SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[ ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
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(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): N/A
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[ ] Fee paid previously with preliminary materials: N/A
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
The Annual General Meeting of Shareholders of CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD. (the "Company"), a Bermuda company, will be held at the offices
of Conyers Dill & Pearman, Clarendon House, 2 Church Street, Hamilton, Bermuda,
on May 15, 2002 at 10:00 A.M., for the following purposes:
1. To elect eight directors to serve until the next Annual
General Meeting of Shareholders;
2. To consider and act upon an amendment to the Company's
Bye-laws concerning the indemnification provided by the
Company to the Company's current and former directors
and officers;
3. To consider and act upon an amendment to the Company's
Bye-laws to authorize the Company's Board of Directors
in its discretion and from time to time, to issue
additional shares of the Company's Class A Common
Stock, par value $0.08 per share, and Class B Common
Stock, par value $0.08 per share to the Company's
shareholders as a share dividend;
4. To consider and act upon an amendment to the Company's
Bye-laws authorizing the Company's Board of Directors
to fill any vacancy in the office of the Company's
auditors;
5. To receive and adopt the financial statements of the
Company for the Company's fiscal year ended December
31, 2001, together with the auditors' report thereon;
and
6. To appoint Arthur Andersen as auditors for the Company
and to authorize the directors to approve their fee.
The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each other matter to
be presented to the shareholders.
Only shareholders of record at the close of business on April 1, 2002 are
entitled to notice of and to vote at the meeting.
By order of the Board of Directors,
MICHAEL ASHFORD
Secretary
Hamilton, Bermuda
April 18, 2002
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL ENSURE THAT YOUR SHARES WILL BE
VOTED. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
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PROXY STATEMENT FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
MAY 15, 2002
-----------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
(the "Company" or "CME"), a Bermuda company, for use at the Annual General
Meeting of Shareholders of the Company (the "Meeting") to be held at Conyers
Dill & Pearman, Clarendon House, 2 Church Street, Hamilton, Bermuda, on May 15,
2002, at 10:00 A.M., and at any adjournments thereof.
Shareholders may vote their shares either by signing and returning the
proxy card accompanying this Proxy Statement or by touch-tone telephone.
Instructions for telephone voting are set forth on the accompanying proxy card.
Shareholders who execute proxies retain the right to revoke them at any time by
notice in writing to the Secretary of the Company, by revocation in person at
the Meeting or by presenting a later-dated proxy. Unless so revoked, the shares
represented by proxies will be voted at the Meeting in accordance with the
directions given therein. Shareholders vote at the Meeting by casting ballots
(in person or by proxy) which are tabulated by a person who is appointed by the
Board of Directors before the Meeting to serve as inspector of election at the
Meeting and who has executed and verified an oath of office. The presence, in
person or by proxy, of shareholders entitled to cast at least a majority of the
total number of votes entitled to be cast on each matter to be voted upon at the
Meeting constitutes a quorum as to each such matter. Abstentions and broker
"non-votes" are included in the determination of the number of shares present at
the Meeting for quorum purposes, but abstentions and broker "non-votes" are not
counted in the tabulations of the votes cast on proposals presented to
shareholders. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner or has discretionary power but
elects not to exercise it.
The registered office of the Company is located at Clarendon House, Church
Street, Hamilton HM CX, Bermuda. Certain subsidiaries of Central European Media
Enterprises Ltd. also maintain offices at Aldwych House, 71-91 Aldwych, London
WC2B 4HN, England. The date on which this Proxy Statement and the enclosed form
of proxy will be first sent to shareholders is on or about April 18, 2002.
Shareholders of record of the Class A Common Stock, par value $.08 per
share, of the Company (the "Class A Common Stock") at the close of business on
April 1, 2002, shall be entitled to one vote for each share then held.
Shareholders of record of the Class B Common Stock, par value $.08 per share, of
the Company (the "Class B Common Stock") at the close of business on April 1,
2002 shall be entitled to ten votes for each share then held. The Class A Common
Stock and the Class B Common Stock shall be voted on all matters presented as a
single class. There were issued and outstanding at the close of business on
April 1, 2002, 2,314,221 shares of Class A Common Stock and 991,842 shares of
Class B Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 1, 2002 with
respect to the beneficial ownership of the Company's Class A Common Stock and
Class B Common Stock and also sets forth certain information with respect to
voting power and percentage of ownership as of April 1, 2002, by (i) each
shareholder known by the Company to beneficially own more than 5% of any class
of the Company's outstanding voting securities, (ii) each director of the
Company, (iii) the Chief Executive Officer and the other executive officers of
the Company and (iv) all directors and executive officers of the Company as a
group. Except as otherwise noted below, each of the shareholders identified in
the table has sole voting and investment power over the shares beneficially
owned by such person.
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF COMMON STOCK
CLASS A COMMON CLASS B COMMON ------------
STOCK (A) STOCK % OF %
----------------------- ------------------------ VOTING OWNER-
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT POWER(B) SHIP(B)
------------------------ ------ ------- ------ ------- -------- -------
Ronald S. Lauder(1)(9)............. 33,500(19) 1.4% 914,384(24) 91.0% 74.2% 28.5%
Frederic T. Klinkhammer............ 114,125(20) 4.7 -- -- * 3.3
Nicolas G. Trollope(2)............. 2,112 * -- -- * *
Jacob Z. Schuster.................. 250(21) * -- -- * *
Mark Wyllie (3).................... 11,533(22) * -- -- * *
Marie-Monique Steckel.............. 250(21) * -- -- * *
Alfred W. Langer................... 250(21) * -- -- * *
Charles R. Frank, Jr. -- -- -- -- -- --
Herbert A. Granath -- -- -- -- -- --
Robert E. Burke -- -- -- -- -- --
All directors and executive
officers as a group (10 persons). 162,020(23) 6.7 914,384(24) 91.0 74.6 31.3
Vladimir A. Gousinsky (4) ......... 520,789 22.5 -- -- 4.3 15.8
Mark A. Reily (5)(10) ............. 422,212 18.2 -- -- 3.5 12.8
Curtis Alexander(5) (11)........... 297,787 12.9 -- -- 2.4 9.0
Media Group Investors L.P. (5) (12) 235,295 10.2 -- -- 1.9 7.1
Stephen L. Farley(6)(13)........... 231,318 10.0 -- -- 1.9 7.0
Labrador Partners L.P.(6)(14) ..... 209,600 9.1 -- -- 1.7 6.3
ValueVest Management Company,
LLC (7)(15) ..................... 156,375 6.8 -- -- 1.3 4.7
ValueVest Partners, L.P.(7)(16).... 134,500 5.8 -- -- 1.1 4.1
Leonard A. Lauder (8)(17) ......... -- -- 171,069 17.2 14.0 5.2
EL/RSLG Media, Inc.(1)(18)......... -- -- 80,861 8.2 6.6 2.4
-----------------
* Less than 1.0%
(a) Does not include 991,842 shares of Class A Common Stock issuable upon
conversion of shares of Class B Common Stock. Shares of Class B Common
Stock are convertible at any time into shares of Class A Common Stock
for no additional consideration on a share-for-share basis.
(b) Represents the percentage of total voting power and the percentage
ownership of the Class A Common Stock and the Class B Common Stock
currently beneficially owned by each identified shareholder and all
directors and executive officers as a group. The Class A Common Stock
and the Class B Common Stock are the only authorized classes of the
Company's capital stock with shares outstanding.
(1) The address of each of the shareholders indicated is Suite 4200, 767
Fifth Avenue, New York, New York 10153.
(2) These shares are owned beneficially by the Proverbs Trust of which Mr.
Trollope and his wife are co-trustees and beneficiaries.
(3) These shares are owned beneficially by Mr. Wyllie and include 1,000
shares of Class A Common Stock owned by Anne Marie Hennessy, who is a
member of Mr. Wyllie's household.
(4) Information in respect of the beneficial ownership of Mr. Vladimir A.
Goussinsky (other than percentage ownership) is based upon a statement
on Schedule 13D/A filed October 26, 1999 jointly by Mr.
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Goussinsky, Elemental Limited, Media Most Limited, Media Most B.V., Zao
Media Most and Dr. Andre V. Tsimailo. The address of Mr. Goussinsky,
Zao Media Most and Dr. Andre V. Tsimailo is ulitsa Novy Arbat 36,
Moscow 121205 Russian Federation. The address of Elemental Limited and
Media Most Limited is 57/63 Line Wall Road, Gibraltar. The address of
Media Most B.V. is Locatellikade 1, 1076 AZ, Amsterdam Netherlands.
(5) Information in respect of the beneficial ownership of Mark A. Reily,
Curtis Alexander and Media Group Investors L.P. (other than percentage
ownership) is based upon a statement on Schedule 13G/A filed on
February 13, 2002 jointly by such persons. The address of Mr. Reily is
260 Broadway, Suite 2-D, New York, New York 10013. The address of Mr.
Alexander is 615 Boston Post Road, Suite 200, Sudbury, Massachusetts
01776. The address of Media Group Investors L.P. is 615 Boston Post
Road, Suite 200, Sudbury, Massachusetts 01776.
(6) Information in respect of the beneficial ownership of Stephen L. Farley
and Labrador Partners L.P. (other than percentage ownership) is based
upon a statement on Schedule 13G/A filed on March 5, 2002 jointly by
such persons. The address of Mr. Farley and Labrador Partners L.P. is
655 Third Avenue, Suite 2520, New York, New York 10017.
(7) Information in respect of the beneficial ownership of ValueVest
Management Company, LLC and ValueVest Partners, L.P. (other than
percentage ownership) is based upon a statement on Schedule 13G filed
on September 1, 1999 jointly by such persons. The address of ValueVest
Management Company, LLC and ValueVest Partners, L.P. is One Sansome
Street, 39th Floor, San Francisco, California 94104.
(8) Information in respect of the beneficial ownership of Leonard A. Lauder
(other than percentage ownership) is based upon a statement on Schedule
13D filed by him. The address of Mr. Leonard Lauder is c/o The Estee
Lauder Companies Inc., 767 Fifth Avenue, New York, New York 10153.
