<PAGE>
`
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PRIMEDIA INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock, par value $.01 per share ("Common Stock"), of the Registrant
(2) Aggregate number of securities to which transaction applies: 130,283,909
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total Fee Paid: N/A
/ / 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)(3) 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: April 10, 1998
<PAGE>
PRIMEDIA Inc.
<TABLE>
<S> <C>
WILLIAM F. REILLY 745 FIFTH AVENUE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER NEW YORK, NY 10151
</TABLE>
April 10, 1998
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
PRIMEDIA Inc. (the "Company"). The meeting will be held at 10:00 a.m. on
Thursday, May 21, 1998, at Le Parker Meridien, 118 West 57th Street, New York,
New York 10019.
Information regarding the business to be conducted at the meeting is set forth
in the following formal Notice of Annual Meeting and Proxy Statement. The Annual
Meeting will begin with a report on the Company, and you will be asked to vote
upon the election of eight directors and the appointment of the auditors. You
will have an opportunity to ask questions about the items under consideration as
well as other matters relating to the Company's business.
Your vote is important. Therefore, after you read the Notice of Annual Meeting
and Proxy Statement, please complete and return promptly the enclosed form of
proxy to ensure that your shares will be represented.
A return envelope is enclosed for your convenience. You may revoke your proxy at
any time before it is exercised at the meeting. Accordingly, you should sign and
return your proxy even if you plan to attend the meeting.
I look forward to receiving your proxy and meeting you on May 21.
Sincerely,
[LOGO]
<PAGE>
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 21, 1998
To the Stockholders of
PRIMEDIA Inc.:
The annual meeting of stockholders of PRIMEDIA Inc. will be held on Thursday,
May 21, 1998, at Le Parker Meridien, 118 West 57th Street, New York, New York
10019 at 10:00 a.m. to:
(1) Elect eight directors;
(2) Act upon the selection of auditors for the fiscal year ending December
31, 1998;
(3) Transact such other business as may properly come before the meeting.
Only holders of record of Common Stock, $.01 par value, at the close of business
on March 23, 1998, will be entitled to vote at the meeting.
Beverly C. Chell
VICE CHAIRMAN AND SECRETARY
April 7, 1998
<PAGE>
PROXY STATEMENT
SOLICITATION OF PROXIES
This proxy statement is furnished by the Board of Directors (the "Board") of
PRIMEDIA Inc. (the "Company" or "PRIMEDIA" and, where appropriate, together with
its subsidiaries), in connection with its solicitation of proxies for use at the
annual meeting of stockholders to be held on Thursday, May 21, 1998, at 10:00
a.m., at Le Parker Meridien, 118 West 57th Street, New York, New York 10019 and
at any and all adjournments thereof. Mailing of the proxy statement will
commence on or about April 10, 1998. Holders of record of Common Stock, $.01 par
value (the "Common Stock"), at the close of business on March 23, 1998, will be
entitled to one vote for each share held on all matters to come before the
meeting. On March 23, 1998, there were outstanding 145,986,144 shares of Common
Stock.
A proxy on the enclosed form may be revoked at any time before it has been
exercised. Unless the proxy is revoked or there is a direction to abstain on one
or more proposals, it will be voted on each proposal and, if a choice is made
with respect to any matter to be acted upon, in accordance with such choice. If
no choice is specified, the proxy will be voted as recommended by the Board.
VOTING AT THE MEETING
A majority of the votes entitled to be cast on matters to be considered at the
meeting constitutes a quorum. If a share is represented for any purpose at the
meeting, it is deemed to be present for all other matters. Abstentions and
shares held of record by a broker or its nominee ("Broker Shares") that are
voted on any matter are included in determining the number of votes present.
Broker Shares that are not voted on any matter at the meeting will not be
included in determining whether a quorum is present.
The election of each nominee for director and the selection of the auditors
requires a majority of the votes cast. Abstentions and Broker Shares that are
not voted on the matter will not be included in determining the number of votes
cast.
Stockholders' proxies are received by the Company's independent proxy processing
agent, and the vote is certified by independent inspectors of election. Proxies
and ballots that identify the vote of individual stockholders will be kept
confidential, except as necessary to meet legal requirements, in cases where
stockholders write comments on their proxy cards or in a contested proxy
solicitation. During the proxy solicitation period, the Company will receive
vote tallies from time to time from the inspectors, but such tallies will
provide aggregate figures rather than names of stockholders. The independent
inspectors will notify the Company if a stockholder has failed to vote so that
he or she may be reminded and requested to do so.
