<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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
T/SF COMMUNICATIONS 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:
Notes:
<PAGE>
T/SF COMMUNICATIONS CORPORATION
2407 East Skelly Drive
Tulsa, Oklahoma 74105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 4, 1996
Notice is hereby given that the Annual Meeting of Stockholders of T/SF
COMMUNICATIONS CORPORATION (the "Company") will be held at Warren Place II, 6110
South Yale, Tulsa, Oklahoma, at 9:00 a.m., C.D.T., on June 4, 1996, for the
following purposes:
1. Election of Directors. To approve a Board of Directors composed of
eleven (11) members and to elect nine (9) Directors to serve until the next
Annual Meeting of Stockholders and until their successors are duly elected and
qualified, thus leaving two vacancies which may be filled by the Board of
Directors at any time. The following persons have been nominated:
Howard G. Barnett, Jr. Martin F. Beck Robert E. Craine, Jr.
William N. Griggs David Lloyd Jones Jenkin Lloyd Jones Jr.
Mark A. Leavitt Robert J. Swab Martin A. Vaughan
2. Other Business. To consider and transact such other business as may
properly come before the meeting and any adjournment or adjournments thereof.
Only stockholders of record at the close of business on April 22, 1996, are
entitled to notice of and to vote at the Annual Meeting of Stockholders or any
adjournment or adjournments thereof. A complete list of the stockholders
entitled to vote at the meeting will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of ten days prior to the date of the meeting at the offices
of the Company and at the time and place of the meeting.
It is important that your shares be represented at the Annual Meeting of
Stockholders, regardless of the number you may hold. Therefore, whether or not
you plan to attend, please sign, date and return your Proxy as soon as possible
in the envelope provided, to which no postage need be affixed if mailed within
the United States. Signing, dating and returning your Proxy will not prevent
you from voting your shares in person if you do attend the Annual Meeting of
Stockholders.
Proposals of Stockholders. The next Annual Meeting of Stockholders is
expected to be held in June, 1997. Should an eligible stockholder desire to
present a proposal at the next Annual Meeting of Stockholders, such proposal
must be received by the Company not later than December 26, 1996. There are
certain requirements that must be met to be eligible to submit such a proposal.
By Order of the Board of Directors
Linda F. Toon,
Secretary
Tulsa, Oklahoma
April 25, 1996
<PAGE>
T/SF COMMUNICATIONS CORPORATION
2407 East Skelly Drive
Tulsa, Oklahoma 74105
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 4, 1996
SOLICITATION AND REVOCATION OF PROXIES
The enclosed Proxy is being solicited by the Board of Directors of T/SF
Communications Corporation (the "Company"). Any Proxy may be revoked by a
stockholder at any time before it is exercised by giving written notice of
revocation to the Secretary of the Company, by submitting another valid Proxy
bearing a later date, or by attending the Annual Meeting of Stockholders and
voting in person.
Proxies in the accompanying form, properly executed, duly returned to the
Company and not revoked, will be voted at the Annual Meeting of Stockholders to
be held June 4, 1996 (the "Meeting"), or any adjournment or adjournments
thereof. Proxies as to which no direction is indicated will be voted "FOR" the
approval of a Board of Directors composed of eleven members with nine members
being elected at the Meeting, thus creating two vacancies on the Board of
Directors (which may be filled by the Board of Directors without approval of the
stockholders), and "FOR" the election of Directors. The expense of the
solicitation of Proxies for the Meeting, including the cost of mailing and the
regular wages of employees who, as part of their regular duties, devote time to
the solicitation effort, will be borne by the Company. These costs are not
expected to exceed amounts normally expended for solicitation of proxies for the
election of Directors.
In addition to mailing copies of this material to stockholders on or about
April 25, 1996, the Company will request persons who hold stock in their names
or custody as nominees for others to forward copies of such material to those
persons for whom they hold shares of stock of the Company and to request voting
instructions from beneficial owners of such shares. The Company will reimburse
such persons for the reasonable expenses incurred by them in obtaining voting
instructions from beneficial owners of such shares.
The Board of Directors of the Company knows of no other matter other than
those listed in the Notice of Annual Meeting of Stockholders which is likely to
be brought before the Meeting. If any other matter, not presently known,
properly comes before the Meeting, the persons named in the enclosed Proxy will
vote the Proxy in accordance with their best judgment in any such matter.
The Annual Report of the Company for the fiscal year ended December 31,
1995, which includes financial information, was mailed with this Proxy Statement
on or about April 25, 1996, to stockholders of record on April 22, 1996.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on April 22, 1996, there were issued and
outstanding 3,350,822 shares of Common Stock of the Company, $0.10 par value per
share (referred to herein as "Common Stock"), having voting power, the holders
thereof being entitled to one vote per share on all matters to be voted upon by
stockholders. Approximately 51 percent of the shares entitled to vote at the
Meeting, or 1,694,625 shares of Common Stock, are owned by officers, directors,
director nominees, key employees and their affiliates. Such persons have
indicated to the Company that they intend to vote "FOR" the creation of an
eleven person Board of Directors and "FOR" all nine herein listed nominees for
Directors, thus assuring the approval of such actions and the election of such
persons.
The holders of record of the voting securities of the Company at the close
of business on April 22, 1996, are entitled to notice of and to vote at the
Meeting and any adjournment or adjournments thereof. The presence, in person or
by Proxy, of the holders of a majority of all the outstanding voting securities
in the aggregate is required to constitute a quorum. Votes withheld from
nominees for Directors, abstentions and broker non-votes will be counted for
purposes of determining whether a quorum has been reached. The affirmative vote
of a majority of the shares entitled to vote at a meeting where a quorum is
present is sufficient to adopt any matter on which the vote is being taken,
including the election of Directors. With regard to the election of Directors,
votes may be cast in favor of or withheld from each nominee; votes that are
withheld will be excluded entirely from the vote and will have no effect.
Abstentions, which may be specified on all proposals except the election of
Directors, will have the effect of a negative vote. Under applicable Delaware
law, a broker non-vote will have no effect on the outcome of the election of
Directors or the other proposal.
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of April 22, 1996 (except for Dimensional Fund
Advisors Inc., as to which the information is as of December 31, 1995, the
effective date of its Schedule 13G filing notifying the Company of its ownership
and Fir Tree Partners, to which the information is as of September 25, 1995, the
effective date of its Schedule 13D filing notifying the company of its
ownership), for each beneficial owner of more than five percent of the Common
Stock.
2
<PAGE>
<TABLE>
<CAPTION>
Approximate
Number of Shares of Percentage of
Common Stock Common Stock
Name and Address of Beneficial Owner Beneficially Owned Beneficially Owned
- ------------------------------------ ------------------- ------------------
<S> <C> <C>
Florence Lloyd Jones Barnett /(1)/
2619 East 37th Street
Tulsa, OK 74105 666,139 19.9%
Howard G. Barnett, Jr. /(2)/
6742 South Evanston
Tulsa, OK 74136 644,024 19.2%
Jenkin Lloyd Jones Jr. /(3)/
6447 S. Louisville
Tulsa, OK 74136 239,375 7.1%
Hayden Ann Barnett Kiser
1616 East 31st Place
Tulsa, OK 74105 202,482 6.0%
Fir Tree Partners/(4)/
29th Floor
1211 Avenue of the Americas
New York, NY 10036 234,012 7.0%
Dimensional Fund Advisors Inc. /(5)/
11th Floor
1299 Ocean Avenue
Santa Monica, CA 90401 231,400 6.9%
</TABLE>
- -----------------------
/(1)/ Of the 666,139 shares of Common Stock beneficially owned by Mrs. Barnett,
466,139 shares are owned by her and Howard G. Barnett, Jr., as Co-Trustees
of the Revocable Inter Vivos Trust of Florence Lloyd Jones Barnett, which
shares are also included in the beneficial ownership of Howard G. Barnett,
Jr., and 200,000 shares are owned by Mrs. Barnett as Trustee of the
Florence Lloyd Jones Barnett Charitable Remainder Unitrust. Mrs. Barnett's
ownership does not include 2,510 shares beneficially owned by her husband,
Howard G. Barnett, which shares are included in the ownership of Howard G.
