<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Heritage Media Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
HERITAGE MEDIA CORPORATION
ONE GALLERIA TOWER
13355 NOEL ROAD, SUITE 1500
DALLAS, TEXAS 75240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1995
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 25, 1995 at 9:00 A.M., local time,
for the following purposes:
(a) To elect six directors of the Company; and
(b) 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 30, 1995, 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 21, 1995
<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 25, 1995
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 25, 1995, 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.
This Proxy Statement and accompanying proxy are first being mailed on or
about April 21, 1995. The Company's Annual Report covering the year ended
December 31, 1994 is enclosed herewith but does not form any part of the
materials for solicitation of proxies.
ACTION TO BE TAKEN AT THE MEETING
At the Annual Meeting, holders of the Company's Class A Common Stock (the
"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 and David N. Walthall.
Only holders of record of Common Stock at the close of business on March 30,
1995 (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, 17,670,800 shares of
Common Stock. Holders of record of Common Stock are entitled to one vote per
share on 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 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 plurality of
the votes cast at the Annual Meeting.
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 six
nominees set forth above and (ii) at the discretion of the proxy holders on any
other matter that may properly come before the meeting or any adjournment
thereof. 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 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.
Where stockholders have appropriately specified how their proxies are to be
voted, they will be voted accordingly. Abstentions and broker non-votes will be
counted toward determining whether a quorum is present at the Annual Meeting.
Votes submitted as abstentions on matters to be voted on at the Annual Meeting
will be counted as votes against such matters. Broker non-votes will not count
for or against the matters to be voted on at the Annual Meeting.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock as of March 30, 1995 by (i) each person
who is known to beneficially own more than 5% of the Common Stock, (ii) each
director of the Company, (iii) certain named executive officers and (iv) 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. The Company has no
other classes of stock outstanding other than the Common Stock.
<TABLE>
<CAPTION>
NO. OF
NAME AND ADDRESS(1) SHARES(2) PERCENT
- ---------------------------------- ----------- -----------
<S> <C> <C>
James M. Hoak 1,085,876(3) 6.0%
13355 Noel Road, Suite 1500
Dallas, Texas 75240
James S. Cownie 183,818(4) 1.0
David N. Walthall 220,225 1.2
Joseph M. Grant 6,000 *
Clark A. Johnson 5,784 *
Alan R. Kahn 13,457 *
Wayne W. LoCurto 1,325 *
James J. Robinette -- --
Paul W. Fiddick 85,775 *
The Equitable Companies 1,411,126 7.8
Incorporated(5)
787 Seventh Avenue
New York, NY 10009
FMR Corp.(6) 1,623,900 9.0
Fidelity Investments
82 Devonshire Street
Boston, MA 02109
Janus Capital Corporation(7) 830,600 4.6
100 Fillmore St.
Suite 300
Denver, Co. 80206
All officers and directors as a 1,795,141 9.9
group (12 persons)
<FN>
- ------------------------
* Less than 1%
(1) Includes shares issuable upon exercise of stock options which are vested or
will be vested prior to May 29, 1995.
(2) Excludes shares allocated to participants' accounts under the Company's
Retirement Savings Plan.
(3) Includes 35,366 shares of Common Stock held by Mr. Hoak's wife and
children. Mr. Hoak disclaims beneficial ownership of such shares.
(4) Includes 51,750 shares of Common Stock held by Mr. Cownie's family and
charitable trust. Mr. Cownie disclaims beneficial ownership of such shares.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(5) Based on information contained in amended Schedule 13G dated February 10,
1995 filed jointly on behalf of five French mutual insurance companies, AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha Assurances
I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle and Uni Europe Assurance
Mutuelle, and The Equitable Companies Incorporated and their subsidiaries
(the "Equitable Group"). The Equitable Group has sole voting and
dispositive power with respect to 1,407,875 of the shares indicated and
shares dispositive power with respect to 3,251 of the shares indicated.
(6) Based on information contained in Schedule 13G dated February 14, 1995. FMR
Corp has the sole dispositive power with respect to all of the shares
indicated and has sole voting power with respect to 34,000 of the shares
indicated.
(7) Based on information contained in amended Schedule 13G dated February 9,
1995 filed jointly on behalf of Janus Capital Corporation ("Janus
Capital"), Thomas H. Bailey and Janus Venture Fund (the "Janus Group").
