<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GC Companies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(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:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
(617) 278-5600
[GC COMPANIES,INC. LOGO]
January 26, 1999
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 5, 1999
The Annual Meeting of Stockholders of GC Companies, Inc. will be held at
10:00 a.m., Eastern Standard Time, on Friday, March 5, 1999, AT THE COMPANY'S
CORPORATE HEADQUARTERS, 27 BOYLSTON STREET (ROUTE 9), ADJACENT TO THE CHESTNUT
HILL GENERAL CINEMA THEATRE, CHESTNUT HILL, MASSACHUSETTS, for the following
purposes:
1. To elect one Class II director in accordance with the By-Laws of the
Company.
2. To consider and act upon a proposal to approve an amendment to the GCC
Investments, Inc. Incentive Pool Plan.
3. To consider and act on a proposal to ratify the appointment by the
Board of Directors of Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year.
4. To transact such other business as may properly come before the meeting
and any adjournments of the meeting.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Philip J. Szabla
Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
(617) 278-5600
[GC COMPANIES,INC. LOGO]
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 5, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of GC Companies, Inc. (the "Company") for use
at the Annual Meeting of Stockholders to be held at 10:00 a.m. on Friday, March
5, 1999, AT THE COMPANY'S CORPORATE HEADQUARTERS, 27 BOYLSTON STREET (ROUTE 9),
ADJACENT TO THE CHESTNUT HILL GENERAL CINEMA THEATRE, CHESTNUT HILL,
MASSACHUSETTS, and at any adjournments thereof. All shares will be voted in
accordance with the instructions contained in the proxy, but if the proxies
which are signed and returned do not specify a vote on any proposal, the proxies
will be voted FOR the election of the nominee for director named herein, FOR the
Second Amendment to the GCC Investments, Inc. Incentive Pool Plan, and FOR the
ratification of the appointment by the Board of Directors of Deloitte & Touche
LLP as the Company's independent auditors for the current fiscal year. Any proxy
may be revoked by a stockholder at any time before it is exercised by providing
written notice of revocation to the Secretary of the Company (at the address set
forth above), by executing a proxy bearing a later date, or by voting in person
at the Annual Meeting. The mailing of this proxy statement and accompanying form
of proxy is expected to commence on or about January 29, 1999.
In addition to solicitations of proxies by mail, the Company's officers,
directors or employees may solicit proxies by telephone or personal
communication. All costs of soliciting proxies, including reimbursement of GC
Companies, Inc. fees of certain brokers, fiduciaries and nominees in obtaining
voting instructions from beneficial owners, will be borne by the Company.
Although stock transfer books will remain open, the Board of Directors has
fixed the close of business on January 15, 1999 as the record date for
determining the stockholders having the right to vote at the Annual Meeting. At
the meeting, each share of Common Stock of the Company ("Common Stock") is
entitled to one vote. At the close of business on January 15, 1999, there were
7,786,552 shares of Common Stock outstanding and entitled to vote at the
meeting.
<PAGE> 4
Shares of Common Stock represented in person or by proxy at the Annual
Meeting (including abstentions and broker non-votes) will be tabulated by the
inspectors of election appointed for the meeting and will be counted in
determining that a quorum is present. Votes are counted using written ballots.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 15, 1999 (except
as noted in footnotes 4 and 5 below) with respect to the beneficial ownership of
the Company's Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of the Company's Common
Stock, (ii) each executive officer named in the Summary Compensation Table,
(iii) each director of the Company, and (iv) all current executive officers and
directors as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED
NAME AND ADDRESS --------------------
OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------- --------- -------
<S> <C> <C>
Smith Family Group(1)(2)(3)................................. 2,274,495 29.21%
c/o Richard A. Smith
GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Richard A. Smith(2)(3)...................................... 1,404,220 18.03%
c/o GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Nancy L. Marks(2)(3)........................................ 1,023,642 13.15%
c/o GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Gabelli Funds, Inc.(4)...................................... 1,554,249 19.96%
One Corporate Center
Rye, NY 10580
Harris Associates L.P. and Harris Associates, Inc.(5)....... 651,780 8.37%
Two North LaSalle Street Suite 500 Chicago, IL 60602
William L. Brown(6)......................................... 2,829 *
Peter C. Read(6)............................................ 1,555 *
Leonard A. Schlesinger(6)................................... 1,043 *
Francis E. Sutherby(6)...................................... 1,066 *
Robert A. Smith(2)(3)(7).................................... 105,462 1.35%
Paul R. DelRossi(1)(8)...................................... 50,559 *
William B. Doeren(1)........................................ 8,182 *
John G. Berylson(1)(2)(3)(9)................................ 197,335 2.53%
G. Gail Edwards(1).......................................... 2,234 *
All current directors and officers as a group (12
persons)(1)(2)(3)(10)..................................... 1,775,614 22.80%
</TABLE>
- ---------------
* Less than 1%
(1) The number of shares of Common Stock reported in the table for the
executive officers of the Company individually and as a group includes
shares allocated to each executive officer's account under the Company's
Employee Stock Ownership Plan ("ESOP"), as to which the officers share
voting power with the trustee of the ESOP. The number of shares is as
follows: Paul R. Del Rossi -- 582; William B. Doeren -- 12; John G.
Berylson -- 42; G. Gail Edwards -- 12; and all current executive officers
as a
2
<PAGE> 5
group -- 648. Except as set forth in the preceding sentence or in the
following footnotes, each stockholder referred to above has sole voting and
investment power with respect to the shares listed. The number of shares
reported in the table also includes shares of Common Stock subject to
options exercisable within 60 days of January 15, 1999 as follows: Paul R.
Del Rossi -- 31,167; William B. Doeren -- 8,170; John G. Berylson -- 7,910;
G. Gail Edwards -- 2,222; and all current executive officers as a group --
50,598.
(2) Certain of the shares included in the table have been counted more than
once because of certain rules and regulations of the Securities and
Exchange Commission ("SEC"). The total number of shares owned by, or for
the benefit of, Richard A. Smith, Nancy L. Marks and members of their
families is as shown for the "Smith Family Group". See Note 3. Mr. Smith
and Mrs. Marks are "control" persons of the Company within the meaning of
the rules and regulations of the SEC.
(3) The Smith Family Group includes Richard A. Smith, Chairman and Chief
Executive Officer of the Company; Nancy L. Marks, Richard A. Smith's
sister; Robert A. Smith, President and Chief Operating Officer of the
Company, who is Richard A. Smith's son; John G. Berylson, Senior Vice
President and Chief Investment Officer of the Company, who is Richard A.
Smith's son-in-law; other members of their families; and various Smith
family corporations, trusts and charitable foundations. Members of the
Smith Family Group possess sole or shared voting power over all of the
shares shown in the table as being beneficially owned by the Smith Family
Group.
Certain members of the Smith Family Group have filed a Schedule 13D dated
December 15, 1993 (the "Smith Family Group 13D") with the SEC. The Smith
Family Group 13D discloses that certain members of the Smith Family Group
have executed the "Smith-Lurie/Marks Family Stockholders' Agreement Re GC
Companies, Inc." dated December 15, 1993, as amended and supplemented (the
"Stockholders Agreement"). The Stockholders' Agreement imposes obligations
on members of the Smith Family Group prior to disposing of their shares of
Common Stock of the Company. According to the Smith Family Group 13D, not
all of the shares of Common Stock owned beneficially by the members of the
Smith Family Group are subject to the Stockholders' Agreement. Currently,
1,801,432 shares of Common Stock are subject to the terms of the
Stockholders' Agreement.
(4) The information reported is based on an amendment to Schedule 13D dated
November 20, 1998 filed with the SEC by the Gabelli Funds, Inc. and its
affiliates (collectively, the "Gabelli Affiliates"). The Gabelli Affiliates
have sole investment power over 1,554,249 shares of Common Stock reported
in the table, and sole voting power over 1,534,249 of such shares.
(5) The information reported is based on an amendment to Schedule 13G dated
January 27, 1998 filed with the SEC by Harris Associates L.P. and its
affiliate Harris Associates, Inc. (collectively, "Harris"). Harris has sole
investment power over 242,780 shares of Common Stock, shared investment
power over 409,000 additional shares of Common Stock and shared voting
power over all of the shares of Common Stock reported in the table.
(6) Messrs. Brown, Read, Schlesinger and Sutherby hold, respectively 1,072,
1,055, 1,043, and 1,066 Common Stock based units which are included in the
table. These individuals do not have voting or dispositive power with
respect to these Common Stock based units which were received in lieu of
the payment of directors' fees.
