<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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
(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>
HISPANIC BROADCASTING CORPORATION
3102 OAK LAWN, SUITE 215
DALLAS, TX 75219
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 2000
To the Stockholders:
The Annual Meeting of the Stockholders (the "Annual Meeting") of
HISPANIC BROADCASTING CORPORATION (the "Company") will be held at the
Waldorf-Astoria, 301 Park Avenue, New York, New York 10022, on May 26, 2000 at
9:00 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 increase the number of authorized shares of Class A
Common Stock from 100 million shares to 175 million shares.
(3) To amend the Company's 1997 Long-Term Incentive Plan to increase the
number of shares authorized for issuance thereunder.
(4) To ratify the appointment of KPMG LLP as independent auditors for the
fiscal year ending December 31, 2000.
(5) 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 17,
2000, 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.
<PAGE>
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 10, 2000
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>
HISPANIC 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 Hispanic Broadcasting Corporation (the "Company") in connection
with the Annual Meeting of Stockholders and any adjournments thereof (the
"Annual Meeting") to be held on May 26, 2000, at the Waldorf-Astoria, 301 Park
Avenue, New York, New York 10022, at 9:00 a.m. local time. This Proxy Statement
and the associated Proxy are first being sent or given to stockholders on or
about April 25, 2000.
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 increase the
authorized shares of the Class A Common Stock, (ii) amend the Company's 1997
Long-Term Incentive Plan to increase the number of shares authorized for
issuance thereunder, or (iii) 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 17,
2000, (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 40,251,462 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 multiple ownership rules policy. The voting rights and conversion
privileges of the Class B Common Stock as described herein may have the effect
of delaying or preventing 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 increase the authorized shares of the
Class A Common Stock and the approval of the amendment to the Company's 1997
Long-Term Incentive Plan to increase the number of authorized shares of Class A
Common Stock issuable thereunder 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 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 directors and
executive officers 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......................................... 6,789,773(1) 16.9%
McHenry T. Tichenor............................................. 6,745,980(2) 16.8
Warren W. Tichenor.............................................. 6,797,992(3) 16.9
Janus Capital Corporation(4).................................... 4,701,400 11.7
Putnam Investments, Inc.(5)..................................... 2,515,506 6.2
AMVESCAP PLC(6) ................................................ 2,382,320 5.9
Baron Capital Group, Inc.(7).................................... 2,288,700 5.7
Morgan Stanley Dean Witter & Co.(8)............................. 2,067,516 5.1
Robert W. Hughes................................................ 9,500(9) *
James M. Raines................................................. 10,000(9) *
Ernesto Cruz.................................................... 9,500(9) (10) *
David D. Lykes.................................................. 250,237(11) *
Jeffrey T. Hinson............................................... 146,665(12) *
All Directors and Executive Officers as a Group (7 persons)..... 7,216,072 17.9
</TABLE>
- ----------------------
*Indicates less than 1.0%.
(1) Includes 1,618,652 shares held by McHenry T. Tichenor, Jr. and 5,171,121
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 71,792 shares held by McHenry T. Tichenor and 6,674,188 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 2,232,527 shares held by Warren W. Tichenor and 4,565,465 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 owned by the reporting person's spouse. Warren W.
Tichenor's mailing address is 37 Eton Green Circle, San Antonio, Texas
78257.
(4) Address: 100 Fillmore Street, Denver, Colorado 80206-4923.
(5) Address: One Post Office Square, Boston, Massachusetts 02109.
(6) Address: 11 Devonshire Square, London EC2M 4YR, England.
(7) Address: 767 Park Avenue, 24th floor, New York, New York 10153.
(8) Address: 1585 Broadway, New York, New York 10036.
(9) Includes 9,500 vested but unexercised stock options for shares of Class A
Common Stock.
(10) Excludes 2,000 shares owned by the reporting person's children.
(11) Excludes 18,000 shares owned by the reporting person's spouse.
(12) Excludes 4,694 shares owned by the reporting person's children.
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 26.0% 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 executive
officers of the Company and the current directors (representing all nominees for
director):
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY AGE
---- --------------------- ---
<S> <C> <C>
McHenry T. Tichenor, Jr. Chairman of the Board, President and Chief Executive Officer 44
David D. Lykes Executive Vice President, Chief Operating Officer and 65
Secretary
Jeffrey T. Hinson Senior Vice President, Chief Financial Officer and Treasurer 45
McHenry T. Tichenor Director 67
Robert W. Hughes Director 64
James M. Raines Director 60
Ernesto Cruz Director 45
</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 Media System, Inc. ("Tichenor
Media").
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
Media. Mr. Lykes began his career at Tichenor Media 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 Media. 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 Media. 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
29 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.
