10-KT/A 1 d10kta.txt AMENDMENT #1 TO FORM 10-K/A ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K/A FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [_]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended or [X]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from April 1, 2000 to December 31, 2000 Commission file number 0-24218 GEMSTAR-TV GUIDE INTERNATIONAL, INC. (Exact name of Registrant as specified in its charter) Delaware 95-4782077 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
135 North Los Robles Avenue, Suite 800, Pasadena, California 91101 (Address of Principal Executive Offices) (Zip Code)
(626) 792-5700 (Registrant's telephone number, including area code:) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share (Title of Class) --------------- Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] As of March 31, 2001, there were 411,319,000 shares of the Registrant's common stock outstanding, par value $.01 per share ("Common Stock"), which is the only class of common stock of the Registrant. As of March 31, 2001, the aggregate market value of common stock held by non-affiliates of the Registrant was approximately $4.6 billion, based on the closing sales price of $28.75 per share as reported by the Nasdaq National Market System. Shares of common stock held by officers, directors and five percent holders have been excluded from this calculation because such persons may be deemed to be affiliates. The determination of affiliate status is not a conclusive determination for other purposes. ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- The Registrant's transition report on Form 10-K filed with the Securities and Exchange Commission on April 2, 2001 is hereby amended as follows: PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information with Respect to Directors The following table sets forth certain information with respect to each director of Gemstar--TV Guide International, Inc. ("Gemstar" or the "Company").
Name and Age Director Year Term (as of April, 2001) Position and Business Experience Since Expires ------------------- -------------------------------- -------- --------- Henry C. Yuen...... Dr. Yuen is a co-founder of the Company and April 1992 2003 (51) has served as the Company's Chief Executive Officer since August 1994, as President from August 1994 to July 2000, as a director since April 1992, and as Chairman of the Board of Directors of the Company since January 1999. Dr. Yuen invented the Company's VCR Plus+ system and co-founded Gemstar in 1989. Prior to the founding of Gemstar, Dr. Yuen was a research scientist and Technical Fellow at TRW, Inc., and held faculty positions at New York University Courant Institute of Mathematical Sciences and the California Institute of Technology. Dr. Yuen holds a B.S. (Mathematics) from the University of Wisconsin, a Ph.D. (Applied Mathematics) from the California Institute of Technology, and a J.D. from Loyola University School of Law. Dr. Yuen has over 70 published scientific papers, 25 issued patents, and over 100 pending patents. Dr. Yuen is a member of the State Bar of California. Elsie Ma Leung .... Ms. Leung has served as the Company's Chief April 1994 2003 (54) Financial Officer since August 1994 and as a director of the Company since April 1994. Since July 2000, Ms. Leung has also served as Co-President and Co-Chief Operating Officer and as a member of the Office of the Chief Executive. Ms. Leung founded a public accounting firm, Leung, Kaufman & Co., in 1983 and was its managing partner until joining the Company. Ms. Leung also served as Chief Financial Officer of American Plant Growers, Inc. from 1988 to 1993. Prior to 1983, Ms. Leung performed audit duties at Kenneth Leventhal & Company. Ms Leung is a Certified Public Accountant. Ms. Leung holds a B.A. (Accounting) from California State University, Los Angeles.
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Name and Age Director Year Term (as of April, 2001) Position and Business Experience Since Expires ------------------- -------------------------------- -------- --------- Peter C. Boylan III.... Mr. Boylan has been co-President and Chief July 2000 2003 (37) Operating Officer, a member of the Office of the Chief Executive and a Director of the Company and co-Chairman and Chief Executive Officer and co-President of TV Guide, Inc. ("TV Guide") since July 2000. Mr. Boylan served as President and Chief Operating Officer of TV Guide from June 1999 through July 2000; Executive Vice President of TV Guide from March 1999 to June 1999; President of TV Guide from August 1997 to March 1999; Chief Operating Officer of TV Guide from December 1996 to March 1999 and Executive Vice President and Chief Financial Officer of TV Guide from October 1994 to December 1996. Mr. Boylan has been a director of TV Guide since July 1995. Mr. Boylan is also a director of BOK Financial Corporation. Joachim Kiener......... Mr. Kiener has been co-President and Chief July 2000 2003 (48) Operating Officer, a member of the Office of the Chief Executive and a Director of the Company and co-Chairman and Chief Executive Officer and co-President of TV Guide since July 2000. Mr. Kiener served as Chairman of the Board and Chief Executive Officer of TV Guide from June 1999 through July 2000 and President of TV Guide from March 1999 to June 1999 and has been a Director of TV Guide since March 1999. Mr. Kiener was President and Chief Operating Officer of News America Publishing Group, a division of News Corp., from March 1998 to March 1999. He joined News Corp. as Executive Vice President and Chief Operating Officer of HarperCollins Publishers in September 1996. Prior to joining HarperCollins Publishers, Mr. Kiener spent seven years in various senior executive positions at EMI-Capitol Music Group, N.A. Stephen A. Weiswasser.. Mr. Weiswasser served as a director, July 1999 Resigned (60) Secretary, Executive Vice President and effective General Counsel of the Company from July 1999 December 31, until December 31, 2000. Mr. Weiswasser has 2000. been a partner at the law firm of Covington & Burling from April 1998 to present. From 1995 to 1998, Mr. Weiswasser served as the Chief Executive Officer of Americast. Prior to his position with Americast, Mr. Weiswasser served as a Senior Vice President of Capital Cities/ABC Inc., and held a number of other senior executive positions with that company from 1986 to 1995. Mr. Weiswasser holds a B.A. from Wayne State University and a J.D. from Harvard Law School.
