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
Filed by the registrant \X\
Filed by a party other than the registrant \ \
Check the appropriate box:
\X\ Preliminary Proxy Statement
\ \ Definitive Proxy Statement
\ \ Definitive Additional Materials
\ \ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-
12
IDB Communications Group, Inc.
(Name of Registrant as Specified in Its Charter)
IDB Communications Group, Inc.
(Name of Person(s) Filing the 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 in
Exchange Act Rule 0-11 (a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
_________________________________________________
(2) Form, schedule or registration statement no.:
_________________________________________________
(3) Filing party:
_________________________________________________
(4) Dated filed:
_________________________________________________
[LOGO]
IDB COMMUNICATIONS GROUP, INC.
10525 West Washington Boulevard
Culver City, California 90232-1922
_______, 1994
Dear Stockholder:
You are cordially invited to attend the 1994 Annual Meeting
of Stockholders (the "Annual Meeting") of IDB Communications
Group, Inc. (the "Company" or "IDB"), which will be held at 10:00
a.m. (local time) on Thursday, June 30, 1994 at the Loews Santa
Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, California.
At the Annual Meeting you will be asked to (a) elect seven
directors of the Company; (b) amend the 1992 Incentive Stock Plan
to increase the maximum number of shares of Common Stock
available for awards to 8,150,000 and limit the number of options
that may be granted to an individual in any one year to 500,000
(the "Stock Plan Proposal"); (c) approve the grant of stock
options to certain officers of the Company (the "Option
Proposal"); (d) approve an amendment to the Company's Restated
Certificate of Incorporation which would increase the number of
authorized shares of Common Stock, par value $.01 per share
("Common Stock"), of the Company from 200,000,000 shares to
500,000,000 shares (the "Charter Amendment Proposal"); and (e)
transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS OF THE COMPANY VOTE TO APPROVE THE CHARTER
AMENDMENT PROPOSAL, THE STOCK PLAN PROPOSAL AND THE OPTION
PROPOSAL AND TO ELECT THE SEVEN DIRECTOR NOMINEES PROPOSED BY THE
BOARD OF DIRECTORS OF THE COMPANY.
IN VIEW OF THE IMPORTANCE OF THE ACTIONS TO BE TAKEN AT THE
ANNUAL MEETING, YOU ARE URGED TO READ CAREFULLY THE ACCOMPANYING
PROXY STATEMENT AND, REGARDLESS OF THE NUMBER OF SHARES YOU OWN,
WE REQUEST THAT YOU COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY IN THE ACCOMPANYING PREPAID ENVELOPE. YOU
MAY, OF COURSE, ATTEND THE ANNUAL MEETING AND VOTE IN PERSON,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
Sincerely,
Jeffrey P. Sudikoff
Chairman of the Board and Chief Executive Officer
[Logo]
IDB COMMUNICATIONS GROUP, INC.
10525 West Washington Boulevard
Culver City, California 90232-1922
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
To be Held June 30, 1994
TO THE STOCKHOLDERS OF IDB COMMUNICATIONS GROUP, INC.:
The 1994 Annual Meeting of Stockholders (the "Annual Meeting") of
IDB Communications Group, Inc., a Delaware corporation (the
"Company" or "IDB"), will be held at the Loews Santa Monica Beach
Hotel, 1700 Ocean Avenue, Santa Monica, California, at 10:00 a.m.
(local time) on Thursday, June 30, 1994, for the following
purposes:
(a) To elect the following seven individuals as directors of the
Company: Jeffrey P. Sudikoff, Edward R. Cheramy, Peter F. Hartz,
William L. Snelling, Franklin E. Fried, Joseph M. Cohen and
Stephen N. Carroll;
(b) To consider and act upon a proposal to amend the Company's
1992 Incentive Stock Plan to increase the maximum number of
shares of Common Stock available for awards to 8,150,000 and
limit the number of options that may be granted to an individual
in any one year to 500,000;
(c) To consider and act upon a proposal to approve the grant of
stock options to certain officers of the Company;
(d) To consider and act upon a proposal to amend the Restated
Certificate of Incorporation of the Company to increase the
number of authorized shares of Common Stock, par value $.01 per
share ("Common Stock"), from 200,000,000 shares to 500,000,000
shares; and
(e) To transact such other business as may properly come before
the Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on June 6,
1994 as the record date for the determination of stockholders
entitled to vote at the Annual Meeting. A list of stockholders
entitled to vote at the Annual Meeting is available for review at
the offices of the Company's transfer agent, Mellon Securities
Transfer Services, in Calabasas, California. A copy of the
Company's Annual Report, including financial statements for the
fiscal year ended December 31, 1993, is enclosed with this Notice
but is not to be considered part of the proxy solicitation
material.
By Order of the Board of Directors
Neil J Wertlieb
Secretary
Los Angeles, California
_______, 1994
[LOGO]
IDB COMMUNICATIONS GROUP, INC.
10525 West Washington Boulevard
Culver City, California 90232-1922
_______________
PROXY STATEMENT
_______________
GENERAL INFORMATION
This Proxy Statement is being sent on or about June 8, 1994
in connection with the solicitation of proxies by the Board of
Directors of IDB Communications Group, Inc., a Delaware
corporation (the "Company" or "IDB"). The proxies are for use at
the Company's 1994 Annual Meeting of Stockholders (the "Annual
Meeting"), which will be held at 10:00 a.m. (local time) on
Thursday, June 30, 1994 at the Loews Santa Monica Beach Hotel,
1700 Ocean Avenue, Santa Monica, California, and at any meetings
held upon the adjournment or postponement thereof. The record
date for the Annual Meeting is the close of business on June 6,
1994 (the "Record Date"), and all holders of record of shares of
IDB's Common Stock, par value $.01 per share (the "Common
Stock"), on the Record Date are entitled to notice of the Annual
Meeting and to vote at the Annual Meeting and any meetings held
upon adjournment or postponement thereof.
A proxy form is enclosed. Whether or not you plan to attend
the Annual Meeting in person, please date, sign and return the
enclosed proxy as promptly as possible, in the postage prepaid
envelope provided, to insure that your shares will be voted at
the Annual Meeting. Any stockholder who returns a proxy in such
form has the power to revoke it at any time prior to its
effective use by filing a signed written notice revoking it or a
duly executed proxy bearing a later date with the Secretary of
the Company. Attendance at the Annual Meeting without filing
such a written notice or proxy will not revoke a proxy previously
filed with the Company.
Unless contrary instructions are given, any such proxy, if
not revoked, will be voted at the Annual Meeting: (a) for
approval of a proposal (the "Charter Amendment Proposal") to
amend the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from
200,000,000 shares to 500,000,000 shares (the "Charter
Amendment"); (b) for approval of a proposal (the "Stock Plan
Proposal") to amend the Company's 1992 Incentive Stock Plan (as
amended, the "1992 Stock Plan") to increase the number of shares
of Common Stock available for awards to 8,150,000 and limit the
number of options that may be granted to an individual in any one
year to 500,000; (c) for approval of a proposal (the "Option
Proposal" and together with the Stock Plan Proposal, the
"Incentive Stock Proposals") to approve the grant of stock
options to certain officers of the Company; (d) for the slate of
nominees to the Company's board of directors (the "Board of
Directors" or "Board"); and (e) as recommended by the Board of
Directors with regard to all other matters, in its discretion.
The only voting securities of the Company are the
outstanding shares of Common Stock. As of the Record Date, the
Company had __________ shares of Common Stock outstanding. For
each share of Common Stock held on the Record Date, a stockholder
is entitled to one vote on all matters to be considered at the
Annual Meeting. The Company's Restated Certificate of
Incorporation does not provide for cumulative voting. Under
Delaware law, IDB's stockholders do not have any appraisal or
similar dissenters' rights with respect to any matter to be acted
upon at the Annual Meeting.
The cost of preparing, assembling, printing and mailing this
Proxy Statement and the enclosed proxy form, and the cost of
soliciting proxies relating to the Annual Meeting will be borne
by IDB. The Company may request banks and brokers to solicit
their customers who beneficially own shares of Common Stock
listed of record in names of nominees, and will reimburse such
banks and brokers for their reasonable out-of-pocket expenses of
such solicitations. The original solicitation of proxies by mail
may be supplemented by telephone, telegram and solicitation by
officers, directors and regular employees of the Company, but no
additional compensation will be paid to such individuals.
Requests for additional copies of proxy materials should be
addressed to Neil J Wertlieb, Corporate Secretary, at the offices
of the Company, 10525 West Washington Boulevard, Culver City,
California 90232-1922.
The Company was originally incorporated in California in
September 1983 and was reincorporated in Delaware on
September 30, 1986. "IDB" and the "Company" refer to IDB
Communications Group, Inc. and its subsidiaries and, for periods
prior to September 30, 1986, to its predecessor California
corporation and subsidiaries.
YOU ARE URGED TO VOTE UPON THE MATTERS PRESENTED AND TO
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED. IT IS IMPORTANT FOR YOU TO BE REPRESENTED AT THE
MEETING. THE EXECUTION OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT
TO VOTE IN PERSON IF YOU ARE PRESENT AT THE MEETING.
THE DATE OF THIS PROXY STATEMENT IS _______, 1994.
INTRODUCTION
This Proxy Statement is being furnished to stockholders of
the Company in connection with the solicitation of proxies by the
Board of Directors of the Company for use at the Annual Meeting
to be held at 10:00 a.m. (local time), on Thursday, June 30, 1994
at the Loews Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa
Monica, California. This Proxy Statement is first being mailed
to stockholders of the Company on or about June 8, 1994.
At the Annual Meeting or any adjournment or postponement
thereof, stockholders of the Company will: (a) consider and act
upon the Charter Amendment Proposal to approve the Charter
Amendment; (b) consider and act upon the Stock Plan Proposal to
amend the Company's 1992 Incentive Stock Plan; (c) consider and
act upon the Option Proposal to approve the grant of stock
options to certain officers of the Company; (d) elect a Board of
seven directors; and (e) transact such other business as may
properly come before the Annual Meeting or any adjournment or
postponement thereof.
VOTING AND PROXIES
Voting Securities
Only stockholders of record of IDB Common Stock at the close
of business on the Record Date are entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement
thereof. As of the Record Date, _______________ shares of IDB's
Common Stock were issued and outstanding and held by _______
stockholders of record. Stockholders of record will be entitled
to one vote for each share held on each matter to be acted upon
or which may properly come before the Annual Meeting.
