<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant[ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
YOUNG BROADCASTING INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
___________________________________________________________________
4) Proposed maximum aggregate value of transaction:
5) Total fee paid: ___________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ___________________________________________
2) Form, Schedule or Registration Statement No.: _____________________
3) Filing Party: _____________________________________________________
4) Date Filed: _______________________________________________________
<PAGE>
YOUNG BROADCASTING INC.
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1997
____________________
The Annual Meeting of Stockholders of Young Broadcasting Inc. (the
"Company") will be held at the offices of KCAL-TV, 5515 Melrose Avenue, Los
Angeles, California at 10:00 A.M. (Los Angeles Time) on Monday, May 5, 1997,
for the following purposes:
1. To elect seven directors of the Company to serve for a term
of one year.
2. To ratify and approve the selection of independent auditors
of the Company to serve until the next annual meeting of
stockholders.
3. To approve an amendment to the Young Broadcasting Inc. 1995
Stock Option Plan to increase the total number of shares with
respect to which options and stock appreciation rights may be
granted thereunder.
4. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Preferred Stock, and to cancel authorized, but not
outstanding, series of Preferred Stock.
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of record of shares of the Company's Class A Common Stock
and Class B Common Stock at the close of business on April 4, 1997 are entitled
to notice of, and to vote at, the meeting and any adjournment thereof.
By Order of the Board of Directors,
JAMES A. MORGAN
Secretary
April 11, 1997
ALL PERSONS TO WHOM THE ACCOMPANYING PROXY IS ADDRESSED ARE REQUESTED TO
DATE, EXECUTE AND RETURN IT PROMPTLY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
YOUNG BROADCASTING INC.
____________________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 5, 1997
____________________
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Young Broadcasting Inc. (the "Company") of proxies
and voting instructions in the accompanying form for use at the Annual Meeting
of Stockholders to be held at the offices of KCAL-TV, 5515 Melrose Avenue, Los
Angeles, California at 10:00 A.M. (Los Angeles time) on Monday, May 5, 1997,
and at all adjournments thereof. The shares represented by proxies solicited
by the Board of Directors of the Company will be voted in accordance with the
directions given therein. If no direction is indicated, the proxy will be
voted in favor of the proposals set forth in the notice attached to this proxy
statement. Any stockholder may revoke his proxy at any time prior to the
voting thereof by giving notice in writing to the Secretary of the Company, by
granting a proxy bearing a later date or by voting in person at the meeting.
Holders of record of shares of the Company's Class A Common Stock, $.001
par value ("Class A Common Stock"), and Class B Common Stock, $.001 par value
("Class B Common Stock"), at the close of business on April 4, 1997 are
entitled to vote at the meeting. As of such record date, there were 12,241,608
shares of Class A Common Stock and 2,017,230 shares of Class B Common Stock
outstanding.
The presence, in person or by proxy, of stockholders entitled to cast at
least a majority of the votes entitled to be cast by all stockholders will
constitute a quorum for the transaction of business at the meeting. Holders of
shares of Class A Common Stock and Class B Common Stock will vote as a single
class on all matters submitted to a vote of the stockholders. Each share of
Class A Common Stock will be entitled to one vote and each share of Class B
Common Stock will be entitled to ten votes.
Directors will be elected by a plurality of the votes cast at the
meeting. Approval of each other matter will require the affirmative vote of a
majority of the votes cast thereon. On all matters to come before the meeting,
abstentions and non-votes will not be considered as votes cast, and will be
considered only for purposes of determining whether a quorum is present at the
meeting. Adam Young and Vincent Young together beneficially possess
approximately 58.5% of the aggregate votes that may be cast at the meeting.
See "Security Ownership of Certain Beneficial Owners and Management."
Accordingly, the affirmative vote of Adam Young and Vincent Young alone is
sufficient to adopt each of the proposals to be submitted to the stockholders
at the meeting. Adam Young and Vincent Young have advised the Company that
they will vote all of their shares in favor of the proposals set forth in the
notice attached to this proxy statement.
The cost of soliciting these proxies will be borne by the Company.
Proxies may be solicited by directors, officers or employees of the Company in
person or by telephone.
The principal executive offices of the Company are at 599 Lexington
Avenue, New York, New York 10022. This proxy statement and the form of proxy
are being mailed to stockholders on or about April 11, 1997.
ELECTION OF DIRECTORS
It is proposed to elect seven directors of the Company to hold office for
terms of one year and until their successors shall be elected and shall
qualify. At the meeting, the persons named in the enclosed form of proxy will
vote the shares covered thereby for the election of the nominees named below to
the Board of Directors of the Company unless instructed to the contrary. Each
nominee is currently a director of the Company.
<PAGE>
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NAME OF NOMINEE AGE SINCE EXPERIENCE DURING THE PAST FIVE YEARS
- --------------- --- -------- -------------------------------------
Vincent J. Young 49 1986 Chairman of the Company since its inception
in 1986, member of the Compensation and
Audit Committees of the Company, and a
director and President of each of the
Company's corporate subsidiaries. Mr.
Young is also Chairman and a director of
Adam Young Inc., a national television
representation firm, a position he has held
since 1980. Vincent Young is the son of
Adam Young.
Adam Young 83 1986 Treasurer of the Company since its
inception, and a director and Treasurer of
each of the Company's corporate
subsidiaries. Mr. Young is also Treasurer
and a director of Adam Young Inc., which he
founded in 1944.
Ronald J. Kwasnick 50 1994 President of the Company since its
inception.
Bernard F. Curry 78 1994 Chairman of the Audit Committee of the
Company. Mr. Curry served from 1982 as a
director and from December 1992 as the
Chairman of the Audit Committee of Morgan
Trust Company of Florida, N.A. until it was
merged into J.P. Morgan Florida, FSB in
January 1994. He has served the surviving
bank, which is an indirect wholly-owned
subsidiary of J.P. Morgan & Co.
Incorporated, in the same capacities since
August 1991.
Alfred J. Hickey, Jr. 60 1994 Member of the Compensation Committee and
the Stock Option Committee of the Company.
Mr. Hickey is currently a private investor.
He was Vice-President--Institutional Sales
of Legg Mason, a brokerage firm, from May
1990 to May 1991. Mr. Hickey was a private
investor from May 1991 to June 1993, when he
became the Vice President--International
Sales of Southeast Research Partners, a
brokerage firm, in which capacity he served
until October 1994.
Leif Lomo 67 1994 Member of the Audit Committee of the
Company. From 1987 to 1994, Mr. Lomo
served as Chairman of A.B. Chance
Industries, Inc., a manufacturer of
electricity-related equipment. Prior to
its acquisition by Hubbell Incorporated in
April 1994, Mr. Lomo also acted as
President and Chief Executive Officer of
A.B. Chance. From January 1995 to June
1996, Mr. Lomo served as the President of
Marley Pump, a division of United Dominion
Company, which is principally engaged in
the manufacture and marketing of
submersible pumps for small water well
applications and the distribution of
gasoline. Mr. Lomo is currently a private
investor.
Michael S. Willner 45 1994 Chairman of the Compensation Committee and
the Stock Option Committee of the Company.
Mr. Willner co-founded and has served as
President and Chief Operating Officer of
Insight Communications Company, L.P., a
cable television operator, since 1985. Mr.
Willner currently serves as a
2
<PAGE>
director of International CableTel
Incorporated and of the National Cable
Television Association.
Each of Vincent Young, Adam Young and Ronald Kwasnick was a director
and/or executive officer of the Company at the time of the June 1992 filing of
an involuntary petition under Chapter 11 of the Bankruptcy Code against the
Company, which petition was dismissed at the mutual request of all participants
in August 1992.
The Board of Directors of the Company has an Audit Committee, a
Compensation Committee and a Stock Option Committee. The Board of Directors
has no nominating committee; nominees for election as directors of the Company
are selected by the Board of Directors. During 1996, there were three meetings
of the Audit Committee, four meetings of the Compensation Committee and two
meetings of the Stock Option Committee. All of the respective Committee
members attended each of the Committee meetings.
The Audit Committee consists of three directors, two of whom are required
by the Company's By-Laws to be independent directors. The current members of
the Audit Committee are Bernard Curry, Leif Lomo and Vincent Young. Its
functions are to (i) recommend the appointment of independent accountants, (ii)
review the arrangements for and scope of the audit by independent accountants,
(iii) review the independence of the independent accountants, (iv) consider the
adequacy of the system of internal accounting controls and review any proposed
corrective actions, (v) review and monitor the Company's policies regarding
business ethics and conflicts of interest, (vi) discuss with management and the
independent accountants the Company's draft annual financial statements and key
accounting and reporting matters, and (vii) review the activities and
recommendations of the Company's accounting department.
The Compensation Committee consists of three directors, two of whom are
required by the Company's By-Laws to be independent directors. The current
members of the Compensation Committee are Michael Willner, Alfred Hickey and
Vincent Young. The Compensation Committee has authority to review and make
recommendations to the Board of Directors with respect to the compensation of
executive officers of the Company. See "Executive Compensation-Report of the
Compensation Committee."
The Stock Option Committee consists of two directors, each of which is a
"disinterested" director (as described hereinafter under "Approval of Amendment
to 1995 Stock Option Plan"). The current members of the Stock Option Committee
are Michael Willner and Alfred Hickey. The Stock Option Committee administers
the Young Broadcasting Inc. 1995 Stock Option Plan (the "Plan") and determines,
among other things, the time or times at which options will be granted, the
recipients of grants, whether a grant will consist of incentive stock options
("ISOs"), nonqualified stock options and stock appreciation rights ("SARs") (in
tandem with an option or free-standing) or a combination thereof, the option
periods, whether an option is exercisable for Class A Common Stock or Class B
Common Stock, the limitations on option exercise and the number of shares to be
subject to such options, taking into account the nature and value of services
rendered and contributions made to the success of the Company. The Stock
Option Committee also has authority to interpret the Plan and, subject to
ceratin limitations, to amend provisions of the Plan as it deems advisable.
See "Approval of Amendment to 1995 Stock Option Plan."
During 1996, the Board of Directors of the Company held eleven meetings
and took action twice by unanimous written consent. All of the directors
attended at least 75% of the aggregate number of meetings of the Board.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 3, 1997
regarding the beneficial ownership of the Company's Common Stock by (i) each
executive officer and director of the Company, (ii) each stockholder known by
the Company to beneficially own 5% or more of such Common Stock, (iii) all
directors and executive officers as a group. Except as otherwise indicated,
the address of each beneficial holder of 5% or more of such Common Stock is the
same as the Company.
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock Percent of
-------------------- -------------------- Vote as a
Beneficial Owner Number % Number % Single Class(1)
- ---------------- ------ --- ------ --- ---------------
<S> <C> <C> <C> <C> <C>
Vincent J. Young 4,517(2)(3) * 1,181,942(4) 51.3 33.5
(5)(6)(7)
Adam Young -- -- 948,668(4)(8) 47.0 29.3
Ronald J. Kwasnick 533(3) * 123,645(7)(9) 6.0 3.8
James A. Morgan 833(3)(10) * 214,795(7)(11) 9.9 6.3
Deborah A. McDermott 1,333(3) * 39,555(7)(12) 1.9 1.2
Richard Young 1,000 * 130,016(5) 6.4 4.0
Putnam Investments, Inc. 1,493,024 12.2 -- -- 4.6
and Affiliates(13)
One Post Office Square
Boston, MA 02109
FMR Corp. 622,400 5.1 -- -- 1.9
and Affiliates(14)
82 Devonshire Street
Boston, MA 02109
Franklin Resources, Inc. 610,000 5.1 -- -- 1.9
and Affiliates(15)
777 Mariners Island Boulevard
San Mateo, CA 94403
Janus Capital Corporation 1,266,600 10.4 -- -- 3.9
and Affiliates(16)
100 Fillmore Street
Denver, CO 80206
Mellon Bank Corporation 738,000 6.0 -- -- 2.3
and Affiliates(17)
One Mellon Bank Center
Pittsburgh, PA 15258
Neuberger & Berman, LLC 689,825 5.6 -- -- 2.1
and Affiliates(18)
605 Third Avenue
New York, NY 10158
Bernard F. Curry(19) 4,400 * -- -- *
Alfred J. Hickey, Jr.(19) 3,400 * -- -- *
Leif Lomo(19) 4,400 * -- -- *
Michael S. Willner(19) 13,400 * -- -- *
All directors and 32,200 * 2,454,755 96.7 65.2
executive officers,
as a group
(footnotes begin on following page)
</TABLE>
4
<PAGE>
- ---------------------------
* Less than 1%.
(1) Holders of Class A Common Stock are entitled to one vote per share, and
holders of Class B Common Stock are entitled to ten votes per share
except for votes relating to certain significant transactions. Holders
of both classes of Common Stock will vote together as a single class on
all matters presented for a vote, except as otherwise required by law.
(2) Includes 2,812 shares held by his wife.
(3) Includes 533 shares held through the 401(k) Plan.
(4) Includes 67,450 shares held by Adam Young Inc., of which Adam Young and
Vincent Young are executive officers and directors, and of which they
together beneficially own all of the outstanding voting shares.
(5) Includes 130,016 shares held pursuant to an agreement dated as of July 1,
1991 which established a voting trust for the benefit of family members of
management, for which Vincent Young and Richard Young act as trustees.
During the term of the voting trust, which expires July 1, 2001, the
trustees have the sole right to vote the shares subject to the trust. If
the trustees cannot agree as to how the shares shall be voted, each
trustee will vote 50% of the shares.
(6) Includes 288,150 shares issuable upon the exercise of options granted
pursuant to the Young Broadcasting Inc. 1995 Stock Option Plan (the
"Plan"), 10,126 of which are exercisable at $21.725 per share, 122,999 of
which are exercisable at $19.75 per share, 3,252 of which are
exercisable, subject to stockholder approval of the proposal to amend the
Plan, at $33.825 per share and 18,648 of which are exercisable, subject
to such approval, at $30.75 per share. See "Approval of Amendment to
1995 Stock Option Plan." Also includes 14,087 shares held pursuant to an
agreement dated as of October 1, 1996 which established a voting trust
for the benefit of family members of management, for which Vincent Young
acts as trustee. During the term of the voting trust, which expires
October 1, 2006, the trustee has the right to vote the shares subject to
the trust.
(7) Does not include those shares issuable upon the exercise of options
granted pursuant to the Plan which are not exercisable within 60 days.
(8) Includes 100,000 shares held by his wife.
(9) Includes 35,250 shares issuable upon the exercise of options granted
pursuant to the Plan, 32,000 of which are exercisable at $19.75 per share
and 3,250 of which are exercisable, subject to stockholder approval of
the proposal to amend the Plan, at $30.75 per share. See "Approval of
Amendment to 1995 Stock Option Plan."
(10) Includes 300 shares held by a family trust.
(11) Includes 160,125 shares issuable upon the exercise of options granted
pursuant to the Plan, 157,125 of which are exercisable at $19.75 per
share and 3,000 of which are exercisable, subject to stockholder approval
of the proposal to amend the Plan, at 30.75 per share. See "Approval of
Amendment to 1995 Stock Option Plan."
(12) Includes 25,000 shares issuable upon the exercise of options granted
pursuant to the Plan, 22,000 of which are exercisable at $19.75 per share
and 3,000 of which are exercisable, subject to stockholder approval of
the proposal to amend the Plan, at $30.75 per share. See "Approval of
Amendment to 1995 Stock Option Plan."
(13) Represents shares beneficially owned by Putnam Investment Management,
Inc. ("PIM") (1,303,472) and The Putnam Advisory Company, Inc. (189,552),
wholly-owned subsidiaries of Putnam Investments, Inc. ("PI"), a
wholly-owned subsidiary of Marsh & McLennan Companies, Inc. ("MM"), which
shares of PIM include 799,800 shares beneficially owned by Putnam New
Opportunities Fund which is part of the Putnam Family of Funds, as
reported in a Schedule 13G filed in February 1997. PI and MM disclaim
beneficial ownership of such shares pursuant to Rule 13d-4 under the
Securities Exchange Act of 1934, as amended ("Exchange Act").
(14) Represents shares beneficially owned by Fidelity Management & Research
Company (517,700) and Fidelity Management Trust Company (104,700),
subsidiaries of FMR Corp., as reported in a Schedule 13G filed in
February 1997. Such report also includes individual reporting persons
who control FMR Corp.
(15) Represents shares beneficially owned by Franklin Mutual Advisers, Inc., a
subsidiary of Franklin Resources, Inc. ("Franklin"), as reported in a
Schedule 13G filed in February 1997. Such report also includes
individual reporting persons who control Franklin. All of such reporting
persons disclaim beneficial ownership of such shares pursuant to Rule
13d-4 under the Exchange Act.
(16) Represents shares beneficially owned by Janus Capital Corporation ("Janus
Capital"), including 1,045,150 shares beneficially owned by Janus Fund,
as reported in a Schedule 13G filed in February 1997. Such report also
includes an individual reporting person who controls Janus Capital.
Janus Capital and such individual disclaim beneficial ownership of such
shares pursuant to Rule 13d-4 under the Exchange Act.
(17) Represents shares beneficially owned by Mellon Bank Corporation and
certain of its direct and indirect subsidiaries acting in various
fiduciary capacities, as reported in a Schedule 13G filed in February
1997.
(18) Represents shares beneficially owned by Neuberger & Berman, LLC and
Neuberger & Berman Management Inc., as reported in a Schedule 13G filed
in February 1997.
(19) Includes 1,000 shares issuable upon the exercise of stock options
exercisable at $20.70 per share, and 2,400 shares issuable upon the
exercise of options granted pursuant to the Plan, 1,200 of which are
exercisable at $28.00 per share and 1,200 of which are exercisable at
$34.00 per share.
5
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Company's Compensation Committee (the "Committee"), which is composed
of two independent directors (Alfred J. Hickey, Jr. and Michael S. Willner) and
one inside director (Vincent Young), is responsible for reporting to the Board
concerning the compensation policies followed by the Committee in recommending
to the Board compensation for executive officers.
The Committee utilizes a program designed to attract, motivate and retain
highly skilled and effective executives who can achieve long-term success in an
increasingly competitive business environment and whose services the Company
needs to maximize its return to stockholders. The program is premised on the
belief that an executive's compensation should reflect his individual
performance and the overall performance of the Company, with an appropriate
balance maintained among the weightings of these potentially disparate
performance levels. The program requires flexibility in order to ensure that
the Company can continue to attract and retain executives with unique and
special skills critical to the Company's success. Flexibility is also
necessary to permit adjustments in compensation in light of changes in business
and economic conditions.
The compensation of each executive officer is reviewed annually by the
Committee. The Committee's approach in determining base salaries is to offer
salaries that the Committee perceives are fair and competitive with those of
executives with similar responsibilities at companies that are considered to be
comparable in terms of assets, net revenues and cash flows, based upon such
information as may be acquired by the Committee from annual reports and proxy
materials of such other companies, business and industry publications and other
sources as may be available from time to time. Such comparisons of executive
compensation are not necessarily with the same companies included in the
indices used in the performance graph that follows, as the Company's
competitors for executive talent are not limited to such companies.
The Committee applied the above considerations in recommending the 1996
compensation for the Company's Chairman and chief executive officer, Vincent
Young. In February 1996, the Board, based upon the Committee's
recommendations, established the base salary levels for Vincent Young and the
other executive officers. Consistent with the Committee's policy of
establishing competitive salary levels, each executive officer received an
approximately 15% increase from 1995 base salary.
As one of the Company's largest stockholders, Vincent Young's financial
well-being is directly tied to the overall performance of the Company as
reflected in the price per share of common stock. For his services as the
Company's chief executive officer, Vincent Young's compensation will be
determined in accordance with the compensation policies outlined herein.
In February 1996, the Committee established a year-end cash bonus plan
providing for bonus awards to executive officers at the discretion of the Board
if the Company substantially achieved its objectives in 1996. Included among
the objectives were (i) the continuing evaluation and pursuit of attractive
acquisition opportunities, (ii) achieving the financial goals set forth in the
1996 budget approved by the Board, (iii) increasing financial community and
investor awareness concerning the Company's securities and (iv) developing new
areas of business. In recognition of the successful achievement of such
objectives and other major accomplishments during 1996, the Committee
recommended and the Board approved the year-end cash bonuses to the Company's
executive officers as indicated in the Summary Compensation Table. The
management team's most important accomplishment during 1996 was the successful
negotiation for the financing and purchase from The Walt Disney Company of
KCAL-TV, the only independent VHF television station operating in the Los
Angeles market, which is ranked as the second-largest television market in
terms of population and the largest in terms of estimated television revenue.
In light of this transaction, the Committee recommended and the Board approved
a special component of the year-end cash bonuses to the Company's executive
officers in recognition of their contributions to the KCAL-TV acquisition.
This bonus is included in the Summary
6
<PAGE>
Compensation Table. In addition, the Company's executive officers attended
numerous conferences and met with many potential investors, and the Company's
coverage in the investment banking community has significantly expanded.
Furthermore, the Company has surpassed its projected 1996 estimates for new
business sales. Other accomplishments included (a) the successful completion
of the acquisitions of KWQC-TV in Davenport, Iowa and KELO-TV in Sioux Falls,
South Dakota, (b) the creation of a new $500 million senior credit facility
that includes a $185 million line of credit for future acquisitions and (c) the
successful completion in October 1996 of a public offering of 7,361,398 shares
of Class A Common Stock, certain proceeds of which were used to purchase
KCAL-TV.
The Committee in February 1996 also established an incentive cash
compensation plan for executive officers that created the potential for
significant incentive bonuses if Company achieved certain cash flow levels in
1996. The television broadcasting industry generally recognizes operating cash
flow or "OCF" (operating income before income taxes and interest expense, plus
depreciation and amortization and non-cash compensation, less payments for
program license liabilities) as a means of valuing companies. Accordingly, the
Committee believed it to be in the best interests of the stockholders to
establish an incentive for executive officers to achieve the highest possible
OCF. If the Company met or exceeded its OCF targets for 1996, a bonus pool was
to be created based upon a predetermined rising scale percentage of the excess
OCF. The allocation of the bonus pool among the executive officers was to be
determined at the discretion of the Board. The Company failed to meet the 1996
OCF target and, accordingly, the Committee recommended that no incentive
compensation be paid for 1996.
The Committee's annual performance evaluation of each executive officer
is subjective, will rely heavily on the performance evaluation presented to the
Committee by the Company's Chairman, and will not typically be based upon an
exact formula for determining the relative importance of each of the factors
considered, nor will there be a precise measure of how each of the individual
factors relates to the Committee's recommendation with respect to each
executive officer's ultimate annual compensation.
Section 162(m) of the Internal Revenue Code limits deductions for certain
executive compensation in excess of $1 million. Certain types of compensation
in excess of $1 million are deductible only if (i) performance goals are
specified in detail by a compensation committee comprised solely of two or more
outside directors, (ii) payments are approved by a majority vote of the
stockholders prior to payment of such compensation, (iii) the material terms of
the compensation are disclosed to the stockholders, and (iv) the compensation
committee certifies that the performance goals were in fact satisfied. During
1996, the Committee considered the compensation arrangements of the Company's
executive officers in light of the requirements of Section 162(m).
While the Committee will continue to give due consideration to the
deductibility of compensation payments on future compensation arrangements with
the Company's executive officers, the Committee will make its compensation
decisions based upon an overall determination of what it believes to be in the
best interests of the Company and its stockholders, and deductibility will be
only one among a number of factors used by the Committee in making its
compensation decisions. Accordingly, the Company may enter into compensation
arrangements in the future under which payments are not deductible under
Section 162(m).
Compensation Committee of the Board of Directors
Michael S. Willner, Chairman
Alfred J. Hickey, Jr.
Vincent J. Young
7
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Class A Common Stock with
the cumulative total return of the Nasdaq Stock Market Index and the cumulative
total return of the Nasdaq Telecommunications Stock Market Index (an index
containing performance data of radio, telephone, telegraph, television and
cable television companies) from November 7, 1994, the effective date of the
Company's initial public offering, through December 31, 1996. The performance
graph assumes that an investment of $100 was made in the Class A Common Stock
and in each Index on November 7, 1994, and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON NOVEMBER 7, 1994
------------------------------------------
[PERFORMANCE GRAPH]
11/7/94 12/31/94 12/31/95 12/31/96
------- -------- -------- --------
Young Broadcasting Inc. $100 $93 $149 $154
Nasdaq Stock Market Index 100 99 140 172
Nasdaq Telecommunications 100 94 123 126
Stock Market Index
The Company believes that the foregoing information provided has only
limited relevance to an understanding of the Company's compensation policies
during the indicated periods and does not reflect all matters appropriately
considered in developing its compensation strategy. In addition, the stock
price performance shown on the graph is not necessarily indicative of future
price performance.
8
<PAGE>
The following table summarizes the compensation for services rendered to
the Company paid in 1994, 1995 and 1996 to the Chief Executive Officer and the
Company's other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#) ($)(3)
- ---------------- ---- ------- ------- ------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Vincent J. Young 1996 750,000 290,000 278,044 -- 202,740 4,500
Chairman (CEO) 1995 650,000 164,486 23,801 -- 266,250 4,500
1994 522,325 160,000 -- 1,011,750 -- 4,500
Adam Young 1996 230,000 67,500 -- -- -- --
Treasurer 1995 200,000 35,000 -- -- -- --
1994 200,000 20,000 -- -- -- --
Ronald J.
Kwasnick 1996 385,000 135,000 58,797 -- 16,242 4,500
President 1995 335,000 76,512 5,034 -- 32,000 4,500
1994 270,000 80,000 -- 356,750(4) -- 4,500
James A. Morgan 1996 322,500 106,000 54,971 -- 13,992 4,500
Executive Vice 1995 280,000 60,577 4,704 -- 157,125 4,500
President 1994 225,000 65,000 -- 268,441(5) -- 4,500
Deborah A.
McDermott 1996 248,333 90,000 30,294 -- 13,992 4,500
Executive Vice
President-Operations
</TABLE>
______________________
(1) Reflects the forgiveness of loans which were made to employees in 1994 and
1995 for the purpose of satisfying their federal income tax withholding
requirements related to non-cash compensation paid in the form of shares
of Common Stock. See "Certain Transactions."
(2) 1994 data includes amounts relating to shares of Class B Common Stock
which were awarded pursuant to the Company's terminated Incentive Stock
Grant Program on November 14, 1994 with respect to 1994 performance. All
such shares were valued at $19, the initial public offering price for the
Company's Class A Common Stock, as follows: Vincent Young, $1,011,750;
Ronald Kwasnick, $141,645; and James Morgan, $128,155. The foregoing
shares were registered by the Company in November 1995 pursuant to a Form
S-8 Registration Statement under the Securities Act of 1933.
(3) Reflects employer contributions to the Company's 401(k) Plan on behalf of
the named executive officers. For 1994, 1995 and 1996, such contributions
were made in the form of shares of Class A Common Stock valued at fair
market value on the date of issuance.
(4) Includes amounts relating to 65,320 shares of Class B Common Stock issued
in February 1994 pursuant to the terms of a former employment agreement.
(5) Includes amounts relating to 42,600 shares of Class B Common Stock issued
in March 1994 pursuant to the terms of an employment agreement dated as
March 1, 1993.
9
<PAGE>
The following table sets forth information concerning individual grants of
stock options made during 1996 to the named executive officers in the Summary
Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OF BASE FOR OPTION TERM (3)
OPTION EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR SHARE (2) DATE 5%($) 10%($)
- ---------------- --------- ------------ --------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Vincent J. Young 202,740 43.2% $30.75 11/20/2006 3,920,689 9,935,797
16,260 3.5 33.825(4) 11/20/2006 395,888 926,549
Adam Young -- -- -- -- -- --
Ronald J.
Kwasnick 32,500 6.9 30.75 11/20/2006 628,502 1,592,746
James A. Morgan 30,000 6.4 30.75 11/20/2006 580,155 1,470,227
Deborah A.
McDermott 30,000 6.4 30.75 11/20/2006 580,155 1,470,227
</TABLE>
______________________
(1) Subject to stockholder approval of the proposal to amend the Plan, options
may be exercised immediately with respect to 10% of the total option
shares indicated for each of the named executive officers. The following
fixed percentages of such option shares will become exercisable on
November 20, 1997 and on each of the three anniversaries of such date, in
cumulative fashion: 15%, 20%, 25% and 30%, respectively. See "Approval of
Amendment to 1995 Stock Option Plan."
(2) The exercise price was established at the market price on the date of
grant, November 20, 1996.
(3) The assumed annual rates of appreciation of 5% and 10% would result in the
price of the Company's Class A Common Stock increasing to $37.32 and
$47.12, respectively. For the period from November 7, 1994, the effective
date of the Company's initial public offering, through December 31, 1996,
the cumulative total return of the Company's Class A Common Stock has
increased 54%.
(4) The exercise price was established at 110% of the market price on the date
of grant, as this option is an "incentive" stock option and Mr. Young
possesses more than 10% of the total voting power of the Company's Common
Stock. See "Approval of Amendment to 1995 Stock Option Plan."
10
<PAGE>
The following table sets forth information at fiscal year-end 1996
concerning stock options held by the named executive officers in the Summary
Compensation Table, including options subject to stockholder approval of the
proposal to amend the Plan. See "Approval of Amendment to 1995 Stock Option
Plan." No options held by such individuals were exercised during 1996.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ----------- ------------- ----------- -------------
Vincent J. Young 155,025 330,225 1,244,689 1,254,688
Adam Young -- -- -- --
Ronald J. Kwasnick 19,250 45,250 152,000 152,000
James A. Morgan 148,125 39,000 1,378,688 114,000
Deborah A.
McDermott 14,000 38,000 104,500 104,500
Those directors who are not also employees of the Company receive as an
annual retainer five year options, having a fair market value exercise price,
to purchase 1,200 shares of Class A Common Stock, and also receive
reimbursement of out-of-pocket expenses incurred for each Board or committee
meeting attended. Nonemployee directors also receive, upon becoming a
director, a five-year option to purchase up to 1,000 shares of Class A Common
Stock at an exercise price equal to 120% of the quoted price on the date of
grant. No other directors are compensated for services as a director.
EMPLOYMENT AGREEMENT
The Company has an employment agreement with James A. Morgan, Executive
Vice President of the Company. The term of Mr. Morgan's employment agreement
expires 90 days after the date on which the Company gives notice of
termination. Under the agreement, Mr. Morgan's base salary is $225,000.
However, such amount may be increased at the discretion of the Board of
Directors, which has approved an increase in Mr. Morgan's base salary to
$370,875 effective as of January 1, 1997. The agreement provides for the
payment of his base salary for twelve months after termination other than by
reason of disability, death or breach of the agreement. Pursuant to the
agreement, 21,300 shares of Common Stock were issued to Mr. Morgan on March 1
of each of 1993 and 1994. The agreement also provided for the issuance of
21,300 additional shares on March 1 of each of 1995 and 1996 as well as 10,650
additional shares on September 1, 1996. However, effective as of February 15,
1995, the employment agreement was amended to provide for the grant of options
under the Company's 1995 Stock Option Plan in lieu of the future issuance of
shares on the basis of two and one-half option shares for each share which was
to be issued. See "Approval of Amendment to 1995 Stock Option Plan." The
exercise dates for the options and the adjusted number of shares available for
exercise are in accordance with the original provisions of the employment
agreement relating to the issuance of shares.
401(K) PLAN
The Company maintains a retirement plan (the "401(k) Plan") established in
conformity with Section 401(k) of the Internal Revenue Code of 1986, as amended
(the "Code"), covering all of the eligible employees of the Company and Adam
Young Inc., an affiliate of the Company. Pursuant to the 401(k) Plan,
employees may elect
11
<PAGE>
to defer up to 15% of their current pre-tax compensation and have the amount of
such deferral contributed to the 401(k) Plan. The maximum elective deferral
contribution was $9,500 in 1996, subject to adjustment for cost-of-living in
subsequent years. Certain highly compensated employees may be subject to a
lesser limit on their maximum elective deferral contribution. The 401(k) Plan
permits, but does not require, matching contributions and non-matching (profit
sharing) contributions to be made by the Company up to a maximum dollar amount
or maximum percentage of participant contributions, as determined annually by
the Company. For 1994, the Company made non-matching contributions of shares
of Class A Common Stock equal to 3% of 1994 compensation, or $471,888, in the
aggregate. The Company effected such contribution by issuing an aggregate of
21,696 shares of Class A Common Stock as of March 14, 1995, which shares had a
quoted price on that date of $21.75 per share. For 1995, the Company made
non-matching contributions of shares of Class A Common Stock equal to 3% of
1995 compensation, or $728,669 in the aggregate, by issuing an aggregate of
27,685 of such shares as of January 5, 1996, which shares had a quoted price on
that date of $26.32 per share. For 1996, the Company also made non-matching
contributions of shares of Class A Common Stock equal to 3% of 1996
compensation, or $833,069 in the aggregate, by issuing an aggregate of 28,481
of such shares based upon the closing price for such shares as of December 31,
1996 of $29.25 per share. Effective January 1, 1997, the 401(k) Plan was
amended to offer a match to employee contributions equal to .5% for each 1% of
compensation an employee contributes, up to a maximum 3% Company contribution.
Such contributions will be made in the form of Class A Common Stock to be
contributed by the Company to the 401(k) after each calendar quarter with
respect to such quarter based upon the closing price as of the last day of such
quarter. The 401(k) applies a seven-year vesting schedule to all shares
contributed based upon the number of years employed by the Company. The 401(k)
Plan is qualified under Section 401 of the code so that contributions by
employees and employer, if any, to the 401(k) Plan, and income earned on plan
contributions, are not taxable to employees until withdrawn from the 401(k)
Plan, and so that contributions by the Company, if any, will be deductible by
the Company when made.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Currently, the members of the compensation committee are Michael S.
Willner, Alfred J. Hickey, Jr. and Vincent J. Young, the Company's Chairman.
CERTAIN TRANSACTIONS
Adam Young Inc. ("AYI"), wholly-owned by Adam Young and Vincent Young, is
a national representation firm which procures national advertising on behalf of
television stations in the United States. AYI has entered into sales
representative agreements with each of the Company's twelve television stations
other than KWQC-TV (Davenport, Iowa). AYI received commissions of approximately
$4.3 million in the aggregate from the Company's stations in 1996. In addition,
at December 31, 1996, the Company's stations had accrued commissions payable to
AYI of approximately $718,000. AYI procured approximately $53.7 million of total
advertising time for the Company's stations in 1996. The Company believes that
the terms of the agreements between AYI and the stations are no less favorable
to the Company than could be obtained from other national representation firms.
The Company has entered into a sublease (the "Sublease") with AYI for the
use by AYI of approximately 9,500 square feet of office space together with
furnishings and equipment at the Company's principal executive offices. The
Sublease expires on September 30, 2000, the expiration date of the Company's
underlying lease. The Sublease presently provides for a monthly rental of
$51,451 through the end of the term. In addition, AYI must pay a certain
percentage of the taxes, expenses and other amounts payable by the Company
pursuant to the underlying lease. The Company received a total of $554,000 in
rental and other payments from AYI in 1996 pursuant to the Sublease. The
Company may terminate the Sublease by giving prior notice to AYI. The terms of
the lease were negotiated on an arms-length basis. The Company believes that
the rent under the Sublease is at rates comparable to other subleases for
office space in its vicinity. The annual rent charges to AYI by the Company has
exceeded the Company's cost for the space and leasehold improvements made by
the Company.
12
<PAGE>
Concurrently with the closing of its public offering in October 1996, the
Company repurchased from an affiliate of The Walt Disney Company ("Disney")
1,500,000 shares of the Company's Class C Common Stock and a warrant to
purchase an additional 750,000 shares of such Common Stock. The Company
repurchased such shares at $31.03 per share (the public offering price per
share of the Class A Common Stock, less the underwriting discount per share).
The Company repurchased the warrants at $10.965 per share (the public offering
price per share of the Class A Common Stock and the per share exercise price of
the warrants ($22.80), plus $2, less one-half of the underwriting discount per
share). In 1996, the Company's stations received aggregate annual compensation
of approximately $7.3 million from American Broadcasting Companies, Inc., a
subsidiary of Disney.
The Company made loans in 1994 to certain executive officers and other
employees of the Company to satisfy their federal income tax withholding
requirements related to non-cash compensation paid in the form of shares of
Common Stock. The Company made additional loans to such employees in 1995 to
satisfy their remaining tax obligations related to such non-cash compensation.
The shares were issued to such employees in August and November 1994 pursuant
to the Company's terminated Incentive Stock Grant Program (the "Program") and
in March 1994 as part of compensation under employment arrangements. The
aggregate outstanding principal amount of such loans at April 10, 1996 was
$1,341,000, including $802,000 to Vincent Young, Chairman and a director of the
Company; $169,000 to Ronald J. Kwasnick, President and a director of the
Company; $159,000 to James A Morgan, Executive Vice President of the Company;
and $88,000 to Deborah McDermott, Executive Vice President-Operations of the
Company. The loans bear interest at the rate of 7.21% per annum and are
payable in five equal annual installments of principal and accrued interest. On
November 8, 1995, the Board of Directors of the Company adopted a loan
forgiveness policy in order to afford employees who received grants under the
Program with the benefits intended by the Program without imposing upon them
the adverse tax consequences incident thereto. Under the forgiveness policy,
all employees of the Company with such loans outstanding who were employed in
good standing as of November 15, 1995 could elect to defer for one year the
first installment of principal and related accrued interest. For all of such
electing employees, one-twelfth of such deferred installment was forgiven as of
the end of each full month of employment in good standing during the
twelve-month period ended November 15, 1996. This policy provides for employee
elections similarly to defer the remaining four installments as they become due
with similar monthly vesting for forgiveness based upon continued employment in
good standing.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Ernst & Young LLP as its independent auditors for 1997. Although
stockholder ratification of the Board of Directors' action in this respect is
not required, the Board of Directors considers it desirable for stockholders to
pass upon such appointment. If the stockholders do not ratify the appointment
of Ernst & Young LLP, the engagement of independent auditors will be
reevaluated by the Board of Directors.
A representative of Ernst & Young LLP is expected to attend the meeting
and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP.
13
<PAGE>
APPROVAL OF AMENDMENT TO 1995 STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to the Young Broadcasting Inc. 1995 Stock Option Plan
(the "Plan") increasing the total number of shares with respect to which
options and stock appreciation rights ("SARs") may be granted under the Plan
from 1,000,000 to 1,500,000. The purpose of the Plan is to promote the
interests of the Company and its stockholders by strengthening the Company's
ability to attract and retain competent employees, to make service on the Board
of Directors of the Company more attractive to present and prospective
non-employee directors and to provide a means to encourage stock ownership and
proprietary interest in the Company by officers, non-employee directors and
valued employees and other individuals upon whose judgment, initiative and
efforts the financial growth of the Company largely depend.
The Plan may be administered by either the entire Board of Directors of
the Company or a committee consisting of two or more members of the Board of
Directors, each of whom is a "disinterested person." The Plan is currently,
and has been since its adoption in February 1995, administered by a Stock
Option Committee of the Board of Directors consisting of two "disinterested"
directors, Michael Willner and Alfred Hickey. To qualify as a disinterested
director, a director may not be eligible for grants under the Plan, but may
receive options in respect of annual non-employee director retainer fees.
Incentive stock options ("ISOs") may be granted only to officers and key
employees of the Company and its subsidiaries. Nonqualified stock options and
SARs may be granted to such officers and employees as well as to agents and
directors of and consultants to the Company, whether or not otherwise employees
of the Company. In determining the eligibility of an individual for grants
under the Plan, as well as in determining the number of shares to be optioned
to any individual, the Stock Option Committee takes into account the
recommendations of the Company's Chairman, Vincent Young, the position and
responsibilities of the individual being considered, the nature and value to
the Company or its subsidiaries of his or her service or accomplishments, his
or her present or potential contribution to the success of the Company or its
subsidiaries, the number and terms of options and SARs already held by an
individual and such other factors as the Stock Option Committee may deem
relevant. In making recommendations to the Stock Option Committee, the
Chairman focuses upon individuals who would be motivated by a direct economic
stake in the equity of the Company. Such individuals are primarily in the
executive management group and in the individual station management groups, and
are evaluated by the Chairman at each grant date based upon the factors
discussed above.
Options may provide for their exercise into shares of any class of the
Company's Common Stock, Class A, Class B or Class C. Each such class of Common
Stock has substantially identical rights, except with respect to voting. The
Class A Common Stock entitles its holders to one vote per share on all matters
submitted to a vote of the holders of Common Stock. The Class B Common Stock
entitles its holders to ten votes per share, except in connection with certain
significant transactions. Holders of Class C Common Stock, none of which is
presently outstanding, would not be entitled to vote, except as required by
law. All classes of Common Stock entitled to vote on any matter vote together
as a single class, except as otherwise required by law. Shares of Class B
Common Stock may only be held, directly or indirectly, by members of management
and certain family members of management. Accordingly, options exercisable for
shares of Class B Common Stock may only be granted to individuals within such
group.
The Plan provides for the granting of ISOs to purchase the Company's
Common Stock at not less than the fair market value on the date of the option
grant and the granting of nonqualified options and SARs with any exercise
price. SARs granted in tandem with an option have the same exercise price as
the related option. As of March 3, 1997, options for an aggregate of 798,538
shares had been granted to various individuals, including Vincent Young, Ronald
Kwasnick, James Morgan and Deborah McDermott. As of such date, options for an
additional 317,250 shares had been granted subject to stockholder approval.
The Plan contains certain
14
<PAGE>
limitations applicable only to ISOs granted thereunder. To the extent that the
aggregate fair market value, as of the date of grant, of the shares to which
ISOs become exercisable for the first time by an optionee during the calendar
year exceeds $100,000, the option will be treated as a nonqualified option. In
addition, if an optionee owns more than 10% of the total voting power of all
classes of the Company's stock at the time the individual is granted an ISO, the
option price per share cannot be less than 110% of the fair market value per
share and the term of the ISO cannot exceed five years. No option or SAR may be
granted under the Plan after February 5, 2005, and no option or SAR may be
outstanding for more than ten years after its grant.
Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash, check or, under certain
circumstances, in shares of any class of the Company's Common Stock, or any
combination thereof. SARs, which give the holder the privilege of surrendering
such rights for the appreciation in the Common Stock between the time of the
grant and the surrender, may be settled, in the discretion of the Board or
committee, as the case may be, in cash, Common Stock, or in any combination
thereof. The exercise of an SAR granted in tandem with an option cancels the
option to which it relates with respect to the same number of shares as to
which the SAR was exercised. The exercise of an option cancels any related SAR
with respect to the same number of shares as to which the option was exercised.
Generally, options and SARs may be exercised while the recipient is performing
services for the Company and within three months after termination of such
services.
The Plan may be terminated at any time by the Board of Directors, which
may also amend the Plan, except that without stockholder approval, it may not
increase the number of shares subject to the Plan or change the class of
persons eligible to receive options under the Plan.
Federal Income Tax Consequences to the Company and the Participant.
Incentive Stock Options
- -----------------------
Options granted under the Plan which constitute ISOs will, in general, be
subject to the following Federal income tax treatment:
(i) The grant of an ISO will give rise to no Federal income tax
consequences to either the Company or the participant.
(ii) A participant's exercise of an ISO will result in no Federal income
tax consequences to the Company.
(iii) A participant's exercise of an ISO will not result in ordinary
Federal taxable income to the participant, but may result in the imposition of
an increase in the alternative minimum tax. If shares acquired upon exercise
of an ISO are not disposed of within the same taxable year the ISO is
exercised, the excess of the fair market value of the shares at the time the
ISO is exercised over the option price is included in the participant's
computation of alternative minimum taxable income.
(iv) If shares acquired upon the exercise of an ISO are disposed of within
two years of the date of the option grant, or within one year of the date of
the option exercise, the participant will realize ordinary Federal taxable
income at the time of the disposition to the extent that the fair market value
of the shares at the time of exercise exceeds the option price, but not in an
amount greater than the excess, if any, of the amount realized on the
disposition over the option price.
Short-term or long-term capital gain will be realized by the participant
at the time of such a disposition to the extent that the amount of proceeds
from the sale exceeds the fair market value at the time of the exercise of the
ISO.
15
<PAGE>
Short-term or long-term capital loss will be realized by the participant
at the time of such a disposition to the extent that the option price exceeds
the amount of proceeds from the sale.
If a disposition is made as described in this section, the Company will be
entitled to a Federal income tax deduction in the taxable year in which the
disposition is made in an amount equal to the amount of ordinary Federal
taxable income realized by the participant.
If shares acquired upon the exercise of an ISO are disposed of after the
later of two years from the date of the option grant or one year from the date
of the option exercise, the participant will realize long-term capital gain or
loss in an amount equal to the difference between the amount realized by the
participant on the disposition and the participant's Federal income tax basis
in the shares, usually the option price. In such event, the Company will not
be entitled to any Federal income tax deduction with respect to the ISO.
Non-Qualified Stock Options
- ---------------------------
Non-qualified stock options ("NQSO"s) granted under the Plan will, in
general, be subject to the following Federal income tax treatment.
(i) The grant of a NQSO will give rise to no Federal income tax
consequences to either the Company or the participant.
(ii) The exercise of a NQSO will generally result in ordinary Federal
taxable income to the participant in an amount equal to the excess of the fair
market value of the shares at the time of exercise over the option price.
(iii) A deduction from Federal taxable income will be allowed to the
Company in an amount equal to the amount of ordinary income recognized by the
participant, provided the Company deducts and withholds all appropriate Federal
withholding tax.
(iv) Upon a subsequent disposition of shares, a participant will
recognize a short-term or long-term capital gain or loss equal to the
difference between the amount received and the tax basis of the shares, usually
fair market value at the time of exercise.
16
<PAGE>
NEW PLAN BENEFITS
YOUNG BROADCASTING INC. 1995 STOCK OPTION PLAN
On November 20, 1996, the Stock Option Committee awarded options to
purchase an aggregate of 317,500 shares of the Company's Class B Common Stock
to six officers of the Company, subject to stockholder approval of the proposal
to amend the Plan. As of March 3, 1997, the market value of the Common Stock
underlying such options, based upon the closing price of $29.375 per share of
the Company's Class A Common Stock on such date, was $9,326,562.50. The
options vest as follows: 10% of the shares covered by the options may be
purchased at any time; an additional 15% of such shares may be purchased at any
time after one year from the date of grant; an additional 20% of such shares
may be purchased at any time after two years from the date of grant; an
additional 25% of such shares may be purchased at any time after three years
from the date of grant; and the remaining 30% of such shares may be purchased
at any time after four years from the date of grant. Each of the options is
treated as an ISO with respect to up to 3,252 of the option shares that may
become exercisable during a calendar year. The remaining options are treated
as nonqualified options. Each of the options has a ten year term other than
with respect to the ISOs granted to Vincent Young, which have five-year terms.
The options were granted with an exercise price of $30.75 per share, except for
the ISOs granted to Vincent Young, which have an exercise price of $33.825 per
share. The following table sets forth certain information relating to such
awards to the named executive officers and to the specified groups and
persons.
NUMBER OF
NAME AND POSITION OPTIONS
----------------- ---------
Vincent J. Young 219,000
Chairman
Adam Young --
Treasurer
Ronald J. Kwasnick 32,500
President
James A. Morgan 30,000
Executive Vice President
Deborah A. McDermott 30,000
Executive Vice President-Operations
Executive Group 311,500
Non-Executive 0
Director Group
Non-Executive Officer 5,750
Employee Group
Nominees for Election 251,500
as Director
Employee Group 317,250
17
<PAGE>
Giving effect to approval of this proposal and the increase in the number
of shares available for grants under the Plan, there would be 384,212
additional shares available for future grants under the Plan. No
determinations have been made regarding the persons to whom grants will be made
in the future under the Plan or the terms of such grants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE 1995 STOCK OPTION PLAN.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED PREFERRED STOCK AND CANCEL UNUSED PREFERRED SERIES
The Certificate of Incorporation of the Company (the "Certificate")
currently authorizes the Company's Board of Directors, without the necessity
of any stockholder approval, to issue up to 133,351 shares of Preferred Stock,
with 33,351 of such shares having been designated as specific series. The
Board of Directors is authorized to provide for the issuance of the remaining
100,000 shares of Preferred Stock in one or more series and to fix the terms of
the designations of such series. There are no shares of Preferred Stock
presently outstanding.
The Board of Directors believes it is in the best interests of the Company
and its stockholders to amend the Certificate to increase to 20,000,000 the
number of shares of Preferred Stock that may be issued by the Company. The
Board of Directors believes that it is advisable to authorize such shares and
have them available for issuance in connection with possible future
transactions, such as financings, corporate mergers, acquisitions and other
uses not presently determinable and as may be deemed to be feasible and in the
best interests of the Company. In addition, the Board of Directors believes
that it is desirable that the Company have the flexibility to issue shares of
Preferred Stock without further stockholder action, except as otherwise
provided by law.
The Preferred Stock will have such designations, preferences, conversion
rights, cumulative, relative, participating, optional or other rights,
including voting rights, qualifications, limitations or restrictions thereof as
are determined by the Board of Directors. Thus, if this proposed amendment is
approved, the Board of Directors would be entitled to authorize the creation
and issuance of up to 20,000,000 shares of Preferred Stock in one or more
series with such limitations and restrictions as may be determined in the
Board's sole discretion, without further authorization by the Company's
stockholders. Stockholders will not have preemptive rights to subscribe for
shares of Preferred Stock.
It is not possible to determine the actual effect of the Preferred Stock
on the rights of the stockholders of the Company until the Board of Directors
determines the rights of the holders of a series of the Preferred Stock.
However, such effects might include (i) restrictions on the payment of
dividends to holders of the Common Stock; (ii) dilution of voting power to the
extent that the holders of shares of Preferred Stock are given voting rights;
(iii) dilution of the equity interests and voting power if the Preferred Stock
is convertible into Common Stock; and (iv) restrictions upon any distribution
of assets to the holders of the Common Stock upon liquidation or dissolution
until the satisfaction of any liquidation preference granted to the holders of
Preferred Stock.
The Board of Directors is required by Delaware law to make any
determination to issue shares of Preferred Stock based upon its judgment as to
the best interests of the stockholders and the Company. Although the Board of
Directors has no present intention of doing so, it could issue shares of
Preferred Stock (within the limits imposed by applicable law) that could,
depending on the terms of such series, make more difficult or discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest or other means. When in the judgment of the Board of Directors
such action would be in the best interests of the stockholders and the Company,
the issuance of shares of Preferred Stock could be used to create voting or
other impediments or to discourage persons seeking to gain control of the
Company, for example, by the sale of Preferred Stock to purchasers favorable to
the Board of Directors. In addition, the Board of Directors could authorize
holders of a series of Preferred Stock
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to vote either separately as a class or with the holders of Common Stock, on
any merger, sale or exchange of assets by the Company or any other
extraordinary corporate transaction. The existence of the additional
authorized shares could have the effect of discouraging unsolicited takeover
attempts. The issuance of new shares could also be used to dilute the stock
ownership of a person or entity seeking to obtain control of the Company should
the Board of Directors consider the action of such entity or person not to be
in the best interests of the stockholders and the Company. Such issuance of
Preferred Stock could also have the effect of diluting the earnings per share
and book value per share of the Common Stock held by the holders of Common
Stock.
While the Company does not have any specific plans, understandings or
agreements to issue any of the shares for which authorization is sought, either
in an equity financing, an acquisition or otherwise, the Company is receptive
to all methods of financing which may be reasonably available and acquisition
opportunities which may arise from time to time. The Board of Directors
believes that, in the future, occasions may arise where the time required to
obtain stockholder approval might adversely delay the Company's ability to
enter into a desirable transaction. Authorized but unissued shares of
Preferred Stock may be used by the Company from time to time as appropriate and
opportune situations arise.
If approved, this amendment would also eliminate the series designations
of the Preferred Stock presently set forth in the Certificate. Of the 33,351
shares designated in the Certificate with specific series, 12,334 shares of
Preferred Stock are designated as "Series D 13.5% Cumulative Redeemable
Non-Participating Senior Preferred Stock," 18,617 shares are designated as
"Series E 14.0% Cumulative Redeemable Non-Participating Senior Preferred Stock"
and 2,400 shares are designated as "Series F 11.0% Cumulative Redeemable
Non-Participating Senior Preferred Stock." None of such shares are outstanding
and, in view of the limited rights associated with such series, as set forth in
the Certificate, the Company does not anticipate issuing any shares of such
Preferred Stock. Shares of each such series of Preferred Stock were issued in
December 1992 as part of a restructuring of the Company's indebtedness and all
of such shares were subsequently repurchased in November 1994 in connection
with the Company's initial public offering. Accordingly, as part of this
amendment, the Board of Directors recommends that such series designations be
deleted.
DISSENTERS' RIGHTS
Pursuant to Delaware law, the Company's stockholders are not entitled to
dissenters' rights of appraisal with respect to this proposal.
DESCRIPTION OF PROPOSED AMENDMENT
If this proposal is approved by the stockholders, Sections 4(a) and 4(c)
of the Certificate would be amended in their entirety to read as follows:
"4. (a) The total number of shares of stock which the
Corporation shall have authority to issue is eighty million
(80,000,000) shares, of which sixty million (60,000,000) shall be
shares of Common Stock, $.001 par value, and twenty million
(20,000,000) shall be shares of Preferred Stock, $.001 par value.
. . .
"(c) The rights, preferences, privileges and
restrictions granted to and imposed upon the Preferred Stock are
as follows:
The shares of Preferred Stock may be issued from time to time in
one or more series of any number of shares, provided that the
aggregate number of shares issued and not canceled of any and all
such series shall not exceed the total number of shares of
Preferred Stock hereinabove authorized, and with
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distinctive serial designations, all as shall hereafter be stated
and expressed in the resolution or resolutions providing for the
issue of such shares of Preferred Stock from time to time adopted
by the Board of Directors pursuant to authority so to do which is
hereby vested in the Board of Directors. Each series of shares of
Preferred Stock (a) may have such voting powers, full or limited,
or may be without voting powers; (b) may be subject to redemption
at such time or times and at such prices; (c) may be entitled to
receive dividends (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and
payable in preference to, or in such relation to, the dividends
payable on any other class or classes or series of stock; (d) may
have such rights upon the dissolution of, or upon any distribution
of the assets of, the Corporation; (e) may be made convertible
into, or exchangeable for, shares of any other class or classes or
of any other series of the same or any other class or classes of
shares of the Corporation at such price or prices or at such rates
of exchange and with such adjustments; (f) may be entitled to the
benefit of a sinking fund to be applied to the purchase or
redemption of shares of such series in such amount or amounts; (g)
may be entitled to the benefit of conditions and restrictions upon
the creation of indebtedness of the Corporation or any subsidiary,
upon the issue of any additional shares (including additional
shares of such series or of any other series) and upon the payment
of dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by the Corporation or
any subsidiary of, any outstanding shares of the Corporation and
(h) may have such other relative, participating, optional or other
special rights, qualifications, limitations or restrictions
thereof; all as shall be stated in said resolution or resolutions
providing for the issue of such shares of Preferred Stock. Shares
of Preferred Stock of any series that have been redeemed (whether
through the operation of a sinking fund or otherwise) or that if
convertible or exchangeable, have been converted into or exchanged
for shares of any other class or classes shall have the status of
authorized and unissued shares of Preferred Stock of the same
series and may be reissued as a part of the series of which they
were originally a part or may be reclassified and reissued as part
of a new series of shares of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of
any other series of shares of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in the resolution
or resolutions adopted by the Board of Directors providing for the
issue of any series of shares of Preferred Stock.
Subject to the provisions of any applicable law or of the By-laws
of the Corporation as from time to time amended, with respect to
the closing of the transfer books or the fixing of a record date
for the determination of stockholders entitled to vote and except
as otherwise provided by law or by the resolution or resolutions
providing for the issue of any series of shares of Preferred
Stock, the holders of outstanding shares of Common Stock shall
exclusively possess voting power for all purposes.
Subject to the provisions of this Restated Certificate of
Incorporation and except as otherwise provided by law, the stock
of the Corporation, regardless of class, may be issued for such
consideration and for such corporate purposes as the Board of
Directors may from time to time determine."
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EFFECTIVENESS OF AMENDMENT
If approved by the stockholders, the amendment will become effective upon
the filing of a Certificate of Amendment to the Certificate, setting forth the
proposed amendment, with the Secretary of State of the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE CERTIFICATE.
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COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own beneficially more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership of
such Common Stock with the Securities and Exchange Commission, and to file
copies of such reports with the Company. Based solely upon a review of the
copies of such reports filed with the Company, the Company believes that during
1996 such reporting persons complied with the filing requirements of said
Section 16(a).
ANNUAL REPORT
The Company's 1996 Annual Report is being mailed to stockholders
together with this proxy statement. No part of such Annual Report shall be
regarded as proxy-soliciting material or as a communication by means of which
any solicitation is being or is to be made. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO EACH OF ITS STOCKHOLDERS, UPON THE WRITTEN REQUEST OF ANY SUCH
STOCKHOLDERS, A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, EXCLUSIVE OF EXHIBITS. WRITTEN REQUESTS FOR SUCH FORM 10-K
SHOULD BE SENT TO JAMES A. MORGAN, SECRETARY, YOUNG BROADCASTING INC., 599
LEXINGTON AVENUE, NEW YORK, NEW YORK 10022.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. However, if other matters should come before the meeting, it is the
intention of each person named in the proxy to vote such proxy in accordance
with his judgment on such matters.
1998 STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. In order for stockholder proposals for the 1998 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement,
they must be received by the Secretary of the Company at the Company's
principal executive offices not later than December 12, 1997.
By Order of the Board of
Directors,
JAMES A. MORGAN
Secretary
April 11, 1997
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<PAGE>
YOUNG BROADCASTING INC. 1995 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of the Young Broadcasting Inc. 1995
Stock Option Plan (the "Plan") is to promote the interests of Young
Broadcasting Inc., a Delaware corporation (the "Company"), and its stockholders
by strengthening the Company's ability to attract and retain competent
employees, to make service on the Board of Directors of the Company (the
"Board") more attractive to present and prospective non-employee directors of
the Company and to provide a means to encourage stock ownership and proprietary
interest in the Company by officers, non-employee directors and valued
employees and other individuals upon whose judgment, initiative and efforts the
financial success and growth of the Company largely depend. The Plan became
effective on February 6, 1995, by resolution of the Board, subject to
ratification of the Plan by a majority vote of the stockholders of the Company
at its 1995 Annual Meeting of Stockholders.
2. STOCK SUBJECT TO THE PLAN. (a) The total number of shares of the
authorized but unissued or treasury shares of the Common Stock, $.001 par value
per share, of the Company ("Common Stock") for which options and stock
appreciation rights ("SARs") may be granted under the Plan shall be 700,000
subject to adjustment as provided in Section 14 hereof, which shares may be of
any class of Common Stock; provided, however, that such number of shares may
from time to time be reduced to the extent that a corresponding number of
issued and outstanding shares of Common Stock are purchased by the Company and
set aside for issue upon the exercise of options.
(b) If an option granted or assumed hereunder shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for subsequent option grants under the
Plan; provided, however, that shares as to which an option has been surrendered
in connection with the exercise of a related SAR will not again be available
for subsequent option or SAR grants under the Plan.
(c) Stock issuable upon exercise of an option or SAR granted under the
Plan may be subject to such restrictions on transfer, repurchase rights or
other restrictions as shall be determined by the Board.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board. No member of the Board shall act upon any matter exclusively affecting
an option or SAR granted or to be granted to himself or herself under the Plan.
A majority of the members of the Board shall constitute a quorum, and any action
may be taken by a majority of those present and voting at any meeting. The
decision of the Board as to all questions of interpretation and application of
the Plan shall be final, binding and conclusive on all persons. The Board may,
in its sole discretion, grant options to purchase shares of Common Stock, grant
SARs and issue shares upon exercise of such options and SARs, as provided in the
Plan. The Board shall have authority, subject to the express provisions of the
Plan, to construe the respective option and SAR agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option and SAR agreements,
which may but need not be identical, and to make all other determinations in the
judgment of the Board necessary or desirable for the administration of the Plan.
The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option or SAR agreement in the manner and to
the extent it shall deem expedient to carry the Plan into effect and shall be
the sole and final judge of such expediency. No director shall be liable for any
action or determination made in good faith. The Board may, in its discretion,
delegate its power, duties and responsibilities to a committee, consisting of
two or more members of the Board, all of whom are "disinterested persons" (as
hereinafter defined). If a committee is so appointed, all references to the
Board herein shall mean and relate to such committee, unless the context
otherwise requires. For the purposes of the Plan, a director or member of such
committee shall be deemed to be "disinterested" only if such person qualified as
a "disinterested person" within the meaning of paragraph (c)(2) of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as such term is interpreted from time to time.
<PAGE>
4. TYPE OF OPTIONS. Options granted pursuant to the Plan shall be
authorized by action of the Board (or a committee designated by the Board) and
may be designated as either incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
non-qualified options which are not intended to meet the requirements of
Section 422 of the Code, the designation to be in the sole discretion of the
Board. Options designated as incentive stock options that fail to continue to
meet the requirements of Section 422 of the Code shall be redesignated as
non-qualified options automatically on the date of such failure to continue to
meet the requirements of Section 422 of the Code without further action by the
Board.
5. ELIGIBILITY. Options designated as incentive stock options may be
granted only to officers and key employees of the Company or of any subsidiary
corporation (herein called "subsidiary" or "subsidiaries"), as defined in
Section 424 of the Code and the Treasury Regulations promulgated thereunder
(the "Regulations"). Directors who are not otherwise employees of the Company
or a subsidiary shall not be eligible to be granted incentive stock options
pursuant to the Plan. SARs and options designated as non-qualified options may
be granted to (i) officers and key employees of the Company or of any of its
subsidiaries, or (ii) agents and directors of and consultants to the Company,
whether or not otherwise employees of the Company.
In determining the eligibility of an individual to be granted an option
or SAR, as well as in determining the number of shares to be optioned to any
individual, the Board shall take into account the recommendation of the
Company's Chairman, the position and responsibilities of the individual being
considered, the nature and value to the Company or its subsidiaries of his or
her service and accomplishments, his or her present and potential contribution
to the success of the Company or its subsidiaries, and such other factors as
the Board may deem relevant.
6. RESTRICTIONS ON INCENTIVE STOCK OPTIONS. Incentive stock options (but
not non-qualified options) granted under this Plan shall be subject to the
following restrictions:
(a) Limitation on Number of Shares. The aggregate fair market value
of the shares of Common Stock with respect to which incentive stock options are
granted, determined as of the date the incentive stock options are granted,
exercisable for the first time by an individual during any calendar year shall
not exceed $100,000. If an incentive stock option is granted pursuant to which
the aggregate fair market value of shares with respect to which it first
becomes exercisable in any calendar year by an individual exceeds such $100,000
limitation, the portion of such option which is in excess of the $100,000
limitation, and any such options issued subsequently in the same calendar year,
shall be treated as a non-qualified option pursuant to section 422(d)(1) of the
Code. In the event that an individual is eligible to participate in any other
stock option plan of the Company or any parent or subsidiary of the Company
which is also intended to comply with the provisions of Section 422 of the
Code, such $100,000 limitation shall apply to the aggregate number of shares
for which incentive stock options may be granted under this Plan and all such
other plans.
(b) Ten Percent (10%) Stockholder. If any employee to whom an
incentive stock option is granted pursuant to the provisions of this Plan is on
the date of grant the owner of stock (as determined under Section 424(d) of the
Code) possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company,
then the following special provisions shall be applicable to the incentive
stock options granted to such individual:
(i) The option price per share subject to such incentive stock
options shall be not less than 110% of the fair market value of the stock
determined at the time such option was granted. In determining the fair market
value under this clause (i), the provisions of Section 8 hereof shall apply.
(ii) The incentive stock option shall have a term expiring not
more than five (5) years from the date of the granting thereof.
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7.OPTION AGREEMENT. Each option and SAR shall be evidenced by an
agreement (the "Agreement") duly executed on behalf of the Company and by the
grantee to whom such option or SAR is granted, which Agreement shall comply
with and be subject to the terms and conditions of the Plan. The Agreement may
contain such other terms, provisions and conditions which are not inconsistent
with the Plan as may be determined by the Board, provided that options
designated as incentive stock options shall meet all of the conditions for
incentive stock options as defined in Section 422 of the Code. No option or
SAR shall be granted within the meaning of the Plan and no purported grant of
any option or SAR shall be effective until the Agreement shall have been duly
executed on behalf of the Company and the optionee. More than one option and
SAR may be granted to an individual.
8. OPTION PRICE. (a) The option price or prices of shares of Common
Stock for options designated as non-qualified stock options shall be as
determined by the Board.
(b) Subject to the conditions set forth in Section 6(b) hereof, the
option price or prices of shares of Common Stock for options designated as
incentive stock options shall be at least the fair market value of such Common
Stock at the time the option is granted as determined by the Board in
accordance with clause (c) below.
(c) If the Common Stock is then listed on any national securities
exchange, the fair market value shall be the mean between the high and low
sales prices, if any, on the largest such exchange on the date of the grant of
the option or, if none, shall be determined by taking a weighted average of the
means between the highest and lowest sales on the nearest date before and the
nearest date after the date of grant in accordance with Regulations Section
25.2512-2. If the Common Stock is not then listed on any such exchange, the
fair market value shall be the mean between the closing "Bid" and the closing
"Ask" prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") for the date of the grant of the
option, or, if none, shall be determined by taking a weighted average of the
means between the highest and lowest sales on the nearest date before and the
nearest date after the date of grant in accordance with Regulations Section
25.2512-2. If the Common Stock is not then either listed on any such exchange
or quoted in NASDAQ, the fair market value shall be the mean between the
average of the "Bid" prices, if any, as reported in the National Daily
Quotation Service for the date of the grant of the option, or, if none, shall
be determined by taking a weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the date of
grant in accordance with Regulations Section 25.2512-2. If the fair market
value of the Common Stock cannot be determined under the preceding three
sentences, it shall be determined in good faith by the Board in accordance with
the Regulations promulgated under Section 422 of the Code.
9. MANNER OF PAYMENT; MANNER OF EXERCISE. (a) Options granted under
the Plan may provide for the payment of the exercise price by delivery of (i)
cash or a check payable to the order of the Company in an amount equal to the
exercise price of such options, (ii) shares of Common Stock owned by the
optionee having a fair market value equal in amount to the exercise price of
such options, or (iii) any combination of (i) and (ii); provided, however, that
payment of the exercise price by delivery of shares of Common Stock owned by
such optionee may be made only upon the condition that such payment does not
result in a charge to earnings for financial accounting purposes as determined
by the Board, unless such condition is waived by the Board. The fair market
value of any shares of Common Stock which may be delivered upon exercise of an
option shall be determined by the Board in accordance with Section 8 hereof.
(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares
with respect to which the option is being exercised, accompanied by payment in
full for such shares as provided in subparagraph (a) above. Upon such
exercise, delivery of a certificate for paid-up non-assessable shares shall
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be made at the principal office of the Company to the person or persons
exercising the option at such time, during ordinary business hours, after three
(3) days but not more than ninety (90) days from the date of receipt of the
notice by the Company, as shall be designated in such notice, or at such time,
place and manner as may be agreed upon by the Company and the person or persons
exercising the option.
10. EXERCISE OF OPTIONS AND SARS. Each option and SAR granted under the
Plan shall, subject to Section 11(b) and Section 13 hereof, be exercisable at
such time or times and during such period as shall be set forth in the
Agreement; provided, however, that no option or SAR granted under the Plan
shall have a term in excess of ten (10) years from the date of grant. To the
extent that an option or SAR is not exercised when it becomes initially
exercisable, it shall not expire but shall be carried forward and shall be
exercisable, on a cumulative basis, until the expiration of the exercise
period. No partial exercise may be made for less than one hundred (100) full
shares of Common Stock. The exercise of an option shall result in the
cancellation of the SAR to which it relates with respect to the same number of
shares of Common Stock as to which the option was exercised.
11. TERM OF OPTIONS AND SARS; EXERCISABILITY.
(a) Term. (i) Each option shall expire not more than ten (10) years
from the date of the granting thereof, except as (a) otherwise provided
pursuant to the provisions of Section 6(b) hereof, and (b) earlier termination
as herein provided.
(ii) Except as otherwise provided in this Section 11, an option
or SAR granted to any grantee who ceases to perform services for the Company or
one of its subsidiaries shall terminate three months after the date such
grantee ceases to perform services for the Company or one of its subsidiaries,
or on the date on which the option or SAR expires by its terms, whichever
occurs first.
(iii) If the grantee ceases to perform services for the Company
because of dismissal for cause or because the grantee is in breach of any
employment agreement, such option or SAR will terminate on the date the grantee
ceases to perform services for the Company or one of its subsidiaries.
(iv) If the grantee ceases to perform services for the Company
because the grantee has become permanently disabled (within the meaning of
Section 22(e)(3) of the Code), such option or SAR shall terminate twelve months
after the date such grantee ceases to perform services for the Company, or on
the date on which the option or SAR expires by its terms, whichever occurs
first.
(v) In the event of the death of any grantee, any option or SAR
granted to such grantee shall terminate twelve months after the date of death,
or on the date on which the option or SAR expires by its terms, whichever
occurs first.
(b) Exercisability. (i) Except as provided below, an option or SAR
granted to a grantee who ceases to perform services for the Company or one of
its subsidiaries shall be exercisable only to the extent that such option or
SAR has accrued and is in effect on the date such grantee ceases to perform
services for the Company or one of its subsidiaries.
(ii) An option or SAR granted to a grantee who ceases to perform
services for the Company or one of its subsidiaries because he or she has
become permanently disabled (as defined above) shall be exercisable with
respect to the full number of shares covered thereby, whether or not under the
provisions of Section 10 hereof the grantee was entitled to do so at the date
he or she became permanently disabled, and may be exercised by a legal
representative on behalf of the grantee.
(iii) In the event of the death of any grantee, the option or SAR
granted to such grantee may
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be exercised with respect to the full number of shares covered thereby, whether
or not under the provisions of Section 10 hereof the grantee was entitled to do
so at the date of his or her death, by the estate of such grantee, or by any
person or persons who acquired the right to exercise such option or SAR by
bequest or inheritance or by reason of the death of such grantee.
12. OPTIONS NOT TRANSFERABLE. The right of any grantee to exercise any
option or SAR granted to him or her shall not be assignable or transferable by
such grantee other than by will or the laws of descent, and any such option or
SAR shall be exercisable during the lifetime of such grantee only by him. Any
option or SAR granted under the Plan shall be null and void and without effect
upon the bankruptcy of the grantee to whom the option is granted, or upon any
attempted assignment or transfer except as herein provided, including without
limitation, any purported assignment, whether voluntary or by operation of law,
pledge, hypothecation or other disposition, attachment, trustee process or
similar process, whether legal or equitable, upon such option or SAR.
13. TERMS AND CONDITIONS OF SARS. (a) An SAR may be granted separately
or in connection with an option (either at the time of grant or at any time
during the term of the option).
(b) The exercise of an SAR granted in connection with an option shall
result in the cancellation of the option to which it relates with respect to
the same number of shares of Common Stock as to which the SAR was exercised.
(c) An SAR granted in connection with an option shall be exercisable or
transferable only to the extent that such related option is exercisable or
transferable.
(d) Upon the exercise of an SAR related to an option, the holder will
be entitled to receive payment of an amount determined by multiplying:
(i) the difference obtained by subtracting the purchase price of
a share of Common Stock specified in the related option from the fair market
value of a share of Common Stock on the date of exercise of such SAR (as
determined by the Board in accordance with Section 8 hereof), by
(ii) the number of shares as to which such SAR is exercised.
(e) An SAR granted without relationship to an option shall be
exercisable as determined by the Board, but in no event after ten years from
the date of grant.
(f) An SAR granted without relationship to an option will entitle the
holder, upon exercise of the SAR, to receive payment of an amount determined by
multiplying:
(i) the difference obtained by subtracting the fair market value
of a share of Common Stock on the date the SAR was granted from the fair market
value of a share of Common Stock on the date of exercise of such SAR (as
determined by the Board in accordance with Section 8 hereof), by
(ii) the number of shares as to which such SAR is exercised.
(g) Notwithstanding subsections (d) and (f) above, the Board may limit
the amount payable upon exercise of an SAR. Any such limitation shall be
determined as of the date of grant and noted on the instrument evidencing the
SAR granted.
(h) At the discretion of the Board, payment of the amount determined
under subsections (d) and (f) above may be made either in whole shares of
Common Stock valued at their fair market value on the date of
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exercise of the SAR (as determined by the Board in accordance with Section 8
hereof), or solely in cash, or in a combination of cash and shares. If the
Board decides to make full payment in shares of Common Stock and the amount
payable results in a fractional share, payment for the fractional share shall
be made in cash.
(i) Neither an SAR nor an option granted in connection with an SAR
granted to a person subject to Section 16(b) of the Exchange Act may be
exercised before six months after the date of grant.
14. RECAPITALIZATION, REORGANIZATION AND THE LIKE. In the event that the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares, or
dividends payable in capital stock, appropriate adjustment shall be made in
accordance with Section 424(a) of the Code in the number and kind of shares as
to which options and SARs may be granted under the Plan and as to which
outstanding options and SARs or portions thereof then unexercised shall be
exercisable, to the end that the proportionate interest of the grantee shall be
maintained as before the occurrence of such event; such adjustment in
outstanding options and SARs shall be made without change in the total price
applicable to the unexercised portion of such options and SARs and with a
corresponding adjustment in the exercise price per share.
