<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Saga Communications, Inc.
(Name of Registrant as Specified In Its Charter)
Saga Communications, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
SAGA COMMUNICATIONS, INC.
73 KERCHEVAL AVENUE
GROSSE POINTE FARMS, MICHIGAN 48236
NOTICE OF ANNUAL MEETING
MAY 11, 1998
To the Stockholders of
Saga Communications, Inc.
Notice is hereby given that the Annual Meeting of the Stockholders of Saga
Communications, Inc. (the "Corporation"), will be held at the Georgian Inn,
31327 Gratiot, Roseville, Michigan, on Monday, May 11, 1998 at 10:00 A.M.,
Eastern Daylight Time, for the following purposes:
(1) To elect directors of the Corporation for the ensuing year, and
until their successors are elected and qualified.
(2) To ratify the selection by the Board of Directors of Ernst & Young
LLP as independent auditors to audit the Corporation's books and accounts
for the fiscal year ending December 31, 1998.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
By Order of the Board of Directors,
MARCIA LOBAITO
Secretary
April 7, 1998
Mailed at Boston, Massachusetts
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT AS PROMPTLY
AS POSSIBLE. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE
USED.
<PAGE> 3
SAGA COMMUNICATIONS, INC.
73 KERCHEVAL AVENUE
GROSSE POINTE FARMS, MICHIGAN 48236
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Stockholders of Saga Communications,
Inc. (the "Corporation") to be held on May 11, 1998 and at any adjournment
thereof, for the purposes set forth in the accompanying notice of such meeting.
All stockholders of record of the Corporation's Common Stock at the close of
business on March 31, 1998 will be entitled to vote. The stock transfer books
will not be closed.
Proxies in the form enclosed are solicited on behalf of the Board of
Directors. Any stockholder giving a proxy in such form has the power to revoke
it at any time before it is exercised by filing a later proxy with the
Corporation, by attending the meeting and voting in person, or by notifying the
Corporation of the revocation in writing to its President at 73 Kercheval
Avenue, Grosse Pointe Farms, Michigan 48236. Any such proxy, if received in time
for the voting and not revoked, will be voted at the Annual Meeting in
accordance with the directions of the stockholder. Any proxy which fails to
specify a choice with respect to any matter to be acted upon will be voted for
the election of each nominee for director and in favor of each proposal to be
acted upon.
As of March 31, 1998, the Corporation had outstanding and entitled to vote
8,959,963 shares of Class A Common Stock and 1,208,510 shares of Class B Common
Stock (the Class A and Class B Common Stock collectively, the "Common Stock").
Each share of Class A Common Stock entitles the holder thereof to one vote on
the matters to be voted upon at the Annual Meeting and each share of Class B
Common Stock entitles the holder thereof to one vote in the election of
directors and ten votes on the other matters to be voted upon at the Annual
Meeting. All holders of Common Stock vote together as one class, except that in
the election of directors the holders of Class A Common Stock vote as a separate
class to elect two directors. Abstentions and broker non-votes will be counted
in determining if a quorum is present. With regard to the election of directors,
votes that are withheld will be excluded entirely from the vote and will have no
effect. Abstentions may be specified on all proposals other than the election of
directors and will be counted as present for purposes of the item on which the
abstention is noted. Abstentions on the ratification of accountants will have
the same legal effect as a vote against such matter. Under the rules of the
American Stock Exchange, brokers holding shares in street name have the
authority to vote on certain matters when they have not received instructions
from the beneficial owners. Brokers that do not receive instructions are
permitted to vote on the outcome of the election of directors and the
ratification of accountants. As a result, broker non-votes will have no effect
on the outcome of the election of directors and the ratification of accountants.
The holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum for the transaction of business. In the absence of a quorum,
the Annual Meeting may be postponed from time to time until stockholders holding
the requisite amount are present or represented by proxy.
