<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
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 Rule 14a-11(c) or Rule 14a-12
HOME SHOPPING NETWORK, INC.
(Name of Registrant as Specified in Its Charter)
HOME SHOPPING NETWORK, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing of 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) Dated filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
March 29, 1994
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Home Shopping Network, Inc. to be held at the Holiday Inn St.
Petersburg/Clearwater International Airport Hotel, 3535 Ulmerton Road,
Clearwater, Florida on May 4, 1994, at 10:00 a.m., Eastern Daylight Time.
Matters to be considered and acted upon at the annual meeting include: (i)
the election of directors; (ii) approval of an Employee Stock Purchase Plan;
(iii) the appointment of independent auditors; and (iv) such other matters as
may properly come before the meeting.
Information concerning the matters to be considered and voted upon at the
annual meeting is set forth in the attached Notice of Annual Meeting of
Stockholders and Proxy Statement. We encourage you to review the attached
material carefully and sign, date and return the proxy card in the enclosed
self-addressed envelope.
We appreciate your cooperation and hope to see you at the annual meeting.
Sincerely,
/s/ GERALD F. HOGAN
-------------------------------------
GERALD F. HOGAN
President and Chief Executive Officer
<PAGE> 3
HOME SHOPPING NETWORK, INC.
2501 118TH AVENUE NORTH
ST. PETERSBURG, FLORIDA 33716
---------------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MAY 4, 1994
---------------------
TO STOCKHOLDERS OF HOME SHOPPING NETWORK, INC.:
Notice is hereby given that the annual meeting of stockholders of Home
Shopping Network, Inc. (the "Company") will be held at the Holiday Inn St.
Petersburg/Clearwater International Airport Hotel, 3535 Ulmerton Road,
Clearwater, Florida on May 4, 1994, at 10:00 a.m., Eastern Daylight Time for the
following purposes:
1. To elect six directors of the Company to hold office until the next
annual meeting of stockholders or until their successors have been duly
elected;
2. To approve the implementation of an Employee Stock Purchase Plan
which would be available to all full-time employees of the Company;
3. To ratify the appointment by the Board of Directors of KPMG Peat
Marwick as the independent auditors of the Company for the year ending
December 31, 1994; and
4. To act upon, as determined in the best judgment of the Chairman of
the Board of Directors of the Company, such other matters as may properly
come before the annual meeting.
The close of business on March 18, 1994, has been fixed as the record date
(the "Record Date") for the meeting. All stockholders of record at that date are
entitled to vote at the meeting. A list of stockholders of record as of the
Record Date will be available for examination by stockholders prior to the
annual meeting at the offices of the Company, 2501 118th Avenue North, St.
Petersburg, Florida 33716.
By the Order of the Board of
Directors,
/s/ GERALD F. HOGAN
-------------------------------------
GERALD F. HOGAN
President and Chief Executive Officer
All holders of Common Stock are urged to fill in and sign the enclosed
proxy and return it to the Company. Please sign, date and return your proxy
promptly in the enclosed postage paid envelope. If you are present at the
meeting and desire to vote in person or for any reason desire to revoke your
proxy, you may do so at any time before it is voted.
Please sign your proxy exactly as your name appears on the enclosed proxy
card.
<PAGE> 4
HOME SHOPPING NETWORK, INC.
2501 118TH AVENUE NORTH
ST. PETERSBURG, FLORIDA 33716
---------------------
PROXY STATEMENT
MARCH 29, 1994
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1994
---------------------
PLACE OF ANNUAL MEETING
The annual meeting (the "Annual Meeting") of stockholders of the Company
will be held at the Holiday Inn St. Petersburg/Clearwater International Airport
Hotel, 3535 Ulmerton Road, Clearwater, Florida on May 4, 1994, at 10:00 a.m.,
Eastern Daylight Time.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, stockholders will be asked to elect six directors to
the Company's Board of Directors. Stockholders will also be asked to approve the
implementation of an Employee Stock Purchase Plan (the "Purchase Plan") and to
ratify the appointment of KPMG Peat Marwick as the Company's independent
auditors for the year ending December 31, 1994.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
Only holders of record of Home Shopping Network, Inc. Common Stock, $.01
par value (the "Common Stock") and Class B Common Stock, $.01 par value (the
"Class B Common Stock") at the close of business on March 18, 1994, will be
entitled to notice of, and to vote at, the Annual Meeting or any adjournment or
postponement thereof. As of the Record Date, there were 73,920,285 shares of
Common Stock (net of shares held in treasury), 20,000,000 shares of Class B
Common Stock outstanding and entitled to vote and 8,804 stockholders of record.
The presence, either in person or by properly executed proxy, of the holders of
a majority of the outstanding shares of Common Stock and Class B Common Stock is
necessary to constitute a quorum for the matters to be submitted to stockholders
at the Annual Meeting. See "Solicitation And Voting."
REQUIRED VOTE
Each share of Common Stock entitles its holder to one vote and each share
of Class B Common Stock entitles its holder to ten votes, voting together with
the Common Stock as one class, on the matters to be considered by stockholders
at the annual meeting. The owners of Common Stock are entitled, however, to
elect 25% of the directors voting as a separate class. Accordingly, holders of
Common Stock, voting as a separate class, shall elect two directors. The holders
of Common Stock and the holders of Class B Common Stock shall together elect
four directors, with the Class B stockholder casting ten votes for each share of
Class B Common Stock owned by such stockholder.
---------------------
THE PROXY MATERIAL IS BEING MAILED TO STOCKHOLDERS COMMENCING ON OR ABOUT
APRIL 2, 1994.
<PAGE> 5
The Company's By-laws provide that when a quorum is present at any meeting
of stockholders, the vote of the holders of a majority of the voting securities
having voting power present in person or represented by proxy shall be necessary
to decide a matter brought before such meeting. Abstentions and broker non-votes
will be counted as present for purposes of determining the presence or absence
of a quorum for the transaction of business. Abstentions and broker non-votes
will have the same effect as a negative vote with respect to the matters
submitted for the consideration of the Company's stockholders at the Annual
Meeting.
SOLICITATION AND VOTING
The enclosed proxy, to be used at the Annual Meeting is solicited by, and
on behalf of, the Board of Directors of the Company. If a proxy is properly
executed and returned in the form enclosed, shares represented thereby will be
voted in favor of Items 1, 2 and 3 except to the extent other directions are
given in the proxy. Any other matters which may properly come before the Annual
Meeting will be considered and voted upon in the best judgment of the President
and Chief Executive Officer of the Company, Gerald F. Hogan, who will serve as
the proxy agent.
Any stockholder who executes a proxy may revoke it at any time before it is
voted by notifying the President of the Company in writing of the revocation or
by oral notice to the presiding officer during the Annual Meeting.
Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. Upon request, the Company will reimburse brokers, dealers
and banks or their nominees, for reasonable expenses incurred in forwarding
copies of the proxy material and annual report to the beneficial owners of
shares which such persons hold of record. Solicitation of proxies will be made
principally by mail. Proxies may also be solicited in person, or by telephone or
telegraph, by officers and regular employees of the Company.
2
<PAGE> 6
CHANGE IN CONTROL
On February 11, 1993, Liberty Program Investments, Inc. ("LPI"), a Wyoming
corporation and wholly-owned subsidiary of Liberty Media Corporation, a Delaware
corporation ("Liberty"), acquired (the "Acquisition") 20,000,000 shares of Class
B Common Stock from RMS Limited Partnership, a Nevada Limited Partnership
("RMS"), in exchange for $58,000,000 in cash and 8,000,000 shares (adjusted for
a 2 for 1 stock split), of Liberty Class A Common Stock, par value $1.00 per
share, of Liberty (the "Liberty Common Stock"). Immediately following the
closing of the Acquisition, Liberty delivered a proposal (the "Liberty Merger
Proposal") to the Board of Directors of the Company to acquire all remaining
shares of Common Stock not already owned by it for $9.00 per share in cash and
stock of a corporation to be formed by the Company. On February 23, 1993,
Liberty revised the Liberty Merger Proposal by reducing the proposed
consideration to $8.50 in cash and Liberty Common Stock, and on April 9, 1993,
Liberty withdrew the Liberty Merger Proposal.
On April 23, 1993, Liberty and LPI commenced a tender offer to purchase up
to 15,000,000 shares of Common Stock of the Company at a price of $7.00 per
share in cash (the "Tender Offer"). On May 20, 1993, Liberty announced that
23,266,306 shares had been tendered into the offer and that it would purchase
16,296,602 shares (the "Shares") for an aggregate purchase price of
approximately $114,000,000.
In its filings with the Securities and Exchange Commission ("SEC"), Liberty
has indicated that the source of funds used to pay the cash portion of the
purchase price for the Class B Common Stock was Liberty's working capital. The
sources of funds used to purchase the Shares, as disclosed in Liberty's Offer to
Purchase, were cash and cash equivalents available to Liberty.
On July 12, 1993, QVC, Inc. ("QVC") submitted a proposal (the "QVC Merger
Proposal") to the Company regarding a business combination. The Board of
Directors of the Company appointed a committee to review and consider the QVC
Merger Proposal. In November 1993, the Company agreed with QVC to terminate
negotiations with respect to the QVC Merger Proposal.
As a result of the Acquisition, on July 13, 1993, the Company changed its
fiscal year end from August 31 to December 31, effective January 1, 1993. On
November 4, 1993, LPI assigned its interest in the Common Stock and Class B
Common Stock to Liberty HSN, Inc., a Colorado corporation and a wholly-owned
subsidiary of LPI.
In January 1994, Liberty and Tele-Communications, Inc. (TCI) entered into a
definitive agreement providing for a combination of the two companies. The
transaction is subject to the approval of both sets of shareholders as well as
various regulatory approvals and other customary conditions.