Quorum and Voting Requirements
The presence, either in person or by proxy, of the holders
of a majority of the shares of IDB Common Stock outstanding on
the Record Date is necessary to constitute a quorum at the Annual
Meeting. The affirmative vote of a majority of the shares of IDB
Common Stock represented and voting at the Annual Meeting of
Stockholders will be required to approve the Charter Amendment
Proposal, the Stock Plan Proposal and the Option Proposal. The
director nominees who receive the greatest number of votes at the
Annual Meeting will be elected to the Board of Directors of the
Company.
Shares of IDB Common Stock represented at the Annual Meeting
by proxies that reflect abstentions will be treated as shares
that are present and entitled to vote for purposes of determining
the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the stockholders for a vote.
Abstentions, however, do not constitute a vote "for" or "against"
any matter and thus have the practical effect of voting against a
matter because an abstention from voting is one less vote for
approval of such matter. Shares of IDB Common Stock referred to
as "broker non-votes" will be treated as shares that are present
and entitled to vote for purposes of determining the presence of
a quorum. However, for purposes of determining the outcome of
any matter as to which a broker or nominee has physically
indicated on the proxy that it does not have discretionary
authority to vote, those shares will be treated as not present
and not entitled to vote with respect to that matter. Any
unmarked proxies, including those submitted by brokers or
nominees, will be voted as indicated in the accompanying proxy,
as summarized elsewhere in this Proxy Statement.
Proxies; Right to Revoke Proxy
All shares of IDB Common Stock that are represented at the
Annual Meeting by properly executed proxies received prior to or
at the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on
such proxies. If no instructions are indicated, such proxies
will be voted FOR approval of the Charter Amendment Proposal, the
Stock Plan Proposal, the Option Proposal and to elect the seven
director nominees selected by the Board of Directors of the
Company. The Board of Directors of IDB does not know of any
other matters that are to come before the Annual Meeting. If any
other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed proxy and acting
thereunder will have discretion to vote on such matters in
accordance with their best judgment, including any proposal to
adjourn such Annual Meeting or otherwise concerning the conduct
of such Annual Meeting.
Any holder of IDB Common Stock returning the proxy enclosed
with this Proxy Statement has the power to revoke such proxy at
any time prior to the exercise thereof by giving written notice
of such revocation, or by delivering a later dated proxy to the
Corporate Secretary of IDB. Attendance at the Annual Meeting
without filing such a written notice or proxy will not revoke a
proxy previously filed with the Company. Valid proxies will be
voted at the Annual Meeting and at any postponement or
adjournment thereof in the manner specified herein.
Expenses of Solicitation
All costs of soliciting proxies in connection with the
Annual Meeting will be borne by IDB. In addition to solicitation
by mail, officers, directors and regular employees of IDB may
solicit proxies from stockholders of IDB by telephone, telegram
or in person. Such persons will receive no additional
compensation for such services. In addition, IDB will request
persons holding IDB Common Stock in their name and custody, or in
the name of a nominee, to send proxy materials to their
principals and will request authority for the execution of the
proxies. IDB will reimburse such persons for the reasonable
expenses in so doing.
OWNERSHIP OF IDB COMMON STOCK
The following table sets forth information regarding the
ownership of the Company's shares of Common Stock as of March 15,
1994 by (a) stockholders known by the Company to own beneficially
more than 5% of the Company's shares of Common Stock, (b) each
director and nominee, (c) each executive officer named in the
Summary Compensation Table and (d) all directors and executive
officers as a group. Except as otherwise noted, the Company
knows of no agreements among its stockholders that relate to
voting or investment power of its shares of Common Stock.
<TABLE>
<CAPTION>
Number of Percent of
Shares Total
Beneficially Outstanding
Name Owned(1) Shares
- - - - ----- ---------- -----------
<S> <C> <C>
Jeffrey P. Sudikoff . . . . . . . 4,775,587 6.5%
Edward R. Cheramy(2) . . . . . . 756,889 1.0
Peter F. Hartz(3) . . . . . . . . 348,279 *
Stephen N. Carroll . . . . . . 26,500 *
Rudy Wann(4) . . . . . . . . . . 28,379 *
James E. Kolsrud(5) . . . . . . . 34,631 *
William L. Snelling(6) . . . . . 26,491 *
Franklin E. Fried(7) . . . . . . 6,406 *
Joseph M. Cohen(8) . . . . . . . 64,914 *
All directors, nominees and
executive officers as a group (10 6,074,887 8.2
persons)(9) . . . . . . . . . .
FMR Corp.(10) . . . . . . . . . . 5,550,930 7.5
82 Devonshire Street
Boston, Massachussets 02109
Metropolitan Life Insurance 4,521,336 6.1
Company(11) . . . . . . . . . . .
One Madison Avenue
New York, New York 10010
</TABLE>
____________________
* Less than 1%.
(1) Except as indicated in other notes to this table, each such
stockholder listed has sole voting and dispositive power
with respect to the shares beneficially owned, subject to
any limitations on such power arising under community
property or similar laws.
(2) Shares are held by the Edward R. and Shirley J. Cheramy
Trust, of which Mr. Cheramy and his spouse, Shirley J.
Cheramy, are co-trustees. Includes 366,261 shares covered
by outstanding stock options granted to Mr. Cheramy that are
exercisable within 60 days of March 15, 1994.
(3) Includes 10,335 shares covered by outstanding stock options
granted to Mr. Hartz that are exercisable within 60 days of
March 15, 1994.
(4) Includes 25,229 shares covered by outstanding stock options
granted to Mr. Wann that are exercisable within 60 days of
March 15, 1994.
(5) Includes 34,631 shares covered by outstanding stock options
granted to Mr. Kolsrud that are exercisable within 60 days
of March 15, 1994.
(6) Shares are held by the Snelling 1986 Trust, of which
Mr. Snelling and his spouse, Cleora A. Snelling, are co-
trustees. Includes 19,325 shares covered by outstanding
stock options granted to Mr. Snelling that are exercisable
within 60 days of March 15, 1994.
(7) Includes 6,406 shares covered by outstanding stock options
granted to Mr. Fried that are exercisable within 60 days of
March 15, 1994.
(8) Shares are held by Joseph M. Cohen, Inc., a corporation that
is wholly owned by Mr. Cohen.
(9) Includes 474,983 shares covered by outstanding stock options
granted to all directors and executive officers that are
exercisable within 60 days of March 15, 1994.
(10) Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of
4,916,205 shares of Common Stock, and Fidelity Management
Trust Company, a wholly-owned subsidiary of FMR Corp., is
the beneficial owner of 634,725 shares of Common Stock.
(11) Shares are held by State Street Research & Management
Company, a wholly-owned subsidiary of Metropolitan Life
Insurance Company. Metropolitan Life Insurance Company and
State Street Research & Management Company have disclaimed
beneficial ownership of all of such shares.
MANAGEMENT OF IDB
Directors and Executive Officers
The Company's directors, persons nominated to become
directors, executive officers and key employees are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Position or Director
Name Age Office Since
- - - - ----- --- ----------- --------
Jeffrey P. Sudikoff 38 Chairman of the 1983
Board, Chief
Executive
Officer and
Director
Edward R. 50 President and 1986
Cheramy(1)(2) . . . Director
Peter F. Hartz . . 40 Senior Vice 1988
President, Sales
and
Marketing and
Director
Stephen N. Carroll 44 President--IDB --
WorldCom and
director
nominee
Rudy Wann . . . . . 37 Vice President, --
Finance and
Chief
Financial
Officer
James E. Kolsrud . 49 Vice President, --
Engineering and
Administration
Neil J Wertlieb . . 35 Vice President, --
General Counsel
and Secretary
John A. Tagliaferro 50 President--IDB --
Broadcast
William L. 63 Director 1983
Snelling(1)(3) . .
Franklin E. 66 Director 1988
Fried(2)(3) . . . .
Joseph M. 47 Director 1989
Cohen(1)(2)(3) . .
</TABLE>
_______________________
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Stock Option Committee.
Jeffrey P. Sudikoff, a founder of the Company, has been
instrumental in the Company's development. Mr. Sudikoff has been
the Chief Executive Officer and a director of the Company since
its incorporation in September 1983 and has been Chairman of the
Board of Directors since May 1986. He also served as the
Company's President from September 1983 until March 1989. From
1978 until founding the Company, Mr. Sudikoff provided consulting
services to the radio broadcast industry in the areas of
programming production and distribution.
Edward R. Cheramy was appointed President of the Company in
March 1989 and has been a director since joining the Company in
May 1986. Mr. Cheramy also served as Chief Financial Officer of
the Company from September 1990 to November 1992 and from
May 1986 to July 1989, and as Executive Vice President of the
Company from May 1986 to March 1989. From 1978 until joining the
Company, Mr. Cheramy was a partner in the accounting firm of
Price Waterhouse.
Peter F. Hartz joined the Company in November 1984 and has
been Senior Vice President, Sales and Marketing since
February 1991 and a director since April 1988. From June 1990 to
January 1991, Mr. Hartz served as President of IDB Broadcast
Division, and from September 1985 to February 1991, he served as
Vice President, Sales and Marketing. From September 1980 to
January 1982, Mr. Hartz was Director of Advertising and Promotion
for Watermark, Inc., now ABC Watermark, a radio programming
syndicator. From January 1982 to January 1983, Mr. Hartz served
as Director of Marketing for Diamond P Sports, a television
program supplier, and from January 1983 to November 1984,
Mr. Hartz authored a nonfiction book about the financial
community.
Stephen N. Carroll, a 15-year veteran of the
telecommunications industry, joined the Company in September 1991
as President of IDB WorldCom (formerly IDB&T). Prior to joining
IDB, Mr. Carroll was employed by Comsat, Inc.'s World Systems
Division, where he was Vice President of Sales and Business
Development since 1986 and Director of Carrier Sales since 1983.
During his tenure at Comsat, Inc., Mr. Carroll represented the
services of Intelsat to U.S. long distance carriers, authorized
users, and U.S. and international broadcasters.
Rudy Wann joined the Company in May 1991 and has been Vice
President, Finance since April 1992 and Chief Financial Officer
since November 1992. From August 1990 to April 1991, Mr. Wann
was Vice President, Finance and Chief Financial Officer of Tiger
Media, Inc., a developer of computer software. From July 1979 to
July 1990, Mr. Wann was with the accounting firm of Price
Waterhouse, most recently as a senior manager, except for eleven
months from August 1984 to June 1985 when he held various
accounting positions with Inter-Con Systems, a government
contractor.
