SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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KATZ MEDIA GROUP, INC.
(Name of Registrant as Specified in its Charter)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
- - -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - -------------------------------------------------------------------------------
(5) Total fee paid:
- - -------------------------------------------------------------------------------
[ ] Fee paid previously.
- - ------------------------------------------------------------------------------
[ ] 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>
KATZ
MEDIA GROUP,
INC.
125 West 55th Street
New York, NY 10019
Thomas F. Olson
President and Chief Executive Officer
May 1, 1997
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of the
Company which will be held at the offices of Donaldson, Lufkin & Jenrette, 12th
floor, 277 Park Avenue, New York, New York on Tuesday, June 10, 1997 at 9:30
A.M.
The Notice of the Annual Meeting and Proxy Statement, which are attached,
provide information concerning the matters to be considered at the meeting. In
addition, the general operations of the Company will be discussed and
stockholders will be afforded the opportunity to ask questions.
We would appreciate your signing and returning your proxy in the enclosed
envelope as soon as possible, whether or not you plan to attend the meeting.
Please sign, date and return the enclosed proxy in the self-addressed,
postage-paid return envelope. If you do not return the signed proxy, your proxy
cannot be counted. We value your opinions and encourage you to participate in
this year's Annual Meeting by voting your proxy.
Very truly yours,
/s/ Thomas F. Olson
Thomas F. Olson
For further information about the Annual Meeting, please call (212) 424-6863.
<PAGE>
KATZ MEDIA GROUP, INC.
125 West 55th Street
New York, NY 10019
Notice of Annual Meeting of Stockholders
to be held June 10, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Katz
Media Group, Inc., a Delaware corporation (the "Company"), will be held at the
offices of Donaldson, Lufkin & Jenrette, 12th floor, 277 Park Avenue, New York,
New York on Tuesday, June 10, 1997 at 9:30 A.M., for the purpose of:
1) Electing three directors for terms of three years, each to hold office
until the expiration of his term and until his successor shall have
been elected and shall have qualified; and
2) Transacting such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
A record date of April 18, 1997 has been fixed for determining
stockholders entitled to notice of, and to vote at, the Annual Meeting of
Stockholders, and only holders of Common Stock of record at the close of
business on the record date will be entitled to receive notice, of, and to vote
at, such meeting or any adjournment or adjournments thereof.
Whether or not you expect to be present at the meeting, please sign,
date and return the enclosed proxy in the enclosed self-addressed envelope which
requires no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James E. Beloyianis
James E. Beloyianis
Vice President and
Corporate Secretary
Dated: May 1, 1997
New York, New York
<PAGE>
KATZ MEDIA GROUP, INC.
125 West 55th Street
New York, NY 10019
------------
PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
June 10, 1997
------------
GENERAL INFORMATION
This statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Katz Media Group, Inc., a Delaware
corporation (the "Company" or "Katz"), of proxies for use at its Annual Meeting
of Stockholders to be held at the offices of Donaldson, Lufkin & Jenrette, 12th
floor, 277 Park Avenue, New York, New York on Tuesday, June 10, 1997, at 9:30
A.M., for the purposes set forth in the accompanying notice of the meeting.
Proxy material is being mailed to holders of the Company's common stock, par
value $0.01 per share ("Common Stock"), on or about May 1, 1997.
A stockholder may, at any time prior to the meeting, revoke a proxy by
giving written notice of such revocation addressed to the Corporate Secretary of
the Company at 125 West 55th Street, New York, New York 10019. Unless revoked
prior to its exercise, any proxy given pursuant to this solicitation will be
voted at the meeting. Also, a stockholder may attend the meeting and vote in
person whether or not the stockholder has previously given a proxy.
The principal executive offices of the Company are located at 125 West
55th Street, New York, New York 10019.
As of March 20, 1997, DLJ Merchant Banking Partners, L.P. and related
investors (collectively "DLJMB") owned 49.4% of the outstanding shares of Common
Stock. DLJMB has informed the Company that it intends to vote for the election
of each of the nominees listed herein.
Record Date and Voting at the Meeting
On April 18, 1997, the record date for the determination of
stockholders entitled to vote at the meeting, the Company had 13,491,729 shares
of Common Stock outstanding, each of which will be entitled to one vote at the
meeting. Votes cast by proxy or in person at the meeting will be tabulated by
the election inspectors appointed for the meeting. The holders of a majority of
the shares entitled to vote at the meeting, whether present in person or
represented by proxy, will constitute a quorum for the transaction of business
at the meeting. Abstentions and broker non-votes will be counted for the purpose
of determining whether there is a quorum. Proxy cards that are not signed or
that are not returned are treated as not voted for any purpose.
<PAGE>
All elections for directors shall be decided by a plurality of the
votes cast in respect thereof. If no voting direction is indicated on the proxy
card, the shares will be considered votes for the nominee. In accordance with
Delaware law, a stockholder entitled to vote for the election of directors can
withhold authority to vote for all nominees for directors or can withhold
authority to vote for certain nominees for director.
