<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 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
EMMIS BROADCASTING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and 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
[EMMIS COMMUNICATIONS LOGO]
May 21, 1998
Dear Shareholder:
The directors and officers of Emmis Broadcasting Corporation join me in
extending to you a cordial invitation to attend the annual meeting of our
shareholders. This meeting will be held on Tuesday, June 23, 1998, at 9:30
a.m. at the Skyline Club, One American Square, Indianapolis, Indiana.
One of the issues we will vote on this year is a proposed change in the
name of our company. As you can see from our new logo, above, we plan to
change our name to "Emmis Communications Corporation." This name change
reflects the growth and opportunity that have become Emmis watchwords. Our
recent purchase of the acclaimed Texas Monthly magazine and our pending
acquisition of six television stations help create a company diverse in media
and spirit. We believe our new name symbolizes a company which is uniquely
poised for continued expansion and profitability as we move into the new
millennium.
The formal notice of this annual meeting and the proxy statement appear on
the following pages. After reading the proxy statement, PLEASE MARK, SIGN, AND
RETURN THE ENCLOSED PROXY CARD TO ENSURE THAT YOUR VOTES ON THE BUSINESS
MATTERS OF THE MEETING WILL BE RECORDED.
We hope that you will attend this meeting. Whether or not you attend, we
urge you to return your proxy promptly in the postpaid envelope provided.
After returning the proxy, you may, of course, vote in person on all matters
brought before the meeting.
We look forward to seeing you on June 23.
Sincerely,
Jeffrey H. Smulyan
President and
Chairman of the Board
<PAGE> 3
EMMIS BROADCASTING CORPORATION
INDIANAPOLIS, INDIANA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of Emmis Broadcasting Corporation
(the "Corporation") will be held on Tuesday, June 23, 1998, at 9:30 a.m. at the
Skyline Club, One American Square, Indianapolis, Indiana, to consider and to
take action on the following matters:
1. The election of six directors of the Corporation for terms of one year;
2. The approval of an amendment of the Corporation's Articles of
Incorporation to change the name of the Corporation to Emmis
Communications Corporation.
3. The approval of independent auditors; and
4. The transaction of such other business as may properly come before the
meeting and any adjournments thereof.
Only shareholders of record at the close of business on April 29, 1998 are
entitled to notice of and to vote at this meeting and any adjournments thereof.
By order of the Board of Directors,
Norman H. Gurwitz
Secretary
Indianapolis, Indiana
May 21, 1998
<PAGE> 4
EMMIS BROADCASTING CORPORATION
950 NORTH MERIDIAN STREET, SUITE 1200
INDIANAPOLIS, INDIANA 46204
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Emmis Broadcasting Corporation (the "Corporation") of
proxies to be voted at the annual meeting of shareholders to be held on
Tuesday, June 23, 1998, and at any adjournment thereof. The approximate date
of mailing this proxy statement is May 21, 1998. The following is important
information in a question-and-answer format regarding the annual meeting and
this proxy statement.
Q: WHAT AM I VOTING ON?
* Election of six directors (Susan B. Bayh, Gary L. Kaseff, Richard A.
Leventhal, Jeffrey H. Smulyan, Doyle L. Rose, and Lawrence B. Sorrel,
with Susan B. Bayh and Richard A. Leventhal nominated to serve as the
independent directors elected solely by the holders of the Corporation's
Class A Common Stock)
* Change the name of the Corporation to "Emmis Communications
Corporation"
* Approve the appointment of Arthur Andersen LLP as the Corporation's
independent auditors
Q: WHO IS ENTITLED TO VOTE?
Holders of either class of the Corporation's Common Stock, Class A or
Class B, as of the close of business on April 29, 1998 (the "Record Date") are
entitled to vote at the annual meeting. As of the Record Date, 8,469,666
shares of Class A Common Stock and 2,560,894 shares of Class B Common Stock
were issued and outstanding.
Q: WHAT ARE THE VOTING RIGHTS OF THE CLASS A AND CLASS B COMMON STOCK?
On each matter submitted to a vote of the Corporation's shareholders, each
share of Class A Common Stock is entitled to one vote and each share of Class B
Common Stock is entitled to ten votes. Generally, the Class A and Class B
Common Stock vote together as a single group. However, the two classes vote
separately in connection with (i) the election of directors, (ii) certain
"going private" transactions and (iii) other matters as provided by law.
For this annual meeting, the Class A and Class B Common Stock will vote
together on all issues, except the election of directors where the holders of
Class A Common Stock are entitled to separately elect two of the Corporation's
directors. Each of these two directors must be an "independent director." An
independent director is a person who is not an officer or employee of the
Corporation or its subsidiaries, and who does not have a relationship which, in
the opinion of the Board of Directors, would interfere with the exercise of
independent judgement in carrying out the responsibilities of a director.
