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)14) and O-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 O-11: N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
[GRAPHIC OMITTED]
April 14, 2000
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 16,
2000 at the Hunt Valley Inn, 245 Shawan Road, Hunt Valley, MD 21031-1099 at
10:00 a.m. local time.
At the 2000 annual meeting, we will ask you to:
o Elect six members of the board of directors;
o Ratify the selection of Arthur Andersen LLP as independent accountants
for the fiscal year ending December 31, 2000; and
o Transact such other business as properly comes before the meeting.
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, 1999.
THE BOARD OF DIRECTORS OF SINCLAIR RECOMMENDS THAT STOCKHOLDERS VOTE TO
ELECT THE BOARD'S NOMINEES FOR DIRECTOR AND TO RATIFY THE APPOINTMENT OF ARTHUR
ANDERSEN LLP.
Your vote on these matters is very important. We urge you to review
carefully the enclosed materials and to return your proxy promptly.
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,
/s/ David D. Smith
David D. Smith
Chairman of the board
and Chief Executive Officer
YOUR VOTE IS IMPORTANT -- PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY
PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE
SINCLAIR BROADCAST GROUP, INC. ANNUAL MEETING.
SINCLAIR BROADCAST GROUP, INC.
10706 BEAVER DAM ROAD
COCKEYSVILLE, MD 21030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: TUESDAY, MAY 16, 2000
TIME: 10:00 A.M. LOCAL TIME
PLACE: THE HUNT VALLEY INN
245 SHAWAN ROAD
HUNT VALLEY, MD 21031-1099
YOUR VOTE AT THE ANNUAL MEETING IS VERY IMPORTANT TO US.
Dear Stockholders:
At the 2000 annual meeting, we will ask you to:
1. Elect six 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, 2000.
3. Transact such other business as may properly come before the annual
meeting.
Accompanying this notice is a proxy statement and a proxy card. Whether or
not you expect to be present at the annual meeting, please sign and date the
proxy card and return it in the enclosed envelope before the date of the annual
meeting. You may revoke your proxy any time before it is voted at 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 10, 2000.
You are cordially invited to attend the annual meeting, and you may vote
in person even though you have returned your card.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
April 14, 2000
TABLE OF CONTENTS
PAGE
-----
INFORMATION ABOUT THE 2000 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
STOCKHOLDER PROPOSALS .............................................. 21
i
SINCLAIR BROADCAST GROUP, INC.
10706 BEAVER DAM ROAD
COCKEYSVILLE, MARYLAND 21030
--------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2000
--------------
This proxy statement provides information that you should read before you
vote on the proposals that will be presented to you at the 2000 annual meeting
of Sinclair Broadcast Group, Inc. The 2000 annual meeting will be held on May
16, 2000 at the Hunt Valley Inn, 245 Shawan Road, Hunt Valley, MD 21031-1099.
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 six 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, 2000, 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 April 14, 2000, we began mailing information to people who, according
to our records, owned common shares or beneficial interests in Sinclair as of
the close of business on April 10, 2000. We have mailed with that information
a copy of Sinclair's annual report to stockholders for the fiscal year ended
December 31, 1999.
1
INFORMATION ABOUT THE 2000 ANNUAL MEETING AND VOTING
THE ANNUAL MEETING
The annual meeting will be held on May 16, 2000 at the Hunt Valley Inn,
245 Shawan Road, Hunt Valley, MD 21031-1099 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.
On April 14, 2000, we began mailing this proxy statement to all people who,
according to our stockholder records, owned shares at the close of business on
April 10, 2000.
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 by 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
16, 2000.
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 2000 fiscal year.
We have described in this proxy statement all the proposals that we expect
will be made at the annual meeting. If we or a stockholder properly present any
other proposal to the meeting, we will use your proxy to vote your shares on
the proposal in our best judgment.
REVOKING YOUR PROXY
If you decide to change your vote, you may revoke your proxy at any time
before it is voted. You may revoke your proxy one of three ways:
o You may notify the Secretary of Sinclair in writing that you wish to
revoke your proxy, at the following address: Sinclair Broadcast Group,
Inc., 10706 Beaver Dam Road, Cockeysville, Maryland, Attention: J.
Duncan Smith, Vice President and Secretary. Your notice must be
received by us before the time of the annual meeting.
o You may submit a proxy dated later than your original proxy.
o You may attend the annual meeting and vote. Merely attending the
annual meeting will not by itself revoke a proxy; you must obtain a
ballot and vote your shares to revoke the proxy.
2
VOTE REQUIRED BY APPROVAL
SHARES ENTITLED TO VOTE. On April 10, 2000 (the record date), the
following shares were issued and outstanding and had the votes indicated:
o class A common stock. 45,628,488 shares of class A common stock, each
of which is entitled to one vote on each of the proposals;
o class B common stock. 47,570,886 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 260,668,675 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 six directors The nominees for director who receive the most votes will
be elected. Up to seven persons may be elected if that
number were properly nominated, but only six persons have
been nominated. 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 of The affirmative vote of a majority of the votes cast at
Independent Accountant 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, 1999, including consolidated financial statements, to all
shareholders entitled to vote at the annual meeting together with this proxy
statement. The annual report does not constitute a part of the proxy
solicitation material. The annual report tells you how to get additional
information about Sinclair.
3
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees for election to the board of directors are:
David D. Smith
Frederick G. Smith
J. Duncan Smith
Robert E. Smith
Basil A. Thomas
Lawrence E. McCanna
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 six nominees is currently a member of the
board of directors and has consented to serve as a director if re-elected. More
detailed information about each of the nominees is available in the section of
this proxy statement titled "Directors and Executive Officers," which begins on
page 7.
If any of the nominees cannot serve for any reason (which is not
anticipated), the board of directors may designate a substitute nominee or
nominees. If a substitute is nominated, we will vote all valid proxies for the
election of the substitute nominee or nominees. Alternatively, the board of
directors may also decide to leave the board seat or seats open until a
suitable candidate or candidates are located, or it may decide to reduce the
size of the board.
The board of directors has established the size of the board at seven
members. However, since a vacancy was created by the resignation of one
director in 1997, the board has not appointed a replacement or nominated anyone
to be elected to this position. The board may in the future appoint someone to
fill this vacancy, or may leave the position open, and therefore has not taken
action to eliminate the vacant directorship. Proxies for the annual meeting may
not be voted for more than the six nominees named.
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
2000. 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There were 93,324,246 shares of common stock of Sinclair issued and
outstanding on April 5, 2000. 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 executive officer described on the "Summary
Compensation Table" on page 12;
o all directors and executive officers as a group.
