<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: 144,582,682
(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 12, 1999
<PAGE>
PRIMEDIA Inc.
<TABLE>
<S> <C>
WILLIAM F. REILLY 745 FIFTH AVENUE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER NEW YORK, NY 10151
</TABLE>
April 12, 1999
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
Wednesday, May 12, 1999, at the Four Seasons Hotel, 57 East 57th St., New York,
New York 10022.
Information regarding the business to be conducted at the meeting is set forth
in the following formal Notice of Annual Meeting and Proxy Statement. At the
Annual Meeting, you will be asked to vote upon the items described in the Notice
and then I will report on the Company. 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 12.
Sincerely,
[LOGO]
<PAGE>
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 12, 1999
To the Stockholders of
PRIMEDIA Inc.:
The annual meeting of stockholders of PRIMEDIA Inc. will be held on Wednesday,
May 12, 1999, at the Four Seasons Hotel, 57 East 57th Street, New York, New York
10022 at 10:00 a.m. to:
(1) Elect nine directors;
(2) Consider the Short-Term Senior Executive Non-Discretionary Plan;
(3) Consider the 1992 Stock Purchase and Option Plan (as amended);
(4) Consider the Long-Term Incentive Compensation Plan;
(5) Act upon the selection of auditors for the fiscal year ending December
31, 1999; and
(6) 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 17, 1999, will be entitled to vote at the meeting.
Beverly C. Chell
VICE CHAIRMAN AND SECRETARY
April 12, 1999
<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 Wednesday, May 12, 1999, at 10:00
a.m., at the Four Seasons Hotel, 57 East 57th St., New York, NY 10022 and at any
and all adjournments thereof. Mailing of the proxy statement will commence on or
about April 12, 1999. Holders of record of Common Stock, $.01 par value (the
"Common Stock"), at the close of business on March 17, 1999, will be entitled to
one vote for each share held on all matters to come before the meeting. On March
17, 1999, there were outstanding 144,582,682 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 vote on matters at the meeting constitutes a
quorum. If a share is represented for any purpose at the meeting, it is 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.
Each matter to be voted on 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
will be kept confidential, except as necessary to meet legal requirements.
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
BOARD OF DIRECTORS
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 five meetings in 1998 and also acted 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.
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
1
<PAGE>
independent accountants, discusses with the independent accountants their audit
procedures, in connection with determining their independence, reviews the
services performed by the independent accountants. The Committee met four times
in 1998. Professor Meyer Feldberg and H. John Greeniaus are the members of 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 Henry R. Kravis, Michael T. Tokarz and Perry Golkin and
met once in 1998.
The EXECUTIVE COMMITTEE, consisting of William F. Reilly and Messrs. Kravis,
Tokarz and Golkin, has authority to act for the Board on most matters during
intervals between Board meetings. This committee acted by unanimous written
consent during 1998.
THE NOMINEES
It is proposed that nine 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 other than H. John
Greeniaus, who joined the Board since the last Annual Meeting. The average
attendance of the Board and all of its committees during 1998 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: 60 capacities since November of 1991. Mr.
Reilly is also a director of FMC
Corporation. Mr. Reilly is also 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: 56 1992.
MEYER FELDBERG Professor Feldberg is Professor and Dean
Director of the Columbia University Graduate
Age: 57 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 Chairman 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: 45 Partner of KKR Associates and was a
General Partner of Kohlberg Kravis
Roberts & Co. ("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.
H. JOHN GREENIAUS Mr. Greeniaus is the former Chairman and
Director Chief Executive Officer of Nabisco, Inc.
Age: 54 He became a director in June 1998. He is
also a director of CCL Industries. He is
a member of the Audit Committee.
HENRY R. KRAVIS Mr. Kravis became a Director of PRIMEDIA
Director in November 1991. He is a Founding
Age: 55 Partner 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
Accuride Corporation, Amphenol
Corporation, Borden Inc., The Boyd's
Collection Ltd., Evenflo Company, Inc.
The Gillette Company, IDEX Corporation,
KinderCare Learning Centers, Inc., KSL
Recreation Corporation, Newsquest plc,
Owens-Illinois, Inc., Randall's Food
Markets, Inc., Regal Cinemas, Inc.,
Safeway Inc., Sotheby's Holdings, Inc.,
Spaldings Holdings Corporation and TI
Group plc. 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: 43 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: 55 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 Accuride Corporation,
Amphenol Corporation, Borden Inc.,
Evenflo Company Inc., IDEX Corporation,
KinderCare Learning Centers, Inc.,
Owens-Illinois, Inc., Randall's Food
Markets, Inc., Safeway, Inc., and
Spaldings Holdings Corporation.
MICHAEL T. TOKARZ Mr. Tokarz became a Director of PRIMEDIA
Director in November 1991. He is a General
Age: 49 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 Company Inc.,
IDEX Corporation, Spaldings Holdings
Corporation 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 1998, non-employee directors
received an annual all inclusive fee of $45,000 for all services on the Board
and all committees. In February 1998, Professor Feldberg was paid $25,000 for
services as the sole member of the independent committee of the Board
established in connection with the sale by the Company of Common Stock to an
investment fund managed by KKR.
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. Three of the non-employee directors have elected to defer their fees in
Common Stock equivalents.
On June 22, 1998, the Compensation Committee granted Mr. Greeniaus ten-year
non-qualified stock option to purchase 25,000 shares of the Company's Common
Stock under the Company's stock option plan, with an exercise price of $13.125
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 Committee believes that compensation for executive officers should be linked
to performance. To achieve correlation between executive compensation and
performance, the Company targets approximately half of the compensation paid to
an executive officer, assuming performance targets are met, to be at-risk
incentive compensation directly related to the performance of the Company, its
business units and its Common Stock. This includes annual cash bonuses,
long-term incentive plan awards and stock option grants.
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 1998, none of the named
executives, who remain in the Company's employ, received salary increases.
ANNUAL INCENTIVES. Annual cash bonuses, principally contingent on meeting
earnings and cash flow performance-targets, are provided to senior executives
and middle-managers. For 1998, over 776 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 this proxy statement, to reduce the
executive compensation that may be subject to the deductibility limits of
Section 162(m) of the Internal Revenue Code of 1954 as amended (the "Code") for
certain senior executives of PRIMEDIA including those named in the Executive
Compensation Table elsewhere in this proxy statement. Therefore, the most senior
executives participate in two executive incentive plans, which together provide
the same level of incentive compensation previously provided under the one plan.
LONG-TERM PERFORMANCE AWARDS. A new three-year long-term performance cycle began
January 1, 1998 for the three most senior executives, the only participants in
the Long-Term Incentive Compensation Plan (the "Long-Term Plan"). 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 Stock Purchase and Option Plan as amended (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.
5
<PAGE>
The Committee periodically evaluates its stock option award guidelines. In 1998,
the Committee granted options to approximately 287 executives based on the
desire to strengthen their focus on long-term stock-based compensation. The
executives to whom options were granted in 1998 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 in 1998 to any
executive named in the Executive Compensation Table of the Company other than
Mr. Farnsworth.
COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. Mr.
Reilly's salary was last increased in October 1997, 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.
