SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
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14A-6(E)(2))
/X/ Definitive Proxy Statement
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/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SINCLAIR BROADCAST GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SINCLAIR BROADCAST GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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and 0-11.
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April 16, 2001
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Sinclair Broadcast Group, Inc. We will be holding the annual meeting on May 22,
2001 at Sinclair's corporate office, second floor, 10706 Beaver Dam Road,
Cockeysville, MD 21030 at 10:00 a.m., local time.
Enclosed with this letter is a notice of the annual meeting of
stockholders, a proxy statement, a proxy card and a return envelope. Also
enclosed with this letter is Sinclair Broadcast Group, Inc.'s annual report to
stockholders for the fiscal year ended December 31, 2000.
Your vote on these matters is very important. We urge you to review
carefully the enclosed materials and to return your proxy promptly.
You are cordially invited to attend the annual meeting, and you may vote in
person even though you have returned your card. Whether or not you plan to
attend the annual meeting, please sign and promptly return your proxy card in
the enclosed postage paid envelope. If you attend the meeting, you may vote in
person if you wish, even though you have previously returned your proxy.
Sincerely,
David D. Smith
Chairman of the Board
and Chief Executive Officer
YOUR VOTE IS IMPORTANT--PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SINCLAIR BROADCAST
GROUP, INC. ANNUAL MEETING.
SINCLAIR BROADCAST GROUP, INC.
10706 BEAVER DAM ROAD
COCKEYSVILLE, MD 21030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------------------------------------------
DATE: TUESDAY, MAY 22, 2001
TIME: 10:00 A.M. LOCAL TIME
PLACE: SINCLAIR CORPORATE OFFICE,
SECOND FLOOR
10706 BEAVER DAM RD
COCKEYSVILLE, MD 21030
-----------------------------------------------------------
YOUR VOTE AT THE ANNUAL MEETING IS VERY IMPORTANT TO US.
Dear Stockholders:
At the 2001 annual meeting, we will ask you to:
1. Elect seven directors, each for a one-year term.
2. Ratify the appointment by the board of directors of the firm of Arthur
Andersen LLP as independent public accountants of Sinclair for the
fiscal year ending December 31, 2001.
3. Transact such other business as may properly come before the annual
meeting.
You will be able to vote your shares at the annual meeting if you were a
stockholder of record at the close of business on April 9, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
April 16, 2001
TABLE OF CONTENTS
PAGE
----
INFORMATION ABOUT THE 2001 ANNUAL MEETING AND VOTING.......................................2
PROPOSAL 1: ELECTION OF DIRECTORS..........................................................4
PROPOSAL 2: RATIFICATION OF INDEPENDENT AUDITORS...........................................4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................5
DIRECTORS AND EXECUTIVE OFFICERS...........................................................7
AUDIT COMMITTEE, AUDIT FEES AND AUDITOR INDEPENDENCE......................................19
STOCKHOLDER PROPOSALS.....................................................................21
APPENDIX 1 - AUDIT COMMITTEE CHARTER......................................................22
i
SINCLAIR BROADCAST GROUP, INC.
10706 BEAVER DAM ROAD
COCKEYSVILLE, MARYLAND 21030
--------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2001
--------------
This proxy statement provides information that you should read before you
vote on the proposals that will be presented to you at the 2001 annual meeting
of Sinclair Broadcast Group, Inc. The 2001 annual meeting will be held on May
22, 2001 at Sinclair's corporate office, second floor, Cockeysville, MD 21030 at
10:00 a.m. local time.
This proxy statement provides detailed information about the annual
meeting, the proposals you will be asked to vote on at the annual meeting, and
other relevant information. The board of directors of Sinclair is soliciting
these proxies.
At the annual meeting, you will be asked to vote on the following
proposals:
1. Elect seven directors, each for a one-year term,
2. Ratify the appointment by the board of directors of the firm of Arthur
Andersen LLP as independent public accountants of Sinclair for the
fiscal year ending December 31, 2001, and
3. Such other matters as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE TO ELECT THE
BOARD'S NOMINEES FOR DIRECTOR AND TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN
LLP.
On or about April 20, 2001, we began mailing this proxy statement to people
who, according to our records, owned common shares or beneficial interests in
Sinclair as of the close of business on April 9, 2001. We have mailed with the
proxy statement a copy of Sinclair's annual report to stockholders for the
fiscal year ended December 31, 2000.
1
INFORMATION ABOUT THE 2001 ANNUAL MEETING AND VOTING
THE ANNUAL MEETING
The annual meeting will be held on May 22, 2001 at Sinclair's corporate
office, second floor, 10706 Beaver Dam Road, Cockeysville, MD 21030 at 10:00
a.m. local time.
THIS PROXY SOLICITATION
We are sending you this proxy statement because Sinclair's board of
directors is seeking a proxy to vote your shares at the annual meeting. This
proxy statement is intended to assist you in deciding how to vote your shares.
Sinclair is paying the cost of requesting these proxies. Sinclair's
directors, officers and employees may request proxies in person or by telephone,
mail, telecopy or letter. Sinclair will reimburse brokers and other nominees
their reasonable out-of-pocket expenses for forwarding proxy materials to
beneficial owners of our common shares.
VOTING YOUR SHARES
You may vote your shares at the annual meeting either in person or by
proxy. To vote in person, you must attend the annual meeting and obtain and
submit a ballot. Ballots for voting in person will be available at the annual
meeting. To vote by proxy, you must complete and return the enclosed proxy card
in time to be received by us before the annual meeting. By completing and
returning the proxy card, you will be directing the persons designated on the
proxy card to vote your shares at the annual meeting in accordance with the
instructions you give on the proxy card.
If you hold your shares with a broker and you do not tell your broker how
to vote, your broker has the authority to vote on both proposals.
IF YOU DECIDE TO VOTE BY PROXY, YOUR PROXY CARD WILL BE VALID ONLY IF YOU
SIGN, DATE AND RETURN IT BEFORE THE ANNUAL MEETING SCHEDULED TO BE HELD ON MAY
22, 2001.
If you complete the proxy card, except for the voting instructions, then
your shares will be voted FOR each of the director nominees identified on the
proxy card, and FOR ratification of the selection of Arthur Andersen LLP as the
independent accountants of Sinclair for the 2001 fiscal year.
We have described in this proxy statement all the proposals that we expect
will be made at the annual meeting. If we or a stockholder properly present any
other proposal to the meeting, we will use your proxy to vote your shares on the
proposal in our best judgment.
REVOKING YOUR PROXY
If you decide to change your vote, you may revoke your proxy at any time
before it is voted. You may revoke your proxy one of three ways:
o You may notify the Secretary of Sinclair in writing that you wish to
revoke your proxy, at the following address: Sinclair Broadcast Group,
Inc., 10706 Beaver Dam Road, Cockeysville, Maryland, 21030, Attention:
J. Duncan Smith, Vice President and Secretary. Your notice must be
received by us before the time of the annual meeting.
o You may submit a proxy dated later than your original proxy.
o You may attend the annual meeting and vote. Merely attending the
annual meeting will not by itself revoke a proxy; you must obtain a
ballot and vote your shares to revoke the proxy.
2
VOTE REQUIRED BY APPROVAL
SHARES ENTITLED TO VOTE. On April 9, 2001 (the record date), the following
shares were issued and outstanding and had the votes indicated:
o 39,595,877 shares of class A common stock, each of which is entitled
to one vote on each of the proposals, and
o 44,838,828 shares of class B common stock, each of which is entitled
to ten votes on each of the proposals.
QUORUM. A "quorum" must be present at the annual meeting in order to
transact business. A quorum will be present if 243,992,079 votes are represented
at the annual meeting, either in person (by the stockholders) or by proxy. If a
quorum is not present, a vote cannot occur. In deciding whether a quorum is
present, abstentions will be counted as shares that are represented at the
annual meeting.
VOTES REQUIRED. The votes required on each of the proposals are as follows:
Proposal 1: Election of Seven Directors The seven nominees for director who receive the most votes will be
elected. If you indicate "withhold authority to vote" for a
particular nominee on your proxy card, your vote will not count
either for or against the nominee.
Proposal 2: Ratification of Selection The affirmative vote of a majority of the votes cast at the annual
of Independent Accountant meeting is required to ratify the selection of independent
accountants. If you abstain from voting, your abstention will not
count as a vote cast for or against the proposal.
ADDITIONAL INFORMATION
We are mailing our annual report to stockholders for the fiscal year ended
December 31, 2000, including consolidated financial statements, to all
stockholders entitled to vote at the annual meeting together with this proxy
statement. The annual report does not constitute a part of the proxy
solicitation material. The annual report tells you how to get additional
information about Sinclair.
3
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees for election to the board of directors are:
David D. Smith
Frederick G. Smith
J. Duncan Smith
Robert E. Smith
Basil A. Thomas
Lawrence E. McCanna
Daniel C. Keith
Each director will be elected to serve for a one-year term, unless he
resigns or is removed before his term expires, or until his replacement is
elected and qualified. Each of the first six nominees listed above is currently
a member of the board of directors and each of them, and Mr. Keith has consented
to serve as a director if re-elected. More detailed information about each of
the nominees is available in the section of this proxy statement titled
"Directors and Executive Officers," which begins on page 7.
