or less than 100% of the
fair market value of the shares of Common Stock subject to the Award on the
date the Award is granted.
(b) Each Award shall contain such vesting provisions, such transfer
restrictions and such other restrictions and conditions as the Board of
Directors (or the Committee), in its sole discretion, may determine,
including, without limitation, the circumstances under which the Company
shall have the right and option to repurchase shares of Common Stock
acquired pursuant to an Award.
(c) Stock certificates representing Common Stock acquired pursuant to
an Award shall bear a legend referring to the restrictions imposed on such
Stock and such other matters as the Board of Directors may determine.
(d) In the event that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by the
Participant in respect of an Award granted hereunder, or in respect of any
shares acquired pursuant to an Award, or in respect of the vesting of any
such shares of Common Stock, then the Company shall deduct from any
payments of any kind otherwise due to such Participant the aggregate amount
of such Federal, state or local taxes required to be so withheld, or, if
such payments are insufficient to satisfy such Federal, state or local
taxes, or if no such payments are due or become due to such Participant,
then such Participant will be required to pay to the Company, or make other
arrangements satisfactory to the Company regarding payment to the Company
of, the aggregate amount of any such taxes. All matters with respect to the
total amount of taxes to be withheld in respect of any such compensation
income shall be determined by the Board of Directors in its sole
discretion.
SECTION 8. Non-Employee Director Stock Options.
(a) On the third business day following approval of this Plan by the
stockholders of the Company at the 1997 Annual Meeting of Stockholders, each
Non-Employee Director then serving as such (including but not limited to
Non-Employee Directors elected or re-elected at such meeting) shall
automatically, and without further action by the Board of Directors or the
Committee, be granted (i) a Non-Qualified Option to purchase 5,000 shares of
Common Stock, and (ii) a Non-Qualified Option to purchase a number of shares of
the Common Stock equal to the product of (x) 5,000 and (y) a fraction, the
numerator of which is the number of years remaining in such Non-Employee
Director's then-current term as a director (counting as the first year the year
commencing immediately after the 1997 Annual Meeting of Stockholders), and the
denominator of which is three;
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(b) On the third business day following his or her first appointment or
election as a director of the Company, each person who becomes a Non-Employee
Director shall automatically, and without further action by the Board of
Directors or the Committee, be granted (i) a Non-Qualified Option to purchase
5,000 shares of Common Stock and (ii) a Non-Qualified Option to purchase a
number of shares of Common Stock equal to the product of (x) 5,000 and (y) a
fraction, the numerator of which is the number of years or partial years
remaining in the term to which such Non-Employee Director was appointed or
elected, and the denominator of which is three;
(c) On the third business day following the 1998 annual meeting of the
stockholders of the Company and each Annual Meeting of Stockholders thereafter
at which a Non-Employee Director is re-elected as a member of the Board of
Directors, such Non-Employee Director shall automatically, and without further
action by the Board of Directors or the Committee, be granted a Non-Qualified
Option to purchase 5,000 shares of Common Stock;
(d) Notwithstanding the provisions of Subsections 6.2 (a) and (b) hereof,
the terms and conditions of each Non-Qualified Option granted pursuant to this
Section 8 shall be as follows:
(i) Each such Non-Qualified Option shall have an option price equal to
100% of the fair market value of the shares of Common Stock subject to such
Non-Qualified Option on the date such Non-Qualified Option is granted.
(ii) Subject to the provisions of Subsection (d) below, the term of
each such Non-Qualified Option shall be ten years from the date on which
such Non-Qualified Option is granted.
(iii) Each Non-Employee Director will become entitled to exercise (x)
each Non-Qualified Option granted pursuant to clause (a)(i) or (b)(i)
hereof commencing six months after the date of grant, (y) each
Non-Qualified Option granted pursuant to clause (c) hereof with respect to
one-third (1/3) of the shares of Common Stock subject thereto on the first,
second and third anniversaries of the grant thereof, and (z) each Option
granted pursuant to clause (a)(ii) or (b)(ii) hereof shall become
exercisable ratably over the remaining directorship term during which such
Non-Qualified Option was granted, on the date of each Annual Meeting of
Stockholders following such grant, but in any event not before the
expiration of six months from the date of grant.
