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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Section 240.14a-11(c) or Section 240.14a-2.
NTL INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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[NTL LOGO]
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
------------------------
PROXY STATEMENT AND
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1998
------------------------
The Annual Meeting of Stockholders of NTL Incorporated (the "Company") will
be held at 10:45 a.m., local time, on Wednesday, June 3, 1998, at The Waldorf
Astoria Hotel, fourth floor, Park Avenue Center/North, located at 301 Park
Avenue, New York, New York 10022, for the following purposes:
1. To elect three directors to the Board of Directors.
2. To ratify the appointment by the Board of Directors of Ernst & Young
LLP as independent auditors for the year ending December 31, 1998.
3. To transact any other business that may properly be brought before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 14, 1998,
as the record date for the determination of the stockholders entitled to notice
of and to vote at the meeting. Accordingly, only stockholders of record at the
close of business on that date will be entitled to vote at the meeting. The
transfer books will not be closed. A list of the stockholders entitled to vote
at the meeting will be located at the Company's principal executive offices, 110
East 59th Street, New York, New York 10022, at least ten days prior to the
meeting and will also be available for inspection at the meeting.
A copy of the Annual Report for 1997 is being mailed together with this
proxy material.
It is important that your shares be represented at the meeting. Regardless
of whether you plan to attend the meeting, please execute the enclosed proxy and
return it promptly in the accompanying postage-paid envelope. Submitting this
executed proxy will not preclude your right to revoke it and to vote in person
at the meeting.
By order of the Board of Directors,
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1998
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NTL INCORPORATED
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1998
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PROXY STATEMENT
------------------------
This proxy statement sets forth certain information with respect to the
accompanying proxy proposed to be used at the Annual Meeting of Stockholders of
NTL Incorporated (the "Company" or "NTL"), or at any adjournment or postponement
thereof (the "Annual Meeting"), for the purposes set forth in the accompanying
Notice of Annual Meeting. The Board of Directors of the Company solicits this
proxy and urges you to sign the proxy, fill in the date, and return it
immediately to the Secretary of the Company. The prompt cooperation of the
stockholders is necessary in order to ensure a quorum and to avoid expenses and
delay.
Holders of record of the Company's Common Stock, par value $.01 per share
(the "Common Stock"), at the close of business on April 14, 1998, will be
entitled to vote at the meeting. At the close of business on April 14, 1998,
32,311,367 shares of Common Stock were outstanding and entitled to vote at the
meeting. Each share of Common Stock is entitled to one vote.
The proxy is revocable on written instructions, including a subsequently
received proxy, signed in the same manner as the proxy, and received by the
Secretary of the Company at any time at or before the balloting on the matter
with respect to which such proxy is to be exercised. If you attend the meeting
you may, if you wish, revoke your proxy by voting in person. This proxy
statement and the accompanying proxy materials are being mailed to stockholders
on or about April 28, 1998.
The meeting will be held at 10:45 a.m., local time, on Wednesday, June 3,
1998, at The Waldorf Astoria Hotel, fourth floor, Park Avenue Center/North,
located at 301 Park Avenue, New York, New York 10022.
All expenses of soliciting proxies, including clerical work, printing and
postage, will be paid by the Company. Proxies may be solicited personally, or by
mail, telephone or facsimile, by current and former directors, officers and
other employees of the Company, but the Company will not pay any compensation
for such solicitations. In addition, the Company has agreed to pay D.F. King &
Co., Inc. a fee of $4,000, plus reasonable expenses, for proxy solicitation
services. The Company will also reimburse brokers and other persons holding
shares in their names or in the names of nominees for their expenses for sending
material to principals and obtaining their proxies.
