SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRANSMEDIA NETWORK INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
TRANSMEDIA NETWORK INC.
11900 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33181
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1997
----------------
To the Stockholders
of Transmedia Network Inc.:
The 1997 Annual Meeting of Stockholders (the "Annual Meeting") of
Transmedia Network Inc. (the "Company") will be held at The Helmsley Hotel, 212
East 42nd Street, New York, New York 10017 (between 2nd and 3rd Avenues) Turtle
Bay Room, on Tuesday, June 10, 1997 at 10:00 a.m., New York time, for the
following purposes:
(1) to elect Directors; and
(2) to transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Provision is made on the enclosed proxy card for your direction as to the
matters set forth as Items (1) and (2) above. Further information concerning
these matters is set forth in the accompanying Proxy Statement.
Holders of record of the Company's Common Stock at the close of business on
May 5, 1997 are entitled to receive notice of and to vote at the Annual Meeting
and at any postponement or adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING WHETHER OR
NOT YOU ARE PERSONALLY ABLE TO ATTEND. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND
THE MEETING IN PERSON ARE URGED TO PLEASE SIGN AND DATE THE ACCOMPANYING PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES
ARE VOTED IN ACCORDANCE WITH YOUR WISHES AND THAT A QUORUM WILL BE PRESENT AT
THE ANNUAL MEETING.
By Order of the Board of Directors,
KATHRYN M. FERARA
Secretary
Miami, Florida
May 7, 1997
<PAGE>
TRANSMEDIA NETWORK, INC.
11900 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33181
----------------
1997 ANNUAL MEETING OF STOCKHOLDERS
----------------
PROXY STATEMENT
SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Transmedia Network Inc., for use at the
1997 Annual Meeting of Stockholders (the "Annual Meeting") to be held at The
Helmsley Hotel, 212 East 42nd Street, New York, New York 10017 (between 2nd and
3rd Avenues) Turtle Bay Room, on Tuesday, June 10, 1997 at 10:00 a.m., New York
time, and any postponements or adjournments thereof. This Proxy Statement and
the enclosed proxy are being sent to stockholders commencing on or about May 9,
1997. The principal executive offices of the Company are located at 11900
Biscayne Boulevard, Miami, Florida 33181.
Solicitation will be primarily by mail but may also be made by personal
interview, by telephone, by telegram, or by telecopier, in each case by officers
and employees of the Company who will not be additionally compensated therefor.
The Company will request persons such as brokers and other custodians, nominees
and fiduciaries, holding stock in their names for others, or holding stock for
others who have the right to give voting instructions, to forward proxy material
to their principals and request authority for the execution of the proxy. The
total cost of soliciting proxies will be borne by the Company.
VOTING
Only holders of record of common stock (the "Common Stock"), par value $.02
per share, of the Company at the close of business of May 5, 1997, the record
date, will be entitled to vote at the meeting. On the record date, there were
10,189,955 shares of Common Stock outstanding, and each holder of such shares
will be entitled to one vote at the meeting for each share registered in his
name. Holders of Common Stock are not entitled to cumulate their votes on any
matter to be considered at the meeting. The presence at the meeting, in person
or by proxy, of the holders of a majority of the total number of shares of
Common Stock outstanding on the record date constitutes a quorum for the
transaction of business at the meeting.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors to serve until the annual
meeting of stockholders in 2000, in voting by proxy, stockholders may vote in
favor of both nominees or withhold their votes as to both nominees or withhold
their votes as to a specific nominee.
A stockholder who submits a proxy may revoke it at any time prior to the
voting of the proxy by written notice to the Secretary of the Company or by
attending the meeting and voting his shares in person.
After the initial mailing of this Proxy Statement, proxies may be solicited
by telephone, telegram, telecopier or personally by directors, officers and
other employees of the Company (who will not receive any additional compensation
therefor). All expenses with respect to this solicitation of proxies, including
printing and postage costs will be paid by the Company. Arrangements will be
made with brokers and other custodians, nominees and fiduciaries to send proxies
and the proxy material to their principals, and the Company will, upon request,
reimburse them for their reasonable expenses in doing
<PAGE>
so. The Company may engage an outside proxy soliciting firm to assist in the
solicitation of proxies. The Company will pay reasonable fees and out-of-pocket
costs and expenses if it elects to engage such a firm.
ITEM NO. 1-ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with one class
standing for election each year for a three-year term. The Board has nominated
Herbert M. Gardner, and Barry S. Kaplan for reelection as directors, each to
hold office until the Annual Meeting of Stockholders in 2000 and until his
respective successor is duly elected and qualified.
Should any one or both of these nominees become unable to serve for any
reason, or will not serve, which is not anticipated, the Board of Directors may,
unless the Board by resolution provides for a lesser number of Directors,
designate a substitute nominee or nominees, in which event the persons named in
the enclosed proxy will vote proxies that would otherwise be voted for all named
nominees for the election of such substitute nominee or nominees.