As of the Record Date, there were 20,000,000 shares of Class B Common Stock
and 73,920,285 shares of Common Stock outstanding (net of shares held in
treasury). As a result of its purchase of the Class B Common Stock and the
Shares, and the purchase of 616,300 shares of Common Stock, Liberty beneficially
owns approximately 39.30% of the outstanding equity securities of the Company
and approximately 79.19% of the voting power of the outstanding equity
securities of the Company. Each share of Class B Common Stock is convertible
into one share of Common Stock. Because fewer than 22,800,000 shares of Class B
Common Stock are outstanding, as provided in the Company's Restated Certificate
of Incorporation, the holder of Class B Common Stock will vote together with the
holders of Common Stock, and the holder of Class B Common Stock will be entitled
to ten votes for each share of Class B Common Stock owned by such holder.
Liberty will vote together with the holders of the Common Stock on all matters
submitted to stockholders except for the election of 25% of the Board of
Directors, and is entitled to cast ten votes per share. Accordingly, through its
ownership of the Class B shares, Liberty has the ability to control the vote on
substantially all matters submitted to a vote of the Company's stockholders.
3
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 18, 1994, information relating
to the beneficial ownership of the Company's Common Stock by (i) each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each director and nominee for election as a director,
(iii) the Company's Chief Executive Officer and the Executive Officers (as such
term is hereinafter defined), and (iv) all officers and directors of the Company
as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ----------------------------------------------------------------------- ---------- --------
<S> <C> <C>
Liberty Media Corporation(1)........................................... 16,912,902 22.88%
8101 E. Prentice Avenue
Suite 500
Englewood, Colorado 80111
FMR Corporation(2)..................................................... 7,785,140 10.53
82 Devonshire Street
Boston, Massachusetts 02109
John M. Draper(3)...................................................... 0 --
Robert R. Bennett(3)................................................... 0 --
J. Anthony Forstmann(4)................................................ 0 --
Leo J. Hindery, Jr.(5)................................................. 30,000 (6)
Gerald F. Hogan(7)..................................................... 89,965 (6)
George C. McNamee(5)................................................... 30,000 (6)
Les R. Wandler(8)...................................................... 90,100 (6)
Alan H. Gerson(9)...................................................... 74,000 (6)
L. Douglas Bailey(10).................................................. 20,000 (6)
Celia H. Bachman(11)................................................... 17,100 (6)
All officers and directors as a group (27 persons)(12)................. 782,257 1.05
</TABLE>
The following table sets forth information relating to the beneficial
ownership of the Company's Class B Common Stock as of March 18, 1994:
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ----------------------------------------------------------------------- ---------- --------
<S> <C> <C>
Liberty Media Corporation(1)........................................... 20,000,000 100.00%
8101 E. Prentice Avenue
Suite 500
Englewood, Colorado 80111
</TABLE>
- ---------------
(1) In addition to its 16,912,902 shares of Common Stock, Liberty also is the
beneficial owner of 20,000,000 shares of Class B Common Stock. All or any
portion of such shares of Class B Common Stock may be converted at any time
into an equal number of shares of Common Stock. If Liberty were to convert
all of its shares of Class B Common Stock into Common Stock, it would own,
in total, 36,912,902 shares of Common Stock, or 39.30% of the total number
of shares of Common Stock outstanding. Because each share of Class B Common
Stock is entitled to 10 votes per share when voting with the Common Stock
as a single class, Liberty is the beneficial owner of shares representing
approximately 79.19% of the voting power of the Company's capital stock.
The shares reported as beneficially owned by Liberty in the Common Stock
table and the Class B Common Stock table assume that none of the shares of
Class B Common Stock beneficially owned by Liberty have been converted into
Common Stock. Does not
4
<PAGE> 8
include 653,800 shares of Common Stock beneficially owned by TCI
Development Corporation, a company related to Liberty and the Company
through common control.
(2) Represents, as of December 31, 1993, shares held by registered investment
companies and other investment advisory client accounts managed by FMR
Corporation.
(3) Messrs. Draper and Bennett are officers of Liberty. The share ownership
totals for such persons do not include shares beneficially owned by
Liberty.
(4) Does not include 30,000 shares of Common Stock issuable upon exercise of
non-vested options granted to Mr. Forstmann pursuant to the 1986 Stock
Option Plan for Outside Directors (the "Directors Plan"). See "COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS -- Compensation of Outside Directors."
(5) Includes 30,000 shares of Common Stock issuable upon exercise of vested
options granted pursuant to the Directors Plan. Does not include 60,000
shares of Common Stock issuable upon exercise of non-vested options granted
pursuant to the Directors Plan. See "COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS -- Compensation of Outside Directors."
(6) Percentage of shares beneficially owned does not exceed 1% of the class.
(7) Includes 89,965 shares of Common Stock issuable upon exercise of vested
stock appreciation rights ("SARs") granted pursuant to Mr. Hogan's
employment agreement, based upon the difference between the closing price
of the Company's Common Stock on March 18, 1994, and the exercise price of
the SAR. Does not include 738,657 non-vested SARs granted pursuant to Mr.
Hogan's employment agreement. Does not include 659,100 shares of Common
Stock held by Mr. Hogan solely as custodian under the 1990 Executive Stock
Award Program (the "Award Program"). See "COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS -- Employment Agreements."
(8) Mr. Wandler's employment with the Company terminated on December 31, 1993.
Includes 46,000 shares of Common Stock issuable upon exercise of vested
options granted pursuant to the 1986 Stock Option Plan for Employees (the
"Employee Plan"). Includes 44,000 shares of Common Stock granted pursuant
to the Award Program. Does not include 291 shares vested pursuant to the
Company's Retirement Savings Plan (the "Savings Plan"). See "COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS -- Employment Agreements."
(9) Mr. Gerson's employment with the Company terminated on December 31, 1993.
Includes 70,000 shares of Common Stock issuable upon exercise of vested
options granted pursuant to the Employee Plan. Includes 4,000 shares of
Common Stock granted pursuant to the Award Program. See "COMPENSATION OF
DIRECTORS AND EXECUTIVE OFFICERS -- Employment Agreements."
(10) Includes 20,000 shares of Common Stock issuable upon exercise of vested
options granted pursuant to the Employee Plan. Does not include 80,000
shares of Common Stock issuable upon exercise of non-vested options granted
pursuant to the Employee Plan.
(11) Ms. Bachman's employment with the Company terminated on January 7, 1994.
Includes 17,000 shares of Common Stock issuable upon exercise of vested
options granted pursuant to the Employee Plan. Does not include 97 shares
vested pursuant to the Savings Plan. See "COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS -- Employment Agreements."
(12) Includes 337,800 shares of Common stock issuable upon exercise of vested
options granted pursuant to the Directors Plan and the Employee Plan.
Includes 89,965 shares of Common Stock issuable upon exercise of vested
SARs, based upon the difference between the closing price of the Company's
Common Stock on March 18, 1994, and the exercise price of the SAR. Includes
173,600 non-vested shares of Common Stock granted pursuant to the Award
Program. Does not include 674,800 shares of Common Stock issuable upon
exercise of non-vested options granted pursuant to the Directors Plan and
the Employee Plan.
ELECTION OF DIRECTORS
Six directors are to be elected by the stockholders of the Company to hold
office until the Annual Meeting of stockholders for the year ending December 31,
1994, or until their respective successors have been
5
<PAGE> 9
elected. It is intended that proxies granted by stockholders in the form
enclosed will be voted, unless otherwise directed, in favor of electing the
following persons as directors: Messrs. Robert R. Bennett, John M. Draper, J.
Anthony Forstmann, Leo J. Hindery, Jr., Gerald F. Hogan and George C. McNamee.
Mr. Forstmann and Mr. McNamee have been designated by the Board as nominees for
the positions on the Board to be elected by holders of Common Stock voting as a
separate class. Election of the remaining directors requires the favorable vote
by the holders of a majority of the outstanding shares of Common Stock and Class
B Common Stock, voting as a single class, present in person or represented by
proxy and entitled to vote thereon at the meeting. In the event any nominee
named herein for election as a director at the Annual Meeting is not available
or willing to serve when the election occurs, proxies in the accompanying form
may be voted for a substitute as well as for the other persons named herein.
INFORMATION REGARDING DIRECTORS
ROBERT R. BENNETT, 35, was appointed to the Board in February 1993,
following the Acquisition, on August 11, 1993, was named acting Chairman of the
Board and on September 28, 1993, was named Chairman of the Board. Mr. Bennett is
Senior Vice President, Treasurer and Secretary of Liberty. Mr. Bennett joined
Liberty in June 1990 as Vice President and Treasurer, was named Secretary in
October 1990 and Senior Vice President in September of 1991. Prior to joining
Liberty, Mr. Bennett served as Director of Finance for TCI from 1987 until 1989
when he was appointed Vice President. Mr. Bennett resigned his position with TCI
in March 1991. From 1982 to 1989, Mr. Bennett was employed by The Bank of New
York in its Communications, Entertainment and Publishing Division.
JOHN M. DRAPER, 55, was appointed to the Board in July 1993. Mr. Draper has
served as General Counsel, Senior Vice President and Assistant Secretary of
Liberty since 1991. Prior to that time, he was employed by TCI for more than
five years, most recently as Senior Vice President and General Counsel.
J. ANTHONY FORSTMANN, 56, is the Chairman of the Board and President of The
National Registry Inc. ("NRI"). Mr. Forstmann served as a Managing Director of
J.A. Forstmann & Co., a Los Angeles-based merchant banking firm, from October
1987 to October 1991. He co-founded Forstmann-Leff Associates, an institutional
money management firm, in 1968 and was a Managing Director thereof from its
inception until October 1987. Mr. Forstmann has been a Limited Partner of
Forstmann Little & Co. since its inception in 1978, and is also a director of
Cities in Schools, a non-profit corporation. Mr. Forstmann has served on the
Company's Board since April, 1992.
LEO J. HINDERY, JR., 46, was appointed to the Board in July 1993. Mr.
Hindery founded InterMedia Partners, a multi-system cable television operator,
in 1988 and has served as the Managing General Partner and Chief Executive
Officer of InterMedia Partners and its affiliated entities since that time.
Prior to 1988, Mr. Hindery served as the Chief Officer for Planning and Finance
of The Chronicle Publishing Company. Prior to that, Mr. Hindery was employed by
Becker Paribas Incorporated as Chief Financial Officer and Managing Director and
earlier by Utah International Inc. Mr. Hindery is a Director of the Certus
Financial Corporation, the Cable Telecommunications Association (CATA), the
Cabletelevision Advertising Bureau, Inc. (CAB), and the California Pacific
Medical Center Foundation. Mr. Hindery is a Trustee of Seattle University.
