DEF 14A 1 d694494ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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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  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨    Preliminary Proxy Statement
¨    Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x    Definitive Proxy Statement
¨    Definitive Additional Materials
¨    Soliciting Material Pursuant to §240.14a-12

CABLEVISION SYSTEMS CORPORATION

(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

Notice of Annual Meeting and

Proxy Statement

Dear Stockholder:

You are cordially invited to attend our annual meeting of stockholders at 10:00 a.m. on May 22, 2014 at our corporate headquarters building at 1111 Stewart Avenue, Bethpage, New York.

You will have an opportunity to ask questions and to meet your directors and executives.

We are continuing to take advantage of the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their stockholders on the Internet. We believe the e-proxy process expedites stockholders’ receipt of proxy materials, and lowers the costs and reduces the environmental impact of our annual meeting.

I look forward to seeing you at the meeting. Your vote is important to us. Stockholders may vote by using a toll-free telephone number or over the Internet. Also, if you receive a paper copy of the proxy card by mail, you may sign and return the proxy card in the envelope provided.

Sincerely yours,

 

LOGO

Charles F. Dolan

Chairman

April 11, 2014

Cablevision Systems Corporation, 1111 Stewart Avenue, Bethpage, NY 11714-3581


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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF CABLEVISION

SYSTEMS CORPORATION

Time: 10:00 a.m., Eastern Time

Date:  May 22, 2014

Place: Cablevision Systems Corporation

   Corporate Headquarters

   1111 Stewart Avenue

   Bethpage, New York 11714

Purpose:

 

   

  Elect directors

 

   

  Ratify appointment of independent registered public accounting firm

 

   

  Approve the Amended and Restated 2006 Employee Stock Plan

 

   

  Hold an advisory vote to approve executive compensation

 

   

  Consideration of two stockholder proposals, if properly presented at the meeting

 

   

  Conduct other business if properly raised

Only stockholders of record on March 28, 2014 may vote at the meeting.

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

Important Notice: Our 2013 Annual Report on Form 10-K and the 2014 Proxy Statement are available at www.cablevision.com/investor/proxy.jsp

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. You will need the 12-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, read “How do I attend the 2014 Annual Meeting in person? What do I need to bring?” on page 3 of the Proxy Statement.

By order of the Board of Directors

 

LOGO

Jamal H. Haughton

Senior Vice President,

Associate General Counsel

and Assistant Secretary

April 11, 2014


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Table of Contents       

General Information

    1   

PROPOSAL 1 — Election of Directors

    4   

Board of Directors and Committees

    10   

Director Independence

    11   

Committees

    12   

Director Compensation

    18   

Director Compensation Table

    19   

PROPOSAL 2 — Ratification of Appointment of Independent Registered Public Accounting Firm

    20   

Report of Audit Committee

    21   

Executive Compensation

    22   

Compensation Discussion and Analysis

    22   

Executive Summary

    22   

Compensation Practices and Policies

    25   

Elements of In-Service Compensation

    28   

Post-Termination Compensation

    37   

Tax Deductibility of Compensation

    38   

Report Of Compensation Committee

    39   

EXECUTIVE COMPENSATION TABLES

    40   

Summary Compensation Table

    40   

Grants of Plan-Based Awards

    44   

Outstanding Equity Awards at Fiscal Year-End

    46   

Option Exercises and Stock Vested

    48   

Pension Benefits

    49   

Nonqualified Deferred Compensation

    52   

Employment Agreements

    53   

Termination and Severance

    64   

Equity Compensation Plan Information

    73   

PROPOSAL  3 — Approval of Cablevision Systems Corporation Amended and Restated 2006 Employee Stock Plan

    73   

PROPOSAL 4 — Non-Binding Advisory Vote to Approve Executive Compensation

    81   

PROPOSAL 5 — Stockholder Proposal for a Political Contributions Report

    82   

PROPOSAL 6 — Stockholder Proposal to Adopt a Recapitalization Plan

    84   

OUR EXECUTIVE OFFICERS

    87   

RELATED PARTY POLICY AND CERTAIN TRANSACTIONS

    88   

Conflicts of Interest

    99   

STOCK OWNERSHIP TABLE

    100   

OTHER MATTERS

    113   

Exhibit A Cablevision Systems Corporation Amended and Restated 2006 Employee Stock Plan

    A-1   


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Proxy Statement 2014 - Cablevision

 

GENERAL INFORMATION

Voting Rights

Holders of Cablevision NY Group Class A common stock (“Class A common stock”) and Cablevision NY Group Class B common stock (“Class B common stock”), as recorded in our stock register at the close of business on March 28, 2014, may vote at the meeting. On March 28, 2014, there were 216,363,821 shares of Class A common stock and 54,137,673 shares of Class B common stock outstanding. Each share of Class A common stock has one vote per share and holders will be voting for the election of five candidates to the Board of Directors. Each share of Class B common stock has ten votes per share and holders will be voting for the election of twelve candidates to the Board of Directors. As a result of their ownership of Class B common stock, our Chairman, Charles F. Dolan, certain members of his family and related family entities, have the power to elect all of the directors to be elected by the holders of Class B common stock and to approve Proposals 2, 3 and 4 and reject Proposals 5 and 6 regardless of how other shares are voted.

How to vote

As permitted by rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders (other than those who previously requested electronic or paper delivery). All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. There is no charge to you for requesting a copy of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed set of proxy materials may be found in the Notice. In addition, stockholders may request to receive future proxy materials in printed form by mail or electronically by email on an ongoing basis.

You may vote in person at the meeting or by proxy. You may vote by telephone or over the Internet. Also, if you receive a paper copy of the proxy card by mail, you may sign and return the proxy card in the envelope provided. We recommend you vote by proxy even if you plan to attend the meeting. You can always change your vote at the meeting.

How proxies work

Cablevision Systems Corporation’s (the “Company”) Board of Directors (the “Board”) is asking for your proxy. If you submit a proxy, but do not specify how to vote, the Company representatives named in the proxy will vote your shares (a) in favor of the director nominees identified in this proxy statement and Proposals 2, 3 and 4, and (b) against Proposals 5 and 6. The Notice contains instructions for telephone and Internet voting. Also, if you receive a paper copy of the proxy card by mail, you may sign and return the proxy card in the envelope

 

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provided. Whichever method you use, giving us your proxy means you authorize us to vote your shares at the meeting in the manner you direct. You may vote for all, some, or none of our director candidates. You may also vote for or against Proposals 2, 3, 4, 5 or 6 or abstain from voting.

You may receive more than one Notice or proxy or voting card depending on how you hold your shares. If you hold shares through another party, such as a bank or brokerage firm, you may receive material from them asking how you want to vote.

Revoking a proxy

You may revoke your proxy at any time before the final vote at the annual meeting by submitting a new proxy with a later date; by voting in person at the meeting; granting a subsequent proxy through the Internet or telephone or by notifying the Company’s Investor Relations department in writing at Cablevision Systems Corporation, Investor Relations, 1111 Stewart Avenue, Bethpage, New York 11714, so that it is received prior to May 21, 2014.

Quorum

In order to carry on the business of the meeting, we must have a quorum. This means that at least a majority of the outstanding votes represented by outstanding shares eligible to vote must be represented at the meeting, either by proxy or in person. If voting on a particular action is by class, a majority of the votes represented by the outstanding shares of such class constitutes a quorum for that action.

Votes needed

Election of directors by the holders of Class A common stock (“Class A directors”) requires the affirmative vote of a plurality of votes cast by holders of Class A common stock. Election of directors by the holders of Class B common stock (“Class B directors”) requires the affirmative vote of a plurality of votes cast by holders of Class B common stock. Approval of Proposals 2, 3, 4, 5 and 6 requires the favorable vote of a majority of the votes cast by the holders of Class A common stock and holders of Class B common stock, voting together as a single class. Abstentions and broker non-votes are treated as present for quorum purposes. They are not treated as votes cast for purposes of Proposals 2, 4, 5 or 6 and, therefore, will not affect the voting on those proposals. Under NYSE policy, abstentions (but not broker non-votes) will count as “votes cast” for purposes of Proposal 3. Broker non-votes occur when a bank, brokerage firm or other nominee submits a proxy for the meeting but does not vote on one or more proposals because the beneficial owner of the shares did not provide voting instructions on those proposals.

Please note that brokers are not permitted to vote your shares on any of the proposals other than Proposal 2 unless you provide instructions as to how to vote. We encourage you to provide instructions to your broker regarding the voting of your shares.

 

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Important Notice

How do I attend the 2014 Annual Meeting in person? What do I need to bring?

This year an admission ticket will be required if you desire to attend the annual meeting in person. To be admitted to the 2014 annual meeting, you must have been a stockholder at the close of business on the record date of March 28, 2014 or be the legal proxy holder or qualified representative of a stockholder, and bring with you your admission ticket and a valid government-issued photo identification card (federal, state or local), such as a driver’s license or passport. Persons without an admission ticket or proper identification may be denied admission to the annual meeting.

To obtain an admission ticket, go to www.proxyvote.com or call 1-866-232-3037. You will need to enter your 12-digit control number, which can be found on your Notice of Internet Availability of Proxy Materials, voter instruction form and proxy card. The deadline to obtain an admission ticket is 5:00 p.m. on May 12, 2014. For questions about admission to the annual meeting, please call 1-866-232-3037.

Please note that you will need your ticket to be admitted to the meeting whether you vote before or at the meeting, and regardless of whether you are a registered or beneficial stockholder. If you are attending the meeting as a proxy or qualified representative for a stockholder, you will need to bring your legal proxy or authorization letter, in addition to your admission ticket and government-issued photo identification card.

Stockholders must provide advance written notice to the Company if they intend to have a legal proxy (other than the persons appointed as proxies on the Company’s proxy card) or qualified representative attend the annual meeting on their behalf. The notice must include the name and address of the legal proxy or qualified representative and must be received by 5:00 p.m., on May 10, 2014 in order to allow enough time for the issuance of an admission ticket to such person. For further details, read “Advance Notice of Proxy Holders and Qualified Representatives” on page 114 of this proxy statement.

Please note that cameras, video and audio recording equipment and other similar electronic devices, as well as large bags (including large handbags and briefcases) and packages will need to be checked at the door. Additionally, the Company may impose additional restrictions on items that must be checked at the door as well as the conduct of the meeting. To ensure the safety of all persons, attendees may also be subject to security inspections.

Requests for admission tickets will be processed in the order received. Please note that seating is limited, and requests for tickets will be handled on a first-come, first-served basis.

Solicitation

These proxy materials are first being sent to stockholders on April 11, 2014. In addition to this mailing, the Company’s employees may solicit proxies personally, electronically or by

 

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telephone. The Company pays the costs of soliciting proxies. We also reimburse brokers and other nominees for their expenses in sending these materials to you and obtaining your voting instructions. The Company has also retained D. F. King & Co., Inc. to assist in the solicitation of proxies at a fee estimated at $15,000 plus reasonable out-of-pocket expenses.

PROPOSAL 1

Election of Directors

The Board has nominated the seventeen director candidates named below all of whom currently serve as our directors except for Joseph J. Lhota. Of the seventeen nominees for director, twelve are to be elected by the Class B stockholders and five are to be elected by the Class A stockholders. All of the directors are elected for a one year term and serve until their successors are elected and qualified or until their earlier resignation or removal.

Each current director was elected by the stockholders at the last annual meeting.

The Company representatives named in the proxy intend to vote for the election of each of the director nominees below, unless you indicate on your proxy that your vote should be withheld from any or all of the nominees.

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

Information on each of our nominees is given below.

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

Directors to be elected by Class A Stockholders

 

 

JOSEPH J. LHOTA, 59, Senior Vice President, Vice Dean and Chief of Staff at NYU Langone Medical Center. In 2013, he was a candidate for Mayor of the City of New York. He was Chairman and Chief Executive Officer of the New York Metropolitan Transportation Authority from 2011 to 2012, New York City Deputy Mayor for Operations from 1997 to 2001 and New York City Budget Director from 1995 to 1997. From 2002 to 2010, Mr. Lhota was Executive Vice President of the Company, and from 2010 to 2011 he was Executive Vice President of The Madison Square Garden Company. From 1980 to 1994, Mr. Lhota was an investment banker. Prior, he was a Senior Accountant with Arthur Andersen & Co. He is a graduate of the Harvard Business School and Georgetown University. Mr. Lhota is a director of First Aviation Services, Inc. and a trustee of The City University of New York.

 

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In light of Mr. Lhota’s experience as a senior executive at major public companies, his knowledge of the industry, his government service, including leading a major governmental organization, his experience as an investment banker and accountant, 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 elected to the Board.

 

 

 

THOMAS V. REIFENHEISER, 78, Director of the Company since 2002. Mr. Reifenheiser retired as a Managing Director of JP Morgan Chase, overseeing the Global Media and Telecommunications Division in September 2000 after 38 years with JP Morgan Chase and its predecessors. Mr. Reifenheiser is a director of Lamar Advertising Company. During the past five years, Mr. Reifenheiser was a director of Citadel Broadcasting Corporation and Mediacom Communications Corporation.

In light of Mr. Reifenheiser’s experience as a commercial banker to media and telecommunications companies, his service as a director of other public companies, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, 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.

 

 

 

VICE ADMIRAL JOHN R. RYAN USN (RET.), 68, Director of the Company since 2002. President and Chief Executive Officer of the Center for Creative Leadership in Greensboro, North Carolina since June 2007. He was Chancellor of the State University of New York from June 2005 to June 2007. He was President of the State University of New York Maritime College from June 2002 to June 2005, Interim President of State University at Albany from February 2004 to February 2005, and Superintendent of the United States Naval Academy from June 1998 to June 2002. Vice Admiral Ryan’s military career included positions as Commander of the Maritime Surveillance and Reconnaissance Force, US Sixth Fleet/Commander, Fleet Air Mediterranean Commander, Maritime Air Forces, Mediterranean until his retirement from the U.S. Navy in July 2002. Vice Admiral Ryan is the lead director of CIT Group Inc.

In light of Vice Admiral Ryan’s experience in military service, his leadership positions at major universities, his experience as the chief executive officer of another company, his service as the lead director of another public 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, 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.

 

 

 

VINCENT TESE, 71, Director of the Company since 1996. 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

 

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December 1994. Mr. Tese is Chairman of Bond Street Holdings LLC and Executive Chairman of Florida Community Bank and is a director of Intercontinental Exchange, Inc., ICE Clear Credit LLC, Mack-Cali Realty Corporation, The Madison Square Garden Company and New York Racing Association, Inc., and a trustee of New York Presbyterian Hospital and New York University School of Law. During the past five years, Mr. Tese was a director of Bowne & Company, Inc., Municipal Art Society, NRDC Acquisition Corp., GGCP, Inc., Wireless Cable International, Inc. and Xanboo Inc.

In light of Mr. Tese’s experience as the chief executive officer of the New York State Urban Development Corporation, his government service, his experience as the executive chairman of private companies, his service as a director of other public companies, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, 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.

 

 

 

DR. LEONARD TOW, 85, Director of the Company since 2005. Chief Executive Officer of New Century Holdings LLC, an outdoor advertising company, since January 2005. Dr. Tow is a director of AMC Networks Inc., and was a director of Citizens Communications Company from 1989 to September 2004. Chairman and Chief Executive Officer of Citizens Communications Company from 1990 to September 2004. Dr. Tow is also a Trustee of Columbia University Mailman School of Public Health.

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, 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 to be elected by Class B Stockholders

 

 

RAND V. ARASKOG, 82, Director of the Company since 2005. Self-employed as a private investor as principal in RVA Investments since March 1998.

In light of Mr. Araskog’s experience as the chief executive officer of a public company and as a principal in a private investment 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, 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.

 

 

 

EDWARD C. ATWOOD, 78, Director of the Company since May 2011. Vice President — Multimedia Services of the Company since 1998. Mr. Atwood is the brother-in-law of Charles F. Dolan and the uncle of James L. Dolan, Kathleen M. Dolan, Patrick F. Dolan, Deborah Dolan-Sweeney, Thomas C. Dolan and Marianne Dolan Weber.

 

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In light of Mr. Atwood’s experience in various positions with Cablevision since 1982, 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.

 

 

 

FRANK J. BIONDI, 69, Director of the Company since 2005. Senior Managing Director of WaterView Advisors LLC since June 1999. Mr. Biondi is a director of Hasbro, Inc., Seagate Technology, Amgen, Inc. and RealD Inc. During the past five years, Mr. Biondi was a director of Yahoo Inc.

In light of Mr. Biondi’s experience as a senior executive of other companies and as a managing director 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, 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, 87, Director of the Company since 1985. Chairman of the Company since 1985. Executive Chairman of AMC Networks Inc. since June 2011. Chief Executive Officer of the Company from 1985 to October 1995. Founded and acted as the General Partner of the Company’s predecessor from 1973 to 1985. Established Manhattan Cable Television in 1961 and Home Box Office in 1971. He serves as a director of AMC Networks Inc. and The Madison Square Garden Company. Charles F. Dolan is the father of James L. Dolan, Kathleen M. Dolan, Patrick F. Dolan, Thomas C. Dolan, Deborah Dolan-Sweeney and Marianne Dolan Weber, the father-in-law of Kristin A. Dolan and Brian G. Sweeney, and the brother-in-law of Edward C. Atwood.

In light of Mr. Dolan’s experience as founder, his service as Chairman and, previously, as the Chief Executive Officer of Cablevision and its predecessors, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, 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, 58, Director of the Company since 1991. Chief Executive Officer of the Company since October 1995. President of the Company from June 1998 to April 2014. Executive Chairman of The Madison Square Garden Company since July 2009. Chairman of Madison Square Garden, LP since October 1999. Chief Executive Officer of Rainbow Media Holdings, Inc., a subsidiary of the Company, from September 1992 to October 1995. Vice President of the Company from 1987 to September 1992. He serves as a director of AMC Networks Inc. and The Madison Square Garden Company. During the past five years, Mr. Dolan was a director of Live Nation Entertainment, Inc. James L. Dolan is the son of Charles F. Dolan, the spouse of Kristin A. Dolan, the brother of Kathleen M. Dolan, Patrick F. Dolan, Thomas C. Dolan, Deborah Dolan-Sweeney and Marianne Dolan Weber, the brother-in-law of Brian G. Sweeney, and the nephew of Edward C. Atwood.

 

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In light of Mr. Dolan’s experience in various positions with Cablevision since 1979, including as its Chief Executive Officer since 1995, as well as the knowledge and experience he has gained and contributions he has made during his tenure as a director of the Company, 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.

 

 

 

KATHLEEN M. DOLAN, 51, Director of the Company since 2008. Director and Founder of Purple Crayon Productions, Inc., a Woodstock, Vermont based community art and music center, since September 2004. Kathleen M. Dolan is the daughter of Charles F. Dolan, the sister of James L. Dolan, Patrick F. Dolan, Thomas C. Dolan, Deborah Dolan-Sweeney and Marianne Dolan Weber, the sister-in-law of Kristin A. Dolan and Brian G. Sweeney, and the niece of Edward C. Atwood.

In light of Ms. Dolan’s experience as a member of Cablevision’s founding family, as well as the knowledge and experience she has gained and contributions she has made during her tenure as a director of the Company, 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.

 

 

 

KRISTIN A. DOLAN, 48, Director of the Company since 2010. Chief Operating Officer of the Company since April 2014. President, Optimum Services of the Company from April 2013 to April 2014. Senior Executive Vice President of Product Management and Marketing from November 2011 to April 2013. Senior Vice President of the Company from 2003 to 2011. Ms. Dolan has been an employee of the Company since 1990. She serves as a director of AMC Networks Inc. and The Madison Square Garden Company. Kristin A. Dolan is the daughter-in-law of Charles F. Dolan, the spouse of James L. Dolan and the sister-in-law of Kathleen M. Dolan, Patrick F. Dolan, Thomas C. Dolan, Brian G. Sweeney, Deborah Dolan-Sweeney and Marianne Dolan Weber.

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, 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, 62, Director of the Company since 1991. President of News 12 Networks of the Company since February 2002. Vice President of News from September 1995 to February 2002. News Director of News 12 Long Island, a subsidiary of the Company, from December 1991 to September 1995. He serves as director of AMC Networks Inc. Patrick F. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan, Kathleen M. Dolan, Thomas C. Dolan, Deborah Dolan-Sweeney and Marianne Dolan Weber, the brother-in-law of Kristin A. Dolan and Brian G. Sweeney, and the nephew of Edward C. Atwood.

