DEF 14A
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b41395scdef14a.txt
SAGA COMMUNICATIONS, INC.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
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14a-6(e)(2))
Saga Communications, Inc.
(Name of Registrant as Specified In Its Charter)
Saga Communications, Inc.
(Name of Person(s) Filing Proxy Statement)
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SAGA COMMUNICATIONS, INC.
73 KERCHEVAL AVENUE
GROSSE POINTE FARMS, MICHIGAN 48236
NOTICE OF ANNUAL MEETING
MAY 13, 2002
To the Stockholders of
Saga Communications, Inc.
Notice is hereby given that the Annual Meeting of the Stockholders of Saga
Communications, Inc. (the "Corporation"), will be held at the Georgian Inn,
31327 Gratiot, Roseville, Michigan, on Monday, May 13, 2002 at 10:00 A.M.,
Eastern Daylight Time, for the following purposes:
(1) To elect directors of the Corporation for the ensuing year, and
until their successors are elected and qualified.
(2) To ratify the selection by the Board of Directors of Ernst & Young
LLP as independent auditors to audit the Corporation's books and accounts
for the fiscal year ending December 31, 2002.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
By Order of the Board of Directors,
MARCIA LOBAITO
Secretary
April 15, 2002
Mailed at Boston, Massachusetts
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT AS PROMPTLY
AS POSSIBLE. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE
USED.
SAGA COMMUNICATIONS, INC.
73 KERCHEVAL AVENUE
GROSSE POINTE FARMS, MICHIGAN 48236
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2002
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Stockholders of Saga Communications,
Inc. (the "Corporation") to be held on May 13, 2002 and at any adjournment
thereof, for the purposes set forth in the accompanying notice of such meeting.
All stockholders of record of the Corporation's Common Stock at the close of
business on March 31, 2002 will be entitled to vote. The stock transfer books
will not be closed.
Stockholders attending the meeting may vote by ballot. However, since many
stockholders may be unable to attend the meeting, the board of directors is
soliciting proxies so that each stockholder at the close of business on the
record date has the opportunity to vote on the proposals to be considered at the
meeting.
Registered stockholders can simplify their voting and save the Corporation
expense by voting by telephone or by the Internet. Telephone and Internet voting
information is on the proxy card. Stockholders not voting by telephone or
Internet may return the proxy card. Stockholders holding shares through a bank
or broker should follow the voting instructions on the form they receive from
the bank or broker. The availability of telephone and Internet voting will
depend on the bank's or broker's voting process.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by filing a later proxy with the Corporation, by
attending the meeting and voting in person, or by notifying the Corporation of
the revocation in writing to its President at 73 Kercheval Avenue, Grosse Pointe
Farms, Michigan 48236. Proxies received in time for the voting and not revoked
will be voted at the Annual Meeting in accordance with the directions of the
stockholder. Any proxy which fails to specify a choice with respect to any
matter to be acted upon will be voted for the election of each nominee for
director and in favor of each proposal to be acted upon.
As of April 1, 2002, the Corporation had outstanding and entitled to vote
14,536,809 shares of Class A Common Stock and 1,888,296 shares of Class B Common
Stock (the Class A and Class B Common Stock collectively, the "Common Stock").
Each share of Class A Common Stock entitles the holder thereof to one vote on
the matters to be voted upon at the Annual Meeting and each share of Class B
Common Stock entitles the holder thereof to one vote in the election of
directors and ten votes on the other matters to be voted upon at the Annual
Meeting. All holders of Common Stock vote together as one class, except that in
the election of directors the holders of Class A Common Stock vote as a separate
class to elect two directors. Abstentions and broker non-votes will be counted
in determining if a quorum is present. With regard to the election of directors,
votes that are withheld will be excluded entirely from the vote and will have no
effect. Abstentions may be specified on all proposals other than the election of
directors and will be counted as present for purposes of the item on which the
abstention is noted. Abstentions on the ratification of accountants will have
the same legal effect as a vote against such matter. Under the rules of the
American Stock Exchange, brokers holding shares in street name have the
authority to vote on certain matters when they have not received instructions
from the beneficial owners. Brokers that do not receive instructions are
permitted to vote on the outcome of the election of directors and the
ratification of accountants. As a result, broker non-votes will have no effect
on the outcome of the election of directors or the ratification of accountants.
The holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote, present in person or represented by proxy, will
constitute a quorum for the transaction of business. In the absence of a quorum,
the Annual Meeting may be postponed from time to time until stockholders holding
the requisite amount are present or represented by proxy.
The approximate date on which the Proxy Statement and accompanying proxy
card will first be mailed to the stockholders of the Corporation is April 15,
2002.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 2002, information concerning
the ownership of shares of Common Stock by (i) each person or group who is known
by the Corporation to own beneficially more than five percent of the issued and
outstanding Common Stock, (ii) each director of the Corporation, (iii) the
Corporation's Chief Executive Officer and the other most highly compensated
executive officers whose salary and bonus exceeded $100,000 for the
Corporation's last fiscal year, and (iv) all directors and executive officers as
a group. Except as otherwise indicated, each person named has sole investment
and voting power with respect to the securities shown.