(7) Includes 15,800 shares held by Robert A. Smith as trustee, 16,000 shares
held in an insurance trust, and 460 shares held in trust for the benefit of
his children, as to which Mr. Smith disclaims beneficial ownership. Robert
A. Smith is the son of Richard A. Smith, Chairman and Chief Executive
Officer of the Company, and is the brother-in-law of John G. Berylson,
Senior Vice President and Chief Investment Officer of the Company.
3
<PAGE> 6
(8) Includes 405 shares of Common Stock held by members of Mr. Del Rossi's
immediate family and 1,761 shares of restricted Common Stock over which Mr.
Del Rossi has voting but not investment power.
(9) Includes 84,352 shares held by Mr. Berylson's wife, 16,000 shares held in
an insurance trust for the benefit of Mr. Berylson's wife, 40,591 shares
held by Mr. Berylson as a trustee, and 4,438 shares held as guardian for
his minor children, as to which Mr. Berylson disclaims beneficial
ownership. Also includes 43,775 shares of restricted stock over which Mr.
Berylson has voting, but not investment power. Mr. Berylson, a member of
the Smith Family Group, is the son-in-law of Richard A. Smith, Chairman and
Chief Executive Officer of the Company, and is the brother-in-law of Robert
A. Smith, President and Chief Operating Officer of the Company.
(10) Includes 45,536 shares of restricted Common Stock described in Notes 8 and
9 above.
4
<PAGE> 7
1. ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three
classes. At each Annual Meeting, a class of directors is elected for a full term
of three years to succeed those whose terms are expiring.
One Class II director is to be elected for a three year term at the Annual
Meeting. The persons named in the accompanying proxy will vote each proxy for
the election of the nominees listed below, unless directed otherwise. The
nominee is currently a member of the Board of Directors. The Company has no
reason to believe that the nominee will become unavailable for election, but if
for any reason that should be the case, the proxies may be voted for a
substitute nominee. A plurality of the votes cast at the Annual Meeting is
required to elect a director. Proxies withholding authority to vote for a
nominee will be treated as votes cast against the election of such nominee.
Broker non-votes will not be treated as votes cast and therefore will not be
counted in calculating a plurality.
The nominee for director, and the directors who will continue to serve
after the 1999 Annual Meeting, are listed below with their principal occupations
for the last five years.
NOMINEE FOR TERM EXPIRING IN 1999 (CLASS II DIRECTOR)
PETER C. READ, age 62, Director since 1994
Currently active in consulting, venture capital and civic and charitable
matters; Executive Vice President of The First National Bank of Boston until his
retirement in September 1992; Director of Granite State Bank.
DIRECTORS WHOSE TERMS EXPIRE IN 2001 (CLASS I DIRECTORS)
FRANCIS E. SUTHERBY, age 66, Director since 1993
Partner of Deloitte & Touche LLP, the independent auditors of the Company,
from 1968 until his retirement in May 1992.
LEONARD A. SCHLESINGER, age 46, Director since May, 1997
Mr. Schlesinger is the Senior Vice President of Development at Brown
University. He previously has served as a faculty member at the Harvard Business
School for more than five years. Mr. Schlesinger serves as a director of The
Limited, Inc., a clothing retailer, Pegasystems, Inc., a customer service
software company, and Borders Group, Inc., a book store chain.
DIRECTORS WHOSE TERMS EXPIRE IN 2000 (CLASS III DIRECTORS)
WILLIAM L. BROWN, age 77, Director since 1993
Retired Chairman of Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston; Director of Standex International
Corporation and Ionics, Incorporated and a trustee of Bradley Real Estate Trust.
RICHARD A. SMITH, age 74, Director since 1993
Chairman and Chief Executive Officer of the Company since 1993; President
of the Company from 1993 until November 1995; Chairman of Harcourt General, Inc.
("Harcourt General") and of The Neiman
5
<PAGE> 8
Marcus Group, Inc., a majority owned subsidiary of Harcourt General ("NMG");
Chief Executive Officer of Harcourt General and of NMG (until December 1998)
since January 15, 1997 and prior to December 1991; Director of NMG. Mr. Smith is
the father of Robert A. Smith, President and Chief Operating Officer of the
Company, and the father-in-law of John G. Berylson, Senior Vice President and
Chief Investment Officer of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended October 31, 1998, the Board of Directors held
five meetings and acted by unanimous written consent on two other occasions.
During fiscal 1998, each director of the Company participated in at least 75% of
the aggregate number of Board meetings and meetings held by the committees of
which he is a member. The By-laws of the Company designate three principal
standing committees. Set forth below are descriptions of the functions of such
committees and the names of their current members.
Audit Committee. The members of the Audit Committee, which met three times
during fiscal 1998, are Messrs. Read (Chairman), Brown, Sutherby and
Schlesinger. The functions of the Audit Committee include the review of the
scope of the services of the Company's independent auditors and the
responsibilities of the Company's internal audit department and a continuing
review of the Company's internal procedures and controls. The Audit Committee
also annually reviews the Company's audited financial statements, considers the
qualifications and fees of the independent auditors of the Company and makes
recommendations to the Board of Directors as to the selection of the auditors
and the scope of their audit services.
Compensation Committee. The members of the Compensation Committee, which
met three times during fiscal 1998, are Messrs. Brown (Chairman), Sutherby, Read
and Schlesinger. The functions of the Compensation Committee include the review
or determination of salaries, benefits and other compensation for officers and
key employees of the Company and the administration of the Company's incentive
plans.
Special Review Committee. The members of the Special Review Committee,
which met once during fiscal 1998, are Messrs. Sutherby (Chairman), Brown, Read
and Schlesinger. The primary function of the Special Review Committee is to make
all determinations for the Company regarding the fees charged to the Company by
Harcourt General for services to the Company. For additional information see
"Executive Compensation -- Summary Compensation Table" (Note 1).
The Company does not currently have a Nominating Committee. The Company's
By-laws provide that the Board of Directors or any nominating committee
appointed by the Board of Directors must carefully consider all suggestions for
nominees to the Board of Directors which are timely received in proper written
form. To be timely, notice shall be delivered to, or mailed and received by, the
Secretary of the Company at the principal executive offices of the Company (see
"Deadline for Submission of 2000 Stockholder Proposals and Nominations"). To be
in proper written form, a stockholder's notice shall set forth in writing (i) as
to each person whom the stockholder proposes to nominate for election as a
director, all information relating to such person that is required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC,
including such person's written consent to being named in the proxy statement as
a nominee and to serving as a director if elected and (ii) as to the stockholder
giving the notice (x) the name and address, as they appear on the Company's
books, of such stockholder and (y) the class and number of shares of the
corporation which are beneficially owned by such stockholder.
DIRECTORS' COMPENSATION
Directors who are not affiliated with the Company each receive an annual
cash retainer of $15,000 plus an equal amount of stock based units and a fee of
$1,500 per Board of Directors meeting attended, plus travel and incidental
expenses (none in fiscal 1998) incurred in attending meetings and carrying out
their duties as
6
<PAGE> 9
directors. Such directors also receive a fee of $750 (the Chairmen receive
$1,000) for each committee meeting attended. If a director is unable to attend a
meeting in person but participates by telephone, he receives one-half of the fee
that otherwise would be payable.
The Company offers non-employee directors the alternative of receiving
directors' fees on a deferred basis. Those directors may elect to defer receipt
of all or a specified portion of their fees (i) in the form of cash with
interest at a rate equal to the average of the top rates paid by major New York
banks on three month negotiable certificates of deposit; or (ii) in the form of
stock based units, the value of each unit initially being equal to the fair
market value of one share of Common Stock of the Company on the date the fees
would otherwise be payable. To date, each director has elected to defer fees
using the stock based method.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of the Company's Common Stock to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. The Company believes that all filing requirements
applicable to its insiders were complied with during fiscal 1998.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information on the compensation provided for
services rendered to the Company during fiscal 1998, 1997 and 1996 by the
Company's Chief Executive Officer, Chief Operating Officer, and the other
executive officers of the Company at the end of fiscal 1998 who were not
employed by Harcourt General, Inc. ("Harcourt General").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION ANNUAL COMPENSATION
----------------------------------- ---------------------------------------
AWARDS PAYOUTS
------------------------- -----------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS
POSITION YEAR ($) ($)(2) ($)(3) ($)(4) (#) (5)
------------------ ------ ------ ------ ------------ ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard A. Smith,........... 1998 -- -- -- -- -- --
Chairman (President 1997 -- -- -- -- -- --
until November 1996 -- -- -- -- -- --
1995) and Chief
Executive Officer(1)
Robert A. Smith............. 1998 -- -- -- -- -- --
President and Chief 1997 -- -- -- -- -- --
Operating Officer(1) 1996 -- -- -- -- -- --
Paul R. Del Rossi........... 1998 $330,000 $165,000 -- -- 2,420 --
President and Chief 1997 $330,076 $ 59,807 -- -- 3,200 --
Executive Officer of 1996 $321,115 $ 49,600 $123,347 -- 3,000 --
General Cinema
Theatres, Inc.
