<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
International Family Entertainment, 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[INTERNATIONAL FAMILY ENTERTAINMENT LOGO]
April 24, 1997
To the Stockholders of International Family Entertainment, Inc.:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of International Family Entertainment, Inc. on Tuesday, May 20, 1997 at 3:00
p.m. (local time) at the Norfolk Waterside Marriott, 235 East Main Street,
Norfolk, Virginia. A notice of the meeting, a proxy card, and a Proxy Statement
containing information about the matters to be acted upon are enclosed. It is
important that your shares be represented at the meeting. Accordingly, we urge
you to sign and date the enclosed proxy card and promptly return it to us in the
enclosed, pre-addressed, postage-paid envelope even if you are planning to
attend the meeting. If you attend the meeting, you may vote in person even if
you have previously returned a proxy card.
We look forward to the 1997 Annual Meeting of Stockholders and we hope you
will attend the meeting or be represented by proxy.
Sincerely,
/s/ Pat Robertson
Pat Robertson
Chairman
/s/ Tim Robertson
Tim Robertson
Chief Executive Officer
<PAGE> 3
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
2877 GUARDIAN LANE
VIRGINIA BEACH, VIRGINIA 23452
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1997
To the Stockholders of
International Family Entertainment, Inc.:
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
International Family Entertainment, Inc., a Delaware corporation (the
"Company"), will be held at the Norfolk Waterside Marriott, 235 East Main
Street, Norfolk, Virginia, on Tuesday, May 20, 1997 at 3:00 p.m. (local time)
for the following purposes:
1. To elect three Class A Common Stock directors and three Class B Common
Stock directors for terms to expire at the next annual meeting of the
Company's stockholders;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the year 1997; and
3. To act upon such other matters as may properly be brought before the
meeting or any adjournment thereof affecting the business and affairs of
the Company.
Information concerning the matters to be acted upon at the meeting is set
forth in the accompanying Proxy Statement. Only stockholders of record at the
close of business on March 24, 1997 are entitled to notice of and to vote at the
meeting or any adjournment thereof. A complete list of the stockholders of the
Company entitled to vote at the 1997 Annual Meeting of Stockholders will be
available for inspection by stockholders of the Company, for any purpose germane
to the 1997 Annual Meeting of Stockholders, during ordinary business hours at
the principal offices of the Company at 2877 Guardian Lane, Virginia Beach,
Virginia, for a period of at least ten days prior to the 1997 Annual Meeting of
Stockholders. Such list will also be available for inspection at the time and
place of the 1997 Annual Meeting of Stockholders and may be inspected at such
time for any purpose germane to the 1997 Annual Meeting of Stockholders.
ADMISSION TO THE 1997 ANNUAL MEETING OF STOCKHOLDERS OR ANY ADJOURNMENT
THEREOF WILL BE RESTRICTED TO STOCKHOLDERS OF THE COMPANY, THEIR AUTHORIZED
REPRESENTATIVES, THOSE HOLDING PROXIES FOR STOCKHOLDERS, AND FAMILY AND GUESTS
OF THOSE ENTITLED TO ATTEND AND VOTE AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
OR ANY ADJOURNMENT THEREOF.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED, EVEN IF YOU EXPECT TO BE PRESENT IN PERSON AT
THE MEETING.
By Order of the Board of Directors,
/s/ Louis A. Isakoff
Louis A. Isakoff
Corporate Secretary
Virginia Beach, Virginia
April 24, 1997
<PAGE> 4
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1997
INTRODUCTION
This Proxy Statement is furnished to the stockholders of International
Family Entertainment, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies on behalf of the Company's Board of
Directors (the "Board of Directors") to be voted at the 1997 Annual Meeting of
Stockholders (the "1997 Annual Meeting") to be held on Tuesday, May 20, 1997 at
3:00 p.m. (local time) at the Norfolk Waterside Marriott, 235 East Main Street,
Norfolk, Virginia, or at such other time and place to which the 1997 Annual
Meeting may be adjourned, for the purposes set forth in the accompanying Notice
of Meeting. This Proxy Statement and Notice of Meeting and the related proxy
card are first being mailed to stockholders beginning on or about April 24,
1997. The Company's principal executive office is located at 2877 Guardian Lane,
Virginia Beach, Virginia 23452. Admission to the 1997 Annual Meeting or any
adjournment thereof will be restricted to stockholders of the Company, their
authorized representatives, those holding proxies for stockholders, and family
and guests of those entitled to attend and vote at the 1997 Annual Meeting or
any adjournment thereof.
RECORD DATE
The Board of Directors has fixed the close of business on March 24, 1997 as
the record date (the "Record Date") for the 1997 Annual Meeting. Only
stockholders of record on that date are entitled to vote at the meeting in
person or by proxy.
PROXIES
The proxies named on the enclosed proxy card were appointed by the Board of
Directors to vote the shares represented by the proxy card. Upon receipt by the
Company of a properly signed and dated proxy card, the shares represented
thereby will be voted in accordance with the instructions on the proxy card. If
a stockholder does not return a signed proxy card, his or her shares cannot be
voted by proxy. Stockholders are urged to mark the boxes on the proxy card to
show how their shares are to be voted. If a stockholder returns a signed proxy
card without marking the boxes, the shares represented by the proxy card will be
voted as recommended by the Board of Directors herein and on the proxy card, (i)
FOR the election of the persons named under "Election of Directors" as nominees
for election as Directors of the Company (each a "Nominee;" collectively, the
"Nominees") for terms to expire at the next annual meeting of the Company's
stockholders; and (ii) FOR the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors for the year 1997. The proxy card also
confers discretionary authority on the proxies to vote on any other matter not
presently known to management that may properly come before the meeting or any
adjournment thereof. Any proxy delivered pursuant to this solicitation is
revocable at the option of the person(s) executing the same (i) upon receipt by
the Company before the proxy is voted of a duly executed proxy bearing a later
date, (ii) by written notice of revocation to the Secretary of the Company
received before the proxy is voted, or (iii) by such person(s) voting in person
at the 1997 Annual Meeting. The expenses incidental to the preparation and
mailing of this proxy material are being paid by the Company. No solicitation
currently is planned beyond the mailing of this proxy material to stockholders
and to brokerage firms, nominees, custodians, and fiduciaries, who may be
requested to forward the proxy materials to the beneficial owners of shares held
of record by them.
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<PAGE> 5
VOTING SHARES AND QUORUM REQUIRED
On the Record Date, the Company had outstanding 5,000,000 shares of Class A
common stock, par value $.01 per share (the "Class A Common Stock") and
32,782,120 shares of Class B common stock, par value $.01 per share (the "Class
B Common Stock" and, together with the Class A Common Stock, the "Voting Common
Stock"). Holders of Class B Common Stock (collectively, the "Class B Common
Stockholders") are entitled to one vote per share on all matters submitted to a
vote of stockholders, and holders of Class A Common Stock (collectively, the
"Class A Common Stockholders") are entitled to ten votes per share on all
matters submitted to a vote of stockholders. Both classes vote together as a
single class on all matters except that so long as the outstanding Class A
Common Stock represents more than 40% of the total outstanding voting power of
Voting Common Stock, the Class A Common Stockholders, voting separately as a
class, are entitled to elect a majority of the Company's Directors (the "Class A
Directors"), with the remainder of the Directors (the "Class B Directors") being
elected by the Class B Common Stockholders, voting separately as a class. As of
the Record Date, the outstanding Class A Common Stock represented 60.4% of the
total outstanding voting power of the Voting Common Stock.
The affirmative vote of a plurality of the shares of Class A Common Stock,
voting separately as a class, represented in person or by proxy at the 1997
Annual Meeting is required to elect the Class A Directors and the affirmative
vote of a plurality of the shares of Class B Common Stock, voting separately as
a class, represented in person or by proxy at the 1997 Annual Meeting is
required to elect the Class B Directors. The affirmative vote of a majority of
the combined voting power of the holders of the Class A Common Stock and the
Class B Common Stock, represented in person or by proxy, at the 1997 Annual
Meeting is required to ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the year 1997. Business that might have been transacted
at the 1997 Annual Meeting as originally called may be conducted at any
adjournment at which the requisite quorum is present.
Pursuant to the laws of the State of Delaware, the inspectors of the
election will not count shares represented by proxies that reflect abstentions
or "broker non-votes" (i.e., shares held by brokers or nominees that are
represented at the 1997 Annual Meeting, but with respect to which the broker or
nominee is not empowered to vote on a particular proposal) as votes cast with
respect to the election of Directors, and, therefore, neither abstentions nor
broker non-votes will affect the election of Nominees receiving the plurality of
votes. With respect to all other proposals scheduled to come before the 1997
Annual Meeting, abstentions with respect to a particular proposal will have the
effect of a vote against such proposal. Broker non-votes, however, will be
treated as unvoted for purposes of determining approval of such proposal and
will not be counted as votes for or against such proposal.
