SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Telewest Communications plc
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(Name of Registrant as Specified in Its Charter)
Registrant
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(Name of Person(s) Filing Proxy Statement)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU
ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, PLEASE CONSULT AN
APPROPRIATE INDEPENDENT ADVISER IMMEDIATELY. IF YOU HAVE SOLD OR
OTHERWISE TRANSFERRED ALL OF YOUR HOLDING OF ORDINARY SHARES IN TELEWEST
COMMUNICATIONS PLC, YOU SHOULD SEND THIS DOCUMENT TOGETHER WITH THE
ACCOMPANYING FORM OF PROXY, PROXY STATEMENT AND ANNUAL REPORT TO THE
PURCHASER OR TRANSFEREE OR TO THE STOCKBROKER, BANK OR OTHER AGENT
THROUGH WHOM THE SALE OR TRANSFER WAS EFFECTED FOR TRANSMISSION TO THE
PURCHASER OR TRANSFEREE.
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[GRAPHIC OMITTED]
TELEWEST COMMUNICATIONS PLC
NOTICE OF
ANNUAL GENERAL MEETING
Notice of the Annual General Meeting of the Company to be held at The Grocers'
Hall, Princes Street, London EC2R 8AW on Friday, 8 May 1998 at 10.00am is set
out herein. Forms of Proxy for the Annual General Meeting must be received by
the Company's Registrars, Lloyds Bank plc, Registrars Department, The Causeway,
Worthing, West Sussex, N99 6DB England not later than 10.00am on 6 May 1998.
TELEWEST COMMUNICATIONS PLC
(Registered in England and Wales No. 2983307)
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom
31 March 1998
Dear Shareholder,
1998 ANNUAL GENERAL MEETING
The 1998 Annual General Meeting of the Company ("AGM") is to be held on Friday,
8 May 1998 at 10.00 am (United Kingdom time) at The Grocers' Hall, Princes
Street, London EC2R 8AD. The Notice convening the AGM, the Proxy Card and the
related Proxy Statement accompany this letter. I am writing to give you more
information about the resolutions to be considered at the AGM.
Resolutions 1 to 12 deal with the adoption of the 1997 Directors' Report and
Accounts, and the reappointment of the Directors. Resolutions 13 and 14 deal
with the Directors' authority to allot (i.e., issue) shares and the
disapplication of pre-emption rights.
With regard to Resolution 13, under English company law, a company's directors
may not allot shares unless they are authorised to do so by an ordinary
resolution of the shareholders of the company or under its articles of
association. Resolution 13 gives the Directors authority to allot up to
309,189,200 ordinary shares of 10p each in the capital of the Company,
representing just under one third of the Company's current issued ordinary
share capital.
Resolution 14, a special resolution, provides the Board with the power to allot
shares for cash without first offering those shares pro rota to existing
shareholders as otherwise required by the Companies Act 1985. This would empower
your Directors to issue shares for cash other than pro rata to shareholders in
limited circumstances in connection with a rights issue or open offer (subject
to the limit set out in Resolution 13) and, in addition, to issue for cash up to
an aggregate number of 46,378,380 shares, representing just under 5 per cent of
the Company's current issued ordinary share capital.
Under English company law, a company may not acquire its own shares unless such
acquisitions are authorised in the articles and by a resolution of the company.
Resolution 16 authorises the Directors to acquire up to 46,378,380 ordinary
shares in the Company (representing 5 per cent of the current issued ordinary
share capital) in the market in certain circumstances. As required by law, the
resolution also sets out a minimum and a maximum price to be paid for any shares
acquired pursuant to the authority.
The Board considers that it is in the best interests of the Company that it
should have the flexibility sought in Resolutions 13, 14 and 16. However, the
Board has no present intention of allotting shares under the authorities
conferred by Resolutions 13 and 14, or of acquiring shares in the Company under
the authority conferred by Resolution 16. The authorities conferred by these
resolutions, if passed, will lapse fifteen months after the AGM or at the
conclusion of the 1998 Annual General Meeting, whichever occurs first. The terms
of the authorities sought by the Directors comply in all respects with the
guidelines issued by the UK institutional investors associations.
Resolution 15 deals with the reappointment of KPMG Audit plc as auditors of the
Company.
ACTION TO BE TAKEN
If you are unable to attend the AGM, I urge you to vote at the meeting by proxy.
A Proxy Card for use by holders of ordinary shares at the AGM is enclosed.
Holders of ordinary shares are advised to complete and return the Proxy Card in
accordance with the instructions printed on it so as to arrive at the Company's
Registrars as soon as possible, but in any event not later than 10.00 am on
Wednesday, 6 May 1998. The return of the Proxy Card will not preclude a holder
of ordinary shares from attending and voting in person at the AGM if he or she
so wishes. Details concerning proxy voting are set out in the Proxy Statement.
THE DIRECTORS CONFIRM THAT THEY BELIEVE THE PROPOSALS CONTAINED IN THE NOTICE OF
AGM ARE IN THE BEST INTERESTS OF SHAREHOLDERS AS A WHOLE AND RECOMMEND THAT
SHAREHOLDERS VOTE FOR THE RESOLUTIONS.
Refreshments will be available prior to the meeting and my fellow Directors and
I look forward to meeting you then.
Yours sincerely,
FRED VIERRA
Chairman
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of Telewest
Communications plc (the "Company") will be held on Friday, 8 May 1998, at 10.00
am (United Kingdom time) at the Grocers' Hall, Princes Street, London EC2R 8AD
for the purpose of considering and, if thought fit, passing the resolutions set
out below. Resolutions 1 to 13 and 15 will be proposed as Ordinary Resolutions
and Resolutions 14 and 16 will be proposed as Special Resolutions.
ORDINARY BUSINESS
1. To adopt the Directors' Report and Accounts of the Company for the year
ended 31 December 1997.
2. To reappoint Fred A. Vierra as a director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the
Company's Articles of Association.
3. To reappoint Anthony W.P. Stenham as a director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.
4. To reappoint Arthur G. Ames as a director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the
Company's Articles of Association.
5. To reappoint Robert W. Shaner as a director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.
6. To reappoint Lord Borrie QC as a director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the
Company's Articles of Association.
7. To reappoint Charles J Burdick as a director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.
8. To reappoint Stephen J. Davidson as a director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.
9. To reappoint Lord Griffiths of Fforestfach as a director, who is
retiring by rotation at the forthcoming Annual General Meeting in
accordance with the Company's Articles of Association.
10. To reappoint David R. Van Valkenburg as a director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.
11. To reappoint James O.R. Robbins as a director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.
12. To reappoint Adam N. Singer as a director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the
Company's Articles of Association.
13. To approve the following Ordinary Resolution:
THAT in substitution for all previous authorities which are hereby
revoked, the Directors be generally and unconditionally authorised
pursuant to Section 80 of the Companies Act 1985 (the "Act") to allot
relevant securities (within the meaning of Section 80(2) of the Act) up
to an aggregate nominal amount of (pound)30,918,920, such authority to
expire (unless previously renewed, varied or revoked by the Company in
a general meeting) on the earlier of 7 August 1999 or the conclusion
of the Annual General Meeting of the Company to be held in 1999, but
the Company may make an offer or agreement which would or might require
relevant securities to be allotted after the expiry of this authority
and the Directors may allot relevant securities in pursuance of that
offer or agreement as if this authority had not expired.
14. To approve the following Special Resolution:
THAT in substitution for all previous powers which are hereby revoked,
and subject to the passing of Resolution 13, the Directors be generally
empowered pursuant to Section 95 of the Act to allot equity securities
(within the meaning of Section 94(2) of the Act) for cash pursuant to
the authority conferred by Resolution 13 as if Section 89(1) of the Act
did not apply to any such allotment. This power:
(i) expires on the earlier of 7th August 1999 or the conclusion of the
Annual General Meeting of the Company to be held in 1999, but the
Company may make an offer or agreement which would or might require
equity securities to be allotted after the expiry of this power and the
Directors may allot equity securities in pursuance of that offer or
agreement as if this power had not expired; and
(ii) is limited to:
A allotments of equity securities in connection with an issue in favour
of holders of ordinary shares of 10p each in the capital of the Company
("Ordinary Shares") and of holders of other equity securities of any
class having the right to participate in any such issue, in proportion
(as nearly as may be) to their existing holdings of Ordinary Shares or,
in the case of holders of other equity securities, on the basis of
their rights to participate in such issue subject to the Directors
having a right to make such exclusions or other arrangements in
connection with the offer as they deem necessary or expedient:
(a) in relation to fractional entitlements; and
(b) to deal with legal or practical problems under the laws of, or
the requirements of recognised regulatory body or any stock
exchange in any territory; and
B allotments of equity securities for cash otherwise than pursuant to
paragraph A up to an aggregate nominal amount of (pound)4,637,838.00.
15. To reappoint KPMG Audit plc, as auditors, to serve from the conclusion
of the forthcoming Annual General Meeting to the Annual General Meeting
of the Company to be held in 1999, and to authorise the Directors to
fix the remuneration of the auditors.
SPECIAL BUSINESS
16. To approve the following Special Resolution:
THAT the Directors be generally and unconditionally authorised to make
market purchases (within the meaning of s163(3) of the Companies Act
1985) on The London Stock Exchange of Ordinary Shares, subject to the
following conditions:
(i) the maximum number of Ordinary Shares authorised to be purchased is
46,378,380, representing 5 per cent of the current issued share capital
of the Company;
(ii) the minimum price (exclusive of expenses) that may be paid for each
Ordinary Share is 10p;
(iii) the maximum price (exclusive of expenses) that may be paid for each
Ordinary Share is an amount equal to 105% of the average of the middle
market quotations for an Ordinary Share as derived from the London
Stock Exchange Daily Official List for the five business days before
the day on which the purchase is made;
(iv) this authority, unless previously revoked or varied, expires on the
earlier of 7th August 1999 or the conclusion of the Annual General
Meeting of the Company to be held in May 1999; and
(v) the Company may make a contract to purchase Ordinary Shares under this
authority before the expiry of this authority which will or may be
executed wholly or partly after the expiry of this authority, and a
purchase of shares may be made in pursuance of any such contract.
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This Notice and the related proxy materials are being mailed to shareholders on
the register at the close of business on 31 March 1998. All shareholders on the
register at the time of the Annual General Meeting (or any postponements or
adjournments thereof) will be entitled to vote at the meeting (or such
postponements or adjournments). By Order of the Board of Directors
V HULL, LLB
Company Secretary
Registered Office:
Telewest Communications plc
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom
31 March 1998
Notes:
1. For information with respect to the voting requirements for Ordinary
Resolutions and Special Resolutions, see "Voting Requirements" in the
Proxy Statement accompanying this Notice.
2. A shareholder entitled to attend and vote at the Annual General Meeting
is also entitled to appoint one or more proxies to attend and, on a
poll taken at the meeting, vote instead of him or her. A proxy need not
be a shareholder of the Company.
3. To be effective, the instrument appointing a proxy and any authority
under which it is executed (or a notarially certified copy of each
authority) must be deposited at the offices of Lloyds Bank plc,
Registrar's Department, The Causeway, Worthing, West Sussex, BN99 6DB
England, not less than 48 hours before the time of the Annual General
Meeting. A Proxy Card is enclosed with this Notice. Completion and
return of the Proxy Card will not preclude a shareholder from attending
and voting in person at the meeting.
4. Copies of all the Directors' service contracts and the Register of
Directors' Interests kept by the Company under Section 325 of the Act
will be available for inspection at the registered office of the
Company during normal business hours on any weekday (Saturday excluded)
from the date of this Notice until the close of the meeting and at the
place of the Annual General Meeting for at least 15 minutes before, and
during, the meeting.
EACH SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD PROMPTLY
TELEWEST COMMUNICATIONS PLC
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are first being mailed on
March 31, 1998 to holders of ordinary shares of 10 pence each (the "Ordinary
Shares") of Telewest Communications plc (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be used at
the 1998 Annual General Meeting of Shareholders. The Annual General Meeting will
be held on Friday, May 8, 1998 at 10:00 a.m. (United Kingdom time) at The
Grocers' Hall, Princes Street, London EC2R 8AD. Ordinary Shares can be voted at
the Annual General Meeting only if the shareholder is represented by proxy or is
present in person. All shareholders on the share register at the time of the
Annual General Meeting (or any postponements or adjournments thereof) will be
entitled to vote at the meeting (or such postponements or adjournments).
EACH SHAREHOLDER'S VOTE IS IMPORTANT. ACCORDINGLY, SHAREHOLDERS ARE URGED TO
SIGN AND RETURN THE ACCOMPANYING PROXY CARD REGARDLESS OF WHETHER THEY PLAN TO
ATTEND THE ANNUAL GENERAL MEETING. To be effective, the proxy card (together
with any authority under which it is executed (or a notarially certified copy of
each such authority)) must be received at the Office of Lloyds Bank plc,
Registrar's Department, The Causeway, Worthing, West Sussex BN99 6DB, United
Kingdom, not less than 48 hours before the time of the Annual General Meeting.
Completion and return of a proxy card will not preclude a shareholder from
attending and voting in person at the meeting. If a shareholder attends and
votes by ballot at the Annual General Meeting, that vote will cancel any proxy
vote previously given. In addition, a shareholder giving a proxy may revoke it
at any time prior to the foregoing deadline for proxy voting by giving a valid
proxy to Lloyds Bank plc bearing a later date before such deadline.
When proxy cards are returned properly signed, the shares represented will be
voted in accordance with the shareholder's directions. If a proxy card is signed
and returned without specifying choices, the proxy will vote or abstain at his
discretion.
On March 1, 1998, there were 927,567,600 Ordinary Shares outstanding and 3,029
holders of record. Each Ordinary Share is entitled to one vote on all matters
properly brought before the Annual General Meeting. Two or more persons holding
Ordinary Shares (one of whom must be a representative of the TCI Affiliate Group
(as defined herein) and one of whom must be a representative of the U S WEST
Affiliate Group (as defined herein)) must be present in person or by proxy to
constitute a quorum to conduct business at the Annual General Meeting.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to persons known
to the Company to be the beneficial owners, as of March 1, 1998, of more than 5%
of the Company's Ordinary Shares: Unless otherwise discussed below, the persons
named in the table have sole voting and investment power with respect to all
Ordinary Shares and Convertible Preference Shares indicated as being
beneficially owned by them.
NUMBER OF PERCENTAGE
NUMBER OF PERCENTAGE CONVERTIBLE OF CONVERTIBLE
NAME AND ADDRESS OF BENEFICIAL ORDINARY OF ORDINARY PREFERENCE PREFERENCE
OWNER SHARES (1) SHARES SHARES (1) SHARES
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Tele-Communications, Inc. 246,111,750 26.5 132,638,250 26.7
5619 DTC Parkway
Englewood, Colorado 80111 (2)
U S WEST, Inc. 246,111,750 26.5 132,638,250 26.7
7800 East Orchard Road
Englewood, Colorado 80111 (3)
SBC Communications, Inc. 91,997,480 9.9 115,395,104 23.3
2 Read's Way
Suite 222, Corporate Commons
New Castle, Delaware 19720 (4)
Cox Communications, Inc. 91,997,480 9.9 115,395,104 23.3
1400 Lake Hearn Drive
Atlanta, Georgia 30319 (5)
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(1)For so long as the Ordinary Shares are listed on the London Stock Exchange,
subject to certain exceptions, a holder of Convertible Preference Shares is
not entitled to convert any of its Convertible Preference Shares into
Ordinary Shares to the extent that, immediately following such conversion,
the number of Ordinary Shares in the hands of the public (as specified in the
London Stock Exchange listing rules) would be less than 25%. In addition, the
TCI Affiliate Group, the U S WEST Affiliate Group, the SBC Affiliate Group
and the Cox Affiliate Group (each as defined herein) have agreed not to
convert the Convertible Preference Shares held by them other than in certain
limited circumstances. See "-- Disposal and Acquisition of Ordinary and
Convertible Preference Shares" below. Accordingly, the Ordinary Shares
reflected in this table as beneficially owned by a person do not include any
Ordinary Shares that may be issuable upon conversion of Convertible
Preference Shares beneficially owned by such person.
