<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Heftel Broadcasting Corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
HEFTEL BROADCASTING CORPORATION
3102 OAK LAWN, SUITE 215
DALLAS, TX 75219
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 1999
To the Stockholders:
The Annual Meeting of the Stockholders of HEFTEL BROADCASTING
CORPORATION (the "Annual Meeting") will be held at the Hotel Crescent Court,
400 Crescent Court, Dallas, Texas 75201, on June 3, 1999 at 10:00 a.m. local
time, to consider and act upon the following matters, all as more fully
described in the accompanying Proxy Statement which is incorporated herein by
this reference:
(1) To elect five members to the Board of Directors to serve until the next
Annual Meeting of Stockholders or until their respective successors shall
be elected and qualify.
(2) To amend the Company's Second Amended and Restated Certificate of
Incorporation to change the name of the Company from "Heftel Broadcasting
Corporation" to "Hispanic Broadcasting Corporation."
(3) To ratify the appointment of KPMG LLP as independent auditors for the
fiscal year ending December 31, 1999.
(4) To transact such other business and to consider and take action upon any
and all matters that may properly come before the Annual Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on April 29,
1999, as the record date for the determination of the stockholders entitled
to notice of and to vote at the Annual Meeting and any adjournment thereof.
For ten days prior to the Annual Meeting, a complete list of stockholders
entitled to vote at the Annual Meeting will be available for examination by
any stockholder for any purpose germane to the Annual Meeting during ordinary
business hours at the Company's executive office, located at the address set
forth above.
All stockholders are invited to attend the Annual Meeting in person.
By Order of the Board of Directors
David D. Lykes
CORPORATE SECRETARY
Dallas, Texas
April 30, 1999
IMPORTANT WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE
MARK, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE ANNUAL MEETING.
<PAGE>
HEFTEL BROADCASTING CORPORATION
3102 OAK LAWN, SUITE 215
DALLAS, TEXAS 75219
(214) 525-7700
---------------
PROXY STATEMENT
---------------
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Heftel Broadcasting Corporation (the "Company") in connection
with the Annual Meeting of Stockholders and any adjournments thereof (the
"Annual Meeting") to be held on June 3, 1999, at the Hotel Crescent Court,
400 Crescent Court, Dallas, Texas, 75201, at 10:00 a.m. local time. This
Proxy Statement and the associated Proxy are first being sent or given to
stockholders on or about April 30, 1999.
Stockholders are requested to complete, date, and sign the accompanying
proxy, and return it promptly to the Company. Any proxy given may be revoked
by a stockholder at any time before it is voted at the Annual Meeting or any
adjournments thereof by filing with the Secretary of the Company a notice in
writing revoking the proxy, or by duly executing and submitting a proxy
bearing a later date. Proxies may also be revoked by any stockholder present
at the Annual Meeting who expresses a desire to vote such shares in person.
Subject to such revocation, all proxies duly executed and received prior to,
or at the time of, the Annual Meeting will be voted in accordance with the
specification on the proxy card. If no specification is made, proxies will be
voted in favor of the proposals therein. As to other matters, if any, to be
voted upon, the persons designated as proxies will take such actions as they,
in their discretion, may deem advisable. The persons named as proxies were
selected by the Board of Directors of the Company, and each of them is a
director of the Company.
Under the Company's bylaws and Delaware law, shares represented by
proxies that reflect abstentions or "broker non-votes" (i.e.: shares held by
a broker or nominee which are represented at the Annual Meeting, but with
respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled
to vote for purposes of determining the presence of a quorum. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no
impact on the election of directors, except to the extent that the failure to
vote for an individual results in another individual receiving a larger
proportion of votes. Any shares represented at the Annual Meeting but not
voted (whether by abstention, broker non-vote or otherwise) with respect to
the proposals to (i) amend the Company's Second Amended and Restated
Certificate of Incorporation to change the name of the Company, or (ii)
ratify the selection of KPMG LLP will have no effect on the vote for such
proposals except to the extent the number of abstentions causes the number of
shares voted in favor of the proposal not to equal or exceed the minimum
number of shares necessary to approve such proposals (in which case the
proposal would not be adopted).
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others forwarding the
solicitation material to beneficial owners of stock. Directors, officers and
regular employees of the Company may solicit proxies personally, by telephone
or by telegraph but will not be separately compensated for such solicitation
services.
