☐ |
Preliminary Proxy Statement | |
☐ |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ |
Definitive Proxy Statement | |
☐ |
Definitive Additional Materials | |
☐ |
Soliciting Material under §240.14a-12 | |
☒ |
No fee required | |
☐ |
Fee paid previously with preliminary materials. | |
☐ |
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
JAMES L. DOLAN
Executive Chairman and
Chief Executive Officer
Notice of Annual Meeting and
Proxy Statement
Dear Stockholder:
You are cordially invited to attend our annual meeting of stockholders, which will be conducted via live webcast on Friday, December 8, 2023 at 10:00 a.m. Eastern Time. You can attend the annual meeting via the internet by visiting www.virtualshareholdermeeting.com/SPHR2023. There is no in-person annual meeting this year for you to attend.
Information on how to vote, attend and ask questions during the annual meeting is described in the enclosed materials. Your vote is important to us.
Sincerely yours,
James L. Dolan
Executive Chairman and
Chief Executive Officer
October 25, 2023
SPHERE ENTERTAINMENT CO., TWO PENNSYLVANIA PLAZA, NEW YORK, NY 10121
PROXY STATEMENT
NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Sphere Entertainment Co.
The Annual Meeting of Stockholders of Sphere Entertainment Co. will be held on Friday, December 8, 2023, at 10:00 a.m. Eastern Time. You can attend the annual meeting via the internet, vote your shares electronically and submit your questions during the annual meeting, by visiting www.virtualshareholdermeeting.com/SPHR2023 (there is no physical location for the annual meeting). You will need to have your 16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials) to join the annual meeting. We encourage you to allow ample time for online check-in, which will begin at 9:45 a.m. Eastern Time. For further information on how to participate in the meeting please see General Information, “How do I attend, vote and ask questions during the 2023 annual meeting?”
The annual meeting will be held to consider and vote upon the following proposals:
| 1. | Election of directors. |
| 2. | Ratification of the appointment of our independent registered public accounting firm. |
| 3. | Approval of the Company’s 2020 Employee Stock Plan, as amended. |
| 4. | Approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended. |
| 5. | An advisory vote on the compensation of our named executive officers. |
| 6. | Conduct such other business as may be properly brought before the meeting. |
Only stockholders of record on October 16, 2023 may vote during the meeting.
Your vote is important to us. Even if you plan on participating in the annual meeting virtually, we recommend that you vote as soon as possible by telephone, by Internet or by signing, dating and returning the proxy card in the postage-paid envelope provided.
| By order of the Board of Directors, |
|
|
|
Mark C. Cresitello Secretary |
New York, New York
October 25, 2023
SPHERE ENTERTAINMENT CO., TWO PENNSYLVANIA PLAZA, NEW YORK, NY 10121
TABLE OF CONTENTS
| 1 | ||||
| 1 | ||||
| 1 | ||||
| 2 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 7 | ||||
| 7 | ||||
| 7 | ||||
| Questions and Answers You May Have About Our Annual Meeting and Voting |
8 | |||
| 14 | ||||
| 14 | ||||
| 14 | ||||
| 15 | ||||
| 15 | ||||
| Executive Sessions of Non-Management and Independent Board Members |
15 | |||
| 15 | ||||
| 16 | ||||
| 16 | ||||
| 16 | ||||
| 18 | ||||
| 18 | ||||
| 19 | ||||
| 19 | ||||
| 22 | ||||
| 25 | ||||
| Proposal 2 — Ratification of Appointment of Independent Registered Public Accounting Firm |
37 | |||
| 38 | ||||
| 38 | ||||
| 39 | ||||
| 40 | ||||
| 41 | ||||
| Compensation Disclosure Considerations Related to the MSGE Distribution |
41 | |||
| 42 | ||||
| 48 | ||||
| 52 | ||||
| 65 | ||||
| 66 | ||||
| 67 | ||||
| 68 | ||||
| 69 | ||||
| 72 | ||||
| 73 | ||||
| 73 |
- i -
| 73 | ||||
| 77 | ||||
| 79 | ||||
| 82 | ||||
| 83 | ||||
| 86 | ||||
| 86 | ||||
| 96 | ||||
| 104 | ||||
| 106 | ||||
| 107 | ||||
| Proposal 3 — Approval of the Company’s 2020 Employee Stock Plan, as amended |
114 | |||
| 121 | ||||
| 125 | ||||
| Proposal 5 — Non-Binding Advisory Vote On Named Executive Officer Compensation |
127 | |||
| 128 | ||||
| 130 | ||||
| 130 | ||||
| 138 | ||||
| 139 | ||||
| 140 | ||||
| 140 | ||||
| 142 | ||||
| 143 | ||||
| 144 | ||||
| 156 | ||||
| 156 | ||||
| Advance Notice of Proxy Holders and Qualified Representatives |
157 | |||
| 157 | ||||
| A-1 | ||||
| Annex B — 2020 Employee Stock Plan as amended through December 8, 2023 |
B-1 | |||
| Annex C — 2020 Stock Plan for Non-Employee Directors as amended through December 8, 2023 |
C-1 |
- ii -
PROXY STATEMENT SUMMARY
This summary highlights selected information in the proxy statement. Please review the entire proxy statement and our Annual Report on
Form 10-K for the fiscal year ended June 30, 2023 before voting.
VOTING ITEMS AND BOARD RECOMMENDATIONS
| Proposals | Board Recommendation | |||
| Proposal 1
|
Election of directors
|
FOR
| ||
| Proposal 2 |
Ratification of the appointment of our independent registered public accounting firm |
FOR | ||
| Proposal 3 |
Approval of the Company’s 2020 Employee Stock Plan, as amended |
FOR | ||
| Proposal 4 |
Approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended |
FOR | ||
| Proposal 5 |
An advisory vote on the compensation of our named executive officers |
FOR | ||
COMPANY OVERVIEW
Sphere Entertainment Co. (the “Company”) is a premier live entertainment and media company comprised of two reportable segments, Sphere and MSG Networks. Sphere is a next-generation entertainment medium, and MSG Networks operates two regional sports and entertainment networks, as well as a direct-to-consumer and authenticated streaming product.
| • | Sphere: This segment reflects Sphere, a next-generation entertainment medium powered by cutting-edge technologies that enables multi-sensory storytelling at an unparalleled scale. The Company’s first Sphere opened in Las Vegas in September 2023. The venue can accommodate up to 20,000 guests and will host a wide variety of events year-round, including The Sphere ExperienceTM, which features original immersive productions, as well as concerts and residencies from renowned artists, and marquee sporting and corporate events. Supporting this strategy is Sphere Studios, which is home to a team of creative, production, |
| technology and software experts who provide full in-house creative and production services. The studio campus in Burbank includes a 68,000-square-foot development facility, as well as Big Dome, a 28,000-square-foot, 100-foot high custom dome, with a quarter-sized version of the screen at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere. |
| • | MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its direct-to-consumer streaming product, MSG+. MSG Networks serves the New York Designated Market Area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the New York Knicks (the |
1
| “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”), New York Islanders (the “Islanders”), New Jersey Devils (the “Devils”) and Buffalo Sabres (the “Sabres”) |
| of the National Hockey League (the “NHL”), as well as significant coverage of the New York Giants (the “Giants”) and the Buffalo Bills (the “Bills”) of the National Football League (the “NFL”). |
CORPORATE GOVERNANCE AND BOARD PRACTICES
Our board of directors (the “Board”) has adopted Corporate Governance Guidelines (the “Governance Guidelines”) and other practices to promote the functioning of the Board and its
committees to serve the best interests of all our stockholders. The Governance Guidelines and our other governance documents provide a framework for our governance practices, including:
| ✓ |
Annual election of directors, with all directors elected to one-year terms
| |
| ✓ |
Board composition to include a broad range of skills, experience, industry knowledge, diversity of opinion and contacts relevant to the Company’s business, which serves the interests of the holders of both our Class A Common Stock and Class B Common Stock
| |
| ✓ |
Board self-assessments conducted at least annually to assess the mix of skills and experience that directors bring to the Board to facilitate an effective oversight function
| |
| ✓ |
Robust director nomination criteria to ensure a diversity of viewpoints, background and expertise in the boardroom
| |
| ✓ |
Regular executive sessions of independent directors | |
| ✓ |
Independent Board committees, with each of the Audit Committee and the Compensation Committee comprised 100% of independent directors | |
| ✓ |
Restricted stock units subject to holding requirement through end of service on the Board | |
APPROACH TO FOSTERING DIVERSITY AND INCLUSION
We aim to create an employee experience that fosters the Company’s culture of respect and inclusion. By welcoming the diverse perspectives and experiences of our employees, we all share in the creation of a more vibrant, unified, and engaging place to work.
Together with Madison Square Garden Entertainment Corp. (“MSGE”) and Madison Square Garden Sports Corp. (“MSGS”), we have furthered these objectives under our expanded Talent Management, Diversity and Inclusion (“DI”) function, including:
Workforce: Embedding Diversity and Inclusion through Talent Actions
| • | Created a common definition of “potential” and an objective potential assessment to |
| de-bias talent review conversations so employees have an opportunity to learn, grow and thrive. Implemented quarterly performance and career conversations to facilitate regular conversations between managers and employees about goals, career growth and productivity. |
| • | Integrated DI best practices into our performance management and learning and development strategies with the goal of driving more equitable outcomes. |
| • | Developed an emerging talent list to expand our talent pool to better identify and develop high performing diverse talent for expanded roles and promotion opportunities. |
2
Workplace: Building an Inclusive and Accessible Community
| • | Redoubled our efforts with the MSG Diversity Inclusion Heritage Month enterprise calendar to acknowledge and celebrate culturally relevant days and months of recognition, anchored by our six employee resource groups (“ERGs”): Asian Americans and Pacific Islanders (AAPI), Black, LatinX, PRIDE, Veterans, and Women. Increased combined ERG involvement from 622 members in fiscal year 2022 to 1,120 members in fiscal year 2023 (an increase of 80.1%), which includes employees from the Company, MSGE and MSGS. |
| • | Revamped our Conscious Inclusion Awareness Experience, a training program, and created two required educational modules focused on unconscious bias and conscious inclusion within our learning management system. As of June 30, 2023, over 90% of employees across the Company, MSGE and MSGS had completed both required trainings either through the e-modules or through live training sessions. |
| • | Broadened our LGBTQ+ inclusivity strategy by launching new gender pronoun feature within the employee intranet platform, hosted live allyship and inclusivity trainings, and launched toolkit resources for employees to learn and develop. Together with the PRIDE ERG, marched in the 2022 and 2023 NYC Pride Parades. Hosted a community conversations series focused on “Finding Your Voice as an LGBTQ+ Professional” |
| with a prominent LGBTQ+ elected official and employees of the Company, MSGE and MSGS. |
Community: Bridging the Divide through Expansion to Diverse Stakeholders
| • | Focused on connecting with minority-owned businesses to increase the diversity of our vendors and suppliers by leveraging ERGs and our community, which creates revenue generating opportunities for diverse suppliers to promote their businesses and products. In fiscal year 2023, the Company and MSGS hosted a multi-city holiday market event featuring twenty underrepresented businesses in New York City and Burbank. |
| • | Invested in an external facing supplier diversity portal on our website, which launched in fiscal year 2023. The portal is intended to expand opportunities for the Company, MSGE and MSGS to do business with diverse suppliers, including minority-, women-, LGBTQ+- and veteran-owned businesses. |
| • | Strengthened our commitment to higher education institutions to increase campus recruitment pipelines. In partnership with the Knicks and our social impact team, we and MSG Sports hosted the 2nd Annual Historically Black Colleges and Universities (“HBCU”) Night highlighting the important contributions of these institutions and awarded a $60,000 scholarship to a New York City high school student. |
DIRECTOR NOMINEES
The Board has nominated 16 director candidates. Of the 16 nominees, four are Class A nominees and twelve are Class B nominees. Assuming all of the director nominees are elected at the 2023 annual meeting, our Class A director representation will be 25% of the Board, which meets the percentage required by our Amended and Restated Certificate of Incorporation, as amended (“Certificate of Incorporation”).
All director candidates have been nominated for a one-year term to expire at the 2024 annual
meeting of the Company’s stockholders and once their successors have been elected and qualified.
Our Class A nominees are elected by holders of our Class A Common Stock:
| • | All Class A nominees are independent and collectively have significant experience in business leadership, finance and accounting, law, government service, management, investment, operational and strategic planning, and extensive knowledge of the media, sports and entertainment industries. |
3
Our Class B nominees are elected by holders of our Class B Common Stock:
| • | Class B nominees collectively have significant experience in industry and business leadership, finance and accounting, operational and strategic planning, and unmatched institutional knowledge of the Company. |
Our Board believes that the Company and its stockholders benefit from the combination of Class A and Class B nominees’ diverse perspectives, institutional knowledge, and their collective deep business and investment experience.
Detailed information about each nominee’s background, skills and qualifications can be found under “Proposal 1 — Election of Directors.”
| Class A Director Nominees |
Class B Director Nominees | |||
| Joseph J. Lhota |
James L. Dolan |
Quentin F. Dolan | ||
| Joel M. Litvin |
Charles F. Dolan |
Ryan T. Dolan | ||
| John L. Sykes |
Charles P. Dolan |
Thomas C. Dolan | ||
| Carl E. Vogel |
Kristin A. Dolan |
Brian G. Sweeney | ||
| Marianne Dolan Weber |
Vincent Tese | |||
| Paul J. Dolan |
Isiah L. Thomas III | |||
EXECUTIVE COMPENSATION PROGRAM
The Company is a premier live entertainment and media company. Sphere is a next-generation entertainment medium, and MSG Networks operates two regional sports and entertainment networks, as well as a direct-to-consumer and authenticated streaming product. We operate in specialized industries and our executive officers have substantial and meaningful professional experience in these industries. Given the unique nature of our business, including the design and
construction of Sphere in Las Vegas, the creation of our original immersive productions and MSG Networks’ direct-to-consumer product, the Company places great importance on its ability to attract, retain, motivate and reward experienced executive officers who can drive our business objectives and achieve strong financial, operational and stock price performance, as well as long-term value creation.
| Executive Compensation Principles: | ||
| ✓ |
A significant portion of compensation opportunities should be at risk | |
| ✓ |
Long-term performance incentives should generally outweigh short-term performance incentives | |
| ✓ |
Executive officers should be aligned with our stockholders through equity compensation | |
| ✓ |
The compensation structure should enable the Company to attract, retain, motivate and reward the best talent in a competitive industry | |
Elements of Fiscal Year 2023 Compensation Performance Objectives
The Company compensates its named executive officers (“NEOs”) through base salary, annual incentive awards, long-term incentive awards, perquisites and benefit programs. Our annual and long-term incentive programs provide performance-
based incentives for our NEOs tied to key financial and strategic measures that drive long-term stockholder value and reward sustained achievement of the Company’s key financial goals. The Company considers net revenue and adjusted operating income (“AOI”) to be key financial measures of its operating performance. As such, our Compensation Committee has reflected these performance measures in our
4
incentive plans, along with other specific strategic and operating measures. The Company’s long-term incentive program also includes restricted stock units which value is tied to the performance of the market value of the Company’s Class A Common Stock.
The table below summarizes the elements of our compensation program for the 2023 fiscal year and how each element was linked to Company performance. For more information on our executive compensation program and policies, please see “Compensation Discussion Analysis.”
|
Component
|
Performance Link
|
Description
| ||||||||
| Base Salary |
Cash | • Fixed level of compensation determined primarily based on the role, job performance and experience
• Intended to compensate NEOs for day-to-day services performed | ||||||||
| Annual Incentive (Corporate Business Unit) | Cash |
Financial(1) (50%)
|
Total Company Net Revenue (30%) |
• Performance-based cash incentive opportunity
• Designed to be based on the achievement of pre-determined total Company financial performance measures and business unit strategic performance measures approved by the Compensation Committee | ||||||
| Total Company AOI (70%) | ||||||||||
|
Strategic (50%)
|
Strategic Objectives
| |||||||||
| Annual Incentive (Networks Business Unit) | Cash |
Financial (50%)
|
50% Total Company results(1) | Total Company Net Revenue (30%); Total Company AOI (70%) |
• Performance-based cash incentive opportunity
• Designed to be based on the achievement of pre-determined total Company and business unit financial measures and business unit strategic performance measures approved by the Compensation Committee | |||||
| 50% Networks Business Unit results | Networks Business Unit Net Revenue (30%); Networks Business Unit AOI (70%) | |||||||||
|
Strategic (50%)
|
Strategic Objectives
| |||||||||
| Long- Term Incentive |
Performance Stock Units (50%) |
Total Company Net Revenue (50%) |
• Financial performance targets were pre-determined by the Compensation Committee to incentivize strong execution of our strategy and long-term financial goals and will be amended by the Compensation Committee to reflect the MSGE Distribution as described herein
• Cliff-vest after three years to the extent that financial performance targets measured in the last year of the three-year period are achieved
| |||||||
| Total Company Business Unit AOI (50%) | ||||||||||
| Restricted Stock Units (50%) |
Stock Price Performance
|
• Share-based award establishes direct alignment with our stock price performance and stockholder interests
• Vest ratably over three years | ||||||||
5
| (1) | As a result of the MSGE Distribution (as defined below), and as discussed in greater detail under “Compensation Discussion Analysis — Elements of Our Compensation Program — Annual Cash Incentives” below, for fiscal year 2023, total Company financial performance for the annual incentive awards was evaluated based on the combined financial performance of the Company and MSGE, as reflected in the “Consolidated Total Company Net Revenue” and “Consolidated Total Company AOI” financial measures. |
6
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 8, 2023
GENERAL INFORMATION
COMPANY OVERVIEW
Sphere Entertainment Co., incorporated on November 21, 2019, is a Delaware corporation with executive offices at Two Pennsylvania Plaza, New York, NY 10121. In this proxy statement, the words “Company,” “we,” “us,” “our,” and “SPHR” refer to Sphere Entertainment Co., a holding company, and its direct and indirect subsidiaries through which substantially all of our operations are conducted. Our Class A Common Stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “SPHR.” As a result, we are subject to certain of the NYSE corporate governance listing standards.
The Company was incorporated as MSG Entertainment Spinco, Inc., a direct, wholly-owned subsidiary of MSGS. We changed our name to Madison Square Garden Entertainment Corp. on April 17, 2020 (the “2020 Distribution Date”) in connection with the distribution of all of the Company’s outstanding common stock to the stockholders of MSGS (the “2020 Distribution”). Pursuant to the 2020 Distribution, the Company acquired the entertainment businesses previously owned and operated by MSGS through its MSG Entertainment business segment, and the sports booking business previously owned and operated by MSGS through its MSG Sports business segment.
On July 9, 2021, a subsidiary of the Company merged with MSG Networks Inc. (“MSGN”), a company that was also controlled by the Dolan family, in an all-stock, fixed exchange ratio transaction pursuant to an Agreement and Plan of Merger, dated as of March 25, 2021 (the “Merger Agreement”), among the Company, Broadway Sub Inc., a wholly owned subsidiary of the Company and MSGN. As a result of the transaction (the “Networks Merger”), MSGN became a direct wholly-owned subsidiary of the Company.
On April 20, 2023 (the “MSGE Distribution Date”), the Company distributed approximately 67% of the outstanding common stock of MSGE Spinco, Inc. (now known as Madison Square Garden Entertainment Corp. and referred to herein as “MSGE”) to our stockholders (the “MSGE Distribution”). Pursuant to the MSGE Distribution, MSGE acquired the traditional live entertainment business previously owned and operated by the Company through its Entertainment segment (excluding Sphere). In connection with the MSGE Distribution, the Company changed its name to Sphere Entertainment Co.
PROXY STATEMENT MATERIALS
These proxy materials are provided in connection with the solicitation of proxies by our Board for the Annual Meeting of Stockholders, which will be conducted via live webcast on Friday, December 8, 2023 at 10:00 a.m. Eastern Time. You can attend the annual meeting via the internet by visiting www.virtualshareholdermeeting.com/
SPHR2023. This proxy statement is first being sent to stockholders on or about October 25, 2023. Unless otherwise indicated, references to “2023,” the “2023 fiscal year” and the “year ended June 30, 2023” refer to the Company’s fiscal year ended on June 30, 2023.
7
QUESTIONS AND ANSWERS YOU MAY HAVE ABOUT OUR ANNUAL MEETING AND VOTING
When and where is the annual meeting being held?
The annual meeting will be held at 10:00 a.m. Eastern Time on Friday, December 8, 2023. Our 2023 annual meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. For more information on how to attend the virtual meeting, please see the question titled “How do I attend, vote and ask questions during the 2023 annual meeting?” below.
Who may vote during the annual meeting?
Holders of our Class A common stock, par value $0.01 per share (“Class A Common Stock”), and holders of our Class B common stock, par value $0.01 per share (“Class B Common Stock,” together with Class A Common Stock, collectively, “Company Stock”), as recorded in our stock register at the close of business on October 16, 2023, may vote during the annual meeting. On October 16, 2023, there were 28,243,621 shares of Class A Common Stock and 6,866,754 shares of Class B Common Stock outstanding. Each share of Class A Common Stock has one vote per share and holders will be voting for the election of four candidates to the Board. Each share of Class B Common Stock has ten votes per share and holders will be voting for the election of twelve candidates to the Board. As a result of their ownership of all of the shares of Class B Common Stock, certain members of the Dolan family, including certain trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”) have the power to elect all of the directors to be elected by the holders of our Class B Common Stock, and to approve Proposals 2 (appointment of the Company’s independent registered public accounting firm), 3 (approval of the Company’s 2020 Employee Stock Plan, as amended), 4 (approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended), and 5 (advisory vote on the compensation of our named executive officers), regardless of how other shares are voted.
Why did I receive a Notice of Annual Meeting and Internet Availability of Proxy Materials instead of a full set of proxy materials?
Pursuant to rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), the Company has elected to provide access to its proxy materials by Internet. Accordingly, the Company has sent a Notice of Annual Meeting and Internet Availability of Proxy Materials to our stockholders. All stockholders have the ability to access the proxy materials on the website referred to in the Notice of Annual Meeting and Internet Availability of Proxy Materials or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials by Internet or to request a printed copy may be found in the Notice of Annual Meeting and Internet Availability of Proxy Materials. In addition, our stockholders may request to receive proxy materials in printed form by mail or electronically. If you previously chose to receive proxy materials electronically, you will continue to receive access to these materials via email unless you otherwise elect. The Company encourages our stockholders who have not already done so to take advantage of the availability of the proxy materials on the Internet to help reduce the cost and the environmental impact of the annual meeting.
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, EQ Shareowner Services, you are considered a stockholder of record with respect to those shares, and the Notice of Annual Meeting and Internet Availability of Proxy Materials was sent directly to you by the Company. If you request printed copies of the proxy materials by mail, you will also receive a proxy card.
8
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are a beneficial owner of shares held in “street name,” and the Notice of Annual Meeting and Internet Availability of Proxy Materials was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to instruct that organization how to vote the shares held in your account. If you requested printed copies of the proxy materials by mail, you will receive a voting instruction form from that organization.
What votes need to be present to hold the annual meeting?
In order to carry on the business of the annual meeting, we need a majority of the votes represented by the outstanding shares eligible to vote on the record date, October 16, 2023, to be present, either by participating in the virtual meeting or by proxy. This is known as a “quorum.” If voting on a particular action is by class, a majority of the votes represented by the outstanding shares of such class constitutes a quorum for such action. Abstentions and broker non-votes (described below) are considered present for purposes of determining a quorum.
How do I vote?
You may vote in advance of the annual meeting by telephone, Internet or mail by following the instructions provided on the Notice of Annual Meeting and Internet Availability of Proxy Materials. If you choose to vote by mail, please sign, date and return the proxy card in the postage-paid envelope provided. You may also vote during the virtual meeting. For more information on how to vote during the meeting, please see the question titled “How do I attend, vote and ask questions during the 2023 annual meeting?” below. Even if you plan to participate in the virtual meeting, the Board strongly recommends that you submit a proxy to vote your
shares in advance so that your vote will be counted if you later decide not to participate in the annual meeting.
Can my broker vote my shares without instructions from me?
If you are a beneficial owner whose shares are held of record by a brokerage firm, bank, broker-dealer or other similar organization, you must instruct them how to vote your shares. Please use the voting instruction form provided to you by your brokerage firm, bank, broker-dealer or other similar organization to direct them how to vote your shares. If you do not provide voting instructions, your shares will not be voted on the election of directors or any other proposal on which the brokerage firm, bank, broker-dealer or other similar organization does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the brokerage firm, bank, broker-dealer or other similar organization can register your shares as being present at the annual meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under applicable rules.
If you are a beneficial owner whose shares are held of record by a brokerage firm, bank, broker-dealer or other similar organization, your brokerage firm, bank, broker-dealer or other similar organization has discretionary voting authority under applicable rules to vote your shares on the ratification of the appointment of the Company’s independent registered public accounting firm (Proposal 2), even if the brokerage firm, bank, broker-dealer or other similar organization does not receive voting instructions from you. However, your brokerage firm, bank, broker-dealer or other similar organization does not have discretionary authority to vote on the (i) election of directors (Proposal 1), (ii) approval of the Company’s 2020 Employee Stock Plan, as amended (Proposal 3), (iii) approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended (Proposal 4), or (iv) advisory vote with respect to
9
the compensation of our NEOs (Proposal 5) without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on these matters.
What is the voting requirement to approve each of the proposals?
Election of directors by the holders of our Class A Common Stock requires the affirmative vote of the plurality of votes cast by holders of our Class A Common Stock. Election of directors by the holders of our Class B Common Stock requires the affirmative vote of the plurality of votes cast by holders of our Class B Common Stock. The (i) ratification of the appointment of the Company’s independent registered public accounting firm (Proposal 2), (ii) approval of the Company’s 2020 Employee Stock Plan, as amended (Proposal 3), (iii) approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended (Proposal 4), and (iv) approval of the advisory vote with respect to the compensation of our NEOs (Proposal 5) require the favorable vote of a majority of the votes cast by the holders of our Class A Common Stock and the holders of our Class B Common Stock, voting together as a single class. Neither abstentions nor broker non-votes will affect the outcome of any of the proposals because abstentions and broker non-votes are not considered votes cast. As a result of their ownership of all of the shares of our Class B Common Stock, the Dolan Family Group has the power to elect all of the directors to be elected by the holders of our Class B Common Stock and to approve (i) the ratification of the appointment of the Company’s independent registered public accounting firm (Proposal 2), (ii) the Company’s 2020 Employee Stock Plan, as amended (Proposal 3), (iii) the Company’s 2020 Stock Plan for Non-Employee Directors, as amended (Proposal 4), and (iv) the advisory vote with respect to the compensation of our NEOs (Proposal 5), regardless of how other shares are voted. Proposal 5 is an advisory vote only and is not binding on the Company.
Can I change my vote after I have voted?
Yes. If you are a stockholder of record, you may revoke your proxy and change your vote at any time before the final vote during the annual meeting. You may change your vote prior to the annual meeting by:
| • | re-voting your shares by Internet or by telephone by following the instructions on the Notice of Annual Meeting and Internet Availability of Proxy Materials or proxy card (only your latest Internet or telephone proxy submitted prior to the annual meeting will be counted); |
| • | signing and returning a valid proxy card or voting instruction form with a later date; |
| • | delivering a written notice of revocation to the Company’s Secretary at Two Pennsylvania Plaza, New York, NY 10121; or |
| • | attending the annual meeting and re-voting your shares electronically during the annual meeting by clicking “Vote Here” on the meeting website (but your attendance at the annual meeting will not automatically revoke your proxy unless you validly vote again at the annual meeting). |
If your shares are held of record by a brokerage firm, bank, broker-dealer or other similar organization, you should follow the instructions they provide in order to change your vote.
How will my shares be voted at the annual meeting if I submit a proxy card?
The proxy materials, including the proxy card, are being solicited on behalf of the Board. The Company representatives appointed by the Board (the persons named on the proxy card, or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted as the Board recommends, which is:
| • | FOR the election of each of the Director nominees named in this proxy statement to be |
10
| elected by holders of the relevant class of Company common stock (Proposal 1); |
| • | FOR the ratification of the appointment of our independent registered public accounting firm (Proposal 2); |
| • | FOR the approval of the Company’s 2020 Employee Stock Plan, as amended (Proposal 3); |
| • | FOR the approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended (Proposal 4); and |
| • | FOR the approval, on an advisory basis, of the compensation of our NEOs (Proposal 5). |
Who participates in and pays for this solicitation?
The Company will bear the expense of preparing, printing and mailing this proxy statement and the accompanying materials. Solicitation of individual stockholders may be made by mail, personal interviews, telephone, facsimile, electronic delivery or other telecommunications by our executive officers and regular employees who will receive no additional compensation for such activities.
We have retained D.F. King Co., Inc. to assist with the solicitation of proxies for a fee estimated not to exceed $25,000, plus reimbursement for out-of-pocket expenses. In addition, we will reimburse brokers and other nominees for their expenses in forwarding solicitation material to beneficial owners.
How do I attend, vote and ask questions during the 2023 annual meeting?
This year’s annual meeting will be a virtual meeting of stockholders conducted via live webcast. To be admitted to the 2023 virtual annual meeting, you must have been a stockholder of record at the close of business on the record date of October 16, 2023 or be the legal proxy holder or qualified representative of such stockholder. The virtual meeting will afford stockholders the same rights as if the meeting were held in person, including
the ability to vote shares electronically during the meeting and ask questions in accordance with the rules of conduct for the meeting, which will be posted to our investor relations website, https://investor.sphereentertainmentco.com, and will be available on www.virtualshareholdermeeting.com/SPHR2023 during the annual meeting.
Attending the Virtual Meeting. To attend the virtual annual meeting, please visit www.virtualshareholdermeeting.com/SPHR2023. To participate in the annual meeting, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials).
Legal Proxy. Stockholders must provide advance written notice to the Company if they intend to have a legal proxy (other than the persons appointed as proxies on the Company’s proxy card) or a qualified representative attend the annual meeting on their behalf. The notice must include the name and address of the legal proxy or qualified representative and must be received by 5:00 p.m. Eastern Time on November 30, 2023. For further details, see “Other Matters — Advance Notice of Proxy Holders and Qualified Representatives.”
Voting During the Virtual Meeting. If you have not voted your shares prior to the annual meeting, or you wish to change your vote, you will be able to vote or re-vote your shares electronically during the annual meeting by clicking “Vote Here” on the meeting website. Whether or not you plan to attend the meeting, you are encouraged to vote your shares prior to the meeting by one of the methods described in the proxy materials you previously received.
Asking Questions. If you wish to submit a question, you may do so live during the meeting by accessing the meeting at www.virtualshareholdermeeting.com/SPHR2023.
Only questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. If any questions pertinent to meeting
11
matters cannot be answered during the meeting due to time constraints, we will post and answer a representative set of these questions online at https://investor.sphereentertainmentco.com. The questions and answers will be available as soon as reasonably practicable after the meeting and will remain available until one week after posting.
Help with Technical Difficulties. If you have any technical difficulties accessing the virtual meeting on the meeting date, please call the phone numbers displayed on the virtual meeting website, www.virtualshareholdermeeting.com/MSGS2023. If there are any technical issues in convening or hosting the meeting, we will promptly post information to our investor relations website, https://investor.sphereentertainmentco.com, including information on when the meeting will be reconvened.
For a period of at least 10 days prior to the 2023 annual meeting, a complete list of stockholders entitled to vote during the 2023 annual meeting will be open to the examination of any stockholder during ordinary business hours at our corporate headquarters located at Two Pennsylvania Plaza, New York, NY 10121, or through an alternative method publicly disclosed in advance. If you are interested in viewing the list, please send an email to investor@sphereentertainmentco.com one business day in advance to schedule your visit.
What is “householding” and how does it affect me?
Stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials may receive only one copy of this Notice of Annual Meeting and Proxy Statement and Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “2023 Form 10-K”) unless we are notified that one or more of these stockholders wishes to receive individual copies. This “householding” procedure will reduce our printing costs and postage fees as well as the environmental impact of the annual meeting.
Stockholders who participate in householding will continue to receive separate proxy cards.
If you participate in householding and wish to receive a separate copy of this Notice of Annual Meeting and Proxy Statement and any accompanying documents, or if you do not wish to continue to participate in householding and prefer to receive separate copies of these documents in the future, please contact Broadridge Householding Department, by calling their toll-free number, 1-866-540-7095, or by writing to: Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. You will be removed from the householding program within 30 days of receipt of your instructions, at which time you will then be sent separate copies of the documents.
If you are a beneficial owner, you can request information about householding from your broker, bank or other holder of record.
How can I get electronic access to the proxy materials?
This Notice of Annual Meeting and Proxy Statement, the proxy card and the 2023 Form 10-K are available at www.proxyvote.com.
In accordance with the SEC rules, we are using the Internet as our primary means of furnishing proxy materials to our stockholders. Consequently, most of our stockholders will not receive paper copies of our proxy materials. Instead, we are sending these stockholders a Notice of Annual Meeting and Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our proxy statement and the 2023 Form 10-K, and voting by Internet. This makes the proxy distribution process more efficient and less costly and helps conserve natural resources. The Notice of Annual Meeting and Internet Availability of Proxy Materials also provides information on how our stockholders may obtain paper copies of our proxy materials if they so choose. If you previously elected to receive proxy materials
12
electronically, these materials will continue to be sent via email unless you change your election.
If you receive paper copies of our proxy materials and would like to sign up for electronic delivery via email or the Internet, please follow the
instructions to vote by Internet at www.proxyvote.com and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
13
BOARD AND GOVERNANCE PRACTICES
CORPORATE GOVERNANCE PRACTICES
Our Board has adopted the Governance Guidelines and other practices to promote the functioning of the Board and its committees to serve the best interests of all our stockholders. The Governance Guidelines and our other governance documents provide a framework for our governance practices, including:
| ✓ | Annual election of directors, with all directors elected to one-year terms |
| ✓ | Board composition to include a broad range of skills, experience, industry knowledge, diversity of opinion and contacts relevant to the Company’s business, which serves the interests of all stockholders |
| ✓ | Board self-assessments conducted at least annually to assess the mix of skills and experience that directors bring to the Board to facilitate an effective oversight function |
| ✓ | Robust director nomination criteria to ensure a diversity of viewpoints, background and expertise in the boardroom |
| ✓ | Regular executive sessions of independent directors |
| ✓ | Independent Board committees, with each of the Audit Committee and the Compensation Committee comprised 100% of independent directors |
| ✓ | Restricted stock units subject to holding requirement through the end of service on the Board |
Our Corporate Governance Guidelines set forth our practices and policies with respect to Board composition and selection, Board meetings, executive sessions of the Board, Board committees, the expectations we have of our directors, selection of the Executive Chairman and the Chief Executive Officer, management succession, Board and executive compensation, and Board self-assessment requirements. The full text of our Corporate Governance Guidelines may be viewed at our corporate website at www.sphereentertainmentco.com under Investors — Governance — Corporate Governance. A copy may be obtained by writing to Sphere Entertainment Co., Two Pennsylvania Plaza, New York, NY 10121; Attention: Corporate Secretary.
STOCKHOLDER ENGAGEMENT
Fostering long-term relationships with our stockholders is a priority for the Company. Engagement helps us gain insight into the issues most important to our stockholders, informing Board discussions and allowing us to consider investors’ views on a range of topics including corporate governance and executive compensation matters.
We regularly engage with stockholders, and during the 2023 fiscal year we engaged with holders of over 70% of our Class A Common Stock concerning our Board, governance and/or executive compensation practices, with the specific goal of seeking stockholder feedback. We greatly value the views of our stockholders, and we look forward to continuing to receive such feedback.
14
BOARD LEADERSHIP STRUCTURE
Our Board has the flexibility to determine whether the roles of Executive Chairman and Chief Executive Officer should be separated or combined. The Board makes this decision based on its evaluation of the circumstances and the Company’s specific needs. The Board believes combining these roles is the optimal leadership structure for the Company at this time because of
Mr. Dolan’s experience with the Company’s business and industry, as well as his ability to most effectively identify strategic priorities of the Company and ensure execution of the Company’s strategy. The Board does not designate a lead independent director and believes it is appropriate not to have one because of the Company’s stockholder voting structure.
BOARD SELF-ASSESSMENT
The Board conducts an annual self-assessment to determine whether the Board and its committees are functioning effectively. Among other things, the Board’s self-assessment seeks input from the directors on whether they have the tools and access necessary to perform their oversight function as well as suggestions for improvement
of the Board’s functioning. In addition, our Audit Committee and Compensation Committee each conducts its own annual self-assessment, which includes an assessment of the adequacy of their performance as compared to their respective charters.
EXECUTIVE SESSIONS OF NON-MANAGEMENT AND INDEPENDENT BOARD MEMBERS
Under our Governance Guidelines, either our directors who are not also executive officers of our Company (the “non-management directors”) or our directors who are independent under the NYSE rules are required to meet regularly in executive sessions with no members of management present. If non-management directors who are not independent participate in
these executive sessions, the independent directors under the NYSE rules are required to meet separately in executive sessions at least once each year. The non-management or independent directors may specify the procedure to designate the director who may preside at any such executive session.
RISK OVERSIGHT
Our Board believes that risk oversight is an important Board responsibility. The Board has delegated risk oversight to the Audit Committee, including venue security and oversight over cybersecurity risks. The Audit Committee discusses guidelines and policies governing the process by which the Company’s management assesses and manages the Company’s exposure to risk, and discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee also receives periodic updates from subject matter experts regarding specific risks, such as venue security and cybersecurity.
The Compensation Committee considers the Company’s exposure to risk in establishing and implementing our executive compensation program. The Compensation Committee, with the assistance of its independent compensation consultant, reviewed the level of risk incentivized by the Company’s executive compensation program as well as incentive programs below the executive officer level. Based on this assessment and the executive compensation program’s emphasis on long-term performance, its close connection to Company-wide and divisional performance and its equity-based component designed to align the executive officers’
15
compensation with the Company’s long-term strategy and growth, the Compensation Committee determined that our executive
compensation program does not create incentives for excessive risk-taking that are reasonably likely to have a material adverse effect on the Company.
COMMUNICATING WITH OUR DIRECTORS
Our Board has adopted policies designed to allow our stockholders and other interested parties to communicate with our directors. Any interested party who wishes to communicate with the Board or any director or the non-management directors as a group should send communications in writing to the Chairman of the Audit Committee, Sphere Entertainment Co., Two Pennsylvania Plaza, New York, NY 10121. Any person, whether or not an
employee, who has a concern with respect to our accounting, internal accounting controls, auditing issues or other matters, may, in a confidential or anonymous manner, communicate those concerns to our Audit Committee by contacting the SPHR Integrity Hotline, which is operated by a third-party service provider, at 1-844-761-0392 or www.msg.ethicspoint.com.
CODE OF CONDUCT AND ETHICS
Our Board has adopted a Code of Conduct and Ethics for our directors, officers and employees. A portion of this Code of Conduct and Ethics also serves as a code of conduct and ethics for our senior financial officers, including our principal accounting officer and controller. Among other things, our Code of Conduct and Ethics covers conflicts of interest, disclosure responsibilities, legal compliance, reporting and compliance with the Code of Conduct and Ethics, confidentiality, corporate opportunities, fair dealing, protection and proper use of Company assets and equal employment opportunity and harassment. The full
text of the Code of Conduct and Ethics is available on our website at www.sphereentertainmentco.com under Investors — Governance — Corporate Governance. In addition, a copy may be obtained by writing to Sphere Entertainment Co., Two Pennsylvania Plaza, New York, NY 10121; Attention: Corporate Secretary. Within the time period required by the SEC, we will post on our website any amendment to the Code of Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer.