 

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In light of Mr. Dolan’s experience as a member of Cablevision’s founding family and in various positions with 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, 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, 61, Director of the Company since 2007. Executive Vice President-Strategy and Development, Office of the Chairman since September 2008. Executive Vice President and Chief Information Officer of the Company from October 2001 until April 2005. Mr. Dolan was on unpaid leave of absence from April 2005 until September 2008. Senior Vice President and Chief Information Officer of the Company from February 1996 to October 2001. Vice President and Chief Information Officer of the Company from July 1994 to February 1996. General Manager of the Company’s East End Long Island cable system from November 1991 to July 1994. System Manager of the Company’s East End Long Island cable system from August 1987 to October 1991. He also served as a director of the Company from March 1998 to May 2005. He serves as a director of AMC Networks Inc. and The Madison Square Garden Company. Thomas C. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan, Kathleen M. Dolan, Patrick F. Dolan, Deborah Dolan-Sweeney and Marianne Dolan Weber, the brother-in-law of Kristin A. Dolan and Brian G. Sweeney, and the nephew of Edward C. Atwood.

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, a majority of our Board of Directors, acting on the recommendation of a majority of the directors elected by the Class B stockholders, has concluded that he should be reelected to the Board. In light of the lawsuit filed by Thomas C. Dolan against Cablevision described under “Related Party Policy and Certain Transactions — Certain Other Transactions,” the following directors abstained from the Board’s recommendation on Thomas C. Dolan: Messrs. Araskog, Biondi, Reifenheiser, Ryan, Tese and Tow.

 

 

 

DEBORAH DOLAN-SWEENEY, 50, Director of the Company since 2008. Director of Dolan Family Foundation since 1986. Director of Dolan Children’s Foundation since 1997. She serves as a director of The Madison Square Garden Company. Deborah Dolan-Sweeney is the daughter of Charles F. Dolan, the spouse of Brian G. Sweeney, the sister of James L. Dolan, Kathleen M. Dolan, Patrick F. Dolan, Thomas C. Dolan and Marianne Dolan Weber, the sister-in-law of Kristin A. Dolan, and the niece of Edward C. Atwood.

In light of Ms. Dolan-Sweeney’s experience as a member of Cablevision’s founding family, as well as the knowledge and experience she has gained and contributions she has made during her tenure as a director of the Company, 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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BRIAN G. SWEENEY, 49, Director of the Company since 2005. President of the Company since April 2014. Senior Executive Vice President, Strategy and Chief of Staff from January 2013 to April 2014. Senior Vice President — eMedia of the Company from January 2000 to January 2013. He serves as a director of AMC Networks Inc. and The Madison Square Garden Company. Brian G. Sweeney is the son-in-law of Charles F. Dolan, the spouse of Deborah Dolan-Sweeney, and the brother-in-law of James L. Dolan, Kathleen M. Dolan, Kristin A. Dolan, Patrick F. Dolan, Thomas C. Dolan and Marianne Dolan Weber.

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, 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.

 

 

 

MARIANNE DOLAN WEBER, 56, Director of the Company since 2005. President of Dolan Family Foundation from 1986 to September 1999. Chairman of Dolan Family Foundation from September 1999 through 2011. President of Dolan Children’s Foundation from 1997 to September 1999. Chairman of Dolan Children’s Foundation from September 1999 through 2011. Manager of Dolan Family Office, LLC from 1997 through 2011. She serves as a director of AMC Networks Inc. and The Madison Square Garden Company. Marianne Dolan Weber is the daughter of Charles F. Dolan, the sister of James L. Dolan, Kathleen M. Dolan, Patrick F. Dolan, Thomas C. Dolan and Deborah Dolan-Sweeney, the sister-in-law of Kristin A. Dolan and Brian G. Sweeney, and the niece of Edward C. Atwood.

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, 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.

BOARD OF DIRECTORS AND COMMITTEES

The Board met nine times in 2013. Each of our directors in 2013 attended at least 75% of the meetings of the Board and the committees of the Board on which he or she served during 2013, except for Kathleen M. Dolan and Marianne Dolan Weber.

We encourage our directors to attend annual meetings of stockholders and believe that attendance at annual meetings is just as important as attendance at Board and committee meetings. All of our directors in 2013 attended the 2013 annual stockholders meeting except for Edward C. Atwood, Frank J. Biondi, Charles F. Dolan, Kathleen M. Dolan, Thomas C. Dolan and Deborah Dolan-Sweeney.

 

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Director Independence

The Company’s Class A common stock is listed on the New York Stock Exchange. As a result, we are subject to the New York Stock Exchange’s corporate governance listing standards. However, a listed company that meets the New York Stock Exchange’s definition of “controlled company,” a company of which more than 50% of the voting power is held by a single entity or group, may elect not to comply with certain of these requirements. On March 19, 2004, the Class B stockholders who are members of the Dolan family and related family entities entered into a Stockholder Agreement relating, among other things, to the voting of their shares of the Company’s Class B common stock and filed a Schedule 13D with the Securities and Exchange Commission as a “group” under the rules of the Securities and Exchange Commission. As a result, we fall within the New York Stock Exchange’s definition of a “controlled company.”

As a “controlled company”, we have the right to elect not to comply with the corporate governance rules of the New York Stock Exchange requiring: (i) a majority of independent directors on our Board, (ii) an independent corporate governance and nominating committee, and (iii) an independent compensation committee. Because of our status as a “controlled company” we have elected not to maintain a majority of independent directors on our Board or to have a corporate governance and nominating committee. 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 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.

In determining director independence, the Board applies the independence standards of the New York Stock Exchange and affirmatively determines whether each director has any other material relationship with the Company. In applying its independence standards, the Board has determined that each of the following non-employee directors is an independent member: Rand V. Araskog, Frank J. Biondi, Thomas V. Reifenheiser, John R. Ryan, Vincent Tese and Leonard Tow. Each of those non-employee directors is also a nominee for director. 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 and noted the following:

With respect to Vincent Tese, the Board considered one existing relationship noted below and determined that it was not material and that Mr. Tese was independent:

 

   

Vincent Tese has served as an outside director of The Madison Square Garden Company since the date on which it was distributed to the Company’s stockholders, February 9, 2010.

 

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With respect to Leonard Tow, the Board considered one existing relationship noted below and determined it was not material and that Dr. Tow was independent:

 

   

Leonard Tow has served as an outside director of AMC Networks Inc. since the date on which it was distributed to the Company’s stockholders, June 30, 2011.

The Board has also determined that Joseph J. Lhota, if elected by the stockholders at the annual meeting, will be an independent member of the Board.

The Board has also determined that each member of our Audit Committee, as listed below, qualifies as “independent” under the independence standards of the Securities and Exchange Commission for audit committee members.

Committees

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Executive Committee. In addition, the Board has an independent committee comprised exclusively of independent directors to review and approve certain related party transactions.

Audit Committee

Committee members: Messrs. Ryan (Chairman), Tese and Tow currently comprise the Audit Committee.

Meetings in 2013: 5

The primary purposes of our Audit Committee are: (a) to assist the Board in its oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our independent registered public accounting firm’s qualifications and independence, and (iv) the performance of our internal audit function and independent registered public accounting firm; (b) to 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, audit-related and other services, if any, to be provided by the independent registered public accounting firm; and (c) to prepare any report of the Audit Committee required by the rules and regulations of the Securities and Exchange Commission for inclusion in our annual proxy statement. The text of our Audit Committee charter is available on our website at www.cablevision.com. A copy may be obtained, without charge, by writing to Cablevision Systems Corporation, Corporate Secretary, 1111 Stewart Avenue, Bethpage, New York 11714.

Our Board has determined that each member of the Audit Committee is independent as defined under the rules of both the New York Stock Exchange and the Securities and Exchange Commission, is financially literate and has accounting or related financial management expertise, as such qualifications are defined under the rules of the New York

 

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Stock Exchange, and that John R. Ryan, Chairman of the Audit Committee, is an “audit committee financial expert” within the meaning of the rules of the Securities and Exchange Commission.

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

Compensation Committee

Committee members: Messrs. Tese (Chairman), Reifenheiser and Ryan currently comprise the Compensation Committee. Our Board has determined that each member of the Compensation Committee is independent as defined under the rules of the New York Stock Exchange.

Meetings in 2013: 13

The primary responsibilities of our Compensation Committee, as defined in the Committee’s Charter include:

 

   

Establishing general compensation philosophy and overseeing the development and implementation of compensation programs, in consultation with management;

 

   

Reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and the other executive officers of the Company who are required to file reports under Section 16(a) of the Securities Exchange Act of 1934;

 

   

Evaluating executive officers’ performance in light of goals and objectives and determining and approving their compensation levels based upon those evaluations;

 

   

Overseeing the activities of the committee or committees administering our retirement plans;

 

   

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

 

   

Overseeing regulatory compliance with respect to compensation matters, in consultation with management; and

 

   

Determining and approving any severance or similar termination payments to current or former executive officers.

The text of our Compensation Committee charter is available on our website at www.cablevision.com. A copy may be obtained, without charge, by writing to Cablevision Systems Corporation, Corporate Secretary, 1111 Stewart Avenue, Bethpage, New York 11714.

Our Board determined that each member of the Compensation Committee meets the independence requirements of the New York Stock Exchange applicable to compensation committee members.

 

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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. The Compensation Committee uses an independent compensation consultant to assist the Compensation Committee in determining whether the elements of the Company’s executive compensation program are reasonable and consistent with the Company’s objectives. For more information, see “Compensation Discussion and Analysis.”

Compensation Committee Interlocks and Insider Participation

Messrs. Tese, Reifenheiser and Ryan served as the members of the Compensation Committee during 2013. None of them is a current or former officer or employee of the Company.

Executive Committee

Committee members: Messrs. James L. Dolan (Chairman) and Tese currently comprise the Executive Committee.

The Executive Committee has broad power to act on behalf of the Board. In practice, the Executive Committee typically acts on ordinary course matters that arise between Board meetings. The Executive Committee did not meet or take any actions in 2013.

Committee of Independent Directors to Review Related Party Transactions

In addition to standing committees, the Board also has a committee comprised exclusively of independent directors to review certain related party transactions in accordance with the Company’s Related Party Transaction Approval Policy. This Policy establishes an important independent oversight mechanism, which 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 the holders of Class B common stock.

The Related Party Transaction Approval Policy stipulates that a committee of independent Directors shall be formed to approve any transaction that meets the related party disclosure requirements of the Securities and Exchange Commission as set forth in Regulation S-K Item 404 (“Item 404”). This independent committee review and approval requirement applies to Company and subsidiary transactions 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. Similarly, the Related Party Transaction Approval Policy provides that an independent committee oversee approval of transactions and arrangements between Cablevision and its subsidiaries, including CSC Holdings, on the one hand, and The Madison Square Garden Company and its subsidiaries (“MSG”), or AMC Networks Inc. and its subsidiaries (“AMC”), on the other hand, to the extent involving amounts in excess of the dollar threshold set forth in Item 404. The SEC currently sets this threshold at $120,000.

For more information, see “Related Party Policy and Certain Transactions — Agreements Related to the MSG Distribution and AMC Distribution — Related Party Transaction Approval Policy.”

 

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Director Nominations

The Board has established a nomination mechanism in our Corporate Governance Guidelines. Nominees for election as Class A directors are recommended to the Board by a majority of the independent Class A directors then in office. Nominees for election as Class B directors are recommended to our Board by a majority of the Class B directors then in office. Our Certificate of Incorporation provides holders of the Company’s Class B common stock the right to elect up to 75% of the members of our Board and holders of Class A common stock the right to elect up to 25% of the members of our Board. We believe that creating a nominating committee responsible for recommending nominees for election as directors would be inconsistent with the vested rights of the holders of 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 our directors 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 businesses;

 

   

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

 

   

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

 

   

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

The Class A directors will evaluate possible candidates to recommend to the Board for nomination as Class A directors. The Board will also consider nominees for Class A directors recommended by our stockholders. Nominees recommended by stockholders will be 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 2015 annual meeting of stockholders may do so by submitting in writing such nominees’ names, in compliance with the procedures and along with the other information required by our by-laws. Any such nominee must be submitted to the Corporate Secretary of the Company, at Cablevision Systems Corporation, 1111 Stewart Avenue, Bethpage, New York 11714 not less than 60 nor more than 90 days prior to the date of our 2015 annual meeting of stockholders, provided that if the date of the meeting is publicly announced or disclosed less than 70 days prior to the date

 

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of the meeting, such notice must be given not more than ten days after such date is first announced or disclosed. See “Stockholder Proposals for 2015 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 the outstanding Class B common stock. The Class B directors do not intend to consider unsolicited suggestions of nominees. We believe that this is appropriate in light of the voting provisions of our Amended and Restated Certificate of Incorporation, which vest the right to elect the Company’s Class B directors exclusively in the holders of the Company’s Class B common stock.

Board Leadership Structure

Our Board of Directors has chosen to separate the roles of Chairman of the Board and Chief Executive Officer. The Board believes that this is the optimal leadership structure as it allows the Company to benefit from the services of its founder, Charles F. Dolan, particularly with respect to strategic planning, while also benefitting from the extensive experience of its Chief Executive Officer, James L. Dolan, who has served as the Company’s Chief Executive Officer for 19 years, with responsibility for day-to-day management of the Company.

Risk Oversight

The Company’s Board of Directors believes that 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 guidelines and policies governing 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. We believe that our 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 considers the issue of the Company’s exposure to risk in establishing and implementing our executive compensation programs.

Corporate Governance Guidelines

Our 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 Chairman of the Board and the 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 website at

 

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www.cablevision.com. A copy may be obtained, without charge, by writing to Cablevision Systems Corporation, Corporate Secretary, 1111 Stewart Avenue, Bethpage, New York 11714.

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 conduct 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 Board Members

Under our Corporate Governance Guidelines, our directors who are not also officers of the Company or any of its affiliates (“Non-management directors”) meet at least quarterly in executive sessions. If the Non-management directors include any directors who are not independent under the New York Stock Exchange rules, the independent directors are to meet in executive sessions at least semi-annually. The Non-management directors shall designate the director who will preside at each executive session. Only a Non-management director who is also independent under the New York Stock Exchange Rules will preside at an executive session of the independent directors. Non-management directors who are family members of executive officers do not participate in the Non-management director meetings.

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 with the Board or any director or the Non-management directors as a group should send communications in writing to Chairman of the Audit Committee, Cablevision Systems Corporation, c/o Corporate Secretary, 1111 Stewart Avenue, Bethpage, New York 11714. Any person, whether or not an employee, who has a concern with respect to accounting, internal accounting controls or auditing 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 this purpose, at 1-888-310-6742. This information for communicating with the Audit Committee and Non-management directors is also available on our website at www.cablevision.com.

Code of Business Conduct and Ethics

Our Board has adopted a Code of Business Conduct and Ethics for our directors, officers and employees. A portion of this Code of Business Conduct and Ethics also serves as a code of ethics for our senior financial officers. Among other things, our Code of Business Conduct and

 

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Ethics covers conflicts of interest, disclosure responsibilities, legal compliance, confidentiality, corporate opportunities, fair dealing, protection and proper use of assets, and equal employment opportunity and harassment. The full text of the code is available on our website at www.cablevision.com. A copy may be obtained, without charge, by writing to Cablevision Systems Corporation, Corporate Secretary, 1111 Stewart Avenue, Bethpage, New York 11714.

DIRECTOR COMPENSATION

Directors who are Company employees receive no extra compensation for serving as directors. Non-employee directors receive annual compensation in the form of cash and restricted stock units.

Each non-employee director receives a base fee of $60,000 per year, $2,000 per Board, committee and non-management director meeting attended in person, and $500 per Board, committee and non-management director meeting attended by telephone. Non-employee directors also receive $7,500 annually per committee membership and $15,000 annually per committee chairmanship.

Each year, each non-employee director receives a grant of restricted stock units with a value equal to $110,000, based on the closing price of Class A common stock on the New York Stock Exchange on the date of grant. The restricted stock units are fully vested on the date of grant, and cannot be sold during the duration of, and for 90 days after termination of, board service. The shares of Class A common stock represented by the restricted stock units are delivered to the non-employee directors 90 days after the end of their service on the Board. As a result, each of our directors effectively maintains stock ownership in the Company.

Directors who reside in our service territory are entitled to receive free cable television, high-speed-data and voice services for their primary residence.

Our non-employee directors are entitled to use the Company’s travel service department from time to time to make arrangements for their personal travel. Except as noted below, the Company does not pay any of the directors’ travel expenses other than the cost of travel on Company business. The Company believes it is beneficial to the Company for directors to participate in certain Company events and meet with management, customers and other individuals who have important relationships with the Company. Accordingly, from time to time the Company requests that certain directors attend events, including events outside the New York area. In these instances, the Company provides the directors with transportation and reimburses the directors for expenses for themselves and, in certain cases, their spouses.

Charles F. Dolan and James L. Dolan are employees of the Company and their compensation for 2013 is discussed under “Executive Compensation.”

Edward C. Atwood, Kristin A. Dolan, Patrick F. Dolan, Thomas C. Dolan and Brian G. Sweeney are employees of the Company and their compensation for 2013 is discussed under “Related Party Policy and Certain Transactions.”

 

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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 for the year ended December 31, 2013. Directors who are employees of the Company receive no compensation for service as directors.

 

Name   Fees Earned
Or Paid in
Cash
($)(1)
    Stock
Awards
($)(2)
    Option
Awards
($)(3)
    Non-Equity
Incentive Plan
Compensation
($)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
    All Other
Compensation
($)(4)
    Total
($)
 

Zachary W. Carter(5)

    72,500        110,000                             *        191,349   

Thomas V. Reifenheiser

    102,000        110,000                             *        220,922   

John R. Ryan

    138,534        110,000                                    248,534   

Vincent Tese

    113,625        110,000                             10,055        233,680   

Leonard Tow

    82,000        110,000                             *        201,887   

Rand V. Araskog

    70,168        110,000                             *        187,602   

Frank J. Biondi

    75,370        110,000                                    185,370   

Kathleen M. Dolan

    63,000        110,000                                    173,000   

Deborah Dolan-Sweeney

    67,500        110,000                             *        186,504   

Marianne Dolan Weber

    67,500        110,000                             *        186,180   

 

* Represents less than $10,000.

 

(1) The amounts reported for fees include expenses incurred in attending meetings for which the Company reimburses each non-employee director.

 

(2) This column reflects the aggregate grant date fair value of the 7,120 restricted stock units granted in 2013 to each non-employee director, as calculated under Accounting Standards Codification (“ASC”) Topic 718. For each non-employee director, the aggregate number of restricted stock units outstanding at December 31, 2013 is as follows: Mr. Carter, 38,041; Mr. Reifenheiser, 45,353; Mr. Ryan, 45,353; Mr. Tese, 45,353; Dr. Tow, 41,604; Mr. Araskog, 41,604; Mr. Biondi, 41,604; Ms. Dolan, 34,966; Ms. Dolan-Sweeney, 30,734; and Ms. Dolan Weber, 41,604.

 

(3) No stock options were granted in 2013. Prior to 2007, stock options were granted to non-employee directors.

For each non-employee director, the aggregate number of shares of Class A common stock underlying outstanding stock options held at December 31, 2013 is as follows: Mr. Carter, 0; Mr. Reifenheiser, 8,000; Mr. Ryan, 12,000; Mr. Tese, 12,000; Dr. Tow, 8,000; Mr. Araskog, 0; Mr. Biondi, 8,000; Ms. Dolan, 0; Ms. Dolan-Sweeney, 0; and Ms. Dolan Weber, 8,000.

 

(4) This column includes, for each individual, as applicable, an amount for free cable television, high-speed data and voice services.

 

(5) Mr. Carter resigned from the Board effective January 7, 2014.

 

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PROPOSAL 2

Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee of the Board has approved the retention of KPMG LLP (“KPMG”) as our independent registered public accountants for 2014. KPMG will audit our financial statements for fiscal year 2014. We are asking that you ratify that appointment, although your ratification is not required. A KPMG representative will be at the annual meeting to answer appropriate questions and to make a statement if he or she desires. This proposal requires the affirmative 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 have one vote per share and holders of Class B common stock have ten votes per share.

The Board recommends you vote FOR this proposal.

KPMG LLP Information

The following table presents fees for services rendered by KPMG in 2012 and 2013.