Each of Janus Capital and Janus Venture Fund is a registered investment
advisor. Mr. Bailey owns approximately 12.2% of Janus Capital and serves as
President and Chairman of the Board of Janus Capital and as a result of
such stock ownership and positions may be deemed to exercise control over
Janus Capital. The Janus Group does not have sole dispositive and voting
power with respect to any of the shares indicated and shares voting and
dispositive power with respect to all of the shares indicated.
</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, 51, has served as Chairman of the Board of the Company since
August 1987. Mr. Hoak has also served as Chairman of Cypress Capital Corporation
(a private investment company) since September 1991, and as Chairman and
President of James M. Hoak & Co. (an investment banking company) and Hoak
Securities Corp. (a securities broker-dealer) since 1995. Mr. Hoak served as
Chairman and Chief Executive Officer of Crown Media, Inc. (a cable television
company) from 1991 to 1995. Mr. Hoak is a director of Airgas, Inc., Midwest
Resources, Inc., Pier 1 Imports, Inc., Sun Coast Industries, Inc. and Texas
Industries, Inc.
DAVID N. WALTHALL, 49, has served as President, Chief Executive Officer and
a director of the Company since August 1987.
PAUL W. FIDDICK, 45, has served as Executive Vice President and President,
Radio Group of the Company since August 1987.
WAYNE W. LOCURTO, 51, has served as an Executive Vice President of the
Company and as President, Actmedia since November 1989.
JAMES J. ROBINETTE, 61, has served as Executive Vice President and
President, Television Group of the Company since August 1987.
WAYNE KERN, 62, has served as Senior Vice President and Secretary of the
Company since 1987. From July 1991 to March 1995, Mr. Kern also served as
Executive Vice President of Crown Media, Inc. From 1985 to 1991, Mr. Kern served
as the Executive or Senior Vice President, General Counsel and Secretary of
Heritage Communications, Inc. ("HCI"), a diversified communications company.
JAMES P. LEHR, 47, has served as Vice President -- Administration,
Controller and Assistant Secretary of the Company since December 1987.
DOUGLAS N. WOODRUM, 37, has served as Vice President, Finance since January
1995. Mr. Woodrum served as Vice President, Development and Treasurer of the
Company since August 1987.
3
<PAGE>
JAMES S. COWNIE, 50, 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, 56, 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 General
Corporation (a life insurance, real estate and consumer finance company). Mr.
Grant has been a director of the Company since June 1992.
CLARK A. JOHNSON, 64, 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, 55, 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 nine meetings in 1994. No director attended
fewer than 75% of the meetings of the Board (and any committees thereof) which
they were required to attend.
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 did not meet
independently from the Board of Directors during 1994.
The Compensation Committee, comprised of Messrs. Cownie, Grant and Kahn, met
once during 1994. 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 once during 1994.
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company receives, in
addition to the basic annual fee of $15,000, $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 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 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 Common Stock are granted annually.
4
<PAGE>
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth information concerning cash compensation paid
or accrued by the Company during the three years ended December 31, 1994 to or
for the Company's chief executive officer and the four other highest compensated
executive officers of the Company.
<TABLE>
<CAPTION>
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS/SARS COMPENSATION(3)
- --------------------- --------- ----------- ----------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall 1994 $ 337,000 $ 240,000 $ -- 50,000(4) $ 4,500
CEO and Pres. 1993 300,171 273,151 -- 50,000 4,497
1992 304,046 136,702 -- 83,561 7,912
Mr. LoCurto(5) 1994 275,000 155,400 -- 30,000(4) 4,500
Exec. V.P. 1993 258,889 160,500 -- 20,000 4,497
1992 250,732 60,500 -- 41,823 -0-
Mr. Hoak 1994 240,000 120,000 -- 35,000(4) 4,500
Chairman 1993 240,923 125,794 -- 2,000 4,497
1992 300,000 34,557 -- 75,920 -0-
Mr. Robinette 1994 210,000 136,500 -- -- 4,500
Exec. V.P. 1993 195,089 149,400 115,466 -- (4) 4,497
1992 178,346 110,968 -- 9,207 7,912
Mr. Fiddick 1994 193,550 105,000 -- 20,000(4) 4,500
Exec. V.P. 1993 175,019 117,750 -- 14,000 4,497
1992 176,323 93,956 -- 19,769 7,912
<FN>
- ------------------------
(1) Bonus for 1994 paid in 1995.
