<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
PAXSON COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
(LOGO)
(PAXSON COMMUNICATION CORPORATION LOGO)
March 18, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Paxson Communications Corporation (the "Company"), which will be held at the
Palm Beach Gardens Marriott, 4000 RCA Boulevard, Palm Beach Gardens, Florida
33410, on April 17, 1998, at 10:30 a.m., local time.
Please note that attendance at the Annual Meeting will be limited to
stockholders as of the record date (or their authorized representatives) and to
guests of the Company. If your shares are registered in your name and you plan
to attend the Annual Meeting, please mark the appropriate box on the enclosed
proxy card and you will be pre-registered for the meeting (if your shares are
held of record by a broker, bank or other nominee and you plan to attend the
meeting, you must also pre-register by returning the registration card forwarded
to you by your bank or broker). Stockholders who are not pre-registered will
only be admitted to the Annual Meeting upon verification of stock ownership.
The notice of the meeting and proxy statement on the following pages
contain information concerning the business to be considered at the meeting.
Please give these proxy materials your careful attention. It is important your
shares be represented and voted at the Annual Meeting regardless of the size of
your holdings. Accordingly, whether or not you plan to attend the Annual
Meeting, please complete, sign, and return the accompanying proxy card in the
enclosed envelope in order to make sure your shares will be represented at the
Annual Meeting. Stockholders who attend the Annual Meeting will have the
opportunity to vote in person.
The continuing interest of the stockholders in the business of the Company
is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
/s/ Lowell W. Paxson
-------------------------------------
LOWELL W. PAXSON
Chairman and Chief Executive Officer
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401-6233
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1998
---------------------
The Annual Meeting of Stockholders of Paxson Communications Corporation
will be held at the Palm Beach Gardens Marriott, 4000 RCA Boulevard, Palm Beach
Gardens, Florida 33410, on April 17, 1998, at 10:30 am., local time, for the
following purposes:
1. To elect five directors;
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent certified public accountants for 1998; and
3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 9, 1998, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
Stockholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE MEETING.
By Order of the Board of Directors
/s/ ANTHONY L. MORRISON
----------------------------------
Anthony L. Morrison, Secretary
West Palm Beach, Florida
March 18, 1998
<PAGE> 4
PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401-6233
PROXY STATEMENT
This proxy statement is first being sent to stockholders on or about March
20, 1998, in connection with the solicitation of proxies by the Board of
Directors of Paxson Communications Corporation (the "Company"), to be voted at
the Annual Meeting of Stockholders to be held on April 17, 1998, and at any
adjournment thereof (the "Meeting"). The Board of Directors has fixed the close
of business on March 9, 1998, as the record date of the determination of
stockholders entitled to notice of and to vote at the Meeting. At the close of
business on the record date, the Company had outstanding (i) 51,381,100 shares
of $0.001 par value Class A Common Stock ("Class A Common Stock"), entitled to
one vote per share, (ii) 8,311,639 shares of $0.001 par value Class B Common
Stock ("Class B Common Stock," and with the Class A Common Stock, collectively,
the "Common Stock"), entitled to ten votes per share, and (iii) 33,000 shares of
$0.001 par value Junior Cumulative Compounding Redeemable Preferred Stock
("Junior Preferred Stock"), entitled to one vote per share on only certain
issues.
VOTING
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Meeting will be voted at the Meeting in
accordance with the directions given. If a proxy card is signed and returned
without specifying a vote or an abstention on any proposal, it will be voted
according to the recommendation of the Board of Directors on that proposal. The
Board of Directors recommends a vote FOR the election of directors and the other
proposals described in this Proxy Statement. The Board of Directors knows of no
business to be transacted at the Meeting other than the proposals set forth in
this Proxy Statement. If other matters are properly presented for action, it is
the intention of the persons named as proxies to vote on such matters according
to their best judgment.
Stockholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. A stockholder who
signs and returns a proxy may revoke it at any time before it is voted by taking
one of the following three actions: (i) giving written notice of the revocation
to the Secretary of the Company; (ii) executing and delivering a proxy with a
later date; or (iii) voting in person at the Meeting. Attendance at the Meeting
will not in itself constitute revocation of a proxy.
A majority of the outstanding shares of Common Stock, represented in person
or by proxy, constitutes a quorum for the transaction of business at the
Meeting. The election of directors will require the affirmative vote of a
plurality of the votes cast at the Meeting by the Common Stock, if a quorum is
present. The affirmative vote of at least a majority of the votes cast with
respect to the Common Stock in person or by properly executed proxy is required
to approve the other proposals to be considered at the Meeting. Votes cast by
proxy or in person at the Meeting will be tabulated by one or more inspectors of
election appointed at the Meeting, who will also determine whether a quorum is
present for the transaction of business. Abstentions and broker non-votes will
be counted as shares present at the Meeting for purposes of determining whether
a quorum is present. Because only a plurality is required for the election of
directors, abstentions or broker non-votes will have no effect on the election
of directors. As to other matters to be considered at the Meeting, abstentions
will be treated as votes AGAINST, and broker non-votes will not be counted for
the purpose of determining whether a proposal has been approved.
