SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than Registrant [ ]
Check the Appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
UNITED VIDEO SATELLITE GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction: $________
5) Total fee paid: $_______
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously.
Identify the previous filing by registration statement number, or the
form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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UNITED VIDEO SATELLITE GROUP, INC.
7140 South Lewis Avenue
Tulsa, Oklahoma 74136-5422
July 7, 1998
Dear Stockholder:
On behalf of the Board of Directors and management, I cordially invite
you to attend the Annual Meeting of Stockholders (the "Annual Meeting") of
United Video Satellite Group, Inc. (the "Company"), which will be held at the
Southern Hills Marriott Hotel, 1902 East 71st Street South, Tulsa, Oklahoma, on
July 28, 1998, at 10:00 a.m. local time.
At the Annual Meeting, stockholders will be asked to consider and vote
upon the following matters: (1) election of a Board of seven directors for the
ensuing year, (2) approval of a proposed amendment to the Restated Certificate
of Incorporation of the Company increasing the number of authorized shares of
Class A Common Stock and Class B Common Stock, (3) approval of a proposed
amendment to the Company's Stock Option Plan for Non-Employee Directors to
increase the number of shares of Common Stock reserved for issuance thereunder
and to make certain other changes, (4) ratification of the appointment of the
Company's independent auditors, and (5) transaction of such other business as
may properly come before the meeting or any adjournment or postponement thereof.
Details of the proposals and other important information are set forth in the
accompanying Proxy Statement, which should be considered carefully by
stockholders.
The recently announced acquisition by the Company of certain satellite
television programming assets of Liberty Media Corporation and the recently
announced acquisition by the Company of TV Guide magazine and certain related
assets of The News Corporation Limited will not be completed without the
approval of the Company's stockholders. The Company, however, is not seeking
such approval at the Annual Meeting. Instead, matters related to such
acquisitions will be considered at a special meeting to be held at the earliest
practicable time after the Annual Meeting.
Whether or not you are personally able to attend the Annual Meeting,
please complete, sign, date and return the enclosed proxy as soon as possible in
the enclosed return envelope, which requires no postage if mailed in the United
States. This action will not limit your right to vote in person if you wish to
attend the Annual Meeting and vote personally and any proxy may be revoked in
the manner described in the accompanying proxy statement.
Sincerely,
/s/ Peter C. Boylan III
Peter C. Boylan III
President and Chief Operating Officer
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UNITED VIDEO SATELLITE GROUP, INC.
7140 South Lewis Avenue
Tulsa, Oklahoma 74136-5422
(918) 488-4000
---------------
Notice of Annual Meeting of Stockholders
to be held July 28, 1998
----------------
TO THE STOCKHOLDERS OF UNITED VIDEO SATELLITE GROUP, INC.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders of
United Video Satellite Group, Inc., a Delaware corporation (the "Company"), will
be held on July 28, 1998, at 10:00 a.m., local time, at the Southern Hills
Marriott Hotel, 1902 East 71st Street South, Tulsa, Oklahoma (the "Annual
Meeting"), for the following purposes:
1. To elect a Board of seven directors for the ensuing year.
2. To approve a proposed amendment to the Restated Certificate
of Incorporation of the Company increasing the number of
authorized shares of Class A Common Stock and Class B Common
Stock.
3. To approve a proposed amendment to the Company's Stock Option
Plan for Non-Employee Directors to increase the number of
shares of Common Stock reserved for issuance thereunder and
to make certain other changes.
4. To ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the fiscal year
ending December 31, 1998.
5. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on June 19,
1998 as the record date for the determination of the stockholders entitled to
notice of and to vote at the Annual Meeting or any adjournment or postponement
thereof. A list of stockholders entitled to notice of and to vote at the Annual
Meeting will be open to the examination of any stockholder, for any purpose
appropriate to the meeting, during ordinary business hours, for a period of ten
days prior to the Annual Meeting, at the principal executive offices of the
Company.
By Order of the Board of Directors,
/s/ Peter C. Boylan III
Peter C. Boylan III
President and Chief Operating Officer
Tulsa, Oklahoma
July 7, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, HOWEVER, YOU ARE URGED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A
POSTAGE PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING
THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THAT STOCKHOLDER HAS RETURNED A
PROXY.
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UNITED VIDEO SATELLITE GROUP, INC.
7140 South Lewis Avenue, Tulsa, Oklahoma 74136-5422
PROXY STATEMENT
General
The enclosed Proxy is solicited by the Board of Directors of United
Video Satellite Group, Inc., a Delaware corporation (the "Company") for use at
the Annual Meeting of Stockholders to be held on July 28, 1998, at 10:00 a.m.,
local time, at the Southern Hills Marriott Hotel, 1902 East 71st Street South,
Tulsa, Oklahoma, and at any adjournment or postponement thereof (the "Annual
Meeting"), for the purposes set forth in the forgoing Notice of Annual Meeting.
This Proxy Statement is being furnished to Holders of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), and Class B Common Stock, par
value $.01 per share (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock"), of the Company. Copies of solicitation
material will be furnished to brokers, fiduciaries and custodians to forward to
beneficial owners of the Class A common Stock held in their names. The Company
will reimburse brokers and other persons representing beneficial owners of
shares for their reasonable expenses in forwarding solicitation material to such
beneficial owners. This Proxy Statement and the accompanying proxy will be
mailed on or about July 7, 1998 to all stockholders entitled to vote at the
meeting. Unless the context otherwise requires, the term "Company" includes the
Company and its consolidated subsidiaries.
At the Annual Meeting, stockholders will be asked to consider and act
upon the following: (1) the election of seven directors for the ensuing year;
(2) the approval of a proposed amendment to the Restated Certificate of
Incorporation of the Company (the "Charter Amendment") to increase the number of
authorized shares of Class A Common Stock from 60,000,000 to 650,000,000 shares
and the number of authorized shares of Class B Common Stock from 30,000,000 to
300,000,000 shares; (3) the approval of a proposed amendment (the "Directors
Plan Amendment") to the Company's Stock Option Plan for Non-Employee Directors
(the "Directors Plan") to increase the number of shares of Common Stock reserved
for issuance thereunder and to make certain other changes; and (4) transact such
other business as may properly come before the Annual Meeting.
