<PAGE> 1
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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OUTDOOR SYSTEMS, INC.
- --------------------------------------------------------------------------------
(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] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 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> 2
PRELIMINARY COPY
OUTDOOR SYSTEMS
April , 1997
Dear Stockholders:
We are holding the Company's 1997 Annual Meeting of Stockholders on
Thursday, May 29, 1997, at 10:00 a.m., local time, at 2502 N. Black Canyon
Highway, Phoenix, Arizona. We hope that you will be able to attend the meeting,
and we look forward to seeing you. Matters on which action will be taken at the
meeting are explained in detail in the Notice and Proxy Statement following this
letter.
Whether or not you expect to attend the meeting in person, please complete,
date, sign and return the enclosed proxy in the envelope provided at your
earliest convenience so that your shares will be represented at the meeting. If
you choose to attend the meeting, you may withdraw your proxy and vote your own
shares.
Sincerely,
WILLIAM S. LEVINE
Chairman of the Board
ARTURO R. MORENO
President and Chief Executive Officer
<PAGE> 3
PRELIMINARY COPY
OUTDOOR SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 29, 1997
The Annual Meeting of Stockholders of Outdoor Systems, Inc. will be held at
2502 N. Black Canyon Highway, Phoenix, Arizona on Thursday, May 29, 1997, at
10:00 a.m., local time, for the following purposes:
1. To elect one Class I director to the Board of Directors to serve
for a term of three years;
2. To vote upon a proposal to amend the Certificate of Incorporation
of the Company to increase the number of authorized shares of Common Stock
of the Company from 60,000,000 to 200,000,000 shares;
3. To vote upon a proposal to approve the Incentive Bonus Plan for the
Chief Executive Officer; and
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on April 17, 1997 are
entitled to vote at the meeting.
The mailing address of the Company's principal executive office is 2502 N.
Black Canyon Highway, Phoenix, Arizona 85009.
PLEASE COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY SO THAT YOUR
SHARES WILL BE REPRESENTED AT THE MEETING. IF YOU CHOOSE TO ATTEND THE MEETING,
YOU MAY WITHDRAW YOUR PROXY AND PERSONALLY CAST YOUR VOTES.
By Order of the Board of Directors,
BILL M. BEVERAGE
Secretary
April , 1997
Phoenix, Arizona
<PAGE> 4
PRELIMINARY COPY
OUTDOOR SYSTEMS, INC.
2502 N. BLACK CANYON HIGHWAY
PHOENIX, ARIZONA 85009
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
The following Proxy Statement and the accompanying proxy card, first mailed
to stockholders of Outdoor Systems, Inc. (the "Company") on or about April ,
1997, are furnished in connection with the solicitation by the Board of
Directors of the Company of proxies to be used in voting at the Annual Meeting
of Stockholders of the Company to be held on Thursday, May 29, 1997, at 2502 N.
Black Canyon Highway, Phoenix, Arizona, and at any adjournment(s) thereof (the
"Meeting").
Any stockholder returning a proxy has the power to revoke it prior to the
Meeting by giving the Secretary of the Company written notice of revocation, by
returning a later dated proxy or by expressing a desire to vote in person at the
Meeting. All shares of the Company's common stock, $.01 par value per share
("Common Stock"), represented by valid proxies received pursuant to this
solicitation and not revoked before they are exercised will be voted in the
manner specified therein. If no specification is made, the proxy will be voted
(i) FOR the election of the nominee for Class I director named in this Proxy
Statement, (ii) FOR the proposed amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock of the
Company from 60,000,000 to 200,000,000 shares, (iii) FOR the approval of the
Incentive Bonus Plan for the Chief Executive Officer, and (iv) in accordance
with the best judgment of the proxy holders on any other matter that may
properly come before the Meeting.
The entire cost of soliciting proxies will be borne by the Company. In
following up the original solicitation of proxies by mail, the Company will
request brokers and others to send proxy forms and other proxy material to the
beneficial owners of the Common Stock and will reimburse them for expenses
incurred in so doing. If necessary, the Company also may use some of its
employees to solicit proxies from the stockholders personally or by telephone.
The Board of Directors of the Company fixed April 17, 1997 as the record
date for the Meeting and, accordingly, only holders of Common Stock of record at
the close of business on that date will be entitled to notice of, and to vote
at, the Meeting. The number of shares of Common Stock outstanding on April 17,
1997 was 40,155,631, each of which is entitled to one vote. The presence in
person or by proxy of stockholders holding of record a majority of shares of
Common Stock outstanding and entitled to vote at the Meeting will constitute a
quorum for the transaction of business at the Meeting. Abstentions, broker
non-votes and shares for which authority to vote is withheld are counted as
present in determining whether a quorum exists.
Election of the director nominee named in Proposal 1 hereof requires the
affirmative vote of a plurality of shares of Common Stock voting in person or by
proxy at the Meeting. Shares with respect to which authority to vote is withheld
will not be included in the vote total and will not affect the outcome of the
election. Approval of the amendment to the Certificate of Incorporation
described in Proposal 2 hereof requires the affirmative vote of a majority of
the shares of Common Stock of the Company outstanding and entitled to vote at
the Meeting. Therefore, abstentions and broker non-votes will have the same
effect as votes against Proposal 2. Approval of the Incentive Bonus Plan for the
Chief Executive Officer described in Proposal 3 hereof requires the affirmative
vote of a majority of the votes cast on the matter. Therefore, abstentions will
have the same effect as votes against Proposal 3, but broker non-votes will have
no effect on the outcome of the vote.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of April 17, 1997
(except as otherwise noted) regarding the amount of Common Stock beneficially
owned by (i) all persons known by the Company to
<PAGE> 5
beneficially own more than five percent of the outstanding Common Stock, (ii)
each director and director nominee of the Company, (iii) each of the executives
officers of the Company named in the Summary Compensation Table below, and (iv)
all directors and executive officers of the Company as a group. All shares shown
reflect sole voting and investment power except as otherwise noted. An asterisk
indicates beneficial ownership of less than one percent of the outstanding
Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- ----------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
William S. Levine.......................................... 14,814,240(1) 36.9%
1702 E. Highland, Suite 310
Phoenix, Arizona 85016
Arturo R. Moreno........................................... 12,131,487(2) 27.4%
2502 N. Black Canyon Highway
Phoenix, Arizona 85009
Stephen J. Haberkorn....................................... 5,511,615(3) 13.7%
1702 E. Highland, Suite 310
Phoenix, Arizona 85016
Putnam Investments, Inc.................................... 4,007,831(4) 10.0%
One Post Office Square
Boston, Massachusetts 02109
Brian J. O'Connor.......................................... 15,750(5) *
Stephen F. Butterfield..................................... 49,500(6) *
Wally C. Kelly............................................. 462,012(7) 1.2%
Bill M. Beverage........................................... 42,188(8) *
All directors and executive officers as a group (7
persons)................................................. 22,031,687(9) 49.2%
</TABLE>
- ---------------
(1) Includes 5,511,615 shares of Common Stock owned by M-K Link Investments
Limited Partnership ("M-K Link") over which Mr. Levine shares voting control
with Mr. Moreno and over which Messrs. Levine and Moreno have certain rights
of first refusal with respect to certain private sales. Of those 5,511,615
shares, 301,507 shares are subject to an option granted to Mr. Levine (now
held by Levine Investments Limited Partnership, Mr. Levine's family
partnership) and 1,993,418 shares are subject to an option granted to Mr.
