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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
ACME COMMUNICATIONS, INC
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[ACME COMMUNICATIONS LOGO]
2101 E. FOURTH STREET, STE. 202A
SANTA ANA, CALIFORNIA 92705
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of ACME Communications, Inc. which will be held at the offices of
Trust Company of the West, 11100 Santa Monica Blvd., 20th Floor, Los Angeles,
California on Thursday, May 31, 2001 at 9:00 a.m. (local time).
At the Annual Meeting, holders of common stock will vote upon
the election of eight directors. In addition, we will ask all stockholders to
ratify the appointment of KPMG LLP as our independent accountants for the 2001
fiscal year. The attached Proxy Statement contains information about these
matters.
Whether or not you plan to attend, please promptly execute and
return your proxy card to assure that your shares are represented at the
meeting.
I hope you will be able to attend the Annual Meeting and look
forward to seeing you on May 31, 2001.
Sincerely,
Jamie Kellner
Chairman of the Board and
Chief Executive Officer
April 30, 2001
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[ACME COMMUNICATIONS LOGO]
2101 E. FOURTH STREET, STE. 202A
SANTA ANA, CALIFORNIA 92705
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 31, 2001
ACME Communications, Inc. will hold its Annual Meeting of
Stockholders on Thursday, May 31, 2001 at the offices of Trust Company of the
West, 11100 Santa Monica Blvd., 20th Floor, Los Angeles, California on Thursday,
May 31, 2001 at 9:00 a.m. (local time) for the following purposes:
1. To elect eight directors;
2. To ratify the appointment of KPMG LLP as our
independent accountants for 2001; and
3. To transact such other business as may properly come
before the meeting.
Only stockholders who owned stock at the close of business on
April 27, 2001 can vote at this meeting or any adjournments that may take place.
Even though you may plan to attend the meeting, we ask that you sign and date
the enclosed proxy card, and return it without delay in the enclosed
postage-paid envelope. If you are present, you may withdraw your proxy card and
vote in person.
Please sign, date and mail the enclosed proxy card promptly
in the enclosed envelope so that your shares of stock may be present at the
meeting.
By Order of the Board of Directors,
Thomas Allen
Executive Vice President,
Chief Financial Officer and
Secretary
April 30, 2001
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[ACME COMMUNICATIONS LOGO]
2101 E. FOURTH STREET, STE. 202A
SANTA ANA, CALIFORNIA 92705
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 2001
GENERAL
ACME Communications, Inc.'s Board of Directors is soliciting
the enclosed proxy for use at our Annual Meeting of Stockholders to be held on
Thursday, , May 31, 2001 at the offices of Trust Company of the West, 11100
Santa Monica Blvd., 20th Floor, Los Angeles, California at 9:00 a.m. (local
time) and at any adjournment thereof.
We will vote all valid and properly executed proxies that we
receive before the Annual Meeting in accordance with the instructions specified
in the proxy. If proxies do not give any instructions, we will vote shares FOR:
(1) the election of the named nominees for director, and (2) ratification of
KPMG, LLP's appointment as independent accountants.
You may revoke your proxy at any time before it is actually
voted at the Annual Meeting by delivering a written notice of revocation to our
corporate Secretary or attending the meeting and withdrawing your proxy.
We will pay the cost of this proxy solicitation. Brokers and
nominees should forward soliciting materials to the beneficial owners of the
stock such brokers and nominees hold of record. We will reimburse them for their
reasonable forwarding expenses. Our directors, officers and regular employees,
without extra compensation, may solicit proxies personally, by telephone, by
mail or by other means of communication.
VOTING SECURITIES
Each share of common stock has one vote on all matters
submitted to our stockholders at the Annual Meeting. Stockholders of record at
the close of business on April 27, 2001 are entitled to vote at the Annual
Meeting. On April 20, 2001, our issued and outstanding voting securities
consisted of 16,750,000 shares of common stock.
The presence at the Annual Meeting, in person or by proxy, of
the holders of a majority in voting power of the outstanding shares of our
common stock entitled to vote will constitute a quorum for the meeting. Assuming
such a quorum is present, for the purpose of
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electing directors, the affirmative vote of a plurality of votes cast is
necessary to approve the election of directors. For the purpose of approving all
other proposals presented to our stockholders at the Annual Meeting, the
affirmative vote of a majority in voting power of the shares of common stock
that are present in person or by proxy and entitled to vote thereon.
COUNTING OF VOTES
Our inspector of elections will count all votes cast in
person, by proxy or by written consent at the meeting. Abstentions will be
treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, and will be treated as votes cast and have
the same effect as a vote against a proposal. Under Delaware law, if a broker or
nominee indicates on its proxy that it does not have discretionary authority to
vote on a particular matter as to certain shares, those shares will be counted
for general quorum purposes but not be counted in determining the number of
shares necessary for approval.