If any of the nominees cannot serve for any reason (which is not
anticipated), the board of directors may designate a substitute nominee or
nominees. If a substitute is nominated, we will vote all valid proxies for the
election of the substitute nominee or nominees. Alternatively, the board of
directors may also decide to leave the board seat or seats open until a suitable
candidate or candidates are located, or it may decide to reduce the size of the
board.
The board of directors has established the size of the board at seven
members. Proxies for the annual meeting may not be voted for more than seven
nominees.
Messrs. David, Frederick, Duncan and Robert Smith (collectively, the
controlling stockholders) have entered into a stockholders' agreement pursuant
to which they have agreed to vote for each other as candidates for election to
the board of directors until June 12, 2005.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES TO THE
BOARD OF DIRECTORS.
PROPOSAL 2: RATIFICATION OF INDEPENDENT AUDITORS
The board of directors, with the concurrence of Sinclair's audit committee,
has selected Arthur Andersen LLP as its independent auditors for 2001. If the
stockholders do not ratify the appointment of Arthur Andersen LLP, the board of
directors will reevaluate the engagement of the independent auditors. Even if
the appointment is ratified, the board of directors in its discretion may
nevertheless appoint another firm of independent auditors at any time during the
year if the board of directors determines that such a change would be in the
best interests of the shareholders and Sinclair.
A representative of Arthur Andersen LLP is expected to attend the annual
meeting. The Arthur Andersen representative will have the opportunity to make a
statement if he or she desires to do so and will be able to respond to
appropriate questions from shareholders. Additional information regarding fees
paid to Arthur Andersen LLP is available in the section of this proxy statement
titled "Audit Committee, Audit Fees and Auditor Independence."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There were 84,434,705 shares of common stock of Sinclair issued and
outstanding on April 6, 2001 consisting of 39,595,877 shares of class A common
stock and 44,838,828 shares of class B common stock. The following table shows
how many shares were owned by the following categories of persons as of that
date:
o persons who own more than 5% of the shares;
o each director and each officer described on the "Summary Compensation
Table" on page 12;
o all directors and executive officers as a group.
SHARES OF CLASS B SHARES OF CLASS A
COMMON STOCK COMMON STOCK PERCENT OF
BENEFICIALLY OWNED BENEFICIALLY OWNED TOTAL
--------------------- -------------------------- VOTING
NAME NUMBER PERCENT NUMBER PERCENT (a) POWER (b)
---- ------ ------- -------- ------------ ----------
David D. Smith (c) (d)............. 12,227,393 27.3% 12,333,514 23.8% 25.1%
Frederick G. Smith (c) (e)......... 9,878,553 22.0% 10,698,692 21.6% 20.4%
J. Duncan Smith (c) (f)............ 12,281,431 27.4% 12,282,485 23.7% 25.2%
Robert E. Smith (c) (g)............ 10,130,503 22.6% 10,637,809 21.4% 20.9%
David B. Amy (h)................... 158,139 * *
Barry P. Drake (i)................. 138,871 * *
Basil A. Thomas.................... 4,000 * *
Lawrence McCanna................... 600 * *
Daniel C. Keith.................... -- * *
Barry Baker (j)
28 Merry Hill Ct.
Baltimore, MD 21208............ 2,764,870 7.0% *
Citigroup, Inc. (k)
399 Park Ave.
New York, NY 02109.............. 4,152,458 10.5% *
T. Rowe Price Associates, Inc. (l)
100 E. Pratt St
Baltimore, MD 21202............. 3,746,342 9.5% *
Neuberger Berman, Inc. (m)
605 Third Avenue
New York, NY 10158.............. 6,157,900 15.6% 1.3%
Schroder Investment Management
Group (n)
31 Gresham Street
London, EC2V 7QA
United Kingdom.................. 2,032,300 5.1% *
Westfield Capital Management
Co., Inc. (o)
One Financial Center, 23rd fl.
Boston, MA 02111............... 3,476,581 8.8% *
All directors and executive officers
as a group (9 persons) (p)...... 44,517,880 99.3% 46,254,110 55.0% 91.6%
- ----------
* Less than 1%
(a) Percent of class A common stock beneficially owned by an individual (or
group) is calculated by taking the number of shares of class A common stock
beneficially owned by an individual (or group) divided by the number of
shares of class A common stock outstanding plus only shares of class A
common stock equivalents held by an individual (or group), including class
B common stock and exercisable stock options.
5
(b) Holders of class A common stock are entitled to one vote per share and
holders of class B common stock are entitled to ten votes per share except
for votes relating to "going private" and certain other transactions. The
class A common stock and the class B common stock vote altogether as a
single class except as otherwise may be required by Maryland law on all
matters presented for a vote. Holders of class B common stock may at any
time convert their shares into the same number of shares of class A common
stock.
(c) Shares of class A common stock beneficially owned includes both shares of
class A common stock and class B common stock beneficially owned and
aggregated, assuming each share of class B common stock has been converted
into one share of class A common stock.
(d) Includes 75,000 shares of class A common stock that may be acquired upon
exercise of options.
(e) Includes 608,558 shares held in irrevocable trusts established by Frederick
G. Smith for the benefit of his children and as to which Mr. Smith has the
power to acquire by substitution of trust property. Absent such
substitution, Mr. Smith would have no power to vote or dispose of the
shares.
(f) Includes 552,000 shares held in irrevocable trusts established by J. Duncan
Smith for the benefit of his children and as to which Mr. Smith has the
power to acquire by substitution of trust property. Absent such
substitution, Mr. Smith would have no power to vote or dispose of the
shares.
(g) Includes 1,117,639 shares held in irrevocable trusts established by Robert
E. Smith for the benefit of his children and as to which Mr. Smith has the
power to acquire by substitution of trust property. Absent such
substitution, Mr. Smith would have no power to vote or dispose of the
shares.
(h) Includes 151,250 shares of class A common stock that may be acquired upon
exercise of options.
(i) Includes 112,500 shares of class A common stock that may be acquired upon
exercise of options.
(j) Mr. Baker's 2,764,870 shares of class A common stock may be acquired upon
the exercise of options.
(k) As set forth in the schedule 13G filed by Citigroup, Inc. with the SEC on
February 15, 2001, Citigroup Inc., through Salomon Smith Barney Holdings,
Inc., its wholly-owned subsidiary, holds 4,152,458 shares of class A common
stock. Solomon Smith Barney Holdings, Inc. owns 4,002,458 shares and
Citigroup, Inc. owns 150,000 shares.
(l) As set forth in the schedule 13G filed by T. Rowe Price Associates, Inc.
with the SEC on February 12, 2001, T. Rowe Price Associates, Inc. is deemed
to be the beneficial owner of 3,746,342 shares and has sole voting
discretion with respect to 723,344 of those shares as a result of acting as
investment advisor to various investment companies.
(m) As set forth in the Schedule 13G filed by Neuberger Berman, Inc. with the
SEC on February 6, 2001, Neuberger Berman Inc., through its wholly-owned
subsidiaries Neuberger Berman LLC and Neuberger Berman Management Inc., is
deemed to be the beneficial owner of 6,157,900 shares of class A common
stock and has sole voting discretion with respect to 4,838,150 of those
shares. Neuberger Berman, LLC acts as an investment advisor and
broker/dealer with discretion for individual securities for various
unrelated clients. Neuberger Berman Management, Inc. acts as investment
advisor to a series of public mutual funds.
(n) As set forth in the schedule 13F filed by Schroder Investment Management
Group with the SEC on February 14, 2001, Schroder Investment Management
Group is deemed to be the beneficial owner of 2,032,300 shares.
(o) As set forth in the schedule 13F filed by Westfield Capital Management Co.,
Inc. with the SEC on January 12, 2001, Westfield Capital Management Co.,
Inc. is deemed to be the beneficial owner of 3,476,581 shares.
(p) Includes 338,750 shares of Class A common stock that may be acquired upon
exercise of options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
Exchange Act) requires our officers (as defined in the SEC regulations) and
directors, and persons who own more than ten percent of a registered class of
the our equity securities, to file reports of ownership and changes in ownership
with the SEC. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file.
6
Based solely on a review of copies of such reports of ownership furnished
to us, or written representations that no forms were necessary, we believe that
during the past fiscal year our officers, directors and greater than ten percent
beneficial owners complied with all applicable filing requirements.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information relating to our executive officers,
directors and nominees, and certain key employees.
NAME AGE TITLE
---- --- -----
David D. Smith............................... 50 President, Chief Executive Officer, Director and Chairman
of the Board
Frederick G. Smith........................... 51 Vice President and Director
J. Duncan Smith.............................. 47 Vice President, Secretary and Director
David B. Amy................................. 48 Executive Vice President and Chief Financial Officer
Lawrence McCanna............................. 57 Director
Basil A. Thomas.............................. 85 Director
Robert E. Smith.............................. 37 Director
Daniel C. Keith.............................. 46 Director
Barry Drake.................................. 49 Chief Executive Officer of Sinclair Communications, Inc.
