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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PRIMEDIA INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock, par value $.01 per share ("Common Stock"), of the Registrant
(2) Aggregate number of securities to which transaction applies: 254,605,461
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total Fee Paid: N/A
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(3) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
PRIMEDIA Inc.
745 FIFTH AVENUE
THOMAS S. ROGERS NEW YORK, NY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER 10151
April 29, 2002
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
PRIMEDIA Inc. (the "Company"). The meeting will be held at 10:00 a.m. on
Thursday, May 16, 2002, at the Four Seasons Hotel, 57 East 57th St., New York,
New York 10022.
Information regarding the business to be conducted at the meeting is set forth
in the following formal Notice of Annual Meeting and Proxy Statement. At the
Annual Meeting, you will be asked to vote upon the items described in the Notice
and then I will report on the Company. You will have an opportunity to meet me
and the other members of senior management and to ask questions about the items
under consideration as well as other matters relating to the Company's business.
Your vote is important. Therefore, after you read the Notice of Annual Meeting
and Proxy Statement, please complete and return promptly the enclosed form of
proxy to ensure that your shares will be represented. A return envelope is
enclosed. For your convenience, you can also vote by phone or on-line. You may
revoke your proxy at any time before it is exercised at the meeting.
Accordingly, you should vote your proxy even if you plan to attend the meeting.
I am looking forward to receiving your proxy and meeting you on May 16.
Sincerely,
/s/ Thomas S. Rogers
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 16, 2002
To the Stockholders of
PRIMEDIA Inc.:
The annual meeting of stockholders of PRIMEDIA Inc. will be held on Thursday,
May 16, 2002, at the Four Seasons Hotel, 57 East 57th Street, New York, New York
10022 at 10:00 a.m. to:
(1) Elect ten directors;
(2) Consider amending the Certificate of Incorporation to increase the
number of authorized shares of common stock from 300 million to
350 million;
(3) Act upon the selection of auditors for the fiscal year ending
December 31, 2002; and
(4) Transact such other business as may properly come before the meeting.
Only holders of record of common stock of the Company, $.01 par value, at the
close of business on April 5, 2002, will be entitled to vote at the meeting.
Beverly C. Chell
VICE CHAIRMAN AND SECRETARY
April 29, 2002
PROXY STATEMENT
SOLICITATION OF PROXIES
This proxy statement is furnished by the Board of Directors (the "Board") of
PRIMEDIA Inc. (the "Company" or "PRIMEDIA" and, where appropriate, together with
its subsidiaries), in connection with its solicitation of proxies for use at the
annual meeting of stockholders to be held on Thursday, May 16, 2002, at 10:00
a.m., at the Four Seasons Hotel, 57 East 57th St., New York, NY 10022 and at any
and all adjournments thereof. Mailing of the proxy statement will commence on or
about April 26, 2002. Holders of record of common stock of the Company, $.01 par
value (the "Common Stock"), at the close of business on April 5, 2002, will be
entitled to one vote for each share held on all matters to come before the
meeting. On April 5, 2002, there were outstanding 254,605,461 shares of Common
Stock.
The proxy on the enclosed form may be revoked at any time before it has been
exercised. Unless the proxy is revoked or there is a direction to abstain on one
or more proposals, it will be voted on each proposal and, if a choice is made
with respect to any matter to be acted upon, in accordance with such choice. If
no choice is specified, the proxy will be voted as recommended by the Board.
VOTING AT THE MEETING
A majority of the votes entitled to vote on matters at the meeting constitutes a
quorum. If a share is represented for any purpose at the meeting, it is present
for all other matters. Abstentions and shares held of record by a broker or its
nominee ("Broker Shares") that are voted on any matter are included in
determining the number of votes present. Broker Shares that are not voted on any
matter at the meeting will not be included in determining whether a quorum is
present.
Each matter to be voted on requires a majority of the votes cast, except for the
amendment to the Company's Restated Certificate of Incorporation which requires
a majority of the outstanding shares. Abstentions and Broker Shares that are not
voted on the matter will not be included in determining the number of votes
cast.
Stockholders' proxies are received by the Company's independent proxy processing
agent, and the vote is certified by independent inspectors of election. Proxies
will be kept confidential, except as necessary to meet legal requirements.
During the proxy solicitation period, the Company will receive vote tallies from
time to time from the inspectors, but such tallies will provide aggregate
figures rather than names of stockholders. The independent inspectors will
notify the Company if a stockholder has failed to vote so that he or she may be
reminded and requested to do so.
------------------------
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board has responsibility for establishing broad corporate policies and for
the overall performance of the Company. Members of the Board are kept informed
of the Company's businesses by various reports and documents sent to them each
month as well as by operating and financial reports made at Board and committee
meetings by the Chairman of the Board and other officers.
Regular meetings of the Board are held each calendar quarter. The organizational
meeting will follow immediately after the annual meeting of stockholders. The
Board held four meetings in 2001 and also acted by unanimous written consent.
COMMITTEES OF THE BOARD
Various committees of the Board have been established to assist it in the
discharge of its responsibilities. Those committees are described below. The
biographical information on the nominees for director set forth in this proxy
statement includes regular committee memberships currently held by each nominee.
1
The AUDIT COMMITTEE in accordance with its duties and obligations set forth in
the Audit Committee Charter attached to this proxy statement as Annex A, meets
with management, the Company's independent accountants and its internal auditors
to consider the adequacy of the Company's internal controls and other financial
reporting matters. The Audit Committee recommends to the Board the engagement of
the Company's independent accountants, discusses with the independent
accountants their audit procedures and, in connection with determining their
independence, reviews the services performed by the independent accountants. The
Committee met three times in 2001. Professor Meyer Feldberg, David Bell and H.
John Greeniaus are the members of the Audit Committee. All such members of the
Audit Committee meet the applicable standards for independence including those
set by the New York Stock Exchange. In Mr. Bell's case, the Board of Directors
determined that Mr. Bell meets the requirements for independence after full
disclosure of the existence of certain business relationships between the
Company and the Interpublic Group of Companies, of which Mr. Bell is Vice
Chairman (principally the purchase of advertising in the Company's media as an
advertising agency on behalf of clients).
The COMPENSATION COMMITTEE is responsible for administering the Company's
compensation programs and remuneration arrangements for its senior executives,
including the chief executive officer. The Committee's Report on Executive
Compensation appears elsewhere in this proxy statement. The Compensation
Committee consisted of Henry R. Kravis, Michael T. Tokarz and Perry Golkin and
met once in 2001. To meet the requirements for deductability of certain
executive compensation under the Internal Revenue Code of 1986, as amended (the
"Code"), the Company established in 1999 the Special Compensation Committee,
consisting of Professor Feldberg and Mr. Greeniaus, which acted by unanimous
written consent in 2001.
