-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WDDW+Cj52L9FkA19s9fKyeCDjraPlqbvdE91dwWwjclJ1Kz9tw/MXEHXF2Du6VAl hv0zKcyoWJlAiIDIXo0Y+A== 0000799319-94-000018.txt : 19970924 0000799319-94-000018.hdr.sgml : 19970924 ACCESSION NUMBER: 0000799319-94-000018 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940509 FILED AS OF DATE: 19940509 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDB COMMUNICATIONS GROUP INC CENTRAL INDEX KEY: 0000799319 STANDARD INDUSTRIAL CLASSIFICATION: 4899 IRS NUMBER: 930933098 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 000-14972 FILM NUMBER: 94526686 BUSINESS ADDRESS: STREET 1: 10525 W WASHINGTON BLVD CITY: CULVER CITY STATE: CA ZIP: 90232 BUSINESS PHONE: 2138709000 PRE 14A 1 PRELIMINARY PROXY STATEMENT 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 \ \ Definitive Proxy Statement \ \ Definitive Additional Materials \ \ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a- 12 IDB Communications Group, Inc. (Name of Registrant as Specified in Its Charter) IDB Communications Group, Inc. (Name of Person(s) Filing the Proxy Statement) Payment of Filing Fee (check the appropriate box): \X\ $125 per Exchange Act Rule 0-11 (c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). \ \ $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). \ \ 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: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transaction: \ \ Check box if any part of the fee is offset as provided in 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.: _________________________________________________ (3) Filing party: _________________________________________________ (4) Dated filed: _________________________________________________ [LOGO] IDB COMMUNICATIONS GROUP, INC. 10525 West Washington Boulevard Culver City, California 90232-1922 _______, 1994 Dear Stockholder: You are cordially invited to attend the 1994 Annual Meeting of Stockholders (the "Annual Meeting") of IDB Communications Group, Inc. (the "Company" or "IDB"), which will be held at 10:00 a.m. (local time) on Thursday, June 30, 1994 at the Loews Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, California. At the Annual Meeting you will be asked to (a) elect seven directors of the Company; (b) amend the 1992 Incentive Stock Plan to increase the maximum number of shares of Common Stock available for awards to 8,150,000 and limit the number of options that may be granted to an individual in any one year to 500,000 (the "Stock Plan Proposal"); (c) approve the grant of stock options to certain officers of the Company (the "Option Proposal"); (d) approve an amendment to the Company's Restated Certificate of Incorporation which would increase the number of authorized shares of Common Stock, par value $.01 per share ("Common Stock"), of the Company from 200,000,000 shares to 500,000,000 shares (the "Charter Amendment Proposal"); and (e) transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE TO APPROVE THE CHARTER AMENDMENT PROPOSAL, THE STOCK PLAN PROPOSAL AND THE OPTION PROPOSAL AND TO ELECT THE SEVEN DIRECTOR NOMINEES PROPOSED BY THE BOARD OF DIRECTORS OF THE COMPANY. IN VIEW OF THE IMPORTANCE OF THE ACTIONS TO BE TAKEN AT THE ANNUAL MEETING, YOU ARE URGED TO READ CAREFULLY THE ACCOMPANYING PROXY STATEMENT AND, REGARDLESS OF THE NUMBER OF SHARES YOU OWN, WE REQUEST THAT YOU COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ACCOMPANYING PREPAID ENVELOPE. YOU MAY, OF COURSE, ATTEND THE ANNUAL MEETING AND VOTE IN PERSON, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD. Sincerely, Jeffrey P. Sudikoff Chairman of the Board and Chief Executive Officer [Logo] IDB COMMUNICATIONS GROUP, INC. 10525 West Washington Boulevard Culver City, California 90232-1922 NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS To be Held June 30, 1994 TO THE STOCKHOLDERS OF IDB COMMUNICATIONS GROUP, INC.: The 1994 Annual Meeting of Stockholders (the "Annual Meeting") of IDB Communications Group, Inc., a Delaware corporation (the "Company" or "IDB"), will be held at the Loews Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, California, at 10:00 a.m. (local time) on Thursday, June 30, 1994, for the following purposes: (a) To elect the following seven individuals as directors of the Company: Jeffrey P. Sudikoff, Edward R. Cheramy, Peter F. Hartz, William L. Snelling, Franklin E. Fried, Joseph M. Cohen and Stephen N. Carroll; (b) To consider and act upon a proposal to amend the Company's 1992 Incentive Stock Plan to increase the maximum number of shares of Common Stock available for awards to 8,150,000 and limit the number of options that may be granted to an individual in any one year to 500,000; (c) To consider and act upon a proposal to approve the grant of stock options to certain officers of the Company; (d) To consider and act upon a proposal to amend the Restated Certificate of Incorporation of the Company to increase the number of authorized shares of Common Stock, par value $.01 per share ("Common Stock"), from 200,000,000 shares to 500,000,000 shares; and (e) To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. The Board of Directors has fixed the close of business on June 6, 1994 as the record date for the determination of stockholders entitled to vote at the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting is available for review at the offices of the Company's transfer agent, Mellon Securities Transfer Services, in Calabasas, California. A copy of the Company's Annual Report, including financial statements for the fiscal year ended December 31, 1993, is enclosed with this Notice but is not to be considered part of the proxy solicitation material. By Order of the Board of Directors Neil J Wertlieb Secretary Los Angeles, California _______, 1994 [LOGO] IDB COMMUNICATIONS GROUP, INC. 10525 West Washington Boulevard Culver City, California 90232-1922 _______________ PROXY STATEMENT _______________ GENERAL INFORMATION This Proxy Statement is being sent on or about June 8, 1994 in connection with the solicitation of proxies by the Board of Directors of IDB Communications Group, Inc., a Delaware corporation (the "Company" or "IDB"). The proxies are for use at the Company's 1994 Annual Meeting of Stockholders (the "Annual Meeting"), which will be held at 10:00 a.m. (local time) on Thursday, June 30, 1994 at the Loews Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, California, and at any meetings held upon the adjournment or postponement thereof. The record date for the Annual Meeting is the close of business on June 6, 1994 (the "Record Date"), and all holders of record of shares of IDB's Common Stock, par value $.01 per share (the "Common Stock"), on the Record Date are entitled to notice of the Annual Meeting and to vote at the Annual Meeting and any meetings held upon adjournment or postponement thereof. A proxy form is enclosed. Whether or not you plan to attend the Annual Meeting in person, please date, sign and return the enclosed proxy as promptly as possible, in the postage prepaid envelope provided, to insure that your shares will be voted at the Annual Meeting. Any stockholder who returns a proxy in such form has the power to revoke it at any time prior to its effective use by filing a signed written notice revoking it or a duly executed proxy bearing a later date with the Secretary of the Company. Attendance at the Annual Meeting without filing such a written notice or proxy will not revoke a proxy previously filed with the Company. Unless contrary instructions are given, any such proxy, if not revoked, will be voted at the Annual Meeting: (a) for approval of a proposal (the "Charter Amendment Proposal") to amend the Company's Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock from 200,000,000 shares to 500,000,000 shares (the "Charter Amendment"); (b) for approval of a proposal (the "Stock Plan Proposal") to amend the Company's 1992 Incentive Stock Plan (as amended, the "1992 Stock Plan") to increase the number of shares of Common Stock available for awards to 8,150,000 and limit the number of options that may be granted to an individual in any one year to 500,000; (c) for approval of a proposal (the "Option Proposal" and together with the Stock Plan Proposal, the "Incentive Stock Proposals") to approve the grant of stock options to certain officers of the Company; (d) for the slate of nominees to the Company's board of directors (the "Board of Directors" or "Board"); and (e) as recommended by the Board of Directors with regard to all other matters, in its discretion. The only voting securities of the Company are the outstanding shares of Common Stock. As of the Record Date, the Company had __________ shares of Common Stock outstanding. For each share of Common Stock held on the Record Date, a stockholder is entitled to one vote on all matters to be considered at the Annual Meeting. The Company's Restated Certificate of Incorporation does not provide for cumulative voting. Under Delaware law, IDB's stockholders do not have any appraisal or similar dissenters' rights with respect to any matter to be acted upon at the Annual Meeting. The cost of preparing, assembling, printing and mailing this Proxy Statement and the enclosed proxy form, and the cost of soliciting proxies relating to the Annual Meeting will be borne by IDB. The Company may request banks and brokers to solicit their customers who beneficially own shares of Common Stock listed of record in names of nominees, and will reimburse such banks and brokers for their reasonable out-of-pocket expenses of such solicitations. The original solicitation of proxies by mail may be supplemented by telephone, telegram and solicitation by officers, directors and regular employees of the Company, but no additional compensation will be paid to such individuals. Requests for additional copies of proxy materials should be addressed to Neil J Wertlieb, Corporate Secretary, at the offices of the Company, 10525 West Washington Boulevard, Culver City, California 90232-1922. The Company was originally incorporated in California in September 1983 and was reincorporated in Delaware on September 30, 1986. "IDB" and the "Company" refer