Pending Transactions
On February 17, 1998 the Company and Liberty Media Corporation
("Liberty"), a subsidiary of TeleCommunications, Inc. ("TCI"), announced an
agreement for the Company to acquire certain C-band direct-to-home satellite
entertainment programming and wholesale satellite entertainment programming
assets from Liberty in exchange for shares of Common Stock. In addition, on June
10, 1998, the Company and News America Incorporated ("NAI") a subsidiary of The
News Corporation Limited, announced an agreement for the acquisition by the
Company of TV Guide magazine and related assets from NAI in exchange for cash
and shares of Common Stock. Even if the Charter Amendment is approved, the rules
of the Nasdaq Stock Market applicable to the Company require that the Company
seek the approval of the stockholders before issuing Common Stock in connection
with the completion of either proposed acquisition. The proposed acquisitions
are not matters to be acted upon at the Annual Meeting, and you are not being
requested in any way in this Proxy Statement to consider or to vote on the
proposed acquisitions. Consequently, the proposed acquisitions will not be
completed until the Company has received the approval of its stockholders at a
special meeting to be held at a future date to consider matters related to the
proposed acquisitions. Stockholders of record on a date yet to be determined
will be provided with a definitive proxy statement concerning the proposed
acquisitions at the time such matters are submitted to stockholders for
approval.
Annual Report
The Annual Report to Stockholders covering the Company's fiscal year
ended December 31, 1997, including audited financial statements is enclosed
herewith. The Annual Report to Stockholders does not form any part of the
material for the solicitation of Proxies.
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Stockholder Proposals
Proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Secretary
of the Company not later than March 10, 1999 in order to be included in the
proxy statement and proxy relating to the 1999 Annual Meeting.
Voting Rights
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the taking of the vote at
the Annual Meeting, a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of the Company, before the taking of the vote at
the Annual Meeting or (iii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
a revocation of the proxy). Any written notice of revocation or subsequent proxy
should be sent so as to be delivered to the Company at 7140 South Lewis Avenue,
Tulsa, Oklahoma, 74136-5422, Attention:
Secretary, at or before the taking of the vote at the Annual Meeting.
Only stockholders of record of shares of Common Stock at the close of
business on June 19, 1998 will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on June 19, 1998, the Record Date,
there were 24,303,874 shares of Class A Common Stock outstanding and entitled to
vote, held by 100 holders of record, and 12,373,294 shares of Class B Common
Stock outstanding and entitled to vote, held by one holder of record. Each share
of Class A Common Stock has one vote and each share of Class B Common Stock has
ten votes. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Annual Meeting.
With respect to the Charter Amendment and the Directors Plan
Amendment, stockholders may vote in favor of each proposal, may vote against
each proposal or abstain with respect to each proposal. Approval of the Charter
Amendment requires the affirmative vote of a majority of the total voting power
of all outstanding shares of Class A Common Stock and Class B Common Stock
entitled to vote at the Annual Meeting, voting together as a single class.
Approval of the Directors Plan Amendment requires the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy at the
Annual Meeting and entitled to vote, voting together as a single class. In the
election of directors, stockholders may vote in favor of the nominees, may
withhold their vote for the nominees, or may withhold their vote as to specific
nominees. Directors will be elected by a plurality of the votes of the holders
of shares of Common Stock present in person or by proxy at the Annual Meeting
and entitled to vote, voting together as a single class. All votes will be
tabulated by the inspector of election appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes. Abstentions will be counted toward the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes. Broker non-votes are not counted for any purpose in determining
whether a matter has been approved.
All shares of Common Stock that are entitled to vote and are
represented at the Annual Meeting by properly executed proxies received prior to
or at the Annual Meeting, and not revoked, will be voted at the Annual Meeting
in accordance with the instructions indicated on such proxies. If no
instructions are indicated, such proxies will be voted FOR (1) the election of
each of the nominees for director identified therein, (2) the adoption and
approval of the Charter Amendment, (3) the adoption and approval of the
Directors Plan Amendment and (4) the ratification of the appointment of KPMG
Peat Marwick LLP as the Company's independent auditors.
Expenses incurred in connection with the printing and mailing of this
Proxy Statement will be paid by the Company. In addition to solicitation by use
of the mails, proxies may be solicited by directors, officers and employees of
the Company in person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally compensated, but
may be reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 23,
1998, regarding ownership of Common Stock by (1) each person believed by the
Company to be the beneficial owner of more than five percent of its outstanding
Common Stock; (2) each director and director nominee, the Chief Executive
Officer and each of the four other most highly compensated executive officers
for the fiscal year 1997 (the "Named Executive Officers"), and (3) all current
executive officers and directors of the Company as a group. Shares of Class B
Common Stock are convertible immediately into shares of Class A Common Stock on
a one-for-one basis and, accordingly, the holder of the Class B Common Stock is
deemed to own beneficially the same number of shares of Class A Common Stock in
addition to the number of shares of Class A Common Stock otherwise beneficially
owned by it. The table below does not reflect such beneficial ownership of Class
A Common Stock.
<TABLE>
<CAPTION>
Percent of
UVSG Class A UVSG Class B Vote of All
Common Stock Common Stock Outstanding
Number Percent Number Percent UVSG
Beneficial Owner of Shares of Class of Shares of Class Common Stock
----------- ---------- ----------- -------- ------------
- --------------------------------------
<S> <C> <C> <C> <C> <C>
Tele-Communications, Inc. (1)(2).......... 14,518,760 59.7% 12,373,294 100% 93.4%
Wanger Capital Management (3)............. 1,435,400 5.9% -- -- *
Capital Research & Management (4)......... 1,225,000 5.0% -- -- *
Robert R. Bennett ........................ -- -- -- -- *
Leo J. Hindery, Jr........................ -- -- -- -- *
Larry E. Romrell (5)...................... 6,000 * -- -- *
J. David Wargo (5)........................ 93,500 * -- -- *
Lawrence Flinn, Jr. (6)................... 99,800 * -- -- *
Gary S. Howard (7)........................ 20,000 * -- -- *
Peter C. Boylan III (8)................... 267,444 1.1% -- -- *
Charles Butler Ammann (9)................. 5,600 * -- -- *
Craig M. Waggy (10)....................... 9,200 * -- -- *
All Directors and Executive
Officers as a Group (10 persons)(11).... 501,544 2.0% -- -- *
</TABLE>
* Less than 1%
(1) The address of Tele-Communications, Inc. ("TCI") is 5619 DTC Parkway,
Englewood, Colorado 80111-3000. TCI holds such shares as follows: TCI
Ventures Group, a subsidiary of TCI, owns 8,332,113 shares of Class A
Common Stock and 12,373,294 shares of Class B Common Stock and Liberty, a
majority-owned subsidiary of TCI, owns 6,186,647 shares of Class A Common
Stock.