(2)All of the Ordinary Shares and Convertible Preference Shares that are listed
as beneficially owned by Tele-Communications, Inc. ("TCI") are owned by TW
Holdings, LLC ("TW Holdings") (which also directly owns the 246,111,750
Ordinary Shares and 132,638,250 Convertible Preference Shares that are listed
as beneficially owned by U S WEST, Inc. ("U S WEST") and therefore has an
interest in a total of 492,223,500 Ordinary Shares and a total of 265,276,500
Convertible Preference Shares (53.2% of the issued Ordinary Shares assuming
full conversion of the Convertible Preference Shares)). 50% of TW Holdings is
owned by United Artists Programming -- Europe Inc. ("UAEP"), a wholly-owned
subsidiary of Tele-Communications International, Inc. Tele-Communications
International, Inc., in turn, is a subsidiary of TCI. UAEP is the registered
holder of the shares owned by TW Holdings for TCI. UAEP is referred to herein
as the "TCI Affiliate."
(3)All of the Ordinary Shares and Convertible Preference Shares that are listed
as beneficially owned by U S WEST are owned by TW Holdings (which also
directly owns the 246,111,750 Ordinary Shares and 132,638,250 Convertible
Preference Shares that are listed as beneficially owned by TCI and therefore
has an interest in a total of 492,223,500 Ordinary Shares and a total of
265,276,500 Convertible Preference Shares (53.2% of the issued Ordinary
Shares assuming full conversion of the Convertible Preferences Shares)).
45.6% of TW Holdings is owned by U S WEST UK Cable, Inc. ("U S WEST UK") and
4.4% of TW Holdings is owned by U S WEST Cable Partnership Holdings, Inc. ("U
S WEST Cable"). U S WEST UK and U S WEST Cable are each wholly-owned
subsidiaries of U S WEST International Holdings, Inc., which is a
wholly-owned subsidiary of U S WEST. U S WEST UK (as to 224,717,516 Ordinary
Shares and 121,027,284 Convertible Preference Shares) and U S WEST Cable (as
to 21,394,234 Ordinary Shares and 11,610,966 Convertible Preference Shares)
are the registered holders of the shares owned by TW Holdings for U S WEST. U
S WEST UK and U S WEST Cable are collectively referred to herein as the "U S
WEST Affiliates."
(4)All of the Ordinary Shares and the Convertible Preference Shares which are
beneficially owned by SBC Communications, Inc. ("SBC") are owned by and
registered in the name of Southwestern Bell International Holdings (UK-1)
Corporation and Southwestern Bell International Holdings (UK-2) Corporation,
which are indirect wholly-owned subsidiaries of SBC. Southwestern Bell
International Holdings (UK-1) Corporation and Southwestern Bell International
Holdings (UK-2) Corporation each hold 45,998,740 Ordinary Shares and
57,697,552 Convertible Preference Shares. Assuming full conversion of the
Convertible Preference Shares, SBC would beneficially own 14.6% of the issued
Ordinary Shares. Southwestern Bell International Holdings (UK-1) Corporation
and Southwestern Bell International Holdings (UK-2) Corporation are
collectively referred to herein as the "SBC Affiliates."
(5)All of the Ordinary Shares and Convertible Preference Shares which are
beneficially owned by Cox Communications, Inc. ("Cox") are owned by and
registered in the name of Cox U.K. Communications L.P., a Delaware limited
partnership comprised of indirect wholly-owned subsidiaries of Cox. Assuming
full conversion of the Convertible Preference Shares, Cox would beneficially
own 14.6% of the issued Ordinary Shares. Cox U.K. Communications L.P. is
referred to herein as the "Cox Affiliate".
2
VOTING ARRANGEMENTS BETWEEN THE TCI AFFILIATE GROUP AND THE U S WEST
AFFILIATE GROUP
The TCI Affiliate and the U S WEST Affiliates have entered into a Shareholders'
Agreement, dated November 22, 1994, as amended (the "Shareholder Agreement"),
with respect to the ownership, voting and disposal of all of their shares in the
Company, including the Ordinary Shares and the Convertible Preference Shares
owned by TW Holdings. Pursuant to the Shareholder Agreement, the TCI Affiliate
Group and the U S WEST Affiliate Group have agreed that, on any matter requiring
shareholder approval, they will vote their shares together in such manner as may
be agreed by them or, in the absence of such agreement, will vote their shares
together in the manner that would most likely continue the status quo without
materially increasing the Company's financial obligations or materially
deviating from its approved budget and business plan. If either the TCI
Affiliate Group or the U S WEST Affiliate Group, as the case may be, is
precluded from voting on any matter because of a conflict of interest, the
members of the other affiliate group may vote on such matter as they deem
appropriate. As a result of these ownership and voting arrangements, the TCI
Affiliate Group and the U S WEST Affiliate Group together generally will be able
to determine the outcome of any matter requiring shareholder approval (other
than one involving a special resolution), including the election or removal of
Directors, the creation and issue of further shares and the granting of the
necessary authority to the Directors to allot any unissued shares.
DISPOSAL AND ACQUISITION OF ORDINARY AND CONVERTIBLE PREFERENCE SHARES
Pursuant to the Shareholder Agreement, the TCI Affiliate Group and the U S WEST
Affiliate Group has each agreed that, so long as it owns in excess of 25% of the
issued Ordinary Shares, it will not transfer any of its shares of the Company,
including any owned by TW Holdings, without first offering such shares to the
other on the same terms as any proposed transfer. This right of first offer does
not apply to transfers of shares by the TCI Affiliate Group or the U S WEST
Affiliate Group to their respective affiliates. The TCI Affiliate Group and the
U S WEST Affiliate Group has each also agreed that it will not reduce its
interest in the Company to 25% or less of the issued Ordinary Shares without the
consent of the other and, in connection with any such permitted reduction, among
other things the transferee agrees to become bound by the Shareholder Agreement.
Notwithstanding the foregoing, following the fifth anniversary of the
Shareholder Agreement, each of the TCI Affiliate Group and the U S WEST
Affiliate Group will be permitted to so reduce its interest in shares in the
public market after first offering them to the other on the same terms.
The TCI Affiliate Group and the U S WEST Affiliate Group have agreed with each
other that upon a change of control of the TCI Affiliate Group or the U S WEST
Affiliate Group that results in the controlling persons (other than TCI or U S
WEST, as the case may be) of the TCI Affiliate Group or the U S WEST Affiliate
Group, as the case may be, ceasing to have the power directly or indirectly to
direct the voting or disposition of at least 25% of the issued Ordinary Shares,
the party not undergoing the change of control will have an opportunity either
to consent to such change or to require the other to elect to purchase its
Ordinary Shares and Convertible Preference Shares for a specified price or to
sell its shares to the other at the same price (with such choice being made by
the party undergoing the change of control). The TCI Affiliate Group and the U S
WEST Affiliate Group have also agreed with each other that, until the fifth
anniversary of the Shareholder Agreement, without the consent of the other,
neither will acquire any additional equity interests in the Company, other than
pursuant to pre-emption rights or the anti-dilution option referred to below.
Pursuant to the Shareholder Agreement and the Articles of Association of the
Company (the "Articles"), the rights and obligations of the TCI Affiliate Group
and the U S WEST Affiliate Group thereunder continue for so long as they each
hold 25% or more of the issued Ordinary Share capital of the Company. For the
purposes of the Shareholder Agreement and the Articles, unless otherwise
indicated, references to the percentage of Ordinary Shares owned by the TCI
Affiliate Group and the U S WEST Affiliate Group assume conversion of all the
issued Convertible Preference Shares by such groups into Ordinary Shares. In
addition, such percentages also include Ordinary Shares and Convertible
Preference Shares held by certain permitted transferees ("Permitted
Transferees") of TCI (and its affiliates) and U S WEST (and its affiliates) who
become parties to the Shareholder Agreement in accordance with the terms thereof
and with the rights and obligations thereunder and under the Articles. TCI and
its Permitted Transferees are referred to as the "TCI Affiliate Group" and U S
WEST and its Permitted Transferees are referred to as the "U S WEST Affiliate
Group."
3
Pursuant to a Share Dealing Agreement (the "Share Dealing Agreement"), dated
October 3, 1995, SBC, the SBC Affiliates, Cox and the Cox Affiliate have each
agreed that, subject to certain exceptions, for a period of five years from the
date of completion of the merger (the "Merger") of Telewest Communications Cable
Limited, formerly known as Telewest Communications plc ("Old Telewest"), and SBC
CableComms (U.K.) ("SBCC"), SBC, the SBC Affiliates and affiliates thereof (the
"SBC Affiliate Group") and Cox, the Cox Affiliate and affiliates thereof (the
"Cox Affiliate Group") will (a) not dispose of any of their Ordinary Shares
unless it offers to involve Kleinwort Benson Securities Limited or other
stockbrokers of the Company from time to time in the sale process, whether as
lead brokers or otherwise; (b) not dispose of an interest in Ordinary Shares
and/or Convertible Preference Shares amounting to in excess of 1% of the
Ordinary Share capital of the Company (assuming conversion of any Convertible
Preference Shares being sold) in one sale, to a person who is a U.K. cable
television, cable telephony or satellite television operator or to a person who
is an affiliate of any such person; and (c) offer the Company (either for itself
or its nominated purchaser), TCI and U S WEST a right of first refusal in
respect of any private sale of their Ordinary Shares. The foregoing transfer
restrictions and right of first refusal do not apply to (i) any transfer of
shares by the SBC Affiliate Group or the Cox Affiliate Group to their respective
affiliates or between the SBC Affiliate Group and the Cox Affiliate Group, (ii)
any transfer by the SBC Affiliate Group to enable it to comply with the
Modification of Final Judgment entered on August 24, 1982 by the United States
District Court for the District of Columbia in connection with the divestiture
by AT&T of its local telephony business in the U.S., (iii) any transfer
accepting a third party offer for all the Ordinary Shares (including giving an
irrevocable undertaking to accept such an offer), (iv) any transfer selling
Ordinary Shares to a bona fide third party offer for all the Ordinary Shares or
(v) any transfer pursuant to an offer by either the SBC Affiliate Group or the
Cox Affiliate Group for all the Ordinary Shares.
The SBC Affiliate Group and the Cox Affiliate Group has also each agreed in the
Share Dealing Agreement that, until October 3, 2000, it will not, except in
connection with the exercise of pre-emption rights or in order to maintain its
interests in the Ordinary Shares at 10% of the issued Ordinary Shares, acquire
any additional Ordinary Shares. This restriction does not apply to transfers
between the SBC Affiliate Group and the Cox Affiliate Group.
Pursuant to the terms of the Share Dealing Agreement, when any conversion of
Convertible Preference Shares is permitted, such conversion rights will first be
made available to the TCI Affiliate Group and the U S WEST Affiliate Group to
the extent necessary to keep their collective holding of Ordinary Shares above
50% of the voting rights. Next, such rights will be made available to the SBC
Affiliate Group and the Cox Affiliate Group to the extent necessary to keep each
of their holdings of Ordinary Shares at 10% of the voting rights. No conversion
of Convertible Preference Shares will be made unless there is a need to maintain
respective voting rights at the levels referred to above or if the effect would
be to reduce the collective holding of Ordinary Shares of the TCI Affiliate
Group and the U S WEST Affiliate Group to 50% or below of the voting rights in
the Company. On any sale of Convertible Preference Shares they will
automatically convert into Ordinary Shares to the extent they are sold to the
public.
4
PRE-EMPTIVE RIGHTS
Pursuant to the Companies Act, if the Company issues new equity shares for cash,
it is required to offer those shares to its existing shareholders on a
pre-emptive pro rata basis. This requirement has been waived with respect to the
anti-dilution option referred to below until November 29, 1999 and, in addition,
in respect of issues for cash of up to 5% of the nominal value of the issued
Ordinary Shares (in aggregate 46,378,380 Ordinary Shares) until the forthcoming
Annual General Meeting and in accordance with U.K. institutional guidelines (a
proposal to renew this waiver for cash issues is set out in Resolution #14
herein). Although this requirement may further be waived by a vote of the
holders of at least 75% of the Ordinary Shares represented at a duly convened
shareholders meeting, the TCI Affiliate, the U S WEST Affiliates, the SBC
Affiliates and the Cox Affiliate has each advised the Company that it does not
currently intend to vote to waive this requirement with respect to any future
issues of shares other than for the amounts set out above and otherwise in
accordance with U.K. institutional guidelines. The Company has agreed to use its
best efforts (consistent with the interests of shareholders generally) to ensure
that any issue of shares is made in such a manner so as to provide existing
shareholders with an opportunity to acquire additional shares and thereby avoid
a dilution of the interests in the Company of the TCI Affiliate, the U S WEST
Affiliates, the SBC Affiliates and the Cox Affiliate.
In addition, for so long as the TCI Affiliate Group and the U S WEST Affiliate
Group collectively own at least 50.1% of the issued Ordinary Shares (including
those issuable on conversion of the Convertible Preferences Shares) they will
each have an option (an "Anti-dilution Option"), exercisable upon the issue of
Ordinary Shares by the Company other than for cash, or, if for cash, other than
pursuant to a pre-emptive offering, to enable them to maintain their collective
ownership of Ordinary Shares at 50.1% of the issued Ordinary Shares. The
Anti-dilution Option grants the TCI Affiliate Group and the U S WEST Affiliate
Group the right to purchase (at the time of the dilutive event) additional newly
issued Ordinary Shares for cash at a purchase price per share based on the
average of the prices quoted on the London Stock Exchange for the ten days
ending on the day preceding the day on which the Anti-dilution Option is
exercised, and is exercisable only in the event that the collective ownership of
Ordinary Shares held by the TCI Affiliate Group and the U S WEST Affiliate Group
might otherwise have been reduced to 50% or below of the issued Ordinary Shares
as a result of the Company's proposed issue of such shares other than for cash
or if for cash, other than pursuant to a pre-emptive offering. In order for the
TCI Affiliate Group and the U S WEST Affiliate Group to exercise the
Anti-dilution Option, they must first have converted all Convertible Preference
Shares held by them into Ordinary Shares to the extent such Convertible
Preference Shares are then convertible. The TCI Affiliate Group and the U S WEST
Affiliate Group have agreed with each other that they will exercise any rights
to subscribe for new Ordinary Shares (including pursuant to pre-emptive rights
and the Anti-dilution Option) to the extent necessary to ensure that each
Affiliate Group owns at least 25% of the issued Ordinary Shares.
REGISTRATION RIGHTS
The Company has agreed that the TCI Affiliate, the U S WEST Affiliates, the SBC
Affiliates and the Cox Affiliate will have the right, subject to certain limited
exceptions, to require the Company to include all or any portion of their
Ordinary Shares (including those arising from a conversion of Convertible
Preference Shares on any sale to the "public") in any registered offering by the
Company of Ordinary Shares under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), or in a public offering under U.K. law. In addition, the
TCI Affiliate, the U S WEST Affiliates, the SBC Affiliates and the Cox Affiliate
will have the right to cause the Company on up to eight separate occasions (two
exercisable by each of the TCI Affiliate, the U S WEST Affiliates, the SBC
Affiliates and the Cox Affiliate) to offer all or any part of their Ordinary
Shares for sale in a registered offering under the Securities Act or in a public
offering under U.K. law.
