SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission only (as
permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
LAMAR ADVERTISING COMPANY
---------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
LAMAR ADVERTISING COMPANY
5551 CORPORATE BOULEVARD, BATON ROUGE, LOUISIANA 70808
(225) 926-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of the stockholders of Lamar Advertising Company, a
Delaware corporation, will be held at the offices of Lamar Advertising Company,
5551 Corporate Boulevard, Baton Rouge, Louisiana, at 10:00 a.m. on Thursday, May
23, 2002, for the following purposes:
1. To elect ten directors of the Company, each for a one-year
term.
2. To approve an amendment to the Company's 1996 Equity Incentive
Plan to increase the number of shares of the Company's Class A
common stock available for issuance pursuant to awards under
the 1996 Equity Incentive Plan by 3,000,000 shares from
5,000,000 to 8,000,000 shares.
3. To transact such other business as may properly come before
the meeting.
Only stockholders of record at the close of business on April 8, 2002
will be entitled to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN
PERSON, YOUR PROXY WILL NOT BE USED.
By order of the Board of Directors,
James R. McIlwain
Secretary
April 25, 2002
LAMAR ADVERTISING COMPANY
---------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 2002
---------
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of
Lamar Advertising Company for use at the annual meeting of stockholders to be
held at the offices of Lamar Advertising Company, 5551 Corporate Boulevard,
Baton Rouge, Louisiana, at 10:00 a.m. on Thursday, May 23, 2002, and at any
adjournments thereof. The approximate date on which this proxy statement and
accompanying proxy are first being sent or given to stockholders is April 25,
2002.
The authority granted by an executed proxy may be revoked, at any time
before its exercise, by filing with the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date or by voting in person
at the meeting. Shares represented by valid proxies will be voted in accordance
with the specifications in the proxies. If no specifications are made, the
proxies will be voted to elect the directors nominated by the Board of Directors
and to approve the amendment to the 1996 Equity Incentive Plan.
Only stockholders of record at the close of business on April 8, 2002,
referred to herein as the record date, will be entitled to vote at the meeting.
On the record date, the Company had outstanding 84,151,560 shares of Class A
common stock, 16,611,835 shares of Class B common stock and 5,719.49 shares of
Series AA preferred stock, which are its only outstanding classes of voting
stock. The holders of Class A common stock and Series AA preferred stock are
entitled to one vote for each share registered in their names on the record date
with respect to all matters to be acted upon at the meeting, and the holders of
Class B common stock are entitled to ten votes for each share registered in
their names on the record date with respect to such matters. The presence at the
meeting, in person or by proxy, of one-third of the voting capital stock issued
and outstanding and entitled to vote at the meeting shall constitute a quorum
for the transaction of business. Proxies submitted by brokers that do not
indicate a vote for one or more proposals because the brokers do not have
discretionary voting authority and have not received instructions from the
beneficial owners on how to vote on these proposals are called "broker
non-votes." Abstentions and broker non-votes will be considered present for
purposes of determining the presence of a quorum.
SHARE OWNERSHIP
The following table and footnotes set forth certain information
regarding the beneficial ownership of the common stock as of March 29, 2002 by
(i) persons known by the Company to be beneficial owners of more than 5% of
either class of common stock, (ii) the Chief Executive Officer and each of the
other executive officers other than the Chief Executive Officer, (iii) each
director and nominee for election as a director of the Company and (iv) all
current executive officers and directors of the Company as a group:
DIRECTORS, OFFICERS TITLE OF NUMBER OF PERCENT
AND 5% STOCKHOLDERS CLASS SHARES(1) OF CLASS
------------------- -------- --------- --------
Kevin P. Reilly, Jr. Class A 183,873(2) *
c/o The Lamar Corporation Class B(3) 15,530,606(4) 93.5%(5)
5551 Corporate Blvd.
Baton Rouge, LA 70808
Sean E. Reilly Class A 39,000(6) *
c/o The Lamar Corporation Class B(3) 15,400,460(4) 92.7%(7)
5551 Corporate Blvd.
Baton Rouge, LA 70808
Anna Reilly Cullinan Class A 6,446(8) *
c/o The Lamar Corporation Class B(3) 15,399,561(4) 92.7%(9)
5551 Corporate Blvd.
Baton Rouge, LA 70808
The Reilly Family Limited Partnership Class B(3) 15,000,000 90.3%(10)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Janus Capital Corporation Class A 8,856,669(11) 10.5%
100 Fillmore Street
Denver, CO 80206
AIM Management Group Inc. Class A 8,429,058(12) 10.0%
11 Greenway Plaza
Suite 100
Houston, TX 77046
Charles W. Lamar, III Class A 5,142,172(13) 6.1%
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
T. Rowe Price Associates, Inc. Class A 4,814,000(14) 5.7%
100 E. Pratt Street
Baltimore, MD 21202
Gerald H. Marchand Class A 116,389(15) *
Keith A. Istre Class A 96,712(16) *
T. Everett Stewart, Jr. Class A 74,000(17) *
Stephen P. Mumblow Class A 9,000(18) *
John Maxwell Hamilton Class A 9,000(19) *
Thomas V. Reifenheiser Class A 8,000(20) *
All Directors and Executive Officers as a Group Class A 22,035,219(21) 21.9%(22)
(10 Persons)
---------
* Less than 1%
2
(1) The persons and entities named in the table have sole voting and investment
power with respect to all shares beneficially owned by them, except as
noted below.
(2) Includes 39,000 shares of Class A common stock subject to stock options
exercisable within 60 days of March 29, 2002.
(3) Upon the sale of any shares of Class B common stock to a person other than
to a Permitted Transferee, such shares will automatically convert into
shares of Class A common stock. Permitted Transferees include (i) Kevin P.
Reilly, Sr.; (ii) a descendant of Kevin P. Reilly, Sr.; (iii) a spouse or
surviving spouse (even if remarried) of any individual named or described
in (i) or (ii) above; (iv) any estate, trust, guardianship, custodianship,
curatorship or other fiduciary arrangement for the primary benefit of any
one or more of the individuals named or described in (i), (ii) and (iii)
above; and (v) any corporation, partnership, limited liability company or
other business organization controlled by and substantially all of the
interests in which are owned, directly or indirectly, by any one or more of
the individuals and entities named or described in (i), (ii), (iii) and
(iv) above. Except for voting rights, the Class A and Class B common stock
are substantially identical. The holders of Class A common stock and Class
B common stock vote together as a single class (except as may otherwise be
required by Delaware law), with the holders of Class A common stock
entitled to one vote per share and the holders of Class B common stock
entitled to ten votes per share, on all matters on which the holders of
common stock are entitled to vote.
(4) Includes 15,000,000 shares held by the Reilly Family Limited Partnership
(the "RFLP"), of which Kevin Reilly, the President and Chief Executive
Officer of the Company, is the managing general partner. Kevin Reilly's
three siblings, Anna Reilly Cullinan, Sean E. Reilly (both nominees for
director) and Wendell S. Reilly are the other general partners of the RFLP.
The managing general partner has sole voting power over the shares but
dispositions of the shares require the approval of 50% of the general
partnership interests of the RFLP.
(5) Represents 15.6% of the Class A common stock if all shares of Class B
common stock are converted into Class A common stock.