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Name and Age Director Year Term (as of April, 2001) Position and Business Experience Since Expires ------------------- -------------------------------- -------- --------- Jonathan Orlick.... Mr. Orlick has served as a director of the March 2001 2002 (43) Company since March 2001, and has been the Senior Vice President, Intellectual Property and Licensing since 1997. Mr. Orlick has also served as Vice President, Intellectual Property and Licensing, General Counsel, and Secretary for Starsight Telecast, Inc., since 1996. Mr. Orlick also is a director of Norpak Corporation. George Carrier..... Dr. Carrier has served as a director of the August 1994 2002 (82) Company since August 1994. He served on the faculty of Harvard University from 1952 until he retired in 1988. While at Harvard, he served as the Gordon McKay Professor of Mechanical Engineering and T. Jefferson Coolidge Professor of Applied Mathematics. Since 1995, Dr. Carrier has served as a private consultant to TRW Inc.'s Aerospace and Automotive Divisions, since 1992 has served as a private consultant to the National Science Foundation and is a consultant for Fendell Associates. Dr. Carrier holds a B.S. (Mechanical Engineering) from Cornell University and a Ph.D. (Applied Mechanics) from Cornell University. Robert Bennett..... Mr. Bennett has been a director of the July 2000 2002 (43) Company since July 2000. Previously, Mr. Bennett was a Director of TV Guide from February 1998 to July 2000. Mr. Bennett has also been President and Chief Executive Officer of Liberty Media Corporation since April 1997, Executive Vice President of Tele- Communications, Inc., from April 1997 to March 1999, Executive Vice President, Chief Financial Officer, Secretary and Treasurer of Liberty Media Corporation from June 1995 through March 1997, Senior Vice President of Liberty Media Corporation from September 1991 to June 1995, and acting Chief Financial Officer of Liberty Digital, Inc., from June 1997 to July 1997. Mr. Bennett is also the Chairman of the Board of Liberty Digital, Inc., and a director of Liberty Livewire Corporation, Liberty Satellite & Technology, Inc., USANi, LLC and Teligent, Inc.
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Name and Age Year Term (as of April, 2001) Position and Business Experience Director Since Expires ------------------- -------------------------------- -------------- --------- Chase Carey........ Mr. Carey has been a director of the Company July 2000 2002 (47) since July 2000. Mr. Carey was previously a Director of TV Guide from March 1999 to July 2000 and has been Director of Fox Entertainment Group, Inc. and Co-Chief Operating Officer of Fox Entertainment Group, Inc. since August 1998. Mr. Carey is an Executive Director and has been the Co-Chief Operating Officer of News Corp. and a Director and Executive Vice President of News America Incorporated since 1996. Mr. Carey has served as the Chairman and Chief Executive Officer of Fox Television since July 1994. Mr. Carey joined Fox, Inc. (predecessor of Fox Entertainment Group, Inc.) in 1990 as Executive Vice President, served as Chief Financial Officer, and assumed the title of Chief Operating Officer in February 1992. Prior to joining Fox Television, Mr. Carey worked at Columbia Pictures in several executive positions. Mr. Carey is also a member of the Boards of Directors of Gateway, Inc., NDS Group plc, and The News Corporation Limited. Douglas B. Macrae.. Mr. Macrae has served as a director of the September 1997 2001 (42) Company since September 1997. Mr. Macrae founded VideoGuide Inc., a wholly-owned subsidiary of the Company, in September 1993 and has served as its President since that time. Mr. Macrae currently serves as Chairman of the Board of GCC Technologies, Inc., a privately held company that designs, licenses, manufactures and sells consumer electronics and computer products. Mr. Macrae is currently a director of Norpak Corporation and a director of @TV Media. James E. Meyer..... Mr. Meyer has served as a director of the May 1997 2001 (46) Company since May 1997. Mr. Meyer has served as the Senior Executive Vice President and Chief Operating Officer for Thomson Consumer Electronics, Inc. ("Thomson") since 1997. Mr. Meyer served as Senior Vice President Product Management for Thomson from 1992 to 1996. From December 1996 to September 1997, Mr. Meyer served as Executive Vice President, Marketing & Sales-Americas for Thomson. Since June 1995. Mr. Meyer also serves as a director for Mikohn Gaming Corporation and Geocast Systems.
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Name and Age Director Year Term (as of April, 2001) Position and Business Experience Since Expires ------------------- -------------------------------- -------- --------- J. David Wargo............ Mr. Wargo has been a director of the Company July 2000 2001 (47) since July, 2000. Previously, Mr. Wargo was a director of TV Guide from January 25, 1996 to July, 2000. Mr. Wargo has been President of Wargo & Company, a private investment company specializing in the communications industry, since January 1993. Mr. Wargo was a Managing Director of The Putnam Companies from December 1989 to December 1992. Mr. Wargo is a director of On Command Corporation and Liberty Digital, Inc. Nicholas Donatiello, Jr... Mr. Donatiello has been a director of the July 2000 2001 (40) Company since July, 2000. Mr. Donatiello was a Director of TV Guide from June 23, 1999 to July, 2000 and has been the President and Chief Executive Officer of Odyssey Ventures, Inc., which is the general partner of Odyssey, L.P., since September 1993. Odyssey, L.P. is principally engaged in conducting market research of consumer adoption and usage of new media products and services. Prior to founding Odyssey, he was Press Secretary and Campaign Manager for U.S. Senator Bill Bradley and a consultant with McKinsey and Co.