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to the Company's equity
securities beneficially owned on March 18, 1998, by (i) each director, (ii) each
executive officer named in the Summary Compensation Table, (iii) all directors
and executive officers of the Company as a group, and (iv) any person who is
known by the Company to be the beneficial owner of more than five percent of any
class of the Company's voting securities. Beneficial ownership means sole or
shared voting power or investment power with respect to a security. The Company
has been informed that all shares shown are held of record with sole voting and
investment power, except as otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF AGGREGATE
BENEFICIAL VOTING
CLASS OF STOCK NAME OF BENEFICIAL OWNER(1) OWNERSHIP % OF CLASS POWER
- -------------- --------------------------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Class A Common Stock Lowell W. Paxson 23,357,543(2) 44.1% 17.2%
Landmark Communications, Inc.(3) 4,773,097 9.0% 3.5%
James B. Bocock 949,850(4) 1.8% *
Dean M. Goodman 286,836(4) * *
Jon Jay Hoker 316,325(4) * *
Arthur D. Tek 93,350 * *
Bruce L. Burnham 20,600(4) * *
James L. Greenwald 7,000(4) * *
All directors and executive officers
as a group 25,286,854(5) 47.7% 18.6%
Class B Common Stock Lowell W. Paxson 8,311,639 100.0% 61.1%
All directors and executive officers
as a group 8,311,639 100.0% 61.1%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise specified in the footnotes to this table, the address of
each person in this table is c/o Paxson Communications Corporation, 601
Clearwater Park Road, West Palm Beach, Florida 33401-6233.
(2) Does not include 8,311,639 shares of Class B Common Stock, each share of
which is convertible into one share of Class A Common Stock. Mr. Paxson is
the beneficial owner of all his shares of Class A Common Stock and Class B
Common Stock through his control of Second Crystal Diamond, Limited
Partnership and Paxson Enterprises, Inc.
(3) According to information contained in a Schedule 13D filed with the
Securities and Exchange Commission (the "Commission"), dated July 21, 1997,
Landmark Communications, Inc., whose address is 150 Brambleton Avenue,
Norfolk, Virginia 23510, acquired such shares pursuant to an Asset
Acquisition Agreement dated as of June 13, 1997 in connection with its sale
to the Company of the assets related to The Travel Channel, and continues to
hold such shares for investment purposes.
(4) Includes shares which may be acquired within 60 days through the exercise of
stock options granted under the Company's Stock Incentive Plans as follows:
James B. Bocock -- 892,000; Dean M. Goodman -- 240,361; Jon Jay
Hoker -- 269,000; Bruce L. Burnham -- 8,500; James L. Greenwald -- 7,000.
(5) Includes 1,596,261 shares which may be acquired within sixty (60) days
through the exercise of stock options granted under the Company's Stock
Incentive Plans.
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the meeting, five directors are to be elected to hold office until the
1999 Annual Meeting of Stockholders and until their successors have been elected
and qualified. The five nominees for election as directors are Lowell W. Paxson,
James B. Bocock, Arthur D. Tek, Bruce L. Burnham and James L. Greenwald, all of
whom are currently members of the Board. Information concerning each of the
nominees is set forth below. The persons named in the enclosed proxy card have
advised that, unless otherwise directed on the proxy card, they intend to vote
FOR the election of the designated nominees, and that should any nominee become
unable or unwilling to accept nomination or election for any reason, votes will
be cast for
2
<PAGE> 6
a substitute nominee designated by the Board of Directors, which has no reason
to believe the nominees named will be unable or unwilling to serve if elected.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATION, DIRECTOR
NOMINEE AGE BUSINESS EXPERIENCE AND DIRECTORSHIPS SINCE
------- --- ------------------------------------- --------
<S> <C> <C> <C>
Lowell W. Paxson 63 Chairman of the Board and Chief Executive Officer of 1991
the Company since 1991 (inception). President, Home
Shopping Network, Inc. ("HSN") from 1985 to 1990.
James B. Bocock 53 President and Chief Operating Officer of the Company 1994
since 1991. Vice President -- Broadcast
Affiliations of HSN from 1986 to 1991.
Arthur D. Tek 48 Vice President and Chief Financial Officer of the 1994
Company since 1992, and Treasurer of the Company
since 1994. Chief Financial Officer and Controller
from 1990 to 1992 of Chase Communications, Inc., a
television and radio broadcasting firm.
