<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 Section240.14a-11(c) or
Section240.14a-12
LODGENET ENTERTAINMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
LODGENET ENTERTAINMENT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that, pursuant to its Bylaws and the call of its
Board of Directors, the Annual Meeting of Stockholders (the "Meeting") of
LodgeNet Entertainment Corporation (the "Company") will be held at the Radisson
Encore Inn, 4300 Empire Place, Sioux Falls, South Dakota 57116, on Wednesday,
May 14, 1997, at 9:00 a.m., Central Daylight Time, for the purpose of
considering and voting upon the following matters:
TO RECEIVE AND CONSIDER:
The report of the Management on the business of the Company and the
Company's audited financial statements for the fiscal year ended December 31,
1996, together with the report thereon of Arthur Andersen LLP, the Company's
independent public accountants.
TO ACT ON:
1. ELECTION OF DIRECTORS. To elect one person to the Board of Directors of
the Company to serve for a three-year term expiring in 2000 and until
such person's successor is elected and qualified. The Board's nominee to
the Board of Directors is:
Richard R. Hylland
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To ratify
the appointment of Arthur Andersen LLP as the Company's independent
public accountants for the fiscal year ending December 31, 1997.
3. OTHER BUSINESS. To transact such other business as may properly come
before the Meeting and at any and all adjournments thereof.
Only those stockholders of record on March 26, 1997 shall be entitled to
notice of and to vote in person or by proxy at the Meeting.
The Proxy Statement which accompanies this notice contains additional
information regarding the proposals to be considered at the Meeting and
stockholders are encouraged to read it in its entirety.
As set forth in the enclosed Proxy Statement, the proxy is solicited by and
on behalf of the Board of Directors of the Company. It is expected that these
materials will be first mailed to stockholders on or about April 3, 1997.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO BE SURE
THAT YOUR STOCK IS VOTED. YOUR VOTE IS IMPORTANT, WHETHER YOU OWN A FEW SHARES
OR MANY.
By Order of the Board of Directors,
/s/Tim C. Flynn
Tim C. Flynn
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Dated: April 3, 1997
<PAGE>
LODGENET ENTERTAINMENT CORPORATION
808 WEST AVENUE NORTH
SIOUX FALLS, SOUTH DAKOTA 57104
(605) 330-1330
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of LodgeNet Entertainment Corporation (the
"Company") for use at the Annual Meeting of Stockholders (the "Meeting") of the
Company to be held on Wednesday, May 14, 1996, at the Radisson Encore Inn, 4300
Empire Place, Sioux Falls, South Dakota 57116, on Wednesday, May 14, 1997, at
9:00 a.m., Central Daylight Time, and at any and all adjournments thereof. Tim
C. Flynn and Scott C. Petersen, the designated proxyholders (the
"Proxyholders"), are directors and executive officers of the Company. This Proxy
Statement and the enclosed proxy card (the "Proxy") and other enclosures will be
first mailed to stockholders on or about April 3, 1997. Only stockholders of
record on March 26, 1996 (the "Record Date") are entitled to vote in person or
by proxy at the Meeting.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Meeting will be:
1. ELECTION OF DIRECTORS. To elect one person to the Board of Directors of
the Company to serve for a three-year term expiring in 2000 and until
such person's successor is elected and qualified. The Board's nominee to
the Board of Directors is:
Richard R. Hylland
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To ratify
the appointment of Arthur Andersen LLP as the Company's independent
public accountants for the fiscal year ending December 31, 1997.
3. OTHER BUSINESS. To transact such other business as may properly come
before the Meeting and at any and all adjournments thereof.
VOTING AND REVOCABILITY OF PROXIES
A Proxy for use at the Meeting is enclosed. The Proxy must be signed and
dated by you or your authorized representative or agent. You may revoke a Proxy
at any time before it is exercised at the Meeting by submitting to the Secretary
of the Company a written revocation of such proxy or a duly executed proxy
bearing a later date or by voting in person at the Meeting.
Unless revoked, the shares of common stock represented by Proxies will be
voted in accordance with the instructions given thereon. In the absence of any
instruction in the Proxy, your shares of common stock will be voted: (i) "FOR"
the election of the nominee for director set forth herein; and (ii) "FOR" the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1997.
The enclosed Proxy confers discretionary authority with respect to any
amendments or modifications of the proposals or other business which properly
may be brought before the Meeting. As of the date hereof, Management is not
aware of any such amendments or modifications or other matters to be
1
<PAGE>
presented for action at the Meeting. However, if any other matters properly come
before the Meeting, the Proxies solicited hereby will be voted by the
Proxyholders in accordance with the recommendation and in the discretion of the
Board of Directors.
COSTS OF SOLICITATION OF PROXIES
This Proxy is made on behalf of the Board of Directors of the Company and
the Company will bear the costs of solicitation. The expense of preparing,
assembling, printing and mailing this Proxy Statement and the materials used in
this solicitation of Proxies also will be borne by the Company. It is
contemplated that Proxies will be solicited principally through the mail, but
directors, officers and regular employees of the Company may solicit Proxies
personally or by telephone. Although there is no formal agreement to do so, the
Company may reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding these proxy materials to
their principals. The Company does not intend to utilize the services of other
individuals or entities not employed by or affiliated with the Company in
connection with the solicitation of Proxies.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The authorized capital of the Company consists of 20,000,000 shares of
common stock, par value $.01 per share, of which 11,215,037 shares were issued
and outstanding on the Record Date, and 5,000,000 shares of preferred stock,
$.01 par value, of which there are no shares outstanding.