(2) TCI is party to a Stockholder Agreement with the Company providing for
certain matters relating to the voting of equity securities of the
Company held by it. See "Executive Compensation--Stockholder Agreement
with TCI".
(3) Based solely upon information contained in a Schedule 13G filed with the
Securities and Exchange Commission. The address of Wanger Capital
Management is 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606- 5016.
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(4) Based solely upon information contained in a Schedule 13F filed with the
Securities and Exchange Commission. The address of Capital Research &
Management is 333 South Hope Street, Los Angeles, California 90071.
(5) Includes 6,000 shares of Class A Common Stock subject to currently
exercisable options. (6) Represents shares of Class A Common Stock
owned by the Lawrence Flinn, Jr., Charitable Trust of which Mr. Flinn
is Trustee. Mr. Flinn disclaims beneficial ownership of such shares.
(7) Includes 20,000 shares of Class A Common Stock subject to currently
exercisable options.
(8) Includes 253,292 shares of Class A Common Stock subject to currently
exercisable options.
(9) Includes 5,600 shares of Class A Common Stock subject to currently
exercisable options.
(10) Includes 9,200 shares of Class A Common Stock subject to currently
exercisable options.
(11) Includes 300,092 shares of Class A Common Stock subject to currently
exercisable options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who own more than ten
percent of a registered class of the Company's equity securities (collectively,
the "reporting persons") to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "Commission") and to furnish
the Company with copies of these reports. Based solely upon a review of copies
of such reports furnished to the Company, and written representations received
from the reporting persons, the Company believes that all filings required to be
made by the reporting persons for the last fiscal year were made on a timely
basis except as follows: Mr. Gary S. Howard, Chairman of the Board and Chief
Executive Officer of the Company was late in filing the initial Form 3, which
reported no beneficial ownership of shares of Class A Common Stock.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Directors and Executive Officers
The number of directors of the Company to be elected at the annual
meeting is seven. The Company's Restated Certificate of Incorporation provides
that each director, if elected, will serve on the Board until the next annual
meeting or until his or her earlier death, resignation or removal. Each person
nominated for election has agreed to serve, if elected, and management has no
reason to believe that any of the seven nominees will be unavailable for
service. Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the seven nominees. If any of the
seven nominees should become unavailable for election due to an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as the Board may propose, unless the Board reduces the number of
directors.
<TABLE>
<CAPTION>
Name Age Principal Occupation Held with the Company
<S> <C> <C>
Gary S. Howard 47 Chairman of the Board and Chief Executive Officer
Peter C. Boylan III 34 President, Chief Operating Officer and Director
Charles B. Ammann 43 Senior Vice President and General Counsel
Craig M. Waggy 39 Senior Vice President and Chief Financial Officer
Toby DeWeese 38 Vice President Corporate Development
Lawrence Flinn, Jr. 62 Chairman of the Board Emeritus
Robert R. Bennett 40 Director
Leo J. Hindery, Jr. 50 Director
Larry E. Romrell 58 Director
J. David Wargo 44 Director
</TABLE>
Nominees for Director
Set forth below is a description of the backgrounds of the nominees
for directors of the Company.
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Gary S. Howard joined the Company in June 1997 as Chairman of the
Board and Chief Executive Officer. Mr. Howard was named an Executive Vice
President of TCI and President and Chief Executive Officer of TCI Ventures
Group, LLC ("Ventures LLC"), a subsidiary of TCI, in December 1997 and has
served as Chief Executive Officer of TCI Satellite Entertainment, Inc. ("TSAT")
since December 1996. Mr. Howard served as President of the Company from June
1997 to September 1997, President of TSAT from February 1995 through August
1997, a Senior Vice President of TCI Communications, Inc. ("TCIC") from October
1994 to December 1996 and a Vice President of TCIC from December 1991 through
October 1994. Mr. Howard is a director of TSAT.
Peter C. Boylan III, joined the Company in October 1994 as Executive
Vice President and Chief Financial Officer. He was elected a director in July
1995, Chief Operating Officer in December 1996 and President in August 1997.
Beginning in 1992, Mr. Boylan served with Hallmark Cards, Inc. in its Corporate
Development and Strategy Group, focusing primarily on the communications and
entertainment industries.
Lawrence Flinn, Jr. assumed the position Chairman Emeritus in June
1997. Prior to that time, Mr. Flinn had been Chairman of the Board and Chief
Executive Officer since he acquired a majority ownership interest in the Company
in 1976. Mr. Flinn has been a full-time professional participant in the cable
television industry for nearly 30 years. Mr. Flinn is a director of LodgeNet
Entertainment Corporation.
Robert R. Bennett has been an Executive Vice President of TCI and
President and Chief Executive Officer of Liberty since April 1997. From June
1995 through March 1997, Mr. Bennett was an Executive Vice President and the
Chief Financial Officer, Secretary and Treasurer of Liberty. Mr. Bennett served
as Senior Vice President of Liberty from September 1991 through June 1995. Mr.
Bennett was elected a director of the Company in February 1998. Mr. Bennett is a
director of BET Holdings, Inc. and TCI Music, Inc.
Leo J. Hindery, Jr. has been President and Chief Operating Officer of
TCI and President and Chief Executive Officer of TCIC since March 1997 and has
served as President and Chief Executive Officer of TCI Pacific Communications,
Inc. ("TCI Pacific"), a subsidiary of TCI, since September 1997. Mr. Hindery was
elected a director of TCI in May 1997 and of the Company in November 1997. In
addition, Mr. Hindery is President, Chief Executive Officer and/or a director of
many of TCI's subsidiaries. From 1988 until he joined TCI, Mr. Hindery was
founder, Managing General Partner and Chief Executive Officer of Intermedia
Partners and its affiliates. Mr. Hindery is Chairman of the Board of Directors
of TCI Music, Inc. and is a director of TCIC, TCI Pacific, At Home Corporation,
TSAT, Lenfest Communications, Inc. and Cablevision Systems Corporation.
Larry E. Romrell has been an Executive Vice President of TCI since
January 1994. Mr. Romrell has served as the Executive Vice President and Chief
Executive Officer of TCI Business Alliance and Technology Co., Inc., a
subsidiary of TCI, since February 1998, a Senior Vice President of Ventures LLC
since December 1997, and President of TCI Technology Ventures, Inc., a
subsidiary of TCI, from September 1994 to October 1997. Mr. Romrell served as a
Senior Vice President of TCIC from 1991 to September 1994. Currently, Mr.