Michael Granados............................. 46 Regional Director
Steven M. Marks.............................. 44 Regional Director
Craig Millar................................. 52 Regional Director
Richard D. Singer............................ 57 Regional Director
Jeffrey W. Sleete............................ 46 Regional Sales Counselor
David R. Bochenek............................ 38 Corporate Controller
M. William Butler............................ 48 Vice President / Group Programming and Promotions
Michael Draman............................... 52 Vice President / TV Sales and Marketing
Barry M. Faber............................... 39 Vice President / General Counsel
Mark E. Hyman................................ 43 Vice President / Corporate Relations
Leonard Ostroff.............................. 33 Chief Operating Officer of Sinclair Ventures, Inc.
Nat Ostroff.................................. 60 Vice President / New Technology
Delbert R. Parks III......................... 49 Vice President / Operations and Engineering
Lucy A. Rutishauser.......................... 36 Treasurer
Robin A. Smith............................... 44 Vice President / Finance
Donald H. Thompson........................... 34 Vice President / Human Resources
Members of the board of directors are elected for one-year terms and until
their successors are duly elected and qualified. Executive officers are
appointed by the board of directors annually to serve for one-year terms and
until their successors are duly appointed and qualified.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The board of directors held a total of six meetings during 2000, and
executed seven unanimous consents in lieu of meetings. Each director attended
100% of the aggregate number of meetings of the board of directors and all
committees of the board of directors on which he served.
The board of directors currently consists of six members. The committees of
the board of directors include an audit committee and a compensation committee.
o AUDIT COMMITTEE. The members of the audit committee are Messrs. Thomas
and McCanna. Messrs. Thomas and McCanna meet the independence criteria
established by the National Association of Securities Dealers, Inc.
The report of the audit committee describes the scope of authority of
the committee and may be found on page 19. The audit committee's
charter is included as Appendix 1.
Newly effective rules of the NASDAQ require that audit committees have
three members as of June 2001. Each of these members must be
independent directors provided that one non-independent director may
7
serve on the audit committee as long as the board of directors
determines this is in the best interest of Sinclair. In addition, the
board is required to disclose its reasons for this determination in
our proxy statement.
If Mr. Keith is elected to the board of directors he will be appointed
to serve on the audit committee. Pursuant to the NASDAQ rules,
although Mr. Keith is not related to the Smith family and does not
perform services for Sinclair, he is not treated as independent. His
characterization as non-independent stems from the investment and
management services Mr. Keith provides to three of the Smith brothers
and certain corporations owned by one or more of them.
Notwithstanding Mr. Keith's failure to qualify as an independent
director under the rules of NASDAQ, the board of directors has
determined that it is in the best interest of Sinclair that Mr. Keith
serve on both the board and the audit committee. This determination
was based on the personal knowledge that the board has with regard to
Mr. Keith's financial abilities, judgement and integrity, based in
large part on his past provision of services to three members of the
current board of directors. Mr. Keith, who has been advising clients
for more than 20 years, has extensive business experience, a
comprehensive understanding of financial issues and experience serving
as a member of several other local boards of directors.
o COMPENSATION AND STOCK OPTION COMMITTEE. The members of the
compensation and stock option committee are Messrs. Thomas and
McCanna. This committee is charged with the responsibility for setting
executive compensation, reviewing certain compensation programs and
making recommendations to the board of directors in the interval
between meetings. The compensation and stock option committee formally
met 18 times during the year ended December 31, 2000.
DIRECTOR AND OFFICER PROFILES
David D. Smith has served as President and Chief Executive Officer since
1998 and as Chairman of the Board since September 1990. Prior to that, he served
as General Manager of WCWB, Pittsburgh, Pennsylvania, from 1984, and assumed the
financial and engineering responsibility for Sinclair. In 1980, Mr. Smith
founded Comark Television, Inc., which applied for and was granted the permit
for WPXT-TV in Portland, Maine and which purchased WDSI-TV in Chattanooga,
Tennessee. WPXT-TV was sold one year after construction and WDSI-TV was sold two
years after its acquisition. From 1978 to 1986, Mr. Smith co-founded and served
as an officer and director of Comark Communications, Inc., a company engaged in
the manufacture of high power transmitters for UHF television stations. David D.
Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith are brothers.
David Smith is currently a member of the board of directors of Sinclair
Ventures, Inc., Acrodyne Communications, Inc., G1440, Inc., Summa Holdings, Ltd.
and KDSM, Inc.
Frederick G. Smith has served as Vice President of Sinclair since 1990 and
as a Director since 1986. Prior to joining Sinclair in 1990, Mr. Smith was an
oral and maxillofacial surgeon engaged in private practice and was employed by
Frederick G. Smith, M.S., D.D.S., P.A., a professional corporation of which Mr.
Smith was the sole officer, director and stockholder. Mr. Smith is currently a
member of the board of directors of Sinclair Ventures, Inc., the Freven
Foundation and Gerstell Academy.
J. Duncan Smith has served as Vice President, Secretary and as a Director
of Sinclair since 1988. Prior to that, he worked for Comark Communications, Inc.
installing UHF transmitters. In addition, he also worked extensively on the
construction of WCWB in Pittsburgh, WTTE in Columbus, WIIB in Bloomington and
WTTA in St. Petersburg, the renovation of the new studio, offices and news
facility for WBFF in Baltimore and construction of the new Sinclair headquarters
building in Cockeysville, Md. J. Duncan Smith is currently a member of the board
of directors of Sinclair Ventures, Inc.
David B. Amy has served as Executive Vice President and Chief Financial
Officer (CFO) since March 2001. Prior to that, he served as Executive Vice
President since September 1999 and as Vice President and CFO from September 1998
to September 1999. Prior to that, he served as CFO since 1994. In addition, he
serves as Secretary of SCI, the Sinclair subsidiary that owns and operates the
broadcasting operations. Prior to his appointment as Vice President and CFO, Mr.
Amy served as the Corporate Controller and the Chief Accounting Officer of
Sinclair beginning in 1986. Mr. Amy has over 17 years of broadcast experience,
having joined Sinclair as a Business Manager for WCWB-TV in Pittsburgh. Mr. Amy
received his MBA degree from the University of Pittsburgh in 1981. Mr. Amy is
currently a member of the board of directors of Acrodyne Communications, Inc.,
G1440, Inc., and KDSM, Inc., and an advisor to Allegiance Capital, L.P.
8
Lawrence E. McCanna has served as a Director of Sinclair since July 1995.
Mr. McCanna has been a shareholder of the accounting firm of Gross, Mendelsohn &
Associates, P.A. since 1972 and has served as its managing director since 1982.
Mr. McCanna has served on various committees of the Maryland Association of
Certified Public Accountants and was chairman of the Management of the
Accounting Practice Committee. He is also a former member of the Management of
an Accounting Practice Committee of the American Institute of Certified Public
Accountants. Mr. McCanna is a former member of the board of directors of
Maryland Special Olympics.
Basil A. Thomas has served as a Director of Sinclair since November 1993.
He is of counsel to the Baltimore law firm of Thomas & Libowitz, P.A. and has
been in the private practice of law since 1983. From 1961 to 1968, Judge Thomas
served as an Associate Judge on the Municipal Court of Baltimore City and, from
1968 to 1983, he served as an Associate Judge of the Supreme Bench of Baltimore
City. Judge Thomas is a trustee of the University of Baltimore and a member of
the American Bar Association and the Maryland State Bar Association. Judge
Thomas attended the College of William & Mary and received his L.L.B. from the
University of Baltimore. Judge Thomas is the father of Steven A. Thomas, a
senior attorney and founder of Thomas & Libowitz, counsel to Sinclair.
Robert E. Smith has served as a Director of Sinclair since 1995. He served
as Vice President and Treasurer of Sinclair from 1988 to June 1998, at which
time he resigned from his position as Vice President and Treasurer. Prior to
that time, he assisted in the construction of WTTE-TV and also worked for Comark
Communications, Inc. installing UHF transmitters. Mr. Smith is currently a
member of the board of directors of Sinclair Ventures, Inc., Nextgen Foundation
Charitable Trust and Gerstell Academy.
Daniel C. Keith is the President and Founder of the Cavanaugh Group, Inc.,
a Baltimore based investment advisory firm founded in October 1995. Prior to
establishing the Cavanaugh Group, Inc., Mr. Keith was Vice President, Senior
Portfolio Manager, and Director of the Investment Management division of a local
financial services company since 1985. During this time, he served as chairman
of the Investment Advisory Committee and was a member of the Board of Directors.
Mr. Keith has been advising clients since 1979 and is currently a member of
several local boards as well as charitable foundations.
Barry Drake has served as Chief Executive Officer of SCI since June 1999.
Prior to that time he served as Chief Operating Officer of SCI Radio since 1996
and Chief Operating Officer of Keymarket Radio Division of River City since July
1995. Prior to that time, he was President and Chief Operating Officer of
Keymarket since 1988. From 1985 through 1988, Mr. Drake performed the duties of
the President of each of the Keymarket broadcasting entities, with
responsibility for three stations located in Houston, St. Louis and Detroit. Mr.