NUMBER OF SHARES PERCENT OF CLASS
---------------------------- ---------------------
NAME CLASS A CLASS B CLASS A CLASS B
---- ------- ------- ------- -------
T. Rowe Price Associates, Inc........... 1,461,800(1) -- 9.9% --
100 E. Pratt Street
Baltimore, MD 21202
Ronald Baron............................ 6,448,289(2) -- 44.1% --
767 Fifth Avenue
New York, NY 10153
Goldman Sachs Asset Management.......... 1,034,411 -- 7.1% --
One New York Plaza
New York, NY 10004
Edward K. Christian..................... 259 2,235,143(4) * 100%
Jonathan Firestone...................... 15,868 -- * --
Joseph P. Misiewicz..................... 4,471(5)(6) -- * --
Gary Stevens............................ 4,011(5) -- * --
Donald Alt.............................. 26,458(5)(7) -- * --
Kristin Allen........................... 3,084(5) -- * --
Robert J. Maccini....................... 2,518 -- * --
Samuel D. Bush.......................... 135,522(8)(9) -- * --
Steven J. Goldstein..................... 329,087(8) -- 2.2% --
Catherine A. Bobinski................... 69,403(8) -- * --
Warren S. Lada.......................... 170,169(8) -- 1.1% --
Marcia K. Lobaito....................... 68,988(8) -- * --
All directors and executive officers as
a group............................... 829,838(5)(8) 2,235,143(4) 5.4% 100%
---------------
(1) These securities are owned by various individual and institutional
investors, including T. Rowe Price Small Cap Value Fund, Inc. (which owns
1,150,600 shares, representing 7.8% of the shares outstanding), which T.
Rowe Price Associates, Inc. ("Price Associates") serves as investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of
such securities. However, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such securities. According to their joint
Schedule 13G on file with the Securities and Exchange Commission ("SEC"),
Price Associates, Inc. and T. Rowe Price Small Cap Value Fund, Inc. have
sole voting power with respect to 236,500 and 1,150,600 shares,
respectively, have sole dispositive power with respect to 1,461,800 and 0
shares, respectively, and have no shared voting or dispositive power.
(2) According to their joint Schedule 13D on file with the SEC, Mr. Baron, Baron
Capital Group, Inc. ("BCG") and Baron Capital Management, Inc. ("BCM") have
sole voting and dispositive power with respect to 757,365 shares, and Mr.
Baron, BCG, BAMCO, Inc., BCM and Baron Asset Fund have shared voting and
dispositive power with respect to 5,690,924 shares, 4,384,753 shares,
1,306,170 shares, 3,664,753 shares, and 5,690,924 shares, respectively.
(3) According to its Schedule 13G on file with the SEC, Goldman Sachs Asset
Management, a separate operating unit of Goldman, Sachs & Co., has sole
voting and dispositive power with respect to 1,034,411 shares and no shared
voting or dispositive power. Goldman Sachs Asset Management disclaims
beneficial ownership of the securities beneficially owned by (i) any client
accounts with respect to which it or its employees have voting or investment
discretion, or both, and (ii) certain investment entities, of which its
affiliate is the general partner, managing general partner or other manager,
to the extent interests in such entities are held by persons other than the
Asset Management unit.
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(4) Includes 346,847 shares of Class B Common Stock reserved for issuance upon
exercise of stock options outstanding pursuant to the Corporation's 1992
Stock Option Plan.
(5) Includes the following shares of Class A Common Stock reserved for issuance
upon exercise of stock options outstanding pursuant to the Corporation's
1997 Non-Employee Directors Stock Option Plan: Mr. Misiewicz, 4,471 shares;
Mr. Stevens, 4,011 shares; Mr. Alt, 4,103 shares; Ms. Allen, 3,084 shares;
Mr. Maccini, 628 shares; and all executive officers and directors as a
group, 15,497 shares.
(6) Mr. Misiewicz has shared voting power with his son as to 238 of these
shares.
(7) Mr. Alt disclaims beneficial ownership of 3,194 of these shares which are
held in trusts for the benefit of his children.
(8) Includes the following shares of Class A Common Stock reserved for issuance
upon exercise of stock options outstanding pursuant to the Corporation's
1992 Stock Option Plan: Mr. Bush, 130,192 shares; Mr. Goldstein, 196,011
shares; Ms. Bobinski, 67,716 shares; Mr. Lada, 163,957 shares; Ms. Lobaito,
67,716 shares; and all directors and executive officers as a group, 641,089
shares.
(9) Includes 375 shares owned by his children.
* Less than 1%.
ELECTION OF DIRECTORS
The persons named below have been nominated for election at the Annual
Meeting as directors of the Corporation. The directors who are elected shall
hold office until their respective successors shall have been duly elected and
qualified. It is intended that the two persons named in the first part of the
following list will be elected by the holders of the Class A Common Stock and
that the five persons named in the second part of the list will be elected by
the holders of the Class A Common Stock and Class B Common Stock, voting
together as a single class, with each share entitling the holder thereof to one
vote. In accordance with Delaware General Corporation Law, directors are elected
by a plurality of the votes of the shares present in person or represented by
proxy at the Annual Meeting.
