SEAGRAM CO LTD
DEF 14A, 1998-09-18
BEVERAGES
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<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>
[ ]  Preliminary Proxy Statement                [ ]  Confidential, for Use of the Commission
                                                Only (as permitted by Rule 14a-6(e)(2))
[x]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
 
                           THE SEAGRAM COMPANY LTD.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)
 
- --------------------------------------------------------------------------------
      (Name of Person(s) Filing Proxy Statement, if other than Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
[X]  No fee required.
 
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
 
     (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
 
                            THE SEAGRAM COMPANY LTD.
 
                                 [SEAGRAM LOGO]
 
                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
 
     NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of The Seagram Company Ltd. (the "Corporation") will be held at Le
Centre Sheraton, 1201 Rene-Levesque Boulevard West, in the City of Montreal,
Province of Quebec, on Wednesday, the 4(th) day of November, 1998, at 11:30 a.m.
(E.S.T.) for the following purposes:
 
     1.   To receive the Report of Directors and Consolidated Financial
          Statements of the Corporation for the fiscal year ended June 30, 1998;
 
     2.   To elect directors;
 
     3.   To consider and, if deemed advisable, to approve the amendment to the
          Corporation's 1996 Stock Incentive Plan set forth in the accompanying
          Proxy Circular;
 
     4.   To appoint auditors; and
 
     5.   To transact such other business as may properly come before the
          Meeting.
 
      Montreal, Quebec, September 18, 1998.  BY ORDER OF THE BOARD OF DIRECTORS,
 
                                                   /S/ MICHAEL C. L. HALLOWS
 
                                                     MICHAEL C. L. HALLOWS
 
                                                           Secretary
 
                      ------------------------------------
 
                                   IMPORTANT
 
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE
                      ENVELOPE PROVIDED FOR THAT PURPOSE.
 
                      ------------------------------------
 
     On peut se procurer l'edition francaise de cet avis de l'assemblee, de la
procuration et de la circulaire de sollicitation de procurations en ecrivant au
Secretaire, La Compagnie Seagram Ltee, 1430, rue Peel, Montreal (Quebec) H3A
1S9; ADDRESSE ELECTRONIQUE: SHAREHOLDERS*[email protected].
<PAGE>   3
 
                            THE SEAGRAM COMPANY LTD.
                                1430 Peel Street
                        Montreal, Quebec, Canada H3A 1S9
                      ------------------------------------
 
                         ANNUAL MEETING OF SHAREHOLDERS
 
                                 PROXY CIRCULAR
 
     This Proxy Circular is furnished to shareholders in connection with the
solicitation by the Board of Directors of The Seagram Company Ltd. (the
"Corporation") of proxies to be voted at the Annual Meeting of Shareholders of
the Corporation (the "Meeting") to be held at the time and place and for the
purposes set forth in the accompanying notice and at any and all adjournments
thereof. There is enclosed herewith a notice of the Meeting and proxy for use at
the Meeting. There is also enclosed a copy of the Report of Directors and
Consolidated Financial Statements of the Corporation for the fiscal year ended
June 30, 1998 (the "Fiscal Year"), to be placed before the shareholders at the
Meeting pursuant to the requirements of the Canada Business Corporations Act,
but such Report is not deemed to be proxy soliciting material. Except as
otherwise stated, the information contained herein is given as of August 31,
1998. The approximate date this Proxy Circular will be first mailed to
shareholders is September 18, 1998. Only the holders of record of common shares
(the "Shares") of the Corporation at the close of business on September 16, 1998
will be entitled to receive notice of the Meeting.
 
     All dollar amounts stated herein are expressed in United States currency
except where otherwise indicated.
 
SOLICITATION OF PROXIES
 
     THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
CORPORATION and the expenses of solicitation of proxies will be borne by the
Corporation. The solicitation will be made primarily by mail, but officers and
regular employees of the Corporation may also solicit proxies by telephone,
telegraph, facsimile or in person. The Corporation also has retained D. F. King
& Co., Inc. to assist in soliciting proxies for a fee of $6,000 plus
reimbursement of reasonable out-of-pocket expenses. In connection with its
general engagement to provide shareholder services for the Corporation, CIBC
Mellon Trust Company also assists in soliciting proxies in Canada.
 
APPOINTMENT OF PROXIES
 
     EACH SHAREHOLDER MAY APPOINT A PERSON (WHO NEED NOT BE A SHAREHOLDER) OTHER
THAN THE PERSONS NAMED IN THE ENCLOSED PROXY TO REPRESENT HIM OR HER AT THE
MEETING BY INSERTING SUCH PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE
ENCLOSED PROXY OR BY COMPLETING ANOTHER PROPER PROXY. IN EITHER CASE, SUCH
COMPLETED PROXY SHOULD BE RETURNED IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT
PURPOSE FOR DELIVERY BEFORE THE MEETING OR SHOULD BE DELIVERED TO THE SECRETARY
OF THE CORPORATION AT 1430 PEEL STREET, MONTREAL, QUEBEC, NOT LATER THAN 5 P.M.
ON TUESDAY, NOVEMBER 3, 1998.
 
REVOCATION OF PROXIES
 
     A shareholder giving a proxy pursuant to this solicitation may revoke such
proxy by instrument in writing executed by the shareholder or by his attorney
duly authorized in writing or, if the shareholder is a corporation, by an
officer or attorney thereof duly authorized, and deposited either at the
executive offices or the registered office of the Corporation at any time up to
and including the last business day preceding the day of the Meeting, or any
adjournment thereof, or with the Chairman of the Meeting on the day of the
Meeting, or any adjournment thereof.
 
VOTING OF THE SHARES AT THE MEETING
 
     The persons named in the enclosed proxy will vote the Shares in respect of
which they are appointed in accordance with the directions of the shareholder
appointing them. IN THE ABSENCE OF SUCH DIRECTIONS, SUCH SHARES WILL BE VOTED
(i) FOR THE ELECTION OF DIRECTORS, (ii) FOR THE APPROVAL OF THE AMENDMENT TO THE
CORPORATION'S 1996 STOCK INCENTIVE PLAN AS SET FORTH IN THIS PROXY CIRCULAR AND
(iii) FOR THE APPOINTMENT OF AUDITORS, ALL AS STATED UNDER THE APPLICABLE
HEADINGS IN THIS PROXY CIRCULAR.
 
     The enclosed proxy confers discretionary authority upon the persons named
therein with respect to amendments to or variations of matters identified in the
notice of Meeting and with respect to such other matters as may properly come
before the Meeting. Management does not intend to present any other matters for
action at the Meeting and has no knowledge that any person intends to present
any matters that may be properly presented at the
 
                                        1
<PAGE>   4
 
Meeting. However, if any other matters properly come before the Meeting, the
persons named in the proxy shall vote the Shares represented by such proxies in
accordance with their judgment on such matters.
 
     Holders of Shares listed as shareholders at the close of business on
September 16, 1998 will be entitled to one vote for each Share held, except that
if such a holder subsequently transfers the ownership of a Share and the
transferee establishes that he or she owns such Share and requests not later
than ten days before the Meeting that he or she be included on the shareholders'
list, such transferee (and not his or her transferor) will be entitled to vote
such Share at the Meeting. As of August 31, 1998, the Corporation had
outstanding 347,450,648 Shares, and there were outstanding options which are
currently exercisable or become exercisable within 60 days to acquire an
additional 21,520,006 Shares.
 
                                SHARE OWNERSHIP
 
PRINCIPAL HOLDERS OF SHARES
 
     As of August 31, 1998, descendants of the late Samuel Bronfman and trusts
established for their benefit beneficially owned directly or indirectly an
aggregate of 119,923,154 Shares, constituting approximately 34.52 % of the
outstanding Shares, and held options which are currently exercisable or become
exercisable within 60 days to acquire an additional 3,775,723 Shares. This
amount includes the Shares owned by the following persons, who are the only
persons known by the Corporation to own beneficially, or exercise control or
direction over, more than 5% of the outstanding Shares as of August 31, 1998.
 
<TABLE>
<CAPTION>
                                                                                Percentage
                                                                  Number         of Shares
                     Beneficial Owner                            of Shares      Outstanding
                     ----------------                          -------------    -----------
<S>                                                            <C>              <C>
EDGAR MILES BRONFMAN TRUST.................................       60,704,604(1)   17.47%
C. BRONFMAN FAMILY TRUST,
CHARLES ROSNER BRONFMAN FAMILY TRUST,
CHARLES BRONFMAN TRUST,
CHARLES BRONFMAN TRUST II,
CHARLES R. BRONFMAN TRUST AND
CHARLES ROSNER BRONFMAN DISCRETIONARY TRUST................       51,522,760(2)   14.83%
</TABLE>
 
- ---------------
(1) Includes 59,218,088 Shares owned indirectly by the Edgar Miles Bronfman
    Trust, 375 Park Avenue, New York, New York, a trust established for the
    benefit of Edgar M. Bronfman and his descendants (the "EMBT"), through its
    99% interest in Bronfman Associates, a partnership of which Edgar M.
    Bronfman is the managing general partner, and 1,486,516 Shares owned
    directly by the PBBT/Edgar Miles Bronfman Family Trust, a trust established
    for the benefit of Edgar M. Bronfman and his descendants (the "PBBT/EMBFT").
    The trustees of the EMBT and the PBBT/EMBFT include Edgar M. Bronfman and
    Edgar Bronfman, Jr.
 
(2) Includes 17,320,000 Shares owned indirectly by the C. Bronfman Family Trust
    (the "C.BFT"), c/o Chancery Chambers, Chancery House, High Street,
    Bridgetown, Barbados, 24,800,000 Shares owned by the Charles Rosner Bronfman
    Family Trust (the "CRBFT"), c/o Goodman Phillips & Vineberg, 1501 McGill
    College Avenue, Montreal, Quebec, 1,700,000 Shares owned by the Charles
    Bronfman Trust (the "CBT"), 5,000,000 Shares owned by the Charles Bronfman
    Trust II (the "CBT II") and 1,700,000 Shares owned by the Charles R.
    Bronfman Trust (the "CR.BT"), each c/o Goodman Phillips & Vineberg, 430 Park
    Avenue, New York, New York, and 1,002,760 Shares owned by the Charles Rosner
    Bronfman Discretionary Trust (the "CRBDT"), c/o Bergman, Horowitz &
    Reynolds, 157 Church Street, New Haven, Connecticut. The C.BFT, the CRBFT,
    the CBT, the CBT II, the CR.BT and the CRBDT are trusts established for the
    benefit of Charles R. Bronfman and his descendants. The trustees of the
    CRBFT include Arnold M. Ludwick.
 
     In addition, as of August 31, 1998 Phyllis Lambert owned directly or
indirectly 1,000,000 Shares and trusts for the benefit of the family of the late
Minda de Gunzburg and members of her immediate family owned directly or
indirectly an aggregate of 2,517,212 Shares.
 
     Edgar M. Bronfman, Charles R. Bronfman, Phyllis Lambert and the late Minda
de Gunzburg are siblings. Edgar M. Bronfman and Charles R. Bronfman are
directors and officers of the Corporation. Edgar Bronfman, Jr. is a son of Edgar
M. Bronfman and a director and officer of the Corporation and Samuel Bronfman II
is a son of Edgar M. Bronfman and a director of the Corporation. Arnold M.
Ludwick is an officer of the Corporation.
 