William B. Doeren........... 1998 $330,000 $ 33,000 -- -- 8,380 --
Executive Vice 1997 $318,774 $ 34,708 -- -- 3,000 --
President and Chief 1996 $311,538 $ 38,400 -- -- 8,825 --
Operating Officer of
General Cinema
Theatres, Inc.
John G. Berylson............ 1998 $337,500 $168,750 -- $1,602,168 3,530 $164,852
Senior Vice President 1997 $300,138 $150,000 -- $ 48,792 2,800 $179,269
and Chief Investment 1996 $273,507 -- -- -- -- $705,000
Officer(7)
G. Gail Edwards............. 1998 $270,000 $135,000 -- -- 3,992 --
Vice President, Chief 1997 $253,346 $125,665 -- -- 7,120 --
Financial Officer and 1996 $ 85,865 $ 44,000 -- -- -- --
Treasurer(8)
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($)(6)
------------------ ------------
<S> <C>
Richard A. Smith,........... --
Chairman (President --
until November --
1995) and Chief
Executive Officer(1)
Robert A. Smith............. --
President and Chief --
Operating Officer(1) --
Paul R. Del Rossi........... $13,513
President and Chief $13,128
Executive Officer of $15,133
General Cinema
Theatres, Inc.
William B. Doeren........... $12,724
Executive Vice $11,717
President and Chief $ 1,188
Operating Officer of
General Cinema
Theatres, Inc.
John G. Berylson............ $36,287
Senior Vice President $33,452
and Chief Investment $11,910
Officer(7)
G. Gail Edwards............. $11,114
Vice President, Chief $12,137
Financial Officer and $ 1,937
Treasurer(8)
</TABLE>
- ---------------
(1) Harcourt General provides the services of Richard A. Smith as Chairman and
Chief Executive Officer of the Company, and Robert A. Smith as President and
Chief Operating Officer of the Company, as well as such additional corporate
services as are agreed to from time to time between the Company and Harcourt
General. The payment of fees to Harcourt General has been and will continue
to be subject to the approval of the Special Review Committee, a committee
of the Company's Board of Directors consisting solely of directors who are
not affiliated with Harcourt General. Richard A. Smith and Robert A. Smith
receive all of their cash and non-cash compensation from Harcourt General.
Of the amounts paid by the Company to Harcourt General for fiscal 1998, 1997
and 1996, approximately $228,416, $243,874, and $429,000, respectively, were
attributable to Richard A. Smith's services, and approximately $227,488,
$174,922, and $193,900, respectively, were attributable to Robert A. Smith's
services. These amounts include costs related to their base compensation,
bonus and benefits, all of which are direct obligations of Harcourt General.
(2) Bonus payments are reported with respect to the year in which the related
services were performed.
8
<PAGE> 11
(3) No disclosure regarding items included in this category is required unless
the amount in any year exceeds the lesser of $50,000 or 10% of the annual
salary and bonus for the named executive officer.
(4) Calculated by multiplying the closing price of the Common Stock on the New
York Stock Exchange on the date of grant by the number of shares awarded.
Twenty percent of an award of restricted Common Stock are freed from the
restrictions on transfer each year, commencing one year after the date of
grant, provided that the recipient continues to be employed by the Company
on the anniversary date of the grant. Holders of restricted stock are
entitled to vote their restricted shares. In the event of termination of
employment for any reason, other than death or permanent disability,
restricted shares are forfeited by the holder and revert to the Company.
(5) The long term incentive plan ("LTIP") payout reported in this category with
respect to Mr. Berylson for fiscal 1998 includes cash portions of Mr.
Berylson's share of incentive pools relating to the Company's investment
activity in accordance with the terms of the GCC Investments, Inc. Incentive
Pool Plan (the "Pool Plan"). See "Summary of the GCC Investments, Inc.
Incentive Pool Plan." Mr. Berylson participates in the Pool Plan. Mr.
Berylson received $37,950, which is the second installment of a $162,641
award that relates to the sale of the Company's Vision Express investment in
1997. In addition, Mr. Berylson received $126,902, representing the second
installment of a $380,705 investment banking fee relating to the acquisition
of international theatre assets, which fee is payable in cash in three equal
installments over two years. See, "Long Term Incentive Plan Awards in Last
Fiscal Year."
(6) The items accounted for in this category include the value of allocated ESOP
shares, the cost to the Company of matching contributions under the Key
Employee Deferred Compensation Plan and life insurance premiums. For fiscal
1998, such amounts for each of the named executive officers other than
Richard A. Smith and Robert A. Smith were, respectively, as follows: Mr. Del
Rossi -- $500, $11,694 and $1,319; Mr. Doeren -- $500, $10,905 and $1,319;
Mr. Berylson -- $500, $19,873 and $1,349; and Ms. Edwards -- $500, $9,535
and $1079. Also included for Mr. Berylson only is 14,565 of interest earned
on deferred cash installments under the Pool Plan.
(7) The restricted stock awards shown in the table for Mr. Berylson are based
upon 30% of the amounts available for distribution, in accordance with the
Pool Plan. See, "Long Term Incentive Plan Awards in Last Fiscal Year."
(8) Ms. Edwards' employment commenced on June 24, 1996.
9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted under
the Company's 1993 Equity Incentive Plan during the fiscal year ended October
31, 1998 to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
---------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL
SECURITIES RATES OF STOCK PRICE
UNDERLYING % OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OR OPTION TERM(3)
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME (#)(1) IN FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ---------- --------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Smith(4)........... -- -- -- -- -- --
Robert A. Smith(4)............ -- -- -- -- -- --
Paul R. Del Rossi............. 745 6.69% $41.9375 11/03/07 $ 19,649 $100,758
1,675 -- $52.4200 -- 26,619 208,978
William B. Doeren............. 7,079 23.15% $41.9375 11/03/07 186,703 957,404
1,301 -- $52.4200 -- 20,675 162,317
John G. Berylson.............. 3,530 9.75% $41.9375 11/03/07 93,101 477,417
G. Gail Edwards............... 3,992 11.03% $41.9375 11/03/07 105,286 539,901
</TABLE>
- ---------------
(1) No stock appreciation rights were granted to any named executive officer
during fiscal 1998. The option grants listed are non-qualified stock options
having a term of 10 years and one day; they become exercisable at the rate
of 20% on each of the first five anniversary dates of the grant.
(2) The options reflected in this table were granted at not less than fair
market value measured by the closing price of the Common Stock on the New
York Stock Exchange on the date of grant.
(3) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission.
(4) Richard A. Smith and Robert A. Smith do not participate in the Company's
1993 Equity Incentive Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information regarding stock options exercised
during fiscal 1998 and the number and value of stock options held at October 31,
1998 by the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
(#)(5) OPTIONS ($)
------------ --------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- --------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Richard A. Smith(3)............ -- -- -- --
Robert A. Smith(3)............. -- -- -- --
Paul R. Del Rossi(4)........... 10,166 $252,809 22,387/8,780 $164,675/$13,565
William B. Doeren.............. -- -- 4,130/16,075 $ 14,446/$25,794
John G. Berylson............... -- -- 5,145/7,542 $ 26,679/$19,868
G. Gail Edwards(6)............. 1,424 $ 12,460 0/9,688 $ 0/$15,664
</TABLE>
10
<PAGE> 13
- ---------------
(1) Represents the difference between the closing price of the Common Stock on
the New York Stock Exchange on the date of exercise and the option exercise
price.
(2) The value of unexercised in-the-money options is calculated by multiplying
the number of underlying shares by the difference between the closing price
of the Company's Common Stock on the New York Stock Exchange at October 30,
1998 ($37.375) and the option exercise price for those shares. These values
have not been realized.
(3) Richard A. Smith and Robert A. Smith do not participate in the Company's
1993 Equity Incentive Plan.
(4) The number of shares listed in the first column for Mr. Del Rossi includes
the surrender of vested options to purchase 10,166 shares of Common Stock at
various exercise prices. The Company paid Mr. Del Rossi an aggregate of
$252,809 in connection with those surrenders. That amount, which was
calculated based on the difference between the closing price of the Common
Stock on the New York Stock Exchange on the respective dates Mr. Del Rossi
surrendered these options and the various option exercise prices, is
included in the second column in this table.
(5) There are no outstanding SAR's.
