Outlet Communications, Inc.
23 Kenney Drive
Cranston, RI 02920
Notice of Annual Meeting of Stockholders and Proxy Statement
Outlet
Communications, Inc.
<PAGE>
Notice of Annual Meeting of Stockholders
Wednesday, May 4, 1994 at 1:00 P.M.
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Outlet Communications, Inc. will be held
on Wednesday, May 4, 1994, at 1:00 P.M., local time, at WCMH Broadcast
Studios, 3165 Olentangy River Road, Columbus, Ohio, for the following
purposes:
1. To elect directors for the ensuing year, or until their respective
successors are duly elected and qualified;
2. To ratify the selection by the Board of Directors of Ernst & Young as the
independent auditors of the Company for the fiscal year ending December 31,
1994; and
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The close of business on March 18, 1994 has been fixed as the record date for
the determination of the stockholders entitled to notice of and to vote at the
meeting and at any adjournment thereof.
By Order of the Board of Directors,
Joanne Schenck
Secretary
Cranston, Rhode Island
April 1, 1994
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY, SIGN AND PROMPTLY RETURN THE COMPLETED
PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
<PAGE>
PROXY STATEMENT
The enclosed Proxy is solicited by the Board of Directors of Outlet
Communications, Inc. (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") on May 4, 1994.
The Company's principal executive office is located at 23 Kenney Drive,
Cranston, Rhode Island 02920. The approximate date on which this Proxy
Statement is first being sent to stockholders is April 1, 1994.
You may revoke the proxy at any time prior to its use by delivering a written
notice to the Secretary of the Company, by executing a later-dated proxy or by
attending the meeting and voting in person. Proxies in the form enclosed,
unless previously revoked, will be voted at the meeting in accordance with the
specifications made by you thereon or, in the absence of such specifications,
for the election of directors nominated herein, and for the proposal to ratify
the selection of Ernst & Young as independent auditors for the fiscal year
ending December 31, 1994.
Holders of record of Class A Common Stock, par value $.01 per share ("Common
Stock"), of the Company at the close of business on March 18, 1994 will be
entitled to vote at the Annual Meeting. Each share of Common Stock will be
entitled to one vote. On March 18, 1994 there were 6,564,515 shares of Common
Stock issued and outstanding. Shares redeemed or repurchased by the Company
before the date of the Annual Meeting will not be entitled to vote. There are
no other voting securities outstanding.
_________________________________________________________________
ELECTION OF DIRECTORS
At the Annual Meeting, twelve directors are to be elected to serve for a term
of one year or until their respective successors are elected and qualified.
There are two vacancies on the Board of Directors. See description of
Stockholders Agreement under "Certain Relationships and Related Transactions."
It is intended that proxies will be voted for the nominees set forth herein.
Although it is expected that all candidates will be able to serve, if one or
more is unable to do so, the proxy holders will vote the proxies for the
remaining nominees and for substitute nominees chosen by the Board of
Directors unless the Board reduces the number of directors to be elected. If
each of the parties to the Company's Stockholders' Agreement vote their shares
of Common Stock pursuant to the provisions of such agreement, the director
nominees will be elected. See "Certain Relationships and Related
Transactions-Stockholders' Agreement." All of the twelve nominees for
directors are currently serving as directors of the Company.
The following table presents information on the nominees for election as
directors of the Company.
<PAGE>
Principal Occupation and Director
Name Age Other Information Since
_____________________________________________________________________________
James G. Babb 62 Chairman of the Board, 1991
President and Chief
Executive Officer since May 1,
1991; former President of
Jefferson-Pilot Communications
Company, a radio and television
broadcasting company, from
November 1988 to January 1991.
Prior thereto, he was Executive
Vice President and Chief Operat-
ing Officer of that company.
Letitia Baldrige(1) 68 Director; Owner of Letitia 1987
Baldrige Enterprises, Inc.,
a management training and
public relations consulting
firm, since 1964; Author,
Lecturer and Director of
Hartmarx Corporation and
Federal Home Loan Bank of
Atlanta.
Robert C. Butler 63 Director; Senior Vice 1988
President and Chief Financial
Officer of International Paper
Company, a forest products
company, since 1988; Group
Executive Vice President of
the National Broadcasting
Company from 1984 to 1988.
Stephen J. Carlotti 52 Director; Partner in law firm 1991
of Hinckley, Allen & Snyder
since January 1992 and from
May 1970 to July 1989; former
Senior Executive Vice
President, Chief Operating
Officer, and General Counsel
of The Mutual Benefit Life
Insurance Company ("Mutual
Benefit") from August 1989 to
August 1991; consultant to
Mutual Benefit from September
1991 to December 1991.
Frederick Griffiths(1) 73 Retired former Vice President- 1992
Corporate Affairs of the
Company from 1976 to 1987. He
previously served in various
administrative and creative
capacities during a thirty-five
year affiliation with the
Company.