                                        2
<PAGE>   5
 
     Pursuant to a voting trust agreement dated August 3, 1984, as amended (the
"Bronfman voting trust agreement"), Charles R. Bronfman serves as voting trustee
for 700,000 Shares owned by the CRBDT and Shares beneficially owned directly or
indirectly by the EMBT, the PBBT/EMBFT, the C.BFT, the CRBFT, the CBT, the CBT
II, the CR.BT and two charitable foundations, of which Charles R. Bronfman and
Arnold M. Ludwick are among the directors, that owned collectively 3,874,164
Shares as of August 31, 1998. The Bronfman voting trust agreement has a term of
20 years and contains no restrictions on the right of the voting trustee to vote
the deposited Shares. As of August 31, 1998, 115,798,768 Shares were subject to
the Bronfman voting trust agreement.
 
     Pursuant to a voting trust agreement dated as of May 15, 1986 (the "de
Gunzburg voting trust agreement"), Edgar M. Bronfman, Charles R. Bronfman,
Stanley N. Bergman, Guido Goldman and Leonard M. Nelson serve as voting trustees
for Shares beneficially owned directly or indirectly by trusts for the benefit
of the family of the late Minda de Gunzburg and by members of her immediate
family. Messrs. Bergman, Goldman and Nelson, whose address is c/o First Spring
Corporation, 499 Park Avenue, New York, New York, are the trustees of such
trusts. The de Gunzburg voting trust agreement has a term of 15 years and
contains no restrictions on the right of the voting trustees to vote the
deposited Shares. As of August 31, 1998, 2,516,332 Shares were subject to the de
Gunzburg voting trust agreement.
 
     Shares owned directly or indirectly by the EMBT, the PBBT/EMBFT, the C.BFT,
the CRBFT, the CBT, the CBT II, the CR.BT, the CRBDT, the trusts established for
the benefit of the family of the late Minda de Gunzburg and by members of her
immediate family, the charitable foundations referred to above and Phyllis
Lambert are subject to an agreement governing dispositions of Shares. The
agreement, entered into as of August 3, 1984, as amended, has a term of 20 years
and permits transfers by each of the four branches of the family within its
family group. However, transfers to third parties are subject to a right of
first refusal in favour of the other branches of the family.
 
SHARE OWNERSHIP OF MANAGEMENT
 
     Set forth below is the number of Shares which each of the directors of the
Corporation and nominees for director, each of the persons named in the "Summary
Compensation Table" and the directors and executive officers of the Corporation
as a group owned beneficially, or exercised control or direction over, as of
August 31, 1998. Each trustee of a trust or a charitable foundation may be
deemed to be the beneficial owner of the Shares held by the trust or foundation.
Because certain persons listed below serve as trustees of the same trusts or
charitable foundations, there are substantial duplications in the number of
shares and percentages shown in the table.
 
<TABLE>
<CAPTION>
                                                                              Percentage        Deferred
                                                             Number of         of Shares         Share
                     Beneficial Owner                         Shares          Outstanding       Units(1)
                     ----------------                       -----------    -----------------    --------
<S>                                                         <C>            <C>                  <C>
Edgar M. Bronfman.........................................   61,711,561(2)     17.72    %             --
The Hon. Charles R. Bronfman, P.C., C.C. .................   55,849,421(3)     16.05    %             --
Edgar Bronfman, Jr. ......................................   63,385,102(4)     18.12    %             --
Samuel Bronfman II........................................      357,541(5)       *                    --
Matthew W. Barrett, O.C. .................................        1,000          *                 3,115
Laurent Beaudoin, C.C.....................................           --(6)      --                 1,518
Frank J. Biondi, Jr. .....................................    1,000,500(7)       *                    --
Richard H. Brown..........................................        1,000          *                 1,670
The Honourable William G. Davis, P.C., C.C., Q.C. ........          982          *                    --
Andre Desmarais...........................................        5,000          *                   954
Barry Diller..............................................        1,000(8)       *                 1,112
Michele J. Hooper.........................................        2,482          *                    --
David L. Johnston, C.C. ..................................          400          *                 3,313
The Honourable E. Leo Kolber, Senator.....................        4,240          *                 3,189
Marie-Josee Kravis, O.C. .................................          400          *                 2,504
Robert W. Matschullat.....................................      645,500(9)       *                    --
C. Edward Medland.........................................        6,000          *                 3,326
Samuel Minzberg...........................................           --         --                 1,171
John S. Weinberg..........................................        6,500(10)       *                3,350
Directors and executive officers as a group...............  123,269,574(11)     34.80    %
</TABLE>
 
- ---------------
  * Less than 1%
 
                                        3
<PAGE>   6
 
 (1) See "Compensation of Directors" for a description of the deferred share
     units under The Seagram Company Ltd. Stock Plan for Non-Employee Directors.
 
 (2) Includes 59,218,088 Shares owned indirectly by the EMBT and 1,486,516
     Shares owned directly by the PBBT/EMBFT, trusts for which Mr. Bronfman
     serves as a trustee, 240 Shares owned directly by Mr. Bronfman, 763,921
     Shares issuable upon the exercise of currently exercisable options, 1,840
     Shares owned by Mr. Bronfman's spouse, 600 Shares owned directly by his
     children (other than Edgar Bronfman, Jr. and Samuel Bronfman II), 356
     Shares owned by an estate for which Mr. Bronfman is an executor, and
     240,000 Shares owned by a charitable foundation of which Mr. Bronfman is
     among the trustees. Mr. Bronfman disclaims beneficial ownership of the
     foregoing Shares, except to the extent of his beneficial interest in the
     EMBT and the PBBT/EMBFT and with respect to Shares owned directly by him.
     In addition, Mr. Bronfman serves as a voting trustee with respect to the
     2,516,332 Shares subject to the de Gunzburg voting trust agreement with
     respect to which Mr. Bronfman disclaims beneficial ownership.
 
 (3) Includes 17,320,000 Shares owned directly by the C.BFT, 24,800,000 Shares
     owned directly by the CRBFT, 1,700,000 Shares owned directly by the CBT,
     5,000,000 Shares owned directly by the CBT II, 1,700,000 Shares owned
     directly by the CR.BT and 700,000 Shares owned directly by the CRBDT,
     trusts for which Mr. Bronfman serves as the voting trustee, 454,901 Shares
     issuable upon exercise of currently exercisable options, 12,000 Shares
     owned by Mr. Bronfman's spouse, 48,000 Shares owned directly by his
     children, 356 Shares owned by an estate for which Mr. Bronfman is an
     executor, and 4,114,164 Shares owned by three charitable foundations of
     which Mr. Bronfman is among the directors or trustees. Mr. Bronfman
     disclaims beneficial ownership of the foregoing Shares. In addition, Mr.
     Bronfman serves as the voting trustee with respect to 60,704,604 Shares
     held by the EMBT and the PBBT/EMBFT subject to the Bronfman voting trust
     agreement and as a voting trustee with respect to 2,516,332 Shares subject
     to the de Gunzburg voting trust agreement with respect to which Mr.
     Bronfman disclaims beneficial ownership.
 
 (4) Includes 59,218,088 Shares owned indirectly by the EMBT and 1,486,516
     Shares owned directly by the PBBT/EMBFT, trusts for which Mr. Bronfman
     serves as a trustee, 240 Shares owned directly by Mr. Bronfman, 2,439,600
     Shares issuable upon exercise of options which are currently exercisable or
     become exercisable within 60 days, 240,000 Shares owned by a charitable
     foundation of which Mr. Bronfman is among the trustees and 658 Shares in
     which Mr. Bronfman has an indirect interest through an investment in the
     Retirement Savings and Investment Plan for Employees of Joseph E. Seagram &
     Sons, Inc. and Affiliates (based on the value of such investment as of
     August 31, 1998). Mr. Bronfman disclaims beneficial ownership of the
     foregoing Shares, except to the extent of his beneficial interest in the
     EMBT and the PBBT/EMBFT and with respect to Shares owned directly by him.
 
 (5) Includes 240 Shares owned directly by Mr. Bronfman, 117,301 Shares issuable
     upon exercise of currently exercisable options and 240,000 Shares owned by
     a charitable foundation of which Mr. Bronfman is among the trustees. Mr.
     Bronfman disclaims beneficial ownership of the foregoing Shares except the
     Shares owned directly by him.
 
 (6) Does not include 300 Shares held by Gestion Claire B. Beaudoin Inc., a
     company owned by Mr. Beaudoin's wife. Mr. Beaudoin disclaims beneficial
     ownership of the foregoing Shares.
 
 (7) Includes 500 Shares owned directly by Mr. Biondi and 1,000,000 Shares
     issuable upon exercise of currently exercisable options. See "Employment
     and Consulting Agreements". Mr. Biondi disclaims beneficial ownership of
     the foregoing Shares except with respect to Shares owned directly by him.
 
 (8) Includes 1,000 Shares held by Ranger Investments, L.P., a limited
     partnership in which Mr. Diller owns a 99% interest.
 
 (9) Includes 100,000 Shares owned directly by Mr. Matschullat and 545,500
     Shares issuable upon exercise of options which are currently exercisable or
     become exercisable within 60 days. See "Employment and Consulting
     Agreements". Mr. Matschullat disclaims beneficial ownership of the
     foregoing Shares except with respect to Shares owned directly by him.
 
(10) Includes 1,000 Shares owned directly and 5,500 Shares owned by a trust
     established for the benefit of Mr. Weinberg for which he serves as a
     trustee.
 
(11) Includes 6,734,368 Shares issuable upon exercise of options which are
     currently exercisable or become exercisable within 60 days.
 
                                        4
<PAGE>   7
 
                             ELECTION OF DIRECTORS
 
NOMINEES FOR DIRECTOR
 
     The persons named in the enclosed proxy, unless otherwise directed by the
shareholder appointing them, intend to vote at the Meeting for the election of
all the nominees whose names are set forth below. Management does not
contemplate that any of the nominees will be unable to serve as a director but,
if such inability occurs for any reason prior to the Meeting, the persons named
in the enclosed proxy reserve the right to vote, in their discretion, the Shares
represented by such proxy for the election of any other person or persons
nominated by the Board of Directors. Each director elected will hold office
until the next annual meeting of shareholders and until his or her successor is
duly elected, unless his or her office is earlier vacated in accordance with the
By-Laws of the Corporation.
 
     Certain information is given in the following table with respect to the
nominees for director of the Corporation. All such persons have been engaged in
the occupation or employment set forth opposite their respective names in their
current capacities for more than five years except where indicated. Statements
contained in such table with respect to each nominee are based upon information
obtained from the person concerned.
 
