Definitive Proxy Statement


Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

(Rule 14a-101)

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934 (AMENDMENT NO.     )

Filed by the Registrant      Filed by a Party other than the Registrant 

Check the appropriate box:

☐      Preliminary Proxy Statement

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☑      Definitive Proxy Statement

☐      Definitive Additional Materials

☐      Soliciting Material Pursuant to §240.14a-12

 

AMC Networks Inc.

(Name of registrant as specified in its charter)

         

(Name of person(s) filing proxy statement, if other than the registrant)

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LOGO

Dear Stockholder:

You are cordially invited to attend our annual meeting of stockholders, which is being held on Tuesday, June 6, 2017 at 10:00 a.m. Eastern Daylight Time at The Paley Center for Media, 25 West 52nd Street, New York, New York 10019.

In 2016, the Company continued to deliver strong financial performance and remained focused on its commitment to return value to its stockholders by implementing a stock repurchase program. In addition, the Company continued to successfully develop outstanding original programming, with the following notable achievements:

 

   

AMC continued to be home to the #1 show on television, by a large margin, with its flagship series, The Walking Dead. The series has ranked as the #1 show on television for the last five years, among Adults ages 18-49. AMC was also home to four of the top nine shows on cable television among Adults ages 18-49 (in live + 3 ratings).

 

   

BBC AMERICA was one of the top five fastest growing entertainment networks on cable and the debut of its new original series, Dirk Gently’s Holistic Detective Agency , was one of BBC AMERICA’s biggest scripted series launches in the network’s history.

 

   

SundanceTV continued to be a leading destination for high quality shows. Its original drama, Hap and Leonard , debuted as the highest-rated series in the network’s history, and the network’s Peabody Award-winning series, Rectify , completed its fourth and final season as one of the most critically-acclaimed dramas on television.

 

   

Established in 2010 to produce The Walking Dead , AMC Studios has grown significantly as the Company has pursued a strategy to own and distribute more of its content. In 2016, AMC Studios produced 10 wholly-owned scripted original series for three of the Company’s national networks – AMC, BBC AMERICA and SundanceTV.

Throughout the year we continue to engage with our stockholders on a range of topics including the Company’s Board, governance and executive compensation practices. We remain focused on executing our strategy and are well positioned to capitalize on future opportunities to maintain strong growth.

I look forward to seeing you at the meeting, where you will have an opportunity to ask questions and to meet your directors and executives.

 

Sincerely yours,

LOGO

Charles F. Dolan

Executive Chairman

April 27, 2017


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NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

 

 

To the Stockholders of

AMC Networks Inc.

The Annual Meeting of Stockholders of AMC Networks Inc. (the “Company”) will be held at The Paley Center for Media, 25 West 52nd Street, New York, New York 10019 on Tuesday, June 6, 2017, at 10:00 a.m. Eastern Daylight Time to consider and vote upon the following proposals:

 

  1. Election of Directors.

 

  2. Ratification of appointment of independent registered public accounting firm.

 

  3. Conduct such other business properly brought before the meeting.

Only stockholders of record on April 10, 2017 may vote at the meeting.

The Company is pleased to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the impact of the Company’s annual meeting on the environment.

Your vote is important. We urge you to vote as soon as possible by telephone, over the Internet or by mailing a proxy card. If you choose to vote by mail, please sign and return the proxy card in the envelope provided.

ADMISSION TICKET REQUIRED FOR ADMISSION TO THE ANNUAL MEETING

An admission ticket is required if you wish to attend the annual meeting in person. You can obtain and print your admission ticket at www.proxyvote.com or call 844-318-0137. You will need the 16-digit control number which can be found on your Notice of Internet Availability of Proxy Materials, voter instruction form and proxy card. For more details, see General Information, “How do I attend the 2017 Annual Meeting in person? What do I need to bring?” of the Proxy Statement.

 

By order of the Board of Directors,

LOGO

Anne G. Kelly

Senior Vice President and Secretary

New York, New York

April 27, 2017


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PROXY STATEMENT SUMMARY

We present here a summary of important information in this proxy statement. Please review the complete proxy statement before you vote.

2016 Business Highlights

2016 continued our long-term trend of delivering strong financial performance despite a challenging environment. Our incentive compensation is determined by Net Revenues, Adjusted Operating Income and Free Cash Flow, given our belief that successful performance against these measures promotes the creation of long-term stockholder value.

 

   

Net revenues increased 6.8% to $2.76 billion

 

   

Operating Income decreased 7.3% to $658 million reflecting impairment charges of $68 million related to the AMCNI Digital Media Center

 

   

Adjusted operating income (AOI) increased 4.8% to $879 million

 

   

Cash Provided by Operating Activities increased 39% to $514 million

 

   

Free Cash Flow increased 43% to $426 million

We premiered a new AMC original series, Preacher , and a new AMC mini-series, The Night Manager. Our television and film content continued to receive widespread critical praise and industry honors, with The Night Manager being the most awarded single program at the Golden Globes. We continued to build and expand our international business into key markets across Europe and Latin America.

The Company continued to focus on its commitment to return value to its stockholders by implementing a stock repurchase program to repurchase up to $500 million of the Company’s outstanding shares of Class A Common stock. As of February 17, 2017, the Company has repurchased 4,924,000 shares of Class A Common stock leaving up to $231 million available for future repurchases. Our share repurchases are part of an overall capital allocation strategy overseen by our Board of Directors and designed to efficiently balance return of capital to shareholders with investment in our business.

Corporate Governance Highlights

Notwithstanding our status as a controlled company, we are committed to ensuring that our Board is accountable to and acts in the best interests of all our stockholders. We have implemented a number of strong governance practices and policies to promote independent leadership in the boardroom and the protection of stockholder rights.

 

 Commitment to Sound Governance Practices as a Controlled Company

  ✓  

  Annual election of directors, with directors serving one-year terms

  ✓  

  Robust director nomination criteria, including consideration for diversity of perspectives, backgrounds and experiences relevant to the Company’s strategic priorities, and ability to serve the interests of both Class A and Class B stockholders

  ✓  

  Independent Board committees, with Audit and Compensation comprised 100% of independent directors

  ✓  

  Executive sessions with only independent Class A Directors at least twice a year

  ✓  

  Effective Board self-evaluations conducted at least annually

  ✓  

  Regular engagement with stockholders regarding Company performance and strategy, our Board and corporate governance practices, and our executive compensation program

 

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Director Nominees

The Board has nominated fourteen director candidates; five Class A nominees and nine Class B nominees. Each director is nominated for a term to expire at the 2018 annual meeting of the Company’s stockholders. Our Class A nominees are elected by our Class A stockholders and have significant business leadership and management experience, and extensive knowledge of the media industry. Our Class B nominees are elected by Class B stockholders and have significant industry and leadership experience, and a long history of institutional knowledge of the Company. The Board is comprised of 43% independent directors. See Proposal 1 — Election of Directors, “Directors Elected By Class A Common Stockholders” and “Directors Elected By Class B Common Stockholders” of the Proxy Statement for detailed information about each director’s background, skills and qualifications.

 

  Name  

Director

Since

  Principal Occupation   Committees
  Directors Elected By Class A Common Stockholders

  Jonathan F. Miller

  2013  

•     Partner, Advancit Capital

  Compensation

  Leonard Tow

  2011  

•     Chief Executive Officer, New Century Holdings LLC

  Compensation (Chair); Audit

  David E. Van Zandt

  2015  

•     President, The New School

•     Special General Counsel and Adviser, Artal Group S.A. and The Invus Group, LLC

  Audit

  Carl E. Vogel

  2013  

•     Industry Advisor, Kohlberg Kravis Roberts & Co. L.P.

•     Senior Advisor, DISH Network Corporation

•     President, Bulldog Capital, Inc.

  Audit (Chair); Compensation

  Robert C. Wright

  2011  

•     Senior Advisor, Lee Equity Partners LLC

  —  
  Directors Elected By Class B Common Stockholders

  William J. Bell

  2011  

•     Former Vice Chairman and Chief Financial Officer, Cablevision Systems Corporation

  —  

  Charles F. Dolan

   Executive Chairman

  2011  

•     Executive Chairman, AMC Networks Inc.

•     Former Chairman, Cablevision Systems Corporation

  —  

  James L. Dolan

  2011  

•     Executive Chairman, MSG Networks Inc.

•     Executive Chairman, The Madison Square Garden Company

  —  

  Kristin A. Dolan

  2011  

•     Chief Executive Officer, 605, LLC

  —  

  Patrick F. Dolan

  2011  

•     President, News 12 Networks

  —  

  Thomas C. Dolan

  2011  

•     Former Executive Vice President-Strategy and Development, Office of the Chairman, Cablevision Systems Corporation

  —  

  Brian G. Sweeney

  2011  

•     Former President and Chief Financial Officer, Cablevision Systems Corporation

  —  

  Vincent Tese

  2016  

•     Former Chief Executive Officer of the New York State Urban Development Corporation

•     Executive Chairman of Florida Community Bank

•     Chairman of Bond Street Holdings, LLC and ICE Clear Credit LLC

  —  

  Marianne Dolan Weber

  2011  

•     President, Heartfelt Wings Foundation

•     Director, Green Mountain Foundation Inc.

  —  

 

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Executive Compensation Highlights

AMC Networks Inc. places great importance on its ability to attract, retain, motivate and reward experienced executive officers. The Company strives to do so by developing executive compensation policies and programs that are consistent with, explicitly linked to, and supportive of, the strategic objectives of growing the Company’s businesses and maximizing stockholder value. In particular, we believe that the majority of compensation should be at risk and contingent on Company performance, with particular emphasis on long-term, equity-based incentive compensation.

As part of the annual evaluation of the Company’s compensation program, and in consideration of stockholder interests and feedback, the Compensation Committee made changes to the compensation program for 2016, as detailed in the graphic below.

 

2016 CEO Annual Pay Mix

     

Key Changes to the Executive Compensation

Program

 

LOGO

    2016    

 

•     Updated the Company’s peer group to better align with the Company’s growth of its core business and significant expansion of its international operations

 

    2016    

 

•     Replaced long-term cash performance awards with long-term PSUs in the long-term incentive program

 

 

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TABLE OF CONTENTS

 

     Page

BOARD AND CORPORATE GOVERNANCE PRACTICES

     1  

Corporate Governance Guidelines

     1  

Engagement with our Stockholders

     1  

Board Leadership Structure

     1  

Board Self-Assessment

     2  

Executive Sessions of Non-Management and Independent Board Members

     2  

Risk Management Oversight

     2  

Communicating with Our Directors

     2  

Code of Conduct and Ethics

     2  

Director Independence

     3  

Director Nomination

     3  

Director Selection

     3  

Board Meetings

     4  

Board Committees

     4  

Director Compensation

     7  

PROPOSAL 1 — ELECTION OF DIRECTORS

     9  

Directors Elected By Class A Common Stockholders

     9  

Directors Elected By Class B Common Stockholders

     11  

PROPOSAL 2 —  RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     15  

Fees Paid to Independent Registered Accounting Firm

     15  

REPORT OF THE AUDIT COMMITTEE

     16  

COMPENSATION DISCUSSION AND ANALYSIS

     18  

EXECUTIVE SUMMARY

     18  

Business Highlights

     18  

2016 Key Compensation Decisions

     22  

Stockholder Engagement and Our Compensation Program

     23  

Philosophy and Objectives of Our Executive Compensation Program

     24  

Elements of the Company’s Compensation Program

     25  


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    Page  

COMPENSATION DECISION PROCESS AND COMPENSATION POLICIES

    32  

REPORT OF THE COMPENSATION COMMITTEE

    37  

EXECUTIVE COMPENSATION TABLES

    38  

Summary Compensation Table

    38  

Employment Agreements

    43  

Termination and Severance

    52  

Equity Compensation Plan Information

    56  

OUR EXECUTIVE OFFICERS

    57  

TRANSACTIONS WITH RELATED PARTIES AND RELATED PARTY TRANSACTION POLICY

    59  

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    61  

STOCK OWNERSHIP TABLE

    62  

GENERAL INFORMATION

    73  

Directors Elected By Class A Common Stockholders

    ii  

Directors Elected By Class B Common Stockholders

    ii  

OTHER MATTERS

    77  

ANNEX A: CALCULATION OF NON-GAAP FIGURES

    A-1  


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LOGO

 

 

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 6, 2017

 

 

BOARD AND CORPORATE GOVERNANCE PRACTICES

In this proxy statement, the words “Company,” “we,” “us,” “our” and “AMC Networks” refer to AMC Networks Inc., a Delaware corporation. We refer to the U.S. Securities and Exchange Commission as the “SEC” and The NASDAQ Stock Market LLC as “NASDAQ.” This proxy statement is first being sent to stockholders on April 27, 2017.

AMC Networks Inc. is a holding company and conducts substantially all of its operations through its subsidiaries. Our Class A Common Stock is listed on NASDAQ under the symbol “AMCX.” As a result, we are generally subject to NASDAQ corporate governance listing standards. Our Board of Directors oversees the business of AMC Networks and monitors the performance of management.

Corporate Governance Guidelines

The board of directors of AMC Networks Inc. (the “Board of Directors” or “Board”) has adopted our Corporate Governance Guidelines. These guidelines set forth our practices and policies with respect to Board composition and selection, Board meetings, executive sessions of the Board, Board committees, the expectations we have of our directors, selection of the Executive Chairman and the President and Chief Executive Officer, management succession, Board and executive compensation, and Board self-evaluation requirements. The full text of our Corporate Governance Guidelines may be viewed at our corporate website at http://investors.amcnetworks.com. A copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001, Attention: Corporate Secretary.

Engagement with our Stockholders

The Company values feedback from its stockholders and regularly engages with stockholders to keep informed on the evolving perspectives of the investor community. We engage with our stockholders on various matters, including corporate governance, executive compensation and Company performance. These stockholder dialogues, focused on governance and compensation matters, inform discussions in the boardroom and are a component of the Compensation Committee’s review and refinement of our executive compensation program.

Board Leadership Structure

Our Board has chosen to separate the roles of Executive Chairman of the Board and Chief Executive Officer. The Board believes that this is the optimal leadership structure as it recognizes both Mr. Charles F. Dolan’s senior executive role with the Company as well as his leadership position on the Company’s Board while the Company is also able to benefit from the experience of its President and Chief Executive Officer (the “CEO”), Mr. Joshua W. Sapan, with responsibility for day-to-day management of the Company.


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Board Self-Assessment

The Board conducts an annual self-assessment to determine whether the Board and its committees are functioning effectively. Among other things, the Board’s assessment process seeks input from the directors on whether they have the tools and access necessary to perform their oversight function as well as suggestions for improvement of the Board’s functioning. In addition, our Audit Committee and Compensation Committee each conducts their own annual self-assessment, which includes an assessment of the adequacy of their performance as compared to their respective charters.

Executive Sessions of Non-Management and Independent Board Members

Under our Corporate Governance Guidelines, our non-management directors may meet in executive sessions with no members of management present. The non-management directors may specify the procedure to designate the director who may preside at any such executive session. Non-management directors who are not independent under the rules of NASDAQ may participate in these executive sessions, but directors who are independent under the rules of NASDAQ must meet separately in regularly scheduled executive sessions at least twice each year.

Risk Management Oversight

The oversight of risk management is an important Board responsibility. The Audit Committee takes the lead on behalf of the Board in monitoring risk management. The Audit Committee discusses the process by which senior management of the Company and the relevant departments of the Company assess and manage the Company’s exposure to risk and discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. AMC Networks believes that its executive compensation program, with its emphasis on long-term performance, its close connection to Company-wide and divisional performance and its significant equity components, is designed to align the executives’ compensation with the Company’s long-term strategy and growth and, as a result, does not encourage excessive risk taking. Our Compensation Committee has considered the issue of the Company’s exposure to risk in establishing and implementing our executive compensation programs.

Communicating with Our Directors

Our Board has adopted policies designed to allow stockholders and other interested parties to communicate with our directors. Any interested party that wishes to communicate directly with the Board or any director or the non-management directors as a group should send communications in writing to the Chairman of the Audit Committee, AMC Networks Inc., 11 Penn Plaza, New York, NY 10001. Any person, whether or not an employee, who has a concern with respect to our accounting, internal accounting controls, auditing issues or other matters, may, in a confidential or anonymous manner, communicate those concerns to our Audit Committee by contacting The Network, Inc., which has been designated to act as a confidential contact organization for these purposes, at 888-217-8076.

Code of Conduct and Ethics

Our Board has adopted a Code of Conduct and Ethics for our directors, officers and employees. A portion of this Code of Conduct and Ethics also serves as a code of conduct and ethics for our senior financial officers, including our principal accounting officer and controller. Among other things, our Code of Conduct and Ethics covers conflicts of interest, disclosure responsibilities, legal compliance, reporting and compliance under the Code of Conduct and Ethics, confidentiality, corporate opportunities, fair dealing, protection and proper use of Company assets, and equal employment opportunity and harassment. The full text of the code is available on our website at http://investor.amcnetworks.com. In addition, a copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001, Attention: Corporate Secretary.

 

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Director Independence

Our Board has elected for the Company to be treated as a “controlled company” under NASDAQ’s corporate governance rules, and, as a result, the Company is not required to comply with the corporate governance rules of NASDAQ requiring: (i) a majority of independent directors on our Board of Directors, (ii) an independent compensation committee and (iii) an independent corporate governance and nominating committee. Our Board of Directors has elected not to comply with the NASDAQ requirement for a majority of independent directors on our board and an independent corporate governance and nominating committee because of our status as a controlled company. We do comply with the requirement for an independent compensation committee. Our Board elected not to comply with the requirement for a majority of independent directors on our Board because of our stockholder voting structure. Under the terms of our Amended and Restated Certificate of Incorporation, the holders of the Company’s Class B Common Stock have the right to elect up to 75% of the members of our Board and there is no requirement that any of those directors be independent or be chosen independently.

Our Board has determined that each of the following non-employee directors is “independent” within the meaning of the rules of NASDAQ and the SEC: Messrs. Jonathan F. Miller, Vincent Tese, David E. Van Zandt, Carl E. Vogel and Robert C. Wright and Dr. Leonard Tow. In making the determination as to the independence of each director, the Board considered all relationships between that director and the Company and its affiliates. In reaching its determination with respect to Mr. Tese, the Board considered the fact that Mr. Tese serves as an outside director of The Madison Square Garden Company (“MSG”) and determined that this relationship is not material and that Mr. Tese is independent. The Board is comprised of 43% independent directors.

Director Nomination

As permitted under NASDAQ rules, we do not have a nominating committee and believe it is appropriate not to have one because of our stockholder voting structure. Under the terms of our Amended and Restated Certificate of Incorporation, the holders of our Class B Common Stock currently have the right to elect up to 75% of the members of our Board. We believe that creating a committee consisting solely of independent directors charged with responsibility for recommending nominees for election as directors would be inconsistent with the vested rights of the holders of Class B Common Stock under our Amended and Restated Certificate of Incorporation.

Our Corporate Governance Guidelines provide a mechanism for the selection of nominees for election as directors by the holders of our Class A Common Stock (“Class A Directors”) and by the holders of our Class B Common Stock (“Class B Directors”). The holders of our Class A Common Stock are currently entitled to elect 25% of the members of our Board. Under our Corporate Governance Guidelines, nominees for election as Class A Directors shall be recommended to the Board by the Class A Directors then in office who were elected by the holders of our Class A Common Stock. Nominees for election as Class B Directors shall be recommended to our Board by the Class B Directors then in office who were elected by the holders of the Class B Common Stock.

Director Selection

Our directors have not set specific, minimum qualifications that nominees must meet in order for them to be nominated for election to the Board, but rather believe that each nominee should be evaluated based on his or her individual merits, taking into account, among other matters, the factors set forth in our Corporate Governance Guidelines under “Board Composition” and “Selection of Directors.” Those factors include:

 

   

The desire to have a board that encompasses a broad range of skills, expertise, industry knowledge, diversity of viewpoints, opinions, background and experience and contacts relevant to our business;

 

   

Personal qualities and characteristics, accomplishments and reputation in the business community;

 

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Ability and willingness to commit adequate time to board and committee matters; and

 

   

The fit of the individual’s skill and personality with those of other directors and potential directors in building a board that is effective, collegial and responsive to the needs of our Company.

The Class A Directors will evaluate possible candidates to recommend to the Board for nomination as Class A Directors and suggest individuals for the Board to explore in more depth. The Board also considers nominees for Class A Directors recommended by holders of our Class A Common Stock. Nominees recommended by stockholders are given appropriate consideration in the same manner as other nominees.

Stockholders who wish to submit nominees for consideration by the Board for election at our 2018 annual meeting of stockholders may do so by submitting in writing such nominees’ names, in compliance with the procedures and along with other information required by the Company’s By-laws. See Other Matters, “Stockholder Proposals for 2018 Annual Meeting.”

The Class B Directors will consult from time to time with one or more of the holders of Class B Common Stock to assure that all Class B Director nominees recommended to the Board are individuals who will make a meaningful contribution as Board members and will be individuals likely to receive the approving vote of the holders of a majority of the outstanding Class B Common Stock. The Class B Directors do not intend to consider unsolicited suggestions of nominees by holders of our Class A Common Stock. We believe that this is appropriate in light of the voting provisions of our Amended and Restated Certificate of Incorporation, which vest exclusively in the holders of our Class B Common Stock the right to elect our Class B Directors.

Board Meetings

The Board met five times between January 1, 2016 and December 31, 2016. During that time, each of our directors attended at least 75% of the meetings of the Board and, as applicable, the committees of the Board on which he or she served during such time. We also encourage our directors to attend annual meetings of stockholders and believe that attendance at annual meetings is just as important as attendance at meetings of the Board. With the exception of Mr. Thomas C. Dolan, all of the directors attended the 2016 annual meeting.

Board Committees

Our Board has two standing committees: the Audit Committee and the Compensation Committee.

Audit Committee

Committee Members: Mr. Vogel (Chair), Dr. Tow and Mr. Van Zandt

Meetings in 2016: 4

The primary purposes and responsibilities of our Audit Committee are to:

 

   

Assist the Board (i) in its oversight of the integrity of our financial statements, (ii) in its oversight of our compliance with legal and regulatory requirements, (iii) in assessing our independent registered public accounting firm’s qualifications and independence, and (iv) in assessing the performance of our internal audit function and independent registered public accounting firm;

 

   

Appoint, retain or terminate the Company’s independent registered public accounting firm and to pre-approve, or to adopt appropriate procedures to pre-approve, all audit and non-audit services, if any, to be provided by the independent registered public accounting firm;

 

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Review the appointment of Ernst & Young as the Company’s internal audit service provider (the “Internal Audit Service Provider”);

 

   

Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by Company employees or any provider of accounting-related services of concerns regarding questionable accounting and auditing matters and review of submissions and treatment of any such complaints;

 

   

Review and approve related party transactions that are required to be disclosed under SEC rules, other than those submitted for approval by a committee of independent directors under the Company’s Related Party Transaction Approval Policy;

 

   

Conduct and review with the Board an annual performance evaluation of the Audit Committee;

 

   

Prepare any report of the Audit Committee required by the rules and regulations of the SEC for inclusion in our annual proxy statement;

 

   

Review and reassess the Audit Committee charter at least annually; and

 

   

Report to the Board on a regular basis.

The text of our Audit Committee charter is available on our website at http://investors.amcnetworks.com/governance.cfm. A copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001, Attention: Corporate Secretary.

As discussed above, our Board has determined that each member of our Audit Committee is “independent” within the meaning of the rules of both NASDAQ and the SEC, and that each has not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years and is able to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements. Our Board has also determined that each of Dr. Tow, Mr. Van Zandt and Mr. Vogel is an “audit committee financial expert” within the meaning of the rules of the SEC.

Our Board has established a procedure whereby complaints or concerns with respect to accounting, internal controls, auditing and other matters may be submitted to the Audit Committee. This procedure is described under Corporate Governance, “Communicating with Our Directors.”

Compensation Committee

Committee Members: Dr. Tow (Chair), Mr. Miller and Mr. Vogel

Meetings in 2016: 6

The primary purposes of our Compensation Committee are to:

 

   

Establish our general compensation philosophy and, in consultation with management, oversee the development and implementation of compensation programs;

 

   

Review and approve corporate goals and objectives relevant to the compensation of our Executive Chairman and President and CEO, evaluate their performance in light of these goals and objectives and determine and approve their compensation based upon that evaluation;

 

   

Make recommendations to the Board with respect to the compensation of our executive officers (other than the Executive Chairman and the CEO) who are required to file reports with the SEC under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (together with the Executive Chairman and the CEO, the “Senior Employees”);

 

   

Approve any new equity compensation plan or material changes to an existing plan;

 

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Oversee the activities of the committee or committees administering our retirement and benefit plans;

 

   

In consultation with management, oversee regulatory compliance with respect to compensation matters;

 

   

Determine and approve any severance or similar termination payments to be made to senior employees (current or former);

 

   

Determine the components and amount of Board compensation and review such determinations from time to time in relation to other similarly situated companies;

 

   

Prepare any reports of the Compensation Committee to be included in the Company’s annual proxy statement;

 

   

Conduct and review with the Board an annual performance evaluation of the Compensation Committee; and

 

   

Report to the Board on a regular basis, but not less than annually.

The Compensation Committee may, in its discretion, delegate a portion of its duties and responsibilities to one or more subcommittees of the Compensation Committee. For example, the Compensation Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the Compensation Committee who are (i) “non-employee directors” for the purposes of Rule 16b-3 of the Exchange Act, and (ii) “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code, as in effect from time to time. The text of our Compensation Committee charter is available on our website at http://investors.amcnetworks.com/governance.cfm. A copy may be obtained by writing to AMC Networks Inc., 11 Penn Plaza, New York, NY 10001; Attention: Corporate Secretary.

The Compensation Committee reviews the performance of the Executive Chairman and CEO, evaluates their performance in light of those goals and objectives and determines and approves the compensation levels for the Executive Chairman and CEO based on this evaluation. In determining the long-term incentive component compensation for the Executive Chairman and CEO, the Compensation Committee considers, among other factors, the Company’s performance, the value of similar incentive awards to executives in similar positions at comparable companies and the awards given to the Executive Chairman and to the CEO in past years.