James E. Kolsrud joined the Company in October 1989 in
connection with the Company's acquisition of CICI, Inc. and has
served as Vice President of Engineering and Administration since
November 1992. From October 1989 to November 1992, Mr. Kolsrud
served as President of the Company's International division.
From March 1989 through October 1989, Mr. Kolsrud served as
President of CICI, Inc. when it was a subsidiary of Contel ASC.
From April 1985 through March 1989, Mr. Kolsrud served as Vice
President of Engineering and Operations at CICI, Inc. and from
1975 until joining CICI, Inc., Mr. Kolsrud held several positions
for Comsat, Inc. including Senior Director of Engineering for
World Systems Division and United States Representative to the
Intelsat Board of Governors Technical Advisory Committee.
Neil J Wertlieb joined the Company in August 1992 as a Vice
President. He was promoted to General Counsel in October 1993
and to Secretary in November 1993. From October 1984 to June
1992, Mr. Wertlieb was an associate at the law firm of O'Melveny
& Myers.
John A. Tagliaferro joined the Company in January 1989 in
connection with the Company's acquisition of the assets of Hughes
Television Network. Mr. Tagliaferro has been President of IDB
Broadcast Group since January 1991, and from January 1989 through
January 1991, Mr. Tagliaferro served as President of the
Company's HTN division. From December 1986 through January 1989,
Mr. Tagliaferro served as President and Chief Operating Officer
of Hughes Television Network.
William L. Snelling, a founder of the Company, has been a
director since the Company's incorporation in September 1983. In
addition, Mr. Snelling served as Chairman of the Board and Chief
Financial Officer from the Company's incorporation until May 1986
and as Secretary from the Company's incorporation until June
1991. Mr. Snelling is also currently the Secretary and a
director of the Bank of Santa Maria, located in Santa Maria,
California. From June 1991 through November 1992, Mr. Snelling
was a private investor. From November 1992 to November 1993,
Mr. Snelling was a consultant to Southwest Leasing Corporation.
Since November 1993, Mr. Snelling has been the Chairman of
California Commercial Spaceport, Inc., a company that launches
low orbital communications satellites. Mr. Snelling also
provides consulting services to the Company pursuant to a
consulting agreement. See "Executive Compensation --
Compensation Committee Interlocks and Insider Participation."
Franklin E. Fried has been a director of the Company since
December 1988. From January 1989 to November 1991, Mr. Fried was
the President of the San Diego-based Fried-Schegan, which
specialized in entertainment and creative developments in the
hospitality field. From 1977 to January 1989, Mr. Fried was
President of Franklin E. Fried Associates, an entertainment and
hospitality services firm. From 1984 to 1988, Mr. Fried was also
President of the Delta Queen Steamboat Company, a firm
specializing in the operation of paddleboats on the Mississippi
River. From June 1991 through November 1992, Mr. Fried was the
Chairman of Old New Orleans Seafood Company, a seafood
distributor.
Joseph M. Cohen has been a director of the Company since
June 1989 and also served as a member of the Board of Directors
from March 1988 through November 1988. From 1991 to January
1994, Mr. Cohen was the President of Spectacor West, overseeing
all West Coast activities of the international sports and
entertainment company Spectacor. Since January 1994, Mr. Cohen
has been a consultant to Rainbow Programming Services for Sports
Channel Networks, Inc. and has been involved in planning the
construction of a new sports arena in Los Angeles. From January
1988 to March 1989, Mr. Cohen served as President and Chief
Executive Officer of Z Channel, a pay television channel in Santa
Monica, California.
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and certain of its
officers, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange
Commission (the "Commission") and the NASDAQ National Market
System. Such directors, officers and stockholders are required
by the Commission's regulations to furnish the Company with
copies of all Section 16(a) reports they file. Based solely on
its review of the copies of such reports received by it, or
written representations from certain reporting persons that no
such reports were required for those persons, the Company
believes that from January 1, 1993 to December 31, 1993, all
filing requirements applicable to such directors, officers and
stockholders were complied with, except for the following: Each
of Messrs. Sudikoff and Cohen filed Form 4 reports related to
sales of shares of Common Stock in July 1993 more than ten days
following the end of the month in which such transactions
occurred. Mr. Fried filed a Form 4 report related to the
exercise of stock options and subsequent sale of the resulting
shares in May 1993 more than 10 days following the end of the
month in which such transactions occurred. David W. Anderson
failed to file a Form 4 report relating to the exercise of stock
options and subsequent sale of the resulting shares of Common
Stock; however, such transactions were reported in a timely filed
Form 5 report.
The Company's Board of Directors met ten times and acted by
unanimous written consent once during the fiscal year ended
December 31, 1993. No director attended fewer than 75% of the
aggregate of (a) the total number of meetings of the Board of
Directors held during his term as a director in 1993 and (b) the
total number of meetings of all committees of the Board of
Directors on which he served which were held during 1993.
The Compensation Committee of the Board of Directors has the
power and authority to establish and implement policies and
procedures regarding the compensation of officers and employees
of the Company. The Committee, which consists of Messrs.
Cheramy, Snelling and Cohen, acted once by unanimous written
consent during fiscal 1993. The Audit Committee of the Board of
Directors reviews, reports and makes recommendations to the Board
of Directors on all matters relating to the financial reporting
process of the Company. The Audit Committee, which consists of
Messrs. Cheramy, Fried and Cohen, met once during fiscal 1993.
The Stock Option Committee of the Board of Directors administers
the Company's 1992 Incentive Stock Plan. The Stock Option
Committee, which consists of Messrs. Snelling, Fried and Cohen,
meet twice and acted by written consent once during fiscal 1993.
There is no nominating committee of the Board of Directors.
Other than Mr. Snelling, a director of the Bank of Santa
Maria, in Santa Maria, California, none of the nominees presently
holds a directorship in any other company with a class of
securities registered under, or otherwise subject to the
reporting requirements of, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or registered under the
Investment Company Act of 1940.
Summary Compensation Table
The table sets forth information concerning the compensation
paid by the Company during the last three fiscal years to the
Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company.
<TABLE>
<CAPTION>
Annual Compensation
----------------------------
Other
Annual
Name and Principal Position Year Salary Bonus(1) Compensation
- - - - --------------------------- ---- ------- -------- ------------
<S> <C> <C> <C> <C>
Jeffrey P. Sudikoff 1993 $575,000 $400,000 (4)
Chairman of the Board and 1992 500,000 -- (4)
Chief Executive Officer 1991 480,000 -- (6)
Edward R. Cheramy 1993 460,000 400,000 (4)
President 1992 400,000 -- (4)
1991 390,000 -- (6)
Peter F. Hartz 1993 190,800 25,000 (4)
Senior Vice President, Sales 1992 180,000 53,125 (4)
and Marketing 1991 162,500 25,000 (6)
Rudy Wann(7) 1993 142,500 125,000 (4)
Vice President, Finance 1992 121,667 15,000 (4)
and Chief Financial Officer 1991 74,166 -- (6)
James E. Kolsrud 1993 170,000 50,000 (4)
Vice President of 1992 140,000 75,000 (4)
Engineering and Administration 1991 134,000 -- (6)
<CAPTION>
Long Term
Compensation
--------------
Securities
Underlying All Other
Name and Principal Position Year Options (2) Compensation (3)
- - - - --------------------------- ---- ------------- -----------------
<S> <C> <C> <C>
Jeffrey P. Sudikoff 1993 740,250(5) $4,497
Chairman of the Board and 1992 213,728 4,364
Chief Executive Officer 1991 86,820 (6)
Edward R. Cheramy 1993 740,250(5) 4,497
President 1992 213,727 4,364
1991 86,820 (6)
Peter F. Hartz 1993 157,500 4,497
Senior Vice President, Sales 1992 112,219 4,250
and Marketing 1991 52,095 (6)
Rudy Wann(7) 1993 236,250(5) 3,562
Vice President, Finance 1992 32,288 3,292
and Chief Financial Officer 1991 17,366 (6)
James E. Kolsrud 1993 63,000 3,212
Vice President of 1992 102,375 3,500
Engineering and Administration 1991 31,500 (6)
</TABLE>
_______________________
(1) Bonus payments are reported for the year in which they were earned.
(2) Adjusted to reflect the 5% Common Stock dividends
paid on each of October 11, 1991
and November 10, 1992 and the 3.15-to-one
Common Stock split in the form of a 215%
Common Stock dividend paid on February
4, 1994 (the "Common Stock Split").
(3) Represents the dollar value of Company
matching contributions under the Company's
401(k) Savings and Retirement Plan.
(4) The named individual received certain perquisites
and other personal benefits from
the Company; however, the dollar value of such
other annual compensation did not
exceed the lesser of $50,000 or 10% of
the total annual salary and bonus for such
individual in each of 1992 and 1993.
(5) Does not include the grant to each of
Messrs. Sudikoff and Cheramy of options to
purchase 2,835,000 shares of Common Stock
(as adjusted to reflect the Common Stock
Split) and the grant to Mr. Wann of options
to purchase 236,250 shares of Common
Stock (as adjusted to reflect the Common Stock
Split). Such options were granted
subject to stockholder approval,
which has not yet been received. See "Approval of
the Incentive Stock Proposals -- Grants Made
Outside the 1992 Incentive Stock Plan."
(6) In accordance with the transitional provisions
applicable to the revised rules on
executive compensation disclosure adopted by
the Securities and Exchange Commission,
information with respect to Other Annual
Compensation and All Other Compensation for
1991 has been omitted.
(7) Rudy Wann joined the Company in May 1991.
Options Granted in 1993
The following information is furnished for the year ended December 31,
1993 with respect to the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers of
the Company for stock options which were granted in 1993.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total
Underlying Options Exercise
Options Granted to Price Per
Name Granted(1)(2)(3)(4)(5) Employees Share(3)(5)(6)
in 1993(5)
------ ---------------------- ---------- --------------
<S> <C> <C> <C>
Jeffrey P. 425,250 17.6% $11.98
Sudikoff . . 315,000 13.1 14.37
Edward R. 425,250 17.6 11.98
Cheramy . . . 315,000 13.1 14.37
Peter F. Hartz 94,500 3.9 11.98
63,000 2.6 14.37
Rudy Wann . . 157,500 6.5 11.98
78,750 3.3 14.37
James E. 63,000 2.6 11.98
Kolsrud . . .
