<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ] 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
(617) 278-5600
[GC COMPANIES LOGO]
January 28, 2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 15, 2000
The Annual Meeting of Stockholders of GC Companies, Inc. will be held at
10:00 a.m., Eastern Standard Time, on Wednesday, March 15, 2000, AT THE GENERAL
CINEMA THEATRE IN FRAMINGHAM, MASSACHUSETTS, LOCATED ON FLUTIE PASS, OFF ROUTE
9, ADJACENT TO THE NATICK MALL, for the following purposes:
1. To elect two Class III directors in accordance with the By-Laws of the
Company.
2. 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.
3. 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 LOGO]
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 15, 2000
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 Wednesday,
March 15, 2000, AT THE GENERAL CINEMA THEATRE IN FRAMINGHAM, MASSACHUSETTS,
LOCATED ON FLUTIE PASS, OFF ROUTE 9, ADJACENT TO THE NATICK MALL, 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 nominees for director named herein, 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 28, 2000.
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. for 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 21, 2000 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 21, 2000, there were
7,806,777 shares of Common Stock outstanding and entitled to vote at the
meeting.
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.
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 21, 2000 (except
as noted in footnotes 5 and 6 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)................................. 2,273,984 29.13%
c/o Richard A. Smith
GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Richard A. Smith(2)(3)...................................... 1,480,614 18.97%
c/o GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Nancy L. Marks(2)(3)........................................ 1,034,734 13.25%
c/o GC Companies, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Gabelli Funds, Inc.(4)...................................... 2,286,706 29.29%
One Corporate Center
Rye, NY 10580
Harris Associates L.P. and Harris Associates, Inc.(5)....... 406,300 5.20%
Two North LaSalle Street
Suite 500
Chicago, IL 60602
Dimensional Fund Advisors, Inc.(6).......................... 453,900 5.81%
1299 Ocean Avenue,
11th Floor
Santa Monica, CA 90401
William L. Brown(7)......................................... 3,989 *
Peter C. Read(7)............................................ 2,752 *
Leonard A. Schlesinger(7)................................... 2,207 *
Francis E. Sutherby(7)...................................... 2,247 *
Robert A. Smith(2)(3)(8).................................... 129,068 1.65%
William B. Doeren(1)........................................ 12,253 *
John G. Berylson(1)(2)(3)(9)................................ 199,043 2.55%
G. Gail Edwards(1).......................................... 5,154 *
Frank T. Stryjewski(1)...................................... 2,670 *
All current directors and officers as a group (13
persons)(1)(2)(3)(7)(8)(9)................................ 1,842,545 23.60%
</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: William B. Doeren -- 42; John G.
2
<PAGE> 5
Berylson -- 72; G. Gail Edwards -- 30; Frank T. Stryjewski -- 42, and all
current executive officers as a group -- 246. 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 21,
2000 as follows: William B. Doeren -- 12,211; John G. Berylson -- 10,337;
G. Gail Edwards -- 5,154; Frank T. Stryjewski -- 2,628; and all current
executive officers as a group -- 32,788.
(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
January 21, 2000 filed with the SEC by the Gabelli Funds, Inc. and its
affiliates (collectively, the "Gabelli Affiliates"). The Gabelli Affiliates
have sole investment power over 2,286,706 and sole voting power over
2,256,206 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") and subsequent
information provided by Harris to the Company. Harris has sole investment
power over 266,200 shares of Common Stock, shared investment power over
140,100 additional shares of Common Stock and shared voting power over all
of the shares of Common Stock reported in the table.
(6) The information reported is based upon Schedule 13G dated February 11, 1999
filed with the SEC by Dimensional Fund Advisors, Inc. ("Dimensional") and
subsequent information provided by Dimensional to the Company. Dimensional
has sole investment power and sole voting power over all of such shares.
(7) Messrs. Brown, Read, Schlesinger and Sutherby hold, respectively 2,232,
2,252, 2,207, and 2,247 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.