The EXECUTIVE COMMITTEE, which consisted of Thomas S. Rogers, Chairman, and
Messrs. Kravis, Tokarz and Golkin has authority to act for the Board on all
matters during intervals between Board meetings. This committee acted by
unanimous written consent during 2001.
In 2001, a SPECIAL COMMITTEE of the Board was established to function as a
committee of independent directors to consider certain financing transactions
between the Company and an investment fund managed by Kohlberg Kravis Roberts &
Co. ("KKR"). The Special Committee consisted of Messrs. Bell, Feldberg and
Greeniaus. This committee met 11 times in 2001.
THE NOMINEES
It is proposed that ten directors be elected to hold office until the next
annual meeting of stockholders and until their successors have been elected.
Unless otherwise marked or indicated a proxy will be voted for such persons. In
September 2001, Scott Kurnit resigned as a director. In addition, Mr. Tokarz has
left KKR Associates and will not be standing for election. Joseph Y. Bae has
been nominated to stand for election as a director at this meeting. Except for
these changes, each of the nominees was elected at the last Annual Meeting as a
director.
The average attendance of the Board and all of its committees during 2001 was
over 90%.
Although management does not anticipate that any of the persons named below will
be unable or unwilling to stand for election, a proxy, in the event of such an
occurrence, may be voted for a substitute designated by the Board. However, in
lieu of designating a substitute, the Board may amend the By-Laws to reduce the
number of directors.
2
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES DESCRIBED
BELOW.
THOMAS S. ROGERS Mr. Rogers is Chairman of the Board, Chief
Chairman of the Board, Chief Executive Executive Officer and a Director of
Officer and Director PRIMEDIA and has served in such capacities
Age: 47 since October 1999, when he joined the
Company. Previously he was President of
NBC Cable from 1988 and, additionally,
Executive Vice President of NBC from 1992.
Mr. Rogers is also Chairman of the
Executive Committee.
JOSEPH Y. BAE Mr. Bae is a limited partner of KKR
Director Nominee Associates and has been an executive of
Age: 30 KKR since September 1996. Previously, he
worked at Goldman Sachs & Co. from 1994 to
1996. He is also a director of Shoppers
Drug Mart.
DAVID BELL Mr. Bell became a director in May 2001. He
Director has been the Vice Chairman of the
Age: 58 Interpublic Group of Companies since July
2001 and previously was the Chairman of
the Board and Chief Executive Officer of
True North Communications Inc. from 1999
through 2001. From 1994 through March
1999, he was President and Chief Executive
Officer of Bozell World Wide, a division
of True North. Mr. Bell is a member of the
Audit Committee.
BEVERLY C. CHELL Ms. Chell became Vice Chairman, General
Vice Chairman, General Counsel, Secretary Counsel and Secretary of PRIMEDIA in
and Director November 1991 and a Director in March
Age: 59 1992.
MEYER FELDBERG Professor Feldberg is Professor and Dean of
Director the Columbia University Graduate School of
Age: 60 Business and has been since 1989. He
joined the Board in January 1997. He is
also a director of Brinson Advisors Funds
Federated Department Stores, Inc., Revlon,
Inc., SAPPI, Ltd., and Select Medical
Corporation. He is the Chairman of the
Audit Committee and a member of the
Special Compensation Committee.
PERRY GOLKIN Mr. Golkin became a Director of PRIMEDIA in
Director November 1991. He is a General Partner of
Age: 48 KKR Associates and was a General Partner
of KKR from January 1, 1995 until
January 1, 1996 when he became a member
of the limited liability company which
serves as the general partner of KKR. He
is also a director of Walter Industries,
Inc. and Willis Group Holdings Limited.
Mr. Golkin is a member of the Compensation
and Executive Committees.
H. JOHN GREENIAUS Mr. Greeniaus is the former Chairman and
Director Chief Executive Officer of Nabisco, Inc.
Age: 57 He became a director in June 1998. He is
also a director of Interpublic Group of
Companies, Inc. and Pennzoil-Quaker State
Company. He is a member of the Audit
Committee and the Special Compensation
Committee.
3
HENRY R. KRAVIS Mr. Kravis became a Director of PRIMEDIA in
Director November 1991. He is a Founding Partner of
Age: 58 KKR and KKR Associates. Effective
January 1, 1996, he became a managing
member of the Executive Committee of the
limited liability company which serves as
the general partner of KKR. He is also a
director of Accuride Corporation, Alliance
Imaging, Inc., Amphenol Corporation,
Borden Chemical Inc., The Boyd's
Collection Ltd., Evenflo Company, Inc.,
The Gillette Company, IDEX Corporation,
KinderCare Learning Centers, Inc., Regal
Cinemas, Inc., Sotheby's Holdings, Inc.,
Spaldings Holdings Corporation, Willis
Group Holdings Limited, Mr. Kravis is
Chairman of the Compensation Committee and
serves on the Executive Committee.
CHARLES G. MCCURDY Mr. McCurdy became President and a Director
President and Director of PRIMEDIA in November 1991 and was also
Age: 46 Treasurer from 1991 to August 1993.
GEORGE R. ROBERTS Mr. Roberts became a Director of PRIMEDIA in
Director March 1992. He is a Founding Partner of
Age: 58 KKR and KKR Associates. Effective
January 1, 1996, he became a managing
member of the Executive Committee of the
limited liability company which serves as
the general partner of KKR. He is also a
director of Accuride Corporation, Alliance
Imaging, Inc., Amphenol Corporation,
Borden Chemical, Inc., The Boyd's
Collection Ltd., DPL Inc., Evenflo Company
Inc., IDEX Corporation, KinderCare
Learning Centers, Inc., Owens-Illinois,
Inc., Safeway, Inc., Spaldings Holdings
Corporation and Willis Group Holdings
Limited.
Messrs. Kravis and Roberts are first cousins.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for services as a director. In 2001, non-employee directors
received an annual all inclusive fee of $55,000 for all services on the Board
and all committees.
In connection with serving on the Special Committee of the Board, each of
Messrs. Bell, Feldberg and Greeniaus received $45,000.
A non-employee director may elect to defer all or part of the fee. Deferred
amounts are "credited" to an unfunded cash account or Common Stock equivalent
account, as selected by the director. Interest, at PRIMEDIA's average borrowing
rate, is credited quarterly for bookkeeping purposes to a director's cash
account. Subject to certain restrictions, a director is permitted to take
distributions in cash from a cash account or in shares of Common Stock or cash
equivalent to the then value of credited shares, at the Company's option, in
whole or in part, from his account following retirement or termination of
service. Three of the non-employee directors have elected to defer their fees in
Common Stock equivalents.
