<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 9, 2000
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 Tuesday, May 9, 2000 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, 2000.
(3) To approve the adoption of the Chief Executive Officer Annual
Incentive Plan.
(4) 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 10, 2000
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 9, 2000
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 9, 2000 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, 2000 will be entitled to vote. The stock transfer books
will not be closed.
The enclosed proxies are solicited on behalf of the Board of Directors. Any
stockholder giving a proxy 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. Proxies 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, 2000, the Corporation had outstanding and entitled to vote
14,590,241 shares of Class A Common Stock and 1,888,296 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 or approval
of the Chief Executive Officer Annual Incentive Plan 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 and the
approval of the Chief Executive Officer Annual Incentive Plan. As a result,
broker non-votes will have no effect on the outcome of the election of
directors, the ratification of accountants or the approval of the Chief
Executive Officer Annual Incentive Plan.
The holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote, present in person or represented by proxy, will
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 10,
2000.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000, 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>
T. Rowe Price Associates, Inc........... 1,417,000(1) -- 9.7% --
100 E. Pratt Street
Baltimore, MD 21202
Ronald Baron............................ 6,087,931(2) -- 42.4% --
767 Fifth Avenue
New York, NY 10153
Putnam Investments, Inc................. 634,603(3) -- 5.4% --
One Post Office Square
Boston, MA 02109
Edward K. Christian..................... 104 2,216,601(4) * 100%
Jonathan Firestone...................... 15,868 -- * --
Joseph P. Misiewicz..................... 2,982(5)(6) -- * --
Gary Stevens............................ 2,503(5) -- * --
Donald Alt.............................. 2,171(5) -- * --
Kristin Allen........................... 1,686(5) -- * --
Samuel D. Bush.......................... 118,152(7)(8) -- * --
Steven J. Goldstein..................... 311,393(7) -- 2.1% --
Catherine A. Bobinski................... 40,899(7) -- * --
Warren S. Lada.......................... 169,234(7) -- 1.1% --
Marcia K. Lobaito....................... 40,516(7) -- * --
All directors and executive officers as
a group............................... 705,508(5)(7) 2,216,601(4) 4.7% 100%
</TABLE>
- ---------------
(1) These securities are owned by various individual and institutional
investors, including T. Rowe Price Small Cap Value Fund, Inc. (which owns
1,250,000 shares, representing 8.5% of the shares outstanding), which T.
Rowe Price Associates, Inc. ("Price Associates") serves as investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of
such securities; however, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such securities. According to their joint
Schedule 13G on file with the Securities and Exchange Commission ("SEC"),
Price Associates, Inc. and T. Rowe Price Small Cap Value Fund, Inc. have
sole voting power with respect to 123,100 and 1,250,000 shares,
respectively, have sole dispositive power with respect to 1,417,000 and 0
shares, respectively, and have no shared voting or dispositive power.
(2) According to their joint Schedule 13D on file with the SEC, Mr. Baron, Baron
Capital Group, Inc. ("BCG") and Baron Capital Management, Inc. ("BCM") have
sole voting and dispositive power with respect to 718,937 shares, and Mr.
Baron, BCG, BAMCO, Inc., BCM and Baron Asset Fund have shared voting and
dispositive power with respect to 5,368,993 shares, 5,368,993 shares,
4,110,940 shares, 1,258,053 shares, and 3,617,252 shares, respectively.
(3) According to their joint Schedule 13G on file with the SEC, Putnam
Investments, Inc., Putnam Investment Management Inc. and The Putnam Advisory
Company Inc. have shared voting power with respect to 303,431 shares, 0
shares and 303,431 shares, respectively, and shared dispositive power as to
0 shares, 212,746 shares and 421,856 shares, respectively.
(4) Includes 328,305 shares of Class B Common Stock reserved for issuance upon
exercise of stock options outstanding pursuant to the Corporation's 1992
Stock Option Plan.