Barnett, Jr. Mrs. Barnett disclaims beneficial ownership of the shares
held by her husband.
/(2)/ Of the 644,024 shares of Common Stock beneficially owned by Mr. Barnett,
175,346 shares are beneficially owned directly for his own account (12,462
shares are restricted until January, 1998, except as to voting rights) and
29 shares are held by the T/SF Communications Savings and Retirement Plan
and allocated to Mr. Barnett's account. In addition, Mr. Barnett is the
beneficial owner of 466,139 shares of Common Stock owned by Florence Lloyd
Jones Barnett (Mr. Barnett's mother) and Mr. Barnett, as Co-Trustees of
the Revocable Inter Vivos Trust of Florence Lloyd Jones Barnett, and 2,510
shares of Common Stock owned by Howard G. Barnett (Mr. Barnett's father)
and Mr. Barnett, as Co-Trustees of the Revocable Inter Vivos Trust of
Howard G. Barnett. The stock ownership of Mr. Barnett does not include
shares held by his wife, Billie T. Barnett (26,602 shares). Mr. Barnett
disclaims beneficial ownership of the shares held by his wife. Mr. Barnett
has also been granted certain option awards under the Company's 1994
Incentive Stock Plan and Incentive Stock Option Plan, but such shares are
not included in Mr. Barnett's ownership because none of the options are
vested.
/(3)/ The ownership shown for Jenkin Lloyd Jones Jr. is derived as follows:
93,265 shares of Common Stock owned by Jenkin Lloyd Jones Jr. and Carol B.
Jones, as Co-Trustees of the Revocable Inter Vivos Trust of Jenkin Lloyd
Jones Jr., 1,480 shares owned by Carol B. Jones and Jenkin Lloyd
3
<PAGE>
Jones Jr., as Co-Trustees of the Revocable Inter Vivos Trust of Carol B.
Jones, 16 shares are held by the T/SF Communications Savings and
Retirement Plan and allocated to Mr. Jones Jr.'s account, and 144,614
shares owned by the Revocable Inter Vivos Trust of Jenkin Lloyd Jones, of
which Jenkin Lloyd Jones and Jenkin Lloyd Jones Jr. are Co-Trustees.
/(4)/ Per Schedule D filed as of September 25, 1995, shares owned beneficially
by Fir Tree, Inc., a New York corporation, doing business as Fir Tree
Partners, and Jeffrey Tannenbaum, the sole stockholder, executive officer,
director and principal of Fir Tree Partners, for the account of Fir Tree
Value Fund, L.P. of which Mr. Tannenbaum is the general partner.
/(5)/ Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 231,400 shares of
Common Stock as of December 31, 1995, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit plans, all
of which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
The following table sets forth the beneficial ownership of the Common Stock
held by each Director and nominee for Director of the Company, each of the
executive officers of the Company or its subsidiaries named in the Summary
Compensation table below and all executive officers and Directors, as a group as
of April 22, 1996.
<TABLE>
<CAPTION>
Approximate
Number of Shares Percentage of Common
of Common Stock Stock Beneficially
Name and Position Beneficially Owned/(1)/ Owned
----------------- ------------------ -----
<S> <C> <C>
Martin F. Beck, Director 1,000 --
Howard G. Barnett, Jr.,
Chairman, President and
Chief Executive Officer,
Director /(2)/ 644,024 19.2
Robert E. Craine, Jr.,
Executive Vice President,
Director /(3)/ 36,218 1.1
William N. Griggs, Director -0- --
David Lloyd Jones, Director 30,539 .9
Jenkin Lloyd Jones Jr.,
Director /(4)/ 239,375 7.1
Mark A. Leavitt, Director 1,000 --
John R Laughlin /(5)/ 88,370 2.6
J. Gary Mourton, Senior Vice
President-Finance /(6)/ 38,498 1.1
Robert J. Swab, Director 119,480 3.6
Richard A. Wimbish,
President, Transportation
Information Services, Inc.
("TISI") /(7)/ 1,436 --
Martin A. Vaughan,
Director /(8)/ 53,024 1.6
All Executive Officers and
Directors as a group, 13
persons /(9)/ 1,253,363 37.4
________________
</TABLE>
4
<PAGE>
/(1)/ Each of the beneficial owners has sole voting and investment power with
respect to the securities specified, except as noted in the footnotes
below. Included are vested options held by each person under the Company's
Incentive Stock Option Plan and 1994 Incentive Stock Plan.
/(2)/ The beneficial ownership for Mr. Barnett is determined as described in
footnote 2 of the preceding table.
/(3)/ Included in Mr. Craine's ownership are 4,820 shares which are restricted
until 1998 except as to voting rights and 64 shares held by T/SF
Communications Savings and Retirement Plan and allocated to Mr. Craine's
account.
/(4)/ The beneficial ownership of Mr. Jones Jr. is determined as described in
footnote 3 of the preceding table.
/(5)/ Included in Mr. Laughlin's ownership are 13,333 vested options and 37
shares held by T/SF Communications Savings and Retirement Plan and
allocated to Mr. Laughlin's account.
/(6)/ Included in Mr. Mourton's ownership are 5,451 shares which are restricted
until 1998 except as to voting rights and 57 shares held by T/SF
Communications Savings and Retirement Plan and allocated to Mr. Mourton's
account.
/(7)/ Included in Mr. Wimbish's ownership are 99 shares held by T/SF
Communications Savings and Retirement Plan and allocated to Mr. Wimbish's
account.
/(8)/ The shares shown as owned by Mr. Vaughan exclude 43,747 shares of Common
Stock held by his wife, Nancy Swab Vaughan, directly, and 31,918 shares of
Common Stock held by his wife as Co-Trustee of the Revocable Inter Vivos
Trust of John T. Swab. Mr. Vaughan disclaims beneficial ownership in any
such shares. Mr. Vaughan's stock holdings in the table include 29,833
shares of Common Stock held by Midwest Resources, Inc., a private company
of which Mr. Vaughan is president, and 3,639 shares of Common Stock held
by Maverick Exploration, Inc., of which Mr. Vaughan owns 100 percent. The
trustees of the Revocable Inter Vivos Trust of John T. Swab are Nancy Swab
Vaughan, wife of Martin A. Vaughan, and John Stephen Swab.
/(9)/ Includes 1,216,912 shares of Common Stock owned directly (of which 22,733
shares are restricted until 1998 except as to voting rights), 385 shares
held by T/SF Communications Savings and Retirement Plan and allocated to
officers' accounts and 13,333 shares of Common Stock related to vested
options.
5
<PAGE>
DIRECTORS, DIRECTOR NOMINEES AND OFFICERS
The Board of Directors is authorized to fix the number of Directors at not
more than fifteen members nor less than three members. Accordingly, the number
of Directors of the Company has been fixed by the Board of Directors at eleven.
Pursuant to the Certificate of Incorporation and Bylaws of the Company, the
Board of Directors may elect a person to fill the unexpired term of a Director
who resigns or otherwise is unable to serve; however, the Board of Directors may
not increase its number and then elect Directors to fill the vacancies thus
created without seeking stockholder approval. Accordingly, the stockholders are
being asked to approve the creation of two vacancies on the Board of Directors
by electing only nine Directors to the eleven person Board of Directors
established pursuant to the Bylaws. The Board of Directors desires to create
these vacancies on the Board to give it flexibility to add additional Directors
during the year, if appropriate. No particular individuals have yet been
identified and the Board is not actively seeking new Directors. It is noted
that there are no limitations on the Board's power to elect persons to fill the
vacancies. If the vacancies are created, they may be filled by action of the
Board of Directors without any further action or approval by the stockholders.
Unless directed otherwise in a Proxy, the persons named in the accompanying
Proxy intend to vote for the creation of two vacancies on the Board of
Directors.
Even though eleven members are authorized for the Board of Directors,
proxies can only be voted for nine persons, being the number of nominees named.
