SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
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MOVIEFONE, INC.
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MOVIEFONE, INC.
335 MADISON AVENUE, 27TH FLOOR
NEW YORK, NY 10017
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 1998
To the Stockholders of MovieFone, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
MovieFone, Inc., a Delaware corporation (the "Company"), will be held at 10:00
A.M. on June 19, 1998 at the Company's New York office located at 335 Madison
Avenue, 27th floor, New York, New York for the following purposes:
1. To elect seven directors of the Company, each to serve until the next
annual meeting of stockholders and until their respective successors
are duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998;
3. To transact such other business as may properly be brought before the
meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 21, 1998
are entitled to notice of and to vote at the Annual Meeting and at any and all
adjournments or postponements thereof. A list of stockholders entitled to vote
at the meeting will be kept at the office of the Secretary of the Company, 335
Madison Avenue, 27th Floor, New York, New York for a period of ten days prior
to the meeting.
By Order of the Board of Directors,
Adam H. Slutsky
Secretary
New York, New York
April 30, 1998
YOUR VOTE IS IMPORTANT
EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. RETURNING A SIGNED PROXY WILL NOT PREVENT YOU FROM ATTENDING
THE MEETING AND VOTING IN PERSON, IF YOU SO DESIRE.
MOVIEFONE, INC.
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 1998
GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of MovieFone,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders of the Company, to be held at 10:00 A.M. local
time on June 19, 1998 at the Company's New York office located at 335 Madison
Avenue, 27th floor, New York, New York, and at any and all adjournments or
postponements thereof. Stockholders of record at the close of business on April
21, 1998 are entitled to vote at the Annual Meeting. Attached to this Proxy
Statement and accompanying Proxy Card is a copy of the Company's Annual Report
on Form 10-K as filed with the Securities and Exchange Commission for the
fiscal year ended December 31, 1997.
Business at the Annual Meeting is conducted in accordance with the
procedures determined by the presiding officer and is generally limited to
matters properly brought before the Annual Meeting by or at the suggestion of
the Board of Directors or by a stockholder.
Your attention is called to the Proxy Statement and accompanying Proxy
Card. You are requested, whether or not you plan to attend the Annual Meeting,
to sign, date and promptly return the enclosed Proxy Card in the envelope
provided for which no postage must be affixed if mailed in the United States.
If you attend the Annual Meeting, you may revoke any previously furnished proxy
and vote your shares in person at the Annual Meeting.
This Proxy Statement and accompanying Proxy Card are first being
mailed to stockholders of the Company on or about May 15, 1998.
No person is authorized to give any information or to make any
representations other than those contained in this Proxy Statement and, if
given or made, such information must not be relied upon as having been
authorized.
BOARD OF DIRECTORS' RECOMMENDATIONS
The Board of Directors of the Company is soliciting your proxy for use
at the Annual Meeting and any adjournment or postponement of the Annual
Meeting. The Board of Directors recommends a vote for (i) the election of the
nominees for directors described below and (ii) the ratification of the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the fiscal year ending December 31, 1998.
VOTING AND SOLICITATION OF PROXIES
Only holders of record of the Company's Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), and Class B Common Stock,
par value $.01 per share (the "Class B Common Stock"), at the close of business
on April 21, 1998 (the "Record Date") are entitled to notice of the Annual
Meeting. At the close of business on the Record Date, there were 5,262,660
shares of Class A Common Stock outstanding entitling the holders thereof to an
aggregate of 5,262,660 votes and 7,155,053 shares of Class B Common Stock
outstanding entitling the holders thereof to an aggregate of 35,775,265 votes.
Only holders of record of the Class A Common Stock and Class B Common Stock as
of the Record Date are entitled to vote at the Annual Meeting. The presence, in
person or by proxy, of the holders of a majority of the aggregate voting power
of the Class A Common Stock and Class B Common Stock issued and outstanding on
the Record Date and entitled
to vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. All shares present in person or represented by proxy are counted for
quorum purposes. The election of a Director requires the affirmative vote of a
majority of the votes represented by the shares of the Company's Class A Common
Stock and Class B Common Stock present, in person or by proxy, and entitled to
vote at the Annual Meeting. Generally, abstentions and broker non-votes will be
included as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the Annual Meeting.