Bruce L. Burnham 64 President since 1993 of The Burnham Group, a firm 1996
providing consulting and marketing services to the
retail industry Director, Forcenergy, Inc., and
J.B. Rudolph, Inc.
James L. Greenwald 71 Chairman and Chief Executive Officer from 1975 to 1996
1994 of Katz Communications, Inc., a broadcast
advertising representative sales firm; Chairman
Emeritus since 1994. Director, Granite Broadcasting
Company and Source Media, Inc.
</TABLE>
OTHER EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION, BUSINESS EXPERIENCE
EXECUTIVE OFFICER AGE AND DIRECTORSHIPS
- ----------------- --- -----------------------------
<S> <C> <C>
Dean M. Goodman 50 President, PAX NET Television since 1998. President from
1995-1997 of the Company's inTV and Paxson
Network-Affiliated Television divisions. General Manager
from 1993 to 1995 of the Company's Miami radio group.
Executive Vice President until 1993 of the television and
radio broadcast group of Gilmore Broadcasting Corp.
Jon Jay Hoker 59 President, Paxson Television Station Group since 1997.
President from 1995-1997 of the Company's Paxson Radio
division. President from 1994 to 1995 of Paxson Networks,
Inc. President from 1985 to 1994 of Hoker Broadcasting, a
radio station owner/operator.
S. William Scott 64 President of Programming since January 1998. Consultant to
various media companies since 1987. Director of the
Company from February, 1995 until his resignation from the
Board in February 1998.
Anthony L. Morrison 36 Vice President, Secretary and General Counsel of the Company
since 1995. Attorney with the New York office of O'Melveny
& Meyers from 1990 to 1995.
Kenneth M. Gamache 35 Vice President -- Controller of the Company since 1997.
Controller of the Company since 1993.
Seth A. Grossman 32 Senior Vice President, Corporate Development since 1998.
Vice President, Corporate Development of the Company from
1997-1998. Director of Finance 1997-1995.
</TABLE>
3
<PAGE> 7
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1997, the Company's Board of Directors held four meetings. Each
incumbent director attended at least 75% of the total number of Board meetings
and meetings of committees of which he is a member. In addition, the Board of
Directors took action twelve times during 1997 by written consent in lieu of a
meeting signed by all members of the Board of Directors then in office, as
permitted by applicable state law.
The Compensation Committee consists of Lowell W. Paxson. The Compensation
Committee recommends to the Board both base salary levels and bonuses for the
Chief Executive Officer and the other officers of the Company. See "Board
Compensation Committee Report on Executive Compensation." The Compensation
Committee also reviews and makes recommendations with respect to the Company's
existing and proposed compensation plans, and serves as the committee
responsible for administering the Company's Stock Incentive Plans. During 1997
the Compensation Committee met in conjunction with each of the meetings of the
Board of Directors, but did not hold separate Committee meetings.
During 1997, the Audit Committee consisted of Bruce L. Burnham and James L.
Greenwald. Mr. Burnham is the chairman of the Committee. The duties of the Audit
Committee are to recommend to the Board of Directors the selection of
independent certified public accountants, to meet with the Company's independent
certified public accountants to review the scope and results of the audit, and
to consider various accounting and auditing matters related to the Company,
including its system of internal controls and financial management practices.
During 1997, the Audit Committee had two meetings.
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
COMPENSATION OF DIRECTORS
All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. Mr. Burnham and
Mr. Greenwald were granted certain options to purchase shares of Class A Common
Stock in consideration for their services as directors of the Company, which
commenced in 1996. No other directors receive separate compensation for services
rendered as a director.
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
S. William Scott, a director of the Company from February 1995 until his
resignation from the Board in February 1998, had an arrangement with the Company
to provide consulting services to the Company with respect to the development of
its news programming for its radio and television broadcast business and its
radio network business. Mr. Scott was paid approximately $10,000 for such
services during the year ended December 31, 1997. Additionally, in 1996, Mr.
Scott received benefits under the Company's health and benefits plan and was
granted options to purchase 20,000 shares of stock under the Company's Stock
Incentive Plan. During 1997 the Company hired Mr. Scott and subsequently named
him President of Network Programming on January 1, 1998.
During December, 1996, the Company agreed to extend loans to certain of its
key employees, including its executive officers, to finance the purchase by such
persons of shares of Class A Common Stock on the open market. The loans are the
personal obligations of each borrower and are secured by a pledge of the shares
of Class A Common Stock purchased with the loan proceeds. Each loan accrues
interest at a fixed
4
<PAGE> 8
annual rate of 5.75% and is due and payable in full, with all accrued and unpaid
interest, upon the earlier of March 31, 1999, or the sale of the shares of Class
A Common Stock pledged as security for the loan. As of December 31, 1997, the
outstanding balance of principal and accrued interest on such loans to the
Company's Executive Officers was as follows: Mr. Bocock, $515,567.74; Mr.
