UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
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Check the appropriate box:
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COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Comcast Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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Notes:
[LOGO] COMCAST
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 10, 2002
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The Annual Meeting of Shareholders of Comcast Corporation (the "Company")
will be held on Wednesday, July 10, 2002 at 9:00 a.m. local time at The
Doubletree Hotel Philadelphia, Broad and Locust Streets, Philadelphia,
Pennsylvania, for the following purposes:
1. To elect ten directors to serve for the ensuing year and until their
respective successors shall have been duly elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 2002 fiscal year.
3. To consider a proposal to approve an amendment to the 1996 Stock Option
Plan.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The close of business on April 25, 2002 has been fixed as the record date
for the meeting. All shareholders of record at that time are entitled to
notice of, and all holders of Class A Common Stock and Class B Common Stock
are entitled to vote at, the meeting and any adjournment or postponement
thereof.
Because holders of Class A Special Common Stock are not generally entitled
to vote and no resolution is proposed for the meeting for which a vote of the
Class A Special Common Stock is required by law, holders of Class A Special
Common Stock are not entitled to vote at the meeting. The enclosed proxy
statement is being sent to holders of Class A Special Common Stock for
informational purposes only.
All shareholders are cordially invited to attend the meeting. The Board of
Directors urges you to vote by telephone or via the Internet or to complete,
date, sign and return promptly the enclosed proxy with respect to your shares
of Class A Common Stock. The proxies are solicited by the Board of Directors
of the Company. The return of the proxy will not affect your right to vote in
person if you do attend the meeting. A copy of the Company's 2001 Annual
Report is enclosed.
Following the Annual Meeting of Shareholders, the Company will hold a
Special Meeting of Shareholders to consider the proposed merger of the Company
with the broadband business of AT&T Corp. and other related matters. You will
receive a separate notice and proxy statement with respect to such Special
Meeting of Shareholders and the matters to be acted upon at that meeting.
STANLEY WANG
Secretary
June 5, 2002
[LOGO] COMCAST
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
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PROXY STATEMENT
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The enclosed proxy is solicited by the Board of Directors of Comcast
Corporation (the "Company"), a Pennsylvania corporation, for use at the Annual
Meeting of Shareholders (the "meeting") to be held on Wednesday, July 10, 2002
at 9:00 a.m. local time at The Doubletree Hotel Philadelphia, Broad and Locust
Streets, Philadelphia, Pennsylvania, and any adjournment or postponement
thereof. This Proxy Statement, the foregoing notice and the enclosed proxy are
being mailed to shareholders on or about June 5, 2002.
The Board of Directors does not intend to bring any matters before the
meeting other than the matters specifically referred to in the notice of the
meeting, nor does the Board of Directors know of any matter which anyone else
proposes to present for action at the meeting. However, if any other matters
properly come before the meeting, the persons named in the accompanying proxy
or their duly constituted substitutes acting at the meeting will be deemed
authorized to vote or otherwise act thereon in accordance with their judgment
on such matters.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. In the absence of
instructions, the shares represented at the meeting by the enclosed proxy will
be voted "FOR" each of the nominees for the Board of Directors in the election
of directors and "FOR" each of the other proposals submitted to shareholders
in accordance with the foregoing notice of meeting and as set forth in this
Proxy Statement. Any proxy may be revoked at any time prior to its exercise by
notifying the Secretary in writing, by delivering or transmitting a duly
executed or authenticated proxy bearing a later date or by attending the
meeting and voting in person.
Voting Electronically and by Telephone
Instead of submitting your vote by mail on the enclosed proxy card, the
Company's by-laws permit you to vote by telephone or via the Internet. Please
note that there are separate telephone and Internet voting arrangements
depending on whether shares registered in the Company's stock records are in
your name or in the name of a brokerage firm or bank.
The telephone and Internet voting procedures are designed to authenticate
shareholders' identities, to allow shareholders to vote their shares and to
confirm that their instructions have been properly recorded. Shareholders
voting via the Internet should understand that there may be costs associated
with electronic access, such as usage charges from Internet access providers
and telephone companies, that will be borne by the shareholder. Shareholders
who vote by telephone will be able to utilize a toll-free telephone number,
the cost of which is borne by the Company.
For Shares Registered Directly in the Name of the Shareholder
Shareholders with shares registered directly in their name in the Company's
stock records maintained by its transfer agent, EquiServe Trust Company, N.A.
("EquiServe"), may vote their shares in any of the following ways:
. by telephone by calling (toll-free) 1-877-779-8683,
. via the Internet at the following address on the World Wide Web:
http://www.eproxyvote.com/cmcsa,
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. by mailing their signed proxy card, or
. by attending the meeting and voting in person.
Specific instructions to be followed by registered shareholders are set
forth on the enclosed proxy card. Votes submitted by telephone or via the
Internet through EquiServe as described herein must be received by 5:00 p.m.
eastern time on July 9, 2002.
For Shares Registered in the Name of a Brokerage Firm or Bank
A number of brokerage firms and banks are participating in separate programs
that offer telephone and/or Internet voting options. Such programs are
different from the programs provided by EquiServe for shares registered
directly in the name of the shareholder. If your shares are held in an account
at a brokerage firm or bank participating in any such program, you may vote
those shares by telephone and/or via the Internet in accordance with
instructions set forth on the voting form provided to you by the brokerage
firm or bank that holds your shares.
Important Notice
All meeting attendees may be asked to present a valid government-issued
photo identification (federal, state or local), such as a driver's license or
passport, before entering the meeting. In addition, video and audio recording
devices and other electronic devices will not be permitted at the meeting, and
attendees will be subject to security inspections.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Outstanding Shares and Voting Rights
At the close of business on April 25, 2002, the record date, the Company had
outstanding 21,591,115 shares of Class A Common Stock, par value $1.00 per
share, 9,444,375 shares of Class B Common Stock, par value $1.00 per share,
and 915,590,935 shares of Class A Special Common Stock, par value $1.00 per
share.
On each matter voted upon at the meeting and any adjournment or postponement
thereof, the Class A Common Stock and Class B Common Stock will vote together.
Each record holder of Class A Common Stock will be entitled to one vote per
share and each record holder of Class B Common Stock will be entitled to
fifteen votes per share. Holders of Class A Special Common Stock shall not be
entitled to vote at the meeting. References in this Proxy Statement to voting
classes of the Company's Common Stock shall not include the Class A Special
Common Stock. In the election of directors, holders of Class A Common Stock
and Class B Common Stock shall not have cumulative voting rights.
The presence, in person or by proxy, of shareholders entitled to cast a
majority of the votes that shareholders are entitled to cast on each matter to
be voted upon at the meeting will constitute a quorum for the meeting. If the
meeting is adjourned for one or more periods aggregating at least fifteen days
due to the absence of a quorum, those shareholders entitled to vote who attend
the adjourned meeting, although otherwise less than a quorum as described in
the preceding sentence, shall constitute a quorum for the purpose of acting
upon any matter set forth in the foregoing notice of the meeting.
In the election of directors, the ten nominees receiving a plurality of the
votes cast at the meeting shall be elected. Approval of all other proposals to
be submitted to shareholders in accordance with the foregoing notice of the
meeting and as set forth in this Proxy Statement requires the affirmative vote
of a majority of the votes cast at the meeting. For purposes of determining
the number of votes cast with respect to any voting matter, only those cast
"FOR," "AGAINST" or, in the case of the
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election of directors, "WITHHELD," are included. Abstentions and broker non-
votes are counted only for purposes of determining whether a quorum is present
at the meeting.
The holder of all of the outstanding Class B Common Stock has indicated that
it will vote all of its shares "FOR" each of the nominees for director listed
below and "FOR" each of the other proposals submitted to shareholders in
accordance with the foregoing notice of the meeting and as set forth in this
Proxy Statement. Consequently, the election of each of the nominees for
director listed below and the approval of each of the other proposals
submitted to shareholders in accordance with the foregoing notice of the
meeting and as set forth in this Proxy Statement are assured.
Principal Shareholders
The following table sets forth certain information regarding the holdings of
each shareholder who was known to the Company to be the beneficial owner, as
defined in Rule 13d-3 of the Securities Exchange Act of 1934 (the "Exchange
Act"), of more than 5% of any voting class of the Company's Common Stock
(Class A and Class B) as of March 31, 2002. So far as is known to the Company,
the persons named in the table below as beneficially owning the shares set
forth therein have sole voting power and sole investment power with respect to
such shares, unless otherwise indicated.
Amount Percent
Name and Address of Beneficial Beneficially of
Title of Voting Class Owner Owned Class
--------------------- -------------------------------- ------------ -------
Class A Common Stock Brian L. Roberts 138,268(1) 0.6%
1500 Market Street
Philadelphia, PA 19102-2148
Chilton Investment Company, Inc. 2,111,000(2) 9.7%
1266 East Main Street, 7th Floor
Stamford, CT 06902
Class B Common Stock Brian L. Roberts 9,444,375(1) 100%
1500 Market Street
Philadelphia, PA 19102-2148
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(1) As of March 31, 2002, Sural LLC ("Sural"), a Delaware limited liability
company, was the sole owner of the Company's outstanding Class B Common
Stock and owned 136,912 shares of the Company's outstanding Class A
Common Stock. Mr. Brian L. Roberts, President of the Company, owns
membership interests representing substantially all of the voting power
of all classes of voting securities of Sural. Pursuant to Rule 13d-3
under the Exchange Act, Mr. Brian L. Roberts is deemed to be the
beneficial owner of the shares of Class B Common Stock and Class A Common
Stock owned by Sural, and he is deemed to be the beneficial owner of
1,356 shares of Class A Common Stock owned by his wife, as to which he
disclaims beneficial ownership. Since each share of Class B Common Stock
is entitled to fifteen votes, the shares of Class A Common Stock and
Class B Common Stock owned by Sural and Mr. Brian L. Roberts constituted
as of March 31, 2002 approximately 87% of the voting power of the two
classes of the Company's voting Common Stock combined. The Class B Common
Stock is convertible on a share-for-share basis into Class A Common Stock
or Class A Special Common Stock. If Sural and Mr. Brian L. Roberts were
to convert the Class B Common Stock that they are deemed to beneficially
own into Class A Common Stock, Mr. Roberts would beneficially own
9,582,643 shares of Class A Common Stock (approximately 30.6% of the
Class A Common Stock).
(2) The information contained in this table with respect to Chilton
Investment Company, Inc. ("Chilton") is based upon a filing dated March
28, 2002 made on Schedule 13G by Chilton setting forth information as of
March 18, 2002. The Schedule 13G indicates that Chilton has sole voting
and dispositive power as to all of such shares.
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Security Ownership of Management
The following table sets forth certain information regarding the Class A
Common Stock (one vote per share) and the Class A Special Common Stock
(generally non-voting) beneficially owned as of March 31, 2002 by each
director of the Company, by Mr. Ralph J. Roberts (the "Chief Executive
Officer," see note (11) below), by each of the Company's other four most
highly compensated executive officers during 2001 and by all the directors and
executive officers of the Company as a group. The table also sets forth
certain information regarding the shares of Common Stock of QVC, Inc., a 57%-
owned non-public subsidiary of the Company, beneficially owned as of March 31,
2002 by the persons named in the table and by all the directors and executive
officers of the Company as a group. Each of the persons named in the table
below as beneficially owning the shares set forth therein has sole voting
power and sole investment power with respect to such shares, unless otherwise
indicated.
Amount Beneficially Owned Percent of Class
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Class A Class A
Name of Beneficial Owner Class A Special(1) QVC(2) Class A Special(1) QVC(2)
- ------------------------ ------------- ----------------- ------ ------- ---------- ------
Decker Anstrom.......... -- 10,600 -- -- (3) --
Sheldon M. Bonovitz..... 12,080(4) 204,658(5) -- (3) (3) --
Julian A. Brodsky....... 145,968(6) 2,829,490(7) 800 (3) (3) (3)
Stephen B. Burke........ -- 1,071,354(8) -- -- (3) --
Joseph L. Castle, II.... 375 26,969 -- (3) (3) --
Brian L. Roberts........ 138,268(9) 15,028,092(10) 5,392 (3)(9) 1.6%(10) (3)
Ralph J. Roberts(11).... 809,120(12) 5,464,508(13) -- 3.7% (3) --
Felix G. Rohatyn........ -- 12,000 -- -- (3) --
Lawrence S. Smith....... -- 619,734(14) 2,560 -- (3) (3)
Bernard C. Watson....... -- 32,400 -- -- (3) --
Irving A. Wechsler...... 98,581 583,251 -- (3) (3) --
Anne Wexler............. -- 33,900 -- -- (3) --
All directors and
executive officers as a 1,225,963 27,617,201 11,152 5.6% 3.0% (3)
group (15 persons)..... (4)(6)(9)(12) (5)(7)(8)(10)(13)
(14)(15)
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(1) With respect to each beneficial owner, the shares issuable upon
exercise of his or her options exercisable on or within 60 days of
March 31, 2002 are deemed to be outstanding for the purpose of
computing the number of shares and percentage of the class of Common
Stock owned. Includes the following shares of Class A Special Common
Stock for which the following persons hold options exercisable on or
within 60 days of March 31, 2002: Mr. Anstrom, 9,000 shares; Mr.
Bonovitz, 32,400 shares; Mr. Brodsky, 1,667,922 shares; Mr. Burke,
1,060,355 shares; Mr. Castle, 21,600 shares; Mr. Brian L. Roberts,
5,370,968 shares; Mr. Ralph J. Roberts, 3,664,705 shares; Mr. Rohatyn,
9,000 shares; Mr. Smith, 498,745 shares; Mr. Watson, 32,400 shares; Mr.
Wechsler, 32,400 shares; Ms. Wexler, 32,400 shares; and all directors
and executive officers as a group, 13,912,370 shares. Does not include
the following shares which were issuable under options exercised prior
to March 31, 2002, but the issuance and receipt of which was
irrevocably deferred for periods of time not exceeding three years
pursuant to the Company's 1997 Deferred Stock Option Plan: Mr.
Bonovitz, 34,631 shares; Mr. Brodsky, 1,678,293 shares; Mr. Ralph J.
Roberts, 4,164,523 shares; and Mr. Wechsler, 29,694 shares. Does not
include interests owned indirectly in Comcast Interactive Capital, L.P.
("CIC"), a limited partnership that is consolidated in the Company's
financial statements, as follows: Mr. Ralph J. Roberts, 1.18%; Mr.
Brian L. Roberts, 1.18%; Mr. Burke, 0.88%; and Mr. Smith, 0.94%. Does
not include Mr. Brodsky's approximately 38% interest in the general
partner of CIC, in which the Company owns no interest.
(2) With respect to each beneficial owner, the shares issuable upon
exercise of his or her options exercisable on or within 60 days of
March 31, 2002 are deemed to be outstanding for the purpose
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of computing the number and percentage of the shares of Common Stock of
QVC, Inc. owned. Includes the following shares of QVC, Inc. Common Stock
for which the following hold options exercisable on or within 60 days of
March 31, 2002: Mr. Brodsky, 320 shares; Mr. Brian L. Roberts, 640 shares;
Mr. Smith, 1,760 shares; and all directors and executive officers as a
group, 3,920 shares.
(3) Less than one percent of the applicable class.
(4) Includes 6,425 shares of Class A Common Stock owned by his wife and 2,636
shares held by him as trustee for a testamentary trust, as to all of
which shares he disclaims beneficial ownership.
(5) Includes 4,498 shares of Class A Special Common Stock owned by his wife,
112,528 shares held by him as trustee for a testamentary trust, 40,000
shares held by him as a trustee of grantor retained annuity trusts for
his mother-in-law, and 10,476 shares owned by a charitable foundation of
which his wife is a trustee, as to all of which shares he disclaims
beneficial ownership.
(6) Includes 15,000 shares of Class A Common Stock owned by a charitable
foundation of which he and members of his family are directors and
officers.
(7) Includes 122,067 shares of Class A Special Common Stock owned in a
grantor retained annuity trust, as to all of which shares he disclaims
beneficial ownership.
(8) Includes 492 shares of Class A Special Common Stock owned in the Comcast
Corporation Retirement--Investment Plan, as to which shares he disclaims
beneficial ownership.
(9) Includes 1,356 shares of Class A Common Stock owned by his wife, as to
which shares he disclaims beneficial ownership, and 136,912 shares owned
by Sural. Does not include additional shares of Class A Common Stock
issuable upon conversion of Class B Common Stock beneficially owned by
Mr. Brian L. Roberts. If Sural and Mr. Brian L. Roberts were to convert
the Class B Common Stock that they are deemed to beneficially own into
Class A Common Stock, Mr. Brian L. Roberts would beneficially own
9,582,643 shares of Class A Common Stock (approximately 30.6% of the
Class A Common Stock). See note (1) to the table under the caption
"Principal Shareholders."
(10) Includes 2,712 shares of Class A Special Common Stock owned by his wife
and 41,132 shares owned in the Comcast Corporation Retirement--Investment
Plan, as to all of which shares he disclaims beneficial ownership. Also
includes 9,581,288 shares owned by Sural, but does not include additional
shares of Class A Special Common Stock issuable upon conversion of Class
B Common Stock beneficially owned by Mr. Brian L. Roberts. If Sural and
Mr. Brian L. Roberts were to convert the Class B Common Stock that they
are deemed to beneficially own into Class A Special Common Stock, Mr.
Brian L. Roberts would beneficially own 24,472,467 shares of Class A
Special Common Stock (approximately 2.6% of the Class A Special Common
Stock). See note (1) to the table under the caption "Principal
Shareholders."
(11) The Company's by-laws do not provide for the position of "Chief Executive
Officer." For purposes of application of the proxy rules of the
Securities and Exchange Commission to this Proxy Statement, the Company
has determined that Mr. Ralph J. Roberts should be deemed to be the
Company's chief executive officer.
(12) Includes 570,813 shares of Class A Common Stock owned by a limited
partnership, the general partner of which is controlled by Mr. Ralph J.
Roberts.
(13) Includes 570,813 shares of Class A Special Common Stock owned by a
limited partnership, the general partner of which is controlled by Mr.
Ralph J. Roberts.
(14) Includes 36,355 shares of Class A Special Common Stock owned in a grantor
retained annuity trust, as to which shares he disclaims beneficial
ownership.
(15) Includes 58 shares of Class A Special Common Stock owned by executive
officers, other than those named above, in the Comcast Corporation
Retirement--Investment Plan, as to which shares beneficial ownership is
disclaimed.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who own more than ten percent of a registered class
of the Company's equity securities (collectively, the "reporting persons") to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and to furnish the Company with copies of these reports.
Based on the Company's review of the copies of these reports received by it,
and written representations received from reporting persons, the Company
believes that all filings required to be made by the reporting persons for the
period January 1, 2001 through December 31, 2001 were made on a timely basis;
however, the withholding of 20,917 shares of stock in connection with a stock
option exercise by Mr. Ralph J. Roberts under the Company's 1997 Deferred
Stock Option Plan on June 1, 2000 was reported on a Form 4 filed on September
7, 2001.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the meeting, the shareholders will elect ten directors to hold office for
the ensuing year and until their respective successors have been duly elected
and qualified. Should any one or more of these nominees become unavailable to
accept nomination or election as a director, the persons named in the enclosed
proxy will vote the shares which they represent for the election of such other
persons as the Board of Directors may recommend, unless the Board of Directors
reduces the number of directors. Each of the nominees currently is serving as
a director of the Company.