DIRECTOR INDEPENDENCE
As a “controlled company” we are not subject to the corporate governance rules of the NYSE requiring: (i) a majority of independent directors on our Board, (ii) an independent corporate governance and nominating committee, and (iii) an independent compensation committee. On account of this, and based on our ownership and voting structure, we do not have a majority of independent directors on our Board and we have not created a corporate governance and nominating committee; however, we have elected to comply with the NYSE requirement for an independent compensation committee.
Under the terms of our Certificate of Incorporation, the holders of our Class B Common Stock have the right to elect up to 75% of the members of our Board and there is no requirement that any of those directors be independent or be chosen independently.
Despite the fact that our Board does not have a majority of independent directors, we value independent oversight and perspectives in our boardroom. That independent input is fostered by our Certificate of Incorporation, which gives our Class A stockholders the right to elect at least 25% of our Board, as well as by the presence on
16
our Board of a director elected by our Class B stockholders who meets the NYSE standards of independence. Assuming all of the director nominees are elected at the 2023 annual meeting, our actual Class A director representation will be 25% of the Board, meeting the percentage required by our Certificate of Incorporation, and independent director representation will be approximately 31%. Our Board believes that the Company and its stockholders will benefit from the continuity of the current independent directors and their collective deep business expertise. We welcome their combined insights as we continue to pursue our strategies to create long-term shareholder value.
Our Board has determined that each of the following non-management directors is “independent” within the meaning of the rules of the NYSE and the SEC: Joseph J. Lhota, Joel M. Litvin, John L. Sykes, Vincent Tese and Carl E. Vogel. In reaching its determination, the Board considered the following:
| • | Mr. Lhota served as a director of MSGN (a company that was also controlled by the Dolan family) from 2016 until the Networks Merger in July 2021, and previously served as an Executive Vice President of MSGN from 2010 to 2011 and Executive Vice President of Cablevision from 2002 to 2010. In addition, Mr. Lhota served as a director of MSGS (formerly The Madison Square Garden Company) from 2017 until the 2020 Distribution Date. The Board determined that these relationships are not material and that Mr. Lhota is independent within the meaning of the rules of the NYSE and the SEC. |
| • | Mr. Litvin served as a director of MSGN from 2015 until the Networks Merger in July 2021. The Board has determined that this relationship is not material and that |
| Mr. Litvin is independent within the meaning of the rules of the NYSE and the SEC. |
| • | Mr. Sykes served as a director of MSGN from 2015 until the Networks Merger in July 2021. In addition, Mr. Sykes is a non-executive officer of iHeart Media, Inc., which has entered into routine commercial transactions with the Company in connection with hosting events at the Company’s historical venues. The Board has determined that these relationships are not material and that Mr. Sykes is independent within the meaning of the rules of the NYSE and the SEC. |
| • | Mr. Tese served as a director of MSGN from 2010 to 2015. In addition, Mr. Tese has served as a director of MSGS since 2015 and AMC Networks Inc. (“AMC Networks”) (a company that is also controlled by the Dolan family) since 2016. His brother was employed by Sphere Entertainment Group, LLC (formerly MSG Entertainment Group, LLC), a subsidiary of the Company, in a non-executive officer position from September 2015 until August 2020. Mr. Tese’s brother was re-hired in December 2021 in a non-executive officer position and his employment was transferred to a subsidiary of MSGE in connection with the MSGE Distribution. Mr. Tese’s brother was also employed by a subsidiary of MSGN in a non-executive officer position from 2005 until September 2015. See “Transactions with Related Parties.” The Board determined that these relationships are not material and Mr. Tese is independent within the meaning of the rules of the NYSE and the SEC. |
| • | Mr. Vogel has served as a director of AMC Networks since June 2013. The Board determined that this relationship is not material and Mr. Vogel is independent within the meaning of the rules of the NYSE and the SEC. |
17
DIRECTOR NOMINATIONS
As permitted under the NYSE rules, we do not have a nominating committee and believe it is appropriate not to have one because of our stockholder voting structure. The Board has nonetheless established a nomination mechanism in our Corporate Governance Guidelines for the selection of nominees for election as directors by the holders of our Class A Common Stock (“Class A Directors”) and by the holders of our Class B Common Stock (“Class B Directors”), as follows:
| • | Nominees for election as Class A Directors are recommended to the Board by a majority of the independent Class A Directors then in office. |
| • | Nominees for election as Class B Directors are recommended to our Board by a majority of the Class B Directors then in office. |
Our Certificate of Incorporation provides holders of the Company’s Class B Common Stock the right to elect up to 75% of the members of our Board and holders of our Class A Common Stock the right to elect at least 25% of the members of our Board.
DIRECTOR SELECTION
Our Board believes that each director nominee should be evaluated based on the skills needed on the Board and his or her individual merits, taking into account, among other matters, the factors set forth in our Corporate Governance Guidelines under “Board Composition” and “Selection of Directors.” Those factors include:
| • | The desire to have a Board that encompasses a broad range of skills, expertise, industry knowledge, diversity of viewpoints, opinions, background and experience and contacts relevant to our business; |
| • | Personal qualities and characteristics, accomplishments and reputation in the business community; |
| • | Ability and willingness to commit adequate time to Board and committee matters; and |
| • | The fit of the individual’s skill and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of our Company. |
The Class A Directors evaluate and recommend Class A Director candidates to the Board for nomination as Class A Directors and suggest individuals for the Board to explore in more
depth. The Class A Directors also consider Class A Director nominees recommended by our stockholders. Nominees recommended by our stockholders are given consideration in the same manner as other nominees. Stockholders who wish to nominate directors for election at our 2024 annual meeting may do so by submitting in writing such nominees’ names, in compliance with the procedures and along with other information required by the Company’s Amended By-laws. See “Other Matters — Stockholder Proposals for 2024 Annual Meeting.”
The Class B Directors will consult from time to time with one or more of the holders of our Class B Common Stock to ensure that all Class B Director nominees recommended to the Board are individuals who will make a meaningful contribution as Board members and will be individuals likely to receive the approving vote of the holders of a majority of the outstanding Class B Common Stock. The Class B Directors do not intend to consider unsolicited suggestions of nominees by holders of our Class A Common Stock. We believe that this is appropriate in light of the voting provisions of our Certificate of Incorporation which provide the holders of our Class B Common Stock the exclusive right to elect our Class B Directors.
18
BOARD MEETINGS
The Board met six times during the fiscal year ended June 30, 2023. All of the directors who were on the Board during the 2023 fiscal year, except one, attended at least 75% of the meetings of the Board and the committees of the Board on which he or she served during 2023.
We encourage our directors to attend annual meetings of our stockholders and believe that attendance at annual meetings is equally as important as attendance at Board and committee meetings. All of the directors who were then on the Board attended the 2022 annual stockholders’ meeting.
COMMITTEES
Our Board has two standing committees comprised solely of independent directors: the Audit Committee and the Compensation Committee.
Audit Committee
| • | Members: Messrs. Lhota (Chair), Tese and Vogel |
| • | Meetings during fiscal year ended June 30, 2023: Eight |
The primary purposes and responsibilities of our Audit Committee are to:
| • | assist the Board in (i) its oversight of the integrity of our financial statements, (ii) its oversight of our compliance with legal and regulatory requirements, (iii) assessing our independent registered public accounting firm’s qualifications and independence, and (iv) assessing the performance of our internal audit function and independent registered public accounting firm; |
| • | appoint, compensate, retain, oversee and terminate the Company’s independent registered public accounting firm and pre-approve, or adopt appropriate procedures to pre-approve, all audit and non-audit services, if any, to be provided by the independent registered public accounting firm; |
| • | review the appointment and replacement of the head of our Internal Audit Department and to review and coordinate the agenda, |
| scope, priorities, plan and authority of the Internal Audit Department; |
| • | establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by Company employees or any provider of accounting-related services of concerns regarding questionable accounting and auditing matters and review of submissions and treatment of any such complaints; |
| • | review and approve related party transactions that are required to be disclosed under SEC rules or that require such approval under the Company’s Related Party Transaction Approval Policy (if the Audit Committee is then serving as the Independent Committee under such policy); |
| • | conduct and review with the Board an annual self-assessment of the Audit Committee; |
| • | prepare any report of the Audit Committee required by the rules and regulations of the SEC for inclusion in our annual proxy statement; |
| • | review and reassess the Audit Committee charter at least annually; |
| • | report to the Board on a regular basis; and |
| • | oversee corporate risks, including cybersecurity and venue security, and provide periodic updates to the Board on such oversight activities. |
19
Our Board has determined that each member of our Audit Committee is “independent” within the meaning of the rules of both the NYSE and the SEC, and that each has not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years and is able to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements. Our Board has also determined that each of Messrs. Lhota, Tese and Vogel is an “audit committee financial expert” within the meaning of the rules of the SEC.
Our Board has established a procedure whereby complaints or concerns with respect to accounting, internal controls, auditing and other matters may be submitted to the Audit Committee. This procedure is described under “Board and Governance Practices — Communicating with Our Directors.”
The text of our Audit Committee charter is available on our website at www.sphereentertainmentco.com under Investors — Governance — Corporate Governance. A copy may be obtained by writing to Sphere Entertainment Co., Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121.
Compensation Committee
| • | Members: Messrs. Lhota, Sykes (Chair) and Vogel |
| • | Meetings during fiscal year ended June 30, 2023: Ten |
The primary purposes and responsibilities of our Compensation Committee are to:
| • | establish our general compensation philosophy and, in consultation with management, oversee the development and implementation of compensation programs; |
| • | review and approve corporate goals and objectives relevant to the compensation of our Chief Executive Officer and our other |
| executive officers who are required to file reports with the SEC under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (together with the Chief Executive Officer, the “Senior Employees”), evaluate the Senior Employees’ performance in light of these goals and objectives and determine and approve their compensation based upon that evaluation; |
| • | approve any new equity compensation plan or material changes to an existing plan; |
| • | oversee the activities of the committee or committees administering our retirement and benefit plans; |
| • | in consultation with management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company’s policies on structuring compensation programs to preserve tax deductibility; |
| • | determine and approve any severance or similar termination payments to be made to Senior Employees (current or former); |
| • | determine the components and amount of Board compensation and review such determinations from time to time in relation to other similarly situated companies; |
| • | prepare any reports of the Compensation Committee to be included in the Company’s annual proxy statement in accordance with the applicable rules and regulations of the SEC; |
| • | conduct and review with the Board an annual self-assessment of the Compensation Committee; and |
| • | report to the Board on a regular basis, but not less than annually. |
The Compensation Committee reviews the performance of the Senior Employees, evaluates their performance in light of those goals and
20
objectives and, either as a committee or together with any other independent directors (as directed by the Board), determines and approves the Senior Employees’ compensation level based on this evaluation. In determining the long-term incentive component of our Chief Executive Officer’s compensation, the Compensation Committee considers, among other factors, the Company’s performance and relative stockholder return, the value of similar incentive awards to Chief Executive Officers at comparable companies and the awards given to the Chief Executive Officer in past years.
As discussed above, our Board has determined that each member of our Compensation Committee is “independent” under the rules of the NYSE.
The Compensation Committee may, in its discretion, delegate a portion of its duties and responsibilities to one or more subcommittees of the Compensation Committee. For example, the Compensation Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the Compensation Committee who are “non-employee directors” for the purposes of Rule 16b-3 of the Exchange Act. The Compensation Committee may also engage outside consultants to assist in the performance of its duties and responsibilities. The text of our Compensation Committee charter is available on our website at www.sphereentertainmentco.com under Investors — Governance — Corporate Governance. A copy may be obtained by writing to Sphere Entertainment Corp., Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121.
Compensation Committee Interlocks and Insider Participation
Messrs. Joseph J. Lhota, John L. Sykes and Carl E. Vogel currently serve as members of the Compensation Committee. None of them are current or former executive officers or employees of the Company.
Independent Committees
In addition to standing committees, from time to time our Board appoints or empowers a committee of the Board consisting entirely of independent directors (an “Independent Committee”) to act with respect to specific matters.
The Company has adopted a policy whereby an Independent Committee will review and approve or take such other action as it may deem appropriate with respect to transactions involving the Company and its subsidiaries in which any director, executive officer, greater than 5% stockholder of the Company or any other “related person” (as defined in Item 404 of Regulation S-K adopted by the SEC) has or will have a direct or indirect material interest. This approval requirement covers any transaction that meets the related party disclosure requirements of the SEC as set forth in Item 404, which currently apply to transactions (or any series of similar transactions) in which the amount involved exceeds $120,000.
Our Board has also adopted a special approval policy for transactions with MSGE, MSGS and AMC Networks, and their respective subsidiaries, whether or not such transactions qualify as “related party” transactions described above. Under this policy, an Independent Committee oversees approval of all transactions and arrangements between the Company and its subsidiaries, on the one hand, and each of MSGE and its subsidiaries, MSGS and its subsidiaries and AMC Networks and its subsidiaries, on the other hand, in which the value or expected value of the transaction or arrangement exceeds $1,000,000. In addition, an Independent Committee receives a quarterly update from the Company’s Internal Audit Department of all related party transactions, including transactions and arrangements between the Company and its subsidiaries on the one hand, and each of MSGE and its subsidiaries, MSGS and its subsidiaries and AMC Networks and its subsidiaries, on the other hand, regardless of value. To simplify the administration of the approval process under this
21
policy, the Independent Committee may, where appropriate, establish guidelines for certain of these transactions.
For a further discussion of the scope of these policies, see “Related Party Transaction Approval Policy.”
Other Committee Matters
Our Amended By-laws permit the Board to form an Executive Committee of the Board which would have the power to exercise all of the
powers and authority of the Board in the management of the business and affairs of the Company, except as limited by the Delaware General Corporation Law. Our Board has not formed an Executive Committee, although it could do so in the future.
Our Amended By-laws also permit the Board to appoint other committees of the Board from time to time which would have such powers and duties as the Board properly determines.
DIRECTOR COMPENSATION
The following table describes the components of our non-employee directors’ compensation program in effect during the fiscal year ended June 30, 2023:
| Compensation Element(1) |
Compensation(2)(3) | |
| Annual Cash Retainer |
$75,000 | |
| Annual Equity Retainer(4) |
$160,000 | |
| Annual Audit/Compensation Committee Member Fee |
$15,000 | |
| Annual Audit/Compensation Committee Chair Fee |
$25,000 | |
| Board and Audit/Compensation Committee Meeting Fees |
No meeting fees |
| (1) | A director who is also a Company employee receives no compensation for serving as a director. |
| (2) | From time to time our Compensation Committee and/or our Board may approve additional or alternate compensation arrangements for directors who serve on other committees of the Board, including Independent Committees. |
| (3) | Non-employee directors have the ability to make a non-revocable annual election to defer all cash compensation (annual cash retainer and, if applicable, committee fees) to be earned in the next calendar year into restricted stock units (the “Deferred Compensation Election”). Participating directors made their elections in calendar year 2022 with respect to the Deferred Compensation Election for cash payments to be received in calendar year 2023. Grants of restricted stock units in lieu of cash compensation are determined by dividing the value of the applicable director’s total annual cash compensation by the 20-trading day average closing market price on the day prior to the grant date (February 15 or the next succeeding business day). Restricted stock units are fully vested on the date of grant but remain subject to a holding requirement until the first business day following 90 days after the director incurs a separation from service (other than in the event of a director’s death, in which case they are settled as soon as practicable), at which time they are settled in stock or, at the Compensation Committee’s election, in cash. Such equity grants are made pursuant to the Company’s 2020 Stock Plan for Non-Employee Directors, as amended (the “Director Stock Plan”). |
| (4) | Each director receives an annual grant of restricted stock units determined by dividing the value of the annual equity retainer by the 20-trading day average closing market price on the day prior to the grant date (typically the annual meeting). Restricted stock units are fully vested on the date of grant but remain subject to a holding requirement until the first business day following 90 days after the director incurs a separation from service (other |
22
| than in the event of a director’s death, in which case they are settled as soon as practicable), at which time they are settled in stock or, at the Compensation Committee’s election, in cash. Such compensation is made pursuant to the Director Stock Plan. |
In order for our directors to develop an intimate familiarity with the different types of events presented at our venues, the services and support offered to patrons at our events and the characteristics and features of our venues, the Company makes available to each of our non-employee directors without charge up to two tickets per event for up to eight events per calendar year, subject to availability (including for events held at the Company’s traditional live entertainment venues prior to the MSGE Distribution). Director attendance at such events is integrally and directly related to the performance of their duties and, as such, we do not deem the receipt of such tickets to be perquisites. These ticket limitations do not apply to special events to which non-employee directors and their guests may have been specifically
invited from time to time in their capacity as non-employee directors of the Company (e.g., charity events, premieres, etc.). In addition, non-employee directors are able to purchase tickets to events at the Company and MSGE venues at face value, subject to availability. Tickets provided to non-employee directors are not available for resale.
Director Compensation Table
The table below summarizes the total compensation paid to or earned by each person who served as a non-employee director during the fiscal year ended June 30, 2023. Directors who are employees of the Company receive no compensation for service as directors and are therefore not identified in the table below.
| Name |
Fees Earned or Paid in Cash ($)(1) |
Stock Awards ($)(2)(3)(4) | Total ($) | ||||||||||||
|
Current Non-Employee Directors
|
|||||||||||||||
|
Charles F. Dolan
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Charles P. Dolan
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Kristin A. Dolan
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Marianne Dolan Weber
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Paul J. Dolan
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Quentin F. Dolan
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Thomas C. Dolan
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Joseph J. Lhota
|
|
49,162
|
|
|
231,032
|
|
|
280,194
|
| ||||||
|
Joel M. Litvin
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Brian G. Sweeney
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
John L. Sykes
|
|
174,516
|
|
|
171,868
|
|
|
346,384
|
| ||||||
|
Vincent Tese
|
|
90,000
|
|
|
171,868
|
|
|
261,868
|
| ||||||
|
Isiah L. Thomas III
|
|
75,000
|
|
|
171,868
|
|
|
246,868
|
| ||||||
|
Carl E. Vogel(5)
|
|
20,769
|
|
|
97,036
|
|
|
117,805
|
| ||||||
|
Former Non-Employee Director
|
|||||||||||||||
|
Martin Bandier(6)
|
|
164,516
|
|
|
231,032
|
|
|
395,548
|
| ||||||
|
Frederic V. Salerno(6)
|
|
132,016
|
|
|
247,406
|
|
|
379,422
|
| ||||||
23
| (1) | These amounts represent Board retainer and meeting fees earned during the fiscal year ended June 30, 2023, including (i) the value of such amounts that were received by Messrs. Bandier, Lhota and Salerno as restricted stock units pursuant to their Deferred Compensation Election, (ii) compensation for service on one or more Independent Committees with respect to Messrs. Bandier, Salerno and Sykes and (iii) prorated retainer and meeting fees with respect to Mr. Vogel, for his service on the Board beginning April 20, 2023. The amounts reported do not include any reasonable out-of-pocket expenses incurred while attending meetings for which the Company reimburses each non-employee director. |
| (2) | This column reflects the grant date fair market value of (i) 3,519 restricted stock units granted on December 6, 2022, to each non-employee director (except in the case of Mr. Vogel, which reflects 4,072 units granted on May 30, 2023 to reflect prorated fees for his service on the Board from April 20, 2023 through the next anticipated annual equity retainer grant), and (ii) with respect to Messrs. Bandier, Lhota and Salerno, this column also reflects the difference between (x) the grant date fair market value of 1,728, 1,728 and 2,207 restricted stock units, respectively, granted in February 2023 pursuant to their Deferred Compensation Election for Board service during calendar year 2023, and (y) the Board retainer and meeting fees reported in the Fees Earned or Paid in Cash column for Board service during fiscal year 2023. Such grant date fair market value was calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 (“Topic 718”). The assumptions used by the Company in calculating these amounts are set forth in Note 14 to our financial statements included in our 2023 Form 10-K. The values reflected in this column differ from the value set forth in our directors’ compensation program because the value calculated under Topic 718 differs from the 20-trading day average used to determine the number of units granted to directors. The grant date fair value of the awards granted in December 2022 and February 2023 are based on the stock price of the pre-MSGE Distribution Company. The grant date fair value of the awards from May 2023 are based on the stock price of the post-MSGE Distribution Company. |
| (3) | For each current non-employee director, the aggregate number of restricted stock units held as of June 30, 2023 is as follows: Charles F. Dolan, 17,773 units; Charles P. Dolan, 8,141 units; Kristin A. Dolan, 12,201 units; Marianne Dolan Weber, 8,141 units; Paul J. Dolan, 14,749 units; Quentin F. Dolan, 8,141 units; Thomas C. Dolan, 17,773 units; Joseph J. Lhota, 16,636 units; Joel M. Litvin, 13,070 units; Brian G. Sweeney, 17,773 units; John L. Sykes, 14,906 units; Vincent Tese, 8,141 units; Isiah L. Thomas, 8,141 units; and Carl E. Vogel, 4,072 units. For each former non-employee director, the aggregate number of restricted stock units held as of June 30, 2023 is as follows: Martin Bandier, 9,869 units; and Frederic V. Salerno, 11,950 units. |
| (4) | In connection with the MSGE Distribution, each of the current non-employee directors and the former non-employee directors received one share of MSGE Class A Common Stock in respect of every restricted stock unit owned on the record date in accordance with the award agreement. |
| (5) | Mr. Vogel was appointed as a director of the Company by the directors elected by holders of the Company’s Class A Common Stock effective as of the MSGE Distribution Date. |
| (6) | Messrs. Bandier and Salerno resigned as directors of the Company effective as of the MSGE Distribution Date. Their restricted units will settle into shares 90 days after such director incurs a separation from service (other than in the event of a director’s death, in which case they are settled as soon as practicable). |
24
PROPOSAL 1 — ELECTION OF DIRECTORS
Our Board has nominated 16 candidates for election to the Board at this year’s annual meeting. Following the MSGE Distribution, the size of the Board was reduced from 17 to 16 directors.
Of the 16 director nominees, four are to be elected by the holders of our Class A Common Stock and twelve are to be elected by the holders of our Class B Common Stock. All 16 nominees have been nominated for a term to expire at the 2024 annual meeting and until their successors have been elected and qualified.
The Company representatives appointed by the Board (the persons named on the proxy card, or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted to elect each of the director nominees below, as applicable, based on whether you are a holder of our Class A Common Stock or our Class B
Common Stock. Information on each of our nominees is given below.
Each director nominee listed below has consented to being named in this proxy statement and has agreed to serve if elected. However, if a nominee for election as a director by the holders of our Class A Common Stock becomes unavailable before the election or for good cause will not serve, the persons named on the Class A proxy card would be authorized to vote for a replacement director nominee for election as a director by the holders of our Class A Common Stock if the Board names one. If a nominee for election as a director by the holders of our Class B Common Stock becomes unavailable before the election or for good cause will not serve, the persons named on the Class B proxy card would be authorized to vote for a replacement director nominee for election as a director by the holders of our Class B Common Stock if the Board names one.
The Board unanimously recommends that you vote FOR each of the following candidates:
25
JAMES L. DOLAN – Age 68
Class B Director since November 21, 2019
Committee Membership: None
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan has served as a director, the Executive Chairman and Chief Executive Officer of the Company since November 2019. Mr. Dolan has also served as a director and the Executive Chairman and Chief Executive Officer of MSGE since December 2022 and a director and the Executive Chairman of MSGS since 2015. Mr. Dolan has served as Non-Executive Chairman of AMC Networks since February 2023, previously serving in that role from September 2020 to December 2022, and has served as a director since 2011. He served as Interim Executive Chairman of AMC Networks from December 2022 to February 2023. Mr. Dolan was a director and the Executive Chairman of MSGN from 2009 until the Networks Merger in July 2021, the Chief Executive Officer of MSGS from November 2017 to April 2020 and the Chief Executive Officer of Cablevision Systems Corporation (“Cablevision”) from 1995 to 2016. He was President of Cablevision from 1998 to 2014; Chief Executive Officer of Rainbow Media Holdings, Inc., a former programming subsidiary of Cablevision that spun-off in 2011 to become AMC Networks, from 1992 to 1995; and Vice President of Cablevision from 1987 to 1992. In addition, Mr. Dolan previously served as a director of Cablevision from 1991 to 2016. James L. Dolan is the son of Charles F. Dolan, the spouse of Kristin A. Dolan, the father of Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan, the brother of Marianne Dolan Weber and Thomas C. Dolan, the brother-in-law of Brian G. Sweeney and the cousin of Paul J. Dolan.
Key Skills Experience
In light of his experience as Executive Chairman and Chief Executive Officer of the Company and MSGE, and as Executive Chairman and former Chief Executive Officer of MSGS, as well as experience in various positions with Cablevision, including as its Chief Executive Officer, and in various positions with MSGN and its predecessors since 1999, including as Executive Chairman, as well as the knowledge and experience he has gained about the Company’s businesses and contributions he has made during his tenure as a director of the Company, MSGS, MSGN, AMC Networks and Cablevision, our Board has concluded that James L. Dolan should serve as a director of the Company.
26
CHARLES F. DOLAN – Age 97
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan has served as a director and Chairman Emeritus of AMC Networks since 2011 and 2020, respectively. He served as Executive Chairman of AMC Networks from 2011 to September 2020 and Chairman of Cablevision from 1985 to 2016. He was Chief Executive Officer of Cablevision from 1985 to 1995. Mr. Dolan founded and acted as the General Partner of Cablevision’s predecessor from 1973 to 1985 and established Manhattan Cable Television in 1961 and Home Box Office in 1971. In addition to AMC Networks, Mr. Dolan has served as a director of MSGE since April 2023, MSGS since 2015, and previously served as a director of MSGN from 2009 to 2021 and Cablevision from 1985 to 2016. Charles F. Dolan is the father of James L. Dolan, Marianne Dolan Weber and Thomas C. Dolan, the father-in-law of Kristin A. Dolan and Brian G. Sweeney, the uncle of Paul J. Dolan and the grandfather of Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan
Key Skills Experience
In light of Mr. Dolan’s experience in the cable television and cable programming industries, as well as his experience as founder of Cablevision, his previous service as Chairman and Chief Executive Officer of Cablevision and its predecessors, his service as Executive Chairman and Chairman Emeritus of AMC Networks as well as the knowledge and experience he has gained about the Company’s business and contributions he has made during his tenure as a director of the Company, MSGE, MSGS, MSGN, AMC Networks and Cablevision, our Board has concluded that Charles F. Dolan should serve as a director of the Company.
CHARLES P. DOLAN – Age 36
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan has been an employee of Knickerbocker Group LLC since 2010. Mr. Dolan has served as a director of MSGE since April 2023, MSGS since 2015, and previously served as a director of MSGN from 2010 to 2015. He is a graduate of New York University and has significant familiarity with the business of the Company as a member of the third generation of Cablevision’s founding family. Mr. Dolan is the son of James L. Dolan, the stepson of Kristin A. Dolan, the brother of Quentin F. Dolan and Ryan T. Dolan, the grandson of Charles F. Dolan, the nephew of Marianne Dolan Weber, Thomas C. Dolan and Brian G. Sweeney and the cousin of Paul J. Dolan.
Key Skills Experience
In light of his familiarity with the Company’s business, being a member of the third generation of Cablevision’s founding family, as well as the knowledge and experience he has gained and the contributions he has made during his tenure as a director of the Company, MSGE, MSGS and MSGN, our Board has concluded that Charles P. Dolan should serve as a director of the Company.
27
KRISTIN A. DOLAN – Age 57
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: The Wendy’s Company (NASDAQ: WEN)
Career Highlights
Ms. Dolan has served as the Chief Executive Officer of AMC Networks since February 2023. Prior to that, she founded 605, LLC, an audience measurement and data analytics company in the media and entertainment industries, served as its Chief Executive Officer from its inception in 2016 until February 2023 and served as its Non-Executive Chairman until September 2023. Ms. Dolan previously served as the Chief Operating Officer of Cablevision from 2014 to 2016. Prior to becoming Chief Operating Officer, Ms. Dolan served in various other roles at Cablevision, including: President of Optimum Services from 2013 to 2014; Senior Executive Vice President of Product Management and Marketing from 2011 to 2013; and Senior Vice President from 2003 to 2011. Ms. Dolan has served as a director of The Wendy’s Company since 2017, and previously served as a director of Revlon, Inc. from 2017 until May 2023, AMC Networks from 2011 until March 2023, MSGS from 2015 to 2021, MSGN from 2010 to 2015 and from 2018 to 2021, and Cablevision from 2010 to 2016. Kristin A. Dolan is the spouse of James L. Dolan, the step-mother of Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan, the daughter-in-law of Charles F. Dolan, the sister-in-law of Marianne Dolan Weber, Thomas C. Dolan and Brian G. Sweeney and the cousin by marriage of Paul J. Dolan.
Key Skills Experience
In light of her experience as Chief Executive Officer of AMC Networks and as founder and former Chief Executive Officer of 605, LLC and in various positions at Cablevision, her service as a director of other public companies, as well as the knowledge and experience she has gained about the Company’s business and the contributions she has made during her tenure as a director of the Company, MSGS, MSGN, AMC Networks and Cablevision, our Board has concluded that Kristin A. Dolan should serve as a director of the Company.
28
MARIANNE DOLAN WEBER – Age 66
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Ms. Dolan Weber has been President of Heartfelt Wings Foundation Inc. since 2015 and a Member of the Board of Green Mountain Foundation Inc. since 2015. Ms. Dolan Weber currently serves as the manager of MLC Ventures LLC and served as Chairman of both the Dolan Family Foundation and the Dolan Children’s Foundation from 1999 to 2011 and Vice Chairman and Director of the Dolan Family Office, LLC from 1997 to 2011. Ms. Dolan Weber has served as a director of MSGE since April 2023, AMC Networks since June 2022 and a director of MSGS since 2016. She previously served as a director of AMC Networks from 2011 to June 2021, Cablevision from 2005 to 2016 and MSGN from 2010 to 2014. Marianne Dolan Weber is the daughter of Charles F. Dolan, the sister of James L. Dolan and Thomas C. Dolan, the sister-in-law of Brian G. Sweeney and Kristin A. Dolan, the cousin of Paul J. Dolan and the aunt of Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan.
Key Skills Experience
In light of her experience as a member of Cablevision’s founding family and as former Chairman of the Dolan Family Foundation and her experience as the former Vice Chairman of the Dolan Family Office, LLC, as well as the knowledge and experience she has gained about the Company’s business and contributions she has made during her tenure as a director of the Company, MSGE, MSGS, MSGN, AMC Networks and Cablevision, our Board has concluded that Marianne Dolan Weber should serve as a director of the Company.
PAUL J. DOLAN – Age 65
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: J.M. Smucker Company (NYSE: SJM), Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan has been the Chairman and Chief Executive Officer of the Cleveland Guardians Major League Baseball (“MLB”) team since 2010. Mr. Dolan was President of the Cleveland Guardians from 2004 to 2010 and Vice President and General Counsel from 2000 to 2004. Mr. Dolan has served on multiple committees of the MLB and is currently serving on the MLB’s Long Range Planning Committee, Ownership Committee and Diversity and Inclusion Committee as well as serving on the Executive Council. Mr. Dolan has been a director and member of the Executive Compensation Committee of the J.M. Smucker Company since 2006 and served as the Chair of the Executive Compensation Committee from 2017 until August 2022. Additionally, Mr. Dolan has served as a director of MSGE since April 2023, MSGS since December 2019 and Dix Eaton, a privately-owned communications and public relations firm, since 2014. Mr. Dolan previously served as a director of MSGN from 2015 to 2021 and Cablevision from 2015 to 2016. Mr. Dolan was Chairman and Chief Executive Officer of Fast Ball Sports Productions, a sports media company, from 2006 through 2012. Paul J. Dolan is the nephew of Charles F. Dolan, the cousin of James L. Dolan, Thomas C. Dolan, Marianne Dolan Weber, Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan and the cousin by marriage of Brian G. Sweeney and Kristin A. Dolan.
Key Skills Experience
In light of his extensive business and management experience in the sports and media industries, his experience as a member of Cablevision’s founding family, the experience he has gained during his tenure as a director of the Company, MSGE, MSGS, MSGN and of Cablevision, and his service on the board of other public and private companies, our Board has concluded that Paul J. Dolan should serve as a director of the Company.
29
QUENTIN F. DOLAN – Age 29
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan has been Investment Director of MSGS since 2022 and has served as a director of MSGS since 2021 and as a director of MSGE since April 2023. Mr. Dolan is a graduate of New York University. Mr. Dolan previously served as a director of MSGN from 2015 to June 2020 and has held internship positions at Grubman Shire Meiselas, P.C. and Azoff MSG Entertainment, LLC. Quentin F. Dolan is the son of James L. Dolan, the step-son of Kristin A. Dolan, the brother of Charles P. Dolan and Ryan T. Dolan, the grandson of Charles F. Dolan, the nephew of Marianne Dolan Weber, Thomas C. Dolan and Brian G. Sweeney, and the cousin of Paul J. Dolan.
Key Skills Experience
In light of his familiarity with the Company’s business as a member of the third generation of Cablevision’s founding family, as well as the knowledge and experience he has gained and the contributions he has made during his tenure as a director of the Company, MSGE, MSGS and MSGN, our Board has concluded that Quentin F. Dolan should serve as a director of the Company.
RYAN T. DOLAN – Age 34
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan has served as Vice President, Interactive Experiences of MSG Ventures, LLC, a wholly-owned subsidiary of the Company, since June 2019, and previously served as its Director, Interactive Experiences from 2016 to June 2019. Mr. Dolan has played an integral role in the growth and development of MSG Ventures, LLC’s interactive gaming initiatives and has significant familiarity with the business of the Company as a member of the third generation of Cablevision’s founding family. Mr. Dolan has served as a director of MSGE since April 2023 and MSGS since December 2019. Mr. Dolan is the son of James L. Dolan, the stepson of Kristin A. Dolan, the brother of Charles P. Dolan and Quentin F. Dolan, the grandson of Charles F. Dolan, the nephew of Marianne Dolan Weber, Thomas C. Dolan and Brian G. Sweeney and the cousin of Paul J. Dolan.
Key Skills Experience
In light of his familiarity with the Company’s business, being a member of the third generation of Cablevision’s founding family, as well as the knowledge and experience he has gained about the Company’s business as an employee of MSG Ventures, a wholly-owned subsidiary of the Company, and a key contributor to the Company’s growth strategy, and his service as a director of the Company, MSGE and MSGS, our Board has concluded that Ryan T. Dolan should serve as director of the Company.
30
THOMAS C. DOLAN – Age 71
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Dolan served as Executive Vice President — Strategy and Development, Office of the Chairman of Cablevision from 2008 to 2016. He was Chief Executive Officer of Rainbow Media Corp. from 2004 to 2005; and previously served in various roles at Cablevision, including: Executive Vice President and Chief Information Officer from 2001 until 2005, Senior Vice President and Chief Information Officer from 1996 to 2001, Vice President and Chief Information Officer from 1994 to 1996, General Manager of Cablevision’s East End Long Island cable system from 1991 to 1994, and System Manager of Cablevision’s East End Long Island cable system from 1987 to 1991. Mr. Dolan has served as a director of MSGE since April 2023, MSGS since 2015 and AMC Networks since 2011 and previously served as a director of MSGN from 2010 to 2021 and Cablevision from 2007 to 2016. Mr. Dolan is the son of Charles F. Dolan, the brother of James L. Dolan and Marianne Dolan Weber, the brother-in-law of Brian G. Sweeney and Kristin A. Dolan, the cousin of Paul J. Dolan and the uncle of Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan.
Key Skills Experience
In light of his experience as a member of Cablevision’s founding family and in various positions with Cablevision, as well as the knowledge and experience he has gained about the Company’s business and contributions he has made during his tenure as a director of the Company, MSGE, MSGS, MSGN, AMC Networks and Cablevision, our Board has concluded that Thomas C. Dolan should serve as a director of the Company.
JOSEPH J. LHOTA – Age 69
Class A Director since April 17, 2020
Committee Membership: Audit (Chair), Compensation
Other Public Company Directorships: None
Career Highlights
Mr. Lhota has been the Executive Vice President, Vice Dean and Chief of Staff at NYU Langone Health since 2014 and has been an adjunct professor for the NYU Grossman School of Medicine since 2014. In 2013, Mr. Lhota was a candidate for Mayor of the City of New York. He previously served as Chairman and Chief Executive Officer of the New York Metropolitan Transportation Authority from 2011 to 2012 and Chairman from 2017 to 2018. Mr. Lhota was Executive Vice President of MSGN from 2010 to 2011 and Executive Vice President of Cablevision from 2002 to 2010. Mr. Lhota was also New York City’s Deputy Mayor for Operations from 1997 to 2001 and Budget Director from 1995 to 1997. Prior to government service, Mr. Lhota had a career in investment banking and public accounting from 1976 to 1994. Mr. Lhota previously served as a director and chairman of the audit committee of MSGN from 2016 until the Networks Merger in July 2021, and as a director of MSGS from 2017 to April 2020, a director and the chairman of the audit committee of FirstAviation Services, Inc. from 2002 until it became a private company in 2015, and a director of Cablevision from 2014 to 2016.
Key Skills Experience
In light of Mr. Lhota’s experience as a former executive of MSGN, as well as the knowledge he has gained about the Company’s business and the contributions he has made during his tenure as a director of the Company, as well as during his tenure as a director of MSGS, MSGN and Cablevision, his experience as a senior executive and director of other public companies, his knowledge of the media and entertainment industry, his government service (including leading a major governmental organization) and his experience as an investment banker and accountant, our Board has concluded that Mr. Lhota should serve as a director of the Company.
31
JOEL M. LITVIN – Age 64
Class A Director since July 9, 2021
Committee Membership: None
Other Public Company Directorships: None
Career Highlights
Mr. Litvin was the President, League Operations, of the NBA from 2006 until his retirement in 2015. As the NBA’s President, League Operations, he managed several core areas of the day-to-day operations of the NBA, including the league’s basketball operations, security, player development, social responsibility and legal functions. Mr. Litvin also managed, on behalf of the NBA Board of Governors, franchise matters such as revenue sharing, team sales and financings, relocations and the NBA’s ownership and debt policies. At the NBA, Mr. Litvin was previously Executive Vice President, Legal and Business Affairs, from 2000 to 2006, Senior Vice President and General Counsel from 1999 to 2000, and he started at the NBA as a staff attorney in 1988. Mr. Litvin began his professional career at the New York law firm of Willkie Farr Gallagher, where he worked on several matters for Major League Baseball. As founder and president of Calumet Consulting, LLC, a sports consulting business, Mr. Litvin has provided sports consulting services to various sports properties and individuals since 2018. Mr. Litvin has served as a member of the Board of Trustees of the Naismith Memorial Basketball Hall of Fame since 2008. He has also served as a lecturer in Columbia University’s master’s degree program in Sports Management since 2018. Mr. Litvin previously served as a director of MSGN from 2015 until the Networks Merger in July 2021, and was a member of its Audit Committee and Compensation Committee.
Key Skills Experience
In light of his more than 27 years of business experience at the NBA (including as the chief NBA league office liaison to the NBA Board of Governors), extensive knowledge about the sports and media businesses, management and legal experience, and service on the boards of the Company, MSGN and various charitable institutions, our Board has concluded that Mr. Litvin should serve as a director of the Company.