As discussed above, our Board has determined that each member of our Compensation Committee is “independent” under the rules of NASDAQ.

Compensation Committee Interlocks and Insider Participation

Mr. Miller, Dr. Tow and Mr. Vogel served as members of the Compensation Committee during 2016. None of them is a current or former officer or employee of the Company.

Other Committees

In addition to standing committees, the Company has adopted a policy whereby a committee of our Board consisting entirely of independent directors (an “Independent Committee”) will review and approve or take such other action as it may deem appropriate with respect to transactions involving the Company and its subsidiaries in which any director, executive officer, greater than 5% stockholder of the Company or any other “related person” (as defined in Item 404 of Regulation S-K adopted by the SEC) has or will have a direct or indirect material interest. This approval requirement covers any transaction that meets the related party disclosure requirements of the SEC as set forth in Item 404, which currently applies to transactions (or any series of similar transactions) in which the amount involved exceeds $120,000.

 

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In addition, our Board has adopted a special approval policy for transactions with MSG and MSG Networks Inc. (“MSG Networks”), each of which is under common control with the Company, and their respective subsidiaries whether or not such transactions qualify as “related party” transactions described above. Under this policy, the Independent Committee oversees approval of all transactions and arrangements between the Company and its subsidiaries, on the one hand, and each of MSG and its subsidiaries and MSG Networks and its subsidiaries, on the other hand, in which the amount exceeds $120,000. To simplify the administration of the approval process under this policy, the Independent Committee may, where appropriate, establish guidelines for certain of these transactions.

Currently, and throughout our fiscal year ended December 31, 2016, our Audit Committee or Compensation Committee (each of which consisted solely of directors elected by the Class A stockholders) served as the Independent Committee under the above policy. For a further discussion of the scope of this policy, see “Related Party Transaction Policy.”

Our Amended By-Laws permit us to form an Executive Committee of the Board which would have the power to exercise all of the powers and authority of the Board in the management of the business and affairs of the Company, except as limited by the Delaware General Corporation Law. Our Board has not formed an Executive Committee, although it could do so in the future.

Director Compensation

The following table describes the components of the non-employee Director compensation program in effect during 2016:

 

Compensation Element*    Compensation Program

Annual Retainer

  

$70,000

Annual Equity Retainer**

  

$135,000 in RSUs that vest on the date of grant and settle 90 days after service on the Board ceases

Annual Committee Retainer Fees

  

$7,500

Chair Fee

  

$20,000 for the Audit Committee $20,000 for the Compensation Committee

Meeting Fees

  

$2,000 per meeting

 

* Includes any non-standing committee of the Board that may be established from time to time. A director who is a Company employee receives no additional compensation for serving as a director.

** Each director annual grant of RSUs determined by dividing the value of the annual equity retainer by the twenty trading day average closing price on the day prior to the annual stockholders’ meeting.

 

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Director Compensation Table

The table below summarizes the total compensation paid to or earned by each of our non-employee directors from January 1, 2016 through December 31, 2016. Directors who are employees of the Company receive no additional compensation for service as directors.

 

Name   Fees Earned
or Paid in
Cash ($)(1)
    Stock
Awards
($)(2)(3)
    Option
Awards
($)(4)
    Non-Equity
Incentive Plan
Compensation
($)
    All Other
Compensation
(5)
    Total ($)  

Jonathan F. Miller

    99,500       128,439                         227,939  

Alan D. Schwartz(6)

    34,769                               34,769  

Leonard Tow

    135,000       128,439                         263,439  

David E. Van Zandt

    95,500       128,439                         223,939  

Carl E. Vogel

    135,000       128,439                         263,439  

Robert C. Wright

    80,000       128,439                         208,439  

William J. Bell

    80,000       128,439                         208,439  

James L. Dolan

    80,000       128,439                         208,439  

Kristin A. Dolan

    80,000       128,439                         208,439  

Patrick F. Dolan

    80,000       128,439                         208,439  

Thomas C. Dolan

    78,000       128,439                         206,439  

Brian G. Sweeney

    80,000       128,439                         208,439  

Vincent Tese

    45,423       128,439                         173,862  

Marianne Dolan Weber

    80,000       128,439                         208,439  

 

 

(1)

These amounts represent base fees, meeting fees and committee fees earned. The amounts reported do not include the Company’s reimbursement of reasonable out-of-pocket expenses incurred by each non-employee director in attending Board and Committee meetings.

 

(2)

This column reflects the fair market value of 2,082 RSUs granted to each non-employee director on June 8, 2016 based on the closing stock price of $61.69 on that date as calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718.

 

(3)

For each non-employee director, the aggregate number of RSUs held as of December 31, 2016 is as follows: Mr. Jonathan F. Miller, 7,291 units; Mr. Alan D. Schwartz, no units; Dr. Leonard Tow, 13,619 units; Mr. David E. Van Zandt, 3,825 units; Mr. Carl E. Vogel, 7,315 units; Mr. Robert C. Wright, 13,619 units; Mr. William J. Bell, 13,619 units; Mr. James L. Dolan, 13,619 units; Ms. Kristin A. Dolan, 13,619 units; Mr. Patrick F. Dolan, 13,619 units; Mr. Thomas C. Dolan, 13,619 units; Mr. Brian G. Sweeney, 13,619 units; Mr. Vincent Tese, 2,082 units and Ms. Marianne Dolan Weber, 13,619 units.

 

(4)

No stock options were awarded between January 1, 2016 and December 31, 2016 in connection with the directors’ service to the Company.

 

(5)

The Company encouraged its directors to attend certain events relating to its business at the Company’s expense to gain a better understanding of the Company’s business and products. The value of these benefits is not included in the table as permitted by SEC rules because the aggregate amount of perquisites did not exceed $10,000 for any director.

 

(6)

Mr. Schwartz did not stand for re-election at the June 8, 2016 annual meeting.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

The Board has nominated fourteen director candidates named below. Of the fourteen nominees for director, five are to be elected by the Class A stockholders and nine are to be elected by the Class B stockholders. All fourteen director candidates were elected by the respective Class A and Class B stockholders at the 2016 annual meeting of the Company’s stockholders.

All candidates are hereby nominated for a term to expire at the 2018 annual meeting of the Company’s stockholders.

The Company representatives appointed by the Board (the persons named in the proxy card, or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted to elect each of the director nominees below, as applicable based on whether you are a holder of Class A Common Stock or Class B Common Stock.

If a nominee for election as a director by the Class A stockholders becomes unavailable before the election, the Company representatives named in the Class A proxy card would be authorized to vote for a replacement nominee for election as a director by the Class A stockholders if the Board names one. If a Class B director nominee becomes unavailable before the election, the persons named in the Class B proxy card would be authorized to vote for a replacement Class B director nominee if the Board names one.

The Board unanimously recommends that you vote FOR each of the following candidates:

Directors Elected By Class A Common Stockholders

JONATHAN F. MILLER

Age: 60

Director since October 2013

Mr. Miller is a partner in Advancit Capital, a private investment firm. He was the Chairman and Chief Executive Officer of News Corporation’s Digital Media Group and News Corporation’s Chief Digital Officer from April 2009 until September 2012. Mr. Miller had previously been a founding partner of Velocity Interactive Group, an investment firm focusing on digital media and the consumer Internet, from its inception in February 2007 until April 2009. Prior to founding Velocity Interactive Group, Mr. Miller served as Chief Executive Officer of AOL LLC (“AOL”) from August 2002 to November 2006. Prior to joining AOL, Mr. Miller served as Chief Executive Officer and President of USA Information and Services, of USA Interactive, a predecessor to IAC/ InterActiveCorp. During the prior five years, Mr. Miller was a director of Houghton Mifflin Harcourt, Live Nation Entertainment, Inc., RTL Group SA, Shutterstock, Inc. and TripAdvisor, Inc. Mr. Miller is currently a member of the board of directors of Akamai Technologies, Inc., Interpublic Group of Companies, Inc., and J2 Global, Inc. Mr. Miller also serves as a director of The Paley Center for the Media and American Film Institute.

Key Skills & Qualifications   In light of Mr. Miller’s extensive knowledge of the media industry acquired through his high level executive roles at News Corporation, AOL and USA Networks Information and Services as well as other management experience, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be reelected to the Board.

 

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LEONARD TOW

Age: 88

Director since June 2011

Dr. Tow is Chief Executive Officer of New Century Holdings LLC, an outdoor advertising company, since January 2005. Chairman and Chief Executive Officer of Citizens Communications Company from 1990 to September 2004. Dr. Tow previously served as a director of Cablevision Systems Corporation (“Cablevision”) until its sale in June 2016 and Citizens Communications Company. Dr. Tow also serves as Chairman of the Tow Foundation, a trustee of the Brooklyn College Foundation, a trustee of Columbia University Mailman School of Public Health, and a member of the board of Lincoln Center Theater.

Key Skills & Qualifications   In light of Dr. Tow’s experience as a founder and chief executive officer of a major cable television company, his experience as the chief executive officer of a private company, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be reelected to the Board.

DAVID E. VAN ZANDT

Age: 64

Director since June 2015

Mr. Van Zandt is the President of The New School. Mr. Van Zandt is also the special general counsel and an adviser for Artal Group S.A., a European-based family controlled and funded private equity firm, and The Invus Group, LLC, a U.S.-based worldwide family controlled and funded private equity firm. From 1995 through 2010, he served as the Dean of Northwestern University School of Law. Mr. Van Zandt joined the faculty of Northwestern University School of Law in 1985. After graduating from law school, Mr. Van Zandt clerked for Judge Pierre N. Leval, U.S. District Court for the Southern District of New York (now on the U.S. Court of Appeals for the Second Circuit) and for Harry Blackmun, Associate Justice of the Supreme Court of the United States and then joined the law firm, Davis Polk and Wardwell. Mr. Van Zandt is a trustee for the Citizens Budget Commission. He is also a member of the steering committee of the Association for a Better New York and is on the education advisory board for The Vistria Group.

Key Skills & Qualifications   In light of Mr. Van Zandt’s significant and valuable leadership and management experience as the President of The New School and as the Dean of Northwestern University School of Law and the extensive experience he has gained in strategic planning, risk management and governance by serving in those roles, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be elected to the Board.

CARL E. VOGEL

Age: 59

Director since June 2013

Mr. Vogel is a private investor. He serves as an industry advisor for Kohlberg Kravis Roberts & Co. L.P. and a Senior Advisor of DISH Network Corporation. Mr. Vogel is also the President and sole stockholder of Bulldog Capital, Inc., a private investment firm. From November 2011 to October 2014, Mr. Vogel served as a Senior Adviser of The Gores Group, a private equity firm. From June 2005 until March 2009, Mr. Vogel served as Vice Chairman of DISH Network Corporation (formerly Echostar Communications Corporation, a satellite-delivered digital television services provider) and President from September 2006 until February 2008 of Echostar Communications Corporation. From October 2007 to March 2009, Mr. Vogel was Vice Chairman and Senior Advisor at Echostar Corp. Prior to that, Mr. Vogel was President, Chief Executive Officer and a director of Charter Communications, a broadband service provider. He is director of Ascent Capital Group, Inc., DISH Network Corporation, Sirius/XM Holdings Inc., Shaw Communications, Inc. and Universal Electronics Inc. Mr. Vogel previously served on the board of directors of NextWave Wireless Inc., ICG Communications and Liberty Satellite.

 

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Key Skills & Qualifications   In light of Mr. Vogel’s extensive knowledge of the media industry acquired through his high level executive roles at DISH Network Corporation and Charter Communications Inc. as well as his accounting experience acquired through his work as a certified public accountant and his role as a chief executive and senior finance executive of public companies, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be reelected to the Board.

ROBERT C. WRIGHT

Age: 74

Director since June 2011

Mr. Wright is Senior Adviser of Lee Equity Partners LLC (formerly known as Thomas H. Lee Capital), an investment firm, since 2008. He served as Vice Chairman of General Electric Company and President, Chief Executive Officer and Chairman of NBC and NBC Universal from 1986 to 2007. Mr. Wright has served on the boards of General Electric Company, NBC Universal and EMI Group Global Inc. Mr. Wright is a director of Ralph Lauren Corporation. He is a trustee of the New York Presbyterian Hospital, co-founder of Autism Speaks and the founder of The Suzanne Wright Foundation.

Key Skills & Qualifications   In light of Mr. Wright’s extensive business leadership and management experience at a major television network and leading media and entertainment company and his service as a director of other public companies, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class A stockholders, has concluded that he should be reelected to the Board.

Directors Elected By Class B Common Stockholders

WILLIAM J. BELL

Age: 77

Director since June 2011

Mr. Bell was a Consultant to Cablevision from 2005 to 2014 and held various positions at Cablevision and its predecessor from 1979 to 2004, including serving as its Vice Chairman and Chief Financial Officer until 2004. He serves as a director of MSG Networks. Mr. Bell also serves as a director of the Lustgarten Foundation.

Key Skills & Qualifications   In light of Mr. Bell’s experience in various positions with Cablevision since 1979, including as its former Vice Chairman and Chief Financial Officer, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

CHARLES F. DOLAN

Age: 90

Director since March 2011

Mr. Charles F. Dolan is Executive Chairman of the Company since June 2011. Mr. Dolan served as the Chairman of Cablevision from 1985 until its sale in June 2016. He was Chief Executive Officer of Cablevision from 1985 to October 1995. Mr. Dolan founded and acted as the General Partner of Cablevision’s predecessor from 1973 to 1985 and established Manhattan Cable Television in 1961 and Home Box Office in 1971. He serves as a director of MSG Networks and MSG, and previously served as a director of Cablevision. Mr. Dolan is the father of James L. Dolan, Patrick F. Dolan, Thomas C. Dolan and Marianne Dolan Weber and the father-in-law of Kristin A. Dolan and Brian G. Sweeney.

Key Skills & Qualifications   In light of Mr. Dolan’s experience as founder of Cablevision, his previous service as Chairman and Chief Executive Officer of Cablevision and its predecessors, as well as the knowledge

 

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and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

JAMES L. DOLAN

Age: 61

Director since March 2011

Mr. James L. Dolan is Executive Chairman of MSG since October 2015 and MSG Networks since July 2009. He also assumed the responsibilities of the President and Chief Executive Officer of MSG Networks from March 15, 2015 to July 15, 2015. Mr. James L. Dolan was Chief Executive Officer of Cablevision from October 1995 until its sale in June 2016. He was President of Cablevision from June 1998 to April 2014, Chief Executive Officer of Rainbow Media Holdings, Inc. from September 1992 to October 1995, and Vice President of Cablevision from 1987 to September 1992. He serves as a director of MSG Networks and MSG. Mr. Dolan previously was a director of Cablevision and Live Nation Entertainment, Inc. Mr. Dolan is the son of Charles F. Dolan, the spouse of Kristin A. Dolan, the brother of Patrick F. Dolan, Thomas C. Dolan and Marianne Dolan Weber and the brother-in-law of Brian G. Sweeney.

Key Skills & Qualifications   In light of Mr. Dolan’s experience in various positions with Cablevision since 1979, including as its Chief Executive Officer from 1995 until its sale in June 2016 and his experience as the Executive Chairman of MSG Networks, Inc. since 2009 and MSG since 2015, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

KRISTIN A. DOLAN

Age: 51

Director since June 2011

Ms. Kristin A. Dolan is the Chief Executive Officer of 605, LLC (f/k/a DataCo Ventures LLC). She previously served as the Chief Operating Officer of Cablevision from April 2014 until its sale in June 2016. She was President of Optimum Services for Cablevision from April 2013 to April 2014, Senior Executive Vice President of Product Management and Marketing of Cablevision from November 2011 to April 2013 and Senior Vice President of Cablevision from 2003 to 2011. She serves as a director of MSG and previously served as a director of Cablevision and MSG Networks. Ms. Dolan is the daughter-in-law of Charles F. Dolan, the spouse of James L. Dolan and the sister-in-law of Patrick F. Dolan, Thomas C. Dolan, Brian G. Sweeney and Marianne Dolan Weber.

Key Skills & Qualifications   In light of Ms. Dolan’s experience in various positions with Cablevision since 1990, as well as the knowledge and experience she has gained and contributions she has made during her tenure as a director of the Company, MSG Networks, MSG and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that she should be reelected to the Board.

PATRICK F. DOLAN

Age: 65

Director since June 2011

Mr. Patrick F. Dolan is President of News 12 Networks since February 2002. News 12 Networks is a subsidiary of Altice N.V. He was Vice President of News 12 Networks from September 1995 to February 2002. He is a majority owner of Newsday Media Group since July 2016. Mr. Dolan previously served as a director of Cablevision. Mr. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan, Thomas C. Dolan and Marianne Dolan Weber and the brother-in-law of Kristin A. Dolan and Brian G. Sweeney.

 

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Key Skills & Qualifications   In light of Mr. Dolan’s experience as a member of Cablevision’s founding family and in various positions with News 12 Networks, a former subsidiary of Cablevision, since 1989, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

THOMAS C. DOLAN

Age: 64

Director since June 2011

Mr. Thomas C. Dolan was Executive Vice President-Strategy and Development, Office of the Chairman of Cablevision from September 2008 until its sale in June 2016. He was Chief Executive Officer of Rainbow Media Corp. from April 2004 to April 2005. Executive Vice President and Chief Information Officer of Cablevision from October 2001 until April 2005. He serves as a director of MSG Networks and MSG and previously served as a director of Cablevision. Mr. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan, Patrick F. Dolan and Marianne Dolan Weber and the brother-in-law of Kristin A. Dolan and Brian G. Sweeney.

Key Skills & Qualifications   In light of Mr. Dolan’s experience as a member of Cablevision’s founding family and in various positions with Cablevision since 1987, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

BRIAN G. SWEENEY

Age: 52

Director since June 2011

Mr. Brian G. Sweeney served as the President of Cablevision from April 2014 and Chief Financial Officer of Cablevision from March 2015 until its sale in June 2016. Previously, Mr. Sweeney served as the Senior Executive Vice President, Strategy and Chief of Staff of Cablevision from January 2013 to April 2014, Senior Vice President – Strategic Software Solutions of Cablevision from June 2012 to January 2013 and Senior Vice President — eMedia of Cablevision from January 2000 to December 2012. He serves as a director of MSG Networks and MSG and previously served as a director of Cablevision. Mr. Sweeney is the son-in-law of Charles F. Dolan and the brother-in-law of James L. Dolan, Kristin A. Dolan, Patrick F. Dolan, Thomas C. Dolan and Marianne Dolan Weber.

Key Skills & Qualifications   In light of Mr. Sweeney’s experience in various positions with Cablevision since 1993, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, MSG Networks, MSG and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board.

VINCENT TESE

Age: 74

Director since June 2016

Mr. Tese served as Chairman and Chief Executive Officer of the New York State Urban Development Corporation from 1985 to 1987 and as Director of Economic Development for New York State from 1987 to December 1994. Mr. Tese is Chairman of Bond Street Holdings, LLC and ICE Clear Credit LLC. He is Executive Chairman of Florida Community Bank. Mr. Tese is a director of MSG and Mack-Cali Realty Corporation. He is a director and the Chairman of the Compensation Committee of Intercontinental Exchange,

 

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Inc. He also serves as a trustee of New York Presbyterian Hospital and New York University School of Law. Mr. Tese previously was a director of Gabelli Asset Management, National Wireless Holdings, Inc., The Bear Stearns Companies, Inc., Cablevision and MSG Networks.

Key Skills & Qualifications   In light of his experience as the chief executive officer of the New York State Urban Development Corporation, his other governmental service, his experience as the executive chairman of Florida Community Bank, and the contributions he has made during his tenure as a director of the Company and formerly of Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that he should be elected to the Board.

MARIANNE DOLAN WEBER

Age: 59

Director since June 2011

Ms. Marianne Dolan Weber is President of Heartfelt Wings Foundation and a Member of the Board of Green Mountain Foundation Inc. Ms. Dolan Weber served as Chairman of The Dolan Family Foundation and The Dolan Children’s Foundation from September 1999 through December 2011, President of The Dolan Family Foundation from 1986 to September 1999, President of The Dolan Children’s Foundation from 1997 to September 1999, and Vice Chairman and Director of Dolan Family Office, LLC from 1997 through December 2011. She serves as a director of MSG and previously served as a director of Cablevision and MSG Networks. Ms. Dolan Weber is the daughter of Charles F. Dolan, the sister of James L. Dolan, Patrick F. Dolan and Thomas C. Dolan and the sister-in-law of Kristin A. Dolan and Brian G. Sweeney.

Key Skills & Qualifications   In light of Ms. Dolan Weber’s experience as a member of Cablevision’s founding family and as Chairman of the Dolan Family Foundation and the Dolan Children’s Foundation, as well as the knowledge and experience she has gained and contributions she has made during her tenure as a director of the Company, MSG Networks, MSG and Cablevision, our Board of Directors, acting on the unanimous recommendation of the directors elected by the Class B stockholders, has concluded that she should be reelected to the Board.

 

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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee, comprised of independent members of the Board, has appointed KPMG LLP (“KPMG”) as our independent registered public accounting firm (the “independent auditors”) with respect to our operations for 2017. KPMG will audit our financial statements for 2017. Representatives of KPMG will be present at the annual meeting to answer appropriate questions and to make a statement if they desire.

We are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm. Although ratification is not required by our organizational documents, the Board is submitting the selection of KPMG to our stockholders for ratification because we believe it is a matter of good corporate practice. In the event that our stockholders fail to ratify the selection, it will be considered a recommendation to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. Approval of this proposal requires the favorable vote of the majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Amended and Restated Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and holders of Class B Common Stock will have ten votes per share.

The Board unanimously recommends that you vote FOR this proposal.

Fees Paid to Independent Registered Public Accounting Firm

The following table provides information about fees for services rendered by KPMG, our independent registered public accounting firm, in 2016 and 2015:

 

              2016                       2015          

Audit fees (1)

   $ 3,506,687      $ 2,934,200  

Audit-related fees (2)

   $ 1,266,146      $ 243,094  

Tax fees (3)

   $ 306,606      $ 340,784  

All other fees (4)

   $ 37,461         

 

 

(1)

Audit fees billed to and incurred by the Company consist of (i) services for work arising from the Company’s financial statement audit, including the integrated audit of internal control over financial reporting, (ii) statutory and separate Company audits of the financial statements of certain Company subsidiaries, and (iii) reviews of the Company’s unaudited interim consolidated financial statements for quarterly periods. In 2016, audit fees also included fees billed in connection with procedures related to the Company’s debt offering.

 

(2)

Audit-related fees billed to the Company consisted principally of services relating to due diligence in connection with acquisitions and employee benefit plan audits.

 

(3)

Tax fees billed to the Company consisted of fees for advisory services relating to state and federal tax matters and compliance services.

 

(4)

All other fees billed to the Company consisted of contract compliance and other permitted advisory services.

The Audit Committee’s pre-approval policy requires that the Audit Committee pre-approve audit and non-audit services performed by the independent registered public accounting firm. The Audit Committee may delegate its pre-approval authority to the Chairman provided that any such services are subsequently ratified by the entire Audit Committee. All of the services for which fees were disclosed under “Audit-related fees,” and “Tax fees” and “All other fees” in the table above were pre-approved under the Audit Committee’s pre-approval policy.

 

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee assists the Board in its oversight of the Company’s financial reporting, internal controls, and audit functions. Three independent Class A Directors comprise the Audit Committee. The Audit Committee operates under a written charter adopted by the Board. The Board has determined that each member of the Audit Committee has no material relationship with the Company under the Board’s independence standards and each is independent and financially literate under the listing standards of NASDAQ and under the SEC’s standards relating to independence of audit committees. In addition, the Board of Directors has determined that all of our Audit Committee members: Messrs. Van Zandt and Vogel, and Dr. Tow, satisfy the financial expertise requirements of NASDAQ and have the requisite experience to be designated an audit committee financial expert as that term is defined by rules of the SEC. Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.

The Company’s independent registered public accounting firm, KPMG, is responsible for auditing the Company’s financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on the conformity of the consolidated financial statements to U.S. generally accepted accounting principles (“GAAP”) and on the effectiveness of the Company’s internal control over financial reporting.

In the performance of its oversight function, the Audit Committee has reviewed and discussed the audited financial statements with management and KPMG. The Audit Committee also has discussed with KPMG the matters required to be discussed under the applicable requirements of the PCAOB. Finally, the Audit Committee has received the written disclosures from KPMG in accordance with the applicable requirements of the PCAOB regarding KPMG’s independence, and has discussed with KPMG, its independence.

As part of its responsibilities for oversight of the risk management process, the Audit Committee has reviewed and discussed the Company’s risk assessment and risk management framework, including discussions of individual risk areas as well as a summary of the overall process.

The Audit Committee has discussed with the Company’s Internal Audit Service Provider and KPMG the overall scope of and plans for their respective audits. The Audit Committee meets with the Internal Audit Service Provider in regular and executive sessions (with and without management), to discuss the results of their examinations, the evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting and compliance programs.

The Audit Committee is also responsible for the approval of audit fees, and the Committee reviewed and pre-approved all fees paid to KPMG. These fees are described under “Fees Paid to Independent Registered Public Accounting Firm.” The Audit Committee also considered whether KPMG’s provision of non-audit services to the Company was compatible with the independence of the independent registered public accountants. The Audit Committee has adopted a formal policy for pre-approval of audit, audit-related and non-audit services, which is briefly described under “Fees Paid to Independent Registered Public Accounting Firm.” The Audit Committee concluded that KPMG is independent from the Company and its management.

 

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Based upon the reports, review and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2016 filed with the SEC. The Audit Committee has also retained KPMG as the Company’s independent registered public accountants for the fiscal year 2017. The Audit Committee and the Board believe that the continued retention of KPMG to serve as the Company’s independent registered public accountants is in the best interests of the Company and its stockholders and have recommended that stockholders ratify the appointment of KPMG as the Company’s independent registered public accountants for the fiscal year 2017.