In accordance with the applicable rules of the New York Stock Exchange (the
"NYSE"), with respect to the matters that are to be voted on by the stockholders
of the Company at the 1997 Annual Meeting, a broker or nominee that has
transmitted the Proxy Statement and proxy card to the beneficial owner of the
shares at least fifteen (15) days prior to the 1997 Annual Meeting, and that has
solicited voting instructions, but has not received voting instructions from the
beneficial owner of the shares by the tenth day before the 1997 Annual Meeting,
may give a proxy with respect to such shares, provided such broker or nominee
does not have any knowledge of any contest as to such action to be taken at such
meeting.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership
of Voting Common Stock by each of the Directors and Nominees, the Company's
Chief Executive Officer, the Company's officers meeting the criteria set forth
in 17 CFR 229.402(a)(3) (the "Named Executive Officers"), all Directors and
executive officers as a group, and each stockholder who is known by the Company
to own beneficially more than 5% of the outstanding Class A Common Stock or
Class B Common Stock, as of the Record Date. Except as otherwise indicated,
shares issuable upon exercise of options that are or will become exercisable
within 60 days of the Record Date or upon conversion of convertible securities
are deemed to be outstanding for the purpose of computing the percentage
ownership of persons beneficially owning such options or convertible securities,
but are not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. Except as otherwise indicated, each person listed
below has informed the Company that he has (i) sole voting and investment power
with respect to his shares of stock, except to the extent that authority is
shared by spouses under applicable law, and (ii) record and beneficial ownership
with respect to his shares of stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK PERCENT OF
-------------------- ------------------------ VOTE OF
NUMBER OF % OF NUMBER OF % OF ALL COMMON
BENEFICIAL OWNER SHARES OWNED CLASS SHARES OWNED CLASS STOCK OUTSTANDING
- -------------------------------- ------------ ----- ------------ ----- -----------------
<S> <C> <C> <C> <C> <C>
M.G. "Pat" Robertson,
individually and as trustee
(a)(b)........................ 3,125,000(c) 62.5 631,375(d)(e)(f) 1.9 38.5
Timothy B. Robertson,
individually and as trustee
(b)(g)........................ 1,875,000(h) 37.5 858,375(d)(f)(i) 2.6 23.7
Louis A. Isakoff (b)............ -- -- 91,311(f) (j) (j)
William L. Armstrong (k)........ -- -- 1,250 (j) (j)
Lowell W. Morse (l)............. -- -- -- -- --
Robert M. Wallace (m)........... -- -- -- -- --
Anthony D. Thomopoulos (b)...... -- -- 195,312(f) (j) (j)
Richard L. Sirvaitis (b)........ -- -- 35,625(f)(n) (j) (j)
K.J. "Gus" Lucas (b)............ -- -- 30,000(f) (j) (j)
Stephen D. Lentz (b)............ -- -- 23,484(f) (j) (j)
All Directors and executive
officers as a group (15
persons)...................... 5,000,000 100 2,058,314(d)(f)(n) 6.2 62.4
The Christian Broadcasting
Network, Inc. (o)(p).......... -- -- 3,891,121(q) 11.9 4.7
Regent University (o)........... -- -- 4,214,325(r) 12.9 5.1
Liberty IFE, Inc. (s)........... -- -- 9,676,232(t) 22.8 10.5
The Capital Group Companies,
Inc. (u)...................... -- -- 4,835,250(u) 14.8 5.8
SMALLCAP World Fund, Inc. (v)... -- -- 1,768,750(v) 5.4 2.1
Mario J. Gabelli and affiliated
entities (w).................. -- -- 7,629,868(w) 23.3 9.2
</TABLE>
- ---------------
(a) Does not include shares of Voting Common Stock owned by Timothy B.
Robertson, as to which M.G. "Pat" Robertson disclaims beneficial ownership.
(M.G. "Pat" Robertson and Timothy B. Robertson are sometimes hereinafter
referred to as the "Robertsons.")
(b) The business address for these persons is c/o International Family
Entertainment, Inc., 2877 Guardian Lane, Virginia Beach, Virginia 23452.
(c) All of these shares of Class A Common Stock are held of record by a
charitable remainder trust (the "Charitable Remainder Trust") established
by M.G. "Pat" Robertson. As trustee of the Charitable Remainder Trust, M.G.
"Pat" Robertson has voting and investment power with respect to, and thus
beneficial ownership of, these shares. The assets of the Charitable
Remainder Trust, including any shares
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<PAGE> 7
of Class A Common Stock that have not been previously sold, will be
transferred to The Christian Broadcasting Network, Inc. ("CBN") on January
22, 2010.
(d) Excludes shares of Class B Common Stock issuable upon conversion of Class A
Common Stock.
(e) Includes 79,950 shares of Class B Common Stock which are held of record by
certain trusts established by M.G. "Pat" Robertson for the benefit of his
children other than Timothy B. Robertson. As trustee of these trusts, M.G.
"Pat" Robertson has voting and investment power with respect to, and thus
beneficial ownership of, these shares.
(f) The numbers set forth in the table assumes the exercise of options issued
pursuant to the terms of the International Family Entertainment, Inc. Stock
Incentive Plan (the "Stock Plan") with respect to the following numbers of
shares of Class B Common Stock; for M.G. "Pat" Robertson -- 125,000 shares;
Timothy B. Robertson -- 125,000 shares; Louis A. Isakoff -- 27,083 shares;
Anthony D. Thomopoulos -- 195,312 shares; Richard L. Sirvaitis -- 5,000
shares; K.J. "Gus" Lucas -- 30,000 shares; Stephen D. Lentz -- 23,333
shares; and for all Directors and executive officers as a group -- 599,527
shares.
(g) Does not include shares of Voting Common Stock owned by M.G. "Pat"
Robertson, as to which Timothy B. Robertson disclaims beneficial ownership.
(h) Includes 37,500 shares of Class A Common Stock which are held of record by
a trust established by Timothy B. Robertson for the benefit of his children
(the "Robertson Family Trust"). As trustee of the Robertson Family Trust,
Timothy B. Robertson has voting and investment power with respect to, and
thus beneficial ownership of, these shares.
(i) Includes 24,375 shares of Class B Common Stock which are held of record by
the minor children of Timothy B. Robertson. Also includes 43,900 shares of
Class B Common Stock which are held of record by the Robertson Family Trust
and 8,000 shares of Class B Common Stock which are held of record by a
charitable remainder trust established by Timothy B. Robertson. As trustee
of these trusts, Timothy B. Robertson has voting and investment power with
respect to, and thus beneficial ownership of, these shares.
(j) Amounts to less than 1%.
(k) The business address for Mr. Armstrong is 1625 Broadway, Suite 780, Denver,
Colorado 80202.
(l) The business address for Mr. Morse is 5335 S.W. Meadows Road, Suite 365,
Lake Oswego, Oregon 97035.
(m) The business address for Mr. Wallace is 1590 The Alameda, Suite 1C, San
Jose, California 95113.
(n) Includes shares of Class B Common Stock issued pursuant to and, in part,
subject to forfeiture under the terms of the Stock Plan.
(o) The business address for CBN is 700 CBN Center, Virginia Beach, Virginia
23463. The business address for Regent University is 1000 Regent University
Drive, Virginia Beach, Virginia 23463. Regent University may be deemed to
be an affiliate of CBN.
(p) Does not include the 3,125,000 shares of Class A Common Stock held by the
Charitable Remainder Trust, in which CBN holds the remainder interest.
(q) Excludes 4,212,450 shares of Class B Common Stock held by Regent
University, over which CBN may be deemed to share dispositive power with
Regent University.
(r) CBN may be deemed to share dispositive power with Regent University as to
4,212,450 of these shares.
(s) Liberty IFE, Inc. is a direct, wholly owned subsidiary of Liberty Media
Corporation. Liberty Media is a direct, wholly owned subsidiary of
Tele-Communications, Inc. ("TCI"). The business address for Liberty IFE and
Liberty Media is 8101 East Prentice Avenue, Suite 500, Englewood, Colorado
80111. The business address for TCI is 5619 DTC Parkway, Englewood,
Colorado 80111.
(t) Includes 7,088,732 shares of Class B Common Stock issuable upon conversion
of Liberty IFE's 7,088,732 shares of the Company's non-voting Class C
common stock, par value $.01 per share (the "Class C Common Stock"), and
2,587,500 shares of Class B Common Stock issuable upon conversion
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<PAGE> 8
of 2,587,500 shares of Class C Common Stock, which Class C Common Stock is
issuable upon conversion of Liberty IFE's $23,000,000 aggregate principal
amount of the Company's 6% Convertible Secured Notes Due 2004.
(u) The number of shares reported in this table is based upon information
included in Amendment No. 3 to the Schedule 13G, dated February 12, 1997
(as amended, the "Capital Group Amended Schedule 13G"), filed by The
Capital Group Companies, Inc. ("The Capital Group"). As of February 12,
1997, Capital Guardian Trust Company and Capital Research and Management
Company ("CRMC"), operating subsidiaries of The Capital Group, exercised
investment discretion with respect to 1,504,000 shares and 3,331,250
shares, respectively, which shares were owned by various institutional
investors. CRMC is an investment advisor to SMALLCAP World Fund, Inc.