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE ELECTION OF DIRECTORS
The Board of Directors of the Company recommends a vote FOR Herbert M.
Gardner, and Barry S. Kaplan as Directors to hold office until the Annual
Meeting of Stockholders in 2000 and until their respective successors are duly
elected and qualified. Proxies received by the Board of Directors will be so
voted unless stockholders specify in their proxy a contrary choice.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
DIRECTOR TERM TO
NOMINEE AGE POSITION AND/OR PRINCIPAL OCCUPATION SINCE EXPIRE
- -------------------- ------ ---------------------------------------------- ----------- ---------
<S> <C> <C> <C> <C>
Herbert M. Gardner 57 Senior Vice President, 1983 2000
Janney Montgomery Scott Inc.
Barry S. Kaplan 38 Vice President of the Company and 1996 2000
President of Transmedia Service Company Inc.
</TABLE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR TERM TO
NOMINEE AGE POSITION AND/OR PRINCIPAL OCCUPATION SINCE EXPIRE
- -------------------- ------ ---------------------------------------- ----------- ---------
<S> <C> <C> <C> <C>
Jack Africk 68 Chairman of the Board 1992 1999
Evolution Consulting Group, Inc.
Irwin Hochberg 68 Senior Partner and President, 1987 1999
Bloom Hochberg & Co., P.C.
Henry Seiden 68 Chairman and Chief Executive Officer, 1988 1999
The Seiden Group Inc.
James M. Callaghan 57 Vice President of the Company 1991 1998
Melvin Chasen 68 Chairman of the Board, President and 1984 1998
Chief Executive Officer of the Company
</TABLE>
BUSINESS EXPERIENCE
Mr. Gardner, a director of the Company since 1983, has been employed as a
Senior Vice President of Janney Montgomery Scott Inc., an investment banking
firm, for more than five years. He was a director of two predecessors of the
Company from 1983 through 1987. Mr. Gardner is a director of
2
<PAGE>
Shelter Components Corporation, a supplier to the manufactured housing industry,
and Nu Horizons Electronics Corp., an electronics components distributor. He is
Chairman of the Board of Supreme Industries, Inc., a company which manufactures
specialized truck bodies and shuttle buses. Mr. Gardner is also a director of
The Western Systems Corp. (formerly, The Western Transmedia Company Inc.), which
was the Company's franchisee in California, Oregon, Washington and parts of
Nevada until January 1997, a director of TGC Industries, Inc., a company in the
geophysical services industry, a director of Hirsch International Corp., an
importer of computerized embroidery machines, a developer of embroidery machine
application software and a provider of other services to the embroidery
industry, and a director of Chase Packaging, an agricultural packaging products
company.
Mr. Kaplan, who was elected a director of the Company in 1996, has served
as Vice President of the Company and President of Transmedia Service Company
Inc., a subsidiary, since July 1995. From 1986 until joining the Company, he
served in various positions including as Executive Vice President and Chief
Operating Officer of Liberty Travel, Inc., a chain of full-service travel
agencies.
Mr. Africk, who was elected a director of the Company in 1992, is the
Chairman of the Board of Evolution Consulting Group, Inc., Boca Raton, Florida.
From 1993 to 1995, he was Vice Chairman of the Board of Duty Free International,
Inc., and is currently a director of that company. Until June 1993, Mr. Africk
was Vice Chairman of UST, Inc. and President and Chief Executive Officer of its
subsidiary, United States Tobacco Company. He is also a director of Crown
Central Petroleum Corporation and of Tanger Factory Outlet Centers.
Mr. Hochberg, a director of the Company since 1987, served as a director of
Transmedia Network Inc., a Colorado corporation ("Transmedia Colorado"), which
was merged into the Company. He has been Senior Partner and President of Bloom
Hochberg & Co., P.C., a firm of Certified Public Accountants, for more than
seven years. He is also a director of Ampal-America Israel Corporation, a
subsidiary of Bank Hapoalim, which finances industrial, financial, commercial
and agricultural enterprises.
Mr. Seiden, a director of the Company since 1988, is presently the Chairman
and Chief Executive Officer of The Seiden Group Inc., an advertising consultant,
and Vice Chairman of Jordan, McGrath, Case & Taylor Inc., an advertising agency.
Mr. Seiden had been the Chairman of Ketchum Advertising, New York, an
advertising agency which is a division of Ketchum Communications, Inc., from
1987 through 1991.
Mr. Callaghan, a director of the Company since 1991, was elected Vice
President of the Company and President of Transmedia Restaurant Company Inc., a
subsidiary, in 1994. He joined the Company in 1989 and has served as its
Executive Vice President, as Vice President, Sales and Marketing and as
Treasurer.