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SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of April 10, 1998, by (i) each executive
officer and director of the Company, (ii) all directors and executive officers
as a group (iii) stockholders holding 5% or more of the Company's Common Stock.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------------
PRESENTLY
EXERCISABLE
EXECUTIVE OFFICERS, DIRECTORS AND COMPANY OPTIONS AND
PRINCIPAL STOCKHOLDERS STOCK WARRANTS (1) TOTAL PERCENT (2)
--------------------------------- ------- ------------ ----- -----------
J. Barclay Knapp............................ 140,932 1,686,112 1,827,044 5.38%
George S. Blumenthal (3).................... 114,126 1,699,955 1,814,081 5.34
Richard J. Lubasch (4)...................... 23,279 230,796 254,075 *
Leigh Costikyan Wood........................ 695 130,889 131,584 *
Gregg Gorelick.............................. 41,426 45,130 86,556 *
John F. Gregg............................... 800 112,666 113,466 *
Thomas S. DellaRocco (5).................... 4,755 195,888 200,643 *
Steven L. Wagner............................ -- 97,333 97,333 *
Hamid R. Heidary............................ 2,500 110,666 113,166 *
Ted H. McCourtney (6)....................... 85,120 58,808 143,928 *
Del Mintz (7)............................... 487,725 58,808 546,533 1.69
Sidney R. Knafel (8)........................ 1,847,317 368,743 2,216,060 6.78
Alan J. Patricof (9)........................ 7,227 58,808 66,035 *
Warren Potash............................... 1,389 58,808 60,197 *
Michael S. Willner (10)..................... 553,088 350,800 903,888 2.77
All directors and officers as a group (15 in
number)................................... 3,310,379 5,264,210 8,574,589 22.83
General Electric Investment Corporation
(11)...................................... 2,796,276 -- -- 8.66
G.E. Investment Management Incorporated
(11)...................................... 732,290 -- -- 2.27
3003 Summer Street
Stamford, CT 06904
Ronald Baron (12)........................... 3,104,431 -- -- 9.61
Baron Capital, Inc. (12)
767 Fifth Avenue
New York, NY 10153
The Capital Group Companies, Inc. (13)...... 1,972,600 -- -- 6.11
333 South Hope Street
Los Angeles, CA 90071
Hyder plc (14).............................. 1,950,000 -- -- 6.04
Swalec Head Offices
Newport Road
St. Mellons, Cardiff
South Glamorgan, Wales CF3 9XW
Neuberger & Berman LLC (15)................. 1,661,748 -- -- 5.15
605 Third Avenue
New York, NY 10158
(footnotes on following page)
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* Represents less than one percent.
(1) Includes shares of Common Stock purchased upon the exercise of options
which are exercisable or become so in the next 60 days ("Presently
Exercisable Options"). Of the options and warrants shown in the table
above, (a) 435,584 options were assumed by NTL in the Merger, having a
weighted average exercise price of $1.62 per share; (b) 4,675,065 options
are employee and non-employee director options that have been issued by NTL
under the 1993 Employee Stock Option Plan, the 1993 Non-Employee Director
Stock Option Plan or certain other stock option agreements, having a
weighted average exercise price of $13.61 per share; and (c) 619,870 are
NTL seven-year warrants that were issued pursuant to certain
non-competition agreements having an exercise price of $5.57 per share.
(2) Includes Common Stock and Presently Exercisable Options and Warrants.
(3) Includes 2,112 shares of Common Stock owned by trusts for the benefit of
Mr. Blumenthal's children.
(4) Includes 111 shares of Common Stock owned by Mr. Lubasch as custodian for
his child, as to which shares Mr. Lubasch disclaims beneficial ownership.
(5) Includes 133 shares of Common Stock owned by Mr. DellaRocco's wife and 76
shares of Common Stock owned by Mr. DellaRocco's son.
(6) Includes 74,073 shares of Common Stock held by a partnership in which Mr.
McCourtney is a general partner and 556 shares of Common Stock held by
trusts for the benefit of Mr. McCourtney's children, as to which shares Mr.
McCourtney disclaims beneficial ownership.
(7) Includes 39,181 shares of Common Stock owned by Mr. Mintz's children or by
Mr. Mintz's children as trustees for their children and 25 shares owned by
Mr. Mintz's wife, as to which shares Mr. Mintz disclaims beneficial
ownership.
(8) Includes 32,804 shares of Common Stock owned by Mr. Knafel's wife and
754,134 shares of Common Stock owned by a trust account for the benefit of
children of Mr. Knafel, as to which shares Mr. Knafel disclaims beneficial
ownership. Includes 30,100 shares owned by a corporation directly and 2,500
shares owned by a trust, as to which Mr. Knafel disclaims beneficial
ownership. An additional 78,581 shares are owned by an adult child of Mr.
Knafel , as to which shares Mr. Knafel disclaims beneficial ownership.
(9) Includes 69 shares of Common Stock owned by Mr. Patricof's wife and 268
shares owned by, or in trust for the benefit of, Mr. Patricof's children,
as to which shares Mr. Patricof disclaims beneficial ownership.
(10) Includes 117,667 shares of Common Stock held by a trust account for the
benefit of Mr. Willner's children, as to which shares Mr. Willner disclaims
beneficial ownership.
(11) Based solely upon Schedule 13-G (Amendment No. 2), dated February 13, 1998,
filed by General Electric Investment Corporation and GE Investment
Management Incorporated with the Securities and Exchange Commission (the
"SEC").
(12) Based solely upon Schedule 13-G, dated April 27, 1998, filed by Baron
Capital, Inc. and Ronald Baron with the SEC.
