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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
- --------------------------------------------------------------------------------
(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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
/ / Fee paid previously with preliminary materials: N/A
/ / 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:
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. (the 'Company'), a Bermuda corporation, will be held at The Hamilton
Princess Hotel, 76 Pitts Bay Road, Pembroke HM 08, Bermuda, on Friday, May 2,
1997 at 10:00 A.M., for the following purposes:
1. To elect six directors to serve until the next Annual General
Meeting of Shareholders;
2. To consider and act upon a proposal to set the maximum number of
directors to serve on the Board of Directors until the next Annual
General Meeting of Shareholders at eight;
3. To consider and act upon a proposal to increase the number of
authorized shares of the Company's stock from 50,000,000 shares to
120,000,000 shares by increasing the number of authorized shares of
Class A Common Stock from 30,000,000 shares to 100,000,000 shares by
(i) amending the Company's Memorandum of Association and (ii)
amending the Company's Bye-laws;
4. To consider and act upon amendments to the Company's Bye-laws
concerning the scope of the authority of the directors and officers
of the Company;
5. To consider and act upon amendments to the Company's Bye-laws
concerning the requirements for approving certain proposals;
6. To consider and act upon a proposal to approve a change to the
compensation of directors;
7. To consider and act upon an amendment to the Company's Bye-laws
permitting the Board of Directors to set the compensation to be paid
to directors;
8. To receive and adopt the financial statements of the Company for
the Company's fiscal year ended December 31, 1996 together with the
auditors' report thereon; and
9. To appoint Arthur Andersen & Co. as auditors for the Company and to
authorize the directors to approve their fee.
The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each other matter to
be presented to the shareholders.
Only shareholders of record at the close of business on March 24, 1997 are
entitled to notice of and to vote at the meeting.
By order of the Board of Directors,
/s/ Nicolas G. Trollope
NICOLAS G. TROLLOPE
Secretary
Hamilton, Bermuda
April 4, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL ENSURE THAT YOUR SHARES WILL BE
VOTED. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1997
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
(the 'Company'), a Bermuda company, for use at the Annual Meeting of
Shareholders of the Company (the 'Meeting') to be held at The Hamilton Princess
Hotel, 76 Pitts Bay Road, Pembroke HM 08, Bermuda, on Friday, May 2, 1997, at
10:00 A.M., and at any adjournments thereof.
Shareholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the Meeting or by presenting a later-dated proxy. Unless so revoked,
the shares represented by proxies will be voted at the Meeting in accordance
with the directions given therein. Shareholders vote at the Meeting by casting
ballots (in person or by proxy) which are tabulated by a person who is appointed
by the Board of Directors before the Meeting to serve as inspector of election
at the Meeting and who has executed and verified an oath of office. The
presence, in person or by proxy, of shareholders entitled to cast at least a
majority of the total number of votes entitled to be cast on each matter to be
voted upon at the Meeting constitutes a quorum as to each such matter.
Abstentions and broker 'non-votes' are included in the determination of the
number of shares present at the Meeting for quorum purposes, but abstentions and
broker 'non-votes' are not counted in the tabulations of the votes cast on
proposals presented to shareholders. A broker 'non-vote' occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner or has
discretionary power but elects not to exercise it.
The registered office of the Company is located at Clarendon House, Church
Street, Hamilton HM CX, Bermuda. The Central European Media Enterprises Ltd.
group of companies also maintains offices at 18 D'Arblay Street, London W1V 3FP,
England. The approximate date on which this Proxy Statement and the enclosed
form of proxy will be first sent to shareholders is on or about April 14, 1997.
Shareholders of record of the Class A Common Stock, par value $.01 per
share, of the Company (the 'Class A Common Stock') at the close of business on
March 24, 1997 shall be entitled to one vote for each share then held.
Shareholders of record of the Class B Common Stock, par value $.01 per share, of
the Company (the 'Class B Common Stock') at the close of business on March 24,
1997 shall be entitled to ten votes for each share then held. The Class A Common
Stock and the Class B Common Stock shall be voted on all matters presented as a
single class. There were issued and outstanding at the close of business on
March 24, 1997, 16,716,478 shares of Class A Common Stock and 7,149,475 shares
of Class B Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 24, 1997
with respect to the beneficial ownership of the Company's Class A Common Stock
and Class B Common Stock and also sets forth certain information with respect to
voting power as of March 24, 1997, by (i) each shareholder known by the Company
to beneficially own more than 5% of any class of the Company's outstanding
voting securities, (ii) each director of the Company, (iii) the Chief Executive
Officer and each other executive officer and (iv) all directors and executive
officers of the Company as a group. Except as otherwise noted below, each of the
shareholders identified in the table has sole voting and investment power over
the shares beneficially owned by such person.
CLASS A COMMON STOCK CLASS B COMMON STOCK
---------------------- ----------------------
PERCENT
AMOUNT BENEFICIALLY AMOUNT BENEFICIALLY OF
OWNED OWNED TOTAL
---------------------- ---------------------- VOTING
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT POWER
- -------------------------------------------- --------- ------- --------- ------- -------
Ronald S. Lauder(1)(10)..................... 5,487,941(17) 25.1(23)% 4,940,595 69.1% 56.3%
Andrew Gaspar(1)(11)........................ 745,982(18) 4.3(23) 745,982 10.4 8.5
Leonard M. Fertig........................... 398,805(19) 2.3(23) 228,805 3.2 2.6
John A. Schwallie........................... 47,500(20) * -- -- *
Herbert S. Schlosser........................ 43,000(21) * -- -- *
Robert A. Rayne............................. -- -- -- -- --
Nicolas G. Trollope......................... 1,700 * -- -- *
All directors and executive officers as a
group (7 persons)......................... 6,724,928(22) 29.1(23) 5,915,382 82.7 67.5
The Capital Group Companies, Inc.(2)........ 1,621,400 9.7 -- -- 1.8
Mercury Asset Management plc(3)............. 1,481,650 8.9 -- -- 1.7
Leonard A. Lauder(4)(12).................... 1,368,568(18) 7.6(23) 1,368,568 19.1 15.5
Dresdner Bank AG(5)(13)..................... 1,337,900 8.0 -- -- 1.5
RCM Capital Management, L.L.C.(6)(14)....... 1,337,900 8.0 -- -- 1.5
Warburg, Pincus Counsellors, Inc.(7)........ 1,288,200 7.7 -- -- 1.5
Scudder, Stevens & Clark, Inc.(8)........... 838,870 5.0 -- -- 1.0
EL/RSLG Media, Inc.(1)(15).................. 646,895(18) 3.7(23) 646,895 9.0 7.3
Mark Palmer(9)(16).......................... 400,060(18) 2.3(23) 400,060 5.6 4.5
- ------------------
* Less than 1.0%
(1) The address of each of the shareholders indicated is Suite 4200, 767 Fifth
Avenue, New York, New York 10153.
(2) Information in respect of the beneficial ownership of The Capital Group
Companies, Inc. (other than its percentage ownership) is based upon a
statement on Schedule 13G filed jointly by such person, Capital Guardian
Trust Company and Capital Research and Management Company. The address of
each of these shareholders is 333 South Hope Street, Los Angeles,
California 90071. The Capital Group Companies, Inc. disclaims beneficial
ownership of all of these shares. Capital Guardian Trust Company reported
ownership of 680,000 of these shares but it disclaims beneficial ownership
with respect to such shares. Capital Research and Management Company
reported ownership of 915,000 of these shares but it disclaims beneficial
ownership with respect to such shares.
(3) Information in respect of the beneficial ownership of Mercury Asset
Management plc (other than percentage ownership) is based upon a statement
on Schedule 13D filed by such person. The address of Mercury Asset
Management plc is 33 King William Street, London, EC4R 9AS, England.
(4) Information in respect of the beneficial ownership of Leonard A. Lauder
(other than his percentage ownership) is based upon a statement on Schedule
13D filed by such person. The address of Mr. Leonard Lauder is c/o The
Estee Lauder Companies Inc., 767 Fifth Avenue, New York, New York 10153.
(Footnotes continued on next page)
2
(Footnotes continued from previous page)
(5) Information in respect of the beneficial ownership of Dresdner Bank AG
(other than percentage ownership) is based upon a statement on Schedule 13G
filed by such person. The address of Dresdner Bank AG is Jurgen-Ponto-Platz
1, 60301 Frankfurt, Germany. Dresdner Bank AG reported beneficial ownership
of 1,337,900 shares, but only to the extent that it is deemed to have
beneficial ownership of securities beneficially owned by RCM Capital
Management, L.L.C., a wholly-owned subsidiary of Dresdner Bank AG.