------------------------
ELECTION OF DIRECTORS
GENERAL INFORMATION
The Board has responsibility for establishing broad corporate policies and for
the overall performance of the Company. Members of the Board are kept informed
of the Company's businesses by various reports and documents sent to them each
month as well as by operating and financial reports made at Board and committee
meetings by the Chairman of the Board and other officers.
Regular meetings of the Board are held each calendar quarter. The organizational
meeting will follow immediately after the annual meeting of stockholders. The
Board held four meetings in 1997 and acted four times by unanimous written
consent.
------------------------
COMMITTEES OF THE BOARD
Various committees of the Board have been established to assist it in the
discharge of its responsibilities. Those committees are described below. The
biographical information on the nominees for director set forth in this proxy
statement includes committee memberships currently held by each nominee.
1
<PAGE>
The AUDIT COMMITTEE meets with management, the Company's independent accountants
and its internal auditors to consider the adequacy of the Company's internal
controls and other financial reporting matters. The Audit Committee recommends
to the Board the engagement of the Company's independent accountants, discusses
with the independent accountants their audit procedures, including the proposed
scope of the audit, the audit results and the accompanying management letters
and, in connection with determining their independence, reviews the services
performed by the independent accountants. The Committee met twice in 1997.
Professor Meyer Feldberg is the sole member on the Audit Committee.
The COMPENSATION COMMITTEE is responsible for administering the Company's
compensation programs and remuneration arrangements for its senior executives,
including the chief executive officer. The Committee's Report on Executive
Compensation appears elsewhere in this proxy statement. The Compensation
Committee consists of three non-employee directors and met twice in 1997.
The EXECUTIVE COMMITTEE, consisting of four directors, has authority to act for
the Board on most matters during intervals between Board meetings. This
committee acted by unanimous written consent twice during 1997.
------------------------
THE NOMINEES
It is proposed that eight directors be elected to hold office until the next
annual meeting of stockholders and until their successors have been elected.
Unless otherwise marked, a proxy will be voted for such persons. Each of the
nominees was elected at the last Annual Meeting as a director. The average
attendance of the Board and all of its committees during 1997 was over 90%.
Although management does not anticipate that any of the persons named below will
be unable or unwilling to stand for election, a proxy, in the event of such an
occurrence, may be voted for a substitute designated by the Board. However, in
lieu of designating a substitute, the Board may amend the By-Laws to reduce the
number of directors.
The Board of Directors recommends that you vote FOR the nominees described
below.
<TABLE>
<CAPTION>
WILLIAM F. REILLY Mr. Reilly is Chairman of the Board, Chief
Chairman of the Board, Chief Executive Executive Officer and a Director of
Officer and Director PRIMEDIA and has served in such
Age: 59 capacities since November of 1991. Mr.
Reilly is also a director of FMC
Corporation. Mr. Reilly is Chairman of
the Executive Committee.
<S> <C>
BEVERLY C. CHELL Ms. Chell became Vice Chairman, General
Vice Chairman, General Counsel, Secretary Counsel and Secretary of PRIMEDIA in
and Director November 1991 and a Director in March
Age: 55 1992. She is also a director of
Mecklermedia Corporation.
MEYER FELDBERG Professor Feldberg is Professor and Dean
Director of the Columbia University Graduate
Age: 56 School of Business and has been since
1989. He joined the Board in January
1997. He is also a director of Federated
Department Stores, Inc. and Revlon, Inc.
He is the sole member of the Audit
Committee.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
PERRY GOLKIN Mr. Golkin became a Director of PRIMEDIA
Director in November 1991. He is a General
Age: 44 Partner of KKR Associates and was a
General Partner of KKR from January 1,
1995 until January 1, 1996 when he
became a member of the limited liability
company which serves as the general
partner of KKR. Prior to 1995, Mr.
Golkin was an executive at KKR. He is
also a director of Walter Industries,
Inc. Mr. Golkin is a member of the
Compensation and Executive Committees.
HENRY R. KRAVIS Mr. Kravis became a Director of PRIMEDIA
Director in November 1991. He is a Founding
Age: 54 Partner of Kohlberg Kravis Roberts & Co.
