SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant
Filed by Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
EMMIS COMMUNICATIONS CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(4) Date filed:
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PROXY STATEMENT
December 8, 2000
Dear Shareholder:
The directors and officers of Emmis Communications Corporation join me
in extending to you a cordial invitation to attend the annual meeting of our
shareholders. This meeting will be held on Wednesday, January 10, 2001 at 11:00
a.m., local time, at One Emmis Plaza, 40 Monument Circle, Indianapolis, Indiana
46204.
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 postage paid 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 January 10th.
Sincerely,
Jeffrey H. Smulyan
Chief Executive Officer, President
and Chairman of the Board
<PAGE>
EMMIS COMMUNICATIONS CORPORATION
INDIANAPOLIS, INDIANA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of Emmis Communications
Corporation will be held on Wednesday, January 10, 2001, at 11:00 a.m., local
time, at One Emmis Plaza, 40 Monument Circle, Indianapolis, Indiana 46204.
The holders of common stock will be asked to consider and to vote on
the following matters:
(1) election of eight directors to Emmis' board of directors for terms
ranging from one to three years;
(2) approval of the new Employee Stock Purchase Plan, as set forth in Annex
I to the accompanying proxy statement;
(3) ratification of the selection of Arthur Andersen LLP as Emmis'
independent auditors for the fiscal year ending February 28, 2001; and
(4) transaction of any other business that may properly come before the
meeting and any adjournments or postponements of the meeting.
We describe each of these proposals in more detail in the accompanying
proxy statement, which you should read in its entirety before voting.
Only shareholders of record at the close of business on November 20,
2000 are entitled to notice of and to vote at this meeting and any adjournments
or postponements of this meeting. The proxy statement and proxy cards are
enclosed.
By order of the Board of Directors,
Norman H. Gurwitz
Secretary
Indianapolis, Indiana
December 8, 2000
<PAGE>
EMMIS COMMUNICATIONS CORPORATION
ONE EMMIS PLAZA
40 MONUMENT CIRCLE
INDIANAPOLIS, INDIANA 46204
PROXY STATEMENT
In this proxy statement, Emmis Communications Corporation is referred
to as "we," "us," "our company" or "Emmis."
QUESTIONS AND ANSWERS ABOUT THIS ANNUAL MEETING
Q: WHY DID I RECEIVE THIS PROXY STATEMENT?
You received this proxy statement because our board of directors is
soliciting your proxy to vote at the annual meeting of shareholders. The annual
meeting will be held on Wednesday, January 10, 2001, at 11:00 a.m., local time,
at One Emmis Plaza, 40 Monument Circle, Indianapolis, Indiana 46204.
This proxy statement summarizes the information you need to know to
vote on an informed basis at the annual meeting; however, you do not need to
attend the annual meeting to vote your shares. See "--How do I vote?". We expect
to begin sending this proxy statement, the attached notice of annual meeting and
the enclosed proxy card(s) on December 11, 2000 to all shareholders entitled to
vote.
Q: WHAT AM I VOTING ON?
You are being asked to consider and vote on the following:
o election of eight directors to our board of directors for
terms ranging from one to three years;
o approval of the new Employee Stock Purchase Plan; and
o ratification of the selection of Arthur Andersen LLP as our
independent auditors for the fiscal year ending February 28,
2001.
Q: WHO IS ENTITLED TO VOTE?
Holders of outstanding Class A common stock and holders of outstanding
Class B common stock as of the close of business on November 20, 2000, the
record date, are entitled to vote at the annual meeting. As of November 20,
2000, 41,745,946 shares of Class A common stock and 5,230,396 shares of Class B
common stock were issued and outstanding. As of November 20, 2000, there were no
shares of Class C common stock issued or outstanding.
Q: HOW DO I VOTE?
You may attend the meeting and vote in person or you can vote by proxy.
To vote by proxy, 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 each of the proposals on your behalf. If
you mark "abstain" on your proxy card, your shares will be counted as present
for purposes of determining the presence of a quorum. You have the right to
revoke your proxy at any time before the meeting by either notifying our
corporate secretary or returning a later-dated proxy. You may also revoke your
proxy by voting in person at the annual meeting.
If you hold your shares through a broker, you should contact your
broker to determine the procedure by which you can vote on these proposals.
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Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
If you receive 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: WHAT ARE THE VOTING RIGHTS OF THE CLASS A COMMON STOCK AND THE CLASS B
COMMON STOCK?
On each matter submitted to a vote of our 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 the election of certain directors, certain "going private"
transactions and other matters as provided by law.
At this annual meeting, the Class A and Class B common stock will vote
together on the following issues: (i) the election of directors, except that the
holders of Class A common stock, voting as a separate class, are entitled to
elect two directors; (ii) the approval of the new Employee Stock Purchase Plan;
and (iii) the ratification of Arthur Andersen LLP as our independent auditor for
the next fiscal year.
Q: WHO WILL COUNT THE VOTE?
Representatives of First Union National Bank, our transfer agent, will
count the votes.
Q: WHAT CONSTITUTES A QUORUM?
A majority of the combined voting power of the outstanding Class A and
Class B common stock entitled to vote at the meeting constitutes a quorum for
the annual meeting (i.e., counting one vote for each share of outstanding Class
A common stock and ten votes for each share of outstanding Class B common stock,
present in person or represented by proxy). No additional quorum requirements
apply to matters on which the holders of Class A and Class B common stock will
vote together as a single class.
With respect to the election of the two directors by the holders of
Class A common stock, a majority of the votes entitled to be cast by the holders
of the Class A common stock constitutes a quorum for the holders of the Class A
common stock.
Q: HOW MANY VOTES ARE NEEDED FOR APPROVAL OF EACH PROPOSAL?
Directors will be elected by a plurality of the votes cast by the
holders of existing common stock entitled to vote in the election who are
present, in person or by proxy, at the meeting. Consequently, the two Class A
director nominees receiving the most votes of holders of the Class A common
stock will be elected Class A directors and the six other nominees receiving the
most votes of the holders of Class A and Class B common stock, voting together,
will be elected to fill the remaining director positions. Only votes cast for a
nominee will be counted. The accompanying proxy card will be voted for all eight
nominees listed on the proxy unless the proxy contains instructions to the
contrary. 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 approval of the new Employee Stock Purchase Plan and the
ratification of Arthur Andersen LLP as our independent auditors for the next
fiscal year each require that the number of votes cast in favor of that proposal
by holders of our outstanding common stock exceed the number of votes cast
against that proposal by holders of our outstanding common stock.
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." Abstentions and broker non-votes
will not affect the voting on the proposals.
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Q: WHAT PERCENTAGE OF STOCK DOES OUR SIGNIFICANT SHAREHOLDER OWN? HOW DOES HE
INTEND TO VOTE?
Jeffrey H. Smulyan, the Chief Executive Officer, President and Chairman
of our board of directors, is our largest single shareholder, beneficially
owning 535,282 ,shares, or 1.3%, of our Class A common stock and 5,830,396
shares, or 100%, of our Class B common stock as of November 20, 2000. Mr.
Smulyan has informed us that he intends to vote in favor of each of the
proposals and for all of the nominees for director. If he does so, each proposal
on which the existing common stock votes together as a single class will be
approved because Mr. Smulyan controls 62.6% of the combined voting power of our
existing common stock.
All directors and officers together beneficially own approximately 4.0%
of our Class A common stock and 100% of our Class B common stock, which
represents approximately 63.8% of the combined voting power of our existing
common stock.
Q: WHO CAN ATTEND THE ANNUAL MEETING?
All shareholders as of November 20, 2000 can attend.
Q: WHAT DO I DO IF I HAVE ADDITIONAL QUESTIONS?
If you have any questions prior to the annual meeting, please call our
Investor Relations Department at (317) 266-0100.
PROPOSAL 1: ELECTION OF DIRECTORS
There are currently eight members of the board of directors. At a
special meeting held on February 21, 2000, the shareholders approved an
amendment to our articles of incorporation providing for the creation of a
classified board divided into three classes, designated as Class I, Class II and
Class III, with each class having as nearly equal members in number as possible.
Accordingly, a total of eight directors are to be elected at this year's annual
meeting to hold office for staggered terms initially ranging from one to three
years. Because the 2000 annual meeting of shareholders was delayed until January
2001 and because we expect to return to our practice of holding annual meetings
in June with the next annual meeting, the first "year" is actually expected to
be approximately six months assuming the next annual meeting occurs in June
2001. Two directors have been nominated as Class I directors to serve an initial
term until the next annual meeting of shareholders. Three directors have been
nominated as Class II directors to serve an initial term until the annual
shareholders' meeting in 2002. Three directors have been nominated as Class III
directors to serve an initial term until the annual shareholders' meeting in
2003. Each nominee is nominated to serve his or her respective term and until
his or her successor is elected and qualified. At each subsequent annual meeting
of shareholders, one class of directors will be elected for a term of three
years and until their successors are duly elected and qualified.