This solicitation is being made by the Company. The cost of this
solicitation will be borne by the Company. Solicitation will be made by mail,
and may be made personally or by telephone by officers and other employees of
the Company who will not receive additional compensation for solicitation. The
Company has retained American Stock Transfer and Trust Company to assist in the
distribution of proxy solicitation materials at a cost of approximately $1,500
plus handling charges and out-of-pocket expenses.
ATTENDANCE AT THE ANNUAL MEETING
All stockholders are invited to attend the Annual Meeting. Due to the
limited seating capacity, persons who are not stockholders may attend only if
invited by the Board of Directors. If you are a stockholder but do not own
shares in your name, you must bring proof of ownership (e.g., a current
broker's statement) in order to be admitted to the Annual Meeting.
ITEM 1.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected to hold
office until the next succeeding annual meeting of stockholders and until their
respective successors have been elected and qualified. All of the nominees are
currently directors of the Company. Each of the nominees has consented to serve
as a director if elected at the Annual Meeting and, to the best knowledge of
the Board of Directors, each of such nominees is and will be able to serve if
so elected. In the event that any of the nominees listed below should be
unavailable to stand for election before the Annual Meeting, the persons named
in the accompanying proxy intend to vote for such other person, if any, as may
be designated by the Board of Directors, in the place of any nominee unable to
serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE COMPANY'S NOMINEES AS
DIRECTORS.
Set forth below is a brief biography of each nominee for election as a
Director.
Dr. Henry G. Jarecki, age 65. Dr. Jarecki has been Chairman of the
Board of Directors of the Company since its inception. In addition, Dr. Jarecki
has been Chairman of The Falconwood Corporation of New York ("Falconwood"), a
merchant banking and financial services firm, since 1976. From 1969 to 1989 he
was Chairman of Mocatta Metals Corporation, a bullion dealing company. He has
been on the faculty at the Yale University School of Medicine since 1963. Dr.
Jarecki is the father of Andrew R. Jarecki.
Andrew R. Jarecki, age 35. Mr. Jarecki has been Chief Executive
Officer and a Director of the Company since its inception. Prior to developing
MovieFone Mr. Jarecki served as managing director of Falconwood, overseeing the
firm's venture capital activities. Mr. Jarecki received a BA degree from
Princeton University. Mr. Jarecki is the son of Dr. Henry G. Jarecki.
Adam H. Slutsky, age 34. Mr. Slutsky has been Chief Financial Officer
and Chief Operating Officer and a Director of the Company since its inception.
Prior to developing MovieFone Mr. Slutsky was Trading Manager and Director of
Industrial Marketing for Falconwood from 1987 to 1989. Mr. Slutsky received a
BS degree in industrial and labor relations from Cornell University and an MBA
degree from Columbia University Business School.
J. Russell Leatherman, age 36. Mr. Leatherman has been President and a
Director of the Company since its inception. Prior to developing MovieFone Mr.
Leatherman was an independent film and television producer/director. Mr.
Leatherman has directed news programs and produced sports broadcasts and
television specials for public television. He also operated a production
company which specialized in producing motion picture trailers, commercials,
and videos. Mr. Leatherman holds a BS degree from the University of Idaho.
2
Mark N. Kaplan, age 68. Mr. Kaplan has been a Director of the Company
since March 1994. For more than the past five years he has been a partner in
the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Skadden, Arps, Slate,
Meagher & Flom LLP currently provides legal services to the Company.
George H. McLaughlin, age 61. Mr. McLaughlin has been a Director of
the Company since March 1994. Mr. McLaughlin is an entrepreneur in the food
industry and has, from 1989 to the present, held executive positions in the
following companies: Ideal Macaroni Company, Weiss Noodle Company, and Food
Tree, Inc. In addition, Mr. McLaughlin has, since 1989, been president of World
Wide Licensing Corporation, a distributor of fashion accessories. Mr.
McLaughlin received a BA degree from Princeton University and an MBA degree
from Harvard Business School.