(9) 15,004 of the shares of Class B Common Stock listed are owned directly
by Ronald S. Lauder, 423,177 of the shares of Class B Common Stock are
owned beneficially by RSL Investments Corporation, 284,062 of the
shares of Class B Common Stock are owned beneficially by RSL Capital
LLC and 72,223 of the shares of Class B Common Stock are owned
beneficially by Duna Investments, Inc., all of which are owned by Mr.
Lauder. 26,307 of the shares of Class B Common Stock are held by RAJ
Family Partners L.P. and beneficially owned by Mr. Lauder, and 80,861
of the shares of Class B Common Stock are held by EL/RSLG Media, Inc.,
of which 50% of the common stock outstanding is beneficially owned by
the 1995 Estee Lauder RSL Trust and beneficially owned by Mr. Lauder.
(10) 119,175 of these shares are owned directly by Mark A. Reily ("Reily"),
4,000 of these shares are owned by an IRA F/B/O Reily, 1,250 of these
shares are owned by a SEP IRA F/B/O Reily, 235,295 of these shares are
owned by Media Group Investors, L.P. which has a sole general partner,
Media Group Management, Inc., of which Reily is a 75% shareholder and
62,492 of these shares are owned by Media Group Investments, Ltd.,
which has as its investment advisor Vercingetorix Corp., of which Reily
is a 50% shareholder.
(11) 235,295 of these shares are owned by Media Group Investors, L.P. which
has a sole general partner, Media Group Management, Inc., of which
Alexander is a 25% shareholder. 62,492 of these shares are owned by
Media Group Investments, Ltd., which has as its investment advisor
Vercingetorix Corp. of which Alexander is a 50% shareholder.
(12) The shares owned by Media Group Investors L.P. ("MGI") are also
included in the shares owned by Mark Reily and Curtis Alexander who are
75% and 25% shareholders respectively of Media Group Management, Inc.,
MGI's sole general partner.
(13) Includes (i) 209,600 shares reported as being beneficially owned by
Labrador Partners L.P. and (ii) 21,718 shares reported as being
beneficially owned by Farley Capital L.P. Mr. Farley is the managing
general partner of each of Labrador Partners L.P. and Farley Capital
L.P.
(14) These shares are also included in the shares reported as being
beneficially owned by Stephen L. Farley, the managing general partner
of Labrador Partners L.P.
3
(15) 134,500 of these shares are also included in the shares reported as
being beneficially owned by ValueVest Partners, L.P. ValueVest
Management Company, LLC is the general partner of ValueVest Partners,
L.P.
(16) These shares are also included in the shares reported as being
beneficially owned by ValueVest Management Company, LLC, the general
partner of ValueVest Partners, L.P.
(17) 35,654 of the shares of Class B Common Stock listed are owned directly
by Leonard A. Lauder, 80,861 of the shares of Class B Common Stock are
held by EL/RSLG Media, Inc., of which 50% of the common stock
outstanding is beneficially owned by the 1995 Estee Lauder LAL Trust,
of which Leonard A. Lauder is a co-trustee and beneficiary and 54,554
of the shares of Class B Common Stock are held by LWG Family Partners
L.P., a partnership whose managing partner is a corporation which is
one-third owned by Mr. Lauder.
(18) These shares are also included in the shares reported as being
beneficially owned by Ronald S. Lauder and Leonard A. Lauder.
(19) Includes 2,500 shares of Class A Common Stock underlying options which
are currently exercisable at $184.00 per share and which expire on
August 1, 2007. Does not include 750 shares of Class A Common Stock
underlying options which are not currently exercisable and which will
not become exercisable within 60 days, but which had an initial
exercise price of $178.60 per share, which exercise price increases on
the first day of each calendar quarter by one-quarter of 5.57% and
which expire on June 8, 2008.
(20) Includes (i) 110,000 shares of Class A Common Stock underlying options
which are currently exercisable at an exercise price per share of
$11.875 and which expire on March 8, 2007 and (ii) 4,000 shares of
Class A Common Stock underlying options which are currently exercisable
at an exercise price per share of $1.25 and which expire on March 31,
2011. Does not include (i) 22,000 shares of Class A Common Stock
underlying options with an exercise price per share of $11.875, which
are not currently exercisable and which will not become exercisable
within 60 days and which expire on March 8, 2007 and (ii) 8,000 shares
of Class A Common Stock underlying options with an exercise price per
share of $1.25 which are not currently exercisable and which will not
become exercisable within 60 days and which expire on March 31, 2011.
(21) Consists of 250 shares of Class A Common Stock underlying options which
will be exercisable at a price of $2.00 per share as of May 18, 2002
and which expire on May 18, 2011. Does not include 1,000 shares of
Class A Common Stock underlying options which are not currently
exercisable and which will not become exercisable within 60 days, but
which have an exercise price of $2.00 per share and which expire on May
18, 2011.
(22) Includes 3,333 shares of Class A Common Stock underlying options which
are currently exercisable at an exercise price per share of $1.25 per
share and which expire on March 31, 2011. Does not include 6,667 shares
Class A Common Stock underlying options with an exercise price per
share of $1.25 which are not currently exercisable and which will not
become exercisable within 60 days and which expire on March 31, 2011.
(23) Includes 120,583 shares of Class A Common Stock underlying options
which are currently exercisable or which will become exercisable within
60 days. Does not include 40,417 shares of Class A Common Stock
underlying options which are not currently exercisable and which will
not become exercisable within 60 days.
(24) Includes (i) 12,500 shares of Class B Common Stock underlying options
which are currently exercisable at an exercise price of $191.416 per
share and which expire on August 1, 2007, and (ii) 250 shares of Class
B Common Stock underlying options which will be exercisable at a price
of $2.10 per share as of May 19, 2002 and which expire on May 18, 2011.
Does not include options for 1,000 shares of Class B Common Stock
underlying options, which are not currently exercisable and which will
not become exercisable within 60 days, but which have an exercise price
of $2.10 per share and which expire on May 18, 2011.
4
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
greater than 10% of a registered class of the Company's equity securities to
file certain reports ("Section 16 Reports") with the Securities and Exchange
Commission with respect to ownership and changes in ownership of the Common
Stock and other equity securities of the Company. Based solely on the Company's
review of the Section 16 Reports furnished to the Company and written
representations from certain reporting persons, the Company believes that,
during the fiscal year ended December 31, 2001, all filing requirements under
Section 16(a) applicable to its officers, directors and greater than 10%
beneficial owners were complied with on a timely basis, with the exception of
the initial Form 3 to be filed by Charles Frank after he became a director,
which was filed late and the Form 4 to be filed by each of Frederic Klinkhammer
and Mark Wyllie after a grant of options to each of them in April 2001, which
was filed late.
ELECTION OF DIRECTORS
Eight directors will be nominated for election at the Meeting to serve
until the Company's next annual general meeting of shareholders. The election of
directors requires the affirmative vote of a majority of the votes cast, in
person or by proxy, at the Meeting, provided that a quorum is present in person
or by proxy. Abstentions and broker non-votes will be included in determining
the presence of a quorum, but are not counted as votes cast. UNLESS OTHERWISE
INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE PERSONS LISTED
below. At this time, the Board of Directors knows of no reason why any nominee
might be unable to serve. There is no arrangement or understanding between any
director and any other person pursuant to which such person was selected as a
director.
YEAR
BECAME A
NAME OF NOMINEE PRINCIPAL OCCUPATION AGE DIRECTOR
--------------- -------------------- --- --------
Ronald S. Lauder............... Nonexecutive Chairman of the Board of the Company 58 1994
Frederic T. Klinkhammer........ President, Chief Executive Officer and Director 57 1999
Nicolas G. Trollope............ Partner, Conyers Dill & Pearman 54 1994
Jacob Z. Schuster.............. Consultant 53 1999
Marie-Monique Steckel.......... Consultant to Ronald S. Lauder 62 1999
Alfred W. Langer .............. Consultant 51 2000
Charles R. Frank, Jr. ......... Financial Advisor 64 2001
Herbert A. Granath ............ Chairman Emeritus, ESPN 73 2002
Ronald S. Lauder, a founder of the Company, has served as nonexecutive
Chairman of the Board of the Company since its incorporation in 1994. Mr. Lauder
is a principal shareholder of The Estee Lauder Companies Inc. ("Estee Lauder")
and has served as Chairman of Estee Lauder International and Chairman of
Clinique Laboratories, Inc., divisions of Estee Lauder, since returning to the
private sector from government service in 1987. From 1986 until 1987, Mr. Lauder
served as U.S. Ambassador to Austria. From 1983 to 1986, Mr. Lauder served as
Deputy Assistant Secretary of Defense for European and NATO Affairs. Mr. Lauder
currently is a director of Estee Lauder. He is Chairman of the Board of Trustees
of the Museum of Modern Art, President of the Jewish National Fund, Chairman of
the International Public Committee of the World Jewish Restitution Organization,
Treasurer of the World Jewish Congress, former Chairman of the Council of
Presidents of American Jewish Organizations, a member of the Board of Governors
of the Joseph H. Lauder Institute of Management and International Studies at the
University of Pennsylvania and a member of the Visiting Committee of the Wharton
School at the University of Pennsylvania. He received his B.S. in International
Business from the Wharton School of the University of Pennsylvania.
5
Frederic T. Klinkhammer has served as President and Chief Executive Officer
of the Company since March 1999. Mr. Klinkhammer has also served as President
and Chief Executive Officer of CME Development Corporation since March 1999.
From January 1998 until March 1999, Mr. Klinkhammer served as Chief Operating
Officer and Executive Vice President of the Company and as Chief Operating
Officer, Executive Vice President and Managing Director of CME Development
Corporation. From July 1992 to December 1997, Mr. Klinkhammer operated an
international broadcasting and telecommunications consulting practice. Mr.
Klinkhammer was founding Chief Executive Officer of MediaLinx, the multimedia
arm of BCE Inc., from March 1993 to August 1996 and was responsible for the
creation of Sympatico, Canada's largest internet service provider. Mr.