3
<PAGE> 6
(8) Includes 15,800 shares held by Robert A. Smith as trustee, 16,000 shares
held in an insurance trust for his benefit and 1,540 shares held in trust
for the benefit of his children, as to which Mr. Smith disclaims beneficial
ownership. Robert A. Smith, a member of the Smith Family Group, 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.
(9) Includes 82,462 shares held by Mr. Berylson's wife, 2,219 shares held by
Mr. Berylson's daughter, 16,000 shares held in an insurance trust for the
benefit of Mr. Berylson's wife, 42,481 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 34,975
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.
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.
Two Class III directors are 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. Each
nominee is currently a member of the Board of Directors. The Company has no
reason to believe that either of the nominees will become unavailable for
election, but if for any reason that should be the case, the proxies may be
voted for a substitute nominee or nominees. 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.
All of the nominees for director, and the directors who will continue to
serve after the 2000 Annual Meeting, are listed below with their principal
occupations for the last five years.
NOMINEES FOR TERM EXPIRING IN 2003 (CLASS III DIRECTORS)
WILLIAM L. BROWN, age 78, Director since 1993
Retired Chairman of Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston and a trustee of Bradley Real
Estate Trust.
RICHARD A. SMITH, age 75, 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 Marcus Group, Inc. ("NMG"); Chief
Executive Officer of Harcourt General (until November, 1999) and of NMG (until
December, 1998) and 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.
DIRECTORS WHOSE TERMS EXPIRE IN 2001 (CLASS I DIRECTORS)
FRANCIS E. SUTHERBY, age 67, 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 47, Director since May, 1997
Executive Vice President -- Organization, Leadership and Human Resources
for The Limited, Inc., a specialty retailer, since October 1999; Senior Vice
President of Development at Brown University from 1998 to 1999; Faculty member
at the Harvard Business School from 1993 to 1998. Mr. Schlesinger serves as a
director of The Limited, Inc., Pegasystems, Inc., a customer service software
company, and Borders Group, Inc., a book store chain.
5
<PAGE> 8
DIRECTORS WHOSE TERMS EXPIRE IN 2002 (CLASS II DIRECTORS)
PETER C. READ, age 63, 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.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended October 31, 1999, the Board of Directors held
six meetings and acted by unanimous written consent on one other occasion.
During fiscal 1999, 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 1999, 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 twice during fiscal 1999, 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 1999, 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. Footnote 1 to the "Summary
Compensation Table" provides additional information regarding the compensation
of Richard A. Smith and Robert A. Smith.
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 2001 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 be named in the proxy statement as a
nominee and to serve 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.
6
<PAGE> 9
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 1999) incurred in attending meetings and carrying out
their duties as 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 1999.
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 1999, 1998 and 1997 by the
Company's Chief Executive Officer, Chief Operating Officer, and the other
executive officers of the Company at the end of fiscal 1999 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 ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(2) ($)(3) ($)(4) (#) (5) ($)(6)
------------------ ------ ------ ------ ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard A. Smith,........... 1999 -- -- -- -- -- -- --
Chairman (President 1998 -- -- -- -- -- -- --
until November 1997 -- -- -- -- -- -- --
1995) and Chief
Executive Officer(1)
Robert A. Smith............. 1999 -- -- -- -- -- -- --
President and Chief 1997 -- -- -- -- -- -- --
Operating Officer(1) 1997 -- -- -- -- -- -- --
William B. Doeren........... 1999 $330,000 -- -- -- -- -- $12,738
Vice Chairman of 1998 $330,000 $ 33,000 -- -- 8,380 -- $12,724
General Cinema 1997 $318,774 $ 34,708 -- -- 3,000 -- $11,717
Theatres, Inc.
Frank T. Stryjewski......... 1999 $256,538 -- $100,000(7) -- 5,000 -- $ 9,716
President and Chief 1998 $250,000 $ 15,750 -- -- 1,070 -- $ 8,841
Operating Officer of 1997 $225,000 $ 19,858 -- -- 2,000 -- $ 4,984
General Cinema
Theatres, Inc.