(13) Based solely upon Schedule 13-G (Amendment No. 2), dated February 11, 1998,
filed by The Capital Group Companies, Inc. with the SEC.
(14) Based solely upon Schedule 13-D, dated December 19, 1996, filed by Hyder
plc with the SEC.
(15) Based solely upon Schedule 13-G, dated February 17, 1998, filed by
Neuberger & Berman LLC with the SEC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors and executive officers,
and persons who own more than ten percent of a registered class of the Company's
equity securities file with the SEC, and with each exchange on which the Common
Stock trades, initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers, directors
and greater than ten percent beneficial owners are required by the SEC's
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended
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December 31, 1997, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with, except that in the case of Sidney R. Knafel, a filing reporting a
transaction made in 1997 was inadvertently not made when required in 1997, but
instead was made in April of 1998.
ELECTION OF DIRECTORS
(ITEM 1)
ELECTION OF DIRECTORS
Pursuant to the Company's Restated Certificate of Incorporation, which
provides for a classified Board of Directors, the Board of Directors consists of
three classes of directors with overlapping three year terms. One class of
directors is to be elected each year with terms expiring on the third succeeding
annual meeting after such election. The terms of three directors expire this
year. Accordingly, at the meeting, three directors will be elected to serve for
a three year term and until their successors shall have been elected and
qualified. Unless otherwise indicated on any proxy, the proxy holders intend to
vote the shares it represents for each of the nominees whose biographical
sketches appear in the section immediately following. Each of the nominees are
now serving as directors of the Company and were previously elected by the
stockholders of the Company. The proxies cannot be voted for a greater number of
persons than the number of nominees named.
The election to the Board of Directors of each of the nominees identified
in this Proxy Statement will require the affirmative vote of the holders of a
plurality of the shares of Common Stock present in person or represented by
proxy at the annual meeting and entitled to vote. In tabulating the vote,
abstentions from voting and broker non-votes will be disregarded and have no
effect on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE
NOMINEES IDENTIFIED FOR REELECTION
The votes applicable to the shares represented by proxies in the
accompanying form will be cast in favor of the three nominees below. While it is
not anticipated that any of the nominees will be unable to serve, if any should
be unable to serve, the proxy holders reserve the right to substitute any other
person.
The nominees and continuing directors of the Company were elected by the
Company's stockholders in 1995, 1996 and 1997, as applicable. The continuing
directors will serve for the terms indicated and until their successors are duly
elected and qualified.
PRESENT DIRECTORS WHO ARE NOMINEES FOR REELECTION
POSITION
NAME AGE (PROPOSED TERM AS DIRECTOR)
- ---- --- ---------------------------
Sidney R. Knafel.................. 67 Director (2001)
Ted H. McCourtney................. 59 Director (2001)
Del Mintz......................... 70 Director (2001)
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CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
POSITION
NAME AGE (TERM AS DIRECTOR)
- ---- --- ------------------
George S. Blumenthal.............. 54 Director, Chairman of the
Board and Treasurer (1999)
J. Barclay Knapp.................. 41 Director, President, Chief
Executive Officer, and
Chief Financial Officer
(1999)
Michael S. Willner................ 46 Director (1999)
Alan J. Patricof.................. 63 Director (2000)
Warren Potash..................... 66 Director (2000)
Additional information as of April 14, 1998 regarding the two nominees for
election as directors and the continuing directors and information regarding
executive officers of the Company is as follows:
NOMINEES
Sidney R. Knafel, a director of the Company since its formation, has been
Managing Partner of SRK Management Company, a private investment company, since
1981. In addition, Mr. Knafel is Chairman of Insight Communications, Inc. and
BioReliance Corporation. Mr. Knafel is also a director of General American
Investors Company, Inc., IGENE Biotechnology, Inc., Cellular Communications
International, Inc. ("CCII") and CoreComm Incorporated ("CoreComm") and some
privately owned companies.
Ted H. McCourtney, a director of the Company since its formation, is a
General Partner of Venrock Associates, a venture capital investment partnership,
a position he has held since 1970. Mr. McCourtney also serves as a director of
MedPartners Inc., Visual Networks, Inc. and several privately owned companies.
Del Mintz, a director of the Company since its formation, is President of
Cleveland Mobile TeleTrak, Inc. and Cleveland Mobile Radio Sales, Inc. and Ohio
Mobile TeleTrak, Inc., companies providing telephone answering and radio
communications services in Cleveland and Columbus, respectively. Mr. Mintz has
held similar positions with the predecessor of these companies since 1967. Mr.
Mintz is President of several other companies, and was President and a principal
stockholder of Cleveland Mobile Cellular Telephone, Inc. before such company was
acquired by merger with CCI's predecessor in 1985. Mr. Mintz is also a director
of CCII, CoreComm and several privately owned companies.