Klinkhammer was President and Chief Executive Officer of IMAX Corporation from
August 1990 to June 1992, during which time that company produced its first two
feature length films. From March 1984 to August 1990, Mr. Klinkhammer served as
President and Chief Executive Officer of First Choice, Canada's largest pay
television company. From March 1983 to March 1984, Mr. Klinkhammer served as
Chief Executive Officer of Cablenet Ltd., a multi system cable operator with
operations in the U.S. and Canada. From January 1974 to March 1983, Mr.
Klinkhammer served as Vice President-Finance and later Vice President and
General Manager of Citytv in Toronto, Canada. Mr. Klinkhammer, a certified
Management Accountant, is a graduate of Ryerson Polytechnical Institute in
Business.
Alfred W. Langer has served as a Director of the Company since 2000. Mr.
Langer is a consultant to a number of privately held companies engaged in the
acquisition of businesses in a variety of industries. Mr. Langer served as
Treasurer of Celanese AG, a chemical company, from October 1999 until December
2000. Mr. Langer served as Chief Financial Officer of Hoechst Celanese Corp., a
chemical company, from June 1997 until October 1999. Mr. Langer served as Chief
Executive Officer of Hoechst Trevira GmbH, a producer of synthetic fibers, from
October 1994 until July 1997. Mr. Langer received an M.B.A. degree from the
University GH Siegen.
Jacob Z. Schuster has served as a Director of the Company since 1999. Mr.
Schuster has served as a consultant to Ronald S. Lauder since 2001. Mr. Schuster
was President and Treasurer of RSL Management Corporation from November 1995
until 2001. Mr. Schuster served as Executive Vice President and Assistant
Secretary of RSL Communications, Ltd., an international telecommunications
company, from 1994 until December 1999 and as its Treasurer from 1994 through
1998 and had been its Chief Financial Officer from February 1997 until December
1998. From 1986 to 1992, Mr. Schuster was a General Partner and the Treasurer of
Goldman, Sachs & Co. Mr. Schuster received a B.S. degree from Johns Hopkins
University and an M.B.A. degree from Baruch College.
Marie-Monique Steckel has served as a Director of the Company since 1999.
Ms. Steckel has served as a consultant to Ronald S. Lauder since September 1999.
From 1979 to September 1999, Ms. Steckel served as the President of France
Telecom North America, a telecommunications company. Ms. Steckel serves as a
director of Lepercq-Istel Fund. Ms. Steckel received a political science degree
from the Institute d'Etudes Politiques in Paris and did graduate work at Yale
and Harvard Business School.
Nicolas G. Trollope has served as Vice President of the Company since
January 1997. Mr. Trollope has been a partner with the law firm of Conyers, Dill
& Pearman, Hamilton, Bermuda, since 1991. Mr. Trollope received an LL.B. degree
from London University.
Charles R. Frank, Jr. has served as a Director of the Company since 2001.
Mr. Frank is currently a financial advisor. He was First Vice President at the
European Bank for Reconstruction and Development (EBRD), and was Supervisor of
the EBRD Banking Department from 1997 until August 2001. The EBRD Banking
Department originates, executes and manages EBRD's debt and equity investments
in central and eastern Europe and the former Soviet Union. Mr. Frank was
Managing Director of the Structured Finance Group at GE Capital (a financial
services company), and Vice President of GE Capital Services from 1988 to 1997.
Mr. Frank served as Chief Executive Officer of Frank and Company from 1987 to
1988, and Vice President of Salomon Bothers until 1987. Mr. Frank has held
senior academic and government advisory positions, serving as Deputy Assistant
Secretary of State and Chief Economist at the U.S. Department of State, Senior
Fellow at the Brookings Institute, Professor of Economics and International
Affairs at Princeton University, and Assistant Professor of Economics at Yale
University. Mr. Frank has been nominated as a Director of Vimpelcom, a Russian
mobile telephone company. Mr. Frank graduated from Rensselaer Polytechnic
Institute with a B.S. in mathematics and economics before completing a Ph.D. in
economics at Princeton University.
6
Herbert A. Granath has served as a Director of the Company since January
2002. Mr. Granath is Chairman Emeritus, ESPN, a cable sports network and Senior
Content Advisor, Callahan Associates International LLC, a leading European cable
communications operator since 2000. He has served on the Board of Veronis,
Suhler & Associates, Fund III, a billion-dollar fund investing in worldwide
media since 1999. Mr. Granath was employed by ABC for over 35 years and was
Chairman, Disney/ABC International (an international broadcasting company) from
1996 to January 1998 where he pioneered many aspects of ABC's expanding
television business, including its successes in the cable and international
programming arenas. He served as Chairman of the Board of ESPN and Senior Vice
President of ABC, Inc. from 1998 until 2001. He also served as Chairman of the
Board of A&E, The History Channel, The Biography Channel and Lifetime
Television, and was a founding partner and Board member of Eurosport, the
largest cable network in Europe. He also served on the Boards of Telefunf, RTL2
and TM3 networks in Germany, SBS Broadcasting SA (SBS) and TVA, the Brazilian
Pay-TV company. Included in the awards Mr. Granath has received are two Tony
awards, along with six Tony nominations, an International EMMY (Lifetime
Achievement in International TV), as well as a U.S. EMMY (Lifetime Achievement
in Sports Television).
COMMITTEES OF THE BOARD
The Board of Directors has an Audit Committee which is composed of Messrs.
Frank, Langer and Trollope. Until Mr. Frank was appointed to the Board of
Directors in December 2001, the Audit Committee during 2001 was composed of
Messrs. Lauder, Langer and Trollope. The Audit Committee is responsible for
recommending annually to the Board of Directors the independent auditors to be
retained by the Company, reviewing with the independent auditors the scope and
results of the audit engagement and establishing and monitoring the Company's
financial policies and control procedures.
The Class A Common Stock was delisted from the NASDAQ National Market in
October 2000. Because the Class A Common Stock was listed on the NASDAQ National
Market from the time of the Company's initial public offering until October
2000, the Company has determined to measure whether its Audit Committee meets
independence requirements using NASDAQ's rules. Under NASDAQ rules the current
members of the Audit Committee satisfy independence requirements. The Audit
Committee acts under a written charter first adopted and approved by the Board
of Directors in June 2000, a copy of which was attached to the Company's Proxy
Statement for the 2001 Annual Meeting of the Company's shareholders as Exhibit
A. During the fiscal year ended December 31, 2001 the Audit Committee met on
four occasions.
The Board of Directors has a Compensation Committee which is composed of
Messrs. Lauder and Schuster and Ms. Steckel. The Compensation Committee is
responsible for determining executive compensation policies and guidelines and
for administering the Company's 1994 Stock Option Plan (the "1994 Stock Option
Plan") and the Company's 1995 Stock Option Plan (the "1995 Stock Option Plan";
collectively, the 1994 Stock Option Plan and the 1995 Stock Option Plan may be
referred to as the "Stock Option Plans"), including granting options and setting
the terms thereof pursuant to such Plans. In addition, the Compensation
Committee is responsible for reviewing and approving significant employment
agreements. During the fiscal year ended December 31, 2001, the Compensation
Committee met on one occasion.
During the fiscal year ended December 31, 2001, the Board of Directors met,
or acted by unanimous consent, on eight occasions. Each member of the Board of
Directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and the Committees of the Board on which they served during the
periods that they served.
There is no family relationship among any directors or executive officers
of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE EIGHT NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS.
7
EXECUTIVE OFFICERS
Set forth below is certain information describing the Company's executive
officers who are not nominees for director:
Robert E. Burke, age 50, has served as Vice President and Chief Operating
Officer of the Company since July 2001. From 1999 to 2001, Mr. Burke served as
Executive Vice President of Microcast, Inc., an internet broadcasting company.
From 1995 to 1998, Mr. Burke served as President and Chief Executive Officer of
WTN, a subsidiary of ABC based in London, United Kingdom. WTN was a diversified
global news and television production company and, prior to its sale, provided
news, sports, entertainment, business and corporate programming to virtually
all the world's broadcasters (including all of the stations owned by the
Company) via a global 24-hour satellite network. Mr. Burke was Vice President
of WTN from 1984 to 1995 and previously worked as a reporter, producer, and
manager for ABC News in Washington and New York from 1980 until 1984. Mr. Burke
has a BA (History) from Washington University, St. Louis.
Mark Wyllie, age 38, has served as Vice President-Finance of the Company
since February 2001 and previously served as Finance Director since September
2000. Mr. Wyllie, a Chartered Certified Accountant, served in various finance
roles within United Biscuits from September 1988 until July 2000. United
Biscuits is a multi-national manufacturer and distributor of biscuits,
confectioneries and other food products. From 1998 to 2000 Mr. Wyllie was
Finance Director for Asia and Central and Eastern Europe for United Biscuits in
charge of operations in Poland, Hungary and Romania as well as the Far East.
From 1986 to 1988 Mr. Wyllie served as a consultant with Metapraxis Ltd, a
small, financially oriented software consultancy. Mr. Wyllie received his honors
degree from Oxford University.
There is no arrangement or understanding between any executive officer and
any other person regarding selection as an executive officer.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by, or paid to the Company's Chief Executive Officer, Vice President
and Chief Operating Officer and Vice President - Finance, who were the Company's
only executive officers during 2001 (together, the "Named Executive Officers")
who either served as executive officers during, or were serving as executive
officers at the end of, the last completed fiscal year ended December 31, 2001,
for services rendered in all capacities to the Company and its subsidiaries for
each of the Company's last three fiscal years.
Long-Term Compensation
------------------------------------------
Awards
Annual Compensation ------------------------------------------
------------------------------------------- Securities
Other Annual Restricted Underlying All Other
Name and Salary Bonus Compensation Awards Options Compensation
Principal Position Year $ $ $ $ # $
------------------ ---- -------- -------- -------- -------- --------- --------
Frederic T. Klinkhammer 2001 392,749 600,000 153,473 (3) -- 12,000 2,700 (5)
President and Chief Executive 2000 363,192 367,500 161,028 (3) -- 132,000 2,700 (5)
Officer......................... 1999 350,000 100,000 166,400 (3) -- -- 2,700 (5)
Robert E. Burke
Vice President and Chief
Operating Officer (1).......... 2001 120,323 -- 28,075 (4) -- -- 2,700(5)
Mark Wyllie
Vice President - Finance (2)... 2001 168,642 35,839 -- -- 10,000 2,700 (5)
2000 44,321 37,345 -- -- -- --
----------------------
(1) Became Vice President and Chief Operating Officer in July 2001.