<PAGE>
STOCKHOLDERS' VOTING RIGHTS
Each share of the Company's Class A Common Stock, $.001 par value
("Class A Common Stock"), outstanding at the close of business on April 29,
1999, (the "Record Date") will be entitled to notice of, and to vote at, the
Annual Meeting. Each share of the Company's Class A Common Stock is entitled
to one vote. There were 35,182,719 shares of Class A Common Stock outstanding
on the Record Date. The Company also has 14,156,470 shares of Class B Common
Stock, $.001 par value ("Class B Common Stock" and together with the Class A
Common Stock, the "Common Stock") outstanding. All of the outstanding shares
of Class B Common Stock are currently held by Clear Channel Communications,
Inc. ("Clear Channel") and its affiliates. Holders of Class B Common Stock do
not have voting rights except as provided in the Company's Second Amended and
Restated Certificate of Incorporation. As long as Clear Channel and its
affiliates own at least 20% of the then outstanding Common Stock, neither the
Company nor any of its subsidiaries may, without the affirmative vote or
consent of the holders of a majority of the Class B Common Stock voting as a
single class, (i) effect the sale, lease or other transfer of all or
substantially all of the Company's assets, or any merger or consolidation
involving the Company where the stockholders of the Company immediately prior
to such transaction would not own at least 50% of the capital stock of the
surviving entity, or any reclassification, recapitalization, dissolution,
liquidation or winding up of the Company; (ii) authorize, issue or obligate
itself to issue any shares of Preferred Stock; (iii) make or permit any
amendment to the Company's certificate of incorporation that adversely
affects the rights of the holders of the Class B Common Stock; (iv) declare
or pay any non-cash dividends on or make any other non-cash distribution on
the Company's Common Stock; or (v) make or permit any amendment or
modification to the Company's certificate of incorporation concerning the
Company's capital stock. Shares of Class B Common Stock will be entitled to
one vote per share on all such matters submitted for a vote or consent to the
holders thereof. In addition, shares of Class B Common Stock are convertible
into shares of Class A Common Stock at the holder's option, subject to the
receipt of applicable regulatory approvals, including compliance with the
FCC's "cross-interest" policy. The voting rights and conversion privileges of
the Class B Common Stock as described herein may have the effect of impeding
the acquisition of control of the Company by means of a tender offer, proxy
fight, open market purchases or otherwise. See "Security Ownership of Certain
Beneficial Owners and Management" and "Certain Transactions."
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Class A Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. If a quorum is not present, the
stockholders entitled to vote who are present in person or by proxy at the
Annual Meeting have the power to adjourn the Annual Meeting from time to
time, without notice other than an announcement at the Annual Meeting, until
a quorum is present. At any adjourned Annual Meeting at which a quorum is
present, any business may be transacted that might have been transacted at
the Annual Meeting as originally noticed.
With respect to election of directors, the five candidates receiving the
highest number of votes from holders of Class A Common Stock will be elected.
The approval of the amendment to the Company's Second Amended and Restated
Certificate of Incorporation to change the name of the Company requires the
affirmative vote of stockholders holding a majority of the outstanding shares
of Class A Common Stock. The appointment of KPMG LLP requires the affirmative
vote of stockholders holding a majority of the shares of Class A Common Stock
represented and voting at the Annual Meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership
of the Class A Common Stock and Class B Common Stock as of the Record Date by
(i) each person known by the Company to be the beneficial owner of more than
5% of the outstanding shares of Class A Common Stock, (ii) each director of
the Company, (iii) the current and former Chief Executive Officers and each
other executive officer of the Company named in the Summary Compensation
Table, and (iv) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF
NAME CLASS A COMMON STOCK PERCENT OF CLASS
---- -------------------- ----------------
<S> <C> <C>
McHenry T. Tichenor, Jr......................................... 7,204,532(1) 20.5%
McHenry T. Tichenor............................................. 7,160,342(2) 20.4
Robert W. Hughes................................................ 5,000(3) *
James M. Raines................................................. 5,500(3) *
Ernesto Cruz.................................................... 5,000(3)(4) *
Ricardo A. del Castillo......................................... 122,736 *
Jeffrey T. Hinson............................................... 157,216(5) *
David D. Lykes.................................................. 256,000(6) *
Ronald Baron(7)................................................. 3,829,900 10.9
Warren W. Tichenor.............................................. 7,209,572(8) 20.5
AMVESCAP PLC(9)................................................. 1,808,000 5.1
Janus Capital Corporation(10)................................... 3,568,445 10.1
Putnam Investments, Inc.(11).................................... 3,490,684 9.9
All Directors and Executive Officers as a Group (8 persons)..... 7,755,984 22.0
</TABLE>
- ----------------------
*Indicates less than 1.0%.
(1) Includes 1,755,334 shares held by McHenry T. Tichenor, Jr. and 5,449,198
shares held by McHenry T. Tichenor Jr.'s family, with respect to which
McHenry T. Tichenor, Jr. shares voting control pursuant to a voting
agreement among certain members of the Tichenor family (the "Tichenor
Voting Agreement").
(2) Includes 195,468 shares held by McHenry T. Tichenor and 6,964,874 shares
held by McHenry T. Tichenor's family, with respect to which McHenry T.
Tichenor shares voting control pursuant to the Tichenor Voting Agreement.
(3) Includes 5,000 vested but unexercised stock options for shares of Class A
Common Stock.
(4) Excludes 2,000 shares owned by the reporting person's children.
(5) Excludes 4,694 shares owned by the reporting person's children.
(6) Excludes 18,000 shares held by the reporting person's spouse.