 

      2012      2013  
     (in thousands)  

Audit Fees(1)

   $ 4,099       $ 3,950   

Audit Related Fees(2)

     643         703   

Tax Fees(3)

     38         56   

All Other Fees (4)

     564         940   
  

 

 

    

 

 

 

Total Fees

   $ 5,344       $ 5,649   
  

 

 

    

 

 

 

 

(1) Audit fees consisted of services for: (1) the audit of the Company’s annual financial statements, (2) audits of internal control over financial reporting, (3) reviews of the interim financial statements included in the Company’s Quarterly Reports on Form 10-Q, and (4) XBRL-related agreed-upon procedures related to the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.

 

(2) Audit related fees consisted principally of services relating to regulatory requirements of certain subsidiaries, audits of employee benefit plans, agreed upon procedures or expanded audit procedures to comply with contractual agreements and filings with the Securities and Exchange Commission.

 

(3) Tax fees consisted of fees for tax consultation services.

 

(4) This fee category consists of fees billed for services other than the services reported in other categories, and consists of fees for permissible advisory services not related to the audit.

The Audit Committee’s 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 or any other member of the Audit Committee. All of the services for which fees were disclosed in the table above were pre-approved under the Audit Committee’s pre-approval policy.

 

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REPORT OF AUDIT COMMITTEE

In accordance with its charter, the Audit Committee assists the Board in its oversight of the Company’s financial reporting process. Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm (the “independent auditor”) is responsible for auditing the Company’s annual financial statements and expressing opinions as to the conformity of the annual financial statements with generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting.

As part of its oversight activities during 2013, the Audit Committee discussed with the independent auditor the overall scope and plans for their audit and approved the terms of their engagement letter. The Audit Committee also reviewed the Company’s internal audit plan. The Audit Committee met with the independent auditors and with the Company’s internal auditors, in each case with and without other members of management present, to discuss the results of their respective examinations, their evaluations of the Company’s internal controls and the overall quality and integrity of the Company’s financial reporting. Additionally, the Audit Committee reviewed the performance, responsibilities, budget and staffing of the Company’s internal auditors. Further, the Audit Committee monitored the Company’s response to matters raised through the confidential hotline and also discussed with management the processes by which the Company assesses and manages exposure to risks.

In the performance of its oversight function, the Audit Committee reviewed and discussed with management and the independent auditor the audited financial statements for the year ended December 31, 2013 and the independent auditor’s evaluation of the Company’s internal control over financial reporting. The Audit Committee discussed with the independent auditor the matters required to be discussed pursuant to Public Company Accounting Oversight Board Auditing Standard No. 16 (Communications with Audit Committees). The Audit Committee received the written disclosures and the letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee regarding independence, and the Audit Committee discussed with the independent auditor that firm’s independence. All audit and non-audit services performed by the independent auditor were approved in accordance with the Audit Committee’s pre-approval policy, and the Audit Committee has concluded that the provision of such services to the Company is compatible with the independent auditor’s independence.

Based upon the review and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements for the year ended December 31, 2013 be included in the Company’s Annual Report on Form 10-K for 2013 filed with the Securities and Exchange Commission.

 

Members of the Audit Committee

John R. Ryan (Chairperson)

   Vincent Tese    Leonard Tow

 

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

Cablevision is a leading telecommunications and media company with a portfolio of operations that includes a full suite of advanced digital television, voice and high-speed Internet services and valuable local media and local programming properties.

We operate our businesses in an increasingly competitive, highly regulated, rapidly changing and complex technological environment and continue to lead the industry with the highest penetration rates across our three primary products of any major provider of similar services.

We strive to remain competitive by developing new and advanced products and services and continue to balance investments in our products and network with our overall financial objectives. This includes returning capital to stockholders, which in 2013 took the form of quarterly dividends. Our capital allocation strategy is designed to enhance long-term value for the Company and our stockholders.

Cablevision places great importance on its ability to attract, retain, motivate and reward experienced executives who can continue to help the Company achieve strong financial, operational and stock performance. We strive 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 seeks to offer both short-term and long-term incentive compensation programs that will provide competitive compensation, drive performance and encourage executive retention. The following principles describe the key objectives of our executive compensation program:

 

   

First, the majority of compensation for the Company’s executive officers should be at risk and based on the performance of the Company, so that compensation depends on the Company’s actual performance;

 

   

Second, over time, incentive compensation of the Company’s executive officers should focus more heavily on long-term rather than short-term accomplishments and results;

 

   

Third, equity-based compensation should be used to align executive officers’ interests with the stockholders’ interests; and

 

   

Fourth, 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

 

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the talented executives who are essential to the Company’s continuing success. Total direct compensation, rather than individual compensation elements, is the Compensation Committee’s focus in providing competitive compensation opportunities.

In formulating the executive compensation program, the Compensation Committee seeks to fulfill these objectives by maintaining appropriate balances between (1) short-term and long-term compensation, (2) cash and equity compensation, and (3) performance-based and non-performance-based compensation.

The five of our six executive officers who remain employed by the Company have a combined total of more than 100 years of service in the cable and telecommunications industries with the Company and other related companies and industries.

To the extent that we do not achieve our annual or long-term performance targets, our compensation program is designed to reduce the amount of total compensation received by our executive officers. In both 2012 and 2013, no payments were made pursuant to awards granted under our long-term cash performance plan awards due primarily to the Company’s decision to make significant investments in our products and services, with a focus on retention and acquisition of customers. Such investments had not been contemplated when the plan targets were set. For the four years prior to that the cash performance awards paid out at less than 100% of target.

Elements of Compensation. The table below summarizes the current elements of our compensation program and how each element supports the Company’s compensation objectives:

 

Compensation

Element

  Description   At-Risk   Long Term   Stockholder
Alignment
  Talent
Focus
 

Base Salary

 

•   Fixed level of compensation

          X   
   
   

•   Determined within a competitive range established through peer benchmarking

                   
   
Annual Performance Bonus Award  

•   Performance-based cash incentive opportunity

  X     X     X   
   
   

•   Based on Company and individual performance

                   
   
Long-Term Cash Performance Awards  

•   Performance plan based solely on quantitative metrics;

  X   X   X     X   
   
   

•   Awards vest three years from date of grant

                   
   

Stock Options

 

•   Variable pay based on increases in our stock price over time

  X   X   X     X   
   

Restricted Stock

 

•   Awards of restricted stock that vest three years from date of grant

  X   X   X     X   
   

Retirement Plans

 

•   Cablevision 401(k) Savings Plan

          X   
   
   

•   Cablevision Excess Savings Plan

                   

 

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Engaging with Stockholders

The Company regularly engages with stockholders, including through its investor relations program and through meetings and calls with major stockholders on various matters, including corporate governance and executive compensation. We increased the frequency of certain of these engagements in 2013 and 2014. As part of this overall effort, during the last twelve months the Company had discussions with holders of more than 50% of Class A common stock.

Role of Compensation Committee

Our executive compensation program is administered by our Compensation Committee. The responsibilities of the Compensation Committee are set forth in its charter. Among other responsibilities, the Compensation Committee (1) establishes our general compensation philosophy and, in consultation with management, oversees the development and implementation of compensation programs; (2) reviews and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and the other executive officers of the Company who are required to file reports under Section 16(a) of the Securities Exchange Act of 1934, evaluates such executive officers’ performance in light of those goals and objectives and determines and approves their compensation levels based upon those evaluations; and (3) oversees the activities of the committee or committees administering our retirement plans. The Compensation Committee also administers our stockholder approved compensation plans. For more information about the Compensation Committee, please see “Board of Directors and Committees — Committees — Compensation Committee.”

Role of 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. The Compensation Committee uses a compensation consultant to assist the Compensation Committee in determining whether the elements of the Company’s executive compensation program are reasonable and consistent with the Company’s objectives. The compensation consultant advises the Compensation Committee on designing the executive compensation program and the reasonableness of individual compensation awards. The compensation consultant reports directly to the Compensation Committee, although the compensation consultant meets with members of management from time to time for purposes of gathering information on management proposals and recommendations to be presented to the Compensation Committee.

As part of its ongoing engagement, the Compensation Committee’s compensation consultant, Pay Governance LLC (“Pay Governance”), conducted a review of executive compensation to assist the Compensation Committee in determining compensation programs and decisions for 2013. The Compensation Committee has retained Pay Governance to assist in designing and establishing the Company’s executive compensation programs for 2014.

Role of Executives in Compensation Decisions

The Compensation Committee reviews the performance and compensation of the Chief Executive Officer and the Chairman and, following discussions with its compensation

 

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consultant, establishes each of their compensation. The management of the Company provides to the Compensation Committee, either directly or through the compensation consultant, management’s recommendations on the compensation, including annual cash incentive compensation, for executive officers other than the Chief Executive Officer and the Chairman. The Chief Executive Officer and the Chief Financial Officer assist the Compensation Committee and its compensation consultant in determining the Company’s core peer group and the peer group comparisons, as described below. Other members of management provide support to the Compensation Committee as needed. Based upon a review of performance and historical compensation, recommendations and information from members of management, and discussions with its compensation consultant, the Compensation Committee determines and approves compensation for the executive officers.

Compensation Practices and Policies

Employment Agreements

We have written employment agreements with certain named executive officers. In April 2014, we entered into a letter agreement with Mr. James L. Dolan which amended his prior employment agreement to remove his right to terminate his employment for any reason and receive a severance payment during the 13th month after a Change in Control (as defined in the agreement). In addition, in April 2014, we entered into a letter agreement with Mr. David G. Ellen which amended his prior employment agreement to extend the scheduled expiration date by two years, to December 31, 2018. For a description of the terms and provisions of the employment agreements, see “Executive Compensation Tables — Employment Agreements”.

Performance Objectives

As described below under “— Elements of In-Service Compensation”, the Company grants performance-based cash incentives as important elements of executive compensation.

Generally, the performance metrics for the incentives have been based on net revenues and on adjusted operating cash flow, which we also refer to as “AOCF”, a non-GAAP financial measure, defined as operating income (loss) before depreciation and amortization (including impairments), excluding stock based compensation expense or benefit and restructuring expense or credits. The Company considers these performance measures to be key measures of the Company’s operating performance. At the time of the grant of an award, the performance measures used may contemplate certain potential future adjustments and exclusions.

Tally Sheets

The Compensation Committee has reviewed tally sheets setting forth all components of compensation payable, and the benefits accruing, to the named executive officers for the completed fiscal year, including all cash compensation, perquisites and the current value of outstanding equity-based awards. The tally sheets also set forth potential payouts to the named

 

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executive officers upon various types of termination. The Compensation Committee considers the information presented in tally sheets in determining future compensation.

Benchmarking

The Compensation Committee reviewed and compared compensation from a core peer group of companies in the same general industry or industries as the Company as well as companies of similar size and business mix to evaluate the competitiveness and appropriateness of our compensation program. The Compensation Committee, with the assistance of its compensation consultant, selected the companies that would comprise the core peer group in 2013, which were Comcast Corporation, DIRECTV Group, Inc., Time Warner Cable Inc., Viacom Inc., CBS Corporation, CenturyLink, Inc., DISH Network Corporation, Liberty Media Corporation, Frontier Communications Corporation, Level 3 Communications, Inc., Windstream Corporation and Charter Communications, Inc. Because we also compete for executives with more diversified companies, the Compensation Committee also considered a supplemental reference group that included AT&T Inc., Verizon Communications Inc., Time Warner Inc., The Walt Disney Company, Sprint Nextel Corporation and News Corporation. The Compensation Committee determined that the core peer group represented an appropriate benchmark for the competitive market for our senior executive talent in 2013, based on our business operations and competitive labor markets, and the supplemental reference group provided an additional relevant point of reference. The core peer group is a broader group of companies than the companies included in the peer group for the stock performance graph contained in our Annual Report on Form 10-K.

The Compensation Committee’s compensation consultant presented to the Compensation Committee a comparison of base salary, target bonus, total cash compensation (defined as base salary plus target bonus), long-term incentives and total direct compensation (defined as total cash compensation plus the annualized value of long-term incentives) with the median, 75th percentile and 90th percentile of the core peer group and also compared compensation levels with the supplemental reference group. As part of the total compensation review, the Compensation Committee’s compensation consultant assisted the Compensation Committee in (1) determining the peer group to be used for competitive comparisons, (2) assessing executive compensation in comparison with the 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. In the analysis, it was noted that, as in prior years, there was limited market information regarding the role and compensation of chairmen who are executive officers but not chief executive officers. The Compensation Committee considered that the Company’s founder and Chairman, Mr. Charles F. Dolan, continues to play a unique and important role in setting the strategic direction of the Company, in addition to his role on the Board. The Compensation Committee determined to exclude Mr. Charles F. Dolan from these comparisons with officers of the members of the core peer group. The Compensation Committee concluded that as a result of Mr. Dolan’s important role in setting the strategic direction of the Company, an appropriate general guideline for Mr. Dolan’s target total direct compensation for 2013 was slightly below the target total direct compensation of the Chief Executive Officer of the Company.

 

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The Compensation Committee also received information from its compensation consultant concerning comparisons of compensation levels for the other named executive officers to comparable positions among the peer companies. Compensation of the Company’s Chief Executive Officer, Mr. James L. Dolan, was compared to chief executive officers at the peer group companies. Mr. Gregg G. Seibert, Vice Chairman and Chief Financial Officer of the Company, was compared to chief financial officers at the peer group companies. Mr. David G. Ellen, Executive Vice President, General Counsel and Secretary of the Company was compared to chief legal officers at the peer group companies. Compensation of Mr. Kevin F. Watson, Senior Vice President and Treasurer of the Company, was compared to treasurers at the peer group companies. Compensation of Ms. Victoria D. Salhus, the former Senior Vice President, Deputy General Counsel and Secretary of the Company, was compared to deputy chief legal officers at the peer group companies.

The Compensation Committee also took into account the responsibilities of Mr. Charles F. Dolan with AMC following the AMC Distribution and Mr. James L. Dolan with MSG following the MSG Distribution.

Based on the total compensation review, the Compensation Committee set a general guideline for target total direct compensation based on a combination of internal and market considerations. Internal factors include experience, skills, position, level of responsibility, historic and current compensation levels, internal relationship of compensation levels between executives, as well as attraction and retention of executive talent. Market considerations include referencing market pay levels and pay practices among a peer group of companies with a reference to the third quartile of the core peer group. The Compensation Committee’s decisions are based upon a combination of these considerations and may exceed or fall below the third quartile of the core peer group. The Compensation Committee believed that this range was appropriate in light of the dynamics, diversity, complexities and competitive nature of the Company’s businesses as well as the Company’s performance. The Compensation Committee believed that the guideline for target total direct compensation provided a useful point of reference, along with the other factors described above, in administering the Company’s executive compensation program.

Say on Pay

In accordance with the advisory vote on the frequency of the stockholder advisory vote on executive compensation submitted to stockholders at the Company’s 2011 annual meeting, the Company will hold a stockholder advisory vote on executive compensation every three years. The first executive compensation advisory vote was held at the Company’s 2011 annual meeting of stockholders, at which more than 90% of the votes of holders of Class A common stock and Class B common stock, voting together as a single class, approved the advisory vote on the compensation of executive officers. More than a majority of the votes of holders of Class A common stock were cast to approve the advisory vote on the compensation of executive officers. The Compensation Committee considered the affirmative outcome of this vote for compensation and has continued to apply the same principles when making compensation decisions for our named executive officers.

 

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The next executive compensation advisory vote will be held at this year’s annual meeting of stockholders. See “Proposal 4 — Non-Binding Advisory Vote to Approve Executive Compensation” for further information.

Elements of In-Service Compensation

Our executive compensation program consists of three principal elements, each of which is important to the Company’s desire to attract, retain, motivate and reward highly-qualified executives. The three principal compensation elements are base salary, annual cash incentives and long-term incentives (including equity grants and cash performance grants). In addition, each executive officer is also eligible to receive certain benefits, which are generally provided to all other eligible employees, and certain perquisites described below.

A significant percentage of total direct compensation is allocated to incentive compensation in accordance with the Compensation Committee’s philosophy as described above. The Compensation Committee reviews historical Company compensation and other information provided by its compensation consultant and other factors such as experience, performance and length of service to determine the appropriate level and mix of compensation for executive officers, by position and grade level.

Base Salaries

The Compensation Committee is responsible for setting the base salaries of the named executive officers. Base salaries for these executives have been set at levels that are intended to reflect the competitive marketplace in attracting and retaining quality executives. The employment agreements of each of the named executive officers who have employment agreements contains a minimum base salary level. For information regarding these minimum base salary levels, please see “— Employment Agreements” below. The Compensation Committee currently reviews the salaries of the named executive officers no less frequently than on an annual basis. The Compensation Committee evaluates each executive’s performance, experience and grade level and may increase executive salaries. Based on their performance and in accordance with the terms of the employment agreements, the Compensation Committee, in its discretion, has increased base salaries for the named executive officers over time. Based on evaluation of performance, experience and the competitive marketplace, the Compensation Committee reviewed the base salaries of the named executive officers in 2013 and increased the base salaries in 2013 of Mr. James L. Dolan by $250,000, of Mr. Gregg G. Seibert by $375,000, of Mr. David G. Ellen by $350,000, of Mr. Kevin F. Watson by $161,000 and of Ms. Victoria D. Salhus by $45,000. The base salaries for the named executive officers in 2013 are set forth in the Summary Compensation Table under “Executive Compensation Tables” below.

Annual Incentives

Under our executive compensation program, annual incentive awards, or bonuses, are made to executive officers and other members of management. For the named executive officers and

 

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other individuals that the Compensation Committee determines may be covered by Section 162(m) of the Internal Revenue Code, as amended, 2013 bonuses were granted under the 2011 Cash Incentive Plan (“CIP”), a stockholder approved plan. For all other members of management, bonuses were granted under a management performance incentive program (“MPIP”) administered by the Compensation Committee.

Annual incentive awards are designed to link directly executive compensation to the Company’s performance and provide incentives and rewards for excellent business performance during the year. Each bonus-eligible employee is assigned a target bonus of a percentage of that employee’s annual base salary. The target bonuses are determined based upon the applicable employee’s position, grade level, responsibilities, and historical and expected future contributions to the Company. In addition, the employment agreement of each named executive officer who has an employment agreement, other than Mr. Charles F. Dolan, contains a minimum target bonus level. For information regarding these minimum target bonus levels, please see “— Employment Agreements” below. The Compensation Committee currently reviews the target bonus levels of the named executive officers no less frequently than on an annual basis. The Compensation Committee evaluates each executive’s performance, experience and grade level and may adjust executive target bonus levels accordingly. Based on their performance and in accordance with the terms of the employment agreements, the Compensation Committee, in its discretion, has increased target bonus levels for the named executive officers over time. Target bonuses for 2013 were as follows: Mr. Charles F. Dolan — 175%; Mr. James L. Dolan — 200%; Mr. Seibert — 200%; Mr. Ellen — 150%; Mr. Watson — 60%; and Ms. Salhus — 75%.

The payment of annual incentive awards depends on the extent to which the Company achieves performance objectives established by the Compensation Committee. For 2013, under the CIP, if the Company achieved a certain target net revenue to budget, each named executive officer would be eligible to receive payment of an annual incentive award equal to the lesser of $10 million and two times his target bonus, subject to the Compensation Committee’s discretion to reduce the award. In general, under the CIP, regardless of whether the Company achieves, exceeds or fails to achieve its target metrics, the Compensation Committee has the discretion only to decrease bonuses if the Company wishes to preserve the Section 162(m) deduction. For 2013, the performance target for the named executive officers was at least 90% of the Company’s 2013 budgeted net revenue. As the Company’s net revenue for the period was in excess of 90% of the Company’s budgeted net revenue, the performance target was met. The Compensation Committee elected to exercise its negative discretion and to reduce the incentive award payments to the levels that the named executive officers would have received if they had been participants in the MPIP. The Compensation Committee established MPIP performance metrics that varied depending upon the eligible employee’s specific business unit. These performance objectives related to items such as net revenues, AOCF, subscribers, advertising revenue, capital expenditures and other division-specific strategic and operating metrics. For executive officers and other individuals who hold corporate positions at the Company, the MPIP metrics were predominantly based on a

 

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weighted average of the comparisons of all of the business units’ performances against their respective performance objectives. In determining to use the MPIP payouts for the bonuses payable to the named executive officers, the Compensation Committee used this weighted average. Bonuses awarded under the MPIP may also be adjusted for recipients’ individual performances. To the extent the Company exceeds the MPIP performance metrics, employees may receive payments greater than their target bonuses.