Strauss Zelnick, age 40. Mr. Zelnick has been a Director of the
Company since March 1994. Mr. Zelnick is President and Chief Executive Officer
of BMG Entertainment North America. Prior to joining BMG Entertainment North
America, Mr. Zelnick was President and Chief Executive Officer of Crystal
Dynamics, a supplier of video game software, from 1993 to 1994. Prior to
joining Crystal Dynamics, he was President and Chief Operating Officer of
Twentieth Century Fox from 1989 to 1993. Mr. Zelnick holds both an MBA degree
and a JD degree from Harvard University and is a former member of the Board of
Directors of the Motion Picture Association of America.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Company's Board of Directors held three meetings in the fiscal
year ended December 31, 1997. Each Director attended all of the meetings of the
Board of Directors and meetings of committees on which such director served.
The Board of Directors has established an Audit Committee and a
Compensation Committee. The Company does not have a Nominating Committee. The
Audit Committee held one meeting in the fiscal year ended December 31,1997. The
Audit Committee makes recommendations to the Board of Directors regarding the
appointment of the independent auditors of the Company, discusses and reviews
the scope and the fees of the prospective annual audit and reviews the results
thereof with the independent auditors, reviews and approves non-audit services
of the independent auditors, reviews compliance with existing major accounting
and financial policies of the Company, reviews the adequacy of the financial
organization of the Company and reviews management's procedures and policies
relative to the adequacy of the Company's internal accounting controls. The
Audit Committee consists of Dr. Henry G. Jarecki, Mark N. Kaplan and George H.
McLaughlin.
The Compensation Committee held one meeting in the fiscal year ended
December 31, 1997. The Compensation Committee reviews and approves annual
salaries and bonuses for all executive officers and reviews, approves, and
recommends to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto, and administers the Company's Stock Option
Plan. The Compensation Committee consists of Dr. Henry G. Jarecki, Andrew R.
Jarecki, Mark N. Kaplan, and George H. McLaughlin.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
Andrew R. Jarecki, a member of the Compensation Committee, is also
Chief Executive Officer of the Company. Both Mr. Jarecki and Dr. Jarecki are
prohibited, however, from participating in any deliberations or decisions
regarding compensation matters relating to either of them.
3
COMPENSATION OF DIRECTORS
Non-employee directors are paid $15,000 annually for their services as
directors and for attendance at meetings. Under the Company's Stock Option
Plan, as amended, each non-employee director also automatically receives a
Non-Statutory Option (defined below) to purchase 2,000 shares of the Company's
Class A Common Stock at each annual meeting of the stockholders of the Company
for as long as such individual remains a director. Employee-directors are not
paid any fees or other compensation for their services as directors.
4
ITEM 2.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors considers it desirable that its appointment of
the firm of Deloitte & Touche LLP as independent auditors for the Company for
the fiscal year ending December 31, 1998 be ratified by the stockholders.
Deloitte & Touche LLP has served as the independent auditors of the
Company since 1993. One or more representatives of Deloitte & Touche LLP are
expected to be present at the Annual Meeting and will have an opportunity to
make a statement if they desire to do so and will be available to respond to
any questions from the stockholders present.
The Company has been informed by Deloitte & Touche LLP that neither
the firm nor any of its members or their associates has any direct financial
interest or material indirect financial interest in the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF THE FIRM OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
In the event the stockholders do not ratify the appointment of
Deloitte & Touche LLP, the Board of Directors will select another firm of
auditors for the following year.
MANAGEMENT
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
- ---- --- --------
Dr. Henry G. Jarecki*....... 65 Chairman of the Board of Directors
Andrew R. Jarecki*.......... 35 Chief Executive Officer; Director
Adam H. Slutsky*............ 34 Chief Financial Officer and Chief
Operating Officer; Director
J. Russell Leatherman*...... 36 President; Director
Thomas A. Jarecki........... 32 Senior Vice President, Operations
Richard S. O'Connell........ 37 Senior Vice President, Exhibitor Sales and
Marketing
John Ventura................ 37 Senior Vice President, Theater Management
Systems
Nada Stirrat................ 32 Senior Vice President, Sales
Matthew Blumberg............ 27 Vice President, Marketing and Product
Management
Robert Gukeisen............. 33 Vice President, New Technologies
Marc S. Hollander........... 38 Vice President, Computer Systems
Shlomo Sudry................ 38 Vice President, Theater Management Systems
Philip Talamas . ........... 32 Vice President, Operations
Mark N. Kaplan*............. 68 Director
George H. McLaughlin*....... 61 Director
Strauss Zelnick*............ 40 Director
- ----------
* Biographical information regarding directors is set forth in Item 1 above.