Susan B. Bayh and Frank V. Sica have been nominated to serve as
directors in Class III, and as the independent directors elected separately by
the holders of our Class A common stock. The other six nominees will be elected
by the Class A and Class B common stock voting together as a single class.
All nominees are members of the present board of directors. If, at the
time of this 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.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE ELECTION OF EACH OF
THE FOLLOWING NOMINEES.
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION(S) AND DIRECTOR
BUSINESS EXPERIENCE DURING PAST 5 YEARS SINCE
--------------------------------------- --------
<S> <C>
NOMINATED FOR A TERM EXPIRING IN 2001:
Jeffrey H. Smulyan, Age 53 1979
Mr. Smulyan founded Emmis in 1979 and is the Chairman of the Board of
Directors, President and Chief Executive Officer. He has held the positions of
Chairman of the Board of Directors and Chief Executive Officer since 1981 and
the position of President since 1994. Mr. Smulyan began working in radio in
1973, and has owned one or more radio stations since then. Formerly, he was also
the owner and chief executive officer of the Seattle Mariners major league
baseball team. He is Chairman of the Radio Advertising Bureau, a director of The
Finish Line, a sports apparel manufacturer, and serves as a Trustee of Ball
State University. Mr. Smulyan has been chosen Radio Executive of the Year by a
radio industry group and was voted one of the Ten Most Influential Radio
Executives in the Past 20 Years in a poll in RADIO AND RECORDS magazine.
Greg A. Nathanson, Age 54 1998
Mr. Nathanson joined Emmis in 1998 as Television Division President.
Mr. Nathanson has over 30 years of television broadcasting experience, most
recently as President of Programming and Development for Twentieth Television
from 1996 to 1998, as General Manager of KTLA-TV in Los Angeles, California from
1992 to 1996 and as President of Fox Television Stations from 1990 to 1992. Mr.
Nathanson resigned as Television Division President effective October 1, 2000,
but continues as a consultant and Director of the company.
NOMINATED FOR A TERM EXPIRING IN 2002:
Richard A. Leventhal, Age 53 1992
Mr. Leventhal has owned and operated Top Value Fabrics, Inc., a
wholesale fabric and textile company in Carmel, Indiana, for 24 years. Mr.
Leventhal is the brother-in-law of Norman H. Gurwitz.
Doyle L. Rose, Age 51 1984
Mr. Rose has been Radio Division President of Emmis since 1989, and
served as General Manager of KPWR-FM in Los Angeles from 1991 through 1995.
Previously, he was our Executive Vice President-Operations. Mr. Rose has been a
general manager of one or more radio stations for approximately twenty years.
Lawrence B. Sorrel, Age 41 1993
Mr. Sorrel is a general partner of Welsh, Carson, Anderson & Stowe, a
private equity investment firm. He is Chairman of the Board of SpectraSite
Communications, Inc., an owner and operator of telecommunications towers, and a
board member of Winstar Communications Inc. and CFW Communications Co. Prior to
May 1998, he was a Managing Director of Morgan Stanley Dean Witter & Co.
Incorporated, where he had been employed since 1986.
</TABLE>
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<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION(S) AND DIRECTOR
BUSINESS EXPERIENCE DURING PAST 5 YEARS SINCE
--------------------------------------- --------
<S> <C>
NOMINATED FOR A TERM EXPIRING IN 2003:
Susan B. Bayh,* Age 40 1994
Mrs. Bayh is the Commissioner of the International Joint Commission of
the United States and Canada, and also serves as a Distinguished Visiting
Professor at Butler University, positions she has held since 1994. Previously,
she was an attorney with Eli Lilly & Company. She is a director of Anthem, Inc.,
an insurance company; Golden State Foods and Corvas Cubist, Inc.
Gary L. Kaseff, Age 52 1994
Mr. Kaseff is employed as Executive Vice President and General Counsel
to Emmis, a post he has held since 1998. Before becoming general counsel, Mr.
Kaseff practiced law in Southern California. Previously, he was President of the
Seattle Mariners major league baseball team and partner with the law firm of
Epport & Kaseff.
Frank V. Sica,* Age 48 1998
Mr. Sica is a Managing Director of Soros Fund Management LLC and
Managing Partner of Soros Private Equity Partners. He is director of CSG Systems
International, Inc., a computer software company, Global TeleSystems Group,
Inc., a telecommunications company, Kohl's Corporation, a retail company, and
Outboard Marine Corporation, a manufacturer of marine engines and boats. Prior
to joining Soros in 1998, Mr. Sica had been a Managing Director at Morgan
Stanley Dean Witter & Co. Incorporated.
</TABLE>
------------------------
*Nominee to serve as independent director elected by the holders of the
existing Class A common stock voting as a single class.
PROPOSAL 2: NEW EMPLOYEE STOCK PURCHASE PLAN
On February 8, 2000, our board of directors adopted the new Employee
Stock Purchase Plan, referred to as the "new Stock Purchase Plan," effective
March 1, 2000, and reserved shares of our Class A common stock for issuance
under the new Stock Purchase Plan, subject to shareholder approval within twelve
months of our board's adoption. At the annual meeting, holders of our Class A
and Class B common stock, voting together as a single class, are being asked to
approve the new Stock Purchase Plan and the board's reservation of shares under
the new Stock Purchase Plan for the purpose of qualifying the reserved shares
for special tax treatment under Internal Revenue Code Section 423. The following
is only a summary of the new Stock Purchase Plan and is qualified in its
entirety by reference to its full text, a copy of which is attached to this
proxy statement as Annex I.
PURPOSE
The purpose of the new Stock Purchase Plan is to incentivize our
employees by providing them with an opportunity to purchase shares of Class A
common stock, subject to certain restrictions and limitations. These shares will
be provided to our employees at a discount to the prevailing market price which
will provide an incentive for employees to have an ownership interest in our
company at a minimum cost to us.
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ADMINISTRATION
The new Stock Purchase Plan will be administered by a committee
appointed by our board of directors. Unless our board of directors appoints a
different committee, the committee will consist of the members of the
compensation committee of the board of directors. The committee has full power
to administer and interpret the new Stock Purchase Plan, and the decisions of
the committee are final and binding upon all participants.
SHARES RESERVED FOR ISSUANCE
Subject to the adjustments discussed below for changes in our capital
structure or upon a corporate transaction, the maximum number of shares of Class
A common stock that will be made available for sale under the new Stock Purchase
Plan is 400,000 plus an annual increase on the first day of each fiscal year
equal to 0.5% of the shares of each outstanding class of common stock
outstanding on the last day of the immediately preceding fiscal year or such
lesser number of shares as is determined by the board of directors.
ELIGIBILITY
Any of our employees or employees of any of our subsidiaries designated
by our board of directors or the committee who has completed at least six months
of continuous service as an employee (subject to certain permitted interruptions
of up to 90 days) as of an offering date is eligible to participate in the new
Stock Purchase Plan during the relevant offering period, subject to
administrative rules established by the committee. Eligible employees become
participants in the new Stock Purchase Plan by filing with the committee or a
broker designated by the committee during the 30-day period prior to the
applicable offering date (or such other time as is designated by the committee)
a subscription agreement authorizing payroll deductions. As of March 1, 2000,
approximately 1,395 of our employees, including seven executive officers, were
eligible to participate in the new Stock Purchase Plan.
PARTICIPATION IN AN OFFERING
The new Stock Purchase Plan is implemented by offering periods lasting
for six months commencing on each of March 1 and September 1. The first offering
period commenced on March 1, 2000. Shares of common stock are purchased under
the new Stock Purchase Plan on the last day of each offering period, unless the
participant withdraws or terminates employment earlier. To participate in the
new Stock Purchase Plan, each eligible employee must authorize payroll
deductions pursuant to the new Stock Purchase Plan in an amount up to 100% of
the participant's compensation; however, no participant may purchase more than
25,000 shares during any offering period. On each purchase date, each
participant who has elected to participate is automatically deemed to have
elected to purchase shares of Class A common stock with the entire balance of
the payroll deductions accumulated during the relevant offering period in the
participant's payroll deduction account. In addition, no employee is eligible to
purchase shares under the new Stock Purchase Plan to the extent that,
immediately after the purchase, that employee would own 5% or more of either the
voting power or the value of all classes of our common stock, and no employee's
rights to purchase our common stock pursuant to the new Stock Purchase Plan may
accrue at a rate that exceeds $25,000 per calendar year. For this purpose, stock
that the participant may purchase under any outstanding option is treated as
owned by the participant. In addition, during any one calendar year, all
participants who are officers of our company subject to Section 16 of the
Securities Exchange Act of 1934, as amended, may not purchase, in the aggregate,
more than 50% of the common stock purchased by participants in the new Stock
Purchase Plan during that calendar year.