Mr. Reilly's target bonus under the Senior Executive Non-Discretionary Plan was
36% of his base salary, of which one-half related to the attainment by PRIMEDIA
of EBITDA and one-half to attainment of cash flow goals. His target bonus under
the Senior Executive Performance Plan was 24% 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 1998, the Committee determined that Mr. Reilly's bonus award percentage
under the Senior Executive Performance Plan should mirror his bonus award
percentage under the Senior Executive Non-Discretionary Plan, which approximated
his target bonus.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY AND OTHER
MATTERS. Section 162(m) of the Code 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, $227,911 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 APRIL 8, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PRM S&P 500 PEER GROUP
<S> <C> <C> <C>
11/1/95 $100.00 $100.00 $100.00
12/31/95 $121.25 $105.89 $107.85
12/31/96 $107.50 $129.20 $111.54
12/31/97 $126.25 $172.30 $148.34
12/31/98 $118.75 $221.54 $190.50
4/8/99 $169.38 $243.09 $201.10
</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 TABLE
The following table shows, for the fiscal years ending December 31, 1996, 1997
and 1998, 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 1998 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............... 1998 $ 990,002 $ 594,756 -- $ 222,750 $ 81,632
Chairman and Chief Executive 1997 933,168 736,649 -- 222,750 53,941
Officer 1996 914,992 743,499 150,000 205,875 49,724
Charles G. McCurdy.............. 1998 $ 624,988 $ 469,180 -- $ 105,000 $ 49,813
President 1997 587,105 511,222 -- 105,000 38,162
1996 574,990 389,352 100,000 96,600 37,374
Beverly C. Chell................ 1998 $ 585,000 $ 372,158 -- $ 98,280 $ 46,792
Vice Chairman, General Counsel 1997 550,899 362,403 -- 98,280 35,808
and Secretary 1996 539,994 365,655 50,000 90,720 35,100
Jack Farnsworth................. 1998 $ 610,000 $ 91,500 60,000 $ -- $ 48,822
Executive Vice President 1997 581,450 339,732 -- -- 37,794
1996 527,890 398,438 80,000 -- 34,313
James Warner.................... 1998 $ 372,500 $ 325,000 -- $ -- $ --
Vice President
</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 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 Senior
Executive Non-Discretionary Plan and the PRIMEDIA Senior Executive
Performance Plan, which substitutes for the Executive Incentive Plan for the
above named 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 Code, 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 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 Code. For the fiscal year ended December 31, 1998, the
Company made contributions on behalf of Messrs. Reilly, McCurdy, Farnsworth
and Warner and Ms. Chell to the PRIMEDIA Thrift and Retirement Plan in the
amounts of $10,400, $10,400, $10,400, $0 and $10,400, respectively, and
credited their accounts in the PRIMEDIA Restoration Plan in the amounts of
$71,232, $39,413, $38,422, $0 and $36,392, respectively.
(4) The compensation shown represents amounts paid or payable to Mr. Warner for
the period prior to his leaving the Company. See "Certain Relationships and
Related Transactions" for information on amounts paid to him and to Mr.
Farnsworth upon termination.
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, 1998.
<TABLE>
<CAPTION>
VALUE OF
IN-THE-MONEY OPTIONS
NUMBER OF OPTIONS AT FISCAL YEAR-END 1998(2)
----------------------------- -------------------------------
NAME(1) EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- ------------------------------------------------ ------------ --------------- -------------- ---------------
<S> <C> <C> <C> <C>
William F. Reilly............................... 3,165,560 212,600 $ 20,374,525 $ 542,575
Charles G. McCurdy.............................. 2,015,798 126,000 13,121,611 300,750
Beverly C. Chell................................ 1,657,484 60,000 10,987,702 138,750
Jack L. Farnsworth.............................. 323,400 154,600 1,588,175 216,575
</TABLE>
- ------------------------
(1) All options canceled for Mr. James Warner upon his leaving the Company.
(2) Calculated based on the difference between the December 31, 1998 closing
market price of the Common Stock and the exercise price with respect to such
Options.
(3) None of the named executive officers who remain in the Company's employ
received an option grant in 1998.
8
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
The table below represents potential payouts of cash-denominated awards pursuant
to the Long-Term Plan to be made in 2000 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 1999
NAME (ASSUMING NO SALARY INCREASES IN 1999)
- --------------------------------------------- --------------------------------------
<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 17, 1999, approximately 79%
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 entered into an employment agreement with the
Company and on February 4, 1998, Mr. Warner entered into an employment agreement
with the Company. Messrs. Farnsworth and Warner are no longer employed by the
Company and, therefore, such agreements have been terminated. Messrs. Farnsworth
and Warner will or have received payments equal to $2,035,250 and $1,845,667,
respectively under those agreements upon termination.
In February 1998, an investment fund managed by KKR purchased 16,666,667 shares
of Company Common Stock for a price of $12 per share equal to the then market
price per share less a discount approximating the per share cost of a public
market sale. Professor Feldberg approved such transaction acting as an
independent committee of the Board and recommended its approval by the Board.
The Board, with KKR executives who are directors, recussing themselves, approved
the purchase and sale.
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 17, 1999 by (i) each beneficial owner
of more that five percent of the Company's outstanding Common Stock, (ii) each
of the Company's directors and named executive officers, and (iii) all directors
and executive officers of the Company as a group. No information is given for
named executives who were not officers on March 17, 1999.
<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 85.5%
William F. Reilly (2)....................................................... 4,681,853 3.2
Charles G. McCurdy (2)(4)................................................... 2,470,612 1.7
Beverly C. Chell(2)......................................................... 2,084,357 1.4
Henry R. Kravis (3)......................................................... -- --
Meyer Feldberg.............................................................. 16,250 *
H. John Greeniaus........................................................... 22,000 *
Perry Golkin (3)............................................................ 3,000 *
George R. Roberts (3)....................................................... -- --
Michael T. Tokarz (3)....................................................... 5,000 *
All directors and executive officers as a group (14 persons)................ 9,627,692 6.3%
</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, 3,233,160, 2,043,798, and 1,675,484 shares,
respectively, for Messrs. Reilly and, McCurdy, and Ms. Chell are in fact
represented by Options which were either exercisable on March 17, 1999 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>
CONSIDERATION OF EXECUTIVE COMPENSATION PLANS
The shareholders are being asked to approve the Company's performance based
executive incentive compensation plans: the Senior Executive Non-Discretionary
Plan, the Long-Term Plan and the Stock Option Plan. Shareholder approval is not
required for the Board and its Compensation Committee to grant awards under
those plans. Shareholder approval is required under Section 162(m) of the Code
in order that awards made under those performance based plans may continue to be
deductible for Federal income tax purposes. In the event any of the plans is not
approved by the shareholders, the Directors will still have the ability to grant
awards under any such plan taking into consideration the potential lack of
deductibility. A description of the plans under consideration follows and the
full text of each of the plans is included as an exhibit to this proxy
statement. See the Executive Compensation Table, Aggregate Fiscal Year-End
Option Table and Long-Term Incentive Plan Awards sections of this proxy
statement for information as to awards, payments and grants under such plans.