2
<PAGE> 5
(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, 2,182 shares;
Mr. Stevens, 2,503 shares; Mr. Alt, 2,171 shares; Ms. Allen, 1,686 shares;
and all executive officers and directors as a group, 8,542 shares.
(6) Mr. Misiewicz has shared voting power with his son as to 238 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. Bush, 116,316 shares; Mr. Goldstein, 149,017
shares; Ms. Bobinski, 39,989 shares; Mr. Lada, 164,459 shares; Ms. Lobaito,
39,989 shares; and all directors and executive officers as a group, 518,312
shares.
(8) Includes 375 shares owned by his children.
* Less than 1%.
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, 55.................. Marketing consultant since 2000; 12/92
President and Chief Executive Officer of
BBDO Minneapolis and director of BBDO,
North America (advertising agency)
from 1988 to 1999
Joseph P. Misiewicz, 53................. 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, 55................. President, Chief Executive Officer and 3/92
Chairman of the Corporation and its
predecessor since 1986
Donald Alt, 54.......................... Broadcasting investor; Chairman of 7/97
Forever Broadcasting since 1996; Chief
Financial Officer of Keymarket Radio
Companies from 1984 to 1996
Gary Stevens, 60........................ Managing Director, Gary Stevens & Co. 7/95
(media broker) since 1986
Kristin Allen, 40....................... Managing Director, Credit Suisse First 7/97
Boston Corporation since 1997 and Vice
President 1995-1997
</TABLE>
3
<PAGE> 6
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee, currently comprised of
Ms. Allen and Messrs. Alt (Chair), Firestone, Misiewicz and Stevens, 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 five times during the
Corporation's last fiscal year. The Compensation Committee also administers the
Corporation's 1992 Stock Option Plan.
The Board of Directors has a Finance and Audit Committee, currently
comprised of Ms. Allen and Messrs. Alt (Chair), Firestone, 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 two times 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 six meetings during 1999. 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 1999. Directors who are employees receive no
additional compensation for serving as directors or attending Board or Committee
meetings.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended
December 31, 1999, 1998, and 1997 of the Corporation's chief executive officer
and the other most highly compensated executive officers whose salary and bonus
exceeded $100,000.
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.......................... 1999 $371,332 $681,502(3) -- $3,154
President, Chief Executive Officer 1998 $360,516 $606,502(3) 313,706 $2,878
1997 $350,012 $275,000 11,718 $3,247
Steven J. Goldstein.......................... 1999 $288,393 $ 75,000 40,366 $2,289
Executive Vice President and Group 1998 $279,996 $ 70,000 31,992 $2,048
Program Director 1997 $247,000 $ 60,000 7,812 $1,914
Samuel D. Bush(4)............................ 1999 $177,693 $ 25,000 -- $ 949
Vice President, Chief 1998 $176,057 $ 17,500 110,066 $ 854
Financial Officer 1997 $ 72,868 $ 5,500 6,250 $ 256
Catherine A. Bobinski........................ 1999 $ 93,000 $ 15,000 17,356 $ 481
Vice President, Controller 1998 $ 90,000 $ 12,500 13,711 $ 495
Warren S. Lada............................... 1999 $184,608 $ 25,000 -- $ 997
Vice President-Operations
Marcia K. Lobaito............................ 1999 $ 93,000 $ 15,000 17,356 $ 527
Vice President, Corporate
Secretary, Director of
Business Affairs
</TABLE>
- ---------------
(1) Restated to reflect five-for-four stock splits effective April 1, 1997, May
29, 1998 and December 15, 1999.
(2) Consists of life insurance premiums or payments in lieu thereof in 1999,
1998, and 1997.
(3) Includes bonus of $331,502 to forgive 20% of a loan from the Corporation and
federal and state income tax liabilities related to such loan. See
"Employment Contracts" below and "Certain Transactions."
(4) Mr. Bush commenced employment with the Corporation on September 8, 1997.