(6) Information in respect of the beneficial ownership of RCM Capital
Management, L.L.C. (other than percentage ownership) is based upon a
statement on Schedule 13G filed jointly by such person, RCM Limited L.P.
and RCM General Corporation. The address of each of these shareholders is
Four Embarcadero Center, Suite 2900, San Francisco, California 94111.
(7) Information in respect of the beneficial ownership of Warburg, Pincus
Counsellors, Inc. (other than its percentage ownership) is based upon a
statement on Schedule 13G filed by such person. The address of Warburg,
Pincus Counsellors, Inc. is 466 Lexington Avenue, New York, New York 10017.
(8) Information in respect of the beneficial ownership of Scudder, Stevens &
Clark, Inc. (other than its percentage ownership) is based upon a statement
on Schedule 13G filed by such person. The address of Scudder, Stevens &
Clark, Inc. is 345 Park Avenue, New York, New York 10154.
(9) Information in respect of the beneficial ownership of Mark Palmer (other
than his percentage ownership) is based upon a statement on Schedule 13G
filed by such person. The address of Mr. Palmer is 4437 Reservoir Road,
N.W., Washington, D.C. 20007.
(10) 3,385,417 of these shares are owned beneficially by RSL Investments
Corporation and 577,788 of these shares are owned beneficially by Duna
Investments, Inc., both of which are owned by Mr. Lauder. 210,461 of these
shares are held by RAJ Family Partners L.P. and beneficially owned by Mr.
Lauder, and 646,895 of these shares are held by EL/RSLG Media, Inc., of
which 50% of the common stock outstanding is beneficially owned by the 1995
Estee Lauder RSL Trust and beneficially owned by Mr. Lauder.
(11) 738,590 of these shares are owned beneficially by Bukfenc Inc., which is
wholly-owned by Mr. Gaspar and members of his family.
(12) 646,895 of these shares are held by EL/RSLG Media, Inc., of which 50% of
the common stock outstanding is beneficially owned by the Estee Lauder LAL
Trust, of which Leonard A. Lauder is a co-trustee and beneficiary. 436,434
of these shares are held by LWG Family Partners L.P., a partnership whose
managing partner is a corporation which is one-third owned by Mr. Lauder.
(13) These shares are also included in the shares reported as being beneficially
owned by RCM Capital Management, L.L.C., which is a wholly-owned subsidiary
of Dresdner Bank AG.
(14) These shares are also included in the shares reported as being beneficially
owned by Dresdner Bank AG, the parent holding company of RCM Capital
Management, L.L.C.
(15) These shares are also included in the shares reported as being beneficially
owned by Ronald S. Lauder and Leonard A. Lauder.
(16) 392,467 of these shares are owned beneficially by Democracy, Inc., which is
wholly-owned by Mr. Palmer.
(17) Includes 4,940,595 shares of Class A Common Stock into which Mr. Lauder's
shares of Class B Common Stock are convertible at the election of such
holder and 250,000 shares of Class A Common Stock underlying warrants which
are currently exercisable.
(18) Represents shares of Class A Common Stock into which such holder's shares
of Class B Common Stock are convertible at the election of such holder.
(Footnotes continued on next page)
3
(Footnotes continued from previous page)
(19) Consists of 228,805 shares of Class A Common Stock into which Mr. Fertig's
shares of Class B Common Stock are convertible at the election of such
holder and 125,000 shares of Class A Common Stock underlying options.
(20) Represents shares of Class A Common Stock underlying options.
(21) Includes 40,000 shares of Class A Common Stock underlying options.
(22) Includes 5,915,382 shares of Class A Common Stock into which shares of
Class B Common Stock beneficially owned by all directors and executive
officers as a group are convertible at the election of such holders,
212,500 shares of Class A Common Stock underlying options which are
currently exercisable, and 250,000 shares of Class A Common Stock
underlying warrants which are currently exercisable.
(23) Percentage ownership is calculated pursuant to Rule 13d-3(d)(1)(i) under
the Securities Exchange Act of 1934.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
greater than 10% of a registered class of the Company's equity securities to
file certain reports ('Section 16 Reports') with the Securities and Exchange
Commission with respect to ownership and changes in ownership of the Common
Stock and other equity securities of the Company. Based solely on the Company's
review of the Section 16 Reports furnished to the Company and written
representations from certain reporting persons, the Company believes that,
during the fiscal year ended December 31, 1996, all filing requirements under
Section 16(a) applicable to its officers, directors and greater than 10%
beneficial owners were complied with on a timely basis, except that (i) Mr.
Fertig, a director and executive officer of the Company, failed to timely file a
Form 5 covering an option grant in August 1996, and (ii) Mr. Rayne, a non-U.S.
citizen, failed to timely file a Form 3 upon becoming a director of the Company
in May 1996.
ELECTION OF DIRECTORS
Six directors will be elected at the Meeting to serve until the Company's
next annual general meeting of shareholders. The election of directors requires
the affirmative vote of a majority of the votes cast, in person or by proxy, at
the Meeting, provided that a quorum is present in person or by proxy.
Abstentions and broker non-votes will be included in determining the presence of
a quorum, but are not counted as votes cast. UNLESS OTHERWISE INDICATED, THE
ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE PERSONS LISTED BELOW. At this
time, the Board of Directors knows of no reason why any nominee might be unable
to serve. All nominees are
4
currently directors. There is no arrangement or understanding between any
director and any other person pursuant to which such person was selected as a
director.
YEAR
BECAME A
NAME OF NOMINEE PRINCIPAL OCCUPATION AGE DIRECTOR
- ------------------------------------------ ------------------------------------------ ---- --------
Ronald S. Lauder.......................... Chairman of the Board of the Company; 53 1994
Chairman of Estee Lauder International
Leonard M. Fertig......................... President and Chief Executive Officer of 50 1994
the Company; President of CME
Development Corporation, a subsidiary of
the Company
Andrew Gaspar............................. President of the general partner of R.S. 49 1994
Lauder, Gaspar & Co., LP
Robert A. Rayne........................... Director of London Merchant Securities plc 48 1996
Herbert S. Schlosser...................... Senior Advisor, Schroder Wertheim & Co. 70 1994
Incorporated
Nicolas G. Trollope....................... Partner of Conyers, Dill & Pearman 49 1994
Ronald S. Lauder, Chairman of the Board of Directors of the Company, has
served as Chairman of Central European Development Corporation Ltd. ('CEDC')
since 1990, Chairman of RSL Investments Inc. and Chairman of RSL Communications,
Ltd. ('RSLC') an international telecommunications company, since 1994. Mr.
Lauder has served as Chairman of Estee Lauder International since 1992 and
Chairman of Clinique Laboratories, Inc., an Estee Lauder division, since 1992.
From 1986 until 1987, Mr. Lauder served as U.S. Ambassador to Austria, having
previously served as Deputy Assistant Secretary of Defense for European and NATO
Policy. Mr. Lauder currently serves as a director of The Estee Lauder Companies
Inc. and The International Society for Yad Vashem, as Chairman of the Board of
Directors of The Museum of Modern Art and President of The Jewish National Fund.
Leonard M. Fertig has served as President and Chief Executive Officer of
the Company since August 1995. Mr. Fertig served as Vice President-Finance and
Chief Financial Officer of the Company from its inception in June 1994 until
August 1995. Mr. Fertig is also President of CME Programming Services, Inc. and
CME Development Corporation, subsidiaries of the Company. Mr. Fertig was an
independent consultant to the media industry from 1989 until 1994. From 1985
until 1989, Mr. Fertig was Executive Vice President and Chief Financial Officer
of Reiss Media Enterprises, a pay-per-view network. His experience includes over
20 years of consulting, planning and management of businesses, including with
American Airlines and Capital Cities/ABC. Mr. Fertig also serves as a director
of the following broadcast operations of the Company: Nova TV, PULS, Media Pro
International, Pro Plus and STS.
Andrew Gaspar directed the activities of the Company's predecessors from
1991 to June 1994. From its inception in June 1994 until December 1996, Mr.
Gaspar served as Vice President and Secretary of the Company. Mr. Gaspar has
been President of the general partner of R.S. Lauder, Gaspar & Co., LP, a
venture capital company, since 1991 and holds a comparable position with an
affiliate. Mr. Gaspar has been Vice Chairman of CEDC since 1991 and a director
and Vice Chairman of RSLC since 1994. From 1982 until 1991, Mr. Gaspar was a
partner of Warburg, Pincus & Co., a venture capital firm, in which Mr. Gaspar
specialized in start-up ventures in the telecommunications industry. Mr. Gaspar
is Chairman of the Board and a director of Auto Info Inc., a financial services
company.