("SMALLCAP"); accordingly, the shares with respect to which CRMC exercises
investment discretion include the 1,768,750 shares reported in this table
as being beneficially owned by SMALLCAP. The business address for The
Capital Group and its affiliates disclosed in the Capital Group Amended
Schedule 13G is 333 South Hope Street, Los Angeles, California 90071.
(v) The number of shares reported in this table is based upon information
included in the Capital Group Amended Schedule 13G, to which SMALLCAP is a
party pursuant to a Joint Filing Agreement, dated as of February 12, 1997,
among SMALLCAP, The Capital Group, and CRMC. CRMC is an investment advisor
to SMALLCAP; accordingly, the 1,768,750 shares reported in this table as
being beneficially owned by SMALLCAP are included in the number of shares
reported in this table as being beneficially owned by The Capital Group.
The business address for SMALLCAP disclosed in the Capital Group Amended
Schedule 13G is 333 South Hope Street, Los Angeles, California 90071.
(w) The number of shares reported in this table is based upon information
included in Amendment No. 20 to the Schedule 13D, dated as of March 3, 1997
(as amended, the "Gabelli Amended Schedule 13D"), filed by Gabelli Funds,
Inc. ("GFI"), GAMCO Investors, Inc. ("GAMCO"), Gabelli International II
Limited ("GIL II"), Gabelli Performance Partnership L.P. ("GPP"), Gabelli
Asset Management Company International Advisory Services Ltd. ("Gabelli
Asset Management"), Gabelli International Limited ("GIL"), and Mario J.
Gabelli (each, a "Reporting Person" and collectively, the "Reporting
Persons," all of which are party to a Joint Filing Agreement dated as of
January 22, 1993). The Gabelli Amended Schedule 13D reports that the
Reporting Persons beneficially own the shares reported in this table as
follows: GFI (as agent) -- 1,765,125 shares; GAMCO (as agent) -- 5,666,143
shares; GIL II -- 10,500 shares; GPP -- 115,000 shares; Gabelli Asset
Management -- 10,500 shares; GIL -- 54,600 shares; Mario J.
Gabelli -- 8,000 shares. Further, Mario J. Gabelli is deemed to have
beneficial ownership of the shares beneficially owned by each Reporting
Person and GFI is deemed to have beneficial ownership of the shares
reported by each Reporting Person other than Mr. Gabelli. The Gabelli
Amended Schedule 13D discloses that each of the Reporting Persons has the
sole power to vote or direct the vote and the sole power to dispose or to
direct the disposition of the shares reported for it, either for its own
benefit or for the benefit of its investment clients or its partners, as
the case may be, except that GAMCO does not have the authority to vote
201,250 shares of the shares it beneficially owns and the power of Mario J.
Gabelli and GFI is indirect with respect to the shares beneficially owned
by other Reporting Persons. The business address for GFI, GAMCO, and Mario
J. Gabelli disclosed on the Gabelli Amended Schedule 13D is One Corporate
Center, Rye, New York 10580. The business address for GIL II disclosed on
the Gabelli Amended Schedule 13D is c/o Coutts & Company (Cayman) Limited,
West Bay Road, Grand Cayman, British West Indies. The business address for
GPP disclosed on the Gabelli Amended Schedule 13D is 8 Sound Shore Drive,
Greenwich, Connecticut 06830. The business address for Gabelli Asset
Management disclosed on the Gabelli Amended Schedule 13D is c/o Appleby,
Spurling & Kempe, Cedar House, 41 Cedar Avenue, Hamilton, HM12, Bermuda.
The business address for GIL disclosed on the Gabelli Amended Schedule 13D
is c/o MeesPierson
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<PAGE> 9
(Cayman) Limited, British American Centre, Dr. Roy's Drive-Phase 3, George
Town, Grand Cayman, British West Indies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Directors, officers and persons who beneficially own more than 10% of a
registered class of stock of the Company to file initial reports of ownership
(Forms 3) and reports of changes in beneficial ownership (Forms 4 and 5) with
the Securities and Exchange Commission (the "SEC") and the NYSE. Such persons
are also required under the rules and regulations promulgated by the SEC to
furnish the Company with copies of all such Section 16(a) filings.
Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that all Section 16(a) filing requirements
applicable to its Directors, officers and greater than 10% beneficial owners
were complied with.
CORPORATE GOVERNANCE
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors meets on a regularly scheduled basis during
the year to review significant developments affecting the Company and to act on
matters requiring approval by the Board of Directors. It also holds special
meetings when an important matter requires action by the Board of Directors
between scheduled meetings. The Board of Directors met 6 times and acted by
unanimous consent 4 times during 1996. In accordance with NYSE rules, William L.
Armstrong and Lowell W. Morse have served as the Company's outside Directors.
During 1996, each member of the Board of Directors participated in all meetings
of the Board of Directors and all meetings of the applicable committees during
the period for which he was a Director. The Company compensates its non-employee
Directors at $50,000 per annum; Directors who are also employees of the Company
receive no additional compensation for serving as Directors. The Company
reimburses all of its Directors for travel and out-of-pocket expenses in
connection with their attendance at meetings of the Board of Directors.
The Company has established a standing Audit Committee of the Board of
Directors composed of outside Directors who are not affiliates or present or
former employees of the Company or any of its subsidiaries. The Audit Committee
meets periodically with management and the Company's independent auditors to
review the activities of each and to discuss audit matters, financial reporting
and the adequacy of internal corporate controls. William L. Armstrong and Lowell
W. Morse currently serve on the Audit Committee. During 1996, the Audit
Committee met once and acted by unanimous consent 3 times.
The Company does not have a standing nominating committee. The functions
customarily attributable to a nominating committee are performed by the Board of
Directors as a whole. The Company will consider nominees recommended by
stockholders, although it has not actively solicited recommendations from
stockholders for nominees nor has it established any procedures for this purpose
for the 1997 Annual Meeting other than as set forth in the By-laws of the
Company. In the future, stockholders wishing to recommend a person for
consideration as a nominee for election to the Company's Board of Directors can
do so in accordance with the Company's By-laws by giving timely written notice
to the Corporate Secretary of the Company that provides each such nominee's
name, appropriate biographical information and any other information that would
be required in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of Directors. The
nominating stockholder must also indicate the class
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<PAGE> 10
and number of shares of capital stock of the Company that are owned beneficially
or of record by such stockholder. Such notice should be accompanied by a written
statement from each nominee consenting to be named as a nominee and to serve as
a Director if elected. To be timely, such notice must be delivered to, or if
mailed, received at, the Company's executive offices not less than 60 days nor
more than 90 days prior to the anniversary of the immediately preceding annual
meeting of stockholders; provided, however, that if the annual meeting is called
for a date that is not within 30 days before or after such anniversary date,
notice by the stockholder in order to be timely must be so received not later
than the close of business on the tenth day following the earlier of the day on
which such notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made.
The Company has established a standing Compensation Committee, with
authority to set compensation and determine compensation-related policy for the
Company's executive officers. William L. Armstrong and Lowell W. Morse currently
serve on the Compensation Committee. During 1996, the Compensation Committee met
once and acted by unanimous consent 7 times.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AGREEMENTS BETWEEN CBN AND THE COMPANY
Lease of Space from CBN. Pursuant to a Lease Agreement, dated as of
January 1, 1995 (the "Lease"), between CBN and the Company, the Company leases
space from CBN in CBN's Corporate Support Building located at 1000 Centerville
Turnpike, Virginia Beach, Virginia, which the Company uses for its master
control facility, satellite earth station, certain post-production facilities,
and other administrative purposes. The Lease is for a three-year term. CBN
charged the Company approximately $280,000 during 1996 under the Lease. The
Company believes that the Lease was negotiated on terms comparable to those that
could have been obtained in an arms' length transaction with an unaffiliated
third party providing comparable space.
Uplink Facilities Lease and Transponder Sublease with CBN. Pursuant to an
Uplink Facilities Lease and Transponder Sublease, dated as of January 5, 1990,
between CBN and the Company, (i) the Company leases to CBN certain tangible
property relating to an earth station and (ii) CBN leases to the Company
transmission capacity at such earth station. The lease of the earth station by
the Company to CBN and the lease of the transmission capacity at such earth
station by CBN to the Company are in consideration for each other and no
payments of rent are otherwise due to either the Company or CBN in connection
therewith. The earth station is operated pursuant to licenses issued by the
Federal Communications Commission to CBN.
Program Time Agreement with CBN. Pursuant to a Program Time Agreement,
dated as of January 5, 1990 (the "Program Time Agreement"), between CBN and the
Company, the Company provides CBN up to 17.5 hours per week on The Family
Channel for CBN to air its programming, including The 700 Club, in the following
blocks: (i) a one and one-half hour block between 9 a.m. and noon, five days per
week; (ii) a one-hour block between 10 p.m. and midnight, five days per week;
and (iii) a one-hour block between 2 a.m. and 4 a.m., five days per week. In
addition, the Company provides CBN with a continuous block of 12 hours on a
single day in January of each year for purposes of the annual CBN telethon and
occasionally sells additional time to CBN. In consideration for the program
time, the Company charges CBN a monthly fee equal to the direct costs to the
Company of providing the program time to CBN (currently calculated at a rate of
approximately $493 per hour of CBN program time). The Company charged CBN
approximately $836,000 in 1996 under the Program Time Agreement. The Program
Time Agreement is for a 15-year term, renewable unilaterally by CBN thereafter
for successive five-year terms so long as CBN or any related organization holds
any capital stock or notes convertible into capital stock of the Company.