     Following consummation of the Corporation's offer to acquire all of the
issued shares of PolyGram N.V. ("PolyGram"), the Corporation has agreed to
appoint Cornelis Boonstra, the Chairman of the Board of Management and the
President of Koninklijke Philips Electronics N.V. ("Philips"), to the Board of
Directors. See "Transactions with Directors and Others."
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
                                                                                                Director
                Name                    Age     Principal occupation and other information       since
- ----------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>                                             <C>
 
EDGAR M. BRONFMAN....................   69    Chairman of the Board of the Corporation since
                                              June 1994. Previously, he was also Chief
                                              Executive Officer..............................     1955
 
THE HONOURABLE
  CHARLES R. BRONFMAN,
  P.C., C.C..........................   67    Co-Chairman of the Board and Chairman of the
                                              Executive Committee of the Corporation. Mr.
                                              Bronfman is also Chairman of Koor Industries
                                              Limited and a director of Power
                                              Corporation of Canada. ........................     1958
 
EDGAR BRONFMAN, JR...................   43    President and Chief Executive Officer of the
                                              Corporation since June 1994. Previously, he was
                                              President and Chief Operating Officer. Mr.
                                              Bronfman is also a director of USA Networks,
                                              Inc............................................     1988
 
SAMUEL BRONFMAN II...................   44    President of Seagram Chateau & Estate Wines
                                              Company (a division of Joseph E. Seagram &
                                              Sons, Inc., a subsidiary of the Corporation).
                                              He also has served as Chairman of The Seagram
                                              Beverage Company (a division of Joseph E.
                                              Seagram & Sons, Inc.) since July 1998..........     1991
 
MATTHEW W. BARRETT, O.C..............   53    Chairman and Chief Executive Officer of Bank of
                                              Montreal (a financial institution). Mr. Barrett
                                              is also a director of The Molson Companies
                                              Limited........................................     1995
 
LAURENT BEAUDOIN, C.C................   60    Chairman and Chief Executive Officer of
                                              Bombardier Inc. (a transportation, aerospace
                                              and motorized products company)................     1997
</TABLE>
 
                                        5
<PAGE>   8
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
                                                                                                Director
                Name                    Age     Principal occupation and other information       since
- ----------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>                                             <C>
FRANK J. BIONDI, JR..................   53    Chairman and Chief Executive Officer of
                                              Universal Studios, Inc. ("Universal") since
                                              April 1996. Previously, he was President, Chief
                                              Executive Officer and a director of Viacom Inc.
                                              Mr. Biondi is also a director of The Bank of
                                              New York, USA Networks, Inc. and Vail Resorts
                                              Inc. ..........................................     1996
 
RICHARD H. BROWN.....................   51    Chief Executive of Cable and Wireless plc (a
                                              provider of international telecommunications
                                              services) since July 1996. From May 1995 to
                                              July 1996 he served as President and Chief
                                              Executive Officer of H & R Block, Inc. and from
                                              January 1993 to April 1994 he was Vice Chairman
                                              of Ameritech Corporation. Mr. Brown is also
                                              Chairman of Hong Kong Telecommunications
                                              Limited and Cable & Wireless Communications plc
                                              and a director of Pharmacia and Upjohn,
                                              Inc. ..........................................     1997
 
THE HONOURABLE WILLIAM G. DAVIS,
  P.C., C.C., Q.C....................   69    Counsel to Tory Tory DesLauriers & Binnington
                                              (attorneys). Mr. Davis is also a director of
                                              Algoma Steel Inc., Canadian Imperial Bank of
                                              Commerce, Corel Corporation, Dylex Limited,
                                              First American Financial Corporation, First
                                              American Title Insurance Company, Gentra Inc.,
                                              International Comfort Products Corporation,
                                              Magna International Inc., Magellan Aerospace
                                              Corporation, NIKE Canada Ltd., Power
                                              Corporation of Canada and St. Lawrence Cement
                                              Inc............................................     1985
 
ANDRE DESMARAIS......................   41    President and Co-Chief Executive Officer of
                                              Power Corporation of Canada (a holding and
                                              management company) and Deputy Chairman of
                                              Power Financial Corporation since May 1996.
                                              From May 1994 to May 1996 he was Chairman of
                                              Power Pacific Corporation Limited. Previously
                                              he was President and Chief Operating Officer of
                                              Power Corporation of Canada. Mr. Desmarais is
                                              also a director of Audiofina S.A., Bombardier
                                              Inc., CLT-UFA, Citic Pacific Limited, Groupe
                                              Bruxelles-Lambert S.A., Great-West Lifeco Inc.,
                                              The Great-West Life Assurance Company,
                                              Investors Group Inc., London Insurance Group
                                              Inc. and Pargesa Holding S.A...................     1997
</TABLE>
 
                                        6
<PAGE>   9
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
                                                                                                Director
                Name                    Age     Principal occupation and other information       since
- ----------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>                                             <C>
BARRY DILLER.........................   56    Chairman and Chief Executive Officer of USA
                                              Networks, Inc. (a diversified media and
                                              electronic commerce company formerly known as
                                              HSN, Inc.) since February 1996. From August
                                              1995 he was Chairman and Chief Executive
                                              Officer of Silver King Communications, Inc. and
                                              from November 1995 he was Chairman of Home
                                              Shopping Network, Inc. until the merger of
                                              these companies into HSN, Inc. in December
                                              1996. From December 1992 to December 1994 he
                                              served as Chairman and Chief Executive Officer
                                              of QVC, Inc. Previously, he served as the
                                              Chairman and Chief Executive Officer of Fox,
                                              Inc. Mr. Diller is also a director of Golden
                                              Books Family Entertainment, Inc. ..............     1998
 
MICHELE J. HOOPER....................   47    President and Chief Executive Officer of
                                              Stadtlander Drug Co., Inc. (a health services
                                              company) since July 1, 1998. From November 1992
                                              to June 1998 she served as Corporate Vice
                                              President of Caremark International Inc. She
                                              also served as President of the International
                                              Business Group of Caremark International Inc.
                                              from November 1992 to June 1998. Ms. Hooper is
                                              also a director of Dayton Hudson Corporation
                                              and PPG Industries.............................     1996
 
DAVID L. JOHNSTON, C.C...............   57    Professor of Law at McGill University (an
                                              educational institution) since July 1994.
                                              Previously, he was also Principal and
                                              Vice-Chancellor. Mr. Johnston is also a
                                              director of CT Financial Services Inc., Emco
                                              Limited and The CGI Group Inc..................     1987
 
THE HONOURABLE
  E. LEO KOLBER, SENATOR.............   69    Member of The Senate of Canada. Previously, he
                                              was also Chairman of the Board of Claridge Inc.
                                              from June 1987 to September 1993. Senator
                                              Kolber is also a director of Loews Cineplex
                                              Entertainment Corporation. ....................     1971
 
MARIE-JOSEE KRAVIS, O.C..............   48    Senior Fellow of Hudson Institute Inc. (a
                                              non-profit economics research institute) since
                                              March 1994. Previously, she was Executive
                                              Director of The Hudson Institute of Canada Inc.
                                              Mrs. Kravis is also a director of Canadian
                                              Imperial Bank of Commerce, Hasbro, Inc.,
                                              Hollinger International Inc., Ford Motor
                                              Company and UniMedia Inc. .....................     1985
 
ROBERT W. MATSCHULLAT................   50    Vice Chairman and Chief Financial Officer of
                                              the Corporation since October 1995. Previously,
                                              he was Managing Director and Head of Worldwide
                                              Investment Banking for Morgan Stanley & Co.,
                                              Inc. and a director of Morgan Stanley Group,
                                              Inc. Mr. Matschullat is also a director of
                                              Transamerica Corporation and USA Networks,
                                              Inc. ..........................................     1995
</TABLE>
 
                                        7
<PAGE>   10
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
                                                                                                Director
                Name                    Age     Principal occupation and other information       since
- ----------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>                                             <C>
SAMUEL MINZBERG......................   49    President and Chief Executive Officer of
                                              Claridge Inc. (a management company) since
                                              January 1, 1998. Previously, he was a partner
                                              and Chairman of the Montreal office of Goodman
                                              Phillips & Vineberg (attorneys). Mr. Minzberg
                                              is also a director of Koor Industries Limited
                                              and USA Networks, Inc. and is of counsel to the
                                              Montreal office of Goodman Phillips &
                                              Vineberg.......................................     1998
 
JOHN S. WEINBERG.....................   41    Managing Director of Goldman, Sachs & Co.
                                              (investment bankers) since December 1996.
                                              Previously, he was a general partner of
                                              Goldman, Sachs & Co. ..........................     1995
</TABLE>
 
                              CORPORATE GOVERNANCE
 
GENERAL
 
     In May 1995, both the Toronto Stock Exchange (the "TSE") and the Montreal
Exchange adopted a requirement that each company incorporated in Canada and
listed on such exchanges disclose its corporate governance practices with
reference to the guidelines contained in the final report of the Committee on
Corporate Governance of the TSE (the "TSE Report"). In accordance with those
listing requirements, a description of the Corporation's governance practices
with reference to the guidelines set out in the TSE Report, including
differences from the guidelines, is set forth below.
 
BOARD OF DIRECTORS
 
     Stewardship.  The Board of Directors is responsible for the overall
stewardship of the Corporation and for oversight of management to assure
protection of shareholder interests. The Board relies upon management for the
development of the overall corporate and individual business unit strategies.
The Board evaluates the strategic direction of the Corporation, for which
management prepares annual business and longer range strategic plans.
 
     The Board, directly and through its Audit Committee, is responsible for
identifying the principal risks of the Corporation's businesses and ensuring the
implementation of appropriate strategies and systems to manage those risks. The
Board, directly and through its Audit Committee, assesses the integrity of the
Corporation's internal controls, including computer-based systems.
 
     It is the Board's responsibility to select the chief executive officer, to
provide for his or her successor and directly and through its Human Resources
Committee, to evaluate the performance of the chief executive officer. The Board
appoints the principal officers of the Corporation and is responsible, directly
and through its Human Resources Committee, for the evaluation of the performance
of the principal officers of the Corporation and for development, training and
succession planning for senior management.
 
     The Corporation maintains an active investor relations program. Oral and
written inquiries from shareholders, the investment community and the general
public are responded to by the Secretary of the Corporation or the Vice
President, Investor Relations of Joseph E. Seagram & Sons, Inc. ("JES"). The
Board is advised of inquiries when appropriate. The investor relations program
also includes periodic presentations to the investment community. The Board
believes that the existing program facilitates effective communication with the
Corporation's shareholders, the general public, and the investment community.
The Board, directly and through its Audit Committee, reviews the interim and
annual financial results and approves the management proxy circular.
 
     Size and Relatedness.  The Board is currently composed of 19 directors;
there are 18 nominees seeking election at the Meeting. The Board believes that
ten of its current directors are "unrelated" to the Corporation as defined in
the TSE Report, i.e., independent of management and free from any business or
other relationship, which could, or could reasonably be perceived to, materially
interfere with the director's ability to act with a view to the best interests
of the Corporation, other than interests and relationships arising from
shareholdings. Six directors are "related" to the Corporation because they are
members of management, namely Edgar M. Bronfman, Chairman of the Board, The
Honourable Charles R. Bronfman, Co-Chairman of the Board, Edgar Bronfman, Jr.,
President and
 
                                        8
<PAGE>   11
 
Chief Executive Officer, Samuel Bronfman II, President of Seagram Chateau &
Estate Wines Company and Chairman of The Seagram Beverage Company, Robert W.
Matschullat, Vice Chairman and Chief Financial Officer of the Corporation and
Frank J. Biondi, Jr., Chairman and Chief Executive Officer of Universal. In
addition, three directors may be regarded as "related" in that they hold senior
positions with companies which have substantial ongoing business relationships
with the Corporation, namely Matthew W. Barrett, Chairman and Chief Executive
Officer of the Bank of Montreal, Barry Diller, Chairman and Chief Executive
Officer of USA Networks, Inc., and John S. Weinberg, Managing Director of
Goldman, Sachs & Co. Although nine members of the current Board may be
considered to qualify as "related" directors within the meaning of the TSE
Report, a majority (13) of the Corporation's 19 directors are not current
officers or employees of the Corporation or any of its affiliates and are
therefore "outside" directors as defined in the TSE Report. C. Edward Medland
will not be standing for re-election at the Meeting. Accordingly, if all
nominees are elected, the number of directors who are "unrelated" will decrease
to nine and the number of "outside" directors will decrease to 12. The Board
believes that all members of the Board, regardless of the existence of
relationships to the Corporation, exercise independent judgment with a view to
the best interests of the Corporation, and believes that the Corporation
benefits from the knowledge, experience and mix of skills which its directors
bring to the Board. For information with respect to Cornelis Boonstra, who is to
become a director of the Corporation after the Corporation's acquisition of
PolyGram, see "Transactions with Directors and Others". The Corporation has no
shareholder who qualifies as a "significant shareholder" within the meaning of
the TSE Report, i.e., a shareholder with the ability to exercise a majority of
the votes for the election of the Board of Directors. However, for information
regarding the shareholdings of the descendants of Samuel Bronfman, the founder
of the Corporation, and trusts established for their benefit, see "Share
Ownership".
 