Members of the Audit Committee

Carl E. Vogel (Chair)

Leonard Tow

David E. Van Zandt

 

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COMPENSATION DISCUSSION AND ANALYSIS

AMC Networks’ executive compensation program emphasizes alignment of pay and performance through annual and long-term incentive programs that provide performance-based incentives for our management team that are tied to key financial measures that we believe drive stockholder value and reward sustained achievement of our key financial goals.

This Compensation Discussion and Analysis provides a discussion of our compensation philosophy and 2016 program for the following named executive officers (“NEOs” or “Named Executive Officers”):

 

Charles F. Dolan

  Executive Chairman

Joshua W. Sapan

  President and CEO

Edward A. Carroll

  Chief Operating Officer

Sean S. Sullivan

  Executive Vice President and Chief Financial Officer

James G. Gallagher

  Executive Vice President and General Counsel

EXECUTIVE SUMMARY

Business Highlights

Our Business

AMC Networks owns and operates several of cable television’s most recognized brands, delivering high quality content to audiences and a valuable platform to distributors and advertisers. Since our founding in 1980, we have been a pioneer in the cable television programming industry, having created or developed some of the industry’s leading programming networks, with a focus on programming of original productions.

Outstanding Long-Term Results

2016 continued our long-term trend of growing Net Revenues, Adjusted Operating Income, and Free Cash Flow, and delivering outstanding operational performance for our shareholders. Our incentive compensation is determined by these metrics, given our belief that successful performance against these measures promotes the creation of long-term stockholder value.

 

LOGO

 

 

*

For a reconciliation of these non-GAAP figures with the corresponding GAAP figures, please see Annex A

 

(1)  

2016 Operating Income reflects impairment charges of $68 million related to the AMCNI Digital Media Center.

 

(2)

The Company has renamed its non-GAAP performance measure to Adjusted Operating Income (Loss), formerly referred to as Adjusted Operating Cash Flow (“AOCF”). There has been no change to the definition. The Company defines AOI,

 

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which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization, share-based compensation expense or benefit, and restructuring expense or credit. Because it is based on operating income (loss), AOI also excludes interest expense (including cash interest expense) and other non-operating income and expense items. See Annex A for reconciliation of this non-GAAP measure with the corresponding GAAP figure.

 

( 3)  

Free Cash Flow is a non-GAAP financial measure and is defined as net cash provided by operating activities (continuing operations) less capital expenditures (continuing operations) and cash distributions to non-controlling interests). Net cash provided by operating activities excludes net cash provided by operating activities of discontinued operations. See Annex A for reconciliation of this non-GAAP measure with the corresponding GAAP figure.

2016 Financial Results and Notable Successes

In 2016, the Company continued to perform well and we remain well positioned to capitalize on future opportunities. In determining incentive compensation for 2016, the Compensation Committee considered the strong growth the Company achieved in 2016, particularly in light of the challenging environment for the media industry. Our incentive compensation is determined by Net Revenues, Adjusted Operating Income and Free Cash Flow, given our belief that successful performance against these measures promotes the creation of long-term stockholder value.

 

   

Net revenues increased 6.8% to $2.76 billion

 

   

Operating Income decreased 7.3% to $658 million reflecting impairment charges of $68 million related to the AMCNI Digital Media Center

 

   

Adjusted operating income (AOI) increased 4.8% to $879 million

 

   

Cash Provided by Operating Activities increased 39% to $514 million

 

   

Free Cash Flow increased 43% to $426 million

The Company continued to focus on its commitment to return value to its stockholders through Board approval of a stock repurchase program to repurchase up to $500 million of the Company’s outstanding shares of Class A Common stock. As of February 17, 2017, the Company has repurchased 4,924,000 shares of Class A Common Stock leaving up to $231 million available for future repurchases. Our share repurchases are part of an overall capital allocation strategy overseen by our Board of Directors and designed to efficiently balance return of capital to shareholders with investment in our business.

Total Stockholder Return (June 16, 2011 through December 31, 2016) (1)

 

LOGO

Source: S&P Capital IQ

 

 

( 1)  

The Total Stockholder Chart uses the opening price of AMC Networks Inc. and the opening price of the S&P 500 Index on June 16, 2011, the first day that AMC Networks traded as a public company.

 

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In 2016, the Company continued to increase its investment in world-class original programming and to build brands that have passionate, engaged and connected audiences. This investment has enabled us to expand the distribution of our content through new and existing platforms, leading to growth in our distribution revenues. In addition, we continue to have programming that reaches attractive demographics and as a result, our advertising revenue increased in 2016. Through the Company’s AMC Studios operation, we now own more of our own content, which has enabled us to invest in and grow our international channels business, providing us with increasing revenue diversification and a vibrant, global platform.

In 2016, the Company’s businesses achieved notable successes.

 

   

LOGO

  

 

•     AMC was the #1 destination for original programming in all of cable television.

•     AMC was home to four of the top nine shows on cable television among Adults ages 18-49 in LIVE + 3 ratings with The Walking Dead , Fear the Walking Dead , Better Call Saul and new original series Preacher .

•     AMC continued to be home to the #1 show on television with its original series, The Walking Dead . The series has ranked as the #1 show on television for the last five years, among Adults ages 18-49.

•     The AMC mini-series The Night Manager debuted to wide critical acclaim and accolades. Co-starring Hugh Laurie and Tom Hiddleston, The Night Manager won two Emmy Awards and was the most awarded television series at the 2017 Golden Globe Awards.

 

 

   

LOGO

  

 

•     BBC AMERICA was one of the top five fastest growing entertainment networks on cable in 2016.

•     BBC AMERICA’s original series, Dirk Gently’s Holistic Detective Agency , debuted as one of the biggest series launches in the network’s history.

•     The star of BBC AMERICA’s acclaimed original series Orphan Black , Tatiana Maslany, won the coveted Emmy Award for Best Actress in a Drama Series.

•     BBC AMERICA’s Doctor Who and Orphan Black ranked among cable’s most popular dramas on social media platforms for the year.

 

 

   

LOGO

  

 

•     WE tv remained the #1 Cable Network for African American adults and women on Thursday nights in primetime and is a Top 10 Cable Entertainment Network on Fridays during primetime.

•       The network’s successful franchise series, Braxton Family Values and Marriage Boot Camp: Reality Stars , continued to perform strongly among Adults ages 25-54 in LIVE+3 ratings.

 

 

   

LOGO

  

 

•     In 2016, SundanceTV had year-over-year double-digit ratings increases among its target demo of Adults ages 25-54, making 2016 the best year in the network’s history.

•     SundanceTV’s new original series Hap and Leonard debuted as its highest-rated series ever.

•     SundanceTV’s Peabody Award-winning series Rectify completed its fourth and final season as one of the most critically-acclaimed dramas on television.

 

 

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LOGO

  

 

•      IFC was recognized with multiple Emmy Award nominations, including for its two original series, Portlandia and Documentary Now! , which were each nominated in the Outstanding Variety Sketch Series category.

•      IFC was also well-represented across many “Best Of” critics lists for 2016, underscoring IFC’s ability to break through in a crowded field with popular and acclaimed shows including Portlandia , Documentary Now! and new series Stan Against Evil .

•      In 2016, AMC Networks announced a minority ownership stake in leading comedy brand Funny or Die after a series of successful collaborations with IFC.

 

 

   

LOGO

  

 

•      IFC Films continued to distribute critically-acclaimed, distinctive independent films, with many named by critics as among the best films of the year, including Things to Come, Certain Women, Weiner, and I, Daniel Blake .

•      IFC Films won the Palme d’Or at the Cannes Film Festival for I, Daniel Blake , the second year in a row IFC Films has won this highly prestigious award.

 

 

   

LOGO

  

 

•      AMC Networks International secured new distribution deals for its networks with leading pay TV platforms throughout Europe, Latin America and Africa.

•      AMC Networks International’s Iberian channels had their best year ever, receiving the highest audience share among pay TV channels in both Spain and Portugal.

 

 

   

LOGO

  

 

•      Established in 2010 to produce The Walking Dead , AMC Studios has grown significantly as the Company has pursued a strategy to own and distribute more of its content. In 2016, AMC Studios produced 10 wholly-owned scripted originals for air across three of the Company’s national networks, AMC, BBC AMERICA and SundanceTV, as well as its AMC- and SundanceTV-branded international channels.

•      AMC Studios generates additional revenues from sales of subscription video-on-demand rights as well as from sales of its originals to international territories in which AMC Networks does not operate.

 

 

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The Compensation Committee believes that the efforts and leadership of our senior management team, including our NEOs, are, and will continue to be critical to the Company’s accomplishments.

2016 Key Compensation Decisions

Taking into consideration the Company’s 2016 performance and relatively strong performance to those of its peers, the Compensation Committee made the following key compensation decisions:

 

  Topic    Committee Action    Committee Rationale

  Modified its

  Long-Term

  Incentive

  Awards

  

Modified its Long-Term Incentive Awards by replacing its long-term cash performance awards with long-term PSU awards

  

The Compensation Committee believes that using an equity-based award that is subject to market risk over a multi-year performance period better aligns the interests of its senior officers with those of stockholders. As a result, commencing in 2016, the Compensation Committee replaced its long-term cash performance awards with PSU awards. The awards have a three-year cliff vest and retain the same financial performance metrics as its cash performance awards but also take into account the Company’s stock performance. The Compensation Committee also modified the vesting schedule of its awards of RSUs, so that all future RSU grants will vest ratably over three years rather than cliff vest. The Compensation Committee found that this change would provide the Company with a more effective recruitment tool, conformed to industry practice and was appropriately balanced by the three-year cliff vesting on the PSUs.

  Executive

  Compensation

  Peer Group

  

Updated the Company’s peer group to better align with the Company’s core business . The updated peer group was adopted and used for 2016 compensation benchmarking.

  

To better reflect the role and responsibility of the Company’s executive officers and increased challenges of the media business in content and distribution, the Compensation Committee determined to revise its peer group used to assess competitiveness of executive compensation levels relative to the market.

  Annual Incentive

  Bonus Pool

  

Approved the 2016 annual incentive bonus payouts at 114.5%.

  

To reflect the Company’s performance, the Compensation Committee approved the payout of the annual incentive bonuses to the NEOs based on the Company’s overall corporate performance, which is calculated based on the weighted average of each business unit’s performance against pre-established financial targets, at 114.5% of target.

Impact of Transition from Long-Term Cash Awards to Long-Term Equity

As noted above, commencing with respect to 2016, the Compensation Committee replaced long-term cash performance awards with PSUs. This has an impact on the compensation amounts disclosed in the Summary Compensation Table during the transition from cash to equity based long-term performance awards. SEC rules require that cash-based compensation be included in the Summary Compensation Table for the year in which the compensation was earned (which for the long-term cash performance awards is for the year when the performance period ended). Grants of equity are required to be disclosed for the year in which the grant was made. Therefore, the 2016 Summary Compensation Table includes both the cash-based long-term performance awards granted in 2014 and earned for the period of 2014-2016, and the PSU awards granted for 2016 (with payment based upon the performance period 2016-2018).

 

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2016 NEO Annual Compensation Determinations

The table below sets forth the 2016 Compensation Committee compensation determinations with respect to our NEOs. This table is different from the SEC-required 2016 Summary Compensation Table on page 38. The long-term cash-based performance awards granted in 2014 are not included in this table as they were not part of the Compensation Committee’s 2016 determinations. The PSUs awarded in 2016 are included in this table and in the Summary Compensation Table.

 

             
NEO   Salary     Annual Cash
Incentive Award
    RSUs (1)     PSUs (1)     All Other
Compensation
    2016 Total Direct
Compensation
Package
 
             

Charles F. Dolan

    $400,000       $801,500       $380,000       $570,000       $32,615       $2,184,115  
             

Joshua W. Sapan

    $2,000,000       $4,580,000       $5,200,000       $7,800,000       $173,862       $19,753,862  
             

Edward A. Carroll (2)

    $1,700,000       $3,226,038       $1,700,000       $1,700,000       $122,938       $8,448,976  
             

Sean S. Sullivan

    $900,000       $1,008,041       $1,200,000       $1,200,000       $67,368       $4,375,409  
             

James G. Gallagher

    $725,000       $605,749       $625,000       $625,000       $53,369       $2,634,118  

 

 

(1)

With respect to RSUs and PSUs awarded for 2016, the number of units awarded was determined by dividing the dollar amount shown in the table by a share price of $65.00, which was determined by the 20 day average closing price of the Company’s Class A Common Stock through March 3, 2016.

 

(2)

In order to provide a fair presentation of Mr. Carroll’s annual compensation for 2016, we also excluded a one-time special equity retention award of restricted stock units with an aggregate target value of $12.5 million, which vests on December 31, 2021, which Mr. Carroll received in connection with his execution of a new employment agreement with the Company. See “Employment Agreements – Edward A. Carroll” for details about the special equity retention award. This one-time special equity award is included in Mr. Carroll’s 2016 stock award column in the Summary Compensation Table.

Stockholder Engagement and Our Compensation Program

The Company values feedback from its stockholders and regularly engages with stockholders to keep informed on the evolving perspectives of the investor community. We engage with our stockholders on various matters, including Company performance and strategy, our Board and corporate governance practices, and our executive compensation program. These stockholder dialogues, focused on governance and compensation matters, are an important component of the Compensation Committee’s review of our executive compensation program.

The Compensation Committee believes that our executive compensation program closely links to our business strategies, aligns pay with performance and reflects competitive practices regarding executive compensation. Management and directors also engaged with our institutional shareholders in meetings and calls regarding our executive compensation program throughout 2016.

Frequency of Say on Pay Vote

Consistent with the results of the advisory vote on the frequency of the stockholder advisory vote on executive compensation held at the 2012 annual meeting of stockholders, the Company has determined to conduct an advisory vote on executive compensation every three years, as permitted under SEC rules, and intends to hold the next such advisory vote at its 2018 annual meeting. In the interim, the Compensation Committee will continue to solicit feedback from stockholders on governance and compensation matters, and

 

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will consider stockholder views, as well as market trends and practices when making determinations regarding the Company’s executive compensation program.

Philosophy and Objectives of Our Executive Compensation Program

The Company is a media business comprised of dynamic and powerful brands. In support of its business objectives, the Company places great importance on its ability to attract, retain, motivate and reward experienced executive officers. The Company strives to do so by developing executive compensation policies and programs that are consistent with, explicitly linked to, and supportive of, the strategic objectives of growing the Company’s businesses and maximizing stockholder value. The Compensation Committee sets executive compensation, and seeks to offer both short and long-term incentive compensation programs that will provide competitive compensation, drive performance and encourage executive retention, guided by the following principles:

 

   

The majority of compensation for the Company’s executive officers should be at risk and contingent on Company performance;

 

   

Incentive compensation of the Company’s executive officers should be weighted more heavily on long-term rather than short-term accomplishments and results;

 

   

Equity-based compensation should be used to align the interests of our executive officers with our stockholders’ interests; and

 

   

The overall executive compensation program should be competitive, equitable and structured so as to ensure the Company’s ability to attract, retain, motivate and reward the talented executives who are essential to the Company’s continuing success. Total target compensation, rather than individual compensation elements, is the Compensation Committee’s focus in providing competitive compensation opportunities.

The primary elements of 2016 executive compensation are base salary, an annual cash incentive award and long-term incentive awards in the form of RSUs, which vest ratably over three years, and PSUs that typically cliff vest in three years. We target the elements of our compensation so that at least 70% of total target compensation for our NEOs is performance-based. In this way, a significant portion of the value ultimately realized by the executive depends upon the Company’s performance and can be considered at-risk compensation.

 

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Elements of the Company’s Compensation Program

Our executive compensation program is designed to provide a mix of fixed and variable incentive awards, including short-and long-term incentives:

2016 NEO Total Direct Compensation Program Structure

 

Component

        Pay for Performance Rationale    Performance Period

Base Salary

       

•    Based on level and merit

   N/A

Annual

Cash

Incentives

       

•    Combination of weighted average of all business units’ operating performance (including revenue, AOI and Free Cash Flow) and an assessment of each business unit’s achievement of certain strategic objectives and its performance relative to its peers

   One year
       

Long-Term

Incentive

Awards

  

Performance Stock Unit Awards (PSUs)

•    60%: CEO/Chairman

•    50%: Other NEOs

  

•    AOI

•    Net revenue

•    Free cash flow

•    Stock Performance

   Three years
  

Restricted Stock Units (RSUs)

•    40%: CEO/Chairman

•    50%: Other NEOs

  

•    Stock Performance

   Ratably over three years

2016 CEO Annual Compensation Decision Mix

 

LOGO

2016 Performance Metrics

A significant percentage of total compensation is allocated to incentive compensation in accordance with the Compensation Committee’s philosophy as described above. The Compensation Committee reviews historical Company compensation, other information provided by the Compensation Committee’s independent

 

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compensation consultant and other factors, such as experience, performance and length of service to determine the level and mix of compensation for executive officers, by position and grade level, that the Compensation Committee has deemed appropriate. The allocation between cash and equity compensation and short and long-term compensation is designed to provide a combination of fixed and at-risk compensation that is related to the achievement of the Company’s short-term and long-term objectives.

Generally, the performance metrics for the Company’s incentive compensation have been based on the Company’s AOI, net revenues and free cash flow. The Compensation Committee believes that these are the key measures for evaluating our NEOs effectiveness in executing the Company’s strategy as these are the common performance measures used by the Company’s investors and analysts to evaluate the Company’s operating performance. The Compensation Committee believes that successful performance against these measures promotes the creation of long-term stockholder value.

 

   

Net revenue growth is important to the creation of long-term stockholder value because it is a reflection of management’s ability to grow our top line through growth in advertising, distribution and other revenue.

 

   

AOI is important because it reflects our ability to control costs and generate cash through our operations to invest in our current businesses as well as new opportunities.

 

   

Free cash flow reflects our ability to generate cash for our stockholders after we have made the necessary investments in our current operations to ensure they continue to perform.

2016 COMPENSATION DECISIONS

Employment Agreements

We have written employment agreements with each of our Named Executive Officers. We enter into employment agreements with our senior executives when the Compensation Committee determines that it is appropriate to attract or retain an executive. As discussed in greater detail below under Executive Compensation Tables, “Employment Agreements,” much of the NEOs’ compensation is determined in accordance with their employment agreements. Mr. Dolan’s employment agreement was entered into in connection with the Company’s 2011 spin off from Cablevision and approved by Cablevision’s compensation committee at a time when the Company was a subsidiary of Cablevision. The Company entered into an employment agreement with Mr. Sapan in 2014. On April 13, 2016, the Company entered into new employment agreements with Messrs. Sullivan and Gallagher, replacing their prior 2013 employment agreements. On October 13, 2016, the Company entered into a new employment agreement with Mr. Carroll replacing his prior 2013 employment agreement. The Compensation Committee believes that entering into employment contracts with our senior executives provides management stability and helps ensure that the Company has the continuity to achieve its strategic objectives. The Compensation Committee further believes that the entertainment industry standard practice is for executives to have employment agreements. Each of the NEOs has demonstrated strong performance and willingness to take on greater responsibilities as the Company grows and their multi-year agreements are designed to ensure their continued contributions to the Company.

Base Salaries

Base salaries for our executives have been set at levels that are intended to reflect the competitive marketplace in attracting and retaining quality executives. The Compensation Committee currently reviews the salaries of the executive officers at least annually. The Compensation Committee evaluates each executive’s performance and experience and based on this evaluation and in accordance with the terms of the employment agreements, the Compensation Committee, in its discretion, may increase base salaries for the executive officers over time. Each of the employment agreements of our NEOs contains a minimum base salary level. For

 

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information regarding these minimum base salary levels, please see Executive Compensation Tables, “Employment Agreements” below.

In connection with the Company entering into new employment agreements with Messrs. Carroll, Sullivan and Gallagher, the Compensation Committee increased their base salaries for 2016 by approximately 13.3%, 12.5% and 16%, respectively. For 2016, Messrs. Dolan and Sapan did not receive any base salary increase. The annual base salaries paid to the NEOs in 2016 were as follows: Mr. Dolan — $400,000; Mr. Sapan — $2,000,000; Mr. Carroll — $1,700,000; Mr. Sullivan — $900,000; and Mr. Gallagher — $725,000. See footnote 1 to Executive Compensation Tables, “Summary Compensation Table” for a more detailed discussion of the 2016 base salaries.

Annual Cash Incentives

Annual cash incentive awards are designed to link executive compensation directly to the Company’s performance and provide incentives and rewards for excellent business performance during the year.

We have two performance-based annual incentive programs:

 

   

2016 Cash Incentive Plan (the “2016 CIP”). Annual incentive program for all NEOs that the Compensation Committee determines may be covered by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The 2016 CIP was approved by the Company’s stockholders at the 2016 annual meeting of stockholders and is administered by the Compensation Committee. See “Tax Deductibility of Compensation,” below.

 

   

Annual performance incentive program (“Annual Incentive Program”). Annual incentive program for all other members of management.

Although our NEOs were awarded annual incentive compensation as part of the Amended and Restated 2011 Cash Incentive Plan (the “2011 CIP”), the predecessor to the 2016 CIP, the actual calculation of awards is based on bringing payouts generally in line with the payouts the NEOs would have received if they had been participants in the Annual Incentive Program.

NEO Annual Incentive Award Target Setting

Each annual cash incentive award-eligible employee is assigned a target annual incentive award equal to a percentage of that employee’s annual base salary. For 2016, target bonuses were set as a percentage of the base salary earned during 2016 (“Eligible Earnings”).

The target annual cash incentive awards are determined based upon the applicable employee’s position, grade level, responsibilities, and historical and expected future contributions to the Company. In addition, each of the employment agreements of Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher contains a target annual incentive award level. The Compensation Committee currently reviews the target bonus levels of the executive officers, and going forward intends to do so at least annually. The Compensation Committee evaluates each such executive’s performance and experience, and, based on this evaluation and in accordance with the terms of the employment agreements, the Compensation Committee, in its sole discretion, may set target annual incentive award levels for the executive officers. Target bonuses for 2016 (expressed as a percentage of Eligible Earnings) were as follows: Mr. Dolan — 175%; Mr. Sapan — 200%; Mr. Carroll — 175%; Mr. Sullivan — 100%; and Mr. Gallagher — 75%. For information regarding these target annual incentive award levels, see Executive Compensation Tables, “Employment Agreements,” below.

2016 CIP Performance Metrics

The payment of the 2016 annual cash incentive awards under the 2011 CIP is conditioned upon the satisfaction of one or more performance objectives established by the Compensation Committee. The

 

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performance metrics were designed to achieve tax deductibility under Code Section 162(m). Upon achievement of the performance objective(s), each NEO would be eligible to receive payment of an incentive bonus equal to the lesser of $10 million or two times the executive’s target annual incentive award, subject to the Compensation Committee’s discretion to reduce the award. In general, under the 2011 CIP, regardless of whether the Company achieves, exceeds or fails to achieve its target performance objective(s), the Compensation Committee has the discretion only to decrease annual incentive awards if the Company wishes to preserve the Code Section 162(m) deduction. Performance objectives are subject to various adjustments including acquisitions and dispositions and investments in new business ventures not contemplated when the performance objections are formulated.

In order for the NEOs to be eligible to receive an annual cash incentive award for the year ended December 31, 2016, the AOI of the business units for the year ended December 31, 2016 needed to exceed approximately $754 million.

2016 CIP Awards

On March 9, 2017, the Compensation Committee certified the awards as achieved by virtue of the AOI of the business units for the year ended December 31, 2016 equaling approximately $879 million. 1

The Compensation Committee applied negative discretion under the 2011 CIP to bring payouts generally in line with the payouts the NEOs would have received if they had been participants in the Annual Incentive Program. Each of our NEOs holds a corporate-wide position and, as such the amount by which his annual incentive award under the 2011 CIP was reduced based on the level of achievement of Company-wide performance metrics under the Annual Incentive Program, as described in more detail below. On March 14, 2017, the 2016 annual incentive awards were paid by the Company to the NEOs as shown in the table below:

 

           
NEO   Eligible
Earnings
    Target Bonus as
% of Base Salary
    Target Bonus     Annual Incentive
Program Award
of Target
    Actual 2011
CIP Annual
Incentive Award
 
           

Charles F. Dolan

    $400,000       175     $700,000       114.5     $801,500  
           

Joshua W. Sapan

    $2,000,000       200     $4,000,000       114.5     $4,580,000  
           

Edward A. Carroll

    $1,610,000       175     $2,817,500       114.5     $3,226,038  
           

Sean S. Sullivan

    $880,335       100     $880,335       114.5     $1,008,041  
           

James G. Gallagher

    $705,385       75     $529,039       114.5     $605,749  

2016 Annual Incentive Program Awards

The payment of annual incentive awards under the Annual Incentive Program is conditioned upon the satisfaction of one or more performance objectives established by the Compensation Committee depending upon the applicable eligible employee’s specific business unit. For 2016, under the Annual Incentive Program, these performance objectives related to an assessment of business unit performance against goals, strategies, operating performance and growth initiatives. These performance objectives include specific annual growth targets for revenues, AOI and Free Cash Flow for each of the following business units: AMC, BBC AMERICA (the

 

1  

AOI for this purpose is based upon the AOI of the Company (see Compensation Discussion and Analysis, “Business Highlights — Outstanding Long-Term Results, footnote 1) excluding the cost of the Company’s long-term incentive program that is included as an expense of the Company’s reporting segments. For 2016, “AOI” was subject to adjustment for the following events: the exclusion of charges for long-term incentive expense and acquisitions (including certain small international acquisitions).

 

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Company’s joint venture with BBC Worldwide), WE tv, IFC, SundanceTV, IFC Films, AMC Networks International, Affiliate Sales and Digital & OTT. In addition, each of the networks is expected to achieve growth in advertising impressions, and targets for viewership of new series and has also additional weighted metrics tailored for its business unit. Each business unit also is assessed on its achievement of certain strategic objectives and its performance relative to its peers. For individuals who hold corporate-wide positions at the Company, the Annual Incentive Program performance objectives are predominantly based on the weighted average performance of the different business units. Bonuses awarded under the Annual Incentive Program may also be adjusted based on recipients’ individual performances. To the extent the Company exceeds or falls short of the Annual Incentive Program performance objectives, eligible employees may receive payments greater than or less than their target annual incentive award.

