<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:
/ / Preliminary Proxy Statement
/X/ 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 20, 1995
---------------------
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 20, 1995 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 ratify and approve the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year 1995; and
3. 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 19, 1995. 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 26, 1995
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 20, 1995 at ten o'clock in the morning and at any and all
adjournments thereof.
The shares represented by the proxy will be voted at the annual meeting and
will be voted as specified on the proxy with respect to the election of
directors and with respect to Proposal (2) 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 proposal. 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 26, 1995. The Company's Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1994 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 19, 1995. 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 March 31, 1995, the Company had
outstanding 12,019,010 shares of Class A Common Stock, par value $.01 per share,
each of which entitled the holder to one vote, and 11,678,922 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,
and trusts for the benefit of members of his family, together beneficially own
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 Proposal (2).
BOARD OF DIRECTORS
The Board of Directors of the Company met, or acted by written consent in
lieu of meeting, eight times in 1994 and presently consists of 14 members, 7 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
<PAGE>
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, four times in 1994.
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 one time in 1994.
The Compensation 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, SARs 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,
seven times in 1994.
Each member of the Board of Directors (other than Patrick F. Dolan, who
participated in five of eight meetings or consents in lieu of meeting)
participated in not less than 75% of the aggregate number of meetings or
consents in lieu of meeting of the Board of Directors and of each Board
committee of which he or she was a member, during 1994.
COMPENSATION OF DIRECTORS
Directors who are not employees are paid a fee of $20,000 per year for
services rendered in that capacity, 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.
John Tatta, a non-employee director, has a consulting agreement with the
Company expiring in 1998 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. Pursuant to this consulting agreement, under which Mr. Tatta assists
senior management of the Company in strategic planning and performs special
projects relating to the Company's business, Mr. Tatta is to provide not more
than 50 percent of his professional time to the Company. Because Mr. Tatta
provided substantially more than 50 percent of his professional time to the
Company during 1994, Mr. Tatta also received an additional payment of $200,000
for such additional services. The aggregate compensation paid to Mr. Tatta for
services rendered in 1994 was $685,000.
(1) ELECTION OF DIRECTORS
With respect to the election of directors, the Certificate of Incorporation
of the Company provides that holders of Class A Common Stock, voting as a
separate class, 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,
2
<PAGE>
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 the
shares of 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 the
shares of 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.
The following table sets forth information at April 1, 1995 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 61 Director; Member, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, 1985
P.C., Attorneys
Richard H. Hochman (1)(2) 49 Director; Managing Partner of Regent Capital Partners, L.P. 1986
Victor Oristano (1) 78 Director; Chairman of Alda Communications Corp. 1985
A. Jerrold Perenchio (3) 64 Director; General Partner of Chartwell Partners 1987
</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) 55 Vice Chairman and Director 1985
Charles F. Dolan (2) 68 Chairman and Chief Executive Officer and Director 1985
James L. Dolan (4) 39 Director and Chief Executive Officer of Rainbow Programming 1991
Holdings, Inc.
Patrick F. Dolan 43 Director and Vice President of News 1991
Robert S. Lemle (4) 42 Executive Vice President, General Counsel, Secretary and 1988
Director
Marc A. Lustgarten (4) 48 Vice Chairman and Director 1985
Sheila A. Mahony 53 Senior Vice President and Director 1988
Francis F. Randolph, Jr. 67 Director 1985
Daniel T. Sweeney 65 Director 1985
John Tatta (2)(4) 74 Chairman of the Executive Committee and Director 1985
<FN>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(3) Mr. Perenchio resigned from the Board of Directors on December 15, 1992 and
was re-elected to the Board of Directors on February 3, 1993.
(4) Member of the Executive Committee.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the directors and executive officers of the
Company as of April 1, 1995.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------
<S> <C> <C>
Charles F. Dolan 68 Chairman, Chief Executive Officer and Director
William J. Bell 55 Vice Chairman and Director
Marc A. Lustgarten 48 Vice Chairman and Director
Robert S. Lemle 42 Executive Vice President, General Counsel,
Secretary and Director
Barry J. O'Leary 51 Senior Vice President, Finance and Treasurer
Sheila A. Mahony 53 Senior Vice President and Director
Jerry Shaw 48 Vice President and Controller
William J. Quinn 48 President, Cable Operations
James L. Dolan 39 Director and Chief Executive Officer of Rainbow
Programming Holdings, Inc.
Patrick F. Dolan 43 Director and Vice President of News
John Tatta 74 Chairman of the Executive Committee and Director
Charles D. Ferris 61 Director
Richard H. Hochman 49 Director
Victor Oristano 78 Director
A. Jerrold Perenchio 64 Director
Francis F. Randolph, Jr. 67 Director
Daniel T. Sweeney 65 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 -- Director of the Company since 1985. Vice Chairman of
the Company since 1989. 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.
4
<PAGE>
Robert S. Lemle -- Director of the Company since 1988. Executive Vice
President, General Counsel and Secretary since 1994. Senior Vice President,
General Counsel and Secretary of the Company from 1986 to 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.
Sheila A. Mahony -- Director of the Company since 1988. Senior Vice
President of the Company since 1995. Vice President of Government Relations and
Public Affairs of the Company and its predecessor from 1980 to 1995. 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.
William J. Quinn -- President, Cable Operations of the Company since 1991.
Vice President, Cable Operations and General Manager of the Company's Long
Island cable television systems from 1986 to 1991.
James L. Dolan -- Director of the Company since 1991 and Vice President of
the Company from 1987 to 1994. Chief Executive Officer of Rainbow Programming
Holdings, Inc., a subsidiary of the Company, 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. Vice President of
News since March 1995. News Director of News 12 Long Island, a subsidiary of the
company, from 1991 to March, 1995 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 and consultant to the Company since January 1, 1992.