Q: HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you return your signed proxy card but do not indicate your voting
preferences, we will vote FOR the three proposals on your behalf. You have the
right to revoke your proxy any time before the meeting by (i) notifying the
Corporation's secretary, or (ii) returning a later-dated proxy. You may also
revoke your proxy by voting in person at the meeting.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
It means you hold shares registered in more than one account. Sign and
return ALL proxy cards to ensure that all your shares are voted.
Q: WHO WILL COUNT THE VOTE?
Representatives of First Union National Bank, the Corporation's transfer
agent, will tabulate the votes.
Q: WHAT CONSTITUTES A QUORUM?
A majority of the combined voting power of the Class A and Class B Common
Stock constitutes a quorum for the meeting (i.e., counting one vote for each
Class A share, and ten votes for each Class B share, present in person or
represented by proxy).
<PAGE> 5
Q: HOW MANY VOTES ARE NEEDED FOR APPROVAL OF EACH ITEM?
There are different voting requirements for the various proposals.
Directors will be elected by a plurality of the votes cast at the meeting.
Consequently, the two Class A director nominees receiving the most votes of
Class A Common Stock will be elected Class A directors and the four other
nominees receiving the most votes of both Class A and Class B Common Stock will
be elected to fill the remaining director positions. Only votes cast for a
nominee will be counted. However, the accompanying proxy will be voted for all
six nominees listed on the proxy unless the proxy contains instructions to the
contrary. Proxies submitted by brokers that do not indicate a vote for some of
the proposals because the holders do not have discretionary voting authority
and have not received instructions from the beneficial owners on how to vote on
those proposals are called "broker non-votes." Broker non-votes, abstentions
and instructions on the accompanying proxy card to withhold authority to vote
for one or more of the nominees will result in those nominees receiving fewer
votes.
The amendment to the Articles of Incorporation changing the name of the
Corporation to "Emmis Communications Corporation" requires an affirmative vote
of a majority of the combined voting power of the Class A and Class B Common
Stock outstanding and entitled to vote as of the Record Date. Abstentions and
broker non-votes will have the same effect as votes against the proposal.
The approval of Arthur Andersen LLP as the Corporation's independent
auditor for the next fiscal year requires that the number of votes cast in
favor of Arthur Andersen exceed the number of votes cast against Arthur
Andersen. For this proposal, abstentions and broker non-votes will not be
voted for or against the proposals and will not be counted as entitled to vote.
Q: WHO CAN ATTEND THE ANNUAL MEETING?
All shareholders as of the Record Date can attend.
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
Together, they own approximately 7.2% shares of Class A Common Stock and
100.0% shares of Class B Common Stock, representing 78.6% of the combined
voting power of the Class A and Class B Common Stock as of the Record Date.
(See page 3 for details.)
Q: WHO ARE THE LARGEST PRINCIPAL SHAREHOLDERS?
Jeffrey H. Smulyan, the Corporation's President and Chairman of the Board
of Directors, is the largest single shareholder of the Corporation,
beneficially owning 224,444 Class A shares and 2,935,894 Class B shares as of
the Record Date. In addition, Putnam Investments, Inc., Westport Asset
Management, Inc., Denver Investment Advisers LLC and Capital Group Companies
each beneficially own in excess of 5% of the Class A Common Stock. (See page 3
for details.)
Q: WHEN ARE SHAREHOLDER PROPOSALS AND NOMINATIONS FOR THE 1999 MEETING DUE?
Any shareholder of the Corporation wishing to have a proposal considered
for inclusion in the Corporation's 1999 proxy solicitation materials must set
forth such proposal in writing and file it with the secretary of the
Corporation on or before January 21, 1999. The Board of Directors of the
Corporation will review any shareholder proposals that are filed as required
and will determine whether such proposals meet applicable criteria for
inclusion in its 1999 proxy solicitation materials or consideration at the 1999
annual meeting.
VOTING SECURITIES AND BENEFICIAL OWNERS
The following table shows, as of April 29, 1998, the number and percentage
of shares of Common Stock held by each person known to the Corporation who
owned beneficially more than five percent of the issued and outstanding Common
Stock of the Corporation, by the Corporation's directors and nominees, and by
certain executive officers:
2
<PAGE> 6
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------- --------------------
FIVE PERCENT SHAREHOLDERS, AMOUNT AND AMOUNT AND PERCENT
SELLING SHAREHOLDER, NATURE OF PERCENT NATURE OF PERCENT OF TOTAL
DIRECTORS AND CERTAIN BENEFICIAL OF BENEFICIAL OF VOTING
EXECUTIVE OFFICERS OWNERSHIP CLASS OWNERSHIP CLASS POWER
- ------------------------------- ---------- ------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan 224,444(1) 2.7% 2,935,894(14) 100.0% 77.6%
Susan B. Bayh 10,100(2) * - - *
Richard F. Cummings 102,957(3) 1.2 - - *
Norman H. Gurwitz 89,445(4) 1.0 - -- *
Gary L. Kaseff 24,424(5) * - -- *
Richard A. Leventhal 30,600(6) * - -- *
Doyle L. Rose 107,935(7) 1.3 - -- *
Howard L. Schrott 63,602(8) * - -- *
Lawrence B. Sorrel - * - -- *
Putnam Investments, Inc. 923,000(9) 11.2 - -- 2.7
Westport Asset Management, Inc. 507,200(10) 6.1 - -- 1.5
Denver Investment Advisors LLC 504,500(11) 6.1 - -- 1.5
Capital Group Companies, et al. 467,100(12) 5.6 - -- 1.4
All Officers and Directors
as a Group (9 persons) 638,501(13) 7.2 2,935,894 100.0 78.6
</TABLE>
______________________
* Less than 1%.