APPROVAL OF THE SHORT-TERM SENIOR EXECUTIVE NON-DISCRETIONARY PLAN (THE
"NON-DISCRETIONARY PLAN"). The Non-Discretionary Plan is administered by the
Compensation Committee of the Board. The Compensation Committee may interpret
provisions of the Non-Discretionary Plan.
Cash awards may be made under the Non-Discretionary Plan to employees who are
executive officers, in the senior executive band. Approximately 8 officers of
the Company are currently eligible to participate in the Non-Discretionary Plan.
Awards made under the Non-Discretionary Plan are paid solely on account of
attainment of the budgeted EBITDA and free cash flow of the Company beginning
January 1 of each calendar year. Awards are determined as a percentage of base
salary. No EBITDA award is paid if actual EBITDA is less than 80% of budgeted
EBITDA, and no cash flow award is paid if actual cash flow is less than 80% of
budgeted cash flow. At 80% attainment of budget, 50% of the target award is paid
and for each 1% increment in attainment up to 120% an additional 2 1/2% of the
target award is paid. Target awards are stated as a percentage of the
participant's base salary as of December 31 of the calendar year in question.
The maximum amount of compensation payable to any individual under the
Non-Discretionary Plan would be paid to Mr. Reilly because it is based upon a
percentage of annual base salary. Assuming the maximum performance goal was met
for the fiscal year beginning January 1, 1999, he would earn $534,600 for 1999.
With respect to the past three annual periods, however, Mr. Reilly's awards have
averaged less than $400,000. The maximum awards under the Non-Discretionary Plan
are lower for the other participants. Each year the percentage of salary target
is set for each participant.
The Board may terminate or suspend the Non-Discretionary Plan in whole or in
part, and may amend the Non-Discretionary Plan from time to time to correct any
defect, supply any omission or reconcile any inconsistency in the
Non-Discretionary Plan that does not constitute the modification of a material
term of the Non-Discretionary Plan.
A copy of the Non-Discretionary Plan is provided as Exhibit A to this proxy
statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE NON-DISCRETIONARY
PLAN.
APPROVAL OF THE LONG-TERM PLAN. The Long-Term Plan is administered by the
Compensation Committee of the Board. The only participants in the Long Term Plan
are Messrs Reilly and McCurdy and Ms. Chell. The Long-Term Plan is intended to
incentivize the three most senior executives to maximize the cash generation of
the Company, the most frequent measure to value the Company's shares used by
stock market analysts. The terms of the Plan have not been changed since its
inception in 1991.
Awards are paid if, and only if, free cash flow, as defined, over a three year
period exceeds over 90% of budgeted free cash flow, as so defined, over that
same three year period. A new three year period starts every calendar year, so
that at any time each participant is participating in three different plan
periods. Free cash flow is defined as EBITDA before overhead charges but after
all financial charges. Budgeted
11
<PAGE>
free cash flow is determined based on the business plan of the Company completed
prior to the beginning of the respective three year plan period. The amount of
the respective awards over the last three years is set forth under the long-term
compensation heading on the Executive Compensation Table. Assuming no salary
increases in the future, the amounts payable to Messrs. Reilly and McCurdy and
Ms. Chell would be the same as the amounts set forth in that column for 1998,
respectively.
The Long-Term Plan may be suspended or terminated, in whole or in part, at any
time provided that awards for completed periods shall be payable.
A copy of the Long-Term Plan is provided in Exhibit B to this proxy statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE LONG-TERM PLAN.
APPROVAL OF THE STOCK OPTION PLAN. Each employee of the Company or any of its
subsidiaries is eligible to be considered for the grant of awards under the
Stock Option Plan. The maximum number of shares of Company Common Stock that may
be issued pursuant to awards granted under the Option Plan is 25,000,000,
subject to certain adjustments to prevent dilution.
The Option Plan will be administered by the Compensation Committee. Subject to
the provisions of the Stock Option Plan, the Committee has full and final
authority to select the employees to whom awards will be granted thereunder, to
grant the awards and to determine the terms and conditions of the awards and the
number of shares to be issued pursuant thereto.
AWARDS
The Stock Option Plan authorizes the Committee to enter into any type of
arrangement with an eligible employee that, by its terms, involves or might
involve the issuance of (i) shares of Common Stock, (ii) an option, warrant,
convertible security, stock appreciation right or similar right with an exercise
or conversion privilege at a price related to Common Stock, or (iii) any other
security or benefit with a value derived from the value Common Stock. The
maximum number of shares of Common Stock with respect to which options or rights
may be granted under the Stock Option Plan to any employee is 15 million,
subject to certain adjustments to prevent dilution.
Awards under the Stock Option Plan are not restricted to any specified form or
structure and may include arrangements such as restricted stock, stock options,
stock purchase warrants, other rights to acquire stock, securities convertible
into or redeemable for stock, stock appreciation rights, phantom stock,
performance units or performance shares. An award may consist of one such
arrangement or two or more such arrangements in tandem or in the alternative.
An award granted under the Stock Option Plan to an employee may include a
provisions relating to awards, upon the occurrence of specified events, such as
a change of control of the Company, an acquisition of a specified percentage of
the voting power of the Company or a dissolution, liquidation, merger,
reclassification, sale of substantially all of the property and assets of the
Company or other significant corporate transaction. Any stock option granted to
an employee may be a tax-benefited incentive stock option or a nonqualified
stock option that is not tax-benefited.
An award under the Stock Option Plan may permit the recipient to pay all or part
of the purchase price of the shares or other property issuable pursuant to the
award, and/or to pay all or part of the recipient's tax withholding obligations
with respect to such issuance, by delivering previously owned shares of capital
stock of the Company or other property, or by reducing the amount of shares or
other property otherwise issuable pursuant to the award. If an option granted
under the Stock Option Plan permitted the recipient to pay for the shares
issuable pursuant thereto with previously owned shares, the recipient would be
able to "pyramid" his or her previously owned shares, I.E., to exercise the
option in successive transactions, starting with a relatively small number of
shares and, by a series of exercises using shares acquired from each transaction
to pay the purchase price of the shares acquired in the following
12
<PAGE>
transaction, to exercise the option for a larger number of shares with no more
investment than the original share or shares delivered.
PLAN DURATION
The Stock Option Plan became effective upon its adoption by the Board of
Directors in May 1992 and options to purchase 11,945,441 shares were outstanding
as of March 17, 1999. No awards may be granted under the Stock Option Plan after
October, 2005.
AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the Stock Option Plan at any time
and in any manner provided that no recipient of any award may, without his or
her consent, be deprived thereof or of any of his or her rights thereunder or
with respect thereto as a result of such amendment or termination. The Board of
Directors may amend, suspend or terminate the Plan, except the Board may not
increase the number of shares available, the price of existing awards or extend
the term of the Stock Option Plan.
A copy of the Stock Option Plan is provided as Exhibit C to the proxy statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK OPTION PLAN.
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, 1999. 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 OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF AUDITORS.
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
13
<PAGE>
no annual corrective filings were required for those persons, the Company
believes that during fiscal 1998 all these filing requirements were satisfied.