     The Chairman of the Board, Edgar M. Bronfman, while separate from the Chief
Executive Officer ("CEO"), is a "related" director. Mr. Bronfman served as CEO
for 19 years and has been a member of the Board for 43 years. The Board believes
that since the founding family retains substantial shareholdings in the
Corporation and members of that family have been, and continue to be, primarily
responsible for the management and development of the business, their depth of
experience and commitment, as well as long-range vision and strategic focus,
constitute an invaluable resource that provides continuity for the Corporation.
For these reasons, the Board believes that the composition of the Board is both
appropriate and beneficial to the Corporation and its shareholders and that Mr.
Bronfman is the most qualified director to act as Chairman.
 
     Functioning.  The Board approves major capital commitments, acquisitions
and expenditures which exceed established thresholds, significant divestitures,
dividends and certain changes to the Corporation's capital structure. The Board
does not have a formal Nominating Committee. In its stead, the Executive
Committee performs the functions of a nominating committee for the Corporation
and provides for timely and orderly nomination of new members capable of
contributing to the effectiveness of the Board. The Corporation has a formal
position description for directors. Consistent with such position description,
in considering candidates for election to the Board, experience running a major
business enterprise involved in the global distribution of products or services,
significant managerial leadership, good judgment, business acumen and board
experience with public companies are taken into account. The Corporation does
not have a formal process for assessing the effectiveness of the Board as a
whole, the committees of the Board and the contribution of individual directors,
nor does it have formal processes and practices to ensure the independence of
the Board from management.
 
     The Corporation educates its new directors through presentations and by
providing them with materials which contain basic information about the
Corporation and related matters, which materials are updated, as appropriate. In
addition, Board meetings are held at various facility sites to provide the
directors with additional insight into the Corporation's businesses.
 
     The Board has not developed a formal position description for the CEO.
Although the Board and Human Resources Committee do not establish formal
corporate objectives for the CEO, certain portions of the compensation of the
CEO are determined with reference to established criteria. See "Report on
Executive Compensation". In addition, there is regular discussion at Board and
Human Resources Committee meetings regarding achievement by senior management of
corporate and business unit strategic objectives.
 
     Although there is no formal procedure to enable individual directors to
engage an outside advisor at the expense of the Corporation, outside advisors
are retained from time to time to represent and advise directors, as
appropriate.
 
                                        9
<PAGE>   12
 
BOARD MEETINGS, COMMITTEES
 
     During the Fiscal Year the Board of Directors held fifteen meetings and
committees of the Board held a total of seventeen meetings. With the exception
of The Honourable Paul Desmarais and Lew R. Wasserman, who retired from the
Board in November 1997 and February 1998, respectively, all directors attended
75% or more of the meetings of the Board of Directors and of the committees of
the Board on which they served during the time in which they were directors or
committee members.
 
     The Board has established four committees to assist the Board in
effectively carrying out its responsibilities: Executive; Audit; Human
Resources; and Corporate Governance Committees. With the exception of the
Executive Committee, each of the committees of the Board is comprised entirely
of "outside" directors, a majority of which are "unrelated". All of the
committees of the Board report to the Board on a regular basis. Additional
information on each of the committees is set out below.
 
     Executive Committee.  The members of the Executive Committee are Edgar M.
Bronfman, The Honourable Charles R. Bronfman, Edgar Bronfman, Jr., Matthew W.
Barrett, Richard H. Brown, Barry Diller, Senator E. Leo Kolber and Samuel
Minzberg, five of whom are "outside" directors and three of whom are
"unrelated". The Executive Committee met three times during the Fiscal Year. The
Committee's mandate is to exercise all of the powers of the Board in the
management and direction of the operations of the Corporation, except such acts
as must by law be performed by the full Board and any matter which the full
Board retains for itself.
 
     Corporate Governance Committee.  The members of the Corporate Governance
Committee are The Honourable William G. Davis, Chairman, David L. Johnston,
Marie-Josee Kravis and John S. Weinberg, all of whom are "outside" directors and
three of whom are "unrelated". The Corporate Governance Committee met two times
during the Fiscal Year. The Committee's mandate is to develop the Corporation's
approach to governance issues, the Corporation's response to the TSE guidelines
and to review the form and adequacy of the compensation of directors. In
furtherance of this mandate, the Committee reviews and assesses the
Corporation's procedures with respect to a wide range of governance issues
identified in the TSE guidelines.
 
     Audit Committee.  The members of the Audit Committee are C. Edward Medland,
Chairman, Matthew W. Barrett, Laurent Beaudoin, The Honourable William G. Davis
and Michele J. Hooper, all of whom are "outside" directors and four of whom are
"unrelated". The Committee met six times during the Fiscal Year. The primary
responsibilities of the Committee are to review the nature and scope of the
audit and non-audit services provided by the Corporation's independent auditors,
to recommend the retention or replacement of the independent auditors, to review
the recommendations of the independent auditors and the responses of the
Corporation's management, to review internal accounting and financial procedures
of the Corporation, to review the Corporation's annual and quarterly financial
statements, to review matters in regard to the Corporation's defined benefit
plans, to review the Corporation's risk management and insurance plans and to
monitor the Corporation's program for compliance with policies on business
ethics. The Audit Committee assesses the integrity of the Corporation's internal
controls, including computer-based systems.
 
     Human Resources Committee.  The members of the Human Resources Committee
are Marie-Josee Kravis, Chairman, Richard H. Brown, Andre Desmarais, David L.
Johnston, Senator E. Leo Kolber, and John S. Weinberg, all of whom are "outside"
directors and five of whom are "unrelated". The Committee met six times during
the Fiscal Year. Its principal functions are to supervise development of
management resources, to review the performance and compensation of the Chief
Executive Officer, to review the annual compensation of all officers of the
Corporation and selected officers and employees of subsidiary companies, and to
review all executive compensation plans and major changes to existing employee
benefit plans. The Committee is also responsible for reviewing the succession
plan for senior management.
 
COMPENSATION OF DIRECTORS
 
     The Corporation's directors, other than those who are employees of the
Corporation, are paid $35,000 a year plus a fee of $1,500 for each Board and
committee meeting attended, and are reimbursed for travel expenses incurred in
connection therewith. Committee chairmen receive an additional $4,500 per year.
Directors who are employees of the Corporation or its subsidiaries do not
receive compensation by reason of their membership on, or attendance at meetings
of, the Board or committees thereof.
 
                                       10
<PAGE>   13
 
     Non-employee directors receive at least 50% of their annual fees in Shares
or Share equivalents pursuant to The Seagram Company Ltd. Stock Plan for
Non-Employee Directors. Under the plan, each non-employee director may elect to
receive either 50% or 100% of his or her annual retainer in Shares or deferred
share units. If a director elects to receive Shares, the applicable retainer
amount (net of withholding taxes) will be used to purchase Shares on the open
market. The Shares will be delivered promptly to the director. If a director
elects to receive deferred share units, units representing the value of Shares
will be credited to the director's account based on the market value of a Share
on the annual crediting date. Deferred share units will be paid to the director,
along with the value of dividends as if reinvested in additional Shares, after
termination of Board service. Payment will be made in Shares or cash, net of tax
withholding, based on the then market value of the Shares. Fees for attending
Board and committee meetings and/or for serving as a Board committee chairman
may also be received in deferred share units at the election of non-employee
directors.
 
                                       11
<PAGE>   14
 
                             EXECUTIVE COMPENSATION
 
                           SUMMARY COMPENSATION TABLE
 
     The following table summarizes the compensation of the Corporation's chief
executive officer and each of the Corporation's four other most highly
compensated executive officers with respect to the Fiscal Year, the fiscal year
ended June 30, 1997 and the five month transition period ended June 30, 1996.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                     Annual Compensation                    Long-Term Compensation                 
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                  Awards            
                                                    --------------------------------------------------------------------------------
                                                                                                              Payouts  
                                                                Other                          Securities                       All 
                                                                Annual       Restricted        Underlying       LTIP          Other
  Name and                     Year(1)     Salary      Bonus Compensation   Stock Awards      Options/SARs    Payouts   Compensation
  Principal Position                        ($)         ($)      ($)           (#)                (#)          ($)          ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>               <C>        <C>        <C>               <C>         <C>               <C>      <C>
 Edgar M. Bronfman       June 30, 1998   750,000    750,000    370,083(2)         0              80,000         0       111,206(3)
   Chairman of the       June 30, 1997   750,000    787,500    372,184            0              80,000         0        93,380(3)
   Board of the          June 30, 1996   312,500    293,750     68,893            0              80,000         0           250(3)
   Corporation and       
   of JES                
- ------------------------------------------------------------------------------------------------------------------------------------
 Charles R. Bronfman     June 30, 1998   600,000    600,000     66,684(4)         0              69,200         0             0
   Co-Chairman of the    June 30, 1997   600,000    630,000          0            0              69,200         0             0
   Board of the          June 30, 1996   250,000    235,000          0            0              69,200         0             0
   Corporation and JES
   and Chairman of the
   Executive Committee
   of the Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
 Edgar Bronfman, Jr.     June 30, 1998 1,000,000  3,000,000     30,289            0                   0         0        18,929(3)
   President and Chief   June 30, 1997 1,000,000  3,150,000     63,440            0                   0         0        17,864(3)
   Executive Officer of  June 30, 1996   416,675  1,175,000          0            0           1,000,000         0             0
   the Corporation and
   of JES                
- ------------------------------------------------------------------------------------------------------------------------------------
 Robert W. Matschullat   June 30, 1998   920,015  2,250,000      9,934            0           1,500,000         0         1,125(3)
   Vice Chairman and     June 30, 1997   795,840  1,000,000      6,674            0             150,000         0         1,125(3)
   Chief Financial       June 30, 1996   312,500    312,500          0            0                   0         0           188(3)
   Officer of the  
   Corporation and 
   of JES
- ------------------------------------------------------------------------------------------------------------------------------------
 Frank J. Biondi, Jr.    June 30, 1998 1,000,000  4,988,385    282,756(6)         0             200,000         0       337,572(7)
   Chairman and          June 30, 1997 1,000,000  5,850,000    477,832            0             200,000         0       314,426
   Chief Executive       June 30, 1996   189,744    853,846          0            0           1,500,000         0        56,712
   Officer of 
   Universal(5)          
- ------------------------------------------------------------------------------------------------------------------------------------
 
</TABLE>
 
(1) The Corporation changed its fiscal year end to June 30, effective June 30,
    1996. The table reflects information for the Fiscal Year, the fiscal year
    ended June 30, 1997 and the five month transition period ended June 30,
    1996.
 