5
Thomas A. Jarecki has been Senior Vice President, Operations of the
Company since March 1997 and was Vice President, Operations of the Company
since its inception. Prior to joining the Company, he worked at Brody, White
and Company ("Brody") as a business analyst. Mr. Jarecki holds a BS degree from
Boston University.
Richard S. O'Connell has been Senior Vice President, Exhibitor Sales
and Marketing of the Company since March 1998. He was Senior Vice President,
Marketing from August 1996 to March 1998. Prior to joining the Company, Mr.
O'Connell was Vice President of Marketing for Court TV, a cable network, from
1993 to 1996. From 1986 through 1993, Mr. O'Connell was a Management Supervisor
at Chiat/Day Advertising. Mr. O'Connell holds a BA degree from Dartmouth
College.
John Ventura has been Senior Vice President, Theater Management
Systems of the Company since July 1995. Prior to joining the Company, Mr.
Ventura was Director of Finance and Operations at A-Vision Entertainment, a
Division of Time Warner, from 1992 to 1995. From 1989 to 1992, Mr. Ventura was
TRS Manager of Gold Card Marketing at American Express. Mr. Ventura holds a BA
degree from Lafayette College and an MBA degree from Dartmouth College.
Nada Stirratt, has been Senior Vice President Sales since joining the
Company in November 1997. Prior to MovieFone, Ms. Stirratt was the Advertising
Director at Conde Nast's Allure magazine. Ms. Stirratt holds a BA degree from
the University of Illionis.
Matthew Blumberg, has been Vice President, Marketing and Product
Management since March 1998. Mr. Blumberg was Vice President, MovieLink from
1995 to 1998. Prior to joining MovieFone, Mr. Blumberg was an associate with
General Atlantic Partners, a private equity investment firm which invests in
later-stage software and on line services companies and a consultant at Mercer
Management Consulting. Mr. Blumberg graduated summa cum laude from Princeton
University, with a BA degree.
Robert Gukeisen has been Vice President, New Technologies since May
1995. He was Vice President, Systems Development of the Company since its
inception. Prior to developing MovieFone, Mr. Gukeisen was a systems analyst
for US Topper, a provider of interactive telephone service from 1986 to 1989.
Mr. Gukeisen holds a BS degree from California State University at Northridge.
Marc S. Hollander has been Vice President, Computer Systems since the
Company's inception. From 1983 until he began working for the Company, he was a
computer systems analyst at Brody.
Shlomo Sudry has been Vice President, Theater Management Systems
Development since January 1996 and Senior Programmer at MovieFone since August
1994.
Philip Talamas has been Vice President, Operations since January 1998
and was Vice President of Technical Services since joining the firm in May
1995. Prior to joining the Company, Mr. Talamas worked at Brody as the Vice
President of New York Operations from 1992 to 1995. He holds a BS degree from
Georgia Institute of Technology.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered or will enter into an indemnification
agreement (the "Indemnification Agreement") with each director, and such
officers, employees and agents of the Company as the Board of Directors shall
determine from time to time. The Indemnification Agreement provides for, among
other things: (i) indemnification to the fullest extent permitted by law
against any and all expenses, judgments, fines, penalties and amounts paid in
settlement of any claim against an indemnified party (the "Indemnitee") unless
it is determined, as provided in the Indemnification Agreement, that
indemnification is not permitted under law; (ii) prompt advancement of expenses
to any Indemnitee in connection with his or her defense against any claim; and
(iii) a provision that no legal action be brought and no cause of action be
asserted by or in the right of the Company against an Indemnitee after the
expiration of two years from the date such cause of action accrues unless a
shorter period of limitations is otherwise applicable.