Mr. Chasen, who devotes all of his time to the affairs of the Company, has
been a director and the Chairman of the Board, President and Chief Executive
Officer of the Company since 1984. From 1984 through 1987, he was a director,
Chairman of the Board, President and Chief Executive Officer of Transmedia
Colorado. From its inception in 1983 until 1984, he was President and a director
of Transmedia Network Inc., a private Delaware corporation engaged in the media
barter business, which merged with Transmedia Colorado in 1984. Until March
1995, Mr. Chasen served as a director of The Western Transmedia Company, Inc.,
as a director of Transmedia Europe, Inc., the Company's European licensee, and
as a director of Transmedia Asia Pacific, Inc., the Company's licensee for the
Asia-Pacific rim region.
MEETINGS AND COMMITTEES OF BOARD OF DIRECTORS
During the fiscal year ended September 30, 1996, the Compensation Committee
of the Company consisted of Messrs. Africk, Gardner, Hochberg and Seiden. The
Compensation Committee was charged with administering the Company's 1996
Long-Term Incentive Plan (the "1996 Plan"), reviewing the compensation of senior
management and recommending to the Board of Directors such changes to
3
<PAGE>
the compensation of senior management, including changes to the Company's
compensation plans and programs, as the Compensation Committee finds
appropriate.
The Audit Committee of the Company consists of Messrs. Africk and Hochberg.
The Audit Committee is charged with recommending to the Board of Directors the
engagement or discharge of independent public accountants; reviewing the plan
and results of the auditing engagement with the Chief Financial Officer of the
Company and the independent public accountants; and reviewing with the Chief
Financial Officer of the Company the scope and nature of the Company's internal
auditing system.
During the fiscal year ended September 30, 1996, the Board of Directors
held four meetings, the Compensation Committee held four meetings, and the Audit
Committee held one meeting. Except for one director, A. Barry Merkin, who has
resigned and has not been nominated for reelection, each director attended at
least 75% of the aggregate number of meetings held by the Board and any
committee on which he served.
COMPENSATION OF DIRECTORS
The Company pays each director who is not a full-time employee an annual
stipend of $10,000 in quarterly installments in arrears on January 1, April 1,
July 1 and October 1 of each fiscal year, and an attendance fee of $1,000 for
each meeting of the Board that the director attends. Full-time employees of the
Company who also serve as directors do not receive compensation for attending
board meetings. The Company also pays each member of the Audit Committee and
Compensation Committee an attendance fee of $1,000 for each meeting of the
respective committee attended by such member.
4
<PAGE>
EXECUTIVE COMPENSATION
The aggregate compensation paid or accrued by the Company during the fiscal
years ended September 30, 1996, 1995 and 1994, to the Chief Executive Officer of
the Company and to the four most highly compensated executive officers (other
than the Chief Executive Officer) whose compensation in salary and bonus
exceeded $100,000, is set forth in the following table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------- -----------------------
SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
- ------------------------------ ------- ----------- ----------- -----------------------
<S> <C> <C> <C> <C>
Melvin Chasen 1996 $300,000 $216,100 -
Chairman of the Board, 1995 275,000 362,900 30,000
President and Chief 1994 225,000 373,200 45,000
Executive Officer
James M. Callaghan 1996 250,000 10,000 -
Vice President 1995 180,000 16,400 15,000
1994 170,000 142,257 22,500
Barry S. Kaplan 1996 225,000 - 50,000
Vice President 1995 27,692 - 20,000
1994 - - -
David L. Weinberg 1996 147,500 10,000 -
Vice President and Chief 1995 137,154 25,000 15,000
Financial Officer 1994 115,346 - 22,500
Paul A. Ficalora 1996 146,250 10,000 -
Executive Vice President of 1995 130,673 30,000 10,000
Transmedia Restaurant 1994 109,942 - -
Company Inc.
</TABLE>
OPTIONS GRANTED
The following table sets forth, as to the executive officers named in the
Summary Compensation Table, with respect to the fiscal year ended September 30,
1996, information relating to the grants of stock options both outside and under
the 1996 Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OF FOR OPTION TERM
OPTIONS IN FISCAL BASE PRICE EXPIRATION ----------------------
NAME DATE OF GRANT GRANTED YEAR ($/SH)(1) DATE 5% 10%
- ----------------- ------------------- ------------- --------------- ------------- -------------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Barry S. Kaplan December 5, 1995 50,000 88.3% $10.00 December 5, 2005 $314,447 $796,871
</TABLE>
- ----------------
(1) All options were granted at 100% of the underlying Common Stock price on the
date of grant.