Long-term Incentives

Our long-term incentive program in 2016 for all executives consisted of two elements: PSUs and RSUs. These long-term incentives are awarded to members of management based upon each individual’s grade level. Except for Messrs. Dolan and Sapan, who receive long- term incentive awards comprised of 60% of the value as PSUs and 40% of the value in RSUs, these long-term incentive awards granted to the other NEOs are comprised of 50% of the value in cash performance awards and 50% of the value as RSUs.

As part of the Compensation Committee’s annual evaluation of the Company’s compensation program and in consideration of investor feedback, beginning in 2016, the Compensation Committee modified the Company’s long-term incentive program and decided to replace the Company’s long-term cash performance awards with long-term PSUs. The performance metrics for the PSUs are identical to those used for the cash performance awards. The Compensation Committee believes that using an equity-based award that is subject to market risk over a multi-year performance period better aligns the interests of its senior officers with those of stockholders. Commencing in 2016, the Compensation Committee also modified the vesting schedule of its awards of RSUs so that all future RSU grants generally will vest ratably over three years rather than cliff vest. The Compensation Committee found that this change would provide the Company with a more effective recruitment tool, conformed to industry practice and was appropriately balanced by the three-year cliff vesting on the PSUs.

We believe that our PSU awards provide strong incentives for the NEOs to help the Company achieve specific long-term financial objectives. We further believe that both our PSU awards and RSU awards provide the NEOs with further incentives to improve the Company’s stock price performance and align our NEOs with stockholders’ interests, as well as the potential for a continuing stake in the long-term success of the Company.

Performance Stock Unit Awards

In 2016, our executive compensation program provided annual grants of three-year PSU awards to executive officers and other members of management to be earned on the basis of long-term performance of the Company relative to pre-established financial goals. The 2016 PSUs were made to such executive officers and certain other members of management pursuant to the Company’s Amended and Restated 2011 Employee Stock Plan (the “2011 Employee Stock Plan”), or its successor, the 2016 Employee Stock Plan. The Compensation Committee sets the performance objectives for each award in the first quarter of the year of grant. Each recipient is eligible to receive a target PSU award, the amount of which depends on the employee’s grade level and employment agreement, if any. To the extent that the Company’s target performance objectives are achieved and the recipient is continuously employed through the payment date, eligible employees may receive payments greater than or less than (or none of) their target PSU.

2016 PSU Award Grants .  On March 4, 2016, the Company granted PSU awards to the NEOs in the following target amounts: Mr. Dolan — 8,681 PSUs; Mr. Sapan — 118,794 PSUs; Mr. Carroll — 26,206 PSUs; Mr. Sullivan — 18,276 PSUs; and Mr. Gallagher — 9,519 PSUs. Additionally, on October 13, 2016, in

 

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accordance with the terms of his employment agreement, the Company granted Mr. Carroll a PSU award in the amount of 1,457 PSUs. All 2016 PSU awards are subject to vesting based on achievement of specified targets of AOI, net revenues and free cash flow (determined by calculating the average of AOI, net revenues and free cash flow of the Company earned in 2016, 2017 and 2018) and continuous employment through March 4, 2019. These performance targets are intended to measure the Company’s ongoing operating performance and are subject to various adjustments including for acquisitions and dispositions and investments in new business initiatives not contemplated at the time the performance objectives are formulated and exclude all charges for long-term performance-based compensation. In addition, the PSUs granted to Mr. Carroll in October 2016 have a threshold performance condition, pursuant to which vesting of the units is contingent on the Company achieving a 1% target rate of growth in AOI (relative to 2015) in any of 2017 or 2018. If this threshold performance condition is met, then the vesting of Mr. Carroll’s October 2016 PSUs will be determined in accordance with the performance targets described above. The 2016 performance awards will be determined based on the weights and performance achievements as shown in the table below:

 

         
Metric   Weight   Threshold   Target   Maximum
         

Average AOI

  50%   90% of target   Target from strategic plan   110% of target
         

Average Net Revenues

  30%   90% of target   Target from strategic plan   110% of target
         

Average Free Cash Flow

  20%   90% of target   Target from strategic plan   110% of target
         

Award Earned*

      50%   100%   200%

 

 

*

No award will be earned for performance below threshold. Performance between threshold and target and between target and maximum will be established by linear interpolation.

Because the targets for the 2016 awards have been derived from the Company’s confidential strategic plan, which is not disclosed publicly for competitive reasons, we do not believe it is appropriate to disclose specific numerical targets. Disclosure of these targets could provide information that could lead to competitive harm. We believe that our strategic plan, and consequently the targets set for the PSUs, are ambitious and reflect desired above-market performance. In determining the threshold levels of performance, the Company’s strategic plans and the degree of difficulty in achieving the targets, including a comparison of the strategic plans with analysts’ published projections of our growth as well as the projected growth of some of our competitors, were considered. The 2016 PSUs include a sliding scale of payouts based upon the achievement over the next three years of average AOI, average net revenues and average free cash flow. The Compensation Committee believes that the lowest levels on the sliding scale of the 2016 awards should be achieved, although there can be no assurance this will occur. The Compensation Committee has the authority to amend or waive the performance targets under the 2016 awards and to make interpretations thereof and adjustments thereto subject to the requirements of Code Section 162(m) if applicable to the award.

Restricted Stock Units   Under our executive compensation program, long-term incentive grants of RSUs are made to executive officers and certain other members of management pursuant to the Company’s 2011 Employee Stock Plan or 2016 Employee Stock Plan. The RSUs granted to the NEOs also include a performance vesting condition. In 2016, the Compensation Committee determined that the 2016 RSU grants would vest ratably over a three-year vesting period, subject to the attainment of the performance vesting condition during the first year, rather than cliff vest at the end of the period. The Committee found that this change would provide the Company with a more effective recruitment tool, conformed to industry practice and was appropriately balanced by the three-year cliff vesting of the PSUs.

On March 4, 2016, the Company granted RSUs to the NEOs in the following amounts: Mr. Dolan 5,787 RSUs; Mr. Sapan — 79,196 RSUs; Mr. Carroll — 24,749 RSUs; Mr. Sullivan — 18,276 RSUs; and Mr. Gallagher — 9,519 RSUs. All such 2016 RSU awards will vest ratably over a three-year vesting period,

 

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based on achievement of performance objectives during the first year and continued employment through the applicable vesting period. On October 13, 2016, in accordance with the terms of his employment agreement, the Company granted Mr. Carroll an additional RSU award in the amount of 242,813 RSUs, which vests on December 31, 2021 subject to continued employment, and 1,457 RSUs that vest two-thirds on March 4, 2018 and one-third on March 4, 2019, subject to continued employment. The performance condition relating to the RSUs required the Company to achieve a 1% target rate of growth in AOI (relative to 2015) in any of the three fiscal years: 2016, 2017 and 2018; provided that the RSUs granted to Mr. Carroll in October 2016 require achievement of such target rate of growth in 2017 or 2018 (relative to 2015). The performance metric is designed to achieve tax deductibility under Code Section 162(m). This performance requirement was met in 2016. 2 Additional information regarding RSUs for the NEOs during 2016 is set forth in the Summary Compensation Table and the Grants of Plan-Based Awards table under “Executive Compensation Tables” below. More information regarding other equity grants for the NEOs appears in the Outstanding Equity Awards at December 31, 2016 table under “Executive Compensation Tables” below.

Cash Performance Awards

Achievement of 2014 Cash Performance Award Objectives . On March 1, 2017, the Compensation Committee certified the Company’s achievement of performance objectives of average “AOCF”, average net revenue and average free cash flow for the cash performance awards granted in March 2014. In determining the achievement of the performance objectives for the 2014 cash performance awards, AOCF, net revenue and free cash flow were weighted at 50%, 30%, and 20%, respectively. The following table shows actual performance with respect to each of the performance objectives relative to the ranges established by the Compensation Committee in March 2014 and the resulting performance factor used in calculating the aggregate weighted performance payout at 135.2% of target in March 2017.

 

             
($000s)   2014-2016
Target
    Financial
Performance
Range (1)
    Actual
2014-2016
Performance
    Actual
Performance
v. Target
    Weighting     Weighted
Performance
Factor
 
             

AOCF

    $737       $664 - $811       $783       106.2     50     71.6
             

Net Revenue

    $2,404       $2164 - $2644       $2,409       100.2     30     30.2
             

Free Cash Flow

    $593       $533 - $652       $640       108.0     20     33.4
   

Weighted Performance Payout

 

                    135.2

 

 

( 1)

These awards provide for a potential payout on a sliding scale such that the actual payment may range from zero (if average AOCF, average net revenues and average free cash flow each fail to reach at least 90% of the targets) to 200% (if, for example, average AOCF equals or exceeds 110% of the target, average net revenues equal or exceed 110% of the target, and average free cash flow equals or exceeds 110% of the target).

For the 2014 cash performance awards to pay out at 100%, the Company was required to achieve specified targets of average AOCF of $737 million, average net revenues of $2,404 million, and average free cash flow of $593 million for years 2014 through 2016, subject to various adjustments including for certain impacts of the Distribution as well as unanticipated acquisitions and dispositions and investments in new business initiatives and exclude all charges for long-term performance-based compensation. 3 Based upon the Company’s performance, as shown in the table above, the 2014 cash performance awards paid out at 135.2% of target in March 2017.

 

2  

See footnote 1 to the Compensation Discussion and Analysis for “AOI” adjustments.

3  

See footnote 1 to the Compensation Discussion and Analysis for “AOI” adjustments. “Free Cash Flow” was subject to the same adjustments as described in footnote 2 to the Compensation Discussion and Analysis.

 

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COMPENSATION DECISION PROCESS AND COMPENSATION POLICIES

Role of Compensation Committee

The Compensation Committee oversees the design and administration of AMC’s compensation and benefits policies and programs. Among its duties, the Compensation Committee is responsible for (1) establishing our general compensation philosophy and, in consultation with management, overseeing the development and implementation of compensation programs; (2) reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and the other executive officers of the Company; (3) evaluating the CEO’s and other executive officers’ performance in light of those goals and objectives and determining and approving their compensation levels based upon those evaluations; (4) evaluating the competitiveness of each executive officer’s total compensation package; (5) administering our stockholder approved compensation plans; and (6) overseeing the activities of the committee or committees administering our benefit and retirement plans.

 

The Compensation Committee is supported in its work by the head of the Human Resources Department, his staff and the Committee’s independent executive compensation consultant as described below. Based upon a review of performance and historical compensation, recommendations and information from members of management, and discussions with the compensation consultant, the Compensation Committee determines and approves compensation for the executive officers, which includes making recommendations to the full Board for its approval of compensation for the Company’s executive officers (other than the Executive Chairman and CEO).

The Committee’s charter, which sets out its duties and responsibilities and addresses other matters, can be found on our website at www.amcnetworks.com.

Role of Independent Compensation Consultant

In accordance with its charter, the Compensation Committee has the authority to engage outside consultants to assist in the performance of its duties and responsibilities. Our Compensation Committee utilizes the services of an independent compensation consultant to assist in determining whether the elements of our executive compensation program are reasonable and consistent with our objectives.

In August 2011, after a full review and selection process, the Compensation Committee engaged Pay Governance LLC (the “Pay Governance”) to serve as its independent compensation consultant. Pay Governance reports directly to our Compensation Committee, and, at the request of the Compensation Committee, Pay Governance meets with members of our management from time to time for purposes of gathering information on management proposals and recommendations to be presented to our Compensation Committee.

The following is a description of the services provided by Pay Governance as the Compensation Committee’s consultant:

 

   

Attended all Compensation Committee meetings;

 

   

Provided information, research and analysis pertaining to the executive compensation program for 2016;

 

   

Regularly updated the Compensation Committee on market trends, changing practices and legislation pertaining to compensation;

 

   

Assisted the Compensation Committee in making pay determinations for the Executive Chairman and the President and CEO and the other executive officers;

 

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Advised the Compensation Committee on the design and terms of the new employment agreements for the Company’s Chief Operating Officer, Chief Financial Officer and General Counsel;

 

   

Advised on the design of the executive compensation program and the competitiveness of individual compensation targets and awards; and

 

   

Provided advice and recommendations that incorporated both market data and Company-specific factors.

During 2016, Pay Governance provided no other services to the Company.

The Compensation Committee believes that Pay Governance’s work did not raise any conflict of interest during 2016. In reaching this conclusion, the Compensation Committee considered the factors set forth in the SEC rules regarding compensation advisor independence. Although such independence rules are not applicable to the Company because it is a controlled company, the Compensation Committee believes that Pay Governance nonetheless satisfies the independence factors provided in such rules.

Role of Management

The Compensation Committee reviews the performance and compensation of the Executive Chairman and the President and CEO and, following discussions with Pay Governance and a review of market competitive data, establishes each of their compensation. The management of the Company assists the Compensation Committee and Pay Governance as described above. Within the framework of the compensation programs approved by the Compensation Committee and based on management’s review of market competitive positions, management provides to the Compensation Committee, either directly or through the compensation consultant, management’s recommendations on the compensation for executive officers other than the Executive Chairman and the President and CEO. These recommendations are influenced by the CEO’s assessment of each executive officer’s performance, the performance of the individual’s respective business or function and employee retention considerations. The Compensation Committee reviews management’s recommendations and approves any compensation changes affecting our executive officers as it determines in its sole discretion.

Tally Sheets

The Compensation Committee has reviewed tally sheets setting forth all components of compensation payable, and the benefits accruing, to the NEOs for 2016, including all cash compensation, perquisites and the current value of outstanding equity-based awards. The Compensation Committee considers the information presented in the tally sheets in determining future compensation.

Benchmarking

To ensure we provide compensation comparable to that offered by other leading companies in our industry, we compare the Company’s executive compensation levels against an appropriate peer group of companies tailored for specific Named Executive Officers. As part of the Compensation Committee’s review of 2016 compensation, Pay Governance assisted the Compensation Committee in: (1) determining the appropriate peer group to be used for competitive comparisons; (2) assessing executive compensation in comparison with the appropriate peer group and in light of the Company’s performance; and (3) reviewing the Company’s equity and cash-based executive incentive programs, taking into account evolving market trends.

As a result of the Company’s continued rapid growth in both its domestic and international operations, the Compensation Committee met with Pay Governance to re-evaluate the Corporate Peer Group to determine whether it was comprised of the appropriate group of comparable companies. On December 14, 2015, the

 

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Compensation Committee approved changes to the Corporate Peer Group for the 2016 performance year to better reflect the Company’s more complex multi-content international business.

 

2016 Corporate Peer Group

CBS Corporation

   Scripps Networks Interactive, Inc.

Discovery Communications, Inc.

   Starz Corporation

DreamWorks Animation SKG Inc.

   Take-Two Interactive Software Inc

Lions Gate Entertainment Corp

   Tribune Media Company (New for 2016)

Netflix, Inc.

   Viacom, Inc. ( New for 2016 )

The Compensation Committee added Viacom, Inc. and Tribune Media Company and eliminated SIRIUS XM Holdings Inc. While the Corporate Peer Group includes several significantly larger market capitalization companies, the Committee determined that market capitalization should only be one of many factors considered when selecting a peer group. Revenues, lines of business and sources and competition for talent are also important and, thus, Viacom, Inc. was added and CBS Corporation and Netflix, Inc. remained in the peer group. The Compensation Committee also took into account that Netflix used the Company as one of its peers. The Company eliminated SIRIUS due to its belief that it was not a relevant peer of the Company both in respect of its lines of business and competition for talent.

This Corporate Peer Group differs from that used in the stock performance graph contained in the Annual Report on Form 10-K. Due to the fact that only a few of the companies in our peer group had an executive serving as a chief operating officer, the Compensation Committee also considered a supplemental reference group for the Company’s Chief Operating Officer role, which included business unit executives at CBS Corporation, Disney, Fox, Netflix, Viacom and Paramount.

The Compensation Committee also considered internal and external sources of information to determine the appropriate level and mix of compensation. In order to obtain a general understanding of current compensation practices, the Compensation Committee considered multiple broad-based compensation surveys prepared by a variety of different compensation firms and industry groups. In addition to the Corporate Peer Group, in 2016, the Compensation Committee also considered an additional supplemental reference group for the Company’s Chief Financial Officer and General Counsel roles. This additional supplemental reference group consisted of companies with revenues between $1 billion and $3 billion that participated in the Towers Watson’s 2015 Media Industry Executive Compensation Survey. In its 2016 review of these roles, the Compensation Committee considered competitive pay data based on three references, including: (1) Corporate Peer Group data; (2) the supplemental Towers Watson Media Survey reference group data; and (3) a blend of the Corporate Peer Group data and the supplemental Towers Watson Media Survey reference group data.

In connection with the review of 2016 compensation, Pay Governance presented to the Compensation Committee a comparison of total compensation and each of its components with the median in each position’s peer group. In its review, the compensation consultant noted that there was limited market information regarding the role and compensation of the Executive Chairman in its peer group. The Compensation Committee further considered that the Company’s founder and Executive Chairman, Mr. Charles F. Dolan, plays a unique and important role in setting the strategic direction of the Company in addition to his role on the Board. The Compensation Committee also considered that Mr. Dolan was an executive officer of Cablevision until its sale to Altice in June 2016. Pay Governance compared Mr. Dolan’s total target compensation to that received by other executive chairmen of other similar sized companies who were significant stockholders of their companies and found that Mr. Dolan’s total target compensation was below the 50th percentile of this group.

In connection with its review of 2016 compensation, the Compensation Committee set a general guideline for total target compensation, over time, at a range from the median to the 75th percentile of the applicable peer group, reserving for the Compensation Committee the flexibility to recognize differences by

 

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individual. The Company competes for talented executives in a highly-compensated industry. The Compensation Committee believes that this range is appropriate in light of the competitive nature of the Company’s businesses as well as the Company’s and its management’s performance. The Compensation Committee believes that these guidelines for total target compensation provide a useful point of reference, along with the other factors described above, in administering the Company’s executive compensation program. For 2016, after considering individual performance and scope of responsibilities, the Compensation Committee believes that all Named Executive Officers are assigned total target compensation levels consistent with the compensation philosophy.

Benefits

Our executive officers are generally eligible to participate in the same retirement plans, health and welfare benefit plans and other voluntary benefit plans made available to other benefits-eligible employees of the Company, including, for example, medical, dental, vision, life insurance and disability coverage.

Defined Contribution Plans

The Company maintains the AMC Networks 401(k) Savings Plan, a tax qualified retirement savings plan (the “AMC 401(k) Plan”). Participating employees, including executive officers, may contribute into their plan accounts a percentage of their eligible pay on a before-tax basis as well as a percentage of their eligible pay on an after-tax basis. The Company matches 100% of the first 3% of pretax eligible earnings and 50% of the next 2% of pretax eligible earnings contributed by participating employees.

The Company also maintains the AMC Networks Excess Savings Plan (the “AMC Excess Savings Plan”) for certain of the Company’s employees, including executive officers. The AMC Excess Savings Plan is a non-qualified deferred compensation plan offered to certain employees, including executive officers, who are restricted by the applicable IRS annual compensation limitation and/or the pre-tax income deferral limitation. More information regarding the AMC Excess Savings Plan is provided in the Nonqualified Deferred Compensation table. In addition, the Company may provide a profit sharing contribution based on the employee’s eligible earnings. For December 31, 2016, the Company provided a 3% profit sharing contribution based on the employee’s eligible earnings to each eligible employee, including each NEO (other than Mr. Dolan). The Company’s profit sharing contributions are subject to vesting limitations for the first three years of employment. Matching contributions made by the Company under the AMC 401(k) Plan, and the AMC Excess Savings Plan on behalf of the NEOs are set forth in the Summary Compensation Table under “Executive Compensation Tables” below.

Other

In addition to the standard life insurance available to all Company employees (based on a multiple of base salary, up to a $4,000,000 cap on the total amount of life insurance), Cablevision had purchased whole life insurance policies for certain current and former senior executives of Cablevision, including Mr. Sapan. The policies originally provided coverage (before the application of any dividends to purchase increased insurance) in the amount of the greater of three times the individual’s annual base salary as in effect in 1996 or the estimated death benefit provided under previous policies. As of the most recent anniversary date, the policies for Mr. Sapan provided for an estimated aggregate death benefit of $1,291,138. Information regarding premiums paid with respect to Mr. Sapan is set forth in the Summary Compensation Table below. On June 30, 2011 (the “Distribution Date”), the date Cablevision spun off the Company (the “Distribution”), the Company assumed responsibility for the payment of required premiums, if any, with respect to Mr. Sapan.

Perquisites

The Company has adopted a policy that it generally will not provide perquisites to its executive officers. During 2016, the aggregate value of perquisites received by each of Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher by the Company was less than $10,000.

 

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Post-Termination Compensation

We believe that post-termination benefits are integral to the Company’s ability to attract and retain qualified executives.

Under certain circumstances, payments or other benefits may be provided to employees upon the termination of their employment with the Company. These may include payments or other benefits upon a termination by the Company without cause, termination by the employee for good reason, other voluntary termination by the employee, retirement, death, disability, or termination following a change in control of the Company or a going-private transaction. With respect to the NEOs, the amounts and terms of such payments and other benefits (including the definition of “cause” and “good reason”) are governed by each NEO’s employment agreement and any applicable award agreements. The Company award agreements regarding various long-term incentives address employment termination events, including the circumstances upon which vesting, payment and/or forfeiture of all or a portion of the long-term incentives may be accelerated. If an executive’s employment agreement with the Company refers to the treatment of any award upon a triggering event, the employment agreements generally provide that, if the terms of the award agreement are more favorable to the executive than the terms of the employment agreement, then the terms of the award agreement will apply. Post-termination compensation is discussed in greater detail in Executive Compensation Tables, “Employment Agreements” and Executive Compensation Tables, “Termination and Severance” below.

Tax Deductibility of Compensation

Code Section 162(m) establishes a $1 million limit on the amount that a publicly held corporation may deduct for compensation paid to the chief executive officer and the next three most highly paid NEOs (other than the chief financial officer) in a taxable year. This limitation does not apply to any compensation that is “qualified performance-based compensation” under Code Section 162(m), which is defined as compensation paid in connection with certain stock options or that is paid only if the individual’s performance meets pre-established objective goals based on performance criteria established under a plan approved by stockholders. Our short-term and long-term incentive compensation plans are generally designed to qualify for this exemption from the deduction limitations of Code Section 162(m) and to be consistent with providing appropriate compensation to executives. The Company’s stockholders approved the 2011 CIP and the 2011 Employee Stock Plan at the Company’s June 5, 2012 annual meeting of stockholders. On June 8, 2016, the Company’s stockholders approved the 2016 Employee Stock Plan, which superseded the 2011 Employee Stock Plan, and the 2016 Executive Cash Incentive Plan, which superseded the 2011 CIP.

From time to time, to the extent it deems appropriate, the Compensation Committee may make awards (or modifications to awards) that would not qualify for an exemption from Code Section 162(m). For example, we expect that the amount of annual base salary plus any other annual compensation paid or imputed to the President and CEO and the next three most highly paid NEOs covered by Code Section 162(m) that causes their non-performance-based compensation to exceed the $1 million limit will not be deductible by the Company for federal income tax purposes.

Although it is the Company’s intent generally to qualify compensation for the exemption from the deduction limitations, we believe that it is in the best interests of the Company’s stockholders to allow the Compensation Committee the flexibility and discretion to design an appropriate executive compensation program so that the Company can attract, retain and motivate our executives, notwithstanding Code Section 162(m).

 

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above. Based on such review and discussions, we have recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the U.S. Securities and Exchange Commission.

Members of the Compensation Committee

Leonard Tow (Chair)

Jonathan F. Miller

Carl E. Vogel

 

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EXECUTIVE COMPENSATION TABLES

The tables below reflect the compensation of the Company’s Executive Chairman, President and CEO, Chief Financial Officer and the two other most highly paid executive officers. See “Compensation Discussion and Analysis” for an explanation of our compensation philosophy and program.

Total Compensation 2016 — “Bunching” effect.   In 2016, the Company changed its long term incentive compensation to be 100% equity based and eliminated the cash performance award (CPA) award, which was awarded in each of 2015 and 2014. SEC reporting rules require that the Company report CPAs when paid at the end of their three-year performance cycle. At the same time, SEC rules require that PSU awards, which also vest after a three-year performance cycle, be reported in the year granted. This results in a “bunching” effect because 2016 includes both the CPAs that were granted in 2014 and the PSUs granted in 2016. As a result, all of our NEOs will have a “bunching” effect for their 2016 compensation. Footnote 2 of the Summary Compensation Table provides additional explanation. See a detailed discussion on the impact of the change in the make-up of the long-term awards on page 22 of this Proxy Statement.

Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of our NEOs and paid by us for the years ended December 31, 2014, December 31, 2015 and December 31, 2016.

 

Name and Principal Position   Year     Salary
($)(1)
    Bonus
($)
    Stock
Awards
($)(2)
    Option and
Rights
Awards
($)(3)
    Non-Equity
Incentive Plan
Compensation
($)(4)
    All Other
Compensation
($)(5)
    Total ($)  

Mr. Charles F. Dolan

    2016       400,000             963,569             1,572,140       32,615       2,968,324  

Executive Chairman

    2015       400,000             393,458             1,763,500       31,384       2,588,342  
      2014       400,000             418,970             1,468,220       32,000       2,319,190  

Mr. Joshua W. Sapan

    2016       2,000,000             13,186,134             15,125,600       173,862       30,485,596  

President and Chief Executive

    2015       2,000,000             5,384,285             10,135,000       167,327       17,686,612  

Officer

    2014       2,000,000             29,760,943             8,411,309       141,604       40,313,856  

Mr. Edward A. Carroll

    2016       1,700,000             15,155,351             5,254,038       122,938       22,232,327  

Chief Operating Officer

    2015       1,500,000             1,553,180             4,513,038       100,038       7,666,256  
      2014       1,150,000             1,653,976             2,755,385       90,055       5,649,416  

Mr. Sean S. Sullivan

    2016       900,000             2,434,364             2,089,641       67,368       5,491,373  

Executive Vice President and

    2015       800,000             1,035,453             1,907,769       57,643       3,800,865  

Chief Financial Officer

    2014       700,000             882,136             1,206,253       54,128       2,842,517  

Mr. James G. Gallagher

    2016       725,000             1,267,930             1,214,149       53,369       3,260,448  

Executive Vice President and

    2015       625,000             517,727             1,116,621       45,198       2,304,546  

General Counsel

    2014       550,000             496,177             892,351       42,749       1,981,277  

 

(1)

For 2016, salaries paid to the NEOs accounted for the following percentage of their total compensation: Mr. Dolan —19%; Mr. Sapan — 10%; Mr. Carroll — 9%; Mr. Sullivan — 21%; and Mr. Gallagher — 29%. Effective March 1, 2016, Mr. Carroll’s base salary increased to $1,600,000 and, effective as of September 1, 2016, increased to $1,700,000. See “Employment Agreements — Edward A. Carroll” for details about the base salary increase.