(2) Became Vice President - Finance in February 2001. Served as Financial
Director of the Company from September 2000 until February 2001.
(3) Represents an expatriate premium paid by the Company pursuant to the terms
of an employment agreement.
(4) Represents an allowance paid by the Company pursuant to the terms of an
employment agreement until such time as options to purchase Class A Common
Stock are issued to Mr. Burke.
(5) Represents life insurance benefits paid by the Company.
No stock appreciation rights or long-term incentive plan awards (all as
defined in the proxy regulations of the Securities and Exchange Commission) were
awarded to, earned by, or paid to the Named Executive Officers during the time
periods described above.
9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of
options to purchase shares of Class A Common Stock granted to the Named
Executive Officers during the fiscal year ended December 31, 2001.
Individual Grants
-------------------------------------------------- Potential Realizable
Percent of Value at Assumed Annual
Total Rates of Stock Price
Number of Options Appreciation
Securities Granted to for Option Term
Underlying Employees Exercise ---------------------------
Options in Fiscal Price Expiration 5% 10%
Name Granted Year ($/sh) Date ($) ($)
---- ------- ---- ------ ---- ------------ --------
Frederic T. Klinkhammer...... 12,000 46.2% $1.25 3/31/11 $9,433 $23,906
Mark Wyllie................. 10,000 38.5% $1.25 3/31/11 $7,861 $19,922
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to each exercise of
stock options during the fiscal year ended December 31, 2001 by the Named
Executive Officers and the value at December 31, 2001 of unexercised stock
options held by the Named Executive Officers.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE FISCAL YEAR-END FISCAL YEAR-END
ON EXERCISE REALIZED (#) ($)(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- -------- ------------------------- -------------------------
Frederic T. Klinkhammer 0 0 66,000 / 78,000 $0 / $107,400
Mark Wyllie 0 0 0 / 10,000 $0 / $89,500
-----------------
(1) Fair market value of securities underlying the options at fiscal year end
minus the exercise price of the options.
COMPENSATION OF DIRECTORS
The Company pays a cash fee to each of its non-employee directors of
$25,000 per annum. This was increased from $10,000 per annum on December 5,
2001. In addition, on the day of each annual general meeting of the Company's
shareholders during the term of the 1995 Stock Option Plan, each non-employee
director of the Company (other than Mr. Trollope who declines such options, but
including for these purposes the Chairman) who has served as a director since
the last annual general meeting of shareholders will be granted options to
purchase 2,000 shares (or, in the case of the Chairman, such higher number as
the Board of Directors shall determine) of Class A Common Stock (in the case of
the Chairman, Class B Common Stock if such grant is approved by the Board). For
the non-employee directors, the exercise price of the options will equal the
average of the closing price of a share of Class A Common Stock for the 10
business days following the annual meeting (105% of the fair market value of a
share of Class A Common Stock in the case of an option to acquire Class B Common
Stock). The options will vest over the five-year period from the date of grant
and will expire 10 years from the date of grant.
The Company reimburses each director for expenses in connection with
attending meetings of the Board of Directors. Mr. Trollope is a partner in the
law firm of Conyers Dill & Pearman, Hamilton, Bermuda, which served as the
Company's Bermuda counsel for the fiscal year ended December 31, 2001 and is
expected to continue to serve as the Company's Bermuda counsel in 2002. For the
fiscal year ended December 31, 2001, the Company paid fees of $101,945 to
Conyers Dill & Pearman and its related service company, which includes the
services of Mr. Trollope as a director and member of the Audit Committee. Alfred
W. Langer and Charles R. Frank, Jr. are paid a per diem rate of $1,000 for
acting on the Audit Committee. Otherwise, no separate compensation is paid to
any director for serving on committees. Directors who are also employees of the
Company receive no additional compensation for service as a director.
10
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Frederic T. Klinkhammer
Frederic T. Klinkhammer has employment agreements dated as of January 1,
1998 and amended as of March 23, 1999 with the Company and a wholly-owned
subsidiary of the Company. The employment agreements provide that Mr.
Klinkhammer will serve as President and Chief Executive Officer of the Company
and such subsidiary. Prior to March 23, 1999, under the employment agreements,
Mr. Klinkhammer served as Executive Vice President and Chief Operating Officer
of the Company and Executive Vice President, Managing Director and Chief
Operating Officer of such subsidiary. Pursuant to Mr. Klinkhammer's employment
agreement with the Company, as amended, the Company was required to name Mr.
Klinkhammer to its Board of Directors and the Board is required to nominate Mr.
Klinkhammer for election and re-election to the Board of Directors of the
Company during his term of employment with the Company. Under the employment
agreements, Mr. Klinkhammer will be entitled to receive a base salary of
$350,000 per year which will be increased annually, commencing on March 23,
2000, by 5% or such greater amount determined at the option and sole discretion
of the Compensation Committee, and an expatriate premium of UK (pound)104,000
per annum (plus an additional amount based on the increase in the consumer price
index in the LOndon metropolitan area). The employment agreements provide for an
annual cash bonus opportunity of 75% of base salary if performance is at 100% of
target performance goals established by the Compensation Committee for such year
and up to 100% of his base salary if performance is at or above 150% of such
target. 60% of the bonus is based on the achievement of Company wide objectives
established by the Compensation Committee and 40% of the bonus is based on an
evaluation of personal performance as determined by the Compensation Committee.
For 2001 Mr. Klinkhammer was given a cash bonus of $600,000. For 2002, Mr.
Klinkhammer's base salary was increased to $450,000. The employment agreements
also provide that Mr. Klinkhammer will receive an additional one time bonus of
$1,000,000 if he is employed by the Company or any successor corporation to the
Company on December 31, 2003 and if the price of the Class A Common Stock has
increased from its price as of March 22, 1999 (i.e., $66.50 per share) and the
percentage increase exceeds that of the Nasdaq Composite Index for such period.
In March 2000 the Board of Directors (acting without the participation of
Mr. Klinkhammer) upon the recommendation of the Compensation Committee cancelled
all previously granted options to acquire shares of Class A Common Stock which
had been granted to Mr. Klinkhammer under one of his employment agreements and
awarded to Mr. Klinkhammer options to acquire 132,000 shares of the Class A
Common Stock at an exercise price equal to $11.875 per share. This award was
approved by the shareholders at the 2000 Annual General Meeting of Shareholders.
Such options vest in three equal installments on each of the first three
anniversaries of the date of the grant provided that the vesting will be
accelerated as to one-half of such options if the Company's attributable EBITDA
for operating stations (before corporate charges) equals or exceeds $10.0
million during any year in which such options have not yet vested and as to the
remaining one-half of such options if the Company's attributable EBITDA for
operating stations (before corporate charges) equals or exceeds $15.0 million
during any year in which such options have not yet vested. Based on these
criteria, options to acquire 110,000 shares of Class A Common Stock pursuant to
this award are currently vested. All such options have an expiration date of
March 8, 2007. All options granted to Mr. Klinkhammer will become exercisable in
the event that Mr. Klinkhammer's employment is terminated by the Company as a
result of a change in control of the Company or in the event of a merger,
reorganization or consolidation in which the Company is not the surviving
corporation. In addition, in April 2001, the Company awarded to Mr. Klinkhammer
an option to purchase 12,000 shares of Class A Common Stock at an exercise price
of $1.25 per share. Such options vest in three equal annual installments on each
of the first three anniversaries of the date of the grant. Options to acquire
4,000 shares pursuant to this award are currently vested. Such options expire on
April 1, 2011. The timing and amount of any subsequent option awards will be at
the discretion of the Compensation Committee and approved by the Board of
Directors, and will be commensurate with Mr. Klinkhammer's position with the
Company and taking into account option awards made to other executives of the
Company.
Mr. Klinkhammer's employment agreements also contain noncompetition
provisions applicable during the term of the employment agreement and for a two
year period thereafter, prohibit Mr. Klinkhammer from using confidential
information of the Company during the term of the employment agreements and
thereafter, and specify certain benefits and perquisites that Mr. Klinkhammer
shall be entitled to receive. The term of the employment agreements generally
expire on March 22, 2004. The employment agreements provide that if Mr.
Klinkhammer's
11
employment agreements are not extended at the expiration of the five-year term,
he will serve as a part-time consultant for two years following such expiration,
for which he will be paid $250,000 per annum.
Mark Wyllie
Mark Wyllie, Vice President-Finance of the Company, has an employment
agreement dated as of July 21, 2000, with a wholly-owned subsidiary of the
Company. Under the employment agreement, Mr. Wyllie is entitled to receive an
aggregate annual salary of UK (pound)125,000. Mr. Wyllie has the opportunity to
earn an annual cash Bonus for each full year in a target amount of 30% of base
salary ("Target Amount"), and is based upon the Company's combined EBITDA in
relation to the budgeted goal for the Company's EBITDA and personal performance
goals. If combined EBITDA is equal to the budgeted goal, Mr. Wyllie will be
eligible for a bonus payment of up to 100% of the Target Amount for performance.
If EBITDA is 150% of budget, Mr. Wyllie will be eligible for a bonus payment of
up to 200% of the Target Amount for performance. Mr. Wyllie's employment
agreement also contains noncompetition provisions applicable during the term of
the employment agreement and for a two year period thereafter, prohibits Mr.
Wyllie from using confidential information of the Company during the term of the
employment agreement and thereafter, and specifies certain benefits and
perquisites that Mr. Wyllie shall be entitled to receive. Mr. Wyllie's
employment agreement is for an indefinite term. However, the Company's
wholly-owned subsidiary may terminate the employment agreement at any time if it
continues Mr. Wyllie's salary for a six-month period and Mr. Wyllie may
terminate the agreement at any time with three months' notice.
In April 2001, the Company awarded to Mr. Wyllie options to acquire 10,000
shares of the Class A Common Stock at an exercise price of $1.25 per share. Such
options vest in three equal installments on each of the first three
anniversaries of the date of the grant. Options to acquire 3,333 shares of the
Class A Common Stock are currently vested. Such options expire on April 1, 2011.
