<PAGE>
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
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a - 11 (c) or
Section 240.14a - 12
PEOPLE'S CHOICE TV CORP.
- --------------------------------------------------------------------------------
(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)(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>
PEOPLE'S CHOICE TV CORP.
Two Corporate Drive, Suite 249
Shelton, Connecticut 06484
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on December 12, 1997
-----------------------------
To the Stockholders of
People's Choice TV Corp.:
The Annual Meeting of the Stockholders of People's Choice TV Corp., a
Delaware corporation (the "Company"), for the 1997 calendar year will be held on
December 12, 1997, at 1:00 p.m., local time, at One Corporate Drive, Shelton,
Connecticut for the following purposes:
(1) To elect one director to serve for a three-year term.
(2) To authorize an amendment to the Company's 1993 Stock Option Plan to
increase the number of shares issuable thereunder to 1,800,000.
(3) To consider and vote upon such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 22, 1997
will be entitled to notice of and to vote at this Annual Meeting of Stockholders
and any adjournment thereof.
The Company's Annual Report on Form 10-K for the year ended December 31,
1996 is being mailed to stockholders with this Notice.
By Order of the Board of Directors
Donald E. Olander,
Vice President, General Counsel
and Corporate Secretary
November 6, 1997
Even if you expect to attend the meeting, you are requested to complete and
sign the enclosed proxy and return it promptly in the accompanying envelope.
Returning the proxy will not limit your right to vote in person or to attend the
Annual Meeting of Stockholders but will ensure your representation if you cannot
attend. The proxy is revocable at any time prior to its use.
<PAGE>
PROXY STATEMENT
OF
PEOPLE'S CHOICE TV CORP.
This proxy statement and the enclosed proxy card are furnished in
connection with the solicitation of proxies to be voted at the Annual Meeting of
Stockholders of People's Choice TV Corp., a Delaware corporation (the
"Company"), to be held at One Corporate Drive, Shelton, Connecticut, on Friday,
December 12, 1997, at 1:00 p.m., local time, and any adjournment thereof. This
proxy statement and the enclosed proxy card are being mailed to stockholders on
or about November 6, 1997.
Persons Making the Solicitation
The enclosed proxy is solicited by the Board of Directors of the
Company and will be voted at the Annual Meeting and any adjournment of the
meeting. All expenses of the Company in connection with this solicitation will
be borne by the Company. In addition to solicitation by mail, proxies may be
solicited by directors, officers and other employees of the Company by
telephone, telefax, in person or otherwise, without additional compensation.
The Company will also request brokerage firms, nominees, custodians and
fiduciaries to forward proxy materials to the beneficial owners of shares held
of record by such persons and will reimburse such persons and the Company's
transfer agent for their reasonable out-of-pocket expenses in forwarding such
material.
Record Date and Shares Outstanding
As of October 22, 1997, the Company had issued and outstanding
12,923,817 shares of Common Stock and 644,541 shares of Convertible Cumulative
Pay-in-Kind Preferred Stock (the "Convertible Preferred Stock"). Each share of
Common Stock is entitled to one vote and each share of Convertible Preferred
Stock is entitled to 4.444 votes. Including outstanding shares of Convertible
Preferred Stock, there will be 15,788,445 votes entitled to be cast at the
Annual Meeting. The shares of Common Stock and shares of Convertible Preferred
Stock will vote together as a single class on all matters to be submitted to a
vote at the Annual Meeting. The shares of Common Stock and Convertible
Preferred Stock constitute the only classes of outstanding securities of the
Company entitled to notice of and to vote at the Annual Meeting. Only
stockholders of record at the close of business on October 22, 1997 (the "Record
Date") will be entitled to vote at the meeting or any adjournment thereof.
Revocability of Proxy
A proxy may be revoked by a shareholder prior to the voting at the
Annual Meeting by written notice to the Secretary of the Company, by submission
of another duly executed proxy bearing a later date or by voting in person at
the Annual Meeting. Such notice or later proxy will not affect a vote on any
matter taken prior to the receipt thereof by the Company or its transfer agent.
The mere presence at the Annual Meeting of the shareholder who has appointed a
proxy will not revoke the prior appointment. If not revoked, the proxy will be
voted at the Annual Meeting in accordance with the instructions indicated on the
Proxy Card by the shareholder or, if no instructions are indicated, will be
voted FOR the election of the director named herein, FOR the amendment to the
People's Choice TV Corp. 1993 Stock Option Plan, and, as to any other matter
that may be properly brought before the Annual Meeting, in accordance with the
judgment of the proxy holders.
Quorum; Abstentions; Broker Non-Votes
The required quorum for the transaction of business at the Annual
Meeting is a majority of the votes eligible to be cast by holders of Common
Stock and Convertible Preferred Stock issued and outstanding on the Record Date.
Shares that are voted "FOR", "AGAINST" or "WITHHELD FROM" a matter are treated
as being present at the meeting for the purposes of establishing a quorum and
are also treated as shares entitled to vote at the Annual Meeting (the "Votes
Cast") with respect to such matter.