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 three 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) review the compensation programs for other key
employees, including salary and cash bonus amounts, (iv) establish and review
policies regarding executive officer prerequisites, (v) engage experts on
compensation matters, if and when the members of the Compensation Committee deem
it proper or advisable to do so, and (vi) perform such other duties as shall
from time to time be delegated by the Board. The Compensation Committee held one
meetings during the last fiscal year.
The Board of Directors held a total of six meetings during the last
fiscal year. Each incumbent director who was a director of the Company during
the fiscal year ended December 31, 1999, 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.
5
<PAGE>
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 year ended
December 31, 1999, and each of the other three most highly compensated executive
officers whose total cash compensation exceeded $100,000 for services rendered
in all capacities for the year ended December 31, 1999 (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- ----------------------------------
Awards Payouts
---------------------- ----------
Other
Annual Restricted All Other
Compen- Stock LTIP Compensation
Name And Principal Position Year Salary ($) Bonus ($) sation ($) Awards ($) Options (=) Payout ($) ($)
- ---------------------------- ------ ----------- ----------- ---------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
McHenry T. Tichenor, Jr. 1999(1) $ 265,350 $ 468,232 $ - $ - 20,000 $ - $ 1,850(3)
Chairman, President and CEO 1998(1) 265,897 249,635 - - 18,000 - 1,850(3)
1997(2) 227,500 240,243 - - 40,000 - 1,850(3)
David D. Lykes 1999(1) 240,000 253,984 - - 18,000 - 22,112(4)
Executive Vice President 1998(1) 230,000 170,313 - - 16,000 - 23,689(4)
and COO 1997(2) 201,250 161,199 - - 35,000 - 15,025(4)
Jeffrey T. Hinson 1999(1) 210,000 230,981 - - 18,000 - 1,850(3)
Senior Vice President 1998(1) 180,000 160,805 - - 16,000 - 1,850(3)
and CFO 1997(2) 157,500 151,042 - - 35,000 - 1,850(3)
</TABLE>
(1) Represents the years ended December 31, 1999 and 1998, respectively.
(2) Represents partial year compensation in 1997. The individual became an
executive officer of the Company on February 14, 1997 upon consummation of
the merger with Tichenor Media ("Tichenor Merger").
(3) Represents Company contributions to the 401(k) plan account of the
respective employee.
(4) Represents $20,262, $23,439 and $13,175 of insurance premiums paid by the
Company for the years ended December 31, 1999, 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 $1,850 represents Company contributions to his
401(k) plan account.
OPTIONS
The following table sets forth certain information concerning options
granted to the Named Executive Officers during the year ended December 31, 1999:
<TABLE>
<CAPTION>
Potential Realizable Value At Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
------------------------------------------------- -------------------------------------
Percent of
Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price
Name Granted (#) Year ($/share) Expiration Date 5% ($) 10% ($)
- --------------------------- ----------- ---------- --------- --------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
McHenry T. Tichenor, Jr. 20,000 4.1% $ 41.94 03/23/09 $ 527,517 $ 1,336,831
David D. Lykes 18,000 3.7 41.94 03/23/09 474,765 1,203,148
Jeffrey T. Hinson 18,000 3.7 41.94 03/23/09 474,765 1,203,148
</TABLE>
6
<PAGE>
The following table sets forth certain information regarding stock
options exercised by the Named Executive Officers during the year ended December
31, 1999, 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, 1999. 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, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Year End (#) Options 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. - - - 78,000 - $4,761,860
David D. Lykes - - - 69,000 - 4,205,760
Jeffrey T. Hinson - - - 69,000 - 4,205,760
</TABLE>
EMPLOYMENT AGREEMENTS
On February 14, 1997, upon the closing of the Tichenor Merger, the
Company entered into an Employment Agreement with McHenry T. 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 of the Company's Class A Common Stock when they attend their first
meeting of the Board of Directors. These options are fully excercisable
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. In addition, in June 1998 and March 1999,
each outside director was granted options to purchase 2,000 and 2,500 shares of
Class A Common Stock, respectively. These options vested six months following
their date of grant.
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 Media, entered into a 24-month Local
Marketing Agreement with Heart Unlimited Company ("Heart"). McHenry T. Tichenor,
a director of the Company and the father of McHenry T. Tichenor, Jr., is the
controlling shareholder of Heart. Under the terms of the Local Marketing
Agreement, Heart paid 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 reimbursed the Company for the cost of
7
<PAGE>
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 Media 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 solely on its review of the copies of such forms received by it,
or written responses from certain reporting persons that no such forms were
required to be filed by those persons, the Company believes that during the year
ended December 31, 1999, directors, executive officers and beneficial owners of
more than 10% of the Company's Class A Common Stock were in compliance with the
applicable filing requirements except that one report covering one transaction
was filed late by Warren W. Tichenor.