to IDB Communications Group, Inc. and its subsidiaries and, for periods prior to September 30, 1986, to its predecessor California corporation and subsidiaries. YOU ARE URGED TO VOTE UPON THE MATTERS PRESENTED AND TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IT IS IMPORTANT FOR YOU TO BE REPRESENTED AT THE MEETING. THE EXECUTION OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE PRESENT AT THE MEETING. THE DATE OF THIS PROXY STATEMENT IS _______, 1994. INTRODUCTION This Proxy Statement is being furnished to stockholders of the Company in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Annual Meeting to be held at 10:00 a.m. (local time), on Thursday, June 30, 1994 at the Loews Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, California. This Proxy Statement is first being mailed to stockholders of the Company on or about June 8, 1994. At the Annual Meeting or any adjournment or postponement thereof, stockholders of the Company will: (a) consider and act upon the Charter Amendment Proposal to approve the Charter Amendment; (b) consider and act upon the Stock Plan Proposal to amend the Company's 1992 Incentive Stock Plan; (c) consider and act upon the Option Proposal to approve the grant of stock options to certain officers of the Company; (d) elect a Board of seven directors; and (e) transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. VOTING AND PROXIES Voting Securities Only stockholders of record of IDB Common Stock at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. As of the Record Date, _______________ shares of IDB's Common Stock were issued and outstanding and held by _______ stockholders of record. Stockholders of record will be entitled to one vote for each share held on each matter to be acted upon or which may properly come before the Annual Meeting. Quorum and Voting Requirements The presence, either in person or by proxy, of the holders of a majority of the shares of IDB Common Stock outstanding on the Record Date is necessary to constitute a quorum at the Annual Meeting. The affirmative vote of a majority of the shares of IDB Common Stock represented and voting at the Annual Meeting of Stockholders will be required to approve the Charter Amendment Proposal, the Stock Plan Proposal and the Option Proposal. The director nominees who receive the greatest number of votes at the Annual Meeting will be elected to the Board of Directors of the Company. Shares of IDB Common Stock represented at the Annual Meeting by proxies that reflect abstentions will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum and for purposes of determining the outcome of any matter submitted to the stockholders for a vote. Abstentions, however, do not constitute a vote "for" or "against" any matter and thus have the practical effect of voting against a matter because an abstention from voting is one less vote for approval of such matter. Shares of IDB Common Stock referred to as "broker non-votes" will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum. However, for purposes of determining the outcome of any matter as to which a broker or nominee has physically indicated on the proxy that it does not have discretionary authority to vote, those shares will be treated as not present and not entitled to vote with respect to that matter. Any unmarked proxies, including those submitted by brokers or nominees, will be voted as indicated in the accompanying proxy, as summarized elsewhere in this Proxy Statement. Proxies; Right to Revoke Proxy All shares of IDB Common Stock that are represented at the Annual Meeting by properly executed proxies received prior to or at the Annual Meeting, and not revoked, will be voted at the Annual Meeting in accordance with the instructions indicated on such proxies. If no instructions are indicated, such proxies will be voted FOR approval of the Charter Amendment Proposal, the Stock Plan Proposal, the Option Proposal and to elect the seven director nominees selected by the Board of Directors of the Company. The Board of Directors of IDB does not know of any other matters that are to come before the Annual Meeting. If any other matters are properly presented at the Annual Meeting for consideration, the persons named in the enclosed proxy and acting thereunder will have discretion to vote on such matters in accordance with their best judgment, including any proposal to adjourn such Annual Meeting or otherwise concerning the conduct of such Annual Meeting. Any holder of IDB Common Stock returning the proxy enclosed with this Proxy Statement has the power to revoke such proxy at any time prior to the exercise thereof by giving written notice of such revocation, or by delivering a later dated proxy to the Corporate Secretary of IDB. Attendance at the Annual Meeting without filing such a written notice or proxy will not revoke a proxy previously filed with the Company. Valid proxies will be voted at the Annual Meeting and at any postponement or adjournment thereof in the manner specified herein. Expenses of Solicitation All costs of soliciting proxies in connection with the Annual Meeting will be borne by IDB. In addition to solicitation by mail, officers, directors and regular employees of IDB may solicit proxies from stockholders of IDB by telephone, telegram or in person. Such persons will receive no additional compensation for such services. In addition, IDB will request persons holding IDB Common Stock in their name and custody, or in the name of a nominee, to send proxy materials to their principals and will request authority for the execution of the proxies. IDB will reimburse such persons for the reasonable expenses in so doing. OWNERSHIP OF IDB COMMON STOCK The following table sets forth information regarding the ownership of the Company's shares of Common Stock as of March 15, 1994 by (a) stockholders known by the Company to own beneficially more than 5% of the Company's shares of Common Stock, (b) each director and nominee, (c) each executive officer named in the Summary Compensation Table and (d) all directors and executive officers as a group. Except as otherwise noted, the Company knows of no agreements among its stockholders that relate to voting or investment power of its shares of Common Stock.
Number of Percent of Shares Total Beneficially Outstanding Name Owned(1) Shares - - - - ----- ---------- ----------- Jeffrey P. Sudikoff . . . . . . . 4,775,587 6.5% Edward R. Cheramy(2) . . . . . . 756,889 1.0 Peter F. Hartz(3) . . . . . . . . 348,279 * Stephen N. Carroll . . . . . . 26,500 * Rudy Wann(4) . . . . . . . . . . 28,379 * James E. Kolsrud(5) . . . . . . . 34,631 * William L. Snelling(6) . . . . . 26,491 * Franklin E. Fried(7) . . . . . . 6,406 * Joseph M. Cohen(8) . . . . . . . 64,914 * All directors, nominees and executive officers as a group (10 6,074,887 8.2 persons)(9) . . . . . . . . . . FMR Corp.(10) . . . . . . . . . . 5,550,930 7.5 82 Devonshire Street Boston, Massachussets 02109 Metropolitan Life Insurance 4,521,336 6.1 Company(11) . . . . . . . . . . . One Madison Avenue New York, New York 10010
____________________ * Less than 1%. (1) Except as indicated in other notes to this table, each such stockholder listed has sole voting and dispositive power with respect to the shares beneficially owned, subject to any limitations on such power arising under community property or similar laws. (2) Shares are held by the Edward R. and Shirley J. Cheramy Trust, of which Mr. Cheramy and his spouse, Shirley J. Cheramy, are co-trustees. Includes 366,261 shares covered by outstanding stock options granted to Mr. Cheramy that are exercisable within 60 days of March 15, 1994. (3) Includes 10,335 shares covered by outstanding stock options granted to Mr. Hartz that are exercisable within 60 days of March 15, 1994. (4) Includes 25,229 shares covered by outstanding stock options granted to Mr. Wann that are exercisable within 60 days of March 15, 1994. (5) Includes 34,631 shares covered by outstanding stock options granted to Mr. Kolsrud that are exercisable within 60 days of March 15, 1994. (6) Shares are held by the Snelling 1986 Trust, of which Mr. Snelling and his spouse, Cleora A. Snelling, are co- trustees. Includes 19,325 shares covered by outstanding stock options granted to Mr. Snelling that are exercisable within 60 days of March 15, 1994. (7) Includes 6,406 shares covered by outstanding stock options granted to Mr. Fried that are exercisable within 60 days of March 15, 1994. (8) Shares are held by Joseph M. Cohen, Inc., a corporation that is wholly owned by Mr. Cohen. (9) Includes 474,983 shares covered by outstanding stock options granted to all directors and executive officers that are exercisable within 60 days of March 15, 1994. (10) Fidelity Management & Research Company, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 4,916,205 shares of Common Stock, and Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 634,725 shares of Common Stock. (11) Shares are held by State Street Research & Management Company, a wholly-owned subsidiary of Metropolitan Life Insurance Company. Metropolitan Life Insurance Company and State Street Research & Management Company have disclaimed beneficial ownership of all of such shares. MANAGEMENT OF IDB Directors and Executive Officers The Company's directors, persons nominated to become directors, executive officers and key employees are as follows:
Position or Director Name Age Office Since - - - - ----- --- ----------- -------- Jeffrey P. Sudikoff 38 Chairman of the 1983 Board, Chief Executive Officer and Director Edward R. 50 President and 1986 Cheramy(1)(2) . . . Director Peter F. Hartz . . 40 Senior Vice 1988 President, Sales and Marketing and Director Stephen N. Carroll 44 President--IDB -- WorldCom and director nominee Rudy Wann . . . . . 37 Vice President, -- Finance and Chief Financial Officer James E. Kolsrud . 49 Vice President, -- Engineering and Administration Neil J Wertlieb . . 35 Vice President, -- General Counsel and Secretary John A. Tagliaferro 50 President--IDB -- Broadcast William L. 63 Director 1983 Snelling(1)(3) . . Franklin E. 66 Director 1988 Fried(2)(3) . . . . Joseph M. 47 Director 1989 Cohen(1)(2)(3) . .
