<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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
TELE-COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2), or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(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
TELE-COMMUNICATIONS, INC.
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111
(303) 267-5500
July 22, 1996
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Tele-Communications, Inc. (the "Company" or "TCI"), which will be held at the
TCI National Digital Television Center, 4100 E. Dry Creek Road, Littleton,
Colorado, on August 15, 1996, starting at 10:00 a.m. local time. A notice of the
annual meeting, a proxy card and a proxy statement containing important
information about the matters to be acted upon at the annual meeting are
enclosed. If you plan to attend in person, please read the attached Notice of
Annual Meeting for information on admission procedures.
You will be asked at the annual meeting to consider and vote upon: (i) the
election of three directors of the Company to hold office until the 1999 annual
meeting of stockholders or until their successors are elected and qualified,
(ii) the approval of the Tele-Communications, Inc. 1996 Incentive Plan, and
(iii) such other business as may properly come before the annual meeting.
The Board of Directors has approved the adoption of the Company's 1996
Incentive Plan and believes its adoption is in the best interests of the Company
and its stockholders. The Board of Directors recommends that the stockholders
vote in favor of the proposals presented in the enclosed proxy statement.
Whether or not you are personally able to attend the annual meeting, please
complete, sign and date the enclosed proxy card and return it in the enclosed
prepaid envelope as soon as possible. This action will not limit your right to
vote in person if you wish to attend the annual meeting and vote personally.
Sincerely yours,
/s/ BOB MAGNESS
Bob Magness
Chairman of the Board
<PAGE> 3
TELE-COMMUNICATIONS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 15, 1996
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (including
any adjournment or postponement thereof, the "Annual Meeting") of
Tele-Communications, Inc., a Delaware corporation (the "Company" or "TCI"), will
be held at the TCI National Digital Television Center, 4100 E. Dry Creek Road,
Littleton, Colorado, starting at 10:00 a.m. local time, on August 15, 1996, for
the following purposes:
1. To elect three directors of the Company to hold office until the
1999 annual meeting of stockholders or until their successors are elected
and qualified (the "Election of Directors Proposal").
2. To consider and vote upon a proposal to approve the
Tele-Communications, Inc. 1996 Incentive Plan (the "1996 Incentive Plan
Proposal").
3. To transact such other business as may properly come before the
Annual Meeting.
Holders of record of: (i) Tele-Communications, Inc. Series A TCI Group
Common Stock (the "TCI Group Series A Stock"), (ii) Tele-Communications, Inc.
Series A Liberty Media Group Common Stock (the "Liberty Group Series A Stock"),
(iii) Tele-Communications, Inc. Series B TCI Group Common Stock (the "TCI Group
Series B Stock"), (iv) Tele-Communications, Inc. Series B Liberty Media Group
Common Stock (the "Liberty Group Series B Stock"), (v) Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock (the "Class B Preferred Stock"),
(vi) Convertible Preferred Stock, Series C (the "Series C Preferred Stock"),
(vii) Redeemable Convertible TCI Group Preferred Stock, Series G (the "Series G
Preferred Stock"), and (viii) Redeemable Convertible Liberty Media Group
Preferred Stock, Series H (the "Series H Preferred Stock") at the close of
business on June 17, 1996, the record date for the Annual Meeting, will be
entitled to notice of the Annual Meeting. Holders of record of the TCI Group
Series A Stock, the Liberty Group Series A Stock, the TCI Group Series B Stock,
the Liberty Group Series B Stock, the Class B Preferred Stock, the Series C
Preferred Stock, the Series G Preferred Stock and the Series H Preferred Stock
at the close of business on the record date will be entitled to vote together as
a single class on the Election of Directors Proposal, and holders of record of
the TCI Group Series A Stock, the Liberty Group Series A Stock, the TCI Group
Series B Stock, the Liberty Group Series B Stock and the Series C Preferred
Stock at the close of business on the record date will be entitled to vote
together as a single class on the 1996 Incentive Plan Proposal.
To ensure that your interests will be represented at the Annual Meeting,
regardless of whether you plan to attend in person, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed return
envelope, which requires no postage if mailed in the United States. This action
will not limit your right to vote in person if you wish to attend the Annual
Meeting and vote personally.
If you plan to attend the Annual Meeting in person, please bring the
admission ticket printed on the back cover of this Proxy Statement or please
bring other evidence of share ownership with you to gain admission to the Annual
Meeting.
This Proxy Statement and the accompanying form of proxy are first being
mailed to the stockholders of the Company on or about July 22, 1996.
By Order of the Board of Directors
/s/ STEPHEN M. BRETT
Stephen M. Brett
Secretary
Englewood, Colorado
July 22, 1996
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE ANNUAL MEETING.
<PAGE> 4
TELE-COMMUNICATIONS, INC.
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING INFORMATION
This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of Tele-Communications, Inc. (the "Company" or "TCI")
of proxies for use at the annual meeting of the stockholders of the Company, or
at any adjournment or postponement thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Meeting. Proxies are being
solicited from the holders of the following securities of the Company: (i)
Tele-Communications, Inc. Series A TCI Group Common Stock (the "TCI Group Series
A Stock"), (ii) Tele-Communications, Inc. Series A Liberty Media Group Common
Stock (the "Liberty Group Series A Stock"), (iii) Tele-Communications, Inc.
Series B TCI Group Common Stock (the "TCI Group Series B Stock"), (iv)
Tele-Communications, Inc. Series B Liberty Media Group Common Stock (the
"Liberty Group Series B Stock"), (v) Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock (the "Class B Preferred Stock"), (vi)
Convertible Preferred Stock, Series C (the "Series C Preferred Stock"), (vii)
Redeemable Convertible TCI Group Preferred Stock, Series G (the "Series G
Preferred Stock"), and (viii) Redeemable Convertible Liberty Media Group
Preferred Stock, Series H (the "Series H Preferred Stock"). The aforementioned
securities shall be referred to in this Proxy Statement, from time to time, as
the "Voting Securities".
TIME AND PLACE; PURPOSES
The Annual Meeting will be held at the TCI National Digital Television
Center, 4100 E. Dry Creek Road, Littleton, Colorado, on August 15, 1996,
starting at 10:00 a.m. local time. At the Annual Meeting, the stockholders of
the Company will be asked to consider and vote upon proposals: (i) to elect
three directors of the Company to hold office until the 1999 annual meeting of
stockholders or until their successors are elected and qualified (the "Election
of Directors Proposal"); (ii) to consider and vote upon a proposal to approve
the Tele-Communications, Inc. 1996 Incentive Plan (the "1996 Incentive Plan
Proposal"); and (iii) to transact such other business as may properly come
before the Annual Meeting.
This Proxy Statement and the accompanying form of proxy are first being
mailed to the stockholders of the Company on or about July 22, 1996.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The Board of Directors has fixed the close of business on June 17, 1996
(the "Record Date") as the date for the determination of holders of the Voting
Securities entitled to notice of and to vote at the Annual Meeting. Only holders
of record of shares of the Voting Securities at the close of business on the
Record Date are entitled to notice of and to vote at the Annual Meeting.
Holders of record of the TCI Group Series A Stock, the Liberty Group Series
A Stock, the TCI Group Series B Stock, the Liberty Group Series B Stock, the
Class B Preferred Stock, the Series C Preferred Stock, the Series G Preferred
Stock and the Series H Preferred Stock at the close of business on the Record
Date will be entitled to vote together as a single class on the Election of
Directors Proposal, and holders of record of the TCI Group Series A Stock, the
Liberty Group Series A Stock, the TCI Group Series B Stock, the Liberty Group
Series B Stock and the Series C Preferred Stock at the close of business on the
Record Date will be entitled to vote together as a single class on the 1996
Incentive Plan Proposal. At the close of business on the Record Date, there
were: (i) 583,938,288 shares of TCI Group Series A Stock outstanding and
entitled to vote at the Annual Meeting, (ii) 84,675,501 shares of TCI Group
Series B Stock outstanding and entitled to
<PAGE> 5
vote at the Annual Meeting, (iii) 145,959,648 shares of Liberty Group Series A
Stock outstanding and entitled to vote at the Annual Meeting, (iv) 21,192,387
shares of Liberty Group Series B Stock outstanding and entitled to vote at the
Annual Meeting, (v) 1,620,026 shares of Class B Preferred Stock outstanding and
entitled to vote at the Annual Meeting, (vi) 70,575 shares of Series C Preferred
Stock outstanding and entitled to vote at the Annual Meeting, (vii) 6,697,949
shares of Series G Preferred Stock outstanding and entitled to vote at the
Annual Meeting, and (viii) 6,697,879 shares of Series H Preferred Stock
outstanding and entitled to vote at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
combined voting power of the outstanding shares of the Voting Securities
entitled to vote is necessary to constitute a quorum at the Annual Meeting. The
Election of Directors Proposal must be approved by a plurality of the votes of
the shares of the TCI Group Series A Stock, the Liberty Group Series A Stock,
the TCI Group Series B Stock, the Liberty Group Series B Stock, the Class B
Preferred Stock, the Series C Preferred Stock, the Series G Preferred Stock and
the Series H Preferred Stock, represented in person or by proxy and entitled to
vote at the Annual Meeting, voting as a single class. The affirmative vote of a
majority of the combined voting power and a majority of the combined number of
the shares of the TCI Group Series A Stock, the Liberty Group Series A Stock,
the TCI Group Series B Stock, the Liberty Group Series B Stock and the Series C
Preferred Stock represented in person or by proxy and entitled to vote at the
Annual Meeting, voting as a single class, is required to approve the 1996
Incentive Plan Proposal. Each holder of record as of the Record Date of: (i) the
TCI Group Series A Stock, the Liberty Group Series A Stock, the Class B
Preferred Stock, the Series G Preferred Stock and the Series H Preferred Stock
is entitled to cast one vote per share of such class or series held, (ii) the
TCI Group Series B Stock and the Liberty Group Series B Stock is entitled to
cast ten votes per share of such series held, and (iii) the Series C Preferred
Stock is entitled to cast 100 votes per share of such series held, on each
matter on which holders of shares of such class or series are entitled to vote
at the Annual Meeting.
PROXIES
All shares of the Voting Securities represented by properly executed
proxies received prior to or at the Annual Meeting, and not revoked, will be
voted in accordance with the instructions indicated in such proxies. If no
instructions are indicated, such proxies will be voted FOR the Election of
Directors Proposal and FOR the 1996 Incentive Plan Proposal. So far as the
Company's Board of Directors is aware, the Election of Directors Proposal and
the 1996 Incentive Plan Proposal are the only matters to be acted upon at the
Annual Meeting. As to any other matter which may properly come before the Annual
Meeting, the persons named in the accompanying proxy card will vote thereon in
accordance with their best judgment. A properly executed proxy marked "ABSTAIN",
although counted for purposes of determining whether there is a quorum and for
purposes of determining the aggregate voting power and number of shares
represented and entitled to vote at the Annual Meeting, will not be voted and,
therefore, except in the case of the Election of Directors Proposal, will have
the same effect as a vote cast against the matter to which such instruction is
indicated. Shares represented by "broker non-votes" (i.e., shares held by
brokers or nominees which are represented at a meeting but with respect to which
the broker or nominee is not empowered to vote on a particular proposal) will
also be counted for purposes of determining whether there is a quorum at the
Annual Meeting and will be deemed shares not entitled to vote and will not be
included for purposes of determining the aggregate voting power and number of
shares represented and entitled to vote on such matter.
A stockholder may revoke his or her proxy at any time prior to its use by
delivering to the Secretary of the Company a signed notice of revocation or a
later dated signed proxy or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not in itself constitute the
revocation of a proxy.
The cost of solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, officers and regular employees of the Company
may solicit proxies by telephone, telegram, in person or by other means. Such
persons will receive no additional compensation for such services. Brokerage
houses, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares held of record by them
and will be reimbursed for their reasonable out-of-pocket expenses in connection
therewith.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 30, 1996, information with
respect to the ownership of TCI Group Series A Stock, Liberty Group Series A
Stock, TCI Group Series B Stock, Liberty Group Series B Stock, Class B Preferred
Stock, Series C Preferred Stock, Series G Preferred Stock and Series H Preferred
Stock, by each person known to the Company to own beneficially more than 5% of
any such class outstanding on that date. Shares issuable upon exercise of
options or conversion of convertible securities are deemed to be outstanding for
the purpose of computing the percentage of ownership and overall voting power of
persons beneficially owning such options or convertible securities, but have not
been deemed to be outstanding for the purpose of computing the percentage
ownership or overall voting power of any other person. Voting power in the table
is computed with respect to a general election of directors and, therefore, the
Class B Preferred Stock, the Series G Preferred Stock and the Series H Preferred
Stock are included in the calculation notwithstanding the fact that the Class B
Preferred Stock, the Series G Preferred Stock and the Series H Preferred Stock
do not generally vote with respect to matters submitted to a vote of
stockholders. The number of shares of Bob Magness and Dr. Malone includes
interests of Mr. Magness and Dr. Malone in shares held by the trustee of TCI's
Employee Stock Purchase Plan ("ESPP"). So far as is known to TCI, the persons
indicated below have sole voting and investment power with respect to the shares
indicated as owned by them except as otherwise stated in the notes to the table
and except for the shares held by the trustee of the ESPP for the benefit of Mr.
Magness and Dr. Malone, which shares are voted at the discretion of the trustee.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF VOTING
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS(1) POWER(1)
-------------- ------------------- ---------- -------- --------
<S> <C> <C> <C> <C>
TCI Group Series A Bob Magness, Chairman of 5,628,574(2)(3)(4) * 26.0%
Stock the Board and a Director
TCI Group Series B 5619 DTC Parkway 37,132,076(2)(4)(7) 43.9%
Stock Englewood, Colorado
Liberty Group Series 1,406,770(2)(3)(4) *
A Stock
Liberty Group Series 9,283,019(2)(4)(7) 43.8%
B Stock
Class B Pref. 125,000 7.7%
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TCI Group Series A John C. Malone, President 2,171,776(5) * 17.7%
Stock and a Director
TCI Group Series B 5619 DTC Parkway 25,332,083(6)(7) 29.9%
Stock Englewood, Colorado
Liberty Group Series 542,849(5) *
A Stock
Liberty Group Series 6,360,520(6)(7) 30.0%
B Stock
Class B Pref. 306,000(6) 18.9%
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF VOTING
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS(1) POWER(1)
-------------- ------------------- ---------- -------- --------
<S> <C> <C> <C> <C>
TCI Group Series A Kearns-Tribune Corporation 8,792,514(4) 1.5% 6.9%
Stock 400 Tribune Building
TCI Group Series B Salt Lake City, Utah 9,112,500(4)(7) 10.8%
Stock
Liberty Group Series 2,198,128(4) 1.5%
A Stock
Liberty Group Series 2,278,125(4)(7) 10.8%
B Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TCI Group Series A The Associated Group, Inc. 12,479,976 2.1% 5.8%
Stock 200 Gateway Towers
TCI Group Series B Pittsburgh, Pennsylvania 7,071,852 8.4%
Stock
Liberty Group Series 3,119,994 2.1%
A Stock
Liberty Group Series 1,767,963 8.3%
B Stock
Class B Pref. 41,598 2.6%
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TCI Group Series A The Equitable Companies 41,193,448(8) 7.1% 3.1%
Stock Incorporated
TCI Group Series B 787 Seventh Avenue -- --
Stock New York, New York; and
Liberty Group Series The Mutuelles AXA and AXA 14,685,004(9) 10.1%
A Stock 101-100 Terrasse Boieldieu
Liberty Group Series 92042 Paris La Defense -- --
B Stock France
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TCI Group Series A The Capital Group 39,546,870(10) 6.8% 2.9%
Stock Companies, Inc.
TCI Group Series B 333 South Hope Street -- --
Stock Los Angeles, California
Liberty Group Series 13,037,740(11) 8.9%
A Stock
Liberty Group Series -- --
B Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF VOTING
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS(1) POWER(1)
-------------- ------------------- ---------- -------- --------
<S> <C> <C> <C> <C>
TCI Group Series A Bill Daniels 259(12) * *
Stock c/o Daniels & Associates
TCI Group Series B 3200 Cherry Creek Drive South -- --
Stock Denver, Colorado
Liberty Group Series 64(12) *
A Stock
Liberty Group Series -- --
B Stock
Class B Pref. -- --
Series C Pref. 70,575 100%
Series G Pref. -- --
Series H Pref. -- --
TCI Group Series A Lawrence Flinn Jr. 1,102,344(12) * *
Stock 209 Taconic Road
TCI Group Series B Greenwich, Connecticut 24,000(12) *
Stock
Liberty Group Series 275,611(12) *
A Stock
Liberty Group Series 6,000(12) *
B Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. 6,186,647(12) 85.2%
Series H Pref. 6,186,647(12) 85.2%
</TABLE>
- ---------------
* Less than one percent.
(1) Based on 583,361,905 shares of TCI Group Series A Stock (after elimination
of shares of TCI held by subsidiaries of TCI), 84,681,629 shares of TCI
Group Series B Stock, 145,817,085 shares of Liberty Group Series A Stock,
21,192,387 shares of Liberty Group Series B Stock, 1,620,026 shares of
Class B Preferred Stock, 70,575 shares of Series C Preferred Stock,
6,707,718 shares of Series G Preferred Stock and 6,707,648 shares of Series
H Preferred Stock outstanding on April 30, 1996.
(2) Mr. Magness, as executor of the Estate of Betsy Magness, is the beneficial
owner of all shares of TCI Group Series A Stock, TCI Group Series B Stock,
Liberty Group Series A Stock and Liberty Group Series B Stock held of
record by the Estate of Betsy Magness. The number of shares held by Mr.
Magness includes 2,105,332 shares of TCI Group Series A Stock, 6,346,212
shares of TCI Group Series B Stock, 526,333 shares of Liberty Group Series
A Stock and 1,586,553 shares of Liberty Group Series B Stock of which Mr.
Magness is beneficial owner as executor.
(3) Assumes the exercise in full of stock options granted in tandem with stock
appreciation rights in November of 1992 to acquire 1,000,000 shares of TCI
Group Series A Stock and 250,000 shares of Liberty Group Series A Stock.
Options to acquire 600,000 and 150,000 shares of TCI Group Series A Stock
and Liberty Group Series A Stock, respectively, are currently exercisable.
Additionally assumes the exercise in full of stock options granted in
tandem with stock appreciation rights in December of 1995 to acquire
1,000,000 shares of TCI Group Series A Stock and 250,000 shares of Liberty
Group Series A Stock. None of the options are exercisable until August 4,
1996. Such grant is subject to the approval by stockholders of the 1996
Incentive Plan Proposal. See note 1 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Option/SAR Grants Table of TCI" for
additional information.
5
<PAGE> 9
(4) Mr. Magness and Kearns-Tribune Corporation ("Kearns") are parties to a
buy-sell agreement under which neither party may dispose of their shares
without notification of the proposed sale to the other, who may then buy
such shares at the offered price, sell all of their shares to the other at
the offered price or exchange one share of their TCI Group Series A Stock
for each share of TCI Group Series B Stock or one share of their Liberty
Group Series A Stock for each share of Liberty Group Series B Stock held by
the other and purchase any remaining TCI Group Series B Stock or Liberty
Group Series B Stock at the offered price. There are certain exceptions,
including transfers to specified persons or entities, certain public sales
of TCI Group Series A Stock or Liberty Group Series A Stock and exchanges
of TCI Group Series A Stock for TCI Group Series B Stock or Liberty Group
Series A Stock for Liberty Group Series B Stock.
(5) Assumes the exercise in full of stock options granted in tandem with stock
appreciation rights in November of 1992 to acquire 1,000,000 shares of TCI
Group Series A Stock and 250,000 shares of Liberty Group Series A Stock.
Options to acquire 600,000 and 150,000 shares of TCI Group Series A Stock
and Liberty Group Series A Stock, respectively, are currently exercisable.
Additionally assumes the exercise in full of stock options granted in
tandem with stock appreciation rights in December of 1995 to acquire
1,000,000 shares of TCI Group Series A Stock and 250,000 shares of Liberty
Group Series A Stock. None of the options are exercisable until August 4,
1996. Such grant is subject to the approval by stockholders of the 1996
Incentive Plan Proposal. See note 2 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Option/SAR Grants Table of TCI" for
additional information.
(6) Includes 1,173,000 shares of TCI Group Series B Stock, 293,250 shares of
Liberty Group Series B Stock and 6,900 shares of Class B Preferred Stock
held by Dr. Malone's wife, Mrs. Leslie Malone, but Dr. Malone has
disclaimed any beneficial ownership of such shares.
(7) Pursuant to a letter agreement, dated June 17, 1988, Mr. Magness and Kearns
each agreed with Dr. Malone that prior to making a disposition of a
significant portion of their respective holdings of TCI Group Series B
Stock or Liberty Group Series B Stock, he or it would first offer Dr.
Malone the opportunity to purchase such shares.
(8) The number of shares in the table is based upon a Schedule 13G, dated
February 9, 1996, filed by The Equitable Companies Incorporated which
Schedule 13G indicates that said corporation has sole voting power over
30,729,443 shares and shared voting power over 1,002,725 shares of TCI
Group Series A Stock. No information is given with respect to voting power
over the remaining shares.
(9) The number of shares in the table is based upon a Schedule 13G, dated
January 9, 1996, filed by The Equitable Companies Incorporated which
Schedule 13G indicates that said corporation has sole voting power over
11,219,798 shares and shared voting power over 273,681 shares of Liberty
Group Series A Stock. No information is given with respect to voting power
over the remaining shares.
(10) Certain operating subsidiaries of The Capital Group Companies, Inc.
exercised investment discretion over various institutional accounts which
held as of December 29, 1995, 39,546,870 shares of TCI Group Series A
Stock. Capital Guardian Trust Company, a bank, and one of such operating
companies, exercised investment discretion over 3,636,820 of said shares.
Capital Research and Management Company, a registered investment advisor,
and Capital International Limited and Capital International, S.A., other
operating subsidiaries, had investment discretion with respect to
35,565,750, 137,770 and 206,510 shares, respectively, of the above shares.
The information set forth above is based upon a Schedule 13G, dated
February 9, 1996, filed by The Capital Group Companies, Inc.
(11) Certain operating subsidiaries of The Capital Group Companies, Inc.
exercised investment discretion over various institutional accounts which
held as of December 29, 1995, 13,037,740 shares of Liberty Group Series A
Stock. Capital Guardian Trust Company, a bank, and one of such operating
companies, exercised investment discretion over 3,123,430 of said shares.
Capital Research and Management Company, a registered investment advisor,
and Capital International Limited and Capital International, S.A., other
operating subsidiaries, had investment discretion with respect to
9,825,430, 34,440 and 54,420 shares, respectively, of the above shares. The
information set forth above is based upon a Schedule 13G, dated February 9,
1996, filed by The Capital Group Companies, Inc.
6
<PAGE> 10
(12) Based upon the Company's review of the record of stockholders provided by
the Company's transfer agent, The Bank of New York.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 30, 1996, information with
respect to the ownership of: (i) TCI Voting Securities (TCI Group Series A
Stock, TCI Group Series B Stock, Liberty Group Series A Stock, Liberty Group
Series B Stock, Class B Preferred Stock, Series C Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock) and (ii) the voting securities of
Tele-Communications International, Inc., a majority owned subsidiary of the
Company ("International"), (which consist of Tele-Communications International,
Inc. Series A Common Stock ("TINTA Series A Stock") and Tele-Communications
International, Inc. Series B Common Stock ("TINTA Series B Stock")) by all
directors and each of the named executive officers of TCI and by all executive
officers and directors of TCI as a group. Shares issuable upon exercise of
options or conversion of convertible securities and upon vesting of restricted
shares are deemed to be outstanding for the purpose of computing the percentage
ownership and overall voting power of persons beneficially owning such
securities, but have not been deemed to be outstanding for the purpose of
computing the percentage ownership or overall voting power of any other person.