5
<PAGE> 8
The following table sets forth certain information relating to option
grants pursuant to the Corporation's 1992 Stock Option Plan (the "Option Plan")
in the year ended December 31, 1999 to the individuals named in the Summary
Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
------------------------------------------------------------------ VALUE AT ASSUMED
% OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR GRANT- OPTION
OPTIONS/ EMPLOYEES BASE DATE MARKET TERM(3)(4)
SARS IN FISCAL PRICE PRICE EXPIRATION ----------------------
NAME GRANTED(1) YEAR ($/SH) PER SHARE DATE 5% 10%
---- ---------- ------------ -------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Edward K. Christian.............. -- -- -- -- -- -- --
Steven J. Goldstein.............. 40,366 22% $15.90 $15.90 6/22/09 $403,637 $1,022,895
Samuel D. Bush................... -- -- -- -- -- -- --
Catherine A. Bobinski............ 17,356 9% $15.90 $15.90 6/22/09 $173,550 $ 439,810
Warren S. Lada................... -- -- -- -- -- -- --
Marcia K. Lobaito................ 17,356 9% $15.90 $15.90 6/22/09 $173,550 $ 439,810
</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 June 22, 1999 pursuant to the
Option Plan. The options become exercisable in 20% increments on March 1,
2000, 2001, 2002, 2003 and 2004, 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
$25.90 and 10% results in a stock price per share of $41.24.
(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.
The following table sets forth certain information with respect to options
exercised during the year ended December 31, 1999 by the individuals named in
the Summary Compensation Table and unexercised options to purchase the
Corporation's Common Stock granted under the Option Plan to the individuals
named in the Summary Compensation Table above.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS/SARS AT VALUE OF UNEXERCISED
FY-END(1) IN-THE-MONEY OPTIONS/
--------------------------- SARS AT FY-END(2)
SHARES ACQUIRED VALUE ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward K. Christian........... 65,472 $738,123 -- 328,305 -- $2,407,170
Steven J. Goldstein........... 58,911 $942,910 84,203 64,814 $1,332,066 $ 417,118
Samuel D. Bush................ -- -- 2,500 113,816 $ 27,425 $ 817,103
Catherine A. Bobinski......... -- -- 10,592 29,397 $ 143,073 $ 166,972
Warren S. Lada................ -- -- 45,720 118,739 $ 751,170 $ 855,710
Marcia K. Lobaito............. -- -- 10,592 29,397 $ 143,073 $ 166,972
</TABLE>
- ---------------
(1) Reflects five-for-four stock splits effective July 31, 1995, April 30, 1996,
April 1, 1997, May 29, 1998 and December 15, 1999.
(2) Based on the closing price on the American Stock Exchange of the
Corporation's Common Stock on December 31, 1999 ($20.25).
6
<PAGE> 9
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 six senior executives named in the Summary Compensation
Table 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 new peer
group used for the Performance Graph set forth on page 9 hereof (the "Peer
Group"). 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.
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. During 1999 no stock options were granted to Messrs. Christian,
Bush and Lada. However, the options granted to them in 1998 were based on a five
year plan whereby the total number of options that would normally have been
granted over the period 1998 to 2003 were granted in 1998. In addition to the
historic five year vesting period that would have been normal for past grants,
the options granted to Messrs. Christian, Bush and Lada in 1998 required that a
target stock price representing minimally accepted annual stock price growth be
obtained and maintained for a period of 40 consecutive days. It is believed that
this structure will assure that these three members of the management team are
directly tied to shareholders interests, mainly growing the stock price.
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
7
<PAGE> 10
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 1999, the Corporation's most highly compensated executive officer was
Edward K. Christian, President and Chief Executive Officer. No options were
granted to Mr. Christian in 1999. His salary was increased by $11,140 or 3%
effective January 1, 2000 to $382,472.
In determining the 1999 bonus paid to Mr. Christian and the salary increase
for 2000, the Committee took into account the Corporation's financial
performance in 1999 and the criteria discussed above. During the year ended
December 31, 1999, the Corporation's net revenue increased by 18.7% over the
year ended December 31, 1998 to $90 million. Broadcast cash flow (defined as
station operating income excluding depreciation, amortization and corporate
general and administrative expenses) increased by 22.5% and net income for the
year ended December 31, 1999 was $8.6 million compared to $6.4 million for the
year ended December 31, 1998. 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 22.7% over the year ended December 31, 1998.
