INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
PURPOSE OF INFORMATION STATEMENT
This Information Statement advises stockholders of Altice USA, Inc. ("
Altice USA
" or the
"
Company
") of actions taken by written consent (the "
Stockholder Written Consent
") of Next Alt
S.à r.l. ("
Next Alt
"). Next Alt holds a majority of the aggregate voting power of all outstanding shares of capital stock of the Company
entitled as of October 31, 2018, the date established by our Board of Directors (the "
Board
") as the record date (the
"
Record Date
"), to vote in general meetings.
GENERAL OVERVIEW OF ACTIONS
On November 2, 2018, our Board approved an amendment to our 2017 Long Term Incentive Plan (the
"
Plan
"), which was subsequently approved by our stockholders holding a majority of the voting power of our capital stock by written consent on
November 15, 2018. The written consent approved the adoption of the amendment to the Plan, which increases the maximum aggregate number of shares of our Class A common stock, par value
$0.01 per share (the "
Shares
"), that may be issued for all purposes under the Plan, by 10,000,000 shares from 9,879,291 to 19,879,291 shares (the
"
Amendment
"). The action taken by the Board with respect to the approval of the Amendment was subsequently approved on November 15, 2018 by our
stockholders holding approximately 83.7% of the total voting power of the outstanding capital stock of Altice USA as of the Record Date. The full text of the Amendment is attached to this Information
Statement as Exhibit A.
REASONS FOR AND GENERAL EFFECT OF THE AMENDMENT
In reviewing our compensation practices, including in light of various evolving market practices, as well as to enhance the Company's
flexibility to make awards, our Board determined to make the above change to the Plan. In addition, the Amendment increasing the number
of Shares authorized for issuance under the Plan ensures our ability to continue to grant stock options and other awards, which are vital to our ability to attract and retain outstanding and highly
skilled individuals in the extremely competitive labor markets in which we must compete. Our employees are valued assets, and such awards are crucial to our ability to motivate individuals in our
service to achieve our goals.
All
necessary corporate approvals in connection with the amendment of our Plan to effect the Amendment have been obtained. This Information Statement is furnished solely for the purpose
of informing our stockholders, in the manner required under the Exchange Act and the DGCL, of this corporate action. Pursuant to Rule 14c-2 under the Exchange Act, the actions described herein
will not be effective until 20 days after the date this definitive Information Statement is filed with the Securities and Exchange Commission and a copy thereof is mailed to each of our
stockholders as of the Record Date. Therefore, this Information Statement is being sent to you for informational purposes only.
Summary of the Plan
The following summary of the principal features of the Plan included in this Information Statement is qualified in its entirety by reference to
the full text of the Plan, which is incorporated by reference into this Information Statement. Other than the proposed amendments to the number of Shares available under the Plan, the terms of the
Plan remain unchanged. Capitalized terms not defined in this summary shall have the meaning given in the Plan.
1
Background and Purpose of the Plan
The Plan is intended to promote our long-term success and to increase shareholder value by providing officers, employees and consultants of the
Company and any of its affiliates with incentives to contribute to our long-term growth and profitability, and to assist us in attracting and retaining the best available officers, employees and
consultants for positions of substantial responsibility. The increase in authorized Shares under the Amendment will enable us to continue to be able to make awards thereunder.
Eligibility and Administration
Awards may be granted to officers, employees and consultants, including all of our approximately 12,105 employees and seven non-executive
directors, as of November 5, 2018. The Plan will be administered by our Board, or if delegated by the Board, the Compensation Committee (the
"
Committee
") of the Board or any other committee appointed from time to time by the Board to administer the Plan, subject to the provision of the
stockholders' agreement that requires prior written approval of Next Alt for the establishment and modification of certain remuneration arrangements. The Plan is currently being administered by the
Committee.
Except
to the extent not prohibited by applicable laws, rules and regulations, the Committee may, from time to time, delegate some or all of its authority under the Plan to a
subcommittee or subcommittees thereof or other persons or groups of persons as it deems necessary, appropriate or advisable under such conditions or limitations as it may set at the time of such
delegation or thereafter. But only the Committee itself can make awards to participants who are the Company's executive officers or directors.