Voting power in the table is computed with respect to a general election of
directors. The number of TCI Group Series A Stock, TCI Group Series B Stock,
Liberty Group Series A Stock and Liberty Group Series B Stock in the table
include interests of the named directors or executive officers or of members of
the group of directors and executive officers in shares held by the trustee of
TCI's ESPP and shares held by the trustee of United Artists Entertainment
Company's Employee Stock Ownership Plan for their respective accounts. So far as
is known to TCI, the persons indicated below have sole voting and investment
power with respect to the shares indicated as owned by them except as otherwise
stated in the notes to the table and except for the shares held by the trustee
of TCI's ESPP for the benefit of such person, which shares are voted at the
discretion of the trustee.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT VOTING
NAME OF BENEFICIAL OF CLASS POWER
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP (1)(2) (1)(2)
- ------------------------- ------------------- ---------- -------- -----
<S> <C> <C> <C> <C>
TCI Group Series A Stock Bob Magness 5,628,574(3) * 26.0%
TCI Group Series B Stock 37,132,076(3) 43.9%
Liberty Group Series A 1,406,770(3) *
Stock
Liberty Group Series B 9,283,019(3) 43.8%
Stock
Class B Pref. 125,000(3) 7.7%
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 450,000 * *
TINTA Series B Stock -- --
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT VOTING
NAME OF BENEFICIAL OF CLASS POWER
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP (1)(2) (1)(2)
-------------- ---------------- ---------- -------- -----
<S> <C> <C> <C> <C>
TCI Group Series A Stock John C. Malone 2,171,776(4) * 17.7%
TCI Group Series B Stock 25,332,083(4) 29.9%
Liberty Group Series A 542,849(4) *
Stock
Liberty Group Series B 6,360,520(4) 30.0%
Stock
Class B Pref. 306,000(4) 18.9%
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 50,000(17) * *
TINTA Series B Stock -- --
TCI Group Series A Stock Donne F. Fisher 586,365(5) * *
TCI Group Series B Stock 249,072 *
Liberty Group Series A 148,858(5) *
Stock
Liberty Group Series B 62,268 *
Stock
Class B Pref. 3,464 *
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock -- -- --
TINTA Series B Stock -- --
TCI Group Series A Stock John W. Gallivan 52,124(6)(16) * *
TCI Group Series B Stock -- --
Liberty Group Series A 13,031(6)(16) *
Stock
Liberty Group Series B -- --
Stock
Class B Pref. 14(16) *
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock -- -- --
TINTA Series B Stock -- --
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT VOTING
NAME OF BENEFICIAL OF CLASS POWER
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP (1)(2) (1)(2)
-------------- ---------------- ---------- -------- -----
<S> <C> <C> <C> <C>
TCI Group Series A Stock Kim Magness 50,000(7) * *
TCI Group Series B Stock 518,000 *
Liberty Group Series A 12,500(7) *
Stock
Liberty Group Series B 129,500 *
Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 2,000 * *
TINTA Series B Stock -- --
TCI Group Series A Stock Jerome H. Kern 2,050,000(8) * *
TCI Group Series B Stock -- --
Liberty Group Series A 512,500(8) *
Stock
Liberty Group Series B -- --
Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 50,000(18) * *
TINTA Series B Stock -- --
TCI Group Series A Stock Tony Coehlo 150,800(9) * *
TCI Group Series B Stock -- --
Liberty Group Series A 12,700(9) *
Stock
Liberty Group Series B -- --
Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 1,000 * *
TINTA Series B Stock -- --
</TABLE>
9
<PAGE> 13
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT VOTING
NAME OF BENEFICIAL OF CLASS POWER
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP (1)(2) (1)(2)
-------------- ---------------- ---------- -------- -----
<S> <C> <C> <C> <C>
TCI Group Series A Stock Robert A. Naify 23,688,860(10) 3.9% 1.6%
TCI Group Series B Stock -- --
Liberty Group Series A 5,922,192(10) 3.9%
Stock
Liberty Group Series B -- --
Stock
Class B Pref. 1,000 *
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock -- -- --
TINTA Series B Stock -- --
TCI Group Series A Stock Fred A. Vierra 580,320(11) * *
TCI Group Series B Stock -- --
Liberty Group Series A 140,994(11) *
Stock
Liberty Group Series B -- --
Stock
Class B Pref. 200 *
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 442,000(12) * *
TINTA Series B Stock -- --
TCI Group Series A Stock Brendan R. Clouston 1,985,390(13) * *
TCI Group Series B Stock 230 *
Liberty Group Series A 221,347(13) *
Stock
Liberty Group Series B 57 *
Stock
Class B Pref. -- --
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock -- -- --
TINTA Series B Stock -- --
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT VOTING
NAME OF BENEFICIAL OF CLASS POWER
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP (1)(2) (1)(2)
-------------- ---------------- ---------- -------- -----
<S> <C> <C> <C> <C>
TCI Group Series A All directors and 40,827,576(1)(3)(4)(5)(6)(7)(8) 6.6% 45.4%
Stock executive officers (9)(10)(11)(13)(14)
TCI Group Series B as a group (17 63,236,807(1)(3)(4)(12) 74.7%
Stock persons)
Liberty Group 10,783,717(1)(3)(4)(5)(6)(7)(8) 7.0%
Series A Stock (9)(10)(11)(13)(14)
Liberty Group Series B 15,836,700(1)(3)(4) 74.7%
Stock
Class B Pref. 438,884(1)(4) 27.1%
Series C Pref. -- --
Series G Pref. -- --
Series H Pref. -- --
TINTA Series A Stock 1,053,200(2)(12)(15)(17)(18) * *
TINTA Series B Stock -- --
</TABLE>
- ---------------
* Less than one percent.
(1) See note 1 to the table in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT -- Security Ownership of Certain Beneficial Owners".
(2) Based on 106,960,873 shares of TINTA Series A Stock and 11,700,000 shares
of TINTA Series B Stock outstanding on April 30, 1996.
(3) See notes (2) through (4) and note (7) to the table in "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- Security Ownership of
Certain Beneficial Owners".
(4) See notes (5) through (7) to the table in "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT -- Security Ownership of Certain
Beneficial Owners".
(5) Assumes the exercise in full of (i) stock options granted in tandem with
stock appreciation rights in November of 1994 pursuant to the TCI 1994
Stock Incentive Plan (the "1994 Plan") to acquire 200,000 shares of TCI
Group Series A Stock and 50,000 shares of Liberty Group Series A Stock and
(ii) stock options granted in January 1996 pursuant to the TCI 1994
Nonemployee Director Stock Option Plan (the "Director Stock Option Plan")
to acquire 50,000 shares of TCI Group Series A Stock and 12,500 shares of
Liberty Group Series A Stock. Options to acquire 40,000 shares of TCI Group
Series A Stock and 10,000 shares of Liberty Group Series A Stock are
currently exercisable under the 1994 Plan. None of the stock options
granted pursuant to the Director Stock Option Plan are currently
exercisable. See "CONCERNING MANAGEMENT -- Compensation of Directors" for
additional information. Also, see note 8 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Summary Compensation Table of TCI".
(6) Includes 1,524 shares of TCI Group Series A Stock and 381 shares of Liberty
Group Series A Stock held by Mr. Gallivan's wife. Also, assumes the
exercise in full of options granted pursuant to the Director Stock Option
Plan to acquire 50,000 shares of TCI Group Series A Stock and 12,500 shares
of Liberty Group Series A Stock. Options to acquire 10,000 shares of TCI
Group Series A Stock and 2,500 shares of Liberty Group Series A Stock are
currently exercisable. See "CONCERNING MANAGEMENT -- Compensation of
Directors" for additional information.
(7) Assumes the exercise in full of options granted pursuant to the Director
Stock Option Plan to acquire 50,000 shares of TCI Group Series A Stock and
12,500 shares of Liberty Group Series A Stock. Options to acquire 10,000
shares of TCI Group Series A Stock and 2,500 shares of Liberty Group Series
A Stock are currently exercisable. See "CONCERNING
MANAGEMENT -- Compensation of Directors" for additional information.
11
<PAGE> 15
(8) Assumes the exercise in full of stock options granted in tandem with stock
appreciation rights to acquire 1,500,000 shares of TCI Group Series A Stock
and 375,000 shares of Liberty Group Series A Stock. Options to acquire
700,000 shares and 175,000 shares of TCI Group Series A Stock and Liberty
Group Series A Stock, respectively, are currently exercisable and the
remainder vest and become exercisable evenly over two years. The options
expire on October 12, 1998. Additionally, assumes the exercise in full of
stock options granted in tandem with stock appreciation rights to acquire
500,000 shares of TCI Group Series A Stock and 125,000 shares of Liberty
Group Series A Stock. None of the options are exercisable until August 4,
1996. Also assumes the exercise in full of stock options granted pursuant
to the Director Stock Option Plan to acquire 50,000 shares of TCI Group
Series A Stock and 12,500 shares of Liberty Group Series A Stock. Options
to acquire 10,000 shares of Series A and 2,500 shares of Liberty Group
Series A Stock are currently exercisable. See "CONCERNING
MANAGEMENT -- Compensation of Directors" for additional information.
(9) Assumes the exercise in full of stock options granted to acquire 50,000
shares of TCI Group Series A Stock and 12,500 shares of Liberty Group
Series A Stock. Options to acquire 10,000 shares of TCI Group Series A
Stock and 2,500 shares of Liberty Group Series A Stock are currently
exercisable. See "CONCERNING MANAGEMENT -- Compensation of Directors" for
additional information. Additionally assumes the exercise in full of stock
options granted in tandem with stock appreciation rights granted to acquire
100,000 shares of TCI Group Series A Stock. None of these options are
exercisable until August 4, 1996. See "CONCERNING MANAGEMENT -- Certain
Relationships and Related Transactions -- Transactions with Management and
Others" for additional information.
(10) Mr. Robert Naify received notes, which are currently convertible into
22,446,926 shares of TCI Group Series A Stock and 5,611,731 shares of
Liberty Group Series A Stock, as partial consideration for the sale to TCI
of the stock owned by him in United Artists Communications, Inc. ("UACI").
Mr. Naify is also a co-trustee, along with Mr. Naify's brother, Marshall,
and their sister, of a trust for the benefit of Marshall which holds
additional notes convertible into 341,606 shares of TCI Group Series A
Stock and 85,401 shares of Liberty Group Series A Stock. The number of
shares indicated as held by Mr. Naify assumes the conversion of these
notes. Also, assumes the exercise in full of options granted pursuant to
the Director Stock Option Plan to acquire 50,000 shares of TCI Group Series
A Stock and 12,500 shares of Liberty Group Series A Stock. Options to
acquire 10,000 shares of TCI Group Series A Stock and 2,500 shares of
Liberty Group Series A Stock are currently exercisable. See "CONCERNING
MANAGEMENT -- Compensation of Directors" for additional information.
(11) Assumes the exercise in full of stock options granted in tandem with stock
appreciation rights in November of 1992 to acquire 100,000 shares of TCI
Group Series A Stock and 25,000 shares of Liberty Group Series A Stock.
Options to acquire 60,000 shares of TCI Group Series A Stock and 15,000
shares of Liberty Group Series A Stock are currently exercisable. Also
assumes the exercise in full of stock options granted in tandem with stock
appreciation rights in November of 1993 to acquire 100,000 shares of TCI
Group Series A Stock and 25,000 shares of Liberty Group Series A Stock.
Options to acquire 50,000 shares of TCI Group Series A Stock and 12,500
shares of Liberty Group Series A Stock are currently exercisable. See note
9 to the table in "CONCERNING MANAGEMENT -- Executive
Compensation -- Summary Compensation Table of TCI" for additional
information. Additionally assumes the exercise in full of stock options
granted in tandem with stock appreciation rights in November of 1994 to
acquire 200,000 shares of TCI Group Series A Stock and 50,000 shares of
Liberty Group Series A Stock. Options to acquire 40,000 shares of TCI Group
Series A Stock and 10,000 shares of Liberty Group Series A Stock are
currently exercisable. See note 8 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Summary Compensation Table of TCI"
for additional information.
(12) Assumes the exercise in full of options granted in tandem with stock
appreciation rights in December of 1995 to acquire 400,000 shares of TINTA
Series A Stock. None of the options are exercisable until August 4, 1996.
See note 3 to the table in "CONCERNING MANAGEMENT -- Executive
Compensation -- Option/SAR Grants Table of TCI" for additional information.
Additionally assumes the vesting in full of 15,000 shares of TINTA Series A
Stock which is restricted. None of such stock is
12
<PAGE> 16
currently vested. See note 5 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Summary Compensation Table of TCI"
for additional information.
(13) Assumes the exercise in full of stock options granted in tandem with stock
appreciation rights in November of 1992 to acquire 300,000 shares of TCI
Group Series A Stock and 75,000 shares of Liberty Group Series A Stock.
Options to acquire 100,000 shares of TCI Group Series A Stock and 25,000
shares of Liberty Group Series A Stock are currently exercisable.
Additionally assumes the exercise in full of stock options granted in
tandem with stock appreciation rights in November of 1993 to acquire
375,000 shares of TCI Group Series A Stock and 93,750 shares of Liberty
Group Series A Stock. Options to acquire 125,000 shares of TCI Group Series
A Stock and 31,250 shares of Liberty Group Series A Stock are currently
exercisable. See note 9 to the table "CONCERNING MANAGEMENT -- Executive
Compensation -- Summary Compensation Table of TCI" for additional
information. Also assumes the exercise in full of stock options granted in
tandem with stock appreciation rights in November of 1994 to acquire
200,000 shares of TCI Group Series A Stock and 50,000 shares of Liberty
Group Series A Stock. Options to acquire 40,000 shares of TCI Group Series
A Stock and 10,000 shares of Liberty Group Series A Stock are currently
exercisable. See note 8 to the table in "CONCERNING MANAGEMENT -- Executive
Compensation -- Summary Compensation Table of TCI" for additional
information. Assumes the exercise in full of stock options granted in
tandem with stock appreciation rights in December of 1995 to purchase
1,000,000 shares of TCI Group Series A Stock. None of the options are
exercisable until August 4, 1996. See note 4 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Option/SAR Grants Table of TCI" for
additional information. Additionally assumes the vesting in full of 100,000
shares of TCI Group Series A Stock which is restricted. None of the stock
is currently vested. See note 6 to the table in "CONCERNING
MANAGEMENT -- Executive Compensation -- Summary Compensation Table of TCI"
for additional information.
(14) Certain executive officers and directors of TCI (10 persons, including
Messrs. Magness, Malone, Vierra and Clouston) hold options which were
granted in tandem with stock appreciation rights in November of 1992, to
acquire an aggregate of 3,025,000 shares of TCI Group Series A Stock and an
aggregate of 756,250 shares of Liberty Group Series A Stock at purchase
prices of $12.50 per share and $16.75 per share, respectively. Options to
acquire 1,735,000 shares of TCI Group Series A Stock and 433,750 shares of
Liberty Group Series A Stock are currently exercisable. Additionally
certain executive officers (8 persons including Messrs. Vierra and
Clouston) hold stock options granted in tandem with stock appreciation
rights in October and November of 1993 to acquire an aggregate of 1,100,000
shares of TCI Group Series A Stock and an aggregate of 275,000 shares of
Liberty Group Series A Stock at purchase prices of $12.50 per share and
$16.75 per share, respectively. Options to acquire 487,500 shares of TCI
Group Series A Stock and 121,875 shares of Liberty Group Series A Stock are
currently exercisable. Also, certain executive officers and directors (10
persons including Messrs. Fisher, Vierra and Clouston) hold stock options
which were granted in tandem with stock appreciation rights in November of
1994 to acquire an aggregate of 1,450,000 shares of TCI Group Series A
Stock and an aggregate of 362,500 shares of Liberty Group Series A Stock at
purchase prices of $16.50 per share and $22.50 per share, respectively.
Options to acquire 290,000 shares of TCI Group Series A Stock and 72,500
shares of Liberty Group Series A Stock are currently exercisable.
Additionally, certain executive officers and directors (11 persons,
including Messrs. Magness, Malone, Kern and Clouston) hold stock options
which were granted, pursuant to the TCI 1994 Stock Incentive Plan (the
"1994 Plan") and the TCI 1996 Incentive Plan (the "1996 Plan"), in tandem
with stock appreciation rights in December of 1995 to acquire an aggregate
of 4,650,000 shares of TCI Group Series A Stock at $17.00 per share. The
1996 Plan is subject to approval by stockholders pursuant to the 1996
Incentive Plan Proposal. None of the options are exercisable until August
4, 1996. Additionally, certain executive officers and directors (6 persons,
including Messrs. Magness, Malone and Kern) hold stock options which were
granted, pursuant to the 1994 Plan and the 1996 Plan, in tandem with stock
appreciation rights in December of 1995 to acquire an aggregate of
1,775,000 shares of Liberty Group Series A Stock at a purchase price of
$24.00 per share. None of the options are exercisable until August 4, 1996.
Also, certain executive officers (7 persons, including Mr. Clouston) hold
an aggregate of 240,000 shares of TCI Group Series A
13
<PAGE> 17
Stock which is restricted. None of the shares are currently vested. Certain
executive officers (2 persons) hold an aggregate of 20,000 shares of
Liberty Group Series A Stock which is restricted. None of the shares are
currently vested. Mr. Kern holds an option to acquire 1,500,000 shares of
TCI Group Series A Stock and 375,000 shares of Liberty Group Series A Stock
as described in note 8 above. Also, Messrs. Gallivan, Kim Magness, Kern,
Coelho and Naify hold options to purchase an aggregate of 250,000 shares of
TCI Group Series A Stock and an aggregate of 62,500 shares of Liberty Group
Series A Stock at purchase prices of $16.50 per share and $22.50 per share,
respectively. Options to purchase 50,000 shares of TCI Group Series A Stock
and 12,500 shares of Liberty Group Series A Stock are currently
exercisable. Also, Mr. Fisher holds options to purchase an aggregate of
50,000 shares of TCI Group Series A Stock and an aggregate of 12,500 shares
of Liberty Group Series A Stock at purchase prices of $19.75 per share and
$25.25 per share, respectively. None of such options are currently
exercisable. All of the aforementioned options with tandem stock
appreciation rights, options and restricted stock are reflected in this
table assuming the exercise or vesting in full of such securities.
(15) Two executive officers, including Mr. Vierra, hold options which were
granted in tandem with stock appreciation rights in December of 1995 to
acquire an aggregate of 450,000 shares of TINTA Series A Stock. None of the
options are exercisable until August 4, 1996. Additionally Mr. Vierra holds
15,000 shares of TINTA Series A Stock which is restricted. None of the
shares are currently vested. Additionally, one executive officer holds
options granted in tandem with stock appreciation rights in December of
1995 by TCI to acquire 50,000 shares of its TINTA Series A Stock. None of
the options are exercisable until August 4, 1996.
(16) The number of shares in the table does not include any shares held by
Kearns, of which Mr. Gallivan is an officer.
(17) Assumes the exercise in full of stock options granted in April of 1996
pursuant to the TINTA 1996 Nonemployee Director Stock Option Plan (the
"TINTA Director Stock Option Plan") to acquire 50,000 shares of TINTA
Series A Stock. None of these options are exercisable until April of 1997.
(18) Assumes the exercise in full of stock options granted in April of 1996
pursuant to the TINTA Director Stock Option Plan to acquire 50,000 shares
of TINTA Series A Stock. None of these options are exercisable until April
of 1997.
No equity securities in any subsidiary of the Company, other than
directors' qualifying shares, are owned by any of the Company's executive
officers or directors, except for those shares of TINTA Series A Stock reflected
in the tables in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT" and except that Mr. Bob Magness, a director and an executive officer
of the Company, owns 948 shares of 12% Series C Cumulative Compounding Preferred
Stock ("WestMarc Preferred Stock") of WestMarc Communications, Inc.
("WestMarc"), a wholly-owned subsidiary of TCI. Mr. Kim Magness, a director of
the Company, owns 31 shares of WestMarc Preferred Stock; Dr. Malone, a director
and an executive officer of the Company, owns, as trustee for his children, 68
shares of WestMarc Preferred Stock; Mr. Larry Romrell, an officer of the
Company, owns 103 shares of WestMarc Preferred Stock and Mr. Jerome Kern, a
director of the Company, is deemed to have beneficial ownership over 116 shares
of WestMarc Preferred Stock owned by his wife, Diane D. Kern. Mr. Kern has
disclaimed any beneficial ownership of such shares owned by Mrs. Kern. In
addition, in July 1996, Brendan Clouston, an executive officer of the Company,
was granted a restricted stock award of 62 shares of WestMarc Preferred Stock.
See "CONCERNING MANAGEMENT -- Certain Relationships and Related
Transactions -- Transactions with Management and Others" for a discussion of
certain other proposed acquisitions by a director and certain executive officers
of the Company of equity in certain of the Company's subsidiaries.
CHANGE OF CONTROL
The Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date
result in a change in control of the Company.
14
<PAGE> 18
ELECTION OF DIRECTORS PROPOSAL
GENERAL
The persons named in the accompanying proxy will vote for the election of
three directors, with the term of office of each to continue until the 1999
annual meeting of stockholders or until his successor shall have been duly
elected and qualified, unless authority to vote is withheld. Tony Coelho, John
C. Malone and Robert A. Naify are the three nominees for election as directors
of the Company, and the Company is informed that these nominees are willing to
serve as directors. However, if any such nominee should decline or shall become
unable to serve as a director for any reason, votes will be cast for a
substitute nominee, if any, designated by the Board of Directors, or, if none is
so designated prior to the election, votes will be cast according to the
judgment in such matters of the person or persons voting the proxy. Messrs.
Coelho, Malone and Naify are each incumbent directors.
The following lists the three nominees for election as directors of the
Company and the five directors of the Company whose term of office will continue
after the Annual Meeting, including the birth date of each person, the positions
with the Company or principal occupations of each person, certain other
directorships held and the year each person became a director of the Company.
The numbers of Voting Securities owned beneficially by each such person as of
April 30, 1996 are set forth in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT".
NOMINEES FOR ELECTION AS DIRECTORS
JOHN C. MALONE: Born March 7, 1941; director of the Company since June of
1994; Chief Executive Officer and President of TCI since January of 1994; Chief
Executive Officer of TCI Communications, Inc., the predecessor company to TCI
and now a majority owned subsidiary of TCI ("TCIC"), from March of 1992 to
October of 1994 and President of TCIC from 1973 to October of 1994; Chairman of
the Board and director of International since May 1995; is President and a
director of many of the Company's subsidiaries; also a director of Turner
Broadcasting System, Inc., BET Holdings, Inc., Home Shopping Network, Inc. and
The Bank of New York; TCIC director since 1973.
TONY COELHO: Born June 14, 1942; director of the Company since June of
1994; TCIC director from March of 1994 to August 1994; is Chairman of the Board
and Chief Executive Officer of ETC w/tci, Inc. (TCI's newly formed education
division) since October 1995; Chairman and Chief Executive Officer of Coelho
Associates, LLC since July of 1995; was President and Chief Executive Officer of
Wertheim Schroder Investment Services from 1990 to June of 1995 and Managing
Director of Wertheim Schroder & Co., Incorporated from 1989 to June of 1995; was
formerly U.S. Representative from California from January 1979 through June 1989
and Majority Whip of the U.S. House of Representatives from December 1986
through June 1989; also a director of Circus Circus Enterprises, Inc., ICF
Kaiser International, Inc., Service Corporation International, Specialty Retail
Group, Inc., Crop Growers Corporation, and Tanknology Environmental, Inc.
ROBERT A. NAIFY: Born February 17, 1922; director of the Company since June
of 1994; TCIC director from 1987 to August of 1994; also Co-Chairman, Co-Chief
Executive Officer and a director of The Todd-AO Corporation.
DIRECTORS WHOSE TERM EXPIRES IN 1997
DONNE F. FISHER: Born May 24, 1938; director of the Company since June of
1994; TCIC director since 1980; Executive Vice President of the Company from
January of 1994 to January of 1996; Mr. Fisher resigned as Executive Vice
President on January 1, 1996; Executive Vice President of TCIC from December of
1991 to October of 1994; was previously Senior Vice President of TCIC since 1982
and Treasurer since 1970; also a director of General Communication, Inc. and
United Video Satellite Group, Inc.
15
<PAGE> 19
KIM MAGNESS: Born May 17, 1952; director of the Company since June of 1994;
TCIC director from 1985 to August of 1994; reinstated as TCIC director in
January 1996; manages numerous personal and business investments, and is
Chairman and President of a company developing liners for irrigation canals.
DIRECTORS WHOSE TERM EXPIRES IN 1998
BOB MAGNESS: Born June 3, 1924; Chairman of the Board and director of the
Company since June of 1994 and of TCIC since 1973; TCIC director since 1968.
JOHN W. GALLIVAN: Born June 28, 1915; director of the Company since June of
1994; Chairman of the Board of Kearns-Tribune Corporation, a newspaper
publishing concern; also a director of Silver King Mining Company; TCIC director
from 1980 to August of 1994. Reinstated as TCIC director in January 1996.
JEROME H. KERN: Born June 1, 1937; director of the Company since June of
1994; TCIC director from December of 1993 to August of 1994; director of
International since May 1995; also special counsel from July 1996 to present and
a senior partner from September 1992 to July 1996 with the law firm of Baker &
Botts, L.L.P. Prior to joining Baker & Botts, L.L.P., Mr. Kern was a senior
partner with the Law Offices of Jerome H. Kern from January 1, 1992 to September
1, 1992 and, prior to that, was a senior partner with the law firm of Shea &
Gould from 1986 through December 31, 1991.
VOTES REQUIRED FOR APPROVAL
THE ELECTION OF DIRECTORS PROPOSAL MUST BE APPROVED BY A PLURALITY OF THE
VOTES OF THE SHARES OF THE TCI GROUP SERIES A STOCK, THE LIBERTY GROUP SERIES A
STOCK, THE TCI GROUP SERIES B STOCK, THE LIBERTY GROUP SERIES B STOCK, THE CLASS
B PREFERRED STOCK, THE SERIES C PREFERRED STOCK, THE SERIES G PREFERRED STOCK
AND THE SERIES H PREFERRED STOCK, REPRESENTED IN PERSON OR BY PROXY AND ENTITLED
TO VOTE AT THE ANNUAL MEETING, VOTING AS A SINGLE CLASS.
CONCERNING MANAGEMENT
EXECUTIVE OFFICERS
The following lists the executive officers of the Company, other than the
directors listed above, their birth dates, and a description of their business
experience and positions held with the Company as of April 30, 1996. All
officers are appointed for an indefinite term, serving at the pleasure of the
Board of Directors.
<TABLE>
<CAPTION>
NAME POSITIONS
- ------------------------ ------------------------------------------------------------------
<S> <C>
Stephen M. Brett Executive Vice President, General Counsel and Secretary of TCI
Born September 20, 1940 since January of 1994. Appointed TCI Senior Vice President and
General Counsel of TCIC as of December of 1991. Vice President and
Secretary of most of TCI's subsidiaries. From August of 1988
through December of 1991, was Executive Vice President-Legal and
Secretary of United Artists Entertainment Company ("UAE") and its
predecessor, UACI.
Fred A. Vierra Executive Vice President of TCI since January of 1994. Chief
Born November 9, 1931 Executive Officer and a director of International since October of
1994. Served as Chairman of the Board of International from
October of 1994 to May of 1995. Vice Chairman of the Board of
International since May of 1995. Executive Vice President of TCIC
from December of 1991 to October of 1994. Was President, Chief
Operating Officer and a director of UAE from May of 1989 through
December of 1991.