(2) Other Annual Compensation for the Fiscal Year includes $81,003 for financial
    counseling services and $63,000 which represents the current dollar value of
    the insurance premiums paid to provide surviving spouse retirement benefits.
 
(3) Reflects the aggregate value of the contributions by the Corporation's
    subsidiaries under the Retirement Savings and Investment Plan for Employees
    of Joseph E. Seagram & Sons, Inc. and Affiliates and the current dollar
    value benefit of the premiums paid under the JES Insurance and Salary
    Continuation Programs.
 
(4) Other Annual Compensation for the Fiscal Year includes $43,470 which
    represents the imputed income on the Corporation's group life insurance
    premiums.
 
(5) Mr. Biondi became Chairman and Chief Executive Officer of Universal on April
    23, 1996.
 
(6) Other Annual Compensation for the Fiscal Year includes reimbursements of
    $60,908 pursuant to Universal's relocation program.
 
(7) All Other Compensation for the Fiscal Year includes $322,100 of deferred
    compensation paid pursuant to Mr. Biondi's employment agreement with
    Universal and $15,472 contributed by Universal to the Universal Studios,
    Inc. Profit Sharing Trust.
 
                                       12
<PAGE>   15
 
                        OPTION/SAR GRANTS IN FISCAL YEAR
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Potential Realizable Value
                          Number of                                                  at Assumed Annual Rates
                          Securities     % of Total                                  of Stock Price Appreciation
                          Underlying    Options/SARs    Exercise                     for Option Term
                         Options/SARs    Granted to     or Base                      -----------------------------------------------
                           Granted      Employees in     Price         Expiration       0%            5%                10%
         Name                (#)        Fiscal Year       ($)             Date          ($)          ($)                ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>            <C>          <C>               <C>       <C>              <C>              <C>
 Edgar M. Bronfman         80,000 (1)        1%         37.3438     February 8, 2008     0          1,878,811         4,761,305
- ------------------------------------------------------------------------------------------------------------------------------------
 Charles R. Bronfman       69,200 (1)        1%         37.3438     February 8, 2008     0          1,625,172         4,118,529
- ------------------------------------------------------------------------------------------------------------------------------------
 Edgar Bronfman, Jr.                0       N/A             N/A            N/A          N/A               N/A               N/A
- ------------------------------------------------------------------------------------------------------------------------------------
 Robert W. Matschullat  1,000,000 (2)       18%         37.3438     February 8, 2008     0         23,485,142        59,516,308
                          500,000 (2)                   52.2813                          0          4,273,821        22,289,404
- ------------------------------------------------------------------------------------------------------------------------------------
 Frank J. Biondi, Jr.     200,000 (3)        2%           39.75       June 30, 2007      0          4,999,676        12,670,233
- ------------------------------------------------------------------------------------------------------------------------------------
 All Shareholders (4)                                                                    0      8,936,983,109    22,648,201,530
- ------------------------------------------------------------------------------------------------------------------------------------
 Gain to Named Executive Officers as a Percentage of Gain to all Shareholders            0%                  0%                0%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
 
(1) Options to purchase Shares which were granted on February 9, 1998 and become
    exercisable in equal installments over a three-year period beginning on the
    first anniversary of the date of grant.
 
(2) Options to purchase Shares which were granted on February 9, 1998 and become
    exercisable in five equal annual installments beginning on December 31,
    1998.
 
(3) Options to purchase Shares which were granted on July 1, 1997 and became
    exercisable on July 1, 1998.
 
(4) The potential realizable gain to all shareholders is calculated based on
    347,132,224 Shares outstanding and a fair market value of $40.9375 per Share
    on June 30, 1998.
 
               AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR AND
                       FISCAL YEAR-END OPTION/SAR VALUES
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
                                                                NUMBER OF SECURITIES              VALUE OF UNEXERCISED
                                                               UNDERLYING UNEXERCISED                 IN-THE-MONEY
                            SHARES                                 OPTIONS/SARS AT                   OPTIONS/SARS AT
                         ACQUIRED ON          VALUE                FISCAL YEAR-END                   FISCAL YEAR-END
                           EXERCISE          REALIZED         EXERCISABLE/UNEXERCISABLE         EXERCISABLE/UNEXERCISABLE
NAME                         (#)               ($)                       (#)                               ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S>                    <C>               <C>               <C>                               <C>
 Edgar M. Bronfman         121,200          2,334,433              763,921/159,999                 11,560,497/565,824
- ----------------------------------------------------------------------------------------------------------------------------
 Charles R. Bronfman          0                 0                  454,901/138,399                  5,461,534/489,437
- ----------------------------------------------------------------------------------------------------------------------------
 Edgar Bronfman, Jr.          0                 0                 2,785,600/900,000               33,281,600/6,018,750
- ----------------------------------------------------------------------------------------------------------------------------
 Robert W.
  Matschullat                 0                 0                 545,500/1,550,000                3,246,500/3,665,575
- ----------------------------------------------------------------------------------------------------------------------------
 Frank J. Biondi, Jr.         0                 0                 800,000/1,100,000                4,400,000/4,625,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
 
                                       13
<PAGE>   16
 
PENSION, BENEFIT EQUALIZATION, SALARY CONTINUATION AND SEVERANCE PLANS
 
     JES maintains a pension plan for employees (including Edgar M. Bronfman,
Edgar Bronfman, Jr., Robert W. Matschullat and other officers) of JES and
certain of its U.S. subsidiaries. Benefits under this plan are based upon salary
as reported in the "Summary Compensation Table", and are subject to statutory
limitations as to maximum amounts payable. A separate benefit equalization plan
provides for additional payments on an unfunded basis with respect to awards
payable under the Management Incentive Plan of JES ("MIP") and the Corporation's
Senior Executive Short-Term Incentive Plan ("STIP") and amounts in excess of
statutory limitations for certain senior executives of JES, including Edgar M.
Bronfman, Edgar Bronfman, Jr. and Robert W. Matschullat. The benefit
equalization plan also grants to participating senior executive employees credit
for one year of additional service (up to a maximum of 15 years) for each year
of actual service, up to a combined aggregate of 35 years of service (up to 40
years under certain circumstances), provided that such employees have attained
the age of 65 (or earlier under certain circumstances) and have accumulated at
least ten years of service for purposes of the pension plan. The estimated
annual pension benefits (calculated on a straight-life basis) payable on
retirement to eligible employees at or after age 65 under the plans as currently
in effect at an assumed average covered compensation during any five years of
the last ten years of employment in which the covered compensation was the
highest are shown below.
 
                               PENSION PLAN TABLE
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                 Annual pension for representative
                                    years of continuous service
  Five-year average    -----------------------------------------------------
  final compensation      5        10         20          30          40
  <S>                  <C>       <C>       <C>         <C>         <C>
  --------------
      $1,200,000        90,000   180,000     360,000     539,000     719,000
       1,600,000       120,000   240,000     480,000     719,000     959,000
       2,000,000       150,000   300,000     600,000     899,000   1,199,000
       2,400,000       180,000   360,000     720,000   1,079,000   1,439,000
       2,800,000       210,000   420,000     840,000   1,259,000   1,679,000
       3,200,000       240,000   480,000     960,000   1,439,000   1,919,000
       3,600,000       270,000   540,000   1,080,000   1,619,000   2,159,000
       4,000,000       300,000   600,000   1,200,000   1,799,000   2,399,000
</TABLE>
 
- --------------------------------------------------------------------------------
 
     At June 30, 1998, Edgar M. Bronfman was credited with 40 years (the maximum
years permitted under the plans), Charles R. Bronfman was credited with 18
months, Edgar Bronfman, Jr., was credited with 16 years and Robert W.
Matschullat was credited with two years for purposes of the plans. JES has
agreed with Robert W. Matschullat that upon his retirement he will receive a
minimum annual pension benefit of $50,000 multiplied by the number of years (or
portions thereof) of his actual service to the Corporation. JES has also agreed
that if Mr. Matschullat retires after continuous employment through December 31,
2002, he will be credited with fifteen years of service for purposes of the
plans and other benefits.
 
     JES maintains a program which provides retirement salary continuation
benefits for Edgar M. Bronfman and Edgar Bronfman, Jr. and certain other
executives of JES. If the participant retires after the age of 55 with ten or
more years of service, he will receive an amount payable annually for ten years
of up to 35% of the sum of his base salary in the last year of employment plus
the highest management incentive award previously received. Effective as of
1988, there will be no new participants in the salary continuation program and,
subject to the terms of such program, existing participants will receive
payments based on their compensation levels at January 31, 1988.
 
     Joseph E. Seagram & Sons, Limited ("JES Limited"), a Canadian subsidiary of
the Corporation, maintains registered pension, unfunded pension and
post-retirement consulting plans for certain of the Corporation's executive
employees, including Charles R. Bronfman. These plans are substantially
equivalent to the pension, benefit equalization and retirement salary
continuation plans of JES. The estimated aggregate annual pension benefits
payable at normal retirement age, at or after age 60, under the registered and
unfunded plans as currently in effect at an assumed average salary and cash
bonus during any five years of the last ten years of employment in which the
compensation was the highest are shown below.
 
                                       14
<PAGE>   17
 
                               PENSION PLAN TABLE
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                      Annual pension for representative
                                                         years of continuous service
    Five-year average      ---------------------------------------------------------------------------------------
    final compensation                10                20               30                40                45
  <S>                      <C>               <C>               <C>               <C>               <C>
  ----------------------------------------------------------------------------------------------------------------
  (Canadian Dollars)
        $ 200,000          $        30,000   $        60,000   $        90,000   $       120,000   $       135,000
          400,000                   60,000           120,000           180,000           240,000           270,000
          600,000                   90,000           180,000           270,000           360,000           405,000
          800,000                  120,000           240,000           360,000           480,000           540,000
        1,000,000                  150,000           300,000           450,000           600,000           675,000
        1,200,000                  180,000           360,000           540,000           720,000           810,000
        1,400,000                  210,000           420,000           630,000           840,000           945,000
</TABLE>
 
- --------------------------------------------------------------------------------
 
     At June 30, 1998, Charles R. Bronfman was credited with 35 years of service
for purposes of the registered pension plan (the maximum years permitted by such
plan) and 46 years of service for purposes of the unfunded pension and
post-retirement consulting plans.
 
     JES maintains a severance pay plan (the "Severance Pay Plan") for certain
non-union employees of JES and certain of its U.S. subsidiaries, including Edgar
M. Bronfman, Edgar Bronfman, Jr. and Robert W. Matschullat. The named executive
officers are entitled to receive benefits under the Severance Pay Plan only if
their employment is terminated due to a permanent and complete closing of a
location, a job elimination, or a failure to consistently perform at a level
that meets minimum acceptable requirements. The Severance Pay Plan provides
benefits to eligible employees equal to a certain portion of their annual rate
of base salary for each year of service, subject to a maximum amount. The
maximum period of time over which benefits may be provided under the Severance
Pay Plan is 24 months.
 