John G. Berylson............ 1999 $369,337 $247,500 -- -- 4,441 $1,536,749 $62,485
Senior Vice President 1998 $337,500 $168,750 -- $1,602,168 3,530 $ 164,852 $21,722
and Chief Investment 1997 $300,138 $150,000 -- $ 48,792 2,800 $ 179,269 $33,452
Officer
G. Gail Edwards............. 1999 $270,000 $162,000 -- -- 3,553 -- $13,753
Vice President, Chief 1998 $270,000 $135,000 -- -- 3,992 -- $11,114
Financial Officer and 1997 $253,346 $125,665 -- -- 7,120 -- $12,137
Treasurer
</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 1999, 1998
and 1997, approximately $210,048, $228,416 and $243,874, respectively, were
attributable to Richard A. Smith's services, and approximately $244,985,
$227,488 and $174,922, 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) Value is calculated by multiplying the number of shares awarded by the
closing price of the Common Stock on the New York Stock Exchange on the last
date of the fiscal quarter in which the related services were performed. In
general, 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.
(5) The long term incentive plan ("LTIP") payout reported in this category with
respect to Mr. Berylson for fiscal 1999 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 $126,902, representing the last 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. Mr. Berylson received $1,246,130, which is the second cash
installment of a total $5,340,559 award relating to the initial public
offering of Global TeleSystems, Inc. in fiscal 1998, plus interest of
$125,767. Of the total $5,340,559 award, 70% or $3,738,391 is payable in
cash in three equal installments over three years, commencing November 23,
1998, and 30% or $1,602,168 was paid in restricted stock in 1998 which vests
over the succeeding five years.
(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
1999, such amounts for each of the named executive officers other than
Richard A. Smith and Robert A. Smith were, respectively, as follows: Mr.
Doeren -- $500, $10,890 and $1,348; Mr. Berylson -- $500, $60,476 and
$1,509; and Ms. Edwards -- $500, $12,150 and $1,103; and Mr. Stryjewski --
$500, $8,168, and $1,048.
(7) Represents a retention payment authorized upon promotion to President of
General Cinema Theatres, Inc. in September, 1999.
9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted under
the Company's 1993 Equity Incentive Plan during the fiscal year ended October
31, 1999 to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
---------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL
SECURITIES RATES OF STOCK PRICE
UNDERLYING % OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OR OPTION TERM(3)
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME (#)(1) IN FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ---------- --------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Smith(4)........... -- -- -- -- -- --
Robert A. Smith(4)............ -- -- -- -- -- --
William B. Doeren............. -- -- -- -- -- --
Frank T. Stryjewski........... 5,000 20.36% $40.00 11/23/08 $125,779 $644,987
John G. Berylson.............. 4,441 18.09% $40.00 11/23/08 $111,717 $572,877
G. Gail Edwards............... 3,553 14.47% $40.00 11/23/08 $ 89,379 $458,328
</TABLE>
- ---------------
(1) No stock appreciation rights were granted to any named executive officer
during fiscal 1999. The option grants listed are non-qualified stock options
having a term of 10 years and one day; they become exercisable at the rate
of 20% on each of the first five anniversary dates of the grant.
(2) The options reflected in this table were granted at not less than fair
market value measured by the closing price of the Common Stock on the New
York Stock Exchange on the date of grant.
(3) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission.
(4) Richard A. Smith and Robert A. Smith do not participate in the Company's
1993 Equity Incentive Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information regarding stock options exercised
during fiscal 1999 and the number and value of stock options held at October 31,
1999 by the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
(#)(4) OPTIONS ($)
------------ ------------
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)............... -- -- -- --
William B. Doeren................ -- -- 8,170/12,035 $ 0/$ 0
Frank T. Stryjewski.............. -- -- 1,014/ 7,056 $ 0/$ 0
John G. Berylson................. -- -- 7,683/ 9,445 $8,500/$2,125
G. Gail Edwards.................. -- -- 2,222/11,019 $ 0/$ 0
</TABLE>
- ---------------
(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.
10
<PAGE> 13
(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 29,
1999 ($29.75) 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) There are no outstanding SAR's.
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
at the time of initial participation ($170,000 as of January 21, 2000) 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 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 2000 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 exclude the impact of 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.