Unless directed otherwise in a Proxy, the persons named in the accompanying
Proxy intend to vote for the election of Howard G. Barnett, Jr., Martin F. Beck,
Robert E. Craine, Jr., William N. Griggs, David Lloyd Jones, Jenkin Lloyd Jones
Jr., Mark A. Leavitt, Robert J. Swab and Martin A. Vaughan as Directors of the
Company, each to serve until the next Annual Meeting of Stockholders and until
the election and qualification of his successor. Except as to Robert J. Swab,
there are no agreements requiring any person to be nominated as a Director.
Robert J. Swab's Retirement Agreement (described below under Certain
Transactions) requires that he be nominated as a Director. The Company has been
informed that the nominees named are willing to serve as Directors, but if any
of them should decline or be unable to act as a Director, the persons named in
the Proxy will vote for any nominee who shall be designated by the present Board
of Directors to fill the vacancy. It is noted that the nominees comprise the
current Board of Directors of the Company and were elected at last year's Annual
Meeting of Stockholders.
The following table sets forth information with respect to each Director,
Director nominee and executive officer, as well as with respect to certain other
key employees of the Company. All Directors of the Company hold office until
the next Annual Meeting of Stockholders and until the election and qualification
of their successors. Except as noted, each officer was elected in 1995 at the
annual meeting of the Board of Directors to serve for one year or, if earlier or
later, until the next Annual Meeting of the Board of Directors.
6
<PAGE>
<TABLE>
<CAPTION>
Director or Officer
of the Company or
Tribune/Swab-Fox or Position with the
Name Age Employee Since /(1)/ Company
- ---- --- -------------------- -----------------------
<S> <C> <C> <C>
Howard G. Barnett, Jr. 45 1984 Chairman, President, Chief Executive
Officer and Director
Robert E. Craine, Jr. 48 1985 Executive Vice President and Director
of the Company and President of each
of Atwood Convention Publishing,
Inc. ("Atwood") and Galaxy
Registration, Inc. ("Galaxy")
J. Gary Mourton 49 1980 Senior Vice President-Finance, Chief
Financial Officer and Treasurer
Martin F. Beck 78 1989 Director
William N. Griggs 64 1989 Director
Mark A. Leavitt 37 1989 Director
David Lloyd Jones 57 1991 Director
Jenkin Lloyd Jones Jr. 59 1984 Director
Robert J. Swab 58 1969 Director
Martin A. Vaughan 69 1984 Director
Stuart P. Honeybone 54 1986 Vice President of the Company and
President of G.E.M. Communications,
Inc. ("G.E.M.")
Richard A. Wimbish 52 1987 President of TISI
Jimmy C. Strong 61 1990 Vice President-Human Resources
Linda F. Toon 51 1985 Secretary
______________________
</TABLE>
/(1)/ As the Company was not formed until 1989, if the date indicated is prior
to 1989, this represents the date that the individual was first employed
or became an officer or director of Tribune/Swab-Fox Companies, Inc.
("Tribune/Swab-Fox"), the former parent company of the Company. See Merger
------
with Tribune/Swab-Fox, below.
----------------------
7
<PAGE>
Howard G. Barnett, Jr. - Became Executive Vice President of Tribune/Swab-Fox
on January 1, 1985, and was elected President in March 1991, and Chief Executive
Officer on August 1, 1993. He was elected President of the Company on its
formation in 1989, and was elected Chairman and Chief Executive Officer on
August 1, 1993. For approximately ten years prior to joining Tribune/Swab-Fox,
Mr. Barnett was a member of the law firm of Sneed, Lang, Adams & Barnett, Tulsa,
Oklahoma. Mr. Barnett is the cousin of David Lloyd Jones and Jenkin Lloyd Jones
Jr.
Robert E. Craine, Jr. - Joined Tribune/Swab-Fox in November, 1985, as
President of TSF Capital Corp., a then wholly-owned subsidiary of Tribune/Swab-
Fox. He became Vice President of Tribune/Swab-Fox in May, 1986, and Senior Vice
President in August, 1988. Mr. Craine became Senior Vice President of the
Company upon its formation in 1989 and became Executive Vice President and a
Director in March, 1994. Mr. Craine became President of Atwood, a wholly-owned
subsidiary of the Company, and President of Galaxy, a wholly-owned subsidiary of
the Company, in August, 1995. For the 11 years preceding his joining
Tribune/Swab-Fox, Mr. Craine was a member of the law firm of Gable & Gotwals,
Inc., Tulsa, Oklahoma.
J. Gary Mourton - Joined Tribune/Swab-Fox as Chief Financial Officer in 1980
and became Vice President-Finance and Treasurer in 1984. For the 11 years
prior to that time, Mr. Mourton was with the accounting firm of Arthur Andersen
LLP. Mr. Mourton is a certified public accountant. Mr. Mourton became Senior
Vice President-Finance, Chief Financial Officer and Treasurer of the Company
upon its formation in 1989.
Martin F. Beck - Until its sale in 1995, Mr. Beck was Chairman of Beck-Ross
Communications, Inc., Rockville Centre, New York, a company which he founded in
1968 and which owned and operated several radio stations. Mr. Beck has been
involved most of his life in the media business, primarily in radio. He is a
past president of the New York State Broadcasters Association and Past Chairman
of the Radio Board of the National Association of Broadcasters. Mr. Beck is
currently an investor and serves on the board of Granite Broadcasting Company, a
public media company which owns and operates television stations.
William N. Griggs - Has been a Managing Director of Griggs & Santow
Incorporated, a financial and economic consulting firm, since 1983. Dr. Griggs
previously served as Financial Economist at the Federal Reserve Bank of Dallas
and Deputy to the Assistant Secretary of the Treasury responsible for economic
policy. Prior to forming his own firm, Dr. Griggs worked over the years in Wall
Street with Aubrey G. Lanston, Lehman Brothers and J. Henry Schroder Bank &
Trust Company. He currently serves on the Board of Directors of Massachusetts
Mutual Life Insurance Company, and its Investment Policy Committee. Dr. Griggs
received his Ph.D from Ohio State University.
Mark A. Leavitt - Joined Oppenheimer & Co., Inc., an investment banking
firm, as a Vice President in the Corporate Finance Department in 1987, and
became Senior Vice President in 1989 and Managing Director on May 1, 1992. For
the seven years prior to joining Oppenheimer, Mr. Leavitt was with Continental
Illinois National Bank, and was a Senior Director in the Capital Markets Group
when he left to join Oppenheimer & Co., Inc.
8
<PAGE>
David Lloyd Jones - Served as Vice President and Director of Tulsa Tribune
Company, a wholly-owned subsidiary of the Company ("Tribune"), from 1984 until
1992. Mr. Jones was elected as a Director of the Company in 1991. Mr. Jones,
with his wife, currently owns and manages a book store in Tulsa, Oklahoma. Mr.
Jones is the cousin of Howard G. Barnett, Jr., and the brother of Jenkin Lloyd
Jones Jr.
Jenkin Lloyd Jones Jr. - Was Vice President of Tribune from 1967, and became
Executive Editor of The Tulsa Tribune, a newspaper published by Tribune, in
1975, was made Editor in 1988 and in November, 1991, was made Publisher. Mr.
Jones currently writes for various publications on a contract or a freelance
basis. Mr. Jones is the brother of David Lloyd Jones and a cousin of Howard G.
Barnett, Jr.
Robert J. Swab - Has been associated with Tribune/Swab-Fox and its
predecessors and has served as a Director of such companies from May, 1969, to
May, 1995. He was Executive Vice President, Secretary and Treasurer of
Tribune/Swab-Fox or such predecessors from 1969 through January, 1979, President
from January, 1979, to April, 1980, and Chairman of the Board from April, 1980,
to October, 1984, and Chairman of the Executive Committee from October 1, 1984,
until December, 1994, when he retired.
Martin A. Vaughan - Is currently the Chairman of the Board, President and
Chief Executive Officer, Director and a major owner of Midwest Energy
Corporation, a privately-held oil and gas exploration company, and of Midwest
Energy Companies, Inc., a public international oil and gas exploration company.
