<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
HERITAGE MEDIA CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
HERITAGE MEDIA CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
HERITAGE MEDIA CORPORATION
ONE GALLERIA TOWER
13355 NOEL ROAD, SUITE 1500
DALLAS, TEXAS 75240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 1994
To the stockholders of
Heritage Media Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Heritage
Media Corporation (the "Company"), will be held at The Westin Hotel Galleria,
13340 Dallas Parkway, Dallas, Texas, on May 26, 1994 at 9:00 A.M., local time,
for the following purposes:
(a) For holders of Class A Common Stock to elect seven directors of the
Company;
(b) For consideration of the adoption of the Company's Amended and
Restated Stock Option Plan; and
(c) For the transaction of such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 21, 1994, are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
Whether or not you plan to attend the Annual Meeting and regardless of the
number of shares you own, please date, sign and return the enclosed proxy card
in the enclosed envelope (which requires no postage if mailed in the United
States).
By Order of the Board of Directors
WAYNE KERN,
SECRETARY
Dallas, Texas
April 22, 1994
<PAGE>
HERITAGE MEDIA CORPORATION
ONE GALLERIA TOWER
13355 NOEL ROAD, SUITE 1500
DALLAS, TEXAS 75240
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 1994
This Proxy Statement is furnished to stockholders of Heritage Media
Corporation, an Iowa corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
annual meeting of stockholders to be held on May 26, 1994, and at any and all
adjournments or postponements thereof. Proxies in the form enclosed will be
voted at the meeting, if properly executed, returned to the Company prior to the
meeting and not revoked. The proxy may be revoked at any time before it is voted
by giving written notice to the Secretary of the Company.
ACTION TO BE TAKEN AT THE MEETING
At the Annual Meeting, holders of the Company's Class A Common Stock (the
"Class A Common Stock") will consider and vote for the election as directors of
the Company of Messrs. James S. Cownie, Joseph M. Grant, James M. Hoak, Clark A.
Johnson, Alan R. Kahn, Joseph D. Mahaffey and David N. Walthall. Such holders
will also consider and vote upon a proposal to adopt the Company's Amended and
Restated Stock Option Plan (the "Option Plan").
Only holders of record of Class A Common Stock at the close of business on
March 21, 1994 (the "Record Date") are entitled to notice of, and to vote at,
the Annual Meeting. At the close of business on the Record Date, the Company had
issued and outstanding, and entitled to vote at the Annual Meeting, 12,634,597
shares of Class A Common Stock. The Company also had issued and outstanding on
such date 4,829,728 shares of Class C Common Stock (the "Class C Common Stock").
Holders of record of Class A Common Stock are entitled to one vote per share on
the matters to be considered at the Annual Meeting, as to which such shares are
entitled to vote as set forth above. The holders of Class C Common Stock
generally do not have voting rights and are not entitled to vote with respect to
the matters to be considered at the Annual Meeting.
The presence, either in person or by properly executed proxy, of the holders
of record of a majority of the Class A Common Stock is necessary to constitute a
quorum at the Annual Meeting.
The election as a director of each nominee set forth above requires the
affirmative vote of the holders of record of a majority of the outstanding
voting power of the shares of Class A Common Stock represented, in person or by
proxy, and entitled to vote at the Annual Meeting. The proposal to adopt the
Option Plan requires the affirmative vote of the holders of record of a majority
of the outstanding voting power of the shares of Class A Common Stock
represented, in person or by proxy, and entitled to vote at the Annual Meeting.
Accordingly, abstentions and "broker non-votes" are counted for purposes of
determining the presence of a quorum. Abstentions will have the effect of a vote
against such proposals but "broker non-votes" are not entitled to vote on the
subject matter and consequently, will have no effect on the outcome of such
vote. A "broker non-vote" occurs if a broker or other nominee does not have
discretionary authority and has not received instructions with respect to a
particular item.
The accompanying proxy, unless the stockholder otherwise specifies in the
proxy, will be voted (i) for the election as directors of the Company of the
seven nominees set forth above, (ii) for the adoption of the Option Plan and
(iii) at the discretion of the proxy holders on any other matter that may
properly come before the meeting or any adjournment thereof.
Where stockholders have appropriately specified how their proxies are to be
voted, they will be voted accordingly. If any other matter or business is
brought before the meeting, the proxy holders may vote the proxies in their
discretion. The directors do not know of any such other matter or business.
Should any nominee for the Board of Directors become unable or unwilling to
accept
<PAGE>
nomination or election, the proxy holders may vote the proxies for the election
in his stead of any other person the Board of Directors may recommend. Each
nominee has expressed his intention to serve the entire term for which election
is sought.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as to the beneficial
ownership of each class of Common Stock of the Company as of March 21, 1994 by
(i) each person who is known to beneficially own more than 5% of each such class
and (ii) all officers and directors as a group. Unless otherwise indicated, each
of the persons named below has sole voting and investment power with respect to
the shares of Common Stock beneficially owned by such person.