_______________________ (1) Member of Compensation Committee. (2) Member of Audit Committee. (3) Member of Stock Option Committee. Jeffrey P. Sudikoff, a founder of the Company, has been instrumental in the Company's development. Mr. Sudikoff has been the Chief Executive Officer and a director of the Company since its incorporation in September 1983 and has been Chairman of the Board of Directors since May 1986. He also served as the Company's President from September 1983 until March 1989. From 1978 until founding the Company, Mr. Sudikoff provided consulting services to the radio broadcast industry in the areas of programming production and distribution. Edward R. Cheramy was appointed President of the Company in March 1989 and has been a director since joining the Company in May 1986. Mr. Cheramy also served as Chief Financial Officer of the Company from September 1990 to November 1992 and from May 1986 to July 1989, and as Executive Vice President of the Company from May 1986 to March 1989. From 1978 until joining the Company, Mr. Cheramy was a partner in the accounting firm of Price Waterhouse. Peter F. Hartz joined the Company in November 1984 and has been Senior Vice President, Sales and Marketing since February 1991 and a director since April 1988. From June 1990 to January 1991, Mr. Hartz served as President of IDB Broadcast Division, and from September 1985 to February 1991, he served as Vice President, Sales and Marketing. From September 1980 to January 1982, Mr. Hartz was Director of Advertising and Promotion for Watermark, Inc., now ABC Watermark, a radio programming syndicator. From January 1982 to January 1983, Mr. Hartz served as Director of Marketing for Diamond P Sports, a television program supplier, and from January 1983 to November 1984, Mr. Hartz authored a nonfiction book about the financial community. Stephen N. Carroll, a 15-year veteran of the telecommunications industry, joined the Company in September 1991 as President of IDB WorldCom (formerly IDB&T). Prior to joining IDB, Mr. Carroll was employed by Comsat, Inc.'s World Systems Division, where he was Vice President of Sales and Business Development since 1986 and Director of Carrier Sales since 1983. During his tenure at Comsat, Inc., Mr. Carroll represented the services of Intelsat to U.S. long distance carriers, authorized users, and U.S. and international broadcasters. Rudy Wann joined the Company in May 1991 and has been Vice President, Finance since April 1992 and Chief Financial Officer since November 1992. From August 1990 to April 1991, Mr. Wann was Vice President, Finance and Chief Financial Officer of Tiger Media, Inc., a developer of computer software. From July 1979 to July 1990, Mr. Wann was with the accounting firm of Price Waterhouse, most recently as a senior manager, except for eleven months from August 1984 to June 1985 when he held various accounting positions with Inter-Con Systems, a government contractor. James E. Kolsrud joined the Company in October 1989 in connection with the Company's acquisition of CICI, Inc. and has served as Vice President of Engineering and Administration since November 1992. From October 1989 to November 1992, Mr. Kolsrud served as President of the Company's International division. From March 1989 through October 1989, Mr. Kolsrud served as President of CICI, Inc. when it was a subsidiary of Contel ASC. From April 1985 through March 1989, Mr. Kolsrud served as Vice President of Engineering and Operations at CICI, Inc. and from 1975 until joining CICI, Inc., Mr. Kolsrud held several positions for Comsat, Inc. including Senior Director of Engineering for World Systems Division and United States Representative to the Intelsat Board of Governors Technical Advisory Committee. Neil J Wertlieb joined the Company in August 1992 as a Vice President. He was promoted to General Counsel in October 1993 and to Secretary in November 1993. From October 1984 to June 1992, Mr. Wertlieb was an associate at the law firm of O'Melveny & Myers. John A. Tagliaferro joined the Company in January 1989 in connection with the Company's acquisition of the assets of Hughes Television Network. Mr. Tagliaferro has been President of IDB Broadcast Group since January 1991, and from January 1989 through January 1991, Mr. Tagliaferro served as President of the Company's HTN division. From December 1986 through January 1989, Mr. Tagliaferro served as President and Chief Operating Officer of Hughes Television Network. William L. Snelling, a founder of the Company, has been a director since the Company's incorporation in September 1983. In addition, Mr. Snelling served as Chairman of the Board and Chief Financial Officer from the Company's incorporation until May 1986 and as Secretary from the Company's incorporation until June 1991. Mr. Snelling is also currently the Secretary and a director of the Bank of Santa Maria, located in Santa Maria, California. From June 1991 through November 1992, Mr. Snelling was a private investor. From November 1992 to November 1993, Mr. Snelling was a consultant to Southwest Leasing Corporation. Since November 1993, Mr. Snelling has been the Chairman of California Commercial Spaceport, Inc., a company that launches low orbital communications satellites. Mr. Snelling also provides consulting services to the Company pursuant to a consulting agreement. See "Executive Compensation -- Compensation Committee Interlocks and Insider Participation." Franklin E. Fried has been a director of the Company since December 1988. From January 1989 to November 1991, Mr. Fried was the President of the San Diego-based Fried-Schegan, which specialized in entertainment and creative developments in the hospitality field. From 1977 to January 1989, Mr. Fried was President of Franklin E. Fried Associates, an entertainment and hospitality services firm. From 1984 to 1988, Mr. Fried was also President of the Delta Queen Steamboat Company, a firm specializing in the operation of paddleboats on the Mississippi River. From June 1991 through November 1992, Mr. Fried was the Chairman of Old New Orleans Seafood Company, a seafood distributor. Joseph M. Cohen has been a director of the Company since June 1989 and also served as a member of the Board of Directors from March 1988 through November 1988. From 1991 to January 1994, Mr. Cohen was the President of Spectacor West, overseeing all West Coast activities of the international sports and entertainment company Spectacor. Since January 1994, Mr. Cohen has been a consultant to Rainbow Programming Services for Sports Channel Networks, Inc. and has been involved in planning the construction of a new sports arena in Los Angeles. From January 1988 to March 1989, Mr. Cohen served as President and Chief Executive Officer of Z Channel, a pay television channel in Santa Monica, California. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and certain of its officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission") and the NASDAQ National Market System. Such directors, officers and stockholders are required by the Commission's regulations to furnish the Company with copies of all Section 16(a) reports they file. Based solely on its review of the copies of such reports received by it, or written representations from certain reporting persons that no such reports were required for those persons, the Company believes that from January 1, 1993 to December 31, 1993, all filing requirements applicable to such directors, officers and stockholders were complied with, except for the following: Each of Messrs. Sudikoff and Cohen filed Form 4 reports related to sales of shares of Common Stock in July 1993 more than ten days following the end of the month in which such transactions occurred. Mr. Fried filed a Form 4 report related to the exercise of stock options and subsequent sale of the resulting shares in May 1993 more than 10 days following the end of the month in which such transactions occurred. David W. Anderson failed to file a Form 4 report relating to the exercise of stock options and subsequent sale of the resulting shares of Common Stock; however, such transactions were reported in a timely filed Form 5 report. The Company's Board of Directors met ten times and acted by unanimous written consent once during the fiscal year ended December 31, 1993. No director attended fewer than 75% of the aggregate of (a) the total number of meetings of the Board of Directors held during his term as a director in 1993 and (b) the total number of meetings of all committees of the Board of Directors on which he served which were held during 1993. The Compensation Committee of the Board of Directors has the power and authority to establish and implement policies and procedures regarding the compensation of officers and employees of the Company. The Committee, which consists of Messrs. Cheramy, Snelling and Cohen, acted once by unanimous written consent during fiscal 1993. The Audit Committee of the Board of Directors reviews, reports and makes recommendations to the Board of Directors on all matters relating to the financial reporting process of the Company. The Audit Committee, which consists of Messrs. Cheramy, Fried and Cohen, met once during fiscal 1993. The Stock Option Committee of the Board of Directors administers the Company's 1992 Incentive Stock Plan. The Stock Option Committee, which consists of Messrs. Snelling, Fried and Cohen, meet twice and acted by written consent once during fiscal 1993. There is no nominating committee of the Board of Directors. Other than Mr. Snelling, a director of the Bank of Santa Maria, in Santa Maria, California, none of the nominees presently holds a directorship in any other company with a class of securities registered under, or otherwise subject to the reporting requirements of, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or registered under the Investment Company Act of 1940. Summary Compensation Table The table sets forth information concerning the compensation paid by the Company during the last three fiscal years to the Company's Chief Executive Officer and the four other most highly compensated executive officers of the Company.
Annual Compensation ---------------------------- Other Annual Name and Principal Position Year Salary Bonus(1) Compensation - - - - --------------------------- ---- ------- -------- ------------ Jeffrey P. Sudikoff 1993 $575,000 $400,000 (4) Chairman of the Board and 1992 500,000 -- (4) Chief Executive Officer 1991 480,000 -- (6) Edward R. Cheramy 1993 460,000 400,000 (4) President 1992 400,000 -- (4) 1991 390,000 -- (6) Peter F. Hartz 1993 190,800 25,000 (4) Senior Vice President, Sales 1992 180,000 53,125 (4) and Marketing 1991 162,500 25,000 (6) Rudy Wann(7) 1993 142,500 125,000 (4) Vice President, Finance 1992 121,667 15,000 (4) and Chief Financial Officer 1991 74,166 -- (6) James E. Kolsrud 1993 170,000 50,000 (4) Vice President of 1992 140,000 75,000 (4) Engineering and Administration 1991 134,000 -- (6) Long Term Compensation -------------- Securities Underlying All Other Name and Principal Position Year Options (2) Compensation (3) - - - - --------------------------- ---- ------------- ----------------- Jeffrey P. Sudikoff 1993 740,250(5) $4,497 Chairman of the Board and 1992 213,728 4,364 Chief Executive Officer 1991 86,820 (6) Edward R. Cheramy 1993 740,250(5) 4,497 President 1992 213,727 4,364 1991 86,820 (6) Peter F. Hartz 1993 157,500 4,497 Senior Vice President, Sales 1992 112,219 4,250 and Marketing 1991 52,095 (6) Rudy Wann(7) 1993 236,250(5) 3,562 Vice President, Finance 1992 32,288 3,292 and Chief Financial Officer 1991 17,366 (6) James E. Kolsrud 1993 63,000 3,212 Vice President of 1992 102,375 3,500 Engineering and Administration 1991 31,500 (6)
_______________________ (1) Bonus payments are reported for the year in which they were earned. (2) Adjusted to reflect the 5% Common Stock dividends paid on each of October 11, 1991 and November 10, 1992 and the 3.15-to-one Common Stock split in the form of a 215% Common Stock dividend paid on February 4, 1994 (the "Common Stock Split"). (3) Represents the dollar value of Company matching contributions under the Company's 401(k) Savings and Retirement Plan. (4) The named individual received certain perquisites and other personal benefits from the Company; however, the dollar value of such other annual compensation did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus for such individual in each of 1992 and 1993. (5) Does not include the grant to each of Messrs. Sudikoff and Cheramy of options to purchase 2,835,000 shares of Common Stock (as adjusted to reflect the Common Stock Split) and the grant to Mr. Wann of options to purchase 236,250 shares of Common Stock (as adjusted to reflect the Common Stock Split). Such options were granted subject to stockholder approval, which has not yet been received. See "Approval of the Incentive Stock Proposals -- Grants Made Outside the 1992 Incentive Stock Plan." (6) In accordance with the transitional provisions applicable to the revised rules on executive compensation disclosure adopted by the Securities and Exchange Commission, information with respect to Other Annual Compensation and All Other Compensation for 1991 has been omitted. (7) Rudy Wann joined the Company in May 1991. Options Granted in 1993 The following information is furnished for the year ended December 31, 1993 with respect to the Company's Chief Executive Officer and each of the four other most highly compensated executive officers of the Company for stock options which were granted in 1993.