EMPLOYMENT AND CONSULTING AGREEMENTS
 
     In connection with his continued employment as Vice Chairman and Chief
Financial Officer and a director of the Corporation and JES, Robert W.
Matschullat and JES entered into an amended and restated employment agreement
dated February 4, 1998 which provides that Mr. Matschullat is paid an annual
salary of $1,000,000 and participates in all benefit plans and arrangements
generally applicable to JES senior executives. Pursuant to the JES MIP or the
Corporation's STIP or any successor plans, Mr. Matschullat has the opportunity
to earn an annual cash incentive bonus for the Fiscal Year targeted at
$2,250,000, which target will be adjusted annually until June 30, 2002, by an
amount equal to the inflation rate multiplied by the sum of the preceding year's
target bonus plus $1,000,000. In lieu of other option grants during the period
from February 9, 1998 to June 30, 2002, on February 9, 1998 Mr. Matschullat was
awarded a special one-time grant of options to purchase 1,000,000 Shares at
their fair market value on the date of grant and options to purchase 500,000
Shares at 140% of such fair market value. Such options become exercisable in
five equal annual installments commencing on December 31, 1998 and expire ten
years from the date of grant unless terminated earlier upon the occurrence of
certain events.
 
     If Mr. Matschullat's employment with the Corporation and JES is terminated
by him with good reason, or by the Corporation and JES without cause, all
options then held by Mr. Matschullat will become exercisable in full (and, if
such termination constitutes a "retirement" as defined in the employment
agreement, he may hold such options until their original expiration dates) and
Mr. Matschullat will be entitled to receive: (i) all accrued and unpaid salary
and bonus, (ii) an amount equal to two times his annual salary and target bonus
and (iii) continuation of medical, dental and insurance coverage for two years
following the date of termination or, if earlier, the date on which Mr.
Matschullat becomes eligible for coverage with a subsequent employer. If Mr.
Matschullat's employment terminates by reason of his death or permanent
disability during the term of his employment agreement, in addition to accrued
salary and bonus, Mr. Matschullat will receive an amount equal to one-year's
salary plus a pro rated portion of his targeted annual bonus.
 
     In connection with his appointment as Chairman and Chief Executive Officer
of Universal on April 23, 1996, Frank J. Biondi, Jr., Universal and the
Corporation entered into an employment agreement dated as of such date with a
term ending on June 30, 2001 which provides that Mr. Biondi is paid an annual
salary of $1,000,000 and participates in all benefit plans and arrangements and
certain medical, life insurance and auto plans available to Universal
executives. Pursuant to the STIP, Mr. Biondi has the opportunity to earn an
annual cash incentive bonus for each fiscal year commencing on or after July 1,
1996 targeted at $4,500,000, adjusted for inflation in future
 
                                       15
<PAGE>   18
 
years, up to a maximum of twice the initial target, if and to the extent
applicable Universal performance targets are met. Mr. Biondi will receive
deferred annual compensation for each year in an amount equal to his previous
year's salary and deferred compensation, adjusted for inflation, less
$1,000,000, with such deferred compensation to be paid in January of the first
calendar year following the fiscal year in which Mr. Biondi ceases to be an
executive officer of Universal. Mr. Biondi will receive annual grants of
ten-year options (which become exercisable after one year) to purchase 200,000
Shares at the fair market value of such Shares on the date of grant. On April
23, 1996, Mr. Biondi was awarded a special one-time grant of options to purchase
1,000,000 Shares at their fair market value on the date of grant and options to
purchase 500,000 Shares at 140% of such fair market value. Such options become
exercisable in five equal annual installments commencing on April 23, 1997 and
expire ten years after the date of grant unless terminated earlier upon the
occurrence of certain events.
 
     If Mr. Biondi's employment with Universal is terminated by him with good
reason, including the diminution of the Corporation's ownership of Universal
below specified levels or the sale of substantially all of Universal's income
producing assets or property, or by Universal without cause, Mr. Biondi's
options will become exercisable in full and Mr. Biondi will be entitled to
receive (i) salary, deferred compensation and target bonus payments for the
longer of two years from such termination date or the expiration of the term of
his employment agreement, (ii) a cash payment of between $5,000,000 and
$15,000,000 depending upon when such termination occurs, and (iii) continuation
of medical, dental and insurance coverage until the earlier of the conclusion of
the continuation period or his eligibility for coverage with another employer,
with life insurance coverage maintained until June 30, 2001. If Mr. Biondi's
employment terminates by reason of his death during the term of his employment
agreement, Mr. Biondi's beneficiary is entitled to receive salary, deferred
compensation and target bonus payments for the shorter of one year from such
date or the remainder of the term of his employment agreement. If Mr. Biondi's
employment is terminated by reason of his permanent disability, he is generally
entitled to receive (i) salary, deferred compensation and target bonus payments
continuing for the shorter of two years from such date or the remainder of the
term of his employment agreement, and (ii) 60% of salary until the earlier of
his attainment of age 65 or the end of his permanent disability, in either case,
as reduced by the amount of any other benefits otherwise payable to Mr. Biondi
in connection therewith. With respect to any of the payments described herein,
if such payments would result in the imposition of an excise tax upon Mr. Biondi
under Section 4999 of the United States Internal Revenue Code (the "Code"), Mr.
Biondi shall also receive a cash payment equal to the sum of such excise taxes
due by reason of such payments, plus any amount necessary to place Mr. Biondi in
the same after-tax position as if no such excise taxes had been imposed. In
addition, Universal will provide him with a $10,000,000 life insurance benefit
during the term of the agreement. The agreement also restricts Mr. Biondi's
ability to interfere with the businesses of Universal, its subsidiaries and
affiliates for two years following the termination of his employment and, in the
event his employment is terminated by Universal for cause, by him without good
reason or due to his permanent disability, his ability to compete with such
entities for the lesser of one year following such termination or the remainder
of the term of his employment agreement.
 
     During the Fiscal Year, the Corporation paid Lew R. Wasserman, who was a
director of the Corporation until February 1998 as well as the former Chairman
and Chief Executive Officer of Universal, consulting fees in the amount of
$1,000,000 pursuant to the terms of his employment agreement with Universal
dated as of December 6, 1988, as amended. Pursuant to such agreement, Mr.
Wasserman became a consultant and advisor to Universal on an exclusive basis
effective January 4, 1996 at an annual fee of $1,000,000 and will serve in that
capacity until his death or his election to terminate such relationship. Under
the terms of the agreement, Mr. Wasserman participated, and while he serves as a
consultant will continue to participate, in benefit plans generally available to
Universal employees and certain medical, life insurance and auto plans available
to Universal executives.
 
REPORT ON EXECUTIVE COMPENSATION
 
     The Human Resources Committee of the Board of Directors (the "Committee"),
which consists of directors who are not employed by the Corporation, has
furnished the following report on executive compensation:
 
     Compensation for executive officers consists primarily of three components:
salary, annual incentive compensation and stock-based compensation. The general
guidelines used by the Corporation to determine the levels of these components
are described below. It should be noted, however, that the compensation of
certain executive officers is governed by the terms of employment agreements,
certain of which are described above under "Employment and Consulting
Agreements".
 
                                       16
<PAGE>   19
 
     The Corporation annually reviews compensation data from surveys conducted
by independent compensation consultants relating to approximately 30 companies
consisting primarily of Fortune 500 and similar international companies in the
food, beverage and consumer products industries and, in the case of the CEO, a
group of 12 Fortune 500 and similar international consumer product and
entertainment companies (the "Comparison Group"). The peer group included in the
performance graph on page 19 consists of companies of varying sizes engaged in
the beverage alcohol, food and entertainment businesses, some of which are
included in the Comparison Group. The Committee believes the Comparison Group
more accurately reflects the Corporation's competitors for executive talent.
Based on its review of the Compensation data, the Committee determines the
various components of executive compensation for each executive officer. A
subcommittee consisting of Marie-Josee Kravis, Richard H. Brown, Andre Desmarais
and David L. Johnston (the "Subcommittee") approves awards and administers the
Senior Executive Short-Term Incentive Plan ("STIP") and 1996 Stock Incentive
Plan described below.
 
     Salary. Salaries for executive officers are generally maintained at
competitive levels within relevant labor markets and are reviewed annually to
maintain a competitive position. For the Fiscal Year, the Corporation targeted
base salaries in the third quartile relative to the Comparison Group for similar
positions. Salary was determined for each executive based on the executive's
responsibilities, skills and sustained performance.
 
     Annual Incentive Compensation.  Annual incentive awards are paid to
participating executive officers under either the STIP or the Management
Incentive Plan ("MIP") of JES. For the Fiscal Year, the Subcommittee established
target awards under the STIP based upon the Corporation or applicable operating
unit achieving prescribed objectives for earnings before interest, taxes,
depreciation and amortization ("EBITDA"). Target awards under the MIP were based
upon the Corporation and any applicable operating unit achieving prescribed
objectives for EBITDA and Seagram Value Added (defined as EBITDA in excess of
capital cost). Under the plans, target annual incentive awards for executive
officers ranged from approximately 40% to 450% of salary in effect for the
Fiscal Year. Annual incentive awards for executive officers generally were
targeted at levels such that if targets were achieved, incentive awards in
combination with salary would result in executive officers earning cash
compensation at approximately the 75th percentile of the Comparison Group for
similar positions. Awards under the STIP can be reduced by the Subcommittee for
any reason including its assessment of individual performance or of the
financial performance of the Corporation or its operating units. MIP awards may
be reduced or increased based on an assessment of the individual executive's
performance. Actual awards were determined at the end of the Fiscal Year and
ranged from 90% to 120% of targets based on the actual performance of the
Corporation or the applicable operating unit as well as on the individual
executive's performance. Executives may elect to receive their MIP awards on a
deferred basis in the form of cash or Shares.
 
     Stock-Based Compensation. The Corporation's 1996 Stock Incentive Plan
("Incentive Plan") provides an opportunity for participating executive officers
and other participating employees to benefit from the appreciation in the value
of the Shares. Options are an important element of the total compensation
program.
 
     Since the exercise price of an option granted under the Incentive Plan
cannot be less than the fair market value of a Share on the date of grant,
options produce value for recipients only if the price of Shares increases
relative to the price on the grant date. Options generally are granted to
executive officers annually, have ten year terms (subject to early termination
in certain circumstances) and generally have three-year vesting periods (subject
to acceleration in certain circumstances), although the Incentive Plan provides
the Subcommittee with the flexibility to grant options with different vesting
periods. Generally, the number of options granted to executive officers annually
is determined so that the aggregate value of base salary, targeted short-term
incentive awards and stock option grants would approximate the 75th percentile
of the aggregate value of base salary, annual bonus and stock option grants for
similar positions at companies in the Comparison Group. For this purpose, stock
options are valued using a variant of the Black-Scholes option pricing model. In
granting options annually, the amount and terms of outstanding options held by
executive officers generally are not taken into account.
 
