<Page>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
SINCLAIR BROADCAST GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SINCLAIR BROADCAST GROUP, INC.
- --------------------------------------------------------------------------------
(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)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
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[SBG LOGO]
April 15, 2002
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 23,
2002 at Sinclair's corporate office, second floor, 10706 Beaver Dam Road, Hunt
Valley, 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, 2001.
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.
<Page>
SINCLAIR BROADCAST GROUP, INC.
10706 BEAVER DAM ROAD
HUNT VALLEY, MD 21030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------------------------------------------
DATE: THURSDAY, MAY 23, 2002
TIME: 10:00 A.M. LOCAL TIME
PLACE: SINCLAIR CORPORATE OFFICE,
SECOND FLOOR
10706 BEAVER DAM RD
HUNT VALLEY, MD 21030
-----------------------------------------------------------
YOUR VOTE AT THE ANNUAL MEETING IS VERY IMPORTANT TO US.
Dear Stockholders:
At the 2002 annual meeting, we will ask you to:
1. Elect eight 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, 2002.
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 15, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
April 15, 2002
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TABLE OF CONTENTS
PAGE
INFORMATION ABOUT THE 2002 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..........................20
STOCKHOLDER PROPOSALS.........................................................21
i
<Page>
SINCLAIR BROADCAST GROUP, INC.
10706 BEAVER DAM ROAD
HUNT VALLEY, MARYLAND 21030
--------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2002
--------------
This proxy statement provides information that you should read before you
vote on the proposals that will be presented to you at the 2002 annual meeting
of Sinclair Broadcast Group, Inc. The 2002 annual meeting will be held on May
23, 2002 at Sinclair's corporate office, second floor, Hunt Valley, 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 eight 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, 2002, 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 22, 2002, 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 15, 2002. We have mailed with the
proxy statement a copy of Sinclair's annual report to stockholders for the
fiscal year ended December 31, 2001.
1
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INFORMATION ABOUT THE 2002 ANNUAL MEETING AND VOTING
THE ANNUAL MEETING
The annual meeting will be held on May 23, 2002 at Sinclair's corporate
office, second floor, 10706 Beaver Dam Road, Hunt Valley, 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
23, 2002.
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 2002 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, Hunt Valley, 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.
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VOTE REQUIRED BY APPROVAL
SHARES ENTITLED TO VOTE. On April 15, 2002 (the record date), the following
shares were issued and outstanding and had the votes indicated:
o 42,832,071 shares of class A common stock, each of which is entitled
to one vote on each of the proposals, and
o 42,559,035 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 234,211,211 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 Eight Directors The eight 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 Independent Accountant of the votes cast at the annual
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, 2001, 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
<Page>
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
Martin R. Leader
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 seven nominees listed above is
currently a member of the board of directors and each of them, and Mr. Leader,
has consented to serve as a director if 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 eight
members. Proxies for the annual meeting may not be voted for more than eight
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 2002. 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 and the audit committee are aware of recent events
concerning Arthur Andersen LLP and have reviewed these matters with
representatives of the firm. We have also reviewed Arthur Andersen LLP's
expertise, qualifications, and the quality of their independent services. Based
on our discussions and review, and in light of our relationship and long history
and our satisfaction with the personnel assigned to our account, the board of
directors and the audit committee continue to recommend the appointment of
Arthur Andersen LLP as its auditors for 2002. The board of directors and the
audit committee will continue to closely monitor ongoing developments at Arthur
Andersen LLP and, in their discretion, may change the appointment at any time
during the year if they determine that such a change would be in the best
interests of the shareholders and Sinclair.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP.
4
<Page>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There were 85,371,506 shares of common stock of Sinclair issued and
outstanding on April 1, 2002 consisting of 42,647,471 shares of class A common
stock and 42,724,035 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.