The following sets forth certain information about each nominee:
Ralph J. Roberts, 82, has served as a director and Chairman of the Board of
Directors of the Company for more than five years. He is the father of Mr.
Brian L. Roberts. Mr. Roberts is also a director of Comcast Cable
Communications, Inc.
Julian A. Brodsky, 68, has served as a director and Vice Chairman of the
Board of Directors of the Company for more than five years. Mr. Brodsky is
also Chairman of Comcast Interactive Capital, L.P., a venture fund that is
consolidated in the Company's financial statements and for which the Company
is the principal source of capital. He is also a director of RBB Fund, Inc.
and NDS Group plc.
Brian L. Roberts, 42, has served as President of the Company and a director
for more than five years. He is Manager of Sural. He is a son of Mr. Ralph J.
Roberts. Mr. Roberts is also a director of Comcast Cable Communications, Inc.
and The Bank of New York Company.
Decker Anstrom, 51, has been a director of the Company since 2001. Mr.
Anstrom was President and Chief Executive Officer of The Weather Channel from
1999 to 2001. In 2002, Mr. Anstrom became a director and the President and
Chief Operating Officer of Landmark Communications, Inc., a privately-held
multimedia company the assets of which include The Weather Channel. Prior to
1999, Mr. Anstrom was President and Chief Executive Officer of the National
Cable Television Association ("NCTA") in Washington, D.C. for five years. He
is currently a director of the NCTA and the Cable TV Advertising Bureau.
Sheldon M. Bonovitz, 65, has been a director of the Company for more than
five years. Mr. Bonovitz has been a partner specializing in tax matters with
the law firm of Duane, Morris & Heckscher LLP for more than five years and is
currently Chairman and Chief Executive Officer of that firm. Mr. Bonovitz is
also a director of Surgical Laser Technologies, Inc. and eResearch
Technologies, Inc.
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Joseph L. Castle, II, 69, has been a director of the Company for more than
five years. Mr. Castle has been, for more than five years, a financial
consultant and is the Chairman and Chief Executive Officer and a director of
Castle Energy Corporation, an independent oil and gas exploration and
production company. Mr. Castle is also a director of Charming Shoppes, Inc.
Felix G. Rohatyn, 73, has been a director of the Company since 2001. Since
April 2001, Mr. Rohatyn has been President of Rohatyn Associates LLC, a
licensed broker dealer engaging in financial consulting, mergers and
acquisitions and capital formation. Mr. Rohatyn was the United States
Ambassador to France from September 1997 to December 2000. Prior to 1997, Mr.
Rohatyn was Managing Director of Lazard Freres & Co. LLC, Investment Bankers,
in New York, New York for at least five years. Mr. Rohatyn is also a director
of Fiat SpA, LVMH Moet Hennessey Louis Vuitton SA, Suez and Publicis Groupe
SA.
Bernard C. Watson, 74, has been a director of the Company for more than five
years. From 1993 until his retirement in 1997, Dr. Watson was Chairman of the
Board of Directors of Health Management Alternatives Foundation. Prior to
1993, he had been President and Chief Executive Officer of the William Penn
Foundation for more than five years.
Irving A. Wechsler, 81, has been a director of the Company for more than
five years. Mr. Wechsler is currently of counsel in the firm of Wechsler,
Wolsh and Associates, Certified Public Accountants, in Pittsburgh,
Pennsylvania, where he had previously been a partner for more than five years.
Anne Wexler, 72, has been a director of the Company for more than five years
and has been for more than five years Chairman of Wexler Walker Public Policy
Associates, a consulting firm specializing in government relations and public
affairs, which is an operating unit of Hill and Knowlton Public Affairs
Worldwide. Ms. Wexler is also a director of seventeen individual funds of The
Dreyfus Corporation complex of mutual funds, and a director of Wilshire Mutual
Funds, Inc. and Methanex Corporation.
Committees and Meetings of the Board of Directors
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee. The Compensation Committee
has a Subcommittee on Performance-Based Compensation.
Messrs. Bonovitz, Castle, Brian L. Roberts and Ralph J. Roberts (Chair)
serve as members of the Executive Committee. The Executive Committee held four
meetings during 2001. The Executive Committee acts for the directors in the
intervals between meetings of the Board of Directors.
Messrs. Anstrom, Bonovitz, Castle, Rohatyn and Wechsler (Chair) serve as
members of the Audit Committee. The Audit Committee held seven meetings during
2001. The Audit Committee meets with the Company's independent public
accountants, counsel, internal audit department and management to discuss the
scope and results of the annual audit, internal accounting procedures and
certain other questions of accounting policy, as more fully described in the
Report of the Audit Committee presented under Proposal Two below.
Messrs. Castle and Watson serve as members of the Subcommittee on
Performance-Based Compensation of the Compensation Committee (the
"Compensation Subcommittee"). The Compensation Subcommittee held four meetings
during 2001. The Compensation Subcommittee's functions include responsibility
for the Company's stock option, restricted stock and bonus plans, establishing
performance-based criteria and goals for compensation to senior executive
officers, and approving certain agreements with the Chief Executive Officer
and Mr. Brian L. Roberts. Messrs. Anstrom, Bonovitz (Chair), Castle and Watson
serve as members of the Compensation Committee, which considers and determines
all other compensation matters relating to the Company's executive officers.
The Compensation Committee held four meetings during 2001, in conjunction with
meetings of the Compensation Subcommittee.
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Ms. Wexler (Chair) and Messrs. Rohatyn and Watson serve as members of the
Nominating Committee. The Nominating Committee held one meeting during 2001.
The Nominating Committee reviews the size and composition of the Board of
Directors and is responsible for recommending nominees to serve on the Board
of Directors. In carrying out its responsibilities, the Nominating Committee
will consider candidates recommended by other directors, employees and
shareholders. Written suggestions for candidates to serve as directors if
nominated and elected should be sent to the President of the Company at
Comcast Corporation, 1500 Market Street, Philadelphia, Pennsylvania 19102-
2148. The Company's by-laws require that written notice of the intent to make
a nomination at a meeting of shareholders must be received by the President of
the Company (a) with respect to an election to be held at an annual meeting,
not less than 90 days in advance of the date which is the one year anniversary
of the prior year's annual meeting of shareholders, and (b) with respect to an
election to be held at a special meeting, the close of business on the seventh
day following the day on which notice of a special meeting of shareholders for
the election of directors is given to shareholders. The notice must contain:
(a) the name and address of the shareholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that the
shareholder is a holder of record of the Company's stock entitled to vote at
the meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; (d)
such other information regarding each nominee proposed by such shareholder as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had each nominee
been nominated, or intended to be nominated, by the Board of Directors; and
(e) the consent of each nominee to serve as a director of the Company if so
elected.
The Board of Directors held fourteen meetings in 2001. No member of the
Board of Directors attended fewer than 75% of the aggregate of the total
number of meetings of the Board of Directors and the total number of meetings
held by all committees of the Board of Directors on which such director
served.
Compensation of Directors
Each member of the Board of Directors who is not an employee of the Company
(a "non-employee director") receives an annual fee of $35,000, plus $2,000 for
each meeting of the Board of Directors attended and $1,000 for each meeting of
any committee of the Board of Directors attended which is not held in
conjunction with a meeting of the Board of Directors. In addition, any non-
employee director who serves as the chair of a committee of the Board of
Directors receives an annual fee of $1,000. Each director is also reimbursed
for incidental travel expenses for meetings attended.
The Comcast Corporation 1996 Stock Option Plan (the "1996 Stock Option
Plan") provides that each non-employee director will be granted annually, on
each February 1, an option to purchase 5,400 shares of Class A Special Common
Stock except that any newly-elected non-employee director shall receive a
grant of options to purchase 9,000 shares of Class A Special Common Stock on
the date such director is first elected to the Board of Directors. If such
election date is less than 90 days before the next February 1, a newly-elected
director shall not be entitled to receive the option to purchase 5,400 shares
on that February 1. The options granted to non-employee directors have an
exercise price per share equal to the fair market value of a share of Class A
Special Common Stock on the date of grant. Each such option becomes
exercisable six months after the date of grant and generally expires five
years from the date of grant. A non-employee director of the Company may not
sell shares of the Company's common stock unless, subsequent thereto, such
director owns shares of the Company's common stock with a value at least equal
to five times their base annual compensation from the Company. See "Report on
Executive Compensation--Equity Ownership Policy."
8
Certain Related Party Transactions
Mr. Bonovitz, a director of the Company, is Chairman and Chief Executive
Officer of the law firm of Duane, Morris & Heckscher LLP, which provides
services to the Company. In 2001, total fees paid for such services were
$92,524.
Ms. Wexler, a director of the Company, is Chairman of the consulting firm
Wexler Walker Public Policy Associates, which is an operating unit of Hill &
Knowlton Public Affairs Worldwide. Wexler Walker Public Policy Associates
provides services to the Company, and, in 2002, Ms. Wexler was appointed the
Company's Senior Washington Advisor. In 2001, total fees paid for such
services were $426,624.
Compensation Committee Interlocks and Insider Participation
Mr. Bonovitz, a member of the Compensation Committee, is Chairman and Chief
Executive Officer of the law firm of Duane, Morris & Heckscher LLP, which
provides services to the Company from time to time. Mr. Bonovitz is not a
member of the Compensation Subcommittee, which, during 2001, performed
substantially all functions of the Compensation Committee with respect to
senior executives of the Company, including administration of the Company's
stock option and restricted stock plans, the bonus plans applicable to senior
executives of the Company, and approval of all agreements with the Chief
Executive Officer, Mr. Brian L. Roberts and other executive officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF EACH OF THE NOMINEES.
PROPOSAL TWO
TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the firm of Deloitte & Touche LLP, which served as the Company's
independent auditors for the last fiscal year, to serve as the Company's
independent auditors with respect to the consolidated financial statements of
the Company for 2002. The Board of Directors has determined to request the
shareholders to ratify such appointment, although shareholder ratification is
not required. A representative of Deloitte & Touche LLP is expected to be
present at the meeting and will have the opportunity to make a statement if he
or she desires to do so. The representative is also expected to be available
to respond to appropriate questions of shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
The following table sets forth the fees incurred by the Company for the
services of Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu and their respective affiliates in 2001.
Financial Information Systems All Other
Audit Fees Design and Implementation Fees Fees
---------- ------------------------------ ------------
$2.0 million -- $1.6 million
Audit Fees consist of services rendered for the audit of the annual
financial statements and the reviews of quarterly financial statements of the
Company for 2001.
All Other Fees consist of audit related services of approximately $600,000
and non-audit services of approximately $1,000,000. Audit related services
include fees for statutory audits, employee benefit
9
plan audits, due diligence and related services on acquisitions, accounting
consultations and work on filings with the Securities and Exchange Commission.
Non-audit services include fees amounting to (i) approximately $800,000 for
domestic and foreign tax compliance, tax consultation, tax examination
assistance, expatriate administration and tax preparation and (ii)
approximately $200,000 for information technology consulting.
Report of the Audit Committee
The Audit Committee of the Board of Directors (the "Audit Committee") is
composed entirely of independent directors as defined in the listing standards
of the National Association of Securities Dealers, Inc. The key
responsibilities of the Audit Committee are set forth in its Charter, adopted
on May 1, 2000, which was included with the Company's Proxy Statement for its
2001 Annual Meeting of Shareholders.
The Audit Committee serves in an oversight capacity and is not intended to
be part of the Company's operational or managerial decision-making process.
The Company's management is responsible for preparing the Company's
consolidated financial statements, and its independent auditors are
responsible for auditing the consolidated financial statements. The principal
purpose of the Audit Committee is to monitor these processes.
In this context, the Audit Committee met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared
in accordance with generally accepted accounting principles applied on a
consistent basis, and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent
auditors. The Audit Committee discussed with the independent auditors matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees) as amended.
The Audit Committee discussed with the independent auditors the auditors'
independence from the Company and its management, including the matters in the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions With Audit Committees). The Audit Committee has also
considered whether the independent auditors' provision of non-audit related
services to the Company is compatible with the auditors' independence.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee met with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, the
evaluations of the Company's internal controls and the overall quality of the
Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee has recommended to the Board of Directors, and the Board has
approved, 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. The Audit Committee has
recommended and the Board has approved, subject to shareholder ratification,
the selection of the Company's independent auditors.
Members of the Audit Committee
Irving A. Wechsler (Chair)
Decker Anstrom
Sheldon M. Bonovitz
Joseph L. Castle, II
Felix G. Rohatyn
10
PROPOSAL THREE
TO APPROVE AN AMENDMENT TO THE
COMCAST CORPORATION 1996 STOCK OPTION PLAN
The Company's 1996 Stock Option Plan is the Company's sole plan for awarding
options to purchase shares of the Company's Class A Special Common Stock to
the Company's employees and non-employee directors. A description of the terms
of the 1996 Stock Option Plan is provided below. The Company's shareholders
will vote at the meeting on a proposal to increase the maximum aggregate
number of shares for which options may be granted under the 1996 Stock Option
Plan from 50 million shares to 75 million shares.
Prior to April 29, 2002, the maximum number of shares of the Company's Class
A Special Common Stock for which options may be granted under the 1996 Stock
Option Plan was limited to an aggregate of 50 million shares. On April 29,
2002, the Compensation Subcommittee amended the 1996 Stock Option Plan to
increase the aggregate number of shares for which options may be granted under
the 1996 Stock Option Plan to 75 million shares, subject to approval by the
Company's shareholders at the meeting.
If the proposed merger of the Company with the broadband business of AT&T
Corp. referenced in the notice of meeting occurs, it is anticipated that the
1996 Stock Option Plan will be adopted by the new combined company and options
granted thereunder will remain outstanding with respect to the combined
company's common stock. The increased number of shares under the 1996 Stock
Option Plan that is the subject of shareholder approval under this proposal
will be available to the combined company if the merger occurs; however, the
number of additional shares was determined by anticipating the needs of the
Company through at least 2003, assuming the proposed merger does not occur. If
the proposed merger occurs, the Company anticipates that further shares (in
addition to those proposed for approval hereunder) will need to be added to
the 1996 Stock Option Plan to meet the needs of the substantially larger
combined company. Any such further increase will be subject to shareholder
approval at a meeting of the shareholders of the combined company.
Description of the 1996 Stock Option Plan
The following is a summary of the material features of the 1996 Stock Option
Plan.
The 1996 Stock Option Plan provides for the grant of options to purchase
shares of the Company's Class A Special Common Stock to employees (whether or
not members of the Board of Directors) of the Company and its parents or
subsidiaries ("Affiliates") within the meaning of Sections 424(e) and (f) of
the Internal Revenue Code of 1986, as amended (the "Code"), as designated by
the Company's Board of Directors or a committee of two or more of its non-
employee members appointed by the Board of Directors, and for the grant of
options to non-employee directors of the Company. Except to the extent an
option granted under the 1996 Stock Option Plan is specifically designated as
a nonqualified option (as defined below) or otherwise becomes a nonqualified
option after grant, options granted to employees of the Company or its
Affiliates under the 1996 Stock Option Plan are intended to qualify as
qualified stock options (sometimes hereinafter referred to as "ISOs") within
the meaning of Section 422(b) of the Code. Options granted under the 1996
Stock Option Plan to non-employee directors of the Company, options granted to
employees under the 1996 Stock Option Plan which are specifically designated
as nonqualified options, and options otherwise ineligible for treatment as an
ISO are hereinafter referred to as "nonqualified options."
The purpose of the 1996 Stock Option Plan is to assist the Company in
retaining valued employees, officers and directors by offering them a greater
stake in the Company's success and a closer identity with it, and to aid in
attracting individuals whose services would be helpful to the Company and
would contribute to its success.
11
ISOs and nonqualified options are sometimes hereinafter collectively
referred to as "Options." Recipients of Options are hereinafter referred to as
"Optionees." Shares of the Company's Class A Special Common Stock are
sometimes hereinafter referred to as "Shares." Shares which may be issued upon
exercise of Options are hereinafter referred to as "Option Shares." The 1996
Stock Option Plan is currently administered by the Compensation Subcommittee
of the Board of Directors. This subcommittee, or any other committee or
subcommittee of the Board of Directors administering the 1996 Stock Option
Plan, is sometimes referred to, with respect to the 1996 Stock Option Plan, as
the "Committee."
No Options may be granted under the 1996 Stock Option Plan after March 12,
2006.
Eligibility
All employees of the Company and its Affiliates are eligible to receive ISOs
under the 1996 Stock Option Plan. All employees and non-employee directors of
the Company and its Affiliates are eligible to receive nonqualified options
under the 1996 Stock Option Plan. An employee may receive more than one Option
under the 1996 Stock Option Plan but only on the terms and subject to the
restrictions of the 1996 Stock Option Plan.
In determining the eligible participants to whom Options are granted under
the 1996 Stock Option Plan and the number of Shares covered by such Options,
the Committee may take into account the nature of such participant's services
and responsibilities, his or her present and potential contributions to the
Company's success and such other factors as the Committee may deem relevant.
The 1996 Stock Option Plan provides that the maximum number of shares of the
Class A Special Common Stock for which Options may be issued to any single
individual in any calendar year is 10 million shares, subject to adjustment as
described under "Purchase of Shares Under the 1996 Stock Option Plan" below.
The 1996 Stock Option Plan provides that each non-employee director of the
Company shall receive a grant of Options to purchase 5,400 shares of Class A
Special Common Stock on each February 1, except that any newly-elected non-
employee director shall receive a grant of Options to purchase 9,000 shares of
Class A Special Common Stock on the date such director is first elected to the
Board of Directors. If such election date is less than 90 days before the next
February 1, the newly-elected director shall not be entitled to receive
Options to purchase 5,400 shares on that February 1.
Shares Covered By The 1996 Stock Option Plan
On April 29, 2002, the Committee amended the 1996 Stock Option Plan, subject
to shareholder approval at the meeting, to provide for the grant of Options to
purchase up to an aggregate of 75 million shares of the Company's Class A
Special Common Stock. Prior to such amendment, the maximum number of shares
underlying Options available for grant was 50 million. If an Option granted
under the 1996 Stock Option Plan expires or terminates without having been
exercised in full, the Option Shares allocable to the unexercised portion of
such Option will be available for the grant of additional Options under the
1996 Stock Option Plan, to the extent additional Options thereunder may be
granted.
12
New Plan Benefits
Future grants of Options, if any, that will be made to eligible participants
in the 1996 Stock Option Plan are subject to the discretion of the Committee
and, therefore, are not determinable at this time. The following table
reflects the number of Options which have been granted subject to
shareholders' approval of the increase in the number of shares available for
grant under the 1996 Stock Option Plan in accordance with this proposal.
1996 Stock Option Plan
Name and Position Number of Options(1)
- ----------------- --------------------
Ralph J. Roberts......................................... 600,000
Chairman of the Board of Directors
Julian A. Brodsky........................................ 150,000
Vice Chairman of the Board of Directors
Brian L. Roberts......................................... 750,000
President
Stephen B. Burke......................................... 800,000
Executive Vice President; President of
Comcast Cable Communications, Inc.