The approximate date on which the Proxy Statement and accompanying proxy
card will first be mailed to the stockholders of the Corporation is April 7,
1998.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1998, certain information
concerning the ownership of shares of Common Stock by (i) each person or group
who is known by the Corporation to own beneficially more than five percent of
the issued and outstanding Common Stock, (ii) each director of the Corporation,
(iii) the Corporation's Chief Executive Officer and the other most highly
compensated executive officers whose salary and bonus exceeded $100,000 for the
Corporation's last fiscal year, and (iv) all directors and executive officers as
a group. Except as otherwise indicated, each person named has sole investment
and voting power with respect to the securities shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS
---------------------------- ---------------------
NAME CLASS A CLASS B CLASS A CLASS B
---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Wellington Management Company, LLP................ 428,357(1) -- 4.8% --
75 State Street
Boston, MA 02109
T. Rowe Price Associates, Inc..................... 859,999(2) -- 9.6% --
T. Rowe Price Small Cap Value Fund, Inc........... 820,312(2) -- 9.2% --
100 E. Pratt Street
Baltimore, MD 21202
Ronald Baron...................................... 3,654,647(3) -- 40.8% --
767 Fifth Avenue
New York, NY 10153
Edward K. Christian............................... -- 1,259,758(4) * 100%
Jonathan Firestone................................ 10,156 -- * --
Joseph P. Misiewicz............................... 1,019(5)(6) -- * --
Gary Stevens...................................... 603(5) -- * --
Donald Alt........................................ 207(5) -- -- --
Kristin Allen..................................... 254(5) -- -- --
Steven J. Goldstein............................... 199,091(7) -- 2.2% --
All directors and executive officers as a group... 221,519(5)(7) 1,259,758(4) 2.5% 100%
</TABLE>
- ---------------
(1) According to its Form 13G on file with the Securities and Exchange
Commission ("SEC"), Wellington Management Company has sole and shared voting
power with respect to 0 and 161,326 shares, respectively, and shared
dispositive power as to 428,357 shares.
(2) According to their joint Schedule 13G on file with the SEC, T. Rowe Price
Associates, Inc. and T. Rowe Price Small Cap Value Fund, Inc. have sole
voting power with respect to 39,687 and 820,312 shares, respectively, no
shared voting power, have sole dispositive power with respect to 859,999 and
0 shares, respectively, and have no shared dispositive power.
(3) According to their joint Form 13D on file with the SEC, Mr. Baron, Baron
Capital Group, Inc., ("BCG"), Baron Capital, Inc. ("BCI"), and Baron Capital
Management, Inc. ("BCM") have sole voting and dispositive power with respect
to 477,500 shares, and Mr. Baron, BCG, BCI, BAMCO, Inc., BCM and Baron Asset
Fund have shared voting and dispositive power with respect to 3,177,147
shares, 3,177,147 shares, 589,747 shares, 2,587,400 shares, 589,747 shares,
and 2,312,400 shares, respectively.
(4) Includes 1,208,510 shares of Class B Common Stock pledged to the Corporation
to secure a note to the Corporation and 51,248 shares of Class B Common
Stock reserved for issuance upon exercise of stock options outstanding
pursuant to the Corporation's 1992 Stock Option Plan.
(5) Includes the following shares of Class A Common Stock reserved for issuance
upon exercise of stock options outstanding pursuant to the Corporation's
1997 Non-Employee Directors Stock Option Plan: Mr. Misiewicz, 508 shares;
Mr. Stevens, 603 shares; Mr. Alt, 207 shares; Ms. Allen, 254 shares; and all
executive officers and directors as a group, 1,572 shares.
(6) Mr. Misiewicz has shared voting power with his son as to 153 of these
shares.
(7) Includes the following shares of Class A Common Stock reserved for issuance
upon exercise of stock options outstanding pursuant to the Corporation's
1992 Stock Option Plan: Mr. Goldstein, 145,194 shares; and all directors and
executive officers as a group, 156,478 shares.
* Less than 1%.
2
<PAGE> 5
ELECTION OF DIRECTORS
The persons named below have been nominated for election at the Annual
Meeting as directors of the Corporation. The directors who are elected shall
hold office until their respective successors shall have been duly elected and
qualified. It is intended that the two persons named in the first part of the
following list will be elected by the holders of the Class A Common Stock and
that the four persons named in the second part of the list will be elected by
the holders of the Class A Common Stock and Class B Common Stock, voting
together as a single class, with each share entitling the holder thereof to one
vote. In accordance with Delaware General Corporation Law, directors are elected
by a plurality of the votes of the shares present in person or represented by
proxy at the Annual Meeting.