<Table>
<Caption>
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)............. 12,116,393 28.4% 12,230,291 22.3% 25.8%
Frederick G. Smith (c) (e)......... 9,529,231 22.3% 9,620,629 18.4% 20.3%
J. Duncan Smith (c) (f)............ 11,875,500 27.8% 11,876,831 21.8% 25.3%
Robert E. Smith (c) (g)............ 8,963,963 20.9% 8,937,309 17.3% 19.0%
David B. Amy (h)................... - - 221,520 * *
Barry P. Drake..................... - - - * *
Barry M. Faber (i)................. - - 93,954 * *
Basil A. Thomas.................... - - 5,000 * *
Daniel C. Keith.................... - - - * *
Lawrence E. McCanna................ - - 600 * *
Barry Baker (j)
28 Merry Hill Ct.
Baltimore, MD 21208............ - - 2,764,870 6.5% *
Citigroup, Inc. (k)
399 Park Ave.
New York, NY 02109.............. - - 3,764,614 8.8% *
Neuberger Berman, LLC (l)
605 Third Avenue
New York, NY 10158.............. - - 4,811,378 11.3% 1.0%
T. Rowe Price Associates, Inc. (m)
100 E. Pratt St
Baltimore, MD 21202............. - - 3,862,380 9.1% *
Putnam Investments, LLC. (n)
One Post Office Square
Boston, MA 02109................ - - 5,180,059 12.1% 1.1%
All directors and executive officers
as a group (10 persons) (o)..... 42,458,087 99.4% 42,986,134 50.5% 90.5%
* Less than 1%
</Table>
(a) Percent of class A common stock beneficially owned is calculated by taking
the number of shares of class A common stock beneficially owned divided by
the number of shares of class A common stock outstanding plus any class B
common stock individually held.
(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
5
<Page>
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 shares of class
B common stock beneficially owned, each of which is convertible into one
share of class A common stock.
(d) Includes 112,500 shares of class A common stock that may be acquired upon
exercise of options.
(e) Includes 586,588 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 550,000 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 812,699 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 221,500 shares of class A common stock that may be acquired upon
exercise of options.
(i) Includes 87,050 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 7, 2002, Citigroup Inc., through Salomon Smith Barney Holdings,
Inc., its wholly-owned subsidiary, holds 3,764,614 shares of class A common
stock. Salomon Smith Barney Holdings, Inc. owns 3,722,414 shares and
Citigroup, Inc. owns 42,200 shares.
(l) As set forth in the Schedule 13G filed by Neuberger Berman, Inc. with the
SEC on February 12, 2002, Neuberger Berman Inc., through its wholly-owned
subsidiaries Neuberger Berman LLC and Neuberger Berman Management Inc., is
deemed to be the beneficial owner of 4,811,378 shares of class A common
stock and has sole voting discretion with respect to 3,642,378 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.
(m) As set forth in the schedule 13G filed by T. Rowe Price Associates, Inc.
with the SEC on February 14, 2002, T. Rowe Price Associates, Inc. is deemed
to be the beneficial owner of 3,862,380 shares and has sole voting
discretion with respect to 832,444 of those shares as a result of acting as
investment advisor to various investment companies.
(n) As set forth in the schedule 13G filed by Putnam Investments, LLC with the
SEC on March 8, 2002, Putnam Investments, LLC is deemed to be the
beneficial holder of 5,180,059 shares.
(o) Includes 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
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.
Mr. Thomas did not file a changes in ownership report on a timely basis for
three transactions but has subsequently filed the required reports. 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, except as previously noted, our officers, directors and greater
than ten percent beneficial owners complied with all applicable filing
requirements.
6
<Page>
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information relating to our executive officers,
directors and nominees, and certain key employees.
