<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities and Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CABLEVISION SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of Securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
<PAGE>
CABLEVISION SYSTEMS CORPORATION
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1994
---------------------
To the Stockholders:
The annual meeting of the stockholders of Cablevision Systems Corporation
will be held at the Company's executive offices, One Media Crossways, Woodbury,
New York 11797, on Tuesday, June 14, 1994 at ten o'clock in the morning for the
following purposes:
1. To elect fourteen (14) directors, each to serve for a term of one year
and until their respective successors shall have been duly elected and
qualified;
2. To authorize and approve certain amendments to the Company's Certificate
of Incorporation.
3. To authorize and approve certain amendments to the Company's Amended and
Restated Employee Stock Plan.
4. To ratify and approve the appointment of KPMG Peat Marwick as
independent auditors of the Company for the fiscal year 1994; and
5. To transact such other business as may properly come before the meeting,
or any adjournment thereof.
Pursuant to the By-Laws, the Board of Directors has fixed the time and date
for the determination of stockholders entitled to notice of and to vote at the
meeting as of the close of business on May 17, 1994. Accordingly, only holders
of record of issued and outstanding Common Stock of the Company on such date and
at such time will be entitled to vote at the meeting, notwithstanding any
transfer of any stock on the books of the Company thereafter.
By order of the Board of Directors,
ROBERT S. LEMLE
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Woodbury, New York
May 24, 1994
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR STOCK TO BE
VOTED, PLEASE DATE, SIGN AND MAIL THE ACCOMPANYING FORM OF PROXY AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE>
CABLEVISION SYSTEMS CORPORATION
EXECUTIVE OFFICES
ONE MEDIA CROSSWAYS
WOODBURY, NEW YORK 11797
------------------------
PROXY STATEMENT
---------------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Cablevision Systems Corporation (the "Company") for use at the
annual meeting of its stockholders to be held at the Company's executive
offices, on June 14, 1994 at ten o'clock in the morning and at any and all
adjournments thereof.
The shares represented by the proxy will be voted as directed with respect
to the election of directors and with respect to Proposals (2), (3) and (4) or,
if no direction is indicated, will be voted in favor of the election as
directors of the nominees listed below and in favor of such proposals. The
person giving the proxy has the power to revoke it at any time before it is
voted at the annual meeting by written notice to the Secretary of the Company,
or upon request if such person is present at the annual meeting.
The cost of solicitation will be borne by the Company. The Company may use
the services of its directors, officers and other regular employees to solicit
proxies personally or by telephone, and may request brokers, fiduciaries,
custodians and nominees to send proxies, proxy statements and other material to
their principals at the expense of the Company. This proxy statement and the
accompanying proxy are being sent to the stockholders of the Company on or about
May 24, 1994. The Company's Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1993 is enclosed herewith.
VOTING RIGHTS
Pursuant to the By-Laws, the Board of Directors has fixed the time and date
for the determination of stockholders entitled to notice of and to vote at the
meeting as of the close of business on May 17, 1994. Accordingly, only holders
of record of Common Stock of the Company on such date and at such time will be
entitled to vote at the meeting, notwithstanding any transfer of any stock on
the books of the Company thereafter. On April 1, 1994, the Company had
outstanding 10,912,922 shares of Class A Common Stock, par value $.01 per share,
each of which entitled the holder to one vote, and 12,411,532 shares of Class B
Common Stock, $.01 par value per share, each of which entitled the holder to ten
votes.
Charles F. Dolan, the Chairman and Chief Executive Officer of the Company,
beneficially owns shares of capital stock of the Company having the power to
elect as directors the ten persons nominated by the Board of Directors for
election by holders of Class B Common Stock, which directors would constitute a
majority of the Board of Directors, and to authorize and approve Proposals (3)
and (4).
BOARD OF DIRECTORS
The Board of Directors of the Company met or acted by written consent in
lieu of meeting ten times in 1993 and presently consists of 14 members, 9 of
whom are officers of the Company or its subsidiaries.
BOARD COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee. The Board of Directors does not have a nominating
committee.
The Executive Committee consists of Messrs. Tatta, Bell, Lustgarten, Lemle
and James Dolan. The Executive Committee is authorized to exercise, between
meetings of the Board of Directors, all the powers thereof except as limited by
Delaware law and except for certain specified exceptions including authorization
of contracts with officers or directors, significant acquisitions, investments
or guarantees, entering new businesses, the approval of operating budgets or the
issuance of capital stock. The Executive Committee met, or acted by written
consent in lieu of meeting, three times in 1993.
<PAGE>
The Audit Committee of the Board of Directors consists of Messrs. Hochman
and Oristano. The functions of the Audit Committee are to review and report to
the Board of Directors with respect to selection and the terms of engagement of
the Company's independent public accountants and to maintain communications
among the Board of Directors, such independent public accountants and the
Company's internal accounting staff with respect to accounting and audit
procedures, the implementation of recommendations by such independent public
accountants, the adequacy of the Company's internal audit controls and related
matters. The Audit Committee met, or acted by written consent in lieu of
meeting, one time in 1993.
The Compensation Committee (formerly the Stock Option Committee) consists of
Messrs. Charles Dolan, Hochman and Tatta. The functions of the Compensation
Committee are (i) to represent the Board in discharging its responsibilities
with respect to the Company's employee stock plans and, in doing so, to
administer such plans with regard to, among other things, the determination of
eligibility of employees, the granting of stock and/or options, and the
termination of such plans and (ii) to determine the appropriate levels of
compensation, including salaries, bonuses, stock and option rights and
retirement benefits for members of the Company's senior management, subject to
the approval of the Board of Directors. The Compensation Committee met, or acted
by written consent in lieu of meeting, four times in 1993.
COMPENSATION OF DIRECTORS
Directors who are not employees are paid a fee of $20,000 per year for
services rendered in that capacity and a fee of $1,000 for each meeting attended
in person and a fee of $500 for each meeting participated in by telephone.
Members of the Audit Committee and members of the Compensation Committee who are
not officers of the Company are paid a fee of $1,000 for each meeting attended
in person and a fee of $500 for each meeting participated in by telephone.
Non-employee members of the Board of Directors who serve on the Cablevision
Employee Benefit Plans Investment Committee, receive a fee of $1,000 for each
meeting attended in person and a fee of $500 for each meeting participated in by
telephone. Mr. Tatta, a non-employee director, has a consulting agreement with
the Company expiring in 1995 which provides for an annual consulting fee of
$485,000, reimbursement of certain expenses and the continuation of certain life
insurance and supplemental pension benefits provided to him when he was an
employee. Mr. Tatta also received an additional payment of $425,000 for services
rendered to the Company in 1993.
(1) ELECTION OF DIRECTORS
With respect to the election of directors, the Certificate of Incorporation
of the Company currently provides that holders of Class A Common Stock vote as a
separate class and are entitled to elect 25% of the total number of directors
constituting the whole Board and, if such 25% is not a whole number, then the
holders of Class A Common Stock are entitled to elect the nearest higher whole
number of directors that is at least 25% of the total number of directors.
Holders of Class B Common Stock, voting as a separate class, are entitled to
elect the remaining directors. Under the Company's By-Laws, the Board of
Directors is to consist of at least three members, the exact number to be fixed
by the Board. The Board has set the number of Directors to be elected at the
annual meeting at fourteen directors (four of whom are to be elected by the
holders of Class A Common Stock, and ten of whom are to be elected by the
holders of Class B Common Stock), to hold office until the next annual meeting
of stockholders and until their respective successors have been duly elected and
qualified. The four Class A Directors of the Company are elected by the
favorable vote of a plurality of shares Class A Common Stock present in person
or represented by proxy at the meeting and entitled to vote on the election of
Directors. The ten Class B Directors of the Company are elected by the favorable
vote of a plurality of shares Class B Common Stock present in person or
represented by proxy at the meeting and entitled to vote on the election of
Directors.
All proxies received by the Board of Directors from holders of Class A
Common Stock and Class B Common Stock will be voted for the election of the
respective directors hereinafter shown as the nominees of each such respective
class of Common Stock, if no direction to the contrary is given. In the event
that any nominee is unable or declines to serve, the proxy solicited herewith
may be voted for the election of another person in his or her stead. The Board
of Directors knows of no reason to anticipate that this will occur. Abstentions
from voting and broker non-votes (that is, shares held for customers of a broker
but not voted because of a lack of instructions from the broker's customers)
will have no effect on the outcome of the election of directors.
2
<PAGE>
The following table sets forth information at April 1, 1994 as to the
nominees for election as directors of the Company.
NOMINEES FOR ELECTION BY HOLDERS OF CLASS A COMMON STOCK
<TABLE>
<CAPTION>
DIRECTOR
PRINCIPAL OCCUPATION CONTINUOUSLY
NAME OF NOMINEE AGE AND POSITION(S) WITH THE COMPANY SINCE
- -------------------------- --- -------------------------------------------------------------- ------------
<S> <C> <C> <C>
Charles D. Ferris 60 Director; Member, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, 1985
P.C., Attorneys
Richard H. Hochman (1)(2) 48 Director; Managing Director of PaineWebber Incorporated 1986
Victor Oristano (1) 77 Director; Chairman of Alda Communications Corp. 1985
A. Jerrold Perenchio 63 Director; General Partner of Chartwell Partners 1987(3)
</TABLE>
NOMINEES FOR ELECTION BY HOLDERS OF CLASS B COMMON STOCK
<TABLE>
<CAPTION>
DIRECTOR
PRINCIPAL OCCUPATION CONTINUOUSLY
NAME OF NOMINEE AGE AND POSITION(S) WITH THE COMPANY SINCE
- -------------------------- --- -------------------------------------------------------------- ------------
<S> <C> <C> <C>
William J. Bell (4) 54 Vice Chairman and Director 1985
Charles F. Dolan (2) 67 Chairman and Chief Executive Officer and Director 1985
James L. Dolan (4) 38 Director and Chief Executive Officer of Rainbow Programming 1991
Holdings, Inc.
Patrick F. Dolan 42 Director and News Director of News 12 Long Island 1991
Robert S. Lemle (4) 41 Executive Vice President, General Counsel, Secretary and 1988
Director
Marc A. Lustgarten (4) 47 Vice Chairman and Director 1985
Sheila A. Mahony 52 Vice President and Director 1988
Francis F. Randolph, Jr. 66 Vice Chairman and Director 1985
Daniel T. Sweeney 64 Senior Vice President and Director 1985
John Tatta (2)(4) 73 Chairman of the Executive Committee and Director 1985
<FN>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Mr. Perenchio resigned from the Board of Directors on December 15, 1992
and was re-elected to the Board of Directors on February 9, 1993.
(4) Member of the Executive Committee.
</TABLE>
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the directors and executive officers of the
Company as of April 1, 1994.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------
<S> <C> <C>
Charles F. Dolan 67 Chairman, Chief Executive Officer and Director
William J. Bell 54 Vice Chairman and Director
Marc A. Lustgarten 47 Vice Chairman and Director
Francis F. Randolph, Jr. 66 Vice Chairman and Director
Robert S. Lemle 41 Executive Vice President, General Counsel,
Secretary and Director
Barry J. O'Leary 50 Senior Vice President, Finance and Treasurer
Daniel T. Sweeney 64 Senior Vice President and Director
Sheila A. Mahony 52 Vice President and Director
Jerry Shaw 47 Vice President and Controller
James L. Dolan 38 Director and Chief Executive Officer of Rainbow
Programming Holdings, Inc.