(7) Ronald Baron reported beneficial ownership of an aggregate of 3,829,900
shares of Class A Common Stock through Baron Capital Group, Inc. which is
controlled by Ronald Baron. Ronald Baron disclaims beneficial ownership
since all shares are held on behalf of advisory clients. Ronald Baron's
mailing address is 767 Park Avenue, 24th floor, New York, New York 10153.
(8) Includes 2,225,778 shares held by Warren W. Tichenor and 4,983,794 shares
held by Warren W. Tichenor's family, with respect to which Warren W.
Tichenor shares voting control pursuant to the Tichenor Voting Agreement.
Excludes 6,000 shares held by the reporting person's spouse.
Warren W. Tichenor's mailing address is 37 Eton Green Circle, San Antonio,
Texas 78257.
(9) Address: 11 Devonshire Square, London EC2M 4YR, England.
(10) Address: 100 Fillmore Street, Denver, Colorado 80206-4923.
(11) Address: One Post Office Square, Boston, Massachusetts 02109.
As of the Record Date, Clear Channel and its affiliates owned no shares
of Class A Common Stock. However, Clear Channel and its affiliates owned all
of the outstanding shares of the Company's Class B Common Stock (14,156,470
shares), which accounted for approximately a 28.7% interest in the Common
Stock of the Company.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Five directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting to hold office until the next Annual Meeting of
Stockholders or until their respective successors have been elected and shall
qualify. The Board of Directors has designated McHenry T. Tichenor, Jr.,
McHenry T. Tichenor, Robert W. Hughes, James M. Raines and Ernesto Cruz as
nominees, each of whom currently serves as a member of the Board of
Directors. It is the intention of the persons named in the enclosed proxy to
vote the shares covered by each proxy for the election of all the nominees
named above. Although the Board of Directors does not anticipate that any
nominees will be unavailable for election, in the event of such occurrence
the proxies will be voted for such substitute, if any, as the Board of
Directors may designate. There is no cumulative voting for the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT EACH HOLDER OF CLASS A COMMON
STOCK VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE.
DIRECTORS, NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
The following table sets forth information concerning the current
directors (representing all nominees for director) and executive officers of
the Company:
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY AGE
---- --------------------- ---
<S> <C> <C>
McHenry T. Tichenor, Jr. Chairman of the Board, President and Chief Executive Officer 43
David D. Lykes Executive Vice President, Chief Operating Officer and
Secretary 64
Jeffrey T. Hinson Senior Vice President, Chief Financial Officer and Treasurer 44
McHenry T. Tichenor Director 66
Robert W. Hughes Director 63
James M. Raines Director 59
Ernesto Cruz Director 44
</TABLE>
McHenry T. Tichenor, Jr. has been the Chairman of the Board, President,
Chief Executive Officer, and a director of the Company since February 14,
1997. From 1981 until February 14, 1997, Mr. Tichenor was the President,
Chief Executive Officer, and a director of Tichenor.
David D. Lykes has served as the Executive Vice President and Chief
Operating Officer of the Company since February 14, 1997. Mr. Lykes
previously served as the Senior Vice President of Operations and a director
of Tichenor. Mr. Lykes began his career at Tichenor in 1959.
Jeffrey T. Hinson has served as the Senior Vice President and Chief
Financial Officer of the Company since February 14, 1997. From October 1995
until February 14, 1997, Mr. Hinson served as the Chief Financial Officer,
Treasurer, and a director of Tichenor. From October 1991 to October 1995, Mr.
Hinson was president of Alliance Investors Holding, Ltd., a privately held
merchant bank located in Houston, Texas.
McHenry T. Tichenor has been a director and an employee of the Company
since February 14, 1997. From 1981 until February 14, 1997, Mr. Tichenor
served as the Vice Chairman and a director of Tichenor. McHenry T. Tichenor
is the father of McHenry T. Tichenor, Jr.
4
<PAGE>
Mr. Hughes became a director of the Company on February 14, 1997. Mr.
Hughes is Chairman of Prime Management Group in Austin, Texas. In that
capacity, he also serves as Chairman of Prime Cable, Prime Video, Prime
Venture I, and Prime New Ventures Management, and has served in such position
for more than five years. Mr. Hughes serves on the Board of Directors of
Atlantic Cellular, Providence, Rhode Island, and Hawaiian Wireless, Honolulu,
Hawaii. For the past 28 years, he has primarily been involved in the cable
television industry.
Mr. Raines became a director of the Company on August 5, 1996. Mr.
Raines is the President of James M. Raines & Company, and has served in such
position for more than five years. Mr. Raines serves on the Board of
Directors of Waddell & Reed Financial, Inc.
Mr. Cruz became a director of the Company on August 5, 1996. Mr. Cruz is
a Managing Director of Credit Suisse First Boston Corporation, and has served
in this position for more than five years.