5
LIMITATIONS ON SCOPE OF BUSINESS AND ASSETS SALES
In connection with the Company's initial public offering of Old Telewest in
November 1994 (the "Initial Public Offering") and the Merger, the Company and
affiliates of TCI, U S WEST, SBC and Cox entered into various agreements which
provide, among other things, for certain restrictions on the scope of business
of the parties thereto (and certain affiliates thereof) and also require the
consent of the TCI Affiliate Group, the U S WEST Affiliate Group, the SBC
Affiliate Group and the Cox Affiliate Group for certain dispositions of assets
of the Company in limited circumstances. In addition, one of the Company's
principal bank credit facilities provides that it is an event of default if the
beneficial ownership of TCI and U S WEST decreases below certain specified
levels under certain circumstances.
PROPOSALS FOR SHAREHOLDER ACTION
ADOPTION OF 1997 DIRECTORS' REPORT AND ACCOUNTS
(RESOLUTION #1 ON THE PROXY CARD)
In accordance with the Companies Act, at the Annual General Meeting, the Board
of Directors will present for shareholder adoption the Directors' Report and
Accounts of the Company for the year ended December 31, 1997, a copy of which is
included in the Company's Annual Report for 1997 that accompanies this Proxy
Statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR ADOPTION OF THE 1997
DIRECTORS' REPORT AND ACCOUNTS.
APPOINTMENT OF DIRECTORS
(RESOLUTION #2 THROUGH #12 ON THE PROXY CARD)
The Articles provide that the Board of Directors shall consist of no less than
two directors and no more than twelve directors. The Articles provide that so
long as the TCI Affiliate Group owns 25% or more of the outstanding Ordinary
Shares and the U S WEST Affiliate Group owns 25% or more of the outstanding
Ordinary Shares, the Board shall consist of two representatives designated by
the TCI Affiliate Group and two representatives designated by the U S WEST
Affiliate Group. For these purposes, each of the TCI Affiliate Group and the U S
WEST Affiliate Group shall be deemed to own 50% of the Ordinary Shares owned by
TW Holdings. The Articles also provide that for so long as the SBC Affiliate
Group owns a Qualifying Interest of the issued Ordinary Shares, the SBC
Affiliate Group will be entitled to appoint (and remove) one person as a
Director, and that for so long as the Cox Affiliate Group owns a Qualifying
Interest of the issued Ordinary Shares, the Cox Affiliate Group will be entitled
to appoint (and remove) one person as a Director. A Qualifying Interest shall be
8.33% or more of the Ordinary Shares or, following any Dilutive Issue (as
defined below), 5% or more of the Ordinary Shares; provided, however, that
immediately prior to such Dilutive Issue, the SBC Affiliate Group or the Cox
Affiliate Group, as the case may be, held 8.33% or more of the Ordinary Shares.
For purposes of the foregoing, "Dilutive Issue" means any issue of Ordinary
Shares or other securities (including securities convertible into or
exchangeable for Ordinary Shares or other securities) of the Company in respect
of which the SBC Affiliate Group or the Cox Affiliate Group, as the case may be,
is not entitled by the terms of such issue to participate on a pro-rata basis.
As a condition to the continued listing of the Ordinary Shares on the London
Stock Exchange, the Company must demonstrate its "independence" from any
"controlling shareholder" (defined as a shareholder owning more than 30% of the
outstanding voting shares of the Company). TCI and its affiliates and U S WEST
and its affiliates are "controlling shareholders." To comply with the
independence requirement, the Company must demonstrate that all "significant"
decisions can be made by a majority of directors who are independent from TCI
and its affiliates and U S WEST and its affiliates as controlling shareholders.
Consequently, a majority of the Company's Board of Directors needs to be
independent of TCI and its affiliates and U S WEST and its affiliates. Each of
the TCI Affiliate Group and the U S WEST Affiliate Group has agreed that so long
as they collectively own more than 50%, or individually own more than 30%, in
each case, of the outstanding Ordinary Shares, they will use their best efforts
to ensure that a majority of the directors are independent of TCI and U S WEST
and their respective affiliates within the meaning of the London Stock Exchange
Rules.
6
Consistent with the foregoing requirements, the Board of Directors has nominated
each of the persons listed below (all of whom currently are directors of the
Company) for appointment as a director. If one or more of the nominees should
become unavailable or unable to serve at the time of the Annual General Meeting,
the shares to be voted for such nominee or nominees which are represented by
proxies will be voted for any substitute nominee or nominees designated by the
Board or, if none, a vacancy will be maintained until filled by the Board. The
Board knows of no reason why any of the nominees will be unavailable or unable
to serve at the time of the Annual General Meeting.
Directors appointed at the Annual General Meeting will hold office until the
next Annual General Meeting or until their successors have been elected and
qualified. The following is a brief listing of the principal occupations for at
least the past five years, certain other significant affiliations and the age as
of March 1, 1998 for each of the nominees.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPOINTMENT OF EACH OF
THE DIRECTORS NOMINATED BY THE BOARD.
Nominees for Appointment as Directors
(To Serve until the Annual General Meeting in 1999)
---------------------------------------------------
FRED A. VIERRA
Mr. Vierra has served as the non-executive Chairman of the Board of the Company
since April 1994 and served on the Executive Committee of the joint venture that
was a predecessor business of the Company (the "Joint Venture") from its
formation in December 1991 until the Joint Venture was acquired by the Company
in November 1994 in connection with the Initial Public Offering. He is a
consultant for TCI and Vice Chairman on the Board of Tele-Communications
International Inc., having served in those positions since ________ 1997 and
October 1994, respectively. He served as an Executive Vice President of TCI (and
its predecessor company), responsible for international cable operators and
international programming from December 1991 to ______ 1997 and from October
1994 to May 1995 he served as Chairman of the Board of Tele-Communications
International, Inc. Mr. Vierra also serves as Chairman of TeleWest Europe Group
(a joint venture between TCI and U S WEST which operates cable television
networks in Norway, Sweden and Hungary) and as a non-executive director of
Flextech plc ("Flextech") (a provider of television programming). Age 66.
ANTHONY W.P. STENHAM
Mr. Stenham has served as a non-executive director and Deputy Chairman of the
Board of the Company since November 1994 and has served as a consultant to the
Executive Committee of the Joint Venture from May 1994 until the Joint Venture
was acquired by the Company in November 1994 in connection with the Initial
Public Offering. He was Chairman of Arjo Wiggins Appleton plc (a manufacturer
and distributor of paper products) from 1990 to November 1997. Previously, Mr.
Stenham was a Managing Director of Bankers Trust Company from 1986 to 1990. Mr.
Stenham serves as a non-executive director of various companies including The
Rank Organisation plc (an entertainment company), Standard Chartered PLC (a
commercial bank), Unigate PLC (a manufacturer and distributor of dairy
products), Jarrold & Sons (multiple retail shops and specialised printing) and
Rothmans International BV (a manufacturer and distributor of tobacco products).
Age 66.
A. GARY AMES
Mr. Ames has served as a non-executive director of the Company since November
1995. He is the President and Chief Executive Officer of MediaOne International,
also known as U S WEST International, based in London, responsible for the U S
WEST Media Group's international operations. Mr. Ames has served in this
position since July 1995. Previously, from January 1990 to June 1995 Mr. Ames
was President and Chief Executive Officer of U S WEST Communications (a provider
of residential and business telephone services in the U.S.). Mr. Ames also
serves as a director of Albertsons Inc. (a U.S. supermarket chain) and
Tektronics Inc.(a manufacturer of IT and electronics equipment) and as a
non-executive director of Flextech. Age 53.
7
ROBERT W. SHANER
Mr. Shaner has served as a non-executive director of the Company since June
1997. He is President of European and Middle East operations for SBC
International, responsible for SBC International's telephony interests in
France, Switzerland and the Middle East, having served in this position since
March 1997. From 1995 to March 1997 he was President and Chief Executive Officer
for SBC International Wireless in France. Previously, from 1991 to 1995, he was
Executive Vice President for Southwestern Bell Mobile Systems in Dallas. Age 49.
LORD BORRIE QC
Lord Borrie QC has served as a non-executive director of the Company since
November 1994 and has served as a consultant to the Executive Committee of the
Joint Venture from May 1994 until the Joint Venture was acquired by the Company
in November 1994 in connection with the Initial Public Offering. He was
President of the Institute of Trading Standards Administration from 1992 to 1996
and the Director General of the Office of Fair Trading from 1976 to 1992. Lord
Borrie also serves as a non-executive director of The Mirror Group plc (a media
company which has an interest in Live TV (as discussed below)), the Woolwich plc
(a financial institution), Three Valleys Water plc and Newspaper Publishing plc.
Age 66.
CHARLES J. BURDICK
Mr. Burdick has served as Acting Chief Financial Officer of the Company since
September 1996 and was appointed Finance Director in February 1997. He was Vice
President Finance and Assistant Treasurer at U S WEST from 1990 to October 1996.
Prior to joining U S WEST, Mr. Burdick worked in Treasury and Corporate
Development positions at Time Warner and Carnation International. Age 46.
STEPHEN J. DAVIDSON
Mr. Davidson has served as a director of the Company since April 1994. He was
appointed Chief Executive of the Company in February 1997 and had been Acting
Chief Executive since August 1996 and the Finance Director of the Company from
January 1993 until August 1996. Previously, he worked for four years at Bankers
Trust Company in London where he was a Managing Director with responsibility for
clients in the media business throughout Europe. Age 42.
LORD GRIFFITHS OF FFORESTFACH
Lord Griffiths has served as a non-executive director of the Company since
November 1994 and has served as a consultant to the Executive Committee of the
Joint Venture since May 1994 until the Joint Venture was acquired by the Company
in November 1994 in connection with the Initial Public Offering. He is Vice
Chairman of Goldman Sachs Europe and an International Advisor at Goldman Sachs
International, having served in those positions since 1991. Previously, Lord
Griffiths served as Head of the U.K. Prime Minister's Policy Unit from 1985 to
1990. From 1984 to 1986, he was a Director of The Bank of England. Lord
Griffiths currently serves as a non-executive director of Herman Miller Inc. (a
manufacturer and distributor of furniture), Times Newspaper Holdings Ltd,
Servicemaster Limited (a provider of consumer maintenance services and
management maintenance services to homeowners and commercial facilities) and
English, Welsh and Scottish Railways (a freight rail company). Age 55.
JAMES O. ROBBINS
Mr. Robbins was appointed to serve as a non-executive director of the Company
upon completion of the Merger in October 1995. He is the President and Chief
Executive Officer of Cox Communications Inc., having served as the President of
the Cable Division of Cox Enterprises Inc. from 1985 until 1995 and the Chief
Executive Officer of Cox Enterprises Inc. from January 1995. He is a past
chairman of the U.S. National Cable Television Association and currently serves
on its executive committee. He is also a director of Teleport Communications
Group (an information technology company) and NCR Corporation (a local exchange
carrier company). Age 55.
8
ADAM N. SINGER
Mr. Singer has served as a non-executive director of the Company since November
1995. He is the Chairman of Flextech, having served in this position since June
1997. Previously he was the President and Chief Operating Officer of
Tele-Communications International, Inc., responsible for the management and
development of its international cable, telephony and programming operations
from October 1994 to June 1997. He was Vice President-International of TCI
(and its predecessor company) from June 1992 to October 1994 and President and
Chief Executive Officer of United Artists Entertainment (Programming) Limited
from September 1988 to June 1992. Mr. Singer is a director of
Tele-Communications International, Inc. and Scottish Television plc. Age 46.
DAVID R. VAN VALKENBURG
Mr. Van Valkenburg has served as a director of the Company and as Group
Operations Director since June 1997. He is also Executive Vice President for U S
WEST International Inc. in London, responsible for overseeing the development of
U S WEST International's broadband cable interests in mainland Europe and South
America, having served in this position since January 1996. Previously, from
December 1994 until December 1995 he was a Senior Vice President for the
Multimedia Group of U S West Multimedia Communications, Inc. Prior to this he
was President and Chief Operating Officer of MultiVision Cable TV Corp. (a
partnership with Merrill Lynch and General Capital Corp.) from April 1990 until
December 1994. Age 55.
---------------
In accordance with the terms of the Articles and the Shareholder Agreement, Mr.
Vierra and Mr. Singer have been designated to serve as directors by the TCI
Affiliate Group and Mr. Ames and Mr. Van Valkenburg have been designated to
serve as directors by the U S WEST Affiliate Group. In the Shareholder
Agreement, each of the TCI Affiliate Group and the U S WEST Affiliate Group has
agreed that on any matter requiring Board approval, it will cause the directors
designated by it to vote together as agreed by them (subject to each director's
fiduciary duties to the Company and to minority shareholders of the Company) or,
in the absence of such agreement, to vote together in the manner that would be
most likely to maintain the status quo without materially increasing the
Company's financial obligations or materially deviating from its approved budget
and business plan. If either the TCI Affiliate Group or the U S WEST Affiliate
Group (as the case may be) is precluded from voting on any matter because of a
conflict of interest, the designees of the other Affiliate Group may vote on
such matter as they deem appropriate.
In accordance with the terms of the Articles, Mr. Shaner and Mr. Robbins have
been designated to serve as directors by the SBC Affiliate Group and the Cox
Affiliate Group, respectively.
---------------
Board Meetings
--------------
Regular meetings of the Board of Directors of the Company are scheduled to be
held at least four times during the year and special meetings will be scheduled
when required. The Board held 9 meetings in 1997. No incumbent Director attended
fewer than 75% of the total number of meetings of the Board and all Committees
of the Board on which such Director served. Directors meet their
responsibilities not only by attending Board and Committee meetings, but also
through communication with members of management on matters affecting the
Company.
Board Committees
----------------
The Board has established an Audit Committee and a Remuneration Committee to
assist it in meeting its responsibilities.
The Audit Committee is responsible for reviewing and monitoring the Company's
accounting policies and financial reporting. Regular meetings of the Audit
Committee are scheduled at least four times during the year and special meetings
are scheduled when required (6 meetings were held in 1997). Pursuant to the
9
Articles and the Shareholder Agreement, the Audit Committee is comprised of the
Company's three independent non-executive directors and, based on current share
ownership levels, one designee from each of the TCI Affiliate Group, the U S
WEST Affiliate Group and the SBC Affiliate Group/the Cox Affiliate Group. The
TCI Affiliate Group has agreed that, for so long as the SBC Affiliate Group/the
Cox Affiliate Group retain the right to appoint one representative to the Audit
Committee, the TCI Affiliate Group will not exercise its right to have one
designee on the Audit Committee. The Company has agreed that for the period
during which the TCI Affiliate Group has a right to appoint a representative to
the Audit Committee but does not so exercise it, the TCI Affiliate Group will be
able to appoint an observer to attend meetings of the Audit Committee. Mr.
Stenham, Lord Borrie and Lord Griffiths currently serve as the independent
non-executive director representatives, Mr. Ames and Mr. Shaner currently serve
as the representatives of the U S WEST Affiliate Group and the SBC Affiliate
Group/the Cox Affiliate Group, respectively, and Mr. Vierra currently is the
observer appointed by the TCI Affiliate Group. Mr. Stenham is the Chairman of
the Audit Committee.