All nominees are members of the present Board. Each of the nominees for
director has consented to being named a nominee in this Proxy Statement and has
agreed to serve as a director, if elected at the Annual Meeting. It is the
intention of the persons named in the proxy to vote for the following nominees.
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
------------ --------------------------- --------
DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK:
Jonathan Firestone, 57.................. Marketing consultant since 2000;
President and Chief Executive Officer of
BBDO Minneapolis and director of BBDO,
North America (advertising agency)
from 1988 to 1999
Joseph P. Misiewicz, 55................. Director, Idea Mart, Ball State 12/92
University, since 2002; Chairperson,
Telecommunications Department at Ball
State University from 1998 to 2002;
Professor, Telecommunications Department
from 1996 to 1998 and Chairperson from
1990 to 1996
DIRECTORS TO BE ELECTED BY HOLDERS OF COMMON STOCK:
Edward K. Christian, 57................. President, Chief Executive Officer and 3/92
Chairman of the Corporation and its
predecessor since 1986
Donald Alt, 56.......................... Broadcasting investor; Chairman of 7/97
Forever Broadcasting since 1996; Chief
Financial Officer of Keymarket Radio
Companies from 1984 to 1996
4
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
------------ --------------------------- --------
Gary Stevens, 62........................ Managing Director, Gary Stevens & Co. 7/95
(media broker) since 1986
Kristin Allen, 42....................... Managing Director, Credit Suisse First 7/97
Boston Corporation since 1997 and Vice
President 1995-1997
Robert J. Maccini, 43................... President, Signal Ventures Associates, 3/01
Inc. d/b/a Media Services Group, Inc.
(media broker) since 1989
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee, currently comprised of
Ms. Allen and Messrs. Alt, Firestone, Maccini, Misiewicz and Stevens (Chair),
which is charged with the responsibility of reviewing certain of the
Corporation's compensation programs and making recommendations to the Board of
Directors with respect to compensation. The Compensation Committee met five
times during the Corporation's last fiscal year. The Compensation Committee also
administers the Corporation's 1992 Stock Option Plan.
The Board of Directors has a Finance and Audit Committee, currently
comprised of Ms. Allen and Messrs. Alt (Chair), Firestone, Maccini, Misiewicz
and Stevens, which is charged with the responsibility of reviewing the
Corporation's internal auditing procedures and accounting controls and considers
the selection and independence of the Corporation's outside auditors. The
Finance and Audit Committee met four times during the Corporation's last fiscal
year.
The Board of Directors does not have a nominating committee as the Board as
a whole considers the qualifications and recommends to the stockholders the
election of directors of the Corporation. Stockholders may recommend nominees
for election as directors by writing to the President of the Corporation.
The Board of Directors held a total of four meetings during 2001. Each
member of the Board of Directors attended at least 75% of the aggregate number
of meetings of the Board and all committees on which he or she served.
COMPENSATION OF DIRECTORS
Each director of the Corporation who is not an employee receives fees of
$4,000 per year, plus $1,000 for each Board or committee meeting attended in
person and $200 for each telephonic meeting attended. In addition, the Chairs of
the Committees receive $2,000 per year. Under the Corporation's 1997
Non-Employee Directors Stock Option Plan, options are granted to the directors
in lieu of these fees. On the last business day of January of each year each
eligible director is automatically granted an option to purchase that number of
shares of the Corporation's Class A Common Stock equal to the amount of the
retainer divided by the fair market value of the Class A Common Stock on the
last trading day of the December immediately preceding the date of grant less
$.01 per share. The options are immediately vested and exercisable at an
exercise price of $.01 per share and may be exercised for a period of 10 years
from the date of grant. Directors may elect to receive life insurance premiums
in lieu of their compensation. Mr. Firestone is the only director to make such
election and, as a result, the Corporation paid life insurance premiums on his
behalf in the amount of $16,992 in 2001. Directors who are employees receive no
additional compensation for serving as directors or attending Board or Committee
meetings.
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FINANCE AND AUDIT COMMITTEE REPORT
The Finance and Audit Committee operates under a charter that was last
amended and restated on March 28, 2001. As set forth in the charter, the role of
the Committee is to assist the Board of Directors in its oversight of the
Corporation's financial reporting process. In the Board of Director's judgment,
all of the members of the Audit Committee are "independent" as required by the
listing standards of the American Stock Exchange.
The Corporation's management is responsible for the preparation,
presentation and integrity of the Corporation's financial statements, the
Corporation's accounting and financial reporting principles, and the
Corporation's internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. The independent
auditors are responsible for auditing the Corporation's financial statements and
expressing an opinion as to their conformity with generally accepted accounting
principles. The Committee's responsibility is generally to monitor and oversee
these processes.
In the performance of its oversight function, the Committee:
- Reviewed and discussed the Corporation's audited financial statements
for the year ended December 31, 2001 with the Corporation's management
and its independent auditors;
- Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication
with Audit Committees, as currently in effect;
- Received from the independent auditors written affirmation of their
independence as required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees, as currently in
effect.