     Compensation for the Chief Executive Officer. For the Fiscal Year, the base
salary for Edgar Bronfman, Jr. remained at $1,000,000 and his target annual
incentive was set at 300% of salary. Mr. Bronfman was awarded 100% of his target
annual incentive under the STIP for the Fiscal Year. Mr. Bronfman's salary is
between the median and the 75th percentile of salary paid by members of the
Comparison Group. Including his bonus, Mr. Bronfman's total cash compensation is
between the median and the 75th percentile of total cash compensation for chief
executive officers of the Comparison Group.
 
                                       17
<PAGE>   20
 
     In 1993 the Committee approved a five-year equity-based compensation
program for Mr. Bronfman providing for annual grants of stock appreciation
rights ("SARs") to the extent the return on the Shares exceeds the return on the
shares included in the Standard & Poor's 500 Composite Index ("S&P 500"). The
SAR program did not result in any SAR grants during the Fiscal Year.
 
     Section 162(m) of the Internal Revenue Code. Section 162(m) of the Code
limits the deductibility of certain types of compensation in excess of $1
million paid to persons named in the Summary Compensation Table. The Corporation
believes that compensation paid under the STIP and awards of stock options under
the Incentive Plan satisfy the requirements of 162(m). However, Section 162(m)
may limit JES' ability to deduct some other types of compensation paid to
individuals named in the Summary Compensation Table. The Committee believes it
should maintain the flexibility to design compensation strategies that can
respond quickly to marketplace and the Corporation's needs even if such
compensation is not fully deductible.
 
                                       HUMAN RESOURCES COMMITTEE
 
                                       Marie-Josee Kravis, Chairman
                                       Richard H. Brown
                                       Andre Desmarais
                                       David L. Johnston
                                       Senator E. Leo Kolber
                                       John S. Weinberg
 
                                       18
<PAGE>   21
 
PERFORMANCE GRAPH
 
     The following graph compares the cumulative five-year total return of the
Corporation's Shares with the S&P 500, the Toronto Stock Exchange 300 Composite
Index ("TSE 300") and a peer group. The peer group is comprised of companies
included in the S&P Beverages (Alcoholic) Index together with certain non-U.S.
competitors that compete with the Corporation's beverage alcohol business,
companies included in the S&P Foods Index, and certain entertainment companies
that compete with the Corporation's entertainment business. In addition to the
Corporation, the peer group is comprised of Adolph Coors Company, Allied Domecq
PLC, Anheuser-Busch Companies, Inc., Brown-Forman Corporation, Campbell Soup
Company, ConAgra, Inc., Bestfoods (formerly CPC International, Inc.), The Walt
Disney Company, General Mills, Inc., Diageo plc, H.J. Heinz Company, Hershey
Foods Corporation, Kellogg Company, The News Corporation Limited, The Quaker
Oats Company, Ralston Purina Company, Sara Lee Corporation, Time Warner Inc.,
Unilever N.V., Viacom Inc. and W.M. Wrigley Jr., Co. The returns of each company
have been weighted according to their respective market capitalization as well
as the respective revenues from the Corporation's beverage alcohol, juice and
entertainment businesses.
 
     The performance graph assumes that $100 was invested on June 30, 1993 in
the Shares, the S&P 500, the TSE 300 and the peer group and that all dividends
were reinvested.
 
                COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
             AMONG THE CORPORATION, S&P 500, TSE 300 AND PEER GROUP
                         (TWELVE MONTHS ENDED JUNE 30)
[S&P CHART]
 
<TABLE>
<CAPTION>
    MEASUREMENT PERIOD
   (FISCAL YEAR COVERED)        SEAGRAM          S&P 500          TSE 300         PEER GROUP
<S>                          <C>              <C>              <C>              <C>
1993                              100              100              100              100
1994                              118              101              104              103
1995                              138              128              120              118
1996                              136              161              136              132
1997                              166              217              177              162
1998                              172              282              206              222
</TABLE>
 
                                       19
<PAGE>   22
 
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The Human Resources Committee is comprised of six "outside" directors,
Richard H. Brown, Andre Desmarais, David L. Johnston, Senator E. Leo Kolber,
Marie-Josee Kravis and John S. Weinberg. Certain information with respect to
entities with which certain of such members are related is set forth below.
 
     As of August 31, 1998, Universal held approximately 26% of the common stock
of Loews Cineplex Entertainment Corporation ("Loews Cineplex"). Pursuant to film
distribution and exhibition agreements entered into in accordance with normal
business terms and conditions, Universal receives film licensing fees from Loews
Cineplex and pays Loews Cineplex distribution fees. As of August 31, 1998,
certain entities and persons related to Charles R. Bronfman held approximately
7% of the common stock of Loews Cineplex. Senator E. Leo Kolber, a director of
the Corporation, is a director of Loews Cineplex and as of August 31, 1998
beneficially owned approximately 0.6% of the common stock of Loews Cineplex.
 
     Goldman, Sachs & Co. from time to time performs investment banking services
and provides investment advice for the Corporation and its subsidiaries,
including acting as financial advisor to the Corporation in connection with the
sale of Tropicana Products, Inc. to PepsiCo, Inc., as a dealer in the sale of
commercial paper issued by JES, as a market maker in certain securities of JES,
as a broker in connection with the Corporation's Share Purchase Program in the
United States, and as managing underwriter or participating underwriter in
connection with the sale of securities. John S. Weinberg, a director of the
Corporation, is Managing Director of Goldman, Sachs & Co.
 
TRANSACTIONS WITH DIRECTORS AND OTHERS
 
     During the Fiscal Year, Claridge Inc. ("Claridge") reimbursed a subsidiary
of the Corporation for use of aircraft owned by such subsidiary in the amount of
$125,429, representing Claridge's pro rata share of all applicable operating
expenses. The CRBFT owns all of the shares of Claridge. Charles R. Bronfman,
Samuel Minzberg and Arnold M. Ludwick are among the directors and officers of
Claridge.
 
     During the Fiscal Year, the Corporation paid or accrued rent and reimbursed
expenses to Claridge in the amount of Cdn. $392,998 (and Cdn. $31,547 during the
current fiscal year to August 31, 1998) with respect to use by the Corporation
of office and parking space and secretarial services. During the Fiscal Year,
Claridge also paid or accrued rent and reimbursed the Corporation in the amount
of $67,364 (and $17,610 during the current fiscal year to August 31, 1998) with
respect to use by Claridge of office space in the Corporation's offices in New
York.
 
     Bank of Montreal extends credit and provides other services to the
Corporation and its subsidiaries from time to time, including serving as a
co-agent and lender pursuant to several credit agreements with the Corporation
and its subsidiaries, acting as an issuing agent and broker for commercial paper
of the Corporation and providing cash management and other services to the
Corporation and certain of its subsidiaries. Matthew W. Barrett, a director of
the Corporation, is Chairman and Chief Executive Officer of Bank of Montreal.
Nesbitt Burns Inc., an affiliate of Bank of Montreal, acts as a broker in
connection with the Corporation's Share Purchase Program in Canada.
 
     During the Fiscal Year, JES paid or accrued consulting fees in the amount
of $75,000 (and $12,500 during the current fiscal year to August 31, 1998) with
respect to consulting services provided to JES and its affiliates by Henry
Consultants Ltd., a company which is beneficially owned by Frank Alcock, the
father-in-law of Edgar Bronfman, Jr.
 
     Mr. Samuel Minzberg is of counsel to the Montreal office of Goodman
Phillips & Vineberg, a law firm which provided legal services to the Corporation
during the Fiscal Year.
 
     In connection with the Corporation's offer (the "Offer") to acquire all of
the issued shares of PolyGram, the Corporation and Philips, the beneficial owner
of 75% of the issued shares of PolyGram, have entered into a stockholders
agreement dated as of June 21, 1998 (the "Stockholders Agreement") pursuant to
which the Corporation and Philips have agreed to certain arrangements relating
to Philips' ownership of the Shares following consummation of the Offer. Upon
consummation of the Offer, it is anticipated that Philips will beneficially own
 
                                       20
between 9.1% and 12.1% of the Shares (after giving effect to the issuance of
additional Shares pursuant to the Offer), depending upon the extent to which
other PolyGram shareholders elect to receive Shares in the Offer.
 
     Pursuant to the Stockholders Agreement, the Corporation has agreed to use
its best efforts to cause the election of the Chief Executive Officer of Philips
to the Board of Directors for so long as Philips beneficially owns at least 5%
of the Shares. Accordingly, it is anticipated that Cornelis Boonstra, the
Chairman of the Board of Management and
 
                                       21
<PAGE>   23
 
the President of Philips, will be appointed to the Board of Directors of the
Corporation following consummation of the Offer. Mr. Boonstra is 60 years old,
has served in his present position since October 1, 1996 and did not
beneficially own any Shares as of August 31, 1998. In addition, the Stockholders
Agreement also provides that at any time Philips is entitled to designate a
director thereunder, Philips will also be entitled to appoint one ex officio
member of the Board of Directors, who will be entitled to notice of and to
attend meetings of the Board of Directors and to receive all information
circulated or made available to the Board of Directors. Such ex officio member
will not be deemed to be a member of the Board of Directors for purposes of
determining a quorum or for any other purpose, and will not have the right to
vote on any matter voted on by the Board. Philips has informed the Corporation
that it intends to select Jan Hommen, Executive Vice President and the Chief
Financial Officer of Philips, to serve as the ex officio member of the Board of
Directors.
 
     Pursuant to the Stockholders Agreement, subject to certain conditions, (i)
Philips has agreed to vote its Shares to cause each of the nominees designated
by the Board of Directors to be elected to the Board and (ii) in connection with
any vote of shareholders of the Corporation relating to any other matter, unless
the Corporation otherwise consents in writing, Philips has agreed to vote its
Shares, at its option, either proportionately on the same basis as the other
shareholders so vote or as recommended by the Board of Directors. Philips has
also agreed that (i) transfers of its Shares will be subject to various
restrictions and (ii) it will not acquire any additional Shares or participate
in certain extraordinary transactions involving the Corporation or any material
portion of its business. The Stockholders Agreement also grants to Philips
customary demand and piggyback rights with respect to the registration of its
Shares.
 