PERCENT OF
SHARES OF CLASS B SHARES OF CLASS A TOTAL
COMMON STOCK COMMON STOCK VOTING
BENEFICIALLY OWNED BENEFICIALLY OWNED POWER (B)
----------------------- -------------------------- ------------
NAME NUMBER PERCENT NUMBER PERCENT (A)
- ----------------------------------------- ------------ --------- ------------ ------------
David D. Smith (c) ...................... 12,716,325 26.7% 12,736,325 21.8% 25.3%
Frederick G. Smith (c) (d) .............. 11,036,171 23.2% 11,057,171 19.5% 21.2%
J. Duncan Smith (c) (e) ................. 12,623,321 26.5% 12,623,321 21.6% 24.2%
Robert E. Smith (c) (f) ................. 10,409,363 21.9% 10,488,324 18.7% 20.0%
David B. Amy (g) ........................ 95,000 * *
Patrick J. Talamantes (h) ............... 61,479 * *
Barry P. Drake (i) ...................... 98,486 * *
Basil A. Thomas ......................... 4,000 * *
Lawrence E. McCanna ..................... 600 * *
Barry Baker (j)
1215 Cole Street
St. Louis Missouri 63106 ............... 2,764,870 5.7% *
FMR Corp. (k)
82 Devonshire Street
Boston, Massachusetts 02109 ............ 2,589,308 5.7% *
Denver Investment Advisors LLC(l)
1225 17th Street, 26th Floor
Denver, Colorado 80217 ................. 3,945,100 8.6% *
Capital Research and Management
Company (m)
333 South Hope Street
Los Angeles, California 90071 .......... 5,933,800 13.0% 1.1%
Neuberger Berman Inc. (n)
605 Third Avenue
New York, New York 10104 ............... 6,216,300 13.6% 1.2%
All directors and executive officers as a
group (9 persons) (o) ................... 46,785,180 98.3% 47,164,706 50.9% 90.7%
- ------------------
* Less than 1%
(a) Percent of class A common stock beneficially owned by an individual (or
group) is calculated by taking the number of shares of class A common stock
beneficially owned by an individual (or group) divided by the number of
shares of class A common stock outstanding plus only shares of class A
common stock equivalents held by an individual (or group), including class
B common stock and exercisable stock options.
(b) Holders of class A common stock are entitled to one vote per share and
holders of class B common stock are entitled to ten votes per share except
for votes relating to "going private" and certain other transactions. The
class A common stock and the class B common stock vote altogether as a
single class except as otherwise may be required by Maryland law on all
matters presented for a vote. Holders of class B common stock may at any
time convert their shares into the same number of shares of class A common
stock.
5
(c) Shares of class A common stock beneficially owned includes both shares of
class A common stock and class B common stock beneficially owned and
aggregated, assuming each share of class B common stock has been converted
into one share of class A common stock.
(d) Includes 766,176 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.
(e) Includes 860,390 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.
(f) Includes 1,206,999 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.
(g) Includes 90,000 shares of class A common stock that may be acquired upon
the exercise of options.
(h) Includes 52,500 shares of class A common stock that may be acquired upon
the exercise of options.
(i) Includes 75,000 shares of class A common stock that may be acquired upon
the 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 FMR Corp. with the SEC on
February 14, 2000, FMR Corp., through Fidelity Management & Research
Company and Fidelity Management Trust Company, its wholly-owned
subsidiaries, and Fidelity International Limited, an independent entity of
FMR Corp., is deemed to be the beneficial owner of 2,589,308 shares of
class A common stock. Fidelity Management & Research Company beneficially
owns 1,935,600 shares of class A common stock as a result of acting as
investment advisor to various investment companies. Fidelity Management
Trust Company beneficially owns 239,398 shares of class A common stock as a
result of serving as investment manager of institutional accounts. Fidelity
International Limited is the beneficial owner of 414,310 shares of class A
common stock.
(l) As set forth in the Form 13F-HR filed by Denver Investment Advisors LLC
with the SEC on February 10, 2000, Denver Investment Advisors LLC holds
3,945,100 shares of class A common stock and has sole voting discretion
with respect to 2,399,800 of those shares.
(m) As set forth in the Schedule 13G filed by Capital Research & Management
Company with the SEC on February 11, 2000, Capital Research and Management
Company is deemed to be the beneficial owner of 5,993,800 shares of class A
common stock as a result of acting as investment advisor to various
investment companies.
(n) As set forth in the Schedule 13G filed by Neuberger Berman, Inc. with the
SEC on February 3, 2000, Neuberger Berman Inc., through its wholly-owned
subsidiaries Neuberger Berman LLC and Neuberger Berman Management, Inc. is
deemed to be the beneficial owner of 6,216,300 shares of class A common
stock. 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 an investment
advisor to a series of public mutual funds.
(o) Includes 217,500 shares of class A common stock that may be acquired upon
the 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.
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 all filing requirements applicable to our officers,
directors and greater than ten percent beneficial owners were complied with.
6
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information relating to our executive officers,
directors, and certain key employees.
NAME AGE TITLE
- -------------------------------- ----- ----------------------------------------------------
David D. Smith ................. 49 President, Chief Executive Officer, Director and
Chairman of the Board
Frederick G. Smith ............. 50 Vice President and Director
J. Duncan Smith ................ 46 Vice President, Secretary and Director
David B. Amy ................... 47 Executive Vice President
Patrick J. Talamantes .......... 35 Chief Financial Officer
Barry P. Drake ................. 48 Chief Executive Officer of Sinclair Communications,
Inc. (SCI)
Thomas E. Severson ............. 36 Vice President/Chief Accounting Officer
Will Davis ..................... 51 Regional Director of SCI
Robert Gluck ................... 42 Regional Director of SCI
Michael Granados ............... 45 Regional Director of SCI
Steven M. Marks ................ 43 Regional Director of SCI
Craig Millar ................... 51 Regional Director of SCI
Richard M. Singer .............. 56 Regional Director of SCI
David R. Bochenek .............. 37 Corporate Controller
Archie L. Buffkins ............. 66 Vice President/Corporate Affairs
M. William Butler .............. 47 Vice President/Group Programming and Promotions of
SCI
Michael Draman ................. 51 Vice President/TV Sales and Marketing of SCI
Barry Faber .................... 38 Vice President/General Counsel of SCI
Mark E. Hyman .................. 42 Vice President/Corporate Relations
Leonard Ostroff ................ 32 Chief Operating Officer of Sinclair Ventures, Inc.