("KKR") and KKR Associates. Effective
January 1, 1996, he became a managing
member of the Executive Committee of the
limited liability company which serves
as the general partner of KKR. He is
also a director of Amphenol Corporation,
AutoZone, Inc., Borden Inc., Bruno's,
Inc., Evenflo & Spalding Holdings
Corporation, The Gillette Company, IDEX
Corporation, KinderCare Learning
Centers, Inc., Owens-Illinois Group,
Inc., Owens-Illinois, Inc., Randall's
Food Markets, Inc., RELTEC Corporation,
Safeway Inc., Sotheby's Holdings, Inc.,
Union Texas Petroleum Holdings, Inc. and
World Color Press, Inc. Mr. Kravis is
Chairman of the Compensation Committee
and serves on the Executive Committee.
CHARLES G. MCCURDY Mr. McCurdy became President and a
President and Director Director of PRIMEDIA in November 1991
Age: 42 and was also Treasurer from 1991 to
August 1993.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
GEORGE R. ROBERTS Mr. Roberts became a Director of PRIMEDIA
Director in March 1992. He is a Founding Partner
Age: 54 of KKR and KKR Associates. Effective
January 1, 1996, he became a managing
member of the Executive Committee of the
limited liability company which serves
as the general partner of KKR. He is
also a director of Amphenol Corporation,
AutoZone, Inc., Borden Inc., Bruno's,
Inc., Evenflo & Spalding Holdings
Corporation, IDEX Corporation,
KinderCare Learning Centers, Inc.,
Owens-Illinois Group, Inc.,
Owens-Illinois, Inc., Randall's Food
Markets, Inc., RELTEC Corporation,
Safeway, Inc., Union Texas Petroleum
Holdings, Inc. and World Color Press,
Inc.
MICHAEL T. TOKARZ Mr. Tokarz became a Director of PRIMEDIA
Director in November 1991. He is a General
Age: 48 Partner of KKR Associates and was a
General Partner of KKR from January 1,
1993 until January 1, 1996 when he
became a member of the limited liability
company which serves as the general
partner of KKR. Prior to 1993, Mr.
Tokarz was an executive at KKR. He is
also a director of Evenflo & Spalding
Holdings Corporation, IDEX Corporation,
Safeway, Inc. and Walter Industries,
Inc. Mr. Tokarz is a member of the
Compensation and Executive Committees.
</TABLE>
Messrs. Kravis and Roberts are first cousins.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for services as a director. In 1997, non-employee directors
received an annual all inclusive fee of $45,000 for all services on the Board
and all committees.
A non-employee director may elect to defer all or part of the fee. Deferred
amounts are "credited" to an unfunded cash account or Common Stock equivalent
account, as selected by the director. Interest, at PRIMEDIA's average borrowing
rate, is credited quarterly for bookkeeping purposes to a director's cash
account. Subject to certain restrictions, a director is permitted to take
distributions in cash from a cash account or in shares of Common Stock or cash
equivalent to the then value of credited shares, at the Company's option, in
whole or in part, from his account following retirement or termination of
service. Messrs. Golkin and Roberts have each elected to defer his fee in Common
Stock equivalents.
On March 5, 1997, the Compensation Committee granted Professor Feldberg ten-year
non-qualified stock options to purchase 25,000 shares of the Company's Common
Stock under the Company's stock option plan, with an exercise price of $13 per
share, the fair market value on the date of grant.
4
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
TO OUR STOCKHOLDERS:
The Compensation Committee is responsible for administering total compensation
programs that are designed to:
- Match the Company's compensation plans to its business strategies, as well
as the external business environment;
- Emphasize the relationship between pay and performance by placing a
significant portion of compensation at risk and subject to the achievement
of financial goals and objectives;
- Maximize profitability through growth and cost efficiency, balancing
appropriately the short-term and long-term goals of the Company;
- Align the interests of executives with those of stockholders through the
use of equity-based incentive awards to link a significant portion of
compensation to stockholder value; and
- Target executive compensation at a level sufficient to insure PRIMEDIA's
ability to attract and retain superior executives.
The following factors affected the actions of the Committee in 1997:
- The successful implementation of the Company's growth strategy: to have
double digit annual growth fueled equally by organic growth and product
line extension acquisitions.
- The successful implementation of the Company's Focusing Program, commenced
and substantially completed in 1997, to focus on areas of business that
have the greatest potential for future growth and divest certain businesses
that did not provide that growth potential.
- The overall financial performance of the Company, as measured by the
Company's growth in EBITDA (earnings before interest, taxes, depreciation
and amortization) and "free cash flow" which is EBITDA after the effect of
changes in working capital and after deductions for capital expenditures.