All nominees are members of the present Board. Each of the nominees for
director has consented to being named a nominee in this Proxy Statement and has
agreed to serve as a director, if elected at the Annual Meeting. It is the
intention of the persons named in the proxy to vote for the following nominees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
------------ --------------------------- --------
<S> <C> <C>
DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK:
Jonathan Firestone, 53.................. President and Chief Executive Officer of 12/92
BBDO Minneapolis and director of BBDO,
North America (advertising agency)
since 1989
Joseph P. Misiewicz, 51................. Chairperson, Telecommunications 12/92
Department since 1998; Professor,
Telecommunications Department at Ball
State University from 1996 to 1998 and
Chairperson from 1990 to 1996
DIRECTORS TO BE ELECTED BY HOLDERS OF COMMON STOCK:
Edward K. Christian, 53................. President, Chief Executive Officer and 3/92
Chairman of the Corporation and its
predecessor since 1986
Kristin Allen, 38....................... Managing Director, Credit Suisse First 7/97
Boston Corporation since 1997 and in
various other positions since 1992
Donald Alt, 52.......................... Broadcasting investor; Chairman of 7/97
Forever Broadcasting since 1996; Chief
Financial Officer of Keymarket Radio
Companies from 1984 to 1996
Gary Stevens, 58........................ Managing Director, Gary Stevens & Co. 7/95
(media broker) since 1986
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee, currently comprised of
Ms. Allen and Messrs. Alt, Firestone, Misiewicz and Stevens (Chair), which is
charged with the responsibility of reviewing certain of the Corporation's
compensation programs and making recommendations to the Board of Directors with
respect to compensation. The Compensation Committee met four times during the
Corporation's last fiscal year. The Compensation Committee also administers the
Corporation's 1992 Stock Option Plan.
3
<PAGE> 6
The Board of Directors has a Finance and Audit Committee, currently
comprised of Ms. Allen and Messrs. Alt, Firestone (Chair), Misiewicz and
Stevens, which is charged with the responsibility of reviewing the Corporation's
internal auditing procedures and accounting controls and considers the selection
and independence of the Corporation's outside auditors. The Finance and Audit
Committee met twice during the Corporation's last fiscal year.
The Board of Directors does not have a nominating committee as the Board as
a whole considers the qualifications and recommends to the stockholders the
election of directors of the Corporation. Stockholders may recommend nominees
for election as directors by writing to the President of the Corporation.
The Board of Directors held a total of four meetings during 1997. Each
member of the Board of Directors attended at least 75% of the aggregate number
of meetings of the Board and all committees on which he or she served.
COMPENSATION OF DIRECTORS AND OFFICERS
DIRECTORS COMPENSATION
Each director of the Corporation who is not an employee receives fees of
$4,000 per year, plus $1,000 for each Board or committee meeting attended in
person and $200 for each telephonic meeting attended. In addition, the Chairs of
the Committees receive $2,000 per year. Under the Corporation's 1997
Non-Employee Directors Stock Option Plan, options are granted to the directors
in lieu of these fees. On the last business day of January of each year each
eligible director is automatically granted an option to purchase that number of
shares of the Corporation's Class A Common Stock equal to the amount of the
retainer divided by the fair market value of the Class A Common Stock on the
last trading day of the December immediately preceding the date of grant less
$.01 per share. The options are immediately vested and exercisable at an
exercise price of $.01 per share and may be exercised for a period of 10 years
from the date of grant. Directors may elect to receive life insurance premiums
in lieu of their compensation. Mr. Firestone is the only director to make such
election and, as a result, the Corporation paid life insurance premiums on his
behalf in the amount of $16,992 in 1997. Directors who are employees receive no
additional compensation for serving as directors or attending Board or Committee
meetings.
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended
December 31, 1997, 1996, and 1995 of the Corporation's chief executive officer
and the other most highly compensated executive officers whose salary and bonus
exceeded $100,000.