Patrick F. Dolan 42 Director and News Director of News 12 Long
Island
John Tatta 73 Chairman of the Executive Committee and Director
Charles D. Ferris 60 Director
Richard H. Hochman 48 Director
Victor Oristano 77 Director
A. Jerrold Perenchio 63 Director
</TABLE>
All directors hold office until the annual meeting of stockholders of the
Company next following their election and until their successors are elected and
qualified. All executive officers are elected to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
their successors have been elected and qualified.
Information with respect to the business experience and affiliations of the
directors and executive officers of the Company is set forth below.
Charles F. Dolan -- Chairman, Chief Executive Officer and director of the
Company since 1985. Founded and acted as the General Partner of the Company's
predecessor from 1973 until 1985. Established Manhattan Cable Television in 1961
and Home Box Office in 1971. General Partner of Cablevision of Chicago,
Cablevision of Boston and Cablevision of Brookline Limited Partnership.
William J. Bell -- Vice Chairman and director of the Company since 1985.
Joined the Company's predecessor in 1979. Former Assistant Treasurer of General
Instrument Corporation, the parent company of the Jerrold Electronics Division,
where he managed a finance subsidiary dedicated to cable television from 1976 to
1979.
Marc A. Lustgarten -- Vice Chairman of the Company since 1989. Director of
the Company since 1985. Executive Vice President of the Company from 1985 to
1989. Affiliated with the Office of the Corporation Counsel for The City of New
York prior to joining the Company's predecessor in 1975.
Francis F. Randolph, Jr. -- Vice Chairman and director of the Company since
1985. Partner in the law firm of Cravath, Swaine & Moore, New York, New York,
from 1963 to 1981, when he joined the Company's predecessor.
Robert S. Lemle -- Director of the Company since 1988. Executive Vice
President, General Counsel and Secretary since February 9, 1994. Senior Vice
President, General Counsel and Secretary of the Company from
4
<PAGE>
1986 to February 9, 1994 and Vice President, General Counsel and Secretary of
the Company from 1985 to 1986. Associated with the law firm of Cravath, Swaine &
Moore, New York, New York, from 1978 to 1982, when he joined the Company's
predecessor.
Barry J. O'Leary -- Senior Vice President of the Company since 1986, Vice
President of the Company from 1985 to 1986 and Treasurer of the Company since
1985. Joined the Company's predecessor in 1984. Formerly with The
Toronto-Dominion Bank from 1967 to 1984, most recently as Vice President of its
U.S.A. Division.
Daniel T. Sweeney -- Senior Vice President and director of the Company since
1985. Vice President of the Company's predecessors since 1973. First Chief
Operating Officer of Home Box Office.
Sheila A. Mahony -- Vice President and director of the Company since 1988.
Vice President of Government Relations and Public Affairs of the Company and its
predecessors since 1980. Formerly Executive Director of the Carnegie Commission
from 1977 to 1979. Prior to Ms. Mahony's position as Executive Director of The
Cable Television Information Center of the Urban Institute from 1972 to 1977,
she served as Assistant Corporation Counsel for the City of New York from 1967
to 1972.
Jerry Shaw -- Vice President and Controller of the Company since 1986 and
Controller of the Company since 1985. Formerly with Warner Amex Cable
Communications Inc. as Assistant Controller from 1983 to 1985.
James L. Dolan -- Director of the Company since 1991 and Vice President of
the Company from 1987 to 1993. Chief Executive Officer of Rainbow Programming
Holdings, Inc. since 1992. Director of Advertising Sales from 1985 to 1992.
Manager of Advertising Sales from 1983 to 1985. James L. Dolan is the son of
Charles F. Dolan and the brother of Patrick F. Dolan.
Patrick F. Dolan -- Director of the Company since 1991. News Director of
News 12 Long Island since 1991 and Special Projects Director of News 12 Long
Island from 1986 to 1991. Patrick F. Dolan is the son of Charles F. Dolan and
the brother of James L. Dolan.
John Tatta -- Director of the Company since 1985. Chairman of the Executive
Committee of the Company since January 1, 1992. President of the Company from
1985 to 1991. Chief Operating Officer of the Company from 1985 to 1989 and of
the Company's predecessors since 1973. Former Vice President of Manhattan Cable
Television.
Charles D. Ferris -- Director of the Company since 1985. Member of the law
firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. since 1981. Chairman
of the FCC from October 1977 until April 1981. General Counsel to the Speaker of
the United States House of Representatives during 1977. Chief Counsel for the
United States Senate Majority and Chief Counsel to Senate Majority Leader from
1963 to 1977.
Richard H. Hochman -- Director of the Company since 1986. Managing Director
of PaineWebber Incorporated since 1990. Managing Director of Drexel Burnham
Lambert, Incorporated from 1984 to 1990. In June, 1990, a petition under the
Federal bankruptcy laws was filed by Drexel Burnham Lambert, Incorporated. From
1969 to 1984, Mr. Hochman was associated with E.F. Hutton & Company Inc., most
recently as Senior Vice President from 1979 to 1984. Mr. Hochman is also a
member of the Board of Directors of Alliance Entertainment Corporation.
Victor Oristano -- Director of the Company since 1986. Chairman of Alda
Communications Corp., a holding company which has built and operated cable
television systems in Connecticut, Florida, New Jersey, Pennsylvania and
England. Mr. Oristano is also a member of the Board of Directors of People's
Choice TV, Corp.
A. Jerrold Perenchio -- Director of the Company since 1987. Chief Executive
Officer of Univision Television Group from 1992 to present. General Partner,
Chartwell Partners from 1983 to present. Co-owner Malibu Bay Company from 1989
to present. President and owner of Embassy Films Inc. and General Partner of
Embassy Films Associates from 1984 to present. President of Clifton Way, Inc.,
Driving Miss Daisy Productions, Jerrold Investments, Inc. and Perenchio
Pictures, Inc. Partner in the Blade Runner Partnership, the Zanuck Company and
Ioki Partners.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth (i) the number and percent of shares of Class
A and Class B Common Stock owned of record and beneficially as of April 1, 1994
by each director and each executive officer or former executive officer of the
Company named in the summary compensation table below and (ii) the name, address
and the number and percent of shares of Class A and Class B Common Stock owned
of record and beneficially by persons beneficially owning more than five (5%)
percent of any class. (See also Note 4 below.)
<TABLE>
<CAPTION>
CLASS A & CLASS B
CLASS A COMMON CLASS B COMMON COMMON STOCK
STOCK BENEFICIALLY STOCK BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED (1) OWNED (1)(2) OWNED (1)(2)
- -------------------------------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Dolan (2)(3)(4) ....................... 415,000 3.8% 6,852,944 55.2% 7,267,944 31.2%
One Media Crossways
Woodbury, NY 11797
The Capital Group, Inc. (5) ...................... 1,293,950 11.9% -- -- 1,293,950 5.5%
Capital Research and
Management Company (5)
333 South Hope Street
Los Angeles, CA 90071
The Equitable Companies .......................... 1,023,085 9.4% -- -- 1,023,085 4.9%
Incorporated (6)
787 Seventh Avenue
New York, NY 10019
Harris Associates L.P. (7) ....................... 575,303 5.3% -- -- 575,303 2.5%
Harris Associates, Inc. (7)
2 North LaSalle Street
Chicago, IL 60602
GeoCapital Corporation (8) ....................... 857,950 7.9% -- -- 857,950 3.7%
Irwin Lieber (8)
Barry Fingerhut (8)
655 Madison Avenue
New York, NY 10021
John Tatta (9).................................... 96,500 * -- -- 96,500 *
William J. Bell (10)(11)(12)...................... 177,059 1.6% -- -- 177,059 *
Francis F. Randolph, Jr. (11)(12)................. 463,000 4.1% -- -- 463,000 1.9%
Robert S. Lemle (11)(12).......................... 140,511 1.3% -- -- 140,511 *
Marc Lustgarten (10)(11)(12)...................... 162,750 1.5% -- -- 162,750 *
Sheila A. Mahony (11)(12)......................... 40,596 * -- -- 40,596 *
Daniel T. Sweeney (11)(12)........................ 41,111 * -- -- 41,111 *
Charles D. Ferris................................. 1,000 * -- -- 1,000 *
Richard H. Hochman................................ 1,000 * -- -- 1,000 *
Victor Oristano (14).............................. 1,000 * -- -- 1,000 *
A. Jerrold Perenchio (15)......................... 300,000 2.7% -- -- 300,000 1.3%
James L. Dolan (16)............................... 1,000 * -- -- 1,000 *
Patrick F. Dolan (17)............................. 2,000 * -- -- 2,000 *
All executive officers and directors as a group
(16 persons) (10)(11)(12)......................... 1,898,302 15.8% 6,852,944 55.2% 8,751,246 35.9%
<FN>
- ------------------------
* Represents less than one percent.
</TABLE>
6
<PAGE>
<TABLE>
<C> <S>
<FN>
(1) Beneficial ownership of a security consists of sole or shared voting power
(including the power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the disposition)
with respect to the security through any contract, arrangement,
understanding, relationship or otherwise. Unless indicated, beneficial
ownership disclosed consists of sole voting and investment power.
Beneficial ownership of Class A Common Stock is exclusive of the shares of
Class A Common Stock that are issuable upon conversion of shares of Class B
Common Stock.
(2) Class B Common Stock is convertible into Class A Common Stock at the option
of the holder on a share for share basis. The holder of one share of Class
A Common Stock is entitled to one vote at a meeting of stockholders of the
Company, and the holder of one share of Class B Common Stock is entitled to
ten votes at a meeting of stockholders of the Company except in the
election of directors.
(3) Includes 401,500 shares of Class A Common Stock owned by the Dolan Family
Foundation, a New York not-for-profit corporation, the sole members of
which are Charles Dolan and his wife, Helen A. Dolan. Neither Mr. Dolan nor
Mrs. Dolan has an economic interest in such shares, but Mr. Dolan and his
wife share the ultimate power to vote and dispose of such shares. Under
certain rules of the Securities and Exchange Commission, so long as Mr.
Dolan and his wife retain such powers, each of Mr. Dolan and his wife is
deemed to have beneficial ownership thereof. Also includes 5,000 shares of
Class A Common Stock owned directly by Mrs. Dolan.
(4) Does not include an aggregate of 5,558,038 shares of Class B Common Stock
held by trusts for the benefit of Dolan family interests (the "Dolan Family
Trusts"). The Dolan Family Trusts also own an aggregate of 94,026 shares of
Series C Preferred Stock which, commencing on December 30, 1997, may be
converted by the Company into shares of Class B Common Stock, in lieu of
redeeming such shares for cash. Mr. Dolan disclaims beneficial ownership of
the shares owned by the Dolan Family Trusts, in that he has neither voting
nor investment power with respect to such shares.
(5) The Company has been informed that certain subsidiaries of The Capital
Group, Inc., an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, including Capital Research and Management
Company, also an investment advisor registered under Section 203, hold an
aggregate of 1,293,950 Shares of Class A Common Stock. Such companies
exercise sole dispositive power with respect to all such shares and sole
voting power with respect to 258,500 of such shares. Of such amount,
Capital Research and Management Company exercises sole dispositive power
with respect to 785,000 of such shares. Both The Capital Group, Inc. and
Capital Research and Management Company disclaim beneficial ownership of
all such shares pursuant to rule 13d-4 under The Securities Exchange Act of
1934.