<Table>
<Caption>
NAME AGE TITLE
David D. Smith............................... 51 President, Chief Executive Officer, Director
and Chairman of the Board
Frederick G. Smith........................... 52 Vice President and Director
J. Duncan Smith.............................. 48 Vice President, Secretary and Director
David B. Amy................................. 49 Executive Vice President and Chief Financial
Officer
Lawrence McCanna............................. 58 Director
Basil A. Thomas.............................. 86 Director
Robert E. Smith.............................. 38 Director
Daniel C. Keith.............................. 47 Director
Martin R. Leader............................. 61 Director Nominee
Michael Granados............................. 47 Vice President/Regional Director
Steven M. Marks.............................. 45 Vice President/Regional Director
Craig Millar................................. 53 Vice President/Regional Director
David R. Bochenek............................ 39 Corporate Controller
M. William Butler............................ 49 Vice President / Group Programming and
Promotions
Barry M. Faber............................... 40 Vice President / General Counsel
Lawrence M. Fiorino.......................... 40 Founder and CEO / G1440, Inc.
Mark E. Hyman................................ 44 Vice President / Corporate Relations
Leonard Ostroff.............................. 34 Chief Operating Officer of Sinclair Ventures, Inc.
Nat Ostroff.................................. 61 Vice President / New Technology
Delbert R. Parks III......................... 49 Vice President / Operations and Engineering
Lucy A. Rutishauser.......................... 37 Treasurer
Jeffrey W. Sleete............................ 47 Vice President / Marketing
Gregg Seigel................................. 41 Vice President / National Sales
Darren Shapiro............................... 41 Vice President / Sales
Robin A. Smith............................... 45 Vice President / Finance
Donald H. Thompson........................... 35 Vice President / Human Resources
</Table>
Members of the board of directors are elected for one-year terms and serve
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 five meetings during 2001, and
executed five 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 seven members. The committees
of the board of directors include an audit committee and a joint compensation
and stock option committee.
o AUDIT COMMITTEE. The members of the audit committee are Messrs.
Thomas, McCanna, and Keith. Messrs. Thomas and McCanna meet the
independence criteria established by the National Association of
Securities Dealers, Inc. If Mr. Leader is elected to the board of
directors, he will also be appointed to serve on the audit committee.
Mr. Leader meets the independence criteria established by the National
Association of Securities Dealers. The audit committee formally met
seven times during the year ended December 31, 2001. The report of the
audit committee describes the scope of authority of the committee and
may be found on page 19.
o Newly effective rules of the NASDAQ require that audit committees have
three members as of June 2001. Each of these members must be
independent provided that one non-independent director may serve on
the
7
<Page>
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.
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 JOINT COMPENSATION AND STOCK OPTION COMMITTEE. The members of the
joint compensation and stock option committee are Messrs. Thomas,
McCanna and Keith. 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 joint compensation and stock option
committee formally met 14 times during the year ended December 31,
2001.
DIRECTOR AND OFFICER PROFILES
In 1978, David D. Smith founded Comark Communications, Inc., a company
engaged in the manufacture of high power transmitters for UHF television
stations, and was an officer and director of Comark until 1986. He also was a
principal in other television stations prior to serving as a General Manager of
WCWB from 1984 until 1986. In 1986, David was instrumental in the formation of
Sinclair Broadcast Group, Inc. He has served as President and Chief Executive
Officer since 1988 and as Chairman of the Board of Sinclair Broadcast Group,
Inc. since September 1990. David Smith is currently a member of the Board of
Directors of Sinclair Ventures, Inc., Acrodyne Communications, Inc., G1440,
Inc., Summa Holdings, Ltd., KDSM, Inc., and Safe Waterways in Maryland.
Frederick G. Smith has served as Vice President of Sinclair since 1990 and
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, Safe Waterways in Maryland, and Gerstell Academy.
J. Duncan Smith has served as Vice President, Secretary and as a Director
of Sinclair since 1986. 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 Tampa / St. Petersburg, the renovation of the studio, offices and news
facility for WBFF in Baltimore and construction of the Sinclair headquarters
building in Hunt Valley, MD. J. Duncan Smith is currently a member of the board
of directors of Sinclair Ventures, Inc., the Boys Latin School, High Rock
Foundation, and Safe Waterways in Maryland.
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. Mr. Amy has over 18 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.
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
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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 1986. 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, Garrison Forest School, Safe Waterways in Maryland, 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.