Robert A. Rayne has been a director of London Merchant Securities plc, a
U.K. investment firm, since 1983. Mr. Rayne also is Investment Director of
Westpool Investment Trust plc. Mr. Rayne serves as a director for several
U.K.-based companies and in addition, serves on the Board of Directors of Energy
Ventures Inc.
Herbert S. Schlosser has served as a Senior Advisor, Broadcasting and
Entertainment to Schroder Wertheim & Co. Incorporated since 1986. Mr. Schlosser
serves as a consultant to the Company and receives a fee for such services. Mr.
Schlosser also serves as a consultant to Data Broadcasting Corporation. Mr.
Schlosser was
5
Executive Vice President of RCA Corporation from 1978 until 1985 and President
of the National Broadcasting Company (NBC) from 1974 until 1978. Mr. Schlosser
is a director of United States Satellite Broadcasting Company, Inc. and Data
Broadcasting Corporation.
Nicolas G. Trollope has served as Vice President and Secretary of the
Company since January 1997 and has been a partner with the law firm of Conyers,
Dill & Pearman, Hamilton, Bermuda, since 1991, and an attorney at the firm for
more than the past six years.
COMMITTEES OF THE BOARD
The Board of Directors has an Audit Committee composed of Messrs. Lauder,
Schlosser and Gaspar. The Audit Committee is responsible for recommending
annually to the Board of Directors the independent auditors to be retained by
the Company, reviewing with the independent auditors the scope and results of
the audit engagement and establishing and monitoring the Company's financial
policies and control procedures. During the fiscal year ended December 31, 1996,
the Audit Committee met on one occasion.
The Board of Directors has a Compensation Committee composed of Messrs.
Lauder and Gaspar. The Compensation Committee is responsible for determining
executive compensation policies and guidelines and for administering the
Company's 1994 Stock Option Plan (the '1994 Stock Option Plan') and the
Company's 1995 Stock Option Plan (the '1995 Stock Option Plan'; collectively,
the 1994 Stock Option Plan and the 1995 Stock Option Plan may be referred to as
the 'Stock Option Plans'), including granting options and setting the terms
thereof pursuant to such plans. During the fiscal year ended December 31, 1996,
the Compensation Committee met on two occasions.
The Board of Directors has an Administrative Committee composed of Messrs.
Trollope and Fertig. Mr. Gaspar also served as a member of the Administrative
Committee for a portion of the fiscal year ended December 31, 1996. The
Administrative Committee is responsible for acting on routine matters incidental
to the day-to-day affairs of the Company. The Administrative Committee did not
meet during the fiscal year ended December 31, 1996.
During the fiscal year ended December 31, 1996, the Board of Directors met,
or acted by unanimous consent, on seven occasions. Each member of the Board of
Directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and the Committees of the Board on which they served during the
periods that they served.
There is no family relationship among any directors or executive officers
of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE SIX NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS.
6
EXECUTIVE OFFICERS
Set forth below is certain information describing the Company's other
executive officer:
John A. Schwallie, age 34, has served as Vice President-Finance and Chief
Financial Officer of the Company since August 1995. Mr. Schwallie, a certified
public accountant, served as Financial Director of Nova TV from 1994 until
August 1995. From 1992 until 1993, Mr. Schwallie served as the Advisor to the
Financial Director of Prague Breweries, the second largest brewery in the Czech
Republic. During 1991, he served as the Assistant to the Regional Director of
General Atlantic, a London based multi-billion dollar privately held
conglomerate, operating retail outlets in Prague. Mr. Schwallie currently serves
as a director of Media Pro International and director of the audit committee of
Nova TV.
There is no arrangement or understanding between any executive officer and
any other person regarding selection as an executive officer.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by, or paid to the Company's current Chief Executive Officer and its
three most highly compensated executive officers (together, the 'Named Executive
Officers') who either served as executive officers during, or were serving as
executive officers at the end of, the last completed fiscal year ended December
31, 1996, for services rendered in all capacities to the Company and its
subsidiaries for each of the Company's last three fiscal years. Inception of the
Company occurred in June 1994. Amounts reflected in the following table for
Messrs. Fertig, Palmer and Gaspar with respect to services rendered in 1994
prior to the inception of the Company are amounts which were paid to these Named
Executive Officers by certain shareholders or partners of the Company's
predecessors for services rendered by these Named Executive Officers to the
operations of the Company during its development stage.
LONG-TERM COMPENSATION
--------------------------------------------
AWARDS
ANNUAL COMPENSATION --------------------------------------------
------------------------------------------ SECURITIES
OTHER ANNUAL RESTRICTED STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR $ $ $ $ # $
- ------------------------------------ ---- ------- ------- ------------ ---------------- ---------- ------------
Leonard M. Fertig 1996 309,840 150,000 64,358(1) -- 50,000 --
President and Chief 1995 220,623 125,000 58,806(2) -- 200,000 --
Executive Officer................. 1994 218,933 -- 41,896(3) -- 25,000 --
John A. Schwallie 1996 184,375 50,000 -- -- -- 696(4)
Vice President--Finance 1995 120,193 35,000 7,366(5) -- 75,000 600(4)
and Chief Financial Officer....... 1994 78,000 -- -- -- 10,000 --
Mark Palmer 1996 125,000 -- -- -- -- --
Vice Chairman of the Board 1995 125,000 -- -- -- -- --
of Directors(6)................... 1994 195,833(8) -- -- -- -- --
Andrew Gaspar 1996 125,000 -- -- -- -- --
Vice President and 1995 125,000 -- -- -- -- --
Secretary(7)...................... 1994 230,833(8) -- -- -- -- --
- ------------------
(1) Of this amount, $55,800 represents housing costs paid by the Company and
$8,558 represents use of a Company automobile.
(2) Of this amount, $45,918 represents housing costs paid by the Company and
$12,888 represents use of a Company automobile.
(3) Of this amount, $26,659 represents housing costs paid by the Company and
$15,237 represents use of a Company automobile.
(4) Represents life insurance benefits paid by the Company.
(5) Represents housing costs paid by the Company.
(Footnotes continued on next page)
7
(Footnotes continued from previous page)
(6) Mr. Palmer resigned as Vice Chairman of the Board of Directors of the
Company on October 8, 1996.
(7) Mr. Gaspar resigned as Vice President and Secretary of the Company on
December 31, 1996.
(8) These amounts include amounts paid by affiliated entities to Messrs. Palmer
and Gaspar, which were part of the $733,000 charged by those entities to the
Company in 1994 and included in corporate costs and expenses.
No stock appreciation rights or long-term incentive plan awards (all as
defined in the proxy regulations of the Securities and Exchange Commission) were
awarded to, earned by, or paid to the Named Executive Officers during the time
periods described above.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Class A Common Stock granted to the Named Executive Officers
during the fiscal year ended December 31, 1996.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL
NUMBER OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES EXERCISE ----------------------
GRANTED IN FISCAL PRICE EXPIRATION 5% 10%
NAME (#) YEAR ($/SH) DATE ($) ($)
- --------------------------------------------- ---------- ----------- -------- ---------- --------- ---------
Leonard M. Fertig............................ 50,000 7.85% 21.75 8/1/06 684,000 1,733,000
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to each exercise of
stock options during the fiscal year ended December 31, 1996 by the Named
Executive Officers and the value at December 31, 1996 of unexercised stock
options held by the Named Executive Officers.
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS AT
SHARES ACQUIRED VALUE FISCAL YEAR-END
ON EXERCISE REALIZED (#)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE
- ------------------------------------------ --------------- ----------- -------------------------
Leonard M. Fertig......................... 0 0 125,000/150,000
John A. Schwallie......................... 0 0 47,500/37,500
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END(1)
($)
NAME EXERCISABLE/UNEXERCISABLE
- ------------------------------------------ -------------------------
Leonard M. Fertig......................... 1,705,750/1,762,000
John A. Schwallie......................... 743,000/565,500
- ------------------
(1) Fair market value of securities underlying the options at fiscal year end
minus the exercise price of the options.
COMPENSATION OF DIRECTORS
The Company has previously paid fees to each non-employee director who is
not a controlling person of an affiliate of $2,500 per Board meeting. A proposal
to change the fees to be paid to directors from $2,500 per meeting to $10,000
per annum and to change the directors eligible to receive such fees has been
approved by the Board of Directors of the Company and is to be voted upon at the
Meeting (see 'Directors' Compensation'). Mr. Trollope is a partner in the law
firm of Conyers, Dill & Pearman, Hamilton, Bermuda, which served as the
Company's Bermuda counsel for the fiscal year ended December 31, 1996 and is
expected to continue to serve as the Company's Bermuda counsel in 1997. No
separate compensation is paid to any director for serving on committees. As of
August 3, 1995, the Company entered into a consulting agreement with Mr.