Robert Burke
Robert Burke, Vice President and Chief Operating Officer of the Company has
an employment agreement dated as of July 16, 2001, with a wholly-owned
subsidiary of the Company. Under the employment agreement, Mr. Burke is entitled
to receive an aggregate annual salary of UK (pound)180,000, which may be
increased each July aT the Company's discretion. In addition, Mr. Burke is
entitled to a monthly UK (pound)3,500 allowance payable only Until such time as
the Board of Directors of the Company approves an initial stock option grant to
Mr. Burke. Mr. Burke will have the opportunity to earn an annual cash bonus for
each full year with a target amount of 33% of yearly compensation ("Burke Target
Amount"), based upon the subsidiary Company's performance on a combined EBITDA
basis in relation to the Company's budgeted goals. If 85% of the budgeted goal
is achieved, Mr. Burke will be eligible for a bonus of 50% of the Burke Target
Amount. If EBITDA is 150% of budget, Mr. Burke will be eligible for a bonus
payment of up to 200% of the Burke Target Amount for such performance.
In the event of the completion of the pending international arbitrations
regarding the Company's disputes in the Czech Republic, the Company may in its
sole discretion, grant Mr. Burke options to acquire shares of the Company's
Class A Common Stock in accordance with the Stock Option Plans. Mr. Burke's
employment agreement also contains non-competition provisions applicable for a
one year period following the termination of the agreement, prohibits Mr. Burke
from using confidential information of the Company during the term of the
employment agreement and thereafter, and specifies certain benefits and
perquisites that Mr. Burke shall be entitled to receive.
Mr. Burke's employment agreement is for an indefinite term. The Company can
terminate the agreement upon 12 months written notice or at any time if the
Company makes a lump sum payment in lieu of the 12 months notice.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee at the end of the fiscal year
ended December 31, 2001 were Ronald S. Lauder, Jacob Z. Schuster and
Marie-Monique Steckel. See "Compensation of Directors."
12
AUDIT COMMITTEE REPORT
TO OUR SHAREHOLDERS:
We have reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended December 31, 2001.
We have discussed with Arthur Andersen, the independent auditor for the
Company, the matters required to be discussed by the Statements on Auditing
Standards No. 61, Communications With Audit Committees, as amended.
We have also received the written disclosures and the letter from Arthur
Andersen required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as amended, and have discussed with Arthur
Andersen its independence.
Based on the reviews and discussions referred to above, we recommended to
the Board of Directors that the audited financial statements referred to above
be included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001, to be filed with the Securities and Exchange
Commission.
Submitted by,
CHARLES R. FRANK, JR.
ALFRED W. LANGER
NICOLAS G. TROLLOPE
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee administers the Company's compensation programs
for the Company's executive officers and station managers and also administers
the Company's Stock Option Plans.
COMPENSATION OBJECTIVES AND POLICIES
The Compensation Committee seeks to provide compensation packages to the
Company's executive officers and station managers that will motivate them and
retain their services. The Compensation Committee has adopted the following
basic objectives and policies for compensating the Company's executive officers
and station managers:
o compensation plans reward individual and corporate achievement;
o short and long-term incentives are to be effectively balanced to satisfy
both the short and long-term goals of the Company; and
o the interests of the Company's executive officers and station managers
are to be aligned with those of the Company's shareholders through
potential stock ownership.
The Compensation Committee has devised pay packages that consist of three
components:
BASE SALARY
Base salaries are intended to provide regular compensation at a sufficient
level to retain and motivate the Company's executive officers and station
managers.
ANNUAL BONUS
The Company's annual bonus plan for the Company's executive officers and
station managers provides participants an opportunity to earn bonuses equal to a
specified percentage of their salaries. A portion of the bonus (determined by
the Compensation Committee) will be based on the achievement of company-wide
financial objectives (such as attributable revenue and EBITDA) established by
the Compensation Committee, and the remainder will be based on an evaluation of
personal performance submitted by management and approved by the Compensation
Committee. The performance of the Chief Executive Officer will be evaluated
solely by the Compensation Committee.
STOCK OPTIONS
Stock options are an integral part of the pay packages of the Company's
executive officers and station managers. The Compensation Committee believes
that stock options, which are designed to focus attention on stock values, are
the most effective way of aligning the long-term interests of the Company's
executive officers and station managers with those of the Company's
shareholders. The exercise price of each option on shares of Class A Common
Stock will not be less than the fair market value on the date the grant is
approved by the Compensation Committee, and will generally take any of the
following three forms, at the discretion of the Compensation Committee.
EXPIRY VESTING SCHEDULE (YEARS)
----------- -------------------------------------------------------------------
1 2 3 4 5
Two-year options................ 5 years 33% 67%
Three-year options.............. 7 years 25% 30% 45%
Five-year options............... 10 years 10% 15% 15% 25% 35%
The Compensation Committee may elect to accelerate the vesting schedule of
the options based on the satisfaction of certain Company performance goals.
14
Options will generally remain exercisable during continued employment until
the fifth, seventh or tenth anniversary of the date of grant, which provides
executives an incentive to increase shareholder value over the long term since
the full benefit of the options cannot be realized unless stock price
appreciation occurs over a number of years.
Options under the 1995 Stock Option Plan will expire on the earlier of
their stated expiration date or one year after termination of an executive's
employment, except that options terminate immediately following a termination
for cause and 90 days following a voluntary termination by the executive. If
there is a change in control of the Company, options generally will become
exercisable if an executive is thereafter terminated by the Company other than
for cause, or if the executive terminates for good reason. Options that have not
vested at the time of termination of employment cannot be exercised.
FISCAL YEAR 2001
Compensation of the Chief Executive Officer
-------------------------------------------
Frederic T. Klinkhammer
-----------------------
Frederic T. Klinkhammer has served as the Company's Chief Executive Officer
since March 1999. Mr. Klinkhammer has entered into employment agreements with
the Company and a wholly-owned subsidiary of the Company dated as January 1,
1998 and amended as of March 23, 1999. They provide:
Salary
An initial base salary of $350,000 per year with 5% increase in base salary
per year ($392,749 for 2001) (or such greater amount determined at the option
and sole discretion of the Compensation Committee) provided during the term of
the agreements and an expatriate premium of UK(pound)104,000 per year (plus an
additional amount based on an increase in the consumer price index in the London
metropolitan area, which totalled UK(pound)106,000 for 2001). For 2002 the
Compensation Committee increased Mr. Klinkhammer's base salary to $450,000 per
year as a result of achieving the objectives described in the next paragraph.
Annual Bonus
The Compensation Committee granted a $600,000 bonus to Mr. Klinkhammer for
2001. The bonus granted to Mr. Klinkhammer was based on the achievement of
Company-wide objectives and his achievement of personal performance objectives
established by the Compensation Committee. Mr. Klinkhammer was eligible for a
bonus equal to 150% of base salary because the combination of Company-wide and
personal performance objectives achieved during 2001 vastly exceeded performance
objectives. The Compensation Committee determined that Mr. Klinkhammer achieved
these objectives through the following performance by the Company:
o Delivering combined Company EBITDA of $17.0 million, a 34% increase over
2000 combined Company EBITDA.
o Achieving a 41% decrease in net loss as compared to the Company's 2000
net loss.
o Obtaining 51% controlling interest in the POP TV license holding Company.
o Obtaining a 34% interest in the Markiza license holding Company and a
blocking control over Markiza's significant activities.
o Obtaining an award in an arbitration claim filed against Dr. Vladamir
Zelezny. Dr. Zelezny was ordered to refund to the Company $23,350,000 paid
to him pursuant to a share purchase agreement, plus interest. As of March
24, 2002, the total amount owed by Dr. Zelezny to the Company, including
accrued interest, was $28,388,000. A more complete description of this
arbitration claim and award is included in the Company's Annual Report on
Form 10-K, which is being circulated together with this Proxy Statement.
o Obtaining a partial award in an arbitration claim filed against the Czech
Republic in connection wih NOVA TV. The Czech Republic was ordered to
remedy the injury the Company suffered as a result of the Czech Republic's
violations of the Netherlands-Czech Bilateral Investment Treaty (the
"Treaty") by payment of the fair market value of the
15
Company's investment as it was before consummation of the Czech Republic's
breach of the Treaty in 1999, in an amount to be determined at a second
phase of the arbitration. A more complete description of this arbitration
claim and award is included in the Company's Annual Report on Form 10-K,
which is being circulated together with this Proxy Statement
Stock Option
In April 2001, the Company awarded to Mr. Klinkhammer options to
purchase 12,000 shares of the Class A Common Stock at an exercise price of $1.25
per share. Such options vest in three equal installments. Options to acquire
4,000 shares of the Class A Common Stock are currently vested. The options will
expire on April 1, 2011. The number of shares underlying the options awarded to
Mr. Klinkhammer was somewhat low due to the size of the options granted to Mr.
Klinkhammer in 2000.
In setting Mr. Klinkhammer's compensation package when he became Chief
Executive Officer in March 1999, a number of factors were considered, including:
o the desire of the Board of Directors to name a current executive of the
Company, with knowledge of both the operations and the short and long-term
strategy of the Company, as Chief Executive Officer, particularly in light
of the resignation of Michel Delloye after only one year as the Company's
Chief Executive Officer and ongoing negotiations with SBS Broadcasting S.A.
("SBS") with respect to the purchase by SBS of all the assets, and the
assumption by SBS of all the liabilities, of the Company. The transaction
with SBS subsequently was terminated (See the Company's Form 8-K, dated
September 29, 1999);
o the unique skills and experience of Mr. Klinkhammer in the international
media business which the Board of Directors believed would be necessary to
lead the Company through what the Board of Directors believed would be an
extremely challenging operating environment; and
o the total compensation of key executives at other media companies.
Compensation Committee
RONALD S. LAUDER
JACOB Z. SCHUSTER
MARIE-MONIQUE STECKEL
16
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the change in the
cumulative shareholder return of the Class A Common Stock against the total
cumulative total return of the Nasdaq Composite Index and the Dow Jones World
Broadcasting Index between December 31, 1996 and December 31, 2001.