<TABLE>
<CAPTION>
PERCENT
OWNERSHIP
CLASS A CLASS C CLASS A
NAME AND ADDRESS(1) COMMON(2) PERCENT COMMON PERCENT EQUIV.(3)
- ---------------------------------- ------------ ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
James M. Hoak 1,030,876(4) 8.0% -- -- 5.8%
Chairman of the Board
13355 Noel Road, Suite 1500
Dallas, TX 75240
James S. Cownie 321,013(5) 2.5% -- -- 1.8%
Director
2600 Grand Avenue,
Des Moines, IA 50312
David N. Walthall 158,687(6) 1.2% -- -- .9%
President and CEO; Director
13355 Noel Road, Suite 1500
Dallas, TX 75240
HC Crown Corp.(7) 305,555 2.4% 2,430,645 50.5% 15.5%
Mellon Bank Cntr.
2nd Floor
10th & Market
Wilmington, DE 19801
The Equitable Companies Inc. 986,275 7.7% -- -- 5.6%
787 Seventh Avenue
New York, NY 10009
Morgan Capital Corp. 55,556 .4% 512,987 10.6% 3.2%
902 Market Street
Wilmington, DE 19801
Goldman, Sachs & Co. 456,168 3.5% 550,375 11.4% 5.7%
85 Broad Street
New York, NY 10004
Janus Capital Corporation 846,100 6.6% -- -- 4.8%
100 Fillmore St.
Suite 300
Denver, CO 80206
Tele-Communications, Inc.(7) -- -- 1,335,721 27.7% 7.5%
5619 DTC Parkway
Englewood, CO 80111
All officers and directors as a 1,771,801(8) 13.8 -- -- 10.0%
group (13 persons)
<FN>
- ------------------------------
(1) Table includes presently exercisable portion of stock options.
(2) Excludes shares allocated to participants' accounts under the Company's
Retirement Savings Plan.
(3) Assumes conversion of each outstanding share of Class C Common Stock into
one share of Class A Common Stock.
(4) Includes 6,785 shares of Class A Common Stock held by Mr. Hoak's wife and
children. Mr. Hoak disclaims beneficial ownership of such shares.
(5) Includes 85,945 shares of Series A Common Stock held by Mr. Cownie's
family. Mr. Cownie disclaims beneficial ownership of such shares.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(6) Includes 17,339 shares held by Mr. Walthall's wife. Mr. Walthall disclaims
beneficial ownership of such shares.
(7) HC Crown Corp. and Tele-Communications, Inc. sold 3,700,000 of the shares
beneficially owned by them pursuant to an underwritten public offering
completed on April 8, 1994.
(8) Excludes 8,801 shares issuable to directors pursuant to the Heritage Plan
for Deferral of Non-Employee Director Compensation and Fees.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
A brief description of each director and executive officer of the Company is
provided below. Directors hold office until the next annual meeting of the
stockholders or until their successors are elected and qualified. All officers
serve at the discretion of the Board of Directors.
JAMES M. HOAK, 50, has served as Chairman of the Board of the Company since
August 1987. Mr. Hoak has also served as Chairman and Chief Executive Officer of
Crown Media, Inc. (a cable television company unaffiliated with the Company)
since February 1991, and Chairman of Cypress Capital Corporation (a private
investment company) since September 1991. Until December 1990, Mr. Hoak had been
Chairman (since 1987), President (1971 to 1987) and Chief Executive Officer and
a director of Heritage Communications, Inc. ("HCI"), a diversified
communications company. Mr. Hoak is a director of Airgas, Inc., Midwest
Resources, Inc., Pier 1 Imports, Inc., and Sun Coast Industries, Inc. and a
member of the Board of Governors of the American Stock Exchange.
DAVID N. WALTHALL, 48, has served as President, Chief Executive Officer and
a director of the Company since August 1987. From 1985 to April 1988, he was
Executive Vice President of HCI and President of its Communications Products
Group.
JOSEPH D. MAHAFFEY, 48, joined the Company in March 1992 as Executive Vice
President, Chief Financial Officer and a member of the Board of Directors. Mr.
Mahaffey served as President and Vice Chairman of United Meridian Corporation
(an oil and gas company) from 1987 to 1992.
PAUL W. FIDDICK, 44, has served as Executive Vice President and President,
Radio Group of the Company since August 1987.
WAYNE W. LOCURTO, 50, has served as an Executive Vice President of the
Company and as President, Actmedia since November 1989. He served as Vice
President of Glendinning Associates (a marketing consulting firm) from 1987 to
November 1989.
JAMES J. ROBINETTE, 60, has served as Executive Vice President and
President, Television Group of the Company since August 1987.
WAYNE KERN, 61, has served as Senior Vice President and Secretary of the
Company since 1987. Since July 1991, Mr. Kern has also served as Executive Vice
President of Crown Media, Inc. Until December 1990, Mr. Kern had been Executive
or Senior Vice President, General Counsel and Secretary of HCI at all times
since 1985.
JAMES P. LEHR, 46, has served as Vice President -- Administration,
Controller and Assistant Secretary of the Company since December 1987.
DOUGLAS N. WOODRUM, 36, has served as Vice President -- Development and
Treasurer of the Company since August 1987.
JAMES S. COWNIE, 49, served as the President and a director of HCI from
August 1987 until December 1990. Since March 1991, Mr. Cownie has been the
Chairman of the corporate partner of New Heritage Associates (a cable television
firm unaffiliated with the Company). Mr. Cownie was elected as a director of the
Company in July 1989.