(6) The Company has been informed that certain operating subsidiaries of The
Equitable Companies Incorporated exercise sole investment discretion over
various institutional accounts which own 1,023,085 shares of Class A Common
Stock, and that such operating subsidiaries exercise sole voting power with
respect to 831,815 of such shares, sole dispositive power with respect to
all of such shares and sole voting power with respect to 894,145 of such
shares.
(7) The Company has been informed that Harris Associates L.P. and Harris
Associates, Inc., the general partner of Harris Associates, L.P., together
beneficially own an aggregate 575,303 shares of Class A Common Stock. Each
such company exercises sole dispositive power over 406,303 of such shares
and shared dispositive power over 169,000 of such shares.
(8) The Company has been informed that GeoCapital Corporation, an investment
advisor registered under Section 203 of the Investment Advisers Act of
1940, beneficially owns an aggregate 857,950 shares of Class A Common
Stock. GeoCapital Corporation does not exercise sole or shared voting power
with respect to any of such shares and exercises sole investment power with
respect to all of such shares. GeoCapital Corporation disclaims any
economic interest in such shares, because the actual owners of such
securities are clients of GeoCapital Corporation. By reason of their
ownership interests in GeoCapital Corporation, Mr. Irwin Lieber and Mr.
Barry Fingerhut may also be deemed to be beneficial owners of the 857,950
shares which
</TABLE>
7
<PAGE>
<TABLE>
<C> <S>
GeoCapital Corporation is deemed to own beneficially. Mr. Lieber owns
directly an additional 3,500 shares of Class A Common Stock, and trusts for
his children (for which he disclaims beneficial interest) own 500 shares of
Class A Common Stock.
(9) Does not include 264,375 shares of Class A Common Stock held by the Tatta
Family Group. The Tatta Family Group is a New York limited partnership, the
general partners of which are six trusts for the benefit of Tatta family
interests (the co-trustees of each of which are Stephen A. Carb, Esq. and
either Deborah T. DeCabia or Lisa T. Crowley, each a daughter of John Tatta
who has been since 1985 a director and was from 1985 until 1991 the
President of the Company), and the limited partners of which are trusts for
the benefit of Mr. Tatta and Tatta family interests (the trustee of each of
which is Stephen A. Carb, Esq.). Mr. Tatta, who, as of April 1, 1994, was
the holder of 96,500 shares of Class A Common Stock, disclaims beneficial
ownership of the stock beneficially owned by trusts for the benefit of his
family, in that he has neither voting nor investment power with respect to
such shares.
(10) Includes shares owned by children of the individuals listed, which shares
represent less than 1% of the outstanding Class A Common Stock.
(11) Includes shares of Common Stock issuable upon the exercise of options
granted pursuant to the Company's Amended and Restated Employee Stock Plan
or its predecessor plans which on April 1, 1994 were unexercised but were
exercisable within a period of 60 days from that date. These amounts
include the following number of shares for the following individuals: Bell
169,700; Randolph 462,500; Lemle 134,950; Lustgarten 154,700; Mahony
38,300; Sweeney 28,300; all executive officers and directors as a group
1,037,675.
(12) Includes shares of Common Stock issuable upon the vesting of bonus award
shares granted pursuant to the Company's Amended and Restated Employee
Stock Plan or its predecessor plans which on April 1, 1994 were unvested
but which vest within a period of 60 days from that date. These amounts
include the following number of shares for the following individuals: Bell
7,050; Lemle 5,350; Lustgarten 7,050; Mahony 2,150; Sweeney 2,150; all
executive officers and directors as a group 29,950. Bonus award shares are
payable either in cash or shares of common stock or in a combination of
cash and shares at the option of the Company.
(13) Does not include 500 shares of Class A Common Stock held by The Utopia Fund
and 500 shares of Class A Common Stock held by The Sarah Tod Fund. The
Utopia Fund and The Sarah Tod Fund are both private charitable trusts of
which Mr. Randolph is the sole trustee. Mr. Randolph disclaims beneficial
ownership of the shares of Class A Common Stock held by The Utopia Fund and
The Sarah Tod Fund in that neither Mr. Randolph nor any member of his
immediate family has a vested interest in the income or corpus of such
trusts.
(14) The shares listed are owned by Alda Investment Company, a Florida
partnership consisting of members of the Oristano family.
(15) The shares listed are owned by the A. Jerrold Perenchio Living Trust.
(16) Does not include 28,500 shares of Class B Common Stock owned by trusts for
minor children as to which James L. Dolan disclaims beneficial ownership.
(17) Does not include 9,500 shares of Class B Common Stock owned by trust for
minor child as to which Patrick F. Dolan disclaims beneficial ownership.
</TABLE>
The Dolan family interests (other than Charles Dolan) have agreed with the
Company that in the case of any sale or disposition by Dolan family interests
(other than Charles Dolan) of shares of Class B Common Stock to a holder other
than Charles Dolan or Dolan family interests, the Class B Common Stock will be
converted on the basis of one share of Class A Common Stock for each share of
Class B Common Stock.
Charles Dolan is able to control the affairs and policies of the Company and
elect 75% of the Company's Board of Directors and may be considered to be the
"parent" of the Company, as such term is defined in the Act, and the rules and
regulations thereunder.
8
<PAGE>
REGISTRATION RIGHTS. The Company has granted to each of Charles Dolan,
certain Dolan family interests and the Dolan Family Foundation the right to
require the Company to register, at any time prior to the death of both Mr.
Dolan and his wife, the shares of Class A Common Stock held by them provided
that the shares requested to be registered shall have an aggregate market value
of at least $3,000,000. There is no limitation on the number or frequency of the
registrations that such parties can demand pursuant to the preceding sentence.
After the death of both Mr. Dolan and his wife, such parties will be permitted
one additional registration. In addition, the Company has granted such parties
"piggyback" rights pursuant to which they may require the Company to register
their holdings of Class A Common Stock on any registration statement under the
Act with respect to an offering by the Company or any security holder thereof
(other than a registration statement on Form S-8, S-4, S-15 or any successor
form thereto).
The Company has granted Mr. Tatta and certain Tatta family interests the
right to require the Company, on any date, with the consent of Charles Dolan,
his widow or the representative of the estate of Mr. Dolan or his wife, to
register the shares of Class A Common Stock held by them provided that the
shares requested to be registered have an aggregate market value of at least
$3,000,000. After the death of both Charles Dolan and his wife, such parties
will be permitted to demand only one registration. Such parties have also been
granted piggyback registration rights identical to those described above,
provided that in certain instances they receive written consent of Mr. Dolan,
his widow or the representative of the estate of Mr. Dolan or his wife.
Pursuant to an Agreement of Sale and Assignment, dated as of February 14,
1989 among the A. Jerrold Perenchio Living Trust (the "Perenchio Trust"), the
Company, Mr. Tatta and certain Tatta family interests, the Perenchio Trust was
assigned registration rights with respect to the 270,000 shares of Class A
Common Stock purchased under such agreement. In connection with an option
granted to Mr. Randolph to acquire 840,000 shares of Class A Common Stock
pursuant to the Company's 1986 Nonqualified Stock Option Plan, the Company
granted to Mr. Randolph a limited right to require the Company to register such
shares. Pursuant to these agreements, in 1990 the Company filed a registration
statement on Form S-3 with respect to these shares and has agreed to use its
best efforts to keep such registration statement continuously effective until
such time as all the shares covered thereby have been publicly sold.
The demand and piggyback registration rights described above are subject to
certain limitations which are intended to prevent undue interference with the
Company's ability to distribute securities.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
comprised of Charles Dolan, John Tatta and Richard Hochman. Mr. Dolan is the
Chairman and Chief Executive Officer of the Company. Mr. Tatta, the Chairman of
the Company's Executive Committee and former President of the Company, is not
currently an employee of the Company but is a consultant to the Company (see
"Board of Directors -- Compensation of Directors", above). Mr. Hochman is not an
employee of the Company. The Compensation Committee's responsibilities include
determining the appropriate levels of compensation for members of the Company's
senior management, including salaries, bonuses, stock and option rights and
retirement benefits, subject to the approval of the Board of Directors. Mr.
Tatta and Mr. Hochman make the determinations of compensation for Mr. Dolan and
members of his family subject to the approval of the Board of Directors.
The Company's executive compensation program is designed to attract and
retain highly qualified and motivated management personnel, to appropriately
reward individual executives for their contributions to the attainment of the
Company's key strategic goals, and to link the interests of executives and
stockholders through performance-based annual cash incentives and stock-based
long-term incentives. The Compensation Committee meets with an outside
consultant at least annually to evaluate how well the Company's executive
compensation program adheres to this philosophy and to evaluate the level and
mix of salary, annual bonuses and long-term incentives.
9
<PAGE>
This Committee report first describes the components of the executive
compensation program and the policies used by the Compensation Committee in
determining compensation levels for senior executives and their application in
1993. It then describes the manner in which 1993 compensation determinations
were made for the Company's Chairman and Chief Executive Officer, Charles Dolan.
COMPENSATION PROGRAM COMPONENTS. The major components of the executive
compensation program are base salaries, annual cash bonus incentives and
long-term stock incentives, as follows:
BASE SALARIES. Base salaries are determined within the framework of a
structure of position grades and salary ranges to which executive positions have
been assigned based on an evaluation and comparison of the scope, complexity and
impact of each position's responsibilities with that of other executive
positions, and on the Committee's view of general salary trends for comparable
positions based on information derived by its outside consultant from various
published sources including the Cable Television Administrative and Marketing
Society (CTAM) survey and the Towers Perrin Media Industry Compensation Survey.
This structure was developed and is maintained with the assistance of the
Committee's consultant. Each year the Committee reviews the base salaries of
executives of the Company and its subsidiaries and determines the adjustments
needed to reflect such general salary trends. For each of the past three years,
these structure adjustments have been in a range of 4.0 to 4.5 percent. The base
salaries of individual executives are then further adjusted to reflect the
Committee's subjective assessment of individual performance.
ANNUAL CASH BONUS INCENTIVES. Cash bonus incentives for executives are
determined each year by the Committee. In making bonus determinations, the
Committee begins with the guideline bonus opportunity (expressed as a percentage
of base salary) that has been assigned to each executive's salary grade. The
guideline bonus opportunities currently range from 50% of salary for senior
executives to 15% of salary for lower level managers. The Committee then adjusts
the bonus percentage for each individual on a subjective basis, taking into
consideration the degree to which pre-established Company or subsidiary
performance objectives formulated by the Company have been achieved and the
individual executive's contribution to the achievement of these performance
objectives.
In 1993, the guideline bonus opportunity for each of the Chief Executive
Officer and the four other highest paid executives listed in the tables
beginning on page 18 was 50 percent of salary and the maximum allowable bonus
was 87.5 percent of salary. The calculated guideline bonuses for these
executives were first adjusted to reflect the achievement of applicable
Company/subsidiary performance objectives, both quantitative and qualitative.
Quantitative objectives for 1993 included cash flow increase (for the Company or
the applicable subsidiary), decrease in the ratio of debt to cash flow,
improvement in cash flow margin, increase in cash flow per subscriber and growth
in subscribers. Qualitative objectives for 1993 included improving the Company's
capital structure, accomplishing strategic acquisitions, improving the Company's
level of customer service and adaptation to newly imposed federal regulations.