(6) The number of shares listed in the first column for Ms. Edwards includes the
surrender of vested options to purchase 1,424 shares of Common Stock at
various exercise prices. The Company paid Ms. Edwards an aggregate of
$12,460 in connection with those surrenders. That amount, which was
calculated based on the difference between the closing price of the Common
Stock on the New York Stock Exchange on the respective dates Ms. Edwards
surrendered these options and the various option exercise prices, is
included in the second column in this table.
LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL YEAR
The following table provides information regarding Long-Term Incentive Plan
awards during the fiscal year ended October 31, 1998 to the executive officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER
PERIOD
NUMBER OF SHARES, UNTIL MATURATION OR
NAME UNITS OR OTHER RIGHTS PAYOUT
---- --------------------- --------------------
<S> <C> <C>
Richard A. Smith(1)............... -- --
Robert A. Smith(1)................ -- --
Paul R. Del Rossi(2).............. -- --
William B. Doeren(2).............. -- --
John G. Berylson(3)............... $5,340,559 2/5
G. Gail Edwards(1)................ -- --
</TABLE>
- ---------------
(1) Richard A. Smith, Robert A. Smith, Mr. Del Rossi and Ms. Edwards do not
participate in any of the Company's Long-Term Incentive Plans.
(2) Mr. Doeren participates in General Cinema Theatres, Inc. EVA Incentive Plan.
Mr. Del Rossi participated in the EVA Incentive Plan through fiscal 1997.
See the description of this plan under the Compensation Committee Report on
Executive Compensation.
(3) Mr. Berylson participates in the GCC Investments, Inc. Incentive Pool Plan
(the "Pool Plan"). See "Summary of the GCC Investments, Inc. Incentive Pool
Plan." The amount in such incentive pool allocated to Mr. Berylson in fiscal
1998 was $5,340,559, which is Mr. Berylson's share of 20% of the unrealized
gain from the Global TeleSystems, Inc. initial public offering after
deducting a preferred rate of return to the Company and certain other items.
Of this amount, $3,738,391 or 70% is payable in cash
11
<PAGE> 14
in equal installments of $1,246,130 over two years commencing November 23,
1998, and $1,602,168 or 30% is payable in restricted stock, which vests 20%
per year over five years. In accordance with the Pool Plan, the number of
shares of restricted stock awarded were based upon the closing price per
share of the Company's Common shares on the New York Stock Exchange on
October 30, 1998.
PENSION PLANS
The Company maintains a funded, qualified pension plan known as the GC
Companies, Inc. Retirement Plan (the "Retirement Plan"). Non-union employees of
the Company who have reached the age of 21 and completed one year of service
with 1,000 or more hours participate in the Retirement Plan, which pays benefits
upon retirement or termination of employment by reason of disability. Benefits
under the Retirement Plan become fully vested after five years of service with
the Company.
The Company also maintains a Supplemental Executive Retirement Plan (the
"SERP"). The SERP is an unfunded, nonqualified plan under which benefits are
paid from the Company's general assets to supplement Retirement Plan benefits.
Employees with an annual base salary at least equal to a self adjusting minimum
($160,000 as of January 15, 1999) are eligible to participate in the SERP.
Benefits under the SERP become fully vested after five years of service with the
Company. Former Harcourt General employees who became employees of the Company
in connection with the Spinoff have been given full credit under the SERP for
their service with and compensation from Harcourt General. At normal retirement
age, a participant with 25 or more years of service is entitled to payments
under the SERP sufficient to bring his or her combined annual benefit from the
Retirement Plan and the SERP, up to 50% of the participant's highest 60 month
average of annual pensionable earnings, less 60% of his or her estimated annual
primary Social Security benefit. If the participant has fewer than 25 years of
service or retired before age 62, the combined benefit is reduced. In computing
the combined benefit, "pensionable earnings" means base salary, including any
salary which may have been deferred.
The following table shows the estimated annual pension benefits payable to
employees in various compensation and years of service categories. The estimated
benefits apply to an employee retiring at age 65 in 1999 who elects to receive
his or her benefit in the form of a straight life annuity. These benefits
include amounts attributable to both the Retirement Plan and the SERP, in
aggregate, and are in addition to any retirement benefits that might be received
from Social Security.
ESTIMATED ANNUAL RETIREMENT BENEFITS
UNDER THE RETIREMENT PLAN AND THE SERP(1)
<TABLE>
<CAPTION>
TOTAL YEARS OF SERVICE
AVERAGE ------------------------------------------------------
PENSIONABLE 25
EARNINGS 5 10 15 20 OR MORE
- ----------- ------ -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
$100,000........... $10,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000
200,000........... 20,000 40,000 60,000 80,000 100,000
300,000........... 30,000 60,000 90,000 120,000 150,000
400,000........... 40,000 80,000 120,000 160,000 200,000
500,000........... 50,000 100,000 150,000 200,000 250,000
</TABLE>
- ---------------
(1) The amounts actually payable will be lower than the amounts shown above,
since the above amounts will be reduced by 60% of the participant's
estimated Social Security benefit.
12
<PAGE> 15
The following table shows the pensionable earnings and credited years of
service for the executive officers named in the Summary Compensation Table as of
October 31, 1998 and years of service creditable at age 65. Credited service may
not exceed 25 years for purpose of calculating retirement benefits under any of
the Company's retirement plans. Richard A. Smith and Robert A. Smith do not
participate in the Retirement Plan or the SERP.
<TABLE>
<CAPTION>
CREDITED YEARS OF SERVICE
PENSIONABLE EARNINGS -------------------------------
FOR YEAR ENDED AT AT
NAME OCTOBER 31, 1998 OCTOBER 31, 1998 AGE 65
---- -------------------- ---------------- ------
<S> <C> <C> <C>
Mr. Del Rossi.............. $330,000 18 27
Mr. Doeren................. $330,000 3 16
Mr. Berylson............... $337,500 5 25
Ms. Edwards................ $270,000 2 24
</TABLE>
- ---------------
(1) Pursuant to his previous employment agreement with the Company, Mr. Del
Rossi received two years of service credit for each of his first five years
of employment with the Company after the Spinoff for purposes of calculating
his benefits under the SERP. Accordingly, Mr. Del Rossi has 23 years of
service credit under the SERP. See "Transactions Involving Management."
TRANSACTIONS INVOLVING MANAGEMENT
Paul R. Del Rossi
On December 14, 1993, the Company entered into an employment agreement with
Mr. Del Rossi, then President and Chief Executive Officer of General Cinema
Theatres, Inc. for an initial term of four years.
On November 1, 1997, the Company entered into an amended employment
agreement (the "Employment Agreement") with Mr. Del Rossi, Chairman of General
Cinema Theatres, for a term of four years, pursuant to which Mr. Del Rossi will
serve as Chairman of General Cinema Theatres, Inc. and receive a salary of
$330,000 for fiscal year 1998, and a salary of at least $237,500 per year for
fiscal years 1999 through October 31, 2002, unless the Agreement is terminated
earlier. Mr. Del Rossi will no longer participate in the EVA Plan, but will
receive all previously earned EVA bonuses, and may earn a bonus for
extraordinary performance as determined by the President of the Company.
In addition, Mr. Del Rossi's stock options vested as of October 31, 1998.
His retirement benefits will continue under the Company's Retirement Plan. In
lieu of benefits provided under the Company's SERP, the Company will fund
$181,500 per year to a trust for his named beneficiaries. Through October 31,
2002, Mr. Del Rossi will receive family coverage under the Company's Executive
Medical Plan, group term life insurance coverage, eligibility to participate in
the Key Executive Deferred Compensation Plan and other fringe benefits afforded
vice presidents of the Company. The Agreement may be terminated by the Company
only for cause, death or disability. The Agreement may be terminated by Mr. Del
Rossi upon a change of control, defined to be a change in Board composition
after a change of ownership resulting in the Smith Family Group controlling less
than twenty percent (20%) of the Company or a third party obtaining over twenty
percent (20%) of the voting stock of the Company.
If the Agreement is terminated due to total disability or change of
control, salary to the end of term will be paid in a lump sum and all benefits
will continue to the end of the term. If the Agreement is terminated by Mr. Del
Rossi or the Company for cause, salary and bonuses will cease and benefits will
cease, except for pension benefits and payments into trust in lieu of SERP
payments. In the event of Mr. Del Rossi's death, salary will cease but
beneficiaries will be entitled to group life insurance coverage, pension and
trust payments will continue and Mr. Del Rossi's spouse will be entitled to
family health coverage until the end of the original term.
13
<PAGE> 16
In addition, Mr. Del Rossi has agreed not to compete with the Company
throughout the term of the Agreement and for a period of eighteen (18) months
thereafter in the motion picture exhibition business.