5
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES THEREOF
The Board of Directors has an Audit Committee and a Compensation
Committee. The functions of the Audit Committee include (i) selecting
independent auditors for the Company, (ii) reviewing and arranging the scope
of audits of the Company's financial statements and reviewing with the
independent auditors and management of the Company the results thereof,
including evaluation of the internal accounting controls, and (iii) reviewing
and approving the Company's accounting principles and methods of their
application. The members of the Audit Committee are Messrs. Hughes
(Chairman), Cruz and Raines. The Audit Committee held four meetings during
the last fiscal year.
The members of the Compensation Committee are Messrs. Cruz (Chairman),
Hughes and Raines. The functions of the Compensation Committee are to (i)
approve policies, plans and performance criteria concerning the salaries,
bonuses and other compensation of the executive officers of the Company, (ii)
review and approve the salaries, bonuses and other compensation of the
executive officers of the Company, (iii) establish and review policies
regarding executive officer prerequisites, (iv) engage experts on
compensation matters, if and when the members of the Compensation Committee
deem it proper or advisable to do so, and (v) perform such other duties as
shall from time to time be delegated by the Board. The Compensation Committee
held three meetings during the last fiscal year.
The Board of Directors held a total of four meetings during the last
fiscal year. Each incumbent director who was a director of the Company during
the fiscal year ended December 31, 1998, attended more than 75% of the
aggregate number of meetings of the Board and the committees of which they
were members that were held during the period such director was a member of
the Board of Directors.
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
of each individual who served as Chief Executive Officer during the fiscal
year ended December 31, 1998, and each of the other three most highly
compensated executive officers whose total cash compensation exceeded
$100,000 for services rendered in all capacities for the year ended December
31, 1998 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------------- -----------------------------------
Awards Payouts
Other -----------------------------------
Annual Restricted All Other
Compen- Stock LTIP Compensation
Name And Principal Position Year Salary ($) Bonus ($) sation ($) Awards ($) Options(#) Payout ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
McHenry T. Tichenor, Jr. 1998(1) $ 265,897 $ 249,635 $ - $ - 18,000 $ - $ 1,850(4)
Chairman, President and CEO 1997(2)(3) 227,500 240,243 - - 40,000 - 1,850(4)
David D. Lykes 1998(1) 230,000 170,313 - - 16,000 - 23,689(5)
Executive Vice President 1997(2)(3) 201,250 161,199 - - 35,000 - 15,025(5)
and COO
Jeffrey T. Hinson 1998(1) 180,000 160,805 - - 16,000 - 1,850(4)
Senior Vice President 1997(2)(3) 157,500 151,042 - - 35,000 - 1,850(4)
and CFO
6
<PAGE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------------- -----------------------------------
Awards Payouts
Other -----------------------------------
Annual Restricted All Other
Compen- Stock LTIP Compensation
Name And Principal Position Year Salary ($) Bonus ($) sation ($) Awards ($) Options(#) Payout ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ricardo A. del Castillo(6) 1998(1) 133,269 66,648 - - 8,000 - 1,850(4)
Former Senior Vice President 1997(2)(3) 105,000 86,696 - - 20,000 - 1,850(4)
</TABLE>
(1) Represents the year ended December 31, 1998.
(2) Represents partial year compensation in 1997. Became an executive officer
of the Company on February 14, 1997 upon consummation of the Tichenor
Merger.
(3) Represents the year ended December 31,1997, except as noted in (2) above.
(4) Represents Company contributions to the 401(k) plan account of the
respective employee.
(5) Represents $23,439 and $13,175 of insurance premiums paid by the Company
for the years ended December 31, 1998 and 1997, respectively, on a
split-dollar life insurance policy where Mr. Lykes names the beneficiary.
The amount includes the term life portion of the premiums paid by the
Company. The remaining $1,850 represents Company contributions to his
401(k) plan account.
(6) Mr. A. del Castillo resigned from the Company on January 25, 1999.
OPTIONS
The following table sets forth certain information concerning options
granted to the Named Executive Officers during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Potential Realizable Value At Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
--------------------------------------------------------------------------------------
Percent of
Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price
Name Granted (#) Year ($/share) Expiration Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
McHenry T. Tichenor, Jr. 18,000 4.9% $36.25 06/04/2008 $410,354 $1,039,917
David D. Lykes 16,000 4.3 36.25 06/04/2008 364,759 924,371
Jeffrey T. Hinson 16,000 4.3 36.25 06/04/2008 364,759 924,371
Ricardo A. del Castillo 8,000 2.2 36.25 06/04/2008 182,379 462,185
</TABLE>
7
<PAGE>
The following table sets forth certain information regarding stock
options exercised by the Named Executive Officers during the year ended
December 31, 1998, including the aggregate value of gains on the date of
exercise. In addition, the table sets forth the number of shares covered by
both exercisable and nonexercisable stock options as of December 31, 1998.