The Remuneration Committee is responsible for reviewing and approving the
remuneration and other terms of employment of the executive directors and senior
executives, as well as for determining or recommending the level of
participation for all the Company's employees in the Company's share and other
incentive plans. Regular meetings of the Remuneration Committee are scheduled
twice during the year and special meetings are scheduled when required (4
meetings were held in 1997). Pursuant to the Articles and the Shareholder
Agreement, the Remuneration Committee is comprised of one of the Company's
independent non-executive directors and, based on current share ownership
levels, one designee from each of the TCI Affiliate Group and the U S WEST
Affiliate Group. In addition, based on current share ownership levels, the SBC
Affiliate Group and the Cox Affiliate Group each has the right to appoint one
observer to the Remuneration Committee. Mr. Stenham currently serves as the
non-executive director representative and Mr. Singer and Mr. Ames currently
serve as the representatives of the TCI Affiliate Group and U S WEST Affiliate
Group, respectively. Mr. Shaner and Mr. Robbins currently serve as the observers
for the SBC Affiliate Group and the Cox Affiliate Group, respectively. Mr. Ames
is the Chairman of the Remuneration Committee.
Compensation of Non-Executive Directors
---------------------------------------
The independent non-executive directors (other than the Deputy Chairman of the
Board) receive an annual payment of (pound)20,000. The Deputy Chairman of the
Board receives an annual payment of (pound)35,000. In early 1998 the Board
agreed to pay Mr. Stenham an additional fee of (pound)50,000 in early 1998 for
additional responsibilities undertaken on behalf of the Company during 1996 and
1997. Each independent non-executive director also receives (pound)1,000 for
each Board and committee meeting attended and reimbursement for reasonable
expenses incurred in the performance of his duties as a director.
No compensation is paid to any of the other non-executive directors or to any of
the executive directors for their service as directors.
10
ALLOCATION OF SECURITIES
(RESOLUTION #13 ON THE PROXY CARD)
Under the Companies Act, directors may not allot (i.e., issue) shares unless
they are authorized to do so by an ordinary resolution of the shareholders of
the company or under the articles of association of such company. At the Annual
General Meeting, the Board of Directors will present the resolution set out
below, which provides the Directors with the authority to allot up to
309,189,200 Ordinary Shares (representing approximately one third of the
Company's current issued ordinary share capital), which number of shares is in
accordance with U.K. institutional guidelines. This authority will lapse 15
months after the Annual General Meeting or at the conclusion of the 1999 Annual
General Meeting, whichever occurs first.
Text of resolution:
THAT in substitution for all previous authorities which are hereby revoked,
the Directors be generally and unconditionally authorized pursuant to
Section 80 of the Companies Act 1985 (the "Act") to exercise all or any
powers of the Company to allot relevant securities (within the meaning of
Section 80(2) of the Act) up to an aggregate nominal amount of
(pound)30,918,920 such authority to expire (unless previously renewed,
varied or revoked by the Company in a general meeting) on the earlier of
August 7, 1999 or the conclusion of the Annual General Meeting of the
Company to be held in 1999, but the Company may make an offer or agreement
which would or might require relevant securities to be allotted after the
expiry of this authority and the Directors may allot relevant securities in
pursuance of that offer or agreement.
Notwithstanding the foregoing resolution authorizing the Directors to issue
additional securities under certain circumstances without shareholder approval,
the rules of the Nasdaq National Market may require the Company to seek further
shareholder approval for certain such issuances in the future.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE RESOLUTION
BECAUSE IT BELIEVES THAT IT IS IN THE COMPANY'S BEST INTEREST FOR THE DIRECTORS
TO HAVE THE FLEXIBILITY OF ALLOTTING SHARES AS PROVIDED THEREUNDER, ALTHOUGH
THEY HAVE NO PRESENT INTENTION OF DOING SO.
DISAPPLICATION OF PRE-EMPTION RIGHTS
(RESOLUTION #14 ON THE PROXY CARD)
At the Annual General Meeting, the Board of Directors will present the
resolution set out below, which provides the Directors with the authority to
allot shares for cash without first offering such shares pro rata to existing
shareholders, as otherwise required by the Companies Act. The limited authority
conferred by such resolution would empower the Directors to make such cash
issues other than pro rata to shareholders provided such issues did not exceed
in aggregate 46,378,380 Ordinary Shares (representing 5% of the Company's
current issued Ordinary Share capital), which number of shares is in accordance
with U.K. institutional guidelines. This authority will lapse 15 months after
this Annual General Meeting or at the conclusion of the 1999 Annual General
Meeting, whichever occurs first. The effectiveness of this Resolution is
conditional on the approval by the shareholders of Resolution #13.
Text of resolution:
THAT in substitution for all previous authorities which are hereby revoked,
and subject to the passing of Resolution #13, the Directors be empowered
pursuant to Section 95 of the Companies Act 1985 (the "Act") to allot
equity securities (within the meaning of Section 94(2) of the Act) for cash
pursuant to the authority conferred by Resolution #13 as if Section 89(1)
of the Act did not apply to any such allotment. This power:
(i) expires on the earlier of August 7, 1999 and the conclusion of the
Annual General Meeting of the Company to be held in 1999, but the Company
may make an offer or agreement which would or might require equity
securities to be allotted after the expiry of this authority and the
Directors may allot equity securities in pursuance of that offer or
agreement; and
11
(ii) is limited to:
A. allotments of equity securities where such securities have been
offered (whether by way of a rights issue, open offer or otherwise) to
holders of ordinary shares of 10p each in the capital of the Company
("Ordinary Shares") and, if in accordance with their rights, the Directors
so determine, to holders of other equity securities of any class, in
proportion (as nearly as may be) to their existing holdings of Ordinary
Shares or (as the case may be) other equity securities of the class on the
basis of their rights to receive such offer or, failing which, on the basis
that their holdings have been converted into or that they have subscribed
for Ordinary Shares on the basis then applicable, subject to the Directors
having a right to make such exclusions or other arrangements in connection
with the offer as they deem necessary or expedient:
(a) to deal with equity securities representing fractional entitlements;
and
(b) to deal with legal or practical problems under the laws of, or the
requirements of any recognized regulatory body or any stock exchange in any
territory; and
B. allotments of equity securities for cash otherwise than pursuant
to paragraph A up to an aggregate nominal amount of (pound)4,637,838.
Notwithstanding the foregoing resolution authorizing the Directors to issue
additional securities under certain circumstances without shareholder approval,
the rules of the Nasdaq National Market may require the Company to seek further
shareholder approval for certain such issuances in the future.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE RESOLUTION
BECAUSE IT BELIEVES THAT IT IS IN THE COMPANY'S BEST INTEREST FOR THE DIRECTORS
TO HAVE THE FLEXIBILITY OF ALLOTTING SHARES AS PROVIDED THEREUNDER, ALTHOUGH
THEY HAVE NO PRESENT INTENTION OF DOING SO.
APPOINTMENT OF AUDITORS AND AUTHORIZATION FOR DIRECTORS TO FIX REMUNERATION
(RESOLUTION #15 ON THE PROXY CARD)
The Board of Directors, upon the recommendation of the Audit Committee, has
recommended that KPMG Audit plc, a limited liability company wholly-owned by
KPMG, be appointed as auditors, to serve from the conclusion of the forthcoming
Annual General Meeting until the next annual general meeting. The Board intends
to fix the remuneration of the auditors for such period after their appointment.
At the Annual General Meeting, the Board of Directors will present for
shareholder approval a resolution appointing KPMG Audit plc as auditors and
authorizing the Board to fix the remuneration for the auditors.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR SUCH APPOINTMENT AND
AUTHORIZATION TO FIX REMUNERATION.
Representatives of KPMG Audit plc are expected to be present at the Annual
General Meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and will be available to respond to questions
from shareholders.
AUTHORITY FOR COMPANY TO PURCHASE ITS OWN SHARES
(RESOLUTION #16 ON THE PROXY CARD)
The Board of Directors has recommended that the Company be authorized to acquire
up to 46,378,380 Ordinary Shares of the Company (representing 5% of the current
issued Ordinary Share capital) in the market at such time or times as the Board
may deem appropriate and in any event in accordance with the applicable laws and
the resolutions set forth below. As required by U.K. law, the following
resolution authorizes the Company to acquire such Ordinary shares and sets out a
minimum and maximum price to be paid for any shares acquired pursuant to the
resolution.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR SUCH RESOLUTION.
12
Text of resolution:
THAT the Directors be generally and unconditionally authorised to make
market purchases (within the meaning of s163(3) of the Companies Act 1985)
on The London Stock Exchange of Ordinary Shares, subject to the following
conditions:
(i) the maximum number of Ordinary Shares authorised to be purchased is
46,378,380, representing five per cent of the current issued share capital
of the Company;
(ii) the minimum price (exclusive of expenses) that may be paid for each
Ordinary Share is 10p;
(iii) the maximum price (exclusive of expenses) that may be paid for each
Ordinary Share is an amount equal to 105% of the average of the middle
market quotations for an Ordinary Share as derived from the London Stock
Exchange Daily Official List for the five business days before the day on
which the purchase is made;
(iv) this authority, unless previously revoked or varied, expires on the
earlier of 7th August 1999 or the conclusion of the Annual General Meeting
of the Company to be held in May 1999; and
(v) the Company may make a contract to purchase Ordinary Shares under this
authority before the expiry of this authority which will or may be executed
wholly or partly after the expiry of this authority, and a purchase of
shares may be made in pursuance of any such contract.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information known to the Company with
respect to Ordinary Shares beneficially owned, as of March 1, 1998, by each
director, director nominee and named executive officer and all directors and
executive officers as a group:
NUMBER OF PERCENT OF
ORDINARY OUTSTANDING
SHARES ORDINARY
NAME OWNED SHARES
---- ----- ------
A. Gary Ames -- --
Lord Borrie, QC -- --
Charles Burdick 40,000(1) (2)
Stephen J. Davidson -- --
Richard H. Evans -- --
Lord Griffiths of Fforestfach -- --
Lynn C. Rexroth -- --
James O. Robbins -- --
Anthony W. P. Stenham -- --
Robert W. Shaner -- --
Adam N. Singer -- --
David R. Van Valkenburg
Fred A. Vierra -- --
Roger P. Wilson -- --
All Directors and Executive Officers (as a group) 40,000(1) (2)
- -------------
1. In the form of American Depository Receipts.
2. Represents less than 0.01% of the Company's outstanding Ordinary Shares.
13
EXECUTIVE COMPENSATION
Summary Compensation Table (1)
------------------------------
Annual Compensation Long Term Compensation
----------------------------------- ---------------------------
Ordinary
Other Restricted Shares
Annual Stock Underlying All Other
Name and Position Year Salary Bonus Compensation Awards (2) Options Compensation
(in pounds) (in pounds) (in pounds) (in pounds) (in pounds)
- ---------------------------------------------------------------------------------------------------------------------
Stephen J. Davidson 1997 333,367 67,500 18,835 (3) - 16,810 24,447 (4)
Chief Executive 1996 235,756 25,502 11,903 (3) - 107,579 12,599 (4)
Officer 1995 143,100 98,312 11,443 (3) 819,691 (5) 178,380 10,017 (4)
Charles Burdick(6) 1997 225,000 37,500 8,617 (7) - 765,847 6,300 (8)
Finance Director 1996 - - - - - -
1995 - - - - - -
David Van Valkenburg(9) 1997 94,258 41,584 170,234 (10) - - 3,107 (11)
Chief Operations 1996 - - - - - -
Director 1995 - - - - - -
Lynn C. Rexroth(12) 1997 132,962 53,485 89,149 (12) - - 9,323 (15)
Chief Operations 1996 175,000 17,093 143,660 (12) 63,584 (14) 104,280 4,808 (15)
Officer 1995 84,969 59,649 166,274 (12) 119,957 (14) 107,882 4,827 (15)
Roger P. Wilson(16) 1997 116,705 12,164 9,904 (17) - - 14,630 (18)
Senior Vice 1996 98,000 9,155 8,479 (17) - 139,007 11,760 (18)
President of 1995 83,970 108,132 7,350 (17) 98,710 (19) - 10,076 (18)
Residential
Services
Richard H. Evans(20) 1997 105,870 22,885 10,455 (21) - - 11,375 (22)
Group IT Director
1. Certain amounts reflected in this table and elsewhere in this section were
paid in US dollars, but are represented in this table in pounds sterling
based on an average exchange rate of $1.64 to (pound)1.00 for the year
ended December 31, 1997.
2. The value of the Restricted Stock reflected in this table represents the
product of the number of Ordinary Shares underlying the award multiplied
by the closing price per Ordinary Share of the Ordinary Shares on the
London Stock Exchange on the date of the grant (January 24, 1996 (132.5p)
in the case of Restricted Share awards granted to Mr. Rexroth on that
date, November 8, 1995 (175.0p) in the case of Restricted Share awards
granted to Mr. Wilson on that date and January 13, 1995 (172.5p) in the
case of Restricted Share awards granted to Mr. Davidson on that date).
3. Mr. Davidson's "Other Annual Compensation" includes (pound)12,211,
(pound)11,060 and (pound)10,322 for an automobile and related expenses for
the years 1997, 1996 and 1995, respectively.
4. Mr. Davidson's "All Other Compensation" consists of payments made by the
Company to his private pension plan.
5. On January 13, 1995 Mr. Davidson was granted an award of 475,183 shares of
Restricted Stock. As of December 31, 1997, the aggregate value of such
shares was (pound)332,628 based on a price per Ordinary Share of 70p (the
closing price per Ordinary Share of the Ordinary Shares on the London
Stock Exchange on December 31, 1997). Such shares vested on January 13,
1998.
6. Mr. Burdick served as Acting Chief Financial Officer from September 1996
and was appointed Finance Director in February 1997.
7. Mr. Burdick's "Other Annual Compensation" includes (pound)8,363 for
automobile and related expenses.
8. Mr. Burdick's "All Other Compensation" consists of payments made by
Telewest to his private pension plan.
9. Mr. Van Valkenburg is a secondee to the Company from U S WEST and
consequently, as described below under "Employment Agreements," certain
amounts reflected in this table for Mr. Van Valkenburg were paid by an
affiliate of U S WEST, which was reimbursed by the Company for all such
payments. Mr. Van Valkenburg commenced employment with the Company on July
1, 1997.
14
10. Mr. Van Valkenburg's "Other Annual Compensation" includes (pound)55,330 in
respect of his U.K. income taxes for 1997 and (pound)74,057 in respect of
housing allowance for 1997.
11. Mr. Van Valkenburg's "All Other Compensation" represents matching
contributions to his 401(k) plan.
12. Mr. Rexroth was a secondee to the Company from U S WEST and consequently,
as described below under "-Employment Agreements," certain amounts
reflected in this table for Mr. Rexroth were paid by an affiliate of U S
WEST, which was reimbursed by the Company for all such payments. Mr.
Rexroth's employment with the Company commenced on December 1, 1992 and he
returned to U S WEST on June 30, 1997.
13. Mr. Rexroth's "Other Annual Compensation" includes provisions of
(pound)13,491, (pound)74,253 and (pound)102,968 in respect of his U.K.
income taxes for the years 1997, 1996 and 1995, respectively, and
((pound)11,318), (pound)30,462 and (pound)32,496 in respect of housing
allowances for 1997, 1996 and 1995, respectively.
14. On January 24, 1996 and January 13, 1995 Mr. Rexroth was granted an award
of 47,988 and 69,540 shares, respectively, of Restricted Stock. As of
December 31, 1997, the aggregate value of such shares was (pound)78,770
based on a price per Ordinary Share of 70p (the closing price per Ordinary
Share of the Ordinary Shares on the London Stock Exchange on December 31,
1997). 69,540 of such shares vested on January 13, 1998 and 47,988 of such
shares vest and will be distributed to Mr. Rexroth (without payment of
consideration) on January 24, 1999 subject to earlier vesting and
distribution under certain circumstances. Until such shares are vested,
Mr. Rexroth will not be entitled to vote or receive dividends in respect
of such shares
15. Mr. Rexroth's "All Other Compensation" represents matching contributions
to his 401(k) plan.