4
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
TO OUR STOCKHOLDERS:
The Compensation Committee is responsible for administering executive
compensation programs that are designed to:
- Match the Company's compensation plans to its business strategies as well
as the external business environment;
- Emphasize the relationship between pay and performance by placing a
significant portion of compensation at risk and subject to the achievement
of financial goals and objectives;
- Maximize profitability through growth and cost efficiency, balancing
appropriately the short-term and long-term goals of the Company;
- Align the interests of executives with those of stockholders through the
use of equity-based incentive awards to link a significant portion of
compensation to stockholder value; and
- Target executive compensation at a level sufficient to insure PRIMEDIA's
ability to attract and retain superior executives.
The Committee believes that compensation for executive officers should be linked
to performance. To achieve correlation between executive compensation and
performance, the Company targets a significant portion of the compensation paid
to an executive officer, assuming performance targets are met, to be at-risk
incentive compensation directly related to the performance of the Company, its
business units and its Common Stock. This includes annual and longer term cash
bonuses, restricted stock awards, and stock option grants.
BASE SALARY. Base salary is based on a qualitative evaluation of a variety of
factors, including level of responsibility and individual performance. It is the
policy of the Committee to review base salary of its most senior executives no
more frequently than every 14 to 20 months. Other than Robert Metz, CEO of the
Consumer Guide Group, and Mr. Rogers, none of the named executives received
salary increases during 2001.
ANNUAL INCENTIVES. Annual cash bonuses, principally contingent on meeting
revenue, earnings and cash flow performance targets, are provided to senior
executives and middle-managers. For 2001, over 1,000 senior executives and
middle managers participated in the Company's various executive incentive plans.
Each participant's incentive bonus opportunity is specially designed to reflect
the participant's personal performance and performance of the entity of which
the participant is part. Bonuses consider both financial performance of the
participant's business and personal performance. Because of the poor operating
performance of certain of the Company's businesses, total bonuses for the
Company for 2001 are down substantially from 2000. Other than Mr. Metz, whose
group performed on or better than target, and John Loughlin, CEO of the Consumer
Magazine and Media Group, whose group met one of their financial targets, none
of the named executives received a bonus for 2001.
LONG-TERM PERFORMANCE AWARDS. The Company's 1992 Stock Purchase and Option Plan,
as amended (the "Stock Option Plan"), provides that stock options, restricted
stock and performance awards may be granted to key executives who contribute to
the growth and profitability of the Company. During 2001, stock options were
granted under the Stock Option Plan and both restricted stock and options are
outstanding under the Plan. During 2001, stock options to purchase 50 shares of
Company stock were granted to most employees of the Company who had not
previously received an option grant. These options were intended to enable
employees not previously considered for option grants to benefit from their
contribution to improving the financial performance of the Company.
COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER. Mr. Rogers' compensation in 2001 was paid in accordance with the terms
of his employment agreement entered into when he joined the Company in 1999 and
in May 2001, he was granted a 7% increase in base salary which took effect in
July 2001, 20 months after his start date. For calendar year starting in 2001,
it was
5
determined that the Company did not meet the performance targets necessary for
Mr. Rogers to receive a bonus. The terms of Mr. Rogers' employment agreement are
described under Certain Relationships and Related Transactions elsewhere in this
proxy statement.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY AND OTHER
MATTERS. Section 162(m) of the Code generally limits to $1,000,000 the annual
tax deductible compensation paid to a covered officer. However, the limitation
does not apply to performance-based compensation, provided certain conditions
are satisfied.
The Company's policy is generally to preserve the federal income tax
deductibility of compensation paid. Accordingly, the Company has taken, to the
extent it believes feasible, appropriate actions to preserve the deductibility
of annual incentive, long-term performance, restricted stock and stock option
awards. However, notwithstanding the Company's general policy, the Committee
retains the authority to authorize payments that may not be deductible if it
believes that it is in the best interests of the Company and its stockholders.
As the Company is not currently a taxpayer for federal income tax purposes, the
loss of deductibility does not have a current effect on the Company.
COMPENSATION COMMITTEE
Henry R. Kravis, Chairman
Perry Golkin
Michael T. Tokarz
6
PERFORMANCE GRAPH
CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1996
WITH DIVIDENDS REINVESTED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01
Primedia Inc. $100 $117 $110 $153 $111 $40
S&P < 500 $100 $133 $171 $208 $189 $166
New Peer Group (5 Stocks) $100 $86 $94 $120 $108 $77
Old Peer Group (7 Stocks) $100 $120 $150 $165 $182 $179
SOURCE: GEORGESON SHAREHOLDER COMMUNICATIONS INC.
The above graph assumes a $100 investment on December 31, 1996, and reinvestment
of all dividends, in the Company's Common Stock, the S&P 500 Index and a new
composite peer group of consisting of Emmis Communications Corp., Martha Stewart
Living Omnimedia, Inc. (beginning after its initial public offering in the
second quarter of 2000), Meredith Corp., Penton Media, Inc. (beginning after its
initial public offering in the fourth quarter of 1998) and Reader's Digest
Association Inc. (Class A).
The Company has determined that as a result of changes in the business of the
Company, as well as changes in the industry, it is appropriate to compare the
Company to the new composite peer group. The old composite peer group consisted
of Harcourt General Inc. (thru 2Q01), Houghton-Mifflin Co. (thru 2Q01), John
Wiley & Sons (Class A), Meredith Corp., McGraw-Hill Companies, Reader's Digest
Association Inc. (Class A), and Scholastic Corp.