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
for Option Term(7)
Expiration --------------------
Name Date(4) 5% 10%
------ ---------- --- ----
<S> <C> <C> <C>
Jeffrey P. 7/29/2003 $3,203,901 $8,119,313
Sudikoff . . 11/29/2003 2,846,723 7,214,155
Edward R. 7/29/2003 3,203,901 8,119,313
Cheramy . . . 11/29/2003 2,846,723 7,214,155
Peter F. Hartz 7/29/2003 711,978 1,804,292
11/29/2003 569,345 1,442,831
Rudy Wann . . 7/29/2003 1,186,629 3,007,152
11/29/2003 711,681 1,803,538
James E. 7/29/2003 474,652 1,202,861
Kolsrud . . .
</TABLE>
_______________________
(1) Adjusted to reflect the Common Stock Split.
(2) Options granted in 1993 vest over a four-year period, with
25% of the shares covered thereby becoming exercisable on
each anniversary date.
(3) Under the terms of the Company's stock incentive plans, the
Board of Directors or the Stock Option Committee thereof
retains discretion, subject to plan limits, to modify the
terms of outstanding options and to reprice the options.
(4) The options were granted for a term of ten years, subject to
earlier termination in certain events related to termination
of employment.
(5) Does not include the grant to each of Messrs. Sudikoff and
Cheramy of options to purchase 2,835,000 shares of Common
Stock (as adjusted to reflect the Common Stock Split) and
the grant to Mr. Wann of options to purchase 236,250 shares
of Common Stock (as adjusted to reflect the Common Stock
Split). Such options were granted on November 29, 1993,
will expire on November 30, 2003 and have an exercise price
of $14.37 (as adjusted to reflect the Common Stock Split),
the fair market value on the date that the options were
granted (as adjusted to reflect the Common Stock Split).
Such options were granted subject to stockholder approval,
which has not yet been received. See "Approval of the
Incentive Stock Proposals -- Grants Made Outside the 1992
Incentive Stock Plan."
(6) The exercise price may be paid by delivery of a promissory
note, already owned shares or other lawful consideration,
subject to certain conditions and as otherwise approved by
the Board of Directors or the Stock Option Committee.
(7) The potential realizable values indicated are based solely
on arbitrarily assumed rates of appreciation required by
applicable regulations of the Securities and Exchange
Commission. The actual value, if any, an executive may
realize will depend upon the excess of the stock price on
the date an option is exercised over the exercise price. As
a result, such assumed values are not necessarily indicative
of the values that can be realized upon exercise of such
options, and use of such rates should not be viewed in any
way as a forecast of the future performance of the Company's
stock.
Aggregated Option Exercises in 1993 and Year-End Value Table
The following information is furnished for the year ended
December 31, 1993 with respect to the Company's Chief Executive
Officer and each of the four other most highly compensated
executive officers of the Company for stock options exercised
during 1993 and for unexercised options held at year end.
<TABLE>
<CAPTION>
Number of
Securities Underlying
Shares Unexercised Options
Acquired Value at December 31, 1993(1)(3)
Name on Realized(2) ---------------------------
Exercise(1) Exercisable Unexercisable
-------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Jeffrey P. Sudikoff 266,149 $1,438,674 99,844 922,251
Edward R. Cheramy . 315,000 4,734,000 509,703 922,249
Peter F. Hartz . . 333,959 2,083,602 -- 254,686
Rudy Wann . . . . . -- -- 21,097 264,806
James E. Kolsrud . 12,600 87,194 45,793 149,348
<CAPTION>
Value of Unexercised
In-the-Money Options
at December 31,1993(3)(4)
---------------------------
Name Exercisable Unexercisable
---------- ----------- -------------
<S> <C> <C>
Jeffrey P. Sudikoff . $1,592,511 $5,783,056
Edward R. Cheramy . . 7,987,520 5,783,024
Peter F. Hartz . . . -- 2,046,229
Rudy Wann . . . . . . 316,602 1,502,994
James E. Kolsrud . . 673,780 1,532,826
</TABLE>
_______________________
(1) Adjusted to reflect the Common Stock Split.
(2) This amount is the aggregate of the market value of the
Common Stock at the time each stock option was exercised
minus the exercise price for that option.
(3) Does not include the grant to each of Messrs. Sudikoff and
Cheramy of options to purchase 2,835,000 shares of Common
Stock (as adjusted to reflect the Common Stock Split) and
the grant to Mr. Wann of options to purchase 236,250 shares
of Common Stock (as adjusted to reflect the Common Stock
Split). Such options are subject to stockholder approval.
See "Approval of the Incentive Stock Proposals -- Grants
Made Outside the 1992 Incentive Stock Plan."
(4) This amount is the aggregate of the number of options
multiplied by the difference between the closing price of
the Common Stock on the NASDAQ National Market System on
December 31, 1993 ($17.46, as adjusted to reflect the Common
Stock Split) and the exercise price for such options.
Compensation of Directors
No director received any compensation during the Company's
last fiscal year for any service provided as a director.
Beginning in 1994, the Company compensates each non-employee
director $2,000 for each month of membership on the Board of
Directors and $1,000 for each meeting of the Board that the
director attends.
Nonemployee directors of the Company are entitled to receive
annually a limited number of non-qualified stock options pursuant
to the Company's 1992 Stock Option Plan for Nonemployee Directors
(the "Nonemployee Director Plan"). The Nonemployee Director Plan
provides for the annual automatic granting of options to purchase
6,615 shares, subject to adjustment, of IDB Common Stock to each
nonemployee director immediately following the annual meeting of
stockholders. The option exercise price is the fair market value
(as defined) of the Common Stock on the date of grant. The
options vest over a four year period, and expire ten years and
one day from the date of grant, subject to earlier termination in
accordance with the terms of the Nonemployee Director Plan. As
of the date hereof, an aggregate of 33,075 options have been
granted under the Nonemployee Director Plan.
The Company entered into a consulting agreement with William
L. Snelling as of January 1, 1992. Under the consulting
agreement, Mr. Snelling will be paid an annual fee over a 15-year
period, beginning at $125,000 in 1992, with cost of living
increases each year. The Consulting Agreement also provides that
the Company will reimburse Mr. Snelling up to $100,000 per year
for business expenses and personal accounting, financial, tax and
legal consulting and similar expenses incurred by Mr. Snelling.
See "Certain Relationships and Related Transactions."
Employment Agreements
The Company entered into employment agreements with Messrs.
Sudikoff, Cheramy and Hartz on January 1, 1992, each for a five
year term, which is automatically renewed each year thereafter,
subject to earlier termination under certain circumstances. Mr.
Sudikoff's employment agreement provides for a minimum base
salary of $500,000 in 1992, $575,000 in 1993, $661,250 in 1994,
$760,437 in 1995 and $874,503 in 1996. Mr. Cheramy's employment
agreement provides for a minimum base salary of $400,000 in 1992,
$460,000 in 1993, $529,000 in 1994, $608,350 in 1995 and $699,602
in 1996. Mr. Hartz' employment agreement provides for a minimum
base salary of $180,000 in 1992, $190,800 in 1993, $202,248 in
1994, $214,383 in 1995 and $227,246 in 1996. Each of Messrs.
Sudikoff, Cheramy and Hartz is entitled to receive an annual
bonus in an amount determined by the Compensation Committee of
the Board of Directors. Messrs. Sudikoff's, Cheramy's and Hartz'
employment agreements also provide for the reimbursement of
business and automobile expenses and certain other benefits,
including an allowance of up to $50,000, $50,000 and $15,000,
respectively, for each contract year for personal accounting,
financial, tax and legal consulting and other similar expenses
for Messrs. Sudikoff, Cheramy and Hartz. In the event of a
change of control of the Company (as defined), amounts payable
through the remaining term of the employment agreements become
payable, with the Company obligated to pay any taxes that are
specifically levied on payments made pursuant to change of
control provisions.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors
consists of Edward R. Cheramy, William L. Snelling, Joseph M.
Cohen and, prior to his resignation as a member of the Board of
Directors in October 1993, John S. Reiland. Mr. Cheramy is, and
during 1993 was, President of the Company. Until June 1991, Mr.
Snelling was an officer of the Company. See "Directors and
Executive Officers of the Registrant." Mr. Reiland was the
Chairman of TeleColumbus USA, Inc., a Delaware corporation ("TC
USA"). TC USA acquired 13,230,000 shares of Common Stock (as
adjusted to reflect the Common Stock Split) and 34,000 shares of
the Company's 4% Cumulative Convertible Preferred Stock, which
was convertible into 6,158,709 shares of Common Stock (as
adjusted to reflect the Common Stock Split), in connection with
the Company's acquisition of World Communications, Inc. from TC
USA in 1992. TC USA sold 18,928,255 shares of Common Stock (as
adjusted to reflect the Common Stock split) in a secondary
offering in November 1993.
The Company entered into a consulting agreement with William
L. Snelling as of January 1, 1992. Under the consulting
agreement, Mr. Snelling will be paid an annual fee over a 15-year
period, beginning at $125,000 in 1992, with cost of living
increases each year. The Consulting Agreement also provides that
the Company will reimburse Mr. Snelling up to $100,000 per year
for business expenses and personal accounting, financial, tax and
legal consulting and similar expenses incurred by Mr. Snelling.
See "Certain Relationships and Related Transactions."
Board Compensation Committee Report on Executive Compensation
The Compensation and Stock Option Committees of the Board of
Directors of the Company have furnished the following report on
executive compensation. The following report shall not be deemed
incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except
to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed
under such Acts.
As members of the Compensation and Stock Option Committees
of the Board of Directors of the Company, it is our duty to
establish and implement policies and procedures regarding the
compensation of officers and employees of the Company and to
administer the Company's incentive stock plans. The Compensation
Committee reviews compensation levels of management, evaluates
the performance of management, considers management succession
and related matters, and reports to the Board of Directors (which
retains ultimate authority) with respect to all aspects of
compensation (other than incentive stock awards) for the Chief
Executive Officer and the President of the Company. The Stock
Option Committee determines the type and amount of incentive
stock awards granted to eligible employees, including the
executive officers of the Company.