The Company's Annual Report to Shareholders for the fiscal year ended December
31, 1998, including certified financial statements and all other required
information, has been furnished to all persons who were shareholders of the
Company on the record date for the Annual Meeting of Shareholders.
2000 ANNUAL MEETING
For a stockholder to bring matters before the 2000 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 2000 Annual Meeting, notice must be received by the
Company on or before January 1, 2000. 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 12, 1999
14
<PAGE>
EXHIBIT A
PRIMEDIA INC.
SHORT TERM SENIOR EXECUTIVE NON-DISCRETIONARY PLAN
This document sets forth the PRIMEDIA Inc. Short Term Senior Executive
Non-Discretionary Plan (the "Plan"), as authorized by the Board of Directors
(the "Board") and shareholders of PRIMEDIA Inc. (the "Company"), for the payment
of incentive compensation to designated employees of the Company and certain of
its subsidiaries and affiliates.
1. DEFINITIONS
As used in the Plan, the following terms have the following meanings:
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board.
"Earnings Before Interest, Taxes and Amortization (EBITA)" shall mean
primary earnings from continuing operations before interest, income taxes,
amortization of goodwill, other intangible assets and deferred charges,
provisions for write-downs or write-offs of tangible or intangible assets,
other non-operating income or expense and other purchase accounting
adjustments.
"Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)"
shall mean EBITA plus depreciation of property, plant and equipment and all
amortization which is included as an expense in the calculation of EBITA.
"Exchange Act: shall mean the Securities Exchange Act of 1934, as amended.
"Free Cash Flow" shall mean operating cash flow after the effect of changes
in working capital, after deductions for capital expenditures and before
deductions for acquisition and financing related payments. Free Cash Flow
shall be defined as set forth in the Company's Financial Policy No. 6.31 as
in effect from time to time.
"Outside Directors" shall have the meaning ascribed to it in Section 162(m)
of the Code and the regulations proposed or adopted thereunder.
2. OBJECTIVES
The objectives of the Plan are to:
Help attract, retain and motivate the senior executive required to manage
the Company;
Promote the achievement of rigorous but realistic financial goals; and
Qualify compensation under the Plan as "performance based compensation"
within the meaning of Section 162(m) of the Code.
3. ADMINISTRATION
The Plan will be administered by the Committee. The Committee shall contain
at least two Outside Directors provided that in the event the Company has
less than two outside Directors, the Committee may be constituted of only
one Outside Director. Subject to the provisions of the Plan, the Committee
will have full authority to interpret the Plan, to establish and amend rules
and regulations relating to it, to determine the terms and provisions for
making awards and to make all other determinations necessary or advisable
for the administration of the Plan.
4. PARTICIPATION
Participation in the Plan in any calendar year will be limited to
individuals who on the last day of the calendar year are (i) the chief
executive officer of the Company (or person acting in such capacity), or
(ii) among the four highest compensated officers (other than the Chief
Executive Officer), each as
1
<PAGE>
determined pursuant to the executive compensation disclosure rules under the
Exchange Act (the "Participants").
5. INCENTIVE AWARDS
Awards to Participants under the Plan are cash awards which will be paid if,
and to the extent that, certain financial goals are achieved for the
calendar year in question. The amount, if any, of the awards actually paid
shall be determined as follows:
(a) AWARD AMOUNTS. No later than 90 days after the commencement of the
calendar year for which the amount is awarded, the Committee shall determine
the cash awards which Participants in the Plan may receive if the various
financial goals set for such awards are achieved. The target awards shall be
determined by the Committee based on the Participant's position and will be
expressed as a percentage of the average base salary of the respective
Participant for the calendar year in question. In no event shall the maximum
amount payable to any Participant hereunder exceed $2,000,000.
(b) GOALS. The Committee shall establish the financial goals which will
determine whether, and the extent to which, target award amounts will be
paid. The financial performance measure for Participants shall be based 50%
on the Company's EBITDA, and 50% on the Company's Free Cash Flow.
(c) AWARD PAYMENTS. The amount, if any, of the target award to be paid to a
Participant shall depend on attainment of financial goals determined by
comparing actual results for the calendar year in question with the
applicable goals established for that year. As to each financial performance
measure, attainment of the percentage of the goal set forth in the first
column below shall result in payment of the percentage set forth in the
second column below of the target award:
EBITDA
<TABLE>
<CAPTION>
ACTUAL RESULTS PORTION OF TARGET AWARD
- ----------------- -------------------------
<S> <C>
80% of target 50%
100% of target 100%
120% of target 150%
</TABLE>
FREE CASH FLOW
<TABLE>
<CAPTION>
ACTUAL RESULTS PORTION OF TARGET AWARD
- ----------------- -------------------------
<S> <C>
80% of target 50%
100% of target 100%
120% of target 150%
</TABLE>
If the percentage of any financial performance goal attained is between the
percentages set forth in the above first column, the related percentage in
the second column which determines the award amount to be paid shall be
scaled accordingly. If actual results are less than the minimum goal for any
performance measure set forth above, no cash payment shall be made with
respect to the portion of the award amount based on such performance
measure.
6. TIME AND FORM OF PAYMENT
Award payments to which Participants become entitled as provided herein will
be paid in cash as soon as practicable after the close of the calendar year
in question but in no event will payment be made later than 60 days after
the date of the opinion of the Company's independent auditors certifying the
Company's financial results for the calendar year in question.
2
<PAGE>
7. DEATH, DISABILITY, RETIREMENT AND TERMINATION OF EMPLOYMENT
(a) Unless otherwise determined by the Committee, in the event of a
Participant's termination of employment by reason of death, disability
or retirement under a Company retirement plan during a calendar year,
the Participant (or his or her beneficiary) shall receive, after the end
of the calendar year, a prorated portion of the performance bonus to
which the Participant would otherwise have been entitled hereunder. Such
prorated portion shall bear the same ratio to the total award payment as
the number of full months such Participant was actually employed during
the calendar year bears to 12.
(b) Unless otherwise determined by the Committee, a Participant who
voluntarily terminates his employment prior to the end of calendar year
or a Participant whose employment is terminated for cause at any time
prior to payment of any award hereunder shall forfeit any right to
receive any then unpaid award payment.
8. MISCELLANEOUS
(a) AMENDMENT AND TERMINATION OF THE PLAN. The Committee with the approval
of the Board may amend, modify or terminate this Plan at any time and
from time to time. Notwithstanding the foregoing, no such amendment,
modification or termination shall affect payment of a bonus for a
calendar year already ended.
(b) NO ASSIGNMENT. Except as otherwise required by applicable law, no
interest, benefit, payment, claim or right of any Participant under the
Plan shall be subject in any manner to any claims of any creditor of any
participant or beneficiary, nor to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to take any such action shall
be null and void.
(c) NO RIGHTS TO EMPLOYMENT OR AWARDS. Nothing contained in the Plan shall
give any person the right to be retained in the employment of the
Company or any of its affiliates or associated corporations or affect
the right of any such employer to dismiss any employee, nor shall
anything contained herein give any employee any claim or right to be
granted under the Plan.
(d) WITHHOLDING. The Company shall have the right to deduct from all awards
paid under the Plan any federal, state or local taxes or other amounts
required by law to be withheld with respect to such payments.