11
<PAGE> 14
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, 1999 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, 1999 OCTOBER 31, 1999 AGE 65
---- -------------------- ---------------- ------
<S> <C> <C> <C>
Mr. Doeren (1).................... $330,000 4 4
Mr. Stryjewski.................... $256,538 3 24
Mr. Berylson...................... $337,500 6 25
Ms. Edwards....................... $270,000 5 24
</TABLE>
- ---------------
(1) Mr. Doeren resigned as an officer and director of General Cinema Theatres,
Inc. and its subsidiaries effective as of December 31, 1999.
TRANSACTIONS INVOLVING MANAGEMENT
William B. Doeren
Pursuant to an agreement between Mr. Doeren and the Company, effective
December 31, 1999, Mr. Doeren resigned as an officer and director of General
Cinema Theatres, Inc. and is entitled to receive severance payments equal to his
then-current annual salary for up to 18 months following such termination, which
payments will be reduced by any amounts received by him from other employment
during the period beginning 6 months and ending 18 months following such
termination.
Frank T. Stryjewski
Pursuant to an agreement between Mr. Stryjewski and the Company, the
Company has agreed that in the event Mr. Stryjewski's employment is terminated
other than for cause, total disability or death he will receive termination
benefits consisting of (1) a continuation of his then current annual base salary
for 18 months, reduced by any amounts earned from subsequent employment during
this period; (2) continuation of medical and dental insurance coverage during
this 18 month period or until such earlier time as Mr. Stryjewski commences full
time employment; (3) outplacement services and (4) immediate vesting of all his
stock options. In addition, Mr. Stryjewski will also receive these termination
benefits if his employment is terminated other than due to total disability or
death within 18 months following a sale of all or substantially all the assets
or a controlling interest in the stock of General Cinema Theatres, Inc. or if he
resigns within 18 months following such a sale of General Cinema Theatres, Inc.
as a result of a reduction in his duties or if he is required to relocate out of
the Boston area.
John G. Berylson
In August of 1999, the Company formed GCC Investments, LLC (the "Fund") a
limited liability company to act as a vehicle to hold the Company's investment
portfolio on an ongoing basis. Existing investments in non-public portfolio
companies were transferred to the Fund, and it is anticipated that all future
investments will be made through the Fund. The Fund is owned 99% by GCC
Investments, Inc. (a wholly owned subsidiary of the Company) and 1% by Chestnut
Hill Capital Partners, LLC (the "Manager"). Mr. Berylson is the Senior Manger of
the Manager. The Manager is owned 43.75% by Mr. Berylson, and 56.25% is owned in
varying percentages by three other individuals who were officers of GCC
Investments, Inc. Except for Mr. Berylson, none of these individuals remain an
employee of the Company or GCC Investments, Inc.
12
<PAGE> 15
The Fund is managed by a four person Advisory Committee consisting of
Richard A. Smith, Robert A. Smith, Brian J. Knez and John G. Berylson. The
Company has the power to appoint three of the members of the Advisory Committee
and the Manager has the power to appoint one member of the Advisory Committee.
Under the Fund's Operating Agreement, 20% of net gains after expenses,
write-downs, losses and a preferred return to the Fund is allocated to the
Manager and 80% of net gains is allocated to the Fund. 20% of the share
allocated to the Manager is retained by the Fund to pay losses and excess
expenses. Any portion retained that is not used for losses and expenses after
five years is payable to the Manager.
Of the Manager's portion of a gain, a "cash component" equal to 70% is
payable in cash as follows: 45% by the end of the first quarter following the
determination of the gain, and the balance in two equal installments on each of
the first two anniversary dates of the first payment, together with interest at
a rate determined by the Fund. A "stock component" equal to 30% of the Manager's
portion of the gain is distributed to the Manager in cash equally over five
years and is intended to be used to purchase the Company's stock under a Put
Agreement between the Company and the Manager. Under the Put Agreement, the
Company may exercise a put to the Manager of the stock of the Company equal to
this 30% portion, which is exercisable 20% each year for five years. However,
the put may not be exercisable by the Company if the price of the Company's
shares is 20% less than the price at the time the gain was determined.