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01
-------- -------- -------- -------- -------- --------
PRIMEDIA Inc................................. $100 $117 $110 $153 $111 $ 40
S&P -C- 500.................................. $100 $133 $171 $208 $189 $166
New Peer Group (5 Stocks).................... $100 $ 86 $ 94 $120 $108 $ 77
Old Peer Group (7 Stocks).................... $100 $120 $150 $165 $182 $179
7
EXECUTIVE COMPENSATION TABLE
The following table shows, for the fiscal years ending December 31, 1999, 2000
and 2001 the compensation paid by the Company to the Chief Executive Officer and
each of the other five most highly compensated executive officers of the Company
in 2001 in all capacities in which they served:
LONG-TERM COMPENSATION
---------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION(1) -------------------------- ----------
NAME AND PRINCIPAL --------------------------- RESTRICTED LONG-TERM ALL OTHER
POSITION(2) YEAR SALARY BONUS STOCK OPTIONS STOCK PLAN(3) COMPENSATION(4)
-------------------------- -------- ---------- ---------- ------------- ---------- ---------- ----------------
Thomas S. Rogers.......... 2001 $1,248,463 -- -- -- -- $10,200
Chairman and Chief 2000 1,200,004 $1,300,000 -- -- -- 12,000
Executive Officer 1999 207,693 400,000 5,000,000 1,380,711 -- --
Charles G. McCurdy........ 2001 $ 699,998 -- -- -- $117,600 $10,200
President 2000 679,803 $ 419,783 1,000,000 -- 105,000 62,446
1999 624,988 404,702 125,000 -- 53,376
Beverly C. Chell.......... 2001 $ 699,998 -- -- -- -- $10,200
Vice Chairman, General 2000 669,037 $ 692,116 -- -- $117,600 60,675
Counsel and Secretary 1999 585,000 378,809 65,000 -- 98,280 50,092
David G. Ferm............. 2001 $ 697,690 -- 40,000 -- -- $ 5,100
Executive Vice President 2000 557,306 $ 348,166 250,000 -- -- --
and CEO--Business to 1999 -- -- -- -- -- --
Business Group
John P. Loughlin.......... 2001 $ 699,998 $ 58,978 120,000 -- -- $10,200
Executive Vice President 2000 519,614 538,024 150,000 -- -- --
and CEO--Consumer 1999 -- -- -- -- -- --
Magazine and Media Group
Robert C. Metz............ 2001 $ 399,525 $ 412,186 95,000 -- -- $ 6,800
Executive Vice President 2000 374,998 555,851 -- -- -- 8,850
and CEO--Consumer Guide 1999 354,702 374,070 20,000 -- -- 8,655
Group
------------------------------
(1) During the calendar year ended December 31, 2001, all executive officers
participated in the Company's executive incentive and discretionary
performance plans. Under these plans, cash awards are contingent and are
based on various factors including earnings performance and cash flow of the
Company (or in the case of Messrs. Loughlin, Metz and Ferm, the revenues,
earnings and cash flow of the operations they respectively manage) and the
executive's individual performance during the calendar year in question as
evaluated by the committee overseeing the Executive Incentive Plan.
(2) Scott Kurnit resigned as an officer and director in September 2001. In 2001
and 2002 he was paid an aggregate of $1,788,966.
(3) Payments were contingent on the attainment of cash flow targets pursuant to
a Long-Term Incentive Compensation Plan.
(4) Represents contributions made by the Company for the benefit of the
executives to the PRIMEDIA Thrift and Retirement Plan, a defined
contribution plan covering most of the Company's employees and the PRIMEDIA
Restoration Plan, a deferred unfunded program restoring to employees the
amount of the Company contribution to the PRIMEDIA Thrift and Retirement
Plan which the Company was not permitted to contribute because of the limit
on contributions to qualified plans under the Code. For the fiscal year
ended December 31, 2001, the Company suspended contributions to the
Restoration Plan and contributions listed above for 2001 were credited to
the Thrift and Retirement Plan.
8
STOCK OPTION GRANTS IN LAST FISCAL YEAR (1)(2)
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OF SECURITIES OPTIONS PRICE APPRECIATION FOR TEN-YEAR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (4)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------------------
NAME GRANTED (3) FISCAL YEAR SHARE DATE 0% 5% 10%
---- ------------- ------------- ---------- ---------- -------- ----------- -----------
David G. Ferm............ 40,000 .2% $ 1.85 10/5/11 0 $ 46,450 $ 117,936
John P. Loughlin......... 120,000 1.0% 1.85 10/5/11 0 139,620 353,808
Robert C. Metz........... 95,000 .5% 1.85 10/5/11 110,533 280,098
Increase in market value of PRIMEDIA common stock for all 5% (to 10% (to
stockholders at assumed annual rates of stock price $7.0857/share) $11.2828/share)
appreciation (as used in the table above) from $4.35 per $669,109,521 $1,695,654,673
share, over the ten-year period, based on approximately
244.6 million shares outstanding on December 31, 2001.
------------------------------
(1) In 2002, Messrs. Rogers and McCurdy and Ms. Chell were granted 3 million,
2 million and 1.1 million stock options, respectively. The options have
exercise prices of $4 (30% of each grant), $5 (30% of each grant) and $6
(40% of each grant). The $4 options vest in equal annual installments over
the first four years following the date of grant. The $5 options vest in
2010 unless the Company's EBITDA (earnings before interest, taxes,
depreciation and amortization) from continuing businesses exceeds
$300 million in 2003. The $6 options vest in 2010 unless (as to 75% thereof)
2004 EBITDA is $340 million and (as to the remainder) 2005 EBITDA is
$380 million. In the event an EBITDA acceleration target (as set forth
above) is met, the underlying options will vest when the financial
statements for the relevant year are finalized. EBITDA acceleration targets
are subject to adjustment by the Board of Directors to reflect acquisitions,
divestitures and other material items not presently contemplated.
(2) No Stock Appreciation Rights ("SARs") were granted to the named executive
officers during 2001.
(3) Included in the total aggregate exercise price of the grants made to the
named executive officers is approximately $100,000 of Incentive Stock
Options, which become exercisable along with the balance of their grants in
four equal installments commencing on the first anniversary date.
(4) Potential Realizable Value is based on the assumed annual growth rates for
each of the grants shown over their ten-year option term. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/
SHARES YEAR-END SARS AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ---------- ------------ -------------- ------------ --------------
Thomas S. Rogers.......... -- -- 3,562,508 1,437,492 $ 0 $ 0
Charles G. McCurdy........ 115,256 $ 923,719 2,241,042 875,000 0 0
Beverly C. Chell.......... -- -- 1,743,484 39,000 0 0
David G. Ferm............. -- -- 50,000 240,000 0 100,000
John P. Loughlin.......... -- -- 30,000 240,000 0 300,000
Robert C. Metz............ -- -- 74,000 111,000 0 237,500
------------------------------
(1) The Company's stock price on December 31, 2001 was $4.35 per share.
LONG-TERM INCENTIVE PLAN AWARDS
The Long-Term Incentive Compensation Plan was cancelled effective May 2000.
9
PRIMEDIA EMPLOYEE STOCK PURCHASE PLAN
Effective March 29, 2000, the Executive Committee of the Board of Directors and
a majority of the stockholders, by written consent, approved and adopted an
employee stock purchase plan designed to give employees a greater stake in the
Company through increased stock holdings. The following summary describes
features of the PRIMEDIA Employee Stock Purchase Plan (the "Plan").
The Plan became effective March 29, 2000 and 5,000,000 shares of Common Stock
($0.01 par value) were reserved for issuance under the Plan. The Plan has a
duration of six years, subject to earlier termination by the Board of Directors.