JOSEPH M. GRANT, 55, has served as the Senior Vice President and Chief
Financial Officer of Electronic Data Systems, Inc. (an information technology
company) since December 1990. From 1989 to 1990, Mr. Grant served as the
Executive Vice President and Chief Systems Officer for American
3
<PAGE>
General Corporation (a life insurance, real estate and consumer finance
company). Prior to 1989, Mr. Grant served as the Chairman of the Board and Chief
Executive Officer of Texas American Bancshares Inc. (a bank holding company).
Mr. Grant has been a director of the Company since June 1992.
CLARK A. JOHNSON, 63, has served as the Chairman and Chief Executive
Officer of Pier 1 Imports, Inc. (a specialty retailer of home furnishings) since
1988 and was President of such company from 1985 to 1988. Mr. Johnson has been a
director of the Company since March 1990. He also serves as a director of
Actava, Inc., Albertson's, Inc., AnaComp, Inc., and Intertan, Inc.
ALAN R. KAHN, 54, is a business consultant and private investor and was
President of Sun Country Industries, Inc. (a beverage distributor) from 1984 to
1988. Mr. Kahn has been a director of the Company since August 1987.
The Board of Directors held ten meetings in 1993. No director attended fewer
than 75% of the meetings of the Board (and any committees thereof) which they
were required to attend.
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table sets forth certain information as to beneficial
ownership of Class A Common Stock of the Company by the executive officers and
directors of the Company:
<TABLE>
<CAPTION>
CLASS A
NAME(1) COMMON PERCENT
- ------------------------------------------------------------------------- ----------- ---------
<S> <C> <C>
James M. Hoak............................................................ 1,030,876 8.0%
David N. Walthall........................................................ 158,687 1.2%
Joseph D. Mahaffey....................................................... 13,500 .1%
Paul W. Fiddick.......................................................... 66,006 .5%
Wayne W. LoCurto......................................................... 15,456 .1%
James J. Robinette....................................................... -- N/A
Wayne Kern............................................................... 104,249 .8%
James P. Lehr............................................................ 3,878 -- (2)
Douglas N. Woodrum....................................................... 40,895 .3%
James S. Cownie.......................................................... 321,013 2.5%
Joseph M. Grant.......................................................... 2,000 -- (2)
Clark A. Johnson......................................................... 3,784 -- (2)
Alan R. Kahn............................................................. 11,457 .1%
<FN>
- ------------------------
(1) Table includes presently exercisable options.
(2) Less than .1%
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee, comprised of Messrs. Hoak (Chairman), Kahn and
Walthall, is empowered to exercise all authority of the entire Board, subject to
certain exceptions (primarily statutory) relating generally to such matters as
mergers, sales of assets, sales of capital stock, bylaw amendments and changes
to the membership of the Board. The Executive Committee met one time during
1993.
The Compensation Committee, comprised of Messrs. Cownie, Grant, and Kahn met
one time during 1993. Reference is made to the separate report of the
Compensation Committee set forth elsewhere herein.
The Audit Committee, comprised of Messrs. Cownie, Grant, Johnson and Kahn
(Chairman), is empowered to recommend to the Board the appointment of the
Company's independent public accountants and to periodically meet with such
accountants to discuss their fees, audit and non-audit services, and the
internal controls and audit results for the Company. The Audit Committee also is
empowered to meet with the Company's accounting personnel to review accounting
policies and reports. The Audit Committee met two times during 1993.
4
<PAGE>
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company receives, in
addition to the basic annual fee of $12,000, $1,000 per Board meeting (or
committee meeting not in conjunction with a Board meeting) held in person or
$200 if the meeting is held by telephone. Any non-employee director may elect to
defer such fees for later payment with an interest equivalent or invest such
fees in shares of the Company's Class A Common Stock. When first elected,
directors who are not officers or employees of the Company are granted options
(vesting in full after two years of service and expiring ten years after the
date of grant) to acquire 2,000 shares of Class A Common Stock at the fair
market value of such stock on the date of grant. Thereafter, options to purchase
an additional 2,000 shares of Class A Common Stock are granted annually.
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued by the Company during the three years ended December 31, 1993 to or for
the Company's chief executive officer and the four other highest compensated
executive officers of the Company.
<TABLE>
<CAPTION>
COMPANY
COMPANY CONTRIBUTION
STOCK TO DEFINED
NAME AND OTHER ANNUAL OPTIONS CONTRIBUTION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDED(2) PLAN
- ------------------- ----------- ----------- ----------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall 1993 $ 300,171 $ 273,151 $ 11,887 50,000 $ 4,497
CEO and Pres. 1992 304,046 136,702 7,200 83,561 7,912
1991 241,608 24,895 7,200 -- 7,325
Mr. LoCurto(3) 1993 258,889 160,500 9,780 20,000 4,497
Exec. V.P. 1992 250,732 60,500 13,135 41,823 -0-
1991 229,923 9,000 11,580 -- 783
Mr. Hoak 1993 240,923 125,794 -- 2,000 4,497
Chairman 1992 300,000 34,557 -- 75,920 -0-
1991 251,923 7,903 1,938 -- 1,212
Mr. Mahaffey 1993 222,127 144,263 11,143 16,000 4,497
CFO and Exec. V.P. 1992(4) 165,385 56,713 5,538 46,782 --
Mr. Robinette 1993 195,089 149,400 115,466 -- 4,497
Exec. V.P. 1992 178,346 110,968 7,477 9,207 7,912
1991 161,631 41,367 7,200 -- 6,929
- ------------------------
(1) Includes auto allowance, moving expenses and taxable fringe benefits.