 

(2)

This column includes the value of stock awarded to NEOs during 2016, 2015 and 2014 based upon its grant date fair value, as determined under SEC guidance. PSUs and RSUs were granted to the NEOs in 2016. The increase in stock awards in 2016 is a result of the Company moving its long-term incentive to 100% equity, by replacing CPAs (reported under the “Non-Equity Incentive Plan” column when paid) with PSUs (reported in this column when granted). Details regarding the grants of PSUs and RSUs can be found in the “Grants of Plan-Based Awards” table and details regarding outstanding stock awards can be found in the “Outstanding Equity Awards at 2016 Year End” table. See page      in “Compensation Discussion and Analysis” for additional information regarding the RSUs and PSUs granted in 2016. The 2016 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher reflect the aggregate grant date fair value of the Company’s RSUs and PSUs at target that were awarded in 2016 and solely without any reduction for risk of forfeiture, as calculated in accordance with FASB ASC Topic 718 as follows: Mr. Dolan: $385,414 and $578,155,

 

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respectively; Mr. Sapan: $5,274,454 and $7,911,680, respectively; Mr. Carroll: $13,436,753 and $1,718,598, respectively; Mr. Sullivan: $1,217,182 and $1,217,182, respectively; and Mr. Gallagher: $633,965 and $633,965, respectively. The grant date fair value of the 2016 PSUs assuming maximum performance, as calculated in accordance with FASB ASC Topic 718, is as follows: Mr. Dolan: $1,156,350, Mr. Sapan: $15,823,360, Mr. Carroll: $3,437,196, Mr. Sullivan: $2,434,364 and Mr. Gallagher: $1,267,930. Beginning in 2016, the Compensation Committee granted PSUs instead of the long-term cash performance awards that had historically been granted to the NEOs. The 2016 figures in this column include the long-term PSU awards that were granted in 2016. The figures in the Non-Equity Incentive Plan Compensation column for 2016 include the long-term cash performance awards granted in 2014 for the performance period of 2014-2016.

For 2015 and 2014, this column reflects the aggregate grant date fair value of the Company’s RSUs that were awarded in 2015 and 2014, respectively, and solely without any reduction for risk of forfeiture, as calculated in accordance with FASB ASC Topic 718. In 2014, concurrently with the execution of his amended and restated employment agreement, Mr. Sapan received a one-time special equity retention award of RSUs with an aggregate target value of $25,000,000, which vests on December 31, 2020. See “Employment Agreements — Joshua W. Sapan” for details about the special equity retention award. In 2016, concurrently with the execution of his employment agreement, Mr. Carroll also received a one-time special equity retention award of RSUs with an aggregate target value of $12,500,000, which vests on December 31, 2021. See “Employment Agreements — Edward A. Carroll” for details about the special equity retention award.

 

(3)

No stock options and/or rights were granted in 2014, 2015 or 2016.

 

(4)

The 2016 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher include amounts from two distinct awards: (i) the annual incentive awards for performance in 2016 and (ii) the value of long-term cash performance awards granted in 2014, earned at the end of 2016 as follows: Mr. Dolan: $801,500 and $770,640, respectively; Mr. Sapan: $4,580,000 and $10,545,600, respectively; Mr. Carroll: $3,226,038 and $2,028,000, respectively; Mr. Sullivan: $1,008,041 and $1,081,600, respectively; and Mr. Gallagher: $605,749 and $608,400, respectively. Beginning in 2016, the Compensation Committee replaced its long-term cash performance awards with PSU awards. Therefore, the 2016 row contains both the cash-based long-term performance awards granted in 2014 and earned for the period of 2014-2016 (disclosed in the Non-Equity Incentive Plan Compensation column), and the PSUs granted in 2016 for the performance period of 2016 to 2018 (disclosed in the Stock Awards column).

The 2015 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher include amounts from two distinct awards: (i) the annual incentive awards for performance in 2015 and (ii) the value of long-term cash performance awards granted in 2013, earned at the end of 2015 as follows: Mr. Dolan: $994,000 and $769,500, respectively; Mr. Sapan: $5,680,000 and $4,455,000, respectively; Mr. Carroll: $2,994,288 and $1,518,750, respectively; Mr. Sullivan: $1,097,769 and $810,000 , respectively; and Mr. Gallagher: $644,121 and $472,500, respectively.

The 2014 figures in this column for Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher include amounts from two distinct awards: (i) the annual incentive awards for performance in 2014 and (ii) the value of long-term cash performance awards granted in 2012, earned at the end of 2014 as follows: Mr. Dolan: $864,500 and $603,720, respectively; Mr. Sapan: $4,916,441 and $3,494,868, respectively; Mr. Carroll: $1,637,385 and $1,118,000, respectively; Mr. Sullivan: $647,253 and $559,000, respectively; and Mr. Gallagher: $556,951 and $335,400, respectively.

 

(5)

The table below shows the components of this column:

 

Name        Year          401(k)
Plan
Match
($)(a)
     Excess
Savings
Plan
Match
$(a)
     Life
Insurance
Premiums
($)(b)
     Deferred
Compensation
Awards ($)
     Perquisites
($)(c)
     Total ($)  

Charles F. Dolan

     2016               32,615                             32,615  

Joshua W. Sapan

     2016        20,200        142,876        10,786                      173,862  

Edward A. Carroll

     2016        21,200        101,738                             122,938  

Sean S. Sullivan

     2016        20,885        46,483                             67,368  

James G. Gallagher

     2016        21,200        32,169                             53,369  

 

(a)

These columns represent, for each individual, a matching contribution and non-contributory Company contribution funded by the Company on behalf of such individual under the AMC 401(k) Plan or AMC Excess Savings Plan, as applicable. The AMC Excess Savings Plan match and non-contributory Company contributions are reflected in the Nonqualified Deferred Compensation table below.

 

(b)

This column represents amounts paid for premiums on whole life insurance policies for Mr. Sapan.

 

(c)

Perquisites provided to Messrs. Dolan, Sapan, Carroll, Sullivan or Gallagher did not exceed an aggregate value of $10,000. For more information regarding perquisites, see Compensation Discussion and Analysis, “Compensation Decision Process and Compensation Policies — Perquisites.”

 

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Grants of Plan-Based Awards

The table below presents information regarding awards granted in 2016 to each NEO under the Company’s plans, including estimated possible and future payouts under non-equity incentive plan awards and other restricted stock and stock option awards.

 

             

 

Estimated Future Payouts Under Non-

Equity Incentive Plan Awards

   

 

Estimated Future Payouts Under

Equity Incentive Plan Awards

    All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
    Grant Date
Fair Value
of Stock
and Option
Awards
($)(1)
 
Name     Year     Grant Date     Threshold($)     Target($)     Maximum($)     Threshold(#)     Target(#)     Maximum(#)      

Charles F. Dolan

  2016     1/1/2016 (2)         700,000       1,400,000            
  2016     3/4/2016 (3)             4,341       8,681       17,362         578,155  
    2016     3/4/2016 (4)                                                       5,787       385,414  

Joshua W. Sapan

  2016     1/1/2016 (2)         4,000,000       8,000,000            
  2016     3/4/2016 (3)             59,397       118,794       237,588         7,911,680  
    2016     3/4/2016 (4)                                                       79,196       5,274,454  

Edward A. Carroll

  2016     1/1/2016 (2)         2,975,000       5,950,000            
  2016     3/4/2016 (3)             12,375       24,749       49,498         1,648,283  
  2016     3/4/2016 (4)                   24,749       1,648,283  
  2016     10/13/2016 (5)             729       1,457       2,914         70,315  
  2016     10/13/2016 (6)                   1,457       70,315  
    2016     10/13/2016 (7)                                                       242,813       11,718,155  

Sean S. Sullivan

  2016     1/1/2016 (2)         900,000       1,800,000            
  2016     3/4/2016 (3)             9,138       18,276       36,552         1,217,182  
    2016     3/4/2016 (4)                                                       18,276       1,217,182  

James G. Gallagher

  2016     1/1/2016 (2)         544,000       1,088,000            
  2016     3/4/2016 (3)             4,760       9,519       19,038         633,965  
    2016     3/4/2016 (4)                                                       9,519       633,965  

 

(1)

This column reflects the aggregate grant date fair value of the Company’s RSUs and target PSUs, as the case may be, granted to each NEO in 2016 without any reduction for risk of forfeiture, as calculated in accordance with FASB ASC Topic 718 on the grant date.

 

(2)

This row reflects the possible payouts with respect to grants of annual incentive awards under the Company’s Executive Cash Incentive Plan for performance in 2016. Each of the executives is assigned a target bonus percentage and amount; there is no threshold amount for annual incentive awards. Under the terms of the awards, each executive is eligible to receive payment of an annual incentive award equal to the lesser of $10 million or two times his bonus target, subject to the Compensation Committee’s discretion to reduce the award. The amounts of annual incentive awards actually paid for performance in 2016 are disclosed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. For more information regarding the terms of these annual incentive awards, please see Compensation Discussion and Analysis, “2016 Compensation Decisions —Annual Cash Incentives.”

 

(3)

This row reflects the Company’s PSUs that were granted in 2016. Each PSU was granted with a target amount, whose actual vesting amount will be based on a sliding scale ranging from zero to two times the target grant amount. The stated threshold payout for the PSUs represent the units awarded in the event that the threshold performance level is achieved (but not exceeded) for each of the applicable performance targets. If the threshold performance level is achieved for at least one of the performance targets, but not achieved for one or more of the performance targets, then the units granted would be less than the amount stated in the table above. These PSUs will vest on March 4, 2019 if the Company achieves a minimum of specified performance thresholds in the three-year period ending December 31, 2018. See Compensation Discussion and Analysis, “2016 Compensation Decisions — Long-term Incentives — Performance Stock Unit Awards.”

 

(4)

This row reflects the Company’s RSUs that were awarded in 2016. The awards vest ratably over three years on March 4, 2017, March 4, 2018 and March 4, 2019 and are subject to performance criteria which have been satisfied. See Compensation Discussion & Analysis, “2016 Compensation Decisions — Long-term Incentives — Restricted Stock Units.”

 

(5)

This row reflects an additional grant of PSUs that were granted to Mr. Carroll on October 13, 2016 in accordance with the terms of his employment agreement. These PSUs have a threshold performance condition, pursuant to which vesting of the units is contingent on the Company achieving a 1% target rate of growth in AOI (relative to 2015) in any of 2017 or 2018. If this threshold performance condition is met, then the vesting of Mr. Carroll’s October 2016 PSUs will vest on March 4, 2019 if the

 

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Company achieves a minimum of specified performance thresholds in the three-year period ending December 31, 2018. The vesting amount of the PSUs will be based on a sliding scale ranging from zero to two times the target grant amount. The stated threshold payout for the PSUs represent the units awarded in the event that the threshold performance level is achieved (but not exceeded) for each of the applicable performance targets. If the threshold performance level is achieved for at least one of the performance targets, but not achieved for one or more of the performance targets, then the units granted would be less than the amount stated in the table above.

 

(6)

This row reflects an additional 1,457 RSUs that were granted to Mr. Carroll on October 13, 2016, in accordance with the terms of his employment agreement, which vest two-thirds on March 4, 2018 and one-third on March 4, 2019.

 

(7)

This row reflects a one time special equity retention award of RSUs granted to Mr. Carroll in 2016 concurrently with the execution of his new employment agreement, which vests on December 31, 2021. See “Employment Agreements — Edward A. Carroll” for details about the special equity retention award.

Outstanding Equity Awards at 2016 Year End

The table below shows the aggregate number of unvested RSUs and PSUs outstanding for each NEO, in each case as of December 31, 2016.

 

    Option Awards   Stock Awards
Name  

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

Number of

Securities

underlying

Unexercised

Options (#)

Unexercisable

 

Equity

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

 

Option

Exercise

    Price ($)    

 

Option

Expiration

Date

 

Number of

Shares or

Units of Stock

That Have

Not Vested (#)

   

Market Value

of Shares or

Units of Stock

That Have

Not Vested

($)(1)

   

Equity

Incentive Plan

Awards:

Number of

Unearned

Shares, Units

or Other

Rights That

Have Not

Vested (#)

 

Equity

Incentive Plan

Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other

Rights That

Have not

Vested ($)

Charles F. Dolan

              5,787 (2)      302,892      
              5,430 (3)      284,206      
              5,432 (4)      284,311      
                8,681 (5)      454,364      

Joshua W. Sapan

              79,196 (2)      4,145,119      
              74,307 (3)      3,889,228      
              74,339 (4)      3,890,903      
              118,794 (5)      6,217,678      
                353,757 (6)      18,515,641      

Edward A. Carroll

              26,206 (2)      1,371,622      
              21,435 (3)      1,121,908      
              21,444 (4)      1,122,379      
              26,206 (5)      1,371,622      
                242,813 (7)      12,708,832      

Sean S. Sullivan

              18,276 (2)      956,566      
              14,290 (3)      747,939      
              11,437 (4)      598,613      
                18,276 (5)      956,566      

James G. Gallagher

              9,519 (2)      498,224      
              7,145 (3)      373,969      
              6,433 (4)      336,703      
                9,519 (5)      498,224      

 

(1)

Calculated using the closing price of Class A Common Stock on NASDAQ on December 30, 2016, the last trading day of the year of $52.34 per share.

 

(2)

These RSUs vest ratably on March 4, 2017, March 4, 2018 and March 4, 2019.

 

(3)

These RSUs are scheduled to vest on March 6, 2018.

 

(4)

These RSUs vested on March 7, 2017.

 

(5)

These PSUs vest on March 4, 2019 if the Company achieves specified performance targets in the three-year period ending December 31, 2018. The PRUs and associated value reported in the table are based on the target numbers of

 

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shares granted. The actual number of units that will vest is subject to a sliding scale ranging from zero to two times the target grant amount.

 

(6)

These RSUs are scheduled to vest on December 31, 2020.

 

(7)

These RSUs are scheduled to vest on December 31, 2021.

Option Exercises and Stock Vested

The table below shows stock option exercises during the year ended December 31, 2016 and the vesting of RSUs during the same period.

 

     Option Exercises      RSUs  
Name    Number of Shares
Acquired on
Exercise
     Value Realized on
Exercise ($)(1)
     Number of Shares
Acquired on
Vesting
     Value Realized On
Vesting ($)(2)
 

Charles F. Dolan

     66,000        4,413,420        6,497        425,424  

Joshua W. Sapan

                   37,613        2,462,899  

Edward A. Carroll

                   18,969        1,242,090  

Sean S. Sullivan

                   10,258        671,694  

James G. Gallagher

                   5,984        391,832  

 

 

(1)

These amounts reflect the difference between the exercise price of the option and the market price at the time of exercise.

 

(2)

Calculated using the closing price of Class A Common Stock on March 11, 2016, multiplied by the number of shares vesting on March 12, 2016.

Nonqualified Deferred Compensation

The table below shows: (1) the contributions made by the NEOs in respect of their compensation from the Company and contributions funded by the Company in 2016; (2) aggregate earnings on each NEO account balance in 2016; and (3) the account balance of such executive officer under the AMC Networks Inc. Excess Savings Plan as of December 31, 2016.

 

Name   Plan Name   Executive
Contributions
in 2016(1)($)
    Registrant
Contributions
in 2016(2)($)
    Aggregate
Earnings in
2016(3)($)
    Aggregate
Withdrawals/
Distributions
($)
  Aggregate
Balance at
2016 FYE ($)
 

Charles F. Dolan

  AMC Excess Savings Plan     24,923       32,615       465         294,074  

Joshua W. Sapan

  AMC Excess Savings Plan     189,692       142,876       3,760         2,354,088  

Edward A. Carroll

  AMC Excess Savings Plan     141,054       101,738       2,531         1,602,304  

Sean S. Sullivan

  AMC Excess Savings Plan     65,401       46,483       19,894         416,615  

James G. Gallagher

  AMC Excess Savings Plan     52,942       32,169       9,911         369,729  

 

(1)

These amounts represent a portion of the NEOs’ salaries, which are included in the numbers reported in the “Salary” column of the Summary Compensation Table that the executives contributed to the respective plans.

 

(2)

These amounts are included in the Summary Compensation Table under “All Other Compensation” and described in Note 5 to that table.

 

(3)

These amounts are not reported in the “All Other Compensation” column of the Summary Compensation Table.

 

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AMC Networks 401(k) Savings Plan

During 2016, the Company’s U.S. employees, including its executive officers, other than Mr. Dolan, participated in the AMC 401(k) Plan, a tax-qualified retirement savings plan. Under this plan, participating employees are eligible to contribute into their plan accounts a percentage of their eligible pay on a before-tax basis as well as a percentage of their eligible pay on an after-tax basis. The Company matches up to 100% of the first 3% of eligible earnings contributed pre-tax by participating employees and then matches 50% of the next 2% of eligible earnings contributed pre-tax by participating employees. In addition, the Company may provide a non-contributory profit sharing contribution based on the employee’s eligible earnings. The Company’s profit sharing contributions are subject to vesting limitations for the first three years of employment. For December 31, 2016, the Company provided an additional 3% profit sharing contribution based on the employee’s eligible earnings to each participating and eligible employee.

AMC Networks Inc. Excess Savings Plan

During 2016, certain of the Company’s U.S. employees, including its executive officers, participated in the AMC Excess Savings Plan. The AMC Excess Savings Plan is a non-qualified deferred compensation plan that operates in conjunction with the AMC 401(k) Plan. An employee is eligible to participate in the AMC Excess Savings Plan for a calendar year if his or her eligible earnings in the preceding year exceeded (or would have exceeded, if the employee had been employed for the entire year) the IRS limit on the amount of compensation that can be taken into account in determining contributions under tax-qualified retirement plans ($265,000 in 2016) and he or she makes an election to participate prior to the beginning of the year. An eligible employee whose contributions to the AMC 401(k) Plan are limited as a result of this compensation limit or as a result of reaching the maximum 401(k) deferral limit ($18,000 or $24,000 if 50 or over, for 2016) can continue to make pre-tax contributions under the AMC Excess Savings Plan of up to 10% of his or her eligible pay. In addition, the Company will make matching contributions of 100% of the first 3% of eligible earnings contributed by participating employees and then will match 50% of the next 2% of eligible earnings contributed by participating employees. A participant is always fully vested in his or her own contributions and in the Company’s matching contributions. Account balances under the AMC Excess Savings Plan are invested at the discretion of the executive choosing from a selection of investments generally equal to those investments available in the AMC 401(k) Plan. Distributions are made in a lump sum as soon as practicable after termination of the participant’s employment with the Company, subject to restrictions under Section 409A.

Employment Agreements

The Company’s employment agreements with Messrs. Dolan, Sapan, Carroll, Sullivan and Gallagher are described below.

Charles F. Dolan

Mr. Dolan’s employment agreement with the Company provides for his employment as our Executive Chairman. The employment agreement with the Company has an initial term of one year and automatically renews for successive one-year terms unless terminated by either party at least three months prior to the end of the then existing term. The agreement provides for an annual base salary of not less than $400,000 per year, subject to increase by the Company’s Compensation Committee. Mr. Dolan is also eligible for an annual bonus with a target of 175% of his annual base salary, as the Company’s Compensation Committee shall determine in its discretion. Under the agreement, Mr. Dolan continues to be eligible to participate in the Company’s long-term cash or equity programs or arrangements, at the level determined by the Company’s Compensation Committee, in its discretion consistent with his role and responsibilities as Executive Chairman. Although there is no guarantee, it is currently expected that long-term cash and/or equity awards will be made to Mr. Dolan annually.

 

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The Company provides Mr. Dolan with medical, life and accidental death and dismemberment insurance. Such life and accidental death and dismemberment insurance provided by the Company is based on Mr. Dolan’s base salary. Mr. Dolan does not participate in any other employee welfare benefit or pension plan of the Company. The employment agreement authorizes Mr. Dolan, in carrying out his responsibilities and duties under the agreement, to make expenditures from time to time on behalf of the Company for the performance, furtherance and maintenance of the Company’s business, including travel relating to the business of the Company, entertainment and similar items, and the Company agrees to promptly reimburse Mr. Dolan for such expenditures or in some cases to advance the amount thereof to Mr. Dolan.

Mr. Dolan’s employment agreement does not provide for any post-employment benefits in the event of the termination of his employment by him or the Company other than in the case of his death or disability. In the event of Mr. Dolan’s death, his agreement provides for payment to his estate of an amount equal to the greater of one year’s base salary or one-half of the compensation that would have been payable to Mr. Dolan during the remaining term of his agreement. The Company has the right under the employment agreement to terminate the agreement if Mr. Dolan is incapacitated for more than six consecutive months. In that event, Mr. Dolan will be entitled to receive all his compensation and benefits until the end of the remaining term of his agreement. Mr. Dolan’s employment agreement does not address (or provide for any benefits in the event of) termination by the Company without cause, by Mr. Dolan for good reason or termination in connection with retirement, a change in control or a going private transaction.

Joshua W. Sapan

On April 24, 2014, the Company entered into an amended and restated employment agreement with Mr. Sapan. The employment agreement amended and restated an employment agreement that the Company entered into with Mr. Sapan in 2011. Mr. Sapan’s employment agreement with the Company provides for Mr. Sapan’s employment as President and CEO of the Company until December 31, 2020 (the “Sapan Scheduled Expiration Date”) at a minimum annual base salary of $2,000,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus equal to 200% of his annual base salary (and a possible range of 0% to 400%) based on the achievement of performance criteria established by the Compensation Committee in its discretion. Such performance criteria will be set with the same level of difficulty as applied to other senior executives of the Company generally and it is anticipated that such performance criteria will be set with a level of difficulty reasonably consistent with past practice. Under the agreement, Mr. Sapan continues to be eligible to participate in all the Company’s employee benefits and retirement plans at the level available to other members of senior management of the Company subject to meeting the relevant eligibility requirements and the terms of the plans.

Mr. Sapan is eligible to participate in the Company’s long-term cash or equity programs and arrangements consistent with the role and responsibilities of President and CEO. In calendar year 2014, and each year thereafter through the Sapan Scheduled Expiration Date during which Mr. Sapan is employed by the Company, Mr. Sapan is entitled to receive long-term cash and equity awards with an aggregate target value of $13,000,000. Unless consented to by Mr. Sapan in writing, the ratio of long-term cash and equity awards in each applicable period will be reasonably consistent with past practice and will be the same ratio as generally provided to Mr. Sapan currently or to other senior executives of the Company generally. Any performance criteria applicable to the long-term cash and equity awards will be set with the same level of difficulty as applied to other senior executives of the Company generally and it is anticipated that the performance criteria will be set with a level of difficulty reasonably consistent with past practice.

To provide an additional incentive for Mr. Sapan to agree to extend his tenure and stay through the end of the term of his new employment agreement, the Compensation Committee offered Mr. Sapan the opportunity to earn a one time special equity retention award of 353,756 RSUs (the “Sapan Special Equity Award”). This Sapan Special Equity Award will vest on December 31, 2020, as long as Mr. Sapan is continuously employed until such date and the performance condition is attained or on an earlier change in control (as defined in the

 

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award agreement). The performance condition requires the Company to achieve in any of the two fiscal years 2015 and 2016, at least 90% of the AOI for fiscal year 2013, or in the period April 1, 2014 through December 31, 2014 at least 90% of the AOI for the period April 1, 2013 through December 31, 2013. This Company performance requirement was met in 2014.

If, prior to the Sapan Scheduled Expiration Date, Mr. Sapan’s employment with the Company is terminated (i) by the Company or (ii) by him for Good Reason, and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other provisions substantially similar to (and not more restrictive than) those set forth in the agreement (a “Separation Agreement”), the Company will provide him with the following benefits and rights:

(a)         A cash severance payment equal to two times the sum of his annual base salary and annual target bonus will be made on the 90th day after the termination of his employment;

(b)         Each outstanding long-term cash performance award that is subject to performance criteria will immediately vest in full and will be paid at the same time and to the same extent that other members of senior management receive payment for such awards as determined by our Compensation Committee (subject to the satisfaction of any applicable performance objectives);

(c)         Each of his outstanding long-term cash awards (including any deferred compensation awards under the long-term cash award program) that are not subject to performance criteria will immediately vest in full and will be payable on the 90th day after the termination of his employment;

(d)         (i) All of the time-based restrictions on his outstanding restricted stock and RSUs (including the Sapan Special Equity Award) will immediately be eliminated; (ii) deliveries with respect to all such restricted stock that are not subject to performance criteria will be made to him immediately after the effective date of the Separation Agreement; (iii) payment and deliveries with respect to all such RSUs that are not subject to performance criteria will be made to him on the 90th day after the termination of his employment; and (iv) payments or deliveries with respect to his restricted stock and RSUs that are subject to performance criteria will be made (A) with respect to the Sapan Special Equity Award and any other award granted after the date of the employment agreement, as soon as practicable after the Compensation Committee determines that performance criteria have been satisfied (which determination will be made (1) with respect to performance periods that ended on or prior to the date of termination, within a reasonable period of time following termination and (2) with respect to performance periods ending after the date of termination, within a reasonable period of time following the end of such performance periods) and (B) with respect to other awards only if, when and to the same extent that other executive officers receive payment or deliveries for such awards as determined by our Compensation Committee (subject to satisfaction of any applicable performance objectives);

(e)         Each of his outstanding stock options and stock appreciation awards will immediately vest and become exercisable and he will have the right to exercise each of those options and stock appreciation awards for the remainder of the term of the option or award; and

(f)         A prorated annual bonus for the year in which such termination occurred to the same extent that other executive officers receive payment of bonuses for such year as determined by our Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable performance objectives), payable at the same time annual bonuses for such year are payable to other executive officers, and, if not previously paid, his annual bonus for the preceding year, to the same extent that other members of senior management receive payment of annual bonuses for such preceding year as determined by our Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable performance objectives), which annual bonus shall be payable at the same time annual bonuses for such preceding year are payable to other members of senior management.