Arrangements with respect to the election of directors exist in the Stockholders Agreement entered into by Henry C. Yuen, Liberty Media Corporation, The News Corporation Limited and Gemstar which became effective upon the completion of the merger between the Company and TV Guide, Inc., on July 12, 2000 (the "Merger"). Henry C. Yuen and designees of Mr. Yuen, Liberty and News Corp. have agreed (1) to vote for, or to use their best efforts to cause their respective designees on the board of directors to vote for, Mr. Yuen's election as a director and appointment as Chairman of the Board and Chief Executive Officer until the earlier of the fifth anniversary of the completion of the Merger and the date Mr. Yuen ceases to be Chief Executive Officer of the Company other than as a result of his termination without cause and (2) to vote for the election to the board of five other persons (including two independent directors) designated by Mr. Yuen until the earlier of the fifth anniversary of the completion of the Merger and the date Mr. Yuen ceases to be Chief Executive Officer of the Company other than as a result of his termination without cause, provided that if Mr. Yuen should die or become disabled during such five-year period Liberty and News Corp. have each agreed, for the remainder of the five- year period, to continue to vote for the election to the board of the directors formerly designated by Mr. Yuen or their successors (including Mr. Yuen's successor) and to vote against their removal except for cause. For so long as Liberty and News Corp. are committed to vote for Mr. Yuen and his designees, Mr. Yuen has agreed to vote his shares of Gemstar common stock for the election to the Gemstar board of three designees of Liberty (including one independent director) and three designees of News Corp. (including one independent director). Each of Liberty's and News Corp.'s right to designate directors generally shall be reduced by one director upon the transfer of 90% or more of its respective shares of common stock of the Company, but if the transfer of any of the shares was from one to the other then the total number of directors Liberty and News Corp. have the right to designate will not be reduced. Liberty and News Corp. have the right to allocate designees to the Gemstar board between one another as they may agree in connection with any transfer of shares among Liberty, News Corp. and their respective controlled related parties. Mr. Yuen's designees are Elsie Ma Leung, Jonathon Orlick, George Carrier, Douglas B. Macrae and James E. Meyer. Liberty's designees are Peter C. Boylan III, Robert Bennett and J. David Wargo. News Corp.'s designees are Joachim Kiener, Nicholas Donatiello, Jr. and Chase Carey. 5 Executive Officers The following table sets forth certain information regarding the current executive officers of the Company:
Executive Age as of Officer Name April, 2001 Position and Office. Since ---- ----------- -------------------- ----------- Henry C. Yuen 51 Chief Executive Officer and August 1994 Chairman of the Board. Elsie Ma Leung 54 Chief Financial Officer, Co- August 1994 President and Co-Chief Operating Officer, member of the Office of the Chief Executive. Peter C. Boylan III 37 Co-President and Co-Chief July 2000 Operating Officer, member of the Office of the Chief Executive, and chairman and Chief Executive Officer of certain business units. Joachim Kiener 48 Co-President and Co-Chief July 2000 Operating Officer, member of the Office of the Chief Executive, and chairman and Chief Executive Officer of certain business units.
For a description of the business experience for the executive officers listed above, see "Information with Respect to Directors." SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the United States Securities Exchange Act of 1934, as amended, requires that a Company's directors and officers, and persons who own more than 10% of a registered class of the Company's equity securities, file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission") and the National Association of Securities Dealers, Inc. ("NASD"). Directors, officers and beneficial owners of more than 10% of the Company's common stock are required by the Commission to furnish the Company with copies of the reports they file. Based solely on its review of the copies of such reports and written representations from certain reporting persons that certain reports were not required to be filed by such persons, the Company believes that all of its directors, officers and beneficial owners complied with all of the filing requirements applicable to them with respect to transactions during the fiscal year ended December 31, 2000, except that Mr. Meyer inadvertently failed to timely file five Form 4's in respect of five transactions involving Gemstar-- TV Guide common stock effected in 2000, and Mr. Macrae inadvertently failed to timely file three Form 4's in respect of four transactions involving Gemstar-- TV Guide Common stock effected in 2000. Mr. Meyer and Mr. Macrae subsequently made the appropriate filings to report these transactions. 6 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth certain summary information concerning the compensation paid by the Company for the twelve months ended December 31, 2000 and the fiscal years ended March 31, 2000 and March 31, 1999 to the Company's principal executive officer and the four other most highly compensated executive officers during the year ended December 31, 2000 (collectively, the "Named Executive Officers"):
Annual Compensation Long Term Compensation ------------------------- -------------------------- Restricted Securities Name and Other Annual Stock Underlying Principal Positions Fiscal Year Salary ($) (1) Bonus ($) Compensation ($) Award(s)($) Options (#)(2) ------------------- ----------------- -------------- --------- ---------------- ----------- -------------- Henry C. Yuen ... December 31, 2000 2,255,443(3) (4) 233,710(5) -- 3,371,339 Chief Executive March 31, 2000 1,921,590 2,911,714 -- -- 3,438,984 Officer and Chairman of the March 31, 1999 1,534,833 2,215,167 -- -- 4,220,980 Board Elsie Ma Leung .. December 31, 2000 961,634(3) (4) 73,469(5) -- 2,400,000 Chief Financial March 31, 2000 819,292 327,717 -- -- -- Officer, March 31, 1999 700,000 280,000 -- -- -- Co-President and Co- Chief Operating Officer Stephen A. Weiswasser ..... December 31, 2000 760,947(3) 18,750 77,453(5) -- -- Former Executive March 31, 2000 520,192 75,000 -- -- 327,118 Vice President and General March 31, 1999 -- -- -- -- -- Counsel Joachim Kiener .. December 31, 2000 412,597(7) 139,315(8) -- -- -- Co-President and March 31, 2000 -- -- -- -- -- Co-Chief Operating March 31, 1999 -- -- -- -- -- Officer Peter C. Boylan III............. December 31, 2000 405, 685(7) 142,759(8) 286,833(5) -- -- Co-President and March 31, 2000 -- -- -- -- -- Co-Chief Operating March 31, 1999 -- -- -- -- -- Officer Name and All Other Principal Positions Compensation ($) ------------------- ---------------- Henry C. Yuen ... 487,544(6) Chief Executive 490,159 Officer and Chairman of the 492,144 Board Elsie Ma Leung .. 1,400(6) Chief Financial 1,400 Officer, 1,333 Co-President and Co- Chief Operating Officer Stephen A. Weiswasser ..... 1,400(6) Former Executive -- Vice President and General -- Counsel Joachim Kiener .. 19,342(9) Co-President and -- Co-Chief Operating -- Officer Peter C. Boylan III............. 15,303(9) Co-President and -- Co-Chief Operating -- Officer