(iv) In the event that the Company is required to withhold any
Federal, state or local taxes in respect of any compensation income
realized by a Non-Employee Director in respect of a Non-Qualified Option
granted hereunder or in respect of any shares of Common Stock acquired upon
exercise of any such Non-Qualified Option, the Company shall deduct from
any payments of any kind otherwise due to such Non-Employee Director the
aggregate amount of such Federal, state or local taxes required to be so
withheld or, if such payments are insufficient to satisfy such Federal,
state or local taxes, or if no such payments are due or to become due to
such Non-Employee Director, then such Non-Employee Director will be
required to pay to the Company, or make other arrangements satisfactory to
the Company regarding payment to the Company of, the aggregate amount of
any such taxes. All matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be determined by
the Board of Directors in its sole discretion.
(e) In the determination of the Board of Directors, exercised in its sole
discretion (the Non-Employee Directors abstaining from participation in any such
determination), the terms and conditions of any Non-Qualified Option granted to
Non-Employee Directors shall include the following provisions:
(i) In the event a Non-Employee Director shall cease to serve as a
director of the Company or any Parent or Subsidiary of the Company for any
reason other than as a result of his death or "disability" (within the
meaning of Section 22(e)(3) of the Code), the unexercised portion of any
Non-Qualified Option held by such Non-Employee Director at that time may
only be exercised within one month after the date on which such
Non-Employee Director ceased to serve as a director of the Company or any
Parent or Subsidiary of the Company, and only to the extent that such
Non-Employee Director could have otherwise exercised such Non-Qualified
Option as of the date on which he ceased serve as such.
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<PAGE> 32
(ii) In the event a Non-Employee Director shall cease to serve as a
director of the Company or any Parent or Subsidiary of the Company by
reason of his "disability" (within the meaning of Section 22(e)(3) of the
Code), the unexercised portion of any Non-Qualified Option held by such
Non-Employee Director at that time may only be exercised within one year
after the date on which the Non-Employee Director ceased to serve as such,
and only to the extent that the Non-Employee Director could have otherwise
exercised such Non-Qualified Option as of the date on which he ceased to be
so employed.
(iii) In the event a Non-Employee Director shall die while serving as
a Non-Employee Director of the Company or any Parent or Subsidiary of the
Company (or within a period of one month after ceasing to serve as such for
any reason other than such "disability" or within a period of one year
after ceasing to be an Employee by reason of such "disability"), the
unexercised portion of any Non-Qualified Option held by such Non-Employee
Director at the time of his death may only be exercised within one year
after the date of such Non-Employee Director's death, and only to the
extent that such Non-Employee Director could have otherwise exercised such
Non-Qualified Option at the time of his or her death. In such event, such
Non-Qualified Option may be exercised by the executor or administrator of
the Non-Employee Director's estate or by any person or persons who shall
have acquired such Non-Qualified Option directly from the Non-Employee
Director by bequest or inheritance.
(iv) Such Non-Qualified Options shall not be transferable otherwise
than by will or the laws of descent and distribution, and during a
Non-Employee Director's lifetime such Non-Qualified Option shall be
exercisable only by such Non-Employee Director.
(f) All Non-Qualified Options granted to a Non-Executive Director shall be
confirmed by an agreement between the Company and such grantee.
(g) Notwithstanding the appointment of a Committee to administer the Plan,
all administrative, interpretive and discretionary powers with respect to the
Non-Qualified Options granted pursuant to this Section 8 shall be exercised by
the Board of Directors (the Non-Employee Directors abstaining).
SECTION 9. Adjustments. In the event that, after the adoption of the Plan
by the Board of Directors, the outstanding shares of the Company's Common Stock
shall be increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation through reorganization, merger or consolidation,
recapitalization, reclassification, stock split, split-up, combination or
exchange of shares or declaration of any dividends payable in Common Stock or
other corporate transaction, the Board of Directors shall appropriately adjust
(i) the number of shares of Common Stock (and the option price per share)
subject to the unexercised portion of any outstanding Option (to the nearest
possible full share), provided, however, that the limitations of Section 424 of
the Code shall apply with respect to adjustments made to ISOs; (ii) the number
of shares of Common Stock to be acquired pursuant to an Award; and (iii) the
number of shares of Common Stock for which Options and/or Awards may be granted
under this Plan, as set forth in Sections 4.1 and 4.5 hereof, and such
adjustments shall be effective and binding for all purposes of this Plan.