Abstentions from voting with respect to proposals are treated as votes
against the particular proposal. Broker non-votes will be disregarded and will
have no effect on the outcome of the vote.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
In connection with the August 1994 acquisition (the "Acquisition") of
Katz Media Corporation ("KMC") and the capitalization of the Company, all of the
initial shareholders of the Company at such time (the "Initial Shareholders")
entered into a Shareholders Agreement (the "Shareholders Agreement") which
provides that the Board shall consist of nine directors (or such smaller or
larger number as may be agreed among DLJMB and the Chief Executive Officer (the
"CEO")), one of whom shall be the person occupying at the time the office of the
CEO, two of whom shall be designated from time to time by the CEO, and the
remaining number of whom shall be designated from time to time by certain of the
DLJMB investors. Accordingly, the Board is divided into three classes of
directors whose terms expire at the annual meeting of the Company's shareholders
in 1997, 1998 and 1999.
At the meeting, the three Class II directors are to be elected for
terms of three years, each to hold office until the expiration of his term in
2000 and until his successor shall have been elected and shall have qualified.
It is the intention of the persons named in the accompanying form of proxy to
vote such proxy, unless otherwise instructed, for the election of Messrs.
Beloyianis, Connelly and Marbut for terms of three years. If any of these
nominees should be unable to serve, the proxies will be voted for the election
of such other persons as shall be determined by the persons named in the proxy,
in accordance with their judgment.
Messrs. Beloyianis, Connelly and Marbut are the Class II directors
whose terms are scheduled to expire at the 1997 annual meeting. Mr. Beloyianis
was designated to serve as director by the CEO and Messrs. Connelly and Marbut
were designated by DLJMB.
Messrs. Olson, Dean and Gilbert are the Class III directors whose
terms expire in 1998. The other directors (other than Mr. Olson, the CEO) were
designated by DLJMB.
Messrs Olds, Barry and Wittels are the Class I directors whose terms
are scheduled to expire at the 1999 annual meeting and were elected by the
shareholders in 1996.
2
<PAGE>
Information as to Directors
Certain information concerning the nominees for election as directors,
and those persons whose terms of office as directors will continue after the
meeting, is set forth below:
Nominees for Election
JAMES E. BELOYIANIS - Mr. Beloyianis joined the Company in 1973 as a
member of Katz Television. He was promoted in 1991 to Senior Vice President of
Katz Television, a position he held until 1992, when he was promoted to
Executive Vice President of Katz Television. In April 1994, Mr. Beloyianis was
promoted to President of Katz Television. In August 1994, Mr. Beloyianis was
appointed to the positions of Vice President, Secretary and director of the
Company.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
47 1994 2000
MICHAEL J.CONNELLY - Mr. Connelly has served as a director of the
Company since August 1994. Mr. Connelly has been a Managing Director of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") since March 1992.
From 1986 to 1992, Mr. Connelly was employed by The First Boston Corporation in
the Media and Communications Group.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
45 1994 2000
BOB MARBUT - Mr. Marbut has been a director of the Company since
August 1994. Mr. Marbut has served as Chairman, Chief Executive Officer and
director of Argyle Television, Inc. since its founding in August 1994.
Previously, he was Chief Executive Officer and director of Argyle Television
Holding, Inc. from March 1993 until its sale in April 1995. During this period,
he also was Vice President and director of Argyle Television Operations, Inc., a
wholly-owned subsidiary of Argyle Television Holding, Inc. Additionally, Mr.
Marbut has been Chairman and Chief Executive Officer of and has been associated
with Argyle Communications, Inc. and its predecessor since 1991. From 1970 until
1991, Mr. Marbut worked at Harte-Hanks Communications, Inc., where he served as
President and Chief Executive Officer. During this period, Harte-Hanks was a
diversified, nationwide media company which, among its activities, included the
ownership of broadcasting and advertising businesses. Mr. Marbut is also a
director of Tupperware Corporation, Diamond Shamrock, Inc. and Tracor, Inc.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
61 1994 2000
3
<PAGE>
Directors Continuing in Office
STUART O. OLDS - Mr. Olds joined the Company in 1977 as a radio
salesman in the firm's Chicago office. In 1981, Mr. Olds was promoted to Vice
President of Katz Radio and in 1984 to Vice President of the Katz Radio Group
Network. Mr. Olds was named President of Katz Radio in 1987 and was promoted to
Executive Vice President--Radio in 1990 and Executive Vice President, General
Manager--Radio in 1992. Since August 1994, Mr. Olds has served as President of
Radio and Vice President and director of the Company.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
46 1994 1999
THOMAS J. BARRY - Mr. Barry has served as a director of the Company
since August 1994. Mr. Barry has been a Senior Vice President of DLJ Merchant
Banking, Inc. since 1992. From 1990 to 1992, Mr. Barry worked in a variety of
positions at DLJ.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
39 1994 1999
DAVID M. WITTELS - Mr. Wittels has been a director of the Company
since August 1994. Mr. Wittels is a Senior Vice President of DLJ Merchant
Banking, Inc. and was previously a Vice President of DLJMB since 1993. From 1989
to 1992, Mr. Wittels worked in a variety of positions at DLJ. He is also a
director of McCulloch Corporation.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
32 1994 1999
THOMAS F. OLSON - Mr. Olson joined the Company in 1975 as a television
sales executive in the firm's Chicago office. From 1977 to 1984, he held various
positions at Katz Continental Television and in 1984 was named President of Katz
Continental Television. In 1990, he was named President of Katz Television and
in April 1994 was promoted to the position of President of the Company. Mr.