5
<PAGE>
EXERCISES AND VALUES OF OPTIONS
The following table sets forth, as to the executive officers named in the
Summary Compensation Table, with respect to the fiscal year ended September 30,
1996, information relating to the exercise and values of stock options under the
1996 Plan and outside of the 1996 Plan.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
HELD AT FISCAL YEAR-END (#) FISCAL YEAR-END ($) (1)
SHARES VALUE -------------------------------- --------------------------------
AQUIRED ON REALIZED
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- --------------- ---------- -------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Melvin Chasen - - 232,500 45,000 $123,755 -
James M. Callaghan - - 124,687 30,937 77,347 -
Barry S. Kaplan - - 5,000 65,000 - -
David L. Weinberg 7,593 $34,063 15,000 22,500 - -
Paul A. Ficalora - - 31,188 11,437 31,406 -
</TABLE>
- ----------------
(1) Based on the closing sale price of the Company's Common Stock on the New
York Stock Exchange of $5.375 per share on September 30, 1996
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT.
On November 15, 1996, the Company's Employment Agreement with Mr. Chasen
was amended to: (i) extend the term of the Employment Agreement to cover the
period commencing October 1, 1997 and ending September 30, 1999; (ii) provide
Mr. Chasen with a base salary of $375,000 in fiscal year 1998, and $400,000 in
fiscal year 1999; and (iii) provide Mr. Chasen with a bonus, not to exceed
$700,000 for fiscal years 1998 and 1999, equivalent to 5% of pre-tax income for
each of the fiscal years occurring during the term of the Employment Agreement.
For the fiscal year ended September 30, 1997, Mr. Chasen will receive a base
salary of $350,000 and a bonus, not to exceed $700,000, equivalent to 5% of
pre-tax income. In the event of a sale of all or substantially all of the assets
of the Company, or the sale of a control block of its shares, Mr. Chasen will
have the right, within one year after such event, to continue his employment
under the terms of the Employment Agreement or to resign and receive a payment
of $1,000,000 without further obligation to the Company. The Company has agreed
to maintain in force a $500,000 life insurance policy on Mr. Chasen during the
term of the agreement. If Mr. Chasen becomes disabled during the employment
term, he will receive his full compensation during the first six months of
disability, and thereafter will be paid 75% of his salary for the remaining term
of the agreement and a pro rata bonus only with respect to the portion of the
fiscal year ending at the end of the first six months of disability. The Company
may terminate the Employment Agreement for certain enumerated causes. The
Employment Agreement restricts Mr. Chasen from competing against the Company for
a two-year period following termination.
The Company and Mr. Callaghan have amended his Employment Agreement: (i) to
extend the term of the Employment Agreement to cover the period commencing
October 1, 1997, and ending September 30, 1999; (ii) to provide Mr. Callaghan
with an annual base salary of $300,000 in fiscal year 1997, $315,000 in fiscal
year 1998 and $335,000 in fiscal year 1999; and (iii) to provide that he is
eligible for a bonus of up to one-half of his salary during each year of the
term of the Employment Agreement. The Company has agreed to maintain in force a
$500,000 life insurance policy on Mr. Callaghan, with his estate listed as
beneficiary during the term of the Employment Agreement, which will be
transferred to Mr. Callaghan, without cost, at the end of the employment term
(whether or not he becomes disabled during the term). If Mr. Callaghan becomes
disabled during the employment term, he will receive his full compensation
during the first six months of disability, and thereafter will be paid 75% of
his salary for the remaining term of the agreement and pro rata bonus only with
respect to the portion of the fiscal year ending at the end of the first six
months of disability. The Company may terminate the Employment Agreement for
certain enumerated causes. The Employment Agreement restricts Mr. Callaghan from
competing against the Company for a two-year period following termination.
6
<PAGE>
The Company and Mr. Kaplan have amended his Employment Agreement to provide
for (i) a term of employment covering the period commencing October 1, 1997, and
ending September 30, 1999; (ii) an annual base salary of $280,000 in fiscal year
1997, $315,000 in fiscal year 1998 and $335,000 for fiscal year 1999; and (iii)
his eligibility for an annual bonus of up to one-half of his base salary for
each year of the term of the Employment Agreement. The Company has agreed to
maintain in force a $500,000 life insurance policy on Mr. Kaplan, with his
estate listed as beneficiary during the term of the Employment Agreement, which
will be transferred to Mr. Kaplan, without cost, at the end of the employment
term (whether or not he becomes disabled during the term). If Mr. Kaplan becomes
disabled during the employment term, he will receive his full compensation
during the first six months of disability, and thereafter will be paid 75% of
his salary for the remaining term of the agreement and pro rata bonus only with
respect to the portion of the fiscal year ending at the end of the first six
months of disability. The Company may terminate the Employment Agreement for
certain enumerated causes. The Employment Agreement restricts Mr Kaplan from
competing against the Company for a two-year period following the termination of
his employment.