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
The nominees proposed for election are Jamie Kellner, Douglas
Gealy, Thomas Allen, James Collis, Brian McNeill, Thomas Embrescia, Michael
Roberts and Darryl Schall. Each director will serve until the annual meeting of
stockholders in 2002 or until his successor is elected and qualified.
Each nominee has indicated his willingness to serve if
elected, but if any nominee should become unable to serve, we will vote the
proxies solicited hereby for the election of such other person as our directors
shall select. Background information on the directors appears below.
NOMINEES FOR ELECTION AS DIRECTORS
The following table sets forth information about our directors as of April
20, 2001.
NAME AGE POSITION YEAR FIRST ELECTED
---- --- -------- ------------------
Jamie Kellner.................. 53 Chairman of the Board and Chief Executive Officer 1997
Douglas Gealy.................. 40 President, Chief Operating Officer and Director 1997
Thomas Allen................... 48 Executive Vice President, Chief Financial Officer and 1997
Director
James Collis................... 38 Director 1999
Thomas Embrescia............... 54 Director 1998
Brian McNeill.................. 45 Director 1999
Michael Roberts................ 52 Director 1999
Darryl Schall.................. 40 Director 1999
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Jamie Kellner is a founder of ACME and has served as our Chief Executive
Officer and Chairman of the Board since 1997. Mr. Kellner is also a founder, and
has been Chief Executive Officer and a partner of The WB Network since 1993.
Additionally, in March 2001, Mr. Kellner became Chairman and Chief Executive
Officer of AOL Time Warner's Television Networks division. Mr. Kellner was
President of Fox Broadcasting Company from its inception in 1986 to 1993.
Douglas Gealy is a founder of ACME and has served as our President and Chief
Operating Officer and as a member of our Board since 1997. Since December of
1996, Mr. Gealy has been involved in development activities for ACME. Before
founding ACME, Mr. Gealy served for one year as Executive Vice President of
Benedek Broadcasting Corporation. From 1991 to 1996, Mr. Gealy was a Vice
President and General Manager of WCMH and, under a local marketing agreement,
WWHO, both in Columbus, Ohio, and following the acquisition of these stations by
NBC, served as President and General Manager of these stations.
Thomas Allen is a founder of ACME and has served as our Executive Vice
President and Chief Financial Officer and as a member of our Board since 1997.
Since June 1996, Mr. Allen has been involved in development activities for ACME.
From August 1993 to May 1996, Mr. Allen was the Chief Operating Officer and
Chief Financial Officer for Virgin Interactive Entertainment. Before that Mr.
Allen served as Senior Vice President and Chief Financial Officer of the Fox
Broadcasting Company from its inception in 1986 to 1993.
James Collis has served as a member of our Board since July 1999. Mr. Collis
is an Executive Vice President of Seaport Capital, LLC a limited liability
company formed to manage Seaport Capital Partners II, L.P., CEA Capital Partners
USA, L.P. and CEA Capital Partners USA CI, L.P. Mr. Collis has served in this
role since February 2000. Prior to Seaport Capital, Mr. Collis served as
Executive Vice President of CEA Management Corp., a corporation formed to manage
CEA Capital Partners USA, L.P. and CEA Capital Partners USA CI, L.P. Before
joining CEA Management Corp., Mr. Collis was a Principal at Chase Manhattan Bank
beginning in December 1996. Before becoming a Principal, Mr. Collis was a Vice
President of Chase Manhattan Bank beginning in June 1995 and an associate before
that beginning in June 1991.
Thomas Embrescia has served as a member of our Board since we acquired WTVK
from Second Generation Television, Inc. in June 1998. Mr. Embrescia is the
Chairman and principal investor of Second Generation Television, a company he
formed in 1993. In addition, he also serves as chairman or Chief Executive
Officer and is a principal investor in several other media and marketing related
businesses. Mr. Embrescia has over 31 years of experience in the broadcasting
and media industry.
Brian McNeill has served as a member of our Board since July 1999. Since
1996, he has been the Managing General Partner of Alta Communications, a private
venture capital firm he co-founded, which specializes in the communications
industry. Since 1986, Mr. McNeill has been a general partner of various funds
affiliated with Burr, Egan, Deleage & Co., a major private equity firm which
specializes in investments in the communications and technology industries. He
currently serves on the board of Radio One, Inc. a publicly traded company on
the NASDAQ exchange
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Michael Roberts has served as a member of our Board since April 1999. Mr.