Peter R. Barton Executive Vice President of TCI since January of 1994; President
Born April 6, 1951 and Chief Executive Officer of Liberty Media Corporation, a
wholly-owned subsidiary of TCI subsequent to August 4, 1994, since
June of 1990; was Senior Vice President of TCIC from 1988 to March
of 1991.
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
NAME POSITIONS
- ------------------------ ------------------------------------------------------------------
<S> <C>
Brendan R. Clouston Executive Vice President of TCI since January of 1994 and Chief
Born April 28, 1953 Operating Officer of TCI since December 1995; President and Chief
Executive Officer of TCIC since October of 1994; Executive Vice
President and Chief Operating Officer of TCIC from March of 1992
to October of 1994; previously Senior Vice President of TCIC since
December of 1991; from January of 1987 through December of 1991,
held various executive positions with UAE and its predecessor,
UACI, most recently Executive Vice President and Chief Financial
Officer.
Larry E. Romrell Executive Vice President of TCI since January of 1994. President
Born December 30, 1939 and Chief Executive Officer of TCI Technology Ventures, Inc., a
wholly-owned subsidiary of TCI, since September of 1994 and a
director of same since December of 1994; Senior Vice President of
TCIC from 1991 to October of 1994; previously held various
executive positions with WestMarc.
Barry P. Marshall Executive Vice President of TCIC since October of 1994. Executive
Born March 4, 1946 Vice President and Chief Operating Officer of TCI Cable Management
Corporation, TCIC's primary operating subsidiary, from March of
1992 through January 1, 1994, where he directly oversaw all of
TCIC's regional operating divisions. From 1986 to March of 1992,
was Vice President and Chief Operating Officer of TCIC's largest
regional operating division.
Gary K. Bracken Controller of TCIC since 1969. Appointed Senior Vice President of
Born July 29, 1939 TCIC in December of 1991. Was named Vice President and Principal
Accounting Officer of TCIC in 1982.
Bernard W. Schotters Appointed Senior Vice President-Finance and Treasurer of TCIC in
Born November 25, 1944 December of 1991. Was appointed Vice President-Finance of TCIC in
1984. Vice President and Treasurer of most of TCI's subsidiaries.
Robert N. Thomson Appointed Senior Vice President of TCIC in February of 1995.
Born December 19, 1943 Senior Vice President of Communications and Policy Planning for
TCIC from 1991 to October of 1994. Previously, Vice President of
Government Affairs for TCIC from January of 1987 to 1991.
</TABLE>
Mr. J. C. Sparkman, previously an Executive Vice President of TCI, retired
in March of 1995 and Mr. R. E. Turner resigned from the Board of Directors in
October of 1995.
There are no family relations, of first cousin or closer, among the
Company's directors or executive officers, by blood, marriage or adoption,
except that Bob Magness and Kim Magness are father and son, respectively.
During the past five years, none of the above persons have had any
involvement in such legal proceedings as would be material to an evaluation of
his ability or integrity.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires TCI's officers and directors, and persons who own more
than ten percent of a registered class of TCI's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than ten-percent
stockholders are required by SEC regulation to furnish TCI with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such Forms 3, 4 and 5 and
amendments thereto furnished to TCI with respect to its most recent fiscal year,
or written representations that no Forms 5 were required, TCI believes that,
during the year ended December 31, 1995, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with except that one report, covering one transaction, was
filed late by Mr. Robert Thomson, an officer of the Company, and except that two
reports, one covering shares held by minor children and one covering a
transaction relating to the exercise of stock options, were filed late by Mr.
Bernard Schotters, another officer of the Company.
17
<PAGE> 21
EXECUTIVE COMPENSATION
On August 3, 1995, TCI amended its Restated Certificate of Incorporation
to, among other things, (i) redesignate the TCI Class A Common Stock as
"Tele-Communications, Inc. Series A TCI Group Common Stock" ("TCI Group Series A
Stock") and TCI's Class B Common Stock as "Tele-Communications, Inc. Series B
TCI Group Common Stock" ("TCI Group Series B Stock") and (ii) authorize two
additional series of TCI common stock, designated as "Tele-Communications, Inc.
Series A Liberty Media Group Common Stock" ("Liberty Group Series A Stock") and
"Tele-Communications, Inc. Series B Liberty Media Group Common Stock" ("Liberty
Group Series B Stock"). Thereafter, TCI distributed to the holders of TCI common
stock one-fourth of a share of the corresponding series of Liberty Media Group
common stock in respect of each share of TCI Group common stock held of record
as of August 4, 1995, the record date for such distribution (the
"Distribution"). Certain of the stock options with tandem stock appreciation
rights relative to TCI Group Series A Stock and Liberty Group Series A Stock
indicated in the following tables were granted prior to the foregoing
redesignation and Distribution. Options to purchase TCI Class A common stock
outstanding at the time of the Distribution were adjusted by issuing to the
holders of such options separate options to purchase that number of shares of
Liberty Group Series A Stock which the holder would have been entitled to
receive had the holder exercised such option to purchase TCI Class A common
stock prior to the record date for the Distribution and reallocating a portion
of the aggregate exercise price of the previously outstanding options to the
newly issued options to purchase Liberty Group Series A Stock.
Summary Compensation Table of TCI. The following table shows, for each of
the years in the three-year period ended December 31, 1995, all forms of
compensation for the Chief Executive Officer and each of the four most highly
compensated executive officers of TCI, whose total annual salary and bonus
exceeded $100,000 for the year ended December 31, 1995:
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- -------------------------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ ALL OTHER
POSITION YEAR SALARY($) COMPENSATION($) AWARD(S)($) SARS(#) COMPENSATION($)
-------- ---- --------- --------------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Bob Magness 1995 $850,000 -- -- 1,250,000(7) $17,500(10)(11)
Chairman of the Board 1994 $830,769 -- -- -- $ 2,500(11)
1993 $800,000 -- -- -- $ 2,500(11)
John C. Malone 1995 $850,000(1) $ 3,758(3) -- 1,250,000(7) $17,500(10)(11)
President and Chief 1994 $821,731(1) $ 2,610(3) -- -- $17,500(10)(11)
Executive Officer 1993 $800,000(1) $ 2,726(3) -- -- $17,500(10)(11)
Fred A. Vierra 1995 $650,000(2) $ 3,207(3) $ 380,625(5) 400,000(7) $15,000(10)
Executive Vice President 1994 $669,613(2) $ 1,024(3) -- 250,000(8) $15,000(10)
1993 $623,617(2) $ 263(3) -- 125,000(9) $15,000(10)
Brendan R. Clouston 1995 $550,000 $ 3,181(3) $2,062,500(6) 1,000,000(7) $15,000(10)
Executive Vice President 1994 $525,000 $ 1,000(3) -- 625,000(8) $15,000(10)
1993 $519,231 $ 263(3) -- 625,000(9) $15,000(10)
Donne F. Fisher 1995 $450,000 $341,670(3)(4) -- -- $17,500(10)(11)
Executive Vice President 1994 $440,385 $388,135(3)(4) -- 250,000(8) $17,500(10)(11)
1993 $400,000 $432,860(3)(4) -- -- $17,500(10)(11)
</TABLE>
- ---------------
(1) Includes deferred compensation of $320,000 in 1995, $320,000 in 1994 and
$150,000 in 1993.
(2) Includes deferred compensation of $250,000 in each of the years presented.
(3) Consists of amounts reimbursed during the year for the payment of taxes.
During 1995, 1994 and 1993, a total of $5,673, $4,138 and $864,
respectively, was paid to Mr. Fisher.
(4) Includes $335,997, $383,997 and $431,996 dividend income received on
WestMarc Preferred Stock that until January 31, 1996 was owned by Mr.
Fisher.
18
<PAGE> 22
(5) International has a stock incentive plan (the "International Plan") which
is subject to the approval of the International stockholders. On December
13, 1995, pursuant to the International Plan, Mr. Vierra was granted 15,000
restricted shares of TINTA Series A Stock. Such restricted shares vest as
to 50% of such shares on December 13, 1999 and as to the remaining shares
50% on December 13, 2000. The value of such restricted stock award was
$341,250 at the end of 1995 based upon the closing price of TINTA Series A
Stock on December 29, 1995. International has not paid cash dividends on
TINTA Series A Stock and does not anticipate declaring and paying cash
dividends on the TINTA Series A Stock at any time in the foreseeable
future.
(6) On December 13, 1995, pursuant to the 1994 Plan, Mr. Clouston was granted
100,000 restricted shares of TCI Group Series A Stock. Such restricted
shares vest as to 50% of such shares on December 13, 1999 and as to the
remaining shares 50% on December 13, 2000. The value of such restricted
stock award was $1,987,500 at the end of 1995 based upon the closing price
of TCI Group Series A Stock on December 29, 1995. TCI has not paid cash
dividends on the TCI Group Series A Stock and does not anticipate declaring
and paying cash dividends on the TCI Group Series A Stock at any time in
the foreseeable future. See "CONCERNING MANAGEMENT -- Certain Relationships
and Related Transactions -- Transactions with Management and Others" for a
discussion of awards to Mr. Clouston after the reporting period.
(7) For additional information regarding this award, see "CONCERNING
MANAGEMENT -- Executive Compensation -- Option/SAR Grants Table of TCI"
below.
(8) On November 17, 1994, pursuant to the 1994 Plan, certain executive officers
and other key employees were granted an aggregate of 3,191,000 options in
tandem with stock appreciation rights to acquire shares of TCI Group Series
A Stock at an adjusted purchase price of $16.50 per share and an aggregate
of 797,750 options in tandem with stock appreciation rights to acquire
shares of Liberty Group Series A Stock at a purchase price of $22.00 per
share. Such options vest evenly over five years, became exercisable
beginning on November 17, 1995 and expire on November 17, 2004.
Notwithstanding the vesting schedule as set forth in the option agreement,
the option shares shall become available for purchase if grantee's
employment with the Company (a) shall terminate by reason of (i)
termination by the Company without cause (ii) termination by the grantee
for good reason (as defined in the agreement) or (iii) disability, (b)
shall terminate pursuant to provisions of a written employment agreement,
if any, between the grantee and the Company which expressly permits the
grantee to terminate such employment upon occurrence of specified events
(other than the giving of notice and passage of time), or (c) if grantee
dies while employed by the Company. Further, the option shares will become
available for purchase in the event of an Approved Transaction, Board
Change, or Control Purchase (each as defined in the 1994 Plan), unless in
the case of an Approved Transaction, the Compensation Committee under the
circumstances specified in the 1994 Plan determines otherwise.
(9) On October 12, 1993 certain executive officers and other key employees were
granted an aggregate of 1,355,000 options in tandem with stock appreciation
rights to acquire shares of TCI Group Series A Stock at an adjusted
purchase price of $12.50 per share and an aggregate of 338,750 options in
tandem with stock appreciation rights to acquire shares of Liberty Group
Series A Stock at a purchase price of $16.75 per share. On November 12,
1993, an additional grant of stock options in tandem with stock
appreciation rights to purchase an aggregate of 600,000 shares of TCI Group
Series A Stock at an adjusted purchase price of $12.50 per share and an
aggregate of 150,000 options in tandem with stock appreciation rights to
acquire shares of Liberty Group Series A Stock at a purchase price of
$16.75 per share were made to Messrs. Clouston and Vierra. Such options
vest evenly over four years, first became exercisable on October 12, 1994
and expire on October 12, 2003. Notwithstanding the vesting schedule as set
forth in the option agreement, the option shares shall become available for
purchase if grantee's employment with the Company (a) shall terminate by
reason of (i) termination by the Company without cause (ii) termination by
the grantee for good reason (as defined in the agreement) or (iii)
disability, (b) shall terminate pursuant to provisions of a written
employment agreement, if any, between the grantee and the Company which
expressly permits the grantee to terminate such employment upon occurrence
of specified events (other than the giving of notice and passage of time),
19
<PAGE> 23
or (c) if grantee dies while employed by the Company. Further, the option
shares will become available for purchase in the event of an Approved
Transaction, Board Change, or Control Purchase (each as defined in the 1994
Plan), unless in the case of an Approved Transaction, the Compensation
Committee under the circumstances specified in the 1994 Plan determines
otherwise.
(10) Includes dollar value of annual TCI contributions to the ESPP in which all
named executive officers are fully vested. Directors who are not employees
of TCI are ineligible to participate in the ESPP. The ESPP, a defined
contribution plan, enables participating employees to acquire a proprietary
interest in TCI and benefits upon retirement. Under the terms of the ESPP,
employees are eligible for participation after one year of service. The
ESPP's normal retirement age is 65 years. Participants may contribute up to
10% of their compensation and TCI (by annual resolution of the Board of
Directors) may contribute up to 100% of the participants' contributions.
The ESPP includes a salary deferral feature in respect of employee
contributions. Forfeitures (due to participants' withdrawal prior to full
vesting) are used to reduce TCI's otherwise determined contributions.
Generally, participants acquire a vested right in TCI contributions as
follows:
<TABLE>
<CAPTION>
VESTING
YEARS OF SERVICE PERCENTAGE
---------------- ----------
<S> <C>
Less than 1....................................... 0
1-2.......................................... 20
2-3.......................................... 30
3-4.......................................... 45
4-5.......................................... 60
5-6.......................................... 80
6 or more.................................... 100
</TABLE>
Participant contributions are fully vested. Although TCI has not expressed
an intent to terminate the ESPP, it may do so, at any time. The ESPP
provides for full and immediate vesting of all participants' rights upon
termination. In each of the years ending December 31, 1995, 1994 and 1993,
TCI contributed $15,000 to the ESPP for Dr. Malone and Mr. Fisher. In the
year ending December 31, 1995, TCI contributed $15,000 to the ESPP for Mr.
Magness.
(11) Includes fees paid to directors for attendance at each meeting of the Board
of Directors ($500 per meeting). During 1995, 1994 and 1993, a total of
$2,500 of such fees, respectively, were paid to each of Dr. Malone, Mr.
Magness and Mr. Fisher.
Option/SAR Grants Table of TCI. The following table shows all individual
grants of stock options and stock appreciation rights ("SARs") granted to each
of the named executive officers of TCI during the year ended December 31, 1995:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/ GRANTED MARKET
SARS TO EMPLOYEES EXERCISE OR PRICE ON GRANT DATE
GRANTED IN FISCAL BASE PRICE GRANT DATE EXPIRATION PRESENT VALUE
NAME (#) YEAR ($/SH) ($/SH) DATE ($)
- ---- --------- ------------ ----------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bob Magness
TCI Group Series A Stock....... 1,000,000 (1) $17.00 $20.625(5) August 4, 2005 $14,133,800(8)
Liberty Group Series A Stock... 250,000 (1) $24.00 $ 26.25(6) August 4, 2005 $ 4,543,150(9)
John C. Malone
TCI Group Series A Stock....... 1,000,000 (2) $17.00 $20.625(5) August 4, 2005 $14,133,800(8)
Liberty Group Series A Stock... 250,000 (2) $24.00 $ 26.25(6) August 4, 2005 $ 4,543,150(9)
Fred A. Vierra
TINTA Series A Stock........... 400,000 (3) $16.00 $25.375(7) August 4, 2005 $ 6,913,440(10)
Brendan R. Clouston
TCI Group Series A Stock....... 1,000,000 (4) $17.00 $20.625(5) August 4, 2005 $14,133,800(8)
</TABLE>
- ---------------
(1) On December 13, 1995, pursuant to the 1996 Plan (which is subject to the
approval of stockholders pursuant to the 1996 Incentive Plan Proposal)
certain executive officers of TCI, including Dr. Malone and Mr. Magness,
were granted an aggregate of 2,000,000 options in tandem with stock
appreciation
20
<PAGE> 24
rights to acquire shares of TCI Group Series A Stock and 1,100,000 options
in tandem with stock appreciation rights to acquire shares of Liberty Group
Series A Stock. Each such grant of options with tandem stock appreciation
rights vests evenly over five years with such vesting period beginning
August 4, 1995, first becomes exercisable beginning on August 4, 1996 and
expires on August 4, 2005. Mr. Magness' grant of 1,000,000 options in
tandem with stock appreciation rights to purchase TCI Group Series A Stock
represents 50% of the total options granted to purchase TCI Group Series A
Stock pursuant to the 1996 Plan and, together with the options granted to
purchase TCI Group Series A Stock described in note 4 below, represents
13.5% of all options granted in 1995 to purchase TCI Group Series A Stock.
Additionally, Mr. Magness' grant of 250,000 options in tandem with stock
appreciation rights to purchase Liberty Group Series A Stock represents
22.7% of the total options granted to purchase Liberty Group Series A Stock
pursuant to the 1996 Plan and, together with the options granted to
purchase Liberty Group Series A Stock described in note 4 below, represents
11.3% of all options granted in 1995 to purchase Liberty Group Series A
Stock.
(2) Dr. Malone's grant of 1,000,000 options in tandem with stock appreciation
rights to purchase TCI Group Series A Stock represents 50% of the total
options granted to purchase TCI Group Series A Stock pursuant to the 1996
Plan and, together with the options granted to purchase TCI Group Series A
Stock described in note 4 below, represents 13.5% of all options granted in
1995 to purchase TCI Group Series A Stock. Additionally, Dr. Malone's grant
of 250,000 options in tandem with stock appreciation rights to purchase
Liberty Group Series A Stock represents 22.7% of the total options granted
to purchase Liberty Group Series A Stock pursuant to the 1996 Plan and,
together with the options granted to purchase Liberty Group Series A Stock
described in note 4 below, represents 11.3% of all options granted in 1995
to purchase Liberty Group Series A Stock.
(3) On December 13, 1995, pursuant to the International Plan, certain executive
officers and other key employees of TCI were granted an aggregate of
1,302,000 options in tandem with stock appreciation rights to acquire
shares of TINTA Series A Stock. Additionally, one executive officer of TCI
was granted an aggregate of 50,000 options in tandem with stock
appreciation rights to acquire from TCI shares of TINTA Series A Stock
owned by it. Each such grant of options vests evenly over 5 years with such
vesting period beginning August 4, 1995, first becomes exercisable
beginning August 4, 1996 and expires on August 4, 2005. Mr. Vierra's grant
of 400,000 options in tandem with stock appreciation rights represents
30.7% of the total options granted pursuant to the International Plan and,
together with the grant by TCI of options in tandem with stock appreciation
rights to purchase its ownership of TINTA Series A Stock, represents 29.6%
of all options granted in 1995 to purchase TINTA Series A Stock.
(4) On December 13, 1995, pursuant to the 1994 Plan, certain executive officers
were granted an aggregate of 2,650,000 options in tandem with stock
appreciation rights to acquire shares of TCI Group Series A Stock and an
aggregate of 675,000 options in tandem with stock appreciation rights to
acquire shares of Liberty Group Series A Stock. Additionally, the Company
has a stock incentive plan, the Tele-Communications, Inc. 1995 Stock
Incentive Plan (the "1995 Plan"). On December 13, 1995, pursuant to the
1995 Plan, certain key employees were granted an aggregate of 2,757,500
options in tandem with stock appreciation rights to acquire shares of TCI
Group Series A Stock and an aggregate of 436,000 options in tandem with
stock appreciation rights to acquire shares of Liberty Group Series A
Stock. Each such grant of options with tandem stock appreciation rights
vests evenly over five years with such vesting period beginning August 4,
1995, first becomes exercisable beginning on August 4, 1996 and expires on
August 4, 2005. Mr. Clouston's grant, pursuant to the 1994 Plan, of
1,000,000 options in tandem with stock appreciation rights to acquire
shares of TCI Group Series A Stock represents 37.7% of the total options
granted to purchase TCI Group Series A Stock pursuant to the 1994 Plan and,
together with the options granted to purchase TCI Group Series A Stock
pursuant to the 1995 Plan and the 1996 Plan, represents 13.5% of all
options granted in 1995 to purchase TCI Group Series A Stock.
(5) Represents the closing market price per share of TCI Group Series A Stock
on December 13, 1995.
(6) Represents the closing market price per share of Liberty Group Series A
Stock on December 13, 1995.
21
<PAGE> 25
(7) Represents the closing market price per share of TINTA Series A Stock on
December 13, 1995.
(8) The values shown are based on the Black-Scholes model and are stated in
current annualized dollars on a present value basis. The key assumptions
used in the model for purposes of this calculation include the following:
(a) a 5.65% discount rate; (b) a volatility factor based upon the
historical trading pattern of TCI Group Series A Stock; (c) the 10-year
option term; and (d) the closing price of TCI Group Series A Stock on
February 8, 1996. The actual value an executive may realize will depend
upon the extent to which the stock price exceeds the exercise price on the
date the option is exercised. Accordingly, the value, if any, realized by
an executive will not necessarily be the value determined by the model.
(9) The values shown are based on the Black-Scholes model and are stated in
current annualized dollars on a present value basis. The key assumptions
used in the model for purposes of this calculation include the following:
(a) a 5.65% discount rate; (b) a volatility factor based upon the
historical trading pattern of Liberty Group Series A Stock; (c) the 10-year
option term; and (d) the closing price of Liberty Group Series A Stock on
February 8, 1996. The actual value an executive may realize will depend
upon the extent to which the stock price exceeds the exercise price on the
date the option is exercised. Accordingly, the value, if any, realized by
an executive will not necessarily be the value determined by the model.
(10) The values shown are based on the Black-Scholes model and are stated in
current annualized dollars on a present value basis. The key assumptions
used in the model for purposes of this calculation include the following:
(a) a 5.75% discount rate; (b) a volatility factor based upon the
historical trading pattern of TINTA Series A Stock; (c) the 10-year option
term; and (d) the closing price of TINTA Series A Stock on January 15,
1996. The actual value an executive may realize will depend upon the extent
to which the stock price exceeds the exercise price on the date the option
is exercised. Accordingly, the value, if any, realized by an executive will
not necessarily be the value determined by the model.
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
of TCI. The following table shows each exercise of stock options and SARs during
the year ended December 31, 1995 by each of the named executive officers of TCI
and the December 31, 1995 number and year-end value of unexercised options and
SARs on an aggregated basis:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, DECEMBER 31,
1995(#) 1995($)
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) $ UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Bob Magness
Exercisable
TCI Group Series A Stock...... -- -- 600,000 $4,425,000
Liberty Group Series A
Stock....................... -- -- 150,000 $1,518,750
Unexercisable
TCI Group Series A Stock...... -- -- 1,400,000 $5,825,000
Liberty Group Series A
Stock....................... -- -- 350,000 $1,731,250
John C. Malone
Exercisable
TCI Group Series A Stock...... -- -- 600,000 $4,425,000
Liberty Group Series A
Stock....................... -- -- 150,000 $1,518,750
Unexercisable
TCI Group Series A Stock...... -- -- 1,400,000 $5,825,000
Liberty Group Series A
Stock....................... -- -- 350,000 $1,731,250
</TABLE>
22
<PAGE> 26
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, DECEMBER 31,
1995(#) 1995($)
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) $ UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Fred A. Vierra
Exercisable
TCI Group Series A Stock...... 9,714 $ 100,054 150,000 $ 946,250
Liberty Group Series A
Stock....................... -- -- 37,500 $ 327,188
TINTA Series A Stock.......... -- -- -- --
Unexercisable
TCI Group Series A Stock...... -- -- 250,000 $1,203,750
Liberty Series A Stock........ -- -- 62,500 $ 422,813
TINTA Series A Stock.......... -- -- 400,000 $2,700,000
Brendan R. Clouston
Exercisable
TCI Group Series A Stock...... -- $2,396,875(1) 265,000 $1,794,375
Liberty Group Series A
Stock....................... -- $ 873,438(1) 66,250 $ 618,281
Unexercisable
TCI Group Series A Stock...... -- -- 1,610,000 $6,733,750
Liberty Group Series A
Stock....................... -- -- 152,500 $1,334,063
Donne F. Fisher
Exercisable
TCI Group Series A Stock...... -- -- 40,000 $ 135,000
Liberty Group Series A
Stock....................... -- -- 10,000 $ 48,750
Unexercisable
TCI Group Series A Stock...... -- -- 160,000 $ 540,000
Liberty Group Series A
Stock....................... -- -- 40,000 $ 195,000
</TABLE>
- ---------------
(1) Mr. Clouston received an aggregate payment of $3,270,313 from the Company
(based on the market value of TCI Group Series A Stock of $19.875 per share
and Liberty Group Series A Stock of $27.50 per share) in September of 1995,
in cancellation of his options with tandem stock appreciation rights
covering 325,000 shares of TCI Group Series A Stock and 81,250 shares of
Liberty Group Series A Stock.
Employment Contracts and Termination of Employment and Change of Control
Arrangements. Effective November 1, 1992, the employment agreements between TCIC
and Mr. Magness and Dr. Malone, as amended, were further amended and restated.
Pursuant to an Assignment and Assumption Agreement, dated August 4, 1994, the
payment, performance and other obligations of such employment agreements were
assumed by TCI. The term of each agreement is extended daily so that the
remainder of the employment term shall at all times on and prior to the
effective date of the termination of employment as provided by each agreement be
five years. Dr. Malone's and Mr. Magness' employment agreements provide for
annual salaries of $800,000, subject to increase upon approval of the Board of
Directors. During 1995, Dr. Malone and Mr. Magness were each given a salary
increase such that their annual salary is currently $850,000. Additionally,
these employment agreements provide for personal use of the Company's aircraft
and flight crew, limited to an aggregate value of $35,000 per year.