 

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Notwithstanding clauses (c), (d) and (e) above, any more favorable provisions of Mr. Sapan’s existing cash incentive, restricted stock, RSU, stock option or stock appreciation right award agreements will apply to the treatment of such awards following a “going private transaction” (as defined in the award agreements), a “change of control” (as defined in the award agreements) or Mr. Sapan’s death.

With respect to any long-term cash performance, restricted stock and RSU awards that are subject to performance criteria and for which the performance periods have not been completed on the date of Mr. Sapan’s termination of employment by the Company without Cause or by him for Good Reason at which time Cause does not exist, the Company will (1) pay a cash amount equal to the target amount of the cash awards and deliver a number of shares equal to the number of restricted shares and RSU awards to a “Rabbi Trust” and (2) to the extent the performance criteria are satisfied, the cash and shares in the Rabbi Trust will be paid to Mr. Sapan in accordance with the terms set forth in clauses (c) and (d) above (and to the extent the performance criteria are not achieved, the cash and shares will revert to the Company).

If Mr. Sapan ceases to be an employee of the Company or any of its affiliates prior to the Sapan Scheduled Expiration Date as a result of his death or physical or mental disability, Mr. Sapan (or his estate or beneficiary) will be provided with the benefits and rights set forth in (b) through (f) of the preceding paragraph, and, in the event of his death, such longer period to exercise his then outstanding stock options and stock appreciation awards as may otherwise be permitted under the applicable plan and award letter.

If, after the Sapan Scheduled Expiration Date, Mr. Sapan’s employment with the Company is terminated (i) by the Company; (ii) by him for Good Reason; or (iii) by him without Good Reason but only if he had provided the Company with at least six months’ advance written notice of his intent to terminate his employment and such written notice specifies an effective date of termination no sooner than the first day after the Sapan Scheduled Expiration Date; or (iv) as a result of his death or disability, and at the time of any such termination, Cause does not exist, then, subject to (except in the case of his death) his execution of a Separation Agreement, he or his estate or beneficiary, as the case may be, will be provided with the benefits and rights set forth above in (b) through (f).

If, prior to, on, or after the Sapan Scheduled Expiration Date, Mr. Sapan ceases to be employed by the Company for any reason other than his being terminated for Cause, he will have three years to exercise outstanding stock options and stock appreciation awards, unless he is afforded a longer period for exercise pursuant to his employment agreement or any applicable award letter. In no event, however, will stock options or stock appreciation rights remain exercisable beyond their regularly scheduled term (except as may otherwise be permitted under the applicable award in the case of death).

Upon the termination of Mr. Sapan’s employment with the Company, except as otherwise specifically provided in the employment agreement, his rights to benefits and payments under the Company’s pension and welfare plans (other than severance benefits) and any outstanding long-term cash or equity awards will be determined in accordance with the then current terms and provisions of such plans, agreements and awards under which such benefits and payments (including such long-term cash or equity awards) were granted.

The employment agreement contains certain covenants by Mr. Sapan, including a noncompetition agreement that restricts Mr. Sapan’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Sapan’s employment agreement, the following definitions apply:

“Cause” is defined as (1) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (2) commission of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere or imposition of unadjudicated probation for any crime involving moral turpitude or any felony.

 

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“Change in Control” of the Company means the acquisition, in a transaction or a series of related transactions, by any person or group, other than Charles F. Dolan or members of the immediate family of Charles F. Dolan or trusts for the benefit of Charles F. Dolan or his immediate family (or an entity or entities controlled by any of them) or any employee benefit plan sponsored or maintained by the Company, of the power to direct the management of the Company or substantially all its assets (as constituted immediately prior to such transaction or transactions).

Termination for “Good Reason” means that (1) without Mr. Sapan’s consent, (A) Mr. Sapan’s base salary or annual bonus target is reduced, (B) the Company requires that Mr. Sapan’s principal office be located more than 50 miles from Manhattan, (C) the Company materially breaches its obligations to Mr. Sapan under his employment agreement, (D) Mr. Sapan is no longer the President and CEO of the Company, (E) Mr. Sapan no longer reports directly to the Chairman (or an Executive Chairman) of the Board of Directors of the Company, or (F) Mr. Sapan’s responsibilities are materially diminished; (2) Mr. Sapan has given the Company written notice, referring specifically to this definition, that he does not consent to such action; (3) the Company has not corrected such action within 15 days of receiving such notice; and (4) Mr. Sapan voluntarily terminates his employment within 90 days following the happening of the action described in subsection (1) of this definition.

Edward A. Carroll

On October 13, 2016, AMC Networks entered into an employment agreement with Mr. Carroll (the “Carroll Employment Agreement”), replacing his previous employment agreement, which expired on December 31, 2016. The Carroll Employment Agreement provides for Mr. Carroll’s employment as Chief Operating Officer of the Company through December 31, 2021 (the “Carroll Scheduled Expiration Date”), with a minimum annual base salary, effective as of March 1, 2016, of $1,600,000 and, effective as of September 1, 2016, of $1,700,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus opportunity equal to not less than 175% of his annual base salary. He will be eligible for our standard benefits programs and retirement plans at the level available to other members of senior management of the Company subject to meeting the relevant eligibility requirements and the terms of the plans.

Mr. Carroll is eligible to participate in the Company’s long-term cash or equity programs and arrangements consistent with the role and responsibilities of a Chief Operating Officer. Beginning in calendar year 2017, and each year thereafter through the Carroll Scheduled Expiration Date during which Mr. Carroll is employed by the Company, Mr. Carroll is entitled to receive long-term cash and equity awards with an aggregate target value of $3,400,000.

To provide an additional incentive for Mr. Carroll to agree to extend his tenure and stay through the end of the term of his new employment agreement, the Compensation Committee offered Mr. Carroll the opportunity to earn a one time special equity retention award of 242,813 RSUs (the “Carroll Special Equity Award”) and, in recognition of Mr. Carroll’s increased compensation level, a one-time grant of long-term cash and/or equity awards with an aggregated target value of not less than $150,000. Except as described below, the Carroll Special Equity Award will vest on December 31, 2021, as long as Mr. Carroll is continuously employed until such date and the performance condition is attained or on an earlier change in control (as defined in the award agreement). The performance condition requires the Company to achieve in any of the two fiscal years 2017 and 2018, at least 90% of the AOI for fiscal year 2015.

If, prior to the Carroll Scheduled Expiration Date, Mr. Carroll’s employment with the Company is terminated (i) by the Company or (ii) by him for Good Reason, and at the time of any such termination Cause does not exist, then, subject to his execution of the Company’s then standard separation agreement (modified to reflect terms of the employment agreement), which separation agreement will include, without limitation, general releases by him as well as non-competition, non-solicitation, non-disparagement, confidentiality and other

 

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provisions substantially similar to (and not more restrictive than) those set forth in the agreement, the Company will provide him with the following benefits and rights:

(a)         the payment of an amount in cash equal to not less than two times the sum of Mr. Carroll’s annual base salary and his annual target bonus as in effect at that time;

(b)         the payment of a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, payment of an annual bonus for the preceding year, in each case, if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable Company and business-unit performance objectives without adjustment for individual performance);

(c)         each of his outstanding long-term cash awards and PSUs granted under the plans of the Company shall immediately vest in full and be payable at the same time and to the same extent such awards are paid to similarly situated active executives as determined by the Company’s Compensation Committee (subject to satisfaction of any applicable performance criteria);

(d)         each of his outstanding restricted stock or RSU awards granted under plans of the Company (other than the Carroll Special Equity Award) will continue to vest in accordance with their original vesting schedule and payments or deliveries will be made to him on the original vesting date;

(e)         each of his outstanding stock options and stock appreciation awards under the plans of the Company will continue to vest in accordance with their original vesting schedule and he will have the right to exercise each of such options and awards for the remainder of the term of such option or award; and

(f)         the time-based restrictions on the Carroll Special Equity Award will lapse and such award will be paid to Mr. Carroll upon achievement of the performance criteria.

If Mr. Carroll ceases to be an employee of the Company prior to the Carroll Scheduled Expiration Date as a result of his death or physical or mental disability, and at the time Cause does not exist then, subject (other than in the case of death) to his execution of a Separation Agreement, Mr. Carroll (or his estate or beneficiary) will be provided with the benefits and rights set forth in clauses (b), (d), (e) and (f) in the preceding paragraph, and each of his outstanding long-term cash incentive awards and PSUs granted under plans of the Company will immediately vest in full, whether or not subject to performance criteria and will be payable on the 90th day after termination of his employment; provided, that if any such award is subject to any performance criteria, then (i) if the measurement period for such performance criteria has not yet been fully completed, then the payment amount shall be at the target amount for such award and (ii) if the measurement period for such performance criteria has already been fully completed, then the payment of such award shall be at the same time and to the extent that other similarly situated executives receive payment as determined by the Company’s Compensation Committee (subject to satisfaction of the applicable performance criteria).

If, after the Carroll Scheduled Expiration Date, Mr. Carroll’s employment with the Company is terminated (i) by the Company; (ii) by him for Good Reason; or (iii) by him without Good Reason but only if he had provided the Company with at least six months’ advance written notice of his intent to terminate his employment and such written notice specifies an effective date of termination no sooner than the first day after the Carroll Scheduled Expiration Date; or (iv) as a result of his death or disability, and at the time of any such termination, Cause does not exist, then, subject to (except in the case of his death) his execution of a separation agreement, he or his estate or beneficiary, as the case may be, will be provided with the benefits and rights set forth above in (b) through (e).

Notwithstanding clauses (c), (d) and (e) above, any more favorable provisions of Mr. Carroll’s existing cash incentive, PSUs, restricted stock, RSU, stock option or stock appreciation right award agreements will apply

 

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to the treatment of such awards following a “going private transaction” (as defined in the award agreements), a “change of control” (as defined in the award agreements) or Mr. Carroll’s death.

For purposes of the Carroll Employment Agreement the following definitions apply:

“Cause” means (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any crime involving moral turpitude or any felony.

Termination for “Good Reason” means that (1) without Mr. Carroll’s consent, (A) his base salary or annual bonus target is reduced, (B) his title is reduced, (C) he reports directly to someone other than the Executive Chairman or the President and CEO of the Company, (D) his responsibilities as in effect immediately after October 13, 2016 are thereafter materially diminished, (E) the Company requires that his principal office be located more than 50 miles from Manhattan or (F) the Company materially breaches it obligations to Mr. Carroll under the Carroll Employment Agreement; (2) he has given the Company written notice, referring specifically to the Carroll Employment Agreement and the Good Reason definition, that he does not consent to such action; (3) the Company has not corrected such action within 30 days of receiving such notice; and (4) he voluntarily terminates his employment within 90 days following the happening of the action described in subsection (1) above.

Sean S. Sullivan

On April 13, 2016, the Company entered into an amended and restated employment agreement with Mr. Sullivan, the terms of which are described below. The employment agreement provides for Mr. Sullivan’s employment as Executive Vice President — Chief Financial Officer of the Company through April 13, 2019, with a minimum annual base salary of $900,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus opportunity equal to 100% of his annual base salary in the discretion of the Company’s Compensation Committee. He will be offered our standard benefits programs and the opportunity to participate in our long-term equity and other incentive programs, in each case on the same basis as similarly situated executives at the Company. The agreement provides that, beginning in 2016, it is expected that Mr. Sullivan’s participation in the Company’s long-term equity and other incentive programs will consist of annual grants of cash and/or equity awards with a target value of not less than $2,400,000, as determined by the Compensation Committee.

Mr. Sullivan’s employment agreement provides severance benefits if Mr. Sullivan’s employment is terminated prior to April 13, 2019 (1) by the Company or (2) by Mr. Sullivan for Good Reason, and at the time of such termination under clauses (1) or (2) Cause does not exist. These benefits consist of the payment of an amount in cash equal to not less than two times the sum of Mr. Sullivan’s annual base salary and his annual target bonus as in effect at that time. In addition, Mr. Sullivan is entitled to a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, an annual bonus for the preceding year, in each case, if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion and subject to the satisfaction of any applicable Company and business-unit performance objectives without adjustment for individual performance (collectively, the “Sullivan Bonuses”). Mr. Sullivan is also entitled to vesting (or, in the case of options and stock appreciation awards, continued vesting in accordance with the original vesting schedule) of a prorated portion of any then-outstanding equity and cash incentive awards, in each case subject to the Compensation Committee’s certification of the achievement of any applicable performance conditions. Mr. Sullivan will have the right to exercise any such prorated portion of options and stock appreciation awards for the remainder of the applicable term. Finally, the Company’s Compensation Committee will consider, in good faith, approving the vesting of Mr. Sullivan’s remaining outstanding equity and cash incentive awards, provided that, to the extent any such awards are subject to any performance criteria, any

 

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such vested portion will be payable when and to the same extent paid to other employees generally holding such awards, subject to the satisfaction of the performance criteria. All termination payments and benefits described above would be conditioned on Mr. Sullivan executing a Separation Agreement.

If Mr. Sullivan ceases to be an employee of the Company prior to April 13, 2019 as a result of his death or physical or mental disability, and at such time Cause does not exist, then Mr. Sullivan will be entitled to payment of the Sullivan Bonuses and Mr. Sullivan’s outstanding equity and cash incentive awards will vest and pay in full, whether or not subject to performance criteria. Any such award that is subject to performance criteria will vest and pay at the target level unless the performance measurement period for such award has been completed prior to the date of termination, in which case the award will vest and pay when and to the same extent as the awards held by other employees, subject to the satisfaction of the performance criteria. In the event of a termination as a result of physical or mental disability, all termination payments and benefits described above would be conditioned on Mr. Sullivan executing a Separation Agreement.

In connection with any termination of Mr. Sullivan’s employment, other than as specifically provided above, all equity or cash incentive grants or awards he may then have outstanding will be treated in accordance with their terms and nothing in the employment agreement is intended to limit any more favorable rights to which Mr. Sullivan is entitled under the terms of his equity or cash incentive grants or awards, including in event of a termination of employment, a “going private transaction” (as defined in the award agreements) or a “change of control” (as defined in the award agreements).

The employment agreement contains certain covenants by Mr. Sullivan, including a noncompetition agreement that restricts Mr. Sullivan’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Sullivan’s employment agreement the following definitions apply:

“Cause” means Mr. Sullivan’s (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for, in each case, any crime involving moral turpitude or any felony.

Termination for “Good Reason” means that (1) without Mr. Sullivan’s consent, (A) his base salary or annual bonus target (as each may be increased from time to time in the Company’s Compensation Committee’s discretion) is reduced, (B) his title is diminished, (C) he reports to someone other than the Company’s President and CEO or the Executive Chairman, (D) his responsibilities as in effect immediately after April 13, 2016 are thereafter materially diminished, (E) the Company materially breaches its obligations under the employment agreement or (F) the Company requires that his principal office be located more than 50 miles from Manhattan; (2) he has given the Company written notice, referring specifically to the employment agreement and the Good Reason definition, that he does not consent to such action; (3) the Company has not corrected such action within 30 days of receiving such notice; and (4) he voluntarily terminates his employment with the Company within 90 days following the happening of the action described in subsection (1) above.

Prior to April 13, 2016, Mr. Sullivan’s employment was governed by the terms of the employment agreement entered into with Mr. Sullivan in 2013, which was generally consistent with the terms described above except that: (1) the scheduled expiration date was March 12, 2016, (2) the minimum annual base salary was $655,000, (3) the target annual bonus was 75% of base salary, (4) the expected annual long-term incentive grant was $1,200,000, (5) the employment agreement did not provide for vesting of a prorated portion of outstanding equity and cash incentive awards in the event of a termination of employment without Cause or for Good Reason, and (6) the employment agreement did not provide that the more favorable provisions of existing award agreements apply following a change in control or going private transaction, notwithstanding the provisions in the employment agreement.

 

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James G. Gallagher

On April 13, 2016, the Company entered into an amended and restated employment agreement with Mr. Gallagher, the terms of which are described below. The agreement provides for Mr. Gallagher’s employment as Executive Vice President — General Counsel of the Company through April 13, 2019, with a minimum annual base salary of $725,000 (subject to annual review and potential increase in the discretion of the Company’s Compensation Committee) and an annual target bonus opportunity equal to 75% of his annual base salary in the discretion of the Company’s Compensation Committee. He will be offered our standard benefits programs and the opportunity to participate in our long-term equity and other incentive programs, in each case on the same basis as similarly situated executives at the Company. The agreement provides that, beginning in 2016, it is expected that Mr. Gallagher’s participation in the Company’s long-term equity and other incentive programs will consist of annual grants of cash and/or equity awards with a target value of not less than $1,250,000, as determined by the Compensation Committee.

Mr. Gallagher’s employment agreement provides severance benefits if Mr. Gallagher’s employment is terminated prior to April 13, 2019 (1) by the Company or (2) by Mr. Gallagher for Good Reason, and at the time of such termination under clauses (1) or (2) Cause does not exist. These benefits consist of the payment of an amount in cash equal to not less than two times the sum of Mr. Gallagher’s annual base salary and his annual target bonus as in effect at that time. In addition, Mr. Gallagher is entitled to a prorated bonus for the year of termination and, to the extent termination occurs prior to the payment of an annual bonus for the preceding year, an annual bonus for the preceding year, in each case if and when other similarly situated employees receive payment of bonuses for such years as determined by the Company’s Compensation Committee in its sole discretion and subject to the satisfaction of any applicable Company and business-unit performance objectives without adjustment for individual performance (collectively, the “Gallagher Bonuses”). Mr. Gallagher is also entitled to vesting (or, in the case of options and stock appreciation awards, continued vesting in accordance with the original vesting schedule) of a prorated portion of any then-outstanding equity and cash incentive awards, in each case subject to the Compensation Committee’s certification of the achievement of any applicable performance conditions. Mr. Gallagher will have the right to exercise any such prorated portion of options and stock appreciation awards for the remainder of the applicable term. Finally, the Company’s Compensation Committee will consider, in good faith, approving the vesting of Mr. Gallagher’s remaining outstanding equity and cash incentive awards, provided that, to the extent any such awards are subject to any performance criteria, any such vested portion will be payable when and to the same extent paid to other employees generally holding such awards, subject to the satisfaction of the performance criteria. All termination payments and benefits described above would be conditioned on Mr. Gallagher executing a Separation Agreement.

If Mr. Gallagher ceases to be an employee of the Company prior to April 13, 2019 as a result of his death or physical or mental disability, and at such time Cause does not exist, then Mr. Gallagher will be entitled to payment of the Gallagher Bonuses and Mr. Gallagher’s outstanding equity and cash incentive awards will vest and pay in full, whether or not subject to performance criteria. Any such award that is subject to performance criteria will vest and pay at the target level unless the performance measurement period for such award has been completed prior to the date of termination, in which case the award will vest and pay when and to the same extent as the awards held by other employees, subject to the satisfaction of the performance criteria. In the event of a termination as a result of physical or mental disability, all termination payments and benefits described above would be conditioned on Mr. Gallagher executing a Separation Agreement.

In connection with any termination of Mr. Gallagher’s employment, other than as specifically provided above, all equity or cash incentive grants or awards he may then have outstanding will be treated in accordance with their terms and nothing in the employment agreement is intended to limit any more favorable rights to which Mr. Gallagher is entitled under the terms of his equity or cash incentive grants or awards, including in event of a termination of employment, a “going private transaction” (as defined in the award agreements) or a “change of control” (as defined in the award agreements).

 

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The employment agreement contains certain covenants by Mr. Gallagher, including a noncompetition agreement that, subject to applicable rules of professional responsibility, restricts Mr. Gallagher’s ability to engage in competitive activities until the first anniversary of the termination of his employment with the Company.

For purposes of Mr. Gallagher’s employment agreement the following definitions apply:

“Cause” means Mr. Gallagher’s (i) commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof, or (ii) commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for, in each case, any crime involving moral turpitude or any felony.

Termination for “Good Reason” means that (1) without Mr. Gallagher’s consent, (A) his base salary or annual bonus target (as each may be increased from time to time in the Company’s Compensation Committee’s discretion) is reduced, (B) his title is diminished, (C) he reports to someone other than the Company’s President and CEO or the Executive Chairman, (D) his responsibilities as in effect immediately after April 13, 2016 are thereafter materially diminished, (E) the Company materially breaches its obligations under the employment agreement or (F) the Company requires that his principal office be located more than 50 miles from Manhattan; (2) he has given the Company written notice, referring specifically to the employment agreement and the Good Reason definition, that he does not consent to such action; (3) the Company has not corrected such action within 30 days of receiving such notice; and (4) he voluntarily terminates his employment with the Company within 90 days following the happening of the action described in subsection (l) above.

Prior to April 13, 2016, Mr. Gallagher’s employment was governed by the terms of the employment agreement entered into with Mr. Gallagher in 2013, which was generally consistent with the terms described above except that: (1) the scheduled expiration date was March 12, 2016, (2) the minimum annual base salary was $520,000, (3) the target annual bonus was 60% of base salary, (4) the expected annual long-term incentive grant was $700,000, (5) the employment agreement did not provide for vesting of a prorated portion of outstanding equity and cash incentive awards in the event of a termination of employment without Cause or for Good Reason, and (6) the employment agreement did not provide that the more favorable provisions of existing award agreements apply following a change in control or going private transaction, notwithstanding the provisions in the employment agreement.

Termination and Severance

This section describes the payments that would be received by executive officers from the Company upon various termination of employment scenarios.

Separation from the Company

Payments may be made to employees upon the termination of their employment with the Company depending upon the circumstances of their termination, which include termination by the Company with cause or without cause, termination by the employee for good reason, other voluntary termination by the employee, retirement, death, disability, or termination following a change in control of the Company or following a going-private transaction. Certain of these circumstances are addressed in employment agreements between the Company and the executives. The information under “Separation from the Company” assumes that the NEO was employed by the Company under his applicable agreement, if any, and his employment terminated as of December 31, 2016. For a description of termination provisions in the employment agreements, see “Employment Agreements” above. In addition, award agreements for any long-term incentives will also address some of these circumstances.

 

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Quantification of Termination and Severance

The following tables set forth a quantification of estimated severance and other benefits payable to our NEOs under various circumstances regarding the termination of their employment. In calculating these severance and other payments, we have taken into consideration or otherwise assumed the following:

(1) Termination of employment occurred after the close of business on December 30, 2016. Payment calculations are based upon the applicable NEO’s employment agreement, if any, as in effect on that date.

(2) We have valued equity awards using the closing market price of Class A Common Stock on the NASDAQ on December 30, 2016, the last trading day of the year, of $52.34.

In the event of termination of employment, the payment of certain long-term incentive awards and other amounts may be delayed, depending upon the terms of each specific award agreement, the provisions of the applicable NEO’s employment agreement and the applicability of Section 409A. In quantifying aggregate termination payments, we have not taken into account the timing of the payments and we have not discounted the value of payments that would be made over time, except where otherwise disclosed.

We have assumed that all performance metrics for performance-based awards are achieved at the target level (but not exceeded).

Benefits Payable As a Result of Voluntary Termination of Employment by Employee, Retirement or Termination of Employment by the Company for Cause

In the event of voluntary termination of employment by the executive without Good Reason, retirement or termination by the Company for cause, in each case that is not in connection with a change in control, none of our NEOs would have been entitled to any payments at December 30, 2016.

Benefits Payable As a Result of Termination of Employment by the Company Without

Cause or by Employee For Good Reason*

 

Elements     Mr. Dolan        Mr. Sapan          Mr. Carroll          Mr. Sullivan          Mr. Gallagher    
Severance        $12,000,000(1)        $9,350,000(1)        $3,600,000(1)        $2,537,500(1)  

Pro rata bonus

       $4,580,000(2)        $3,226,038(2)        $1,008,041(2)        $605,749(2)  
Unvested RSUs        $30,440,892(3)        $16,324,741(4)        $1,415,398(5)        $751,677(5)  

Unvested PSUs

       $6,217,678(6)        $1,371,622(6)        $429,000(7)        $247,500(7)  
Cash performance awards        $15,600,000(8)        $3,000,000(8)        $1,470,000(9)        $785,000(9)  

 

 

*

The amounts in this table do not include any payments or awards that were vested at December 30, 2016 or any pension or other vested retirement benefits.

 

(1)

Represents severance equal to two times the sum of the executive’s salary and target bonus in accordance with the executive’s employment agreement.

 

(2)

Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other executives, without regard to individual performance in accordance with the executive’s employment agreement.

 

(3)

Represents full vesting of the executive’s outstanding RSU awards in accordance with the executive’s employment agreement.

 

(4)

Represents vesting of the executive’s outstanding RSUs in accordance with their original vesting schedule as provided for in the executive’s employment agreement, provided however that the executive’s one-time special equity award, awarded in October 2016, shall immediately vest in full and be payable upon achievement of performance criteria.

 

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(5)

Represents vesting of a pro-rated portion of executive’s outstanding RSUs in accordance with the executive’s employment agreement.

 

(6)

Represents full vesting of the executive’s outstanding PSUs in accordance with the executive’s employment agreement.

 

(7)

Represents vesting of a pro-rated portion of the executive’s outstanding PSUs in accordance with the executive’s employment agreement.

 

(8)

Represents full vesting of the executive’s outstanding cash performance awards in accordance with the executive’s employment agreement.

 

(9)

Represents full vesting of a pro-rated portion of the executive’s outstanding cash performance awards in accordance with the executive’s employment agreement.

