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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2000
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission file number 0-26878
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GEMSTAR-TV GUIDE INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-4782077
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
135 North Los Robles Avenue, Suite 800, Pasadena, California 91101
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (626) 792-5700
--------------
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_] ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge,
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in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
As of the end of the fiscal year on May 31, 2000, prior to the issuance of the
Registrant's shares of common stock in connection with the merger between the
Registrant and TV Guide, Inc. there were outstanding 208,480,000 shares of the
Registrant's common stock, par value $.01 per share (``Common Stock"), which is
the only class of common stock of the Registrant. As of May 31, 2000, the
aggregate market value of common stock held by non-affiliates of the Registrant
was approximately $6.1 billion, based on the closing sales price of $ 42.44 per
share as reported by the Nasdaq National Market System. Shares of common stock
held by officers, directors and five percent holders have been excluded from
this calculation because such persons may be deemed to be affiliates. The
determination of affiliate status is not a conclusive determination for other
purposes.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
INFORMATION WITH RESPECT TO DIRECTORS
The following table sets forth certain information with respect to each
director of Gemstar - TV Guide International, Inc. (the "Company"). On July 12,
2000, Gemstar International Group Limited ("Gemstar") and TV Guide Inc. ("TV
Guide") consummated a merger transaction pursuant to which TV Guide became a
wholly-owned subsidiary of Gemstar (the "Merger"). The following table reflects
the new Board of Directors of the Company effective as of July 12, 2000.
<TABLE>
<CAPTION>
Name and Age (as of Position and Business Experience Director Since Year Term Expires
June 2000)
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<S> <C> <C> <C>
Henry Yuen (50) Dr. Henry C. Yuen is a co-founder of the Company and April 1992 2003
has served as the Company's Chief Executive Officer and
President since August 1994 and as a director since
April 1992, and as Chairman of the Board of Directors
of the Company since January 1999. Dr. Yuen invented
the Company's VCR Plus+ system and co-founded Gemstar
in 1989. Prior to the founding of Gemstar, Dr. Yuen was
a research scientist and Technical Fellow at TRW, Inc.,
and held faculty positions at New York University
Courant Institute of Mathematical Sciences and the
California Institute of Technology. Dr. Yuen holds a
B.S. (Mathematics) from the University of Wisconsin, a
Ph.D. (Applied Mathematics) from the California
Institute of Technology, and a J.D. from Loyola
University School of
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</TABLE>
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<TABLE>
<S> <C> <C> <C>
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Law. Dr. Yuen has over 70 published scientific papers,
25 issued patents, and over 100 pending patents. Dr.
Yuen is a member of the State Bar of California.
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Elsie Ma Leung (52) Ms. Elsie Ma Leung has served as the Company's Chief April 1994 2003
Financial Officer since August 1994 and as a director
of the Company since April 1994. As of July 12, 2000
Ms. Leung also serves as Co-President and Co-Chief
Operating Officer and member of the Office of the Chief
Executive. Ms. Leung founded a public accounting firm,
Leung, Kaufman & Co., in 1983 and was its managing
partner until joining the Company. Ms. Leung also
served as Chief Financial Officer of American Plant
Growers, Inc. from 1988 to 1993. Prior to 1983, Ms.
Leung performed audit duties at Kenneth Leventhal &
Company. Ms Leung is a Certified Public Accountant.
Ms. Leung holds a B.A. (Accounting) from California
State University, Los Angeles.
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Peter C. Boylan III Mr. Peter C. Boylan III has been a director, July 2000 2003
(36) Co-President and Co-Chief Operating Officer, and member
of the Office of the Chief Executive since July 12,
2000. Previously, Mr. Boylan was President and Chief
Operating Officer of TV Guide since June 1999 and a
Director of TV Guide since July 1995. Mr. Boylan served
as Executive Vice President and member of the Office of
the Chairman of TV Guide from March 1999 to June 1999;
President of TV Guide from August 1997 to March 1999;
Chief Operating Officer of TV Guide from December 1996 to
March 1999 and Executive Vice President and Chief
Financial Officer of TV Guide from October 1994 to
December 1996. Beginning in 1992 through October 1994,
Mr. Boylan served with Hallmark Cards, Inc. in its
Corporate Development and Strategy Group, focusing primarily
on the communications and entertainment industries.
Mr. Boylan is also a director of BOK Financial Corporation.
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</TABLE>
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<TABLE>
<S> <C> <C> <C>
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Joachim Kiener (47) Mr. Joachim Kiener has served as a Director, Co- July 2000 2003
President, Co-Operating Officer and member of the
Office of the Chief Executive since July 12, 2000.
Previously, Mr. Kiener was Chairman of the Board and
Chief Executive Officer of TV Guide since June 1999 and
a Director of TV Guide, Inc. from March 1999 to July
2000. Mr. Kiener served as President of the TV Guide
from March 1999 to June 1999. Mr. Kiener was President
and Chief Operating Officer of News America Publishing
Group, a division of News Corp., since March 1998. Mr.
Kiener joined News Corp. as Executive Vice President
and Chief Operating Officer of HarperCollins Publishers
in September 1996. Prior to joining HarperCollins
Publishers, Mr. Kiener spent seven years in various
senior executive positions at EMI-Capitol Music Group,
N.A., one of the major worldwide operating music
distribution and publishing companies.
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Stephen A. Weiswasser Mr. Stephen A. Weiswasser has served as a director, July 1999 2002
(59) Secretary, Executive Vice President and General
Counsel of the Company since July 1999. Mr. Weiswasser
has been a partner at the law firm of Covington & Burling
from April1998 to present. From 1995 to 1998, Mr.
Weiswasser served as the Chief Executive Officer of
Americast. Prior to his position with Americast, Mr.
Weiswasser served as a Senior Vice President of Capital
Cities/ABC Inc., and held a number of other senior
executive positions with that company from 1986 to
1995. Mr. Weiswasser holds a B.A. from Wayne State
University and a J.D. from Harvard Law School.
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George Carrier Dr. George F. Carrier has served as a director of the August 1994 2002
Company since August 1994. He served on the faculty of
Harvard University from 1952 until he retired in 1988.
While at Harvard, he served as the Gordon McKay
Professor of Mechanical Engineering and T. Jefferson
Coolidge Professor of Applied Mathematics. Since 1995,
Dr. Carrier has served as a private consultant to TRW
Inc.'s Aerospace and Automotive Divisions and
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</TABLE>
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<TABLE>
<S> <C> <C> <C>
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since 1992 has served as a private consultant to the
National Science Foundation. Dr. Carrier holds a B.S.
(Mechanical Engineering) from Cornell University and
a Ph.D. (Applied Mechanics) from Cornell University.
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Robert Bennett (42) Mr. Robert Bennett has been a director of the Company July 2000 2002
since July 12, 2000. Previously, Mr. Bennett was a
Director of TV Guide from February 1998 to July 2000.
Mr. Bennett has been President, Chief Executive
Officer and a member of the board of directors of
Liberty Media Corporation since April 1997. Mr. Bennett
served as Executive Vice President of Tele-
Communications, Inc. from April 1997 to March 1999. Mr.