Mr. Vaughan has been with such companies or their predecessors since 1982. Mr.
Vaughan was a director of Tribune/Swab-Fox from 1984 to May, 1995, and was Vice
Chairman of that Board from August, 1993, to May, 1995.
Stuart P. Honeybone - Joined Tribune/Swab-Fox in June, 1986, as Vice
President of TSF Capital Corp., a then wholly-owned subsidiary of Tribune/Swab-
Fox, and became Vice President of Tribune/Swab-Fox in 1988. Mr. Honeybone
became Vice President of the Company upon its formation in 1989. Mr. Honeybone
became President of G.E.M. (formerly BMT Communications, Inc.), a wholly-owned
subsidiary of the Company, in December, 1994. From September, 1985, until
joining Tribune/Swab-Fox, Mr. Honeybone was the owner and chief executive
officer of HBO Management, a consulting firm specializing in problem or troubled
businesses. For the six years preceding this, Mr. Honeybone was with
Hinderliter Industries, Inc. and was Group Vice President, Energy Group, at the
time of his leaving the employ of such company.
Richard A. Wimbish - Joined TISI, a wholly-owned subsidiary of the Company,
as Controller in 1987 and became Executive Vice President in 1990. Mr. Wimbish
was made President of TISI in 1991. Prior to joining TISI, Mr. Wimbish was
Controller and Chief Financial Officer of Carlson Reserve Corporation from 1981
through 1986.
Jimmy C. Strong - Became Vice President-Human Resources of the Company in
1990. For the year before joining the Company, Mr. Strong was with Hinderliter
Heat Treating, Inc., as Vice President of Human Resources, and was with
Hinderliter Industries, Inc., a diversified manufacturing company, for the
preceding 16 years.
9
<PAGE>
Linda F. Toon - Has been employed as Assistant to Mr. Barnett since 1985 and
became Secretary of the Company in December, 1995, upon the retirement of Donna
J. Peters.
Forms 3, 4 and 5 Filings. To the Company's knowledge, based solely on
review of the copies of Forms 3, 4 and 5 furnished to the Company and written
representations that no other forms were required, all persons required to file
Forms 3, 4 and 5 during and with respect to 1995 timely made all required
filings.
MERGER WITH TRIBUNE/SWAB-FOX
Pursuant to that certain Agreement for Contribution of Assets, Assumption
of Liabilities and Merger (the "Contribution Agreement"), by and among the
Company, Tribune and Tribune/Swab-Fox, Tribune/Swab-Fox caused the Company to be
formed. At that time, the Company entered into an Agreement for Management
Services (the "Management Agreement") to provide all of the necessary management
and administrative services for Tribune/Swab-Fox and its various separate
businesses and subsidiaries, other than the Company. The Management Agreement
was effective as of January 1, 1989, for three years through December 31, 1991,
unless extended by the mutual agreement of the parties. The agreement was
extended for 1992, 1993 and 1994. Tribune/Swab-Fox continued to separately pay
certain direct expenses of its operations, such as legal fees and taxes.
For the first 12 months of the Management Agreement, Tribune/Swab-Fox paid
the Company $70,000 per month for its services. The Company was paid $56,750,
$48,333, $43,333, $38,333, and $23,333 per month in 1990, 1991, 1992, 1993 and
1994, respectively. The Company believes that this is a fair payment for the
services rendered and is believed to be not less than what the Company could
receive for the rendering of similar services to an unrelated third party. In
contemplation of the merger of the Company and Tribune/Swab-Fox, as described
below, the parties extended the Management Agreement for 1995 at a flat fee of
$45,000.
Pursuant to that certain Agreement and Plan of Merger, dated January 25,
1995, as amended (the "Merger Agreement"), the Company and Tribune/Swab-Fox
agreed to merge, with the Company to be the surviving corporation (the
"Merger"). At a Special Meeting of Stockholders held May 24, 1995, for both
companies, the stockholders of both companies approved the Merger and the Merger
was effective on May 25, 1995.
Pursuant to the Merger Agreement, each holder of Class A Common Stock or
Class B Common Stock of Tribune/Swab-Fox (collectively, the "Tribune/Swab-Fox
Common Stock") could choose to receive, with respect to each share of
Tribune/Swab-Fox Common Stock owned, either 0.1255 of a share of Common Stock of
the Company or $0.88 in cash (the "Cash Alternative"). In the merger,
stockholders owning 8,849,784 shares of Tribune/Swab-Fox Common Stock chose the
Cash Alternative. The maximum number of shares of Common Stock which the
Company could have issued in the Merger was 3,977,500 shares, less shares
attributable to stock in Tribune/Swab-Fox owned by the Company, or a net
3,834,087 shares. Because of the number of shares tendered for the Cash
Alternative, the total number of shares of Common Stock which the Company issued
in the Merger to former stockholders of Tribune/Swab-Fox is 2,723,322 shares.
Since the 3,777,500 shares of Common Stock owned by Tribune/Swab-Fox were
canceled for no consideration in the Merger, the net effect of the Merger
10
<PAGE>
and the Cash Alternative was that the total outstanding shares of the Company
were reduced to 3,839,801 shares.
To effect the Cash Alternative, the Company borrowed $2,000,000, with the
remaining $5,788,000 coming from the Company's cash reserves. Certain officers
and directors or their affiliates elected the Cash Alternative in the Merger, as
follows:
<TABLE>
<CAPTION>
Number of Shares of
Tribune/Swab-Fox Cash Received in
Tendered in the the Cash
Name of Stockholder Cash Alternative Alternative
------------------- ---------------- -----------
<S> <C> <C>
Jenkin Lloyd Jones Jr./(1)/ 800,000 $ 704,000.00
David Lloyd Jones /(2)/ 883,758 777,707.04
Billie T. Barnett, as Trustee of
the Howard G. Barnett, Jr.
Trust for Adrienne Lee
Barnett /(3)/ 387,099 340,647.12
Billie T. Barnett, as Trustee
of the Howard G. Barnett, Jr.
Trust for Allison Michelle
Barnett /(3)/ 387,099 340,647.12
Howard G. Barnett, Jr.,
as Trustee of the Katherine
Ann Kiser 1980 Trust /(4)/ 387,099 340,647.12
Robert J. Swab /(5)/ 594,575 523,226.00
J. Gary Mourton 39,541 34,796.08
Tulsa Tribune Foundation /(6)/ 1,593,490 1,402,271.20
__________________________
</TABLE>
/(1)/ The shares sold were sold by either the Revocable Inter Vivos Trust of
Jenkin Lloyd Jones Jr. or the Revocable Inter Vivos Trust of Carol B.
Jones. Carol B. Jones is the wife of Jenkin Lloyd Jones Jr. Excluded
from the table are shares sold by children and grandchildren of Jenkin
Lloyd Jones Jr.
/(2)/ Excluded from shares sold by David Lloyd Jones are shares sold by his
children or by Mr. Jones as trustee under trusts for his nieces.
/(3)/ Billie T. Barnett is the wife of Howard G. Barnett, Jr., and the trusts
are for the sole benefit of their children.
/(4)/ The trust is for the sole benefit of Katherine Ann Kiser, Mr. Barnett's
niece.
/(5)/ Excluded from the shares sold by Mr. Swab are shares sold by Mr. Swab's
children.
/(6)/ Director Howard G. Barnett, Jr., and Advisory Directors Florence Lloyd
Jones Barnett and Jenkin Lloyd Jones, are trustees of this foundation.
11
<PAGE>
CERTAIN TRANSACTIONS
By reason of the Merger, the Company was substituted for Tribune/Swab-Fox as
a lender under a Loan Agreement with Howard G. Barnett, Jr., Chairman, President
and Chief Executive Officer, that arose in 1984 in connection with the merger of
Tribune and the predecessor to Tribune/Swab-Fox. During 1995, the maximum
amount of Mr. Barnett's loan was $250,000 and that amount represents the amount
outstanding under such loan as of December 31, 1994. The balance of such loan
at December 31, 1995, was $241,666 and was $216,666 as of April 22, 1996. As of
May 1, 1995, this loan became an installment loan requiring amortization of
principal in semi-annual installments (plus accrued interest at 8.5 percent per
annum) equal to 1/15th of the outstanding principal balance, with the first
installment having been due and paid October 1, 1995, with semi-annual payments
thereafter with the remaining principal and interest being due on October 1,
1999. Mr. Barnett has pledged 87,279 shares of Common Stock to secure this
loan.