(2) Reflects options exchanged pursuant to the 1992 Option Exchange Program.
(3) In 1991, Mr. LoCurto was granted 10,000 units under the Actmedia Stock
Appreciation Rights Plan of 1990. Pursuant to this plan, certain executive
officers of the Company's Actmedia, Inc. subsidiary are eligible to
receive grants of phantom equity units reflecting the fair market value of
the common share equity of Actmedia. Persons receiving grants of such
units will generally be entitled to receive in cash the difference between
the value per unit on December 31, 1994 and the base value on the date of
grant with respect to all vested units. Units vest under the plan in
installments between the grant date and December 31, 1994. The units
granted to Mr. LoCurto in 1991 had a base value of $9.70 per unit on the
date of grant.
(4) Mr. Mahaffey joined the Company in March 1992.
</TABLE>
STOCK OPTIONS
In 1987, the Company adopted the Option Plan, which was subsequently amended
in 1989 and 1993. Under the Option Plan, non-qualified stock options for up to
1,500,000 shares of Class A Common Stock may be granted to officers, directors
and key employees of the Company and its
5
<PAGE>
subsidiaries at a price at least equal to fair market value at the date of
grant, unless waived by the Board of Directors. An optionee may not receive a
grant in excess of 100,000 shares of Class A Common Stock in any calendar year.
Options granted under the Option Plan vest in full after two years of employment
and are exercisable for not more than 10 years from the date of grant.
The following table sets forth certain information with respect to the
options granted during the year ended December 31, 1993 to the executive
officers named in the above compensation table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------- VALUE AT ASSUMED
PERCENT OF TOTAL ANNUAL RATES OF STOCK
OPTIONS/ OPTIONS/ SARS PRICE APPRECIATION FOR
SARS GRANTED TO EXERCISE OR OPTION TERM
GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION --------------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------- --------- ------------------- ------------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall........... 50,000 21.0% $ 18.75 12-13-03 $ 681,214 $ 1,640,032
Mr. LoCurto............ 20,000 8.4 18.75 12-13-03 272,486 656,013
Mr. Hoak............... 2,000 .8 18.75 12-13-03 27,249 65,601
Mr. Mahaffey........... 16,000 6.7 18.75 12-13-03 217,988 524,810
Mr. Robinette.......... -- N/A N/A N/A N/A N/A
</TABLE>
The following table sets forth certain information with respect to the
options exercised by the executive officers named in the above compensation
table during the year ended December 31, 1993 or held by such persons at
December 31, 1993:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT DEC. 31, 1993 DEC. 31, 1993(1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall........... -- N/A 22,023 111,538 $ 263,721 $ 792,783
Mr. LoCurto............ -- N/A 14,131 47,692 170,170 355,189
Mr. Hoak............... -- N/A 20,920 57,000 250,071 477,250
Mr. Mahaffey........... -- N/A -- 62,782 N/A 623,190
Mr. Robinette.......... 9,207 $ 89,768 -- -- N/A N/A
<FN>
- ------------------------
(1) Based upon the closing price of the Class A Common Stock of the Company on
December 31, 1993, which price was $19.875 per share.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
The Company's Compensation Committee is empowered to review, and to
recommend to the full Board of Directors, the annual compensation, long term
incentive plans and compensation procedures for all executive officers of the
Company. In carrying out these responsibilities, the Committee evaluates
numerous factors including the Company's financial performance in relation to
the goals established by the Board, the individual contribution of each
executive officer, competitive compensation practices within the industry, and
general economic inflationary factors. The base salary component of executive
officer compensation is primarily determined by reference to the individual
contribution of each officer. The annual cash bonus component is based solely
upon the achievement of targeted cash flow levels by the Company or, where
applicable, by specific operating segments of the Company. All targeted cash
flow levels are reviewed and approved by the Compensation Committee at the
beginning of each fiscal year. The long-term incentive plan of the Company
consists of grants under the Company's stock option plan and (in the case of Mr.
LoCurto) participation in the Actmedia stock appreciation rights plan. The level
of stock option grants to executive officers is based upon their performance,
relative position and responsibilities in the Company.
The base salary levels for executive officers of the Company were increased
6% in 1993 over 1992. During 1993, the Company achieved approximately 114% of
targeted cash flows, which represented a 26% increase over the cash flow
achieved in 1992. As a result, annual bonuses, which were based upon specific
formulae relating to cash flow levels, represented approximately 37% of cash
compensation
6
<PAGE>
received by the executive officers for 1993. In 1993 the Company granted options
to purchase 107,000 shares of the Company's common stock to the executive
officers of the Company. These stock option grants reflected the improved
financial performance of the Company and the achievement of several operating
and financial goals established by the Board.