Martin R. Leader, is a retired partner of the law firm ShawPittman in
Washington, D.C. where he specialized in communications law matters. Prior to
his service at ShawPittman, Mr. Leader was a senior partner with the law firm of
Fisher Wayland Cooper Leader & Zaragoza in Washington, D.C. from 1973 to 1999.
He is currently a director of Star Scientific, Inc. (NASDAQ) where he serves on
the Audit and Compensation Committees. Mr. Leader has served on the staff of the
Office of Opinions and Review of the Federal Communications Commission. He is a
member of the District of Columbia Bar. Mr. Leader graduated from Tufts
University and Vanderbilt University Law School.
Michael Granados has served as a Vice President/Regional Director of SCI
since March 2002. As a Vice President/Regional Director, Mr. Granados is
responsible for the Sacramento, Las Vegas, San Antonio, Oklahoma City, Kansas
City, Mobile/Pensacola, Milwaukee, St. Louis, Champaign/Springfield and Madison
markets. Prior to his appointment as Vice President/Regional Director, Mr.
Granados served as Regional Director since July 1996. Prior to July 1996, Mr.
Granados has served as the General Manager of WTTV, San Antonio. 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 Vice President/Regional Director of SCI since
March 2002. As a Vice President/Regional Director, Mr. Marks is responsible for
the Baltimore, Columbus, Pittsburgh, Flint, Tallahassee, Charleston, WV,
Portland, Springfield, Minneapolis, Tampa, Syracuse, Norfolk, Richmond, Buffalo
and Rochester markets. Prior to his appointment as Vice President/Regional
Director, Mr. Marks served as Regional Director since October 1994. Prior to his
appointment as Regional Director, Mr. Marks served as General Manager for WBFF,
Baltimore since July 1991. From 1986 until joining WBFF in 1991, Mr. Marks
served as General Sales Manager at WTTE, Columbus. Prior to that time, he was
national sales manager for WFLX-TV in West Palm Beach, Florida.
Craig Millar has served as a Vice President/Regional Director since March
2002. As a Vice President/Regional Director, Mr. Millar is responsible for the
Raleigh, Asheville/Greenville, Greensboro, Charleston, (SC), Tri-Cities, Des
Moines, Cape Girardeau/Paducah, Cedar Rapids, Peoria, Nashville, Birmingham,
Indianapolis, Lexington, Cincinnati and Dayton markets. Prior to his appointment
as Vice President/Regional Director, Mr. Millar served as Regional Director
since July 1998. 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 of
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.
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David R. Bochenek has served as Corporate Controller since March 2000.
Prior to joining 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 Certified
Public Accountant.
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 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 was the Program Director at WLVI in Boston,
Massachusetts. Mr. Butler attended the Graduate Business School of the
University of Cincinnati from 1975 to 1976.
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.
Lawrence Fiorino founded G1440 in April 1998. From 1996 to 1998, was vice
president of systems and technology for The Ryland Group, Inc. Mr. Fiorino is a
Certified Public Accountant, has a BA in Accounting, an MBA in MIS, and is a
columnist for Builder Magazine's "CyberBuilder" feature and The Business
Monthly.
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.
During 1996 to 1997, Mr. Hyman worked as a Johns Hopkins University
congressional fellowship. Previously, 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 an active duty Naval officer for nine
years and is currently a drilling Naval Reservist. Holding the rank of Captain,
he is the Commanding Officer of the U.S. Naval Space Command Reserve Unit in
Dahlgren, Virginia. 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 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 30 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 Army
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 1992 to 1997, Ms.
Rutishauser was the Assistant Treasurer for Treasure Chest Advertising Company
and Integrated Health
10
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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.
Jeffrey W. Sleete has served as VP of Marketing since the fall of 2001.
Prior to that he was a Regional Sales Counselor for SCI since November 1999. Mr.
Sleete also served as a Regional Director and was responsible for the
Minneapolis and Flint markets. Prior to joining SCI Television 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.