Dr. Malone's employment agreement provides, among other things, for
deferral of a portion (40% in 1993 and not in excess of 40% thereafter) of the
monthly compensation payable to him. Pursuant to a letter agreement entered into
between Dr. Malone and the Company subsequent to the date of his employment
agreement, Dr. Malone deferred $150,000 in 1993 in lieu of 40% of his
compensation for such year. The deferred amounts will be payable in monthly
installments over a 20-year period commencing on the
23
<PAGE> 27
termination of Dr. Malone's employment, together with interest thereon at the
rate of 8% per annum compounded annually from the date of deferral to the date
of payment. The amendment also provides for the payment of certain benefits,
discussed below.
Mr. Magness' and Dr. Malone's agreements described above also provide that
upon termination of such executive's employment by the Company (other than for
cause, as defined in the agreement), or if Mr. Magness or Dr. Malone elects to
terminate the agreement because of a change in control of the Company, all
remaining compensation due under the agreement for the balance of the employment
term shall be immediately due and payable.
Dr. Malone's and Mr. Magness' agreements provide that during their
employment with the Company and for a period of two years following the
effective date of their termination of employment with the Company, unless
termination results from a change in control of the Company, they will not be
connected with any entity in any manner, as defined in the agreement, which
competes in a material respect with the business of the Company. However, the
agreements provide that both executives may own securities of any corporation
listed on a national securities exchange or quoted in the Nasdaq System to the
extent of an aggregate of 5% of the amount of such securities outstanding.
Dr. Malone's agreement also provides that in the event of termination of
his employment with the Company, he will be entitled to receive 240 consecutive
monthly payments of $15,000 (increased at the rate of 12% per annum compounded
annually from January 1, 1988 to the date payment commences), the first of which
will be payable on the first day of the month succeeding the termination of Dr.
Malone's employment. In the event of Dr. Malone's death, his beneficiaries will
be entitled to receive the foregoing monthly payments. The Company currently
owns a whole-life insurance policy on Dr. Malone, the face value of which is
sufficient to meet its obligation under the salary continuation arrangement. The
premiums payable by the Company on such insurance policy are currently being
funded through earnings on the policy. Dr. Malone has no interest in this
policy.
The Company pays a portion of the annual premiums (equal to the "PS-58"
costs) on three whole-life insurance policies of which Dr. Malone is the insured
and trusts for the benefit of members of his family are the owners. The Company
is the designated beneficiary of the proceeds of such policies less an amount
equal to the greater of the cash surrender value thereof at the time of Dr.
Malone's death and the amount of the premiums paid by the policy owners.
Dr. Malone deferred a portion of his monthly compensation under his
previous employment agreement. Such deferred compensation (together with
interest thereon at the rate of 13% per annum compounded annually from the date
of deferral to the date of payment) will continue to be payable under the terms
of the previous agreement. The rate at which interest accrues on such previously
deferred compensation was established in 1983 pursuant to such earlier
agreement.
Effective January 1, 1992, the Company entered into an employment agreement
with Mr. Fisher which provided for a salary of $375,000 in the first year with
annual increases of $25,000 in each succeeding year of his employment term. The
term of the agreement (of which his initial term was January 1, 1992 through
December 31, 1996) was extended daily so that the remainder of the employment
term would at all times be five years unless Mr. Fisher's employment was
terminated as provided by the agreement. Mr. Fisher's employment agreement
provided for the restricted stock grant of WestMarc Preferred Stock discussed
below in "CONCERNING MANAGEMENT--Certain Relationships and Related Transactions"
and provided for personal use of the Company's aircraft and flight crew, limited
to an aggregate value of $35,000 per year.
Effective January 1, 1996, Mr. Fisher resigned as an executive officer of
the Company and the Company and Mr. Fisher entered into a consulting agreement.
During the term of the consulting agreement, which extends until January 1, 2006
unless sooner terminated as provided in the agreement, Mr. Fisher is obligated
to provide consulting services for up to 70 hours per month and 700 hours during
any period of twelve consecutive months as and if requested by the Company's
chief executive officer. Whether or not his services are requested, Mr. Fisher
will receive compensation as follows: (i) during the period from January 1, 1996
through December 31, 2000, inclusive, the rate of $475,000 per annum, increased
annually by the amount of
24
<PAGE> 28
$25,000 per annum in each successive year of such period commencing January 1,
1997 and (ii) from and after January 1, 2001 throughout the balance of the Term,
the rate of $500,000 per annum. If he dies before the end of the term of his
consulting services, the Company is required to pay his designated beneficiaries
a lump sum equal to one year's compensation at the then-current rate. During the
term of the agreement, Mr. Fisher will continue to be entitled to participate
in, and to be accorded all rights and benefits under, all group insurance
policies (including, but not limited to, all disability, life, health and
medical insurance policies) maintained by the Company for the benefit of its
employees. The consulting agreement also provides for Mr. Fisher's personal use
of the Company's aircraft and flight crew, limited to an aggregate value of
$35,000 per year.
Under a prior employment agreement between Mr. Fisher and the Company, a
portion of Mr. Fisher's salary was deferred, and the deferred amounts, plus
interest at an annual rate of 13%, were to be paid to him in 240 monthly
installments which would have commenced on the date of termination of his
full-time employment with the Company. The consulting agreement provides for
such payment to be made to Mr. Fisher in 240 monthly installments of $21,425.92
each, without interest, commencing on January 1, 2001, with any remaining
payments due after Mr. Fisher's death being paid in a lump-sum to his designated
beneficiaries. Similarly, Mr. Fisher's 1992 employment agreement with the
Company provided for Mr. Fisher to receive, commencing on termination of his
employment, 240 consecutive monthly salary continuation payments of $6,250,
increased at the rate of 12% per annum, compounded annually from January 1, 1988
to the date of such termination. The consulting agreement provides that such
salary continuation payments will be made in 240 consecutive monthly payments of
$27,271.84 each, without interest, commencing on January 1, 2001, with any
remaining payments due after Mr. Fisher's death being made to his designated
beneficiaries.
Mr. Fisher's consulting agreement provides that during its term, Mr. Fisher
will not be connected in any manner specified with any entity which competes in
a material respect with the business of the Company; however, he may own
securities of any corporation listed on a national securities exchange or quoted
in the Nasdaq System to the extent of an aggregate of 5% of the amount of such
securities outstanding.
International and TCI have entered into an Amended and Restated Employment
Agreement with Mr. Vierra relating to Mr. Vierra's employment with International
as Vice Chairman and Chief Executive Officer, providing for a base salary of
$650,000 per year. Mr. Vierra's salary is subject to annual review by the
International board of directors, which may in its sole discretion increase his
salary. Mr. Vierra's salary for 1995 is currently set at $650,000. Mr. Vierra's
employment agreement provides for the deferral of a portion of each monthly
salary payment so as to result in the deferral of salary at the rate of $250,000
per annum. The deferred amounts are to be paid in monthly installments over a
240-month period commencing on the later of December 31, 1998 and the
termination of Mr. Vierra's full-time employment with International, together
with interest thereon at the rate of 8% per annum compounded annually from the
date of deferral to the payment date. In the event of Mr. Vierra's death, all
outstanding deferred amounts will be paid in a lump sum to his beneficiaries.
While he is employed by International pursuant to his employment agreement,
Mr. Vierra is entitled to participate in all formal incentive compensation
plans, stock incentive plans, employee stock purchase plans, retirement plans
and insurance plans or policies adopted for the benefit of TCI's or
International's executive officers or employees generally. Additionally, Mr.
Vierra's employment agreement provides for personal use of TCI's aircraft and
flight crew, limited to an aggregate value of $35,000 per year.
Mr. Vierra's employment agreement has a stated termination date of December
31, 1998. It also provides that upon an earlier termination of Mr. Vierra's
employment by International without cause, all remaining compensation due under
such agreement for the balance of the employment term would become immediately
due and payable to Mr. Vierra. Upon his death during the employment term,
International would pay to Mr. Vierra's beneficiaries a lump sum in an amount
equal to the lesser of (i) the compensation due under his employment agreement
for the balance of the employment term and (ii) one year's salary. In the event
of his disability, International would continue to pay Mr. Vierra his annual
salary as and when it would have otherwise become due until the first to occur
of the end of the employment term or the date of his death.
25
<PAGE> 29
Mr. Vierra's agreement further provides that during his employment with
International and for the longer of a period of two years following the
effective date of his termination of employment or if Mr. Vierra terminates his
employment before the end of the term of his employment in breach of the
employment agreement, or if Mr. Vierra is terminated "for cause" (as defined in
the employment agreement) by International, until December 31, 1998, he will not
be connected with any entity in any manner, as defined in the agreement, which
competes in a material respect with the business of International or any of
International's or TCI's majority owned subsidiaries. However, the agreement
provides that Mr. Vierra may own securities of any corporation listed on a
national securities exchange or quoted in the Nasdaq National Market System to
the extent of an aggregate of 5% of the amount of such securities outstanding.
Under the employment agreement, substantially all of Mr. Vierra's business time,
attention and efforts will be devoted to the affairs of International.
By the terms of the WestMarc Preferred Stock held by a number of the
Company's officers and directors, if a "change in control" of the Company
occurs, all of the WestMarc Preferred Stock would be subject to redemption at
the option of WestMarc during the 60-day period following the occurrence of such
"change in control" and, if WestMarc does not elect to exercise such redemption
right, each holder of WestMarc Preferred Stock could elect during the
immediately succeeding 60-day period to require WestMarc to redeem such holder's
shares. The redemption price per share in either event would be the Liquidation
Price of such share ($32,250 per share plus accrued but unpaid dividends as of
the redemption date) plus, if redeemed prior to January 3, 2010, a premium,
which is currently 14% of the Liquidation Price and declines 1% annually on each
January 3. The WestMarc Preferred Stock defines "change in control" as occurring
at such time as either (i) none of Bob Magness, John Malone, or any lineal
descendent of such persons serves on the Board of Directors of the Company, or
(ii) Bob Magness, John Malone and their estates and heirs cease to own, in the
aggregate, securities possessing at least 25% of the combined voting power of
the securities of the Company that are entitled to vote generally in the
election of directors of the Company, on a fully diluted basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's compensation committee are Messrs. Robert A.
Naify and John W. Gallivan, both directors of the Company. Neither Mr. Naify nor
Mr. Gallivan are or were ever officers of the Company or any of its
subsidiaries.
Dr. Malone is an executive officer and a director of TCI and is Chairman of
the Board and a member of the compensation committee of International.
Mr. R.E. Turner, a director of the Company through October 4, 1995, is the
Chairman of the Board and President of Turner Broadcasting System, Inc. ("TBS")
and the beneficial owner of 67.6% of the total voting power of all outstanding
TBS stock as of December 31, 1995. Mr. Fred A. Vierra, an Executive Vice
President of the Company, serves on the compensation committee of the Board of
Directors of TBS. During the year ended December 31, 1995, the Company and its
affiliates paid approximately $128 million to purchase certain cable television
programming from TBS.
During the year ended December 31, 1995, the Company paid approximately
$1.8 million to TBS relating to the lease of a satellite transponder. The
Company is committed to pay approximately $9 million through the year 2000
pursuant to such lease.
During the year ended December 31, 1995, the Company and its affiliates
paid license fees of approximately $1.5 million to TBS for the rights to exhibit
certain motion pictures.
The TBS SuperStation signal is retransmitted by a common carrier, Southern
Satellite Systems, Inc. ("Southern"), which is controlled by an indirect wholly
owned subsidiary of the Company. Southern is compensated by the local cable
systems receiving the retransmission of the TBS SuperStation and does not have a
contract with, or receive compensation from, TBS with respect to such
retransmission.
TBS and the Company each own a 44% indirect interest in SportSouth Network,
Ltd. ("SportSouth"), a limited partnership that operates a regional sports
network serving the Southeast United States. SportSouth's revenue is primarily
derived from the sale of advertising and the subscription sale of its service to
cable television operators.
26
<PAGE> 30
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Neither the report of the Compensation Committee of the Board of Directors
(the "Compensation Committee") nor the stock performance graphs which follow
such report shall be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
Compensation Philosophy. The Compensation Committee's compensation
philosophy is based on the belief that a link should exist between executive
compensation and the return on investment provided to stockholders as reflected
by the appreciation in the price of the Company's stock. In applying this
philosophy, the Compensation Committee has developed and implemented a
compensation policy which seeks to attract and retain highly skilled and
effective executives with the business experience and acumen necessary for
achievement of the long-term business objectives of the Company and to align the
financial interests of the Company's senior executives with those of its
stockholders. The Company attempts to realize these goals by providing
competitive compensation and linking a substantial portion of the compensation
to the enhancement of stockholder value.
The Company's executive compensation is based principally on two
components -- salary and equity-based incentives -- each of which is intended to
serve the Company's overall compensation philosophy. The Compensation Committee
uses independent compensation consultants and compensation surveys furnished and
evaluated by such consultants to provide advice and data to assist it in
developing compensation programs that are competitive with other
similarly-situated cable/media companies and which reinforce the Company's
objective of aligning executive compensation with the interests of the Company's
stockholders.
Base Salary. Base salary for executive officers is generally targeted at or
below the median for executives with comparable qualifications, experience and
responsibilities at other companies in the cable/media industry. In the
aggregate, executive salaries are consistent with this philosophy. Base salary
levels are also based on the employees' relative levels of seniority and
responsibility. Although the 1996 Incentive Plan permits cash bonuses and other
performance based awards, the Company does not usually pay cash bonuses to its
senior executives.
During 1992, TCIC undertook a review of the compensation paid to its key
employees and retained independent consultants to advise it in connection with
setting base salaries. The consultants provided the Compensation Committee with
a survey of the base salaries, bonuses and long-term incentive compensation
packages of the chief executive officers and certain other senior officers at 93
companies in the media industry, including 47 in the cable television industry,
and 394 companies in various other industries. The Compensation Committee then
established new salary levels for its executive officers below the median of the
annual salaries and bonuses of officers in comparable positions and in media
companies included in the survey.
In connection with this review, in late 1992, TCIC entered into employment
agreements with six of its executive officers, including the Chief Executive
Officer and three of the four other named executive officers. Certain of the
Company's employment agreements with executives (not including any of the named
executives) required minimum automatic increases of $25,000 per year in base
salary. Four of the agreements, including the Chief Executive Officer's
agreement, established a minimum annual salary and provided that any increases
would be in the discretion of the Board of Directors. Generally, the executive
officers have been paid in accordance with the salary levels set in 1992 or
pursuant to their employment agreements, with modest increases in the cash
compensation paid to the Company's executives in 1995. Certain terms of the
employment agreements of certain named executive officers are described in
"CONCERNING MANAGEMENT -- Executive Compensation -- Employment Contracts and
Termination of Employment and Change of Control Arrangements" above.
Equity-Based Incentives. In order to make the overall compensation packages
of the Company's executives and other key employees competitive with other
companies in the cable/media industry, the Compensation Committee has emphasized
equity-based incentives rather than salary and bonuses. The Compensation
Committee believes that reliance upon such incentives is advantageous to the
Company because they foster a long-term commitment by the recipient to the
Company and motivate the employees to seek to improve the long-term market
performance of the Company's stock.
27
<PAGE> 31
During 1995, the Company undertook a review of the compensation paid to its
key employees and retained independent consultants to advise it in connection
with making grants of long-term equity based compensation awards. The
consultants provided the Compensation Committee with a survey of the
compensation packages of the chief executive officers and certain other senior
officers at 13 companies in the cable/media industry. The Compensation Committee
then evaluated the surveys and granted awards to the Company's executive
officers at a level below the median of the awards given to officers in
comparable positions in the cable/media companies included in the survey. Due to
the long-term focus of equity based awards, the Compensation Committee
determined that it was in the best interest of the Company to evaluate such
awards every few years rather than evaluate and grant such awards on an annual
basis. Accordingly, unless circumstances change, the Compensation Committee does
not currently anticipate granting new equity based awards in 1996 to the named
executive officers.
In connection with this review, the Compensation Committee authorized the
grant of stock options in tandem with stock appreciation rights to certain named
executive officers and other key employees. The aggregate number of shares of
the TCI Group Series A Stock covered by the options granted to the named
executives in 1995 represents 0.52% of the total number of shares of such series
outstanding. The aggregate number of shares of the Liberty Group Series A Stock
covered by the options granted to the named executives in 1995 represents 0.35%
of the total number of shares of such series outstanding. The aggregate number
of shares of the TINTA Series A Stock covered by the options granted to the
named executives in 1995 represents 0.42% of the total number of shares of such
series outstanding.
In addition, in connection with this review, the Compensation Committee
authorized the grant of restricted stock to certain named executive officers and
others. The aggregate number of shares of each of the TCI Group Series A Stock,
Liberty Group Series A Stock and TINTA Series A Stock covered by the restricted
stock grants to the named executives in 1995 represents less than 0.1% of the
total number of shares of such series outstanding. The stock options in tandem
with stock appreciation rights and the restricted stock awards are more fully
described in "CONCERNING MANAGEMENT -- Executive Compensation -- Summary
Compensation Table of TCI" and "CONCERNING MANAGEMENT -- Executive
Compensation -- Option/SAR Grants Table of TCI".
The above-described grants also were made after a review of the exercise
prices, numbers and dates of the awards of the stock options, tandem stock
appreciation rights, and restricted stock already held by the Company's
executives and other key employees. The Compensation Committee based its grants
for 1995 in part upon the level of the executive or other key employee's
responsibilities, experience and expertise and the degree to which such person
is in a position to contribute to the achievement or advancement of the
Company's financial and strategic objectives. Specifically, with respect to the
grant to Dr. Malone of 1,000,000 options in tandem with stock appreciation
rights to purchase TCI Group Series A Stock and the grant of 250,000 options in
tandem with stock appreciation rights to purchase Liberty Group Series A Stock,
the Compensation Committee determined that the existing compensation package
held by Dr. Malone was below the median of similar compensation paid to the
chief executive officers of the companies in the survey group.
Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code (the "Code") and the U.S. Treasury regulations relating thereto
restrict publicly traded companies from claiming or receiving a tax deduction on
compensation paid to an executive officer in excess of $1 million, unless such
compensation is performance based. As such, many companies with executive pay
levels exceeding the $1 million limit have revised or amended current
compensation programs to qualify the payments thereunder for deductibility. The
Compensation Committee has taken no action with respect to the Company's
executive compensation plans that were in effect at the time of the adoption of
Section 162(m) in 1994 and has not conformed the 1995 Plan to such requirements.
The 1996 Plan has been conformed to the requirements of Section 162(m) to the
extent that the Compensation Committee has discretionary authority under the
1996 Plan to grant awards which conform to the requirements of Section 162(m).
COMPENSATION COMMITTEE
John W. Gallivan
Robert A. Naify
28
<PAGE> 32
STOCK PERFORMANCE GRAPHS
On August 3, 1995, TCI amended its Restated Certificate of Incorporation
to, among other things, (i) redesignate its TCI Class A Common Stock as TCI
Group Series A Stock and TCI's Class B Common Stock as TCI Group Series B Stock
and (ii) authorize the Liberty Group Series A Stock and the Liberty Group Series
B Stock. Thereafter, TCI distributed to the holders of TCI common stock
one-fourth of a share of the corresponding series of Liberty Media Group common
stock in respect of each share of TCI Group common stock held of record as of
August 4, 1995, the record date for such distribution.
The following graphs compare (i) the yearly percentage change in the
cumulative total stockholder return on the Class A Common Stock of TCI (and its
predecessor TCIC) from December 31, 1990 to August 9, 1995 (the date the TCI
Group Series A Stock and the Liberty Group Series A Stock commenced trading on
the Nasdaq National Market), (ii) the percentage change in the cumulative total
stockholder return on the TCI Group Series A Stock from August 9, 1995 to
December 31, 1995, and (iii) the percentage change in the cumulative total
stockholder return on the Liberty Group Series A Stock from August 9, 1995 to
December 31, 1995. The Class A Common Stock and the TCI Group Series A Stock
graphs are compared for each time period with the cumulative total return on the
Standard & Poor's 500 Stock Index and with a selected peer group of 6 companies
engaged in the cable television industry (including the Company): Cablevision
Systems Corp., Jones Intercable, Inc., TCA Cable TV, Inc., Comcast Corporation
and Time Warner, Inc. The Liberty Group Series A Stock graph is compared for the
time period with the cumulative total return on the Standard & Poor's 500 Stock
Index and with a selected peer group of 5 companies engaged in the cable
television and television programming industry (including the Company):
Cablevision Systems Corp., Time Warner, Inc., Turner Broadcasting System, Inc.,
and Viacom Inc.
The comparisons assume $100 was invested at the beginning of each time
period and assume the reinvestment of dividends.
TOTAL RETURN TO STOCKHOLDERS
CLASS A COMMON STOCK
DECEMBER 31, 1990 -- AUGUST 9, 1995
<TABLE>
<CAPTION>
INDEXED RETURNS
YEARS ENDING
DEC90 DEC91 DEC92 DEC93 DEC94 8/9/95
======================================================================================
<S> <C> <C> <C> <C> <C> <C>
S&P 500 INDEX 100 130.47 140.41 154.56 156.60 194.53
TELE-COMMUNICATIONS, INC. 100 232.68 290.85 414.04 297.70 444.85
PEER GROUP 100 116.21 149.02 238.28 182.20 227.06
</TABLE>
29
<PAGE> 33
TOTAL RETURN TO STOCKHOLDERS
TCI GROUP SERIES A STOCK
AUGUST 9, 1995 -- DECEMBER 31, 1995
<TABLE>
<CAPTION>
INDEXED RETURNS
YEARS ENDING
8/9/95 DEC95
===================================================================
<S> <C> <C>
S&P 500 INDEX 100 111.37
PEER GROUP 100 89.69
TELE-COMM -SER A TCI GRP 100 76.26
</TABLE>
TOTAL RETURN TO STOCKHOLDERS
LIBERTY GROUP
SERIES A COMMON STOCK
AUGUST 9, 1995 -- DECEMBER 31, 1995
<TABLE>
<CAPTION>
INDEXED RETURNS
YEARS ENDING
8/9/95 DEC95
===================================================================
<S> <C> <C>
S&P 500 INDEX 100 111.37
PEER GROUP 100 90.60
TELE-COMM -LIBERTY MEDIA GROUP 100 109.14
</TABLE>
30
<PAGE> 34
COMPENSATION OF DIRECTORS
The standard arrangement by which TCI's directors are compensated for all
services (including any amounts payable for committee participation or special
assignments) as a director is as follows: each director receives a fee of $500
plus travel expenses for attendance at each meeting of the Board of Directors
and each director who is not a full-time employee of TCI receives additional
compensation of $30,000 per year. In addition, the Company's stockholders
approved the Director Stock Option Plan and in connection with such approval,
approved the grant effective as of November 16, 1994, to each person that as of
such date was a member of the Board of Directors and was not an employee of the
Company or any of its subsidiaries, of options to purchase 50,000 shares of TCI
Group Series A Stock and 12,500 shares of Liberty Group Series A Stock. Such
options have a purchase price of $16.50 per share and $22.00 per share,
respectively, and vest and become exercisable over a five-year period,
commencing on November 16, 1995, and will expire on November 16, 2004. Each
person who becomes a director of the Company and is not an employee of the
Company or any of its subsidiaries will be automatically granted similar options
upon such person's becoming a director. Additionally, each person who is an
employee and director of the Company who ceases to be an employee but remains a
director will be automatically granted similar options upon such event. The
exercise price of each such subsequently granted option will be equal to the
fair market value of the TCI Group Series A Stock on the date the option is
granted. In general, such fair market value will be 95% of the last sale price
for the shares of the TCI Group Series A Stock as reported on the Nasdaq Stock
Market on the date of the grant, with the price resulting from such percentage
rounded down to the nearest quarter dollar.
The Company has a deferred compensation plan for all non-employee
directors. Each director may elect to defer receipt of all, but not less than
all, of the annual compensation (excluding meeting fees and reimbursable
expenses) payable to the director for serving on the Company's Board of
Directors for each calendar year for which such deferral is elected. An election
to defer may be made as to the compensation payable for a single calendar year
or period of years. Any compensation deferred shall be credited to the
director's account on the last day of the quarter for which compensation has
accrued. Such deferred compensation bears interest from the date credited to the
date of payment at a rate of 8% per annum in 1993 and 120% of the applicable
federal long-term rate thereafter, compounded annually.
A director may elect payment of deferred compensation to be made at a
specified year in the future or upon termination of the director's service as
director of the Company. Each director may elect payment in a lump sum, three
substantially equal consecutive annual installments or five substantially equal
consecutive annual installments. In the event that a director dies prior to
payment of all the amounts payable pursuant to the plan, any amounts remaining
in the director's deferred compensation account, together with accrued interest
thereon, shall be paid to the director's designated beneficiary.
There are no other arrangements whereby any of TCI's directors received
compensation for services as a director during 1995 in addition to or in lieu of
that specified by the aforementioned standard arrangement.
BOARD MEETINGS
During 1995, there were 6 meetings of the full Board of Directors of the
Company. Except for Mr. Turner, no director attended fewer than 75% of the
meetings of the Board of Directors or of any committee of which he is a member.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Executive Committee, an Audit Committee and a
Compensation Committee. There is no standing nomination committee of the
Company's Board of Directors.
The members of the Executive Committee are John W. Gallivan, Bob Magness,
and John C. Malone. The Executive Committee exercises all of the powers and
authority of the Board of Directors between meetings of the entire Board, other
than such powers and authority as the Delaware General Corporation Law (the
"DGCL") specifically prohibits an executive committee from performing. The
Executive Committee took all action by unanimous written consent and therefore
held no meetings during 1995.