A majority of the outstanding shares of common stock constitutes a quorum
for the conduct of business at the Meeting. Each stockholder is entitled to one
vote, in person or by proxy, for each share of common stock standing in his or
her name on the books of the Company as of the Record Date on any matter
submitted to the stockholders. The Company's Certificate of Incorporation does
not authorize cumulative voting. In the election of directors, the persons
receiving the highest number of votes will be elected. The ratification of
Arthur Andersen LLP as the Company's independent public accountants for the
fiscal year ending December 31, 1997 requires the affirmative vote of a majority
of the common stock represented and eligible to vote at the Meeting.
Accordingly, broker non-votes and abstentions from voting on the ratification of
the Company's independent public accountants will have the effect of a vote
"AGAINST" the ratification.
Brokers and nominees holding common stock in "street name" which are members
of a stock exchange are required by the rules of the exchange to transmit this
Proxy Statement to the beneficial owner of the common stock and to solicit
voting instructions with respect to the matters submitted to the stockholders.
In the event any such broker or nominee has not received instructions from the
beneficial owner by the date specified in the statement accompanying such
material, the broker or nominee may give or authorize the giving of a Proxy to
vote such common stock on the matters to be considered at the Meeting; PROVIDED,
HOWEVER, that the broker or nominee may not give or authorize the giving of a
Proxy for any matter if it has notice of any contest with respect to any matter,
and, PROVIDED, FURTHER, that the broker or nominee may not vote the common stock
"FOR" any matter which substantially affects the rights or privileges of the
common stock without specific instructions from the beneficial owner. If you
hold your common stock in "street name" and you fail to instruct your broker or
nominee as to how to vote your common stock, your broker or nominee may, in its
discretion, vote your common stock "FOR" the election of the Board of Directors'
nominee and "FOR" the proposal to ratify the appointment of Arthur Andersen LLP
as the Company's independent public accountants for the fiscal year ending
December 31, 1997.
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of common stock as
of the Record Date by each person known to the Company to be the record or
beneficial owner of more than five percent of the outstanding shares of common
stock (other than depositories holding shares of common stock on behalf of
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<PAGE>
brokers, dealers and others who are the record stockholders for beneficial
owners desiring to have their shares held in "street name"), by each director
and nominee for director, each executive officer named in the Summary
Compensation Table, and by all directors and executive officers, as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) CLASS (3)
- ------------------------------------------------------------------------------------- ----------------------- -----------
<S> <C> <C>
Tim C. Flynn,(4) Chairman, President and Chief Executive Officer..................... 602,727 5.3%
Scott C. Petersen,(4) Executive Vice President, Chief Operating Officer and
Director........................................................................... 427,725 3.7
John M. O'Haugherty,(4) Senior Vice President and Chief Operating Officer, Lodging
Division........................................................................... 105,117 *
Douglas D. Truckenmiller,(4) Vice President, Chief Operating Officer,
ResNetCommunications, Inc.(5)...................................................... 279,343 2.5
David M. Bankers,(4) Vice President, Corporate Technologies.......................... 77,006 *
Eric R. Jacobsen,(4) Vice President, General Counsel and Secretary................... 92,500 *
David Austad, Director(6)............................................................ 11,892 *
Lawrence Flinn, Jr., Director(6)..................................................... 11,892 *
Richard R. Hylland,(7)(8) Director................................................... 933,158 8.3
R.F. Leyendecker,(7)(8) Director..................................................... 938,158 8.3
Northwestern Networks, Inc.(8)....................................................... 916,266 8.2
Wellington Management Company(9)..................................................... 1,537,100 13.7
Directors and Executive Officers(4) (A group of 13 persons).......................... 2,863,206 23.2
</TABLE>
- --------------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of such person is 808 West Avenue
North, Sioux Falls, South Dakota 57104.
(2) Each named person has sole voting and investment power with respect to the
shares listed, except as noted below.
(3) Shares which the person (or group) has the right to acquire pursuant to
stock options (whether or not vested) are deemed to be outstanding in
calculating the percentage ownership of the person (or group) but are not
deemed to be outstanding as to any other person (or group).
(4) Includes shares issuable upon the exercise of options to purchase Common
Stock (whether or not vested) as follows: Mr. Flynn, 158,895 shares; Mr.
Petersen, 427,575 shares; Mr. D. Truckenmiller, 106,111; Mr. O'Haugherty,
105,117 shares; Mr. Bankers, 77,006 shares; and Mr. Jacobsen, 92,500 shares;
and all directors and executive officers as a group, 1,140,926 shares. Does
not include 5,379 shares held in the Company's 401(k) Plan of which Mr.
Flynn and Mr. Petersen are Trustees; and for Mr. Flynn, includes 300 shares
owned by Mr. Flynn's minor children, and for Mr. Petersen includes 150
shares owned by Mr. Petersen's minor children.
(5) ResNet communications, Inc. ("ResNet") is a majority-owned subsidiary of the
Company.
(6) Includes 11,000 shares of Common Stock which each of Messrs. Austad and
Flinn have the right to acquire by the exercise of vested stock options.
(7) Messrs. Hylland and Leyendecker are directors of Northwestern Networks, Inc.