Set forth below is a chart summarizing the Corporation's operating results over
the past three fiscal years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Net Operating Revenue.................................. $90,020 $75,871 $66,258
Broadcast Cash Flow.................................... $33,468 $27,327 $22,462
Net Income............................................. $ 8,552 $ 6,351 $ 4,492
After-tax Cash Flow.................................... $17,585 $14,328 $11,083
</TABLE>
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. Since Mr. Christian's non-performance-based compensation in 1999
exceeded $1 million by $173,733, the Corporation was unable to deduct such
amount. To avoid this result in the future, the Committee determined that it is
necessary at this time to seek to qualify some or all of the bonus portion of
the Chief Executive Officer's compensation package as performance-based
compensation within the meaning of Section 162(m). As a result, the Committee
recommended and the Board adopted the Chief Executive Officer Annual Incentive
Plan to be effective beginning in the year 2000, subject to stockholder
approval. See "Approval of Chief Executive Officer Annual Incentive Plan."
However, the Board, in its discretion, may also award bonuses to Mr. Christian
which are not in accordance with this Plan. Any such discretionary bonuses may
not qualify as performance based compensation within the meaning of Section
162(m) of the Internal Revenue Code.
EXECUTIVE COMPENSATION COMMITTEE
Kristin Allen
Donald Alt (Chair)
Jonathan Firestone
Joseph P. Misiewicz
Gary Stevens
8
<PAGE> 11
CORPORATE PERFORMANCE
Set forth below is a line graph comparing the cumulative total stockholder
return for the years ended December 31, 1995, 1996, 1997, 1998 and 1999 of the
Corporation's Class A Common Stock against the cumulative total return of the
AMEX Market Value Index, the peer group used in the 1999 proxy statement and a
new peer group index, the M Street Radio Stock Index. The graph and table assume
that $100 was invested on December 31, 1994 in each of the Corporation's Class A
Common Stock, the AMEX Market Value Index, the 1999 peer group and the M Street
Radio Stock Index and that all dividends were reinvested.
<TABLE>
<CAPTION>
AMEX MARKET VALUE M STREET RADIO STOCK
SAGA COMMUNICATIONS INDEX 1999 PEER GROUP INDEX
------------------- ----------------- --------------- --------------------
<S> <C> <C> <C> <C>
12/31/94 100.00 100.00 100.00 100.00
12/31/95 141.30 128.70 171.20 132.30
12/31/96 212.00 130.70 267.40 160.00
12/31/97 288.70 163.50 588.60 242.90
12/31/98 348.20 175.50 739.20 250.10
12/31/99 429.90 224.20 1220.90 305.90
</TABLE>
In prior years, the Corporation had used a self-determined peer group of
comparably-sized radio broadcast companies in its proxy statements. However, due
primarily to merger activity in the radio broadcast industry, the composition of
this peer group tended to change each year. For example, of the nine companies
included in the 1998 proxy statement group, three are no longer in existence and
one is no longer a radio broadcast company. The Corporation believes that the M
Street Radio Stock Index provides a more meaningful group against which to
compare its performance since it is an index of a broader group of radio
broadcast companies of various sizes and is generally believed to be indicative
of market performance for radio broadcast companies.
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
1999 base annual salary under the agreement was $371,331, subject to annual cost
of living adjustments. The Board of Directors has increased Mr. Christian's
salary under the agreement to $382,472 effective January 1, 2000. 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
9
<PAGE> 12
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.
The employment agreement 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 was amended effective December 8, 1998 to provide
that the unpaid balance of his note to the Corporation in the amount of $690,700
(see "Certain Transactions -- Loan to Principal Stockholder") will be ratably
forgiven 20% per year in each of the years 1998, 1999, 2000, 2001 and 2002.