SECTION 10. Effect of the Plan on Employment Relationship.
Neither this Plan nor any Option and/or Award granted hereunder to a
Participant shall be construed as conferring upon such Participant any right to
continue in the employ of the Company or the service of the Company or any
Subsidiary, as the case may be, or limit in any respect the right of the Company
or any Subsidiary to terminate such Participant's employment or other
relationship with the Company or any Subsidiary, as the case may be, at any
time.
SECTION 11. Amendment of the Plan. The Board of Directors may amend the
Plan from time to time as it deems desirable; provided, however, that, without
the approval of the holders of a majority of the shares of Common Stock present
or represented and entitled to vote thereon at a meeting of stockholders, the
Board of Directors may not amend the Plan (i) to increase (except for increases
due to adjustments in accordance with Section 9 hereof) the aggregate number of
shares of Common Stock for which Options
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<PAGE> 33
and/or Awards may be granted hereunder, (ii) to decrease the minimum exercise
price specified by the Plan in respect of ISOs, or (iii) to change the class of
Employees eligible to receive ISOs under the Plan. Notwithstanding the
foregoing, if stockholder approval is required in order to comply with (a)
Section 422 of the Code in respect of ISOs, or (b) rules promulgated under
Section 16(b) of the Exchange Act, the Board of Directors may not amend the Plan
without stockholder approval.
SECTION 11. Termination of the Plan. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate on May 3, 1999. No Option
and/or Award may be granted hereunder after termination of the Plan. The
termination or amendment of the Plan shall not alter or impair any rights or
obligations under any Option and/or Award theretofore granted under the Plan.
SECTION 12. Effective Date of the Plan. This 1996 Amended and Restated
Stock Option and Restricted Stock Plan, and any amendments thereof requiring
stockholder approval, shall become effective as of the date on which the Plan is
approved by affirmative vote of the holders of a majority of the shares of
Common Stock present or represented and entitled to vote at a meeting of
stockholders of the Company at which the approval of the Plan (or of any such
amendment) is considered.
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<PAGE> 34
KING WORLD PRODUCTIONS INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders, Monday, January 13, 1997
The undersigned stockholder of KING WORLD PRODUCTIONS, INC., a Delaware
corporation, hereby appoints Roger King, Michael King, Diana King, and
Jonathan Birkhahn, or any of them, voting singly in the absence of the others,
attorneys and proxies, with full power of substitution and revocation, to vote,
as designated on the reverse side, all shares of Common Stock of King World
Productions, Inc., which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of said Corporation to be held at the Hotel
InterContinental, 444 St. Charles Street, New Orleans, Louisiana 70130 on
January 13, 1997 at 10:00 a.m. (local time) or any adjournment thereof, in
accordance with the instructions on the reverse side.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued on reverse side)
<PAGE> 35
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, the
proxy will be voted "FOR" all nominees in proposal No. 1. and "FOR" proposals
Nos. 2 and 3. The proxies are authorized to vote as they may determine in their
discretion upon such other business as may properly come before the meeting.
The Board of Directors recommends a vote "FOR" all nominees in Proposal No. 1
and "FOR" Proposals Nos. 2 and 3.
1. Election of the following Nominees as Directors: Michael
King, Roger King and Richard King.
WITHHOLD
FOR ALL AUTHORITY to vote FOR, except vote withheld
NOMINEES for all nominees from the following nominee(s):
/ / / / ---------------------------
2. The proposal to approve amendments to the Company's 1995
Amended and Restated Stock Option and Restricted Stock
Purchase Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. The appointment of Arthur Andersen LLP as auditors for the
fiscal year ending August 31, 1997.
FOR AGAINST ABSTAIN
/ / / / / /
4. The proxies are authorized to vote as they may determine in their
discretion upon such other business as may properly come before the
meeting.
Signature(s):_________________________________ Date:_____________
Note: Please sign exactly as name
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, trustee or guardian, please
give full title as such.