The Plan permits employees to purchase PRIMEDIA Common Stock through payroll
deductions during six month periods beginning on January 1 and July 1 (each, an
"Offering Period").
Eligible employees on each offering date are able to purchase full shares
through payroll deductions of between 2% and 5% of salary, but in no event shall
the fair market value of the shares purchased under the Plan by an employee, as
measured as of the first day of each applicable Offering Period, exceed $25,000
in any calendar year. The price an employee pays will be the lesser of 90% of
the price on the first business day of each Offering Period or 90% of the price
on the last business day of the applicable pay period. Shares for the Plan may
be sourced from shares purchased in the open market, treasury shares or
authorized and unissued shares. Eligibility was extended to all regular and
certain other employees of the Company and of its subsidiaries, as defined in
the Plan. Messrs. Rogers and Loughlin participate in the Plan.
The Plan is administered by a committee composed of senior management. The Plan
may be amended by the Board of Directors but may not be amended, without prior
stockholder approval, to increase the number of shares or to reduce the purchase
price per share. The proceeds of the sale of stock and of administrative fees
received under the Plan constitute general funds of the Company and may be used
by it for any purpose. The Plan provides for proportionate adjustments to
reflect stock splits, stock dividends or other changes in the capital stock.
On December 31, 2001, the Company's Common Stock closed at $4.35 on the New York
Stock Exchange, a price lower than on July 1, 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of Messrs. Kravis, Tokarz and Golkin in
2001, none of whom has ever been an officer or employee of the Company. Each of
Messrs. Kravis and Golkin are, and Mr. Tokarz was, a general partner of KKR
Associates and members of KKR 1996 GP LLC, the general partners of the
partnerships, which own as of March 31, 2002, approximately 62% of the
outstanding Common Stock. As general partners of KKR Associates and members of
KKR 1996 GP LLC, Messrs. Kravis, Tokarz and Golkin may be deemed to share
beneficial ownership of the Common Stock beneficially owned by KKR Associates;
however, they disclaim such beneficial ownership. See "Certain Relationships and
Related Transactions" and "Security Ownership of Certain Beneficial Owners and
Management."
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1999, Mr. Rogers and the Company entered into a four year
employment agreement providing for annual salary of $1,200,000, an annual target
performance bonus of $800,000 and a potential annual discretionary bonus of up
to $1 million based on extraordinary performance. The agreement provides for the
grant of restricted stock and stock options as described in the Executive
Compensation Table above.
On April 5, 2001, the Company sold the capital stock of QWIZ, Inc. and QWIZ (UK)
Limited to QWIZ Acquisition Corporation ("QWIZ Acquisition") in exchange for
$7 million in cash PLUS preferred stock of QWIZ Acquisition having a liquidation
value of $3 million. Mr. Tokarz, one of the Company's directors, owns more than
10% of QWIZ Acquisition.
In April 2001, Ms. Chell entered into an agreement with the Company pursuant to
which she became eligible for an additional annual discretionary bonus based on
performance of certain start-up business areas for the Company. In addition,
pursuant to the agreement, Ms. Chell is entitled to certain retirement benefits.
In April 2002, Mr. McCurdy entered into a four year employment agreement
providing for annual salary of $700,000 and an annual target performance bonus
of $385,000.
On September 17, 2001, Mr. Kurnit agreed that his employment with the Company
would terminate effective December 31, 2001 and he resigned from the Board
effective September 17, 2001. Mr. Kurnit earned $439,583 in salary for 2001.
Pursuant to the agreement relating to his termination, one half of the
restricted shares and stock options granted pursuant to his employment agreement
vested on December 31, 2001 and the other half of each were forfeited. On
February 28, 2001, those vested options expired unexercised. Pursuant to such
agreement, Mr. Kurnit was paid $1,349,383 on April 1, 2002. Commencing
January 1, 2002 through February 28, 2005, Mr. Kurnit will receive monthly
payments equal to $25,000.
In March 2000, Mr. Loughlin and the Company entered into a three year employment
agreement providing for annual salary of $700,000, an annual target performance
bonus of $420,000 and a sign on bonus of $250,000. The agreement provides for
the grant of stock options as described in the Executive Compensation Table
above.
In March 2002, Mr. Ferm and the Company entered into an agreement extending his
employment agreement through March 31, 2003. The agreement provides for a base
salary of $670,000, an annual target performance bonus of $420,000 and an
additional special incentive payment if certain financial targets of PRIMEDIA
Business Magazines and Media, of which Mr. Ferm is the CEO, are met.
In February 2002, a long-term compensation plan was established for Mr. Metz and
three other senior executives in the Consumer Guide Group. Under this plan,
Mr. Metz has target payouts of $100,000, $150,000 and $450,000 in 2002, 2003 and
2004, respectively. This plan replaced a prior long-term plan (payments to
Mr. Metz in 2001 under this prior plan are reflected on the Executive
Compensation Table). Payment of any amount is contingent on the Consumer Guide
Group achieving certain financial targets.
Each of the named executives was granted stock options in some or all of the
Company's internet entities. No information is given about such options because
such options have no value or liquidity at this time.
On August 24, 2001, the Company acquired 100% of the outstanding common stock of
EMAP Inc., the U.S. publishing business of EMAP plc. The total consideration was
$525 million including warrants to acquire 2,000,000 shares of the Company's
Common Stock at $9 per share.
The Company financed the acquisition of EMAP in part by issuing 1,000,000 shares
of Series J Convertible Preferred Stock to KKR 1996 Fund (a partnership
associated with KKR) for $125 million. In addition, KKR 1996 Fund purchased from
the Company $125 million of Common Stock and Series K Convertible Preferred
Stock, both at a price per share equal to $4.70. This resulted in an additional
10,800,000
11
shares of Common Stock and 15,795,745 shares of Series K Convertible Preferred
Stock. On September 27, 2001, all of the issued and outstanding shares of the
Series K Convertible Preferred Stock were, in accordance with their terms,
converted into 15,795,745 shares of the Company's Common Stock.
In connection with the equity financing by KKR 1996 Fund, the Company paid KKR
1996 Fund a commitment fee consisting of warrants to purchase 1,250,000 shares
of Common Stock of the Company at an exercise price of $7 per share, subject to
adjustment, and a funding fee consisting of warrants to purchase an additional
2,620,000 shares of the Company's Common Stock at an exercise price of $7 per
share, subject to adjustment. These warrants may be exercised after the first
anniversary of the grant date and expire on August 24, 2011 or upon a change in
control, as defined. In addition, the Company may be required to issue to KKR
1996 Fund additional warrants to purchase up to 4,000,000 shares of the
Company's Common Stock at an exercise price of $7 per share, subject to
adjustment. The issuance of the additional 4,000,000 warrants is contingent upon
the length of time that the Series J Convertible Preferred Stock is outstanding.