On November 15, 1996, the Company's Consulting Agreement with Mr. Chasen
was amended to commence on the termination of his Employment Agreement and to
continue for ten years thereafter. The agreement provides for: (i) compensation
at an annual amount equal to 50% of the sum of the highest base salary and bonus
received by him in any year under the Employment Agreement, discussed above, not
to exceed in any one year during the term of the Consulting Agreement 10% of the
Company's prior year's pre-tax income, but in any event not less than $100,000;
(ii) a commitment of five business days per month, with opportunity to devote
more time without additional compensation at Mr. Chasen's option; (iii) possible
continued Board Chairmanship, if desired by the Board of Directors; (iv)
termination upon death or, after 10-days prior notice, disability; (v)
continuation of certain office services and benefits; (vi) a suitable covenant
not to compete for two years; and (vii) accelerated payment of consulting fees
upon a change in control of the Company, at Mr. Chasen's option.
The Company has a severance policy which provides selected officers and key
employees of the Company, including Mr. Callaghan and Mr. Kaplan, a severance
payment upon a change of control of the Company, in an amount equal to one year
of salary (which shall be payable based on the current rate of base salary plus
any bonus paid or payable for the immediately preceding fiscal year) for each
year, or portion thereof, of service with the Company, up to a maximum of three
years, if, within the two-year period following a change of control of the
Company, the employment of such officer or key employee is terminated by the
Company (other than for a conviction of a felony involving fraud committed
against the Company) or such officer or key employee resigns for good reason,
which includes, but is not limited to, reduction in his salary and transfer of
his employment location.
BENEFIT PLANS
The Company does not have a pension plan. For information with respect to
options granted to executive officers of the Company under the 1996 Plan and
outside of the 1996 Plan, see "Executive Compensation-Option Granted."
COMPLIANCE WITH REPORTING REQUIREMENTS
The Company believes that, during the fiscal year ended September 30, 1996,
all filing requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended, applicable to its officers, directors and greater than ten
percent stockholders were complied with on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
For the fiscal year ended September 30, 1996, the Board of Directors had a
Compensation Committee which performed the functions of a board compensation
committee. No executive officers served on the Compensation Committee.
7
<PAGE>
COMPENSATION REPORT OF THE COMPENSATION COMMITTEE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee retained William M. Mercer, Incorporated
("Mercer") to evaluate the Company's current compensation program covering
eleven top executives. As part of its analysis, Mercer was asked to determine
competitive compensation levels for two open executive positions, Chief
Operating Officer and the senior Management Information Systems Executive.
Following the analysis, Mercer was asked to make recommendations to the
Company's compensation program. The major steps in Mercer's study included (i)
reviewing financial, organizational and compensation data provided by the
Company, (ii) conducting interviews with the Company's and its subsidiaries'
executive officers, (iii) analyzing competitive pay practices for which market
data was available, (iv) determining competitive market compensation levels for
all executive personnel positions, (v) preparing a draft report on the 1996
Plan, (v) meeting with the Chief Executive Officer to review such reports, and
(viii) preparing its final report. The Compensation Committee reviewed and
approved Mercer's final report, which presented that firm's analysis and
recommendations.
Mercer concluded that the Company's base salaries and base salary increases
were competitive and appropriate. The Compensation Committee recommended that
the Company substitute the individual bonus arrangements which the Company has
entered into with its executive officers and replace it with a uniform program
which enables each officer to earn a bonus measured by a percentage of his base
salary. The Company accordingly is implementing a new bonus program. The
aggregate of all such bonuses may not exceed 35% of the sum of the base salaries
of all such executive officers. Bonus awards would be based on an executive's
level of responsibility, whether the executive achieves his individual
performance goals and on the Company's overall performance. Bonus awards would
be limited by the established 35% bonus "pool" which will permit the Company to
budget bonus awards and provide a framework for allocating bonuses. The Company
agreed with Mr. Callaghan and Mr. Kaplan to amend their respective Employment
Contracts by extending their respective terms, increasing their base salaries
and modifying their respective bonus provisions in accordance with this new
policy.
Mr. Chasen, the President and Chief Executive Officer of the Company, will
not be covered by the new bonus plan. However, Mercer found that his
compensation level is well within the range of reasonableness since Mr. Chasen
is the founder of the Company, is primarily responsible for the Company's growth
and his compensation was low relative to market levels during the Company's
early years. The Committee concurs in this conclusion. Moreover, the
Compensation Committee approved amendments to Mr. Chasen's Employment Agreement,
including extending its term and increasing his base salary by $25,000 for each
year of the extended term. By majority vote, the Compensation Committee also
approved a three-year extension of the term of Mr. Chasen's Consulting
Agreement.
The Company's agreements with Messrs. Chasen, Callaghan and Kaplan are
described above under the heading "Employment Agreements and Termination of
Employment."
The Compensation Committee, consistent with Mercer's recommendations, also
recommended that the Company formalize the 1996 Plan by granting option shares
to all employees who can affect the profitability of the Company.
The members of the Compensation Committee in fiscal 1996 were Jack Africk,
Herbert M. Gardner, Irwin Hochberg, and Henry Seiden.