BRIAN G. SWEENEY – Age 59
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Madison Square Garden Entertainment Corp. (NYSE: MSGE), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Sweeney served as the President of Cablevision from 2014 and President and Chief Financial Officer of Cablevision from 2015 to 2016. Previously, Mr. Sweeney served in various other roles at Cablevision, including: Senior Executive Vice President, Strategy and Chief of Staff from 2013 to 2014; Senior Vice President — Strategic Software Solutions from 2012 to 2013; and Senior Vice President — eMedia from January 2000 to 2012. Mr. Sweeney has served as a director of MSGE since April 2023, MSGS since 2015 and AMC Networks since 2011 and previously served as a director of MSGN from 2010 to 2021 and Cablevision from 2005 to 2016. Brian G. Sweeney is the son-in-law of Charles F. Dolan, the brother-in-law of James L. Dolan, Marianne Dolan Weber, Thomas C. Dolan and Kristin A. Dolan, the cousin by marriage of Paul J. Dolan and the uncle of Charles P. Dolan, Quentin F. Dolan and Ryan T. Dolan.
Key Skills Experience
In light of his experience in various positions with Cablevision, as well as the knowledge and experience he has gained about the Company’s business and contributions he has made during his tenure as a director of the Company, MSGE, MSGS, MSGN, AMC Networks, and Cablevision, our Board has concluded that Brian G. Sweeney should serve as a director of the Company.
32
JOHN L. SYKES – Age 68
Class A Director since April 17, 2020
Committee Membership: Compensation (Chair)
Other Public Company Directorships: None
Career Highlights
Mr. Sykes has been the President of Entertainment Enterprises for iHeartMedia, Inc., a global media and entertainment company, since 2012. In his role at iHeartMedia, Mr. Sykes is responsible for developing new business partnerships and platforms across a range of media, including broadcast television, digital video platforms and live events, as well as creating value for iHeartMedia’s advertisers and key partners. Mr. Sykes is the co-executive producer of iHeartRadio branded annual live events, which include multiple iHeartRadio live events that are broadcast on network television annually. He also worked with iHeartMedia in a consulting role during 2011. Prior to joining iHeartMedia, Mr. Sykes was affiliated with the Pilot Group, a private equity and venture firm, from 2008 to 2011. He was a core member of the team at Viacom, Inc. that launched MTV Networks in 1981. During his more than 20-year tenure at Viacom, Mr. Sykes served as President of New Network Development for MTV from 2005 to 2008, Chairman and CEO of Infinity Broadcasting Corporation (now CBS Radio) from 2002 to 2005 and President of the VH1 Cable Television Network from 1994 to 2002. Mr. Sykes is the founder and has served as a director since 1997 of VH1 Save the Music, and has also served on the boards of Critical Content since 2016, the Robin Hood Foundation since 1996, the Rock and Roll Hall of Fame since 1997, If Only since 2013, and Syracuse University’s Newhouse School of Communications since 1994, and previously served on the board of MSGN from 2015 until Networks Merger in July 2021, and Shazam Mobile from 2011 to 2014.
Key Skills Experience
In light of his approximately 40 years of business and management experience, as well as the knowledge and experience he gained and contributions he made during his tenure as a director of MSGN, his extensive experience in the media, television and entertainment industries and his service on the boards of other companies and charitable institutions, our Board has concluded that John L. Sykes should serve as a director of the Company.
33
VINCENT TESE – Age 80
Class B Director since April 17, 2020
Committee Membership: Audit
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Claros Mortgage Trust, Inc. (NYSE: CMTG), Madison Square Garden Sports Corp. (NYSE: MSGS)
Career Highlights
Mr. Tese has served as a director of Claros Mortgage Trust, Inc. since 2021, AMC Networks since 2016 and MSGS since 2015. Mr. Tese served as Executive Chairman of FCB Financial Holdings, Inc. (formerly known as Bond Street Holdings, LLC), a bank holding company, from 2009 until January 2019 and Executive Chairman of its subsidiary Florida Community Bank from 2010 until January 2019. Mr. Tese served as New York State Superintendent of Banks from 1983 to 1985, Chairman and Chief Executive Officer of the New York State Urban Development Corporation from 1985 to 1987, Director of Economic Development for New York State from 1987 to 1994 and Commissioner and Vice Chairman of the Port Authority of New York and New Jersey from 1991 to 1995. Mr. Tese was the Commissioner of the Department of Economic Development and Chairman of both the Science and Technology Foundation and the Job Development Authority. Mr. Tese also serves as a director of New York Racing Association, Inc., and a trustee of New York Presbyterian Hospital since 1996 and New York University School of Law since 1990. Mr. Tese previously served as a director of Intercontinental Exchange, Inc. from 2004 to May 2022, FCB Financial Holdings, Inc. from 2010 to 2019, Mack-Cali Realty Corporation from 1997 to 2019, Cablevision from 1996 to 2016 and MSGN from 2010 to 2015. He also served as a director of Gabelli Asset Management, National Wireless Holdings, Inc., and The Bear Stearns Companies, Inc. from 1994 to 2008.
Key Skills Experience
In light of his experience as the Chief Executive Officer of the New York State Urban Development Corporation, his other government service, his experience as the executive chairman of private companies, his service as a director of other public companies, as well as the knowledge and experience he has gained about the Company’s business and the contributions he has made during his tenure as a director of the Company, MSGS, MSGN, AMC Networks and Cablevision, our Board has concluded that Vincent Tese should serve as a director of the Company.
34
ISIAH L. THOMAS III – Age 62
Class B Director since April 17, 2020
Committee Membership: None
Other Public Company Directorships: One World Products, Inc. (OTC:OWPC), UWM Holdings Corporation (NYSE: UWMC)
Career Highlights
Mr. Thomas has been the Chairman and Chief Executive Officer of Isiah International, LLC, a holding company with interests in a diversified portfolio of businesses, since 2011. Mr. Thomas has served as a Commentator and Analyst for NBA TV, a sports broadcasting channel, since 2014 and Turner Sports, a sports broadcasting channel, since 2012. Mr. Thomas has also served as Chief Executive Officer and Executive Chairman of One World Products, Inc., a company licensed to cultivate, produce and distribute raw cannabis and hemp plant ingredients for medical, scientific and industrial uses, since 2020. He previously served as the President Alternate Governor of the New York Liberty of the Women’s National Basketball Association from 2015 to February 2019, the Head Basketball Coach at Florida International University, a higher education institution, from 2009 to 2012, the General Manager, President of Basketball Operation and Head Coach of the New York Knicks of the NBA, which is owned by MSGS, from 2006 to 2008, the Head Coach of the Indiana Pacers of the NBA from 2000 to 2003, the Owner of the Continental Basketball Association from 1998 to 2000, Minority Owner Executive Vice President of the Toronto Raptors of the NBA from 1994 to 1998 and point guard for the Detroit Pistons of the NBA from 1981 to 1994. Mr. Thomas has served as a director of UWM Holdings Corporation, a residential and wholesale mortgage lender, since January 2021, Get in Chicago, an organization focused on stopping gun and related violence in Chicago, since 2013 and he is the Founder of Mary’s Court Foundation, a charitable organization established in 2010. Mr. Thomas graduated from Indiana University and received a Master’s degree in Education from the University of California at Berkeley.
Key Skills Experience
In light of his over 25 years of business and management experience, his knowledge of the sports and entertainment industries, as well as his familiarity with the Company’s business through his previous roles with the Knicks, our Board has concluded that Isiah L. Thomas III should serve as a director of the Company.
35
CARL E. VOGEL – Age 66
Class A Director since April 20, 2023
Committee Membership: Audit, Compensation
Other Public Company Directorships: AMC Networks Inc. (NASDAQ: AMCX), Universal Electronics, Inc. (NASDAQ: UEIC), Sirius XM Holdings Inc. (NASDAQ: SIRI)
Career Highlights
Mr. Vogel is a private investor and an industry advisor for KKR Co Inc., a leading global investment firm. He is also an Executive Partner of Mill Point Capital, a middle market private equity firm, and Executive Chairman of Full Circle Fiber Partners, LLC. Mr. Vogel served as President of Dish Network Corporation, a satellite television provider from September 2006 until February 2008 and served as its Vice Chairman from June 2005 until March 2009. From October 2007 until March 2009, Mr. Vogel served as the Vice Chairman of the board of directors of, and as a Senior Advisor to, EchoStar Communications Corporation. From 2001 until 2005, Mr. Vogel served as the President and Chief Executive Officer of Charter Communications, Inc., a cable television and broadband services provider. Prior to joining Charter, Mr. Vogel worked as an executive officer in various capacities for companies affiliated with Liberty Media. Mr. Vogel is a member of the board of directors of AMC Networks, Universal Electronics, Inc. and Sirius XM Holdings Inc. Mr. Vogel also served as a director of Shaw Communications, Inc., Dish Network Corporation and Ascent Media Corporation, Inc. during the last five years, and previously served as the chairman of Progress Acquisition Corp., a blank check company.
Key Skills Experience
In light of his extensive experience in executive leadership at various communications and media companies, the knowledge he has gained through multiple public company directorships and the contributions he has made during his tenure as a director of AMC, our Board has concluded, acting on the recommendation of the directors elected by the holders of our Class A Common Stock, that Carl E. Vogel should serve as a director of the Company.
36
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee, comprised of independent members of the Board, has appointed Deloitte Touche LLP (“Deloitte”) as our independent registered public accounting firm (the independent auditors) with respect to our operations for the fiscal year ending June 30, 2024. Deloitte will audit our financial statements for the fiscal year ending June 30, 2024. Representatives of Deloitte will be present at the 2023 annual meeting. Those representatives will have the opportunity to make a statement if they desire to do so and will answer appropriate questions.
Even if the selection is ratified, the Audit Committee may, in its discretion, select a
different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
We are asking that you ratify the appointment of Deloitte, although your ratification is not required. Approval of this proposal requires the favorable vote of the majority of the votes cast by the holders of our Company Stock, voting together as a single class. In accordance with our Certificate of Incorporation, holders of our Class A Common Stock will have one vote per share and holders of our Class B Common Stock will have ten votes per share.
The Board unanimously recommends that you vote FOR this proposal.
37
AUDIT COMMITTEE MATTERS
SERVICES AND FEES FOR 2023 AND 2022
The following table provides information about fees billed for services rendered by Deloitte for
our fiscal years ended June 30, 2023 and June 30, 2022:
| Fiscal Year Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Audit fees(1) |
$ |
1,455,000 |
|
$ |
2,605,000 |
| ||
| Audit-related fees(2) |
$ |
2,000,000 |
|
$ |
245,000 |
| ||
| Tax fees(3) |
$ |
115,000 |
|
$ |
84,000 |
| ||
| All other fees |
|
— |
|
|
— |
| ||
| (1) | Audit fees of the Company in the fiscal years ended June 30, 2023 and 2022 consisted of fees for services rendered for the integrated audits of the Company’s consolidated financial statements and its internal control over financial reporting, for review of the interim consolidated financial statements included in quarterly reports, audit consultations, assistance with and review of documents filed with SEC, including in the fiscal year ended June 30, 2023 services related to the filings of Form S-8, in the fiscal year ended June 30, 2022 services related to the Networks Merger, and for services in connection with standalone and statutory audits. |
| (2) | Audit-related fees of the Company in the fiscal years ended June 30, 2023 and 2022, consisted primarily of fees for services relating to the carve out audits related to the MSGE Distribution in the fiscal year ended 2023, and in the fiscal year ended June 30, 2022 consisted of audits of certain retirement plans. |
| (3) | Tax fees of the Company in the fiscal years ended June 30, 2023 and 2022 consisted primarily of tax consultation and advisory services. |
The Audit Committee’s policy requires that the Audit Committee pre-approve audit and non-audit services performed by the independent registered public accounting firm. In addition, under the Audit Committee’s pre-approval policy, the Chairman of the Audit Committee may pre-approve audit and non-audit services, provided that any such services are subsequently
ratified by the entire Audit Committee. All of the services for which fees were disclosed and paid by the Company were pre-approved under the Audit Committee’s pre-approval policy. The Audit Committee has determined that the provision of the services described above is compatible with maintaining the independence of our independent registered accounting firm.
38
REPORT OF AUDIT COMMITTEE
The Audit Committee assists the Board in its oversight of the Company’s financial reporting, internal controls, and audit functions. As set forth in the charter of the Audit Committee, management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles, and the Company’s internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Following the MSGE Distribution Date, the Company’s Internal Audit function is provided to the Company by the Internal Audit Department of MSGE through an agreement with MSGE. The Internal Audit function provides the Audit Committee and management an independent review function, including reviewing and evaluating the adequacy, effectiveness, and quality of the Company’s system of internal controls.
The Company’s independent registered public accounting firm, Deloitte, is responsible for auditing the Company’s financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on the conformity of the consolidated financial statements to U.S. generally accepted accounting principles (“U.S. GAAP”) and on the effectiveness of the Company’s internal control over financial reporting.
In the performance of its oversight function, the Audit Committee has reviewed and discussed with management and Deloitte the audited financial statements and its evaluation of the Company’s internal control over financial reporting. The Audit Committee discussed with Deloitte the matters required to be discussed pursuant to PCAOB standards. The Audit Committee received the written disclosures and the letter from Deloitte required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee regarding independence, and the Audit Committee discussed with Deloitte the firm’s independence. All audit and non-audit services performed by Deloitte must be specifically approved by the Audit Committee or by its Chairman (and subject to ratification by the full committee).
As part of its responsibilities for oversight of the risk management process, the Audit Committee has reviewed and discussed the Company’s risk assessment and risk management framework, including discussions of individual risk areas as well as a summary of the overall process.
The Audit Committee discussed with the Company’s Internal Audit Department and Deloitte, the overall scope of and plans for their respective audits. For the fiscal year ended June 30, 2023, the Audit Committee met with (i) prior to the MSGE Distribution, the head of the Company’s Internal Audit Department; and (ii) following the MSGE Distribution, the head of the Internal Audit Department of MSGE (who oversees the provision of internal audit services to the Company under an agreement with MSGE) and, in each case, representatives of Deloitte, in regular and executive sessions, 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 and compliance programs.
Based upon the reports, reviews and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements be included in the 2023 Form 10-K that was filed with the SEC.
Members of the Audit Committee
Joseph J. Lhota (Chair)
Vincent Tese
Carl E. Vogel
39
LETTER FROM THE COMPENSATION COMMITTEE
Dear Fellow Stockholder,
The Compensation Committee believes in the importance of motivating executives with a pay-for-performance compensation structure that aligns with our strategy. To that end, each year, the Compensation Committee evaluates the Company’s compensation program and makes compensation decisions within the context of four over-arching principles that we believe establish pay and performance alignment and appropriately motivate our executive officers:
| • | A significant portion of each executive officer’s compensation opportunity should be at risk; |
| • | Long-term incentives should generally comprise a greater proportion of total compensation than short-term incentives; |
| • | Equity compensation should be a meaningful component of total compensation in order to establish a direct alignment of interests between executive officers and our stockholders; and |
| • | We should attract, retain, motivate and reward the best talent in a competitive industry. |
The Compensation Committee also seeks to include the input of our stockholders in the regular evaluation of our programs and welcomes continued stockholder feedback regarding our executive compensation practices. During the 2023 fiscal year, management of the Company engaged with holders of over 70% of our Class A Common Stock to discuss our Board, governance and/or compensation practices, with the specific goal of seeking stockholder feedback.
Further detail on our compensation program and 2023 fiscal year compensation is included in the following Compensation Discussion Analysis. We are committed to maintaining a compensation structure that aligns pay with performance and effectively motivates our executive officers to continue driving long-term value creation for our stockholders.
Members of the Compensation Committee
Joseph J. Lhota
John L. Sykes (Chair)
Carl E. Vogel
40
COMPENSATION DISCUSSION ANALYSIS
This Compensation Discussion Analysis provides a discussion of our compensation
philosophy and 2023 fiscal year compensation for the following NEOs:
| Current NEOs | ||
| James L. Dolan | Executive Chairman and Chief Executive Officer | |
| Andrea Greenberg | President and Chief Executive Officer of MSG Networks | |
| David Granville-Smith | Executive Vice President | |
| Gautam Ranji | Executive Vice President, Chief Financial Officer and Treasurer | |
| Gregory Brunner | Senior Vice President, Controller and Principal Accounting Officer |
| Former Executives | ||
| David F. Byrnes | Former Executive Vice President and Chief Financial Officer | |
| Jamal H. Haughton | Former Executive Vice President and General Counsel | |
| Philip G. D’Ambrosio | Former Senior Vice President and Treasurer |
COMPENSATION DISCLOSURE CONSIDERATIONS RELATED TO THE MSGE DISTRIBUTION
On April 20, 2023, the Company completed the MSGE Distribution and spun-off its traditional live entertainment business into a separate publicly traded company, Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.). In connection with the MSGE Distribution, the Company changed its name to Sphere Entertainment Co. and changed its symbol on the NYSE to “SPHR.”
In connection with the MSGE Distribution, the employment agreements of Messrs. David F. Byrnes, Jamal H. Haughton and Philip G. D’Ambrosio were assigned to MSGE, and they are no longer employed by the Company, but for purposes of this Compensation Discussion Analysis are deemed to be named executive officers.
Following the MSGE Distribution, Mr. Dolan serves as an officer and employee of the Company, MSGE and MSGS.
Mr. Ranji became Executive Vice President, Chief Financial Officer and Treasurer effective April 20, 2023 and served as the Company’s principal accounting officer until Mr. Brunner became Senior Vice President, Controller and Principal Accounting Officer, effective June 5, 2023. Mr. Granville-Smith became Executive Vice President effective June 15, 2023. Each of Messrs. Ranji, Brunner and Granville-Smith, became executive officers of the Company as of each respective effective date.
This Compensation Discussion Analysis describes the specific arrangements that the Company had in place for our NEOs in the fiscal year ended June 30, 2023, as well as a discussion of our compensation philosophy for the NEOs with respect to that year.
41
EXECUTIVE SUMMARY
Business Overview
The Company is a premier live entertainment and media company and manages its business through two reportable segments:
| • | Sphere: This segment reflects Sphere, a next-generation entertainment medium powered by cutting-edge technologies that enables multi-sensory storytelling at an unparalleled scale. The Company’s first Sphere opened in Las Vegas in September 2023. The venue can accommodate up to 20,000 guests and will host a wide variety of events year-round, including The Sphere Experience, which features original immersive productions, as well as concerts and residencies from renowned artists, and marquee sporting and corporate events. Supporting this strategy is Sphere Studios, which is home to a team of creative, production, technology and software experts who provide full in-house creative and production services. The studio campus in Burbank includes a 68,000-square-foot development facility, as well as Big Dome, a 28,000-square-foot, 100-foot high custom dome, with a quarter-sized version of the screen at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere. |
| • | MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its direct-to-consumer streaming product, MSG+. MSG Networks serves the New York Designated Market Area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the Knicks of the NBA, and the Rangers, Islanders, Devils and Sabres of the NHL, as well as significant coverage of the Giants and the Bills of the NFL. |
Fiscal Year 2023 Operational Highlights
The MSGE Distribution occurred on April 20, 2023, and therefore, the operational highlights for the fiscal year ended June 30, 2023 reflect the operations of our Sphere and MSG Networks businesses, as well as the traditional live entertainment business prior to the MSGE Distribution Date. Fiscal year 2023 was a noteworthy year as we successfully executed a number of strategic priorities, with highlights including:
| • | Successfully achieving key strategic initiatives, including: |
| ○ | Completing the MSGE Distribution, a transaction that we believe sets the stage for long-term value creation for our shareholders; and |
| ○ | Completing the sale of the Company’s majority interest in TAO Group Sub-Holdings LLC (“Tao Group Hospitality”) in a transaction that valued Tao Group Hospitality at $550 million and resulted in approximately $290 million of net proceeds to the Company; |
| • | Making meaningful progress on the Company’s Sphere initiative, including: |
| ○ | Completing primary construction of Sphere in Las Vegas, which opened at the end of September 2023; |
| ○ | Announcing that global rock band U2 would open the venue on September 29, 2023 with the first of 25 performances; |
| ○ | Announcing that The Sphere Experience, featuring the Company’s original immersive production, Postcard from Earth, directed by Academy Award nominee, Darren Aronofsky, would debut publicly on October 6, 2023; and |
42
| ○ | Launching Sphere Studios, the Company’s immersive content studio dedicated to creating multisensory live entertainment experiences exclusively for Sphere through proprietary and cutting-edge technology, tools and production facilities; |
| • | Telecasting hundreds of live professional sports telecasts for MSG Networks’ five NBA and NHL sports teams and delivering a record advertising revenue year in the aggregate across those teams; |
| • | Completing renewals with several distributors of MSG Networks, including with one of our largest affiliates; |
| • | Launching MSG+, a state-of-the-art direct-to-consumer and authenticated streaming platform that features MSG Networks’ two linear networks, including MSG Networks’ live sports events and programming. In addition to monthly and annual subscription offerings, fans have the option to purchase single games, a first-of-its kind offering for any regional sports network; |
| • | Benefiting from robust consumer and corporate demand in the traditional live entertainment business, including: |
| ○ | Successfully hosting the first full year of events at our venues since the onset of the pandemic, which included a wide variety of marquee entertainment and sporting events, including the return of the Christmas Spectacular production for the show’s 89th year at Radio City Music Hall and its first complete run since the 2019 holiday season. In the aggregate, the Company and MSGE hosted over 5.5 million guests at nearly 900 live events in fiscal year 2023; |
| ○ | Delivering a record number of concerts during the 2023 fiscal year at The Garden and Radio City Music Hall, |
| which helped drive full-year event-related revenues above pre-pandemic levels; |
| ○ | Continuing to focus on the in-arena experience, which helped drive an over 10% increase in food, beverage and merchandise per-capita spending for the Company and MSGE in fiscal year 2023; |
| ○ | Achieving the Christmas Spectacular’s highest grossing run in the show’s history, with over $130 million dollars in revenue, approximately 930,000 tickets sold and record-setting ticket yields across 181 shows; |
| ○ | Exceeding pre-pandemic levels in our premium hospitality and marketing partnerships business as the Company continued to benefit from robust corporate demand; and |
| ○ | Successfully renewing key signature marketing partners such as Verizon and Spectrum, and entering into multi-year agreements with new partners, including with new signature-level partner Hub International and with QVC as the presenting partner of the Christmas Spectacular; |
| • | Successfully entering into a $275 million five-year term loan to support the Company’s growth plans with Sphere in Las Vegas; and |
| • | Monetizing approximately $205 million, or 6.9 million shares, of the Company’s retained interest in MSGE, with approximately 10.1 million shares of MSGE’s Class A common stock still held as of June 30, 2023. |
Stockholder Engagement Responsiveness
During the 2023 fiscal year, we engaged with holders of over 70% of our Class A Common Stock concerning our Board, governance and/or executive compensation practices, with the specific goal of seeking stockholder feedback.
43
The Compensation Committee has incorporated various aspects of stockholder feedback into our disclosure practices, and we continue to make enhancements that we believe further align our compensation disclosures with our long-term strategy and interests of our stockholders. Such enhancements include the improvement of disclosures regarding the annual incentive program goal-setting process and the measurement of achievement against those goals, illustrating the alignment of the annual incentive payouts with the Company’s strategic objectives. In seeking to continue our efforts to align our compensation practices with long-term stockholder interests, the Committee seeks out and values opportunities to receive stockholder feedback. We look forward to continuing to receive such feedback to inform the regular, ongoing review of our compensation program.
Executive Compensation Program Objectives and Philosophy
The Company is a premier live entertainment and media company. Sphere is a next-generation entertainment medium, and MSG Networks operates two regional sports and entertainment
networks, as well as a direct-to-consumer and authenticated streaming product. We operate in specialized industries and our executive officers have substantial and meaningful professional experience in these industries. Given the unique nature of our business, including the design and construction of Sphere in Las Vegas, the creation of our original immersive productions and MSG Networks’ direct-to-consumer product, the Company places great importance on its ability to attract, retain, motivate and reward experienced executive officers who can drive our business objectives and achieve strong financial, operational and stock price performance, as well as long-term value creation. The Compensation Committee has designed executive compensation policies and programs that are consistent with, explicitly linked to, and supportive of the financial and strategic objectives of growing the Company’s businesses and driving long-term stockholder value.
Our Compensation Committee has designed a program that reflects four key overarching executive compensation principles:
| Principle
|
Implementation(1)
| |
|
A significant portion of compensation opportunities should be at risk. |
• The majority of executive compensation is at risk and based on stockholder returns as well as the Company’s performance against predetermined financial performance targets.
| |
|
Long-term performance incentives should generally outweigh short-term performance incentives.
|
• Incentive compensation focuses more heavily on long-term rather than short-term accomplishments and results.
| |
|
Executive officers should be aligned with our stockholders through equity compensation.
|
• Equity-based compensation comprises a substantial portion of executive compensation, ensuring alignment with stockholder interests.
| |
|
The compensation structure should enable the Company to attract, retain, motivate and reward the best talent in a competitive industry. |
• The overall executive compensation program is competitive, equitable and thoughtfully structured so as to attract, retain, motivate and reward talent.
• The Compensation Committee focuses on total direct compensation, as well as individual compensation elements when providing competitive compensation opportunities.
| |
| (1) | Excludes any one-time awards, including awards granted in connection with commencement of employment. |
44
In designing our executive compensation program, the Compensation Committee seeks to fulfill these objectives by maintaining appropriate balances between (1) short-term and long-term compensation, (2) cash and equity compensation, and (3) performance-based and time-based vesting of compensation.
Elements of Fiscal Year 2023 Compensation Performance Objectives
The Company compensates its NEOs through base salary, annual incentive awards, long-term incentive awards, perquisites and benefit programs. Our annual and long-term incentive programs provide performance-based incentives for our NEOs tied to key financial and strategic measures that drive long-term stockholder value
and reward sustained achievement of the Company’s key financial goals. The Company considers net revenue and AOI to be key financial measures of its operating performance. As such, our Compensation Committee has reflected these performance measures in our incentive plans, along with other specific strategic and operating measures. The Company’s long-term incentive program also includes restricted stock units, the value of which is tied to the performance of the market value of the Company’s Class A Common Stock.
The table below summarizes the elements of our compensation program for the 2023 fiscal year and how each element was linked to Company performance.
45
|
Component
|
Performance Link
|
Description
| ||||||||
| Base Salary |
Cash | • Fixed level of compensation determined primarily based on the role, job performance and experience
• Intended to compensate NEOs for day-to-day services performed | ||||||||
| Annual Incentive (Corporate Business Unit) | Cash | Financial(1) (50%) |
Total Company Net Revenue (30%) | • Performance-based cash incentive opportunity • Designed to be based on the achievement of pre-determined total Company financial performance measures and business unit strategic performance measures approved by the Compensation Committee | ||||||
| Total Company AOI (70%) | ||||||||||
| Strategic (50%) |
Strategic Objectives | |||||||||
| Annual Incentive (Networks Business Unit) |
Cash |
Financial (50%)
|
50% Total Company results(1) | Total Company Net Revenue (30%); Total Company AOI (70%) | • Performance-based cash incentive opportunity • Designed to be based on the achievement of pre-determined total Company and business unit financial measures and business unit strategic performance measures approved by the Compensation Committee | |||||
| 50% Networks Business Unit results |
Networks Business Unit Net Revenue (30%); Networks Business Unit AOI (70%) | |||||||||
| Strategic (50%) |
Strategic Objectives | |||||||||
| Long-Term Incentive | Performance Stock Units (50%) | Total Company Net Revenue (50%) |
• Financial performance targets were pre-determined by the Compensation Committee to incentivize strong execution of our strategy and long-term financial goals and will be amended by the Compensation Committee to reflect the MSGE Distribution as described herein • Cliff-vest after three years to the extent that financial performance targets measured in the last year of the three-year period are achieved
| |||||||
| Total Company Business Unit AOI (50%) | ||||||||||
| Restricted Stock Units (50%) |
Stock Price Performance
|
• Share-based award establishes direct alignment with our stock price performance and stockholder interests • Vest ratably over three years
| ||||||||
| (1) | As a result of the MSGE Distribution, and as discussed in greater detail under “— Elements of Our Compensation Program — Annual Cash Incentives,” for fiscal year 2023, total Company financial performance for the annual incentive awards was evaluated based on the combined financial performance of the Company and MSGE, as reflected in the “Consolidated Total Company Net Revenue” and “Consolidated Total Company AOI” financial measures. |
46
2023 Fiscal Year Annual Compensation Opportunities Mix
As described above, the Company’s compensation program is designed with significant long-term
performance-based and at-risk components. For the 2023 fiscal year, a substantial majority of NEO compensation was at risk, with a majority of at-risk compensation granted in the form of long-term equity-based awards.
| Executive Chairman and Chief Executive Officer Pay Mix(1)(2) | Average NEO Pay Mix(1)(2) (excluding Executive Chairman and Chief Executive Officer)
| |
|
|
| (1) | Reflects the allocation of base salary, annual target bonus opportunity, and long-term incentive award target value as set forth in each current NEO’s employment agreement for the 2023 fiscal year (except with respect to Messrs. Granville-Smith and Brunner). For calculating the Average NEO Pay Mix and to best reflect the go-forward pay mix for Messrs. Granville-Smith and Brunner, includes each of Messrs. Granville-Smith’s and Brunner’s base salary and 2024 fiscal year annual target bonus opportunity and long-term incentive target value, as per the terms of their employment agreements, they were not eligible to participate in the Company’s fiscal year 2023 MPIP (as defined below) and long-term incentive programs given their start dates of June 15, 2023 and June 5, 2023, respectively. |
| (2) | Sum of compensation elements or the “At-Risk” value shown may not add to 100% (or “At-Risk” value) due to rounding. |
47
Sound Compensation Governance Practices
The Company’s executive compensation program is overseen by the wholly independent Compensation Committee, with the support of an
independent compensation consultant and independent legal counsel. We maintain a compensation program with strong governance features, including:
|
Compensation Practices
| ||
| ✓ |
Substantial proportion of standard annual compensation is at risk (89% for the Executive Chairman and Chief Executive Officer and 69% on average for the other NEOs) | |
| ✓ |
Short- and long-term incentives earned based on the achievement of objective, pre-determined performance goals | |
| ✓ |
Stockholder feedback considered in Compensation Committee review of compensation program | |
| ✓ |
Anti-hedging/pledging policies | |
| ✓ |
No excise tax gross-up provisions | |
| ✓ |
Review of tally sheets for each current NEO by Compensation Committee at least annually | |
| ✓ |
Fully independent Compensation Committee oversight of compensation decisions | |
| ✓ |
Compensation Committee utilizes support of an independent compensation consultant and independent legal counsel | |
COMPENSATION PROGRAM PRACTICES AND POLICIES
The following discussion describes the practices and policies implemented by the Compensation Committee during the fiscal year ended June 30, 2023. For the 2023 fiscal year, compensation for the NEOs was subject to employment agreements approved by the Company’s Compensation Committee. Information concerning the Company’s employment agreements with each NEO is set forth below under “Executive Compensation Tables — Employment Agreements.”
In connection with the MSGE Distribution, the Company amended and restated its multi-year employment agreement with Mr. Dolan. The amended and restated agreement is substantially the same as the prior employment agreement, except that (i) the annual base salary will be not less than $1,000,000 subject to annual review and potential increase by the Compensation Committee in its discretion, (ii) it is expected that Mr. Dolan will receive annual grants of cash and/or equity long-term incentive awards with an
aggregate target value of not less than $6,000,000, as determined by the Compensation Committee in its discretion and (iii) the agreement recognizes that Mr. Dolan will be employed by MSGE and MSGS during his employment with the Company. As a result of this amendment, Mr. Dolan’s prior direct compensation opportunities with the Company, as in effect prior to the MSGE Distribution, were reduced effective as of the MSGE Distribution by an amount equal to Mr. Dolan’s direct compensation opportunities under his post-MSGE Distribution employment agreement with MSGE. Accordingly, Mr. Dolan’s aggregate total target direct compensation opportunities across the Company and MSGE did not change upon the MSGE Distribution.
The Compensation Committee was responsible for overseeing matters relating to the amended and restated agreement and was advised by the Committee’s independent compensation consultant and the Committee’s independent legal counsel.
48
In the course of their review, the independent compensation consultant provided the Committee with an overview of the proposed modifications to Mr. Dolan’s post-MSGE Distribution compensation arrangements, the terms of the modified employment agreement with the Company and the new employment agreement with MSGE, background on Mr. Dolan’s executive positions at multiple MSG entities, the nature of the business operations of the Company and MSGE following the MSGE Distribution, and broad market data (both industry-related and general industry data) regarding the proposed post-MSGE Distribution total target direct compensation for Mr. Dolan at MSGE and the reduction in total target direct compensation for Mr. Dolan at the Company. The Committee’s review took into account the factors reviewed by its independent compensation consultant, Mr. Dolan’s extensive experience and history as Executive Chairman and Chief Executive Officer of the Company, his in-depth knowledge of the Company’s business, his leadership of, and relationship with, members of senior management of the Company, as well as other information relating to the Company’s operations and performance.
In fiscal year 2023, the Company entered into new employment agreements with Mr. Ranji effective as of the MSGE Distribution Date, Mr. Brunner effective as of June 5, 2023 and Mr. Granville-Smith effective as of June 15, 2023.
In the Company’s most recent advisory “say-on-pay” proposal, which was held in 2022, a majority of stockholders (including a majority of holders of our Class A Common Stock) voted to approve, on an advisory basis, the Company’s executive compensation. The Compensation Committee considered the results of this vote, as well as the Company’s ongoing discussions with stockholders, in its assessment and development of the compensation program.
Role of the Compensation Committee
Our Compensation Committee administers our executive compensation program. The responsibilities of the Compensation Committee are set forth in its charter. Among other responsibilities, the Compensation Committee: (1) establishes our general compensation philosophy and, in consultation with management, oversees the development and implementation of compensation programs; (2) reviews and approves corporate goals and objectives relevant to the compensation of our executive officers who are required to file reports with the SEC under Section 16(a) of the Exchange Act, evaluates their performance in light of those goals and objectives, and determines and approves their respective compensation levels based on this evaluation; (3) oversees the activities of the committee or committees administering our retirement and benefit plans; and (4) administers our equity-based compensation plans. For more information about the Compensation Committee, please see “Board and Governance Practices — Committees — Compensation Committee.”
Role of the Independent Compensation Consultant
The Compensation Committee has authority under its charter to engage outside consultants to assist in the performance of its duties and responsibilities. Our Compensation Committee utilizes the services of ClearBridge Compensation Group LLC (the “independent compensation consultant”), an independent compensation consultant, to assist in determining whether the elements of our executive compensation program are reasonable and consistent with our objectives.
The independent compensation consultant collaborates with independent legal counsel to the Compensation Committee and reports directly to the Compensation Committee and, at the request of the Compensation Committee, the independent compensation consultant meets with members of management from time to time for the purpose of gathering information on management proposals
49
and recommendations to be presented to the Compensation Committee.
With respect to compensation matters for the fiscal year ended June 30, 2023, the services provided by the independent compensation consultant to the Compensation Committee included:
| • | Attending all Compensation Committee meetings; |
| • | Providing information, research, and analysis pertaining to our executive compensation program for the 2023 fiscal year; |
| • | Regularly updating the Compensation Committee on market trends, changing practices, and legislation pertaining to compensation; |
| • | Assisting the Compensation Committee in making pay determinations for the executive officers; |
| • | Assisting the Compensation Committee in connection with the entry into an amended and restated employment agreement with the Executive Chairman and Chief Executive Officer and new employment agreements with the (i) Executive Vice President, (ii) Executive Vice President, Chief Financial Officer and Treasurer and (iii) Senior Vice President, Controller and Principal Accounting Officer; |
| • | Assisting with compensation-related matters in connection with the MSGE Distribution; |
| • | Advising on the design of the executive compensation program and the reasonableness of individual compensation targets and awards; |
| • | Conducting a compensation risk assessment; |
| • | Providing advice and recommendations that incorporate both market data and Company-specific factors; and |
| • | Assisting the Compensation Committee in connection with its review of non-employee director compensation. |
During the 2023 fiscal year, the independent compensation consultant provided no services to the Company other than those provided to the Compensation Committee.
The Compensation Committee charter requires the Compensation Committee to consider the NYSE independence factors before receiving advice from an advisor, despite the fact that such independence rules are not applicable to controlled companies. For the fiscal year ended June 30, 2023, the Compensation Committee concluded that the independent compensation consultant satisfies the independence requirements of the NYSE rules. In addition, the Compensation Committee believes that the independent compensation consultant’s work did not raise any conflicts of interest during the fiscal year ended June 30, 2023. In reaching this conclusion, the Compensation Committee considered the same rules regarding advisor independence.
Role of Executive Officers in Determining Compensation
The Compensation Committee reviews the performance and compensation of the Executive Chairman and Chief Executive Officer and, following discussions with the independent compensation consultant, establishes his compensation. Senior management of the Company assists the Compensation Committee and the independent compensation consultant as described in this Compensation Discussion Analysis, and provides to the Compensation Committee, either directly or through the independent compensation consultant, management’s recommendations on the compensation for executive officers other than the Executive Chairman and Chief Executive Officer. Other members of management provide support to the Compensation Committee as needed. Based upon a review of performance and historical compensation, recommendations and information
50
from members of management, and recommendations and discussions with the independent compensation consultant, the Compensation Committee determines and approves compensation for the executive officers.
Performance Objectives
As described below under “— Elements of Our Compensation Program,” performance-based incentive compensation is an important element of the Company’s executive compensation program.
Generally, the Compensation Committee has historically based the performance objectives for the Company’s incentive compensation on Total Company Net Revenue, Total Company AOI and Total Company Business Unit AOI. The Company considers these performance objectives to be key measures of the Company’s operating performance. As discussed in more detail below, for certain performance-based incentive compensation covering fiscal year 2023 performance, total Company financial performance was evaluated based on the combined financial performance of the Company and MSGE, as reflected in the Consolidated Total Company Net Revenue, Consolidated Total Company AOI and Consolidated Total Company Business Unit AOI financial measures. Starting with the 2023 fiscal year, in addition to the above, the financial objectives for the Networks Business Unit now also include Networks Business Unit Net Revenue and Networks Business Unit AOI.
The Company defines “Total Company Net Revenue” as total revenue for all business units other than specified divisions where direct contribution is the measure used, in which cases Total Company Net Revenue includes the direct contribution of those units. Direct contribution is revenue less event-related expenses. In those instances, management believes direct contribution serves as a more meaningful measure of revenue. The Company defines “Networks Business Unit Net Revenue” as the net revenue generated by the Networks Business Unit.
The Company defines “Total Company AOI,” which is a non-U.S. GAAP financial measure, as operating income (loss) before (i) adjustments to remove the impact of non-cash straight-line leasing revenue associated with the arena license agreements with MSGS (the “Arena License Agreements”) (if applicable for the period), (ii) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets, (iii) amortization for capitalized cloud computing arrangement costs, (iv) share-based compensation expense, (v) restructuring charges or credits, (vi) merger and acquisition-related costs, including litigation expenses, (vii) gains or losses on sales or dispositions of businesses and associated settlements, (viii) the impact of purchase accounting adjustments related to business acquisitions, and (ix) gains and losses related to the remeasurement of liabilities under the Company’s executive deferred compensation plan.
“Networks Business Unit AOI” is based upon the AOI of the Networks business unit.
“Total Company Business Unit AOI” is based upon Company AOI less unallocated corporate business unit expenses such as public company costs and merger and acquisition support, subject to certain adjustments.