16. Mr. Wilson commenced employment with the Company upon completion of the
Merger on October 3, 1995. Amounts reflected for Mr. Wilson prior to
completion of the Merger were paid by SBCC.
17. Mr. Wilson's "Other Annual Compensation" includes (pound)9,329,
(pound)7,779 and (pound)6,731 for an automobile and related expenses for
the years 1997, 1996 and 1995, respectively.
18. Mr. Wilson's "All Other Compensation" consists of payments made by the
Company to his private pension plan.
19. On November 8, 1995 Mr. Wilson was granted an award of 56,406 shares of
Restricted Stock. As of December 31, 1997, the aggregate value of such
shares was (pound)39,484 based on a price per Ordinary Share of 70p (the
closing price per Ordinary Share of the Ordinary Shares on the London
Stock Exchange on December 31, 1997). Such shares vest and will be
distributed to Mr. Wilson (without payment of consideration) on November
8, 1998, subject to earlier vesting and distribution under certain
circumstances. Until such shares are vested, Mr. Wilson will not be
entitled to vote or receive dividends in respect of such shares.
20. Mr. Evans commenced employment with the Company in July, 1997.
21. Mr. Evan's "Other Annual Compensation" includes (pound)9,831 for
automobile and related expenses.
22. Mr. Evan's "All Other Compensation" represents matching contributions to
his 401(k) plan.
15
OPTION GRANT TABLE
INDIVIDUAL GRANTS
----------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED OPTION TERM
NAME OPTIONS TO EMPLOYEES EXERCISE ---------------
---- GRANTED IN 1997 PRICE(1) EXPIRATION DATE 5% 10%
------- ------- -------- --------------- -- ---
(in pounds)
Stephen J. Davidson....... 16,810(2) 0.31% 58.0p June 15, 2001 3,005 5,239
Charles Burdick........... 687,144(4) 7.68% 117.5p March 12, 2007 507,766 1,286,778
53,280(4) 0.60% 117.5p March 12, 2007 39,371 99,775
25,423(3) 0.28% 118.0p March 12, 2007 18,659 47,481
Richard H. Evans......... 140,740(4) 1.57% 135.0p October 30, 1999 19,475 39,900
22,222(3) 0.25% 135.0p October 30, 1999 3,075 6,300
- -------------
1. The exercise prices reflect the middle market quotation on the London
Stock Exchange for the Ordinary Shares on the day of grant in the case of
incentive stock options under Section 422 of the U.S. Internal Revenue
Code, as amended, and on the day before the grant in the case of other
options.
2. Represents grants under the Telewest Sharesave Scheme.
3. Represents Grants under the Telewest (1995) (No.1) Executive Share Option
Scheme.
4. Represents grants under the Telewest (1995) (No.2) Executive Share Option
Scheme.
OPTION EXERCISES AND YEAR-END VALUE TABLE(1)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT YEAR-END AT YEAR-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (2)
---- ----------- -------- ------------------------- -----------------------------
Stephen J. Davidson........ 0 0 0/302,679 0/0
Charles Burdick............ 0 0 0/765,847 0/0
Richard H. Evans........... 0 0 0 0/0
Lynn C. Rexroth............ 0 0 0/765,847 0/0
David R. Van Valkenburg.... 0 0 0 0/0
Roger P. Wilson............ 0 0 0/212,162 0/0
1. References to grants of options are options granted by the Company under
its Executive Share Option Schemes and Sharesave Scheme.
2. Based on the closing price per Ordinary Share on December 31, 1997 of 70p.
LTIP AWARDS IN LAST YEAR
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS
----------------------------------------
NUMBER OF THRESHOLD TARGET MAXIMUM
NAME SHARES PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------ ------ -------- --------- --------
Stephen J. Davidson........ -
Charles Burdick............ -
Richard H. Evans........... 105,569 October 1, 2000
Lynn C. Rexroth............ 20,000 June 30, 1997
David R. Van Valkenburg.... -
Roger P. Wilson............ -
In November 1997, certain senior executives were granted awards under the
LTIP, however grants were not made to Mr. Davidson or Mr. Burdick at that time
because they were then in a "closed period." The Board has agreed that when such
period ends, appropriate arrangements will be made so that Mr. Davidson and Mr.
16
Burdick are not prejudiced by the failure of the Company to make LTIP awards to
them at that time.
EMPLOYMENT AGREEMENTS
Mr. Davidson and the Company have agreed that Mr. Davidson will serve as Chief
Executive Officer of the Company for an indefinite term, commencing as of
February 12, 1997. The Company and Mr. Davidson each has the right to terminate
the employment agreement at any time upon one years' notice. The agreement
provides that Mr. Davidson will receive a base salary of (pound)335,000 per
annum and also provides that he will be eligible for a bonus of 25% of his base
salary each year upon the Company's achievement of target performance,
increasing to a maximum of 50% of his base salary if the Company exceeds target
performance by specified amounts.
Mr. Burdick and the Company have agreed that Mr. Burdick will serve as Group
Finance Director of the Company for an initial two year fixed term, commencing
as of February 12, 1997 and to continue thereafter unless terminated by either
party giving no less than one year's notice. The agreement provides that Mr.
Burdick will receive a base salary of (pound)225,000 per annum and also provides
thAT hE will be eligible for a bonus of 25% of his base salary each year upon
the Company's achievement of target performance, increasing to a maximum of 50%
of his base salary if the Company exceeds target performance by specified
amounts.
Mr. Van Valkenburg commenced employment with the Company on June 1997. Pursuant
to an agreement with U S WEST Overseas International. Mr. Van Valkenburg was
assigned to serve as Director of Group Operations for an indefinite term. US
WEST Overseas International and the Company each have the right to terminate the
arrangement at any time. Pursuant to this arrangement Mr. Van Valkenburg
receives a base salary of (pound)157,738 per annum plus foreign service premiums
and other expatriate compensation and is eligible for a bonus of up to 40% of
his base salary each year upon the Company's achievement (or for 1997, U S
WEST's achievement) of target performance. The Company has agreed to reimburse U
S WEST Overseas International for all amounts paid to Mr. Van Valkenburg during
the term of the assignment. Mr. Van Valkenburg continues to receive benefits
under certain U S WEST plans.
Mr. Rexroth commenced employment with the Company on December 24, 1992. Pursuant
to the terms of an assignment agreement with U S WEST Overseas on December 1,
1995, Mr. Rexroth was assigned to serve as Senior Vice President of Group
Operations for a fixed term of eighteen months, commencing as of January 1,
1996. He returned to U S WEST in June 1997. The agreement (as revised) provided
that Mr. Rexroth received a base salary of (pound)175,000 per annum plus foreign
service premiums and otheR expatriate compensation (subject to certain
adjustments) and also provided that he would be eligible for a bonus of up to
30% of his base salary each year upon the Company's achievement of target
performance. Mr. Rexroth was reimbursed for relocation costs to the U.S. The
Company reimbursed U S WEST Overseas for all amounts paid to Mr. Rexroth during
the term of the assignment. Mr. Rexroth continues to receive benefits under
certain U S WEST plans.
Mr. Wilson commenced employment with the Company on October 3, 1995, being
previously employed by SBCC since October 1992. Mr. Wilson and the Company
entered into an employment agreement which provides that Mr. Wilson will serve
as Senior Vice President of Operations of the Company for an indefinite term,
commencing as of September 16, 1996. The Company and Mr. Wilson each has the
right to terminate the employment agreement at any time upon one year's notice
and the Company has given notice to terminate the agreement effective July 1998.
The agreement provides that Mr. Wilson will receive a base salary of
(pound)85,460 per annum and also provides that he will be eligible for a bonUS
oF 25% of his base salary each year upon the Company's achievement of target
performance, increasing to a maximum of 50% of his base salary if the Company
exceeds target performance by specified amounts. In addition, Mr. Wilson was
paid a cash bonus of (pound)31,496 in January 1998 pursuant to a retention plan
established by SBCC. Following reviews in January 1996, January 1997 and March
1997 Mr. Wilson's salary was increased to (pound)98,000 per annum,
(pound)106,820 per annum and (pound)120,000 per annum, respectively.
17
Mr. Evans commenced employment with the Company on July, 1997. Mr. Evans and the
Company entered into an employment agreement which provides that Mr. Evans will
serve as Group IT Director for an indefinite term. The Company and Mr. Evans
each has the right to terminate the employment agreement at any time upon one
year's notice. The agreement provides that Mr. Evans will receive a base salary
of 105,870 per annum and also provides that he will be eligible for a bonus of
25% of his base salary each year upon the Company's achievement of target
performance, increasing to a maximum of 50% of his base salary if the Company
exceeds target performance by specified amounts.
REMUNERATION COMMITTEE REPORT
A report of the Remuneration Committee of the Company's Board of Directors
covering various matters specified by applicable U.S. law, the Code of Best
Practice of the Report of the Study Group on Directors' Remuneration and Section
A of the Best Practice Provisions on remuneration committees as annexed to the
Listing Rules of the London Stock Exchange, set out in the Annual Report of the
Company for 1997 under the caption "Report of the Remuneration Committee" is
incorporated by reference herein.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SECONDMENT OF PERSONNEL
Affiliates of TCI, U S WEST, SBC and Cox have seconded senior personnel to the
Company to provide certain business and technical expertise and support.
Currently, three of the Company's employees are on secondment from affiliates of
TCI, U S WEST, SBC and Cox. The Company has agreed in secondment agreements to
reimburse the affiliates of TCI, U S WEST, SBC and Cox, as the case may be, for
the full costs each incurs in respect of any personnel seconded to the Company.
The aggregate amount expensed by the Company to TCI, U S WEST, SBC and Cox (or
affiliates thereof) in respect of personnel (and certain technical consultants)
in 1997 was approximately (pound)259,000, (pound)232,000 and (pound)234,352
respectively.
TECHNOLOGY SHARING ARRANGEMENTS
TCI and U S WEST have agreed to make available to the Company proprietary
technology and know-how which they are permitted to license and which is related
to cable television and cable telephony at a fair market price which is
generally no less favorable than those provided to any unaffiliated customers.
The Company has agreed to make available to TCI and U S WEST any of the
Company's proprietary technology and know-how which it is permitted to license
and which is related to cable television and cable telephony at a fair market
price which is generally not less favorable than those provided to any
unaffiliated customers.
PROGRAMMING
An affiliate of TCI, an affiliate of U S WEST and Cox own approximately 36.8%,
6.7% and 13.2%, respectively, of Flextech. In addition Mr. Vierra and Mr. Ames
are directors of Flextech and Mr. Singer is Chairman of Flextech. Flextech owns
interests (in some cases, controlling interests) in certain programming channels
and provides management services to certain of such channels and other channels.
Some of the channels in which Flextech owns an interest or provides management
services to are offered directly by the Company to its subscribers and some are
included in the BSkyB Multi-Channel Package, which is also offered by the
Company to its subscribers. In addition, affiliates of U S WEST, TCI and SBC are
partners in CPP-1, a joint venture with three other U.S. cable operators which
has a 10% interest in Live TV. Lord Borrie is also a director of The Mirror
Group plc, which has an interest in Live TV. Live TV is carried by the Company's
network. An affiliate of TCI has an interest in Time Warner Inc., which owns CNN
International, The Cartoon Network and TNT, all of which are carried by the
Company's network. The Company believes that programming obtained from all the
affiliated programming suppliers is obtained on terms no less favorable than
those available to unrelated third parties.
18
CERTAIN TAX CONSEQUENCES OF OWNERSHIP OF ADSS
A description of certain tax consequences relating to the ownership of ADSs is
set out in Annex A hereto.
PERFORMANCE GRAPHS
The following graph compares, for the period from November 22, 1994 through the
year ended December 31, 1997, the cumulative total shareholder return on the
ADSs which are traded on the Nasdaq National Market to that of (a) the S&P 500
Index and (b) a peer group (the "NASDAQ Peer Group") which consists of (i)
Comcast UK Cable Partnership and International CableTel Inc. through December
31, 1997, (ii) Bell Cablemedia plc through June 17, 1997 (when it was acquired
by Cable & Wireless Communications plc ("CWC") and ceased trading on the NASDAQ
National Market), (iii) NYNEX CableComms Group plc from June 9, 1995 (when it
commenced trading on the NASDAQ National Market) through June 17, 1997 (when it
was acquired by CWC and ceased trading on the NASDAQ National Market), (iv)
General Cable plc from June 9, 1995 (when it commenced trading on the NASDAQ
National Market) through December 31, 1997 and (v) CWC from April 24, 1997 (when
it commenced trading on the NASDAQ National Market) through December 31, 1997.
The cumulative shareholder return on the ADSs reflects ADSs evidencing Old
Telewest Ordinary Shares (which were traded on the London Stock Exchange prior
to the Merger) for the period from November 22, 1994 (the first time such shares
were registered under the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act")) through September 29, 1995 (the last day of trading for such
shares) and reflects the Company's Ordinary Shares for the period October 2,
1995 (the first day of trading for such shares) through December 31, 1996.
The NASDAQ Peer Group was originally comprised of Bell Cablemedia plc, Comcast
UK Cable Partnership and General Cable plc (the "Original NASDAQ Peer Group").
The Original NASDAQ Peer Group was selected because it represented companies
listed on the NASDAQ National Market that were engaged (like the Company)
principally in the cable television and cable telephony business in the U.K.
Since that time, three companies engaged (like the Company) principally in the
cable television and telephony business in the U.K. (NYNEX CableComms Group plc,
General Cable plc and CWC), have commenced trading on the NASDAQ National Market
and consequently have been added to the NASDAQ Peer Group. NYNEX Cablecomms
Group plc and Bell Cablemedia PLC were removed from the peer group when they
were acquired by CWC. The Company believes that it is appropriate to modify its
NASDAQ Peer Group from time to time to comprise companies engaged in the same
business as the Company in the U.K.
MEASUREMENT PERIOD TELEWEST S&P 500 NASDAQ
(FISCAL YEAR COVERED ) ADSS COMPOSITE PEER GROUP
- ---------------------- ---- --------- ----------
NOV. 22, 1994 100.00 100.00 100.00
DEC. 31, 1994 93.38 102.77 92.64
MAR. 31, 1995 92.67 108.37 90.26
JUN. 9, 1995 91.79 116.99 95.89
JUN. 30, 1995 89.25 121.51 94.38
SEP. 30, 1995 106.23 131.84 100.83
DEC. 31, 1995 85.67 142.48 87.40
MAR. 29, 1996 77.62 152.73 92.04
JUN. 28, 1996 88.48 156.76 92.37
SEP. 30, 1996 65.66 160.58 82.18
DEC. 31, 1996 66.87 158.93 83.21
MAR. 31, 1997 58.32 170.16 77.09
APR. 24, 1997 46.58 175.23 76.93
JUN. 17, 1997 51.32 202.33 84.68
JUN. 30, 1997 51.76 197.19 85.36
SEP. 30, 1997 46.09 218.33 74.41
DEC. 31, 1997 41.07 220.50 73.52
19
The following graph compares, for the period from November 23, 1994 through the
year ended December 31, 1996, the cumulative total shareholder return on
Ordinary Shares which are traded on the London Stock Exchange to that of (a) the
Financial times - Stock Exchange All Share Index, and (b) a peer group (the "LSE
Peer Group") which consists of (i) British Telecommunications plc, Cable &
Wireless plc, Vodaphone and Securicor Services (the "Original LSE Peer Group")
through June 8, 1995, (ii) NYNEX CableComms Group plc from June 9, 1995 (when it
commenced trading on the London Stock Exchange) through June 17, 1997 (when it
was acquired by CWC and ceased trading on the London Stock Exchange), (iii)
General Cable plc from June 9, 1995 (when it commenced trading on the London
Stock Exchange) through December 31, 1997 and (iv) CWC from April 24, 1997 (when
it commenced trading on the London Stock Exchange) through December 31, 1995.