On May 29, 1990, Tribune/Swab-Fox entered into a Loan Agreement with Robert
J. Swab, with the Company being substituted for Tribune/Swab-Fox as lender as a
result of the Merger. This was a line-of-credit loan for up to $350,000. The
maximum loan balance outstanding during 1994 was $348,546, plus accrued
interest, and the principal due at December 31, 1994, was $324,317, plus accrued
interest. On December 14, 1994, Tribune/Swab-Fox entered into a retirement
agreement (the "Retirement Agreement") with Mr. Swab and the Company is bound by
the terms thereof as a result of the Merger. The Retirement Agreement had
certain conditions relating to Mr. Swab's participation in the Merger, all of
which were fulfilled. See the table above under Merger with Tribune/Swab-Fox
for a description of the shares of Tribune/Swab-Fox Common Stock sold by Mr.
Swab in the Cash Alternative in the Merger. Pursuant to Mr. Swab's Retirement
Agreement, effective December 31, 1994, the following matters, which are now
binding on the Company as a result of the Merger, were agreed to:
(i) Commencing January, 1995, for 72 consecutive months, Mr. Swab will be
paid the amount of $5,130 per month.
(ii) Mr. Swab entered into a Covenant-Not-to-Compete (with 30 percent of
the payments described in (i) above being allocated for such Covenant-
Not-to-Compete).
(iii) Mr. Swab's loan was reduced to an outstanding balance of $299,317,
bearing interest, payable quarterly, at 9 percent per annum, with
$25,000 of principal payable each year, and the remaining balance due
May 31, 1998.
The Retirement Agreement also provided for Mr. Swab being able to "put" up
to approximately 88,000 shares of Common Stock to the Company at $5.98 per
share, with the Company having a reciprocal "call" right on such shares at $8.77
per share. After the Merger, questions were raised by Mr. Swab about the intent
of the parties with respect to such "puts" and "calls" and as to their
enforceability. After negotiations with Mr. Swab, his Retirement Agreement was
amended and, in connection with such amendment, the Company purchased 30,000
shares of Common Stock from Mr. Swab at $10.50 per share, with the proceeds
being utilized to repay Mr. Swab's loan to the Company in full (which occurred
at the closing of these transactions on January 3, 1996) with all "put" and
"call" rights being thereafter eliminated.
12
<PAGE>
For additional disclosures with respect to transactions with related
parties, see "Merger with Tribune/Swab-Fox."
In March, 1996, Mrs. Florence Lloyd Jones Barnett transferred 200,000 shares
of Common Stock to a charitable remainder trust (the "Trust"), of which she is
sole trustee. Under the terms of the Trust, it will be obligated to pay Mrs.
Barnett $197,000 in cash in December, 1996. To raise such cash, the Trust would
need to sell some of its Common Stock. In its March, 1996, meeting, the Board
of Directors agreed to buy $197,000 worth of Common Stock from the Trust in
December, 1996, at a price equal to 95% of the average closing price of the
Common Stock on the American Stock Exchange for the ten trading days preceding
December 20, 1996.
On August 16, 1995, the Company purchased all of the Common Stock owned by
The Prudential Insurance Company of America (464,814 shares) for $5,112,954 or
$11.00 per share. These shares were retired by the Company.
In connection with the Agreement for Purchase and Sale of Stock whereby the
Company acquired 100 percent of the issued and outstanding common stock of
Galaxy, the Company, as tenant through Galaxy, entered into (and guaranteed) a
Lease Agreement with John R. Laughlin, as landlord. The Lease covers the office
and warehouse building occupied by Galaxy in connection with its business,
comprising approximately 25,000 square feet of space, extends for an initial
term of five years and provides for a rental amount of $14,565 per month during
the initial term. The Lease also contains an option to renew for five
additional years at a rate of $15,621 per month. As part of the Lease the
tenant also pays certain tax, insurance, maintenance and operating costs. The
terms of the Lease were negotiated with Mr. Laughlin on an arm's-length basis
prior to the closing of the acquisition and are comparable to those to which the
Company would have agreed with an unrelated third party.
On December 30, 1994, the Company loaned $1,250,000 under a $2,500,000 line
of credit to Tribune/Swab-Fox, due July 1, 1995, with interest at Chase
Manhattan prime rate plus 1.5 percent (10% at December 31, 1994). Such loan was
effectively repaid as part of the Merger.
ACTIVITIES OF THE BOARD OF DIRECTORS
During 1995, the Board of Directors held four meetings. All Directors
attended all of the meetings, except that Mr. Beck missed two meetings and Mr.
Leavitt and Dr. Griggs missed one meeting. The Board of Directors also approved
four Consents to Action during 1995.
Three committees of the Board of Directors operated during 1995. An
Executive Committee, composed of Messrs. Barnett and Mourton through August,
1995, and Messrs. Barnett and Craine thereafter, is empowered to take actions
between meetings of the Board of Directors of a type which would otherwise
require the approval of the Board. The major function of the Executive
Committee is to oversee the expenditure of funds in accordance with the plans
and budgets adopted by the Board of Directors. No formal meetings of the
Executive Committee were held during 1995. Messrs. Leavitt, Griggs, David Lloyd
Jones and Swab comprise the Compensation Committee. This committee is to make
recommendations to the Board of
13
<PAGE>
Directors concerning compensation matters affecting officers of the Company.
This Committee met twice in 1995, with all members in attendance, and met
telephonically several times during the year (for which no formal minutes were
maintained). The Audit Committee is composed of Messrs. Vaughan, Beck, Leavitt
and Jenkin Lloyd Jones Jr. This committee was established to review the audit
procedures with the Company's independent public accountants and to review and
make proposals concerning the audit to the Board of Directors. The Audit
Committee met telephonically once in 1995, and all members participated. The
Company has no Nominating Committee.
In addition, pursuant to the T/SF Communications Stock Purchase Plan,
Messrs. Mourton and Barnett were designated as the Administrative Committee to
oversee the administration of this plan. This plan has not been activated, and,
thus, no meetings of the Administrative Committee were held during 1995.
EXECUTIVE COMPENSATION
Compensation.
Set forth below is certain information with respect to the compensation of
the Company's Chief Executive Officer and each of the Company's and its
subsidiaries' five other most highly compensated executive officers, based on
salary and bonus earned during 1995, for services in all capacities to the
Company and its subsidiaries during each of the Company's last three fiscal
years. No information is given as to any person for any fiscal year during
which such person was not an executive officer of the Company or its
subsidiaries.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------
Awards Payouts
------------------------- -------
Annual Compensation /(1)/
---------------------------------
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Options/ LTIP Compensa-
Principal Position Year Salary($) Bonus($)/(2)/ sation($) Award(s)($)/(3)/ SARs(#)/(4)/ Payouts($) tion ($)/(5)/
------------------ ---- --------- ------------- -------- ---------------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Howard G. Barnett, Jr./(6)/ 1995 210,904 175,000 --- --- --- --- 5,575
Chairman, President and 1994 207,704 77,889 --- 77,889 75,000 --- 5,544
Chief Executive Officer 1993 207,704 -0- --- --- --- --- 4,261
J. Gary Mourton 1995 157,410 63,000 --- --- --- --- 5,047
Senior Vice President and 1994 151,410 34,067 --- 34,067 37,500 --- 4,620
Chief Financial Officer 1993 151,410 -0- --- --- --- --- 3,475
Robert E. Craine, Jr. 1995 150,000 55,000 --- --- --- --- 5,154
Executive Vice President 1994 133,900 30,127 --- 30,127 37,500 --- 4,107
1993 133,900 7,500 --- --- --- --- 2,884
Richard A. Wimbish 1995 140,000 36,083 --- --- --- --- 4,959
President, TISI 1994 125,000 36,192 --- --- 22,500 --- 3,960
1993 100,000 26,500 --- --- --- --- 2,593
Stuart P. Honeybone 1995 132,000 52,000 --- --- 15,000 --- 5,369
Vice President 1994 120,150 27,500 --- --- 10,000 --- 4,064
1993 108,150 10,000 --- --- --- --- 2,396
John R. Laughlin /(7)/ 1995 89,583 100,000 --- --- --- --- 2,631
Formerly President and 1994 75,000 115,000 --- --- --- --- 1,917
Chief Operating Officer
of Galaxy
- ---------------------------
</TABLE>
14
<PAGE>
/(1)/ No cash compensation other than the annual amounts described was paid to
any of the named executives during the period shown. Certain executives
are also entitled to car allowances or are provided cars, and club dues
are paid for certain executives. The value of such perquisites is not
required to be disclosed because the aggregate amount of such compensation
does not exceed the lesser of $50,000 or 10 percent of the total amount of
annual salary and bonus for any named executive.
/(2)/ Includes bonuses earned for the year, even if paid in another year.
/(3)/ Under the T/SF Communications Corporation 1994 Incentive Stock Plan (the
"Incentive Stock Plan"), approved by the stockholders of the Company at
the 1994 Annual Meeting of Stockholders, one-half of the 1994 bonus paid
to Howard G. Barnett, Jr., J. Gary Mourton and Robert E. Craine, Jr., was
paid in the form of restricted stock grants. The amount shown here
represents the dollar amount of such stock grants, which were granted at a
rate of $6.25 per share, being the closing price on the American Stock
Exchange for Common Stock on December 30, 1994 (the last trading day of
1994). Each such stock grant vests 100 percent after three years, assuming
the employee is then employed by the Company (subject to earlier vesting
in the case of death or disability of employee). Dividends are payable on
the restricted stock to the same extent as would be paid on Common Stock.
There are no other outstanding restricted stock grants to such persons. As
of December 31, 1995, Mr. Barnett held 12,462 shares of restricted Common
Stock, valued at $168,237 in the aggregate; Mr. Mourton held 5,451 shares
restricted Common Stock, valued at $73,588 in the aggregate; and Mr.
Craine held 4,820 shares of restricted Common Stock, valued at $65,070 in
the aggregate. Values as of December 31, 1995, of restricted Common Stock
are based on the closing price on the American Stock Exchange for Common
Stock on December 29, 1995 (the last trading day of 1995).
/(4)/ Consists solely of options to acquire shares of Common Stock.
/(5)/ These amounts represent the total value of the Company's contributions
made or accrued to the Company's 401(k) plan. All such persons are 100
percent vested in their accounts under the Company's plan.
/(6)/ The cash compensation shown for Howard G. Barnett, Jr., in the table does
not include amounts paid to him as a director of Tribune/Swab-Fox.
Employees who are Directors of the Company do not receive fees from the
Company as Directors.
/(7)/ Amounts for 1994 for John R. Laughlin, President of Galaxy until August,
1995, are from the effective date of acquisition of Galaxy, March 1, 1994.
At that time his Employment Agreement was amended as described below.
15
<PAGE>
Options.
The following table sets forth certain information with respect to
options exercised by the named executive officers of the Company and its
subsidiaries during 1995, and the number and value of unexercised options held
by such persons at the end of the year. The Company has never granted any stock
appreciation rights.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
-------------------------------------
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Securities Under- In-the-Money
lying Unexercised Options/SARs
Options/SARs at at Fiscal Year-
Fiscal Year-End End ($) /(1)(2)/
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)/(1)/ Unexercisable Unexercisable
---- ---------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Howard G. Barnett, Jr. -0- -0- 0/75,000 0/693,750
J. Gary Mourton -0- -0- 0/37,500 0/346,875
Robert E. Craine, Jr. -0- -0- 0/37,500 0/346,875
Richard A. Wimbish -0- -0- 0/22,500 0/208,125
Stuart P. Honeybone -0- -0- 0/25,000 0/205,000
John R. Laughlin -0- -0- 6,667/13,333 53,336/106,664
- ------------------------
</TABLE>
/(1)/ Market value of the underlying securities at exercise date or fiscal year-
end, as the case may be, minus the option exercise price.
/(2)/ The closing price for Common Stock on the American Stock Exchange on
December 29, 1995, the last trading day of the fiscal year, was $13.50.
16
<PAGE>
The following table sets forth certain information with respect to options
granted to the named executive officers of the Company and its subsidiaries
during 1995. The Company has never granted any stock appreciation rights.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
--------------------------------------------------------------------------
Individual Grants
- ---------------------------------------------------------------------------------------------------- Potential Realizable Value
Number of at Assumed Annual Rates
Securities % of Total Options/SARs of Stock Price Appreciation
Underlying Granted to for Option Term /(2)/
Options/SARs Employees in Exercise Expiration ---------------------------
Name Granted(#)/(1)/ Fiscal Year or Base Price($/sh) Date 5%($) 10%($)
- ------------------------ --------------- ----------------------- ------------------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Howard G. Barnett, Jr. -- -- -- -- -- --
J. Gary Mourton -- -- -- -- -- --
Robert E. Craine, Jr. -- -- -- -- -- --
Richard A. Wimbish -- -- -- -- -- --
Stuart P. Honeybone 15,000 100% 6.00 4/1/05 56,601 143,437
John R. Laughlin -- -- -- -- -- --
__________________
</TABLE>
/(1)/Consists solely of options to acquire shares of Common Stock. The options
were granted for a term of ten years, subject to earlier termination in
certain events related to the termination of employment. The exercise
price of the options is equal to the fair market value of the Common Stock
on the date of grant. The options become exercisable in full on January 1,
1998. The option exercise price may be paid in cash, by delivery of
already-owned shares, by offset of the underlying shares, or by a
combination of such methods. Tax withholding obligations related to
exercise may be paid by offset of the underlying shares, subject to certain
conditions.
/(2)/Potential realizable value illustrates the value that might be realized
upon exercise of the options immediately prior to the expiration of their
term (ten years from the date of grant), assuming that the Common Stock
appreciates in value from the date of grant to the end of the option term
at rates of 5 percent and 10 percent, respectively, compounded annually.
Compensation of Directors. Employee Directors receive no additional
compensation for service on the Board of Directors or any committee thereof.
Nonemployee Directors are paid a fee of $5,000 per year, plus an attendance fee
of $350 per meeting. Nonemployee Directors receive an additional fee of $1,000
per year for each committee of the Board of Directors on which they serve, plus
an attendance fee of $350 per committee meeting. While Mr. Barnett did not
receive Director's fees from the Company, he did receive Director's fees from
Tribune/Swab-Fox, until its merger with and into the Company, in an amount
comparable to the Company's payments to its nonemployee Directors. All
Directors are reimbursed by the Company for out-of-pocket expenses incurred by
them in connection with their service on the Board of Directors and any
committee thereof. In addition to the fees paid to Dr. Griggs for serving as a
Director of the Company, the Company has agreed to pay the firm of Griggs &
Santow Incorporated, economists and consultants, $5,000 annually for periodic
consulting services.
17
<PAGE>
Employment Agreements. As of April 22, 1996, the Company was subject to
employment agreements with certain directors, nominees for directors, officers
or key employees, as follows:
David Lloyd Jones - As part of Tribune's termination of the Joint Operating
Agreement ("JOA") which resulted in the closure of The Tulsa Tribune, Director
David Lloyd Jones' employment with NPC was terminated and he was no longer
needed as an employee of Tribune. A severance arrangement was entered into by
the Company whereby Mr. Jones is employed by the Company for special projects
and is paid $50,000 per year through March, 1999. This severance payment is in
lieu of severance to which Mr. Jones would have been entitled under the
Company's package for other Tribune newsroom employees of NPC.