Drake is a graduate of Penn State University. On February 27, 2001, Mr. Drake
announced his resignation as Chief Executive Officer of SCI, which will take
effect May 31, 2001.
Michael Granados has served as a Regional Director of SCI since July 1996.
As a Regional Director, Mr. Granados is responsible for the Sacramento, Las
Vegas, San Antonio, Oklahoma City, Kansas City, Mobile/Pensacola, Milwaukee and
Tallahassee markets. Prior to July 1996, Mr. Granados has served as the General
Manager of WTTV-TV. Before 1996 and while working for River City, Mr. Granados
served as the General Sales Manager of KABB from 1989 to 1993 and the Station
Manager and Director of Sales of WTTV from 1993 to 1994.
Steven M. Marks has served as Regional Director of SCI since October 1994.
As Regional Director, Mr. Marks is responsible for the Baltimore, Tampa,
Syracuse, Norfolk, Richmond, Buffalo and Rochester markets. Prior to his
appointment as Regional Director, Mr. Marks served as General Manager for WBFF
since July 1991. From 1986 until joining WBFF in 1991, Mr. Marks served as
General Sales Manager at WTTE-TV. Prior to that time, he was national sales
manager for WFLX-TV in West Palm Beach, Florida.
Craig Millar has served as a Regional Director since July 1998. As Regional
Director, Mr. Millar is responsible for the Raleigh, Ashville/Greenville,
Greensboro, Charleston (South Carolina), Tri-Cities, Des Moines, Cape/Paducah,
Cedar Rapids, Peoria, Nashville, Birmingham, Indianapolis, Lexington, Cincinnati
and Dayton markets. Prior to his appointment as Regional Director, Mr. Millar
served as President and General Manager of KTBC/KVC-TV in Austin, Texas since
April 1995. Prior to that Mr. Millar was President and General Manager WBRC-TV
in Birmingham, Alabama since March 1992. Prior to that Mr. Millar was Vice
President of Sales for Great American Broadcasting since August 1989. Prior to
that Mr. Millar served in various sales management and sales positions in both
television and radio.
9
Richard D. Singer has served as Regional Director of SCI since November
1999. As Regional Director, Mr. Singer is responsible for the Pittsburgh,
Madison and Charleston (West Virginia) markets. Prior to joining Sinclair, Mr.
Singer served as Director of Sales for WAMI-TV in Miami in addition to his
duties as Vice President of National Sales for USA Broadcasting. Prior to that,
Mr. Singer served as Director of Sales and Marketing for Knight-Ridder Video and
was a General Partner in Regency Communications LP, a group owner of small
market radio stations. Prior to that, Mr. Singer served in various management
positions with Telerep, including Vice President and General Sales Manager in
New York and Vice President East Coast Offices in Philadelphia.
Jeffrey W. Sleete has served as Regional Sales Counselor for SCI since
November 1999. Mr. Sleete also serves as acting Regional Director and is
responsible for the Minneapolis and Flint markets. Prior to joining SCI
Televison in November 1999, Mr. Sleete had been the VP of Sales and Marketing
for SCI Radio since 1996. Prior to joining Sinclair, he was a General Manager in
the Detroit, Houston and West Palm Beach markets since 1985, and held various
other positions in these markets since 1975.
David R. Bochenek has served as Corporate Controller since March 2000.
Prior to jointing Sinclair, Mr. Bochenek was Vice President, Corporate
Controller for Prime Retail, Inc. since 1993. From 1990 to 1993, Mr. Bochenek
served as Assistant Vice President for MNC Financial, Inc. and prior to that
held various positions in the audit department of Ernst & Young, LLP since 1983.
Mr. Bochenek received his Bachelor of Business Administration in Accounting and
Master of Science in Finance from Loyola College of Maryland. Mr. Bochenek is a
member of the American Institute of Certified Public Accountants and the
Maryland Association of Certified Public Accountants.
M. William Butler has served as Vice President/Group Programming and
Promotions of SCI since July 1999 and prior to that as Vice President/Group
Program Director, SCI since 1997. From 1995 to 1997, Mr. Butler served as
Director of Programming at KCAL, the Walt Disney Company station in Los Angeles,
California. From 1991 to 1995, he was Director of Marketing and Programming at
WTXF in Philadelphia, Pennsylvania and prior to that he held the same position
at WLVI in Boston, Massachusetts. Mr. Butler attended the Graduate Business
School of the University of Cincinnati from 1975 to 1976.
Michael Draman has served as Vice President/TV Sales and Marketing of SCI
since 1997. Mr. Draman also serves as acting Regional Director and is
responsible for the Springfield (Massachusetts), Portland, Springfield
(Illinois) and Champaign markets. From 1995 until joining Sinclair, Mr. Draman
served as Vice President of Revenue Development for New World Television. From
1983 to 1995, he was Director of Sales and Marketing for WSVN-TV in Miami,
Florida. Mr. Draman attended The American University and The Harvard Business
School and served with the U.S. Marine Corps in Vietnam.
Barry M. Faber has served as Vice President/General Counsel of SCI since
August 1999 and prior to that as Associate General Counsel from 1996 to 1999.
Prior to that time, he was associated with the law firm of Fried, Frank, Harris,
Shiver, & Jacobson in Washington, D.C. Mr. Faber is a graduate of the University
of Virginia and the University of Virginia School of Law.
Mark E. Hyman has served as Vice President/Corporate Relations since July
1999 and prior to that as Director of Government Relations since February 1997.
Prior to joining Sinclair, he was a career Federal employee as an Intelligence
Officer, a foreign treaty weapons inspector with the U.S. On-Site Inspector
Agency and a Congressional Fellow. A graduate of the U.S. Naval Academy and a
military veteran, he was a Naval officer and a Naval Reservist. He most recently
served as the Executive Officer of the U.S. National Reconnaissance Office. He
has been awarded several military and Intelligence Community awards including
four CIA National Intelligence Meritorious Citations.
Leonard Ostroff has served as Chief Operating Officer of Sinclair Ventures,
Inc., a wholly owned subsidiary of Sinclair Broadcast Group, Inc., since August
1999. From 1994 to 1999, Mr. Ostroff served as Vice President of Information
Systems for Prudential Securities, Inc., a global securities firm based in New
York City. From 1991 to 1994, Mr. Ostroff served as a Senior Imaging Consultant
at Viable Information Processing Systems, a systems consulting firm in Towson,
Maryland. From 1989 to 1991, Mr. Ostroff worked for Andersen Consulting in New
York City as a Senior Consultant. He currently serves on the boards of Sinclair
Ventures, Inc. and G1440, Inc.
Nat Ostroff has served as Vice President/New Technology since joining
Sinclair in January 1996. From 1984 until joining Sinclair, he was the President
and CEO of Comark Communications, Inc., a leading manufacturer of UHF
transmission equipment. While at Comark, Mr. Ostroff was nominated and awarded a
Prime Time Emmy Award for outstanding engineering achievement for the
development of new UHF transmitter technologies in
10
1993. In 1968, Mr. Ostroff founded Acrodyne Industries Inc., a manufacturer of
TV transmitters and a public company and served as its first President and CEO.
Mr. Ostroff holds a BSEE degree from Drexel University and an MEEE degree from
New York University. He is a member of several industry organizations, including
AFCCE, IEEE and SBE. Mr. Ostroff also serves as Chief Executive Officer and
Chairman of the Board for Acrodyne Communications, Inc.
Delbert R. Parks III has served as Vice President/Operations and
Engineering of SCI since 1996. Prior to that time, he was Director of Operations
and Engineering for WBFF-TV and Sinclair since 1985, and has been with Sinclair
for 29 years. He is responsible for planning, organizing and implementing
operational and engineering policies and strategies as they relate to television
operations, web activity, information management systems, and infrastructure.
Mr. Parks is a member of the Society of Motion Picture and Television Engineers
and the Society of Broadcast Engineers. Mr. Parks is also a retired Lieutenant
Colonel who has held various commands during his 26-year reserve career.
Lucy A. Rutishauser has served as Treasurer since March 2001. Prior to that
time, she served as Assistant Treasurer/Corporate Finance since September 1999
and as Assistant Treasurer since December 1998. From 1990 to 1996, Ms.
Rutishauser was the Assistant Treasurer for Treasure Chest Advertising Company
and Integrated Health Services, Inc. Prior to that, she held various treasury
positions with Laura Ashley, Inc. and Black and Decker Corporation. Ms.
Rutishauser graduated magna cum laude from Towson University and received her
M.B.A., with honors from the University of Baltimore. Ms. Rutishauser is a
member of the National Institute of Investor Relations and the Association of
Finance Professionals and has served two terms on the Board of Directors for the
Mid-Atlantic Treasury Management Association.
Robin A. Smith has served as Vice President/Finance of SCI since August
1999 and prior to that as Chief Financial Officer, SCI Radio since June 1996.
From 1993 until joining Sinclair, Ms. Smith served as Vice President and Chief
Financial Officer of the Park Lane Group of Menlo Park, California, which owned
and operated small market radio stations. From 1982 to 1993, she served as Vice
President and Treasurer of Edens Broadcasting, Inc. in Phoenix, Arizona, which
owns and operates radio stations in major markets. Ms. Smith is a graduate of
Arizona State University and is a Certified Public Accountant.