Subject
to applicable law, the terms of the Plan and the stockholders' agreement, the Committee has full power and authority to, among other things, select eligible participants, to
grant awards in accordance with the Plan, to determine the number of Shares subject to each award or the cash amount payable in connection with an award and determine the terms and conditions of each
award, including, without limitation, those related to term, permissible methods of exercise, vesting, cancellation, forfeiture, payment, settlement, exercisability, performance periods, performance
targets, and the effect or occurrence, if any, of a participant's termination of employment, separation from service or leave of absence with the Company, or any of its affiliates or of a change of
control.
Authorized Shares
The maximum aggregate number of Shares currently authorized pursuant to the Plan is 9,879,291 Shares. Upon the effectiveness of the Amendment,
the aggregate number of Shares that may be issued pursuant to awards under the Plan shall increase to 19,879,291 Shares. Shares issued pursuant to awards under the Plan may be either authorized and
unissued Shares, Shares held by the Company in its treasury, or a combination thereof. As of November 5, 2018, options to purchase 7,196,322 Shares were outstanding, 2,682,969 Shares remained
available for grant, and no options had been exercised. As of November 5, 2018, the outstanding options were exercisable at a per share exercise price ranging from $16.775 to $20.375, or a
weighted average per share exercise price of $17.50.
The
number of Shares remaining available for issuance shall be reduced by the number of Shares subject to outstanding awards and, for awards that are not denominated by Shares, by the
number of Shares actually delivered upon settlement or payment of the award. For purposes of determining the number of Shares that remain available for issuance under the Plan, the number of Shares
corresponding to awards under the Plan that are forfeited or cancelled or otherwise expire for any reason without having been exercised or settled or that are settled through the issuance of
consideration other than Shares (including, without limitation, cash) will be added back to the Shares available for the grant of awards;
provided
,
however
,
that this provision will not be applicable with
2
respect
to (i) the cancellation of a stock appreciation right granted in tandem with an option upon the exercise of the option or (ii) the cancellation of an option granted in tandem
with a stock appreciation right upon the exercise of the stock appreciation right. In addition, (i) the number of Shares that are tendered by a participant or withheld by the Company to pay the
exercise price of an award or to satisfy the tax withholding obligations in connection with the vesting, exercise or settlement of an award and (ii) the number of Shares subject to an option or
stock appreciation right but not issued or delivered as a result of the net settlement of such option or stock appreciation right will be added back to the Shares available for the grant of awards. No
participant may be granted under the Plan in any fiscal year awards covering more than the number of Shares equal to 50% of the maximum Shares that may be issued under the Plan.
Awards
Awards under the Plan may consist of options, restricted shares, restricted share units, stock appreciation rights, performance stock,
performance stock units and other awards. Any award may be granted singly or in combination or tandem with any other award, as the Committee may determine. The Committee will set the vesting criteria
applicable to each award, which, depending on the extent to which the criteria are met, will determine the extent to which the award becomes exercisable or the number of Shares or the amount of cash
that will be distributed or paid out to the participant with respect to the award. The Committee may set vesting criteria based upon the achievement of specified Company-wide, business unit, or
individual goals (including, but not limited to, continued employment or provision of services), or any other basis determined by the Committee in its discretion. The terms and conditions of each
award will be set forth in an award document in a form approved by the Committee. The award document will contain terms and conditions not inconsistent with the Plan. The Committee may at any time
following grant (i) accelerate the vesting, exercisability, lapse of restrictions, settlement or payment of any award, (ii) eliminate the restrictions and conditions applicable to an
award or (iii) extend the post-termination exercise period of an outstanding award (subject to the limitations of Section 409A of the Internal Revenue Code).
The
Committee may, upon the earning and vesting of an outstanding award, provide participants with the right to receive dividends or payments equivalent to dividends or interest with
respect to such award, which payments can either be paid currently or deemed to have been reinvested in Shares (to the extent compliant with applicable laws, including Section 409A of the
Internal Revenue Code), and can be made in Shares, cash or a combination thereof, as the Committee may determine. No dividends or dividend equivalents will be paid with respect to options or stock
appreciation rights. In the event of a stock split, reverse stock split, stock dividend, recapitalization, reorganization, partial or complete liquidation, reclassification, merger, consolidation,
separation, extraordinary stock or cash dividend, split-up, spin-off, combination, exchange of Shares, warrants or rights offering to purchase Shares at a price substantially below fair market value,
or any other corporate event or distribution of stock or property of the Company affecting the Shares in order to preserve, but not increase, the benefits or potential benefits intended to be made
available under the Plan, the Committee will adjust the number and kind of Shares authorized for issuance and the number and kind of Shares subject to any outstanding award and the exercise price per
share, if any, under any outstanding award, as the Committee deems necessary, in order to preserve the benefits or potential benefits intended to be made available to participants.