Moreno (see Note 2 below). Mr. Levine disclaims beneficial ownership of the
shares owned by M-K Link except to the extent of the 301,507 shares subject
to the option granted to Mr. Levine. The option for the 301,507 shares of
Common Stock of M-K Link and the remaining 9,302,625 shares of Common Stock
attributed to Mr. Levine are owned by Levine Investments Limited
Partnership, 1702 E. Highland, Suite 310, Phoenix, Arizona 85016. Mr. Levine
is the sole general partner of Levine Investments Limited Partnership; Mr.
Levine, his wife and children are the limited partners. Mr. Levine disclaims
beneficial ownership of such shares and option except in his capacity as
general partner and to the extent of his partnership interest therein.
(2) Includes 5,511,615 shares of Common Stock owned by M-K Link over which Mr.
Moreno shares voting control with Mr. Levine and over which Messrs. Levine
and Moreno have certain rights of first refusal with respect to certain
private sales. Of those 5,511,615 shares, 1,993,418 shares are subject to an
option granted to Mr. Moreno and 301,507 shares are subject to an option
granted to Mr. Levine now held by Mr. Levine's family partnership (see Note
1 above). Mr. Moreno disclaims beneficial ownership of the shares owned by
M-K Link except to the extent of the 1,993,418 shares subject to the option
granted to Mr. Moreno. Also includes (i) 3,948,567 shares of Common Stock
that may be purchased by Mr. Moreno pursuant to options granted by the
Company that are currently exercisable and 171,572 shares subject to options
that become exercisable within 60 days of April 17, 1997, (ii) 1,278,617
shares of Common Stock held by Mr. Moreno and his wife, as joint tenants,
and (iii) 1,221,116 shares held by BRN Properties Limited Partnership, an
Arizona limited partnership of which Mr. Moreno is the sole general partner.
(3) Represents shares of Common Stock held by M-K Link, 1702 E. Highland, Suite
310, Phoenix, Arizona 85016, an Arizona limited partnership of which Mr.
Haberkorn is the sole general partner. Of the
2
<PAGE> 6
shares indicated, 2,294,925 are subject to options held by Levine
Investments Limited Partnership and
Mr. Moreno. Mr. Haberkorn disclaims beneficial ownership of shares owned by
M-K Link, except in his capacity as general partner and to the extent of his
partnership interest therein, and both he and M-K Link disclaim beneficial
ownership of shares subject to options in favor of Levine Investments
Limited Partnership and Mr. Moreno. Messrs. Levine and Moreno hold certain
voting and rights of refusal power as to shares owned by M-K Link. See Notes
1 and 2 above.
(4) Based on Schedule 13G, as amended, filed by Putnam Investments, Inc. with
the Securities and Exchange Commission (the "Commission") reporting
beneficial ownership as of December 31, 1996. Each of Putnam Investment
Management, Inc. and the Putnam Advisory Company, Inc., wholly-owned
registered investment advisors of Putnam Investments, Inc. having the same
address, also filed a Schedule 13G with the Commission which, as amended,
reports beneficial ownership of 3,757,910 shares and 249,921 shares,
respectively, as of December 31, 1996.
(5) Includes 4,500 shares of Common Stock subject to options that become
exercisable within 60 days of April 17, 1997.
(6) Includes (i) 2,250 shares of Common Stock owned by Mr. Butterfield's
children, and (ii) 2,250 shares of Common Stock subject to options that
become exercisable within 60 days of April 17, 1997.
(7) Represents options to purchase 377,637 shares of Common Stock from the
Company that are currently exercisable and options to purchase 84,375 shares
that become exercisable within 60 days of April 17, 1997. Does not include
any shares of Common Stock that Mr. Kelly may receive in settlement of
incentive units.
(8) Represents shares of Common Stock subject to options that become exercisable
within 60 days of April 17, 1997. Does not include any shares of Common
Stock that Mr. Beverage may receive in settlement of incentive units.
(9) Includes (i) 301,507 and 1,993,418 shares of Common Stock that may be
acquired by Levine Investments Limited Partnership and Mr. Moreno,
respectively, upon the exercise of options held by them to purchase shares
held by M-K Link (see Notes 1 and 2 above), and (ii) 4,659,214 shares of
Common Stock that may be acquired upon the exercise of options granted by
the Company which are currently exercisable or will become exercisable
within 60 days of April 17, 1997. Does not include shares of Common Stock
that may be issued in settlement of incentive units.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for three classes of
directors with staggered, three-year terms of office and provides that upon the
expiration of the term of office for a class of directors, the nominees for that
class will be elected for a term of three years to serve until the election and
qualification of their successors or until their earlier resignation, death or
removal from office. The Company's Certificate of Incorporation and its Bylaws
provide that the Board of Directors shall consist of not less than three nor
more than ten directors and authorize the exact number of directors to be fixed
from time to time by resolution of a majority of the Board of Directors. The
Board of Directors has fixed the exact number of members of the Board of
Directors at five. At the Meeting, the nominee is for Class I director. The
Class II and Class III directors have one year and two years, respectively,
remaining on their terms of office. There is currently one vacancy in Class II
of the Board of Directors. The Board of Directors may fill this vacancy at any
time pursuant to the authority vested in it by the Company's Bylaws.