Bennett served as Executive Vice President and Chief
Financial Officer, Secretary and Treasurer of Liberty
Media Corporation from June 1995 through March 1997, and
as Senior Vice President from September 1991 to June 1995.
Mr. Bennett also served as acting Chief Financial Officer
of Liberty Digital, Inc. from June 1997 to July 1997.
Mr. Bennett is a director of Teligent, Inc. and
Chairman of the Board of Liberty Digital, Inc.
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Chase Carey (46) Mr. Chase Carey has been a director of the Company July 2000 2002
since July 12, 2000. Mr. Carey was previously a
Director of TV Guide from March 1999 to July 2000 and
has been Director of Fox Entertainment Group, Inc. and
Co-Chief Operating Officer of Fox Entertainment Group,
Inc. since August 1998. Mr. Carey is an Executive
Director and has been the Co-Chief Operating Officer of
News Corp. and a Director and Executive Vice President
of News America Incorporated since 1996. Mr. Carey has
served as the Chairman and Chief Executive Officer of
Fox Television since July 1994. Mr. Carey joined Fox,
Inc. (predecessor of Fox Entertainment Group, Inc.) in
1990 as Executive Vice President, served as Chief
Financial Officer, and assumed the title of Chief
Operating Officer in February 1992. Prior to joining
Fox Television, Mr. Carey worked at Columbia Pictures in
several executive positions, including President of
Pay/Cable and Home Entertainment and Executive Vice
President of Columbia Pictures International. Mr. Carey
is
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</TABLE>
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<TABLE>
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also a member of the Boards of Directors of Gateway,
NDS, Global Center and Colgate University.
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Douglas B. Macrae (41) Mr. Douglas B. Macrae has served as a director of the September 1997 2001
Company since September 1997. Mr. Macrae founded
VideoGuide Inc., a wholly-owned subsidiary of the
Company, in September 1993 and has served as its
President since that time. Mr. Macrae currently serves
as Chairman of the Board of GCC Technologies, Inc., a
privately held company that designs, licenses,
manufactures and sells consumer electronics and
computer products. Mr. Macrae is currently a Director
of Norpak Corporation and a Director of @TV Media.
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James E. Meyer (45) Mr. James E. Meyer has served as a director of the May 1997 2001
Company since May 1997. Mr. Meyer has served as Chief
Operating Officer for Thomson Consumer Electronics,
Inc. ("Thomson") since 1997. Mr. Meyer served as Senior
Vice President Product Management for Thomson from 1992
to 1996. From December 1996 to September 1997, Mr.
Meyer served as Executive Vice President, Marketing &
Sales-Americas for Thomson. Since June 1995. Mr. Meyer
also serves as a director for Mikohn Gaming and Geocast
Systems.
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J. David Wargo (46) Mr. J. David Wargo has been a director of the Company July 2000 2001
since July 12, 2000. Previously, Mr. Wargo was a
director of TV Guide from January 25, 1996 to July 12,
2000. Mr. Wargo has been President of Wargo &
Company, a private investment company specializing in
the communications industry, since January 1993. Mr.
Wargo was a Managing Director of The Putnam Companies
from December 1989 to December 1992. Mr. Wargo is a
director of On Command Corporation and Liberty Digital,
Inc.
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Nicholas Donatiello, Mr. Nicholas Donatiello, Jr. has been a director of the July 2000 2001
Jr. (40) Company since July 12, 2000. Previously, Mr.
Donatiello was a Director of TV Guide from June 23,
1999 to July 12, 2000 and has been the President and
Chief Executive Officer of Odyssey Ventures, Inc.,
which is the general partner of Odyssey, L.P.,
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</TABLE>
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<TABLE>
<S> <C> <C> <C>
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since September 1993. Odyssey, L.P. is principally engaged
in conducting market research of consumer practices and
views relating to present and future consumer behavior in
the areas of entertainment, information, communication and
commerce.
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</TABLE>
Arrangements with respect to the election of directors exist in the
Stockholders Agreement entered into by Henry C. Yuen, Liberty Media Corporation,
The News Corporation Limited and Gemstar which became effective upon the
completion of the Merger. Henry C. Yuen and designees of Mr. Yuen, Liberty and
News Corp. have agreed (1) to vote for, or to use their best efforts to cause
their respective designees on the board of directors to vote for, Mr. Yuen's
election as a director and appointment as Chairman of the Board and Chief
Executive Officer until the earlier of the fifth anniversary of the completion
of the merger and the date Mr. Yuen ceases to be Chief Executive Officer of
the Company other than as a result of his termination without cause and (2) to
vote for the election to the board of five other persons (including two
independent directors) designated by Mr. Yuen until the earlier of the fifth
anniversary of the completion of the merger and the date Mr. Yuen ceases to be
Chief Executive Officer of the Company other than as a result of his termination
without cause, provided that if Mr. Yuen should die or become disabled during
such five-year period Liberty and News Corp. have each agreed, for the remainder
of the five-year period, to continue to vote for the election to the board of
the directors formerly designated by Mr. Yuen or their successors (including Mr.
Yuen's successor) and to vote against their removal except for cause. Designees
of Liberty and News Corp. For so long as Liberty and News Corp. are committed to
vote for Mr. Yuen and his designees, Mr. Yuen has agreed to vote his shares of
common stock of the Company for the election to the board of three designees of
Liberty (including one independent director) and three designees of News Corp.
(including one independent director). Each of Liberty's and News Corp.'s right
to designate directors generally shall be reduced by one director upon the
transfer of 90% or more of its respective shares of Gemstar common stock, but if
the transfer of any of the shares was from one to the other then the total
number of directors Liberty and News Corp. have the right to designate will not
be reduced. Liberty and News Corp. have the right to allocate designees to the
Gemstar board between one another as they may agree in connection with any
transfer of shares among Liberty, News Corp. and their respective controlled
related parties. The Company's bylaws also contain certain arrangements with
respect to appointment of Directors.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company:
<TABLE>
<CAPTION>
Name Age Position and Office Executive Officer Since
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<S> <C> <C> <C>
Henry C. Yuen 50 Chief Executive Officer, President and Director August 1994
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Elsie Ma Leung 52 Chief Financial Officer, Co-President and August 1994
Co-Chief Operating Officer, member of the
Office of the Chief Executive.
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Stephen A. Weiswasser 59 Executive Vice President General Counsel July 1999
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Peter C. Boylan III 36 Co- President and Co-Chief Operating July 2000
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</TABLE>
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<TABLE>
<S> <C> <C> <C>
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Officer, member of the Office of the Chief
Executive, and chairman and Chief Executive
Officer of certain business units
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Joachim Kiener 47 Co- President and Co-Chief Operating Officer, July 2000
member of the Office of the Chief Executive,
and chairman and Chief Executive Officer of
certain business units
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</TABLE>
For a description of the business experience for the executive officers
listed above, see "Information with Respect to Directors."
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the United States Securities Exchange Act of 1934, as
amended, requires that a Company's directors and officers, and persons who own
more than 10% of a registered class of the Company's equity securities, file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission") and the National Association of Securities
Dealers, Inc. ("NASD"). Directors, officers and beneficial owners of more than
10% of the Company's common stock are required by the Commission to furnish the
Company with copies of the reports they file.