PURCHASE PRICE, SHARES PURCHASED
Shares of our Class A common stock may be purchased under the new Stock
Purchase Plan at a price equal to 90% of the fair market value of the common
stock on the offering date or the purchase date, whichever is less. On March 1
and August 31, 2000, the closing price per share of our Class A common stock was
$35.375 and $32.8125, respectively. Pursuant to the terms of the new Stock
Purchase Plan, 18,027 shares of our Class A common stock were purchased on
August 31, 2000. The number of whole shares of our Class A common stock a
participant purchases in each offering period is determined by dividing the
total amount of payroll deductions withheld from the participant's compensation
during that offering period by the purchase price. The broker
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designated by the committee will acquire shares that are newly issued or held as
treasury shares by of our company or, if directed by the committee, will acquire
shares in purchases on the open market or in private transactions. If shares are
purchased in the open market or in private transactions at the direction of the
committee, we will pay the designated broker the difference between the purchase
price under the new Stock Purchase Plan and the price at which such shares are
purchased for participants.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
death, immediately terminates his or her participation in the new Stock Purchase
Plan. In such event, the payroll deductions credited to the participant's
account will be returned without interest, and all existing stock held for the
participant in the new Stock Purchase Plan will be distributed, to him or her
or, in the case of death, to the person or persons entitled to those deductions
and stock.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR SALE OF ASSETS
In the event that the common stock is changed by reason of any stock
split, stock dividend, combination, recapitalization, reclassification or other
similar changes in our capital structure effected without the receipt of
consideration, or in the event of a merger in which we are the surviving
corporation, the committee may make appropriate proportional adjustments in the
number of shares of stock subject to the new Stock Purchase Plan, the price per
share of stock to be purchased under the new Stock Purchase Plan and other
relevant provisions of the new Stock Purchase Plan. The committee's
determination of any such adjustment will be conclusive and binding. In the
event of a proposed sale of all or substantially all of our assets or our merger
or consolidation with another company where we are not the surviving
corporation, the committee may take such actions with respect to the new Stock
Purchase Plan as the committee deems appropriate.
AMENDMENT AND TERMINATION OF THE PLAN
The board may terminate or amend the new Stock Purchase Plan at any
time, except that it may not increase the number of shares subject to the new
Stock Purchase Plan other than as described in the new Stock Purchase Plan. The
new Stock Purchase Plan will continue until the purchase date that participants
become entitled to purchase a number of shares of common stock greater than the
number of reserved shares remaining available for purchase under the new Stock
Purchase Plan.
WITHDRAWAL
Generally, a participant may withdraw from the new Stock Purchase Plan
at any time during an offering period prior to the purchase date. If a
participant elects to withdraw, all of the participant's payroll deductions
credited to the participant's payroll deduction account will be returned to the
participant, and the participant may not make any further contributions to the
new Stock Purchase Plan for the purchase of shares during that offering period.
A participant's voluntary withdrawal during an offering period will not have any
effect upon the participant's eligibility to participate in the new Stock
Purchase Plan during a subsequent offering period.
NEW PLAN BENEFITS
Because benefits under the new Stock Purchase Plan will depend on
employees' elections to participate and the fair market value of common stock at
various future dates, it is not possible to determine the benefits that will be
received by executive officers and other employees if the new Stock Purchase
Plan is approved by the shareholders. Non-employee directors are not eligible to
participate in the new Stock Purchase Plan.
FEDERAL INCOME TAX CONSEQUENCES
If the holders of our common stock approve this proposal, the new Stock
Purchase Plan and the right of participants to make purchases under the new
Stock Purchase Plan should qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code. Under these provisions, no income will be taxable
to a
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participant until the shares purchased under the new Stock Purchase Plan are
sold or otherwise disposed of. Upon sale or other disposition of the shares, the
participant will generally be subject to tax and the amount of the tax will
depend upon the holding period. If the shares are sold or otherwise disposed of
more than two years from the applicable offering date and more than one year
from the date of transfer of the shares to the participant, then the participant
generally will recognize ordinary income measured as the lesser of (i) the
excess of the fair market value of the shares at the time of such sale or
disposition over the purchase price, or (ii) an amount equal to 10% of the fair
market value of the shares as of the offering date. Any additional gain should
be treated as long-term capital gain. If the shares are sold or otherwise
disposed of before the expiration of this holding period, the participant will
recognize ordinary income generally measured as the excess of the fair market
value of the shares on the date the shares are purchased over the purchase
price. Any additional gain or loss on a sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. We are not
entitled to a deduction for amounts taxed as ordinary income or capital gain to
a participant except to the extent ordinary income is recognized by participants
upon a sale or disposition of shares prior to the expiration of the holding
period(s) described above. In all other cases, no deduction is allowed to us.
The foregoing is only a summary of the effect of U.S. federal income
taxation upon the participant and us with respect to the shares purchased under
the new Stock Purchase Plan. It does not discuss the tax consequences arising in
the context of a participant's death or the income tax laws of any municipality,
state or foreign country in which the participant's income or gain may be
taxable or other tax matters that may be relevant to particular participants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE NEW STOCK
PURCHASE PLAN.
PROPOSAL 3: RATIFICATION OF SELECTION OF AUDITORS
The selection of our independent auditors is being submitted for
ratification by the holders of existing common stock. Our financial statements
for the fiscal year ended February 29, 2000 were certified by Arthur Andersen
LLP. The board of directors has selected Arthur Andersen LLP as our independent
auditors for the fiscal year ending February 28, 2001. Representatives of Arthur
Andersen LLP 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 LLP, the selection of independent auditors will be reconsidered by the
board of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT AUDITORS.
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SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
As of November 20, 2000, there were 41,745,946 shares of our Class A
common stock and 5,230,396 shares of our Class B common stock issued and
outstanding. The Class A common stock is entitled to an aggregate of 41,745,946
votes and the Class B common stock is entitled to an aggregate of 52,303,960
votes. The following table shows, as of November 20, 2000, the number and
percentage of shares of our common stock held by each person known to us to own
beneficially more than five percent of the issued and outstanding common stock,
by our directors and nominees, and by certain of our executive officers:
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
--------------------------- ---------------------------
FIVE PERCENT SHAREHOLDERS, AMOUNT AND NATURE AMOUNT AND NATURE
DIRECTORS AND CERTAIN OF BENEFICIAL PERCENT OF BENEFICIAL PERCENT PERCENT OF TOTAL
EXECUTIVE OFFICERS OWNERSHIP OF CLASS OWNERSHIP OF CLASS VOTING POWER
---------------------------- ----------------- -------- ----------------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan............ 535,282(1) 1.3% 5,830,396(17) 100.0% 62.6%
Susan B. Bayh................. 32,700(2) * -- -- *
Walter Z. Berger.............. 40,334(3) * -- -- *
Randall D. Bongarten.......... 28,207(4) * -- -- *
Richard F. Cummings........... 299,386(5) * -- -- *
Norman H. Gurwitz............. 203,496(6) * -- -- *
Gary L. Kaseff................ 98,049(7) * -- -- *
Richard A. Leventhal.......... 68,800(8) * -- -- *
Doyle L. Rose................. 138,015(9) * -- -- *
Greg A. Nathanson............. 205,973(10) * -- -- *
Frank V. Sica................. 10,000(11) * -- -- *
Lawrence B. Sorrel............ 18,000(12) * -- -- *
Liberty Media Corporation..... 5,400,000(13) 13.0 -- -- 5.7
Mellon Financial Corporation.. 5,000,307(14) 12.0 -- -- 5.3
Westport Asset Management, Inc. 3,055,800(15) 7.3 -- -- 3.3
All Officers and Directors as a
Group (12 persons).......... 1,678,242(16) 4.0 5,830,396(16) 100.0 63.8
</TABLE>
------------------------
* Less than 1%.
(1) Consists of 348,056 shares held by Mr. Smulyan as trustee for the Emmis
Communications Corporation Profit Sharing Trust (the "Profit Sharing
Trust"), as to which Mr. Smulyan disclaims beneficial ownership of all
but 3,413 held for his benefit, 259 shares held in the 401(k) Plan and
186,967 shares owned individually.
(2) Consists of 2,700 shares owned individually and 30,000 shares
represented by stock options exercisable within 60 days of November 20,
2000.
(3) Consists of 30 shares held in the 401(k) Plan, 304 shares held in the
new Stock Purchase Plan and 40,000 shares represented by stock options
exercisable within 60 days of November 20, 2000.
(4) Consists of 4,000 shares owned individually, 207 shares held in the
Profit Sharing Trust and 24,000 shares represented by stock options
exercisable within 60 days of November 20, 2000.
(5) Consists of 209,375 shares owned individually, 6,752 shares owned for
the benefit of Mr. Cummings' children, 3,413 shares held in the Profit
Sharing Trust, 246 shares held in the 401(k) Plan and 9,600 shares
represented by stock options exercisable within 60 days of November 20,
2000.
(6) Consists of 38,540 shares owned jointly by Mr. Gurwitz and his spouse,
980 shares owned by Mr. Gurwitz's spouse, 5,476 shares owned for the
benefit of Mr. Gurwitz's children, 17,800 shares owned by a corporation
of which Mr. Gurwitz's spouse is a 50% shareholder, 2,225 shares held
in the Profit Sharing Trust, 2,609 shares held in the 401(k) Plan, 406
shares held in the new Stock Purchase Plan and 135,460 shares
represented by stock options exercisable within 60 days of November 20,
2000.