Roberts is a co-founder of Roberts Broadcasting which owns several television
stations in medium-sized markets in the U.S. and has served as its Chairman and
Chief Executive Officer since 1981. Mr. Roberts is also a 50% owner of the
Roberts Tower Company, which owns over 165 broadcast and telecommunications
towers. He is also the founder of companies active in commercial real estate
development, construction program management and corporate management
consulting. Mr. Roberts is also a director of Alamosa Holdings, Inc., a publicly
held company and Sprint's largest affiliate.
Darryl Schall has served as a member of our Board since July 1999. Mr.
Schall is a Managing Director of Trust Company of the West and has been employed
by Trust Company of the West since November 1995. Mr. Schall was Director of
Research at Crescent Capital Corporation from July 1994 until its acquisition by
Trust Company of the West in 1995.
See "Certain Relationships and Related Transactions" below for a description
of the long-term voting agreement entered into in 1999 between the Company and
Messrs. Kellner, Gealy, Allen, Embrescia and Roberts, and investment funds
managed by or affiliated with Alta Communications, BancBoston, CEA Capital and
TCW Asset Management Company, all of whom are current stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE DIRECTORS
LISTED ABOVE. WE WILL VOTE PROXIES RECEIVED BY US IN FAVOR OF THE ABOVE NOMINEES
UNLESS A CONTRARY CHOICE IS INDICATED.
DIRECTORS' COMPENSATION
Our directors do not currently receive any cash compensation
for services on our Board of Directors or any committee of our board. However,
directors may be reimbursed for expenses they incur in attending board and
committee meetings. All directors are eligible to participate in our 1999 Stock
Incentive Plan. No grants of stock options were made to our directors in 2000 in
their capacity as directors.
BOARD OF DIRECTORS MEETINGS
The Board of Directors met four times during 2000. Each
director attended more than 75% of all meetings of the Board and Committees on
which he served.
BOARD COMMITTEES
Audit Committee
On June 14, 2000 the Board of Directors amended our Audit
Committee Charter. Our Audit Committee is comprised of Darryl Schall and James
Collis. Our Audit Committee recommends the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of such audit engagement, approves professional services provided by the
independent public accountants, reviews independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of our internal accounting controls. The Audit Committee met four times
in 2000.
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Compensation Committee
Our Compensation Committee is comprised of Thomas Embrescia
and Brian McNeill. The committee determines the compensation of our executive
officers and administers our 1999 Stock Incentive Plan, as amended. The
Compensation Committee met three times in 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following contains information regarding the beneficial ownership of our
common stock as of March 28, 2001, for:
- holders or groups of related holders who, individually or as a group,
are known to us to be the beneficial owners of 5% or more of our common
stock;
- our executive officers;
- each director;
- our executive officers and directors as a group.
Unless otherwise noted, the address for each person or entity named below is
c/o ACME Communications, Inc. 2101 E. Fourth Street, Suite 202, Santa Ana,
California 92705.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by footnote, the Section
titled "Certain Relationships and Related Transactions", and subject to
community property laws where applicable, the persons named in the table below
have sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them.
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS BENEFICIALLY BENEFICIALLY
OF BENEFICIAL OWNER OWNED OWNED
------------------- ------------ --------------
Directors and Executive Officers:
Jamie Kellner 1,001,459 5.98%
Douglas Gealy 739,883 4.42%
Thomas Allen 737,218 4.40%
Ed Danduran 12,467 *
James Collis(1) 1,535,360 9.17%
Thomas Embrescia(2) 238,464 1.42%
Brian McNeill(3) 1,535,360 9.17%
Michael Roberts 471,700 2.82%
Darryl Schall(4) 1,172,138 7.00%
All directors and executive officers as a group (9 persons) 7,444,048 44.44%
5% or Greater Beneficial Owners:
Alta Communications, Inc./Burr, Egan, Deleage & Co., Inc.(3) 1,535,360 9.17%
Banc Boston Ventures Inc.(5) 1,462,918 8.73%
CEA Capital Partners USA, LP(1) 1,535,360 9.17%
Dimensinal Fund Advisors Inc.(6) 858,800 5.13%
TCW Asset Management Company(4) 1,172,138 7.00%
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* Represents beneficial ownership of less than 1%.
(1) Includes 1,151,737 shares held by CEA Capital Partners USA, L.P. and
355,180 shares held by CEA Capital Partners USA CI, L.P., two limited
partnerships which own CEA ACME, Inc. which holds 28,443 shares. Mr.
Collis, one of our directors, is an Executive Vice President of Seaport
Capital, LLC, a limited liability company formed to manage CEA Capital
Partners USA, L.P. and CEA Capital Partners USA CI, L.P. and therefore may
be deemed to having voting and investment power over the shares. Mr.
Collis and Seaport Capital, LLC have no pecuniary interest in and disclaim
beneficial ownership of these shares. The address for Seaport Capital, LLC
is 199 Water Street, 20th Floor, New York, New York 10038.