Schlosser for a term of one year and, on August 1, 1996, the Company and Mr.
Schlosser entered into a subsequent one year consulting agreement. Under the
consulting agreements, Mr. Schlosser served and serves as a consultant to the
Company and, at the request of the Company's management, performed and performs
general consulting services relating to the Company's broadcast operations.
Pursuant to the agreement entered into in 1995, the Company paid Mr. Schlosser
at the rate of $50,000 per annum and granted Mr. Schlosser 10 year options to
purchase 25,000 shares of Class A Common Stock at an exercise price equal to the
last reported sale price of the Class A Common Stock on the Nasdaq National
Market on August 3, 1995. Options to purchase 12,500 of such shares became
exercisable commencing February 3, 1996 and the remainder of these options
became exercisable commencing August 3, 1996. Pursuant to the agreement entered
into in August 1996, the Company pays
8
Mr. Schlosser at the rate of $100,000 per annum and granted Mr. Schlosser 10
year options to purchase 15,000 shares of Class A Common Stock at an exercise
price equal to the last reported sale price of the Class A Common Stock on the
Nasdaq National Market on August 1, 1996. Such options are in addition to those
granted separately to Mr. Schlosser for serving as a director. Non-employee
directors (other than Mr. Trollope who declines such options and other than
controlling persons of affiliates of the Company) have automatically been
granted options to purchase 10,000 shares of Class A Common Stock once per year
under the Stock Option Plans. The Company has not previously paid fees to
employee directors and directors who are controlling persons of affiliates of
the Company for services as directors; however, as described above, the proposal
before the Meeting provides that certain of these directors would receive fees
for serving as directors. The Company reimburses each director for expenses in
connection with attending meetings of the Board of Directors.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Leonard M. Fertig, President and Chief Executive Officer of the Company,
has three-year employment agreements, dated as of August 10, 1995, with the
Company and with a wholly-owned subsidiary of the Company. Under the terms of
the employment agreements, Mr. Fertig receives in the aggregate a salary of
$250,000 for the first year, $275,000 for the second year and $300,000 for the
third year. The employment agreements contain a confidentiality covenant and a
non-compete covenant which has a term of two years after the termination of his
employment. Pursuant to a consulting agreement with a wholly-owned subsidiary of
the Company, a consulting company owned by Mr. Fertig is paid $50,000 per year.
Mr. Fertig has also been granted options to purchase 25,000 shares of Class A
Common Stock under a previous agreement with the Company and under his current
agreements, Mr. Fertig has been granted options to purchase 200,000 shares of
Class A Common Stock. These options originally were to become exercisable in
three equal installments on each of the first, second and third anniversaries of
the agreements. However, the Board of Directors recently amended the 1995 Stock
Option Plan to provide for two-year vesting rather than three-year vesting, and
therefore these options are exercisable in two equal installments on each of the
first and second anniversaries of these agreements. In addition, as a result of
the Company having met certain performance goals established by agreement
between the Compensation Committee and Mr. Fertig, options to purchase an
additional 50,000 shares (exercisable in equal installments on each of the first
and second anniversaries of their grant) were granted to Mr. Fertig in August
1996. In addition, if the Company meets or exceeds performance goals to be
established by agreement between the Compensation Committee and Mr. Fertig,
options to purchase an additional 50,000 shares of Class A Common Stock will be
granted to him in August 1997. In the event of a merger, reorganization or
consolidation in which the Company is not the surviving corporation, then all
options which have been granted to Mr. Fertig shall be immediately exercisable
in full.
John A. Schwallie, Vice President-Finance and Chief Financial Officer of
the Company has two-year employment agreements, dated as of August 14, 1995,
with the Company and a wholly-owned subsidiary of the Company. Under the terms
of the employment agreements, Mr. Schwallie receives in the aggregate a salary
of $175,000 in the first year, which amount is to be increased by the Board of
Directors by an amount not less than the U.S. Consumer Price Index increase in
the second year. The employment agreements contain a confidentiality covenant
and a non-compete covenant which has a term of two years after the termination
of Mr. Schwallie's employment. Mr. Schwallie, who had previously been granted
options to purchase 60,000 shares of Class A Common Stock, has been granted
options under his current agreements to purchase an additional 25,000 shares of
Class A Common Stock, 12,500 of which are exercisable on August 14, 1996 and an
additional 12,500 of which are exercisable on August 14, 1997, all pursuant to
the Company's Stock Option Plans. In the event of a merger, reorganization or
consolidation in which the Company is not the surviving corporation, then all
options which have been granted to Mr. Schwallie shall be immediately
exercisable in full.
Mark Palmer, formerly the Vice Chairman of the Board of Directors of the
Company, continues to have a services agreement with the Company, dated as of
July 29, 1996. Pursuant to his agreement, the Company pays $125,000 per year to
a corporation owned by Mr. Palmer for services performed by him outside of the
United States. The services agreement has a two year term. Under the agreement,
the Company acknowledges that Mr. Palmer will devote at least a majority of his
business time to activities unrelated to the business and affairs of the
Company. The agreement contains prohibitions on the disclosure of confidential
information and a non-compete covenant which has a term of two years after its
termination.
9
Andrew Gaspar, a director of the Company and formerly Vice President and
Secretary of the Company, continues to have a services agreement with the
Company. Pursuant to his agreement with the Company, which was extended in
October 1996 for an additional two years, the Company pays $125,000 per year to
a corporation owned by Mr. Gaspar and members of his family for services
performed by him outside of the United States. Under the agreement, the Company
acknowledges that Mr. Gaspar will devote at least a majority of his business
time to activities unrelated to the business and affairs of the Company. The
agreement contains prohibitions on the disclosure of confidential information
and a non-compete covenant which has a term of two years after its termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Ronald S. Lauder and Andrew
Gaspar, who was Vice President and Secretary of the Company until December 31,
1996. See 'Certain Relationships and Related Transactions' and 'Employment
Agreements, Termination of Employment and Change-in-Control Arrangements.'
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is charged with developing a corporate
compensation philosophy, determining compensation packages for the Chief
Executive Officer and the Chief Financial Officer and the Company's other
executive officers, if any, and administering the Stock Option Plans. The
compensation paid to Messrs. Palmer and Gaspar as executive officers during the
Company's fiscal year ended December 31, 1996 was based on the terms of
agreements entered into prior to the time that the Company became subject to the
reporting requirements of the Exchange Act. The agreements under which Messrs.
Palmer and Gaspar currently are being compensated were entered into after
Messrs. Palmer and Gaspar, respectively, had notified the Company of their
intention to resign as executive officers. Consequently, although the
Compensation Committee is responsible for determining compensation policies and
guidelines for all executive officers, it has not at this time formulated such
policies for executive officers other than the Chief Executive Officer and the
Chief Financial Officer.
The primary objective of the compensation packages of the Chief Executive
Officer and the Chief Financial Officer is to provide a remuneration opportunity
that will motivate and retain these key executives of the Company.
Based on this objective, the Compensation Committee has adopted the
following basic principles for compensating the Chief Executive Officer and the
Chief Financial Officer:
o compensation plans should reward individual and corporate
achievement; and
o short and long-term incentives must be effectively balanced to
satisfy both the short and long-term goals of the Company.
Based on the Compensation Committee's own knowledge of compensation
packages for comparable positions at other media companies, both public and
private, the Compensation Committee devised pay packages that consist of three
components, each designed to achieve a distinctive objective:
Base Salary provides regular compensation for services rendered at a
sufficient level to retain and motivate the Chief Executive Officer and the
Chief Financial Officer.
Bonus provides cash incentive compensation for services rendered to
motivate and reward the Chief Executive Officer and the Chief Financial Officer.
Bonuses are determined at the Compensation Committee's discretion, considering
individual performance as well as contribution to the growth, development and
success of the Company.
Stock Options are an integral part of the pay packages of the Chief
Executive Officer and the Chief Financial Officer. Options provide a unique
compensation opportunity. The Compensation Committee believes that stock
options, which are designed to focus attention on stock values, are the most
effective way of aligning the long-term interests of the Chief Executive Officer
and the Chief Financial Officer with those of the Company's shareholders.
Options are granted at prices equal to the fair market value at the date of
grant, are not exercisable until the first anniversary of the date of grant and
do not become fully exercisable until the second anniversary of the date of
grant. Options generally remain exercisable during continued employment until
the tenth anniversary of the date of grant, which provides executives an
incentive to increase shareholder value over
10
the long term since the full benefit of the options cannot be realized unless
stock price appreciation occurs over a number of years.