(e) PLAN UNFUNDED. The entire cost of this Plan shall be paid from the
general assets of the Company. The rights of any person to receive
benefits under the Plan shall be only those of a general unsecured
creditor, and neither the Company, the Board nor the Committee shall be
responsible for the adequacy of the general assets of the Company to
meet and discharge Plan liabilities nor shall the Company be required to
reserve or otherwise set aside funds for the payment of its obligations
hereunder.
(f) CORPORATE TRANSACTIONS. In determining EBITDA and Free Cash Flow, the
operations of any corporation or business acquired during the calendar
year in question along with any income or expense relating to such
acquisitions will be excluded. In the case of any corporation or
business divested during the calendar year in question, EBITDA and Free
Cash Flow will be restated to exclude the operations of the corporation
or business divested for the entire fiscal year in question along with
any income or expense relating to divestiture.
9. EFFECTIVE DATE
This Plan shall be effective as of October 6, 1995.
3
<PAGE>
EXHIBIT B
PRIMEDIA INC.
LONG TERM INCENTIVE COMPENSATION PLAN
The PRIMEDIA Long Term Incentive Compensation Plan is designed to provide an
incentive to senior executives to maximize the corporation's cash generation
over the long run. For the purposes of the plan, the following definitions
apply:
EBITDA BEFORE OVERHEAD: Earnings before interest, taxes, depreciation,
amortization and other one-time or unusual charges ("EBITDA") before the
deduction of corporate overhead expenses. EBITDA for purposes of this plan is
the same as EBITDA for purposes of the Short Term Senior Non-Discretionary
Compensation Plan with the exception of the corporate overhead exclusion.
INTEREST EXPENSE: Total interest expense on the company's debt obligations as
reported in the audited financial statements.
CASH PREFERRED DIVIDENDS: Dividends paid in cash on preferred stock, as opposed
to dividends paid in kind or otherwise.
TOTAL FINANCIAL CHARGES: Interest Expense plus Cash Preferred Dividends.
FREE CASH FLOW: EBITDA before overhead minus Total Financial Charges.
Under the plan, a three year Free Cash Flow target is established each year upon
completion of the official business plan, and is calculated based on 90% of the
budgeted EBITDA before overhead, minus Total Financial Charges. Actual Free Cash
Flow performance against those three year targets will determine plan payments
to be made at the end of each three year period.
<TABLE>
<CAPTION>
AS PROJECTED IN THE BUSINESS PLAN
PAYMENT DATES FREE CASH FLOW PERIOD COMPLETED AT:
- --------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
End of March Three consecutive year period Year end prior to start of three
following Free Cash starting each January 1 consecutive year period
Flow Period
</TABLE>
The plan evergreens on a rolling three year basis.
Attainment of the cumulative three year Free Cash Flow target results in a
payment to participants at the end of the three year period. The three
participants in the plan receive the following percentages of their year-end
base salary, assuming attainment of the Free Cash Flow target for the respective
period.
<TABLE>
<CAPTION>
PARTICIPANT % OF YEAR-END BASE SALARY
- ----------------------------- -----------------------------
<S> <C>
W.F. Reilly.................. 22.5%
C.G. McCurdy................. 16.8%
B.C. Chell................... 16.8%
</TABLE>
1
<PAGE>
EXHIBIT C
PRIMEDIA INC.
1992 STOCK PURCHASE AND OPTION PLAN AS AMENDED
1. PURPOSE OF PLAN
The PRIMEDIA Inc. 1992 Stock Purchase and Option Plan (the "Plan") is
designed:
(a) to promote the long term financial interests and growth of PRIMEDIA Inc.
(the "Corporation") and its Subsidiaries (as defined below) by
attracting and retaining management personnel with the training,
experience and ability to enable them to make a substantial contribution
to the success of the Corporation's business:
(b) to motivate management personnel by means of growth-related incentives
to achieve long range goals: and
(c) to further the identity of interests of participants with those of the
stockholders of the Corporation through opportunities for increased
stock, or stock-based, ownership, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of a
Stock Option, Stock Appreciation Right, Dividend Equivalent Right,
Restricted Stock, Purchase Stock, Performance Units, Performance Shares
or Other Stock Based Grant or any combination of the foregoing.
(b) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations
applicable to a Grant.
(c) "Board of Directors" means the Board of Directors of the Corporation.
(d) "Committee" means the Compensation Committee of the Board of Directors.
(e) "Common Stock" or "Share" means common stock of the Corporation which
may be authorized but issued and reacquired.
(f) "Derivative Security" has the meaning given it in Rule 16a-1(c) under
the Exchange Act.
(g) "Employee" means a person, including an officer, in the employment of
the Corporation or one of its Subsidiaries who is selected by the
Committee.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(i) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any
applicable resolutions or regulations of the Committee in effect at the
relevant time.
(j) "Participant" means an Employee, or other person having a relationship
with the Corporation or any of its Subsidiaries, to whom one or more
Grants have been made and such Grants have not all been forfeited or
terminated under the Plan: provided, however, a non-employee director of
the Corporation or one of its Subsidiaries may not be a Participant.
(k) "Stock-Based Grants" means the collective reference to the grant of
Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stock,
Performance Units, Performance Shares and Other Stock Based Grants.
(l) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Other Stock Options".
1
<PAGE>
(m) "Subsidiary" means any entity of which the Corporation owns, either
directly or indirectly, at least 50% of the combined voting power or
economic interest of such entity.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee. The Committee may adopt
its own rules of procedure, and the action of a majority of the
Committee, taken at a meeting or taken without a meeting by a writing
signed by such majority, shall constitute action by the Committee. The
Committee shall have the power and authority to administer, construe and
interpret the Plan, to make rules for carrying it out and to make
changes in such rules. Any such interpretations, rules, and
administration shall be consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to
such conditions and limitations as the Committee shall prescribe except
that only the Committee may designate and make Grants to Participants
who are subject to Section 16 of the Exchange Act or Section 162(m) of
the Code.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation,
and the officers and directors of the Corporation shall be entitled to
rely upon the advice, opinions or valuations of any such persons. No
member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the
Plan or the Grants, and all members of the Committee shall be fully
protected by the Corporation with respect to any such action,
determination or interpretation.
(d) The Committee may construe and interpret the Plan and the Grants awarded
thereunder and establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting
any defect or supplying any omission, or reconciling any inconsistency
in the Plan or in any Grant Agreement, in the manner and to the extent
it shall deem necessary or advisable to make the Plan fully effective.
(e) The Committee may determine the duration and purposes for leaves of
absence which may be granted to a Participant on an individual basis
without constituting a termination of employment or service for purposes
of the Plan.
(f) The Committee may resolve all questions of interpretation arising under
or in connection with the administration of the Plan, exercise its
discretion with respect to the powers and rights granted to it as set
forth in the Plan, and generally, exercise such powers and perform such
acts as are deemed necessary or advisable to promote the best interests
of the Company with respect to the Plan.