8
<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 amounts. The Compensations 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 that awards options (the "Option Committee") under the Company's 1997
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 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
9
<PAGE>
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). At this year's Annual Meeting, the stockholders are
being asked to approve an amendment to the Incentive Plan to increase the number
of shares of Class A Common Stock issuable thereunder.
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
10
<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 September 30, 1994 and ending on December
31, 1999. 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 September 30, 1994.
COMPARISON OF 63 MONTH CUMULATIVE TOTAL RETURN*
AMONG HISPANIC BROADCASTING CORPORATION, THE S & P 500 INDEX
AND THE S & P BROADCASTING (TV, RADIO, CABLE) INDEX
[GRAPH]
* $100 INVESTED ON 9/30/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
<TABLE>
<CAPTION>
SEP 94 SEP 95 SEP 96 DEC 96 DEC 97 DEC 98 DEC 99
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Hispanic Broadcasting Corporation 100.00 145.28 329.25 237.74 705.66 743.40 1,391.98
S & P 500 100.00 129.74 156.13 169.15 225.58 290.04 351.08
S & P Broadcasting (TV, Radio & Cable) 100.00 124.91 102.84 106.74 175.62 272.44 475.93
</TABLE>
11
<PAGE>
PROPOSAL TWO
AMENDMENT TO THE COMPANY'S SECOND AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
The current authorized capital stock of the Company consists of
5,000,000 shares of preferred stock, $0.001 par value (the "Preferred Stock"),
100,000,000 shares of Class A Common Stock, and 50,000,000 shares of Class B
Common Stock, of which no shares of Preferred Stock, 40,251,462 shares of Class
A Common Stock, and 14,156,470 of Class B Common Stock were issued and
outstanding at April 17, 2000. In addition to the 40,251,462 shares of Class A
Common Stock outstanding on April 17, 2000, 14,156,470 shares are reserved for
issuance upon conversion of outstanding shares of Class B Common Stock and
approximately 1,476,184 shares are reserved for issuance upon exercise of
currently outstanding options to purchase Class A Common Stock, leaving
approximately 44,115,884 shares available for issuance. On March 2, 2000, the
Board adopted a proposed amendment to Section 4.1 of the Company's Second
Amended and Restated Certificate of Incorporation increasing the authorized
number of shares of Class A Common Stock from 100,000,000 shares to 175,000,000
shares for submission to the stockholders at the Annual Meeting.
Holders of Class A Common Stock are entitled to one vote per share on
all matters submitted to a vote of stockholders of the Company. Holders of
Common Stock are entitled to receive dividends, if any, as may be declared from
time to time by the Board from funds legally available therefore, subject to the
payment of any outstanding preferential dividends declared with respect to any
Preferred Stock that from time to time may be outstanding. Upon liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in any assets available for distribution to stockholders after
payment of all obligations of the Company, subject to the rights to receive
preferential distributions of the holders of any Preferred Stock then
outstanding.
Holders of Class B Common Stock will, in certain circumstances, have
certain voting rights, with each share of Class B Common Stock being entitled to
one vote. Specifically, so 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. 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 multiple ownership rules policy. The voting rights and
conversion privileges of the Class B Common Stock as described herein may have
the effect of delaying or preventing the acquisition of control of the Company
by means of a tender offer, proxy fight, open market purchases or otherwise.
If the proposed amendment is approved, all or any part of the
authorized but unissued shares of Class A Common Stock may thereafter be issued
without further approval from the stockholders, except as may be required by law
or the policies of any stock exchange on which the shares of stock of the
Company may be listed, for such purposes and on such terms as the Board may
determine. Holders of the capital stock of the Company do not have any
preemptive rights to subscribe for the purchase of any shares of Class A Common
Stock, which means that current stockholders do not have a prior right to
purchase any new issue of Class A Common Stock in order to maintain their
proportionate ownership.
12
<PAGE>
Upon obtaining the consent of the holders of Class B Common Stock, the
Board of Directors has the authority to issue up to 5,000,000 shares of
Preferred Stock, par value $0.001 per share, in one or more series, and to fix
the rights, preferences, privileges, and qualifications thereof without any
further vote or action by the stockholders. There are currently no shares of
Preferred Stock issued or outstanding. The issuance of Preferred Stock could
have the effect of delaying, deferring or preventing a change in control of the
Company. In addition, the voting rights and conversion privileges of the Class B
Common Stock as described herein could have the effect of delaying, deferring or
preventing a change in control of the Company. See "Security Ownership of
Certain Beneficial Owners and Management" for a description of the Voting
Agreement between certain members of the Tichenor Family.
The proposed amendment will not affect the rights of existing holders
of Common Stock except to the extent that future issuances of Class A Common
Stock will reduce each existing Class A Common Stockholder's proportionate
ownership.