GERALD F. HOGAN, 48, was appointed President and Chief Executive Officer of
the Company at a meeting of the Board of Directors held on February 23, 1993,
and was appointed to the Board of Directors on March 25, 1993. Prior to becoming
President and Chief Executive Officer of the Company, Mr. Hogan served as
Vice-Chairman of Whittle Communications since October 1990. Prior to October
1990, Mr. Hogan was an employee of Turner Broadcasting System, Inc. ("TBS") for
19 years and became a member of its Board of
6
<PAGE> 10
Directors in 1987. Prior to leaving TBS, Mr. Hogan was a Vice President of TBS
and the President of Turner Entertainment Networks, a subsidiary of TBS. Mr.
Hogan is a director of North Georgia National Bankshares, Inc.
GEORGE C. MCNAMEE, 47, was appointed to the Board in July 1993. Mr. McNamee
is the Chairman of First Albany Companies, Inc., the holding company for the
investment banking firm, First Albany Corporation. Mr. McNamee has worked in the
securities business for almost 25 years. He serves as Chairman of the Committee
on Clearance and Settlement of the Securities Industry Association. Mr. McNamee
is a Director of MapInfo Corporation.
BOARD OF DIRECTORS
The Board of Directors of the Company held twelve meetings during 1993 and
acted by unanimous written consent on five occasions.
AUDIT COMMITTEE
The Audit Committee, currently consisting of Messrs. Forstmann, McNamee,
and Hindery, is empowered to recommend to the Board independent certified public
accounting firms for selection as auditors of the Company; make recommendations
to the Board on auditing matters; examine and make recommendations to the Board
concerning the scope of audits; and review and approve the terms of transactions
between the Company and related party entities. Members of the Board of
Directors elected by holders of Common Stock, voting as a separate class, serve
on the Audit Committee. During the year ended 1993, the Audit Committee met
seven times. KPMG Peat Marwick served as the Company's auditors for the four
months ended December 31, 1992, and the year ended December 31, 1993.
COMPENSATION/BENEFITS COMMITTEE
The Compensation/Benefits Committee (the "Compensation Committee"),
currently consisting of Messrs. Bennett, Draper and Hindery, is authorized to
make recommendations to the Board of Directors with respect to executive
salaries and bonuses and administers the Employee Plan, Award Program and
subject to stockholder approval, the Purchase Plan. The Compensation Committee
met five times during 1993.
EXECUTIVE COMMITTEE
The Executive Committee, currently consisting of Messrs. Bennett, Hogan and
Hindery, is authorized, subject to certain limitations under Delaware law, to
exercise all of the powers of the Board of Directors in the management of the
business and affairs of the Company while the Board is not in session. The
Executive Committee acted by unanimous written consent three times during 1993.
NOMINATING COMMITTEE
The Nominating Committee, currently consisting of Messrs. Bennett and
Hogan, was created on May 5, 1993, and is authorized to recommend nominees to
fill vacancies on the Company's Board of Directors and to recommend a slate of
Directors to the stockholders of the Company for election at the annual meeting
of stockholders. The Nominating Committee does not have a policy with respect to
the consideration of nominees recommended by security-holders. The Nominating
Committee acted by unanimous written consent one time during 1993.
7
<PAGE> 11
EXECUTIVE OFFICERS
The following is a list of the current executive officers of the Company
who do not serve on the Board of Directors:
L. DOUGLAS BAILEY, 52, is President of the Company's wholly-owned
subsidiary, Home Shopping Club, Inc. ("HSC"). From 1991 until joining the
Company in January 1993, he served as Senior Vice President of Purchasing for
Jack Eckerd Corporation. From 1988 through 1991, he served as the Senior Vice
President of Merchandising and from 1980 through 1988 was Vice President of
Merchandising for Jack Eckerd Corp.
ROBERT F. BUCCOS, 41, is Vice President of Strategic Planning and Budgeting
for the Company. Mr. Buccos joined the Company in 1988 as Director of Financial
Planning & Budgeting. Mr. Buccos was Assistant Controller for Maas
Brothers/Jordan Marsh from 1986 to 1988.
M. WADE DOWNS, 44, is Vice President of Corporate Research and Analysis for
the Company. Mr. Downs joined the Company in February 1987 and was promoted to
Vice President in March 1988.
BRIAN J. FELDMAN, 34, was appointed Controller in December 1993. Prior to
this appointment he served as Deputy Controller and Assistant Controller of the
Company since May 1989.
PETER J. HARDY, 57, is Vice President of New Business Development for the
Company. Prior to joining the Company in April 1993, Mr. Hardy from 1975 through
January 1993 served as President of Hardy Investment Group which dealt in
commercial real estate and personal computer merchandising.
PETER M. KERN, 27, was appointed Senior Vice President of Strategic
Development and Corporate Finance in December 1993. Prior to this appointment he
served as Vice President of Strategic Development and Assistant to the CEO for
the Company. Prior to joining the Company in March 1993, he served as Vice
President of Corporate Finance and Strategic Development for Whittle
Communications, L.P. Mr. Kern also served in investment banking at the New York
firm, Bear, Stearns & Co., Inc.
HONORE A. LEBRUN, III, 48, was appointed Executive Vice President of
Affiliate Sales and Marketing in December 1993. Prior to this appointment he
served as Senior Vice President of the TV Food Network since January 1993. Prior
to that appointment, he served concurrently as the General Manager and President
of Meridian Broadcasting Corporation, which filed in 1991 for protection under
the Federal Bankruptcy Code, and General Manager and Vice President of Frey
Communications South.
KEVIN J. MCKEON, 37, was appointed Senior Vice President of Accounting and
Finance and Treasurer in December 1993. Prior to this appointment he served as
Controller of the Company since July 1992. Prior to that appointment he served
as the Executive Director of Finance since May 1991. From September 1990 to
March 1991, Mr. McKeon served as Vice President and Chief Financial Officer of
Pharmacy Management Services, Inc. of Tampa, Florida. From December 1986 to
September 1990, he served in various financial capacities for the Company.
MICHAEL W. D. MCMULLEN, 51, was appointed President of the Company's
International Division in August 1993. Prior to joining the Company in August
1993, he founded, in 1983, Michael W.D. McMullen & Associates Inc., an
international consulting company.
J. MICHAEL REARDON, 55, is Executive Vice President of Operations and from
1987 until December 1988 was Senior Vice President of Operations. Mr. Reardon
was Senior Vice President/Director -- Warehousing and Distribution of the
Company from 1984 until 1987.
STELLA L. TAVILLA, 39, is Executive Vice President of Management
Information Services. Ms. Tavilla served as Senior Vice President of Management
Information Systems from October 1987 until her promotion
8
<PAGE> 12
in September 1990. From June 1985 to October 1987, Ms. Tavilla served as
Director of Management Information Systems of the Company.
EDWARD M. VAUGHN, 58, has been Senior Vice President of Human Resources for
the Company since December 1989. Mr. Vaughn joined the Company in April 1989 as
the Vice President of Human Resources. Mr. Vaughn served as Vice President of
Human Resources at PRIDE of Florida from 1987 to 1989.
SECTION 16 REPORTS
Since August 31, 1992, Edward M. Vaughn, Robert F. Buccos and J. Anthony
Forstmann, each failed to file on a timely basis one Form 4 stock ownership
report reflecting a single transaction.
9
<PAGE> 13
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF OUTSIDE DIRECTORS
The Company pays an annual fee of $30,000 to each director who is not
employed by the Company or an affiliate of the Company. It also pays each such
director $1,000 for each meeting of the Board of Directors which he attends or
$5,000 for each non-telephonic meeting in excess of six meetings (excluding
telephonic meetings) in a given fiscal year, plus reimbursement for all
reasonable expenses incurred by such director in connection with his attendance
at any meeting of the Board of Directors. Furthermore, the Company pays each
member of a committee of the Board of Directors, who is not employed by the
Company as an officer, $1,000 for each meeting of a committee of the Board of
Directors which he attends ($500 if in conjunction with a Board meeting), plus
reimbursement for any expenses incurred in connection with his attendance at any
committee meeting. Each member of the Board of Directors who is also an employee
of an affiliate is paid an annual fee of $10,000 and $1,000 for each Board or
committee meeting which he attends ($500 for a committee meeting if in
conjunction with a Board meeting) and also is reimbursed for all reasonable
expenses incurred in connection with attending any meeting of the Board of
Directors.
The directors who are not employees of the Company also participate in the
Directors Plan, pursuant to which each such director has been granted an option
to purchase 90,000 shares of Common Stock. The exercise price of options granted
under the Directors Plan is equal to the closing price of the Company's Common
Stock on the date of election to the Company's Board of Directors. Such options
become exercisable in three equal, annual increments beginning on the date of
grant. Each option expires five years after it becomes exercisable. Directors
commencing a sixth year of service on the Company's Board are granted an option
to purchase an additional 90,000 shares of Common Stock, which options become
exercisable in five equal, annual increments beginning on the date of grant. The
exercise price of such options is the closing price of the Common Stock on the
date of grant. Each option expires five years after it becomes exercisable. All
options granted to a director under the Directors Plan expire 30 days after his
resignation or termination as a director. Accordingly, all options granted to
those directors who resigned from the Company's Board of Directors on February
11, 1993, in connection with the Acquisition (other than Messrs. Forstmann and
McNamara, who were immediately reelected to the Board) expired on March 13,
1993. During 1993, the Company granted options to two current directors to
purchase 180,000 shares of Common Stock at an exercise price of $14.75 under the
Directors Plan. Options to purchase a total of 30,000 shares of Common Stock at
an exercise price of $5.45 are held by another current director. Messrs. Draper
and Bennett have waived their rights to participate in the Directors Plan.