<PAGE>
The Company believes that abstentions should be counted for purposes
of determining both (i) the presence or absence of a quorum for the transaction
of business and (ii) the total number of Votes Cast with respect to the
particular proposal (other than the election of directors). In the absence of
controlling precedent to the contrary, the Company intends to treat abstentions
in this manner. Accordingly, abstentions will have the same effect as a vote
against the proposal.
While broker non-votes should be counted for the purposes of
determining the presence or absence of a quorum for the transaction of business,
broker non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to a particular proposal on which the broker has
expressly not voted. Accordingly, the Company intends to treat broker non-votes
in this manner. Thus, a broker non-vote will not affect the outcome of the
voting on a proposal.
PRINCIPAL STOCKHOLDERS
The authorized capital stock of the Company consists of Common Stock
and Convertible Preferred Stock. The holders of the Convertible Preferred Stock
are entitled to vote with the holders of the Common Stock as a single class on
all matters submitted to the stockholders of the Company. When voting with the
Common Stock as a single class, each share of Convertible Preferred Stock is
entitled to 4.444 votes per share.
The table below sets forth, as of October 22, 1997, certain
information regarding beneficial ownership of Common Stock or Convertible
Preferred Stock with respect to (i) each person or entity known to the Company
who beneficially owns 5% or more of the outstanding shares of Common Stock or
Convertible Preferred Stock, (ii) each director, (iii) the Company's Chief
Executive Officer and other most highly compensated executive officers in fiscal
1996 and (iv) all executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Number and
Percentage of Number and Percentage
Shares of Percentage of of Common
Convertible Shares Voting
Name of Beneficial Owner Preferred Stock of Common Stock Power
- ------------------------ ----------------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Blackstone Capital
Partners II Merchant
Banking
Fund L.P. (1) 484,348 75% 13.6%
Blackstone Offshore
Capital Partners II L.P.
(1) 127,089 20% 3.6%
Blackstone Family
Investment Partnership II
L.P. (1) 33,105 5% 1.0%
James J. Mossman(2) 100% 18.2%
Anthony Grillo (2) 100% 18.2%
Matthew Oristano (3) 1,258,194 9.7% 8.0%
BCI Growth III, L.P. (4) 1,180,474 9.1% 7.6%
FMR Corp. (5) 809,675 6.3% 5.1%
Fleming Capital
Management(6) 1,238,050 9.6% 7.8%
Dimensional Fund
Advisors(7) 942,421 7.3% 6.0%
Victor Oristano (8) 529,544 4.1% 3.4%
Terry L.Scott 0 * *
Todd A. Rowley 41,833 * *
Charles F. Schwartz 6,667 * *
Peter Lynch 4,167 * *
Robert Young 35,200 * *
All executive officers and
directors as a group
(11 persons) (9) 644,541 100% 1,895,364 14.7% 30.1%
- ---------------
</TABLE>
* Less than 1%
2
<PAGE>
(1) The principal address of Blackstone Capital Partners II Merchant Banking
Fund L.P. ("BCPII") and Blackstone Family Investment Partnership II L.P.
("BFIPII") is 118 North Bedford Road, Mount Kisco, New York 10549. The
principal address of Blackstone Offshore Capital Partners II L.P. ("BCP
Offshore") is c/o Mees Pierson Management (Cayman), British American Center,
Dr. Roy's Drive, Georgetown, Grand Cayman, British West Indies. The general
partner of BCPII, BFIPII and BCP Offshore is Blackstone Management
Associates II L.L.C. ("BMAII"). The members of BMAII have the power to vote
and dispose of the PCTV Convertible P-I-K Preferred Stock.
(2) Messrs. Mossman and Grillo are affiliated with The Blackstone Group L.P. in
the capacities described under "Proposal One--Preferred Stock Directors."
Each such person's business address is c/o The Blackstone Group L.P., 345
Park Avenue, New York, NY 10154. Mr. Mossman and Mr. Grillo are members of
BMAII. Therefore, Mr. Mossman and Mr. Grillo may be deemed to share
beneficial ownership of the PCTV Convertible Preferred Stock. Mr. Mossman
and Mr. Grillo disclaim beneficial ownership of any such shares of PCTV
Convertible Preferred Stock.
(3) Includes (i) 112,808 shares of Common Stock which Matthew Oristano owns
directly, (ii) 910,440 shares of Common Stock owned by Alda Multichannels,
Ltd. for which Matthew Oristano may be deemed to share voting power and
investment power with members of his immediate family, (iii) 31,613
additional shares of Common Stock over which Matthew Oristano may be deemed
to exercise indirect control, and (iv) 203,333 shares of Common Stock which
Matthew Oristano has an option to acquire within 60 days of the date hereof
pursuant to stock option agreements but excludes 1,667 shares which he has
the option to acquire thereafter.
(4) BCI Growth's mailing address is c/o BCI Advisors, Inc., Glenpointe Centre
West, Teaneck, New Jersey 07666.
(5) The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109.
(6) The address of Fleming Capital Management is 320 Park Ave., New York, NY
10022.
(7) The address of Dimensional Fund Advisors is 1299 Ocean Ave., Santa Monica,
CA 90401.