------- (1) The salary paid to each of the Named Executive Officers represents each such officer's adjusted base salary for each of the indicated periods calculated pursuant to the applicable formula under such officer's employment agreement with the Company or Gemstar Development Corporation, a wholly owned subsidiary of the Company, ("GDC") as the case may be. (2) Number of securities has been adjusted to reflect the 2-for-1 stock split effected in May 1999 and the 2-for-1 stock split effected in December 1999. (3) In November of 2000, the Company changed its fiscal year from March 31st to December 31st, and as a result, salary figures reported here for the twelve months ended December 31, 2000 include overlap from January 1, 2000 to March 31, 2000 with salary figures for fiscal year ending March 31, 2000. The amount of overlap is as follows: Mr. Yuen: $494,387; Ms. Leung: $210,778; Mr. Weiswasser: $187,500. (4) As a result of the consummation of a significant transaction through the Company's acquisition of TV Guide in July 2000 and the Company's change in fiscal year from March 31st to December 31st in November of this year, bonus amounts for the year ended December 31, 2000 have not yet been calculated. (5) Amount represents other benefits paid pursuant to executive employment agreements. (6) The amounts shown include the following: (a) Matching contributions by the Company under the Gemstar Employees 401(k) and Profit Sharing Plan, which permit salaried employees to make tax- deferred contributions of a portion of their base compensation pursuant to Section 401(k) of the Code. Effective January 1, 1998, GDC's matching contribution was an amount equal to 100% of up to 2% of a participant's compensation contributed, up to applicable limits under the Code. (b) Premiums paid for split dollar life insurance policies. (7) Amount represents salary paid from July 12, 2000 through December 31, 2000. Mr. Boylan and Mr. Kiener became officers of the Company on July 12, 2000 upon consummation of the Merger with TV Guide. 7 (8) Bonus attributable to the year ended December 31, 2000, pro-rated for the period from July 12, 2000 through December 31, 2000. Mr. Boylan and Mr. Kiener became officers of the Company on July 12, 2000 upon consummation of the Merger with TV Guide. (9) Amounts shown include employer matching on SERP deferrals and group term life insurance premiums. SUMMARY OF OPTION GRANTS The following table provides certain summary information concerning grants of options to the Named Executive Officers of the Company during the year ended December 31, 2000. Option Grants in the Last Fiscal Year
Potential Realizable % of Total Value at Assumed Annual Number of Options Rates of Securities Granted to Exercise Stock Price Appreciation Underlying Employees Price for Option Term Options in Fiscal per Expiration ------------------------ Name Granted Year Share Date 5% 10% ---- ---------- ---------- -------- ---------- ----------- ------------ Henry C. Yuen........... 41,159 0.7% $42.438 5/31/2010 $ 1,098,494 $ 2,783,799 3,330,180 54.3% $47.188 6/01/2010 $98,827,353 $250,447,916 Elsie Ma Leung.......... 2,400,000 39.2% $39.813 4/13/2010 $60,091,636 $152,284,004 Stephen A. Weiswasser... -- -- -- -- -- -- Joachim Kiener.......... -- -- -- -- -- -- Peter C. Boylan III..... -- -- -- -- -- --
Summary of Options Exercised The following sets forth certain summary information concerning the exercise of stock options by the Named Executive Officers during the year ended December 31, 2000 together with the fiscal year-end value of unexercised options. Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities Underlying Value of Unexercised Unexercised Options at in the Money Options Value Fiscal Year End (1) at Fiscal Year End (2) Shares Acquired Realized ------------------------- -------------------------- Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable ---- --------------- ---------- ----------- ------------- ------------ ------------- Henry C. Yuen........... -- -- 21,195,596 16,714,607 $879,759,026 $444,083,212 Elsie Ma Leung.......... 10,000 349,000 5,230,000 4,800,000 $213,770,500 $107,848,800 Stephen A. Weiswasser... 81,780 4,038,296 -- -- -- -- Joachim Kiener.......... 250,000 17,324,500 39,212 1,105,168 $ 1,062,841 $ 15,605,579 Peter C. Boylan III..... 11,553 942,609 1,600,941 1,105,168 $ 58,794,228 $ 15,605,579
-------- (1) Number of securities and exercise price has been adjusted to reflect the 2-for-1 stock split effected in May 1999 and the 2-for-1 stock split effected in December 1999. (2) Market Value of the securities underlying the options at year-end, minus the exercise price or base price of "in the money" options. 8 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION From January 1, 2001 to July 12, 2000, the Company's Compensation Committee consisted of Dr. George Carrier and Mr. Teruyuki Toyama, neither of whom is an officer or employee of the Company or was previously an officer or employee of the Company. Mr. Teruyuki resigned as a Director effective July 12, 2000. Since July 12, 2000, the members of the Compensation Committee have been Dr. Henry Yuen, Dr. George Carrier, Mr. James Meyer, Mr. Robert Bennett and Mr. Chase Carey. Dr. Yuen is an officer of the Company. Mr. Carrier, Mr. Meyer, Mr. Bennett and Mr. Carey are not and have never been employees or officers of the Company. EMPLOYMENT CONTRACTS In July 2000, Gemstar consummated a significant transaction through its acquisition of TV Guide and in November of 2000, the Company changed its fiscal year from March 31st to December 31st. The Company's Compensation Committee is currently considering the impact of these events on the calculations of the annual incentive and merit bonuses described below for its Chief Executive Officer and Chief Financial Officer for the fiscal year ending December 31, 2000 and on a going forward basis. Amended and Restated Employment Agreement with Dr. Yuen On January 7, 1998, the Company's Compensation Committee and Board approved an Amended and Restated Employment Agreement, and on October 4, 1999 the Board approved the Amendment No. 1 to the Amended and Restated Employment Agreement (as amended, the "New Yuen Agreement"). The New Yuen Agreement supersedes and replaces Dr. Yuen's former Employment Agreement with GDC, and provides for