After adjusting guideline bonuses for Company/subsidiary performance, further
adjustments were made as deemed appropriate by the Committee to reflect each
executive's individual contributions to the achievement of the performance
objectives. In 1993, final bonuses for the four highest paid executive officers
who were serving as executive officers at the end of 1993, excluding the Chief
Executive Officer, ranged from 64 to 76 percent of salary, averaging 72 percent.
In 1992, final bonuses for these four executives ranged from 82 percent to 84
percent of salary, averaging 83 percent. The Committee's decision to award
smaller bonuses for 1993 was based primarily on its evaluation of the degree to
which quantitative Company and subsidiary performance goals were achieved in
1993 in comparison to the achievement of such goals in prior years.
LONG-TERM STOCK INCENTIVES. The long term stock incentives component of the
Company's executive compensation program is designed to align executive and
stockholder interests by rewarding executives for the attainment of stock price
appreciation. The Committee administers the long-term stock incentive program
through biennial grants of stock options, stock appreciation rights (SARs), and
bonus award shares to officers and other key employees of the Company and its
major operating subsidiaries.
The Company's Amended and Restated Employee Stock Plan (the "Stock Plan")
authorizes grants of stock options, SARs, restricted shares, and bonus award
shares. Bonus award shares are restricted shares that are
10
<PAGE>
payable upon vesting in cash and/or stock at the Company's election. The
Chairman and Chief Executive Officer, Mr. Dolan, does not participate in the
Company's long-term stock incentive program. No long-term stock incentive awards
were made in 1993 to the four other highest paid executives.
The Committee undertakes periodic reviews of the long-term stock incentives
component of the Company's executive compensation program to ensure that the
interests of executives and stockholders remain aligned and balanced.
DETERMINATION OF CEO'S 1993 COMPENSATION. Decisions regarding the salary
and cash bonus incentive compensation of the Chairman and Chief Executive
Officer, Charles Dolan, are the responsibility of the two non-employee members
of the Compensation Committee, subject to approval by the Board of Directors.
Mr. Dolan has requested in recent years that his salary not be increased, a
request acceded to by the Committee. Accordingly, Mr. Dolan received a salary of
$600,000 in 1993, the same as in 1992, and will receive the same salary in 1994,
the sixth consecutive year at $600,000 (an amount only slightly over the
midpoint of the Company's salary range for his position grade). Mr. Dolan's cash
bonus for 1993 was set by the Committee at $375,000, $25,000 less than the
$400,000 paid to Mr. Dolan for 1992 and $125,000 less than the bonus paid in
each of the three years previous to that. The Committee's decision to award a
smaller bonus for 1993 was based primarily on its evaluation of the degree to
which quantitative Company and subsidiary performance goals were achieved in
1993 in comparison to the achievement of such goals in prior years.
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION. In light of the
Company's present compensation structure, the Committee does not believe that
the application of the limitations on deductibility of payments of compensation
to the Chief Executive Officer and the other four highest paid executives of the
Company of over $1,000,000, as imposed by Section 162(m) of the Internal Revenue
Code of 1986, as amended, will have a significant impact on the Company's tax
position in the near future. The Committee will continue to consider the
potential impact of Section 162(m) in connection with its future compensation
decisions and will take such steps as it deems appropriate and in the best
interests of the Company and its shareholders.
Compensation Committee
Charles F. Dolan John Tatta Richard H. Hochman
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1993,
1992 and 1991, the cash compensation paid by the Company, and a summary of
certain other compensation paid or accrued for such years, to the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers who were serving as executive officers at the end
of 1993 (as determined pursuant to the rules of Securities and Exchange
Commission (the "SEC")) (the "named executive officers") for service in all
capacities with the Company. No stock options, SARs, restricted shares or bonus
award shares were granted to the named executive officers during 1993.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-----------------------
ANNUAL COMPENSATION RESTRICTED
---------------------- STOCK AWARDS OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(2) SARS (#) COMPENSATION ($)
- ----------------------------------------- ---- ---------- --------- ------------ -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Charles Dolan 1993 600,000 375,000 0 0 150,861(3)
Chairman, Chief Executive Officer 1992 600,000 400,000 0 0 30,000(4)
Director 1991 600,000 500,000 0 0 64,485(5)
James A. Kofalt 1993 530,000 340,000 0 0 65,537(3)
Former President, Chief Operating Officer 1992 500,000 420,000 356,363 175,800 30,000(4)
and Director (1) 1991 425,000 365,000 0 0 34,756(5)
William J. Bell 1993 450,000 340,000 0 0 100,324(3)
Vice Chairman and Director 1992 425,000 350,000 309,400 134,900 30,000(4)
1991 400,000 350,000 0 0 34,877(5)
Marc A. Lustgarten 1993 450,000 340,000 0 0 54,182(3)
Vice Chairman and Director 1992 425,000 350,000 309,400 142,400 30,000(4)
1991 400,000 330,000 0 0 32,967(5)
Robert S. Lemle 1993 330,000 250,000 0 0 44,092(3)
Executive Vice President, General 1992 310,000 255,000 234,800 107,000 30,000(4)
Counsel, Secretary and Director 1991 290,000 240,000 0 0 35,767(5)
<FN>
- ------------------------
(1) Mr. Kofalt resigned as a director and executive officer of the Company as
of February 28, 1994. His compensation is included in the table, as
required by SEC rules, because he was an executive officer of the Company
on December 31, 1993.
(2) Grants reported under the Restricted Stock Awards column consist of bonus
award shares granted under the Company's Amended and Restated Employee
Stock Plan, which bonus award shares are payable, upon vesting, in cash or
in shares of Class A Common Stock, at the election of the Compensation
Committee. Amounts shown represent the aggregate market value as of the
date of grant of the shares of Class A Common Stock specified in each
grant of bonus award shares to the named executive officers during the
years shown. The aggregate number and fair market value of all shares of
Class A Common Stock represented by all grants of bonus award shares held
by the named individuals on December 31, 1993 (all of which were unvested)
are as follows:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF BONUS VALUE ON
NAME AWARD SHARES (#) 12/31/93 ($)
- ---------------------------------------------- ---------------- ------------
<S> <C> <C>
Charles Dolan................................. 0 --
James A. Kofalt............................... 19,950 1,354,106
William J. Bell............................... 18,250 1,238,719
Marc A. Lustgarten............................ 18,250 1,238,719
Robert S. Lemle............................... 13,850 940,069
<FN>
No dividends are payable on bonus award shares unless and until such bonus
award shares are actually paid in shares of Class A Common Stock.
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
(3) Represents the sum of (i) for each individual, $3,538 contributed by the
Company on behalf of such individual under the Company's Money Purchase
Pension Plan (the "Pension Plan"), (ii) for each individual, $22,925
credited to such individual on the books of the Company pursuant to the
defined contribution portion of the Company's Supplemental Benefit Plan
(the "Supplemental Plan"), (iii) for each individual, $3,538 contributed by
the Company on behalf of such individual as a basic company contribution
under the Company's 401(k) Plan, (iv) for each individual, the following
amounts contributed by the Company on behalf of such individual as a
matching contribution under the Company's 401(k) Plan: Mr. Dolan $1,000;
Mr. Kofalt $925; Mr. Bell $937; Mr. Lustgarten $937; and Mr. Lemle $963,
(v) for each individual, the following amounts paid as a premium on
individual life insurance policies purchased by the Company for the
executive officer to replace coverage under the integrated policy described
in footnote 5 below: Mr. Dolan $119,861; Mr. Kofalt $34,614; Mr. Bell
$69,387; Mr. Lustgarten $23,245; and Mr. Lemle $13,129.
(4) Represents the sum of (i) for each individual, $6,866 contributed by the
Company on behalf of such individual under the Pension Plan, and (ii) for
each individual, $23,134 credited to such individual on the books of the
Company pursuant to the defined contribution portion of the Supplemental
Plan.
(5) Represents the sum of (i) for each individual, $6,667 contributed by the
Company on behalf of such individual under the Pension Plan, (ii) for each
individual, $23,333 credited to such individual on the books of the Company
pursuant to the defined contribution portion of the Supplemental Plan, and
(iii) $34,485, $4,756, $4,877, $2,967 and $5,767 paid by the Company on
behalf of Messrs. Dolan, Kofalt, Bell Lustgarten and Lemle, respectively,
as premiums for life insurance benefits under an integrated policy pursuant
to which death benefits will be payable to the executive officer's
beneficiaries and any cash surrender value belongs to the Company.
</TABLE>
FISCAL YEAR END OPTION/SAR VALUE TABLE
The following table shows certain information with respect to the named
executive officers concerning (i) each exercise of stock options or SARs during
1993 and (ii) unexercised stock options and SARs granted in tandem therewith
held as of December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY-END (#) SARS AT FY-END ($)
--------------------------- ---------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Dolan 0 0 0 0 0 0
James A. Kofalt 0 0 272,600 81,400(2) $12,149,913 $ 3,454,212
William J. Bell 0 0 171,750 141,350(3) $ 7,905,281 $ 6,332,775
Marc A. Lustgarten 25,000(1) 646,875 156,750 148,850(4) $ 7,136,531 $ 6,717,150
Robert S. Lemle 0 0 136,300 112,100(5) $ 6,268,481 $ 5,019,306
<FN>
- ------------------------
(1) Represents the settlement of an option by the cash payment by the Company
(in lieu of the issuance of shares) of an amount equal to 25,000 times the
difference between the per share exercise price of the options and the
closing price of a share of Class A Common Stock on the date of exercise.
(2) Includes 30,000 SARs as to which the distribution of proceeds upon any
exercise is automatically deferred without interest until October 15,
1994. As a result of his resignation as of February 28, 1994, Mr. Kofalt
will not receive payment with respect to these SARs.
(3) Includes 112,500 SARs as to which the distribution of proceeds upon any
exercise is automatically deferred without interest until October 15, 1994
as to the first 37,500 of such SARs, October 15, 1995 as to the second
37,500 of such SARs, and October 15, 1996 as to the final 37,500 of such
SARs.
(4) Includes 120,000 SARs as to which the distribution of proceeds upon any
exercise is automatically deferred without interest until October 15, 1994
as to the first 40,000 of such SARs, October 15, 1995 as to the second
40,000 of such SARs, and October 15, 1996 as to the final 40,000 of such
SARs.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
(5) Includes 90,000 SARs as to which the distribution of proceeds is
automatically deferred without interest until October 15, 1994 as to the
first 30,000 of such SARs, October 15, 1995 as to the second 30,000 of
such SARS and October 15, 1996 as to the final 30,000 of such SARs.
</TABLE>
DEFINED BENEFIT PENSION PLAN
The Company's unfunded, nonqualified Supplemental Benefit Plan provides
actuarially-determined pension benefits, among other types of benefits, for 21
employees of the Company who were previously employed by Cablevision Systems
Services Corporation ("CSSC"). CSSC, which is wholly-owned by Charles Dolan,
provided management services to Cablevision Company (the Company's predecessor)
and continues to provide management services to certain affiliates of the
Company. The Supplemental Plan is designed to provide these employees, in
combination with certain qualified benefit plans maintained by the Company and
certain qualified retirement plans formerly maintained by CSSC, with the same
retirement benefit formulae they would have enjoyed had they remained employees
of CSSC and continued to participate in the former CSSC qualified plans. The
Supplemental Plan provides that the Company may set aside assets for the purpose
of paying benefits under the Supplemental Plan, but that any such assets remain
subject to the claims of general creditors of the Company.