7
<PAGE> 11
The Founders Inn & Conference Center. From time to time, the Company
engages the facilities of The Founders Inn & Conference Center, an affiliate of
CBN, for management meetings, temporary housing of guests and employees
relocating to Virginia Beach, and other similar purposes. During 1996, the
Company paid The Founders Inn & Conference Center approximately $62,000 for such
services. The Company believes that the fees paid The Founders Inn & Conference
Center during 1996 are equivalent to those that would have been paid to an
unaffiliated third party providing comparable services and amenities.
Original Programming Payments. During 1996, the Company paid Northstar
Entertainment Group, Inc., an affiliate of CBN, certain contractually required
license and royalty payments totaling approximately $100,000 with respect to
programming produced for the Company in the past.
THE FAMILY CHANNEL FILM AND MEDIA ENDOWMENT
During 1996, the Company donated the sum of $100,000 to Regent University
to establish The Family Channel Film and Media Endowment. The purpose of the
endowment is to provide funding for Regent University student film productions
and media projects. In the past, Regent University student productions have
received critical acclaim and have won numerous awards, including several
student Academy Awards. Regent University is exempt from federal income tax
pursuant to Section 501(c)(3) of the Internal Revenue Code; accordingly, the
Company's donation to Regent University is tax-deductible.
TRANSACTIONS WITH FLEXTECH plc
Sale of The Family Channel (UK) and Certain Other Assets. On April 22,
1996, the Company consummated the sale of its television production studio in
Maidstone, England (the "UK Studio") and its 61% interest in The Family Channel
(UK) to Flextech plc, an English public limited company and owner of the
remaining 39% interest in The Family Channel (UK), pursuant to agreements dated
as of March 20, 1996. Flextech is an affiliate of Liberty IFE and TCI. As
consideration for this transaction, the Company received L3,000,000
(approximately $4,600,000) in cash and 5,792,008 shares of Flextech's
convertible redeemable non-voting common stock. This common stock is
convertible, under certain circumstances, into Flextech's voting common stock
which is listed on the London Stock Exchange. The market value of the underlying
voting common stock as of the date of the aforementioned agreements was
$46,100,000. The Company believes that the terms of this transaction were
comparable to those that could have been obtained in an arms' length transaction
with an unaffiliated third party.
In connection with this transaction, the Company received the right,
beginning in June 1997, to "put" its holdings of Flextech's non-voting stock to
Flextech's majority owner, Tele-Communications International, Inc. ("TCI
International"). Upon exercise of the put, TCI International has the option of
redeeming the stock for cash at the then-market value of Flextech's voting
common stock. If the shares are not redeemed for cash, the Company has the
option of either (i) converting 50% of the shares on a share-for-share basis
into Flextech's voting common stock and 50% of the shares into common stock of
the same value of TCI International, or (ii) converting 100% of the shares into
common stock of the same value of TCI International. Recently, however, pursuant
to an agreement between Flextech and the Company, the Company has converted its
holdings of Flextech non-voting common stock into Flextech voting common stock,
thereby eliminating the Company's right to "put" its Flextech holdings to TCI
International.
Sublease of Transponder from Flextech. Prior to the consummation of the
sale of The Family Channel (UK) to Flextech, the Company subleased a satellite
transponder from Flextech between the hours of 5:00 p.m. and 6:00 a.m., local
time, for transmission of The Family Channel (UK). The Company paid its pro
8
<PAGE> 12
rata share of the cost of the transponder based on the total cost of the
transponder to Flextech. In 1996, Flextech charged the Company $1,687,000
pursuant to the transponder sublease.
Studio Facilities Lease to Flextech. Prior to the consummation of the sale
of the UK Studio to Flextech, the Company would, from time to time, lease the
television production facilities of the UK Studio to Flextech for the creation
of originally produced television programs. In 1996, the Company charged
Flextech $114,000 for the lease of such television production facilities.
AFFILIATION AGREEMENTS WITH SATELLITE SERVICES, INC.
Liberty IFE is an affiliate of Satellite Services, Inc. ("SSI"), another
TCI affiliate, with which the Company has entered into affiliation agreements.
SSI is a wholly owned subsidiary of TCI which enters into affiliation agreements
with, and purchases programming services from, cable television program
suppliers such as the Company and then makes such services available for
carriage on cable television systems operated by TCI, its subsidiaries and
affiliates.
Pursuant to an affiliation agreement dated as of December 28, 1989, as
amended (the "SSI Affiliation Agreement"), between the Company and SSI, the
Company grants SSI a non-exclusive license to exhibit and distribute, and SSI
agrees to make available for carriage, The Family Channel on certain
TCI-operated cable systems. SSI currently makes The Family Channel available for
carriage on substantially all TCI-operated cable systems. In exchange for the
right to carry The Family Channel on TCI-operated cable systems, SSI pays the
Company a quarterly per subscriber service fee. Pursuant to the SSI Affiliation
Agreement, SSI delivers The Family Channel to approximately 26% of the Company's
subscribers. After rebates for channel position and net of advertising purchased
from TCI-affiliated cable systems, the Company charged SSI approximately
$21,919,000 during 1996.
The Company and SSI have also reached an agreement regarding SSI's carriage
of FiT TV. FiT TV is provided to all domestic cable affiliates, including SSI,
free of any per subscriber service fee. During 1996, the Company paid
TCI-affiliated cable systems approximately $688,000 to support the launch and
continued carriage of FiT TV on such systems.
FORMATION OF FiT TV PARTNERSHIP
On April 30, 1996, Cable Health TV, Inc. ("CHTV") (a 90%-owned subsidiary
of the Company), Liberty CHC, Inc. (an affiliate of Liberty IFE), and Reebok
CHC, Inc. (an affiliate of Reebok International Ltd.) entered into a definitive
partnership agreement (the "FiT TV Partnership Agreement") forming FiT TV
Partnership, effective January 1, 1996, to own and operate the FiT TV cable
network. FiT TV had previously been owned and operated by CHTV.
In accordance with the terms of the FiT TV Partnership Agreement, CHTV
contributed all of the assets and liabilities of FiT TV to the partnership in
exchange for an 80% partnership interest and functions as managing partner.
Reebok CHC contributed cash of $2,000,000 and other consideration agreed upon
among the parties in exchange for a 10% partnership interest. Liberty CHC
contributed cash of $1,000,000 and other consideration agreed upon among the
parties in exchange for a 10% partnership interest.
In conjunction with this transaction, CHTV and Liberty CHC entered into an
agreement whereby Liberty CHC was granted a 5-year option to purchase an
additional 10% partnership interest from CHTV. The exercise price for this
option varies (up to a maximum of $5,000,000) depending on the number of
domestic subscribers receiving FiT TV from delivery systems owned or managed by
Liberty Media or an affiliate of Liberty Media (including SSI) at the time of
exercise.
9
<PAGE> 13
TALENT AGREEMENT WITH CRISTINA FERRARE
During 1996, the Company entered into a talent agreement with Cristina
Ferrare. Anthony D. Thomopoulos, one of the Named Executive Officers, and Ms.
Ferrare are husband and wife. Pursuant to the talent agreement, Ms. Ferrare
appears as one of the hosts of Home & Family, a live, two-hour program which is
telecast weekdays on The Family Channel. In addition, Ms. Ferrare makes public
appearances on behalf of the Company and has hosted certain prime-time specials
for The Family Channel. During 1996, the Company paid Ms. Ferrare $450,000 for
her services rendered under the talent agreement. The terms of Ms. Ferrare's
engagement were negotiated on the Company's behalf by outside counsel. The
Company believes that the terms of Ms. Ferrare's talent agreement are consistent
with standard industry practices and that the compensation paid thereunder in
1996 is equivalent to that which would be required to engage the services of a
celebrity of comparable status.
DELWILBER+ASSOCIATES
On December 31, 1995, the Company sold its interest in the Ice Capades, a
touring ice show, to DelWilber+Associates ("DWA"). Pursuant to the terms of the
transaction, the Company has the power to designate one-half of DWA's two-member
Board of Directors. From December 31, 1995 through June 30, 1996, the Company's
designee to the DWA Board of Directors was John B. Damoose, then an executive
officer of the Company. Mr. Damoose resigned from the Company and the DWA Board
of Directors effective June 30, 1996. During 1995, DWA awarded Mr. Damoose
options to purchase up to 40,000 shares of DWA's common stock. Upon Mr.
Damoose's resignation, these options were repurchased by DWA for $300,000 in
cash. The Company's current designee to the DWA Board of Directors does not have
a direct or indirect material interest in DWA.
Through June 30, 1996, the Company had advanced DWA a total of $12,000,000
under a revolving credit facility and an additional $300,000, payable on demand,
to fund the repurchase of Mr. Damoose's options.