("NNI"), which is a subsidiary of Northwestern Public Service Company
("NPSC"). The shares attributable to Messrs. Hylland and Leyendecker include
16,000 and 21,000 shares, respectively, which they have the right to acquire
by the exercise of vested stock options, and 916,266 shares held by NNI as a
result of their being directors of NNI. Messrs. Hylland and Leyendecker
disclaim beneficial ownership of the shares attributable to NNI.
(8) The address of NNI and Messrs. Hylland and Leyendecker is 33 Third Street,
S.E., Huron, South Dakota 57350-1318; share ownership information is based
on information provided by NNI.
(9) The address of Wellington Management Company is 75 State Street, Boston,
Massachusetts 02109; address and share ownership information is based on
Schedule 13G filed for the year ended December 31, 1996.
3
<PAGE>
ELECTION OF DIRECTORS
BOARD OF DIRECTORS AND NOMINEES
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors shall be determined from time to time by the Board of
Directors but may not be less than three nor more than nine. The Board of
Directors is currently composed of six members. The Bylaws further provide for
the division of the directors into three classes of approximately equal size,
with directors in each class elected for a three-year term and approximately
one-third of the directors elected each year.
The director nominated for reelection is Richard L. Hylland. Mr. Hylland is
completing the term to which he was elected by the stockholders in 1994, has
indicated his willingness to serve and, unless otherwise instructed, Proxies
will be voted in favor of such nominee. In the event that Mr. Hylland should be
unable to serve as a director, it is intended that the Proxies will be voted for
the election of such substitute nominee(s), if any, as shall be designated by
the Board of Directors. Management has no reason to believe that the nominee
will be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NOMINEE TO THE BOARD OF DIRECTORS.
The following table sets forth certain information, as of the Record Date,
with respect to the nominee for director and the continuing directors of the
Company. The number of shares of common stock beneficially owned by the nominee
for director and the continuing directors is set forth above under "Beneficial
Ownership of Principal Stockholders and Management."
<TABLE>
<CAPTION>
YEAR FIRST
PRINCIPAL OCCUPATION OR EMPLOYMENT BECAME DIRECTOR(1)/
NAME AGE FOR THE PAST FIVE YEARS TERM EXPIRES
- ----------------------------------- --- ----------------------------------------------------------------- -------------------
<S> <C> <C> <C>
NOMINEE FOR DIRECTOR:
Richard R. Hylland 36 Executive Vice President -- Strategic Development and Director of 1990/1997
NPSC* from 1995-present; President, Chief Operating Officer and
Director of Northwestern Growth Corporation (a subsidiary of
NPSC) from 1994-present; Vice President -- Corporate Development
of NPSC from 1993-present; Vice Chairman of SYN Inc. (Synergy
Gas); Vice Chairman of Cornerstone Propane GP, Inc., the Managing
General Partner of Cornerstone Propane Partners, L.P.*; Director
of Lucht Inc., Franklin Industries, Empire Energy and NNI.
OTHER DIRECTORS:
David Austad 36 President and Chief Executive Officer of AGS, Inc.; President and 1993/1999
Chief Executive Officer, The Austad Company, Inc., from
1988-1996.
Lawrence Flinn, Jr. 61 Chairman and Chief Executive Officer of United Video Satellite 1994/1998
Group, Inc.*
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
PRINCIPAL OCCUPATION OR EMPLOYMENT BECAME DIRECTOR(1)/
NAME AGE FOR THE PAST FIVE YEARS TERM EXPIRES
- ----------------------------------- --- ----------------------------------------------------------------- -------------------
<S> <C> <C> <C>
Tim C. Flynn 47 Chairman, President and Chief Executive Officer of the Company. 1983/1999
Mr. Flynn founded the Company in 1980 and has been its President
and Chief Executive Officer since its incorporation in 1983.
R.F. Leyendecker 51 Vice President -- Marketing Development, NPSC*, 1996-present; 1986/1999
Vice President -- Energy Services, NPSC from 1994-1996; Vice
President -- Rates and Regulations, NPSC from 1987-1994; elected
Assistant Corporate Secretary, 1993; director of NNI.
Scott C. Petersen 41 Executive Vice President and Chief Operating Officer of the 1993/1998
Company. Mr. Petersen joined the Company in 1987 as Senior Vice
President for Corporate and Legal Affairs and was appointed
Executive Vice President and Chief Operating Officer in 1991.
</TABLE>
- --------------------------
* Denotes public company.
(1) For purposes of this table, the year in which an individual first became a
director of the Company shall be the year in which such individual was
appointed to the Board of Directors of the Company or its South Dakota
predecessor.
PROCEDURES FOR NOMINATING DIRECTORS
The procedures for nominating directors, other than by the Board of
Directors itself, are set forth in the Bylaws. Nominations for the election of
directors, other than by the Board of Directors, must be made by a stockholder
entitled to vote for the election of directors by giving timely written notice
to the Secretary of the Company at the Company's principal offices. Such notice
must be received at least 90 days prior to the date on which, in the immediately
preceding calendar year, the Company's Annual Meeting of Stockholders for such
year was held; PROVIDED, HOWEVER, that in the event the date of the Annual
Meeting is changed by more than 30 days from such anniversary date, such
stockholder's notice must be received by the Secretary of the Company no later
than 10 days after notice or prior public disclosure of the meeting is first
given or made to stockholders. The stockholder's notice must be in writing and
must set forth as to each proposed nominee all information relating to such
person that is required to be disclosed in solicitations of proxies pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including, but not limited to, such person's written consent to
being named in the proxy statement as a nominee and to serving as a director, if
elected. The stockholder notice must also set forth the name and address of the
nominating stockholder. If the stockholder fails to comply with the above
provisions, then the Chairman of the meeting may declare that the nomination was
not made in accordance with the procedures prescribed by the Bylaws and the
defective nomination may be disregarded.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors is composed of Messers.