In addition, unless otherwise determined by the Board in its sole
discretion, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or (ii) Change
in Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock may, in his, her or its discretion, deliver to the
optionee the same kind of consideration that is delivered to the stockholders
of the Company as a result of such sale, conveyance or Change in Control, or
the Board may cancel all outstanding options and SARs in exchange for
consideration in cash or in kind which consideration in both cases shall be
equal in value to the value of those shares of stock or other securities the
optionee would have received had the option been exercised (to the extent then
exercisable) and no disposition of the shares acquired upon such exercise been
made prior to such sale, conveyance or Change in Control, less the exercise
price therefor. Upon receipt of such consideration, the options and SARs shall
immediately terminate and be of no further force and effect. The value of the
stock or other securities the grantee would have received if the option had
been exercised shall be determined in good faith by the Board, and in the case
of shares of Common Stock, in accordance with the provisions of Section 8
hereof.
The Board shall also have the power and right to accelerate the
exercisability of any options or SARs, notwithstanding any limitations in this
Plan or in the Agreement upon such a sale, conveyance or Change in Control.
Upon such acceleration, any options or portion thereof originally designated as
incentive stock options that no longer qualify as incentive stock options under
Section 422 of the Code as a result of such acceleration shall be redesignated
as non-qualified stock options.
A "Change in Control" shall be deemed to have occurred if any person, or
any two or more persons acting as a group, and all affiliates of such person or
persons, who prior to such time owned less than fifty percent (50%) of the then
outstanding Common Stock, shall acquire such additional shares of Common Stock
in one or more transactions, or series of transactions, such that following
such transaction or transactions, such person or group and affiliates
beneficially own fifty percent (50%) or more of the Common Stock outstanding.
If by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation, the Board shall
authorize the issuance or assumption of a stock option or stock options in a
transaction to which Section 424(a) of the Code applies, then, notwithstanding
any other provision of the Plan, the Board may grant an option or options upon
such terms and conditions as it may deem appropriate for the purpose of
assumption of the old option, or substitution of a new option for the old
option, in conformity with the provisions of such Section 424(a) of the Code
and the Regulations thereunder, and any such option shall not reduce the number
of shares otherwise available for issuance under the Plan.
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<PAGE>
No fraction of a share shall be purchasable or deliverable upon the
exercise of any option or SAR, but in the event any adjustment hereunder in the
number of shares covered by the option or SAR shall cause such number to
include a fraction of a share, such fraction shall be adjusted to the nearest
smaller whole number of shares.
15. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or in any
option or SAR granted under the Plan shall confer upon any grantee any right
with respect to the continuation of his or her employment by the Company (or
any subsidiary) or interfere in any way with the right of the Company (or any
subsidiary), subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of the grantee from the rate in existence at the time of the
grant of an option or SAR. Whether an authorized leave of absence, or absence
in military or government service, shall constitute termination of employment
shall be determined in accordance with Regulations Section 1.421-7(h)(2).
16. WITHHOLDING. The Company's obligation to deliver shares upon the
exercise of any non-qualified option or SAR granted under the Plan shall be
subject to the option holder's satisfaction of all applicable Federal, state
and local income and employment tax withholding requirements. The Company and
optionee may agree to withhold shares of Common Stock purchased upon exercise
of an option or SAR to satisfy the above-mentioned withholding requirements;
provided, however, that no such agreement may be made by a grantee who is an
"officer" or "director" within the meaning of Section 16 of the Exchange Act,
except pursuant to a standing election to so withhold shares of Common Stock
purchased upon exercise of an option, such election to be made not less than
six months prior to such exercise and which election may be revoked only upon
six months prior written notice.
17. RESTRICTIONS ON ISSUANCE OF SHARES. (a) Notwithstanding the
provisions of Section 9 hereof, the Company may delay the issuance of shares
covered by the exercise of an option or SAR and the delivery of a certificate
for such shares until one of the following conditions shall be satisfied:
(i) The shares with respect to which such option or SAR has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force or as
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such shares are
exempt from registration and qualification under applicable Federal and state
securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options and SARs shall be
effective, and the Company shall use its best efforts to bring about compliance
with the above conditions, within a reasonable time, except that the Company
shall be under no obligation to qualify shares or to cause a registration
statement or a post-effective amendment to any registration statement to be
prepared for the purpose of covering the issue of shares in respect of which
any option may be exercised, except as otherwise agreed to by the Company in
writing.
18. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION.
Unless the shares to be issued upon exercise of an option or SAR granted under
the Plan have been effectively registered under the Securities Act of 1933, as
amended (the "1933 Act"), the Company shall be under no obligation to issue any
shares covered by any option or SAR unless the person who exercises such
option, in whole or in part, shall give a written representation and
undertaking to the Company which is satisfactory in form and scope to counsel
for the Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option or SAR for his or her own account as an investment and
not with a view to, or for sale in connection with, the distribution of any
such shares, and that he or she will make no transfer of the same except in
compliance with any rules and
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<PAGE>
regulations in force at the time of such transfer under the 1933 Act, or any
other applicable law, and that if shares are issued without such registration,
a legend to this effect may be endorsed upon the securities so issued.
In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any
shares with respect to which an option or SAR shall have been exercised, or to
qualify any such shares for exemption from the 1933 Act or other applicable
statutes, then the Company may take such action and may require from each
grantee such information in writing for use in any registration statement,
supplementary registration statement, prospectus, preliminary prospectus or
offering circular as is reasonably necessary for such purpose and may require
reasonable indemnity to the Company and its officers and directors from such
holder against all losses, claims, damages and liabilities arising from such
use of the information so furnished and caused by any untrue statement of any
material fact therein or caused by the omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.
19. LOANS. At the discretion of the Board, the Company may loan to the
optionee some or all of the purchase price of the shares acquired upon exercise
of an option granted under the Plan.
20. MODIFICATION OF OUTSTANDING OPTIONS AND SARS. Subject to limitations
contained herein, the Board may authorize the amendment of any outstanding
option or SAR with the consent of the grantee when and subject to such
conditions as are deemed to be in the best interests of the Company and in
accordance with the purposes of the Plan.
21. APPROVAL OF STOCKHOLDERS. The Plan shall be subject to approval by a
majority vote of the stockholders of the Company voting in person or by proxy
at the Company's 1995 Annual Meeting of Stockholders. The Plan became
effective on February 7, 1995 by resolution of the Board. The Board may grant
options and SARs under the Plan prior to such stockholder approval, but any
such option shall become effective as of the date of grant only upon such
approval and, accordingly, no such option may be exercisable prior to such
approval.
22. TERMINATION AND AMENDMENT OF PLAN. Unless sooner terminated as
herein provided, the Plan shall terminate on February 6, 2005. The Board may
at any time terminate the Plan or make such modification or amendment thereof
as it deems advisable; provided, however, that (i) the Board may not, without
approval by a majority vote of the stockholders of the Company, increase the
maximum number of shares for which options and SARs may be granted or change
the designation of the class of persons eligible to receive options and SARs
under the Plan, and (ii) any such modification or amendment of the Plan shall
be approved by a majority vote of the stockholders of the Company to the extent
that such stockholder approval is necessary to comply with applicable
provisions of the Code, rules promulgated pursuant to Section 16 of the
Exchange Act, applicable state law, or applicable National Association of
Securities Dealers, Inc. or exchange listing requirements. Termination or any
modification or amendment of the Plan shall not, without the consent of an
optionee, affect his or her rights under an option or SAR theretofore granted
to him or her.
23. LIMITATION OF RIGHTS IN THE UNDERLYING SHARES. A holder of an option
or SAR shall not be deemed for any purpose to be a stockholder of the Company
with respect to such option or SAR except to the extent that such option or SAR
shall have been exercised with respect thereto and, in addition, a stock
certificate shall have been issued theretofore and delivered to the holder.
24. NOTICES. Any communication or notice required or permitted to be
given under the Plan shall be in writing, and mailed by registered or certified
mail or delivered by hand, if to the Company, to its principal place of
business, attention: Chairman, and, if to the holder of an option or SAR, to
the address as appearing on the records of the Company.
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<PAGE>
AMENDMENT NO. 1
TO
YOUNG BROADCASTING INC.
1995 STOCK OPTION PLAN
----------------------
On March 25, 1996, the Compensation Committee of the Board of Directors
(the "Board") of Young Broadcasting Inc., a Delaware corporation (the
"Company"), by resolution recommended that the Board approve the following
amendments to the Young Broadcasting Inc. 1995 Stock Option Plan (the "Plan"),
and the Board by resolution on such date approved such amendments:
1. Subject to the ratification by a majority vote of the Company's
stockholders at the 1996 Annual Meeting of Stockholders of the Company, Section
2(a) of the Plan is amended by replacing the number "700,000" appearing therein
with the number "1,000,000."
2. Section 12 of the Plan is amended by adding the following proviso
at the end of the first sentence thereof:
; provided, that the Board may permit a grantee, by expressly
--------
so providing in the related Agreement, to assign or transfer,
without consideration (and only without consideration), the right
to exercise any option or SAR granted to him or her to his or her
children, grandchildren or spouse, to trusts for the benefit of
such family members and to partnerships in which such family
members are the only partners.
Such amendment shall apply to any options and SARs hereafter granted pursuant
to the Plan, as well as options previously granted pursuant to the Plan by
means of an amendment to the related Agreement.
Except as expressly set forth above, the Plan is unchanged and remains in
full force and effect.
/s/ James A. Morgan
------------------------
James A. Morgan,
Secretary
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<PAGE>
YOUNG BROADCASTING INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Vincent J. Young and James A.
Morgan as proxies, each with the power of substitution, and hereby authorizes
them to vote all shares of Class A and Class B Common Stock of the undersigned
at the 1997 Annual Meeting of the Company, to be held at the offices of
KCAL-TV, 5515 Melrose Avenue, Los Angeles, California, on Monday, May 5, 1997,
and at any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE PROPOSALS SET
FORTH ON THE REVERSE SIDE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE -------------------
SEE REVERSE
SIDE
-------------------
[ X ] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Directors.
NOMINEES: Vincent J. Young, Adam Young, Ronald J.
Kwasnick, Bernard F. Curry, Alfred J. Hickey, Jr., Leif
Lomo, Michael S. Willner
[ ] FOR [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]
- ---------------------------------------
For all nominees except as noted above
2. Selection of Independent FOR AGAINST ABSTAIN
Auditors.
[ ] [ ] [ ]
3. Approval of Amendment to
the Company's 1995 Stock
Option Plan. [ ] [ ] [ ]
4. Approval of Amendment to
the Company's Certificate
of Incorporation to [ ] [ ] [ ]
increase authorized
Preferred Stock and cancel
unused series of Preferred
Stock.
MARK
HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian. Please give
full title as such.
Signature:________________________________________Date_________________________
Signature:________________________________________Date_________________________