Based solely on its review of the copies of such reports and written
representations from certain reporting persons that certain reports were not
required to be filed by such persons, the Company believes that all of its
directors, officers and beneficial owners complied with all of the filing
requirements applicable to them with respect to transactions during the 2000
fiscal year.
ITEM 11 EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning the
compensation paid by the Company for fiscal years 2000, 1999 and 1998 to the
Company's chief executive officer and the two of the most highly compensated
executive officers during the 2000 fiscal year (collectively, the "Named
Executive Officers"):
<TABLE>
<CAPTION>
Annual Compensation (1) (2) Long Term Compensation
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Name and Fiscal Salary ($) Bonus ($) Other Restricted Securities All Other
Principal Year Annual Stock Underlying Compensation
Positions as Compensation Award(s) Options (#) ($) (4)
of the end of ($) ($) (3)
the Fiscal
Year 2000
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<S> <C> <C> <C> <C> <C> <C> <C>
Henry C. Yuen 2000 1,921,590 2,911,744 -- -- 3,438,984 490,159
Chief
Executive
Officer,
Chairman
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</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
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of the Board
and Director
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1999 1,534,833 2,215,167 -- -- 4,220,980 492,144
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1998 888,800 1,611,200 -- -- 16,650,900 493,912
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Elsie Ma Leung 2000 819,292 327,717 -- -- -- 1,400
Chief
Financial
Officer and
Director
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1999 700,000 280,000 -- -- -- 1,333
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1998 570,000 228,000 -- -- 6,000,000 2,427
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Stephen A. 2000 520,192 $ 75,000 -- -- 327,118 --
Weiswasser (5)
Executive
Vice
President,
General
Counsel
and Director
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1999 -- -- -- -- -- --
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1998 -- -- -- -- -- --
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</TABLE>
(1) No individual listed in the table received aggregated other compensation
exceeding $50,000 or 10% of the compensation reported in the table for such
individual.
(2) The salary paid to each of the Named Executive Officers represents each such
officer's adjusted base salary for the each of the indicated fiscal years
calculated pursuant to the applicable formula under such officer's employment
agreement with the Company or Gemstar Development Corporation, a wholly owned
subsidiary of the Company, ("GDC") as the case may be. The bonuses paid to Dr.
Yuen represent the aggregate amounts of Dr. Yuen's merit bonus and annual
incentive bonus, calculated pursuant to the applicable formula set forth in the
Employment Agreement between GDC and Dr. Yuen, dated April 1, 1994, as amended,
and the New Yuen Agreement (as defined). The bonuses paid to each of Mr.
Weiswasser and Ms. Leung represent the amount of the annual incentive bonus paid
to each such officer for each of the indicated fiscal years, calculated pursuant
to the applicable formula in such officer's employment agreement with GDC or the
Company, as the case may be.
(3) Number of securities has been adjusted to reflect the 2-for-1 stock split
effected in May 1999 and the 2-for-1 stock split effected in December 1999.
(4) The Company provides the Named Executive Officers with certain group life,
health, medical and other non-cash benefits generally available to all salaried
employees and not included in this column pursuant to the Securities and
Exchange Commission's rules. The amounts shown in this column include the
following:
(a) Matching contributions by the Company under the Gemstar Employees
401(k) and Profit Sharing Plan, which permit salaried employees to make tax-
deferred contributions of a portion of their base compensation pursuant to
Section 401(k) of the Code. Under
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such plan, prior to January 1, 1998, the Company will match 100% of 3% of a
participant's compensation up to $16,667 contributed as elective deferrals and
50% of 3% of a participant's compensation in excess of $16,667 contributed as
elective deferrals up to applicable limits under the Code. Effective January 1,
1998, GDC's matching contribution will be an amount equal to 100% of up to 2% of
a participant's compensation contributed, up to applicable limits under the
Code.
(b) Represents premiums paid for split dollar life insurance policies.
(5) Income and bonus figures are fractional for the year to reflect employment
since July 1999.
SUMMARY OF OPTION GRANTS
The following table provides certain summary information concerning grants of
options to the Named Executive Officers of the Company during the 1999 fiscal
year.
Option Grants in the Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for Option Term
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<S> <C> <C> <C> <C> <C> <C>
Name Number of % of Total Exercise Expiration Date 5% 10%
Securities Options Granted per Share
Underlying to Employees in
Options Fiscal Year
Granted (1)
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Henry Yuen 108,804 78% $30.907 5/31/2009 $ 2,114,850 $ 5,359,445
3,330,180 $ 30.00 6/1/2009 $62,829,969 $159,223,478
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Elsie Ma Leung 0 -- -- --
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Stephen 327,118 8% $35.315 7/22/2009 $ 7,265,099 $ 18,411,187
Weiswasser
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</TABLE>
(1) Number of securities and exercise price has been adjusted to reflect the 2-
for-1 stock split effected in May 1999 and the 2-for-1 stock split effected in
December 1999.
Summary of Options Exercised
The following sets forth certain summary information concerning the
exercise of stock options by the Named Executive Officers during the 2000 fiscal
year together with the fiscal year-end value of unexercised options.
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Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised in the Money
Unexercised Options at Fiscal Options at Fiscal Year End (2)
Year End (1)
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Name Shares Value Realized Exercisable Unexercisable Exercisable Unexercisable
Acquired on
Exercise
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<S> <C> <C> <C> <C> <C> <C>
Henry Yuen...... 0 -- 17,518,496 17,020,368 1,431,951,127 1,268,976,560
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Elsie Ma Leung... 0 -- 5,240,000 2,400,000 423,147,000 110,848,000
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Stephen 0 -- 0 327,118 0 16,579,976
Weiswasser.......
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</TABLE>
(1) Number of securities and exercise price has been adjusted to reflect the 2-
for-1 stock split effected in May 1999 and the 2-for-1 stock split effected in
December 1999.
(2) Market Value of the securities underlying the options at exercise date or
year-end, as the case may be, minus the exercise price or base price of "in the
money" options and transaction costs.
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
It is the Compensation Committee's duty to administer the Company's
overall compensation program for its senior management. The Compensation
Committee also oversees the administration of the Gemstar International Group
Limited 1994 Stock Incentive Plan, as amended (the "Stock Incentive Plan"). In
addition, the Compensation Committee establishes the compensation and evaluates
the performance of the Chief Executive Officer. The Compensation Committee as of
the end of the Fiscal Year 2000 was comprised of Dr. Carrier and Mr. Teruyuki
Toyoma, both non-employee directors.
The primary philosophy of the Company regarding compensation is to offer a
program which rewards each of the members of senior management commensurately
with the Company's overall financial performance and growth, including each
person's individual performance during the previous fiscal year. The Company's
compensation program for senior management is designed to attract and retain
individuals who are capable of leading the Company in achieving its business
objectives in an industry characterized by competitiveness, growth and change.