Dr. Yuen's service to each of the Company and GDC as Chief Executive Officer and President through July 12, 2004, subject to a three-year renewal term and to earlier termination under certain circumstances. The New Yuen Agreement also provides that Dr. Yuen will serve as President and CEO of GDC and President, CEO and Chairman of the Board of the Company. The New Yuen Agreement includes provisions (collectively, the "Performance- Based Provisions") pursuant to which Dr. Yuen's annual base salary ("Base Salary") is adjusted and his merit bonus, annual incentive bonus and annual stock option grants are calculated. The Performance-Based Provisions of the New Yuen Agreement were subject to shareholder approval to satisfy one of the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), in order to permit the Company to deduct payments in excess of $1 million in any fiscal year. The Performance-Based Provisions of Dr. Yuen's Amended and Restated Employment Agreement were approved by the shareholders at a Special Meeting of Members of the Company held on March 12, 1998 (the "1998 Special Meeting"). Under the New Yuen Agreement, Dr. Yuen's Base Salary initially is set at $1 million. For the fiscal year ending March 31, 2000, the New Yuen Agreement provides for annual adjustments to Dr. Yuen's Base Salary based on the growth of the Company's consolidated revenues and consolidated net earnings. Upon consummation of the Merger on July 12, 2000, the New Yuen Agreement provides for annual adjustments to Dr. Yuen's Base Salary based on a calculation relating to the growth of the Company's consolidated net earnings per share. The New Yuen Agreement also provides for the payment to Dr. Yuen of a merit bonus (the "Merit Bonus") which is equal to a percentage of Dr. Yuen's then- current Base Salary (reflecting any prior adjustments), equal to the percentage increase, if any, in the Company's consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for its most recently completed fiscal year from the Company's EBITDA for the comparable period in the immediately preceding fiscal year. Upon consummation of the Merger on July 12, 2000, the Merit Bonus is equal to a Adjusted Percentage of Dr. Yuen's then-current Base Salary (reflecting any prior adjustments). The Adjusted Percentage is equal to the product of (i) the percentage increase per outstanding share, if any, from the previous fiscal year in the Company's consolidated earnings before interest, taxes, 9 depreciation and amortization ("EBITDA") plus (ii) the percentage increase per outstanding share, if any, from the previous fiscal year in that portion of the Company's consolidated EBITDA attributable to the business being conducted by the Company and its subsidiaries prior to the Merger. The product of (i) and (ii) is then multiplied by .125. The New Yuen Agreement also provides for the payment to Dr. Yuen of an additional bonus (the "Annual Incentive Bonus"), which as of the end of the fiscal year 2000 was tied to the annual rate of growth of the Company's consolidated earnings per share. Upon consummation of the Merger on July 12, 2000, the Annual Incentive Bonus will be equal to the Adjusted Percentage times the Base Salary. The New Yuen Agreement allows Dr. Yuen to elect to receive the Merit Bonus and the Annual Incentive Bonus in the form of options to acquire common stock of the Company in lieu of receiving the Merit Bonus and the Annual Incentive Bonus in cash. The Company granted Dr. Yuen options to purchase 41,159 shares of common stock of the Company in lieu of paying a portion of Dr. Yuen's Merit Bonus and Annual Incentive Bonus in cash. Under the New Yuen Agreement, the aggregate dollar amount of Dr. Yuen's Base Salary (as adjusted), Merit Bonus, and Annual Incentive Bonus for each compensation period is subject to an annual limitation, which was increased upon consummation of the Merger on July 12, 2000. The amount of the adjustment to Dr. Yuen's Base Salary, and the amount of the Merit Bonus and the Annual Incentive Bonus payable to Dr. Yuen under the New Yuen Agreement for the fiscal year ended on March 31, 2000, were dependent upon the Company's financial performance for such year and on whether the Company's consolidated revenues and consolidated earnings from operations for the fiscal quarter ended March 31, 2000 exceeded the Company's consolidated revenues and consolidated earnings from operations, respectively, for the fiscal quarter ended March 31, 1999. The New Yuen Agreement provided for the immediate grant to Dr. Yuen of options to purchase 16,650,900 shares of common stock of the company and annual grants of options to purchase 3,330,180 shares of common stock (as adjusted for all stock splits). The Company's shareholders approved these stock option grants to Dr. Yuen at the 1998 Special Meeting. Dr. Yuen is also entitled to $1,000 a month automobile allowance and other benefits, including, health insurance and participation in bonus and incentive and stock option compensation plans. The New Yuen Agreement entitles Dr. Yuen to terminate the New Yuen Agreement within 90 days following a change of control (as defined below), in which event (1) he would be entitled to receive (a) a lump-sum payment equal to five times his then-current Base Salary, (b) for a period of 60 months following such termination, all other elements of his compensation provided under the New Yuen Agreement, (2) all unvested options granted to him pursuant to the New Yuen Agreement would immediately vest in full and would be exercisable for their full term and all previously granted vested options to acquire shares of common stock will remain fully exercisable for their full term. A "change of control" is defined as of the end of the fiscal year 2000 as the occurrence of any of the following: (i) the acquisition (other than from the Company directly or from any Company shareholder who was, as of the effective date of the New Yuen Agreement, a 25% shareholder of the Company) by any person or entity of beneficial ownership of 25% or more of the Company's outstanding shares; (ii) the acquisition (other than from GDC directly or from any GDC shareholder who was, as of the effective date of the New Yuen Agreement, a 25% shareholder of GDC) by any person or entity of beneficial ownership of 25% or more of GDC's outstanding shares; (iii) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the board of directors of the Company or GDC (together with any new directors whose election or appointment to such board of directors or whose nomination for election by the shareholders of the Company or GDC was approved by Dr. Yuen or by a vote of a majority of the directors then still in office who are either directors at the beginning of such period or whose election, appointment or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors of the Company or GDC then in office; (iv) approval by the