[GRAPHIC OMITTED]
Value of $100 invested at December 31, 1996 as of December 31, 2001:
Central European Media Enterprises Ltd.............................$4.02
NASDAQ Composite Index...........................................$151.07
Dow Jones World Broadcasting Index (1)...........................$159.35
----------------
(1) This index includes 20 companies, many of which are non-U.S. based.
Accordingly, the Company believes that the inclusion of this index is useful in
understanding the stock performance of the Company compared to companies in the
television broadcast and cable industry.
17
PROPOSAL TO AMEND THE BYE-LAWS OF THE COMPANY CONCERNING
DIRECTORS AND OFFICERS INDEMNIFICATION
The Companies Act, 1981 of Bermuda allows companies incorporated under
the laws of Bermuda to indemnify their directors and officers in connection with
the execution of their duties as a director or officer of a Bermuda company in
accordance with standards that are more flexible than those currently provided
for in the Company's Bye-laws. The Board of Directors believes that amending the
Bye-laws to (i) extend the indemnification of the Company's directors and
officers to include any act done or purported to be done by a director or
officer on behalf of the Company, (ii) to provide for the waiver and release by
shareholders of any claim or right of action, whether individually or as a
shareholder of the Company, against any director or officer of the Company, if
such claim or right of action arose on account of any act done, purported to be
done, concurred in or omitted in connection with such director's or officer's
duties to the Company, provided that such waiver does not apply to any claims or
rights of action arising as a result of any fraud or dishonesty on the part of
any officer or director, and (iii) extend such protection against shareholder
claims and the existing and proposed indemnification standards to former
directors and officers, will assist the Board in identifying and attracting
additional independent directors with broad experience and skills to serve on
the Board. In addition, the Board of Directors believes that the adoption of the
proposed amendments would make the Company's indemnification standards and its
protection of its directors and officers more consistent with the
indemnification and protections typically offered to directors and officers of
other public companies organized under the laws of Bermuda.
For the reasons set forth above, the Board of Directors has determined
that it is in the best interests of the Company and its shareholders to amend
Bye-law 166(1) and add new Bye-laws 166(2), 166(3) and 166(4), each as set forth
in Exhibit A hereto.
The amendment to Bye-law 166(1) extends the indemnification granted to
the directors and officers from the Company to include any act done, purported
to be done, concurred in or omitted by any director or officer on behalf of the
Company or purportedly on behalf of the Company.
New Bye-law 166(2), if adopted, would result in the waiver and release
by shareholders of any claim or right of action, whether individually or as a
shareholder of the Company, against any director or officer of the Company, if
such claim or right of action arose on account of any act done, purported to be
done, concurred in or omitted in connection with such director's or officer's
duties to the Company, provided that such waiver does not apply to any claims or
rights of action arising as a result of any fraud or dishonesty on the part of
any officer or director.
New Bye-law 166(3) extends the indemnification provided in Section
166(1) and the waiver and release of shareholder claims provided in Section
166(2) to each former director and officer of the Company.
New Bye-law 166(4) preserves the indemnity and protection provided by
Bye-laws 166(1), 166(2) 166(3) in the event any of Bye-laws 166(1), 166(2)
166(3) or 166(4) are modified or repealed.
VOTE REQUIRED; RECOMMENDATION
Approval of this proposal requires the affirmative vote of a majority
of the votes cast, in person or by proxy, at the Meeting, provided that a quorum
is present in person or by proxy. Abstentions and broker non-votes will be
included in determining the presence of a quorum, but are not counted as votes
cast. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED
FOR ADOPTION OF THIS PROPOSAL.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF AMENDING THE COMPANY'S BYE-LAWS CONCERNING DIRECTORS AND OFFICERS
INDEMNIFICATION.
18
PROPOSAL TO AMEND THE BYE-LAWS OF THE COMPANY TO PERMIT THE
BOARD OF DIRECTORS IN ITS DISCRETION AND FROM TIME TO TIME,
TO ISSUE ADDITIONAL SHARES AS A DIVIDEND
There are currently relatively few shares of the Class A Common Stock
outstanding compared to the number of shares of stock outstanding for most
publicly traded companies. The Board of Directors believes that this has been a
factor in the limited trading that occurs in the Class A Common Stock in the
over-the-counter market. Although many other factors beyond the Company's
control affect the number of shares traded in the Class A Common Stock in the
over-the-counter market, the Board of Directors believes that providing it with
the ability to issue additional shares in the form of a share dividend to the
holders of the Company's Common Stock on a pro rata basis in accordance with
share ownership may increase the liquidity of the Class A Common Stock in the
over-the-counter market. Under the current Bye-laws of the Company, such a
dividend may only be declared with the consent of the shareholders. Because of
notice requirements for the convening of shareholders meetings under Bermuda
law, if the Company wished to declare a share dividend, it could not do so
promptly. In addition, there are significant legal, solicitation and printing
expenses in circulating a proxy statement in connection with a special meeting
of shareholders. The Board of Directors believes that an increase in the
liquidity of the Class A Common Stock in the over-the-counter market would be a
benefit to shareholders. A share dividend to the holders of the Company's Common
Stock on a pro rata basis in accordance with share ownership would not result in
dilution to the shareholders.
For this reason, the Board of Directors has determined that it is in
the best interests of the Company and its shareholders to delete Bye-law 146 in
its entirety and amend Bye-law 148 as set forth in Exhibit B hereto, which would
allow the Company acting pursuant to a resolution of its Board of Directors to
issue additional shares of the Class A Common Stock and Class B Common Stock in
the form of a share dividend paid to the Company's shareholders.
VOTE REQUIRED; RECOMMENDATION
Approval of this proposal requires the affirmative vote of a majority
of the votes cast, in person or by proxy, at the Meeting, provided that a quorum
is present in person or by proxy. Abstentions and broker non-votes will be
included in determining the presence of a quorum, but are not counted as votes
cast. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED
FOR ADOPTION OF THIS PROPOSAL.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF AMENDING THE COMPANY'S BYE-LAWS TO PERMIT THE BOARD OF DIRECTORS IN ITS
DISCRETION AND FROM TIME TO TIME, TO ISSUE ADDITIONAL SHARES AS A DIVIDEND.
19
PROPOSAL TO AMEND THE BYE-LAWS OF THE COMPANY TO PERMIT THE
BOARD OF DIRECTORS TO FILL ANY VACANCY IN THE OFFICE OF THE AUDITOR.
The Board of Directors has proposed that Arthur Andersen serve as
auditors for the Company until the conclusion of the Company's next annual
general meeting of shareholders. Currently, the Company's Bye-laws require the
shareholders to fill a vacancy in the office of the auditor. This would require
the convening of a special general meeting of the shareholders and approval of
the shareholders to fill a vacancy in the office of the auditor, if such a
vacancy were to occur during the year. Because of notice requirements for the
convening of shareholders meetings under Bermuda law, if a vacancy in the office
of the auditor were to occur, the office of the auditor could not be filled
promptly. In addition, there are significant legal, solicitation and printing
expenses in circulating a proxy statement in connection with a special meeting
of shareholders. The Board of Directors believes that it is in the best
interests of the Company and its shareholders that the Company's Bye-laws be
amended to provide the Board with the power to fill such a vacancy if it were to
occur during the year. The Board of Directors also believes that most publicly
traded companies which are incorporated in a U.S. jurisdiction provide the Board
with this power.
For this reason, the Board of Directors has determined that it is in
the best interests of the Company and its shareholders to amend Bye-law 157 as
set forth in Exhibit C hereto.
VOTE REQUIRED; RECOMMENDATION
Approval of this proposal requires the affirmative vote of a majority
of the votes cast, in person or by proxy, at the Meeting, provided that a quorum
is present in person or by proxy. Abstentions and broker non-votes will be
included in determining the presence of a quorum, but are not counted as votes
cast. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED
FOR ADOPTION OF THIS PROPOSAL.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF AMENDING THE COMPANY'S BYE-LAWS TO PERMIT THE BOARD OF DIRECTORS TO
FILL ANY VACANCY IN THE OFFICE OF THE AUDITOR.
20
ADOPTION OF FINANCIAL STATEMENTS
The Audit Committee of the Board of Directors has approved the audited
financial statements for the Company's fiscal year ended December 31, 2001 (the
"Financial Statements") for presentation to the shareholders at the Annual
General Meeting of Shareholders. Under Bermuda law, the shareholders are
requested to adopt financial statements; under Bermuda law, the adoption of the
Financial Statements by the shareholders does not affect any rights that the
shareholders may have with respect to the Financial Statements. The Financial
Statements are included in the Company's Annual Report on Form 10-K, which is
being circulated together with this Proxy Statement.
VOTE REQUIRED; RECOMMENDATION
The adoption of the Financial Statements requires the affirmative vote
of a majority of the votes cast, in person or by proxy, at the Meeting, provided
that a quorum is present in person or by proxy. Abstentions and broker non-votes
will be included in determining the presence of a quorum, but are not counted as
votes cast. UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE
VOTED FOR ADOPTION OF THE FINANCIAL STATEMENTS AND THE AUDITORS' REPORT THEREON.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ADOPTION OF THE FINANCIAL STATEMENTS AND THE AUDITORS' REPORT THEREON.
21
SELECTION OF AUDITORS
At the recommendation of the Audit Committee, the Board of Directors
recommends to the shareholders that Arthur Andersen, Victoria Hall, Hamilton,
Bermuda, be appointed to serve as the independent auditors of the Company until
the conclusion of the Company's next annual general meeting of shareholders. In
addition, the Board of Directors recommends to the shareholders that the
shareholders authorize the Board of Directors to approve the auditors' fee.
The Company's Board of Directors and the Audit Committee are aware of
recent events concerning Arthur Andersen and have reviewed these matters with
representatives of the firm. Based on these discussions, the Board of Directors
and the Audit Committee continue to recommend the appointment of Arthur Andersen
as the Company's auditor for the year 2002. The Audit Committee will continue to
closely monitor ongoing developments at Arthur Andersen
Representatives of Arthur Andersen are expected to be present at the
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions from shareholders.
AUDIT FEES
Arthur Andersen is the Company's principal independent auditor. Arthur
Andersen's audit fees for auditing the Company's annual consolidated financial
statements for the year ended December 31, 2001 and reviews of the Company's
interim financial statements included in the Company's Forms 10-Q filed with the
Securities Exchange Commission during 2001 were $822,807.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees for financial information systems design or
implementation paid to Arthur Andersen during the year ended December 31, 2001.