(2) Unless otherwise indicated, the dollar value of perquisites and other
personal benefits for each of the named executive officers was less than
the established reporting thresholds. The amount indicated in 1993 for Mr.
Robinette includes $98,941 of moving expenses.
(3) Amounts reflected represent the Company's contribution to its defined
contribution plan on behalf of the named executive officers.
(4) Reflects options exchanged pursuant to the 1992 Option Exchange Program.
(5) 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 received grants of
phantom equity units reflecting the fair market value of the common share
equity of Actmedia. Persons who received grants of such units were entitled
to receive in 1995 cash or shares of the Company's Common Stock in an
amount equal to 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.
</TABLE>
STOCK OPTIONS
In 1987, the Company adopted the Amended and Restated Option Plan (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 Common
Stock may be granted to officers, directors and key employees of the Company and
its 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 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.
5
<PAGE>
The following table sets forth certain information with respect to the
options granted during the year ended December 31, 1994 to the executive
officers named in the above compensation table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
OPTIONS/ GRANTED TO EXERCISE STOCK PRICE APPRECIATION
SARS EMPLOYEES OR BASE FOR OPTION TERM (1)
GRANTED IN FISCAL PRICE EXPIRATION --------------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------------- --------- ------------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall............................ 50,000 15.8% $ 24.25 12-14-04 $ 845,077 $ 2,141,591
Mr. LoCurto............................. 30,000 9.5 24.25 12-14-04 507,046 1,284,954
Mr. Hoak................................ 35,000 11.1 24.25 12-14-04 591,554 1,499,114
Mr. Robinette........................... -- NA NA NA NA NA
Mr. Fiddick............................. 20,000 6.3 24.25 12-14-04 338,031 856,637
<FN>
- ------------------------
(1) The assumed annual appreciation rates are disclosed pursuant to the rules
of the Securities and Exchange Commission and are not intended to forecast
future appreciation of the Company's Common Stock.
</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, 1994 or held by such persons at
December 31, 1994:
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
ACQUIRED 1994 AT DECEMBER 31, 1994(1)
ON VALUE -------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- --------- --------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Walthall.................... -- -- 83,561 100,000 $ 1,578,470 $ 537,500
Mr. LoCurto..................... -- -- 41,823 50,000 792,041 241,250
Mr. Hoak........................ -- -- 75,920 37,000 1,401,675 108,125
Mr. Robinette................... -- -- -- -- -- --
Mr. Fiddick..................... -- -- 29,275 34,000 557,098 166,250
<FN>
- ------------------------
(1) Based upon the closing price of the Common Stock of the Company on December
31, 1994, which price was $26.88 per share.
</TABLE>
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
1994.
6
<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, 1994, 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. The following companies comprise the peer group index: Catalina
Marketing Corporation; Citicasters; Clear Channel Communications, Inc.; Granite
Broadcasting Corporation; In-Store Advertising, Inc.; Osborn Communications
Corporation; and Outlet Communications, Inc. The graph assumes that $100 was
invested at the beginning of the period and that any dividends paid during the
period were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Heritage Media 100 112 112 69 159 215
S&P 500 100 97 126 136 150 152
Peer Group Index (2) 100 59 59 79 146 168
</TABLE>
7
<PAGE>
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 December 22, 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 21, 1995
8
<PAGE>
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
8% in 1994 over 1993. During 1994, the Company achieved approximately 109% of
targeted cash flows, which represented a 32% increase over the cash flow
achieved in 1993. As a result, annual bonuses, which were based upon specific
formulae relating to cash flow levels, represented approximately 35% of cash
compensation received by the executive officers for 1994. In 1994 the Company
granted options to purchase 150,000 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.
Mr. Walthall's base salary for fiscal 1994 was $337,000, an increase from
$300,000 in the prior year. The Committee recommended this increase 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 1994 bonus which was paid in 1995 represented
approximately 44% of his total cash compensation for 1994 and was based entirely
upon the achievement by the Company of 109% of the targeted cash flow level.
Compensation Committee
James S. Cownie
Alan R. Kahn
Joseph M. Grant
9