The performance measures used for purposes of annual incentives or long-term awards may contemplate certain potential future adjustments and exclusions.
Tally Sheets
The Compensation Committee has reviewed tally sheets prepared by the independent compensation consultant, setting forth all components of compensation payable, and the benefits accruing, to the current NEOs for the fiscal year ended June 30, 2023, including all cash compensation, benefits, perquisites and the current value of outstanding equity-based awards. The tally sheets also set forth potential payouts to the current NEOs upon various termination scenarios.
51
Determining Compensation Levels; Benchmarking
As part of the Compensation Committee’s review of total compensation for the fiscal year ended June 30, 2023, the independent compensation consultant assisted the Compensation Committee in: (1) determining if a peer group should be used for comparative purposes, (2) assessing executive compensation in light of internal and external considerations and (3) reviewing the Company’s equity and cash-based executive incentive programs, taking into account evolving market trends. The Compensation Committee, in consultation with the independent compensation consultant, considered broad market data (both industry-related and general industry data) and
multiple broad-based compensation surveys in order to appropriately assess compensation levels.
For the fiscal year ended June 30, 2023, the Compensation Committee, in consultation with the independent compensation consultant, determined not to utilize a peer group or target positioning in determining compensation given the limited number of comparable publicly-traded companies.
In addition to the market data listed above, the Compensation Committee considered internal information (job responsibility, experience, parity among executive officers, contractual commitments, attraction and retention of talent and historical compensation) to determine compensation.
ELEMENTS OF OUR COMPENSATION PROGRAM
Our executive compensation philosophy is reflected in the principal elements of our executive compensation program, each of which is important to the Company’s goal of attracting, retaining, motivating and rewarding highly-qualified executive officers. The compensation program included the following key elements for the fiscal year ended June 30, 2023: base salary, annual cash incentives, long-term incentives, retirement, health and welfare and other benefits, which are generally provided to all other eligible employees, and additional executive officer benefits, including post-termination compensation under certain circumstances and certain perquisites, each as described below.
A significant percentage of total direct compensation is allocated to incentive compensation in accordance with the Compensation Committee’s philosophy. The Compensation Committee reviews historical compensation, other information provided by the independent compensation consultant and other factors, such as experience, performance, length of service and contractual commitments, to determine the appropriate level and mix of compensation for executive officers. The allocation between cash and equity compensation
and between short-term and long-term compensation is designed to provide a variety of fixed and at-risk compensation that is related to the achievement of the Company’s short-term and long-term objectives.
Mr. Dolan was employed by MSGS as Executive Chairman and by MSGE as Executive Chairman and Chief Executive Officer during the fiscal year ended June 30, 2023, and received separate compensation from MSGS and MSGE. While the Compensation Committee is aware that Mr. Dolan also receives compensation for services rendered to MSGS and MSGE, its own compensation decisions are based on its independent assessment and application of the compensation goals and objectives of the Company.
Mr. Granville-Smith was employed by MSGS and AMC Networks during the fiscal year ended June 30, 2023, and received separate compensation from MSGS and AMC Networks. While the Compensation Committee is aware that Mr. Granville-Smith also receives compensation for services rendered to MSGS and AMC Networks, its own compensation decisions are based on its independent assessment and
52
application of the compensation goals and objectives of the Company.
The compensation program and philosophies discussed in this proxy statement reflect only compensation that is paid by the Company for services rendered to the Company, except as otherwise noted. For more information regarding the compensation of Mr. Dolan by MSGS and MSGE, see MSGS’s and MSGE’s 2023 Definitive Proxy Statements, respectively. For more information regarding the compensation of Mr. Granville-Smith by MSGS, see MSGS’s 2023 Definitive Proxy Statement.
Base Salaries
Our Compensation Committee is responsible for setting the base salaries of the executive officers, which are intended to compensate them for the day-to-day services that they perform for the Company. Base salaries for these executive officers have been set at levels that are intended to reflect the competitive marketplace in attracting and retaining quality executive officers. The employment agreement between the Company and each NEO contains a minimum base salary level. For information regarding these base salary levels, please see “Executive Compensation Tables — Employment Agreements” below. The Compensation Committee reviews the salaries of the executive officers at least annually. The Compensation Committee may adjust base salaries for executive officers over time, based on their performance and experience and in accordance with the terms of their employment agreements.
The base salaries for each of Mr. Dolan, Ms. Greenberg, and Messrs. Granville-Smith, Ranji and Brunner as of the end of the fiscal year ended June 30, 2023 were as follows: $1,000,000, $1,350,000, $800,000, $625,000 and $450,000, respectively. The base salaries for each of Messrs. Byrnes, Haughton and D’Ambrosio pursuant to their employment agreements which were assigned to MSGE were as follows: $800,000, $1,100,000 and $680,000, respectively. See footnote 1 to “Executive Compensation Tables —
Summary Compensation Table” for additional information regarding the base salaries, and actual amounts paid by the Company during the Company’s fiscal year. The Compensation Committee determined salaries for NEOs after evaluation of Company and individual performance, market pay levels, the range of increases generally provided to the Company’s employees and, to the extent appropriate, management’s recommendations.
Annual Cash Incentives
Overview
Annual cash incentives earned for performance in the 2023 fiscal year were determined by performance against goals established by the Compensation Committee under the Management Performance Incentive Plan (“MPIP”). Under the MPIP, eligible members of management were provided an opportunity to earn an annual cash award. The size of the bonus pool was based on performance measures tied to Total Company Net Revenue and Total Company AOI targets for the 2023 fiscal year (and in the case of the Networks Business Unit also included Networks Business Unit Net Revenue and Networks Business Unit AOI) as well as certain pre-determined business unit strategic objectives. As a result of the MSGE Distribution, the total Company financial performance for the fiscal year ended June 30, 2023 was evaluated based on the financial performance of the Company prior to the MSGE Distribution plus the combined financial performance of the Company and MSGE following the MSGE Distribution (the “consolidated financial performance”).
This annual incentive was designed to link executive compensation directly to the Company’s performance by providing incentives and rewards based upon business performance during the applicable fiscal year.
MPIP awards to all eligible employees were conditioned upon the satisfaction of predetermined financial and strategic objectives. For the 2023 fiscal year, the Company applied a
53
business unit-specific weighting system, with the weighting between financial and strategic objectives for each business unit depending on the specific challenges and desired focus of that unit. In connection with our fiscal year 2023 MPIP, we had 14 business units, including Corporate, MSG Networks, Ventures Sphere Studios, Sphere Development Construction, Sphere Business and Sphere Venue Operations, with a varied range of strategic weightings determined by the Compensation Committee, depending on the particular business unit. The financial and strategic objectives for the Corporate business unit (including our NEOs other than
Ms. Greenberg) and the MSG Networks business unit (including Ms. Greenberg) were each weighted 50% (with the weighting of the financial objectives for MSG Networks comprised of 50% total Company results and 50% Networks business unit results). The weighting between financial and strategic objectives continues to reflect the Company’s long-term goals for transformative strategic growth and development, including the development of Sphere.
MPIP results were calculated based on performance achievement against these predetermined goals, as discussed below, for our Corporate and MSG Networks business units.
As discussed in “Performance Targets Achievement Levels” below, as a result of the level of achievement of the adjusted Corporate and MSG Networks financial and strategic objectives, the payout level of the annual cash incentives was calculated at 153.2% and 132.9% of the target level, respectively.
Target Award Opportunities
Each employee eligible for an annual incentive award was assigned a target award equal to a percentage of that employee’s base salary as of the conclusion of the applicable fiscal year.
Target annual incentive opportunities were based upon the applicable employee’s position, grade level, responsibilities, and historical and expected future contributions to the Company. In addition, each employment agreement between the
Company and each of the NEOs contains a minimum target annual incentive award level. The Compensation Committee reviews the target annual incentive award levels of the NEOs at least annually, subject to the minimum target annual incentive award level set forth in each employment agreement between the Company and each of the NEOs. See “Executive Compensation Tables — Employment Agreements” below.
Annual Incentive Payouts
The below table summarizes each NEO’s target annual incentive opportunity and actual 2023 fiscal year annual incentive payouts, as determined by the Compensation Committee. For the 2023 fiscal year, the Company will reimburse MSGE for a portion of Messrs. Byrnes’, Haughton’s and D’Ambrosio’s annual incentive awards relating to performance prior to the
54
MSGE Distribution in accordance with the MSGE Employee Matters Agreement (as defined below).
The annual incentive payouts are described in more detail below.
| Name |
2023 Fiscal Year Base Salary(1) |
Target Incentive (% of Base Salary) |
Actual 2023 Fiscal Year MPIP as a % of Target |
Actual 2023 Fiscal Year Annual Incentive Award(2) |
||||||||||||
|
Current NEOs
|
| |||||||||||||||
|
James L. Dolan
|
$
|
1,000,000
|
|
|
200
|
%
|
|
153.2
|
%
|
$
|
3,064,000
|
| ||||
|
Andrea Greenberg
|
$
|
1,350,000
|
|
|
150
|
%
|
|
132.9
|
%
|
$
|
2,691,225
|
| ||||
|
David Granville-Smith(3)
|
$
|
800,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
|
Gautam Ranji
|
$
|
625,000
|
|
|
100
|
%
|
|
153.2
|
%
|
$
|
957,500
|
| ||||
|
Gregory Brunner(4)
|
$
|
450,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
|
Former Executives
|
| |||||||||||||||
|
David F. Byrnes
|
$
|
800,000
|
|
|
100
|
%
|
|
153.2
|
%
|
$
|
1,225,600
|
| ||||
|
Jamal H. Haughton
|
$
|
1,100,000
|
|
|
100
|
%
|
|
153.2
|
%
|
$
|
1,685,200
|
| ||||
|
Philip G. D’Ambrosio
|
$
|
680,000
|
|
|
75
|
%
|
|
153.2
|
%
|
$
|
861,750
|
| ||||
| (1) | Reflects the current NEO’s base salaries as of the conclusion of the 2023 fiscal year and the former executives’ base salaries as of the MSGE Distribution Date. |
| (2) | With respect to the current NEOs, these amounts are the current NEO’s actual 2023 fiscal year annual incentive awards. With respect to the former executives, these amounts are the former executives’ actual 2023 fiscal year annual incentive awards. With respect to Mr. D’Ambrosio, following the MSGE Distribution, MSGE entered into a new employment agreement with the former executive, effective April 1, 2023, providing for a base salary of $750,000 and a target incentive equal to 75% of base salary, resulting in an actual 2023 fiscal year annual incentive award equal to $861,750 (under his employment agreement with the Company, Mr. D’Ambrosio would have received a 2023 fiscal year annual incentive award equal to $781,320). MSGE assumed the liability to pay the former executives’ annual incentive awards and these amounts include the portion of the MSGE annual incentive awards for which the Company will reimburse MSGE (50%) in accordance with the MSGE Employee Matters Agreement. The amounts of annual incentive awards actually paid in September 2023 for performance in the 2023 fiscal year (including the impact of payments between the Company and MSGE) are disclosed in the Non-Equity Incentive Plan Compensation column and related footnote thereto of the Summary Compensation Table. |
| (3) | Pursuant to the terms of his employment agreement, Mr. Granville-Smith was not eligible for an annual cash incentive award for the fiscal year ended June 30, 2023, but was provided a one-time cash award in the amount of $925,000, which was intended to compensate him for forfeited compensation from his previous employer. Mr. Granville-Smith will be required to repay the full amount of this one-time cash award in the event of his resignation without “good reason” or termination for “cause” within one year following the commencement of his employment with the Company. Pursuant to his employment agreement, commencing with the 2024 fiscal year, Mr. Granville-Smith will be eligible to participate in the annual incentive program with an annual target bonus opportunity equal to not less than 100% of his base salary. |
| (4) | Pursuant to the terms of his employment agreement, Mr. Brunner was not eligible for an annual cash incentive award for the fiscal year ended June 30, 2023, but was provided a one-time cash award in the amount of $150,000 in connection with the commencement of his employment with the Company. |
55
| Mr. Brunner will be required to repay the full amount of this one-time cash award in the event of his resignation without “good reason” or termination for “cause” within one year following the commencement of his employment with the Company. Pursuant to his employment agreement, commencing with the 2024 fiscal year, Mr. Brunner will be eligible to participate in the annual incentive program with an annual target bonus opportunity equal to not less than 40% of his base salary. |
Performance Targets Achievement Levels
Financial Component (50%): For the fiscal year ended June 30, 2023, the MPIP financial performance objectives included rigorous net revenue (weighted 30% of the financial component) and AOI (weighted 70% of the financial component) targets, with potential payouts under this component ranging from 0-200% of target. As a result of the MSGE Distribution, the total Company financial performance for the fiscal year ended June 30,
2023 was evaluated based on consolidated financial performance.
The financial component of the MPIP was determined after assessing financial performance against the predetermined targets. The MPIP provides for pre-approved adjustments when evaluating the financial performance against the pre-determined objectives.
The measurement against the adjusted targets for the 2023 fiscal year provided the following calculated results:
2023 Fiscal Year Corporate Business Unit Goals Achievement:
|
Financial Metrics (Weighting)
|
2023 Fiscal Year Payout Results
| |
| Consolidated Total Company Net Revenue (30%) | 116.4% of target | |
| Consolidated Total Company AOI (70%) | 189.7% of target |
Based on the performance against these pre-determined financial performance objectives, the calculated result of the financial component of the MPIP for the Corporate
business unit (applicable to the NEOs other than Ms. Greenberg), giving effect to the payment provisions of the MPIP, was 167.7%.
2023 Fiscal Year MSG Networks Business Unit Goals Achievement:
|
Financial Metrics (Weighting)
|
2023 Fiscal Year Payout Results
| |||||
| Consolidated Total Company Results (50%) |
Consolidated Total Company Net Revenue (30%) | 116.4% of target |
167.7% of target | |||
| Consolidated Total Company AOI (70%) | 189.7% of target | |||||
| Networks Business Unit Results (50%) |
Networks Business Unit Net Revenue (30%) | 89.4% of target |
95.4% of target | |||
| Networks Business Unit AOI (70%) | 97.9% of target | |||||
56
Based on the performance against these pre-determined financial performance objectives, the calculated result of the financial component of the MPIP for the Networks Business Unit (applicable to Ms. Greenberg), giving effect to the payment provisions of the MPIP, was 131.5%.
Strategic Component (50%): For the fiscal year ended June 30, 2023, the MPIP also included a performance component that measured achievement against relevant strategic goals which are reviewed and approved by the Compensation Committee at the beginning of each year. As a result of the MSGE Distribution, the strategic performance for the 2023 fiscal year was evaluated based on the achievement of consolidated strategic goals across both the Company and MSGE.
Goal Setting Process: Each year, numerous specific goals that are aligned with the Company’s broad strategic initiatives are established for each business unit. Discrete milestones and tactics are enumerated to measure year-end achievement of these goals. As part of this process, each goal (and its related tactics) is assigned a weight, and at the end of the fiscal year, each goal and tactic’s level of achievement is evaluated and assigned a rating of 0-200%. Taking into account the weighted rating of each goal and underlying milestones and tactics, these ratings are then used to derive the overall strategic score for each business unit.
2023 Fiscal Year Corporate Business Unit Goals Achievement: The strategic component for NEO payouts (except for Ms. Greenberg) was calculated based on the extent to which specific goals for the Corporate business unit were achieved in the 2023 fiscal year. As discussed below, the strategic component for the payout to Ms. Greenberg was based on specific goals for the MSG Networks business unit.
In the 2023 fiscal year, the Corporate business unit’s strategic component focused on numerous core strategies aimed at establishing structures and policies to drive value through:
| • | Corporate transactions, key business initiatives and special projects; |
| • | The Sphere initiative; and |
| • | Successful office hybridization. |
As noted above, goals were set by the Compensation Committee at the beginning of the fiscal year and prior to the MSGE Distribution, and therefore include achievements related to the Company’s traditional live entertainment business for the period before and after the MSGE Distribution. Because achievement of the strategic component for fiscal year 2023 covers both the pre- and post- MSGE Distribution period, goals, metrics and milestones relate both to the businesses of the Company and MSGE.
Corporate business unit goals were supported by more than 55 individual measurable milestones and tactics. Successful achievement of milestones and tactics under the Corporate-specific goals for fiscal year 2023 included:
| • | Driving value through corporate transactions, key business initiatives and special projects: |
| ○ | Completed the MSGE Distribution in April 2023, with the Company retaining a one-third stake in MSGE for additional financial flexibility; |
| ○ | Completed secondary offering of MSGE Class A common stock by the Company as selling stockholder, monetizing approximately $205 million, or 6.9 million shares, of the Company’s retained interest, with approximately 10.1 million shares of MSGE Class A common stock still held as of June 30, 2023; |
| ○ | Completed the sale of Tao Group Hospitality in a transaction that valued the business at $550 million and resulted in approximately $290 million of net proceeds to the Company; |
| ○ | Successfully entered into a $275 million five-year term loan to support the Company’s growth plans with Sphere in Las Vegas; and |
57
| ○ | Made significant progress in the process of obtaining a new special operating permit for The Garden, including obtaining significant commitments of support from political and other community stakeholders; |
| • | Supporting development of Sphere in Las Vegas: |
| ○ | Supported all aspects of construction of Sphere in Las Vegas, which resulted in the completion of primary construction of the venue in June 2023, and which opened at the end of September 2023; |
| ○ | Supported all aspects of original content creation for Sphere, which — in fiscal 2023 — culminated with the announcement of and ticket on-sale for Postcard from Earth, the Company’s first original immersive production for Sphere, which debuted publicly on October 6, 2023; |
| ○ | Supported all aspects of technology and production development for Sphere, which resulted in the launch of Sphere Studios in June 2023, the Company’s immersive content studio dedicated to creating multisensory live entertainment experiences exclusively for Sphere; and |
| ○ | Determined the optimal venue staffing structure and hiring strategy for Sphere, resulting in the successful hiring of thousands of venue-level positions; and |
| • | Establishing structures, policies and programs to facilitate the transition of employees into a hybrid and remote work environment: |
| ○ | Implemented hybrid and remote work strategies for a majority of the Company’s employee base; |
| ○ | Provided employees with technology and equipment which enabled a |
| productive shift to remote and hybrid work environments; and |
| ○ | Provided educational tools for goal setting and a new performance management program to measure and maintain productivity standards. |
Based on the performance against these predetermined Corporate goals, the Compensation Committee determined the payout result of the strategic component of the MPIP for the Corporate business unit was achieved at 138.8% of target.
2023 Fiscal Year MSG Networks Business Unit Goals Achievement: The strategic component for Ms. Greenberg’s payout was calculated based on the extent to which goals for the MSG Networks business unit were achieved in the 2023 fiscal year.
In the 2023 fiscal year, the MSG Networks business unit’s strategic component focused on maximizing revenue through:
| • | Execution of specific revenue-generating initiatives across existing product offerings; |
| • | Delivery of compelling content across existing product offerings; and |
| • | Introduction of new product offerings and evolution of the workforce and technology. |
MSG Networks business unit goals were supported by 30 individual measurable milestones and tactics. Successful achievement of milestones and tactics under the MSG Networks-specific goals for fiscal year 2023 included:
| • | Executing revenue-generating initiatives across existing product offerings: |
| ○ | Completed renewals with several distributors, including with one of our largest affiliates; |
| ○ | Delivered record aggregate advertising revenue for our NBA and NHL teams; and |
58
| ○ | Delivered annual advertising revenue growth in fiscal year 2023 in non-ratings-based initiatives, including all-time high advertising revenue for MSG GO, the Company’s former authenticated streaming platform; |
| • | Delivering compelling content across existing product offerings: |
| ○ | Augmented MSG Networks’ live professional sports content — which included another year of hundreds of telecasts — with a host of unique and new programming for our audiences, including: |
| - | Season-long content strategy that highlighted specific players, themed nights and programming, and coproducing promotional and branded content; and |
| - | Expanded sports betting programming, including 12 betcasts across Knicks and Rangers games over the course of the 2022-2023 seasons; and |
| • | Introducing new product offerings and evolving the workforce and technology: |
| ○ | Development and public launch of MSG+, a direct-to-consumer and authenticated streaming product to provide fans in the region with the ability to access MSG Networks’ exclusive coverage of their favorite teams; |
| ○ | Finalized innovative pricing for MSG+, which includes monthly and annual subscriptions as well as single game access — a first-of-its-kind offering for any regional sports network; |
| ○ | Launched MSG Sports Zone, a new free, ad-supported streaming TV channel which features a mix of original programming from our content library |
| and is currently available on Plex, Vizio, Redbox and Samsung; |
| ○ | Merged the existing streaming organization with MSG+, enabling efficiencies in areas such as staffing, technology and marketing; and |
| ○ | Completed a comprehensive strategic review of our business and implemented significant restructuring and cost reduction measures, including migrating signal delivery from satellite to fiber, modifying production schedules and reorganizing and streamlining personnel. |
Based on the performance against these predetermined MSG Networks goals, the Compensation Committee determined the payout result of the strategic component of the MPIP for the MSG Networks business unit was achieved at 134.3% of target.
Annual Cash Incentive Payout: As a result of the level of achievement of the Corporate and MSG Networks financial and strategic goals, as discussed above, the payout level of the annual cash incentives was calculated at 153.2% and 132.9% of the target level for the 2023 fiscal year, respectively.
Long-term Incentives
Long-term incentives represent a substantial portion of our executive officers’ annual total direct compensation. For the fiscal year ended June 30, 2023, standard long-term incentives were comprised of performance stock units and restricted stock units.
The Compensation Committee believes this equity mix:
| • | Establishes strong alignment between executive officers and the interests of the Company’s stockholders; |
| • | Provides meaningful incentive to drive actions that will improve the Company’s long-term stockholder value; and |
59
| • | Supports the Company’s objectives of attracting and retaining the best executive officer talent. |
The following table summarizes our 2023 fiscal year standard annual long-term incentive awards to our NEOs:
| Element | Weighting | Summary | ||||
| Restricted Stock Units | 50% | ✓ | Share-based award establishes direct alignment with our stock price performance and stockholder interests | |||
| ✓ | Vest ratably over three years | |||||
| Performance Stock Units | 50% | ✓ | Performance is measured by Total Company Net Revenue and Total Company Business Unit AOI, which are equally weighted and considered key value drivers of our business | |||
| ✓ | Financial performance targets were pre-determined by the Compensation Committee to incentivize strong execution of our strategy and long-term financial goals and will be amended by the Compensation Committee to reflect the MSGE Distribution as described herein | |||||
| ✓ | Cliff-vest after three years to the extent that financial performance targets measured in the final year of the three-year period are achieved | |||||
Additional information regarding long-term incentive awards granted to NEOs during the 2023 fiscal year is set forth in the “Summary Compensation Table” and the “Grants of Plan-Based Awards” table under “Executive Compensation Tables” below.
Restricted Stock Units
Restricted stock units serve to align executive officers’ interests with those of our stockholders and promote the retention of employees, including the NEOs.
The Compensation Committee approved the awards of restricted stock units shown in the table below to the NEOs for the fiscal year ended
June 30, 2023 pursuant to the Company’s 2020 Employee Stock Plan, as amended (the “Employee Stock Plan”) and, in the case of Ms. Greenberg, the MSG Networks Inc. 2010 Employee Stock Plan, as amended and assumed by the Company in the Networks Merger (“MSGN’s Employee Stock Plan”).
In connection with the MSGE Distribution, for every restricted stock unit of the Company that was held on April 14, 2023 (the “Distribution Record Date”), one restricted stock unit of MSGE was issued with the same vesting terms. The one-for-one distribution ratio is consistent with treatment of Company stockholders’ Class A or Class B Common Stock held on the Distribution Record Date.
60
| Name |
Restricted Stock Units | Grant Date Fair Value(1) |
||||||
| Current NEOs |
||||||||
| James L. Dolan |
|
98,750 |
|
$ |
5,486,550 |
| ||
| Andrea Greenberg |
|
20,779 |
|
$ |
1,154,481 |
| ||
| David Granville-Smith(2) |
|
— |
|
|
— |
| ||
| Gautam Ranji(3) |
|
5,308 |
|
$ |
257,059 |
| ||
| Gregory Brunner(4) |
|
— |
|
|
— |
| ||
| Former Executives |
||||||||
| David F. Byrnes |
|
13,990 |
|
$ |
777,284 |
| ||
| Jamal H. Haughton |
|
10,698 |
|
$ |
594,381 |
| ||
| Philip G. D’Ambrosio |
|
8,230 |
|
$ |
457,259 |
| ||
| (1) | The grant date fair value listed above is calculated in accordance with Topic 718. The Company determines the number of restricted stock units to grant by dividing the target grant value by the 20-trading day average ending on the day before the date of approval by the Compensation Committee. Except for Mr. Ranji, the values presented in this column reflect restricted stock units granted prior to the MSGE Distribution, and thus, the grant date fair value reflects the stock price of the pre-MSGE Distribution Company. |
| (2) | Pursuant to his employment agreement, Mr. Granville-Smith was not eligible for any grant of long-term incentive awards for the fiscal year ended June 30, 2023. Pursuant to the terms of his employment agreement, Mr. Granville-Smith was provided a one-time equity award in the amount of 140,225 units (with a grant date fair value of $3,903,864 calculated in accordance with Topic 718 as discussed above) granted in June 2023, which was intended to compensate him for forfeited compensation from his previous employer. |
| (3) | With respect to Mr. Ranji, this amount includes (i) 4,115 units ($228,629) granted in August 2022 and (ii) 1,193 units ($28,429) granted in May 2023 to reflect the increased target long-term incentive opportunity (on a pro rata basis) as a result of Mr. Ranji’s promotion to Executive Vice President, Chief Financial Officer and Treasurer effective as of the MSGE Distribution Date. The number of units and the grant date fair value of the awards from August 2022 are based on the stock price of the pre-MSGE Distribution Company. The number of units and the grant date fair value of the awards from May 2023 are based on the stock price of the post-MSGE Distribution Company. |
| (4) | Pursuant to his employment agreement, Mr. Brunner was not eligible for any grant of long-term incentive awards for the fiscal year ended June 30, 2023. |
Standard restricted stock units vest ratably over three years on September 15th of each year following the year of grant, subject to continued employment and employment agreement terms (as applicable). Mid-year grants in respect of an out-of-cycle promotion, increase in compensation or new-hire typically vest on the same timeframe as standard restricted stock units granted that fiscal year.
Performance Stock Units
Performance stock units are intended to align our executive officers’ interests with those of our stockholders, with a focus on long-term financial results.
Under our executive compensation program for the fiscal year ended June 30, 2023, performance stock units were granted to executive officers
61
pursuant to our Employee Stock Plan and, in the case of Ms. Greenberg, MSGN’s Employee Stock Plan.
2023 Fiscal Year Grants
During the fiscal year ended June 30, 2023, the Compensation Committee approved the following awards of performance stock units to the NEOs for the 2023-2025 fiscal year period:
| Name |
Performance Stock Units (at target) |
Grant Date Fair Value(1) |
||||||
| Current NEOs |
||||||||
| James L. Dolan |
|
98,750 |
|
$ |
5,486,550 |
| ||
| Andrea Greenberg |
|
20,779 |
|
$ |
1,154,481 |
| ||
| David Granville-Smith(2) |
|
— |
|
|
— |
| ||
| Gautam Ranji(3) |
|
5,308 |
|
$ |
257,059 |
| ||
| Gregory Brunner(4) |
|
— |
|
|
— |
| ||
| Former Executives |
||||||||
| David F. Byrnes |
|
13,990 |
|
$ |
777,284 |
| ||
| Jamal H. Haughton |
|
10,698 |
|
$ |
594,381 |
| ||
| Philip G. D’Ambrosio |
|
8,230 |
|
$ |
457,259 |
| ||
| (1) | The grant date fair value listed above is calculated in accordance with Topic 718. The Company determines the number of performance stock units to grant by dividing the target grant value by the 20-trading day average ending on the day before the date of approval by the Compensation Committee. Except for Mr. Ranji, the values presented in this column reflect restricted stock units granted prior to the MSGE Distribution, and thus, the grant date fair value reflects the stock price of the pre-MSGE Distribution Company. |
| (2) | Pursuant to his employment agreement, Mr. Granville-Smith was not eligible for any grant of long-term incentive awards for the fiscal year ended June 30, 2023. |
| (3) | With respect to Mr. Ranji, this amount includes (i) 4,115 units ($228,629) granted in August 2022 and (ii) 1,193 units ($28,429) granted in May 2023 to reflect the increased target long-term incentive opportunity (on a pro rata basis) as a result of Mr. Ranji’s promotion to Executive Vice President, Chief Financial Officer and Treasurer effective as of the MSGE Distribution Date. The number of units and the grant date fair value of the awards from August 2022 are based on the stock price of the pre-MSGE Distribution Company. The number of units and the grant date fair value of the awards from May 2023 are based on the stock price of the post-MSGE Distribution Company. |
| (4) | Pursuant to his employment agreement, Mr. Brunner was not eligible for any grant of long-term incentive awards for the fiscal year ended June 30, 2023. |
Standard performance stock units are structured to be settled upon the later of September 15th following a three-year period and the date of certification of achievement against pre-determined performance goals measured in the final year of such three-year period. Mid-year grants in respect of an out-of-cycle promotion, increase in compensation or new-hire typically settle on the same timeframe as standard performance stock units granted that fiscal year.
Target Setting
For the 2023 fiscal year performance stock units approved in August 2022 and May 2023 for the 2023-2025 fiscal year period, the Compensation Committee established financial metrics to be measured in the final fiscal year of the vesting period. The Compensation Committee intends to amend the financial metrics to be measured in the final fiscal year of the vesting period to reflect
62
goals specific to the Company following the MSGE Distribution. The current performance goals of Total Company Net Revenue and Business Unit AOI were established at the time of grant by the Compensation Committee, and were based on the Company’s then-existing long-range plan. The long-range strategic plan represented the combined businesses, including the traditional live entertainment business that is not part of the Company following the MSGE Distribution. The Company’s long-range plan is confidential and disclosure of those targets could provide information that could lead to competitive harm, and for this reason the performance stock unit
financial performance targets are not disclosed; however, the Compensation Committee seeks to make target goals ambitious, requiring meaningful growth over the performance period, while threshold goals are expected to be achievable. The Company intends to disclose the Total Company Net Revenue and Total Company Business Unit AOI payout results as a percentage of target as well as the resulting payout for the 2023 performance stock units as a percentage of target measured in the last year of the three-year vesting period (i.e., performance is based on 2025 fiscal year performance).
| Financial Metrics (Weighting) |
Threshold Performance |
Maximum Performance | ||
| Total Company Net Revenue (50%) |
85% of target goal | 115% of target goal | ||
| Total Company Business Unit AOI (50%) |
75% of target goal | 125% of target goal |
The performance stock unit payout opportunity ranges from 0 to 110% of target, based on performance and subject to continued employment and employment agreement terms (as applicable). At the threshold performance level, the award would vest at 90% of the target performance stock units, and at or above the maximum performance level, the award would vest at 110% of the target performance stock units. If the Company exceeds threshold levels but does not achieve the targeted rates, or if the Company achieves or exceeds one target but not both, the award provides for partial payments. No performance stock units would vest if the Company fails to achieve both threshold levels of performance.
2021 Fiscal Year Performance Stock Unit Awards
The performance stock units granted in August 2020 and the mid-year grant of performance stock units granted to Mr. D’Ambrosio in April 2021 (collectively, the “Company 2021 fiscal year performance stock units”) were subject to Total Company Net Revenue and Total Company Business Unit AOI performance objectives,
weighted at 50% each, measured over a July 1, 2022 through June 30, 2023 performance period (the third year of the three-year performance award). The performance stock units of MSGE that were issued at the time of the MSGE Distribution in respect of such Company 2021 fiscal year performance stock units (the “MSGE 2021 fiscal year performance stock units”) are subject to the same performance objectives. In connection with the MSGE Distribution, achievement of the performance objectives for both the Company 2021 fiscal year performance stock units and the MSGE 2021 fiscal year performance stock units was evaluated based on consolidated financial performance. The level of achievement for each performance objective was adjusted in accordance with the terms of the awards. Based on the consolidated financial performance evaluated against the predetermined Company objectives, the Consolidated Total Company Net Revenue and Consolidated Total Company Business Unit AOI performance results as a percentage of target performance were calculated at 102.0% and 98.7%, respectively, with a resulting calculated payout for the Company 2021 fiscal year performance stock
63
units of 100.4% of target. The Company 2021 fiscal year performance stock units were settled in September 2023. For more information on the MSGE 2021 fiscal year performance stock units, see MSGE’s 2023 Definitive Proxy Statement.
Treatment of MSGN Equity Awards
In connection with the Networks Merger, the MSGN stock options and restricted stock unit awards, including such awards held by any NEO who was also employed by MSGN, were assumed by the Company and converted into a stock option or restricted stock unit denominated in shares of Class A Common Stock based on an exchange ratio of 0.172 (stock options and restricted stock units subject to performance vesting conditions were converted to stock options and restricted stock units, as applicable, with time-vesting conditions for the remainder of the performance period assuming the performance conditions were achieved at 100% of target). Additional details regarding the assumption and conversion of the MSGN awards is available in the joint proxy statement/prospectus filed by the Company and MSGN in connection with the Networks Merger.
Hedging and Pledging Policies
The Company’s Insider Trading Policy prohibits all directors, consultants and employees (including NEOs), and all members of their immediate families or any individual who is materially dependent upon them for financial support who reside in the same household, from directly or indirectly (i) engaging in short sales, short sales against the box or other “hedging” transactions unless otherwise permitted by the Company and (ii) placing securities in margin accounts or otherwise pledging Company securities.
Clawback Policy
The Company’s Clawback Policy, which was established in accordance with the listing requirement of the NYSE, provides for the
recovery or “clawback” of certain erroneously awarded incentive-based compensation in the event that the Company is required to prepare an accounting restatement. The policy is effective December 1, 2023 and applies to incentive-based compensation received by current and former executive officers of the Company during the three fiscal years preceding an accounting restatement and after the effective date of the NYSE’s listing requirement, October 2, 2023.
Holding Requirements
Under our executive compensation program for the fiscal year ended June 30, 2023, annual restricted stock unit awards vest ratably over three years and annual performance stock unit awards cliff-vest after three years to the extent that pre-determined financial performance targets measured in the last year of the three-year period are achieved, in each case, so long as the recipient is continuously employed by the Company, MSGE or MSGS until the applicable vesting date (and subject to the performance conditions described above and any applicable terms of the award agreements and their employment agreement). With respect to our non-management directors, and as discussed above under “— Director Compensation,” compensation includes annual awards of restricted stock units. Pursuant to the award agreements, directors’ restricted stock units are settled in shares of Class A Common Stock (or, in the Compensation Committee’s discretion, cash) on the first business day following 90 days after the director incurs a separation from service (other than in the event of a director’s death, where the restricted stock units are settled immediately). One effect of the cliff and three-year ratable vesting (with respect to our NEOs and eligible employees) and the holding requirements (with respect to our non-management directors) is to require each of our non-management directors, NEOs and eligible employees to maintain significant holdings of Company securities at all times.
64
BENEFITS
Benefits offered by the Company to its executive officers generally provide for retirement income and serve as a safety net against hardships that can arise from illness, disability or death. The executive officers are generally eligible to participate in the same health and welfare benefit plans made available to the other benefits-eligible employees of the Company, including, for example, medical, dental, vision, life insurance and disability coverage. Notwithstanding the foregoing, following the MSGE Distribution, Mr. Dolan ceased participating in certain Company benefit plans, including the Company’s medical, dental and vision plans, as he began receiving such benefits from MSGE.
Defined Benefit Plans
Prior to the MSGE Distribution, the Company sponsored the MSG Entertainment Group, LLC Cash Balance Pension Plan (the “Cash Balance Pension Plan”), a tax-qualified defined benefit plan for participating employees, including certain executive officers. Following the MSGE Distribution, sponsorship of the Cash Balance Plan was transferred to MSGE. Under the MSGN Holdings, L.P. Excess Cash Balance Plan (the “MSGN Excess Cash Balance Plan”), a nonqualified deferred compensation plan retained by the Company following the Networks Merger, the Company provides additional benefits to employees, including Ms. Greenberg, who are restricted by the applicable IRS annual compensation limitation. Each of the Cash Balance Pension Plan and MSGN Excess Cash Balance Plan were frozen to new participants and future benefit accruals effective as of December 31, 2015 (though, for the Cash Balance Pension Plan, accrued benefits continue to earn interest credits).
More information regarding the Cash Balance Pension Plan and the MSGN Excess Cash Balance Plan is provided in the Pension Benefits table under “Executive Compensation Tables” below.
Defined Contribution Plans
Prior to the MSGE Distribution, the Company sponsored the Madison Square Garden 401(k) Savings Plan (the “Savings Plan”), a tax-qualified retirement savings plan, for participating employees, including executive officers. Following the MSGE Distribution, sponsorship of the Savings Plan was transferred to MSGE and the Company (including MSGN) and MSGS contribute as participating employers. Under the Savings Plan, participants may contribute into their plan accounts a percentage of their eligible pay on a pre-tax or Roth 401k after-tax basis as well as a percentage of their eligible pay on an after-tax basis. The Savings Plan provides (a) fully-vested matching contributions equal to 100% of the first 4% of eligible pay contributed on a pre-tax or Roth 401k after-tax basis by participating employees and (b) a discretionary non-elective contribution by the applicable employer.
In addition, the Company offers the MSGN Holdings, L.P. Excess Savings Plan and the Sphere Entertainment Excess Savings Plan (together, the “Excess Savings Plans”), nonqualified deferred compensation plans, to employees, including executive officers, whose contributions to the Savings Plan are restricted by the applicable IRS annual compensation limitation and/or the income deferral limitation. Prior to the MSGE Distribution, the Company offered the MSG Entertainment Group, LLC Excess Savings Plan to employees but sponsorship of this plan was transferred to MSGE following the MSGE Distribution. More information regarding the Excess Savings Plans is provided in the Nonqualified Deferred Compensation table under “Executive Compensation Tables” below.
Matching contributions and discretionary contributions made by the Company in the fiscal year ended June 30, 2023 in respect of the NEOs under the Savings Plan and the Excess Savings
65
Plans are set forth in the Summary Compensation Table under “Executive Compensation Tables” below.
Deferred Compensation Plan
The Company sponsors the Sphere Entertainment Co. Executive Deferred Compensation Plan (the “EDCP”), pursuant to which certain employees, including executive officers, may elect to participate. Pursuant to the EDCP, participants may make elective base salary or bonus deferral contributions. Participants may make individual investment elections that will determine the rate of return on their deferral amounts under the EDCP. The EDCP does not provide any above-market returns or preferential earnings to participants, and the participants’ deferrals and their earnings are always 100% vested. The EDCP does not provide for any Company
contributions. Participants may elect at the time they make their deferral elections to receive their distribution either as a lump sum payment or in substantially equal annual installments over a period of up to five years.
MSG Cares Charitable Matching Gift Program
Since the 2020 fiscal year, our employees, including our NEOs, have also been eligible to participate in the MSG Cares Charitable Matching Gifts Program. Under this program, the Company matches charitable contributions made by our employees, including the NEOs, to eligible 501(c)(3) organizations of the employee’s choice. In December 2022, we increased the aggregate amount of the Company match offered to members of management, including our NEOs, from $1,000 to $5,000 per employee for each fiscal year.
PERQUISITES
The Company provides certain perquisites to executive officers as described below. Additional information concerning perquisites received by each of the NEOs is set forth in the Summary Compensation Table under “Executive Compensation Tables” below. The perquisites described below were provided by the Company prior to the MSGE Distribution and pursuant to arrangements between the Company and MSGE following the MSGE Distribution.