Romrell is a director of General Communication, Inc. and Teleport Communications
Group, Inc.
J. David Wargo has been President of Wargo & Company, a private
investment company specializing in the communications industry, since January
1993. Mr. Wargo was a Managing Director of The Putnam Companies from December
1989 to December 1992.
There are no family relationships among any of the directors and
executive officers of the Company.
Other Executive Officers
Charles B. Ammann joined the Company in January 1996 as Senior Vice
President and General Counsel. Mr. Ammann is responsible for the Company's
legal, human resources, risk management, facilities and legislative affairs.
From 1990 until he joined the Company, Mr. Ammann served as Vice President of
Administration and General Counsel for Flint Industries, Inc., a privately-held
company engaged in general contracting of commercial and industrial
construction, oil and gas pipeline construction, oil field services and
construction management services.
Craig M. Waggy joined the Company in 1995 as Vice President of Finance
and Treasurer and in 1997 was promoted to Senior Vice President and Chief
Financial Officer. Mr. Waggy is responsible for the Company's accounting,
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<PAGE>
finance and information technology functions. Prior to joining the Company, he
was a Senior Manager with Ernst & Young LLP.
Toby DeWeese joined the Company in September 1997 as Vice President of
Corporate Development. From 1990 until he joined the Company, Mr. DeWeese held
several positions at TCI, including Director of Primestar Development from
November 1991 to March 1993, Vice President of Sales and Distribution for
Primestar by TCI from April 1993 to October 1995, Vice President of Business
Development and Technology for Netlink from November 1995 to May 1997 and Vice
President of Operations for the National Digital Television Center from May 1997
to September 1997.
Management and the Board recommend a vote FOR each nominee.
PROPOSAL 2 -- INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board has approved and recommended that the stockholders consider
and approve an amendment to Article Four of the Restated Certificate of
Incorporation (the "Charter Amendment") that would increase the number of
authorized shares of the Company's Class A Common Stock from 60,000,000 shares
to 650,000,000 shares and the Company's Class B Common Stock from 30,000,000
shares to 300,000,000 shares. The Board has also approved a two-for-one split of
the Company's common stock conditioned upon approval of the Charter Amendment.
To be adopted, this proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of Class A Common Stock and the holders of a
majority of the outstanding shares of Class B Common Stock of the Company
entitled to vote at the Annual Meeting, voting together as a single class. The
Board believes that it is in the best interests of the Company and its
stockholders to amend the Restated Certificate.
As of June 19, 1998, there were 24,303,874 shares of Class A Common
Stock and 12,373,294 shares of Class B Common Stock issued and outstanding. An
additional 3,131,183 shares of Class A Common Stock may be issued pursuant to
the Company's Equity Incentive Plan and Directors Plan. This leaves a balance of
32,564,943 authorized shares of Class A Common Stock and 17,626,706 authorized
shares of Class B Common Stock available for use as of June 19, 1998. There are
2,000,000 shares of preferred stock, $.01 par value authorized and none are
issued.
The Board considers the proposed increase in the number of authorized
shares desirable because, in addition to permitting the proposed two-for-one
stock split, it would give the Board the necessary flexibility to issue Common
Stock in connection with future stock dividends and splits, acquisitions,
financings and employee benefits and for other general corporate purposes
without the expense and delay incidental to obtaining stockholder approval of an
amendment to the Certificate of Incorporation increasing the number of
authorized shares at the time of such action, except as may be required for a
particular issuance by applicable law or by the rules of any stock exchange on
which the Company's securities may be issued.
Both the Company's recently announced agreement to acquire certain
direct-to-home and wholesale programming assets from Liberty and the Company's
recently announced agreement to acquire TV Guide magazine and certain related
assets from NAI involve the issuance of Common Stock by the Company as all or
part of the consideration for the assets to be acquired. Under the rules of the
Nasdaq Stock Market applicable to the Company, each of such acquisitions
requires the approval of the Company's stockholders before the Company can issue
Common Stock in connection with the completion of such acquisition. Although the
Charter Amendment, if approved, will authorize sufficient Common Stock to
complete both proposed acquisitions, the Company is not seeking approval from
stockholders for the proposed acquisitions at the Annual Meeting. Accordingly,
even if the Charter Amendment is approved, the proposed acquisitions will not be
completed until the Company has received stockholder approval at a special
meeting to be held at a future date to consider matters related to the proposed
acquisitions. Stockholders of record on a date yet to be determined will be
provided with a definitive proxy statement concerning the proposed acquisitions
at the time such matters are submitted to stockholders for approval.
Management and the Board recommend a vote FOR this proposal.
6
<PAGE>
PROPOSAL 3 - DIRECTORS PLAN AMENDMENT
The Board of the Company has adopted amendments (the "Directors Plan
Amendment") to the Company's Stock Option Plan for Non-Employee Directors (the
"Directors Plan") to increase the number of shares of Class A Common Stock
reserved for issuance under the Directors Plan from 165,000 shares to 250,000
shares, to remove the formula option grant provisions from the Directors Plan
and permit the full Board to grant options to non-employee directors at such
times, and in such amounts, as the Board may determine in its discretion, and to
permit the Board to accelerate the vesting of options and extend the period
during which the options may be exercised. The Directors Plan provides for the
grant of options on up to 165,000 shares of Common Stock of the Company.
Adoption of the Directors Plan Amendment also requires the approval of the
Company's stockholders.
Reasons for the Proposed Amendment
The Directors Plan currently provides for the grant of options on up
to 165,000 shares of Common Stock of the Company. The Board believes that it is
in the best interests of the Company to increase the number of shares available
for awards under the Directors Plan.
The Directors Plan currently provides for a one-time grant of an
option to acquire 15,000 shares of Common Stock to each member of the Board who
is not also an employee of the Company (a "non-employee director"). At the time
the Directors Plan was adopted, rules of the Commission generally required that
such plans contain an automatic formula grant mechanism. The Commission has
revised the rules applicable to the grant of stock options to non-employee
directors and such rules no longer require the use of a fixed formula plan. The
Board believes that the flexibility to grant varying option awards to
non-employee directors will enhance the ability of the Company to attract
qualified individuals to serve on the Board and also believes that the use of a
formula option grant mechanism unduly restricts the flexibility of the Board to
offer incentives to the Company's non-employee directors. The Board also
believes that the flexibility to accelerate the vesting of outstanding options
and to extend the period during which outstanding options may be exercised will
enable the Board to make necessary adjustments to outstanding options in order
to reflect changed circumstances and changes in the membership of the Board.