CONTINUING DIRECTORS
George S. Blumenthal, has been Chairman, Treasurer and a director of the
Company since its formation and a director of OCOM Corporation, now a subsidiary
of the Company ("OCOM") since its inception in 1990, as well. Mr. Blumenthal was
also Chief Executive Officer of the Company until October 1996. Mr. Blumenthal
was President of Blumenthal Securities, Inc. (and its predecessors), a member
firm of The New York Stock Exchange, from 1967 until 1992. Mr. Blumenthal was
Chairman, Treasurer and a director of Cellular Communications, Inc. ("CCI"),
which positions he held since CCI's founding in 1981 until its merger in August
1996 into a subsidiary of AirTouch Communications, Inc. (the "CCI Merger"). Mr.
Blumenthal is Chairman and a director of CoreComm and is also a director of
Andover Togs, Inc.
J. Barclay Knapp, is the President, Chief Executive Officer, Chief
Financial Officer and a director of the Company and has held these positions
since its formation with the exception that Mr. Knapp was Chief Operating
Officer until October 1996 when he was appointed Chief Executive Officer. Mr.
Knapp has also held these positions at OCOM since its inception in 1990, with
the exception that he was the Executive Vice President from 1990 until April
1993, when he was appointed President. In addition, Mr. Knapp was also Executive
Vice President, Chief Operating Officer, Chief Financial Officer and a director
of CCI, until the CCI Merger. Mr. Knapp is Executive Vice President, Chief
Operating Officer and a director of CCII and also holds the position of
President, Chief Executive Officer and director of CoreComm.
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Alan J. Patricof, a director of the Company since its formation, is
Chairman of Patricof & Co. Ventures, Inc., a venture capital firm he founded in
1969. Mr. Patricof also serves as a director CCII, CoreComm and other privately
owned companies.
Warren Potash, has been a director of the Company since its formation. Mr.
Potash retired in 1991 as President and Chief Executive Officer of the Radio
Advertising Bureau, a trade association, a position he had held since February
1989. Prior to that time and beginning in 1986, he was President of New Age
Communications, Inc., a communications consultancy firm. Until his retirement in
1986, Mr. Potash was a Vice President of Capital Cities/ABC Broadcasting, Inc.,
a position he held since 1970. Mr. Potash is also a director of CCII and
CoreComm.
Michael S. Willner, a director of the Company since October 1993, has
served as President and Chief Operating Officer of Insight Communications
Company, L.P. since 1985. Mr. Willner is currently President of Insight
Communications, Inc., a position he has held since 1985. Mr. Willner is also a
director of C-Span and the National Cable Television Association.
EXECUTIVE OFFICERS OTHER THAN DIRECTORS
Richard J. Lubasch, 51, has been the Company's Senior Vice
President-General Counsel and Secretary since its formation and has held these
positions at OCOM since its inception in 1990. Mr. Lubasch was Vice
President-General Counsel and Secretary of CCI from July 1987 until the CCI
Merger. Mr. Lubasch is also Senior Vice President-General Counsel and Secretary
of CCII and CoreComm, as well as Treasurer of CCII.
Leigh Costikyan Wood, 40, has been the Company's Senior Vice President
since October 1996 and is the Chief Operating Officer of the Company's U.K.
operations. From April 1993 until the CCI Merger, Ms. Wood had been the Chief
Executive Officer of a Joint Venture between CCI and AirTouch. From 1982 until
1984, she was Deputy Chief Financial Officer of General Atlantic Corp., a
private investment firm. Previously, she was employed by Peat Marwick Mitchell &
Co. Ms. Wood had been Vice President-Operations of CCI from 1984 until the CCI
Merger.
Gregg Gorelick, 39, has been the Company's Vice President-Controller since
its formation. From 1981 to 1986 he was employed by Ernst & Whinney (now known
as Ernst & Young LLP). Mr. Gorelick is a certified public accountant and was
Vice President-Controller of CCI from 1986 until the CCI Merger. He also holds
that position at CCII and CoreComm.
John F. Gregg, 34, has been the Company's Vice President of Corporate
Development since August of 1996. Mr. Gregg joined the Company in 1994 as
Managing Director of Corporate Development. He is Vice Chairman and a director
of Virgin Net, a joint venture between the Company and Virgin Communications
Group. Prior to his employment by the Company, Mr. Gregg was employed by Golder,
Thoma & Cressey, a venture capital firm.
Thomas S. DellaRocco, 40, is the Company's Vice President-Construction and
Group Director of Network Services of the Company's U.K. operations. Mr.