In August 1996, DWA entered into a $12,000,000 bank credit facility which
was guaranteed by the Company. Advances under this bank credit agreement were
used to fully repay the revolving credit facility with the Company. Through
December 31, 1996, in addition to borrowings under the bank credit agreement and
the advance to fund the repurchase of Mr. Damoose's options, DWA borrowed
$7,000,000 from the Company.
In addition, DWA charges the Company a monthly retainer to DWA for
marketing services. Charges pursuant to this arrangement amounted to $315,500
through June 30, 1996, and $631,000 through December 31, 1996.
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<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY EXECUTIVE COMPENSATION TABLE
The following table sets forth certain information regarding aggregate cash
compensation, restricted stock awards, stock option grants, and other
compensation earned by the Company's Chief Executive Officer and each of the
Named Executive Officers for services rendered in all capacities to the Company
and its subsidiaries during the last three years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
--------------------------
ANNUAL COMPENSATION SHARES OF
-------------------------------- CLASS B
OTHER ANNUAL RESTRICTED COMMON STOCK ALL OTHER
SALARY BONUS COMPENSATION STOCK AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(a) ($) ($)(b) ($) OPTIONS(#) ($)(c)
- ---------------------------- ---- ------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.G. "Pat" Robertson........ 1996 377,571 100,200 212 -- -- 3,750
Chairman of the Board 1995 368,000 104,542 550 -- 625,000 3,750
1994 335,010 100,847 460 -- -- 3,750
Timothy B. Robertson........ 1996 545,846 200,200 287 -- -- 3,750
President and 1995 532,000 207,970 761 -- 625,000 3,750
Chief Executive Officer 1994 484,016 101,522 460 -- -- 3,750
Anthony D. Thomopoulos(d)... 1996 800,020 150,100 159 -- -- 3,750
Chief Executive Officer of 1995 661,555 101,256 514 -- 312,500 --
MTM Entertainment, Inc.
Richard L. Sirvaitis(e)..... 1996 410,210 300,200 205 -- 25,000 3,750
President, IFE Advertising 1995 269,237 110,100 43 312,300(f) 25,000 --
Sales
K.J. "Gus" Lucas(g)......... 1996 335,330 200,200 1,041 -- 25,000 3,750
President, Family Channel 1995 206,774 100,100 294 -- 50,000 --
Programming
Stephen D. Lentz(h)......... 1996 307,664 174,200 212 -- 25,000 3,750
President, FiT TV 1995 278,685 192,668 738 -- 25,000 3,750
1994 224,042 136,347 460 -- 15,000 3,750
</TABLE>
- ---------------
(a) Represents base salary, excluding bonus and commission.
(b) Represents payments to cover taxes incurred (commonly known as "gross-ups")
in connection with non-cash gifts. Excludes non-cash compensation that is
not properly categorized as salary or bonus.
(c) Represents amounts the Company contributed to the International Family
Entertainment, Inc. 401(k) Employee Retirement Savings Plan, a defined
benefit contribution plan, for the account of the Named Executive Officers.
(d) Mr. Thomopoulos' employment with the Company commenced March 6, 1995;
accordingly, Mr. Thomopoulos was not an employee of the Company during 1994
and no amounts are reported for such period.
(e) Mr. Sirvaitis' employment with the Company commenced April 7, 1995;
accordingly, Mr. Sirvaitis was not an employee of the Company during 1994
and no amounts are reported for such period.
(f) The value shown is the aggregate value (net of any consideration paid) for
the restricted stock award of 25,000 shares of Class B Common Stock to Mr.
Sirvaitis in 1995. The dollar value of the award of
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<PAGE> 15
restricted stock was calculated by multiplying the closing market price of
the Class B Common Stock on the date of grant by the number of shares
awarded. Pursuant to the terms of Mr. Sirvaitis' employment agreement, his
award will vest at a rate of 5,000 shares per year, commencing April 7,
1996. Accordingly, on December 31, 1996, Mr. Sirvaitis had vested in 5,000
shares and 20,000 shares remained unvested. The value of Mr. Sirvaitis'
unvested shares on such date was $310,000 (based on a per share value of
$15.50, the NYSE closing price for the Class B Common Stock on December 31,
1996). No other person listed in this table held any unvested awards of
restricted stock as of December 31, 1996. Pursuant to the terms of the Stock
Plan, dividends, if any, are payable with respect to shares received as
awards of restricted stock.
(g) Mr. Lucas' employment with the Company commenced May 3, 1995; accordingly,
Mr. Lucas was not an employee of the Company during 1994 and no amounts are
reported for such period.
(h) Mr. Lentz was not an executive officer of the Company on December 31, 1996;
however, he is included as a Named Executive Officer pursuant to 17 CFR
229.402(a)(3)(iii).
1996 OPTION GRANTS TABLE
The following table sets forth the number of options to purchase shares of
Class B Common Stock and shares of the common stock (the "MTM Common Stock") of
MTM Entertainment, Inc., a wholly owned subsidiary of the Company, granted to
the Company's Chief Executive Officer and the Named Executive Officers during
1996.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SHARES OPTIONS GRANTED EXERCISE OR PRESENT VALUE
UNDERLYING TO EMPLOYEES BASE PRICE EXPIRATION ON DATE OF GRANT
NAME OPTIONS GRANTED IN 1996 ($/SHARE) (a) DATE ($)(b)
- --------------------------- --------------- --------------- ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
CLASS B COMMON STOCK
M.G. "Pat" Robertson....... -- -- -- -- --
Timothy B. Robertson....... -- -- -- -- --
Anthony D. Thomopoulos..... -- -- -- -- --
Richard L. Sirvaitis....... 25,000(c) 8.4 15.375 12/02/06 172,000
K.J. "Gus" Lucas........... 25,000(d) 8.4 15 12/19/06 154,000
Stephen D. Lentz........... 25,000(e) 8.4 15.375 12/02/06 138,000
MTM COMMON STOCK
Anthony D. Thomopoulos..... 625,000(c) 100 4.4 03/06/05 1,600,000
</TABLE>
- ---------------
(a) All options were granted at an exercise price greater than or equal to the
fair market value of the underlying securities on the date of the grant.
(b) This value is based on the Black-Scholes option pricing model which includes
assumptions for variables such as interest rates, stock price volatility,
and future dividend yield. The Company's use of this model should not be
construed as an endorsement of its accuracy. Whether the model assumptions
used will prove to be accurate cannot be known at the date of grant or as of
the date of this Proxy Statement. The Black-Scholes model produces a value
based on freely tradeable securities; however, the stock options awarded in
1996 are not transferable. Therefore, the "present value" shown cannot be
realized by the holder. Recognizing these limitations of the model as
described, the following assumptions were used to estimate the present value
on the date of grant: (i) for the option granted to Mr.
Sirvaitis -- dividend yield of 0%, five-year zero-coupon risk-free interest
rate of 5.85%, estimated volatility of 34.5%, and estimated average expected
option term of 6 years; (ii) for the option granted to Mr. Lucas -- dividend
yield of 0%, five-year zero-coupon risk-free interest rate of 6.17%,
estimated volatility of 34.5%, and estimated average expected option term of
5 years; (iii) for the option granted to Mr. Lentz -- dividend yield of 0%,
five-year zero-coupon risk-free interest rate of 5.85%, estimated volatility
of 34.7%, and
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<PAGE> 16
estimated average expected option term of 4 years; and (iv) for the option
granted to Mr. Thomopoulos -- dividend yield of 0%, five-year zero-coupon
risk-free interest rate of 7.01%, estimated volatility of 65%, and estimated
average expected option term of 6 years.
(c) These options vest 20% on each anniversary of the date of the grant until
fully vested.
(d) These options vest 25% on each anniversary of the date of the grant until
fully vested.
(e) These options vest 33 1/3% on each anniversary of the date of the grant
until fully vested.
1996 YEAR-END VALUE TABLE
During 1996, no stock options were exercised by the Company's Chief
Executive Officer or any of the Named Executive Officers. The following table
sets forth the number and value of all unexercised options at year end for these
individuals.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT
YEAR-END(#) FISCAL YEAR-END($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------- -------------------- ------------------
<S> <C> <C>
CLASS B COMMON STOCK
M.G. "Pat" Robertson................................... 125,000/500,000 437,500/1,750,000
Timothy B. Robertson................................... 125,000/500,000 437,500/1,750,000
Anthony D. Thomopoulos................................. 195,312/117,188 683,592/410,158
Richard L. Sirvaitis................................... 5,000/45,000 12,000/51,125
K.J. "Gus" Lucas....................................... 30,000/45,000 99,500/60,500
Stephen D. Lentz....................................... 23,333/56,667 40,999/74,626
MTM COMMON STOCK
Anthony D. Thomopoulos................................. 125,000/500,000 0/0
</TABLE>
EMPLOYMENT AGREEMENTS
M.G. "Pat" Robertson. M.G. "Pat" Robertson's employment agreement as
Chairman of the Board of the Company was effective as of January 1, 1995 and
extends through January 1, 2000. The agreement specifies an initial annual base
salary of $368,000, subject to adjustment for changes in the Consumer Price
Index.