Compensation of Chief Executive Officer
The Compensation Committee and the Board of Directors recognize the unique
skills and experience of the Chief Executive Officer. The goal of the
Compensation Committee in developing a pay package for the Chief Executive
Officer was to provide a significant incentive to motivate and retain his
services for a significant term. The current employment agreements with the
Chief Executive Officer, which have three-year terms expiring in August 1998,
provide:
Salary
A base salary of $250,000 per year with $25,000 increases in base
salary per year provided during the term of the agreements. In addition,
pursuant to a consulting agreement with a wholly-owned subsidiary of the
Company, a consulting company owned by Mr. Fertig is paid $50,000 per year.
Annual Bonus
The Compensation Committee granted a $150,000 bonus to Mr. Fertig for
1996 based on Mr. Fertig's extraordinary performance during the year. This
bonus was discretionary and not expressly provided for in the employment
agreement with Mr. Fertig. The Compensation Committee took into
consideration (i) the success realized in 1996 by Nova TV, the Company's
television station in the Czech Republic, (ii) the early success of PRO TV
and POP TV, the Company's television operations in Romania and Slovenia
which began broadcasting in December 1995, (iii) Mr. Fertig's contribution
to the successful start-up of new television broadcast operations in the
Slovak Republic and Ukraine, and (iv) the completion of the Company's third
public offering of 5,520,000 shares of Class A Common Stock (the '1996
Offering').
Stock Options
During 1995, the Chief Executive Officer was granted options to
purchase 200,000 shares of Class A Common Stock, which, due to recent
changes to the 1995 Stock Option Plan, vest equally after the first and
second anniversaries of this grant. In addition, having satisfied
performance goals established by agreement between the Compensation
Committee and the Chief Executive Officer, the Chief Executive Officer was
granted options to purchase an additional 50,000 shares of Class A Common
Stock in August 1996. Such performance goals included: (i) the procurement
of new licenses, (ii) the build-out of new television operations, (iii) the
recruitment and effective management of qualified staff, (iv) the increase
in the Company's Class A Common Stock price, and (v) the identification of
new growth opportunities. In addition, if the Company meets or exceeds
performance goals to be established by agreement between the Compensation
Committee and the Chief Executive Officer, options to purchase an
additional 50,000 shares of Class A Common Stock will be granted in August
1997.
In setting the above compensation package a number of factors were
considered, including:
o the unique skills and experience of the Chief Executive Officer;
o total compensation of key executives at other media companies; and
o the importance of the Chief Executive Officer to the continued
growth and success of the Company and the need to provide him with a
significant incentive to motivate and retain his services for a
three-year period starting in 1995.
Summary
The Compensation Committee will continue to evaluate the Company's
executive compensation programs on an ongoing basis to assure that the Company's
compensation philosophies and practices are consistent with the objective of
enhancing shareholder value.
Compensation Committee
RONALD S. LAUDER
ANDREW GASPAR
11
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the change in the
cumulative shareholder return of the Class A Common Stock against the cumulative
return of the Nasdaq Stock Market Index and the Dow Jones Broadcasting Index
between October 13, 1994 (the first day on which the Class A Common Stock
commenced trading on the Nasdaq National Market) and December 31, 1996.
[PERFORMANCE GRAPH]
NASDAQ Stock Dow Jones
CETV Market Index Broadcasting Index
------ ------------ ------------------
12-Oct-94 $100.00 $100.00 $100.00
30-Dec-94 100.00 98.04 94.99
29-Dec-95 146.43 137.17 128.02
31-Dec-96 226.79 168.32 101.45
Value of $100 invested at October 13, 1994 as of December 31, 1996
Central European Media Enterprises Ltd. $226.79
The Nasdaq Stock Market Index $168.32
Dow Jones Broadcasting Index $101.45
12
NUMBER OF DIRECTORS
The Board of Directors recently has begun a search process for two
additional independent directors. The Board of Directors believes that it is in
the best interests of the Company to have additional independent directors with
significant knowledge, skills, perspectives and insights with respect to an
international business, such as that operated by the Company. The Board of
Directors believes that ideally such persons would have both operational and
financial expertise. Since this search process commenced only recently, the
Board of Directors was unable to nominate such persons for approval by the
shareholders at the Meeting. Under Bermuda law, in order for the Board of
Directors to elect such additional directors after the Meeting to serve until
the Company's next annual general meeting of shareholders, the shareholders are
required to establish a maximum number of directors which provides for two
vacancies on the Board of Directors. Accordingly, the Board of Directors
believes that it is in the best interests of the Company to set the maximum
number of directors to serve on the Board of Directors until the next annual
general meeting of shareholders at eight.
VOTE REQUIRED; RECOMMENDATION
Approval of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
APPROVAL OF THIS PROPOSAL.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE IN FAVOR OF SETTING
THE MAXIMUM NUMBER OF DIRECTORS TO SERVE ON THE BOARD OF DIRECTORS UNTIL THE
NEXT ANNUAL GENERAL MEETING OF SHAREHOLDERS AT EIGHT.
INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON STOCK
The Company's Memorandum of Association presently authorizes the issuance
of 50,000,000 shares of stock divided into three classes: 30,000,000 shares of
Class A Common Stock, 15,000,000 shares of Class B Common Stock and 5,000,000
shares of Preferred Stock. As of March 24, 1997, 16,716,478 shares of Class A
Common Stock were issued and outstanding and 9,371,559 shares were reserved for
issuance upon the conversion of shares of Class B Common Stock into Class A
Common Stock, and the exercise of employee and other stock options and warrants.
Accordingly, there are currently 3,911,963 shares of Class A Common Stock that
are unissued and not reserved for issuance. As of March 24, 1997, 7,149,475
shares of Class B Common Stock and no shares of Preferred Stock were issued and
outstanding, leaving 7,850,525 shares of Class B Common Stock and 5,000,000
shares of Preferred Stock unissued and not reserved for issuance.
The Board of Directors of the Company has determined that it is in the best
interests of the Company and its shareholders to increase the number of
authorized shares of stock from 50,000,000 to 120,000,000, such increase
representing a change in the shares of Class A Common Stock that are authorized
from 30,000,000 shares to 100,000,000 shares. This increase would be effected by
(i) amending the Company's Memorandum of Association and (ii) amending Bye-law
3(1)(a), as set forth in Exhibit A hereto. The Board of Directors has determined
that the authorization of an additional 70,000,000 shares of Class A Common
Stock will provide the Company with flexibility in the future by assuring that
there will be sufficient authorized shares of Class A Common Stock to enable the
Company to issue shares in connection with future acquisitions or mergers, new
capital requirements, stock dividends, employee stock option plans and for other
corporate purposes.
The unreserved and unissued shares of Class A Common Stock may be issued at
such times, for such purposes and for such consideration as the Board of
Directors of the Company may determine to be in the best interests of the
Company and its shareholders and, except as otherwise required by applicable
law, without further authority from the shareholders of the Company. The Company
has no present plan, agreement or understanding with respect to the issuance of
such additional authorized shares of Class A Common Stock.
13
VOTE REQUIRED; RECOMMENDATION
Adoption of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum, but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AMENDMENTS TO THE COMPANY'S MEMORANDUM OF ASSOCIATION AND
BYE-LAWS TO INCREASE THE NUMBER OF SHARES OF STOCK AUTHORIZED FROM 50,000,000
SHARES TO 120,000,000 SHARES BY INCREASING THE NUMBER OF SHARES OF CLASS A
COMMON STOCK AUTHORIZED FROM 30,000,000 SHARES TO 100,000,000 SHARES.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE IN FAVOR OF THE
ADOPTION OF THE AMENDMENTS TO THE COMPANY'S MEMORANDUM OF ASSOCIATION AND
BYE-LAWS TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON STOCK.
AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE SCOPE OF THE AUTHORITY OF
DIRECTORS AND OFFICERS
The Bye-laws of the Company presently accord any two directors the power to
bind the Company without regard to financial limitations. The Board of Directors
has determined that such broad authority is contrary to the best interests of
the Company and its shareholders, and that it would be in the best interests of
the Company and its shareholders to more precisely define the scope of the
directors' and officers' authority by amending the Company's Bye-laws. By
deleting Bye-laws 104(2) and 105, renumbering Bye-law 104(3) as 104(2), and
amending Bye-law 107, as set forth in Exhibit B hereto, the proposal seeks to
limit, unless otherwise expressly authorized by the Board of Directors, any
director or officer from (i) entering into any contract, deed, or other
agreement obligating the Company to make payments above a certain term or
amount, which term or amount may be determined from time to time by the Board of
Directors, or (ii) issuing or agreeing to issue any shares of capital stock of
the Company.