The Company currently has no plans or arrangements to make any
specific grant of options to non-employee directors if the Directors Plan
Amendment becomes effective.
Description of the Directors Plan
Pursuant to the provisions of the Directors Plan as amended, the Board
will have the authority to grant options to each member of the Board who is not
also an employee of the Company. Options may be granted at such times, and
pursuant to such terms (which must be consistent with the provisions of the
Directors Plan) as the full Board may determine in its discretion. Unless
otherwise specified by the Board, the options become exercisable with respect to
20% of the shares covered thereby after the first anniversary of the effective
date of the grant and with respect to the remaining 80% in equal annual
increments over the four year period thereafter. The Board will retain the power
to accelerate the exercisability of outstanding options subsequent to the option
grant. The options are nontransferable other than by will or by the laws of
descent and distribution. Options must be exercised no later than ten years
after date of grant, and generally must be exercised within specified periods of
time following the termination of a director's services as a member of the
Board, although the Board may extend the period of time to exercise such options
up until the expiration of such ten year period.
A non-employee director may exercise an option by written notice and
payment of the exercise price in (i) cash or certified funds, (ii) by the
surrender of a number of shares of Common Stock already owned by the option
holder for at least 6 months with a fair market value equal to the exercise
price, or (iii) through a broker's transaction by directing the broker to sell
all or a portion of the Common Stock to pay the Company the exercise price or
make a loan to the option holder to permit the option holder to pay the exercise
price.
Vesting is accelerated upon a "change in control" of the Company. A
"change in control" occurs if (a) a person (as such term is used in Section
13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of shares of
the Company having 50% or more of the total number of votes that may be cast for
the election of directors of the Company; or (b) individuals who constitute the
directors of the Company at the beginning of a 24-month period cease to
constitute at least 2/3 of all directors at any
7
<PAGE>
time during such period, unless the election of any new or replacement directors
was approved by a vote of at least a majority of the members of the Board in
office immediately prior to such period and of the new and replacement directors
so approved. No option will become exercisable by virtue of the occurrence of a
change in control if the holder of that option or any group of which that holder
is a member is the person whose acquisition constituted the change in control.
In addition, no change of control will be deemed to have occurred upon the
transfer of beneficial ownership of shares of the Company between or among
persons that are affiliates of TCI so long as TCI or an affiliate thereof
controls the Company. The Board will consider whether the definition of a
"change in control" should be modified in light of the proposed transactions
with Liberty and NAI.
The number of shares covered by the Directors Plan is subject to
adjustment on account of stock splits, stock dividends, recapitalizations and
other dilutive changes in the Common Stock. Four directors currently are
eligible to participate in the Directors Plan.
The Directors Plan provides for the grant of options that are not
incentive options within the meaning of section 422 of the Internal Revenue Code
of 1986 (the "Code"). When a non-qualified stock option is granted, there are no
income tax consequences for the option holder or the Company. When a
non-qualified stock option is exercised, in general, the option holder
recognizes self-employment income equal to the excess of the fair market value
of the Common Stock on the date of exercise over the exercise price. However, if
the sale of the Common Stock at a profit would subject the option holder to
liability under Section 16(b) of the Exchange Act ("Section 16(b)"), the option
holder will recognize self-employment income equal to the excess of (i) the fair
market value of the Common Stock on the earlier of the date that is six months
after the date of exercise or the date the option holder can sell the stock
without Section 16(b) liability over (ii) the exercise price. The option holder
can make an election under Code section 83(b) to measure the amount of income as
of the date the non-qualified stock option is exercised. The Company is entitled
to a deduction equal to the income recognized by the option holder for the
Company's taxable year that ends with or within the taxable year in which the
option holder recognized the income, assuming the amounts satisfy the ordinary
and necessary and reasonable compensation requirements for deductibility.
Vote Required
To be adopted, the Directors Plan Amendment must also be approved by
the holders of a majority of the voting power of the outstanding shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting, voting together as a single class.
Management and the Board recommend a vote FOR this proposal.
PROPOSAL 4 -- INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the
Company's independent accountants for the year ending December 31, 1998 and has
authorized that this selection of independent auditors be submitted for
ratification by the stockholders at the Annual Meeting. KMPG Peat Marwick LLP
audited the Company's financial statements for the year ended December 31, 1997.
Representatives of KPMG Peat Marwick LLP, the Company's independent public
accountants, are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions. If a majority of the shares voted at the
Annual Meeting do not vote for ratification of the selection of KPMG Peat
Marwick LLP, the Board of Directors will reconsider such selection.
On May 1, 1997, the Board of Directors determined that the firm of
Ernst & Young LLP would not be re-engaged to conduct the audit of the Company's
financial statements for the fiscal year ended December 31, 1997.
Ernst & Young LLP's report on the financial statements of the Company
for the past two years prior to that date did not contain any adverse opinion or
disclaimer of opinion, nor was it qualified, or modified as to uncertainty,
audit scope, or accounting principles. There were no disagreements between the
Company and Ernst & Young LLP during the past two years or during the
intervening interim period on any matter of accounting principles or practices,
financial statement disclosure, or audit scope or procedure, which
disagreement(s), if not resolved to the satisfaction of Ernst & Young LLP, would
have caused it to make a reference to the subject matter of the disagreement(s)
in connection with its reports.
Management and the Board recommend a vote FOR this proposal.
8
<PAGE>
EXECUTIVE COMPENSATION
Directors' Compensation
Directors who are not also employees of the Company or its
subsidiaries receive a fee of $4,000 per meeting attended in person and a fee of
$2,000 per committee meeting attended in person, unless such committee meeting
is held on the same day as a meeting of the full Board. Telephonic meetings of
the Board and committees are compensable at the rate of $400. Directors who are
also employees of the Company or its subsidiaries receive no additional
compensation for serving as directors. The Company reimburses all of its
directors for reasonable travel and out-of-pocket expenses in connection with
their attendance at meetings of the Board.
The Company adopted the Directors Plan on March 8, 1996, subject to
stockholder approval, which was given on May 15, 1996. The Company has reserved
165,000 shares of Class A Common Stock to be issued pursuant to the exercise of
options granted under the Directors Plan. The Board has adopted and is
submitting for stockholder approval the Directors Plan Amendment to increase the
number of shares of Class A Common Stock reserved for issuance thereunder and to
make certain other changes. Pursuant to the provisions of the amended Directors
Plan, the Board fully vested the options held by Messrs. David P. Beddow,
William J. Bresnan, Donne F. Fisher, Paul A. Gould and J. C. Sparkman, and
extended the period of time to exercise such options until ten years from the
date of grant, in connection with the resignation of such directors from the
Board in February 1998. For a description of the terms of the Directors Plan and
the effects of the Directors Plan Amendment, see "Proposal 3--Directors Plan
Amendment."