(6) Consists of 39,000 shares of Class A common stock subject to stock options
exercisable within 60 days of March 29, 2002.
(7) Represents 15.3% of the Class A common stock if all shares of Class B
common stock are converted into Class A common stock.
(8) Consists of shares owned jointly with Mrs. Cullinan's spouse
(9) Represents 15.3% of the Class A common stock if all shares of Class B
common stock are converted into Class A common stock.
(10) Represents 14.9% of the Class A common stock if all shares of Class B
common stock are converted into Class A common stock.
(11) Based on the Schedule 13G/A filed with the SEC by Janus Capital Corporation
for the year ended December 31, 2001.
(12) Based on the Schedule 13G/A for the year ended December 31, 2001 filed by
AIM Management Group, Inc. with the SEC on behalf of itself and its
wholly-owned subsidiaries, AIM Advisors, Inc. and AIM Capital Management,
Inc.
(13) Includes (a) 425,000 shares that Mr. Lamar has exchanged for units in
exchange funds over which he retains voting power; (b) 1,036,829 shares
held in trust for Mr. Lamar's two minor children who reside with him and in
a charitable lead annuity trust; Mr. Lamar disclaims beneficial ownership
of these shares, (c) 1,000,000 shares held by a private exchange fund, as
to which Mr. Lamar is deemed the beneficial owner; (d) 80,000 shares that
the trusts for Mr. Lamar's two minor children who reside with him have
exchanged for units in an exchange fund over which they retain voting
power; Mr. Lamar disclaims beneficial ownership of these shares; (e)
2,250,000 shares held by CWL3, LLC; CWL3, No. 2DG, LLC; and CWL3, No. 3C,
LLC; as to which Mr. Lamar is deemed the beneficial owner and (f) 50,750
shares owned by Mr. Lamar's spouse, as to which Mr. Lamar disclaims
beneficial ownership.
(14) Based on the Schedule 13G/A filed with the SEC by T. Rowe Price Associates,
Inc. for the year ended December 31, 2001.
(15) Consists of 50,000 shares of Class A common stock subject to stock options
exercisable within 60 days of March 29, 2002, and 66,389 shares owned by
the Marchand Family Partnership of which Mr. Marchand is a partner. Mr.
Marchand shares voting power over the partnership shares with his wife.
(16) Includes 95,400 shares of Class A common stock subject to stock options
exercisable within 60 days of March 29, 2002.
(17) Includes 26,000 shares of Class A common stock subject to stock options
exercisable within 60 days of March 29, 2002.
(18) Includes 8,000 shares of Class A common stock subject to stock options
exercisable within 60 days of March 29, 2002.
(19) Includes 8,000 shares of Class A common stock subject to options
exercisable within 60 days of March 29, 2002.
(20) Consists of 8,000 shares of Class A common stock subject to options
exercisable within 60 days of March 29, 2002.
(21) See Notes 2, 4, 6, 8, 13, 15, 16, 17, 18, 19 and 20.
(22) Assumes the conversion of all shares of Class B common stock into shares of
Class A common stock.
3
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers and directors and persons who own
beneficially more than ten percent of the Company's equity securities are
required under Section 16(a) of the Securities Exchange Act of 1934 to file
reports of ownership and changes in ownership of Company securities with the
Securities and Exchange Commission. Copies of these reports must also be
furnished to the Company. Based solely on a review of the copies of reports
furnished to the Company and written representations that no other reports were
required, the Company believes that during 2001 the Company's executive
officers, directors and 10% beneficial owners complied with all applicable
Section 16(a) filing requirements, except that forms, in each case reporting the
grant of stock options, were filed late on behalf of each of Kevin P. Reilly,
Jr., Sean E. Reilly and Keith Istre.
ITEM 1 ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at ten for the
coming year. The persons named below have been nominated for election as
directors at the annual meeting of stockholders to be held on May 23, 2002, to
serve until the next annual meeting of stockholders and until their successors
are elected and qualified. Each has consented to being named a nominee in this
proxy statement and to serve, if elected, as a director. If any nominee is
unable to serve, proxies will be voted for such other candidates as may be
nominated by the Board of Directors.
Directors will be elected by a plurality of the votes cast by the
stockholders entitled to vote on this proposal at the meeting. Abstentions,
broker non-votes and votes withheld will not be treated as votes cast for this
purpose and will not affect the outcome of the election.
The following table contains certain information about the nominees for
director.
BUSINESS EXPERIENCE DURING PAST FIVE DIRECTOR
NAME AND AGE YEARS AND OTHER DIRECTORSHIPS SINCE
------------ ------------------------------------ --------
Kevin P. Reilly, Jr. Kevin P. Reilly, Jr. has served as the Company's President and 1984
Age: 47 Chief Executive Officer since February 1989 and as a director of
the Company since February 1984. Mr. Reilly also serves on the
Executive Committee of the Board. Mr. Reilly served as
President of the Company's Outdoor Division from 1984 to 1989.
Mr. Reilly, an employee of the Company since 1978, has also
served as Assistant and General Manager of the Company's Baton
Rouge Region and Vice President and General Manager of the
Louisiana Region. Mr. Reilly received a B.A. from Harvard
University in 1977.
Keith A. Istre Keith A. Istre has been Chief Financial Officer of the Company 1991
Age: 49 since February 1989 and a director of the Company since
February 1991. Mr. Istre also serves on the Executive Committee
of the Board. Mr. Istre joined the Company as Controller in 1978
and became Treasurer in 1985. Prior to joining the Company, Mr.
Istre was employed by a public accounting firm in Baton Rouge
from 1975 to 1978. Mr. Istre graduated from the University of
Southwestern Louisiana in 1974 with a degree in Accounting.
4
BUSINESS EXPERIENCE DURING PAST FIVE DIRECTOR
NAME AND AGE YEARS AND OTHER DIRECTORSHIPS SINCE
------------ ------------------------------------ --------
Charles W. Lamar, III Charles W. Lamar, III has been a director of the Company since 1973
Age: 53 June 1973. He joined the Company in 1982 and served as General
Counsel and Secretary through December 1998. Prior to joining
the Company, Mr. Lamar maintained his own law practice and
was employed by a law firm in Baton Rouge. In January 1999,
Mr. Lamar became Chairman and Chief Executive Officer of
Woodlawn Land Company, a commercial real estate company.
Mr. Lamar received a B.A. in Philosophy from Harvard
University in 1971, a M.A. in Economics from Tufts University in
1972 and a J.D. from Boston University in 1975.
Gerald H. Marchand Gerald H. Marchand has supervised certain properties owned by 1978
Age: 70 TLC Properties, Inc., a subsidiary of the Company, since
December 2000, and has been a director of the Company since
1978. Mr. Marchand was Regional Manager of the Gulf Coast
Region from 1988 to 2000. He began his career with the
Company in leasing and went on to become President of the
Outdoor Division. He has served as General Manager of the Lake
Charles and Mobile operations. Mr. Marchand received a Masters
in Education from Louisiana State University in 1955.