SUMMARY OF EXECUTIVE OFFICER COMPENSATION
The following sets forth the annual and long-term compensation for services
to the Company for the twelve month periods ending December 31, 1993, August 31,
1992 and August 31, 1991, of those persons who were during the year ended
December 31, 1993, (i) the Chief Executive Officer of the Company and (ii) the
other four most highly compensated officers of the Company (the "Executive
Officers"). Since December 31, 1993, certain of the Executive Officers are no
longer employed by the Company, and new officers have been appointed:
10
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------------------
------------------------------------------ RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
NAME & PRINCIPAL POSITION (1) ($) ($) ($)(2) ($)(3) (#)(4) ($)(5)
- -------------------------------- ----- -------- ----- --------------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald F. Hogan................. 1993 $432,692 $ 0 $ 120,436 $ -- 984,876 $ 935(12)
President and Chief Executive 1992 -- -- -- -- -- --
Officer(6) 1991 -- -- -- -- -- --
Roy M. Speer.................... 1993 326,923 0 0 0 0 218,534(13)
Chairman and Chief Executive 1992 500,000 0 0 0 0 1,480(14)
Officer(7) 1991 500,000 0 0 0 0 --
Les R. Wandler.................. 1993 225,000 0 0 0 0 32,718(15)
Executive Vice President, 1992 200,000 0 0 0 0 904(14)
Chief Financial Officer, and 1991 198,846 0 0 343,750 115,000 --
Treasurer(8)
Alan P. Gerson.................. 1993 225,000 0 0 0 0 1,006(14)
Executive Vice President(9) 1992 194,712 0 105,862 0 200,000 374(12)
1991 -- -- -- -- -- --
L. Douglas Bailey............... 1993 196,154 0 0 0 100,000 424(12)
President, Home Shopping 1992 -- -- -- -- -- --
Club(10) 1991 -- -- -- -- -- --
Celia H. Bachman................ 1993 179,673 0 0 0 40,000 908(14)
Senior Vice President, General 1992 128,029 0 0 0 0 766(14)
Counsel, and Secretary(11) 1991 123,269 0 0 53,750 0 --
</TABLE>
- ---------------
(1) Disclosure is required for each of the Company's last three completed
fiscal years. The information disclosed in the Summary Compensation Table
is for the twelve month periods ending December 31, 1993, August 31, 1992,
and August 31, 1991. During the four month period ending December 31, 1992,
the Executive Officers received no extraordinary non-cash compensation,
except for Mr. Gerson who received 5,000 shares of Common Stock under the
Award Program. Those shares were valued at $35,000 on the grant date.
(2) Disclosure of perquisites and other personal benefits, securities or
property received by an Executive Officer is required only in the event
that the aggregate amount of such compensation exceeds the lesser of
$50,000 or 10% of the total of the Executive Officer's salary and bonus for
the year. The amounts set forth in this column represent reimbursements for
relocation expenses.
(3) During 1990, Roy M. Speer and Lowell W. Paxson, a former President of the
Company, contributed 2,990,000 shares of Common Stock to fund the Award
Program. Such shares were granted to 107 persons in 1990, each grant
vesting in five equal, annual installments. The amount reported in the
table represents the market value of the shares granted on the date of
grant. As of the end of 1993, the total number of shares granted and
unvested under the Award Program was 654,600 shares, which shares were
valued at $9,737,175 (based on the closing price of the Company's Common
Stock on December 31, 1993, and without giving effect to the diminution of
value attributable to any restrictions on such stock). Such amounts include
$89,250 (6,000 shares) for Ms. Bachman, whose employment terminated January
7, 1994. A total of 80,000 shares worth $430,000 were awarded in 1991, and
287,000 shares worth $2,220,375 were awarded in 1992. No awards were made
in 1993. These awards reflected the reallocation of shares originally
granted in 1990, but which were forfeited by the original grantee as a
11
<PAGE> 15
result of termination of employment with the Company. Grantees of stock
under the Award Program are entitled to any dividends paid with respect to
such shares.
(4) The amount listed represents the total number of options or SARs which were
granted to the Executive Officer.
(5) Under the transition provision of the SEC's Executive Compensation
Disclosure Rules, "All Other Compensation" is only required for the years
1993 and 1992.
(6) Mr. Hogan joined the Company in February 1993. As a result, no information
regarding his compensation prior to such date is provided herein.
(7) Until his resignation on August 11, 1993, Mr. Speer was employed by the
Company under an employment agreement dated as of March 5, 1986, which
provides for Mr. Speer to be retained as a consultant for a period of five
years following the termination of his employment. See "Employment
Agreements." On February 12, 1993, Mr. Speer resigned as Chief Executive
Officer of the Company and on August 11, 1993, resigned as Chairman of the
Board and a Director at which time his consultancy and non-competition
compensation commenced. On February 23, 1993, Mr. Hogan was named as
President and Chief Executive Officer and on August 11, 1993, Mr. Bennett
was named as acting Chairman of the Board. On September 28, 1993, Mr.
Bennett was elected Chairman of the Board. See "Employment Agreements."
(8) Mr. Wandler's employment with the Company terminated December 31, 1993. See
"Employment Agreements."
(9) Mr. Gerson joined the Company in October 1991. As a result, no information
regarding his compensation prior to such date is provided herein. Mr.
Gerson's employment with the Company terminated December 31, 1993. See
"Employment Agreements."
(10) Mr. Bailey joined the Company in January 1993. As a result, no information
regarding his compensation prior to such date is provided herein.
(11) Ms. Bachman's employment with the Company terminated January 7, 1994. See
"Employment Agreements."
(12) Represents the premium paid by the Company to provide term life insurance
to the Executive Officer. No cash surrender value is generated under this
policy.
(13) Includes $520 which represents the purchase price of shares of Common Stock
allocated under the Savings Plan. Pursuant to the Savings Plan, the
Company's Board of Directors may elect to match a portion of employee
contributions, which is currently matched up to $520 per year, per
employee, which stock vests in five equal annual increments commencing
three years from the contribution date. Includes $44,231 paid to Mr. Speer
upon termination which amount represents unused vacation and sick leave
benefits. Includes $173,077 representing payment under a consultancy and
non-competition arrangement. See "Employment Agreements." Includes $706
which represents the premium paid by the Company to provide term life
insurance. No cash surrender value is generated under this policy.
(14) Includes $520 which represents the purchase price of shares of Common Stock
allocated under the Savings Plan. The remainder of this amount represents
the premium paid by the Company to provide term life insurance to the
Executive Officer. No cash surrender value is generated under this policy.
(15) Includes $520 which represents the purchase price of shares of Common Stock
allocated under the Savings Plan. Includes $19,712 paid to Mr. Wandler upon
termination which amount represents unused vacation and sick leave
benefits. Includes $12,000 representing an office allowance. See
"Employment Agreements." Includes $486 which represents the premium paid by
the Company to provide term life insurance. No cash surrender value is
generated under this policy.
12
<PAGE> 16
OPTION AND SAR GRANTS
Set forth below is information with respect to options to purchase the
Company's Common Stock and SARs granted to the Executive Officers during 1993
under the Employee Plan.
OPTION AND SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR OPTION
OPTIONS/SARS GRANTED TO OR BASE TERM(4)
GRANTED EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE(3) 5%($) 10%($)
- ----------------------------- ------------ ------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald F. Hogan.............. 984,876 48.09% $8.250 Feb-23-2003 $5,109,912 $12,949,519
Roy M. Speer(5).............. 0 -- -- -- -- --
Les R. Wandler(6)............ 0 -- -- -- -- --
Alan P. Gerson(7)............ 0 -- -- -- -- --
Mar-14-1999
L. Douglas Bailey............ 100,000 4.88 8.500(2) through 408,829 988,645
Mar-14-2003
Jun-14-1999
Celia H. Bachman(8).......... 40,000 1.95 9.875(2) through 189,985 459,429
Jun-14-2003
</TABLE>
- ---------------
(1) Under the terms of the Employee Plan, the Compensation Committee retains
discretion, subject to certain plan limitations, to modify the terms of the
outstanding options and to reprice such options.
(2) All options are exercisable at the closing price of the Company's Common
Stock on the date prior to the grant date. The exercise price and tax
withholding obligations related to the exercise may be paid by cash or
delivery of already-owned shares, subject to certain conditions.
(3) Under the Employee Plan, each option grant becomes exercisable in five
equal, annual increments commencing one year from the grant date. Each such
option expires five years after it becomes exercisable. In addition, each
employee's option becomes fully exercisable in the event of a termination
by the Company of the employee's employment with the Company following a
change in control of the Company. Under Mr. Hogan's Employment Agreement,
the SARs are exercisable in four equal, annual increments commencing one
year from the grant date and, once vested, are exercisable until February
23, 2003. The SARs will vest upon termination of employment other than for
cause and will be exercisable for up to one year following the termination
of employment. In the event of a change in control, whether or not Mr.
Hogan has elected to terminate his employment, all unvested SARs will vest
immediately prior to the change in control and shall remain exercisable for
a one-year period.
(4) Potential realizable values are reported net of the option exercise price,
but before taxes associated with exercise. These amounts represent certain
assumed rates of appreciation and assumed holding periods. Actual gains, if
any, on stock option or SAR exercise will be dependent upon the future
performance of the Common Stock, overall stock market conditions, as well
as the option or SAR holder's continued employment through the vesting
period. The amounts reflected in this table may not necessarily be
achieved.
13
<PAGE> 17
(5) On February 12, 1993, Mr. Speer resigned as Chief Executive Officer of the
Company and on August 11, 1993, resigned as Chairman of the Board and a
Director. See "Employment Agreements."
(6) Mr. Wandler's employment with the Company terminated December 31, 1993. See
"Employment Agreements."
(7) Mr. Gerson's employment with the Company terminated December 31, 1993. See
"Employment Agreements."
(8) Ms. Bachman's employment with the Company terminated January 7, 1994 and as
a result, she forfeited her interest in the options which were granted in
1993. See "Employment Agreements."
OPTION AND SARS EXERCISES
Set forth below is information with respect to exercises of Employee Plan
options and SARs by the Executive Officers during 1993 and the year-end value of
all unexercised Employee Plan options and SARs held by such persons.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL YEAR IN-THE-MONEY OPTIONS/SARS
SHARES END AT FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald F. Hogan........... 0 $ 0 0 984,876 $ 0 $ 6,524,804
Roy M. Speer(2)........... -- -- -- -- -- --
Les R. Wandler(3)......... 145,000 1,227,913 95,000 0 1,060,675 0
Alan H. Gerson(4)......... 60,000 520,158 140,000 0 1,319,780 0
L. Douglas Bailey......... 0 0 0 100,000 0 637,500
Celia H. Bachman(5)....... 13,000 139,802 5,000 52,000 58,145 339,548
</TABLE>
- ---------------
(1) Represents the difference between the closing price of the Company's Common
Stock on December 31, 1993, and the exercise price of the option/SAR.