8
<PAGE>
PERFORMANCE ANALYSIS
Set forth below is a line graph comparing the cumulative total return of
the Company, the S&P 500 Index and the S&P Financial Index for the five fiscal
years commencing October 1, 1991 and ended September 30, 1996.
STOCK PERFORMANCE GRAPH AND TABLE
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL RETURNS AMONG TRANSMEDIA NETWORK INC.,
S&P COMPOSITE INDEX AND THE S&P FINANCIAL INDEX
<TABLE>
<CAPTION>
COMPANY 10/01/91 09/30/92 09/30/93 09/30/94 09/30/95 09/30/96
- ------------------------------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Transmedia Network Inc. ...... 100 176 215 329 248 133
S&P Composite ............... 100 108 118 119 151 177
S&P Financial Index ......... 100 114 152 136 187 229
</TABLE>
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock as of April 15, 1997, by each person who is known by
the Company to own beneficially more than 5% of its Common Stock. Except as
otherwise specified, the named beneficial owner has sole voting and investment
power with respect to the shares beneficially owned by him.
<TABLE>
<CAPTION>
AMOUNT OF
COMMON STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED CLASS
- ------------------------------ --------------------- ------------
<S> <C> <C>
Melvin Chasen ............... 1,100,914(1) 10.54%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
</TABLE>
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 15, 1997, by each director
and nominee for director of the Company, the executive officers named in the
Summary Compensation Table and the executive officers and directors as a group
and includes options and warrants to purchase shares of Common Stock which will
become exercisable by June 14, 1996. Except as otherwise indicated, each such
stockholder has sole voting and investment power with respect to the shares
beneficially owned by such stockholder.
<TABLE>
<CAPTION>
AMOUNT OF OPTIONS AND
COMMON STOCK WARRANTS
BENEFICIALLY EXERCISABLE PERCENT OF
NAME AND ADDRESS OWNED WITHIN 60 DAYS TOTAL CLASS
- ----------------------------- --------------- ----------------- ------------------- ------------
<S> <C> <C> <C> <C>
Melvin Chasen ............ 849,664 251,250 1,100,914(1) 10.54%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
James M. Callaghan ......... 85,662 134,062 219,724(2) 2.13%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Herbert M. Gardner ......... 297,661 54,467 352,128(3) 3.44%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Irwin Hochberg ............ 10,937 28,750 39,687(4) .39%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Henry Seiden ............... 139,280 28,750 168,030(5) 1.64%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Jack Africk ............... 63,830 28,750 92,580(6) .91%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF OPTIONS AND
COMMON STOCK WARRANTS
BENEFICIALLY EXERCISABLE PERCENT OF
NAME AND ADDRESS OWNED WITHIN 60 DAYS TOTAL CLASS
- ---------------------------------------- --------------- ----------------- ----------------- ------------
<S> <C> <C> <C> <C>
Paul A. Ficalora ..................... 186,035 16,813 202,848(7) 1.99%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Barry S. Kaplan ..................... 22,800 17,500 40,300(8) .40%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Gregory R. Borges ..................... 18,625 7,563 26,188(9) .26%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Kathryn M. Ferara ..................... 657 4,282 4,939(10) .05%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181 ..................
All directors and executive officers as
a group (12 persons) .................. 1,675,151 572,187 2,247,338 20.88%
</TABLE>
- ----------------
(1) Includes for Mr. Chasen (i) 139,600 shares owned by a family partnership
for which Mr. Chasen exercises voting and investment authority, (ii)
options to purchase 135,000 shares at a price of $4.8333 per share, which
options were granted outside the 1987 Stock Option and Rights Plan (the
"1987 Plan"), are exercisable and expire in May 2002, (iii) options to
purchase 67,500 shares of Common Stock of the Company at an exercise price
of $7.4445 per share, which options were granted outside the 1987 Plan, are
exercisable and expire in September 1998, (iv) options to purchase 33,750
shares at a price of $15.00 per share, which options were granted under the
1987 Plan and expire in March 2004, and (v) options to purchase 15,000
shares at a price of $12.25 per share, which options were granted under the
1987 Plan, are exercisable and expire in March 2005. Does not include (i)
options to purchase 46,250 shares, which were granted under the 1987 and
1996 Plans and are not exercisable within 60 days of April 15, 1997, (ii)
200,778 shares held by Iris Chasen, the wife of Mr. Chasen, or (iii) 81,000
shares held by Mr. Chasen's three adult children, as to all of which Mr.
Chasen disclaims beneficial ownership.