T. Everett Stewart, Jr. T. Everett Stewart, Jr. has been President of Interstate Logos, Inc. 1997
Age: 48 since 1988, and has been a director since 1997. He served as
Regional Manager of the Company's Baton Rouge Region from
1984 to 1988. Previously, he served the Company as Sales
Manager in Montgomery and General Manager of the Monroe and
Alexandria operations. Before joining the Company in 1979,
Mr. Stewart was employed by the Lieutenant Governor of the
State of Alabama and by a United States Senator from the State of
Alabama. Mr. Stewart received a B.S. in Finance from Auburn
University in 1976.
Sean E. Reilly Sean E. Reilly has been Chief Operating Officer and President of 1999
Age: 40 the Company's Outdoor Division since November 2001.
Mr. Reilly also holds the position of Vice President of Mergers
and Acquisitions and President of the Company's real estate
division, TLC Properties, Inc. He has been a director of the
Company since 1999 and serves on the Executive Committee of
the Board. He began working with the Company as Vice
President of Mergers and Acquisitions in 1987 and served in that
capacity until 1994. He also served as a director of the Company
from 1989 to 1996. Mr. Reilly was the Chief Executive Officer of
Wireless One, Inc., a wireless cable television company, from
1994 to 1997 after which he rejoined the Company. Mr. Reilly
received a B.A. from Harvard University in 1984 and a J.D. from
Harvard Law School in 1989.
5
BUSINESS EXPERIENCE DURING PAST FIVE DIRECTOR
NAME AND AGE YEARS AND OTHER DIRECTORSHIPS SINCE
------------ ------------------------------------ --------
Anna Reilly Cullinan From 1992 until 2000, Mrs. Cullinan owned and operated Lula's 2001
Age: 38 Cafe, a restaurant, and served on the Board of Directors of several
community-based organizations in South Bend, Indiana.
Mrs. Cullinan currently is a director of St. Joseph Capital Bank in
South Bend. Prior to living and raising her family in Indiana,
Mrs. Cullinan worked for the Corporation for National Service
and the Ashoka Foundation in Washington, D.C. Mrs. Cullinan
received her B.A. from Emory University in 1985, and a Masters
of Public Policy from Duke University in 1990.
Stephen P. Mumblow Stephen P. Mumblow is the President of Manhan Media, Inc., an 1999
Age: 46 investment company in broadcasting and other media concerns.
Until January 2002, Mr. Mumblow was the President and a
Director of Communications Corporation of America, a television
and radio broadcasting company, having joined that company in
1998. Mr. Mumblow was a Managing Director of Chase
Securities, Inc., an investment banking firm, from March 1988 to
August 1998, prior to which he was a Vice President of Michigan
Energy Resources Company, an intrastate natural gas utility
company and cable television and broadcasting concern, and
Citibank, N.A., a commercial bank. Mr. Mumblow is a 1977
graduate of The Wharton School, University of Pennsylvania with
a BS Degree in Economics.
John Maxwell Hamilton John Maxwell Hamilton has served as Dean of the Manship 2000
Age: 55 School of Mass Communications of Louisiana State University
since 1992. In addition, Mr. Hamilton worked on the staff of the
World Bank, the United States House of Representatives
Subcommittee on Economic Policy and Trade, and the United
States Agency for International Development. Mr. Hamilton
received a B.A. in Journalism from Marquette University in 1969,
an M.S. in Journalism from Boston University in 1974 and a
Ph.D. from George Washington University in 1983.
Thomas V. Reifenheiser Thomas V. Reifenheiser was a Managing Director and Group 2000
Age: 66 Executive for the Global Media and Telecom Group of Chase
Securities Inc., an investment banking firm, from prior to 1995 to
2000. He joined Chase in 1963 and was the Global Media and
Telecom Group Executive since 1977. He is a member of the
Board of Directors of Mediacom Communications Corp.
Mr. Reifenheiser received a B.B.A. from Hofstra University and
an M.B.A. from The Wharton School, University of Pennsylvania.
Kevin P. Reilly, Jr. and Sean E. Reilly are brothers, Anna Reilly
Cullinan is their sister and Charles W. Lamar, III is their cousin.
6
COMMITTEES OF THE BOARD
The Company has standing Audit and Compensation Committees of the Board
of Directors but does not have a Nominating Committee. The Company also has an
Executive Committee of the Board of Directors.
AUDIT COMMITTEE
The Audit Committee currently consists of Stephen P. Mumblow
(Chairman), John Maxwell Hamilton and Thomas V. Reifenheiser, each of whom is
independent as defined by applicable Nasdaq National Market standards governing
the qualifications of Audit Committee members. The Audit Committee held six
meetings during 2001. The purposes of the Audit Committee are to review with the
Company's management and independent accountants such matters as internal
accounting controls and procedures, the plan and results of the annual audit,
and suggestions of the accountants for improvements in accounting procedures; to
make recommendations to the Board of Directors regarding the appointment of
independent accountants; and to provide such additional information as the Audit
Committee may deem necessary to make the Board of Directors aware of significant
financial matters that require the Board of Directors' attention. The Audit
Committee operates under a written charter adopted by the Board of Directors on
May 25, 2000, a copy of which is included as Appendix A to this Proxy Statement.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors currently consists
of Charles W. Lamar, III (Chairman), Stephen P. Mumblow and Thomas V.
Reifenheiser. The Committee's responsibilities include considering the
performance of the Chief Executive Officer and other executive officers of the
Company and reviewing and approving such officers' cash and equity-based
compensation and benefits. The Committee met one time during 2001.
EXECUTIVE COMMITTEE
The Executive Committee has authority to operate the affairs of the
Company between meetings of the Board of Directors and administers the Company's
2000 Employee Stock Purchase Plan. The Executive Committee currently consists of
Kevin Reilly, Keith Istre and Sean Reilly.
ATTENDANCE AT MEETINGS
The Board of Directors held five meetings during 2001. Each of the
directors then in office attended at least 75% of the aggregate of all meetings
of the Board and all meetings of the committees of the Board on which such
director then served.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company purchased approximately $1,842,000 of highway signs and
transit bus shelters from Interstate Highway Signs Corp., which represented
approximately 13% of total capitalized expenditures for its logo sign and
transit advertising businesses during the year ended December 31, 2001. The
Company does not use Interstate Highway Signs Corp. exclusively for its highway
sign and transit bus shelter purchases. Interstate Highway Signs Corp. is a
wholly-owned subsidiary of Sign Acquisition Corp. Kevin P. Reilly, Jr., the
President and Chief Executive Officer of the Company, has voting control over a
majority of the outstanding shares of Sign Acquisition Corp. through a voting
trust.
7
Mr. Mumblow, a director of the Company, is the former President and
Director of Communications Corporation of America. Communications Corporation of
America and its affiliates purchased outdoor advertising space, which consisted
of approximately 464 outdoor advertising displays, from the Company in 2001 for
a total purchase price of $219,217.
The Company's wholly-owned direct subsidiary, Lamar Media Corp., loaned
$196,666.66 to Gerald Marchand, a director of the Company, pursuant to a
promissory note dated March 24, 2001. The note was due and payable on September
24, 2001 and accrued interest on a rate of eight percent per annum. This loan is
no longer outstanding.
The Company advanced T. Everett Stewart, Jr., a director of the
Company, $87,000 on January 9, 2002 as an advancement against Mr. Stewart's
bonus for fiscal year 2001. This loan was paid in full on January 24, 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Charles W. Lamar, III,
Stephen P. Mumblow and Thomas V. Reifenheiser. Wendell Reilly served on the
Committee from November 1999 until his resignation from the Board of Directors
in March 2001. None of the Company's executive officers serves as a member of
the Board of Directors or compensation committee of any other company that has
one or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.