<PAGE>
Principal Occupation and Director
Name Age Other Information Since
______________________________________________________________________________
Julius Koppelman 77 Director; Chairman of the 1987
Board and President of
Harding Service Corporation
("Harding Service"), a consult-
ing firm, since 1985; President
of its predecessor, Harding
Resources, Inc. from 1982 to
1985. Director of other
corporations including Gibson
Greetings, Inc. and Lincoln
Foodservice Products, Inc.
Leonard Lieberman 65 Director; Chairman of the 1988
Board, President and Chief
Executive Officer of the
Company from January to April
1991; former Chairman, President
and Chief Executive Officer of
Supermarkets General Corpora-
tion, an operator of super-
markets, drugstores and do-it-
yourself stores; Mr. Lieberman
was Chairman of that company
from 1986 to 1987 and President
and CEO from 1983 to 1987.
Director of other corporations
including Celestial Seasonings,
Inc., Republic New York Corpora-
tion, Sonic Corp., The William
Carter Company and Russell-
Stanley Corporation.
James K. Makrianes 69 Director; Partner, Ward 1988
Howell International, Inc.,
an executive search firm, since
February 1989. Senior Vice
President, President, then
Chairman of Haley Associates,
an executive search firm, from
1978 to 1988.
<PAGE>
Principal Occupation and Director
Name Age Other Information Since
____________________________________________________________________________
Victor H. Palmieri 64 Director; Deputy Rehabili- 1993
tator and Chief Executive
Officer of Mutual Benefit
since August, 1991;
Chairman of The Palmieri
Company, a business and
government management firm,
since 1969; former Trustee and
Chief Executive Officer of
Colorado-Ute Electric Associa-
tion, an electric utility, from
1990 to 1991. Director of
other corporations including
Ernst Home Center, Inc., The
William Carter Company; and
Island Developers, Ltd.
Frank E. Richardson 54 Director; President of Wesray 1987
Capital Corporation ("Wesray"),
a private investment banking
firm, of which Mr. Richardson
has been an officer for more
than five years. Director of
other corporations including
Alex. Brown & Sons, Dyersburg
Fabrics, Inc., New River Indus-
tries, Inc. and Sonic Corp.
Frank E. Walsh, Jr. 53 Director; Chairman of Wesray 1987
since August 1989; Vice
Chairman from 1986 to 1989,
Executive Vice President from
1985 to 1986 and a Director
of Wesray since 1984; Director
of other corporations including
Tyco Laboratories, Inc. and
Lincoln Foodservice Products,
Inc.
Solomon M. Yas(1) 53 Consultant in the field of 1992
resources; former Vice
President-Human Resources of
the Company from 1985 until
retirement as of June 1, 1991,
after completing seventeen
years of service with the
Company.
(1) Designated as a director by certain management stockholders
pursuant to the Stockholders' Agreement. See "Certain Rela-
tionships and Related Transactions-Stockholders' Agreement."
All other directors were designated by Wesray pursuant to the
Stockholders' Agreement.
There are no family relationships between
any director nominees, or between any of them
and any officer of the Company.
<PAGE>
STOCK OWNERSHIP
DIRECTORS AND EXECUTIVE OFFICERS: The following table shows the number of
shares of the Company's Common Stock beneficially owned by each director and
by the executive officers listed in the Summary Compensation Table who are not
directors and by all directors and officers as a group as of March 18, 1994.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
NAME (ALL LISTED NAMES
TITLE OF ARE DIRECTORS OR NUMBER
CLASS EXECUTIVE OFFICERS) OF SHARES PERCENT
- --------------------------------------------------------------------------
Class A James G. Babb 35,000(1) (8)
Common Stock Letitia Baldrige 200 (8)
Robert C. Butler 200 (8)
Stephen J. Carlotti - -
Frederick R. Griffiths 15,450 (8)
Julius Koppelman 16,842 (8)
Leonard Lieberman 1,000 (8)
James K. Makrianes - -
Victor Palmieri 2,137,000(2) 32.3
Frank E. Richardson 256,228(3) 3.9
Frank E. Walsh, Jr. - -
Solomon M. Yas 5,000 (8)
Felix W. Oziemblewski 45,199(4) (8)
Douglas E. Gealy 9,999(5) (8)
Linda W. Sullivan 10,599(6) (8)
All Directors and
Executive Officers
as a group (16 persons) 2,533,217(7) 38.3
- ------------------------------------------------------------------------------
(1) Includes 30,000 shares acquirable upon exercise of stock options or
restricted stock awards currently exercisable or to become exercisable
within 60 days.
(2) Mr. Palmieri is a director and officer of Mutual Benefit and, for
purposes of disclosure of beneficial ownership under Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
Mr. Palmieri may be deemed to be a beneficial owner of the 2,135,000
shares owned by that company.
(3) Includes 2,500 shares owned by Mr. Richardson's minor children. Mr.
Richardson disclaims beneficial ownership of such shares.