The defined benefit feature of the Supplemental Plan provides that, upon
attaining normal retirement age (the later of age 65 or the completion of five
years of service), a participant will receive an annual benefit equal to the
lesser of 75% of his or her average compensation (not including bonuses and
overtime) for his or her three most highly compensated years and the maximum
benefit permitted by the Code (the maximum in 1994 is $118,800 for employees who
retire at age 65), reduced by the amount of any benefits paid to such individual
pursuant to the qualified defined benefit plan formerly maintained by CSSC. This
benefit will be reduced proportionately if the participant retires or otherwise
terminates employment before reaching normal retirement age.
The following sets forth the estimated annual benefits payable upon normal
retirement under the defined benefit portion of the Supplemental Plan (reduced
by any retirement benefits paid in connection with the termination of the CSSC
Defined Benefit Pension Plan) to the following persons: Charles Dolan, $50,800;
Mr. Kofalt, $95,756; Mr. Bell, $91,311, Mr. Lustgarten, $98,876; and Mr. Lemle,
$104,030.
14
<PAGE>
PERFORMANCE GRAPH
The chart below compares the performance of the Company's Class A Common
Stock with the performance of the American Stock Exchange Market Value Index
(the "Amex Index") and a Peer Group Index by measuring the changes in common
stock prices from December 31, 1988 through December 31, 1993. As required by
the SEC, the values shown assume the reinvestment of all dividends. Because no
published index of comparable media companies currently reports values on a
dividends-reinvested basis, the Company has created a Peer Group Index for
purposes of this graph in accordance with the requirements of the SEC. The Peer
Group Index is made up of companies that engage in cable television operations
as a significant element of their business, although not all of the companies
included in the Peer Group Index participate in all of the lines of business in
which the Company is engaged and some of the companies included in the Peer
Group Index also engage in lines of business in which the Company does not
participate. Additionally, the market capitalizations of many of the companies
included in the Peer Group are quite different from that of the Company. The
common stocks of the following companies have been included in the Peer Group
Index: ADELPHIA COMMUNICATIONS CORPORATION, COMCAST CORPORATION, CENTURY
COMMUNICATIONS CORPORATION, FALCON CABLE SYSTEMS COMPANY, JONES SPACELINK
LIMITED, TCA CABLE TV, INC., TELE-COMMUNICATIONS, INC., THE TIMES MIRROR COMPANY
AND TIME WARNER INC. The chart assumes $100 was invested on December 31, 1988 in
each of the Company's Class A Common Stock, the Amex Index and the Peer Group
Index and reflects reinvestment of dividends on a quarterly basis and market
capitalization weighting.
[Chart goes here]
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Charles Dolan has an employment agreement with the Company expiring in 1994
with automatic renewals for successive one-year terms unless terminated by
either party at least three months prior to the end of the then
15
<PAGE>
existing term. The agreement provides for annual compensation of not less than
$400,000 per year to Mr. Dolan. The agreement also provides for payment to Mr.
Dolan's estate in the event of his death during the term of such agreement, of
an amount equal to the greater of one year's base salary or one-half of the
compensation that would have been payable to Mr. Dolan during the remaining term
of such agreement.
Mr. Tatta has a consulting agreement with the Company expiring in 1995 which
provides for an annual consulting fee of $485,000, for reimbursement of certain
expenses and for the continuation of certain life insurance and supplemental
pension benefits. Mr. Tatta also received an additional payment from the Company
of $425,000 in 1993 in connection with services performed for the Company. On
December 14, 1993 the Company purchased 50,000 shares of Class A Common Stock
from Mr. Tatta for $64.75 per share, the closing price of a share of Class A
Common Stock on the American Stock Exchange on such date. Mr. Tatta also
receives fees in connection with his services on the Board of Directors as
described under "Compensation of Directors", above.
Mr. Sweeney has an agreement with the Company pursuant to which he will, in
the event he retires before his normal retirement date, receive a lump-sum
supplemental amount equal to the present value of the difference between the
amount he will receive under the Supplemental Benefit Plan and the Pension Plan
and the amount he would have received had he been employed continuously to his
normal retirement date.
Under the applicable award agreements, the vesting of the bonus award
shares, Stock Options and SARs granted to employees, including Messrs. Kofalt,
Bell, Lustgarten and Lemle, under the Company's Amended and Restated Employee
Stock Plan and its predecessor plans, may be accelerated, in certain
circumstances, upon a "change of control" of the Company. A "change of control"
is defined as the acquisition by any person or group, other than Charles Dolan
or members of his immediate family (or trusts for the benefit of Charles Dolan
or his immediate family) or any employee benefit plan sponsored or maintained by
the Company, of (1) the power to direct the management of substantially all of
the cable television systems then owned by the Company in the New York City
metropolitan area, or (2) after any fiscal year of the Company in which the
Company's cable television systems in the New York City metropolitan area
contributed in the aggregate less than a majority of the net revenues of the
Company and its consolidated subsidiaries, the power to direct the management of
the Company or substantially all of its assets. Upon such a change in control,
the bonus award shares, Stock Options and SARs may be converted into either a
right to receive an amount of cash based upon the highest price per share of
common stock paid in the transaction resulting in the change of control, or into
a corresponding award with equivalent profit potential in the surviving entity,
at the election of the Compensation Committee.
In connection with his resignation as a director and executive officer of
the Company as of February 28, 1994, James Kofalt received a severance payment
of $1,661,500, consisting primarily of three years' salary. In addition, the
Company purchased certain bonus award shares from Mr. Kofalt, pursuant to the
terms of the agreements granting such awards, at a per share price equal to the
closing price of a share of Class A Common Stock on the date of purchase.
INDEMNIFICATION AGREEMENT
Charles Dolan has entered into an agreement pursuant to which he has agreed
to guarantee the Company's obligation to indemnify its officers and directors to
the fullest extent permitted by Delaware law. In addition, subject to certain
limitations, Mr. Dolan has agreed to indemnify such officers and directors
against any loss or expense such person may incur in connection with any
transaction involving Mr. Dolan or entities affiliated with Mr. Dolan to the
extent indemnification is not provided by the Company. Any payment required to
be made by Mr. Dolan pursuant to such agreement will be reduced by any proceeds
of insurance or reimbursement under any other form of indemnification
reimbursement available to such officer or director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As disclosed above, the Compensation Committee of the Board of Directors is
comprised of Messrs. Charles Dolan, Tatta and Hochman. (See "Report of Executive
Compensation Committee," above.) Charles Dolan, a member of the Compensation
Committee of the Board of Directors, is the Chairman and Chief Executive Officer
of the Company and also serves as an officer of certain of the Company's
subsidiaries. Mr. Tatta, the Chairman of the Company's Executive Committee and
the former President of the Company, is currently a consultant to the
16
<PAGE>
Company. Mr. Hochman, who is not an employee of the Company, is a Managing
Director of PaineWebber Incorporated. Certain relationships and transactions
between the Company and these individuals or their affiliates are described
below.
The Company has made investments in and advances to certain affiliates over
which Charles Dolan is the managing general partner or in which Mr. Dolan or
Dolan family interests have substantial ownership interests. At December 31,
1993, such investments and advances (less applicable reserves) to such
affiliates aggregated approximately $34.8 million (consisting of $17.5 million
for Cablevision of Boston Limited Partnership ("Cablevision Boston"), $12.4
million for Cablevision of Chicago ("Cablevision Chicago") and $4.0 million for
Atlantic Cable Television Publishing Corporation ("Atlantic Publishing").
Cablevision Boston, a Massachusetts limited partnership, is engaged in the
construction, ownership and operation of cable television systems in Boston and
Brookline, Massachusetts. The Company had advanced net funds to Cablevision
Boston as of December 31, 1993 amounting to approximately $52.8 million. Due to
uncertainties existing during 1985 (which subsequently were resolved), the
Company wrote off for accounting purposes its entire investment in and advances
to Cablevision Boston of $34.5 million as of September 30, 1985. Subsequent to
1985, a subsidiary of the Company exchanged $45.7 million of advances,
consisting of amounts previously written off of $34.5 million, interest of $3.2
million that had not been recognized for accounting purposes, and $8.0 million
of subsequent advances, for $45.7 million of preferred equity in Cablevision
Boston. After this exchange, the Company advanced an additional $9.5 million to
Cablevision Boston and, at December 31, 1993, $81.2 million of unpaid
distributions had accrued on the Company's preferred equity. At December 31,
1993, as a result of the write-off referred to above and non-recognition for
accounting purposes of the unpaid distributions, the Company's consolidated
financial statements reflected $17.5 million due from Cablevision Boston. The
Company's preferred equity is subordinated to the indebtedness of Cablevision
Boston (including the Company's $9.5 million of advances not converted to
preferred equity) and accrued but unpaid management fees due to a corporation
owned by Charles Dolan, which indebtedness and management fees aggregated
approximately $92.2 million at December 31, 1992, and any working capital
deficit incurred in the ordinary course of business.
In addition to the Company's preferred equity interest in Cablevision
Boston, the Company is a limited partner in Cablevision Boston and currently
holds a 7% prepayout interest and a 20.7% postpayout interest. Charles Dolan
holds directly or indirectly a 1% prepayout general partnership interest and a
23.5% postpayout general partnership interest in Cablevision Boston. With
respect to Cablevision Boston, "payout" means the date on which the limited
partners are distributed the amount of their original investment.
Cablevision Chicago owns cable television systems operating in the suburban
Chicago area. The Company does not have a material ownership interest in
Cablevision Chicago but had loans and advances outstanding to Cablevision
Chicago in the amount of $12.4 million (plus $10.1 million in accrued interest
which the Company has fully reserved) as of December 31, 1993 which loans and
advances are subordinated to Cablevision Chicago's senior credit facility.
Charles Dolan currently holds directly or indirectly an approximate 1% prepayout
and a 32.7% postpayout general partnership interest in the cable television
systems owned and operated by Cablevision Chicago. With respect to Cablevision
Chicago, "payout" means the date on which the limited partners in Cablevision
Chicago are distributed the amount of their original investment, plus interest
thereon, if applicable.
On February 5, 1993, Cablevision Chicago completed an amendment to its
senior credit agreement pursuant to which the amount of the facilities was
increased to $85.0 million. In connection with this amendment, Cablevision
Chicago obtained permission to pay certain subordinated debt, including $13.6
million to Cablevision Systems Services Corporation, a corporation wholly-owned
by Charles Dolan ("CSSC"), constituting the entire amount outstanding under a
promissory note between Cablevision Chicago and CSSC and $9.0 million to
Cablevision Systems Company ("CSCo."), a partnership wholly-owned by Charles F.
Dolan and trusts for members of his family, constituting accrued and unpaid
management fees outstanding under a management agreement between CSCo. and
Cablevision Chicago. $13.6 million was paid to CSSC and $0.7 million was paid to
CSCo. on February 8, 1993 and it is anticipated that an additional $8.3 million
will be paid to CSCo. on or before
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December 31, 1994 in connection with the above described obligations.
Cablevision Chicago did not obtain permission to pay any amount owing to the
Company in connection with the amendment to the senior credit facility.