The members of the Committee are not professionally engaged in the practice
of auditing or accounting and are not experts in the fields of accounting or
auditing, including in respect of auditor independence. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent auditors. As a
result, the Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures. In
addition, the Committee's considerations and discussions referred to above do
not assure that the audit of the Corporation's financial statements has been
carried out in accordance with generally accepted auditing standards, that the
financial statements are presented in accordance with generally accepted
accounting principles or that the Corporation's auditors are in fact
independent.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Committee
referred to above and in its charter, the Committee recommended to the Board
that the audited financial statements be included in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 2001 filed with the
Securities and Exchange Commission.
FINANCE AND AUDIT COMMITTEE
Kristin Allen
Donald Alt (Chair)
Jonathan Firestone
Robert J. Maccini
Joseph P. Misiewicz
Gary Stevens
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COMPENSATION COMMITTEE REPORT
OVERVIEW
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of six independent non-employee members of the Board of Directors. The
responsibilities of the Committee include reviewing the Corporation's management
compensation programs and making recommendations to the Board of Directors with
respect to compensation.
The Committee believes that in order to maximize shareholder value the
Corporation must have a compensation program designed to attract and retain
superior management at all levels in the organization. The objective of the
management compensation program is to both reward short-term performance and
motivate long-term performance in such a way that management's incentives are
aligned with the interests of the stockholders. The Committee believes that
management at all levels should have a meaningful equity participation in the
ownership of the Corporation, although no specific target level of equity
holdings has been established by the Committee.
EXECUTIVE COMPENSATION PROGRAM
In order to meet these objectives, the Corporation's executive compensation
program consists of three primary components: salary, bonuses, and stock
options. The Committee has established guidelines for the annual cash
compensation for the six senior executives named in the Summary Compensation
Table and the station managers (the "executives"). Under these guidelines, the
executives' aggregate budgeted cash compensation should not exceed a targeted
percentage of budgeted operating profits (i.e., earnings before taxes, interest,
depreciation, amortization and extraordinary items) before deduction of the
executives' budgeted cash compensation. Salaries are established for each
executive officer on the basis of the scope of responsibility and accountability
within the Corporation, and take into account publicly available compensation
levels for comparable positions in the entities which comprise the M Street
Radio Stock Index used for the Performance Graph set forth on page 8 hereof (the
"Peer Group"). The Committee attempts to set compensation at levels
approximating the median compensation rates of comparable positions in the Peer
Group. Bonuses for the executives are determined based on the Committee's
judgment of the Corporation's operating profitability, growth in revenues and
profits and overall financial condition, and the individual executive's
contribution to these results.
Grants of stock options are a major part of the Corporation's long-term
incentive strategy. The Committee believes that options provide executives with
an economic stake in the Corporation's future parallel to that of the
stockholders.
On the basis of the factors described above and the Committee's subjective
judgment of each officer's performance, none of which factors are given specific
numerical weighting, the Committee set the salaries, bonuses and stock option
grants of the executives, including the President and Chief Executive Officer.
The compensation of the senior executives was determined based on the Company's
overall performance. Comparison of the Company's stock performance to its Peer
Group was not a significant consideration in the determination of bonus amounts
and stock option awards since the Committee believes the Company's operating
performance is not directly reflected in the Company's stock valuation, owing in
part to its relatively small capitalization and consequent lack of broad-based
institutional ownership. The Committee intends to reevaluate its compensation
policies on an annual basis.
In 1998 options were granted to Messrs. Christian, Bush and Lada based on a
five year plan whereby the total number of options that would normally have been
granted over the period 1998 to 2003 were granted in 1998. In addition to the
historic five year vesting period that would have been normal for prior grants,
these options require that a target stock price representing minimally accepted
annual stock price growth be attained and maintained for a period of 40
consecutive days. In 2001, the Committee reduced the 40 consecutive days
requirement to 5 consecutive days. It is believed that this structure will
assure that these three members of the
7
management team are directly tied to shareholders interests, mainly growing the
stock price. The stock price target has been attained and maintained for the
newly-required 5 day period. As a result, 60% of these options have now vested.
Based on the Corporation's history of sound financial performance, including the
fact that for the year ended December 31, 2000 the Corporation's revenues for
the first time exceeded $100 million, the Committee determined in June 2001 to
make a one-time grant of options to the executives in addition to those that
normally would have been granted in accordance with past practices. Messrs.
Christian, Bush and Lada were included in this one-time grant. As a result, they
granted options to purchase 18,542 shares, 13,876 shares and 14,755 shares,
respectively, to them in 2001.
CEO COMPENSATION
In 2001, the Corporation's most highly compensated executive officer was
Edward K. Christian, President and Chief Executive Officer. Options to purchase
18,542 shares of Class B Common Stock at a price of $17.80 per share were
granted to Mr. Christian in 2001 and he received a bonus of $425,000. In
accordance with his employment agreement, Mr. Christian also received a bonus of
$386,235 to forgive 20% of a loan from the Corporation and certain related
taxes, as described below under "Employment Contracts" and "Certain
Transactions." In 2002, the Corporation entered into a seven year employment
agreement with Mr. Christian, as described below under "Employment Contracts."