(4) Includes 6,666 shares acquirable upon exercise of stock options
currently exercisable or to become exercisable within 60 days.
(5) Includes 9,999 shares acquirable upon exercise of stock options or
restricted stock awards currently exercisable or to become exercisable
within 60 days.
(6) Includes 3,333 shares acquirable upon exercise of stock options
currently exercisable or to become exercisable within 60 days.
(7) Includes 49,998 shares acquirable upon exercise of stock options or
restricted stock awards currently exercisable or to become exercisable
within 60 days.
(8) Less than 1%.
<PAGE>
The Company owns all of the issued and outstanding shares of capital stock of
Outlet Broadcasting, Inc. ("Outlet Broadcasting").
The addresses of the persons shown in the table above who are the beneficial
owners of more than five percent of the Company's Common Stock are as follows:
Victor H. Palmieri c/o The Mutual Benefit Life Insurance Company, 520 Broad
Street, Newark, New Jersey 07102.
<PAGE>
OWNERSHIP IN EXCESS OF FIVE PERCENT OF COMPANY'S COMMON STOCK
The following table sets forth certain information with respect to those
persons, other than officers or directors, known to the Company to be the
holders of more than five percent of the Company's Common Stock as of March
18, 1994.
NAME AND ADDRESS OF NUMBER OF
BENEFICIAL OWNER SHARES PERCENT
- ------------------------------------------------------------------------------
The Hartington Trust(1) 626,764 9.5
P.O. Box 1975
Morristown, New Jersey 07962-1975
William E. Simon 510,132 7.8
310 South Street
Morristown, New Jersey 07960
The OCI Trust 331,625 5.1
P.O. Box 1975
Morristown, New Jersey 07962-1975
Mutual Benefit Life 2,135,000 32.5
Insurance Company in Rehabilitation
520 Broad Street
Newark, New Jersey 07102
Gabelli Group Inc. 758,811 11.6
(aggregate holdings of affiliates
and entities)
655 Third Avenue
New York, New York 10017
Sandler Associates, 559,700 8.5
Sandler Capital Management
767 Fifth Avenue
New York, New York 10153
Parties to Stockholders' Agreement 4,718,685 71.9
- -----------------------------------------------------------------------------
(1) As the grantor of such revocable Trust, Mr. Raymond G. Chambers may, for
purposes of disclosure of beneficial ownership under the Exchange Act,
be deemed to be the beneficial owner of the shares of Common Stock held
by the Trust. Additionally, as co-trustees of such Trust, Messrs. Kurt
T. Borowsky, Gary L. Moore and David J. Roy may, for purposes of
disclosure of beneficial ownership under the Exchange Act, be deemed to
be the beneficial owners of the shares of Common Stock held by the
Trust.
(2) For purposes of disclosure of beneficial ownership under the Exchange
Act, the parties to the Stockholders' Agreement identified under Certain
Relationships and Related Transactions are deemed to be a single person
and the beneficial owners of the shares of Common Stock owned by all
parties to the Stockholders' Agreement.
- -----------------------------------------------------------------------------
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively, "Section 16 reporting
persons"), to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Section 16 reporting
persons are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1993, all
Section 16(a) filing requirements applicable to the Company's Section 16
reporting persons were satisfied.
- ------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid to the Chief Executive Officer and the Company's most highly
compensated executive officers as to whom the total annual salary and bonus
earned exceeded $100,000 for the fiscal year ended December 31, 1993.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Shares
Other Under-
Annual Restricted lying
Principal Compen- Stock Options
Name Position Year Salary Bonus(3) sation(4) Awards(5) Granted
<S> <C> <C> <C> <C> <C> <C> <C>
James G. Babb Chairman, 1993 $294,615 $200,000 $23,014 $ 0 0
President 1992 266,442 160,000 15,068 67,500 30,000
and Chief 1991 196,701 0 0 0
Executive
Officer(1)
Felix W. Oziemblewski Vice 1993 121,554 60,000 8,781 0 0
President- 1992 116,319 40,700 7,165 22,500 10,000
Chief 1991 116,820 0 0 0
Financial
Officer and
Treasurer
Douglas E. Gealy Vice 1993 133,077 65,000 5,101 0 0
President- 1992 113,615 41,700 4,080 22,500 10,000
General 1991 59,991 0 0 0
Manager
WCMH-TV(2)
Linda W. Sullivan Vice 1993 111,539 57,500 5,136 0 0
President- 1992 102,539 35,100 4,136 22,500 10,000
General 1991 101,476 0 0 0
Manager
WJAR-TV
</TABLE>
<PAGE>
(1) Mr. Babb joined the Company in May 1991.
(2) Mr. Gealy joined the Company in July 1991.
(3) Amounts represent incentive compensation awards. The amounts for 1993
also include one-time bonuses of $25,000 for Mr. Babb and $15,000 each
for Mr. Oziemblewski, Mr. Gealy and Ms. Sullivan, paid upon completion
of a successful debt refinancing.