The Company believes a substantial portion of the annual compensation of each
member of senior management should relate to, and should be contingent upon, the
financial performance of the Company, as well as the individual contribution of
each particular person to the Company's financial performance. As a result, a
significant portion of the total compensation package consists of variable,
performance-based components, such as merit and annual incentive bonuses and
stock option awards, which can increase or decrease to reflect changes in
corporate and individual performance.
The Compensation Committee evaluates the total compensation for the
Company's Chief Executive Officer, Dr. Henry C. Yuen, and certain other members
of senior management in light of information collected by the Compensation
Committee regarding the financial performance of the Company. The Compensation
Committee considers various indicators of success on both a corporate
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and individual level in determining the overall compensation package for Dr.
Yuen and other members of senior management. The Corporate indicators of success
include, among others, revenue, operating income and earnings per share.
On January 7, 1998 the Compensation Committee approved, and recommended
that the Company's Board of Directors also approve, an Amended and Restated
Employment Agreement with Dr. Yuen (as amended by Amendment No. 1, the "New Yuen
Agreement"). The New Yuen Agreement supersedes and replaces Dr. Yuen's former
Employment Agreement with GDC, and provides for Dr. Yuen's service to each of
the Company and GDC as Chief Executive Officer and President through July 12,
2004, subject to a three-year renewal term and to earlier termination under
certain circumstances. The New Yuen Agreement also provides that Dr. Yuen will
serve as President and CEO of GDC and President, CEO and Chairman of the Board
of the Company.
On January 7, 1998, the Company's Board of Directors (with Dr.Yuen
abstaining from voting) also approved the Amended and Restated Employment
Agreement with Dr. Yuen, and on October 4, 1999 the Board approved Amendment No.
1 to the Amended and Restated Employment Agreement with Dr. Yuen. In approving
the New Yuen Agreement, the Compensation Committee and the Board of Directors
took into account, among other things, (i) the Company's substantial dependence
upon Dr. Yuen's continued contributions and service to the Company; (ii) Dr.
Yuen's considerable business experience and technological expertise; (iii) the
increased challenge faced by the Company of sustaining its growth into the
coming decade; (iv) challenges associated with rapidly evolving technology and
increasing global competition in the businesses in which the Company operates;
and (v) the desirability of obtaining Dr. Yuen's commitment to carry out the
long-term future projects of the Company beyond the term of Dr. Yuen's former
employment agreement.
The New Yuen Agreement includes provisions (collectively, the
"Performance-Based Provisions") pursuant to which Dr. Yuen's annual base salary
("Base Salary") is adjusted and his merit bonus, annual incentive bonus and
annual stock option grants are calculated. The Performance-Based Provisions of
the New Yuen Agreement were subject to shareholder approval to satisfy one of
the requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), in order to permit the Company to deduct payments in
excess of $1 million in any fiscal year. The Performance-Based Provisions of
Dr.Yuen's Amended and Restated Employment Agreement were approved by the holders
of the Company's Ordinary Shares at a Special Meeting of Members of the Company
held on March 12, 1998 (the "1998 Special Meeting").
Under the New Yuen Agreement, Dr. Yuen's Base Salary initially is set at
$1 million. For the fiscal year ending March 31, 2000, the New Yuen Agreement
provides for annual adjustments to Dr. Yuen's Base Salary based on the growth of
the Company's consolidated revenues and consolidated net earnings. Upon
consummation of the Merger on July 12, 2000, the New Yuen Agreement provides for
annual adjustments to Dr. Yuen's Base Salary based on a calculation relating to
the growth of the Company's consolidated net earnings per share.
The New Yuen Agreement also provides for the payment to Dr. Yuen of a
merit bonus (the "Merit Bonus") which is equal to a percentage of Dr. Yuen's
then-current Base Salary (reflecting any prior adjustments), equal to the
percentage increase, if any, in the Company's consolidated earnings before
interest, taxes, depreciation and amortization ("EBITDA") for its most recently
completed fiscal year from the Company's EBITDA for the comparable period in the
immediately preceding fiscal year. Upon consummation of the Merger on July 12,
2000, the Merit Bonus is equal to a Adjusted Percentage of Dr. Yuen's then-
current Base Salary (reflecting any prior adjustments). The Adjusted Percentage
is equal to the product of (i) the percentage increase per outstanding share, if
any, from the previous fiscal
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year in the Company `s consolidated earnings before interest, taxes,
depreciation and amortization ("EBITDA") plus (ii) the percentage increase per
outstanding share, if any, from the previous fiscal year in that portion of the
Company's consolidated EBITDA attributable to the business being conducted by
the Company and its subsidiaries prior to the Merger. The product of (i) and
(ii) is then multiplied by .125.
The New Yuen Agreement also provides for the payment to Dr. Yuen of an
additional bonus (the "Annual Incentive Bonus"), which as of the end of the
fiscal year 2000 was tied to the annual rate of growth of the Company's
consolidated earnings per share. Upon consummation of the Merger on July 12,
2000, the Annual Incentive Bonus will be equal to the Adjusted Percentage times
the Base Salary.
Under the New Yuen Agreement, the aggregate dollar amount of Dr. Yuen's
Base Salary (as adjusted), Merit Bonus, and Annual Incentive Bonus for each
compensation period is subject to an annual limitation, which was increased upon
consummation of the Merger on July 12, 2000. The amount of the adjustment to Dr.
Yuen's Base Salary, and the amounts of the Merit Bonus and the Annual Incentive
Bonus payable to Dr. Yuen under the New Yuen Agreement for the fiscal year ended
on March 31, 2000, were dependent upon the Company's financial performance for
such year and on whether the Company's consolidated revenues and consolidated
earnings from operations for the fiscal quarter ended March 31, 2000 exceeded
the Company's consolidated revenues and consolidated earnings from operations,
respectively, for the fiscal quarter ended March 31, 1999.
The Compensation Committee determines the cash compensation paid to the
other members of senior management in accordance with their employment
agreements in a similar manner as that of the Chief Executive Officer. Each
officer's overall cash compensation is based upon the Company achieving certain
financial objections, together with each officer satisfying certain qualitative
individual management objectives.
The Compensation Committee oversees the administration of the Stock
Incentive Plan, which provides the Company with the ability to periodically
reward key employees with options to purchase shares of the Company's Ordinary
Shares. These long-term incentives are designed to align the interests of key
employees with those of the shareholders of the Company. Stock option grants
provide an incentive that focuses the individual's attention on managing the
Company from the perspective of an owner, with an equity stake in the business.
The value of stock options is tied to the future performance of the Company's
common stock and provides value to the recipient only when the price of the
Company's common stock increases above the option exercise price. Stock options
reward management for long-term strategic planning through the resulting
enhancement of share price. The Company believes that a compensation structure
which includes the periodic granting of long-term incentives such as stock
options helps to attract and retain senior managers with long-term management
perspectives.
During the 2000 fiscal year, the Company granted stock options to Dr.