In December 1993, the Committee recommended an increase in the base salary
of Mr. Walthall, chief executive officer of the Company, from $300,000 to
$337,000. The increase was intended to recognize Mr. Walthall's contribution
toward (i) the 26% increase in cash flow of the Company in 1993, (ii) the 130%
increase in the Company's common stock price during 1993 and (iii) the relative
position of the Company's three business groups in their industries. The
Committee was also cognizant of the generally higher level of base salaries paid
to chief executive officers of comparable companies. Mr. Walthall's bonus, which
represented approximately 44% of his total cash compensation for 1993, was based
entirely upon the achievement by the Company of 114% of the targeted cash flow
level.
Compensation Committee
James S. Cownie
Alan R. Kahn
Joseph M. Grant
CERTAIN FILINGS
Under the securities laws of the United States, the Company's directors and
executive officers, and persons who own more than 10% of the Company's Common
Stock, are required to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates have been established for these reports,
and the Company is required to disclose in this proxy statement any failure to
file by these dates. All of these filing requirements were satisfied during
1993.
7
<PAGE>
STOCK PRICE PERFORMANCE
Set forth below is a line graph indicating the stock price performance of
the Company's Common Stock for the five years ended December 31, 1993, as
contrasted with (i) the Standard & Poor's 500 Stock Index and (ii) a peer group
of publicly traded companies with operations in television and radio
broadcasting and in-store marketing with market capitalizations similar to the
Company's.
[GRAPHIC]
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Heritage Media.......................... 100 69 78 78 48 110
---- ---- ---- ---- ---- ----
S&P 500................................. 100 127 119 150 157 168
---- ---- ---- ---- ---- ----
Peer Group Index(2)..................... 100 108 64 63 86 159
---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
<FN>
- ------------------------
(1) Assumes $100 invested on December 31, 1988 in Heritage Media Class A
Common Stock, S&P 500 Index and a peer group Index.
(2) Companies comprising the peer group index: Catalina Marketing Corporation;
Clear Channel Communications, Inc.; Granite Broadcasting Corporation;
Great American Communications Company; Osborn Communications Corporation;
and Outlet Communications, Inc.
</TABLE>
ADOPTION OF AMENDED AND RESTATED STOCK OPTION PLAN
During 1993, the Board of Directors approved various amendments to the
Option Plan to reflect certain changes in the classes of capital stock of the
Company, certain changes necessitated by amendments to the federal income tax
laws and certain changes to reflect the grant of options to outside directors of
the Company. In December 1993, the Board of Directors amended and restated the
Option Plan to incorporate these various amendments into one plan document. See
"Directors and Executive Officers -- Stock Options" and "-- Compensation of
Directors" for information regarding the Option Plan and the granting of stock
options thereunder. The complete text of the Option Plan is set forth as Exhibit
A hereto.
The Option Plan provides for officers and directors who are also Company
employees an exemption from the provisions of Section 16(b) for the grant of
options. Section 16(b) provides for recovery by the Company of profits made by
officers and directors on short-term trading in shares of Common
8
<PAGE>
Stock of the Company. The Company requires the approval of the amendment to the
Option Plan by the stockholders at the Annual Meeting in order to continue the
exemption from Section 16(b) for the grant of options.
Stock options granted under the Option Plan are not currently entitled to
"incentive stock option" treatment for federal income tax purposes provided by
Section 422 of the Internal Revenue Code. An optionee, upon exercise of an
option under the Option Plan, will realize taxable income equal to the
difference between the exercise price and the fair market value at the time of
exercise, and the Company is entitled to a corresponding deduction. The
foregoing statements are based upon current federal income tax laws and
regulations and are subject to change if the tax laws and regulations, or
interpretations thereof, change.
As of April 18, 1994 the Company had approximately 1,300 employees and a
Board of Directors comprised of seven members, each of whom is eligible to
participate in the Option Plan. As of April 18, 1994, the market price of the
Company's Class A Common Stock underlying the stock options, as reported on the
American Stock Exchange, was $16 7/8 per share. Messrs. Walthall, LoCurto, Hoak,
Mahaffey and Robinette have been granted options to purchase 133,561, 61,823,
77,920, 62,782 and 9,207 shares, respectively. Messrs. Cownie, Grant, Johnson
and Kahn, have been granted options to purchase 4,857, 6,000, 5,034, and 4,857
shares, respectively (an aggregate of 20,748 shares as the group of current
non-employee directors). Options to purchase 429,796 shares have been granted to
all executive officers as a group (13 persons) and options to purchase 1,813,192
shares have been granted to all employees including non-executive officers (120
persons) as a group.
The Board of Directors recommends that stockholders vote FOR the proposed
amendment to the Option Plan.
STOCKHOLDERS' PROPOSALS
Any proposals that stockholders of the Company desire to have presented at
the 1995 annual meeting of stockholders must be received by the Company at its
principal executive offices no later than March 15, 1995.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy and the material used in the solicitation thereof will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by directors and regular officers and
employees of the Company. Arrangements may also be made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
Representatives of KPMG Peat Marwick, the Company's independent auditors,
are expected to be present at the Annual Meeting with the opportunity to make a
statement if they desire and to be available to respond to appropriate
questions.