(4) Amounts listed represent gross-up payments for tax liabilities.
Excludes perquisites and other benefits, unless the aggregate amount of
these items exceeds the lesser of either $50,000 or 10 percent of the
total annual salary and bonus reported for the named executive officer.
Pursuant to the transitional provisions set forth in the proxy rules,
amounts of Other Annual Compensation are excluded for the Company's 1991
fiscal year.
(5) The value of the restricted stock awards shown in the table is based on
the market value of the shares on the date of grant of the award, less
the purchase price ($1.00 per share). As of December 31, 1993, total
restricted stock awards of 71,500 shares had been made pursuant to the
Company's 1992 Stock Incentive Plan. The shares subject to such awards
vest in three equal annual installments commencing in August 1993. As
of December 31, 1993, the market value of outstanding restricted stock
awards held by Mr. Babb, Mr. Oziemblewski, Mr. Gealy and Ms. Sullivan,
less the purchase price ($1.00 per share), was $285,000, $63,337,
$95,000 and $63,337, respectively. No restricted stock awards were made
in 1993.
<PAGE>
STOCK OPTIONS
The Company currently maintains the 1992 Stock Incentive Plan (the "Plan") as
approved by the Company's stockholders on June 25, 1992, amended April 27,
1993. The Plan authorizes grants of either non-qualified or incentive stock
options, or awards of restricted shares, to key employees of the Company. The
aggregate number of shares of the Company's Common Stock available for awards
under the Plan is 300,000 shares. The purpose of the Plan is to encourage
stock ownership by executives and thereby increase the executives' personal
interest in the Company's continued success and progress. The Plan is
administered by the Compensation Committee of the Board of Directors, which
determines the terms of options granted, the exercise price and exercisability
thereof.
There were no options granted in the last fiscal year to the executive
officers named in the Summary Compensation Table.
The following table summarizes options exercised during 1993 and shows fiscal
year-end option values for the executive officers named in the Summary
Compensation Table.
<PAGE>
<TABLE>
FISCAL YEAR-END OPTION VALUES
- -------------------------------------------------------------
<CAPTION>
Number
of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Year-End Year-End(2)
Acquired Value Exer- Unexer- Exer- Unexer-
Name on Exercise Realized(1) cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
James G. Babb 20,000 10,000 $145,000 $72,500
Felix W. Oziemblewski 6,666 3,334 48,328 24,172
Douglas E. Gealy 6,666 3,334 48,328 24,172
Linda W. Sullivan 3,333 $25,414 3,333 3,334 24,164 24,172
<FN>
(1) Value is based on average of the bid and ask prices on the date of exercise less the
exercise price.
(2) Value is based on the last sales price per share ($10.50) on December 31, 1993, as
reported on the NASDAQ National Market System, less the applicable option price.
</TABLE>
<PAGE>
RETIREMENT PLANS
The Company maintains a non-contributory qualified retirement plan (the
"Retirement Plan") for the benefit of its employees, including the individuals
named in the Summary Compensation Table. The following table shows the
estimated annual benefits payable upon retirement to persons in specified
salary and bonus levels and years of credited service.
Compen-
sation Years of Service
15 20 25 30 35
________________________________________________________________
$125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
150,000 33,750 45,000 56,250 67,500 78,750
175,000 39,375 52,500 65,625 78,750 91,875
200,000 45,000 60,000 75,000 90,000 105,000
225,000 50,625 67,500 84,375 101,250 115,641*
250,000 56,250 75,000 93,750 112,500 115,641*
300,000 67,500 90,000 112,500 115,641* 115,641*
400,000 90,000 115,641* 115,641* 115,641* 115,641*
450,000 101,250 115,641* 115,641* 115,641* 115,641*
500,000 112,500 115,641* 115,641* 115,641* 115,641*
600,000 115,641* 115,641* 115,641* 115,641* 115,641*
_________________________________________________________________
* Maximum annual benefit permitted under Sections 415 and
401(a)(17) of the Internal Revenue Code.
The amounts payable shown in the above table are based on the following
assumptions: (i) the individual shall have retired at the normal retirement
age of 65, (ii) "compensation" is the average of the covered compensation paid
to such individual during the three calendar years in which salary is the
highest, (iii) covered compensation is salary and bonuses paid to Plan
participants, and for 1993 is shown in the Salary and Bonus columns of the
Summary Compensation Table, and (iv) benefits are paid in the form of a
straight-life annuity.
In addition to the Retirement Plan, the individuals named in the Summary
Compensation Table also participate in a non-qualified supplemental retirement
plan (the "Supplemental Plan") which provides a supplemental benefit based on
a percentage of final average compensation and years of service, less benefits
paid under the Retirement Plan and Social Security benefits. The following
table shows the estimated annual benefits payable under the Supplemental Plan
to persons in the specified salary and bonus levels and years of credit
service.