1 Includes 144,444 shares held by Mr. Smulyan as trustee for the Emmis
Broadcasting Corporation Profit Sharing Trust, (the "Profit Sharing
Trust") as to which Mr. Smulyan disclaims beneficial ownership.
2 Consists of 100 shares owned individually and 10,000 shares represented
by stock options exercisable within 60 days of April 29, 1998.
3 Consists of 11,916 shares owned individually, 2,468 shares held for the
benefit of Mr. Cummings' children, 1,573 shares held in the Profit Sharing
Trust, and 87,000 shares represented by stock options exercisable within
60 days of April 29, 1998.
4 Consists of 11,238 shares owned individually or jointly with his spouse,
275 owned by Mr. Gurwitz's spouse, 2,308 owned for the benefit of Mr.
Gurwitz's children, 64,545 shares represented by stock options exercisable
within 60 days of April 29, 1998, 979 shares held in the Profit Sharing
Trust, and 10,100 shares owned by a corporation of which Mr. Gurwitz's
spouse is a 50% owner.
5 Consists of 3,059 shares owned individually by Mr. Kaseff, 1,154 shares
owned by Mr. Kaseff's spouse, 211 shares held in the Profit Sharing Trust,
and 20,000 shares represented by stock options exercisable within 60 days
of April 29, 1998.
6 Consists of 4,000 shares owned individually, 1,500 shares owned by Mr.
Leventhal's spouse, 10,100 shares owned by a corporation of which Mr.
Leventhal is a 50% owner and 15,000 shares represented by stock options
exercisable within 60 days of April 29, 1998.
7 Consists of 19,362 shares owned individually, 1,573 shares held in the
Profit Sharing Trust, and 87,000 shares represented by stock options
exercisable within 60 days of April 29, 1998.
8 Consists of 750 shares owned individually, 570 shares held in the Profit
Sharing Trust, and 62,282 shares represented by stock options exercisable
within 60 days of April 29, 1998.
9 Information concerning these shares was obtained from an Amendment to
Schedule 13G filed in January 1998 by Putnam Investments, Inc. on behalf
of itself, Marsh & McLennan Companies, Inc., Putnam Investment Management,
Inc., The Putnam Advisory Company, Inc., and Putnam New Opportunities
Fund, each of whom has an address of one Post Office Square, boston,
Massachusetts 02109 (except Marsh & McLennan Companies, Inc. which has an
address of 1166 Avenue of the Americas, New York, New York 10036).
10 Information concerning these shares was obtained from an Amendment to
Schedule 13G filed in February 1998 by Westport Asset Management, Inc.,
which has an address of 235 Riverside Avenue, Westport, Connecticut 06880.
11 Information concerning these shares was obtained from an Amendment to
Schedule 13G filed in February 1998 by Denver Investment Advisors LLC,
which has an address of 1225 17th Street, 26th Floor, Denver, Colorado
80202. Denver Investment Advisors LLC has indicated that it has dispositive
power over 504,500 shares and sole voting power over 332,200 shares.
12 Information concerning these shares was obtained from an Amendment to
Schedule 13G filed in February 1998 by The Capital Group Companies, Inc.,
Capital Research and Management Company and SMALLCAP World Fund, Inc.,
each of whom has an address of 333 South Hope Street, 52nd Floor, Los
Angeles, California 90071.
3
<PAGE> 7
13 Includes 345,827 shares represented by stock options exercisable within
60 days of April 29, 1998, and 144,444 shares held in the Emmis
Broadcasting Corporation Profit Sharing Trust.