The Committee believes that the actions undertaken in 1997 with respect to the
Company's compensation program, as discussed below, met its objectives.
The Committee believes that compensation for executive officers should be linked
to performance. To achieve correlation between executive compensation and
performance, more than half of the compensation awarded to the executive officer
group for 1997 was at-risk incentive compensation directly related to the
performance of the Company and its business units. This includes annual cash
bonuses and long-term incentive plan awards.
BASE SALARY. Base salary, is based on a qualitative evaluation of a variety of
factors, including level of responsibility and individual performance. It is the
policy of the Committee to review base salary of its most senior executives no
more frequently than every 14 to 20 months. During 1997, Messrs. Reilly and
McCurdy and Ms. Chell of the named executives received salary increases.
ANNUAL INCENTIVES. Annual cash bonuses principally contingent on meeting
performance-targets, are provided to senior executives and middle-managers. For
1997, 620 senior executives and middle managers participated in the Company's
various executive incentive plans. Effective for 1996, the Committee modified
its Executive Incentive Compensation Plan (The "Executive Incentive Plan"), as
described in footnote (1) to the Executive Compensation Table, to reduce the
executive compensation that may be subject to the deductibility limits of
Section 162(m) of the Internal Revenue Code ("IRC") for certain senior
executives of PRIMEDIA including those named in the Summary Compensation Table.
Therefore, for 1997, the most senior executives participated in two executive
incentive plans, which together provide the same level of incentive compensation
previously provided under the one plan.
5
<PAGE>
LONG-TERM PERFORMANCE AWARDS. A new three-year long-term performance cycle began
January 1, 1997 for the three most senior executives. The awards for the covered
officers are based on a formula tied to the achievement of cumulative cash flow
targets during each three year performance cycle.
The Company's 1992 Amended and Restated Stock Option Plan (the "Stock Option
Plan") provides that stock options, restricted stock and performance awards may
be granted to key executives who contribute to the growth and profitability of
the Company. Only stock options are outstanding under the Plan.
The Committee periodically evaluates its stock option award guidelines. In 1997,
the Committee granted options to six executives based on the desire to
strengthen their focus on long-term stock-based compensation. The executives to
whom options were to be granted in 1997 were determined based on individual
performance, future needs of the Company and role within the Company. The size
of actual stock option awards was based on a model by job and was adjusted
upward or downward based on a subjective evaluation of individual contribution
and potential. In order to receive an initial grant, the executive must purchase
and hold shares of Common Stock equal to at least 25% of the number of options
granted. No stock options were granted to any executive officer of the Company
in 1997.
COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. Mr.
Reilly's salary was increased effective October 1, 1997. His last increase was
November 1995, and is consistent with the Company's policy to review the base
salary of the most senior management no more frequently than every 14 to 20
months. The amount of increase was $75,000 per year for annualized increase of
approximately 4%.
Mr. Reilly's target bonus under the Senior Executive Non-Discretionary Plan was
60% of his base salary, of which one-half related to the attainment by PRIMEDIA
of EBITDA and one-half to attainment of free cash flow goals. His target bonus
under the Senior Executive Performance Plan was 40% of his base salary and the
amount awarded is at the discretion of the Committee. In exercising such
discretion, the Committee may award a discretionary bonus equal to 150% of the
target bonus. For 1997, the Committee determined that the Company's outstanding
overall performance under Mr. Reilly's leadership including successful
implementation of the Company's growth strategy and Focusing Program merited
awarding the maximum discretionary bonus.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY AND OTHER
MATTERS. Section 162(m) of the IRC generally limits to $1,000,000 the annual tax
deductible compensation paid to a covered officer. However, the limitation does
not apply to performance-based compensation, provided certain conditions are
satisfied.
The Company's policy is generally to preserve the federal income tax
deductibility of compensation paid. Accordingly, the Company has taken, to the
extent it believes feasible, appropriate actions to preserve the deductibility
of annual incentive, long-term performance, and stock option awards. However,
notwithstanding the Company's general policy, the Committee retains the
authority to authorize payments that may not be deductible if it believes that
is in the best interests of the Company and its stockholders. The Committee
believes that retaining the discretion to grant or withhold a portion of Mr.
Reilly's compensation is an important aspect of increasing shareholder value.