If the proposed amendment is adopted, Section 4.1 of the Company's
Second Amended and Restated Certificate of Incorporation would be amended to
read as follows:
"AUTHORIZED SHARES. The total number of shares of capital stock
which the Corporation shall have authority to issue is 230,000,000
shares, consisting of three classes of capital stock:
(a) 175,000,000 shares of Class A Common Stock, par value $.001
per share (the "Class A Shares");
(b) 50,000,000 shares of Class B Common Stock, par value $.001 per
share (the "Class B Shares" and, together with the Class A Shares,
the "Common Shares"); and
(c) 5,000,000 shares of Preferred Stock, par value $.001 per share
(the "Preferred Stock")."
The proposed amendment to Section 4.1 will not change any other aspect
of the Company's Second Amended and Restated Certificate of Incorporation.
The Board has determined that it would be appropriate for the Company
to increase the number of its authorized shares of Class A Common Stock in order
to have additional shares available for possible future acquisition or financing
transactions, stock splits, stock dividends and other issuances, or to satisfy
requirements for additional reservations of shares by reason of future
transactions which might require increased reservations. The Company currently
has enough shares of Common Stock authorized for issuance to consummate all
issuances of Common Stock that have been previously reserved for issuance
without amending its Second Amended and Restated Certificate of Incorporation.
Furthermore, the additional authorized shares will allow the Company to declare
a two-for-one stock split, providing the conditions are appropriate for such a
declaration. The Company currently has no plans to issue any additional shares
of Common Stock. The issuance of additional shares of Class A Common Stock could
decrease the amount of earnings and assets available for distribution to the
Company's existing stockholders, and may have the effect of delaying, deferring
or preventing a change in control of the Company.
In June and November 1999, the Company issued 2,000,000 shares and
3,051,290 shares of Class A Common Stock, respectively, in connection with
public offerings. The Company's ability to have additional shares of Class A
Common Stock available for issuance in possible future acquisitions and
financings is an essential part of the Company's acquisition strategy.
The Company effected a two-for-one stock split in December 1997.
13
<PAGE>
The affirmative vote of holders of at least a majority of the
outstanding shares of Class A Common Stock entitled to vote at the Annual
Meeting is required in order to adopt the proposed amendment. In addition,
pursuant to the Company's Second Amended and Restated Certificate of
Incorporation, the approval of the holders of a majority of the outstanding
shares of Class B Common Stock is also required in order to adopt the proposed
amendment. Clear Channel, the sole holder of all outstanding shares of Class B
Common Stock has consented in writing to the proposed amendment. Unless
indicated to the contrary, the enclosed proxy will be voted for the proposed
amendment. Votes "withheld" or abstaining from voting will have the same effect
as a negative vote or a vote "against" the proposed amendment.
THE BOARD RECOMMENDS THAT THE HOLDERS OF THE SHARES OF CLASS A COMMON
STOCK VOTE "FOR" THE PROPOSED AMENDMENT.
14
<PAGE>
PROPOSAL THREE
AMENDMENT TO THE COMPANY'S 1997 LONG-TERM INCENTIVE PLAN
On March 2, 2000, the Board of Directors approved an increase in the
maximum number of shares of Class A Common Stock that may be the subject of the
various types of awards under the 1997 Long-Term Incentive Plan (the "Incentive
Plan") at one time under the Incentive Plan, subject to certain exceptions set
forth in that plan, to an amount equal to (i) ten percent of the total number of
shares of Class A Common Stock outstanding from time to time MINUS (ii) the
total number of shares of Class A Common Stock subject to outstanding awards
that may be granted under the Incentive Plan on the date of calculation under
that plan and any other stock-based plan for employees or directors of the
Company (other than the Company's 1997 Employee Stock Purchase Plan).
INCREASES IN AUTHORIZED SHARES UNDER THE INCENTIVE PLAN
Currently, subject to certain exceptions set forth in the Incentive
Plan, the aggregate number of shares of Class A Common Stock that may be the
subject of the various types of awards under the Incentive Plan at one time
under that plan is an amount equal to (i) five percent of the total number of
shares of Class A Common Stock outstanding from time to time MINUS (ii) the
total number of shares of Class A Common Stock subject to outstanding awards
that may be granted under the Incentive Plan on the date of calculation under
that plan and any other stock-based plan for employees or directors of the
Company (other than the Company's 1997 Employee Stock Purchase Plan).