From October 1982 to December 1998, Charles Lamar was the Company's
Secretary and General Counsel.
8
EXECUTIVE COMPENSATION
The Compensation Committee Report set forth on the following page describes the
Company's compensation policies applicable to executive officers and the basis
for Mr. Reilly's compensation as Chief Executive Officer. The following graph
shows a comparison of the cumulative total stockholder returns on the Class A
common stock over the period from December 31, 1996 to December 31, 2001 as
compared with that of the Nasdaq US Index and an index comprised of certain
companies selected by the Company as comparative to the Company in that each
operates as part of its business outdoor advertising properties as well as other
media properties. The graph assumes $100 invested on December 31, 1996 in the
Company's Class A common stock, the Nasdaq US Index and the Custom Composite
Index, with all dividends, if any, being reinvested.
CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1996
WITH DIVIDENDS REINVESTED
[GRAPH]
31-DEC-96 31-DEC-97 31-DEC-98 31-DEC-99 31-DEC-00 31-DEC-01
--------- --------- --------- --------- --------- ---------
Lamar Advertising Company $100 $164 $230 $375 $239 $262
Nasdaq US $100 $122 $173 $321 $193 $153
Custom Composite Index (2 Stocks)(1) $100 $213 $289 $466 $252 $268
---------
(1) The Custom Composite Index consists of Clear Channel Communications, Inc.
and the Ackerley Group, Inc.
9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policy is designed to attract,
retain and reward executive officers who contribute to the long-term success of
the Company by maintaining a competitive salary structure and aligning
individual compensation with the achievement of corporate and individual
performance objectives.
Executive Officer Compensation
Overall, the Committee has determined that executive officer base
salaries and cash bonuses should be based on industry averages for comparable
positions as well as on individual and corporate performance.
For 2001, the Chief Executive Officer made recommendations to the
Committee as to base salary amounts for each executive officer (including
himself) based on his assessment of each officer's individual performance and
current level of compensation. The Committee evaluated the Chief Executive
Officer's recommendations, taking into account the officer's tenure in his
position, the Committee's subjective assessment of individual performance and
the Company's overall performance during the prior year. The Committee did not
apply a strict formula but instead considered these factors together without
giving any specific weight to any individual factor. The Committee gauged
overall performance of the Company based on several key indicators. These
indicators included the number of acquisitions completed and the aggregate
purchase price, the market performance of the Company's Class A common stock and
the growth in net revenues and cash flows. The Committee also considered the
current financial and economic environment in making its assessment. The Chief
Executive Officer recommended that his base compensation and the base
compensation of the Chief Operating Officer and the Chief Financial Officer
remain the same in 2001 as it was in 2000. The Committee agreed with this
recommendation.
Each year, the Chief Executive Officer proposes to the Committee the
size of annual bonuses, taking into account the growth of the Company for that
year and each officer's individual performance. In 2001, cash bonuses paid to
the Chief Executive Officer and other executive officers totaled $375,000. The
Chief Executive Officer's bonus was based on the overall financial performance
of the Company during 2001.
Stock Options
In September 2001, the Company awarded option grants of 97,500 shares
to the Chief Executive Officer and Chief Operating Officer and 48,000 shares to
the Chief Financial Officer, as shown in the Summary Compensation Table. Due to
the economic slowdown, the Committee determined that option grants to the
executive officers appropriately balanced total compensation, which included
base salaries that remained constant and reduced annual bonuses from the
previous year. The Committee believes that this mix of compensation allowed the
Company to conserve cash while further aligning the interests of management with
those of the Company's stockholders.
10
Deduction Limit for Executive Compensation
Section 162(m) of the Internal Revenue Code limits a publicly held
company's tax deduction for compensation paid to the chief executive officer and
the other four most highly paid officers. Generally, amounts paid in excess of
$1,000,000 to a covered executive in any year cannot be deducted. Certain
performance-based compensation that has been approved by stockholders is not
subject to the limit. The Company does not currently expect to pay cash
compensation exceeding the $1,000,000 limitation. Stock options granted under
the 1996 Equity Incentive Plan are not subject to the limitation under
applicable regulations. In addition, the Committee will consider as appropriate
other ways to maximize the deductibility of executive compensation, while
retaining the discretion to compensate certain executive officers in a manner
commensurate with performance and the competitive environment for executive
talent without regard to deductibility.
By the Compensation Committee,
Charles W. Lamar, III (Chair)
Stephen P. Mumblow
Thomas V. Reifenheiser
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
Chief Executive Officer and each of the other executive officers of the Company
whose salary and bonus for the year ended December 31, 2001 exceeded $100,000,
which are herein referred to as the Named Executive Officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
---------------------
ANNUAL COMPENSATION SHARES OF CLASS A
------------------------------- COMMON STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) UNDERLYING OPTIONS(#) COMPENSATION($)(1)
--------------------------- ---- --------- -------- --------------------- ------------------
Kevin P. Reilly, Jr. 2001 220,000 150,000 97,500 57,500
President and Chief Executive 2000 220,000 300,000 -- 57,500
Officer 1999 220,000 400,000 -- 57,500
Sean E. Reilly 2001 150,000 112,500 97,500 50,000
Chief Operating Officer and Vice 2000 150,000 225,000 -- 15,000
President 1999 137,500 250,000 -- --
Keith A. Istre 2001 166,000 112,500 48,000 15,000
Treasurer and Chief Financial 2000 166,000 225,000 -- 15,000
Officer 1999 160,000 250,000 40,000 15,000
---------
(1) The reported amounts consist of employer contributions under the Company's
deferred compensation plan.
11
OPTION GRANTS AND POTENTIAL REALIZABLE VALUES TABLE
The following table sets forth certain information concerning option
grants made to the Named Executive Officers during fiscal year 2001.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
------------------------------------------------------------------ ASSUMED ANNUAL RATES OF STOCK
PERCENT OF TOTAL PRICE APPRECIATION
NUMBER OF SECURITIES OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(3)
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED (#) FISCAL YEAR(%) ($/SH) DATE 5% ($) 10% ($)
---- -------------------- ---------------- ----------- ---------- ------------------------------
Kevin P. Reilly, Jr. ..... 97,500(1) 4.4 26.42 9/27/11 1,620,001 4,105,401
Sean E. Reilly ........... 97,500(1) 4.4 26.42 9/27/11 1,620,001 4,105,401
Keith A. Istre ........... 48,000(2) 2.2 26.42 9/27/11 797,539 2,021,120
---------
(1) This option became exercisable as to 39,000 shares on September 27, 2001
and will become exercisable as to an additional 29,250 shares on each of
September 27, 2002 and 2003.
(2) This option became exercisable as to 19,200 shares on September 27, 2001
and will become exercisable as to 14,400 shares on each of September 27,
2002 and 2003.
(3) The values in this column are given for illustrative purposes; they do not
reflect the Company's estimate or projection of future stock prices. The
values are based on an assumption that the Company's Class A common stock's
market price will appreciate at the stated rate, compounded annually, from
the date of the option grant until the end of the option's 10-year term.