<PAGE>
Compen-
sation Years of Service
15 20 25 30 35
_________________________________________________________________
$125,000 $ 21,875 $ 25,000 $ 15,625 $ 6,250 $ 0
150,000 26,250 30,000 18,750 7,500 0
175,000 30,625 35,000 21,875 8,750 0
200,000 35,000 40,000 25,000 10,000 0
225,000 39,375 45,000 28,125 11,250 0
250,000 43,750 50,000 31,250 12,500 9,359
300,000 52,500 60,000 37,500 34,359 34,359
400,000 70,000 84,359 84,359 84,359 84,359
450,000 78,750 109,359 109,359 109,359 109,359
500,000 87,500 134,359 134,359 134,359 134,359
600,000 124,359 184,359 184,359 184,359 184,359
_________________________________________________________________
The amounts payable shown in the above table are based on the following
assumptions: (i) the individual shall have retired at the normal age of 65,
(ii) "compensation" is the average salary paid to such individual during the
three calendar years in which salary is the highest in the five years prior to
retirement, plus the average Executive Incentive Compensation award for the
highest three years during the ten years prior to retirement, (iii) benefits
are paid in the form of a straight-line annuity, (iv) estimated annual
payments are after deduction for Retirement Plan benefits, but before any
deduction for Social Security benefits. Covered compensation under the
Supplemental Plan is included in the Salary and Bonus columns of the Summary
Compensation Table.
As of December 31, 1993, for purposes of computing benefits under the
Retirement Plan and the Supplemental Plan, Mr. Babb has 2.7 years of service,
Mr. Oziemblewski has 25.2 years, Ms. Sullivan has 8.7 years, and Mr. Gealy has
2.5 years.
- ------------------------------------------------------------------------------
EMPLOYMENT CONTRACTS
Mr. James G. Babb entered into an employment agreement as Chairman, President
and Chief Executive Officer, effective January 1, 1993, for a term of five
years, as amended. The agreement provides for a base salary of $305,000, as
adjusted. The agreement also provides that Mr. Babb will be a participant in
the Executive Incentive Compensation Plan and that he will be eligible to
receive awards of stock options under the Company's stock option plans. Mr.
Babb is further eligible to receive additional compensation in the event of a
merger or sale of assets pursuant to which the Company's stockholders receive
value in excess of $9 per share. In the event of termination without cause,
the Company will pay Mr. Babb his compensation for twelve months or the
remaining portion of his employment period, whichever is greater.
<PAGE>
Mr. Douglas E. Gealy entered into an employment agreement as Vice President-
General Manager of WCMH-TV in May 1993 which remains in effect until April 30,
1996. The contract provides for a base salary of $140,000 per annum and also
provides that the employee will be a participant in the Executive Incentive
Compensation Plan. Mr. Oziemblewski and Ms. Sullivan had employment contracts
with the Company and Outlet Broadcasting for a term which expired as of March
31, 1992. These contracts provide, however, that if employment is terminated
other than for cause, death or disability within a five-year period following
the term of the contract, Outlet Broadcasting will pay a minimum of one year
base salary as severance payment. At December 31, 1993, these amounted to
$123,700 and $115,000 per annum, respectively. In the event of a merger of
the Company or Outlet Broadcasting, or acquisition of 50% of their voting
securities, or any other change in control, the contracts are deemed to have
been assigned to the successor entity.
_________________________________________________________________
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Richardson serves as Chairman and Messrs. Butler, Koppelman and Walsh and
Ms. Baldrige serve as members of the Compensation Committee of the Board. No
member of the Compensation Committee is a current or former officer or
employee of the Company or any of its subsidiaries. All members of the
Compensation Committee except Ms. Baldrige were designated by Wesray pursuant
to the Stockholders' Agreement described below under "Certain Relationships
and Related Transactions-Stockholders' Agreement."
Messrs. Richardson and Walsh are stockholders and Messrs. Koppelman,
Richardson and Walsh are directors of Harding Service, which provides
management consulting services to the Company pursuant to an agreement entered
into in July 1986. Under the agreement, Harding Service has agreed to provide
the Company with general management, corporate finance, marketing and business
investment advice until July 1996. Such advice includes reviewing capital and
operating budgets, capital appropriations, executive compensation and employee
incentive programs, business strategies, budgeting and forecasting, and
general corporate planning and financial oversight. Harding Service provides
management consulting services to several other entities affiliated with
Wesray. In consideration of the consulting services, the Company has agreed
to pay consulting services fees equal to 0.333% of annual gross revenues to
Harding Service, which fees totalled $186,974 in 1993. This agreement was
entered into when the Company was privately held and may not be on terms as
favorable to the Company as could have been obtained from an unaffiliated
party.
- -----------------------------------------------------------------------------
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of Outlet Communications,
Inc. (the "Committee") herein presents the following report on executive
compensation:
The Company maintains a Salary Administration Program of which the primary
purpose is to ensure that the Company has a credible, logical and consistent
process for making salary decisions. The existence of such a program enables
the Company to determine that each executive receives a fair and reasonable
salary for the level of work performed and for the quality of that work. The
program also directly associates executive compensation with Company
performance.