The compensation policies of the Company, which are endorsed
by both Committees, are designed to support the overall objective
of enhancing value for our stockholders and to help the Company
achieve its business objectives. These policies include: (a)
attracting, developing, rewarding and retaining highly qualified
and productive individuals; (b) providing incentive compensation
that varies directly with both Company performance and individual
performance; and (c) encouraging executive stock ownership to
enhance a mutuality of interest with other stockholders.
The Company's executive compensation is based on three
components, each of which is intended to serve our overall
compensation objectives: base salary, annual incentives and
long-term incentives. In 1993, the base salaries for Jeffrey P.
Sudikoff and Edward R. Cheramy, the Chairman of the Board and
Chief Executive Officer and the President of the Company, were
$575,000 and $460,000, respectively, pursuant to the terms of
their five-year employment agreements with the Company, as
described in the Company's Proxy Statement. Such amounts were
determined in accordance with the Company's compensation
policies, after reviewing the compensation levels of top
management at other comparable companies. Base salary for the
other executive officers of the Company, some of whom also have
entered into employment agreements with the Company, was
determined on a consistent basis.
Annual incentives consist primarily of bonuses, which are
generally paid based upon an employee's performance during the
year. Bonuses for executive officers are additionally based upon
overall Company performance, and may be dependent upon the cash
flow and liquidity needs of the Company. In 1993, each of
Messrs. Sudikoff and Cheramy received a $400,000 cash bonus.
Such cash bonuses were made to compensate Messrs. Sudikoff and
Cheramy for their exceptional performance in connection with
three public offerings by the Company in 1993 and the acquisition
and successful integration of World Communications, Inc., TRT
Communications, Inc. and TC WorldCom AG ("WorldCom Europe") and
were based upon the increase in Company revenues and growth of
the Company as a result of such acquisitions and the record
market performance of IDB's Common Stock in 1993.
Long-term incentives consist primarily of the granting of
options to purchase Common Stock of the Company. Option grants
are intended to retain and motivate officers and key employees to
improve long-term stock market performance. Stock options are
granted at the prevailing market price of the Common Stock and
will only have value if the stock price increases. Generally,
stock options vest in equal amounts over a four-year period from
the date of grant, and the optionee must be employed by the
Company at the time of vesting in order to exercise the options.
In 1993, each of Messrs. Sudikoff and Cheramy received options to
purchase 3,875,798 shares of Common Stock of the Company (as
adjusted to reflect the Common Stock split), 2,835,000 of which
were granted subject to stockholder approval. The granting of
such options was made in accordance with the Company's
compensation policies stated above.
A recently enacted section of the Internal Revenue Code of
1986 prohibits the Company from deducting compensation, subject
to certain exceptions, in excess of $1 million paid to the
Company's chief executive officer or any of its four most highly
compensated executive officers. The Compensation Committee
intends to take all steps necessary to comply with the recently
enacted revenue law.
The foregoing report has been furnished by the Compensation
Committee consisting of Edward R. Cheramy, William L. Snelling
and Joseph M. Cohen, and the Stock Option Committee, consisting
of William L. Snelling, Franklin E. Fried and Joseph M. Cohen.
Stock Price Performance Graph
The following Stock Price Performance Graph shall not be
deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
The following Stock Price Performance Graph compares the
cumulative total return to stockholders on the Company's Common
Stock with the cumulative return of the NASDAQ Stock Market (U.S.
Companies) and the NASDAQ Nonfinancial Stocks, assuming
reinvestment of dividends and assuming an initial investment of
$100 made on January 1, 1989.
[STOCK PRICE PERFORMANCE GRAPH TO BE INSERTED HERE]
<TABLE>
<CAPTION>
12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
IDB $100.00 $ 91.93 $ 67.59 $171.72 $256.29 $655.65
NASDAQ Stock $100.00 $121.24 $102.96 $165.21 $192.10 $219.21
Market(U.S.
Copmanies)
NASDAQ $100.00 $125.10 $110.13 $177.33 $193.93 $222.28
Nonfinancial
Stocks
</TABLE>
Market for Company's Common Stock and Related Stockholder Matters
The Company's Common Stock is traded in the NASDAQ National
Market System under the symbol "IDBX." The following table sets
forth the range of high and low closing sales prices on the
NASDAQ National Market System for the indicated periods:
<TABLE>
<CAPTION>
High Low
Fiscal Year Ended ------ -----
December 31, 1992:
------------------
<S> <C> <C>
First Quarter $ 5.74 $ 3.59
Second Quarter 5.60 4.16
Third Quarter 5.48 4.08
Fourth Quarter 7.14 4.84
Fiscal Year Ended
December 31, 1993:
First Quarter $ 8.57 $ 6.27
Second Quarter 13.10 8.41
Third Quarter 17.26 11.98
Fourth Quarter 18.17 13.57
</TABLE>
As of May 5, 1994, the number of record holders of the
Company's Common Stock was 778.
On November 10, 1992, the Company issued a 5% Common Stock
dividend to the record holders of IDB Common Stock as of
September 30, 1992. The stock prices listed above have been
adjusted to reflect the Common Stock dividend paid on November
10, 1992 and the 3.15-to-one Common Stock split in the form of a
215% Common Stock dividend paid on February 4, 1994.
The Company has never paid any cash dividends on its Common
Stock. The Company intends to retain earnings for further
business development and does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. None
of the Company's existing debt agreements restrict its ability to
pay dividends on the Common Stock.
Certain Relationships and Related Transactions
In order to allow foreign ownership of the Company to exceed
25% without risk of refusal or revocation of licenses pursuant to
the Communications Act, on December 17, 1992 the Company's
subsidiaries that had been holding the transmission licenses used
by the Company assigned all of their common carrier earth station
and microwave licenses to Southwest Communications, Inc. ("SCI")
in exchange for SCI's entering into the Operator Agreements
described below. Messrs. Jeffrey P. Sudikoff, Edward R. Cheramy
and Peter F. Hartz, the Chairman and Chief Executive officer,
President and Senior Vice President, Sales and Marketing of the
Company, respectively, own 49%, 40% and 11%, respectively, of the
capital stock of SCI. See "Directors and Executive Officers of
the Registrant." The Company entered into Operator Agreements
with SCI on December 17, 1992. No monetary compensation has been
received by the Company in connection with such assignments.
These Operator Agreements have initial terms of ten years and
provide for SCI to be the operator and FCC licensee of the
satellite earth stations and microwave stations owned by the
Company. In accordance with the Operator Agreements, the Company
paid $34,200 to SCI during 1993 as an operator fee. Such fees
are subject to adjustment annually.
The Company has entered into employment agreements with each
of Jeffrey P. Sudikoff, Edward R. Cheramy and Peter F. Hartz.
See "Executive Compensation -- Employment Agreements." In
addition, the Company entered into a consulting agreement with
William L. Snelling, a director of the Company, as of January 1,
1992. Under the consulting agreement, Mr. Snelling will be paid
an annual fee over a 15-year period, beginning at $125,000 in
1992, with cost of living increases each year. In 1993, the
Company paid Mr. Snelling $135,000 pursuant to the Consulting
Agreement.
In December 1993, each of Messrs. Sudikoff and Cheramy
borrowed $1,400,000 from the Company for his own personal use.
Such loans bear interest at an annual rate equal to five percent.
In December 1993 and March 1994, Messrs. Cheramy and Sudikoff,
respectively, repaid all outstanding amounts under the loans made
in 1993. During 1992, each of Messrs. Sudikoff and Cheramy
borrowed an aggregate of $250,000 from the Company for his own
personal use. Such loans are due in equal annual installments of
$50,000, beginning in December 1993, and bear interest at a rate
of five percent per annum. Each of Messrs. Sudikoff and Cheramy
paid the annual installment due in December 1993. In April 1994,
Messrs. Sudikoff and Cohen borrowed $2,750,000 and $500,000,
respectively, from the Company for personal uses. Such loans
bear interest at a rate equal to the prime rate and are payable
at the earlier of the demand of the Company or June 30, 1994,
with respect to the loan made to Mr. Cohen, or December 15, 1994,
with respect to the loan made to Mr. Sudikoff.
During 1991, 1992 and 1993, IDB Mobile Communications, Inc.
("IDB Mobile") made progress payments of $1,750,000, $1,798,000
and $832,000, respectively, to Aesses Equipment Corporation
("Aesses"), which is 42.5% owned by Mr. Sudikoff and 42.5% owned
by Mr. Cheramy. These progress payments were made under an
agreement to purchase from Aesses $4,380,000 of satellite
transmission equipment for use on airplanes. Aesses paid
$2,000,000 to a supplier to develop such equipment and has agreed
to purchase minimum quantities of the equipment from such
supplier. A disinterested majority of the Board of Directors of
IDB and IDB Mobile elected not to incur such development costs
and enter Aesses' business. The prices paid by IDB Mobile for
such equipment were no less favorable to IDB Mobile than the
prices payable for such equipment by unrelated parties. See Note
8 of Notes to Consolidated Financial Statements of the Company.
In November 1993, Aesses agreed to pay IDB Mobile $3,441,000 in
cash consideration to repurchase all of the equipment, except one
unit, previously sold by Aesses to IDB Mobile. All amounts owed
by Aesses to IDB Mobile pursuant to the agreement to repurchase
the equipment have been paid and all remaining obligations for
IDB Mobile to purchase equipment from Aesses pursuant to the
agreement between Aesses and IDB Mobile have terminated. In
February 1993, Aesses borrowed $300,000 from the Company, which
amount bears interest at a rate equal to 5% per annum. In March
1994, Aesses repaid all amounts outstanding under the loan made
by the Company in February 1993.
In August 1993, the Company purchased a $1,500,000 loan
evidenced by a note secured by a deed of trust with an assignment
of rents (the "Loan") from William L. Snelling and Cleora A.
Snelling, as trustees of the Snelling 1986 Trust (the "Trust").
In December 1992, the Trust made the Loan to the Olympic-
Centinela Partnership, a California limited partnership (the
"Partnership"), in connection with the Partnership's acquisition
of certain facilities which the Company now leases as part of its
Los Angeles international teleport. The loan made by the Trust
to the Partnership bears interest at a rate equal to the prime
rate plus 3% and is due in December 1995. The Company paid
$1,500,000 for the Loan, $500,000 of which was paid at the time
the Company acquired the Loan and the remainder of which will be
paid in equal annual installments of $100,000 or upon the demand
of the Trust. The unpaid balance of the purchase price bears
interest at a rate equal to the prime rate plus 2%.