Yuen. The New Yuen Agreement provides for the annual grant of options to
purchase 3,330,180 shares of common stock of the Company, as adjusted to reflect
the 2-for-1 stock split effected in May 1999 and the 2-for-1 stock split in
December 1999. Stockholders of the Company approved the annual stock option
grant to Dr. Yuen at the 1998 Special Meeting. Additionally, Dr. Yuen has the
option to receive his Merit Bonus and Annual Incentive Bonus in the form of
options to shares of common stock of the Company. The number of options granted
to each employee of the Company was determined in accordance with the relative
position, seniority and contribution of each such individual.
The Compensation Committee has considered the anticipated tax treatment to
the Company regarding the compensation and benefits paid to the executive
officers of the Company in light of the
-12-
<PAGE>
enactment of Section 162(m) of the Code. Section 162(m) of the Code renders non-
deductible to a publicly-held corporation certain compensation in excess of $1
million paid in any year to certain of its executive officers, unless the excess
compensation is "performance-based" (as defined) or is otherwise exempt from
Section 162(m). The basic philosophy of the Compensation Committee is to strive
to provide the executive officers of the Company with a compensation package
which will preserve the deductibility of such payments for the Company to the
extent reasonably practicable and to the extent consistent with its other
compensation objectives. However, certain types of compensation payments and
their deductibility (e.g., the spread and exercise of non-qualified options)
depend upon the timing of an executive officer's vesting or other factors beyond
the Compensation Committee's control, and may affect the deductibility of
certain compensation payments. While we believe that the options granted and to
be granted to Dr. Yuen will qualify for the "performance-based" exception to
Section 162(m), no assurance can be given as to the deductibility of any
compensation paid under the New Yuen Agreement to the extent that such
compensation would, together with any other nonexempt compensation paid to Dr.
Yuen, exceed $1 million in any year.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Dr. George F. Carrier
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the end of the 2000 Fiscal Year and until July 12, 2000 the
Company's Compensation Committee consisted of Dr. George Carrier and Mr.
Teruyuki Toyama, neither of whom is an officer or employee of the Company or was
previously an officer or employee of the Company. Mr. Teruyuki resigned as a
Director effective July 12, 2000.
The composition of the Compensation Committee as of July 12, 2000 consists
of Dr. Henry Yuen, Dr. George Carrier, Mr. James Meyer, Mr. Robert Bennett and
Mr. Chase Carey. Dr. Yuen is an officer of the Company. Mr. Carrier, Mr.
Meyer, Mr. Bennet and Mr. Carey are not and have never been employees of the
Company.
PERFORMANCE GRAPH
The following graph shows the Company's total return to shareholders
compared to the Nasdaq Composite Index, the Morgan Stanley High Technology Index
and the Nasdaq 100 over the period from October 11, 1995 (the date the Company's
shares began trading on the Nasdaq National Market) to March 31, 2000.
-13-
<PAGE>
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
10/11/95 3/29/96 3/31/97 3/31/98 3/31/99 3/31/00
Gemstar 100 182 89 218 547 2502
Nasdaq 100 110 122 183 246 457
Morgan Stanley High Tech 100 102 114 175 329 342
Nasdaq-100 100 108 141 216 373 779
</TABLE>
EMPLOYMENT CONTRACTS
Amended and Restated Employment Agreement with Dr. Yuen
On January 7, 1998, the Company's Compensation Committee and Board
approved an Amended and Restated Employment Agreement, and on October 4, 1999
the Board approved the Amendment No. 1 to the Amended and Restated Employment
Agreement (as amended, the "New Yuen Agreement"). The New Yuen Agreement
supersedes and replaces Dr. Yuen's former Employment Agreement with GDC, and
provides for Dr. Yuen's service to each of the Company and GDC as Chief
Executive Officer and President through July 12, 2004, subject to a three-year
renewal term and to earlier termination under certain circumstances. The New
Yuen Agreement also provides that Dr. Yuen will serve as President and CEO of
GDC and President, CEO and Chairman of the Board of the Company.
The New Yuen Agreement includes provisions (collectively, the
"Performance-Based Provisions") pursuant to which Dr. Yuen's annual base salary
("Base Salary") is adjusted and his merit bonus, annual incentive bonus and
annual stock option grants are calculated. The Performance-Based Provisions of
the New Yuen Agreement were subject to shareholder approval to satisfy one of
the
-14-
<PAGE>
requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), in order to permit the Company to deduct payments in excess of $1
million in any fiscal year. The Performance-Based Provisions of Dr. Yuen's
Amended and Restated Employment Agreement were approved by the shareholders at a
Special Meeting of Members of the Company held on March 12, 1998 (the "1998
Special meeting").
Under the New Yuen Agreement, Dr. Yuen's Base Salary initially is set at
$1 million. For the fiscal year ending March 31, 2000, the New Yuen Agreement
provides for annual adjustments to Dr. Yuen's Base Salary based on the growth of
the Company's consolidated revenues and consolidated net earnings. Upon
consummation of the Merger on July 12, 2000, the New Yuen Agreement provides for
annual adjustments to Dr. Yuen's Base Salary based on a calculation relating to
the growth of the Company's consolidated net earnings per share.
The New Yuen Agreement also provides for the payment to Dr. Yuen of a
merit bonus (the "Merit Bonus") which is equal to a percentage of Dr. Yuen's
then-current Base Salary (reflecting any prior adjustments), equal to the
percentage increase, if any, in the Company's consolidated earnings before
interest, taxes, depreciation and amortization ("EBITDA") for its most recently
completed fiscal year from the Company's EBITDA for the comparable period in the
immediately preceding fiscal year. Upon consummation of the Merger on July 12,
2000, the Merit Bonus is equal to a Adjusted Percentage of Dr. Yuen's then-
current Base Salary (reflecting any prior adjustments). The Adjusted Percentage
is equal to the product of (i) the percentage increase per outstanding share, if
any, from the previous fiscal year in the Company `s consolidated earnings
before interest, taxes, depreciation and amortization ("EBITDA") plus (ii) the
percentage increase per outstanding share, if any, from the previous fiscal year
in that portion of the Company's consolidated EBITDA attributable to the
business being conducted by the Company and its subsidiaries prior to the
Merger. The product of (i) and (ii) is then multiplied by .125.
The New Yuen Agreement also provides for the payment to Dr. Yuen of an
additional bonus (the "Annual Incentive Bonus"), which as of the end of the
fiscal year 2000 was tied to the annual rate of growth of the Company's
consolidated earnings per share. Upon consummation of the Merger on July 12,
2000, the Annual Incentive Bonus will be equal to the Adjusted Percentage times
the Base Salary.
During the 2000 fiscal year, the Company granted stock options to Dr.
Yuen. The New Yuen Agreement provides for the annual grant of options to
purchase 3,330,180 shares of common stock of the Company (as adjusted to reflect
the two for one stock split in May 1999 and the two for one stock split in
December 1999.) In addition, the New Yuen Agreement allows Dr. Yuen to elect to
receive the Merit Bonus and the Annual Incentive Bonus in the form of options to
acquire common stock of the Company in lieu of receiving the Merit Bonus and the
Annual Incentive Bonus in cash. Under the New Yuen Agreement, the aggregate
dollar amount of Dr. Yuen's Base Salary (as adjusted), Merit Bonus, and Annual
Incentive Bonus for each compensation period is subject to an annual limitation,
which was increased upon consummation of the Merger on July 12, 2000.