Actual gains, if any, on stock option exercises will depend upon the future
performance of the Company's Class A common stock's price, which will
benefit all stockholders proportionately.
OPTION EXERCISES AND YEAR-END VALUES TABLE
The following table sets forth certain information concerning
exercisable and unexercisable stock options held by the Named Executive Officers
as of December 31, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE YEAR-END(#) FISCAL YEAR-END($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- --------------- ----------- ------------------------- ----------------------------
Kevin P. Reilly, Jr. ..... 0 -- 39,000/58,500 620,880/931,320
Sean E. Reilly ........... 0 -- 39,000/58,500 620,880/931,320
Keith A. Istre ........... 0 -- 87,400/54,800 1,723,818/721,856
---------
(1) Based on the difference between the option exercise price and the closing
price of the underlying Class A common stock on December 31, 2001, which
closing price was $42.34.
DIRECTOR COMPENSATION
During 2001, directors who were not employed by the Company received a
fee of $1,500 a month and were reimbursed for travel expenses incurred to attend
board meetings.
12
REPORT OF THE AUDIT COMMITTEE
In the course of its oversight of the Company's financial reporting
process, the Audit Committee of the Board of Directors has (i) reviewed and
discussed with management the Company's audited financial statements for the
fiscal year ended December 31, 2001, (ii) discussed with KPMG LLP, the Company's
independent auditors, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, and (iii)
received the written disclosures and the letter from the auditors required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, discussed with the auditors their independence, and considered
whether the provision of nonaudit services by the auditors is compatible with
maintaining their independence.
Based on the foregoing review and discussions, the Committee
recommended to the board of directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2001 for filing with the Securities and Exchange Commission.
By the Audit Committee,
Stephen P. Mumblow (Chair)
John Maxwell Hamilton
Thomas V. Reifenheiser
13
ITEM 2 PROPOSAL TO APPROVE AN AMENDMENT TO 1996 EQUITY INCENTIVE PLAN
GENERAL
The 1996 Equity Incentive Plan was adopted by Lamar Advertising Company
in July 1996. There were originally 2,000,000 shares of Class A common stock
reserved for issuance under the 1996 Equity Incentive Plan, which became
3,000,000 shares as a result of a 3-for-2 stock split effected in February 1998.
In September 1998, the Board of Directors amended the 1996 Equity Incentive Plan
to increase the aggregate number of shares of Class A common stock reserved for
issuance under the plan to 4,000,000 shares, and this increase was approved by
stockholders at the 1999 Annual Meeting of Stockholders. In August 1999, the
1996 Equity Incentive Plan was further amended to increase the aggregate number
of shares of Class A common stock reserved for issuance under the plan to
5,000,000 shares, and this increase was approved by stockholders at the 2000
Annual Meeting of Stockholders. The number of shares reserved for issuance under
the 1996 Equity Incentive Plan includes shares subject to options already
granted and shares issued pursuant to options already exercised. The 1996 Equity
Incentive Plan is designed to provide the Company flexibility in awarding equity
incentives by providing for different types of incentives that may be awarded.
The purpose of the 1996 Equity Incentive Plan is to attract and retain directors
and key employees of and consultants to the Company and its eligible affiliated
companies and to enable them to participate in the long-term growth of the
Company.
As the amount of any awards under the 1996 Equity Incentive Plan is
within the Compensation Committee's discretion, total awards that may be granted
for the current fiscal year are not determinable until completion of the year.
Under the 1996 Equity Incentive Plan to date, (i) equity awards to purchase
97,500 shares of Class A common stock have been granted to Kevin P. Reilly, Jr.
(ii) equity awards to purchase a total of 288,000 shares of Class A common stock
have been granted to Keith Istre (iii) equity awards to purchase a total of
97,500 shares of Class A common stock have been granted to Sean E. Reilly (iv)
equity awards to purchase a total of 483,000 shares of Class A common stock have
been granted to current executive officers as a group (3 persons); (v) equity
awards to purchase a total of 433,500 shares of Class A common stock have been
granted to current directors who are not also executive officers as a group (7
persons); and, (vi) equity awards to purchase a total of 6,059,000 shares of
Class A common stock were granted to all other Company employees as a group
(including current officers who are not executive officers).
Of the nominees for election as director, Mr. Marchand has received
options to purchase a total of 90,000 shares, Mr. Stewart has received options
to purchase a total of 283,500 shares, Mr. Mumblow has received options to
purchase a total of 20,000 shares, Mr. Hamilton has received options to purchase
a total of 20,000 shares, and Mr. Reifenheiser has received options to purchase
a total of 20,000 shares. No equity awards have been granted to Anna Reilly
Cullinan or Charles W. Lamar. No person has received five percent of the options
granted under the Equity Incentive Plan.
AMENDMENT
In September 2001, the Executive Committee of the Board of Directors
voted, subject to stockholder approval, to amend the 1996 Equity Incentive Plan
to increase the aggregate number of shares of Class A common stock available
under such plan by an additional 3,000,000 shares to an aggregate of 8,000,000
shares, subject to adjustment for stock-splits and similar capital changes.
Although approval of the amendment is not required by applicable law on
resolutions, it is required in order for options granted under the 1996 Equity
Incentive Plan to qualify as Incentive Stock Options. The Board of Directors
believes that it is advisable to give the stockholders an opportunity to approve
this amendment so that employee participants in the 1996 Equity Incentive Plan
may benefit from the favorable tax treatment
14
described below. If the stockholders are opposed to the proposal, the Board of
Directors will reconsider the amendment. The Company believes that this increase
is necessary and appropriate to enable the Company to attract and retain the
quality of employees whose services are considered important to the Company's
future progress, including employees of companies acquired by the Company. The
Company believes that participation in the 1996 Equity Incentive Plan provides
such employees with an incentive to remain as employees of the Company.
The following is a summary of the Equity Incentive Plan's features.
ADMINISTRATION AND ELIGIBILITY
The 1996 Equity Incentive Plan provides for the grant of stock options
(incentive and nonstatutory), stock appreciation rights, restricted stock and
unrestricted stock for the purchase of shares of Class A common stock. Awards
under the 1996 Equity Incentive Plan can be granted to employees, consultants
and directors of the Company as well as employees and consultants of its
eligible subsidiaries who are capable of contributing significantly to the
successful performance of the Company. The Compensation Committee administers
the 1996 Equity Incentive Plan and selects the participants and establishes the
terms and conditions of each option or other equity right granted under the 1996
Equity Incentive Plan, including the exercise price, the number of shares
subject to options or other equity rights and the time(s) at which such options
become exercisable. Subject to certain limitations the Compensation Committee
may delegate to one or more executive officers of the Company the power to make
awards to participants who are not subject to Section 16 of the Securities
Exchange Act of 1934 or "covered employees" for purposes of Section 162(m) of
the Internal Revenue Code. The Compensation Committee has authorized the Chief
Financial Officer to grant options to purchase shares of Class A common stock to
each such participant.
The exercise price of all incentive stock options, or ISOs, within the
meaning of Section 422 of the Internal Revenue Code granted under the 1996
Equity Incentive Plan must be at least equal to 100% of the fair market value of
the option shares on the date of grant. The term of any ISO granted under the
1996 Equity Incentive Plan may not exceed ten years.
As of March 29, 2002, the approximately 2,900 employees of the Company
and its affiliates were eligible to participate in the 1996 Equity Incentive
Plan. The closing price of the Company's Class A common stock as reported on the
Nasdaq National Market on March 28, 2002 was $40.62.