Number of Percent of Securities Total Underlying Options Exercise Options Granted to Price Per Name Granted(1)(2)(3)(4)(5) Employees Share(3)(5)(6) in 1993(5) ------ ---------------------- ---------- -------------- Jeffrey P. 425,250 17.6% $11.98 Sudikoff . . 315,000 13.1 14.37 Edward R. 425,250 17.6 11.98 Cheramy . . . 315,000 13.1 14.37 Peter F. Hartz 94,500 3.9 11.98 63,000 2.6 14.37 Rudy Wann . . 157,500 6.5 11.98 78,750 3.3 14.37 James E. 63,000 2.6 11.98 Kolsrud . . . Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(7) Expiration -------------------- Name Date(4) 5% 10% ------ ---------- --- ---- Jeffrey P. 7/29/2003 $3,203,901 $8,119,313 Sudikoff . . 11/29/2003 2,846,723 7,214,155 Edward R. 7/29/2003 3,203,901 8,119,313 Cheramy . . . 11/29/2003 2,846,723 7,214,155 Peter F. Hartz 7/29/2003 711,978 1,804,292 11/29/2003 569,345 1,442,831 Rudy Wann . . 7/29/2003 1,186,629 3,007,152 11/29/2003 711,681 1,803,538 James E. 7/29/2003 474,652 1,202,861 Kolsrud . . .
_______________________ (1) Adjusted to reflect the Common Stock Split. (2) Options granted in 1993 vest over a four-year period, with 25% of the shares covered thereby becoming exercisable on each anniversary date. (3) Under the terms of the Company's stock incentive plans, the Board of Directors or the Stock Option Committee thereof retains discretion, subject to plan limits, to modify the terms of outstanding options and to reprice the options. (4) The options were granted for a term of ten years, subject to earlier termination in certain events related to termination of employment. (5) Does not include the grant to each of Messrs. Sudikoff and Cheramy of options to purchase 2,835,000 shares of Common Stock (as adjusted to reflect the Common Stock Split) and the grant to Mr. Wann of options to purchase 236,250 shares of Common Stock (as adjusted to reflect the Common Stock Split). Such options were granted on November 29, 1993, will expire on November 30, 2003 and have an exercise price of $14.37 (as adjusted to reflect the Common Stock Split), the fair market value on the date that the options were granted (as adjusted to reflect the Common Stock Split). Such options were granted subject to stockholder approval, which has not yet been received. See "Approval of the Incentive Stock Proposals -- Grants Made Outside the 1992 Incentive Stock Plan." (6) The exercise price may be paid by delivery of a promissory note, already owned shares or other lawful consideration, subject to certain conditions and as otherwise approved by the Board of Directors or the Stock Option Committee. (7) The potential realizable values indicated are based solely on arbitrarily assumed rates of appreciation required by applicable regulations of the Securities and Exchange Commission. The actual value, if any, an executive may realize will depend upon the excess of the stock price on the date an option is exercised over the exercise price. As a result, such assumed values are not necessarily indicative of the values that can be realized upon exercise of such options, and use of such rates should not be viewed in any way as a forecast of the future performance of the Company's stock. Aggregated Option Exercises in 1993 and Year-End Value Table The following information is furnished for the year ended December 31, 1993 with respect to the Company's Chief Executive Officer and each of the four other most highly compensated executive officers of the Company for stock options exercised during 1993 and for unexercised options held at year end.
Number of Securities Underlying Shares Unexercised Options Acquired Value at December 31, 1993(1)(3) Name on Realized(2) --------------------------- Exercise(1) Exercisable Unexercisable -------- ---------- ---------- ----------- ------------- Jeffrey P. Sudikoff 266,149 $1,438,674 99,844 922,251 Edward R. Cheramy . 315,000 4,734,000 509,703 922,249 Peter F. Hartz . . 333,959 2,083,602 -- 254,686 Rudy Wann . . . . . -- -- 21,097 264,806 James E. Kolsrud . 12,600 87,194 45,793 149,348 Value of Unexercised In-the-Money Options at December 31,1993(3)(4) --------------------------- Name Exercisable Unexercisable ---------- ----------- ------------- Jeffrey P. Sudikoff . $1,592,511 $5,783,056 Edward R. Cheramy . . 7,987,520 5,783,024 Peter F. Hartz . . . -- 2,046,229 Rudy Wann . . . . . . 316,602 1,502,994 James E. Kolsrud . . 673,780 1,532,826
_______________________ (1) Adjusted to reflect the Common Stock Split. (2) This amount is the aggregate of the market value of the Common Stock at the time each stock option was exercised minus the exercise price for that option. (3) Does not include the grant to each of Messrs. Sudikoff and Cheramy of options to purchase 2,835,000 shares of Common Stock (as adjusted to reflect the Common Stock Split) and the grant to Mr. Wann of options to purchase 236,250 shares of Common Stock (as adjusted to reflect the Common Stock Split). Such options are subject to stockholder approval. See "Approval of the Incentive Stock Proposals -- Grants Made Outside the 1992 Incentive Stock Plan." (4) This amount is the aggregate of the number of options multiplied by the difference between the closing price of the Common Stock on the NASDAQ National Market System on December 31, 1993 ($17.46, as adjusted to reflect the Common Stock Split) and the exercise price for such options. Compensation of Directors No director received any compensation during the Company's last fiscal year for any service provided as a director. Beginning in 1994, the Company compensates each non-employee director $2,000 for each month of membership on the Board of Directors and $1,000 for each meeting of the Board that the director attends. Nonemployee directors of the Company are entitled to receive annually a limited number of non-qualified stock options pursuant to the Company's 1992 Stock Option Plan for Nonemployee Directors (the "Nonemployee Director Plan"). The Nonemployee Director Plan provides for the annual automatic granting of options to purchase 6,615 shares, subject to adjustment, of IDB Common Stock to each nonemployee director immediately following the annual meeting of stockholders. The option exercise price is the fair market value (as defined) of the Common Stock on the date of grant. The options vest over a four year period, and expire ten years and one day from the date of grant, subject to earlier termination in accordance with the terms of the Nonemployee Director Plan. As of the date hereof, an aggregate of 33,075 options have been granted under the Nonemployee Director Plan. The Company entered into a consulting agreement with William L. Snelling as of January 1, 1992. Under the consulting agreement, Mr. Snelling will be paid an annual fee over a 15-year period, beginning at $125,000 in 1992, with cost of living increases each year. The Consulting Agreement also provides that the Company will reimburse Mr. Snelling up to $100,000 per year for business expenses and personal accounting, financial, tax and legal consulting and similar expenses incurred by Mr. Snelling. See "Certain Relationships and Related Transactions." Employment Agreements The Company entered into employment agreements with Messrs. Sudikoff, Cheramy and Hartz on January 1, 1992, each for a five year term, which is automatically renewed each year thereafter, subject to earlier termination under certain circumstances. Mr. Sudikoff's employment agreement provides for a minimum base salary of $500,000 in 1992, $575,000 in 1993, $661,250 in 1994, $760,437 in 1995 and $874,503 in 1996. Mr. Cheramy's employment agreement provides for a minimum base salary of $400,000 in 1992, $460,000 in 1993, $529,000 in 1994, $608,350 in 1995 and $699,602 in 1996. Mr. Hartz' employment agreement provides for a minimum base salary of $180,000 in 1992, $190,800 in 1993, $202,248 in 1994, $214,383 in 1995 and $227,246 in 1996. Each of Messrs. Sudikoff, Cheramy and Hartz is entitled to receive an annual bonus in an amount determined by the Compensation Committee of the Board of Directors. Messrs. Sudikoff's, Cheramy's and Hartz' employment agreements also provide for the reimbursement of business and automobile expenses and certain other benefits, including an allowance of up to $50,000, $50,000 and $15,000, respectively, for each contract year for personal accounting, financial, tax and legal consulting and other similar expenses for Messrs. Sudikoff, Cheramy and Hartz. In the event of a change of control of the Company (as defined), amounts payable through the remaining term of the employment agreements become payable, with the Company obligated to pay any taxes that are specifically levied on payments made pursuant to change of control provisions. Compensation Committee Interlocks and Insider Participation The Compensation Committee of the Board of Directors consists of Edward R. Cheramy, William L. Snelling, Joseph M. Cohen and, prior to his resignation as a member of the Board of Directors in October 1993, John S. Reiland. Mr. Cheramy is, and during 1993 was, President of the Company. Until June 1991, Mr. Snelling was an officer of the Company. See "Directors and Executive Officers of the Registrant." Mr. Reiland was the Chairman of TeleColumbus USA, Inc., a Delaware corporation ("TC USA"). TC USA acquired 13,230,000 shares of Common Stock (as adjusted to reflect the Common Stock Split) and 34,000 shares of the Company's 4% Cumulative Convertible Preferred Stock, which was convertible into 6,158,709 shares of Common Stock (as adjusted to reflect the Common Stock Split), in connection with the Company's acquisition of World Communications, Inc. from TC USA in 1992. TC USA sold 18,928,255 shares of Common Stock (as adjusted to reflect the Common Stock split) in a secondary offering in November 1993. The Company entered into a consulting agreement with William L. Snelling as of January 1, 1992. Under the consulting agreement, Mr. Snelling will be paid an annual fee over a 15-year period, beginning at $125,000 in 1992, with cost of living increases each year. The Consulting Agreement also provides that the Company will reimburse Mr. Snelling up to $100,000 per year for business expenses and personal accounting, financial, tax and legal consulting and similar expenses incurred by Mr. Snelling. See "Certain Relationships and Related Transactions." Board Compensation Committee Report on Executive Compensation The Compensation and Stock Option Committees of the Board of Directors of the Company have furnished the following report on executive compensation. The following report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. As members of the Compensation and Stock Option Committees of the Board of Directors of the Company, it is our duty to establish and implement policies and procedures regarding the compensation of officers and employees of the Company and to administer the Company's incentive stock plans. The Compensation Committee reviews compensation levels of management, evaluates the performance of management, considers management succession and related matters, and reports to the Board of Directors (which retains ultimate authority) with respect to all aspects of compensation (other than incentive stock awards) for the Chief Executive Officer and the President of the Company. The Stock Option Committee determines the type and amount of incentive stock awards granted to eligible employees, including the executive officers of the Company. The compensation policies of the Company, which are endorsed by both Committees, are designed to support the overall objective of enhancing value for our stockholders and to help the Company achieve its business objectives. These policies include: (a) attracting, developing, rewarding and retaining highly qualified and productive individuals; (b) providing incentive compensation that varies directly with both Company performance and individual performance; and (c) encouraging executive stock ownership to enhance a mutuality of interest with other stockholders. The Company's executive compensation is based on three components, each of which is intended to serve our overall compensation objectives: base salary, annual incentives and long-term incentives. In 1993, the base salaries for Jeffrey P. Sudikoff and Edward R. Cheramy, the Chairman