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<PAGE> 35
The members of the Audit Committee are Donne F. Fisher, John W. Gallivan,
and Robert A. Naify. The duties of the Audit Committee are to review and monitor
the Company's financial reports and accounting practices to ascertain that they
are within acceptable limits of sound practice, to receive and review audit
reports submitted by the Company's independent auditors and by its internal
auditing staff and make such recommendations to the Board as may seem
appropriate to the Committee to assure that the interests of the Company are
adequately protected and to review all related party transactions and potential
conflict-of-interest situations. The Audit Committee of the Company held 1
meeting during 1995.
The members of the Compensation Committee are John W. Gallivan and Robert
A. Naify. The functions of the Compensation Committee are to review and make
recommendations to the Board of Directors concerning the compensation of the
executive officers of the Company, to consider and make recommendations to the
Board of Directors concerning existing and proposed employment agreements
between the Company and its executive officers and to administer the 1994 Plan,
the 1995 Plan, and, if approved by stockholders, the 1996 Plan. The Compensation
Committee of the Company held 1 meeting during 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others. Pursuant to a Restricted Stock
Award Agreement, dated December 10, 1992, the Company transferred to Mr. Fisher,
a director and until January 1, 1996, an officer of the Company, 124.03 shares
(having a liquidation value of $4 million) of WestMarc Preferred Stock owned by
the Company, subject to forfeiture in the event of certain circumstances from
the date of grant through February 1, 2002, with the number of shares subject to
forfeiture decreasing by 10% on February 1 of each year. Upon Mr. Fisher's
resignation as an officer of the Company effective January 1, 1996, he acquired
vested title to 37.209 of such shares of WestMarc Preferred Stock and forfeited
the balance of such shares. As described below, effective as of January 31,
1996, the 37.209 vested shares of WestMarc Preferred Stock owned by Mr. Fisher
were used by one of his affiliates as the consideration for the purchase of
certain partnership interests held by subsidiaries of the Company.
In 1989, ECP Holdings, Inc., a subsidiary of the Company ("ECP"), and
Halcyon Communications, Inc., an Oklahoma corporation which is not an affiliate
of the Company ("HCI"), formed Halcyon Communications Partners, an Oklahoma
general partnership ("HCP"), for the purpose of acquiring, owning and operating
cable television systems. In 1994, HCI and American Televenture of Minersville,
Inc., a subsidiary of the Company ("ATM"), as general partners, and three other
subsidiaries of the Company, TCI Cablevision of Nevada, Inc. ("TCINV"), TEMPO
Cable, Inc. ("Tempo Cable"), and TCI Cablevision of Utah, Inc. ("TCIU") as
limited partners, formed Halcyon Communications Limited Partnership, an Oklahoma
limited partnership ("HCLP"), for the purpose of acquiring, owning and operating
certain other cable television systems. Effective as of January 31, 1996, Fisher
Communication Associates, L.L.C., a Colorado limited liability company ("Fisher
Communications") controlled by Mr. Fisher, purchased one-third of ECP's
partnership interest in HCP and one-third of the partnership interest of each of
ATM, TCINV, TCIU and Tempo Cable in HCLP, a ten-year option to purchase the
balance of ECP's partnership interest in HCP and ten-year options to purchase
the balance of the partnership interest in HCLP of each of ATM, TCINV, TCIU and
Tempo Cable. The purchase price for each such partnership interest purchased by
Fisher Communications consisted of shares of WestMarc Preferred Stock. The
purchase price for each such option acquired by Fisher Communications was $100
in cash, and each such option is exercisable for cash in a specified amount. The
number of WestMarc Preferred Stock delivered to each of the Company's
subsidiaries named above as consideration for one-third of its partnership
interest in HCP or HCLP, and the cash exercise
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<PAGE> 36
price which Fisher Communications would be required to pay in order to exercise
the options granted by those subsidiaries, are as follows:
<TABLE>
<CAPTION>
NUMBER
OF SHARES CASH
OF WESTMARC EXERCISE PRICE
PREFERRED STOCK OF OPTION
--------------- --------------
<S> <C> <C>
ECP...................................................... 14.8836 $1,200,000
ATM...................................................... 0.5224 42,120
TCINV.................................................... 2.8911 233,100
TCIU..................................................... 4.3557 351,180
Tempo Cable.............................................. 14.5562 1,173,600
------- ----------
37.2090 $3,000,000
======= ==========
</TABLE>
The WestMarc Preferred Stock is not publicly traded. The dividend,
liquidation, and redemption features of the WestMarc Preferred Stock are
determined by reference to "Liquidation Price," which is defined, per share, as
the sum of (i) $32,250 plus (ii) an amount equal to all dividends which accrued
during any quarterly dividend period and were not paid in full at the end of
that period or subsequently. The dividend rate on the WestMarc Preferred Stock
is 12% per annum. See also "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT -- Security Ownership of Management".
The Company has negotiated an employment agreement with Tony Coelho, which
when executed by the parties will become effective as of October 1, 1995, with
respect to the terms of Mr. Coelho's employment as the Chairman of the Board and
Chief Executive Officer of the education business which is now conducted by the
Company's ETC w/tci, Inc. subsidiary ("ETC w/tci"). The employment agreement
will run through September 30, 2000. Under the terms of the employment
agreement, Mr. Coelho will be entitled to an annual base salary of not less than
$400,000 as well as benefits commensurate with similarly situated executives of
the Company. In the event that Mr. Coelho's employment is terminated by the
Company other than as a result of death or for cause (as defined in the
employment agreement), Mr. Coelho will be entitled to receive all remaining
compensation to which he would have been entitled through the term of his
employment agreement. In connection with his employment, Mr. Coelho was granted
options to acquire 100,000 shares of the Series A TCI Group Common Stock of the
Company at an exercise price of $17 per share subject to customary terms and
will be permitted to acquire 15% of the equity capital of ETC w/tci at a
founder's valuation. Under certain circumstances, Mr. Coelho will be entitled to
increase his percentage ownership in ETC w/tci to up to 20%. The terms of the
agreements under which Mr. Coelho will acquire his equity interest in ETC w/tci
will afford him the right at any time after September 30, 2000 to require the
Company to purchase his equity interest at fair market value and require the
Company to purchase his entire equity interest at fair market value on September
30, 2001.
The Board of Directors has authorized the Company to permit certain of its
executive officers to acquire equity interests in certain of the Company's
subsidiaries. In connection therewith, the Board has approved the acquisition by
Brendan Clouston, an executive officer of the Company, of 1% of the net equity
of the companies which own and operate the satellite, telephony and internet
businesses of the Company. Additionally, the Board has approved the acquisition
by Larry Romrell, an executive officer of the Company, of 1% of the net equity
of the companies which own and operate the satellite and telephony businesses of
the Company. The terms and structure of the foregoing transactions have not yet
been determined.
Mr. Clouston was granted a restricted stock award of 62 shares of WestMarc
Preferred Stock in July 1996. In addition, the Company paid Mr. Clouston
$119,970 which represents the dividends which would have been paid on the 62
shares of the WestMarc Preferred Stock granted to Mr. Clouston from January 1,
1996 to June 30, 1996. The restricted stock award is subject to forfeiture in
certain specified events prior to December 13, 2005.
Certain Business Relationships. Mr. Jerome H. Kern, a director of TCI, is
special counsel with the law firm of Baker & Botts, L.L.P., the principal
outside counsel for TCI. Fees paid to Baker & Botts, L.L.P. by
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<PAGE> 37
TCI and consolidated subsidiaries were $8.8 million for the last full fiscal
year. See also "CONCERNING MANAGEMENT -- Certain Relationships and Related
Transactions."
There is no indebtedness of management owed to the Company.
1996 INCENTIVE PLAN PROPOSAL
INTRODUCTION
The Board of Directors adopted the Tele-Communications, Inc. 1996 Incentive
Plan (the "1996 Plan") to provide a means whereby (i) employees of the Company
and its subsidiaries and (ii) independent contractors providing services to the
Company or its subsidiaries ("Eligible Participants" or individually, an
"Eligible Participant") can be awarded additional remuneration for services
rendered and encouraged to invest in capital stock of the Company, thereby
increasing such Eligible Participants' proprietary interest in the Company's
businesses, encouraging such Eligible Participants to remain in the employ of
the Company or its subsidiaries, and increasing such Eligible Participants'
personal interest in the continued success and progress of the Company and its
subsidiaries. Accordingly, on December 13, 1995, the Board of Directors of the
Company adopted the 1996 Plan and directed that the 1996 Incentive Plan Proposal
be submitted to a vote of the stockholders of the Company at the Annual Meeting.
Only the Eligible Participants may receive awards under the 1996 Plan.
There are approximately 39,000 employees eligible to receive awards under the
1996 Plan. The number of independent contractors eligible to receive awards
under the 1996 Plan is not determinable. The Compensation Committee of the Board
is invested with broad authority to select Eligible Participants to receive
awards under the 1996 Plan. The Compensation Committee may take into account the
nature of the services rendered by the Eligible Participant, and the present and
past contributions of the Eligible Participant.
NEW PLAN BENEFITS
On December 13, 1995, the Compensation Committee of the Board granted
certain executive officers of the Company an aggregate of 2,000,000 options in
tandem with stock appreciation rights to acquire shares of TCI Group Series A
Stock and 1,100,000 options in tandem with stock appreciation rights to acquire
shares of Liberty Group Series A Stock. The Compensation Committee granted
options in tandem with stock appreciation rights for the following amounts of
underlying shares: (i) Bob Magness -- 1,000,000 shares of TCI Group Series A
Stock and 250,000 shares of Liberty Group Series A Stock, (ii) Dr.
Malone -- 1,000,000 shares of TCI Group Series A Stock and 250,000 shares of
Liberty Group Series A Stock, and (iii) Peter Barton, President and Chief
Executive Officer of Liberty Media Corporation, 600,000 shares of Liberty Group
Series A Stock. See "CONCERNING MANAGEMENT -- Executive
Compensation -- Option/SAR Grants Table of TCI" for information regarding these
grants.
With respect to the grant to Mr. Barton, the exercise price of the options
in tandem with stock appreciation rights is $24 per share. None of Mr. Barton's
options are exercisable until August 4, 1996. The options will be exercisable on
a cumulative basis with 20% of the total number of shares subject to such
options exercisable on August 4, 1996, and with respect to the remaining shares
of Liberty Group Series A Stock subject to any such options, such options will
be exercisable with respect to an additional 20% as of the second, third, fourth
and fifth anniversaries of August 4, 1995.
The total present dollar value (using the Black-Scholes model) of such
grants to each of Dr. Malone and Mr. Magness was $18,676,950 and $18,676,950,
respectively, on the date of grant. The total present dollar value (using the
Black-Scholes model) of such grant to Mr. Barton was $10,903,560 on the date of
grant. For a further discussion of these grants, see "CONCERNING
MANAGEMENT -- Executive Compensation -- Summary Compensation Table of TCI" and
"CONCERNING MANAGEMENT -- Executive Compensation -- Option/SAR Grants Table of
TCI."
Except for the grants made under the 1996 Plan to the three executive
officers discussed above, the benefits or the amounts that would have been
granted in 1995 or which will be granted in the future under the
34
<PAGE> 38
1996 Plan to eligible participants are not determinable. The amounts and
benefits are not determinable because the Compensation Committee of TCI has
complete discretion over the making of any awards under the 1996 Plan and, as a
result, may choose to make awards or may choose to decline to make awards in
accordance with the Compensation Committee's then existing policies and in
accordance with the terms of the 1996 Plan. The 1996 Plan and the aforementioned
grants made thereunder are subject to, and will become effective upon approval
of, the 1996 Incentive Plan Proposal by the requisite vote of the stockholders
at the Annual Meeting.
The market value of the TCI Group Series A Stock subject to award under the
1996 Plan is $306,000,000. Such market value is based on the maximum number of
shares of TCI Group Series A Stock eligible to be awarded under the 1996 Plan
multiplied by $19.125, the last reported sales price of TCI Group Series A Stock
on the Nasdaq National Market on April 30, 1996. The market value of the Liberty
Group Series A Stock subject to award under the 1996 Plan is $109,500,000. Such
market value is based on the maximum number of shares of Liberty Group Series A
Stock eligible to be awarded under the 1996 Plan multiplied by $27.375, the last
reported sales price of Liberty Group Series A Stock on the Nasdaq National
Market on April 30, 1996.
DESCRIPTION OF THE 1996 PLAN
A copy of the 1996 Plan is attached hereto as Appendix A. The discussion of
the 1996 Plan set forth below is subject to, and qualified in its entirety by
reference to, the 1996 Plan.
General. The 1996 Plan provides (i) for stock-based awards to be made in
respect of a maximum of 16 million shares of TCI Group Series A Stock and a
maximum of 4 million shares of Liberty Group Series A Stock (subject to certain
adjustments described below) and (ii) for cash awards in amounts determined by
the Compensation Committee. TCI Group Series A Stock and Liberty Group Series A
Stock shall be hereinafter collectively referred to as the "Common Stock."
Awards may be made as grants of stock options ("Options"), stock
appreciation rights ("SARs"), restricted shares ("Restricted Shares"), stock
units ("Stock Units"), performance awards ("Performance Awards"), or any
combination thereof (collectively, "Awards"). Shares in respect of which Awards
are made may be either authorized but unissued shares of Common Stock or issued
shares reacquired by the Company, including shares purchased in the open market.
Shares of Common Stock that are subject to Awards that expire, terminate or are
annulled for any reason without having been exercised (or, with respect to
Tandem SARs deemed exercised, by virtue of the exercise of a related Option), or
are Restricted Shares or Stock Units that are forfeited prior to becoming
vested, or are subject to Awards of SARs that are exercised for cash, will
return to the pool of such shares available for grant under the 1996 Plan.
The 1996 Plan will be administered by the Compensation Committee of the
Company's Board of Directors, or such other committee as the Board may in the
future appoint, which shall be comprised of at least two persons. Each member of
the Compensation Committee shall be a member of the Board who during the
one-year period prior to service on the Compensation Committee was not, and
during such service is not, granted or awarded equity securities pursuant to the
1996 Plan or any other plan of the Company or any of its affiliates, if such
grant or award or participation in such plan would prevent such member from
being a "disinterested person" with respect to the 1996 Plan for purposes of
Rule 16b-3 of the Exchange Act. The members of the Compensation Committee of the
Company are Mr. Gallivan and Mr. Naify. See "CONCERNING MANAGEMENT -- Committees
of the Board of Directors" above.
The Compensation Committee will have broad discretion in administering the
1996 Plan, and is authorized, subject only to the express provisions of the 1996
Plan, to determine the persons to whom Awards may be made, to determine the
terms and conditions (which need not be identical) of each Award (including the
timing of the grant, the type of Award granted, the pricing and the amount of
the Award and terms related to vesting, exercisability, forfeiture and
termination), and to interpret the provisions of the 1996 Plan and each
agreement relating to Awards granted under the 1996 Plan. The determinations of
the Compensation Committee are final and binding upon all participants.
35
<PAGE> 39
Stock Options. Options granted pursuant to the 1996 Plan may be either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the Code or nonqualified stock options ("Nonqualified Option") which do not
qualify under Section 422. The Compensation Committee is authorized to designate
an Option as an Incentive Option or a Nonqualified Option.
The exercise price of all Options granted under the 1996 Plan will be fixed
by the Compensation Committee, and may be more than, less than or equal to the
fair market value of the Common Stock subject to the Option as of the date the
Option is granted. Except as otherwise provided in the 1996 Plan regarding
acceleration of Awards, no participant may be granted in any calendar year
Options covering more than 2 million shares of either TCI Group Series A Stock
or Liberty Group Series A Stock (as adjusted for stock splits, etc.).
Subject to the provisions of the 1996 Plan with respect to death,
retirement and termination of employment, the term of each Option shall be for
such period as the Compensation Committee shall determine as set forth in the
applicable agreement relating to the Award. An Option granted under the 1996
Plan shall become (and remain) exercisable during the term of the Option to the
extent provided in the applicable agreement relating to the Award and the 1996
Plan and, unless the applicable agreement relating to the Award otherwise
provides, may be exercised to the extent exercisable, in whole or in part, at
any time and from time to time during such term; provided, however, that
subsequent to the grant of an Option, the Compensation Committee, at any time
before complete termination of such Option, may accelerate the time or times at
which such Option may be exercised in whole or in part (without reducing the
term of such Option).
An Option may be exercised by written notice to the Company in accordance
with the terms of the applicable agreement and in accordance with the procedures
established by the Compensation Committee. The method of payment of the exercise
price of an Option, and of the amount required to satisfy applicable Federal,
state and local withholding tax requirements, will be determined by the
Compensation Committee and may consist of cash, a check, a promissory note, the
surrender of already owned shares of the Common Stock (or in the case of Options
on TCI Group Series A Stock, the surrender of already owned shares of TCI Group
Series B Stock and in the case of Options on Liberty Group Series A Stock, the
surrender of already owned shares of Liberty Group Series B Stock), the
withholding of shares of Common Stock issuable upon exercise of such Option, the
delivery of a properly executed exercise notice and irrevocable instructions to
a broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the purchase price, any combination of the foregoing methods of
payment or such other consideration and method of payment as may be permitted
for the issuance of shares under the DGCL. The permitted method or methods of
payment of the Option exercise price and applicable withholding taxes, if other
than cash, shall be set forth in the agreement relating to the Award and may be
subject to such conditions as the Compensation Committee deems appropriate.
Shares of Common Stock, TCI Group Series B Stock or Liberty Group Series B
Stock surrendered in payment in whole or in part of the Option exercise price
and applicable withholding taxes, and shares of Common Stock issuable upon
exercise of an Option that are withheld for such purposes, will be valued at
their fair market value on the date of exercise. In general, fair market value
is determined by reference to the last sale price for shares of the applicable
series as reported on the Nasdaq Stock Market on the relevant date. If an
Optionholder elects to have shares withheld in payment of all or part of the
amounts payable upon exercise of an Option and such election is made during a
10-day "window period" following the release of quarterly or annual statements
of the Company's sales and earnings in order to comply with the requirements of
Rule 16b-3, then for purposes of valuing the shares withheld, the Option (other
than an Incentive Option) will be deemed to have been exercised on the date
during such window period on which the highest last sale price of a share of the
relevant Common Stock is reported on the Nasdaq Stock Market, and the fair
market value of such shares shall be deemed to be such highest last reported
sale price. The Compensation Committee will have the right in its sole
discretion to approve or disapprove any election by the holder to have shares
withheld to pay the Option exercise price or withholding taxes.
36
<PAGE> 40
Unless otherwise determined by the Compensation Committee and provided in
the applicable agreement, Options shall not be transferable other than by will
or the laws of descent and distribution or pursuant to a domestic relations
order and, except as otherwise required pursuant to a domestic relations order,
Options may be exercised during the lifetime of the holder thereof only by such
holder (or his or her court appointed legal representative).
Stock Appreciation Rights. An SAR may be granted under the 1996 Plan to the
holder of an Option (a "Related Option") with respect to all or a portion of the
shares of Common Stock subject to the Related Option (a "Tandem SAR") or may be
granted separately to an eligible employee (a "Free Standing SAR"). A Tandem SAR
may be granted either concurrently with the grant of the Related Option or (if
the Related Option is a Nonqualified Option) at any time thereafter and prior to
the complete exercise, termination, expiration or cancellation of the Related
Option. A Tandem SAR will be exercisable only at the time and to the extent that
the Related Option is exercisable and may be subject to such additional
limitations on exercisability as the related agreement may provide and in no
event after the complete termination or full exercise of the Related Option.
Upon exercise of a Tandem SAR, the Related Option will be deemed to have been
exercised to the extent of the number of shares of Common Stock with respect to
which such Tandem SAR is exercised. Upon the exercise or termination of the
Related Option, the Tandem SAR will be canceled automatically to the extent of
the number of shares of Common Stock with respect to which the Related Option
was so exercised or terminated. Free Standing SARs will be exercisable at the
time, to the extent and upon the terms and conditions determined by the
Compensation Committee and set forth in the agreement relating to the Award. No
participant may be granted in any calendar year SARs covering more than 2
million shares of either TCI Group Series A Stock or Liberty Group Series A
Stock (as adjusted for stock splits, etc.).
The base price of a Tandem SAR will be the same as the exercise price of
the Related Option unless the Compensation Committee provides for a higher base
price. The base price of a Free Standing SAR will not be less than the fair
market value of the applicable Common Stock on the date of grant of the Free
Standing SAR. Upon exercise of an SAR, the holder will be entitled to receive
from the Company, for each share of applicable Common Stock with respect to
which the SAR is exercised, an amount equal to the excess of the fair market
value of a share of such Common Stock on the date of exercise over the base
price per share of such SAR. Such amount shall be paid in cash, shares of Common
Stock (valued at their fair market value on the date of exercise of the SAR) or
a combination thereof as specified in the agreement relating to the Award or, if
so provided in the agreement, either as determined by the Compensation Committee
in its sole discretion or as elected by the holder. The Compensation Committee
will have the right in its sole discretion to approve or disapprove any election
by the holder to receive cash in full or partial settlement of an SAR. As
described above with respect to Options granted under the 1996 Plan, if in order
to meet the requirement of Rule 16b-3, a holder exercises an SAR (other than one
granted in tandem with an Incentive Option) in whole or in part for cash during
a 10-day window period prescribed by such Rule, then such SAR will be deemed to
have been exercised on the day during such window period on which the highest
last sale price of a share of Common Stock is reported on the Nasdaq Stock
Market, and the fair market value of such shares shall be deemed to be such
highest reported last sale price. Unless the Compensation Committee shall
otherwise determine, to the extent a Free Standing SAR is exercisable, it will
be exercised automatically for cash on its expiration date.
The agreement relating to an Award of SARs may provide for a limit on the
amount payable to a holder upon exercise of SARs at any time or in the
aggregate, for a limit on the number of SARs that may be exercised by the holder
in whole or in part for cash during any specified period, for a limit on the
time periods during which a holder may exercise SARs and for such other limits
on the rights of the holder and other terms and conditions as the Compensation
Committee may determine.
Unless otherwise determined by the Compensation Committee and provided in
the applicable agreement, SARs shall not be transferable other than by will or
the laws of descent and distribution or pursuant to a domestic relations order
and, except as otherwise required pursuant to a domestic relations order, SARs
may be exercised during the lifetime of the holder thereof only by such holder
(or his or her court appointed legal representative).
37
<PAGE> 41
Restricted Shares. At the time of any Award of Restricted Shares, the
Compensation Committee will designate a period of time which must elapse (the
"Restriction Period") and may impose such other restrictions, terms and
conditions that must be fulfilled, before the Restricted Shares will become
vested. The Compensation Committee may determine that (a) Restricted Shares will
be issued at the beginning of the Restriction Period, in which case, such shares
will constitute issued and outstanding shares of Common Stock for all corporate
purposes, or (b) Restricted Shares will not be issued until the end of the
Restriction Period, in which case, the holder will have none of the rights of a
stockholder with respect to the shares of Common Stock covered by such Award
until such shares shall have been issued to such holder at the end of the
Restriction Period. The holder will have the right to vote Restricted Shares
issued at the beginning of the Restriction Period and to receive such dividends
and other distributions as the Compensation Committee may, in its sole
discretion, designate which are paid or distributed on such Restricted Shares,
and generally to exercise all other rights as a holder of Common Stock, except
that, until the end of the Restriction Period: (i) such holder will not be
entitled to take possession of the stock certificates representing the
Restricted Shares, (ii) such holder may not sell, transfer or otherwise dispose
of the Restricted Shares, and (iii) other than such dividends and other
distributions as the Compensation Committee may designate, the Company will
retain custody of all dividends and distributions made or declared with respect
to the Restricted Shares ("Retained Distributions") and such Retained
Distributions shall not bear interest or be segregated in a separate account. In
the case of Restricted Shares issued at the end of the Restriction Period, the
holder will be entitled to receive, to the extent specified by the Compensation
Committee only, cash or property corresponding to all dividends and other
distributions (or the economic equivalent thereof) that would have been paid,
made or declared on such Restricted Shares had such shares been issued at the
beginning of the Restriction Period (collectively, "Dividend Equivalents"), and
such Dividend Equivalents will be paid as specified by the Compensation
Committee in the applicable Award agreement. A breach of any restrictions, terms
or conditions established by the Compensation Committee with respect to any
award of Restricted Shares will cause a forfeiture of such Restricted Shares and
any Retained Distributions (including any unpaid Dividend Equivalents) with
respect thereto. The 1996 Plan also provides that the Compensation Committee may
authorize awards of cash to a holder of Restricted Shares, payable at any time
after the Restricted Shares become vested.
Upon expiration of the applicable Restriction Period and the satisfaction
of any other applicable conditions, all or part of the Restricted Shares and any
Retained Distributions thereon (including any unpaid Dividend Equivalents) will
become vested and all or part of any cash amount awarded will become payable.
Any Restricted Shares and Retained Distributions thereon (including any unpaid
Dividend Equivalents) which do not vest will be forfeited.
Stock Units. The 1996 Plan also authorizes the Compensation Committee to
grant to eligible persons, either alone or in addition to Options, SARs and
Restricted Shares, awards of Common Stock and other awards that are valued in
whole or in part by reference to, or are otherwise based on, the fair market
value of the Common Stock ("Stock Units"). The Compensation Committee will
determine all terms and conditions of such Awards, including any restrictions
(including restrictions on transfer), deferral periods, or performance
requirements. The provisions of any Award of Stock Units need not be the same
with respect to each recipient and are subject to such rules as the Compensation
Committee may establish at the time of grant.
Performance Awards. Performance Awards consist of grants made to an
eligible person subject to the attainment of one or more performance goals. A
Performance Award will be paid, vested or otherwise deliverable solely upon the
attainment of one or more pre-established, objective performance goals
established by the Compensation Committee prior to the earlier of (i) 90 days
after the commencement of the period of service to which the performance goals
relate and (ii) the elapse of 25% of the period of service, and in any event
while the outcome is substantially uncertain. A performance goal may be based
upon one or more business criteria that apply to the eligible person, one or
more business units of the Company or the Company as a whole, and may include
any of the following: revenue, net income, stock price, market share, earnings
per share, return on equity, return on assets or decrease in costs. Subject to
the foregoing, the terms, conditions and limitations applicable to any
Performance Award will be determined by the Compensation Committee.
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<PAGE> 42
Any Performance Awards granted under the 1996 Plan will be limited so that
no individual may be granted Performance Awards consisting of cash or in any
other form permitted under the 1996 Plan (other than any Awards consisting of
Options or SARs or otherwise consisting of shares of Common Stock or units
denominated in such shares, or, in either case, additional cash amounts related
to such an Award) in respect of any one-year period having a value determined on
the date of grant in excess of $10,000,000.
Effect of Termination of Employment. Under the terms of the 1996 Plan, if
the employment of the holder of an Award terminates by reason of death or total
disability, then, unless the agreement relating to such Award provides
otherwise, (a) all outstanding Options and SARs granted in such Award will
become immediately exercisable in full in respect of the aggregate number of
shares covered thereby, (b) the Restriction Period for all Restricted Shares
granted in such Award will be deemed to have expired and all such Restricted
Shares, any related Retained Distributions and any unpaid Dividend Equivalents
will become vested and any cash amounts payable pursuant to the related
agreement will be adjusted in such manner as may be provided in such agreement,
(c) all Stock Units will become vested in full, and (d) Performance Awards will
become vested in full.
Under the terms of the 1996 Plan, if the employment of the holder of an
Award is terminated during the Restriction Period with respect to any Restricted
Shares, or prior to the complete exercise (or deemed exercise thereof) of any
Option or SAR or the vesting or complete exercise of any Stock Units, or the
vesting of any Performance Awards, then such Options, SARs, Stock Units and
Performance Awards will thereafter be exercisable, and the holder's rights to
any such unvested Restricted Shares, Retained Distributions, unpaid Dividend
Equivalents and cash amounts and any such unvested Stock Units will thereafter
vest, only to the extent provided by the Compensation Committee in the agreement
relating to such Award, except that (a) if the holder's employment terminates by
reason of death or total disability then any Option or SAR will remain
exercisable for a period of at least one year after such termination, and (b) if
the holder's employment is terminated for cause (as defined in the applicable
agreement or the 1996 Plan) then (i) such employee's rights to all Restricted
Shares, Retained Distributions, unpaid Dividend Equivalents and any cash amounts
covered by such Award will be forfeited immediately, (ii) all Options and SARs
and all unvested or unexercised Stock Units will immediately terminate, and
(iii) such employee's interest in all unvested Performance Awards will be
forfeited immediately.
Additional Provisions. Unless otherwise provided by the Compensation
Committee in the agreement relating to an Award, each Award will vest and become
exercisable in full upon the occurrence of any of the following change in
control transactions: (a) the Company's Board (or stockholders, if Board
approval is not required by law) approves any of the following transactions
(each an "Approved Transaction"): (i) any consolidation or merger of the
Company, or binding share exchange, pursuant to which shares of common stock of
the Company would be changed or converted into or exchanged for cash, securities
or other property, other than any such transaction in which the common
stockholders of the Company immediately prior to such transaction have the same
proportionate ownership of the common stock of, and voting power with respect
to, the surviving corporation immediately after such transaction, (ii) any
merger, consolidation or binding share exchange to which the Company is a party
as a result of which the persons who are common stockholders of the Company
immediately prior thereto would have less than a majority of the combined voting
power of the outstanding capital stock of the Company ordinarily (and apart from
the rights accruing under special circumstances) having the right to vote in the
election of directors immediately following such merger, consolidation or
binding share exchange, (iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Company, or (iv) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company; (b) any person or other
entity (other than the Company or any subsidiary or any employee benefit plan
sponsored by the Company or any subsidiary) purchases any common stock of the
Company pursuant to a tender or exchange offer, without the prior consent of the
Company's Board, or any person or other entity (other than the Company, any
subsidiary, any employee benefit plan sponsored by the Company or any subsidiary
or any Controlling Person (as defined)) becomes the beneficial owner of
securities of the Company representing 20% or more of the combined voting power
of the Company's outstanding securities, other than in a transaction (or series
of related transactions) approved by the Company's Board; or (c) during any
two-year period, individuals who at
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the beginning of such period constitute the entire Board of the Company cease to
constitute a majority of the Board, unless the election, or nomination for
election, of each new director is approved by at least two-thirds of the
directors then still in office who were directors at the beginning of the
period. "Controlling Person" is defined in the 1996 Plan to mean each of (1) the
Chairman of the Board, the President and each of the directors of the Company as
of the effective date of the 1996 Plan, (2) the respective family members,
estates and heirs of each of the persons referred to in clause (1) and any trust
or other investment vehicle for the primary benefit of any of such persons or
their respective family members or heirs and (3) Kearns-Tribune Corporation.
Options, SARs or, if applicable, Stock Units not theretofore exercised will
terminate upon consummation of an Approved Transaction. The Compensation
Committee will have the discretion, unless otherwise provided in the agreement
relating to a particular Award, to determine that any or all outstanding Awards
of any or all types granted pursuant to the 1996 Plan will not vest or become
exercisable on an accelerated basis in connection with an Approved Transaction
or will not terminate if not exercised prior to consummation of the Approved
Transaction, if action that, in the opinion of the Compensation Committee, is
equitable and appropriate is taken by the Company's Board or by the surviving or
acquiring corporation, as the case may be, to assume such Award or substitute a
new Award therefor and in order to make such assumed or new Award, as nearly as
may be practicable, equivalent to the old Award, taking into account the kind
and amount of securities, cash or other assets into or for which the Common
Stock may be converted or exchanged in connection with the Approved Transaction.
In the event of a stock split, stock dividend or distribution,
reclassification, recapitalization or other corporate event that affects the
Common Stock (including mergers or consolidations other than those which
constitute Approved Transactions), the 1996 Plan provides for the Compensation
Committee to make such adjustments as it deems equitable and appropriate to any
or all of (i) the number and kind of shares subject to outstanding Awards, (ii)
the purchase or exercise price and the relevant base price of outstanding Awards
and (iii) the number and kind of shares for which Awards may thereafter be
granted under the 1996 Plan.
The Compensation Committee may require in the agreement relating to an
Award that if the holder acquires any shares of Common Stock through the
exercise of Options or SARs or through the vesting of Restricted Shares or Stock
Units granted in the Award, then prior to selling or otherwise transferring any
such shares to a third party, such holder must offer to sell such shares to the
Company, at their fair market value, pursuant to a right of first refusal.
The obligations of the Company with respect to Awards granted under the
1996 Plan are subject to all applicable laws.
No awards may be granted under the 1996 Plan on or after the ten-year
anniversary of its effective date. The Board or the Compensation Committee may
at any time prior to the tenth anniversary of the effective date terminate the
1996 Plan, and may, from time to time, suspend or discontinue the 1996 Plan or
modify or amend the 1996 Plan in such respects as it shall deem advisable;
except that no such modification or amendment shall be effective prior to
approval by the Company's stockholders to the extent such approval is then
required pursuant to Rule 16b-3 of the Exchange Act in order to preserve the
applicability of any exemption provided by such rule to any Award then
outstanding (unless the holder of such Award consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements.
Termination or amendment of the 1996 Plan may not adversely affect the rights of
any holder of an Award without his or her consent. Subject to the specific terms
of the 1996 Plan, the Compensation Committee may accelerate any Award or waive
any conditions or restrictions pertaining to such Award at any time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary generally describes the principal Federal (but not
state and local) income tax consequences of Awards made pursuant to the 1996
Plan. It is general in nature and is not intended to cover all tax consequences
that may apply to a particular employee or to the corporation or other entity
employing the recipient of an award (the "Employer Entity"). In particular, this
summary is qualified in its entirety by the discussion of Section 162(m) of the
Code, discussed below under "THE 1996 INCENTIVE PLAN PROPOSAL -- Limitation on
Deductions". The provisions of the Code and the regulations thereunder
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relating to these matters are complicated and their impact in any one case may
depend upon the particular circumstances.
Options. In general, for Federal income tax purposes, neither the grant nor
the exercise of an Incentive Option will result in taxable income to the
Optionholder or a deduction for the Company. However, an Optionholder may be
subject to the alternative minimum tax in the year that an Incentive Option is
exercised. The excess of the fair market value of the Common Stock (determined
at the date of exercise) acquired through the exercise of an Incentive Option
over the exercise price is in addition to income in determining alternative
minimum taxable income and such additional amount may be sufficient in amount to
subject the Optionholder to the alternative minimum tax.
If the Optionholder holds Common Stock acquired through the exercise of
Incentive Options for the full holding period (two years after the Option is
granted and one year after it is exercised), he will recognize a capital gain or
loss at the time of the sale of the stock based on the difference between the
Option exercise price and the sale price. Currently, long-term capital gains are
taxed to an individual at a maximum rate of 28% as opposed to a maximum rate of
39.6% for ordinary income. There is no tax effect on the Employer Entity from
the sale of such stock.
If Common Stock acquired through the exercise of an Incentive Option is
disposed of before the end of the holding period described in the preceding
paragraph (a "disqualifying disposition"), the Optionholder will recognize
ordinary income equal to the lesser of (i) the difference between the fair
market value of the shares on the date the Option was exercised and the Option
exercise price or (ii) the difference between the amount received on the sale of
the Common Stock and the Option exercise price. In the event of a disqualifying
disposition, the Employer Entity will be entitled to a deduction in a
corresponding amount to the extent that the amount is reasonable compensation
and is an ordinary and necessary business expense. If the amount received by the
Optionholder on the disqualifying disposition exceeds the fair market value of
the shares on the date of exercise of the Incentive Option, such excess will
ordinarily constitute capital gain.
Although the Compensation Committee has the discretion under the 1996 Plan
to provide for a period of time after the termination of an Optionholder's
employment in which his or her Options may continue to be exercised, under
current law an option must generally be exercised within three months after
termination of employment (one year in the case of termination because of death
or disability) in order to qualify as an Incentive Option.
In general, the grant of a Nonqualified Option will not result in taxable
income to the Optionholder or a deduction to the Employer Entity for Federal
income tax purposes. Upon exercise of a Nonqualified Option, the Employer Entity
will be entitled, for Federal income tax purposes, to a tax deduction and the
Optionholder will recognize ordinary income. The amount of such deduction and
income generally will equal the amount by which the fair market value of the
shares acquired on the date the Nonqualified Option is exercised exceeds the
Option exercise price of the shares if the Common Stock is transferable and not
subject to a substantial risk of forfeiture at such time. In general, the Common
Stock received on exercise of a Nonqualified Option will be transferable and
will not be subject to a substantial risk of forfeiture. However, if the sale of
the Common Stock acquired upon exercise of a Nonqualified Option would subject
the Optionholder to liability under Section 16(b) of the Exchange Act, which
requires certain "insiders" to pay to the Company any profits received upon
certain sales of Common Stock, the Optionholder will recognize ordinary income
(and the Employer Entity will be entitled to a corresponding tax deduction)
equal to the amount by which the fair market value of the shares acquired
exceeds the Option exercise price for the shares on the earlier of (i) the date
that the Optionholder is no longer subject to liability under Section 16(b) of
the Exchange Act or (ii) six months after the date the Nonqualified Option is
exercised. An Optionholder subject to liability under Section 16(b) of the
Exchange Act may, however, recognize ordinary income (and the Employer Entity
will be entitled to a corresponding tax deduction) at the time the Option is
exercised if the Optionholder makes an election under Section 83(b) of the Code.
If an Option is exercised through the use of Common Stock previously owned
by the holder, such exercise generally will not be considered a taxable
disposition of the previously owned shares and thus no gain or loss will be
recognized with respect to such shares upon such exercise. However, if the
previously owned
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shares were acquired by the exercise of an Incentive Option and the holding
period requirement for those shares is not satisfied at the time they are used
to exercise an Incentive Option, such use would constitute a disqualifying
disposition of such previously owned shares resulting in the recognition of
ordinary income in the amount described above. If shares issuable upon exercise
of an Incentive Option are withheld to pay amounts payable in connection with
the exercise of such Option, such shares would be deemed to have been disposed
of in a disqualifying disposition, also resulting in the recognition of ordinary
income with respect to the shares withheld as described above.
Any difference between the basis of the Common Stock acquired through the
exercise of a Nonqualified Option (the Option exercise price plus the ordinary
income recognized) and the amount realized upon a subsequent sale of such shares
will be treated as a short-term or long-term capital gain or loss, depending on
the length of the period such shares are held prior to sale. Currently,
long-term capital gains are taxed to an individual at a maximum rate of 28% as
opposed to a maximum rate of 39.6% for ordinary income.
Stock Appreciation Rights. For Federal income tax purposes, the grant of an
SAR will not result in taxable income to the holder or a tax deduction to the
Employer Entity. At the time of exercise of an SAR, the holder will forfeit the
right to benefit from any future appreciation of the stock subject to the SAR.
Accordingly, taxable income to the holder is deferred until the SAR is
exercised. Upon exercise, the amount of cash and fair market value of shares
received by the holder, less cash or other consideration paid (if any), is taxed
to the holder as ordinary income and the Employer Entity will receive a
corresponding income tax deduction to the extent the amount represents
reasonable compensation and an ordinary and necessary business expense, subject
to any required income tax withholding. However, if the holder receives Common
Stock upon the exercise of an SAR and is then subject to the restrictions under
Section 16(b) of the Exchange Act discussed above, unless the holder elects
otherwise, the amount of ordinary income and deduction will generally be
measured at the time such restrictions lapse.
Restricted Shares. The award of Restricted Shares will not result in
taxable income to the employee or a tax deduction to the Employer Entity for
Federal income tax purposes. Upon expiration of the Restriction Period
applicable to the Restricted Shares awarded, or, if applicable, at such later
date as the restrictions under Section 16(b) of the Exchange Act described above
expire, the fair market value of such shares at such expiration date, plus the
amount of any Retained Distributions and unpaid Dividend Equivalents on such
shares and any cash amount awarded, less cash or other consideration paid (if
any), will be included in the holder's ordinary income as compensation, except
that, in the case of Restricted Shares issued at the beginning of the
Restriction Period, the holder may elect to include in his ordinary income as
compensation at the time the Restricted Shares are awarded, the fair market
value of such shares at such time, less any amount paid therefor. Absent the
making of the election referred to in the preceding sentence, any cash dividends
or other distributions paid with respect to Restricted Shares prior to
expiration of the applicable Restriction Period will be included in the
employee's ordinary income as compensation at the time of receipt. In each case,
the Employer Entity will be entitled to a corresponding income tax deduction to
the extent that the amount represents reasonable compensation and an ordinary
and necessary business expense, subject to any required income tax withholding.
Stock Units. The Federal income tax consequences of the award of Stock
Units will depend on the conditions of the Award. Generally, the transfer of
cash or property will result in ordinary income to the recipient and a tax
deduction to the Employer Entity. If there is a substantial risk that the
property transferred will be forfeited (for example, because receipt of the
property is conditioned upon the performance of substantial future services),
the taxable event is deferred until the risk of forfeiture lapses. However, the
recipient may generally elect to accelerate the taxable event to the date of
transfer, even if the property is subject to a substantial risk of forfeiture.
If this election is made, subsequent appreciation is not taxed until the
property is sold or exchanged (and the lapse of the forfeiture restriction does
not create a taxable event). Generally, any deduction for the Employer Entity
occurs only when ordinary income in respect of an Award is recognized by the
employee (and then the deduction is subject to reasonable compensation and
withholding requirements). Because Stock Unit Awards will be subject to whatever
conditions may be determined by the Compensation Committee, the Federal income
tax consequences to the recipient and to the Employer Entity will depend on the
specific conditions and terms of the Award.
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Performance Awards. A recipient will recognize ordinary income upon receipt
of cash pursuant to a Performance Award or, if earlier, at the time such cash is
otherwise made available for the eligible person to draw upon it. In general, a
recipient will recognize ordinary income as a result of the receipt of Common
Stock pursuant to a Performance Award in an amount equal to the fair market
value of the Common Stock when such stock is received; provided, however, that
if the stock is not transferable and is subject to a substantial risk of
forfeiture when received, the recipient will recognize ordinary income in an
amount equal to the fair market value of the Common Stock when it first becomes
transferable or is no longer subject to a substantial risk of forfeiture, unless
the recipient makes an election to be taxed on the fair market value of the
Common Stock when such stock is received.
Limitation on Deductions. Notwithstanding the above, The Revenue
Reconciliation Act of 1993 added Section 162(m) to the Code which restricts the
deduction of compensation by a publicly held corporation which, according to
proposed regulations, includes compensation paid by any members of its
affiliated group of corporations, as defined in Proposed Treasury Regulation
Section 1.162-27(c)(1)(ii). Specifically, Section 162(m) prohibits the deduction
of compensation to "covered employees" to the extent that "remuneration" to any
such covered employee exceeds $1,000,000 in any taxable year. Covered employees
are defined as any individual who on the last day of the taxable year is the
chief executive officer or among the four most highly compensated officers
(other than the chief executive officer). For the purpose of determining whether
the $1,000,000 limitation is applicable the following items do not count as
remuneration: (i) compensation paid on a commission basis, (ii) non-taxable
fringe benefits, (iii) payments to or from a tax-qualified pension plan, (iv)
"performance-based compensation" (as defined in Section 162(m)(4)(C) of the Code
and the applicable regulations) and (v) payments made pursuant to a binding
written contract in effect on February 17, 1993 and not modified in any material
respect after such date prior to the grant of compensation. In general, in order
to qualify as "performance based compensation" the compensation must be payable
solely on account of performance goals which are disclosed to and approved by
stockholders, and the compensation must be established and administered by a
compensation committee which consists solely of two or more outside directors as
defined in the Treasury regulations. Because stockholders are approving a
performance goal criteria in connection with the vote on the 1996 Plan at the
Annual Meeting, compensation paid pursuant to Performance Awards under the 1996
Plan may qualify as performance-based compensation, and is compensation which is
based solely on an increase in value of the Common Stock after the date of grant
(such as an Option or SAR granted with an exercise price or base price at least
equal to the fair market value on the date of grant) is deemed to be paid on
account of performance goals. However, compensation which is based solely on an
increase in value of the employee's stock with respect to Performance Awards
will not qualify as performance-based compensation unless the requirement that
such compensation is granted by a compensation committee consisting of two or
more outside directors is met, performance goals are established by the
compensation committee and certified by the compensation committee as being met
prior to payment. The 1996 Plan itself only requires that the Compensation
Committee members be directors. Accordingly, no grants (including grants of
Options and SARs) will qualify under the performance based compensation
exception unless all the members of the Compensation Committee qualify as
"outside" directors. Present members of the Compensation Committee qualify as
"outside" directors.
If compensation granted by the Compensation Committee does not fall within
any of the exceptions to the definition of remuneration, then the Employer
Entities which are members of the Company's affiliated group of corporations may
lose part of the deductions they would otherwise be entitled to take with
respect to covered employees.
INTEREST OF CERTAIN PERSONS IN 1996 INCENTIVE PLAN PROPOSAL
On December 13, 1995, the Compensation Committee of the Board granted,
pursuant to the 1996 Plan, options in tandem with stock appreciation rights for
the following amounts of underlying shares: (i) Bob Magness -- 1,000,000 shares
of TCI Group Series A Stock and 250,000 shares of Liberty Group Series A Stock,
(ii) Dr. Malone -- 1,000,000 shares of TCI Group Series A Stock and 250,000
shares of Liberty Group Series A Stock, and (iii) Mr. Barton -- 600,000 shares
of Liberty Group Series A Stock. See "CONCERNING MANAGEMENT -- Executive
Compensation -- Option/SAR Grants Table of TCI"
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and "1996 INCENTIVE PLAN PROPOSAL -- New Plan Benefits" for a discussion of the
terms of these grants. The effectiveness of these grants is conditioned upon the
stockholders approving the 1996 Incentive Plan Proposal. If the 1996 Incentive
Plan Proposal is not approved by stockholders, the above-described grants to
Messrs. Magness, Malone and Barton will be null and void.
VOTE REQUIRED FOR APPROVAL
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE COMBINED VOTING POWER AND A
MAJORITY OF THE COMBINED NUMBER OF THE SHARES OF THE TCI GROUP SERIES A STOCK,
THE LIBERTY GROUP SERIES A STOCK, THE TCI GROUP SERIES B STOCK, THE LIBERTY
GROUP SERIES B STOCK AND THE SERIES C PREFERRED STOCK REPRESENTED IN PERSON OR
BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL MEETING, VOTING AS A SINGLE CLASS,
IS REQUIRED TO APPROVE THE 1996 INCENTIVE PLAN PROPOSAL.
INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP serves as the Company's independent
certified public accountants. A partner of KPMG Peat Marwick LLP will be present
at the Annual Meeting with the opportunity to make a statement if KPMG Peat
Marwick LLP so desires and will be available to respond to appropriate
questions.
STOCKHOLDERS' PROPOSALS
Proposals by stockholders for which consideration is desired at the 1997
annual meeting of stockholders must be received by the Company by March 24, 1997
in order to be considered for inclusion in proxy materials for the 1997 annual
meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCLUDING EXHIBITS, MAY BE OBTAINED BY STOCKHOLDERS WITHOUT CHARGE BY WRITTEN
REQUEST ADDRESSED TO THE INVESTOR RELATIONS DEPARTMENT, TELE-COMMUNICATIONS,
INC., POST OFFICE BOX 5630, DENVER, COLORADO 80217-5630.
Englewood, Colorado
July 22, 1996
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APPENDIX A
TELE-COMMUNICATIONS, INC.
1996 INCENTIVE PLAN
ARTICLE I
PURPOSE AND EFFECTIVENESS
1.1 Purpose. The purpose of the Tele-Communications, Inc. 1996 Incentive
Plan (the "Plan") is to promote the success of Tele-Communications, Inc. (the
"Company") by providing a method whereby (i) eligible employees of the Company
and its Subsidiaries and (ii) independent contractors providing services to the
Company or its Subsidiaries may be awarded additional remuneration for services
rendered and encouraged to invest in capital stock of the Company, thereby
increasing their proprietary interest in the Company's businesses, encouraging
them to remain in the employ of the Company or its Subsidiaries, and increasing
their personal interest in the continued success and progress of the Company or
its Subsidiaries. The Plan is also intended to aid (i) in attracting persons of
exceptional ability to become officers and employees of the Company and its
Subsidiaries and (ii) inducing independent contractors to agree to provide
services to the Company.
1.2 Effective Date. The Plan shall be effective on December 13, 1995 but
shall be subject to the approval by the affirmative vote of the holders of at
least a majority of the outstanding shares of capital stock of the Company
represented in person or by proxy and entitled to vote, at the 1996 annual
meeting of stockholders of the Company. Any Awards under the Plan made prior to
such stockholder approval shall be conditioned upon such approval and shall be
null and void if such approval is not obtained.
ARTICLE II
DEFINITIONS
2.1 Certain Defined Terms. Capitalized terms not defined elsewhere in the
Plan shall have the following meanings (whether used in the singular or plural):
"Affiliate" of the Company means any corporation, partnership, or
other business association that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with the Company.
"Agreement" means a stock option agreement, stock appreciation rights
agreement, restricted shares agreement or stock units agreement, or an
agreement evidencing more than one type of Award, specified in Section
11.5, as any such Agreement may be supplemented or amended from time to
time.
"Approved Transaction" means any transaction in which the Board (or,
if approval of the Board is not required as a matter of law, the
stockholders of the Company) shall approve (i) any consolidation or merger
of the Company, or binding share exchange, pursuant to which shares of
common stock of the Company would be changed or converted into or exchanged
for cash, securities or other property, other than any such transaction in
which the common stockholders of the Company immediately prior to such
transaction have the same proportionate ownership of the common stock of,
and voting power with respect to, the surviving corporation immediately
after such transaction, (ii) any merger, consolidation or binding share
exchange to which the Company is a party as a result of which the persons
who are common stockholders of the Company immediately prior thereto have
less than a majority of the combined voting power of the outstanding
capital stock of the Company ordinarily (and apart from the rights accruing
under special circumstances) having the right to vote in the election of
directors immediately following such merger, consolidation or binding share
exchange, (iii) the adoption of any plan or proposal for the liquidation or
dissolution of the Company, or (iv) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company.
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"Award" means a grant of Options, SARs, Restricted Shares, Stock
Units, Performance Awards and/or cash under this Plan.
"Board" means the Board of Directors of the Company.
"Board Change" means, during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire
Board cease for any reason to constitute a majority thereof unless the
election, or the nomination for election, of each new director was approved
by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute or statutes thereto. Reference to any
specific Code section shall include any successor section.
"Committee" means the committee of the Board appointed pursuant to
Section 3.1 to administer the Plan.
"Common Stock" means either TCOMA, TCOMB, LBTYA or LBTYB.
"Company" means Tele-Communications, Inc., a Delaware corporation.