In addition, pursuant to the terms of the agreement, M.G. "Pat" Robertson
is entitled to receive an annual bonus targeted to be $100,000, based upon the
Company's achieving certain annual operating cash flow targets. The targeted
bonus amount is tied to a "mid-case" assumption. Thus, the annual bonus for a
given year may exceed the targeted bonus amount if the applicable cash flow
targets are exceeded; likewise, if the applicable cash flow targets are not
achieved, the annual bonus may be diminished.
In the event M.G. "Pat" Robertson's employment is terminated due to his
death, disability, or retirement with the consent of the Company, then for the
balance of the term of the agreement plus a period of 24 months he, or his
estate, shall be entitled to receive the annual base salary then in effect under
the agreement. Further, if the original term of the employment agreement expires
and is not renewed, then for a period of 24 months M.G. "Pat" Robertson shall be
entitled to receive the annual base salary then in effect under the agreement.
In the event of a change of control of the Company to which M.G. "Pat" Robertson
has not consented, the agreement shall be deemed terminated and for a period of
24 months he shall be entitled to receive the annual base salary then in effect
under the agreement.
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<PAGE> 17
Timothy B. Robertson. Timothy B. Robertson's employment agreement as
President and Chief Executive Officer of the Company was effective as of January
1, 1995, and extends through January 1, 2000. The agreement specifies an initial
annual base salary of $532,000, subject to adjustment for changes in the
Consumer Price Index.
In addition, pursuant to the terms of his employment agreement, Timothy B.
Robertson is entitled to receive an annual bonus targeted to be $200,000, based
upon the Company's achieving certain annual operating cash flow targets. The
targeted bonus amount is tied to a "mid-case" assumption. Thus, the annual bonus
for a given year may exceed the targeted bonus amount if the applicable cash
flow targets are exceeded; likewise, if the applicable cash flow targets are not
achieved, the annual bonus may be diminished. Furthermore, for any year in which
such operating cash flow targets are exceeded by at least 10%, Timothy B.
Robertson shall be entitled to receive $150,000 as additional bonus
compensation.
In the event Timothy B. Robertson's employment is terminated due to his
death, disability, or retirement with the consent of the Company or if,
following a change of control of the Company, Timothy B. Robertson's employment
is terminated, either voluntarily or involuntarily (other than for cause), or
there is a diminution of his responsibilities with respect to the Company, then
for the balance of the term of the agreement plus a period of 24 months he, or
his estate, shall be entitled to receive the annual base salary then in effect
under the agreement and an annual bonus equal to the bonus paid for the year
prior to the date of termination. Further, if the original term of the
employment agreement expires and is not renewed, then for a period of 24 months
Timothy B. Robertson shall be entitled to receive the annual base salary then in
effect under the agreement and an annual bonus equal to the bonus paid for the
year prior to the date of termination.
Anthony D. Thomopoulos. Mr. Thomopoulos' employment agreement as Chief
Executive Officer of MTM Entertainment, Inc. was effective as of March 6, 1995,
and extends through March 6, 2000. The agreement specifies an annual base salary
of $800,000.
In addition, pursuant to the terms of his employment agreement, beginning
in 1997, Mr. Thomopoulos is entitled to receive an annual bonus targeted to be
$100,000 in each of 1997 and 1998, and $200,000 in 1999, based on MTM
Entertainment's achieving certain annual earnings targets.
In the event Mr. Thomopoulos' employment is terminated other than for cause
prior to his having served 30 months under his employment agreement, he shall be
entitled to receive the annual base salary then in effect under the agreement
for a period of 24 months. In the event Mr. Thomopoulos' employment is
terminated other than for cause subsequent to his having served 30 months under
his employment agreement, he shall be entitled to receive the annual base salary
then in effect under the agreement for the balance of the term, but in any
event, not less than 12 months. Further, if the original term of the employment
agreement expires and is not renewed by the Company, then for a period of 12
months Mr. Thomopoulos shall be entitled to receive the annual base salary then
in effect under the agreement.
Mr. Thomopoulos' employment agreement also provides for the grant to Mr.
Thomopoulos of an option (the "MTM Option") to purchase 625,000 shares of MTM
Common Stock at an exercise price of $4.40 per share, which price was 110% of
the fair market value of the MTM Common Stock on the date the option was
granted. The MTM Option is for a term of 10 years and vests 20% per year on each
anniversary of the date of the employment agreement until fully vested.
Commencing on the fifth anniversary of the date of the employment agreement and
continuing on each of the 4 following anniversary dates, if the MTM Common Stock
is not then publicly traded, during each such year Mr. Thomopoulos may tender to
MTM Entertainment, and MTM Entertainment shall purchase, up to 20% of the stock
covered by the MTM Option. The purchase price for these repurchases shall be
based upon the value of MTM Entertainment calculated as 10
14
<PAGE> 18
times MTM Entertainment's earnings before income taxes, depreciation, and
amortization, which shall be determined according to the audited financial
statements of MTM Entertainment.
In the event of a change of control of MTM Entertainment or the Company,
the MTM Option shall immediately vest in full. Further, in the event Mr.
Thomopoulos' employment is terminated other than for cause, any option to
purchase MTM Common Stock or Class B Common Stock theretofore granted to Mr.
Thomopoulos shall immediately vest in full.
Richard L. Sirvaitis. Mr. Sirvaitis' employment agreement as President,
IFE Advertising Sales was effective as of April 7, 1995, and extends through
April 7, 2000. The agreement specifies an annual base salary of $400,000,
subject to adjustment for changes in the Consumer Price Index.
In addition, pursuant to the terms of his employment agreement, Mr.
Sirvaitis is entitled to receive an annual bonus targeted to be $100,000, based
upon the Company's achieving certain annual ad sales revenue targets established
by the Company's President and Chief Executive Officer and approved by the Board
of Directors. In the event the applicable revenue target is exceeded in a given
year, Mr. Sirvaitis' bonus for that year may be increased. In the event the
applicable revenue target is not met in a given year, Mr. Sirvaitis' bonus for
that year will be diminished proportionately.
Mr. Sirvaitis' agreement specifies that, provided Mr. Sirvaitis is then
employed by the Company, he will receive an option to purchase 25,000 shares of
Class B Common Stock in December 1995, 1996, 1997, and 1998. Each such option
will have an exercise price equal to the fair market value of the underlying
stock on the date of the grant thereof, will vest 20% per year for a period of
five years, and will otherwise be subject to the terms of a stock option
agreement to be entered into between Mr. Sirvaitis and the Company.
In the event Mr. Sirvaitis' employment is terminated due to his death,
disability, or otherwise other than for cause, or if the original term of the
employment agreement expires and is not renewed by the Company, then for a
period of 24 months he, or his estate, shall be entitled to receive the annual
base salary then in effect under the agreement and an annual bonus equal to the
bonus paid for the year prior to the date of termination.
K.J. "Gus" Lucas. Mr. Lucas' employment agreement as Senior Vice President
of Programming of IFE was effective as of May 3, 1995, and extends by its terms
through May 3, 2000. In connection with Mr. Lucas' recent promotion to
President, Family Channel Programming, he and the Company are currently
finalizing amendments to his employment agreement which are expected to include,
among other things, new minimum annual base salary and bonus levels.
The terms of Mr. Lucas' current agreement specify an annual base salary of
$320,000, with scheduled increases of 7 1/2% per year. In addition, Mr. Lucas is
entitled to receive an annual bonus targeted to be $100,000, based upon Mr.
Lucas' achieving certain mutually agreed upon goals. In the event the applicable
goals are exceeded in a given year, Mr. Lucas' bonus for such year may be
adjusted upwards at the discretion of the Company.
In the event Mr. Lucas' employment is terminated other than for cause, then
for a period of 24 months he shall be entitled to receive the annual base salary
then in effect under the agreement.
Stephen D. Lentz. The Company and Mr. Lentz are currently finalizing the
terms of a definitive employment agreement which is expected to include, among
other things, a 5-year term, minimum annual base salary and bonus levels, and
compensatory arrangements with respect to early termination of Mr. Lentz's
employment. There can be no assurance that such an agreement will be completed.
The actual amounts of Mr. Lentz's bonus and salary for 1996 are set forth in the
foregoing Summary Executive Compensation Table.
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<PAGE> 19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, William L. Armstrong and Lowell W. Morse, the Company's
outside Directors, served as the Compensation Committee. Neither Mr. Morse nor
Mr. Armstrong is a current or former officer or employee of the Company or any
of its subsidiaries. During 1996, no executive officer of the Company served as
a member of the compensation committee of another entity.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Policy and Company Performance. The executive compensation
program has been designed to motivate, reward, and retain executives with the
level of talent and ability required to prudently guide the Company's growth,
efficiently manage its diverse resources, achieve its long-range business
objectives, and successfully maintain its position as one of the leading
providers of family entertainment. The compensation program provides the means
of achieving these goals by creating incentives to accomplishing short-term and
long-term objectives, by rewarding exceptional performance that contributes to
the business, and by utilizing competitive base salaries that recognize a policy
of career continuity.