Gregg L. Siegel has served as Vice President of National Sales since June
2001. Prior to this he has worked as Director of Business Development, Strategic
Sales Manager and as a national sales manager on a regional basis since starting
with Sinclair in 1994. From 1982 to 1994 Mr. Siegel worked for several national
representative sales firms in sales and management capacities. Mr. Siegel
received a bachelors' degree in communications and marketing from the University
of Arizona.
Darren J. Shapiro has served as Vice President of Sales since mid-2001. His
duties include overseeing all levels of sales in Sinclair's top twenty markets.
From 1989, when Mr. Shapiro joined Sinclair, to 2001, he has held various sales
management positions including Director of Internet Sales, Strategic Sales
Manager, General Sales Manager, Local Sales Manager and Corporate National Sales
Manager. Prior to joining Sinclair, Mr. Shapiro was a Senior Account Executive
for Seltel Inc. in New York City. Mr. Shapiro holds a bachelors' degree in
Economics from the University of Rochester.
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 a 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.
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EXECUTIVE COMPENSATION TABLE
The following table sets forth certain information regarding annual and
long-term compensation for services rendered in all capacities during the year
ended December 31, 2001 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
<Table>
<Caption>
LONG-TERM
COMPENSATION
NAME AND ANNUAL COMPENSATION SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (a) OPTIONS GRANTED (#) COMPENSATION (b)
------------------ --------- ------ -------- ------------------- ----------------
David D. Smith................... 2001 $1,000,000 --- --- $4,713
President and Chief Executive 2000 1,000,000 --- 150,000 6,659
Officer 1999 1,072,500 $603,115 --- 4,609
Frederick G. Smith............... 2001 190,000 --- --- 4,381
Vice President 2000 190,000 --- --- 4,877
1999 190,000 --- --- 4,277
J. Duncan Smith.................. 2001 190,000 --- --- 4,081
Vice President and Secretary 2000 190,000 --- --- 4,877
1999 190,000 --- --- 15,165
David B. Amy..................... 2001 300,000 --- 10,000 4,713
Executive Vice President and 2000 300,000 --- 100,000 6,659
Chief Financial Officer 1999 300,000 75,000 --- 9,145
Barry M. Faber................... 2001 230,000 --- 5,000 4,547
Vice President - General Counsel 2000 210,000 36,000 15,000 7,223
1999 158,000 15,000 20,000 9,273
Barry P. Drake (c)............... 2001 234,229 --- 10,000 3,297
Chief Executive Officer of SCI 2000 450,000 50,000 --- 6,659
1999 400,000 --- --- 4,609
</Table>
(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) On February 27, 2001, Barry P. Drake announced his resignation as Chief
Executive Officer of SCI, which took effect May 31, 2001.
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STOCK OPTIONS
The following table shows the number of stock options granted during 2001
and the 2001 year-end value of the stock options held by the named executive
officers:
<Table>
<Caption>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL OPTIONS MARKET ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE ON PRICE APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE DATE OF EXPIRATION ----------------------------------
NAME GRANTED FISCAL YEAR PER SHARE GRANT DATE 0% 5% 10%
---- ------- ----------- --------- ------- ---- --- --- ---
David D. Smith......... --- --- --- --- --- --- --- ---
Frederick G. Smith..... --- --- --- --- --- --- --- ---
J. Duncan Smith........ --- --- --- --- --- --- --- ---
David B. Amy........... 10,000 1.42% $ 8.81 $ 8.81 3/12/11 --- $55,406 $140,409
Barry Faber............ 5,000 0.71% 8.81 8.81 3/12/11 --- 27,703 70,204
Barry P. Drake......... 10,000 1.42% 8.81 8.81 5/31/01 --- (a) (a)
</Table>
(a) The unvested balance of these options expired without being exercised on
June 30, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 2001
OPTION VALUES
The following table shows information regarding options exercised during
2001, the number of securities underlying unexercised options, and the value of
"in the money" options outstanding on December 31, 2001.