EXECUTIVE COMPENSATION POLICY. It is the policy of the Company to provide
executive compensation that is equitable and competitively attractive. In
addition, executive compensation should be related to improvements in
corporate operating performance. Thus, compensation will be established at
levels that are fair and objectively determined and, through incentives tied
in to performance objectives, will be directly connected with increases in the
Company's value for the ultimate benefit of the shareholders. The Company
would not currently be subject to the limitation on deductibility of executive
compensation as enacted in recent legislation but is considering whether it
will modify its policies in response thereto.
BASE COMPENSATION. The Company's Salary Administration Program, as it
pertains to base compensation, includes the following elements:
. JOB EVALUATION Establishes the economic value of each job and relates the
valuation to both the marketplace and other jobs. This results in the
development of a salary range for each level of work.
. PERFORMANCE APPRAISAL Provides for a fair and equitable review of job
performance, conducted on a regular basis.
. PERFORMANCE PLANNING Combines pay programs with fulfillment of the
Company's operating goals and/or financial objectives.
The Committee considers that the salary range levels developed for the
executive officers are reasonable and competitive. Actual salaries are based
on the established salary range as further adjusted within that range by
individual performance contributions. During fiscal 1993, in recognition of
the Company's overall improvement in operations, including revenue growth,
expense reductions and a significant increase in operating income, the
Committee granted the executive officers named in the Summary Compensation
Table (the "Named Executives") an increase in base salary. Also, for having
successfully accomplished a refinancing of long-term debt during the year, the
Company awarded the Named Executives a one-time bonus payment as shown in the
Summary Compensation Table.
<PAGE>
EXECUTIVE INCENTIVE COMPENSATION PLAN Key management employees
are eligible to participate in Outlet Broadcasting's Executive Incentive
Compensation Plan. Participants are selected based on ability to affect
profitability, with awards based primarily on the attainment of certain annual
operating objectives. The plan is intended to reward specific operating
accomplishments and provide competitive levels of compensation for the
attainment of those financial objectives. In particular, the plan aims to
focus the Company's activities toward optimum and steady earnings growth
which, the Committee believes, are primary determinants of share price over
time. Under the plan, target awards are established for executive officers as
a percentage of their base salary range. The targeted awards are subject to
decrease or increase based on the Company's actual performance and at the
discretion of the Committee. The Committee may also grant discretionary
awards to certain key employees. During 1993, the Company exceeded its
financial performance objectives and incentive compensation awards were made
to the Named Executives as shown in the Summary Compensation Table, to be paid
in 1994. In 1992, incentive compensation awards were paid as shown in the
Summary Compensation Table. The Company did not achieve its financial
performance objectives for 1991 and no awards were paid for that year.
STOCK INCENTIVE PROGRAM The Committee believes that by encouraging stock
ownership in the Company by executives, it serves to increase the executives'
personal interest in the Company's continued success and progress. Therefore,
executives are eligible to receive stock options and/or restricted shares,
giving them the right to purchase shares of Common Stock of the Company at a
specified price in the future. During fiscal 1992, individual stock options
were granted and restricted shares were awarded to executive officers based on
competitive practices.
COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mr. James G. Babb, Chairman, President and Chief Executive Officer joined the
Company in May 1991. His employment agreement with the Company was structured
to provide Mr. Babb with a competitive base salary, subject to annual review,
along with an annual incentive opportunity. In considering Mr. Babb's
compensation for 1993, the Committee reviewed such compensation arrangements
and further reviewed the trend of the Company's operating performance during
the year. It was noted that the Company significantly exceeded its financial
operating objectives for 1993. In particular, the Committee noted that the
1993 financial performance as measured by various factors, including revenue
growth, expense control, operating income and net income per share, was a
continuation of the Company's significantly improved financial performance of
1992.
<PAGE>
Because of the considerable success enjoyed by the Company in its 1993
operating results, and because such success will further serve to benefit the
Company's long-term business prospects, the Committee has made the following
determinations regarding the compensation of Mr. Babb:
. Upon annual review, Mr. Babb's base salary was increased from $275,000 per
year to $305,000 per year.
. Under the annual incentive compensation plan, an incentive award of
$175,000 was accrued for fiscal 1993.
. Upon the Company's successful completion of a debt-refinancing, during
1993, Mr. Babb was awarded a one-time bonus of $25,000.
SUMMARY As described above, the Committee believes that the Salary
Administration Program for executives is competitive and that the executive
compensation programs include variable compensation opportunities that are
based on achievements of financial objectives and enhancements in shareholder
value.
Compensation Committee: Frank E. Richardson, Chairman, and Members Letitia
Baldrige, Robert C. Butler, Julius Koppelman and Frank E. Walsh, Jr.