6
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation
paid or accrued by the Company to the Chief Executive Officer and the other
four most highly compensated executive officers for services rendered in all
capacities to the Company during the years ended December 31, 1997, 1996, and
1995:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
----------------------
ANNUAL COMPENSATION SECURITIES ALL
------------------- UNDERLYING OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(a)
- ------------------------- ---- ------ ----- ------- ---------------
Andrew R. Jarecki........ 1997 $202,000 $53,885(b) - - -(c) $30
Chief Executive Officer 1996 $180,000 $114,573 21,000 $30
1995 $155,000 $62,981 8,000 $30
Adam H. Slutsky.......... 1997 $200,000 $53,846(b) - - -(c) $144
COO and CFO 1996 $185,000 $109,114 21,000 $144
1995 $165,000 $58,173 8,000 $144
J. Russell Leatherman.... 1997 $170,000 $185,249(d) 8,000 $144
President 1996 $155,000 $187,263(d) 8,000 $144
1995 $140,000 $57,042(d) 8,000 $144
John Ventura............. 1997 $120,000 $60,109(e) 6,000 $144
Sr. VP, Theatre 1996 $88,000 $18,692 10,000
Mgmn't Systems 1995 $37,630 $12,707(f) 43,500
Thomas A Jarecki......... 1997 $107,000 $53,558 6,000 $144
Sr. VP, Operations 1996 $90,000 $31,031 4,000 $144
1995 $80,000 $15,538 2,500 $144
- ---------------
(a) Other compensation is for life insurance premiums paid by the Company.
(b) The performance bonuses payable in respect of 1997 to Messrs. Jarecki and
Slutsky have not yet been determined but will be paid in 1998.
(c) Long-Term Compensation Awards in respect of 1997 for Messrs. Jarecki and
Slutsky have not yet been determined. The Company anticipates that each
will receive stock options under the Company's Stock Option Plan.
(d) Mr. Leatherman's bonuses for 1997, 1996, and 1995 were earned for
performance in accordance with the Company's sales plans for such years.
(e) Mr. Ventura's bonus for 1997 was earned for performance in accordance with
the Company's sales plan for such year.
(f) Mr. Ventura began working for the Company in July 1995.
7
STOCK OPTION GRANTS IN 1997
The following table sets forth information with respect to grants of
stock options in 1997 pursuant to the 1994 Stock Option Plan to the named
officers.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEE IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE
- ---- ------- ----------- ------ ----
Andrew R. Jarecki.......... 5,000 2.1 7.50 6/2/07
16,000 6.8 4.25 3/27/07
Adam H. Slutsky............ 5,000 2.1 7.50 6/2/07
16,000 6.8 4.25 3/27/07
J. Russell Leatherman...... 8,000 3.4 4.25 3/27/07
John Ventura............... 10,000 4.2 4.25 3/27/07
Thomas A. Jarecki.......... 16,000 6.8 4.25 3/27/07
8
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table sets forth information with respect to the named
officers concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year. The options shown in
the table reflect options granted to the named officers by the Company under
the 1994 Stock Option Plan.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END AT FY-END
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
Andrew R. Jarecki.......... 0 $0 12,093 39,336 $41,431 $100,416
Adam H. Slutsky............ 0 $0 77,025 118,697 $272,589 $382,942
J. Russell Leatherman...... 0 $0 42,093 71,336 $112,531 $187,066
John Ventura............... 0 $0 10,350 43,150 $24,596 $89,944
Thomas A. Jarecki.......... 0 $0 13,691 36,955 $47,833 $109,482
RETIREMENT PLAN
The Executive Officers of the Company are participants in the
Falconwood Group Defined Benefit Pension Plan (the "Retirement Plan"). See
"Certain Relationships and Related Party Transactions, Transactions Between the
Falconwood Corporation and the Company." Normal benefits under the Retirement
Plan, payable beginning at age 65, are calculated with respect to any
participant as follows: 1.30 percent of such participant's average annual
compensation for the five highest paid consecutive years multiplied by such
participant's years of service. The following table shows annual benefits
payable under the Retirement Plan to participants at age 65 in specified years
of service and remuneration classes:
AVERAGE ANNUAL
COMPENSATION IN YEARS IN SERVICE
FIVE CONSECUTIVE -----------------------------------------------
HIGHEST PAID YEARS 15 20 25 30 35
------------------ -----------------------------------------------
$100,000 $19,500 $26,000 $32,500 $39,000 $45,500
$125,000 $24,375 $32,500 $40,625 $48,750 $56,875
$150,000 $29,250 $39,000 $48,750 $58,500 $68,250
Compensation covered under the Retirement Plan is the total
compensation reported on a participant's Federal tax Form W-2, which for 1997,
1996, and 1995 is equal to the amount of compensation for each named executive
set forth in the Summary Compensation Table (which for purposes of the
Retirement Plan may not exceed $160,000, subject to increase from time to time
pursuant to Treasury regulations under the Code). Estimated credited years of
service for the named executives for purposes of computing their benefits are:
Andrew R. Jarecki, 12 years; Adam H. Slutsky, 11 years; J. Russell Leatherman,
4 years; John Ventura, 2 years; and Thomas A. Jarecki, 8 years. Benefits are
payable in an annuity form for a period of at least 10 years and thereafter for
the life of the participant. Benefits payable are not subject to any deduction
for Social Security or other offset amounts.