of the Board and Chief Executive Officer and the President of the Company, were $575,000 and $460,000, respectively, pursuant to the terms of their five-year employment agreements with the Company, as described in the Company's Proxy Statement. Such amounts were determined in accordance with the Company's compensation policies, after reviewing the compensation levels of top management at other comparable companies. Base salary for the other executive officers of the Company, some of whom also have entered into employment agreements with the Company, was determined on a consistent basis. Annual incentives consist primarily of bonuses, which are generally paid based upon an employee's performance during the year. Bonuses for executive officers are additionally based upon overall Company performance, and may be dependent upon the cash flow and liquidity needs of the Company. In 1993, each of Messrs. Sudikoff and Cheramy received a $400,000 cash bonus. Such cash bonuses were made to compensate Messrs. Sudikoff and Cheramy for their exceptional performance in connection with three public offerings by the Company in 1993 and the acquisition and successful integration of World Communications, Inc., TRT Communications, Inc. and TC WorldCom AG ("WorldCom Europe") and were based upon the increase in Company revenues and growth of the Company as a result of such acquisitions and the record market performance of IDB's Common Stock in 1993. Long-term incentives consist primarily of the granting of options to purchase Common Stock of the Company. Option grants are intended to retain and motivate officers and key employees to improve long-term stock market performance. Stock options are granted at the prevailing market price of the Common Stock and will only have value if the stock price increases. Generally, stock options vest in equal amounts over a four-year period from the date of grant, and the optionee must be employed by the Company at the time of vesting in order to exercise the options. In 1993, each of Messrs. Sudikoff and Cheramy received options to purchase 3,875,798 shares of Common Stock of the Company (as adjusted to reflect the Common Stock split), 2,835,000 of which were granted subject to stockholder approval. The granting of such options was made in accordance with the Company's compensation policies stated above. A recently enacted section of the Internal Revenue Code of 1986 prohibits the Company from deducting compensation, subject to certain exceptions, in excess of $1 million paid to the Company's chief executive officer or any of its four most highly compensated executive officers. The Compensation Committee intends to take all steps necessary to comply with the recently enacted revenue law. The foregoing report has been furnished by the Compensation Committee consisting of Edward R. Cheramy, William L. Snelling and Joseph M. Cohen, and the Stock Option Committee, consisting of William L. Snelling, Franklin E. Fried and Joseph M. Cohen. Stock Price Performance Graph The following Stock Price Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. The following Stock Price Performance Graph compares the cumulative total return to stockholders on the Company's Common Stock with the cumulative return of the NASDAQ Stock Market (U.S. Companies) and the NASDAQ Nonfinancial Stocks, assuming reinvestment of dividends and assuming an initial investment of $100 made on January 1, 1989. [STOCK PRICE PERFORMANCE GRAPH TO BE INSERTED HERE]
12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 -------- -------- -------- -------- -------- -------- IDB $100.00 $ 91.93 $ 67.59 $171.72 $256.29 $655.65 NASDAQ Stock $100.00 $121.24 $102.96 $165.21 $192.10 $219.21 Market(U.S. Copmanies) NASDAQ $100.00 $125.10 $110.13 $177.33 $193.93 $222.28 Nonfinancial Stocks
Market for Company's Common Stock and Related Stockholder Matters The Company's Common Stock is traded in the NASDAQ National Market System under the symbol "IDBX." The following table sets forth the range of high and low closing sales prices on the NASDAQ National Market System for the indicated periods:
High Low Fiscal Year Ended ------ ----- December 31, 1992: ------------------ First Quarter $ 5.74 $ 3.59 Second Quarter 5.60 4.16 Third Quarter 5.48 4.08 Fourth Quarter 7.14 4.84 Fiscal Year Ended December 31, 1993: First Quarter $ 8.57 $ 6.27 Second Quarter 13.10 8.41 Third Quarter 17.26 11.98 Fourth Quarter 18.17 13.57
As of May 5, 1994, the number of record holders of the Company's Common Stock was 778. On November 10, 1992, the Company issued a 5% Common Stock dividend to the record holders of IDB Common Stock as of September 30, 1992. The stock prices listed above have been adjusted to reflect the Common Stock dividend paid on November 10, 1992 and the 3.15-to-one Common Stock split in the form of a 215% Common Stock dividend paid on February 4, 1994. The Company has never paid any cash dividends on its Common Stock. The Company intends to retain earnings for further business development and does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. None of the Company's existing debt agreements restrict its ability to pay dividends on the Common Stock. Certain Relationships and Related Transactions In order to allow foreign ownership of the Company to exceed 25% without risk of refusal or revocation of licenses pursuant to the Communications Act, on December 17, 1992 the Company's subsidiaries that had been holding the transmission licenses used by the Company assigned all of their common carrier earth station and microwave licenses to Southwest Communications, Inc. ("SCI") in exchange for SCI's entering into the Operator Agreements described below. Messrs. Jeffrey P. Sudikoff, Edward R. Cheramy and Peter F. Hartz, the Chairman and Chief Executive officer, President and Senior Vice President, Sales and Marketing of the Company, respectively, own 49%, 40% and 11%, respectively, of the capital stock of SCI. See "Directors and Executive Officers of the Registrant." The Company entered into Operator Agreements with SCI on December 17, 1992. No monetary compensation has been received by the Company in connection with such assignments. These Operator Agreements have initial terms of ten years and provide for SCI to be the operator and FCC licensee of the satellite earth stations and microwave stations owned by the Company. In accordance with the Operator Agreements, the Company paid $34,200 to SCI during 1993 as an operator fee. Such fees are subject to adjustment annually. The Company has entered into employment agreements with each of Jeffrey P. Sudikoff, Edward R. Cheramy and Peter F. Hartz. See "Executive Compensation -- Employment Agreements." In addition, the Company entered into a consulting agreement with William L. Snelling, a director of the Company, as of January 1, 1992. Under the consulting agreement, Mr. Snelling will be paid an annual fee over a 15-year period, beginning at $125,000 in 1992, with cost of living increases each year. In 1993, the Company paid Mr. Snelling $135,000 pursuant to the Consulting Agreement. In December 1993, each of Messrs. Sudikoff and Cheramy borrowed $1,400,000 from the Company for his own personal use. Such loans bear interest at an annual rate equal to five percent. In December 1993 and March 1994, Messrs. Cheramy and Sudikoff, respectively, repaid all outstanding amounts under the loans made in 1993. During 1992, each of Messrs. Sudikoff and Cheramy borrowed an aggregate of $250,000 from the Company for his own personal use. Such loans are due in equal annual installments of $50,000, beginning in December 1993, and bear interest at a rate of five percent per annum. Each of Messrs. Sudikoff and Cheramy paid the annual installment due in December 1993. In April 1994, Messrs. Sudikoff and Cohen borrowed $2,750,000 and $500,000, respectively, from the Company for personal uses. Such loans bear interest at a rate equal to the prime rate and are payable at the earlier of the demand of the Company or June 30, 1994, with respect to the loan made to Mr. Cohen, or December 15, 1994, with respect to the loan made to Mr. Sudikoff. During 1991, 1992 and 1993, IDB Mobile Communications, Inc. ("IDB Mobile") made progress payments of $1,750,000, $1,798,000 and $832,000, respectively, to Aesses Equipment Corporation ("Aesses"), which is 42.5% owned by Mr. Sudikoff and 42.5% owned by Mr. Cheramy. These progress payments were made under an agreement to purchase from Aesses $4,380,000 of satellite transmission equipment for use on airplanes. Aesses paid $2,000,000 to a supplier to develop such equipment and has agreed to purchase minimum quantities of the equipment from such supplier. A disinterested majority of the Board of Directors of IDB and IDB Mobile elected not to incur such development costs and enter Aesses' business. The prices paid by IDB Mobile for such equipment were no less favorable to IDB Mobile than the prices payable for such equipment by unrelated parties. See Note 8 of Notes to Consolidated Financial Statements of the Company. In November 1993, Aesses agreed to pay IDB Mobile $3,441,000 in cash consideration to repurchase all of the equipment, except one unit, previously sold by Aesses to IDB Mobile. All amounts owed by Aesses to IDB Mobile pursuant to the agreement to repurchase the equipment have been paid and all remaining obligations for IDB Mobile to purchase equipment from Aesses pursuant to the agreement between Aesses and IDB Mobile have terminated. In February 1993, Aesses borrowed $300,000 from the Company, which amount bears interest at a rate equal to 5% per annum. In March 1994, Aesses repaid all amounts outstanding under the loan made by the Company in February 1993. In August 1993, the Company purchased a $1,500,000 loan evidenced by a note secured by a deed of trust with an assignment of rents (the "Loan") from William L. Snelling and Cleora A. Snelling, as trustees of the Snelling 1986 Trust (the "Trust"). In December 1992, the Trust made the Loan to the Olympic- Centinela Partnership, a California limited partnership (the "Partnership"), in connection with the Partnership's acquisition of certain facilities which the Company now leases as part of its Los Angeles international teleport. The loan made by the Trust to the Partnership bears interest at a rate equal to the prime rate plus 3% and is due in December 1995. The Company paid $1,500,000 for the Loan, $500,000 of which was paid at the time the Company acquired the Loan and the remainder of which will be paid in equal annual installments of $100,000 or upon the demand of the Trust. The unpaid balance of the purchase price bears interest at a rate equal to the prime rate plus 2%. In connection with three public offerings of securities of the Company, the acquisition of TRT and certain other Company business, the Company paid approximately $3,600,000 related to the use during 1993 of aircraft owned by Messrs. Sudikoff and Cheramy. The amounts paid by the Company in connection with the use during 1993 of such aircraft were commercially competitive and such payments were approved by the Board of Directors of the Company. ELECTION OF DIRECTORS The Company presently has six directors, all of whom are elected annually. At the Annual Meeting, the term of office of all present directors will expire and a full board of seven directors will be elected to serve for a term of office consisting of the ensuing year and until their respective successors are elected. The Board of Directors has nominated the following seven persons for election as directors: Jeffrey P. Sudikoff, Edward R. Cheramy, Peter F. Hartz, William L. Snelling, Franklin E. Fried, Joseph M. Cohen and Stephen N. Carroll. See "Management of IDB" for information regarding the nominees, meetings, committees, compensation and certain relationships and related transactions. The persons named in the accompanying form of proxy have advised the Company that at the Annual Meeting they intend to vote the shares for which they are acting as proxy for the election of the nominees named below. If, by reason of death or other unexpected occurrence, any one or more of such nominees should for any reason become unavailable for election, the persons named in the accompanying form of proxy may vote for