<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
The 1999 Annual Meeting of Shareholders of The Seagram Company Ltd. will be
held on Wednesday, November 3, 1999, at 10:00 a.m. (E.S.T.) at the Hotel Omni
Montreal, 1050 Sherbrooke Street West, Montreal, Quebec.
The business to be conducted at the 1999 Annual Meeting will be:
1. to receive our Annual Report to Shareholders, which includes the
Consolidated Financial Statements of Seagram for the fiscal year ended
June 30, 1999;
2. to elect directors;
3. to appoint auditors; and
4. to transact such other business as may properly come before the 1999
Annual Meeting.
The record date for the 1999 Annual Meeting is September 15, 1999. If you
were a shareholder at the close of business on the record date, you are entitled
to vote.
Montreal, Quebec, September 21, 1999 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; ADRESSE ELECTRONIQUE : SHAREHOLDERS*[email protected].
<PAGE> 3
THE SEAGRAM COMPANY LTD.
1430 Peel Street
Montreal, Quebec, Canada H3A 1S9
------------------------------------
PROXY CIRCULAR
The Board of Directors is soliciting proxies to be used at the 1999 Annual
Meeting of Shareholders, which will be held on Wednesday, November 3, 1999 at
10:00 a.m. (E.S.T.) at the Hotel Omni Montreal, 1050 Sherbrooke Street West,
Montreal, Quebec. Enclosed with this Proxy Circular is the Notice of the 1999
Annual Meeting, a proxy form and a copy of our Annual Report to Shareholders.
The enclosed Annual Report, which includes the Consolidated Financial Statements
of Seagram for the fiscal year ended June 30, 1999, will be placed before the
shareholders at the 1999 Annual Meeting as required by the Canada Business
Corporations Act, but is not a part of the proxy soliciting material. The
information in this Proxy Circular is as of August 31, 1999, unless otherwise
stated. All dollar amounts are stated in United States currency unless otherwise
indicated. This Proxy Circular will be mailed to shareholders on approximately
September 21, 1999.
SHAREHOLDERS ENTITLED TO VOTE
If you were a shareholder of record of Seagram common shares at the close
of business on September 15, 1999, you are entitled to receive this Proxy
Circular and Notice and to vote your shares at the 1999 Annual Meeting. However,
if you became a new owner of common shares after September 15, 1999, and
establish that you own those shares, you may request, on or prior to October 22,
1999, to be included on Seagram's shareholders' list. If you are included on
that list you may vote your shares at the 1999 Annual Meeting, but the previous
owner may not.
Holders of common shares are entitled to one vote for each share held. As
of August 31, 1999, 433,103,343 Seagram common shares were outstanding, and
options which were then excercisable, or will become exercisable within 60 days,
to acquire an additional 20,099,000 common shares, were outstanding.
WHY THE BOARD SOLICITS PROXIES
In order to vote your shares, you must attend the 1999 Annual Meeting and
vote in person, or appoint a proxy to vote on your behalf. Because it is
impossible for all shareholders to attend all annual meetings in person, the
Board of Directors recommends that you appoint the four persons named on the
accompanying proxy form to act as your proxies at the 1999 Annual Meeting.
QUORUM/REQUIRED VOTE
In order to conduct business at the 1999 Annual Meeting, holders of at
least 40% of Seagram's outstanding common shares must be present in person or be
represented by proxy at the Meeting. Once that quorum is reached, the
affirmative vote of a majority of the votes cast is required for the election of
directors and for the appointment of auditors.
APPOINTMENT OF PROXIES
IN LIEU OF THE FOUR PERSONS NAMED IN THE ACCOMPANYING PROXY FORM, YOU MAY
APPOINT ANY OTHER PERSON (WHO DOES NOT NEED TO BE A SHAREHOLDER) TO REPRESENT
YOU AT THE 1999 ANNUAL MEETING BY INSERTING SUCH PERSON'S NAME IN THE BLANK
SPACE PROVIDED ON THE PROXY FORM OR BY COMPLETING ANOTHER PROXY FORM. THE
COMPLETED PROXY FORM SHOULD BE RETURNED IN THE ENCLOSED ENVELOPE FOR DELIVERY
BEFORE THE 1999 ANNUAL MEETING, OR SHOULD BE DELIVERED TO THE SECRETARY OF
SEAGRAM AT 1430 PEEL STREET, MONTREAL, QUEBEC, NO LATER THAN 5 P.M. ON TUESDAY,
NOVEMBER 2, 1999.
REVOCATION OF PROXIES
You may revoke your proxy by delivering written notice signed by you or
your authorized attorney-in-fact to (1) the Secretary of Seagram at Seagram's
executive or registered office at any time on or before Tuesday, November 2,
1999, or (2) the Chairman of the 1999 Annual Meeting on the day of the Meeting.
1
<PAGE> 4
VOTING BY PROXIES
If you appoint the persons named on the enclosed proxy form as your
proxies, they will vote your shares in accordance with your voting instructions.
IF YOU DO NOT PROVIDE VOTING INSTRUCTIONS, SUCH PERSONS WILL VOTE YOUR SHARES AS
FOLLOWS:
(1) FOR THE ELECTION OF THE DIRECTORS DESCRIBED UNDER THE HEADING "ELECTION
OF DIRECTORS," AND
(2) FOR THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS SEAGRAM'S
INDEPENDENT AUDITORS.
If any other matters which are not described in this Proxy Circular are
properly brought before the 1999 Annual Meeting, the proxies will vote for or
against such matters using their discretion. Seagram management does not intend
to present any other matters for action at the 1999 Annual Meeting, nor are they
aware that any other person intends to present any other matters.
SOLICITATION OF PROXIES AND ITS EXPENSE
The Board of Directors is soliciting the enclosed proxy form, and the
expense of the solicitation will be borne by Seagram. Proxies will be solicited
primarily by mail, but officers and employees of Seagram may also solicit
proxies by telephone, facsimile or in person. Seagram has retained D.F. King &
Co., Inc. to assist in soliciting proxies for a fee of $6,000 plus reasonable
expenses. CIBC Mellon Trust Company also assists in soliciting proxies in Canada
as part of its general engagement by Seagram to provide shareholder services.
SHARE OWNERSHIP
PRINCIPAL HOLDERS OF SHARES
As of August 31, 1999, descendants of the late Samuel Bronfman and trusts
established for their benefit, beneficially owned directly or indirectly a total
of 106,494,116 common shares, which constituted approximately 24.59% of the
outstanding common shares. This amount includes the shares which are owned by
the holders in the following table other than Koninklijke Philips Electronics
N.V. The holders in the following table are the only holders which, to Seagram's
knowledge, own beneficially, or exercise control or direction over, more than 5%
of the outstanding shares of Seagram as of August 31, 1999. Descendants of the
late Samuel Bronfman also hold options to acquire an additional 4,036,403 shares
which are exercisable on or within 60 days of August 31, 1999.
<TABLE>
<CAPTION>
Percentage
Number of Shares
Beneficial Owner of Shares Outstanding
- ---------------- ---------- -----------
<S> <C> <C>
THE EDGAR MILES BRONFMAN TRUST.............................. 60,104,604(1) 13.88%
THE C. BRONFMAN FAMILY TRUST,
THE CHARLES ROSNER BRONFMAN FAMILY TRUST,
THE CHARLES BRONFMAN TRUST II,
THE CHARLES R. BRONFMAN DISCRETIONARY TRUST
CRB ASSOCIATES, LIMITED PARTNERSHIP......................... 41,286,760(2) 9.53%
KONINKLIJKE PHILIPS ELECTRONICS N.V......................... 47,831,952(3) 11.04%
</TABLE>
- ---------------
(1) Includes 58,618,088 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 14,320,000 shares owned directly by The C. Bronfman Family Trust
(the "C.BFT"), c/o Chancery Chambers, Chancery House, High Street,
Bridgetown, Barbados, 20,364,000 shares owned by The Charles Rosner Bronfman
Family Trust (the "CRBFT"), c/o Goodman Phillips & Vineberg, 1501 McGill
College Avenue, Montreal, Quebec, 5,000,000 shares owned by The Charles
Bronfman Trust II (the "CBT II"), c/o Goodman Phillips & Vineberg, 430 Park
Avenue, New York, New York, and 302,760 shares owned by The
2
<PAGE> 5
Charles R. Bronfman Discretionary Trust (the "CRBDT") and 1,300,000 shares
owned by CRB Associates, Limited Partnership ("CRB Associates"), each c/o
Bergman, Horowitz & Reynolds, 157 Church Street, New Haven, Connecticut. The
general partners of CRB Associates are the CRBFT, which holds a 51.04%
general partnership interest, and Claridge Israel LLC, which holds a 48%
general partnership interest. Stephen R. Bronfman holds indirectly a 0.96%
limited partnership interest in CRB Associates and is a trustee of the
CRBFT. The managers of Claridge Israel LLC include Charles R. Bronfman. The
members of Claridge Israel LLC are The Charles R. Bronfman Trust (the
"CR.BT") and The Charles Bronfman Trust (the "CBT"). 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.