(8) Includes (i) 36,000 shares of Common Stock which Victor Oristano and his
spouse own directly, (ii) 381,877 shares of Common Stock held by certain
trusts and a foundation over which shares Victor Oristano may be deemed to
exercise partial control, (iii) 10,000 shares of Common Stock held by a
limited partnership over which shares Victor Oristano may be deemed to
exercise partial control, and (iv) 101,667 shares of Common Stock which
Victor Oristano has an option to acquire within 60 days of the date hereof
pursuant to a stock option agreement.
(9) Includes 371,001 shares of Common Stock which all directors and executive
officers of the Company have the option to acquire within 60 days of the
date hereof but does not include 277,499 additional shares which all
directors and executive officers have an option to acquire thereafter.
PROPOSAL ONE
ELECTION OF DIRECTORS
There are currently five members of the Board of Directors of the Company.
Three of these members are elected by the holders of the Common Stock and
Convertible Preferred Stock voting as a single class (the "Common Stock
Directors"). Two of these directors are elected by the holders of the
Convertible Preferred Stock voting as a separate class (the "Preferred Stock
Directors"). The Common Stock Directors are divided into three classes, with
directors in each class serving three-year staggered terms. There are currently
three Common Stock Directors, consisting of one director who is serving for a
term which expires at this Annual Meeting, one director who is serving for a
term which expires at the Annual Meeting of Stockholders in 1998, and one
director who is serving for a term which expires at the Annual Meeting of
Stockholders in 1999.
The Board of Directors has nominated Terry L. Scott to serve as a director
of the Company until the Annual Meeting of Stockholders in 2000 or until his
respective successor is duly elected and qualified.
The nominee has consented to be a nominee and to serve as a director if
elected. Except as otherwise directed on the proxy card, the persons named as
proxies will vote for the election of the designated nominee. In the event that
the nominee should become unavailable for election as a director, the persons
named as proxies will vote for any substitute nominee as the Board of Directors
may select.
Set forth below is biographical information for Terry L. Scott and each
person whose term of office as director will continue after the Annual Meeting.
3
<PAGE>
Common Stock Directors
- ----------------------
Nominee for Election for a Three-Year Term
Expiring at the 2000 Annual Meeting
Terry L. Scott has been a director of the Company since March of 1997 when
he was elected by the Board of Directors to fill a vacancy. Mr. Scott is
currently Chairman and Chief Executive Officer of Flash Comm, Inc., a privately
held company involved in data communications. From January, 1994 through
October of 1995, Mr. Scott was President and Chief Executive Officer of Paging
Network, Inc. From 1993 to 1995 Mr. Scott served on the board of directors of
Paging Network. Mr. Scott first became President of Paging Network in February
of 1993. From 1990 to 1993, Mr. Scott was Senior Vice President--Finance and
Administration, Treasurer and Chief Financial Officer of Paging Network. Mr.
Scott serves on the board of directors of the Personal Communications Industry
Association (PCIA) and was on the executive committee of the PCIA from 1990 to
1995. Mr. Scott received a BS in Accounting from Bradley University in 1972 and
is a Certified Public Accountant. Mr. Scott was born on October 21, 1950.
Director Continuing in Office until the 1999 Annual Meeting
Matthew Oristano has been the Chairman and Chief Executive Officer and a
director of the Company since its formation in April 1993. From 1988 to 1993,
Mr. Oristano served as an executive and manager of the Company's predecessors.
Mr. Oristano also serves on the board of directors and executive committee of
the Wireless Cable Association International ("WCA"), one of the wireless cable
industry's trade associations. From 1984 to 1988 Mr. Oristano was on the
executive committee of and was the Chief Executive of Croydon Cable Television,
one of the first cable systems in the United Kingdom built by an American
company. Also, Mr. Oristano was founder and, from 1984 to 1988, the Chief
Executive Officer of Bravo, a UK movie service delivered to cable operators. In
addition, Mr. Oristano was a board member from 1985 to 1988 and founder of The
Cable Guide, the UK national cable TV guide. Mr. Oristano was on the board of
directors and executive committee of the Cable Television Association of Great
Britain from 1987 to 1988. From 1982 to 1984, Mr. Oristano was the General
Manager of the Bridgeport, Connecticut cable system owned and operated by a
partnership which was controlled by the Oristano family. During 1984 and 1985,
Mr. Oristano was also President of the Connecticut Cable Television Association.
Mr. Oristano holds a degree in physics from Rennselaer Polytechnic Institute.
Mr. Oristano is the son of Mr. Victor Oristano. Mr. Oristano was born on May 1,
1956.
Director Continuing in Office until the 1998 Annual Meeting
Victor Oristano has been Vice Chairman and a director of the Company since
its formation in April 1993. Mr. Oristano is also a director of Cablevision
Systems Corporation, one of the largest cable television system operators in the
United States. Prior to his involvement with the Company, Mr. Oristano was from
1983 to 1989 Chairman of Cablevision UK, which was in a partnership with
Cablevision Systems Corporation, and then with United Cable and United Artists
Entertainment, to develop cable systems in the United Kingdom. Mr. Oristano is
the father of Matthew Oristano, the Company's Chairman and Chief Executive
Officer. Born on September 10, 1916, Mr. Oristano built his first cable
television system in 1966.