Nat Ostroff .................... 59 Vice President/New Technology
Delbert R. Parks III ........... 48 Vice President/Operations and Engineering of SCI
Lucy A. Rutishauser ............ 35 Assistant Treasurer/Corporate Finance
Robin A. Smith ................. 43 Vice President/Finance of SCI
Donald H. Thompson ............. 33 Vice President/Human Resources
John T. Quigley ................ 56 Vice President/Business Development of Sinclair
Ventures, Inc.
Lawrence E. McCanna ............ 56 Director
Basil A. Thomas ................ 84 Director
Robert E. Smith ................ 36 Director
Members of the board of directors are elected for one-year terms and until
their successors are duly elected and qualified. Executive officers are
appointed by the board of directors annually to serve for one-year terms and
until their successors are duly appointed and qualified.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The board of directors held a total of 4 meetings during 1999, and
executed 8 unanimous consents in lieu of meetings. Each director attended at
least 75% of the aggregate number of meetings of the board of directors and all
committees of the board of directors on which he served.
The board of directors currently consists of six members. The committees
of the board of directors include an audit committee and a compensation
committee.
o AUDIT COMMITTEE. The members of the audit committee are Messrs. Thomas
and McCanna. This committee is charged with the responsibility of
reviewing our internal auditing procedures and accounting controls and
will consider the selection and independence of our outside auditors.
The audit committee met 5 times during the year ended December 31,
1999.
7
o COMPENSATION AND STOCK OPTION COMMITTEE. The members of the
compensation committee are Messrs. Thomas and McCanna. This committee
is charged with the responsibility for setting executive compensation,
reviewing certain of our compensation programs, including our stock
option program and making recommendations to the board of directors in
the interval between meetings. The compensation and stock option
committee met 16 times during the year ended December 31, 1999.
DIRECTOR AND OFFICER PROFILES
David D. Smith has served as President, Chief Executive Officer and
Chairman of the Board since September 1990. Prior to that, he served as General
Manager of WPTT, Pittsburgh, Pennsylvania, from 1984, and assumed the financial
and engineering responsibility for Sinclair, including the construction of
WTTE, Columbus, Ohio, in 1984. In 1980, Mr. Smith founded Comark Television,
Inc., which applied for and was granted the permit for WPXT-TV in Portland,
Maine and which purchased WDSI-TV in Chattanooga, Tennessee. WPXT-TV was sold
one year after construction and WDSI-TV was sold two years after its
acquisition. From 1978 to 1986, Mr. Smith co-founded and served as an officer
and director of Comark Communications, Inc., a company engaged in the
manufacture of high power transmitters for UHF television stations. His
television career began with WBFF in Baltimore, where he helped in the
construction of the station and was in charge of technical maintenance until
1978. David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert E. Smith
are brothers. David Smith is currently a member of the board of directors of
Sinclair Ventures, Inc., Acrodyne Communications, Inc., BeautyBuys.com, Inc.,
and Net Fanatics, Inc.
Frederick G. Smith has served as Vice President of Sinclair since 1990 and
as a Director since 1986. Prior to joining Sinclair in 1990, Mr. Smith was an
oral and maxillofacial surgeon engaged in private practice and was employed by
Frederick G. Smith, M.S., D.D.S., P.A., a professional corporation of which Mr.
Smith was the sole officer, director and stockholder. Mr. Smith is currently a
member of the board of directors of Sinclair Ventures, Inc.
J. Duncan Smith has served as Vice President, Secretary and as a Director
of Sinclair since 1988. Prior to that, he worked for Comark Communications,
Inc. installing UHF transmitters. In addition, he also worked extensively on
the construction of WPTT in Pittsburgh, WTTE in Columbus, WIIB in Bloomington
and WTTA in St. Petersburg, as well as on the renovation of the new studio,
offices and news facility for WBFF in Baltimore. J. Duncan Smith is currently a
member of the board of directors of Sinclair Ventures, Inc.
David B. Amy has served as Executive Vice President since September 1999.
Prior to that time, he served as Chief Financial Officer (CFO) since October of
1994, and as Vice President and CFO since September, 1998. In addition, he
serves as Secretary of SCI, the Sinclair subsidiary which owns and operates the
broadcasting operations. Prior to his appointment as Vice President and CFO,
Mr. Amy served as the Corporate Controller of Sinclair beginning in 1986 and
has been Sinclair's Chief Accounting Officer since that time. Mr. Amy has over
sixteen years of broadcast experience, having joined Sinclair as a business
manager for WCWB in Pittsburgh. Mr. Amy received an MBA degree from the
University of Pittsburgh in 1981. Mr. Amy is currently a member of the board of
directors of Acrodyne Communications, Inc., BeautyBuys.com, Inc., and an
advisor to Allegiance Capital.
Patrick J. Talamantes has served as Chief Financial Officer since
September 1999. Prior to that time he served as Treasurer of Sinclair since
September 1998 and as Director of Corporate Finance and Treasurer of SCI since
1996. Prior to that time and since April 1995, he served as Treasurer for River
City Broadcasting, L.P. (River City), a radio and television broadcasting
company acquired by Sinclair in 1996. From 1991 to 1995, he was a Vice
President with Chemical Bank, where he completed financings for clients in the
cable, broadcasting, publishing and entertainment industries. Mr. Talamantes
holds a B.A. degree from Stanford University and an M.B.A. from the Wharton
School at the University of Pennsylvania.
Barry P. Drake has served as Chief Executive Officer of SCI since June
1999. Prior to that time he served as Chief Operating Officer of SCI Radio
since 1996 and Chief Operating Officer of Keymarket Radio Division of River
City since July 1995. Prior to that time, he was President and Chief Operating
8
Officer of Keymarket since 1988. From 1985 through 1988, Mr. Drake performed
the duties of the President of each of the Keymarket broadcasting entities,
with responsibility for three stations located in Houston, St. Louis and
Detroit. Mr. Drake is a graduate of Penn State University.
Thomas E. Severson has served as Vice President/Chief Accounting Officer
since September 1999 and prior to that as Corporate Controller since January
1997. In addition, Mr. Severson served as Assistant Controller of Sinclair
since 1995. Prior to joining Sinclair, Mr. Severson held positions in the audit
departments of KPMG Peat Marwick LLP and Deloitte & Touche LLP from 1991 to
1995. Mr. Severson is a graduate of the University of Baltimore and is a member
of the American Institute of Certified Public Accountants and the Maryland
Association of Certified Public Accountants.
Will Davis has served as Regional Director of SCI since January 2000.