9
EMPLOYMENT AGREEMENTS AND COMPENSATION ARRANGEMENTS
During the Company's fiscal year ended December 31, 1994, the Company
entered into employment agreements with each of Messrs. Andrew R. Jarecki, Adam
H. Slutsky and J. Russell Leatherman (each, an "Executive"). Each such
employment agreement provides for an employment term expiring in May 1996. Each
of Mr. Jarecki's and Mr. Leatherman's agreements were automatically renewed for
a two year term in May of 1996. The agreements also provide that for a period
of two years after termination of the Executive's employment with the Company,
the Executive may not (without the written approval of the Board of Directors
of the Company) engage in any business in competition with the Company or its
subsidiaries, as such business is conducted on the date on which such
Executive's employment with the Company is terminated, or solicit the
employment of any employee of the Company. The agreements provide that the
Company will pay, during the initial term of each agreement, each of Mr.
Jarecki and Mr. Leatherman an annual base salary of not less than $110,000, and
thereafter such greater amount as may be determined by the Board of Directors.
Bonus payments may be paid in such amounts and at such times as the Board of
Directors may determine. In May of 1996, the Company entered a new employment
agreement with Mr. Slutsky. Mr. Slutsky's new agreement contains substantially
the same terms as his original agreement, except that the new agreement
provides for an employment term expiring in May of 1998, which is automatically
renewed for one additional year unless notice of non-renewal is given and an
annual base salary of not less than $185,000.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
REGISTRATION RIGHTS AGREEMENT
Pursuant to the terms of a Registration Rights Agreement (the
"Registration Rights Agreement") by and among Dr. Henry Jarecki, Andrew R.
Jarecki, certain members of their immediate family and certain trusts and a
corporation affiliated with Dr. Jarecki (collectively, the "Jarecki Entities"),
Adam H. Slutsky, J. Russell Leatherman, Robert Gukeisen, and certain other
current stockholders of the Company (collectively, the "Holders") and the
Company, the Company has agreed that the Holders, subject to certain
conditions, may cause the Company to file a registration statement with the
Securities and Exchange Commission (the "SEC") relating to the Common Stock
held by them (or their transferees) (the "Registrable Securities"). The Company
generally will be required to use its best efforts to effect any such
registration on demand. The Company is not required to effect more than five
such demand registrations for the holders of Registrable Securities, and not
more frequently than two times during any period of twelve consecutive months.
Such registrations will be at the Company's expense, except that each selling
stockholder will bear its pro rata share of the underwriting fees and expenses,
the fees and expenses of its counsel and applicable transfer taxes.
In addition, the Holders of Registrable Securities have certain
incidental (or "piggyback") registration rights that require the Company to
include in any registration statement that the Company proposes to file with
respect to its securities (whether for its own account or for the account of
any security holder), such amount of Registrable Securities requested by them
to be included therein, subject to certain exceptions. Such registrations will
be at the Company's expense, except that each selling stockholder will bear its
pro rata share of the underwriting fees and expenses, the fees and expenses of
its counsel and applicable transfer taxes.
TRANSACTIONS BETWEEN THE FALCONWOOD CORPORATION AND THE COMPANY
During 1995 and 1996 the Company leased office space from Falconwood
at Four World Trade Center, New York, New York for which the Company paid
Falconwood at a rate the Company believes approximated prevailing market rates.
During 1995, 1996, and 1997 the Company had an agreement with Falconwood for
the provision of certain administrative and other services, for which the
Company paid 125 percent of Falconwood's
10
direct costs for providing such services. During the years ended December 31,
1997 and 1996, Falconwood was paid approximately $191,000 and $264,000
respectively, for such services. During the year ended 1997 and 1996, various
Company employees provided certain administrative and professional services to
Falconwood and its affiliates and charged Falconwood approximately $59,000 and
$32,000, respectively for such services. The Company believes the office lease
and the administrative services arrangements are on terms comparable to those
that could have been obtained in an arm's length transaction with an
unaffiliated third party providing comparable office space and services.