If the Series J Convertible Preferred Stock is outstanding for three, six, nine
or twelve months from the date of issuance, KKR 1996 Fund will receive the
additional warrants to purchase 250,000, 1 million, 1.25 million and
1.5 million shares of Common Stock, respectively. Accordingly, during
November 2001, the Company issued to KKR 1996 Fund additional warrants to
purchase 250,000 shares of the Company's Common Stock. The Company ascribed a
value of $498,000 to these warrants using the Black Scholes pricing model. These
warrants expire ten years from the date of issuance or upon a change in control.
All of the above described financing transactions between the Company and KKR
were reviewed by and recommended for approval by the Special Committee of the
Board which retained its own counsel and investment banker to advise it as to
the financing transactions.
From time to time, KKR, which is an affiliate of KKR Associates, may receive
customary investment banking fees for services rendered to the Company in
connection with divestitures, acquisitions and certain other transactions. In
addition, KKR renders management, consulting, acquisition and financial services
to the Company for an annual fee of $1 million payable quarterly in arrears. The
Company believes that this fee is no less favorable than that which could be
obtained for comparable services from unaffiliated third parties. Partners of
KKR who also serve as directors of the Company do not receive additional
compensation for service in such capacity, other than customary director's fees.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 31, 2002 by (i) each beneficial owner
of more that five percent of the Company's outstanding Common Stock, (ii) each
of the Company's directors and named executive officers, and (iii) all directors
and executive officers of the Company as a group.
NUMBER OF
SHARES BENEFICIALLY
NAME OWNED(1)(2) PERCENTAGE
---- ------------------- ----------
KKR Associates (3)
9 West 57th Street
New York, New York 10019................................. 106,886,265 41.98%
KKR 1996 GP LLC(4)
9 West 57th Street
New York, New York 10019................................. 49,190,039 19.32%
Joseph Y. Bae(3)(4)........................................ -- *
Beverly C. Chell(2)........................................ 2,138,357 *
Meyer Feldberg............................................. 55,000 *
Perry Golkin (3)(4)........................................ 33,660 *
H. John Greeniaus.......................................... 140,497 *
Henry R. Kravis (3)(4)..................................... -- *
Charles G. McCurdy (2)(5).................................. 2,870,643 1.2%
George R. Roberts (3)(4)................................... 30,660 *
Thomas S. Rogers (2)....................................... 5,435,660 2.2%
All directors and executive officers as a group
(17 persons)............................................. 11,308,977 4.62%
------------------------
* Less than one percent.
(1) For purposes of this table, a person or group is deemed to have "beneficial
ownership" of any shares as of a given date which such person has the right
to acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person or group of persons
named above on a given date, any security which such person or persons has
the right to acquire within 60 days after such date is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage of ownership of any other person.
(2) Of the shares shown as owned, 3,875,006, 2,441,042 and 1,743,484 shares,
respectively, for Messrs. Rogers, McCurdy and Ms. Chell are in fact
represented by options to purchase Common Stock which were either
exercisable on March 31, 2002 or become exercisable within 60 days
thereafter.
(3) Shares of Common Stock shown as owned by KKR Associates are owned of record
by MA Associates, L.P., FP Associates, L.P., Magazine Associates, L.P.,
Publishing Associates, L.P., Channel One Associates, L.P., KKR 1996 Fund
L.P., and KKR Partners II, L.P., of which KKR Associates is the sole general
partner and as to which it possessed sole voting and investment power.
Messrs. Kravis, Roberts, Tokarz and Golkin (directors of PRIMEDIA) and Paul
E. Raether, Robert I. MacDonnell Michael W. Michelson, James H. Greene,
Edward A. Gilhuly, and Scott M. Stuart, as the general partners of KKR
Associates, may be deemed to share beneficial ownership of the shares shown
as beneficially owned by KKR Associates. Such persons disclaim beneficial
ownership of such shares.
13
Mr. Bae is a limited partner of KKR Associates and an executive of KKR. He
disclaims beneficial ownership of such shares.
(4) Shares of Common Stock shown as owned by KKR 1996 GP LLC are owned of record
by KKR 1996 Fund L.P., of which KKR Associates 1996 L.P. is the sole general
partner. KKR 1996 GP LLC is the sole general partner of KKR Associates 1996
L.P. and possesses sole voting and investment power. Messrs. Kravis,
Roberts, Tokarz and Golkin (directors of PRIMEDIA) and Paul E. Raether,
Michael W. Michaelson, James H. Greene, Edward A. Gilhuly, Scott M. Stuart,
Todd Fisher, Johannes Huth, Alexander Navab and Neil Richardson are the
members of KKR 1996 GP LLC. Each of such individuals disclaims beneficial
ownership of such shares. Messrs. Kravis and Roberts constitute the
management committee of KKR 1996 GP LLC. Mr. Bae is a limited partner of KKR
Associates and an executive of KKR. He disclaims beneficial ownership of
such shares.
(5) Includes 160,000 shares held in trust for his minor children.
14
CONSIDERATION OF APPROVAL OF AN INCREASE IN AUTHORIZED COMMON STOCK
In March 2002, the Board of Directors unanimously approved an amendment to the
Company's certificate of incorporation to permit the Company to issue up to an
additional 50 million shares of Common Stock. The Board directed that the
amendment be voted on by stockholders. The form of the proposed amendment is
attached to this proxy statement as Annex B.
The Company is currently permitted to issue up to an aggregate of 300 million
shares of Common Stock. As of April 5, 2002, 254,605,461 shares of Common Stock
were issued and outstanding.
The Board in December 2001, approved the exchange of shares of the Company's
Common Stock for up to $100 million of aggregate redemption value of the
Company's outstanding preferred stock at a substantial discount. Through
April 3, 2002, the Company had exchanged $62,066,400 of redemption value of its
preferred stock for 11,758,797 shares of its Common Stock; the equivalent of
selling Common Stock at an average per share price of $5.28. Assuming the
remainder of the $100 million of preferred stock is exchanged at similar
discounts, the Company would have virtually no authorized but unissued shares of
its Common Stock. The Board believes the remaining authorized but unissued
shares do not provide the Company with an appropriate level of authorized Common
Stock in the event of unanticipated events. Therefore, the Board would like to
increase the number of shares of Common Stock that the Company can issue for
possible additional preferred stock exchanges acquisitions, financings and other
corporate purposes.