Also reported are the values of "in the money" options which represent the
positive spread between the exercise price of any existing stock options and
the Common Stock price as of December 31, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End (#) at Fiscal Year End ($)
------------------------------ ----------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
McHenry T. Tichenor, Jr. - - - 58,000 - $1,264,000
David D. Lykes - - - 51,000 - 1,109,250
Jeffrey T. Hinson - - - 51,000 - 1,109,250
Ricardo A. del Castillo - - - 28,000 - 619,000
</TABLE>
EMPLOYMENT AGREEMENTS
On February 14, 1997, upon the closing of the Tichenor Merger, the
Company entered into an Employment Agreement with McHenry Tichenor, Jr. to
serve as President and Chief Executive Officer of the Company. Mr. Tichenor's
Employment Agreement provides for a five year term at an annual salary of
$260,000 plus incentive compensation as determined by the Compensation
Committee of the Board of Directors. Upon termination by the Company without
cause or by Mr. Tichenor for good reason, the Company is obligated to pay Mr.
Tichenor a lump sum amount equal to the estimated payments of salary and
bonus remaining through the end of the term of the agreement. Furthermore,
Mr. Tichenor's Employment Agreement provides that Mr. Tichenor agrees not to
compete with the Company for a period of one year following the date his
Employment Agreement is terminated.
DIRECTOR COMPENSATION
Each member of the Board of Directors other than McHenry T. Tichenor,
Jr. receives an annual fee of $20,000, payable in quarterly installments
which the directors may elect to receive in cash or shares of the Company's
Class A Common Stock. Each non-employee director receives a one-time grant of
2,500 options for the Company's Class A Common Stock when they attend their
first meeting of the Board of Directors. These options are fully exercisable
commencing six months from the date of grant and expire ten years after the
date of grant. The Company also reimburses directors for expenses related to
attending board or committee meetings. The Company's directors do not receive
any additional compensation for attendance at board or committee meetings.
CERTAIN TRANSACTIONS
The following transactions were entered into between the Company and
certain current directors, nominees for election as directors, officers and
beneficial owners of five percent or more of the Company's Common Stock.
On February 3, 1997, Tichenor, a wholly-owned subsidiary of the Company,
granted Heart Unlimited Company ("Heart") an option to purchase radio station
KPOZ(AM) in San Antonio, Texas for a purchase price of $1.0 million. McHenry
T. Tichenor, a director of the Company and the father of McHenry T. Tichenor,
Jr., is the controlling shareholder of Heart. The term of the option was
from February
8
<PAGE>
3, 1997, until November 3, 1998. The option was not exercised and it expired.
In addition, Tichenor entered into a 24-month Local Marketing Agreement with
Heart. Under the terms of the Local Marketing Agreement, Heart pays the
Company $4,000 a month during the first 12 months of the agreement and $5,000
a month during the last 12 months of the agreement. Heart also reimburses the
Company for the cost of operating and maintaining the station's transmitter.
The term of the Local Marketing Agreement expired on February 28, 1999.
In connection with the closing of the Tichenor Merger on February 14,
1997, McHenry T. Tichenor, Jr., McHenry T. Tichenor, certain other members of
the Tichenor family, David D. Lykes, Jeffrey T. Hinson, Ricardo A. del
Castillo, and certain other former Tichenor stockholders (the "Major Tichenor
Stockholders") entered into a Registration Rights Agreement (the "Tichenor
Registration Rights Agreement") pursuant to which the Company granted to the
Major Tichenor Stockholders the following demand registration rights: (i) at
any time during the three year period following the date on which Clear
Channel beneficially owns a greater number of shares of Class A Common Stock
than the number of shares owned by the Major Tichenor Stockholders (the
"Conversion Date"), up to two demand registrations, and (ii) prior to the
Conversion Date, during any period (a) in which less than 2.0 million shares
of Class A Common Stock are held by public stockholders, one demand
registration or (b) after February 14, 1998, until the earlier of (1) such
time as the Company consummates a qualified public offering (as defined in
the Tichenor Registration Rights Agreement) or (2) the exercise of the demand
registration right under clause (a), one demand registration. Any demand
registration must be made by the holders of at least 25% of the registrable
securities held by the Major Tichenor Stockholders and the size of the
proposed registered offering must be at least $20.0 million. The Tichenor
Registration Rights Agreement also provides the Major Tichenor Stockholders
with certain piggyback registration rights.
In connection with the closing of the Tichenor Merger on February 14,
1997, the Company entered into a Registration Rights Agreement with Clear
Channel (the "Clear Channel Registration Rights Agreement"). Under the Clear
Channel Registration Rights Agreement, the Company has granted Clear Channel
certain rights to demand registration of shares of the Company's Class A
Common Stock in the event of a distribution of such shares to Clear Channel's
stockholders. The agreement also provides Clear Channel with certain
"piggy-back" registration rights.
In connection with the closing of the Tichenor Merger on February 14,
1997, Clear Channel and the Major Tichenor Stockholders entered into a
Stockholders Agreement with the Company whereby such stockholders agreed to
certain restrictions on the transfer of their shares of Class A Common Stock
and granted certain rights of first refusal and "tag along" rights with
respect to certain sales of such shares.