4
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------
SECURITIES
ANNUAL UNDERLYING
COMPENSATION OPTIONS/
------------------- SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES)(1) COMPENSATION(2)
--------------------------- ---- ------ ----- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Edward K. Christian.......................... 1997 $350,012 $275,000 7,500 $3,247
President, CEO 1996 $335,000 $250,000 6,250 $3,427
1995 $311,000 $250,000 11,719 $3,160
Steven J. Goldstein.......................... 1997 $247,000 $ 60,000 5,000 $1,914
Executive Vice President and Group 1996 $240,000 $ 56,000 2,500 $2,181
Program Director 1995 $223,000 $ 50,000 4,882 $2,046
</TABLE>
- ---------------
(1) Restated to reflect five-for-four stock splits effective July 31, 1995,
April 30, 1996 and April 1, 1997.
(2) Consists of life insurance premiums or payments in lieu thereof in 1997,
1996, and 1995.
The following table sets forth certain information relating to option
grants pursuant to the Corporation's 1992 Stock Option Plan (the "Option Plan")
in the year ended December 31, 1997 to the individuals named in the Summary
Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------------------------ REALIZABLE
% OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS/SARS EXERCISE STOCK PRICE
UNDERLYING GRANTED TO OR GRANT- APPRECIATION FOR
OPTIONS/ EMPLOYEES BASE DATE MARKET OPTION TERM(4)
SARS IN FISCAL PRICE PRICE EXPIRATION --------------------
NAME GRANTED(1) YEAR ($/SH) PER SHARE DATE 5% 10%
---- ---------- ------------ -------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Edward K. Christian............... 7,500(2) 33.3% $14.50 $18.50 7/1/07 $117,259(3) $251,132(3)
Steven J. Goldstein............... 5,000(2) 22.2% $14.50 $18.50 7/1/07 $ 78,173(3) $167,421(3)
</TABLE>
- ---------------
(1) None of the options granted were options with tandem SARs and no
free-standing SARs were granted.
(2) Granted to the named executive officers on July 1, 1997 pursuant to the
Option Plan. The options become exercisable in 20% increments on March 1,
1998, 1999, 2000, 2001 and 2002, respectively. If a Change of Control (as
defined in the Option Plan) occurs, these options would become immediately
exercisable.
(3) Potential Realizable Value is based on the assumed growth rates for the
ten-year option term. 5% annual growth results in a stock price per share of
$30.13 and 10% results in a stock price per share of $47.98.
(4) The actual value, if any, an executive may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised, so that there is no assurance the value realized by an executive
will be at or near the amounts reflected in this table.
5
<PAGE> 8
No options were exercised by the individuals named in the Summary
Compensation Table during the year ended December 31, 1997. The following table
sets forth certain information with respect to unexercised options to purchase
the Corporation's Common Stock granted under the Option Plan to the individuals
named in the Summary Compensation Table above.
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END(1) SARS AT FY-END(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward K. Christian....................................... 21,875 29,373 $ 325,743 $366,760
Steven J. Goldstein....................................... 125,890 19,304 $1,988,294 $243,167
</TABLE>
- ---------------
(1) Reflects five-for-four stock splits effective July 31, 1995, April 30, 1996
and April 1, 1997.
(2) Based on the closing price on the American Stock Exchange of the
Corporation's Common Stock on December 31, 1997 ($21.25).
COMPENSATION COMMITTEE REPORT
OVERVIEW
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of five independent non-employee members of the Board of Directors.
The responsibilities of the Committee include reviewing the Corporation's
management compensation programs and making recommendations to the Board of
Directors with respect to compensation.
The Committee believes that in order to maximize shareholder value the
Corporation must have a compensation program designed to attract and retain
superior management at all levels in the organization. The objective of the
management compensation program is to both reward short-term performance and
motivate long-term performance in such a way that management's incentives are
aligned with the interests of the stockholders. The Committee believes that
management at all levels should have a meaningful equity participation in the
ownership of the Corporation, although no specific target level of equity
holdings has been established by the Committee.
EXECUTIVE COMPENSATION PROGRAM
In order to meet these objectives, the Corporation's executive compensation
program consists of three primary components: salary, bonuses, and stock
options. The Committee has established guidelines for the annual cash
compensation for the two senior executives named in the Summary Compensation
Table, the other executive officers and the station managers (the "executives").