The employment agreement was further amended in February 2000 to provide
that Mr. Christian's bonuses would be paid in accordance with the Chief
Executive Officer Annual Incentive Plan. However, the Board, in its discretion,
may also award bonuses to Mr. Christian which are not in accordance with this
Plan. Any such discretionary bonuses may not qualify as performance based
compensation within the meaning of Section 162(m) of the Internal Revenue Code.
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 1999 all
Section 16(a) filing requirements applicable to its insiders were complied with.
CERTAIN TRANSACTIONS
LOANS 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 bears interest at a rate per annum
equal to the lowest rate necessary to avoid the imputation of income for federal
income tax purposes. Although the loan had been secured by the Class B Common
Stock owned by Mr. Christian, in December 1998 the Board of Directors authorized
the termination of the pledge agreement. As described above, the loan is being
ratably forgiven 20% per year in each of the years 1998, 1999, 2000, 2001 and
2002. See "Compensation of Directors and Officers -- Employment Contracts."
In May 1999 the Corporation lent $125,000 to Mr. Christian. The loan bears
interest at 7% per annum. Principal and interest on the loan is payable in two
equal installments on May 5, 2000 and 2001. Mr. Christian loaned the proceeds of
his loan to Surtsey Productions, Inc., a company owned by his daughter, to
finance the
10
<PAGE> 13
purchase of the assets of television station KVCT, Victoria, Texas. Under the
ownership rules of the Federal Communications Commission the Corporation is
prohibited from owning this station. Surtsey Productions, Inc. has leased KVCT
to the Corporation exclusively for sales and programming. Under the 18 year
lease agreement, the Corporation makes lease payments of $2,000 per month.
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, 2000 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 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, 1999 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, 2000.
11
<PAGE> 14
APPROVAL OF CHIEF EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
On February 18, 2000 the Board of Directors adopted, effective January 1,
2000 and subject to stockholder approval, the Chief Executive Officer Annual
Incentive Plan (the "Plan"). The Plan is designed to qualify the amount paid
from time to time thereunder to the Chief Executive Officer as "qualified
performance-based compensation" under Section 162(m) of the Internal Revenue
Code (the "Code"). The Plan is intended to provide significant cash rewards to
the Chief Executive Officer for continuing profitable growth while permitting
such compensation to be deductible by the Corporation for federal income tax
purposes. Approval of the Plan requires the affirmative vote of a majority of
the shares entitled to vote thereon present in person or represented by proxy at
the Annual Meeting when a quorum is present. The Board of Directors recommends
that you vote FOR the approval of the Plan.
DESCRIPTION OF THE PLAN
Participation. Only the Chief Executive Officer of the Corporation is
eligible to participate in the Plan.
Administration. The Plan will be administered by the Compensation
Committee of the Board of Directors. The Committee will have the authority to
interpret the Plan, to establish or revise Plan rules and regulations and to
make any determinations necessary to administer the Plan.
Bonus Awards. Within 90 days after the beginning of each fiscal year, the
Committee will establish a target bonus opportunity for the Chief Executive
Officer based on a percentage of his base salary. The percentage of the target
bonus actually paid will be based on the extent to which corporate and financial
goals are met. The financial goals may include any or all of the following:
earnings per share, net revenue growth, broadcast cash flow, free cash flow,
after-tax cash flow and annual net revenue. The goals and the relative weight
given to each for any particular year will be approved by the Committee.
The bonus payments under the Plan will be calculated at the end of the
fiscal year based on the achievement of the annual financial goals. The amount
earned will be paid in cash after the financial results are available for the
Corporation's fiscal year to which the bonus pertains. In the discretion of the
Committee, the Chief Executive Officer may elect to defer payment of all or any
part of any bonus by complying with such procedures as the Committee may
prescribe. The Committee must certify in writing that the performance criteria
have been met prior to any payments under the Plan. The Chief Executive Officer
will not be entitled to any bonus award under the Plan if minimum corporate
objectives are not achieved.