(2) On February 12, 1993, Mr. Speer resigned as Chief Executive Officer of the
Company and on August 11, 1993, resigned as Chairman of the Board and a
Director. See "Employment Agreements."
(3) Mr. Wandler's employment with the Company terminated December 31, 1993. See
"Employment Agreements."
(4) Mr. Gerson's employment with the Company terminated December 31, 1993. See
"Employment Agreements."
(5) Ms. Bachman's employment with the Company terminated January 7, 1994. See
"Employment Agreements."
EMPLOYMENT AGREEMENTS
On March 5, 1986, Mr. Speer and the Company entered into a five year
employment agreement, as amended, which was automatically renewed in 1991 for a
three year term and which was renewable for additional three year terms. It
provided for a minimum base salary which as of August 31, 1992, was set at
$500,000 and the use of a Company car. On August 11, 1993, Mr. Speer resigned as
Chairman of the Board and a Director of the Company prior to the scheduled
termination of his employment under the employment agreement. As provided in the
employment agreement, upon the termination of his employment, Mr. Speer
14
<PAGE> 18
commenced a five year consultancy and non-competition arrangement with the
Company during which period he will be paid his minimum base annual salary.
Effective as of February 23, 1993, Mr. Hogan and the Company entered into a
four year employment agreement which is automatically renewable for successive
one year terms unless either party provides 180 days written notice to the other
party. Mr. Hogan will receive an annual base salary of not less than $500,000
and may participate in any bonus program established for executives of the
Company and in any benefits provided to employees of the Company. Termination of
the agreement by the Company other than for cause will result in payment of the
annual base salary amount that would have been payable had his employment with
the Company continued until the expiration of the employment term plus any
annual bonus for the year of termination. He will receive a minimum of four
weeks paid vacation per year. The Company reimbursed Mr. Hogan for relocation
expenses. The Company guaranteed a minimum sales price, based on an appraised
value, from the sale of Mr. Hogan's home in Knoxville, Tennessee and agreed to
pay his monthly mortgage on that residence plus certain maintenance and
insurance costs through the date of sale. Mr. Hogan received SARs with respect
to 984,876 shares of the Company's Common stock at an exercise price of $8.25
per share. The SARs vest over a four year period and are exercisable until
February 23, 2003. The SARs will vest upon termination of employment other than
for cause and will be exercisable for up to one year following the termination
of employment. In the event of a change in control, whether or not Mr. Hogan has
elected to terminate his employment, all unvested SARs will vest immediately
prior to the change in control and shall remain exercisable for a one year
period. SARs not exercised will expire to the extent not exercised. The SARs may
be exercised for cash or, so long as the Company is a public company, for shares
of the Company's Common Stock equal to the excess of the fair market value of
each share of Common Stock over $8.25. The SARs also will vest in the event of
death or disability. In addition, a termination of employment by Mr. Hogan
following a change in control may result in entitlement to all unpaid
compensation through the term of the contract. A change in control will be
deemed to occur if Liberty ceases to be the sole beneficial owner of the
Company's voting securities having a majority of the outstanding voting power of
the Company or if Liberty experiences a change in control. Mr. Hogan may not
compete with the Company during his employment term and is prohibited from
disclosing information relating to the business practices of the Company.
In September 1993, Mr. McMullen and the Company entered into a two year
employment arrangement. Under this arrangement, Mr. McMullen will receive a base
annual compensation of $220,000. Mr. McMullen was also guaranteed a $50,000
bonus in year one of his employment arrangement. Mr. McMullen was also granted,
under the Employee Plan, options to purchase 100,000 shares of the Company's
Common Stock.
In December 1993, Mr. LeBrun and the Company entered into a two year
employment arrangement. Under this arrangement, Mr. LeBrun will receive a base
annual compensation of $175,000 and $200,000 in years one and two of his
employment arrangement, respectively. Mr. LeBrun was also guaranteed a $50,000
bonus in year one of his employment arrangement, with a maximum potential bonus
of $150,000 over the term of his employment arrangement. Mr. LeBrun was also
provided with a $1,200 a month housing allowance. Mr. LeBrun was also granted,
under the Employee Plan, options to purchase 100,000 shares of the Company's
Common Stock.
In 1993 and early 1994, the Company entered into agreements with Les R.
Wandler, Alan H. Gerson and Celia H. Bachman relating to their separation from
the Company. Mr. Wandler's agreement was effective December 31, 1993. Under the
terms of Mr. Wandler's agreement, he will receive his 1993 base annual salary of
$225,000 to be paid in bi-weekly installments beginning January 1, 1994, and
concluding on December 31, 1994. Mr. Wandler immediately vested in options for
46,000 shares of Common Stock granted pursuant to the Employee Plan and 44,000
shares of Common Stock granted pursuant to the Award Program. Mr. Wandler
15
<PAGE> 19
was provided with $12,000 as an office allowance and was paid $19,712
representing unused vacation and sick leave benefits.
Mr. Gerson's agreement was effective December 31, 1993. Under the terms of
Mr. Gerson's agreement, he will receive his 1993 base annual salary of $225,000
to be paid in bi-weekly installments beginning January 1, 1994, and concluding
on December 31, 1994. Mr. Gerson immediately vested in options for 160,000
shares of Common Stock granted pursuant to the Employee Plan and 4,000 shares of
Common Stock granted pursuant to the Award Program. Mr. Gerson was paid $12,980
representing unused vacation and sick leave benefits.
Ms. Bachman's agreement was effective January 7, 1994. Under the terms of
Ms. Bachman's agreement, she was paid $340,000 in a lump sum distribution. Ms.
Bachman immediately vested in options for 12,000 shares of Common Stock granted
pursuant to the Employee Plan. Ms. Bachman was paid $19,238 representing unused
vacation and sick leave benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On December 31, 1992, the Compensation Committee consisted of Franklin J.
Chu, J. Anthony Forstmann, Thomas A. James, John J. McNamara, William J. Ramsey
and Michael V. Roberts. In connection with the Acquisition, on February 11,
1993, Messrs. Chu, James, Ramsey and Roberts resigned from the Board. In
addition, Messrs. Forstmann and McNamara nominally resigned from the Board.
Although Messrs. Forstmann and McNamara were immediately appointed to fill two
of the vacancies on the Board of Directors, they were not named to the
Compensation Committee. On May 3, 1993, Mr. McNamara resigned from the Board of
Directors. Messrs. Bennett and Draper, each of whom is an officer of Liberty,
serve with Mr. Hindery on the Compensation Committee. From February 23, 1993,
until their resignation from the Company's Board of Directors on July 13, 1993,
Messrs. John Malone and Peter Barton served on the Compensation Committee. See
"CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS."
On April 28, 1992, the Company purchased 100,000 non-voting shares of
Series A Preferred Stock, par value $.01 per share, of NRI for $10,000,000 in
cash and services, of which $2,775,000 was provided in 1993. The shares of
Series A Preferred Stock are convertible into a total of 6,000,000 shares of NRI
Common Stock upon the occurrence of certain events, and contain certain
liquidation preferences. J. Anthony Forstmann, the Chief Executive Officer of
NRI, was subsequently appointed to the Board of Directors of the Company. Les R.
Wandler, Gerald F. Hogan and Peter M. Kern serve on the Board of Directors of
NRI.
On April 21, 1989, the Company loaned Roberts Broadcasting Company, Inc.
("Roberts") approximately $3,800,000 for the purchase and construction of
television broadcast station WHSL, serving the St. Louis metropolitan area. The
promissory note relating to such loan was assigned to Silver King
Communications, Inc. ("Silver King") prior to the Silver King Distribution (as
hereinafter defined). Under the terms of the note, the Company received payments
of 12.8% interest annually from January 1990 through March 1991. The Company
received payments of principal and interest annually at 12.8% from April 1991
through December 1992. The Company, through a broadcast affiliation agreement
with station WHSL, paid Roberts approximately $1,600,000 in 1993. Silver King is
a nonvoting common stockholder in Roberts. Michael V. Roberts, a former Company
director, is a significant owner of Roberts.
On July 31, 1992, the Company distributed all of the shares of capital
stock of Precision Systems, Inc. ("PSi"), its former wholly-owned subsidiary, to
the stockholders of record of the Company as of July 30, 1992 (the "PSi
Distribution"). Each stockholder of the Company received one share of PSi common
stock and one share of PSi Class B common stock for each ten shares of the
Company's Common Stock and Class B Common Stock owned, respectively. Roy M.
Speer, through his ownership of all of the capital stock of Crystal
16
<PAGE> 20
Diamond, Inc., the Managing General Partner of RMS, is the controlling
shareholder of PSi. Stella Tavilla served on the Board of Directors of PSi until
February 1993. Les R. Wandler served on the Board of Directors of PSi until
March 1993. Each stockholder of record of the Company as of July 30, 1992, was
provided a copy of an information statement (the "PSi Information Statement")
filed with the SEC describing the PSi Distribution in detail. In connection with
the PSi Distribution, the Company and PSi entered into certain agreements,
including a Distribution Agreement, Tax Sharing Agreement, Corporate Services
Agreement, Software License Agreement, System Maintenance and Support Agreement,
Software Development Agreement and Credit Agreement, all of which are described
in the PSi Information Statement. Prior to the PSi Distribution, the Company
contributed $5,000,000 to PSi and forgave approximately $44,000,000 of
intercompany indebtedness. The Company purchased certain equipment and paid
license and system maintenance fees related to this equipment of $1,316,000 and
$3,545,000, respectively in 1993. Subsequent to year end, HSN and PSi entered
into an Amended and Restated System Maintenance and Support Agreement and a
Source Code Escrow Agreement pursuant to which certain computer source code has
been delivered by PSi to an escrow agent.