Lawrence S. Smith........................................ 300,000
Executive Vice President
All executive officers as a group........................ 2,990,000
All non-employee directors as a group.................... 37,800
Company employees other than executive officers, as a
group................................................... 6,405,996
- --------
(1) The options granted to Company employees other than executive officers
vest in installments over a period of either five years or nine years and
six months and expire ten years after the date granted. The options
granted to the Company's executive officers vest in installments over a
period of nine years and six months and expire ten years after the date
granted. The options granted to the Company's non-employee directors vest
fully six months after the date of grant and expire five years after the
date granted. The exercise price of all of the options is the fair market
value of the underlying shares on the date of grant. Except for 500,000
options granted to Mr. Burke on January 7, 2002, as to which the exercise
price is $34.90, the options granted to all of the executive officers,
including Messrs. Ralph J. Roberts, Brodsky, Brian L. Roberts, Burke and
Smith, were granted on January 24, 2002, and the exercise price of those
options is $35.49. The options granted to all of the non-employee
directors were granted on February 1, 2002, and the exercise price of
those options is $35.53. The options granted to Company employees other
than executive officers were granted at various times from January 2002 to
April 2002. The closing market price of the Class A Special Common Stock
on the Nasdaq National Market on April 25, 2002 was $27.04.
Administration
The 1996 Stock Option Plan provides that it will be administered by any
committee or subcommittee designated by the Board of Directors of the Company,
provided such committee or subcommittee is composed of two or more non-
employee members of the Board of Directors of the Company, each of whom is an
"outside director" within the meaning of the Code. Currently, the Compensation
Subcommittee of the Board of Directors administers the 1996 Stock Option Plan.
The Committee is authorized under the 1996 Stock Option Plan to determine
the Optionees to whom and the times at which the Options are granted and
become exercisable. Subject to the provisions of the 1996 Stock Option Plan,
the Committee also is authorized to determine the number
13
of Shares issuable upon exercise of each Option and other terms and conditions
of the Option. In addition, the 1996 Stock Option Plan provides that the
Committee may determine whether an Option is intended to be an ISO. Under
certain circumstances, the Committee may have the power to accelerate or
extend the exercise date of outstanding Options. See "Amendments," "Methods of
Exercise" and "Termination" below.
The individual option document (the "Option Document") for each Option sets
forth the terms of such Option, including the vesting of Options thereunder.
The Option Documents are in such form as the Committee shall from time to time
approve. The interpretation and construction by the Committee of any provision
of the 1996 Stock Option Plan, or of any Option Document, is final, binding
and conclusive.
Purchase of Shares Under the 1996 Stock Option Plan
Under the 1996 Stock Option Plan, the Committee sets forth in each Option
Document the exercise price for the Option Shares covered thereby (the "Option
Price"), provided that the Option Price of ISOs may not be less than 100% of
the fair market value of such Shares on the date or at the time that the
Option is granted. In addition, if an ISO is granted to an Optionee who then
owns, directly or by attribution under Section 424(d) of the Code, shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or an Affiliate, the Option Price must be at least 110%
of the fair market value of such Shares on the date the Option is granted. The
1996 Stock Option Plan provides that "fair market value" shall generally be
determined based on the last reported sale price of Shares on the last trading
day prior to the date on which such Option is granted.
The number of Shares of Class A Special Common Stock for which Options may
be granted under the 1996 Stock Option Plan, and the number of Shares of Class
A Special Common Stock issuable upon exercise of Options granted under the
1996 Stock Option Plan, and the exercise price for such Options, are subject
to adjustment in the event of a stock dividend, stock split or certain other
capital adjustments. No adjustment will be made in respect of the issuance of
Shares on the conversion of other securities of the Company that are
convertible into such class or classes of Shares.
Amendments
The Committee may amend the 1996 Stock Option Plan from time to time in such
manner as it may deem advisable. However, amendments to change the class of
individuals eligible to receive ISOs under the 1996 Stock Option Plan, extend
the expiration date of the 1996 Stock Option Plan, decrease the minimum Option
Price of an ISO granted under the 1996 Stock Option Plan or increase the
maximum number of Shares for which Options may be granted (other than as a
result of adjustments in the event of a stock dividend, stock split or certain
other capital adjustments) are not effective unless shareholder approval is
obtained within twelve months before or after such action. In addition,
provisions of the 1996 Stock Option Plan relating to grants of Options to non-
employee directors that determine (i) which directors are granted Options
pursuant to such provisions; (ii) the number of Shares subject to Options
granted under such provisions; (iii) the Option Price of such Shares; and (iv)
the timing of grants of Options pursuant to such provisions may not be amended
more than once every six months, other than to comport with the Code or the
Employee Retirement Income Security Act of 1974, if applicable.
The power of the Board of Directors or the Committee to amend Option
Documents or the 1996 Stock Option Plan may be subject to limitations
contained in applicable provisions of the Code and federal securities laws and
regulations.
Methods of Exercise
An Option granted under the 1996 Stock Option Plan may be exercised by the
Optionee only by written notice to the Company. The notice required under the
1996 Stock Option Plan must specify
14
the number of Shares to be purchased and must be accompanied by payment in
full of the purchase price. Payment may be made in cash, by certified check
payable to the order of the Company, or by a combination of the foregoing. In
addition, if the Committee so provides in an Option Document, payment may be
made all or in part in shares of Class A Special Common Stock or Class A
Common Stock; provided, however, that the Option Shares may not be paid for in
shares of Class A Special Common Stock or Class A Common Stock if such method
of payment would result in liability under Section 16(b) of the Exchange Act,
or if the Optionee does not own as of the date the relevant option is
exercised a number of shares held for at least six months at least equal to
the number of shares used to pay the exercise price of the Option.
There is no limitation on the number of Shares an Optionee may acquire under
the 1996 Stock Option Plan in any given year through the exercise of
outstanding Options, except as may be provided by the Committee in an Option
Document.
Certain Optionees who hold nonqualified stock options may elect to defer the
receipt of shares otherwise deliverable on the exercise of a nonqualified
stock option under the Comcast Corporation 1997 Deferred Stock Option Plan. In
general, an eligible Optionee may elect to defer the receipt of shares for a
minimum of two years and a maximum of ten years. In general, the Company will
deliver shares, which are originally reserved for issuance on the exercise of
a nonqualified stock option, net of shares required to exercise, at the end of
the deferral period elected by the eligible Optionee.
Termination
The term during which an Option may be exercised is set out in the
individual Option Document, but may not exceed (i) ten years from the date of
grant or, (ii) with respect to ISOs, five years from the date of grant if the
Optionee on the date of grant owns, directly or by attribution under Section
424(d) of the Code, shares possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of an Affiliate.
An Optionee's right to exercise any part of an Option granted pursuant to
the 1996 Stock Option Plan terminates on expiration of the Option term
specified in the Option Document. Generally, an Option expires on the first to
occur of: (i) expiration of 90 days from the date when the Optionee ceases to
be an employee of the Company or an Affiliate for any reason other than
disability (as defined in Section 22(e)(3) of the Code), death or a finding of
the Committee that the employee has breached his or her employment contract
with, or has been engaged in any sort of disloyalty to, or has disclosed trade
secrets of, the Company or an Affiliate, provided that the Committee may
specify in an Option Document that an Option may be exercisable during a
longer period after the Optionee ceases to be an employee, but in no event
later than the expiration of the Option term specified in the Option Document;
(ii) expiration of one year from the date the Optionee's employment with the
Company or an Affiliate terminates as a result of an Optionee's death or
disability; (iii) the date set by the Committee as an accelerated expiration
date in the event of the dissolution or liquidation of the Company or any
other transaction in which an unaffiliated third party acquires more than 50%
of the voting power for election of directors of the Company; or (iv) the date
of a finding by the Committee that the Optionee has breached his or her
employment contract with the Company or an Affiliate (if such Optionee is an
employee of the Company or an Affiliate), has been engaged in any sort of
disloyalty to the Company or an Affiliate, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his or her employment (if an employee) or in the course of his or
her service as a director (if a non-employee director), or has disclosed trade
secrets of the Company or an Affiliate. In the event of such a finding by the
Committee, in addition to immediate termination of the Option, the Optionee,
upon a determination by the Committee, will forfeit all Option Shares for
which the Company has not yet delivered stock certificates representing the
Option Shares, upon refund by the Company of the exercise price of the Option.
15
Options granted to certain employees of the Company, including the executive
officers named under the heading "Executive Compensation," provide that in the
event of death or disability (as defined in the 1996 Stock Option Plan) the
Options will vest fully and remain exercisable for the remaining term.
Transferability of Options
In general, Options granted under the 1996 Stock Option Plan are not
transferable by the Optionee except by will or by the laws of descent and
distribution, and, during the lifetime of the Optionee, Options may be
exercised only by the Optionee. However, the 1996 Stock Option Plan provides
that the Committee may, in its discretion, provide in an Option Document or an
amendment thereto that such Options may be transferred to members of the
Optionee's immediate family, or trusts or partnerships the sole beneficiaries
or partners of which are members of the Optionee's immediate family or the
Optionee, provided that such transfer is without consideration. Any Options so
transferred will remain subject to all conditions applicable to the Options,
as set forth in the 1996 Stock Option Plan or the relevant Option Documents,
except that the consent of the transferee of the Options (rather than that of
the original Optionee) will be required in order to amend the transferred
Options. See "Amendments" above. Any Option which is made transferable to the
extent provided in the 1996 Stock Option Plan will be a nonqualified option.
Cash Rights
The 1996 Stock Option Plan provides that the Committee may, in its sole
discretion, give an Optionee the right to receive the value of any
nonqualified Option in cash upon exercise of the Option rather than to pay the
exercise price of the Option and receive Shares. Such rights must be attached
to specific Options and are subject to the same vesting, expiration and
transferability terms as the Options to which they are attached. Options and
associated cash rights may not be exercised separately.
Withholding of Taxes
Whenever the Company is required to deliver or transfer Shares of Class A
Special Common Stock in connection with the exercise of an Option under the
1996 Stock Option Plan, the Company has the right to require the Optionee to
remit or otherwise make available to the Company an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements prior to
the delivery or transfer of any certificate or certificates for such shares or
to take whatever action it deems necessary to protect its interests with
respect to tax liabilities in connection with the issuance of such shares.
Under the 1996 Stock Option Plan, tax liabilities incurred in connection
with the exercise of an Option will be satisfied by the Company's withholding
a portion of the Option Shares underlying the Option that have a fair market
value approximately equal to the minimum amount of taxes required to be
withheld by the Company under applicable law, unless otherwise determined by
the Committee with respect to any Optionee. However, the Committee may permit
an Optionee to elect to have taxes withheld in excess of the minimum amount
required to be withheld by the Company (provided the Optionee certifies at the
time of such election that he or she has held for at least six months a number
of Shares at least equal to the number of all Option Shares withheld in excess
of the minimum amount), or to pay to the Company in cash all or a portion of
the taxes to be withheld upon the exercise of an Option. The Committee may add
such other requirements and limitations regarding these elections as it deems
appropriate.
Federal Income Taxation
The following discussion is intended to point out the general principles of
current federal income tax law applicable to the Options issued under the 1996
Stock Option Plan.
16
Incentive Stock Options. For the purposes of the regular income tax
currently imposed under the Code, the holder of an Option under the 1996 Stock
Option Plan which is an ISO will not recognize taxable income upon either the
grant or exercise of the Option.
The Optionee will recognize long-term capital gain or loss on a disposition
of the Option Shares acquired upon exercise of an ISO provided the Optionee
does not dispose of the Option Shares within two years from the date the ISO
was granted and within one year after the Option Shares were transferred to
the Optionee. For purposes of determining such gain or loss, the Optionee's
basis in such Shares will, in general, be the Optionee's Option Price. Under
present law, long-term capital gain is subject to an effective tax rate of 20%
or 18%, depending upon the length of time the Option Shares are held, while
ordinary income may be taxed at a maximum effective rate of 38.6%. If the
Optionee satisfies both of the holding periods described above, then the
Company will not be allowed a deduction by reason of the exercise of the ISO.
The amount, if any, by which the fair market value of an Option Share at the
time of exercise (determined without regard to certain transfer restrictions)
exceeds the Option Price will be included in the computation of the Optionee's
"alternative minimum taxable income," generally in the year he or she
exercises the ISO, for purposes of the "alternative minimum tax" imposed by
Section 55 of the Code. If an Optionee pays alternative minimum tax, the
amount of such tax paid that is attributable to the exercise of ISOs will be
allowed as a credit against regular tax liability in subsequent years in which
the Optionee's regular tax liability (reduced by certain other tax credits)
exceeds his or her alternative minimum tax. Further, the Optionee's basis in
Option Shares acquired through exercise of an ISO will, for alternative
minimum tax purposes, equal the fair market value of the Option Shares taken
into account in determining the Optionee's alternative minimum taxable income.
As a general rule, if the Optionee disposes of the Option Shares before
satisfying the holding period requirements discussed above (a "disqualifying
disposition"), his or her gain recognized on the disqualifying disposition
will be taxed as ordinary income to the extent of the difference between the
fair market value of the Option Shares on the date of exercise and the
adjusted basis of the Option Shares (or, in certain cases, the excess of the
amount realized on disposition over the adjusted basis, if such excess is less
than the amount arrived at by the former calculation), and the Company will be
entitled to a deduction in that amount.
The gain (if any) in excess of the amount recognized as ordinary income on a
disqualifying disposition will be long-term or short-term capital gain,
depending upon the length of time the recipient held the Option Shares prior
to the disposition.
Optionees may be permitted to exercise ISOs by transferring to the Company
shares of Class A Special Common Stock or Class A Common Stock then held by
the Optionee ("Prior Shares") having a market value equal to the Option Price
of the Shares to be purchased (see "Methods of Exercise" above). If the
Optionee acquired the Prior Shares by exercise of an ISO and the Optionee has
not satisfied the holding period requirements described above for the Prior
Shares, then the transfer will be treated as a disqualifying disposition by
the Optionee of the Prior Shares. However, if the Optionee did not acquire the
Prior Shares by exercise of an ISO or if the Optionee has satisfied the
holding period requirements applicable to the Prior Shares, then the Optionee
will not recognize gain or loss upon the exchange. In that case, the
Optionee's basis and holding period (for purposes other than the Option
holding period rules) in the Prior Shares will carry over to a corresponding
number of Option Shares received. The Optionee's basis in any additional
Option Shares received will be zero and his or her holding period will begin
on the date the Optionee becomes the owner of such Shares.
If an Option granted under the 1996 Stock Option Plan which is intended to
be an ISO fails to qualify as such under applicable rules and regulations of
the Code, such Option will be subject to the general principles of Federal
income tax law discussed below with respect to nonqualified options.
17
Nonqualified Options. For Federal income tax purposes, the holder of a
nonqualified Option will not recognize taxable income at the time of grant,
and the Company will not be allowed a deduction by reason of the grant of a
nonqualified Option. The Optionee will in general recognize ordinary income
upon exercise of the nonqualified Option, in an amount equal to the excess of
the fair market value of the Option Shares received at the time of exercise
(including Option Shares withheld by the Company to satisfy tax withholding
obligations) over the exercise price of the nonqualified Option, and the
Company will be allowed a deduction in that amount.
Upon disposition of the Option Shares, the Optionee will recognize long-term
or short-term capital gain or loss, depending upon the length of time he or
she held the Option Shares prior to disposition. The amount of long-term or
short-term capital gain or loss recognized by the Optionee upon disposition of
the Option Shares will be an amount equal to the difference between the amount
realized on the disposition and the Optionee's basis in the Option Shares
(which basis is ordinarily the fair market value of the Option Shares on the
date the Option was exercised).
Optionees may be permitted to exercise nonqualified Options by transferring
to the Company Prior Shares having a market value equal to the Option Price of
the Shares to be purchased (see "Methods of Exercise" above). In that case, no
income will be recognized on the receipt of a corresponding number of Option
Shares, and the Optionee's basis and holding period in the Prior Shares will
carry over to the corresponding number of Option Shares received. The
Optionee's basis in such additional Option Shares received will equal the
amount includable in the Optionee's income and his or her holding period will
begin on the date the Optionee becomes the owner of such shares.
Certain Optionees may be permitted to transfer nonqualified Options to
members of their immediate family, or certain trusts or partnerships, without
consideration. See "Transferability of Options" above. In the case of any
nonqualified Option so transferred, the original Optionee will recognize
income upon the exercise of the option by the transferee to the same extent as
if the original Optionee had exercised the Option, and the Company's
concurrent deduction will also be the same. The transferee's basis and holding
period in the stock received upon exercise of the transferred Option will be
the same basis and holding period as would have applied had the original
Optionee exercised the option in the same manner used by the transferee to
exercise the Option.
As described above, certain Optionees who hold nonqualified Options may
elect to defer the receipt of shares otherwise deliverable on the exercise of
a nonqualified Option under the Comcast Corporation 1997 Deferred Stock Option
Plan. The amount deferred will not be includible in an Optionee's ordinary
income for federal income tax purposes for the taxable year in which the
amount would have been received if no deferral election had been in effect.
Instead, the value of shares distributed at the end of the deferral period
will be includible in the Optionee's income when distributions under the 1997
Deferred Stock Option Plan are actually made.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE COMCAST CORPORATION 1996 STOCK OPTION PLAN.
18
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the Company's last three fiscal years,
certain information concerning the annual and long-term compensation, as well
as other compensation, paid to or for the Chief Executive Officer and each of
the other executive officers named in the table.
Long-Term
Compensation All Other
Annual Compensation Awards Compensation
---------------------------------- ------------ (Including
Number of Split-Dollar
Other Annual Securities Insurance
Name and Principal Compensation Underlying Benefits)
Position(1) Year Salary Bonus (2) (3) Options(#) (4)
- ------------------ ---- ---------- ---------- ------------ ------------ ------------
Ralph J. Roberts........ 2001 $1,171,325 $ 585,663 $3,065,388 1,100,000(5) $ 9,660,949
Chairman of the Board 2000 1,102,500 551,250 2,669,177 250,000(5) 10,427,697
of Directors 1999 1,050,000 525,000 2,279,829 250,000(5) 9,769,013
Julian A. Brodsky....... 2001 $ 797,677 $ 398,839 $ 80,298 150,000(5) $ 412,305
Vice Chairman of the 2,240(6)
Board of Directors 2000 759,692 379,846 27,358 60,000(5) 418,968
800(6)
1999 723,516 361,758 25,252 60,000(5) 1,121,721
Brian L. Roberts........ 2001 $1,102,500 $1,653,750 $ 427,817 750,000(5) $ 249,564
President 4,680(6)
2000 1,050,000 1,737,000 310,474 4,000,000(5) 932,376
640(6)
1999 1,000,000 1,662,000 360,643 4,000,000(5) 233,875
2,600(6)
Stephen B. Burke........ 2001 $ 926,100 $ 463,050 $ 3,468 500,000(5) $ 179,396
Executive Vice 2000 882,000 441,000 2,149 1,300,000(5) 87,278
President; President of 1999 841,000 420,000 1,713 100,000(5) 37,259
Comcast Cable
Communications, Inc.