The amount to be paid to the Chief Executive Officer will depend on the
factors set forth above. However, the maximum bonus that he may receive under
the Plan in any one fiscal year is 500% of his base salary. Generally, the Chief
Executive Officer must be actively employed by the Corporation or a subsidiary
company and on the payroll on the date the award is paid to receive the award.
Certain pro rata awards may be made if termination of employment results from
retirement, permanent disability or death.
Amendment and Termination. The Committee may terminate, suspend or amend
the Plan, in whole or in part, at any time so long as stockholder approval
required by Section 162(m) of the Code has been obtained. No amendment,
termination or modification may adversely affect outstanding awards under the
Plan without the consent of the Chief Executive Officer.
Federal Income Tax Consequences. Under present federal income tax law, the
Chief Executive Officer will realize ordinary compensation income equal to the
amount of the bonus received in the year received. The Corporation will receive
a corresponding deduction for the amount the Chief Executive Officer recognizes
as ordinary income, provided that the amount of such deduction is not limited
under the provisions of Section 162(m). It is the Corporation's intention that
the Plan be adopted and administered in a manner which maximizes the
deductibility of compensation for the Corporation under Section 162(m) to the
extent practicable and consistent with the Corporation's business
considerations.
12
<PAGE> 15
New Plan Benefits. The amount, if any, that will be received by Mr.
Christian in the Plan for 2000 are contingent upon the achievement of specified
corporate and financial goals and, therefore, are not determinable at this time.
In addition, because the designated measurement criteria to be used to determine
eligibility for the bonus under the Plan involve information that was
unavailable prior to 2000, the Corporation is unable to determine the amount
that would have been received by Mr. Christian for 1999 had the Plan been in
place for that year.
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 1999
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 2001 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 2001 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 10, 2000, in order to be included in the Corporation's proxy statement
relating to the 2001 Annual Meeting. All such proposals which are not to be
included in the Corporation's proxy statement relating to the 2001 Annual
Meeting must be received at the above address on or before February 23, 2001.
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 10, 2000
13
<PAGE> 16
1161-PS-00
<PAGE> 17
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
[SAGA COMMUNICATIONS, INC. LOGO]
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 in the enclosed envelope.
COMPANY'S RECENT DEVELOPMENTS
On March 9, 2000, the Company announced that it had entered into an agreement
to acquire the assets of WHMP-AM/FM, Northampton, Massachusetts for
$12,000,000. Additionally, on March 20, 2000, the Company announced that it had
entered into an agreement to acquire all the issued and outstanding membership
units of Tak Communications II, LLC for $7,000,000. At the time of closing, Tak
Communications II, LLC will be the operator and licensee of WKI0-FM in
Champaign-Urbana, Illinois.
DETACH HERE
[x] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR ALL
PROPOSALS.
1. ELECTION OF DIRECTORS:
NOMINEES: (01) Jonathan Firestone, (02) Joseph P. Misiewicz,
(03) Edward K. Christian, (04) Kristin M. Allen,
(05) Donald J. Alt and (06) Gary Stevens
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] _____________________________________________________
INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name above.
FOR AGAINST ABSTAIN
2. To ratify the selection of Ernst & [ ] [ ] [ ]
Young LLP as independent auditors
of the Corporation for the fiscal year
ending December 31, 2000.
3. To approve the adoption of the Chief [ ] [ ] [ ]
Executive Officer Annual Incentive
Plan.
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
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: ______
<PAGE> 18
DETACH HERE
PROXY
SAGA COMMUNICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward K. Christian, Samuel D. Bush and
Marcia K. Lobalto, or any one or more of them, attorneys with full power of
substitution to each for and in the name of the undersigned, with all powers
the undersigned would possess if personally present to vote the Class A Common
Stock, $.01 par value, of the undersigned in Saga Communications, Inc. at the
Annual Meeting of its Stockholders to be held May 9, 2000 or any adjournment
thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3 AND 4.
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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