Ernesto Cruz, a director of the Company, is a Managing Director of
Credit Suisse First Boston Corporation, which performed investment banking
services for the Company during the last fiscal year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 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 a registered class of the Company's equity securities to file various
reports with the Securities and Exchange Commission concerning their holdings
of, and transactions in, securities of the Company. Copies of these filings
must be furnished to the Company.
Based on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and
directors, the Company believes that, during the year ended December 31,
1998, all of its directors and executive officers were in compliance with the
applicable filing requirements.
9
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews the performance of the executive
officers of the Company, reviews and approves the compensation of the
executive officers of the Company, and reviews the compensation programs for
other key employees, including salary and cash bonus levels. The Compensation
Committee currently consists of three outside directors, Ernesto Cruz, Robert
W. Hughes and James M. Raines. Robert Hughes and James M. Raines are also
members of the committee (the "Option Committee") that awards options under
the Company's Long-Term Incentive Plan (the "Incentive Plan").
COMPENSATION POLICIES AND PHILOSOPHY
The financial success of the Company is linked to the ability of its
executive officers and managers to direct the Company's current operations,
and to assess the advantages of potential acquisitions, and realign the
operations of the acquired entities with the operating policies of the
Company. A major objective of the Company's compensation strategy is to
attract and retain top-quality executive officers and managers. Another
objective of the Company's compensation strategy is to reward executive
officers and managers based on the financial performance of operations under
their control. Financial incentives are used to motivate those responsible to
achieve the Company's financial goals and to align the interests of the
Company's managers with the interests of the Company's stockholders.
In order to achieve the foregoing objectives, the Company uses a
combination of base salary, cash bonuses, and stock options.
In establishing the compensation levels for the Company's executive
officers, the Compensation Committee considers a number of factors, including
the level and types of compensation paid to executive officers in similar
positions by comparable companies. In addition, the Compensation Committee
evaluates the Company's performance by looking at factors such as performance
relative to competitors, performance relative to business conditions and the
success of the Company in meeting its financial objectives.
COMPONENTS OF COMPENSATION
Executive officer base salaries are established in relation to salaries
for individuals in comparable positions paid by other companies in the radio
broadcast industry.
Executive officer cash bonuses are used to provide executive officers
with financial incentives to meet annual performance targets. The performance
targets are based on the Company's budgeted goals pursuant to a detailed
annual operating plan. Bonus recommendations for executive officers other
than the Chief Executive Officer ("CEO") are proposed by the CEO, reviewed
and, when appropriate, revised and approved by the Compensation Committee.
The Compensation Committee also establishes the bonus level for the CEO.
The Compensation Committee believes that equity ownership by the
executive officers, managers, and other employees of the Company provides
incentive to build stockholder value and aligns the interests of these
employees with the interests of stockholders. Upon hiring executive officers,
managers, and certain other key employees, the Option Committee, a subset of
the Compensation Committee, typically approves stock option grants under the
Incentive Plan, subject to applicable vesting periods. Thereafter, the
10
<PAGE>
Option Committee considers awarding additional grants, usually on an annual
basis, under the Incentive Plan. The Option Committee believes these
additional annual grants will provide incentives for executive officers,
managers, and key employees to remain with the Company. Options are granted
at the current market price of the Company's Class A Common Stock and,
consequently, have value only if the price of the Company's Class A Common
Stock increases over the exercise price. The size of the initial and periodic
grants to employees other than the CEO and the executive officers are
proposed by the CEO, reviewed and, when appropriate, revised and approved by
the Option Committee. The Option Committee establishes the size of the
initial and periodic grants to the CEO and the executive officers.
At the 1997 Annual Meeting, the stockholders approved the Incentive
Plan, which meets the requirements of Section 162(m) of the Internal Revenue
Code. The Company's present intention is that awards under the Incentive Plan
comply with Section 162(m).
COMPENSATION OF THE CEO
On February 14, 1997, the Company entered into an Employment Agreement
with McHenry T. Tichenor, Jr., Chairman of the Board, President, and Chief
Executive Officer of the Company, which provides an annual base salary of
$260,000, with monthly and annual bonuses based on the performance of the
Company. See "Employment Agreements." The Compensation Committee reviews the
performance of the CEO of the Company, as well as other executive officers of
the Company annually.
Respectfully submitted,
Compensation Committee
Ernesto Cruz
Robert W. Hughes
James M. Raines
11
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graph below compares the cumulative total stockholder return on the
Company's Class A Common Stock with the cumulative total return on the
Standard & Poor's 500 Index and the Standard & Poor's Broadcasting Index for
TV, Radio and Cable for the period commencing on July 27, 1994 (the date
trading of the Company's Class A Common Stock commenced on the Nasdaq
National Market) and ending on December 31, 1998. The data set forth below
assumes the value of an investment in the Company's Class A Common Stock and
each Index was $100 on July 27, 1994.