Donald H. Thompson has served as Vice President of Human Resources since
November 1999 and prior to that as Director of Human Resources since September
1996. Prior to joining Sinclair, Mr. Thompson was Human Resources Manager for
NASA at the Goddard Space Flight Center near Washington, D.C. Mr. Thompson holds
a Bachelor's Degree in Psychology and Certificate in Personnel and Industrial
Relations from University of Maryland and a Masters of Science in Business/Human
Resource & Behavioral Management from Johns Hopkins University. Mr. Thompson is
a member of the Society for Human Resource Management.
11
EXECUTIVE COMPENSATION TABLE
The following table sets forth certain information regarding our annual and
long-term compensation for services rendered in all capacities during the year
ended December 31, 2000 by the Chief Executive Officer and the five most highly
compensated executive officers other than the Chief Executive Officer, who are
collectively referred to as the named executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND ------------------- SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (a) OPTIONS GRANTED(#) COMPENSATION (b)
------------------ ---- ------ --------- ------------------ ----------------
David D. Smith................... 2000 $1,000,000 -- 150,000 $6,659
President and Chief Executive 1999 1,072,500 $603,115 -- 4,609
Officer 1998 1,290,000 502,526 -- 4,715
Frederick G. Smith............... 2000 190,000 -- -- 4,877
Vice President 1999 190,000 -- -- 4,277
1998 222,093 130,000 -- 4,342
J. Duncan Smith.................. 2000 190,000 -- -- 4,877
Vice President and Secretary 1999 190,000 -- -- 15,165
1998 226,671 135,000 -- 21,809
David B. Amy..................... 2000 300,000 -- 100,000 6,659
Executive Vice President and 1999 300,000 75,000 -- 9,145
Chief Financial Officer 1998 200,000 75,000 135,000 9,336
Patrick J. Talamantes (c)........ 2000 240,000 -- 40,000 6,084
Chief Financial Officer 1999 201,041 15,250 -- 4,484
1998 132,500 20,500 70,000 3,636
Barry P. Drake (d)............... 2000 450,000 50,000 -- 6,659
Chief Executive Officer of SCI 1999 400,000 -- -- 4,609
1998 350,000 -- 80,000 3,722
- ----------
(a) The bonuses reported in this column represent amounts awarded and paid
during the fiscal years noted but relate to the fiscal year immediately
prior to the year noted.
(b) All other compensation consists of income deemed received for personal use
of Sinclair-leased automobiles, the Sinclair 401 (k) contribution and life
insurance.
(c) Patrick J. Talamantes resigned as Chief Financial Officer effective March
19, 2001. Mr. Talamantes received a bonus of $30,000 in 2001 related to
2000.
(d) On February 27, 2001, Barry P. Drake announced his resignation as Chief
Executive Officer of SCI, which will take effect May 31, 2001.
12
STOCK OPTIONS
The following table shows the number of stock options granted during 2000
and the 2000 year-end value of the stock options held by the named executive
officers:
PERCENT OF TOTAL MARKET POTENTIAL REALIZABLE VALUE
NUMBER OF SECURITIES OPTIONS GRANTED TO EXERCISE PRICE ON AT ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS EMPLOYEES IN PRICE DATE OF EXPIRATION STOCK PRICE APPRECIATION
NAME GRANTED FISCAL YEAR PER SHARE GRANT DATE FOR OPTION TERM
---- ------- ----------- --------- ----- ---- -----------------------------
0% 5% 10%
-- -- ---
David D. Smith......... 150,000 10.97% $9.25 $9.625 3/1/10 $56,250 $964,217 $2,357,216
Frederick G. Smith..... -- -- -- -- -- -- -- --
J. Duncan Smith........ -- -- -- -- -- -- -- --
David B. Amy........... 100,000 7.32% 9.25 9.625 3/1/10 37,500 642,811 1,571,477
Patrick J. Talamantes.. 40,000 2.93% 9.25 9.625 3/1/10 15,000 257,124 628,591
Barry Drake............ 60,000 4.39% 9.25 9.625 3/1/10 22,500 385,687 942,886
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 2000 OPTION
VALUES
The following table shows information regarding options exercised during
2000, the number of securities underlying, and the value of "in the money"
options outstanding on December 31, 2000.
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS "IN-THE-MONEY" OPTIONS
AT DECEMBER 31, 2000 AT DECEMBER 31, 2000 (a)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------- ----------- ------------- ----------- -------------
David D. Smith....... -- -- 37,500 112,500 $ 29,295 $ 87,885
Frederick G. Smith... -- -- -- -- -- --
J. Duncan Smith...... -- -- -- -- -- --
David B. Amy......... -- -- 90,000 210,000 19,530 58,590
Patrick J. Talamantes -- -- 52,500 77,500 7,812 23,436
Barry P. Drake....... -- -- 75,000 125,000 11,718 35,154
(a) An "in-the-money" option is an option for which the option price of the
underlying stock is less than the market price at December 31, 2000, and
all of the value shown reflects stock price appreciation since the granting
of the option.
DIRECTOR COMPENSATION
Sinclair directors who also are Sinclair employees serve without additional
compensation. Independent directors receive $15,000 annually. These independent
directors also receive $1,000 for each meeting of the board of directors
attended and $500 for each committee meeting, special meeting, unanimous consent
and informal action attended. In addition, the independent directors are
reimbursed for any expenses incurred in connection with their attendance at such
meetings.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with David D. Smith, President and
Chief Executive Officer of Sinclair, on June 12, 1995, which expired on June 12,
1998. We have not entered into a new agreement with Mr. Smith and do not
currently anticipate entering into a new agreement. The compensation committee
has set David Smith's base salary for 2001 at $1,000,000.
In June 1998, we entered into an employment agreement with Frederick G.
Smith, Vice President of Sinclair. The agreement does not have any specified
termination date, and we have the right to terminate the employment of Frederick
Smith at any time, with or without cause, subject to the payment of severance
payments for termination without cause. The severance payment due upon
termination without cause is equal to one month's base salary in effect at the
time of termination times the number of years of continuous employment by
Sinclair or its predecessor. Frederick Smith receives a base salary of $190,000
and is entitled to annual incentive bonuses payable based on the attainment of
certain cash flow objectives by Sinclair, as well as discretionary bonuses. The
incentive bonus takes the form of stock options to acquire shares of the our
class A common stock
13
pursuant to our non-qualified stock option long-term incentive plan. The
agreement also contains non-competition and confidentiality restrictions on
Frederick Smith.
In June 1998, we entered into an employment agreement with J. Duncan Smith,
Vice President and Secretary of Sinclair. The agreement does not have any
specified termination date, and we have the right to terminate the employment of
Duncan Smith at any time, with or without cause, subject to the payment of
severance payments for termination without cause. The severance payment due upon
termination without cause is equal to one month's base salary in effect at the
time of termination times the number of years of continuous employment by
Sinclair or its predecessor. Duncan Smith receives a base salary of $190,000 and
is entitled to annual incentive bonuses payable based on the attainment of
certain cash flow objectives by Sinclair, as well as discretionary bonuses. The
incentive bonus takes the form of stock options to acquire shares of our class A
common stock pursuant to our non-qualified stock option long-term incentive
plan. The agreement also contains non-competition and confidentiality
restrictions on Duncan Smith.
In September 1998, we entered into an employment agreement with David B.
Amy, Executive Vice President and Chief Financial Officer of Sinclair. The
agreement does not have any specified termination date, and we have the right to
terminate the employment of Mr. Amy at any time, with or without cause. The
severance payment due upon termination without cause is equal to one month's
base salary in effect at the time of termination times the number of years of
continuous employment by Sinclair or its predecessor. Mr. Amy receives a base
salary of $300,000 and may receive an annual bonus based on performance. The
agreement also contains non-competition and confidentiality restrictions on Mr.
Amy.
In February 1997, SCI entered into an employment agreement with Barry
Drake, Chief Executive Officer of SCI. The agreement does not have any specified
termination date, and SCI has the right to terminate the employment of Mr. Drake
at any time, with or without cause, subject to the payment of severance payments
for termination without cause. The severance payment due upon termination
without cause is equal to one month's base salary in effect at the time of
termination times the number of years of continuous employment by Sinclair. Mr.
Drake receives a base salary of no less than $325,000, provided that SCI
continues to have at least the same level of broadcast cash flow as in 1997. Mr.
Drake is also entitled to receive options to acquire shares of our class A
common stock pursuant to the our non-qualified stock option long-term incentive
plan. Mr. Drake's compensation may include a bonus in the sole discretion of the
executive committee. The agreement also contains non-competition and
confidentiality restrictions on Mr. Drake.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors consists entirely of
non-employee directors. The committee determines all compensation paid or
awarded to our key executive officers.