Capital contributions required for investments are made 99% by the Fund,
and 1% by the Manager. To provide funds to the members of the Manager for these
purposes, the Company has agreed to provide a loan to each individual member
equal to this required capital contribution. The loans are repayable from 30% of
the second and third installments of the Manager's cash component related to any
gain. Interest at 8% is payable annually. The notes are repayable in full at the
end of seven years and are secured by the individual's interest in the Manager
and any amounts due to the individual under the GCC Investments, Inc. Incentive
Pool Plan. As of the end of the fiscal year, the amount of the principal owed by
Mr. Berylson under this Note was $245,621. As of the date of this Proxy
statement, the total amount owed by Mr. Berylson for such loans was $347,777.
The Manager manages the Company's investments portfolio pursuant to a
management agreement that provides for the payment of a fee to the Manager
equivalent to the annual expense budget approved by the Advisory Committee and
not to exceed the greater of 2% of the cost of securities held in the portfolio
or $4 million, unless otherwise approved by the Chairman of the Advisory
Committee.
The Fund may terminate the Manager at any time. In the event of
termination, the Manager is entitled to participate in gains on investments
realized during the one year period after termination. Members of the Manager
who have more than 12 years combined service with the Company and the Manager at
the time of termination are entitled to receive payment for both the cash
component and stock component of the Manager's share of gains realized upon
investments. Members of the Manager (including Mr. Berylson) who have more than
five, but less than 12 years of combined service with the Company and the
Manager at the time of termination are entitled to receive payment for the cash
component only of the Manager's share of realized gains. In the event of an
initial public offering (IPO) of an investment occurring within one year
following termination, a gain will be determined based upon the value of the
stock on the date it is unrestricted and freely tradable within one year
following termination (18 months for termination after 12 years of service).
Payment for determined gains will be made only on cash realization.
In the event the Fund is liquidated and the investment business is
terminated by the Company, the Manager's portion of gains on realized
investments will be paid to the Manager. In the event of a change of control of
the Company (as defined in the Fund's Operating Agreement), the Manager will
receive payment for its portion of gains for realized investments as of the
change of control.
13
<PAGE> 16
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 and are payable in annual principal installments equal
to the lesser of $20,000 per year or 20% of Ms. Edwards' annual bonus. The loans
have a current principal balance of $60,000 and are unsecured and payable in
full on or before December 31, 2002 or sooner if Ms. Edwards' employment is
terminated for cause. Pursuant to an agreement between Ms. Edwards and the
Company, Ms. Edwards is to receive a retention payment of one times her base
salary in the event she remains employed by the Company through October 31,
2000. In addition, in the event the Company enters into one or more defined
major transactions, Ms. Edwards will be paid an incentive payment equal to two
times her base salary (less any retention amount paid under the previous
sentence); these amounts are payable in three equal installments over 18 months.
In the event Ms. Edwards' employment is terminated without cause or other than
due to her total disability or death, or if Ms. Edwards voluntarily terminates
her employment due to a reduction in duties following a change of control of the
Company, she will receive severance payment equal to her then base salary for up
to 18 months following such termination, which payments will be reduced by any
amounts received by her from other employment beginning six months and ending 18
months following such termination. For each of the next five fiscal years
commencing with fiscal year 1999, Ms. Edwards will also receive an additional
year of supplemental pension service for each year she continues with the
Company.
---------------------
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.
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 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 various
benchmarks as a reference point, a particular individual's base salary may
vary from these benchmarks 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.
Existing Incentive Plans:
For fiscal year 1999, the determination of annual bonuses for
executive officers other than executives of General Cinema Theatres, Inc.
was based principally on the achievement of performance objectives for the
Company for which the executive officer is responsible.
15
<PAGE> 18
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 executives of
the Company (including certain of the named executive officers) were
awarded equity based compensation in fiscal 1999, 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.