(3) Address of principal executive offices is Rembrandt Tower, Amstelplein 1,
1096 HA Amsterdam, The Netherlands. A description of certain voting
arrangements between Koninklijke Philips Electronics N.V. and Seagram can be
found on page 22 under the heading "Transactions with Directors and Others".
In addition, as of August 31, 1999, trusts for the benefit of the family of
the late Minda de Gunzburg and members of her immediate family owned directly or
indirectly a total of 1,487,212 shares.
Edgar M. Bronfman, Charles R. Bronfman and the late Minda de Gunzburg are
siblings. Edgar M. Bronfman and Charles R. Bronfman are directors and officers
of Seagram. Edgar Bronfman, Jr. is a son of Edgar M. Bronfman and a director and
officer of Seagram. Samuel Bronfman II is a son of Edgar M. Bronfman and a
director of Seagram. Stephen R. Bronfman is the son of Charles R. Bronfman and
has been nominated to become a director of Seagram.
Under a voting trust agreement dated August 3, 1984, as amended, Charles R.
Bronfman is the voting trustee for certain shares beneficially owned directly or
indirectly by the EMBT, the PBBT/EMBFT, the C.BFT, the CRBFT, the CBT II, CRB
Associates and two charitable foundations. Charles R. Bronfman is a director of
the two charitable foundations, which together owned 3,334,164 shares as of
August 31, 1999. 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, 1999, the Bronfman voting trust agreement
covered 104,398,768 shares.
Under a voting trust agreement dated as of May 15, 1986, Edgar M. Bronfman,
Charles R. Bronfman, Stanley N. Bergman, Guido Goldman and Leonard M. Nelson are
voting trustees for shares beneficially owned directly or indirectly by trusts
for the benefit of the family of the late Minda de Gunzburg and 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 the 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, 1999, the de Gunzburg voting trust agreement
covered 1,486,332 shares.
An agreement governs the dispositions of shares which the EMBT, the
PBBT/EMBFT, the C.BFT, the CRBFT, the CBT II, the CRBDT, CRB Associates, the
trusts established for the benefit of the family of the late Minda de Gunzburg
and members of her immediate family and three charitable foundations (including
the charitable foundations referred to above), beneficially own directly or
indirectly. The agreement, entered into as of August 3, 1984, as amended, has a
term of 20 years and permits each of the branches of the family to transfer
shares 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.
3
<PAGE> 6
SHARE OWNERSHIP OF MANAGEMENT
The following table shows the number of shares which each of the directors
of Seagram and nominees for director, each of the persons named in the "Summary
Compensation Table" and the directors and executive officers of Seagram as a
group owned beneficially, or exercised control or direction over, as of August
31, 1999. 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 of Deferred
Number of Shares Share
Beneficial Owner Shares Outstanding Units(1)
- ---------------- ------------- ------------- --------
<S> <C> <C> <C>
Edgar M. Bronfman.......................................... 61,079,841(2) 13.92% --
The Hon. Charles R. Bronfman, P.C., C.C. .................. 45,118,621(3) 10.28% --
Edgar Bronfman, Jr. ....................................... 62,985,064(4) 14.35% --
Samuel Bronfman II......................................... 381,741(5) * --
Stephen R. Bronfman........................................ 24,998,404(6) 5.70% --
Matthew W. Barrett, O.C. .................................. 1,000 * 4,827
Laurent Beaudoin, C.C. .................................... --(7) -- 2,885
Cornelis Boonstra.......................................... 895 * 169
John D. Borgia............................................. 241,634(8) * --
Richard H. Brown........................................... 1,000 * 3,414
The Honourable William G. Davis, P.C., C.C., Q.C. ......... 1,268 * --
Andre Desmarais............................................ 5,000 * 1,872
Barry Diller............................................... 1,000(9) * 2,302
Michele J. Hooper.......................................... 3,377 * --
David L. Johnston, C.C. ................................... 400 * 4,930
The Honourable E. Leo Kolber, Senator...................... 4,240 * 4,888
Marie-Josee Kravis, O.C. .................................. 400 * 3,806
Robert W. Matschullat...................................... 970,500(10) * --
Samuel Minzberg............................................ -- -- 2,781
John S. Weinberg........................................... 6,500(11) * 5,092
Directors and executive officers as a group................ 110,937,931(12) 25.28%
</TABLE>
- ---------------
(*) Less than 1%
(1) See "Corporate Governance -- Compensation of Directors" for a description
of the deferred share units under The Seagram Company Ltd. Stock Plan for
Non-Employee Directors.
(2) Includes 58,618,088 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, 732,201
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
1,486,332 shares subject to the de Gunzburg voting trust agreement with
respect to which Mr. Bronfman disclaims beneficial ownership.
(3) Includes 14,320,000 shares owned directly by the C.BFT, 20,364,000 shares
owned directly by the CRBFT, 5,000,000 shares owned directly by the CBT II
and 1,300,000 shares owned directly by CRB Associates, entities for which
Mr. Bronfman serves as the voting trustee or in which he has a beneficial
interest, 1,000 shares owned directly by Mr. Bronfman, 523,101 shares
issuable upon exercise of currently exercisable options, 12,000 shares
owned indirectly by Mr. Bronfman's spouse, 24,000 shares owned directly by
his children, 356 shares owned by an estate for which Mr. Bronfman is an
executor, and 3,574,164 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, except to the
extent of his beneficial interest in the foregoing entities and with
respect to shares owned directly by him. In addition, Mr. Bronfman serves
as the voting trustee with respect to 60,104,604 shares held by the EMBT
and the PBBT/EMBFT subject to the Bronfman voting trust agreement and as a
voting trustee with respect to 1,486,332 shares subject to the de Gunzburg
voting trust agreement with respect to which Mr. Bronfman disclaims
beneficial ownership.
(4) Includes 58,618,088 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, 2,639,600
shares
4
<PAGE> 7
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 620 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,
1999). 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, 141,501 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) Includes 20,364,000 shares owned directly by the CRBFT, a trust for which
Mr. Bronfman serves as a trustee, 1,300,000 shares owned directly by CRB
Associates, and 3,334,404 shares owned directly by three charitable
foundations of which Mr. Bronfman is among the directors. Mr. Bronfman
disclaims beneficial ownership of the foregoing shares, except to the
extent of his beneficial interest in the CRBFT and CRB Associates.
(7) 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.
(8) These shares are issuable upon exercise of options which are currently
exercisable or become exercisable within 60 days.
(9) These shares are held by Ranger Investments, L.P., a limited partnership in
which Mr. Diller owns a 99% interest.
(10) Includes 100,000 shares owned directly by Mr. Matschullat and 870,500
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.
(11) 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.
(12) Includes 5,801,507 shares issuable upon exercise of options which are
currently exercisable or become exercisable within 60 days.
5
<PAGE> 8
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
The proxies named in the proxy form will vote your shares as you specify
when providing your proxy. If you do not specify in your proxy form how you want
your shares voted, the proxies will vote your shares for the election of all of
the nominees listed below. We expect each of the nominees to be able to serve if
elected. If a nominee becomes unable to serve prior to the 1999 Annual Meeting,
the Board of Directors may nominate someone else for election. In that
situation, the proxies will have the right to vote your shares, in their
discretion, for the election of that person. 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 Seagram's By-Laws.
The following table contains the principal occupation and certain other
information about the nominees for the Board of Directors, based on information
obtained from each nominee. All nominees have been engaged in the occupation or
employment described immediately next to their names for more than five years,
except where indicated.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Director
Name Age Principal Occupation and Other Information Since
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EDGAR M. BRONFMAN.................... 70 Chairman of the Board of Seagram. ............ 1955
THE HONOURABLE
CHARLES R. BRONFMAN,
P.C., C.C.......................... 68 Co-Chairman of the Board and Chairman of the
Executive Committee of Seagram. Mr. Bronfman
is also Chairman of Koor Industries Ltd. and a
director of Power Corporation of Canada....... 1958
EDGAR BRONFMAN, JR................... 44 President and Chief Executive Officer of
Seagram. Mr. Bronfman is also a director of
USA Networks, Inc. ........................... 1988
SAMUEL BRONFMAN II................... 45 President of Chateau & Estate Wines Company (a
division of Joseph E. Seagram & Sons, Inc., a
subsidiary of Seagram) and, since July 1998,
Chairman of The Seagram Beverage Company (a
division of Joseph E. Seagram & Sons, Inc.)... 1991
STEPHEN R. BRONFMAN.................. 35 Chairman of Claridge SRB Investments Inc. (a
private holding company) since 1998. From July
1995 to March 1999 he was the Deputy Chairman
of Netstar Communications Inc. Previously, he
was an executive with Claridge Properties
Ltd. ......................................... --
MATTHEW W. BARRETT, O.C.............. 54 Group Chief Executive of Barclays PLC (a
financial institution) effective October 1,
1999. From February to July 1999, he was
Chairman of the Board of Bank of Montreal
prior to which he was also Chief Executive
Officer. Mr. Barrett is also a director of
Molson Inc. and, effective October 1, 1999, a
director of Barclays PLC and Barclays Bank
PLC. ......................................... 1995
LAURENT BEAUDOIN, C.C................ 61 Chairman of the Board and Chairman of the
Executive Committee of Bombardier Inc. (a
transportation, aerospace and motorized
products company) since February 1, 1999.