(g) All decisions and determinations by the Committee in the exercise of the
powers conferred upon it under the Plan shall be final, binding and
conclusive upon the Company, the Subsidiaries, Participants and all
other persons having any interest therein.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a relationship with the Corporation or
any of its Subsidiaries, and in such form and having such terms, conditions
and limitations as the Committee may determine. No Grants may be made under
this Plan to non-employee directors of the Corporation or any of its
Subsidiaries. Grants may be granted singly, in combination or in tandem. The
terms, conditions and limitations of each Grant under the Plan shall be set
forth in a Grant Agreement, in a form approved by the Committee, consistent,
however, with the terms of the Plan; provided, however, such Grant Agreement
shall contain provisions dealing with the treatment of Grants in the event
of the termination, death or disability of a Participant, and may also
include provisions concerning the treatment of Grants in the event of a
change of control of the Corporation.
2
<PAGE>
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants to Participants. Grants shall be subject to such terms and
conditions, including without limitation, vesting and exercisability periods
or restrictions, and the effect on a Grant of a termination or change in
employment status of a Participant (including a termination or change by
reason of a sale of a subsidiary or division of the Corporation), as the
Committee may in its discretion determine. Such Grants may take the
following forms in the Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS--These are stock options within the meaning of
Section 422 of the Code, to purchase Common Stock. In addition to other
restrictions contained in the Plan, an option granted under this
Paragraph 5(a), (i) may not be exercised more than 10 years after the
date it is granted, (ii) may not have an option price less than the Fair
Market Value of Common Stock on the date the option is granted, (iii)
must otherwise comply with Code Section 422, and (iv) must be designated
as an "Incentive Stock Option" by the Committee. The maximum aggregate
Fair Market Value of Common Stock (determined at the time of each Grant)
with respect to which any Participant may first exercise Incentive Stock
Options under this Plan and any Incentive Stock Options granted to the
Participant for such year under any plans of the Corporation or any
Subsidiary in any calendar year is $100,000. Payment of the option price
shall be made in cash or in shares of Common Stock, or a combination
thereof, in accordance with the terms of the Plan, the Grant Agreement,
and of any applicable guidelines of the Committee in effect at the time.
(b) OTHER STOCK OPTIONS--These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the
time of the Grant the Committee shall determine, and shall have
contained in the Grant Agreement or other Plan rules, the option
exercise period, the option price, and such other conditions or
restrictions on the grant or exercise of the option as the Committee
deems appropriate, which may include the requirement that the grant of
options is predicated on the acquisition by the optionholder of Purchase
Stock under Paragraph 5(c) by the Optionee. In addition to other
restrictions contained in the Plan, an option granted under this
Paragraph 5(b), (i) may not be exercised more than 10 years after the
date it is granted and (ii) may not have an option exercise price less
than 50% of the Fair Market Value of Common Stock on the date it is
granted.
(c) STOCK APPRECIATION RIGHTS--These are rights that on exercise entitle the
holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on
the date of Grant (the "base value") multiplied by (iii) the number of
rights exercised as determined by the Committee. Stock Appreciation
Rights granted under the Plan may, but need not be, granted in
conjunction with an Option under Paragraph 5(a) or 5(b). The Committee,
in the Grant Agreement or by other Plan rules, may impose such
conditions or restrictions on the exercise of Stock Appreciation Rights
as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted
under this Plan may be exercised more than 10 years after the date it is
granted.
(d) RESTRICTED STOCK--Restricted Stock is Common Stock delivered to a
Participant with restrictions or conditions on the Participant's right
to transfer or sell such stock; provided that the price of any share of
Restricted Stock delivered for consideration other than services and not
as bonus stock may not be less than 50% of the Fair Market Value of a
share of Common Stock on the date such Restricted Stock is granted or
the price of such Restricted Stock may be the par value of a share of
Common Stock. The number of shares of Restricted Stock and the
restrictions on such shares shall be as the Committee determines, in the
Grant Agreement or by other Plan rules, and the certificate for the
Restricted Stock shall bear evidence of the restrictions or conditions.
3
<PAGE>
(e) PURCHASE STOCK--Purchase Stock are shares of Common Stock offered to a
Participant at such price as determined by the Committee; provided,
however, that the price per share of such Purchase Stock may not be less
than 50% of the Fair Market Value of the Common Stock on the date such
shares of Purchase Stock are offered.
(f) DIVIDEND EQUIVALENT RIGHTS--These are rights to receive cash payments
from the Corporation at the same time and in the same amount as any cash
dividends paid on an equal number of shares of Common Stock to
shareholders of record during the period such rights are effective. The
Committee, in the Grant Agreement or by other Plan rules, may impose
such restrictions and conditions on the Dividend Equivalent Rights,
including the date such rights will terminate, as it deems appropriate,
and may terminate, amend, or suspend such Dividend Equivalent Rights at
any time.
(g) PERFORMANCE UNITS--These are rights to receive at a specified future
date, payment in cash of an amount equal to all or a portion of the
value of a unit granted by the Committee. At the time of the Grant, in
the Grant Agreement or by other Plan rules, the Committee must determine
the base value of the unit, the performance factors applicable to the
determination of the ultimate payment value of the unit and the period
over which Corporation performance will be measured. These factors must
include a minimum performance standard for the Corporation below which
no payment will be made and a maximum performance level above which no
increased payment will be made. The term over which Corporation
performance will be measured shall be not less than six months.
(h) PERFORMANCE SHARES--These are rights to receive at a specified future
date, payment in cash or Common Stock, as determined by the Committee,
of an amount equal to all or a portion of the (i) average of the Fair
Market Value of a share of Common Stock on each trading day during the
last forty-five (45) days of such period, multiplied by (ii) a specified
number of shares of Common Stock. At the time of the Grant, the
Committee, in the Grant Agreement or by Plan rules, will determine the
factors which will govern the portion of the rights so payable and the
period over which performance will be measured. The factors will be
based on Corporation performance and must include a minimum performance
standard for the Corporation below which no payment will be made and a
maximum performance level above which no increased payment will be made.
The term over which Corporation performance will be measured shall be
not less than six months. Performance Shares will be granted for no
consideration other than services.
(i) OTHER STOCK-BASED GRANTS--The Committee may make other Grants under the
Plan pursuant to which shares of Common Stock (which may, but need not,
be shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in
the future be acquired, or Grants denominated in stock units, including
Grants valued using measures other than market value. Other Stock-Based
Grants may be granted with or without consideration; provided, however,
that the price of any such Grant made for consideration other than
services that provides for the acquisition of shares of Common Stock or
other equity securities of the Corporation may not be less than 50% of
the Fair Market Value of a share of the Common Stock or such other
equity securities on the date of grant of such Grant. Such Other
Stock-Based Grants may be made alone, in addition to or in tandem with
any Grant of any type made under the Plan and must be consistent with
the purposes of the Plan.
(j) MANNER OF EXERCISE AND PAYMENT OF STOCK OPTIONS--A Stock Option, or
portion thereof, shall be exercised for whole shares of Common Stock by
delivery of a written notice of exercise to the Corporation and payment
of the full exercise price of the shares being purchased. A Participant
may exercise a Stock Option with respect to less than the full number of
shares for which the Stock Option may then be exercised. The price of
Common Stock purchased pursuant to an Option, or portion thereof, may be
paid:
4
<PAGE>
(1) in United States dollars in cash or by check, bank draft or money
order payable to the order of the Corporation.