Preferred Stock Directors
- -------------------------
The following individuals currently serve on the Board of Directors as the
Preferred Stock Directors:
James J. Mossman has been a Senior Managing Director of The Blackstone
Group L.P. since January 1990. He was a Vice President of The Blackstone Group
from September 1986 to December 1989. Mr. Mossman serves on the board of
directors of Transtar, Inc., Collins & Aikman Corporation, and Great Lakes
Dredge & Dock Corporation. Mr. Mossman was born on November 5, 1958.
4
<PAGE>
Anthony Grillo has been a Senior Managing Director of The Blackstone Group
L.P. since January 1993. He was a Managing Director of The Blackstone Group from
May 1991 to January 1993. Mr. Grillo serves on the board of directors of
Littelfuse, Inc., Tracor, Inc., Joule, Inc., Bar Technologies, Inc. and other
privately held companies. Mr. Grillo was born on July 12, 1955.
As described above, the Preferred Stock Directors are elected for annual
terms by the holders of the Convertible Preferred Stock voting as a separate
class. The holders of the Convertible Preferred Stock have advised the Company
that they intend to elect Messrs. Mossman and Grillo to serve as Preferred Stock
Directors of the Company for an annual term ending in 1998.
Board Committees and Compensation
The members of the Audit Committee of the Board of Directors consist of
Matthew Oristano, Anthony Grillo and Terry Scott. The Audit Committee assists
the Board of Directors in fulfilling its responsibilities with respect to the
Company's accounting and financial reporting activities.
The members of the Compensation Committee of the Board of Directors consist
of Matthew Oristano, Anthony Grillo and Terry Scott. The Compensation Committee
determines the compensation to be paid by the Company to its executive officers.
The members of the Stock Option Committee consist of Matthew Oristano,
Anthony Grillo and Terry Scott. The Stock Option Committee administers the 1993
Stock Option Plan currently maintained by the Company.
During the year ended December 31, 1996, the Board of Directors met in
person or telephonically five times. The Audit Committee met once in 1996. The
Compensation Committee and the Stock Option Committee each met one time during
1996. No director attended less than 75% of the total number of meetings of the
Board of Directors (held during the period for which he was a director) and of
the committees of the Board of Directors on which such director served during
fiscal 1996.
Directors who are not officers or consultants are paid an annual fee of
$5,000 and a fee of $500 per meeting attended, not to exceed $5,000 per year per
director, plus out-of-pocket expenses. Mr. Scott received options to purchase
10,000 shares of Company Common Stock at the time of his appointment to the
Board of Directors. Officers and consultants who also serve as directors do not
receive fees for serving as directors.
Vote Required and Recommendation
The Board of Directors unanimously recommends that shareholders vote FOR
the nominee set forth above.
The nominee receiving the highest number of affirmative votes of the shares
present or represented by proxy and entitled to be voted for such nominee shall
be elected as director. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, but have no other legal effect under Delaware law. Shareholders do
not have the right to cumulate their votes in the election of directors.
5
<PAGE>
PROPOSAL TWO
AMENDMENT OF THE 1993 STOCK OPTION PLAN
Proposed Amendment
On April 30, 1993, the Company adopted the Company's 1993 Stock Option Plan
(the "1993 Plan"). On October 22, 1997, the Board of Directors of the Company
approved an amendment to the 1993 Plan to increase the number of shares of
Common Stock available for issuance thereunder from 900,000 to 1,800,000. At
this Annual Meeting the stockholders of the Company are being asked to approve
such increase in shares under the 1993 Plan. The Board of Directors believes
that the adoption of the amendment to the 1993 Plan will be helpful in
attracting, motivating and retaining executives and other key employees.
Summary of the Plan
Eligibility. Under the 1993 Plan, options to purchase shares of Common
------------
Stock may be granted from time to time to key employees (including officers),
directors, advisors and independent consultants to the Company or to any of its
subsidiaries (excluding Matthew and Victor Oristano).
Administration. The 1993 Plan is currently administered by the Stock Option
--------------
Plan Committee which currently consists of Matthew Oristano, Anthony Grillo and
Terry Scott. The committee is generally empowered to interpret the 1993 Plan,
to prescribe rules and regulations relating thereto, to determine the terms of
the option agreements, to amend them with the consent of the optionee, to
determine the employees to whom options are to be granted, and to determine the
number of options to be granted and the exercise price thereof.
Exercise Price. The per share exercise price of options granted under the
---------------
1993 Plan will not be less than 100% of the fair market value per share of the
Common Stock on the date options are granted.
Term. Options will be exercisable for a term that will not be greater than
-----
ten years from the date of grant. Options may be exercised only while the
original grantee has a relationship with the Company which confers eligibility
to be granted options or within three months after the termination of such
relationship with the Company, or up to one year after death, retirement or
permanent disability. In the event of the termination of such relationship
between the original grantee and the Company for cause (as defined in the 1993
Plan), all options granted to that original optionee terminate immediately.
Options granted under the 1993 Plan are not transferable other than by will or
the laws of descent and distribution. Options may be exercised during the
holder's lifetime only by the holder, his or her guardian or legal
representative.
Amendment or Termination. The Board of Directors may modify, suspend or
-------------------------
terminate the 1993 Plan, provided, however, that certain material modifications
affecting the 1993 Plan must be approved by the stockholders, and any change in
the 1993 Plan that may adversely affect an optionee's rights under an option
previously granted under the 1993 Plan requires the consent of the optionee.