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PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the Total Return Index for the Nasdaq Stock Market (U.S.
Companies) and to the Nasdaq Telecommunications Stocks Index for the Company's
last five fiscal years. The graph assumes that the value of the investment in
the Company's Common Stock and each index was $100 at December 31, 1988 and
all dividends were reinvested.
A paper copy of the performance graph has been filed under cover of Form SE.
Fiscal Year Ended December 31,
- -------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993
- -------------------------------------------------------------------------
The Company 100 105 36 18 17 44
Nasdaq Total
Return
Index (US) 100 121 103 165 192 219
Nasdaq Tele-
communications
Stocks Index 100 158 106 146 180 277
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS' AGREEMENT The Company, Outlet Broadcasting, and each of the
Company's original stockholders (including Mutual Benefit) and certain of
their successors and assigns are parties to a stockholders' agreement (the
"Stockholders' Agreement"). As of March 18, 1994, an aggregate of 4,718,685
shares of the Common Stock were beneficially owned by the parties to the
Stockholders' Agreement. The Stockholders' Agreement requires that the
stockholders party to the Stockholders' Agreement vote their shares to fix the
number of directors of the Company at 14 and elect as directors five persons
designated by certain management stockholders (the "Management Stockholders")
and nine persons designated by the stockholders affiliated with Wesray (the
"Wesray Stockholders"). The following persons are parties to the
Stockholders' Agreement: Hugh J. Byrnes, Richard D. Ferrier, Maria E. Ferrier,
The Hartington Trust, Keith Hightower, John D. Howard, Julius Koppelman, Frank
H. Pearl, Frank E. Richardson, E. Burke Ross, Jr., William E. Simon, Manfred
L. Steyn, Henrik N. Vanderlip, The OCI Trust, (Wesray Stockholders), Reginald
Butts, Steve J. Caminis, Charles G. Conklin, Estate of David E. Henderson and
related trusts, Frederick R. Griffiths, Thomas J. Mosher, Felix W.
Oziemblewski, Gerald T. Plemmons, Josephine Renola, Garland R. Robinson, John
D. Sawhill, Gerald Scher, John A. Serrao, Mara L. Snodgrass, Solomon M. Yas,
Joseph A. Young (Management Stockholders) and Mutual Benefit.
The Stockholders' Agreement also provides that each stockholder and Mutual
Benefit may not agree to sell any securities to a buyer who would as a result
of such purchase own more than 50% of the outstanding Common Stock of the
Company unless prior to such sale the buyer agrees to be bound by the
Stockholders' Agreement and affords each stockholder the opportunity to sell a
pro rata portion of his shares on the same terms and conditions.
The Stockholders' Agreement terminates on the earlier of (i) July 30, 1996;
(ii) the date that the Wesray Stockholders, Management Stockholders and Mutual
Benefit own an aggregate of less than 50% of the Company's issued and
outstanding Common Stock; and (iii) the date of an event of bankruptcy or
insolvency of the Company or Outlet Broadcasting or foreclosure or similar
actions or proceedings by the Company's senior bank lender. Mutual Benefit
was placed in rehabilitation by the New Jersey Commissioner of Insurance on
July 16, 1991.
MANAGEMENT CONSULTING AGREEMENT In July 1986, the Company entered into an
agreement for management consulting services with Harding Service, of which
Mr. Richardson and Mr. Walsh are stockholders and Messrs. Koppelman,
Richardson and Walsh are directors. For a description of the agreement with
Harding Service, see "Compensation Committee Interlocks and Insider
Participation."
<PAGE>
TRANSACTIONS WITH THE LAW FIRM OF HINCKLEY, ALLEN & SNYDER The law firm of
Hinckley, Allen & Snyder of which Mr. Carlotti, a Director of the Company, is
a partner, provided legal services to the Company during fiscal year 1993.
DIRECTORS' COMPENSATION
All non-employee directors receive an annual retainer of $13,000. All non-
employee directors also receive a $1,000 fee for each meeting of the Board
attended and $600 for attendance at committee meetings.
- -----------------------------------------------------------------------------
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors during the fiscal year ended December 31, 1993 had a
total of four meetings. All of the incumbent directors standing for
reelection attended at least 75% of the aggregate number of meetings of the
Board. Director Victor H. Palmieri attended all of the meetings since his
election to the Board on October 28, 1993.
As standing committees, the Board has an Executive Committee, an Audit
Committee, a Compensation Committee and a Nominating Committee.
The Executive Committee consists of Frank E. Richardson, Chairman, James G.
Babb, Stephen J. Carlotti, Julius Koppelman and Leonard Lieberman.
The Compensation Committee consists of non-employee directors. Its members
are Frank E. Richardson, Chairman; Letitia Baldrige, Robert C. Butler, Julius
Koppelman and Frank E. Walsh, Jr. The Committee held two meetings during
fiscal year 1993 and all members attended both meetings except for Frank E.