DellaRocco joined the Company in 1993 as Group Director and head of Construction
and Planning. Mr. DellaRocco has been a Vice President of the Company since June
1994. Previously, Mr. DellaRocco held positions in the CCI/AirTouch joint
venture as Vice President of Network Services (1991), Vice President of
Technical Operations (1989) and Project Manager (1987).
Steven L. Wagner, 46, is the Company's Vice President-Consumer Services and
is Group Managing Director of the National Media Services division in the
Company's U.K. operations. Mr. Wagner joined the Company in February 1994 as
Group Director of Consumer Services of the Company's U.K. operations and was
appointed Vice President-Consumer Services of NTL in June 1994. Mr. Wagner has
spent the past fifteen years in consumer and business related activities. Most
recently, Mr. Wagner served as Vice President, Eastern Region for the Walt
Disney Company's premium television service, the Disney Channel.
Hamid R. Heidary, 41, is the Company's Vice President-Network Services
Operations in the Company's U.K. operations. Mr. Heidary joined the Company in
1993 and has served as the Group Managing Director of
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the Company's U.K. operations and had been Group Director of Network Services.
Mr. Heidary was first appointed as a Vice President of the Company in June 1994.
Mr. Heidary has spent over fifteen years in various technical roles within the
cable television and communications industry. Prior to joining the Company, Mr.
Heidary held the position of Vice President of Engineering at C-COR Electronics,
Inc. of Pennsylvania, USA.
Executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
During calendar 1997, ten meetings (including regularly scheduled and
special meetings) of the Board of Directors of the Company were held. The Board
of Directors has a compensation and option committee and an audit committee.
Messrs. Knafel, McCourtney and Mintz serve as members of the Board of Directors'
compensation and option committee and Messrs. Mintz, Patricof and Potash serve
as members of the Board of Directors' audit committee. The compensation and
option committee reviews and makes recommendations regarding annual compensation
for Company officers and the audit committee oversees the Company's financial
reporting process on behalf of the Company's Board of Directors. During calendar
year 1997, the compensation and option committee held two meetings and the audit
committee held one meeting. No director during 1997 attended fewer than 78% of
the meetings of the Board of Directors of the Company and committee meetings of
the Board of which he was a member. Directors are reimbursed for out-of-pocket
expenses incurred in attending meetings of the Board and the committees. In
addition, as of December 31, 1997, Messrs. Knafel, McCourtney, Mintz, Patricof,
Potash and Willner have each been granted options at the fair market value on
the date of grant to purchase an aggregate of 46,166 shares of Common Stock at a
weighted average price of $12.38 per share. In addition, Messrs. Knafel,
McCourtney, Mintz, Patricof and Potash have each been granted options from OCOM
at the fair market value on the date of grant to purchase an aggregate of 17,943
shares of Common Stock at a weighted average price of $2.28 per share. Directors
who are not officers are paid a fee of $500 for each Board of Directors meeting
and committee meeting that they attend.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
POLICY
The Compensation and Option Committee of the Board of Directors (the
"Committee") has the responsibility for the design and implementation of the
Company's executive compensation program. The Committee is composed entirely of
non-employee directors.
The Company's executive compensation program is designed to be closely
linked to corporate performance and return to shareholders. To this end, the
Company has developed an overall compensation strategy and specific compensation
plans that tie a very significant portion of an executive's aggregate
compensation to the appreciation in the Company's stock price. In addition,
executive bonuses are linked to the achievement of operational goals and
therefore relate to shareholder return. The overall objective of this strategy
is to attract and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's business strategy and
to link executive and shareholder interests through equity-based compensation,
thereby seeking to enhance the Company's profitability and shareholder value.
Each year the Committee conducts a review of the Company's executive
compensation to determine the appropriate level and forms of compensation. Such
review permits an annual evaluation of the link between the Company's
performance and its executive compensation.
In assessing compensation levels for the named executives, the Committee
recognizes the fact that certain executives have participated in the development
of the Company (and its predecessors) from its
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earliest stages, and have produced significant long-term value for shareholders
over the course of the Company's existence. In determining the annual
compensation for the Chief Executive Officer, the Committee uses the same
criteria as it does for the other named executives.
BASE SALARY AND BONUS
In furtherance of the Company's incentive-oriented compensation goals set
forth above, cash compensation (annual base salary and bonus) is generally set
below levels paid by comparable sized telecommunications companies and is
supplemented by equity-based option grants. With respect to 1997, the aggregate
annual base salary for the named executive officers increased by approximately
$427,700 from 1996 levels. The 1997 base salary for the Chief Executive Officer
of the Company was raised by $132,500 to $270,000. Prior to the CCI Merger, Mr.