(7) Consists of 8,796 shares owned individually by Mr. Kaseff, 3,013 shares
owned by Mr. Kaseff's spouse, 550 shares held by Mr. Kaseff's spouse
for the benefit of their children, 690 shares held in the Profit
Sharing Trust, and 85,000 shares represented by stock options
exercisable within 60 days of November 20, 2000.
(8) Consists of 8,000 shares owned individually, 3,000 shares owned by Mr.
Leventhal's spouse, 17,800 shares owned by a corporation of which Mr.
Leventhal is a 50% shareholder and 40,000 shares represented by stock
options represented by stock options exercisable within 60 days of
November 20, 2000.
(9) Consists of 124,980 shares owned individually, 3,413 shares held in the
Profit Sharing Trust, 220 shares held in the 401(k) Plan and 9,600
shares exercisable within 60 days of November 20, 2000.
(10) Consists of 111,973 shares owned individually or jointly with his
spouse, 44,000 shares owned by a trust for the benefit of Mr.
Nathanson's children and 50,000 shares represented by stock options
exercisable within 60 days of November 20, 2000.
9
<PAGE>
(11) Consists entirely of shares represented by stock options exercisable
within 60 days of November 20, 2000.
(12) Consists of 8,000 shares owned individually and 10,000 shares
represented by stock options exercisable within 60 days of November 20,
2000, 2000.
(13) Information concerning these shares was obtained from a Schedule 13D
filed in November 1999 by Liberty Media Corporation, which has a
mailing address of 9197 South Peoria Street, Englewood, Colorado 80112.
The shares are held by Liberty EMMS, Inc., an affiliate of Liberty
Media Corporation.
(14) Information concerning these shares was obtained from a Schedule 13G
filed on October 6, 2000 by Mellon Financial Corporation on behalf of
itself, Boston Group Holdings, Inc., The Boston Company, Inc. and The
Boston Company Asset Management, Inc., each of which has a mailing
address of One Mellon Center, Pittsburgh, Pennsylvania 15258.
(15) Information concerning these shares was obtained from an Amendment to a
Schedule 13G filed in February 2000 by Westport Asset Management, Inc.
on behalf of itself and Westport Advisors LLC, each of which has a
mailing address of 253 Riverside Avenue, Westport, Connecticut 06880.
(16) Includes 419,660 shares represented by stock options exercisable within
60 days of November 20, 2000 and 348,056 shares held in the Profit
Sharing Trust.
(17) Consists of 5,230,396 shares owned individually and 600,000 shares
represented by stock options exercisable within 60 days of November 20,
2000.
BOARD OF DIRECTORS' MEETINGS
During our last fiscal year, our board of directors held six meetings,
either in person, by telephone or by written consent. Each director attended at
least 75% of (1) the total number of meetings of our board of directors held
while he or she was a director and (2) the total number of meetings held by all
committees on which he or she served, except for Frank V. Sica, who attended 45%
of the meetings, and Lawrence B. Sorrel, who attended 67% of the meetings.
Through the date of this proxy statement, Mr. Sica and Mr. Sorrel have attended
89% and 86%, respectively, of such meetings held during the current fiscal year.
Our directors who are not officers or employees of our company are compensated
for their services at the rate of $2,000 per meeting attended. Pursuant to the
Non-Employee Director Stock Option Plan, directors who are not officers or
employees of our company also are entitled to receive options to purchase 10,000
shares of Class A common stock. The options are granted on the date of our
annual meeting of shareholders at the closing price of the underlying shares on
that date. In addition to her duties as a director, we separately engaged Susan
B. Bayh to continue to develop plans for the involvement of our company and each
of our stations and publications in various charitable organizations and perform
certain other consulting services. During the last fiscal year, Mrs. Bayh
received approximately $50,000 as compensation for such services. Nominees for
election as a director are selected by the board of directors, acting as a
nominating committee. Our board of directors currently has an audit committee
and a compensation committee.
CERTAIN TRANSACTIONS
We have periodically made interest-bearing loans to various officers
and employees. At November 20, 2000, the approximate amount of this indebtedness
outstanding, and the largest aggregate amount of indebtedness outstanding at any
month end during the last fiscal year, was $1,055,299 and $1,016,205,
respectively, for Jeffrey H. Smulyan, Chairman, Chief Executive Officer and
President; $171,912 and $166,149, respectively, for Doyle L. Rose, Radio Group
President and Director; $124,279 and $119,702, respectively, for Richard F.
Cummings, Executive Vice President-Programming; and $93,621 and $90,271,
respectively, for Norman H. Gurwitz, Executive Vice President-Human Resources
and Secretary. These loans bear interest at our cost of senior debt, which at
November 20, 2000 was approximately 8.50% per annum. During the last fiscal
year, we purchased approximately $157,000 in corporate gifts and specialty items
from a company owned by the spouse of Norman H. Gurwitz, part of these purchases
were awarded through competitive bids, and we made payments of approximately
$364,000 to a company owned by Jeffrey H. Smulyan for our use of an airplane
owned by that company.
10
<PAGE>
REPORT OF THE AUDIT COMMITTEE
The audit committee of the board of directors, consisting solely of
non-employee directors, assists the board in carrying out its oversight
responsibilities for Emmis' financial reporting process, audit process and
internal controls. The responsibilities of the audit committee are described in
the Audit Committee Charter attached as Annex II to this proxy statement.
In December 1999, the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. adopted new rules applicable to
companies with securities traded on Nasdaq. Under these new rules, an audit
committee is, or will be, required to:
(i) adopt a formal written charter,
(ii) consist of at least 3 directors, each of whom meets certain
independence and financial literacy requirements,
(iii) conduct quality discussions with the company's independent
auditor prior to the filing of the company's Form 10-K,
(iv) ensure that the company's independent auditors have conducted
quarterly reviews of the company's financial statements,
engaging in quality discussions with the independent auditors
when appropriate,
(v) disclose whether it has (A) reviewed and discussed the
company's audited financial statements for the last fiscal
year with management; (B) discussed with the company's
independent auditors the matters required to be discussed by
SAS 61 (Codification for Statements on Auditing Standards);
and (C) received and discussed the written disclosures and the
letter from the company's independent auditors required by
Independence Standards Board Statement No. 1 (INDEPENDENCE
DISCUSSIONS WITH AUDIT COMMITTEES), and
(vi) disclose whether the audit committee recommended to the board
that the audited financial statements be included in the
company's Form 10-K.
Each of these new rules has different effective dates, and most did not apply to
our company's financial statements for the fiscal year ended February 29, 2000.
However, our audit committee has adopted a formal written charter, a copy of
which is attached as Annex II to this proxy statement. In addition, the
committee has determined that its members meet the literacy requirements of the
new rules and expects to comply with the other new structural and membership
requirements before they take effect in June 2001. The committee has also made
certain that our company's quarterly financial statements continue to be
reviewed by our independent auditors prior to filing and put in place mechanisms
to ensure that committee members are notified whenever our independent auditors
believe that significant events, transactions or changes in accounting estimates
have affected the quality of our company's financial reporting. In connection
with its preparation for the audit for the fiscal year ending February 28, 2001,
the audit committee discussed the audited financial statements for the last
fiscal year with management, discussed the items required to be discussed by SAS
61 with our auditors and received and discussed the disclosures and letter
required by Independence Standards Board Statement No. 1. While the committee
members agreed that the audited financial statements for our last fiscal year
should be included in our company's Form 10-K, no formal committee
recommendation was made to the board. Based on the committee's and management's
assessment of the performance of Arthur Andersen LLP during the audit for our
last fiscal year, the committee has recommended to the full board of directors
that Arthur Andersen LLP be engaged as our independent auditors for the next
fiscal year.
AUDIT COMMITTEE MEMBERS
-----------------------
Richard A. Leventhal, Chair
Lawrence B. Sorrel
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The compensation committee, which met three times during the last
fiscal year, provides a general review of our compensation and benefit plans to
ensure that they meet our corporate objectives. The compensation committee also
has authority to administer and to recommend the grant of options and other
awards under our various stock option and incentive plans, and to administer and
recommend contributions under our Profit Sharing Trust. During the last fiscal
year, Susan B. Bayh, Richard A. Leventhal and Frank V. Sica were members of the
compensation committee.
POLICY AND PERFORMANCE MEASURES. We have entered into two and three
year employment agreements with many of our executive officers, general managers
and other key officers. These agreements, which provide for a base salary,
annual performance bonuses, and restricted stock and stock option awards,
generally prohibit the officer from directly or indirectly competing with us.
The compensation committee believes that entering into these agreements is in
our best interest, particularly because the structure of these agreements
assists us in retaining our key officers for a certain period of time and
focusing the efforts and energies of those officers on further enhancing the
long-term value of our company to our shareholders. The total compensation
reflected in these employment agreements is generally based upon the officers'
prior compensation levels and peer group benchmarking surveys. Overall,
compensation to our officers is targeted at the top half to top quarter of our
peer group in order to attract and retain highly qualified employees, and an
emphasis is placed upon incentive-based compensation.