Previously, he was also Chief Executive
Officer....................................... 1997
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Director
Name Age Principal Occupation and Other Information Since
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORNELIS BOONSTRA.................... 61 Chairman of the Board of Management and
President of Koninklijke Philips Electronics
N.V. ("Philips") (an electronics company)
since October 1996. From June 1, 1994 he was
Executive Vice President of Philips and from
July 1, 1994 until April 1, 1995 he was also
President and Chief Executive Officer of
Philips Lighting Holding B.V. Mr. Boonstra is
also a director of Hunter Douglas
International, N.V., Sara Lee/DE N.V. and
NBM-Amstelland N.V. .......................... 1998
RICHARD H. BROWN..................... 52 Chairman of the Board and Chief Executive
Officer of Electronic Data Systems Corporation
(an information technology company) since
January 1, 1999. From July 1996 to December
1998 he was Chief Executive of Cable and
Wireless plc. 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 a
director of Pharmacia and Upjohn, Inc. ....... 1997
ANDRE DESMARAIS...................... 42 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
BARRY DILLER......................... 57 Chairman and Chief Executive Officer of USA
Networks, Inc. (a diversified media and
electronic commerce company) or its
predecessors since August 1995. From December
1992 to December 1994 he served as Chairman
and Chief Executive Officer of QVC, Inc. Mr.
Diller is also a director of Ticketmaster
Online-CitySearch............................. 1998
MICHELE J. HOOPER.................... 48 President and Chief Executive Officer of
Voyager Expanded Learning (an educational
development company) since August 1999. From
July 1, 1998 to November 30, 1998 she was
President and Chief Executive Officer of
Stadtlander Drug Co., Inc. 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
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Director
Name Age Principal Occupation and Other Information Since
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DAVID L. JOHNSTON, C.C............... 58 President of University of Waterloo (an
educational institution) since July 1999. From
July 1994 to June 1999 he was Professor of Law
at McGill University. Previously, he was also
Principal and Vice-Chancellor. Mr. Johnston is
also a director of CT Financial Services Inc.,
Emco Limited, The CGI Group Inc and Lifestyle
Furnishings International Ltd. ............... 1987
MARIE-JOSEE KRAVIS, O.C.............. 49 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................ 51 Vice Chairman and Chief Financial Officer of
Seagram 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 The
Clorox Corporation and USA Networks, Inc. .... 1995
SAMUEL MINZBERG...................... 50 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 Dylex Limited, Koor
Industries Ltd. and USA Networks, Inc. and is
of counsel to the Montreal office of Goodman
Phillips & Vineberg........................... 1998
JOHN S. WEINBERG..................... 42 Managing Director of Goldman, Sachs & Co.
(investment bankers) since December 1996.
Previously, he was a general partner of
Goldman, Sachs & Co. ......................... 1995
</TABLE>
8
<PAGE> 11
CORPORATE GOVERNANCE
GENERAL
The following is a description of Seagram's governance practices with
reference to the guidelines set out in the final report of the Committee on
Corporate Governance of the Toronto Stock Exchange.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS
The Board of Directors is responsible for the overall stewardship of
Seagram and oversees 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 reviews annual business and
longer range strategic plans prepared by management as part of the Board's
overall evaluation of Seagram's strategic direction. The Board, directly and
through its Committees, is responsible for:
- reviewing the interim and annual financial results and approving the
management proxy circular;
- approving major capital commitments, acquisitions, divestitures and
expenditures;
- approving dividends and certain changes to Seagram's capital structure;
- selecting and evaluating the performance of the Chief Executive Officer
and other principal officers of Seagram and development, training and
succession planning for senior management;
- identifying the principal risks of Seagram's businesses and ensuring that
management implements appropriate strategies and systems to manage those
risks; and
- assessing the integrity of Seagram's internal controls, including
computer-based systems.
SIZE AND RELATEDNESS
The Board is currently composed of 18 directors. If all nominees are
elected to the Board, the number of directors will decrease to 17. The Board
believes that 11 of its current directors are "unrelated" to Seagram as defined
in the Toronto Stock Exchange report on corporate governance. The report defines
an "unrelated" director as someone who
- is independent of management; and
- is 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 Seagram, other than
interests and relationships arising from shareholdings.
Five directors are "related" to Seagram because they are members of
management. These five directors are:
Edgar M. Bronfman
Chairman of the Board
The Honourable Charles R. Bronfman
Co-Chairman of the Board
Edgar Bronfman, Jr.
President and 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
In addition, two directors may be regarded as "related" because they hold
senior positions with companies that have substantial ongoing business
relationships with Seagram. These two directors are:
Barry Diller
Chairman and Chief Executive Officer of USA Networks, Inc.
John S. Weinberg
Managing Director of Goldman, Sachs & Co.
9
<PAGE> 12
Until July 27, 1999, Matthew W. Barrett was Chairman of the Bank of Montreal,
and until that time may have been regarded as "related."
Although seven members of the Board may be considered "related" directors,
a majority (13 of 18) of Seagram's directors are not current officers or
employees of Seagram or any of its affiliates and are therefore "outside"
directors as defined in the Toronto Stock Exchange report. The Honourable
William G. Davis and Senator E. Leo Kolber will not be standing for re-election
at the shareholders meeting. Stephen R. Bronfman is a nominee for election to
the Board. Although Mr. Bronfman would be considered an "outside" director, he
may be regarded as "related" because he is a relative of certain members of
Seagram's management. Accordingly, if all nominees are elected, the number of
directors who may be considered "related" will increase to eight and the number
of "outside" directors will decrease to 12. The Board believes that all members,
regardless of the existence of relationships to Seagram, exercise independent
judgment with a view to the best interests of Seagram, and believes that Seagram
benefits from the knowledge, experience and mix of skills which its directors
bring to the Board. Seagram has no shareholder who qualifies as a "significant
shareholder" which is defined in the Toronto Stock Exchange report as a
shareholder with the ability to exercise a majority of the votes for the
election of the Board of Directors. Information regarding the shareholdings of
the descendants of Samuel Bronfman, Seagram's founder, and trusts established
for their benefit can be found on page 2 under the heading "Share Ownership".
The Chairman of the Board, Edgar M. Bronfman, while separate from the Chief
Executive Officer, is a "related" director. Mr. Bronfman served as Chief
Executive Officer for 19 years and has been a member of the Board for 44 years.
The Board believes that since the founding family retains substantial
shareholdings in Seagram 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
Seagram. For these reasons, the Board believes that the composition of the Board
is both appropriate and beneficial to Seagram and its shareholders and that Mr.
Bronfman is the most qualified director to act as Chairman.
FUNCTIONING
The Executive Committee performs the functions of a nominating committee
for Seagram and nominates new members capable of contributing to the
effectiveness of the Board. Seagram has a formal position description for
directors. When 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.
Seagram does not have a formal process for assessing the effectiveness of the
Board as a whole, the committees of the Board or the contribution of individual
directors, nor do we have formal processes and practices to ensure the
independence of the Board from management.
While the Board has not developed a formal position description for the
Chief Executive Officer, the Board, through its Human Resources Committee, has
established corporate objectives for the Chief Executive Officer and certain
portions of the Chief Executive Officer's compensation are determined with
reference to such objectives. For more information concerning compensation see
page 17 under the heading "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.
Education of new directors is provided through presentations and up to date
materials which contain basic information about Seagram and related matters. In
addition, Board meetings are held at various corporate facilities to provide the
directors with additional insight into Seagram's businesses.
Seagram maintains an active investor relations program. The Secretary of
Seagram or the Vice President, Investor Relations of Joseph E. Seagram & Sons,
Inc. responds to all inquiries from shareholders, the investment community and
the general public. 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 Seagram's shareholders, the general public, and the
investment community.
10
<PAGE> 13
Although there is no formal procedure to enable an individual director to
engage an outside advisor, directors may retain outside advisors from time to
time to represent and advise them at Seagram's expense.
BOARD AND COMMITTEE MEETINGS
During the 1999 fiscal year the Board of Directors held 10 meetings and
committees of the Board held a total of 26 meetings. With the exception of
Cornelis Boonstra and Barry Diller, 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.
COMMITTEES
The four committees of the Board described below assist the Board in
carrying out its responsibilities. With the exception of the Executive
Committee, each of the committees is comprised entirely of "outside" directors,
a majority of which are "unrelated". All of the committees report to the Board
on a regular basis. Additional information on each of the committees is set out
below.
Executive Committee.
<TABLE>
<S> <C>
Members: The Honourable Charles R. Bronfman, Chairman
Edgar M. Bronfman
Edgar Bronfman, Jr.
Matthew W. Barrett
Cornelis Boonstra
Richard H. Brown
Barry Diller
Senator E. Leo Kolber
Samuel Minzberg
Relatedness: Six members of the committee are "outside"
directors and five are "unrelated".