As part of the process for determining executive compensation in 2013, the Compensation Committee reviewed the payouts that the named executive officers were expected to receive in 2013 for performance awards granted in prior years, as well as each executive officer’s performance, experience and grade level.

Long-Term Incentives

Our executive compensation program is designed to achieve the objectives described above under “Executive Compensation Program Objectives and Philosophy”. Except as noted below, our core long-term incentive program in 2013 for all executives consisted of two elements: restricted stock and cash performance awards. These long-term incentives were awarded to members of management based upon each individual’s grade level and, except for Mr. James L. Dolan, provided approximately 50% of the value of their long-term incentive awards in restricted stock and approximately 50% of the value of their long-term incentive award as cash performance awards. Pursuant to his employment agreement, Mr. James L. Dolan’s long-term incentive award consisted of stock options and cash performance awards, as described in more detail below under “Employment Agreements.” We believe restricted stock (and, stock options, in the case of Mr. James L. Dolan) provides the named executive officers with an incentive to improve the Company’s stock price performance and a direct alignment with stockholders’ interests, as well as a continuing stake in the long-term success of the Company. The cash performance awards also provide strong incentives for the executives to help the Company achieve specific long-term financial objectives. In addition, because these equity and cash awards would vest over time, we believe these awards provide strong incentives for the executives to remain with the Company.

Grants of long-term incentives are made under our 2006 Employee Stock Plan, which was originally approved by stockholders at our annual meeting in May 2006 and was amended and restated and approved by our stockholders in May 2009. Subject to approval by our stockholders as described below under “Proposal 3 — Approval of Cablevision Systems Corporation Amended and Restated 2006 Employee Stock Plan”, future equity incentive awards will continue to be granted under that plan. Cash awards have been made under our 2011 Cash Incentive Plan which was approved by stockholders in May 2011 and will be used for future cash performance awards.

Our goal is to make annual grants of the elements of our long-term incentive program to eligible employees after the public announcement of our annual financial information.

 

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Restricted stock (and stock options for Mr. James L. Dolan) and cash performance awards were granted in March 2013. The current executive compensation program annual long-term incentives generally were granted in March 2014, with any grants for new eligible employees hired after annual grants, but prior to October 1 of each year, generally made in October.

Restricted Stock

Under our executive compensation program, annual grants of restricted stock are made to executive officers and other members of management. An award of restricted stock provides the recipient with a specified number of shares of Class A common stock as long as the recipient remains employed by the Company through the date that the restrictions lapse. Under the current executive compensation program, restricted stock awards will vest in their entirety on the third anniversary of the date of grant (i.e., three-year cliff vesting) as long as the recipient is continuously employed until such date. Information regarding restricted stock awards for the named executive officers in 2013 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 restricted stock grants for the named executive officers appears in the Outstanding Equity Awards at Fiscal Year-End Table under “Executive Compensation Tables” below. Vesting of restricted stock awards granted in March 2013 to Messrs. Charles F. Dolan, Gregg G. Seibert, David G. Ellen and Ms. Victoria D. Salhus was also subject to the Company achieving a performance condition designed to achieve tax deductibility under Section 162(m) of the Internal Revenue Code. The performance condition requires the Company to achieve growth in net revenue (relative to 2012) in fiscal years 2014 or 2015.

Performance Awards

The current executive compensation program contemplates annual grants of three-year performance awards to executive officers and other members of management to be earned on the basis of long-term performance relative to pre-established financial goals. Each recipient will be eligible to receive a specified dollar amount, depending on the employee’s grade level, to the extent that the performance objectives are achieved. The performance awards granted in 2013 will be payable in 2016 if the Company achieves specified targets of net revenues and AOCF in fiscal years 2014 and 2015, calculated on a cumulative basis. The target levels of net revenues and AOCF were derived from the Company’s long-term plan for its operating business units. These targets were intended to measure ongoing operating performance of the Company and are subject to various adjustments such as for acquisitions and dispositions and investments in new business initiatives and exclude all charges for long-term performance based compensation. In determining achievement of the 2013 performance awards, net revenues are weighted at 40% and AOCF at 60%. The awards provide for a potential payout on a sliding scale such that the actual payment may range from zero (if cumulative business unit net revenues and AOCF fail to reach at least 97% of the targets) to 150% (if, for example, cumulative business unit net revenues and AOCF equal or exceed 105% or 106%, respectively, of the targets). If the Company does not achieve threshold levels of performance,

 

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the award does not provide for any payment. If the Company exceeds threshold levels but does not achieve the targeted rates, or if the Company achieves one target but not both, the award provides for partial payments.

Because the targets for all performance awards have been derived from the Company’s confidential long-term strategic plans, which are not disclosed publicly for competitive reasons, we do not believe it is appropriate to disclose specific future numerical targets. Disclosure of these targets could provide information that could lead to competitive harm. We believe that our long-term plans, and consequently the targets set for the performance awards, are ambitious and reflect desired performance. In determining the threshold levels of performance, the Compensation Committee considered, among other factors, the Company’s long-term plan and the degree of difficulty in achieving the targets, including a comparison of the long-term plan with analysts’ published projections of our growth as well as of some of our competitors. The 2013 performance award included a sliding scale of payouts based upon the levels of cumulative net revenues and AOCF.

Based on the experience and grade level of the named executive officers in 2013, the Compensation Committee granted Messrs. Charles F. Dolan, Gregg G. Seibert, David G. Ellen, Kevin F. Watson and Ms. Victoria D. Salhus performance awards with targeted amounts of $3,725,000, $3,000,000, $1,500,000, $250,000 and $375,000, respectively. Based on his experience and grade level, and on the terms of his employment agreement, the Compensation Committee granted Mr. James L. Dolan a performance award with a targeted amount of $4,086,000. Performance awards for the named executive officers granted in 2013 are set forth in the Grants of Plan-Based Awards Table under “Executive Compensation Tables” below.

As noted above, Company performance awards granted in 2010 and 2011 did not pay out any amounts on vesting. Potential payouts under the 2010 awards were based on incremental net revenues and AOCF from 2009 to 2012, and potential payouts under the 2011 awards were based on incremental net revenues, AOCF and AOCF less capital expenditures from 2010 to 2013, in each case, calculated exclusive of certain corporate expenses and subject to certain adjustments to reflect changes in the Company’s business and other factors over the course of the award measurement period, including to account for acquisitions of or investments in new businesses, dispositions or discontinuation of businesses (including the MSG and AMC Distributions) and changes in the application of GAAP. We refer to incremental net revenue, incremental AOCF and incremental AOCF less capital expenditures, as so adjusted for purposes of performance awards, as “Award-Adjusted Incremental Net Revenue”, “Award-Adjusted Incremental AOCF” and “Award-Adjusted Incremental AOCF Less Capital Expenditures.” The target Award-Adjusted Incremental Net Revenue was $848 million for the 2010 award and $932 million for the 2011 award, the target Award-Adjusted Incremental AOCF was $244 million for the 2010 award and $339 million for the 2011 award and the target Award-Adjusted Incremental AOCF Less Capital Expenditures for the 2011 award was $516 million.

 

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Under the sliding-scale payout formula described above, the minimum payout thresholds were not reached for either the 2010 or 2011 awards.

Stock Options

In 2012, we made a special grant of stock options to certain officers and employees of the Company, including the named executive officers. This grant was approved by the Compensation Committee in light of the expectation of Company management that the three-year cash performance awards granted in 2010 and 2011 would not pay out any amounts, due to the Company’s decision in 2012 to make significant investments and take other steps designed to enhance our products and services, with a focus on retention and acquisition of customers. Such actions, which adversely affected revenues and AOCF, were not contemplated at the time the performance targets for the 2010 and 2011 cash performance awards were established. As noted above, these awards in fact did not pay out any amounts upon vesting.

Each stock option granted in 2012 was granted with an exercise price equal to the closing price of the Class A common stock on the date of grant. The stock options granted in 2012 vested over two years in 50% annual increments, based on the achievement of a pre-established net revenue performance goal and the executive’s continued employment through such vesting date, and expire ten years from the grant date. The performance goal was the achievement in 2012 of net revenue of at least 90% of the Company’s budgeted net revenue for 2012 of $6.88 billion, subject to certain adjustments to reflect changes in the Company’s business over the course of 2012, including to account for acquisitions of or investments in new businesses, dispositions or discontinuations of businesses, and changes in the application of GAAP (“Award-Adjusted Net Revenue”). In 2013, the Compensation Committee certified that Award-Adjusted Net Revenue for 2012 was $6.77 billion, and that the performance goal had been achieved. The options are now fully vested. More information regarding other stock option grants to the named executive officers appears in the Outstanding Equity Awards at Fiscal Year-End Table under “Executive Compensation Tables” below.

In 2013, Mr. James L. Dolan was granted 2,000,000 stock options in accordance with the terms of the letter agreement amending his employment agreement. The options granted to Mr. Dolan were granted with an exercise price equal to the closing price of the Class A common stock on the date of grant. Mr. Dolan will only realize value if, and to the extent that the price of Class A common stock on the date the stock option is exercised exceeds the exercise price (as adjusted in accordance with its terms). The stock options granted to Mr. Dolan in 2013 vest on the third anniversary of the grant date and expire ten years from the grant date.

In compliance with NYSE regulations, options granted by the Company may not be repriced without stockholder consent.

 

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Benefits

Benefits offered to executive officers generally provide for retirement income and serve as a safety net against hardships that can arise from illness, disability or death. The executive officers are eligible to participate in the same health and welfare benefit plans made available to the other benefits-eligible employees of the Company, including, for example, medical, dental, vision, life insurance and disability coverage. In addition to the standard life insurance available to all employees (based on a multiple of base salary, up to a $4,000,000 cap on the total amount of life insurance), the Company purchased whole life insurance policies for certain current and former senior executives of the Company, including Messrs. Charles F. Dolan and James L. Dolan. 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 death benefit provided under previous policies. As of each respective policy’s 2013 anniversary date, the policies provided estimated death benefits for these executives in the following amounts: Charles F. Dolan — $3,505,199 and James L. Dolan — $1,834,220. Based on current projections, the Company believes the policies are fully funded and the Company does not anticipate the need to make any additional premium payments. The expected death benefits are expected to grow over time to the extent that the dividends payable on the policy values exceed the premiums required to fund the death benefit. Information regarding premiums paid by the Company with respect to each of the executive officers is set forth in the Summary Compensation Table under “Executive Compensation Tables” below.

Defined Benefit Plans

The Company maintains the Cablevision Cash Balance Pension Plan, a tax-qualified defined benefit plan, for participating employees, including executive officers. Under the Company’s Excess Cash Balance Plan, a non-qualified deferred compensation plan, the Company provides additional benefits to employees who are restricted by the applicable Internal Revenue Service (“IRS”) annual compensation limitation. Effective December 31, 2013, the Cash Balance Pension Plan and Excess Cash Balance Plan were amended to freeze participation and future benefit accruals under those plans for all Company employees except those covered by a collective bargaining relationship in Brooklyn. Therefore, no future pay credits will be made under these plans after 2013 except for employees covered by such collective bargaining relationship. Monthly interest credits will continue to be made to participant accounts until distribution of the accounts following termination of employment. The Company’s Nonqualified Supplemental Benefit Plan provides actuarially determined pension benefits for certain employees of the Company or its subsidiaries and affiliates who were previously employed by CSSC, L.L.C., which is wholly owned by Charles F. Dolan and his spouse. There are only two remaining active employees of the Company who accrue benefits under this plan, only one of whom is a named executive officer, Charles F. Dolan.

 

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More information regarding the Cash Balance Pension Plan, the Excess Cash Balance Plan and the Nonqualified Supplemental Benefit Plan is provided with the Pension Benefits Table under “Executive Compensation Tables” below.

Defined Contribution Plans

Under the Cablevision 401(k) Savings Plan (the “401(k) Plan”), a tax-qualified retirement savings 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. Historically, the Company has matched 50% of the first 6% of eligible pay contributed by participating employees. The Company matching contributions are subject to vesting limitations for the first three years of employment.

In addition, the Company offers an Excess Savings Plan, a non-qualified deferred compensation plan, to employees who are restricted by the applicable IRS annual compensation limitation and/or the pre-tax income deferral limitation. More information regarding the Excess Savings Plan is provided with the Nonqualified Deferred Compensation Table under “Executive Compensation Tables” below.

Effective January 1, 2014, the Company amended the 401(k) Plan to provide for a matching contribution of 100% of the first 4% of eligible pay contributed by participating employees, and for an additional discretionary year-end contribution by the Company based upon a percentage of eligible compensation. Any discretionary year-end contribution, if approved by the Company, will be provided to all eligible participants who are active on the last day of the plan year and who complete 1,000 hours of service in such plan year.

The Company’s Nonqualified Supplemental Benefit Plan also includes a defined contribution component. The Company provides allocations to the participant’s notional accounts. There are only two remaining active employees of the Company who accrue benefits under this plan, only one of whom is a named executive officer, Charles F. Dolan.

Matching contributions made by the Company under the 401(k) Plan and the Excess Savings Plan and allocations under the defined contribution portion of the Nonqualified Supplemental Benefit Plan on behalf of the named executive officers are set forth in the Summary Compensation Table under “Executive Compensation Tables” below.

Perquisites

The Company provides certain perquisites to executive officers as described below. The aggregate value of perquisites received by each of the named executive officers is set forth in the Summary Compensation Table under “Executive Compensation Tables” below.

Telecommunications Services

The Company’s perquisites include access to telecommunications services (cable television, high-speed data and voice) at no monthly cost to employees, including executive officers,

 

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living in the Company’s service area. Certain employees living outside the service area are eligible for reimbursement of certain costs in purchasing similar services. The services provided vary depending on the grade level of the employee.

Executive Security

In order to address the security concerns of the Company, we have established an executive security program for the protection of the named executive officers. Recommendations of a third party security expert have been implemented for office, home and travel, at the Company’s cost, to the extent approved by the Compensation Committee. Because certain of these costs can be viewed as conveying personal benefits to the named executive officers, they are reported as perquisites.

Car and Driver

In connection with our executive security program, Messrs. Charles F. Dolan and James L. Dolan each has a Company car and driver assigned to them on a full-time basis, which they are permitted to use for their personal use in addition to business purposes. In addition, certain executive officers and members of management have used Company cars and drivers on a limited basis for personal use.

To the extent employees use Company-provided car service for personal use, those employees are imputed compensation for tax purposes. For compensation reporting purposes, the benefit attributable to the personal use of Company cars is valued at a portion of the cost of the driver plus car maintenance, fuel and other related costs, based on an estimated percentage of use.

Aircraft

The Company owns and operates three passenger helicopters and leases and operates a jet to facilitate business travel of senior executives. As described under “Related Party Policy and Certain Transactions — Certain Other Transactions,” the Company also has four separate dry lease agreements with entities controlled by Charles F. Dolan or other members of the Dolan family pursuant to which the Company has the right to use fixed-wing or rotary aircraft operated by such entities.

Generally, Messrs. Charles F. Dolan and James L. Dolan are permitted to use the helicopters and the jet for personal travel and Messrs. Gregg G. Seibert and David G. Ellen are permitted to use the Company jet (or in certain limited circumstances with the approval of the Company, other aircraft owned by entities controlled by Charles F. Dolan or other members of the Dolan family which the Company has the right to use) for up to 40 hours annually for Mr. Seibert and 15 hours annually for Mr. Ellen, for personal travel. In addition, certain other executive officers and other members of management are permitted to use the helicopters and the jet for personal travel upon the approval of the Chief Executive Officer. Personal use of the helicopters has primarily been for purposes of commutation.

 

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To the extent any employee uses any of the aircraft for personal travel without reimbursement, they are imputed compensation for tax purposes based on the Standard Industry Fare Level rates that are published biannually by the IRS. For compensation reporting purposes, we valued the incremental cost of the personal use of the aircraft based on the variable costs incurred by the Company. The incremental cost of the use of the aircraft does not include any costs that would have been incurred by the Company whether or not the personal trip was taken, such as lease and insurance payments, pilot salaries, ordinary course maintenance and other overhead costs.

In connection with any personal travel on the Company jet, Charles F. Dolan and James L. Dolan reimburse the Company for the actual expenses of each specific flight at a rate no greater than the maximum amount the Company may legally charge under Part 91 of the Federal Aviation Regulations.

In connection with any personal travel on the Company jet (or on aircraft operated by entities controlled by Charles F. Dolan or other members of the Dolan family), Messrs. Gregg G. Seibert and David G. Ellen reimburse the Company for the actual expenses of each specific flight at a rate no greater than the maximum amount the Company may legally charge under Part 91 of the Federal Aviation Regulations.

Other

Certain of the named executive officers have, from time to time, used the Company’s travel department to make their personal travel arrangements. For compensation reporting purposes, we valued the incremental cost of personal use of the travel department as a portion of the cost of the travel department employees and related overhead, based on the time spent making the arrangements.

Post-Termination Compensation

Our executives have helped build the Company into the successful enterprise that it is today and 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. The amount and type of any payment or benefit will depend upon the circumstances of the termination of employment. These may include 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 following a going-private transaction. The definitions of “cause” and “good reason” may vary among the different employment agreements with the named executive officers and the award agreements.

The award agreements regarding the various long-term incentives also 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

 

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employment agreement refers to the treatment of any award upon a triggering event, the particular award agreement will not supersede the terms of the employment agreement unless otherwise provided in the employment agreement or the award agreement.

Mr. Charles F. Dolan’s employment agreement addresses post-termination benefits only in the event of death or disability. In the employment agreements for Messrs. James L. Dolan, Seibert and Ellen, severance benefits include, in addition to certain cash payments, the acceleration of certain long-term incentives under various circumstances. For Mr. Charles F. Dolan, the treatment of his long-term incentives in the event of termination is governed solely by the specific provisions of his award agreements.

The Cablevision Severance Pay Plan provides for the discretionary payment of severance benefits under certain circumstances. Under the severance plan, the Company has discretion to determine (1) under what conditions severance benefits will be made available to any employee, (2) the type and amount of severance benefits to be paid or provided and for what period of time, (3) the manner and form in which severance benefits will be paid or provided to any employee, and (4) any other terms and conditions for receiving severance benefits. All severance benefits payable under this severance plan would be conditioned on the employee executing a severance agreement with the Company, including any terms and conditions that the Company may require.

Under the Cablevision Systems Corporation Supplemental Life Insurance Premium Payment Policy, at all times following a “change of control” of the Company (as defined below under “Executive Compensation Tables — Termination and Severance — Award Agreements”), the Company would continue to pay on behalf of certain senior executives of the Company, including Messrs. Charles F. Dolan and James L. Dolan, all premiums on life insurance policies purchased by the Company for these executive officers, up to the aggregate amount of additional premiums, if any, necessary to fund fully the face amount of each senior executive’s policy equal to the greater of three times the executive’s annual base salary as in effect in 1996 or the death benefit provided under previous policies. This policy is also provided for in the employment agreement of Mr. James L. Dolan, as described below under “Employment Agreements”.

For a description and quantification of the severance and other benefits payable to each of the named executive officers under the different circumstances of termination, please see “Termination and Severance” under “Executive Compensation Tables” below.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code, as amended, 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 named executive officers (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 Section 162(m), which is defined as compensation paid in connection with certain stock options or that is paid only if the

 

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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 Section 162(m) and to be consistent with providing appropriate compensation to executives.

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 Section 162(m). For example, we expect that, for 2013, the amount of base salary in excess of $1 million for the Chief Executive Officer and the next three most highly paid named executive officers covered by Section 162(m), plus any other annual compensation paid or imputed to the Chief Executive Officer and the next three most highly paid named executive officers covered by Section 162(m) that causes their respective non-performance-based compensation to exceed the $1 million limit, will not be deductible by the Company for 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 Section 162(m).

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with management. Based on such review and discussions, we have recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 for filing with the Securities and Exchange Commission.

Members of the Compensation Committee

 

Vincent Tese (Chairperson)    Thomas V. Reifenheiser    John R. Ryan

 

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EXECUTIVE COMPENSATION TABLES

The tables below reflect the compensation of the Company’s named executive officers. See “Compensation Discussion and Analysis” beginning on page 22 for an explanation of our compensation philosophy and program.