By Order of the Board of Directors
WAYNE KERN,
SECRETARY
Dallas, Texas
April 22, 1994
9
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
STOCK OPTION PLAN
OF
HERITAGE MEDIA CORPORATION
WHEREAS, the Board of Directors of the Corporation deems it in the best
interests of the Corporation that certain key employees, officers and directors
of the Corporation and its subsidiaries be given an opportunity to acquire a
stake in the operation and growth of the Corporation, as a means of assuring
their maximum effort and continued association with the Corporation; and
WHEREAS, the Board believes that the Corporation can best obtain these and
other benefits by granting stock options to key employees, officers and
directors designated from time to time, pursuant to this Plan; and
WHEREAS, the Board adopted this Stock Option Plan in 1987 and has made
various amendments since the date thereof; and
WHEREAS, the Board now desires to amend and restate this Stock Option Plan
in its entirety;
NOW, THEREFORE, the Board does hereby adopt this AMENDED AND RESTATED STOCK
OPTION PLAN and hereby directs the Corporation to obtain the ratification by the
shareholders of the Corporation of such adoption.
1. DEFINITIONS.
Wherever used herein, the following terms shall have the following meanings,
respectively:
(a) "Plan" shall mean this Amended and Restated Stock Option Plan, as
the same may be amended on and after the date hereof.
(b) "Corporation" shall mean Heritage Media Corporation, or any
successor thereof.
(c) "Parent" shall mean any Parent of the Corporation.
(d) "Subsidiary" shall mean any Subsidiary of the Corporation.
(e) "Board" shall mean the Board of Directors of the Corporation.
(f) "Optionee" or "Participant" shall mean any individual designated by
the Board on recommendation by the Committee under Paragraph 4 hereof to be
Optionees under the Plan.
(g) "Transferee" means a person who has succeeded to the rights of an
Optionee under the Option as provided in Paragraphs 5(b) and 7(c) hereof.
(h) "Committee" shall mean the Compensation Committee of the Board, or
such future committee as may be appointed by the Board to administer the
Plan.
(i) "Eligible Individuals" shall mean any employee, officer or director
of the Corporation or any Parent or Subsidiary, and shall constitute the
class eligible to receive options under the Plan.
2. AUTHORITY TO GRANT OPTIONS.
Under this Plan, the Corporation may, from time to time, but in no event
after September 1, 1997, grant to Eligible Individuals as herein provided, an
option or options to purchase from the Corporation specified amounts of the
authorized and unissued $.01 par value Class A Common Stock of the Corporation,
but not to exceed in the aggregate 1,500,000 Class A shares, subject to
adjustment as provided in Paragraph 8 below. Shares covered by options which
lapse or otherwise are not exercised may be the subject of additional options
granted under the Plan. The Corporation shall at all times while this Plan is in
force reserve as authorized but unissued stock such number of shares of said
Class A Common Stock as will be sufficient to satisfy the requirements of this
Plan with respect to stock subject to being optioned as well as stock subject to
options granted but not exercised.
<PAGE>
3. ADMINISTRATION OF PLAN.
(a) The Plan will be administered by the Committee. No member of the Board
or of the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted under the Plan.
(b) The Committee shall be appointed by the Board, and subject to removal
by the Board with or without cause. Vacancies on the Committee, howsoever
caused, shall be filled by the Board. The Committee shall establish its own
rules (not inconsistent with the provisions hereof), for its meetings and the
performance of its responsibilities, but it shall select any of its members as
Chairman and one as Secretary, and shall keep written minutes of its meetings
and actions, a copy of which shall be furnished to the Board not later than the
time of the first meeting of the Board subsequent to each such action by the
Committee. Meetings shall be held at such time and places as the Committee may
determine. A majority of the Committee shall constitute a quorum for the
transaction of business. The Committee shall act by majority vote of the quorum
present, or by written consent of a majority of its members.
(c) Subject to the provisions of the Plan, the Committee is authorized to
interpret the Plan, to make, promulgate, amend and rescind rules and regulations
relating to the Plan, and to make all other determinations necessary or
advisable for its administration, and for the accomplishment of the purposes of
the Plan. Interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive, unless otherwise determined by the
Board.
4. GRANT OF OPTIONS.
(a) The Committee shall, from time to time, but in any event not later than
September 1, 1997, recommend those Eligible Individuals whom the Committee
determines should be granted options under the Plan, and the number of shares to
be optioned under each grant. Such Eligible Individuals may be persons
previously recommended to receive options under the Plan, or may be persons not
previously so recommended.
(b) The Committee shall also determine the number of shares to be so
optioned (not to exceed the number of shares specified by the Committee for each
such person, respectively), and shall determine the option price at which the
shares are to be offered to the Eligible Individuals selected, provided that the
option price shall not be less than the market price of the Corporation's stock
at the time the option is granted.
(c) Effective January 1, 1994, no Eligible Individual may receive grants of
options in excess of 100,000 shares of Class A Common Stock in any calendar
year.