Under these guidelines, the executives' aggregate budgeted cash compensation
should not exceed a targeted percentage of budgeted operating profits (i.e.,
earnings before taxes, interest, depreciation, amortization and extraordinary
items) before deduction of the executives' budgeted cash compensation. Salaries
are established for each executive officer on the basis of the scope of
responsibility and accountability within the Corporation, and take into account
publicly available compensation levels for comparable positions in the entities
which comprise the Peer Group used for the Performance Graph set forth on page 8
hereof. The Committee attempts to set compensation at levels approximating the
median compensation rates of comparable positions in the Peer Group. Bonuses for
the executives are determined based on the Committee's judgment of the
Corporation's operating profitability, growth in revenues and profits and
overall financial condition, and the individual executive's contribution to
these results.
6
<PAGE> 9
Grants of stock options are a major part of the Corporation's long-term
incentive strategy. The Committee believes that options provide executives with
an economic stake in the Corporation's future parallel to that of the
stockholders.
On the basis of the factors described above and the Committee's subjective
judgment of each officer's performance, none of which factors are given specific
numerical weighting, the Committee set the salaries, bonuses and stock option
grants of the executives, including the President and Chief Executive Officer.
The compensation of the senior executives was determined based on the Company's
overall performance. Comparison of the Company's stock performance to its Peer
Group was not a significant consideration in the determination of bonus amounts
and stock option awards since the Committee believes the Company's operating
performance is not directly reflected in the Company's stock valuation, owing in
part to its relatively small capitalization and consequent lack of broad-based
institutional ownership. The Committee intends to reevaluate its compensation
policies on an annual basis.
CEO COMPENSATION
In 1997, the Corporation's most highly compensated executive officer was
Edward K. Christian, President and Chief Executive Officer. Options to purchase
7,500 shares of Class A Common Stock at a price of $14.50 per share were granted
to Mr. Christian in 1997. In addition, his salary was increased by $10,504 or 3%
effective January 1, 1998.
In determining the 1997 bonus paid to Mr. Christian and the salary increase
for 1998, the Committee took into account the Corporation's financial
performance in 1997 and the criteria discussed above. During the year ended
December 31, 1997, the Corporation's net revenue increased by 17.8% over the
year ended December 31, 1996 to $66.3 million. Broadcast cash flow (defined as
station operating income excluding depreciation, amortization and corporate
general and administrative expenses) increased by 14.5% and net income for the
year ended December 31, 1997 was $4.5 million compared to $3.9 million for the
year ended December 31, 1997. After-tax cash flow (defined as net income plus
depreciation, amortization [excluding film rights], loss on the sale of assets,
and deferred taxes) increased by 9.3% over the year ended December 31, 1996. Set
forth below is a chart summarizing the Corporation's operating results over the
past three fiscal years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Net Operating Revenue.................................. $66,258 $56,240 $49,699
Broadcast Cash Flow.................................... $22,462 $19,611 $17,263
Net Income............................................. $ 4,492 $ 3,935 $ 2,678
After-tax Cash Flow.................................... $11,083 $10,143 $ 9,564
</TABLE>
IRS MATTERS
Under section 162(m) of the Internal Revenue Code and the regulations
promulgated thereunder, deductions for employee remuneration in excess of $1
million which is not performance-based are disallowed for publicly-traded
companies. The Committee has determined that it is unnecessary at this time to
seek to qualify the components of its compensation program as performance-based
compensation within the meaning of Section 162(m).
EXECUTIVE COMPENSATION COMMITTEE
Kristin Allen
Donald Alt
Jonathan Firestone
Joseph P. Misiewicz
Gary Stevens (Chair)
7
<PAGE> 10
CORPORATE PERFORMANCE
Set forth below is a line graph comparing the cumulative total stockholder
return for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 of the
Corporation's Class A Common Stock against the cumulative total return of the
AMEX Market Value Index, and of a peer group consisting of the following radio
broadcast companies: Sinclair Broadcast Group Inc., Chancellor Media Corp.,
Triathlon Broadcasting Co., Clear Channel Communications Inc., Jacor
Communications Inc., Children's Broadcasting Corp., Emmis Broadcasting Corp.,
Heftel Broadcasting Corp. and Cox Radio, Inc. (the "Peer Group"). The graph and
table assume that $100 was invested on December 31, 1992 in each of the
Corporation's Class A Common Stock, the AMEX Market Value Index and the Peer
Group and that all dividends were reinvested.