The cumulative shareholder return on Ordinary Shares reflects the Old Telewest
Ordinary Shares (which were traded on the London Stock Exchange prior to the
Merger) for the period from November 22, 1994 (the first time such shares were
registered under the U.S. Securities Exchange Act) through September 29, 1995
(the last day of trading for such shares) and reflects the Company's Ordinary
Shares for the period October 2, 1995 (the first day of trading for such shares)
through December 31, 1997.
At the time the Original Peer Group was selected there were no companies listed
on the London Stock Exchange that engaged (like the Company) principally in the
cable television and cable telephony business in the U.K., and accordingly the
Original Peer Group represents selected companies listed on the London Stock
Exchange engaged in the same general industry as the Company (i.e.,
communications). Since that time, three companies engaged (like the Company)
principally in the cable television and telephony business in the U.K. (NYNEX
CableComms Group plc, General Cable plc and CWC) have commenced trading on the
London Stock Exchange and consequently have been added to the LSE Peer Group in
substitution for the Original Peer Group. NYNEX Cablecomms Group plc was removed
from the peer group when it was acquired by CWC. The Company believes that it is
appropriate to modify its LSE Peer Group from time to time to comprise companies
engaged in the same business as the Company in the U.K.
TELEWEST
MEASUREMENT PERIOD LSE PEER FTSE ALL ORDINARY
(FISCAL YEAR COVERED) GROUP SHARE SHARES
- --------------------- ----- ----- ------
NOV. 21, 1994 100.00 100.00 100.00
DEC. 30, 1994 100.9 98.6 94.0
MAR. 31, 1995 99.0 101.0 94.0
JUN. 9, 1995 105.7 108.5 90.9
JUN. 30, 1995 102.9 107.6 89.8
SEP. 29, 1995 115.6 116.3 107.1
DEC. 29, 1995 98.1 122.1 85.2
MAR. 29, 1996 92.9 126.4 78.0
JUN. 28, 1996 95.8 128.7 88.7
SEP. 30, 1996 87.3 136.6 65.4
DEC. 31, 1996 97.2 142.4 68.1
MAR. 31, 1997 92.7 150.0 60.4
APR. 24, 1997 90.8 149.9 46.7
JUN. 17, 1997 86.1 162.1 51.7
JUN. 30, 1997 91.7 171.2 52.8
SEP. 30, 1997 64.9 192.0 45.3
DEC. 31, 1997 62.0 204.6 38.5
In calculating cumulative total shareholder return in the two preceding graphs,
returns are calculated on a quarterly basis (assuming an initial investment of
$100 on November 22, 1994), reinvestment of dividends is assumed, and the
returns of each member of the indices and the peer groups are weighed for market
capitalization. The cumulative total shareholder return of the Company's peer
groups assumes that on the date of the addition or removal of any company from
any such peer group, the cumulative total shareholder return to such date of
such peer group is reinvested in the companies constituting such peer group
after such addition or removal.
20
COMPLIANCE WITH SECTION 16(A) OF THE U.S. SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and any persons who own more than ten
percent of the Company's Ordinary Shares to file reports of initial ownership of
the Company's Ordinary Shares and subsequent changes in that ownership with the
Securities and Exchange Commission (initial reports are filed on Form 3 and
reports as to subsequent changes or certain other matters are filed on Forms 4
or 5). Officers, directors and greater than ten-percent beneficial owners are
also required to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely upon a review of the copies of the forms furnished to the Company,
the Company believes that during 1997 all Section 16(a) filing requirements were
complied with except that (a) Mr. Burdick filed one Report on Form 3 late
reflecting his appointment as Finance Director.
APPLICABILITY OF SECTION 162(M) OF THE U.S. INTERNAL REVENUE CODE OF 1986
Because the Company is not currently and does not expect in the future to be
subject to U.S. federal income tax, Section 162(m) of the U.S. Internal Revenue
Code of 1986, as amended (the "Code"), which generally denies a deduction for
U.S. federal income tax purposes to publicly-held companies for compensation
paid to certain executives in excess of $1 million per executive per taxable
year, currently does not apply to the Company.
VOTING REQUIREMENTS
Every holder of Ordinary Shares who is present in person or by proxy at the
Annual General Meeting shall have one vote on each matter to be presented, and
on a poll every shareholder who is present in person or by proxy shall have one
vote for every Ordinary Share held (subject in each case to disenfranchisement
in the limited circumstances provided in the Articles). Voting at the Annual
General Meeting will be by a show of hands unless a poll is demanded. A poll may
be demanded by (a) the chairman of the meeting, (b) not less than five
shareholders present in person or by proxy and entitled to vote, (c) any
shareholder or shareholders present in person or by proxy and representing in
the aggregate not less than one-tenth of the total voting rights of all
shareholders entitled to attend and vote at such meeting or (d) any shareholder
or shareholders present in person or by proxy and holding shares conferring a
right to vote at the meeting on which there have been paid-up sums in aggregate
equal to not less than one-tenth of the total sum paid on all shares conferring
such right. Since under English law voting rights are only conferred on
registered holders of shares, a person holding through a nominee may not
directly demand a poll.
Where a poll is not demanded, the interests of beneficial owners of Ordinary
Shares who hold through a nominee or record owners who have appointed a proxy
may not be reflected in votes cast on a show of hands if such nominee or proxy
does not attend the meeting or receives conflicting voting instructions from
different beneficial or records owners for whom it holds as nominee or acts as
proxy. In any event, in a show of hands, such nominee or proxy will have only
one vote, notwithstanding the number of beneficial or record owners for whom he
or she acts.
Resolutions #1 through #13 and #15 are Ordinary Resolutions and require the
affirmative vote of a majority of the shareholders present in person or by
proxy, in the case of a vote by show of hands, or present in person or by proxy
and holding shares conferring in the aggregate a majority of the votes actually
cast on the Ordinary Resolution, in the case of a vote by poll. Resolutions #14
and #16 are Special Resolutions and require the affirmative vote of not less
than 75% of the shareholders present in person or by proxy, in the case of a
vote by show of hands, or present in person or by proxy and holding shares
conferring in the aggregate at least 75% of the votes actually cast on the
Special Resolution, in the case of a vote by poll. In accordance with London
Stock Exchange Rules, shareholders do not have an opportunity to cast
"abstentions." Broker non-votes will not count as votes cast "FOR" or "AGAINST"
any matter.
21
SOLICITATION OF PROXIES
The cost of soliciting proxies in the accompanying form will be borne by the
Company. The Company has not retained any independent soliciting agent. Proxies
may be solicited in person or by telephone or telegram by the directors,
executive officers and employees of the Company, who will not receive additional
compensation for such activities.
Brokers, nominees and other similar record holders will be requested to forward
proxy solicitation material to beneficial owners and, upon request, will be
reimbursed by the Company for their out-of-pocket expenses.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in next year's Proxy Statement
should be sent to the Company Secretary at Genesis Business Park, Albert Drive,
Woking, Surrey GU21 5RW, United Kingdom, and must be received by November 28,
1998.
FINANCIAL STATEMENTS AVAILABLE
Consolidated financial statements for the Company are included in the Annual
Report of the Company for 1997 furnished to shareholders with this Proxy
Statement. Additional copies of these statements and the Annual Report on Form
10-K for the year ended December 31, 1997 may be obtained without charge from
the Company Secretary at Genesis Business Park, Albert Drive, Woking, Surrey
GU21 5RW, United Kingdom.
The Annual Report on Form 10-K is also on file with the Securities and Exchange
Commission, Washington, D.C. 20549, and The Nasdaq Stock Market Inc., 1735 K
Street, NW, Washington, DC 20006-1500.
Dated: March 31, 1998
22
ANNEX A
CERTAIN TAX CONSEQUENCES OF OWNERSHIP OF
TELEWEST ORDINARY SHARES AND ADSS
GENERAL
The following generally summarizes the principal U.K. and U.S. federal income
tax consequences of the purchase, ownership and disposition of Ordinary Shares
or ADSs (evidenced by ADRs) that are residents or citizens of the U.S. and hold
the Ordinary Shares or ADSs as capital assets ("U.S. Holders"). BECAUSE THIS IS
A GENERAL SUMMARY, PROSPECTIVE PURCHASERS OF ORDINARY SHARES OR ADSS WHO ARE
U.S. HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
U.S. FEDERAL, STATE AND LOCAL TAX CONSEQUENCES, AS WELL AS TO THE U.K. TAX
CONSEQUENCES, OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES OR
ADSS APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS.
The statements of U.S. federal income tax and U.K. tax law set out below are
based (a) on the laws in force, and as interpreted by the relevant taxation
authorities, as of the date of this Proxy Statement, and are subject to any
changes (which may apply retroactively) in U.S. or U.K. law, or in the
interpretation thereof by the relevant taxation authorities, or in the
conventions between the U.S. and the U.K. relating to income and capital gains
(the "Income Tax Convention") and estate and gift taxes (the "Estate and Gift
Tax Convention"), occurring after such date and (b) in part, on representations
of the Depositary and on the assumption that each obligation in the Deposit
Agreement and any related agreement will be performed in accordance with its
terms.
This summary does not address the laws of any state or locality or any foreign
government (other than the U.K.). Further, this summary does not address the tax
consequences to particular classes of taxpayers that are subject to special
rules including, without limitation, dealers in securities or currencies,
insurance companies, tax exempt organizations, financial institutions, persons
that hold their Ordinary or ADSs as part of a straddle, hedging or "conversion
transaction", persons whose functional currency is other than the U.S. dollar,
tax-exempt investors or persons owning directly, indirectly or constructively,
10% or more of the Company's stock. This summary does not address the U.K. or
U.S. tax treatment of persons who hold Ordinary Shares or ADSs through a
partnership or other pass-through entity. Except to the limited extent discussed
below, it does not consider the U.K. tax or U.S. tax consequences to a person
other than a U.S. Holder (a "Non-U.S. Holder").
For purposes of the Conventions and the Code, U.S. Holders will be treated as
the owners of the Ordinary Shares represented by ADSs evidenced by ADRs.
Accordingly, and except as noted below, the U.K. tax and U.S. federal income tax
consequences discussed below apply equally to beneficial owners of both Ordinary
Shares and ADSs that are U.S. Holders.
TAXATION OF DIVIDENDS
For the purposes of this summary, the term "Eligible U.S. Holder" means a
beneficial owner of an ADS or an Ordinary Share (a) that derives and
beneficially owns the cash dividend paid thereon, (b) that is an individual, a
corporation, a trust or estate resident in the U.S. (and, in the case of a
corporation, not also resident in the U.K. for U.K. tax purposes) for the
purposes of the Income Tax Convention and (c) whose holding is not effectively
connected with a "permanent establishment" through which the Eligible U.S.
Holder carries on business in the U.K. with a "fixed base" in the U.K. from
which the Eligible U.S. Holder performs independent personal services. Such term
excludes, however, (a) a beneficial owner who owns at least 10% of the Ordinary
Shares in respect of which the dividend is paid, (b) under certain
circumstances, a corporation 25% or more of the capital of which is owned
directly or indirectly by one or more persons who are not individual residents
or nationals of the U.S. and (c) a U.S. corporation that controls, directly or
indirectly (either alone or with one or more associated corporations), 10% or
more of the voting stock of the Company.
A-1
The Company is required, when paying a dividend in respect of the Ordinary
Shares, to account to the U.K. Inland Revenue for a payment known as advance
corporation tax ("ACT"). The rate of ACT at present is equal to 25% of any
dividend paid to shareholders, which is equivalent to 20% of the sum of the
dividend and the related ACT. It was recently proposed that the duty to account
for ACT in respect of dividends paid will be abolished from 1999.
An Eligible U.S. Holder is entitled under the Income Tax Convention and current
U.K. law to claim from the U.K. Inland Revenue a refund of an amount equal to
the ACT paid by the Company in respect of the dividend (the "Tax Credit
Amount"), but subject to a 15% U.K. withholding tax on the combined sum of the
dividend paid and the related Tax Credit Amount. For example, assuming
continuance of ACT at the rate of 25% of a dividend paid, a dividend of
(pound)8.00 paid to such an Eligible U.S. Holder would generally entitle the
Eligible U.S. Holder to claim (pound)0.50 (a Tax Credit Amount of (pound)2.00
less a withholding of (pound)1.50) from the U.K. Inland Revenue, giving a total
cash received, after U.K. taxes but before U.S. taxes, of (pound)8.50. Under
current proposals the rate of tax credits will be reduced from 20% of the sum of
the dividend and tax credit to 10% of such amount on dividends paid on or after
April 6, 1999 with the result that an Eligible U.S. Holder would not be entitled
to claim any amount attributable to a Tax Credit Amount.
If the Eligible U.S. Holder is a U.S. trust or estate, the Tax Credit Amount
will be available only to the extent that the income derived by such trust or
estate is subject to U.S. tax as the income of a resident either in its hands or
in the hands of its beneficiaries, as the case may be.
In respect of dividends paid before April 6, 1999 for U.S. federal income tax
purposes, the gross amount of a dividend plus the Tax Credit Amount, including
the 15% U.K. withholding tax thereon, (a) will be included in gross income by a
U.S. Holder and (b) will be treated as foreign source dividend income to the
extent paid out of current or accumulated earnings and profits as determined for
U.S. federal income tax purposes. Subject to certain limitations, including
certain holding period requirements with respect to the Ordinary Shares, the 15%
U.K. withholding tax will be treated as a foreign income tax eligible for credit
against such Eligible U.S. Holder's federal income tax (or, alternatively, a
deduction in computing such U.S. Holder's taxable income). The consequences of
these limitations will depend on the nature and sources of each Eligible U.S.
Holder's income and the deductions appropriately allocated or apportioned
thereto. In general, no dividends received deduction will be allowed with
respect to dividends paid by the Company. The amount of the dividend will be the
U.S. dollar spot value of the dividend on the date of receipt, regardless of
whether the payment is in fact converted into U.S. dollars on such date.
Exchange gain or loss, if any, recognized by an Eligible U.S. Holder on a sale
or other disposition of pounds received pursuant to the dividend will generally
be U.S. source ordinary income or loss.
For dividends paid on or after April 6, 1999 (assuming that the current
proposals are enacted) an Eligible U.S. Holder who receives the (pound)8
dividend in the above example for US federal income tax purposes would be
considered to receive a dividend of (pound)8.89 ((pound)8 dividend plus the 89p
tax credit) and would include that amount in income. Such US Holder also would
be considered to have paid 89p of U.S. tax that, subject to the limitations
described above, would be creditable against such Eligible U.S. Holder's US
federal income tax liability.
Arrangements exist with the U.K. Inland Revenue under which certain Eligible
U.S. Holders of ADSs (i.e., (a) a U.S. corporation, (b) an individual resident
in the U.S. and not resident in the U.K. or (c) a trust or estate all the
beneficiaries of which are resident in the U.S. or Canada) generally will
receive directly from the Company together with the payment of the associated
dividend payment of the Tax Credit Amount to which such Holder is entitled, net
of the applicable U.K. withholding tax, without the need to file a claim for
refund. To claim the benefit of the arrangements, the registered holder must
complete the declaration on the reverse of the dividend check confirming the
Eligible U.S. Holder's entitlement to the Tax Credit Amount and present the
check for payment within three months from the date of issue of the check. These
arrangements can be terminated or altered without notice by the U.K. Inland
Revenue.
A-2
In addition, arrangements exist with the U.K. Inland Revenue under which an
Eligible U.S. Holder of Ordinary Shares will receive payment of the U.K. tax
credit at the same time as and together with the payment of the associated
dividend. In order to receive such payment, the Eligible U.S. Holder must have
the Ordinary Shares registered in the name of a nominee approved by the U.K.