Regional Director, Mr. Davis is responsible for the Greenville/Asheville/
Spartanburg, Des Moines, Tri-Cities, Peoria, Cape Girardeau and Charleston
(South Carolina) markets. From 1996 to 2000, Mr. Davis served as Vice President
& General Manager of WLOS-TV in Asheville. Prior to joining Sinclair, Mr. Davis
served as General Manager of television stations in the Des Moines, Flint and
Indianapolis markets. He is a graduate of the University of North Carolina at
Chapel Hill.
Robert Gluck has served as Regional Director of SCI since August 1997. As
Regional Director, Mr. Gluck is responsible for the Baltimore, Minneapolis,
Greensboro/Winston-Salem, Milwaukee, and Raleigh/Durham, Springfield, Portland,
and Madison markets. Prior to joining Sinclair, Mr. Gluck served as General
Manager at WTIC-TV in the Hartford-New Haven market. Prior to joining WTIC-TV
in 1988, Mr. Gluck served as National Sales Manager and Local Sales Manager of
WLVI-TV in Boston. Before joining WLVI-TV, Mr. Gluck served in various sales
and management capacities with New York national sales representative firms.
Michael Granados has served as a Regional Director of SCI since July 1996.
As a Regional Director, Mr. Granados is responsible for the Sacramento, Las
Vegas, San Antonio, Oklahoma City, Kansas City, Moblie/Pensacola and
Tallahassee markets. Prior to July 1996, Mr. Granados served as the General
Manager of WTTV-TV. Before 1996 and while working for River City, Mr. Granados
served as the General Sales Manager of KABB-TV from 1989 to 1993 and the
Station Manager and Director of Sales of WTTV-TV from 1993 to 1994.
Steven M. Marks has served as Regional Director of SCI since October 1994.
As Regional Director, Mr. Marks is responsible for the Tampa, Syracuse,
Charleston (West Virginia), Norfolk, Flint, Richmond, Buffalo, and Rochester
markets. Prior to his appointment as Regional Director, Mr. Marks served as
General Manager for WBFF-TV since July 1991. From 1986 until joining WBFF-TV in
1991, Mr. Marks served as General Sales Manager at WTTE-TV. Prior to that time,
he was national sales manager for WFLX-TV in West Palm Beach, Florida.
Richard D. Singer has served as Regional Director of SCI over WPGH-TV and
WCWB-TV in Pittsburgh since November 1999. Prior to joining Sinclair, Mr.
Singer served as Director of Sales for WAMI-TV in Miami in addition to his
duties as Vice President of National Sales for USA Broadcasting. Prior to that,
Mr. Singer served as Director of Sales and Marketing for Knight-Ridder Video
and was a General Partner in Regency Communications LP, a group owner of small
market radio stations. Prior to that, Mr. Singer served in various management
positions with Telerep, including Vice President and General Sales Manager in
New York and Vice President East Coast Offices in Philadelphia.
Craig Millar has served as a Regional Director since July 1998. As
Regional Director, Mr. Millar is responsible for the Nashville, Birmingham,
Indianapolis, Lexington, Cincinnati, and Dayton markets and has oversight for
the markets in Will Davis' region. Prior to his appointment as Regional
Director, Mr. Millar served as President and General Manager of KTBC/KVC-TV in
Austin, Texas since April 1995. Prior to that Mr. Millar was President and
General Manager WBRC-TV in Birmingham, Alabama since March 1992. Prior to that
Mr. Millar was Vice President of Sales for Great American Broadcasting from
August 1989. Prior to that Mr. Millar served in various sales management and
sales positions in both television and radio.
David R. Bochenek has served as Corporate Controller since March 2000.
Prior to joining Sinclair, Mr. Bochenek was the 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
9
various positions in the audit department of Ernst & Young, LLP since 1983. Mr.
Bochenek received his Bachelor of Business Administration in Accounting and
Master of Science in Finance from Loyola College of Maryland. Mr. Bochenek is a
member of the American Institute of Certified Public Accountants and Maryland
Association of Certified Public Accountants, on which he serves as a member of
the executive committee for Central Maryland.
Archie L. Buffkins has served as Vice President for Corporate Affairs
since June 1999. Prior to that, Dr. Buffkins served 17 years in governance and
senior management with the Maryland Public Broadcasting Commission where he
served as Senior Vice President for Broadcasting, Senior Vice President for
Strategic Planning and Research and Interim President. Prior to that, Dr.
Buffkins was Senior Advisor to the Chairman and Consulting Producer at the John
F. Kennedy Center for the Performing Arts and was Chancellor of the University
of Maryland, Eastern Shore Campus. Dr. Buffkins has held several high-level
positions in higher education, the arts and public policy. Dr. Buffkins earned
his bachelor's degree from Jackson State University and his masters and
doctorate degrees from Columbia University. Dr. Buffkins has done further study
at the Chicago Conservatory, Harvard, the University of Maine School of Law,
Columbia University, and Tel Aviv University. Dr. Buffkins has served on
several presidential, gubernatorial and community boards.
M. William Butler has served as Vice President/Group Programming and
Promotions of SCI since July 1999 and prior to that as Vice President/Group
Program Director, SCI since 1997. From 1995 to 1997, Mr. Butler served as
Director of Programming at KCAL, the Walt Disney Company station in Los
Angeles, California. From 1991 to 1995, he was Director of Marketing and
Programming at WTXF in Philadelphia, Pennsylvania and prior to that he held the
same position at WLVI in Boston, Massachusetts. Mr. Butler attended the
Graduate Business School of the University of Cincinnati from 1975 to 1976.
Michael Draman has served as Vice President/TV Sales and Marketing of SCI
since 1997. From 1995 until joining Sinclair, Mr. Draman served as Vice
President of Revenue Development for New World Television. From 1983 to 1995,
he was Director of Sales and Marketing for WSVN-TV in Miami, Florida. Mr.
Draman attended The American University and The Harvard Business School and
served with the U.S. Marine Corps in Vietnam.
Barry Faber has served as Vice President/General Counsel of SCI since
August 1999 and prior to that as Associate General Counsel from 1996 to 1999.
Prior to that time, he was associated with the law firm of Fried, Frank,
Harris, Shiver, & Jacobson in Washington, D.C. Mr. Faber is a graduate of the
University of Virginia and the University of Virginia School of Law.
Mark E. Hyman has served as Vice President of Corporate relations since
July 1999 and prior to that as Director of Government Relations since February
1997. Prior to joining Sinclair, he was a career Federal employee as an
Intelligence Officer, a foreign treaty weapons inspector with the U.S. On-Site
Inspection Agency and a Congressional Fellow. A graduate of the U.S. Naval
Academy and a military veteran, he was a Naval Officer and a Naval Reservist.
He most recently served as the Executive Officer of the U.S. National
Reconnaissance Office. He has been awarded several military and Intelligence
Community awards including four CIA National Intelligence Meritorious
Citations.