(2) through the delivery of shares of Common Stock (which the Participant
has held for at least six months prior to delivery of such shares or
where the Participant has purchased on the open market and for which
the Participant holds title free and clear of all liens and
encumbrances) with an aggregate Fair Market Value on the date of
exercise equal to the exercise price.
(3) by delivery of an irrevocable notice of exercise to a financial
institution acceptable to the Corporation to deliver promptly to the
Corporation the portion of sale or loan proceeds sufficient to pay
the exercise price.
(4) through the written election of the Participant to have shares of
Common Stock withheld by the Corporation from the shares otherwise to
be received, with such withheld shares having an aggregate Fair
Market Value on the date of exercise equal to the exercise price or
Federal, state and local tax withholding obligations in connection
with such exercise or
(5) by any combination of the above methods of payment.
The Committee shall have sole discretion to disapprove of an election
for delivering or withholding Common Stock upon exercise of a Stock
Option in accordance with clauses (2)-(5) above and may impose such
limitations and prohibitions on the use of Common Stock to exercise a
Stock Option as it deems appropriate, including, without limitation,
any limitation or prohibition designed to avoid certain accounting
consequences which may result from the use of Common Stock as payment
upon exercise of a Stock Option or tax withholding obligation. If the
method of payment in clause (3) is elected, the Stock Option will be
deemed to be exercised simultaneously with the sale of the shares by
the financial institution. If the shares to be acquired on such
exercise cannot be sold for a price equal to or greater than the full
Exercise Price, then there will be no exercise of the Stock Option.
(k) NONTRANSFERABILITY OF DERIVATIVE SECURITIES: No Stock Option or
Stock-Based Grant which constitutes a Derivative Security shall be
transferable otherwise than by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved
by the Corporation or be subject to attachment, execution or other
similar process. In the event of any attempt by the Participant to
alienate, assign, pledge, hypothecate or otherwise dispose of a Stock
Option or any such Stock-Based Grant or of any right hereunder, except
as provided for herein, or in the event of any levy or any attachment,
execution or similar process upon the rights or interest hereby
conferred, the Corporation may terminate the Stock Option or such
Stock-Based Grant by notice to the Participant and the Stock Option or
such Stock-Based Grant shall thereupon become null and void.
Notwithstanding the foregoing, the Committee may provide, either at the
time of grant or otherwise, that a Stock Option or Stock-Based Grant
constituting a Derivative Security is transferrable to the extent that
such transferability is permissible under BOTH Rule 16b-3 under the
Exchange Act and the form of Registration Statement under which
securities issued under the Plan are registered under the Securities Act
of 1933.
6. LIMITATIONS AND CONDITIONS
(a) Subject to Paragraph 4, the number of shares available for Grants under
this Plan shall be 25 million shares of Common Stock reduced by the sum
of the aggregate amount of shares issued upon a Grant or become subject
to an outstanding Grant. The number of shares subject to Grants under
this Plan to any one Participant shall not be more than 15 million
shares of Common Stock. To the extent that shares related to outstanding
Grants are not issued by reason of Grants being forfeited, terminated,
cancelled, expire unexercised or delivered or
5
<PAGE>
withheld to pay the exercise price or satisfy withholding obligations,
then such shares shall again immediately become available for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the amendment and restatement of the Plan, but the
terms of Grants made on or before the expiration thereof may extend
beyond such expiration. At the time a Grant is made or amended or the
terms or conditions of a Grant are changed, the Committee may provide
for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend,
and other expenses accrued on deferred Grants shall be charged to the
Participant's employer during the period for which the Grant is made. If
the Participant is employed by more than one Subsidiary or by both the
Corporation and a Subsidiary during the period for which the Grant is
made, the Participant's Grant and related expenses will be allocated
between the companies employing the Participant in a manner prescribed
by the Committee.
(f) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares
subject to any Grant unless and until certificates representing any such
Shares have been issued by the Corporation to such Participants.
(g) No election as to benefits or exercise of any Grant may be made during a
Participant's lifetime by anyone other than the Participant except by a
legal representative appointed for or by the Participant.
(h) Any Grant shall not be deemed compensation for purposes of computing
benefits or contributions under any retirement plan of the Corporation
or its Subsidiaries and shall not affect any benefits under any other
benefit plan of any kind or subsequently in effect under which the
availability or amount of benefits is related to level of compensation.
This Plan is not a "Retirement Plan" or "Welfare Plan" under the
Employee Retirement Income Security Act of 1974, as amended.
(i) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of the Corporation or
any of its Subsidiaries, nor shall any assets of the Corporation or any
of its Subsidiaries be designated as attributable or allocated to the
satisfaction of the Corporation's obligations under the Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan a transfer of a Participant's employment without an
intervening period of separation among the Corporation and any Subsidiary
shall not be deemed a termination of employment.
8. ADJUSTMENTS
In the event of a stock split, spin-off, stock dividend, stock combination
or reclassification, recapitalization or merger, change of control, or
similar event, the Committee may adjust appropriately the number of Shares
subject to the Plan and available for or covered by Grants and Share prices
related to outstanding Grants and make such other revisions to outstanding
Grants as it deems are equitably required.
6
<PAGE>
9. MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION, LIQUIDATION OR DISSOLUTION
In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant, the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after the merger or consolidation of
the Corporation into another corporation, the exchange of all or
substantially all of the assets of the Corporation for the securities of
another corporation, the acquisition by another corporation of 80% or more
of the Corporation's then outstanding shares of voting stock or the
recapitalization, reclassification, liquidation or dissolution of the
Corporation, and if the Committee so provides, it may, in its absolute
discretion and on such terms and conditions as it deems appropriate, also
provide, either by the terms of such Stock Option or Stock-Based Grant or by
a resolution adopted prior to the occurrence of such merger, consolidation,
exchange, acquisition, recapitalization, reclassification, liquidation or
dissolution, that, for some period of time prior to such event, such Stock
Option or Stock-Based Grant shall be exercisable as to all shares subject
thereto, notwithstanding anything to the contrary herein (but subject to the
provisions of Paragraph 6(b)) and that, upon the occurrence of such event,
such Stock Option or Stock-Based Grant shall terminate and be of no further
force or effect; provided, however, that the Committee may also provide, in
its absolute discretion, that even if the Stock Option or Stock-Based Grant
shall remain exercisable after any such event, from and after such event,
any such Stock Option or Stock-Based Grant shall be exercisable only for the
kind and amount of securities and/or other property, or the cash equivalent
thereof, receivable as a result of such event by the holder of a number of
shares of stock for which such Stock Option or Stock-Based Grant could have
been exercised immediately prior to such event.
10. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this
Plan provided that, except for adjustments under Paragraph 8 or 9 hereof, no
such action shall modify such Grant in a manner adverse to the Participant
without the Participant's consent except as such modification is provided
for or contemplated in the terms of the Grant. The Committee's authority
hereunder shall include, without limitation, amendments to accelerate or
waive vesting periods and to extend the exercisability (including to extend
or provide for post-termination exercisability) of Stock Options or
Stock-Based Grants, provided that such exercisability shall not extend past
10 years from the date of grant of such Stock Options, Stock-Based Grants or
Other Stock-Based Grants.