Olson has been President, Chief Executive Officer and director of the Company
since August 1994. Mr. Olson is a past chairman of the Station Representatives
Association.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
48 1994 1998
THOMPSON DEAN - Mr. Dean has served as Chairman of the Board of the
Company since August 1994. Since 1992, Mr. Dean has been a Managing Director of
DLJ Merchant Banking, Inc., the general partner of DLJMB and an affiliate of
DLJ. Mr. Dean was employed by DLJ in various capacities from 1989 until 1992. He
is also a director of Fiberite Holding Inc., Manufacturers' Services Limited,
Phase Metrics Inc. and CommVault Systems, Inc.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
38 1994 1998
4
<PAGE>
STEVEN J. GILBERT - Mr. Gilbert has served as a director of the
Company since August 1994. Mr. Gilbert is Chairman of Gilbert Global Equity
Partners, L.P. From 1992 to 1997, he was Managing General Partner of Soros
Capital, L.P., the venture capital and leveraged transaction entity of Quantum
Group of Funds. He is also the Managing Director of Commonwealth Capital
Partners, L.P., a private equity investment fund, and was Managing General
Partner until 1988 of Chemical Venture Partners, which he founded in 1984. He is
also a director of Asian Infrastructure Fund, NFO Research, Inc., Peregrine
Indonesia Fund Limited, Sydney Harbour Casino Holdings, Ltd, Terra Nova
(Bermuda) Holdings Ltd., UroMed Corporation, Affinity Technology Group, Inc.,
Veritas-DGC, Inc. and GTSDuratek, Inc., and is a member of the Advisory
Committee of DLJMB.
Age at end Became a Proposed
of 1996 Director Term Expires
- - ---------- -------- ------------
49 1994 1998
Committees of the Board
The Board has an Audit Committee and Compensation Committee. Mr.
Gilbert is Chairman of the Audit Committee and Messrs. Barry and Wittels are
members. Mr. Marbut is Chairman and Messrs. Dean and Connelly are members of the
Compensation Committee. During 1996, the Audit Committee met two times and the
Compensation Committee met four times.
The Audit Committee recommends to the Board each year the appointment
of independent auditors for the following year. The Audit Committee considers
the independence of such auditors; reviews the fees for audit and nonaudit
services; reviews the plan, scope and results of the independent audit; reviews
the recommendations resulting from such audit and the responses of management to
such recommendations; and reviews the accounting controls of the Company that
the Audit Committee or the Board may deem necessary or desirable. The Audit
Committee also reviews the annual financial statements issued by the Company to
its security holders and makes recommendations as to accounting and auditing
policies which, in its judgment, should receive the attention of the Board.
The Compensation Committee considers and approves certain remuneration
arrangements between the Company and its officers, including executive officers'
salaries; adopts or makes recommendations to the Board regarding the adoption of
compensation and employee benefit plans in which officers and certain key
employees of the Company and certain subsidiaries are eligible to participate;
grants bonuses, stock options, and other benefits pursuant to Company plans; and
administers such plans. Currently, the Compensation Committee administers the
1994 Stock Option Plan, the 1995 Employee Stock Option Plan and the 1996
Restricted Stock Grant Plan. The Compensation Committee also reviews and makes
recommendations with respect to the election of officers of the Company.
Meetings
During 1996, the Board met seven times. Each incumbent director of the
Company, during his term as a director in 1996, attended at least 75% of the
aggregate number of meetings of the Company's Board and Committees of which he
was a member.
5
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
Security Ownership of Management
The following table shows the number of shares of Common Stock
beneficially owned, as of March 20, 1997, by each continuing director, each
nominee for director, and all directors and executive officers of the Company as
a group as of March 20, 1997.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
-------------------------------------------------
Number of Options
Shares Exercisable Total
Name of Beneficially Within Beneficial Percent of
Beneficial Owner Owned(1) 60 Days Ownership Class
---------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
Thomas F. Olson 141,070 18,333 159,403 1.2%
James E. Beloyianis 124,334 22,222 146,556 1.1%
Stuart Olds 123,834 22,222 146,056 1.1%
L. Donald Robinson 66,667 13,999 80,666 *
Richard E. Vendig 7,115 14,555 21,670 *
Thompson Dean(2) -- -- -- *
Thomas Barry(2) -- -- -- *
Michael Connelly (2) -- -- -- *
Steven J. Gilbert -- 4,444 4,444 *
Bob Marbut(3) 208,334 4,444 212,778 1.6%
David Wittels(2) -- -- -- *
All directors and 7,338,022 100,219 7,438,241 55.1%
executive officers as
a group, including
the above-named
(11 persons)(4)
- - ----------------------
* Less than one percent.