It is intended that persons named in the accompanying form of proxy will
vote for the nominee listed below, who is currently a director, unless authority
to so vote is withheld. In the event the nominee refuses or is unable to serve
as director (which is not now anticipated), the shares represented by proxies in
the accompanying form may be voted for the election of a substitute nominee
selected by the persons named in the proxy.
3
<PAGE> 7
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
THE NOMINEE FOR CLASS I DIRECTOR.
DIRECTOR AND DIRECTOR NOMINEE INFORMATION
NOMINEE FOR DIRECTOR
CLASS I -- TERM EXPIRING 2000
STEPHEN F. BUTTERFIELD Age: 44
Director of the Company since 1996
Mr. Butterfield has been President of Student Loan Acquisition Authority of
Arizona, a not-for-profit firm which participates in the secondary market for
student loans, since 1991. From 1988 to 1991, Mr. Butterfield served as
President of Western Loan Marketing Association; from 1987 to 1988, Mr.
Butterfield served as Vice President of Security Pacific Merchant Bank; from
1983 to 1987, he was a partner of Boettcher & Company, Inc., a regional
investment banking firm specializing in municipal finance; and from 1974 to
1983, Mr. Butterfield served in various positions with Young Smith & Peacock, an
Arizona-based municipal bond house.
DIRECTORS CONTINUING IN OFFICE
CLASS II -- TERM EXPIRING 1998
BRIAN J. O'CONNOR Age: 41
Director of the Company since 1993
Mr. O'Connor has been a Senior Vice President of Alden Capital Markets, Inc.,
which underwrites and trades securities for various local governments in Arizona
and the western United States, since 1990. From 1988 to 1990, he was a Senior
Vice President with Capital Markets Corporation; from 1987 to 1988, he was a
Vice President for Security Pacific Merchant Bank in Phoenix; and from 1983 to
1987, Mr. O'Connor was with Boettcher & Company, Inc., a regional investment
banking firm specializing in municipal finance.
CLASS III -- TERM EXPIRING 1999
WILLIAM S. LEVINE Age: 65
Director of the Company since 1980
Mr. Levine, a founder of the Company, has been Chairman of the Board and a
director of the Company since its formation. Mr. Levine has 17 years of
experience in the outdoor advertising industry. He is an owner and officer of
numerous privately-owned firms. Since 1990, Mr. Levine has dedicated a
substantial portion of his time to the Company's affairs.
ARTURO R. MORENO Age: 50
Director of the Company since 1984
Mr. Moreno has served as the Company's President and Chief Executive Officer and
has been a director of the Company since April 1984. Mr. Moreno has 24 years of
experience in the outdoor advertising industry. From 1981 to 1984, Mr. Moreno
served as President and General Manager of Gannett Outdoor of New Jersey; from
1979 to 1981, he was President and General Manager of Gannett Outdoor of Kansas
City (Missouri); and from 1973 to 1981, Mr. Moreno worked in Phoenix as a Vice
President of Sales for Gannett Outdoor and its predecessor company. Mr. Moreno
is also a director of Ugly Duckling, Inc.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and greater than 10% stockholders ("Reporting
Persons") to file certain reports ("Section 16 Reports") with respect to
beneficial ownership of the Company's equity securities. Based solely on its
review of the Section 16 Reports furnished to the Company by its Reporting
Persons and, where applicable, any
4
<PAGE> 8
written representation by any of them that no Form 5 was required, all Section
16(a) filing requirements applicable to the Reporting Persons during and with
respect to fiscal year 1996 have been complied with on a timely basis.
DIRECTORS' ATTENDANCE
The Board of Directors of the Company held two meetings during fiscal year
1996. Each director attended at least 75% of these meetings and the meetings of
any committee of which he was a member which was held during the fiscal year.
COMPENSATION OF DIRECTORS
Directors of the Company who are also employees receive no separate
compensation for their services as directors of the Company. Pursuant to the
1996 Omnibus Plan, non-employee directors of the Company, other than Mr. Levine,
automatically receive stock options to purchase 2,250 shares of Common Stock at
an exercise price equal to the then fair market value of the Common Stock on the
date following each annual meeting of stockholders.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company. To assist the Board of Directors in carrying out this responsibility,
the Board has delegated certain authority to two committees, as set forth below.
Audit Committee. The Audit Committee is responsible for reviewing the
Company's accounting controls and recommending to the Board of Directors the
engagement of the Company's outside auditors. The Audit Committee met two times
during fiscal year 1996. The current members of the Company's Audit Committee
are Messrs. O'Connor and Butterfield.
Compensation Committee. The Compensation Committee is responsible for
reviewing and approving the amount and type of consideration to be paid to
senior management and for administering the Company's stock option plans. The
Compensation Committee met two times during fiscal year 1996. The current
members of the Company's Compensation Committee are Messrs. Levine (Chairman),
O'Connor and Butterfield.