PHILOSOPHY. The committee's goal is to attract, motivate, and retain an
executive management team that can take full advantage of our opportunities and
achieve long-term success in an increasingly competitive business environment,
thereby increasing stockholder value. In deciding on initial compensation for an
individual, the committee considers determinants of the individual's market
value, including experience, education, accomplishments, and reputation, as well
as the level of responsibility to be assumed. Retention and compensation
decisions are sometimes made in the context of an acquisition, and the committee
considers the overall terms of the acquisition and the individual's relationship
to the acquired business in those cases. In deciding whether to increase the
compensation of an individual or whether to award bonuses or stock options
initially or upon subsequent performance reviews, the committee considers the
contributions of the individual to our progress on our business plan and against
our competitors, to growth of Sinclair and its opportunities and to achievement
of other aims the committee deems valuable to stockholders. Applying these
factors to each individual's case is a judgment process, exercised by the
committee with the advice of management.
The committee's annual performance evaluation of each executive officer is
typically based on a formula, set forth in an employment agreement or otherwise,
which sets forth a range of factors to be considered by the committee in
determining each executive officer's annual compensation.
Executive officers' compensation consists primarily of three components:
o base salary
o cash bonus, and
14
o stock options.
BASE SALARY. The committee establishes base salaries after considering a
variety of factors that make up value and usefulness to us, including the
individual's knowledge, experience, and accomplishments, level of
responsibility, role in an acquired business, and the typical compensation
levels for individuals with similar credentials. In the past, executive officers
of Sinclair have typically entered into employment agreements with Sinclair.
However, we have not entered into an employment agreement with David Smith, the
Chief Executive Officer, since the termination of his earlier agreement in June
1998, and do not currently anticipate entering into a new agreement. The
committee may increase the salary of an individual on the basis of its judgment
for any reason, including the performance of the individual or Sinclair and
changes in the market for an executive with similar credentials.
CASH BONUS. The committee may determine to award cash bonuses for any
fiscal year on a discretionary basis. The committee decided not to award bonuses
with respect to 2000 based on Sinclair's performance during the year, but in
light of Mr. Talamantes' resignation in early 2001, did decide to award a bonus
to Mr. Talamantes in light of his contributions to Sinclair over the period he
was at Sinclair.
STOCK OPTIONS. The committee believes achievement of our goals may be
fostered by a stock option program that is tailored to employees who
significantly enhance the value of Sinclair. In that regard, during the fiscal
year ended December 31, 2000, the committee granted employees options to
purchase 1,366,835 shares of class A common stock. Named executive officers
received options with respect to 350,000 shares of class A common stock. The
options (other than those awarded to David Smith) were awarded as part of a
decision by the compensation committee to make regular awards of options to
employees of a small amount rather than larger awards upon employment or
promotion, as had been the case in the past. The committee believes that this
provides better incentives to employees than the more sporadic issuance of
options. Management recommended granting the options with an exercise price
equal to the market price on the date of the recommendation, which was below the
market price two days later when the compensation committee approved the
recommendation. These options will potentially be subject to the compensation
deduction limit as described below upon exercise.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. As one of our largest stockholders,
David D. Smith's financial well-being is directly tied to the overall
performance of Sinclair. For his services as Sinclair's President and Chief
Executive Officer, David D. Smith's compensation for 2000 was determined in
accordance with the compensation policies established by the compensation
committee. For the year ending December 31, 2001, his base compensation has been
set at $1,000,000. The compensation committee decided not to award Mr. Smith a
bonus with respect to 2000 based on Sinclair's performance during the year. The
committee did decide to award Mr. Smith options to acquire 150,000 shares at the
same time and on the same terms as options awarded to other employees based the
successful sale of Sinclair's radio division.
COMPENSATION DEDUCTION LIMIT. The committee has considered the $1 million
limit on deductible executive compensation that is not performance-based. The
committee believes that substantially all executive compensation expenses paid
in 2000, except for certain compensation paid to David Smith in excess of $1
million, will be deductible by us. The committee believes, however, that
compensation exceeding this limit should not be ruled out where such
compensation is justified on the basis of the executive's value to Sinclair and
its shareholders. In any event, there appears to be little evidence that tax
deductibility is having much impact on the market for managerial talent, in
which we must remain competitive.
Compensation Committee
Lawrence E. McCanna
Basil A. Thomas
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Other than as follows, no named executive officer is a director of a
corporation that has a director or executive officer who is also a director of
Sinclair. Each of David D. Smith, Frederick G. Smith and J. Duncan Smith, all of
whom are executive officers and directors of Sinclair, is a director and/or
executive officer of each of various other corporations controlled by them.
David D. Smith is a director and executive officer of Acrodyne Communications
Inc., Sinclair Ventures, Inc. and G1440 Inc., and a director and executive
officer of Sinclair. Frederick G. Smith is a director and executive officer of
Sinclair and a director of Sinclair Ventures, Inc. J. Duncan Smith is a director
and executive officer of Sinclair and a director of Sinclair Ventures, Inc.
David B. Amy, an executive officer of the Company, is a director of Acrodyne
Communications, Inc. and G1440, Inc.
During 2000, none of the named executive officers participated in any
deliberations of our compensation committee relating to compensation of the
named executive officers.
The members of the compensation committee are Messrs. Thomas and McCanna.
Mr. Thomas is of counsel to the law firm of Thomas & Libowitz, and is the father
of Steven A. Thomas, a senior attorney and founder of Thomas & Libowitz, P.A.
During 2000, we paid Thomas & Libowitz, P.A., approximately $879,220 in fees and
expenses for legal services.
COMPARATIVE STOCK PERFORMANCE
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on our class A common stock with the
cumulative total return of the NASDAQ Stock Market Index and the cumulative
total return of the NASDAQ Telecommunications Stock Market Index (an index
containing performance data of radio, telephone, telegraph, television, and
cable television companies) from December 31, 1995 through December 31, 2000.
The performance graph assumes that an investment of $100 was made in the class A
common stock and in each Index on December 31, 1995, and that all dividends were
reinvested. Total stockholder return is measured by dividing total dividends
(assuming dividend reinvestment) plus share price change for a period by the
share price at the beginning of the measurement period.
[GRAPHIC OMITTED]
COMPANY/INDEX/MARKET 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------------------- -------- -------- -------- -------- -------- --------
Sinclair Broadcast Group......... 100 150.72 270.29 240.56 150.06 123.35
NASDAQ Telecommunications
Index........................... 100 102.30 149.32 247.13 440.92 187.85
NASDAQ Market Index-U.S.......... 100 123.09 150.76 212.85 395.02 237.48
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 2000, we engaged in the following
transactions with the following persons:
o directors, nominees for election as directors, or executive officers;
o beneficial owners of 5% or more of our common stock;
o immediate family members of any of the above; and
o entities in which the above persons have substantial interests.
WPTT NOTE. In connection with our sale of WCWB in Pittsburgh to WPTT, Inc.,
WPTT, Inc. issued to us a 15-year senior secured term note of $6.0 million (the
WPTT note). We subsequently sold the WPTT note to the late Julian S. Smith and
Carolyn C. Smith, the parents of the controlling stockholders and both former
stockholders of Sinclair, in exchange for the payment of $50,000 and the
issuance of a $6.6 million note, which bears interest at 7.21% per annum and
requires payments of interest only through October 2001. Monthly principal
payments of $109,317 plus interest are payable with respect to this note
commencing in November 2001 and ending in September 2006, at which time the
remaining principal balance plus accrued interest, if any, is due. During the
year ended December 31, 2000, we received $0.5 million in interest payments on
this note. At December 31, 2000, the balance on this note was $6.6 million.
AFFILIATED LEASES. From 1987 to 1992, we entered into five lease
transactions (four of which are still in effect) with Cunningham Communications,
Inc. (CCI), a corporation wholly owned by the controlling stockholders, to lease
certain facilities from CCI. Three of these leases are 10-year leases for rental
space on broadcast towers, one of which is a capital lease having a renewable
term of 10 years. The other lease is a month-to-month lease for a portion of
studio and office space at which certain satellite dishes are located. Aggregate
annual rental payments related to these leases were $0.5 million in 2000. The
aggregate annual rental payments related to these leases are scheduled to be
$0.6 million in 2001 and 2002.
In January 1991, we entered into a 10-year capital lease with Keyser
Investment Group (KIG), a corporation wholly owned by the controlling
stockholders, pursuant to which we lease both an administrative facility and
studios for station WBFF. Additionally, in June 1991, we entered into a one-year
renewable lease with KIG pursuant to which we lease parking facilities at the
administrative facility. Payments under these leases with KIG were $0.6 million
in 2000. The aggregate annual rental payments related to the administrative
facility are scheduled to be $0.7 million in 2001 and 2002. During 2000, we
chartered airplanes owned by certain companies controlled by the controlling
stockholders and incurred expenses of approximately $0.2 million related to
these charters.
In June 1999, Sinclair entered into a ten-year capital lease with Beaver
Dam LLC, a corporation wholly owned by three of the controlling stockholders,
pursuant to which Sinclair leases office space for its corporate headquarters.
Payments under this lease agreement were $1.2 million in 2000, and are scheduled
to be $1.1 million in 2001 and 2002.