Knapp received most of his salary from CCI, the cost of which was indirectly
paid by the Company (See footnote (1) to Summary Compensation Table). As a
result of the CCI Merger, the amount of their salary paid directly rather than
indirectly, has now increased.
STOCK OPTIONS
Under the Company's stock option plan, stock options were granted to
certain Company executive officers during 1997. Information with respect to such
option grants to the named executive officers is set forth in the "Option Grants
Table."
Stock options are designed to align the interest of executives with those
of shareholders. The options generally are granted at an exercise price equal to
the market price of the Common Stock on the date of grant and vest over a period
of five years. Accordingly, the executives are provided additional incentive to
create shareholder value over the long term since the full benefit of the
options cannot be realized unless stock price appreciation occurs over a number
of years.
In determining individual option grants, the Committee takes into
consideration the number of options previously granted to that individual, the
amount of time and effort dedicated to the Company during the preceding year and
expected commitment to the Company on a forward-looking basis. The Committee
also strives to provide each option recipient with an appropriate incentive to
increase shareholder value, taking into consideration their cash compensation
levels.
In 1994, 1996 and 1997, Mr. Knapp did not receive an option grant and in
1995 Mr. Knapp received an option to purchase 266,667 shares of Common Stock
with an exercise price of $22.88 (the fair market value of the Common Stock on
the date of grant adjusted to reflect the Stock Split). Mr. Knapp now owns
140,932 shares of Common Stock and holds options to purchase an additional
1,739,446 shares. The Committee believes that the equity interests in the
Company held by the named executive officers, including Mr. Knapp, represent a
significant incentive to increase overall shareholder value.
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COMPENSATION DEDUCTION CAP POLICY
In 1996, the Company's stockholders approved an amendment to the Company's
stock option plan to, among other things, comply with the requirements regarding
non-deductibility of compensation in excess of $1 million under sec.162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). Any compensation
realized from the exercise of such stock options granted at fair market value as
of the date of grant thus would generally be exempt from the deduction
limitations under sec.162(m) of the Code. Other annual compensation, such as
salary and bonus, is not expected to exceed $1 million per executive.
THE COMPENSATION AND OPTION COMMITTEE
Sidney R. Knafel
Ted H. McCourtney
Del Mintz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the members of the Compensation and Option Committee were
Sidney R. Knafel, Ted H. McCourtney and Del Mintz.
The Company has entered into a Non-Competition Agreement with Mr. Knafel
which prohibits Mr. Knafel from entering into a competitive business in the
United Kingdom for a period expiring in October 1998. Under the terms of such
agreement, the Company is entitled to an injunction against any violation or
threatened violation of the Agreement. Mr. Knafel has received warrants to
purchase 309,935 shares of Common Stock which are currently exercisable in
consideration of his agreement not to compete.
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GENERAL
The following table discloses compensation received by the Company's Chief
Executive Officer, the Company's former Chief Executive Officer who resigned in
October 1996 and the four other most highly paid executive officers for the
three years ended December 31, 1997.
SUMMARY COMPENSATION TABLE (1)
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ------------
OTHER ANNUAL COMMON STOCK
BONUS COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) ($)(3) OPTIONS(#) COMPENSATION(4)
--------------------------- ---- ---------- ----- ------------ ------------ ---------------
J. Barclay Knapp (2)............ 1997 270,000 -- -- -- 12,734
President, Chief Executive 1996 137,500 325,000 -- -- 3,000
Officer and Chief Financial 1995 50,000 100,000 -- 266,667 --
Officer
George S. Blumenthal (2)........ 1997 270,000 -- -- -- 12,734
Chairman and Treasurer 1996 137,500 170,000 -- -- 3,000
1995 55,000 -- -- 266,667 --
Leigh C. Wood................... 1997 225,000 149,500 331,800(a) 75,000 --
Senior Vice President and 1996 83,700 62,100 -- 125,000 --
Chief Operating Officer of 1995 -- -- -- -- --
U.K. Operations
Steven L. Wagner................ 1997 195,700 100,100 216,200(b) 35,000 2,500
Vice President -- Marketing 1996 186,000 84,600 98,400(c) 50,000 2,500
1995 168,000 70,000 140,200(d) 33,333 --
Hamid R. Heidary................ 1997 195,700 95,600 147,700(e) 35,000 2,500
Vice President -- Operations 1996 184,000 84,600 82,500(f) 50,000 2,500
1995 159,000 68,600 79,200(g) 33,333 --
- ---------------
(1) Through August 1996, officers and other employees of CCI provided
management, financial and legal services to the Company. Amounts charged to
the Company for these services consisted of salaries and indirect costs
allocated to NTL. For the years ended December 31, 1996 and 1995, CCI
charged the Company approximately $1,194,000 and $1,644,000, respectively.