The purpose of the proposed increase is to provide sufficient shares
for future awards under the Incentive Plan to non-employee directors, executive
officers and other key employees of the Company. As of April 17, 2000, the
Company had 536,389 shares that could be the subject of the various types of
awards under the Incentive Plan. The Board of Directors believes that it is in
the best interests of the Company to have sufficient shares available under the
Incentive Plan to provide awards to certain of its non-employee directors,
executive officers and other key employees. In fiscal 1999, the Company granted
487,750 awards under the Incentive Plan and the Board of Directors believes that
it is prudent to increase the number of shares of Class A Common Stock subject
to future awards so as to continue to grant awards, which is a critical part of
long term compensation. The Board of Directors believes that the Company and its
stockholders significantly benefit from having the Company's non-employee
directors, executive officers and other key employees receive awards to which
the Company's Class A Common Stock is subject and that the opportunity thus
afforded these employees to increase their proprietary interest in the Company
is an essential element of an effective management incentive program. The Board
of Directors also believes that the awards granted pursuant to the Incentive
Plan are very valuable in attracting and retaining highly qualified non-employee
directors and management personnel and in providing additional motivation to
non-employee directors and management to use their best efforts on behalf of the
Company.
15
<PAGE>
INCENTIVE PLAN OPTION GRANT SUMMARY
The following table sets forth information with respect to the options
granted pursuant to the Incentive Plan during the year ended December 31, 1999:
<TABLE>
<CAPTION>
NAME AND OPTIONS WEIGHTED AVERAGE
POSITION GRANTED EXERCISE PRICE
- -------- ------- --------------
<S> <C> <C>
McHenry T. Tichenor, Jr. 20,000 $41.94
Chairman, President and CEO
David D. Lykes 18,000 $41.94
Executive Vice President
and COO
Jeffrey T. Hinson 18,000 $41.94
Senior Vice President
and CFO
Executive Group 56,000 $41.94
Non-Executive Director Group 7,500 $41.94
Non-Executive Officer
Employee Group 424,250 $49.38
</TABLE>
Set forth below is a summary of certain significant portions of the
Incentive Plan.
TYPES OF AWARDS
The types of awards that may be granted under the Incentive Plan
include (i) incentive stock options ("Incentive Stock Options"), as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii)
stock options other than Incentive Stock Options ("Non-qualified Stock Options"
and, together with Incentive Stock Options, "Stock Options"), (iii) stock
appreciation rights, (iv) rights to receive a specified amount of cash or shares
of Class A Common Stock ("Performance Units"), and (v) restricted stock
("Restricted Stock") (collectively, "Awards"). In addition, the Incentive Plan
provides that directors of the Company may elect to receive some or all of their
annual director compensation in the form of shares of Class A Common Stock.
ADMINISTRATION OF PLAN
The Incentive Plan will be administered by the Board of Directors or by
a committee or sub-committee of the Board of Directors (the "Committee")
appointed by the Board of Directors (the "Administrator"). The Committee will
consist of two or more directors who will be eligible to receive certain Awards
(other than Incentive Stock Options) under the Incentive Plan.
Under the Incentive Plan, the Administrator will have wide discretion
and flexibility, thus enabling the Administrator to administer the Incentive
Plan in the manner that it determines, from time to time, is in the best
interest of the Company. The Administrator also will have authority to interpret
the Incentive Plan,
16
<PAGE>
to determine the terms and provisions of Awards, and to make all other
determinations necessary or advisable for Plan administration.
ELIGIBILITY
Employees eligible to participate in the Incentive Plan will be
designated by the Administrator and will be chosen from among those employees
determined to be Key Employees. "Key Employees" are those employees of the
Company and its subsidiaries determined by the Administrator to have a direct
and significant impact on the performance of the Company. The Company's
executive officers are among the employees who would be eligible to receive
Awards under the Incentive Plan. In addition, the Incentive Plan provides for
automatic initial grants of Non-qualified Stock Options to purchase 2,500 shares
of Class A Common Stock to each non-employee director upon the approval of the
Incentive Plan by the Stockholders and to each future non-employee director upon
such individual first being elected to serve on the Company's Board of
Directors. The exercise price of each such director option will be the fair
market value per share of Class A Common Stock on the date of grant.
Non-employee directors may be granted additional Awards at the discretion of the
Board of Directors.
TERMS AND CONDITIONS OF STOCK OPTIONS
The purchase price of Class A Common Stock under each Incentive Stock
Option and Non-qualified Stock Option (other than automatic grants to the
Company's non-employee directors) will be determined by the Administrator;
provided, however, that the exercise price for any Stock Option will not be less
than the greater of the par value or 100% of the fair market value of the Class
A Common Stock on the date of grant of such Stock Option. The aggregate fair
market value (determined at the time an Incentive Stock Option is granted) of
the Class A Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an employee during any calendar year (under
all stock option plans of the Company) will not exceed $100,000, or such other
amount as may be prescribed under the Code or applicable regulations and rulings
from time to time.