Stock Options
A
stock option is the right to acquire Shares at a fixed exercise price for a fixed period of time. Under the Plan, the Committee may grant nonqualified stock options
and/or incentive stock options pursuant to stock option agreements. The Committee will determine the number of Shares covered by each option.
3
The
exercise price of the Shares subject to each option is set by the Committee but generally cannot be less than 100% of the fair market value on the date of grant. Currently, the
Committee has determined that the fair market value for purposes of the Plan is calculated based on the volume weighted average trading price of a share of Class A common stock of the Company
on the New York Stock Exchange as reported on by the New York Stock Exchange (or, if not so reported, as reported by a successor reporting service selected by the Company) for the 30-day period
immediately preceding the grant date of any award granted under the Plan. Stock options granted under the Plan will vest at the rate specified in the stock option agreements. A stock option granted
under the Plan generally cannot be exercised until it becomes vested. The Committee establishes the vesting schedule of each stock option at the time of grant. The exercise price per Share of an
incentive stock option will be fixed by the Committee at the time of grant or will be determined by a method specified by the Committee at the time of grant. No incentive stock option may be issued to
any individual who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, unless
(i) the exercise price is at least 110% of the fair market value
on the date of grant of the Shares subject to such incentive stock option and (ii) the incentive stock option is not exercisable more than five years from the date of grant. The aggregate fair
market value of the Shares, determined on the grant date, covered by incentive stock options, which first become exercisable by any participant during any calendar year, may not exceed $100,000. Any
grants in excess of this limit shall be treated as nonqualified stock options. Additionally, the Committee may grant nonqualified stock options that contain an "early exercise" feature that provides a
participant with the right (but not the obligation) to immediately exercise such portion of the stock option for Shares that will be subject to the same vesting schedule as the underlying stock
option.
The
exercise price of the Shares subject to each option may be paid, among other means, in cash or cash equivalents, by actual delivery or attestation to ownership of freely transferable
Shares already owned by the person exercising the stock option, a combination of cash and Shares equal in value to the exercise price, through net share settlement or similar procedure involving the
withholding of Shares subject to the stock option with a value equal to the exercise price, or by such other means as the Committee may authorize. The Committee may provide that in-the-money stock
options will be exercised automatically, with no action required on the part of a participant, using a net share settlement or similar procedure immediately (or shortly) before their scheduled
expiration date where participants are precluded from using other methods of exercise due to legal restrictions or company policy (including policies on trading in Shares).
Stock Appreciation Rights
Stock
appreciation rights are granted pursuant to stock appreciation grant agreements adopted by the Committee. The Committee may grant stock appreciation rights in
tandem with options or as stand-alone awards. Each stock appreciation right is subject to the terms, conditions and restrictions set forth in the Plan and established by the Committee and as set forth
in the applicable award document, including the per share grant price of the stock appreciation right, which generally cannot be less than 100% of the fair market value of our common stock on the date
of grant. An award of a stock appreciation right entitles a participant to receive, upon satisfaction of the conditions to payment specified in the applicable award document, an amount equal to the
excess, if any, of the fair market value of a Share on the exercise date of the number of Shares for which the stock appreciation right is exercised over the per share grant price for such stock
appreciation right specified in the applicable award document. Payments to a participant upon exercise of a stock appreciation right may be made in cash or Shares, as determined by the Committee on or
following the date of grant. The Committee may provide that in-the-money stock appreciation rights will be exercised automatically, with no action required on the part of a participant, immediately
(or shortly) before their scheduled expiration date where participants are precluded from otherwise exercising such stock appreciation rights due to legal restrictions or Company policy (including
policies on trading in Shares).
4
Restricted Shares and Restricted Share Units
Restricted
share awards are granted pursuant to restricted share award agreements adopted by the Committee. An award of restricted shares consists of one or more Shares
granted or sold to a participant, and is subject to the terms, conditions and restrictions set forth in the Plan and established by the Committee as specified in the applicable award document.