Other than such preferred stock exchange, the Company does not currently plan to
issue any of the additional shares of Common Stock and is subject to some
restrictions on its ability to do so. New York Stock Exchange Rules require
stockholder approval of issuances of Common Stock under certain circumstances
including when the number of shares to be issued equals or exceeds 20% of the
voting power outstanding. The Board can issue shares from time to time in
accordance with Securities and Exchange Commission and New York Stock Exchange
Rules without obtaining the approval of stockholders.
Newly authorized shares would have the same rights as the presently authorized
shares, including the right to cast one vote per share and to receive dividends
paid by the Company. Although the authorization would not, in itself, have any
effect on your rights as a stockholder, issuance of additional shares of Common
Stock for other than a stock split or dividend could, under certain
circumstances, have a dilutive effect on voting rights and earnings per share.
The increase in the Company's authorized share capital must be approved by the
affirmative vote a majority of all outstanding shares of Common Stock.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE TO 350 MILLION THE SHARES OF COMMON
STOCK AUTHORIZED FOR ISSUANCE.
SELECTION OF AUDITORS
The Audit Committee has recommended to the Board that Deloitte & Touche LLP,
which firm has been the independent accountants of the Company since the
Company's inception in 1992 (and its predecessors from 1989), be continued as
auditors for the Company. The stockholders are being asked to approve the
Board's decision to retain Deloitte & Touche LLP for the fiscal year ending
December 31, 2002. A representative of Deloitte & Touche LLP will be present at
the meeting. The representative will be
15
given an opportunity to make a statement if he or she desires to do so and will
be available to answer questions.
ACCOUNTING FEES
The following table sets forth the aggregate fees billed to the Company for the
year ended December 31, 2001 by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte & Touche"), which included Deloitte Consulting. Deloitte & Touche has
recently announced its intent to separate Deloitte Consulting from the firm.":
Audit Fees.................................................. $3,843,000
Audit Related Fees
SEC Filings............................................... 466,000
Divestiture Audit......................................... 200,000
Due Diligence and Other Acquisition-related Services...... 1,014,000
Other..................................................... 83,000
----------
Total Audit Related....................................... 1,763,000
----------
Total Audit and Audit Related........................... $5,606,000
==========
Financial Systems Design and Implementation Fees............ --
All Other Fees (Non-audit Related)
Consulting:
Implementation of Forecasting Process and ERP
Financials............................................ $ 610,000
Evaluation of ERP Business Case......................... 186,000
Help Desk/Desk-top Outsourcing.......................... 267,000
Telecommunications Project.............................. 132,000
----------
Subtotal Consulting................................... 1,195,000
Tax Services.............................................. 45,000
Other..................................................... 94,000
----------
Total Non-audit....................................... $1,334,000
==========
AUDIT COMMITTEE REPORT
In accordance with the Audit Committee Charter, attached hereto as Annex A, the
Audit Committee of the Board (the "Committee") assists the Board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of PRIMEDIA Inc. During year 2001,
the Committee met three times, and the Committee chair, as representative of the
Committee, discussed the interim financial information contained in each
quarterly earnings announcement with the Chief Financial Officer, Controller and
independent auditors prior to public release.
In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on the auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees" and discussed
with the auditors any relationships that may impact their objectivity and
independence. The committee also
16
considered whether the provision of non-audit related services is compatible
with maintaining the auditors' independence. The Committee satisfied itself as
to the auditors' independence. Nonetheless, the Audit Committee determined that
the Company should not, going forward, retain the independent auditors for any
consulting projects unless related to the audit function such as preacquisition
audits.
The Committee also discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the Company's internal controls
and the internal audit function's organization, responsibilities, budget and
staffing. The Committee reviewed with both the independent and the internal
auditors their audit plans, audit scope, and identification of audit risks.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards in the United
States of America, including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees" and, with and without
management present, discussed and reviewed the results of the independent
auditors' examination of the financial statements. The Committee also discussed
the results of the internal audit examinations.
The Committee reviewed the audited financial statements of the Company as of and
for the year ended December 31, 2001, with management and the independent
auditors. Management has the responsibility for the preparation of the Company's
financial statements. The Company's independent auditors are responsible for
auditing the financial statements. The Audit Committee responsibility is to
monitor and review the financial processes and procedures designed to insure
compliance with accounting standards and applicable laws and regulations.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Committee recommended to the Board that the Company's
audited financial statements be included in its Annual Report on Form 10K for
the year ended December 31, 2001, for filing with the Securities and Exchange
Commission. The Committee also recommended the reappointment, subject to
shareholder approval, of the independent auditors and the Board concurred in
such recommendation.
Date: April 29, 2002
NAME OF COMMITTEE
CHAIR, Chair
Dean Meyer Feldberg
/s/ Dean Meyer Feldberg
NAMES OF COMMITTEE
MEMBERS
H. John Greeniaus
/s/ H. Joh Greeniaus
David Bell
/s/ David Bell
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF AUDITORS.
17
OTHER MATTERS
Management knows of no other business that will be presented to the meeting for
a vote, except that stockholder proposals not included in this proxy statement
may be presented. If other matters properly come before the meeting, the persons
named as proxies will vote on them in accordance with their best judgment.
The cost of this solicitation of proxies will be borne by the Company. In
addition to the use of the mails, some of the officers and regular employees of
the Company may solicit proxies by telephone and will request brokerage houses,
banks and other custodians, nominees and fiduciaries to forward soliciting
material to the beneficial owners of Common Stock held of record by such
persons. The Company will reimburse such persons for expenses incurred in
forwarding such soliciting material. It is contemplated that additional
solicitation of proxies will be made in the same manner under the engagement and
direction of Georgeson & Co., at an anticipated cost of less than $5,000, plus
reimbursement of out-of-pocket expenses.
Under the federal securities laws, the Company's directors, officers and ten
percent stockholders are required to report to the Securities and Exchange
Commission and the New York Stock Exchange, by specific dates, transactions and
holdings in the Company's Common Stock. Based solely on its review of the copies
of such forms received by it or written representations from certain reporting
persons that no annual corrective filings were required for those persons, the
Company believes that during fiscal 2001 all these filing requirements were
satisfied.
The Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, including certified financial statements and all other information
required to be included in an annual report to shareholders, has been furnished
to all persons who were shareholders of the Company on the record date for the
Annual Meeting of Stockholders.
On April 25, 2001, Mr. Greeniaus, purchased 1,000 shares of Company Stock in an
open market purchase at a price of $7.35. From August 27, 2001 through
August 30, 2001, Mr. Greenias purchased an aggregate of 23,000 shares of Company
Stock in open market purchases at prices ranging from $4.90 to $5.40.