At the committee's direction, compensation of general managers and
other non-executive officers was determined by Mr. Smulyan and our other
executive officers. The executive officers determined for each general manager
or other non-executive officer a salary that they believed to be reasonable
based upon such officer's compensation for the previous year, our performance
over the previous year and the officer's contribution to that performance.
Because the fiscal year ended February 28, 1999 resulted in an improvement in
same-station broadcast cash flow, base salary levels of the officers for the
fiscal year ended February 29, 2000 were generally increased from base salary
levels in fiscal year 1999.
We have historically relied upon cash bonuses and stock options in
order to tie compensation to corporate performance. For the last fiscal year,
bonuses for our executive officers (other than Mr. Smulyan) were awarded by the
compensation committee based upon Mr. Smulyan's recommendations and, if
applicable, the annual bonus targets specified in officers' employment
agreements. Because of the record levels of revenue and cash flow, particularly
in the radio division, and the increase in the price per share of our Class A
common stock during the fiscal year, maximum bonuses were offered to all of the
executive officers, except the president of the Television Division who received
two-thirds of his potential bonus. Bonuses to non-executive officers were based
upon Mr. Smulyan's and the other executive officers' assessment of the
individual officer's contribution to our overall performance. Stock options were
also granted to our officers during the last fiscal year under our 1994, 1995
and 1997 Equity Plans. The number of options granted to an officer primarily
depended upon that officer's classification within our company. Radio station
general managers generally received options to purchase 6,000 to 20,000 shares
of our Class A common stock, with general managers of more than one radio
station receiving additional options for each radio station under the officer's
management. Television station general managers generally received options to
purchase 2,500 to 10,000 shares of our Class A common stock depending upon the
length of time they served as general manager and any additional duties they
performed within our company. Corporate and other non-general manager officers
received options to purchase between 3,000 and 40,000 shares.
The Internal Revenue Code generally limits to $1 million the amount of
compensation that we may deduct in any year with respect to certain of our
officers. Accordingly, the compensation committee endeavors to structure
executive compensation so that most of that 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, in cases where the compensation
committee determines in good faith that such compensation is appropriate.
CHIEF EXECUTIVE OFFICER COMPENSATION. During the last fiscal year, we
entered into an amendment to Mr. Smulyan's employment agreement which extended
the term of his employment as our chief executive officer until February 29,
2004. The amendment to the employment agreement was designed to emphasize the
performance-based portion of Mr. Smulyan's annual cash compensation. Thus,
rather than increase Mr. Smulyan's
12
<PAGE>
base salary, he received the same salary as the year before. For future years,
the amendment to the employment agreement eliminated the provision that
automatically increased Mr. Smulyan's salary by 10-15% per year and limited the
increase to the rate of inflation. At the same time, the amendment increased the
potential annual bonus of Mr. Smulyan to an amount equal to his annual salary.
For his performance during the last fiscal year, Mr. Smulyan was awarded his
full bonus. In making this determination, the committee recognized Mr. Smulyan's
role in (i) our record levels of revenue and cash flow, (ii) the successful
completion of public offerings of subordinated debt, Class A common stock and
convertible preferred stock, (iii) the $150 million investment from an affiliate
of Liberty Media Corporation, and (iv) the significant increase in the price per
share of the Class A common stock. At the same time, the committee recognized
that awarding Mr. Smulyan the full bonus could cause adverse tax consequences to
us. Thus, we entered into a deferred compensation agreement with Mr. Smulyan
that provides for actual payment of the annual bonus over a period of time such
that the bonus will be deductible by us for federal income tax purposes. Amounts
deferred under this arrangement bear interest at the same rate as our senior
debt.
In connection with the amendment to Mr. Smulyan's employment agreement,
the committee also granted to Mr. Smulyan options to purchase 1,000,000 shares
of common stock at a price per share of $28.25, the fair market value on the
date of grant. Unless specified performance targets are met, these options are
not generally exercisable until March 1, 2006. However, options to purchase
200,000 shares become exercisable at the end of each year in which either our
annual broadcast cash flow increases from the previous year by a percentage
specified in the grant agreement or the percentage increase in the average
monthly fair market value of the Class A common stock during the fiscal year
exceeds that of a specified peer group of broadcasting companies. The committee
believes that the performance accelerated vesting feature of these options is
more favorable to our company than the option arrangement under Mr. Smulyan's
previous employment agreement because it creates an incentive for Mr. Smulyan to
cause us to meet certain performance targets but does not require us to take the
charge to earnings that we had been forced to take when options were granted
under the prior employment arrangement. Because we exceeded the performance
targets specified in the option grant agreement, Mr. Smulyan earned the right to
exercise the option to purchase 200,000 shares.
COMPENSATION COMMITTEE MEMBERS
------------------------------
Susan B. Bayh
Richard A. Leventhal
Frank V. Sica
13
<PAGE>
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. All
stock information in the following tables has been restated for the two-for-one
stock split that occurred in February 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------------- -------------
SECURITIES
FISCAL OTHER UNDERLYING ALL
NAME AND YEAR ENDED ANNUAL OPTIONS/ OTHER
PRINCIPAL POSITION FEBRUARY 28(29) SALARY BONUS(1) COMPENSATION(2) SARS COMPENSATION
---------------------------- --------------- ------ -------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
JEFFREY H. SMULYAN............ 2000 $765,175 $765,175 -- $1,200,000 $130,000(3)
Chief Executive Officer, 1999 762,656 271,301 -- 200,000 40,000
President 1998 681,717 140,000 -- 200,000 101,735
And Chairman of the Board
DOYLE L. ROSE................. 2000 $435,769 $479,593 $ 14,400 -- --
Radio Division President 1999 433,867 -- 14,400 300,000 --
1998 434,156 44,800 14,400 50,000 --
RICHARD F. CUMMINGS........... 2000 $460,781 $479,593 $ 14,400 -- --
Executive Vice 1999 408,855 -- 14,400 300,000 --
President--Programming 1998 434,156 44,800 14,400 50,000 --
GREG A. NATHANSON............. 2000 $435,769 $119,745 $ 14,400 50,000 --
Television Division President 1999 243,227 75,000 8,400 -- --
1998 -- -- -- -- --
WALTER Z. BERGER.............. 2000 $342,192 $119,745 $ 12,000 40,000 $ 86,307(4)
Executive Vice President, 1999 23,539 -- -- -- --
Chief 1998 -- -- -- -- --
Financial Officer and
Treasurer
</TABLE>
------------------------
(1) Includes both cash and stock bonuses. The bonuses for Mr. Cummings and
Mr. Rose include a signing bonus for entering into new employment
agreements with our company.
(2) Represents automobile allowance.
(3) Represents the value of premiums accrued by us on a split-dollar life
insurance policy.
(4) Represents reimbursement of relocation expenses.
14
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE OF
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
------------------------------------------------------------- ----------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED (#) FISCAL YEAR PRICE ($/SHARE) EXPIRATION DATE 5% 10%
-------------------- ----------- ------------ ----------------- --------------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan ... 200,000 12.5% $7.75 6/29/04 $ 7,468,000 $9,480,000
1,000,000 62.3% 28.25 10/23/09 30,260,000 63,490,000
Doyle L. Rose ........ -- -- -- -- -- --
Richard F. Cummings .. -- -- -- -- -- --
Greg A. Nathanson .... 50,000 3.1% 22.6875 (1) 1,200,325 1,831,525
Walter Z. Berger ..... 40,000 2.5% 22.6875 (1) 960,260 1,465,220
</TABLE>
------------------------
(1) The options expire at a rate of 20% per year beginning February 28,
2003, with all options expiring by February 28, 2007.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION /SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS/SARS AT FISCAL VALUE OF UNEXERCISED IN-THE-MONEY
YEAR END OPTIONS/SARS AT FISCAL YEAR END
---------------------------------- ---------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------- ----------- ---------- ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan ... 46,000 $1,691,223 800,000 1,000,000 $21,250,000 8,250,000
Doyle L. Rose ........ 54,800 2,471,238 114,400 250,000(1) 3,305,200 4,125,000
Richard F. Cummings .. 4,800 172,800 164,400 250,000(1) 4,742,700 4,125,000
Greg A. Nathanson .... -- -- -- 50,000 -- 690,625
Walter Z. Berger ..... -- -- -- 40,000 -- 552,500
</TABLE>
------------------------
(1) Options relating to 35,000 of these shares lapsed immediately following
the end of the fiscal year because certain performance targets were not
achieved. The value of the remaining unexercisable in-the-money options
at fiscal year end was $3,547,500.
EMPLOYMENT AGREEMENTS
During the fiscal year ended February 28, 1994, we entered into a
five-year employment agreement with Jeffrey H. Smulyan pursuant to which Mr.