Leonard Ostroff has served as Chief Operating Officer of Sinclair
Ventures, Inc., a wholly-owned subsidiary of Sinclair Broadcast Group, Inc.,
since August 1999. From 1994 to 1999, Mr. Ostroff served as Vice President of
Information Systems for Prudential Securities, Inc., a global securities firm
based in New York City. From 1991 to 1994, Mr. Ostroff served as a Senior
Imaging Consultant at Viable Information Processing Systems, a systems
consulting firm in Towson, Maryland. From 1989 to 1991, Mr. Ostroff worked for
Andersen Consulting in New York City as a Senior Consultant. He currently
serves or participates on the boards of BeautyBuys.com, Inc., Synergy Brands,
Inc. and Net Fanatics, Inc., where he takes an active role in the development
and strategic direction of these companies.
Nat Ostroff has served as Vice President for New Technology since joining
Sinclair in January of 1996. From 1984 until joining Sinclair, he was the
President and CEO of Comark Communication Inc., a leading manufacturer of UHF
transmission equipment. While at Comark, Mr. Ostroff was nominated
10
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 Chairman of the Board for Acrodyne
Communications, Inc.
Delbert R. Parks III has served as Vice President of 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 28 years. He is responsible for planning, organizing and
implementing operational and engineering policies and strategies as they relate
to television operations, web activity, information management systems, and
infrastructure. Mr. Parks is a member of the Society of Motion Picture and
Television Engineers and the Society of Broadcast Engineers. Mr. Parks is also
a retired Lieutenant Colonel who has held various commands during his 26-year
reserve career.
Lucy A. Rutishauser has served as Assistant Treasurer/Corporate Finance
since September 1999 and prior to that as Assistant Treasurer since December
1998. From 1990 to 1996, Ms. Rutishauser was the Assistant Treasurer for
Treasure Chest Advertising Company and Integrated Health Services, Inc. Prior
to that, she held various treasury positions with Laura Ashley, Inc. and Black
& Decker Corporation. Ms. Rutishauser graduated magna cum laude from Towson
University and received her M.B.A., with honors from the University of
Baltimore. Ms. Rutishauser is a member of the National Institute of Investor
Relations and the Association of Finance Professionals and has served two terms
on the board of directors for the Mid-Atlantic Treasury Management Association.
Robin A. Smith has served as Vice President/Finance of SCI since August
1999 and prior to that as Chief Financial Officer, SCI Radio since June 1996.
From 1993 until joining Sinclair, Ms. Smith served as Vice President and Chief
Financial Officer of the Park Lane Group of Menlo Park, California, which owned
and operated small market radio stations. From 1982 to 1993, she served as Vice
President and Treasurer of Edens Broadcasting, Inc. in Phoenix, Arizona, which
owns and operates radio stations in major markets. Ms. Smith is a graduate of
the Arizona State University and is a Certified Public Accountant.
Donald H. Thompson has served as Vice President of Human Resources since
November 1999 and prior to that as Director of Human Resources since September
1996. Prior to joining Sinclair, Mr. Thompson was Human Resources Manager for
NASA at the Goddard Space Flight Center near Washington, D.C. Mr. Thompson
holds a Bachelor's Degree in Psychology and Certificate in Personnel and
Industrial Relations from University of Maryland and a Masters of Science in
Business/Human Resource & Behavior Management from Johns Hopkins University.
Mr. Thompson is a member of the Society for Human Resource Management.
John T. Quigley has served as Vice President, Business Development of
Sinclair Ventures, Inc. since January 2000. Prior to that time, Mr. Quigley
served as a Regional Director of Sinclair since June 1996 and as General
Manager of WTTE since July 1985. Before joining WTTE, Mr. Quigley served in
various broadcast management positions at WCPO-TV in Cincinnati, Ohio and
WPTV-TV in West Palm Beach, Florida.
Lawrence E. McCanna has served as a Director of Sinclair since July 1995.
Mr. McCanna has been a partner of the accounting firm of Gross, Mendelsohn &
Associates, P.A. since 1972 and has served as its managing partner since 1982.
Mr. McCanna has served on various committees of the Maryland Association of
Certified Public Accountants and was chairman of the Management of the
Accounting Practice committee. He is also a former member of the Management of
an Accounting Practice committee of the American Institute of Certified Public
Accountants. Mr. McCanna is a former member of the board of directors of
Maryland Special Olympics.
Basil A. Thomas has served as a Director of Sinclair since November 1993.
He is of counsel to the Baltimore law firm of Thomas & Libowitz, P.A. and has
been in the private practice of law since 1983. From 1961 to 1968, Judge Thomas
served as an Associate Judge on the Municipal Court of Baltimore
11
City and, from 1968 to 1983, he served as an Associate Judge of the Supreme
Bench of Baltimore City. Judge Thomas is a trustee of the University of
Baltimore and a member of the American Bar Association and the Maryland State
Bar Association. Judge Thomas attended the College of William & Mary and
received his L.L.B. from the University of Baltimore. Judge Thomas is the
father of Steven A. Thomas, a senior attorney and founder of Thomas & Libowitz,
counsel to Sinclair.
Robert E. Smith has served as a Director of Sinclair since 1995. He served
as Vice President and Treasurer of Sinclair from 1988 to June 1998, at which
time he resigned from his position as Vice President and Treasurer. Prior to
that time, he assisted in the construction of WTTE-TV and also worked for
Comark Communications, Inc. installing UHF transmitters. Mr. Smith is currently
a member of the board of directors of Sinclair Ventures, Inc.
EXECUTIVE COMPENSATION TABLE
The following table sets forth certain information regarding our annual
and long-term compensation for services rendered in all capacities during the
year ended December 31, 1999 by the Chief Executive Officer and the five most
highly compensated executive officers other than the Chief Executive Officer,
who are collectively referred to as the named executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
NAME AND ANNUAL COMPENSATION SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (A) OPTIONS GRANTED (#) COMPENSATION (B)
- ------------------------------- ------ ------------- ----------- ----------------------- -----------------
David D. Smith ................ 1999 $1,072,500 $603,115 -- $ 4,609
President and Chief Executive 1998 1,290,000 502,526 -- 4,715
Officer 1997 1,354,590 98,224 -- 4,756
Frederick G. Smith ............ 1999 190,000 -- -- 4,277
Vice President 1998 222,093 130,000 -- 4,342
1997 273,000 -- -- 4,362
J. Duncan Smith ............... 1999 190,000 -- -- 15,165
Vice President and Secretary 1998 226,671 135,000 -- 21,809
1997 283,500 -- -- 15,569
David B. Amy .................. 1999 300,000 75,000 -- 9,145
Executive Vice President 1998 200,000 75,000 135,000 9,336
1997 189,000 50,000 50,000 8,590
Patrick J. Talamantes ......... 1999 201,041 15,250 -- 4,484
Chief Financial Officer 1998 132,500 20,500 70,000 3,636
1997 112,000 12,000 20,000 2,967
Barry P. Drake ................ 1999 400,000 -- -- 4,609
Chief Executive Officer of SCI 1998 350,000 -- 80,000 3,722
1997 339,727 -- 60,000 3,752
- ----------
(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's 401 (k) contribution and
life insurance.