<TABLE>
<CAPTION>
AMEX
Measurement Period Saga Market Value
(Fiscal Year Covered) Communications Index Peer Group
<S> <C> <C> <C>
12/31/92 100.00 100.00 100.00
12/31/93 148.40 117.60 245.80
12/31/94 124.60 109.60 284.90
12/30/95 176.00 141.00 468.90
12/29/96 264.00 143.30 688.60
12/31/97 359.60 179.20 1564.00
</TABLE>
EMPLOYMENT CONTRACTS
Mr. Christian has an employment agreement with the Corporation which
expires in 2002. The agreement provides for certain compensation, death,
disability and termination benefits, as well as the use of an automobile. The
1997 base annual salary under the agreement was $350,012, subject to annual cost
of living adjustments. The Board of Directors has increased Mr. Christian's
salary under the agreement to $360,516 effective January 1, 1998. The agreement
also provides that he is eligible for annual bonuses and stock options to be
awarded at the discretion of the Board of Directors. The agreement provides that
Mr. Christian's aggregate compensation in any year may not be less than his
average aggregate annual compensation for 1994, 1995 and 1996 unless his or the
Corporation's performance shall have declined substantially. The agreement may
be terminated by either party in the event of Mr. Christian's disability for a
continuous period of six months or an aggregate period of nine months within any
18 month period. In addition, the Corporation may terminate the agreement for
cause and Mr. Christian may terminate the agreement at any time after the sale
of all or substantially all of the Corporation's assets or the merger of the
Corporation if the Corporation is not the surviving entity.
8
<PAGE> 11
The employment agreement also provides that upon the sale or transfer of
control of the Corporation, Mr. Christian's employment will be terminated and he
will be paid an amount equal to five times the average of his total compensation
for the preceding three years plus an additional amount as is necessary for
applicable income taxes related to the payment.
The employment agreement also provides that if Mr. Christian remains an
employee of the Corporation until the earlier of March 31, 2002 or termination
due to death, disability or the consummation of a merger or consolidation in
which the Corporation is not the surviving entity or a sale or transfer of
control of all or substantially all of the assets or stock of the Corporation,
the Corporation will pay Mr. Christian or his estate the unpaid balance of his
note to the Corporation in the amount of $690,700 (see "Certain
Transactions -- Loan to Principal Stockholder") plus accrued interest less any
life insurance proceeds payable to him under the Corporation's life insurance
policy on Mr. Christian's life. In addition, the Corporation will pay Mr.
Christian or his estate any amounts necessary to enable him to pay all related
federal and state income tax liabilities.
The employment agreement also contains a covenant not to compete
restricting Mr. Christian from competing with the Corporation in any of its
markets during the term of the agreement and for a three year period thereafter.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE; OTHER INFORMATION
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors, and persons who own more than 10% of a
registered class of the Corporation's equity securities ("insiders"), to file
reports of ownership and changes in ownership with the SEC. Insiders are
required by SEC regulation to furnish the Corporation with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Corporation, the Corporation believes that during 1997 all
Section 16(a) filing requirements applicable to its insiders were complied with.
In August 1993, Mr. Alt filed a Chapter 7 proceeding in bankruptcy as a result
of the failure of a relative's business unrelated to the radio broadcast
industry, whose indebtedness to a financial institution was guaranteed by Mr.
Alt. The proceeding was dismissed on June 5, 1995.
CERTAIN TRANSACTIONS
LOAN TO PRINCIPAL STOCKHOLDER
In 1990, Boston Ventures Limited Partnership made a loan to Mr. Christian
in the amount of $690,700 to finance his capital contribution to Saga
Communications Limited Partnership. Pursuant to the reorganization of the
Corporation in December 1992, the original note evidencing such loan was
cancelled and a new note in such amount was issued to the Corporation by Mr.
Christian. The loan from the Corporation is on a non-recourse basis and bears
interest at a rate per annum equal to the lowest rate necessary to avoid the
imputation of income for federal income tax purposes, with principal and
interest due and payable in a single payment on December 31, 2002. The loan is
secured by the Class B Common Stock currently owned by Mr. Christian. Under the
terms of Mr. Christian's employment agreement, this note and any unpaid interest
will be repaid by the Corporation under certain circumstances. See "Compensation
of Directors and Officers -- Employment Contracts."