the election of such substitute nominees as the Board of Directors may propose. The accompanying form of proxy contains a discretionary grant of authority with respect to this matter. There are currently no arrangements or understandings between any nominee and any other person or persons pursuant to which any nominee was or is to be selected as a director or nominee. None of the nominees has any family relationship among themselves or with any executive officer of the Company. Recommendation of Board of Directors THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MESSRS. SUDIKOFF, CHERAMY, HARTZ, SNELLING, FRIED, COHEN AND CARROLL AS THE DIRECTORS OF IDB. APPROVAL OF THE INCENTIVE STOCK PROPOSALS Amendment to 1992 Incentive Stock Plan At the meeting the stockholders will be asked to approve an amendment to the Company's 1992 Incentive Stock Plan (as amended, the "1992 Stock Plan") to increase the maximum number of shares of the Company's Common Stock available for awards from 3,150,000 to 8,150,000 and to limit the number of options that may be granted to an individual in any one year to 500,000. The 1992 Incentive Stock Plan was originally adopted in August 1992. All but approximately 200,000 shares originally authorized under the 1992 Incentive Stock Plan have been granted. Summary Description of the 1992 Stock Plan THE DESCRIPTION OF THE 1992 STOCK PLAN BELOW REFLECTS THE AMENDMENTS PROPOSED BY THE STOCK PLAN PROPOSAL AND SUMMARIZES THE MAIN PROVISIONS OF THE 1992 STOCK PLAN AND THE STOCK INCENTIVES GRANTED UNDER THE 1992 STOCK PLAN. THIS DESCRIPTION IS PROVIDED FOR YOUR INFORMATION ONLY AND DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE PROVISIONS OF THE 1992 STOCK PLAN. THE 1992 STOCK PLAN HAS NOT BEEN AMENDED SINCE THE TIME IT WAS APPROVED BY THE STOCKHOLDERS OF THE COMPANY, EXCEPT, SUBJECT TO STOCKHOLDER APPROVAL, TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT ARE SUBJECT TO THE PLAN TO 8,150,000 AND TO LIMIT THE NUMBER OF OPTIONS THAT MAY BE GRANTED TO AN INDIVIDUAL IN ANY ONE YEAR TO 500,000. The 1992 Stock Plan provides for the granting of incentive stock options, nonqualified stock options and rights to purchase restricted stock to key employees and officers of the Company or any of its subsidiaries including directors who are also key employees or officers of the Company and its subsidiaries. Under the 1992 Stock Plan, shares of Common Stock may be issued pursuant to the 1992 Stock Plan, either upon exercise of options or purchases of restricted stock. For purposes of the 1992 Stock Plan, the term "subsidiary" means any corporation, fifty percent (50%) or more of the voting stock of which is owned by the Company or by a subsidiary (as so defined) of the Company. Under the 1992 Stock Plan, 8,150,000 shares may be issued either as restricted stock or upon the exercise of options. The purpose of the 1992 Stock Plan is to further the growth, development and financial success of the Company and its subsidiaries by providing additional incentives to certain officers and key employees by assisting such persons in acquiring shares of Common Stock and enabling such persons to benefit directly from the Company's growth, development and financial success. All of the Company's employees are eligible for grants of stock options under the 1992 Stock Plan. Grants are made to officers and key employees of the Company based upon past performance and are intended to retain and motivate officers and key employees to improve long term stock market performance. The 1992 Stock Plan will be administered by a committee (the "Committee") consisting of not less than two members of the Board of Directors who are not officers or employees of the Company or its subsidiaries. The members of the Committee are appointed by, and serve at the pleasure of, the full Board of Directors. The Committee determines, among other things, (a) the participants who will receive options, the number of shares to covered by options, the exercise price of options, the dates on which options are granted, and the other terms and conditions of options (which may vary from option to option), (b) the persons who will receive rights to purchase restricted stock and the respective number of shares sold pursuant thereto, and the purchase price and other terms and conditions of the restricted stock purchase agreements entered into with such persons, and (c) whether options will be incentive stock options or nonqualified stock options. The Committee also has the authority to construe and interpret the 1992 Stock Plan, to establish and amend rules and regulations for its administration and to determine the rights and obligations of participants under the 1992 Stock Plan. Furthermore, the Board of Directors may from time to time, to the extent permitted by law, terminate the 1992 Stock Plan with respect to options and restricted stock not then granted or issued, respectively, or revise or amend the 1992 Stock Plan. As of May 5, 1994 the fair market value of all shares of Common Stock underlying the 1992 Stock Plan was $136,512,500. Options. Each option is evidenced by an agreement between the Company and each of the respective optionees (the "Option Agreements") which must conform to the 1992 Stock Plan but may contain such further provisions as the Committee may determine. The Committee determines whether the options will be incentive stock options or nonqualified stock options. Under the 1992 Stock Plan, the exercise price of any option may not be less than the fair market value of such shares on the date of the grant of the option and, solely with respect to any incentive stock option granted to an optionee that is a ten percent shareholder of the Company, will not be less than 110% of the fair market value on the date of the grant of the incentive stock option. When granting each option, the Committee sets the dates on which it is exercisable and the number of shares that may be purchased on each date, provided that each option must become fully exercisable no later than five years from the date of grant and the number of shares of common stock subject to the option must become exercisable at the rate of at least 20% per year until the option is fully exercisable. No persons may receive incentive stock options that are exercisable for the first time during any calendar year with respect to Common Stock having a fair market value of more than $100,000. In calculating the $100,000 limit, Common Stock is valued at its fair market value on the date of grant. Additionally, no person may receive an award in any one year of options to purchased more than 500,000 shares of Common Stock. The Committee also sets the termination date for each option when it grants the option, but incentive stock options and nonqualified stock options may not be granted for a duration of more than 10 years and more than 10 years and one day, respectively. If an option expires or terminates before it is exercised in full, the unissued stock reserved for the option becomes available for the granting of new options or the issuance of restricted stock. The Committee is authorized to grant options containing the agreement of the optionee to resell to the Company at the exercise price therefor any Common Stock issued pursuant to the exercise of such option. The Committee will determine, in its discretion, those persons who will receive options containing such repurchase right and the basis upon which the Company may exercise its repurchase right. Such repurchase right of the Company will terminate at such times, and in such installment amounts, as may be specified by the Committee in any particular instance. Options may be exercised by payment of the full purchase price in cash, by check, by tender of the optionee's promissory note or by any other form of lawful consideration that the Committee has approved. The Committee may allow certain employees to exercise an incentive stock option or a nonqualified stock option by the tender of shares of the Company previously held. The Committee, if it chooses to allow the exercise of options by tender of shares, intends to only allow such exercise tender of shares which have been previously held by the employee for six months. Shortfalls must be made up in cash. All rights to exercise options terminate ninety days from the date the optionee ceases to be an employee of the Company or of a subsidiary of the Company for any reason other than death or disability, or upon expiration of the option, whichever occurs first. During such ninety day period, the optionee may only exercise the options to the extent that they were exercisable on the date the optionee's employment terminated. If an optionee dies without having fully exercised his or her options during the period of his or her employment or within ninety days of the termination of employment, the options may be exercised with a period of one hundred eighty days following his or her death, if the expiration of the option period has not first occurred to the extent that the optionee could have exercised them on the date of his or her death. If an optionee terminates employment with the Company or its subsidiaries while disabled without having fully exercised his or her options, the options may be exercised within a period of one year following his or her termination, if the expiration date has not first occurred, to the extent that the optionee could have exercised them on the date of his or her termination. The Company may grant options to employees of acquired companies or their subsidiaries who hold stock options of the acquired company or one of its subsidiaries. The exercise price of these substitute options may be less than the fair market value of the Company's Common Stock on the date of grant in order to preserve the economic benefit to the optionee of the substitute option. The new options will retain the exercise and termination dates of the options held in the acquired company (subject to the 10-year and one day limit and the 10-year limit on the maximum terms of nonqualified stock options and incentive stock options, respectively, issued under the 1992 Stock Plan). Options and restricted stock as to which the Company has a repurchase right may be transferred only by will or the laws of descent and distribution or a qualified domestic relations order and, during an optionee's lifetime, are exercisable only by the optionee or a transferee pursuant to a qualified domestic relations order. Restricted Stock. Pursuant to the 1992 Stock Plan, the Committee will from time to time determine, in its discretion, those persons who will be offered the right to purchase shares of restricted stock and the number of shares that may be purchased by each such person. The purchase price per share of all restricted stock will be determined by the Committee, in its sole discretion, so long as the purchase price is not less than the fair market value of Common Stock on the date the right to purchase such restricted stock is granted. Such purchase price must be paid in cash, by check, by tender of the person's promissory note or such other lawful consideration as the Committee may approve. All restricted stock will be issued pursuant to a form of Restricted Stock Purchase Agreement, which will generally provide for a repurchase right of the Company, such that if the purchaser of such restricted stock ceases to be an employee of the Company or any of its subsidiaries for any reason whatsoever, the Company will have the option and right to repurchase the restricted stock from such purchaser at a repurchase price equal to the purchase price paid by such purchaser. The Restricted Stock Purchase Agreement will also specify when, and in what installment amounts, if any, that such new repurchase right will terminate. Unless otherwise stated, the Company's right to repurchase will terminate as to 25% of the aggregate number of shares of restricted stock originally issued to the participant on each anniversary date of the participant's commencement of employment by the Company or any of its subsidiaries, commencing upon the first of each anniversary date, such that such repurchase right will terminate completely on the fourth anniversary date of such commencement of employment. If the purchaser