<Table>
<Caption>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS "IN-THE-MONEY" OPTIONS
SHARES ACQUIRED VALUE AT DECEMBER 31, 2001 AT DECEMBER 31, 2001 (a)
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
David D. Smith....... --- --- 75,000 75,000 $15,750 $15,750
Frederick G. Smith... --- --- --- --- --- ---
J. Duncan Smith...... --- --- --- --- --- ---
David B. Amy......... --- --- 151,250 158,750 12,125 15,375
Barry Faber.......... --- --- 38,750 41,250 2,388 4,013
Barry P. Drake....... 32,500 $37,867 --- --- --- ---
</Table>
(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, 2001, 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 do not have an employment agreement with Mr. Smith and do not currently
anticipate entering into an agreement. The compensation committee has set David
Smith's base salary for 2002 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 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 Frederick Smith.
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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, which terminated (except for
non-competition and confidentiality restrictions on Mr. Drake) when Mr. Drake
resigned effective May 31, 2001.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation and stock option 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. 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
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. 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 and on a contractual basis.
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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. Options are awarded by the
compensation and stock option committee to employees based on overall
performance. In that regard, during the fiscal year ended December 31, 2001, the
committee granted employees options to purchase 702,900 shares of class A common
stock. Named executive officers received options totaling 25,000 shares of class
A common stock. The options were awarded as part of a decision by the
compensation and stock option committee to make regular awards of options to
employees.
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 2001 was determined in
accordance with the compensation policies established by the compensation
committee. For the year ending December 31, 2002, his base compensation has been
set at $1,000,000. David Smith elected not to receive a cash bonus in 2001.
COMPENSATION DEDUCTION LIMIT. The committee has considered the $1 million
limit on deductible executive compensation that is not performance-based. The
committee believes that all executive compensation expenses paid in 2001will 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
Daniel C. Keith
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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 2001, none of the named executive officers participated in any
deliberations of our compensation and stock option committee relating to
compensation of the named executive officers.
The members of the compensation and stock option committee are Messrs.
Thomas, Keith 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 2001, we paid Thomas & Libowitz, P.A.,
approximately $386,541 in fees and expenses for legal services.
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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, 1996 through December 31, 2001.
The performance graph assumes that an investment of $100 was made in the class A
common stock and in each Index on December 31, 1996, 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.
[PERFORMANCE CHART]
<Table>
<Caption>
COMPANY/INDEX/MARKET 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
Sinclair Broadcast Group........... 100.00 179.33 159.60 99.56 81.84 77.18
NASDAQ Telecommunications
Index.......................... 100.00 145.96 241.57 431.01 183.63 137.72
NASDAQ Market Index-U.S............ 100.00 122.48 172.92 320.92 192.93 148.92
</Table>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 2001, 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 entitie in which the above persons have substantial interests.
WPTT. 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. During
the year ended December 31, 2001, we received $0.5 million in interest payments
on this note. At December 31, 2001, the balance on this note was $6.6 million.
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 $18.8
million. We closed on this acquisition on January 7, 2002 and the WPTT note was
paid in full on that date.
AFFILIATED LEASES. In 1997, we entered into a lease transaction with
Cunningham Communications, Inc. (CCI), a corporation wholly owned by the
controlling stockholders, to lease space on a broadcast tower from CCI.
Aggregate annual rental payments related to this lease were $0.6 million in
2001. The aggregate annual rental payments related to this lease are scheduled
to be $0.6 million in 2002 and 2003.
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 $0.8 million
in 2001. The aggregate annual rental payments related to the administrative
facility are scheduled to be $0.8 million in 2002 and 2003. During 2001, we
chartered airplanes owned by certain companies controlled by the controlling
stockholders and incurred expenses of approximately $40,992 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 $1.3 million in 2001, and are scheduled
to be $1.3 million in 2002 and $1.4 million in 2003.
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
2001 on the note was $0.2 million. At December 31, 2001, $1.6 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 ranging from seven to twenty-five
years. Aggregate annual rental payment related to these leases was $0.7 million
in 2001.