The Board of Directors also believes that it is in the best interests of
the Company and its shareholders to further amend the Bye-laws to provide the
President of the Company with the express power, acting alone, to enter into any
contract, deed or other agreement that obligates the Company to make payments
(or provide services or goods) in an amount (or having a fair value) not to
exceed $250,000, or, if a certain obligation is contemplated by, and within
limits established by an Annual Budget and Operating Plan that has been approved
by the Board of Directors, in an amount not to exceed $1,000,000. Such
flexibility will enable the President to conduct activities related to the
day-to-day operations of the Company without express approval of the Board of
Directors. The Board of Directors believes that most comparable public companies
permit their President to conduct such activities without approval of the Board
of Directors. This would be accomplished by amending Bye-law 130 as set forth in
Exhibit B hereto.
Bermuda law requires that the shareholders approve all amendments to the
Company's Bye-laws.
VOTE REQUIRED; RECOMMENDATION
Adoption of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum, but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE SCOPE OF THE
AUTHORITY OF DIRECTORS AND OFFICERS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE SCOPE OF THE AUTHORITY
OF DIRECTORS AND OFFICERS.
14
AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE REQUIREMENTS FOR APPROVING
CERTAIN PROPOSALS
The Board of Directors has determined that the procedures and requirements
for (i) electing directors to the Board of Directors and (ii) rescinding,
altering, amending or adopting Bye-laws should be clarified, and that it is in
the best interests of the Company and its shareholders to amend the Company's
Bye-laws to clarify such procedures and requirements.
As a matter of Bermuda law, a simple majority is required for the election
of directors. The Board of Directors believes this to be an appropriate standard
with regard to the election of directors of the Company and believes it
beneficial to the Company and its shareholders to make such a procedure an
express provision of the Company's Bye-laws. The proposed amendment to Bye-law
86(1), as set forth in Exhibit C hereto, accomplishes this by expressly stating
that the election or appointment of directors is to be accomplished 'by ordinary
resolution,' defined elsewhere in the Bye-laws as a simple majority.
Additionally, the Board of Directors has determined that the current
Bye-law provisions regarding the rescinding, altering, amending or adopting of
Bye-laws should be clarified. While the Bye-laws currently define only two types
of resolutions, an 'ordinary resolution' and a 'special resolution,' the
Bye-laws presently make reference to a 'general resolution' being required to
rescind, alter, amend or adopt Bye-laws. The Board of Directors believes that
'general,' as used therein, means 'ordinary,' and deems it advisable to amend
Bye-law 167, as set forth in Exhibit C hereto.
Bermuda law requires that the shareholders approve all amendments to the
Company's Bye-laws.
VOTE REQUIRED; RECOMMENDATION
Adoption of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum, but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE REQUIREMENTS
FOR APPROVING CERTAIN PROPOSALS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE REQUIREMENTS FOR
APPROVING CERTAIN PROPOSALS.
DIRECTORS' COMPENSATION
Each non-employee director of the Company who is not a controlling person
of an affiliate has previously received a fee of $2,500 per Board meeting. Over
the past fiscal year of the Company, it has become the practice of the Company
to hold management meetings from time to time which are attended by all the
directors. Typically, the time commitment of each director, both in preparation
for, and attendance at, such management meetings is similar to that of scheduled
Board meetings. Directors, however, currently are not compensated for attendance
at management meetings. Accordingly, the Board of Directors has determined that
in order to attract and retain qualified individuals to serve as directors of
the Company, it is in the best interests of the Company that the shareholders
approve a per annum fee to be paid to directors, which would result in the
directors indirectly being compensated for time devoted to all activities as
directors on behalf of the Company. In addition, only non-employees who are not
controlling persons of affiliates of the Company have in the past been
compensated for serving as directors. The Company's directors who are
controlling persons of affiliates of the Company devote a substantial amount of
time to serving as directors. The Board of Directors has determined that it is
in the best interests of the Company to compensate such directors at the same
rate that it compensates directors who are not controlling persons of affiliates
of the Company. Therefore, it is proposed that the shareholders approve a fee of
$10,000 per annum to be paid to Messrs. Lauder, Gaspar, Schlosser, Rayne and
Trollope for the Company's 1996 fiscal year and, for each of these directors who
are re-elected at the Meeting, for the 1997 fiscal year. Moreover, since Mr.
Palmer only served as a director of the Company until October 1996, it is
proposed that the shareholders approve a fee of $7,500 to be paid to Mr. Palmer
for the time that he
15
served as a director during the 1996 fiscal year. In addition, a proposal to set
the maximum number of directors to serve until the next annual general meeting
at eight has been approved by the Board of Directors and is to be voted upon at
the Meeting. If the Board of Directors elects new directors after the Meeting,
each such person would receive a pro rata amount of the $10,000 per annum fee.
VOTE REQUIRED; RECOMMENDATION
Approval of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum, but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
APPROVAL OF THIS PROPOSAL.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE PROPOSED DIRECTORS' COMPENSATION.
AMENDMENT TO THE COMPANY'S BYE-LAWS PERMITTING THE BOARD OF DIRECTORS TO SET THE
COMPENSATION TO BE PAID TO DIRECTORS
Currently, the shareholders of the Company must consent to the setting of
the compensation to be paid to directors. The Board of Directors believes that
comparable public companies permit their Boards of Directors to set fees to be
paid to directors' without the consent of their shareholders. In order to be
consistent with the practices of such comparable companies, the Board of
Directors has determined that it is in the best interests of the Company for the
shareholders to amend Bye-law 96 to permit the Board of Directors to set the
compensation to be paid to directors, as set forth in Exhibit D hereto.
Bermuda law requires that the shareholders approve all amendments to the
Company's Bye-laws.
VOTE REQUIRED; RECOMMENDATION
Adoption of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum, but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AMENDMENT TO THE COMPANY'S BYE-LAWS PERMITTING THE BOARD OF
DIRECTORS TO SET THE COMPENSATION TO BE PAID TO DIRECTORS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE AMENDMENT TO THE COMPANY'S BYE-LAWS PERMITTING THE BOARD OF DIRECTORS TO SET
THE COMPENSATION TO BE PAID TO DIRECTORS.
ADOPTION OF FINANCIAL STATEMENTS
The Audit Committee of the Board of Directors has approved the audited
financial statements for the Company's fiscal year ended December 31, 1996 (the
'Financial Statements') for presentation to the shareholders at the Annual
Meeting of Shareholders. Under Bermuda law, the shareholders are requested to
adopt financial statements. Under Bermuda law, the adoption of the Financial
Statements by the shareholders does not affect any rights that the shareholders
may have with respect to the Financial Statements.
VOTE REQUIRED; RECOMMENDATION
The adoption of the financial statements requires the affirmative vote of a
majority of the votes cast, in person or by proxy, at the Meeting, provided that
a quorum is present in person or by proxy. Abstentions and broker non-votes will
be included in determining the presence of a quorum, but are not counted as
votes cast. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE
VOTED FOR ADOPTION OF THE FINANCIAL STATEMENTS AND THE AUDITORS' REPORT THEREON.
16
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ADOPTION OF THE FINANCIAL STATEMENTS AND THE AUDITORS' REPORT THEREON.
SELECTION OF AUDITORS
At the recommendation of the Audit Committee, the Board of Directors
recommends to the shareholders that Arthur Andersen & Co., Victoria Hall,
Hamilton, Bermuda, be appointed to serve as the independent auditors of the
Company until the conclusion of the Company's next annual general meeting of
shareholders. In addition, the Board of Directors recommends to the shareholders
that the shareholders authorize the Board of Directors to approve the auditors'
fee.
Representatives of Arthur Andersen & Co. are expected to be present at the
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions from shareholders.
VOTE REQUIRED; RECOMMENDATION
The appointment of Arthur Andersen & Co. to serve as the independent
auditors of the Company and the authorization of the Board of Directors to
approve the auditors' fee requires the affirmative vote of a majority of the
votes cast, in person or by proxy, at the Meeting, provided that a quorum is
present in person or by proxy. Abstentions and broker non-votes will be included
in determining the presence of a quorum, but are not counted as votes cast.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE
APPOINTMENT OF ARTHUR ANDERSEN & CO. AS THE COMPANY'S AUDITORS AND FOR THE BOARD
OF DIRECTORS TO APPROVE THE AUDITORS' FEE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
APPOINTMENT OF ARTHUR ANDERSEN & CO. AS THE COMPANY'S AUDITORS AND A VOTE IN
FAVOR OF AUTHORIZING THE BOARD OF DIRECTORS TO APPROVE THE AUDITORS' FEE.