12
STOCK OPTIONS
No stock options were granted for the named executive officers for the
year ended December 31, 1999.
The following table shows information regarding options exercised during
1999, the number of securities underlying, and the value of "in the money"
options outstanding on December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 1999 OPTION
VALUES
SHARES
ACQUIRED ON VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
EXERCISE REALIZED UNDERLYING UNEXERCISED "IN THE MONEY"
------------- ---------- OPTIONS AT DECEMBER 31, 1999 OPTIONS AT DECEMBER 31, 1999 (A)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- --------------- ------------- --------------
David D. Smith ................ -- -- -- -- -- --
Frederick G. Smith ............ -- -- -- -- -- --
J. Duncan Smith ............... -- -- -- -- -- --
David B. Amy .................. -- -- 65,000 135,000 $25,545 --
Patrick J. Talamantes ......... -- -- 42,500 47,500 -- --
Barry P. Drake ................ -- -- 60,000 80,000 -- --
(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, 1999, 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 attended. In addition,
the independent directors are reimbursed for any expenses incurred in
connection with their attendance at such meetings.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with David D. Smith, President and
Chief Executive Officer of Sinclair, on June 12, 1995, which expired on June
12, 1998. We have not entered into a new agreement with Mr. Smith and do not
currently anticipate entering into a new agreement. Our compensation committee
has set David Smith's base salary for 2000 at $1,000,000.
In June 1999, 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.
In June 1999, 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
13
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 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 is
entitled to receive an annual bonus based on the performance of Mr. Amy and/or
Sinclair. The agreement also contains non-competition and confidentiality
restrictions on Mr. Amy.
In September 1998, we entered into an employment agreement with Patrick J.
Talamantes, 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. Talamantes at any time, with or without cause. Mr. Talamantes
receives a base salary of $240,000 and is entitled to options granted to him
under his former employment agreement to acquire shares of stock of Sinclair
pursuant to a separate stock option agreement. In addition, Mr. Talamantes is
entitled to receive an annual bonus based on the performance of Mr. Talamantes
and/or Sinclair. Mr. Talamantes' employment agreement also contains
non-competition and confidentiality restrictions.
In February 1997, SCI entered into an employment agreement with Barry
Drake, Chief Executive Officer, Television. The agreement does not have any
specified termination date, and SCI has the right to terminate the employment
of Mr. Drake at any time, with or without cause, subject to the payment of
severance payments for termination without cause. The severance payment due
upon termination without cause is equal to one month's base salary in effect at
the time of termination times the number of years of continuous employment by
SCI or its predecessor. Mr. Drake receives a base salary of no less than
$325,000, provided that SCI continues to have at least the same level of
broadcast cash flow as in February 1997. Mr. Drake is also entitled to receive
options to acquire shares of our class A common stock pursuant to our
non-qualified stock option long-term incentive plan. Mr. Drake's compensation
may include a bonus in the sole discretion of the Executive committee. The
agreement also contains non-competition and confidentiality restrictions on Mr.
Drake.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors consists entirely of
non-employee directors. The committee determines all compensation paid or
awarded to our key executive officers.
Philosophy. The committee's goal is to attract, motivate, and retain an
executive management team that can take full advantage of our opportunities and
achieve long-term success in an increasingly competitive business environment,
thereby increasing stockholder value. In deciding on initial compensation for
an individual, the committee considers determinants of the individual's market
value, including experience, education, accomplishments, and reputation, as
well as the level of responsibility to be assumed. Retention and compensation
decisions are sometimes made in the context of an acquisition, and the
committee considers the overall terms of the acquisition and the individual's
relationship to the acquired business in those cases. In deciding whether to
increase the compensation of an individual or whether to award bonuses or stock
options initially or upon subsequent performance reviews, the committee
considers the contributions of the individual to our progress on our business
plan and against our competitors, to growth of Sinclair and its opportunities
and to achievement of other aims the committee deems valuable to stockholders.
Applying these factors to each individual's case is a judgment process,
exercised by the committee with the advice of management. There is no intent to
relate compensation to our stock price performance, either absolute or relative
to peer groups, except as that relationship is implicit in the stock-based
compensation plans.
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 ultimate annual compensation.
14
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. We have not entered into an
employment agreement with David Smith, the Chief Executive Officer, since the
termination of his earlier agreement in June 1999, and do not currently
anticipate entering into a new agreement. The committee may increase the salary
of an individual on the basis of its judgment for any reason, including the
performance of the individual or Sinclair and changes in the market for an
executive with similar credentials.
Cash Bonus. The committee determined each individual's cash bonus for the
fiscal year ended December 31, 1999. Bonuses are based upon the attainment of
performance targets established by the committee. Performance targets were
based on percentage increases in "equalized broadcast cash flow."
Stock Options. The committee believes achievement of our goals may be
fostered by a stock option program that is tailored to employees who
significantly enhance the value of Sinclair. In that regard, during the fiscal
year ended December 31, 1999, the committee granted employees options to
purchase 881,300 shares of class A common stock. No named executive officers
received options of shares of class A common stock in 1999. The committee did
not grant options in 1999 with an exercise price below the market price for
class A common stock.
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 as reflected in the price per share of common
stock. For his services as our president and chief executive officer, David D.
Smith's compensation for 1999 was determined in accordance with the
compensation policies established by the compensation committee. The committee
awarded Mr. Smith a bonus of $100,000 for the fiscal year ended December 31,
1999 (pursuant to the compensation formula established for 1999). For the year
ending December 31, 2000, his base compensation has been set at $1,000,000. In
addition, he will be paid performance-based bonuses as follows:
o For each quarter beginning January 1, 2000, if that quarter equals or
exceeds the (pro forma) broadcast cash flow of SCI of the
corresponding quarter of the prior year, he shall be paid a bonus of
$100,000, calculated and paid on a quarterly basis, and,
o in addition, he will be entitled to receive a bonus of 2% of the
amount by which the (pro forma) broadcast cash flow of SCI for
calendar year 2000 exceeds the (pro forma) broadcast cash flow for the
immediately preceding year.