The Company does not have a nominating committee.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
awarded to, paid to, or earned by, the Company's Chief Executive Officer and
each of the two other executive officers of the Company whose total annual
salary and bonus exceeded $100,000 for the fiscal year ended December 31, 1996
(together, these persons are sometimes referred to as the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ---------------------
NAME AND PRINCIPAL ----------------------- INCENTIVE STOCK ALL OTHER
POSITION YEAR SALARY BONUS UNITS OPTIONS COMPENSATION(1)
- -------------------------- ---- -------- ---------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Arturo R. Moreno.......... 1996 $475,000 $1,403,989(2) $ -- 686,286 $ 3,510
President and Chief 1995 375,000 311,614(2) -- -- 3,287
Executive Officer 1994 275,000 283,163(2) -- -- 3,206
William S. Levine......... 1996 450,000(3) -- -- -- --
Chairman of the Board 1995 350,000(3) -- -- -- --
1994 250,000(3) -- -- -- --
Wally C. Kelly............ 1996 329,389 -- -- 337,500 2,065
Senior Vice President 1995 283,987 -- -- -- 2,193
1994 244,890 -- -- -- 1,743
Bill M. Beverage.......... 1996 101,327 -- 25,000(4) 168,750 3,510
Treasurer, Secretary and 1995 91,483 -- 10,000 -- 2,958
Chief Financial Officer 1994 76,613 -- 7,500 -- 2,412
</TABLE>
- ---------------
(1) The amounts in this column include the following: (i) Company contributions
to a 401(k) plan for fiscal years 1996, 1995 and 1994, respectively, as
follows: Mr. Moreno, $1,425, $1,386 and $1,305; Mr. Kelly, $1,155, $780 and
$330; and Mr. Beverage, $1,425, $1,057 and $511; and (ii) health insurance
premiums paid for fiscal years 1996, 1995 and 1994, respectively, as
follows: Mr. Moreno, $2,085, $1,901 and $1,901; Mr. Kelly, $1,450, $1,413
and $1,413; and Mr. Beverage, $2,085, $1,901 and $1,901.
(2) The bonus amount shown for 1996 includes (i) $1,025,804 paid subsequent to
the end of fiscal year 1996 by reference to operating results for fiscal
year 1996, and (ii) $378,185 paid in 1996 by reference to operating results
for fiscal year 1995. For 1995 and 1994, the amounts shown represent bonus
earned and paid in the fiscal year indicated in an amount determined by
reference to operating results for the prior year. The bonus is based upon
an understanding between the Company and Mr. Moreno that, for so long as Mr.
Moreno is the Chief Executive Officer and President of the Company, Mr.
Moreno may be awarded an annual bonus in an amount equal to 1.25% of the
Company's EBITDA for the immediately preceding fiscal year as reflected in
the Company's audited financial statements. Pursuant to this understanding,
the bonus for a particular fiscal year was awarded at the discretion of the
Board of Directors following a review by the Compensation Committee after
the audited financial statements for the previous fiscal year had been
released by the Company's auditors. This understanding has been formalized
and the terms thereof have been incorporated into the Incentive Bonus Plan
for the Chief Executive Officer (the "CEO Bonus Plan"). The CEO Bonus Plan
is being submitted to the stockholders for approval at the Meeting. See
"Proposal 3 -- Approval of the Incentive Bonus Plan for the Chief Executive
Officer."
(3) Mr. Levine received no salary, bonus or other compensation from the Company
for his services as Chairman of the Board. The amounts shown as annual
compensation represent management fees paid by the Company to two entities
controlled by Mr. Levine for providing Mr. Levine's services to the Company.
See "Compensation Committee Interlocks and Insider Participation."
(4) Represents the dollar value of incentive units awarded to Mr. Beverage,
which entitle Mr. Beverage to receive up to 1,088 shares of Common Stock,
based on the market price of the Common Stock on the date of the grant. The
incentive units were awarded pursuant to the Company's 1996 Omnibus Plan,
vest
6
<PAGE> 10
ratably over a period of four years from the date of grant or earlier upon a
change in control of the Company and entitle Mr. Beverage to receive the
shares of Common Stock subject to the vested incentive units immediately
following termination of employment because of a change in control of the
Company and over a four-year period following termination of employment for
any other reason.
The following table sets forth certain information regarding stock options
to purchase shares of Common Stock granted during fiscal year 1996 to the Named
Executives. The Company did not grant any stock appreciation rights ("SARs")
during fiscal year 1996.
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL RATES OF STOCK
----------------------------------- PRICE APPRECIATION
% OF OF OPTION TERM*
NUMBER OF TOTAL -----------------------------------------
SECURITIES OPTIONS
UNDERLYING GRANTED 5% 10%
OPTIONS TO EXERCISE ------------------- -------------------
GRANTED EMPLOYEES OR BASE PRICE PRICE
(# OF IN FISCAL PRICE EXPIRATION PER AGGREGATE PER AGGREGATE
SHARES)(1) YEAR ($/SHARE) DATE SHARE VALUE SHARE VALUE
---------- ---------- --------- ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arturo R. Moreno........ 686,286 37.6 $6.67 4/24/06 $10.86 $2,875,538 $17.30 $7,295,220
Wally C. Kelly.......... 337,500 18.4 $6.67 4/24/06 $10.86 $1,414,125 $17.30 $3,587,625
Bill M. Beverage........ 168,750 9.2 $6.67 4/24/06 $10.86 $ 707,063 $17.30 $1,793,813
</TABLE>
- ---------------
* The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and
are not intended to forecast future price appreciation of the Common Stock
of the Company. The gains reflect a future value based upon growth at these
prescribed rates.
(1) The indicated options were granted in connection with the Company's initial
public offering of Common Stock in April 1996 pursuant to the Company's 1996
Omnibus Plan. These options were granted at an exercise price per share
equal to the initial public offering price to the public, have a term of ten
years and become exercisable ratably over a period of four years from the
date of the grant. In the event of a change in control of the Company, all
outstanding options become immediately and fully exercisable, unless
otherwise provided by the Board of Directors prior to the change in control.
The following table sets forth certain information concerning options
exercises during fiscal year 1996 by Named Executives and the value of
unexercised options granted by the Company and held by Named Executives at
December 31, 1996. The Company has no outstanding SARs.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END FISCAL YEAR-END(1)
ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Arturo R. Moreno........ -- $ -- 3,948,567 686,286 $110,516,341 $ 14,727,697
Wally C. Kelly(2)....... 150,000 3,183,500 377,637 337,500 10,310,922 7,242,750
Bill M. Beverage(3)..... -- -- -- 168,750 -- 3,621,375
</TABLE>
- ---------------
(1) Computed based upon the difference between the aggregate fair market value
of the shares of Common Stock purchasable upon the exercise of the options
and the aggregate exercise price of the options. For purposes of this table,
the fair market value of the shares of Common Stock is deemed to be $28.13
per share (the closing price per share as reported by the Nasdaq National
Market for December 31, 1996).
(2) Does not reflect incentive units representing the right to receive up to
96,888 shares of Common Stock following termination of employment.
7
<PAGE> 11
(3) Does not reflect incentive units representing the right to receive up to
3,715 shares of Common Stock following termination of employment.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year 1996.
INTRODUCTION
The Compensation Committee was appointed by the Board of Directors on April
15, 1996, immediately prior to the Company's initial public offering of Common
Stock. The Compensation Committee is responsible for reviewing and approving the
amount and type of consideration to be paid to senior management and for
administering the Company's 1996 Omnibus Plan pursuant to which the Company may
grant a variety of equity-based incentives, including stock options, to its
executive officers and key employees. Prior to the appointment of the
Compensation Committee, compensation decisions were made by the full Board of
Directors.
The Compensation Committee's policy regarding the compensation of the
Company's executive officers is to establish and maintain compensation levels
that (i) are competitive with those of other media companies and thus enable the
Company to attract and retain highly qualified executives, (ii) reward
executives for individual performance and for the performance of the Company
relative to the performance of other media companies, and (iii) align the
interests of the executives with those of the stockholders.
EXECUTIVE COMPENSATION
The Company's compensation program for executive officers has three key
components: (i) base salary, (ii) performance-based annual cash bonus, and (iii)
equity-based incentives.
Base Salary. The executive officers' base salaries for fiscal year 1996
were set by the Board of Directors of the Company prior to the initial public
offering. For future fiscal years, base salaries for all executive officers,
including the Chief Executive Officer, will be reviewed and approved by the
Compensation Committee. Base salary decisions with respect to each executive
officer will take into account, among other things, the executive's past
performance, the Company's past performance and the executive's contribution
thereto, the executive's level of experience in the industry and the
Compensation Committee's evaluation of salary levels for similarly-situated
executives in the Company's industry.
Annual Cash Bonus. The Company's executive officers, other than the Chief
Executive Officer, were not eligible to receive cash bonuses for fiscal year
1996. The Chief Executive Officer's bonus arrangement with the Company, which
was approved by the full Board of Directors prior to the Company's initial
public offering, is described below.
Equity-Based Incentives. The Compensation Committee believes that stock
options and other equity-based grants provide a significant incentive for
management and closely align the interests of executives with those of the
stockholders. During fiscal year 1996, the Compensation Committee granted stock
options to purchase an aggregate of 1,816,911 shares of Common Stock to its
employees, including options to purchase 1,192,536 shares of Common Stock
granted to its then executive officers. These options were granted in connection
with the Company's initial public offering, have an exercise price per share
equal to the offering price to the public in the initial public offering and
become exercisable ratably over a period of four years from the date of the
initial public offering, or earlier upon a change in control of the Company. The
decision to award stock options to a particular executive officer during fiscal
year 1996, and the size of such grant, was based primarily on the executive's
position and level of responsibility with the Company, his individual
performance and his personal contributions to the Company's long-term
performance. In addition, during fiscal year 1996, the Compensation Committee
granted an aggregate of 13,166 incentive units to the Company's employees,
including 1,088 incentive units granted to one executive officer. The incentive
units
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<PAGE> 12
represent rights to receive shares of Common Stock upon certain terminations of
employment and vest ratably over a period of four years or earlier upon a change
in control of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Moreno, the Company's Chief Executive Officer, was paid a base salary
of $475,000 for fiscal year 1996 as approved by the Board of Directors prior to
the Company's initial public offering.
In addition, the Company has an understanding with Mr. Moreno, which was
also approved by the Board of Directors prior to the initial public offering,
that, for so long as Mr. Moreno serves as Chief Executive Officer and President
of the Company, Mr. Moreno may be awarded an annual bonus of 1.25% of the
Company's "EBITDA" (operating income before interest, taxes and depreciation and
amortization expense) for the immediately preceding fiscal year as reflected in
the Company's audited financial statements. Pursuant to the Compensation
Committee's recommendation to the Board of Directors based on its review of the
Company's results for fiscal year 1996, the Board of Directors awarded Mr.
Moreno a cash bonus of $1,025,804. The annual bonus arrangement between the
Company and the Chief Executive Officer has been formalized and the terms
thereof have been incorporated into the Incentive Bonus Plan for the Chief
Executive Officer which is being submitted to the stockholders for approval at
this year's annual meeting.
In connection with the Company's initial public offering, in April 1996,
the Compensation Committee granted to Mr. Moreno options to purchase 686,286
shares of Common Stock with the same terms as the stock options granted to the
other executives. Mr. Moreno did not receive any incentive units in fiscal year
1996.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the amount of individual compensation for certain executives
that may be deducted by the employer for federal tax purposes in any one fiscal
year to $1 million unless such compensation is "performance-based." The
determination of whether compensation is performance-based depends upon a number
of factors, including stockholder approval of the plan under which the
compensation is paid, the exercise price at which options or similar awards are
granted, the disclosure to and approval by the stockholders of applicable
performance standards, the composition of the committee making decisions with
respect to such compensation, and certification by the such committee that
performance standards were satisfied. While it is possible for the Company to
compensate or make awards under incentive plans and otherwise that do not
qualify as performance-based compensation deductible under Section 162(m), the
Company, in structuring compensation programs for its top executive officers,
intends to give strong consideration to the deductibility of awards.
William S. Levine (Chairman)
Stephen F. Butterfield
Brian J. O'Connor
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company formed its Compensation Committee on April 15, 1996. Prior to
such date, compensation decisions were made by the entire Board of Directors.
William S. Levine, Chairman of the Board, and Arturo R. Moreno, President and
Chief Executive Officer, participated in compensation decisions made by the
Board of Directors. Mr. Levine is currently serving as a member of the
Compensation Committee.
The Company is a party to a Services Agreement with Williams Manufacturing,
Inc. ("WMI") and J & L Industries, Inc. ("J & L"), companies controlled by Mr.
Levine, pursuant to which WMI and J & L make at least a majority of Mr. Levine's
business time available to the Company. The Company paid WMI and J & L an
aggregate of $450,000 for fiscal year 1996.