Smulyan was employed as chairman of the board of directors and chief executive
officer. This employment agreement expired by its terms on February 28, 1999. We
and Mr. Smulyan entered into an amendment to the employment agreement effective
March 1, 1999 which extended the term to February 29, 2004. Mr. Smulyan's base
compensation during the last fiscal year was approximately $765,000. The amended
agreement basically kept his salary the same as the previous year and limited
future annual increases of his salary to the rate of inflation. In addition, the
agreement as amended provides for annual bonuses to be set by our board of
directors ranging from a minimum of $50,000 up to a maximum of 100% of Mr.
Smulyan's annual base salary (plus an adjustment for inflation). Mr. Smulyan
also received options to purchase 1,000,000 shares of common stock (after
adjustment for the stock split) at a price per share of $28.25 pursuant to the
agreement. Under the agreement, Mr. Smulyan retains the right to participate in
all our employee benefit plans for which he is otherwise eligible. The agreement
with Mr. Smulyan is subject to termination by our board of directors or by Mr.
Smulyan, either without cause or for cause, at any time upon notice. In the
event we terminate 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 is 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 our company. Following a termination of
Mr. Smulyan's employment, other than a termination by us without cause (as
defined in the agreement) or a termination by Mr. Smulyan with good reason (as
defined in the agreement), Mr. Smulyan is prohibited from engaging in a business
in competition with us for a period of two years after the date of termination.
In connection with the payment of his annual bonus, Mr. Smulyan also entered
into a
15
<PAGE>
deferred compensation agreement with us pursuant to which Mr. Smulyan deferred
the amount of his bonus that would not otherwise be deductible to us under
Section 162(m) of the Internal Revenue Code. The amounts deferred will generally
be paid to Mr. Smulyan over the next four years and will accrue interest at our
cost of senior debt, currently, approximately 7.50%. Future annual bonuses paid
to Mr. Smulyan will be structured, to the extent practicable, to qualify as
performance-based under Section 162(m) of the Internal Revenue Code and thus
deductible to us.
During the fiscal year ended February 29, 2000, we entered into
two-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 provides for a $300,000 signing bonus and an annual base
salary of $433,000, respectively, for each of the three years covered by the
agreements. In addition, the agreements (i) provide for an annual cash bonus of
up to $150,000, (ii) provide for the award of 30,800 shares of Class A Common
Stock (after adjustment for the stock split) to each of Mr. Rose and Mr.
Cummings if the officer remains employed by us at the expiration of the
agreement (or dies), (iii) incorporate the terms of stock option grants made to
Mr. Rose and Mr. Cummings in 1998, which options are subject, in part, to
forfeiture each year if the Radio Division fails to achieve performance
objectives specified in advance by the compensation committee and (iv) permit
Mr. Rose and Mr. Cummings to participate in all of our employee benefit plans
for which they would otherwise be eligible.
Effective March 1, 1999, we entered into a three-year employment
agreement with Walter Z. Berger pursuant to which Mr. Berger is employed as
Executive Vice President and Chief Financial Officer of the Corporation. The
employment agreement provides for an annual base salary of $340,000 for each of
the three years covered by the agreements. In addition, the agreement provides
(i) for an annual cash bonus of up to $100,000, (ii) the award of 20,000 shares
of Class A common stock (after adjustment for the stock split) if Mr. Berger
remains employed by us through the expiration of the agreement (or dies or
becomes disabled, as defined in the agreement), and (iii) for the award of
options to purchase 40,000 shares of Class A common stock (after adjustment for
the stock split) at their fair market value on March 1, 1999 and options to
purchase 40,000 shares of Class A common stock (after adjustment for the stock
split) on the first day of each of the remaining contract years at the fair
market value of the shares on the date of the grant. Under the agreement, Mr.
Berger also retains the right to participate in all of our employee benefit
plans for which he is otherwise eligible.
16
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return on the Class A common stock 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 29, 1995, to the fiscal year ended February
29, 2000. The performance graph assumes that an investment of $100 was made in
the Class A common stock and in each index on February 28, 1995 and that all
dividends were reinvested.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
FEB-95 FEB-96 FEB-97 FEB-98 FEB-99 FEB-00
<S> <C> <C> <C> <C> <C> <C>
Emmis.................................... $100 $239 $216 $309 $289 $456
Nasdaq Stock Market...................... $100 $139 $166 $227 $296 $603
Nasdaq Telecommunications................ $100 $132 $127 $218 $355 $600
</TABLE>
SHAREHOLDER PROPOSALS
Any of our shareholders wishing to have a proposal considered for
inclusion in our 2001 proxy solicitation materials must set forth such proposal
in writing and file it with our corporate secretary on or before the close of
business on the tenth day following the first public announcement of the date of
the 2001 annual meeting. We expect to hold our 2001 annual meeting of
shareholders in June, as we have customarily in the past. Our board of directors
will review any shareholder proposals that are filed as required and will
determine whether such proposals meet applicable criteria for inclusion in our
2001 proxy solicitation materials or consideration at the 2001 annual meeting.
In addition, we retain discretion to vote proxies on matters of which we are not
properly notified at our principal executive offices a reasonable time before we
mail the proxy materials for the 2001 annual meeting, and also retain that
authority under certain other circumstances.
17
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers and directors, and persons who own more than 10% of
existing common stock, to file with the Securities and Exchange Commission
reports detailing their ownership of existing common stock and changes in such
ownership. Officers, directors and greater than 10% shareholders are required by
Commission regulations to furnish us with copies of all Section 16(a) forms they
file. Based solely on review of the copies of such forms furnished to us, we
believe that during the last fiscal year all officers, directors and greater
than 10% shareholders complied with the filing requirements of Section 16(a),
except that Mrs. Bayh and Mr. Leventhal each failed to timely file one report in
connection with one transaction, and Mr. Bongarten failed to timely file a Form
3 and a Form 4 report in connection with a single transaction.
ANNUAL REPORT
A copy of our Annual Report for the year ended February 29, 2000 was
sent to all of our shareholders of record as of April 30, 2000. The Annual
Report is not to be considered as proxy solicitation material.
OTHER MATTERS
Our 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 soliciting proxies, including preparing,
assembling, printing and mailing the proxy form and the material used in the
solicitation of proxies, will be paid by us. Solicitations may be made in
person, or by mail, telephone, facsimile or other means of electronic
communication by our directors, officers and other employees and none of those
persons will receive any additional compensation in connection with the
solicitation. We also 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 those record holders for
their reasonable expenses incurred in doing so.
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ANNEX I
EMMIS COMMUNICATIONS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. DESIGNATION AND PURPOSE. The name of the Plan is the
Emmis Communications Corporation Employee Stock Purchase Plan. The purpose of
the Plan is to provide Employees of the Company and its Designated Subsidiaries
with an opportunity to purchase Common Stock of the Company. The Plan is
intended to qualify as an "Employee Stock Purchase Plan" under Code Section 423.
The provisions of the Plan will, accordingly, be construed so as to extend and
limit participation in a manner within the requirements of that section of the
Code.
SECTION 2. DEFINITIONS. As used in the Plan, the following
terms, when capitalized, have the following meanings:
(a) "BENEFICIARY" means, with respect to a Participant,
the individual or estate designated, pursuant to Section 12, to receive
the Participant's Payroll Deduction Account balance and Common Stock
Account assets after the Participant's death.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and its interpretive rules and regulations.
(d) "COMMITTEE" means a committee established pursuant to
Section 13 to administer the Plan.
(e) "COMMON STOCK" means the Class A common stock of the
Company par value $.01.
(f) "COMMON STOCK ACCOUNT" means the account established
for each Participant to hold Common Stock purchased under the Plan
pursuant to Section 6.
(g) "COMPANY" means Emmis Communications Corporation, an
Indiana corporation, and any successor by Corporate Transaction.
(h) "COMPENSATION" means the total cash compensation
received by an Employee from the Company, a partnership of which the
Company or a Designated Subsidiary is a general partner, or a
Designated Subsidiary, including an Employee's salary, wages, overtime,
shift differentials, bonuses, commissions, and incentive compensation,
but excluding relocation and expense reimbursements, tuition
reimbursements, scholarship grants, and income realized as a result of
participation in any stock option, stock purchase, or similar plan of
the Company or any Designated Subsidiary.
(i) "CONTINUOUS SERVICE" means an uninterrupted period of
service as an Employee. A period of service as an Employee will not be
considered interrupted in the case of (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Company or the
Committee, provided that a leave is for a period of not more than 90
days, unless reemployment upon the expiration of the leave is
guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers
between locations of the Company or its Designated Subsidiaries, or
between the Company and its Designated Subsidiaries.
(j) "CONTRIBUTIONS" means all amounts made by a
Participant and credited to the Participant's Payroll Deduction Account
pursuant to the Plan.
(k) "CORPORATE TRANSACTION" means a sale of all or
substantially all of the Company's assets, or a merger, consolidation,
or other capital reorganization of the Company with or into another
corporation.
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(l) "DESIGNATED BROKER" means Merrill Lynch or any
successor broker selected by the Committee.