Goodman, $518,424.74; Mr. Hoker, $414,192.10; Mr. Tek, $341,780.90; Mr.
Morrison, $272,266.14; Mr. Gamache, $153,511.76; and Mr. Grossman, $124,547.28.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers and persons who own more than ten percent of the Common
Stock of the Company to file initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the Company with the
Securities and Exchange Commission and to furnish the Company with copies of all
Section 16(a) reports they file. Based on its review of the copies of such
reports received by it, the Company believes that during 1997, its directors,
officers and ten percent beneficial owners complied with all applicable
reporting requirements.
EXECUTIVE COMPENSATION
The following table presents certain information concerning the
compensation received or accrued for services rendered during the fiscal years
ended December 31, 1997, 1996 and 1995 for the Company's Chief Executive Officer
and four highest paid executive officers (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION NUMBER OF
---------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS COMPENSATION
- ---------------------------- ---- --------- ---------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson 1997 $423,500 $1,875,000 $ -0- -0- $ -0-
Chairman and Chief 1996 385,000 -0- -0- -0- -0-
Executive Officer 1995 350,000 -0- -0- -0- -0-
James B. Bocock 1997 325,000 1,885,000 -0- -0- 33,500(3)(4)
President and Chief 1996 275,000 -0- 415,140 225,000 14,750(3)(4)
Operating Officer 1995 225,000 -0- 164,325 850,000 -0-
Dean M. Goodman 1997 300,000 1,099,000 -0- -0- 31,000(3)(4)
President -- PAX 1996 250,000 101,200 289,340 150,000 13,500(3)(4)
NET 1995 200,000 75,000 229,625 223,361 -0-
Jon Jay Hoker 1997 300,000 1,581,000 -0- -0- 26,200(3)(4)
President --Paxson 1996 250,000 50,000 201,280 150,000 13,500(3)(4)
Televison Group 1995 200,000 50,000 182,688 150,000 -0-
Arthur D. Tek 1997 225,000 800,000 1,209,491 -0- 23,500(3)(4)
Vice President, 1996 175,000 -0- 289,340 125,000 9,750(3)(4)
Treasurer and Chief 1995 150,000 -0- -0- 150,000 3,000(5)
Financial Officer
</TABLE>
- ---------------
(1) Includes amount Named Executive Officer elected to defer pursuant to the
Company's Profit Sharing Plan.
(2) Represents the difference between the price paid by the Named Executive
Officer upon the exercise of certain of his options granted under the Stock
Incentive Plan and the fair market value of the underlying Common Stock at
the time of exercise.
(3) Includes the following Company contributions to supplemental retirement
plans during 1997: Mr. Bocock -- $32,500; Mr. Goodman -- $30,000; Mr.
Hoker -- $25,200; and Mr. Tek -- $22,500. Includes the following Company
contributions to supplemental retirement plans during 1996: Mr.
Bocock -- $13,750; Mr. Goodman -- $12,500; Mr. Hoker -- $12,500; and Mr.
Tek -- $8,750.
(4) Includes $1,000 Company contributions to the Profit Sharing Plan during 1997
and 1996 for each of Messrs. Bocock, Goodman, Hoker, and Tek.
(5) Represents relocation allowance in excess of general allowance under
Company's relocation plan.
5
<PAGE> 9
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1997 AT DECEMBER 31, 1997(1)
ACQUIRED ON VALUE ------------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE(2) NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- ---- ----------- ---------- -------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson -0- $ -0- -0- -0- $ -0- $ -0-
James B. Bocock -0- -0- 847,000 180,000 3,455,760 734,400
Dean M. Goodman -0- -0- 180,361 150,000 735,873 612,000
Jon Jay Hoker -0- -0- 269,000 -0- 1,097,520 -0-
Arthur D. Tek 152,000 1,209,491 -0- 100,000 -0- 408,000
</TABLE>
- ---------------
(1) Based on the public trading price of the Class A Common Stock of $7.50 on
December 31, 1997.
(2) Excludes securities underlying options which vested January 1, 1998 as
follows: James B. Bocock -- 45,000; Dean M. Goodman -- 60,000; Arthur D.
Tek -- 25,000.
STOCK INCENTIVE PLANS
The Company established its Stock Incentive Plan in November 1994 (the
"1994 Plan") and its 1996 Stock Incentive Plan in October 1996 (the "1996 Plan")
to provide incentives to officers and other employees who contribute
significantly to the strategic and long-term performance objectives and growth
of the Company. The 1994 Plan and the 1996 Plan (collectively, the "Stock
Incentive Plans") are administered by the Compensation Committee of the
Company's Board of Directors.