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 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.
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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 2005, with a balloon payment due at
maturity in the amount of $1.5 million. Additionally, monthly interest payments
commenced April 1993 and continued until December 1996. Principal and interest
paid in 2001 on this founders' note was $0.6 million and at December 31, 2001,
$5.3 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 2001 on this founders' note
was $1.1 million. At December 31, 2001, $0.05 million in principal amount of
this founders' note remained outstanding.
RELATIONSHIP WITH CUNNINGHAM BROADCASTING CORPORATION (CUNNINGHAM).
Cunningham (formerly Glencairn) is a corporation owned by
o Carolyn C. Smith, the mother of the controlling stockholders (10%),
and
o certain trusts established by Carolyn C. Smith for the benefit of her
grandchildren (the Cunningham Trusts) (90%).
The 90% equity interest in Cunningham owned by the Cunningham Trusts is
held through the ownership of non-voting common stock. The 10% equity interest
in Cunningham owned by Carolyn C. Smith is held through the ownership of all of
the issued and outstanding voting stock of Cunningham. Mrs. Smith is
Vice-President of Cunningham.
There have been, and we expect that in the future there will be,
transactions between us and Cunningham. Cunningham is the owner-operator and FCC
licensee of WNUV in Baltimore, Maryland, WRGT in Dayton, Ohio, WVAH in
Charleston, West Virginia, WTAT in Charleston, South Carolina, WBSC (formally
WFBC) in Asheville/Greenville/Spartanburg, South Carolina, and WTTE in Columbus,
Ohio. We have entered into LMAs with Cunningham pursuant to which we provide
programming to Cunningham for airing on WNUV, WRGT, WVAH, WTAT, WFBC, and WTTE
in exchange for the payment by us to Cunningham of a monthly fee that covers all
operating expenses and reasonable capital and other expenses of the station.
These payments totaled $10.0 million in 2001.
In June 1995, we acquired options from Carolyn Smith and the Cunningham
trusts (the Cunningham Options) which grant to us the right to acquire, subject
to applicable FCC rules and regulations, stock comprising up to a 100% equity
interest in Cunningham. Each Cunningham 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 Cunningham on the date of
exercise (plus interest at a rate of 10% from the respective acquisition date).
On November 15, 1999, we entered into four separate plans and agreements of
merger, pursuant to which we would acquire through merger with subsidiaries of
Cunningham television broadcast stations WABM, Birmingham, Alabama, KRRT, San
Antonio, Texas, WVTV, Milwaukee, Wisconsin and WRDC, Raleigh/Durham, North
Carolina. We closed on these acquisitions on February 3, 2002 for consideration
of $7.7 million worth of unregistered Class A Common Stock of the Company
totaling 773,029 shares.
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 2001 of
$0.2 million.
BAY TELEVISION, INC. In January 1999, SCI entered into a Local Marketing
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 Local Marketing Agreement provides that we
deliver television programming to Bay Television, Inc., which broadcasts the
programming in return for a monthly fee to Bay of $143,500. We must also make an
annual payment equal to 50% of the annual broadcast cash flow, as defined in the
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Local Marketing Agreement, of the station which is in excess of $1.7 million.
This additional payment is reduced by 50% of the broadcast cash flow, as defined
in the Local Marketing Agreement, that was below zero in prior calendar
years. During 2001 we made payments of approximately $1.7 million related to
the Local Marketing Agreement. No payment was made in 2001 related to the
broadcast cash flow that exceeded $1.7 million for the year ended December
31, 2001 as it was offset by the negative broadcast cash flows of prior years.
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 state of Sinclair's financial reporting. The committee held
seven meetings during fiscal year 2001.
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 Form 10-K for
the year ended December 31, 2001 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 independent auditors.
Audit Committee
Lawrence E. McCanna
Basil A. Thomas
Daniel C. Keith
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DISCLOSURE OF FEES CHARGED BY INDEPENDENT ACCOUNTANTS
The following summarizes the fees charged by Arthur Andersen, LLP for
certain services rendered to Sinclair during 2001.