Car and Driver
Mr. Dolan has regular access to cars and drivers, which he is permitted to use for personal use in addition to business purposes. Prior to the MSGE Distribution, the Company and MSGS shared such costs equally. Following the MSGE Distribution, such costs are shared equally by the Company, MSGE and MSGS (so that the Company is responsible for 33.3% of such costs). In addition, certain other executive officers and members of management have had access to cars and drivers on a limited basis for personal use. To the extent employees used a car and driver for
personal use without reimbursement to the Company, those employees were imputed compensation for tax purposes.
Aircraft Arrangements
During fiscal year 2023, the Company had access to certain aircraft through timesharing arrangements with a subsidiary of MSGE (such subsidiary having been a subsidiary of the Company prior to the MSGE Distribution and having access to owned and leased aircraft, including through arrangements with various Dolan family entities). Mr. Dolan is permitted to use such aircraft for personal use and is not required to reimburse the Company for such use. Additionally, Mr. Dolan has access to helicopter travel, including for personal travel. Helicopter use has primarily been for commutation and he is not required to reimburse the Company for such use. Prior to the MSGE Distribution, the Company and MSGS shared the costs of Mr. Dolan’s personal aircraft and helicopter use equally. Following the MSGE Distribution, such costs are shared equally by the Company, MSGE and MSGS (so that the Company is responsible
66
for 33.3% of such costs). See “Transactions with Related Parties — Aircraft Arrangements.”
Prior to the MSGE Distribution, the Company was typically reimbursed for the incremental variable costs associated with the personal use of aircraft (except as noted above). To the extent any executive officer or other employee used any of the aircraft, including helicopters, for personal travel without reimbursement to the Company, they were imputed compensation for tax purposes based on the Standard Industry Fare Level rates that are published biannually by the IRS. For compensation reporting purposes, we valued the incremental cost of the personal use of the aircraft based on the variable costs incurred by the Company net of any reimbursements received from executive officers. The incremental cost of the use of the aircraft does not include any costs that would have been incurred by the Company whether or not the personal trip was taken.
Executive Security
Mr. Dolan participates in MSGE’s executive security program (and he participated in the Company’s program prior to the MSGE Distribution), including services related to cybersecurity and connectivity. Prior to the MSGE Distribution, the Company and MSGS shared the costs of such participation in the security program equally. Following the MSGE Distribution, such costs are shared equally by the Company, MSGE
and MSGS (so that the Company is responsible for 33.3% instead of 50.0% of such costs). See “Transactions with Related Parties — Relationship Between Us, MSGE, MSGS and AMC Networks.” Because certain of these costs can be viewed as conveying personal benefits to Mr. Dolan, they are reported as perquisites.
Other
From time to time certain employees, including the NEOs (and their guests), have access at no cost to tickets to Company events and, prior to the MSGE Distribution, events at the Company’s traditional live entertainment venues, and may also purchase tickets at face value. Attendance at such events is integrally and directly related to the performance of their duties, and, as such, we do not deem the receipt of such tickets to be perquisites. In addition, certain employees, including NEOs (and their guests), may have access at no cost to tickets to events at venues operated by MSGE, and may also purchase tickets to such events at face value. Tickets provided to employees, including the NEOs, are not available for resale.
Our NEOs may also make incidental use from time to time of certain amenities made available through Company resources, such as food and beverage at the Company’s nightlife, dining and entertainment venues prior to the sale of Tao Group Hospitality.
POST-TERMINATION COMPENSATION
We believe that post-termination benefits are integral to the Company’s ability to attract and retain qualified executive officers.
Under certain circumstances, payments or other benefits may be provided to employees upon the termination of their employment with the Company. These may include payments or other benefits upon a termination by the Company without cause, termination by the employee for good reason, other voluntary termination by the employee, retirement, death, disability or termination following a change in control of the
Company or following a going private transaction. With respect to the NEOs, the amounts and terms of such payments and other benefits (including the definition of “cause” and “good reason”) are governed by each NEO’s employment agreement and any applicable award agreements. Post-termination compensation, including the compensation payable to each former executive in connection with the termination of his employment, is discussed in greater detail in “Executive Compensation Tables — Employment Agreements” and “— Termination and Severance” below.
67
AWARDS ISSUED IN CONNECTION WITH THE MSGE DISTRIBUTION
Stock Options
In connection with the MSGE Distribution, for every Company stock option held on the Distribution Record Date, one stock option of MSGE was issued with the same vesting period pursuant to MSGE’s Employee Stock Plan. The one-for-one distribution ratio is consistent with treatment of Company stockholders’ Class A or Class B Common Stock held on the Distribution Record Date. The existing exercise price was allocated between the existing Company stock options and the new MSGE stock options based upon the volume-weighted average prices of our Class A Common Stock and MSGE’s Class A common stock over the ten trading days immediately following the MSGE Distribution as reported by Bloomberg Business, and the underlying share count took into account the one-for-one distribution ratio. The terms of each employee’s applicable MSGE option award agreement are substantially similar to the terms of the Company’s award agreement, which governs our options. On the Distribution Record Date, our only NEO that held Company stock options was Mr. Dolan.
Restricted Stock Units and Performance Stock Units
In connection with the MSGE Distribution, each holder of a Company restricted stock unit received one MSGE restricted stock unit in respect of every one Company restricted stock unit held on the Distribution Record Date and continues to be entitled to a share of Company Class A Common Stock (or cash or other property) for each Company restricted stock unit in accordance with the Company award agreement. Additionally, each holder of a Company performance stock unit received one MSGE performance stock unit in respect of every one Company performance stock unit held on the Distribution Record Date and continues to be entitled to a share of Company Class A Common Stock (or cash or other property) for each
Company performance stock unit in accordance with the Company award agreement. The one-for-one distribution ratio is consistent with the treatment of Company stockholders’ Class A or Class B Common Stock held on the Distribution Record Date.
The Company 2021 fiscal year performance stock units and MSGE 2021 fiscal year performance stock units, which had a performance period ending in 2023, were subject to the same performance conditions as were established by the Company at the time of grant. In connection with the MSGE Distribution, the achievement of the performance objectives for both the Company 2021 fiscal year performance stock units and MSGE 2021 fiscal year performance stock units was evaluated based on consolidated financial performance. See “Elements of Our Compensation Program — Long-Term Incentives — 2021 Fiscal Year Performance Stock Unit Awards” for more information. The performance conditions applicable to Company performance stock units and MSGE performance stock units that have a performance period ending in 2024 or 2025 will be amended (or were amended, in the case of the MSGE performance stock units) by the applicable compensation committee to reflect performance conditions specific to each company following the MSGE Distribution. At the conclusion of the performance period, the Company’s final payout multiplier (representing a percentage of the target award opportunity), as determined based on the Company’s performance against the pre-approved performance metrics for those awards, will be applied to both the MSGE and Company performance stock units held by Company employees. For individuals employed by both companies, the payout multiplier for Company awards will be determined based on the performance of the Company and the payout multiple for MSGE awards will be based on the performance of MSGE.
68
Other Terms
With respect to outstanding equity awards, the Company, MSGE and MSGS are not regarded as competitive entities of each other for purposes of any non-compete provisions contained in the applicable award agreements. With respect to all outstanding Company awards (and MSGE awards issued in connection with such awards), other than performance awards granted during our
2024 fiscal year, holders of such awards will
continue to vest so long as they remain employed by the Company, MSGE, MSGS or affiliates of such entities, provided that an employee who moves between the Company (or one of its subsidiaries), MSGE (or one of its subsidiaries) or MSGS (or one of its subsidiaries) at a time when the applicable entities are no longer affiliates will not continue to vest in such awards and such change will constitute a termination of employment for purposes of the award agreement.
PERFORMANCE AWARDS GRANTED DURING 2024 FISCAL YEAR
The Company’s first Sphere opened in Las Vegas in late September 2023, which represented the culmination of the Company’s efforts to introduce a next-generation entertainment medium powered by cutting-edge technologies that enables multi-sensory storytelling at an unparalleled scale. The genesis of the Sphere concept originated with Mr. Dolan, the Company’s Executive Chairman and Chief Executive Officer, and over the years he and a small team have worked together to implement the novel and unique live entertainment experience associated with Sphere. Their efforts in developing Sphere’s cutting-edge technologies — including a 16K x 16K screen and Sphere Immersive Sound, an advanced audio system that delivers crystal-clear, concert-grade sound to every seat in Sphere through beamforming and wave field synthesis technology — are expected to establish Sphere as an exceptional brand and concept. As the Company launches the first of its novel venues and debuts The Sphere Experience at the Las Vegas Sphere, it will explore selectively extending the Sphere network beyond Las Vegas to other markets around the world, with the Company’s intention to utilize several options, such as joint ventures, equity partners, a managed venue model, and non-recourse debt financing.
The long-term success of expanding the Sphere business, and its transformative venues and productions, is contingent upon our Chief Executive Officer and his team of valuable individuals continuing to lead the effort, and having the Company draw on their unique skills
and hands-on, teams-based experience acquired during years of working together. The team’s background and experience that spans across venue design and construction, immersive technology, original content creation and venue operations, also renders this team as highly attractive targets in a competitive global market for talent in the entertainment and consumer experience sectors. In light of the unique moment in the Company’s evolution with the opening of the Las Vegas Sphere, the potential for significant stockholder value creation that it represents, and external exposure it has generated for the team that developed Sphere, there is risk that current compensation arrangements for this team may not adequately retain, incentivize, motivate and align with stockholders these critical individuals for the extended period necessary for developing and expanding the Sphere business.
In light of these considerations management provided background to the Compensation Committee on the status of individuals associated with Sphere who are critical given their unique skill set. Management asked that the Compensation Committee consider the grant of “off-cycle” performance awards to the Chief Executive Officer and a select team of personnel who have been key contributors to the success of Sphere, to incentivize and retain this successful team, and further enhance their focus on long term value creation for the stockholders.
In response to management, the Compensation Committee requested that its independent
69
compensation consultant provide additional information (including market data) to allow the Committee to consider performance awards. Management also updated the Compensation Committee on the status of Sphere personnel following the Las Vegas opening.
In considering management’s request, the Compensation Committee reviewed various factors to be addressed as part of an equity award arrangement. First, eligible recipients should be limited to the Chief Executive Officer and the small team directly involved in the development and operation of Sphere. Second, awards should be strictly performance in nature, so that increased stockholder value was a condition for recipients realizing any value on their awards, and to that end management’s interest would be aligned with stockholders by ensuring that awards required increases in stock price (and market capitalization). Third, awards should evidence a significant retention element, so that even if performance targets were satisfied, the awards would not vest unless the recipient satisfied service vesting criteria consistent with the long-term development objectives associated with the Sphere business plan. Fourth, the timing of the grants should be in close proximity to the opening of Sphere in Las Vegas and be made to the team as a group, to provide the team as a whole with a meaningful incentive to drive, and an opportunity to participate in, value creation for the Company and its stockholders soon after the debut of Sphere. Finally, proposed awards should be reviewed in the context of existing and future compensatory arrangements.
Over a series of meetings in September and October 2023, which included consultation with its independent outside compensation consultant and independent outside counsel, the Compensation Committee determined to implement performance awards for the Chief Executive Officer and a small group of other personnel in the form of premium priced options. In connection with this determination, the independent outside compensation consultant assisted the Committee in reviewing a number of
factors, including the proposed structure of the awards, share usage associated with the awards to proposed recipients, and the value creation for stockholders associated with achieving various premium exercise prices. The Compensation Committee viewed premium priced options as establishing a close alignment with stock performance and stockholders’ interests. In order to enhance the performance aspect of the award, the premium priced options were designed (i) to be in-the-money for three equal tranches of shares but only if the exercise price for each tranche, respectively, was in excess of 125%, 135% and 150% of the closing market price of Class A Common Stock on the NYSE on the date of grant, and (ii) to cliff vest only if the recipient remains employed by, or provides services to, the Company, through to and including the third (3rd) anniversary of the grant date (subject to certain limited exceptions). The term of the options extends ten (10) years from the date of grant. If stockholder approval of the 2023 Plan is not obtained, the awards provide that they will be settled in cash to the extent they vest and are otherwise exercisable. See the “New Plan Benefits Table” below for additional information regarding these performance awards.
In considering a performance award for the Chief Executive Officer, the Compensation Committee took into account the significant leadership role and vision that Mr. Dolan has exhibited over the years in bringing Sphere to fruition and his importance in expanding the future business of Sphere. In determining the grant date fair value of the award for Mr. Dolan, management provided to the Compensation Committee material showing the potential future value of a premium priced option assuming a significant increase in stock price. The independent outside compensation consultant then provided the Compensation Committee with (i) the grant date fair value associated with the management presentation and a range of market data for “off cycle” awards (and related grant date fair values) to chief executive officers, including industry-specific data from media and entertainment businesses and additional market data for companies in the broad
70
market, and (ii) various projections showing the increase in market capitalization that would benefit stockholders at projected higher stock prices in the future, and the percentage of that incremental value that could be realized for proposed awards to the Chief Executive Officer and the other award recipients. The independent outside compensation consultant also provided the Compensation Committee with market context to assess the impact of the annualized value of the grant date fair value of a proposed performance award on the current annual total direct compensation of the Chief Executive Officer, information relating to the Company’s performance and stockholder return, and the last three long term incentive awards previously provided to the Chief Executive Officer.
After consultation with its independent compensation consultant and review of the material provided, and after reviewing the internal parity of the grant date fair value of awards to the other recipients, the Compensation Committee determined to grant the Chief Executive Officer a premium priced option with a grant date fair value of $17.2 million.
The performance awards were made by the Compensation Committee on October 20, 2023, and the award to the Chief Executive Officer is generally on the same terms as performance awards to the other personnel.
71
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the Compensation Discussion Analysis set forth above with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion Analysis be included in this proxy statement for filing with the SEC.
Members of the Compensation Committee
Joseph J. Lhota
John L. Sykes (Chair)
Carl E. Vogel
72
EXECUTIVE COMPENSATION TABLES
The tables below reflect the compensation of the Company’s NEOs. See “Compensation
Discussion Analysis” for an explanation of our compensation philosophy and program.
CERTAIN COMPENSATION DISCLOSURE CONSIDERATIONS
Our Executive Chairman and Chief Executive Officer is a shared employee of the Company, MSGE and MSGS and our Executive Vice President is a shared employee of the Company, MSGS and AMC Networks. The information set forth below only reflects the compensation for the shared NEOs paid by the Company for services rendered to the Company. With respect to Messrs. Byrnes, Haughton and D’Ambrosio, who ceased to be employed by the Company at the time of the MSGE Distribution, amounts for the fiscal year ended June 30, 2023 reflect amounts paid or
earned in respect of the portion of such fiscal year ending on the date of the MSGE Distribution, including amounts paid by MSGE and reimbursed by the Company in respect of pre-MSGE Distribution compensation paid by MSGE. For more information regarding the compensation of Mr. Dolan by MSGE and MSGS, the compensation of Mr. Granville-Smith by MSGS, and for the amounts paid to or earned by Messrs. Byrnes, Haughton and D’Ambrosio by MSGE, see MSGE’s and MSGS’ 2023 Definitive Proxy Statements.
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation paid to or earned by each of our
NEOs for the fiscal years ended June 30, 2023, 2022, and 2021, respectively.
| Name and Principal Position |
Year | Salary ($)(1) |
Bonus ($)(2) |
Stock Awards ($)(3) |
Non-Equity Incentive Plan Compensation ($)(4) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) |
All Other Compensation ($)(6) |
Total ($) | ||||||||||||||||||||||||
| Current NEOs |
||||||||||||||||||||||||||||||||
| James L. Dolan | 2023 | 1,823,077 | — | 10,973,100 | 3,064,000 | — | 450,028 | 16,310,205 | ||||||||||||||||||||||||
| Executive Chairman and |
2022 | 1,937,500 | — | 11,148,811 | 5,566,000 | — | 591,368 | 19,243,679 | ||||||||||||||||||||||||
| 2021 | 600,000 | — | 5,848,014 | 1,320,000 | — | 555,826 | 8,323,840 | |||||||||||||||||||||||||
| Andrea Greenberg(7) President and Chief Executive Officer, MSG Networks |
2023 | 1,350,000 | — | 2,308,962 | 2,691,225 | 12,757 | 80,615 | 6,443,559 | ||||||||||||||||||||||||
| 2022 | 1,326,923 | — | 2,415,014 | 2,579,850 | 13,708 | 71,211 | 6,406,706 | |||||||||||||||||||||||||
| David Granville-Smith(8) |
2023 | 21,538 | 925,000 | 3,903,864 | — | — | — | 4,850,402 | ||||||||||||||||||||||||
| Executive Vice President |
||||||||||||||||||||||||||||||||
| Gautam Ranji(9) Executive Vice President, |
2023 | 530,577 | — | 514,117 | 957,500 | — | 23,942 | 2,026,136 | ||||||||||||||||||||||||
| Gregory Brunner(10) |
2023 | 25,962 | 150,000 | — | — | — | 92 | 176,054 | ||||||||||||||||||||||||
| Senior Vice President, Controller and |
||||||||||||||||||||||||||||||||
| Former Executives |
||||||||||||||||||||||||||||||||
| David F. Byrnes(11) |
2023 | 646,154 | — | 1,554,569 | 612,800 | — | 43,356 | 2,856,879 | ||||||||||||||||||||||||
| Former Executive Vice President and |
2022 | 338,462 | 811,868 | 993,165 | 1,113,200 | — | 11,893 | 3,268,588 | ||||||||||||||||||||||||
| Jamal H. Haughton(12) Former Executive Vice President and |
2023 | 888,462 | — | 1,188,762 | 842,600 | — | 61,863 | 2,981,687 | ||||||||||||||||||||||||
| 2022 | 613,462 | 250,000 | 1,075,940 | 1,530,650 | — | 13,112 | 3,483,164 | |||||||||||||||||||||||||
| Philip G. D’Ambrosio(13) | 2023 | 549,231 | — | 914,518 | 430,875 | — | 36,831 | 1,931,455 | ||||||||||||||||||||||||
| Former Senior Vice President and Treasurer |
2022 | 625,481 | — | 956,519 | 809,665 | — | 35,618 | 2,427,283 | ||||||||||||||||||||||||
| 2021 | 575,000 | — | 1,070,669 | 474,375 | — | 32,370 | 2,152,414 | |||||||||||||||||||||||||
73
| (1) | For 2023, salaries paid by the Company to the following NEOs accounted for approximately the following percentages of their total Company compensation: Ms. Greenberg – 21.0%; Mr. Granville-Smith – 0.4%; Mr. Ranji – 26.2%; and Mr. Brunner – 14.7%. For 2023, the combined salaries paid by the Company and MSGE accounted for approximately the following percentages of their total compensation for both companies (excluding any double counting): Mr. Dolan– 7.8%; Mr. Byrnes – 17.9%; Mr. Haughton – 23.4%; and Mr. D’Ambrosio – 22.7%. |
| (2) | This column reflects a one-time special bonus paid outside of the MPIP to Messrs. Brunner and Haughton in connection with the commencement of their employment with the Company and to Messrs. Granville-Smith and Byrnes in connection with forfeited compensation from each of their previous employers. |
| (3) | This column reflects the aggregate grant date fair value of Company restricted stock units and performance stock units granted to the NEOs, without any reduction for risk of forfeiture, as calculated in accordance with Topic 718 on the date of grant. Under Topic 718, the date of grant for performance stock units is the date the performance targets are set for such awards. The assumptions used by the Company in calculating these amounts are set forth in Note 14 to our financial statements included in our 2023 Form 10-K. The grant date fair value of the performance stock units is shown at target performance. The number of restricted stock units and performance stock units granted to the NEOs was determined based on the 20-trading day average closing market price on the day prior to the date such awards were approved by the Compensation Committee. |
| For the 2023 figures, this column reflects the value of restricted stock units and performance stock units granted in August 2022, May 2023 and June 2023, as applicable. The number of units and the grant date fair value of the awards from August 2022 are based on the stock price of the pre-MSGE Distribution Company. The number of units and the grant date fair value of the awards from May 2023 and June 2023 are based on the stock price of the post-MSGE Distribution Company. At the highest level of performance, the value of such 2023 performance stock units on the grant date would be: $6,035,205 for Mr. Dolan; $1,269,935 for Ms. Greenberg; $282,785 for Mr. Ranji; $855,013 for Mr. Byrnes; $653,830 for Mr. Haughton; and $502,985 for Mr. D’Ambrosio. With respect to Mr. Granville-Smith, such amounts reflect a one-time equity award of restricted stock units granted in June 2023 in accordance with the terms of his employment agreement and which was intended to compensate him for forfeited compensation from his previous employer. With respect to Mr. Ranji, such amounts include awards approved in May 2023 to reflect the increased long-term incentive opportunity (on a pro rata basis) as a result of Mr. Ranji’s promotion to Executive Vice President, Chief Financial Officer and Treasurer effective as of the MSGE Distribution Date. |
| For the 2022 figures, this column reflects the value of restricted stock units approved and granted in August 2021 and April 2022 and performance stock units approved in August 2021 and April 2022 and granted for purposes of Topic 718 in June 2022. At the highest level of performance, the value of such 2022 performance stock units on the grant date for purposes of Topic 718 would be: $4,843,171 for Mr. Dolan; $1,053,442 for Ms. Greenberg; $423,812 for Mr. Byrnes; $459,134 for Mr. Haughton; and $417,239 for Mr. D’Ambrosio. With respect to Mr. Dolan, such amounts include awards approved in April 2022 to reflect the increased long-term incentive opportunity (on a non-pro rata basis) as a result of Mr. Dolan’s new employment agreement effective August 2021; with respect to Messrs. Byrnes and Haughton, such awards, approved in April 2022, reflect long-term incentive opportunities under their employment agreements (on a non-pro rata basis). |
| For the 2021 figures, this column reflects the value of restricted stock units and performance stock units granted in August and September 2020 and April 2021. At the highest level of performance, the value of such 2021 performance stock units on the grant date would be: $3,379,808 for Mr. Dolan; and $613,078 for Mr. D’Ambrosio. With respect to Mr. D’Ambrosio, such amounts also include awards granted in April 2021 to reflect an increased long-term incentive opportunity. |
74
| (4) | For the 2023 figures, this column reflects the annual incentive award earned by each NEO under the Company’s program with respect to performance during the fiscal year ended June 30, 2023 and paid in September 2023. With respect to Messrs. Byrnes, Haughton and D’Ambrosio, these amounts equal the portion of the MSGE annual cash incentive award paid by the Company, reflecting the Company’s obligation to pay 50% of the liability in accordance with the MSGE Employee Matters Agreement. For the 2022 figures, this column reflects the annual incentive award earned by each NEO under the Company’s program with respect to performance during the fiscal year ended June 30, 2022 and paid in September 2022. For the 2021 figures, this column reflects the annual incentive award earned by each NEO under the Company’s program with respect to performance during the year ended June 30, 2021 and paid in September 2021. |
| (5) | For each period, this column represents the sum of the increase during such period in the present value of each individual’s accumulated Cash Balance Pension Plan account, accumulated MSGN Excess Retirement Plan account and accumulated MSGN Excess Cash Balance Plan account over the amount reported for the prior period. There were no above-market earnings on nonqualified deferred compensation. For more information regarding the NEOs’ pension benefits, please see the Pension Benefits table below. |
| (6) | The table below shows the components of this column: |
| Name |
Year | 401(k) Plan Match(a) |
401(k) Plan Discretionary Contribution(a) |
Excess Savings Plan Match(a) |
Excess Savings Plan Discretionary Contribution(a) |
Life Insurance Premiums(b) |
MSG Cares Matching Gift Program(c) |
Perquisites(d) | Total | |||||||||||||||||||||||||||
| Current NEOs |
||||||||||||||||||||||||||||||||||||
| James L. Dolan |
2023 | 13,200 | 5,338 | 67,800 | 29,663 | 4,080 | — | 329,947 | 450,028 | |||||||||||||||||||||||||||
| Andrea Greenberg |
2023 | 13,200 | 5,338 | 41,800 | 18,288 | 1,989 | — | — | 80,615 | |||||||||||||||||||||||||||
| David Granville-Smith |
2023 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Gautam Ranji |
2023 | 18,499 | 4,382 | — | — | 61 | 1,000 | — | 23,942 | |||||||||||||||||||||||||||
| Gregory Brunner |
2023 | — | — | — | — | 92 | — | — | 92 | |||||||||||||||||||||||||||
| Former NEOs |
||||||||||||||||||||||||||||||||||||
| David F. Byrnes |
2023 | 11,462 | 5,338 | 17,338 | 7,586 | 1,632 | — | — | 43,356 | |||||||||||||||||||||||||||
| Jamal H. Haughton |
2023 | 9,154 | 5,338 | 31,800 | 13,913 | 1,658 | — | — | 61,863 | |||||||||||||||||||||||||||
| Philip G. D’Ambrosio |
2023 | 8,788 | 5,338 | 14,919 | 6,527 | 1,259 | — | — | 36,831 | |||||||||||||||||||||||||||
| (a) | These columns represent, for each individual, a matching contribution by the Company on behalf of such individual under the Savings Plan or Excess Savings Plans, as applicable, and discretionary contributions under the Savings Plan or Excess Savings Plans, as applicable. |
| (b) | This column represents amounts paid for each individual to participate in the Company’s group life insurance program. Mr. Dolan received his life insurance benefits from the Company prior to the MSGE Distribution, and now receives these benefits from MSGE following the MSGE Distribution. Mr. Granville-Smith receives his life insurance benefits from MSGS. |
| (c) | This column represents amount paid by the Company to eligible 501(c)(3) organizations as matching contributions for donations made by the NEOs under the MSG Cares Charitable Matching Gift Program. |
| (d) | This column represents the following aggregate estimated perquisites, as described in the table below, excluding amounts reimbursed by MSGE and/or MSGS. Prior to the MSGE Distribution, the perquisites were provided pursuant to arrangements between the Company and MSGS. Following the MSGE |
75
| Distribution, the perquisites were provided pursuant to arrangements between the Company, MSGE and MSGS. For more information regarding the calculation of these perquisites, please see “Compensation Discussion Analysis — Perquisites.” |
| Name |
Year | Car and Driver(I) |
Aircraft(II) | Executive Security(III) |
Total ($) | |||||
| Current NEOs |
||||||||||
| James L. Dolan |
2023 | 81,323 | 244,911 | * | 329,947 | |||||
| Andrea Greenberg |
2023 | * | * | * | ** | |||||
| David Granville-Smith |
2023 | * | * | * | ** | |||||
| Gautam Ranji |
2023 | * | * | * | ** | |||||
| Gregory Brunner |
2023 | * | * | * | ** | |||||
| Former Executives |
||||||||||
| David F. Byrnes |
2023 | * | * | * | ** | |||||
| Jamal H. Haughton |
2023 | * | * | * | ** | |||||
| Philip G. D’Ambrosio |
2023 | * | * | * | ** |
| * | Does not exceed the greater of $25,000 or 10% of the total amount of the perquisites of the NEO. |
| ** | The aggregate value of the perquisites in 2023 for the individual is less than $10,000. |
| (I) | Amounts in this column represent the Company’s share of the cost of the personal use (which includes commutation) by Mr. Dolan of cars and drivers provided by the Company and MSGE. These amounts are calculated using a portion of the cost of the Company’s drivers plus maintenance, fuel and other related costs for the Company vehicles, based on an estimated percentage of personal use. |
| (II) | As discussed under “Compensation Discussion Analysis — Perquisites — Aircraft Arrangements,” the amounts in the table reflect the Company’s share of the incremental cost for personal use of aircraft (see “Transactions with Related Parties — Aircraft Arrangements”), as well as personal helicopter use primarily for commutation. Incremental cost is determined as the actual additional cost incurred by the Company under the applicable arrangement. |
| (III) | The amounts in this column represent the Company’s share of the cost of executive security services (including cybersecurity and connectivity) provided to Mr. Dolan. |
| (7) | Effective as of the closing of the Networks Merger on July 9, 2021, Ms. Greenberg (who has been President and Chief Executive Officer of MSG Networks since 2015) became an executive officer of the Company. |
| (8) | Effective June 15, 2023, Mr. Granville-Smith was appointed Executive Vice President of the Company. |
| (9) | Effective as of the MSGE Distribution Date, Mr. Ranji was promoted to Executive Vice President, Chief Financial Officer and Treasurer of the Company. |
| (10) | Effective June 5, 2023, Mr. Brunner was appointed Senior Vice President, Controller and Principal Accounting Officer of the Company. |
| (11) | Mr. Byrnes served as the Executive Vice President and Chief Financial Officer of the Company from January 24, 2022 until the MSGE Distribution Date. |
| (12) | Mr. Haughton served as the Executive Vice President and General Counsel of the Company from December 6, 2021 until the MSGE Distribution Date. |
| (13) | Mr. D’Ambrosio served as the Senior Vice President and Treasurer of the Company until the MSGE Distribution Date. |
76
GRANTS OF PLAN-BASED AWARDS
The table below presents information regarding Company equity awards granted under the Company’s plans and annual incentive awards that were granted during the fiscal year ended June 30, 2023 to each NEO, including estimated
possible and future payouts under non-equity incentive plan awards and equity incentive plan awards of restricted stock units and performance stock units.
| Name |
Year | Grant Date |
Estimated Future Payouts Under Non-Equity |
Estimated Future Payouts Under Equity Incentive |
All Other Stock Awards: Number of Shares of Stock or Units (#)(1) |
Grant Date Fair Value of Stock and Option Awards ($)(2) |
||||||||||||||||||||||||||||||||||
| Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||
| Current NEOs |
||||||||||||||||||||||||||||||||||||||||
| James L. Dolan |
2023 | 8/31/2022 | (3) | 2,000,000 | 4,000,000 | |||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (4) | 88,875 | 98,750 | 108,625 | 5,486,550 | ||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (5) | 98,750 | 5,486,550 | ||||||||||||||||||||||||||||||||||||
| Andrea Greenberg |
2023 | 8/31/2022 | (3) | 2,025,000 | 4,050,000 | |||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (4) | 18,701 | 20,779 | 22,857 | 1,154,481 | ||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (5) | 20,779 | 1,154,481 | ||||||||||||||||||||||||||||||||||||
| David Granville-Smith |
2023 | 6/15/2023 | (5) | 140,225 | 3,903,864 | |||||||||||||||||||||||||||||||||||
| Gautam Ranji |
2023 | 8/31/2022 | (3) | 625,000 | 1,250,000 | |||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (4) | 3,704 | 4,115 | 4,527 | 228,629 | ||||||||||||||||||||||||||||||||||
| 2023 | 5/30/2023 | (4) | 1,074 | 1,193 | 1,312 | 28,429 | ||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (5) | 4,115 | 228,629 | ||||||||||||||||||||||||||||||||||||
| 2023 | 5/30/2023 | (5) | 1,193 | 28,429 | ||||||||||||||||||||||||||||||||||||
| Gregory Brunner(6) |
2023 | — | — | — | ||||||||||||||||||||||||||||||||||||
| Former Executives |
||||||||||||||||||||||||||||||||||||||||
| David F. Byrnes |
2023 | 8/31/2022 | (3) | 800,000 | 1,600,000 | |||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (4) | 12,591 | 13,990 | 15,389 | 777,284 | ||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (5) | 13,990 | 777,284 | ||||||||||||||||||||||||||||||||||||
| Jamal H. Haughton |
2023 | 8/31/2022 | (3) | 1,100,000 | 2,200,000 | |||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (4) | 9,628 | 10,698 | 11,768 | 594,381 | ||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (5) | 10,698 | 594,381 | ||||||||||||||||||||||||||||||||||||
| Philip G. D’Ambrosio |
2023 | 8/31/2022 | (3) | 510,000 | 1,020,000 | |||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (4) | 7,407 | 8,230 | 9,053 | 457,259 | ||||||||||||||||||||||||||||||||||
| 2023 | 8/31/2022 | (5) | 8,230 | 457,259 | ||||||||||||||||||||||||||||||||||||
| (1) | The number of restricted stock units and performance stock units granted to the NEOs was determined based on the 20-trading day average closing market price on the day prior to the date such awards were approved by the Compensation Committee. |
| (2) | This column reflects the aggregate grant date fair value of the restricted stock unit awards and performance stock unit awards, as applicable, granted to each NEO in the 2023 fiscal year without any reduction for risk of forfeiture as calculated in accordance with Topic 718 as of the date of grant. The grant date fair value of the performance stock units is shown at target performance. The grant date fair value of the awards from August 2022 are based on the stock price of the pre-MSGE Distribution Company. The grant date fair value of the awards from May 2023 and June 2023 are based on the stock price of the post-MSGE Distribution Company. At the highest level of performance, the value of the performance stock units on the applicable grant date would be: $6,035,205 for Mr. Dolan; $1,269,935 for Ms. Greenberg; $282,785 for Mr. Ranji; $855,013 for Mr. Byrnes; $653,830 for Mr. Haughton; and $502,985 for Mr. D’Ambrosio. In connection with the MSGE Distribution, the stock option awards, restricted stock unit awards and performance stock |
77
| unit awards granted to the NEOs were adjusted into awards of post-MSGE Distribution equity in the Company and MSGE. See “Compensation Discussion and Analysis — Awards Issued in Connection with the MSGE Distribution” for greater detail. |
| (3) | This row reflects the possible payouts with respect to grants of annual incentive awards under the Company’s MPIP for performance in the fiscal year ended June 30, 2023, without modification for any shared responsibility between the Company and MSGE in accordance with the MSGE Employee Matters Agreement. Each of the NEOs is assigned a target bonus which is a percentage of the NEO’s base salary for as of such fiscal year end. There is no threshold amount for annual incentive awards. As a result of the MSGE Distribution, a portion of the 2023 annual cash incentive awards was paid by MSGE. The amounts of annual incentive awards actually paid by the Company in September 2023 for performance in the 2023 fiscal year (including the impact of payments between the Company and MSGE in accordance with the MSGE Employee Matters Agreement) are disclosed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. For more information regarding the terms of these annual incentive awards, please see “Compensation Discussion Analysis — Elements of Our Compensation Program — Annual Cash Incentives.” |
| (4) | This row reflects the threshold, target and maximum number of Company performance stock units awarded in the fiscal year ended June 30, 2023. Each performance stock unit award was approved with a target number of units, with an actual payment based upon the achievement of performance targets. These grants of performance stock units, which were made under the Employee Stock Plan (except in the case of Ms. Greenberg, whose grants of performance stock units were made under MSGN’s Employee Stock Plan), will vest upon the later of September 15, 2025 and the date of certification of achievement against pre-determined performance goals measured in the 2025 fiscal year, subject to continued employment requirements and employment agreement and award terms (as applicable). See “Compensation Discussion Analysis — Elements of Our Compensation Program — Long-Term Incentives — Performance Stock Units” and “—Employment Agreements.” |
| (5) | This row reflects the number of Company restricted stock units awarded in the fiscal year ended June 30, 2023. These grants of restricted stock units, which were made under the Employee Stock Plan (except in the case of Ms. Greenberg, whose grants of restricted stock units were made under MSGN’s Employee Stock Plan), will vest in three equal installments on September 15, 2023, 2024 and 2025 (except in the case of Mr. Granville-Smith, whose grant of restricted stock units will vest in three equal installments on September 15, 2024, 2025 and 2026), subject to continued employment requirements and employment agreement and award terms (as applicable). See “Compensation Discussion Analysis — Elements of Our Compensation Program — Long-Term Incentives — Restricted Stock Units” and “—Employment Agreements.” |
| (6) | Pursuant to his employment agreement, Mr. Brunner was not eligible for any grant of long-term incentive awards for the fiscal year ended June 30, 2023. |
78
OUTSTANDING EQUITY AWARDS AT JUNE 30, 2023
The table below shows (i) each grant of Company stock options that is unexercised and outstanding, and (ii) the aggregate number and value of unvested Company restricted stock units and
performance stock units outstanding (assuming target performance) for each NEO, in each case, as of June 30, 2023.
| Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
||||||||||||||||||
| Current NEOs |
||||||||||||||||||||||||
| James L. Dolan |
184,150 | (2) | — | 47.87 | 03/15/2024 | — | — | |||||||||||||||||
| 146,349 | (3) | — | 58.06 | 03/01/2025 | — | — | ||||||||||||||||||
| 108,630 | (4) | — | 67.33 | 02/25/2026 | — | — | ||||||||||||||||||
| 191,110 | (5) | — | 38.49 | 02/26/2027 | — | — | ||||||||||||||||||
| — | — | — | — | 436,112 | (6) | 11,945,108 | ||||||||||||||||||
| Andrea Greenberg |
— | — | — | — | 106,756 | (7) | 2,924,047 | |||||||||||||||||
| David Granville-Smith |
— | — | — | — | 140,225 | (8) | 3,840,763 | |||||||||||||||||
| Gautam Ranji |
— | — | — | — | 10,616 | (9) | 290,772 | |||||||||||||||||
| Gregory Brunner |
— | — | — | — | — | — | ||||||||||||||||||
| Former Executives |
||||||||||||||||||||||||
| David F. Byrnes |
— | — | — | — | 40,339 | (10) | 1,104,885 | |||||||||||||||||
| Jamal H. Haughton |
— | — | — | — | 34,785 | (11) | 952,761 | |||||||||||||||||
| Philip G. D’Ambrosio |
— | — | — | — | 37,874 | (12) | 1,037,369 | |||||||||||||||||
| (1) | Calculated using the closing market price of Class A Common Stock on the NYSE on June 30, 2023 of $27.39 per share. |
| (2) | The amounts in this row represent Mr. Dolan’s time-based stock options granted in connection with the Networks Merger as a result of the conversion of Mr. Dolan’s MSGN time-based stock options and performance-based stock options granted as long-term incentive awards on September 15, 2016, which have fully vested. |
| (3) | The amounts in this row represent Mr. Dolan’s time-based stock options granted in connection with the Networks Merger as a result of the conversion of Mr. Dolan’s MSGN time-based stock options and performance-based stock options granted as long-term incentive awards on September 1, 2017, which have fully vested. |
| (4) | The amounts in this row represent Mr. Dolan’s time-based stock options granted in connection with the Networks Merger as a result of the conversion of Mr. Dolan’s MSGN time-based stock options and performance-based stock options granted as long-term incentive awards on August 28, 2018, which have fully vested. |
79
| (5) | The amounts in this row represent Mr. Dolan’s time-based stock options granted in connection with the Networks Merger as a result of the conversion of Mr. Dolan’s MSGN time-based stock options and performance-based (based on target performance) stock options granted as long-term incentive awards on August 29, 2019, which have fully vested. |
| (6) | With respect to Mr. Dolan, the total in this column includes 11,316 Company restricted stock units (from an original award of 33,947 restricted stock units) issued in respect of MSGN restricted stock units and 33,947 Company restricted stock units issued in respect of MSGN performance stock units, granted by MSGN prior to the Networks Merger. 11,316 restricted stock units issued in respect of the MSGN restricted stock units vest on September 15, 2023. 33,947 restricted stock units issued in respect of the MSGN performance stock units vest on September 15, 2023. In addition, this column includes an award of 13,031 restricted stock units (from an original award of 39,091 restricted stock units) and 39,091 target performance stock units approved as long-term incentive awards on August 25, 2020, 45,986 restricted stock units (from an original award of 68,979 restricted stock units) and 68,979 target performance stock units approved as long-term incentive awards on August 27, 2021, 10,505 restricted stock units (from an original award of 15,757 restricted stock units) and 15,757 target performance stock units approved as long-term incentive awards on April 20, 2022, and 98,750 restricted stock units and 98,750 target performance stock units approved as long-term incentive awards on August 31, 2022. The restricted stock units vest ratably over three years on September 15th each year following the year of grant. The performance stock units cliff-vest upon the later of September 15th following a three year-period, and the date of certification of achievement against pre-determined performance goals measured in the final year of the period ending June 30th of the applicable year. In connection with the MSGE Distribution, Mr. Dolan received one MSGE restricted stock unit and one MSGE performance unit for each Company restricted stock unit and Company performance stock unit, respectively, held on the MSGE Distribution Record Date.” See “Compensation Discussion and Analysis –Awards Issued in Connection with the MSGE Distribution.” All vestings are subject to continued employment and the terms of Mr. Dolan’s employment agreement. |
| (7) | With respect to Ms. Greenberg, the total in this column includes 9,024 restricted stock units (from an original award of 28,499 restricted stock units) issued in respect of MSGN restricted stock units and 27,070 Company restricted stock units issued in respect of MSGN performance stock units, granted by MSGN prior to the Networks Merger. 9,024 restricted stock units issued in respect of the MSGN restricted stock units vest on September 15, 2023. 27,070 restricted stock units issued in respect of the MSGN performance stock units vest on September 15, 2023. In addition, this column includes an award of 11,672 restricted stock units (from an original award of 18,431 restricted stock units) and 18,431 target performance stock units approved as long-term incentive awards on August 27, 2021, and 19,780 restricted stock units and 20,779 target performance stock units approved as long-term incentive awards on August 31, 2022. The restricted stock units vest ratably over three years on September 15th each year following the year of grant. The performance stock units cliff-vest upon the later of September 15th following a three year-period, and the date of certification of achievement against pre-determined performance goals measured in the final year of the period ending June 30th of the applicable year. In connection with the MSGE Distribution, Ms. Greenberg received one MSGE restricted stock unit and one MSGE performance stock unit for each Company restricted stock unit and Company performance stock unit, respectively, held on the Distribution Record Date. See “Compensation Discussion and Analysis –Awards Issued in Connection with the MSGE Distribution.” All vestings are subject to continued employment and the terms of Ms. Greenberg’s employment agreement. For more information on the MSG Networks restricted stock units and performance stock units granted by MSGN prior to the Networks Merger, which are not reflected herein, see MSGN’s Definitive Proxy Statement, filed with the SEC on October 21, 2020. |
| (8) | With respect to Mr. Granville-Smith, the total in this column represents an award of 140,225 restricted stock units granted on June 15, 2023 as a one-time special award in accordance with his new employment agreement and which was intended to compensate him for forfeited compensation from his previous employer. The restricted stock units vest ratably over three years on September 15, 2024, 2025 and 2026. All vestings are subject to continued employment and the terms of Mr. Granville-Smith’s employment agreement. |
80
| (9) | With respect to Mr. Ranji, the total in this column represents an award of 4,115 restricted stock units and 4,115 target performance stock units approved as long-term incentive awards on August 31, 2022, and 1,193 restricted stock units and 1,193 target performance stock units approved as long-term incentive awards on May 30, 2023. The restricted stock units vest ratably over three years on September 15th each year following the year of grant. The performance stock units cliff-vest upon the later of September 15th following a three year-period, and the date of certification of achievement against pre-determined performance goals measured in the final year of the period ending June 30th of the applicable year. In connection with the MSGE Distribution, Mr. Ranji received one MSGE restricted stock unit and one MSGE performance stock unit for each Company restricted stock unit and Company performance stock unit, respectively, held on the Distribution Record Date. See “Compensation Discussion and Analysis –Awards Issued in Connection with the MSGE Distribution.” All vestings are subject to continued employment and the terms of Mr. Ranji’s employment agreement. |
| (10) | With respect to Mr. Byrnes, the total in this column represents an award of 4,944 restricted stock units (from an original award of 7,415 restricted stock units) and 7,415 target performance stock units granted as long-term incentive awards on April 20, 2022, and 13,990 restricted stock units and 13,990 target performance stock units granted as long-term incentive awards on August 31, 2022. The restricted stock units vest ratably over three years on September 15th each year following the year of grant. The performance stock units cliff-vest upon the later of September 15th following a three-year period, and the date of certification of achievement against pre-determined performance goals measured in the final year of a three-year period ending June 30th of the applicable year. In connection with the MSGE Distribution, Mr. Byrnes received one MSGE restricted stock unit and one MSGE performance stock unit for each Company restricted stock unit and Company performance stock unit, respectively, held on the Distribution Record Date. See “Compensation Discussion and Analysis –Awards Issued in Connection with the MSGE Distribution.” All vestings are subject to continued employment requirements and employment agreement and award terms (as applicable), as assigned to MSGE in connection with the spin. |
| (11) | With respect to Mr. Haughton, the total in this column represents an award of 5,356 restricted stock units (from an original award of 8,033 restricted stock units) and 8,033 target performance stock units granted as long-term incentive awards on April 20, 2022, and 10,698 restricted stock units and 10,698 target performance stock units granted as long-term incentive awards on August 31, 2022. The restricted stock units vest ratably over three years on September 15th each year following the year of grant. The performance stock units cliff-vest upon the later of September 15th following a three-year period, and the date of certification of achievement against pre-determined performance goals measured in the final year of a three-year period ending June 30th of the applicable year. In connection with the MSGE Distribution, Mr. Haughton received one MSGE restricted stock unit and one MSGE performance stock unit for each Company restricted stock unit and Company performance stock unit, respectively, held on the Distribution Record Date. See “Compensation Discussion and Analysis –Awards Issued in Connection with the MSGE Distribution.” All vestings are subject to continued employment requirements and employment agreement and award terms (as applicable), as assigned to MSGE in connection with the spin. |
| (12) | With respect to Mr. D’Ambrosio, the total in this column includes an award of 1,931 restricted stock units (from an original award of 5,792 restricted stock units) and 5,792 target performance stock units approved as long-term incentive awards on August 25, 2020, 381 restricted stock units (from an original award of 1,143 restricted stock units) and 1,143 target performance stock units approved as long-term incentive awards on April 22, 2021, 4,867 restricted stock units (from an original award of 7,300 restricted stock units) and 7,300 target performance stock units approved as long-term incentive awards on August 27, 2021, and 8,230 restricted stock units and 8,230 target performance stock units approved as long-term incentive awards on August 31, 2022. The restricted stock units vest ratably over three years on September 15th each year following the year of grant. The performance stock units cliff-vest upon the later of September 15th following a three year-period, and the date of certification of achievement against pre-determined performance goals measured in the final year of the period ending June 30th of the applicable year. |
81
| Mr. D’Ambrosio received one MSGE restricted stock unit and one MSGE performance stock unit for each Company restricted stock unit and Company performance stock unit, respectively, held on the Distribution Record Date. See “Compensation Discussion and Analysis –Awards Issued in Connection with the MSGE Distribution.” All vestings are subject to continued employment and the terms of Mr. D’Ambrosio’s employment agreement (as applicable), as assigned to MSGE in connection with the spin. |
OPTION EXERCISES AND STOCK VESTED
The table below shows restricted stock unit awards that vested during the fiscal year ended June 30, 2023.
No Company stock options were exercised in the fiscal year ended June 30, 2023.
| Name |
Restricted Stock Units | |||||||
| Number of Shares Acquired on Vesting |
Value Realized on Vesting ($)(1) |
|||||||
| Current NEOs |
||||||||
| James L. Dolan |
|
74,618 |
|
|
4,198,755 |
| ||
| Andrea Greenberg |
|
37,901 |
|
|
2,131,980 |
| ||
| David Granville-Smith |
— | — | ||||||
| Gautam Ranji |
— | — | ||||||
| Gregory Brunner |
— | — | ||||||
| Former Executives |
||||||||
| David F. Byrnes |
2,471 | 139,043 | ||||||
| Jamal H. Haughton |
2,677 | 150,635 | ||||||
| Phillip G D’Ambrosio |
6,704 | 377,234 | ||||||
| (1) | Calculated using the closing price of Class A Common Stock on the NYSE on the vesting dates, August 31, 2022 and September 15, 2022, of $55.56 and $56.27, per share, respectively. |
82
PENSION BENEFITS
The table below shows the present value of accumulated benefits payable to each of our NEOs, including the number of years of service
credited to each NEO, under our defined benefit pension plans as of June 30, 2023.
| Name |
Plan Name(1) |
Number of Years of Credited Service (#) |
Present Value of Accumulated Benefit ($)(2) |
|||||||
| Current NEOs |
||||||||||
| James L. Dolan |
Cash Balance Pension Plan | — | (3) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (3) | — | |||||||
| Andrea Greenberg |
Cash Balance Pension Plan | 8 | (4) | — | ||||||
| MSGN Excess Cash Balance Plan | 8 | (4) | 451,022 | |||||||
| David Granville-Smith |
Cash Balance Pension Plan | — | (5) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (5) | — | |||||||
| Gautam Ranji |
Cash Balance Pension Plan | — | (5) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (5) | — | |||||||
| Gregory Brunner |
Cash Balance Pension Plan | — | (5) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (5) | — | |||||||
| Former Executives |
||||||||||
| David F. Byrnes |
Cash Balance Pension Plan | — | (5) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (5) | — | |||||||
| Jamal H. Haughton |
Cash Balance Pension Plan | — | (5) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (5) | — | |||||||
| Philip G. D’Ambrosio |
Cash Balance Pension Plan | — | (5) | — | ||||||
| MSGN Excess Cash Balance Plan | — | (5) | — | |||||||
| (1) | Accruals under both the Cash Balance Pension Plan and the MSGN Excess Cash Balance Plan were frozen as of December 31, 2015. |
| (2) | Additional information concerning pension plans and other postretirement benefit plan assumptions is set forth in Note 13 to our financial statements included in our 2023 Form 10-K. |
| (3) | Mr. Dolan does not participate in the Cash Balance Pension Plan or the MSGN Excess Cash Balance Plan. |
| (4) | In connection with the Networks Merger, Ms. Greenberg’s benefits under the Cash Balance Plan and MSGN Excess Cash Balance Plan were retained by the Company and the number of years of credited service under both plans reflect the period of Ms. Greenberg’s participation in MSGN’s cash balance plan and excess cash balance plans prior to the Networks Merger. In connection with the MSGE Distribution, Ms. Greenberg’s accrued benefits under the Cash Balance Plan were transferred to MSGE. |
| (5) | Messrs. Granville-Smith, Ranji, Brunner, Byrnes, Haughton and D’Ambrosio commenced employment with the Company after the Cash Balance Pension Plan and the MSGN Excess Cash Balance Plan were frozen and therefore are not eligible to participate in such plans. |
83
The Company maintains several benefit plans for our executive officers. The material terms and conditions are discussed below.
Cash Balance Pension Plan
Prior to the MSGE Distribution, the Company sponsored the Cash Balance Pension Plan, a tax-qualified defined benefit plan. The sponsorship of the Cash Balance Plan was transferred to MSGE in connection with the MSGE Distribution. The Cash Balance Pension Plan generally covers regular full-time and part-time non-union employees of the sponsoring company and certain of its affiliates who have completed one year of service. The Cash Balance Pension Plan was frozen to future benefit accruals effective as of December 31, 2015 (though accrued benefits continue to earn interest credits). A notional account is maintained for each participant under the Cash Balance Pension Plan, including Ms. Greenberg, which consists of (i) annual allocations made by the sponsoring company as of the end of each year on behalf of each participant who has completed 800 hours of service during the year that range from 3% to 9% of the participant’s compensation, based on the participant’s age and (ii) monthly interest credits based on the average of the annual rate of interest on the 30-year U.S. Treasury Bonds for the months of September, October and November of the prior year. Compensation includes all direct cash compensation received while a participant as part of the participant’s primary compensation structure (excluding bonuses, fringe benefits, and other compensation that is not received on a regular basis), and before deductions for elective deferrals, subject to applicable IRS limits.
A participant’s interest in the Cash Balance Pension Plan is subject to vesting limitations for the first three years of employment. A participant’s account will also vest in full upon his or her termination due to death, disability or retirement after attaining age 65. Upon retirement or other termination of employment, the participant may elect a distribution of the vested portion of the cash balance account. Any amounts
remaining in the Cash Balance Pension Plan will continue to be credited with interest until the account is paid. The normal form of benefit payment for an unmarried participant is a single life annuity and the normal form of benefit payment for a married participant is a 50% joint and survivor annuity. The participant, with spousal consent if applicable, can waive the normal form and elect a single life annuity or a lump sum.
MSGN Excess Cash Balance Plan
The MSGN Excess Cash Balance Plan is a nonqualified deferred compensation plan, which was retained by the Company following the Networks Merger and the MSGE Distribution, that is intended to provide eligible participants, including Ms. Greenberg, with a portion of their overall benefit that they would accrue under the Cash Balance Pension Plan but for Internal Revenue Code of 1986, as amended (“Code”) limits on the amount of “compensation” (as defined in the Cash Balance Pension Plan) that can be taken into account in determining benefits under tax-qualified plans. The MSGN Excess Cash Balance Plan was frozen to future benefit accruals effective as of December 31, 2015 (though accrued benefits continue to earn interest credits). The Company maintains a notional excess cash balance account for each eligible participant and, for each calendar year, credits these accounts with the portion of the allocation that could not be made on his or her behalf under the Cash Balance Pension Plan due to the compensation limitation. In addition, the Company credits each notional excess cash balance account monthly with interest at the same rate used under the Cash Balance Pension Plan. A participant vests in the excess cash balance account according to the same schedule in the Cash Balance Pension Plan. The excess cash balance account, to the extent vested, is paid in a lump sum to the participant as soon as practicable following his or her retirement or other termination of employment with the Company.
84
Savings Plan
Under the Savings Plan, a tax-qualified retirement savings plan, participating employees, including the NEOs, may contribute into their plan accounts a percentage of their eligible pay on a pre-tax or Roth 401k after-tax basis as well as a percentage of their eligible pay on an after-tax basis. The Company provides a (a) fully-vested matching contribution equal to 100% of the first 4% of eligible pay contributed by participating employees and (b) discretionary non-elective contribution by the Company. The Savings Plan is a multiple employer plan and following the MSGE Distribution, sponsorship of the Savings Plan was transferred to MSGE and the Company (including MSGN) and MSGS contribute for their respective employees.
Excess Savings Plans
The Excess Savings Plans are unfunded, nonqualified deferred compensation plans that operate in conjunction with the Company’s tax-qualified Savings Plan. An employee is eligible to participate in the Excess Savings Plans for a calendar year if his or her compensation (as defined in the Savings Plan) in the preceding year
exceeded (or would have exceeded, if the employee had been employed for the entire year) the IRS limit on the amount of compensation that can be taken into account in determining contributions under tax-qualified retirement plans ($330,000 in calendar year 2023) and he or she makes an election to participate prior to the beginning of the year. An eligible employee whose contributions to the Savings Plan are limited as a result of this compensation limit or as a result of reaching the maximum 401(k) deferral limit ($22,500 for calendar year 2023) can continue to make pre-tax contributions under the Excess Savings Plans of up to 4% of his or her eligible pay. In addition, the Company provides a (a) fully-vested matching contribution equal to 100% of the first 4% of eligible pay contributed by participating employees and (b) discretionary non-elective contribution by the Company. Account balances under the Excess Savings Plans are credited monthly with the rate of return earned by the Stable Value Fund offered as an investment alternative under the Savings Plan. Distributions of vested benefits are made in a lump sum as soon as practicable after the participant’s termination of employment with the Company.
85
NONQUALIFIED DEFERRED COMPENSATION
The table below shows (i) the contributions made by each NEO and the Company during the fiscal year ended June 30, 2023, (ii) aggregate earnings on each NEO’s account balance during the year ended June 30, 2023 and (iii) the account balance of each of our NEOs under the Excess Savings Plans as of June 30, 2023. For balances with respect to the participation of Messrs. Dolan, Byrnes, Haughton and D’Ambrosio in MSGE’s excess savings plan, see the MSGE 2023 Definitive Proxy Statement.
| Name |
Plan Name |
Executive Contributions in 2023 ($)(1) |
Registrant Contributions in 2023 ($)(2) |
Aggregate Earnings in 2023 ($)(3) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at End of 2023 ($) |
||||||||||||||||
| Current NEOs |
||||||||||||||||||||||
| James L. Dolan |
Excess Savings Plan | 58,492 | 97,462 | 15,336 | — | 568,879 | ||||||||||||||||
| Andrea Greenberg |
Excess Savings Plan | 43,220 | 60,088 | 27,100 | — | 1,323,394 | ||||||||||||||||
| David Granville-Smith |
Excess Savings Plan | — | — | — | — | — | ||||||||||||||||
| Gautam Ranji |
Excess Savings Plan | 10,776 | — | 136 | — | 10,912 | ||||||||||||||||
| EDCP | 100,462 | — | 6,809 | — | 107,271 | |||||||||||||||||
| Gregory Brunner |
Excess Savings Plan | — | — | — | — | — | ||||||||||||||||
| Former Executives |
||||||||||||||||||||||
| David F. Byrnes |
Excess Savings Plan | 17,231 | 24,924 | 239 | — | — | ||||||||||||||||
| Jamal H. Haughton |
Excess Savings Plan | 23,692 | 45,713 | 475 | — | — | ||||||||||||||||
| Philip G. D’Ambrosio |
Excess Savings Plan | 14,646 | 21,446 | 2,868 | — | — | ||||||||||||||||
| EDCP | 354,833 | — | 7,191 | — | — | |||||||||||||||||
| (1) | These amounts represent a portion of the NEOs’ salaries and/or annual cash incentives, which are included in the numbers reported in the “Salary” or “Non-Equity Incentive Plan Compensation” columns, as applicable, of the Summary Compensation Table that the NEOs contributed to the Excess Savings Plans. |
| (2) | These amounts are reported in the “All Other Compensation” column of the Summary Compensation Table. |
| (3) | These amounts are not reported in the “All Other Compensation” column of the Summary Compensation Table. |
EMPLOYMENT AGREEMENTS
Each of our NEOs had an employment agreement with the Company in the fiscal year ended June 30, 2023. In connection with the MSGE Distribution, the Company amended and restated its employment agreement with Mr. Dolan and entered into an employment agreement with Mr. Ranji, both effective as of the MSGE Distribution Date. The Company also entered into an employment agreement with each of Messrs. Granville-Smith and Brunner, effective June 15, 2023, and June 5, 2023, respectively, in
connection with their commencement of employment with the Company. The Company assigned its employment agreements with Messrs. Byrnes, Haughton and D’Ambrosio to MSGE in connection with the MSGE Distribution. Set forth below is a description of the agreements between the Company and each of Mr. Dolan, Ms. Greenberg, and Messrs. Granville-Smith, Ranji, Brunner, Byrnes, Haughton and D’Ambrosio.
86
As noted above in the Compensation Discussion Analysis, Mr. Dolan also serves as an executive officer and employee of MSGE and MSGS pursuant to terms of employment agreements with each of MSGE and MSGS (which are not described herein). In addition, Mr. Granville-Smith also serves as an employee of MSGS and AMC Networks pursuant to terms of employment agreements with each of MSGS and AMC Networks (which are not described herein). For a description of Mr. Dolan’s employment agreements with each of the MSGE and MSGS and Mr. Granville-Smith’s employment agreement with MSGS, see MSGE’s and MSGS’s 2023 Definitive Proxy Statements.
James L. Dolan
On December 27, 2021, the Company entered into an employment agreement with James L. Dolan, effective as of August 1, 2021, which provided for Mr. Dolan’s continued employment as the Executive Chairman and Chief Executive Officer of the Company and recognized that Mr. Dolan was also employed by MSGS during his employment with the Company.
The agreement provided for an annual base salary of not less than $2,000,000 and eligibility to participate in the Company’s discretionary annual bonus program with an annual target bonus opportunity equal to not less than 200% of his base salary. Mr. Dolan was eligible for our standard benefits program subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans. Mr. Dolan was eligible, subject to his continued employment by the Company, to participate in such long-term incentive programs that were made available to similarly situated executives at the Company, with an aggregate annual target value of not less than $12,000,000.
If, on or prior to June 30, 2024, Mr. Dolan’s employment was either terminated by the Company for any reason other than “cause” (as defined in the agreement), or was terminated by Mr. Dolan for “good reason” (as defined in the
agreement) and cause did not then exist (a “Qualifying Termination”), then, subject to Mr. Dolan’s execution of a separation agreement, the Company would provide him with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of the Company, but in no event less than two times the sum of Mr. Dolan’s annual base salary and annual target bonus, (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred, (c) each of Mr. Dolan’s outstanding unvested long-term cash awards would immediately vest in full and would be payable to Mr. Dolan to the same extent that other similarly situated active executives receive payment, (d) all of the time-based restrictions on each of Mr. Dolan’s outstanding unvested shares of restricted stock or restricted stock units (including restricted stock units subject to performance criteria) would immediately be eliminated and such restricted stock and restricted stock units would be payable or deliverable to Mr. Dolan subject to satisfaction of any applicable performance criteria, and (e) each of Mr. Dolan’s outstanding unvested stock options and stock appreciation awards would immediately vest.
If Mr. Dolan’s employment was terminated due to his death or disability before June 30, 2024, and at such time cause did not exist, then, subject to execution of a separation agreement (other than in the case of death), he or his estate or beneficiary would be provided with the benefits and rights set forth in clauses (b), (d) and (e) above and any long-term cash awards would immediately vest in full, whether or not subject to performance criteria and would be payable on the 90th day after the termination of his employment; provided, that if any such long-term cash award were subject to any performance criteria, then (i) if the measurement period for such performance criteria had not yet been fully completed, then the payment amount would be at the target amount for such award, and (ii) if the measurement period for such performance criteria had already been
87
fully completed, then the payment amount of such award would be at the same time and to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria). If Mr. Dolan’s employment was terminated after June 30, 2024 due to a Qualifying Termination, death or disability, then, subject to execution of a separation agreement (other than in the case of death), he or his estate or beneficiary would be provided with the benefits and rights set forth in clauses (c), (d) and (e) above. Following June 30, 2024, Mr. Dolan would no longer be entitled to the benefits and rights set forth in clauses (a) and (b) above in the event of a Qualifying Termination and certain provisions of Mr. Dolan’s employment agreement regarding annual cash and equity compensation would no longer be in effect with respect to services following such date.
The agreement contained certain covenants by Mr. Dolan, including a noncompetition agreement that restricted Mr. Dolan’s ability to engage in competitive activities until the first anniversary of a termination of his employment with the Company.
In connection with the MSGE Distribution, the Company amended and restated the existing employment agreement with Mr. Dolan. The terms of the amended and restated agreement are substantially the same as prior to the MSGE Distribution, except that (i) Mr. Dolan receives an annual base salary of not less than $1,000,000 annually, (ii) commencing with the Company’s 2024 fiscal year, it is expected that Mr. Dolan will participate in the Company’s long-term incentive programs that are made available in the future to similarly situated executives at the Company, with an aggregate annual target value of not less than $6,000,000 (iii) the amended and restated agreement recognizes that Mr. Dolan will be employed by MSGE and MSGS during his employment with the Company and (iv) while Mr. Dolan is employed by MSGE, he is no longer eligible for our standard benefits program, however, if Mr. Dolan’s employment with MSGE
terminates while he is employed by the Company, he will become eligible for our standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plan.
Andrea Greenberg
Following the Networks Merger, in connection with Ms. Greenberg’s continued employment as President and Chief Executive Officer of MSG Networks, Ms. Greenberg and MSGN, a subsidiary of the Company, entered into an employment agreement on August 27, 2021, which was effective as of August 23, 2021. The employment agreement provides for an annual base salary of not less than $1,350,000. Ms. Greenberg is eligible to participate in the Company’s discretionary annual incentive program with an annual target bonus equal to not less than 150% of her annual base salary.
Ms. Greenberg is eligible to participate in such long-term incentive programs that are made available to similarly situated executives of MSG Networks, subject to Ms. Greenberg’s continued employment by MSGN. It is expected that Ms. Greenberg will receive one or more annual long-term incentive awards with an aggregate target value of not less than $2,525,000.
Under the agreement, Ms. Greenberg is eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
If, on or prior to September 1, 2024, Ms. Greenberg’s employment with MSGN is terminated (i) by the Company other than for “cause” (as defined in the agreement), or (ii) by Ms. Greenberg for “good reason” (as defined in the agreement) and cause does not then exist, then, subject to Ms. Greenberg’s execution of a separation agreement with MSGN, MSGN will provide her with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of MSGN, but in no event less than the sum of Ms. Greenberg’s annual base
88
salary and annual target bonus; (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred; (c) each of Ms. Greenberg’s outstanding long-term cash awards will immediately vest in full and will be payable to Ms. Greenberg to the same extent that other similarly situated active executives receive payment; (d) all of the time-based restrictions on each of Ms. Greenberg’s outstanding restricted stock or restricted stock units will immediately be eliminated and will be payable or deliverable to Ms. Greenberg subject to satisfaction of any applicable performance criteria; and (e) each of Ms. Greenberg’s outstanding stock options and stock appreciation awards under the plans of MSGN, if any, will immediately vest.
If Ms. Greenberg’s employment is terminated due to her death or disability prior to September 1, 2024, and at such time cause does not exist, then, subject to execution of a separation agreement (other than in the case of death), she or her estate or beneficiary will be provided with the benefits and rights set forth in clauses (b), (d) and (e) of the preceding paragraph and each of her outstanding long-term cash awards shall immediately vest in full, whether or not subject to performance criteria and will be payable on the 90th day after the termination of her employment; provided, that if any such award is subject to any performance criteria, then (i) if the measurement period for such performance criteria has not yet been fully completed, then the payment amount will be at the target amount for such award, and (ii) if the measurement period for such performance criteria has already been fully completed, then the payment amount of such award will be at the same time and to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria). If Ms. Greenberg’s employment is terminated by Ms. Greenberg prior to September 1, 2024 for any reason on at least three months’ prior written notice, and at such time
cause does not exist, then, subject to execution of a separation agreement, she will be provided with the benefits and rights set forth in clauses (b) through (e) of the preceding paragraph.
The employment agreement contains certain covenants by Ms. Greenberg including a noncompetition agreement that restricts Ms. Greenberg’s ability to engage in competitive activities until the first anniversary of a termination of her employment with MSGN.
David Granville-Smith
In connection with Mr. Granville-Smith’s appointment as Executive Vice President, the Company entered into an employment agreement with Mr. Granville-Smith dated June 15, 2023, which was effective as of June 15, 2023. The agreement recognizes that Mr. Granville-Smith is employed by MSGS and AMC Networks during his employment with the Company. As noted above, Mr. Granville-Smith’s MSGS and AMC Networks employment arrangements are pursuant to a separate written employment agreement with each of MSGS and AMC Networks, respectively (for more information regarding Mr. Granville-Smith’s employment arrangements with MSGS, see MSGS’s 2023 Definitive Proxy Statement).
The employment agreement provides for an annual base salary of not less than $800,000 and, commencing with the Company’s fiscal year starting July 1, 2023, an annual target bonus opportunity equal to not less than 100% of annual base salary. Mr. Granville-Smith will be eligible, subject to his continued employment by the Company, to participate, commencing with the Company’s fiscal year starting July 1, 2023, in future long-term incentive programs that are made available to similarly situated executives of the Company. It is expected that Mr. Granville-Smith will receive one or more annual long-term awards with an aggregate target value of not less than $1,700,000. Notwithstanding the foregoing, in connection with Mr. Granville-Smith’s continuing employment with the Company, the award granted to Mr. Granville-Smith in September 2023 had an annual target value of $2,000,000.
89
Mr. Granville-Smith received a one-time special award of restricted stock units with an aggregate grant date fair value of $3,500,000, which was granted on the effective date of his employment agreement and is subject to three-year vesting. Mr. Granville-Smith also received a one-time special cash payment of $925,000, paid within 30 days after the effective date of the employment agreement. If Mr. Granville-Smith’s employment with the Company terminates prior to the first anniversary of the commencement of his employment as a result of (a) an involuntary termination by the Company for “cause” (as defined in the agreement) or (b) his resignation (other than for “good reason” (as defined in the agreement)), then Mr. Granville-Smith will be required to refund to the Company the full amount of the special cash award.
Mr. Granville-Smith is not eligible for our standard benefits program, with the exception of Mr. Granville’s participation in the Company’s Excess Saving Plans and life insurance program; provided that if Mr. Granville-Smith’s employment with MSGS is terminated while Mr. Granville-Smith remains employed by the Company, then he would be eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
If, on or prior to June 15, 2028, Mr. Granville-Smith’s employment is either terminated by the Company for any reason other than cause, or is terminated by Mr. Granville-Smith for good reason and cause does not then exist, then, subject to Mr. Granville-Smith’s execution of a separation agreement, the Company will provide him with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of the Company, but in no event less than two times the sum of Mr. Granville-Smith’s annual base salary and annual target bonus, (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination
occurred, (c) each of Mr. Granville-Smith’s outstanding unvested long-term cash awards will immediately vest in full and will be payable to Mr. Granville-Smith to the same extent that other similarly situated active executives receive payment, (d) all of the time-based restrictions on each of Mr. Granville-Smith’s outstanding unvested shares of restricted stock or restricted stock units (including restricted stock units subject to performance criteria) will immediately be eliminated and such restricted stock and restricted stock units will be payable or deliverable to Mr. Granville-Smith subject to satisfaction of any applicable performance criteria, and (e) each of Mr. Granville-Smith’s outstanding unvested stock options and stock appreciation awards will immediately vest.
If Mr. Granville-Smith’s employment is terminated due to his death or disability before June 15, 2028, and at such time cause does not exist, then, subject to execution of a separation agreement (other than in the case of death), he or his estate or beneficiary will be provided with the benefits and rights set forth in clauses (b), (d) and (e) above and any long-term cash awards will immediately vest in full, whether or not subject to performance criteria and will be payable on the 90th day after the termination of his employment; provided, that if any such long-term cash award is subject to any performance criteria, then (i) if the measurement period for such performance criteria has not yet been fully completed, then the payment amount will be at the target amount for such award, and (ii) if the measurement period for such performance criteria has already been fully completed, then the payment amount of such award will be at the same time and to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria).
The employment agreement contains certain covenants by Mr. Granville-Smith, including a non-competition agreement that restricts Mr. Granville-Smith’s ability to engage in
90
competitive activities until the first anniversary of a termination of his employment with the Company.
Gautam Ranji
In connection with Mr. Ranji’s promotion to Executive Vice President, Chief Financial Officer and Treasurer, Mr. Ranji and the Company entered into an employment agreement dated April 20, 2023, which was effective as of the MSGE Distribution Date. The employment agreement provides for an annual base salary of not less than $625,000. Mr. Ranji is eligible to participate in the Company’s discretionary annual incentive program with an annual target bonus equal to not less than 100% of his annual base salary.
Mr. Ranji is eligible, subject to his continued employment by the Company, to participate in such long-term incentive programs that are made available to similarly situated executives of the Company. It is expected that Mr. Ranji will receive one or more annual long-term awards with an aggregate target value of not less than $750,000. With respect to the Company’s fiscal year ending June 30, 2023, Mr. Ranji received a mid-year long-term incentive grant in accordance with his employment agreement representing the increase in his annual target pro-rated for the final three months of the 2023 fiscal year. Mr. Ranji is eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
If, on or prior to April 20, 2026, Mr. Ranji’s employment with the Company is terminated (i) by the Company other than for “cause” (as defined in the agreement), or (ii) by Mr. Ranji for “good reason” (as defined in the agreement) and so long as “cause” does not then exist, then, subject to Mr. Ranji’s execution of a separation agreement with the Company, the Company will provide him with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of the Company, but
in no event less than two times the sum of Mr. Ranji’s annual base salary and annual target bonus; (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred; (c) each of Mr. Ranji’s outstanding long-term cash awards will immediately vest in full and will be payable to Mr. Ranji to the same extent that other similarly situated active executives receive payment; (d) all of the time-based restrictions on each of Mr. Ranji’s outstanding restricted stock or restricted stock units will immediately be eliminated and will be payable or deliverable to Mr. Ranji subject to satisfaction of any applicable performance criteria; and (e) each of Mr. Ranji’s outstanding stock options and stock appreciation awards, if any, will immediately vest.
If Mr. Ranji’s employment is terminated due to his death or disability prior to April 20, 2026, and at such time cause does not exist, then, subject to execution of a separation agreement (other than in the case of death), he or his estate or beneficiary will be provided with the benefits and rights set forth in clauses (b), (d) and (e) of the preceding paragraph and each of his outstanding long-term cash awards shall immediately vest in full, whether or not subject to performance criteria, and will be payable on the 90th day after the termination of his employment; provided, that if any such long-term cash award is subject to any performance criteria, then (i) if the measurement period for such performance criteria has not yet been fully completed, then the payment amount will be at the target amount for such award, and (ii) if the measurement period for such performance criteria has already been fully completed, then the payment amount of such award will be at the same time and to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria).
91
The employment agreement contains certain covenants by Mr. Ranji including a noncompetition agreement that restricts Mr. Ranji’s ability to engage in competitive activities until the first anniversary of a termination of his employment with the Company.
Gregory Brunner
In connection with Mr. Brunner’s appointment as Senior Vice President, Controller and Principal Accounting Executive of the Company, Mr. Brunner and the Company entered into an employment agreement on April 20, 2023, which was effective as of June 5, 2023. The employment agreement provides for an annual base salary of not less than $450,000. Commencing with the 2024 fiscal year, Mr. Brunner will be eligible to participate in the Company’s discretionary annual incentive program with an annual target bonus equal to not less than 40% of his annual base salary. Commencing with the 2024 fiscal year, Mr. Brunner will be eligible, subject to his continued employment by the Company, to participate in such long-term incentive programs that are made available to similarly situated executives at the Company. It is expected that Mr. Brunner will receive one or more annual long-term awards with an aggregate target value of not less than $330,000. Mr. Brunner is eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
In connection with the commencement of his employment with the Company, Mr. Brunner received a one-time special cash payment of $150,000, which was paid within 30 days of the effective date of the agreement. If Mr. Brunner’s employment with the Company terminates prior to the first anniversary of the commencement of his employment as a result of his resignation (other than for “good reason” as defined in the employment agreement) or a termination by the Company for “cause” (as defined in the employment agreement), then Mr. Brunner will be required to refund to the Company the full amount of the special cash award.
If, prior to June 5, 2026, Mr. Brunner’s employment is terminated (i) by the Company other than for “cause” (as defined in the agreement), or (ii) by Mr. Brunner for “good reason” (as defined in the agreement) and so long as cause does not then exist, then, subject to Mr. Brunner’s execution of a separation agreement with the Company, the Company will provide him with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of the Company, but in no event less than the sum of Mr. Brunner’s annual base salary and annual target bonus; and (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred.
The employment agreement contains certain covenants by Mr. Brunner including a noncompetition agreement that restricts Mr. Brunner’s ability to engage in competitive activities until the first anniversary of a termination of his employment with the Company, provided that the non-competition covenant will not apply following a termination of Mr. Brunner’s employment either by the Company other than for “cause” or by Mr. Brunner for “good reason” (if “cause” does not then exist) if Mr. Brunner (i) waives his entitlement to the severance benefits described above or (ii) transfers to an affiliated company such that there is no effective break in service and Mr. Brunner is subject to such affiliated company’s restrictive covenants.
David F. Byrnes
On December 20, 2021, the Company entered into an employment agreement with Mr. Byrnes, which was effective as of that date. The employment agreement provided for Mr. Byrnes’ employment as the Executive Vice President and Chief Financial Officer of the Company. On April 20, 2023, the employment agreement was assigned to MSGE in connection with the MSGE Distribution.
Pursuant to the employment agreement, Mr. Byrnes received an annual base salary of not
92
less than $800,000. Commencing with the Company’s fiscal year starting July 1, 2021, Mr. Byrnes was eligible to participate in the Company’s discretionary annual incentive program with an annual target bonus equal to not less than 100% of his annual base salary.
In connection with the commencement of his employment with the Company, Mr. Byrnes received a one-time special cash payment of $811,868, which was paid no later than the first regular Company payroll date on or after April 1, 2022. If Mr. Byrnes’ employment with the Company had terminated prior to the first anniversary of the commencement of his employment as a result of his resignation (other than for “good reason” as defined in the employment agreement) or a termination by the Company for “cause” (as defined in the employment agreement), then Mr. Byrnes would have been required to refund to the Company the gross amount of the special cash award.
Commencing with the Company’s fiscal year starting July 1, 2021, Mr. Byrnes was eligible, subject to his continued employment by the Company, to participate in such long-term incentive programs that were made available to similarly situated executives of the Company. It was expected that Mr. Byrnes would have received one or more annual long-term awards with an aggregate target value of not less than $1,200,000. Mr. Byrnes was eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
If, on or prior to December 31, 2024, Mr. Byrnes’ employment with the Company had been terminated (i) by the Company other than for “cause” (as defined in the agreement), or (ii) by Mr. Byrnes for “good reason” (as defined in the agreement) and so long as “cause” did not then exist, then, subject to Mr. Byrnes’ execution of a separation agreement with the Company, the Company would have provided him with the following benefits and rights: (a) a severance
payment in an amount determined at the discretion of the Company, but in no event less than two times the sum of Mr. Byrnes’ annual base salary and annual target bonus; (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred; (c) any unpaid portion of the special cash award, which was paid no later than the first regular Company payroll date on or after April 1, 2022; (d) each of Mr. Byrnes’ outstanding long-term cash awards would have immediately vested in full and would have been payable to Mr. Byrnes to the same extent that other similarly situated active executives received payment; (e) all of the time-based restrictions on each of Mr. Byrnes’ outstanding restricted stock or restricted stock units would have immediately been eliminated and would have been payable or deliverable to Mr. Byrnes subject to satisfaction of any applicable performance criteria; and (f) each of Mr. Byrnes’ outstanding stock options and stock appreciation awards, if any, would have immediately vested.
If Mr. Byrnes’ employment had been terminated due to his death or disability prior to December 31, 2024, and at such time cause did not exist, then, subject to execution of a separation agreement (other than in the case of death), he or his estate or beneficiary would have been provided with the benefits and rights set forth in clauses (b), (c), (e) and (f) of the preceding paragraph and each of his outstanding long-term cash awards would have immediately vested in full, whether or not subject to performance criteria, and would have been payable on the 90th day after the termination of his employment; provided, that if any such long-term cash award was subject to any performance criteria, then (i) if the measurement period for such performance criteria had not yet been fully completed, then the payment amount would have been at the target amount for such award, and (ii) if the measurement period for such performance criteria had already been fully completed, then the payment amount of such
93
award would have been at the same time and to the same extent that other similarly situated executives receive payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria).
The employment agreement contained certain covenants by Mr. Byrnes including a noncompetition agreement that would have restricted Mr. Byrnes’ ability to engage in competitive activities until the first anniversary of a termination of his employment with the Company.
Jamal H. Haughton
On October 26, 2021, the Company entered into an employment agreement with Mr. Haughton, which was effective as of December 6, 2021. The employment agreement provided for Mr. Haughton’s employment as the Executive Vice President and General Counsel of the Company. On April 20, 2023, the employment agreement was assigned to MSGE in connection with the MSGE Distribution.
Pursuant to the employment agreement, Mr. Haughton received an annual base salary of not less than $1,100,000. Commencing with the Company’s fiscal year starting July 1, 2021, Mr. Haughton was eligible to participate in the Company’s discretionary annual incentive program with an annual target bonus equal to not less than 100% of Mr. Haughton’s annual base salary.