Inland Revenue for such purpose, and the nominee must follow certain procedural
requirements. In addition, the qualifying holder must be either: (a) an
individual who: (i) is not resident in the U.K. and does not retain the use of
any accommodation in the U.K., (ii) has not during the previous four years been
in the U.K. for as much as three months a year on average, or for a period or
periods amounting in the aggregate to six months in the relevant U.K. income tax
year; (iii) has not been absent from the U.S. for a complete U.S. tax year in
any of the previous four years; (iv) does not have a permanent establishment in
the U.K. and (v) does not own 10% or more of the class of shares in respect of
which the dividend is paid; or (b) a corporation: (i) which is managed and
controlled in the U.S. and does not have a permanent establishment in the U.K.;
(ii) which does not, either alone or together with one or more associated
corporations, control, directly or indirectly, 10% or more of the voting power
in the Company; (iii) which does not own 10% or more of the class of shares in
respect of which the dividend is paid; (iv) which is liable to U.S. tax on the
dividend and (v) at least 75% of the capital of which is owned directly or
indirectly by persons who are U.S. residents. These arrangements will be
extended to trusts, estates in the course of administration, pension funds,
foundations and similar bodies only with the prior approval of the U.K. Inland
Revenue.
Certain Eligible U.S. Holders who are not entitled to receive payment of the
U.K. Tax Credit Amount from the Company with payment of the associated dividend
but who, nevertheless, are entitled to a refund of the Tax Credit Amount, net of
the U.K. withholding tax, must file a claim for the Tax Credit Amount in the
manner described in U.S. Revenue Procedure 80-18, 1980-1 C.B. 623, as modified
by U.S. Revenue Procedures 81-58, 1981-2 C.B. 678; 84-60, 1984-2 C.B. 504, and
90-61, 1990-2 C.B. 657. Claims for tax refund must be made within six years of
the U.K. year of assessment (generally the 12-month period ending April 5 in
each year) in which the related dividend was paid. The first claim by a claimant
for a tax credit under these procedures is made by sending the appropriate U.K.
form (FD/13) in duplicate to the Director of the Internal Revenue Service Center
with which the holder's last U.S. federal income tax return was filed. Forms may
be available from the U.S. Internal Revenue Service Assistant Commissioner
(International), 950 L'Enfant Plaza South, S.W., Washington, D.C. 20024,
Attention: Taxpayers Service Division. Because a refund claim is not considered
made until the U.K. tax authorities receive the appropriate form from the U.S.
Internal Revenue Service, forms should be sent to the U.S. Internal Revenue
Service well before the end of the applicable limitation period. Any claim by a
claimant after the first claim by such a U.S. Holder for payment under these
procedures should be filed directly with the U.K. Financial Intermediaries and
Claims Office, Fitz Roy House, P.O. Box 46, Nottingham, England, NG2 1BD.
Under Section 812 of ICTA 1988, the U.K. government has the power to deny the
payment of associated U.K. tax credits under the Income Tax Convention to a
corporation that controls, directly or indirectly, either alone or together with
one or more corporations, which are treated as associated for the purposes of
the Income Tax Convention, at least 10% of the voting power of the Company, if
it or an "associated company" (as defined in Section 416 ICTA 1988) has a
"qualifying presence" (as defined in Section 812 ICTA 1988) in a state in the
U.S. which operates a unitary system of corporation taxation. These provisions
will come into force only if the U.K. government so determines by statutory
instrument. No such instrument has yet been made.
Subject to the discussion below regarding backup withholding tax, a Non-U.S.
Holder of Ordinary Shares or ADSs generally will not be subject to U.S. federal
income or withholding tax on dividends received on Ordinary Shares or ADSs,
unless such income is effectively connected with the conduct of a trade or
business in the U.S. and, in general, in the case of a Non-U.S. Holder entitled
to benefits under a tax treaty, attributable to a permanent establishment or
fixed base in the U.S.
TAXATION OF CAPITAL GAINS
A U.S. Holder who is not resident or ordinarily resident in the U.K. for U.K.
tax purposes will not be liable for U.K. tax on capital gains realized or
accrued on the sale or other disposal of Ordinary Shares or ADSs unless the
Ordinary Shares or ADSs are held in connection with a trade, profession or
A-3
vocation carried on by such U.S. Holder in the U.K. through a branch or agency
which constitutes a permanent establishment or fixed base and the Ordinary
Shares or ADSs are or have been used, held or acquired for the purposes of such
trade, profession or vocation of such branch or agency. A U.S. Holder will be
liable for U.S. federal income tax on such gains to the same extent as on any
other gains from sales or disposition of stock.
Assuming that gain on the disposition of Ordinary Shares or ADSs would not be
subject to U.K. tax, such gain would be U.S. source income for U.S. foreign tax
credit limitation purposes. Deposits and withdrawals of Ordinary Shares by U.S.
Holders in exchange for ADSs will not result in the realization of gain or loss
for U.K. capital gains tax or U.S. federal income tax purposes.
Subject to the discussion below of backup withholding, a Non-U.S. Holder of
Ordinary Shares or ADSs will not be subject to U.S. federal income or
withholding tax on gain realized on the sale of Ordinary Shares or ADSs unless
(i) such gain is effectively connected with the conduct by the Non-U.S. Holder
of a trade or business in the U.S. and, in general, in the case of a Non-U.S.
Holder entitled to benefits under a tax treaty, such gain is attributable to a
permanent establishment or fixed base in the U.S. or (ii) in the case of gain
realized by an individual Non-U.S. Holder, the Non-U.S. Holder is present in the
U.S. for 183 days or more in the taxable year of the sale and certain other
conditions are met.
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders are generally subject to information reporting requirements with
respect to dividends paid in the U.S. on Ordinary Shares or ADSs. Under existing
regulations, such dividends are not subject to back up withholding. However,
under regulations generally effective January 1, 1999, such dividends paid in
the United States would be subject to back up withholding. Non-U.S. Holders will
not be subject to information reporting or back up withholding with respect to
dividends on Ordinary Shares or ADSs, unless payment is made through a paying
agent (or office) in the U.S. Non-U.S. Holders generally will be subject to
information reporting (and, under proposed regulations, generally effective
January 1, 1999, to back up withholding at a rate of 31%) with respect to the
payment within the U.S. of dividends on Ordinary Shares or ADSs, unless the
holder provides a taxpayer identification number, certifies to its foreign
status, or otherwise establishes an exemption.
U.S. Holders generally will be subject to information and back up withholding at
31% on proceeds paid from the disposition of Ordinary Shares or ADSs unless the
U.S. Holder provides an IRS Form W-9 or otherwise establishes an exemption.
Non-U.S. Holders generally will be subject to information reporting and back up
withholding at a rate of 31% on the payment to or through the U.S. office of a
broker, whether domestic or foreign, of proceeds from the disposition of
Ordinary Shares or ADSs, unless the holder provides a taxpayer identification
number, certifies to its foreign status or otherwise establishes an exemption.
Non-U.S. Holders will not be subject to information reporting or back up
withholding with respect to the payment by a foreign office of a broker of
proceeds from the disposition of Ordinary Shares or ADSs provided, however,
that, if the broker is a U.S. person or "U.S. related person," information
reporting (but not back up withholding) will apply, unless the broker has
documentary evidence in its records of the Non-U.S. Holder's foreign status, the
Non-U.S. Holder certifies to its foreign status under penalties of perjury or
otherwise establishes an exemption. For this purpose, a "U.S. related person" is
a foreign person who has one or more specific relationships with the U.S.
The amount of any back up withholding will be allowed as a credit against such
holder's U.S. federal income tax liability and may entitle such holder to a
refund, provided that the required information is furnished to the U.S. Internal
Revenue Service.
PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
The Company generally will be a passive foreign investment company ("PFIC") for
U.S. federal income tax purposes for any taxable year (i.e., the period from
January 1 to December 31) in which either (a) 75% or more of its gross income is
passive income or (b) on average for the taxable year, 50% or more of its assets
(measured by U.S. tax basis) produce or are held for the production of passive
A-4
income. The Internal Revenue Service has indicated that cash balances, even if
held as working capital, are considered to be passive assets that produce
passive income. As of the date of this Proxy Statement, the Company does not
believe it is a PFIC for U.S. federal income tax purposes, and, based on current
projections, the Company does not anticipate that it will become a PFIC. No
assurance can be given, however, that the Company will not become a PFIC in the
future.
The Company will monitor its status and, promptly following the end of any
taxable year, will notify shareholders if it believes that it is properly
classified as a PFIC for that taxable year, in which case it will comply with
the reporting requirements necessary for U.S. Holders to elect to treat the
Company as a "qualified electing fund" (a "QEF election"). If the Company were a
PFIC, U.S. Holders of Ordinary Shares or ADSs may suffer unfavourable U.S.
federal income tax consequences. This summary does not address the consequences
were the Company determined to be a PFIC. U.S. Holders should consult their own
tax advisers concerning the U.S. tax consequences of holding Ordinary Shares or
ADSs if the Company were considered to be a PFIC, including the consequences of
making a QEF election.
U.K. ESTATE AND INHERITANCE TAX
An Ordinary Share or ADS beneficially owned by an individual U.S. Holder who is
domiciled in the U.S. for the purposes of the Estate and Gift Tax Convention and
is not domiciled in the U.K. for such purposes is not subject to U.K.
inheritance tax on the individual's death or U.K. gift tax on a gift made by the
individual during his lifetime except where the Ordinary Share or ADS is part of
the business property of a U.K. "permanent establishment" of the individual or
pertains to a U.K. "fixed base" of an individual used for the performance of
independent personal services. The Estate and Gift Tax Convention generally
provides for tax paid in the U.K. to be credited against any tax payable in the
U.S. and for tax paid in the U.S. to be credited against any tax payable in the
U.K., based on priority rules set forth in that Convention, in a case where an
Ordinary Share or ADS is subject both to U.K. inheritance tax and to U.S.
federal gift or estate tax. There are special individual rules applying to
trusts. Ordinary Shares or ADSs held in a trust created by a U.S. Holder who is
not domiciled in the U.K. normally will fall outside the scope of U.K.
inheritance tax.
STAMP DUTY AND STAMP DUTY RESERVE TAX
Stamp duty reserve tax at the then-applicable rate arises upon the deposit with
the Depositary of the Ordinary Shares. The current rate of stamp duty reserve
tax is (pound)1.50 per (pound)100 (or part thereof). The stamp duty reserve tax
on the initial deposit of the Ordinary Shares represented by the ADSs was paid
by the Company. On the transfer of further Ordinary Shares to the Depositary,
stamp duty reserve tax will be payable by the Depositary and under the Deposit
Agreement, holders of ADRs must pay an amount equal to such tax to the
Depositary.
Provided that the instrument of transfer is not executed in the U.K. and remains
at all subsequent times outside the U.K., no U.K. stamp duty will be payable on
the acquisition or transfer of ADSs evidenced by ADRs, nor will an agreement to
transfer ADSs evidenced by ADRs give rise to a liability to stamp duty reserve
tax.
A transfer of Ordinary Shares by the Depositary or its nominee to the beneficial
owner of the relevant ADS or its nominee when the beneficial owner is not
transferring beneficial ownership will give rise to U.K. stamp duty at the rate
of 50p per transfer.
Purchasing Ordinary Shares, as opposed to ADSs, will normally give rise to a
charge to U.K. stamp duty or stamp duty reserve tax at the rate of 50p per
(pound)100 (or part) of the price payable for the Ordinary Shares. Stamp duty
and stamp duty reserve tax generally are the liabilities of the purchaser. Where
such Ordinary Shares are later transferred to the Depositary's nominee, further
stamp duty or stamp duty reserve tax will normally be payable at the rate of
(pound)1.50 per (pound)100 (or part thereof) of the value of the Ordinary Shares
at the time of transfer. However, where Ordinary Shares being acquired are
transferred directly to the Depositary's nominee, the only charge will generally
be the higher charge of L1.50 per (pound)100 (or part) of the price payable for
the Ordinary Shares so acquired.
A-5
The U.K. government has announced its intention to abolish both stamp duty and
stamp duty reserve tax in respect of the transfer of securities from a date
which has not yet been announced.
A-6
Attached is a copy of the "Report of the Remuneration Committee" which will be
set out in full in the Company's 1997 Annual Report to Shareholders on page 30
and incorporated by reference in the Company's 1998 Proxy Statement. A copy of
the Company's 1997 Annual Report will be sent to each Shareholder together with
the 1998 Proxy Statement. This arrangement was cleared with Mr. Roger Schwall of
the staff during the preparation of the Company's 1996 Proxy Statement.
REPORT OF THE REMUNERATION COMMITTEE
1. COMPLIANCE
The following report by the Remuneration Committee complies with Section A of
the Best Practice Provisions on remuneration committees as annexed to the
Listing Rules of the London Stock Exchange. Full consideration has also been
given to Section B of the Best Practice Provisions regarding remuneration
policy, service contracts and compensation, as annexed to the Listing Rules of
the London Stock Exchange. The Report is also in line with requirements under US
securities laws applicable to remuneration committee reports. Further
information on senior executive remuneration as required by US law can be found
in the proxy statement accompanying this document.
2. COMPOSITION
The members of the Committee are Mr Ames (Chairman), Mr Stenham and Mr Singer.
The Committee submits reports regularly to the full Board of Directors
concerning its activities and decisions. It has written terms of reference which
include the assessment and approval of the remuneration of the executive
Directors and senior executives. The Board determines the remuneration of the
non-executive Directors.
3. REMUNERATION POLICY FOR THE EXECUTIVE DIRECTORS AND SENIOR EXECUTIVES
a) General policy
The Group aims to attract, motivate and retain high calibre executives by
rewarding them with competitive salary and benefit packages which are linked to
both individual and business performance. These packages are based on the
Group's philosophy of emphasising pay-for-performance. The Group recognises the
pressures for short-term as well as long-term performance and seeks to provide
an appropriate balance. The Group uses a market-based four-tiered salary
structure for its executive employees. Each senior executive is assigned to one
of these four tiers based on his or her level of responsibility and position in
relation to others inside and outside the Group.
The Committee believes that the Group's current remuneration policy
appropriately aligns the Group's senior executive compensation with the
performance of the Group and shareholder interests and offers competitive
compensation for its executives. The Committee does not believe in compensating
for poor performance and does not reward unsatisfactory performance. In the case
of early termination of employment, it is the Committee's policy to seek to
mitigate any liability.
b) Remuneration components
There are four components to the senior executive remuneration package: base
salary and benefits, annual cash bonus, long-term incentive arrangements and
pension.
i) Base salary and benefits
Salaries are established by the Committee by reference to those prevailing in
the employment market generally for executives of comparable status,
responsibility and skills. To assist in determining the comparability of
positions and competitive market pricing, the Group uses executive compensation
salary surveys prepared by recognised independent compensation consulting firms
in the UK. The Group uses surveys that specifically cover the UK cable
communications industry, as well as surveys of comparable companies of similar
size in similar industries. In general, and because of the competitive nature of
the market, the Group seeks to set overall executive compensation levels to rank
between the mid-market and upper quartile of the survey data.
Salary reviews are generally determined by the Committee on an annual basis.
Adjustments in base salary, if any, occur after a formal appraisal process,
taking account of individual performance, changes in job responsibilities,
changes in the marketplace and general economic conditions in the UK.
Benefits for senior executives typically include a car (or a cash payment in
lieu thereof) and payment of its operating expenses and fuel, and life,
disability and health insurance. The benefits are not pensionable.
ii) Annual cash bonuses
The Group's Short-Term Incentive Plan (the "STIP") provides each senior
executive with an opportunity to earn an annual cash award (which is not
pensionable) based upon the achievement of short-term Group targets (ie, one
financial year) and individual contributions to Group results. These targets are
set by the Remuneration Committee at the commencement of each financial year.