Except for Non-qualified Stock Options granted to non-employee
directors, Stock Options may be exercised as determined by the Administrator,
but in no event later than ten years from the date of grant in the case of
Incentive Stock Options.
Upon the exercise of a Stock Option, the participant must pay the
purchase price in full either in cash, a cash equivalent acceptable to the
Administrator, or a combination of cash and its equivalent acceptable to the
Administrator. The purchase price may be paid, with the approval of the
Administrator, by assigning and delivering to the Company shares of Class A
Common Stock or a combination of cash and such shares equal in value to the
exercise price. In addition, at the request of a participant and to the extent
permitted by applicable law, the Administrator may approve arrangements with a
brokerage firm under which such brokerage firm, on behalf of the participant,
will pay the exercise price of the stock options being exercised to the Company
and the Company will promptly deliver to such firm the shares exercised.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
A Stock Appreciation Right ("SAR") may be granted either in tandem with
or independent of a Stock Option. A SAR is the right to receive an amount equal
to the excess of the fair market value of a share of the Company's Class A
Common Stock on the date of exercise over the fair market value of a share of
Class A Common Stock on the date of grant (in the case of SARs granted
independent of a Stock Option) or the exercise price of the related Stock Option
(in the case of a SAR granted in tandem with a Stock Option).
An SAR granted in tandem with a Stock Option will require the holder,
upon exercise, to surrender the related Stock Option or any portion thereof to
the extent unexercised, with respect to the number of shares
17
<PAGE>
as to which such SAR is exercised, and to receive payment as described above.
The surrendered Stock Option will then cease to be exercisable. A tandem SAR
will be exercisable or transferable only to the extent that the related Stock
Option is exercisable or transferable.
An SAR granted independent of a Stock Option will be exercisable as
determined by the Administrator. An independent SAR will entitle the holder,
upon exercise, to receive payment as described above. The Administrator may
limit the amount payable upon exercise of any tandem or independent SAR. Any
such limitation will be specified at the time the SAR is granted.
Payment upon the exercise of SARs will be made, at the discretion of
the Administrator, in cash, in shares of Class A Common Stock, or a combination
of cash and shares of Class A Common Stock.
TERMS AND CONDITIONS OF RESTRICTED STOCK
Restricted Stock is the grant of shares of Class A Common Stock or the
right to purchase Class A Common Stock at a price determined by the
Administrator, which is nontransferable and subject to substantial risk of
forfeiture until specific conditions are met. Certificates evidencing Restricted
Stock will bear a legend making reference to the restrictions imposed. The
restrictions will lapse in accordance with a schedule or other conditions
determined by the Administrator. During the restriction period, the holder of
Restricted Stock may, in the discretion of the Administrator, be given certain
rights as a stockholder, including the right to vote the stock subject to the
Award and/or receive dividends with respect thereto.
ACCELERATION OF VESTING AND EXERCISABILITY
Subject to the Administrator's discretion, if an employee's employment
relationship with the Company is terminated for any reason (other than a
termination in breach of written employment agreement), including as a result of
the employee's retirement, disability or death, then any and all Awards held by
such employee that are not then exercisable (or for which restrictions have not
lapsed) shall become null and void as of the date of such termination. The
portion, if any, of such Awards that are exercisable as of the date of
termination shall be exercisable for a period of the lesser of the remaining
term of the Award or 180 days after the date of termination. If an employee's
employment relationship is terminated in breach of a written employment
agreement, then any and all Awards held by such employee that are not then
exercisable (or for which restrictions have not lapsed) shall become exercisable
(and the restrictions thereon, if any, shall lapse) as of the date of
termination. All such Awards which have become exercisable as of the date of
such termination (either as a result of the acceleration of exercisability as
described herein or otherwise) shall remain exercisable for the lesser of the
remaining term of such Awards or 180 days after the date of termination.
ADJUSTMENT PROVISIONS
The Incentive Plan contains provisions that automatically modify the
terms of Awards or permit the Administrator to modify the terms of Awards when a
subdivision, consolidation or change in control of the Company occurs or when
the Company undergoes certain restructurings that do not result in a change in
control of the Company.
The terms of an Award and the maximum number of shares of Class A
Common Stock authorized for issuance under the Incentive Plan will be adjusted
if the Company subdivides as a whole the number of shares of Class A Common
Stock then outstanding into a greater number of shares of Class A Common Stock
(such as in a stock split) or consolidates as a whole the number of shares of
Class A Common Stock then outstanding into a lesser number of shares of Class A
Common Stock (such as in a reverse stock split). In addition, if the Class A
Common Stock is subdivided or consolidated into one or more different kinds of
securities, the holders of Awards will be entitled to purchase or receive (in
lieu of the shares of Class A
19
<PAGE>
Common Stock originally subject to the Award) the kinds of securities into
which the Class A Common Stock is subdivided or consolidated.