Meetings during the 1999 fiscal year: Three
Functions: Exercises all of the powers of the Board in
the management and direction of Seagram's
operations, except acts which by law must be
performed by the full Board and matters which
the full Board retains for itself.
</TABLE>
Corporate Governance Committee.
<TABLE>
<S> <C>
Members: The Honourable William G. Davis, Chairman
Laurent Beaudoin
David L. Johnston
Marie-Josee Kravis
John S. Weinberg
Relatedness: All members of the committee are "outside"
directors and four of the members are
"unrelated".
Meetings during the 1999 fiscal year: Two
Functions: Develops Seagram's approach to governance
issues.
Reviews and assesses Seagram's procedures with
respect to a wide range of governance issues
identified in the Toronto Stock Exchange
guidelines.
Reviews the form and adequacy of the
compensation of directors.
</TABLE>
11
<PAGE> 14
Audit Committee.
<TABLE>
<S> <C>
Members: Matthew W. Barrett, Chairman
The Honourable William G. Davis
Michele J. Hooper
David L. Johnston
Samuel Minzberg
Relatedness: All members of the committee are "outside"
directors and "unrelated".
Meetings during the 1999 fiscal year: Six
Functions: Reviews the nature and scope of the audit and
non-audit services provided by Seagram's
independent auditors, recommends the retention
or replacement of the independent auditors and
reviews the recommendations of the independent
auditors and the responses of Seagram's
management.
Reviews internal accounting and financial
procedures and reviews Seagram's annual and
interim financial statements.
Reviews investment matters regarding Seagram's
defined benefit plans.
Reviews Seagram's risk management and
insurance plans.
Monitors Seagram's program for compliance with
policies on business ethics and assesses the
integrity of Seagram's internal controls,
including computer-based systems.
</TABLE>
Human Resources Committee.
<TABLE>
<S> <C>
Members: Marie-Josee Kravis, Chairman
Richard H. Brown
Andre Desmarais
Senator E. Leo Kolber
John S. Weinberg
Relatedness: All members are "outside" directors and four
are "unrelated".
Meetings during the 1999 fiscal year: Ten
Functions: Supervises development of management
resources.
Reviews the performance and compensation of
the Chief Executive Officer.
Reviews the annual compensation of all
officers of Seagram and selected officers and
employees of subsidiary companies.
Reviews all executive compensation plans and
major changes to existing employee benefit
plans.
Reviews the succession plan for senior
management.
</TABLE>
COMPENSATION OF DIRECTORS
Non-employee directors are paid $42,500 a year plus a fee of $1,500 for
each Board and committee meeting attended. Directors are also reimbursed for
travel expenses incurred in connection with meetings attended. Committee
chairmen receive an additional $7,500 per year. Directors who are also Seagram
employees do not receive compensation by reason of their membership on, or
attendance at meetings of, the Board or its committees.
12
<PAGE> 15
Non-employee directors receive at least 50% of their annual fees in Seagram
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 Seagram shares or
deferred share units. If a director elects to receive shares, his or her annual
retainer (net of withholding taxes) is used to purchase shares for the director
on the open market. If a director elects to receive deferred share units, units
representing the value of shares are credited to the director's account based on
the market value of the shares on the annual crediting date. Deferred share
units are paid to the director, along with the value of dividends as if
reinvested in additional shares, after termination of Board service. Payments
are 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.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
This table shows the compensation of Seagram's Chief Executive Officer and
each of Seagram's four other most highly compensated executive officers with
respect to the fiscal years ended June 30, 1999, June 30, 1998 and June 30,
1997.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
--------------------------------------------------------------------------
Awards
-----------------------------------
Other Securities
Annual Restricted Underlying
Year Salary Bonus Compensation Stock Awards Options/SARs
Name and Principal Position ($) ($) ($) (#) (#)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edgar M. Bronfman June 30, 1999 812,505 750,750 276,642(1) 0 80,000
Chairman of the Board June 30, 1998 750,000 750,000 370,083 0 80,000
of Seagram and Joseph E. June 30, 1997 750,000 787,500 372,184 0 80,000
Seagram & Sons, Inc. ("JES")
- -----------------------------------------------------------------------------------------------------------------------------
Charles R. Bronfman June 30, 1999 649,998 600,600 125,984(3) 0 69,200
Co-Chairman of the Board of June 30, 1998 600,000 600,000 66,684 0 69,200
Seagram and JES and June 30, 1997 600,000 630,000 0 0 69,200
Chairman of the Executive
Committee of Seagram
- -----------------------------------------------------------------------------------------------------------------------------
Edgar Bronfman, Jr. June 30, 1999 1,000,000 2,730,000 31,458 0 1,500,000
President and Chief Executive June 30, 1998 1,000,000 3,000,000 30,289 0 0
Officer of Seagram and of JES June 30, 1997 1,000,000 3,150,000 63,440 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Robert W. Matschullat June 30, 1999 1,000,000 2,068,200 26,296(4) 0 0
Vice Chairman and June 30, 1998 920,015 2,250,000 9,934 0 1,500,000
Chief Financial Officer of June 30, 1997 795,840 1,000,000 6,674 0 150,000
Seagram and of JES
- -----------------------------------------------------------------------------------------------------------------------------
John D. Borgia June 30, 1999 480,000 393,120 312,981(5) 0 75,000
Executive Vice President, June 30, 1998 442,674 360,000 307,469 0 150,000
Human Resources of June 30, 1997 400,020 300,000 294,607 0 50,000
Seagram and of JES
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Payouts
All
LTIP Other
Payouts Compensation(2)
Name and Principal Position ($) ($)
- ----------------------------------------------------------------
<S> <C> <C>
Edgar M. Bronfman 0 21,841
Chairman of the Board 0 111,206
of Seagram and Joseph E. 0 93,380
Seagram & Sons, Inc. ("JES")
- ----------------------------------------------------------------
Charles R. Bronfman 0 0
Co-Chairman of the Board of 0 0
Seagram and JES and 0 0
Chairman of the Executive
Committee of Seagram
- ----------------------------------------------------------------
Edgar Bronfman, Jr. 0 8,370
President and Chief Executive 0 18,929
Officer of Seagram and of JES 0 17,864
- ----------------------------------------------------------------
Robert W. Matschullat 0 5,760
Vice Chairman and 0 1,125
Chief Financial Officer of 0 1,125
Seagram and of JES
- ----------------------------------------------------------------
John D. Borgia 0 5,760
Executive Vice President, 0 1,125
Human Resources of 0 1,125
Seagram and of JES
- ----------------------------------------------------------------
</TABLE>
(1) Other annual compensation for the 1999 fiscal year includes $84,042 for
financial counseling services.
(2) Reflects the aggregate value of the contributions by Seagram'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 Joseph E. Seagram & Sons, Inc. Insurance and
Salary Continuation Programs.
(3) Other annual compensation for the 1999 fiscal year includes $48,636 imputed
income on Seagram's payment of group life insurance premiums.
(4) Other annual compensation for the 1999 fiscal year includes $14,112 imputed
income on Seagram's payment of group life insurance premiums.
(5) Other annual compensation for the 1999 fiscal year includes a $280,507
payment in respect of restricted deferred share units which were granted to
Mr. Borgia in 1995 upon the commencement of his employment with JES.
13
<PAGE> 16
OPTION/SAR GRANTS IN 1999 FISCAL YEAR
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
Number of at Assumed Annual Rates
Securities % of Total of Stock Price Appreciation
Underlying Options/SARs Exercise for Option Term
Options/SARs Granted to or Base -------------------------------------------
Granted Employees in Price Expiration 0% 5% 10%
Name (#) Fiscal Year ($) Date ($) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edgar M. Bronfman 80,000(1) 1% 47.9063 February 16, 2009 0 2,410,241 6,108,024
- -----------------------------------------------------------------------------------------------------------------------------------
Charles R. Bronfman 69,200(1) 1% 47.9063 February 16, 2009 0 2,084,858 5,283,441
- -----------------------------------------------------------------------------------------------------------------------------------
Edgar Bronfman, Jr. 1,500,000(2) 13% 35.8750 November 8, 2008 0 33,842,385 85,763,250
- -----------------------------------------------------------------------------------------------------------------------------------
Robert W.
Matschullat 0 N/A N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
John D. Borgia 75,000(1) 1% 47.9063 February 16, 2009 0 2,259,601 5,726,273
- -----------------------------------------------------------------------------------------------------------------------------------
All Shareholders(3) 0 13,703,616,379 34,727,628,274
- -----------------------------------------------------------------------------------------------------------------------------------
Gain to Named Executive Officers as a Percentage of Gain to all Shareholders 0% 0% 0%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options to purchase shares were granted on February 17, 1999 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 were granted on November 9, 1998 and become
exercisable in equal installments over a five-year period that began on the
first anniversary of the date of grant.
(3) The potential realizable gain to all shareholders is calculated based on
432,555,456 shares outstanding and a fair market value of $50.375 per share
on June 30, 1999.