In connection with the commencement of his employment with the Company, Mr. Haughton received a one-time special cash payment of $250,000, which was paid within 30 days after the effective date of the employment agreement. If Mr. Haughton’s employment with the Company had terminated prior to the first anniversary of the effective date as a result of his resignation (other than for “good reason” as defined in the employment agreement) or a termination by the Company for “cause” (as defined in the employment agreement), then Mr. Haughton
would have been required to refund to the Company the prorated amount of the special cash award (based on the number of calendar days remaining until the first anniversary of the effective date, less all applicable payroll taxes).
Commencing with the Company’s fiscal year starting July 1, 2021, Mr. Haughton was eligible, subject to his continued employment by the Company, to participate in future long-term incentive programs that were made available to similarly situated executives of the Company. It was expected that Mr. Haughton would have received one or more annual long-term awards with an aggregate target value of not less than $1,300,000. Mr. Haughton was eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
If, on or prior to December 5, 2024, Mr. Haughton’s employment with the Company had been either terminated (i) by the Company other than for “cause” (as defined in the agreement), or (ii) by Mr. Haughton for “good reason” (as defined in the agreement) and so long as “cause” did not then exist, then, subject to Mr. Haughton’s execution of a separation agreement with the Company, the Company would have provided him with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of the Company, but in no event less than two times the sum of Mr. Haughton’s annual base salary and annual target bonus; (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred; (c) each of Mr. Haughton’s outstanding long-term cash awards would have immediately vested in full and would have been payable to Mr. Haughton to the same extent that other similarly situated active executives received payment; (d) all of the time-based restrictions on each of Mr. Haughton’s outstanding restricted stock or restricted stock units would have immediately been eliminated and would have
94
been payable or deliverable to Mr. Haughton subject to satisfaction of any applicable performance criteria; and (e) each of Mr. Haughton’s outstanding stock options and stock appreciation awards, if any, would have immediately vested.
If Mr. Haughton’s employment had been terminated due to his death or disability prior to December 5, 2024, and at such time cause did not exist, then, subject to execution of a separation agreement (other than in the case of death), he or his estate or beneficiary would have been provided with the benefits and rights set forth in clauses (b), (d) and (e) of the preceding paragraph and each of his outstanding long-term cash awards would have immediately vested in full, whether or not subject to performance criteria, and would have been payable on the 90th day after the termination of his employment; provided, that if any such long-term cash award was subject to any performance criteria, then (i) if the measurement period for such performance criteria had not yet been fully completed, then the payment amount would have been at the target amount for such award, and (ii) if the measurement period for such performance criteria had already been fully completed, then the payment amount of such award would have been at the same time and to the extent that other similarly situated executives received payment as determined by the Compensation Committee (subject to the satisfaction of the applicable performance criteria).
The employment agreement contained certain covenants by Mr. Haughton including a non-competition agreement that would have restricted Mr. Haughton’s ability to engage in competitive activities until the first anniversary of a termination of his employment with the Company.
Philip G. D’Ambrosio
On November 17, 2021, the Company entered into an employment agreement with Mr. D’Ambrosio, which was effective as of January 1, 2022. The employment agreement provided for Mr. D’Ambrosio’s continued employment as the Senior Vice President and
Treasurer of the Company. On April 20, 2023, the employment agreement was assigned to MSGE in connection with the MSGE Distribution.
Pursuant to the employment agreement, Mr. D’Ambrosio received an annual base salary of not less than $680,000. Mr. D’Ambrosio was eligible to participate in the Company’s discretionary annual incentive program with an annual target bonus equal to not less than 75% of his annual base salary. Mr. D’Ambrosio was eligible, subject to his continued employment by the Company, to participate in such long-term incentive programs that were made available to similarly situated executives at the Company. It was expected that Mr. D’Ambrosio would have received one or more annual long-term awards with an aggregate target value of not less than $1,000,000. Mr. D’Ambrosio was eligible to participate in the Company’s standard benefits program, subject to meeting the relevant eligibility requirements, payment of required premiums, and the terms of the plans.
If, prior to December 31, 2024, Mr. D’Ambrosio’s employment had been terminated (i) by the Company other than for “cause” (as defined in the agreement), or (ii) by Mr. D’Ambrosio for “good reason” (as defined in the agreement) and so long as cause did not then exist, then, subject to Mr. D’Ambrosio’s execution of a separation agreement with the Company, the Company would have provided him with the following benefits and rights: (a) a severance payment in an amount determined at the discretion of the Company, but in no event less than the sum of Mr. D’Ambrosio’s annual base salary and annual target bonus; and (b) any unpaid annual bonus for the fiscal year prior to the fiscal year in which such termination occurred and a prorated annual bonus for the fiscal year in which such termination occurred.
The employment agreement contained certain covenants by Mr. D’Ambrosio including a noncompetition agreement that would have restricted Mr. D’Ambrosio’s ability to engage in competitive activities until the first anniversary of a termination of his employment with the Company.
95
TERMINATION AND SEVERANCE
This section describes the payments that would be received by our NEOs who were employed by the Company as of June 30, 2023 upon various terminations of employment scenarios. The information under “Separation from the Company” assumes that each NEO was employed by the Company under his or her applicable employment agreement, and his or her employment terminated as of June 30, 2023. This information is presented to illustrate the payments such NEOs would have received from the Company under the various termination scenarios. As discussed above, as of the MSGE Distribution, Messrs. Byrnes’, Haughton’s and D’Ambrosio’s employment with the Company ceased and each became an employee of MSGE. They did not receive severance payments or benefits in connection with the MSGE Distribution. See “— Benefits Payable to the Former Executives as a Result of Termination” for additional detail.
Separation from the Company
Payments may be made to NEOs upon the termination of their employment with the Company depending upon the circumstances of their termination, which include termination by the Company without cause, termination by the Company with cause, termination by the NEO for good reason, other voluntary termination by the NEO, retirement, death, disability, or termination following a change in control of the Company or following a going private transaction. Certain of these circumstances are addressed in the employment agreement between the Company and each NEO. For a description of termination provisions in the employment agreements with our NEOs, please see “— Employment Agreements” above. In addition, award agreements for long-term incentives also address some of these circumstances.
Award Agreement Terms in the Event of a Change in Control or Going Private Transaction
The award agreements governing the restricted stock units of the Company provide that upon a
change in control or going private transaction of the Company, the applicable NEO will be entitled to either (in the successor entity’s discretion) (a) cash equal to the unvested restricted stock units multiplied by the per share price paid in the change in control or going private transaction, or (b) only if the successor entity is a publicly-traded company, a replacement restricted stock unit award from the successor entity with the same terms. Any such cash award as provided in clause (a) above would be payable, and any replacement restricted stock unit award as provided in clause (b) above would vest, upon the earliest of (i) the date the restricted stock units were originally scheduled to vest so long as the applicable NEO remains continuously employed by the Company, MSGE, MSGS or affiliates of such entities and if such entities remain affiliates of the Company, (ii) death, (iii) a termination without “cause” or a resignation for “good reason” (as each term is defined in the applicable award agreement) from the Company, or (iv) only if the successor entity elects clause (b) above, upon a resignation without “good reason” from the Company that is at least six months, but no more than nine months, following the change in control or going private transaction.
The award agreements governing the performance restricted stock units of the Company provide that upon a change in control or going private transaction of the Company, the unvested performance stock units will vest at the target level and be payable (i) upon a change in control, regardless of whether the applicable NEO’s employment is terminated, or (ii) upon the earlier of (x) July 1, 2023 (in the case of fiscal year 2021 awards), July 1, 2024 (in the case of 2022 fiscal year awards) or July 1, 2025 (in the case of 2023 fiscal year awards) if the applicable NEO is employed by the Company, MSGE, MSGS or affiliates of such entities and if such entities remain affiliates of the Company through the applicable date, (y) death or (z) a termination without “cause” or resigns for “good reason” (as each term is defined in the applicable award agreement) from the Company.
96
The award agreements governing the stock options of the Company provide that upon a change in control or going private transaction of the Company, the applicable NEO will be entitled to either (a) cash equal to the number of options multiplied by the excess of the per share price paid in the change in control or going private transaction over the exercise price, or (b) only if the successor entity is a publicly traded company, a replacement option award from the successor entity with the same terms. Any such cash award would be payable, or unvested options would vest, upon the earliest of (i) the date the options were originally scheduled to vest so long as the NEO remains continuously employed by the Company, MSGE, MSGS or affiliates of such entities and if such entities remain affiliates of the Company through the applicable date, (ii) a termination without “cause” or a resignation for “good reason” (as each term is defined in the applicable award agreement) from the Company within three years following the change in control or going private transaction, or (iii) only if the successor entity elects clause (b) above, upon a resignation without “good reason” from the Company that is at least six months, but no more than nine months following the change in control or going private transaction. Any stock options that have an exercise price greater than the per share price paid in the change in control or going private transaction may be cancelled for no consideration.
The award agreements governing the performance stock options of the Company provide that upon a change in control or going private transaction of the Company, the unvested performance stock options will vest at the target level (or at actual performance if the going private transaction is effective following the applicable performance period) and be payable (i) upon a change in control, regardless of whether the applicable NEO’s employment is terminated or (ii) following a going private transaction, (x) if the options are not exercisable on the effective date, upon the earliest of (1) the date the options were originally scheduled to vest so long as the NEO remains continuously employed by the Company, MSGE,
MSGS or affiliates of such entities and if such entities remain affiliates of the Company or (2) a termination without “cause” or a resignation for “good reason” (as each term is defined in the applicable award agreement) from the Company within three years following the going private transaction, or (y) if the options are exercisable on the effective date, promptly following the going private transaction. Any performance stock options that have an exercise price greater than the per share price paid in the change in control or going private transaction may be cancelled for no consideration.
For purposes of the “Benefits Payable as a Result of Termination of Employment by the Company without Cause or for Good Reason Following a Change in Control or Going Private Transaction” below, we have assumed that the applicable NEO has either been terminated without “cause” or resigned for “good reason” after the close of business on June 30, 2023.
Quantification of Termination and Severance
The following tables set forth a quantification of estimated severance and other benefits payable to the NEOs who were employed by the Company as of June 30, 2023 under various circumstances regarding the termination of their employment. A discussion of the benefits payable to Messrs. Byrnes, Haughton and D’Ambrosio as a result of termination follows the tables set forth below. In calculating these amounts, we have taken into consideration or otherwise assumed the following:
| • | Termination of employment occurred after the close of business on June 30, 2023. |
| • | We have valued equity awards (other than stock options) using the closing market price of our Class A Common Stock of $27.39 and MSGE Class A common stock of $33.62 on the NYSE on June 30, 2023. |
| • | We have valued stock options at their intrinsic value equal to the closing market price of our Class A Common Stock of |
97
| $27.39 and MSGE Class A common stock of $33.62 on the NYSE on June 30, 2023, less the per share exercise price, multiplied by the number of shares underlying the stock options. |
| • | We have assumed that the per share price paid in a change in control or going private transaction is equal to the closing market price of our Class A Common Stock of $27.39 and MSGE Class A common stock of $33.62 on the NYSE on June 30, 2023. |
| • | In the event of termination of employment, the payment of certain long-term incentive awards and other amounts may be delayed, depending upon the terms of each specific award agreement, the provisions of the |
| applicable NEO’s employment agreement and the applicability of Code Section 409A. In quantifying aggregate termination payments, we have not taken into account the timing of the payments and we have not discounted the value of payments that would be made over time, except where otherwise disclosed. |
| • | We have assumed that all performance objectives for performance-based long-term awards are achieved (but not exceeded). |
| • | We have assumed that on June 30, 2023, each NEO who was also simultaneously employed by MSGE, MSGS or both is simultaneously terminated from the Company, MSGE and MSGS, as applicable. |
98
Benefits Payable as a Result of Voluntary Termination of Employment by NEO, Termination of Employment by NEO Due to Retirement, or Termination of Employment by the Company for Cause
In the event of a voluntary termination of employment, a retirement, or termination by the Company for Cause, no NEO other than Ms. Greenberg would have been entitled to any payments at June 30, 2023, excluding any pension or other vested retirement benefits. With respect to Ms. Greenberg, if her employment was terminated for any reason on at least three months’ prior written notice, and at such time cause did not exist, then, subject to execution of a separation agreement, she would have been entitled to the benefits set forth in the “Benefits Payable as a Result of Termination of Employment by the Company Without Cause or Termination of Employment by NEO for Good Reason” table, excluding the severance amount.
Benefits Payable as a Result of Termination of Employment by the Company Without Cause or Termination of Employment by NEO for Good Reason*
| Elements |
James L. Dolan |
Andrea Greenberg |
David Granville- Smith |
Gautam Ranji | Gregory Brunner | |||||
| Severance |
$6,000,000(1) | $3,375,000(2) | $3,200,000(1) | $2,500,000(1) | $630,000(2) | |||||
| Pro rata bonus |
$3,064,000(3) | $2,691,225(3) | — | $957,500(3) | — | |||||
| Unvested restricted stock |
$5,848,724(4) | $1,850,085(4) | $3,840,763(5) | $145,386(4) | — | |||||
| Unvested performance stock |
$6,096,384(6) | $1,073,962(6) | — | $145,386(6) | — | |||||
| Unvested time-based stock options |
—(7) | — | — | — | — |
| * | The amounts in this table do not include any pension or other vested retirement benefits. |
| (1) | Represents severance equal to two times the sum of his annual base salary and annual target bonus. |
| (2) | Represents severance equal to the sum of his or her annual base salary and annual target bonus. |
| (3) | Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other NEOs under the Company’s program without regard to personal performance objectives. |
| (4) | Represents the full vesting of the 2021 fiscal year grants of restricted stock units, the restricted stock units issued in July 2021 in respect of outstanding MSGN restricted stock unit and performance stock unit awards held at the time of the Networks Merger, the 2022 fiscal year grants of restricted stock units, the 2023 fiscal year grants of restricted stock units, as applicable, which are: Mr. Dolan, 13,031 units ($356,919), 45,263 units ($1,239,754), 56,491 units ($1,547,288) and 98,750 units ($2,704,763), respectively; Ms. Greenberg, 36,094 units ($988,615), 11,672 units ($319,696), and 19,780 units ($541,774) (Networks Merger, 2022 and 2023 fiscal years only), respectively; and Mr. Ranji, 5,308 units ($145,386) (2023 fiscal year only), respectively. In addition to the amounts included in the table above, Mr. Dolan, Ms. Greenberg and Mr. Ranji would also fully vest in their outstanding MSGE restricted stock units, which are: 213,535 MSGE units ($7,179,047), 67,546 MSGE units ($2,270,897), and 4,115 MSGE units ($138,346), respectively. |
| (5) | Represents the full vesting of 140,225 restricted stock units granted in June 2023 in connection with Mr. Granville-Smith’s commencement of employment with the Company, which was intended to compensate him for forfeited compensation from his previous employer. |
| (6) | Represents the full vesting at target of the 2021, 2022 and 2023 fiscal year grants of performance stock units, as applicable, which are: Mr. Dolan, 39,091 units ($1,070,702), 84,736 units ($2,320,919), and 98,750 units |
99
| ($2,704,763), respectively; Ms. Greenberg, 18,431 units ($504,825) and 20,779 units ($569,137) (2022 and 2023 fiscal years only), respectively; and Mr. Ranji, 5,308 units ($145,386) (2023 fiscal year only), respectively. In addition to the amounts included in the table above, Mr. Dolan, Ms. Greenberg and Mr. Ranji would also fully vest in their outstanding MSGE performance stock units at target, which are: 222,577 MSGE units ($7,483,039), 39,210 MSGE units ($1,318,240), and 4,115 MSGE units ($138,346), respectively. |
| (7) | Represents the full vesting of the stock options issued in July 2021 in respect of outstanding MSGN time-based and performance-based options granted to Mr. Dolan by MSGN as long-term incentive awards in August 2019, but such options have no value because each award had an exercise price greater than the closing market price of a share of Class A Common Stock on June 30, 2023. |
100
Benefits Payable as a Result of Termination of Employment Due to Death or Disability*
| Elements |
James L. Dolan |
Andrea Greenberg |
David Granville- Smith |
Gautam Ranji | Gregory Brunner(1) | |||||
| Severance |
— | — | — | — | — | |||||
| Pro rata bonus |
$3,064,000(2) | $2,691,225(2) | — | $957,500(2) | — | |||||
| Unvested restricted stock |
$5,848,724(3) | $1,850,085(3) | $3,840,763(4) | $145,386(3) | — | |||||
| Unvested performance stock |
$6,096,384(5) | $1,073,962(5) | — | $145,386(5) | — | |||||
| Unvested time-based stock options |
—(6) | — | — | — | — |
| * | The amounts in this table do not include any pension or other vested retirement benefits. |
| (1) | With respect to Mr. Brunner, a termination by the Company due to disability would be treated under his employment agreement as a termination by the Company without cause and, therefore, Mr. Brunner would be entitled to the amounts reflected in the table above, as well as those reflected in the “Benefits Payable as a Result of Termination of Employment by the Company Without Cause or Termination of Employment by NEO for Good Reason” table. |
| (2) | Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other NEOs under the Company’s program but without regard to personal performance objectives. |
| (3) | Represents the full vesting of the 2021 fiscal year grants of restricted stock units, the restricted stock units issued in July 2021 in respect of outstanding MSGN restricted stock unit and performance stock unit awards held at the time of the Networks Merger, the 2022 fiscal year grants of restricted stock units and the 2023 fiscal year grants of restricted stock units, as applicable, which are: Mr. Dolan, 13,031 units ($356,919), 45,263 units ($1,239,754), 56,491 units ($1,547,288) and 98,750 units ($2,704,763), respectively; Ms. Greenberg, 36,094 units ($988,615), 11,672 units ($319,696) and 19,780 units ($541,774) (Networks Merger, 2022 and 2023 fiscal years only), respectively; and Mr. Ranji, 5,308 units ($145,386) (2023 fiscal year only), respectively. In addition to the amounts included in the table above, Mr. Dolan, Ms. Greenberg and Mr. Ranji would also fully vest in their outstanding MSGE restricted stock units, which are: 213,535 MSGE units ($7,179,047), 67,546 MSGE units ($2,270,897), and 4,115 MSGE units ($138,346), respectively. |
| (4) | Represents the full vesting of 140,225 restricted stock units granted in June 2023 in connection with Mr. Granville-Smith’s commencement of employment with the Company, which was intended to compensate him for forfeited compensation from his previous employer. |
| (5) | Represents the full vesting at target of the performance stock units issued of the 2021, 2022 and 2023 fiscal year grants of performance stock units, as applicable, which are: Mr. Dolan, 39,091 units ($1,070,702), 84,736 units ($2,320,919) and 98,750 units ($2,704,763), respectively; Ms. Greenberg, 18,431 units ($504,825) and 20,779 units ($569,137) (2022 and 2023 fiscal years only), respectively; and Mr. Ranji, 5,308 units ($145,386) (2023 fiscal year only), respectively. In addition to the amounts included in the table above, Mr. Dolan, Ms. Greenberg and Mr. Ranji would also fully vest in their outstanding MSGE performance stock units at target, which are: 222,577 MSGE units ($7,483,039), 39,210 MSGE units ($1,318,240), and 4,115 MSGE units ($138,346), respectively. |
| (6) | Represents the full vesting of the stock options issued in July 2021 in respect of outstanding MSGN time-based and performance-based options granted to Mr. Dolan by MSGN as long-term incentive awards in August 2019, but such options have no value because each award had an exercise price greater than the closing market price of a share of Class A Common Stock on June 30, 2023. |
101
Benefits Payable as a Result of Termination of Employment by the Company without Cause or for Good Reason Following a Change in Control or Going Private Transaction(1)(2)*
| Elements |
James L. Dolan |
Andrea Greenberg |
David Granville- Smith |
Gautam Ranji | Gregory Brunner | |||||
| Severance |
$6,000,000(3) | $3,375,000(4) | $3,200,000(3) | $2,500,000(3) | $630,000(4) | |||||
| Pro rata bonus |
$3,064,000(5) | $2,691,225(5) | — | $957,500(5) | — | |||||
| Unvested restricted stock |
$5,848,724(6) | $1,850,085(6) | $3,840,763(7) | $145,386(6) | — | |||||
| Unvested performance stock |
$6,096,384(8) | $1,073,962(8) | — | $145,386(8) | — | |||||
| Unvested time-based stock options |
—(9) | — | — | — | — |
| * | The amounts in this table do not include any pension or other vested retirement benefits. |
| (1) | The information in this table and the footnotes hereto describe amounts payable as a result of certain terminations of employment by the NEO or the Company following a change in control. The amounts payable as a result of termination of employment by the NEO or the Company following a going private transaction are generally equal to or less than the amounts payable as a result of termination of employment by the NEO or the Company following a change in control. Notwithstanding the amounts set forth in this table, if any payment otherwise due to any of the NEOs would result in the imposition of an excise tax under Code Section 4999, then the Company would instead pay to the applicable NEO either (a) the amounts set forth in this table, or (b) the maximum amount that could be paid to such NEO without the imposition of the excise tax, whichever results in a greater amount of after-tax proceeds to such NEO. |
| (2) | As noted in “— Award Agreement Terms in the Event of a Change in Control or Going Private Transaction” above, the amounts in this table assume that the applicable NEO has either been terminated without “cause” or resigned for “good reason” following such a change in control or going private transaction. The award agreements applicable to stock awards held by the NEOs dictate the terms of the vesting of those awards and any severance or bonus reflected in this table is provided as a result of the terms of the applicable NEO’s employment agreement and its terms related to termination without “cause” or resigned for “good reason,” and such severance is not enhanced by the change of control or going private transaction. For additional information, see “—Award Agreement Terms in the Event of a Change in Control or Going Private Transaction” above. |
| (3) | Represents severance equal to two times the sum of his annual base salary and annual target bonus. |
| (4) | Represents severance equal to his or her annual base salary and annual target bonus. |
| (5) | Represents a pro rata annual bonus for the year in which the termination occurred, payable to the same extent as annual bonuses are paid to the other NEOs under the Company’s program without regard to personal performance objectives. |
| (6) | Represents the full vesting of the 2021 fiscal year grants of restricted stock units, the restricted stock units issued in July 2021 in respect of outstanding MSGN restricted stock unit and performance stock unit awards held at the time of the Networks Merger, the 2022 fiscal year grants of restricted stock units, and the 2023 fiscal year grants of restricted stock units, as applicable, which are: Mr. Dolan, 13,031 units ($356,919), 45,263 units ($1,239,754), 56,491 units ($1,547,288) and 98,750 units ($2,704,763), respectively; Ms. Greenberg, 36,094 units ($988,615), 11,672 units ($319,696) and 19,780 units ($541,774) (Networks Merger, 2022 and 2023 fiscal years only), respectively; and Mr. Ranji, 5,308 units ($145,386) (2023 fiscal year only), respectively. In addition to the amounts included in the table above, Mr. Dolan, Ms. Greenberg and Mr. Ranji would also fully vest in their outstanding MSGE Distribution restricted stock units, which are: 213,535 MSGE units ($7,179,047), 67,546 MSGE units ($2,270,897), and 4,115 MSGE units ($138,346), respectively. |
102
| (7) | Represents the full vesting of 140,225 restricted stock units granted in June 2023 in connection with Mr. Granville-Smith’s commencement of employment with the Company, which was intended to compensate him for forfeited compensation from his previous employer. |
| (8) | Represents the full vesting of the 2021, 2022 and 2023 fiscal year grants of performance stock units, as applicable, which are: Mr. Dolan, 39,091 units ($1,070,702), 84,736 units ($2,320,919) and 98,750 units ($2,704,763), respectively; Ms. Greenberg, 18,431 units ($504,825) and 20,779 units ($569,137) (2022 and 2023 fiscal years only), respectively; and Mr. Ranji,5,308 units ($145,386) (2023 fiscal year only), respectively. In addition to the amounts included in the table above, Mr. Dolan, Ms. Greenberg and Mr. Ranji would also fully vest in their outstanding MSGE performance stock units at target, which are: 222,577 MSGE units ($7,483,039), 39,210 MSGE units ($1,318,240), and 4,115 MSGE units ($138,346), respectively. |
| (9) | Represents the full vesting of the stock options issued in July 2021 in respect of outstanding MSGN time-based and performance-based options granted to Mr. Dolan by MSGN as long-term incentive awards in August 2019, but such options have no value because each award had an exercise price greater than the closing market price of a share of Class A Common Stock on June 30, 2023. |
Benefits Payable to the Former Executives as a Result of Termination In Connection with the Spin
Messrs. Byrnes, Haughton and D’Ambrosio ceased to be employed by the Company as of the MSGE Distribution and did not receive any severance or other termination payments or benefits from the Company. Notwithstanding their terminations of employment with the Company in connection with the MSGE Distribution, Messrs. Byrnes, Haughton and D’Ambrosio continue to hold long-term incentive awards of the Company, which will continue to vest subject to their continued employment with MSGE, MSGS, SPHR or affiliates of such entities.
103
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information with respect to compensation plans in effect as of June 30, 2023 under which equity securities of the Company are authorized for issuance.
| Plan Category |
Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)(2) (a) |
Weighted-average Exercise Price of Outstanding Options, Warrants and Rights(3) (b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(2) (c) | |||
| Class A Common Stock Equity compensation plans approved by security holders |
2,463,115 | $29.76 | 1,908,328 | |||
| Class A Common Stock Equity compensation plans not approved by security holders |
— | — | — | |||
| Total |
2,463,115 | $29.76 | 1,908,328 |
| (1) | Includes the following plans: Employee Stock Plan, MSGN’s Employee Stock Plan and the Director Stock Plan. Consists of 2,369,289 restricted stock units (both time-vesting and target performance-vesting) and 93,826 outstanding stock options. Does not reflect the gross number of shares underlying awards issued in connection with the Networks Merger as a result of the assumption of the MSG Networks stock options and restricted stock unit awards (both time-vesting and target performance-vesting), which were converted into stock options or restricted stock units, respectively, denominated in shares of Class A Common Stock. The number of stock options issued in connection with such assumption and conversion was 630,239 and the weighted average exercise price of such converted stock options was $109.77 per share of Class A Common Stock. |
| (2) | In September 2023 the Compensation Committee granted awards of restricted stock units and target performance stock units under the Company’s Employee Stock Plan covering an aggregate of 735,487 shares, and restricted stock units and target performance stock units under MSGN’s Employee Stock Plan covering an aggregate of 117,417 shares. The number of securities in columns (a) and (c) do not reflect the grant of these units. |
| (3) | Represents the weighted average exercise price of the 93,826 outstanding stock options. |
In connection with the closing of the Networks Merger, we assumed MSGN’s Employee Stock Plan and may grant awards covering shares of Class A Common Stock under that plan. The material terms of MSGN’s Employee Stock Plan are described below.
MSGN’s Employee Stock Plan is administered by the Compensation Committee. Awards may be granted under MSGN’s Employee Stock Plan to certain employees of the Company (non-overlap MSG Networks employees at the time of the Networks Merger) and its affiliates as the
Compensation Committee may determine. The total number of shares of MSGN Class A Common Stock that were originally eligible to be issued pursuant to awards under MSGN’s Employee Stock Plan was 12,500,000. To the extent that (i) an award is paid, settled or exchanged or expires, lapses, terminates or is cancelled for any reason, in whole or in part, without the issuance of shares, (ii) any shares under an award are not issued because of payment or withholding obligations or (iii) restricted shares revert back to the Company prior to the lapse of the restrictions or are applied by the Company for
104
purposes of tax withholding obligations, then the Compensation Committee may also grant awards with respect to such shares or restricted shares. Awards payable only in cash or property other than shares do not reduce the aggregate remaining number of shares with respect to which awards may be made under MSGN’s Employee Stock Plan and shares relating to any other awards that are settled in cash or property other than shares, when settled, will be added back to the aggregate remaining number of shares with respect to which awards may be made under the plan.
Under the MSGN Employee Stock Plan, the Company may grant options and stock appreciation rights, which will be exercisable at a price determined by the Compensation Committee on the date of grant, which price will be no less than the fair market value of a share of Class A Common Stock on the date the option or stock appreciation right is granted. MSGN’s Employee Stock Plan prohibits, in each case without the approval of the Company’s stockholders (1) repricing options and stock appreciation rights (other than in connection with Adjustment Events, as defined under the plan), (2) repurchasing options or stock appreciation rights for cash when the exercise price equals or exceeds the fair market value of a share of the Company’s Class A Common Stock or (3) option or stock appreciation right automatic reload provisions. The Company may also grant
restricted shares and restricted stock units. The participant of a restricted share will have the rights of a stockholder, subject to any restrictions and conditions specified by the Compensation Committee in the participant’s award agreement. Notwithstanding the previous sentence, unless the Compensation Committee determines otherwise, all ordinary cash dividends paid upon any restricted share prior to its vesting will be retained by the Company for the account of the relevant participant and upon vesting will be paid to the relevant participant. The Compensation Committee may grant other equity-based or equity-related awards to participants subject to terms and conditions it may specify. These awards may entail the transfer of shares or payment in cash based on the value of shares.
The Board or the Compensation Committee may discontinue MSGN’s Employee Stock Plan at any time and from time to time may amend or revise the terms of MSGN’s Employee Stock Plan or any award agreement, as permitted by applicable law, except that it may not (a) make any amendment or revision in a manner unfavorable to a participant (other than if immaterial), without the consent of the participant or (b) make any amendment or revision without the approval of the stockholders of the Company if such approval is required by the rules of the stock exchange on which the Company’s shares are listed.
105
CEO PAY RATIO
We are providing the following information about the relationship of the median annual total compensation of our employees and the total compensation of Mr. James L. Dolan, our Executive Chairman and Chief Executive Officer as of June 30, 2023, pursuant to the SEC’s pay ratio disclosure rules set forth in Item 402(u) of Regulation S-K (“Item 402(u)”). The pay ratio is calculated in a manner consistent with the SEC’s pay ratio disclosure rules.
To identify our median employee, we first determined our employee population as of June 30, 2023, which consisted of employees located in the U.S. and internationally, representing all full-time, part-time, seasonal and temporary employees employed by the Company on that date. Using information from our payroll records, we then measured each employee’s annual total compensation, consisting of base salary, overtime payments, short and long-term incentives, and sales incentives. For non-U.S. employees paid in local currency, the total annual compensation was translated to U.S. dollars using published exchange rates as of June 30, 2023, and total compensation for full-time employees who were employed for less than the full fiscal year (i.e., full-time employees who were hired during the course of the 2023 fiscal year) was annualized. The Company did not otherwise make any adjustments under Item 402(u).
Once we identified the median employee, we then determined that employee’s total compensation, including any perquisites and other benefits, in
the same manner that we determined the total compensation of our NEOs for purposes of the Summary Compensation Table above.
Given the nature of our business, approximately 40% of our employee population consists of part-time, seasonal and temporary employees. These employees, by the nature of their limited hours worked during the year, have relatively low total compensation when compared to full-time employees. Item 402(u) does not permit annualized or full-time equivalent adjustments to the compensation of these individuals when identifying our median employee or calculating the pay ratio.
Using these guidelines, our Executive Chairman and Chief Executive Officer had annual total compensation of $16,310,205 and the median-compensated employee, an Associate Producer, had an annual total compensation of $91,237. The resulting ratio was 179:1.
Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio provided above may not be comparable to the pay ratio reported by other companies, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratio.
106
Year |
Summary Compensation Table Total for PEO ($) (1) |
Compensation Actually Paid for PEO ($) (2) |
Average Summary Compensation Table Total for Non-PEO NEOs ($) (3) |
Average Compensation Actually Paid for Non-PEO NEOs ($) (4) |
Value of Initial Fixed $100 Investment Based on: |
(GAAP) Net Income ($000s) (7) |
Company Selected Performance Measure |
|||||||||||||||||||||||||
Total Shareholder Return ($) (5) |
Peer Group Total Shareholder Return ($) (5)(6) |
Operating Income ($000s) (8) |
||||||||||||||||||||||||||||||
2023 |
( |
) | ||||||||||||||||||||||||||||||
2022 |
( |
) | ||||||||||||||||||||||||||||||
2021 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| (1) | The dollar amounts reported for the PEO, |
| (2) | The dollar amounts reported for Mr. Dolan under “Compensation Actually Paid” represent the amount of CAP to Mr. Dolan, as computed in accordance with Item 402(v) of Regulation S-K. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to Mr. Dolan’s total compensation for each year to determine CAP: |
James L. Dolan |
||||||||||||
2023 ($) |
2022 ($) |
2021 ($) |
||||||||||
Total Compensation as reported in Summary Compensation Table |
||||||||||||
Subtract change in pension value as reported in Summary Compensation Table |
— | — | — | |||||||||
Add pension value attributable to covered fiscal year’s service and any change in such value attributable to plan amendments made in covered fiscal year |
— | — | — | |||||||||
Subtract value of equity awards as reported in Summary Compensation Table |
||||||||||||
Add year-end fair value of equity awards granted in covered fiscal year that were unvested at end of covered fiscal year |
||||||||||||
Add change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during covered fiscal year (a) |
( |
) | ( |
) | ||||||||
Add vesting date fair value of equity awards granted in covered fiscal year that vested during covered fiscal year (a) |
— | — | — | |||||||||
Add change in fair value from end of prior fiscal year to end of covered fiscal year for awards granted in prior fiscal years that were unvested at end of covered fiscal year (b)(c) |
( |
) | ( |
) | ||||||||
Subtract fair value of awards forfeited in covered fiscal year determined at end of prior fiscal year (d) |
— | — | ||||||||||
Add dividends or other earnings paid on stock or option awards in covered fiscal year that are not otherwise included in total compensation for covered fiscal year (a) |
— | — | — | |||||||||
Compensation Actually Paid to PEO (c)(e) |
( |
) | ||||||||||
| (a) | Includes change in fair value of MSGN awards which were assumed by the Company in connection with the Networks Merger and converted into awards denominated in shares of Class A Common Stock based on an exchange ratio of 0.172 (stock options and restricted stock units subject to performance vesting conditions were converted to stock options and restricted stock units, as applicable, with time-vesting conditions for the remainder of the performance period assuming the performance conditions were achieved at 100% of target). For 2021, calculations for such awards assume fair value at end of prior fiscal year end as of July 9, 2021, the date of the Networks Merger. In addition, calculation for 2021 is net of awards both vested and forfeited in 2021 (see footnote (d) for further detail). |
| (b) | Includes change in fair value of MSGN awards which were assumed by the Company in connection with the Networks Merger and converted into awards denominated in shares of Class A Common Stock based on an exchange ratio of 0.172 (stock options and restricted stock units subject to performance vesting conditions were converted to stock options and restricted stock units, as applicable, with time-vesting conditions for the remainder of the performance p erio d assuming the performance conditions were achieved at 100% of target). For 2021, calculations for such awards assume fair value at end of prior fiscal year end as of July 9, 2021, the date of the Networks Merger. |
| (c) | Includes change in fair value of Company awards granted prior to the MSGE Distribution. For 2023, calculations assume the historical adjustment of Company stock price as of the prior fiscal year end (i.e., 2022) in order to account for the MSGE Distribution. Absent this adjustment, the PEO’s CAP in 2023 would be $5,320,269. |
| (d) | For 2021, includes value of Performance Alignment PSU Grants and Performance Alignment Option Grants, which were voluntarily relinquished in October 2021 in connection with the settlement of litigation. |
| (e) | Does not include MSGE awards granted in April 2023 in res pect of existing Company awards that were granted by the Company prior to the MSGE Distribution. For more information on such awards, see MSGE’s 2023 Definitive Proxy Statement. |
| (3) | The dollar amounts reported under “Average Summary Compensation Total for non-PEO NEOs” represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. Dolan) in the “Total” column of the Summary Compensation Table in each applicable year. The NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Andrea Greenberg, David Granville-Smith, Gautam Ranji, Gregory Brunner, David F. Byrnes, Jamal H. Haughton, and Philip G. D’Ambrosio; (ii) for 2022, Andrea Greenberg, David F. Byrnes, Jamal H. Haughton, Philip G. D’Ambrosio, Andrew Lustgarten, Mark H. FitzPatrick, and Scott S. Packman; and (iii) for 2021, Andrew Lustgarten, Mark H. FitzPatrick, Scott S. Packman, and Philip G. D’Ambrosio. |
| (4) | The dollar amounts reported under “Average Compensation Actually Paid for non-PEO NEOs” represent the average amount of CAP to the NEOs as a group (excluding Mr. Dolan), as computed in accordance with Item 402(v) of Regulation S-K. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments in the table below were made to the non-PEO NEOs’ total compensation for each year to determine the CAP: |
NEO Averages |
||||||||||||
2023 ($) |
2022 ($) |
2021 ($) |
||||||||||
Total Compensation as reported in Summary Compensation Table |
||||||||||||
Subtract change in pension value as reported in Summary Compensation Table |
||||||||||||
Add pension value attributable to covered fiscal year’s service and any change in such value attributable to plan amendments made in covered fiscal year |
— | — | — | |||||||||
Subtract value of equity awards as reported in Summary Compensation Table |
||||||||||||
Add year-end fair value of equity awards granted in covered fiscal year that were unvested at end of covered fiscal year |
||||||||||||
Add change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during covered fiscal year (a) |
( |
) | ( |
) | ||||||||
Add vesting date fair value of equity awards granted in covered fiscal year that vested during covered fiscal year (a) |
— | |||||||||||
Add change in fair value from end of prior fiscal year to end of covered fiscal year for awards granted in prior fiscal years that were unvested at end of covered fiscal year (a)(b) |
( |
) | ||||||||||
Subtract fair value of awards forfeited in covered fiscal year determined at end of prior fiscal year |
— | — | — | |||||||||
Add dividends or other earnings paid on stock or option awards in covered fiscal year that are not otherwise included in total compensation for covered fiscal year |
— | — | — | |||||||||
Compensation Actually Paid to Non-PEO NEOs(b)(c) |
||||||||||||
| (a) | Includes change in fair value of MSGN awards which were assumed by the Company in connection with the Networks Merger and converted into awards denominated in shares of Class A Common Stock based on an exchange ratio of 0.172 (stock options and restricted stock units subject to performance vesting conditions were converted to stock options and restricted stock units, as applicable, with time-vesting conditions for the remainder of the performance period assuming the performance conditions were achieved at 100% of target). For 2021, calculations for such awards assume fair value at end of prior fiscal year end as of July 9, 2021, the date of the Networks Merger. |
| (b) | Includes change in fair value of Company awards granted prior to the MSGE Distribution. For 2023, calculations assume the historical adjustment of Company stock price as of the prior fiscal year end (i.e., 2022) in order to account for the MSGE Distribution. Absent this adjustment, non-PEO NEOs’ CAP in 2023 would be $2,183,961. |
| (c) | Does not include MSGE awards granted in April 2023 in respect of existing Company awards that were granted by the Company prior to the MSGE Distribution. For more information on such awards, see MSGE’s 2023 Definitive Proxy Statement. |
| (5) | Cumulative Total Shareholder Return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the company’s share price at the end and the beginning of the measurement period by the company’s share price at the beginning of the measurement period. |
| (6) | As permitted by SEC rules, the peer group referenced for purposes of “Peer Group Total Shareholder Return” is that of the Bloomberg Americas Entertainment Index, which is the industry index reported in our 2023 Form 10-K in accordance with Regulation S-K Item 201(e). |
| (7) | Reflects Net Income as reported in our Annual Report on Form 10-K for the relevant fiscal year. Net Income Attributable to Sphere Stockholders was $502,772 in 2023, $(194,395) in 2022, and $(377,192) in 2021. |
| (8) | Reflects adjusted operating income as defined in our Annual Report on Form 10-K for the relevant fiscal year. The adjusted operating income figures used to set performance targets and determine payouts within our MPIP and LTIP (as described in the “Compensation Discussion Analysis” section of this proxy statement) may contemplate certain potential future adjustments or exclusions. |
| • |
| • |
| • |
PROPOSAL 3 — APPROVAL OF THE COMPANY’S 2020
EMPLOYEE STOCK PLAN, AS AMENDED
Upon the recommendation of our Compensation Committee, our Board unanimously approved amendments to the Company’s 2020 Employee Stock Plan, as amended (the “Employee Stock Plan”), subject to approval by our stockholders at our annual meeting. The text of the Employee Stock Plan as amended pursuant to this Proposal 3 is set forth in Annex B to this proxy statement, and the following discussion is qualified in its entirety by reference to Annex B.