Upon a "change in control" of the Company, (i) each holder of a Stock
Option will be granted corresponding SARS, (ii) all outstanding SARs and Stock
Options will become immediately and fully vested and exercisable in full, and
(iii) the restriction period on any Restricted Stock will be accelerated and the
restrictions will expire.
In general, under the Incentive Plan, a "change in control" of the
Company occurs in any of five situations: (i) a person other than the Company,
certain affiliated companies or benefit plans, or a company with the same
ownership as the Company, acquires 30% or more of the voting power of the
Company's outstanding voting securities; (ii) a majority of the Board of
Directors is not comprised of the members of the Board of Directors at the
effective date of the Incentive Plan and persons whose election as directors
were approved by those original directors or their approved successors; (iii)
the Company merges or consolidates with another corporation or partnership, or
the Company's stockholders approve such a merger or consolidation, other than
mergers or consolidations in which the Company's voting securities are converted
into securities having the majority of voting power in the surviving company; or
(iv) the Company liquidates or sells all or substantially all of its assets, or
the Company's stockholders approve such a liquidation or sale, except sales to
corporations having substantially the same ownership as the Company.
In addition, if a change in control occurs in connection with a merger
or consolidation of the Company pursuant to which the Company is not the
surviving corporation or a sale of all or substantially all of the Company's
assets, then the holders of Awards will be entitled to receive (upon payment of
the exercise price, if applicable) the same consideration to which they would
have been entitled had they exercised their options, or had the restrictions on
any Restricted Stock lapsed, immediately prior to such transaction.
If a restructure of the Company occurs that does not constitute a
change in control of the Company, the Administrator may (but need not) cause the
Company to take any one or more of the following actions: (i) accelerate in
whole or in part the time of vesting and exercisability of any outstanding Stock
Options and SARs in order to permit those Stock Options and SARs to be
exercisable before, upon or after the completion of the restructure; (ii) grant
each optionholder corresponding SARS; (iii) accelerate in whole or in part the
expiration of some or all of the restrictions on any Restricted Stock; (iv) if
the restructure involves a transaction in which the Company is not the surviving
entity, cause the surviving entity to assume in whole or in part any one or more
of the outstanding Awards upon such terms and provisions as the Administrator
deems desirable; or (v) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in consideration of a cash
payment, adjusted for withholding obligations.
A restructure generally is any merger of the Company or the direct or
indirect transfer of all or substantially all of the Company's assets (whether
by sale, merger, consolidation, liquidation or otherwise) in one transaction or
a series of transactions.
AMENDMENT AND TERMINATION OF THE INCENTIVE PLAN
No Award may be granted under the Incentive Plan after the tenth
anniversary of the adoption of the Incentive Plan. The Board of Directors may,
insofar as permitted by law, with respect to any shares which, at the time, are
not subject to Awards, suspend or discontinue the Incentive Plan.
The Board of Directors may amend or modify the Incentive Plan at any
time for any purpose, to the extent permitted by law. However, the Incentive
Plan may not be amended without the consent of the holders of a majority of the
shares of Class A Common Stock then outstanding to (i) increase materially the
aggregate number of shares of Class A Common Stock that may be issued under the
Incentive Plan, (ii) increase materially the benefits accruing to eligible
individuals under the Incentive Plan or (iii) modify materially the
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eligibility requirements for participation in the Incentive Plan; provided,
however, that such amendments may be made without the consent of stockholders
of the Company if changes occur in law or other legal requirements that would
permit such changes.
The Incentive Plan is intended to comply with the requirements of
Section 162(m) of the Code to the extent required to cause Stock Options and
SARs to be classified as "performance-based compensation" under Section
162(m)(4)(C) of the Code. However, regulations under Section 162(m) of the Code
and interpretations of Section 162(m) and such regulations, could require
certain amendments to the Incentive Plan to accomplish this classification. To
the extent amendments to the Incentive Plan are required, the Board of Directors
may adopt such amendments that it determines are necessary but will not solicit
stockholder approval of such amendments unless stockholder approval is required
under Section 162(m) of the Code or other applicable law.
FEDERAL INCOME TAX CONSEQUENCES
A participant receiving Non-qualified Stock Options or SARs shall not
recognize taxable income at the time the Non-qualified Stock Option or SAR is
granted. At the time the Non-qualified Stock Option or SAR is exercised, the
participant will recognize ordinary taxable income in an amount equal to the
difference between the exercise price (or fair market value of the Class A
Common Stock at the time of grant of SARs granted independent of Stock Options)
and the fair market value of the Company's Class A Common Stock on the date of
exercise. The Company will be entitled to a concurrent deduction equal to the
ordinary income recognized by the participant, provided that the Company
withholds taxes.