Lawrence S. Smith....... 2001 $ 825,000 $ 412,500 $ 3,754 250,000(5) $ 230,521
Executive Vice 2000 759,692 449,962 2,403 800,000(5) 704,977
President 1999 723,516 431,440 3,496 100,000(5) 124,936
- --------
(1) The Company's by-laws do not provide for the position of "Chief Executive
Officer." For purposes of application of the proxy rules of the
Securities and Exchange Commission to this Proxy Statement, the Company
has determined that Mr. Ralph J. Roberts should be deemed to be the
Company's chief executive officer.
(2) The amounts in this column include bonuses earned by the named persons
under the Company's 1996 Executive Cash Bonus Plan, bonuses paid in 2000
and 1999 to Messrs. Brian L. Roberts and Smith relating to termination of
a prior discretionary bonus plan, and guaranteed bonuses of $6,077 and
$5,788 paid to Mr. Smith in 2000 and 1999, respectively.
(3) This column includes Company payments to the named executive officers to
cover their tax liabilities incurred in connection with: (a) local taxes
on certain stock option exercises for Mr. Brian L. Roberts; (b) Company
payments to Messrs. Ralph J. Roberts, Brodsky and Brian L. Roberts to
cover the premiums attributable to the term life insurance portion of
split-dollar life insurance policies or separate term life insurance
policies (see note (4)(b) below); (c) Company payments to cover premiums
attributable to the executive long-term disability plan (see note
19
(4)(d) below); and (d) other incidental taxable fringe benefits provided
to the named executive officers. Such amounts are calculated based upon
the amount of tax payable by the executive officers in accordance with
the highest individual income tax bracket.
(4) The amounts shown in this column include benefits associated with split-
dollar life insurance arrangements. In accordance with the terms of the
split-dollar life insurance arrangements, the Company will recover all of
the cumulative premiums paid by the Company for the whole-life portion of
such policies. This column includes (with respect to amounts applicable
to 2001): (a) the dollar value, on a term loan approach, of the benefit
of the whole-life portion of the premiums for split-dollar life insurance
policies paid by the Company on behalf of certain named executive
officers projected on an actuarial basis (Mr. Ralph J. Roberts,
$6,588,561; Mr. Brian L. Roberts, $22,596; and Mr. Smith, $19,619); (b)
Company payments to certain named executive officers to cover the
premiums attributable to the term life insurance portion of split-dollar
life insurance policies or separate term life insurance policies (Mr.
Ralph J. Roberts, $1,738,011; Mr. Brodsky, $14,229; Mr. Brian L. Roberts,
$190,592; and Mr. Smith, $1,604); (c) Company contributions to the
Comcast Corporation Retirement--Investment Plan in the amount of $3,424
for Mr. Burke and $7,650 for each of the other named executive officers;
(d) Company payments to certain named executive officers to cover the
premiums attributable to the executive long-term disability plan (Mr.
Brodsky, $3,535; Mr. Brian L. Roberts, $4,104; and Mr. Smith, $1,658);
and (e) the dollar value of interest earned on deferred compensation in
excess of 120% of the Long-Term Applicable Federal Rate (Mr. Ralph J.
Roberts, $1,326,727; Mr. Brodsky, $386,891; Mr. Brian L. Roberts,
$24,622; Mr. Burke, $175,972; and Mr. Smith, $199,990).
(5) Represents the number of shares of the Company's Class A Special Common
Stock issuable upon exercise of options. Share amounts with respect to
options granted prior to May 5, 1999 reflect the stock split in the form
of a dividend of one share of Class A Special Common Stock for each share
of Class A Common Stock, Class A Special Common Stock and Class B Common
Stock paid on May 5, 1999.
(6) Represents the number of shares of the Common Stock of QVC, Inc., a 57%-
owned non-public subsidiary of the Company ("QVC"), issuable upon
exercise of options granted to certain named executive officers by the
Compensation Committee of the QVC Board of Directors pursuant to the 1995
QVC Stock Option and Stock Appreciation Rights Plan (the "1995 QVC
Plan"). Such options were issued with tandem stock appreciation rights
exercisable in lieu of the options for 75% of the excess of the value of
the QVC Common Stock (as determined pursuant to the 1995 QVC Plan) over
the exercise price of such options.
20
Stock Option Grants
The following table contains information concerning grants of options under
the Company's 1996 Stock Option Plan to the Chief Executive Officer and to
each of the Company's other named executive officers during 2001. No Company
stock appreciation rights ("SARs") were granted during 2001 to the Chief
Executive Officer or to any of the Company's other named executive officers.
Company Stock Option Grants in 2001
Individual Grants(1)
------------------------------------------------------
% of
Total
Number of Options
Securities Granted
Underlying to Exercise Grant Date
Options Employees Price Expiration Present
Name Granted(#) in 2001 ($/Sh) Dates Value(2)
- ---- ---------- --------- -------- ---------- -----------
Ralph J. Roberts.......... 2,584(3) * $42.5563 03/26/06 $ 35,709
497,416 5.0% 38.6875 03/26/11 9,774,244
2,704(3) * 40.6670 07/30/06 39,168
597,296 6.0% 36.9700 07/30/11 11,288,238
Julian A. Brodsky......... 5,408 * $36.9700 07/30/11 $ 102,205
144,592 1.4% 36.9700 07/30/11 2,732,630
Brian L. Roberts.......... 2,704(3) * $40.6670 07/30/06 $ 39,168
747,296 7.4% 36.9700 07/30/11 14,123,074
Stephen B. Burke.......... 5,408 * $36.9700 07/30/11 $ 102,205
494,592 4.9% 36.9700 07/30/11 9,347,246
Lawrence S. Smith......... 5,408 * $36.9700 07/30/11 $ 102,205
244,592 2.4% 36.9700 07/30/11 4,622,520
- --------
* Less than one percent of total Company options granted to employees in
2001.
(1) All of the options are for the purchase of shares of Class A Special
Common Stock and were granted on either March 26 or July 30, 2001 under
the Company's 1996 Stock Option Plan. Except as described in note (3)
below, all options granted in 2001 have exercise prices equal to the fair
market value of the underlying shares on the date of grant. Except as
described in the next sentence or in note (3) below, options generally
become exercisable at the rate of 20% of the shares covered thereby on
the second anniversary of the date of grant, another 10% on each of the
third through ninth anniversaries of the date of grant and 10% six months
prior to the tenth anniversary of the date of grant. The following
options become exercisable at the rate of 40% of the shares covered
thereby on the second anniversary of the date of the grant and 20% each
on the third, fourth and fifth anniversaries of the date of the grant:
302,296 options granted to Mr. Ralph J. Roberts, 80,000 options granted
to Mr. Brodsky, 377,296 options granted to Mr. Brian L. Roberts, 255,000
options granted to Mr. Burke and 130,000 options granted to Mr. Smith on
July 30, 2001, and 497,416 options granted to Mr. Ralph J. Roberts on
March 26, 2001.
(2) These amounts represent the estimated present value of options at the
date of grant calculated using the Black-Scholes option pricing model,
based upon the following assumptions used in developing the grant
valuations: an expected volatility of approximately 35.9%; an expected
term to exercise of eight years, except for certain incentive stock
options granted to Messrs. Ralph J. Roberts and Brian L. Roberts, for
which the expected term to exercise is five years; an interest rate of
approximately 5.1%; and no dividend yield. The actual value of the
options, if any, realized by an executive officer will depend on the
extent to which the market value of the Class A Special Common Stock
exceeds the exercise price of the option on the date the option is
exercised. Consequently, there is no assurance that the value realized by
an executive officer will be at or near the value estimated above. These
amounts should not be used to predict share performance.
21
(3) In accordance with the tax rules governing incentive stock options, these
options were granted at an exercise price equal to 110% of the fair
market value of the underlying share on the date of grant. The options to
purchase shares of the Company's Class A Special Common Stock become
exercisable at the rate of 40% of the shares covered thereby on the
second anniversary of the date of grant, another 20% on each of the third
and fourth anniversaries of the date of grant and another 20% six months
prior to the fifth anniversary of the date of grant.
The following table contains information concerning grants of options under
the 1995 QVC Plan to the Chief Executive Officer and to each of the Company's
other named executive officers during 2001. Each option under the 1995 QVC
Plan is granted with a tandem SAR that entitles the recipient, in lieu of
exercising the option to which the SAR relates, to receive a cash payment
equal to 75% of the difference between the fair market value of a share of
stock on the date of exercise and the exercise price of the option.
QVC Stock Option/SAR Grants in 2001
Individual Grants(1)
---------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise Grant Date
Options/SARs Employees in Price Expiration Present
Name Granted(#) 2001 ($/Sh) Dates Value(2)
- ---- ------------ ------------ --------- ---------- ----------
Ralph J. Roberts..... -- -- -- -- --
Julian A. Brodsky.... 800 1.4% $1,216.00 01/08/11 $ 380,016
1,440 2.6% $1,374.00 06/22/11 $ 799,690
Brian L. Roberts..... 3,520 6.3% $1,216.00 01/12/11 $1,672,070
640 1.2% $1,374.00 06/11/11 $ 355,418
520 * $1,374.00 07/18/11 $ 287,570
Stephen B. Burke..... -- -- -- -- --
Lawrence S. Smith.... -- -- -- -- --
- --------
* Less than one percent of total QVC options granted to employees in 2001.
(1) These options were granted on January 8, January 12, June 11, June 22 or
July 18, 2001 pursuant to the terms of the 1995 QVC Plan. These options
were granted at an exercise price representing the value of the shares
underlying such options on the date of grant as determined pursuant to
the 1995 QVC Plan, and such options vest 20% on each of the first five
anniversaries of the date of grant, based on the named executive
officer's continued service to the Company. In all cases, vesting is
accelerated upon a change of control of QVC. The QVC options expire ten
years after the date of grant. The terms of the QVC options provide that
a new option will be granted each time shares acquired by exercise of an
existing option are redeemed, with respect to a number of shares equal to
the number of shares redeemed; except for the exercise price, the new
option will contain substantially the same terms as the exercised option,
as set forth in this footnote.
(2) These amounts represent the estimated present value of options at the
date of grant calculated using the Black-Scholes option pricing model,
based upon the following assumptions used in developing the grant
valuations: an expected volatility of approximately 20.0%; an expected
term to exercise of eight years; an interest rate of approximately 5.3%;
and no dividend yield. The actual value of the options, if any, realized
by Messrs. Brodsky and Brian L. Roberts will depend on the extent to
which the fair market value of the common stock of QVC exceeds the
exercise price of the option on the date the option is exercised.
Consequently, there is no assurance that the value realized by Messrs.
Brodsky and Brian L. Roberts will be at or near the values estimated
above.
22
Stock Option Exercises and Holdings
The following table sets forth information related to options to purchase
shares of the Company's Class A Special Common Stock exercised during 2001 by
the Chief Executive Officer and each of the other named executive officers
during 2001, and the number and value of options held at December 31, 2001 by
such individuals.
Aggregated Company Option Exercises in 2001
and Company Option Values at December 31, 2001
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares December 31, 2001(#) December 31, 2001
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
Ralph J. Roberts........ 433,035 (1) 3,492,949 1,979,438 $90,887,439 $ 9,913,887
Julian A. Brodsky....... 504,450(2) $ 901,999(2) 1,569,832 927,304 $40,615,015 $15,907,370
Brian L. Roberts........ 37,578 $1,397,371 3,922,397 9,585,440 $56,771,254 $60,948,967
Stephen B. Burke........ 5,770 $ 164,715 924,980 2,969,250 $17,007,170 $21,013,245
Lawrence S. Smith....... 215,000 $5,725,252 326,050 1,923,172 $ 6,818,474 $19,498,071
- --------
(1) Represents 433,035 shares of Class A Special Common Stock to be issued to
Mr. Ralph J. Roberts, the receipt of which has been deferred until July
15, 2004 pursuant to the Company's 1997 Deferred Stock Option Plan (the
"Deferred Stock Option Plan"), resulting from the exercise on March 8,
2001 of options to purchase 561,198 shares at an exercise price of
$9.5625 per share, net of 11,183 shares withheld to satisfy certain tax
obligations. The per share fair market value of such shares on March 8,
2001 was $45.875. The value ultimately realized with respect to such
shares will be determined based on the fair market value of such shares
upon their issuance to Mr. Ralph J. Roberts. If such shares (and such
withheld shares) had been issued to Mr. Ralph J. Roberts on the date of
exercise, the aggregate value realized by him with respect to such
exercise would have been $20,378,502.
(2) Mr. Brodsky realized the value shown above upon the exercise of options
to purchase 24,000 shares of Class A Special Common Stock. In addition,
the receipt of 480,450 shares of Class A Special Common Stock to be
issued to Mr. Brodsky, resulting from the exercise on January 3, 2001 of
options to purchase 336,000 shares at an exercise price of $4.1667 per
share and options to purchase 252,290 shares at an exercise price of
$9.5625 per share, net of 13,411 shares withheld to satisfy certain tax
obligations, was deferred until June 19, 2004 pursuant to the Deferred
Stock Option Plan. The per share fair market value of such shares on
January 3, 2001 was $40.375. The value ultimately realized with respect
to such shares will be determined based upon the fair market value of
such shares upon their issuance to Mr. Brodsky. If such shares (and such
withheld shares) had been issued to Mr. Brodsky on the date of exercise,
the aggregate value realized by him with respect to such exercises would
have been $19,939,674.
23
The following table sets forth information related to options to purchase
shares of the Common Stock of QVC exercised during 2001 by the Chief Executive
Officer and each of the other named executive officers during 2001, and the
number and value of options held at December 31, 2001 by such individuals.
Neither the Chief Executive Officer nor any of the Company's other named
executive officers exercised any tandem SARs in 2001.
Aggregated QVC Option Exercises in 2001
and QVC Option Values at December 31, 2001
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares December 31, 2001(#) December 31, 2001
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Ralph J. Roberts........ -- -- -- -- -- --
Julian A. Brodsky....... 480 $258,995 -- 3,520 -- $1,138,790
Brian L. Roberts........ 1,288 $735,002 920 9,872 $ 772,947 $4,847,502
Stephen B. Burke........ -- -- -- -- -- --
Lawrence S. Smith....... -- -- 1,480 920 $1,207,137 $ 751,167
The following table summarizes share and exercise price information about
the Company's equity compensation plans as of December 31, 2001. The table
does not include any shares issuable upon the exercise of the proposed
additional options under the 1996 Stock Option Plan that may be approved by
the Company's shareholders at the meeting.
Equity Compensation Plan Information
(c)
Number of securities
(b) remaining available
(a) Weighted-average for future issuance
Number of securities exercise price under equity
to be issued upon of outstanding compensation plans
exercise of options, (excluding
outstanding options, warrants and securities reflected
Plan category warrants and rights rights in column (a))
- ------------- -------------------- ---------------- --------------------
Equity compensation
plans approved by
security holders:
Option plans.......... 55,521,008 $26.89 375,384
Restricted stock
plan................. 713,848 -- 3,028,823
Employee stock
purchase plan........ -- -- 4,199,976
Equity compensation
plans not approved by
security holders....... -- -- --
---------- ---------
Total............... 56,234,856 7,604,183
========== =========
Pension Plan
Under the Company's Supplemental Executive Retirement Plan (the
"Supplemental Executive Retirement Plan"), adopted July 31, 1989, supplemental
retirement, death and disability benefits may be paid to or in respect of
certain senior executives employed by the Company and its affiliated
companies, as selected by the Company's Board of Directors. The Supplemental
Executive Retirement Plan contemplates the payment of various percentages of a
participant's final average compensation (as actuarially reduced, in certain
circumstances, and as defined below) in the event that the participant (i)
elects to retire early (after the later of the participant's 55th birthday or
20 years of
24
service with the Company); (ii) retires at age 65 or after; (iii) suffers a
permanent disability which renders the participant incapable of employment in
the same or a similar occupation; or (iv) dies. A participant may elect a
reduction in lifetime benefits in exchange for the continuation of payments to
a surviving spouse, or, as to Mr. Ralph J. Roberts, his designated
beneficiary. Messrs. Ralph J. Roberts and Brodsky (who are each credited with
30 years of service, the maximum credited service allowed under the
Supplemental Executive Retirement Plan) are the only current employees
selected by the Board of Directors to participate in the Supplemental
Executive Retirement Plan.
The following table shows the annual single life annuity retirement benefit
which Messrs. Ralph J. Roberts and Brodsky, respectively, would receive based
on remuneration covered by, and years of service credited under, the
Supplemental Executive Retirement Plan if he had retired on January 1, 2002 at
age 65 (or older). The benefits shown below are subject to reduction for
Social Security benefits.
Pension Plan Table
Final Average Years of Service
Compensation(1) 30 or More(2)
--------------- ----------------
$1,000,000................................................ $600,000
1,100,000................................................ 660,000
1,200,000................................................ 720,000
1,300,000................................................ 780,000
1,400,000................................................ 840,000
- --------
(1) Final average compensation equals one-fifth of the total compensation for
the five years preceding termination of employment. Compensation includes
salary, bonus (including any deferred bonus) and any other supplementary
remuneration, but excludes payments made to participants for split-dollar
life insurance premium bonuses and payments made to offset tax liabilities
incurred related to these bonuses. In the case of Mr. Ralph J. Roberts,
final average compensation may, under some circumstances, be increased as
described below in "Agreements with Executive Officers--Compensation
Agreement with the Chief Executive Officer--Election to Become a
Consultant."
(2) This column represents the maximum benefits payable under the Supplemental
Executive Retirement Plan.
The Company also has an agreement with Mr. Brodsky pursuant to which he is
entitled to a $30,000 payment each year for 15 years commencing upon his
termination of employment, subject to a vesting schedule. Any benefits
received under this agreement reduce the benefits to which Mr. Brodsky is
entitled under the Supplemental Executive Retirement Plan.
Agreements with Executive Officers
Compensation Agreement with the Chief Executive Officer
A Compensation and Deferred Compensation Agreement and Stock Appreciation
Bonus Plan with the Chief Executive Officer (the "1993 Compensation
Agreement") was approved by the Company's shareholders on June 22, 1994.
Certain terms of the 1993 Compensation Agreement expired on December 31, 1997,
and on December 16, 1997 the Company and the Chief Executive Officer entered
into a new Compensation and Deferred Compensation Agreement. This agreement
was amended and restated effective August 31, 1998, and then amended again
effective August 30, 1999 and June 5, 2001 (as so amended, the "1998
Compensation Agreement"). The 1998 Compensation Agreement generally extends
the terms of the 1993 Compensation Agreement with certain modifications.
25
The 1998 Compensation Agreement provides that the Chief Executive Officer
will continue to serve as Chairman of the Board of Directors of the Company
until December 31, 2002, or until such time as he may elect to change his
status to that of a non-executive consultant, and that until he makes such
election he will continue to devote substantially all of his working time to
the Company, on the terms and conditions summarized below. If he elects to
become a non-executive consultant, he shall devote such time as is necessary
to perform the functions reasonably requested by the Company. In addition, for
a period of five years following any termination of the service period of the
1998 Compensation Agreement, the Chief Executive Officer will perform such
reasonable ceremonial functions as the Company may request, and will promote
the interests and goodwill of the Company in such manner as the Company may
reasonably request.
Base Salary. The 1998 Compensation Agreement provides that the Chief
Executive Officer will receive an annual base salary of $1 million beginning
in 1998, as adjusted (but never reduced, except pursuant to an overall plan to
reduce the compensation of all senior executive officers of the Company) in
order to reflect the greater of increases in the consumer price index
subsequent to 1997 and the average percentage increase in the base
compensation of the five employees of the Company (other than the Chief
Executive Officer) with the highest base compensation during the preceding
year.