The Board of Directors may amend, suspend or terminate the Plan except that
no such action, other than an action under Paragraph 8 or 9 hereof, may be
taken which would, without shareholder approval, increase the aggregate
number of Shares available for Grants under the Plan, decrease the price of
outstanding Options or Stock Appreciation Rights, change the requirements
relating to the Committee or extend the term of the Plan.
11. FOREIGN OPTIONS AND RIGHTS
The Committee may make Grants to Employees who are subject to the laws of
nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the
Plan for the purpose of complying with foreign laws.
12. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any cash payment made
under the Plan any Federal, state or local income or other taxes required by
law to be withheld with respect to such payment. It shall be a condition to
the obligation of the Corporation to deliver shares or pay any cash pursuant
to any Grant that the Participant pay to the Corporation such amount as may
be requested by the Corporation for the purpose of satisfying any liability
for such withholding taxes. Any Grant
7
<PAGE>
Agreement may provide that the Participant may elect, in accordance with any
conditions set forth in such Grant Agreement, to pay a portion or all of
such withholding taxes by delivery of in shares of Common Stock or by having
shares of Common Stock withheld by the Corporation from the shares otherwise
to be received. The number of shares so delivered or withheld shall have an
aggregate Fair Market Value sufficient to satisfy the applicable withholding
taxes. The acceptance of any such election by a Participant shall be at the
sole discretion of the Committee, and in the case of a Participant subject
to Section 16 of the Exchange Act, the Corporation may require that the
method of making such payment be in compliance with Section 16 and rules and
regulations thereunder.
13. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of the date of the approval by the
stockholders of the Corporation in its amended and restated form, and shall
terminate ten years later, subject to earlier termination by the Board of
Directors pursuant to Paragraph 10.
8
<PAGE>
AMENDMENT NO. 1
TO
1992 STOCK PURCHASE AND OPTION PLAN
AMENDED AND RESTATED AS OF MARCH 5, 1997
The first PRIMEDIA Inc. 1992 Stock Option and Purchase Plan (the "Plan") is
hereby amended as follows:
BY ADDING CLAUSE (C) SECTION 1 TO READ AS FOLLOWS:
"(c) to provide incentives to members of the Board of Directors who are not
employees of the Corporation or its Subsidiaries ("Non-Employee Directors")";
and
BY AMENDING CLAUSE (J) OF SECTION 2 TO READ AS FOLLOWS:
"(j) "Participant" means an Employee, a Non-Employee Director or other
person having a relationship with the Corporation or any of its Subsidiaries, to
whom one or more Grants have been made and such Grants have not all been
forfeited or terminated under the Plan"; and
BY AMENDING CLAUSES (A) AND (B) OF SECTION 3 TO READ AS FOLLOWS
"(a) The Plan shall be administered by the Committee. The Committee may
adopt its own rules of procedure, and the action of a majority of the Committee
taken at a meeting or the action of all members of the Committee taken without a
meeting by a writing signed by all members, shall constitute action by the
Committee. The Committee shall have the power and authority to administer,
construe and interpret the Plan to make rules for carrying out and to make
changes in such rules. Any such interpretations, rules, and administration shall
be consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Board of Directors its power and
authority to designate and make Grants to Participants who are Non-Employee
Directors and may delegate to the Chief Executive Officer and to other senior
officers of the Corporation its duties under the Plan subject to such conditions
and limitations as the Committee shall prescribe; and
BY AMENDING SECTION 4 AND 5 TO READ AS FOLLOWS:
"4. The Committee may from time to time make Grants under the Plan to such
Employees, Non-Employee Directors, or other person having a relationship with
the Corporation or any of its Subsidiaries and in such form and having such
terms, conditions and limitations as the Committee may determine. Grants may be
granted singly, in combination or in tandem. The terms, conditions and
limitations of each Grant under the Plan shall be set forth in a Grant Agreement
in a form approved by the Committee consistent, however, with the terms of the
Plan; provided, however, such Grant Agreement shall contain provisions dealing
with the treatment of Grants in the event of the termination, death or
disability of a Participant, and may also include provisions concerning the
treatment of Grants in the event of a change of control of the Corporation.
5. From time to time, the Committee will determine the forms and amounts of
Grants to Participants. Grants shall be subject to such terms and conditions,
including without limitation, vesting and exercisability periods or
restrictions, and the effect on a Grant of a termination or change in employment
or service status of a Participant (including a termination or change by reason
of a sale of a subsidiary or division of the Corporation), as the Committee may
in its discretion determine. Such Grants may take the following forms in the
Committee's sole discretion"; and
Approved March 5, 1997 by the Board of Directors.
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1999
Dear Shareholder:
The Annual Meeting of Shareholders of PRIMEDIA Inc. will be held at 10:00
a.m. on Wednesday, May 12, 1999 at The Four Seasons Hotel, 57 East 57th
Street, New York, New York 10022 for the following purposes:
1. To elect nine directors to the Board of Directors.
2. To approve the Short-Term Senior Executive Non-Discretionary Plan.
3. To approve the Long-Term Incentive Compensation Plan.
4. To approve the 1992 Stock Purchase and Option Plan (as amended).
5. To approve selection of independent public accountants.
Only holders of Common Stock of PRIMEDIA Inc. of record at the close of
business on March 17, 1999 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
/s/ Beverly C. Chell
----------------------------------
April 5, 1999 BEVERLY C. CHELL
VICE CHAIRMAN AND SECRETARY
DETACH PROXY CARD HERE
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <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,
H. John Greeniaus, 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
-------------------------------------------------------------------
<TABLE>
<S> <C> <C>
2. To approve the Short-Term Senior Executive 3. To approve the Long-Term Incentive Compensation Plan.
Non-Discretionary Plan.
FOR /X/ AGAINST /X/ ABSTAIN /X/ FOR /X/ AGAINST /X/ ABSTAIN /X/
4. To approve the 1992 Stock Purchase and 5. To ratify and approve the selection by the
Option Plan (as amended). Board of Directors of Deloitte & Touche LLP PLEASE
as independent public accountants for the Company DETACH HERE
for the fiscal year ending December 31, 1999. You Must Detach
This Portion of the
FOR /X/ AGAINST /X/ ABSTAIN /X/ FOR /X/ AGAINST /X/ ABSTAIN /X/ Proxy Card
Before Returning
In their discretion the Proxies are authorized It In The Enclosed
to vote upon such other matters as may properly Envelope
come before the meeting or any adjournment or
postponement thereof.
Change of Address and
or Comments Mark Here /X/
The signature on the 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
Please sign, date and return this proxy in the /X/ Black or Blue Ink
enclosed postage prepaid envelope.
</TABLE>
<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 12, 1999
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 12, 1999, 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 undersigned shareholder. If no direction is given, this proxy
will be voted FOR proposals 1, 2, 3, 4, and 5.
PRIMEDIA INC.
P.O. BOX 11283
NEW YORK, N.Y. 10203-0283
(Continued and to be signed and dated on reverse side)