1996 EQUITY INCENTIVE PLAN ACTIVITY
As of March 29, 2002, options to purchase an aggregate of 6,975,500
shares of Class A common stock had been granted under the 1996 Equity Incentive
Plan, of which options to purchase 387,009 shares had been cancelled and options
to purchase 2,313,491 shares had been exercised. As of such date, 1,411,509
shares remained available for the granting of awards under the 1996 Equity
Incentive Plan, if the 3,000,000 shares added by the amendment for which
stockholder approval is being requested by the following proposal are included.
No stock appreciation rights or awards other than option grants have been
granted under the 1996 Equity Incentive Plan to date.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO STOCK OPTIONS
Incentive Stock Options. An optionee does not realize taxable income
upon the grant or exercise of an ISO under the 1996 Equity Incentive Plan. If no
disposition of shares issued to an optionee pursuant to the exercise of an ISO
is made by the optionee within two years from the date of grant or within one
year from the date of exercise, then (a) upon sale of such shares, any amount
realized in excess
15
of the option price (the amount paid for the shares) is taxed to the optionee as
a capital gain and any loss sustained will be a capital loss and (b) no
deduction is allowed to the Company for Federal income tax purposes. The
exercise of ISOs gives rise to an adjustment in computing alternative minimum
taxable income that may result in alternative minimum tax liability for the
optionee.
If shares of common stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of the two-year and one-year holding periods
described above, a disqualifying disposition, then (a) the optionee realizes
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of such shares) over the option price thereof and (b) the
Company is entitled to deduct such amount. Any further gain realized is taxed as
a capital gain and does not result in any deduction to the Company. A
disqualifying disposition in the year of exercise will generally avoid the
alternative minimum tax consequences of the exercise of an ISO.
Nonstatutory Stock Options. No income is realized by the optionee at
the time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise and (b)
the Company receives a tax deduction for the same amount. Upon disposition of
the shares, appreciation or depreciation after the date of exercise is treated
as a capital gain or loss and will not result in any deduction by the Company.
VOTES REQUIRED
The affirmative vote of a majority of the total votes properly cast on
this proposal will constitute the approval of the proposed amendment to the 1996
Equity Incentive Plan. Abstentions and broker non-votes will not be treated as
votes cast for the purpose of determining the outcome of the vote on this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
The Board of Directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.
DEADLINE FOR STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be considered for inclusion in
the Company's proxy materials for the 2003 Annual Meeting of Stockholders, it
must be received by the Company at 5551 Corporate Boulevard, Baton Rouge,
Louisiana 70808, Attention: Secretary, no later than December 27, 2002.
In addition, the Company's Bylaws require a stockholder who wishes to
bring business before or propose director nominations at an annual meeting to
give advance written notice to the Secretary of the Company as described in the
Bylaws. To be timely for the 2003 Annual Meeting, proposals must be received by
not later than the close of business on March 10, 2003.
16
INFORMATION CONCERNING AUDITORS
The firm of KPMG LLP, independent accountants, audited the Company's
financial statements for the year ended December 31, 2001. The Board of
Directors has appointed KPMG LLP to serve as the Company's independent auditors
for its fiscal year ending December 31, 2002. Representatives of KPMG LLP are
expected to attend the annual meeting to respond to appropriate questions, and
will have the opportunity to make a statement if they desire.
The fees for services provided by KPMG LLP to the Company in 2001 were
as follows:
Audit Fees $309,500
========
All Other Fees--other non-audit services $111,497
========
EXPENSES OF SOLICITATION
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others of forwarding
solicitation material to beneficial owners of common stock. In addition to the
use of mails, proxies may be solicited by officers and any regular employees of
the Company in person or by telephone. The Company expects that the costs
incurred in the solicitation of proxies will be nominal.
April 25, 2002
17
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
This Charter was adopted at a meeting of the Board of Directors held on May 25,
2000. All of the provisions of this Charter became effective upon adoption,
provided that the provisions of Article II relating to the independence and
qualifications of the members of the Audit Committee shall be satisfied by no
later than June 14, 2001.
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary responsibilities, with respect to the Company's
financial reporting process, are to:
o Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance and
accounting compliance.
o Monitor the independence and performance of the Company's
independent auditors.
o Provide an avenue of communication among the independent
auditors, management and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other consultants or
experts it deems necessary in the performance of its duties.
The Audit Committee's role is one of oversight, and it is recognized
that the Company's management is responsible for preparing the
Company's financial statements and that the independent auditor is
responsible for auditing those financial statements.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of The Nasdaq Stock
Market, Inc. The Audit Committee shall be comprised of three or more
directors as determined by the Board of Directors, each of whom shall,
except as permitted by the Nasdaq rules, be independent non-executive
directors, free form any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Audit
Committee shall have a basic understanding of finance and accounting
and be able to read and understand fundamental financial statements,
and at least one member of the Audit Committee shall have accounting or
related financial management expertise.
Audit Committee members shall be appointed by the Board of Directors.
If an Audit Committee Chair is not designated or present, the members
of the Audit Committee may designate a Chair by majority vote of the
Audit Committee membership.
The Audit Committee shall meet at least three times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall
prepare and/or approve an agenda in advance of each meeting. The Audit
Committee shall meet privately in executive session at least
A-1
annually with management, the independent auditors, and as a committee
to discuss any matters that the Audit Committee or each of these groups
believe should be discussed. In addition, the Audit Committee, or at
least its Chair, should communicate with management and the independent
auditors quarterly, to the extent necessary, to review the Company's
financial statements and significant findings based upon the auditors
limited review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for
approval and have the document published in the Company's
annual proxy statement, at least every three years in
accordance with regulations of the Securities and Exchange
Commission.
2. Review the Company's annual audited financial statements prior
to filing or distribution. Review should include discussion
with management and independent auditors of significant issues
regarding accounting principles, practices, and judgments.
Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the
independent auditors in accordance with SAS 61 (see item 8).
3. In consultation with the management, the independent auditors,
and the internal auditors, consider the integrity of the
Company's financial reporting processes and controls. Discuss
significant financial risk exposures and the steps management
has taken to monitor, control and report such exposures.
Review significant findings prepared by the independent
auditors and the internal auditing department together with
management's responses.
Independent Auditors
4. The independent auditors are ultimately accountable to the
Audit Committee and the Board of Directors. The Audit
Committee shall review the independence and performance of the
auditors and annually recommend to the Board of Directors the
appropriate action regarding the independence of the auditors,
the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
5. Approve the fees and other significant compensation to be paid
to the independent auditors.
6. On an annual basis, the Audit Committee should review and
discuss with the independent auditors all significant
relationships that the auditors have with the Company that
could impair the auditor's independence.
7. Review the independent auditor's audit plan - discuss scope,
staffing, locations, reliance upon management, and general
audit approach.
8. Prior to the filing of the Annual Report on Form 10-K, discuss
the results of the audit with the independent auditors.
Discuss certain matters required to be communicated to the
Audit Committee in accordance with AICPA SAS 61.