14 Consists of 2,560,894 shares owned individually and 375,000 shares
represented by stock options exercisable within 60 days of April 29, 1998.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Six directors are to be elected. Susan B. Bayh and Richard A. Leventhal
have been nominated to serve as the independent directors elected by the
holders of Class A Common Stock, and Jeffrey H. Smulyan, Doyle L. Rose,
Lawrence B. Sorrel, and Gary L. Kaseff have been nominated to fill the
remaining directorships. Each nominee is nominated to serve a term of one year
and until his or her successor is elected and qualified. All nominees are
members of the present Board of Directors. If, at the time of the 1998 annual
meeting, any nominee is unable or declines to serve, the discretionary
authority provided in the proxy may be exercised to vote for a substitute or
substitutes. The Board of Directors has no reason to believe that any
substitute nominee or nominees will be required.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE ELECTION OF THE
FOLLOWING NOMINEES.
<TABLE>
<S> <C>
NAME, AGE, PRINCIPAL
OCCUPATION(S) AND
BUSINESS EXPERIENCE DIRECTOR
DURING PAST 5 YEARS SINCE
- -------------------------- --------
JEFFREY H. SMULYAN, Age 51 1979
Chairman of the Board of Directors and President of the
Corporation; formerly also owner and CEO of the Seattle
Mariners major league baseball team; Director of the Radio
Advertising Bureau and The Finish Line; Trustee of Ball
State University.
DOYLE L. ROSE, Age 49 1984
Radio Division President of the Corporation;
previously Executive Vice President-Operations.
LAWRENCE B. SORREL, Age 39 1993
General Partner of Welsh, Carson, Anderson and Stowe,
a priviate investment firm; previously, Managing Director
of Morgan Stanley & Co., Inc.
GARY L. KASEFF, Age 50 1994
Employed as counsel to the Corporation, also solo
practitioner attorney in Southern California; previously,
President of the Seattle Mariners major league baseball
club and partner with the law firm of Epport & Kaseff.
SUSAN B. BAYH, Age 38* 1994
Commissioner of the International Joint Commission of the
United States and Canada; Also, Distinguished Visiting
Professor at Butler University; previously, Attorney with
Eli Lilly & Company; Director of Bank One, Indiana, and
Anthem (Southeast).
RICHARD A. LEVENTHAL, Age 51* 1992
Owns and operates a wholesale fabric and textile company
in Carmel, Indiana. Mr. Leventhal is the brother-in-law
of Norman H. Gurwitz, an executive officer of the
Corporation.
</TABLE>
_____________
* Nominee to serve as independent director elected by the holders of the
Class A Common Stock voting as a single class.
During the last fiscal year, the Board of Directors of the Corporation
held 6 meetings, either in person, by telephone or by written consent. All
directors attended at least 75% of the aggregate of (1) the total number of
meetings of the Board of Directors of the Corporation and (2) the total number
of meetings held by all committees on which he or she served. Directors of the
Corporation who
4
<PAGE> 8
are not officers or employees are compensated for their services at the rate of
$1,000 per meeting of the Board of Directors attended. Pursuant to the
Non-Employee Director Stock Option Plan, Directors who are not officers or
employees of the Corporation also are entitled to receive options to purchase
5,000 shares of the Corporation's Class A Common Stock. The options are
granted on the date of the Corporation's annual meeting at the closing price of
the underlying shares on that date. In addition to her duties as a director,
the Corporation separately engaged Susan Bayh to develop a unified plan for the
involvement of the Corporation and each of its stations and publications in
various charitable organizations. During the last fiscal year, Mrs. Bayh
received approximately $50,000 as compensation for such services. Nominees for
election as a director of the Corporation are selected by the Board of
Directors, acting as a nominating committee.
CERTAIN COMMITTEES OF THE BOARDS OF DIRECTORS OF THE CORPORATION
The Board of Directors of the Corporation currently has an audit committee
and a compensation committee. The audit committee, which informally met in
connection with certain Board meetings, evaluates audit performance, handles
relations with the Corporation's independent auditors and evaluates policies
and procedures relating to internal audit functions and controls. The audit
committee may also examine and consider other matters relating to the financial
affairs of the Corporation as it deems appropriate. The directors who are
members of the audit committee are Richard A. Leventhal and Lawrence B. Sorrel.
The compensation committee, which met three times during the last fiscal year,
provides a general review of the Corporation's compensation and benefit plans
to ensure that they meet corporate objectives. The compensation committee also
has authority to administer and to recommend the grant of options and other
awards under the Corporation's various stock option and incentive plans, and to
administer and recommend contributions under the Corporation's Profit Sharing
Trust. During the last fiscal year, directors who were members of the
compensation committee were Susan B. Bayh, Richard A. Leventhal and Lawrence B.
Sorrell.