Benefits Payable As a Result of Termination of Employment Due to Death*  

 

Elements      Mr. Dolan          Mr. Sapan          Mr. Carroll          Mr. Sullivan          Mr. Gallagher    
Severance                                   

Salary

     $400,000(1)                              
Pro rata bonus             $4,580,000(2)        $3,226,038(2)        $1,008,041(2)        $605,749(2)  
Unvested RSUs      $871,409(3)        $30,440,892(3)        $16,324,741(3)        $2,303,117(3)        $1,208,897(3)  
Unvested PSUs      $454,364(4)        $6,217,678(5)        $1,700,000(6)        $1,300,000(6)        $750,000(6)  

Cash performance awards

     $1,140,000(7)        $15,600,000(7)        $3,000,000(8)        $1,800,000(8)        $950,000(8)  

 

*

The amounts in this table do not include any payments or awards that were vested at December 30, 2016 or any pension or other vested retirement benefits.

 

(1)

Represents one year of base salary.

 

(2)

Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other executives, without regard to individual performance in accordance with the executive’s employment agreement.

 

(3)

Represents full vesting of the executive’s outstanding RSU awards.

 

(4)

Represents pro rata vesting of executive’s outstanding PSUs based on target performance, prorated for the number of completed months of executive’s employment during the performance period prior to termination in accordance with the executive’s award agreement.

 

(5)

Represents full vesting of executive’s outstanding PSUs in accordance with the executive’s employment agreement.

 

(6)

Represents full vesting of executive’s outstanding PSUs in accordance with the executive’s employment agreement provided that said units shall be payable at target if the applicable performance period has not been completed, or alternatively, if the applicable performance period has been completed, to the same extent paid to similarly situated executives.

 

(7)

Represents full vesting of the executive’s outstanding cash performance awards in accordance with the executive’s employment agreement.

 

(8)

Represents full vesting of executive’s outstanding cash performance awards provided that said awards shall be payable at target if the applicable performance period has not been completed, or alternatively, if the applicable performance period has been completed to the same extent paid to similarly situated executives.

 

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Benefits Payable As a Result of Termination of Employment Due to Disability*

 

Elements      Mr. Dolan          Mr. Sapan          Mr. Carroll          Mr. Sullivan          Mr. Gallagher    
Severance                                   

Salary

     $200,000(1)                              
Pro rata bonus      $801,500(2)        $4,580,000(3)        $3,226,038(3)        $1,008,041(3)        $605,749(3)  

Unvested RSUs

            $30,440,892(4)        $16,324,741(5)        $1,415,398(4)        $751,677(4)  
Unvested PSUs             $6,217,678(6)        $1,700,000(7)        $1,300,000(7)        $750,000(7)  

Cash performance awards

            $15,600,000(8)        $3,000,000(9)        $1,800,000(9)        $950,000(9)  

 

*

The amounts in this table do not include any payments or awards that were vested at December 30, 2016 or any pension or other vested retirement benefits.

 

(1)

Represents six months of base salary payable in accordance with the executive’s employment agreement.

 

(2)

Represents a bonus for the year in which the termination occurred in accordance with the executive’s employment agreement.

 

(3)

Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other executives, without regard to individual performance in accordance with the executive’s employment agreement.

 

(4)

Represents full vesting of the executive’s outstanding RSU awards in accordance with the executive’s employment agreement.

 

(5)

Represents vesting of the executive’s outstanding RSUs in accordance with their original vesting schedule as provided for in the executive’s employment agreement, provided however that the executive’s one-time special equity award awarded in October 2016, shall immediately vest in full and be payable upon achievement of performance criteria.

 

(6)

Represents full vesting of the executive’s outstanding PSUs in accordance with the executive’s employment agreement.

 

(7)

Represents full vesting of executive’s outstanding PSUs in accordance with the executive’s employment agreement provided that said units shall be payable at target if the applicable performance period has not been completed, or alternatively, if the applicable performance period has been completed, to the same extent paid to similarly situated executives.

 

(8)

Represents full vesting of the executive’s outstanding cash performance awards in accordance with the executive’s employment agreement.

 

(9)

Represents full vesting of executive’s outstanding cash performance awards provided that said awards shall be payable at target if the applicable performance period has not been completed, or alternatively, if the applicable performance period has been completed to the same extent paid to similarly situated executives.

Benefits Payable As a Result of Termination of Employment In Connection with a

Change in Control or Going Private Transaction(1)*

 

Elements    Mr. Dolan      Mr. Sapan        Mr. Carroll          Mr. Sullivan          Mr. Gallagher    
Severance             $12,000,000(2)        $9,350,000(2)        $3,600,000(2)        $2,537,500(2)  

Pro rata bonus

            $4,580,000(3)        $3,226,038(3)        $1,008,041(3)        $605,749(3)  
Unvested RSUs      $871,409(4)        $30,440,892(4)        $16,324,741(4)        $2,303,117(4)        $1,208,897(4)  
Unvested PSUs      $454,364(5)        $6,217,678(5)        $1,371,622(5)        $956,566(5)        $498,224(5)  
Cash performance awards      $1,140,000(6)        $15,600,000(6)        $3,000,000(6)        $1,800,000(6)        $950,000(6)  

 

*

The amounts in this table do not include any payments or awards that were vested at December 30, 2016 or any pension or other vested retirement benefits.

 

(1)

The numbers presented in this table reflect amounts payable as a result of termination of employment by the executive for “Good Reason” or by the Company “without Cause” following a change in control. The amounts payable as a result

 

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of such termination following a going private transaction are generally equal to or less than the amounts payable as a result of termination of employment by the executive or the Company following a change in control.

 

(2)

Represents severance equal to two times the sum of the executive’s salary and target bonus.

 

(3)

Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other executives, without regard to individual performance in accordance with the executive’s employment agreement.

 

(4)

Represents full vesting of the executive’s outstanding RSUs. Upon a change in control or going private transaction, Messrs. Dolan, Carroll, Sullivan and Gallagher will be entitled to either (in the Compensation Committee’s discretion) (a) cash equal to the unvested units multiplied by the per share price paid in the change in control or going private transaction, or (b) if the successor entity is a publicly traded company, a replacement RSU award from the successor entity with the same terms. Any such award would be payable upon the earliest of (x) the date the units were originally scheduled to vest so long as the executive remains continuously employed, (y) a termination without cause or a resignation with good reason within three years of the change in control or going private transaction, or (z) only if the Compensation Committee elects clause (a) above, upon a resignation for any reason that occurs at least six months, but no more than nine months following the change in control or going private transaction. Mr. Sapan’s special equity retention award of 353,756 RSUs and Mr. Carroll’s special equity retention award of 242,813 RSUs single-trigger vest on a change in control.

 

(5)

Represents full vesting of the executive’s outstanding PSUs pursuant to the terms of these award agreements. In addition, if a change in control were to occur but the executive’s employment was not terminated, the executive would nevertheless be entitled to full vesting of the executive’s outstanding PSUs.

 

(6)

Represents full vesting of the executive’s outstanding cash performance awards pursuant to the terms of these award agreements. In addition, if a change in control were to occur but the executive’s employment was not terminated, the executive would nevertheless be entitled to full vesting of the executive’s outstanding cash performance awards.

Equity Compensation Plan Information

The following table shows the total number of outstanding options and shares available for other future issuances under all of our equity compensation plans as of December 31, 2016.

 

Plan Category   

(a)

Number of

Securities to be

Issued Upon

Exercise of

Outstanding

Options, Warrants

and Rights (1)

    

(b)

Weighted-Average

Exercise Price of

Outstanding

Options, Warrants

and Rights

    

(c)

Number of

Securities

Remaining

Available for Future

Issuance Under

Equity

Compensation Plans

(Excluding

Securities Reflected

in Column (a) (2))

 

Equity compensation plans approved by security holders

     2,879,765      $ 63.11        5,414,401  

Equity compensation plans not approved by security holders

                    

Total

     2,879,765      $ 63.11        5,414,401  

 

(1)

Includes the following plans: 2011 Employee Stock Plan, 2016 Employee Stock Plan and the Director Stock Plan. 388,385 shares of this amount relate to options held by AMC employees and the PSUs reflected in this amount are assumed to be issued at 100% of performance target.

 

(2)

In March 2017, the Compensation Committee granted awards of (A) RSUs covering an aggregate of 403,602 shares and (B) PSUs covering an aggregate 635,122 shares, which is not reflected in the number of shares remaining available for future issuance in column (c). The aggregate amount listed for PSUs in the prior sentence assumes that they are issued at the maximum achievable performance target of 200%.

 

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OUR EXECUTIVE OFFICERS

The following individuals are our executive officers:

 

Charles F. Dolan (1)

  

Executive Chairman

Joshua W. Sapan

  

President and Chief Executive Officer

Edward A. Carroll

  

Chief Operating Officer

Sean S. Sullivan

  

Executive Vice President and Chief Financial Officer

James G. Gallagher

  

Executive Vice President and General Counsel

Christian B. Wymbs

  

Executive Vice President and Chief Accounting Officer

 

 

(1)

The biography for Charles F. Dolan appears above under Proposal 1 — Election of Directors, “Directors Elected by Class B Common Stockholders.”

JOSHUA W. SAPAN

Age: 66

President and CEO of the Company since March 9, 2011. Chief Executive Officer of Rainbow Media Holdings LLC since 1995. Chief Operating Officer of Rainbow Media Holdings LLC from 1991 to 1995. President of AMC and Bravo from 1987 to 1991. Serves on the boards of The Cable Center, the Cable & Telecommunications Association for Marketing (CTAM) Educational Foundation, the International Radio and Television Society (IRTS) Foundation, the Museum of the Moving Image, the Hebrew Home for the Aged, People for the American Way, WNYC Radio, American Film Institute and The Paley Center.

EDWARD A. CARROLL

Age: 53

Chief Operating Officer of the Company since June 6, 2011. Various positions at Rainbow Media Holdings LLC since 1987, including as Chief Operating Officer of Rainbow Entertainment Services since January 2009; President of Rainbow Entertainment Services from 2004 to 2009; and General Manager of IFC and/or Bravo from 1997 to 2004.

SEAN S. SULLIVAN

Age: 50

Executive Vice President and Chief Financial Officer of the Company since June 6, 2011. Chief Corporate Officer of Rainbow Media Holdings LLC from September 2010 to June 6, 2011. Chief Financial Officer of HiT Entertainment from 2009 to 2010. Chief Financial Officer and President of Commercial Print and Packaging division of Cenveo, Inc. from 2005 to 2008. Executive Vice President and Chief Financial Officer of Spencer Press, Inc. from 2004 to 2005. Serves on the board of Acushnet Holdings Corp. and is the Chair of its Audit Committee.

JAMES G. GALLAGHER

Age: 58

Executive Vice President and General Counsel of the Company since June 6, 2011. Executive Vice President and General Counsel of Rainbow Media Holdings LLC since February 2008. Executive Vice President and General Counsel of Tommy Hilfiger Corporation from 2005 to 2006. Executive Vice President and General Counsel of HSN (Home Shopping Network) from 1996 to 2002.

 

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CHRISTIAN B. WYMBS

Age: 47

Executive Vice President and Chief Accounting Officer of the Company since August 1, 2016. Senior Vice President and Chief Financial Officer of Global Commercial Services Business, American Express Company from October 2014 to July 2016. Senior Vice President and Chief Financial Officer of Enterprise Growth Group, American Express Company, from January 2012 to October 2014. Senior Vice President and Chief Financial Officer of World Service Group, American Express Company, from January 2010 to January 2012 and held various positions at American Express Company from December 2006 to January 2010. Held various positions in finance and audit at General Electric Company from May 2002 to December 2006.

 

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TRANSACTIONS WITH RELATED PARTIES AND RELATED PARTY TRANSACTION POLICY

Relationship Between Us, MSG and MSG Networks

AMC Networks Inc. was incorporated on March 9, 2011 as an indirect, wholly-owned subsidiary of Cablevision. As a result of the Distribution of the Company by Cablevision, the Company became an independent public company and Cablevision no longer holds a common stock ownership interest in us. Prior to June 21, 2016, Charles F. Dolan, members of his family and certain family entities (the “Dolan Family”) were the controlling stockholders of Cablevision. On June 21, 2016, Cablevision was acquired by a subsidiary of Altice N.V. and a change in control occurred which resulted in the Dolan Family no longer being controlling stockholders of the surviving company, Altice USA. Accordingly Altice USA is not a related party. However, MSG, MSG Networks and AMC Networks Inc. continue to be under the control of the Dolan Family.

Certain of the agreements summarized in this section have been included as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2016, and the following summaries of those agreements are qualified in their entirety by reference to the agreements as so filed.

Equity Administration Agreement

The Company is party to an Equity Administration Agreement with MSG Networks and an Equity Administration Agreement with MSG, each of which sets forth the responsibilities and liabilities of the parties regarding exercise and forfeiture of outstanding equity awards: (i) of the Company that are held by employees or former employees of MSG Networks or MSG and (ii) of MSG Networks or MSG that are held by employees or former employees of the Company.

Other Arrangements and Agreements with MSG and/or MSG Networks

The Company has also entered into a number of commercial and technical arrangements and agreements with MSG and its subsidiaries and MSG Networks and its subsidiaries, none of which are material to the Company. These include, but are not limited to, arrangements for office space and administrative support services, an aircraft time sharing agreement, lease of a suite at Madison Square Garden Arena from MSG, provision of technical and transponder services and coordination in respect of certain litigation matters.

See “Stock Ownership Table” for a description of registration rights agreements among Dolan Family interests and the Company.

Dolan Family Arrangements

On June 16, 2016, the Company entered into an arrangement with the Dolan Family Office, LLC (“DFO LLC”), MSG Networks and AMC Networks providing for the sharing of certain expenses associated with executive office space which is available to Charles F. Dolan, James L. Dolan and DFO LLC. The Company’s current share of the office expenses is expected to amount to less than $55,000 a year. In 2016, the Company paid $104,727 for its portion of such office expenses, including initial set up costs of $51,780.

Certain Relationships and Potential Conflicts of Interest

Charles F. Dolan serves as the Executive Chairman of the Company. In addition, six members of our Board also serve as directors of MSG and five members of our Board also serve as directors of MSG Networks. Therefore, these directors may have actual or apparent conflicts of interest with respect to matters involving or

 

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affecting each company. For example, there is the potential for a conflict of interest when we, MSG or MSG Networks consider certain acquisitions and other corporate opportunities that may be suitable for us and either or both of them. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that exist between MSG or MSG Networks and us. In addition, certain of our officers and directors own MSG Networks and MSG stock and options to purchase MSG Networks and MSG stock. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for the Company and MSG or MSG Networks. See “Related Party Transaction Policy” below for a discussion of certain procedures we instituted to help ameliorate any such potential conflicts that may arise.

The Company’s Amended and Restated Certificate of Incorporation acknowledges that the Company may have overlapping directors and officers with MSG Networks and its subsidiaries and successors and that the Company may engage in material business transactions with such entities. The Company has renounced its rights to certain business opportunities and the Company’s Amended and Restated Certificate of Incorporation provides that in certain circumstances our directors and officers will not have liability to the Company or its stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to MSG Networks or any of its subsidiaries instead of the Company, or does not refer or communicate information regarding such corporate opportunity to the Company. Our Amended and Restated Certificate of Incorporation also expressly validates certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Company and MSG Networks and/or any of their respective subsidiaries and provides that, to the fullest extent permitted by law, the actions of the overlapping directors and officers in connection therewith are not breaches of fiduciary duties owed to the Company or its stockholders. In connection with the spin-off of MSG by MSG Networks, our Board adopted a policy putting in place arrangements similar to the foregoing provisions with respect to directors or officers of the Company who are also directors of MSG.

Related Party Transaction Policy

We have adopted a written policy whereby an independent committee of our Board of Directors consisting entirely of directors who have been determined by the Board of Directors to be independent for purposes of the NASDAQ corporate governance standards reviews and approves or takes such other action as it may deem appropriate with respect to transactions involving the Company and its subsidiaries, on the one hand, and in which any director, officer, greater than 5% stockholder of the Company or any other “related person” as defined in Item 404 has or will have a direct or indirect material interest. This approval requirement covers any transaction that meets the related party disclosure requirements of the SEC as set forth in Item 404, which currently apply to transactions (or any series of similar transactions) in which the amount involved exceeds $120,000. To simplify the administration of the approval process under this policy, the independent committee may, where appropriate, establish guidelines for certain of those transactions. The policy does not cover decisions on compensation or benefits or the hiring or retention of any person. The hiring or retention of executive officers is determined by our full Board of Directors. Compensation of executive officers is subject to the approval of our Compensation Committee. This policy also does not cover any pro rata distributions to all Company stockholders, including a pro rata distribution of our Class A Common Stock to holders of our Class A Common Stock and our Class B Common Stock to holders of our Class B Common Stock. No director on an independent committee will participate in the consideration of a related party transaction with that director or any related person of that director.

Our Board of Directors has also adopted a special approval policy for transactions with MSG and its subsidiaries or with MSG Networks and its subsidiaries (collectively, the “Other Company”) whether or not such transactions qualify as “related party” transactions described above. Under this policy, an independent committee of the Board of Directors oversees approval of all transactions and arrangements between the Company and its subsidiaries, on the one hand, and the Other Company, on the other hand, in which the amount exceeds $120,000. To simplify the administration of the approval process under this policy, the independent committee may, where

 

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appropriate, establish guidelines for certain of these transactions. The approval requirement does not apply to the implementation and administration of these intercompany arrangements but does cover any amendments, modifications, terminations or extensions, other than ministerial, nonsubstantive amendments or modifications, as well as the handling and resolution of any disputes. Our executive officers and directors who are also senior executives or directors of the Other Company may participate in the negotiation, execution, implementation, amendment, modification, or termination of these intercompany arrangements, as well as in any resolution of disputes thereunder, on behalf of either or both of the Company and the Other Company, in each case under the direction of an independent committee or the comparable committee of the board of directors of the Other Company.

Currently, and throughout our fiscal year ended December 31, 2016, our Audit Committee or our Compensation Committee (each of which consisted solely of directors elected by the Class A stockholders) served as the Independent Committee under the above policies.

Our Related Party Transaction Approval Policy cannot be amended or terminated without the prior approval of a majority of the independent directors and by a majority of the directors elected by our Class B Common Stockholders. For purposes of this policy, “independent directors” means those directors who have been determined by our Board to be independent directors for purposes of NASDAQ corporate governance standards.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, certain executive officers, and persons who beneficially own more than 10 percent of the outstanding Class A Common Stock to file reports of ownership and changes in ownership with the SEC. The SEC regulations require AMC Networks to identify anyone who failed to file a required report or filed a late report during 2016. Based solely on a review of reports filed under Section 16(a) of the Exchange Act, the Company is aware of no such failure.

 

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STOCK OWNERSHIP TABLE

The table sets forth certain information as of March 15, 2017, except as noted below, with respect to the beneficial ownership of the Company’s Class A Common Stock and Class B Common Stock by (i) each person the Company believes beneficially holds more than 5% of any class of the outstanding shares of the Company’s based solely on the Company’s review of SEC filings; (ii) each director or director nominee of the Company and (iii) each Named Executive Officer of the Company.

 

Name and Address       Title of Stock Class(1)      

Beneficial

  Ownership(1)  

(2)

   

  Percent of  

Class

   

Combined

  Voting Power  

of All Classes

of Stock

Beneficially

Owned(1)(2)

 

Dolan Family Group (3)

  Class A Common Stock     1,133,347       2.01     67.75

c/o Dolan Family Office

  Class B Common Stock     11,484,408       100      

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Charles F. Dolan (3)(4)(5)(18)(26)(27)(28)

  Class A Common Stock     678,792       1.21     30.89

c/o Dolan Family Office

  Class B Common Stock     5,217,217       45.43      

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Helen A. Dolan (3)(4)(5)(18)(26)(27)(28)

  Class A Common Stock     678,792       1.21     30.89

c/o Dolan Family Office

  Class B Common Stock     5,217,217       45.43      

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Joshua W. Sapan (26)

  Class A Common Stock     189,645       *       *  
    Class B Common Stock           *        

Edward A. Carroll (25)(26)

  Class A Common Stock     32,474       *       *  
    Class B Common Stock           *        

Sean S. Sullivan (26)

  Class A Common Stock     27,232     *       *  
    Class B Common Stock           *        

James G. Gallagher (26)

  Class A Common Stock     16,260     *       *  
    Class B Common Stock           *        

William J. Bell (6)

  Class A Common Stock     13,619       *       *  
    Class B Common Stock           *        

James L. Dolan (3)(6)(7)(9)(24)

  Class A Common Stock     147,089       *       6.64

P.O. Box 420

  Class B Common Stock     1,123,547       9.78      

Oyster Bay, NY 11771

                           

Kristin A. Dolan (6)(7)(9)(24)

  Class A Common Stock     147,089       *       6.64

P.O. Box 420

  Class B Common Stock     1,123,547       9.78      

Oyster Bay, NY 11771

                           

Patrick F. Dolan (3)(6)(10)(22)

  Class A Common Stock     23,054       *       5.92

c/o Dolan Family Office

  Class B Common Stock     1,012,491       8.82      

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Thomas C. Dolan (3)(6)(11)(23)

  Class A Common Stock     70,733       *       5.62

c/o Dolan Family Office

  Class B Common Stock     956,029       8.32      

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Brian G. Sweeney (3)(6)(11)(12)(19)

  Class A Common Stock     96,952       *       7.79

c/o Dolan Family Office

20 Audrey Avenue, 1 st Floor

  Class B Common Stock     1,324,261       11.53      

Oyster Bay, NY 11771

                           

Marianne Dolan Weber (3)(6)(14)(21)

  Class A Common Stock     64,343       *       5.87

MLC Ventures LLC

  Class B Common Stock     999,121       8.70      

P.O. Box 1014

Yorktown Heights, NY 10598

                           

 

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Table of Contents
Name and Address       Title of Stock Class(1)      

Beneficial

  Ownership(1)  

(2)

   

  Percent of  

Class

   

Combined

  Voting Power  

of All Classes

of Stock

Beneficially

Owned(1)(2)

 

Jonathan F. Miller (6)

  Class A Common Stock     7,291       *       *  
    Class B Common Stock                  

Vincent Tese (6)

  Class A Common Stock     2,082       *       *  
    Class B Common Stock                  

Leonard Tow (6)

  Class A Common Stock     21,566       *       *  
    Class B Common Stock                  

Robert C. Wright (6)

  Class A Common Stock     13,619     *       *  
    Class B Common Stock                  

David E. Van Zandt (6)

  Class A Common Stock     3,825     *       *  
    Class B Common Stock                  

Carl E. Vogel (6)

  Class A Common Stock     7,315       *       *  
    Class B Common Stock                  

All executive officers and directors as a group (4)(5)(6)(7)(9)(10)(11)(12)(13)(14)(20)(21)(22) (23)(24)(25)(26)(27)(28)

  Class A Common Stock     1,415,891       2.52%       61.80%  
    Class B Common Stock     10,430,674       90.82%        

Kathleen M. Dolan (3)(8)(19)(20)(21)(22)(23)(24)

  Class A Common Stock     227,884       *       32.89

MLC Ventures LLC

  Class B Common Stock     5,603,448       48.79      

P.O. Box 1014

Yorktown Heights, NY 10598

                           

Deborah A. Dolan-Sweeney (3)(6)(11)(13)(20)

  Class A Common Stock     96,952       *       7.79

c/o Dolan Family Office

  Class B Common Stock     1,324,261       11.53      

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Paul J. Dolan (3)(15)(19)(24)

  Class A Common Stock     190,887       *       11.49

Progressive Field, 2401 Ontario St.

  Class B Common Stock     1,945,899       16,94      

Cleveland, OH 44115

                           

Mary S. Dolan (3)(16)(20)(22)

  Class A Common Stock     62,933       *       37.21

300 So. Riverside Plaza, Suite 1480

  Class B Common Stock     6,358,366       55.37      

Chicago, IL 60606

                           

Matthew J. Dolan (3)(17)(21)(23)

  Class A Common Stock     90,887       *       10.68

Corporate Place, 100 7th Avenue, Suite 150

  Class B Common Stock     1,817,760       15.83      

Chardon, OH 44024

                           

David M. Dolan (3)(18)(27)(28)

  Class A Common Stock     308,948       *       26.21

7 Glenmaro Lane

  Class B Common Stock     4,453,410       38.78      

St. Louis, MO 63131

                           

Charles F. Dolan Children Trust (3)(19)

  Class A Common Stock     47,864       *       5.40

FBO Kathleen M. Dolan

  Class B Common Stock     918,981       8.00      

MLC Ventures LLC

P.O. Box 1014

       

Yorktown Heights, NY 10598

                           

Charles F. Dolan Children Trust (3)(20)

  Class A Common Stock     47,864       *       5.40

FBO Deborah A. Dolan-Sweeney

  Class B Common Stock     918,981       8.00      

c/o Dolan Family Office

       

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Charles F. Dolan Children Trust (3)(21)

  Class A Common Stock     47,864       *       5.24

FBO Marianne Dolan Weber

  Class B Common Stock     890,802       7.76      

MLC Ventures LLC

       

P.O. Box 1014

Yorktown Heights, NY 10598

                           

 

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Table of Contents
Name and Address       Title of Stock Class(1)      

Beneficial

  Ownership(1)  

(2)

   

  Percent of  

Class

   

Combined

  Voting Power  

of All Classes

of Stock

Beneficially

Owned(1)(2)

 

Charles F. Dolan Children Trust (3)(22)

  Class A Common Stock           *       5.18

FBO Patrick F. Dolan

  Class B Common Stock     886,015       7.71      

c/o Dolan Family Office

       

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Charles F. Dolan Children Trust (3)(23)

  Class A Common Stock     39,886       *       5.44

FBO Thomas C. Dolan

  Class B Common Stock     926,958       8.07      

c/o Dolan Family Office

       

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Charles F. Dolan Children Trust (3)(24)

  Class A Common Stock     39,886       *       5.44

FBO James L. Dolan

  Class B Common Stock     926,958       8.07      

P.O. Box 420

       

Oyster Bay, NY 11771

                           

Charles F. Dolan 2009 Family Trust FBO (3)(27)

  Class A Common Stock           *       5.38

Thomas C. Dolan

  Class B Common Stock     921,125       8.02      

c/o Dolan Family Office

       

340 Crossways Park Drive

       

Woodbury, NY 11797

                           

Charles F. Dolan 2009 Family Trust FBO (3)(28)

  Class A Common Stock           *       5.19

James L. Dolan

  Class B Common Stock     887,064       7.72      

P.O. Box 420

       

Oyster Bay, NY 11771

                           

Clearbridge Investments, LLC (29)

  Class A Common Stock     8,494,303       15.11%       4.97

620 8th Avenue

  Class B Common Stock                  

New York, NY 10018

                           

BlackRock Inc. (30)

  Class A Common Stock     5,031,464       8.95%       2.94

55 East 52nd Street

  Class B Common Stock                  

New York, New York 10055

                           

The Vanguard Group (31)

  Class A Common Stock     4,451,056       7.92%       2.60

100 Vanguard Blvd.

  Class B Common Stock                  

Malvern, PA 19355

                           

 

*

Less than 1%.