Committees and Meetings
The Board has standing Executive, Audit, Compensation and Special
Compensation Committees. It does not have a nominating committee.
The Executive Committee was established to serve as a representative
committee of the Board to transact the ordinary business of the Company when the
full membership of the Board, or a quorum of the Board, cannot reasonably be
convened. The Executive Committee currently consists of Messrs. Howard
(Chairman), Bennett and Boylan.
The Audit Committee was established to recommend selection of the
Company's independent auditors and to review the financial statements and
reports of the Company and the reports of the independent auditors. The Audit
Committee currently consists of Messrs. Wargo (Chairman), Bennett and Flinn.
The Compensation Committee was established to make recommendations
regarding compensation, including incentive compensation, stock bonus, stock
option, and other incentive or stock plans, and previously administered the
Company's Equity Incentive Plan. The Compensation Committee also reviews and
approves, subject to ratification by the Board, all compensation to the
executive officers. The Compensation Committee currently consists of Messrs.
Wargo (Chairman), Bennett, Flinn and Hindery.
The Special Compensation Committee was established to grant awards
under the Company's Equity Incentive Plan and to make other compensation awards
where necessary in order to comply with the requirements of Section 162(m) of
the Code. The Special Compensation Committee currently consists of two members
of the Compensation Committee, Messrs. Bennett and Wargo.
During 1997, the Board held five meetings. Each director attended more
than 75% of the aggregate number of Board meetings held during the year. The
Audit Committee met separately from the Board four times during 1997, the
Compensation Committee met separately four times, the Executive Committee met
separately once and the Special Compensation Committee met separately four
times. Each director attended more than 75% of the aggregate number of meetings
of all committees of the Board on which such director served.
9
<PAGE>
Compensation Committee Interlocks and Insider
Participation in Compensation Decisions
Mr. Flinn was the Chairman of the Board and Chief Executive Officer of
the Company through June 1997.
Mr. Hindery is President and Chief Operating Officer of TCI and Mr.
Bennett, Mr. Howard and Mr. Romrell are Executive Vice Presidents of TCI. TCI
purchased $8.1 million of video, program promotion and guide services and
subscriber management services from the Company during 1997. Additionally, TCI
purchased system integration services from the Company totaling $1.2 million
during 1997. The Company purchased $36.8 million of programming and production
services from TCI during 1997.
Mr. Bennett is the President and Chief Executive Officer of Liberty.
On February 17, 1998 the Company and Liberty, which is a subsidiary of TCI,
announced an agreement for the Company to acquire certain C-band direct-to-home
satellite entertainment programming and wholesale satellite entertainment
programming assets from Liberty in exchange for 6,375,000 shares of Common
Stock.
Summary Compensation Table
The following Summary Compensation Table sets forth a summary of the
compensation paid by the Company during each of the fiscal years ended December
31, 1997, 1996 and 1995, to the Chief Executive Officer and four other most
highly compensated executive officers ("the Named Executive Officers"). During
the last three fiscal years, none of the Named Executive Officers received any
restricted stock awards or long-term incentive payouts nor did any of the Named
Executive Officers receive any other annual compensation.
<TABLE>
<CAPTION>
Long-Term
Compensation
Name and Annual Compensation Awards All Other
-------------------
Principal Position(1) Year Salary($) Bonus($) Options(#) (2) Compensation($) (3)
- ------------------ ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C>
Gary S. Howard (4) 1997 $215,480 $174,300 100,000 -0-
Chairman of the Board 1996 -0- -0- -0- -0-
and Chief Executive 1995 -0- -0- -0- -0-
Officer
Lawrence Flinn, Jr. (5) 1997 $250,000 -0- -0- $16,491
Chairman of the Board 1996 $646,875 $212,710 -0- $35,711
Emeritus 1995 $568,750 $351,000 -0- $49,970
Peter C. Boylan III 1997 $323,091 $256,300 86,000 $16,025
President and 1996 $259,721 $212,710 150,000 $21,571
Chief Operating Officer 1995 $230,644 $200,000 -0- $49,529
Charles Butler Ammann (6) 1997 $180,000 $ 78,000 -0- $7,843
Senior Vice President and 1996 $166,000 $ 25,000 14,000 $ 260
General Counsel 1995 -0- -0- -0- -0-
Craig M. Waggy (7) 1997 $115,667 $ 77,000 18,000 $5,371
Senior Vice President 1996 $ 99,117 $ 46,170 14,000 $3,276
and Chief Financial 1995 $ 51,154 $ 30,000 -0- $ 17
Officer
</TABLE>
- ----------
(1) The positions shown represent the positions held by such persons at the end
of 1997.
(2) All grants for 1997 and 1996 represent stock options to acquire Class A
Common Stock under the Company's Equity Incentive Plan.
10
<PAGE>
(3) Includes contributions under (i) the Company's SERP and 401(k) Plans
and, (ii) the compensation component of term life insurance premiums,
respectively, as follows for 1997: Mr. Flinn, $12,570 and $3,832; Mr.
Boylan, $15,493 and $393; Mr. Ammann, $7,456 and $372; and Mr. Waggy,
$5,222 and $149.
(4) Mr. Howard joined the Company on June 1, 1997.
(5) Mr. Flinn served as Chairman of the Board and Chief Executive Officer
until June 1997. (6) Mr. Ammann joined the Company on January 1, 1996.
(7) Mr. Waggy joined the Company on June 19, 1995.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning options granted
in 1997 to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable Potential Realizable
Percent of Total Value of Assumed Value of Assumed
Options/SARS Exercise of Annual Rates of Annual Rates of
Options Granted to Employees Base Price Expiration Stock Price Stock Price
Name Granted(#) in Fiscal Year (1) per Share Date Appreciation for Appreciation for
- ---- ---------- ------------------ ----------- ------ Option Term -5% Option Term -10%
---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Gary S. Howard(2) 100,000 21.8% $16.63 05-27-07 $1,045,537 $2,649,597
Lawrence Flinn, Jr. -- -- -- -- -- --
Peter C. Boylan III(2) 86,000 18.8% $15.75 04-30-07 $851,838 $2,158,724
Charles Butler
Ammann -- -- -- -- -- --
Craig M. Waggy (2) 18,000 3.9% $15.75 04-30-07 $178,292 $451,826
- -------------------
</TABLE>
(1) Computation includes 15,000 options granted under the United Video
Satellite Group, Inc. Stock Option Plan for Non-Employee Directors.