Compensation Deduction Limit. The committee has considered the $1 million
limit on deductible executive compensation that is not performance-based. The
committee believes that substantially all executive compensation expenses paid
in 1999, except for certain compensation paid to David Smith in excess of $1
million, will be deductible by us. The committee believes, however, that
compensation exceeding this limit should not be ruled out where such
compensation is justified on the basis of the executive's value to Sinclair and
its shareholders. In any event, there appears to be little evidence that tax
deductibility is having much impact on the market for managerial talent, in
which Sinclair must remain competitive.
Compensation Committee
Basil A. Thomas
Lawrence E. McCanna
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Other than as follows, no named executive officer is a director of a
corporation that has a director or executive officer who is also a director of
Sinclair. Each of David D. Smith, Frederick G. Smith and J. Duncan Smith, all
of whom are executive officers and directors of Sinclair, is a director and/or
executive officer of each of various other corporations controlled by them.
David D. Smith is a director of Acrodyne Communications Inc., Sinclair
Ventures, Inc., BeautyBuys.com, Inc. and NetFanatics, 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 Sinclair, an executive
officer and director of Acrodyne Communications Inc. and a director of
BeautyBuys.com, Inc. and NetFanatics, Inc.
During 1999, none of the named executive officers participated in any
deliberations of our compensation committee relating to compensation of the
named executive officers.
The members of the compensation committee are Judge Thomas and Mr.
McCanna. Judge 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 1999, we paid Thomas & Libowitz, P.A., approximately
$1,516,120 in fees and expenses for legal services.
16
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 Index (an index containing
performance data of radio, telephone, telegraph, television, and cable
television companies) from June 7, 1995, the effective date of our initial
public offering, through December 31, 1999. The performance graph assumes that
an investment of $100 was made in the class A common stock and in each Index on
June 7, 1995, and that all dividends were reinvested. Total stockholder return
is measured by dividing total dividends (assuming dividend reinvestment) plus
share price change for a period by the share price at the beginning of the
measurement period.
[GRAPHIC OMITTED]
Company/Index/Market ............... 6/7/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
Sinclair Broadcast Group ........... 100.00 71.50 107.77 193.26 172.01 107.30
NASDAQ Telecommunications
Index ............................. 100.00 124.09 126.85 187.50 306.71 531.79
NASDAQ Market Index - U.S. ......... 100.00 120.28 147.96 181.64 254.90 461.50
17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 1999, we engaged in the
following transactions with the following persons:
o directors, nominees for election as directors, or executive officers;
o beneficial owners of 5% or more of our common stock;
o immediate family members of any of the above, and
o entities in which the above persons have substantial interests.
WPTT Note. In connection with our sale of WPTT in Pittsburgh to WPTT,
Inc., WPTT, Inc., issued to us a 15-year senior secured term note of $6.0
million (the WPTT note). We subsequently sold the WPTT note to the late Julian
S. Smith and Carolyn C. Smith, the parents of the controlling stockholders and
both former stockholders of Sinclair, in exchange for the payment of $50,000
and the issuance of a $6.6 million note, which bears interest at 7.21% per
annum and requires payments of interest only through September 2001. Monthly
principal payments of $109,317 plus interest are payable with respect to this
note commencing in November 2001 and ending in September 2006, at which time
the remaining principal balance plus accrued interest, if any, is due. During
the year ended December 31, 1999, Sinclair received $0.5 million in interest
payments on this note. At December 31, 1999, the balance on this note was $6.6
million.
WIIB Note. In September 1990, we sold all the stock of Channel 63, Inc.,
the owner of WIIB in Bloomington, Indiana, to the controlling stockholders for
$1.5 million. The purchase price was delivered in the form of a note issued to
us which was refinanced in June 1992 (the WIIB note). The WIIB note bears
interest at 6.88% per annum, is payable in monthly principal and interest
payments of $16,000 until September 30, 2000, at which time a final payment of
approximately $431,000 would have been due. During 1999, Sinclair received
payments for the remaining balance of this note of $0.7 million.
Bay Credit Facility. In connection with the capitalization of Bay
Television, Inc., we agreed on May 17, 1990 to loan the controlling
stockholders up to $3.0 million (the Bay credit facility). Each of the loans to
the controlling stockholders pursuant to the Bay credit facility is evidenced
by an amended and restated secured note totaling $2.6 million due December 31,
1999 accruing interest at a fixed rate equal to 6.88%. Principal and interest
were payable quarterly over six years commencing on March 31, 1994. The note
was paid in full as of December 31, 1999 including payments received during
1999 of $0.7 million.
Affiliated Leases. From 1987 to 1992, we entered into five lease
transactions (four of which are still in effect) with Cunningham
Communications, Inc., a corporation wholly owned by the controlling
stockholders, to lease certain facilities from CCI. Three of these leases are
10-year leases for rental space on broadcast towers, one of which is a capital
lease having a renewable term of 10 years. The other lease is a month-to-month
lease for a portion of studio and office space at which certain satellite
dishes are located. Aggregate annual rental payments related to these leases
were $0.5 million in 1999. The aggregate annual rental payments related to
these leases are scheduled to be $0.5 million in 2000 and $0.6 million in 2001.
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 $0.5
million in 1999. The aggregate annual rental payments related to the
administrative facility are scheduled to be $0.6 million in 2000 and $0.4
million in 2001. During 1999, we chartered airplanes owned by certain companies
controlled by the controlling stockholders and incurred expenses of
approximately $0.4 million related to these charters.
In June 1999, Sinclair entered into a ten-year capital lease with Beaver
Dam LLC, a corporation wholly owned by 3 of the controlling stockholders,
pursuant to which Sinclair leases office space for its corporate headquarters.
Payments under this lease agreement were $0.6 million in 1999 and are scheduled
to be $1.2 million in 2000 and 2001.
18
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
1999 on the note was $0.2 million. At December 31, 1999, $1.7 million in
principal amount of the note remained outstanding. Following the acquisition,
Gerstell LP leased the office/studio, transmitter and tower site to WPGH, Inc.
(a Sinclair subsidiary). The leases have terms of seven years, with four
seven-year renewal periods. Aggregate annual rental payment related to these
leases was $0.6 million in 1999.
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 semiannually
thereafter until maturity. The effective interest rate approximates 9.4%. The
founders' notes are secured by security interests in substantially all of
Sinclair's assets and subsidiaries, and are personally guaranteed by the
controlling stockholders.