For purposes of the Employment Agreement, the term "cause" means a breach
of duty in the course of employment involving fraud, acts of dishonesty, acts of
moral turpitude, repeated insubordination, failure to devote his full time,
loyalty and best efforts to the performance of his duties or conviction of a
felony.
Mr. Del Rossi is a participant in the Company's Key Executive Stock
Purchase Loan Plan (the "Loan Plan"). From November 1, 1996 through January 15,
1999, and currently, the largest aggregate amount of indebtedness outstanding by
Mr. Del Rossi under the Loan Plan was $420,000 (the "Loans"), and the annual
rate of interest on the Loans at all times during such period was five percent
(5.0%). The principal purpose of the Loan Plan, which provides loans to key
employees to finance their purchase of shares of Common Stock, is to encourage
the acquisition and retention of Common Stock by such employees so that the
continuing proprietary interest of such employees in the Company may serve as an
additional incentive to them. Each loan under the Loan Plan is evidenced by a
promissory note bearing interest at a rate determined by the Compensation
Committee of the Board of Directors of the Company, and is secured by a pledge
of the securities purchased with the loan proceeds. The unpaid principal amount
of each such loan (and any unpaid interest) becomes due and payable seven months
after the loan participant's employment with the Company has terminated. The
unpaid principal amount of a loan of a participant who ceases to be an employee
of the Company (a) more than four years after the date of the loan or (b) by
reason of involuntary discharge (except for cause), death, or retirement or
disability, shall be repayable at the option of the participant (or his legal
representative, as the case may be) either in cash or in the number of shares
obtained with the proceeds of the loan. The aggregate unpaid principal amount of
all stock purchase loans outstanding under the Loan Plan may not exceed $3.0
million at any time.
William B. Doeren
Pursuant to an agreement between Mr. Doeren and the Company, effective
August 1995, Mr. Doeren is entitled to receive severance payments in the event
his employment is terminated in certain situations. If the Company terminates
Mr. Doeren's employment other than for cause or other than due to his total
disability or death or if Mr. Doeren voluntarily terminates his own employment
due to a change of control of the Company, Mr. Doeren will receive an amount
equal to his then-current annual salary which amount will be paid in 12 monthly
installments following such termination but will be reduced by any amounts
received by him from other employment during the period beginning six months and
ending 12 months following such termination.
G. Gail Edwards
The Company has provided loans totaling $120,000 to Ms. Edwards, the
Company's Vice President, Chief Financial Officer and Treasurer. The loans bear
interest at 5% per annum (with no interest on $100,000 thereof for fiscal year
1997) and are payable in annual principal installments equal to the lesser of
$20,000 per year or 20% of Ms. Edwards annual bonus commencing January 31, 1998.
The loans have a current principal balance of $80,000 and are unsecured and
payable in full on or before December 31, 2002 or sooner if Ms. Edwards'
employment is terminated for cause.
---------------------
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934, each as amended, that might incorporate future filings, including this
proxy statement, in whole or in part, the following Compensation Committee
Report on Executive Compensation and Stock Performance Graph shall not be deemed
to be incorporated by reference into any such filings, nor shall such sections
of this proxy statement be deemed to be incorporated into any future filings
made by the Company under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
14
<PAGE> 17
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of William L. Brown (Chairman),
Peter C. Read, Francis E. Sutherby and Leonard A. Schlesinger. The members of
the Compensation Committee are all independent directors.
The principal responsibility of the Committee is to review the performance
of, and determine the compensation for, certain of the officers of the Company
who are not also executive officers of Harcourt General. The individuals in this
group include the named executive officers in the Summary Compensation Table.
The compensation of Harcourt General's executive officers who are also executive
officers of the Company is determined by Harcourt General's Compensation
Committee.
Compensation Policies
The principal objectives of the Company's executive compensation program
are to reward competitively its executive officers in order to attract and
retain excellent management and to provide incentives that will most sharply
focus the attention of those individuals on the goal of increasing the
profitability of the Company over both the short and long terms.
Early in each fiscal year, the Committee considers the recommendations of
the Chief Executive Officer, which are supported by data generated by the
Company's Human Resources Department, for each component of compensation of the
Company's executive officers. The Committee reviews those recommendations and
then approves them or makes such modifications as it deems appropriate.
The principal components of the Company's compensation program are:
Base Salary:
Base salary is determined with reference both to salary survey
information from recognized compensation consulting firms and to each
executive officer's level of responsibility, experience and performance.
The salary survey data is used to establish benchmark amounts for both base
salary and total cash compensation for each executive position. Comparisons
are made to a range of companies included in such salary surveys, with the
principal selection criteria for comparisons being similar revenues to the
Company or to the appropriate division within the Company. While there are
no hard and fast rules which bind the Committee, the Company generally sets
its salary and total cash compensation benchmarks (assuming that maximum
bonuses are achieved) for executive officers at the 75th percentile of the
comparison group of companies in order to compete for and retain the best
management talent available. Because the Company competes for executive
talent with a broad range of companies, the Committee does not limit its
comparison information for compensation purposes to the companies included
in the peer group in the Stock Performance Graph.
The Committee reviews in detail the base salary levels for each of the
executive officers of the Company. While the Committee uses the benchmarks
as a reference point, a particular individual's base salary may vary from
the benchmark depending upon his salary history, experience, individual
performance, contractual obligations of the Company, guidelines determined
by the Chief Executive Officer with respect to salary increases for the
entire Company, and the subjective judgment of the Committee.
Annual Incentive Plan:
The bonus program is intended to put substantial amounts of total cash
compensation at risk with the intent of focusing the attention of the
executive officers on achieving both the Company's and their
15
<PAGE> 18
division's performance goals and their individual goals, thereby
contributing to profitability and building shareholder value.
The determination of annual bonuses for executive officers is based
principally on the achievement of performance objectives by the operating
division for which the executive officer is responsible and the executive's
attainment of individual performance objectives which typically include
achievement of specific tasks.
Absent extraordinary circumstances, if the financial performance
targets are exceeded, bonus awards are not increased over the maximum bonus
values established by the Committee. If the performance targets are not
met, bonus awards are generally reduced at the discretion of the Committee.
If the Company and/or the relevant division falls sufficiently short of its
performance target, there is a presumption that bonuses would not be paid
absent special circumstances. If corporate and/or division performance
targets are met, but an individual falls short of his or her performance
goals, the individual's bonus could be reduced or eliminated in the
discretion of the Committee.
Prior to fiscal 1997, the economic performance objectives for Mr.
Doeren and the senior executives of General Cinema Theatres, Inc. included
operating cash flow, film gross profit, patronage and concession sales. The
inclusion and relative weighting of these several objectives varied
depending on the scope of each individual's responsibilities. For fiscal
1997 and beyond, the Board and the Compensation Committee have adopted an
Economic Value Added (EVA)(R) Incentive Plan, described under Long Term
Incentive Programs below, which replaces the current bonus plan for
executives of General Cinema Theatres, Inc.
Stock Incentives:
The Committee's purpose in awarding equity based incentives,
principally in the form of stock options which vest over a five year period
and terminate ten years from the date of grant, is to achieve as much as
possible an identity of interest between the executives and the long term
interest of the stockholders.
The principal factors considered in determining which certain
executives of the Company (including certain of the named executive
officers) were awarded equity based compensation in fiscal 1998, and in
determining the types and amounts of such awards, were salary levels,
equity awards granted to executives at other companies, as well as the
performance, experience and level of responsibility and length of service
of each executive officer. Mr. Doeren and the senior executives of General
Cinema Theatres, Inc., who participate in the Theatre EVA Plan, have stock
incentives awarded in accordance with that Plan.
Long Term Incentive Programs:
General Cinema Theatres, Inc. The Board and the Compensation
Committee adopted an Economic Value Added (EVA)(R) Incentive Plan for
executives of General Cinema Theatres, Inc. effective for fiscal year 1997
and beyond. The purpose of the EVA Incentive Plan is to provide incentive
compensation to certain key employees, including executive officers of
General Cinema Theatres, Inc., in a form which attempts to correlate the
incentive compensation payment to increases in the Company's value to its
stockholders. In general, the EVA is the excess of net operating profit
after taxes, with certain adjustments, less a capital charge. The capital
charge is a historical approximation of the return that can
- ---------------
EVA(R) is registered trademark of Stern Stewart & Co.
16
<PAGE> 19
be expected by the providers of the Company's capital. The Committee
believes that EVA is the financial performance measure which most closely
corresponds with increases in shareholder value.