President of the Company from 1985 to December 31, 1991. Chief Operating Officer
of the Company from 1985 to 1989 and of the Company's predecessor 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 Partner
of Regent Capital Partners, L.P. since April, 1995. Managing Director of
PaineWebber Incorporated from 1990 to April, 1995. 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
since 1975. 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, a Spanish language broadcast television
network, 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
5
<PAGE>
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. Each of these companies is engaged in the production
or finance of motion pictures or other entertainment products.
Francis F. Randolph, Jr. -- Director of the Company since 1985. Vice
Chairman of the Company from 1985 to 1994. Partner in the law firm of Cravath,
Swaine & Moore, New York, New York, from 1963 to 1981, when he joined the
Company's predecessor.
Daniel T. Sweeney -- Director of the Company since 1985. Senior Vice
President of the Company from 1985 to June 30, 1995. Vice President of the
Company's predecessor since 1973. First Chief Operating Officer of Home Box
Office.
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 March 31, 1995
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.
<TABLE>
<CAPTION>
COMBINED
VOTING
POWER
OF
CLASS A
& CLASS
B
CLASS A COMMON CLASS B COMMON CLASS A & CLASS COMMON
STOCK STOCK B COMMON STOCK STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICALLY
NAME AND ADDRESS OWNED (1) OWNED (1)(2) OWNED (1)(2) OWNED (1)(2)
- ---------------------------------------- ---------------- ---------------- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan (3)(4)(5) ............. 390,200 3.2% 6,351,494 54.4% 6,741,694 28.4% 49.61%
One Media Crossways
Woodbury, NY 11797
Charles F. Dolan ....................... -- -- 4,000,000 34.3% 4,000,000 16.9% 31.1%
1994 Grantor Retained
Annuity Trust (5)
The Capital Group Companies Inc. (6) ... 1,321,800 11.0% -- -- 1,321,800 5.6% *
Capital Research and Management Company
(6)
333 South Hope Street
Los Angeles, CA 90071
Putnam Investments, Inc. (7) ........... 757,962 6.3% -- -- 757,962 3.2% *
Putnam Investment Management, Inc. (7)
One Post Office Square
Boston, MA 02109
The Equitable Companies Incorporated 1,112,340 9.3% -- -- 1,112,340 4.7% *
(8) ....................................
787 Seventh Avenue
New York, NY 10019
John Tatta (9).......................... 96,500 * -- -- 96,500 * *
William J. Bell (10)(11)................ 103,049 * -- -- 103,049 * *
Francis F. Randolph, Jr. (11)(12)....... 308,000 2.6% -- -- 308,000 1.3% *
Robert S. Lemle (11).................... 81,286 * -- -- 81,286 * *
Marc Lustgarten (10)(11)................ 108,750 * -- -- 108,750 * *
Sheila A. Mahony (11)................... 41,821 * -- -- 41,821 * *
Daniel T. Sweeney (11).................. 39,261 * -- -- 39,261 * *
Charles D. Ferris....................... 1,000 * -- -- 1,000 * *
Richard H. Hochman...................... 1,000 * -- -- 1,000 * *
Victor Oristano (13).................... 1,000 * -- -- 1,000 * *
A. Jerrold Perenchio (14)............... 300,000 2.5% -- -- 300,000 1.3% *
James L. Dolan (11)(15)(23)(24)......... 5,562 * 845,241 7.2% 850,803 3.6% 6.6%
Patrick F. Dolan (11)(16)(21)(25)....... 2,212 * 817,410 7.0% 819,622 3.5% 6.3%
William J. Quinn (11)................... 33,460 * -- -- 33,460 * *
All executive officers and directors as
a group (17 persons) (3)(4)(9)(10)
(11)(12)(13)(14)(15)(16)................ 1,581,063 13.2% 8,014,145 68.6% 9,595,208 40.5% 63.4%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
COMBINED
VOTING
POWER
OF
CLASS A
& CLASS
B
CLASS A COMMON CLASS B COMMON CLASS A & CLASS COMMON
STOCK STOCK B COMMON STOCK STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICALLY
NAME AND ADDRESS OWNED (1) OWNED (1)(2) OWNED (1)(2) OWNED (1)(2)
- ---------------------------------------- ---------------- ---------------- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Helen A. Dolan (5)(17) ................. 381,700 3.2% 4,000,000 34.5% 4,381,700 18.5% 31.4%
One Media Crossways
Woodbury, NY 11797
Lawrence Dolan (5) ..................... -- -- 4,000,000 34.3% 4,000,000 16.9% 31.1%
100 Corporate Place
Suite 150
Chardon, OH 44024
Paul J. Dolan 1,200 * 2,200,052 18.8% 2,201,252 9.3% 17.0%
(18)(23)(24)(25)(26)(27) ...............
100 Corporate Place
Suite 150
Chardon, OH 44024
Kathleen M. Dolan (18)(24) ............. 1,000 * 816,741 7.0% 817,741 3.5% 6.3%
One Media Crossways
Woodbury, NY 11797
Mary S. Dolan (19)(21) ................. 2,500 * 597,401 5.1% 599,901 2.5% 4.6%
300 So. Riverside Plaza
Suite 1480
Chicago, IL 60606
Deborah A. Dolan (19)(25) .............. 1,000 * 816,741 7.0% 817,741 3.5% 6.3%
One Media Crossways
Woodbury, NY 11797
Matthew J. Dolan (20)(22) .............. 1,500 * 597,401 5.1% 598,901 2.5% 4.6%
231 Main Street
Court House Annex
Chardon, OH 44024
Marianne E. Weber (20)(26)(27) ......... 1,000 * 860,855 7.4% 861,855 3.7% 6.7%
One Media Crossways
Woodbury, NY 11797
Thomas C. Dolan (22)(26)(27) ........... 1,000 * 869,686 7.5% 870,686 3.7% 6.8%
One Media Crossways
Woodbury, NY 1179
John MacPherson (28) ................... 3,000 * 1,893,074 16.2% 1,896,074 8.0% 14.7%
21 Old Town Lane
Halesite, NY 10019
<FN>
- --------------------------
* Represents less than one percent.
(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 376,700 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.
</TABLE>
7
<PAGE>
<TABLE>
<C> <S>
(4) Does not include an aggregate of 5,325,928 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. The amount shown includes
the 4,000,000 shares of Class B Common Stock held by the Charles F. Dolan
1994 Grantor Retained Annuity Trust described in footnote (5) below.
(5) Includes 4,000,000 shares of Class B common stock by the Charles F. Dolan
1994 Grantor Retained Annuity Trust (the "GRAT"). The GRAT was created on
December 31, 1994 by Charles F. Dolan for estate planning purposes. The
GRAT, through its trustees, has the sole power to vote and dispose of such
shares. The two co-trustees of the trust are Helen A. Dolan, the wife of
Charles F. Dolan, and Lawrence Dolan. For two years, the GRAT will pay to
Charles F. Dolan, and in the event of his death, to his wife, Helen A.
Dolan, a certain percentage of the fair market value of the property
initially contributed to the GRAT (the "Annuity"). In addition, the Trustees
may pay to Mr. Dolan (or, if Mr. Dolan dies within such two-year term, to
Mrs. Dolan) such amounts in excess of the Annuity as the Trustees in their
discretion may deem advisable. If Mr. Dolan is living at the expiration of
the term of the GRAT, the remainder will pass into another trust for the
benefit of Mrs. Dolan and the descendants of Charles F. Dolan. If Mr. Dolan
is not living at the expiration of the term of the GRAT, the then principal
of the GRAT will revert to his estate. Charles Dolan disclaims beneficial
ownership of all shares held by the GRAT.
(6) The Company has been informed that certain operating subsidiaries of The
Capital Group Companies, Inc., exercise investment discretion over various
institutional accounts which held as of December 31, 1994, 1,321,800 shares
of Class A common stock. Capital Guardian Trust Company, a bank and one of
such operating, exercised investment discretion over 414,200 of said shares.
Capital Research and Management Company, a registered investment adviser,
and Capital International Limited and Capital International, S.A., other
operating subsidiaries, have investment discretion with respect to 890,000,
5,200 and 12,400 shares, respectively, of the above shares.
(7) The Company has been informed that certain operating subsidiaries of Putnam
Investments, Inc., a wholly owned subsidiary of Marsh & McLennan Companies,
Inc., including Putnam Investment Management Inc., hold an aggregate of
757,962 shares of Class A common stock. Such companies exercise shared
voting power with respect to 71,700 of such shares and shared dispositive
power with respect to all of such shares. The Company has been informed that
Putnam Investment Management, Inc. holds 656,770 of such shares and
exercises shared dispositive power with respect to such 656,770 shares.
(8) The Company has been informed that certain operating subsidiaries of The
Equitable Companies Incorporated exercise sole investment discretion over
various institutional accounts which own 1,112,340 shares of Class A Common
Stock, and that such operating subsidiaries exercise sole voting power with
respect to 964,700 of such shares and sole dispositive power with respect to
all of such shares.
(9) Does not include 139,375 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, 1995 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 102,750;
Randolph 306,500; Lemle 81,075; Lustgarten 107,750; Mahony 41,675; Sweeney
28,300; Quinn 33,275; all executive officers and directors as a group
769,561.
(12) Includes 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
</TABLE>
8
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<TABLE>
<C> <S>
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.
</TABLE>
<TABLE>
<S> <C>
(13) The shares listed are owned by Alda Investment Company, a Florida
partnership consisting of members of the Oristano family.
(14) The shares listed are owned by the A. Jerrold Perenchio Living Trust.
(15) Includes 28,500 shares of Class B Common Stock owned by trusts for minor
children as to which James L. Dolan disclaims beneficial ownership. Also
includes 816,741 shares of Class B Common Stock held by two family trusts
of which James L. Dolan is a contingent beneficiary and a co-trustee, as to
which James L. Dolan disclaims beneficial ownership, which shares are also
described in footnotes (23) and (24).
(16) Includes 9,500 shares of Class B Common Stock owned by trust for a minor
child as to which Patrick F. Dolan disclaims beneficial ownership. Also
includes 807,910 shares of Class B Common Stock held by two family trusts
of which Patrick Dolan is a contingent beneficiary and a co-trustee, as to
which Patrick F. Dolan disclaims beneficial ownership, which shares are
also described in footnotes (21) and (25).
(17) Includes 376,700 shares of Class A Common Stock owned by the Dolan Family
Foundation, 5,000 shares of Class A Common stock owned directly by Mrs.
Dolan and 4,000,000 shares of Class B Common Stock held by the Grantor
Trust for which Mrs. Dolan is co-trustee.
(18) Includes 303,116 shares of Class B Common Stock held by the DC Kathleen
Trust, the co-trustees of which are Kathleen Dolan and Paul Dolan.
(19) Includes 303,116 shares of Class B Common Stock held by the DC Deborah
Trust, the co-trustees of which are Deborah Dolan and Mary Dolan.
(20) Includes 294,285 shares of Class B Common Stock held by the DC Marianne
Trust, the co-trustees of which are Marianne E. Weber and Matt Dolan.
(21) Includes 294,285 shares of Class B Common Stock held by the DC Patrick
Trust, the co-trustees of which are Patrick Dolan and Mary Dolan.
(22) Includes 303,116 shares of Class B Common Stock held by the DC Thomas
Trust, the co-trustees of which are Thomas Dolan and Matt Dolan.
(23) Includes 303,116 shares of Class B Common Stock held by the DC James Trust,
the co-trustees of which are James Dolan and Paul Dolan.
(24) Includes 513,625 shares of Class B Common Stock held by the Dolan
Descendants Trust, the co-trustees of which are James Dolan, Kathleen Dolan
and Paul Dolan.
(25) Includes 513,625 shares of Class B Common Stock held by the Dolan Progeny
Trust, the co-trustees of which are Patrick Dolan, Deborah Dolan and Paul
Dolan.
(26) Includes 513,625 shares of Class B Common Stock held by the Dolan
Grandchildren Trust, the co-trustees of which are Thomas Dolan, Marianne E.
Weber and Paul Dolan.
(27) Includes 52,945 shares of Class B Common Stock held by the Dolan Spouse
Trust, the co-trustees of which are Thomas Dolan, Marianne E. Weber and
Paul Dolan.
(28) Includes an aggregate of 1,893,074 shares of Class B Common Stock held by
various trusts for the benefit of family members of Charles F. Dolan's
family for which Mr. MacPherson serves as Trustee and, in such capacity,
exercises sole voting power and dispositive power with respect to such
shares. Such trusts also own an aggregate of 38,724 shares of Series C
Preferred Stock.
</TABLE>
The Dolan family interests (other than Charles Dolan and the GRAT) have
agreed with the Company that in the case of any sale or disposition by Dolan
family interests (other than Charles Dolan and the GRAT) 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.
9
<PAGE>
Charles Dolan and trusts for the benefit of members of his family, by virtue
of their ownership of Class B common stock, are able collectively to control
stockholder decisions on matters in which holders of Class and Class B common
stock vote together as a class, and to elect 75% of the Company's Board of
Directors.
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.
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 members of the Board of Directors, who are not employees of the
Company or any of its affiliates (the "Independent Directors") rejects such
offer, Mr. Dolan or such family interests may acquire or invest in such cable
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<PAGE>
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. Mr. Dolan's interests in companies other than the Company, may conflict
with his interest in 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
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. During 1994, approximately 90% of Mr. Dolan's professional time was
devoted to the business of the Company.
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. Cablevision Systems Services Corporation,
a corporation wholly owned by Charles Dolan ("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 pays the compensation of such employees and incurs 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 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 1994, 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 of the Company 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 described under "Compensation Committee Interlocks and Insider
Participation" below, Atlantic Publishing holds an interest in a company that
publishes a weekly cable television guide that is sold to the Company's
subscribers.
11
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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.
This Committee report first describes the components of the executive
compensation program, the policies used by the Compensation Committee in
determining compensation levels for senior executives, and their application in
1994. It then describes the manner in which 1994 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, developed and maintained with
the assistance of the Committee's outside consultant, 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 within the Company, and on the Committee's view of general
salary trends for executive and managerial positions based on information
derived by its outside consultant from various published sources such as the
Cable Television Administrative and Marketing Society (CTAM) MSO Compensation
Study and the Towers Perrin Media Industry Compensation Survey. The published
services considered by the consultant include information with respect to
approximately one hundred companies from all segments of the media industry.
While seven of the eight companies included in the Peer Group Index utilized in
the Performance Graph below participate in various surveys reviewed by the
consultant (including the CTAM and Towers Perrin Surveys), the Committee
believes that consideration of a larger number of companies, including both
publicly traded and non-publicly traded companies, provides a more appropriate
basis for the review of salary trends than does the limited group of eight
companies included in the Peer Group Index. Each year the Committee, with the
assistance of its consultant, reviews this salary structure to determine the
adjustment needed to reflect the general rate of salary inflation for executive
and managerial positions. For each of the past three years, this structure
adjustment has been in a range of 3.9 to 4.5 percent. However, salaries for the
CEO and four other highest paid officers listed in the tables beginning on page
20 were unchanged in 1994 from those paid to those officers in 1993.
In reviewing individual base salaries each year within the framework of the
Company's executive salary structure, the Committee first determines the
adjustments needed to reflect general salary trends and inflation, and then
further adjusts the base salary of each individual executive to reflect the
Committee's assessment of the executive's individual performance of his duties
and responsibilities without regard to measures of corporate performance.
Overall, the Committee seeks to ensure that the base salaries of the Company's
executives are in the median of the range for similar positions at other
similarly situated companies. The Committee relies in
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doing so on the recommendations of the consultant, which are based on the
consultant's general knowledge of industry trends, and does not engage in any
direct comparison between particular executive salaries and those of any
particular company or group of companies.
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 guideline bonus
opportunity constitutes neither a minimum nor a maximum bonus amount. Actual
bonuses may range from zero percent of salary to a maximum of 175 percent of the
guideline bonus opportunity. The 50 percent guideline bonus for the Company's
most senior executives reflects the Committee's determination that for this
group, the desired mix of total cash compensation at guideline should be
one-third in variable compensation (through incentive bonus) and two-thirds in
fixed compensation (through base salary). The Committee believes that variable
compensation for less senior executives and managers should constitute a smaller
portion of total cash compensation because of their lesser responsibilities for
total Company performance. The Committee adjusts the guideline bonus for each
executive upwards or downwards (within the range of 0% to 175% of guideline) 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 1994, 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 20 was 50 percent of salary and the maximum allowable bonus
was 88 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 1994 were 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 1994 were improving the Company's capital structure,
accomplishing strategic acquisitions, improving the Company's level of customer
service and adaptation to a second round federal regulations imposed in 1994.
While specific target levels are set for each of the quantitative objectives,
the determination of the achievement of qualitative objectives is made on a
subjective basis.
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 1994, final bonuses for the four highest paid executive officers
who were serving as executive officers at the end of 1994, excluding the Chief
Executive Officer, ranged from 78 to 88 percent of salary, averaging 81 percent.
In 1993, final bonuses for the four most highly compensated executives ranged
from 64 percent to 76 percent of salary, averaging 72 percent. In 1994, after
adjusting for the effects of the implementation of the second round of rate
regulations imposed by the Federal Communications Commission, which regulations
were not available to the Company or the Committee at the time the performance
targets were set, each of the quantitative performance objectives was
substantially met.
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, SARs, and, in some instances, 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 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. In May 1994, regularly scheduled biennial grants of stock
options, SARs and, in some instances, bonus award shares were made to officers
and other key employees (previous biennial awards having been made in 1990 and
1992). The grant schedule, specifying the number of option shares, SARs and,
where applicable, bonus award shares for participants in each eligible position
grade in the salary structure (including those executive officers designated in
the
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summary compensation table as receiving awards), was developed by the
Committee's outside consultant, and was designed to provide competitive
long-term incentive opportunities (assuming a 12 percent or better compound rate
of growth in share price over time) for each of the management levels receiving
grants. Stock options and SARs granted in May 1994 vest and become exercisable
in four annual installments (25 percent a year). Bonus award shares granted in
May 1994 vest and are payable four years from the date of grant. In making
determinations of which types of awards to grant, the Committee primarily
considered the degree of common stock dilution that could result from a given
type of award and the comparative degree of employee incentive created by a
given type of award. In order to provide a greater degree of incentive to senior
managers whose performance is more likely to impact overall company performance
and stock price appreciation, the Committee granted such employees stock options
and SARs only, while other recipients were granted stock options, SARs and bonus
award shares.
In November 1994, each of Messrs. Bell, Lustgarten and Lemle exercised stock
options that had been granted during the period from 1986 to 1989 and were
granted new stock options and SARs in replacement of such exercised options. The
exercise price for these new stock options is equal to the market value of a
share of Class A common stock on the grant date. The stock options exercised by
Messrs. Bell, Lustgarten and Lemle were settled by the Company by the payment of
the option spread in cash, and each such executive agreed to receive such cash
payment in three installments over two years.
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. The Stock
Plan terminates, in accordance with its terms, in December of 1995. Accordingly,
the Committee intends to undertake a complete review of the Company's long-term
compensation program over the next year and to work with the Company and its
consultant to design a new long-term compensation program to replace the Stock
Plan upon its termination.
DETERMINATION OF CEO'S 1994 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 1994, the sixth consecutive year at $600,000 (an amount only
slightly under the midpoint of the Company's salary range for his position
grade). Mr. Dolan's cash bonus for 1994 was set by the Committee at $375,000,
which was the same as the bonus paid to Mr. Dolan for 1993, $25,000 less than
the $400,000 paid to Mr. Dolan for 1992 and $125,000 less than the bonus paid
for each of the three years previous to that. In determining Mr. Dolan's bonus,
the Committee considered the same quantitative performance objectives that were
considered in connection with the determination of the bonuses for other
executives. As noted above, in 1994, after adjusting for the effects of the
implementation of the second round of rate regulations imposed by the Federal
Communications Commission, which regulations were not available to the Company
or the Committee at the time the performance targets were set, each of the
quantitative performance objectives was substantially met. The Committee also
considered Mr. Dolan's request that his bonus not be increased over the amount
paid for 1993. Mr. Dolan's employment agreement provides for cash compensation
of not less than $400,000 per year.
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 $1,000,000, as imposed by Section 162(m) of the Internal Revenue
Code of 1986, as amended, will have a significant impact on the Company's tax
position in the near future. The Committee will continue to consider the
potential impact of Section 162(m) in connection with its future compensation
decisions and will take such steps as it deems appropriate and in the best
interests of the Company and its shareholders.
Compensation Committee
Charles F. Dolan John Tatta Richard H. Hochman
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SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1994,
1993 and 1992, the cash compensation paid by the Company, and a summary of
certain other compensation paid or accrued for such years, to the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers who were serving as executive officers at the end
of 1994 (the "named executive officers") for service in all capacities with the
Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
--------------------------------------
ANNUAL COMPENSATION RESTRICTED ALL OTHER
------------------------------- STOCK OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARDS ($)(1) SARS (#) SATION ($)
- ----------------------------------------------------- --------- --------- --------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles Dolan........................................ 1994 600,000 375,000 0 0 150,861(2)
Chairman, Chief 1993 600,000 375,000 0 0 150,861(3)
Executive Officer 1992 600,000 400,000 0 0 30,000(4)
Director
William J. Bell...................................... 1994 450,000 360,000 0 192,000 100,197(2)
Vice Chairman 1993 450,000 340,000 0 0 100,324(3)
and Director 1992 425,000 350,000 309,400 134,900 30,000(4)
Marc A. Lustgarten................................... 1994 450,000 360,000 0 202,000 54,183(2)
Vice Chairman 1993 450,000 340,000 0 0 54,182(3)
and Director 1992 425,000 350,000 309,400 142,400 30,000(4)
Robert S. Lemle...................................... 1994 330,000 290,000 0 152,000 44,094(2)
Executive Vice President, 1993 330,000 250,000 0 0 44,092(3)
General Counsel, Secretary and Director 1992 310,000 255,000 234,800 107,000 30,000(4)
William J. Quinn..................................... 1994 320,000 250,000 0 32,000 55,886(2)
President of Cable Operations
<FN>
- ------------------------
(1) Grants reported under the Restricted Stock Awards column consist of bonus
award shares granted under the Company's Amended and Restated Employee
Stock Plan, which bonus award shares are payable, upon vesting, in cash or
in shares of Class A Common Stock, at the election of the Compensation
Committee. Amounts shown represent the aggregate market value as of the
date of grant of the shares of Class A Common Stock specified in each grant
of bonus award shares to the named executive officers during the years
shown. The aggregate number and fair market value of all shares of Class A
Common Stock represented by all grants of bonus award shares held by the
named individuals on December 31, 1994 (all of which were unvested) are as
follows:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF BONUS VALUE ON
NAME AWARD SHARES (#) 12/31/94 ($)
- ----------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Charles Dolan.................................................... 0 --
William J. Bell.................................................. 11,200 565,600
Marc A. Lustgarten............................................... 11,200 565,600
Robert S. Lemle.................................................. 8,500 429,250
William J. Quinn................................................. 8,500 429,250
<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.
(2) Represents the sum of (i) for each individual, $2,250 contributed by the
Company on behalf of such individual under the Company's Money Purchase
Pension Plan (the "Pension Plan"), (ii) for each individual, $25,500
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, $2,250 contributed by
the Company on behalf of such individual as a basic company contribution
under the Company's 401(k) Savings Plan, (iv) for each individual, the
following amounts contributed by the
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
Company on behalf of such individual as a matching contribution under the
Company's 401(k) Savings Plan: Mr. Dolan $1,000; Mr. Bell $810; Mr.
Lustgarten $938; Mr. Lemle $963 and Mr. Quinn $933, and (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 an integrated policy previously provided by the
Company: Mr. Dolan $119,861; Mr. Bell $69,387; Mr. Lustgarten $23,245; Mr.
Lemle $13,131 and Mr. Quinn $24,953.
(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. Bell $937; Mr. Lustgarten $937 and Mr. Lemle $963, and (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 previously provided by the
Company: Mr. Dolan $119,861; 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, $23,134 credited to such individual on the books of the
Company pursuant to the defined contribution portion of the Supplemental
Plan.
</TABLE>
OPTION/SAR GRANTS TABLE
The following table contains certain information with respect to stock
options and SAR's granted to the named executive officers in 1994 under the
Company's Amended and Restated Employee Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL
GRANTS
--------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS/SARS RATES OF STOCK PRICE
GRANTED TO APPRECIATION FOR OPTION
EMPLOYEES EXERCISE OR MARKET PRICE TERM (1)
OPTION/SARS IN FISCAL BASE PRICE ON DATE OF EXPIRATION ------------------------
GRANTED (#) YEAR 1994 ($/SHARE) GRANT ($) DATE 5% ($) 10% ($)
------------- --------------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles F. Dolan............ 0 -- -- -- -- -- --
William J. Bell............. 42,000(2) 3.9% 42.00 42.00 05/01/04 1,109,370 2,811,362
150,000(3) 14.0% 56.50 56.50 11/17/99 2,341,500 5,174,072
Marc A. Lustgarten.......... 42,000(2) 3.9% 42.00 42.00 05/01/04 1,109,370 2,881,362
160,000(3) 14.9% 56.50 56.50 11/17/99 2,497,600 5,518,400
Robert S. Lemle............. 32,000(2) 3.0% 42.00 42.00 05/01/04 845,235 2,141,990
120,000(3) 11.2% 56.50 56.50 11/17/99 1,873,200 4,138,800
William Quinn............... 32,000(2) 3.0% 42.00 42.00 05/01/04 845,235 2,141,990
<FN>
- ------------------------
(1) The dollar amounts shown under these columns are the result of calculations
at 5% and 10% rates set by the SEC, and therefore are not intended to
forecast possible future appreciation of the Company's stock price. In all
cases the appreciation is calculated from the award date to the end of the
option term.
(2) Options and tandem SARs granted on May 2, 1992 under the Company's Amended
and Restated Employee Stock Plan. Such options and SARs become exercisable
in annual installments of 25 percent per year on each of the first four
anniversaries of the grant date. One half of the amounts set forth are
options and one half are SARs. Options and SARs may be independently
exercised except that SARs may only be exercised to the extent that the
related options are exercisable and have been exercised. Vesting of options
and tandem SARs may be accelerated upon a change of control of the Company
(SEE "EMPLOYEE CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS"
below).
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
(3) Options and SARs granted on November 18, 1994 under the Company's Amended
and Restated Employee Stock Plan. Such options and SARs are exercisable
until November 18, 1998 whenever the Fair Market Value (as defined in the
Plan) of a share of Class A Common stock shall exceed the exercise price by
20%, and thereafter, whenever the Fair Market Value of a share of Class A
Common stock shall exceed the exercise price. One half of the amounts set
forth are options and one half are SARs. Options and SARs may be
independently exercised except that SARs may only be exercised to the
extent that the related options are exercisable and have been exercised.
Vesting of options and tandem SARs may be accelerated upon a change of
control of the Company (SEE "EMPLOYEE CONTRACTS AND SEVERANCE AND
CHANGE-IN-CONTROL AGREEMENTS" below). These options and SARs (135,000 of
such options and SARs in the case of Mr. Lustgarten) were issued upon the
exercise of a like number of options by such employees on such date.
</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
1994 and (ii) unexercised stock options and SARs held as of December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/
AT FY-END ($) SARS AT FY-END (#)
SHARES ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- --------------- ---------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Dolan................. 0 0 0 0 0 0
William J. Bell.................. 150,000 5,215,625(1) 243,000 112,100(2) $ 2,285,656 $ 2,553,662
Marc A. Lustgarten............... 135,000 4,617,500(1) 255,500 117,100(3) $ 2,370,343 $ 2,722,937
Robert S. Lemle.................. 120,000 4,163,750(1) 192,150 88,250(4) $ 1,776,993 $ 2,023,093
William J. Quinn................. 0 0 48,550 28,250 $ 1,224,206 $ 301,218
<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 the number of
options exercised 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. In accordance with agreements between the Company and
each of Messrs. Bell, Lustgarten and Lemle, one- third of such amount was
paid on December 1, 1994, one-third shall be paid on November 18, 1995,
without interest, and one-third shall be paid on November 18, 1996 with
simple interest from November 18, 1995 at 9.5 percent per annum. The
Company has the right to accelerate the 1995 and 1996 payments and to defer
the 1995 payment until November 18, 1996 with interest from November 18,
1995 at 9.5 percent per annum.
(2) Includes 75,000 SARs as to which the distribution of proceeds upon any
exercise is automatically deferred without interest until October 15, 1995
as to the first 37,500 of such SARs and October 15, 1996 as to the
remaining 37,500 of such SARs.
(3) Includes 80,000 SARs as to which the distribution of proceeds upon any
exercise is automatically deferred without interest until October 15, 1995
as to the first 40,000 of such SARs and October 15, 1996 as to the
remaining 40,000 of such SARs.
(4) Includes 60,000 SARs as to which the distribution of proceeds is
automatically deferred without interest until October 15, 1995 as to the
first 30,000 of such SARs and October 15, 1996 as to the remaining 30,000
of such SARs.
</TABLE>
DEFINED BENEFIT PENSION PLAN
The Company's, 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
17
<PAGE>
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 1995 is $120,000 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: Mr. Dolan, $57,000; Mr.
Bell, $92,431, Mr. Lustgarten, $99,996; Mr. Lemle, $105,150 and Mr. Quinn,
$103,720.
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 Value Index") and a Peer Group Index by measuring the changes in
common stock prices from December 31, 1989 through December 31, 1994. 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, TCA CABLE TV,
INC., TELE-COMMUNICATIONS, INC., THE TIMES MIRROR COMPANY AND TIME WARNER INC.
Jones Spacelink Limited, which was included in the Peer Group used in the
Performance Graph contained in the Company's 1994 Proxy Statement, is not
included in the Peer Group because it is no longer in existence following a
merger. The chart assumes $100 was invested on December 31, 1989 in each of the
Company's Class A Common Stock, the Amex Value Index and the Peer Group Index
and reflects reinvestment of dividends on a quarterly basis and market
capitalization weighting.
FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN FOR CABLEVISION SYSTEMS
CORPORATION,
AMEX VALUE INDEX AND PEER GROUP.
<TABLE>
<CAPTION>
MEASUREMENT CABLEVISION AMEX
PERIOD SYSTEMS CORPORATION VALUE INDEX PEER GROUP
- --------------- ----------------------- --------------- -------------
<S> <C> <C> <C>
1989 100 100 100
1990 42 82 73
1991 94 105 89
1992 94 106 108
1993 183 126 160
1994 136 115 122
</TABLE>
18
<PAGE>
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Charles Dolan has an employment agreement with the Company expiring in
January 1996 with automatic renewals for successive one-year terms unless
terminated by either party at least three months prior to the end of the then
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.
Under the applicable award agreements, the vesting of the bonus award
shares, stock options and SARs granted to employees, including Messrs. Bell,
Lustgarten, Lemle and Quinn, 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.
The Company adopted as of May 1, 1994, a severance pay plan pursuant to
which an employee whose employment is involuntary terminated (other than for
cause) or who resigns with the approval of the Company, may receive a benefit in
an amount determined by the Company.
In November 1994, the Company entered into employment agreements with each
of Messrs. Bell, Lustgarten and Lemle. The agreements are each for a three year
term ending December 31, 1997 and may each be extended for additional one-year
periods up until December 31, 2000, unless the Company or the executive notifies
the other of its election not to extend by the preceding October 31. Under their
respective agreements, these executives are to receive annual salaries of not
less then $450,000 in the case of Mr. Bell, $450,000 in the case of Mr.
Lustgarten, and $330,000 in the case of Mr. Lemle. Each agreement also provides
that in the event that the executive leaves the Company involuntarily (other
than for cause), following a change of control (as defined above), or because
such executive's compensation, title or responsibilities are reduced without his
consent, such executive shall be entitled to receive (1) a severance payment of
not less than the salary due for the remainder of the employment agreement or
one year's annual salary (or three times the sum of his annual salary plus his
prior year's annual bonus in the event of a change of control), whatever is
greater, (2) a pro-rated portion of his annual bonus, (3) acceleration of
unvested stock options, conjunctive rights and bonus award shares, (4) three
years payment of life insurance premiums and (5) the right to participate in the
Company's health plan for retired executives.
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
Compensation Committee," above.) Charles Dolan is the Chairman
19
<PAGE>
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 Company. Mr. Hochman is not an employee of the Company.
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,
1994, such investments and advances (less applicable reserves) to such
affiliates aggregated approximately $33.4 million, consisting of $17.7 million
for Cablevision of Boston Limited Partnership ("Cablevision Boston"), $12.3
million for Cablevision of Chicago ("Cablevision Chicago") and $3.4 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, 1994 amounting to approximately $52.2 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 $9.7 million to
Cablevision Boston and, at December 31, 1994, $101.0 million of unpaid
distributions had accrued on the Company's preferred equity. At December 31,
1994, 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 $17.7 million due from Cablevision Boston. The
contractual terms of the preferred equity provide that the Company is to receive
(i) cumulative distributions equal to an annual rate of 15% (compounded
semi-annually) on its investment, (ii) the right to a priority return of the
equity investment and any amounts of unpaid cumulative distributions when
permitted to be paid and (iii) the right to receive 20% of all amounts available
for postpayout distribution. Certain questions exist as to whether the preferred
equity is entitled to its full contractual rights. In connection with the
proposed acquisition of Cablevision of Boston by the Company discussed below,
the Company has agreed to substantial reductions in the amounts that it would
otherwise be entitled to receive in that transaction in respect of its preferred
equity interests in order to induce the Limited Partners of Cablevision of
Boston to approve the transaction. The Company's preferred equity is
subordinated to the indebtedness of Cablevision Boston (including the Company's
$9.7 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 $90.8 million at
December 31, 1994, 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.
In June 1994, Cablevision Boston entered into an agreement which is designed
to give the Company full ownership of Cablevision Boston. The agreement provides
for the acquisition by the Company of the interests of Cablevision Boston which
its does not already own in a series of transactions. The Company and
Cablevision Boston have filed with the Securities and Exchange Commission a
Consent Solicitation Statement/Prospectus with respect to the proposed
transactions. Each of the transactions is subject to a number of conditions,
including the approval by the limited partners of Cablevision Boston who are
unaffiliated with the general partners of Cablevision Boston. Consummation of
the transactions would result in the limited partners in Cablevision Boston
receiving Class A Common Stock of the Company with an expected aggregate market
value of approximately $40 million.
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
20
<PAGE>
Cablevision Chicago in the amount of $12.3 million (plus $13.4 million in
accrued interest which the Company has fully reserved) as of December 31, 1994,
which loans and advances are subordinated to Cablevision Chicago's senior credit
facility, accrue interest at an annual rate of 14% and have no set maturity
date. 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 January 6, 1995, Cablevision Chicago signed a definitive agreement to
sell its cable systems to Continental Cablevision, Inc. The transfer is subject
to franchise approvals and is expected to close later in 1995.
Atlantic Publishing holds a minority equity interest and a debt interest in
a company that publishes a weekly cable television guide which is offered to the
Company's subscribers and to unaffiliated cable television operators. As of
December 31, 1994, 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 1994), 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 $3.4 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 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 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 Preferred Payment in cash and,
21
<PAGE>
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.
Richard H. Hochman, a director and a nominee for director, was, until
recently, a Managing Director of PaineWebber Incorporated. PaineWebber
Incorporated has performed investment banking services for 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.
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, 1994, 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 on Form 4 filed by James L. Dolan on December 9, 1994 with respect to his
deemed beneficial ownership of Class B Common Stock as a result of his status as
Trustee of certain Dolan family trusts and a report on Form 5 filed by him on
April 4, 1995 with respect to the receipt of stock options and SARs in November,
1994 and (ii) Form 3 filed by each of the Marissa Waller 1989 Trust, the Ryan
Dolan 1989 Trust, the Charles Dolan 1989 Trust and the Tara Dolan 1989 Trust
which are deemed to be reporting entities based on the reporting status of their
respective trustees, and (iii) a Form 3 filed by John MacPherson with respect to
his deemed beneficial ownership of Class B Common stock as a result of his
status as a Trustee of certain Dolan family trusts and a Form 4 filed by him
with respect to his receipt of shares of Class A Common Stock by gift.
(2) APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP as
independent auditors for the fiscal year 1995. The stockholders are requested to
ratify and approve such appointment.
It is expected that a representative of KPMG Peat Marwick LLP 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 amendment to the Stock Plan. Abstentions from voting will have the
same effect as voting against the 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 RATIFICATION AND APPROVAL OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S AUDITORS FOR 1995.
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.
22
<PAGE>
Proposals of stockholders intended to be presented at the Company's 1996
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 23, 1996
to be eligible for inclusion in the Company's proxy material to be used in
connection with the 1996 meeting.
The Company's Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1994 is enclosed herewith.
By order of the Board of Directors,
Robert S. Lemle
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Woodbury, New York
May 26, 1995
23
<PAGE>
CLASS A PROXY
CABLEVISION SYSTEMS CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, JUNE 20, 1995
The undersigned hereby appoints WILLIAM J. BELL, MARC A. LUSTGARTEN, BARRY J.
O'LEARY 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 20, 1995, 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 Proposal (2) 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.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE. If
you receive more then one proxy card, please sign and return ALL cards in the
enclosed envelope.
<PAGE>
I plan to attend the meeting. \ \
1. Election of the following nominees as Class A Directors:
FOR all nominees listed (except as marked to the contrary below) \ \
WITHHOLD AUTHORITY to vote for all nominees listed \ \
Charles D. Ferris, Richard H. Hochman, Victor Oristano and A. Jerrold Perenchio
(INSTRUCTION: To withhold authority for any individual nominees, write that
nominees name on the space provided below.)
- ----------------------------------------------------
2. Proposal to ratify and approve the appointment of KPMG Peat Marwick LLP,
as auditors for the fiscal year 1995.
FOR \ \ AGAINST \ \ ABSTAIN \ \
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
Date____________________________ , 1995
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.
PLEASE DATE, SIGN AND RETURN THIS PROMPTLY IN THE ENVELOPE PROVIDED
<PAGE>
CLASS B PROXY
CABLEVISION SYSTEMS CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, JUNE 20, 1995
The undersigned hereby appoints WILLIAM J. BELL, MARC A. LUSTGARTEN, BARRY J.
O'LEARY, ROBERT S. LEMLE and DAVID A. DEITCH 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 Thursday,
June 20, 1995, 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 Proposal (2) 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.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE. If
you receive more then one proxy card, please sign and return ALL cards in the
enclosed envelope.
<PAGE>
I plan to attend the meeting. \ \
1. Election of the following nominees as Class B Directors:
FOR all nominees listed (except as marked to the contrary below) \ \
WITHHOLD AUTHORITY to vote for all nominees listed \ \
William J. Bell, Charles F. Dolan, James L. Dolan, Patrick F. Dolan, Robert S.
Lemle, Marc A. Lustgarten, Sheila A. Mahony, Francis F. Randolph, Jr., Daniel T.
Sweeney and John Tatta
(INSTRUCTION: To withhold authority for any individual nominees, write that
nominee's name in the space provided below.)
- ----------------------------------------------------
2. Proposal to ratify and approve the appointment of KPMG Peat Marwick LLP,
as auditors for the fiscal year 1995.
FOR \ \ AGAINST \ \ ABSTAIN \ \
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
Date_____________________________ , 1995
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.
PLEASE DATE, SIGN AND RETURN THIS PROMPTLY IN THE ENVELOPE PROVIDED