ALL OTHER FEES
All other fees for Arthur Andersen's services, including tax
preparations during the year ended December 31, 2001, were $384,738.
The Audit Committee of the Board of Directors has considered whether
the provision of the services set forth in the preceding paragraph is compatible
with maintaining Arthur Andersen's independence.
VOTE REQUIRED; RECOMMENDATION
The appointment of Arthur Andersen to serve as the independent auditors
of the Company and the authorization of the Board of Directors to approve the
auditors' fee requires the affirmative vote of a majority of the votes cast, in
person or by proxy, at the Meeting, provided that a quorum is present in person
or by proxy. Abstentions and broker non-votes will be included in determining
the presence of a quorum, but are not counted as votes cast. UNLESS OTHERWISE
INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR THE APPOINTMENT OF
ARTHUR ANDERSEN AS THE COMPANY'S AUDITORS AND FOR THE BOARD OF DIRECTORS TO
APPROVE THE AUDITORS' FEE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
APPOINTMENT OF ARTHUR ANDERSEN AS THE COMPANY'S AUDITORS AND A VOTE IN FAVOR OF
AUTHORIZING THE BOARD OF DIRECTORS TO APPROVE THE AUDITORS' FEE.
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company at its principal
executive office by December 19, 2002 in order to be considered for inclusion in
proxy materials distributed in connection with the next annual general meeting
of shareholders.
The proxy or proxies designated by the Company will have discretionary
authority to vote on any matter properly presented by a shareholder for
consideration at the next annual general meeting of shareholders but not
submitted for inclusion in the proxy materials for such meeting unless notice of
the matter is received by the Company at its principal executive office by March
4, 2003.
MISCELLANEOUS
Under Bermuda law, no matter or business other than those set forth in
the accompanying Notice of Annual Meeting of Shareholders is permitted to be
presented at the Meeting.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to shareholders in connection with this solicitation. Officers and regular
employees may solicit proxies by mail, telephone, telegraph and personal
interview, for which no additional compensation will be paid. In addition,
Georgeson Shareholder Communications Inc. has been engaged by the Company to act
as proxy solicitors and will receive fees of $3,500, plus expenses. The Company
may reimburse persons holding shares in their names or in the names of nominees
for their reasonable expenses in sending proxies and proxy material to their
principals.
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 is being mailed to shareholders simultaneously with this Proxy
Statement.
By order of the Board of Directors,
MICHAEL ASHFORD
Secretary
Hamilton, Bermuda
April 18, 2002
23
EXHIBIT A
Bye-law 166(1), proposed to be amended, currently provides as follows:
BYE-LAW 166(1)
166. (1) The Directors, Secretary and other officers and each person
who is or was or had agreed to become a Director or officer of the Company, and
each such person who is or was serving or who had agreed to serve at the request
of the Board of Directors or an officer of the Company as an employee or agent
of the Company or as a Director, officer, employee or agent of another company,
corporation, partnership, joint venture, trust or other enterprise and every
Auditor for the time being of the Company and the liquidator or trustees (if
any) for the time being acting in relation to any of the affairs of the Company
and everyone of them, and every one of their heirs, executors, administrators
and estates, shall be indemnified and secured harmless out of the assets and
profits of the Company from and against all actions, costs, charges, losses,
damages and expenses which they or any of them, their or any of their heirs,
executors, administrators or estates, shall or may incur or sustain by or by
reason of any act done, concurred in or omitted in or about the execution of
their duty, or supposed duty, in their respective offices or trusts; and none of
them shall be answerable for the acts, receipts, neglects or defaults of the
other or others of them or for joining in any receipts for the sake of
conformity, or for any bankers or other persons with whom any moneys or effects
belonging to the Company shall or may be lodged or deposited for safe custody,
or for insufficiency or deficiency of any security upon which any moneys of or
belonging to the Company shall be placed out on or invested, or for any other
loss, misfortune or damage which may happen in the execution of their respective
offices or trusts, or in relation thereto; PROVIDED THAT this indemnity shall
not extend to any matter in respect of any willful negligence, willful default,
fraud or dishonesty which may attach to any of said persons. Subject to the
provisions of the Act and without limiting the generality or the effect of the
foregoing, the Company may enter into one or more agreements with any person
which provide for indemnification greater or different than that provided in
this Bye-law 166(1). Any repeal or modification of the Bye-law 166(1) shall not
adversely affect any right or protection existing hereunder immediately prior to
such repeal or modification.
If the proposal is adopted, Bye-law 166(1) in its entirety (showing the
changes) and Bye-laws 166(2), 166(3) and 166(4) in their entirety would provide
as follows:
166.(1) The Directors, Secretary and other officers (such term to
include, for the purposes of Bye-laws 166(1), 166(2), 166(3) and 166(4), any
person appointed to any committee by the Board) for the time being and each such
person who is or was or had agreed to become a Director or officer of the
Company and each such person who is or was serving or who had agreed to serve as
an employee or agent of the Company or as a Director, officer, employee or agent
of another company, corporation, partnership, joint venture, trust or other
enterprise in which the Company is or was engaged acting in relation to any of
the affairs of the Company and every auditor for the time being of the Company
and the liquidator or trustees (if any) for the time being acting in relation to
any of the affairs of the Company and every one of them, and their heirs,
executors and administrators, shall be indemnified and secured harmless out of
the assets and profits of the Company from and against all actions, costs,
charges, losses, damages and expenses which they or any of them, their heirs,
executors or administrators, shall or may incur or sustain by or by reason of
any act done, purported to be done, concurred in or omitted in or about the
execution of their duty, or supposed duty, or in their respective offices or
trusts, or on behalf of the Company or purportedly on behalf of the Company, and
none of them shall be answerable for the acts, receipts, neglects or defaults of
the others of them or for joining in any receipts for the sake of conformity, or
for any bankers or other persons with whom any moneys or effects belonging to
the Company shall or may be lodged or deposited for safe custody, or for
insufficiency or deficiency of any security upon which any moneys of or
belonging to the Company shall be placed out on or invested, or for any other
loss, misfortune or damage which may happen in the execution of their respective
offices or trusts, or in relation thereto, PROVIDED THAT this indemnity shall
not extend to any matter in respect of any fraud or dishonesty which may attach
to any of said persons. Subject to the provisions of the Act and without
limiting the generality or the effect of the foregoing, the Company may enter
into one or more agreements with any person which provide for indemnification
greater or different that than provided in this Bye-law.
166.(2) Each Member agrees to waive and release any claim or right of
action such Member might have, whether individually or by or in the right of the
Company, against any Director or officer on account of any act done, purported
to be done, concurred in or omitted in or about the execution of their duty, or
supposed duty, or in their
respective offices or trusts by such Director or officer, or the failure of such
Director or officer to take any action in the performance of his duties with or
for the Company, PROVIDED THAT such waiver shall not extend to any matter in
respect of any fraud or dishonesty which may attach to such Director or officer.
166.(3) The indemnity provided by Bye-law 166(1) above shall extend,
as a matter of contract between each Member and each former Director and officer
of the Company and their heirs, executors and administrators, to any act done,
purported to be done, concurred in or omitted in or about the execution of their
duty, or supposed duty, or in their respective offices or trusts by the former
Directors and officers of the Company. The waiver of claims or right of action
by each Member provided by Bye-law 166(2) above shall extend, as a matter of
contract between each Member and each former Director and officer of the Company
and their heirs, executors and administrators, to any act done, purported to be
done, concurred in or omitted in or about the execution of their duty, or
supposed duty, or in their respective offices or trusts by the former Directors
and officers of the Company.
166.(4) Any repeal or modification of Bye-laws 166(1), 166(2), 166(3)
and 166(4) shall not adversely affect any right or protection existing under
Bye-laws 166(1), 166(2), 166(3) and 166(4) immediately prior to such repeal or
modification.
A-2
EXHIBIT B
Bye-law 146, proposed to be removed in its entirety, currently provides
as follows:
146. (1) Whenever the Board or the Company in general meeting has
resolved that a dividend be paid or declared on any class of the share capital
of the Company, the Board may further resolve either:
(a) that such dividend be satisfied wholly or in part in the form of an
allotment of shares credited as fully paid up, provided that the shareholders
entitled thereto will be entitled to elect to receive such dividend (or part
thereof if the Board so determines) in cash in lieu of such allotment. In such
case, the following provisions shall apply:
(i) the basis of any such allotment shall be determined by the
Board;
(ii) the Board, after determining the basis of allotment,
shall give not less than two (2) weeks' notice in writing to the holders of the
relevant shares of the right of election accorded to them and shall send with
such notice forms of election and specify the procedure to be followed and the
place at which and the latest date and time by which duly completed forms of
election must be lodged in order to be effective;
(iii) the right of election may be exercised in respect of the
whole or part of that portion of the dividend in respect of which the right of
election has been accorded; and
(iv) the dividend (or that part of the dividend to be
satisfied by the allotment of shares as aforesaid) shall not be payable in cash
on shares in respect whereof the cash election has not been duly exercised ("the
non-elected shares") and in satisfaction thereof shares of the relevant class
shall be allotted credited as fully paid up to the holders of the non-elected
shares on the basis of allotment determined as aforesaid and for such purpose
the Board shall capitalise and apply out of any part of the undivided profits of
the Company (including profits carried and standing to the credit of any
reserves or other special account other than the Subscription Rights Reserve) as
the Board may determine, such sum as may be required to pay up in full the
appropriate number of shares of the relevant class for allotment and
distribution to and amongst the holders of the non-elected shares on such basis;
or
(b) that the shareholders entitled to such dividend shall be entitled
to elect to receive an allotment of shares credited as fully paid up in lieu of
the whole or such part of the dividend as the Board may think fit. In such case,
the following provisions shall apply:
(i) the basis of any such allotment shall be determined by the
Board;
(ii) the Board, after determining the basis of allotment,
shall give not less than two (2) weeks' notice in writing to the holders of the
relevant shares of the right of election accorded to them and shall send with
such notice forms of election and specify the procedure to be followed and the
place at which and the latest date and time by which duly completed forms of
election must be lodged in order to be effective;
(iii) the right of election may be exercised in respect of the
whole or part of that portion of the dividend in respect of which the right of
election has been accorded; and
(iv) the dividend (or that part of the dividend in respect of
which a right of election has been accorded) shall not be payable in cash on
shares in respect whereof the share election has been duly exercised ("the
elected shares") and in lieu thereof shares of the relevant class shall be
allotted credited as fully paid up to the holders of the elected shares on the
basis of allotment determined as aforesaid and for such purpose the Board shall
capitalise and apply out of any part of the undivided profits of the Company
(including profits carried and standing to the credit of any reserves or other
special account other than the Subscription Rights Reserve) as the Board may
determine, such sum as may be required to pay up in full the appropriate number
of shares of the relevant class for allotment and distribution to and amongst
the holders of the elected shares on such basis.