AGGREGATED OPTION/SAR EXERCISES IN 1999 FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value Fiscal Year-End Fiscal Year-End
Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
Name (#) ($) (#) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Edgar M. Bronfman 111,720 3,290,310 732,201/159,999 16,174,070/1,182,482
- --------------------------------------------------------------------------------------------------------------------------
Charles R. Bronfman 1,000 30,500 523,101/138,399 10,671,509/1,022,845
- --------------------------------------------------------------------------------------------------------------------------
Edgar Bronfman, Jr. 0 0 3,285,600/1,900,000 67,867,235/25,960,190
- --------------------------------------------------------------------------------------------------------------------------
Robert W. Matschullat 0 0 870,500/1,225,000 10,508,896/10,696,835
- --------------------------------------------------------------------------------------------------------------------------
John D. Borgia 15,400 309,833 241,634/191,666 4,402,349/1,669,515
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
PENSION, BENEFIT EQUALIZATION, RETIREMENT SALARY CONTINUATION AND SEVERANCE
PLANS
PENSION PLAN
Seagram, through its subsidiary Joseph E. Seagram & Sons, Inc. ("JES"),
maintains a pension plan for employees (including Edgar M. Bronfman, Charles R.
Bronfman, Edgar Bronfman, Jr., Robert W. Matschullat, John D. Borgia and other
officers) of JES and certain other U.S. subsidiaries. The pension plan was
amended on January 1, 1999 to migrate from a final average pay plan to a new
retirement account design in which JES applies annual contribution credits as a
percent of pay and annual fixed interest rate credits to participants' account
balances. JES also maintains an executive supplemental pension plan to provide
additional payments on an unfunded basis to
14
<PAGE> 17
certain managers and executives (including Edgar M. Bronfman, Charles R.
Bronfman, Edgar Bronfman, Jr., Robert W. Matschullat, John D. Borgia and other
officers).
BENEFIT EQUALIZATION PLAN
A benefit equalization plan provides for additional payments on an unfunded
basis for
- awards payable under the Management Incentive Plan of JES;
- awards under Seagram's Senior Executive Short-Term Incentive Plan; and
- amounts in excess of statutory limitations for certain senior executives
of JES, including Edgar M. Bronfman, Charles R. Bronfman, Edgar Bronfman,
Jr., Robert W. Matschullat and John D. Borgia.
Senior executive employees participating in this plan are granted 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), if 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 following table shows the estimated annual pension benefits (calculated
on a straight-life basis) payable on retirement to eligible employees at or
after age 65. Benefits are shown using an average compensation which is
calculated using the five most highly compensated years during the last ten
years of employment.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
-------------------------------------------------------------------------
Annual Pension for Representative
Five-year Average Years of Continuous Service
Final -----------------------------------------------------
Compensation 5 10 20 30 40
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 800,000.... 60,000 120,000 240,000 359,000 479,000
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
4,400,000.... 330,000 660,000 1.320,000 1,979,000 2,639,000
4,800,000.... 360,000 720,000 1,440,000 2,159,000 2,879,000
-------------------------------------------------------------------------
</TABLE>
At June 30, 1999, Edgar M. Bronfman was credited with 40 years (the maximum
years permitted under the benefit equalization plan), Charles R. Bronfman was
credited with 30 months, Edgar Bronfman, Jr. was credited with 17 years, Robert
W. Matschullat was credited with three years and John D. Borgia was credited
with four years for purposes of the benefit equalization plan.
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 portion thereof) of his actual service to Seagram. 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
benefit equalization plan and other benefits.
JES has agreed with John D. Borgia that upon his retirement, the total
yearly pension payable to him shall not be less than the sum of $25,000
multiplied by the number of years (or portion thereof) of his continuous service
with Seagram, up to the maximum benefit that would be payable to him under the
terms of the pension plan and the benefit equalization plan or replacement plans
at age 60.
RETIREMENT SALARY CONTINUATION PLAN
JES maintains a program that provides retirement salary continuation
benefits for Edgar M. Bronfman and Edgar Bronfman, Jr. and certain other
executives of JES. If a participant retires after the age of 55 with ten or more
15
<PAGE> 18
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. As of 1988, no new
participants are being accepted into this program and, subject to the terms of
the program, existing participants will receive payments based on their
compensation levels at January 31, 1988.
OTHER RETIREMENT PLANS
Joseph E. Seagram & Sons, Limited, a Canadian subsidiary of Seagram,
maintains registered pension, unfunded pension and post-retirement consulting
plans for certain of Seagram's executive employees, including Charles R.
Bronfman. These plans are substantially equivalent to the pension, benefit
equalization and retirement salary continuation plans of JES. As of 1988, no new
participants are being accepted into the post-retirement consulting plan and,
subject to the terms of the program, existing participants will receive payments
based on their compensation levels at January 31, 1988. The estimated aggregate
annual pension benefits payable at normal retirement age, at or after age 60,
under the registered and unfunded plans are shown below. The benefits shown use
an average salary and cash bonus which is calculated using the five most highly
compensated years of the last ten years of employment.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
--------------------------------------------------------------------------------
Annual Pension for Representative
Years of Continuous Service
Five-year Average -----------------------------------------------------------
Final Compensation 5 10 20 30 40 50
--------------------------------------------------------------------------------
(CANADIAN DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
$ 600,000 90,000 180,000 270,000 360,000 405,000 450,000
800,000 120,000 240,000 360,000 480,000 540,000 600,000
1,000,000 150,000 300,000 450,000 600,000 675,000 750,000
1,200,000 180,000 360,000 540,000 720,000 810,000 900,000
1,400,000 210,000 420,000 630,000 840,000 945,000 1,050,000
--------------------------------------------------------------------------------
</TABLE>
At June 30, 1999, 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 plan.
SEVERANCE PLAN
JES maintains a severance pay plan for certain non-union employees of JES
and certain of its U.S. subsidiaries, including Edgar M. Bronfman, Charles R.
Bronfman, Edgar Bronfman, Jr., Robert W. Matschullat and John D. Borgia. The
named executives 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 one-twelfth 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
Robert W. Matschullat. On February 4, 1998, Robert W. Matschullat, who is
the Vice Chairman and Chief Financial Officer and a director of Seagram and JES,
entered into an employment agreement with JES. Mr. Matschullat's agreement
provides that he will be paid an annual salary of $1 million; that he will
participate in all benefit plans and arrangements generally applicable to senior
executives of JES; and that he will have the opportunity (under the Management
Incentive Plan, Senior Executive Short-Term Incentive Plan or successor plans),
to earn an annual cash incentive bonus which is adjusted annually until June 30,
2002 by the inflation rate multiplied by the sum of the preceding year's target
bonus plus $1 million. On February 9, 1998 Mr. Matschullat was awarded, in lieu
of other option grants during the period from February 9, 1998 to June 30, 2002,
a special one-time grant of options to purchase 1,000,000 Seagram common shares,
at the fair market value of the shares on the date of grant, plus options to
purchase 500,000 Seagram common shares at 140% of such fair market value.
16
<PAGE> 19
The options become exercisable in five equal annual installments that began 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 terminates his employment with good reason, or Seagram
and JES terminates his employment without cause (i) all options held by him will
become exercisable in full (and if the termination constitutes a "retirement" as
defined in the employment agreement, he may hold the options until their
original expiration dates); and (ii) he will be entitled to receive all accrued
and unpaid salary and bonus; an amount equal to two times his annual salary and
target bonus; and continuation of medical, dental and insurance coverage for two
years following the date of termination or if earlier, the date on which he
becomes eligible for coverage with a subsequent employer. If Mr. Matschullat
dies or is permanently disabled during the term of his employment agreement he
will receive all accrued and unpaid salary and bonus, and an amount equal to
one-year's salary plus a pro rata portion of his targeted annual bonus.
John D. Borgia. On April 28, 1995, John D. Borgia, who is the Executive
Vice President, Human Resources of Seagram and JES, accepted a written offer of
employment from JES. Mr. Borgia's offer letter provides that if JES terminates
Mr. Borgia's employment other than for death, retirement or for cause, Mr.
Borgia will receive, for a period of two years following his termination, his
annual base salary and continuation of medical, dental and life insurance
coverage.
Frank J. Biondi, Jr. On April 23, 1996, Seagram and Universal Studios,
Inc. ("Universal") entered into an employment agreement with Frank J. Biondi in
connection with his appointment as Chairman and Chief Executive Officer of
Universal. On November 16, 1998, Seagram announced that Mr. Biondi's employment
with Universal and his position as a director of Seagram,had terminated. For a
discussion of payments made by Seagram to Mr. Biondi pursuant to his employment
agreement in connection with the terminations, see "Transactions with Directors
and Others."
For a description of the pension benefits payable to Robert W. Matschullat
and John D. Borgia, see "Pension, Benefit Equalization, Retirement Salary
Continuation and Severance Plans."
REPORT ON EXECUTIVE COMPENSATION
The following report on executive compensation is provided by the Human
Resources Committee of the Board of Directors, which consists of non-employee
directors.