Tax Information. The following discussion summarizes the material federal
----------------
income tax consequences of participation in the 1993 Plan based on the law as in
effect on December 31, 1996, including in the case of options granted under the
1993 Plan, such consequences of issuance and exercise of such options to the
Company and the optionee. This summary of certain federal income tax
consequences of participation in the 1993 Plan does not purport to cover federal
employment tax or other federal tax consequences that may be associated with the
plans, nor does it cover state, local or non-U.S. taxes.
An optionee realizes no taxable income upon the grant or exercise of an
incentive stock option. However, the exercise of an incentive stock option may
result in an alternative minimum tax liability to the optionee. With certain
exceptions, a disposition of shares purchased under an incentive stock option
within two years from the date of grant or within one year after exercise
produces ordinary income to the optionee and a deduction to the Company equal to
the value of the shares at the time of exercise less the exercise price. Any
additional gain recognized in the
6
<PAGE>
disposition is treated as a capital gain for which the Company is not entitled
to a deduction. If the optionee does not dispose of the shares until after the
expiration of these one- and two-year holding periods, any gain or loss
recognized upon a subsequent sale is treated as a long-term capital gain or loss
for which the Company is not entitled to a deduction.
In the case of a nonstatutory option, the optionee has no taxable income at
the time of grant but realizes income at the time of exercise in an amount equal
to the excess at that time of the fair market value of the shares acquired upon
exercise over the exercise price. A corresponding deduction is available to the
Company. Upon a subsequent sale or exchange of the shares, appreciation or
depreciation after the date of exercise is treated as capital gain or loss for
which the Company is not entitled to a deduction.
Amended Plan Benefits
The following table sets forth grants of stock options received under the
1993 Plan for the fiscal year ended December 31, 1996 by (i) the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company as of December 31, 1996, (ii) all current executive
officers as a group, (iii) all current directors who are not executive officers
as a group; and (iv) all employees, including all officers who are not executive
officers, as a group. Grants under the 1993 Plan are made at the discretion of
the Stock Option Committee.
Amended Plan Benefits
<TABLE>
<CAPTION>
Exercise
Price ($/Sh) Number of Options
------------- -----------------
<S> <C> <C>
Matthew Oristano
Chairman and Chief Executive Officer 0 0
Robert Young 4.00 5,000
Peter Lynch 4.00 30,000
Charles F. Schwartz 4.00 30,000
Todd A. Rowley 4.00 30,000
Executive Group (8 persons) 4.00 125,000
Non-Executive Director Group (3 persons) 0 0
All Employee Group (23 persons) 4.00 - 11.50 259,500
</TABLE>
Vote Required and Board of Director's Recommendation
Approval of the increase in shares reserved under the 1993 Plan requires the
affirmative vote of a majority of the Votes Cast. Accordingly, abstentions will
have the same effect as votes against this proposal and broker non-votes will
not affect the outcome of voting on this proposal.
The Board of Directors recommends a vote FOR the approval of the amendment
to the 1993 Plan.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses compensation for the fiscal years listed
received by the Company's Chief Executive Officer and the Company's four other
most highly compensated executive officers.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
--------------------------------------------
Long Term
Fiscal Other Annual Compensation Awards All Other
Name and Principal Position Year Salary Bonus(1) Compensation Options(#) Compensation(2)
- ---------------------------------------- ------ -------- ---------- ------------ ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Matthew Oristano 1996 $212,000 $ 0 $0 0 $ 1,900
Chairman and Chief Executive Officer 1995 $212,000 $ 0 $0 0 $50,000(3)
1994 $212,000 $50,000 $0 5,000 $50,000(3)
Robert Young (4) 1996 $126,000 $37,300 $0 5,000 $ 2,300
Senior Vice President
Peter Lynch (5) 1996 $142,000 $ 0 $0 30,000 $ 1,500
Senior Vice President--Operations and 1995 $ 54,000 $ 0 $0 25,000 $ 900
Marketing
Charles F. Schwartz 1996 $139,000 $ 0 $0 30,000 $ 900
Senior Vice President, Chief 1995 $108,000 $ 0 $0 20,000 $ 650
Financial Officer 1994 $108,000 $25,000 $0 7,000 $ 400
Todd A. Rowley 1996 $121,000 $ 0 $0 30,000 $ 600
Senior Vice President--Market 1995 $108,000 $15,000 $0 15,000 $ 200
Development 1994 $108,000 $ 7,500 $0 7,000 $ 200
</TABLE>
_______________
(1) Cash bonuses for services rendered in fiscal years 1996, 1995 and 1994 have
been listed in the year earned, but were actually paid in the following
fiscal year.
(2) Except as otherwise noted, the items reported are for life insurance
premiums and matching contributions to the Company's 401(k) plan.
(3) Reflects $50,000 received from Alda Communications Corp. as directors' fees.
(4) Mr. Young became an executive officer of the Company in January, 1996.
(5) Mr. Lynch became an executive officer of the Company in June, 1995.