In August 1996, officers and other employees of the Company began providing
management, financial and legal services to Cellular Communications
International, Inc. ("CCII") and CoreComm Incorporated ("CoreComm"). In 1997
and 1996, the Company charged CCII and CoreComm $871,000 and $351,000 and
$1,492,000 and $200,000, respectively, which included salaries and indirect
costs. In the opinion of management of the Company, the above allocations
are reasonable. Through August 1996, Messrs. Blumenthal and Knapp also
received salaries from CCI. Through August 1996, Ms. Wood received her
entire salary from CCI.
(2) In October 1996, Mr. Blumenthal resigned as Chief Executive Officer of the
Company and Mr. Knapp was appointed Chief Executive Office of the Company.
(3) Other annual compensation reflects perquisites, such as relocation expenses
and housing, travel, professional fee and car and fuel allowances,
including:
(a) housing allowance of $162,900 and relocation expense of $122,331.
(b) housing allowance of $120,800.
(c) housing allowance of $85,400.
(d) housing allowance of $120,300.
(e) housing allowance of $74,600.
(f) housing allowance of $70,800.
(g) housing allowance of $65,100.
(4) All Other Compensation reflects the Company's match of employee
contributions to a 401(k) plan.
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OPTION GRANTS TABLE
The following table provides information on stock option grants during 1997
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES OR BASE -----------------------------
GRANTED IN FISCAL PRICE EXPIRATION 5%($) 10%($)
NAME (#)(1) YEAR ($/SHARE) DATE $39.91 $63.55
- ---- ---------- ---------- --------- ---------- ------ ------
J. Barclay Knapp..................... -- -- -- -- -- --
George S. Blumenthal................. -- -- -- -- -- --
Leigh C. Wood........................ 75,000 4.91% 24.50 06/05/07 1,155,750 2,928,750
Steven L. Wagner..................... 35,000 2.29 24.50 06/05/07 539,350 1,366,750
Hamid R. Heidary..................... 35,000 2.29 24.50 06/05/07 539,350 1,366,750
- ---------------
(1) All options were granted on June 6, 1997 at an exercise price equal to the
closing price of the Common Stock on The Nasdaq Stock Market's National
Market ("NNM") on such date; 20% were exercisable upon issuance, 20% became
exercisable on January 1, 1998 and an additional 20% will become exercisable
on each of January 1, 1999, 2000 and 2001. Upon a change of control of the
Company all unvested options become fully vested and exercisable.
(2) The amounts shown in these columns are the potential realizable value of
options granted at assumed rates of stock price appreciation (5% and 10%)
specified by the Securities and Exchange Commission ("SEC"), and have not
been discounted to reflect the present value of such amounts. The assumed
rates of stock price appreciation are not intended to forecast the future
appreciation of the Common Stock.
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OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on stock option exercises, during
1997 by the named executive officers and the value at December 31, 1997 of
unexercised in-the-money options held by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR-END AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
SHARES AT FY-END (#) FY-END ($)*
ACQUIRED ON VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- ---- ------------ ------------ -------------------- -------------------
J. Barclay Knapp....................... -- -- 1,632,779(E) 29,738,893(E)
106,667(U) 533,335(U)
George S. Blumenthal................... 40,137 805,229 1,646,622(E) 30,211,171(E)
106,667(U) 533,335(U)
Leigh C. Wood.......................... -- -- 80,889(E) 843,947(E)
120,000(U) 405,000(U)
Steven L. Wagner....................... -- -- 68,332(E) 409,283(E)
76,668(U) 326,343(U)
Hamid R. Heidary....................... -- -- 79,000(E) 513,625(E)
79,333(U) 352,415(U)
- ---------------
* Based on the closing price on the NNM on December 31, 1997 of $27.875.
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PERFORMANCE GRAPH
The following graph compares the cumulative return on the Company's Common
Stock with The Nasdaq Stock Market (U.S.) Index (the "Nasdaq (U.S.) Index"), the
Center for Research in Security Prices Index of Nasdaq Telecommunications Stocks
(the "CRSP Index") and the Peer Group Index. In the Company's view, the Peer
Group Index, which includes British Telecom PLC, Cable and Wireless plc, Comcast
UK Cable Partners Limited, General Cable PLC and Telewest Communications plc,
provides a better representation of the performance of telecommunications
companies over the required period than the broader based CRSP Index.
The graph assumes that $100 was invested at the time of the Company's
initial public offering on October 14, 1993.