The Stock Incentive Plans provide for the granting of awards, in the form
of incentive stock options, non-qualified stock options or restricted shares of
Class A Common Stock, to officers and employees as determined by the
Compensation Committee except that the class of persons eligible to receive
awards under the 1996 Plan includes all persons performing services for the
Company or any of its subsidiaries and all persons who have in the past
performed such services (whether or not such persons are officers or employees
of the Company or any such subsidiary), and all persons performing services
relating to the Company in their capacity as an employee or independent
contractor of a corporation or other entity providing such services to the
Company. Under the Stock Incentive Plans, an aggregate of 4,143,575 shares have
been made available for issuance pursuant to awards granted thereunder.
The exercise price per share of Class A Common Stock deliverable upon the
exercise of each stock option granted under the Stock Incentive Plans is
determined by the Compensation Committee at the date the stock option is granted
and as provided in the terms of the Stock Incentive Plans. Stock options are
exercisable in whole or in part on such date or dates as are determined by the
Compensation Committee at the date of the grant. The Compensation Committee may,
in its sole discretion, accelerate the time at which any stock option may be
exercised. Stock options expire on the date or dates determined by the
Compensation Committee at the time the stock options are granted. Holders of
more than ten percent (10%) of the combined voting power of the capital stock of
the Company may be granted stock options, provided that if any of such options
are intended to be incentive stock options, the exercise price must be at least
110% of the fair market value of Class A Common Stock as of the date of the
grant and the term of the option may not exceed five years.
Options granted under the Stock Incentive Plans may be exercised by the
participant to whom granted or by his or her legal representative. If a
participant's employment is terminated for cause, each option which has not been
exercised shall terminate.
The Compensation Committee also has the discretion to award restricted
stock, which are shares of Class A Common Stock which are subject to forfeiture
in whole or in part if the recipient's employment with the Company is terminated
prior to the end of the restrictive period. Participants who receive restricted
stock do not become 100% vested in their restricted stock until five years after
the effective date of the award. During the restricted period prior to vesting,
the participant may transfer the restricted stock to a trust for the
6
<PAGE> 10
benefit of the participant or an immediate family member, but may not otherwise
sell, assign, transfer, give or otherwise dispose of, mortgage, pledge or
encumber such restricted stock. The Compensation Committee may, in its
discretion, provide that a participant shall be vested in whole or with respect
to any portion of the participant's award not previously vested if the
participant's employment with the Company is terminated because of death,
disability or retirement. To date, the Committee has not awarded any restricted
stock under the Stock Incentive Plans.
PROFIT SHARING PLAN
The Company has a profit sharing plan under Section 401(k) of the Internal
Revenue Code (the "Profit Sharing Plan"). The Profit Sharing Plan provides that
employees of the Company must complete one year of service in order to be
eligible to defer salary and, if available, receive matching contributions under
the Section 401(k) portion of the Profit Sharing Plan. Participants may elect to
defer a specified percentage of their compensation into the Profit Sharing Plan
on a pre-tax basis. The Company may, at its sole discretion, make matching
contributions based on a percentage of deferred salary contributions at a
percentage rate to be determined by the Board of Directors of the Company, which
matching contributions may be in Company stock. In addition, the Company may
make supplemental profit sharing contributions in such amounts as the Board of
Directors of the Company may determine. Participants earn a vested right to
their profit sharing contribution in increasing amounts over a period of five
years. After five years of service, the participant's right to his or her profit
sharing contribution vests 100%. Thereafter the participant may receive a
distribution of the entire value of his or her account at age 55, 62 or 65 or
upon termination of employment, death or disability.
EMPLOYMENT AGREEMENTS
Mr. Paxson is employed as Chairman and Chief Executive Officer of the
Company under an employment agreement. The agreement provides that Mr. Paxson
will be employed for a five and one-half year period commencing on June 30,
1994, unless sooner terminated. Mr. Paxson began receiving an annual base salary
of $350,000 commencing on January 1, 1995, which increased to $385,000 in 1996,
$423,500 in 1997, and will increase to $465,850 in 1998 and $500,000 in 1999. In
addition to the base salary, Mr. Paxson may receive an annual bonus at the
discretion of, and in an amount set by, members of the Compensation Committee
that are not employees of the Company. Mr. Paxson's employment agreement is
renewable for successive one-year terms, subject to good faith negotiation of
its terms. Under the terms of the agreement, Mr. Paxson is eligible to
participate in all employee benefit plans and arrangements that are generally
available to other senior executives, and is entitled to vacation days in an
amount determined annually by the Board of Directors after good faith
negotiation. Mr. Paxson is reimbursed for all reasonable expenses incurred by
him in the discharge of his duties, including entertainment and travel. Mr.