Hence, $269,108 of Mr. Reilly's compensation under the Senior Executive
Performance Plan may be non-deductible. As, the Company is not currently a
taxpayer for federal income tax purposes, the loss of deductibility does not
have a current effect on the Company.
COMPENSATION COMMITTEE
Henry R. Kravis, Chairman
Perry Golkin
Michael T. Tokarz
6
<PAGE>
PERFORMANCE GRAPH
COMPARISION OF CUMULATIVE TOTAL RETURN
FOR THE PERIOD FROM NOVEMBER 30, 1995 THROUGH DECEMBER 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
For the Period from Nov. 30, 1995 through Dec. 31, 1997
PRM S&P 500 Peers
11/30/95 100 100 100
12/31/95 103.19 101.94 103.96
12/31/96 91.49 125.33 104.03
12/31/97 107.45 167.14 128.81
</TABLE>
The above graph assumes a $100 investment on November 1, 1995, the date of
PRIMEDIA's initial public offering, and reinvestment of all dividends, in the
Company Common Stock, the S&P 500 Index, and a composite peer group of the
following education, information and specialty media companies: Harcourt General
Inc., Houghton-Mifflin Co., John Wiley & Sons, Meredith Corp., McGraw-Hill
Companies,
Reader's Digest Association Inc. and Scholastic Corp.
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ending December 31, 1995, 1996
and 1997, the compensation paid by the Company to the Chief Executive Officer
and each of the other four most highly compensated executive officers of the
Company in 1997 in all capacities in which they served:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS -----------
NAME AND PRINCIPAL ------------------------ --------------- LONG-TERM ALL OTHER
POSITION YEAR SALARY BONUS(1) STOCK OPTIONS PLAN(2) COMPENSATION(3)
- -------------------------------- --------- ----------- ----------- --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
William F. Reilly............... 1997 $ 933,168 $ 736,649 -- $ 222,750 $ 53,941
Chairman and Chief Executive 1996 914,992 743,499 150,000 205,875 49,724
Officer 1995 852,409 604,805 275,000 205,875 45,657
Charles G. McCurdy.............. 1997 $ 587,105 $ 511,222 -- $ 105,000 $ 38,162
President 1996 574,990 389,352 100,000 96,600 37,374
1995 512,407 452,972 190,000 96,600 33,306
Beverly C. Chell................ 1997 $ 550,899 $ 362,403 -- $ 98,280 $ 35,808
Vice Chairman, General Counsel 1996 539,994 365,655 50,000 90,720 35,100
and Secretary 1995 506,619 253,305 85,000 90,720 32,930
Jack Farnsworth................. 1997 $ 581,450 $ 339,732 -- $ -- $ 37,794
Executive Vice President 1996 527,890 398,438 80,000 -- 34,313
1995 474,235 307,038 135,000 -- 30,825
Harry A. McQuillen (4).......... 1997 $ 366,353 $ -- -- $ -- $ 23,625
Executive Vice President 1996 625,014 523,927 100,000 -- 40,626
1995 555,774 440,557 205,000 -- 36,067
</TABLE>
(Footnotes on following page)
7
<PAGE>
(Footnotes for preceding page)
- ------------------------
(1) During the calendar year ended December 31, 1995, all executive officers
participated in the Company's Executive Incentive Compensation Plan (the
"Executive Incentive Plan"). Under this plan, cash awards are contingent
and are based on three factors: (i) an "Earnings Performance Measure,"
payable if and to the extent that the earnings performance goals set for
the calendar year are met, (ii) a "Cash Flow Measure" payable if and to the
extent that cash flow goals set for the calendar year are met and (iii) a
"Discretionary Performance Measure," based on the executive's individual
performance during the calendar year in question as evaluated by the
committee overseeing the Executive Incentive Plan. Commencing in 1995, the
Company established the PRIMEDIA Short Term Senior Executive
Non-Discretionary Plan and the PRIMEDIA Short Term Senior Executive
Performance Plan, which substitutes for the Executive Incentive Plan for
the above named executive officers and certain other executive officers.
The Executive Incentive Plan had two components, the formula portion and
the discretionary portion. In order to comply with Section 162(m) of the
IRC, that Plan was split into two plans, one based on a formula and the
other discretionary, which in the aggregate provide for the same formula
and discretionary bonuses as the Executive Incentive Plan did in the
aggregate.
(2) Payments are contingent based on the attainment of cash flow targets
pursuant to the Free Cash Flow Long-Term Plan.