EVA performance is determined by reference to the amount of
improvement or deterioration in EVA within a determined interval amount. If
the actual annual EVA is in excess of the target EVA for such year, the
performance calculation will produce an incentive compensation amount in
excess of the target incentive award; if the annual EVA is less than the
target EVA but within the interval, the performance calculation will
produce an incentive compensation amount which is less than the target EVA
award. Individual target incentive awards ("Target Bonuses") under the EVA
Incentive Plan range between 35% and 50% of base compensation. For fiscal
1997 and subsequent Plan years, the target EVA will be the sum of the
actual EVA for the prior year, plus an expected EVA improvement amount to
be determined by the Committee. The expected EVA improvement amount has
been determined for five years as follows: $2.3 million in 1997, $2.4
million in 1998, $2.5 million in 1999, $2.6 million in 2000, and $2.8
million in 2001. In 1998, the Company's EVA did not fall within the
interval amount, and did not reach the target EVA. As a result, Target
Bonuses were not achieved.
Pursuant to the EVA Incentive Plan, there are no limitations on the
amounts an executive may earn for any one year. The "Reserve Account"
feature of the EVA Incentive Plan, however, ensures that extraordinary EVA
improvements are sustained before extraordinary bonus awards are paid. Each
year the bonus declared is added to the outstanding Reserve Account balance
(which has an initial balance of zero), resulting in a balance available
for payment. Up to Target Bonus is immediately drawn out, and then
one-third of any remaining balance is also drawn out, with the remaining
two-thirds carried forward to the next year. If the Reserve Account is
greater than Target Bonus, then Target Bonus plus one-third of the
remainder will be drawn. Of this draw, a fixed amount is to be paid
automatically and the remainder is contingent upon the achievement of
professional objectives. A Reserve Account is "at risk" in the sense that
performance above target must be sustained in order for the bank to remain
positive. If performance is below target, the Reserve Account will be drawn
down, and can even go negative. This "at risk" amount maintains the fixed
sharing relationship between long term cumulative pay and cumulative
performance.
Upon termination of employment due to death, disability or retirement,
the available balance in the Reserve Account will be paid to the
terminating executive of his designated beneficiary or estate. Executives
who voluntarily leave to accept employment elsewhere or who are terminated
for cause forfeit any positive Reserve Account balances.
GCC Investments, Inc. In 1996 the Board and the Compensation
Committee adopted the GCC Investments, Inc. Incentive Pool Plan, which was
approved by the stockholders at the 1997 Annual Meeting, for executives of
the Company's investment group. This incentive pool provides payments based
upon criteria that measure realized returns to the Company from its
investments over time, and is described in detail below under the caption
"The GCC Investments, Inc. Incentive Pool Plan."
Summary of the GCC Investments, Inc. Incentive Pool Plan
The Plan is administered by the Committee which is composed of
non-employee directors who are not eligible to participate in the Plan.
ELIGIBILITY
The employees eligible (the "Eligible Employees") to participate in and
receive compensation under the Plan are the officers of GCCI with the titles of
Chief Investment Officer, Senior Vice President and Senior Investment Officer.
Two employees of GCCI currently are eligible to participate in the Plan.
17
<PAGE> 20
DETERMINATION OF AWARDS
An award pool is determined based on the net gains resulting from (i) a
cash profit being realized as a result of a disposition of an investment made by
GCCI, (ii) securities becoming transferable pursuant to an initial public
offering, (iii) a reevaluation of an investment six years from the date of the
investment or (iv) such other similar event that the Committee may designate
(collectively, a "Sale Event"). The net gains attributable to each Sale Event
are determined based on the amount of cash realized or realizable by GCCI as a
result of the Sale Event less an assumed rate of return and certain deductions
which reflect the cost of doing business. The Committee shall establish at or
prior to the beginning of each fiscal year (or by such later date as may be
permitted under Section 162(m) of the Internal Revenue Code for the
establishment of goals pursuant to which performance-based compensation is to be
payable for a particular period), the specific methodology to be applied during
the fiscal year to determine net gains (e.g., what after-tax losses and expenses
are to be deducted in determining net gains). Once the net gain from any Sale
Event has been determined, 20% of such amount is set aside for awards to be made
under the Plan.
For any pool which relates to an investment made prior to November 1, 1996,
46% of such pool shall be allocated to the Chief Investment Officer and 34% will
be allocated to the Senior Vice President employed by GCCI on that date.
For any pool which relates to an investment made on or after November 1,
1996, 35% of such pool shall be allocated to the Chief Investment Officer, 25%
to the Senior Vice President and 20% will be reserved for allocations to newly
hired Senior Vice Presidents, if any, or Senior Investment Officers. When an
Eligible Employee is hired, the Committee may allocate a pool percentage to such
individual, which may vest over such period of time as the Committee may deem
reasonable.
Once a total of 80% of pool percentages have been allocated to Eligible
Employees, the Committee may then also allocate another 10% to newly hired
Eligible Employees. In no event may more than 90% of pool percentages be
allocated to Eligible Employees under the Plan. Once a total of 90% of pool
percentages have been allocated to Eligible Employees, future allocations to
newly hired Eligible Employees will be deducted from Eligible Employees who
already have allocations on a pro rata basis so that total allocations to
Eligible Employees never exceed 90%. In addition, no Eligible Employee (other
than the Chief Investment Officer) will ever be entitled to a portion of a pool
in excess of 25% of the total pool. The portion of any pool which is not
allocated or used for payments to Eligible Employees may be used to cover
expenses or losses or make other payments to GCCI employees.
FORM AND PAYMENT OF AWARDS
If an Eligible Employee is entitled to a pool allocation, 70% of such pool
allocation will be paid in such number of installments as the Committee may
specify. The remaining 30% of an Eligible Employee's pool allocation shall be
paid in cash or awards of restricted Common Stock awarded under the 1993 Equity
Incentive Plan, or a combination thereof, as determined by the Compensation
Committee. This portion of an Eligible Employee's pool allocation shall be
payable, or in the case of restricted Common Stock shall vest, in a number of
substantially equal installments specified by the Committee.
Except as described under "Termination of Employment" below and except with
respect to the first in the series of any installment payments, an Eligible
Employee must be employed on the payment or vesting date to be entitled to
receive or vest in such installment. For any part of an Eligible Employee's pool
allocation awarded in cash, installments after the first installment shall be
credited with interest until paid at an annual rate specified by the Committee
from time to time.
Any Eligible Employee entitled to a cash payment under the Plan may elect
to defer payment of up to 100% of any such amount in accordance with the terms
of the Plan. Any such deferred amounts will be
18
<PAGE> 21
credited with interest until paid based on an annual rate specified by the
Committee from time to time. However, alternatively, the Committee may, from
time to time, select one or more investment vehicles to be made available as a
measuring standard for crediting earnings or losses on such deferred amounts and
allow an annual eligible employee to select from such vehicle.
TERMINATION OF EMPLOYMENT
Any Eligible Employee who voluntarily terminates employment from the
Company or who is terminated for cause prior to receiving a cash installment or
vesting in a restricted stock award shall forfeit all rights to such benefits.
An Eligible Employee who dies or becomes permanently disabled or who retires
with the approval of GCCI shall be entitled to payment of any unpaid amount in
accordance with the remainder of the installment schedule. An Eligible Employee
who is terminated by the Company for reasons other than for cause or who
voluntarily terminates employment will be entitled to receive all amounts vested
but will forfeit any unvested amounts. In addition, such an Eligible Employee
shall be entitled to share in the proceeds of any Sale Event which occurs within
twelve months following termination to the extent vested, at the time of
termination.
CHANGE OF CONTROL
The Plan provides that in the event of a "Change in Control" (as defined in
the Plan) of the Company, all shares of restricted stock awarded shall
immediately become fully vested and any non-vested installment payments shall be
paid.
AMENDMENT OR TERMINATION OF THE PLAN
The Company may at any time amend, suspend or discontinue the Plan in whole
or in part. Generally, no such action may, without the approval of the Eligible
Employees, affect any Eligible Employee's rights to benefits attributable to
Sale Events which have already occurred.
CALCULATION OF PLAN BENEFITS FOR FISCAL YEAR 1998
For Fiscal Year 1998, total benefits allocated under the GCC Investments,
Inc. Incentive Pool Plan totaled $9,287,928, representing 20% of the unrealized
gain from the initial public offering of Global TeleSystems, Inc. ("GTS")
transaction, after deducting a preferred rate of return to the Company, and
certain other items. This amount is payable 70% in cash in three equal
installments over two years, and 30% in restricted stock which vests 20% per
year over five years. Pursuant to the Plan, a "Sale Event" occurs for purposes
of determining plan benefits when restrictions on shares that have been the
subject of an initial public offering are no longer in effect. GTS shares were
the subject of an initial public offering in February 1998. However, the shares
were subject to restrictions that expired in August 1998. The proposed Second
Amendment to the Pool Plan would eliminate the payment of benefits as a result
of an initial public offering, and tie the payment of benefits to cash sales.