</TABLE>
(1) Does not include shares of Common Stock which the persons have the right to
acquire within 60 days.
(2) Messrs. Dean, Barry and Wittels are officers of DLJ Merchant Banking, Inc.
and Mr. Connelly is a Managing Director of DLJ. Share data shown for such
individuals excludes shares shown below as held by DLJ Merchant Banking
Partners, L.P. and related investors, as to which such individuals disclaim
beneficial ownership.
(3) Includes 166,667 Shares held by KHC Investors, L.P. and 41,667 held by Bob
Marbut directly. KHC Investors, L.P. is a limited partnership of which the
general partner is Argyle Communications, Inc., a corporation controlled by
Bob Marbut. Bob Marbut is also a limited partner of KHC Investors, L.P.
(4) Includes shares shown in the table below as beneficially owned by DLJMB.
6
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to persons known to be
the beneficial owner of more than 5% of the Company's outstanding Common Stock
as of March 20, 1997:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
- - ------------------- -------------------- ----------------
DLJ Merchant Banking
Partners, L.P. and related
investors (1) 6,666,668 49.4%
277 Park Avenue
New York, NY 10172
The Capital Group
Companies, Inc.(2) 1,171,100 8.7%
333 South Hope St.
Los Angeles, CA 90071
- - ------------------------
(1) Consists of shares held by the following related investors: DLJ Merchant
Banking Partners, L.P., 3,133,989 shares; DLJ International Partners, C.V.
("DLJIP"), 1,406,735 shares; DLJ Offshore Partners, C.V. ("DLJOP"), 81,562
shares; DLJ Merchant Banking Funding, Inc., 1,291,147 shares; and DLJ First
ESC L.L.C. ("DLJ ESC"), 753,235 shares. See "Compensation Committee
Interlocks and Insider Participation." The address of each of such persons
except DLJIP and DLJOP is 277 Park Avenue, New York, New York 10172. The
address of each of DLJIP and DLJOP is John B. Gorsiraweg 6, Willemstad,
Curacao, Netherlands Antilles. DLJ Merchant Banking, Inc. may be deemed to
beneficially own indirectly all of the shares held directly by DLJMBF,
DLJIP and DLJOP; DLJ LBO Plans Management Corp. may be deemed to
beneficially own indirectly all of the shares held directly by DLJ ESC; and
Donaldson, Lufkin & Jenrette, Inc. ("DLJ Inc.") may be deemed to
beneficially own indirectly all of the shares shown above as held by DLJ
Merchant Banking Partners, L.P. and related investors. DLJ Inc. is an
indirect subsidiary of The Equitable Companies Incorporated. AXA and
related parties may be considered a parent company of The Equitable
Companies Incorporated.
(2) Based on information contained Schedule 13G filed with the Securities and
Exchange Commission on December 31, 1996. Capital Guardian Trust Company
and Capital Research and Management Company, operating subsidiaries of The
Capital Group Companies, Inc., exercised investment discretion with respect
to 689,500 and 482,300 shares, respectively, owned by various institutional
investors.
Compensation Committee, Interlocks and Insider Participation
DLJ (an affiliate of DLJMB) acted as arranger and an affiliate of DLJ
acted as syndication agent and is a lender under the New Credit Agreement. DLJ
also acted as dealer-manager in connection with KMC's tender offer for all of
its $100.0 million original principal amount of 12 3/4% Senior Subordinated
Notes due 2002, the initial purchaser in connection with the offering of KMC's
10 1/2% Series A Senior Subordinated Notes due 2007 and managing underwriter in
connection with the Company's initial public offering and, from time to time,
provides other investment banking services to the Company, for which it has
received customary fees and expenses. The Company has retained DLJ as its
exclusive investment banker for a period of five years from August 1994 for an
annual fee of $200,000.
Mr. Marbut, a director of the Company, is also a director of Argyle
Television, Inc. and was a director of Argyle Television Operations, Inc. in
1996, clients of the Company. The Company generated approximately $1.4 million
in revenues due to commissions on advertising sales made on behalf of these
clients in 1996.
The Compensation Committee is comprised of Messrs. Marbut (Chairman),
Dean and Connelly.
7
<PAGE>
Shareholders Agreement
In connection with the Acquisition, the Initial Shareholders entered
into the Shareholders Agreement which provides that the Board shall consist of
nine directors (or such smaller or larger number as may be agreed among DLJMB
and the CEO), one of whom shall be the person occupying at the time the office
of the CEO, two of whom shall be designated from time to time by the CEO, and
the remaining number of whom shall be designated from time to time by certain of
the DLJMB investors. Each Initial Shareholder entitled to vote on the election
of directors to the Board agreed to vote their respective shares to ensure the
composition of the Board as set forth therein.