(3) Represents contributions made by the Company for the benefit of the
executives to the PRIMEDIA Thrift and Retirement Plan, a defined
contribution plan covering more than half of the Company's employees and
the PRIMEDIA Restoration Plan, a deferred unfunded program restoring to
employees the amount of the Company contribution to the PRIMEDIA Thrift and
Retirement Plan or PRIMEDIA's Pension Plan which the Company was not
permitted to contribute because of the limit on contributions to qualified
plans under the IRC. For the fiscal year ended December 31, 1997, the
Company made contributions on behalf of Messrs. Reilly and McCurdy, Ms.
Chell, and Messrs. McQuillen and Farnsworth to the PRIMEDIA Thrift and
Retirement Plan in the amounts of $3,685, $10,400, $10,400, $10,400 and
$10,400, respectively, and to the PRIMEDIA Restoration Plan in the amounts
of $50,256, $27,762, $25,408, $13,225 and $27,394, respectively.
(4) The compensation shown represents amounts paid prior to his death on June
30, 1997. See "Certain Relationships and Related Transactions" for
information on amounts paid to the estate of the late Mr. McQuillen.
AGGREGATE FISCAL YEAR-END OPTION TABLE
The following table shows the number of shares and value of Common Stock
represented by outstanding Options held by each of the named officers as of
December 31, 1997.
<TABLE>
<CAPTION>
VALUE OF
IN-THE-MONEY OPTIONS
NUMBER OF OPTIONS AT FISCAL YEAR-END 1997(1)
----------------------------- -------------------------------
NAME EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- ------------------------------------------------ ------------ --------------- -------------- ---------------
<S> <C> <C> <C> <C>
William F. Reilly............................... 3,042,960 335,200 22,275,420 1,175,300
Charles G. McCurdy.............................. 1,949,798 192,000 14,390,710 638,000
Beverly C. Chell................................ 1,622,484 95,000 12,100,190 314,375
Jack L. Farnsworth.............................. 266,800 151,200 1,612,950 505,300
</TABLE>
- ------------------------
(1) Calculated based on the difference between the December 31, 1997 closing
market price of the Common Stock and the exercise price with respect to such
Options.
8
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
The table below represents potential payouts of cash-denominated awards pursuant
to the Free Cash Flow Long-Term Plan to be made in 1999 and annually thereafter
to the named executives which are tied to free cash flow targets for the
respective performance cycle. No payments are made unless 100% of target is
achieved for each performance cycle and the target award is the maximum which
can be paid. Awards, if earned, will be paid in cash at the end of the
respective performance cycle.
<TABLE>
<CAPTION>
TARGET AWARD
FOR THREE YEAR PERFORMANCE
CYCLE ENDING IN 1998
NAME (ASSUMING NO SALARY INCREASES IN 1998)
- --------------------------------------------- --------------------------------------
<S> <C>
William F. Reilly............................ 222,750
Charles G. McCurdy........................... 105,000
Beverly C. Chell............................. 98,280
</TABLE>
The annual target award for each completed performance cycle after 1998 for
Messrs. Reilly and McCurdy and Ms. Chell, respectively, is 22.5%, 16.8% and
16.8% of their annual rate of salary in effect for the last calendar year in the
performance cycle.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Kravis, Tokarz and Golkin, none
of whom has ever been an officer or employee of the Company. Messrs. Kravis,
Tokarz and Golkin are general partners of KKR Associates, the sole general
partner of the partnerships, which own as of March 23, 1998, approximately 78%
of the outstanding Common Stock (on a fully diluted basis). As general partners
of KKR Associates, Messrs. Kravis, Tokarz and Golkin may be deemed to share
beneficial ownership of the Common Stock beneficially owned by KKR Associates;
however, they disclaim such beneficial ownership. See "Certain Relationships and
Related Transactions" and "Security Ownership of Certain Beneficial Owners and
Management."
From time to time, KKR, which is an affiliate of KKR Associates, may receive
customary investment banking fees for services rendered to the Company in
connection with divestitures, acquisitions and certain other transactions. In
addition, KKR renders management, consulting, acquisition and financial services
to the Company for an annual fee of $1 million payable quarterly in arrears. The
Company believes that this fee is no less favorable than that which could be
obtained for comparable services from unaffiliated third parties. Partners of
KKR who also serve as directors of the Company do not receive additional
compensation for service in such capacity, other than customary director's fees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1996, Mr. Farnsworth and the late Mr. McQuillen entered into
employment agreements with the Company expiring on December 31, 1999. The estate
of Mr. McQuillen was paid $1,378,975 as the death benefit payable thereunder.