(d) Each non-employee director of the Company shall, on the date of the
Committee meeting each year during December (or the closest meeting date
thereto), shall be granted an option effective as of that date to purchase 2,000
shares of Class A Common Stock at an exercise price equal to the fair market
value of the Class A Common Stock on the date of grant.
5. OPTION AGREEMENT.
No option granted hereunder shall be effective for any purpose unless and
until the Optionee has executed a written agreement (the Stock Option
Agreement), with the Corporation with respect to the terms of the option and its
exercise. Such agreement shall be in form and content determined by the
Committee and Board to be necessary in order that the option and its exercise
will be pursuant and subject to this Plan. In this regard, but without
limitation thereto, the Stock Option Agreement shall in its terms include the
following provisions, which are hereby made a part of the Plan:
(a) The option is not exercisable after the expiration of ten years from
the date the option is granted; and
(b) The option is non-transferable by the Optionee otherwise than by
will or the laws of descent and/or distribution, and is exercisable, during
his lifetime, by him only.
6. EXERCISE OF OPTION.
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(a) The Optionee shall have remained in the continuous employ or in the
capacity of director of the Corporation or a Parent or Subsidiary for two years
from and after the date on which the option is granted, or such other and
greater period as may be fixed by the Board before he can exercise any part of
the option. Additionally, the Optionee will be able to exercise only if the
Class A Common Stock to be acquired pursuant to the exercise of the option (1)
has been appropriately registered with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 and appropriately registered with the
necessary state "blue sky" laws, or (2) in the legal opinion of counsel for the
Corporation, does not require registration under the applicable federal and
state statutes.
(b) After the Optionee has remained in the continuous employ or in the
capacity of director of the Corporation for two years, and other requirements
for the exercise of the option have been met, the option may be exercised as to
all of the shares subject to the option. No option agreement entered into by the
Corporation shall be considered to impose upon the Corporation or Parent or
Subsidiary any obligation to retain the Optionee in its employment or in the
capacity of director for two years or any other period of time.
(c) The Committee shall, subject to other provisions of this Plan, fix the
manner of exercising the option, in whole or in part. The option shall be
exercised by means of written notice executed by the Optionee or Transferee and
delivered to the Company stating the number of shares to be purchased. Said
notice shall be accompanied by payment in cash, or by certified or cashier's
check payable to the order of the Corporation, of the full purchase price, in
United States dollars; provided, however, that in lieu of cash an Optionee may
exercise his option by tendering to the Corporation such shares of the Class A
Common Stock of the Corporation, owned by him, having a fair market value equal
to the cash exercise price applicable to his option, with the fair market value
of such stock to be determined in such appropriate manner as may be provided for
by the Committee or as may be required in order to comply with or conform to the
requirements of any applicable or relevant laws or regulations, or any
combination of cash payments and stock tenders as may be acceptable to the
Committee. No shares shall be issued to any Optionee or Transferee until full
payment therefor has been made; nor shall any Optionee or Transferee have any of
the rights of a stockholder of the Corporation under any such Option until the
actual issuance thereunder of shares to the person or person entitled thereto.
(d) The notice of exercise of the option shall also be accompanied by a
representation and agreement in writing, signed by the person entitled to
exercise the option, and/or receive the shares, stating (1) that the shares
being acquired are being acquired in good faith for investment, and not for sale
or distribution, and shall not be pledged or hypothecated, nor sold or
transferred, in the absence of an effective registration statement for the
shares under the Securities Act of 1933, and/or an effective registration
statement for the shares as required by state "blue sky" laws, or an opinion of
counsel of the Company that registration is not required under said Act and
"blue sky" laws, and (2) that the Company may attach to or imprint on the shares
a legend to that effect.
(e) Options may be exercised in whole or in part; however, no option shall
be exercised for less than 100 shares unless such exercise shall be for the full
number of shares then purchasable under the option.
7. EMPLOYMENT RELATIONSHIP.
(a) Except as provided in Paragraphs (b) and (c) below, and subject to the
provisions of Paragraph 8 below, options may be exercised only while the
Optionee is an employee or director of (1) the Corporation or a Parent or
Subsidiary, or (2) a corporation (or a parent or subsidiary of such corporation)
issuing or assuming a stock option granted hereunder in a transaction pursuant
to a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation, and has been such an employee or
director at all times during the period commencing with the date of granting the
option and ending on the date of exercise of the option. Nothing contained in
the Plan or in any option granted pursuant to the Plan, however, shall confer
upon any employee, director or
A-3
<PAGE>
Optionee any right with respect to continuation of employment or position of
director by the Corporation or a Parent or Subsidiary, or any other employer,
nor modify or interfere in any way with the right of the Corporation or of such
Parent or Subsidiary or other employer to terminate his employment or position
of director at any time.
(b) In the event that an Optionee shall cease to be an employee or director
of the Corporation or Parent or Subsidiary by reason of his disability, such
Optionee shall have the right, subject to prior approval of the Board, to
exercise the option at any time within three months after such termination of
employment or position of director (but not after the expiration of ten years
from the date of option is granted, and only to the extent the Optionee could
have exercised such option on the date he ceased to be an employee).