A-2
9. Consider the independent auditors' judgments about the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.
Legal Compliance
10. On at least an annual basis, review with the Company's
internal counsel or outside counsel, any material legal
compliance issues, including any legal matters that could have
a significant impact on the organization's financial
statements, the Company's compliance with applicable laws and
regulation, and inquiries received from regulators or
governmental agencies.
Other Audit Committee Responsibilities
11. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission regulations. The report
should be included in the Company's annual proxy statement.
12. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Audit Committee
or the Board of Directors deems necessary or appropriate.
13. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing
activities.
Other Optional Charter Disclosures
14. Annually review a summary of director and officers' related
party transactions and potential conflicts of interest
A-3
APPENDIX B
LAMAR ADVERTISING COMPANY
1996 EQUITY INCENTIVE PLAN
(AS AMENDED THROUGH SEPTEMBER 2001)
1. PURPOSE
The purpose of the Lamar Advertising Company 1996 Equity Incentive Plan
(the "Plan") is to attract and retain directors, key employees and consultants
of the Company and its Affiliates, to provide an incentive for them to achieve
long-range performance goals, and to enable them to participate in the long-term
growth of the Company by granting Awards with respect to the Company's Class A
Common Stock (the "Common Stock"). Certain capitalized terms used herein are
defined in Section 9 below.
2. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
select the Participants to receive Awards and shall determine the terms and
conditions of the Awards. The Committee shall have authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, and to
interpret the provisions of the Plan. The Committee's decisions shall be final
and binding. To the extent permitted by applicable law, the Committee may
delegate to one or more executive officers of the Company the power to make
Awards to Participants who are not Reporting Persons or Covered Employees and
all determinations under the Plan with respect thereto, provided that the
Committee shall fix the maximum amount of such Awards for all such Participants
and a maximum for any one Participant.
3. ELIGIBILITY
All directors, employees and consultants of the Company or any
Affiliate capable of contributing significantly to the successful performance of
the Company, other than a person who has irrevocably elected not to be eligible,
are eligible to be Participants in the Plan. Incentive Stock Options may be
granted only to persons eligible to receive such Options under the Code.
4. STOCK AVAILABLE FOR AWARDS
(a) AMOUNT. Subject to adjustment under subsection (b), Awards may be
made under the Plan for up to 8,000,000 shares of Common Stock. If any Award
expires or is terminated unexercised or is forfeited or settled in a manner that
results in fewer shares outstanding than were awarded, the shares subject to
such Award, to the extent of such expiration, termination, forfeiture or
decrease, shall again be available for award under the Plan. Common Stock issued
through the assumption or substitution of outstanding grants from an acquired
company shall not
B-1
reduce the shares available for Awards under the Plan. Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.
(b) ADJUSTMENT. In the event that the Committee determines that any
stock dividend, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, exchange of shares or
other transaction affects the Common Stock such that an adjustment is required
in order to preserve the benefits intended to be provided by the Plan, then the
Committee (subject in the case of Incentive Stock Options to any limitation
required under the Code) shall equitably adjust any or all of (i) the number and
kind of shares in respect of which Awards may be made under the Plan, (ii) the
number and kind of shares subject to outstanding Awards and (iii) the exercise
price with respect to any of the foregoing, and if considered appropriate, the
Committee may make provision for a cash payment with respect to an outstanding
Award, provided that the number of shares subject to any Award shall always be a
whole number.
(c) LIMIT ON INDIVIDUAL GRANTS. The maximum number of shares of Common
Stock subject to Options and Stock Appreciation Rights that may be granted to
any Participant in the aggregate in any calendar year shall not exceed 300,000
shares and the maximum number of shares of Common Stock that may be granted as
Restricted Stock or Unrestricted Stock Awards, with respect to which performance
goals apply under Section 7 below, to any Participant in the aggregate in any
calendar year shall not exceed 300,000, subject to adjustment under subsection
(b).
5. STOCK OPTIONS
(a) GRANT OF OPTIONS. Subject to the provisions of the Plan, the
Committee may grant options ("Options") to purchase shares of Common Stock (i)
complying with the requirements of Section 422 of the Code or any successor
provision and any regulations thereunder ("Incentive Stock Options") and (ii)
not intended to comply with such requirements ("Nonstatutory Stock Options").
The Committee shall determine the number of shares subject to each Option and
the exercise price therefor, which shall not be less than 100% of the Fair
Market Value of the Common Stock on the date of grant with respect to Incentive
Stock Options. Nonstatutory Stock Options may be granted at such prices as the
Committee may determine. No Incentive Stock Options may be granted hereunder
more than ten years after the effective date of the Plan.
(b) TERMS AND CONDITIONS. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Committee may specify in
the applicable grant or thereafter. The Committee may impose such conditions
with respect to the exercise of Options, including conditions relating to
applicable federal or state securities laws, as it considers necessary or
advisable.
(c) PAYMENT. No shares shall be delivered pursuant to any exercise of
an Option until payment in full of the exercise price therefor is received by
the Company. Such payment may be made in whole or in part in cash or, to the
extent permitted by the Committee at or after the grant of the Option, by
delivery of a note or other commitment satisfactory to the Committee or shares
of Common Stock owned by the optionee, including Restricted Stock, or by
retaining shares otherwise issuable pursuant to the Option, in each case valued
at their Fair Market Value
B-2
on the date of delivery or retention, or such other lawful consideration as the
Committee may determine.
6. STOCK APPRECIATION RIGHTS
(a) GRANT OF SARS. Subject to the provisions of the Plan, the Committee
may grant rights to receive any excess in value of shares of Common Stock over
the exercise price ("Stock Appreciation Rights" or "SARs") in tandem with an
Option (at or after the award of the Option), or alone and unrelated to an
Option. SARs in tandem with an Option shall terminate to the extent that the
related Option is exercised, and the related Option shall terminate to the
extent that the tandem SARs are exercised. The Committee shall determine at the
time of grant or thereafter whether SARs are settled in cash, Common Stock or
other securities of the Company, Awards or other property, and may define the
manner of determining the excess in value of the shares of Common Stock.
(b) EXERCISE PRICE. The Committee shall fix the exercise price of each
SAR or specify the manner in which the price shall be determined. An SAR granted
in tandem with an Option shall have an exercise price not less than the exercise
price of the related Option. SARs granted alone and unrelated to an Option may
be granted at such exercise prices as the Committee may determine.
7. STOCK AWARDS
(a) GRANT OF RESTRICTED OR UNRESTRICTED STOCK. Subject to the
provisions of the Plan, the Committee may grant shares of Common Stock subject
to forfeiture ("Restricted Stock") and determine the duration of the period (the
"Restricted Period") during which, and the conditions under which, the shares
may be forfeited to the Company and the other terms and conditions of such
Awards. Shares of Restricted Stock may be issued for no cash consideration, such
minimum consideration as may be required by applicable law or such other
consideration as the Committee may determine. Shares of Restricted Stock may not
be sold, assigned, transferred, pledged or otherwise encumbered, except as
permitted by the Committee, during the Restricted Period. Shares of Restricted
Stock shall be evidenced in such manner as the Committee may determine. Any
certificates issued in respect of shares of Restricted Stock shall be registered
in the name of the Participant and unless otherwise determined by the Committee,
deposited by the Participant, together with a stock power endorsed in blank,
with the Company. At the expiration of the Restricted Period, the Company shall
deliver such certificates to the Participant or if the Participant has died, to
the Participant's Designated Beneficiary. The Committee also may make Awards of
shares of Common Stock that are not subject to restrictions or forfeiture, on
such terms and conditions as the Committee may determine from time to time
("Unrestricted Stock").