Summary Compensation Table

The table below summarizes the total compensation paid to or earned by each of our named executive officers for the years ending December 31, 2011, 2012, and 2013 (other than for Mr. Watson for whom information is provided for the year ending December 31, 2013).

 

Name and Principal
Position
  Year     Salary
($)(1)
    Bonus
($)(2)
    Stock
Awards
($)(3)
    Option
Awards
($)(4)
    Non-Equity
Incentive Plan
Compensation
($)(5)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(6)
    All Other
Compensation
($)(7)
    Total
($)
 

Charles F. Dolan

    2013        1,664,000        0        3,535,542        0        3,771,040        464,977        314,626        9,750,185   

Chairman

    2012        1,664,000        0        3,413,634        7,093,508        3,101,280        478,123        822,316        16,572,861   
    2011        1,664,000        1,033,606        2,866,340        0        4,723,708        286,663        392,072        10,966,389   

James L. Dolan

    2013        2,000,000        0        0        7,914,000        5,152,606        212,102        708,831        15,987,539   

Chief Executive Officer

    2012        1,750,000        0        3,698,180        6,850,780        3,727,500        238,429        592,715        16,857,604   
    2011        1,750,000        1,033,606        2,844,680        0        5,339,374        201,445        276,123        11,445,228   

Gregg G. Seibert

    2013        1,875,000        0        2,847,726        0        4,815,158        136,427        326,494        10,000,805   

Vice Chairman and Chief Financial Officer

    2012        1,500,000        0        2,396,433        3,425,390        3,195,000        127,332        310,973        10,955,128   
    2011        1,500,000        0        1,963,840        0        2,684,134        112,352        258,035        6,518,361   
                                                                       

David G. Ellen

    2013        1,200,000        0        1,424,562        0        2,302,236        73,044        156,846        5,156,688   

Executive Vice President, General Counsel and Secretary

    2012        850,000        0        1,054,602        1,822,085        1,159,988        67,408        106,834        5,060,917   
    2011        850,000        891,822        866,400        0        1,017,758        51,956        117,961        3,795,897   
                 
                                                                       

Kevin F. Watson

    2013        550,000        0        237,660        0        422,100        31,820        41,803        1,283,383   

Senior Vice President and Treasurer

                 
                                                                       

Victoria D. Salhus*

    2013        575,000        0        1,399,320        199,600        556,600        70,195        1,663,617        4,464,332   

Senior Vice President, Deputy General Counsel and Secretary

    2012        530,000        0        240,072        405,088        327,000        69,867        51,615        1,623,642   
    2011        515,000        761,771        245,480        0        497,480        66,145        34,888        2,120,764   
                 

 

* Ms. Victoria D. Salhus was the Company’s Senior Vice President, Deputy General Counsel and Secretary until her retirement on December 30, 2013.

 

(1) For 2013, salaries paid to the named executive officers accounted for the following percentages of their total compensation: Mr. Charles F. Dolan — 17%; Mr. James L. Dolan — 13%; Mr. Gregg G. Seibert — 19%; Mr. David G. Ellen — 23%; Mr. Kevin F. Watson — 43%; and Ms. Victoria D. Salhus — 13%.

 

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For 2012, salaries paid to the named executive officers accounted for the following percentages of their total compensation: Mr. Charles F. Dolan — 10%; Mr. James L. Dolan — 10%; Mr. Gregg G. Seibert — 14%; Mr. David G. Ellen — 17%; and Ms. Victoria D. Salhus — 33%.

For 2011, salaries paid to the named executive officers accounted for the following percentages of their total compensation: Mr. Charles F. Dolan — 15%; Mr. James L. Dolan — 15%; Mr. Gregg G. Seibert — 23%; Mr. David G. Ellen — 22%; and Ms. Victoria D. Salhus — 24%.

 

(2) For 2011, the amounts reflect the payment of the unpaid portion of special retention incentives referred to as deferred compensation awards. The deferred compensation award to each recipient other than Mr. Charles F. Dolan contemplated an initial award of $500,000 in 2004 that grew each year by an additional amount equal to the lesser of 20% of base salary and $150,000. The award to Mr. Charles F. Dolan was granted in 2005 with economics and vesting designed to give him the rights he would have had if the award had been granted in 2004. The unpaid balance of the deferred compensation awards were paid in 2011 in accordance with their terms.

 

(3) This column reflects the aggregate grant date fair value of restricted stock awards (without any reduction for risk of forfeiture) granted to the named executive officers in 2011, 2012, and 2013, respectively. The 2013 amount for Ms. Salhus also includes the $1,042,830 fair market value of her outstanding restricted stock awards whose vesting was accelerated to December 31, 2013, pursuant to the terms of the separation agreement entered into by Ms. Salhus and the Company upon her retirement.

 

(4) This column reflects the aggregate grant date fair value of stock option awards (without any reduction for risk of forfeiture) granted to the named executive officers. The assumptions used by the Company in calculating these amounts are set forth in Note 14 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The 2013 amount for Ms. Salhus represents the fair value at December 31, 2013 of the portion of her 2012 stock option award whose vesting was accelerated to December 31, 2013 pursuant to the terms of her separation agreement.

 

(5) For 2013, this information reflects annual incentive awards paid in 2014 for performance in 2013.

For 2012, this information reflects annual incentive awards paid in 2013 for performance in 2012.

For 2011, this information reflects annual incentive awards paid in 2012 for performance in 2011, and performance awards granted in 2009 that were earned at the end of 2011, as follows: Mr. Charles F. Dolan, $2,967,328 and $1,756,380, respectively, Mr. James L. Dolan, $3,546,904 and $1,792,470, respectively, Mr. Gregg G. Seibert, $2,275,114 and $409,020, respectively, Mr. David G. Ellen, $817,258 and $200,500, respectively, and Ms. Victoria D. Salhus, $305,000 and $192,480, respectively.

 

(6) This column represents, for each individual, the sum of the increase in the present value of his or her accumulated Cash Balance Pension Plan account and accumulated Excess Cash Balance Plan account. In addition, for Mr. Charles F. Dolan only, it also includes the increase in the lump sum value of the defined benefit plan portion of the Company’s Nonqualified Supplemental Benefit Plan. There were no above-market earnings on nonqualified deferred compensation. For more information regarding the named executive officers’ pension benefits, please see the Pension Benefits Table below.

 

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(7) The table below shows the components of this column:

 

Name   Year     Supple-
mental
Benefit
Plan(a)
    401(k)
Plan
Match(b)
    Excess
Savings
Plan
Match(b)
    Dividends(c)     Perquisites(d)     Termination
Related
Payments(e)
    Total  

Charles F. Dolan

    2013      $ 50,000      $ 4,600      $ 45,320      $ 193,750      $ 20,956             $ 314,626   
    2012      $ 49,000      $ 4,500      $ 45,420      $ 240,265      $ 483,131             $ 822,316   
      2011      $ 49,000      $ 4,400      $ 45,520      $ 135,840      $ 157,312             $ 392,072   

James L. Dolan

    2013             $ 2,760      $ 56,923      $ 181,815      $ 467,333             $ 708,831   
    2012             $ 2,700      $ 49,800      $ 245,195      $ 295,020             $ 592,715   
      2011             $ 2,640      $ 49,572      $ 135,840      $ 88,071             $ 276,123   

Gregg G. Seibert

    2013             $ 6,900      $ 48,874      $ 54,560      $ 216,160             $ 326,494   
    2012             $ 6,750      $ 38,250      $ 55,970      $ 210,003             $ 310,973   
      2011             $ 6,600      $ 38,054             $ 213,381             $ 258,035   

David G. Ellen

    2013             $ 2,100      $ 33,456      $ 41,230      $ 80,060             $ 156,846   
    2012             $ 2,040      $ 23,460      $ 27,550      $ 53,784             $ 106,834   
      2011             $ 1,980      $ 23,347      $ 11,040      $ 81,594             $ 117,961   

Kevin F. Watson

    2013             $ 5,250      $ 11,046      $ 15,965      $ 9,542             $ 41,803   

Victoria D. Salhus

    2013             $ 7,650      $ 9,543      $ 63,420      $ 10,896      $ 1,572,108      $ 1,663,617   
    2012             $ 7,500      $ 8,383      $ 26,390      $ 9,342             $ 51,615   
    2011             $ 7,333      $ 8,099      $ 11,040      $ 8,416             $ 34,888   

 

(a) This column represents the allocation credited to Mr. Charles F. Dolan pursuant to the defined contribution portion of the Company’s Nonqualified Supplemental Benefit Plan.

 

(b) These columns represent, for each individual, a matching contribution by the Company on behalf of such individual under the Company’s 401(k) Plan or Excess Savings Plan, as applicable.

 

(c) As a result of the special cash dividend declared in April 2006, and cash dividends declared in August and November 2008 and February, May, July and November 2009, holders of stock options and stock appreciation rights that vested prior to December 31, 2004 received a cash dividend upon exercise. In October 2009, the Compensation Committee of the Board of Directors approved exercise price adjustments for all dividend eligible stock options and stock appreciation rights so that after that date cash dividends result in a reduction of the exercise price rather than a cash payment. Holders of restricted shares are entitled to receive a cash amount equal to the dividends when the restricted shares vest. This column represents dividend payments made upon restricted stock vesting in the respective periods.

 

(d) This column represents, for each individual, the following aggregate perquisites, as described in the table below. Car and driver amounts for Mr. Charles F. Dolan do not include amounts for car and driver usage by another Dolan family member that were reimbursed by Mr. Dolan. For more information regarding the calculation of these perquisites, please see “Compensation Discussion and Analysis — Elements of In-Service Compensation — Perquisites.”

 

(e) Ms. Salhus retired from the Company on December 30, 2013. The amount in this column includes for Ms. Salhus a severance payment of $1,512,108 and a payment of $60,000 which represents the cost of COBRA continuation for a period of 18 months.

 

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Name    Year      Car and Driver(I)      Aircraft(II)      Other(III)      Total  

Charles F. Dolan

     2013         *         *         *       $ 20,956   
     2012       $ 137,584         *       $ 331,216       $ 483,131   
       2011       $ 132,781         *         *       $ 157,312   

James L. Dolan

     2013       $ 72,648       $ 38,703       $ 355,982       $ 467,333   
     2012       $ 80,788         *       $ 191,122       $ 295,020   
       2011       $ 42,284         *       $ 35,160       $ 88,071   

Gregg G. Seibert

     2013         *       $ 193,216         *       $ 216,160   
     2012         *       $ 141,732       $ 59,493       $ 210,003   
       2011         *       $ 194,317         *       $ 213,381   

David G. Ellen

     2013         *       $ 39,842         *       $ 80,060   
     2012         *       $ 36,921         *       $ 53,784   
       2011         *       $ 70,232         *       $ 81,594   

Kevin F. Watson

     2013         *         *         *         **   

Victoria D. Salhus

     2013         *         *         *       $ 10,896   
     2012         *         *         *         **   
     2011         *         *         *         **   

 

* Does not exceed the greater of $25,000 or 10% of the total amount of the perquisites of named executive officer.

 

** Does not exceed $10,000.

 

(I) Reflects the cost of providing the executives with a car and driver for personal use determined as a portion of the cost of the driver plus maintenance, fuel and other related costs, based on an estimated percentage of use.

 

(II) As discussed under “Compensation Discussion and Analysis — Elements of In-Service Compensation — Perquisites — Aircraft,” Messrs. Charles F. Dolan, James L. Dolan, Gregg G. Seibert and David G. Ellen reimburse the Company for the actual expenses associated with personal use of the Company’s corporate aircraft. The amounts in the table reflect the incremental cost of personal use of the Company’s helicopters and for personal guests accompanying the executive when the executive is traveling on business. Incremental cost is determined as the variable costs incurred by the Company and does not include any costs that would have been incurred by the Company whether or not the personal trip was taken, such as lease and insurance payments, pilot salaries, ordinary course maintenance and other overhead costs. The agreements providing for reimbursement of costs associated with personal use of the Company’s aircraft are described under “Related Party Policy and Certain Transactions.”

 

(III) This column includes the following components: (A) free cable television, high-speed data and voice services, (B) executive home security, (C) use of the Company’s travel department to arrange for personal travel, (D) reimbursement in 2012 for costs incurred related to filings made under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (E) cash dividend equivalent payment made upon expiration of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable waiting period, and (F) use of Company-owned tickets to sporting and entertainment events.

 

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Grants of Plan-Based Awards

The table below presents information regarding awards granted in 2013 to each named executive officer 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.

 

Name   Year     Grant
Date
   

 

 

Estimated Future Payouts Under Non-
Equity Incentive Plan Awards

    All
Other
Stock
Awards:
Number
of
Shares
of Stock
or
Units(#)
    All Other
Option
Awards:
Securities
Underlying
Options(#)
    Exercise
or Base
Price of
Option
Awards
($/Sh)
   

Grant Date
Fair Value
of Stock
and

Option
Awards
($)(1)

 
      Threshold($)     Target($)     Maximum($)          

Charles F. Dolan

    2013        03/07/13 (2)              2,912,000        5,824,000                                   
    2013        03/07/13 (3)            252,900            3,535,542   
      2013        03/07/13 (4)      2,235,000        3,725,000        5,587,500                                   

James L. Dolan

    2013        03/07/13 (2)        3,978,846        8,000,000           
    2013        03/07/13 (3)            0            0   
    2013        03/07/13 (4)      2,451,600        4,086,000        6,129,000           
      2013        03/07/13 (5)                                      2,000,000        13.98        7,914,000   

Gregg G. Seibert

    2013        03/07/13 (2)        3,718,269        7,500,000           
    2013        03/07/13 (3)            203,700            2,847,726   
      2013        03/07/13 (4)      1,800,000        3,000,000        4,500,000                                   

David G. Ellen

    2013        03/07/13 (2)        1,777,789        3,600,000           
    2013        03/07/13 (3)            101,900            1,424,562   
      2013        03/07/13 (4)      900,000        1,500,000        2,250,000                                   

Kevin F. Watson

    2013        03/07/13 (2)        325,913        652,000           
    2013        03/07/13 (3)            17,000            237,660   
      2013        03/07/13 (4)      150,000        250,000        375,000                                   

Victoria D. Salhus

    2013        03/07/13 (2)        429,822        860,000           
    2013        03/07/13 (3)            25,500            356,490   
    2013        03/07/13 (4)      225,000        375,000        562,500           
    2013        12/31/13 (6)              49,900        13.93        199,600   

 

(1) This column reflects the aggregate grant date fair value calculated by multiplying the closing price of Class A common stock by the number of restricted stock awards granted to each named executive officer in 2013 without any reduction for risk of forfeiture, on the date of grant. For options, it reflects the aggregate grant date fair value, without any reduction for risk of forfeiture, calculated using assumptions set forth in Note 14 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The amount for Ms. Victoria D. Salhus does not reflect the fair value of her outstanding restricted stock awards whose vesting was accelerated to December 31, 2013 (see note 3 of the “Executive Compensation Tables — Summary Compensation Table” above for more information).

 

(2)

This row reflects the possible payouts with respect to grants of annual incentive awards under the Company’s Cash Incentive Plan for performance in 2013. Each named executive officer is assigned a target bonus percentage and amount; there is no threshold amount for annual incentive awards. Under the terms of the awards, each named executive officer is eligible to receive payment of an annual incentive award equal to the lesser of $10 million or two times his or her bonus target, subject to the Compensation Committee’s discretion to reduce the award. The amounts of annual incentive awards actually paid for performance in 2013 are disclosed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation

 

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Table above. For more information regarding the terms of these annual incentive awards, please see “Compensation Discussion and Analysis — Elements of In-Service Compensation — Annual Incentives.”

 

(3) This row reflects the number of shares of restricted stock awarded in 2013. These grants of restricted stock, which were made under the Company’s 2006 Employee Stock Plan, are scheduled to vest in their entirety on March 7, 2016. The awards for Mr. Charles Dolan, Mr. Gregg Seibert and Mr. David Ellen are subject to performance criteria. The terms of the awards for Ms. Victoria Salhus were subject to performance criteria when granted but vested on December 31, 2013 pursuant to the terms of her separation agreement.

 

(4) This row reflects what are expected to be the future payouts with respect to performance awards that were granted under the Company’s 2011 Cash Incentive Plan in 2013. Each performance award was granted with a target amount. These performance awards will be payable in the first quarter of 2016 if the Company achieves specified performance targets in the year ending December 31, 2015. For more information regarding the terms of these performance awards, please see “Compensation Discussion and Analysis — Elements of In-Service Compensation — Long-Term Incentives — Performance Awards.”

 

(5) This row reflects the number of shares underlying options awarded in 2013. This grant of options was made under the Cablevision 2006 Employee Stock Plan and vests in its entirety on March 7, 2016.

 

(6) This row reflects the fair value at December 31, 2013 of the portion of Ms. Salhus’ 2012 stock option award whose vesting was accelerated to December 31, 2013 pursuant to the terms of her separation agreement.

 

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Outstanding Equity Awards at Fiscal Year-End

The table below shows (i) each grant of stock options that is still unexercised and outstanding, and (ii) the aggregate number of shares of unvested restricted stock outstanding for each named executive officer, in each case as of December 31, 2013.

 

    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

  

            582,200 (2)      10,438,846       
    264,000            12.48 (3)      06/05/2016           
      873,800        873,800            13.93 (5)      03/06/2022                           

James L. Dolan

  

            327,000 (6)      5,863,110       
    74,400            9.44 (3)(4)      10/01/2014           
    120,000            6.37 (3)(4)      10/01/2014           
    120,000            9.44 (3)(4)      11/08/2015           
    60,000            9.44 (3)(4)      11/08/2015           
    264,000            12.48 (3)      06/05/2016           
    903,100            6.24 (3)      09/05/2014           
    843,900        843,900          13.93 (5)      03/06/2022           
              2,000,000            13.98 (7)      03/07/2023                           

Gregg G. Seibert

  

            425,800 (8)      7,634,594       
    100,000            13.23 (3)      01/20/2019           
    100,000            16.53 (3)      01/20/2019           
      100,000 (9)        19.85 (3)      01/20/2019           
      421,950        421,950            13.93 (5)      03/06/2022                           

David G. Ellen

  

            199,700 (10)      3,580,621       
      224,450        224,450            13.93 (5)      03/06/2022                           

Kevin F. Watson

  

            39,700 (11)      711,821       
      47,900        47,900            13.93 (5)      03/06/2022                           

Victoria D. Salhus

    5,000            9.44 (3)(4)      11/08/2015           
    2,500            6.37 (3)(4)      10/01/2014           
      99,800 (12)                  13.93        12/31/2016                           

 

 

(1) Calculated using the closing price of Class A common stock on the New York Stock Exchange on December 31, 2013 of $17.93 per share.

 

(2) This reflects (i) a grant of 79,400 shares of restricted stock made on March 8, 2011 that vested on March 8, 2014, (ii) a grant of 249,900 shares of restricted stock made on April 9, 2012 that is scheduled to vest on March 5, 2015, and (iii) a grant of 252,900 shares of restricted stock made on March 7, 2013 that is scheduled to vest on March 7, 2016.

 

(3)

The prices of unexercised options were adjusted to reflect the impact of both the MSG and AMC Distributions. The MSG Distribution took place in February 2010. The AMC Distribution took place in June

 

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2011. In connection with each Distribution, each outstanding Cablevision stock option became two options, one was an option covering a number of shares of Cablevision Class A Common Stock equal to the number covered by the original option, and one was an option covering one share of MSG/AMC common stock, respectively, for every four shares covered by the original Cablevision option. The existing exercise price was allocated 82.6% to the Cablevision option and 17.4% to the MSG option, and the existing exercise price was allocated 73.6% to the Cablevision option and 26.4% to the AMC option. In each Distribution, each holder of Cablevision restricted shares received one share of MSG/AMC restricted stock, respectively, for every four Cablevision restricted shares.