The Company retained the investment banking services of Raymond James &
Associates, Inc. ("Raymond James"), at a cost of approximately $150,000, in
connection with the PSi Distribution. Thomas A. James, formerly a member of the
Company's Board of Directors, serves as Chairman of the Board and CEO of Raymond
James Financial, Inc., of which Raymond James is a wholly-owned subsidiary.
On December 28, 1992, the Company distributed all of the shares of capital
stock of Silver King, its former wholly-owned subsidiary, to the stockholders of
record of the Company as of December 24, 1992 (the "Silver King Distribution").
Each stockholder of the Company received one share of Silver King common stock
and one share of Silver King Class B common stock for each ten shares of the
Company's Common Stock and Class B Common Stock owned, respectively. Roy M.
Speer, through his ownership of all of the capital stock of Crystal Diamond,
Inc., the managing general partner of RMS, is the controlling shareholder of
Silver King. In addition, in connection with the Acquisition, RMS has granted to
Liberty an assignable, irrevocable option to purchase a controlling interest in
Silver King. The exercisability of such option is subject to certain government
approvals and other conditions. In addition, upon the sale of Silver King stock
following the exercise of the option or after a change in law that would allow
Mr. Speer to serve on the Board of Directors of Liberty while exercising control
of Silver King, Liberty would cause Mr. Speer to be elected and reelected to the
Liberty Board for so long as he beneficially owns not less than two million
shares of Liberty Class A Common Stock.
Les R. Wandler and Alan H. Gerson, served on the Board of Directors of
Silver King through January 11, 1994. Each stockholder of record of the Company
as of December 24, 1992, was provided a copy of an information statement (the
"Silver King Information Statement") filed with the SEC describing the Silver
King Distribution in detail. In connection with the Silver King Distribution,
the Company and Silver King entered into certain agreements, including a
Distribution Agreement, Tax Sharing Agreement, Corporate Services Agreement,
Loan Agreement, and several Affiliation Agreements, all of which are described
in the Silver King Information Statement. Prior to the Silver King Distribution,
the Company forgave approximately $93,120,000 of intercompany indebtedness.
Payments made under affiliation agreements with Silver King in 1993 were
approximately $39,739,000. Payments by Silver King to the Company under the Loan
Agreement were approximately $15,633,000 in 1993. HSC has affiliation
relationships with broadcast television stations owned by Urban Broadcasting
Corporation ("Urban") and Blackstar Communications, Inc. ("Blackstar"), in which
Silver King has a non-voting equity interests. During 1993, HSC paid $1,112,000
and $4,226,000 to Urban and Blackstar, respectively.
17
<PAGE> 21
The Company retained the investment banking services of Paribas
Corporation, at a cost of approximately $150,000, in connection with the Silver
King Distribution. Franklin J. Chu, formerly a member of the Company's Board of
Directors, serves as a Senior Vice President of Paribas Corporation.
In the normal course of conducting its electronic retailing business, the
Company's principal operating subsidiary, HSC, enters into affiliation
agreements with the operators of cable television systems and operators of
broadcast television stations for the carriage of HSC programming. HSC pays
cable operators which carry its programming commissions based upon the sales of
HSC products to customers within the franchise area of such cable operator and,
in certain circumstances, also pays promotional and marketing fees to cable
operators in return for cable television advertising.
Prior to December 4, 1992, the date on which Liberty and RMS entered into
an agreement in principle relating to the Acquisition (the "Agreement in
Principle"), HSC had entered into affiliation agreements with cable operators
which are wholly or partially owned by either Liberty or TCI. Certain officers
of these companies served, or continue to serve, on the Company's Board.
Payments made under these affiliation agreements in 1993 were approximately
$4,053,000.
In addition, HSC's programming is carried by cable systems which are
operated by InterMedia Partners and its affiliates. In connection with such
cable carriage, HSC paid InterMedia Partners approximately $247,000 in 1993
pursuant to affiliation agreements between HSC and InterMedia Partners. HSC and
InterMedia Partners have entered into affiliation agreements both prior and
subsequent to Mr. Hindery's appointment to the Board. These affiliation
agreements contain terms and conditions which are consistent with HSC's other
cable affiliation agreements. Mr. Hindery is the managing general partner of
InterMedia Partners. Liberty has a 22% limited partnership interest in
InterMedia Partners.
COMPENSATION/BENEFITS COMMITTEE REPORT TO SHAREHOLDERS
The Compensation Committee is responsible for establishing the Company's
executive compensation policy, setting compensation and related performance
goals for the Company's senior executives, and administering the Employee Plan,
the Award Program and, subject to shareholder approval, the Purchase Plan.
The goal of the Compensation Committee is to attract and retain highly
qualified executive officers and key employees, which if properly accomplished,
will enhance stockholder value. The Compensation Committee believes that a link
should exist between executive compensation and appreciation in the price of the
Company's common stock. The Compensation Committee believes it has followed this
strategy by developing and implementing a compensation policy which seeks to
attract talented executives and to align the financial interests of the
Company's senior executives with those of its stockholders. The Company attempts
to realize these goals by providing an aggregate competitive compensation
consisting of cash compensation and permitting executive officers to obtain an
ownership stake in the Company commensurate with their relative levels of
seniority and responsibility.
In establishing compensation for its senior executive officers, the
Compensation Committee follows its belief that the total compensation package
should be at or near median market rates in the telecommunications and retail
industries for seasoned executives with the business experience and acumen
necessary to help the Company to grow by granting the opportunity to participate
in the growth of the Company. To reflect this belief, the Company's executive
compensation is based on two components, salary and equity based incentives,
each of which is intended to serve the Company's overall compensation
philosophy.
18
<PAGE> 22
Compensation for executives may be reviewed periodically by the
Compensation Committee and may be adjusted based on, among other things: (1) the
Compensation Committee's subjective determination that the individual's
contribution to the Company has increased; and (2) increases in median
competitive pay levels. During 1993, the Compensation Committee increased the
base salaries of certain of the Company's senior executives. The determination
to increase salary levels was based on different factors, including reevaluation
of the grade for the position, a determination that an increase in compensation
was due after several years without an increase, or the assumption of new job
responsibilities.
In November 1993, a nationally recognized consulting firm completed a
competitive market survey for certain executive positions at the Company. The
companies surveyed were in the telecommunications and retail industries, as well
as certain other industries, with sales in the $1.0 billion to $1.2 billion
range. The Compensation Committee anticipates that management will rely on the
survey results during the current fiscal year in determining executive
compensation.
The Compensation Committee also notes that the Company's Stock Price
Performance Graph utilizes the Standard and Poor's Retail Specialty Index as the
Company peer group. Due to the hybrid nature of the Company's business, which is
focused on the telecommunications industry as well as the retail industry, the
Compensation Committee believes that it is appropriate to consider compensation
based on comparable compensation levels in these industries. Therefore, the
management of the Company and the Compensation Committee do not restrict
compensation comparisons to the Standard and Poor's Retail Specialty Index.
The Compensation Committee also may consider performance-based bonuses for
certain selected employees. No performance-based bonuses were granted to
employees in 1993. The Compensation Committee did not believe that such bonuses
were merited in light of the financial loss incurred by the Company during 1993.
A broadly based executive bonus program has been implemented for 1994 based on
the Company achieving specific operating cash flow levels for approximately 190
employees. The bonus pool is calculated by multiplying a specified operating
cash flow level by 1.25 percent, which would result in an estimated bonus of ten
percent of annual base cash compensation. If the operating cash flow level is
not satisfied, no bonuses will be paid under this bonus program. In the event
that a higher specified operating cash flow is achieved, the bonus would be
determined by multiplying the cash flow level by 2.5 percent, which would result
in an estimated 25 percent bonus of annual base cash compensation.
Periodic grants of stock options and stock which vest over time to the
executive officers and other key employees, are intended to foster a long-term
commitment to the Company and motivate executives to improve long-term stock
market performance. Stock options are granted under the Employee Plan at the
prevailing market value and will permit the holder to participate in increases
in the Company's Common Stock price following the date of grant. Generally,
grants vest in equal amounts over five years, and executives must be employed by
the Company at the time of vesting in order to exercise the options. During
1993, options to purchase 1,063,000 shares were granted to employees including
553,000 options granted to executive officers. In determining the number of
options to grant to a particular employee, the Compensation Committee relies
heavily on recommendations of management which are based on a number of factors,
including job responsibility, salary, title, the number of options previously
granted and tenure with the Company. Then, the Committee makes a subjective
determination as to whether the recommendation of management is appropriate.
Shares of stock have been granted to a broad spectrum of employees,
including executive officers under the Award Program. Both management and the
Compensation Committee have from time to time in the past, and may, in the
future make a subjective determination as to the amount of a grant to a
particular employee.
19
<PAGE> 23
The shares vest equally over a period of five years. No previous forfeited
shares of employees were reallocated under the Award Program during 1993.
Mr. Hogan became President and Chief Executive Officer of the Company in
February 1993, following the change in control of the Company. Consistent with
the Company's philosophy of linking executive compensation closely to enhanced
stockholder value, Mr. Hogan's compensation is significantly dependent upon the
market performance of the Company's Common Stock through the grant of SARs. His
base salary is identical to that of his predecessor. The number of SARs granted
to Mr. Hogan was based on one percent of the Company's issued and outstanding
shares of capital stock at Mr. Hogan's date of hire. The level of SARs was
subjectively determined through negotiations prior to Mr. Hogan joining the
Company.
Generally, the Compensation Committee expects that the compensation
packages granted to executives will be consistent with the limits established by
the Internal Revenue Code Section 162(m), which generally limits the corporate
tax deduction for compensation paid to certain executive officers to $1,000,000.
Depending upon the date of exercise and the fair market value of the Company's
Common Stock upon exercise, the SARs granted to Mr. Hogan, may cause the Company
to exceed the deductibility limits of Section 162(m).
The Compensation Committee approved severance arrangements for three
executive officers during 1993. The Company does not have a formal severance
policy for executive officers. The Compensation Committee took into account the
executives' positions with the Company and relative contributions to the
operation of the Company in rendering a subjective determination as to their
cash severance compensation packages. Vesting in non-cash compensation was
governed by the terms of the Employee Plan and the Award Program.