Seagram uses the guidelines and methodology described below to determine
the appropriate compensation levels for its executives. However, executive
officers covered by employment agreements may have compensation terms that
differ from the guidelines. The terms of certain of these employment agreements
can be found on page 16 under the heading "Employment and Consulting
Agreements".
Seagram annually reviews compensation data from surveys conducted by
independent compensation consultants in order to understand the levels of
compensation that Seagram's competitors are paying to their executive officers.
The comparison group from which the data is collected comprises a broad range of
Fortune 500 and similar international companies in general industry. In the case
of the Chief Executive Officer, the comparison group comprises 12 Fortune 500
and similar international consumer product and entertainment companies.
Companies of varying sizes engaged in the beverage alcohol and entertainment
businesses, some of which are included in the comparison group, make up the peer
groups included in the performance graphs on pages 20 and 21; however, the
Committee believes the comparison group more accurately reflects Seagram's
competitors for executive talent. Taking into account the comparison group
compensation data, the Committee determines the various components of
compensation for each executive officer. Seagram seeks to place each executive's
total compensation, including base salary, annual incentive awards and stock
option grants, at approximately the 75th percentile of the total compensation
paid for similar positions in the comparison group.
A subcommittee consisting of the following members:
Marie-Josee Kravis
Richard H. Brown
Andre Desmarais
17
<PAGE> 20
approves awards and administers the Senior Executive Short-Term Incentive Plan
and the 1996 Stock Incentive Plan described below.
The Human Resources Committee determines compensation for the executive
officers, which consists primarily of the following three components:
- salary
- annual incentive compensation
- stock-based compensation
Salary. Each executive's salary is based on the executive's
responsibilities, skills and sustained performance. Executive officers' salaries
are maintained at competitive levels within relevant labor markets and are
reviewed annually to maintain this competitive position. In the 1999 fiscal
year, Seagram targeted base salaries at the 50th to 75th percentile of the
comparison group for similar positions.
Annual Incentive Compensation. Seagram pays annual incentive awards to
executive officers participating in Seagram's Senior Executive Short-Term
Incentive Plan or Seagram's Management Incentive Plan. For the 1999 fiscal year,
target awards under the Senior Executive Short-Term Incentive Plan were based
upon Seagram or its applicable operating unit achieving prescribed objectives
for earnings before interest, taxes, depreciation and amortization ("EBITDA").
Target awards under the Management Incentive Plan were based upon Seagram and
its applicable operating unit achieving prescribed objectives for (i) EBITDA and
(ii) EBITDA in excess of capital cost. Under the plans, target annual incentive
awards for executive officers ranged from approximately 40% to 300% of salary
for the 1999 fiscal year. Awards under the Senior Executive Short-Term Incentive
Plan may be reduced for any reason including the Committee's assessment of
individual performance or of the financial performance of Seagram or its
operating units. Management Incentive Plan awards may be reduced or increased
based on an assessment of the individual executive's performance. Awards to
officers under the plans at the end of the 1999 fiscal year ranged from 90% to
120% of targets. Executives may elect to receive their Management Incentive Plan
awards on a deferred basis in the form of cash or Seagram shares.
Stock-Based Compensation. Seagram's 1996 Stock Incentive Plan allows
participating executive officers and other participating employees to benefit
from appreciation in the value of Seagram shares. Options to purchase Seagram
shares are an important element of the total compensation program.
Options granted under the 1996 Incentive Plan produce value for recipients
only if the price of Seagram shares increases from the price on the grant date.
Seagram grants options to executive officers annually. The options have ten-year
terms (subject to early termination in certain circumstances) and generally have
three-year vesting periods (subject to acceleration in certain circumstances).
The 1996 Incentive Plan, however, permits the subcommittee to grant options with
different vesting periods. In determining the option grants in a given year,
Seagram generally does not take into account the amount and terms of outstanding
options held by executive officers.
Compensation for the Chief Executive Officer. For the 1999 fiscal year,
the base salary for Edgar Bronfman, Jr. remained at $1,000,000 and his target
annual incentive award was set at 300% of salary. Mr. Bronfman was awarded 91%
of his target annual incentive award under the Senior Executive Short-Term
Incentive Plan for the 1999 fiscal year. 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.
During the 1999 fiscal year, the Committee renewed the existing equity
award program for Mr. Bronfman for a period of five years. The renewal contained
two elements: (i) a grant of options to purchase 1,500,000 Seagram shares, which
options have a five-year vesting period; and (ii) the opportunity to receive
additional grants should Seagram shares outperform the broader market, measured
at the end of each calendar year during the five-year period. The prior
equity-based program, which expired on January 31, 1999, did not result in the
grant of any equity interests to Mr. Bronfman during the 1999 fiscal year.
18
<PAGE> 21
Section 162(m) of the Internal Revenue Code. Section 162(m) of the
Internal Revenue Code limits the deductibility of certain types of compensation
in excess of $1 million paid to persons named in the Summary Compensation Table.
Seagram believes that compensation paid under the Senior Executive Short-Term
Incentive Plan and awards of stock options under Seagram's 1996 Stock Incentive
Plan satisfy the requirements of Section 162(m). However, Section 162(m) may
limit Seagram's or its affiliates' ability to deduct some other types of
compensation paid to individuals named in the Summary Compensation Table. We
believe Seagram should maintain the flexibility to design compensation
strategies that can respond quickly to the marketplace and Seagram's needs even
if such compensation is not fully deductible.
HUMAN RESOURCES COMMITTEE
Marie-Josee Kravis, Chairman
Richard H. Brown
Andre Desmarais
Senator E. Leo Kolber
John S. Weinberg
PERFORMANCE GRAPHS -- COMPARISON
The following graphs compare the cumulative five-year total return of
Seagram shares with the S&P 500, the Toronto Stock Exchange 300 Composite Index
("TSE 300") and two peer groups. As a result of our acquisition of PolyGram N.V.
("Polygram") and our sale of Tropicana Products, Inc., the nature of our
business changed significantly during fiscal 1999. For comparative purposes, two
peer groups are presented.
The new peer group comprises companies included in the S&P Beverages
(Alcoholic) Index, certain non-U.S. competitors that compete with our beverage
alcohol business, and certain entertainment companies that compete with our
entertainment business. In addition to Seagram, the members of this peer group
are Allied Domecq PLC, Brown-Forman Corporation, Diageo plc, EMI Group plc, Fox
Entertainment Group, Inc., Time Warner Inc., Viacom Inc. and The Walt Disney
Company. We anticipate using this peer group in the future.
The old peer group comprises companies included in the S&P Beverages
(Alcoholic) Index, certain non-U.S. competitors that compete with our beverage
alcohol business, companies included in the S&P Foods Index, and certain
entertainment companies that compete with our entertainment business. In
addition to Seagram, the members of this peer group are 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, EMI Group plc, 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 Wm. Wrigley Jr.,
Company.
The returns of each company have been weighted according to their
respective market capitalization as well as the respective revenues from our
entertainment, spirits and wine, and, until August 1998 when we sold Tropicana
Products, Inc., our juice businesses.
The performance graphs assume that $100 was invested on June 30, 1994 in
Seagram shares, the S&P 500, the TSE 300 and the peer groups and that all
dividends were reinvested.
19
<PAGE> 22
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
SEAGRAM, S&P 500, TSE 300 AND NEW PEER GROUP
(TWELVE MONTHS ENDED JUNE 30)
[S&P CHART]
<TABLE>
<CAPTION>
SEAGRAM S&P 500 TSE 300 INDUSTRY PEER INDEX
------- ------- ------- -------------------
<S> <C> <C> <C> <C>
1994 100 100 100 100
1995 117 126 115 98
1996 115 159 131 96
1997 140 214 170 115
1998 145 278 198 160
1999 182 343 192 179
</TABLE>
20
<PAGE> 23
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
SEAGRAM, S&P 500, TSE 300 AND OLD PEER GROUP
(TWELVE MONTHS ENDED JUNE 30)
[S&P CHART]
<TABLE>
<CAPTION>
SEAGRAM S&P 500 TSE 300 OLD PEER GROUP
------- ------- ------- --------------
<S> <C> <C> <C> <C>
1994 100 100 100 100
1995 117 126 115 115
1996 115 159 131 129
1997 140 214 170 158
1998 145 278 198 217
1999 182 343 192 246
</TABLE>
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All five members of the Human Resources Committee are "outside" directors.
Described below, however, is information regarding certain entities with which
certain of such directors have relationships.
As of August 31, 1999, Universal owned approximately 25.6% of the common
stock of Loews Cineplex Entertainment Corporation. In the normal course of its
business, Universal receives certain film licensing fees from Loews Cineplex and
pays Loews Cineplex distribution fees. As of August 31, 1999, entities and
persons related to Charles R. Bronfman held approximately 6.7% of the common
stock of Loews Cineplex and Senator E. Leo Kolber, a Seagram director,
beneficially owned 0.6% of the common stock of Loews Cineplex and is currently a
director of Loews Cineplex.