The Shareholders Agreement imposes certain restrictions on the rights
of any Initial Shareholder to sell or otherwise dispose of its shares of Common
Stock initially acquired. Pursuant to the Shareholders Agreement, each Initial
Shareholder has agreed that it will not, directly or indirectly, sell, assign,
transfer, grant a participation in, pledge or otherwise dispose of ("transfer")
any shares except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the terms and conditions of the Shareholders Agreement.
The Board has the absolute right in its discretion to refuse to permit or
acknowledge any transfer (i) to any Adverse Person (as defined in the
Shareholders Agreement) or (ii) if such transfer could have adverse consequences
for the Company or its shareholders. Any Initial Shareholder may at any time
transfer shares to any Permitted Transferee (as defined in the Shareholders
Agreement). Any Initial Shareholder may transfer shares during the Initial
Restriction Period (the period commencing on August 12, 1994 and ending on
August 12, 1999) to any third party, provided that the transferee complies with
the various restrictions described in the Shareholders Agreement. After the
Initial Restriction Period, certain of such restrictions will lapse. In
addition, Initial Shareholders other than DLJMB have tag-along rights to
participate in sales by DLJMB to third parties in certain circumstances, and
DLJMB has drag-along rights to require other Initial Shareholders to participate
in such sales in certain circumstances. The Company has the right during the DLJ
Ownership Period (as defined in the Shareholders Agreement) to repurchase all
shares owned by any Management Shareholder and its Permitted Transferees upon
the termination of such Management Shareholder's employment for Cause (as
defined in the Shareholders Agreement).
Upon the request of one or more DLJ Entities (as defined in the
Shareholders Agreement) the Company shall effect the registration under the
Securities Act of such entity's shares. The Company will give written notice of
such request (a "Demand Registration") to all other Initial Shareholders, and
thereupon use its best efforts to effect a registration under the Securities Act
of (i) the shares that the Company has been requested to register by the DLJ
Entities and (ii) all other shares that any other Initial Shareholder requests
the Company to register; provided that the Company shall not be obligated to
effect more than five Demand Registrations total or more than two Demand
Registrations after the DLJ Entities cease to own, collectively, more than 20%
of the initial ownership of the DLJ Entities; and provided, further, that the
Company shall not be obligated to effect a Demand Registration unless the
aggregate number of shares requested to be included in such Demand Registration
by all DLJ Entities has, in the reasonable opinion of DLJMB exercised in good
faith, a fair market value of at least $10,000,000. The Company will pay all
Registration Expenses (as defined in the Shareholders Agreement) in connection
with any Demand Registration.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, DLJ or their
respective subsidiaries (the "Non-Employee Directors," currently Messrs. Gilbert
and Marbut) receive an annual retainer of $10,000 for serving on the Board of
Directors, and are reimbursed for out-of-pocket expenses incurred in that
capacity. Employees of the Company, DLJ or their respective subsidiaries who are
directors do not receive compensation for Board or committee meetings attended.
During 1996, no awards of options were made to any director.
8
<PAGE>
The Company maintains a Non-Employee Director Stock Option Plan (the
"Director Plan"). The purpose of the Director Plan is to promote the interests
of the Company and its shareholders by increasing the proprietary and vested
interest of Non-Employee Directors in the growth and performance of the Company.
Pursuant to the Director Plan, upon first election or appointment to the Board,
each newly elected Eligible Director (as defined in the Director Plan) will be
granted an option to purchase 10,000 shares of Common Stock.
The maximum number of shares of Common Stock in respect of which
options may be granted under the Director Plan is 50,000. The Director Plan
provides for awards of nonqualified options to Non-Employee Directors of the
Company who are not employees of the Company, DLJ or their respective
subsidiaries and who have not, within one year immediately preceding the
determination of such director's eligibility (excluding any time period during
which the Company was not a public company), received any award under any other
plan of the Company or its subsidiaries that entitles the participants therein
to acquire stock, stock options or stock appreciation rights of the Company or
its subsidiaries (other than any other plan under which participants'
entitlements are governed by provisions meeting the requirements of Rule
16b-3(c)(2)(ii) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The options shall vest ratably over a three year
period and, to the extent vested, shall be exercisable in whole or in part at
all times during the period beginning on the date of grant until the earlier of
(i) ten years from the date of grant and (ii) one year from the date on which an
optionee ceases to be an Eligible Director. The exercise price per share of
Common Stock shall be 100% of the fair market value per share on the date the
option is granted.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing and
administering executive compensation programs which promote the Company's
strategic objectives, thereby enhancing stockholder value. This report on
executive compensation describes the compensation decisions made by the
Compensation Committee during 1996 with respect to the executive officers of the
Company. The Compensation Committee is comprised entirely of directors who are
not employees of the Company.
Compensation Philosophy of the Company
The key elements of the Company's total executive compensation program
include base salary, annual bonus and long-term stock incentive plans. These
plans have been developed to attract, reward and retain key personnel critical
to the long-term success of the Company through incentive programs that are
competitive within the national sales advertising representation industry. The
Company's compensation programs are designed to provide executive officers total
compensation levels above the average of the Company's competitive market with
the opportunity to be within the top quartile of a select peer group of
comparable companies, to the extent that Company and executive performance on an
individual and collective basis so warrants. In establishing compensation levels
for the Company's executives, the Company compares its compensation level to
similarly situated companies which operate in the same or similar business. In
1996, Mr. Olson's total compensation was within the top quartile of this select
peer group.