Principal and interest payments on the founders' note issued to the estate
of Julian S. Smith are payable, in various amounts, each April and October,
beginning October 1991 until October 2004, with a balloon payment due at
maturity in the amount of $5.0 million. Additionally, monthly interest payments
commenced on April 1993 and continued until December 1996. Principal and
interest paid in 1999 on this founders' note was $0.5 million and at December
31, 1999, $5.6 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 1999 on this founders' note
was $1.3 million. At December 31, 1999, $2.0 million in principal amount of
this founders' note remained outstanding.
Relationship with Glencairn. Glencairn is a corporation owned by
o Edwin L. Edwards, Sr. (3%),
o Carolyn C. Smith, the mother of the controlling stockholders (7%), and
o certain trusts established by Carolyn C. Smith for the benefit of her
grandchildren (the Glencairn trusts) (90%).
The 90% equity interest in Glencairn owned by the Glencairn trusts is held
through the ownership of non-voting common stock. The 7% equity interest in
Glencairn owned by Carolyn C. Smith is held through the ownership of common
stock that is generally non-voting, except with respect to certain specified
extraordinary corporate matters as to which this 7% equity interest has the
controlling vote. Edwin L. Edwards, Sr. owns a 3% equity interest in Glencairn
through ownership of all of the issued and outstanding voting stock of
Glencairn and is Chairman of the Board, President and Chief Executive Officer
of Glencairn.
There have been, and we expect that in the future there will be,
transactions between us and Glencairn. Glencairn is the owner-operator and FCC
licensee of WNUV in Baltimore, WVTV in Milwaukee, WRDC in Raleigh/Durham, WABM
in Birmingham, KRRT in Kerrville and WFBC in Asheville/Greenville/Spartanburg.
We have entered into LMAs with Glencairn pursuant to which we provide
programming to Glencairn for airing on WNUV, WVTV, WRDC, WABM, KRRT, WFBC and
WTTE in exchange for the payment by us to Glencairn of monthly fees totaling
$0.7 million.
19
In June 1995, we acquired options from Carolyn Smith and the Glencairn
trusts (the Glencairn options) which grant to us the right to acquire, subject
to applicable FCC rules and regulations, stock comprising up to a 97% equity
interest in Glencairn. Each Glencairn option was purchased by us for $1,000
($5,000 in the aggregate) and is exercisable only upon our payment of an option
exercise price generally equal to the optionor's proportionate share of the
aggregate acquisition cost of all stations owned by Glencairn on the date of
exercise (plus interest at a rate of 10% from the respective acquisition date).
We estimate that the aggregate option exercise price for the Glencairn options,
if currently exercised, would be approximately $20.3 million.
On November 15, 1999, we entered into an agreement to purchase
substantially all of the assets of television station WCWB-TV, Channel 22,
Pittsburgh, Pennsylvania, with the owner of that television station, WPTT,
Inc., for a purchase price of $17.8 million. The waiting period under the
Hart-Scott-Rodino Antitrust Act of 1976 has expired and closing on this
transaction is subject to FCC approval. A petition to deny was filed with the
FCC against the application. We have filed an opposition to the petition to
deny, which remains pending at the FCC.
On November 15, 1999, we entered into five separate plans and agreements
of merger, pursuant to which we would acquire through merger with subsidiaries
of Glencairn, Ltd., television broadcast stations WABM-TV, Birmingham, Alabama,
KRRT-TV, San Antonio, Texas, WVTV-TV, Milwaukee, Wisconsin, WRDC-TV, Raleigh,
North Carolina and WBSC-TV (formerly WFBC-TV), Anderson, South Carolina. The
consideration for these mergers is the issuance to Glencairn shares of class A
common voting stock of the Company. The total value of the shares to be issued
in consideration for all the mergers is $8.0 million. A petition to deny was
filed with the FCC against these applications. We have filed an opposition to
the petition to deny, which remains pending at the FCC.
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
us serving the Baltimore DMA and received payments from these companies in 1999
of $0.2 million.
Bay Television, Inc. In January 1999, SCI entered into a Time Brokerage
Agreement with Bay Television, Inc., which owns the television station WTTA-TV
in Tampa, Florida. The controlling stockholders own a substantial portion of
the equity of Bay Television, Inc. The Time Brokerage Agreement provides that
SCI is to deliver television programming to Bay Television, Inc., which
broadcasts the programming in return for a monthly fee to Bay of $143,500. SCI
must also make an annual payment equal to 50% of the annual broadcast cash flow
of the station which is in excess of $1.7 million. During 1999 we made payments
of approximately $1.7 million related to the Time Brokerage Agreement.
Additionally, no payment was made in 1999 related to the broadcast cash flow as
it did not exceed $1.7 million for the year ended December 31, 1999.
Allegiance Capital Limited Partnership. In August 1999 Allegiance Capital
Limited Partnership (Allegiance), with the four controlling stockholders, our
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 77.76% interest in Allegiance, and
thereafter, the four controlling stockholders invested $16,670 each for a
combined 2.1% interest in Allegiance, our 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. 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 $25,000 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 establishment of
the partnership.
20
STOCKHOLDER PROPOSALS
If you intend to propose any matter for action at our 2001 annual meeting
of stockholders, you must submit your proposal to the Secretary of Sinclair at
10706 Beaver Dam Road, Cockeysville, Maryland 21030 not later than December 15,
2000 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 2001
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 February 28, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
April 14, 2000
21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
1. Election of six directors for a term expiring in 2000 as set forth in the
proxy statement
Nominees: David D. Smith, Frederick G. Smith, J. Duncan Smith, Robert E.
Smith, Basil A. Thomas, Lawrence E. McCanna
For: [ ] Withheld: [ ] For all except: [ ]
2. Ratification of the appointment of Arthur Andersen LLP as independent
auditors
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 and FOR each of the
other proposals.
Please mark, sign and date, and return the
proxy card promptly using the enclosed
envelope.
Dated:
--------------------------------------
Signature(s):
-------------------------------
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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.
PROXY
SINCLAIR BROADCAST GROUP, INC.
PROXY FOR ANNUAL MEETING OF MAY 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints David D. Smith and Frederick G. Smith, or
either of them, as attorneys-in-fact, with full power of substitution, to vote
in the manner indicated on the reverse side, and with discretionary authority
as to any other matters that may properly come before the meeting, all shares
of common stock of Sinclair Broadcast Group, Inc. which the undersigned is
entitled to vote at the annual meeting of stockholders of Sinclair Broadcast
Group, Inc. to be held on May 16, 2000 at the Hunt Valley Inn, 245 Shawan Road,
Hunt Valley, MD 21031 at 10:00 a.m. local time or any adjournment thereof.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE-