<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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 approve an amendment to the Company's Certificate of
Incorporation to reduce the required minimum percentage of the
Company's outstanding Common Stock to be held by the "Management
Group" for continued designation of the Company's Class B Common
Stock.
6. 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.
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.
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, acting
together or as a separate class, as the case may be, 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. With respect to proposal 5 set forth
in the notice attached to this proxy statement, the holders of shares of Class A
Common Stock will also vote as a separate class. 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 of the Class A Common Stock and Class B Common
Stock voting as a single class. 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 voted as
such 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>
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NAME OF NOMINEE AGE SINCE EXPERIENCE DURING THE PAST FIVE YEARS
- - ------------------------------------------------------- --- -------- ------------------------------------------------------------
<S> <C> <C> <C>
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 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 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 director of International CableTel Incorporated
and of the National Cable Television Association.
</TABLE>
2
<PAGE>
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 and a
Compensation 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 and
four meetings of the Compensation 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."
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)(5)(6)(7) 51.3 33.5
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
</TABLE>
(footnotes begin on following page)
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
at $33.825 per share and 18,648 of which are exercisable at $30.75 per
share. 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 at $30.75 per share.
(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 at 30.75 per share.
(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 at $30.75 per share.
(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
------------------------------------------
[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
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL 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, $128,155. The foregoing shares
were registered by the Company in November 1995 pursuant to a Form S-8
Registration Statement under the Securities Act of 1933.
(3) Reflects employer contributions to the Company's 401(k) Plan on behalf of
the named executive officers. For 1994, 1995 and 1996, such contributions
were made in the form of shares of Class A Common Stock valued at fair
market value on the date of issuance.
(4) Includes amounts relating to 65,320 shares of Class B Common Stock issued in
February 1994 pursuant to the terms of a former employment agreement.
(5) Includes amounts relating to 42,600 shares of Class B Common Stock issued in
March 1994 pursuant to the terms of an employment agreement dated as March
1, 1993.
9
<PAGE>
The following table sets forth information concerning individual grants of
stock options made during 1996 to the named executive officers in the Summary
Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - -----------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OF BASE FOR OPTION TERM(3)
OPTION EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR PER SHARE(2) DATE 5%($) 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) 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.
(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 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. No options held by such individuals were exercised during 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
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
- - ---------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
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
</TABLE>
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 to defer up to 15% of their current pre-tax compensation and have the
amount of such deferral contributed to the
11
<PAGE>
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.
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 Board of Directors or
committee, as the case may be, is to determine, among other things, the
recipients of grants, whether a grant will consist of incentive stock options
("ISOs"), nonqualified stock options and SARs (in tandem with an option or free-
standing) or a combination thereof, and the number of shares to be subject to
such 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.
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 1,115,788 shares had
been granted to various individuals, including Vincent Young, Ronald Kwasnick,
James Morgan and Deborah McDermott. The Plan contains certain 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.
14
<PAGE>
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.
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.
15
<PAGE>
(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.
On March 3, 1997, the market value of the Common Stock underlying
outstanding stock options, based upon the closing price of $29.375 per share of
the Class A Common Stock on such date, was $32,776,272.
NEW PLAN BENEFITS
YOUNG BROADCASTING INC. 1995 STOCK OPTION PLAN
The benefits and amounts that may be received or allocated in the future
under the Plan are not determinable. The table below indicates option grants
made to date pursuant to the Plan.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS
- - ----------------------------------------------- ---------
<S> <C>
Vincent J. Young 485,250
Chairman
Adam Young --
Treasurer
Ronald J. Kwasnick 64,500
President
James A. Morgan 187,125
Executive Vice President
Deborah A. McDermott 52,000
Executive Vice President-Operations
Executive Group 788,875
Non-Executive 9,600
Director Group
Non-Executive Officer 317,313
Employee Group
Nominees for Election 559,350
as Director
Employee Group 1,106,188
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE 1995 STOCK OPTION PLAN.
16
<PAGE>
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 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 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.
17
<PAGE>
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 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
18
<PAGE>
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 Pre ferred 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."
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 THIS PROPOSED
AMENDMENT TO THE CERTIFICATE.
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PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION TO LOWER REQUIRED
MINIMUM PERCENTAGE OF COMMON STOCK OWNERSHIP BY MANAGEMENT GROUP
BACKGROUND AND REASONS FOR THE PROPOSED AMENDMENT
The Company has three classes of Common Stock, designated as Class A, Class
B and Class C. Each 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 in connection with any change to the Certificate which would
adversely affect their rights as holders of such class of Common Stock. All
classes of Common Stock entitled to vote on any matter vote together as a single
class except as otherwise required by law.
All of the Company's outstanding shares of Class B Common Stock are held by
Company management and by or in trust for family members of management. The
Certificate provides for a defined "Management Group" which includes such
members of management and also includes a defined group of relatives of Vincent
Young and Adam Young, the Chairman and Treasurer, respectively, of the Company,
as well as entities controlled by Messrs. Young and such relatives. In the
event any shares of Class B Common Stock are transferred outside of the
Management Group, such shares will automatically be converted into shares of
Class A Common Stock. In addition, if the total number of shares of Common
Stock held by members of the Management Group falls to below 10% of the total
number of shares of Common Stock outstanding, all of the outstanding shares of
Class B Common Stock automatically will be reclassified as Class A Common Stock.
Vincent and Adam Young together beneficially own shares of Class B Common
Stock representing approximately 58.5% of the total voting power of the
Company's Common Stock and, as a result, maintain control over the election of a
majority of the Company's directors and, thus, over the operations and business
of the Company as a whole. In addition, such stockholders have the ability to
prevent specific types of material transactions, certain of which could make the
Company a less attractive target for a takeover than it otherwise might be.
The Board of Directors believes that ownership and control of the Company by
Vincent Young and Adam Young has been and will continue to be an essential
element in its growth and success. In the past ten years, under the leadership
of Vincent and Adam Young, the Company has grown from an owner and operator of
two television stations to twelve television stations. Excluding network-owned
stations, home shopping stations and foreign language stations, the Company is
presently the sixth-largest television group based upon coverage, with its
stations reaching approximately 9.25% of the television households in the United
States. The Company is presently the seventh largest ABC network affiliate
group in terms of households reached and owns more ABC stations than any single
operator other than ABC. The success of the Company's strategies is evidenced
by this rapid growth and its stations' broadcast cash flow margins, which are
among the highest in the television broadcasting industry. Thus, maintaining
the current voting rights of the Class A and Class B Common Stock will provide
continuity and stability to an experienced management team.
As of April 4, 1997, the record date for the annual meeting, there was a
total of 14,258,838 shares of Common Stock outstanding. Of such shares,
2,037,446 were held by members of the Management Group, representing
approximately 14.3% of such total. The Board of Directors believes that a
reduction of the 10% ownership requirement is necessary to provide the Company
with greater flexibility to issue additional shares of Common Stock or
securities convertible into Common Stock without triggering the automatic
reclassification of the Class B Common Stock, as described above. The reduction
of such ownership requirement to 5% would enable the Company to issue additional
shares 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
20
<PAGE>
interests of the Company. The Company, as of the date hereof, has no agreements
or understandings with respect to any such transaction.
Under Delaware law, the holders of each class of the Common Stock are
entitled to vote as a separate class with respect to any amendment to the
Certificate that would increase or decrease the aggregate number of authorized
shares of such class, increase or decrease the par value of the shares of such
class, or modify or change the powers, preferences or special rights of the
shares of such class so as to affect such shares adversely. The holders of the
Class A Common Stock will vote with respect to this proposal as a separate
class.
DISSENTERS' RIGHTS
Pursuant to the Delaware law, the Company's stockholders are not entitled to
dissenters' rights of appraisal with respect to this proposal.
DESCRIPTION OF PROPOSED AMENDMENT
The Board of Directors proposes and recommends that the stockholders approve
an amendment of the Certificate to reduce the number of shares of Common Stock
required to be held by members of the Management Group from 10% to 5% of the
total shares of Common Stock of the Company outstanding. Accordingly, giving
effect to such amendment, if the total number of shares of Common Stock held by
members of the Management Group were to fall to below 5% of the total number of
shares of Common Stock outstanding, all of the outstanding shares of Class B
Common Stock would automatically be reclassified as Class A Common Stock.
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 THIS 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.
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 AND 3.
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
FOR AGAINST ABSTAIN
2. Selection of Independent
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.
5. Approval of Amendment to
the Company's Certificate [_] [_] [_]
of Incorporation to reduce
minimum required percentage
ownership of Management
Group.
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_____________