(2) (a) The shares allotted pursuant to the provisions of paragraph (1)
of this Bye-law shall rank pari passu in all respects with shares of the same
class (if any) then in issue save only as regards participation in the relevant
dividend or in any other distributions, bonuses or rights paid, made, declared
or announced prior to or contemporaneously with the payment or declaration of
the relevant dividend unless, contemporaneously with the announcement by the
Board of their proposal to apply the provisions of sub-paragraph (a) or (b) of
paragraph (2) of this Bye-law in relation to the relevant dividend or
contemporaneously with their announcement of the distribution, bonus or rights
in question, the Board shall specify that the shares to be allotted pursuant to
the provisions of paragraph (1) of this Bye-law shall rank for participation in
such distribution, bonus or rights.
(b) The Board may do all acts and things considered necessary or
expedient to give effect to any capitalisation pursuant to the provisions of
paragraph (1) of this Bye-law, with full power to the Board to make such
provisions as it thinks fit in the case of shares becoming distributable in
fractions (including provisions whereby, in whole or in part, fractional
entitlements are aggregated and sold and the net proceeds distributed to those
entitled, or are disregarded or rounded up or down or whereby the benefit of
fractional entitlements accrues to the Company rather than to the members
concerned). The Board may authorise any person to enter into on behalf of all
Members interested, an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made pursuant to
such authority shall be effective and binding on all concerned.
(3) The Company may upon the recommendation of the Board by ordinary
resolution resolve in respect of any one particular dividend of the Company that
notwithstanding the provisions of paragraph (1) of this Bye-law a dividend may
be satisfied wholly in the form of an allotment of shares credited as fully paid
up without offering any right to shareholders to elect to receive such dividend
in cash in lieu of such allotment.
(4) The Board may on any occasion determine that rights of election and
the allotment of shares under paragraph (1) of this Bye-law shall not be made
available or made to any shareholders with registered addresses in any territory
where, in the absence of a registration statement or other special formalities,
the circulation of an offer of such rights of election or the allotment of
shares would or might, in the opinion of the Board, be unlawful or
impracticable, and in such event the provisions aforesaid shall be read and
construed subject to such determination. Members affected as a result of the
foregoing sentence shall not be or be deemed to be a separate class of Members
for any purpose whatsoever.
(5) Any resolution declaring a dividend on shares of any class, whether
a resolution of the Company in general meeting or a resolution of the Board, may
specify that the same shall be payable or distributable to the persons
registered as the holders of such shares at the close of business on a
particular date, notwithstanding that it may be a date prior to that on which
the resolution is passed, and thereupon the dividend shall be payable or
distributable to them in accordance with their respective holdings so
registered, but without prejudice to the rights inter se in respect of such
dividend of transferors and transferees of any such shares. The provisions of
this Bye-law shall mutatis mutandis apply to bonuses, capitalisation issues,
distributions of realised capital profits or offers or grants made by the
Company to the Members.
Bye-law 148, proposed to be amended, currently provides as follows:
148. The Company may, upon the recommendation of the Board, at any time
and from time to time pass an ordinary resolution to the effect that it is
desirable to capitalise all or any part of any amount for the time being
standing to the credit of any reserve or fund (including the profit and loss
account) whether or not the same is available for distribution and accordingly
that such amount be set free for distribution among the Members or any class of
members who would be entitled thereto if it were distributed by way of dividend
and in the same proportions, on the footing that the same is not paid in cash
but is applied either in or towards paying up the amounts for the time being
unpaid on any shares in the Company held by such Members respectively or in
paying up in full unissued shares, debentures or other obligations of the
Company, to be allotted and distributed credited as fully paid up among such
members, or partly in one way and partly in the other, and the Board shall give
effect to such resolution provided that, for the purposes of this Bye-law and
subject to Section 40(2A) of the Act, a share premium account and any reserve or
fund representing unrealised profits, may be applied only in paying up in full
unissued shares of the Company to be allotted to such Members credited as fully
paid. In carrying sums to reserve and in applying the same the Board shall
comply with the provisions of the Act.
If the proposal is adopted, Bye-law 148 in its entirety would provide
as follows:
148.(1) The Board may resolve to capitalise any part of the amount for
the time being standing to the credit of any of the Company's share premium or
other reserve accounts or to the credit of the profit and loss account
B-2
or otherwise available for dividend or distribution by applying such sum in
paying up unissued shares to be allotted as fully paid bonus shares pro rata to
the Members.
(2) The Board may resolve to capitalise any sum standing to the credit
of a reserve account or sums otherwise available for dividend or distribution by
applying such amounts in paying up in full partly paid shares of those Members
who would have been entitled to such sums if they were distributed by way of
dividend or distribution."
B-3
EXHIBIT C
Bye-law 157, proposed to be amended, currently provides as follows:
157. If the office of auditor becomes vacant by the resignation or
death of the Auditor, or by his becoming incapable of acting by reason of
illness or other disability at a time when his services are required, the
Directors shall as soon as practicable convene a special general meeting to fill
the vacancy.
If the proposal is adopted, Bye-law 157 in its entirety (showing the
changes) would provide as follows:
157. If the office of auditor becomes vacant by the resignation or
death of the Auditor, or by his becoming incapable of acting by reason of
illness, other disability or other circumstances at a time when his services are
required, the Directors may fill the vacancy.
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
PROXY FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS--MAY 15, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Fredric T. Klinkhammer,
Nicolas G. Trollope and Kevin Butler, or any of them acting singly, with the
power of substitution in any of them, the proxies of the undersigned to vote
with the same force and effect as the undersigned all shares of Common Stock of
Central European Media Enterprises Ltd. (the "Company") held of record by the
undersigned on April 1, 2002 at the Annual General Meeting of Shareholders to be
held at the offices of Conyers Dill & Pearman, Clarendon House, 2 Church Street,
Hamilton, Bermuda, on May 15, 2002, at 10:00 A.M. and at any adjournment or
adjournments thereof, hereby revoking any proxy or proxies heretofore given and
ratifying and confirming all that said proxies may do or cause to be done by
virtue thereof with respect to the following matters:
1. The election of eight directors nominated by the Board of Directors to
serve until the next Annual General Meeting of Shareholders:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated below) for the nominees listed below
RONALD S. LAUDER, FREDERIC T. KLINKHAMMER, NICOLAS G. TROLLOPE, JACOB Z.
SCHUSTER, MARIE-MONIQUE STECKEL, ALFRED LANGER, CHARLES R. FRANK, JR., HERBERT
A. GRANATH.
INSTRUCTION: to withhold authority to vote for any individual nominee, write
that nominee's name on this line:
---------------------------------------------------------------
2. The approval of a proposal to amend the Company's Bye-Laws concerning
the indemnification provided by the Company to the Company's directors
and officers.
[_] FOR [_] AGAINST [_] ABSTAIN
3. The approval of a proposal to amend the Company's Bye-Laws to authorize
the Company's Board of Directors, in its discretion and from time to
time, to issue additional shares of the Company's Class A Common Stock,
par value $0.08 per share and Class B Common Stock, par value $0.08 per
share to the Company's shareholders as a share dividend.
[_] FOR [_] AGAINST [_] ABSTAIN
4. The approval of a proposal to amend the Company's Bye-laws authorizing
the Company's Board of Directors to fill any vacancy in the office of
the Company's auditors.
[_] FOR [_] AGAINST [_] ABSTAIN
5. The adoption of the financial statements of the Company and the
auditors' report thereon for the Company's fiscal year ended December
31, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
6. The appointment of Arthur Andersen as independent auditors of the
Company for the 2002 fiscal year and the authorization of the Board of
Directors to approve the auditors' fee.
[_] FOR [_] AGAINST [_] ABSTAIN
This proxy, when properly executed, will be voted as directed. If no
direction is indicated, the proxy will be voted (i) FOR the election of the
eight named individuals as directors, (ii) FOR the approval of the amendment to
the Bye-laws concerning the indemnification of the Company's officers and
directors, (iii) FOR the approval of the amendment to the Bye-laws authorizing
the Company's Board of Directors, in its discretion and from time to time, to
issue additional shares of the Company's Class A Common Stock, par value $0.08
per share and Class B Common Stock, par value $0.08 per share to the Company's
shareholders as a share dividend, (iv) FOR the approval of the amendment to the
Bye-laws authorizing the Company's Board of Directors to fill any vacancy in the
office of the Company's auditors, (v) FOR the adoption of the financial
statements of the Company and the auditors' report thereon for the Company's
fiscal year ended December 31, 2001, and (vi) FOR the appointment of Arthur
Andersen as independent auditors of the Company for the 2002 fiscal year and the
authorization of the Board of Directors to approve the auditors' fee.
Shares cannot be voted unless this proxy card is signed and returned or
shares are voted by telephone or in person at the Annual General Meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders to be held on May 15, 2002, and the Proxy Statement,
dated April 18, 2002 prior to the signing of this proxy.
Dated _____________________ , 2002
Please sign your name exactly as it appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title as it appears hereon. When signing as joint tenants, all parties in the
joint tenancy must sign. When a proxy is given by a corporation, it should be
signed by an authorized officer and the corporate seal affixed. When a proxy is
given by a partnership, it should be signed in the partnership name by an
authorized person.
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY IN THE ENCLOSED
ENVELOPE.
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