Certain partnerships controlled by Mr. Levine or in which Mr. Levine is a
partner lease certain sites to the Company on which the Company has placed
advertising displays. The Company made aggregate lease payments to such
partnerships of $139,000 in fiscal year 1996 and expects to continue to pay such
amounts at
9
<PAGE> 13
least through the expiration of the terms of the leases in December 2000. The
Company believes that these leases are on terms at least as favorable as would
be available with unrelated third parties through arms-length negotiations.
The Company leased office space to Camelback Services, Inc. ("Camelback"),
an entity controlled by Mr. Levine, pursuant to a month-to-month lease until
April 1996 when the Company sold the property to an unrelated third party.
Camelback paid an aggregate of $6,000 in rent to the Company in fiscal year
1996, which was commensurate with Camelback's use of the facilities and market
rates. The Company believes that the rent paid by Camelback reflected a
competitive market rate for the location.
PERFORMANCE GRAPH
The following chart and table compare the cumulative total return of the
Company's Common Stock for the period beginning April 24, 1996 (the date of the
Company's initial public offering of Common Stock) and ending December 31, 1996,
with the cumulative total return of the Nasdaq Stock Market Index and the Paul
Kagan Associates, Inc. Radio/TV Average Index for the same period. For purpose
of the chart and table below, the index value of 1.00 assigned to the Common
Stock on April 24, 1996, was based on the price of the Common Stock to the
public in the Company's initial public offering.
COMPARISON OF CUMULATIVE TOTAL RETURNS AMONG
OUTDOOR SYSTEMS, INC., THE NASDAQ STOCK MARKET INDEX
AND THE PAUL KAGAN ASSOCIATES INC. RADIO/TV AVERAGE INDEX
<TABLE>
<CAPTION>
PAUL KAGAN
ASSOCIATES, INC.,
MEASUREMENT PERIOD OUTDOOR SYSTEMS, NASDAQ STOCK RADIO/TV AVERAGE
(FISCAL YEAR COVERED) INC. MARKET INDEX INDEX
<S> <C> <C> <C>
4/24/96 1.00 1.00 1.00
6/28/96 2.35 1.02 1.12
9/30/96 4.70 1.05 1.21
12/31/96 4.22 1.11 1.13
</TABLE>
PROPOSAL 2
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
The Board of Directors adopted an amendment to Article IV, Section A,
Subsection 1(a) of the Company's Certificate of Incorporation to increase the
number of shares of Common Stock which the Company is authorized to issue from
60,000,000 to 200,000,000 shares, subject to the approval of the stockholders of
the Company. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required to approve the proposed
amendment. If the stockholders do not approve the proposed amendment, the number
of authorized shares of Common Stock will remain 60,000,000.
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<PAGE> 14
If the proposed amendment is adopted, Subsection 1(a) of Section A of
Article IV of the Company's Certificate of Incorporation would be amended to
read as follows:
(a) 200,000,000 shares of Common Stock, $.01 par value each (herein
referred to as the "Common Stock");
The purpose of the proposed amendment is to provide sufficient shares for
future acquisitions or public offerings, benefit plans, recapitalizations, stock
splits and other corporate purposes. Once authorized, the additional shares of
Common Stock may be issued by the Board of Directors without further action by
the stockholders, unless such action is required by law or applicable Nasdaq
Stock Market or stock exchange listing requirement. The additional authorized
shares would be a part of the existing class of Common Stock and, if and when
issued, would have the same rights and privileges as the shares of Common Stock
currently issued and outstanding.
Since going public in April 1996, the Company effected two three-for-two
stock splits of the Common Stock. As of April 17, 1997, 40,155,631 shares of the
Common Stock were issued and outstanding and 8,039,451 shares were reserved for
issuance pursuant to stock options, incentive stock units or other awards made
or that may be made pursuant to the Company's 1996 Omnibus Plan and upon the
exercise of other outstanding stock options. Thus, of the 60,000,000 shares of
Common Stock currently authorized, 11,804,918 shares remain unissued and
unreserved.
Although the Company is not aware of any pending or threatened efforts to
obtain control of the Company, the availability for issuance of additional
shares of Common Stock could enable the Board of Directors to render more
difficult or discourage an attempt to do so. For example, the issuance of shares
of Common Stock in a public or private sale, merger or similar transaction would
increase the number of outstanding shares, thereby diluting the interest of a
party attempting to obtain control of the Company.
Holders of Common Stock do not have preemptive rights to subscribe to
additional securities that may be issued by the Company, which means that
current stockholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate ownership
interest. However, stockholders wishing to maintain their interests may be able
to do so through normal market purchases.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
PROPOSAL 3
APPROVAL OF THE INCENTIVE BONUS PLAN FOR
THE CHIEF EXECUTIVE OFFICER
The Company currently has a performance-based incentive bonus arrangement
for its Chief Executive Officer which was approved by the Board of Directors
prior to the Company's initial public offering of Common Stock. Upon becoming a
publicly-held corporation, the Company became subject to Section 162(m) of the
Internal Revenue Code. Section 162(m) limits the amount of individual
compensation paid to certain executives of a publicly-held corporation that may
be deducted by the employer for tax purposes in any one fiscal year to $1
million unless such compensation constitutes performance-based compensation paid
on account of the attainment of one or more pre-established, objective
performance goals pursuant to a plan or agreement approved by the employer's
stockholders and certain other requirements are satisfied. The Board of
Directors determined that it is in the best interests of the Company and its
stockholders to formalize the bonus arrangement and incorporate its terms into
an incentive bonus plan (the "CEO Bonus Plan") for the Chief Executive Officer
and to submit the CEO Bonus Plan to the stockholders for approval at the Meeting
to preserve the exception to the deductibility limitation for bonus payments
that may be made to the Chief Executive Officer in the future. Subject to
approval by the stockholders at the Meeting, the CEO Bonus Plan will be
applicable to fiscal years following, and including, fiscal year 1997, unless
and until terminated by the Board of Directors. The following description of the
CEO Bonus Plan is qualified in its entirety by reference to a copy of the CEO
Bonus Plan which is attached hereto as Annex A.