(2) Incentive and non-qualified stock options to acquire shares of the
Company's Class A Common Stock.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Year-End Option/SAR Values
The following table sets forth information concerning options
exercised in 1997 and outstanding options held by the Named Executive Officers
named in the Summary Compensation Table as of December 31, 1997:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired on Value December 31, 1997(#) at December 31, 1997($) (1)
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gary S. Howard -- -- -- / 100,000 -- / $1,212,500
Lawrence Flinn, Jr. -- -- -- / -- -- / --
Peter C. Boylan III -- -- 220,244 / 206,000 $3,699,514 / $1,838,000
Charles Butler Ammann -- -- 2,800 / 11,200 $ 45,500 / $ 182,000
Craig M. Waggy -- -- 2,800 / 29,200 $ 45,500 / $ 416,000
</TABLE>
- ----------
(1) The value of unexercised in-the-money options is calculated based upon
the last reported sales price per share of the Company's Class A
Common Stock on the Nasdaq National Market on December 31, 1997
($28.75), less the exercise price.
11
<PAGE>
Compensation Committee Report
The report of the Compensation Committee of the Board (the
"Compensation Committee") shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
Goals. The Company is committed to providing an executive compensation
program that promotes and supports the Company's mission and its stockholder
objectives. This commitment requires an executive compensation program that is
managed as an investment in the Company's executives. In return, these
executives are expected to contribute to the Company's successful financial
performance and help provide an above average return to its stockholders. The
Company's executive compensation program must also:
- Align the interests of the executives with those of the Company's
stockholders by focusing executives on achieving performance
objectives that enhance stockholder value on a continuing basis;
- Enable the Company to attract, retain and motivate high caliber
executives who are among the most skilled, talented and persistent
individuals available in a very competitive marketplace;
- Inspire executives to innovatively and aggressively pursue
individual, team, department and Company goals;
- Emphasize "pay for performance" by having a significant portion of
our executives' total compensation "at risk";
- Establish a general corporate atmosphere that encourages a
willingness to take calculated risks, undertake mutually supportive
team efforts and develop leadership to maintain a company that acts
quickly and flexibly for the benefit of its customers and
stockholders; and
- Require each executive to own and maintain a meaningful equity
interest in the Company and together manage the business from the
perspective of a long-term investor and business owner.
The Company's Executive Compensation Policy is implemented by the
Compensation Committee of its Board.
The Company has designed its executive compensation program using the
above objectives as its foundation. The following describes the three components
of this program and how each relates to Company goals.
Base Salary. Base compensation for the Chief Executive Officer and the
company's other executive officers in 1997, to the extent not specified by
employment agreements, was proposed by the Chief Executive Officer to the
Compensation Committee. The Chief Executive Officer arrived at his proposal
after consultation with the Company's Chief Operating Officer, among others. The
factors considered by the Chief Executive Officer in determining base
compensation were largely based upon historical compensation studies, but
considered the goals stated above. The salary levels proposed were evaluated by
the Compensation Committee based upon historical compensation studies and are
intended to be consistent with competitive practices (including companies with
comparable market valuations, lines of business and/or revenues) and level of
responsibility (with salary increases reflecting competitive and economic
trends, the overall financial performance of the Company and the performance of
the individual executive). Factors considered in gauging the Company's overall
financial performance include the Company's revenues and profits, but market
performance of the Company's common stock was not directly considered.
Annual Bonus. The Company regularly pays cash bonuses to its executive
officers. Bonuses for executive officers in 1997, including the Chief Executive
Officer, were based on the earnings-performance of the Company and the
attainment of specified goals, and were subject to the review and approval of
the Compensation Committee.
12
<PAGE>
Stock Option Plan. Long-term management incentives are intended to be
provided by periodically granting stock options to executives. No specific
formulas are used in determining stock option grants. Factors taken into account
in awarding stock options are generally the same as those used in setting base
salaries and in awarding annual bonuses. The number of options previously
awarded to and held by executive officers is also reviewed in determining
current option grants. During 1997, two executive officers of the Company were
granted stock options due to the performance of the Company; two executive
officers were granted stock options as a recruiting incentive.
Stock Retention. The Company requires that all executives retain at
least 10% of shares obtained through exercise of stock options. The Company
believes all stockholders benefit when the Company is managed with a goal of
maximizing the long-term return to stockholders. Stockholder return can only be
maximized when executives are stockholders and, therefore, also conduct business
in their own best self-interests.
Other Matters. Provisions of the Internal Revenue Code limit, with
certain exceptions, the deductibility by the Company for federal income tax
purposes of any Named Executive Officer's annual compensation exceeding
$1,000,000. None of the Company's current named executive officers have received
otherwise deductible compensation that would be subject to this limit and could
do so at current salary levels only in connection with the exercise of stock
options or payment of bonuses. The Company generally intends to comply with the
requirements of the Code for the available exemption from the $1,000,000
limitation, but it may not be practicable to do so in all cases. Accordingly,
the Company may, in its sole discretion, determine in one or more cases that it
is in the Company's best interests not to satisfy the requirements of the Code
for the exemption.
COMPENSATION COMMITTEE
J. David Wargo
Robert R. Bennett
Lawrence Flinn, Jr.
Leo J. Hindery, Jr.
13
<PAGE>
Stock Price Performance Graph
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The graph below compares the cumulative return of the Company's Class
A Common Stock against the Total Return Index for the Nasdaq Stock Market (U.S.)
and a peer group which is comprised of the Total Return Index for the Nasdaq
Telecommunications Stocks, excluding telephone communications companies. The
cumulative return depicted is based upon an initial investment of $100 over the
period November 19, 1993 through December 31, 1997. The stock price performance
on the graph is not necessarily an indicator of future price performance.
The cumulative return of the Company's Class A Common Stock is based
upon its initial public offering price of $8.00, adjusted for stock split, and
the last reported sale price of the Class A Common Stock as reported on the
Nasdaq National Market System on the last trading day of 1997 ($28.75).
Total Cumulative Shareholder Return Since IPO
[Performance Graph appears in this space]
Assumes $100 invested on November 19, 1993 in United Video Satellite
Group, Inc. Class A Common Stock, Nasdaq Stock Market (US Companies) Index and
Peer Group Index.