See "Proposal to Approve the Second Amendment to the GCC Investments, Inc.
Incentive Pool Plan" below.
Compensation of the Chief Executive Officer
Richard A. Smith is also the Chairman and Chief Executive Officer of
Harcourt General and a principal member of the Smith Family Group, which owns
approximately 29.2% of the outstanding Common Stock of the Company. All of Mr.
Smith's cash and non-cash compensation is paid directly by Harcourt General and
is approved by the Harcourt General Compensation Committee. Mr. Smith receives
no compensation directly from the Company. However, Harcourt General provides
certain management and other corporate services to the Company, including Mr.
Smith's services as Chief Executive Officer of the Company. During fiscal 1998,
19
<PAGE> 22
the Company paid or accrued $477,225 to Harcourt General for all of its
services, of which $242,838 was attributable to Mr. Smith's services. While the
Special Review Committee of the Company reviews each year the appropriateness of
the charges by Harcourt General to the Company, neither this Committee nor the
Special Review Committee plays any role in determining the compensation that Mr.
Smith receives from Harcourt General.
Compliance with the Internal Revenue Code
The Internal Revenue Code (the "Code") generally disallows a tax deduction
to public companies for compensation in excess of $1 million per year paid to
each of the executive officers named in the Summary Compensation Table who are
employed by the Company on the last day of the fiscal year. The Committee and
the Board of Directors adopted the GCC Investments, Inc. Incentive Pool Plan,
which was approved by the stockholders of the Company at the 1997 Annual Meeting
(see "The GCC Investments, Inc. Incentive Pool Plan"). This Plan allows the
Committee to continue to award stock incentives and cash bonuses to executives
of GCC Investments, Inc. based on objective criteria. The stock incentives and
cash bonuses awarded under the Plan will be characterized as "performance based"
compensation and therefore will be fully deductible by the Company. Compensation
resulting from awards under the Company's 1993 Equity Incentive Plan is not
subject to the deductibility limit. The Committee will continue to monitor the
requirements of the Code to determine what actions should be taken by the
Company in order to preserve the tax deduction for executive compensation to the
maximum extent, consistent with the Company's continuing goals of providing the
executives of the Company with appropriate incentives and rewards for their
performance.
COMPENSATION COMMITTEE:
William L. Brown, Chairman
Peter C. Read
Francis E. Sutherby
Leonard A. Schlesinger
20
<PAGE> 23
STOCK PERFORMANCE GRAPH
The graph set forth below compares the total cumulative return on the
Company's Common Stock to the total cumulative return during the five fiscal
years ended October 31, 1998 of the Standard & Poor's 500 Index and a peer group
index consisting of AMC Entertainment Inc., Carmike Cinemas, Inc., Cineplex
Odeon Corp. and Regal Cinemas, Inc. (Note: Cineplex Odeon Corp. and Regal
Cinemas, Inc. are no longer publicly traded.) The graph assumes a $100
investment in the Company's Common Stock and in each index at October 31, 1993
and that all dividends were reinvested. The common stocks of the companies in
the peer group indices have been weighted annually to reflect relative stock
market capitalization.
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
GC COMPANIES, INC. PEER GROUP INDEX S&P 500 INDEX
------------------ ---------------- -------------
<S> <C> <C> <C>
10/31/93 100.00 100.00 100.00
10/31/94 85.61 108.12 104.87
10/31/95 97.73 122.04 132.59
10/31/96 102.65 130.16 164.55
10/31/97 130.30 169.63 217.39
10/31/98 113.26 104.81 265.19
</TABLE>
The comparisons provided in this graph are not intended to be indicative of
possible future performance of the Company's stock.
2. PROPOSAL TO APPROVE THE SECOND AMENDMENT TO THE
GCC INVESTMENTS, INC. INCENTIVE POOL PLAN
In 1996 the Compensation Committee (the "Committee") of the Board of
Directors established the GCC Investments, Inc. Incentive Pool Plan (the "Plan")
and on March 12, 1997 the shareholders voted to approve such Plan. The Plan is
designed to provide incentive compensation to certain senior executives of GCC
Investments, Inc. ("GCCI"), a wholly-owned subsidiary of the Company, which
makes strategic
21
<PAGE> 24
investments in operating companies. John G. Berylson, son-in-law of Richard A.
Smith and brother-in-law of Robert A. Smith, is Senior Vice President and Chief
Investment Officer of the Company and President of GCCI. The Plan was designed
to comply with the performance-based compensation exception to the million
dollar cap on deductible compensation imposed under Section 162(m) of the
Internal Revenue Code of 1986 (the "Code") for any taxable year paid to a person
named in the summary compensation table and employed by the Company on the last
day of the taxable year. Under Section 162(m) of the Internal Revenue Code of
1986 material amendments to the Plan must also be approved by shareholders.
See the summary of the Plan under the Compensation Committee Report on
Executive Compensation.
Material Changes Effected by the Amendment. A Sale Event under the Plan
occurs in connection with shares of an investment that are the subject of an
initial public offering on the date the investment becomes fully transferable
without restriction. The Second Amendment to the Plan changes the Plan to
provide that for initial public offerings occurring after the Amendment becomes
effective, cash payments under the Plan will not occur until the Company
actually receives cash as a result of the sale of its investment. This change
matches the cash payments to cash profits and eliminates cash payments based
upon the value of shares that have been the subject of an initial public
offering on the date of the release of restriction on shares, thus delaying
payments until the investment is realized. This change may result in a decrease
in amounts payable versus the existing plan. In addition, the vesting schedule
for restricted Company stock granted in connection with an initial public
offering and the pool installment payment schedule will be measured from the
date of the initial public offering. (In no event will restricted stock vest
prior to the Company's investment becoming fully transferable.) This change may
result in the acceleration of cash installments and vesting of restricted
Company stock awarded under the Plan. The amount of restricted Company stock to
be awarded will be based on the closing price of Company stock on the date of
the initial public offering, rather than the end of the fiscal quarter following
the award. This last change may result in an increase or decrease in the value
of the restricted Company stock ultimately awarded under the Plan.
Effective Date of the Amendment. The Amendment will become effective upon
the affirmative vote of the holders for at least a majority of the shares of
Common Stock present or represented and entitled to vote at the Annual Meeting.
Abstentions will be treated as votes cast. Broker non-votes will be treated as
present but not voting. On this proposal, abstentions and broker non-votes will
have the same effect as votes against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE SECOND AMENDMENT TO THE PLAN.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Although Delaware law does not require that the selection by the Board of
Directors of the Company's auditors be approved each year by the stockholders,
the Board of Directors believes it is appropriate to submit its selection to the
stockholders for their approval and to abide by the result of the stockholders'
vote. The Board of Directors recommends that the stockholders ratify the
appointment of Deloitte & Touche LLP as independent auditors to audit the
financial statements of the Company for the fiscal year ending October 31, 1999.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they wish, and will be
available to respond to appropriate questions from stockholders. The Company
paid or accrued approximately $607,715 for audit and tax services rendered by
Deloitte & Touche LLP for the fiscal year ended October 31, 1998.
22
<PAGE> 25
Approval of the proposal to ratify the selection of Deloitte & Touche LLP
as the Company's independent auditors for the current fiscal year requires a
favorable vote of a majority of the issued and outstanding Common Stock
represented and entitled to vote at the Annual Meeting. Abstentions will be
treated as votes cast. Broker non-votes will be treated as present but not
voting. On this proposal, abstentions and broker non-votes will have the same
effect as votes against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING OCTOBER 31, 1999.
4. OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the meeting. If any other matters should be properly brought
before the meeting, it is the intention of the persons named in the enclosed
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
AND NOMINATIONS FOR DIRECTOR
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD IN MARCH 2000
In order for stockholder proposals which are submitted pursuant to Rule
14a-8 of the Securities Exchange Act of 1934 (the "Exchange Act") to be
considered by the Company for inclusion in the proxy material for the Annual
Meeting of Stockholders to be held in March 2000, they must be received by the
Secretary of the Company by November 1, 1999.
For proposals that stockholders intend to present at the Annual Meeting of
Stockholders to be held in March 2000 outside the processes of Rule 14a-8 of the
Exchange Act, unless the stockholder notifies the Secretary of the Company of
such intent by November 1, 1999, any proxy that management solicits for such
Annual Meeting will confer on the holder of the proxy discretionary authority to
vote on any such proposal properly presented at the meeting.