In determining the 2001 bonus paid to Mr. Christian, the Committee took
into account the Corporation's financial performance in 2001 and the criteria
discussed above. During the year ended December 31, 2001, the Corporation's net
revenue increased by 2.2% over the year ended December 31, 2000 to $104 million.
Broadcast cash flow (defined as station operating income excluding depreciation,
amortization and corporate general and administrative expenses) decreased by
5.0% and net income for the year ended December 31, 2001 was $8.6 million
compared to $8.7 million for the year ended December 31, 2000. After-tax cash
flow (defined as net income plus depreciation, amortization [excluding film
rights], other expense, and deferred taxes) decreased by 2.4% over the year
ended December 31, 2000. Set forth below is a chart summarizing the
Corporation's operating results over the past three fiscal years.
YEARS ENDED DECEMBER 31,
-------------------------------
2001 2000 1999
---- ---- ----
(IN THOUSANDS)
Net Operating Revenue.................................. $103,956 $101,746 $90,020
Broadcast Cash Flow.................................... $ 37,316 $ 39,259 $33,468
Net Income............................................. $ 8,565 $ 8,650 $ 8,552
After-tax Cash Flow.................................... $ 21,000 $ 21,515 $17,585
Under Section 162(m) of the Internal Revenue Code and the regulations
promulgated thereunder, deductions for employee remuneration in excess of $1
million that is not performance-based are disallowed for publicly-traded
companies. In order to qualify some or all of the bonus portion of the Chief
Executive Officer's compensation package as performance-based compensation
within the meaning of Section 162(m), the Board adopted the Chief Executive
Officer Annual Incentive Plan effective beginning in the year 2000. However, the
Board, in its discretion, may also award bonuses to Mr. Christian which are not
in accordance with this Plan. Any such discretionary bonuses may not qualify as
performance based compensation within the meaning of Section 162(m) of the
Internal Revenue Code. Of Mr. Christian's bonus under the Plan in 2001, $300,000
qualified as performance-based compensation and the remaining $125,000 did not.
COMPENSATION COMMITTEE
Kristin Allen
Donald Alt
Jonathan Firestone
Robert J. Maccini
Joseph P. Misiewicz
Gary Stevens (Chair)
8
COMMON STOCK PERFORMANCE
Set forth below is a line graph comparing the cumulative total stockholder
return for the years ended December 31, 1997, 1998, 1999, 2000 and 2001 of the
Corporation's Class A Common Stock against the cumulative total return of the
AMEX Market Value Index and the M Street Radio Stock Index. The graph and table
assume that $100 was invested on December 31, 1996 in each of the Corporation's
Class A Common Stock, the AMEX Market Value Index and the M Street Radio Stock
Index and that all dividends were reinvested.
[PERFORMANCE GRAPH]
----------------------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
----------------------------------------------------------------------------------------------------------------
Saga Communications Inc. $100.00 $ 136.2 $ 164.3 $ 202.8 $ 149.0 $ 207.3
----------------------------------------------------------------------------------------------------------------
AMEX Stock Market (US Companies) $100.00 $ 125.3 $ 134.5 $ 176.8 $ 165.7 $ 150.8
----------------------------------------------------------------------------------------------------------------
M Street Radio Stock Index $100.00 $ 142.5 $ 161.8 $ 202.6 $ 162.4 $ 147.2
----------------------------------------------------------------------------------------------------------------
The comparisons in the above table are required by the SEC. This table is
not intended to forecast or to be indicative of any future return on the
Corporation's Class A Common Stock.
9
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended
December 31, 2001, 2000 and 1999 of the Corporation's chief executive officer
and the other most highly compensated executive officers whose salary and bonus
exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
------
SECURITIES
ANNUAL UNDERLYING
COMPENSATION OPTIONS/
------------------- SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES)(1) COMPENSATION(2)
--------------------------- ---- ------ ----- ----------- ---------------
Edward K. Christian.......................... 2001 $395,859 $811,235(3) 18,542 $3,310
President, Chief Executive Officer 2000 $382,472 $756,502(3) -- $3,221
1999 $371,332 $681,502(3) -- $3,154
Steven J. Goldstein.......................... 2001 $307,000 $ 75,000 26,962 $2,288
Executive Vice President and Group 2000 $297,044 $ 75,000 29,968 $2,184
Program Director 1999 $288,393 $ 75,000 40,366 $2,289
Warren S. Lada............................... 2001 $214,231 $ 25,000 14,755 $1,622
Senior Vice President-Operations 2000 $190,181 $ 25,000 -- $1,212
1999 $184,608 $ 25,000 -- $ 997
Samuel D. Bush............................... 2001 $204,904 $ 25,000 13,876 $1,458
Vice President, Chief 2000 $183,750 $ 25,000 -- $1,104
Financial Officer 1999 $177,693 $ 25,000 -- $ 949
Marcia K. Lobaito............................ 2001 $104,981 $ 15,000 14,544 $ 662
Vice President, Corporate 2000 $ 98,000 $ 15,000 13,183 $ 567
Secretary, Director of 1999 $ 93,000 $ 15,000 17,356 $ 527
Business Affairs
Catherine A. Bobinski........................ 2001 $104,981 $ 15,000 14,544 $ 567
Vice President, Controller, 2000 $ 98,000 $ 15,000 13,183 $ 501
Chief Accounting Officer 1999 $ 93,000 $ 15,000 17,356 $ 481
---------------
(1) Restated to reflect five-for-four stock split effective December 15, 1999.