As of December 31, 2013, (i) Mr. Charles F. Dolan did not hold any MSG stock options, (ii) Mr. James L. Dolan held 111,000 MSG stock options (all of which were vested), (iii) Mr. Gregg G. Seibert held 25,000 MSG stock options (all of which were unvested), (iv) Mr. David G. Ellen did not hold any MSG stock options, (v) Mr. Kevin F. Watson did not hold any MSG stock options, and (vi) Ms. Victoria D. Salhus did not hold any MSG stock options. As of December 31, 2013, (i) Mr. Charles F. Dolan held 111,000 AMC stock options (all of which were vested) and 19,850 shares of AMC restricted stock, (ii) Mr. James L. Dolan held 111,000 AMC stock options (all of which were vested), and 19,700 shares of AMC restricted stock, (iii) Mr. Gregg G. Seibert held 25,000 AMC stock options (all of which were unvested), and 13,600 shares of AMC restricted stock, (iv) Mr. David G. Ellen did not hold any AMC stock options, but held 6,000 shares of AMC restricted stock, (v) Mr. Kevin F. Watson did not hold any AMC stock options but held 1,650 shares of AMC restricted stock, and (vi) Ms. Victoria D. Salhus did not hold any AMC stock options or AMC restricted stock.

 

(4) As a result of the special dividend declared in April 2006, stock options that had not vested by December 31, 2004 were adjusted to reduce their per share exercise price by the $10.00 amount of the special dividend. The per share exercise price of stock options that had vested by December 31, 2004 were not adjusted for the special dividend and the holders were to receive the special dividend amount upon exercise.

 

(5) These performance-based stock options, which were granted on March 6, 2012, vested 50% on March 6, 2013 and 50% on March 6, 2014.

 

(6) This reflects (i) a grant of 78,800 shares of restricted stock made on March 8, 2011 that vested on March 8, 2014, and (ii) a grant of 248,200 shares of restricted stock made on March 27, 2012 that is scheduled to vest on March 5, 2015.

 

(7) These stock options which were granted on March 7, 2013 vest in their entirety on March 7, 2016.

 

(8) This reflects (i) a grant of 54,400 shares of restricted stock made on March 8, 2011 that vested on March 8, 2014, (ii) a grant of 167,700 shares of restricted stock made on March 5, 2012 that is scheduled to vest on March 5, 2015, and (iii) a grant of 203,700 shares of restricted stock made on March 7, 2013 that is scheduled to vest on March 7, 2016.

 

(9) These stock options, which were granted on January 20, 2009, vested in their entirety on January 20, 2014.

 

(10) This reflects (i) a grant of 24,000 shares of restricted stock made on March 8, 2011 that vested on March 8, 2014, (ii) a grant of 73,800 shares of restricted stock made on March 5, 2012 that is scheduled to vest on March 5, 2015, and (iii) a grant of 101,900 shares of restricted stock made on March 7, 2013 that is scheduled to vest on March 7, 2016.

 

(11) This reflects (i) a grant of 6,600 shares of restricted stock made on March 8, 2011 that vested on March 8, 2014, (ii) a grant of 16,100 shares of restricted stock made on March 5, 2012 that is scheduled to vest on March 5, 2015, and (iii) a grant of 17,000 shares of restricted stock made on March 7, 2013 that is scheduled to vest on March 7, 2016.

 

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(12) Pursuant to the terms of Ms. Salhus’ separation agreement terms, her unvested stock options vested on December 31, 2013 and remain exercisable for three years.

Option Exercises and Stock Vested

The table below shows stock option exercises during 2013 and restricted stock awards that vested during 2013.

 

     Option Exercises      Restricted Stock  
Name    Number of Shares
Acquired on
Exercise
     Value Realized on
Exercise ($)(1)
     Number of Shares
Acquired on
Vesting
     Value Realized on
Vesting ($)(2)(4)
 

Charles F. Dolan

     180,000         1,249,200         125,000         1,745,000   

James L. Dolan

     0         0         117,300         1,637,508   

Gregg G. Seibert

     0         0         35,200         491,392   

David G. Ellen

     0         0         26,600         371,336   

Kevin F. Watson

     0         0         10,300         143,788   

Victoria D. Salhus

     0         0         59,900         1,031,131 (3) 

 

(1) Calculated using the market price (per share) of Class A common stock on the New York Stock Exchange on the date of exercise less the option price per share multiplied by the number of options exercised.

 

(2) Calculated using the closing price (per share) of Class A common stock on the New York Stock Exchange on March 8, 2013 multiplied by the number of shares vesting.

 

(3) Calculated using the closing price (per share) of Class A common stock on the New York Stock Exchange on March 8, 2013, with respect to 10,800 shares which vested on such date, and on December 31, 2013 with respect to 49,100 shares which vested on such date.

 

(4) Dividends of $0.125 per share were declared in May, August and November 2010 as well as February 2011. Dividends of $0.15 per share were declared in May, August and October 2011, February, May, August and October 2012 and February, May, July and November 2013. All eligible dividends declared prior to vesting were paid in connection with this vesting in addition to the value realized and reflected in the table.

 

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Pension Benefits

The table below shows the present value of accumulated benefits payable to each of our named executive officers, including the number of years of service credited to each named executive officer, under our defined benefit pension plans as of December 31, 2013.

 

Name    Plan Name    Number of Years
Credited Service
(#)(1)
     Present Value of
Accumulated Benefit
($)(2)
     Payments During
Last Fiscal Year
($)
 

Charles F. Dolan

   Cablevision Nonqualified         
   Supplemental Benefit Plan      28         3,784,727           
   Cablevision Cash Balance         
   Pension Plan      16         22,950         22,500   
   Cablevision Excess         
     Cash Balance Plan      13         2,105,226           

James L. Dolan

   Cablevision Cash Balance         
   Pension Plan      16         258,754           
   Cablevision Excess         
     Cash Balance Plan      13         1,607,530           

Gregg G. Seibert

   Cablevision Cash Balance         
   Pension Plan      4         79,055           
   Cablevision Excess         
     Cash Balance Plan      4         376,433           

David G. Ellen

   Cablevision Cash Balance         
   Pension Plan      11         122,104           
   Cablevision Excess         
     Cash Balance Plan      11         218,509           

Kevin F. Watson

   Cablevision Cash Balance         
   Pension Plan      6         77,734           
   Cablevision Excess         
     Cash Balance Plan      6         43,874           

Victoria D. Salhus

   Cablevision Cash Balance         
   Pension Plan      16         312,835           
   Cablevision Excess         
   Cash Balance Plan      13         277,034           

 

(1) Years of service are calculated based on elapsed time measured from date of plan participation. Actual elapsed time for each individual as an employee of the Company are as follows: Mr. Charles F. Dolan, 41 years; Mr. James L. Dolan, 35 years; Mr. Seibert, 5 years; Mr. Ellen, 12 years; Mr. Watson, 7 years; and Ms. Salhus, 23 years.

 

(2)

Assumes that each individual will take a lump sum payment of benefits at retirement. The lump sum payment is based on an assumed retirement age of 65 for all individuals other than Mr. Charles F. Dolan. For Mr. Charles F. Dolan, the lump sum payment is based on a December 31, 2013 retirement date. The lump sum payable under the Nonqualified Supplemental Benefit Plan was calculated using an interest rate of 7% and the 1971 Group Annuity mortality table, as required under the terms of the Nonqualified Supplemental Benefit Plan. The lump sum payable under the cash balance plans was determined by crediting the account balances with an assumed interest-crediting rate of 3.76% until age 65. The present value of the accumulated benefits under the Cash Balance Pension Plan and the Excess Cash Balance Plan

 

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were calculated using a discount rate of 4.55% and 4.00%, respectively. For Mr. Charles F. Dolan, the present value of the accumulated benefits under each of the Cash Balance Pension Plan and the Excess Cash Balance Plan equals the respective December 31, 2013 account balances.

We maintain several retirement benefit plans for our executives. The material terms and conditions are discussed below.

Cash Balance Pension Plan

The Company’s Cash Balance Pension Plan is a tax-qualified defined benefit plan that generally covers regular full-time and part-time nonunion employees of the Company and certain of its affiliates who have completed one year of service. A notional account is maintained for each participant under the plan, including the named executive officers, which, through the end of 2013, consisted of (i) annual allocations made by the Company as of the end of each year on behalf of each participant who has completed 800 hours of service during the year that range from 3% to 9% of the participant’s compensation, based on the participant’s age, and (ii) monthly interest credits based on the average of the annual rate of interest on the 30-year U.S. Treasury Bonds for the months of September, October and November of the prior year. Compensation includes all direct cash compensation received while a participant as part of the participant’s primary compensation structure (excluding bonuses, fringe benefits and other compensation that is not received on a regular basis), and before deductions for elective deferrals (in accordance with the Internal Revenue Code limits, the maximum compensation taken into account in determining benefits was limited to $255,000 in 2013). Effective December 31, 2013, the Cash Balance Pension Plan was amended to freeze participation and future benefit accruals for all Company employees except those covered by a collective bargaining relationship in Brooklyn. Therefore, no future benefit accruals will be made under these plans after 2013 except for employees covered by such collective bargaining relationship. Monthly interest credits will continue to be made to participant accounts until distribution of the accounts following termination of employment.

A participant’s interest in the cash balance account is subject to vesting limitations for the first three years of employment. A participant’s account will vest in full upon his or her termination due to death, disability or retirement after attaining age 65. Upon retirement or other termination of employment with the Company, the participant may elect a distribution of the vested portion of the cash balance account. Any amounts remaining in the plan will continue to be credited with interest until the account is paid. The normal form of benefit payment for an unmarried participant is a single life annuity and the normal form of benefit payment for a married participant is a 50% joint and survivor annuity. The participant, with spousal consent if applicable, can waive the normal form and elect a single life annuity or a lump sum.

Excess Cash Balance Plan

The Company’s Excess Cash Balance Plan is a non-qualified deferred compensation plan that is intended to provide eligible participants, including each named executive officer, with the

 

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portion of their benefit that cannot be paid to them under the Cash Balance Pension Plan due to Internal Revenue Code limits on the amount of compensation (as defined in the Cash Balance Pension Plan) that can be taken into account in determining benefits under tax-qualified plans ($255,000 in 2013). The Company maintains a notional excess cash balance account for each eligible participant, and, for each calendar year through 2013, credited these accounts with the portion of the allocation that could not be made on his or her behalf under the Cash Balance Pension Plan due to the compensation limitation. In addition, the Company credits each notional excess cash balance account monthly with interest at the same rate used under the Cash Balance Pension Plan. Effective December 31, 2013, the Excess Cash Balance Plan was amended to freeze participation and future benefit accruals for all Company employees. Therefore, no future benefit accruals will be made under these plans after 2013. Monthly interest credits will continue to be made to participant accounts until distribution of the accounts following termination of employment.

A participant vests in the excess cash balance account according to the same schedule as the Cash Balance Pension Plan. The excess cash balance account, to the extent vested, is paid in a lump sum to the participant as soon as practicable following his or her retirement or other termination of employment with the Company.

Nonqualified Supplemental Benefit Plan

Mr. Charles F. Dolan is the only named executive officer who participates in the Company’s Nonqualified Supplemental Benefit Plan. The Nonqualified Supplemental Benefit Plan provides actuarially determined pension benefits for certain employees of the Company or its subsidiaries and affiliates who were previously employed by CSSC, L.L.C., successor to Cablevision Systems Services Corporation (“CSSC”), which is wholly owned by Mr. Charles F. Dolan and his spouse, which provided management services to Cablevision Company (the Company’s predecessor) and to certain affiliates of the Company. The Nonqualified Supplemental Benefit Plan was designed to provide participants, in combination with certain qualified benefit plans maintained by the Company and certain qualified retirement plans formerly maintained by CSSC, with the same retirement benefits they would have enjoyed had they remained employees of CSSC and continued to participate in the former CSSC qualified plans. In addition to Mr. Charles F. Dolan, there is only one remaining active employee of the Company who accrues benefits under this plan.

The defined benefit feature of the Nonqualified Supplemental Benefit Plan provides that, upon attaining the later of age 65 or the completion of five years of service, a participant will receive an annual benefit equal to the lesser of (i) 75% of his or her average compensation (not including bonuses and overtime) for his or her three most highly compensated years, or (ii) the maximum benefit permitted by the Internal Revenue Code (the maximum in 2013 was $205,000 for employees who retire at age 65), reduced by the amount of any benefits paid to the participant under the qualified defined benefit plan formerly maintained by CSSC as well as benefits under the Cash Balance Pension Plan and Excess Cash Balance Plan.

 

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Nonqualified Deferred Compensation

The table below shows (i) the contributions made by each named executive officer and the Company in 2013, (ii) aggregate earnings on each named executive officer’s account balance in 2013, and (iii) the account balance of each of our named executive officers under our Excess Savings Plan and the Nonqualified Supplemental Benefit Plan as of December 31, 2013.

 

Name    Plan Name   

Executive
Contributions
in Last FY(1)

($)

    

Registrant
Contributions
in Last FY(2)

($)

    

Aggregate
Earnings
in Last
FY(3)

($)

    

Aggregate
Withdrawals/
Distributions

($)

    

Aggregate
Balance
at Last
FYE

($)

 

Charles F. Dolan

   Cablevision Excess
Savings Plan
     92,840         45,320         19,946                 2,103,985   
     Cablevision Nonqualified
Supplemental Benefit
Plan
             50,000         12,658                 1,312,681   

James L. Dolan

   Cablevision Excess
Savings Plan
     115,165         56,923         13,122                 1,456,561   

Gregg G. Seibert

   Cablevision Excess
Savings Plan
     101,048         48,874         2,950                 391,096   

David G. Ellen

   Cablevision Excess
Savings Plan
     66,912         33,456         4,527                 515,665   

Kevin F. Watson

   Cablevision Excess
Savings Plan
     22,091         11,046         1,082                 132,402   

Victoria D. Salhus

   Cablevision Excess
Savings Plan
     22,719         9,543         2,914                 318,736   

 

(1) These amounts represent a portion of the executives’ 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 reported in the “All Other Compensation” column of the Summary Compensation Table. These amounts do not include deferred compensation awards earned in 2013 and included in the Summary Compensation Table under “All Other Compensation” and described in Note 7 to that table.

 

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

The Cablevision Excess Savings Plan is a non-qualified deferred compensation plan that operates in conjunction with the Company’s tax-qualified 401(k) Plan. An employee is eligible to participate in the Excess Savings Plan for a calendar year if his compensation (as defined in the Cash Balance Pension Plan described above) 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 ($255,000 in 2013) and he makes an election to participate prior to the beginning of the year. An eligible employee whose contributions to the 401(k) Plan are limited as a result of this compensation limit or as a result of reaching the maximum 401(k) deferral limit ($17,500 or $23,000 if age 50 or over, for 2013) can continue to make pre-tax contributions under the Excess Savings Plan of up to 6% of his eligible pay. In addition, the

 

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Company has historically made matching contributions of up to 50% of the first 6% of eligible pay contributed by the employee. Effective January 1, 2014, the Excess Savings Plan was amended to provide for a matching contribution of 100% of the first 4% of eligible pay contributed by participating employees, and for an additional discretionary year-end contribution by the Company based upon a percentage of eligible compensation. The contribution, if approved by the Company, will be provided to all eligible participants who are active on the last day of the plan year and who complete 1,000 hours of service in such plan year.

A participant is always fully vested in his own contributions and vests in the Company matching contributions over three years from date of hire (subject to full vesting upon death, disability or retirement after attaining age 65). Account balances under the Excess Savings Plan are credited monthly with the rate of return earned by the Stable Value Fund offered as an investment alternative under the 401(k) Plan. Distributions are made in a lump sum as soon as practicable after the participant’s termination of employment with the Company.

In addition to providing defined pension benefits, the Company’s Nonqualified Supplement Benefit Plan has a defined contribution feature. Under this provision, the Company maintains notional supplemental accounts for each participant, and for each calendar year, the Company makes an allocation to these notional accounts in an amount equal to the lesser of 10% of a participant’s eligible plan compensation (as limited by the IRS maximum compensation limitation) and the IRS maximum defined contribution allocation ($51,000 for 2013). Account balances under the Company’s Nonqualified Supplement Benefit Plan are credited monthly with the rate of return earned by the Stable Value Fund offered as an investment alternative under the 401(k) Plan.

Employment Agreements

Charles F. Dolan

Mr. Charles F. Dolan has an employment agreement with the Company dated as of January 27, 1986 that 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. His agreement has been automatically extended until January 2015. The employment agreement provides for annual compensation of not less than $400,000 per year, subject to increase by the Company’s Compensation Committee. Mr. Dolan’s annual salary for 2013 was $1,664,000 and his bonus target was 175%.

Mr. Charles F. 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. If Mr. Dolan is incapacitated for more than six consecutive months of disability such that he cannot return to employment and discharge his duties under his

 

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employment agreement, his agreement provides that the Company may terminate him for incapacity but Mr. Dolan will be entitled to receive his base salary and other employee benefits (including medical insurance) 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.

In December 2008, the Company amended the employment agreement of Mr. Dolan in order to avoid the imposition of an additional tax pursuant to Section 409A. This amendment clarified that the delay of payment of severance will be following the executive’s separation of service (within the meaning of Section 409A). In June 2011, the Company amended the employment agreement of Mr. Dolan to acknowledge Mr. Dolan’s service as Executive Chairman of AMC Networks Inc. The amendments did not change the amount of payments under Mr. Charles F. Dolan’s employment agreement.

James L. Dolan

Mr. James L. Dolan is the Company’s Chief Executive Officer and devotes most of his business time to that role. He also serves as the Executive Chairman of MSG and devotes a portion of his business time to that role. In light of Mr. Dolan’s dual responsibilities, on December 24, 2009, the Company and MSG each entered into separate employment agreements with Mr. Dolan. These employment agreements became effective upon the consummation of the MSG Distribution on February 9, 2010 and were amended in February 2013. In April 2014, we entered into a letter agreement with Mr. James L. Dolan which amended his employment agreement to remove his right to receive a severance payment if he terminates his employment for any reason during the 13th month after a Change in Control (as defined in the agreement) and to change his title to “Chief Executive Officer.”

As amended in February 2013, the employment agreement between the Company and Mr. Dolan provided for his continued employment as President and Chief Executive Officer of the Company through December 31, 2017 at a minimum annual base salary of $2,000,000 (subject to annual review and potential increase in the discretion of the Compensation Committee) and an annual target bonus equal to 200% of his annual base salary (and a possible range of 0% to 400%) in the discretion of the Compensation Committee. Mr. Dolan’s annual salary for 2013 was $2,000,000 and his bonus target was 200%. It is expected that Mr. Dolan will continue to be nominated for election as a director of the Company during the period he serves as Chief Executive Officer. Under the employment agreement, Mr. Dolan continues to be eligible to participate in all Company 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. The Company will also continue to pay the premiums on an existing whole life insurance policy to the extent necessary to provide for payment of the initial targeted death benefit.

 

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Mr. Dolan’s agreement further provides that he will be entitled to receive annual long-term cash and/or equity awards with an aggregate annual target value of $12,000,000, as determined in the discretion of the Compensation Committee. The equity portion of these annual awards will consist of options to acquire shares of the Company’s Class A common stock in an amount up to the maximum number of options that the Company may issue to any participant under its employee stock plan during any one calendar year (currently two million options), and the balance (if any) of the annual awards will consist of a cash performance award. The annual award terms and conditions will be determined by the Compensation Committee in its discretion, provided that the awards will not have a time vesting component that is longer than three years.

Any continuing service requirements with respect to outstanding long-term cash and equity awards that were granted to Mr. Dolan prior to the effective date of the employment agreement will be based solely on his continued services to the Company and its affiliates (other than MSG and its subsidiaries). He and the Company have acknowledged that any cash payable pursuant to any of those awards will be the sole responsibility and liability of the Company and that MSG will have no liability to Mr. Dolan with respect to such cash payable.