     Pursuant to the terms of an Investment Agreement, dated as of October 19,
1997, among Universal, USA Networks, Inc. (formerly, HSN, Inc., "USAi"), Home
Shopping Network, Inc. and Liberty Media Corporation ("Liberty") (as amended and
restated as of December 18, 1997, the "Investment Agreement"), on February 12,
1998, USAi acquired USA Networks, consisting of USA Network and Sci-Fi Channel,
and Universal Television, Universal's domestic television production and
distribution business, from Universal in exchange for $4.075 billion in value,
comprised of common stock and class B common stock of USAi and LLC shares of
USAi LLC, a subsidiary of USAi, which are exchangeable for common stock and
class B common stock of USAi, that effectively represented as of the closing of
the transaction a 45.8% equity interest in USAi, and approximately $1.3 billion
in cash. In addition to the Investment Agreement, the transaction included a
number of other agreements including (i) a Governance Agreement, among USAi,
Universal, Liberty and Mr. Diller, which places limits on Universal's ability to
acquire additional equity securities of USAi and restricts Universal from
transferring USAi securities, provides for representation on USAi's Board of
Directors by Universal and Liberty and sets forth fundamental actions that
require the prior consent of Universal, Liberty and Mr. Diller before USAi can
take any such action; (ii) a Stockholders Agreement, among Universal, Liberty,
Mr. Diller, USAi and the Corporation, which governs the acquisition of
additional USAi securities by Liberty, restricts the transfer of shares, and
pursuant to which Mr. Diller generally has been granted voting control over all
of the USAi capital stock owned by Universal and Liberty except with respect to
the fundamental actions discussed under (i) above; (iii) a Spinoff Agreement,
among Universal, Liberty and USAi, providing for interim management arrangements
in the event that Mr. Diller ceases to be Chief Executive Officer of USAi or
becomes disabled; and (iv) agreements providing for various ongoing business
arrangements between Universal and USAi, including an international distribution
agreement, pursuant to which Universal has the right to distribute
internationally programs produced by USAi for a fee, a domestic distribution
agreement, pursuant to which USAi has the right to distribute specific Universal
programming, including Universal's library of television programs, for a fee, a
50-50 joint venture managed by Universal and governing the development and
exhibition of USA Network, Sci-Fi Channel and Universal's new action/suspense
Channel, 13th Street, outside of the United States, a transition services
agreement and agreements relating to merchandising, music administration and
music publishing, home video distribution, the use by USAi of Universal's studio
facilities, and certain other matters. Such ongoing arrangements were negotiated
by the parties on an arms' length basis and contain normal business terms and
conditions. Pursuant to the Investment Agreement, at various times between March
and July 1998, Universal and Liberty exercised their preemptive rights to
purchase additional LLC shares following issuances of common stock by USAi. Mr.
Diller is the Chairman of the Board and Chief Executive Officer of USAi and, at
July 31, 1998 owned or had the right to vote, pursuant to the Stockholders
Agreement, approximately 10% of the outstanding USAi common stock, 100% of the
outstanding USAi class B common stock and approximately 75% of the outstanding
total voting power of USAi common stock and USAi class B common stock.
                                       22
<PAGE>   24
 
     During the Fiscal Year, Universal paid or accrued approximately $1,749,554
(and $325,180 during the current fiscal year to August 31, 1998) in expenses
relating to the construction of a motion picture screening room at Mr. Biondi's
residence in Los Angeles, California. The screening room will be owned by the
Corporation which will be responsible for the operating costs including
insurance, maintenance and property taxes. Should Mr. Biondi no longer be
associated or affiliated with the Corporation, or if he sells his residence, the
Corporation will remove the screening room and restore the property. If Mr.
Biondi desires to retain the screening room, he has the option to purchase the
screening room for the depreciated book value of the construction costs and the
projection equipment and furnishings for their depreciated book value.
 
     The Corporation considers the amounts paid or received with respect to the
various transactions discussed above and under "Human Resources Committee
Interlocks and Insider Participation" to be reasonable and competitive and
believes they are comparable to those which would have been paid to or received
from others.
 
     The Corporation maintains directors' and officers' liability insurance
whereby the directors and officers of the Corporation and its subsidiaries are
insured against certain defined losses from claims against them in their
capacities as directors and officers for defined wrongful acts. The policy
covers amounts which directors and officers become obligated to pay for defined
losses up to a stipulated limit in a policy year. The aggregate limit is
$100,000,000 at an annual premium of $634,000, which was paid in respect of the
policy year which extends until October 1998. The Corporation's deductible is
$500,000.
 
                     AMENDMENT OF 1996 STOCK INCENTIVE PLAN
 
GENERAL
 
     Shareholders will be asked to consider and, if deemed advisable, to approve
an amendment to the Corporation's 1996 Stock Incentive Plan (the "Plan") for
selected key employees of the Corporation and its subsidiaries increasing the
number of Shares available for grant under the Plan. The purpose of the 1996
Plan is to provide selected key employees of the Corporation and its
subsidiaries an opportunity to benefit from the appreciation in the value of the
Shares, thus providing an increased incentive for such employees to contribute
to the future success and prosperity of the Corporation, enhancing the value of
the Shares for the benefit of the shareholders and increasing the ability of the
Corporation and its subsidiaries to attract and retain highly qualified
individuals. During the Fiscal Year, approximately 1,500 employees received
awards under the Plan. At the present time, relatively few Shares remain
available for grants of awards under the Plan. Accordingly, on June 24, 1998,
the Board of Directors of the Corporation adopted the following amendment (the
"Amendment") to the Plan to ensure that a sufficient number of Shares are
available for future grants under the Plan.
 
     THAT Article 4.1 of The Seagram Company Ltd. 1996 Stock Incentive Plan
     (the "Plan") be and it hereby is amended by increasing by 25,000,000
     the total number of Common Shares upon which Awards under the Plan may
     be based, for a total number of Common Shares of 45,000,000.
 
SHAREHOLDER APPROVAL
 
     As a result of the Amendment, the number of Shares reserved for issuance
pursuant to stock options under the Plan, together with all of the Corporation's
previously established share compensation arrangements could exceed 10% of the
Corporation's Shares outstanding as of August 31, 1998. Accordingly, approval of
the Amendment requires the affirmative vote of a majority of the votes cast by
Shareholders present, or represented by proxy, in respect of the resolution
approving the Amendment.
 
     The Board of Directors has approved the Amendment and recommends that
Shareholders vote for approval of the Amendment. The persons named in the
enclosed proxy accordingly intend to vote for the approval of the Amendment
unless otherwise directed by the Shareholder appointing them.
 
                                       23
<PAGE>   25
 
                            APPOINTMENT OF AUDITORS
 
     The persons named in the enclosed proxy, unless otherwise directed by the
shareholder appointing them, intend to vote at the Meeting for the reappointment
of PricewaterhouseCoopers LLP (formerly Price Waterhouse LLP) as auditors of the
Corporation to hold office until the close of the next annual meeting of
shareholders and to authorize the Board of Directors to set their remuneration.
PricewaterhouseCoopers LLP have been auditors of the Corporation for many years.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Meeting and will have the opportunity to make a statement, if they desire to do
so, and will be available to respond to appropriate questions from the
shareholders.
 
                  REPORT OF DIRECTORS AND FINANCIAL STATEMENTS
 
     Pursuant to the requirements of the Canada Business Corporations Act, the
directors will place before the shareholders at the Meeting their Report and the
comparative Consolidated Financial Statements of the Corporation for the Fiscal
Year but no action with respect thereto is required or proposed to be taken by
the shareholders.
 
                      AVAILABILITY OF DISCLOSURE DOCUMENTS
 
     The Corporation will provide to any person or company, upon request to the
Secretary of the Corporation, a copy of: (i) the latest Annual Information Form
or Annual Report on Form 10-K of the Corporation, together with one copy of any
document, or the pertinent pages of any document, incorporated therein by
reference; (ii) the comparative Consolidated Financial Statements of the
Corporation for the Fiscal Year, together with the report thereon of its
auditors and any interim financial statements of the Corporation filed with the
securities commissions of any province of Canada subsequent thereto; and (iii)
the Proxy Circular of the Corporation for the Meeting.
 
                 PROCEDURE FOR SUBMITTING SHAREHOLDER PROPOSALS
 
     Shareholders who wish to present proposals for action at the next annual
meeting of shareholders should submit their proposals in writing to the
Secretary of the Corporation at the address of the Corporation set forth on the
first page of this Proxy Circular so that the same are received by the Secretary
no later than August 6, 1999 for inclusion in the next Proxy Circular. In
addition, the persons named in management's proxy for the next annual meeting of
shareholders will be entitled to exercise discretionary authority on any
shareholder proposal that is not received in writing by the Secretary of the
Corporation at such address by such date.
 
                                    GENERAL
 
     The contents and the sending of this Proxy Circular have been approved by
resolution of the Board of Directors of the Corporation.
 
Montreal, Quebec, August 31, 1998
 
                                                    /s/ Michael C. L. Hallows
 
                                                      MICHAEL C. L. HALLOWS
                                                            Secretary
 
                                       24
<PAGE>   26
 
                           THE SEAGRAM COMPANY LTD.
 
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE SEAGRAM
COMPANY LTD. (THE "CORPORATION") FOR THE ANNUAL MEETING OF SHAREHOLDERS OF THE
CORPORATION TO BE HELD NOVEMBER 4, 1998, and should be read in conjunction with
the Notice of Meeting and Proxy Circular pertaining thereto.
 
The undersigned shareholder hereby appoints Edgar M. Bronfman, Chairman, The
Hon. Charles R. Bronfman, Co-Chairman, Edgar Bronfman, Jr., President and Chief
Executive Officer, and Robert W. Matschullat, Vice Chairman and Chief Financial
Officer, or any one of them, OR INSTEAD OF ANY OF THEM THE UNDERSIGNED HEREBY
APPOINTS
 
attorney or attorneys, or proxy or proxies, with full power of substitution, in
the name and on behalf of the undersigned, to attend, vote and act at the Annual
Meeting of Shareholders to be held on November 4, 1998, at Le Centre Sheraton,
1201 Rene-Levesque Boulevard West, Montreal, Quebec, and at any and all
adjournments thereof, upon the following matters:
 
 
<TABLE>
    <C>                     <C>                     <C>                     <S>                          <C>
- ---------------------------------------------------------------------------------------------------------------------------
                                       THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
- ---------------------------------------------------------------------------------------------------------------------------
    a)  Election of Directors
    Edgar M. Bronfman, The Hon. Charles R. Bronfman, Edgar Bronfman, Jr., Samuel Bronfman II, Matthew W. Barrett, 
    Laurent Beaudoin, Frank J. Biondi, Jr., Richard H. Brown, The Hon. William G. Davis, Andre Desmarais, Barry Diller, 
    Michele J. Hooper, David L. Johnston, Senator E. Leo Kolber, Marie-Josee Kravis, Robert W. Matschullat, Samuel Minzberg
    and John S. Weinberg.
 
         FOR                   WITHHELD                   FOR, except vote withheld from the following nominee(s)
                                                          
         [ ]                     [ ]                      ------------------------------------------------------

    b) Amendment to the Corporation's 1996 Stock Incentive Plan
 
         FOR                   AGAINST                 ABSTAIN
         [ ]                     [ ]                     [ ]

    c) Appointment of PricewaterhouseCoopers LLP as Auditors

         FOR                   WITHHELD
         [ ]                     [ ]

    d) In their discretion, with respect to amendments or upon variations to matters identified above or upon such other
    matters as may properly come before the Meeting, hereby revoking any proxy previously given.

</TABLE>
 
A SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON, WHO NEED NOT BE A
SHAREHOLDER, TO REPRESENT HIM AT THE MEETING MAY DO SO by inserting such other
person's name in the space provided above.
 
This proxy, when properly executed, will be voted in accordance with the
directions of the undersigned shareholder. IN THE ABSENCE OF SUCH DIRECTIONS,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE, FOR THE AMENDMENT TO THE
CORPORATION'S 1996 STOCK INCENTIVE PLAN AND FOR THE APPOINTMENT OF AUDITORS.
 
NOTE: When signing as attorney, executor, administrator, trustee, authorized
officer of a corporation or in any representative capacity, please insert your
title as such.
 
<TABLE>
<S>                              <C>   <C>
Dated..........................  1998  ............................................................
                                                         Signature of Shareholder
</TABLE>
 
(If not dated, this proxy is deemed to bear the date when mailed by the
Corporation.)
 
              PROXY
PLEASE COMPLETE AND RETURN IN THE
       ENVELOPE PROVIDED.
 
LOGO
                                          ACCOUNT NO.                     SHARES


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