of restricted stock dies before the Company's repurchase right is terminated in full, such death will constitute a termination upon which the Company may exercise its repurchase right. The maximum number of shares that may be issued under the 1992 Stock Plan, and all outstanding options and outstanding securities subject to the Company's repurchase right, will be adjusted for stock splits, stock dividends and similar capital changes. Upon the dissolution or liquidation of the Company, or any reorganization, merger or consolidation in which the Company does not survive, the 1992 Stock Plan, each outstanding option and, at the Company's option, the Company's repurchase right with respect to outstanding restricted stock will terminate, except that the surviving corporation may, in its sole and absolute discretion, grant any optionee a new option to purchase shares of the surviving corporation on terms and conditions that will substantially preserve the optionee's rights and benefits under the 1992 Stock Plan. If an optionee does not receive a new option from the surviving corporation, the optionee will have the right, upon 30 days notice, to exercise, in whole or in part, any unexpired option without regard to the installment provisions of the 1992 Stock Plan until five days before the effective date of the dissolution or liquidation of the Company or upon a reorganization, merger or consolidation in which the Company is not the surviving corporation, exercise in whole or in part, any unexpired option or options issued to the optionee that is then capable of being exercised. Amendment of the 1992 Stock Plan; Nonexclusivity. The Board of Directors or Committee may not change or amend the 1992 Stock Plan, without receiving the affirmative vote of the holders of a majority of the Company's voting stock that is represented and entitled to vote at a duly held stockholders' meeting of the Company or by the written consent of the holders of a majority of the voting stock of the Company entitled to vote, in a manner that does any of the following: increases the maximum number of shares subject to the 1992 Stock Plan (except in the case of adjustments for stock splits, stock dividends, reorganization or similar events); decreases the option price requirements (except for the issuance of substitute options); changes the class of employees entitled to receive options; changes the limit on the value of Common Stock that any one optionee may have options to purchase, unless the provisions of the Code, are changed to allow a different limit; or materially increases the benefits accruing to participants under the 1992 Stock Plan. The 1992 Stock Plan does not prevent the Company from establishing any other plan, program or arrangement of any kind relating to employee compensation or benefits or providing for the issuance of shares of Common Stock, and the grant of options or opportunities to purchase restricted stock under the 1992 Stock Plan will not preclude any employee from participating in any other plan, program or arrangement of the Company or its subsidiaries. Federal Income Tax Consequences Incentive Stock Options. No taxable income will be recognized by an optionee upon the grant or exercise of any incentive stock option under the 1992 Stock Plan. The Company will not be entitled to any income tax deduction as a result of the grant or exercise of any incentive stock option. Gain or loss resulting from the subsequent sale of stock acquired upon exercise of an incentive stock option will be long- term capital gain or loss if such sale is made after two years from the date of the grant of the option and after one year from the transfer of such stock to the optionee upon exercise, provided that the optionee is an employee of the Company from the date of grant until three months before the date of exercise. In the event of the optionee's death or disability prior to exercise of an incentive stock option, special rules apply in determining whether gain or loss upon sale of the stock and upon exercise of such option will be taxable as long-term capital gain or loss. If the subsequent sale of stock is made prior to the expiration of such two-year or one-year periods, the optionee will recognize ordinary income in the year of sale in an amount equal to the difference between the exercise price and the fair market value of the stock on the date of exercise, provided that if such sale is a transaction in which a loss (if sustained) would have been recognized by the optionee, the amount of ordinary income recognized by the optionee will not exceed the excess (if any) of the amount realized on the sale over the option price. The Company will then be entitled to an income tax deduction of like amount. Any excess gain recognized by the optionee upon such sale would then be taxable as capital gain, either long-term or short-term depending upon whether the stock had been held for more than one year prior to sale. If the sale of stock received upon exercise of an option qualifies for long-term capital gain treatment, the capital gain would be taxed to individuals at a maximum rate of 28%. The amount by which the fair market value of stock purchased upon exercise of an incentive stock option exceeds the option price of such stock constitutes an item of tax preference which could then be subject to the alternative minimum tax in the year that the option is exercised. Nonqualified Stock Options. Generally, at the time of the grant of any option under the 1992 Stock Plan, no taxable income will be recognized by the optionee and the Company will not be entitled to a deduction. Upon the exercise of such option, the optionee generally will recognize taxable income, and the Company will then be entitled to a deduction, in the amount by which the then fair market value of the shares of Common Stock issued to such optionee exceeds the option price. However, if upon the occurrence of certain events (such as termination of employment), the stock issued to an optionee is subject to repurchase by the Company at the exercise price of the underlying option, then the optionee will not recognize income (and the Company will not be entitled to a deduction) at the time the underlying option is exercised unless the optionee makes an election to recognize income at that time. If such election is not made, the optionee will recognize income and the Company will be entitled to a deduction at the time when the Company's repurchase right expires. See "Restricted Stock" below. Additionally, if a sale of the stock received upon exercise of such option would subject the optionee to suit under Section 16(b) of the Exchange Act the optionee will not recognize income (and the Company will not be entitled to a deduction) at the time such option is exercised unless the optionee makes an election to recognize income at that time. If such election is not made, the optionee will recognize income and the company will be entitled to a deduction at the time when Section 16(b) would no longer apply to such stock sale. Income recognized by the optionee upon exercise of a nonqualified stock option will be taxed as ordinary income at a maximum rate of 31%. Such income constitutes "wages" with respect to which the Company is required to deduct and withhold federal and state income tax. Such deductions will be made from the wages, salary, bonus or other income to which the optionee would otherwise be entitled and, at the Company's election, the optionee may be required to pay to the Company (for withholding on the optionee's behalf) any amount not so deducted but required to be so withheld. Upon the subsequent disposition of shares acquired upon the exercise of an option other than an incentive stock option, the optionee will recognize capital gain or loss in an amount equal to the difference between the proceeds received upon disposition and the fair market value of such shares at the time of exercise. If such shares have been held for more than one year at the time of such disposition, the capital gain or loss will be long-term. Acceleration of Stock Options Upon a Transfer of Control. If, upon a reorganization, merger, sale or other transaction resulting in a change in control of the Company or of a substantial portion of its assets, the exercisability of stock options held by certain employees (generally officers, shareholders and highly compensated employees of the Company) is accelerated (or payments are made to cancel unexercisable options of such employees), such acceleration or payment will be determined to be a "parachute payment" for federal income tax purposes. If the present value of all of the optionee's parachute payments exceeds three times the optionee's average compensation for the past five years, the optionee will be subject to a 20% excise tax on the amount of such parachute payment which is in excess of the greater of such average compensation of the optionee or an amount which the optionee establishes as reasonable compensation. In addition, the Company will not be allowed a deduction for such excess parachute payment. Restricted Stock. A purchaser of restricted stock will be required to include in his or her gross income, in the taxable year of such purchaser in which the shares of restricted stock vest, the amount by which the then fair market value of such restricted stock (determined at the date of vesting) exceeds the purchase price paid for such restricted stock. However, a purchaser may elect pursuant to Section 83(b) of the Code to include in his or her gross income for the taxable year in which the restricted stock is issued, the excess of the fair market value of all such restricted stock at the time of such issuance (determined without reference to the Company's repurchase rights) over the amount paid for such restricted stock. In this event, the purchaser will not recognize taxable income when the restricted stock vests. If shares with respect to which a Section 83(b) election has been made are later repurchased by the Company, the purchaser will not be entitled to a deduction. As a result of issuing restricted stock subject to a repurchase right, the Company will be entitled to a deduction for its taxable year within which ends the taxable year of the purchaser of such stock in which such purchaser is required to include an amount in gross income, either as a result of the vesting of the shares or of making a Section 83(b) election. The amount os such deduction will be equal to the amount, if any, which the purchaser of such stock is required to include in gross income. Any amount included in a purchaser's gross income as a result of the issuance of shares of restricted stock under the 1992 Stock Plan or the vesting of shares of stock will be taxed as ordinary income. Such amount constitutes "wages" with respect to which the Company is required to deduct and withhold federal and state income tax. Such deductions will be made from the wages, salary, bonus or other income to which the purchaser would otherwise be entitled and, at the Company's election, the purchaser may be required to pay the Company (for withholding on such purchaser's behalf) any amount not so deducted but required to be so withheld. Except as described above, upon the disposition of shares of vested restricted stock, the purchaser will recognize capital gain or loss in an amount equal to the difference between the proceeds received from the disposition and the purchaser's tax basis in the shares. If such shares have been held at the time of their disposition for more than one year from the earlier of the date of a Section 83(b) election or the date the Company's repurchase right terminates as to the shares, the capital gain or loss will be long-term. Upon disposition of unvested shares of stock, purchaser will recognize compensation in the amount equal to the difference between the proceeds received from the disposition and the purchaser's tax basis in the shares. The foregoing summary of the effects of federal income taxation upon optionees, holders of restricted stock and the Company with respect to shares issued under the 1992 Stock Plan does not purport to be complete and reference is made to the applicable provisions of the Code. Reasons for Approval of an Amendment to