Restricted shares may, among other things, be subject to restrictions on transferability, vesting requirements or other specified circumstances under which it may be canceled.
Restricted
share units are granted pursuant to restricted share units agreements adopted by the Committee. Restricted share units represent a promise to deliver Shares, or an amount of
cash or property equal to the underlying Shares, at a future date. A restricted share unit entitles a participant to receive, subject to the terms, conditions and restrictions set forth in the Plan
and the applicable award document, one or more Shares. Restricted share units may, among other things, be subject to restrictions on transferability, vesting requirements or other specified
circumstances under which they may be canceled. If and when the cancellation provisions lapse, the restricted share units will be settled by the delivery of Shares or, at the sole discretion of the
Committee, cash, or a combination of cash and Shares, with a value equal to the fair market value of the Shares at the time of payment.
Performance Stock and Performance Stock Units
The
Committee may grant performance stock or performance stock units to participants. An award of performance stock or performance stock units consists of, or
represents a right to receive, a target amount of Shares granted to participants based on the achievement of performance goals selected by the Committee, in its discretion, over the applicable
performance period, and is subject to the terms, conditions and restrictions set forth in the Plan and established by the Committee in connection with the award and specified in the applicable award
document. Payments to a participant in settlement of an award of performance stock or performance stock units may be made in cash or Shares, as determined by the Committee on or following the date of
grant.
Other Awards
The
Committee has the authority to establish the terms and provisions of other forms of awards that the Committee determines to be consistent with the purpose of the
Plan and the
interests of the Company. Such awards may be made subject to restrictions on transfer, vesting requirements or cancellation under specified circumstances.
Change in Control
In the event of a "change in control," the Committee, in its sole discretion, may take any action it deems necessary or desirable with respect
to any award that is outstanding, including, without limitation: (a) the acceleration of the vesting, settlement and/or exercisability of an award; (b) the payment of a cash amount in
exchange for the cancellation of an award; (c) the cancellation of options and/or stock appreciation rights without the payment of consideration therefor if the exercise price of such options
and/or stock appreciation rights equals or exceeds the price paid for a share in connection with the "change in control"; and/or (d) the issuance of substitute awards that substantially
preserve the value, rights and benefits of any affected awards.
Limited Transferability of Awards
A participant's rights and interests under the Plan, including any award previously made to such participant or any amounts payable under the
Plan may not be assigned, pledged, or transferred, except, in the event of the participant's death, to a designated beneficiary in accordance with the Plan, or in the absence of such designation, by
will or the laws of descent or distribution or, except in the
5
case
of an incentive stock option, pursuant to a domestic relations order. The Committee may, subject to applicable laws, rules and regulations and such terms and conditions as it shall specify,
permit the transfer of an award, other than an incentive stock option, for no consideration to a permitted transferee.
Amendment and Termination of the Plan
The Board may at any time terminate or, from time to time, amend, modify or suspend the Plan. No termination, amendment, modification or
suspension will be effective without the approval of our stockholders if such approval is required under applicable laws, rules and regulations, including the rules of the NYSE and such other
securities exchanges, if any, as may be designated by the Board from time to time. The Board has broad authority to amend the Plan or any Award under the Plan without the consent of a participant to
the extent it deems necessary or desirable, including to comply with, or take into account changes in, or interpretations of, applicable tax laws, securities laws, employment laws, accounting rules
and other applicable laws, rules and regulations, including without limitation, to avoid, in the reasonable, good faith judgment of the Company, the imposition on any participant of any tax, interest
or penalty under Section 409A of the Internal Revenue Code, or to take into account unusual or nonrecurring events or market conditions (including, without limitation, events that affect
changes in capitalization).
Summary of U.S. Federal Income Tax Consequences
The following summary of tax consequences to the Company and to Plan participants is not intended to be used as tax guidance to participants in
the Plan. It relates only to U.S. federal income tax and does not address state, local or foreign income tax rules or other U.S. tax provisions, such as estate or gift taxes. Different tax rules may
apply to specific participants and transactions under the Plan, particularly in jurisdictions outside the United States. In addition, this summary is as of the date of this prospectus; federal income
tax laws and regulations are frequently revised and may be changed again at any time. Therefore, each participant is urged to consult a tax advisor before exercising any award or before disposing of
any shares acquired under the Plan.