(2) Includes 47,229 shares held by each of three trusts, 1994 Embrescia
FITrust f/b/o F.M. Embrescia, 1994 Embrescia FITrust f/b/o M.M. Embrescia
and 1994 Embrescia FITrust f/b/o A.M. Embrescia, of which Mr. Embrescia is
trustee. Mr. Embrescia is deemed to be the beneficial owner of these
shares. The address for Mr. Embrescia is 3029 Prospect Avenue, Cleveland,
OH 44115.
(3) Includes 28,443 shares held by Alta ACME, Inc., and 376,729 shares held by
Alta Subordinated Debt Partners III, LP, 1,105,035 shares held by Alta
Communications VI, LP, and 25,153 shares held by Alta Comm S by S, LLC,
entities which own Alta ACME, inc. Alta Subordinated Debt Partners III,
L.P. is managed by Burr, Egan, Deleage & Co., Inc. and Alta Communications
VI, L.P. and Alta Comm S By S, LLC are indirectly managed by Alta
Communications, Inc. which may be deemed to have investment powers with
respect to the shares held by these partnerships. Mr. McNeill is the
general partner of the general partner of Alta Subordinated Debt Partners
III and of Alta Communications VI and is a member of Alta Comm S by S, and
may be deemed to have investment power with respect to the shares owned by
these funds. Mr. McNeill disclaims beneficial ownership of the shares held
by these funds, except to the extent of his proportionate pecuniary
interest therein. The address for both Alta Communications, Inc. and Burr,
Egan, Deleage & Co., Inc., which have common ownership, is 200 Clarendon
Street, 51st Floor, Boston, MA 02116.
(4) Includes 21,186 shares held by LINC ACME, 777,436 shares held by TCW
Leveraged Income Trust, LP, and 373,516 shares held by TCW Shared
Opportunity Fund II LP, investment funds for which TCW Asset Management
provides investment advisory services. LINC ACME is a subsidiary of TCW
Leveraged Income Trust, LP. Mr. Schall is a Managing Director of TCW Asset
Management and may be deemed to have investment powers with respect to the
shares owned by these funds. Mr. Schall has no pecuniary interest in and
disclaims beneficial ownership of these shares. The address for TCW Asset
Management Company is 11100 Santa Monica Boulevard, Suite 2000, Los
Angeles, CA 90025.
(5) BankBoston Corporation directly or indirectly has voting control with
respect to the stock of BancBoston Ventures. The address for BancBoston
Ventures Inc. is 100 Federal Street, Boston, MA 02110.
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(6) Based solely on a Schedule 13G dated February 2, 2001. The address for
Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, Santa Monica, CA
90401.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of a registered class of our equity
securities to file reports of ownership and changes in ownership with the SEC
and NASDAQ. These persons are required by regulation of the SEC to furnish us
with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms that we
received, or written representations from certain reporting persons, we believe
that during 2000, our officers, directors and greater than 10% beneficial owners
complied with all applicable Section 16(a) filing requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Brian McNeill and Thomas Embrescia served as members of our Compensation
Committee during 2000. Mr. Embrescia and an affiliate of Mr. McNeill's are
parties to the voting agreement and the registration rights agreement described
under Certain Relationships and Related Transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with Various Sellers of Stations
In connection with our stations in Utah and New Mexico, we entered into
long-term agreements to lease studio facilities and/or transmission tower space
from affiliates of Michael and his brother, Steven Roberts. These leases have
varying terms of approximately five to fifteen years and provide for monthly
payments aggregating approximately $1,687,000, subject to adjustment based on
the Consumer Price Index.
Voting Agreement
We have entered into a long-term voting agreement with Messrs. Kellner,
Gealy, Allen, Embrescia and Roberts, and investment funds managed by or
affiliated with Alta Communications, BancBoston, CEA Capital and TCW Asset
Management Company, all of whom are current stockholders. Pursuant to the
long-term voting agreement, Messrs. Kellner, Gealy, Allen, Embrescia and Roberts
and affiliates of Alta Communications, BancBoston, CEA Capital and TCW Asset
Management Company all have agreed to vote their shares of voting stock in favor
of certain named designees pursuant to which they will be able to elect at least
a majority of our board. The long-term voting agreement will expire October 5,
2001. In addition
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to being stockholders, Messrs. Kellner, Gealy, Allen, Embrescia and Roberts are
all directors. Furthermore, Messrs. Collis, McNeill and Schall are each employed
by affiliates of the investment fund stockholders (Seaport Capital Partners,
Alta Communications and TCW Asset Management Company, respectively) and each
serve as directors of our company.