The amount of the adjustment to Dr. Yuen's Base Salary, and the amount of
the Merit Bonus and the Annual Incentive Bonus payable to Dr. Yuen under the New
Yuen Agreement for the fiscal year ended on March 31, 2000, were dependent upon
the Company's financial performance for such year and on whether the Company's
consolidated revenues and consolidated earnings from operations for the fiscal
quarter ended March 31, 2000 exceeded the Company's consolidated revenues and
consolidated earnings from operations, respectively, for the fiscal quarter
ended March 31, 1999.
-15-
<PAGE>
The New Yuen Agreement provided for the immediate grant to Dr. Yuen of
options to purchase 4,162,725 shares of common stock of the company and annual
grants of options to purchase 832,545 Ordinary Shares (not adjusted to reflect
2-for-1 stock split). The Company's shareholders approved these stock option
grants to Dr. Yuen at the 1998 Special Meeting. Dr. Yuen is also entitled to
$1,000 a month automobile allowance and other benefits, including, health
insurance and participation in bonus and incentive and stock option compensation
plans.
The New Yuen Agreement entitles Dr. Yuen to terminate the New Yuen
Agreement within 90 days following a change of control (as defined below), in
which event (1) he would be entitled to receive (a) a lump-sum payment equal to
five times his then-current Base Salary, (b) for a period of 60 months following
such termination, all other elements of his compensation provided under the New
Yuen Agreement, (2) all unvested options granted to him pursuant to the New Yuen
Agreement would immediately vest in full and would be exercisable for their full
term and all previously granted vested options to acquire Ordinary Shares will
remain fully exercisable for their full term. A "change of control" is defined
as of the end of the fiscal year 2000 as the occurrence of any of the following:
(i) the acquisition (other than from the Company directly or from any Company
shareholder who was, as of the effective date of the New Yuen Agreement, a 25%
shareholder of the Company) by any person or entity of beneficial ownership of
25% or more of the Company's outstanding shares; (ii) the acquisition (other
than from GDC directly or from any GDC shareholder who was, as of the effective
date of the New Yuen Agreement, a 25% shareholder of GDC) by any person or
entity of beneficial ownership of 25% or more of GDC's outstanding shares; (iii)
during any period of two consecutive years, individuals who, at the beginning of
such period, constituted the board of directors of the Company or GDC (together
with any new directors whose election or appointment to such board of directors
or whose nomination for election by the shareholders of the Company or GDC was
approved by Dr. Yuen or by a vote of a majority of the directors then still in
office who are either directors at the beginning of such period or whose
election, appointment or nomination for election was previously so approved)
cease for any reason to constitute a majority of the board of directors of the
Company or GDC then in office; (iv) approval by the board of directors or a
majority of the shareholders of either the Company or GDC of a merger,
reorganization, combination or consolidation whereby the shareholders of either
the Company or GDC immediately prior to such approval will not, immediately
after consummation of such reorganization, merger, combination or consolidation
own more than 50% of the voting stock of the surviving entity; or (v) a
liquidation or dissolution of either the Company or GDC or the sale of all or
substantially all of the assets of either the Company or GDC, unless the
successor to the assets in any such liquidation, dissolution or sale, is the
Company or any of its subsidiaries. This definition was modified upon the
consummation of the Merger on July 12, 2000 to exclude from the definition of a
change in control the acquisition from Dr. Yuen of more than 25% of the
Company's outstanding shares pursuant to a right of first refusal granted Dr.
Yuen to Liberty Media Corporation and The News Corporation Limited pursuant to a
shareholders agreement entered into in connection with the Merger.
Under the New Yuen Agreement, as similar to Dr. Yuen's former employment
agreement, all inventions, designs, improvements, patents, copyrights,
discoveries and other intellectual property which (i) are developed by Dr. Yuen
while performing his duties for GDC or using GDC's equipment or trade secret
information, (ii) are related at the time of conception to GDC's business or
actual or demonstrably anticipated research, or (iii) result from any work
performed by Dr. Yuen for GDC, are the property of GDC, if and only to the
extent GDC can show by clear and convincing evidence that such property is GDC's
property.
Employment Agreement with Ms. Leung
-16-
<PAGE>
The Company and GDC entered into an Amended and Restated Employment
Agreement with Ms. Leung, dated as of March 31, 1998 and an amendment to the
Employment Agreement dated as of April 13, 2000 (as amended, the "New Leung
Agreement"), which supersedes and replaces Ms. Leung's former employment
agreement. The New Leung Agreement provides for an initial term effective from
January 1, 1998 through September 30, 2005. There is no provision for renewal.
Under the New Leung Agreement, Ms. Leung will serve as Chief Financial
Officer of the Company and Chief Operating Officer and Chief Financial Officer
of GDC. Ms. Leung will also serve as a director of the Company, GDC and
StarSight. Ms. Leung receives a base salary of $700,000 per year, with annual
adjustments based upon the Company's consolidated revenues, as similar to her
former employment agreement. The New Leung Agreement also provides that Ms.
Leung may receive an annual incentive bonus based upon the Company's
consolidated earnings per share, as similar to her former employment agreement.
Under the New Leung Agreement, Ms. Leung received options to purchase 1,200,000
Ordinary Shares (not adjusted to reflect the 2-for-1 stock split effected in May
1999), scheduled to vest ratably over the term of the New Leung Agreement. Ms.
Leung is also entitled to a $750 per month automobile allowance and other
benefits, including health insurance and participation in bonus and incentive
and stock option compensation plans.
The New Leung Agreement provides Ms. Leung the right to terminate the New
Leung Agreement within 90 days following a change of control (defined
substantially as defined above with respect to the New Yuen Agreement), in which
event (1) she would be entitled to receive (a) a lump-sum payment equal to five
times her then-current base salary, (b) for a period of 60 months following such
termination, all other elements of her compensation provided under the New Leung
Agreement, (2) all unvested options granted to her under the New Leung Agreement
would immediately vest in full and would be exercisable for their full term and
all previously granted vested options to acquire Ordinary Shares will remain
fully exercisable for their full term. Ms. Leung agreed in the Amendment to her
Employment Agreement that the consummation of the Merger would not result in a
change in control under her Employment Agreement.
All inventions, designs, improvements, patents, copyrights and discoveries
conceived by Ms. Leung during the term of the New Leung Agreement which are
competitive with or related to existing products or services of GDC shall be
assigned to GDC.
Employment Agreement with Mr. Weiswasser
GDC has entered into an employment agreement with Mr. Weiswasser dated
July 22, 1999 and an amendment to agreement dated as of July 11, 2000 (as
amended, the "Weiswasser Agreement"). The term of the employment agreement is
from July 22, 1999 (the "Effective Date") and ending on the third business day
before the third (3rd) anniversary of the Effective Date, and will be
automatically extended through the and shall end with the close of business on
the day before the fifth (5th) anniversary of the Effective Date. The
Weiswasser Agreement provides for a base salary of $750,000 annually subject to
an annual adjustment based upon the Consumer Price Index, an annual bonus
determined in the sole discretion of the CEO and/or COO to be no greater than 33
1/3% of the base salary, and option grants as determined by the Board of
Directors or Compensation Committee in accordance with the guidelines specified
therein.