Goldman, Sachs & Co. performs investment banking services and provides
investment advice to Seagram and its subsidiaries, including acting as financial
advisor to Seagram in connection with the sales of Tropicana Products, Inc.,
Seagram's Champagne business and PolyGram Filmed Entertainment, Inc., as
managing underwriter or participating underwriter in connection with the sale of
securities of Seagram and JES, as a dealer in the sale of commercial paper
issued by JES, as a market maker in certain securities of JES and as a broker in
connection with Seagram's share purchase program. In June 1999, Goldman, Sachs &
Co. acted as managing underwriter of public
21
<PAGE> 24
offerings of 37,000,000 common shares and 20,025,000 Adjustable Conversion-rate
Equity Security Units. John S. Weinberg, a member of the Human Resources
Committee, is a Managing Director of Goldman, Sachs & Co.
TRANSACTIONS WITH DIRECTORS AND OTHERS
During the 1999 fiscal year, Claridge Inc. reimbursed a subsidiary of
Seagram for the use of aircraft owned by such subsidiary in the amount of
$76,502. The payment represented Claridge's pro rata share of the applicable
operating expenses of the aircraft. During the 1999 fiscal year, Seagram paid or
accrued rent and reimbursed expenses to Claridge in the amount of Cdn. $381,854
(and Cdn. $29,260 during the current fiscal year to August 31, 1999) for the use
by Seagram of office and parking space and secretarial services. The CRBFT owns
all of the shares of Claridge. Charles R. Bronfman and Samuel Minzberg are among
the directors and officers of Claridge.
During the 1999 fiscal year, The Andrea & Charles Bronfman Philanthropies,
Inc., a charitable organization, paid or accrued rent and reimbursed Seagram in
the amount of $67,368 (and $11,228 during the current fiscal year to August 31,
1999) for use by such organization of office space in Seagram's offices in New
York. Andrea Bronfman and Charles R. Bronfman are directors of The Andrea &
Charles Bronfman Philanthropies, Inc.
Bank of Montreal extends credit and provides other services to Seagram and
its subsidiaries, including serving as a co-agent and lender under several
credit agreements, acting as an issuing agent and broker for commercial paper
and providing cash management and other services. Matthew W. Barrett, a Seagram
director, was, until July 27, 1999, Chairman of Bank of Montreal. Nesbitt Burns
Inc., an affiliate of the Bank of Montreal, acts as a broker in connection with
Seagram's share purchase program in Canada and as an underwriter in connection
with the sale of equity and debt securities of Seagram and JES.
During the 1999 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,
1999) for 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.
Samuel Minzberg is of counsel to the Montreal office of Goodman Phillips &
Vineberg, a law firm which provided legal services to Seagram during the 1999
fiscal year.
On June 15, 1999, Esarbee Investments Limited ("Esarbee"), a wholly owned
subsidiary of the CRBFT, transferred indirectly 2,000,000 common shares to
Seagram in exchange for 2,000,000 newly issued common shares. Seagram was fully
indemnified for its participation in and reimbursed for all expenses related to
the exchange. On June 21, 1999, Esarbee sold the 2,000,000 newly issued common
shares as part of a public offering of common shares by Seagram and certain
other selling shareholders at a price per share (excluding underwriting
discounts) of $50.125. Stephen R. Bronfman, a nominee for director of Seagram,
and Ellen J. Bronfman Hauptman, his sister, are trustees of the CRBFT. The CRBFT
is a trust for the benefit of Stephen R. Bronfman.
On November 16, 1998, Frank J. Biondi, Jr.'s employment as Chairman and
Chief Executive Officer of Universal, and his position as a Seagram director,
terminated. In accordance with the terms of Mr. Biondi's employment agreement,
upon his termination of employment, Mr. Biondi's options became exercisable in
full. In addition, Mr. Biondi (i) is entitled to receive salary, deferred
compensation, and target bonus payments through June 30, 2001, plus a cash
payment of $9,000,000, and (ii) will receive continuation of medical, dental and
certain other insurance coverage until the earlier of the conclusion of the
continuation period or his eligibility for coverage with another employer, with
life insurance coverage in the amount of $10,000,000 being maintained until June
30, 2001. Mr. Biondi's ability to interfere with the business of Universal, its
subsidiaries and affiliates is restricted for two years following the
termination of his employment.
In connection with Seagram's acquisition of PolyGram, Seagram and Philips
entered into a stockholders agreement providing for certain arrangements
relating to Philips' ownership of shares following consummation of the
acquisition. Under the stockholders agreement, Seagram agreed to use its best
efforts to cause the election of the chief executive officer of Philips to the
Seagram board of directors for so long as Philips beneficially owns at least 5%
of the shares. Cornelis Boonstra is the Chairman of the Board of Management and
President of Philips. In addition, the agreement provides that at any time
Philips is entitled to designate a director, Philips will also be entitled to
appoint one ex officio member of the board of directors. The ex officio member
will receive notice of and attend board meetings and receive all information
circulated or made available to the board of directors. However, the ex officio
member is not a member of the board for purposes of determining a quorum or for
any other purpose, and does not have the right to vote on any matter voted on by
the board.
22
<PAGE> 25
Under the stockholders agreement, subject to certain conditions, Philips
will vote its shares to cause each of the nominees designated by the board of
directors to be elected to the board. In connection with any vote of Seagram
shareholders relating to any other matter, unless Seagram otherwise consents in
writing, Philips will vote its shares, at its option, either proportionately on
the same basis as the other shareholders vote or as recommended by the board of
directors. The stockholders agreement also:
- restricts Philips from transferring its shares;
- prohibits Philips from acquiring any additional shares or participating
in certain extraordinary transactions involving Seagram or any material
portion of its business; and
- grants to Philips customary demand and piggyback rights for the
registration of its shares.
Universal holds an effective 45% interest in USA Networks, Inc. ("USA
Networks") through its ownership of common stock and class B common stock of USA
Networks and shares of USANi LLC, a subsidiary of USA Networks, which Universal
can exchange for common stock and class B common stock of USA Networks.
Universal is party to a governance agreement among USA Networks, Universal,
Liberty Media and Barry Diller. The governance agreement:
- limits Universal from acquiring additional equity securities of USA
Networks;
- restricts Universal from transferring USA Networks securities;
- provides for representation by Universal and Liberty Media on USA
Networks' board of directors; and
- lists fundamental actions that require the consent of Universal, Liberty
Media and Mr. Diller before USA Networks can take those actions.
In addition, Universal has entered into a stockholders agreement among
Universal, Liberty Media, Mr. Diller, USA Networks and Seagram. The stockholders
agreement:
- governs the acquisition of additional USA Networks securities by Liberty
Media;
- restricts the transfer of shares; and
- generally grants Mr. Diller voting control over all of the USA Networks
capital stock owned by Universal and Liberty Media except with respect to
the fundamental actions discussed above.
Universal is also party to a spinoff agreement among Universal, Liberty
Media and USA Networks providing for interim management arrangements in the
event that Mr. Diller ceases to be Chief Executive Officer of USA Networks or
becomes disabled. In addition, Universal has entered into agreements with USA
Networks providing for various ongoing business arrangements, including:
- an international distribution agreement granting Universal the right to
distribute internationally, programs produced by USA Networks for a fee;
- a domestic distribution agreement granting USA Networks 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 the USA Network, the Sci-Fi Channel and Universal's new
action/suspense channel, 13th Street, outside of the United States; and
- a transition services agreement and agreements relating to merchandising,
music administration and music publishing, home video distribution, the
use by USA Networks of Universal's studio facilities and certain other
matters.
The parties negotiated these ongoing arrangements, which contain normal
business terms and conditions, on an arms' length basis. Under the agreement
governing Universal's investment in USA Networks, at various times since March
1998 Universal and Liberty Media have exercised their preemptive rights to
purchase additional shares of USANi LLC shares following issuances of common
stock by USA Networks. Universal and Liberty Media may continue to exercise
these preemptive rights from time to time in the future. Mr. Diller is the
Chairman of the Board and Chief Executive Officer of USA Networks and, at August
31, 1999, owned or had the right to vote,
23
<PAGE> 26
pursuant to the stockholders agreement, approximately 14% of the outstanding USA
Networks common stock, 100% of the outstanding USA Networks class B common stock
and approximately 74% of the outstanding total voting power of USA Networks
common stock and USA Networks class B common stock.
On May 28, 1999, USA Networks acquired from Universal Studios Holding I
Corp. all of the capital stock of PolyGram Filmed Entertainment, Inc. ("PFE"),
including the domestic motion picture and home video distribution organization
conducted as PolyGram Films, PolyGram Video, PolyGram Filmed Entertainment
Canada, Gramercy Pictures, Interscope Communications and Propaganda Films.