TRANSACTIONS WITH GERSTELL. Gerstell LP, an entity wholly owned by the
controlling stockholders, was formed in April 1993 to acquire certain of our
personal and real property interests in Pennsylvania. In a transaction that was
completed in September 1993, Gerstell LP acquired the WPGH office/studio,
transmitter and tower site for an aggregate purchase price of $2.2 million. The
purchase price was financed in part by a $2.1 million note from Gerstell LP
bearing interest at 6.18% with principal payments beginning on November 1, 1994
and a final maturity date of October 1, 2013. Principal and interest paid in
2000 on the note was $0.2 million. At December 31, 2000, $1.7 million in
principal amount of the note remained outstanding. Following the acquisition,
Gerstell LP leased the office/studio, transmitter and tower site to WPGH, Inc.
(a Sinclair subsidiary). The leases have terms of seven years, with four
seven-year renewal periods. Aggregate annual rental payment related to these
leases was $0.6 million in 2000.
STOCK REDEMPTIONS. On September 30, 1990, we issued certain notes (the
founders' notes) maturing on May 31, 2005, payable to the late Julian S. Smith
and Carolyn C. Smith, former majority owners of Sinclair and the parents of the
controlling stockholders. The founders' notes, which were issued in
consideration for stock redemptions equal to 72.65% of the then outstanding
stock of Sinclair, have principal amounts of $7.5 million and $6.7 million,
respectively. The founders' notes include stated interest rates of 8.75%, which
were payable annually from October 1990 until October 1992, then payable monthly
commencing April 1993 to December 1996, and then
17
semi-annually thereafter until maturity. The effective interest rate
approximates 9.4%. The founders' notes are secured by security interests in
substantially all of Sinclair's assets and subsidiaries, and are personally
guaranteed by the controlling stockholders.
Principal and interest payments on the founders' note issued to the estate
of Julian S. Smith are payable, in various amounts, each April and October,
beginning October 1991 until October 2004, with a balloon payment due at
maturity in the amount of $5.0 million. Additionally, monthly interest payments
commenced April 1993 and continued until December 1996. Principal and interest
paid in 2000 on this founders' note was $0.6 million and at December 31, 2000,
$5.5 million in principal amount of this founders' note remained outstanding.
Principal payments on the founders' note issued to Carolyn C. Smith are
payable, in various amounts, each April and October, beginning October 1991
until October 2002. Principal and interest paid in 2000 on this founders' note
was $1.1 million. At December 31, 2000, $1.1 million in principal amount of this
founders' note remained outstanding.
RELATIONSHIP WITH GLENCAIRN. Glencairn is a corporation owned by
o Edwin L. Edwards, Sr. (3%),
o Carolyn C. Smith, the mother of the controlling stockholders (7%), and
o certain trusts established by Carolyn C. Smith for the benefit of her
grandchildren (the Glencairn Trusts) (90%).
The 90% equity interest in Glencairn owned by the Glencairn Trusts is held
through the ownership of non-voting common stock. The 7% equity interest in
Glencairn owned by Carolyn C. Smith is held through the ownership of common
stock that is generally non-voting, except with respect to certain specified
extraordinary corporate matters as to which this 7% equity interest has the
controlling vote. Edwin L. Edwards, Sr. owns a 3% equity interest in Glencairn
through ownership of all of the issued and outstanding voting stock of Glencairn
and is Chairman of the Board, President and Chief Executive Officer of
Glencairn.
There have been, and we expect that in the future there will be,
transactions between us and Glencairn. Glencairn is the owner-operator and FCC
licensee of WNUV in Baltimore, Maryland, WVTV in Milwaukee, Wisconsin, WRDC in
Raleigh/Durham, North Carolina, WABM in Birmingham, Alabama, KRRT in San
Antonio, Texas, WBSC (formally WFBC) in Asheville/Greenville/Spartanburg, South
Carolina, and WTTE in Columbus, Ohio. We have entered into LMAs with Glencairn
pursuant to which we provide programming to Glencairn for airing on WNUV, WVTV,
WRDC, WABM, KRRT, WFBC and WTTE in exchange for the payment by us to Glencairn
of a monthly fee totaling $0.8 million.
In June 1995, we acquired options from Carolyn Smith and the Glencairn
trusts (the Glencairn Options) which grant to us the right to acquire, subject
to applicable FCC rules and regulations, stock comprising up to a 97% equity
interest in Glencairn. Each Glencairn option was purchased by us for $1,000
($5,000 in the aggregate) and is exercisable only upon our payment of an option
exercise price generally equal to the optionor's proportionate share of the
aggregate acquisition cost of all stations owned by Glencairn on the date of
exercise (plus interest at a rate of 10% from the respective acquisition date).
We estimate that the aggregate option exercise price for the Glencairn options,
if currently exercised, would be approximately $22.3 million.
On November 15, 1999, we entered into five separate plans and agreements
of merger, pursuant to which we would acquire through merger with subsidiaries
of Glencairn, Ltd., television broadcast stations WABM, Birmingham, Alabama,
KRRT, San Antonio, Texas, WVTV, Milwaukee, Wisconsin, WRDC, Raleigh/Durham,
North Carolina and WBSC (formerly WFBC), Ashville/Greenville/Spartanburg, South
Carolina. The consideration for these mergers is the issuance to Glencairn
shares of class A voting common stock the Company. The total value of the shares
to be issued in consideration for all of the mergers is $8.0 million. A petition
to deny was filed with the FCC against the applications. We have filed an
opposition to the petition to deny and are awaiting FCC action.
TRANSACTION WITH WPTT, INC. On November 15, 1999, we entered into an
agreement to purchase substantially all of the assets of television station
WCWB, Pittsburgh, Pennsylvania, with the owner of that television station, WPTT,
Inc., for a purchase price of $17.8 million. The waiting period under the
Hart-Scott-Rodino Antitrust Act of 1976 has expired and closing on this
transaction is subject to FCC approval. A petition to deny was filed with the
FCC against the application. We have filed an opposition to the petition to deny
and are awaiting FCC action.
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HERITAGE AUTOMOTIVE GROUP. In January 1997, David D. Smith, our President
and Chief Executive Officer and one of the controlling stockholders, made a
substantial investment in, and became a member of the board of directors of,
Summa Holdings, Ltd. which, through wholly owned subsidiaries, owns the Heritage
Automotive Group (Heritage) and Allstate Leasing (Allstate). Mr. Smith is not an
officer, nor does he actively participate in the management, of Summa Holdings,
Ltd., Heritage, or Allstate. Heritage owns and operates new and used car
dealerships in the Baltimore metropolitan area. Allstate owns and operates an
automobile and equipment leasing business with offices in the Baltimore,
Richmond, Houston, and Atlanta metropolitan areas. We sell Heritage and Allstate
advertising time on WBFF and WNUV, the television stations operated by Sinclair
serving the Baltimore DMA and received payments from these companies in 2000 of
$0.3 million. G1440, Inc. provided $0.2 million in services to subsidiaries of
Summa Holdings, Ltd. in 2000.
BAY TELEVISION, INC. In January 1999, SCI entered into a Time Brokerage
Agreement with Bay Television, Inc., which owns the television station WTTA-TV
in Tampa, Florida. The controlling stockholders own a substantial portion of the
equity of Bay Television, Inc. The Time Brokerage Agreement provides that SCI is
to deliver television programming to Bay Television, Inc., which broadcasts the
programming in return for a monthly fee to Bay of $143,500. SCI must also make
an annual payment equal to 50% of the annual broadcast cash flow of the station
which is in excess of $1.7 million. During 2000 we made payments of
approximately $1.7 million related to the Time Brokerage Agreement. No payment
was made in 2000 related to the broadcast cash flow as it did not exceed $1.7
million for the year ended December 31, 2000.
ALLEGIANCE CAPITAL LIMITED PARTNERSHIP. In August 1999 Allegiance Capital
Limited Partnership (Allegiance), with the controlling stockholders, our Chief
Financial Officer and Executive Vice President and Allegiance Capital Management
Corporation (ACMC), the general partner, established a small business investment
company. In August 1999 we invested $2.4 million for a 77.8% interest in
Allegiance, and thereafter, the controlling shareholders invested $16,670 each
for a combined 2.1% interest in Allegiance, our Chief Financial Officer and
Executive Vice President invested $3,330 for a 0.1% interest in Allegiance and
ACMC undertook to manage the operations of Allegiance for a 20% interest in
Allegiance. During 2000, we invested an additional $2.9 million, the controlling
shareholders invested an additional $20,100 each and our Chief Financial Officer
and Executive Vice President invested an additional $3,600. ACMC, as the general
partner, controls all decision making, investing, and management of operations
in exchange for a monthly management fee based on actual expenses incurred which
currently averages approximately $27,000 paid by the limited partners. We, along
with the other limited partners, have committed to investing up to a combined
total of $15.0 million of which $2.5 million was invested upon establishing of
the partnership.
AUDIT COMMITTEE, AUDIT FEES AND AUDITOR INDEPENDENCE
AUDIT COMMITTEE REPORT
The audit committee oversees Sinclair's financial reporting process on
behalf of the board of directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the committee
reviewed the audited financial statements in the annual report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgements, and the
clarity of disclosures in the financial statements.
The committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgements as to
the quality, not just the acceptability, of Sinclair's accounting principles and
such other matters as are required to be discussed with the committee under
generally accepted auditing standards. In addition the committee has discussed
with the independent auditors the auditors' independence from management and
Sinclair including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of non-audit
services with the auditors' independence.