8
<PAGE>
The following table sets forth certain information regarding stock option grants
made to the named executive officers in 1996.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------
% of Total Potential Realizable Value
Options at Assumed Annual Rates of
Granted to Exercise Stock Price Appreciation
Options Employees Price Expiration for Option Term/(1)/
Name Granted (#) in Fiscal Year ($/Sh.) Date 5%($) 10%($)
- ---- ----------- -------------- ------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Matthew Oristano 0 -- -- -- -- --
Robert Young 5,000/(2)/ 1.9% 4.00 1/28/07 $12,578 $ 31,875
Peter Lynch 30,000/(2)/ 11.6% 4.00 1/28/07 $75,467 $191,249
Charles F. Schwartz 30,000/(2)/ 11.6% 4.00 1/28/07 $75,467 $191,249
Todd A. Rowley 30,000/(2)/ 11.6% 4.00 1/28/07 $75,467 $191,249
</TABLE>
- ---------------
1 Potential realizable value is based on an assumption that the stock price
of the Common Stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the ten-year term of the option.
Potential realizable values are net of exercise price, but before taxes
associated with exercise. These numbers are calculated based on the
requirements promulgated by the Securities and Exchange Commission and do not
reflect the Company's estimate of future stock price growth.
2 Incentive stock option which has an exercise price equal to the fair market
value of the Common Stock on the date of grant, vests at a rate of 33 1/3
percent on the first, second and third anniversary of the grant date and has a
term of ten years.
Option Exercises and Fiscal 1996 Year-End Value
The number of options exercised and the value realized from any such
exercise during fiscal 1996 and the number and value of options held at fiscal
year end for the named executive officers are set forth in the following table.
<TABLE>
<CAPTION>
Aggregate Option Exercises and Fiscal Year-End Option Values
------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options at
End (#) Fiscal Year End ($)(1)
-------------------------- --------------------------
Shares Value
Acquired on Realized
Name Exercise(#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Matthew Oristano 0 0 203,333 1,667 $0 $0
Robert Young 0 0 0 5,000 $0 $ 10,625
Peter Lynch 0 0 0 55,000 $0 $ 90,313
Charles F. Schwartz 0 0 0 70,000 $0 $106,250
Todd A. Rowley 0 0 36,000 65,000 $216,900 $100,938
- ---------------
</TABLE>
(1) Value of unexercised options is (i) the fair market value of the common
stock at fiscal 1996 year end ($6.125) less the option exercise price per
share, times (ii) the number of shares subject to the option.
(2) Value realized upon exercise is (i) the fair market value of the Common
Stock on the date of exercise, less the option exercise price, times (ii)
the number of shares of common stock received on exercise of the option.
9
<PAGE>
Compensation Committee Interlocks and Insider Participation
The following individuals serve as members of the Compensation Committee of
the Board of Directors: Matthew Oristano, Anthony Grillo and Terry Scott.
Certain transactions between members of the Compensation Committee and the
Company are described below under "Certain Transactions".
Employment and Consulting Agreements
The Company has a written employment agreement with Matthew Oristano.
Pursuant to this agreement Mr. Oristano receives an annual base salary of
$212,000 and he may receive an annual bonus to be determined by the Company's
Compensation Committee. The agreement was executed by the Company and Mr.
Oristano in April 1993, became effective in July 1993 upon the consummation of
the Company's initial public offering and, unless terminated earlier by the
Company or Mr. Oristano, will continue in effect for five years from the
effective date. The agreement contains confidentiality and non-competition
provisions and contemplates that Mr. Oristano will devote his full time to the
business of the Company. Pursuant to this agreement, if Mr. Oristano's
employment is terminated by the Company without cause, he is entitled to his
base salary and certain benefits for the remainder of the employment term.
The Company has a written employment agreement with Peter Lynch. This
agreement provides that Mr. Lynch shall be entitled to an annual base salary of
$143,000 and provides that he may receive an annual bonus to be determined by
the Company's Compensation Committee. The agreement became effective in
February 1996 and, unless terminated earlier by the Company or Mr. Lynch, will
continue in effect for three years from the effective date. The agreement
contains confidentiality and non-competition provisions and contemplates that
Mr. Lynch will devote his full time to the business of the Company. If the
Company terminates Mr. Lynch's employment prior to the end of his employment
term, Mr. Lynch is entitled to receive the continuation of his base salary and
benefits for a period of one year from the date of termination.
The Company has a written employment agreement with Robert Young. This
agreement provides that Mr. Young shall be entitled to an annual base salary of
$133,000 and provides that he may receive an annual bonus of up to $50,000. The
agreement became effective in January 1996 and, unless terminated earlier by the
Company or Mr. Young, will continue in effect for three years from the effective
date. The agreement contains confidentiality and non-competition provisions and
contemplates that Mr. Young will devote his full time to the business of the
Company. If Mr. Young's employment with the Company is terminated by the
Company without cause Mr. Young is entitled to receive half his annual salary
and bonus and six month's benefits as a severance payment.
The Company has entered into change of control severance agreements with
each of Mr. Lynch, Mr. Rowley and Mr. Schwartz which require the Company, in the
case of a change of control of the Company and a severance event as defined in
the agreements, to pay each of such officers two times their annual base salary
and bonus. In addition, in the case of a change of control, options issued
under the Company's 1993 Stock Option Plan vest immediately.