Paxson's employment agreement is terminable by the Board of Directors before
expiration for good cause, as defined in the agreement, or by Mr. Paxson for
good reason, as defined in the agreement. In the event of Mr. Paxson's permanent
disability or death, the Company will pay Mr. Paxson, or his estate, as the case
may be, his then existing salary for the remaining term of the agreement, in the
case of disability, or one year, in the case of death.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, Mr. Paxson, Chairman of the Board and Chief Executive Officer
of the Company, served as the only member of the Compensation Committee. The
Company has entered into certain transactions and relationships with Mr. Paxson,
members of his immediate family and others as described below.
7
<PAGE> 11
THE CHRISTIAN NETWORK, INC. The Company has entered into several
agreements with The Christian Network, Inc. and certain of its for-profit
subsidiaries (individually and collectively referred to herein as "CNI"). CNI is
a non-profit corporation to which Mr. Paxson has been a substantial contributor
and of which he was a member of the Board of Stewards through 1993.
Investment in Broadcast Properties. At December 31, 1997, the Company had
approximately $15,400,000 of advances to CNI to finance television station
acquisitions recorded as investments in broadcast properties. During 1997, the
Company acquired television stations from CNI in Miami, Orlando and Tampa for
total consideration of approximately $14,000,000.
CNI Agreement. The Company and CNI entered into an agreement in May 1994
(the "CNI Agreement") under which the Company agreed that, if the tax exempt
status of CNI were jeopardized by virtue of its relationships with the Company
and its subsidiaries, the Company would take certain actions to ensure that
CNI's tax exempt status would no longer be so jeopardized. Such steps could
include, but not be limited to, rescission of one or more transactions or
payment of additional funds by the Company. The Company believes that all of its
agreements with CNI have been on terms as favorable to CNI as it would obtain in
arm's length transactions. The Company intends any future agreements with CNI to
be as favorable to CNI as CNI would obtain in arm's length transactions.
Accordingly, if the Company's activities with CNI are consistent with the terms
governing their relationship, the Company believes that it will not be required
to take any actions under the CNI Agreement. There can be no assurance however,
that the Company will not be required to take any actions under the CNI
Agreement at a material cost to the Company.
Demand Note. On December 30, 1997, the Company's advances to CNI totaling
$5,485,000 under a demand note bearing interest at the prime rate were repaid
out of the proceeds of the sale of television stations by CNI to the Company in
full.
Worship Channel Studio. CNI and the Company have contracted for the
Company to lease CNI's television production and distribution facility to the
Company for the purpose of producing television programming for the Company's
television network. During the year ended December 31, 1997, the Company
incurred rental charges in connection with this agreement of $231,000.
AIRCRAFT LEASE. During 1997, the Company entered into a three year lease
with a company owned by Mr. Paxson for a Boeing 727 aircraft. The lease provides
for monthly payments of $63,600. The Company incurred rental costs under the
lease of approximately $382,000 during 1997. Additionally, the Company has
recorded at December 31, 1997 leasehold improvements of approximately $107,000
in connection with the lease.
SPORTS VENTURES. During 1996, the Company invested in various ventures
which would own and operate interests in two Arena Football League teams located
in West Palm Beach and Miami, Florida, an inactive American Hockey League
franchise for Palm Beach County, Florida, and a proposed sports arena in West
Palm Beach, Florida. During 1996, the Company included in other expenses, net
the write-off of approximately $1,200,000 relating to its investments in the
West Palm Beach Arena Football League team and the proposed sports arena and in
connection with its acquisition of the Arena Football League team in Miami,
Florida. During 1997, in conjunction with the decision to dispose of the Paxson
Radio segment, the Company wrote-off its investments in the remaining sports
ventures, resulting in a 1997 charge to other expenses, net of approximately
$2,900,000, which is net of anticipated proceeds from the sale of the hockey
franchise which the Company has contracted to sell for $2,000,000.
8
<PAGE> 12
DP MEDIA, INC. In connection with the acquisition by DP Media, Inc. (DP
Media) of WEBZ-FM, during September 1996, the Company agreed to loan up to
$750,000 to DP Media, a company beneficially owned by members of Mr. Paxson's
family. The loan bore interest at the rate of ten percent (10%) and required
monthly principal and interest payments.
During May 1997, the Company sold WWPX-TV to DP Media in exchange for a
$2,470,000 promissory note. Upon its sale to DP Media, the station became a
Company network affiliate. The note bore interest at the rate of 8.25% monthly
with the entire principal due twenty-four months from the date of close.
During June 1997, the Company financed DP Media's purchase of WRPX-TV from
Roberts Broadcasting through a loan of approximately $10,000,000 (of which
approximately $7,500,000, which was assumed by DP Media, had been advanced to
Roberts Broadcasting through the date of closing). Upon its sale to DP Media,
the station became a Company network affiliate. The loan bore interest at the
rate of 8.25%.