In the event a change in control event occurs that is either approved by
the CEO and a majority of all of the members of the Board of Directors of the
Company or GDC, or whereby the Company ceases to be a registered company under
Section 12 of the Securities Exchange Act of 1934 or if deemed by the CEO to be
a Friendly Change in Control Event (a "Friendly Change in Control Event") all
-17-
<PAGE>
amounts or benefits and all stock options or other equity based awards in which
Mr. Weiswasser is not yet vested shall become fully vested, and Mr. Weiswasser
has 90 days after the occurrence of the event to terminate his employment which
will be deemed a termination for Good Reason as defined in the Weiswasser
Agreement.
The Weiswasser Agreement provides that termination of Mr. Weiswasser may
be effected for cause or without cause, or by Mr. Weiswasser for good reason or
without good reason, or due to disability, each of which is defined in the
Weiswasser Agreement and may result in certain benefits to Mr. Weiswasser upon
termination. Any such termination would become effective immediately as a
resignation by Mr. Weiswasser from all positions with the Company or GDC or
related entity.
Employment Agreement with Joachim Kiener
TV Guide and Mr. Kiener entered into a new employment agreement effective
March 1, 1999. This employment agreement was assumed by the Company on July 12,
2000 in connection with the closing of the Merger. The term of the agreement
ends on the sixth anniversary of the completion of the Merger. Thereafter, the
employment agreement will be renewed automatically for a term of three
additional years unless either party elects not to renew. If the employment
agreement is not renewed or if the terms of the renewal are not agreed upon,
failure to renew or agree will be treated as a termination without cause as
described below.
The employment agreement provides that Mr. Kiener will serve as Co-
President and Co-Chief Operating Officer of the Company, member of the Office of
the Chief Executive of the Company, and Chairman and Chief Executive Officer of
certain TV Guide business divisions. Mr. Kiener's annual base salary is
$875,000. The base salary will be increased annually by any percentage increase
in the Consumer Price Index. The employment agreement provides for an annual
incentive bonus at a target amount of 50% of Mr. Kiener's annual base salary in
effect on the last day of the applicable compensation period. The actual amount
of the bonus will be based on criteria to be determined each year by mutual
agreement of Mr. Kiener and the Chief Executive Officer of the Company. There
is no guaranteed minimum bonus.
TV Guide previously granted Mr. Kiener options to acquire 600,000 shares
of its TV Guide Class A Common Stock at $12.50 per share vesting one-fifth each
year on March 1 of years 2000 through 2004. Upon completion of the Merger,
options to acquire 400,000 of such shares vested and became immediately
exercisable on July 12, 2000, and the options to acquire the remaining 200,000
shares, subject to other accelerated vesting provisions in the option grant
agreement itself, will vest and become exercisable ratably (one-fifth each year)
on March 1 of years 2000 through 2004. On October 1, 1999, TV Guide granted Mr.
Kiener options to acquire 1,521,376 shares of TV Guide Class A Common Stock at
$21.93 per share which upon completion of the Merger became exercisable ratably
(one-sixth per year) on each of the first through the sixth anniversaries of the
merger closing, subject to the accelerated vesting provisions of the option
grant agreement itself. Upon completion of the Merger, all options on TV Guide
common stock converted to options to purchase shares of the Company's common
stock with the number of shares issuable and the option price adjusted according
to the terms of the merger agreement.
Termination without cause or constructive termination (as defined in the
employment agreement) will entitle Mr. Kiener to a lump sum payment equal to the
greater of three times his annual base salary or the amount equal to the product
of his annual base salary multiplied by the number of years remaining (rounded
up) in the term of his employment under the employment agreement and to
continuation of the additional benefits provided for in the employment agreement
(such as participation
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<PAGE>
in medical, disability and life insurance plans) for 60 months from the last
date of employment. All stock options and other stock incentive awards
previously granted to him will immediately vest in full and become fully
exercisable for their full term, and all previously vested stock options and
other stock incentive awards will remain fully exercisable for their full term.
The definition of "change of control" in the employment agreement
broadened upon the completion of the Merger, and the event of a change of
control entitles Mr. Kiener to terminate his employment within 90 days after
notice of a change of control and receive a lump sum payment of five times his
current annual base salary and continuation of all other elements of his
compensation for 60 months from the last date of employment. All unvested stock
options and other stock incentive awards previously granted to Mr. Kiener will
immediately vest in full, and those options and awards and all previously vested
stock options and other stock incentive awards will remain fully exercisable for
their full term. Certain payments made to Mr. Kiener upon a "change of control"
will be increased to offset the effect of certain adverse tax consequences which
may be caused by such payments.
At any time after September 1, 2000 Mr. Kiener is entitled to terminate
his employment under the employment agreement without reason upon six months
prior notice and receive a lump sum payment equal to his then current annual
base salary. Upon such termination, all stock options and other stock incentive
awards previously granted and then remaining unvested will be forfeited, and all
previously vested stock options and other stock incentive awards shall remain
fully exercisable for their full term.
Employment Agreement with Peter C. Boylan III.
TV Guide and Mr. Boylan entered into an employment agreement effective
March 1, 1999, which was assumed by the Company on July 12, 2000 with terms and
provisions identical to those in the new employment agreement between the
Company and Mr. Kiener discussed above in the immediately preceding six
paragraphs, except that: (1) Mr. Boylan is Co- President and Co-Chief Operating
Officer of the Company, member of the Office of the Chief Executive of the
Company, and Chairman and Chief Executive Officer of certain other TV Guide
business divisions; and (2) Mr. Boylan's annual base salary is $750,000.
COMPENSATION OF DIRECTORS
The Company pays each director who is not an employee of the Company
$25,000 per year for services as a director of the Company and $1,000 per Board
or committee meeting attended. All directors are reimbursed for their out-of-
pocket expenses incurred in connection with attendance at meetings of, and other
activities relating to service on, the Board or any committee of the Board. In
addition, directors who are not full-time employees of the Company are eligible
to participate in, and each such director has received awards pursuant to, the
Gemstar International Group Limited 1994 Stock Incentive Plan, as amended (the
"Stock Incentive Plan").
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the common shares of the Company as of July 19, 2000 for
each person who owns more than 5% of the outstanding common stock of the
Company:
-19-
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name and Address of Amount and Nature of Percent of Class (1)
Beneficial Owner Beneficial Ownership (1)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Thomas L.H. Lau (2) 40,000,000 9.7%
---------------------------------------------------------------------------------------------------------
Common Stock Liberty Media Corporation 87,465,738 21.3%
(3)
---------------------------------------------------------------------------------------------------------
Common Stock The News Corporation 87,465,738 21.3%
Limited (4)
---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Applicable percentage of ownership is based on 410,609, 553 shares of common
stock outstanding as July 19, 2000 together with applicable options for such
shareholder. Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares subject to options held by that person that are currently exercisable or
that become exercisable within 60 days following July 19, 2000 are deemed
outstanding. However, such shares are not deemed outstanding for purposes of
computing the percentage ownership of any other person. Unless otherwise
indicated, each of the shareholders named in this table has sole voting and
dispositive power with respect to the shares of common stock shown as
beneficially owned by such shareholder.