In order for suggestions by stockholders for nominees for director to be
considered, they must be received by the Secretary of the Company by November 1,
1999.
All such communications to the Secretary of the Company must be in writing
and must be received by the Company at its principal executive offices (27
Boylston Street, Chestnut Hill, Massachusetts 02467) by the applicable date.
By Order of the Board of Directors
PHILIP J. SZABLA
Secretary
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, ALL STOCKHOLDERS ARE URGED TO
PROMPTLY COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
23
<PAGE> 26
EXHIBIT "A"
GCC INVESTMENTS, INC.
INCENTIVE POOL PLAN
SECOND AMENDMENT
Pursuant to the powers reserved to it in Section 14 of the GCC Investments,
Inc. Incentive Pool Plan (the "Plan"), GCC Investments, Inc. (the "Company")
hereby amends the Plan as follows:
1. The Plan is hereby amended by adding a new Article 7A to follow
Article 7 to read as follows:
"7A. Special Rules for Payments Resulting from Initial Public
Offerings. Solely for purposes of determining the amount and payment of
Pool amounts resulting from Sale Events which are initial public offerings
the following special rules shall apply and shall supersede any other
provision of the Plan to the contrary:
(a) The Pool amount shall initially be determined as of the date of
the initial public offering without regard to the existence of any
restrictions.
(b) The Pool amount determined as of the date of the initial public
offering shall be adjusted at the time of cash realization in accordance
with the terms of the Plan. In the event of any loss realized by the
Company: (1) seventy percent (70%) of any resulting decrease in such a
Pool amount shall be reflected in a decrease in any cash installments
remaining to be paid to the Participants to the extent necessary to
account for such decrease (including, without limitation, in order to
account for any installments already made) and (2) thirty percent (30%)
of any resulting decrease shall be reflected to the extent necessary to
account for such decrease in the forfeiture of any shares of restricted
Common Stock which have not yet vested.
(c) The value of the restricted Common Stock granted in connection
with the Pool will be based on the closing price of the Common Stock on
the New York Stock Exchange on the date of the initial public offering.
(d) The vesting period for shares of restricted Common Stock
granted in connection with the Pool will begin on the date of the
initial public offering, but in no event will any Participant vest in
any restricted Common Stock until such time as the Company receives cash
proceeds with respect to the relevant investment.
(e) No cash payments shall be made to any Participant until such
time as the Company receives cash proceeds with respect to the relevant
investment."
2. Section 10 of the Plan is hereby amended by adding a new paragraph
(e) at the end thereof to read as follows:
"(e) Notwithstanding any other provision of the Plan to the
contrary, a Participant who has completed at least twelve years of
employment with GCC Investments, Inc. or Harcourt General, Inc. but
excluding any other affiliates, and who terminates employment other than
for cause, shall be entitled to (a) receive any pool installment payment
relating to Sale Events occurring prior to such termination of
employment and (b) vest in any restricted Common Stock awarded under the
GCC Plan, regardless of whether he or she is employed as of the
scheduled payment date or vesting date, whichever is applicable."
3. This Amendment is effective for Sales Events occurring after
October 31, 1998.
4. Except as herein amended, the provisions of the Plan shall remain
in full force and effect.
24
<PAGE> 27
IN WITNESS WHEREOF, the Company has caused this Second Amendment to the
Plan to be executed on this day of , 1999.
GCC INVESTMENTS, INC.
By:
25
<PAGE> 28
1251-PS-99
<PAGE> 29
Wachovia Corporate Services, Inc.
Trust Services Division
301 North Main Street
Winston-Salem, North Carolina 27150-3099
January 22, 1999
TO: Participants in the GC Companies, Inc.
Employee Stock Ownership Plan
FROM: Wachovia Bank of North Carolina, N.A.
Trustee of the Employee Stock Ownership Plan
As a participant in the non-contributory Employee Stock Ownership Plan
("ESOP") of GC Companies, Inc., which owns shares of GC Companies, Inc. Common
Stock ("Common Stock"), you are entitled to instruct the Trustee on how to vote
the shares of Common Stock in your account on matters scheduled to come before
the Annual Meeting of Stockholders of GC Companies, Inc., to be held on Friday,
March 5, 1999.
A proxy statement, voting instruction card and return envelope are
enclosed. Please complete, date and sign the voting instruction card and mail it
promptly in the return envelope to exercise your right to direct the Trustee
with respect to shares of Common Stock allocated to your account.
If you own shares of Common Stock outside of the ESOP, you will receive
similar materials for those shares in a separate mailing. Please return both
cards in their separate return envelopes if you wish to fully participate in the
matters being submitted to the stockholders of GC Companies, Inc.
<PAGE> 30
GC COMPANIES, INC.
COMMON STOCK PROXY COMMON STOCK PROXY
ANNUAL MEETING OF STOCKHOLDERS - MARCH 5, 1999
Robert A. Smith, G. Gail Edwards, and Philip J. Szabla and each of them (a
majority of those present and acting to have all the powers hereunder), with
several powers of substitution, are hereby authorized to represent and vote all
shares of Common Stock of the undersigned at the Annual Meeting of Stockholders
of GC Companies, Inc. to be held at the corporate headquarters of GC Companies,
Inc., 27 Boylston Street, Chestnut Hill, Massachusetts on Friday, March 5, 1999
at 10:00 A.M. and at any adjournments thereof. The undersigned hereby revokes
any Proxy previously given and acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated January 26, 1999 and a copy of the Annual
Report for the year ended October 31, 1998.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. THE BOARD OF DIRECTORS OF GC COMPANIES, INC. RECOMMENDS A VOTE FOR
THE NOMINEES NAMED BELOW, FOR PROPOSAL 2, AND FOR PROPOSAL 3. IF THIS PROXY IS
SIGNED AND RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY WILL
BE SO VOTED.
ELECTION OF CLASS II DIRECTOR
Nominee: PETER C. READ
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE)
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTOR [ ] [ ] 2. APPROVAL OF SECOND [ ] [ ] [ ]
(SEE REVERSE) AMENDMENT TO
GCC INVESTMENTS, INC.
INCENTIVE POOL PLAN
FOR AGAINST ABSTAIN
3. APPROVAL OF DELOITTE & [ ] [ ] [ ]
TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY
FOR THE CURRENT FISCAL YEAR
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT. THE MEETING.
For joint accounts, each owner should sign.
Executors, Administrators, Trustees, etc.
should give full title.
Signature __________________________Date_______________
Signature __________________________Date_______________
DETACH HERE
</TABLE>
<PAGE> 31
CONFIDENTIAL VOTING INSTRUCTIONS
TO: WACHOVIA BANK OF NORTH CAROLINA, N.A.
AS TRUSTEE UNDER THE
GC COMPANIES, INC.,
EMPLOYEE STOCK OWNERSHIP PLAN
WITH RESPECT TO THE ANNUAL MEETING OF STOCKHOLDERS OF
GC COMPANIES, INC. - MARCH 5, 1999
I hereby instruct the Trustee to vote (in person or by proxy) all shares of
Common Stock of GC Companies, Inc. which are credited to my account under the
above-referenced Plan at the Annual Meeting of Stockholders of GC Companies,
Inc. to be held at the corporate headquarters of GC Companies, Inc., 27 Boylston
Street, Chestnut Hill, Massachusetts on Friday, March 5, 1999 at 10:00 a.m. and
at any adjournments thereof. The undersigned hereby revokes any Proxy
previously given and acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated January 26, 1999 and a copy of the Annual Report for the
year ended October 31, 1998.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. THE BOARD OF DIRECTORS OF GC COMPANIES, INC. RECOMMENDS A VOTE FOR
THE NOMINEES NAMED BELOW, FOR PROPOSAL 2, AND FOR PROPOSAL 3. IF THIS PROXY IS
SIGNED AND RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY WILL
BE SO VOTED.
ELECTION OF CLASS II DIRECTOR
Nominee: PETER C. READ
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE)
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTOR [ ] [ ] 2. APPROVAL OF SECOND [ ] [ ] [ ]
(SEE REVERSE) AMENDMENT TO
GCC INVESTMENTS, INC.
INCENTIVE POOL PLAN
FOR AGAINST ABSTAIN
3. APPROVAL OF DELOITTE & [ ] [ ] [ ]
TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY
FOR THE CURRENT FISCAL YEAR
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT. THE MEETING.
For joint accounts, each owner should sign.
Executors, Administrators, Trustees, etc.
should give full title.
Signature __________________________Date_______________
Signature __________________________Date_______________
</TABLE>