The Company's financial well being is highly dependent upon the success of
its long-term growth strategy. The nature of this strategy requires long-term
and capital-intensive investments, which may take years to generate returns to
stockholders. Therefore, executive compensation decisions are oriented towards
long-term corporate performance and may not fluctuate as greatly as year-to-year
corporate financial results.
Consistent with this long-term view and the unique nature of the Company's
goals, retention of executives who have developed the skills and expertise
required to lead a corporation poised to become a significant international
media enterprise is vital to the Company's competitive strength. Retention and
motivation of individuals possessing the ability to implement the Company's
business plans as well as to react appropriately to unanticipated external
factors is, and will continue to be, the key to the Company's success.
The fundamental principle of the compensation program is to compensate
executives for their performance and for the level of responsibility
corresponding to their positions. Assessments of both individual and corporate
performance influence compensation levels. The Compensation Committee recognizes
the importance of fostering a performance-based environment that motivates
individual achievement. Thus, executives are regularly given recognition for the
prior year's results and provided with incentives to augment their successes in
the future.
The Compensation Committee makes compensation determinations for all of the
Company's senior management, including the individuals whose compensation is
detailed in this Proxy Statement. Compensation decisions for all executives,
including Timothy B. Robertson, the Company's Chief Executive Officer, are based
on the criteria disclosed above.
In order to maintain appropriate compensation practices relative to the
marketplace, the Company periodically commissions independent compensation
consultants to gather and assist in the analysis of comparative compensation
data. These data were taken into account in setting 1996 compensation levels.
There are three primary elements of the Company's compensation program:
base salary, bonus payments, and awards under the Stock Plan.
Base Salaries. A competitive base salary is necessary to the development
and retention of capable management and is consistent with the Company's
long-term goals.
Current base salary levels for executives result from a review of the
comparative compensation data, the Company's business performance, and general
economic factors. While there is no specific weighting of these
16
<PAGE> 20
components, the comparative compensation data are the primary consideration in
making base salary determinations. Business performance and general economic
factors, such as cash flow and projections of inflation, are secondary
considerations. Given the Company's size, complexity, and maturity relative to
the industry, base salary ranges are targeted to generally approximate peer
median levels and the Company has entered into employment agreements with
certain executives which reflect this goal. See "-- Summary Executive
Compensation Table" and "-- Employment Agreements." Within this framework,
executive salaries are determined based on individual performance, level of
responsibility within the Company and its subsidiaries, and experience.
Bonus Payments. Targeted cash bonus payments are awarded to executives in
recognition of contributions to the business during the prior year. An
executive's contributions to the business are measured, in part, by his or her
success in meeting certain goals established by such executive and the Company's
President. The aggregate amount of the bonuses awarded in any calendar year is
determined by reference to the terms of the executive employment agreements,
comparative compensation data, the Company's competitive position, assessment of
progress in attaining long-term goals, and business performance considerations.
These business performance considerations include measurements such as annual
cash flow, earnings per share, and return on investments. None of these
measurements is given a specific weight. No formula was used in determining the
aggregate amount of the bonuses awarded executives in 1996.
The specific cash bonus an executive receives is dependent upon individual
performance and level of responsibility. Assessment of an individual's relative
performance is made annually based on a number of factors, including initiative,
business judgment, knowledge of the industry, and management skills.
Awards under the Stock Plan. Awards under the Stock Plan are designed to
promote an identity of interests between management and stockholders. Under the
Stock Plan, the Company's executives are eligible to receive grants of options
to purchase Class B Common Stock at or above fair market value on the date of
the grant. Typically, grants of stock options are subject to a significant
vesting period. This approach is designed to increase long-term stockholder
value, as the maximum benefit of this element of executive compensation is only
realized if stock price appreciation occurs over a number of years.
Awards of stock options were granted to certain executives in 1996 based on
individual performance (determined as described under "-- Bonus Payments") and
level of responsibility. Award levels are generally intended to be sufficient in
size to provide a strong incentive for executives to work for long-term business
interests and become significant owners of the business. See "-- Summary
Executive Compensation Table" and "-- 1996 Option Grants Table."
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code of 1986 limits a public company's federal income tax deduction for
compensation paid in excess of $1,000,000 to any of its five most highly
compensated executive officers. However, certain performance-based compensation,
including awards of stock options, is excluded from the $1,000,000 limit if
specific requirements are met. Awards of stock options under the Stock Plan are
generally designed to comply with these requirements.
While the tax impact of any compensation arrangement is one factor which is
considered by the Compensation Committee, such impact is evaluated in light of
the compensation policies discussed above. The Compensation Committee's
compensation determinations have generally been designed to maximize the
Company's federal income tax deduction. However, from time to time compensation
may be awarded which is not fully deductible if it is determined that such award
is consistent with the overall design of the compensation program and in the
best interests of the Company and its stockholders.
17
<PAGE> 21
Chief Executive Officer Compensation. The Chief Executive Officer's salary
is determined based upon the competitive salary framework described under
"-- Base Salaries," above, recognizing the Company's significant growth and the
increasing complexity of its business. Within this setting, the minimum base
salary set forth in Mr. Robertson's employment agreement was determined based on
the Compensation Committee's judgment concerning his individual contributions to
the business, level of responsibility, and career experience. Although none of
these factors were given a specific weight, primary consideration was given to
Mr. Robertson's individual contributions to the business. No particular formulas
or measures are used.
The amount of Mr. Robertson's 1996 bonus payment was established based upon
the Company's achievement of certain operating cash flow targets established by
the Compensation Committee and memorialized in Mr. Robertson's employment
agreement. The Compensation Committee's determination of the targeted bonus
amount fixed in Mr. Robertson's employment agreement reflects Mr. Robertson's
level of responsibility within the organization and overall contributions as
Chief Executive Officer.
Mr. Robertson did not receive an award under the Stock Plan in 1996.
Conclusion. The Company has had, and continues to have, an appropriate and
competitive compensation program. The balance of a competitive base salary
position, bonus payments, and significant emphasis on long term incentives is a
foundation designed to build stability and to support the Company's continued
growth.
This report is submitted by the members of the Compensation Committee:
William L. Armstrong
Lowell W. Morse
THE PRECEDING "REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION"
AND THE "STOCK PERFORMANCE CHART" THAT APPEARS IMMEDIATELY HEREAFTER SHALL NOT
BE DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR INCORPORATED BY REFERENCE IN ANY
DOCUMENTS SO FILED.
18
<PAGE> 22
STOCK PERFORMANCE CHART
As part of the executive compensation information presented in this Proxy
Statement, the SEC requires a comparison of stock performance for the Company
with stock performance of a broad equity market index and an appropriate
industry index. The following chart compares the cumulative total stockholder
return on the Class B Common Stock during the period from April 28, 1992 to
March 31, 1997 with the cumulative total return on the Standard and Poor's
("S&P") 500 Composite Index and the S&P Broadcast Media Index. The comparison
assumes $100 was invested on April 28, 1992 (the effective date of the Company's
initial public offering of Class B Common Stock) in the Class B Common Stock and
in each of the foregoing indices and assumes reinvestment of dividends, if any.
The stock performance shown on the following chart is not necessarily indicative
of future performance.
<TABLE>
<CAPTION>
International
Family
Measurement Period Entertainment, S&P 500 Composite S&P Broadcast
(Fiscal Year Covered) Inc. Index Media Index
<S> <C> <C> <C>
4/28/92 100.00 100.00 100.00
12/31/92 93.33 108.79 118.33
12/31/93 138.33 119.75 165.98
12/31/94 84.17 121.33 154.11
12/31/95 109.17 166.93 201.75
12/31/96 129.17 205.26 165.37
3/31/97 172.92 210.76 159.49
</TABLE>
19
<PAGE> 23
MATTERS TO BE VOTED UPON
ELECTION OF DIRECTORS
The Nominees set forth below have been duly nominated to stand for election
as Directors of the Company to serve for a term of one (1) year, or until their
successors are elected and qualified. Three of these individuals have been
nominated to stand for election as Class A Directors and the remaining three
individuals have been nominated to stand for election as Class B Directors. The
election of these six individuals will leave one vacancy among the Class A
Directors. As of the date of this Proxy Statement, the Board of Directors has
not identified a candidate for this position. Pursuant to Article IV, Section B,
paragraph 3 of the Company's Amended and Restated Certificate of Incorporation,
this vacancy may be filled at any time following the 1997 Annual Meeting by the
majority vote of the Class A Directors then in office, for a term to expire at
the next Annual Meeting of the Company's Stockholders. Proxies cannot be voted
for a greater number of persons than the number of Nominees named.
Each of the Nominees has indicated a willingness to serve as a member of
the Board of Directors if elected. Accordingly, the Board of Directors
recommends a vote FOR each of the Nominees. The information provided below with
respect to the Nominees is as of the Record Date.
To be elected by the Class A Common Stockholders:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE OTHER INFORMATION
---------------------- --- -------------------------------------------
<S> <C> <C>
M.G. "Pat" Robertson 67 Chairman of the Board and a Director of the
Company since December 1989. He has served
as Chairman of the Board of CBN since
January 1960, Chief Executive Officer and
President of CBN from January 1960 to
January 1987 and from January 1990 to
September 1993, and Chief Executive Officer
of CBN from September 1993 to the present.