The loans to DP Media for WEBZ-FM, WWPX-TV and WRPX-TV were repaid to the
Company on July 30, 1997, using proceeds of third party financing obtained by DP
Media from Banque Paribas, an affiliate of a holder of the Company's Junior
Preferred Stock.
During July 1997, the Company entered into contracts to sell its interest
in television stations WPXS-TV and WZPX-TV, serving the St. Louis, Missouri and
Grand Rapids, Michigan markets for $4,800,000 and $7,000,000, respectively, to
DP Media. The sale of WPXS-TV to DP Media was consummated in December 1997. The
sale of the tangible assets of WZPX-TV was transacted separately from the sale
of the FCC license. As of December 31, 1997, the Company had received
approximately $5,250,000 for the sale of the tangible assets, and received
$1,750,000 in January 1998 for the sale of the station license, upon receipt of
regulatory approval to transfer the station license.
During February 1998, the Company contracted to sell WPXE-TV to DP Media
for $6,000,000. Upon its sale to DP Media the station will become a Company
network affiliate.
During 1997, the Company granted 33,000 fully vested non-qualified stock
options with a fair value of approximately $299,000 to the President and
Vice-President of DP Media, members of Mr. Paxson's family, as consideration for
past services as former employees of the Company.
DISCONTINUED OPERATIONS. In order to accelerate the payment of the
proceeds from the sales of the Paxson Network Affiliated Television segment and
the Paxson Radio segment, the Company entered into certain bridge agreements
with Mr. Paxson or corporations owned and controlled by Mr. Paxson under similar
terms and conditions to those with the ultimate buyers. As of December 31, 1997,
all Paxson Network Affiliated Television and Paxson Radio properties under these
bridge agreements had been sold to the ultimate third party. Mr. Paxson did not
realize any direct financial benefit from the transactions with the Company and,
in accordance with the terms of the Company's senior subordinated notes and
preferred stock, the Company obtained a written opinion as to the fairness of
such transactions from an independent investment banking firm.
9
<PAGE> 13
Stockholders Agreement. The Company, certain entities controlled by Mr.
Paxson and entities which are affiliates of the holder of the Company's Junior
Preferred Stock are parties to a stockholders agreement whereby the parties to
such agreement were granted registration rights with respect to certain shares
of common stock held by such parties and a right of first refusal to acquire a
pro rata share of any new securities the Company may issue. Additionally, the
stockholders agreement grants certain co-sale rights in the event that Mr.
Paxson should sell more than a predetermined percentage of his ownership
interest in the Company.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE FOLLOWING BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which was first created in February 1995,
consists of Lowell W. Paxson, Chairman of the Board and Chief Executive Officer
of the Company. The Compensation Committee has been directed to recommend to the
Board both base salary levels and bonuses for the executive officers of the
Company other than the Chief Executive Officer, to administer the Stock
Incentive Plans and to make recommendations with respect to any other Company
compensation plans. Mr. Paxson's annual base salary is fixed pursuant to the
terms of an employment agreement entered into in 1994. Under the employment
agreement, Mr. Paxson is permitted to receive an annual bonus at the discretion
of and in an amount determined by the members of the Compensation Committee who
are not employees of the Company. Mr. Paxson received a bonus for his services
during 1997 which was approved by the Board of Directors. Additionally, the
Board of Directors was advised of and approved bonuses granted to the other
executive officers and other key management personnel who assisted in
effectuating the sale of the Company's Radio Division. The Board granted said
bonuses upon recognizing the efforts of the Company's management in
assimilating, operating and arranging for the sale of the radio stations and
related properties. See "Section 16(a) Beneficial Ownership Reporting
Compliance -- Executive Compensation."
During 1997, annual base salaries for executive officers and other key
management personnel other than Mr. Paxson were determined by Mr. Paxson. While
the Board of Directors was advised of Mr. Paxson's determinations and Mr. Paxson
acted after receiving the advice and recommendations of other executive
officers, his decisions were not brought to the Board of Directors for formal
action. The decisions of Mr. Paxson were made in part to reward performance
measured by the Company's annual and long-term goals, and in recognition that
the Company operates in a competitive environment in which both performance and
compensation should be evaluated in comparison to industry peers.