RATIFICATION OF SELECTION OF AUDITORS
The selection, by a majority of the members of the Board who are not
officers or employees of the Corporation, of Ernst & Young LLP as independent
auditors to audit the books and accounts of the Corporation for the fiscal year
ending December 31, 1998 shall be submitted to the Annual Meeting for
ratification. Such ratification requires the affirmative vote of a majority of
the shares entitled to vote thereon
9
<PAGE> 12
present in person or represented by proxy at the Annual Meeting when a quorum is
present. Representatives of Ernst & Young LLP will be present at the Annual
Meeting and will be given an opportunity to make a statement if they desire to
do so and will respond to appropriate questions of stockholders.
The firm of Ernst & Young LLP has advised the Corporation that neither it
nor any of its members has any direct financial interest in the Corporation as a
promoter, underwriter, voting trustee, director, officer or employee.
All professional services rendered by Ernst & Young LLP during the year
ended December 31, 1997 were furnished at customary rates.
The Board recommends a vote FOR ratification of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 1998.
OTHER MATTERS
Management does not know of any matters which will be brought before the
Annual Meeting other than those specified in the notice thereof. However, if any
other matters properly come before the Annual Meeting, it is intended that the
persons named in the form of proxy, or their substitutes acting thereunder, will
vote therein in accordance with their best judgment.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 1997
Annual Report to Stockholders, which has been provided to the stockholders
concurrently herewith. Such report and the financial statements contained
therein are not to be considered as a part of this soliciting material.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Under the regulations of the SEC, a record or beneficial owner of shares of
the Corporation's Common Stock may submit proposals on proper subjects for
action at the 1999 Annual Meeting of Stockholders of the Corporation. All such
proposals must be mailed to the Corporation at 73 Kercheval Avenue, Grosse
Pointe Farms, Michigan 48236 and must be received at that address on or before
December 8, 1998, in order to be included in the Corporation's proxy relating to
the 1999 Annual Meeting.
EXPENSE OF SOLICITATION OF PROXIES
All the expenses of preparing, assembling, printing and mailing the
material used in the solicitation of proxies by the Board will be paid by the
Corporation. In addition to the solicitation of proxies by use of the mails,
officers and regular employees of the Corporation may solicit proxies on behalf
of the Board by telephone, telegram or personal interview, the expenses of which
will be borne by the Corporation. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
materials to the beneficial owners of stock held of record by such persons at
the expense of the Corporation.
By order of the Board of Directors,
MARCIA LOBAITO
Secretary
Grosse Pointe Farms, Michigan
April 7, 1998
10
<PAGE> 13
1161-PS-98
<PAGE> 14
DETACH HERE SAG 2
SAGA COMMUNICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
The undersigned hereby appoints Edward K. Christian, Samuel D. Bush
R and Marcia K. Lobaito, or any one or more of them, attorneys with full
power of substitution to each for and in the name of the undersigned, with
O all powers the undersigned would possess if personally present to vote the
Class A Common Stock, $.01 par value, of the undersigned in Saga
X Communications, Inc. at the Annual Meeting of its Stockholders to be held
May 11, 1998 or any adjournment thereof. THIS PROXY WHEN PROPERLY EXECUTED
Y WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE STOCKHOLDER. IF NO
DIRECTION IS MADE, ITS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
-------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-------------
<PAGE> 15
[SAGA LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Stockholders,
you can be sure your shares are represented at the meeting by returning your
proxy card in the enclosed envelope.
DETACH HERE SAG 2
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR ALL PROPOSALS.
<S> <C>
1. ELECTION OF DIRECTORS:
NOMINEES: Jonathan Firestone, Joseph P. Misiewicz, Edward K. 2. To ratify the selection of Ernst &
Christian, Kristin M. Allen, Donald S. Alt and Gary Stevens. Young LLP as independent auditors [ ] [ ] [ ]
of the Corporation for the fiscal year
FOR WITHHELD ending December 31, 1998.
[ ] [ ]
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting
[ ]_________________________________________________ or any adjournment thereof.
INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name above. MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Please sign exactly as name appears hereon. When shares are held
in more than one name, including joint tenants, each party should
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature: Date: Signature: Date:
-------------------------------------- ------------ -------------------------------------- ------------
</TABLE>