 

(1)

For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any shares of Common Stock that such person has the right to acquire within 60 days of the date of determination. In light of the nature of vested RSUs, we have also included in this table shares of Class A Common Stock underlying vested RSUs. For purposes of computing the percentage of outstanding shares of Common Stock held by each person or group of persons named above, shares of Common Stock underlying vested RSUs are deemed to be outstanding for the purpose of computing the Percent of Class of such person or group but are not deemed to be outstanding for the purpose of computing the Percent of Class of any other person or group. Shares underlying vested RSUs are not deemed to be outstanding for the purpose of computing the Combined Voting Power of All Classes of Stock Beneficially Owned. Beneficial ownership of Class A Common Stock is exclusive of the shares of Class A Common Stock that are issuable upon conversion of shares of Class B Common Stock. Please see footnote 6 below for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(2)

Shares of Class B Common Stock are convertible into shares of Class A Common Stock at the option of the holder on a share for share basis. The holder of one share of Class A Common Stock has one vote per share at a meeting of our stockholders and the holder of one share of Class B Common Stock has 10 votes per share at a meeting of our stockholders, except in the separate elections of directors. Holders of Class A Common Stock have the right to elect 25% of the Board of Directors rounded up to the nearest whole director and the holders of Class B Common Stock have the right to elect the remaining members of the Board of Directors.

 

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(3)

Members of the Dolan family have formed a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934. The members of this group (the “Group Members”) are: Charles F. Dolan, individually and as Trustee of the Charles F. Dolan 2009 Revocable Trust (“CFD 2009 Trust”) and the Charles F. Dolan 2016 Grantor Retained Annuity Trust #1A (“CFD 2016 GRAT #1A”); Helen A. Dolan, individually and as Trustee of the Helen A. Dolan 2009 Revocable Trust (“HAD 2009 Trust”) and the Helen A. Dolan 2016 Grantor Retained Annuity Trust #1A (“HAD 2016 GRAT #1A”); James L. Dolan; Thomas C. Dolan; Patrick F. Dolan; Kathleen M. Dolan, individually and as a Trustee of the Charles F. Dolan Children Trust FBO Kathleen M. Dolan, the Charles F. Dolan Children Trust FBO Deborah Dolan-Sweeney, the Charles F. Dolan Children Trust FBO Marianne Dolan Weber, the Charles F. Dolan Children Trust FBO Patrick F. Dolan, the Charles F. Dolan Children Trust FBO Thomas C. Dolan and the Charles F. Dolan Children Trust FBO James L. Dolan (hereinafter collectively referred to as the “Dolan Children Trusts,” and individually, a “Dolan Children Trust”) and as sole Trustee of the Ryan Dolan 1989 Trust and the Tara Dolan 1989 Trust; Marianne Dolan Weber; Deborah A. Dolan- Sweeney, individually and as Trustee of the Marianne E. Dolan Weber 2012 Descendants Trust and Patrick F. Dolan 2012 Descendants Trust; David M. Dolan, as a Trustee of the Charles F. Dolan 2009 Family Trust FBO Patrick F. Dolan, the Charles F. Dolan 2009 Family Trust FBO Thomas C. Dolan, the Charles F. Dolan 2009 Family Trust FBO James L. Dolan, the Charles F. Dolan 2009 Family Trust FBO Marianne Dolan Weber, the Charles F. Dolan 2009 Family Trust FBO Kathleen M. Dolan and the Charles F. Dolan 2009 Family Trust FBO Deborah A. Dolan- Sweeney (collectively, the “2009 Family Trusts” and individually, a “2009 Family Trust”), as a Trustee of the Charles F. Dolan 2010 Grandchildren Trust FBO Descendants of Deborah A. Dolan- Sweeney, Charles F. Dolan 2010 Grandchildren Trust FBO Descendants of Kathleen M. Dolan, Charles F. Dolan 2010 Grandchildren Trust FBO Descendants of Marianne E. Dolan Weber, Charles F. Dolan 2010 Grandchildren Trust FBO Descendants of Patrick F. Dolan and Charles F. Dolan 2010 Grandchildren Trust FBO Descendants of James L. Dolan (hereinafter collectively referred to as the “CFD 2010 Grandchildren Trusts,” and individually, a “CFD 2010 Grandchildren Trust”) and as a Trustee of the Charles F. Dolan 2012 Descendants Trust; Paul J. Dolan, as a Trustee of the Dolan Children Trusts FBO Kathleen M. Dolan and James L. Dolan and as a Trustee of the Kathleen M. Dolan 2012 Descendants Trust; Matthew J. Dolan, as a Trustee of the Dolan Children Trusts FBO Marianne Dolan Weber and Thomas C. Dolan; Mary S. Dolan, as a Trustee of the Dolan Children Trusts FBO Deborah Dolan- Sweeney and Patrick F. Dolan, the Kathleen M. Dolan 2012 Descendants Trust, each of the 2009 Family Trusts, each of the CFD 2010 Grandchildren Trusts and as a Trustee of the Charles F. Dolan 2012 Descendants Trust; Brian G. Sweeney, as a Trustee of the Deborah A. Dolan-Sweeney 2012 Descendants Trust; Dolan Children Trust FBO Kathleen M. Dolan; Dolan Children Trust FBO Marianne Dolan Weber; Dolan Children Trust FBO Deborah Dolan-Sweeney; Dolan Children Trust FBO James L. Dolan; Dolan Children Trust FBO Thomas C. Dolan; Dolan Children Trust FBO Patrick F. Dolan; 2009 Family Trust FBO James L. Dolan; 2009 Family Trust FBO Thomas C. Dolan; 2009 Family Trust FBO Patrick F. Dolan; 2009 Family Trust FBO Kathleen M. Dolan; 2009 Family Trust FBO Marianne Dolan Weber; 2009 Family Trust FBO Deborah A. Dolan-Sweeney; Ryan Dolan 1989 Trust; Tara Dolan 1989 Trust; CFD 2010 Grandchildren Trust FBO Descendants of Deborah A. Dolan-Sweeney; CFD 2010 Grandchildren Trust FBO Descendants of Kathleen M. Dolan; CFD 2010 Grandchildren Trust FBO Descendants of Marianne E. Dolan Weber; CFD 2010 Grandchildren Trust FBO Descendants of Patrick F. Dolan; CFD 2010 Grandchildren Trust FBO Descendants of James L. Dolan; Charles F. Dolan 2012 Descendants Trust; Deborah A. Dolan-Sweeney 2012 Descendants Trust; Kathleen M. Dolan 2012 Descendants Trust; Marianne E. Dolan Weber 2012 Descendants Trust; Patrick F. Dolan 2012 Descendants Trust; CFD 2016 GRAT #1A and HAD 2016 GRAT #1A. The Group Members may be deemed to beneficially own an aggregate of 12,536,041 shares of Class A Common Stock as a result of their beneficial ownership of (i) 1,133,347 shares of Class A Common Stock and (ii) 11,484,408 shares of shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof. Individuals who are Group Members solely in their capacity as trustees of trusts that are Group Members beneficially own an additional 429,611 shares of Class A Common Stock. Includes 81,714 shares of Class A Common Stock underlying vested RSUs. See footnotes (4) through (24), (27) and (28).

 

(4)

Charles F. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 102,182 shares of Class A Common Stock (including 49,939 shares of Class A Common Stock owned personally and 52,243 shares of Class A Common Stock owned by the CFD 2009 Trust); and 637,557 shares of Class B Common Stock and the equal number of shares of Class A common stock issuable upon conversion thereof owned by the CFD 2016 GRAT #1A; and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 576,610 shares of Class A common stock owned by the Dolan Family Foundation; 126,250 shares of Class B common stock and the equal number of shares of Class A common stock issuable upon conversion thereof owned by the HAD 2016 GRAT #1A; 2,842,880 shares of Class B common stock and the equal number of shares of Class A common stock issuable upon conversion thereof owned by the 2009 Family Trusts; and 1,501,208 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A

 

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Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust. Includes 2,842,880 shares of Class B Common Stock owned by the 2009 Family Trusts; 1,501,208 shares of Class B Common Stock owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust, which Charles F. Dolan may be deemed to have the right to acquire because he has the right to substitute assets with the trust, subject to the trustees’ reasonable satisfaction that the substitute assets received by the trust are of equal value to the trust property exchanged therefore. He disclaims beneficial ownership of 576,610 shares of Class A Common Stock owned by the Dolan Family Foundation; 126,250 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the HAD 2016 GRAT #1A; 2,842,880 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the 2009 Family Trusts; and 1,501,208 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust. See footnotes (5), (18), (27) and (28).

 

(5)

Helen A. Dolan may be deemed to have (i) the sole power to vote or direct the vote of 126,250 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the HAD 2016 GRAT#1A and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 576,610 shares of Class A Common Stock owned by the Dolan Family Foundation; an aggregate of 102,182 shares of Class A Common Stock (including 49,939 shares of Class A Common Stock owned personally by her spouse, Charles F. Dolan, and 52,243 shares of Class A Common Stock owned by the CFD 2009 Trust); 637,557 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2016 GRAT #1A; 2,842,880 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the 2009 Family Trusts; 1,501,208 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust. Includes 2,842,880 shares of Class B Common Stock owned by the 2009 Family Trusts; 1,501,208 shares of Class B Common Stock owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust, which Helen A. Dolan’s spouse, Charles F. Dolan, may be deemed to have the right to acquire because he has the right to substitute assets with the trust, subject to the trustees’ reasonable satisfaction that the substitute assets received by the trust are of equal value to the trust property exchanged therefor. She disclaims beneficial ownership of 576,610 shares of Class A Common Stock owned of the Dolan Family Foundation, an aggregate of 102,182 shares of Class A Common Stock (including 49,939 shares of Class A Common Stock owned personally by her spouse and 52,243 shares of Class A Common Stock owned by the CFD 2009 Trust); 637,557 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2016 GRAT #1A; 2,842,880 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the 2009 Family Trusts; and 1,501,208 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust. See footnotes (4), (18), (27) and (28).

 

(6)

The shares of Class A Common Stock underlying vested RSUs granted under the Company’s 2011 Stock Plan for Non- Employee Directors, which represent a right to receive one share of Class A Common Stock 90 days after the director ceases to serve as a member of the board, included in the table above are as follows: James L. Dolan, 13,619; Kristin A. Dolan, 13,619; Thomas C. Dolan, 13,619; Brian G. Sweeney, 13,619; Patrick F. Dolan, 13,619; Marianne Dolan Weber, 13,619; William J. Bell, 13,619; Vincent Tese, 2,082; Leonard Tow, 13,619; Robert C. Wright, 13,619; David E. Van Zandt, 3,825; Carl E. Vogel, 7,315; and Jonathan F. Miller, 7,291; and all non-employee directors as a group, 143,084. Mr. James L. Dolan’s, Ms. Kristin Dolan’s and Ms. Deborah Dolan-Sweeney’s beneficial ownership in the table above also includes the 13,619 RSUs held directly by each of Ms. Kristin Dolan, Mr. James L. Dolan and Mr. Brian G. Sweeney, respectively.

 

(7)

James L. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 66,719 shares of Class A Common Stock owned personally; 162,529 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally; and an

 

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aggregate of 1,925 shares of Class A Common Stock held as custodian for one or more of his children and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 6,621 shares of Class A Common Stock owned personally by his spouse, Kristin A. Dolan; 1,250 shares of Class A Common Stock owned jointly with his spouse; 3,450 shares of Class A Common Stock owned by members of his household; 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for his benefit and an aggregate of 34,060 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion owned of record by the CFD 2010 Grandchildren Trusts FBO Aidan and Quentin Dolan for which his spouse serves as trustee. He disclaims beneficial ownership of an aggregate of 1,925 shares of Class A Common Stock held as custodian for one or more of his children; 3,450 shares of Class A Common Stock owned by members of his household; 6,621 shares of Class A Common Stock owned personally by his spouse; and 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion-thereof owned by the Dolan Children Trust for his benefit, and an aggregate of 34,060 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion owned of record by the CFD 2010 Grandchildren Trusts FBO Aidan and Quentin Dolan for which his spouse serves as trustee. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(8)

Kathleen M. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 2,220 shares of Class A Common Stock owned personally; 4,481 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally; an aggregate of 2,300 shares of Class A Common Stock held as custodian for one or more minor children; and an aggregate of 30,312 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Ryan Dolan 1989 Trust and the Tara Dolan 1989 Trust for which she serves as trustee and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 223,364 shares of Class A Common Stock owned by the Dolan Children Trusts (of which 47,864 shares are held for her benefit) and an aggregate of 5,468,695 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts (of which 918,981 shares are held for her benefit) and for which she serves as co-trustee; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Kathleen M. Dolan 2012 Descendants Trust. She disclaims beneficial ownership of an aggregate of 2,300 shares of Class A Common Stock held as custodian for one or more minor children, an aggregate of 30,312 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Ryan Dolan 1989 Trust and the Tara Dolan 1989 Trust for which she serves as trustee; an aggregate of 223,364 shares of Class A Common Stock owned by the Dolan Children Trusts (of which 47,864 shares are held for her benefit) and an aggregate of 5,468,695 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts of which 918,981 shares are held for her benefit; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Kathleen M. Dolan 2012 Descendants Trust.

 

(9)

Kristin A. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 6,621 shares of Class A Common Stock owned personally, and an aggregate of 34,060 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion owned of record by the CFD 2010 Grandchildren Trusts FBO Aidan and Quentin Dolan for which she serves as trustee and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 66,719 shares of Class A Common Stock owned personally by her spouse, James L. Dolan; 162,529 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally by her spouse; 1,250 shares of Class A Common Stock owned jointly with her spouse; an aggregate of 1,925 shares of Class A Common Stock held by her spouse as custodian for one or more of his children; 3,450 shares of Class A Common Stock owned by members of her household; 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for the benefit of her spouse. She disclaims beneficial ownership of an aggregate 1,925 shares of Class A Common Stock held by her spouse as custodian for one or more of his children; 3,450 shares of Class A Common Stock owned by members of her household; 66,719 shares of Class A Common Stock owned personally by her spouse; 162,529 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by her spouse; and 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for the benefit of her spouse, and an aggregate of 34,060 shares of Class B Common Stock and the equal number of

 

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shares of Class A Common Stock issuable upon conversion owned of record by the CFD 2010 Grandchildren Trusts FBO Aidan and Quentin Dolan for which she serves as trustee. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(10)

Patrick F. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 4,067 shares of Class A Common Stock owned personally; and 24,444 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally; and (ii) the shared power to vote or direct the vote of and to dispose of or to direct the disposition of 4,256 shares of Class A Common Stock owned jointly with his spouse; 525 shares of Class A Common Stock owned personally by his spouse; 587 shares owned by the Daniel P. Mucci Trust (the “Mucci Trust”) for which he serves as co-trustee; 886,015 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for his benefit and 102,032 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Patrick F. Dolan 2012 Descendants Trust. He disclaims beneficial ownership of 525 shares of Class A Common Stock owned personally by his spouse; 587 shares of Class A Common Stock held by the Mucci Trust; 886,015 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for his benefit; and 102,032 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Patrick F. Dolan 2012 Descendants Trust. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(11)

Thomas C. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 17,228 shares of Class A Common Stock owned personally; 29,071 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally and (ii) the shared power to vote or direct the vote of and to dispose of or to direct the disposition of 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for his benefit. He disclaims beneficial ownership of 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for his benefit. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(12)

Brian G. Sweeney may be deemed to have (i) the sole power to vote or direct the vote of and dispose or direct the disposition of 27,794 shares of Class A Common Stock owned personally; an aggregate of 7,675 shares Class A Common Stock held in trusts for his children for which he serves as co-trustee; and 197,645 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Deborah A. Dolan-Sweeney 2012 Descendants Trust, for which he serves as trustee and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 5,643 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by his spouse, Deborah A. Dolan-Sweeney; 47,864 shares of Class A Common Stock and 918,981 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for the benefit of his spouse; and an aggregate of 201,992 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Marianne E. Dolan Weber 2012 Descendants Trust and the Patrick F. Dolan 2012 Descendants Trust, for which his spouse serves as trustee. He disclaims beneficial ownership of the 5,643 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by his spouse; an aggregate of 7,675 shares of Class A Common Stock held in trusts for his children for which he serves as co-trustee; 47,864 shares of Class A Common Stock and 918,981 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for the benefit of his spouse; 197,645 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Deborah A. Dolan-Sweeney 2012 Descendants Trust; and an aggregate of 201,992 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Marianne E. Dolan Weber 2012 Descendants Trust and the Patrick F. Dolan 2012 Descendants Trust. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(13)

Deborah A. Dolan-Sweeney may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 5,643 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally; and an aggregate of 201,992 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the Marianne

 

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E. Dolan Weber 2012 Descendants Trust and the Patrick F. Dolan 2012 Descendants Trust, for which she serves as trustee and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 27,794 shares of Class A Common Stock owned personally by her spouse, Brian G. Sweeney; an aggregate of 7,675 shares of Class A Common Stock held in trusts for her children for which her spouse serves as co-trustee; 47,864 shares of Class A Common Stock and 918,981 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for her benefit; and 197,645 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Deborah A. Dolan-Sweeney 2012 Descendants Trust, for which her spouse serves as trustee. She disclaims beneficial ownership of 27,794 shares of Class A Common Stock owned personally by her spouse; an aggregate of 7,675 shares of Class A Common Stock held in trusts for her children for which her spouse serves as co- trustee; 47,864 shares of Class A Common Stock and 918,981 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for her benefit; 197,645 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Deborah A. Dolan-Sweeney 2012 Descendants Trust; and an aggregate of 201,992 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Marianne E. Dolan Weber 2012 Descendants Trust and the Patrick F. Dolan 2012 Descendants Trust. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(14)

Marianne Dolan Weber may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 810 shares of Class A Common Stock owned personally; 8,359 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned personally and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 900 shares of Class A Common Stock owned personally by her spouse, 1,150 shares of Class A Common Stock owned by a member of her household, and 47,864 shares of Class A Common Stock and 890,802 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for her benefit; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Marianne E. Dolan Weber 2012 Descendants Trust. She disclaims beneficial ownership of 900 shares of Class A Common Stock owned personally by her spouse, 1,150 shares of Class A Common Stock owned by a member of her household; and 47,864 shares of Class A Common Stock and 890,802 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trust for her benefit; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Marianne E. Dolan Weber 2012 Descendants Trust. Please see footnote 6 for the number of shares of Class A Common Stock underlying vested RSUs which have been included in the table above.

 

(15)

Paul J. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 96,550 shares of Class A Common Stock (including 5,108 shares of Class A Common Stock held as custodian for one or more minor children and 91,442 shares of Class A Common Stock owned by the CFD Trust No. 10) and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 5,907 shares of Class A Common Stock owned jointly with his spouse; an aggregate of 87,750 shares of Class A Common Stock and 1,845,939 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts for the benefit of Kathleen M. Dolan and James L. Dolan; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Kathleen M. Dolan 2012 Descendants Trust. He disclaims beneficial ownership of an aggregate of 5,108 shares of Class A Common Stock held as custodian for one or more minor children; 91,442 shares of Class A Common Stock owned by the CFD Trust No. 10; an aggregate of 87,750 shares of Class A Common Stock and 1,845,939 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts for the benefit of Kathleen M. Dolan and James L. Dolan; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Kathleen M. Dolan 2012 Descendants Trust.

 

(16)

Mary S. Dolan may be deemed to have (i) the sole power to vote or direct the vote and to dispose of or direct the disposition of 6,810 shares of Class A Common Stock held as custodian for one or more minor children and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 8,259 shares of Class A Common Stock owned jointly with her spouse; an aggregate of 47,864 shares of Class A Common Stock and 1,804,996 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts for the benefit of Deborah Dolan-Sweeney and Patrick F. Dolan; and 99,960 shares

 

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of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Kathleen M. Dolan 2012 Descendants Trust, an aggregate of 2,842,880 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the 2009 Family Trusts, an aggregate of 1,501,208 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the CFD 2010 Grandchildren Trusts, and 109,322 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the Charles F. Dolan 2012 Descendants Trust. She disclaims beneficial ownership of 6,810 shares of Class A Common Stock held as custodian for one or more minor children; an aggregate of 47,864 shares of Class A Common Stock and 1,804,996 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts for the benefit of Deborah Dolan-Sweeney and Patrick F. Dolan; and 99,960 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Kathleen M. Dolan 2012 Descendants Trust, an aggregate of 2,842,880 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the 2009 Family Trusts, an aggregate of 1,501,208 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the CFD 2010 Grandchildren Trusts, and 109,322 shares of Class A Common Stock issuable upon conversion of an equal number of shares of Class B Common Stock owned of record by the Charles F. Dolan 2012 Descendants Trust.

 

(17)

Matthew J. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 1,750 shares of Class A Common Stock owned personally and 1,387 shares of Class A Common Stock held as custodian for his child and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 87,750 shares of Class A Common Stock and 1,817,760 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts for the benefit of Marianne Dolan Weber and Thomas C. Dolan. He disclaims beneficial ownership of 1,387 shares of Class A Common Stock held as custodian for his child and an aggregate of 87,750 shares of Class A Common Stock and 1,817,760 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Dolan Children Trusts for the benefit of Marianne Dolan Weber and Thomas C. Dolan.

 

(18)

David M. Dolan may be deemed to have (i) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 300,636 shares of Class A Common Stock (including 1,431 shares of Class A Common Stock owned by the David M. Dolan Revocable Trust and 299,205 shares of Class A Common Stock owned by the Charles F. Dolan Charitable Remainder Trust) and (ii) the shared power to vote or direct the vote of and to dispose of or direct the disposition of 8,312 shares of Class A Common Stock (including 2,300 shares of Class A Common Stock owned jointly with his spouse; 5,250 shares of Class A Common Stock owned by the Ann H. Dolan Revocable Trust, 762 shares of Class A Common Stock held by his spouse as custodian for a minor child); and an aggregate of 2,842,880 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the 2009 Family Trusts; an aggregate of 1,501,208 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust. He disclaims beneficial ownership of 299,205 shares of Class A Common Stock owned by the Charles F. Dolan Charitable Remainder Trust; 5,250 shares of Class A Common Stock owned by the Ann H. Dolan Revocable Trust; 762 shares of Class A Common Stock held by his spouse as custodian for a minor child; an aggregate of 2,842,880 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the 2009 Family Trusts, an aggregate of 1,501,208 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the CFD 2010 Grandchildren Trusts; and 109,322 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by Charles F. Dolan 2012 Descendants Trust.

 

(19)

Kathleen M. Dolan and Paul J. Dolan serve as co-trustees and have the shared power to vote and dispose of the 47,864 shares of Class A Common Stock and 918,981 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan Children Trust FBO Kathleen M. Dolan.

 

(20)

Kathleen M. Dolan and Mary S. Dolan serve as co-trustees and have the shared power to vote and dispose of the 47,864 shares of Class A Common Stock and 918,981 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan Children Trust FBO Deborah A. Dolan-Sweeney.

 

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(21)

Kathleen M. Dolan and Matthew J. Dolan serve as co-trustees and have the shared power to vote and dispose of the 47,864 shares of Class A Common Stock and 890,802 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan Children Trust FBO Marianne Dolan Weber.

 

(22)

Kathleen M. Dolan and Mary S. Dolan serve as co-trustees and have the shared power to vote and dispose of the 886,015 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan Children Trust FBO Patrick F. Dolan.

 

(23)

Kathleen M. Dolan and Matthew J. Dolan serve as co-trustees and have the shared power to vote and dispose of the 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan Children Trust FBO Thomas C. Dolan.

 

(24)

Kathleen M. Dolan and Paul J. Dolan serve as co-trustees and have the shared power to vote and dispose of the 39,886 shares of Class A Common Stock and 926,958 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan Children Trust FBO James L. Dolan.

 

(25)

Includes 1,337 shares for Mr. Carroll held indirectly through a 401(k).

 

(26)

Does not include RSUs and PSUs granted under the Company’s 2011 Employee Stock Plan and the 2016 Employee Stock Plan, which represent a right to receive one share of Class A Common Stock or the cash equivalent thereof. The excluded number of RSUs and PSUs for the following individuals are: Joshua W. Sapan 840,496; Edward A. Carroll 366,901; Sean S. Sullivan 89,478; Charles F. Dolan 19,610; and James G. Gallagher 48,816.

 

(27)

Mary S. Dolan and David M. Dolan serve as co-trustees and have the shared power to vote and dispose of the 921,125 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan 2009 Family Trust FBO Thomas C. Dolan. Charles F. Dolan may be deemed to share power to direct the disposition of the shares held by the trust because he has the right to substitute assets with the trust, subject to the trustees’ reasonable satisfaction that the substitute assets received by the trust are of equal value to the trust property exchanged therefor.

 

(28)

Mary S. Dolan and David M. Dolan serve as co-trustees and have the shared power to vote and dispose of the 887,064 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned by the Charles F. Dolan 2009 Family Trust FBO James L. Dolan. Charles F. Dolan may be deemed to share power to direct the disposition of the shares held by the trust because he has the right to substitute assets with the trust, subject to the trustees’ reasonable satisfaction that the substitute assets received by the trust are of equal value to the trust property exchanged therefor.