CERTAIN TRANSACTIONS
The Corporation has periodically made interest-bearing loans to various
officers and employees. The approximate amount of such indebtedness
outstanding at April 29, 1998, and the largest aggregate amount of indebtedness
outstanding at any month end during the last fiscal year, was $700,000 for
Jeffrey H. Smulyan, Chairman and President, $103,200 for Doyle L. Rose, Radio
Division President and Director, $82,000 for Richard F. Cummings, Executive
Vice President-Programming, and $60,000 for Norman H. Gurwitz, Executive Vice
President, Corporate Counsel and Secretary. These loans bear interest at the
Corporation's cost of senior debt, which at April 29, 1998, was approximately
8%.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
Policy and Performance Measures. During the last fiscal year,
compensation for the Corporation's officers (other than Jeffrey H. Smulyan, the
Corporation's chief executive officer) was largely determined by consensus
between Mr. Smulyan and the Corporation's compensation committee, typically
without formal action. Mr. Smulyan determined for each officer a salary that
he believed to be reasonable based upon such officer's compensation for the
previous year, the Corporation's performance over the previous year and each
officer's contribution to such performance. Because the fiscal year ended
February 28, 1997, resulted in significant improvement in the Corporation's
same-station broadcast cash flow base salary levels of the Corporation's
officers for the fiscal year ended February 28, 1998 were generally increased
from base salary levels in 1997.
The Corporation has historically relied upon cash bonuses, stock options
and stock appreciation rights in order to tie compensation to the Corporation's
performance. For the last fiscal year, bonuses for general managers of the
Corporation's radio stations were based upon the extent to which each station
met specified target levels of broadcast cash flow. Bonuses to other officers
were based upon Mr. Smulyan's personal assessment of their contributions to the
Corporation's overall performance and were then discussed with members of the
compensation committee to ensure that none had any objections. Stock options
were also granted to the Corporation's officers during the last fiscal year
under the Corporation's 1994 and 1997 Equity Incentive Plans. The number of
options granted to an officer primarily depended upon such officer's
classification within the Corporation. Each radio station general manager
received options to purchase 6,000 shares of the Corporation's Class A Common
Stock, and each general manager of more than one radio station received options
to purchase an additional 2,000 shares for each radio station under such
person's management. The other officers received options to purchase between
3,000 and 12,000 shares.
5
<PAGE> 9
The Corporation has also entered into two and three year employment
agreements with certain of the Corporation's general managers and other key
officers. These agreements, which provide for a base salary, annual
performance bonuses, and restricted stock and stock option awards, prohibit the
officer from directly or indirectly competing with the Corporation. The
committee believes that the structure of these agreements should enable the
Corporation to retain its key officers for a certain period of time and to
focus the efforts and energies of such officers on further enhancing the value
of the Corporation to its shareholders
The Internal Revenue Code of 1986, as amended (the "Code"), generally
limits to $1 million the amount of compensation that may be deducted by the
Corporation in any year with respect to certain of the Corporation's officers.
Accordingly, the compensation committee endeavors to structure executive
compensation so that most of such compensation will be deductible. At the same
time, the compensation committee has the authority to award compensation in
excess of the $1 million limit, regardless of whether such additional
compensation will be deductible by the Corporation, where the committee
determines in good faith that such compensation is appropriate.
Chief Executive Officer Compensation. Mr. Smulyan is compensated in
accordance with his employment agreement which provides for (i) an annual
salary of approximately $682,000 in the fiscal year ended February 28, 1998,
with annual increases of 10% plus an inflation adjustment, subject to a maximum
annual increase of 15%; (ii) annual bonuses ranging from a minimum of $50,000
to a maximum of $250,000, as adjusted for inflation; and (iii) the award of
options to purchase 100,000 shares of Common Stock at a price per share of
$15.50 for each year during the term of the agreement that either the
Corporation's annual broadcast cash flow increases from the previous year by a
percentage specified in the agreement or the percentage increase in the average
monthly fair market value of the Corporation's Common Stock during the fiscal
year exceeds that of a specified peer group of broadcasting companies.
The amount of the annual bonuses under Mr. Smulyan's employment agreement
is determined by the Board of Directors, based in part on the recommendation of
the compensation committee. During the last fiscal year, the Corporation's pro
forma broadcast cash flow (as that calculation is defined in Mr. Smulyan's
employment agreement) increased 6.5%. In addition, the Corporation began
operating two additional radio stations in Indianapolis, Indiana, and one
additional radio station in New York, New York, substantially solidifying the
Corporation's presence in each of these markets. Finally, the Corporation
augmented its publishing division through the acquisitions of Cincinnati
Magazine and Texas Monthly. As a result of these achievements, the
compensation committee has recommended a cash bonus of $140,000. Mr. Smulyan
will not be entitled to receive the 100,000 stock options provided for in his
agreement because the increase in broadcast cash flow did not meet the
pre-determined percentage specified by the compensation committee and the fair
market value of the Corporation's Common Stock did not exceed the Corporation's
peer group. However, a final determination on what stock-based compensation,
if any, Mr. Smulyan should receive as a result of his leadership this past
fiscal year will not be determined until the annual meeting of the Board of
Directors in June 1998.