COMPARISON OF 53 MONTH CUMULATIVE TOTAL RETURN*
AMONG HEFTEL BROADCASTING CORPORATION, THE S & P 500 INDEX AND THE S & P
BROADCASTING (TV, RADIO & CABLE) INDEX
[GRAPH]
<TABLE>
<CAPTION>
7/27/94 SEP 94 SEP 95 SEP 96 DEC 96 DEC 97 DEC 98
<S> <C> <C> <C> <C> <C> <C> <C>
Heftel Broadcasting Corporation 100.00 135.90 197.44 447.44 323.08 958.97 1,010.26
Standard & Poor's 500 100.00 104.89 136.09 163.77 177.42 236.61 304.22
Standard & Poor's Broadcasting
(TV, Radio & Cable) 100.00 106.24 132.70 109.25 113.40 186.57 289.43
</TABLE>
12
<PAGE>
PROPOSAL TWO
AMENDMENT TO THE COMPANY'S SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY
The Board of Directors has unanimously approved and recommends to the
stockholders an amendment to the Company's Second Amended and Restated
Certificate of Incorporation to change the name of the Company from "Heftel
Broadcasting Corporation" to "Hispanic Broadcasting Corporation." The Board
of Directors believes that the change in name will better reflect the present
operations and business of the Company.
The change of the Company's name will become effective upon the filing
of a certificate of amendment to the Company's Second Amended and Restated
Certificate of Incorporation with the Secretary of State of the state of
Delaware, which is anticipated to be as soon as practicable following the
date of the Annual Meeting. The ticker symbol for the Company's Class A
Common Stock will not change from "HBCCA."
The change in the Company's name will not affect the validity or
transferability of the Company's outstanding securities or affect the
Company's capital or corporate structure. The Company's stockholders will not
be required to exchange any certificates representing any of the Company's
securities held by them.
THE BOARD RECOMMENDS THAT THE HOLDERS OF CLASS A COMMON STOCK VOTE "FOR"
THE PROPOSED AMENDMENT.
13
<PAGE>
PROPOSAL THREE
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
On February 19, 1997, Ernst & Young LLP, the Company's prior independent
accountants, were notified that KPMG LLP had been approved by the Board of
Directors of the Company and its Audit Committee as the Company's new
independent accountants. Ernst & Young LLP had served as the independent
accountants for the Company and its subsidiaries for the fiscal year ended
September 30, 1996 and the three months ended December 31, 1996. The
independent auditors' reports of Ernst & Young LLP on the consolidated
financial statements of the Company and its subsidiaries as of September 30,
1996 and December 31, 1996, and for the year ended September 30, 1996 and the
three months ended December 31, 1996, each expressed an unqualified opinion,
and were not modified as to uncertainty, audit scope or accounting
principles. During the fiscal year ended September 30, 1996, and through
February 18, 1997, there were no "reportable events" (as such term is defined
in Regulation S-K, Item 304(a)(1)(v)) or disagreements with Ernst & Young LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure that were not resolved to the
satisfaction of Ernst & Young LLP.
The Company's financial statements for the year ended December 31, 1998,
have been audited by KPMG LLP, independent certified public accountants.
Representatives of KPMG LLP are expected to be present at the Annual Meeting
to respond to appropriate questions, and will have an opportunity to make a
statement if they so desire.
The Board has appointed KPMG LLP as independent auditors to audit the
financial statements of the Company for the year ending December 31, 1999.
Unless otherwise directed, the persons named in the accompanying proxy will
vote in favor of the ratification of the appointment of KPMG LLP.
THE BOARD RECOMMENDS THAT THE HOLDERS OF CLASS A COMMON STOCK VOTE "FOR"
THE RATIFICATION OF KPMG LLP AS AUDITORS FOR THE YEAR ENDING DECEMBER 31,
1999.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Bylaws of the Company provide a procedure for stockholder proposals
and stockholder nominations for election of directors. That procedure
provides that any stockholder intending to present a proposal or nomination
for election of one or more directors at the Annual Meeting must deliver a
written notice to the Company's Corporate Secretary at the Company's
principal executive offices not less than 60 days nor more than 120 days
before the date of such Annual Meeting; provided, however, that in the event
that the first public disclosure (whether by mailing of a notice to
stockholders or to an exchange on which the Common Stock of the Company is
listed or to the Nasdaq National Market, by press release or otherwise) of
the date of the Annual Meeting is made less than 65 days prior to the date of
the meeting, notice by the stockholder will be timely received not later than
the close of business on the tenth day following the day on which such public
disclosure was first made.