In connection with three public offerings of securities of
the Company, the acquisition of TRT and certain other Company
business, the Company paid approximately $3,600,000 related to
the use during 1993 of aircraft owned by Messrs. Sudikoff and
Cheramy. The amounts paid by the Company in connection with the
use during 1993 of such aircraft were commercially competitive
and such payments were approved by the Board of Directors of the
Company.
ELECTION OF DIRECTORS
The Company presently has six directors, all of whom are
elected annually. At the Annual Meeting, the term of office of
all present directors will expire and a full board of seven
directors will be elected to serve for a term of office
consisting of the ensuing year and until their respective
successors are elected. The Board of Directors has nominated the
following seven persons for election as directors: Jeffrey P.
Sudikoff, Edward R. Cheramy, Peter F. Hartz, William L. Snelling,
Franklin E. Fried, Joseph M. Cohen and Stephen N. Carroll. See
"Management of IDB" for information regarding the nominees,
meetings, committees, compensation and certain relationships and
related transactions.
The persons named in the accompanying form of proxy have
advised the Company that at the Annual Meeting they intend to
vote the shares for which they are acting as proxy for the
election of the nominees named below. If, by reason of death or
other unexpected occurrence, any one or more of such nominees
should for any reason become unavailable for election, the
persons named in the accompanying form of proxy may vote for the
election of such substitute nominees as the Board of Directors
may propose. The accompanying form of proxy contains a
discretionary grant of authority with respect to this matter.
There are currently no arrangements or understandings
between any nominee and any other person or persons pursuant to
which any nominee was or is to be selected as a director or
nominee. None of the nominees has any family relationship among
themselves or with any executive officer of the Company.
Recommendation of Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MESSRS.
SUDIKOFF, CHERAMY, HARTZ, SNELLING, FRIED, COHEN AND CARROLL AS
THE DIRECTORS OF IDB.
APPROVAL OF THE INCENTIVE STOCK PROPOSALS
Amendment to 1992 Incentive Stock Plan
At the meeting the stockholders will be asked to approve an
amendment to the Company's 1992 Incentive Stock Plan (as amended,
the "1992 Stock Plan") to increase the maximum number of shares
of the Company's Common Stock available for awards from 3,150,000
to 8,150,000 and to limit the number of options that may be
granted to an individual in any one year to 500,000. The 1992
Incentive Stock Plan was originally adopted in August 1992. All
but approximately 200,000 shares originally authorized under the
1992 Incentive Stock Plan have been granted.
Summary Description of the 1992 Stock Plan
THE DESCRIPTION OF THE 1992 STOCK PLAN BELOW REFLECTS THE
AMENDMENTS PROPOSED BY THE STOCK PLAN PROPOSAL AND SUMMARIZES THE
MAIN PROVISIONS OF THE 1992 STOCK PLAN AND THE STOCK INCENTIVES
GRANTED UNDER THE 1992 STOCK PLAN. THIS DESCRIPTION IS PROVIDED
FOR YOUR INFORMATION ONLY AND DOES NOT PURPORT TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY THE PROVISIONS OF THE 1992 STOCK
PLAN. THE 1992 STOCK PLAN HAS NOT BEEN AMENDED SINCE THE TIME IT
WAS APPROVED BY THE STOCKHOLDERS OF THE COMPANY, EXCEPT, SUBJECT
TO STOCKHOLDER APPROVAL, TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK THAT ARE SUBJECT TO THE PLAN TO 8,150,000 AND TO
LIMIT THE NUMBER OF OPTIONS THAT MAY BE GRANTED TO AN INDIVIDUAL
IN ANY ONE YEAR TO 500,000.
The 1992 Stock Plan provides for the granting of incentive
stock options, nonqualified stock options and rights to purchase
restricted stock to key employees and officers of the Company or
any of its subsidiaries including directors who are also key
employees or officers of the Company and its subsidiaries. Under
the 1992 Stock Plan, shares of Common Stock may be issued
pursuant to the 1992 Stock Plan, either upon exercise of options
or purchases of restricted stock. For purposes of the 1992 Stock
Plan, the term "subsidiary" means any corporation, fifty percent
(50%) or more of the voting stock of which is owned by the
Company or by a subsidiary (as so defined) of the Company. Under
the 1992 Stock Plan, 8,150,000 shares may be issued either as
restricted stock or upon the exercise of options.
The purpose of the 1992 Stock Plan is to further the growth,
development and financial success of the Company and its
subsidiaries by providing additional incentives to certain
officers and key employees by assisting such persons in acquiring
shares of Common Stock and enabling such persons to benefit
directly from the Company's growth, development and financial
success. All of the Company's employees are eligible for grants
of stock options under the 1992 Stock Plan. Grants are made to
officers and key employees of the Company based upon past
performance and are intended to retain and motivate officers and
key employees to improve long term stock market performance.
The 1992 Stock Plan will be administered by a committee (the
"Committee") consisting of not less than two members of the Board
of Directors who are not officers or employees of the Company or
its subsidiaries. The members of the Committee are appointed by,
and serve at the pleasure of, the full Board of Directors. The
Committee determines, among other things, (a) the participants
who will receive options, the number of shares to covered by
options, the exercise price of options, the dates on which
options are granted, and the other terms and conditions of
options (which may vary from option to option), (b) the persons
who will receive rights to purchase restricted stock and the
respective number of shares sold pursuant thereto, and the
purchase price and other terms and conditions of the restricted
stock purchase agreements entered into with such persons, and (c)
whether options will be incentive stock options or nonqualified
stock options.
The Committee also has the authority to construe and
interpret the 1992 Stock Plan, to establish and amend rules and
regulations for its administration and to determine the rights
and obligations of participants under the 1992 Stock Plan.
Furthermore, the Board of Directors may from time to time, to the
extent permitted by law, terminate the 1992 Stock Plan with
respect to options and restricted stock not then granted or
issued, respectively, or revise or amend the 1992 Stock Plan.
As of May 5, 1994 the fair market value of all shares of
Common Stock underlying the 1992 Stock Plan was $136,512,500.
Options. Each option is evidenced by an agreement between
the Company and each of the respective optionees (the "Option
Agreements") which must conform to the 1992 Stock Plan but may
contain such further provisions as the Committee may determine.
The Committee determines whether the options will be incentive
stock options or nonqualified stock options. Under the 1992
Stock Plan, the exercise price of any option may not be less than
the fair market value of such shares on the date of the grant of
the option and, solely with respect to any incentive stock option
granted to an optionee that is a ten percent shareholder of the
Company, will not be less than 110% of the fair market value on
the date of the grant of the incentive stock option.
When granting each option, the Committee sets the dates on
which it is exercisable and the number of shares that may be
purchased on each date, provided that each option must become
fully exercisable no later than five years from the date of grant
and the number of shares of common stock subject to the option
must become exercisable at the rate of at least 20% per year
until the option is fully exercisable. No persons may receive
incentive stock options that are exercisable for the first time
during any calendar year with respect to Common Stock having a
fair market value of more than $100,000. In calculating the
$100,000 limit, Common Stock is valued at its fair market value
on the date of grant. Additionally, no person may receive an
award in any one year of options to purchased more than 500,000
shares of Common Stock. The Committee also sets the termination
date for each option when it grants the option, but incentive
stock options and nonqualified stock options may not be granted
for a duration of more than 10 years and more than 10 years and
one day, respectively. If an option expires or terminates before
it is exercised in full, the unissued stock reserved for the
option becomes available for the granting of new options or the
issuance of restricted stock.
The Committee is authorized to grant options containing the
agreement of the optionee to resell to the Company at the
exercise price therefor any Common Stock issued pursuant to the
exercise of such option. The Committee will determine, in its
discretion, those persons who will receive options containing
such repurchase right and the basis upon which the Company may
exercise its repurchase right. Such repurchase right of the
Company will terminate at such times, and in such installment
amounts, as may be specified by the Committee in any particular
instance.
Options may be exercised by payment of the full purchase
price in cash, by check, by tender of the optionee's promissory
note or by any other form of lawful consideration that the
Committee has approved. The Committee may allow certain
employees to exercise an incentive stock option or a nonqualified
stock option by the tender of shares of the Company previously
held. The Committee, if it chooses to allow the exercise of
options by tender of shares, intends to only allow such exercise
tender of shares which have been previously held by the employee
for six months. Shortfalls must be made up in cash.
All rights to exercise options terminate ninety days from
the date the optionee ceases to be an employee of the Company or
of a subsidiary of the Company for any reason other than death or
disability, or upon expiration of the option, whichever occurs
first. During such ninety day period, the optionee may only
exercise the options to the extent that they were exercisable on
the date the optionee's employment terminated. If an optionee
dies without having fully exercised his or her options during the
period of his or her employment or within ninety days of the
termination of employment, the options may be exercised with a
period of one hundred eighty days following his or her death, if
the expiration of the option period has not first occurred to the
extent that the optionee could have exercised them on the date of
his or her death.
If an optionee terminates employment with the Company or its
subsidiaries while disabled without having fully exercised his or
her options, the options may be exercised within a period of one
year following his or her termination, if the expiration date has
not first occurred, to the extent that the optionee could have
exercised them on the date of his or her termination.
The Company may grant options to employees of acquired
companies or their subsidiaries who hold stock options of the
acquired company or one of its subsidiaries. The exercise price
of these substitute options may be less than the fair market
value of the Company's Common Stock on the date of grant in order
to preserve the economic benefit to the optionee of the
substitute option. The new options will retain the exercise and
termination dates of the options held in the acquired company
(subject to the 10-year and one day limit and the 10-year limit
on the maximum terms of nonqualified stock options and incentive
stock options, respectively, issued under the 1992 Stock Plan).
Options and restricted stock as to which the Company has a
repurchase right may be transferred only by will or the laws of
descent and distribution or a qualified domestic relations order
and, during an optionee's lifetime, are exercisable only by the
optionee or a transferee pursuant to a qualified domestic
relations order.
Restricted Stock. Pursuant to the 1992 Stock Plan, the
Committee will from time to time determine, in its discretion,
those persons who will be offered the right to purchase shares of
restricted stock and the number of shares that may be purchased
by each such person.
The purchase price per share of all restricted stock will be
determined by the Committee, in its sole discretion, so long as
the purchase price is not less than the fair market value of
Common Stock on the date the right to purchase such restricted
stock is granted. Such purchase price must be paid in cash, by
check, by tender of the person's promissory note or such other
lawful consideration as the Committee may approve.