Walsh, Jr. who attended one meeting. The Compensation Committee's duties are
to consider and make recommendations to the Board of executive employee
compensation, bonuses and employment plan benefits.
The Nominating Committee consists of Stephen J. Carlotti, Chairman, James G.
Babb and Letitia Baldrige and Frederick R. Griffiths. The Committee, although
it did not hold any official meetings during 1993, held unofficial discussions
as to new directors. The Nominating Committee's duties are to screen and
recommend to the Board qualified candidates for election to the Board. The
Committee will also consider nominees recommended by shareholders.
Shareholders desiring to make such recommendations should submit the
candidate's name, together with biographical information and the candidate's
written consent to nomination to: Secretary, Outlet Communications, Inc., 23
Kenney Drive, Cranston, Rhode Island 02920-4489 no later than January 14,
1995.
The Audit Committee consists of non-employee directors. Its members are
Stephen J. Carlotti, Chairman, Letitia Baldrige, Robert C. Butler, Leonard
Lieberman and Solomon M. Yas. The Committee had one meeting during 1993 and
all members attended.
<PAGE>
The primary objectives of the Audit Committee are to provide direct, personal
contact on a regular basis between non-employee directors and the Company's
independent auditors. The Committee analyzes reports of the independent
auditors, reviews the adequacy of the Company's internal accounting controls
with the independent auditors, and makes such recommendations to the Board as
the Committee may deem advisable. The Audit Committee also approves all audit
services provided by the Company's independent auditors and fees therefor.
- -----------------------------------------------------------------------------
APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the stockholders at the Annual Meeting, the Board
of Directors has elected Ernst & Young, independent public accountants, as
auditors of the Company for the fiscal year ending December 31, 1994. The
affirmative vote of a majority of the shares of Common Stock voted at the
Annual Meeting (whether in person or by proxy) is required to approve this
matter. It is expected that representatives of Ernst & Young will attend the
Annual Meeting, will have an opportunity to address the meeting, if they
desire to do so, and will be available to respond to appropriate questions
from stockholders.
- -----------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for presentation at the
Company's 1995 Annual Meeting of Stockholders must submit the proposal to the
company, Outlet Communications, Inc., 23 Kenney Drive, Cranston, Rhode Island
02920-4489, Attention: Secretary, no later than January 14, 1995 for
inclusion, if appropriate, in the Proxy Statement and the form of proxy
relating to the 1995 Annual Meeting.
- ------------------------------------------------------------------------------
OTHER MATTERS
The management of the Company knows of no matters which are to be brought
before the meeting, other than as set forth above. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the accompanying form of proxy to vote in accordance with their
judgment on such matters.
- ------------------------------------------------------------------------------
EXPENSES
The cost of preparing, assembling and mailing in connection with this
solicitation of proxies will be borne by the Company. Proxies may be
solicited by regular employees of the Company personally or by mail, telephone
or telegraph.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS ARE URGED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
By Order of the Board of Directors,
Joanne Schenck
Secretary
Cranston, Rhode Island
April 1, 1994
<PAGE>
PROXY PROXY
Outlet Communications, Inc.
ANNUAL MEETING OF STOCKHOLDERS, MAY 4, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of OUTLET COMMUNICATIONS, INC., hereby
appoints Letitia Baldrige, Robert C. Butler and Charles G. Conklin and each
of them, with full power(s) of substitution, the proxies of the undersigned
to vote all shares of Common Stock of OUTLET COMMUNICATIONS, INC., which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
corporation to be held at 3165 Olentangy River Road, Columbus, Ohio 43202, on
Wednesday, May 4, 1994, at 1:00 p.m., local time, and at any adjournments or
postponements thereof, with the same force and effect as the undersigned might
or could do if personally present.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposals 1 and 2.
New Address ___________________
___________________
___________________
<PAGE>
This proxy will be voted in the Election of Directors in the manner described
in the Proxy Statement for the Annual Meeting of Stockholders.
------------
COMMON
1. ELECTION OF DIRECTORS FOR AGAINST ABSTAIN
FOR all WITHHOLD
nominees AUTHORITY 2. PROPOSAL TO RATIFY THE SELECTION
listed from all OF ERNST & YOUNG as independent
below nominees public accountants for the cor-
(except as poration for the fiscal year
marked to ending December 31, 1994. The
the con- Board of Directors recommend a
trary) vote FOR:
The Board of Directors 3. In their discretion the Proxies
recommends a vote FOR: are authorized to vote upon such
James G. Babb, other business as may properly
Letitia Baldrige, come before the meeting.
Robert C. Butler,
Stephen J. Carlotti,
Frederick R. Griffiths,
Julius Koppelman,
James K. Makrianes,
Leonard Lieberman,
Victor H. Palmieri,
Frank E. Richardson,
Frank E. Walsh, Jr.,
and Solomon M. Yas.
For, except vote withheld from
the following nominee(s):
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature Date
Signature Date
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE FREE ENVELOPE.