board of directors or a majority of the shareholders of either the Company or GDC of a merger, reorganization, 10 combination or consolidation whereby the shareholders of either the Company or GDC immediately prior to such approval will not, immediately after consummation of such reorganization, merger, combination or consolidation own more than 50% of the voting stock of the surviving entity; or (v) a liquidation or dissolution of either the Company or GDC or the sale of all or substantially all of the assets of either the Company or GDC, unless the successor to the assets in any such liquidation, dissolution or sale, is the Company or any of its subsidiaries. This definition was modified upon the consummation of the Merger on July 12, 2000 to exclude from the definition of a change in control the acquisition from Dr. Yuen of more than 25% of the Company's outstanding shares pursuant to a right of first refusal granted Dr. Yuen to Liberty Media Corporation and The News Corporation Limited pursuant to a shareholders agreement entered into in connection with the Merger. Under the New Yuen Agreement, as well as under a similar provision under Dr. Yuen's former employment agreement, all inventions, designs, improvements, patents, copyrights, discoveries and other intellectual property which (i) are developed by Dr. Yuen while performing his duties for GDC or using GDC's equipment or trade secret information, (ii) are related at the time of conception to GDC's business or actual or demonstrably anticipated research, or (iii) result from any work performed by Dr. Yuen for GDC, are the property of GDC, if and only to the extent GDC can show by clear and convincing evidence that such property is GDC's property. Employment Agreement with Ms. Leung The Company and GDC entered into an Amended and Restated Employment Agreement with Ms. Leung, dated as of March 31, 1998 and an amendment to the Employment Agreement dated as of April 13, 2000 (as amended, the "New Leung Agreement"), which supersedes and replaces Ms. Leung's former employment agreement. The New Leung Agreement provides for an initial term effective from January 1, 1998 through September 30, 2005. There is no provision for renewal. Under the New Leung Agreement, Ms. Leung will serve as Chief Financial Officer of the Company and Chief Operating Officer and Chief Financial Officer of GDC. Ms. Leung will also serve as a director of the Company, GDC and StarSight. Ms. Leung receives a base salary of $700,000 per year, with annual adjustments based upon the Company's consolidated revenues. The New Leung Agreement also provides that Ms. Leung may receive an annual incentive bonus based upon the Company's consolidated earnings per share. Under the New Leung Agreement, Ms. Leung was granted options on March 31, 1998 to purchase 4,800,000 shares of common stock and options on April 13, 2000 to purchase 2,400,000 shares of common stock (as adjusted for all stock splits), scheduled to vest ratably over the term of the New Leung Agreement. Ms. Leung is also entitled to a $750 per month automobile allowance and other benefits, including health insurance and participation in bonus and incentive and stock option compensation plans. The New Leung Agreement provides Ms. Leung the right to terminate the New Leung Agreement within 90 days following a change of control (defined substantially as defined above with respect to the New Yuen Agreement), in which event (1) she would be entitled to receive (a) a lump-sum payment equal to five times her then-current base salary, (b) for a period of 60 months following such termination, all other elements of her compensation provided under the New Leung Agreement, (2) all unvested options granted to her under the New Leung Agreement would immediately vest in full and would be exercisable for their full term and all previously granted vested options to acquire Ordinary Shares will remain fully exercisable for their full term. Ms. Leung agreed in the Amendment to her Employment Agreement that the consummation of the Merger would not result in a change in control under her Employment Agreement. All inventions, designs, improvements, patents, copyrights and discoveries conceived by Ms. Leung during the term of the New Leung Agreement which are competitive with or related to existing products or services of GDC shall be assigned to GDC. Employment Agreement with Joachim Kiener TV Guide and Mr. Kiener entered into a new employment agreement effective March 1, 1999. This employment agreement was assumed by the Company on July 12, 2000 in connection with the closing of the 11 Merger. The term of the agreement ends on the sixth anniversary of the completion of the Merger. Thereafter, the employment agreement will be renewed automatically for a term of three additional years unless either party elects not to renew. If the employment agreement is not renewed or if the terms of the renewal are not agreed upon, failure to renew or agree will be treated as a termination without cause as described below. The employment agreement provides that Mr. Kiener will serve as Co- President and Co-Chief Operating Officer of the Company, member of the Office of the Chief Executive of the Company, and Chairman and Chief Executive Officer of certain TV Guide business divisions. Mr. Kiener's annual base salary was initially $875,000. The base salary will be increased annually by any percentage increase in the Consumer Price Index. The employment agreement provides for an annual incentive bonus at a target amount of 50% of Mr. Kiener's annual base salary in effect on the last day of the applicable compensation period. The actual amount of the bonus will be based on criteria to be determined each year by mutual agreement of Mr. Kiener and the Chief Executive Officer of the Company. There is no guaranteed minimum bonus. TV Guide previously granted Mr. Kiener options to acquire 600,000 shares of its TV Guide Class A Common Stock at $12.50 per share vesting one-fifth each year on March 1 of years 2000 through 2004. Upon completion of the Merger, options to acquire 400,000 of such shares vested and became immediately exercisable on July 12, 2000, and the options to acquire the remaining 200,000 shares, subject to other accelerated vesting provisions in the option grant agreement itself, will vest and become exercisable ratably (one-fifth each year) on March 1 of years 2000 through 2004. On October 1, 1999, TV Guide granted Mr. Kiener options to acquire 1,521,376 shares of TV Guide Class A Common Stock at $21.93 per share which upon completion of the Merger became exercisable ratably (one-sixth per year) on each of the first through the sixth anniversaries of the merger closing, subject to the accelerated vesting provisions of the option grant agreement itself. Upon completion of the Merger, all options on TV Guide common stock converted to options to purchase shares of the