The agreement, as to Mr. Farnsworth provides for a salary of $610,000, and
continued participation in the bonus and other executive compensation plans
described above. In the event of a change of control of PRIMEDIA, the definition
of which is the same as in the Company's main credit agreement, the term of the
agreement is extended for a term of three years from the date of such change of
control and all unvested stock options vest. If he is terminated without cause
or terminates for good reason, the Company is obligated to pay the amounts which
would have been paid through the full term, (and longer, if there has been a
change in control). His agreement provides for a tax gross-up payment if
following a change of control and termination without cause or for good reason,
any excise taxes are payable on salary, bonus or fringe benefit plan payments.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 23, 1998 by (i) each beneficial owner
of more that five percent of the Company's outstanding Common Stock, (ii) each
of the Company's directors, (iii) each of the Company's five executive officers
named in the table under "Management--Executive Compensation" and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY
NAME OWNED(1)(2) PERCENTAGE
- ---------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
KKR Associates (3)
9 West 57th Street
New York, New York 10019.................................................. 123,552,932 84.6%
William F. Reilly (2)....................................................... 4,659,253 3.5
Charles G. McCurdy (2)(4)................................................... 2,394,612 1.8
Beverly C. Chell(2)......................................................... 2,044,357 1.6
Jack L. Farnsworth(2)....................................................... 359,900 *
Henry R. Kravis (3)......................................................... -- --
Meyer Feldberg.............................................................. 11,250 *
Perry Golkin (3)............................................................ 3,000 *
George R. Roberts (3)....................................................... -- --
Michael T. Tokarz (3)....................................................... 5,000 *
All directors and executive officers as a group (15 persons)................ 9,859,842 7.2
</TABLE>
- --------------------------
(1) For purposes of this table, a person or group is deemed to have "beneficial
ownership" of any shares as of a given date which such person has the right
to acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person or group of persons
named above on a given date, any security which such person or persons has
the right to acquire within 60 days after such date is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage of ownership of any other person.
(2) Of the shares shown as owned, 3,110,560, 1,977,798, 286,400 and 1,635,484
shares, respectively, for Messrs. Reilly, McCurdy, and Farnsworth and Ms.
Chell are in fact represented by Options which were either exercisable on
March 23, 1998 or become exercisable within 60 days thereafter.
(3) Shares of Common Stock shown as owned by KKR Associates are owned of record
by MA Associates, L.P., FP Associates, L.P., Magazine Associates, L.P.,
Publishing Associates, L.P., Channel One Associates, L.P., KKR 1996 Fund
L.P., and KKR Partners II, L.P., of which KKR Associates is the sole general
partner and as to which it possessed sole voting and investment power.
Messrs. Kravis, Roberts, Tokarz and Golkin (directors of PRIMEDIA) and
Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, James H.
Greene, Edward A. Gilhuly, Clifton S. Robbins and Scott M. Stuart, as the
general partners of KKR Associates, may be deemed to share beneficial
ownership of the shares shown as beneficially owned by KKR Associates. Such
persons disclaim beneficial ownership of such shares.
(4) Includes 160,000 shares held in trust for his minor children.
* Less than one percent.
10
<PAGE>
SELECTION OF AUDITORS
The Audit Committee has recommended to the Board that Deloitte & Touche, L.L.P.,
which firm has been the independent accountants of the Company since the
Company's inception in 1992, (and its predecessors from 1989) be continued as
auditors for the Company. The stockholders are being asked to approve the
Board's decision to retain Deloitte & Touche, L.L.P. for the fiscal year ending
December 31, 1998. A representative of Deloitte & Touche, L.L.P. will be present
at the meeting. The representative will be given an opportunity to make a
statement if he or she desires to do so and will be available to answer
questions.
THE BOARD RECOMMENDS A VOTE FOR.
OTHER MATTERS
Management knows of no other business that will be presented to the meeting for
a vote, except that stockholder proposals not included in this proxy statement
may be presented. If other matters properly come before the meeting, the persons
named as proxies will vote on them in accordance with their best judgment.