He is also Chairman of Starguide Digital
Networks, Inc.; Chairman of Asia Pacific
Media, Inc.; Chairman of Porchlight
Entertainment, Inc.; President of African
Development Company, Ltd.; President of the
American Center for Law and Justice;
Chairman of Operation Blessing
International Relief and Development
Corporation; and Chancellor and a member of
the Board of Trustees of Regent University.
</TABLE>
20
<PAGE> 24
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE OTHER INFORMATION
---------------------- --- -------------------------------------------
<S> <C> <C>
Timothy B. Robertson 42 President and Chief Executive Officer and a
Director of the Company since December
1989. From January 1987 to January 1990, he
served as President of CBN. He is currently
a board member of the National Cable
Television Association, the National
Academy of Cable Programming, the
Cabletelevision Advertising Bureau, the
Walter Kaitz Foundation, Cable in the
Classroom, and a member of the Board of
Trustees of Regent University. Mr.
Robertson is Chairman of MTM Entertainment,
Inc.
Louis A. Isakoff 42 Senior Vice President, General Counsel and
Secretary of the Company since December
1992, and from January 1990 to such date,
Vice President, General Counsel and
Secretary of the Company. He has served as
a Director of the Company since December
1989.
</TABLE>
To be elected by the Class B Common Stockholders:
<TABLE>
<S> <C> <C>
William L. Armstrong** 60 Director of the Company since April 1992.
Since 1984, he has served as Chairman of
Ambassador Media Corporation. In addition,
since 1991, he has served as Chairman of
Cherry Creek Mortgage Company, Inc. and has
spent substantial time devoted to public
service matters. From 1978 until January
1992, Mr. Armstrong served as the United
States Senator for the State of Colorado.
Mr. Armstrong serves as a director for the
following public companies: Helmerich &
Payne, an oil and gas company; Provident
Life & Accident Insurance Co., an insurance
provider; and Storage Technology
Corporation, a computer peripheral company.
</TABLE>
---------------
** Member of the Audit Committee and Compensation Committee.
21
<PAGE> 25
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AGE OTHER INFORMATION
---------------------- --- -------------------------------------------
<S> <C> <C>
Lowell W. Morse** 59 Director of the Company since May 1995. Mr.
Morse has served as the chairman of Morse &
Associates, Inc. since 1972. In addition,
Mr. Morse is the founder and has been the
Chairman of The Bagel Basket, Inc., a chain
of bagel stores, since 1993, and is the
founder and has been the Chairman of
Cypress Ventures, Inc., a real estate
development company, since 1989. Mr. Morse
also serves as the Chairman of the Board of
Trustees of Regent University, and a
director of Comerica-California, Inc., a
subsidiary of Comerica, Inc., a publicly
traded bank holding company.
Robert M. Wallace 48 Director of the Company since April 1992.
Mr. Wallace is the founder and has been the
Chairman and President of Gateway Advisors,
Inc., a financial advisory firm, since
1987. Mr. Wallace also serves as a director
of Media Arts Group, Inc. and Zycon
Corporation.
</TABLE>
------------------------
** Member of the Audit Committee and Compensation Committee.
M.G. "Pat" Robertson and Timothy B. Robertson are father and son. No
other family relationships exist between any other Nominees.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP served as independent auditors for the
Company for the year ended December 31, 1996. Pursuant to the recommendation of
the Audit Committee, the Board of Directors has appointed this firm to continue
in that capacity for the ensuing year. Accordingly, the Board of Directors
recommends a vote FOR the ratification of the appointment of KPMG Peat Marwick
LLP as the Company's independent auditors for the year 1997.
In the event the stockholders fail to ratify the appointment of KPMG Peat
Marwick LLP, the Board of Directors will appoint other independent public
accountants as auditors. Representatives of KPMG Peat Marwick LLP will attend
the 1997 Annual Meeting. They will have the opportunity to make a statement and
respond to appropriate questions from stockholders.
OTHER MATTERS
OTHER BUSINESS FOR MEETING
The Board of Directors does not know of any matters that will be presented
for action at the 1997 Annual Meeting other than those described above and
matters incident to the conduct of the meeting. If, however, any other matters
not presently known to management should come before the 1997 Annual Meeting, it
is intended that the shares represented by the accompanying proxy will be voted
on such matters in accordance with the discretion of the holders of such proxy.
22
<PAGE> 26
STOCKHOLDER PROPOSALS FOR 1998
Any stockholder of the Company who wishes to present a proposal at the next
annual meeting of stockholders of the Company, and who wishes to have such
proposal included in the Company's proxy statement for that meeting, must in
accordance with Rule 14a-8 of the Securities Exchange Act of 1934, as amended,
deliver a copy of such proposal to the Company at 2877 Guardian Lane, Virginia
Beach, Virginia 23452, Attention: Corporate Secretary, no later than December
19, 1997; however, if next year's annual meeting of stockholders is held on a
date more than 30 days before or after the corresponding date of the 1997 Annual
Meeting, any stockholder who wishes to have a proposal included in the Company's
proxy statement and proxy for that meeting must deliver a copy of the proposal
to the Company within a reasonable time before the proxy solicitation is made.
The Company reserves the right to decline to include in the Company's proxy
statement and proxy any stockholder's proposal that does not comply with the
rules of the SEC and/or the Company's By-laws for inclusion therein.
See "CORPORATE GOVERNANCE -- Meetings and Committees of the Board of
Directors" and the Company's By-laws for notice procedures to recommend a person
for nomination as a director.
ANNUAL REPORT
The Company's 1996 Annual Report to Stockholders accompanies this Proxy
Statement. The 1996 Annual Report to Stockholders does not form any part of the
material for the solicitation of proxies. UPON WRITTEN REQUEST, THE COMPANY WILL
PROVIDE STOCKHOLDERS WITH A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1996 (THE "FORM 10-K"), AS FILED WITH THE SEC, WITHOUT
CHARGE. PLEASE DIRECT WRITTEN REQUESTS FOR A COPY OF THE FORM 10-K TO: INVESTOR
RELATIONS DEPARTMENT, INTERNATIONAL FAMILY ENTERTAINMENT, INC., 2877 GUARDIAN
LANE, VIRGINIA BEACH, VIRGINIA 23452.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY
23
<PAGE> 27
DETACH HERE IFE 1
P PROXY SOLICITED BY THE BOARD OF DIRECTORS
R OF INTERNATIONAL FAMILY ENTERTAINMENT, INC.
O 2877 GUARDIAN LANE
X VIRGINIA BEACH, VIRGINIA 23452
Y
The undersigned holder of shares of Class A Common Stock and/or
Class B Common Stock hereby appoints Timothy B. Robertson and Louis A.
Isakoff, each with power to act without the other and with full power
of substitution, as Proxies to represent and to vote, as designated on
the reverse side, all shares of Common Stock of International Family
Entertainment, Inc. which the undersigned would be entitled to
vote if then personally present, at the 1997 Annual Meeting of
Stockholders to be held at the Norfolk Waterside Marriott, 235 East
Main Street, Norfolk, virginia on Tuesday, May 20, 1997 at 3:00 p.m.
(local time), upon such business as may properly come before the meeting
or any adjournment thereof, including the following proposals set forth on
the reverse side.
---------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
---------------
<PAGE> 28
DETACH HERE IFE 2
Please mark
[X] votes as in
this example
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS SIGNED BUT NOT
MARKED BELOW, IT WILL BE DEEMED TO BE IN FAVOR OF ALL NOMINEES LISTED IN
PROPOSAL (1), AND FOR PROPOSAL (2), AND AT THE DISCRETION OF THE PROXY
HOLDERS WITH REGARD TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
1997 ANNUAL MEETING OF STOCKHOLDERS.
<TABLE>
<S> <C>
FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratification of KPMG Peat --------- --------- ----------
CLASS A NOMINEES: M.G. "Pat" Robertson, Marwick LLP as independent
Timothy B. Robertson, auditors for the year 1997. --------- --------- ----------
Louis A. Isakoff 3. In their discretion, upon such other matters as may properly
CLASS B NOMINEES: Robert M. Wallace, come before the Annual Meeting or any adjournment thereof.
William L. Armstrong,
Lowell W. Morse MARK HERE ----------------
FOR ADDRESS
FOR ---------- --------- AUTHORITY TO VOTE CHANGE AND
ALL WITHHELD NOTE AT LEFT ----------------
NOMINEES FOR ALL
LISTED ---------- --------- NOMINEES LISTED
- --------- This Proxy may be revoked prior to the exercise of the powers
conferred by the proxy.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE.
- --------- --------------------------------------
For all nominees except as noted above Please date and sign exactly as name appears hereon and return the
proxy card in accordance with the instructions provided in the
Proxy Statement. When shares of Class A Common Stock and/or Class B
Common Stock are owned by joint tenants, both should sign. When
signing as attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized paerson.
Signature: Date: Signature: Date:
--------------------------------------- --------- ---------------------------------------- ----------
</TABLE>