Company's common stock with the number of shares issuable and the option price adjusted according to the terms of the merger agreement. Termination without cause or constructive termination (as defined in the employment agreement) will entitle Mr. Kiener to a lump sum payment equal to the greater of three times his annual base salary or the amount equal to the product of his annual base salary multiplied by the number of years remaining (rounded up) in the term of his employment under the employment agreement and to continuation of the additional benefits provided for in the employment agreement (such as participation in medical, disability and life insurance plans) for 60 months from the last date of employment. All stock options and other stock incentive awards previously granted to him will immediately vest in full and become fully exercisable for their full term, and all previously vested stock options and other stock incentive awards will remain fully exercisable for their full term. The definition of "change of control" in the employment agreement broadened upon the completion of the Merger, and the event of a change of control entitles Mr. Kiener to terminate his employment within 90 days after notice of a change of control and receive a lump sum payment of five times his current annual base salary and continuation of all other elements of his compensation for 60 months from the last date of employment. All unvested stock options and other stock incentive awards previously granted to Mr. Kiener will immediately vest in full, and those options and awards and all previously vested stock options and other stock incentive awards will remain fully exercisable for their full term. Certain payments made to Mr. Kiener upon a "change of control" will be increased to offset the effect of certain adverse tax consequences which may be caused by such payments. At any time after September 1, 2000 Mr. Kiener is entitled to terminate his employment under the employment agreement without reason upon six months prior notice and receive a lump sum payment equal to his then current annual base salary. Upon such termination, all stock options and other stock incentive awards previously granted and then remaining unvested will be forfeited, and all previously vested stock options and other stock incentive awards shall remain fully exercisable for their full term. 12 Employment Agreement with Peter C. Boylan III. TV Guide and Mr. Boylan entered into an employment agreement effective March 1, 1999, which was assumed by the Company on July 12, 2000 with terms and provisions identical to those in the new employment agreement between the Company and Mr. Kiener discussed above in the immediately preceding six paragraphs, except that: (1) Mr. Boylan is Co- President and Co-Chief Operating Officer of the Company, member of the Office of the Chief Executive of the Company, and Chairman and Chief Executive Officer of certain other TV Guide business divisions; and (2) Mr. Boylan's annual base salary was initially $750,000. COMPENSATION OF DIRECTORS The Company pays each director who is not an employee of the Company $25,000 per year for services as a director of the Company and $1,000 per Board or committee meeting attended. All directors are reimbursed for their out-of-pocket expenses incurred in connection with attendance at meetings of, and other activities relating to service on, the Board or any committee of the Board. In addition, directors who are not full-time employees of the Company are eligible to participate in, and each such director has received awards pursuant to, the Gemstar International Group Limited 1994 Stock Incentive Plan, as amended (the "Stock Incentive Plan"). ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of the common shares of the Company as of March 31, 2001 for each person who owns more than 5% of the outstanding common stock of the Company.
Amount and Title Nature of of Beneficial Percent Class Name and Address of Beneficial Owner Ownership (1) of Class (1) ----- ------------------------------------ ------------- ------------ Common Stock Henry Yuen (2) 36,518,724 8.38% Common Stock Thomas L.H. Lau (3) 40,000,000 9.72% Common Stock Liberty Media Corporation (4) 87,465,738 21.26% Common Stock The News Corporation Limited (5) 87,465,738 21.26% Common Stock American Century Investment Management (6) 24,706,986 6.0%
-------- (1) Applicable percentage of ownership is based on 411,319,000 shares of common stock outstanding as March 31, 2001 together with applicable options for such shareholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares subject to options held by that person that are currently exercisable or that become exercisable within 60 days following March 31, 2001 are deemed outstanding. However, such shares are not deemed outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, each of the shareholders named in this table has sole voting and dispositive power with respect to the shares of common stock shown as beneficially owned by such shareholder. (2) Amount includes 11,942,960 shares of common stock and 24,575,764 shares of common stock issuable upon exercise of options that are currently exercisable or will become exercisable within sixty days following March 31, 2001. (3) According to Schedule 13G filed with the Securities and Exchange Commission on February 16, 2001, Mr. Lau held 40,000,000 shares as of February 16, 2001. Shares are owed of record by Dynamic Core Holdings Limited, and Mr. Lau is beneficial owner of all of the outstanding shares of Dynamic Core Holdings Limited. The address of Mr. Lau is 26/F., MassMutual Tower, 38 Gloucester Road, Hong Kong. (4) The address of Liberty Media Corporation is 9197 South Peoria Street, Englewood, Colorado 80112. 16,761,150 shares are owned of record by Liberty TVGIA, Inc., a Delaware Corporation and wholly owned subsidiary of Liberty Media Corporation, and 70,704,588 shares are owned of record by Liberty UVSG, 13 Inc. a Colorado corporation and wholly owned subsidiary of Liberty Media Corporation. Liberty is a subsidiary of Tele-Communications, Inc., which in turn is a subsidiary of AT&T Corp. Liberty Media Corporation and The News Corporation Limited have entered into an agreement pursuant to which The News Corporation Limited will purchase Liberty Media Corporation's common stock in the Company. This transaction has not yet closed pending regulatory approval. (5) All 87,465,783 shares are owned of record by Sky Global Networks, Inc., ("SGN") previously named TVG Holdings, Inc., an indirect subsidiary of The News Corporation Limited ("News Corp."). News Corp, as a person who may be deemed to control SGN, may also be deemed to indirectly beneficially own such shares. By virtue of ordinary shares of News Corp. owned by (i) Mr. K. Rupert Murdoch and members of his family, (ii) (A) Cruden Investments Pty. Limited, a private Australian