Registration Rights
We have entered into a registration rights agreement with all of our
pre-initial public offering investors, including Messrs. Kellner, Allen and
Gealy and each of our non-management directors or their affiliates. At any time
180 days after the Company's initial public offering, these stockholders,
holding an aggregate of at least 25% of the stock covered by this registration
rights agreement, may demand that we file a registration statement under the
Securities Act covering all or a portion of the securities of ours held by them.
However, the securities to be registered must have an anticipated aggregate
public offering price of at least $10.0 million. These stockholders can effect
two such demand registrations.
When we are eligible to use a Registration Statement on Form S-3 to register
an offering of our securities, these stockholders may request that we file a
registration statement on Form S-3, covering all or a portion of securities of
ours held by them, if the aggregate public offering price is at least $2.0
million. These stockholders can request that we file two S-3 registration
statements per year.
These registration rights are subject to our right to delay the filing of a
registration statement, not more than once in any 12-month period, for not more
than 90 days.
In addition, these stockholders will have piggyback registration rights. If
we propose to register any common stock under the Securities Act, other than
pursuant to the registration rights noted above, these stockholders may require
us to include all or a portion of their securities in such registration.
However, the managing underwriter, if any, of any such offering has rights to
limit the number of registrable securities proposed to be included in such
registration.
We would bear all registration expenses incurred in connection with these
registrations. The stockholders would pay all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of their securities.
The registration rights of each stockholder under the registration rights
agreement terminate when that stockholder may transfer its securities under Rule
144 promulgated under the Securities Act or their shares have otherwise been
transferred.
The WB Network
Our stations have entered into affiliation agreements and, from time to
time, related marketing arrangements with The WB Network. Mr. Kellner is an
owner and the Chief Executive Officer of The WB Network. We believe that the
terms of each of these affiliation agreements or marketing agreements are or
were at least as favorable to us or our affiliates as those that could be
obtained from an unaffiliated party.
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COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth compensation earned for the years ended December
31, 2000, 1999 and 1998 by all of our executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
NAME AND OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(4) BONUS(2) COMPENSATION OPTIONS/SARS(1) COMPENSATION(3)
----------------------- ---- -------- ---------- ------------ --------------------- ----------------
Jamie Kellner 2000 $250,000 -- -- -- --
Chairman of the 1999 175,000 $1,145,000 -- 838,635 --
Board and Chief 1998 175,000 100,000 -- -- --
Executive Officer
Douglas Gealy 2000 375,000 -- * -- $ 5,045
President and Chief 1999 300,000 877,500 * 685,228 $ 4,345
Operating Officer 1998 300,000 25,000 * -- 93,900
Thomas Allen 2000 375,000 -- * -- $ 5,045
Executive Vice 1999 300,000 877,500 * 685,228 2,716
President and Chief 1998 300,000 25,000 -- -- 6,334
Financial Officer
Ed Danduran 2000 127,505 20,000 -- 22,000 4,575
Vice President, 1999 115,004 25,000 -- 38,000 1,504
Controller 1998 106,016 20,000 -- -- 3,000
(1) We did not have restricted stock, stock appreciation rights or payouts on
long term incentive compensation plans during the periods covered.
(2) Amounts disclosed in the column reflect payments under the incentive
provisions of the individual employment and consulting agreements.
(3) The 2000 amounts disclosed in this column are for the Company's matching
contributions under our 401K savings plan.
(4) For Mr. Kellner, this amount is his consulting fee.
* Less than $50,000 or 10% of such employee's total salary and bonus for said
year.
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EMPLOYMENT ARRANGEMENTS AND AGREEMENTS
Employment Contracts
We have entered into a non-exclusive consulting agreement with Mr. Kellner
and full-time exclusive employment agreements with each of Messrs. Gealy and
Allen. Each of the agreements expires on June 16, 2002. We will have the option
to extend the term of these agreements until September 29, 2003. If we exercise
the extension option, the current base salary at the time of exercise would be
increased by 10% for the period of the extension. If we do not exercise the
extension option, vesting of all of the stock options granted on September 30,
1999 under the 1999 Stock Incentive Plan will accelerate and become immediately
exercisable on June 16, 2002. The employment and consulting agreements provide
for annual compensation reviews by our Compensation Committee, with stipulated
minimum annual adjustments equal to increases in the Consumer Price Index.
As of December 31, 2000, Mr. Kellner's annual consulting fee was $250,000.
Beginning January 1, 2001, Mr. Kellner's annual consulting fee is $258,500. Mr.
Kellner is entitled to annual cash bonuses as determined by our Compensation
Committee. Mr. Kellner declined consideration for a cash bonus for 2000 and none
was paid.
As of December 31, 2000, each of Mr. Gealy's and Mr. Allen's base salary was
$375,000. For the year beginning January 1, 2001, each of Mr. Gealy's and Mr.
Allen's base salary is $387,750. Mr. Gealy and Mr. Allen are entitled to annual
cash bonuses as determined by our Compensation Committee. Mr. Gealy and Mr.