Austad, Flinn and Hylland, each of whom is a non-employee director. The Audit
Committee reviews and reports to the Board of Directors on various auditing and
accounting matters, including internal accounting and financial controls
5
<PAGE>
discussed with management and the Company's independent accountants, the annual
audit report from the Company's independent accountants, and the terms of
engagement of its independent accountants. The Audit Committee met two times
during 1996.
The Compensation Committee of the Board of Directors is composed of Messrs.
Austad, Flinn and Leyendecker, each of whom is a non-employee director. The
Compensation Committee is responsible for establishing compensation policies,
for setting compensation levels for the Company's executive officers, and for
administering the Company's 1993 Stock Option Plan. The Compensation Committee
met two times during 1996. For a description of the functions of the
Compensation Committee, see "ELECTION OF DIRECTORS -- Executive Compensation --
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION."
The Board of Directors met twelve times during 1996. All of the persons who
were directors of the Company during 1996 attended at least 75% of the total
number of meetings of the Board of Directors and the committees of the Board of
Directors on which he served.
DIRECTOR COMPENSATION
The compensation to be paid to each non-employee director is $20,000 per
year, $300 for each committee meeting attended and reimbursement for travel and
related expenses for attendance at Board and committee meetings. The
non-employee directors can elect to receive their annual retainer and meeting
fees in the form of cash, options, shares of the Company's Common Stock or a
combination thereof in accordance with such rules as established by the
Compensation Committee. Non-employee directors automatically receive upon their
initial election or appointment to the Board a nonqualified stock option to
purchase 6,000 shares of Common Stock under the Company's 1993 Stock Option Plan
(the "Plan") plus an additional 6,000 options to be granted on each anniversary
of such election during the term of service. In addition, in recognition of
their long service to the Board (for which they had not previously received
stock option grants), in May 1996 the Company granted Mr. Leyendecker a
nonqualified stock option to purchase 15,000 shares of Common Stock and granted
Mr. Hylland a nonqualified stock option to purchase 10,000 shares of Common
Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, the Company's directors, executive
officers and any persons holding ten percent or more of the common stock are
required to report their ownership of common stock and any changes in that
ownership to the Securities and Exchange Commission (the "SEC") and to furnish
the Company with copies of such reports. Specific due dates for these reports
have been established and the Company is required to report in this Proxy
Statement any failure to file on a timely basis by such persons. To the
Company's knowledge, based solely upon a review of copies of such reports
received by the Company which were filed with the SEC from January 1, 1996
through the Record Date, and upon written representations from such persons that
no other reports were required, the Company has been advised that all reports
required to be filed under Section 16(a) have been timely filed with the SEC,
except for one Form 5 report with respect to the grant of certain incentive
stock options made in December 1995 for each of the following executive officers
of the Company: D. Bankers, T. Flynn, E. Jacobsen, J. O'Haugherty, S. Petersen,
D. Truckenmiller, S. Truckenmiller, and J. Weisner, all of which forms were
filed with the SEC in February 1997.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and the five other most highly
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compensated executive officers (determined as of the end of the last fiscal
year) (the "Named Executives") whose total annual salary and bonus exceeded
$100,000 for the fiscal year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------------------------------- COMPENSATION
OTHER ANNUAL ----------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) STOCK OPTIONS(#)
- ---------------------------------------------------------------- ---- --------- -------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Tim C. Flynn 1996 250,000 92,404 28,614 --
President and Chief Executive Officer 1995 250,000 103,306 20,916 40,000
1994 200,000 -- 15,631 22,222
Scott C. Petersen 1996 240,000 88,708 27,386 --
Executive Vice President and Chief Operating Officer 1995 240,000 99,174 20,165 40,000
1994 190,000 -- 14,161 21,111
John M. O'Haugherty 1996 125,400 37,073 11,216 --
Senior Vice President and Chief Operating Officer, Lodging 1995 115,000 37,510 10,408 20,000
Division 1994 110,000 10,000 8,547 12,222
Douglas D. Truckenmiller 1996 156,200(2) 24,000 13,801 75,000
Vice President and Chief Operating Officer, ResNet 1995 105,000 34,248 10,041 20,000
1994 95,000 -- 7,486 11,111
David M. Bankers 1996 114,500 33,850 13,801 --
Vice President, Corporate Technologies 1995 105,000 34,248 10,041 20,000
1994 95,000 -- 7,486 11,111
Eric R. Jacobsen 1996 114,500 33,850 10,754 --
Vice President, General Counsel and Secretary 1995 70,000(3) 22,832 6,875 80,000
</TABLE>
- --------------------------
(1) Reflects compensation paid to the executive officers listed above by the
Company in order for them to purchase individual supplemental insurance
coverage and other benefits.
(2) In February 1996 Mr. Truckenmiller was appointed Vice President, Chief
Operating Officer of ResNet. Prior to such appointment, Mr. Truckenmiller
was Vice President, Technical Operations of the Company. Compensation for
1996 was based on an annual salary of $114,500 for the month of January and
an annual salary of $160,000 thereafter.