Bonus. The 1998 Compensation Agreement provides that so long as he continues
to serve as an executive of the Company, the Chief Executive Officer will be
eligible to receive annual bonuses of up to 50% of his base salary in
accordance with the Company's Executive Cash Bonus Plan, based on performance
targets established by the Compensation Subcommittee.
Split-Dollar Life Insurance. The 1998 Compensation Agreement requires the
Company to continue to provide and to maintain the split-dollar life insurance
provided to the Chief Executive Officer under the 1993 Compensation Agreement,
and in addition to provide additional survivorship split-dollar life insurance
to the Chief Executive Officer and his spouse. Such split-dollar life
insurance includes certain split-dollar life insurance provided pursuant to
the 1993 Compensation Agreement to replace the potential benefits represented
by the Company's terminated discretionary bonus plan with respect to the
appreciation through March 15, 1994, in the options for Class A Special Common
Stock previously awarded to the Chief Executive Officer, taking into account
the financial position of the Company and the tax deductibility of any such
payments. Under the split-dollar life insurance arrangements, the Company pays
a portion of the annual premiums for certain single-life and joint-and-
survivor life insurance policies for the Chief Executive Officer, and upon
payment of the policies at the death of the Chief Executive Officer or of the
survivor of the Chief Executive Officer and his spouse, as applicable, the
Company recovers all of the cumulative premiums previously paid by the Company
for the whole-life portion of such policies. The Chief Executive Officer is
responsible for payment of the portion of such annual premiums representing
the cost of term insurance for each year. The Company also pays the Chief
Executive Officer an annual cash bonus in an amount equal to the portion of
the annual premium for such life insurance that he is required to pay; in
addition, the Company increases the bonus by an amount sufficient to pay any
income tax and gift tax liability incurred or to be incurred in connection
with payment of the bonus.
The Chief Executive Officer's split-dollar life insurance arrangements were
revised in part in January 2002, in response to a general notice issued by the
Internal Revenue Service ("notice"), to provide: that bonus amounts paid by
the Company for premiums (and related bonus gross-up payments for income and
gift taxes) would continue to be paid to the Chief Executive Officer
subsequent to the policies achieving paid-up status; that the original method
of calculating the cost of the death benefit coverage would be continued, in
lieu of other lower cost methods permitted under the notice, so as to preserve
the original intended economic costs and benefit of the plans to the Company
and the Chief Executive Officer; and that, in order to avoid adverse tax
consequences to the Chief Executive Officer and his spouse, various trusts
created by the Chief Executive Officer may
26
elect whether to pay premium amounts received after the policies achieve paid-
up status to the Company (as partial repayments of premiums previously paid by
the Company on the Chief Executive Officer's behalf) or to the insurance
carrier.
Supplemental Death Benefit. Upon the death of the Chief Executive Officer,
the 1998 Compensation Agreement requires the Company to pay a supplemental
death benefit (the "Death Benefit") to a beneficiary designated by the Chief
Executive Officer. The 1998 Compensation Agreement substituted the Death
Benefit for two bonus arrangements included in the 1993 Compensation Agreement
that were based on appreciation of the Company's Class A Common Stock from the
date of grant of options to purchase Class B Common Stock to the date of
exercise. The Compensation Subcommittee determined that the after-tax present
value cost to the Company of the Death Benefit was approximately equal to the
cost of the bonuses that would otherwise have been paid. The Company must pay
the Death Benefit within six months from the date of the Chief Executive
Officer's death. Under the terms of the 1998 Compensation Agreement, the Chief
Executive Officer requested that the Company invest portions of the Death
Benefit in certain investments identified by the Chief Executive Officer. The
Company has complied with the Chief Executive Officer's request, and so the
amount of the Death Benefit has been adjusted to reflect the increase or
decrease in value of any such investments. As of December 31, 2001, the amount
of the Death Benefit was $30.5 million.
Termination. The 1998 Compensation Agreement will terminate upon the Chief
Executive Officer's death, at the Company's option upon his disability, or for
cause (as such terms are defined in the 1998 Compensation Agreement) upon a
vote of not less than two-thirds of the entire membership of the Company's
Board of Directors. If his employment is terminated by reason of his death or
disability, the Company shall continue to pay his annual base salary on a
monthly basis to him, during his lifetime, or to the beneficiary designated by
him for five years, and the Accrued Cash Bonus, the Benefit Plans (as such
terms are defined in the 1998 Compensation Agreement) and the Death Benefit
will continue to be payable in accordance with their terms. In the event of
death, all of his outstanding stock options will vest fully and remain
exercisable for their remaining terms. If his employment is terminated by the
Company in violation of the 1998 Compensation Agreement, he shall remain
entitled to substantially all of the benefits under the 1998 Compensation
Agreement.
Noncompetition and Confidentiality. Under the 1998 Compensation Agreement,
the Chief Executive Officer has agreed not to compete with the Company during
his employment and for five years after termination of his employment. The
agreement also requires him to maintain the confidentiality of certain
information of the Company, and not to use such information except for the
benefit of the Company, at all times during his employment and after
termination of his employment. Breach of any of such obligations constitutes
cause for termination of the 1998 Compensation Agreement and terminates the
Company's obligations for payments subsequent to any discharge of the Chief
Executive Officer.
Change of Control Provisions. Prior to any "Change of Control" (as defined
below), the Company must establish and fund a grantor trust, the amounts in
which will be subject to claims of the Company's creditors in the case of the
Company's bankruptcy, for the purpose of paying all deferred compensation,
nonqualified retirement benefits, and split-dollar life insurance premiums and
bonuses for the Chief Executive Officer then applicable. Upon the occurrence
of a Change of Control, such trust must become irrevocable (if not already
irrevocable), and the Company must continue to make payments into such trust
to maintain sufficient amounts therein to fund all benefits subject to the
trust. A "Change of Control" is defined as occurring when persons other than
the Chief Executive Officer and members of his immediate family or trusts for
their benefit acquire more than 50% of the voting power over all outstanding
voting shares of the Company. If the proposed transaction with AT&T Corp. is
approved, the Company will be obligated to establish and fund such a trust in
accordance with the terms of the 1998 Compensation Agreement.
27
Election to Become a Consultant. The Chief Executive Officer may at any
time, upon 30 days notice to the Company, elect to change his position from
that of an executive to that of consultant to the Company. In such event, he
shall continue to receive all of the compensation provided under the 1998
Compensation Agreement, other than the bonus to which he would otherwise be
entitled under the Company's Executive Cash Bonus Plan. If he elects to become
a consultant, the Chief Executive Officer's entitlement to retirement benefits
under the Company's Supplemental Executive Retirement Plan will be adjusted
annually to reflect 150% of his base salary as a consultant, but his benefits
under such plan will not in any event exceed the bonus he could have received
under the 1998 Compensation Agreement had he continued to work as an
executive.
Compensation Agreement with Mr. Brian L. Roberts
The Company entered into a Compensation Agreement (the "Compensation
Agreement") with Brian L. Roberts, the Company's President. The following is a
description of the material terms of the Compensation Agreement.
Term. The term of the Compensation Agreement is from June 16, 1998 through
June 30, 2003 (the "Employment Period"). Mr. Brian L. Roberts agreed to work
full time for the Company during the Employment Period.
Base Salary. The Compensation Agreement provides that Mr. Brian L. Roberts
will receive an annual base salary of $1 million beginning in 1998, as
adjusted (but never reduced, except pursuant to an overall plan to reduce the
compensation of all senior executive officers of the Company) from time to
time to reflect his contribution to the growth and success of the Company.
Bonus; Options. Pursuant to the Compensation Agreement, Mr. Brian L. Roberts
is eligible to receive an annual performance bonus, payable in cash,
commencing in 1999, of up to 150% of his base salary for the applicable year.
The amount of the bonus is determined annually by the Compensation
Subcommittee, in accordance with, and upon satisfaction of, the standards
contained in the Company's Executive Cash Bonus Plan. Under the terms of the
Compensation Agreement, Mr. Brian L. Roberts also received grants of options
to purchase 3,000,000 shares of Class A Special Common Stock of the Company
granted effective June 16, 1998 and options to purchase 1,000,000 shares of
Class A Special Common Stock of the Company granted effective each fiscal
quarter in 1999 and 2000.
Deferred Compensation. The Compensation Agreement provides that the Company
and Mr. Brian L. Roberts may, by written agreement prior to the end of any
calendar year during the Employment Period, cause the payment of all or a
portion of the compensation payable to Mr. Brian L. Roberts in the subsequent
calendar year to be deferred to a subsequent calendar year in accordance with
and subject to the Company's 1996 Deferred Compensation Plan.
Termination. The Compensation Agreement will terminate upon the death of Mr.
Brian L. Roberts, at the Company's option upon his disability, or for cause
(as defined in the Compensation Agreement), upon a vote of not less than two-
thirds of the entire membership of the Company's Board of Directors. If his
employment is terminated by reason of his death or disability, the Company
shall continue to pay his annual base salary on a monthly basis to him or his
spouse, during their lifetimes, for a maximum of five years, and the accrued
cash bonus as provided for in the Compensation Agreement and any applicable
health plan benefits will continue to be payable. If his employment is
terminated by the Company in violation of the Compensation Agreement, he shall
remain entitled to substantially all of the benefits under the Compensation
Agreement.
Noncompetition and Confidentiality. Under the Compensation Agreement, Mr.
Brian L. Roberts agreed not to compete with the Company during his employment
and for two years after termination of his employment. The Agreement also
requires him to maintain the confidentiality of
28
certain information of the Company, and not to use such information except for
the benefit of the Company, at all times during his employment and after
termination of his employment. Breach by Mr. Brian L. Roberts of any of such
obligations constitutes cause for termination of the Compensation Agreement,
and terminates the Company's obligations for payments subsequent to such
termination.
Term Life Insurance Agreement with Mr. Brian L. Roberts. The Company has
entered into a Term Life Insurance Premium and Tax Bonus Agreement dated as of
September 23, 1998 (the "Term Life Insurance Agreement") with Mr. Brian L.
Roberts. The Term Life Insurance Agreement provides that, as additional
compensation to Mr. Brian L. Roberts, the Company will reimburse him for all
of the premiums on certain specified 20- and 15-year level-premium term life
insurance policies aggregating $170 million in insurance on his life, and that
the Company will pay him an additional bonus equal to the income tax payable
on such reimbursement and the bonus. The annual amount of the premiums to be
reimbursed under the Term Life Insurance Agreement is approximately $189,000
through 2012 and $177,000 from 2013 through 2017. The Term Life Insurance
Agreement does not terminate upon termination of the employment of Mr. Brian
L. Roberts by the Company.
Change of Control Provisions. Prior to any "Change of Control" (as defined
below), the Company must establish and fund a grantor trust, the amounts in
which will be subject to claims of the Company's creditors in the case of the
Company's bankruptcy, for the purpose of paying all compensation, deferred
compensation and term life insurance premiums and bonuses for Mr. Brian L.
Roberts then applicable. Upon the occurrence of a Change of Control, such
trust must become irrevocable (if not already irrevocable), and the Company
must continue to make payments into such trust to maintain sufficient amounts
therein to fund all benefits subject to the trust. A "Change of Control" is
defined as occurring when Mr. Brian L. Roberts and members of his immediate
family or trusts for their benefit first cease to beneficially own at least
50% of the voting power of the Company. If the proposed transaction with AT&T
Corp. is approved, the Company will be obligated to establish and fund such a
trust in accordance with the provisions of the Compensation Agreement and the
Term Life Insurance Agreement.
Employment Agreements with Messrs. Burke and Smith
The Company has entered into employment agreements with two other named
executive officers of the Company: Stephen B. Burke, an Executive Vice
President of the Company and President of Comcast Cable Communications, Inc.,
and Lawrence S. Smith, an Executive Vice President of the Company. The
following is a description of the material terms of such agreements.
The term of the agreement with Mr. Burke is from March 15, 2000 through July
31, 2007 and the term of the agreement with Mr. Smith is from May 31, 2000
through December 31, 2005 (each, an "Executive Employment Period"). Mr. Burke
and Mr. Smith each agreed to work full time for the Company during his
Executive Employment Period.
The agreement with Mr. Burke provides for a base salary of $926,100 in 2001,
and the agreement with Mr. Smith provides for a base salary of $825,000 in
2001. In each case, for each year in the Executive Employment Period
subsequent to 2001 the base salary is increased by the greater of 5% or the
percentage increase during the previous year in the consumer price index.
Pursuant to the agreements, each of the executives is eligible to receive an
annual performance bonus, commencing in 2000, of up to 50% of his base salary
for the applicable year. The amount of the bonus is determined annually by the
Compensation Subcommittee, based on the performance of the Company and of the
executive during such year, and is payable in cash or in shares of Class A
Special Common Stock of the Company, at the discretion of the Compensation
Subcommittee.
Each agreement provides that the executive's employment may be terminated
without cause by the Company and that he may resign voluntarily. If the
executive's employment is terminated without
29
cause, he is entitled to receive his then-current base salary and all
insurance, medical or other similar benefits for a period of two years from
the date of discharge, subject to offset by other compensation or benefits
earned by the executive during such period, and he is entitled to receive his
bonus for the year of discharge. If the executive resigns, or is terminated
for cause (as defined in the agreement), he is entitled only to his base
salary for days actually worked and any amounts due to him under the Company's
1996 Deferred Compensation Plan.
Under each of the agreements, the executive agreed not to compete with the
Company during his employment and for one year after termination of his
employment. The agreements also require each executive to maintain the
confidentiality of certain information of the Company, and not to use such
information, except for the benefit of the Company, at all times during his
employment and for a period of one year after termination of his employment.
Breach by the executive of any of such obligations constitutes cause for
termination of the applicable agreement, and terminates the Company's
obligations for payments subsequent to any discharge of the executive. Each of
the agreements provides that it shall continue in effect upon the merger of
the Company into another entity, or in similar events.
Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total shareholder return on each of the Company's Class A Common Stock and
Class A Special Common Stock during the five years ended December 31, 2001
with the cumulative total return on the Standard & Poor's 500 Stock Index and
with a selected peer group consisting of the Company and four other companies
engaged in the cable communications industry: Cablevision Systems Corporation
(Class A), Adelphia Communications Corporation, Cox Communications, Inc. and
Charter Communications, Inc. (Class A) ("Charter"). This peer group (the
"Current Peer Group") represents a change from the peer group used for
comparison by the Company in the prior year (the "Prior Peer Group") in that
the Prior Peer Group did not include Charter. Charter was added to the Current
Peer Group because of the Company's belief that Charter is in a line of
business similar to that of the Company and that a comparison of the
performance of the Company's Class A Common Stock and Class A Special Common
Stock against the performance of a peer group that includes Charter is a
meaningful comparison that would be helpful to a person making an investment
decision with respect to the Company's Class A Common Stock or Class A Special
Common Stock. Charter became a public company on November 9, 1999. The
comparison assumes $100 was invested on December 31, 1996 in the Company's
Class A Common Stock and Class A Special Common Stock and in each of the
foregoing indices and assumes the reinvestment of dividends.
30
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Comcast Class A........................................ 182 328 547 472 412
Comcast Class A Special................................ 178 332 572 472 407
Current Peer Group Index............................... 182 330 514 462 372
Prior Peer Group Index................................. 182 330 514 457 371
S&P 500 Stock Index.................................... 133 171 208 189 166
Report on Executive Compensation
This report is issued jointly by the Compensation Committee of the Board of
Directors (the "Committee") and the Compensation Subcommittee. The Committee
is generally responsible for making broad recommendations to the Board of
Directors on executive compensation. However, authority on virtually all
specific compensation decisions for the Company's executive officers has been
delegated to the Compensation Subcommittee, including matters such as
establishing performance-based criteria and goals for compensation to senior
executives, administering the Company's equity incentive plans and bonus
plans, and approving agreements with the Chief Executive Officer and the other
executive officers. The members of the Compensation Subcommittee are
disinterested non-employee directors as well as "outside directors" (as
defined in Section 162(m) of the Internal Revenue Code).
Compensation Policy. The primary goal of the Committee and the Compensation
Subcommittee in their determinations regarding compensation matters is to
attract and retain highly qualified executive officers and key employees in an
effort to enhance shareholder value. The Company attempts to realize this goal
by providing competitive compensation and permitting executive officers to
take an ownership stake in the Company commensurate with their relative levels
of seniority and responsibility.
31
The Committee performs a general review each year of the Company's executive
compensation. The current compensation structure for the named executive
officers (other than the Chief Executive Officer) resulted from a
comprehensive review of the compensation of the Company's President and other
executives, which culminated in the Compensation Subcommittee's authorization
and direction to management in early 2000 to seek to enter into five-year
employment agreements containing non-competition provisions with all executive
officers. This objective was successfully implemented. Such agreements did
not, however, substantially alter the Committee's general goal to provide the
executive officers (other than the Chief Executive Officer) with total
compensation that, based on individual and Company performance viewed over an
appropriate period of time, was generally between the 50th and 75th percentile
of total compensation for executives with comparable positions at peer
companies. In the case of the Chief Executive Officer, compensation has
historically been determined, as discussed below, by an individualized
assessment of his performance and by comparison to executives of other
companies who have been "founders" (i.e., the persons most responsible for
extraordinary growth and success at their companies, regardless of industry),
and is currently governed largely by the terms of the 1993 Compensation
Agreement and the 1998 Compensation Agreement.
The total compensation of the Company's executive officers, including the
Chief Executive Officer, is primarily determined pursuant to their employment
and compensation agreements and awards under the Executive Cash Bonus Plan,
the 1996 Stock Option Plan and, for certain executives, split-dollar life
insurance policies and term insurance policies. The Company seeks to achieve a
mix of these various forms of compensation which will properly compensate and
motivate its executives on an individual basis commensurate with their
relative levels of seniority and responsibility. A variety of factors are
considered in arriving at the amount and mix of compensation paid or awarded
to the Company's executive officers. A key factor in the assessment of the
compensation of the Company's executive officers is the Company's overall
performance, in light of their principal responsibility for overall corporate
policy-making, management and administration; however, no specific weighting
was assigned to any of the factors considered in determining the remuneration
paid or awarded to the named executive officers for 2001.
The Committee believes that the Company's most direct competitors for
executive talent are comprised of a broader range of companies than those with
which the Company would ordinarily be compared for stock performance purposes.
Thus, the compensation comparison group also included companies that are not
included in the peer group index in the stock performance graph above.
Base Salary. The Company's philosophy with respect to setting base salary is
generally to compensate its executive officers with reasonable current income
on a competitive basis. The base salary of the Chief Executive Officer was
increased by 6.2% and the other executive officers were increased by 5.0% to
9.7% in 2001 pursuant to the terms of their compensation or employment
agreements with the Company in effect at the beginning of 2001.