(c) If the Optionee shall die while an employee or director of the
Corporation or a Parent or Subsidiary and shall not have fully exercised the
option, an option may be exercised, subject to the condition of ten years from
the date it is granted, to the extent that the Optionee's right to exercise such
option has accrued pursuant to Paragraph 6 of the Plan at the time of his death
and had not previously been exercised, at any time within 12 months after the
Optionee's death, by the executors or administrators of the Optionee or by any
person or persons who shall have acquired the option directly from the Optionee
by bequest or inheritance.
8. TRANSFERS AND CAPITAL CHANGES BY CORPORATION.
(a) The adoption and approval of this Plan, and the grant of an option
pursuant to the Plan, shall not affect in any way the right or power of the
Corporation to make adjustments, reclassifications, or reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets. Except as in this Paragraph 8 otherwise provided, the Optionee shall
have no rights by reason of any subdivision or consolidation of shares of stock
of any class or the payment of any stock shares of stock of any class, or by
reason of any dissolution, liquidation, merger or consolidation or spinoff of
assets or stock of another corporation, and any issue by the corporation of
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Capital
Stock subject to the option. No provision in this Paragraph 8 shall be deemed to
authorize an extension of the period for the exercise of an option beyond the
period of ten years as provided in Paragraph 5(a) hereof.
(b) Subject to any required action by the stockholders, the number of
shares of Capital Stock covered by each outstanding option, and the price per
share thereof in each option granted under the Plan shall be proportionately
adjusted (but without providing an option for any fractional share) for any
increase or decrease in the number of issued shares of Capital Stock of the
Corporation resulting from a subdivision or consolidation of shares or the
payment of a stock dividend (but only on the Class A Common Stock) or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Corporation.
(c) Subject to any required action by the stockholders, if the Corporation
shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares of Class A Common Stock subject to the option
would have been entitled.
(d) A dissolution of liquidation of the Corporation or a merger or
consolidation in which the corporation is not the surviving corporation, shall
cause all options granted hereunder to terminate, subject to the right of the
Board of Directors of the Corporation to accelerate the time within which the
option may be exercised, and except to the extent that another corporation may,
and does, assume and continue the option or substitute its own options.
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<PAGE>
(e) In the event of a change in the Class A Common Stock of the corporation
as presently constituted, which is limited to a change of all of its authorized
share and par value into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall be deemed to
be the Class A Common Stock within the meaning of the Plan.
9. AMENDMENT AND DISCONTINUANCE.
The Board may, insofar as permitted by law, change, alter, suspend, or
discontinue this Plan, and accept the surrender of outstanding and unexercised
options under the Plan; the Board may, without the consent of the option
holders, modify the terms of outstanding and unexercised options and may cancel
such options, if such modification or cancellation is deemed necessary by the
Board in connection with any future financing arrangements on behalf of the
Corporation; with the exception of the provisions found elsewhere in this
paragraph, no action may be taken or permitted which will alter or impair the
terms and conditions of any Stock Option Agreement under the Plan, without the
written consent of the holders of outstanding and unexercised options.
Any amendment to the Plan that would (a) materially increase the benefits
accruing to participants under the Plan, (b) materially increase the number of
securities that may be issued under the Plan, or (c) materially modify the
requirements of eligibility for participation in the Plan must be approved by
the stockholders of the Company. In addition, to the extent that an amendment
would affect options to non-employee directors, the Plan shall not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
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<PAGE>
PROXY
HERITAGE MEDIA CORPORATION
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of Heritage Media Corporation (the "Company") to be
held on May 26, 1994, at 9:00 a.m., local time, and the Proxy Statement in
connection therewith, and (b) appoints David N. Walthall and Joseph D.
Mahaffey, or each of them, his proxies, with full power of substitution and
revocation, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of capital stock (of every
class) of the Company standing in the name of the undersigned or with respect
to which the undersigned is entitled to vote and act at said meeting or at any
adjournment thereof, and the undersigned directs that his proxy be voted as
follows:
ELECTION OF DIRECTORS / / FOR nominees listed below except as marked to the
contrary below
/ / WITHHOLD AUTHORITY to vote for all nominees
listed below
James S. Cownie, Joseph M. Grant, James M. Hoak, Clark A. Johnson, Alan R.
Kahn, Joseph D. Mahaffey and David N. Walthall
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
PROPOSAL TO ADOPT THE COMPANY'S AMENDED AND RESTATED STOCK OPTION PLAN:
_____FOR _____AGAINST _____ABSTAIN
<PAGE>
Please check the box at right if you plan on
attending the Annual Meeting. / /
If more than one of the proxies listed on the reverse side shall be
present in person or by substitute at the meeting or any adjournment thereof,
the majority of said proxies so present and voting, either in person or by
substitute, shall exercise all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTORS
AND FOR THE NAMED PROPOSAL.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms
all that said proxies, their substitutes, or any of them, may lawfully do by
virtue hereof.
Dated:
----------------------------
----------------------------------
Signature
----------------------------------
(Signature if held jointly)
Please date the proxy and sign your
name exactly as it appears hereon.
Where there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be signed
by a duly authorized officer. Please
sign the proxy and return it promptly
whether or not you expect to attend the
meeting. You may nevertheless vote in
person if you do attend.