-
-
Stock Options and Stock Appreciation Rights.
The grant of an option or
stock appreciation right will create no tax consequences for the participant or the Company. A participant will have no taxable income upon exercise of an incentive stock option, except that the
alternative minimum tax may apply. Upon exercise of an option other than an incentive stock option, a participant generally must recognize ordinary income equal to the fair market value of the shares
acquired minus the exercise price. When disposing of shares acquired by exercise of an incentive stock option before the end of the statutory incentive stock option holding periods, the participant
generally must recognize ordinary income equal to the lesser of (i) the fair market value of the shares at the date of exercise minus the exercise price or (ii) the amount realized upon
the disposition of the shares minus the exercise price. Otherwise, a participant's disposition of shares acquired upon the exercise of an option (including an incentive stock option for which the
incentive stock option holding periods are met) generally will result in only capital gain or loss.
-
-
Other Awards.
Other awards under the Plan generally will result in ordinary
income to the participant at the later of the time of delivery of cash, shares, or other awards, or the time that the risk of forfeiture lapses.
-
-
Company Deduction.
The Company is generally entitled to a tax deduction
equal to the amount recognized as ordinary income by the participant in connection with options, stock appreciation rights or other awards, but not for amounts (i) the participant recognizes as
capital gain and (ii) over $1 million paid to certain "covered employees" under 162(m), except for grandfathered arrangements under Section 162(m). Thus, the Company will not be
entitled to any tax
6
Changes in Capitalization
In the event of certain specified changes in capitalization set forth in the Plan, the number and kind of shares of Class A common stock
authorized for issuance under the Plan and the individual limits will be equitably adjusted in the manner deemed necessary by the Committee to preserve, but not increase, the benefits or potential
benefits intended to be made available under the Plan. Unless otherwise determined by the Committee, such adjusted awards will be subject to the same restrictions and vesting or settlement schedules
to which the underlying awards are subject (subject to the limitations of Section 409A of the Internal Revenue Code).
New Plan Benefits
The Committee has not made any determination to make future grants to any participants under the Plan as of the date of this Information
Statement. As such, new benefits that will be awarded or paid under the Plan are not currently determinable.
VOTES REQUIRED
Our Board is not soliciting your consent or your proxy in connection with this action, and no consents or proxies are being requested from
stockholders. The vote which was required to approve and adopt the Amendment was the affirmative vote of the holders of a majority of the aggregate voting power of all outstanding shares of capital
stock of the Company entitled as of the Record Date to vote generally in an election of directors.
Holders
of our Class A common stock are entitled to one vote per share of Class A common stock. Holders of our Class B common stock are entitled to 25 votes per
share of Class B common stock.
Section 228
of the Delaware General Corporation Law and Article VIII, Section (3) of the Existing Charter provide that stockholders of the Company may act by written
consent without a meeting if such stockholders hold the number of shares representing not less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting
at which all shares entitled to vote thereon were present and voted.
As
of the close of business on the Record Date, the Company had 502,612,620 shares of our Class A common stock and 213,038,953 shares of our Class B common stock
outstanding. Of those shares, 116,285,288 shares of Class A common stock and 190,564,792 shares of Class B common stock, representing 42.9% of the total outstanding capital stock and
83.7% of the total voting power of the outstanding capital stock, approved and adopted the Amendment pursuant to the Stockholder Written Consent.
7
SECURITY AUTHORIZED FOR ISSUANCE UNDER THE PLAN
The following table sets forth certain information as of December 31, 2017 with respect to the Plan.
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options (A)
|
|
Weighted-Average
Exercise Price of
Outstanding
Options (B)
|
|
Number of Securities
Remaining Available for
Future issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected on
Column (A))(1)
|
|
Equity compensation plans approved by stockholders:
|
|
|
|
|
|
|
|
|
|
|
2017 Long Term Incentive Plan
|
|
|
5,110,747
|
|
$
|
17.45
|
|
|
4,768,544
|
|
Equity compensation plans not approved by stockholders:
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
5,110,747
|
|
$
|
17.45
|
|
|
4,768,544
|
|
-
(1)
-
This
Information Statement provides for an additional increase of shares from 9,879,291 to 19,879,291 shares, which increase is not reflected in the above table.