COMPENSATION/BENEFITS COMMITTEE
Robert R. Bennett
John M. Draper
Leo J. Hindery, Jr.
20
<PAGE> 24
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by a general statement incorporating by reference this proxy statement
into any filing under the Securities Act or under the Exchange Act, except to
the extent the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return of the Company's Common
Stock, Standard & Poor's 500 Index and Standard & Poor's Retail Specialty Index
(the "Peer Group").
HOME SHOPPING NETWORK, INC. STOCK PRICE PERFORMANCE
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
HOME SHOPPING NETWORK, S&P 500, PEER GROUP
(PERFORMANCE THROUGH DECEMBER 31, 1993)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) HSN S&P 500 PEER GROUP
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 161.11 131.49 125.99
1990 88.89 127.32 117.48
1991 130.55 166.21 194.12
1992 190.00 179.30 208.18
1993 369.72 197.23 210.89
</TABLE>
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in HSN common stock, S&P 500,
and Peer Group.
Source: Value Line, Inc.
- ---------------
* Cumulative total return assumes reinvestment of dividends.
21
<PAGE> 25
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
On June 21, 1985, the Company and one of its predecessors entered into a
license agreement with Pioneer Data Processing, Inc. ("Pioneer") whereby Pioneer
agreed to provide the Company with the exclusive use of all of its software
programs in perpetuity beginning on July 1, 1985. In return, the Company agreed
to pay Pioneer in perpetuity 1% of the Company's gross profit, as defined in the
license agreement. Payments totaled $297,000 in 1993. Pioneer initially
developed, among other things, software programs used by the Company for order
taking and inventory control. Pioneer changed its name to Western Hemisphere
Sales, Inc. ("Western") following the merger of that company into Pioneer.
Richard M. Speer, the son of Roy M. Speer, is the President and sole shareholder
of Western. On August 11, 1993, Roy M. Speer resigned as Chairman of the Board
of Directors and as a Director of the Company.
In addition to the license agreement described above, until May 31, 1993,
merchandise that was unsuitable for sale via the Company's programs or outlet
stores was sold by Western, which received a commission of 15% on the amount
realized upon disposition. The Company terminated its liquidation arrangement
with Western on May 31, 1993. Liquidation sales by Western were less than .5% of
the total sales of the Company in 1993. In connection with such liquidation
activities by Western, the Company provided to Western free of charge the use of
certain equipment owned by the Company and certain space located at or in close
proximity to each of the Company's four fulfillment facilities. The validity of
the above-described licensing and contractual arrangements between Western and
the Company is the subject of two shareholder derivative lawsuits filed in
December 1992 against certain current and former directors of the Company and
against the Company as a nominal defendant. The Company's Board of Directors has
formed a Special Committee to review and consider the allegations in such
shareholder derivative lawsuits and certain other related matters. On or about
February 8, 1994, counsel for the Company, with the approval of the Special
Committee, signed an agreement in principle to settle the shareholder derivative
suits. Pursuant to the terms of the settlement, the Company has agreed to pay
Western $4,500,000 in exchange for releases and cancellation or acquisition of
the licensing arrangements between Western and the Company. This settlement is
conditioned on, among other things, Court approval after notice to the
stockholders and a hearing on the fairness of the settlement. Roy M. Speer, the
Company's former Chairman of the Board and Chief Executive Officer, has agreed
to pay the Company $2,000,000 in connection with this proposed settlement.
See "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS -- Compensation
Committee Interlocks and Insider Participation."
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
On March 4, 1994, the Company's Board of Directors approved the Purchase
Plan. The Purchase Plan permits elective participation by all employees of the
Company and its subsidiaries who have been employed on a full time basis for at
least 90 days ("Eligible Employees"). This group of Eligible Employees consists
of approximately 4,300 persons.
The Purchase Plan provides that Eligible Employees may elect to have up to
15% of their base compensation withheld by the Company for the purpose of
purchasing shares of Common Stock. The Common Stock to be purchased pursuant to
the Purchase Plan will be purchased on at least a monthly basis in the open
market at its fair market value. Such purchases will be made by an administrator
designated by the Compensation Committee, and the Company will receive no
consideration in the transactions.
Other than payment of brokerage commissions and other costs of
administration of the Purchase Plan, the Company will make no contributions to
the Purchase Plan. The price for Common Stock purchased under
22
<PAGE> 26
the Purchase Plan is paid entirely by the Eligible Employees. The level of
compensation withholding may be changed or discontinued, at the discretion of
any particular Eligible Employees. The Purchase Plan is administered by the
Compensation Committee. See "ELECTION OF DIRECTORS -- Compensation/Benefits
Committee."
The Purchase Plan, if approved by the stockholders, will be effective on or
about June 1, 1994. Therefore, as of the date of this proxy statement, no
benefits have been received by or allocated to any Eligible Employees of the
Company. Because the level of participation by any Eligible Employees is
determined based upon an election made by the Eligible Employees, the amount to
be purchased by any such person under the Purchase Plan is not determinable at
this time.
The Purchase Plan will be approved upon the affirmative vote of a majority
of the outstanding shares of Common Stock and Class B Common Stock present and
entitled to vote at the Annual Meeting. The Company's Board of Directors has
proposed, and recommends to the stockholders, the adoption and approval of the
Purchase Plan, and unless otherwise instructed, the persons named in the
accompanying proxy will vote in favor of adoption and approval.
APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touche served as the Company's independent auditor since the
fiscal year ending August 31, 1990. On February 23, 1993, the Company dismissed
Deloitte & Touche as its auditors when the Board of Directors voted unanimously
to retain the services of KPMG Peat Marwick. The decision to dismiss Deloitte &
Touche and engage new auditors followed Liberty's acquisition of 20,000,000
shares of Class B Common Stock, which represents voting control of the Company.
Neither Deloitte & Touche's report dated October 15, 1992, on the Company's
financial statements for the year ended August 31, 1992, nor its report dated
November 13, 1991, for the year ended August 31, 1991, contained an adverse
opinion or a disclaimer of opinion, and neither report was qualified or modified
as to uncertainty, audit scope or accounting principles. In connection with the
Company's 1993 Annual Report on Form 10-K, Deloitte & Touche reissued their
report, dated October 15, 1992, on the Company's 1992 and 1991 consolidated
financial statements and added an explanatory paragraph for certain
contingencies. This paragraph refers to Note H of the consolidated financial
statements and the report has been dual dated as of February 15, 1994.
During the Company's two fiscal years ended August 31, 1991 and 1992, and
the subsequent interim period through February 23, 1993, there were no
disagreements with Deloitte & Touche on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which
if not resolved to Deloitte & Touche's satisfaction would have caused Deloitte &
Touche to make reference to the subject matter of the disagreement in connection
with Deloitte & Touche's report on the Company's financial statements for such
periods.
During the Company's two fiscal years ended August 31, 1991 and 1992, and
the subsequent interim period ended February 23, 1993, Deloitte & Touche has not
advised the Company as to the presence of any reportable event as described in
Item 304 of Regulation S-K.
On February 23, 1993, management of the Company, with the approval of the
Board of Directors, engaged the firm of KPMG Peat Marwick, St. Petersburg,
Florida as auditors to examine the books and accounts of the Company for the
fiscal year ending August 31, 1993. On July 13, 1993, the Board of Directors of
the Company approved a change of the Company's fiscal year end to December 31
effective January 1,
23
<PAGE> 27
1993. Subsequent to the change in the Company's fiscal year end, KPMG Peat
Marwick was engaged as auditors to examine the books and records of the Company
for the four months ended December 31, 1992, and the year ended December 31,
1993.
The Company has not, during its two fiscal years ended August 31, 1991 and
1992, and the subsequent interim period ended February 23, 1993, consulted with
KPMG Peat Marwick regarding the type of audit opinion that might be rendered on
the Company's financial statements.
Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions and may
make a statement if either desires to do so.
OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the Annual Meeting. If any matters are brought before the
meeting, however, Gerald F. Hogan, who is President and Chief Executive Officer
of the Company and the proxy agent named in the enclosed proxy, will vote on
such matters in accordance with his best judgment.
Any proposal which a stockholder intends to present at the Annual Meeting
of stockholders for 1994 must be received by the Company prior to November 15,
1994, in order to be considered for inclusion in the proxy statement and form of
proxy relating to such meeting.
Solicitation of proxies is being made by the Board of Directors through the
mail, but also may be made in person and by telegraph and telephone by Company
personnel at the Company's expense. The Company has engaged the services of
Corporate Investor Communications at a cost of approximately $5,000 in
connection with services to be rendered prior to the Annual Meeting.
By Order of the Board of Directors,
/s/ GERALD F. HOGAN
-------------------------------------
GERALD F. HOGAN
President and Chief Executive Officer
March 29, 1994
St. Petersburg, Florida
24
<PAGE> 28
(LOGO)
<PAGE> 29
HOME SHOPPING NETWORK, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. DEFINITIONS.
(a) "Administrator" means PNC National Bank, or any successor
appointed by the Company from time to time.
(b) "Base Compensation" means any base salary, wages and overtime
pay received by a Participant.
(c) "Company" means Home Shopping Network, Inc. and its
subsidiaries.
(d) "Eligible Employee" means any person who is currently employed
by the Company or any of its subsidiaries on a regular full-time basis and has
been so employed for a period of at least 90 days prior to electing to
participate in the Plan. A person shall be considered employed on a regular
full-time basis if he or she is customarily employed at least 30 hours per
week.
(e) "Enrollment Dates" means such quarterly dates as are
prescribed by the Administrator, on which Eligible Employees may commence
participation in the Plan, and Participants may make changes to the level of
their participation.
(f) "Insider" means an Eligible Employee subject to the
requirements and restrictions of Section 16 of the Securities Exchange Act of
1934.
(g) "Participant" means any Eligible Employee who elects to
purchase Shares pursuant to the Plan.
(h) "Plan" means this Home Shopping Network, Inc. Employee Stock
Purchase Plan.
(i) "Shares" means common stock of the Company.