Bonuses. Since 1996, annual cash bonuses for executive officers are
primarily determined under the shareholder-approved Executive Cash Bonus Plan,
which had been recommended by an independent compensation consultant. Under
the Executive Cash Bonus Plan, each executive designated by the Compensation
Subcommittee is eligible to earn an annual bonus of up to 150% of the sum of
his or her base salary and any unearned target bonus from any prior plan year,
but not more than $3 million, based on annual cash flow performance targets
established in advance by the Compensation Subcommittee. The Compensation
Subcommittee selected increases in cash flow as the single most significant
measure of operating performance of the Company and other companies in the
Company's industries. The target bonus for each of the named executive
officers is based on the Compensation Subcommittee's assessment of the optimal
mix of base and incentive cash compensation. In 2001, the target bonus for Mr.
Brian L. Roberts was 150%, and the target bonuses for the
32
Company's other named executive officers were 50%. Based on the Company's cash
flow for such period, 100% of the target bonuses were earned for 2001 under
the plan.
Equity-Based Incentive Compensation. The Company's equity-based incentive
compensation is in the form of stock option grants. The Compensation
Subcommittee believes that reliance upon such incentives is advantageous to
the Company because it fosters a long-term commitment by the recipients to the
Company and motivates these executives to seek to improve the long-term market
performance of the Company's stock. The Committee seeks to achieve these long-
term objectives in part by extending the period of time in which the options
vest over a longer period than is the case with many other companies. In the
most recent group of options granted to executives during 2001, approximately
half of each optionee's options vest over five years and the balance vests
over a period of nine years and six months. Stock options produce value to
executives only if the price of the Company's stock appreciates, thereby
directly linking the interests of the executives with those of the Company's
shareholders. The Compensation Subcommittee awarded stock options in 2001 to
the Chief Executive Officer and the Company's other executive officers. In
general, such option grants were based on a proportional relationship to the
expected cash compensation of the option recipients, taking into account prior
option grants and grants made at the same time to other executives of the
Company; in the case of the Chief Executive Officer and Brian L. Roberts, the
Company's President, grants were in part based on other factors relating to
their respective contributions to the Company, such as those described under
"Compensation of Chief Executive Officer," below. The Committee, in part,
based its grant of options to a large group of executives in July of 2001 on
the advice of an independent compensation consultant.
Equity Ownership Policy. The Company's Board of Directors has maintained a
minimum equity ownership policy since 1998, applicable to substantially all
officers of the Company with base salaries in excess of $150,000, as well as
to directors. Officers and directors subject to the policy may not sell shares
of Common Stock of the Company unless, following such sale, they continue to
own at least an amount of Common Stock with a value equal to a multiple of
their annual base compensation from the Company. The Chief Executive Officer,
as well as Mr. Brian L. Roberts, the Company's President, and all non-employee
directors, are required to own shares with a value of five times base
compensation; other officers are required to own shares with a value of one
and one-half to four times their base compensation, depending on base
compensation. Based on their current base compensation, each of the other
named executive officers is required under the policy to own shares with a
value of four times his base compensation. For purposes of the policy, shares
owned by an applicable person's spouse and children, shares owned pursuant to
the Company's 1997 Deferred Stock Option Plan or the Company's 2001 Employee
Stock Purchase Plan and 60% of the value of an applicable person's vested in-
the-money stock options are considered owned by such person. The Board of
Directors has determined that such policy serves to align more fully the
interests of management under the Company's equity-based incentive
compensation programs with the interests of the Company's shareholders.
Compensation of Chief Executive Officer. The Company's by-laws do not
provide for a "Chief Executive Officer" of the Company. The Committee
considers that, for 2001, Mr. Ralph J. Roberts, the Chairman of the Company's
Board of Directors, was its chief executive officer for purposes of this Proxy
Statement.
The Chief Executive Officer's compensation for 2001 was determined under the
terms of the 1993 Compensation Agreement and the 1998 Compensation Agreement.
See "Agreements with Executive Officers--Compensation Agreement with the Chief
Executive Officer." The levels of compensation provided under the 1993
Compensation Agreement and the 1998 Compensation Agreement were determined
when such agreements were entered into or amended based on a review by the
Committee and the Compensation Subcommittee and an independent compensation
consultant of compensation levels of chief executive officers at other
companies in comparable industries and of certain chief
33
executive officers in other industries who, like Mr. Ralph J. Roberts, were
founders of companies and the persons primarily responsible for the growth of
such companies over a substantial period of time. The Committee and
Compensation Subcommittee also took into account an assessment of the
importance of maintaining the continued active participation of the Chief
Executive Officer in the Company's affairs over the periods covered by the
1993 Compensation Agreement and the 1998 Compensation Agreement, the Company's
growth and overall performance during the ten years prior to 1993 and during
the period from 1993 to 1998, and the Chief Executive Officer's prior
compensation levels during those periods. Generally, other than as stated
above, the Committee and the Compensation Subcommittee did not consider
specific performance measures in approving the 1993 Compensation Agreement and
the 1998 Compensation Agreement.
The Chief Executive Officer's compensation in 2001 consisted of the salary
and benefits fixed by the 1998 Compensation Agreement, awards of options to
purchase a total of 1,100,000 shares of Class A Special Common Stock, and
split-dollar life insurance benefits. One award of options to purchase 600,000
shares was made in 2001 based on the proportional relationship to the Chief
Executive Officer's expected cash compensation for the year, also taking into
account prior option grants and grants made at the same time to other
executive officers of the Company. In addition, based on its review and
consideration of a prior award of options to purchase 250,000 shares made to
the Chief Executive Officer in 2000, his compensation relative to that
provided to comparable executives at other companies in the industry, the
grants then made to other Company executive officers, the Company's financial
and operating performance in 2000, and the very high level of service provided
by the Chief Executive Officer to the Company and his involvement in several
large capital transactions and complex strategic transactions in 2000, the
Committee determined that the option award in 2000 had been, under all the
circumstances, substantially insufficient and, having obtained the advice of
an independent compensation consultant that such an additional award would be
reasonable, authorized the additional award of options to purchase 500,000
shares to the Chief Executive Officer. The split-dollar life insurance
benefits were originally granted to the Chief Executive Officer pursuant to
the 1993 Compensation Agreement to replace cash bonus plan entitlements, which
were terminated in connection therewith; additional split-dollar benefits were
provided in the 1998 Compensation Agreement to the Chief Executive Officer and
his spouse.
The Compensation Subcommittee in 2001 also approved the modification of the
terms of two death benefit arrangements relating to the Chief Executive
Officer, one in the 1998 Compensation Agreement and one in the Company's
Supplemental Executive Retirement Plan ("SERP"). Under the former, upon death
while still employed, his salary would be paid to his surviving spouse for a
maximum of five years; this was amended to allow the Chief Executive Officer
to designate one or more beneficiaries to receive his salary for five years.
Under the SERP, his death benefit in the event of death while employed would
have been an annual pension as if he had retired at that time and elected a
joint 100% survivor pension, to which his spouse would be entitled until her
death; this was amended to permit one or more beneficiaries to receive the
pension until his spouse's death or, if she does not survive him, for five
years. The Compensation Subcommittee believed that the change was consistent
with the original purpose of the Death Benefit and was a reasonable
accommodation to the Chief Executive Officer to permit him greater flexibility
in estate planning.
Effect of Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code provides that certain compensation in excess of $1
million paid to the chief executive officer and the other four most highly
compensated executive officers of a public company (determined as of the last
day of the company's tax year) will not be deductible for federal income tax
purposes. A portion of the compensation paid to the Chief Executive Officer
under the 1993 Compensation Agreement and the 1998 Compensation Agreement will
not or may not be deductible under Section 162(m) to the extent it is paid
during the course of his employment as an executive officer of the Company.
The amount of compensation paid to the Chief Executive Officer in 2001 that is
expected to be nondeductible to the
34
Company is approximately $1,353,000. In addition, approximately $693,000 of
the compensation paid in 2001 to Mr. Brian L. Roberts, the Company's
President, is also expected to be nondeductible under Section 162(m), due
principally to the payment of amounts to cover premiums on term life insurance
policies and bonuses related to income tax liabilities arising therefrom, the
payment of amounts with respect to income tax obligations arising upon the
exercise of certain stock options and other incidental taxable fringe
benefits, the fair market value of all of which was considered non-
performance-based compensation for tax purposes in 2001. The Compensation
Subcommittee engages in an ongoing review of the Company's compensation
practices for purposes of obtaining the maximum continued deductibility of
compensation paid by the Company consistent with its existing commitments and
ongoing competitive needs. While the tax impact of any compensation
arrangement is one factor to be considered, such impact is evaluated in light
of the Committee's overall compensation philosophy. From time to time the
Committee may award compensation which is not fully deductible if the
Committee determines that such award is consistent with its philosophy and in
the best interests of the Company and its shareholders.
Members of the Compensation Subcommittee
Joseph L. Castle, II
Bernard C. Watson
Members of the Compensation Committee
Sheldon M. Bonovitz (Chair)
Decker Anstrom
Joseph L. Castle, II
Bernard C. Watson
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Annual Meeting of
Shareholders in 2003 must be received by February 5, 2003 in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. Shareholder proposals should be directed to Stanley
Wang, Executive Vice President and Secretary, at the address of the Company
set forth on the first page of this Proxy Statement. Notwithstanding the
foregoing, shareholders with suggestions on the nomination of directors must
comply with the procedures set forth under the caption "Committees and
Meetings of the Board of Directors."
A shareholder may wish to have a proposal presented at the Annual Meeting of
Shareholders in 2003, but not to have such proposal included in the Company's
proxy statement and form of proxy relating to that meeting. Pursuant to
Section 2-9 of the Company's by-laws, notice of any such proposal must be
received by the Company between April 11, 2003 and May 11, 2003. If it is not
received during this period, such proposal shall be deemed "untimely" for
purposes of Rule 14a-4(c) under the Exchange Act, and, therefore, the proxies
will have the right to exercise discretionary voting authority with respect to
such proposal. Any such proposal should be directed to Stanley Wang, Executive
Vice President and Secretary, at the address of the Company set forth on the
first page of this Proxy Statement.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The expenses of solicitation of proxies for the
meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or telegraph
by directors, officers or regular employees of the Company or its
subsidiaries.
35
HOUSEHOLDING OF PROXY MATERIALS
If you and other residents at your mailing address own shares of Company
stock in street name, your broker or financial institution may have sent you a
notice that your household will receive only one annual report and proxy
statement for each company in which you hold stock through that broker or
financial institution. This practice of sending only one copy of proxy
material is known as "householding." If you received a notice and did not
respond that you did not want to participate in householding, you were deemed
to have consented to the process. In such case, your broker will send one copy
of this document to your address. For voting purposes, a separate proxy card
will be included for each account at the shared address.
You may revoke your consent to householding at any time by contacting your
broker or financial institution for specific information on this matter. In
any event, if you did not receive an individual copy of this Proxy Statement
or the accompanying 2001 Annual Report, you may request a copy by contacting
your broker or financial institution, or by contacting the Company's Investor
Relations Hotline (toll-free) at 1-866-281-2100.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS
SHOULD BE DIRECTED TO "INVESTOR RELATIONS" AT THE ADDRESS OF THE COMPANY SET
FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
36
[FORM OF PROXY -- CLASS A]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF COMCAST CORPORATION
The undersigned, a holder of Class A Common Stock of COMCAST CORPORATION
(the "Company"), hereby constitutes and appoints RALPH J. ROBERTS and STANLEY
WANG, and each of them acting individually, as the attorney and proxy of the
undersigned, with full power of substitution, for and in the name and stead of
the undersigned, to attend the Annual Meeting of Shareholders of the Company to
be held on Wednesday, July 10, 2002 at 9:00 a.m. local time at The Doubletree
Hotel Philadelphia, Broad and Locust Streets, Philadelphia, Pennsylvania, and
any adjournment or postponement thereof, and thereat to vote all shares of Class
A Common Stock which the undersigned would be entitled to vote if personally
present, as follows:
Unless otherwise specified on the reverse side hereof, the shares will be
voted "FOR" the election of all ten nominees for director and "FOR" the other
proposals set forth on the reverse side. This Proxy also delegates discretionary
authority to vote with respect to any other business which may properly come
before the meeting and any adjournment or postponement thereof.
IMPORTANT NOTICE: All annual meeting attendees may be asked to present a valid
government-issued photo identification (federal, state or local), such as a
driver's license or passport, before entering the meeting. In addition, video
and audio recording devices and other electronic devices will not be permitted
at the annual meeting, and attendees will be subject to security inspections.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS, PROXY STATEMENT AND 2001 ANNUAL REPORT OF COMCAST CORPORATION.
(Continued and to be dated and signed on the reverse side)
[SEE REVERSE SIDE]
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[X] Please mark your votes as in this example.
1. Election of ten Directors
[ ] FOR [ ] WITHHELD
Except authority to vote withheld for the following Nominee(s): _____________
01-Ralph J. Roberts, 02-Julian A. Brodsky, 03-Brian L. Roberts,
04-Decker Anstrom, 05-Sheldon M. Bonovitz, 06-Joseph L. Castle, II,
07-Felix G. Rohatyn, 08-Bernard C. Watson, 09-Irving A. Wechsler,
10-Anne Wexler
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 2002 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the 1996 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To vote on such other business which may properly come before the
meeting.
Change of Address and/or Comments mark here [ ]
The signer hereby revokes all previous proxies given by the signer to vote at
the Annual Meeting or any adjournments thereof.
NOTE: Please sign this Proxy exactly as name(s) appear(s) in address. When
signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such, and if signer is a corporation, please sign with
full corporate name by duly authorized officer or officers and affix the
corporate seal. When stock is issued in the name of two or more persons, all
such persons should sign.
- -----------------------------------------
- -----------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
IF VOTING BY MAIL, FOLD AND DETACH HERE AND RETURN PROPERLY EXECUTED PROXY CARD
IN ENCLOSED POSTAGE-PRE-PAID ENVELOPE
[logo of Comcast Corporation appears here]
VOTE BY TELEPHONE OR INTERNET 24 HOURS A DAY, 7 DAYS A WEEK
Your vote is important. Casting your vote in one of three ways described on this
instruction card votes all shares of Class A Common Stock of Comcast Corporation
that you are entitled to vote. We urge you to promptly cast your vote by:
[TELEPHONE GRAPHIC] Using a touch-tone telephone to vote by
telephone toll-free from the U.S. or Canada. Simply
dial 1-877-779-8683 and follow the instructions. When
prompted for your "Voter Control Number", enter the
number printed at the top right hand corner of this
card. When you are finished voting, your vote will be
confirmed and the call will end.
[COMPUTER GRAPHIC] Accessing the World Wide Web site
http://www.eproxyvote.com/cmcsa to vote via the
Internet. When prompted for your "Voter Control
Number", enter the number printed at the top right hand
corner of this card. When you are finished voting, your
vote will be confirmed.
[ENVELOPE GRAPHIC] Completing, dating, signing and mailing
the proxy card in the postage-pre-paid envelope
included with the proxy statement or sending it to
Comcast Corporation, c/o EquiServe Trust Company N.A.,
P.O. Box 8609, Edison, New Jersey 08818-8609.
If you choose to vote by telephone or via the Internet, there is no need to mail
in your proxy card.
VOTES SUBMITTED BY TELEPHONE OR VIA THE INTERNET AS DESCRIBED HEREIN MUST BE
RECEIVED BY 5:00 P.M. EASTERN TIME ON JULY 9, 2002.
COMCAST CORPORATION
1996 STOCK OPTION PLAN
----------------------
(As Amended and Restated, Effective April 29, 2002)
1. Purpose of Plan
The purpose of the Plan is to assist the Company in retaining valued
employees, officers and directors by offering them a greater stake in the
Company's success and a closer identity with it, and to aid in attracting
individuals whose services would be helpful to the Company and would contribute
to its success.
2. Definitions
(a) "Affiliate" means, with respect to any Person, any other Person
-----------
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, the term
"control," including its correlative terms "controlled by" and "under common
control with," mean, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
(b) "Board" means the board of directors of the Sponsor.
-------
(c) "Cash Right" means any right to receive cash in lieu of Shares
------------
granted under the Plan and described in Paragraph 3(a)(iii).
(d) "Cause" means:
-------
(i) for an employee of a Company, a finding by the Committee,
after full consideration of the facts presented on behalf of both the Company
and the employee, that the employee has breached his employment contract with a
Company, has disclosed trade secrets of a Company or has been engaged in any
sort of disloyalty to a Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the course
of his employment.
(ii) for a Non-Employee Director, a finding by the Committee,
after full consideration of the facts presented on behalf of both the Company
and the Director, that such Non-Employee Director has disclosed trade secrets of
a Company, or has been engaged in any sort of disloyalty to a Company,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his service as a Non-Employee
Director.
(e) "Change of Control" means any transaction or series of transactions
-------------------
as a result of which any Person who was a Third Party immediately before such
transaction or series of transactions owns then-outstanding securities of the
Sponsor having more than 50 percent of the voting power for the election of
directors of the Sponsor.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
------
(g) "Comcast Plan" means any restricted stock, stock bonus, stock
--------------
option or other compensation plan, program or arrangement established or
maintained by the Company or an Affiliate, including but not limited to this
Plan, the Comcast Corporation 1997 Deferred Stock Option Plan, the Comcast
Corporation 1990 Restricted Stock Plan and the Comcast Corporation 1987 Stock
Option Plan.
(h) "Committee" means the committee described in Paragraph 5.
-----------
(i) "Common Stock" means:
(i) the Sponsor's Class A Special Common Stock, par value, $1.00;
and
(ii) Subject to the approval of the Sponsor's shareholders, the
Sponsor's Class B Common Stock, par value, $1.00.
(j) "Company" means the Sponsor and each of the Parent Companies and
---------
Subsidiary Companies.
(k) "Date of Grant" means the date as of which an Option is granted.
---------------
(l) "Disability" means a disability within the meaning of section
------------
22(e)(3) of the Code.
(m) "Election Date" means the date on which an individual is first
---------------
elected to the Board as a Non-Employee Director, or is elected to the Board as a
Non-Employee Director following a period of one year or more during which such
individual was not a member of the Board.
(n) "Fair Market Value." If Shares are listed on a stock exchange, Fair
--------------------
Market Value shall be determined based on the last reported sale price of a
Share on the principal exchange on which Shares are listed on the last trading
day prior to the date of determination, or, if Shares are not so listed, but
trades of Shares are reported on the Nasdaq National Market, the last quoted
sale price of a Share on the Nasdaq National Market on the last trading day
prior to the date of determination, or, if Shares are not so reported, the fair
market value as determined by the Board or the Committee in good faith.
(o) "Grant Date" means each February 1st after the date of adoption of
------------
the Plan by the Board.
(p) "Immediate Family" means an Optionee's spouse and lineal
------------------
descendants, any trust all beneficiaries of which are any of such persons and
any partnership all partners of which are any of such persons.
-2-
(q) "Incentive Stock Option" means an Option granted under the Plan,
------------------------
designated by the Committee at the time of such grant as an Incentive Stock
Option within the meaning of section 422 of the Code and containing the terms
specified herein for Incentive Stock Options; provided, however, that to the
-------- -------
extent an Option granted under the Plan and designated by the Committee at the
time of grant as an Incentive Stock Option fails to satisfy the requirements for
an incentive stock option under section 422 of the Code for any reason, such
Option shall be treated as a Non-Qualified Option.
(r) "Non-Employee Director" means an individual who is a member of the
-----------------------
Board, and who is not an employee of a Company, including an individual who is a
member of the Board and who previously was an employee of a Company.