All restricted stock will be issued pursuant to a form of
Restricted Stock Purchase Agreement, which will generally provide
for a repurchase right of the Company, such that if the purchaser
of such restricted stock ceases to be an employee of the Company
or any of its subsidiaries for any reason whatsoever, the Company
will have the option and right to repurchase the restricted stock
from such purchaser at a repurchase price equal to the purchase
price paid by such purchaser. The Restricted Stock Purchase
Agreement will also specify when, and in what installment
amounts, if any, that such new repurchase right will terminate.
Unless otherwise stated, the Company's right to repurchase will
terminate as to 25% of the aggregate number of shares of
restricted stock originally issued to the participant on each
anniversary date of the participant's commencement of employment
by the Company or any of its subsidiaries, commencing upon the
first of each anniversary date, such that such repurchase right
will terminate completely on the fourth anniversary date of such
commencement of employment.
If the purchaser of restricted stock dies before the
Company's repurchase right is terminated in full, such death will
constitute a termination upon which the Company may exercise its
repurchase right.
The maximum number of shares that may be issued under the
1992 Stock Plan, and all outstanding options and outstanding
securities subject to the Company's repurchase right, will be
adjusted for stock splits, stock dividends and similar capital
changes. Upon the dissolution or liquidation of the Company, or
any reorganization, merger or consolidation in which the Company
does not survive, the 1992 Stock Plan, each outstanding option
and, at the Company's option, the Company's repurchase right with
respect to outstanding restricted stock will terminate, except
that the surviving corporation may, in its sole and absolute
discretion, grant any optionee a new option to purchase shares of
the surviving corporation on terms and conditions that will
substantially preserve the optionee's rights and benefits under
the 1992 Stock Plan. If an optionee does not receive a new
option from the surviving corporation, the optionee will have the
right, upon 30 days notice, to exercise, in whole or in part, any
unexpired option without regard to the installment provisions of
the 1992 Stock Plan until five days before the effective date of
the dissolution or liquidation of the Company or upon a
reorganization, merger or consolidation in which the Company is
not the surviving corporation, exercise in whole or in part, any
unexpired option or options issued to the optionee that is then
capable of being exercised.
Amendment of the 1992 Stock Plan; Nonexclusivity. The Board
of Directors or Committee may not change or amend the 1992 Stock
Plan, without receiving the affirmative vote of the holders of a
majority of the Company's voting stock that is represented and
entitled to vote at a duly held stockholders' meeting of the
Company or by the written consent of the holders of a majority of
the voting stock of the Company entitled to vote, in a manner
that does any of the following: increases the maximum number of
shares subject to the 1992 Stock Plan (except in the case of
adjustments for stock splits, stock dividends, reorganization or
similar events); decreases the option price requirements (except
for the issuance of substitute options); changes the class of
employees entitled to receive options; changes the limit on the
value of Common Stock that any one optionee may have options to
purchase, unless the provisions of the Code, are changed to allow
a different limit; or materially increases the benefits accruing
to participants under the 1992 Stock Plan.
The 1992 Stock Plan does not prevent the Company from
establishing any other plan, program or arrangement of any kind
relating to employee compensation or benefits or providing for
the issuance of shares of Common Stock, and the grant of options
or opportunities to purchase restricted stock under the 1992
Stock Plan will not preclude any employee from participating in
any other plan, program or arrangement of the Company or its
subsidiaries.
Federal Income Tax Consequences
Incentive Stock Options. No taxable income will be
recognized by an optionee upon the grant or exercise of any
incentive stock option under the 1992 Stock Plan. The Company
will not be entitled to any income tax deduction as a result of
the grant or exercise of any incentive stock option.
Gain or loss resulting from the subsequent sale of stock
acquired upon exercise of an incentive stock option will be long-
term capital gain or loss if such sale is made after two years
from the date of the grant of the option and after one year from
the transfer of such stock to the optionee upon exercise,
provided that the optionee is an employee of the Company from the
date of grant until three months before the date of exercise. In
the event of the optionee's death or disability prior to exercise
of an incentive stock option, special rules apply in determining
whether gain or loss upon sale of the stock and upon exercise of
such option will be taxable as long-term capital gain or loss.
If the subsequent sale of stock is made prior to the
expiration of such two-year or one-year periods, the optionee
will recognize ordinary income in the year of sale in an amount
equal to the difference between the exercise price and the fair
market value of the stock on the date of exercise, provided that
if such sale is a transaction in which a loss (if sustained)
would have been recognized by the optionee, the amount of
ordinary income recognized by the optionee will not exceed the
excess (if any) of the amount realized on the sale over the
option price. The Company will then be entitled to an income tax
deduction of like amount. Any excess gain recognized by the
optionee upon such sale would then be taxable as capital gain,
either long-term or short-term depending upon whether the stock
had been held for more than one year prior to sale.
If the sale of stock received upon exercise of an option
qualifies for long-term capital gain treatment, the capital gain
would be taxed to individuals at a maximum rate of 28%. The
amount by which the fair market value of stock purchased upon
exercise of an incentive stock option exceeds the option price of
such stock constitutes an item of tax preference which could then
be subject to the alternative minimum tax in the year that the
option is exercised.
Nonqualified Stock Options. Generally, at the time of the
grant of any option under the 1992 Stock Plan, no taxable income
will be recognized by the optionee and the Company will not be
entitled to a deduction. Upon the exercise of such option, the
optionee generally will recognize taxable income, and the Company
will then be entitled to a deduction, in the amount by which the
then fair market value of the shares of Common Stock issued to
such optionee exceeds the option price. However, if upon the
occurrence of certain events (such as termination of employment),
the stock issued to an optionee is subject to repurchase by the
Company at the exercise price of the underlying option, then the
optionee will not recognize income (and the Company will not be
entitled to a deduction) at the time the underlying option is
exercised unless the optionee makes an election to recognize
income at that time. If such election is not made, the optionee
will recognize income and the Company will be entitled to a
deduction at the time when the Company's repurchase right
expires. See "Restricted Stock" below. Additionally, if a sale
of the stock received upon exercise of such option would subject
the optionee to suit under Section 16(b) of the Exchange Act the
optionee will not recognize income (and the Company will not be
entitled to a deduction) at the time such option is exercised
unless the optionee makes an election to recognize income at that
time. If such election is not made, the optionee will recognize
income and the company will be entitled to a deduction at the
time when Section 16(b) would no longer apply to such stock sale.
Income recognized by the optionee upon exercise of a
nonqualified stock option will be taxed as ordinary income at a
maximum rate of 31%. Such income constitutes "wages" with
respect to which the Company is required to deduct and withhold
federal and state income tax. Such deductions will be made from
the wages, salary, bonus or other income to which the optionee
would otherwise be entitled and, at the Company's election, the
optionee may be required to pay to the Company (for withholding
on the optionee's behalf) any amount not so deducted but required
to be so withheld.
Upon the subsequent disposition of shares acquired upon the
exercise of an option other than an incentive stock option, the
optionee will recognize capital gain or loss in an amount equal
to the difference between the proceeds received upon disposition
and the fair market value of such shares at the time of exercise.
If such shares have been held for more than one year at the time
of such disposition, the capital gain or loss will be long-term.
Acceleration of Stock Options Upon a Transfer of Control.
If, upon a reorganization, merger, sale or other transaction
resulting in a change in control of the Company or of a
substantial portion of its assets, the exercisability of stock
options held by certain employees (generally officers,
shareholders and highly compensated employees of the Company) is
accelerated (or payments are made to cancel unexercisable options
of such employees), such acceleration or payment will be
determined to be a "parachute payment" for federal income tax
purposes. If the present value of all of the optionee's
parachute payments exceeds three times the optionee's average
compensation for the past five years, the optionee will be
subject to a 20% excise tax on the amount of such parachute
payment which is in excess of the greater of such average
compensation of the optionee or an amount which the optionee
establishes as reasonable compensation. In addition, the Company
will not be allowed a deduction for such excess parachute
payment.
Restricted Stock. A purchaser of restricted stock will be
required to include in his or her gross income, in the taxable
year of such purchaser in which the shares of restricted stock
vest, the amount by which the then fair market value of such
restricted stock (determined at the date of vesting) exceeds the
purchase price paid for such restricted stock. However, a
purchaser may elect pursuant to Section 83(b) of the Code to
include in his or her gross income for the taxable year in which
the restricted stock is issued, the excess of the fair market
value of all such restricted stock at the time of such issuance
(determined without reference to the Company's repurchase rights)
over the amount paid for such restricted stock. In this event,
the purchaser will not recognize taxable income when the
restricted stock vests. If shares with respect to which a
Section 83(b) election has been made are later repurchased by the
Company, the purchaser will not be entitled to a deduction.
As a result of issuing restricted stock subject to a
repurchase right, the Company will be entitled to a deduction for
its taxable year within which ends the taxable year of the
purchaser of such stock in which such purchaser is required to
include an amount in gross income, either as a result of the
vesting of the shares or of making a Section 83(b) election. The
amount os such deduction will be equal to the amount, if any,
which the purchaser of such stock is required to include in gross
income.
Any amount included in a purchaser's gross income as a
result of the issuance of shares of restricted stock under the
1992 Stock Plan or the vesting of shares of stock will be taxed
as ordinary income. Such amount constitutes "wages" with respect
to which the Company is required to deduct and withhold federal
and state income tax. Such deductions will be made from the
wages, salary, bonus or other income to which the purchaser would
otherwise be entitled and, at the Company's election, the
purchaser may be required to pay the Company (for withholding on
such purchaser's behalf) any amount not so deducted but required
to be so withheld.
Except as described above, upon the disposition of shares of
vested restricted stock, the purchaser will recognize capital
gain or loss in an amount equal to the difference between the
proceeds received from the disposition and the purchaser's tax
basis in the shares. If such shares have been held at the time
of their disposition for more than one year from the earlier of
the date of a Section 83(b) election or the date the Company's
repurchase right terminates as to the shares, the capital gain or
loss will be long-term. Upon disposition of unvested shares of
stock, purchaser will recognize compensation in the amount equal
to the difference between the proceeds received from the
disposition and the purchaser's tax basis in the shares.
The foregoing summary of the effects of federal income
taxation upon optionees, holders of restricted stock and the
Company with respect to shares issued under the 1992 Stock Plan
does not purport to be complete and reference is made to the
applicable provisions of the Code.