(2) Consists of life insurance premiums or payments in lieu thereof in 2001,
2000 and 1999.
(3) Includes bonus of $386,235 to forgive 20% of a loan from the Corporation and
federal and state income tax liabilities related to such loan. See
"Employment Contracts" below and "Certain Transactions."
10
The following table sets forth certain information relating to option
grants pursuant to the Corporation's 1992 Stock Option Plan (the "Option Plan")
in the year ended December 31, 2001 to the individuals named in the Summary
Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
------------------------------------------------------------------ VALUE AT ASSUMED
% OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR GRANT- OPTION
OPTIONS/ EMPLOYEES BASE DATE MARKET TERM(3)(4)
SARS IN FISCAL PRICE PRICE EXPIRATION --------------------
NAME GRANTED(1)(2) YEAR ($/SH) PER SHARE DATE 5% 10%
---- ------------- ------------ -------- ----------- ---------- -- ---
Edward K. Christian............... 18,542 9% 17.80 17.80 6/6/11 $207,565 $526,011
Steven J. Goldstein............... 26,962 12% 17.80 17.80 6/6/11 $301,821 $764,875
Warren S. Lada.................... 14,755 7% 17.80 17.80 6/6/11 $165,172 $418,579
Samuel D. Bush.................... 13,876 6% 17.80 17.80 6/6/11 $155,332 $393,643
Marcia K. Lobaito................. 14,544 7% 17.80 17.80 6/6/11 $162,810 $412,593
Catherine A. Bobinski............. 14,544 7% 17.80 17.80 6/6/11 $162,810 $412,593
---------------
(1) None of the options granted were options with tandem SARs and no
free-standing SARs were granted.
(2) Granted to the named executive officers on June 1, 2001 pursuant to the
Option Plan. The options become exercisable in 20% increments on March 1,
2002, 2003, 2004, 2005 and 2006, respectively. If a Change of Control (as
defined in the Option Plan) occurs, these options would become immediately
exercisable.
(3) Potential Realizable Value is based on the assumed growth rates for the
ten-year option term. 5% annual growth results in a stock price per share of
$28.99 and 10% results in a stock price per share of $46.17.
(4) The actual value, if any, an executive may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised, so that there is no assurance the value realized by an executive
will be at or near the amounts reflected in this table.
The following table sets forth certain information with respect to
unexercised options to purchase the Corporation's Common Stock granted under the
Option Plan to the individuals named in the Summary Compensation Table above. No
options were exercised during the year ended December 31, 2001 by the
individuals named in the Summary Compensation Table.
FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END(1) SARS AT FY-END(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Edward K. Christian....................................... 200,479 146,368 $1,587,024 $1,021,655
Steven J. Goldstein....................................... 125,352 89,515 $1,628,986 $ 308,261
Warren S. Lada............................................ 117,764 61,450 $1,330,674 $ 393,002
Samuel D. Bush............................................ 71,040 59,152 $ 552,400 $ 384,710
Marcia K. Lobaito......................................... 26,572 41,144 $ 235,142 $ 135,076
Catherine A. Bobinski..................................... 26,572 41,144 $ 235,142 $ 135,076
---------------
(1) Reflects five-for-four stock splits effective July 31, 1995, April 30, 1996,
April 1, 1997, May 29, 1998 and December 15, 1999.
(2) Based on the closing price on the American Stock Exchange of the
Corporation's Class A Common Stock on December 31, 2001 ($20.70).
11
EMPLOYMENT CONTRACTS
Mr. Christian had an employment agreement with the Corporation which
expired in March 2002. The Corporation entered into a new seven-year employment
agreement with Mr. Christian in March 2002 that is effective April 1, 2002. Both
agreements provide for certain compensation, death, disability and termination
benefits, as well as the use of an automobile. The 2001 base annual salary under
the original agreement was $395,859, subject to annual cost of living
adjustments. The 2002 base annual salary under the new agreement is $450,000
effective April 1, 2002, increasing to $500,000 per year effective January 1,
2003. The new agreement also provides for annual cost of living adjustments. The
agreements provide that he is eligible for annual bonuses and stock options to
be awarded at the discretion of the Board of Directors. The agreements provide
that Mr. Christian's aggregate compensation in any year may not be less than his
average aggregate annual compensation for 1994, 1995 and 1996 in the original
agreement and for the prior three years in the new agreement, unless his or the
Corporation's performance shall have declined substantially. The agreements may
be terminated by either party in the event of Mr. Christian's disability for a
continuous period of six months in the original agreement and eight months in
the new agreement, or an aggregate period of nine months in the original
agreement and twelve months in the new agreement within any 18 month period. In
addition, the Corporation may terminate the agreement for cause and Mr.
Christian may terminate the agreement at any time after the sale of all or
substantially all of the Corporation's assets or the merger of the Corporation
if the Corporation is not the surviving entity.