Effective October 31, 1996, the lease agreement was terminated as a result of
the Company's move to new office space.
Historically, as a convenience to the Company, employees of the
Company have participated in a defined benefit pension plan provided by
Falconwood and the Company intends to continue this practice. The Company may,
however, in the future determine to provide similar benefits to its employees
other than through this Falconwood plan. During the fiscal years ended December
31, 1997 and 1996, pension expense related to the Company's participation in
the Falconwood plan was approximately $83,000 and $121,000 respectively.
11
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information concerning the
ownership of the Company's Class A Common Stock and Class B Common Stock as of
the Record Date by (i) all persons known to the Company to be beneficial owners
of more than 5 percent of the outstanding Common Stock, (ii) each director of
the Company, (iii) each executive officer of the Company, and (iv) all
executive officers and directors of the Company as a group. Except as otherwise
indicated, the persons indicated have sole voting and investment power with
respect to the securities owned by them. In addition to the ownership of the
Company's Common Stock by the Jarecki Entities set forth in the following
table, other Jarecki Entities own an aggregate of 285,817 shares of Class A
Common Stock, representing approximately 5.4 percent of the outstanding Class A
Common Stock.
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OWNED OUTSTANDING SHARES
------------------ ------------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
Dr. Henry G. Jarecki*.................... 75,000(a)** 7,155,053(b)** 1.4% 100.0%
(Chairman of the Board)
Eugene Eliasoph.......................... 1,497,770(a)(c)** 6,914,010(b)** 28.5 96.6
400 Prospect Street
New Haven, Connecticut 06511
Andrew R. Jarecki*....................... 1,422,770(c)** -- 27.0 --
(Chief Executive Officer)
Adam H. Slutsky*......................... 108,280(d) -- 2.1 --
(COO and CFO)
J. Russell Leatherman.................... 166,105 -- 3.2 --
(President)
1875 Century Park East, Suite 2230
Los Angeles, California 90067
Thomas A. Jarecki*....................... 161,350 -- 3.1 --
(Senior VP, Operations)
Richard S. O'Connell*.................... -- -- -- --
(Sr. VP, Marketing)
John Ventura*............................ -- -- -- --
(Sr. VP, Theater Management Systems)
Nada Stirrat............................. -- -- -- --
(Sr. VP, Sales)
Matthew Blumberg......................... 23,000 -- 0.4 --
(VP, Marketing and Product Management)
Robert Gukeisen*......................... 392,210 -- 7.5 --
(VP, New Technologies)
Marc S. Hollander*....................... 200 -- *** --
(VP, Computer Systems)
Shlomo Sudry*............................ -- -- -- --
(VP, Theater Management Systems)
Philip Talamas........................... 3,430 -- 0.1 --
(VP, Operations)
Mark N. Kaplan........................... 2,000 -- *** --
(Director)
c/o Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
George H. McLaughlin..................... 260 -- *** --
(Director)
263 Mercer Street
Princeton, New Jersey 08540
Strauss Zelnick.......................... 12,500 -- 0.2 --
(Director)
BMG Entertainment
1540 Broadway, 39th Floor
New York, NY 10036
All executive directors and executive
officers as a group.................... 2,367,105(c)** 7,155,053(b)** 45.0% 100.0%
12
- --------------
* The address of each of these individuals is 335 Madison Avenue, 27th
Floor, New York, New York 10017.
** Includes shares set forth elsewhere in this table.
*** Less than 1.0 percent.
(a) Includes 75,000 shares held by The Timber Falls Trust. Dr. Jarecki and Mr.
Eliasoph, as co-trustees of this trust (the beneficiaries of which are
various members of Dr. Jarecki's family and their lineal descendants),
share investment and voting control with respect to these shares.
(b) Includes an aggregate of 6,914,010 shares held by: The Timber Acres Trust
(956,840 shares); The Timber Top Trust (1,156,620 shares); The Timber Edge
Trust (1,226,410 shares); The Timber Falls Trust (3,434,280 shares); and
The Timber Nation Trust (139,860 shares). Dr. Jarecki and Mr. Eliasoph, as
co-trustees of each of these trusts (the beneficiaries of which are
various members of Dr. Jarecki's family and their lineal descendants),
share investment and voting control with respect to these shares.