(s) "Non-Qualified Option" means:
----------------------
(i) an Option granted under the Plan, designated by the Committee
at the time of such grant as a Non-Qualified Option and containing the terms
specified herein for Non-Qualified Options; and
(ii) an Option granted under the Plan and designated by the
Committee at the time of grant as an Incentive Stock Option, to the extent such
Option fails to satisfy the requirements for an incentive stock option under
section 422 of the Code for any reason.
(t) "Option" means any stock option granted under the Plan and
--------
described in Paragraph 3(a).
(u) "Optionee" means a person to whom an Option has been granted under
----------
the Plan, which Option has not been exercised in full and has not expired or
terminated.
(v) "Other Available Shares" means, as of any date, the excess, if any
------------------------
of:
(i) the total number of Shares owned by an Optionee; over
(ii) the sum of:
(A) the number of Shares owned by such Optionee for less than
six months; plus
(B) the number of Shares owned by such Optionee that has,
within the preceding six months, been the subject of a withholding certification
pursuant to Paragraph 16(b) or any similar withholding certification under any
other Comcast Plan; plus
(C) the number of Shares owned by such Optionee that has,
within the preceding six months, been received in exchange for Shares
surrendered as payment, in full or in part, of the exercise price for an option
to purchase any securities of the Sponsor or an Affiliate under any Comcast
Plan, but only to the extent of the number of Shares surrendered; plus
-3-
(D) The number of Shares owned by such Optionee as to which
evidence of ownership has, within the preceding six months, been provided to the
Company in connection with the crediting of "Deferred Stock Units" to such
Optionee's Account under the Comcast Corporation 1997 Deferred Stock Option
Plan.
For purposes of this Paragraph 2(v), a Share that is subject to a deferral
election pursuant to another Comcast Plan shall not be treated as owned by an
Optionee until all conditions to the delivery of such Share have lapsed. For
purposes of Paragraphs 7(d), 8(d) and 16(b), the number of Other Available
Shares shall be determined separately for the Sponsor's Class A Special Common
Stock, par value, $1.00, the Sponsor's Class A Common Stock, par value, $1.00
and the Sponsor's Class B Common Stock, par value, $1.00.
(w) "Outside Director" means a member of the Board who is an "outside
------------------
director" within the meaning of section 162(m)(4)(C) of the Code and applicable
Treasury Regulations issued thereunder.
(x) "Parent Company" means all corporations that, at the time in
----------------
question, are parent corporations of the Sponsor within the meaning of section
424(e) of the Code.
(y) "Person" means an individual, a corporation, a partnership, an
--------
association, a trust or any other entity or organization.
(z) "Plan" means the Comcast Corporation 1996 Stock Option Plan.
------
(aa) "Roberts Family." Each of the following is a member of the Roberts
-----------------
Family:
(i) Brian L. Roberts;
(ii) a lineal descendant of Brian L. Roberts; or
(iii) a trust established for the benefit of any of Brian L.
Roberts and/or a lineal descendant or descendants of Brian L. Roberts.
(bb) "Share" or "Shares" means:
------- --------
(i) for all purposes of the Plan, a share or shares of Common
Stock or such other securities issued by the Sponsor as may be the subject of an
adjustment under Paragraph 11.
(ii) solely for purposes of Paragraphs 2(n), 2(v), 7(d), 8(d) and
16(b), the term "Share" or "Shares" also means a share or shares of the
Sponsor's Class A Common Stock, par value, $1.00.
(cc) "Sponsor" means Comcast Corporation, a Pennsylvania corporation,
---------
including any successor thereto by merger, consolidation, acquisition of all or
substantially all the assets thereof, or otherwise.
-4-
(dd) "Subsidiary Companies" means all corporations that, at the time in
----------------------
question, are subsidiary corporations of the Sponsor within the meaning of
section 424(f) of the Code.
(ee) "Ten Percent Shareholder" means a person who on the Date of Grant
-------------------------
owns, either directly or within the meaning of the attribution rules contained
in section 424(d) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of his employer corporation or of
its parent or subsidiary corporations, as defined respectively in sections
424(e) and (f) of the Code, provided that the employer corporation is a Company.
(ff) "Terminating Event" means any of the following events:
-------------------
(i) the liquidation of the Sponsor; or
(ii) a Change of Control.
(gg) "Third Party" means any Person other than a Company, together with
-------------
such Person's Affiliates, provided that the term "Third Party" shall not include
the Sponsor, an Affiliate of the Sponsor or any member or members of the Roberts
Family.
(hh) "1933 Act" means the Securities Act of 1933, as amended.
----------
(ii) "1934 Act" means the Securities Exchange Act of 1934, as amended.
----------
3. Rights To Be Granted
(a) Types of Options and Other Rights Available for Grant. Rights that
may be granted under the Plan are:
(i) Incentive Stock Options, which give an Optionee who is an
employee of a Company the right for a specified time period to purchase a
specified number of Shares for a price not less than the Fair Market Value on
the Date of Grant;
(ii) Non-Qualified Options, which give the Optionee the right for
a specified time period to purchase a specified number of Shares for a price
determined by the Committee; and
(iii) Cash Rights, which give an Optionee the right for a specified
time period, and subject to such conditions, if any, as shall be determined by
the Committee and stated in the option document, to receive a cash payment of
such amount per Share as shall be determined by the Committee and stated in the
option document, in lieu of exercising a Non-Qualified Option.
In addition, rights that may be granted under the Plan shall include Incentive
Stock Options or Non-Qualified Options to purchase a specified number of Shares
of the Sponsor's Class A Special Common Stock, par value $1.00, which shall be
automatically converted into Incentive
-5-
Stock Options or Non-Qualified Options to purchase the same number of Shares of
the Sponsor's Class B Common Stock, par value $1.00, upon and subject to the
approval by the Sponsor's shareholders of the amendment to the Plan adopted by
the Board on October 5, 2000 to make the Sponsor's Class B Common Stock, par
value $1.00 available for the grant of Options under the Plan.
(b) Limit on Grant of Options. The maximum number of Shares for which
-------------------------
Options may be granted to any single individual in any calendar year, adjusted
as provided in Paragraph 11, shall be 10,000,000 Shares.
(c) Presumption of Incentive Stock Option Status. Each Option granted
--------------------------------------------
under the Plan to an employee of a Company is intended to be an Incentive Stock
Option, except to the extent any such grant would exceed the limitation of
Paragraph 9 and except for any Option specifically designated at the time of
grant as an Option that is not an Incentive Stock Option.
4. Shares Subject to Plan
Subject to adjustment as provided in Paragraph 11, not more than 75,000,000
Shares in the aggregate may be issued pursuant to the Plan upon exercise of
Options. Shares delivered pursuant to the exercise of an Option may, at the
Sponsor's option, be either treasury Shares or Shares originally issued for such
purpose. If an Option covering Shares terminates or expires without having been
exercised in full, other Options may be granted covering the Shares as to which
the Option terminated or expired.
5. Administration of Plan
(a) Committee. The Plan shall be administered by the Subcommittee on
---------
Performance Based Compensation of the Compensation Committee of the Board or any
other committee or subcommittee designated by the Board, provided that the
committee administering the Plan is composed of two or more non-employee members
of the Board, each of whom is an Outside Director. Notwithstanding the
foregoing, if Non-Employee Directors are granted Options in accordance with the
provisions of Paragraph 8, the directors to whom such Options will be granted,
the timing of grants of such Options, the Option Price of such Options and the
number of Option Shares included in such Options shall be as specifically set
forth in Paragraph 8. No member of the Committee shall participate in the
resolution of any issue that exclusively involves an Option granted to such
member.
(b) Meetings. The Committee shall hold meetings at such times and
--------
places as it may determine. Acts approved at a meeting by a majority of the
members of the Committee or acts approved in writing by the unanimous consent of
the members of the Committee shall be the valid acts of the Committee.
(c) Exculpation. No member of the Committee shall be personally liable
-----------
for monetary damages for any action taken or any failure to take any action in
connection with the administration of the Plan or the granting of Options
thereunder unless (i) the member of the Committee has breached or failed to
perform the duties of his office, and (ii) the breach or failure to perform
constitutes self-dealing, wilful misconduct or recklessness; provided, however,
------------------
-6-
that the provisions of this Paragraph 5(c) shall not apply to the responsibility
or liability of a member of the Committee pursuant to any criminal statute.
(d) Indemnification. Service on the Committee shall constitute service
---------------
as a member of the Board. Each member of the Committee shall be entitled without
further act on his part to indemnity from the Sponsor to the fullest extent
provided by applicable law and the Sponsor's By-laws in connection with or
arising out of any actions, suit or proceeding with respect to the
administration of the Plan or the granting of Options thereunder in which he may
be involved by reasons of his being or having been a member of the Committee,
whether or not he continues to be such member of the Committee at the time of
the action, suit or proceeding.
6. Eligibility
(a) Eligible individuals to whom Options may be granted shall be
employees, officers or directors of a Company who are selected by the Committee
for the grant of Options. Eligible individuals to whom Cash Rights may be
granted shall be individuals who are employees of a Company on the Date of
Grant. The terms and conditions of Options granted to individuals other than
Non-Employee Directors shall be determined by the Committee, subject to
Paragraph 7. The terms and conditions of Cash Rights shall be determined by the
Committee, subject to Paragraph 7. The terms and conditions of Options granted
to Non-Employee Directors shall be determined by the Committee, subject to
Paragraph 8.
(b) An Incentive Stock Option shall not be granted to a Ten Percent
Shareholder except on such terms concerning the option price and term as are
provided in Paragraph 7(b) and 7(g) with respect to such a person. An Option
designated as Incentive Stock Option granted to a Ten Percent Shareholder but
which does not comply with the requirements of the preceding sentence shall be
treated as a Non-Qualified Option. An Option designated as an Incentive Stock
Option shall be treated as a Non-Qualified Option if (i) the Optionee is not an
employee of a Company on the Date of Grant or (ii) the only Company by which the
Optionee is employed on the Date of Grant is an entity described in Paragraph
2(dd)(ii).
7. Option Documents and Terms - In General
All Options granted to Optionees other than Non-Employee Directors shall be
evidenced by option documents. The terms of each such option document shall be
determined from time to time by the Committee, consistent, however, with the
following:
(a) Time of Grant. All Options shall be granted within 10 years from
-------------
the earlier of (i) the date of adoption of the Plan by the Board, or (ii)
approval of the Plan by the shareholders of the Sponsor.
(b) Option Price. The option price per Share with respect to any Option
------------
shall be determined by the Committee, provided, however, that with respect to
------------------
any Incentive Stock Options, the option price per share shall not be less than
100% of the Fair Market Value of such Share on the Date of Grant, and provided
--------
further that with respect to any Incentive Stock Options granted to a Ten
- -------
Percent Shareholder, the option price per Share shall not be less than 110% of
the Fair Market Value of such Share on the Date of Grant.
-7-
(c) Restrictions on Transferability. No Option granted under this
-------------------------------
Paragraph 7 shall be transferable otherwise than by will or the laws of descent
and distribution and, during the lifetime of the Optionee, shall be exercisable
only by him or for his benefit by his attorney-in-fact or guardian; provided
--------
that the Committee may, in its discretion, at the time of grant of a Non-
- ----
Qualified Option or by amendment of an option document for an Incentive Stock
Option or a Non-Qualified Option, provide that Options granted to or held by an
Optionee may be transferred, in whole or in part, to one or more transferees and
exercised by any such transferee; provided further that (i) any such transfer is
---------------------
without consideration and (ii) each transferee is a member of such Optionee's
Immediate Family; and provided further that any Incentive Stock Option granted
---------------------
pursuant to an option document which is amended to permit transfers during the
lifetime of the Optionee shall, upon the effectiveness of such amendment, be
treated thereafter as a Non-Qualified Option. No transfer of an Option shall be
effective unless the Committee is notified of the terms and conditions of the
transfer and the Committee determines that the transfer complies with the
requirements for transfers of Options under the Plan and the option document.
Any person to whom an Option has been transferred may exercise any Options only
in accordance with the provisions of Paragraph 7(g) and this Paragraph 7(c).
(d) Payment Upon Exercise of Options. Full payment for Shares purchased
--------------------------------
upon the exercise of an Option shall be made in cash, by certified check payable
to the order of the Sponsor, or, at the election of the Optionee and as the
Committee may, in its sole discretion, approve, by surrendering Shares with an
aggregate Fair Market Value equal to the aggregate option price, or by
delivering such combination of Shares and cash as the Committee may, in its sole
discretion, approve; provided, however, that Shares may be surrendered in
------------------
satisfaction of the option price only if the Optionee certifies in writing to
the Sponsor that the Optionee owns a number of Other Available Shares as of the
date the Option is exercised that is at least equal to the number of Shares to
be surrendered in satisfaction of the Option Price; provided further, however,
-----------------
that the option price may not be paid in Shares if the Committee determines that
such method of payment would result in liability under section 16(b) of the 1934
Act to an Optionee. Except as otherwise provided by the Committee, if payment is
made in whole or in part in Shares, the Optionee shall deliver to the Sponsor
certificates registered in the name of such Optionee representing Shares legally
and beneficially owned by such Optionee, free of all liens, claims and
encumbrances of every kind and having a Fair Market Value on the date of
delivery that is not greater than the option price accompanied by stock powers
duly endorsed in blank by the record holder of the Shares represented by such
certificates. If the Committee, in its sole discretion, should refuse to accept
Shares in payment of the option price, any certificates representing Shares
which were delivered to the Sponsor shall be returned to the Optionee with
notice of the refusal of the Committee to accept such Shares in payment of the
option price. The Committee may impose such limitations and prohibitions on the
use of Shares to exercise an Option as it deems appropriate.
(e) Issuance of Certificate Upon Exercise of Options; Payment of Cash.
------------------------------------------------------------------
Only whole Shares shall be issuable upon exercise of Options. Any right to a
fractional Share shall be satisfied in cash. Upon satisfaction of the conditions
of Paragraph 10, a certificate for the number of whole Shares and a check for
the Fair Market Value on the date of exercise of any fractional Share to which
the Optionee is entitled shall be delivered to such Optionee by the Sponsor.
-8-
(f) Termination of Employment. For purposes of the Plan, a transfer of
-------------------------
an employee between two employers, each of which is a Company, shall not be
deemed a termination of employment. For purposes of Paragraph 7(g), an
Optionee's termination of employment shall be deemed to occur on the date an
Optionee ceases to have a regular obligation to perform services for a Company,
without regard to whether (i) the Optionee continues on the Company's payroll
for regular, severance or other pay or (ii) the Optionee continues to
participate in one or more health and welfare plans maintained by the Company on
the same basis as active employees. Whether an Optionee ceases to have a regular
obligation to perform services for a Company shall be determined by the
Committee in its sole discretion. Notwithstanding the foregoing, if an Optionee
is a party to an employment agreement or severance agreement with a Company
which establishes the effective date of such Optionee's termination of
employment for purposes of this Paragraph 7(g), that date shall apply.
(g) Periods of Exercise of Options. An Option shall be exercisable in
------------------------------
whole or in part at such time or times as may be determined by the Committee and
stated in the option document, provided, however, that if the grant of an Option
would be subject to section 16(b) of the 1934 Act, unless the requirements for
exemption therefrom in Rule 16b-3(c)(1), under such Act, or any successor
provision, are met, the option document for such Option shall provide that such
Option is not exercisable until not less than six months have elapsed from the
Date of Grant. Except as otherwise provided by the Committee in its discretion,
no Option shall first become exercisable following an Optionee's termination of
employment for any reason; provided further, that:
(i) In the event that an Optionee terminates employment with the
Company for any reason other than death or Cause, any Option held by such
Optionee and which is then exercisable shall be exercisable for a period of 90
days following the date the Optionee terminates employment with the Company
(unless a longer period is established by the Committee); provided, however,
that if such termination of employment with the Company is due to the Disability
of the Optionee, he shall have the right to exercise those of his Options which
are then exercisable for a period of one year following such termination of
employment (unless a longer period is established by the Committee); provided,
however, that in no event shall an Incentive Stock Option be exercisable after
five years from the Date of Grant in the case of a grant to a Ten Percent
Shareholder, nor shall any other Option be exercisable after ten years from the
Date of Grant.
(ii) In the event that an Optionee terminates employment with the
Company by reason of his death, any Option held at death by such Optionee which
is then exercisable shall be exercisable for a period of one year from the date
of death (unless a longer period is established by the Committee) by the person
to whom the rights of the Optionee shall have passed by will or by the laws of
descent and distribution; provided, however, that in no event shall an Incentive
------------------
Stock Option be exercisable after five years from the Date of Grant in the case
of a grant to a Ten Percent Shareholder, nor shall any other Option be
exercisable after ten years from the Date of Grant.
(iii) In the event that an Optionee's employment with the Company
is terminated for Cause, each unexercised Option held by such Optionee shall
terminate and cease to be exercisable; provided further, that in such event, in
-----------------
addition to
-9-
immediate termination of the Option, the Optionee, upon a determination by the
Committee shall automatically forfeit all Shares otherwise subject to delivery
upon exercise of an Option but for which the Sponsor has not yet delivered the
Share certificates, upon refund by the Sponsor of the option price.
(h) Date of Exercise. The date of exercise of an Option shall be the
----------------
date on which written notice of exercise, addressed to the Sponsor at its main
office to the attention of its Secretary, is hand delivered, telecopied or
mailed first class postage prepaid; provided, however, that the Sponsor shall
------------------
not be obligated to deliver any certificates for Shares pursuant to the exercise
of an Option until the Optionee shall have made payment in full of the option
price for such Shares. Each such exercise shall be irrevocable when given. Each
notice of exercise must (i) specify the Incentive Stock Option, Non-Qualified
Option or combination thereof being exercised; and (ii) include a statement of
preference (which shall binding on and irrevocable by the Optionee but shall not
be binding on the Committee) as to the manner in which payment to the Sponsor
shall be made (Shares or cash or a combination of Shares and cash). Each notice
of exercise shall also comply with the requirements of Paragraph 15.
(i) Cash Rights. The Committee may, in its sole discretion, provide in
-----------
an option document for an eligible Optionee that Cash Rights shall be attached
to Non-Qualified Options granted under the Plan. All Cash Rights that are
attached to Non-Qualified Options shall be subject to the following terms:
(i) Such Cash Right shall expire no later than the Non-Qualified
Option to which it is attached.
(ii) Such Cash Right shall provide for the cash payment of such
amount per Share as shall be determined by the Committee and stated in the
option document.
(iii) Such Cash Right shall be subject to the same restrictions on
transferability as the Non-Qualified Option to which it is attached.
(iv) Such Cash Right shall be exercisable only when such
conditions to exercise as shall be determined by the Committee and stated in the
option document, if any, have been satisfied.
(v) Such Cash Right shall expire upon the exercise of the
Non-Qualified Option to which it is attached.
(vi) Upon exercise of a Cash Right that is attached to a
Non-Qualified Option, the Option to which the Cash Right is attached shall
expire.