(3) Mr. Jacobsen joined the Company as Vice President and General Counsel in May
1995. Compensation for 1995 was based on an annual salary of $105,000.
EMPLOYMENT AGREEMENTS
In connection with the Company's initial public offering in October 1993,
the Company entered into an employment agreement with Mr. Flynn, dated August
16, 1993, retaining his services as the Company's President and Chief Executive
Officer. The initial term of this agreement was extended for an additional year
on January 1, 1996 and will be automatically extended each January 1 thereafter
unless prior to any such date either Mr. Flynn or the Company notifies the other
of an election not to extend. The agreement may also be earlier terminated as
discussed below. Under the agreement, Mr. Flynn's salary is currently set at
$250,000 per year. In addition to his salary, Mr. Flynn is entitled to
participate in any bonus program, insurance program, stock benefit plan and
other employment benefits that may be provided by the Company from time to time
to its executive officers.
Mr. Flynn's employment may be terminated prior to the expiration of the term
of the agreement (i) automatically upon Mr. Flynn's death, disability or
retirement at age 65; (ii) by the Company at any time, with or without cause, by
action of its Board of Directors; or (iii) by Mr. Flynn or the Company within
three months after a change of control of the Company. In the event of any such
termination of
7
<PAGE>
employment, the following termination benefits apply: (x) for any termination,
other than for cause (including a termination due to death, disability or
retirement at age 65), the Company will pay a pro rata portion of the maximum
bonus for the then current year under any bonus program in which Mr. Flynn may
be participating at the time, unless such payment is not permitted by the terms
of the plan; and (y) for any termination by the Board of Directors without
cause, the Company will continue to pay Mr. Flynn's salary at the rate last in
effect prior to termination for the balance of the term of his employment
agreement or until his earlier death or reaching age 65, and the Company will
continue at its expense any health, disability and life insurance coverage in
effect immediately prior to his termination. In the event of a termination after
a change in control involving the Company, the terms of Mr. Flynn's agreement
will be superseded by the terms and conditions of the Severance Agreements
described below. The employment agreement contains a covenant by Mr. Flynn not
to compete with the Company, or to work for a competing business, for the term
of his employment and six months thereafter, provided that employment with a
cable television vendor will not be considered to be a competing business.
The Company entered into an employment agreement with Mr. Petersen, dated
August 16, 1993, retaining his services as the Company's Executive Vice
President and Chief Operating Officer. The terms of his employment agreement are
the same as those in Mr. Flynn's agreement summarized above, except that Mr.
Petersen's salary is currently set at $240,000 per year.
In July 1995, the Compensation Committee authorized the Company to enter
into agreements (the "Severance Agreements") with the Company's President and
its other executive officers, including the officers named in the Summary
Compensation Table, providing for the payment of certain compensation and other
benefits in the event of a covered termination of the executive's employment
within two years following a "change in control" involving the Company. No
compensation is payable to any executive under the Severance Agreements unless
(i) there has been a change in control and (ii) the executive's employment with
the Company shall have been terminated (including a substantial reduction in
duties or compensation, but excluding termination as a result of the death or
permanent disability of the executive or for cause or voluntary retirement). A
"change in control" is generally defined as the occurrence of any of the
following: (i) any person or group becomes the beneficial owner of securities
representing 30% or more of the voting power of the Company's outstanding
capital stock having the right to vote in the election of directors (excluding
any such transaction that is effected at an actual or implied average valuation
of less than $6.75 per share of common stock); (ii) a majority of the members of
the Board shall not for any reason be the individuals who at the beginning of
such period constitute the Board or persons nominated by such members; (iii) any
merger, consolidation or sale of all or substantially all of the assets of the
Company (meaning assets representing 30% or more of the net tangible assets of
the Company or generating 30% or more of the Company's operating cash flow),
excluding a business combination or transaction in which: (a) the stockholders
of the Company prior to such transaction continue to represent more than 70% of
the voting power of the Company immediately after giving effect to such
transaction; (b) no person or group becomes the beneficial owner of 30% or more
of the Company's voting stock; or (c) the purchase price results in an actual or
implied average valuation of less than $6.75 per share of common stock; (iv) the
adoption of any plan or proposal for the liquidation or dissolution of the
Company; or (v) the occurrence of any other event that would be required to be
reported as a change in control in response to Item 6(e) of Schedule 14A of
Regulation 14A of the Exchange Act.
Upon a covered termination, the executive is entitled to receive a lump sum
payment equal to the compensation the executive would have received over a
30-month period, a pro rata portion of any bonus the executive would have
received for the year in which such termination occurs, any stock options
previously granted to the executive will become fully vested, and the executive
will be entitled to the continuation of the insurance and other welfare benefits
then being received by such executive for a 30-month period. The Severance
Agreements contain a covenant not to compete with the Company for a period of
six months following a covered termination, and executives are not required to
mitigate any
8
<PAGE>
termination benefits (nor will such benefits be reduced by compensation received
from other employment). The Severance Agreements terminate upon the earlier of:
(i) five years (subject to automatic one-year extensions unless the Board
otherwise notifies the executive); (ii) the termination of the executive's
employment other than pursuant to a covered termination described above; (iii)
two years from the date of a change in control of the Company if there has not
been a covered termination; and (iv) prior to a change in control upon the
executive's ceasing to be an executive officer of the Company.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options during the fiscal year ended December 31, 1996 to the Named Executives.
OPTION(1) GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE AT
- ---------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCKPRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED(#)(2) 1996(%) ($/SH) DATE 5%($) 10%($)
- ------------------------------------- --------------- ----------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas D. Truckenmiller............. 75,000 45.2 13.00 5/6/06 613,200 1,553,900
</TABLE>
- --------------------------
(1) The Company has no plans pursuant to which stock appreciation rights may be
granted.