17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LAUDER PROMISSORY NOTE
In October 1996, the Company executed a Promissory Note in favor of Ronald
S. Lauder pursuant to which Mr. Lauder agreed to make loans of up to $20,000,000
to the Company (the 'Lauder Loan'). The Lauder Loan carried interest of 2.0%
over LIBOR and provided Mr. Lauder with warrants exercisable for up to 100,000
shares of Class A Common Stock. The Lauder Loan was repaid in accordance with
its terms at the consummation of the 1996 Offering. Based on the aggregate
advances made by Mr. Lauder of $14,000,000, Mr. Lauder received warrants
exercisable for 70,000 shares of the Class A Common Stock at an exercise price
of $30.25 per share, which warrants will be exercisable for 4 years commencing
on October 2, 1997. Mr. Lauder is Chairman of the Board of the Company.
LEASE AGREEMENTS
CEDC Management Services GmbH owns CEDC Praha s.r.o, the owner of the
facility which Nova TV leases as its television headquarters (the 'Nova
Facility'). This capitalized lease provides for payments to be made, including
principal and interest, by Nova TV of $3,934,000 in each of 1997, 1998 and 1999.
Through December 31, 1996, Nova TV has made principal payments of $2,868,000 to
be applied for the purchase of the Nova facility. The term of the lease is for
one year, but is renewable for additional one year periods at the option of Nova
TV. During the fiscal year ended December 31, 1996, Nova TV made lease payments,
including principal and interest, for the Nova Facility of $3,561,000. The
Company believes that Nova TV's payments under this lease approximate market
rates. CEDC Management Services GmbH is a subsidiary of CEDC. Messrs. Lauder,
Gaspar and Trollope are Chairman, President, and a director, respectively, of
CEDC and have an aggregate equity interest in excess of 10% in CEDC.
ADMINISTRATIVE SERVICES
R.S. Lauder, Gaspar & Co., LP has agreed to perform administrative services
for CME Media Enterprises B.V. ('CME BV'), a subsidiary of the Company, pursuant
to a services agreement dated as of April 1, 1994 (and subsequently extended)
(the 'Services Agreement'). Under the Services Agreement, CME BV has agreed to
reimburse R.S. Lauder, Gaspar & Co., LP for its costs (including the costs of
employees) incurred in providing administrative services to the Company. The
costs of such services that may be requested from time to time by the Company
pursuant to the Services Agreement are at a rate that could reasonably be
expected to be charged by an unaffiliated third party. During the fiscal year
ended December 31, 1996, the Company paid $74,202 to R.S. Lauder, Gaspar & Co.,
LP under the Services Agreement. The Services Agreement was not negotiated on an
arm's length basis. The Company believes, however, that the terms of the
Services Agreement are at least as favorable to the Company as those it could
negotiate with unrelated parties. A previous services agreement with CEDC
expired during the fiscal year ended December 31, 1996, and no payments were
made thereunder during the 1996 fiscal year. Messrs. Lauder and Gaspar are
indirect majority partners of R.S. Lauder, Gaspar & Co., LP. Messrs. Lauder,
Gaspar and Trollope are Chairman, President, and a director, respectively, of
CEDC and have an aggregate equity interest in excess of 10% in CEDC.
SHAREHOLDER PROPOSALS
Any proposal of an eligible shareholder intended to be presented at the
next annual general meeting of shareholders of the Company must be received by
the Company by December 5, 1997 to be eligible for inclusion in the Company's
proxy statement and form of proxy relating to such meeting.
MISCELLANEOUS
Under Bermuda law, no matter or business other than those set forth in the
accompanying Notice of Annual Meeting of Shareholders is permitted to be
presented at the Meeting.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to shareholders in connection with this solicitation.
18
Officers and regular employees may solicit proxies by mail, telephone, telegraph
and personal interview, for which no additional compensation will be paid. In
addition, Shareholder Communications Corporation has been engaged by the Company
to act as proxy solicitors and will receive fees of $3,000, plus expenses. The
Company may reimburse persons holding shares in their names or in the names of
nominees for their reasonable expenses in sending proxies and proxy material to
their principals.
The Annual Report to Shareholders for the fiscal year ended December 31,
1996 is being mailed to shareholders simultaneously with this Proxy Statement.
By order of the Board of Directors,
/s/ Nicolas G. Trollope
NICOLAS G. TROLLOPE
Secretary
Hamilton, Bermuda
April 4, 1997
19
EXHIBIT A
PROPOSED AMENDMENTS TO THE COMPANY'S MEMORANDUM OF
ASSOCIATION AND BYE-LAWS TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF CLASS A COMMON STOCK
MEMORANDUM OF ASSOCIATION
The following constitutes the proposed amendment to the Company's
Memorandum of Association:
That the authorized share capital of the Company be and is hereby
increased from US$500,000 to US$1,200,000 by the creation of
70,000,000 shares of Class A Common Stock of a par value of US$.01
each for the purposes of issuing further shares of a Class A Common
Stock pursuant to the Bye-laws of the Company.
BYE-LAW 3(1)(A)
The current text of Bye-law 3(1)(a) provides as follows:
3. (1) The capital of the Company shall be divided into three classes
of shares, namely:
(a) 30,000,000 Shares of Class A Common Stock, par value US$.01
per share ('Class A Shares').
If the proposal is adopted, Bye-law 3(1)(a) would provide:
3. (1) The capital of the Company shall be divided into three classes
of shares, namely:
(a) 100,000,000 Shares of Class A Common Stock, par value
US$.01 per share ('Class A Shares').
A-1
EXHIBIT B
PROPOSED AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING
THE SCOPE OF THE AUTHORITY OF DIRECTORS AND OFFICERS
Bye-laws 104(2) and 105, proposed to be deleted, and Bye-law 107, proposed
to be amended, currently provide as follows:
BYE-LAW 104(2)
104. (2) Any person contracting or dealing with the Company in the
ordinary course of business shall be entitled to rely on any written
or oral contract or agreement or deed, document or instrument
entered into or executed as the case may be by any two of the
Directors acting jointly on behalf of the Company and the same shall
be deemed to be validly entered into or executed by the Company as
the case may be and shall, subject to any rule of law, be binding on
the Company.
BYE-LAW 105
105. The Board may establish any regional or local boards or
agencies for managing any of the affairs of the Company in any
place, and may appoint any persons to be members of such local
boards, or any managers or agents, and may fix their remuneration
(either by way of salary or by commission or by conferring the right
to participate in the profits of the Company or by a combination or
two or more of these modes) and pay the working expenses of any
staff employed by them upon the business of the Company. The Board
may delegate to any regional or local board, manager or agent any of
the powers, authorities and discretions vested in or exercisable by
the Board (other than its powers to make calls and forfeit shares),
with power to sub-delegate, and may authorise the members of any of
them to fill any vacancies therein and to act notwithstanding
vacancies. Any such appointment or delegation may be made upon such
terms and subject to such conditions as the Board may think fit, and
the Board may remove any person appointed as aforesaid, and may
revoke or vary such delegation, but no person dealing in good faith
and without notice of any such revocation or variation shall be
affected thereby.
BYE-LAW 107
107. The Board may entrust to and confer upon a Managing Director,
Joint Managing Director, Deputy Managing Director, and Executive
Director or any Director any of the powers exercisable by it upon
such terms and conditions and with such restrictions as it thinks
fit, and either collaterally with, or to the exclusion of, its own
powers, and may from time to time revoke or vary all or any of such
powers but no person dealing in good faith and without notice of any
such revocation or variation shall be affected thereby.
If the proposal is adopted, Bye-laws 104 and 107, in their entirety, would
provide as follows:
BYE-LAW 104
104. (1) The business of the Company shall be managed and conducted
by the Board, which may pay all expenses incurred in forming and
registering the Company and may exercise all powers of the Company
(whether relating to the management of the business of the Company
or otherwise) which are not by the Statutes or by these Bye-laws
required to be exercised by the Company in general meeting, subject
nevertheless to the provisions of the Statutes and of these Bye-laws
and to such regulations being not inconsistent with such provisions,
as may be prescribed by the Company in general meeting, but no
regulations made by the Company in general meeting shall invalidate
any prior act of the Board which would have been valid if such
regulations had not been made. The general powers given by this
Bye-law shall not be limited or restricted by any special authority
or power given to the Board by any other Bye-law.
B-1
*(2) Without prejudice to the general powers conferred by these
Bye-laws it is hereby expressly declared that the Board shall have the
following powers:
(a) To give any person the right or option of requiring at a
future date that an allotment shall be made to him of any
share at par or at such premium as may be agreed.
(b) To give any Directors, officers or servants of the Company
an interest in any particular business or transaction or
participation in the profits thereof or in the general
profits of the Company either in addition to or in
substitution for a salary or other remuneration.