The cost of this solicitation of proxies will be borne by the Company. In
addition to the use of the mails, some of the officers and regular employees of
the Company may solicit proxies by telephone and will request brokerage houses,
banks and other custodians, nominees and fiduciaries to forward soliciting
material to the beneficial owners of Common Stock held of record by such
persons. The Company will reimburse such persons for expenses incurred in
forwarding such soliciting material. It is contemplated that additional
solicitation of proxies will be made in the same manner under the engagement and
direction of D.F. King & Co., at an anticipated cost of, less than $5,000, plus
reimbursement of out-of-pocket expenses.
Under the federal securities laws, the Company's directors, officers and ten
percent shareholders are required to report to the Securities and Exchange
Commission and the New York Stock Exchange, by specific dates, transactions and
holdings in the Company's Common Stock. Based solely on its review of the copies
of such forms received by it or written representations from certain reporting
persons that no annual corrective filings were required for those persons, the
Company believes that during fiscal 1997 all these filing requirements were
satisfied.
The Company's Annual Report to Shareholders for the fiscal year ended December
31, 1997, including certified financial statements and all other required
information, is being furnished to all persons who were shareholders of the
Company on the record date for the Annual Meeting of Shareholders.
1999 ANNUAL MEETING
For a stockholder to bring matters before the 1999 Annual Meeting, notice must
be received by the Company within the time limits described below. The notice
must include a description of the proposed business, the reasons therefore and
other specified matters. For a matter to be included in the Company's proxy
statement and proxy for the 1999 Annual Meeting, notice must be received by the
Company on or before January 1, 1999. In each case, the notice must be given to
the Secretary of the Company, whose address is 745 Fifth Avenue, New York, New
York, 10151. Any stockholder desiring a copy of the Company's By-Laws will be
furnished one without charge upon written request to the Secretary.
Beverly C. Chell
VICE CHAIRMAN AND SECRETARY
April 10, 1998
11
<PAGE>
- --------------------------------------------------------------------------------
PRIMEDIA INC.
PROXY CARD
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PRIMEDIA INC.
FOR THE ANNUAL MEETING ON MAY 21, 1998
The undersigned appoints Ann M. Riposanu and Christopher Fraser, and each
of them, with full power of substitution in each, the proxies of the
undersigned, to represent the undersigned and vote all shares of PRIMEDIA
Inc. Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders to be held on May 21, 1998, and at any adjournment or
postponement thereof, as indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed
herein by the under-signed shareholder. If no direction is given, this proxy
will be voted FOR proposals 1 and 2.
PRIMEDIA INC.
P.O. BOX 11283
NEW YORK, N.Y. 10203-0283
(Continued, and to be signed and dated on reverse side.)
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of PRIMEDIA Inc. will be held at 10:00
a.m. on Thursday, May 21, 1998 at Le Parker Meridien, 118 W. 57th Street, New
York, New York 10019, for the following purposes:
1. To elect eight directors to the Board of Directors.
2. To approve selection of independent public accountants.
Only holders of Common Stock of PRIMEDIA Inc. of record at the close of
business on March 23, 1998 will be entitled to vote at the meeting or any
adjournment thereof.
TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN THE
PROXY CARD BELOW, DETACH IT FROM THIS LETTER AND RETURN IT IN THE POSTAGE
PAID ENVELOPE ENCLOSED IN THIS PACKAGE. The giving of such proxy does not
affect your right to vote in person if you attend the meeting. The prompt
return of your signed proxy will aid the Company in reducing the expense of
additional proxy solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
April 9, 1998 BEVERLY C. CHELL
VICE CHAIRMAN AND SECRETARY
Detach Proxy Card Here
V V
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
/ /
1. Election of Directors FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ *EXCEPTIONS /X/
listed below for all nominees listed below.
</TABLE>
Nominees: William F. Reilly, Beverly C. Chell, Meyer Feldberg, Perry Golkin,
Henry R. Kravis, Charles G. McCurdy, George R. Roberts, Michael T. Tokarz
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions ____________________________________________________________________
2. To ratify and approve the selection by the Board of Directors of Deloitte &
Touche LLP as independent public accountants for the Company for the fiscal
year ending December 31, 1998.
FOR /X/ AGAINST /X/ ABSTAIN /X/
In their discretion the Proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment or
postponement thereof.
CHANGE OF ADDRESS AND /X/
OR COMMENTS MARK HERE
The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies, co-executors,
or co-trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.
Dated: ___________________________________________________________________,199__
________________________________________________________________________________
Signature
________________________________________________________________________________
Signature
Votes must be indicated /X/
(x) in Black or Blue ink.
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