AUDIT FEES. Fees for the calendar year audit and the reviews of Forms 10-Q
were $299,685.
AUDIT RELATED SERVICES. Includes benefit plan audits, accounting
consultations, offering assistance, SEC consulting and comfort letters
totaling $357,367.
FEES FOR FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION. None.
ALL OTHER FEES. All other fees billed to Sinclair through December 31, 2001
totaled $434,226 which represented fees for tax planning and compliance
services.
STOCKHOLDER PROPOSALS
If you intend to propose any matter for action at our 2003 annual meeting
of stockholders, you must submit your proposal to the Secretary of Sinclair at
10706 Beaver Dam Road, Hunt Valley, MD 21030 not later than December 17, 2002 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 2003 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 3, 2003.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
April 15, 2002
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PROXY
SINCLAIR BROADCAST GROUP, INC.
PROXY FOR ANNUAL MEETING OF MAY 23, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby authorizes and directs Legg Mason Trust Company,
as trustee (the "Trustee") of Sinclair Broadcast Group, Inc. 401(k) Profit
Sharing Plan, to vote as proxy for the undersigned as herein stated at the
Annual Meeting of Stockholders of Sinclair Broadcast Group, Inc. (the
"Company") to be held on May 23, 2002 at the Company's corporate office, 2nd
floor, 10706 Beaver Dam Road, Hunt Valley, MD 21030, at 10:00 a.m. local
time, and at any adjournment thereof, all shares of Common Stock of the
Company allocated to the account of the undersigned under such Plan, on the
proposals set forth on the reverse hereof and in accordance with the
Trustee's discretion on any other matters that may properly come before the
meeting or any adjournments thereof. The undersigned hereby acknowledges
receipt of the Notice and Proxy Statement, dated April 15, 2002.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED BY THE TRUSTEE IN ITS SOLE
DISCRETION IN THE BEST INTEREST OF THE PLAN PARTICIPANTS AND BENEFICIARIES.
PLEASE MARK, SIGN, DATE AND RETURN THIS VOTING INSTRUCTION CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2 PLEASE MARK
YOUR VOTES
AS INDICATED /X/
IN THIS
EXAMPLE
1. Election of eight directors for a term expiring in 2002
as set forth in the proxy statement.
Nominees: 01 David D. Smith, 02 Frederick G. Smith, 03 J. Duncan Smith,
04 Robert E. Smith, 05 Basil A. Thomas, 06 Lawrence E. McCanna,
07 Daniel C. Keith, 08 Martin R. Lender
FOR WITHHELD FOR ALL EXCEPT:__________________ 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
2. Ratification of the appointment of Arthur Andersen LLP as each of the other proposals and in accordance
independent auditors with the proxies' discretion on any other
business that may properly come before the
FOR AGAINST ABSTAIN 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.
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<Page>
PROXY
SINCLAIR BROADCAST GROUP, INC.
PROXY FOR ANNUAL MEETING OF MAY 23, 2002
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, will 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 23, 2002 at the SBG
corporate office, 2nd floor, 10706 Beaver Dam Road, Hunt Valley, MD 21030 at
10:00 a.m. local time.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
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<Table>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2 PLEASE MARK
YOUR VOTES
AS INDICATED /X/
IN THIS
EXAMPLE
1. Election of eight directors for a term expiring in 2002
as set forth in the proxy statement.
Nominees: 01 David D. Smith, 02 Frederick G. Smith, 03 J. Duncan Smith,
04 Robert E. Smith, 05 Basil A. Thomas, 06 Lawrence E. McCanna,
07 Daniel C. Keith, 08 Martin R. Lender
FOR WITHHELD FOR ALL EXCEPT:__________________ 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
2. Ratification of the appointment of Arthur Andersen LLP as each of the other proposals and in accordance
independent auditors with the proxies' discretion on any other
business that may properly come before the
FOR AGAINST ABSTAIN 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.
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FOLD AND DETACH HERE
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