In structuring the Company's compensation programs and in determining
the appropriateness of awards, the Compensation Committee's primary
consideration is the achievement of the Company's strategic business goals,
taking into consideration competitive practice, market economics and other
factors. To the extent fulfilling these goals is consistent with favorable tax
treatment under section 162(m) of the Internal Revenue Code of 1986, as amended,
the Compensation Committee is committed to making awards that qualify for the
performance-based deduction. The Company maintains two stock option plans, the
1994 Stock Option Plan (the "1994 Plan") and 1995 Employee Stock Option Plan
(the "1995 Plan"). These plans were designed to satisfy the requirements for
exempting compensation attributable to certain awards made under the plans from
the $1 million limit under section 162(m).
9
<PAGE>
The Performance Graph, contained in this proxy statement, compares the
Company's stock price performance over its period against a published index for
mid-cap broadcasting and communication companies. The published index provides a
meaningful comparison of the Company's total stockholder return against a
consistent representation of other companies with whom the Company competes for
investment dollars.
Base Salary, Employment Contracts and Termination of Employment
The Company strives to be the best managed company within the national
sales advertising industry, and structures its compensation programs to match
pay with performance. In this context, Katz's base salaries are targeted to be
above the industry average, taking into account the scope of responsibilities
and internal relationships. Individual base salaries are determined by the
Compensation Committee based on their subjective evaluation of the executive's
performance and the length of time the executive has been in the position. Base
compensation is reviewed annually by the Compensation Committee and adjusted
accordingly to reflect each executive officer's contribution to the performance
of the Company. In addition, the Compensation Committee monitors the aggregate
number of executive officers in an effort to ensure that the organization
continues to be managed on an efficient, cost-effective basis.
Messrs. Olson, Beloyianis, Olds and Robinson are employed as Chief
Executive Officer and President, President of Katz Television, President-Radio
and President-Seltel, respectively, under individual employment agreements.
Under such agreements, Messrs. Olson, Beloyianis, Olds and Robinson received
base salaries at annual rates of $489,250, $437,500, $437,750 and $391,000 for
1996, and each is entitled to three percent annual increases. These agreements
expire on August 12, 1999 but are automatically extended for additional one-year
periods unless either party shall have given notice to the contrary. The
employment agreements provide for continued payments of base salary through the
balance of the employment term in the event of certain types of terminations of
employment and, in the event of such terminations within the last six months of
the employment term, severance compensation under the Company's severance
policies for long-term key employees, and have non-competition covenants during
the period of employment. Each employment agreement, however, would permit
competition with the Company following termination of employment, in which event
such officers would not be entitled to any severance or other compensation which
would otherwise have been payable.
Mr. Vendig is employed as Senior Vice President, Chief Financial &
Administrative Officer, Treasurer of the Company under an individual employment
agreement. Under such agreement, Mr. Vendig was entitled to a base annual salary
of $275,000, plus a bonus for 1996. Mr. Vendig's employment agreement expires on
January 1, 1999 but is automatically extended for additional one-year periods
unless either party shall have given notice to the contrary. Mr. Vendig's
employment agreement provides for continued payments of base salary through the
balance of the employment term in the event of certain types of terminations of
employment or, under certain circumstances, 52-weeks' base salary plus enhanced
severance pay. The agreement prohibits competition with the Company during the
term of agreement and for a period of six months after termination.
Annual salary recommendations are based on perceptions of industry
norms, as well as performance criteria such as overall financial performance
measured by revenues, divisional operating results, client contracts obtained or
retained (and the terms of such contracts) and the realization of long- term
corporate objectives, including leadership as displayed in the corporate and
employee environment.
Performance targets are set annually at the beginning of each fiscal
year. For fiscal 1996, the Company established the following specific
performance targets for executive officers: 2.5% of base salary for exceeding
1995 results; 5% of base salary for exceeding the operating results budgeted to
10
<PAGE>
such executive's division; 10% of base salary if the Company achieved its
budget; 5% of base salary if the executive's operating unit exceeded budget; and
up to 5% of base salary if the Company exceeds its earnings goal.
Annual Incentive Bonus
For 1996, the performance goals established by the Compensation
Committee included financial operational performance criteria. The financial
criteria included targeted cash flow and EBITDA which was measured against
internal objectives. Each performance goal, including the specific criteria for
such goal, was assigned a weight by the Compensation Committee based upon its
relative importance in increasing stockholder value.
Stock Option Plans
The Company believes equity-based programs encourage long-term
strategic management and enhancement of stockholder value. To align the
interests of executive officers with those of stockholders, the Company may
grant certain stock-based awards under the 1995 Plan.