Atlantic Publishing published a weekly cable television guide which is
offered to the Company's subscribers. In November 1992, Atlantic Publishing
consummated a transaction with TVSM, Inc. and certain of its affiliates and The
Chase Manhattan Bank, N.A. pursuant to which Atlantic Publishing licensed and
agreed to transfer to an affiliate of TVSM, Inc., its assets relating to the
weekly cable television guide, and received a minority equity interest and a
debt interest in such affiliate. In connection with this transaction, the
Company and certain of its affiliates entered into agreements to distribute the
weekly guide produced by the TVSM, Inc. affiliate and received options to
purchase, and certain other rights with respect to, such TVSM, Inc. affiliate.
In connection with this transaction, the Company terminated a guaranty, issued
by Charles Dolan in favor of the Company, of up to $4 million of advances made
by the Company to Atlantic, plus interest thereon, and Mr. Dolan released the
Company from all obligations with respect to the fees payable by the Company to
Mr. Dolan under such guaranty, which fees aggregated approximately $455,000 as
of November 30, 1992. As of December 31, 1993, the Company had advanced an
aggregate of approximately $18.3 million to Atlantic Publishing (taking into
account a repayment of approximately $0.5 million in 1993), of which
approximately $0.7 million and $1.8 million were advanced during 1992 and 1991,
respectively. The Company has written off all of its advances to Atlantic
Publishing other than $4.0 million. Atlantic Publishing is owned by a trust for
certain Dolan family members; however, the Company has the option to purchase
Atlantic Publishing for an amount equal to the owner's net investment therein
plus interest. The current owner has made only a nominal investment in Atlantic
Publishing to date.
In July 1992, the Company acquired (the "CNYC Acquisition") substantially
all of the remaining interests in Cablevision of New York City -- Phase I
through Phase V (collectively, "CNYC"), the operator of a cable television
system that is under development in The Bronx and parts of Brooklyn, New York
City. Prior to the CNYC Acquisition, the Company had a 15% interest in CNYC and
Charles Dolan owned the remaining interests. Mr. Dolan remains a partner in CNYC
with a 1% interest and the right to certain preferential payments.
Under the agreement between the Company and Mr. Dolan, a new limited
partnership ("CNYC LP") was formed and holds 99% of the partnership interests in
CNYC. The remaining 1% interest in CNYC is owned by the existing corporate
general partner which is a wholly-owned subsidiary of the Company. The Company
owns 99% of the partnership interests in CNYC LP and Mr. Dolan retains a 1%
partnership interest in CNYC LP plus certain preferential rights. Mr. Dolan's
preferential rights entitle him to an annual cash payment (the "Annual Payment")
of 14% multiplied by the outstanding balance of his "Minimum Payment". The
Minimum Payment is $40.0 million and is to be paid to Mr. Dolan prior to any
distributions from CNYC LP to partners other than Mr. Dolan. In addition, Mr.
Dolan has the right, exercisable on December 31, 1997, and as of the earlier of
(1) December 31, 2000 and (2) December 31 of the first year after 1997 during
which CNYC achieves an aggregate of 400,000 subscribers, to require the Company
to purchase (Mr. Dolan's "put") his interest in CNYC LP. The Company has the
right to require Mr. Dolan to sell his interest in CNYC LP to the Company (the
Company's "call") during the three-year period commencing one year after the
expiration of Mr. Dolan's second put. In the event of a put, Mr. Dolan will be
entitled to receive from the Company the Minimum Payment, any accrued but unpaid
Annual Payments, a guaranteed return on certain of his investments in CNYC LP
and a Preferred Payment defined as a payment (not exceeding $150.0 million)
equal to 40% of the Appraised Equity Value (as defined in the agreement) of CNYC
LP after making certain deductions including a deduction of a 25% compound
annual return on approximately 85% of the Company's investments with respect to
the construction of Phases III, IV and V of the CNYC cable television system and
100% of certain of the Company's other investments in CNYC, including Mr.
Dolan's Annual Payment. In the event the Company exercises its call, the
purchase price will be computed on the same basis as for a put except that there
will be no payment in respect of the Appraised Equity Value amount.
The Company has the right to make payment of the put or call exercise price
in the form of shares of the Company's Class B Common Stock or, if Mr. Dolan so
elects, Class A Common Stock, except that all Annual Payments must be paid in
cash to the extent permitted under the Company's senior credit agreement. Under
the Company's senior credit agreement, the Company is currently prohibited from
paying the put or call exercise
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price in cash and, accordingly, without the consent of the bank lenders, would
be required to pay it in shares of the Company's Common Stock. The Company has
agreed to invest in CNYC LP sufficient funds to permit CNYC LP to make the
required annual payments to Mr. Dolan and to make certain equity contributions
to CNYC.
The Company's by-laws prohibit the making of further investments in or
advances to entities owned or controlled by Charles Dolan without the approval
of a majority of the members of the Board of Directors who are not employees of
the Company or any of its affiliates (the "Independent Directors").
Richard H. Hochman, a director and a nominee for director, is a Managing
Director of PaineWebber Incorporated. PaineWebber Incorporated has performed
investment banking services for the Company and other entities affiliated with
Charles Dolan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH OTHER DIRECTORS
Charles D. Ferris, a director and a nominee for director, is a partner in
the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provides legal services to the
Company and certain of its subsidiaries.
James L. Dolan, a director of the Company and a nominee for director, is a
director, officer and a greater than 10 percent stockholder of Superior
Jamestown Corporation, a distributor of office furniture. Payments for property
or services provided by Superior Jamestown Corporation to the Company and its
subsidiaries amounting to approximately $280,000 in the aggregate, constituted
in excess of five percent of Superior Jamestown Corporation's gross revenues for
its fiscal year ending December 31, 1993.
Pursuant to regulations promulgated by the Securities and Exchange
Commission, the Company is required to identify, based solely on a review of
reports filed under Section 16(a) of the Securities Exchange Act of 1934, each
person who, at any time during its fiscal year ended December 31, 1993, was a
director, officer or beneficial owner of more than ten percent of the Company's
Class A Common Stock that failed to file on a timely basis any such reports.
Based on such review, the Company is aware of no such failure other than (i) a
report filed by A. Jerrold Perenchio in October 1993 with respect to the
purchase of 1,000 shares of Class A Common Stock in January 1993, and (ii) a
report filed by Daniel T. Sweeney in April 1994 with respect to the sale of
5,000 shares of Class A Common Stock in October 1993.
CONFLICTS OF INTEREST
Charles Dolan and certain other principal officers of the Company and
various affiliates of the Company are subject to certain conflicts of interest.
These conflicts include, but are not limited to, the following:
BUSINESS OPPORTUNITIES. Through various affiliates of the Company, Charles
Dolan is engaged in the ownership and operation of cable television systems in
Boston and Chicago. The cable television systems owned and operated by Dolan
affiliates are substantially fully built.
Charles Dolan may from time to time be presented with business opportunities
which would be suitable for the Company and affiliates of the Company in which
Mr. Dolan and his family have varying interests. Mr. Dolan has agreed that he
will own and operate cable television systems only through the Company, except
for cable television systems owned and operated under franchises held by Mr.
Dolan or affiliates of Mr. Dolan as of January 27, 1986, any expansions of such
systems within the same county or an adjacent county, and systems which the
Company elects not to acquire under its right of first refusal. Except for any
such expansions, Mr. Dolan will offer to the Company the opportunity to acquire
or invest in any cable television system or franchise therefor or interest
therein that is offered or available to him or his family interests. If a
majority of the Independent Directors rejects such offer, Mr. Dolan or such
family interests may acquire or invest in such cable television system or
franchise therefor or interest therein individually or with others on terms no
more favorable to Mr. Dolan than those offered to the Company.
Except for the limitations on the ownership and operation of cable
television systems as described above, Mr. Dolan is not subject to any
contractual limitations with respect to his other business activities and may
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engage in programming and other businesses related to cable television. A
significant portion of Mr. Dolan's time may be spent, from time to time, in the
management of such affiliates. Mr. Dolan will devote as much of his time to the
business of the Company as is reasonably required to fulfill the duties of his
office.
In the event that Charles Dolan or any Dolan family interest decides to
offer (other than to any Dolan family interest or an entity affiliated with Mr.
Dolan) for sale for his, her or its account any of his, her or its ownership
interest in any cable television system or franchise therefor, he, she or it
will (subject to the rights of third parties existing at such time) offer such
interest to the Company. Mr. Dolan or such Dolan family interest may elect to
require that, if the Company accepts such offer, up to one-half of the
consideration for such interest would consist of shares of Class B Common Stock,
which shares will be valued at the prevailing market price of the Class A Common
Stock and the remainder would consist of shares of Class A Common Stock and/or
cash. If a majority of the Independent Directors rejects such offer, Mr. Dolan
or such Dolan family interest may sell such interest to third parties on terms
no more favorable to such third parties than those offered to the Company.
SERVICES RENDERED TO AFFILIATES. CSSC is a party to management agreements
with various affiliates of the Company. The agreements generally provide for
payment of a specified percentage of revenues to CSSC for management services
rendered to such affiliates and the reimbursement of certain expenses. The
employees of CSSC have become employees of the Company. Accordingly, the Company
will pay the compensation of such employees and incur related overhead expenses.
To the extent that such employees (other than Charles Dolan) render services to
affiliated entities on an as-needed basis, such entities will reimburse the
Company for an allocable portion of such employees' compensation and related
expenses. The affiliated entities are not otherwise obligated to reimburse the
Company for such employees' compensation and related expenses.
The executive officers of the Company devote such time to the business of
the Company as is reasonably required to fulfill the duties of their offices.
However, pursuant to management agreements, certain of the executive officers of
the Company are involved in the management of affiliated entities which requires
significant amounts of their time and which could conflict with their duties to
the Company. To the extent that there are conflicting demands for the services
of such executive officers, such conflict is resolved in favor of the Company.
CONTRACTS WITH AFFILIATES. The Company from time to time enters into
agreements with entities in which Charles Dolan or his affiliates have
substantial interests. In order to take advantage of cost savings attributable
to the combined purchasing power of CSSC and its affiliates, CSSC purchases a
premium programming service from an unaffiliated program supplier. CSSC makes
such service available to the Company at CSSC's cost in return for the Company's
assumption of a portion of CSSC's obligations under its agreements with such
unaffiliated program supplier. In 1993, an aggregate of $8,008,738 was paid by
the Company to or on behalf of CSSC for such premium programming service. The
Company also purchases certain other premium television services produced or
distributed by affiliates at rates comparable to those charged to similarly
situated entities unrelated to such affiliates.
The Company also may, from time to time, enter into other arrangements with
affiliates for the joint purchase or lease of equipment. The terms of any such
agreements will not be fixed pursuant to arm's-length negotiations but are
expected to be at least as favorable as arrangements which could be made with
third parties.
As noted above, Atlantic Publishing holds an interest in a company that
publishes a weekly cable television guide which is sold to the Company's
subscribers.