The Company also has a written consulting agreement with Alda Limited
Partners pursuant to which it and its chairman, Mr. Victor Oristano, have agreed
to render management consulting services to the Company, including advice
concerning strategic and financial planning matters, wireless cable system
development and operation activities and public and stockholder relations
matters. This agreement provides that the consultant shall be paid consulting
fees of $158,000 per annum and provides that the consultant may receive an
annual performance bonus to be determined by the Company. This agreement was
executed by the Company and the consultant in April 1993, became effective in
July 1993 upon the consummation of the Company's initial public offering of
Common Stock and, unless terminated earlier by the Company or the consultant,
will continue in effect for 5 years from the effective date. The agreement
contains confidentiality and non-competition provisions and, if the consulting
relationship is terminated by the Company without cause, entitles the consultant
to the base consulting fees for the remainder of the consulting term.
10
<PAGE>
REPORT OF THE COMPENSATION
AND STOCK OPTION COMMITTEES
The Compensation Committee of the Board of Directors has responsibility for
determining executive compensation. The Stock Option Committee administers and
approves grants of options under the 1993 Stock Option Plan of the Company.
There are three members of the Compensation Committee and Stock Option
Committee, Mr. Grillo and Mr. Scott, who are non-employee directors, and Matthew
Oristano, the Company's Chairman and Chief Executive Officer. Mr. Scott joined
the Board of Directors of the Company in 1997 and did not participate in
executive compensation decisions with respect to the 1996 fiscal year.
The Company's executive compensation program is designed to support the
achievement of the Company's long term performance objectives, to ensure that
executive officers' interests are aligned with the success of the Company, and
to provide compensation opportunities that will attract, retain and motivate
superior executive personnel. The Company's executive officer compensation
program is currently comprised of base salary, cash bonus, and long-term
incentive compensation (in the form of stock options).
Base Salaries
Base salaries reported in this Proxy Statement were determined by the
Compensation Committee in 1993 in the case of Mr. Oristano, in 1995 in the case
of Mr. Lynch, and in 1996 in the case of Mr. Young, Mr. Schwartz and Mr. Rowley.
When determining base salaries, the Compensation Committee considered salary,
bonus and long-term incentive compensation for other comparable companies in the
high technology sector and in similar geographic areas and at similar stages of
growth and development. To make these comparisons, the Compensation Committee
reviewed public filings relating to other comparable companies and had
discussions with other industry executives and financial advisors including its
independent auditors. Based on a similar review, the Compensation Committee
decided to increase Mr. Schwartz's and Mr. Rowley's base salaries in 1996.
Neither Mr. Schwartz nor Mr. Rowley had received a base salary increase in 1995
or 1994.
Cash Bonuses
The Compensation Committee awarded a cash bonus of $37,300 to Mr. Young for
fiscal 1996 pursuant to the terms of his employment agreement with the Company.
None of the other named executives received a cash bonus for 1996.
Stock Options
The Company uses its stock option program to retain and motivate its
executives and to provide each executive officer with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in the
business. The size of stock option awards are based on several factors. First,
the Stock Option Committee considers the number of stock options granted and the
number of options outstanding as a percentage of the total number of shares of
Company Common Stock outstanding. Second, in the case of individual awards, the
Stock Option Committee considers (i) each executive's position and performance,
(ii) prior award levels and total awards received to date by each executive, and
(iii) the number of options vested and unvested. Based on the Company's
performance in fiscal 1996, the Committee decided to grant each of Mr. Lynch,
Mr. Schwartz and Mr. Rowley 30,000 options and to grant Mr. Young 5,000 options.
11
<PAGE>
Chief Executive Officer Compensation
The Chief Executive Officer's compensation level for fiscal 1996 was
established by the Compensation Committee in connection with the execution of
the CEO's employment agreement with the Company in April 1993. No cash bonus
or option grant was paid to the CEO for fiscal 1996 and the CEO's base salary
was maintained at the same level as in 1995. The CEO's compensation may be
increased in future years by the Compensation Committee, but only with the
approval of a majority of the disinterested members of the Company's Board of
Directors.
Submitted By the Compensation and 1993 Stock Option Committee
Matthew Oristano and Anthony Grillo
PERFORMANCE GRAPH
All of the Company's Common Stock was privately owned until the Company's
initial public offering which was effected on July 8, 1993 at an initial
offering price of $10.50 per share. The following graph shows a comparison of
cumulative total returns for the period beginning July 8, 1993 and ending on
December 31, 1996 for (i) the Company's Common Stock, (ii) the NASDAQ Market
Value Index, and (iii) a peer group index composed of companies included in the
"Cable & Other Pay Television Services" category for which data is compiled by
Media General Financial Services, Inc. The comparison assumes $100 was invested
in the Company's Common Stock and in each of the two indices and assumes
reinvestment of any dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Company/Index Name 7/8/93 12/31/93 12/31/94 12/31/95 12/31/96
- --------------------- ------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
People's Choice TV 100.00 294.05 150.00 180.95 58.38
Peer Group Index 100.00 129.23 93.69 108.16 87.93
NASDAQ Market Index 100.00 107.50 112.86 146.39 181.92
</TABLE>
The peer group index compiled by Media General Financial Services, Inc. is
composed of all companies with SIC Codes of 4841. All of the companies with
such SIC Codes are included in the peer group index. A list of the companies
included in this index will be furnished by the Company to any shareholder upon
a written request to the Corporate Secretary of the Company.