The committee discussed with Sinclair's independent auditors the overall
scope and plans for their respective audits. The committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of Sinclair's internal
controls and the overall quality of Sinclair's financial reporting. The
committee held four meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the committee
recommended to the board of directors (and the board has approved) that the
audited financial statements be included in the Annual Report on
19
Form 10-K for the year ended December 31, 2000 for filing with the Securities
and Exchange Commission. The committee and the board have also recommended,
subject to shareholder approval, the selection of Sinclair's independence
auditors.
Audit Committee
Lawrence E. McCanna
Basil A. Thomas
DISCLOSURE OF FEES CHARGED BY INDEPENDENT ACCOUNTANTS
The following summarizes the fees charged by Arthur Andersen, LLP for
certain serves rendered to Sinclair during 2000.
AUDIT FEES. Fees for the calendar year audit and the reviews of Forms 10-Q
were $270,055.
FEES FOR FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION. None.
ALL OTHER FEES. All other fees billed to Sinclair through December 31, 2000
totaled $794,298 which represented fees for tax planning and compliance
services, internal audit services, and consulting services related to
acquisitions and dispositions.
20
STOCKHOLDER PROPOSALS
If you intend to propose any matter for action at our 2002 annual meeting of
stockholders, you must submit your proposal to the Secretary of Sinclair at
10706 Beaver Dam Road, Cockeysville, MD 21030 not later than December 17, 2001
at 5:00 p.m. Eastern Standard Time. Only then can we consider your proposal for
inclusion in our proxy statement and proxy relating to the 2002 annual meeting.
We will be able to use proxies you give us for the next year's meeting to vote
for or against any shareholder proposal that is not included in the proxy
statement at our discretion unless the proposal is submitted to us on or before
March 2, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
April 16, 2001
21
APPENDIX 1
SINCLAIR BROADCAST GROUP, INC.
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AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
June 14, 2000
I. PURPOSE
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by Sinclair
Broadcast Group, Inc. (the "Company") to the public; the Company's systems
of internal controls regarding finance, accounting, legal compliance and
ethics that management and the Board have established; and the Company's
auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster adherence to, the Company's
policies, procedures and practices at all levels. The Audit Committee's
primary duties and responsibilities are to:
(i) serve as an independent and objective party to monitor the
Company's financial reporting process and internal control
system;
(ii) review and appraise the audit efforts of the Company's outside
auditor; and
(iii) provide an open avenue of communication among the outside
auditor, financial and senior management, and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV. of this Charter.
The purpose of this Charter is also to confirm that:
(a) even though the Company's outside auditor reports directly to
the Audit Committee and the Board of Directors, the outside
auditor's ultimate accountability is to the stockholders of the
Company;
(b) the Audit Committee and the Board of Directors act as
representatives of the stockholders; and
(c) the Audit Committee and the Board of Directors have the ultimate
authority and responsibility to select, evaluate, and where
appropriate, replace the outside auditor (or to nominate the
outside auditor to be presented to the stockholders for approval
in a proxy statement).
II. COMPOSITION
Effective no later than June 14, 2001, the Audit Committee shall have
at least three members, comprised solely of independent directors (as
defined in the applicable rules of the NASDAQ market or any securities
exchange on which the common stock of the Company is listed), each of whom
is able to read and understand fundamental financial statements, including
a company's balance sheet, income statement, and cash flow statement, or
will become able to do so within a reasonable period of time after his or
her appointment to the Audit Committee. Additionally, the Audit Committee
will have at least one member that has past employment experience in
finance or accounting, requisite professional certification in accounting,
or any other comparable experience or background which results in the
individual's financial sophistication, including being or having been a
chief executive officer, chief financial officer or other senior officer
with financial oversight responsibilities. The Audit Committee may have one
director who is not independent if the conditions set forth in NASDAQ Rule
4310(c)(26)(B) are satisfied.
The members of the Audit Committee shall be elected by the Board at
least annually at a meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board,
the members of the Audit Committee may designate a Chair by majority vote
of the full Audit Committee.
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III. MEETINGS
The Audit Committee shall meet at least twice annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Audit Committee should meet at least annually with
management and the outside auditors in separate sessions to discuss any
matters that the Audit Committee or either of these groups believe should
be discussed privately. When deemed appropriate, meetings may be held in
person or by telephone. Minutes or other records of meeting and activities
of the Audit Committee shall be maintained.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
DOCUMENT REPORTS/REVIEWS
1. Review the Company's annual audited financial statements to be
included in the Company's periodic reports filed with the Securities
and Exchange Commission (SEC); discuss them with management, and
discuss with the Company's outside auditor the matters required to be
discussed by Statement on Auditing Standards 61, as modified or
supplemented.
2. Based on the review and discussions described in Sections IV.2 and
IV.5, make recommendations to Board of Directors whether the Company's
annual audited financial statements should be included in the
company's Annual Report on Form 10-K for the preceding fiscal year to
be filed with the SEC.
INDEPENDENT ACCOUNTANTS
3. Recommend to the Board of Directors the selection or replacement of
the outside auditor, and approve the fees and other compensation to be
paid to the outside auditor.
4. Obtain, on an annual basis, a written statement from the Company's
outside auditor delineating all relationships between the auditor and
the Company, consistent with Independence Standards Board Standard 1,
actively engage in a dialogue with the outside auditor with respect to
any disclosed relationships or services that may impact the
objectivity and independence of the auditor, and taking, or
recommending that the full Board of Directors take, appropriate action
to oversee the independence of the outside auditor.
5. Review the performance of the outside auditor and recommend any
proposed discharge of the outside auditor when circumstances warrant.
6. Periodically consult with the outside auditor out of the presence of
management about internal controls and quality, acceptability,
fullness and accuracy of the Company's financial statements.
7. Financial Reporting Process
8. In consultation with the outside auditor, review the integrity of the
Company's financial reporting process, both internal and external.
9. Consider the outside auditor's judgements about the quality and
appropriateness (not just acceptability) of the Company's accounting
principles and the clarity of financial disclosure practices as
applied in its financial reporting.
10. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
outside auditor or management.
11. Discuss, at least annually, with each of management and the outside
auditor any significant judgements made in management's preparation of
the financial statements and the view of each as to appropriateness of
such judgements.
12. Following completion of the annual audit, review separately with each
of management and the outside auditor any significant difficulties
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information.
23
13. Review any significant disagreement among management and the outside
auditor in connection with the preparation of the financial
statements.
14. Review with the outside auditor and management the extent to which
changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review
should be conducted at an appropriate period of time subsequent to
implementation of changes or improvements, as decided by the Audit
Committee.)
ETHICS AND LEGAL COMPLIANCE
15. Review management's monitoring of the Company's compliance with laws
and management's exercise of ethical practices and ensure that
management has the proper review system in place to ensure that the
Company's financial statements, reports and other financial
information disseminated to governmental organizations, and the
public, satisfy legal requirements.
16. Review, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
17. Perform any other activities consistent with this Charter, the
Company's Certificate of Incorporation or Bylaws and governing law, as
the Audit Committee or the Board deems necessary or appropriate.
18. Conduct or authorize investigations into any matters within the
Committee's scope of responsibilities. The Committee shall be
empowered to retain independent counsel and other professionals to
assist in the conduct of any investigation.
REPORTS OF THE AUDIT COMMITTEE
19. Prepare and submit any report of the Audit Committee required by the
SEC in the Company's annual proxy statement.
24
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
1. Election of seven directors for a term expiring in 2001 as set forth in the
proxy statement
Nominees: David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E.
Smith, Basil A. Thomas, Lawrence E. McCanna, Daniel C. Keith
For: / / Withheld: / / For all except: / /
2. Ratification of the appointment of Arthur Andersen LLP as independent
auditors
For: / / Against: / / Abstain: / / THIS PROXY WHEN PROPERLY EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES FOR DIRECTORS, FOR
EACH OF THE OTHER PROPOSALS AND IN
ACCORDANCE WITH THE PROXIES' DISCRETION
ON ANY OTHER BUSINESS THAT MAY PROPERLY
COME BEFORE THE MEETING TO THE EXTENT
PERMITTED BY LAW.
Please mark, sign and date, and return
the proxy card promptly using the
enclosed envelope.
Dated: __________________________________
Signatures:______________________________
-----------------------------------------
Please sign exactly as name appears to
the left. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
1
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PROXY
SINCLAIR BROADCAST GROUP, INC.
PROXY FOR ANNUAL MEETING OF MAY 22, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints David D. Smith and Frederick G. Smith, or
either of them, as attorneys-in-fact, with full power of substitution, to vote
in the manner indicated on the reverse side, and with discretionary authority as
to any other matters that may properly come before the meeting, all shares of
common stock of Sinclair Broadcast Group, Inc. which the undersigned is entitled
to vote at the annual meeting of stockholders of Sinclair Broadcast Group, Inc.
to be held on May 22, 2001 at the SBG corporate office, 2nd floor, 10706 Beaver
Dam Road, Cockeysville, MD 21030, at 10:00 a.m. local time.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
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2