Any such notice from a stockholder to the Company's Corporate Secretary
must contain (i) the name and address of that stockholder as they appear on
the Company's books (and, if the nomination or proposal in question is made
on behalf of a beneficial owner of Common Stock, the name and address of that
beneficial owner), (ii) the number of shares of each class of the Company's
stock beneficially owned by that stockholder and (iii) such other information
relating to the stockholder or the nomination required to be disclosed under
the rules of the Securities and Exchange Commission. If the stockholder's
notice to the Company's Corporate Secretary proposes to nominate one or more
individuals for election or re-election as a director, that notice must also
include for each such individual all information relating to that person that
is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in
14
<PAGE>
each case pursuant to Regulation 14A under the Securities Exchange Act of
1934 (including that individual's written consent to being named in the proxy
statement as a nominee and to serve as a director if elected). If the
stockholder's notice to the Corporate Secretary proposes to bring other
business before the Annual Meeting, that notice must include a reasonably
detailed description of (i) that business, (ii) the reasons for conducting
that business at the Annual Meeting, and (iii) any material interest of the
stockholder in that business (and by the beneficial owner, if any, on whose
behalf the proposal is made). If a stockholder proposal or nomination is not
made in accordance with the procedure set forth above, the Chairman of the
Annual Meeting shall, if the facts warrant, determine and declare at the
Annual Meeting that the proposed business or nomination was not properly
brought before the Annual Meeting in accordance with the procedures set forth
in the Bylaws and direct that the business not be transacted or that the
defective nomination be disregarded.
In order for a stockholder proposal to be included in the Board of
Directors' Proxy Statement for the next Annual Meeting of Stockholders, such
proposal must be submitted in writing and must be received at 3102 Oak Lawn,
Suite 215, Dallas, Texas 75219, Attention: Corporate Secretary, no later than
the close of business on December 31, 1999.
ANNUAL REPORT
The Company's Annual Report on Form 10-K containing its financial
statements for the fiscal year ended December 31, 1998, has been mailed
concurrently herewith. The Annual Report to Stockholders is not incorporated
in this Proxy Statement and is not deemed to be a part of the proxy
solicitation material. Any stockholder who does not receive a copy of such
Annual Report on Form 10-K may obtain one by writing to the Company.
REPORT FILED WITH SECURITIES AND EXCHANGE COMMISSION
Any beneficial owner of securities of the Company whose proxy is hereby
solicited may request and receive without charge a copy of the Company's
Annual Report on Form 10-K, including the financial statements thereto, but
excluding exhibits and schedules, filed with the Securities and Exchange
Commission. Such request should be addressed to: Heftel Broadcasting
Corporation, 3102 Oak Lawn, Suite 215, Dallas, Texas 75219, Attention:
Corporate Secretary.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matter which will be brought before the Annual Meeting.
However, if any other matter properly comes before the Annual Meeting, or any
adjournment thereof, the person or persons voting the proxies will vote on
such matters in accordance with their best judgment and discretion.
By Order of the Board of Directors
McHenry T. Tichenor, Jr.
Chairman of the Board
Dallas, Texas
April 30, 1999
15
<PAGE>
HEFTEL BROADCASTING CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD JUNE 3, 1999
The undersigned hereby appoints McHenry T. Tichenor, Jr. and Jeffrey T.
Hinson, and each of them, proxies of the undersigned with full power of
substitution for and in the name, place and stead of the undersigned to
appear and act for and to vote all shares of Class A Common Stock of HEFTEL
BROADCASTING CORPORATION standing in the name of the undersigned or with
respect to which the undersigned is entitled to vote and act at the Annual
Meeting of Stockholders of said Company to be held in Dallas, Texas on June
3, 1999 at 10:00 A.M., local time, or at any adjournments or postponements
thereof, with all powers the undersigned would possess if then personally
present, as indicated on the reverse side.
THIS UNDERSIGNED ACKNOWLEDGES RECEIPT OF NOTICE OF SAID MEETING AND
ACCOMPANYING PROXY STATEMENT AND OF THE 1998 ANNUAL REPORT ON FORM 10-K AND
RATIFIES AND CONFIRMS ALL ACTS THAT ANY OF THE SAID PROXY HOLDERS OR THEIR
SUBSTITUTES MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
(Continued and to be dated and signed on the reverse side.)
HEFTEL BROADCASTING CORPORATION
<PAGE>
1. ELECTION OF DIRECTORS
FOR all five nominees listed below [ ]
WITHHOLD AUTHORITY to vote for all five nominees below [ ]
EXCEPTIONS* [ ]
Nominees: McHenry T. Tichenor, Jr. McHenry T. Tichenor Robert W. Hughes
James M. Raines Ernesto Cruz
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.) *Exceptions:
-----------------------------------------------
2. AMENDMENT OF THE COMPANY'S SECOND AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY FROM "HEFTEL BROADCASTING
CORPORATION" TO "HISPANIC BROADCASTING CORPORATION."
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S)
THEREOF.
Change of Address and/or Comments: [ ]
Please sign your name exactly as it appears hereon. Joint owners should
sign personally. Attorney, Executor, Administrator, Trustee or Guardian should
indicate full title.
Dated: , 1999
------------------------------------
- -----------------------------------------------
Stockholder's signature
- -----------------------------------------------
Stockholder's signature if stock held jointly
SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK.