(m) "DESIGNATED SUBSIDIARIES" mean the Subsidiaries that
have been designated by the Board or the Committee from time to time,
in their sole discretion, as eligible to participate in the Plan.
(n) "EFFECTIVE DATE" means March 1, 2000, subject to
approval of the Plan by the Company's shareholders within 12 months of
the Plan's adoption.
(o) "ELIGIBLE EMPLOYEE" means any Employee that has
completed at least six (6) months of Continuous Service.
(p) "EMPLOYEE" means any person, including an Officer,
who performs services for the Company or a Designated Subsidiary and
who is initially treated by the Company or a Designated Subsidiary as
an employee for federal income tax purposes.
(q) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time, and its interpretive rules and
regulations.
(r) "FAIR MARKET VALUE" means, with respect to any date,
the closing price of the Common Stock for that date (or, in the event
that the Common Stock is not traded on that date, the closing price on
the immediately preceding trading date), as reported by the National
Association of Securities Dealers Automated Quotation (Nasdaq) National
Market.
(s) "OFFERING DATE" means the first business day of each
Offering Period of the Plan.
(t) "OFFERING PERIOD" means a period of six (6) months
commencing on March 1 and September 1 of each year.
(u) "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act.
(v) "PAYROLL DEDUCTION ACCOUNT" means the account
established for a Participant to hold the Participant's Contributions
pursuant to Section 5.
(w) "PLAN" means the Emmis Communications Corporation
Employee Stock Purchase Plan.
(x) "PURCHASE DATE" means the last day of each Offering
Period of the Plan.
(y) "PURCHASE PRICE" means, with respect to an Offering
Period, an amount equal to ninety percent (90%) of the Fair Market
Value of a Share of Common Stock on the Offering Date or on the
Purchase Date, whichever is lower; provided, however, that in the event
(i) of any stockholder-approved increase in the number of Shares
available for issuance under the Plan, (ii) all or a portion of such
additional Shares are to be issued with respect to the Offering Period
that is underway at the time of such increase ("Additional Shares"),
and (iii) the Fair Market Value of a Share of Common Stock on the date
of such increase (the "Approval Date Fair Market Value") is higher than
the Fair Market Value on the Offering Date for any such Offering
Period, then in such instance the Purchase Price with respect to the
Additional Shares will be ninety percent (90%) of the Approval Date
Fair Market Value or the Fair Market Value of a Share of Common Stock
on the Purchase Date, whichever is lower.
(z) "SHARE" means a share of Common Stock, as adjusted in
accordance with Section 16 of the Plan.
(aa) "SUBSIDIARY" means a corporation, domestic or
foreign, of which not less than fifty percent (50%) of the voting
shares are held by the Company or a Subsidiary, within the meaning of
Code
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Section 424, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
SECTION 3. ELIGIBILITY.
(a) Any person who is an Eligible Employee as of an
Offering Date in a given Offering Period will be eligible to
participate in the Plan for that Offering Period, subject to the
requirements of Section 4 and the limitations imposed by Code Section
423(b).
(b) Notwithstanding any other provision of the Plan, no
Employee will be eligible to participate in the Plan if the Employee
(or any other person whose stock would be attributed to the Employee
pursuant to Code Section 424(d)) owns capital stock of the Company
and/or holds outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary of the Company.
SECTION 4. PARTICIPATION. An Eligible Employee may become a
Participant in the Plan by completing a subscription agreement that authorizes
payroll deductions and any other required documents ("Enrollment Documents")
provided by the Committee or its designee and submitting them to the Committee
or the Designated Broker, pursuant to the rules prescribed by the Committee,
during the 30-day period prior to the applicable Offering Date, unless a
different time for submission of the Enrollment Documents is set by the Board or
the Committee for all Eligible Employees with respect to a given Offering
Period. The Enrollment Documents will set forth the amount of the Participant's
Compensation, up to one hundred percent (100%), to be paid as Contributions
pursuant to the Plan.
SECTION 5. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) A Participant's payroll deductions will begin either
on the first full payroll following the Offering Date or the date on
which the Participant submits Enrollment Documents in accordance with
Section 4, whichever is later, and will end on the last payroll paid on
or prior to the Purchase Date of the Offering Period to which the
Enrollment Documents are applicable, unless the Participant elects to
withdraw from the Plan as provided in Section 8.
(b) All Contributions made by a Participant will be held
by the Company as part of its general assets; however, the Company will
establish a Payroll Deduction Account for each Participant and credit
each Participant's Contributions to the Participant's Payroll Deduction
Account. A Participant may not make any additional payments to the
Participant's Payroll Deduction Account.
(c) No interest will accrue on a Participant's
Contributions to the Plan.
SECTION 6. PARTICIPANT PURCHASES AND COMMON STOCK ACCOUNTS. On
each Purchase Date, each Participant will be deemed, without further action, to
have elected to purchase Shares of Common Stock with the entire balance in the
Participant's Payroll Deduction Account, and the Designated Broker will credit
the purchased shares to the Participant's Common Stock Account.
(a) The Participant will be credited with the number of
whole and fractional Shares (rounded to the nearest thousandth) that
the Participant's Payroll Deduction Account balance can purchase at the
Purchase Price on that Purchase Date.
(b) All dividends paid with respect to the whole and
fractional Shares of the Common Stock and Shares so purchased will be
reinvested in Common Stock and added to the Shares held for a
Participant in the Participant's Common Stock Account.
(c) Expenses incurred in the purchase of Shares and the
expenses of the Designated Broker will be paid by the Company.
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(d) A Participant will have no interest or voting right
in a Share until a Share has been purchased on the Participant's behalf
under the Plan.
(e) Shares held in a Participant's Common Stock Account
will be registered in the name of the Designated Broker or its nominee
for the benefit of the Participant. Shares to be delivered to a
Participant under the Plan will be reregistered in the name of the
Participant or in the name of the Participant and the Participant's
spouse.
SECTION 7. LIMITATION ON PURCHASES. Participant purchases are
subject to the following limitations:
(a) During any one calendar year, a Participant may not
purchase, under the Plan or under any other plan qualified under Code
Section 423, Shares of Common Stock having a Fair Market Value on the
applicable Offering Date in excess of $25,000.
(b) During any one calendar year, all Participants who
are Officers may not purchase, in the aggregate, more than fifty
percent (50%) of the Common Stock purchased under the Plan during that
calendar year.
(c) A Participant's Payroll Deduction Account may not be
used to purchase Common Stock on any Purchase Date to the extent that,
after such purchase, the Participant would own (or be considered as
owning within the meaning of Code Section 424(d)) stock possessing five
percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary of the Company.
For this purpose, stock that the Participant may purchase under any
outstanding option will be treated as owned by such Participant.
(d) As of the first Purchase Date on which this Section
limits a Participant's ability to purchase Common Stock, the
Participant's payroll deductions will terminate, and the Participant
will receive a refund of the balance in the Participant's Payroll
Deduction Account as soon as practicable after the Purchase Date.
(e) During any Offering Period, a Participant's Payroll
Deduction Account may not be used to purchase Common Stock on any
Purchase Date in excess of 25,000 Shares of Common Stock.
SECTION 8. WITHDRAWAL FROM PARTICIPATION.
(a) A Participant may withdraw all but not less than all
the Contributions credited to the Participant's Payroll Deduction
Account at any time prior to a Purchase Date by notifying the Committee
or its designee or the Designated Broker of the Participant's election
to withdraw, pursuant to rules prescribed by the Committee. If a
Participant elects to withdraw, all of the Participant's Contributions
credited to the Participant's Payroll Deduction Account will be
returned to the Participant and the Participant may not make any
further Contributions to the Plan for the purchase of Shares during
that Offering Period.
(b) A Participant's voluntary withdrawal during an
Offering Period will not have any effect upon the Participant's
eligibility to participate in the Plan during a subsequent Offering
Period.
SECTION 9. STOCK PURCHASES BY DESIGNATED BROKER. As of each
Purchase Date, the Designated Broker will acquire, using the accumulated
balances of all Participants' Payroll Deduction Accounts, Shares of Common Stock
to be credited to those Participants' Common Stock Accounts.
(a) The Designated Broker will acquire Shares that are
newly issued or held as treasury shares by the Company or, if directed
by the Committee, will acquire Shares by purchases on the open market
or in private transactions.
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(b) If Shares are purchased in one or more transactions
on the open market or in private transactions at the direction of the
Committee, the Company will pay the Designated Broker the difference
between the Purchase Price and the price at which such Shares are
purchased for Participants.
SECTION 10. COMMON STOCK ACCOUNT WITHDRAWALS. Upon 14 days
advance written notice to the Designated Broker, a Participant may elect to
withdraw the assets in the Participant's Common Stock Account.
(a) A Participant may elect to obtain a certificate for
the whole Shares of Common Stock credited to the Participant's Common
Stock Account. As a condition of participation in the Plan, each
Participant will agree to notify the Company if the Participant sells
or otherwise disposes of any of the Participant's Shares of Common
Stock within two years of the Purchase Date on which such Shares were
purchased.