An employee granted an Incentive Stock Option will not recognize
taxable income at the time of grant or, subject to certain conditions, at the
time of exercise. The excess of the fair market value of the Class A Common
Stock received over the option price is an item of tax preference income
potentially subject to the alternative minimum tax. If stock acquired upon
exercise of an Incentive Stock Option is held for a minimum of two years from
the date of grant and one year from the date of exercise, the gain or loss (in
an amount equal to the difference between the sales price and the exercise
price) upon disposition of the stock will be treated as long-term capital gain
or loss, and the Company will not be entitled to any deduction.
If the holding period requirement is not met, the Incentive Stock
Option will be treated as one which does not meet the requirements of the Code
for Incentive Stock Options and the employee will recognize ordinary income in
an amount equal to the lesser of (i) the excess of the fair market value of
Class A Common Stock on the date of exercise over the exercise price or (ii) the
amount realized on the sale of such stock over the exercise price.
An employee receiving Restricted Stock will not recognize taxable
income at the time of grant. At the time the restrictions lapse, the employee
will recognize ordinary taxable income equal to the difference between the fair
market value of the Class A Common Stock at the time the restrictions lapse and
the price, if any, paid by the employee for such Class A Common Stock. Any
dividends received by the employee before the termination of restrictions will
be taxed as ordinary income. The Company will be entitled to a deduction equal
to the ordinary income reported by the employee, provided the Company withholds
taxes. Upon the disposition of the Class A Common Stock, the employee will
recognize taxable gain or loss equal to the difference between the fair market
value of the Class A Common Stock at the time the restrictions lapse and the
amount realized upon the disposition of the Class A Common Stock. The gain or
loss will be taxable as a capital gain or loss, provided the employee held the
Class A Common Stock as a capital asset.
An employee may elect to report and recognize income at the time of
grant or purchase of Restricted Stock by filing an election under Section 83(b)
of the Code (a "Section 83(b) election"). If the employee makes a Section 83(b)
election, the Company will be entitled to a deduction equal to the ordinary
income reported by the employee in the year of the election, provided the
Company withholds taxes. However,
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dividends received before the restrictions lapse will not be deductible by
the Company. Upon the disposition of the Class A Common Stock, the employee
will recognize gain or loss equal to the difference between the amount
realized and the sum of the income recognized by the employee as a result of
the Section 83(b) election and any amounts paid by the employee for the
Restricted Stock.
Special rules may apply with respect to employees subject to Section
16(b) of the Securities Exchange Act of 1934. Other than in the case of an
Incentive Stock Option held in accordance with the specified holding period
requirements, the amount and timing of the recognition of income by an employee
subject to Section 16(b) (and the concurrent deduction by the Company) on the
exercise of a Stock Option or SAR generally will be based on the fair market
value of the shares received when the restrictions of Section 16(b) lapse,
unless the employee elects otherwise by making a Section 83(b) election.
VOTE REQUIRED
The affirmative vote of holders of at least a majority of the
outstanding shares of Class A Common Stock entitled to vote at the Annual
Meeting is required in order to adopt the proposed amendment. Unless indicated
to the contrary, the enclosed proxy will be voted for the proposed amendment.
Votes "withheld" or abstaining from voting will have the same effect as a
negative vote or a vote "against" the proposed amendment
THE BOARD RECOMMENDS THAT THE HOLDERS OF THE CLASS A COMMON STOCK VOTE
"FOR" THE AMENDMENT TO THE INCENTIVE PLAN. SINCE THE DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY WILL BE ELIGIBLE TO PARTICIPATE IN THE INCENTIVE PLAN,
EACH OF THE DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY HAS AN INTEREST IN
AND MAY BENEFIT FROM THE AMENDMENT TO THE INCENTIVE PLAN.
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PROPOSAL FOUR
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Company's financial statements for the year ended December 31,
1999, 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, 2000.
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,
2000.
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 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.
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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, 2000.
ANNUAL REPORT
The Company's Annual Report on Form 10-K containing its financial
statements for the fiscal year ended December 31, 1999, 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: Hispanic 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 10, 2000
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HISPANIC BROADCASTING CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 26, 2000
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 HISPANIC
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 New York, New York on
May 26, 2000 at 9:00 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 1999 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.)
<PAGE>
HISPANIC BROADCASTING CORPORATION
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS FOR all five nominees listed below [ ]
WITHHOLD AUTHORITY to vote for all five nominees below [ ]
EXCEPTIONS* [ ]
</TABLE>
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 INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON
STOCK FROM 100 MILLION SHARES TO 175 MILLION SHARES.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. AMENDMENT OF THE COMPANY'S 1997 LONG-TERM INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. 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:____________________________________, 2000
________________________________________________
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.