11
<PAGE> 15
Performance Goals and Determination of Awards. Pursuant to the CEO Bonus
Plan, the Chief Executive Officer may earn a cash bonus in an amount equal to
1.25% of the Company's operating income (loss) before interest, taxes and
depreciation and amortization expense ("EBITDA") as reflected in the audited
financial statements of the Company for such fiscal year. The Company believes
that EBITDA is accepted by the outdoor advertising industry as a generally
recognized measure of performance and is used by analysts and investors to
evaluate the financial performance of companies in the outdoor advertising
industry. Pursuant to the bonus formula contained in the CEO Bonus Plan, the
Chief Executive Officer earned a cash bonus of $1,025,804 for fiscal year 1996.
See "Executive Compensation -- Summary Compensation Table."
Payment of Awards. Before any award may be paid pursuant to the CEO Bonus
Plan, a committee or sub-committee of "outside directors" as defined under
Section 162(m) of the Internal Revenue Code must certify that the performance
criteria have been achieved and that the amount of the award has been properly
calculated. The Chief Executive Officer must be employed as of the last day of
the fiscal year as a further condition to the payment of an award, except for
limited circumstances where partial awards may be payable as described below.
Partial Annual Bonus Awards. In the event of the Chief Executive Officer's
death or termination of employment due to disability, the Chief Executive
Officer (or the legal representative of the Chief Executive Officer, as the case
may be) will be entitled to payment of an adjusted annual bonus award. The
amount of the adjusted annual bonus award will be determined by multiplying the
annual bonus award that would have been payable to the Chief Executive Officer
had he remained an employee through the last day of the fiscal year of the
Company by a fraction the numerator of which shall be the number of days during
the fiscal year during which he was an employee and the denominator of which
shall be 365.
Administration. The CEO Bonus Plan will be administered by a committee or
sub-committee of two or more "outside directors" as that term is defined in
Section 162(m) of the Internal Revenue Code.
Amendment and Termination. The Board of Directors at any time may amend or
terminate the CEO Bonus Plan without stockholder approval; provided, however,
that the Board of Directors may condition any amendment on the approval of
stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. The Board of Directors is
specifically authorized to amend the CEO Bonus Plan as necessary or appropriate
to comply with Section 162(m) of the Internal Revenue Code and the regulations
issued thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL OF THE CEO BONUS PLAN
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP served as the Company's independent
auditors for fiscal year 1996. Representatives of Deloitte & Touche LLP will be
present at the Meeting to respond to appropriate questions and will have an
opportunity to make a statement if they so desire.
The appointment of auditors is a matter for determination by the Board of
Directors for which no stockholder approval or ratification is necessary. The
Board of Directors has selected the firm of Deloitte & Touche LLP to audit the
books of the Company for fiscal year 1997.
STOCKHOLDERS PROPOSALS
Any stockholder of the Company wishing to submit a proposal for action at
the Company's 1998 Annual Meeting of Stockholders and desiring the proposal to
be considered for inclusion in the Company's proxy materials must provide a
written copy of the proposal to the management of the Company at its principal
executive office not later than December , 1997, and must otherwise comply
with rules of the Securities and Exchange Commission relating to stockholder
proposals.
12
<PAGE> 16
GENERAL
The Board of Directors does not know of any other business to come before
the Meeting. If, however, other matters do properly come before the Meeting, it
is the intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment.
A list of stockholders entitled to be present and vote at the Meeting will
be available for inspection by the stockholders at the offices of the Company,
located at 2502 N. Black Canyon Highway, Phoenix, Arizona 85009, during regular
business hours from May 19, 1997 to the date of the Meeting. The list also will
be available during the Meeting for inspection by the stockholders who are
present thereat.
The Annual Report of the Company for fiscal year 1996 (which is not part of
the proxy soliciting material) is being mailed with this proxy statement to all
stockholders of record as of the record date for the Meeting.
By Order of the Board of Directors,
BILL M. BEVERAGE
Secretary
April , 1997
Phoenix, Arizona
13
<PAGE> 17
ANNEX A
OUTDOOR SYSTEMS, INC.
INCENTIVE BONUS PLAN FOR THE CHIEF EXECUTIVE OFFICER
The purpose of the Outdoor Systems, Inc. Incentive Bonus Plan for the Chief
Executive Officer is to motivate and reward its chief executive officer for good
performance by making a portion of his cash compensation dependent on growth in
operating income of Outdoor Systems, Inc. (the "Company"). The Plan embodies the
bonus arrangement currently in effect for the benefit of the Company's Chief
Executive Officer. The Plan is designed to ensure that the annual bonus paid
hereunder to the eligible participant, as an executive officer of the Company,
is deductible under Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations and interpretations promulgated thereunder.
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, unless the context clearly
indicates otherwise, and the following capitalized words and phrases are used
herein with the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the committee or sub-committee administering the
Plan and consisting solely of at least two outside directors of the Company
who qualify as such under the requirements of Code Section 162(m). Members
of the committee or sub-committee shall be appointed by the Board of
Directors or a committee thereof.
(d) "Company" means Outdoor Systems, Inc., a Delaware corporation.
(e) "EBITDA" means operating income or loss before interest, taxes and
depreciation and amortization expense for a fiscal year of the Company and
as reflected in the Company's audited annual financial statements.
(f) "Effective Date" means January 1, 1997.
(g) "Participant" means the individual who, pursuant to Plan Section
2, is eligible to participate in the Plan.
(h) "Performance Period" means each fiscal year of the Company ending
after the Effective Date until the Plan is terminated.
(i) "Plan" means the Outdoor Systems, Inc. Chief Executive Officer's
Incentive Bonus Plan.
SECTION 2 ELIGIBILITY
The sole individual entitled to any bonus payment hereunder shall be the
chief executive officer of the Company, Arturo R. Moreno.
SECTION 3 ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine whether established performance criteria have been met; and
to make all other determinations necessary or advisable for the proper
administration of the Plan. The Committee's decisions shall be final and binding
on the Participant. The Plan shall be interpreted in view of the intention that
any grant of compensation pursuant to the Plan is intended to qualify as
performance-based compensation with the meaning of Code Section 162(m) and the
regulations and interpretations promulgated thereunder.