"Control Purchase" means any transaction (or series of related
transactions) in which (i) any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity
(other than the Company, any Subsidiary or any employee benefit plan
sponsored by the Company or any Subsidiary) shall purchase any common stock
of the Company (or securities convertible into common stock of the Company)
for cash, securities or any other consideration pursuant to a tender offer
or exchange offer, without the prior consent of the Board, or (ii) any
person (as such term is so defined), corporation or other entity (other
than the Company, any Subsidiary, any employee benefit plan sponsored by
the Company or any Subsidiary, or any Controlling Person (as defined
below)) shall become the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power of the
then outstanding securities of the Company ordinarily (and apart from the
rights accruing under special circumstances) having the right to vote in
the election of directors (calculated as provided in Rule 13d-3(d) under
the Exchange Act in the case of rights to acquire the Company's
securities), other than in a transaction (or series of related
transactions) approved by the Board. For purposes of this definition,
"Controlling Person" means each of (a) the Chairman of the Board, the
President and each of the directors of the Company as of the Effective Date
of this Plan, (b) the respective family members, estates and heirs of each
of the persons referred to in clause (a) above and any trust or other
investment vehicle for the primary benefit of any of such persons or their
respective family members or heirs and (c) Kearns-Tribune Corporation, a
Delaware corporation. As used with respect to any person, the term "family
member" means the spouse, siblings and lineal descendants of such person.
"Disability" means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months.
"Dividend Equivalents" means, with respect to Restricted Shares to be
issued at the end of the Restriction Period, to the extent specified by the
Committee only, an amount equal to all dividends and other distributions
(or the economic equivalent thereof) which are payable to stockholders of
record during the Restriction Period on a like number and kind of shares of
Common Stock.
"Domestic relations order" means a domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act, or
the rules thereunder.
"Effective Date" means the date on which the Plan becomes effective
pursuant to Section 1.2.
"Equity security" shall have the meaning ascribed to such term in
Section 3(a)(11) of the Exchange Act, and an equity security of an issuer
shall have the meaning ascribed thereto in Rule 16a-1 promulgated under the
Exchange Act, or any successor Rule.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto. Reference
to any specific Exchange Act section shall include any successor section.
"Fair Market Value" of a share of Common Stock on any day means the
last sale price (or, if no last sale price is reported, the average of the
high bid and low asked prices) for a share of the appropriate of TCOMA,
TCOMB, LBTYA or LBTYB, on such day (or, if such day is not a trading day,
on the next preceding trading day) as reported on NASDAQ or, if not
reported on NASDAQ, as quoted by the National Quotation Bureau
Incorporated, or if the appropriate of TCOMA, TCOMB, LBTYA or LBTYB is
listed on an exchange, on the principal exchange on which the appropriate
of TCOMA, TCOMB, LBTYA or LBTYB is listed. If for any day the Fair Market
Value of a share of the appropriate of TCOMA, TCOMB, LBTYA or LBTYB is not
determinable by any of the foregoing means, then the Fair Market Value for
such day shall be determined in good faith by the Committee on the basis of
such quotations and other considerations as the Committee deems
appropriate.
"Free Standing SAR" has the meaning ascribed thereto in Section 7.1.
"Holder" means an employee of the Company or a Subsidiary or an
independent contractor who has received an Award under this Plan.
"Incentive Stock Option" means a stock option granted under Article VI
which is intended to be an incentive stock option within the meaning of
Section 422 of the Code.
"LBTYA" means the Series A Liberty Group Common Stock, $1.00 par value
per share, of the Company.
"LBTYB" means the Series B Liberty Group Common Stock, $1.00 par value
per share, of the Company.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Nonqualified Stock Option" means a stock option granted under Article
VI that is designated a nonqualified stock option.
"Option" means any Incentive Stock Option or Nonqualified Stock
Option.
"Performance Award" means an award of cash or property made pursuant
to this Plan that is subject to the attainment of one or more Performance
Goals.
"Performance Goal" means a standard established by the Committee, to
determine in whole or in part whether a Performance Award shall be earned.
"Plan" has the meaning ascribed thereto in Section 1.1.
"Restricted Shares" means shares of either TCOMA or LBTYA or the right
to receive shares of such Common Stock, as the case may be, awarded
pursuant to Article VIII.
"Restriction Period" means a period of time beginning on the date of
each award of Restricted Shares and ending on the Vesting Date with respect
to such award.
"Retained Distribution" has the meaning ascribed thereto in Section
8.3.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor Rule. References to paragraphs of Rule 16b-3 shall include
the comparable provisions of any successor Rule.
"SARs" means stock appreciation rights, awarded pursuant to Article
VII, with respect to shares of either TCOMA or LBTYB.
"Stock Unit Award" has the meaning ascribed thereto in Section 9.1.
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"Subsidiary" of the Company means any present or future subsidiary (as
defined in Section 424(f) of the Code) of the Company or any business
entity in which the Company owns directly or indirectly, 50% or more of the
voting, capital or profits interests. An entity shall be deemed a
subsidiary of the Company for purposes of this definition only for such
periods as the requisite ownership or control relationship is maintained.
"Tandem SARs" has the meaning ascribed thereto in Section 7.1.
"TCOMA" means the Series A TCI Group Common Stock, $1.00 par value per
share, of the Company.
"TCOMB" means the Series B TCI Group Common Stock, $1.00 par value per
share, of the Company.
"Vesting Date" with respect to any Restricted Shares awarded hereunder
means the date on which such Restricted Shares cease to be subject to a
risk of forfeiture, as designated in or determined in accordance with the
Agreement with respect to such award of Restricted Shares pursuant to
Article VIII. If more than one Vesting Date is designated for an award of
Restricted Shares, reference in the Plan to a Vesting Date in respect of
such Award shall be deemed to refer to each part of such Award and the
Vesting Date for such part.
ARTICLE III
ADMINISTRATION
3.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board unless a different committee is appointed by the Board.
The Committee shall be comprised of not less than two persons. Each member of
the Committee shall be a member of the Board who during the one year period
prior to service on the Committee was not, and during such service is not,
granted or awarded equity securities pursuant to the Plan or any other plan of
the Company or any of its Affiliates if such grant or award or participation in
such plan would prevent such member from being a "disinterested person" with
respect to the Plan for purposes of Rule 16b-3. Subject to the foregoing, the
Board may from time to time appoint members of the Committee in substitution for
or in addition to members previously appointed, may fill vacancies in the
Committee and may remove members of the Committee. The Committee shall select
one of its members as its chairman and shall hold its meetings at such times and
places as it shall deem advisable. A majority of its members shall constitute a
quorum and all determinations shall be made by a majority of such quorum. Any
determination reduced to writing and signed by all of the members shall be fully
as effective as if it had been made by a majority vote at a meeting duly called
and held.
3.2 Powers. The Committee shall have full power and authority to grant to
eligible persons Options under Article VI of the Plan, SARs under Article VII of
the Plan, Restricted Shares under Article VIII of the Plan, Stock Units under
Article IX of the Plan, and/or Performance Awards under Article X of the Plan,
to determine the terms and conditions (which need not be identical) of all
Awards so granted, to interpret the provisions of the Plan and any Agreements
relating to Awards granted under the Plan, and to supervise the administration
of the Plan. The Committee in making an Award may provide for the granting or
issuance of additional, replacement or alternative Awards upon the occurrence of
specified events, including the exercise of the original Award. The Committee
shall have sole authority in the selection of persons to whom Awards may be
granted under the Plan and in the determination of the timing, pricing and
amount of any such Award, subject only to the express provisions of the Plan. In
making determinations hereunder, the Committee may take into account the nature
of the services rendered by the respective employees and independent
contractors, their present and potential contributions to the success of the
Company and its Subsidiaries and such other factors as the Committee in its
discretion deems relevant.
3.3 Interpretation. The Committee is authorized, subject to the provisions
of the Plan, to establish, amend and rescind such rules and regulations as it
deems necessary or advisable for the proper administration of the Plan and to
take such other action in connection with or in relation to the Plan as it deems
necessary or
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advisable. Each action and determination made or taken pursuant to the Plan by
the Committee, including any interpretation or construction of the Plan, shall
be final and conclusive for all purposes and upon all persons. No member of the
Committee shall be liable for any action or determination made or taken by him
or the Committee in good faith with respect to the Plan.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to the provisions of this Article IV, the
maximum number of shares of TCOMA with respect to which Awards may be granted
during the term of the Plan shall be 16,000,000 shares. The maximum number of
LBTYA shares with respect to which Awards may be granted during the term of the
Plan shall be 4,000,000 shares. No TCOMB shares or LBTYB shares may be the
subject of Awards under the Plan. Shares of Common Stock will be made available
from the authorized but unissued shares of the Company or from shares reacquired
by the Company, including shares purchased in the open market. The shares of
Common Stock subject to (i) any Award granted under the Plan that shall expire,
terminate or be annulled for any reason without having been exercised (or
considered to have been exercised as provided in Section 7.2), (ii) any Award of
any SARs granted under the Plan that shall be exercised for cash and (iii) any
Award of Restricted Shares or Stock Units that shall be forfeited prior to
becoming vested (provided that the Holder received no benefits of ownership of
such Restricted Shares or Stock Units other than voting rights and the
accumulation of Retained Distributions and unpaid Dividend Equivalents that are
likewise forfeited), shall again be available for purposes of the Plan.
4.2 Adjustments. If the Company subdivides its outstanding shares of TCOMA
or LBTYA into a greater number of shares of TCOMA or LBTYA (by stock dividend,
stock split, reclassification or otherwise) or combines its outstanding shares
of TCOMA or LBTYA into a smaller number of shares of TCOMA or LBTYA (by reverse
stock split, reclassification or otherwise), or if the Committee determines that
any stock dividend, extraordinary cash dividend, reclassification,
recapitalization, reorganization, split-up, spin-off, combination, exchange of
shares, warrants or rights offering to purchase TCOMA or LBTYA, or other similar
corporate event (including mergers or consolidations other than those which
constitute Approved Transactions) affects TCOMA or LBTYA such that an adjustment
is required in order to preserve the benefits or potential benefits intended to
be made available under this Plan, then the Committee shall, in its sole
discretion and in such manner as the Committee may deem equitable and
appropriate, make such adjustments to any or all of (i) the number and kind of
shares which thereafter may be awarded, optioned, or otherwise made subject to
the benefits contemplated by the Plan, (ii) the number and kind of shares
subject to outstanding Awards, and (iii) the purchase or exercise price and the
relevant appreciation base with respect to any of the foregoing, provided,
however, that the number of shares subject to any Award shall always be a whole
number. The Committee may, if deemed appropriate, provide for a cash payment to
any Holder of an Award in connection with any adjustment made pursuant to this
Section 4.2.
ARTICLE V
ELIGIBILITY
5.1 General. The persons who shall be eligible to participate in the Plan
and to receive Awards under the Plan shall be such employees (including officers
and, subject to Section 5.2, directors) of the Company and its Subsidiaries or
independent contractors as the Committee shall select. Awards may be made to
employees or independent contractors who hold or have held Awards under this
Plan or any similar or other awards under any other plan of the Company or any
of its Affiliates.
5.2 Ineligibility. No member of the Committee, while serving as such,
shall be eligible to receive an Award.
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ARTICLE VI
STOCK OPTIONS
6.1 Grant of Options. Subject to the limitations of the Plan, the
Committee shall designate from time to time those eligible persons to be granted
Options, the time when each Option shall be granted to such eligible persons,
the number of shares subject to such Option, whether such Option is an Incentive
Stock Option or a Nonqualified Stock Option and, subject to Section 6.2, the
purchase price of the shares of TCOMA or LBTYA subject to such Option. Subject
to the other provisions of the Plan, the same person may receive Incentive Stock
Options and Nonqualified Stock Options at the same time and pursuant to the same
Agreement, provided that Incentive Stock Options and Nonqualified Stock Options
are clearly designated as such.
6.2 Option Price. The price at which shares may be purchased upon exercise
of an Option shall be fixed by the Committee and may be more than, less than or
equal to the Fair Market Value of the Common Stock subject to the Option as of
the date the Option is granted.
6.3 Limitation on Grants. Except for Awards described in Section 11.1, no
Person may be granted in any calendar year Options covering more than 2,000,000
shares of either TCOMA or LBTYA (adjusted as provided in Section 4.2).
6.4 Term of Options. Subject to the provisions of the Plan with respect to
death, retirement and termination of employment, the term of each Option shall
be for such period as the Committee shall determine as set forth in the
applicable Agreement.
6.5 Exercise of Options. An Option granted under the Plan shall become
(and remain) exercisable during the term of the Option to the extent provided in
the applicable Agreement and this Plan and, unless the Agreement otherwise
provides, may be exercised to the extent exercisable, in whole or in part, at
any time and from time to time during such term; provided. however, that
subsequent to the grant of an Option, the Committee, at any time before complete
termination of such Option, may accelerate the time or times at which such
Option may be exercised in whole or in part (without reducing the term of such
Option).
6.6 Manner of Exercise.
(a) Form of Payment. An Option shall be exercised by written notice to
the Company upon such terms and conditions as the Agreement may provide and
in accordance with such other procedures for the exercise of Options as the
Committee may establish from time to time. The method or methods of payment
of the purchase price for the shares to be purchased upon exercise of an
Option and of any amounts required by Section 11.10 shall be determined by
the Committee and may consist of (i) cash, (ii) check, (iii) promissory
note, (iv) in the case of Options on LBTYA shares, whole shares of LBTYA or
LBTYB, (v) in the case of Options on TCOMA shares, whole shares of TCOMA or
TCOMB, (vi) the withholding of shares of Common Stock issuable upon such
exercise of the Option, (vii) the delivery, together with a properly
executed exercise notice, of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds
required to pay the purchase price, (viii) any combination of the foregoing
methods of payment, or such other consideration and method of payment as
may be permitted for the issuance of shares under the Delaware General
Corporation Law. The permitted method or methods of payment of the amounts
payable upon exercise of an Option, if other than in cash, shall be set
forth in the applicable Agreement and may be subject to such conditions as
the Committee deems appropriate. Without limiting the generality of the
foregoing, if a Holder is permitted to elect to have shares of Common Stock
issuable upon exercise of an Option withheld to pay all or any part of the
amounts payable in connection with such exercise, then the Committee may
reserve the sole discretion to approve or disapprove such election.
(b) Value of Shares. Shares of LBTYA, LBTYB, TCOMA or TCOMB shares
delivered in payment of all or any part of the amounts payable in
connection with the exercise of an Option, and shares of any such stock
withheld for such payment, shall be valued for such purpose at their Fair
Market Value as of the exercise date. Notwithstanding the foregoing, if a
Holder who is permitted to do so
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pursuant to the applicable Agreement elects to have shares of Common Stock
issuable upon exercise of an Option withheld in payment of all or any part
of the amounts payable in connection with the exercise of such Option and
if, in order to meet the exemptive requirements of Rule 16b-3, such
election is made during a window period determined in accordance with
paragraph (e)(3) of such Rule (or is made prior thereto to become effective
during such window period), then for purposes of determining the Fair
Market Value of the shares of Common Stock withheld, such Option (other
than an Incentive Stock Option) shall be deemed to have been exercised on
the day during such window period on which the highest reported last sale
price of a share of the appropriate of TCOMA or LBTYA as reported on NASDAQ
occurred and the Fair Market Value of such shares shall be deemed to be
such highest reported last sale price.
(c) Issuance of Shares. The Company shall effect the transfer of the
shares of Common Stock purchased under the Option as soon as practicable
after the exercise thereof and payment in full of the purchase price
therefor and of any amounts required by Section 11.10, and within a
reasonable time thereafter such transfer shall be evidenced on the books of
the Company. No Holder or other person exercising an Option shall have any
of the rights of a stockholder of the Company with respect to shares of
Common Stock subject to an Option granted under the Plan until due exercise
and full payment has been made. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date of
such due exercise and full payment.
6.7 Nontransferability. Unless otherwise determined by the Committee and
provided in the applicable Agreement, Options shall not be transferable other
than by will or the laws of descent and distribution or pursuant to a domestic
relations order and, except as otherwise required pursuant to a domestic
relations order, Options may be exercised during the lifetime of the Holder
thereof only by such Holder (or his or her court appointed legal
representative).
ARTICLE VII
SARs
7.1 Grant of SARs. Subject to the limitations of the Plan, SARs may be
granted by the Committee to such eligible persons in such numbers and at such
times during the term of the Plan as the Committee shall determine. An SAR may
be granted to a Holder of an Option (hereinafter called a "related Option") with
respect to all or a portion of the shares of Common Stock subject to the related
Option (a "Tandem SAR") or may be granted separately to an eligible employee (a
"Free Standing SAR"). Subject to the limitations of the Plan, SARs shall be
exercisable in whole or in part upon notice to the Company upon such terms and
conditions as are provided in the Agreement. Except for Awards described in
Section 11.1, no Person may be granted in any calendar year SARs covering more
than 2,000,000 shares of either TCOMA or LBTYA (adjusted as provided in Section
4.2).
7.2 Tandem SARs. A Tandem SAR may be granted either concurrently with the
grant of the related Option or (if the related Option is a Nonqualified Option)
at any time thereafter prior to the complete exercise, termination, expiration
or cancellation of such related Option. Tandem SARs shall be exercisable only at
the time and to the extent that the related Option is exercisable (and may be
subject to such additional limitations on exercisability as the Agreement may
provide), and in no event after the complete termination or full exercise of the
related Option. Upon the exercise or termination of the related Option, the
Tandem SARs with respect thereto shall be cancelled automatically to the extent
of the number of shares of Common Stock with respect to which the related Option
was so exercised or terminated. Subject to the limitations of the Plan, upon the
exercise of a Tandem SAR, the Holder thereof shall be entitled to receive from
the Company, for each share of the appropriate of TCOMA or LBTYA with respect to
which the Tandem SAR is being exercised, consideration (in the form determined
as provided in Section 7.4) equal in value to the excess of the Fair Market
Value of a share of the appropriate of TCOMA or LBTYA on the date of exercise
over the related Option purchase price per share; provided, however, that the
Committee may, in any Agreement
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granting Tandem SARs, provide that the appreciation realizable upon exercise
thereof shall be measured from a base higher than the related Option purchase
price.
7.3 Free Standing SARs. Free Standing SARs shall be exercisable at the
time, to the extent and upon the terms and conditions set forth in the
applicable Agreement. The base price of a Free Standing SAR shall be not less
than 100% of the Fair Market Value of the appropriate of TCOMA or LBTYA on the
date of grant of the Free Standing SAR. Subject to the limitations of the Plan,
upon the exercise of a Free Standing SAR, the Holder thereof shall be entitled
to receive from the Company, for each share of the appropriate of TCOMA or LBTYA
with respect to which the Free Standing SAR is being exercised, consideration
(in the form determined as provided in Section 7.4) equal in value to the excess
of the Fair Market Value of a share of the appropriate of TCOMA or LBTYA on the
date of exercise over the base price per share of such Free Standing SAR.
7.4 Consideration. The consideration to be received upon the exercise of
an SAR by the Holder shall be paid in cash, shares of the series of the TCOMA or
LBTYA shares of Common Stock to which the SAR relates (valued at Fair Market
Value on the date of exercise of such SAR) or a combination of cash and shares
of such Common Stock as specified in the Agreement, or, if so provided in the
Agreement, either as determined by the Committee in its sole discretion or as
elected by the Holder, provided that the Committee shall have the sole
discretion to approve or disapprove the election by a Holder to receive cash in
full or partial settlement of an SAR, which approval or disapproval shall,
unless otherwise permitted by Rule 16b-3, be given after such election is made.
The Company's obligation arising upon the exercise of an SAR may be paid
currently or on a deferred basis with such interest or earnings equivalent as
the Committee may determine. No fractional shares of Common Stock shall be
issuable upon exercise of an SAR and, unless otherwise provided in the
applicable Agreement, the Holder will receive cash in lieu of fractional shares.
Unless the Committee shall otherwise determine, to the extent a Free Standing
SAR is exercisable, it will be exercised automatically for cash on its
expiration date.
7.5 Limitations. The applicable Agreement may provide for a limit on the
amount payable to a Holder upon exercise of SARs at any time or in the
aggregate, for a limit on the number of SARs that may be exercised by the Holder
in whole or in part for cash during any specified period, for a limit on the
time periods during which a Holder may exercise SARs and for such other limits
on the rights of the Holder and such other terms and conditions of the SAR as
the Committee may determine, including, without limitation, a condition that the
SAR may be exercised only in accordance with rules and regulations adopted by
the Committee from time to time. Unless otherwise so provided in the applicable
Agreement, any such limit relating to a Tandem SAR shall not restrict the
exercisability of the related Option. Such rules and regulations may govern the
right to exercise SARs granted prior to the adoption or amendment of such rules
and regulations as well as SARs granted thereafter.
7.6 Exercise. For purposes of this Article VII, the date of exercise of an
SAR shall mean the date on which the Company shall have received notice from the
Holder of the SAR of the exercise of such SAR, except that, if in order to meet
the exemptive requirements of Rule 16b-3 a Holder exercises any SAR (other than
one granted in tandem with an Incentive Stock Option) in whole or in part for
cash during a window period determined in accordance with paragraph (e)(3) of
such Rule, then such SAR shall be deemed to have been exercised on the day
during such window period on which the highest reported last sale price of a
share of Common Stock as reported on NASDAQ occurred and the Fair Market Value
of such shares shall be deemed to be such highest reported last sale price.
7.7 Nontransferability. Unless otherwise determined by the Committee and
provided in the applicable Agreement, SARs shall not be transferable other than
by will or the laws of descent and distribution or pursuant to a domestic
relations order and, except as otherwise required pursuant to a domestic
relations order, SARs may be exercised during the lifetime of the Holder thereof
only by such Holder (or his or her court appointed legal representative).
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ARTICLE VIII
RESTRICTED SHARES
8.1 Grant. Subject to the limitations of the Plan, the Committee shall
designate those eligible persons to be granted awards of Restricted Shares,
shall determine the time when each such Award shall be granted, whether shares
of Common Stock covered by awards of Restricted Shares will be issued at the
beginning or the end of the Restriction Period and whether Dividend Equivalents
will be paid during the Restriction Period in the event shares of the Common
Stock are to be issued at the end of the Restriction Period, and shall designate
(or set forth the basis for determining) the Vesting Date or Vesting Dates for
each award of Restricted Shares and may prescribe other restrictions, terms and
conditions applicable to the vesting of such Restricted Shares in addition to
those provided in the Plan. The Committee shall determine the price, if any, to
be paid by the Holder for the Restricted Shares; provided, however, that the
issuance of Restricted Shares shall be made for at least the minimum
consideration necessary to permit such Restricted Shares to be deemed fully paid
and nonassessable. All determinations made by the Committee pursuant to this
Section 8.1 shall be specified in the Agreement.
8.2 Issuance of Restricted Shares at Beginning of the Restriction Period.
If shares of Common Stock are issued at the beginning of the Restriction Period,
the stock certificate or certificates representing such Restricted Shares shall
be registered in the name of the Holder to whom such Restricted Shares shall
have been awarded. During the Restriction Period, certificates representing the
Restricted Shares and any securities constituting Retained Distributions shall
bear a restrictive legend to the effect that ownership of the Restricted Shares
(and such Retained Distributions), and the enjoyment of all rights appurtenant
thereto, are subject to the restrictions, terms and conditions provided in the
Plan and the applicable Agreement. Such certificates shall remain in the custody
of the Company and the Holder shall deposit with the Company stock powers or
other instruments of assignment, each endorsed in blank, so as to permit
retransfer to the Company of all or any portion of the Restricted Shares and any
securities constituting Retained Distributions that shall be forfeited or
otherwise not become vested in accordance with the Plan and the applicable
Agreement.
8.3 Restrictions. Restricted Shares issued at the beginning of the
Restriction Period shall constitute issued and outstanding shares of Common
Stock for all corporate purposes. The Holder will have the right to vote such
Restricted Shares, to receive and retain such dividends and distributions, as
the Committee may in its sole discretion designate, paid or distributed on such
Restricted Shares and to exercise all other rights, powers and privileges of a
Holder of Common Stock with respect to such Restricted Shares; except, that (a)
the Holder will not be entitled to delivery of the stock certificate or
certificates representing such Restricted Shares until the Restriction Period
shall have expired and unless all other vesting requirements with respect
thereto shall have been fulfilled or waived; (b) the Company will retain custody
of the stock certificate or certificates representing the Restricted Shares
during the Restriction Period as provided in Section 8.2; (c) other than such
dividends and distributions as the Committee may in its sole discretion
designate, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Shares (and such
Retained Distributions will be subject to the same restrictions, terms and
vesting and other conditions as are applicable to the Restricted Shares) until
such time, if ever, as the Restricted Shares with respect to which such Retained
Distributions shall have been made, paid or declared shall have become vested,
and such Retained Distributions shall not bear interest or be segregated in a
separate account; (d) the Holder may not sell, assign, transfer, pledge,
exchange, encumber or dispose of the Restricted Shares or any Retained
Distributions or his interest in any of them during the Restriction Period; and
(e) a breach of any restrictions, terms or conditions provided in the Plan or
established by the Committee with respect to any Restricted Shares or Retained
Distributions will cause a forfeiture of such Restricted Shares and any Retained
Distributions with respect thereto.
8.4 Issuance of Stock at End of the Restriction Period. Restricted Shares
issued at the end of the Restriction Period shall not constitute issued and
outstanding shares of Common Stock and the Holder shall not have any of the
rights of a stockholder with respect to the shares of Common Stock covered by
such an award of Restricted Shares, in each case until such shares shall have
been transferred to the Holder at the end of the Restriction Period. If and to
the extent that shares of Common Stock are to be issued at the end of the
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Restriction Period, the Holder shall be entitled to receive Dividend Equivalents
with respect to the shares of Common Stock covered thereby either (i) during the
Restriction Period or (ii) in accordance with the rules applicable to Retained
Distributions, as the Committee may specify in the Agreement.