If, prior to December 31, 2017 (the “Scheduled Expiration Date”), Mr. Dolan’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 the terms of the 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 those set forth in the agreement (a “Separation Agreement”), the Company will provide him with the following benefits and rights:

 

(a) A severance payment in an amount determined at the discretion of the Compensation Committee, but in no event less than two times the sum of his annual base salary and annual target bonus;

 

(b) Continued payment of premiums on an existing whole life insurance policy on his life to the extent necessary to provide for payment of the initial targeted death benefit under such policy after first applying any associated dividends and surrender of paid up additions;

 

(c) Except as provided otherwise in the employment agreement, each of his outstanding long-term cash performance awards granted under the plans of the Company will immediately vest in full and will be paid to the same extent that other members of senior management receive payment for such awards as determined by the Compensation Committee (and subject to the satisfaction of any applicable performance objectives) and will be payable at the same time such awards are payable to other members of senior management and in accordance with the terms of the award;

 

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

 

(e) (i) All of the time based restrictions under the plans of the Company on each of the outstanding restricted stock or restricted stock units granted to him will immediately be eliminated, (ii) payment and deliveries with respect to his restricted stock units that are not subject to performance criteria will be made on the 90th day after the termination of his employment, (iii) the performance-based restrictions with respect to his restricted stock and restricted stock units that are subject to performance criteria will lapse when and to the same extent that such restrictions lapse on such awards held by other executive officers as determined by the Compensation Committee (subject to satisfaction of any applicable performance objectives), and (iv) the payment and deliveries with respect to his restricted stock units subject to performance criteria will be made at the same time payment and deliveries are made to other executive officers who hold such restricted stock units and in accordance with the terms of the award;

 

(f) Each of his outstanding stock options will immediately vest and become exercisable and he will have the right to exercise each of those options for the remainder of the term of such option;

 

(g) 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 the Compensation Committee in its sole discretion (and subject to the satisfaction of any applicable performance objectives), which pro rata annual bonus will be payable at the same time annual bonuses for such year are payable to other executive officers; and

 

(h) All of his (i) long-term cash performance awards, and (ii) the unvested portion of his deferred compensation award, in each such case outstanding on December 24, 2009, will be subject to the terms of their respective award agreements and the provisions related to his existing employment agreement.

In addition, the employment agreement provides that in the event of a “change of control”, as defined in Mr. Dolan’s long-term award agreements, Mr. Dolan will be entitled to receive the more favorable vesting and payment provisions (if any) provided in his restricted stock, stock option and long-term cash performance award agreements. See “—Termination and Severance — Award Agreements.”

If Mr. Dolan ceases to be an employee of the Company or any of its affiliates (other than MSG and its subsidiaries) prior to the Scheduled Expiration Date as a result of his death, his estate or beneficiary will be provided with the benefits and rights set forth in (c) through (h) above and have such longer period to exercise his then outstanding stock options as may otherwise be permitted under the applicable plan. If he ceases to be an employee of the

 

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Company or any of its affiliates (other than MSG and its subsidiaries) prior to the Scheduled Expiration Date as a result of his physical or mental disability, he will be provided with the benefits and rights set forth in (b) through (h) above.

If after the Scheduled Expiration Date, Mr. Dolan’s employment with the Company is terminated (i) by the Company, (ii) by him for Good Reason, or (iii) as a result of his death or disability, and at the time of any such termination described above, 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 (h) above.

If, prior to or after the Scheduled Expiration Date, Mr. Dolan 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, 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 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. Dolan’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.

In this agreement, the Company acknowledges that, in addition to Mr. Dolan’s services pursuant to the agreement, he will simultaneously serve, and is expected to devote a portion of his business time and attention to serving, as Executive Chairman of MSG. The Company recognizes and agrees that his responsibilities to MSG will preclude him from devoting substantially all of his time and attention to the Company’s affairs. The agreement states the Company’s recognition that there may be certain potential conflicts of interest and fiduciary duty issues associated with Mr. Dolan’s dual roles at the Company and MSG and that none of (i) his dual responsibilities at the Company and MSG, (ii) his inability to devote substantially all of his time and attention to the Company’s affairs, (iii) the actual or potential conflicts of interest and fiduciary duty issues that are waived in the Company’s policy concerning matters related to MSG including responsibilities of overlapping directors and officers, or (iv) any actions taken, or omitted to be taken, by him in good faith to comply with his duties and responsibilities to the Company in light of his dual responsibilities to the Company and MSG, will be deemed to be a breach by him of his obligations under the employment agreement nor will any of the foregoing constitute Cause as such term is defined in the employment agreement.

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

 

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For purposes of Mr. Dolan’s employment agreement, “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.

“Change in Control” 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 (1) the power to direct the management of substantially all the cable television systems then owned by the Company in the New York City Metropolitan Area (as defined), or (2) after any fiscal year of the Company in which all the systems referred to in clause (1) will have contributed in the aggregate less than a majority of the net revenues of the Company and its consolidated subsidiaries, the power to direct the management of the Company and its consolidated subsidiaries, the power to direct the management of the Company or substantially all its assets.

Termination for “Good Reason” in Mr. Dolan’s employment agreement means that (1) without Mr. Dolan’s consent, (A) Mr. Dolan’s base salary or bonus target is reduced, (B) the Company requires that Mr. Dolan’s principal office be located outside of Nassau County or Manhattan, (C) the Company materially breaches its obligations to Mr. Dolan under his employment agreement, (D) Mr. Dolan is no longer the Chief Executive Officer of the Company, (E) Mr. Dolan no longer reports directly to the Chairman of the Board of Directors of the Company, or (F) Mr. Dolan’s responsibilities are materially diminished, (2) Mr. Dolan 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. Dolan voluntarily terminates his employment within 90 days following the happening of the action described in subsection (1) of this definition.

Gregg G. Seibert

On March 29, 2011, the Company entered into an employment agreement with Mr. Gregg G. Seibert, which replaced his prior employment agreement. The agreement with Mr. Seibert provides for his continued employment as Executive Vice President of the Company through December 31, 2016 at a minimum annual base salary of $1,500,000 (subject to annual review and potential increase in the discretion of the Compensation Committee) and an annual target bonus equal to 150% of his annual base salary in the discretion of the Compensation Committee. Mr. Seibert also assumed the role of Chief Financial Officer on June 7, 2011. In February 2013, Mr. Seibert was also named Vice Chairman of the Company. He will also be entitled to participate in future long-term cash and equity programs and arrangements that are made available to similarly situated executives of the Company. In light of Mr. Seibert’s contributions

 

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to the Company and his promotion to Vice Chairman on February 26, 2013, the Compensation Committee determined to increase Mr. Seibert’s annual salary for 2013 to $1,875,000 and his bonus target to 200% and his long-term incentive award target to $6 million.

Under the agreement, Mr. Seibert continues to be eligible to participate in the Company’s standard employee benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans. If, prior to December 31, 2016 (the “Scheduled Expiration Date”), Mr. Seibert’s employment with the Company is terminated (i) by the Company without Cause, or (ii) by him for Good Reason, then, subject to his execution of a separation agreement with the Company, the Company will provide him with the following benefits and rights:

 

(a) A severance payment in an amount determined at the discretion of the Company, but in no event less than two times the sum of his annual base salary and annual target bonus, 60% of which shall be payable to him on the six-month anniversary of his termination date and 40% of which shall be payable to him on the twelve-month anniversary of his termination date;

 

(b) A prorated annual bonus for the year in which such termination occurred, payable at the same time as such bonuses are paid to similarly situated employees and based on his then current annual target bonus as well as Company and his business unit performance as determined by the Company in its sole discretion, but without adjustment for his individual performance, plus any unpaid annual bonus for the year prior to the year in which such termination occurred;

 

(c) Each of his outstanding long-term cash awards will immediately vest in full (whether or not subject to performance criteria) and shall be payable to him at the same time as such awards are paid to other employees of the Company and the payment amount of such award shall be to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to satisfaction of any applicable performance criteria), provided that any more favorable provisions of his existing award agreements will apply to the treatment of such awards following a “going private transaction” (as defined in the award agreements) and following a “change of control” (as defined in the award agreements), his outstanding awards shall be paid at such time as such awards are paid to active employees of the Company, if such time is earlier than they otherwise would have been paid to him;

 

(d)

Each of his outstanding restricted stock or restricted stock unit awards granted to him under the plans of the Company shall continue to vest in accordance with their original vesting schedule and payments or deliveries with respect to his restricted stock and restricted stock units shall be made on the original vesting date (or, in the case of restricted stock units, on the original distribution date), and, in the case of restricted stock, the Company will withhold a portion of such awards in an amount sufficient to fund the minimum statutory tax withholding requirements (including, federal, state and

 

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local income and employment taxes) resulting from the recognition of income in respect of such outstanding restricted stock and make a payroll tax contribution in such amount on his behalf and, in the case of restricted stock units, if his termination of employment occurs on or after October 25th of a particular year, then any such restricted stock units which would otherwise be delivered after termination of his employment during that year will be delivered on the 68th day following his date of termination; and

 

(e) Each of his outstanding stock options under the plans of the Company shall continue to vest in accordance with their original vesting schedule and he will have the right to exercise each of those options for the remainder of the term of such option.

If Mr. Seibert ceases to be an employee of the Company prior to the Scheduled Expiration Date as a result of his death, or his physical or mental disability, and at such time Cause does not exist, then, subject to execution of a Separation Agreement (other than in the case of death), he or his estate or beneficiary will be provided with the benefits and rights set forth in (b), (d) and (e) of the preceding paragraph and each of his outstanding long-term cash awards shall immediately vest in full, whether or not subject to performance criteria and shall be payable on the 90th day after the 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 will 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 amount of such award will be to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria). Notwithstanding the foregoing, if provided for in the applicable stock option, restricted stock or restricted stock unit awards, his stock option, restricted stock and restricted stock unit awards will vest in full (and shares subject to restricted stock units will be distributed) at the time of his death.

If after the Scheduled Expiration Date, Mr. Seibert’s employment with the Company is terminated for any reason by him upon at least twelve months written notice, such notice to be effective no earlier than the first day after the Scheduled Expiration Date, and at the time of such termination Cause does not exist, then, subject to his execution of a separation agreement with the Company, he will be provided with the benefits and rights set forth in (b)-(e) of the second preceding paragraph.

Except as otherwise set forth in the employment agreement, upon the termination of Mr. Seibert’s employment with the Company, any outstanding long-term cash or equity awards will be treated in accordance with their terms and Mr. Seibert will not be eligible for severance benefits under any other plan, program or policy of the Company.

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

 

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For purposes of Mr. Seibert’s employment agreement, “Cause” means his (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. “Good Reason” means that (1) without his written consent, (A) his base salary or annual target bonus (as each may be increased from time to time in the Company’s sole discretion) is reduced, (B) his title (as in effect from time to time) is diminished, (C) he reports directly to someone other than James L. Dolan (or if James L. Dolan is no longer the Chief Executive Officer of the Company, to someone other than the Chairman of the Board of Directors of the Company), (D) the Company requires that his principal office be located outside of Nassau County or the Borough of Manhattan, (E) the Company materially breaches its obligations under the agreement, or (F) his responsibilities as in effect immediately after the date of the agreement, taken together with any additional material responsibilities which are thereafter assigned to him and which are intended to continue at least through the Scheduled Expiration Date, are thereafter materially diminished, (2) he has given the Company written notice 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) he voluntarily terminates his employment with the Company within 90 days following the happening of the action described in subsection (1) above.

David G. Ellen

On February 1, 2012, the Company entered into an employment agreement with Mr. David G. Ellen which replaced his prior employment agreement. In April 2014, we entered into a letter agreement with Mr. David G. Ellen which amended his prior employment agreement to extend the scheduled expiration date by two years to December 31, 2018, as described in more detail below. The February 2012 employment agreement with Mr. Ellen provided for his continued employment as Executive Vice President and General Counsel of the Company through December 31, 2016 at a minimum annual base salary of $850,000 (subject to annual review and potential increase in the discretion of the Compensation Committee) and an annual target bonus equal to at least 95% of his annual base salary in the discretion of the Compensation Committee. It further provided that he would be entitled to participate in future long-term cash and equity programs and arrangements that are made available to similarly situated executives of the Company. In light of Mr. Ellen’s contributions to the Company, on February 26, 2013, the Compensation Committee approved an increase to Mr. Ellen’s annual salary for 2013 to $1,200,000, his bonus target to 150% and his long-term incentive award target to $3 million. In December 2013, upon the retirement of Victoria D. Salhus as Secretary of the Company, the Board of Directors appointed Mr. Ellen as Secretary of the Company.

Under the employment agreement, Mr. Ellen continues to be eligible to participate in the Company’s standard employee benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.

 

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If, prior to December 31, 2018 (the “Scheduled Expiration Date”), Mr. Ellen’s employment with the Company is terminated (i) by the Company without Cause, or (ii) by him for Good Reason, then, subject to his execution of a separation agreement with the Company, the Company will provide him with the following benefits and rights:

 

(a) A severance payment in an amount equal to two times the sum of his annual base salary and annual target bonus, 60% of which shall be payable to him on the six-month anniversary of his termination date and 40% of which shall be payable to him on the twelve-month anniversary of his termination date;

 

(b) A prorated annual bonus for the year in which such termination occurred, payable at the same time as such bonuses are paid to similarly situated employees and based on his then current annual target bonus as well as Company and his business unit performance as determined by the Company in its sole discretion, but without adjustment for his individual performance, plus any unpaid annual bonus for the year prior to the year in which such termination occurred;

 

(c) Each of his outstanding long-term cash awards will immediately vest in full (whether or not subject to performance criteria) and shall be payable to him at the same time as such awards are paid to active employees of the Company and the payment amount of such award shall be to the same extent that other similarly situated active executives receive payment as determined by the Compensation Committee (subject to satisfaction of any applicable performance criteria), provided that any more favorable provisions of his existing award agreements will apply to the treatment of such awards following a “going private transaction” (as defined in the award agreements) and provide, further, that following a “change of control” (as defined in the award agreements), his outstanding awards shall be paid at such time as such awards are paid to active employees of the Company, if such time is earlier than they otherwise would have been paid to him;

 

(d) Each of his outstanding restricted stock or restricted stock unit awards granted to him under the plans of the Company shall continue to vest in accordance with their original vesting schedule and payments or deliveries with respect to his restricted stock and restricted stock units shall be made on the original vesting date (or, in the case of restricted stock units, on the original distribution date), and, in the case of restricted stock, the Company will withhold a portion of such awards in an amount sufficient to fund the minimum statutory tax withholding requirements (including, federal, state and local income and employment taxes) resulting from the recognition of income in respect of such outstanding restricted stock and make a payroll tax contribution in such amount on his behalf; and

 

(e) Each of his outstanding stock options under the plans of the Company shall continue to vest in accordance with their original vesting schedule and he will have the right to exercise each of those options for the remainder of the term of such option.

 

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If Mr. Ellen ceases to be an employee of the Company prior to the Scheduled Expiration Date as a result of his death, or his physical or mental disability, and at such time Cause does not exist, then, subject to execution of a Separation Agreement (other than in the case of death), he or his estate or beneficiary will be provided with the benefits and rights set forth in (b), (d) and (e) of the preceding paragraph and each of his outstanding long-term cash awards shall immediately vest in full, whether or not subject to performance criteria and shall be payable on the 90th day after the 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 will 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 amount of such award will be to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria).

Except as otherwise set forth in the employment agreement, upon the termination of Mr. Ellen’s employment with the Company, any outstanding long-term cash or equity awards will be determined in accordance with their terms and Mr. Ellen will not be eligible for severance benefits under any other plan, program or policy of the Company.

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

For purposes of Mr. Ellen’s employment agreement, “Cause” means his (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. “Good Reason” means that (1) without his written consent, (A) his base salary or annual target bonus (as each may be increased from time to time in the Company’s sole discretion) is reduced, (B) his title (as in effect from time to time) is diminished, (C) he reports directly to someone other than the Chief Executive Officer of the Company, (D) the Company requires that his principal office be located outside of Nassau County or the Borough of Manhattan, (E) the Company materially breaches its obligations under the agreement, or (F) his responsibilities as in effect immediately after the date of the agreement are thereafter materially diminished, (2) he has given the Company written notice 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) he voluntarily terminates his employment with the Company within 90 days following the happening of the action described in subsection (1) above.

The April 2014 letter agreement with Mr. Ellen amended his employment agreement to (1) reflect Mr. Ellen’s current title as Executive Vice President, General Counsel and Secretary, (2) reflect Mr. Ellen’s current salary of $1,200,000, and (3) extend the Scheduled Expiration Date to December 31, 2018.

 

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Termination and Severance

As described in “Compensation Discussion and Analysis — Post-Termination Compensation”, 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 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.

Generally, for the named executive officers, their employment agreements address some of these circumstances. For a description of termination provisions in the employment agreements, see “— Employment Agreements” above. In addition, the award agreements for the long-term incentives also address some of these circumstances. If an employment agreement provides for the treatment of any award upon the termination of employment, the terms of any applicable award agreements will not supersede the terms of the employment agreement unless otherwise provided in the employment agreement or the award agreement.

Award Agreements

Under the applicable award agreements, vesting of restricted stock and stock options granted to employees, including the named executive officers, may be affected upon a “change of control” of the Company or a going private transaction (as defined in Rule 13e-3 of the Securities Exchange Act of 1934). A “change of control” is defined as the acquisition by any person or group, other than Charles F. Dolan or members of his immediate family (or trusts for the benefit of Charles F. Dolan or his immediate family) or any employee benefit plan sponsored or maintained by the Company, of (1) the power to direct the management of substantially all of the cable television systems then owned by the Company in the New York City metropolitan area, or (2) after any fiscal year of the Company in which the Company’s cable television systems in the New York City metropolitan area contributed in the aggregate less than a majority of the net revenues of the Company and its consolidated subsidiaries, the power to direct the management of the Company or substantially all of its assets. Upon a change in control, as defined, the restricted stock shall immediately vest and become payable and stock options shall immediately vest and become exercisable. Upon a going private transaction, the restricted stock and stock options may be converted into either a right to receive an amount of cash based upon the highest price per share of the Company’s Class A common stock paid in the going private transaction, or, as long as the surviving entity is a public company, into a corresponding award with equivalent profit potential in the surviving entity, at the election of the Compensation Committee. Following a going private transaction, the award of restricted stock and stock options will become payable on the earlier to occur of (1) the date on which the award was originally scheduled to vest, or (2) the date on which the recipient’s employment with the Company or the surviving entity is terminated (A) by the Company or the surviving entity other than for cause, or (B) by the recipient for good reason, if such termination occurs within three years after the going private transaction, or by the

 

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recipient for any reason if such termination occurs at least six months, but not more than nine months, after completion of the going private transaction. In addition, the amount payable under the award agreement will include interest from the date of the going private transaction.

Under the applicable award agreements, vesting of restricted stock and stock options granted to employees, including the named executive officers, may be accelerated in certain other circumstances. Under stock option award agreements, upon termination for cause, the entire award is forfeited. Upon termination by the Company without cause, termination by the employee, death, disability or retirement, the unvested portion of the award is forfeited; provided, however, that only with respect to stock options granted in 2006 and 2009, upon death, the entire award is immediately vested. Depending on the type of termination and specific option grant, the time to exercise the vested portion varies from 90 days to three years. With respect to stock options granted in March 2009, depending on the type of termination, the time to exercise the vested option varies from 90 days to the remainder of the term. In no event is this period later than the expiration date, except in the case of death, in which case the time to exercise may be extended for one year after the expiration date. Under restricted stock award agreements, upon any termination for any reason prior to the third anniversary of the grant date other than death or change of control or going private transaction, the entire award is forfeited; upon death, the entire award is immediately vested.

Under the applicable award agreements for performance awards, upon termination for cause, the entire award is forfeited. Upon a change in control, the target performance award vests and is immediately payable, regardless of the performance objectives. Upon any termination for any reason prior to the payment date other than death, the entire performance award is forfeited. Upon death before the end of the performance period, a pro rata portion of the performance award will vest and be immediately payable; upon death after the end of the performance period but prior to the payment date, the entire performance award will be payable upon the payment date. In the event of a going private transaction, the target performance award will be payable regardless of the performance objectives on the earliest to occur of (1) the date on which the award was originally scheduled to vest, (2) the recipient’s death, or (3) the date on which the recipient’s employment with the Company, the surviving entity or one of their subsidiaries is terminated (A) by the Company, the surviving entity or one of their subsidiaries other than for cause, or (B) by the recipient for good reason, provided that the recipient remains in the continuous employ of the Company through that date.

Quantification of Termination and Severance

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

 

   

Termination of employment occurred after the close of business on December 31, 2013.

 

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We have valued equity awards using the closing market price of Class A common stock on the New York Stock Exchange on December 31, 2013, of $17.93.

 

   

We have valued stock options at their intrinsic value, equal to the difference between $17.93 and the per share exercise price, multiplied by the number of shares underlying the stock options.

 

   

Where applicable, we have included in the calculation of the value of equity awards the payment of any quarterly dividends declared through December 31, 2013.

 

   

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 named executive officer’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 (but not exceeded).

Benefits Payable As a Result of Voluntary Termination of Employment by Employee

In the event of voluntary termination by a named executive officer, none of the named executive officers would have been entitled to any payments at December 31, 2013 other than any payments or awards that were vested at December 31, 2013 or any pension or other vested retirement benefits.