The Compensation Committee periodically reviews competitive market
data to determine appropriate stock awards based on the executive's position and
the market value of the stock. In addition, the Compensation Committee considers
previous stock grants when determining grant size for executive officers. The
1995 Plan provides for various stock-based awards, however, the Compensation
Committee continues to award stock options to ensure that the interests of
executives and stockholders are aligned. Stock options only produce value for
the executive if there is an increase in stock price which results in a
corresponding increase in value to the stockholder. Stock options are granted on
an annual basis at the fair market value of the Common Stock on the date of
grant. Pursuant to the Company's stock option plans, vesting of the stock
options may be accelerated upon certain types of termination of employment or a
change in control of the Company. For 1996, the Compensation Committee granted
Messrs. Olson, Beloyianis, Olds, Robinson and Vendig, 15,000, 10,000, 12,500,
5,000 and 12,500 stock option grants, respectively. The Company and the
Committee have no set policy regarding the award of options to executive
officers. In determining option awards to executive officers, the Company and
the Committee considered the same criteria used to determine annual salary
amounts discussed above. The Company and the Committee also considered the
criteria used to measure individual and division performance, the size of the
overall grant, the potential dilutive effect on existing stockholders and other
related criteria.
Summary
Katz's compensation strategy is to provide total compensation
commensurate with the Company's achievement of specific objectives and the
long-term appreciation of Katz's stock price. The Company believes a significant
portion of executive compensation should be directly and materially linked to
the creation of value for our stockholders. The Compensation Committee believes
the design of the Company's total executive compensation program provides
executives the incentive to maximize long-term operational performance
consistent with sound financial controls and high standards of integrity. It is
the Compensation Committee's belief that this focus will ultimately be reflected
in Katz's stock price and stockholder return.
The Compensation Committee of the Board of Directors:
Mr. Thompson Dean
Mr. Michael Connelly
Mr. Bob Marbut
11
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of the
Company as to whom the total annual salary and bonus for the fiscal year ended
December 31, 1996, exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
---------------------------- ------------
Awards
------------
Other
Annual Securities
Compensa- Underlying All Other
Name Principal Position Year Salary($) Bonus($) tion ($)(1) Options (#) Compensation ($)(2)
- - ---- ------------------ ---- --------- -------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Olson President and 1996 489,250 -- 15,000 37,660 (3)
Chief 1995 475,000 100,000 -- 91,667 4,198
Executive 1994 450,000 150,000
Officer
James E. Vice President 1996 437,500 -- 10,000 46,475 (3)
Beloyianis and Secretary 1995 425,000 -- -- 83,334 4,064
1994 385,417 130,000
Stuart Olds Vice President 1996 437,750 10,944 12,500 36,635 (3)
1995 400,000 50,000 -- 83,334 3,598
1994 356,131 130,000
L. Donald Vice President 1996 391,100 -- 5,000 5,296
Robinson 1995 370,000 50,000 -- 52,000 8,086
1994 344,167 70,000
Richard E. Senior Vice 1996 275,000 -- 12,500 37,660 (3)
Vendig President, 1995 225,000 27,000 -- 35,834 6,033
Chief
Financial &
Administrative
Officer and
Treasurer
</TABLE>
- - ----------------
(1) No executive officer had perquisites in excess of $50,000 or 10% of salary
plus bonus.
(2) Reflects amounts contributed in 1996 and 1995 by the Company pursuant to
its respective 401(K) Plan and life insurance premiums, which included
$2,400, $2,400, $1,375, $5,296 and $2,400 to Messrs. Olson, Beloyianis,
Olds, Robinson and Vendig, respectively, and in 1995, pursuant to its
Excess Medical Plan for Senior Executives. For 1996, the Excess Medical
Plan is covered by insurance.
(3) Restricted Stock Grant Award to Messrs. Olson, Beloyianis, Olds and Vendig
representing 2,000, 2,500, 2,000 and 2,000 shares, respectively.
12
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value
at Assumed Annual Rates
of Stock Price
Appreciation
Individual Grants for Option Term(3)
--------------------------------------- -------------------------------------
Number % of
of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price(2) Expiration
Name Granted Fiscal Year ($/SH) Date 0%($) 5%($) 10%($)
- - ---- ----------- ------------ -------- ---------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Olson 15,000 4.65% $8.75 11/1/06 $0 $82,541 $209,178
James E. Beloyianis 10,000 3.10% $8.75 11/1/06 $0 $55,027 $139,452
Stuart O. Olds 12,500 3.87% $8.75 11/1/06 $0 $68,784 $174,315
L. Donald Robinson 5,000 1.55% $8.75 11/1/06 $0 $27,513 $ 69,726
Richard E. Vendig 12,500 3.87% $8.75 11/1/06 $0 $68,784 $174,315
</TABLE>
- - --------------
(1) Stock options granted on November 2, 1996 were granted under the Company's
1995 Plan and vest ratably over a three-year period. In the event of a
"Change of Control" (as defined in the respective option agreement), the
Plan provides for accelerated vesting in certain circumstances.
(2) The exercise price equals the fair market value of the Common stock on the
date of grant.