Compensation Committee Members
------------------------------
Susan B. Bayh
Richard A. Leventhal
Lawrence B. Sorrel
6
<PAGE> 10
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock of the Corporation with
the cumulative total return of the NASDAQ Stock Market Index and the cumulative
total return of the NASDAQ Telecommunications Stock Market Index (an index
containing performance data of radio, telephone, telegraph, television and
cable television companies) from February 28, 1994, to the fiscal year ended
February 28, 1998. The performance graph assumes that an investment of $100
was made in the Corporation's Common Stock and in each index on February 28,
1994, the date of the Corporation's initial public offering, and that all
dividends were reinvested.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
FEB-94 FEB-95 FEB-96 FEB-97 FEB-98
<S> <C> <C> <C> <C> <C>
EMMIS BROADCASTING $100 $103 $247 $223 $318
NASDAQ STOCK MARKET $100 $100 $139 $165 $200
NASDAQ TELECOMMUNICATIONS $100 $93 $125 $124 $204
</TABLE>
7
<PAGE> 11
COMPENSATION TABLES
The following table sets forth the compensation awarded to, earned by, or
paid to the chief executive officer and the four most highly compensated
executive officers other than the chief executive officer (collectively, the
"Named Executive Officers") during each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
---------------------------- -----------------------
OTHER SECURITIES ALL
FISCAL ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND YEAR ENDED COMPEN- STOCK OPTIONS/ COMPEN-
PRINCIPAL POSITION FEBRUARY 28 SALARY BONUS SATION AWARDS SARS(#) SATION
- ------------------ ----------- -------- -------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
JEFFREY H. SMULYAN 1998 $681,717 $140,000 $ -- $ -- 100,000 (1) $______
President and 1997 606,223 250,000 -- -- 100,000 --
Chairman of the Board 1996 538,853 250,000 -- -- 100,000 --
DOYLE L. ROSE 1998 $434,156 $ 44,800 $ 14,400 (2) $ -- 25,000 $ --
Radio Division 1997 408,446 80,000 14,400 -- 25,000 --
President 1996 385,066 245,000 14,400 981,000 (3) 25,000 --
RICHARD F. CUMMINGS 1998 $434,156 $ 44,800 $ 14,400 (2) $ -- 25,000 $ --
Executive Vice President 1997 408,446 80,000 14,400 -- 25,000 --
- -- Programming 1996 385,047 245,000 14,400 981,000 (3) 25,000 $ --
HOWARD L. SCHROTT 1998 $238,162 $ 28,000 $ -- (2) $ -- 12,000 $ --
Executive Vice President, 1997 218,195 50,000 -- -- 29,806 --
Treasurer and Chief 1996 191,920 60,000 -- -- 13,139 --
Financial Officer
NORMAN H. GURWITZ 1998 $215,811 $ 28,000 $14,4002 $ -- 12,000 $ --
Executive Vice President, 1997 195,257 50,000 14,400 -- 29,806 --
Corporate Counsel and 1996 165,992 60,000 14,400 -- 13,139 --
Secretary
</TABLE>
_________________
(1) Stock options granted as of March 1, 1997.
(2) Represents automobile allowance. Mr. Schrott's automobile allowance is
included as part of his salary.
(3) Represents the market value on the date of grant of 36,000 shares of
restricted stock granted to each of Messrs. Rose and Cummings pursuant to
the terms of their respective employment agreements. The restricted stock
held by each of Messrs. Rose and Cummings had a market value of
$1,782,000 as of the end of the Corporation's last fiscal year and vested
March 6, 1998.
8
<PAGE> 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/SARS VALUE AT ASSUMED
UNDERLYING GRANTED TO EXERCISE ANNUAL RATES OF STOCK
OPTIONS/ EMPLOYEES OR BASE PRICE APPRECIATION
SARS IN PRICE EXPIRATION FOR OPTION TERM
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ------------------- ---------- ------------ --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan 100,000 22.99% $15.50 2/28/02 $2,853,171 $4,006,260
Doyle L. Rose 25,000 5.75% 15.50 2/28/00 976,844 1,109,875
Richard F. Cummings 25,000 5.75% 15.50 2/28/00 976,844 1,109,875
Howard L. Schrott 12,000 2.76% 34.50 (1) 142,121 326,106
Norman H. Gurwitz 12,000 2.76% 34.50 (1) 142,121 326,106
</TABLE>
_______________
(1) The options expire at a rate of 20% per year beginning February
28, 2001, with all options expired by February 28, 2005.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR END AT FISCAL YEAR END
------------------------ --------------------------
ACQUIRED ON VALUE EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE REALIZED CISABLE CISABLE1 CISABLE CISABLE
- ------------------- ----------- -------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan -- $ -- 375,000 -- $13,514,063 $ --
Doyle L. Rose -- -- 12,000 75,000 435,000 2,550,000
Richard F. Cummings -- -- 12,000 75,000 435,000 2,550,000
Howard L. Schrott 3,400 102,056 53,045 12,000 1,120,991 180,000
Norman H. Gurwitz 11,275 232,269 52,545 12,000 1,101,241 180,000
</TABLE>
______________________
(1) These options all become exercisable on March 1, 1998.