Reasons for Approval of an Amendment to the 1992 Stock Plan
The Board of Directors believes that the selected use of
stock options and restricted stock is an effective means of
attracting, motivating and retaining employees and that the
availability of an increased number of shares covered by the 1992
Stock Plan is important to the Company's business prospects and
operations. Additionally, the Board of Directors believes that
it is in the best interests of the Company to conform the 1992
Stock Plan to recently enacted provisions of the Code to limit
the number of options that may be granted to any one individual.
Accordingly, the Board of Directors has, subject to stockholder
approval, adopted an amendment to the 1992 Stock Plan increasing
the number of shares of Common Stock available for awards under
the 1992 Stock Plan from 3,150,000 to 8,150,000 and limiting the
number of options that may be granted to an individual in any one
year to 500,000.
Vote Required and Recommendation of Board of Directors
Each holder of shares of Common Stock outstanding on the
record date is entitled to one vote on the proposal to approve
the Stock Plan Proposal. Approval of such action requires the
affirmative vote of a majority of the votes cast at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE
1992 INCENTIVE STOCK PLAN.
Grants Made Outside the 1992 Incentive Stock Plan
On November 29, 1993, the Company granted outside the 1992
Incentive Stock Plan nonqualified stock options to Messrs.
Sudikoff, Cheramy and Wann to purchase 2,835,000, 2,835,000, and
236,250 shares, respectively (each as adjusted to reflect the
Common Stock Split), at an exercise price of $14.37 per share,
the fair market value on the date of the grant of such options,
in consideration of the performance and efforts of Messrs.
Sudikoff, Cheramy and Wann on behalf of the Company. These stock
options vest in equal installments over a four-year period
commencing on November 29, 1994 and are exercisable for ten years
and one day from the date of grant. These stock options were
granted outside of the 1992 Incentive Stock Plan so that such
plan would continue to be in compliance with Rule 16b-3, a rule
promulgated by the Securities and Exchange Commission which
provides an exemption from the operation of the "short-swing
profit" recovery provisions of Section 16(b) of the Exchange Act.
As of May 5, 1994 the closing price of IDB's Common Stock was $16
3/4 per share.
To obtain the benefits of Rule 16b-3, the grants of stock
options to Messrs. Sudikoff, Cheramy and Wann on November 29,
1993 are contingent upon obtaining the approval of the Company's
stockholders. If such stockholder approval is obtained at the
Annual Meeting, the stock options granted to Messrs. Sudikoff,
Cheramy and Wann on November 29, 1993 will remain in full force
and effect. In the event such stockholder approval is not
obtained, the stock options granted to Messrs. Sudikoff, Cheramy
and Wann on November 29, 1993 will become null and void.
Vote Required and Recommendation of Board of Directors
Each holder of shares of Common Stock outstanding on the
record date is entitled to one vote on the proposal to approve
the grants of stock options on November 29, 1993 to Messrs.
Sudikoff, Cheramy and Wann. Approval of such actions requires
the affirmative vote of a majority of the votes cast at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE GRANTS OF
SUCH STOCK OPTIONS TO MESSRS. SUDIKOFF, CHERAMY AND WANN ON
NOVEMBER 29, 1993.
APPROVAL OF THE CHARTER AMENDMENT
The Company is currently authorized to issue 205,000,000
shares of capital stock, consisting of 200,000,000 shares of
Common Stock, par value $.01 per share ("Common Stock"), and
5,000,000 shares of Preferred Stock, par value $.01 per share.
The Board of Directors of the Company has approved, subject to
stockholder approval, an amendment (the "Charter Amendment") to
the Company's Restated Certificate of Incorporation to increase
the number of authorized shares of Common Stock from 200,000,000
to 500,000,000. In addition, the Board of Directors has declared
such amendment to be in the best interests of the Company and its
stockholders and recommends that the stockholders approve such
amendment. As of May 5, 1994, the Company had 74,116,956 shares
of Common Stock issued and outstanding.
The Board of Directors has declared the Charter Amendment to
be in the best interests of the Company and its stockholders. In
the past, the Company has issued shares of its Common Stock for
important corporate purposes, such as raising capital, providing
incentives for management and acquiring businesses. The Company
issued Common Stock as consideration in connection with its
successful acquisition of World Communications, Inc. in 1992 and
TRT Communications, Inc. in 1993. On April 20, 1994, the Company
entered into a letter of intent with Peoples Telephone Company,
Inc., a Delaware corporation ("PTel"), providing that the Company
and PTel intend to enter into a definitive agreement which shall
set forth the terms and conditions of a merger between the
Company and PTel. Except in connection with the Company's
proposed merger with PTel, the Company presently has no plans,
commitments, understandings or arrangements for the issuance of
any additional shares of Common Stock. However, failure to
approve the Charter Amendment would severely impair the growth
prospects of the Company and restrict its ability to raise
capital in the future.
The text of the proposed amendment to the Certificate of
Incorporation of the Company is set forth below:
NOW THEREFORE, BE IT RESOLVED, that Paragraph 1 of
Article FOURTH of the Certificate of Incorporation be
amended to read as follows:
"FOURTH: Capital Stock.
1. Classes and Number of Shares. The
Corporation is authorized to issue two classes of shares to
be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation
shall have authority to issue is five hundred five million
(505,000,000) consisting of five hundred million
(500,000,000) shares of Common Stock, having a par value of
$.01 per share, and five million (5,000,000) shares of
Preferred Stock, having a par value of $0.01 per share."
If the Charter Amendment is approved by the stockholders,
the Company intends to file promptly a certificate of amendment
with the Secretary of State of the State of Delaware to effect
the Charter Amendment. However, in accordance with the Delaware
General Corporation Law and notwithstanding approval of the
Charter Amendment by the stockholders, at any time prior to the
filing of such certificate of amendment, the Board of Directors
of the Company may, in its discretion, abandon such proposed
amendment without further action by the stockholders.
Vote Required and Recommendation of Board of Directors
Each holder of shares of Common Stock outstanding on the
Record Date is entitled to one vote for each share so held on the
proposal to approve the Charter Amendment. Approval of the
Charter Amendment requires the affirmative vote of a majority of
the votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CHARTER
AMENDMENT.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche,
certified public accountants, to continue as the Company's
auditors and to audit the books of account and other records of
the Company for the fiscal year ending December 31, 1994.
Deloitte & Touche has audited the Company's financial statements
since 1986. A representative of that firm is expected to be
present at the Annual Meeting with the opportunity to make a
statement if such representative desires to do so and is expected
to be available to respond to appropriate questions. The Company
has been advised that neither such firm, nor any of its partners
or associates, has any direct or indirect financial interest in
or any connection with the Company other than as accountants and
auditors.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Proposals of stockholders that are intended to be presented
at the 1995 Annual Meeting of Stockholders must be received by
the Company by February 8, 1995 for inclusion in the Company's
Proxy Statement and form of proxy relating to the 1995 Annual
Meeting.
ANNUAL REPORTS
A copy of the 1993 Annual Report to Stockholders (the
"Annual Report") is being mailed to each stockholder of record
together with this Proxy Statement. On March 31, 1994, the
Company filed with the Securities and Exchange Commission its
Annual Report on Form 10-K (the "Form 10-K") for the fiscal year
ended December 31, 1993. The Form 10-K contains detailed
information concerning the Company and its operations,
supplementary financial information and certain schedules that
are not included in the Annual Report. COPIES OF THE FORM 10-K
WILL BE FURNISHED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN
REQUEST DIRECTED TO: IDB COMMUNICATIONS GROUP, INC., 10525 WEST
WASHINGTON BOULEVARD, CULVER CITY, CALIFORNIA 90232-1922;
ATTENTION: NEIL J WERTLIEB, SECRETARY. Each such request must
set forth a good faith representation that the person making the
request was a beneficial owner of IDB Common Stock as of the
Record Date. The Annual Report is not a part of the Company's
soliciting material.
OTHER MATTERS
The Board of Directors does not know of any other matters to
be presented at the Annual Meeting, but if other matters do
properly come before the Annual Meeting, it is intended that the
persons named in the proxy will vote on them in accordance with
their best judgment.
By Order of the Board of
Directors
Neil J Wertlieb
Secretary
Los Angeles, California
_______, 1994
IDB COMMUNICATIONS GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS
The undersigned hereby appoints Edward R. Cheramy, Peter F.
Hartz and William L. Snelling, and each of them, with full power
of substitution, the proxies of the undersigned to vote, as
designated below, all stock which the undersigned is entitled to
vote at the Annual Meeting of the Stockholders (the "Annual
Meeting") to be held on June 30, 1994, at 10:00 a.m. at Loews
Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, and at
any adjournment thereof.
1. Election of Directors
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY to vote
(except as indicated to for all nominees listed below
the contrary below)
Jeffrey P. Sudikoff William L. Snelling Stephen N. Carroll
Edward R. Cheramy Franklin E. Fried
Peter F. Hartz Joseph M. Cohen
(Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_________________________________________________________________
____________________________________________________________
2. Approval of an amendment to the 1992 Incentive Stock Plan.
___ FOR ___ AGAINST ___ ABSTAIN
3. Approval of the grant of stock options to certain officers
of the Company.
___ FOR ___ AGAINST ___ ABSTAIN
4. Approval of an amendment to the Certificate of the
Incorporation to increase the number of authorized shares of
Common Stock.
___ FOR ___ AGAINST ___ ABSTAIN
The proxies, without limiting their authority, are specifically
authorized to vote in accordance with their best judgment with
respect to: matters incident to the conduct of the Annual
Meeting; matters presented at the Annual Meeting but which are
not known to the Board of Directors at the time of the
(Continued and to be signed on the reverse side)
(Continued from reverse side)
solicitation of this proxy; and with respect to the election of
any person as a director if a bona fide nominee for that office
is named in the Proxy Statement and such nominee is unable to
serve or for good cause will not serve.
IF NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE SEVEN (7) DIRECTOR NOMINEES AND FOR
PROPOSALS 2, 3 AND 4.
________________________________________________
Signature of Stockholder
Dated: _______________________________________, 1994
________________________________________________
Signature of Stockholder
Dated: _______________________________________, 1994
IMPORTANT: In signing this proxy, please sign your name or names
on the signature lines in the same way as it is stenciled on this
proxy. When signing as an attorney, executor, administrator,
trustee or guardian, please give your full title as such. EACH
JOINT TENANT SHOULD SIGN.
PLEASE SIGN, DATE AND RETURN YOUR
PROXY PROMPTLY IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.