The agreements provide that upon the sale or transfer of control of the
Corporation, Mr. Christian's employment will be terminated and he will be paid
an amount equal to five times the average of his total compensation for the
preceding three years plus an additional amount as is necessary for applicable
income taxes related to the payment.
The original employment agreement was amended effective December 8, 1998 to
provide that the unpaid balance of his note to the Corporation in the amount of
$690,700 (see "Certain Transactions -- Loan to Principal Stockholder") will be
ratably forgiven 20% per year in each of the years 1998, 1999, 2000, 2001 and
2002.
The agreements provide that Mr. Christian's bonuses would be paid in
accordance with the Chief Executive Officer Annual Incentive Plan. However, the
Board, in its discretion, may also award bonuses to Mr. Christian that are not
in accordance with this Plan. Any such discretionary bonuses may not qualify as
performance based compensation within the meaning of Section 162(m) of the
Internal Revenue Code.
The agreements each contain a covenant not to compete restricting Mr.
Christian from competing with the Corporation in any of its markets during the
term of the agreement and for a three year period thereafter.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors, and persons who own more than 10% of a
registered class of the Corporation's equity securities ("insiders"), to file
reports of ownership and changes in ownership with the SEC. Insiders are
required by SEC regulation to furnish the Corporation with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Corporation, the Corporation believes that during 2001 all
Section 16(a) filing requirements applicable to its insiders were complied with,
except that Steven J. Goldstein inadvertently failed to file on a timely basis
one Section 16(a) form relating to two transactions involving 7,000 shares.
12
CERTAIN TRANSACTIONS
LOANS TO PRINCIPAL STOCKHOLDER
In 1990, Boston Ventures Limited Partnership made a loan to Mr. Christian
in the amount of $690,700 to finance his capital contribution to Saga
Communications Limited Partnership. Pursuant to the reorganization of the
Corporation in December 1992, the original note evidencing such loan was
cancelled and a new note in such amount was issued to the Corporation by Mr.
Christian. The loan from the Corporation bears interest at a rate per annum
equal to the lowest rate necessary to avoid the imputation of income for federal
income tax purposes. Although the loan had been secured by the Class B Common
Stock owned by Mr. Christian, in December 1998 the Board of Directors authorized
the termination of the pledge agreement. As described above, the loan is being
ratably forgiven 20% per year in each of the years 1998, 1999, 2000, 2001 and
2002. See "Compensation of Directors and Officers -- Employment Contracts."
In May 1999 the Corporation lent $125,000 to Mr. Christian. The loan bore
interest at 7% per annum. Principal and interest on the loan was repaid in two
equal installments on May 5, 2000 and 2001. Mr. Christian loaned the proceeds of
his loan to Surtsey Productions, Inc., a company owned by his daughter, to
finance the purchase of the assets of television station KVCT, Victoria, Texas.
Under the ownership rules of the Federal Communications Commission the
Corporation is prohibited from owning this station. Surtsey Productions, Inc.
has leased KVCT to the Corporation exclusively for sales and programming. Under
the 16 year lease agreement, the Corporation made two lump-sum payments of
approximately $118,000 and $122,000 in 2001 and 2002, respectively, and makes
lease payments of $2,000 per month.
A number of the Corporation's radio and television stations have utilized
the graphic design services of Surtsey Productions, a company owned by Mr.
Christian's daughter. For the year ended December 31, 2001 the total fees paid
to Surtsey Productions for such services was approximately $112,000. Surtsey
Productions leases office space in a building owned by the Corporation and paid
the Corporation rent of approximately $33,000 during the year ended December 31,
2001.
ACQUISITION OF STATION FROM AFFILIATE OF DIRECTOR
In February 2001 the Corporation acquired an FM radio station (WVVR-FM) for
approximately $7,000,000, including approximately $1,000,000 of the
Corporation's Class A Common Stock. The radio station was owned by a company in
which Donald Alt, a director of the Corporation, had a 35% beneficial ownership
interest. The purchase price was determined on an arm's length basis. The
Corporation also obtained an opinion from an independent appraiser that the
purchase price was fair from a financial point of view.
COMMISSION PAYABLE TO AFFILIATE OF DIRECTOR
In February 2002 the Corporation entered into an agreement to acquire two
AM and FM radio stations (WKNE-AM/FM and WKVT-AM/FM) for approximately
$9,075,000. This acquisition is expected to close during the second quarter of
2002. Upon closing, a company controlled by Robert Maccini, a director of the
Corporation, will be entitled to a brokerage commission of $200,000.
RATIFICATION OF SELECTION OF AUDITORS
The selection, by a majority of the members of the Board who are not
officers or employees of the Corporation, of Ernst & Young LLP as independent
auditors to audit the books and accounts of the Corporation for the fiscal year
ending December 31, 2002 shall be submitted to the Annual Meeting for
ratification. Such ratification requires the affirmative vote of a majority of
the shares entitled to vote thereon present in person or represented by proxy at
the Annual Meeting when a quorum is present. Representatives of Ernst & Young
LLP will be present at the Annual Meeting and will be given an opportunity to
make a statement if they desire to do so and will respond to appropriate
questions of stockholders.