(2) Shares are owed of record by Dynamic Core Holdings Limited, of which Mr.
Lau is the sole shareholder. The address of Mr. Lau is 26/F., CRC Protective
Tower, 38 Gloucester Road, Hong Kong.
(3) The address of Liberty Media Corporation is 9197 South Peoria Street,
Englewood, Colorado 80112. 16,761,150 shares are owned of record by Liberty
TVGIA, Inc., a Delaware Corporation and wholly owned subsidiary of Liberty Media
Corporation, and 70,704,588 shares are owned of record by Liberty UVSG, Inc. a
Colorado corporation and wholly owned subsidiary of Liberty Media Corporation.
Liberty is a subsidiary of Tele-Communications, Inc., which in turn is a
subsidiary of AT&T Corp.
(4) All 87,465,783 shares are owned of record by Sky Global Networks, Inc.,
("SGN") previously named TVG Holdings, Inc., an indirect subsidiary of The News
Corporation Limited ("News Corp."). News Corp, as a person who may be deemed to
control SGN, may also be deemed to indirectly beneficially own such shares. By
virtue of ordinary shares of News Corp. owned by (i) Mr. K. Rupert Murdoch and
members of his family, (ii) (A ) Cruden Investments Pty. Limited, a private
Australian investment company owned by Mr. Murdoch, members of his family and
certain charities, and (B) a subsidiary of Cruden; and (iii) corporations which
are controlled by trustees of settlements and trusts set up for the benefit of
the Murdoch family, charities and other persons, and Mr. Murdoch's positions as
Chairman and Chief Executive Officer of News Corp., Mr. Murdoch may be deemed to
control the operations of News Corp., and may therefore be deemed to indirectly
beneficially own such shares of SGN. News Corp. and Mr. Murdoch have disclaimed
beneficial ownership of such shares. The address of SGN is 1300 North Market
Street, Suite 404, Wilmington, Delaware 19801; the address of News Corp. is 2
Holt Street, Sydney, New South Wales 2010, Australia; the address of News
Publishing Australia Limited is 1300 North Market Street, Suite 404, Wilmington,
Delaware 19801; and the address of Mr. Murdoch is 10201 West Pico Boulevard, Los
Angeles, California 90035.
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
Title of Class Name of Beneficial Owner Amount and Nature of Percent of Class (1)
Beneficial Ownership (1)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Henry Yuen (2) 33,375,556 7.7%
---------------------------------------------------------------------------------------------------------
Common Stock Elsie Leung (3) 5,240,000 1.3%
---------------------------------------------------------------------------------------------------------
Common Stock Stephen Weiswasser (4) 81,780 *
---------------------------------------------------------------------------------------------------------
Common Stock Douglas Macrae (as of 592,000 *
4/1/00) (5)
---------------------------------------------------------------------------------------------------------
Common Stock James E. Meyer -- *
---------------------------------------------------------------------------------------------------------
Common Stock George Carrier (6) 88,000 *
---------------------------------------------------------------------------------------------------------
Common Stock Joachim Kiener (7) 262,920 *
---------------------------------------------------------------------------------------------------------
Common Stock Peter Boylan (8) 1,635,645 *
---------------------------------------------------------------------------------------------------------
Common Stock Robert Bennett (9) 39,438 *
---------------------------------------------------------------------------------------------------------
Common Stock Chase Carey -- *
---------------------------------------------------------------------------------------------------------
Common Stock J. David Wargo (10) 39,438 *
---------------------------------------------------------------------------------------------------------
Common Stock Nicholas Donatiello, Jr. (11) 19,719 *
---------------------------------------------------------------------------------------------------------
Common Stock Directors and Officers as a 41,374,496 9.4%
Group
---------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) Applicable percentage of ownership is based on 410,609,553 shares of common
stock outstanding as of July 19, 2000 together with applicable options for such
shareholder. Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares subject to options held by that person that are currently exercisable or
that become exercisable within 60 days following June 14, 1999 are deemed
outstanding. However, such shares are not deemed outstanding for purposes of
computing the percentage ownership of any other person. Unless otherwise
indicated, each of the shareholders named in this table has sole voting and
dispositive power with respect to the shares of common stock shown as
beneficially owned by such shareholder. The address for all directors and
officers of the Company is c/o Gemstar - TV Guide International, Inc. 135 North
Los Robles Avenue, Suite 800, Pasadena, California, 91101.
(2) Amount includes 12,179,960 shares of common stock and 21,195,596 shares of
common stock issuable upon exercise of options that are currently exercisable or
will become exercisable within sixty days following July 19, 2000.
(3) Amount represents 5,240,000 shares of common stock issuable upon exercise of
options that are currently exercisable or will become exercisable within sixty
days following July 19, 2000.
(4) Amount represents 81,780 shares of common stock issuable upon exercise of
options that are currently exercisable or will become exercisable within sixty
days following July 19, 2000.
(5) Amount includes 492,000 shares of common stock and 100,000 shares of common
stock issuable upon exercise of options that are currently exercisable or will
become exercisable within sixty days following July 19, 2000.
(6) Amount represents 88,000 shares of common stock issuable upon exercise of
options that are currently exercisable or will become exercisable within sixty
days following July 19, 2000.
(7) (9) (10) (11) Amount represents shares of common stock issuable upon
exercise of options that are currently exercisable or will become exercisable
within sixty days following July 19, 2000.
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(8) Amount includes 23,152 shares of common stock and 1,612,493 shares of
common stock issuable upon exercise of options that are currently exercisable or
will become exercisable within sixty days following July 19, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company continues to maintain service relationships with certain
subsidiaries of Gemstar Manufacturing Holding, Limited, a former wholly owned
subsidiary of the Company ("Holdings"). Certain directors of the Company are
significant shareholders of Holdings. Pursuant to the services agreements, the
Holdings subsidiaries provide marketing and promotion services for the Company
in their respective territories in connection with the Company's systems,
maintain relationships with licensees and promote and monitor the publication of
the PlusCode Numbers (a proprietary one to eight digit number that is entered
into a VCR or television equipped with the Company's VCR Plus+ system, enabling
consumers to record a television program). Service fees paid to these companies
totaled $8,178,000, $6,527,000 and $6,454,000 for each of the years in the
three-year period ended March 31, 1998, 1999 and 2000, respectively.
Mr. Weiswasser, Executive Vice President, General Counsel and Director of
the Company, is also a partner at Covington & Burling in Washington D.C.. The
Company has received legal services from Covington & Burling and incurred fee
obligations that are not material within the SEC's rules either to the Company
or Covington & Burling.
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Pursuant to the requirements of Section 13 or 15(d) or the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GEMSTAR - TV GUIDE INTERNATIONAL, INC.
(Registrant)
Date: July 29, 2000 By: /s/ Stephen A. Weiswasser
------------------------------------------
Stephen A. Weiswasser
Executive Vice President, General Counsel
and Director
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