(2) Includes for Mr. Callaghan (i) 5,038 shares held in Mr. Callaghan's
Individual Retirement Account, (ii) options to purchase 84,375 shares of
Common Stock at an exercise price of $4.8333 per share, which options were
granted under the 1987 Plan, are exercisable and expire in May 2002, (iii)
options to purchase 25,312 shares at an exercise price of $7.4445 per
share, which were granted under the 1987 Plan, are exercisable and expire
in September 2003, (iv) options to purchase 16,875 shares at an exercise
price of $15.00 per share, which options were granted under the 1987 Plan,
are exercisable and expire in March 2004, and (v) options to purchase 7,500
shares at a price of $12.25 per share, which options were granted under the
1987 Plan, are exercisable and expire in March 2005. Does not include (i)
options issued under the 1987 and 1996 Plans to purchase 36,562 shares,
which are not exercisable within 60 days of April 15, 1997, or (ii) 5,724
shares held in the Individual Retirement Account of Mr. Callaghan's wife,
as to all of which shares Mr. Callaghan disclaims beneficial ownership.
(3) Includes for Mr. Gardner (i) 141,699 shares held by Herbert M. Gardner
(Keogh), (ii) warrants to purchase 25,717 shares at a price of $4.56 per
share, which warrants expire in June 1997, (iii) options to purchase 11,250
shares of Common Stock of the Company at an exercise price of $7.4445 per
share, which options were granted outside the 1987 Plan and expire in
September 1998, (iv) options to purchase 7,500 shares of Common Stock at an
exercise price of $15.00 per share, which options were granted under the
1987 Plan and expire in March 2004, and (v) options to purchase 5,000
shares of Common Stock at an exercise price of $12.25 per share, which
options were granted under the 1987 Plan and expire in March 2005 and (vi)
options to purchase 5,000 shares of Common Stock at an exercise price of
$7.875, which options were granted under the 1996 Plan and expire in March
2006. All of such options and warrants are presently exercisable. Does not
include (i) 3,834 shares held by Mr. Gardner's wife individually or as
custodian for their children as to which shares Mr. Gardner disclaims
beneficial ownership.
(4) Includes for Mr. Hochberg (i) options to purchase 11,250 shares of Common
Stock of the Company at in exercise price of $7.4445 per share, which
options were granted outside the 1987 Plan and expire in September 1998,
and (ii) options to purchase 7,500 shares of Common Stock at an exercise
price of $15.00 per share which options were granted under the 1987 Plan
and expire in March 2004, and (iii) options to purchase 5,000 shares of
Common Stock at an exercise price of $12.25 per
11
<PAGE>
share, which options were granted under the 1987 Plan and expire in March
2005. and (iv) options to purchase 5,000 shares of Common Stock at an
exercise price of $7.875, which options were granted under the 1996 Plan
and expire in March 2006. All of such options are presently exercisable.
Does not include (i) 4,362 shares owned by Mrs. Hochberg and (ii) 10,500
shares owned by Mr. Hochberg's children and grandchildren, as to all of
which Mr. Hochberg disclaims beneficial ownership.
(5) Includes for Mr. Seiden (i) options to purchase 11,250 shares of Common
Stock of the Company at an exercise price of $7.4445 per share, which
options were granted outside the 1987 Plan and expire in September 1998,
(ii) options to purchase 7,500 shares of Common Stock at an exercise price
of $15.00 per share, which options were granted under the 1987 Plan and
expire in March 2004, and (iii) options to purchase 5,000 shares of Common
Stock at an exercise price of $12.25 per share, which options were granted
under the 1987 Plan and expire in March 2005 and (vi) options to purchase
5,000 shares of Common Stock at an exercise price of $7.875, which options
were granted under the 1996 Plan and expire in March 2006. All of such
options are presently exercisable.
(6) Includes for Mr. Africk (i) 63,830 shares owned by a family corporation for
which Mr. Africk exercises voting and investment authority, (ii) options to
purchase 11,250 shares of Common Stock of the Company at an exercise price
of $7.4445 per share, which options were granted outside the 1987 Plan and
expire in September 1998, and (iii) options to purchase 7,500 shares of
Common Stock at an exercise price of $15.00 per share, which options were
granted under the 1987 Plan and expire in March 2004 and (iv) options to
purchase 5,000 shares of Common Stock at an exercise price of $12.25 per
share, which options were granted under the 1987 Plan and expire in March
2005 and (vi) options to purchase 5,000 shares of Common Stock at an
exercise price of $7.875, which options were granted under the 1996 Plan
and expire in March 2006 . All of such options are presently exercisable.
(7) Includes for Mr. Ficalora (i) options to purchase 11,813 shares at an
exercise price of $7.4445 per share, which options were granted under the
1987 Plan and expire in September 2003, and (ii) options to purchase 5,000
shares at an exercise price of $12.25, which options were granted under the
1987 Plan and expire March 2005. Does not include (i) options to purchase
14,937 shares, which were granted under the 1987 and 1996 Plans and are not
exercisable within 60 days of April 15, 1997, (ii) 6,075 shares held by
Mrs. Ficalora, and (iii) 1,350 shares held by Mr. Ficalora's child, as to
all of which shares Mr. Ficalora disclaims beneficial ownership.