For senior executives of General Cinema Theatres, Inc. since fiscal
1997, the Company has maintained an economic value added (EVA) incentive
plan under which EVA performance is determined by reference to the amount
of improvement or deterioration in EVA. In general EVA is the excess of net
operating profit after taxes, with certain adjustments less a capital
charge. For fiscal 1999, the Company's EVA did not fall within the interval
amount and did not reach the target EVA. As a result bonuses and stock
awards under the EVA plan were not achieved for executives of General
Cinema Theatres, Inc.
New Management Incentive Plan:
The Committee has undertaken a review of the incentive plans provided
to senior executives at General Cinema Theatres, Inc. under the EVA
Incentive Plan as well as the incentive plans in place for senior
management of the Company not involved in investment activities. Based upon
this review, the Committee has determined to replace the existing EVA
Incentive Plan as well as the current incentive plan for the Companies'
officers with one management incentive plan commencing with fiscal year
2000.
The new Management Incentive Plan 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 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 business results and the executive's
attainment of qualitative performance objectives, which typically include
achievement of specific tasks. The Committee has determined that target
bonus values under this Management Incentive Plan will range between 30%
and 50% of base salary. Determination of the overall participation by an
individual participant depends upon the individual's position with the
Company.
If the business results targets are exceeded, bonus awards may be
increased by up to two times the target bonus values established by the
Committee. If performance targets are not met, bonus awards are decreased.
If the Company and/or the division fall substantially 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 portion of the individual's bonus relating to qualitative
objectives could be reduced or eliminated in the discretion of the
Committee.
For participants in the Management Incentive Plan, the Committee has
determined a stock option level based upon the individual's position with
the Company. In general, the number of options granted is based upon the
stock option opportunity which is 35% to 60% of the individual's base
salary divided by the value of the options (approximately one-third of the
stock price at the time of grant). The actual option award is tied to the
achievement of individual performance. Option prices are based upon fair
market value on the date of grant. Participants vest 20% per year over five
years with an exercise period of ten years from the date of grant.
16
<PAGE> 19
GCC Investments:
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.
In August of 1999, Mr. Berylson and other members of the investment
group formed Chestnut Hill Capital Partners, LLC (the "Manager") to manage
the Company's investment portfolio. The Company transferred all of the
portfolio investments of the Company which were not publicly traded in
August, 1999 to GCC Investments, LLC (the "Fund") and anticipates that all
future investments will be made through the Fund. Accordingly, the Manager
will manage the Fund and will earn management fees under a management
agreement as well as other amounts payable from gains on the sale of
portfolio securities in accordance with the Fund's Operating Agreement. See
"Transactions involving Management" above. Accordingly, only the Company's
investments in Global TeleSystems, GrandVision and PrimaCom that were
publicly traded in August, 1999 will continue to be governed by the GCC
Investments 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 persons eligible (the "Eligible Persons") to participate in and receive
compensation under the Plan are Mr. Berylson and three former employees of GCC
Investments, Inc. ("GCCI") who, with Mr. Berylson, are now members of the
Manager.
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 then Senior Vice President.
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 then Senior Vice President and 20% is reserved for allocations to other
Eligible Persons.
17
<PAGE> 20
In addition, no Eligible Person (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
Persons, may be used to cover expenses or losses.
FORM AND PAYMENT OF AWARDS
If an Eligible Person 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 Person'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 Person'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.
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 Person 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 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 Person who voluntarily terminates employment 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
Person 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 Person who is terminated 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 Person 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
Persons, affect any Eligible Person's rights to benefits attributable to Sale
Events which have already occurred.
CALCULATION OF PLAN BENEFITS FOR FISCAL YEAR 1999
For Fiscal Year 1999, no benefits were allocated under the GCC Investments,
Inc. Incentive Plan.
18
<PAGE> 21
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 29.1% 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 1999,
the Company paid or accrued $810,565 to Harcourt General for all of its
services, of which $210,048 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
19
<PAGE> 22
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 six fiscal
years ended October 31, 1999 of the Standard & Poor's 500 Index and a peer group
index consisting of AMC Entertainment Inc., Carmike Cinemas, Inc., Loews
Cineplex Entertainment Corp. and Regal Cinemas, Inc. (Note: Regal Cinemas, Inc.
is no longer publicly traded.) The graph assumes a $100 investment in the
Company's Common Stock and in each index at October 31, 1994 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.