2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide
employees of the Company with an opportunity to acquire a proprietary interest
in the Company through the purchase of Shares in the open market.
3. BASIS OF PARTICIPATION AND FOR PURCHASING SHARES.
(a) An Eligible Employee may purchase Shares through
payroll deduction by completing the Payroll Deduction Authorization Form and
such other forms as may be promulgated by the Company and delivering them to
the Company at least 10 days prior to an Enrollment Date. The Payroll
Deduction Authorization Form shall state the percentage of the Participant's
Base Compensation that he or she desires to have withheld, which percentage
shall be a whole number not less than one and not greater than 15.
<PAGE> 30
(b) The designated percentage of compensation shall be
withheld by the Company for the next pay period after the Enrollment Date and
for each succeeding pay period until the Participant submits a Payroll
Deduction Authorization Form changing such election. Changes to the percentage
of compensation to be withheld may be made by submitting a Payroll Deduction
Authorization Form to the Company at least 10 days before any subsequent
Enrollment Date; provided, however, that a Participant may discontinue
participation in the Plan at any time, as provided in Section 9.
(c) The Company will deliver the amounts deducted from
the Participant's compensation to the Administrator, who will accumulate and
hold such funds for each Participant's account. Not less frequently than
monthly, the Administrator will use the funds accumulated to purchase Shares in
the open market for the benefit of the Participants. The purchase price for
such Shares shall be their fair market value as of the time of purchase. The
Participant shall not be charged any brokerage fees in relation to the
purchases, and he or she shall be entitled to the interest, if any, paid on
funds held for his or her account. Once funds have been withheld from the
Participant's compensation, the Participant shall have no right to obtain the
release of such funds, except in accordance with the terms of this Plan.
(d) Shares purchased by the Administrator shall be
allocated to the individual accounts established for Participants in proportion
to the respective amounts withheld for Participants' accounts. Any funds not
used for the purchase of Shares on a particular purchase date shall be carried
over to the next purchase date.
4. OWNERSHIP OF SHARES. The Shares once allocated to the
Participants' accounts become the sole property of the respective Participants.
All Shares are registered as designated by the Administrator and remain so
registered until delivery or sale is requested by the Participant pursuant to
Section 5.
5. DELIVERY; SALE.
(a) A Participant may instruct the Company to advise the
Administrator at any time to deliver to him or her a certificate for any or all
of his or her Shares, without affecting his or her continuing participation in
the Plan; provided, however, that such Participant shall pay any and all costs
associated with the issuance and delivery of such certificate.
(b) A Participant may instruct the Company to advise the
Administrator at any time to sell any or all of the Shares allocable to his or
her account, without affecting his or her continuing participation in the Plan.
The Company shall pay all charges therefor, including but not limited to
brokerage commis-
2
<PAGE> 31
sions, transfer taxes, and registration fees. The proceeds of any such sale
shall promptly be delivered to the Participant.
6. DISTRIBUTIONS ON SHARES. Cash dividends and other cash
distributions on Shares held in the custody of the Administrator are credited
to the account of the Participant, and the Participant may take a distribution
of such dividend or distribution or request the Administrator to purchase
additional Shares of the Company. Any dividends paid in Shares or any splits
of Shares which are received by the Administrator on Shares held in custody
will be allocated to each Participant in accordance with his or her interest in
the Shares in which the dividends or splits are paid, without charge.
7. CONFIRMATION OF TRANSACTIONS AND STATEMENTS OF ACCOUNT. Each
Participant will receive from the Administrator quarterly statements of account
which itemize the transactions for his or her account, and will also receive
confirmations of current transactions if required by regulatory authorities.
8. COMMUNICATIONS FROM COMPANY AND VOTING OF SHARES. The
Administrator shall deliver to each Participant as promptly as practicable, by
mail or otherwise, all notices of meetings, proxy statements and other material
distributed by the Company to its shareholders. The Shares in each
Participant's account will be voted in accordance with the Participant's signed
proxy instructions duly delivered to the Administrator, or otherwise in
accordance with rules applicable to the Company.
9. TERMINATION OF PARTICIPATION IN PLAN.
(a) A Participant may terminate his or her participation
in the Plan at any time by delivering to the Company written notice terminating
his or her payroll deduction authorization, which will become effective as soon
as practicable after receipt.
(b) Participation in the Plan and payroll deduction
authorizations terminate automatically without notice upon death or other
termination of employment with the Company. Any funds submitted in payment for
Shares prior to termination of employment and prior to purchase of Shares shall
be promptly returned to the Participant.
10. DIRECTORS AND EXECUTIVE OFFICERS. If an Insider:
(a) Withdraws Shares from the Plan pursuant to Section
5(a),
(b) Instructs the Administrator to sell any or all of the
Shares held by the Plan for the account of such
Insider pursuant to Section 5(b), or
3
<PAGE> 32
(c) Ceases participation in the Plan pursuant to Section
9,
then the Insider shall immediately be required to cease participation in the
Plan and shall not be permitted to renew participation in the Plan for at least
six months after the date of such withdrawal, sale or cessation of
participation.
11. ADMINISTRATION.
(a) The Company's responsibilities under the Plan will be
administered by the Compensation/Benefits Committee appointed by the Board of
Directors, which Committee has appointed the Administrator to perform certain
functions. The Compensation/Benefits Committee serves at the pleasure of the
Board of Directors. The Company reserves the right to change the designation
of the Administrator at any time. Certain conditions imposed upon brokers by
regulatory agencies could cause delay, from time to time, in the purchase of
Shares for which delay neither the Company nor the Administrator shall have any
liability.
(b) All Shares issued under the Plan will either be
appropriately registered under applicable federal and state securities laws or
issued in transactions that comply with exemptions from the securities
registration requirements of applicable federal and state laws. The
Compensation/Benefits Committee may establish procedures and restrictions in
its discretion to ensure compliance with applicable securities laws.
12. TERM OF PLAN. Unless sooner terminated as provided in Section
13, the Plan shall commence on satisfaction of the conditions of Section 15.
Notwithstanding anything in the Plan to the contrary, if (i) the Company is
merged or consolidated with another corporation, and the Company is not a
surviving corporation or (ii) the Company is liquidated or dissolved, then the
Plan shall immediately terminate and all rights to purchase stock hereunder to
the extent not then exercised shall cease and become void.
13. AMENDMENT OR TERMINATION. The Board of Directors of the
Company shall have the right to amend, modify, or terminate the Plan at any
time without notice, provided that without stockholder approval, no such
amendment of the Plan shall (i) change the price at which the Shares shall be
sold from fair market value, or (ii) change the eligibility requirements. Upon
termination, all rights to purchase Shares hereunder to the extent not then
exercised shall cease and become void.
4
<PAGE> 33
14. NOTICES.
(a) All notices or other communications by an employee to the
Company under or in connection with the Plan shall be deemed to have been duly
given when actually received by the Administrator or when actually received in
the form specified by the Company at the locations, or by the person,
designated by the Company for the receipt thereof.
(b) All notices or other communications by the Company to
an employee under or in connection with the Plan shall be deemed to have been
duly given by the Company to the employee if hand delivered to the employee or
delivered to the employee's location of employment, or if sent by U.S. mail to
the residence or business address of the employee as reflected on the books of
the Company or to such other address as the employee may designate from time to
time by notice given in accordance with the provisions in Section 14.
15. CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become
effective upon the occurrence of the following:
(a) Adoption of the Plan by the Board of Directors of the
Company;
(b) Approval of the Plan by the shareholders of the
Company; and
(c) The effective registration under applicable federal
and state securities laws of the Shares under the Plan or the receipt of an
opinion of counsel to the Company that registration of the Shares under the
Plan will not be necessary under either federal or state securities laws.
16. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or any
agreement entered into pursuant to the Plan shall confer upon any Eligible
Employee or other person the right to continue in the employment of the Company
or affect any right which the Company may have to terminate the employment of
such Eligible Employee or other person.
5
<PAGE> 34
<TABLE>
<S> <C>
HOME SHOPPING NETWORK, INC.
REVOCABLE PROXY FOR
MAY 4, 1994 MEETING OF STOCKHOLDERS
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOME SHOPPING
NETWORK, INC.
The undersigned hereby appoints Gerald F. Hogan, President and Chief Executive Officer of Home Shopping Network, Inc. (the
"Company"), proxy with full power of substitution, to vote all shares of Common Stock the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the Holiday Inn St. Petersburg/Clearwater International Airport Hotel,
3535 Ulmerton Road, Clearwater, Florida, 10:00 a.m., Eastern Daylight Time on May 4, 1994, or at any adjournment thereof, as
follows, hereby revoking any proxy previously given:
1. Election of directors.
/ / FOR the nominees listed below / / WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for the nominees listed below
(INSTRUCTION: TO WITHHOLD authority to vote for any individual nominee, strike a line through the nominee named in the list
below.)
George C. McNamee Gerald F. Hogan Robert R. Bennett
J. Anthony Forstmann Leo J. Hindery, Jr. John M. Draper
2. To approve the implementation of an Employee Stock Purchase Plan which would be available to all full-time employees of the
Company.
/ / FOR proposal 2 / / AGAINST proposal 2 / / ABSTAIN proposal 2
3. To ratify the appointment of KPMG Peat Marwick as the Company's independent auditors for 1994.
/ / FOR proposal 3 / / AGAINST proposal 3 / / ABSTAIN proposal 3
(Continued on other side)
4. To act upon such matters as may properly come before the meeting, as determined in the best judgment of the Chairman of the
Board of Directors of the Company.
/ / FOR proposal 4 / / AGAINST proposal 4 / / ABSTAIN proposal 4
All as set out in the Notice and Proxy Statement relating to the meeting, receipt of which is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3 AND 4
Shares represented by this proxy will be voted as directed by the stockholder. If no direction is supplied, the proxy will
be voted "FOR" proposals 1, 2, 3 and 4.
Dated
--------------------------------
-------------------------------------
(Please sign exactly as name
appears hereon)
-------------------------------------
(If stock is owned by more than
one person, all owners should
sign. Persons signing as
executors, administrators,
trustees or in similar
capacities should so indicate.)
</TABLE>