12
<PAGE>
CERTAIN TRANSACTIONS
Alda Channel Leases
Alda Wireless Holdings, Inc. and Alda Gold, Inc. (together, the "Alda
Companies"), which are controlled by Matthew Oristano, lease to the Company the
rights to approximately 40 wireless cable frequencies held by such entities.
The leases provide that the Company shall have the exclusive right to use the
frequencies for an unlimited number of successive one-year terms renewable at
the option of the Company. The annual lease payments to be paid by the Company
are nominal. The Company has the option to acquire these frequency licenses for
$100 per license, and the right to lease any wireless cable frequency licenses
acquired by the Alda Companies. The Company believes that the terms of
these leases between the Company and the Alda Companies are no less favorable to
the Company than the terms of any similar lease that could have been obtained
through arm's length negotiations with an unaffiliated third party.
Blackstone Services
The Company and affiliates of The Blackstone Group have entered into the
following two agreements: (a) an advisory and consulting agreement pursuant to
which Blackstone Management Partners L.P. will provide strategic financial
planning and other services (other than investment banking or other financial
advisory services in connection with acquisitions and divestitures by the
Company) to the Company for an annual fee of $250,000 (plus reimbursement of
certain out-of-pocket expenses) subject to the approval of the Company in each
year; and (b) a separate agreement pursuant to which the Company paid The
Blackstone Group L.P. a fee of $600,000 for financial advisory services provided
by Blackstone in connection with the Company's acquisition of Preferred
Entertainment, Inc.
Merger of Alda Communications Corp. into the Company
The Chairman and Vice Chairman of the Company were stockholders and
officers of Alda Communications Corp. ("ACC"). The primary asset of ACC was
661,304 shares of Company Common Stock. On June 27, 1996, ACC was merged into
the Company and the Company thereby acquired the 661,304 shares of Common Stock
held by ACC. As consideration in the merger, the Company issued 661,304 shares
of Common Stock to the former stockholders of ACC including the Chairman and
Vice Chairman of the Company. The merger was consummated without any cost to
the Company.
INDEPENDENT AUDITORS
Arthur Andersen LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1996 and are serving in such capacity for the
current fiscal year. The appointment of independent auditors is made annually
by the Board of Directors. The decision of the Board of Directors is based on
the recommendation of the Audit Committee, which reviews both the audit scope
and estimated audit fees. Representatives from Arthur Andersen LLP will be
present at the Annual Meeting of Stockholders and will have the opportunity to
make a statement if they desire to do so and to respond to appropriate questions
of stockholders.
SECTION 16(A) REPORTING
The Company is not aware of any reports required to be filed with the
Securities and Exchange Commission under Section 16(a) of the Securities
Exchange Act of 1934 that were filed late or not filed by the Company's
directors or officers.
13
<PAGE>
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the next annual
meeting and intended to be included in the proxy statement and form of proxy for
that meeting must be in proper form and must be received on or before May 1,
1998. All such proposals should be sent to the Corporate Secretary of the
Company, People's Choice TV Corp., Two Corporate Drive, Suite 249, Shelton,
Connecticut 06484. The inclusion of any such proposal is subject to the
applicable requirements of the proxy rules under the Securities Exchange Act of
1934.
ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 accompanies this Proxy Statement.
OTHER MATTERS
The Company does not know of any other matter or business that may be
brought before the meeting. However, if any such matters or business properly
come before the meeting, it is intended that the persons named as proxies in the
enclosed form of proxy card will vote in accordance with their best judgment.
14
<PAGE>
[BACK OF PROXY]
PEOPLE'S CHOICE TV CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 12, 1997
The undersigned appoints Matthew Oristano, Charles F. Schwartz and Donald
E. Olander, or any of them, as proxies, with full power of substitution and
revocation, to vote, as designated on the reverse side hereof, all the of the
shares of Common Stock of People's Choice TV Corp., held of record by the
undersigned on October 22, 1997, at the Annual Meeting of Stockholders to be
held on December 12, 1997, or any adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominee named and FOR proposal No. 2.
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
[FRONT OF PROXY]
PEOPLE'S CHOICE TV CORP.
PROXY
1. ELECTION of the following nominee as Director: Terry Scott
[_] FOR the nominee
[_] WITHHOLD AUTHORITY to vote for the nominee
2. AMENDMENT of the 1993 Stock Option Plan to increase the number of shares of
People's Choice TV Corp. Common Stock issuable under such plan to 1,800,000
shares.
FOR [_] AGAINST [_] ABSTAIN [_]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or any adjournment thereof.
-------------------------------------
(Signature)
-------------------------------------
(Signature if held jointly)
Date:
---------------------------
(Please sign exactly as your name appears
hereon. If stock is registered in more than
one name, each holder should sign. When
signing as an attorney, administrator,
executor, guardian or trustee, please add
your title as such. If executed by a
corporation or other entity, the proxy
should be signed by a duly authorized
officer or other representative.)
15