<TABLE>
<CAPTION>
GC COMPANIES, INC. PEER GROUP INDEX S&P 500 INDEX
------------------ ---------------- -------------
<S> <C> <C> <C>
10/31/94 100.00 100.00 100.00
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
10/31/99 105.31 70.59 317.80
</TABLE>
The comparisons provided in this graph are not intended to be indicative of
possible future performance of the Company's stock.
2. 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, 2000.
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
20
<PAGE> 23
stockholders. The Company paid or accrued approximately $1,223,579 for audit and
tax services rendered by Deloitte & Touche LLP for the fiscal year ended October
31, 1999.
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, 2000.
3. OTHER MATTERS
The Board of Directors knows of no other matters that 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 2001.
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 2001, they must be received by the
Secretary of the Company by November 1, 2000.
For proposals that stockholders intend to present at the Annual Meeting of
Stockholders to be held in March 2001 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, 2000, 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,
2000.
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.
21
<PAGE> 24
GC COMPANIES, INC.
COMMON STOCK PROXY COMMON STOCK PROXY
ANNUAL MEETING OF STOCKHOLDERS - MARCH 15, 2000
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 General Cinema Theatre in Framingham,
Massachusetts, located on Flutie Pass, off Route 9, adjacent to the Natick Mall
on Wednesday, March 15, 2000 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 28, 2000 and a
copy of the Annual Report for the year ended October 31, 1999.
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, AND FOR PROPOSAL 2. IF THIS PROXY IS SIGNED AND
RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY WILL BE SO
VOTED.
(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 AND 2.
1. ELECTION OF TWO CLASS III DIRECTORS
NOMINEES (01) William L. Brown
(02) Richard A. Smith
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] ________________________
FOR BOTH NOMINEES EXCEPT [ ] [ ]
AS NOTED ABOVE.
FOR AGAINST ABSTAIN
2. APPROVAL OF DELOITTE & TOUCH LLP [ ] [ ] [ ]
INDEPENDENT AUDITORS OF THE
COMPANY FOR THE CURRENT FISCAL YEAR
THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS.
MARK HERE FOR ADDRESS [ ]
CHANGE AND NOTE AT LEFT.
MARK HERE IF YOU PLAN [ ]
TO ATTEND THE MEETING.
For joint accounts, each owner
should sign. Executors,
Administrators, Trustees, etc.
should give full title.
Signature________________Date_____
Signature________________Date_____
DETACH HERE
<PAGE> 25
CONFIDENTIAL VOTING INSTRUCTIONS
TO:FIDELITY MANAGEMENT TRUST COMPANY
AS TRUSTEE UNDER THE
GC COMPANIES, INC.,
EMPLOYEE STOCK OWNERSHIP PLAN
WITH RESPECT TO THE ANNUAL MEETING OF STOCKHOLDERS OF
GC COMPANIES, INC., - MARCH 15, 2000
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 General Cinema Theatre in Framingham,
Massachusetts, located on Flutie Pass, off Route 9, adjacent to the Natick Mall,
on Wednesday, March 15, 2000 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 28, 2000 and a
copy of the Annual Report for the year ended October 31, 1999.
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 AND A VOTE FOR PROPOSAL 2. IF THIS PROXY IS SIGNED AND
RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY WILL BE SO
VOTED.
(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 AND 2.
1. ELECTION OF TWO CLASS III DIRECTORS
NOMINEES (01) William L. Brown
(02) Richard A. Smith
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] ________________________
FOR BOTH NOMINEES EXCEPT
AS NOTED ABOVE.
FOR AGAINST ABSTAIN
2. 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 FOR ADDRESS [ ]
CHANGE AND NOTE AT LEFT.
MARK HERE IF YOU PLAN [ ]
TO ATTEND THE MEETING.
For joint accounts, each owner
should sign. Executors,
Administrators, Trustees, etc.
should given full title.
Signature________________Date_____
Signature________________Date_____
DETACH HERE