Jenkin Lloyd Jones Jr. - In the same way as for David Lloyd Jones, Jenkin
Lloyd Jones Jr.'s employment with NPC was terminated upon the termination of the
JOA with World. A severance arrangement was entered into by the Company whereby
Mr. Jones is employed by the Company for special projects and is paid $33,333
per year through December, 1998. This severance package is in lieu of severance
to which Mr. Jones would have been entitled under the Company's package for
other Tribune newsroom employees of NPC.
John R. Laughlin - On the date the Company acquired Galaxy, March 17, 1994,
the Company entered into an Employment Agreement with Mr. Laughlin extending
through December 31, 1996. Mr. Laughlin was employed to serve as President and
Chief Operating Officer of Galaxy at a salary of $90,000 per year. The
Agreement provided that if Galaxy's pre-tax income exceeded $800,000 in 1994,
Mr. Laughlin's compensation would increase to $100,000 in 1995, and if Galaxy's
pre-tax income exceeded $1,100,000 in 1995, Mr. Laughlin would receive a salary
of $120,000 in 1996. The Employment Agreement provided normal provisions for
expense reimbursement, vacations, ownership of intellectual property,
confidentiality of information and normal termination provisions. The Agreement
also provided for the grant of an option to Mr. Laughlin to purchase 20,000
shares of Common Stock at a price of $5.50 per share under the T/SF
Communications Incentive Stock Option Plan (this is a qualified stock option
plan originally adopted in 1989 and is a different plan from the 1994 Incentive
Stock Plan). The option term is for five years and provides that he will
acquire the right to exercise the options ratably over a three-year period from
the date of grant at the rate of one-third after the end of each year of service
with the Company. In 1995, this Employment Agreement was amended to reduce Mr.
Laughlin's salary to $80,000 with Mr. Laughlin moving from Galaxy to become Vice
Chairman of National Employment Screening Services ("NESS"), a start up pre-
employment screening subsidiary of TISI. Mr. Laughlin can earn bonuses of up to
$300,000 and options to acquire up to 20,000 shares of Common Stock if certain
performance targets are achieved for NESS in 1996. In 1995, Mr. Laughlin earned
a bonus of $100,000 for his NESS activities.
18
<PAGE>
Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock for the period from December 31, 1990, through December 31, 1995,
with the cumulative total return of two indices during such period.
Comparison of Cumulative Total Stockholder
Return Among T/SF Communications Corporation,
American Stock Exchange Market Value Index, and
S&P Publishing Group Index*
<TABLE>
<CAPTION>
[GRAPH APPEARS HERE]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Company $100 66 217 193 255 551
Industry $100 123 144 183 176 227
AMEX $100 128 130 155 141 178
- -------------------------
</TABLE>
* The total return set forth above assumes $100 was invested in Common Stock in
each of the indices set forth above on December 31, 1990, and that all
dividends were reinvested. The S&P Publishing Group Index is compiled by
Standard & Poor's Corporation and is composed of Dun & Bradstreet
Corporation, McGraw Hill Publishing Company and Meredith Corporation.
19
<PAGE>
Report of Compensation Committee on Executive Compensation.
The following report from the Compensation Committee of the Board of
Directors (the "Compensation Committee") is intended to describe the factors
considered by the Compensation Committee and the Board of Directors in
determining compensation packages for certain key employees of the Company. For
information regarding certain transactions involving the Company and Mr. Jones
and Mr. Swab, see "Merger with Tribune/Swab-Fox" and "Certain Transactions."
Compensation Committee Interlocks and Insider Participation.
The Compensation Committee is composed of four outside directors, Messrs.
Leavitt, Griggs, Swab and David Lloyd Jones. Mr. Jones is technically an
employee of the Company (see the discussion of Mr. Jones' arrangement above).
However, his employment contract relates primarily to the severance of his
employment relationship with Tulsa Tribune Company and, therefore, the Board of
Directors considers Mr. Jones to be an outside director for purposes of the
Compensation Committee.
The Compensation Committee has oversight responsibility for the Company's
executive compensation programs. It is noted that one of the six highest paid
executives in the Company is the manager of a specific subsidiary and another is
a former manager of a specific subsidiary and, as described below, the
Compensation Committee has acted primarily with respect to the compensation of
the executive management of the Company's headquarters operation and as the
granting committee for all employees under the Company's Incentive Stock Option
Plan and 1994 Incentive Stock Plan and has not directly participated in
compensation issues of subsidiary managers. The Compensation Committee
recommends action with respect to compensation issues and the full Board of
Directors is responsible for acting on the recommendations of the Compensation
Committee.
Subsidiary Manager Compensation.
One of the six highest paid executives in the Company for 1995, John
Laughlin, was subject to an employment agreement for 1995. Mr. Laughlin's
contract extends through 1996 and is described elsewhere herein. Prior to
August, 1995, Mr. Laughlin was employed under an incentive arrangement which
related to the original acquisition of Galaxy in 1994. In renegotiating Mr.
Laughlin's employment contract in 1995, his compensation package was negotiated
by management of the Company based on Mr. Laughlin's former base salary and the
need to have future incentive bonuses based on Mr. Laughlin's activities for
NESS, rather than Galaxy. As described elsewhere herein, certain incentives
which would have otherwise been earnable by Mr. Laughlin with respect to
Galaxy's 1995 and 1996 results were shifted to be earnable from achieving
certain goals in his activities for NESS. One hundred thousand dollars
($100,000) of Mr. Laughlin's compensation for 1995 related to one such NESS
related goal. Mr. Laughlin's new compensation package was approved by the Board
of Directors as a whole, rather than the Compensation Committee. No attempt was
made to compare Mr. Laughlin's salary to any industry norms.
Approximately 25 percent of Mr. Wimbish's compensation was based on
incentive based compensation measures. The Compensation Committee and the Board
of Directors view the
20
<PAGE>
negotiation of salaries and incentive plans with managers of divisions or
subsidiaries as being the function of the Chief Executive Officer, subject to
the approval of the Board of Directors. Thus, Mr. Barnett separately negotiated
and agreed to Mr. Wimbish's compensation plan and the Board of Directors
approved such compensation without modification.
Compensation of Executive Officers.
Before 1994, while industry data has been looked at from time to time, the
Compensation Committee had relied primarily on the individual experiences of the
members of the Compensation Committee in determining the reasonableness of
compensation of the Company's executives. Prior to 1994, salaries and
compensation had been based primarily on the historical salary trend of the
particular employee. In other words, the salary level at which an employee was
hired and then modest increases after that date were the basis for salaries.
Bonuses were, until 1990, subjective. For 1991 and 1992, there was an Executive
Incentive Bonus Plan in place which tied executive bonuses to improvement in
operating income of the Company. No bonus plan existed for 1993 and no
performance bonuses were paid to headquarters executive personnel.
In 1993, the Company hired a national executive compensation consulting
firm to provide assistance to the Compensation Committee in devising an
appropriate executive compensation plan. In January, 1994, the Compensation
Committee received the report of the consultant. The consultant was asked to
provide information on two basic matters. First, to compare the levels of
compensation of the Company's key executives to employees in comparable
positions in comparable companies. As a result of this, the Compensation
Committee determined that the base salaries for Messrs. Barnett, Mourton and
Craine were within the 50th to 75th percentile range of comparable salaries. No
increases in base salary for 1994 were awarded. This same data indicated to the
Compensation Committee that the Company was not providing a comparable level of
compensation in terms of short-term and long-term incentive payments/awards.
Mr. Honeybone's salary was not included in this review and his base compensation
for 1994 and 1995 was determined by Mr. Barnett and approved by the Board of
Directors directly.
The second matter addressed by the consultant was this lack of incentive
compensation. In particular, the consultant had been asked to provide
information on plans in comparable companies, both from the perspective of the
amounts which would be appropriate for Messrs. Barnett, Craine and Mourton, and
in the mix and type of various compensation components. In doing this, the
consultant was instructed to look to plans which closely tie the executives'
bonuses to stock appreciation.