Allen both declined consideration for a cash bonus for 2000 and none was paid.
The Compensation Committee also is charged with the responsibility to
recommend to our Board of Directors for adoption an annual cash incentive plan
under which Messrs. Kellner, Gealy and Allen will be eligible to receive awards.
This plan has not yet been finalized and is anticipated to become effective for
the year beginning January 1, 2001. Each executive will be awarded cash
incentives under such plan if they meet performance targets during 2001.
Mr. Danduran is employed by us pursuant to a full-time exclusive employment
agreement that expires December 31, 2002. Mr. Danduran's base salary was
$127,505 at December 31, 2000 and will increase by $10,000 each January 1st. Mr.
Danduran is entitled to an annual cash bonus with a target of up to 20% of his
current base salary. The Company awarded Mr. Danduran a cash bonus of $20,000
for 2000 that was paid in February 2001.
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OPTION GRANTS
The following table provides details regarding stock options
granted to each of our executive officers in 2000.
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITIES OPTIONS VALUE AT POTENTIAL REALIZABLE VALUE AT
UNDERLYING GRANTED TO EXERCISE MARKET GRANT DATE ASSUMED ANNUAL
OPTIONS EMPLOYEES OR PRICE ON MARKET RATES OF STOCK PRICE
GRANTED IN FISCAL BASE PRICE THE DATE EXPIRATION PRICE APPRECIATION FOR OPTION TERM(3)
NAME (#) YEAR ($/SH) OF GRANT DATE 0% 5% 10%
---- ---------- ---------- ---------- -------- ---------- ---------- --------- ------------
Jamie Kellner -- n/a n/a n/a- n/a n/a n/a n/a
Douglas Gealy -- n/a n/a n/a n/a n/a n/a n/a
Thomas Allen -- n/a n/a n/a n/a n/a n/a n/a
Ed Danduran 10,000(1) 2.22% $24.88 $24.88 2/10/10 $ -- $156,469 $396,523
12,000(2) 2.66% 9.13 9.13 11/14/10 -- 68,902 198,282
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(1) These stock options were granted on February 11, 2000, under our 1999
Stock Incentive Plan. The options vest in five equal annual
installments beginning on February 11, 2001. Unless the Board of
Directors determines otherwise, these stock options will fully
accelerate and become immediately exercisable upon a change in control
event as defined in the Company's 1999 Stock Incentive Plan
(2) These stock options were granted on November 15, 2000, under our 1999
Stock Incentive Plan. The options vest in three equal annual
installments beginning on November 15, 2001. Unless the Board of
Directors determines otherwise, these stock options will fully
accelerate and become immediately exercisable upon a change in control
event as defined in the Company's 1999 Stock Incentive Plan.
(3) Potential gains are net of the exercise price but before taxes
associated with the exercise and assume that the options are exercised
on the latest possible date. The 5% and 10% assumed annual rates of
compounded stock appreciation are pursuant to the rules of the
Securities and Exchange Commission and do not represent our estimate or
projection of the future common stock price. Actual gains, if any, on
stock option exercises depend on our future financial performance,
overall market conditions and the option holders' continued employment
through the vesting period.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000 AND FISCAL YEAR-END OPTION VALUE
None of the stock options held by our executive officers were
exercised during 2000. The following table sets forth information with respect
to the exercisable and non-exercisable stock options held by our executive
officers at the end of 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
AT FY-END AT FY-END (1)
-------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
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Jamie Kellner 209,659 628,706 $ 0 $ 0
Douglas Gealy 171,307 513,921 0 0
Thomas Allen 171,307 513,921 0 0
Ed Danduran 10,667 49,333 0 0
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(1) None of the options granted to any of the Executives are exercisable at a
price below $9.125 per share, which was the market price on the last
trading day of the year, December 31, 2000. No assumptions or
representations regarding the value of such options are made or intended.
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph compares the cumulative total stockholder
return on a $100 investment in our common stock with the cumulative total return
of a $100 investment in (a) the NASDAQ Composite Index and (b) a composite index
of the following four peer companies: (1) Granite Broadcasting Corporation, (2)
Hearst-Argyle Television, Inc., (3) Sinclair Broadcasting Group, Inc. and (4)
Young Broadcasting Inc. Our peers were selected by the Company on a
line-of-business basis and weighted for market capitalization. The graph is
intended to provide a relevant comparison of total returns for the period from
September 30, 1999 (the day our common stock commenced trading) through December
31, 2000. Because we effected our initial public offering in September 1999, the
information in the graph is provided at quarter end intervals. The total return
on the common stock is measured by dividing the difference between the common
stock price at the end and the beginning of the measurement period by the common
stock price at the beginning of the measurement period. The graph for our
Company and each of the indices also assumes the reinvestment of dividends.