(c) Includes 1,422,770 shares held by The Timber Acres Trust II. Mr. Jarecki
and Mr. Eliasoph, as co-trustees of this trust (the beneficiaries of which
are Mr. Jarecki and his lineal descendants), share investment and voting
control with respect to these shares.
(d) Includes 3,000 shares held in trust for Mr. Slutsky's children.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
equity securities ("principal stockholders") to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of the equity securities of the Company. Officers,
directors and principal stockholders are required to furnish the Company with
copies of all such Section 16(a) forms they file. To the Company's knowledge,
based solely on a review of the copies of such reports furnished to the Company
during the last two fiscal years ended December 31, all Section 16(a)
requirements applicable to the Company's officers, directors and principal
stockholders were complied with except that one report covering a transaction
was inadvertently filed late by an executive officer of the Company.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at annual meetings in accordance with regulations adopted by
the SEC. For proposals by stockholders to be included in the Proxy Statement
for the 1999 Annual Meeting of Stockholders, the Company must receive such
proposals on or before December 31, 1998. Such proposals should be directed to
the Company, Attention: Secretary, MovieFone, Inc., 335 Madison Avenue, 27th
Floor, New York, NY 10017.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors is not
aware of any matter to be presented for action at the Annual Meeting other than
the matters set forth herein. Should any other matter requiring a vote of
stockholders arise, the proxies in the enclosed Proxy Card confer upon the
person or persons entitled to vote the shares represented by such proxies
discretionary authority to vote the same in accordance with their best judgment
on such matters.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the SEC. The reports, proxy statements and other
information filed by the Company with the SEC can be inspected and copied at
the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at
Seven World Trade Center, New York, New York 10048 and Suite 1400, Northwest
Atrium Center, 5000 West Madison Street, Chicago, Illinois 60661. Copies of
such material can also be obtained from the Public Reference Section of the
SEC, Washington, D.C. 20549 at prescribed rates.
MOVIEFONE, INC.
New York, New York
April 30, 1998
14
MOVIEFONE, INC.
335 MADISON AVENUE, 27TH FLOOR
NEW YORK, NY 10017
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON JUNE 19, 1998
The undersigned stockholder hereby appoints Matthew Blumberg and Thomas A.
Jarecki, and each of them, proxies of the undersigned, with full power of
substitution, to vote the stock of MOVIEFONE, INC., which the undersigned may
be entitled to vote at the Annual Meeting of Stockholders to be held at
MovieFone's offices at 335 Madison Avenue, 27th Floor, New York, New York on
June 19, 1998 at 10:00 A.M. and at any adjournments or postponements thereof.
The proxies are authorized to vote in their discretion upon such other business
as may properly come before the meeting and any and all adjournments or
postponements thereof. If no directions are given, the executed proxies will
vote for proposals 1 and 2, at their discretion, or on any other matter that
may properly come before the meeting.
You are encouraged to specify your choices by making the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
(To be Signed on Reverse Side)
[X] Please mark your
votes as in this
example
The board of Directors recommends a vote FOR
the election of directors and FOR Item 2 below.
FOR WITHHELD NOMINEES: DR. G. JARECKI
1. Election of seven [ ] [ ] ANDREW R. JARECKI
directors, each to ADAM H. SLUTSKY
serve until the next J. RUSSELL LEATHERMAN
annual meeting of MARK N. KAPLAN
stockholders and until their GEORGE H. MCLAUGHLIN
respective successors are duty STRAUSS ZELNICK
elected and qualified
For, except vote withheld from the following nominee(s):
[ ]
-----------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratify appointment of Independent Auditors [ ] [ ] [ ]
This proxy, when properly executed will be voted in the
manner directed herein. If no direction is made, this
proxy will be voted FOR the election of directors and for
Item 2 hereon.
The proxies are hereby authorized to vote in their
discretion upon such other matters as may properly come
before the meeting and any adjournments or postponements
thereof. See "Other Matters" in the MovieFone, Inc. Proxy
Statement dated April 30, 1998.
SIGNATURE DATE SIGNATURE DATE
-------------------- ----- ---------------- ---------
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such.