13
The firm of Ernst & Young LLP has advised the Corporation that neither it
nor any of its members has any direct financial interest in the Corporation as a
promoter, underwriter, voting trustee, director, officer or employee.
The Board recommends a vote FOR ratification of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 2002.
AUDIT FEES
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the Corporation's consolidated financial statements
for the year ended December 31, 2001 and the reviews of the Corporation's
financial statements included in its Forms 10-Q filed during 2001 were $190,800.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed by Ernst & Young LLP in 2001 for information technology
consulting services relating to financial information systems design and
implementation.
ALL OTHER FEES
The aggregate fees billed by Ernst & Young LLP for services rendered to the
Corporation, other than the audit fees discussed above, for the year ended
December 31, 2001 were $109,947. These fees related primarily to tax services
and employee benefit plan audits.
OTHER MATTERS
Management does not know of any matters which will be brought before the
Annual Meeting other than those specified in the notice thereof. However, if any
other matters properly come before the Annual Meeting, it is intended that the
persons named in the form of proxy, or their substitutes acting thereunder, will
vote thereon in accordance with their best judgment.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 2001
Annual Report to Stockholders, which has been provided to the stockholders
concurrently herewith. Such report and the financial statements contained
therein are not to be considered as a part of this soliciting material.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Under the regulations of the SEC, a record or beneficial owner of shares of
the Corporation's Common Stock may submit proposals on proper subjects for
action at the 2003 Annual Meeting of Stockholders of the Corporation. All such
proposals must be mailed to the Corporation at 73 Kercheval Avenue, Grosse
Pointe Farms, Michigan 48236 and must be received at that address on or before
December 17, 2002, in order to be included in the Corporation's proxy statement
relating to the 2003 Annual Meeting. All such proposals which are not to be
included in the Corporation's proxy statement relating to the 2003 Annual
Meeting must be received at the above address on or before March 1, 2003.
14
EXPENSE OF SOLICITATION OF PROXIES
All the expenses of preparing, assembling, printing and mailing the
material used in the solicitation of proxies by the Board will be paid by the
Corporation. In addition to the solicitation of proxies by use of the mails,
officers and regular employees of the Corporation may solicit proxies on behalf
of the Board by telephone, telegram or personal interview, the expenses of which
will be borne by the Corporation. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
materials to the beneficial owners of stock held of record by such persons at
the expense of the Corporation.
By order of the Board of Directors,
MARCIA LOBAITO
Secretary
Grosse Pointe Farms, Michigan
April 15, 2002
15
1161-PS-02
Regardless of whether you plan to attend the Annual Meeting of Stockholders,
you can be sure your shares are represented at the meeting by returning your
proxy in the enclosed envelope.
On March 4, 2002, the Company reported net revenue of $104.0 million, broadcast
cash flow of $27.3 million and net income of $8.6 million.
On February 19, 2002, the Company announced that it had entered into an
agreement to purchase the assets of WKNE-AM/FM, Keene, NH and WKVT-AM/FM,
Brattleboro, VT.
DETACH HERE ZSBC12
PROXY
SAGA COMMUNICATIONS, INC.
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward K. Christian, Samuel D. Bush and
Marcia K. Lobaito, or any one or more of them, attorneys with full power of
substitution to each for and in the name of the undersigned, with all powers
the undersigned would possess if personally present to vote the Class A Common
Stock, $.01 par value, of the undersigned in Saga Communications, Inc. at the
Annual Meeting of its Stockholders to be held May 13, 2002 or any adjournment
thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, AND 3.
----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
----------- -----------
[SAGA LOGO]
C/O EQUISERVE THIS IS YOUR PROXY.
P.O. BOX 43068 YOUR VOTE IS IMPORTANT.
PROVIDENCE, RI 02940
-----------------
VOTE BY TELEPHONE
-----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
--------------------------------------------------------------------------------
Follow these four easy steps:
1. Read the accompanying Proxy Statement/Prospectus and Proxy Card.
2. Call the toll-free number 1-877-PRX-VOTE (1-877-779-8683).
3. Enter your Voter Control Number located on your Proxy Card above your name.
4. Follow the recorded instructions.
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE. Telephone voting will be available until 12 p.m. E.S.T. on
May 12, 2002.
----------------
VOTE BY INTERNET
----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
--------------------------------------------------------------------------------
Follow these four easy steps:
1. Read the accompanying Proxy Statement/Prospectus and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/sga
3. Enter your Voter Control Number located on your Proxy Card above your name.
4. Follow the instructions provided.
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/sga. Internet voting will be available until 12
p.m. E.S.T. on May 12, 2002.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE ZSGC11
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR ALL
PROPOSALS.
1. ELECTION OF DIRECTORS: NOMINEES: (01) Jonathan Firestone, (02) Joseph P.
Misiewicz, (03) Edward K. Christian, (04) Kristin M. Allen, (05) Donald J.
Alt, (06) Gary Stevens, (07) Robert J. Maccini
FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
[ ] [ ]
[ ]
---------------------------------------------
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name above
2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Corporation for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may property come before the meeting or any adjournment
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears hereon. When shares are held in more than
one name, including joint tenants, each party should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such.
Signature_______________ Date:_________ Signature:_______________ Date__________