(8) Includes for Mr. Kaplan, (i) options to purchase 5,000 shares at an
exercise price of $9.25 per share, which options were granted under the
1987 Plan and expire in August 2005, and (ii) options to purchase 12,500
shares at an exercise price of $10.00 per share, which options were granted
under the 1987 Plan and expire in December 2005. Does not include options
issued under the 1987 and 1996 Plans to purchase 67,500 shares, which are
not exercisable within 60 days of April 15, 1997.
(9) Includes for Mr. Borges (i) options to purchase 5,063 shares at an exercise
price of $7.4445 per share, which options were granted under the 1987 Plan
and expire in September 2003, and (ii) options to purchase 2,500 shares at
an exercise price of $12.25 per share, which options were granted under the
1987 Plan and expire in March 2005. Does not include options to purchase
9,187 shares, which were granted under the 1987 and 1996 Plans and are not
exercisable within 60 days of April 15, 1997.
(10) Includes for Ms. Ferara (i) options to purchase 1,750 shares at an exercise
price of $7.4445 per share, which options were granted under the 1987 Plan
and expire in September 2003 and (ii) options to purchase 2,532 shares at
an exercise price of $12.25 per share, which options were granted under the
1987 Plan and expire in March 2005. Does not include options to purchase
7,593 shares, which were granted under the 1987 and 1996 Plans and are not
exercisable within 60 days of April 15, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Because of the restatement of the Company's pre-tax earnings for the fiscal
year ended September 30, 1996, the amount previously paid to Melvin Chasen,
Chairman of the Board, President and Chief Executive Officer of the Company, as
a bonus has been retroactively reduced. As a result, the Company has recorded a
receivable from Mr. Chasen in the amount of $134,900. This amount will be
credited against payment of his compensation and thereby repaid during this
fiscal year.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick audited the Company's financial statements for the fiscal
year ended September 30, 1996. As has been the prior practice, the Board of
Directors will appoint an auditor for the current fiscal year prior to the
commencement of the audit.
A representative of KPMG Peat Marwick is expected to be present at the
Annual Meeting and will be afforded an opportunity to make a statement and to
respond to appropriate questions.
12
<PAGE>
OTHER BUSINESS
It is not intended to bring before the Annual Meeting any matters except
the election of Directors. The management is not aware at this time that any
other matters are to be presented for action. If, however, any other matters
properly come before the meeting, the persons named as proxies in the enclosed
form of proxy intend to vote in accordance with their judgment on the matters
presented.
PROPOSALS OF STOCKHOLDERS
Proposals, if any, of stockholders of the Company intended to be presented
at the 1998 Annual Meeting of Stockholders must be received by the Company for
inclusion in the appropriate proxy materials no later than September 28, 1997.
OTHER MATTERS
On written request, the Company will provide without charge to each record
or beneficial holder of the Company's Common Stock as of May 5, 1996, a copy of
the Company's Annual Report on Form 10-K for the year ended September 30, 1996,
as filed with the Securities and Exchange Commission. Requests should be
addressed to Mr. Stephen E. Lerch, Executive Vice President and Chief Financial
Officer, Transmedia Network Inc., 11900 Biscayne Boulevard, Miami, Florida
33181.
By Order of the Board of Directors,
KATHRYN M. FERARA
Secretary
Miami, Florida
May 7, 1997
13
<PAGE>
TRANSMEDIA NETWORK INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 10, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Henry Seiden and Irwin Hochberg or either
of them, attorneys' and proxies of the undersigned, for and in the name(s) of
the undersigned, with power of substitution and revocation in each to vote any
and all shares of Common Stock of Transmedia Network Inc. (the "Company")
which the undersigned could do if personally present at the Annual Meeting of
Stockholders of the Company to be held on Tuesday, June 10, 1997 at 10:00 a.m.,
New York time, and at any and all postponements or adjournments thereof, hereby
revoking any prior proxies to vote said stock, upon the following items of
business more fully described in the notice of and proxy statement for the
Annual Meeting (receipt of which is hereby acknowledged);
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" BOTH
DIRECTOR NOMINEES LISTED BELOW.
1. Election of two Directors
<TABLE>
<S> <C>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for the nominees listed below
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Hebert M. Gardner Barry S. Kaplan
(Continued and to be signed on other side)
<PAGE>
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF THE DIRECTORS LISTED HEREIN.
Dated ________________ , 1997
(Please sign exactly as name
appears hereon. When signing
as attorney, executor,
administrator, trustee
guardian, or as an officer
signing for a corporation;
please give full title under
signature.)
PLEASE DATE, AND SIGN AND
RETURN PROMPTLY
-----------------------------
Signature
-----------------------------
Signature, if held jointly