<PAGE> 18
A majority (but not fewer than two) of the members of the Committee shall
constitute a quorum and the vote of a majority of those present at a meeting at
which a quorum is present or the unanimous written consent of the Committee
shall constitute action by the Committee.
SECTION 4 ANNUAL INCENTIVE BONUS AWARDS
4.1 Calculation of Annual Incentive Bonus Award. The Participant shall be
eligible to receive an annual incentive bonus award for each fiscal year of the
Company ending after the Effective Date, subject to the amendment or termination
of the Plan pursuant to Plan Section 5.3. The payment of any annual incentive
bonus award shall be conditioned upon: (a) the achievement of positive EBITDA
during the fiscal year of the Company; and (b) except as provided in Section 4.3
below, the Participant's continuance in employment with the Company through the
last day of the fiscal year. The amount of any annual incentive bonus payable
shall be an amount equal to 1.25% of EBITDA for the immediately preceding fiscal
year.
4.2 Payment of Annual Incentive Bonus Award. Any annual incentive bonus
award that is earned shall be paid as soon as practicable by the Company in cash
following both the close of the fiscal year for which the bonus was earned and
the determinations required by the Committee under Section 4.4 below.
4.3 Partial Annual Incentive Bonus Awards. In the event of the
Participant's death or a termination of employment due to Disability, the
Participant (or the legal representative of the Participant, as the case may be)
shall be entitled to payment of an adjusted annual incentive bonus award. The
amount of the adjusted annual incentive bonus award shall be determined by
multiplying the annual incentive bonus award that would have been payable to the
Participant had he remained an employee through the last day of the fiscal year
of the Company by a fraction, the numerator of which shall be the number of days
during the fiscal year during which he was an employee and the denominator of
which shall be 365.
4.4 Certification of Achievement of Performance Criteria. No annual
incentive bonus award shall be paid unless and until the Committee certifies, by
resolution or other appropriate action in writing, that the performance criteria
were met for the fiscal year of the Company in question and that the amount of
the annual incentive bonus has been correctly calculated.
4.5 Participant's Rights Unsecured. The right of the Participant to
receive annual bonus payments under the Plan shall constitute an unsecured claim
against the general assets of the Company.
4.6 Withholding Taxes. The Company shall have the right to deduct from
each bonus payment any federal, state and local taxes required by such laws to
be withheld with respect to the payment.
SECTION 5 GENERAL PROVISIONS
5.1 Right to Remove Chief Executive Officer. Nothing in the Plan shall
confer upon the Participant the right to continue as an employee of the Company
or the right of the Company to terminate the Participant's employment at any
time.
5.2 Non-alienation of Benefits. Other than as specifically provided with
regard to the death of the Participant, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge; and any attempt to do so shall be void. No such
benefit shall, prior to receipt by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements or torts of the
Participant.
5.3 Termination and Amendment of the Plan. The Board of Directors at any
time may amend or terminate the Plan without stockholder approval, including any
amendment necessary or appropriate to comply with Code Section 162(m) and the
regulations thereunder; provided, however, that the Board of Directors may
condition any amendment on the approval of stockholders of the Company if such
approval is necessary or advisable with respect to tax, securities or other
applicable laws. No termination, modification or amendment of the Plan, without
the consent of the Participant, shall adversely affect the rights of the
Participant with respect to any annual incentive bonus award previously earned,
except as contemplated by Section 5.4 below.
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<PAGE> 19
5.4 Stockholder Approval. The Plan shall be submitted to the stockholders
of the Company for their approval prior to the date that payment of any
compensation becomes due to the Participant hereunder. If such approval is not
obtained, the Plan shall be deemed null and void and no annual incentive bonus
shall be payable to the Participant for any fiscal year ending on or after the
date of the adoption of the Plan by the Board of Directors.
5.5 Effective Date. If the Plan is approved by the stockholders as
provided in Section 5.4, the Plan shall be effective as of the Effective Date.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute this indenture as of the 1st day of January, 1997.
OUTDOOR SYSTEMS, INC.
By:
--------------------------------------
Title:
--------------------------------------
[CORPORATE SEAL]
ATTEST:
- ---------------------------------------------------------
Secretary
3
<PAGE> 20
PRELIMINARY COPY
OUTDOOR SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April [__], 1997, and does hereby
appoint William S. Levine and Arturo R. Moreno, and either of them, with full
power of substitution, as proxy or proxies of the undersigned to represent the
undersigned and to vote all shares of Outdoor Systems, Inc. Common Stock which
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of Outdoor Systems, Inc., to be held at 2502 N. Black
Canyon Highway, Phoenix, Arizona at 10:00 a.m., local time, on Thursday, May 29,
1997, and at any adjournment(s) thereof:
1. TO ELECT STEPHEN F. BUTTERFIELD TO SERVE AS CLASS I DIRECTOR FOR A TERM OF
THREE YEARS.
[ ] FOR the nominee listed above [ ] WITHHOLD AUTHORITY
to vote for the nominee listed above
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTOR NOMINEE LISTED ABOVE.
2. TO AMEND THE CERTIFICATE OF INCORPORATION OF THE COMPANY TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF THE COMPANY FROM 60,000,000
TO 200,000,000 SHARES.
[ ] FOR the proposed amendment [ ] AGAINST the proposed [ ]ABSTAIN
to the Company's Certificate amendment to the
of Incorporation Company's Certificate
of Incorporation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION.
3. TO APPROVE THE INCENTIVE BONUS PLAN FOR THE CHIEF EXECUTIVE OFFICER
[ ] FOR the approval of the Plan [ ] AGAINST approval of the Plan [ ]ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE CEO BONUS PLAN.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, IT
WILL BE VOTED FOR DIRECTOR NOMINEE LISTED ABOVE.
<PAGE> 21
PROXY NUMBER NUMBER OF SHARES Dated: ______________, 1997.
_____________________________________________
Signature
_____________________________________________
Signature, if held jointly
Please sign exactly as your name(s) appear
hereon. If shares are held jointly, each
stockholder named should sign. When signing
as attorney, executor, administrator,
trustee or guardian, give your full title as
such. If the signatory is a corporation,
sign the full corporate name by a duly
authorized officer.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