<TABLE>
<CAPTION>
November 19, December 31
1993 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
United Video Satellite $100 $81 $150 $169 $219 $359
Group, Inc.
Nasdaq Stock Market (US $100 $103 $101 $142 $175 $215
Companies) Index
Peer Group Index $100 $104 $87 $111 $92 $163
</TABLE>
14
<PAGE>
Employment Agreements
The Company has employment agreements with Messrs. Flinn and Boylan.
The agreements have terms ending on January 25, 1999, and provide for 1998 base
salaries of $698,625 and $400,000 for Messrs. Flinn and Boylan, respectively,
with annual increases of 8% in base salary for Mr. Flinn and 12.5% in base
salary for Mr. Boylan. Bonuses may be granted from time to time at the
discretion of the Compensation Committee. Messrs. Flinn and Boylan have each
agreed they will not compete against the Company during the period they are
employed by the Company and for three years after termination of the agreement.
Employment may be terminated by the Company at any time, with or without cause.
If employment is terminated without cause, the terminated individual is entitled
to (i) a continuation of certain employee benefits, (ii) a severance payment
equal to the amount of the base salary that would have been receivable through
the later of the remainder of the agreement's term or one year from the date of
termination, and (iii) payment of one-half of the base salary for the balance of
the three-year period of the agreement not to compete (unless the terminated
individual is employed or engaged as a full-time consultant). If employment is
terminated by the Company or if the individual resigns after being assigned to a
position of lesser responsibility, in either case within a six-month period
after a change of control, the individual is entitled to a continuation of
certain employee benefits and a severance payment equal to the amount of their
base salary for the remainder of a two-year period following the change in
control.
Mr. Flinn resigned as Chairman of the Board and Chief Executive
Officer of the Company during 1997 because of health concerns, but continues to
serve on the Board, Audit Committee and Compensation Committee and as an advisor
to the Company at a reduced salary of $250,000 with no bonus.
Stockholder Agreement with TCI
On January 25, 1996, TCI acquired a controlling interest in the
Company from Mr. Flinn, the Company's Chairman and Chief Executive Officer, when
the Company merged (the "Merger") with a wholly owned subsidiary of TCI pursuant
to an Agreement and Plan of Merger dated as of July 10, 1995, as amended (the
"Merger Agreement"), among the Company, TCI and TCI Merger Sub, Inc. In
connection with the Merger, the Company and TCI entered into a Stockholder
Agreement dated as of January 25, 1996, which currently requires TCI to vote its
shares of the Company's equity securities in any general election of directors
in favor of the election of Mr. Boylan as a director so long as he is an
executive officer of the Company. The Stockholder Agreement in certain
circumstances also limits TCI's ability to vote its equity securities of the
Company at a stockholders' meeting in favor of certain transactions requiring
stockholder approval.
Certain Transactions
See "Executive Compensation -- Compensation Committee Interlocks and
Insider Participation in Compensation Decisions."
OTHER BUSINESS
The Company does not anticipate that any other matters will be brought
before the Meeting. However, if any additional matters shall properly come
before the Meeting, it is intended that the persons authorized under proxies
may, in the absence of instructions to the contrary, vote or act thereon in
accordance with their best judgment.
BY THE BOARD OF DIRECTORS
/s/ Peter C. Boylan III
Peter C. Boylan III
President and Chief Operating Officer
Tulsa, Oklahoma
July 7, 1998
15
<PAGE>
APPENDIX - FORM OF PROXY
PROXY
COMMON STOCK
UNITED VIDEO SATELLITE GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
UNITED VIDEO SATELLITE GROUP, INC.
Annual Meeting of Shareholders - July 28, 1998
The undersigned hereby appoints Peter C. Boylan III and Charles B. Ammann, or
either of them, with full power of substitution in each, proxies to vote all
stock of the undersigned in United Video Satellite Group, Inc. at the Annual
Meeting of Shareholders to be held at the Southern Hills Marriott Hotel, 1902
East 71st Street South, Tulsa, Oklahoma, on July 28, 1998, at 10:00 a.m., local
time, and at any and all adjournments thereof, upon the matter of the election
of directors, the proposals referred to in Item 2, Item 3 and Item 4 of this
proxy and any other business that may properly come before the Annual Meeting.
Shares will be voted as specified. IF NO SPECIFICATION IS MADE, SHARES WILL BE
VOTED TO ELECT THE DIRECTORS AS PROPOSED AND IN FAVOR OF PROPOSALS 2, 3 AND 4.
The proxies or substitutes may vote accordingly in their discretion upon any
other business that may properly come before the Annual Meeting or any
adjournments thereof.
--- Please mark your
| X | vote as in this
--- example
1. ELECTION OF DIRECTORS: Nominees: Gary S. Howard, Peter C. Boylan III,
Lawrence Flinn, Jr., Robert P. Bennett, Leo J. Hindery, Jr., Larry E.
Romrell, and J. David Wargo.
VOTE FOR VOTE WITHHELD
All nominees from all nominees
-- --
|--| |--|
To withhold authority to vote for any nominee, write that nominee's name on the
space below.
----------------------------
This Proxy is Continued on the Reverse Side
Please Sign on the Reverse Side and Return Promptly
16
<PAGE>
2. To ratify and approve the amendment to the restated certificate of
incorporation of United Video Satellite Group, Inc. to increase the authorized
number of shares of Class A Common Stock from 60,000,000 to 650,000,000 and to
increase the authorized number of shares of Class B Common Stock from 30,000,000
to 300,000,000.
FOR AGAINST ABSTAIN
-- -- --
|--| |--| |--|
3. To ratify and approve the amendment to the United Video Satellite Group, Inc.
Stock Option Plan for Non-Employee Directors to increase the number of shares of
Class A Common Stock reserved for issuance thereunder from 165,000 to 250,000
and to make certain other changes.
FOR AGAINST ABSTAIN
-- -- --
|--| |--| |--|
4. To ratify and approve the appointment of KPMG Peat Marwick LLP as the
independent auditors to audit the financial statements of the Company for the
fiscal year ending December 31, 1998.
FOR AGAINST ABSTAIN
-- -- --
|--| |--| |--|
Please mark, sign, date and return this proxy card promptly.
SIGNATURE __________________________ DATE ________________
SIGNATURE __________________________ DATE ________________
NOTE: Please sign this proxy exactly as your name appears hereon, including the
title "Executor", "Trustee", etc., if same is indicated. If joint account, each
joint owner should sign. If stock is held by a corporation, this proxy should be
executed by a proper officer thereof.
17
<PAGE>