EMPLOYMENT AGREEMENTS
During the fiscal year ended February 28, 1994, the Corporation entered
into a five-year employment agreement with Jeffrey H. Smulyan pursuant to which
Mr. Smulyan is employed as chief executive officer of the Corporation. Mr.
Smulyan's base compensation during the last fiscal year was approximately
$682,000, with the agreement providing for annual increases of 10% plus an
inflation adjustment, subject to a maximum aggregate annual increase of 15%.
In addition, the agreement provides for annual bonuses to be set by the Board
of Directors ranging from a minimum of $50,000 up to a maximum of $250,000, as
adjusted for inflation. Mr. Smulyan is also entitled to receive options to
purchase 100,000 shares of Class A Common Stock at a price per share of $15.50
(the price per share in the Corporation's initial public offering) for each
year during the term of the agreement that the Corporation's broadcast cash
flow or Common Stock price targets specified in the agreement are achieved.
Under the agreement, Mr. Smulyan retains the right to participate in all
employee benefit plans of the Corporation for which he is otherwise eligible.
The agreement with Mr. Smulyan is subject to
9
<PAGE> 13
termination by the Board of Directors or by Mr. Smulyan, either without cause
or for cause, at any time upon notice. In the event the Corporation terminates
Mr. Smulyan's employment without cause (as defined in the agreement) or in the
event Mr. Smulyan terminates his employment for good reason (as defined in the
agreement), Mr. Smulyan will be entitled to receive the present value of the
applicable base and incentive compensation through a date five years after the
date of termination. In addition, the agreement entitles Mr. Smulyan to
certain termination benefits upon disability, death or a change in control (as
defined in the agreement) of the Corporation. Following a termination of Mr.
Smulyan's employment, other than a termination by the Corporation without cause
(as defined in the agreement) or a termination by Mr. Smulyan with good reason
(as defined in the agreement), Mr. Smulyan would be prohibited from engaging in
a business in competition with the Corporation for a period of two years after
the date of termination.
During the fiscal year ended February 29, 1996, the Corporation entered
into three-year employment agreements with each of Doyle L. Rose and Richard F.
Cummings, pursuant to which Mr. Rose was employed as Radio Division President
and Mr. Cummings was employed as Executive Vice President--Programming. Each
employment agreement provided for a $150,000 signing bonus and an annual base
salary of $383,000, $408,000 and $433,000, respectively, for each of the three
years covered thereby. In addition, each agreement provided (i) upon the
commencement of the agreement, for the award of 36,000 restricted shares of
Class A Common Stock, which shares were subject to forfeiture if the officer
was terminated for cause (as defined in the agreement) or terminated his
employment for a reason other than death or disability (as defined in the
agreement), (ii) at the end of each completed year of service under the
agreement, for the award of options to purchase up to 25,000 shares of Common
Stock at a price per share equal to $15.50 per share, which options were first
exercisable after the end of the term of the agreement and would automatically
terminate if the officer was is terminated for cause or terminated his
employment for a reason other than death or disability, and (iii) at the end of
each completed year of service under the agreement, for the award of a bonus in
an amount (if any) determined by the Chief Executive Officer, and based upon
such officer's performance during such year and the Corporation's bonus
practices with respect to its other key executive officers for such year.
Under the agreements, Messrs. Rose and Cummings each retained the right to
participate in all employee benefit plans of the Corporation for which they
would otherwise be eligible. These employment agreements expired February 28,
1998. The Corporation and Messrs. Rose and Cummings are in the process of
negotiating new employment agreements.
During the fiscal year ended February 28, 1997, the Corporation entered
into a three-year employment agreement with Howard L. Schrott pursuant to which
Mr. Schrott is employed as Executive Vice President and Chief Financial Officer
of the Corporation. The employment agreement provides for an annual base
salary of approximately $200,000, $220,000 and $242,000, respectively, for each
of the three years covered thereby. In addition, the agreement provides (i)
for an annual cash bonus of not less than $20,000 nor more than $50,000, (ii)
the award of 10,000 shares of Class A Common Stock if Mr. Schrott remains
employed by the Corporation through the expiration of the agreement (or is
disabled, as defined in the agreement), and (iii) for the award of options to
purchase 29,806 shares at their fair market value on March 1, 1996 and options
to purchase 12,000 shares on the first day of each of the remaining contract
years at the fair market value of such shares on the date of the grant. Under
the agreement, Mr. Schrott also retains the right to participate in all
employee benefit plans of the Corporation for which he is otherwise eligible.