(c) To resolve that the Company may be discontinued in Bermuda
and continued in a named country or jurisdiction outside
Bermuda subject to the provisions of the Act.
BYE-LAW 107
107. Except as specified in Bye-law 130 or unless expressly
authorized by the Board in accordance with these Bye-laws, no
Director or Officer may (a) enter into any contract or deed or other
agreement pursuant to which the Company is obliged to make payment
over such term or such amount as the Board may from time to time
determine, or (b) issue or agree to issue any share of the Company.
The Board may entrust to and confer upon any officer such powers,
with such terms, conditions and restrictions, as the Board in its
discretion deems appropriate.
BYE-LAW 130
The current text of Bye-law 130 provides:
130. The officers of the Company shall have such powers and perform
such duties in the management, business and affairs of the Company
as may be delegated to them by the Directors from time to time.
If the proposal is adopted, the following sentence would be added to the
above:
In addition, the President of the Company shall have the power and
is expressly authorized to enter into any contract, deed or other
agreement that obligates the Company to make payments (or provide
services or goods) in an amount (or having a fair value) not
exceeding US$250,000 or, if such obligation is contemplated by and
within the limits established by an Annual Budget and Operating Plan
approved by the Board, obligates the Company to make payments (or
provide services or goods) in an amount (or having a fair value) not
exceeding US$1,000,000.
- ------------------
* This is currently Bye-law 104(3). If the proposal is adopted, this Bye-law
will be renumbered as Bye-law 104(2), as set forth above.
B-2
EXHIBIT C
PROPOSED AMENDMENTS TO THE COMPANY'S BYE-LAWS CONCERNING THE REQUIREMENTS FOR
APPROVING CERTAIN PROPOSALS
BYE-LAW 86(1)
Bye-law 86(1) currently provides:
86. (1) Unless otherwise determined by the Company in general
meeting, the number of Directors shall not be less than three (3).
At all times, at least two (2) Directors shall be independent
directors. There shall be no maximum number of Directors. The
Directors shall be elected or appointed in the first place at the
statutory meeting of Members and thereafter at each annual general
meeting of the Company in accordance with Bye-law 87 and shall
hold office until the next appointment of Directors or until their
successors are elected or appointed. Any general meeting may
authorise the Board to fill any vacancy in their number left
unfilled at a general meeting.
If amended, as proposed, the new Bye-law 86(1) would read as follows:
86. (1) Unless otherwise determined by the Company in general
meeting, the number of Directors shall not be less that three (3).
At all times, at least two (2) Directors shall be independent
directors. There shall be no maximum number of Directors. The
Directors shall be elected or appointed by ordinary resolution in
the first place at the statutory meeting of Members and thereafter
at each annual general meeting of the Company subject to Bye-law
87 and shall hold office until the next appointment of Directors
or until their successors are elected or appointed. Any general
meeting may authorise the Board to fill any vacancy in their
number left unfilled at a general meeting.
BYE-LAW 167
Bye-law 167 currently provides:
167. No Bye-Law shall be rescinded, altered or amended and no new
Bye-Law shall be made until the same has been approved by a
resolution of the Directors and confirmed by a general resolution
of the holders of Common Shares.
If amended, as proposed, Bye-law 167 would read as follows:
167. No Bye-Law shall be rescinded, altered or amended and no new
Bye-Law shall be made until the same has been approved by a
resolution of the Directors and confirmed by an ordinary
resolution of the holders of Common Shares.
C-1
EXHIBIT D
PROPOSED AMENDMENT TO THE COMPANY'S
BYE-LAWS PERMITTING THE BOARD OF
DIRECTORS TO SET THE COMPENSATION
TO BE PAID TO DIRECTORS
BYE-LAW 96
Bye-law 96 currently provides:
96. The ordinary remuneration of the Directors shall from time to
time be determined by the Company in general meeting and shall
(unless otherwise directed by the resolution by which it is voted)
be divided amongst the Board in such proportions and in such manner
as the Board may agree or, failing agreement, equally, except that
any Director who shall hold office for part only of the period in
respect of which such remuneration is payable shall be entitled only
to rank in such division for a proportion of remuneration related to
the period during which he has held office. Such remuneration shall
be deemed to accrue from day to day.
If amended, as proposed, the new Bye-law 96 would read as follows:
96. The remuneration of the Directors shall from time to time be
determined by the Directors and reported to the Members on an annual
basis. Such remuneration shall be deemed to accrue from day to day.
D-1
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS--MAY 2, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Leonard M. Fertig and Nicolas
G. Trollope, or either of them acting singly in the absence of the other, with
the power of substitution in either of them, the proxies of the undersigned to
vote with the same force and effect as the undersigned all shares of Common
Stock of Central European Media Enterprises Ltd. (the 'Company') held of record
by the undersigned on March 24, 1997 at the Annual Meeting of Shareholders to be
held at The Hamilton Princess Hotel, 76 Pitts Bay Road, Pembroke HM 08, Bermuda,
on Friday, May 2, 1997, at 10:00 A.M. and at any adjournment or adjournments
thereof, hereby revoking any proxy or proxies heretofore given and ratifying and
confirming all that said proxies may do or cause to be done by virtue thereof
with respect to the following matters:
1. The election of six directors nominated by the Board of Directors:
/ / FOR all nominees listed below (except as indicated below) / / WITHHOLD AUTHORITY to vote for the nominees listed below
RONALD S. LAUDER, LEONARD M. FERTIG, ANDREW GASPAR, ROBERT A. RAYNE, HERBERT
S. SCHLOSSER AND NICOLAS G. TROLLOPE
INSTRUCTION: to withhold authority to vote for any individual nominee, write
that nominee's name on this line: ______________________________________________
2. The approval of a proposal to set the maximum number of directors to serve on
the Board of Directors until the next annual general meeting of shareholders at
eight.
/ / FOR / / AGAINST / / ABSTAIN
3. The adoption of proposed amendments to the Company's Memorandum of
Association and Bye-laws to increase the number of authorized shares of the
Company's stock from 50,000,000 shares to 120,000,000 shares by increasing
the number of authorized shares of Class A Common Stock from 30,000,000
shares to 100,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
4. The adoption of proposed amendments to the Company's Bye-laws concerning the
scope of the authority of the directors and officers of the Company.
/ / FOR / / AGAINST / / ABSTAIN
5. The adoption of proposed amendments to the Company's Bye-laws concerning the
requirements for approving certain proposals.
/ / FOR / / AGAINST / / ABSTAIN
6. The approval of a proposal to change the compensation of directors.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
7. The adoption of a proposed amendment to the Company's Bye-laws permitting the
Board of Directors to set the compensation to be paid to directors.
/ / FOR / / AGAINST / / ABSTAIN
8. The adoption of the financial statements and the auditors' report thereon for
the fiscal year ended December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
9. The appointment of Arthur Andersen & Co. as independent auditors of the
Company for the 1997 fiscal year and the authorization of the Board of
Directors to approve the auditors' fee.
/ / FOR / / AGAINST / / ABSTAIN
This proxy, when properly executed, will be voted as directed. If no
direction is indicated, the proxy will be voted (i) FOR the election of the six
named individuals as directors, (ii) FOR the approval of the proposal to set the
maximum number of directors to serve on the Board of Directors until the next
annual general meeting at eight, (iii) FOR the adoption of the proposed
amendments to the Company's Memorandum of Association and Bye-laws to increase
the number of authorized shares of the Company's stock, (iv) FOR the adoption of
the proposed amendments to the Company's Bye-laws concerning the scope of the
authority of the directors and officers of the Company, (v) FOR the adoption of
the proposed amendments to the Company's Bye-laws concerning the requirements
for approving certain proposals, (vi) FOR the approval of the proposal to change
the compensation of directors, (vii) FOR the adoption of the proposed amendment
to the Company's Bye-laws permitting the Board of Directors to set the
compensation to be paid to directors, (viii) FOR the adoption of the Financial
Statements and the auditors' report thereon, and (ix) FOR the appointment of
Arthur Andersen & Co. as independent auditors of the Company for the 1997 fiscal
year and the authorization of the Board of Directors to approve the auditors'
fee.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders to be held on May 2, 1997, and the Proxy Statement, dated April
4, 1997 prior to the signing of this proxy.
Dated ____________________________ , 1997
_________________________________________
Please sign your name exactly as it
appears hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
it appears hereon. When signing as joint
tenants, all parties in the joint tenancy
must sign. When a proxy is given by a
corporation, it should be signed by an
authorized officer and the corporate seal
affixed. When a proxy is given by a
partnership, it should be signed in the
partnership name by an authorized person.
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY IN THE ENCLOSED ENVELOPE.