Mr. Greeniaus was late in filing his statements disclosing these purchases with
the SEC. On September 20, 2001, Lawrence Rutkowski, the Company's Chief
Financial Officer purchased 5,000 shares of Company Common Stock in an open
market purchase at a price of $2.76. Mr. Rutkowski was late in filing his
statements disclosing these purchases with the SEC.
2003 ANNUAL MEETING
For a stockholder to bring matters before the 2003 Annual Meeting, notice must
be received by the Company within the time limits described below. The notice
must include a description of the proposed business, the reasons therefore and
other specified matters. For a matter to be included in the Company's proxy
statement and proxy for the 2003 Annual Meeting, notice must be received by the
Company on or before January 25, 2003. In each case, the notice must be given to
the Secretary of the Company, whose address is 745 Fifth Avenue, New York, New
York, 10151. Any stockholder desiring a copy of the Company's By-Laws will be
furnished one without charge upon written request to the Secretary.
Beverly C. Chell
VICE CHAIRMAN AND SECRETARY
April 29, 2002
18
ANNEX A
AUDIT COMMITTEE CHARTER
ROLE AND INDEPENDENCE
The audit committee of the board of directors assists the board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and reporting practices of the corporation and such other duties as
directed by the board. The membership of the committee shall consist of at least
three directors who are generally knowledgeable in financial and auditing
matters, including at least one member with accounting or related financial
management expertise. Each member shall be free of any relationship that, in the
opinion of the board, would interfere with his or her individual exercise of
independent judgement. The committee is expected to maintain free and open
communication (including private executive sessions at least annually) with the
independent accountants, the internal auditors and the management of the
corporation. In discharging this oversight role, the committee is empowered to
investigate any matter brought to its attention, with full power to retain
outside counsel or other experts for this purpose. This charter shall be
reviewed and updated annually.
RESPONSIBILITIES
The audit committee's primary responsibilities include:
- Primary input into the recommendation to the board for the selection and
retention of the independent accountant that audits the financial
statements of the corporation. In the process, the committee will discuss
and consider the auditor's written affirmation that the auditor is in fact
independent, will discuss the nature and rigor of the audit process,
receive and review all reports and will provide to the independent
accountant full access to the committee (and the board) to report on any
and all appropriate matters.
- Provision of guidance and oversight to the internal audit function of the
corporation, including review of the organization, plans and results of
such activity.
- Review of financial statements (including quarterly reports) with
management and the independent auditor. It is anticipated that these
discussions will include quality of earnings review of reserves and
accruals, consideration of the suitability of accounting principles,
review of highly judgmental areas, audit adjustments whether or not
recorded and such other inquiries as may be appropriate.
- Discussion with management and the auditors of the quality and adequacy of
the Company's internal controls.
- Reporting on audit committee activities to the full board and issuance
annually of a summary report (including appropriate oversight conclusions)
suitable for submission to the shareholders.
A-1
ANNEX B
PROPOSED AMENDMENT TO PRIMEDIA'S CERTIFICATE OF INCORPORATION
Article FOURTH is hereby deleted in its entirety and replaced with the
following:
FOURTH: The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is 400 million shares, consisting of
350 million shares of Common Stock, par value $.01 per share, and 50 million
shares of Preferred Stock, par value $.01 per share.
B-1
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----------------------------------------------------
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you marked, signed and returned the proxy card. your proxy.
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/ / MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY /X/
USING THE ENCLOSED ENVELOPE. Votes must be indicated
(x) in Black or Blue ink.
1. Election of Directors
FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
listed below for all nominees listed below
NOMINEES 01 - Thomas S. Rogers, 02 - Joseph Y. Bae, 03 - David Bell, 04 - Beverly C. Chell,
05 - Meyer Feldberg, 06 - Perry Golkin, 07 - H. John Greeniaus, 08 - Henry R.
Kravis, 09 - Charles G. McCurdy, 10 - George R. Roberts.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE
"EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
* Exceptions ___________________________________________________________________________
FOR AGAINST ABSTAIN
2. To approve the amendment to the Restated / / / / / /
Certificate of Incorporation to increase
the number of authorized shares of common
stock from 300 million to 350 million.
FOR AGAINST ABSTAIN
3. To ratify and approve the selection by the Board of
Directors of Deloitte & Touche LLP as independent / / / / / /
public accountants for the Company for the
fiscal year ending December 31, 2002.
4. Transact such other business as may properly come before the meeting.
In their discretion the Proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournment or postponement
thereof.
To change your address, please mark this box. / /
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SCAN LINE
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The signature on this Proxy should correspond exactly with stockholder's name as
printed to the left. In the case of joint tenancies, co-executors, or
co-trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.
Date Share Owner sign here Co-Owner sign here
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PRIMEDIA INC.
745 FIFTH AVENUE
NEW YORK, NEW YORK 10151 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2002
Dear Stockholder:
The Annual Meeting of Stockholders of PRIMEDIA Inc. will be held at 10:00 a.m. on Thursday, May 16, 2002 at The
Four Seasons Hotel, 57 East 57th Street, New York, New York 10022, for the following purposes:
(1) To elect ten directors to the Board of Directors
(2) To approve amending the Restated Certificate of Incorporation to increase the number of authorized shares
of common stock from 300 million to 350 million;
(3) To approve selection of independent public accountants for the fiscal year ending December 31, 2002;
and
(4) Transact such other business as may properly come before the meeting.
Only holders of Common Stock of PRIMEDIA Inc. of record at the close
of business on April 5, 2002 will be entitled to vote at the meeting
or any adjournment thereof.
TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN
THE PROXY CARD ON THE REVERSE SIDE, DETACH IT FROM THIS LETTER AND
RETURN IT IN THE POSTAGE PAID ENVELOPE ENCLOSED IN THIS PACKAGE. The
giving of such proxy does not affect your right to vote in person if
you attend the meeting. The prompt return of your signed proxy will
aid the Company in reducing the expense of additional proxy
solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Beverly C. Chell
BEVERLY C. CHELL
VICE CHAIRMAN AND SECRETARY
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PRIMEDIA Inc.
PROXY CARD
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PRIMEDIA INC.
FOR THE ANNUAL MEETING ON MAY 16, 2002
The undersigned appoints Maureen Sheehan and Christopher
Fraser, and each of them, with full power of substitution in
each, the proxies of the undersigned, to represent the
undersigned and vote all shares of PRIMEDIA Inc. Common Stock
which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders to be held on May 16, 2002, and at any
adjournment or postponement thereof, as indicated on the reverse
side.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder. If no
direction is given, this proxy will be voted FOR proposals 1, 2
and 3.
PRIMEDIA INC.
P.O. BOX 11283
NEW YORK, N.Y. 10203-0283
(Continued, and to be signed and dated on reverse side.)
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