(2) The options were granted pursuant to the Company's 1993 Stock Option Plan
and have a ten-year term. The options become exercisable over time based on
achievement of certain ResNet operating performance targets.
(3) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on a variety of
factors, including market conditions and the price performance of the Common
Stock. There can be no assurance that the rates of appreciation presented in
this table can be achieved.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named
Executives concerning the exercise of options during the fiscal year ended
December 31, 1996 and unexercised options held by the Named Executives as of
December 31, 1996:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
SHARES AT 12/31/96 AT 12/31/96
ACQUIRED ON (#) ($)(1)
EXERCISE VALUE -------------------------- ---------------------------
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Tim C. Flynn.................... 80,000 1,303,200 97,784 41,111 1,485,800 298,100
Scott C. Petersen............... N/A N/A 367,020 40,555 5,745,800 293,559
John M. O'Haugherty............. N/A N/A 49,006 21,111 634,800 153,600
Douglas D. Truckenmiller........ N/A N/A 10,556 95,555 80,100 503,309
David M. Bankers................ N/A N/A 43,951 20,555 565,000 149,059
Eric R. Jacobsen................ N/A N/A 35,000 45,000 357,000 426,000
</TABLE>
- --------------------------
(1) Value of unexercised "in-the-money" options is the difference between the
market price of the Common Stock on December 31, 1996 ($17.75 per share) and
the exercise price of the option, multiplied by the number of shares subject
to the option.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for developing and making recommendations to the Board with respect
to the Company's executive compensation policies. In addition, the Committee,
pursuant to authority delegated by the Board, determines on an annual basis the
compensation to be paid to the Company's chief executive officer and each of the
other executive officers of the Company. The Committee consists exclusively of
non-employee directors. Set forth below is the Report of the Committee
addressing the Company's policies regarding executive compensation for 1996.
COMPENSATION POLICIES APPLICABLE TO EXECUTIVE OFFICERS
THE REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION SHALL NOT
BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933
OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY
SPECIFICALLY INCORPORATES THIS REPORT BY REFERENCE, AND SHALL NOT OTHERWISE BE
DEEMED FILED UNDER SUCH ACTS.
The Company's success is dependent upon its ability to attract and retain
highly qualified and motivated executives. The Company endorses the philosophy
that executive compensation should reflect Company performance and the
contribution of such officers to that performance. The Company's compensation
policies are designed by the Committee to achieve three fundamental objectives:
(i) attract and retain qualified executives, (ii) motivate performance to
achieve specific strategic objectives of the Company, and (iii) align the
interests of senior management with the long-term interests of the Company's
stockholders. The three key elements of the Company's compensation program are
base salary, an annual performance-based cash bonus, and long-term stock
options.
The Company's executive officers are also permitted to participate in the
Company's broad based employee benefit plans and receive supplementary payments
to enable such executives to purchase additional insurance coverage and other
benefits. The incremental cost to the Company of the benefits provided under
these plans to the Named Executives averaged approximately 10% of their base
salaries in 1996.
BASE SALARIES. The Company's approach to compensating executive officers
has been to pay base salaries which are competitive with the salaries paid to
executives of other companies in the media and communications industries, and
based upon the Committee's judgment of the particular individual's experience,
performance and potential contributions to the Company. The Company believes
executive compensation levels must be competitive with those provided to other
executives in the media and communications industries in order to attract and
retain qualified executives crucial to the Company's long-term success. The
group of companies considered by the Committee is broader than the group shown
in the performance graph on page 13, because the Company believes that it
competes with a broader group of companies for executive talent.
The Company's Chief Executive Officer, Mr. Flynn, and Chief Operating
Officer, Mr. Petersen, are employed pursuant to employment contracts (the
"Employment Contracts") entered into in 1993 between the Company and such
executive officers in connection with and prior to the Company's initial public
offering (the "Offering"). The Employment Contracts had an initial term which
expired on December 31, 1995, and are automatically extended each year unless
either the Company or such executive elects not to extend. The base salaries
paid to Messrs. Flynn and Petersen for 1996 were unchanged from 1995. See
"EXECUTIVE COMPENSATION -- EMPLOYMENT AGREEMENTS." In originally approving the
Employment Contracts, the Board made a subjective assessment of management
performance relating to the achievement of financial targets and strategic
milestones and considered the salary levels of executive officers of its
competitors and other public companies of comparable size, and the advice and
recommendations of its financial advisers (who acted as the managing
underwriters in the Offering). In addition, a specific
10
<PAGE>
objective of the Board in approving the Employment Contracts was to provide
compensation to the Company's executive officers sufficient to ensure the
continuity and stability of senior management following the Offering and to
recognize the additional significant demands associated with the management of a
public company. With respect to the Company's other executive officers, based on
the policies and factors described above, including the performance of the
Company and peer group compensation, the Committee approved base salary
adjustments for 1996 averaging 9.12% for such executive officers.
BONUS COMPENSATION. The Company's officers are eligible to receive annual
cash incentive compensation based on achieving specific goals and objectives
established by the Committee. In February 1996 the Committee established an
executive bonus program for 1996 based primarily on the Company's achievement of
target financial goals relating to the Company's earnings before interest
expense, income taxes, depreciation, and amortization ("EBITDA"). Executive
officers were eligible to participate in a bonus pool equal to, in the case of
Messrs. Flynn and Petersen, up to 48.8% of their base salary, and in the case of
other executive officers, up to 39.1% of their base salaries, based on the
Company achieving EBITDA in excess of the targets specified by the Committee.