8.5 Cash Awards. In connection with any award of Restricted Shares, an
Agreement may provide for the payment of a cash amount to the Holder of such
Restricted Shares at any time after such Restricted Shares shall have become
vested. Such cash awards shall be payable in accordance with such additional
restrictions, terms and conditions as shall be prescribed by the Committee in
the Agreement and shall be in addition to any other salary, incentive, bonus or
other compensation payments which such Holder shall be otherwise entitled or
eligible to receive from the Company.
8.6 Completion of Restriction Period. On the Vesting Date with respect to
each award of Restricted Shares, and the satisfaction of any other applicable
restrictions, terms and conditions (a) all or the applicable portion of such
Restricted Shares shall become vested, (b) any Retained Distributions and any
unpaid Dividend Equivalents with respect to such Restricted Shares shall become
vested to the extent that the Restricted Shares related thereto shall have
become vested and (c) any cash award to be received by the Holder with respect
to such Restricted Shares shall become payable, all in accordance with the terms
of the applicable Agreement. Any such Restricted Shares, Retained Distributions
and any unpaid Dividend Equivalents that shall not become vested shall be
forfeited to the Company and the Holder shall not thereafter have any rights
(including dividend and voting rights) with respect to such Restricted Shares,
Retained Distributions and any unpaid Dividend Equivalents that shall have been
so forfeited. The Committee may, in its discretion, provide that the delivery of
any Restricted Shares, Retained Distributions and unpaid Dividend Equivalents
that shall have become vested, and payment of any cash awards that shall have
become payable, shall be deferred until such date or dates as the recipient may
elect. Any election of a recipient pursuant to the preceding sentence shall be
filed in writing with the Committee in accordance with such rules and
regulations, including any deadline for the making of such an election, as the
Committee may provide.
ARTICLE IX
STOCK UNITS
9.1 Grant. In addition to granting awards of Options, SARs and Restricted
Shares, the Committee shall have authority to grant to eligible persons awards
of Stock Units which may be in the form of Common Stock or units, the value of
which is based, in whole or in part, on the Fair Market Value of the Common
Stock. Subject to the provisions of the Plan, including any rules established
pursuant to Section 9.2, awards of Stock Units shall be subject to such terms,
restrictions, conditions, vesting requirements and payment rules as the
Committee may determine in its sole discretion, which need not be identical for
each Award. The determinations made by the Committee pursuant to this Section
9.1 shall be specified in the applicable Agreement.
9.2 Rules. The Committee may, in its sole discretion, establish any or all
of the following rules for application to an award of Stock Units:
(a) Any shares of Common Stock which are part of an award of Stock
Units may not be assigned, sold, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or if later,
the date provided by the Committee at the time of the Award.
(b) Such Awards may provide for the payment of cash consideration by
the person to whom such Award is granted or provide that the Award, and
Common Stock to be issued in connection therewith, if applicable, shall be
delivered without the payment of cash consideration; provided, however,
that the issuance of any shares of Common Stock in connection with an award
of Stock Units shall be for at least the minimum consideration necessary to
permit such shares to be deemed fully paid and nonassessable.
(c) Awards of Stock Units may relate in whole or in part to
performance or other criteria established by the Committee at the time of
grant.
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(d) Awards of Stock Units may provide for deferred payment schedules,
vesting over a specified period of employment, the payment (on a current or
deferred basis) of dividend equivalent amounts with respect to the number
of shares of Common Stock covered by the Award, and elections by the
employee to defer payment of the Award or the lifting of restrictions on
the Award, if any.
(e) In such circumstances as the Committee may deem advisable, the
Committee may waive or otherwise remove, in whole or in part, any
restrictions or limitations to which a Stock Unit Award was made subject at
the time of grant.
ARTICLE X
PERFORMANCE AWARDS
10.1 Terms of Performance Awards. Without limiting the type or number of
Awards that may be made under the other provisions of this Plan, an Award may be
in the form of a Performance Award. A Performance Award shall be paid, vested or
otherwise deliverable solely on account of the attainment of one or more pre-
established, objective Performance Goals established by the Committee prior to
the earlier to occur of (i) 90 days after the commencement of the period of
service to which the Performance Goal relates and (ii) the lapse of 25% of the
period of service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially uncertain. A
Performance Goal is objective if a third party having knowledge of the relevant
facts could determine whether the goal is met.
10.2 Performance Goal Criteria. Such a Performance Goal may be based on
one or more business criteria that apply to the individual, one or more business
units of the Company, or the Company as a whole, and may include one or more of
the following: revenue, net income, stock price, market share, earnings per
share, cash flow, return on equity, return on assets or decrease in costs.
Unless otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and Performance
Awards, it is the intent of the Plan to conform with the standards of Section
162(m) of the Code and Treasury Regulation sec. 1.162-27(e)(2)(i), and the
Committee in establishing such goals and interpreting the Plan shall be guided
by such provisions.
10.3 Committee Certification. Prior to the payment of any compensation
based on the achievement of Performance Goals, the Committee must certify in
writing that applicable Performance Goals and any of the material terms thereof
were, in fact, satisfied. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Performance Awards made pursuant to
this Plan shall be determined by the Committee.
10.4 Certain Limitations. Notwithstanding anything to the contrary
contained in this Plan, any Performance Awards made hereunder shall be limited
so that no person may be granted Performance Awards consisting of cash or in any
other form permitted under this Plan (other than Awards consisting of Options or
SARs or otherwise consisting of shares of Common Stock or units denominated in
such shares, or, in either case, additional cash amounts related to such an
Award) in respect of any one-year period having a value determined on the date
of grant in excess of $10,000,000.
ARTICLE XI
GENERAL PROVISIONS
11.1 Acceleration of Options, SARs, Restricted Shares, Stock Units and
Performance Awards.
(a) Death or Disability. If a Holder's employment shall terminate by
reason of death or Disability, notwithstanding any contrary waiting period,
installment period, vesting schedule or Restriction Period in any Agreement
or in the Plan, unless the applicable Agreement provides otherwise: (i) in
the case of an Option or SAR, each outstanding Option or SAR granted under
the Plan shall immediately become
A-11
<PAGE> 59
exercisable in full in respect of the aggregate number of shares covered
thereby; (ii) in the case of Restricted Shares, the Restriction Period
applicable to each such award of Restricted Shares shall be deemed to have
expired and all such Restricted Shares, any related Retained Distributions
and any unpaid Dividend Equivalents shall become vested and any cash
amounts payable pursuant to the applicable Agreement shall be adjusted in
such manner as may be provided in the Agreement, (iii) in the case of Stock
Units, each such award of Stock Units shall become vested in full, and (iv)
in the case of Performance Awards, each such Performance Award shall become
vested in full.
(b) Approved Transactions; Board Change; Control Purchase. In the
event of any Approved Transaction, Board Change or Control Purchase,
notwithstanding any contrary waiting period, installment period, vesting
schedule or Restriction Period in any Agreement or in the Plan, unless the
applicable Agreement provides otherwise: (i) in the case of an Option or
SAR, each such outstanding Option or SAR granted under the Plan shall
become exercisable in full in respect of the aggregate number of shares
covered thereby; (ii) in the case of Restricted Shares, the Restriction
Period applicable to each such award of Restricted Shares shall be deemed
to have expired and all such Restricted Shares, any related Retained
Distributions and any unpaid Dividend Equivalents shall become vested and
any cash amounts payable pursuant to the applicable Agreement shall be
adjusted in such manner as may be provided in the Agreement; (iii) in the
case of Stock Units, each such award of Stock Units shall become vested in
full; and (iv) in the case of Performance Awards, all Performance Goals
shall thereupon be deemed to have been achieved, fully vested and
immediately payable, in each case effective upon the Board Change or
Control Purchase or immediately prior to consummation of the Approved
Transaction; provided, however, that any Options, SARs or, if applicable,
Stock Units not theretofore exercised shall terminate upon consummation of
the Approved Transaction. Notwithstanding the foregoing, unless otherwise
provided in the applicable Agreement, the Committee may, in its discretion,
determine that any or all outstanding Awards of any or all types granted
pursuant to the Plan will not vest or become exercisable on an accelerated
basis nor Performance Goals be deemed to have been achieved in connection
with an Approved Transaction and/or will not terminate if not exercised
prior to consummation of the Approved Transaction, if the Board or the
surviving or acquiring corporation, as the case may be, shall have taken,
or made effective provision for the taking of, such action as in the
opinion of the Committee is equitable and appropriate to substitute a new
Award for such Award or to assume such Award and in order to make such new
or assumed Award, as nearly as may be practicable, equivalent to the old
Award (before giving effect to any acceleration of the vesting or
exercisability thereof), taking into account, to the extent applicable, the
kind and amount of securities, cash or other assets into or for which the
Common Stock may be changed, converted or exchanged in connection with the
Approved Transaction.
11.2 Termination of Employment.
(a) General. If a Holder's employment shall terminate prior to the
complete exercise of an Option or SAR (or deemed exercise thereof, as
provided in Section 7.2) or during the Restriction Period with respect to
any Restricted Shares or prior to the vesting or complete exercise of any
Stock Units or Performance Award, then such Option, SAR, Stock Unit or
Performance Award shall thereafter be exercisable, and the Holder's rights
to any unvested Restricted Shares, Retained Distributions, unpaid Dividend
Equivalents and cash amounts and any such unvested Stock Units shall
thereafter vest solely to the extent provided in the applicable Agreement;
provided, however, that (i) no Option or SAR may be exercised after the
scheduled expiration date thereof; (ii) if the Holder's employment
terminates by reason of death or Disability, the Option or SAR shall remain
exercisable for a period of at least one year following such termination
(but not later than the scheduled expiration of such Option or SAR); and
(iii) any termination by the Company for cause will be treated in
accordance with the provisions of Section 11.2.
(b) Termination by Company for Cause. If a Holder's employment with
the Company or a Subsidiary shall be terminated by the Company or such
Subsidiary during the Restriction Period with respect to any Restricted
Shares, or prior to the exercise of any Option or SAR, or prior to the
vesting or exercise of any Stock Unit, or prior to the vesting of any
Performance Award, for cause (for these
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<PAGE> 60
purposes, cause shall have the meaning ascribed thereto in any employment
agreement to which such Holder is a party or, in the absence thereof, shall
include but not be limited to, insubordination, dishonesty, incompetence,
moral turpitude, other misconduct of any kind and the refusal to perform
his duties and responsibilities for any reason other than illness or
incapacity; provided, however, that if such termination occurs within 12
months after an Approved Transaction, Control Purchase or Board Change,
termination for cause shall mean only a felony conviction for fraud,
misappropriation or embezzlement), then (i) all Options and SARs and all
unvested or unexercised Stock Units held by such Holder shall immediately
terminate, (ii) such Holder's rights to all Restricted Shares, Retained
Distributions, any unpaid Dividend Equivalents and any cash awards shall be
forfeited immediately and (iii) such Holder's interest in all unvested
Performance Awards shall be forfeited immediately.
(c) Miscellaneous. The Committee may determine whether any given leave
of absence constitutes a termination of employment; provided, however, that
for purposes of the Plan (i) a leave of absence, duly authorized in writing
by the Company for military service or sickness, or for any other purpose
approved by the Company if the period of such leave does not exceed 90
days, and (ii) a leave of absence in excess of 90 days, duly authorized in
writing by the Company, provided the employee's right to reemployment is
guaranteed either by statute or contract, shall not be deemed a termination
of employment. Awards made under the Plan shall not be affected by any
change of employment so long as the Holder continues to be an employee of
the Company or any Subsidiary.
11.3 Right of Company to Terminate Employment. Nothing contained in the
Plan or in any Award, and no action of the Company or the Committee with respect
thereto, shall confer or be construed to confer on any Holder any right to
continue in the employ of the Company or any of its Subsidiaries or interfere in
any way with the right of the Company or a Subsidiary to terminate the
employment of the Holder at any time, with or without cause; subject, however,
to the provisions of any employment agreement between the Holder and the Company
or any Subsidiary.
11.4 Nonalienation of Benefits. No right or benefit under the Plan shall
be subject to anticipation, alienation, sale, assignment, hypothecation, pledge,
exchange, transfer, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void. No right or benefit hereunder shall in any manner
be liable for or subject to the debts, contracts, liabilities or torts of the
person entitled to such benefits.
11.5 Written Agreement. Each grant of an Option under the Plan shall be
evidenced by a stock option agreement which shall designate the Options granted
thereunder as Incentive Stock Options or Nonqualified Stock Options; each SAR
shall be evidenced by a stock appreciation rights agreement; each award of
Restricted Shares shall be evidenced by a restricted shares agreement; each
award of Stock Units shall be evidenced by a stock units agreement; each
Performance Award shall be evidenced by a performance award agreement, each in
such form and containing such terms and provisions not inconsistent with the
provisions of the Plan as the Committee from time to time shall approve;
provided, however, that if more than one type of Award is made to the same
Holder, such Awards may be evidenced by a single agreement with such Holder.
Each grantee of an Option, SAR, Restricted Shares, Stock Units or Performance
Awards shall be notified promptly of such grant and a written agreement shall be
promptly executed and delivered by the Company and the grantee, provided that,
in the discretion of the Committee, such grant of Options, SARs, Restricted
Shares, Stock Units or Performance Award shall terminate if such written
agreement is not signed by such grantee (or his attorney) and delivered to the
Company within 60 days after the date the Committee approved such grant. Any
such written agreement may contain (but shall not be required to contain) such
provisions as the Committee deems appropriate (i) to insure that the penalty
provisions of Section 4999 of the Code will not apply to any stock or cash
received by the Holder from the Company or (ii) to provide cash payments to the
Holder to mitigate the impact of such penalty provisions upon the Holder. Any
such agreement may be supplemented or amended from time to time as approved by
the Committee as contemplated by Section 11.8(b).
11.6 Designation of Beneficiaries. Each person who shall be granted an
Award under the Plan may designate a beneficiary or beneficiaries and may change
such designation from time to time by filing a written
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<PAGE> 61
designation of beneficiary or beneficiaries with the Committee on a form to be
prescribed by it, provided that no such designation shall be effective unless so
filed prior to the death of such person.
11.7 Right of First Refusal. The Agreements may contain such provisions as
the Committee shall determine to the effect that if a Holder elects to sell all
or any shares of Common Stock that such Holder acquired upon the exercise of an
Option or SAR or upon the vesting of Restricted Shares or Stock Units awarded
under the Plan, then such Holder shall not sell such shares unless such Holder
shall have first offered in writing to sell such shares to the Company at Fair
Market Value on a date specified in such offer (which date shall be at least
three business days and not more than ten business days following the date of
such offer). In any such event, certificates representing shares issued upon
exercise of Options or SARs and the vesting of Restricted Shares or Stock Units
shall bear a restrictive legend to the effect that transferability of such
shares are subject to the restrictions contained in the Plan and the applicable
Agreement and the Company may cause the transfer agent for the Common Stock to
place a stop transfer order with respect to such shares.
11.8 Termination and Amendment.
(a) General. Unless the Plan shall theretofore have been terminated as
hereinafter provided, no Awards may be made under the Plan on or after the
tenth anniversary of the Effective Date. The Board or the Committee may at
any time prior to the tenth anniversary of the Effective Date terminate the
Plan, and may, from time to time, suspend or discontinue the Plan or modify
or amend the Plan in such respects as it shall deem advisable; except that
no such modification or amendment shall be effective prior to approval by
the Company's stockholders to the extent such approval is then required
pursuant to Rule 16b-3 in order to preserve the applicability of any
exemption provided by such rule to any Award then outstanding (unless the
holder of such Award consents) or to the extent stockholder approval is
otherwise required by applicable legal requirements.
(b) Modification. No termination, modification or amendment of the
Plan may, without the consent of the person to whom any Award shall
theretofore have been granted, adversely affect the rights of such person
with respect to such Award. No modification, extension, renewal or other
change in any Award granted under the Plan shall be made after the grant of
such Award, unless the same is consistent with the provisions of the Plan.
With the consent of the Holder and subject to the terms and conditions of
the Plan (including Section 11.8(a)), the Committee may amend outstanding
Agreements with any Holder, including, without limitation, any amendment
which would (i) accelerate the time or times at which the Award may be
exercised and/or (ii) extend the scheduled expiration date of the Award.
Without limiting the generality of the foregoing, the Committee may, but
solely with the Holder's consent unless otherwise provided in the
Agreement, agree to cancel any Award under the Plan and issue a new Award
in substitution therefor, provided that the Award so substituted shall
satisfy all of the requirements of the Plan as of the date such new Award
is made. Nothing contained in the foregoing provisions of this Section
11.08(b) shall be construed to prevent the Committee from providing in any
Agreement that the rights of the Holder with respect to the Award evidenced
thereby shall be subject to such rules and regulations as the Committee
may, subject to the express provisions of the Plan, adopt from time to
time, or impair the enforceability of any such provision.
11.9 Government and Other Regulations. The obligation of the Company with
respect to Awards shall be subject to all applicable laws, rules and regulations
and such approvals by any governmental agencies as may be required, including,
without limitation, the effectiveness of any registration statement required
under the Securities Act of 1933, and the rules and regulations of any
securities exchange or association on which the Common Stock may be listed or
quoted. For so long as the Common Stock is registered under the Exchange Act,
the Company shall use its reasonable efforts to comply with any legal
requirements (i) to maintain a registration statement in effect under the
Securities Act of 1933 with respect to all shares of Common Stock that may be
issued to Holders under the Plan, and (ii) to file in a timely manner all
reports required to be filed by it under the Exchange Act.
11.10 Withholding. The Company's obligation to deliver shares of TCOMA or
LBTYA or pay cash in respect of any Award under the Plan shall be subject to
applicable federal, state and local tax withholding requirements. Federal, state
and local withholding tax due at the time of an Award, upon the exercise of any
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<PAGE> 62
Option or SAR or upon the vesting of, or expiration of restrictions with respect
to, Restricted Shares or Stock Units, as appropriate, may, in the discretion of
the Committee, be paid in shares of Common Stock already owned by the Holder or
through the withholding of shares otherwise issuable to such Holder, upon such
terms and conditions (including, without limitation, the conditions referenced
in Section 6.6) as the Committee shall determine. If the Holder shall fail to
pay, or make arrangements satisfactory to the Committee for the payment, to the
Company of all such federal, state and local taxes required to be withheld by
the Company, then the Company shall, to the extent permitted by law, have the
right to deduct from any payment of any kind otherwise due to such Holder an
amount equal to any federal, state or local taxes of any kind required to be
withheld by the Company with respect to such Award.
11.11 Separability. It is the intent of the Company that Awards under this
Plan comply with certain exemptive provisions of Rule 16b-3 with respect to
persons subject to Section 16 of the Exchange Act unless otherwise provided
herein or in an Award Agreement, that any ambiguities or inconsistencies in the
construction of this Plan be interpreted to give effect to such intention, and
that if any provision of this Plan is found not to be consistent with the
availability of exemptions for grants and awards or dispositions to the Company
under Rule 16b-3, such provision shall be null and void to the extent required
to comply with such exemptive provisions of Rule 16b-3.
11.12 Non-Exclusivity of the Plan. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise then under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
11.13 Exclusion from Pension and Profit-Sharing Computation. By acceptance
of an Award, unless otherwise provided in the applicable Agreement, each Holder
shall be deemed to have agreed that such Award is special incentive compensation
that will not be taken into account, in any manner, as salary, compensation or
bonus in determining the amount of any payment under any pension, retirement or
other employee benefit plan, program or policy of the Company or any Subsidiary.
In addition, each beneficiary of a deceased Holder shall be deemed to have
agreed that such Award will not affect the amount of any life insurance
coverage, if any, provided by the Company on the life of the Holder which is
payable to such beneficiary under any life insurance plan covering employees of
the Company or any Subsidiary.
11.14 Unfunded Plan. Neither the Company nor any Subsidiary shall be
required to segregate any cash or any shares of Common Stock which may at any
time be represented by Awards and the Plan shall constitute an "unfunded" plan
of the Company. Except as provided in Article VII with respect to awards of
Restricted Shares and except as expressly set forth in writing, no employee
shall have voting or other rights with respect to shares of Common Stock prior
to the delivery of such shares. Neither the Company nor any Subsidiary shall, by
any provisions of the Plan, be deemed to be a trustee of any Common Stock or any
other property, and the liabilities of the Company and any Subsidiary to any
employee pursuant to the Plan shall be those of a debtor pursuant to such
contract obligations as are created by or pursuant to the Plan, and the rights
of any employee, former employee or beneficiary under the Plan shall be limited
to those of a general creditor of the Company or the applicable Subsidiary, as
the case may be. In its sole discretion, the Board may authorize the creation of
trusts or other arrangements to meet the obligations of the Company under the
Plan, provided, however, that the existence of such trusts or other arrangements
is consistent with the unfunded status of the Plan.
11.15 Governing Law. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
11.16 Accounts. The delivery of any shares of Common Stock and the payment
of any amount in respect of an Award shall be for the account of the Company or
the applicable Subsidiary, as the case may be, and any such delivery or payment
shall not be made until the recipient shall have paid or made satisfactory
arrangements for the payment of any applicable withholding taxes as provided in
Section 11.10.
11.17 Legends. In addition to any legend contemplated by Section 11.7,
each certificate evidencing Common Stock subject to an Award shall bear such
legends as the Committee deems necessary or appropriate to reflect or refer to
any terms, conditions or restrictions of the Award applicable to such shares,
including,
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<PAGE> 63
without limitation, any to the effect that the shares represented thereby may
not be disposed of unless the Company has received an opinion of counsel,
acceptable to the Company, that such disposition will not violate any federal or
state securities laws.
11.18 Company's Rights. The grant of Awards pursuant to the Plan shall not
affect in any way the right or power of the Company to make reclassifications,
reorganizations or other changes of or to its capital or business structure or
to merge, consolidate, liquidate, sell or otherwise dispose of all or any part
of its business or assets.
A-16
<PAGE> 64
If you are planning to attend the Annual Meeting in person, you must bring
the admission ticket printed on this page with you. You will be asked for this
ticket at the stockholder registration desk at the Annual Meeting. If you do not
have an admission ticket, other evidence of share ownership will be necessary to
obtain admission to the Annual Meeting.
(Please cut along this line)
................................................................................
TELE-COMMUNICATIONS, INC.
1996 ANNUAL STOCKHOLDER MEETING ADMISSION TICKET
The Annual Meeting of Stockholders of Tele-Communications, Inc. will be held at
10:00 a.m. local time, on Thursday, August 15, 1996, at the TCI National Digital
Television Center, 4100 E. Dry Creek Road, Littleton, Colorado.
TO ATTEND THIS MEETING YOU MUST PRESENT
THIS ADMISSION TICKET OR PROOF OF STOCK OWNERSHIP
<PAGE> 65
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
TELE-COMMUNICATIONS, INC.
SERIES A TCI GROUP COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
common stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 66
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. To consider and vote upon a proposal to approve the Tele-Communications,
Inc. 1996 Incentive Plan.
FOR AGAINST ABSTAIN
--- --- ---
3. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 67
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
TELE-COMMUNICATIONS, INC.
SERIES A LIBERTY MEDIA GROUP COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
common stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 68
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. To consider and vote upon a proposal to approve the Tele-Communications,
Inc. 1996 Incentive Plan.
FOR AGAINST ABSTAIN
--- --- ---
3. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 69
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
TELE-COMMUNICATIONS, INC.
SERIES B TCI GROUP COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
common stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 70
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. To consider and vote upon a proposal to approve the Tele-Communications,
Inc. 1996 Incentive Plan.
FOR AGAINST ABSTAIN
--- --- ---
3. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
--------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 71
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
TELE-COMMUNICATIONS, INC.
SERIES B LIBERTY MEDIA GROUP COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
common stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 72
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. To consider and vote upon a proposal to approve the Tele-Communications,
Inc. 1996 Incentive Plan.
FOR AGAINST ABSTAIN
--- --- ---
3. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 73
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
CLASS B 6% CUMULATIVE REDEEMABLE EXCHANGEABLE JUNIOR PREFERRED STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
preferred stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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 PROPOSAL 1.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 74
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 75
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
CONVERTIBLE PREFERRED STOCK, SERIES C
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
preferred stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 76
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. To consider and vote upon a proposal to approve the Tele-Communications,
Inc. 1996 Incentive Plan.
FOR AGAINST ABSTAIN
--- --- ---
3. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 77
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
REDEEMABLE CONVERTIBLE TCI GROUP PREFERRED STOCK, SERIES G
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
preferred stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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 PROPOSAL 1.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 78
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
<PAGE> 79
TELE-COMMUNICATIONS, INC.
POST OFFICE BOX 5630
DENVER, CO 80217
REDEEMABLE CONVERTIBLE LIBERTY MEDIA GROUP PREFERRED STOCK, SERIES H
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bob Magness and John C. Malone, as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of the above-referenced
preferred stock of Tele-Communications, Inc. ("TCI") held of record by the
undersigned on June 17, 1996, at the Annual Meeting of TCI to be held on August
15, 1996 or any adjournment thereof.
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 PROPOSAL 1.
(Continued, and to be signed and dated on reverse side.)
<PAGE> 80
1. Election of Three Directors (Nominees: Tony Coelho, John C. Malone and
Robert A. Naify).
FOR all nominees listed above: WITHHOLD AUTHORITY to vote for all nominees
---
listed above:
---
*EXCEPTIONS:
---
(Instructions: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the Annual Meeting.
Signature should agree with name printed hereon.
If stock is held in the name of more than one
person, each joint owner should sign.
Executors, administrators, trustees, guardians,
and attorneys should indicate the capacity in
which they sign.
DATED: , 1996
-------------------
-------------------------------
Stockholder's Signature
-------------------------------
Stockholder's Signature
Please Sign, Date and Return Votes MUST be Indicated
the Proxy Card Promptly Using in Black or Blue Ink (X)
the Enclosed Envelope