the 1992 Stock Plan The Board of Directors believes that the selected use of stock options and restricted stock is an effective means of attracting, motivating and retaining employees and that the availability of an increased number of shares covered by the 1992 Stock Plan is important to the Company's business prospects and operations. Additionally, the Board of Directors believes that it is in the best interests of the Company to conform the 1992 Stock Plan to recently enacted provisions of the Code to limit the number of options that may be granted to any one individual. Accordingly, the Board of Directors has, subject to stockholder approval, adopted an amendment to the 1992 Stock Plan increasing the number of shares of Common Stock available for awards under the 1992 Stock Plan from 3,150,000 to 8,150,000 and limiting the number of options that may be granted to an individual in any one year to 500,000. Vote Required and Recommendation of Board of Directors Each holder of shares of Common Stock outstanding on the record date is entitled to one vote on the proposal to approve the Stock Plan Proposal. Approval of such action requires the affirmative vote of a majority of the votes cast at the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 1992 INCENTIVE STOCK PLAN. Grants Made Outside the 1992 Incentive Stock Plan On November 29, 1993, the Company granted outside the 1992 Incentive Stock Plan nonqualified stock options to Messrs. Sudikoff, Cheramy and Wann to purchase 2,835,000, 2,835,000, and 236,250 shares, respectively (each as adjusted to reflect the Common Stock Split), at an exercise price of $14.37 per share, the fair market value on the date of the grant of such options, in consideration of the performance and efforts of Messrs. Sudikoff, Cheramy and Wann on behalf of the Company. These stock options vest in equal installments over a four-year period commencing on November 29, 1994 and are exercisable for ten years and one day from the date of grant. These stock options were granted outside of the 1992 Incentive Stock Plan so that such plan would continue to be in compliance with Rule 16b-3, a rule promulgated by the Securities and Exchange Commission which provides an exemption from the operation of the "short-swing profit" recovery provisions of Section 16(b) of the Exchange Act. As of May 5, 1994 the closing price of IDB's Common Stock was $16 3/4 per share. To obtain the benefits of Rule 16b-3, the grants of stock options to Messrs. Sudikoff, Cheramy and Wann on November 29, 1993 are contingent upon obtaining the approval of the Company's stockholders. If such stockholder approval is obtained at the Annual Meeting, the stock options granted to Messrs. Sudikoff, Cheramy and Wann on November 29, 1993 will remain in full force and effect. In the event such stockholder approval is not obtained, the stock options granted to Messrs. Sudikoff, Cheramy and Wann on November 29, 1993 will become null and void. Vote Required and Recommendation of Board of Directors Each holder of shares of Common Stock outstanding on the record date is entitled to one vote on the proposal to approve the grants of stock options on November 29, 1993 to Messrs. Sudikoff, Cheramy and Wann. Approval of such actions requires the affirmative vote of a majority of the votes cast at the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE GRANTS OF SUCH STOCK OPTIONS TO MESSRS. SUDIKOFF, CHERAMY AND WANN ON NOVEMBER 29, 1993. APPROVAL OF THE CHARTER AMENDMENT The Company is currently authorized to issue 205,000,000 shares of capital stock, consisting of 200,000,000 shares of Common Stock, par value $.01 per share ("Common Stock"), and 5,000,000 shares of Preferred Stock, par value $.01 per share. The Board of Directors of the Company has approved, subject to stockholder approval, an amendment (the "Charter Amendment") to the Company's Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock from 200,000,000 to 500,000,000. In addition, the Board of Directors has declared such amendment to be in the best interests of the Company and its stockholders and recommends that the stockholders approve such amendment. As of May 5, 1994, the Company had 74,116,956 shares of Common Stock issued and outstanding. The Board of Directors has declared the Charter Amendment to be in the best interests of the Company and its stockholders. In the past, the Company has issued shares of its Common Stock for important corporate purposes, such as raising capital, providing incentives for management and acquiring businesses. The Company issued Common Stock as consideration in connection with its successful acquisition of World Communications, Inc. in 1992 and TRT Communications, Inc. in 1993. On April 20, 1994, the Company entered into a letter of intent with Peoples Telephone Company, Inc., a Delaware corporation ("PTel"), providing that the Company and PTel intend to enter into a definitive agreement which shall set forth the terms and conditions of a merger between the Company and PTel. Except in connection with the Company's proposed merger with PTel, the Company presently has no plans, commitments, understandings or arrangements for the issuance of any additional shares of Common Stock. However, failure to approve the Charter Amendment would severely impair the growth prospects of the Company and restrict its ability to raise capital in the future. The text of the proposed amendment to the Certificate of Incorporation of the Company is set forth below: NOW THEREFORE, BE IT RESOLVED, that Paragraph 1 of Article FOURTH of the Certificate of Incorporation be amended to read as follows: "FOURTH: Capital Stock. 1. Classes and Number of Shares. The Corporation is authorized to issue two classes of shares to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the Corporation shall have authority to issue is five hundred five million (505,000,000) consisting of five hundred million (500,000,000) shares of Common Stock, having a par value of $.01 per share, and five million (5,000,000) shares of Preferred Stock, having a par value of $0.01 per share." If the Charter Amendment is approved by the stockholders, the Company intends to file promptly a certificate of amendment with the Secretary of State of the State of Delaware to effect the Charter Amendment. However, in accordance with the Delaware General Corporation Law and notwithstanding approval of the Charter Amendment by the stockholders, at any time prior to the filing of such certificate of amendment, the Board of Directors of the Company may, in its discretion, abandon such proposed amendment without further action by the stockholders. Vote Required and Recommendation of Board of Directors Each holder of shares of Common Stock outstanding on the Record Date is entitled to one vote for each share so held on the proposal to approve the Charter Amendment. Approval of the Charter Amendment requires the affirmative vote of a majority of the votes cast at the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CHARTER AMENDMENT. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors has appointed Deloitte & Touche, certified public accountants, to continue as the Company's auditors and to audit the books of account and other records of the Company for the fiscal year ending December 31, 1994. Deloitte & Touche has audited the Company's financial statements since 1986. A representative of that firm is expected to be present at the Annual Meeting with the opportunity to make a statement if such representative desires to do so and is expected to be available to respond to appropriate questions. The Company has been advised that neither such firm, nor any of its partners or associates, has any direct or indirect financial interest in or any connection with the Company other than as accountants and auditors. STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING Proposals of stockholders that are intended to be presented at the 1995 Annual Meeting of Stockholders must be received by the Company by February 8, 1995 for inclusion in the Company's Proxy Statement and form of proxy relating to the 1995 Annual Meeting. ANNUAL REPORTS A copy of the 1993 Annual Report to Stockholders (the "Annual Report") is being mailed to each stockholder of record together with this Proxy Statement. On March 31, 1994, the Company filed with the Securities and Exchange Commission its Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended December 31, 1993. The Form 10-K contains detailed information concerning the Company and its operations, supplementary financial information and certain schedules that are not included in the Annual Report. COPIES OF THE FORM 10-K WILL BE FURNISHED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST DIRECTED TO: IDB COMMUNICATIONS GROUP, INC., 10525 WEST WASHINGTON BOULEVARD, CULVER CITY, CALIFORNIA 90232-1922; ATTENTION: NEIL J WERTLIEB, SECRETARY. Each such request must set forth a good faith representation that the person making the request was a beneficial owner of IDB Common Stock as of the Record Date. The Annual Report is not a part of the Company's soliciting material. OTHER MATTERS The Board of Directors does not know of any other matters to be presented at the Annual Meeting, but if other matters do properly come before the Annual Meeting, it is intended that the persons named in the proxy will vote on them in accordance with their best judgment. By Order of the Board of Directors Neil J Wertlieb Secretary Los Angeles, California _______, 1994 IDB COMMUNICATIONS GROUP, INC. PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS The undersigned hereby appoints Edward R. Cheramy, Peter F. Hartz and William L. Snelling, and each of them, with full power of substitution, the proxies of the undersigned to vote, as designated below, all stock which the undersigned is entitled to vote at the Annual Meeting of the Stockholders (the "Annual Meeting") to be held on June 30, 1994, at 10:00 a.m. at Loews Santa Monica Beach Hotel, 1700 Ocean Avenue, Santa Monica, and at any adjournment thereof. 1. Election of Directors ___ FOR all nominees listed below ___ WITHHOLD AUTHORITY to vote (except as indicated to for all nominees listed below the contrary below) Jeffrey P. Sudikoff William L. Snelling Stephen N. Carroll Edward R. Cheramy Franklin E. Fried Peter F. Hartz Joseph M. Cohen (Instructions: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) _________________________________________________________________ ____________________________________________________________ 2. Approval of an amendment to the 1992 Incentive Stock Plan. ___ FOR ___ AGAINST ___ ABSTAIN 3. Approval of the grant of stock options to certain officers of the Company. ___ FOR ___ AGAINST ___ ABSTAIN 4. Approval of an amendment to the Certificate of the Incorporation to increase the number of authorized shares of Common Stock. ___ FOR ___ AGAINST ___ ABSTAIN The proxies, without limiting their authority, are specifically authorized to vote in accordance with their best judgment with respect to: matters incident to the conduct of the Annual Meeting; matters presented at the Annual Meeting but which are not known to the Board of Directors at the time of the (Continued and to be signed on the reverse side) (Continued from reverse side) solicitation of this proxy; and with respect to the election of any person as a director if a bona fide nominee for that office is named in the Proxy Statement and such nominee is unable to serve or for good cause will not serve. IF NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE SEVEN (7) DIRECTOR NOMINEES AND FOR PROPOSALS 2, 3 AND 4. ________________________________________________ Signature of Stockholder Dated: _______________________________________, 1994 ________________________________________________ Signature of Stockholder Dated: _______________________________________, 1994 IMPORTANT: In signing this proxy, please sign your name or names on the signature lines in the same way as it is stenciled on this proxy. When signing as an attorney, executor, administrator, trustee or guardian, please give your full title as such. EACH JOINT TENANT SHOULD SIGN. PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PREPAID ENVELOPE PROVIDED. -----END PRIVACY-ENHANCED MESSAGE-----