investment company owned by Mr. Murdoch, members of his family and certain charities, and (B) a subsidiary of Cruden; and (iii) corporations which are controlled by trustees of settlements and trusts set up for the benefit of the Murdoch family, charities and other persons, and Mr. Murdoch's positions as Chairman and Chief Executive Officer of News Corp., Mr. Murdoch may be deemed to control the operations of News Corp., and may therefore be deemed to indirectly beneficially own such shares of SGN. News Corp. and Mr. Murdoch have disclaimed beneficial ownership of such shares. The address of SGN is 1300 North Market Street, Suite 404, Wilmington, Delaware 19801; the address of News Corp. is 2 Holt Street, Sydney, New South Wales 2010, Australia; the address of News Publishing Australia Limited is 1300 North Market Street, Suite 404, Wilmington, Delaware 19801; and the address of Mr. Murdoch is 10201 West Pico Boulevard, Los Angeles, California 90035. Liberty Media Corporation and The News Corporation Limited have entered into an agreement pursuant to which The News Corporation Limited will purchase Liberty Media Corporation's common stock in the Company. This transaction has not yet closed pending regulatory approval. (6) According to a Schedule 13G filed with the Securities and Exchange Commission on February 13, 2001 jointly by American Century Investment Management, Inc., and American Century Mutual Funds, Inc., American Century Investment Management Inc. is a registered investment advisor, manages, pursuant to management agreements, the investments of thirteen registered investment companies, including American Century Mutual Funds, Inc. American Century Investment Management, Inc. reported having sole voting and dispositive power with respect to 24,706,986 shares of Common Stock of the Company, and American Century Mutual Funds, Inc., reported having sole voting and dispositive power with respect to 24,649,186 shares of Common Stock of the Company, 14 SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth certain information with respect to beneficial ownership of the common stock of the Company as of March 31, 2001 for the directors and officers of the Company.
Amount and Nature of Title of Beneficial Percent Class Name of Beneficial Owner Ownership (1) of Class (1) -------- ------------------------ ------------- ------------ Common Stock Henry Yuen (2) 36,518,724 8.38% Common Stock Elsie Leung (3) 6,039,472 1.45% Common Stock Stephen Weiswasser 0 * Common Stock Douglas Macrae (4) 1,044,000 * Common Stock James E. Meyer 1,000 * Common Stock George Carrier (5) 88,000 * Common Stock Joachim Kiener (5) 65,504 * Common Stock Peter Boylan (6) 1,640,830 * Common Stock Robert Bennett (5) 39,438 * Common Stock Chase Carey 0 * Common Stock J. David Wargo (5) 39,438 * Common Stock Nicholas Donatiello, Jr. (5) 19,719 * Common Stock Jonathan Orlick (5) 60,002 * Common Stock Directors and Officers as a Group 45,566,082 10.25%
-------- * Less than 1% (1) Applicable percentage of ownership is based on 411,319,000 shares of common stock outstanding as of March 31, 2001 together with applicable options for such shareholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares subject to options held by that person that are currently exercisable or that become exercisable within 60 days following March 31, 2001 are deemed outstanding. However, such shares are not deemed outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, each of the shareholders named in this table has sole voting and dispositive power with respect to the shares of common stock shown as beneficially owned by such shareholder. The address for all directors and officers of the Company is c/o Gemstar--TV Guide International, Inc. 135 North Los Robles Avenue, Suite 800, Pasadena, California, 91101. (2) Amount includes 11,942,960 shares of common stock and 24,575,764 shares of common stock issuable upon exercise of options that are currently exercisable or will become exercisable within sixty days following March 31, 2001. (3) Amount includes 9,472 shares of common stock and 6,030,000 shares of common stock issuable upon exercise of options that are currently exercisable or will become exercisable within sixty days following March 31, 2001. (4) Amount includes 744,000 shares of common stock and 300,000 shares of common stock issuable upon exercise of options that are currently exercisable or will become exercisable within sixty days following March 31, 2001. (5) Amount represents shares of common stock issuable upon exercise of options that are currently exercisable or will become exercisable within sixty days following March 31, 2001. (6) Amount includes 13,597 shares of common stock and 1,627,233 shares of common issuable upon exercise of options that are currently exercisable or will become exercisable within sixty days following March 31, 2001. 15 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As a result of the merger between the Company and TV Guide on July 12, 2000, Liberty Media Corporation, an indirect wholly owned subsidiary of AT&T Corp. ("Liberty Media"), and The News Corporation Limited ("News Corp.") became significant shareholders, either directly or indirectly, of the Company. AT&T Broadband and Internet Services ("BIS") (formerly Tele-Communications, Inc.) and its consolidated affiliates purchased video, program promotion and guide services and subscriber management services from the Company during the period from July 12, 2000 through December 31, 2000 totaling $8.4 million. In addition, News Corp. and its consolidated affiliates purchased advertising from the Company during the period from July 12, 2000 through December 31, 2000 totaling $10.3 million. The Company purchased programming and production services and satellite transponder facilities and uplink services from Liberty Media consolidated affiliates during the period from July 12, 2000 through December 31, 2000 totaling $11.3 million. In addition, the Company purchased programming and production services from News Corp. and its consolidated affiliates during the period from July 12, 2000 through December 31, 2000 totaling $7.8 million. The Company has included in the amounts discussed above, transactions with BIS, Liberty Media and News Corp. and all entities in which BIS, Liberty Media and News Corp. have an interest greater than 50%. In addition, the Company has transactions with entities in which BIS, Liberty Media and News Corp. own, directly or indirectly, 50% or less, which transactions were conducted at arms-length in the ordinary course of business. Pursuant to the requirements of Section 13 or 15(d) or the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GEMSTAR--TV GUIDE INTERNATIONAL, INC. (Registrant) Date: April 30, 2001 /s/ Elsie M. Leung By: _________________________________ Elsie M. Leung Co-President, Co-Operating Officer, and Chief Financial Officer 16