(3) The dollar amounts under these columns are the results of calculation at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of
the Company's stock price. The Company did not use an alternative formula
for a grant date valuation, as the Company is not aware of any formula
which will determine with reasonable accuracy a present value based on
future unknown or volatile factors.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Value of
Securities Underlying Unexercised
Shares Unexercised Options at Fiscal In-the-Money Options
Acquired Year-End at Fiscal Year-End
on Value # ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable*
- - ---- -------------- ------------- ----------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Thomas F. Olson -- -- 18,333 82,223 96,247 390,420
James E. Beloyianis -- -- 22,222 71,112 116,665 345,837
Stuart O. Olds -- -- 22,222 73,612 116,665 352,087
L. Donald Robinson -- -- 13,999 43,001 69,997 205,001
Richard E. Vendig -- -- 10,555 37,779 29,163 111,464
Vendig
</TABLE>
- - -------------
* Computed based upon the difference between aggregate fair market value on
December 31, 1996 and aggregate exercise price.
13
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative stockholder return on the
Company's Common Stock from April 11, 1995, the date of the Company's initial
public offering, through December 31, 1996, the Company's fiscal year end, to
the total cumulative return on the S & P 500 Index and the S & P 400 Midcap
Broadcast Media Index over the same period, assuming a $100 investment in Common
Stock and each such index on April 11, 1995, the date of the Company's initial
public offering. The total stockholder return includes reinvestment of all
dividends (if any).
[GRAPHICAL REPRESENTATION OF DATA TABLE BELOW]
<TABLE>
<CAPTION>
4/11/95 6/30/95 12/29/95 6/28/96 12/31/96
------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Katz Media Group, Inc. $100.00 $ 93.40 $103.70 $ 84.60 $ 66.37
S&P Mid Brdcst Media $100.00 $101.80 $117.40 $125.15 $121.63
S&P 500 $100.00 $108.40 $124.00 $136.40 $152.52
</TABLE>
14
<PAGE>
INDEPENDENT AUDITORS
Price Waterhouse LLP served as the Company's independent auditors
during 1996 and was appointed by the Board to serve in that capacity for 1997.
Representatives of Price Waterhouse LLP will be present at the meeting to
respond to appropriate questions from stockholders and to make a statement if
they desire to do so.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furnished to the Company
during its most recent fiscal year and Forms 5 furnished to the Company with
respect to its most recent fiscal year, the Company believes that all
transactions by reporting persons were reported on a timely basis.
OTHER MATTERS
It is not expected that any other matters will come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons named in the accompanying form of proxy to vote
such proxy in accordance with their judgment on such matters.
STOCKHOLDERS PROPOSALS
Any proposal which a stockholder may desire to present to the 1998
Annual Meeting of Stockholders must be received by the Company on or prior to
December 31, 1997.
PROXY SOLICITATION
The cost of preparing, assembling and mailing the material in
connection with the solicitation of proxies will be borne by the Company. It is
expected that the solicitation of proxies will be primarily by mail, but
solicitations may also be made personally or by telephone or telegraph by
officers and other employees of the Company. In addition, the Company has
engaged American Stock Transfer & Trust Company to assist in such solicitation
as part of their ongoing services.
It is important that the proxies be returned promptly. All
stockholders, whether or not they expect to attend in person, are urged to sign,
date and return the accompanying from of proxy in the enclosed addressed
envelope which requires no postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James E. Beloyianis
James E. Beloyianis
Vice President and
Corporate Secretary
Dated: May 1, 1997
New York, New York
15
<PAGE>
<TABLE>
<CAPTION>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
KATZ MEDIA GROUP, INC.
June 10, 1997
<S> <C> <C> <C> <C>
[X] Please mark your
vote as in this
example
WITHHOLD
AUTHORITY to vote
for all nominees
listed at right
FOR
1. ELECTION [ ] [ ] Nominees: James E. Beloyianis 2. To transact such other business as may properly
OF Michael J. Connelly come before the meeting or any adjournment or
DIRECTORS: Bob Marbut adjournments thereof.
FOR all nominees listed (except as marked to the THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECT-
contrary below) ORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE AB-
SENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE
------------------------------------------------ THREE NOMINEES FOR ELECTION.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN
THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH RE-
QUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
SIGNATURES: DATE
-------------------------------------------------------------- ----------------------------------------------
Note: Please sign exactly as name or names appear on stock certificate (as indicated hereon).
</TABLE>
<PAGE>
KATZ MEDIA GROUP, INC.
Proxy for Annual Meeting of Stockholders June 10, 1997
The undersigned hereby appoints Thomas F. Olson, Stuart O. Olds and
Thompson Dean as Proxies, each with the power to appoint his substitute, and
hereby authorizes them, to represent and vote, as designated on reverse, all
shares of Common Stock of Katz Media Group, Inc. (the "Company") held of record
by the undersigned on April 18, 1997 at the Annual Meeting of Stockholders to be
held on June 10, 1997 or any adjournment thereof.
(To be Signed on Reverse Side)