Universal acquired PFE in December 1998 as part of Seagram's approximately $10.6
billion acquisition of Polygram. At the time of the sale of PFE to USA Networks,
USA Networks agreed to pay or assume certain liabilities relating to the
acquired businesses, and Universal and USA Networks entered into agreements
providing for various ongoing business arrangements between Universal and USA
Networks, including, among others:
- a domestic theatrical distribution agreement, pursuant to which USA
Networks made a $200 million interest bearing loan to Universal's parent
which is due in approximately eight years unless repaid earlier from
receipts arising from distribution of specified motion pictures which USA
Networks has the exclusive right to distribute theatrically, on
television and on video in the United States and Canada for a fee;
- an ancillary services agreement, pursuant to which the parties will
provide certain customary transitional services to each other during the
six months following the closing;
- a videogram fulfillment agreement, pursuant to which Universal or one of
its affiliates will provide certain "pick, pack and ship" and related
fulfillment services in the United States and Canada with respect to
videos containing motion pictures of USA Networks; and
- a music administration agreement, pursuant to which, subject to certain
specified exceptions, USA Networks appointed Universal-MCA Music
Publishing to be the exclusive administrator for 15 years of USA
Networks' interest in certain music publishing rights to music
compositions owned or controlled by USA Networks which are written for or
used in motion pictures and videos following the closing.
These arrangements were negotiated by the parties on an arms' length basis
and contain customary business terms and conditions.
In addition, on May 28, 1999, USA Networks indirectly acquired 100 percent
of OFI Holdings, Inc. ("OFI"), in which Universal owned a majority interest,
pursuant to a merger with a wholly-owned subsidiary of USA Networks. OFI owns
October Films, Inc. Universal had acquired 51% of OFI in July 1997 for $10
million. Immediately prior to the merger, Universal subscribed for 300,000
shares of USA Networks common stock for $12 million in cash and exchanged its
shares of common stock of OFI for an equal number of shares of a new class of
preferred stock of OFI. In connection with the merger, Universal received
300,000 additional shares of USA Networks common stock as merger consideration
for its shares of OFI preferred stock and the other shareholders of OFI received
$12 million in cash as merger consideration for their shares. The terms of the
merger were determined to be fair to OFI shareholders by an independent
committee of OFI's board of directors and its financial adviser.
Seagram considers the amounts paid or received in the transactions
described above and under "Human Resources Committee Interlocks and Insider
Participation" to be reasonable and competitive and management believes they are
comparable to those which would have been paid to or received from others.
Seagram maintains directors' and officers' liability insurance, which
insures the directors and officers of Seagram and its subsidiaries against
losses from certain claims brought against its directors and officers. The
policy has an aggregate limit of $100 million with a deductible of $500,000. The
annual premium is $537,256, which has been paid for the policy year ending
October 1999.
APPOINTMENT OF AUDITORS
The persons named in the enclosed proxy, unless otherwise directed by you
in the proxy form, intend to vote FOR the reappointment of
PricewaterhouseCoopers LLP as Seagram's auditors and to authorize the Board of
Directors to set their remuneration. If appointed, PricewaterhouseCoopers will
hold office until the close of the 2000 Annual Meeting. PricewaterhouseCoopers
have been Seagram's auditors for many years. Representatives of
24
<PAGE> 27
PricewaterhouseCoopers will be present at the 1999 Annual Meeting and will have
the opportunity to make a statement. They also will be available to respond to
shareholder questions.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report to Shareholders, which includes the Consolidated
Financial Statements of Seagram for the 1999 fiscal year, will be placed before
the shareholders at the 1999 Annual Meeting as required by the Canada Business
Corporations Act. No action is required or proposed to be taken by shareholders
with respect to this Report.
AVAILABILITY OF DISCLOSURE DOCUMENTS
You may obtain upon request to the Secretary of Seagram, at 1430 Peel
Street, Montreal, Quebec, Canada H3A 1S9, a copy of: (1) the latest Annual
Information Form or Annual Report on Form 10-K, together with any document
incorporated therein; (2) the comparative Consolidated Financial Statements of
Seagram for the 1999 fiscal year, together with the related auditors' report and
any interim financial statements filed with the securities commissions of any
province of Canada after the date of Seagram's 1999 financial statements; and
(3) this Proxy Circular.
PROCEDURE FOR SUBMITTING SHAREHOLDER PROPOSALS
Shareholders who wish to include proposals in the Proxy Circular for the
2000 Annual Meeting of Shareholders, must submit their proposals in writing to
the Secretary of Seagram, at 1430 Peel Street, Montreal, Quebec, Canada H3A 1S9,
on or before August 4, 2000. ANY SHAREHOLDER PROPOSAL WHICH IS NOT SUBMITTED AS
DESCRIBED ABOVE WILL BE SUBJECT TO THE DISCRETIONARY AUTHORITY OF THE PERSONS
NAMED ON THE PROXY FOR THE 2000 ANNUAL MEETING.
GENERAL
The contents and sending of this Proxy Circular have been approved by
resolution of the Board of Directors of Seagram.
Montreal, Quebec, August 31, 1999
/s/ Michael C. L. Hallows
-----------------------------
MICHAEL C. L. HALLOWS
Secretary
25
<PAGE> 28
[RECYCLE LOGO]
<PAGE> 29
THE SEAGRAM COMPANY LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE SEAGRAM
COMPANY LTD. FOR THE ANNUAL MEETING OF SHAREHOLDERS OF SEAGRAM TO BE HELD
NOVEMBER 3, 1999, 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 3, 1999, at the Hotel Omni
Montreal, 1050 Sherbrooke Street West, Montreal, Quebec, and at any and all
adjournments thereof, upon the following matters:
<TABLE>
<C> <C> <S>
- ------------------------------------------------------------------------------------------------------------
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, Stephen R.
Bronfman, Matthew W. Barrett, Laurent Beaudoin,
Cornelis Boonstra, Richard H. Brown, Andre Desmarais, Barry Diller, Michele J. Hooper, David L.
Johnston, Marie-Josee Kravis, Robert W. Matschullat,
Samuel Minzberg and John S. Weinberg.
FOR WITHHELD FOR, except vote withheld from the following nominee(s)
[ ] [ ]
------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
b) Appointment of PricewaterhouseCoopers LLP as Auditors
FOR WITHHELD
[ ] [ ]
c) 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 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.......................... 1999 ............................................................
Signature of Shareholder
</TABLE>
(If not dated, this proxy is deemed to bear the date when mailed by Seagram.)
PROXY
PLEASE COMPLETE AND RETURN IN THE
ENVELOPE PROVIDED.
[RECYCLE LOGO]
ACCOUNT NO. SHARES
<PAGE> 30
[THE SEAGRAM COMPANY LTD. LOGO]
Dear Shareholder:
Since Seagram provides summarized earnings information to the press on the day
its quarterly results are announced and also places these releases and
subsequent Securities and Exchange Commission (S.E.C.) Form 10-Q filings on its
website at www.seagram.com, many shareholders may not wish to receive copies of
the interim financial statements. We therefore only mail interim financial
statements to those shareholders who have indicated that they wish to receive
them.
If you wish to receive interim financial statements for the fiscal year ending
June 30, 2000, please complete, sign, detach and return the bottom portion of
this card in the enclosed envelope along with your proxy. Of course all
shareholders will continue to receive the Annual Report and related proxy
material.
The Seagram Company Ltd.
Please detach here and return with your proxy
_______________________________________________________________________________
THE SEAGRAM COMPANY LTD.
INTERIM FINANCIAL STATEMENTS MAILING LIST
_______________________________________________________________________________
I confirm that I am the owner of common shares of The Seagram Company Ltd.
Signature:____________________________________________ Date:___________________
Name:__________________________________________________________________________
(Please Print)
Street:________________________________________________________________________
______________________________________________________ City:___________________
Province/ Postal/
State:________________________________________________ Zip Code:_______________
[THE SEAGRAM COMPANY LTD. LOGO]
Please add my name to
your mailing list in order
to receive interim
financial statements.
Please detach and
return with proxy.
Or return to:
CIBC Mellon Trust Company
P.O. Box 700, Station "B"
Montreal, Quebec H3B 3K3
<PAGE> 31
[THE SEAGRAM COMPANY LTD. LOGO]
Dear Shareholder:
Since Seagram provides summarized earnings information to the press on the day
its quarterly results are announced and also places these releases and
subsequent Securities and Exchange Commission (S.E.C.) Form 10-Q filings on its
website at www.seagram.com, many shareholders may not wish to receive copies of
the interim financial statements. We therefore only mail interim financial
statements to those shareholders who have indicated that they wish to receive
them.
If you wish to receive interim financial statements for the fiscal year ending
June 30, 2000, please complete, sign, detach and return the bottom portion of
this card. Of course all shareholders will continue to receive the Annual Report
and related proxy material.
The Seagram Company Ltd.
Please detach here and return
_______________________________________________________________________________
THE SEAGRAM COMPANY LTD.
INTERIM FINANCIAL STATEMENTS MAILING LIST
_______________________________________________________________________________
I confirm that I am the owner of common shares of The Seagram Company Ltd.
Signature:____________________________________________ Date:___________________
Name:__________________________________________________________________________
(Please Print)
Street:________________________________________________________________________
______________________________________________________ City:___________________
Province/ Postal/
State:________________________________________________ Zip Code:_______________
[THE SEAGRAM COMPANY LTD. LOGO]
Please add my name to
your mailing list in order
to receive interim
financial statements.
Please detach and
return.