(2) AMENDMENT TO THE CERTIFICATE OF INCORPORATION
REGARDING STOCK DIVIDENDS FOR
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
The Board of Directors of the Company has proposed an amendment to the
Company's Certificate of Incorporation that, if approved, would provide that, in
the case of a dividend or distribution by the Company of shares of capital stock
of a subsidiary, the Company must declare and pay the same dividend or
distribution with respect to each outstanding share of Class A Common Stock and
Class B Common Stock, except that the shares of capital stock distributed in
respect of the outstanding Class A Common Stock may differ from the shares of
capital stock distributed in respect of the Class B Common stock as to voting
rights to the extent and only to the
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extent that the voting rights of the Class A Common Stock and Class B Common
Stock differ as provided in the Company's Certificate of Incorporation. The
Company's Certificate of Incorporation currently provides that any such dividend
or distribution must be the same on both the Class A Common Stock and the Class
B Common Stock. Following the approval of the amendment by the stockholders, the
Certificate of Incorporation of the Company will be amended by adding to Article
FOURTH, Section A.II. the italicized language in the following:
II. Dividends.
Subject to (a) the rights of the holders of Series A Preferred Stock and
Series B Preferred Stock, (b) any other provisions of the Certificate of
Incorporation of the corporation, as amended from time to time, and (c)
the provisions of any Certificates of Designations filed with respect to
any series of Additional Preferred Stock, holders of Class A Common
Stock and Class B Common Stock shall be entitled to receive equally on a
per share basis such dividends and other distributions in cash, stock or
property of the corporation as may be declared thereon by the Board of
Directors from time to time out of assets or funds of the corporation
legally available therefor; provided that the Board of Directors shall
declare no dividend, and no dividend shall be paid, with respect to any
outstanding share of Class A Common Stock or Class B Common Stock,
whether paid in cash or property (including, without limitation, shares
of Class A Common Stock paid on or with respect to shares of Class A
Common Stock or shares of Class B Common Stock paid on or with respect
to shares of Class B Common Stock (collectively, "Stock Dividends")),
unless, simultaneously, the same dividend (in the case of Stock
Dividends, stock of the class on or with respect to which the dividend
is paid in the same percentage, relative to the total number of shares
of such class issued and outstanding immediately prior to the payment of
such dividend, as the Stock Dividend on or with respect to the other
class bears to the number of shares of such class issued and outstanding
immediately prior to the payment of such dividend) is paid with respect
to each share of Class A Common Stock and Class B Common Stock, EXCEPT
THAT IN THE CASE OF ANY DIVIDEND IN THE FORM OF CAPITAL STOCK OF A
SUBSIDIARY OF THE CORPORATION, THE CAPITAL STOCK OF THE SUBSIDIARY
DISTRIBUTED TO HOLDERS OF CLASS A COMMON STOCK MAY DIFFER FROM THE
CAPITAL STOCK OF THE SUBSIDIARY DISTRIBUTED TO HOLDERS OF CLASS B COMMON
STOCK TO THE EXTENT AND ONLY TO THE EXTENT THAT THE CLASS A COMMON STOCK
AND THE CLASS B COMMON STOCK DIFFER AS PROVIDED HEREIN. Stock Dividends
with respect to Class A Common Stock may only be paid with shares of
Class A Common Stock and Stock Dividends with respect to Class B Common
stock may only be paid with shares of Class B Common Stock.
DIVIDENDS UNDER THE COMPANY'S CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation currently provides that holders
of the Company's Class A Common Stock and Class B Common Stock are entitled to
receive equally on a per share basis such dividends and other distributions in
cash, stock and property of the Company as may be declared by the Board of
Directors, provided that no dividend shall be paid unless the same dividend is
paid with respect to each share of the Company's Class A Common Stock and Class
B Common Stock.
Except for stock dividends paid in the Company's Common Stock, the provision
of the Company's Certificate of Incorporation relating to dividends on common
stock does not permit the Board of Directors to declare a dividend or
distribution unless each share of the Company's Class A Common Stock and Class B
Common Stock receives an equal distribution. The proposed amendment is intended
to permit the distribution to holders of Class A Common Stock and holders of
Class B Common Stock of shares of capital stock of subsidiaries of the Company
that have voting rights that are substantially the same as the relative voting
rights of the Class A Common Stock and Class B Common Stock, respectively.
The Company's Certificate of Incorporation currently provides that, except
as otherwise provided by statute, the Class A Common Stock and the Class B
Common Stock have the sole power to vote on all matters to be voted upon by the
Company's stockholders. Each holder of Class A Common Stock is entitled to one
vote per share of Class A Common Stock and each holder of Class B Common stock
is entitled to ten vote per share of Class B Common Stock.
Except with respect to the election of directors, the holders of the
Company's Class A Common Stock and Class B Common Stock vote together as a
single class, provided, however, that the affirmative vote of 66 2/3% of the
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outstanding shares of Class B Common Stock, voting separately as a class, is
required for the authorization or issuance of additional shares of Class B
Common Stock or any amendment to the Company's Certificate of Incorporation
which adversely affects the Class B Common Stock.
With respect to the election of directors, holders of the Class A Common
Stock voting separately as a class are currently entitled to elect 25% of the
Board of Directors. Holders of Class B Common Stock are entitled to elect the
remaining members of the Board of Directors. If the Class A Common Stock were to
represent less than 10% of the total common stock of the Company outstanding,
the holders of Class A Common Stock and Class B Common Stock would vote together
as a single class with respect to the election of directors, with each share of
the Class A Common Stock entitled to one vote per share and each share of the
Class B Common Stock entitled to ten votes per share. If the Class B Common
stock were to represent less than 12 1/2% of the total common stock of the
Company outstanding, the holders of the Class A Common Stock would continue to
elect 25% of the Board of Directors and would vote with holders of Class B
Common Stock together as a single class with respect to the election of the
remaining directors, with each share of the Class A Common Stock entitled to one
vote per share and each share of the Class B Common Stock entitled to ten votes
per share.
EVEN IF THIS PROPOSAL IS APPROVED
BY THE COMPANY'S STOCKHOLDERS,
NO ASSURANCES CAN BE MADE THAT A DIVIDEND
OR DISTRIBUTION OF THE CAPITAL STOCK OF A
SUBSIDIARY OF THE COMPANY WILL BE DECLARED AND PAID.
THE APPROVAL OF THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION DOES NOT REQUIRE
THE BOARD OF DIRECTORS OF THE COMPANY TO
MAKE ANY DIVIDEND OR DISTRIBUTION OF THE
CAPITAL STOCK OF A SUBSIDIARY OF THE COMPANY.
BACKGROUND OF THE PROPOSAL
The Company has from time to time considered possible transactions that
could result in the Company's subsidiary, Rainbow Programming Holdings, Inc.
("RPH") or another entity holding the programming interests of RPH, becoming a
publicly-held company, including a spin-off of all or a portion of RPH or such
other entity to the Company's stockholders.
Among the possible transactions that the Company is considering is a tax
free spin-off (the "Spin-off") by the Company of the common stock of a newly
formed company ("New Rainbow") holding all or substantially all of the assets of
RPH. The Spin-off, if consummated, would separate the cable television
advertising and programming businesses of the Company from the cable television
systems operations and other businesses of the Company, resulting in two
publicly-held corporations. Moreover, the Company could consider other possible
spin-off transactions in the future.
Because the distribution to the stockholders of shares of New Rainbow
without respective voting rights substantially similar to those of the Class A
Common Stock and the Class B Common Stock would dilute the current effective
voting power in RPH of the holders of Class B Common Stock, the Board of
Directors has concluded that the consummation of the Spin-Off without giving
effect to the proposed amendment, would disproportionately affect the rights of
the Class B stockholders. Moreover, the Board of Directors wishes to retain the
flexibility to structure any possible future spin-off transactions in a similar
way.
The proposed amendment would benefit Charles F. Dolan, the Chairman and
Chief Executive Officer of the Company, certain Dolan family interests and
trusts established by Mr. Dolan for the benefit of Dolan family members, which
collectively beneficially own all of the Company's outstanding shares of Class B
Common Stock. Mr. Dolan and each of the other directors elected by the holders
of the Class B Common Stock have voted to approve the amendment to the Company's
Certificate of Incorporation. Each director nominated for election by the
holders of Class A Common Stock also voted to approve the amendment to the
Company's Certificate of Incorporation.
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PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation currently prohibits a
distribution such as the Spin-off by requiring that holders of the Class A
Common Stock and Class B Common Stock receive equally all dividends and other
distributions. The amendment to the Certificate of Incorporation would provide
that in the case of a dividend or distribution by the Company of shares of
capital stock of a subsidiary, the Company must declare and pay the same
dividend or distribution with respect to each outstanding share of Class A
Common Stock and Class B Common Stock, except that the shares of capital stock
distributed in respect of the outstanding Class A Common stock may differ from
the shares of capital stock distributed in respect of the Class B Common stock
as to voting rights to the extent and only to the extent that the voting rights
of the Class A Common Stock and the Class B Common stock differ as provided in
the Company's Certificate of Incorporation.
The affirmative vote of the majority of the votes entitled to be cast by
each of (i) the holders of the Class A Common Stock, (ii) the holders of the
Class B Common Stock and (iii) the holders of the Company's Common stock, voting
as a single class, is required to ratify and approve the amendment to the
Certificate of Incorporation. Mr. Dolan has indicated his intention to vote
shares of Class A Common Stock and Class B Common stock beneficially owned by
him for the approval of the Amendment to the Company's Certificate of
Incorporation.
Abstentions from voting and broker non-votes will have the effect of a vote
against ratification and approval of the amendment to the Certificate of
Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION AND APPROVAL OF
THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
(3) AUTHORIZATION AND APPROVAL OF AMENDMENTS
TO THE AMENDED AND RESTATED EMPLOYEE STOCK PLAN
The Company's Compensation Committee has approved, subject to stockholder
approval, amendments to the Company's Amended and Restated Employee Stock Plan
(the "Stock Plan") that would (i) permit the exercise of stock options granted
under the Stock Plan separately from the exercise of stock appreciation rights
granted in conjunction with such stock options and (ii) permit a nonqualified
option awarded under the Stock Plan to provide that, in the event the recipient
dies during the initial term of the option, the exercise period of the option
will be extended beyond such initial term to the extent necessary to permit the
option to be exercised by the recipient's estate or beneficiary until the first
anniversary of the recipient's date of death.
DESCRIPTION OF PROPOSED AMENDMENTS
PERMITTING SEPARATE EXERCISE OF OPTIONS AND SARS. The Stock Plan currently
permits the issuance of stock appreciation rights (SARs) in conjunction with the
grant of stock options ("Conjunctive Rights"). Section 7(a) of the Stock Plan
provides that if the option holder is granted Conjunctive Rights such
Conjunctive Rights shall be automatically exercised when the related option is
exercised. In order to provide increased flexibility to award recipients, the
Committee has determined that the Stock Plan be amended to permit the separate
exercise of Options and Conjunctive Rights. An option holder would still be able
to exercise Conjunctive Rights only if, and to the extent that, the related
Option is exercisable. Upon of the receipt of the approval of the Company's
stockholders, this amendment would be given effect retroactively to January 1,
1993. The Committee contemplates that following the receipt of stockholder
approval of the amendments, awards previously granted under the Stock Plan (or
its predecessor plans) would be amended to give effect to the amendment
described herein.
EXTENSION OF PERMITTED DURATION OF NONQUALIFIED STOCK OPTIONS. Section 6(c)
of the Stock Plan currently provides that the duration of any Option granted
under the Plan shall be for a period fixed by the Compensation Committee but
shall in no event be more than ten years. In order to provide additional
flexibility to the estate or beneficiary of an award recipient who dies during
the term of an Option, the Committee has determined that the Stock Plan should
be amended to provide an exception to the normal ten-year limit, to permit the
exercise of a nonqualified option granted under the Stock Plan until the first
anniversary of the recipient's date of death. This exception will apply whether
or not the recipient had terminated employment prior to the date of death, and
will permit continued exercise of the option only to the extent the option was
exercisable on the date of death.