Compensation Committee
/s/ LOWELL W. PAXSON
--------------------
Lowell W. Paxson
10
<PAGE> 14
PERFORMANCE GRAPH
The following graph is a comparison of the cumulative total returns for the
Company's common stock as compared with the cumulative total return for the
American Stock Exchange Market Value Index and a peer group index (the "Peer
Group Index"). The Securities and Exchange Commission rules permit the Company
to select a peer group in good faith with which to compare its stock performance
by selecting a group of companies in lines of business similar to its own. In
the previous fiscal year, the Company had selected a peer group consisting of
companies that owned both radio and television properties. That group consisted
of Clear Channel Communications, Inc., Evergreen Media Corp., Infinity
Broadcasting Corp., Renaissance Communications Corp. and Saga Communications,
Inc. ("'96 Peer Group"). Due to changes in the Company's business, the Company
has selected a peer group for the 1997 fiscal year consisting of companies whose
primary business is television broadcasting. The current Peer Group Index
consists of the common stocks of Granite Broadcasting, Hearst-Argyle Television,
LIN Television Corp., Sinclair Broadcast Gp., Univision Communications and Young
Broadcasting, Inc., which are actively traded on the NASDAQ Stock Market and the
New York Stock Exchange.
The cumulative return of the Company was computed by dividing the
difference between the price of the Company's common stock at the end and the
beginning of the measurement period (November 7, 1994 to December 31, 1997) by
the price of the Company's common stock at the beginning of the measurement
period. The total return calculations are based upon an assumed $100 investment
on November 7, 1994, the date the Company first became publicly traded. Similar
calculations were made with respect to the American Stock Exchange Market Value
Index and the Peer Group Index for the relevant periods assuming that all
dividends were reinvested. In addition, the calculations for members of the peer
group were weighted on the basis of their respective market capitalizations.
<TABLE>
<CAPTION>
Paxson
Measurement Period Communications
(Fiscal Year Covered) Corporation AMEX Value Peer Group '96 Peer Group
<S> <C> <C> <C> <C>
11/31/94 $100 $100 $100 $100
12/31/94 $86.42 $96.28 $89.09 $103.36
12/31/95 $112.96 $121.71 $123.20 $167.85
12/31/96 $57.84 $129.50 $168.75 $251.12
12/31/97 $55.97 $151.99 $268.02 $540.99
</TABLE>
The Company cautions that the stock price performance shown in the graph
above should not be considered indicative of potential future stock price
performance.
11
<PAGE> 15
PROPOSAL 2 -- RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed Price Waterhouse LLP, Ft.
Lauderdale, Florida, as independent accountants to audit the consolidated
financial statements of the Company for the year ending December 31, 1998.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting of Stockholders with the opportunity to make a statement if they desire
to do so and to respond to appropriate questions posed by stockholders. The
Company has not had any changes in or disagreements with its independent
accountants on accounting or financial disclosure issues. The Board of Directors
recommends a vote FOR the ratification of the appointment of Price Waterhouse
LLP as the Company's independent certified public accountants for 1998.
OTHER INFORMATION
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended for presentation at the 1999 annual
meeting must be received by the Company on or before December 15, 1998 in order
to be included in the Company's proxy statement and form of proxy for that
meeting.
EXPENSES OF SOLICITATION
The expense of preparing, printing, and mailing proxy materials to
stockholders of the Company will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may solicit proxies on
behalf of the Board of Directors in person or by telephone. The Company will
also reimburse brokerage houses and other nominees for their expenses in
forwarding proxy material to beneficial owners of the Company's stock.
OTHER MATTERS
The financial statements, financial information and management discussion
and analysis of financial condition and results of operations set forth in the
Company's 1997 Annual Report are incorporated by reference. The Company will
provide to any stockholder, upon the written request of any such person, a copy
of the Company's Annual Report on Form 10-K, including the financial statements
and the schedules thereto, for its fiscal year ended December 31, 1997, as filed
with the Securities and Exchange Commission pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934. No charge will be made for copies of such
annual report; however, a reasonable charge for the exhibits will be made.
By Order of the Board of Directors
/s/ ANTHONY L. MORRISON
----------------------------------
Anthony L. Morrison, Secretary
West Palm Beach, Florida
March 18, 1998
12
<PAGE> 16
PROXY PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401-6233
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony L. Morrison and William L. Watson,
or either of them, as Proxies, each with the power to appoint his or her
substitute, and hereby authorizes them or their substitutes to represent and to
vote, as designated below, all the shares of stock of Paxson Communications
Corporation held of record by the undersigned on March 9, 1998, at the annual
meeting of stockholders to be held on April 17, 1998, or any adjournment
thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below)
- --------------------------------------------------------------------------------
L. W. Paxson, J. B. Bocock, A. D. Tek, B. L. Burnham, J. L. Greenwald
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on other side)
(Continued from other side)
3. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1 and 2.
Dated:
--------------------, 1998
--------------------------------
Signature
--------------------------------
Signature if held jointly
PLEASE SIGN EXACTLY AS NAME
APPEARS BELOW. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. When signing as
attorney, as executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