(j) Type of Shares. Each Option granted under this Paragraph 7 to an
--------------
employee of a Company shall be an Option to purchase Shares of the Company's
Class A Special Common Stock, par value, $1.00, except for (i) any Option
specifically designated at the time of grant as an Option to purchase Shares of
the Company's Class B Common Stock, par value, $1.00, or (ii) any Option
specifically designated at the time of grant as an Option to purchase Shares of
the Company's Class A Special Common Stock, par value, $1.00, that will
automatically convert to an Option to purchase Shares of the Company's Class B
Special
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Common Stock, par value, $1.00, upon and subject to the approval by the
Sponsor's shareholders of the amendment to the Plan adopted by the Board on
October 5, 2000 to make the Sponsor's Class B Common Stock, par value $1.00
available for the grant of Options under the Plan.
8. Option Documents and Terms - Non-Employee Directors
Options granted pursuant to the Plan to Non-Employee Directors shall be
granted, without any further action by the Committee, in accordance with the
terms and conditions set forth in this Paragraph 8. Options granted pursuant to
Paragraph 8(a) shall be evidenced by option documents. The terms of each such
option document shall be consistent with Paragraphs 8(b) through 8(g), as
follows:
(a) Grant of Options to Non-Employee Directors. Each Non-Employee
------------------------------------------
Director shall be granted, commencing on the Grant Date next following the
adoption of this Plan by the Board and on each successive Grant Date thereafter,
a Non-Qualified Option to purchase 5,400 Shares. Notwithstanding the preceding
sentence, each newly elected Non-Employee Director:
(i) shall be granted a Non-Qualified Option to purchase 9,000
Shares on the Election Date; and
(ii) shall not be entitled to the grant of an Option hereunder on
the Grant Date immediately following the Non-Employee Director's Election Date
if such Election Date is within ninety (90) days of the Grant Date.
(b) Option Price. The option price per Share with respect to any
------------
Option granted under this Paragraph 8 shall be 100% of the Fair Market Value of
such Share on the Grant Date.
(c) Restrictions on Transferability. No Option granted under this
-------------------------------
Paragraph 8 shall be transferable otherwise than by will or the laws of descent
and distribution and, during the lifetime of the Optionee, shall be exercisable
only by him or for his benefit by his attorney-in-fact or guardian; provided
--------
that the Committee may, in its discretion, at the time of grant of an Option or
- ----
by amendment of an option document for an Option, provide that Options may be
transferred, in whole or in part, to one or more transferees and exercised by
any such transferee; provided further that (i) any such transfer is without
---------------------
consideration, and (ii) each transferee is a member of such Optionee's Immediate
Family. No transfer of an Option shall be effective unless the Committee is
notified of the terms and conditions of the transfer and the Committee
determines that the transfer complies with the requirements for transfers of
Options under the Plan and the option document. Any person to whom an Option has
been transferred may exercise any Options only in accordance with the provisions
of Paragraph 8(f) and this Paragraph 8(c).
(d) Payment Upon Exercise of Options. Full payment for Shares
--------------------------------
purchased upon the exercise of an Option shall be made in cash, by certified
check payable to the order of the Sponsor, or, at the election of the Optionee
and as the Committee may, in its sole discretion, approve, by surrendering
Shares with an aggregate Fair Market Value equal to the aggregate option price,
or by delivering such combination of Shares and cash as the Committee
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may, in its sole discretion, approve; provided, however, that Shares may be
------------------
surrendered in satisfaction of the option price only if the Optionee certifies
in writing to the Sponsor that the Optionee owns a number of Other Available
Shares as of the date the Option is exercised that is at least equal to the
number of Shares to be surrendered in satisfaction of the Option Price; provided
--------
further, however, that the option price may not be paid in Shares if the
- --------
Committee determines that such method of payment would result in liability under
section 16(b) of the 1934 Act to an Optionee. Except as otherwise provided by
the Committee, if payment is made in whole or in part in Shares, the Optionee
shall deliver to the Sponsor certificates registered in the name of such
Optionee representing Shares legally and beneficially owned by such Optionee,
free of all liens, claims and encumbrances of every kind and having a Fair
Market Value on the date of delivery that is not greater than the option price
accompanied by stock powers duly endorsed in blank by the record holder of the
Shares represented by such certificates. If the Committee, in its sole
discretion, should refuse to accept Shares in payment of the option price, any
certificates representing Shares which were delivered to the Sponsor shall be
returned to the Optionee with notice of the refusal of the Committee to accept
such Shares in payment of the option price. The Committee may impose such
limitations and prohibitions on the use of Shares to exercise an Option as it
deems appropriate.
(e) Issuance of Certificate Upon Exercise of Options; Payment of Cash.
------------------------------------------------------------------
Only whole Shares shall be issuable upon exercise of Options granted under this
Paragraph 8. Any right to a fractional Share shall be satisfied in cash. Upon
satisfaction of the conditions of Paragraph 10, a certificate for the number of
whole Shares and a check for the Fair Market Value on the date of exercise of
any fractional Share to which the Optionee is entitled shall be delivered to
such Optionee by the Sponsor.
(f) Periods of Exercise of Options. An Option granted under this
------------------------------
Paragraph 8 shall not be exercisable for six months after the Date of Grant, and
shall then be exercisable in its entirety. No Option shall first become
exercisable following an Optionee's termination of service as a Non-Employee
Director for any reason other than the Non-Employee Director's termination of
service because of the Non-Employee Director's death, Disability or attainment
of mandatory retirement age under any mandatory retirement policy established by
the Board as in effect from time to time ("Mandatory Retirement"). All Options
granted to a Non-Employee Director shall become immediately exercisable in full
upon an Optionee's termination of service as a Non-Employee Director because of
death, Disability or Mandatory Retirement; provided further, that the following
-----------------
rules shall apply to all Options previously granted under the Plan to Non-
Employee Directors that are outstanding as of June 5, 2001, and to all Options
granted under the Plan to Non-Employee Directors after June 5, 2001:
(i) In the event that an Optionee terminates service as a Non-
Employee Director for any reason other than the Disability or Mandatory
Retirement of the Optionee, death or Cause, any Option held by such Optionee and
which is then exercisable shall continue to be exercisable for a period of 90
days following the date the Optionee terminates service as a Non-Employee
Director; provided, however, that in no event shall an Option be exercisable
-------- -------
after the day before the fifth anniversary of the Date of Grant.
(ii) In the event that an Optionee terminates service as a
Non-Employee Director due to the Disability, death or Mandatory Retirement of
the Optionee, any
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Option held by such Optionee and which is then exercisable shall continue to be
exercisable by the Optionee or, in the case of the Optionee's death, by the
person to whom the rights of the Optionee shall have passed by will or by the
laws of descent and distribution until the day before the fifth anniversary of
the Date of Grant.
(iii) In the event that an Optionee's service as a Non-Employee
Director is terminated for Cause, each unexercised Option shall terminate and
cease to be exercisable; provided further, that in such event, in addition to
-----------------
immediate termination of the Option, the Optionee shall automatically forfeit
all Shares otherwise subject to delivery upon exercise of an Option but for
which the Sponsor has not yet delivered the Share certificates, upon refund by
the Sponsor of the option price.
(g) Date of Exercise. The date of exercise of an Option granted under
----------------
this Paragraph 8 shall be the date on which written notice of exercise,
addressed to the Sponsor at its main office to the attention of its Secretary,
is hand delivered, telecopied or mailed first class postage prepaid; provided,
---------
however, that the Sponsor shall not be obligated to deliver any certificates for
- --------
Shares pursuant to the exercise of an Option until the Optionee shall have made
payment in full of the option price for such Shares. Each such exercise shall be
irrevocable when given. Each notice of exercise must (i) specify the Option
being exercised; and (ii) include a statement as to the manner in which payment
to the Sponsor shall be made (Shares or cash or a combination of Shares and
cash). Each notice of exercise shall also comply with the requirements of
Paragraph 15.
(h) Type of Shares. Each Option granted under this Paragraph 8 shall
--------------
be an Option to purchase Shares of the Company's Class A Special Common Stock,
par value, $1.00.
9. Limitation on Exercise of Incentive Stock Options.
The aggregate Fair Market Value (determined as of the time Options are
granted) of the Shares with respect to which Incentive Stock Options may first
become exercisable by an Optionee in any one calendar year under the Plan and
any other plan of the Company shall not exceed $100,000. The limitations imposed
by this Paragraph 9 shall apply only to Incentive Stock Options granted under
the Plan, and not to any other options or stock appreciation rights. In the
event an individual receives an Option intended to be an Incentive Stock Option
which is subsequently determined to have exceeded the limitation set forth
above, or if an individual receives Options that first become exercisable in a
calendar year (whether pursuant to the terms of an option document, acceleration
of exercisability or other change in the terms and conditions of exercise or any
other reason) that have an aggregate Fair Market Value (determined as of the
time the Options are granted) that exceeds the limitations set forth above, the
Options in excess of the limitation shall be treated as Non-Qualified Options.
10. Rights as Shareholders
An Optionee shall not have any right as a shareholder with respect to any
Shares subject to his Options until the Option shall have been exercised in
accordance with the terms of the Plan and the option document and the Optionee
shall have paid the full purchase price for the
-13-
number of Shares in respect of which the Option was exercised and the Optionee
shall have made arrangements acceptable to the Sponsor for the payment of
applicable taxes consistent with Paragraph 16.
11. Changes in Capitalization
(a) Except as provided in Paragraph 11(b), in the event that Shares
are changed into or exchanged for a different number or kind of shares of stock
or other securities of the Sponsor, whether through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split-up or other
substitution of securities of the Sponsor, the Board shall make appropriate
equitable anti-dilution adjustments to the number and class of shares of stock
available for issuance under the Plan, and subject to outstanding Options, and
to the option prices and the amounts payable pursuant to any Cash Rights. Any
reference to the option price in the Plan and in option documents shall be a
reference to the option price as so adjusted. Any reference to the term "Shares"
in the Plan and in option documents shall be a reference to the appropriate
number and class of shares of stock available for issuance under the Plan, as
adjusted pursuant to this Paragraph 11. The Board's adjustment shall be
effective and binding for all purposes of this Plan.
(b) Paragraph 11(a) shall not apply to the number of Shares that
become subject to the grant of Options under Paragraph 8(a). Paragraph 11(a)
shall apply for the purpose of making appropriate equitable anti-dilution
adjustments to Options granted pursuant to Paragraph 8(a) before the effective
date of the relevant event giving rise to the adjustment under Paragraph 11(a).
12. Terminating Events
(a) The Sponsor shall give Optionees at least thirty (30) days' notice
(or, if not practicable, such shorter notice as may be reasonably practicable)
prior to the anticipated date of the consummation of a Terminating Event. Upon
receipt of such notice, and for a period of ten (10) days thereafter (or such
shorter period as the Board shall reasonably determine and so notify the
Optionees), each Optionee shall be permitted to exercise the Option to the
extent the Option is then exercisable; provided that, the Sponsor may, by
--------------
similar notice, require the Optionee to exercise the Option, to the extent the
Option is then exercisable, or to forfeit the Option (or portion thereof, as
applicable). The Committee may, in its discretion, provide that upon the
Optionee's receipt of the notice of a Terminating Event under this Paragraph
12(a), the entire number of Shares covered by Options shall become immediately
exercisable.
(b) Notwithstanding Paragraph 12(a), in the event the Terminating
Event is not consummated, the Option shall be deemed not to have been exercised
and shall be exercisable thereafter to the extent it would have been exercisable
if no such notice had been given.
13. Interpretation
The Committee shall have the power to interpret the Plan and to make and
amend rules for putting it into effect and administering it. It is intended that
the Incentive Stock Options
-14-
granted under the Plan shall constitute incentive stock options within the
meaning of section 422 of the Code, and that Shares transferred pursuant to the
exercise of Non-Qualified Options shall constitute property subject to federal
income tax pursuant to the provisions of section 83 of the Code. The provisions
of the Plan shall be interpreted and applied insofar as possible to carry out
such intent.
14. Amendments
The Board or the Committee may amend the Plan from time to time in such
manner as it may deem advisable. Nevertheless, neither the Board nor the
Committee may, without obtaining approval within twelve months before or after
such action by such vote of shareholders as may be required by Pennsylvania law
for any action requiring shareholder approval, or by a majority of votes cast at
a duly held shareholders' meeting at which a majority of all voting stock is
present and voting on such amendment, either in person or in proxy (but not, in
any event, less than the vote required pursuant to Rule 16b-3(b) under the 1934
Act) change the class of individuals eligible to receive an Incentive Stock
Option, extend the expiration date of the Plan, decrease the minimum option
price of an Incentive Stock Option granted under the Plan or increase the
maximum number of shares as to which Options may be granted, except as provided
in Paragraph 11 hereof. In addition, the provisions of Paragraph 8 that
determine (i) which directors shall be granted Options; (ii) the number of
Shares subject to Options; (iii) the option price of Shares subject to Options;
and (iv) the timing of grants of Options shall not be amended more than once
every six months, other than to comport with changes in the Code or the Employee
Retirement Income Security Act of 1974, as amended, if applicable. No
outstanding Option shall be affected by any such amendment without the written
consent of the Optionee or other person then entitled to exercise such Option.
15. Securities Law
(a) In General. The Committee shall have the power to make each grant
----------
under the Plan subject to such conditions as it deems necessary or appropriate
to comply with the then-existing requirements of the 1933 Act or the 1934 Act,
including Rule 16b-3 (or any similar rule) of the Securities and Exchange
Commission.
(b) Acknowledgment of Securities Law Restrictions on Exercise. To the
---------------------------------------------------------
extent required by the Committee, unless the Shares subject to the Option are
covered by a then current registration statement or a Notification under
Regulation A under the 1933 Act, each notice of exercise of an Option shall
contain the Optionee's acknowledgment in form and substance satisfactory to the
Committee that:
(i) the Shares subject to the Option are being purchased for
investment and not for distribution or resale (other than a distribution or
resale which, in the opinion of counsel satisfactory to the Sponsor, may be made
without violating the registration provisions of the Act);
(ii) the Optionee has been advised and understands that (A) the
Shares subject to the Option have not been registered under the 1933 Act and are
"restricted securities" within the meaning of Rule 144 under the 1933 Act and
are subject to restrictions on
-15-
transfer and (B) the Sponsor is under no obligation to register the Shares
subject to the Option under the 1933 Act or to take any action which would make
available to the Optionee any exemption from such registration;
(iii) the certificate evidencing the Shares may bear a restrictive
legend; and
(iv) the Shares subject to the Option may not be transferred
without compliance with all applicable federal and state securities laws.
(c) Delay of Exercise Pending Registration of Securities.
----------------------------------------------------
Notwithstanding any provision in the Plan or an option document to the contrary,
if the Committee determines, in its sole discretion, that issuance of Shares
pursuant to the exercise of an Option should be delayed pending registration or
qualification under federal or state securities laws or the receipt of a legal
opinion that an appropriate exemption from the application of federal or state
securities laws is available, the Committee may defer exercise of any Option
until such Shares are appropriately registered or qualified or an appropriate
legal opinion has been received, as applicable.
16. Withholding of Taxes on Exercise of Option
(a) Whenever the Company proposes or is required to deliver or
transfer Shares in connection with the exercise of an Option, the Company shall
have the right to (i) require the recipient to remit to the Sponsor an amount
sufficient to satisfy any federal, state and local withholding tax requirements
prior to the delivery or transfer of any certificate or certificates for such
Shares or (ii) take any action whatever that it deems necessary to protect its
interests with respect to tax liabilities. The Sponsor's obligation to make any
delivery or transfer of Shares on the exercise of an Option shall be conditioned
on the recipient's compliance, to the Sponsor's satisfaction, with any
withholding requirement. In addition, if the Committee grants Options or amends
option documents to permit Options to be transferred during the life of the
Optionee, the Committee may include in such option documents such provisions as
it determines are necessary or appropriate to permit the Company to deduct
compensation expenses recognized upon exercise of such Options for federal or
state income tax purposes.
(b) Except as otherwise provided in this Paragraph 16(b), any tax
liabilities incurred in connection with the exercise of an Option under the Plan
other than an Incentive Stock Option shall be satisfied by the Sponsor's
withholding a portion of the Shares underlying the Option exercised having a
Fair Market Value approximately equal to the minimum amount of taxes required to
be withheld by the Sponsor under applicable law, unless otherwise determined by
the Committee with respect to any Optionee. Notwithstanding the foregoing, the
Committee may permit an Optionee to elect one or both of the following: (i) to
have taxes withheld in excess of the minimum amount required to be withheld by
the Sponsor under applicable law; provided that the Optionee certifies in
writing to the Sponsor that the Optionee owns a number of Other Available Shares
having a Fair Market Value that is at least equal to the Fair Market Value of
Option Shares to be withheld by the Company for the then-current exercise on
account of withheld taxes in excess of such minimum amount, and (ii) to pay to
the Sponsor in cash all or a portion of the taxes to be withheld upon the
exercise of an Option.
-16-
In all cases, the Shares so withheld by the Company shall have a Fair Market
Value that does not exceed the amount of taxes to be withheld minus the cash
payment, if any, made by the Optionee. Any election pursuant to this Paragraph
16(b) must be in writing made prior to the date specified by the Committee, and
in any event prior to the date the amount of tax to be withheld or paid is
determined. An election pursuant to this Paragraph 16(b) may be made only by an
Optionee or, in the event of the Optionee's death, by the Optionee's legal
representative. No Shares withheld pursuant to this Paragraph 16(b) shall be
available for subsequent grants under the Plan. The Committee may add such other
requirements and limitations regarding elections pursuant to this Paragraph
16(b) as it deems appropriate.
(c) Except as otherwise provided in this Paragraph 16(c), any tax
liabilities incurred in connection with the exercise of an Incentive Stock
Option under the Plan shall be satisfied by the Optionee's payment to the
Sponsor in cash all of the taxes to be withheld upon exercise of the Incentive
Stock Option. Notwithstanding the foregoing, the Committee may permit an
Optionee to elect to have the Sponsor withhold a portion of the Shares
underlying the Incentive Stock Option exercised having a Fair Market Value
approximately equal to the minimum amount of taxes required to be withheld by
the Sponsor under applicable law. Any election pursuant to this Paragraph 16(c)
must be in writing made prior to the date specified by the Committee, and in any
event prior to the date the amount of tax to be withheld or paid is determined.
An election pursuant to this Paragraph 16(c) may be made only by an Optionee or,
in the event of the Optionee's death, by the Optionee's legal representative. No
Shares withheld pursuant to this Paragraph 16(c) shall be available for
subsequent grants under the Plan. The Committee may add such other requirements
and limitations regarding elections pursuant to this Paragraph 16(c) as it deems
appropriate.
17. Effective Date and Term of Plan
This amendment and restatement of the Plan is effective as of April 29,
2002. The Plan shall expire no later than March 13, 2006, the tenth anniversary
of the date the Plan was initially adopted by the Board, unless sooner
terminated by the Board.
18. General
Each Option shall be evidenced by a written instrument containing such
terms and conditions not inconsistent with the Plan as the Committee may
determine. The issuance of Shares on the exercise of an Option shall be subject
to all of the applicable requirements of the corporation law of the Sponsor's
state of incorporation and other applicable laws, including federal or state
securities laws, and all Shares issued under the Plan shall be subject to the
terms and restrictions contained in the Articles of Incorporation and By-Laws of
the Sponsor, as amended from time to time.
-17-
Executed as of the 29th day of April, 2002.
COMCAST CORPORATION
By: /s/ Stanley Wang
--------------------------------
Attest: /s/ Arthur R. Block
----------------------------
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