(b) A Participant may elect that all Shares in the
Participant's Common Stock Account be sold and that the proceeds, less
expenses of sale, be remitted to the Participant.
(c) In either event, the Designated Broker will sell any
fractional Shares held in the Common Stock Account and remit the
proceeds of such sale, less selling expenses, to the Participant.
SECTION 11. CESSATION OF PARTICIPATION. If a Participant dies or
terminates employment, the Participant will cease to participate in the Plan,
the Company will refund the balance in the Participant's Payroll Deduction
Account, and the Designated Broker will distribute the assets in the
Participant's Common Stock Account.
(a) In the event of a Participant's death, the
Participant's Payroll Deduction Account balance and the Participant's
Common Stock Account assets will be distributed to the Participant's
Beneficiary.
(b) If a Participant terminates employment, the
Participant's Payroll Deduction Account balance and the Participant's
Common Stock Account assets will be distributed to the Participant.
(c) Upon distribution, the Participant or, in the event
of the Participant's death, the Participant's Beneficiary, may elect to
obtain a certificate for the whole Shares of Common Stock credited to
the Participant's Common Stock Account or may elect that any whole
Shares in the Participant's Common Stock Account be sold. In that
event, the Designated Broker will sell such whole Shares and any
fractional Shares held in the Common Stock Account and remit the
proceeds of such sale, less selling expenses, to the Participant or
Beneficiary.
SECTION 12. DESIGNATION OF BENEFICIARY. Each Payroll Deduction
Account and each Common Stock Account will be in the name of the Participant. A
Participant may designate a Beneficiary to receive the Participant's interests
in both accounts in the event of the Participant's death by complying with
procedures prescribed by the Committee. If a Participant is married and the
designated Beneficiary is not the spouse, spousal consent will be required for
such designation to be effective. A Participant may change a Beneficiary
designation (with spousal consent if necessary) at any time by complying with
the procedures prescribed by the Committee. If a Participant dies without having
designated a Beneficiary, or if the Beneficiary does not survive the
Participant, the Participant's estate will be the Participant's Beneficiary.
SECTION 13. ADMINISTRATION OF THE PLAN. The Plan will be
administered by the Committee, consisting of not less than three members
appointed by the Board.
(a) The Committee will be the Company's Compensation
Committee unless the Board appoints another committee to administer the
Plan. The Board from time to time may fill vacancies on the Committee.
(b) Subject to the express provisions of the Plan, the
Committee will have the discretionary authority to take any and all
actions (including directing the Designated Broker as to the
acquisition of
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Shares) necessary to implement the Plan and to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to it; and
to make all other determinations necessary or advisable in
administering the Plan. All such determinations will be final and
binding upon all persons.
(c) A quorum of the Committee will consist of a majority
of its members and the Committee may act by vote of a majority of its
members at a meeting at which a quorum is present, or without a meeting
by a written consent to their action taken signed by all members of the
Committee.
(d) The Committee may request advice or assistance or
employ such other persons as are necessary for proper administration of
the Plan.
SECTION 14. RIGHTS NOT TRANSFERABLE. Rights under the Plan are
not transferable by a Participant.
SECTION 15. SHARES RESERVED FOR THE PLAN. Subject to adjustments
as provided in Section 16, the maximum number of Shares that will be made
available for sale under the Plan will be 400,000 Shares, plus an annual
increase on the first day of each of the Company's fiscal years equal to the
lesser of: (i) one-half of one percent (0.5%) of the Shares outstanding on the
last day of the immediately preceding fiscal year; or (ii) such lesser number of
Shares as is determined by the Board.
SECTION 16. CHANGE IN CAPITAL STRUCTURE. Despite anything in the
Plan to the contrary, the Committee may take the following actions without the
consent of any Participant or Beneficiary, and the Committee's determination
will be conclusive and binding on all persons for all purposes.
(a) In the event of a Common Stock dividend, Common Stock
split, or any combination of Shares, a Corporate Transaction in which
the Company is the surviving corporation, or any other change in the
Company's capital stock (including, but not limited to, a
recapitalization, reclassification or the creation or issuance to
shareholders generally of rights, options or warrants for the purchase
of common stock or preferred stock of the Company), the number and kind
of shares of stock or securities of the Company to be subject to the
Plan, the maximum number of shares or securities that may be delivered
under the Plan and the limitation set forth in Section 7(e), and the
selling price and other relevant provisions of the Plan will be
appropriately adjusted by the Committee, whose determination will be
binding on all persons.
(b) If the Company is a party to a Corporate Transaction
in which the Company is not the surviving corporation, the Committee
may take such actions with respect to the Plan as the Committee deems
appropriate.
SECTION 17. AMENDMENT OF THE PLAN. The Board may at any time, or
from time to time, amend the Plan in any respect. The shareholders of the
Company, however, must approve any amendment that would increase the number of
Shares of Common Stock that may be issued under the Plan (other than an increase
merely reflecting a change in capitalization of the Company pursuant to Section
16) or a change in the designation of any corporations (other than a Subsidiary)
whose employees become Eligible Employees under the Plan.
SECTION 18. TERMINATION OF THE PLAN. The Plan and all rights of
Employees and Beneficiaries under the Plan will terminate:
(a) on the Purchase Date that Participants become
entitled to purchase a number of Shares greater than the number of
reserved Shares remaining available for purchase as set forth in
Section 15, or
(b) at any date at the discretion of the Board.
In the event that the Plan terminates under circumstances described in (a)
above, reserved Shares remaining as of the termination date will be credited to
Participants' Common Stock Accounts on a pro rata basis. Upon termination of the
Plan, each Participant will receive the balance in the Participant's Payroll
Deduction Account and all Shares in the Participant's Common Stock Account.
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SECTION 19. INDEMNIFICATION OF COMMITTEE. Service on the
Committee will constitute service as a director of the Company so that members
of the Committee will be entitled to indemnification and reimbursement as
directors of the Company pursuant to its Articles of Incorporation and Bylaws.
SECTION 20. GOVERNMENT REGULATIONS. The Plan, the grant and
exercise of the rights to purchase Shares under the Plan, and the Company's
obligation to sell and deliver Shares upon the exercise of rights to purchase
Shares, will be subject to all applicable federal, state and foreign laws, rules
and regulations, and to such approvals by any regulatory or government agency as
may, in the opinion of counsel for the Company, be required.
SECTION 21. REPORTS. Statements of account will be provided to
Participants by the Committee or the Designated Broker at least annually, which
statements will set forth the amounts of Contributions, the per Share Purchase
Price, the number of Shares purchased and credited to Participants' Common Stock
Accounts, and the remaining cash balance, if any, in Participants' Payroll
Deduction Accounts.
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ANNEX II
CHARTER OF
THE AUDIT COMMITTEE OF
EMMIS COMMUNICATIONS CORPORATION
The Audit Committee is a committee of the Board of Directors and shall
assist the Board in monitoring (1) the integrity of the financial statements of
the company, (2) the compliance by the company with legal and regulatory
requirements and (3) the independence and performance of the company's auditors.
The Audit Committee shall make regular reports to the Board.
The members of the Audit Committee shall meet the independence and
experience requirements of NASDAQ. The members of the Audit Committee shall be
members of the Board of Directors who are appointed by the full Board, with the
Committee Chairperson selected by the Committee members. Not later than June
2001, the Audit Committee shall consist of at least three individuals.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually.
2. Review the annual audited financial statements with
management, including major issues regarding accounting and auditing principles
and practices as well as the company's system of internal controls.
3. Review with management and the independent auditors any
significant financial reporting issues raised by them in connection with the
preparation of the company's financial statements.
4. Review proposed major changes to the company's auditing and
accounting principles and practices that are brought to their attention by the
auditors or management.
5. Recommend to the full Board the appointment of the independent
auditors.
6. Review questions related to independence of the independent
auditors that are brought to their attention and, if necessary, recommend that
the Board take appropriate action regarding such matters.
7. Review the performance of the independent auditors and, if so
determined, recommend that the Board replace the independent auditors.
8. Ensure that the independent auditor submits a formal written
statement regarding relationships and services which may affect objectivity and
independence.
9. Meet with the independent auditors prior to the audit to
review the planning and staffing of the audit.
10. Discuss with the independent auditors the matters required to
be discussed by professional standards (including applicable Statements on
Auditing Standards) or other regulatory bodies relating to the conduct of the
audit.
11. Review with the independent auditors any management letter
they provide and management's response to that letter, if necessary.
12. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the company's annual proxy statement.
13. Review with the Board, as necessary in the Audit Committee's
judgment, the company's policies and procedures regarding compliance with
applicable laws and regulations.
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14. Review with counsel legal matters which are brought to their
attention and that may have a material impact on the financial statements, the
company's compliance policies and material reports or inquiries received from
regulatory bodies.
15. Meet at least annually with the chief financial officer and
the independent auditor in separate executive sessions.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the company's financial statements are complete and
accurate and are in accordance with accounting principles generally accepted in
the United States. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditor or
to assure compliance with laws and regulations and the company's Code of
Conduct.
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