(b) PERFORMANCE GOALS. The Committee may establish performance goals
for the granting of Restricted Stock or Unrestricted Stock Awards or the lapse
of risk of forfeiture of Restricted Stock. Such performance goals may be based
on earnings per share, revenues, sales or expense targets of the Company or any
subsidiary or division thereof, stock price, or such other business criteria as
the Committee may determine. The achievement of the performance goals shall be
determined by the Committee. Shares of Restricted Stock or Unrestricted Stock
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may be issued for no cash consideration, such minimum consideration as may be
required by applicable law or such other consideration as the Committee may
determine.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant or agreement executed by the Participant
specifying the terms and conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or to
comply with applicable tax and regulatory laws and accounting principles.
(b) COMMITTEE DISCRETION. Each type of Award may be made alone, in
addition to or in relation to any other Award. The terms of each type of Award
need not be identical, and the Committee need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of grant or at any time thereafter.
(c) DIVIDENDS AND CASH AWARDS. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable (in cash or in the form of Awards under the Plan) currently
or deferred with or without interest and (ii) cash payments in lieu of or in
addition to an Award.
(d) TERMINATION OF EMPLOYMENT. The Committee shall determine the effect
on an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.
(e) CHANGE IN CONTROL. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company (as defined by
the Committee), the Committee in its discretion may, at the time an Award is
made or at any time thereafter, take one or more of the following actions: (i)
provide for the acceleration of any time period relating to the exercise or
payment of the Award, (ii) provide for payment to the Participant of cash or
other property with a Fair Market Value equal to the amount that would have been
received upon the exercise or payment of the Award had the Award been exercised
or paid upon the change in control, (iii) adjust the terms of the Award in a
manner determined by the Committee to reflect the change in control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Committee may consider equitable to
Participants and in the best interests of the Company.
(f) TRANSFERABILITY. In the discretion of the Committee, any Award may
be made transferable upon such terms and conditions and to such extent as the
Committee determines, provided that Incentive Stock Options may be transferable
only to the extent permitted by the Code. The Committee may in its discretion
waive any restriction on transferability.
(g) LOANS. The Committee may authorize the making of loans or cash
payments to Participants in connection with the grant or exercise any Award
under the Plan, which loans may be secured by any security, including Common
Stock, underlying or related to such Award
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(provided that the loan shall not exceed the Fair Market Value of the security
subject to such Award), and which may be forgiven upon such terms and conditions
as the Committee may establish at the time of such loan or at any time
thereafter.
(h) WITHHOLDING TAXES. The Participant shall pay to the Company, or
make provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant hereunder or otherwise. In the
Committee's discretion, the minimum tax obligations required by law to be
withheld in respect of Awards may be paid in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery.
(i) FOREIGN NATIONALS. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws.
(j) AMENDMENT OF AWARD. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option. Any such action shall
require the Participant's consent unless:
(i) In the case of a termination of, or a reduction in the
number of shares issuable under, an Option, any time period relating to
the exercise of such Option or the eliminated portion, as the case may
be, is waived or accelerated before such termination or reduction (and
in such case the Committee may provide for the Participant to receive
cash or other property equal to the net value that would have been
received upon exercise of the terminated Option or the eliminated
portion, as the case may be); or
(ii) In any other case, the Committee determines that the
action, taking into account any related action, would not materially
and adversely affect the Participant.
9. CERTAIN DEFINITIONS
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Restricted Stock or
Unrestricted Stock granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor law.
B-5
"Committee" means one or more committees each comprised of not less
than two members of the Board appointed by the Board to administer the Plan or a
specified portion thereof. Unless otherwise determined by the Board, if a
Committee is authorized to grant Awards to a Reporting Person or a Covered
Employee, each member shall be a "non-employee director" or the equivalent
within the meaning of applicable Rule 16b-3 under the Exchange Act or an
"outside director" within the meaning of Section 162(m) of the Code,
respectively.
"Common Stock" or "Stock" means the Class A Common Stock, $0.001 par
value, of the Company.
"Company" means Lamar Advertising Company, a Delaware corporation.
"Covered Employee" means a "covered employee" within the meaning of
Section 162(m) of the Code.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, "Designated
Beneficiary" means the Participant's estate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Reporting Person" means a person subject to Section 16 of the Exchange
Act.
10. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to
be granted an Award. Neither the adoption, maintenance, nor operation of the
Plan nor any Award hereunder shall confer upon any employee or consultant of the
Company or of any Affiliate any right with respect to the continuance of his/her
employment by or other service with the Company or any such Affiliate nor shall
they interfere with the rights of the Company (or Affiliate) to terminate any
employee at any time or otherwise change the terms of employment, including,
without limitation, the right to promote, demote or otherwise re-assign any
employee from one position to another within the Company or any Affiliate.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Restricted Stock or Unrestricted Stock is awarded shall be
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considered a stockholder of the Company at the time of the Award except as
otherwise provided in the applicable Award.
(c) EFFECTIVE DATE. Subject to the approval of the stockholders of the
Company, the Plan shall be effective on July 24, 1996.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to such stockholder approval as
the Board determines to be necessary or advisable.
(e) GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Delaware.
(FRONT OF PROXY CARD)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 23, 2002
LAMAR ADVERTISING COMPANY
The undersigned stockholder of Lamar Advertising Company (the
"Company") hereby appoints Kevin P. Reilly, Jr. and Keith A. Istre and each of
them acting singly, the attorneys and proxies of the undersigned, with full
power of substitution, to vote on behalf of the undersigned all of the shares of
capital stock of the Company that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held May 23, 2002, and at
all adjournments thereof, hereby revoking any proxy heretofore given with
respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATIONS ARE MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSALS.
PLEASE SIGN AND MAIL PROXY TODAY
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
[SEE REVERSE SIDE]
(REVERSE OF PROXY CARD)
[X] PLEASE MARK YOUR VOTES AS THIS EXAMPLE.
FOR WITHHELD
ALL NOMINEES FOR ALL NOMINEES
1. Proposal to elect directors [ ] [ ]
FOR, except withheld from the following nominee(s):
----------------------------------------------
Nominees: Kevin P. Reilly, Jr.
Keith A. Istre
Charles W. Lamar, III
Gerald H. Marchand
T. Everett Stewart, Jr.
Sean E. Reilly
Anna Reilly Cullinan
Stephen P. Mumblow
John Maxwell Hamilton
Thomas V. Reifenheiser
FOR AGAINST ABSTAIN
2. Proposal to amend the 1996 Equity [ ] [ ] [ ]
Incentive Plan to increase the number
of shares of Class A Common stock
available for issuance from
5,000,000 to 8,000,000 shares
MARK HERE FOR ADDRESS CHANGE AND NOTE ON LEFT [ ]
Signature: Date:
--------------------------------- --------------------
Signature: Date:
--------------------------------- --------------------
NOTE: Please sign exactly as name appears on stock certificate. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership
name by authorized person.