Note: We caution that past stock price performance shown for our common stock is
not necessarily indicative of future price performance
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ACME COMMUNICATIONS, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN
SEPTEMBER 30, 1999 TO DECEMBER 31, 2000*
[PERFORMANCE GRAPH]
9/30/99 12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
------- -------- ------- ------- ------- --------
ACME 100.00 107.26 73.79 58.87 29.03 29.44
Peer Group 100.00 113.11 78.42 80.25 87.71 89.93
NASDAQ 100.00 147.80 165.89 144.24 132.72 88.86
Closing Date
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COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee consists of Mr. Embrescia and Mr.
McNeill, both of whom are non-employee directors. The philosophy of the
Compensation Committee is to attract, motivate and retain highly skilled and
effective executives who can achieve long-term success in the Company's present
competitive environment. The Compensation Committee is responsible for making
recommendations to our Board concerning our executive officers' compensation
levels, administers our stock incentive plan and determines awards to be made
under the plan to our officers and all other eligible individuals. The
Compensation Committee may consider other forms of compensation, both short and
long-term, in addition to those generally described above. At the time of our
IPO, the Compensation Committee approved all of our executives' employment and
consulting agreements.
Chief Executive Officer Compensation. Mr. Kellner was
compensated in accordance with his three-year consulting agreement, which
provides for an annual consulting fee of $250,000 in 2000. Although his
agreement also provides for an annual cash incentive award, Mr. Kellner declined
to be considered for such an award for 2000. In determining the annual
consulting fee for Mr. Kellner's consulting agreement, the Compensation
Committee considered the compensation of comparable executives at peer companies
in the broadcasting industry (some of which are included in the peer group index
in the performance graph), taking into account Mr. Kellner's responsibilities,
experience, and individual performance.
Other Executives. The Company has also entered into three-year
employment contracts with each of Mr. Allen and Mr. Gealy. These agreements
provide for a base salary, a discretionary cash bonus and a one-time special
cash bonus in connection with the successful completion of our initial public
offering. Each of the executive officer's base salary for calendar year 2000 was
$375,000 which was determined using the same criteria set forth above for Mr.
Kellner. Mr. Gealy and Mr. Allen also are eligible to receive a discretionary
cash bonus, which both declined to be considered for in 2000.
Stock Options. In 2000, the Company awarded an aggregate of
22,000 stock options for the Company's common stock to Mr. Ed Danduran, the
Company's Vice President -- Controller. In determining the aggregate award of
options to its executives, the Compensation Committee makes a subjective
assessment as to the appropriate level of equity to be granted to sufficiently
and properly incentivize the executives and align their interests with those of
the Company's stockholders.
The Deductibility of Executive Compensation. Section 162(m) of
the Internal Revenue Code does not permit us to deduct cash compensation in
excess of $1 million paid to the chief executive officer and the four highest
compensated executive officers during any taxable year, unless such compensation
meets certain requirements.
Thomas Embrescia
Brian McNeill
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company is composed entirely
of the
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outside directors named as signatories to the Compensation Committee report
above, as was the case during fiscal 2000. Except for the voting agreement noted
under the caption "Certain Relationships and Related Transactions" above, the
Compensation Committee members do not have any non-trivial professional,
familial or financial relationship with the Chief Executive Officer, other
executive officers or the Company, other than his directorship.
AUDIT COMMITTEE REPORT
Our Audit Committee is composed of two independent directors and operates
under a written charter adopted by our Board of Directors and last amended June
14, 2000. The members of the Audit Committee are Messrs. Collis and Schall. The
Audit Committee recommends to the Board of Directors, subject to stockholder
ratification, the selection of our independent accountants.
Management is responsible for our internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of our consolidated financial statements in accordance with
generally accepted auditing standards and to issue a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that our consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit Committee has
reviewed and discussed the consolidated financial statements with management and
the independent accountants. The Audit Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
Our independent accountants also provided to the Audit Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants that firm's independence.
Based upon the Audit Committee's discussions with management and the
independent accountants and the Audit Committee's review of the representation
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in our Annual Report on Form 10-K
for the year ended December 31, 2000 filed with the Securities and Exchange
Commission.
The Audit Committee
James Collis
Darryl Schall
INDEPENDENT PUBLIC ACCOUNTANTS
Our Board of Directors has appointed KPMG LLP as our
independent public accountants for 2001. KPMG LLP has served as our independent
public accountants since 1997.
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We expect representatives of KPMG LLP to be at the Annual
Meeting and to be available to respond to questions from stockholders. We will
give the KPMG LLP representatives an opportunity to make a statement if they
desire.