Comparison of NTL Incorporated, the Peer Group Index,
the CRSP Index and the Nasdaq (U.S.) Index
NASDAQ
Measurement Period NASDAQ Stock Market THE PEER
(Fiscal Year Covered) NTL INC Telecommunications (U.S.) Index GROUP
10/14/93 100.00 100.00 100.00 100.00
12/31/93 108.50 91.83 100.51 104.75
12/30/94 127.59 76.64 98.25 87.59
12/29/95 112.64 100.36 138.94 91.02
12/31/96 116.09 102.59 170.91 112.99
12/31/97 128.16 151.58 209.81 127.87
- ---------------
NOTE: Stock price performance shown above for the Common Stock is historical
and not necessarily indicative of future price performance.
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16
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
Subject to ratification by the stockholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the financial
statements of the Company for the year ending December 31, 1998.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
The ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for 1998 will require the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present in person or
represented by proxy at the annual meeting and entitled to vote. In determining
whether the proposal has received the requisite number of affirmative votes,
abstentions will be counted and will have the same effect as a vote against the
proposal; broker non-votes will be disregarded and have no effect on the outcome
of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR SUCH RATIFICATION
TRANSACTIONS WITH RELATED PARTIES
In October 1993, the Company also entered into non-competition agreements
with Sidney R. Knafel, Michael S. Willner and other persons associated with
Insight U.K. The non-competition agreements prohibit Messrs. Knafel and Willner
and others from entering into a competitive business in the United Kingdom for a
period ending in 1998 with respect to Mr. Knafel, ending in 1998 (subject to
reduction) for Mr. Willner, and a shorter period of time for the others. Under
the terms of such agreements, the Company is entitled to an injunction against
any violation or threatened violation of the non-competition agreements. Messrs.
Knafel and Willner and others have received warrants to purchase an aggregate of
898,364 shares of Common Stock which are currently exercisable in consideration
of their agreements not to compete.
Pursuant to an acquisition agreement entered into in 1993, at the 1996
Annual Meeting of Stockholders, the Company nominated Michael S. Willner for
reelection to the Board of Directors for an additional three-year term.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting must be received by the Company at the address set forth on the first
page of this Proxy Statement on or before December 29, 1998, to be considered
for inclusion in the Company's Proxy Statement and Form of Proxy relating to
that meeting.
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17
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those set
forth in this Proxy Statement that will be presented for action at the Annual
Meeting and does not intend to bring any other matters before the Annual
Meeting. However, if any others matters should properly come before the Annual
Meeting, or at any adjournment or postponement thereof, it is the intention of
the persons named in the accompanying proxy to vote on such matters as they, in
their discretion, may determine.
By order of the Board of Directors,
RICHARD J. LUBASCH
Secretary
New York, New York
April 28, 1998
15
18
NTL INCORPORATED, 110 EAST 59TH STREET, NEW YORK, NY 10022
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON JUNE 3,
1998
The undersigned hereby appoints George S. Blumenthal, J. Barclay Knapp and
Richard J. Lubasch, and each of them, with full power of substitution, proxies
to represent the undersigned at the Annual Meeting of Stockholders of NTL
Incorporated ("the Company") to be held at 10:45 a.m., local time, on Wednesday,
June 3, 1998, at The Waldorf Astoria Hotel, fourth floor, Park Avenue
Center/North, located at 301 Park Avenue, New York, New York 10022 and at any
adjournment or postponement thereof and thereat to vote all of the shares of
stock which the undersigned would be entitled to vote, with all the powers the
undersigned would possess if personally present. The Board of Directors
recommends that you vote FOR the following proposals.
1. Election of Directors: Nominees: Sidney R. Knafel, Ted H. McCourtney
and Del Mintz
[ ] VOTE FOR all nominees listed, except as marked to the [ ] VOTE WITHHELD from all
contrary above. (TO WITHHOLD YOUR VOTES FOR ANY nominees.
INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S
NAME IN THE LIST ABOVE.)
2. Ratify the appointment of Ernst & Young LLP as the independent auditors of
the Company for the fiscal year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please date and sign on reverse side and return promptly.)
19
(Continued from other side)
3. In their discretion, to act upon such other business as may properly come
before the meeting or any adjournment or postponement thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" THE PROPOSALS SET FORTH ON THE
REVERSE SIDE HEREOF. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL
MEETING, IT IS THE INTENTION OF THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN
ACCORDANCE WITH THEIR BEST JUDGMENT.
-----------------------------------
Signature
-----------------------------------
Signature
Dated , 1998
In case of joint owners, each joint
owner must sign. If signing for a
corporation or partnership or as
agent, attorney or fiduciary,
indicate the capacity in which you
are signing.
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD AND RETURN IN
THE ENCLOSED ENVELOPE.