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The benefits of these amendments to particular award recipients or potential
recipients are not determinable.
Following the approval of these amendments by the stockholders, the Stock
Plan will be amended by (i) adding to Section 6(c) the italicized language in
the following:
"(c) Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Committee but shall, EXCEPT
AS DESCRIBED IN THE NEXT SENTENCE, in no event be more than ten years.
NOTWITHSTANDING THE FOREGOING, THE OPTION CERTIFICATE ISSUED IN
CONNECTION WITH A NONQUALIFIED OPTION GRANTED UNDER THIS PLAN MAY
PROVIDE THAT, IN THE EVENT THE OPTION HOLDER DIES WHILE THE OPTION IS
EXERCISABLE, THE OPTION WILL REMAIN EXERCISABLE BY THE HOLDER'S ESTATE
OR BENEFICIARY UNTIL THE FIRST ANNIVERSARY OF THE HOLDER'S DATE OF
DEATH, WHETHER OR NOT SUCH FIRST ANNIVERSARY OCCURS PRIOR TO THE
EXPIRATION OF TEN YEARS FROM THE DATE OF GRANT.
by (ii) deleting Section 7(a) and replacing it in its entirety with the
following:
"(a) CONJUNCTIVE AND ALTERNATIVE RIGHTS. Such Rights shall entitle the
holder to receive cash from the Company:
(i) in addition to the right to exercise the related Option (such
Rights being hereinafter referred to as "Conjunctive Rights");
and/or
(ii) in lieu of the right to exercise the related Option (such
Rights being hereinafter referred to as "Alternative Rights");
as the Committee may determine, in its sole discretion, at the
time the Right is granted. If the Option holder is granted
Conjunctive Rights he may exercise such Rights only if, and to the
extent that, the related Option is exercisable. If the Option
holder is granted Alternative Rights, he may exercise such Rights
only to the extent such related Option is exercisable and the
exercise of such Alternative Rights shall result in the
cancellation of the related Option to the extent of the number of
Shares with respect to which such Alternative Rights have been
exercised and the exercise of the related Option shall result in
cancellation of the Alternative Rights to the extent of the number
of Shares with respect to which such Option has been exercised".
DESCRIPTION OF THE STOCK PLAN
The Cablevision Systems Corporation Amended and Restated Employee Stock Plan
(the "Stock Plan") was authorized by the Compensation Committee on May 1, 1992
and adopted by the Company's Stockholders on June 11, 1992. The Stock Plan
constitutes a consolidation and restatement of (i) the 1985 Employee Stock Plan,
adopted by the Company and its sole stockholder in 1985, (ii) the 1986
Nonqualified Stock Option Plan, adopted by the Company and its sole stockholder
in 1986 and (iii) the Key Employee Bonus Award Plan, adopted by the Company and
its sole stockholder in 1985 (collectively, the "Prior Plans").
The Stock Plan is administered by the Compensation Committee. Awards may be
granted under the Stock Plan to key employees of the Company and its affiliates
(other than members of the Compensation Committee) as the Compensation Committee
may determine. The Compensation Committee may make awards under the Stock Plan
for up to an aggregate number of shares equal to the sum of (i) 3,500,000
shares, which may be either treasury shares or authorized and unissued shares,
and (ii) the number of restricted shares, if any, purchased from employees by
the Company. Additionally, if an award is paid or settled in cash, or expires,
lapses, terminates or is cancelled without the issuance of shares, then the
Compensation Committee may grant awards with respect to shares subject to such
prior awards.
Under the Stock Plan the Company may grant "incentive stock options", as
defined in Section 422A of the Internal Revenue Code of 1986 (the "Code"),
nonqualified stock options, restricted stock and bonus award shares. Bonus award
shares are restricted shares that are payable upon vesting in cash and/or stock
at the Company's election. The option exercise price of stock options may not be
less than the fair market value per share of Class A Common Stock on the date
the option is granted. Other than in the case of the death of an award
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recipient (as described below), such options may be exercised for a term no
longer than ten years. The Stock Plan provides that, in conjunction with the
grant of an option, the Company may grant stock appreciation rights ("SARs")
pursuant to which the employee may elect to receive payment, either in lieu of
the right to exercise such option or in addition to the stock received upon the
exercise of such option, as the Compensation Committee may determine at the time
the SAR is granted, equal to the difference between the fair market value of the
stock as of the date the SAR is exercised and the option exercise price. The
Stock Plan permits the granting of restricted shares and bonus award shares at
prices determined by the Compensation Committee.
An employee will not realize any income when an incentive stock option is
granted under the Stock Plan or when such an option is exercised, and the
Company will not be entitled to a deduction with respect to the grant or
exercise of such an option. The difference between the exercise price of an
incentive stock option and the fair market value of the Shares subject to the
option at the time of exercise is an item of tax preference which may result in
the employee being subject to the alternative minimum tax. If the employee holds
the Shares acquired under an incentive stock option for at least two years from
the date the option is granted and at least one year from the date of exercise
of the option, any gain realized by the employee when the Shares are sold will
be taxable as capital gain. If the holding periods are not satisfied, the
employee will realize ordinary income in the year of the disposition of the
Shares in an amount equal to the excess of the fair market value of such Shares
on the date of exercise (or the proceeds of the disposition, if lower) over the
option price, and the Company will be entitled to a corresponding deduction. Any
remaining gain will generally be capital gain. If an incentive stock option is
settled by the Company in cash, Shares or a combination thereof, the employee
will recognize ordinary income at the time of settlement equal to the fair
market value of such cash, Shares or combination thereof and the Company shall
be entitled to a corresponding deduction.
An employee will not realize any income, and the Company will not be
entitled to a deduction, at the time that a nonqualified stock option is granted
under the Stock Plan. Upon exercising a nonqualified stock option, an employee
will realize ordinary income, and the Company will be entitled to a
corresponding deduction, in an amount equal to the excess of the fair market
value on the exercise date of the Shares subject to the option over the exercise
price of the option. The employee will have a basis in the Shares received as a
result of the exercise, for purposes of computing capital gain or loss, equal to
the fair market value of those Shares on the exercise date and the employee's
holding period in the Shares received will commence on the date of exercise. If
a nonqualified stock option is settled by the Company in cash, Shares or a
combination thereof, the employee will recognize ordinary income at the time of
settlement equal to the fair market value of such cash, Shares or combination
thereof and the Company shall be entitled to a corresponding deduction.
Restricted shares, bonus award shares and shares issuable upon the exercise
of an option are paid, at the specified vesting or exercise date, as the case
may be, in shares of the Company's Class A Common Stock ("Shares") unless
satisfied or settled in cash pursuant to the terms of the Stock Plan. On March
31, 1994, the closing price of a Share on the American Stock Exchange was
$53.875. No awards were granted to any executive officer, director, nominee for
director or any associate of any such person during 1993 other than an award of
5,000 stock options and 5,000 SARs to Sheila Mahony on January 12, 1993. During
1993, a total of 7,850 options, 7,850 SARs and 2,850 bonus award shares were
issued to employees of the Company and its affiliates (including Ms. Mahony)
under the Stock Plan.
The affirmative vote of a majority of the votes cast at the annual meeting,
in person or by proxy, by holders of the Class A Common Stock and the Class B
Common Stock voting together as a single class, is required to ratify and
approve the amendments to the Stock Plan. Abstentions from voting will have the
same effect as voting against this proposal. Broker non-votes will have no
effect on the outcome of the vote on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AUTHORIZATION AND APPROVAL OF
THE AMENDMENTS TO THE AMENDED AND RESTATED EMPLOYEE STOCK PLAN.
(4) APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick as
independent auditors for the fiscal year 1994. The stockholders are requested to
ratify and approve such appointment.
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It is expected that a representative of KPMG Peat Marwick will be present at
the annual meeting of stockholders. The representative will have an opportunity
to make a statement and is expected to be available to respond to appropriate
questions.
The affirmative vote of a majority of the votes cast at the annual meeting,
in person or by proxy, by holders of the Class A Common Stock and the Class B
Common Stock, voting together as a single class, is required to ratify and
approve the appointment of KPMG Peat Marwick as the Company's auditors for 1994.
Abstentions from voting and broker non-votes will have no effect on the outcome
of the vote on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION AND APPROVAL OF
THE APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S AUDITORS FOR 1994.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
As of this date the Board of Directors is not aware of any matters which may
come before the meeting other than those hereinabove set forth, but the proxy
solicited herewith confers discretionary authority to vote with respect to any
other business that may properly come before the meeting.
Proposals of stockholders intended to be presented at the Company's 1995
annual meeting of stockholders must be received by the Company at its executive
offices shown on page 1 of this proxy statement on or prior to January 24, 1995
to be eligible for inclusion in the Company's proxy material to be used in
connection with the 1995 meeting.
The Company's Annual Report on Form 10-K for the Company's fiscal year
December 31, 1993 statements is enclosed herewith.
By order of the Board of Directors,
Robert S. Lemle
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Woodbury, New York
May 24, 1994
26
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C L A S S A P R O X Y
CABLEVISION SYSTEMS CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, JUNE 14, 1994
The undersigned hereby appoints FRANCIS F. RANDOLPH, JR., MARC A. LUSTGARTEN
AND ROBERT S. LEMLE and each of them, jointly and severally, proxies with full
power of substitution, to vote all stock of CABLEVISION SYSTEMS CORPORATION (the
"Company") which the undersigned is entitled to vote at the Company's Annual
Meeting to be held at the Company's executive offices, One Media Crossways,
Woodbury, New York 11797, on Tuesday, June 14, 1994, at 10:00 o'clock in the
morning, and at any adjournment thereof, hereby ratifying all that said proxies
or their substitutes may do by virtue hereof, and the undersigned authorizes and
instructs said proxies to vote as follows:
Unless otherwise specified in the spaces provided, the undersigned's vote is
to cast FOR the election of the nominees for directors listed in Proposal (1)
and FOR approval of Proposals (2), (3) and (4) below, all as more fully
described in the accompanying Proxy Statement.
Receipt of the Notice of said annual meeting and of the Proxy Statement and
Annual Report on Form 10-K of CABLEVISION SYSTEMS CORPORATION accompanying the
same is hereby acknowledged.
1. Election of the following nominees as Class A Directors: Charles D. Ferris,
Richard H. Hochman, Victor Oristano and A. Jerrold Perenchio
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEES,
WRITE THE NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
____________________________________________________________________________
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY to
(except as marked to the contrary vote for all nominees listed below
below) ----------------------------------
<PAGE>
2. Proposal to authorize and approve certain amendments to the Company's
Certificate of Incorporation.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to authorize and approve certain amendments to the Company's
Amended and Restated Employee Stock Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to ratify and approve the appointment of KPMG Peat Marwick, as
auditors for the fiscal year 1994.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<TABLE>
<S> <C>
Date
--------------------------------------- ,
1994
Signature
---------------------------------------
Your signature should appear the same
as your name appears hereon. If signing
as attorney, executor, trustee or
guardian, please indicate the capacity
in which signing. When signing as joint
tenants, all parties to the joint
tenancy must sign. When the proxy is
given by a corporation, it should be
signed by an authorized officer and the
corporate seal affixed.
</TABLE>
PLEASE DATE, SIGN AND RETURN THIS PROMPTLY IN THE ENVELOPE PROVIDED