PROPOSAL NO. 2: APPROVAL OF NAME CHANGE
The Board of Directors of the Corporation has proposed an amendment to the
Corporation's Articles of Incorporation to change the name of the Corporation
to "Emmis Communications Corporation." The directors believe that the term
"communications" more accurately describes the business in which the
Corporation is engaged. When the Corporation was originally formed, its
operations were exclusively focused on radio broadcasting. However, a number
of years ago, the Corporation delved into periodical publishing through
Indianapolis Monthly and, then, Atlanta. More recently, the Corporation has
expanded its publishing operations by acquiring Cincinnati Magazine and Texas
Monthly. Broadcasting remains a cornerstone of the Corporation's business. In
fact, radio broadcasting will soon be supplemented with television
broadcasting. Nonetheless, the directors recognize that broadcasting is but
one of the media through which the Corporation communicates with its audiences.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
10
<PAGE> 14
PROPOSAL NO. 3: APPROVAL OF APPOINTMENT OF AUDITORS
The appointment of the Corporation's independent auditors is being
submitted for approval by vote of the shareholders. The Corporation's
financial statements for the year ended February 28, 1998 were certified by
Arthur Andersen LLP. The Board of Directors has selected Arthur Andersen as
its independent auditors for the fiscal year ending February 28, 1999.
Representatives of Arthur Andersen are expected to attend the annual meeting
with the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions. If shareholders do not approve
the selection of Arthur Andersen, then the selection of independent auditors
will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers and directors, and persons who own more than 10% of
the Corporation's Common Stock, to file with the Securities and Exchange
Commission reports detailing their ownership of the Corporation's Common Stock
and changes in such ownership. Officers, directors and greater than 10%
shareholders (the "Reporting Persons") are required by Securities and Exchange
Commission regulation to furnish the Corporation with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Corporation, the Corporation believes that during the last
fiscal year all Reporting Persons complied with the filing requirements of
Section 16(a), except that Susan B. Bayh, Norman H. Gurwitz, and Jeffrey H.
Smulyan each failed to timely file one report in connection with one
transaction, and Richard A. Leventhal failed to timely file two reports in
connection with two transactions.
ANNUAL REPORT
A copy of the Corporation's Annual Report for the year ended February 28,
1998 has been provided to all shareholders of record as of the Record Date.
The Annual Report is not to be considered as proxy solicitation material.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before this
annual meeting. However, if other matters should come before the meeting, it
is the intention of each person named in the proxy to vote such proxy in
accordance with his or her judgment on such matters.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the
proxy form and the material used in the solicitation of proxies will be paid by
the Corporation. The Corporation does not expect that the solicitation will be
made by specially engaged employees or paid solicitors. Although the
Corporation might use such employees or solicitors if it deems them necessary,
no arrangements or contracts have been made with any such employees or
solicitors as of the date of this statement. In addition to the use of the
mails, solicitation may be made by telephone, telegraph, cable or personal
interview. The Corporation will request record holders of shares beneficially
owned by others to forward this proxy statement and related materials to the
beneficial owners of such shares, and will reimburse such record holders for
their reasonable expenses incurred in doing so.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. Whether or not you
attend the meeting, you are urged to execute and return the proxy.
For the Board of Directors,
Jeffrey H. Smulyan
Chairman
May 21, 1998
11
<PAGE> 15
EMMIS BROADCASTING CORPORATION
950 NORTH MERIDIAN STREET, SUITE 1200
INDIANAPOLIS, INDIANA 46204
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Jeffrey H. Smulyan, Howard L. Schrott and
Norman H. Gurwitz, and each of them, attorneys-in-fact and proxies, with full
power of substitution, to vote as designated below all shares of Class A Common
Stock of Emmis Broadcasting Corporation which the undersigned would be entitled
to vote if personally present at the annual meeting of Shareholders to be held
on June 23, 1998, at 9:30 a.m., and at any adjournment thereof.
1. ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all
nominees
Jeffrey H. Smulyan, Doyle L. Rose,
Lawrence B. Sorrel, Gary L. Kaseff,
Susan B. Bayh* and Richard A. Leventhal*
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line below.)
_______________________________________________________
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO
CHANGE THE NAME OF THE CORPORATION TO "EMMIS COMMUNICATIONS CORPORATION."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued on other side)
* Class A Directors
<PAGE> 16
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholders. If no direction is made, this proxy will be
voted FOR Proposals 1, 2 and 3.
The undersigned acknowledges receipt from Emmis Broadcasting Corporation prior
to the execution of this proxy, of notice of the meeting, a proxy statement,
and an annual report to shareholders.
Please sign exactly as name appears below. When shares are held as joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title. If a corporation, please sign in
full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1998
------------------------------
------------------------------------------
(Signature)
------------------------------------------
(Signature if held jointly)
Please mark, sign, date and return the
proxy card promptly using the enclosed
envelope.
REVOCABLE PROXY