The Committee met in February 1997 to evaluate the Company's performance and
determine the 1996 bonus for executive officers. The Committee considered
whether the stated 1996 objectives for EBITDA, adjusted for certain
extraordinary events, were attained and reviewed other significant strategic
events that occurred during the year, including the formation of a strategic
partnership with PRIMESTAR-Registered Trademark- Partners to expand the
Company's free-to-guest business, the creation of ResNet Communications, Inc.
("ResNet") to extend the Company's proprietary technology to the multifamily
residential market, the formation of a strategic partnership between ResNet and
TCI Satellite, Inc., a public offering of common stock in May 1996 that
generated approximately $44.6 million in net proceeds and the sale of $150
million of senior unsecured notes in December 1996. In light of the foregoing,
the Committee approved cash bonus compensation to Messrs. Flynn and Petersen
equal to 37.0% of their respective base salary, and to the Company's other
executive officers equal to 29.6% of their respective base salary.
LONG-TERM STOCK OPTIONS. The Company believes that stock ownership by
executive officers and key employees aligns their interests with those of
stockholders. Stock options granted to such persons are intended to provide such
employees with an incentive to achieve superior performance that will be
reflected in the appreciation of the Company's common stock. The terms and
conditions of such options are determined and administered by the Committee.
Generally, stock options are granted annually with an exercise price equal to
the prevailing market value of the Company's common stock at the time of grant,
have ten year terms, and vest over a four year period. The nature of the
long-term stock option compensation means that participating executives will not
realize compensation unless the value of the Company's common stock increases.
Each executive officer is considered for stock options based on his or her
responsibilities in the Company and existing stock option position, as well as
stock option award levels of comparable media and communications companies.
Stock options granted in 1996 to the Named Executives are reflected in the
Summary Compensation Table.
SEVERANCE AGREEMENTS. The Board believes that it is in the interest of the
Company and its stockholders to reinforce and encourage the continued dedication
of the Company's executive officers without the distractions occasioned by the
possibility of an abrupt change in control of the Company. In July 1995, the
Committee authorized the Company to enter into severance agreements with the
Company's president and its other executive officers, including the Named
Executives, providing for the payment of certain compensation and other benefits
in the event of a covered termination of the executive's employment within two
years following a "change in control" involving the Company. See "EXECUTIVE
COMPENSATION -- EMPLOYMENT AGREEMENTS."
IRC SECTION 162(m). Section 162(m) of the Internal Revenue Code disallows
the deductibility by the Company of any compensation over $1 million per year
paid to each of the chief executive officer and the four most highly compensated
executive officers (other than the chief executive officer), unless certain
11
<PAGE>
criteria are satisfied. During 1996 the Board discussed the adoption of an
amendment of the Company's stock option plan to, among other things, qualify for
an exemption from the limitation on deductibility with respect to stock options
granted under the plan. No officer of the Company receives compensation in
excess of such amount and, accordingly, such action was not taken in 1996.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The 1996 base salary of Mr. Flynn, the Company's President and Chief
Executive Officer, was established pursuant to his employment contract, which
was approved by the Board in 1993 as discussed above. Mr. Flynn's incentive cash
bonus awarded for 1996 (as reflected in the Summary Compensation Table) was
based on the Company's achievement of strategic goals and meeting financial
targets as discussed above. Mr. Flynn did not receive a grant of stock options
for 1996.
THE COMPENSATION COMMITTEE
David Austad
Lawrence Flinn, Jr.
R.F. Leyendecker
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee has ever served as an officer of the
Company, other than Mr. Leyendecker, who served as the Company's Treasurer from
1988 through 1992. Certain compensation matters were reviewed by the entire
Board of Directors, which includes Mr. Flynn, the President and Chief Executive
Officer, and Mr. Petersen, Executive Vice President and Chief Operating Officer
of the Company. Mr. Leyendecker, a director and member of the Compensation
Committee, is a director of NNI and an executive officer of NPSC. Mr. Hylland, a
director, is a director of NNI and a director and executive officer of NPSC.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
None of the directors or executive officers of the Company or any subsidiary
thereof, or any associates or affiliates of any of them, is or has been indebted
to the Company at any time since the beginning of the last completed fiscal year
in excess of $60,000. None of the directors or executive officers of the
Company, or any associate or affiliate of such person, had any material
interest, direct or indirect, in any transaction or any proposed transaction
with the Company during the past fiscal year.