Benefits Payable As a Result of Termination of Employment Due to Retirement

In the event of termination due to retirement, none of the named executive officers would have been entitled to any payments at December 31, 2013 other than any payments or awards that were vested at December 31, 2013 or any pension or other vested retirement benefits. Ms. Victoria D. Salhus retired on December 30, 2013, and upon her retirement was entitled to a severance payment of $1,512,108 and an additional payment of $60,000 representing the cost of COBRA continuation coverage for 18 months. In addition, her outstanding unvested restricted stock awards (including AMC restricted stock) and unvested stock options vested on December 31, 2013, and the options will remain exercisable for three years from that date. The value of Ms. Salhus’ unvested restricted stock awards (including AMC restricted stock) at December 31, 2013 was $1,042,830 and unvested stock options was $199,600 at December 31, 2013. In connection with her retirement, Ms. Salhus agreed to be bound by certain non-solicitation, non-disparagement and confidentiality obligations.

 

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Benefits Payable As a Result of Termination of Employment by the Company for Cause

In the event of termination by the Company for Cause, none of the named executive officers would have been entitled to any payments at December 31, 2013 other than any payments or awards that were vested at December 31, 2013 or any pension or other vested retirement benefits.

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

 

Elements  

Charles F.

Dolan

   

James L.

Dolan

   

Gregg G.

Seibert

   

David G.

Ellen

     Kevin F.
Watson
 

Severance

         $ 12,000,000 (1)    $ 11,250,000 (1)    $ 6,000,000 (1)         

Most recent bonus

         $ 5,152,606      $ 4,815,158      $ 2,302,236           

Unvested restricted stock

         $ 6,253,740 (2)    $ 8,047,814 (3)    $ 3,769,921 (4)         

Unvested stock options

         $ 11,275,600 (5)    $ 1,687,800 (6)    $ 897,800 (6)         

Unvested performance options

                                   

Performance awards

         $ 7,786,000 (7)    $ 5,550,000 (7)    $ 2,600,000 (7)         

2009 Retention award

                                   

Deferred compensation award

                                   

Consulting arrangements

                                   

Additional retirement benefit

                                   

Health insurance benefits

                                   

Executive life insurance premiums

                                   

 

* The amounts in this table do not include any payments or awards which were vested at December 31, 2013 or any pension or other vested retirement benefits.

 

(1) Represents severance equal to two times the sum of salary and target bonus.

 

(2) Represents full vesting of the 2011 and 2012 grants of 78,800 and 248,200 shares of restricted stock, respectively, with a value of $1,542,904 and $4,710,836, respectively.

 

(3) Represents full vesting of the 2011, 2012 and 2013 grants of 54,400, 167,700 and 203,700 shares of restricted stock, respectively, with a value of $1,065,152, $3,208,101 and $3,774,561, respectively.

 

(4) Represents full vesting of the 2011, 2012, and 2013 grants of 24,000, 73,800 and 101,900 shares of restricted stock, respectively, with a value of $469,920, $1,411,794 and $1,888,207, respectively.

 

(5) Represents full vesting of the unvested portion of the 2012 and 2013 grants of 843,900 and 2,000,000 stock options, respectively, with a value of $3,375,600 and $7,900,000, respectively.

 

(6) Represents full vesting of the unvested portion of the 2012 grant of stock options.

 

(7) Represents full vesting of the 2012 and 2013 performance awards.

 

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Benefits Payable As a Result of Termination of Employment by Employee For Good Reason*

 

Elements   Charles F.
Dolan
    James L.
Dolan
    Gregg G.
Seibert
    David G.
Ellen
     Kevin F.
Watson
 

Severance

         $ 12,000,000 (1)    $ 11,250,000 (1)    $ 6,000,000 (1)         

Most recent bonus

         $ 5,152,606      $ 4,815,158      $ 2,302,236           

Unvested restricted stock

         $ 6,253,740 (2)    $ 8,047,814 (3)    $ 3,769,921 (4)         

Unvested stock options

         $ 11,275,600 (5)    $ 1,687,800 (6)    $ 897,800 (6)         

Unvested performance options

                                   

Performance awards

         $ 7,786,000 (7)    $ 5,500,000 (7)    $ 2,600,000 (7)         

2009 Retention award

                                   

Deferred compensation award

                                   

Consulting arrangements

                                   

Balance under special retirement account

                                   

Health insurance benefits

                                   

Executive life insurance premiums

                                   

 

* The amounts in this table do not include any payments or awards which were vested at December 31, 2013 or any pension or other vested retirement benefits.

 

(1) Represents severance equal to two times the sum of salary and target bonus.

 

(2) Represents full vesting of the 2011 and 2012 grants of 78,800 and 248,200 shares of restricted stock, respectively, with a value of $1,542,904 and $4,710,836, respectively.

 

(3) Represents full vesting of the 2011, 2012 and 2013 grants of 54,400, 167,700 and 203,700 shares of restricted stock, respectively, with a value of $1,065,152, $3,208,101 and $3,774,561, respectively.

 

(4) Represents full vesting of the 2011, 2012 and 2013 grants of 24,000, 73,800 and 101,900 shares of restricted stock, respectively, with a value of $469,920, $1,411,794 and $1,888,207, respectively.

 

(5) Represents full vesting of the unvested portion of the 2012 and 2013 grants of 843,900 and 2,000,000 stock options, respectively, with a value of $3,375,600 and $7,900,000, respectively.

 

(6) Represents full vesting of the unvested portion of the 2012 grant of stock options.

 

(7) Represents full vesting of the 2012 and 2013 performance awards.

 

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

 

Elements  

Charles F.

Dolan

   

James L.

Dolan

   

Gregg G.

Seibert

   

David G.

Ellen

   

Kevin F.

Watson

 

Severance

                                  

Salary

  $ 1,664,000 (1)                             

Most recent bonus

         $ 5,152,606      $ 4,815,158      $ 2,302,236          

Unvested restricted stock

  $ 10,983,991 (2)    $ 6,253,740 (3)    $ 8,047,814 (4)    $ 3,769,921 (5)    $ 752,231 (6) 

Unvested stock options

  $ 3,495,200 (7)    $ 11,275,600 (8)    $ 1,687,800 (7)    $ 897,800 (7)    $ 191,600 (7) 

Unvested performance options

                                  

Performance awards

  $ 3,725,000 (9)    $ 7,786,000 (10)    $ 5,500,000 (10)    $ 2,600,000 (10)    $ 243,333 (9) 

2009 Retention award

                                  

Performance retention award

                                  

Deferred compensation award

                                  

Consulting arrangements

                                  

Additional retirement benefit

                                  

Health insurance benefits

                                  

Executive life insurance premiums

                                  

 

* The amounts in this table do not include any payments or awards which were vested at December 31, 2013 or any pension or other vested retirement benefits.

 

(1) Represents one year of base salary.

 

(2) Represents full vesting of the 2011, 2012 and 2013 grants of 79,400, 249,900 and 252,900 shares of restricted stock, respectively, with a value of $1,554,652, $4,743,102 and $4,686,237, respectively.

 

(3) Represents full vesting of the 2012 and 2013 grants of 78,800 and 248,200 shares of restricted stock, respectively, with a value of $1,542,904 and $4,710,836, respectively.

 

(4) Represents full vesting of the 2011, 2012 and 2013 grants of 54,400, 167,700 and 203,700 shares of restricted stock, respectively, with a value of $1,065,152, $3,208,101 and $3,774,561, respectively.

 

(5) Represents full vesting of the 2011, 2012 and 2013 grants of 24,000, 73,800 and 101,900 shares of restricted stock, respectively, with a value of $469,920, $1,411,794 and $1,888,207, respectively.

 

(6) Represents full vesting of the 2011, 2012 and 2013 grants of 6,600, 16,100 and 17,000 shares of restricted stock, respectively, with a value of $129,228, $307,993 and $315,010, respectively.

 

(7) Represents full vesting of the unvested portion of the 2012 grant of stock options.

 

(8) Represents full vesting of the unvested portion of the 2012 and 2013 grants of 843,900 and 2,000,000 stock options, respectively, with a value of $3,375,600 and $7,900,000, respectively.

 

(9) Represents pro rata vesting of the 2012 and 2013 performance awards.

 

(10) Represents the full vesting of the 2012 and 2013 performance awards.

 

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

 

Elements   Charles F.
Dolan
    James L.
Dolan
    Gregg G.
Seibert
    David G.
Ellen
     Kevin F.
Watson
 

Severance

                                   

Salary

  $ 1,664,000 (1)                              

Most recent bonus

         $ 5,152,606      $ 4,815,158      $ 2,302,236           

Unvested restricted stock

         $ 6,253,740 (2)    $ 8,047,814 (3)    $ 3,769,921 (4)         

Unvested stock options

         $ 11,275,600 (5)    $ 1,687,800 (6)    $ 897,800 (7)         

Unvested performance options

                                   

Performance awards

         $ 7,786,000 (8)    $ 5,500,000 (8)    $ 2,600,000 (8)         

2009 retention award

                                   

Deferred compensation award

                                   

Consulting arrangements

                                   

Additional retirement benefit

                                   

Health insurance benefits

  $ 17,070 (9)                              

Executive life insurance premiums

                                   

 

* The amounts in this table do not include any payments or awards which were vested at December 31, 2013 or any pension or other vested retirement benefits.

 

(1) Represents one year of base salary.

 

(2) Represents full vesting of the 2011 and 2012 grants of 78,800 and 248,200 shares of restricted stock, respectively, with a value of $1,542,904 and $4,710,836, respectively.

 

(3) Represents full vesting of the 2011, 2012 and 2013 grants of 54,400, 167,700 and 203,700 shares of restricted stock, respectively, with a value of $1,065,152, $3,208,101 and $3,774,561, respectively.

 

(4) Represents full vesting of the 2011, 2012 and 2013 grants of 24,000, 73,800 and 101,900 shares of restricted stock, respectively, with a value of $469,920, $1,411,794 and $1,888,207, respectively.

 

(5) Represents full vesting of the unvested portion of the 2012 and 2013 grants of 843,900 and 2,000,000 stock options, respectively, with a value of $3,375,600 and $7,900,000, respectively.

 

(6) Represents full vesting of the unvested portion of the 2012 grant of 421,950 stock options.

 

(7) Represents full vesting of the unvested portion of the 2012 grant of 224,450 stock options.

 

(8) Represents full vesting of the 2012 and 2013 performance awards.

 

(9) Represents payment of his medical and dental insurance for one year.

 

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Benefits Payable As a Result of Termination of Employment In Connection with a Change in Control or Going Private Transaction(1)*

 

Elements  

Charles F.

Dolan(2)

   

James L.

Dolan(3)

   

Gregg G.

Seibert(4)

   

David G.

Ellen(5)

    

Kevin F.

Watson(6)

 

Severance

         $ 12,000,000 (7)    $ 11,250,000 (7)    $ 6,000,000 (7)         

Most recent bonus

         $ 5,152,606      $ 4,815,156      $ 2,302,236           

Unvested restricted stock

  $ 10,983,991      $ 6,253,740      $ 8,047,814      $ 3,769,921       $ 752,231   

Unvested stock options

  $ 3,495,200      $ 11,275,600      $ 1,687,800      $ 897,800       $ 191,600   

Unvested performance options

                                   

Performance awards

  $ 11,830,000      $ 12,136,000      $ 8,500,000      $ 3,920,000       $ 730,000   

2009 Retention award

                                   

Deferred compensation award

                                   

Consulting arrangements

                                   

Additional retirement benefit

                                   

Health insurance benefits

                                   

Executive life insurance premiums

                                   

 

* The amounts in this table do not include any payments or awards which were vested at December 31, 2013 or any pension or other vested retirement benefits.

 

(1) The numbers presented in this table reflect amounts payable as a result of a qualifying termination of employment by the executive or the Company following a change in control. The amounts payable as a result of a qualifying termination of employment by the executive or the Company following a going private transaction are generally equal to or less than the amounts payable as a result of a qualifying termination of employment by the executive or the Company following a change in control. For specific information about payments for a termination following a going private transaction, see Notes (2) to (6) below.

 

(2) If a change in control of the Company were to occur, but Mr. Charles F. Dolan’s employment was not terminated, he would nevertheless be entitled to receive the following upon consummation of the change in control: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $11,830,000; (ii) vesting of all of his outstanding unvested restricted stock (582,200 shares) with a value of $10,983,991; and (iii) vesting of all of his outstanding unvested stock options (873,800 options) with a value of $3,495,200. In the event of a qualifying termination of his employment by Mr. Charles F. Dolan or by the Company following a going private transaction, Mr. Charles F. Dolan would be entitled to receive the following (in addition to all previously vested amounts): (i) vesting of all of his outstanding unvested restricted stock (582,200 shares) with a value of $10,983,991; (ii) vesting of all of his outstanding unvested stock options (873,800 options) with a value of $3,495,200; and (iii) the full vesting of his 2011, 2012 and 2013 performance awards equal to a value of $11,830,000. If a going private transaction were to occur but Mr. Charles F. Dolan’s employment was not terminated, he would nevertheless be entitled to receive the full amount of his 2011 performance award of $4,380,000.

 

(3)

If a change in control of the Company were to occur but Mr. James L. Dolan’s employment was not terminated, he would nevertheless be entitled to receive the following upon consummation of the change in control: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $12,136,000; (ii) vesting of all of his outstanding unvested restricted stock (327,000 shares) with a value of $6,253,470; and (iii) vesting of all of his outstanding unvested stock options (2,843,900 options) with a value of $11,275,600. If Mr. James L. Dolan’s employment were terminated by the Company, or by him, following a

 

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going private transaction, it would be treated as a termination by the Company without cause and he would be entitled to receive payments in the same amounts that are set forth in that table. If a going private transaction were to occur but Mr. James L. Dolan’s employment was not terminated, he would nevertheless be entitled to receive the full amount of his 2011 performance award of $4,350,000.

 

(4) If a change in control of the Company were to occur but Mr. Seibert’s employment was not terminated, he would nevertheless be entitled to receive the following upon consummation of the change in control: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $8,500,000; (ii) vesting of all of his outstanding unvested restricted stock (425,800 shares) with a value of $8,047,814; and (iii) vesting of all of his outstanding unvested stock options (421,950 options) with a value of $1,687,800. If a change in control or a going private transaction of the Company were to occur and there was a qualifying termination of Mr. Seibert’s employment by the Company, or by him, he would be entitled to receive: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $8,500,000; (ii) vesting of all of his outstanding unvested restricted stock (425,800 shares) with a value of $8,047,814; and (iii) vesting of all of his outstanding unvested stock options (421,950 options) with a value of $1,687,800. If a going private transaction were to occur but Mr. Seibert’s employment was not terminated, he would nevertheless be entitled to receive the full amount of his 2011 performance award of $3,000,000.

 

(5) If a change in control of the Company were to occur but Mr. Ellen’s employment was not terminated, he would nevertheless be entitled to receive the following upon consummation of the change in control: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $3,920,000; (ii) vesting of all of his outstanding unvested restricted stock (199,700 shares) with a value of $3,769,921; and (iii) vesting of all of his outstanding unvested stock options (224,450 options) with a value of $897,900. If a change in control or a going private transaction of the Company were to occur and there was a qualifying termination of Mr. Ellen’s employment by the Company, or by him, he would be entitled to receive: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $3,920,000; (ii) vesting of all of his outstanding unvested restricted stock (199,700 shares) with a value of $3,769,921; and (iii) vesting of all of his outstanding unvested stock options (224,450 options) with a value of $897,900. If a going private transaction were to occur but Mr. Ellen’s employment was not terminated, he would nevertheless be entitled to receive the full amount of his 2011 performance award of $1,320,000.

 

(6) If a change in control of the Company were to occur but Mr. Watson’s employment was not terminated, he would nevertheless be entitled to receive the following upon consummation of the change in control: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $730,000; (ii) vesting of all of his outstanding unvested restricted stock (39,700 shares) with a value of $752,231; and (iii) vesting of all of his outstanding unvested stock options (47,900 options) with a value of $191,600. If a change in control or a going private transaction of the Company were to occur and there was a qualifying termination of Mr. Watson’s employment by the Company, or by him, he would be entitled to receive: (i) vesting of his 2011, 2012 and 2013 performance awards equal to a value of $730,000; (ii) vesting of all of his outstanding unvested restricted stock (39,700 shares) with a value of $752,231; and (iii) vesting of all of his outstanding unvested stock options (47,900 options) with a value of $191,600. If a going private transaction were to occur but Mr. Watson’s employment was not terminated, he would nevertheless be entitled to receive the full amount of his 2011 performance award of $240,000.

 

(7) Represents severance equal to two times the sum of his salary and target bonus.

 

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Equity Compensation Plan Information

 

Plan Category    Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(1)(2)(a)
     Weighted-average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)(3)
    

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))(2)

(c)

 

Equity compensation plans approved by security holders

                          

Class A common stock

     16,195,369       $ 12.98         16,714,678   

Equity compensation plans not approved by security holders

                       

Total

     16,195,369       $ 12.98         16,714,678   
  

 

 

    

 

 

    

 

 

 

 

(1) Includes the following plans: the 1996 Amended and Restated Employee Stock Plan, the 1996 Stock Plan for Non-Employee Directors, the 2006 Employee Stock Plan and the 2006 Stock Plan for Non-Employee Directors. 635,549 shares of this amount relate to options held by AMC and MSG employees, 406,216 shares of this amount relate to restricted stock units held by non-employee directors. Does not include 6,205,213 shares of restricted stock issued under the 2006 Employee Stock Plan that were not yet vested at December 31, 2013.

 

(2) In the first quarter of 2014, the Compensation Committee granted awards covering an aggregate of 2,557,160 restricted shares and options to purchase an aggregate of 2,000,000 shares. The shares covered by these awards and options are not reflected as outstanding in column (a) and the number of shares remaining available for future issuance in column (c) has not been reduced to reflect these shares.

 

(3) Represents the weighted-average exercise price of 15,789,153 outstanding stock options.

PROPOSAL 3

Approval of Cablevision Systems Corporation Amended and Restated 2006 Employee Stock Plan

On March 17, 2014, our Compensation Committee, subject to approval by our stockholders, approved amendments to the Cablevision Systems Corporation 2006 Employee Stock Plan to make certain minor changes, as discussed below. The amendments to the 2006 Employee Stock Plan would not increase the number of shares of Class A common stock available for issuance under the plan.

The Amended 2006 Employee Stock Plan is being submitted to stockholders for approval so that the Company may continue to grant certain tax deductible awards under Section 162(m) of the Internal Revenue Code. Section 162(m) requires that the plan be reapproved every five years. The Amended 2006 Employee Stock Plan would permit the Company to continue to grant performance-based restricted stock (and restricted stock unit) awards as “qualified performance-based compensation” as defined under the regulations interpreting Section 162(m). Section 162(m) limits the deductibility of compensation in excess of $1

 

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Proxy Statement 2014 - Cablevision

 

million paid by a publicly traded corporation to certain “covered employees” unless it is “qualified performance-based compensation.” If the Amended 2006 Employee Stock Plan is not approved by our stockholders, then our grant of restricted stock (and restricted stock unit) awards under the 2006 Employee Stock Plan would not be “qualified performance-based compensation” even if the awards had performance conditions and accordingly would not be tax deductible by the Company to the extent those awards and any other compensation which is not “qualified performance-based compensation” received by a “covered employee” exceeds $1 million. Even if stockholders approve the Amended 2006 Employee Stock Plan, we reserve the right to pay our employees, including recipients of awards under the Amended 2006 Employee Stock Plan, amounts which may or may not be deductible under Section 162(m) or other provisions of the Internal Revenue Code.

The text of the Amended 2006 Employee Stock Plan is set forth in Exhibit A to this proxy statement, and the following discussion is qualified in its entirety by reference to Exhibit A.

Historic Burn Rate and Potential Dilution

We believe that the shares currently available for issuance under the Amended 2006 Employee Stock Plan will provide sufficient shares for our equity-based compensation needs for approximately three years following the date the plan is approved by stockholders. We are not proposing an increase in the number of authorized shares. Our equity-based compensation model, including the broad-based participation of our employees and the equity compensation paid to our executive officers and members of management, results in a “burn rate” as indicated in the chart below:

 

      2011     2012     2013     Total/Average