As a result of this, in 1994, the Compensation Committee recommended and
the Board of Directors adopted the 1994 Incentive Stock Plan and a related
target bonus plan. However, for 1995, because of the number and financial
statement impact of several non-recurring transactions -- notably the Merger and
the sale of three G.E.M. trade journals -- the Compensation Committee determined
that the target plan utilized in 1994 and originally set up for 1995 was not
adaptable to these significant transactions.
For 1995, Messrs. Craine and Mourton were given modest inflation raises,
with Mr. Honeybone's compensation being increased based on increasing
responsibility. At the beginning
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of 1995, a target bonus plan was adopted, recognizing that there were several
transactions contemplated for 1995 that would make the application of such a
plan difficult.
In reviewing 1995 for executive bonuses purposes, the Compensation
Committee abandoned the original target bonus plan as unworkable. With the
assistance of compensation consultants, the Compensation Committee based 1995
bonuses for executive officers, including Mr. Barnett, on median salary and
above median bonus comparative information. In doing so, the Compensation
Committee applied the comparative information based on its view that
management's actions and the results of such action in 1995 had been excellent.
In conducting this review, the Compensation Committee determined that options
that vest based on the Company's common stock achieving set market price levels
during a relatively short term were an important part of the compensation mix
based on its view that aligning management's interests with those of the
stockholders was highly desirable. This attitude would influence the go forward
mix of compensation, with the Compensation Committee targeting salaries for
executive officers, including Mr. Barnett, at or slightly above the median for
comparable positions, but targeting bonuses and stock or option based long term
incentive compensation at somewhat above the median. The Compensation Committee
granted incentive stock options in March, 1996, to each of the executive
officers as follows: Mr. Barnett - 30,000 options; Mr. Craine - 21,000 options;
Mr. Mourton - 21,000 options; and Mr. Honeybone - 21,000 options. The options
were granted at $15 per share (which was above the market price on the date of
grant) and 33-1/3% of the options vest when the market price for the Company's
Common Stock achieves and trades for 10 days at or above $18 per share, $21 per
share and $25 per share. Options which have not vested at the end of three
years from date of grant are forfeited.
Also as part of the task of the compensation consultants in 1995/96, the
Compensation Committee determined to base future bonuses on a modified so-called
economic value added model. The final form of this plan is still being
considered by the Compensation Committee.
The Compensation Committee has not set particular targets for executive
compensation, other than as described above. However, the Compensation
Committee recognizes the need for the Company's compensation package to remain
competitive to ensure the retention of key employees and the ability to recruit
additional key employees as needed. Outside compensation consultants will
likely continue to be part of the efforts to monitor the compensation of key
employees more closely and to ensure that compensation issues are being
appropriately addressed.
A 1993 amendment to the Internal Revenue Code of 1986, as amended, provides
that no publicly held company shall be permitted to deduct from its income taxes
compensation exceeding $1 million paid to its chief executive officer or any of
its four other highest paid executive officers unless (a) the compensation is
payable solely on account of the attainment of performance goals, (b) the
performance goals are determined by a compensation committee of two or more
outside directors, (c) the material terms under which the compensation is paid
are disclosed to and approved by the stockholders, and (d) the compensation
committee certifies that the performance goals were met. Neither the
Compensation Committee nor the Board of Directors expects such restrictions to
have an impact, or result in the loss of a deduction, with respect to
compensation paid by the Company to such persons (including stock option and
restricted stock grants under the Incentive Stock Plan) because the compensation
paid by the Company to such persons is substantially below the $1 million
threshold.
22
<PAGE>
Benefits.
Benefits offered to key executives are largely those that are offered to
the general employee population, though the amount of certain benefits varies
based on salary levels. Other variances include either automobiles or
automobile allowances and, in certain cases, club dues.
Mark A. Leavitt David Lloyd Jones
William N. Griggs Robert J. Swab
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP acted as the independent public accountants for the
Company for the fiscal years ended December 31, 1994 and 1995, and has been
selected as the Company's independent public accountants for 1996. Arthur
Andersen LLP expects to have representatives at the Annual Meeting of
Stockholders who will have an opportunity to make a statement and be available
to respond to appropriate questions.
OTHER MATTERS
No business other than that described above is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including a question of adjourning the Meeting, the persons named in the
accompanying Proxy will vote thereon, according to their best judgment, in the
manner they consider to be in the best interest of the Company. In the event
that any of the nominees for the office of Director should withdraw or become
unavailable for reasons not presently known, the persons named as proxies will
vote for other persons in their place, in what they consider to be in the best
interest of the Company, based on nominations submitted by the Board of
Directors.
Included with this Proxy Statement is the Company's Annual Report for its
fiscal year ended December 31, 1995. All stockholders are urged to carefully
review the Annual Report prior to completing their Proxy.
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON
WHO WAS A BENEFICIAL OWNER OF ITS COMMON STOCK ON APRIL 22, 1996, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
(TOGETHER WITH ALL SCHEDULES AND EXHIBITS THERETO, IF REQUESTED). ALL REQUESTS
FOR SUCH ANNUAL REPORT MUST BE IN WRITING DIRECTED TO THE SECRETARY OF THE
COMPANY AND MUST CONTAIN THE REPRESENTATION THAT THE PERSON MAKING THE REQUEST
WAS A BENEFICIAL OWNER OF THE COMMON STOCK OF THE COMPANY ON APRIL 22, 1996.
PLEASE DATE, SIGN AND RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES. A PROMPT RETURN OF THE PROXY WILL BE APPRECIATED AS IT
WILL SAVE THE COMPANY THE EXPENSE OF FURTHER MAILINGS.
T/SF COMMUNICATIONS CORPORATION
Linda F. Toon,
Secretary
Date: April 25, 1996
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LOGO
T/SF COMMUNICATIONS CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 4, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Howard G.
Barnett, Jr., and Robert E. Craine, Jr., or either of them, with full power of
substitution, as attorneys and proxies for the undersigned, to vote at the
Annual Meeting of Stockholders of T/SF Communications Corporation (the
"Company"), to be held at Warren Place II, 6110 South Yale, Tulsa, Oklahoma, at
9:00 a.m., C.D.T., on June 4, 1996, or any adjournment or adjournments of such
Meeting, all shares of Common Stock, $0.10 par value per share, of the Company
which the undersigned is entitled to vote, on the following matters:
1.NUMBER OF DIRECTORS
FOR the creation of a Board of Directors composed of eleven (11) members,
nine (9) of which will be elected at the meeting, thus leaving two vacancies
which may be filled by the Board of Directors at any time.
FOR [_] AGAINST [_] ABSTAIN [_]
2.ELECTION OF DIRECTORS
FOR the election of the nine directors listed below:
<TABLE>
<S> <C> <C>
Howard G. Barnett, Jr. Martin F. Beck Robert E. Craine, Jr.
William N. Griggs David Lloyd Jones Jenkin Lloyd Jones Jr.
Mark A. Leavitt Robert J. Swab Martin A. Vaughan
</TABLE>
[_] FOR all nominees (except [_] WITHHOLD AUTHORITY for
as indicated to the all nominees
contrary in the space
provided)
(NOTE: To withhold authority for any individual nominee(s), write the
name(s) in the space below:)
_________________________________
LOGO
3.In their discretion upon all other matters properly coming before the Annual
Meeting of Stockholders.
This Proxy, when properly executed, will be voted in accordance with
instructions given. IN THE ABSENCE OF INSTRUCTION, THIS PROXY WILL BE VOTED FOR
ITEMS 1 AND 2. This Proxy is revocable at any time before it is exercised.
Receipt of the Notice of Annual Meeting of Stockholders and the accompanying
Proxy Statement and Annual Report is hereby acknowledged.
Dated _______________________ , 1996
____________________________________
____________________________________
Signature
Please sign name exactly as printed
on Proxy
NOTE: Executors, administrators,
trustees, custodians and others
signing in a representative
capacity, including those signing
on behalf of a partnership or
corporation, should indicate the
capacity in which they sign. If
shares are held jointly, EACH
holder should sign.
I do [_] do not [_] plan to attend the Annual Meeting of Stockholders.