12
<PAGE>
PERFORMANCE GRAPH
Prior to October 14, 1993, the date on which the Offering was completed, the
Company's common stock was privately held. The following graph compares the
percentage change in the Company's cumulative total shareholder return on its
common stock with (i) the cumulative total return of the NASDAQ Market Index and
(ii) the cumulative total return of all companies (the "Peer Group") with the
same four-digit standard industrial code (SIC) as the Company (SIC Code 4841 --
Cable and Other Pay Television Services) over the period from October 14, 1993
through December 31, 1996. The graph assumes an initial investment of $100 in
each of the Company, the NASDAQ Market Index and the Peer Group and reinvestment
of dividends. The Company did not declare or pay any dividends in 1996. The
graph is not necessarily indicative of future price performance. THIS GRAPH
SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OR UNDER THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE
BE DEEMED FILED UNDER SUCH ACTS.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ MARKET INDEX AND PEER GROUP*
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG LODGNET ENTERTAINMENT CORP.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LODGENET ENTERTAIN. SIC CODE INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
10/14/1993 $100.00 $100.00 $100.00
12/31/93 108.33 112.13 100.23
12/31/94 56.05 81.29 105.23
12/31/95 70.37 93.85 136.50
12/31/96 131.48 76.29 169.62
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 14, ------------------------------------------
1993 1993 1994 1995 1996
--------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
LodgeNet........................ $ 100.00 $ 108.33 $ 56.02 $ 70.37 $ 131.48
Peer Group...................... 100.00 112.13 81.29 93.85 76.29
NASDAQ Market Index............. 100.00 100.23 105.23 136.50 169.62
</TABLE>
- --------------------------
* Assumes $100 invested October 14, 1993 in the Company's Common Stock, the
Peer Group and the NASDAQ Market Index. Source: Media General Financial
Services, Inc.
13
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The accountants of the Company are Arthur Andersen LLP, 45 South Seventh
Street, Minneapolis, MN 55402-1611. Arthur Andersen LLP has performed accounting
services for the Company and its predecessors since its appointment in the
fourth quarter of 1991, which services have consisted of the examination of the
consolidated financial statements of the Company and its affiliates and
predecessors and limited assistance and consultation in connection with filings
with the SEC. All professional services rendered by Arthur Andersen LLP during
1996 were furnished at customary rates and terms.
Representatives of Arthur Andersen LLP will be present at the Meeting to
respond to appropriate questions and to comment on the Company's consolidated
financial statements.
The Board of Directors has appointed Arthur Andersen LLP as the Company's
independent public accountants for the current fiscal year and the stockholders
are being asked to ratify such appointment. The affirmative vote of the holders
of at least a majority of the outstanding shares of the Company's Common Stock
represented and voting at the Meeting will be required for passage of this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1997.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1996
accompanies this Proxy Statement. The Annual Report contains consolidated
financial statements of the Company and its subsidiaries and the report thereon
of Arthur Andersen LLP, the Company's independent public accountants.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K INCLUDING FINANCIAL STATEMENTS REQUIRED TO BE FILED WITH THE SEC
PURSUANT TO THE EXCHANGE ACT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 BY
WRITING TO THE COMPANY AT 808 NORTH WEST AVENUE, SIOUX FALLS, SOUTH DAKOTA
57104, ATTN: STOCKHOLDER RELATIONS.
PROPOSALS OF STOCKHOLDERS
Under certain circumstances, stockholders are entitled to present proposals
at stockholder meetings. The 1998 Annual Meeting of Stockholders will be held on
or about May 13, 1998. Proposals of stockholders intended to be included in the
proxy materials for the 1998 Annual Meeting of Stockholders must be received by
the Secretary of the Company, 808 North West Avenue, Sioux Falls, South Dakota
57104, by December 12, 1997, in a form that complies with the Company's Bylaws
and applicable requirements.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting. If,
however, other matters are properly brought before the Meeting, it is the
intention of the Proxyholders to vote the shares represented thereby on such
matters in accordance with the recommendations of the Board of Directors and
authority to do so is included in the Proxy.
DATED: April 3, 1997
By Order of the Board of Directors,
Eric R. Jacobsen
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
14
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
LODGENET ENTERTAINMENT CORPORATION
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 14, 1997
The undersigned hereby appoints Mr. Tim C. Flynn and Mr. Scott C.
Petersen, and each of them, the attorneys, agents and proxies of the
undersigned, with full powers of substitution to each (the "Proxies"), to
attend and act as proxy or proxies of the undersigned at the Annual Meeting
of Stockholders (the "Annual Meeting") of LodgeNet Entertainment Corporation
(the "Company") to be held at the Radisson Encore Inn, 4300 Empire Place,
Sioux Falls, South Dakota 57116 on Wednesday, May 14, 1997 at 9:00 a.m.
Central Daylight Time or any adjournment thereof, and to vote as specified
herein the number of shares which the undersigned, if personally present,
would be entitled to vote.
This Proxy when properly executed will be voted as specified. If no
instruction is specified with respect to a matter to be acted upon, the
shares represented by the Proxy will be voted "FOR" the election of Mr.
Richard R. Hylland and "FOR" the ratification of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending December
31, 1997. If any other business is presented at the Annual Meeting, this
Proxy confers authority to and shall be voted in accordance with the
recommendation of the Board of Directors. This Proxy is solicited on behalf
of the Board of Directors and may be revoked prior to its exercise by filing
with the Corporate Secretary of the Company a duly executed proxy bearing a
later date or an instrument revoking this Proxy, or by attending and electing
to vote in person.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS FOR A TERM OF 3 YEARS- For Withheld 2. To ratify the appointment of For Against Abstain
Nominee: Richard R. Hylland / / / / Arthur Andersen LLP as the / / / / / /
Company's independent public
accountants for the fiscal year
ending December 31, 1997.
3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
Annual Meeting and any and all adjournments thereof. The
Board of Directors at present knows of no other business
to be presented by or on behalf of the Company or the
Board of Directors at the Annual Meeting.
Dated ____________________, 1997
Signature(s)______________________________________
Signature(s)______________________________________
Please sign exactly as name appears hereon. Joint
owners should each sign. Where applicable,
indicate official position or representative
capacity.
</TABLE>