Under the STIP, the senior executive has an award opportunity expressed as a
percentage of base salary. For executive Directors, the award is up to 25% of
salary for achieving target, rising to a maximum of 50% of salary if the Group
exceeds its STIP target. The 1997 STIP awards to the executive Directors
represented approximately 53.3% of the targeted bonus amount. The amount of the
STIP is based upon the extent to which the Group achieves certain specified
objectives. In 1997, the STIP objectives related to the achievement of targets
set in respect of growth, quality of operations (measured by customer
satisfaction surveys), operating cash flow and completion of the restructuring
programme. The objective is to have payout tied to Group performance, thereby
providing higher than targeted payouts for better than expected performance and
lower than targeted payouts for performance below the targeted levels.
iii) Long-term incentive arrangements
The Group operates the following long-term share and option incentive plans: The
Telewest Restricted Share Scheme and The Telewest Long Term Incentive Plan (each
of the aforesaid plans is designed to operate in conjunction with an Employee
Share Ownership Plan ("ESOP")); an Inland Revenue approved executive share
option scheme, the Telewest 1995 (No.1) Executive Share Option Scheme; an
unapproved executive share option scheme, the Telewest 1995 (No.2) Executive
Share Option Scheme; an Equity Participation Plan ("EPP"); an employee Share
Save scheme and a profit sharing scheme designed for Inland Revenue approval.
The Telewest Restricted Share Scheme was designed to replace a cash bonus scheme
in operation prior to the initial public offering in November 1994 and, for this
reason, exercise of the award is not subject to the satisfaction of a
performance condition. Under this scheme, awards were made of Telewest shares to
senior executives based on a percentage of salary and for no consideration. At
the time of the initial public offering Mr Davidson was granted an award over
475,183 Telewest shares. Awards generally vest over a three year period and, in
the case of Mr Davidson, the final vesting date was January 1998.
The Telewest Restricted Share Scheme has been replaced with a Long-Term
Incentive Plan ("LTIP") for share awards to executive Directors and senior
executives. It is intended that senior executives in the LTIP will not be
granted further options under the executive share option schemes (subject to
exceptions at the discretion of the Remuneration Committee). In future, options
under these schemes will generally be awarded to employees not participating in
the LTIP. Under the LTIP an senior executive will be awarded the provisional
right to receive, for no payment, a number of Telewest shares with a value
equating to a percentage of base salary. The shares will not vest unless certain
performance criteria, based on total shareholder return assessed over a three
year period, are met. The percentage of salary will be determined by the
Remuneration Committee and will be up to 100% of base salary for executive
Directors. The award is divided equally, with vesting of 50% depending on the
Company's total shareholder return ("TSR") meeting a performance condition
relating to the TSR of FT-SE 100 companies, and the remaining 50% depending on
the Company's TSR meeting a performance condition relating to the TSR of a group
of comparative companies (including cable, broadcasting and telecommunications
companies listed on the London Stock Exchange and cable companies operating in
the UK and listed on Nasdaq), in each case over a three year period. If the
Company's TSR is in the top quartile of the FT-SE 100 over that period, the
executive will receive 50% of the number of shares awarded to him; if the
Company's TSR is 50th place in the FT-SE 100, the executive will receive 12.5%
of the number of shares awarded to him; if below 50th place in the FT-SE 100,
the executive will receive nothing in respect of this portion of the award.
Similarly, if the Company's TSR is in the top quartile of the group of
comparative companies in that period, the executive will receive 50% of the
number of shares awarded to him; if the Company's TSR is at the median position
the executive will receive 12.5% of the number of shares awarded to him; if
below the median position, the executive will receive nothing in respect of that
portion of the award. In either test, a proportionate number of shares will be
received for intermediate positions. TSR in each case will be calculated by
reference to the cash flow generated by dividends, and capital appreciation on a
share purchased at the beginning and sold at the end of the period. If the
executive remains employed by the Group and depending on the achievement of the
performance criteria, at the end of the third year after the date of grant, 50%
of the vested award will be transferred to the employee and the balance will be
transferred at the end of the fourth year after the date of grant if the
employee remains so employed.
The executive share option schemes also form part of the Group's long-term
incentive arrangements. Options over Telewest shares are granted in phases,
generally on a one times salary basis up to a maximum of four times salary and
exercise is subject to a performance condition, namely out-performance of the
FT-SE 100 Index over any three-year period preceding exercise.
The option arrangements relating to Mr Davidson and Mr Burdick are set out on
page 28 of the Report of the Directors.
Under the STIP, employees may be due a cash bonus. The Remuneration Committeee
has provided that under the EPP an employee with two years service or at manager
level or above, can use up to 50% of the bonus payable to him (or such lower
percentage as the Remuneration Committee may determine) to acquire Telewest
shares ("bonus shares"). The employee must deposit the bonus shares with the
Trustee of the existing Telewest ESOP. In return, the employee is provisionally
allocated for no payment a matching number of Telewest shares. Provided the
bonus shares are retained for three years and the employee remains
employed by the Group for three years, the bonus and matching shares would
thereafter be released to the employee.
The Inland Revenue approved sharesave scheme, which enables the Company to grant
options to employees to purchase Telewest shares at a 20% discount to market
price is designed to incentivise employees. These options can be exercised only
with funds saved by employees over time in a qualified savings account.
4. PENSIONS
The Group contributes to personal pension schemes established by individual
employees. The actual contribution of the Group to such schemes depends on the
contribution made by the employee and may vary according to length of service.
Generally the Group contribution varies from 3% of an employee's salary to a
maximum of 12% for executive Directors or up to the Inland Revenue limits. In
addition, there is a money purchase pension scheme to which the Group
contributes an amount equal to the employee's contribution, such contributions
varying between 3% and 6%. The Group's contribution is based on the employee's
salary excluding benefits or bonuses.
5. EXECUTIVE DIRECTORS' AGREEMENTS
Mr Davidson's employment agreement has a one year notice period in accordance
with the recommendation of the Code. However, the Remuneration Committee
believes that at this stage of the Group's development it may be necessary to
offer executives contracts (such as Mr Burdick as discussed below) in excess of
one year to attract candidates of the appropriate calibre. In February 1997 Mr
Davidson's salary was increased to (pound)335,000 (effective from July 1996, to
reflect his confirmation as Chief Executive). For the financial year ended 1997,
Mr Davidson was awarded an annual bonus, pursuant to the STIP, of (pound)45,000.
Mr Burdick has an initial two year, fixed term agreement commencing 12 February
1997 and to continue thereafter until terminated by the Company giving no less
than 12 months' notice to expire on or at any time after the end of the initial
fixed term. The Remuneration Committee believes an initial notice period in
excess of one year is justified in view of his move from the US. Mr Burdick's
salary is (pound)225,000. For the financial year ended 1997, Mr Burdick was
awarded an annual bonus, pursuant to the STIP, of, (pound)25,000.
Mr Van Valkenburg has been seconded to the Company from US West International
for an indefinite period and such arrangement is terminable without advance
notice by either US West International or the Company. The Company has agreed to
reimburse US West International for Mr Van Valkenburg's salary and related
benefits during his secondment to the Company. His salary is (pound)[ ] per
annum. Mr Van Valkenburg is eligible for an annual bonus of up to 40% of salary
for achieving target. For the financial year ended 31st December 1997, Mr Van
Valkenburg was awarded such bonus based on US West International plan criteria
and the Company has reimbursed US West International for the period Mr Van
Valkenburg spent with the Company amounting to (pound)[ ] for the financial year
ending 31st December 1998 he will be subject to the rules of the Telewest STIP.
Under the current Remuneration Committee policy senior executives have
employment agreements with notice periods which range from three months to one
year, depending on their grade.
6. DIRECTORS' REMUNERATION
The aggregate compensation for the Directors is as follows:
1997 1996
(pound)'000 (pound)'000
- ----------------------------------------------------------------------
Base salary and benefits 1,002 530
Annual bonus - STIP 70 25
Pension 33 18
Compensation for loss of office - 539
- ----------------------------------------------------------------------
1,105 1,112
- ----------------------------------------------------------------------
Additional information required under US securities laws with respect to the
compensation of the Directors, the Chief Executive Officer and certain other
executives is set out under the caption "Executive Compensation" in the Proxy
Statement.
DIRECTORS' COMPENSATION
- ------------------------------------------------------------------------------------------------------------------------------------
Compensation Total emoluments
Annual/ for loss of excluding pension Pension
Salaries/fees Taxable Special bonus office contribution Contributions
Benefits
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
- ------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE:
S J Davidson 334 236 19 12 45 25 - - 398 273 24 13
A Michels - 100 - 68 - - - 539 - 707 - 5
D Van Valkenburg 62 - 170 - - - - - 232 - 3 -
C J Burdick 225 - 9 - 25 - - - 259 - 6 -
NON-EXECUTIVE
F Vierra - - - - - - - - - - - -
A G Ames - - - - - - - - - - - -
A W P Stenham 108 50 - - - - - - 108 50 - -
Lord Borrie QC 39 34 - - - - - - 39 34 - -
Lord Griffiths 36 30 - - - - - - 36 30 - -
J A Atterbury - - - - - - - - - - - -
J O Robbins - - - - - - - - - - - -
A N Singer - - - - - - - - - - - -
R W Shaner - - - - - - - - - - - -
- ------------------- ------- ------- -------- ------- ------- -------- ------- ------- ------- --------- ------- ------
804 450 198 80 70 25 0 539 1,072 1,094 33 18
- ------------------- ------- ------- -------- ------- ------- -------- ------- ------- ------- --------- ------- ------
Notes:
1 Certain amounts reflected in this table and elsewhere in this section
were paid in US dollars, but are represented in this table in pounds
sterling, based on an average exchange rate of $1.64 to (pound)1.00 for
the year ended 31 December 1997.
2 Mr Van Valkenburg's principal taxable benefits were the provision of
(pound)55,330 in respect of his income taxes, housing allowance of
(pound)74,057 and relocation and foreign service allowances of
(pound)27,527.
3 The independent non-executive Directors are paid (pound)1,000 for each
Board or Committee meeting they attend in addition to their fees. The
executive Directors' interests in Company share options and restricted
share scheme awards are set out on page 28 of the Report of the
Directors. No non-executive Director has any interests in Telewest
shares.
4 Mr Stenham received additional fees for 1997 for increased
responsibilities undertaken on behalf of the Company.
5 The pension contributions for the Directors were paid into their
private pension schemes. None of the Directors are members of the
Group's Money Purchase pension scheme.
7. REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS
The remuneration policy for non-executive Directors consists of fees for their
services in connection with Board and Board Committee meetings and, where
relevant, for additional services such as chairing a Committee. They are not
eligible for pension scheme membership and do not participate in any of the
Group's bonus, share option or other incentive schemes. Their remuneration is
approved by the Board of Directors.
A G AMES (Chairman)
A W P STENHAM
A N SINGER
The Remuneration Committee
TELEWEST COMMUNICATIONS PLC
ANNUAL GENERAL MEETING
PROXY CARD
I/We ......................................................... of...............
................................................................................
........................................................ being the holder(s) of
Ordinary Shares of 10 pence each in Telewest Communication plc (the "Company")
hereby appoint the Chairman of the meeting or
................................................................................
......of .......................................................................
.........................................................as my/our proxy to vote
in my/our name(s) and on my/our behalf at the Annual General Meeting of the
Company to be held on Friday, 8 May 1998 at 10.00 am at the Grocers' Hall,
Princes Street, London EC2R 8AD and at any adjournment thereof and I/we direct
the proxy to vote in respect of the resolutions to be proposed at the meeting as
indicated herein.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
- -------------------------------------------------------------------------------------- ----------- --------------
ORDINARY RESOLUTIONS FOR AGAINST
- -------------------------------------------------------------------------------------- ----------- --------------
1. To adopt the Directors' Report and Accounts for the year
ended 31 December 1997.
- -------------------------------------------------------------------------------------- ----------- --------------
2. To reappoint Mr F.A. Vierra as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
3. To reappoint Mr A.W.P. Stenham as a director. *
- -------------------------------------------------------------------------------------- ----------- --------------
4. To reappoint Mr A.G. Ames as a director.*
- -------------------------------------------------------------------------------------- ----------- --------------
5. To reappoint Mr R.W. Shaner as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
6. To reappoint Lord Borrie QC as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
7. To reappoint Mr C. J. Burdick as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
8. To reappoint Mr S. J. Davidson as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
9. To reappoint Lord Griffiths of Fforestfach as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
10. To reappoint Mr D.R. Van Valkenburg as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
11. To reappoint Mr O. Robbins as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
12. To reappoint Mr A.N. Singer as a director.
- -------------------------------------------------------------------------------------- ----------- --------------
13. To authorise the Directors to allot ordinary shares.
- -------------------------------------------------------------------------------------- ----------- --------------
SPECIAL RESOLUTION
- -------------------------------------------------------------------------------------- ----------- --------------
14. To disapply statutory pre-emption rights.
Note: The effectiveness of this Resolution is conditional upon
the approval of Resolution 13.
- -------------------------------------------------------------------------------------- ----------- --------------
ORDINARY RESOLUTION
- -------------------------------------------------------------------------------------- ----------- --------------
15. To appoint KPMG Audit plc as auditors and fix their remuneration.
- -------------------------------------------------------------------------------------- ----------- --------------
SPECIAL RESOLUTION
- -------------------------------------------------------------------------------------- ----------- --------------
16. To authorise the Company to purchase its own shares.
- -------------------------------------------------------------------------------------- ----------- --------------
NAME(S) OF SHAREHOLDER(S) IN BLOCK CAPITALS ....................................
DATED ..................... SIGNED ..........................................
Notes:
1. Please indicate how you wish your vote to be cast by inserting an "X"
in the appropriate box opposite each resolution.
2. A holder of Ordinary Shares entitled to attend and vote at the meeting
is also entitled to appoint one or more proxies to attend and vote
instead of the shareholder. A proxy need not be a shareholder of the
Company. In the event that you wish to appoint a person other than the
Chairman as your proxy, delete the reference to the Chairman and insert
the name and address of the person you wish to appoint in the space
provided.
3. This form of proxy must be executed by the appointor or his/her duly
constituted attorney or, if the appointor is a company, under its seal
or under the hand of its duly authorised officer or attorney or other
person authorised to sign.
4. In the case of joint holders of the Ordinary Shares the vote of the
senior who tenders a vote whether in person or by proxy shall be
accepted to the exclusion of the votes of the other joint holders and
for this purpose seniority shall be determined by the order in which
the names of the holders stand in the register of members.
5. Any alteration made to this Proxy Card should be initialled.
6. To be effective this Proxy Card and any authority under which it is
executed (or a notarially certified copy of each authority) must be
deposited at Lloyds Bank plc, Registrar's Department, The Causeway,
Worthing, West Sussex, England BN99 6DB not less than 48 hours before
the time of the Annual General Meeting. Completion and return of this
Proxy Card will not preclude a shareholder from attending and voting in
person at the meeting.
7. IF THIS PROXY CARD IS RETURNED DULY SIGNED BUT WITHOUT AN INDICATION AS
TO HOW THE PROXY MUST VOTE ON A PARTICULAR RESOLUTION, THE PROXY WILL
VOTE OR ABSTAIN AT HIS DISCRETION.
8. * indicates the members of the Remuneration Committee.
SECOND FOLD
BUSINESS REPLY SERVICE
Licence No. BR 3006
Lloyds Bank plc
Registrar's Department
The Causeway
Worthing
West Sussex
England
BN99 6DB
THIRD FOLD
AND TUCK IN OPPOSITE