Ratification of appointment of KPMG LLP as our independent
public accountants for 2001 will require the affirmative vote of a majority of
voting shares of the common stock represented in person or by proxy at the
Annual Meeting. If the stockholders do not make such ratification, the Audit
Committee and the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT AUDITORS.
ACCOUNTANT FEES
Fees for the last annual audit, including quarterly reviews,
were approximately $175,000. There were no fees incurred relating to Financial
Information Systems Design and Implementation. All other fees were
approximately $1,150 and related to tax planning services.
Our Audit Committee determined that KPMG LLC's provision of
services for all non-audit fees in 2000 is compatible with maintaining KPMG
LLC's independence.
FINANCIAL AND OTHER INFORMATION
Our Annual Report for the year ended December 31, 2000,
including financial statements, is being sent to stockholders of record as of
the close of business on April 27, 2001, together with this Proxy Statement. We
will furnish, without charge, a copy of our Annual Report on Form 10-K (without
exhibits) for the year ended December 31, 2000, as filed with the Securities and
Exchange Commission, to any stockholder who submits a written request to our
corporate Secretary at our offices, 2101 E. Fourth Street, Ste. 202, Santa Ana,
California 92705.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at our 2002
Annual Stockholders' Meeting must deliver the proposal to us at our principal
executive offices not later than January 1, 2002 for inclusion in our proxy
statement and form of proxy relating to the meeting.
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Stockholder proposals submitted outside the processes of Rule
14a-8 under the Securities Exchange Act of 1934 (i.e., a proposal to be
presented at the next annual meeting of stockholders but not submitted for
inclusion in the Company's Proxy Statement for that meeting) must be timely
submitted. Until further notice, to be timely with respect to our 2002 Annual
Stockholders' Meeting (which is presently expected to be held in May 2002), a
stockholder's notice of director nominations or of business to be brought before
such Annual Meeting must be received in writing by the Secretary of the Company
at the principal executive office of the Company not less than ninety (90) days
nor more than one hundred and twenty (120) days before the first anniversary of
our 2001 Annual Meeting (provided, however, that if the date of the 2002 Annual
Stockholders' Meeting is more than 30 days before or more than 70 days after
such anniversary date, notice by the stockholder must be delivered no less than
ninety (90) days (or 10 days after the day on which we make a public
announcement of such Annual Meeting) nor more than one hundred and twenty (120)
days before the date of such 2002 Annual Meeting). Such notice must also contain
certain additional information required by the Bylaws and otherwise comply with
applicable legal requirements. Stockholders may obtain a complete copy of the
Company's Bylaws, as amended, by submitting a request to the Secretary of the
Company at the address set forth above under "Financial and Other Information.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for
action by the stockholders at the Annual Meeting other than those described in
this Proxy Statement. Unless otherwise indicated, if any other matter is
properly brought before the meeting and may be properly acted upon, the persons
named in the accompanying form of proxy will be authorized by such proxy to vote
the proxies thereon in accordance with their best judgment.
For the Board of Directors
Thomas Allen
Executive Vice President,
Chief Financial Officer and
Secretary
April 30, 2001
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PROXY
ACME COMMUNICATIONS, INC.
PROXY FOR ANNUAL MEETING OF MAY 31, 2001
The undersigned hereby appoints Thomas Allen and Douglas Gealy, or either
of them, as attorneys-in-fact, with full power of substitutions, to vote in the
manner indicated below, and with discretionary authority as to any other matters
that may properly come before the meeting, all shares of common stock of ACME
Communications, Inc. which the undersigned is entitled to vote at the annual
meeting of stockholders of ACME Communications, Inc. to be held on May 31, 2001,
at Trust Company of the West, 11100 Santa Monica Blvd., 20th Floor, Los Angeles,
California at 9:00 a.m. (local time) or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2
1. Election of the eight nominees for director set forth in the Proxy
Statement
Nominees: Jamie Kellner, Douglas Gealy, Thomas Allen, James Collis,
Thomas Embrescia, Brian McNeill, Michael Roberts and Darryl Schall
FOR ALL: [ ] WITHHELD FOR ALL: [ ] FOR ALL EXCEPT: [ ] _____
2. Ratification of the Appointment of KPMG LLP as independent auditors.
FOR : { ] AGAINST: [ ] ABSTAIN: [ ]
3. Such other matters as may properly come before the meeting or any
adjournment thereof. As to such other matters the undersigned hereby
confers discretionary authority.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
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This Proxy When Properly Executed Will be Voted as Directed. If No
Direction is Made. This Proxy Will be Voted FOR the Nominees for Directors and
FOR the Ratification of KPMG LLP as Independent Auditors.
Dated: , 2001
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Signature(s):
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Note: Please sign exactly as your name is printed. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please mark, sign and date, and return the proxy card promptly using the
enclosed envelope.