The material changes to the Employee Stock Plan are (1) an increase in the number of shares reserved for future issuance by 4,000,000, (2) increasing the maximum annual number of shares that can be granted to an individual to 2,000,000, (3) expanding the definition of participant to cover service providers, and (4) an
extension of the termination date of the Employee Stock Plan to December 8, 2033. Otherwise, the Employee Stock Plan is materially unchanged.
Historic Burn Rate and Potential Dilution
We believe that the shares available for issuance under the Employee Stock Plan as amended pursuant to this Proposal 3 will provide sufficient shares for our equity-based compensation needs for approximately two to three years following the date the plan is approved by stockholders. Our equity-based compensation, including the broad-based participation of our employees and eligible service providers and the equity compensation paid to our NEOs and members of management, results in a “burn rate” as indicated in the chart below:
| Fiscal Year 2023 | Fiscal Year 2022 | Fiscal Year 2021 | Average | |||||||||||||
| (a) Total shares underlying equity-based awards granted(1) |
1,292,949 | 1,018,933 | (2) | 745,965 | 1,019,282 | |||||||||||
| (b) Average diluted common shares outstanding |
34,650,945 | 34,255,408 | 24,205,026 | 31,037,126 | ||||||||||||
| (c) Burn rate (a/b)(3) |
3.73 | % | 2.97 | % | 3.08 | % | 3.26 | % | ||||||||
| (1) | Reflects the gross number of shares underlying awards made to employees during the respective fiscal year. |
| (2) | Does not reflect the gross number of shares underlying awards made to employees in July 2021 in connection with the Networks Merger in respect of outstanding MSGN equity awards or awards issued under MSGN’s Employee Stock Plan covering an aggregate of 84,442 shares. |
| (3) | Not adjusted for forfeiture, withholdings and expirations, which would reduce the burn rate if taken into account. |
As commonly calculated, the total potential dilution or “overhang” from the Employee Stock Plan is 8.73%. The overhang is calculated as follows, in each case as of October 16, 2023: (x) the sum of (a) 1,220,943 shares remaining available under the Employee Stock Plan and (b) 2,252,834 shares underlying outstanding employee awards (inclusive of unexercised stock options), divided by (y) 39,806,994, which includes Class A and Class B shares outstanding plus shares remaining available under the Director
Stock Plan (without giving effect to the proposed amendment under Proposal 4), the Employee Stock Plan, MSGN’s Employee Stock Plan and shares underlying outstanding employee and director awards (inclusive of unexercised employee stock options). The total potential dilution or “overhang” from the Employee Stock Plan as amended by this Proposal 3 is 17.06%. In that case, the overhang is calculated as follows, in each case as of October 16, 2023: (x) the sum of (a) 5,220,943 shares remaining available under
114
the Employee Stock Plan, assuming stockholder approval of the 4,000,000 increase per this amendment, and (b) 2,252,834 shares underlying outstanding employee awards (inclusive of unexercised stock options), divided by (y) 43,806,994, which includes Class A and Class B shares outstanding plus shares remaining available under the Director Stock Plan (without giving effect to the proposed amendment under Proposal 4), the Employee Stock Plan (assuming stockholder approval of the 4,000,000 increase per this amendment), MSGN’s Employee Stock Plan and shares underlying outstanding employee and director awards (inclusive of unexercised employee stock options). There are no unvested awards outstanding under the Director Stock Plan. If stockholders approve the increase in accordance with this amendment, 3,344,412 shares will be issuable if the performance awards described under “Performance Awards Granted During 2024 Fiscal Year” vest in accordance with their terms (which will in turn decrease the remaining life plan of the Employee Stock Plan). For additional information with respect to our outstanding awards, please see Note 14 to our financial statements included in our 2023 Form 10-K.
Overview
The purpose of the Employee Stock Plan is to (i) compensate employees and eligible service providers of the Company and its affiliates who are responsible for the management and growth of the business of the Company and its affiliates, and (ii) advance the interest of the Company by encouraging and enabling the acquisition of a personal proprietary interest in the Company by employees and such service providers upon whose judgment and keen interest the Company and its affiliates are largely dependent for the successful conduct of their operations. It is anticipated that the acquisition of such a proprietary interest in the Company will stimulate the efforts of these employees and such service providers on behalf of the Company and its affiliates, and strengthen their desire to remain with the Company and its affiliates. It is also
expected that the opportunity to acquire such a proprietary interest will enable the Company and its affiliates to attract and retain desirable personnel and will better align the interests of participating employees and service providers with those of the Company’s stockholders. The Employee Stock Plan will provide for grants of incentive stock options (as defined in Section 422 of the Code), non-qualified stock options, stock appreciation rights, restricted shares, restricted stock units and other equity-based awards (collectively, “Awards”). The Employee Stock Plan, as amended pursuant to this Proposal 3, will terminate, and no more Awards will be granted, after December 8, 2033 (unless sooner terminated by our Board or our Compensation Committee). The termination of the Employee Stock Plan will not affect previously granted Awards.
Shares Subject to the Employee Stock Plan; Other Limitations
The Employee Stock Plan is administered by the Company’s Compensation Committee. Awards may be granted under the Employee Stock Plan to such employees and other eligible service providers of the Company and its affiliates as the Compensation Committee may determine. An “affiliate” will be defined in the Employee Stock Plan to mean any entity controlling, controlled by, or under common control with the Company or any other affiliate and will also include any entity in which the Company owns at least five percent of the outstanding equity interests. Effective as of December 8, 2023, the total number of shares of the Company’s Class A Common Stock that may be issued pursuant to Awards under the Employee Stock Plan, as amended pursuant to this Proposal 3, after December 8, 2023 may not exceed an aggregate of 8,500,000 (inclusive of shares underlying Awards granted prior to such effective date (that have not become available for grant again pursuant to the Employee Stock Plan) and shares remaining available for grant immediately prior to such effective date). To the extent that (i) an Award is paid, settled or exchanged or expires, lapses, terminates or is cancelled for any reason without the issuance of
115
shares, (ii) any shares under an Award are not issued because of payment or withholding obligations or (iii) restricted shares revert back to the Company prior to the lapse of the restrictions or are applied by the Company for purposes of tax withholding obligations, then the Compensation Committee will also be able to grant Awards with respect to such shares or restricted shares. Awards payable only in cash or property other than shares will not reduce the aggregate remaining number of shares with respect to which Awards may be made under the Employee Stock Plan and shares relating to any other Awards that are settled in cash or property other than shares, when settled, will be added back to the aggregate remaining number of shares with respect to which Awards may be made under the Employee Stock Plan. Any shares underlying Awards that the Company becomes obligated to make through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity will not count against the shares available to be delivered pursuant to Awards under the Employee Stock Plan. No single employee may be issued Awards during any one calendar year for, or that relate to, a number of shares exceeding 2,000,000. In the event that any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects shares such that the failure to make an adjustment to an Award would not appropriately protect the rights represented by the Award in accordance with the essential intent and principles thereof (each such event, an “Adjustment Event”), then the Compensation Committee will, in such manner as it may determine to be equitable in its sole discretion, adjust any or all of the terms of an outstanding Award (including, without limitation, the number of shares covered by such outstanding Award, the type of property to which the Award is subject and the exercise price of such Award).
Awards
Employees and other service providers who are eligible under General Instruction A.1(a) to Form S-8, excluding any member of the Board who is not a current employee of the Company or its subsidiaries, are eligible to receive Awards under the Employee Stock Plan. As of June 30, 2023, the Company had 690 full-time employees and 410 part-time employees. Under the Employee Stock Plan, the Company may grant options and stock appreciation rights, which will be exercisable at a price determined by the Compensation Committee on the date of the Award grant, which price will be no less than the fair market value of a share of Class A Common Stock on the date the option or stock appreciation right is granted. Other than in the case of the death of a participant, such options and stock appreciation rights may be exercised for a term fixed by the Compensation Committee but no longer than ten years from the date of grant. An award agreement may provide that, in the event the participant dies while the option or stock appreciation right is outstanding, the option or stock appreciation right will remain outstanding until the first anniversary of the participant’s death, whether or not such first anniversary occurs after such ten-year period. Upon its exercise, a stock appreciation right will be settled (and an option may be settled, in the Compensation Committee’s discretion) for an amount equal to the excess of the fair market value of a share of Class A Common Stock on the date of exercise over the exercise price of the stock appreciation right (or option). The Employee Stock Plan prohibits (1) repricing options and stock appreciation rights (other than in connection with Adjustment Events), (2) repurchasing options or stock appreciation rights for cash when the exercise price equals or exceeds the fair market value of a share of the Company’s Class A Common Stock or (3) option or stock appreciation right automatic reload provisions, in each case without the approval of the Company’s stockholders.
116
The Employee Stock Plan also permits the Company to grant restricted shares and restricted stock units. A restricted share is a share of Class A Common Stock that is registered in the participant’s name, but that is subject to certain transfer and/or forfeiture restrictions for a period of time as specified in the applicable award agreement. The participant of a restricted share will have the rights of a stockholder, subject to any restrictions and conditions specified by the Compensation Committee in the participant’s award agreement. Notwithstanding the previous sentence, unless the Compensation Committee determines otherwise, all ordinary cash dividends paid upon any restricted share prior to its vesting will be retained by the Company for the account of the relevant participant and upon vesting will be paid to the relevant participant.
A restricted stock unit is an unfunded, unsecured right to receive a share of Class A Common Stock (or cash or other property) at a future date upon the satisfaction of the conditions specified by the Compensation Committee in the award agreement. Unless otherwise provided by the Compensation Committee, a restricted stock unit will also carry a dividend equivalent right representing an unfunded and unsecured promise to pay to the relevant participant, upon the vesting of the restricted stock unit, an amount equal to any ordinary cash dividends that would have been paid upon any share underlying a restricted stock unit had such shares been issued.
The Compensation Committee is also able to grant other equity-based or equity-related awards to participants subject to terms and conditions it may specify. These awards may entail the transfer of shares or payment in cash based on the value of shares.
Under the Employee Stock Plan, the Compensation Committee has the authority, in its discretion, to add performance criteria as a condition to any participant’s ability to exercise a stock option or stock appreciation right, or the vesting or payment of any restricted shares or
restricted stock units, granted under the Employee Stock Plan. Additionally, the Employee Stock Plan specifies certain performance criteria that may, in the case of certain executive officers of the Company, be conditions precedent to the vesting of awards granted to such executives under the Employee Stock Plan. The Employee Stock Plan provides that such performance criteria, without limitation, may be determined by reference to the performance of the Company, an affiliate or a business unit, product, venue, production, event or service thereof or any combination of the foregoing. Such criteria may also be measured on a per customer, sponsor, basic or diluted share basis or any combination of the foregoing and may reflect absolute performance, incremental performance or comparative performance to other companies (or their products or services) determined on a gross, net, GAAP or non-GAAP basis, with respect to one or more of the following without limitation: (i) net or operating income or other measures of profit; (ii) measures of revenue; (iii) earnings before interest, taxes, depreciation and amortization (EBITDA); (iv) cash flow, free cash flow, adjusted operating cash flow and similar measures; (v) return on equity, investment, assets or capital; (vi) gross or operating margins or savings; (vii) performance relative to budget, forecast or market expectations; (viii) market share or penetration or customer acquisition or retention, facilities utilization or attendance; (ix) operating metrics relating to sales, sponsorships or customer service or satisfaction; (x) capital spending management, facility maintenance, construction or renovation or product or service deployments; (xi) achievement of strategic business objectives such as acquisitions, dispositions or investments; (xii) a specified increase in the fair market value of the Company’s Class A Common Stock; (xiii) a specified increase in the private market value of the Company; (xiv) the price of the Company’s Class A Common Stock; (xv) earnings per share; and/or (xvi) total stockholder return.
117
Amendment; Termination
The Board or the Compensation Committee may discontinue the Employee Stock Plan at any time and from time to time may amend or revise the terms of the Employee Stock Plan or any award agreement, as permitted by applicable law, except that it may not (a) make any amendment or revision in a manner unfavorable to a participant (other than if immaterial), without the consent of the participant or (b) make any amendment or revision without the approval of the stockholders of the Company if such approval is required by the rules of the stock exchange on which the Company’s shares are listed. The consent of the participant will not be required solely pursuant to the previous sentence in respect of any adjustment made in light of an Adjustment Event, except to the extent the terms of an award agreement expressly refer to an Adjustment Event, in which case such terms will not be amended in a manner unfavorable to a participant (other than if immaterial) without such participant’s consent.
U.S. Federal Tax Implications of Certain Awards under the Plan
The following summary generally describes the principal Federal (but not state and local) income tax consequences of certain awards that are permitted under the Employee Stock Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular participant or the Company. The provisions of the Code and the regulations thereunder relating to these matters are complex and their impact in any one case may depend upon the particular circumstances.
Incentive Stock Options
An participant will not be subject to tax upon the grant of an incentive stock option (an “ISO”) or upon the exercise of an ISO. However, the excess of the fair market value of the shares on the date of exercise over the exercise price paid will be included in the participant’s alternative minimum taxable income. Whether the participant is subject to the alternative minimum tax will depend on his
or her particular circumstances. The participant’s basis in the shares received will be equal to the exercise price paid, and the holding period in such shares will begin on the day following the date of exercise. If a participant disposes of the shares on or after (i) the second anniversary of the date of grant of the ISO and (ii) the first anniversary of the date of exercise of the ISO (the “statutory holding period”), the participant will recognize a capital gain or loss in an amount equal to the difference between the amount realized on such disposition and his or her basis in the shares.
Nonstatutory Stock Options
For the grant of an option that is not intended to be (or does not qualify as) an ISO, a participant will not be subject to tax upon the grant of such an option (a “nonstatutory stock option”). Upon exercise of a nonstatutory stock option, an amount equal to the excess of the fair market value of the shares acquired on the date of exercise over the exercise price paid is taxable to a participant as ordinary income, and such amount is generally deductible by the Company. This amount of income will be subject to income tax withholding and employment taxes. A participant’s basis in the shares received will equal the fair market value of the shares on the date of exercise, and a participant’s holding period in such shares will begin on the day following the date of exercise.
Restricted Stock
A participant will not be subject to tax upon receipt of an award of shares subject to forfeiture conditions and transfer restrictions (the “restrictions”) under the Employee Stock Plan unless the participant makes the election referred to below. Upon lapse of the restrictions, a participant will recognize ordinary income equal to the fair market value of the shares on the date of lapse (less any amount the participant may have paid for the shares), and such income will be subject to income tax withholding and employment taxes. A participant’s basis in the shares received will be equal to the fair market value of the shares on the date the restrictions lapse, and a participant’s holding period in such
118
shares begins on the day after the restrictions lapse. If any dividends are paid on such shares prior to the lapse of the restrictions they will be includible in a participant’s income during the restricted period as additional compensation (and not as dividend income) and will be subject to income tax withholding and employment taxes.
If permitted by the applicable award agreement, a participant may elect, within thirty days after the date of the grant of the restricted stock, to recognize immediately (as ordinary income) the fair market value of the shares awarded (less any amount a participant may have paid for the shares), determined on the date of grant (without regard to the restrictions). Such income will be subject to income tax withholding and employment taxes at such time. This election is made pursuant to Section 83(b) of the Code and the regulations thereunder. If a participant makes this election, the participant’s holding period will begin the day after the date of grant, dividends paid on the shares will be subject to the normal rules regarding distributions on stock, and no additional income will be recognized by the participant upon the lapse of the restrictions. However, if the participant forfeits the restricted shares before the restrictions lapse, no deduction or capital loss will be available to the participant (even though the participant previously recognized income with respect to such forfeited shares).
In the taxable year in which a participant recognizes ordinary income on account of shares awarded to the participant, the Company generally will be entitled to a deduction equal to the amount of income recognized by the participant. In the event that the restricted shares are forfeited by a participant after having made the Section 83(b) election referred to above, the Company generally will include in our income the amount of our original deduction.
Stock Appreciation Rights
A participant will not be subject to tax upon the grant of a stock appreciation right. Upon exercise
of a stock appreciation right, an amount equal to the cash and/or the fair market value (measured on the date of exercise) of shares receivable by the participant in respect of a stock appreciation right will be taxable to the participant as ordinary income, and such amount generally will be deductible by the Company. This amount of income will be subject to income tax withholding and employment taxes. A participant’s basis in any shares received will be equal to the fair market value of such shares on the date of exercise, and a participant’s holding period in such shares will begin on the day following the date of exercise.
Restricted Stock Units
A participant will not be subject to tax upon the grant of a restricted stock unit. Upon vesting of a restricted stock unit, the fair market value of the shares covered by the award on the vesting date will be subject to employment taxes. Upon distribution of the shares and/or cash underlying a restricted stock unit, a participant will recognize as ordinary income an amount equal to the cash and/or fair market value (measured on the Distribution Date) of the shares received, and such amount will generally be deductible by the Company. This amount of income will generally be subject to income tax withholding on the date of distribution. A participant’s basis in any shares received will be equal to the fair market value of the shares on the date of distribution, and a participant’s holding period in such shares will begin on the date of distribution. If any dividend equivalent amounts are paid to a participant, they will be includible in the participant’s income as additional compensation (and not as dividend income) and will be subject to income and employment tax withholding.
Disposition of Shares
Unless stated otherwise above, upon the subsequent disposition of shares acquired under any of the preceding awards, a participant will recognize capital gain or loss based upon the difference between the amount realized on such
119
disposition and the participant’s basis in the shares, and such amount will be long-term capital gain or loss if such shares were held for more than 12 months.
New Plan Benefits
For a discussion of new plan benefits, see “New Plan Benefits Table” below.
Vote Required for Approval
Approval of this proposal requires the favorable vote of a majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and holders of Class B Common Stock will have ten votes per share.
The Board unanimously recommends that you vote FOR this proposal.
120
PROPOSAL 4 — PROPOSAL TO APPROVE THE COMPANY’S 2020 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS, AS AMENDED
Upon the recommendation of our Compensation Committee, our Board unanimously approved amendments to the Company’s Stock Plan for Non-Employee Directors, as amended (the “Director Stock Plan”), subject to approval by our stockholders at our annual meeting. The text of the Director Stock Plan as amended pursuant to this Proposal 4 is set forth in Annex C to this proxy statement, and the following discussion is qualified in its entirety by reference to Annex C.
The material changes to the Director Stock Plan are (1) an increase in the number of shares reserved for future issuance by 250,000 and (2) an extension of the termination date of the Director
Stock Plan to December 8, 2033. Otherwise, the Director Stock Plan is materially unchanged.
Historic Burn Rate and Potential Dilution
We believe that the shares available for issuance under the Director Stock Plan pursuant to this Proposal 4 will provide sufficient shares for our equity-based non-employee director compensation needs for approximately one year following the date the plan is approved by stockholders. Our non-employee director compensation results in a “burn rate” as indicated in the chart below:
|
Fiscal Year 2023 |
Fiscal Year 2022 |
Fiscal Year 2021 |
Average |
|||||||||||||
|
(a) Total shares underlying equity-based awards granted (1)
|
62,520 | 37,831 | 21,030 | 40,460 | ||||||||||||
|
(b) Average diluted common shares outstanding
|
34,650,945 | 34,255,408 | 24,205,026 | 31,037,126 | ||||||||||||
|
(c) Burn rate (a/b) (2)
|
0.18 | % | 0.11 | % | 0.09 | % | 0.13 | % | ||||||||
| (1) | Reflects the gross number of shares underlying awards made to non-employee directors during the respective fiscal year. |
| (2) | Not adjusted for forfeiture, withholdings and expirations, which would reduce the burn rate if taken into account. |
As commonly calculated, the total potential dilution or “overhang” from the Director Stock Plan is 0.55%. The overhang is calculated as follows, in each case as of October 16, 2023: (x) the sum of (a) 86,837 shares remaining available under the Director Stock Plan and (b) 133,027 shares underlying outstanding director awards divided by (y) 39,806,994, which includes Class A and Class B shares outstanding plus shares remaining available under the Director Stock Plan, the Employee Stock Plan (without giving effect to the proposed amendment under Proposal 3), MSGN’s Employee Stock Plan and shares underlying outstanding employee and director awards (inclusive of unexercised stock options). The total potential dilution or “overhang” from the Director Stock Plan as
amended by this Proposal 4 is 1.17%. In that case, the overhang is calculated as follows, in each case as of October 16, 2023: (x) the sum of (a) 336,837 shares remaining available under the Director Stock Plan, assuming stockholder approval of the 250,000 increase per this amendment, and (b) 133,027 shares underlying outstanding director awards divided by (y) 40,056,994, which includes Class A and Class B shares outstanding plus shares remaining available under the Director Stock Plan (assuming stockholder approval of the 250,000 increase per this amendment), the Employee Stock Plan (without giving effect to the proposed amendment under Proposal 3), MSGN’s Employee Stock Plan and shares underlying outstanding employee and director awards (inclusive of unexercised stock options). There
121
are no unvested awards outstanding under the Director Stock Plan. For additional information with respect to our outstanding awards, please see Note 14 to our financial statements included in our 2023 Form 10-K.
Overview
We believe that the Company’s ability to attract and retain capable persons as non-employee directors will be enhanced if it can provide its non-employee directors with equity-based awards and that the Company will benefit from encouraging a sense of proprietorship of such persons and thereby stimulate the active interest of such persons in the development and financial success of the Company. The Director Stock Plan provides for potential grants of non-qualified stock options, restricted stock units, restricted shares and other equity-based awards (collectively, “Director Awards”) to our non-employee directors. We currently have 14 non-employee directors.
The Director Stock Plan as amended pursuant to this Proposal 4 will terminate, and no more Director Awards will be granted, after December 8, 2033 (unless sooner terminated by our Board or our Compensation Committee). The termination of the Director Stock Plan will not affect previously granted Director Awards.
Shares Subject to the Director Stock Plan; Other Limitations
The Director Stock Plan is administered by the Company’s Compensation Committee. The total number of shares of the Company’s Class A Common Stock that may be issued pursuant to Director Awards under the Director Stock Plan, as amended pursuant to this Proposal 4, after December 8, 2023 may not exceed an aggregate of 500,000 shares (inclusive of shares underlying Director Awards granted prior to such effective date (that have not become available for grant again pursuant to the Director Stock Plan) and shares remaining available for grant immediately
prior to such effective date).To the extent that (i) a Director Award is paid, settled or exchanged or expires, lapses, terminates or is cancelled for any reason without the issuance of shares or (ii) any shares under a Director Award are not issued because of payment or withholding obligations, then the Compensation Committee may also grant Director Awards with respect to such shares. Director Awards that are payable only in cash or property other than shares do not reduce the aggregate remaining number of shares with respect to which Director Awards may be made under the Director Stock Plan and shares relating to any other Director Awards that are settled in cash or property other than shares, when settled, will be added back to the aggregate remaining number of shares with respect to which Director Awards may be made under the Director Stock Plan. Any shares underlying Director Awards that the Company becomes obligated to make through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity shall not count against the shares available to be delivered pursuant to Director Awards under the Director Stock Plan. In the event that any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects shares such that the failure to make an adjustment to a Director Award would not appropriately protect the rights represented by the Director Award in accordance with the essential intent and principles thereof (each such event, an “Adjustment Event”), then the Compensation Committee will, in such manner as it may determine to be equitable in its sole discretion, adjust any or all of the terms of an outstanding Director Award (including, without limitation, the number of shares covered by such outstanding Director Award, the type of property to which the Director Award is subject and the exercise price of such Director Award).
122
Director Awards
Under the Director Stock Plan, the Company may grant stock options to participants. The options will be exercisable at a price determined by the Compensation Committee on the date of the Director Award grant, which price will be no less than the fair market value of a share of Class A Common Stock on the date the option is granted, and will otherwise be subject to such terms and conditions as specified by the Compensation Committee, provided that, unless determined otherwise by the Compensation Committee, such options will be fully vested and exercisable on the date of grant. Each option granted pursuant to the Director Stock Plan will terminate upon the earlier to occur of (i) the expiration of ten years following the date upon which the option is granted and (ii) a period fixed by the Compensation Committee in the award agreement; however, an award agreement may provide that in the event that a participant dies while an option is exercisable, the option will remain exercisable by the participant’s estate or beneficiary only until the first anniversary of the participant’s date of death and whether or not such first anniversary occurs prior to or following the expiration of the relevant period referred to above. Upon its exercise, an option may be settled, in the Compensation Committee’s discretion, for a cash amount equal to the excess of the fair market value of a share of Class A Common Stock on the date of exercise over the exercise price of the option. The Director Stock Plan, as amended, prohibits, in each case, without the approval of the Company’s stockholders (1) repricing options and stock appreciation rights (other than in connection with Adjustment Events), (2) repurchasing options or stock appreciation rights for cash when the exercise price equals or exceeds the fair market value of a share of the Company’s Class A Common Stock or (3) option or stock appreciation right automatic reload provisions.
The Company may also grant restricted stock units to participants. A restricted stock unit is an unfunded, unsecured right to receive a share of
Class A Common Stock (or cash or other property) at a future date upon the satisfaction of the conditions specified by the Compensation Committee in the Director Award agreement. Unless otherwise provided by the Compensation Committee, such restricted stock units will be fully vested on the date of grant and will also carry a dividend equivalent right representing an unfunded and unsecured promise to pay to the relevant participant an amount equal to the ordinary cash dividends that would have been paid upon any share underlying a restricted stock unit had such shares been issued. If a restricted stock unit is not fully vested at the date of grant, the dividend equivalent right will not apply until such restricted stock unit is vested.
The Compensation Committee may grant other equity-based or equity-related awards (including without limitation restricted shares, unrestricted shares and share appreciation awards) to non-employee directors subject to terms and conditions it may specify. These awards may entail the transfer of shares or payment in cash based on the value of shares.
Amendment; Termination
The Board or the Compensation Committee may discontinue the Director Stock Plan at any time and from time to time may amend or revise the terms of the Director Stock Plan or any Director Award agreement, as permitted by applicable law, except that it may not (a) make any amendment or revision in a manner unfavorable to a participant (other than if immaterial), without the consent of the participant or (b) make any amendment or revision without the approval of the stockholders of the Company if such approval is required by the rules of the stock exchange on which the Company’s shares are listed. Consent of the participant will not be required solely pursuant to the previous sentence in respect of any adjustment made in light of a Director Stock Plan Adjustment Event, except to the extent the terms of a Director Award agreement expressly refer to a Director Stock Plan Adjustment Event, in which case such terms will not be amended in a manner
123
unfavorable to a participant (other than if immaterial) without such participant’s consent.
U.S. Federal Tax Implications of Options and Restricted Stock Units Under the Director Stock Plan
The following summary generally describes the principal Federal (but not state and local) income tax consequences of the issuance and exercise of options and restricted stock units under the Director Stock Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular participant or the Company. The provisions of the Code and the regulations thereunder relating to these matters are complex and subject to change and their impact in any one case may depend upon the particular circumstances.
A non-employee director will not realize any income, and the Company will not be entitled to a deduction, at the time that a stock option is granted under the Director Stock Plan. Upon exercising an option, a non-employee director will realize ordinary income (not as capital gain), and the Company will be entitled to a corresponding deduction, in an amount equal to the fair market value on the exercise date of the shares subject to the option over the exercise price of the option. The non-employee director will have a basis in the shares received as a result of the exercise, for purposes of computing capital gain or loss, equal to the fair market value of those shares on the exercise date and the non-employee director’s holding period in the shares received will commence on the day after
the date of exercise. If an option is settled by the Company in cash, shares or a combination thereof, the non-employee directors will recognize ordinary income at the time of settlement equal to the fair market value of such cash, shares or combination thereof, and the Company will be entitled to a corresponding deduction.
A non-employee director will not realize any income, and the Company will not be entitled to a deduction, at the time that a restricted stock unit is granted under the Director Stock Plan or at the time that a restricted stock unit vests. Upon payment or settlement of a restricted stock unit award in Class A Common Stock or cash, the non-employee director will recognize ordinary income, and the Company will be entitled to a corresponding deduction, equal to the fair market value of any Class A Common Stock or cash received.
New Plan Benefits
For a discussion of new plan benefits, see “New Plan Benefits Table” below.
Vote Required for Approval
Approval of this proposal requires the favorable vote of a majority of the votes cast by the holders of Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Certificate of Incorporation, holders of Class A Common Stock will have one vote per share and holders of Class B Common Stock will have ten votes per share.
The Board unanimously recommends that you vote FOR this proposal.
124
NEW PLAN BENEFITS TABLE
The amount of each participant’s future awards under the Employee Stock Plan (See “Proposal 3 — Approval of the Company’s 2020 Employee Stock Plan, as amended”) and the Director Stock Plan (See “Proposal 4 — Approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended”) will be determined based on the discretion of the Compensation Committee
and therefore is not determinable at this time, except for the performance awards granted in the form of premium priced options described under “Performance Awards Granted During 2024 Fiscal Year.” The following table sets forth awards that were received by the persons and groups named below for the year ended June 30, 2023 under such plan.
| Name and Principal Position |
Employee Stock Plan Dollar Value ($)(1)(2) |
Employee Stock Plan Number of Units at Target (#)(1)(2) |
Director Stock Plan Dollar Value ($)(3) |
Director Stock Plan Number of Units (#)(3) |
||||||||||||
| Current NEOs |
||||||||||||||||
| James L. Dolan(4) Executive Chairman and Chief Executive Officer |
$ | 10,973,100 | 197,500 | — | — | |||||||||||
| Andrea Greenberg(5) President and Chief Executive Officer, MSG Networks |
— | — | — | — | ||||||||||||
| David Granville-Smith Executive Vice President |
$ | 3,903,864 | 140,225 | — | — | |||||||||||
| Gautam Ranji Executive Vice President, Chief Financial Officer and Treasurer |
$ | 514,117 | 10,616 | — | — | |||||||||||
| Gregory Brunner Senior Vice President, Controller and Principal Accounting Officer |
— | — | — | — | ||||||||||||
| Former Executives |
||||||||||||||||
| David F. Byrnes Executive Vice President and Chief Financial Officer |
$ | 1,554,569 | 27,980 | — | — | |||||||||||
| Jamal H. Haughton Executive Vice President and General Counsel |
$ | 1,188,762 | 21,396 | — | — | |||||||||||
| Philip G. D’Ambrosio Senior Vice President and Treasurer |
$ | 914,518 | 16,460 | — | — | |||||||||||
| Other |
||||||||||||||||
| All Executive Officers |
$ | 15,391,081 | 348,341 | — | — | |||||||||||
| All Non-Employee Directors |
— | — | $ | 3,016,421 | 62,520 | |||||||||||
| All Employees who are not Executive Officers(6) |
$ | 48,698,090 | 908,768 | — | — | |||||||||||
| (1) | See “Executive Compensation Tables — Summary Compensation Table” and “Executive Compensation Tables — Grants of Plan-Based Awards” for additional information. |
| (2) | Does not reflect the gross number of shares underlying awards made to employees in July 2021 in connection with the Networks Merger in respect of outstanding MSGN equity awards. |
125
| (3) | See “Board and Governance Practices — Director Compensation — Director Compensation Table” for more information. |
| (4) | Does not include Mr. Dolan’s performance award granted following the end of fiscal year 2023 of 1,224,492 premium priced options. Mr. Dolan’s options will vest on October 20, 2026, which is the third anniversary of the grant date, subject to his continued employment with the Company from the grant date through such vesting date other than in certain limited exceptions. One-third of the options have an exercise price of $42.23 (representing 125% of the closing price of a share on the grant date), one-third of the options have an exercise price of $45.60 (representing 135% of the closing price of a share on the grant date) and one-third of the options have an exercise price of $50.67 (representing 150% of the closing price of a share on the grant date). The expiration date for each of the options is October 20, 2033, subject to earlier termination in connection with certain specified termination events. In the event of death, all unexercised and outstanding options will vest in full and will be exercisable for the lesser of three years following death or the remainder of the term. In the event of disability, all unexercised and outstanding options will vest in full on October 20, 2026 and will be exercisable for the lesser of three years (either following the vesting date or, if later, the disability termination date) or the remainder of the term. In the event of a termination by the Company without cause or by Mr. Dolan for good reason, a pro-rata portion of the unexercised and outstanding options will vest on October 20, 2026, and will be exercisable for the lesser of three years (either following the vesting date or, if later, the termination date) or the remainder of the term. In the event of retirement, there is no accelerated or continued vesting and any then unexercised and vested options will be exercisable for the lesser of three years following retirement or the remainder of the term. In the event of resignation (other than due to retirement or a termination by Mr. Dolan for good reason), there is no accelerated or continued vesting and any then unexercised and vested options will be exercisable for the lesser of 90 days following termination or the remainder of the term. These provisions supersede the provisions in Mr. Dolan’s employment agreement with respect to these options, except that the terms “cause” and “good reason” have the meanings set forth in his employment agreement. For information regarding the federal income tax consequences of the issuance and exercise of the options, see “Proposal 3—Approval of the Company’s 2020 Employee Stock Plan, as amended — U.S. Federal Tax Implications of Certain Awards under the Plan.” For more information regarding Mr. Dolan’s performance award, see “Performance Awards Granted During 2024 Fiscal Year.” |
| (5) | Ms. Greenberg’s grants of restricted stock units and performance stock units were made under MSGN’s Employee Stock Plan, which was assumed by the Company in connection with the Networks Merger and are therefore not presented above. In the fiscal year ended June 30, 2023, she was awarded 41,558 employee stock units at target ($2,308,962). See “Executive Compensation Tables — Summary Compensation Table” and “Executive Compensation Tables — Grants of Plan-Based Awards” for additional information. |
| (6) | Does not include performance awards granted to a select team of personnel following the end of fiscal year 2023 of 2,119,920 premium priced options in the aggregate. The performance awards granted generally have the same terms as the performance award granted to Mr. Dolan, as described in footnote 4 above, including with respect to the vesting date, exercise prices, post-employment exercise periods and term (other than with respect to his good reason and retirement provisions). For more information regarding the premium priced options, see “Performance Awards Granted During 2024 Fiscal Year.” |
126
PROPOSAL 5 — NON-BINDING ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
We are seeking stockholder approval, on an advisory (non-binding) basis, of the compensation of our NEOs as disclosed under the “Compensation Discussion Analysis” and “Executive Compensation Tables” sections of this proxy statement. The Company’s stockholders previously approved, in an advisory vote held at the 2020 annual meeting of stockholders, holding an advisory vote to approve the compensation of our NEOs once every three years. Notwithstanding the foregoing, the Company has determined to hold an advisory vote to approve the compensation of our NEOs this year, in advance of 2025’s required vote. At that the 2022 annual meeting of stockholders, around 86.7% of votes cast voted “FOR” the “say-on-pay” resolution. In considering your vote, we invite you to review the Company’s compensation philosophy and program under “Compensation Discussion Analysis.” As described in the Compensation Discussion Analysis, we believe that the Company’s executive compensation program effectively aligns the interests of our NEOs with those of our stockholders by tying a significant portion of compensation to the Company’s performance and by providing a competitive level of compensation needed to recruit, retain and motivate talented executive officers critical to the Company’s long-term success. We are asking our stockholders to vote “FOR” the adoption of the following resolution:
“RESOLVED, that the stockholders of Sphere Entertainment Co. (“SPHR”) approve, on an advisory basis, the compensation of SPHR’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K in SPHR’s Proxy Statement for the 2023 annual meeting under the headings ‘Compensation Discussion Analysis’ and ‘Executive Compensation Tables’.”
While we intend to carefully consider the voting results of this proposal, the vote is advisory in nature and therefore not binding on us, our Board or our Compensation Committee. Our Board and Compensation Committee value the opinions of all our stockholders and will consider the outcome of this vote when making future compensation decisions for our NEOs.
Vote Required for Approval
Approval of this proposal requires the favorable vote of a majority of the votes cast by the holders of our Class A Common Stock and Class B Common Stock, voting together as a single class. In accordance with our Certificate of Incorporation, holders of our Class A Common Stock will have one vote per share and holders of our Class B Common Stock will have ten votes per share.
The Board unanimously recommends that you vote FOR this proposal.
127
OUR EXECUTIVE OFFICERS
The following individuals are our executive officers:
| James L. Dolan(1) |
Executive Chairman and Chief Executive Officer | |
| Andrea Greenberg |
President and Chief Executive Officer of MSG Networks | |
| David Granville-Smith |
Executive Vice President | |
| Gautam Ranji |
Executive Vice President, Chief Financial Officer and Treasurer | |
| Gregory Brunner |
Senior Vice President, Controller and Principal Accounting Officer |
| (1) | The biography for James L. Dolan appears above under “Proposal 1 — Election of Directors.” |
ANDREA GREENBERG, 64, has served as President and Chief Executive Officer of MSG Networks since 2015, and has been an executive officer of the Company since the Networks Merger in July 2021. She has more than 30 years of experience in the sports, entertainment and media industries. Ms. Greenberg served as the Executive Vice President of the Media business segment of The Madison Square Garden Company from 2010 to 2015. As Executive Vice President of MSG Media, Ms. Greenberg was responsible for all aspects of the media division, including programming, marketing, sales and operations, and directed all major transactional activities of the division. Ms. Greenberg previously served as the Executive Vice President of the MSG Entertainment business segment from 2008 to 2009 while such business was owned by Cablevision Systems Corporation before The Madison Square Garden Company was spun-off from Cablevision in 2010. Prior to that, Ms. Greenberg spent more than 25 years at Rainbow Media Corp., the former Cablevision programming subsidiary that spun-off from Cablevision in 2011 to become AMC Networks, last serving as President of Rainbow Media Ventures from 2004 to 2008. Ms. Greenberg has served as a director of the Garden of Dreams Foundation since 2015.
DAVID GRANVILLE-SMITH, 56 has served as the Executive Vice President of the Company, MSGS and AMC Networks, since June 2023. Previously, Mr. Granville-Smith served as the Chief Operating Officer and Chief Financial
Officer of AE Television Networks, LLC (“A+E Networks”), a global media and entertainment brand portfolio, from December 2016 to June 2023, and as A+E Networks’ Executive Vice President and Chief Financial Officer from July 2014 to December 2016. As Chief Financial Officer of A+E Networks, Mr. Granville-Smith led all key financial functions across the company, including Finance and Accounting, Financial Planning and Analysis, Treasury and Tax, and as Chief Operating Officer, Mr. Granville-Smith oversaw Technology, Media Production and Operations, Engineering and Broadcast Operations, Digital Product Technology and Office Services and Facilities. Mr. Granville-Smith was also responsible for the Corporate Development Strategy Group. During his tenure at A+E Networks, he provided strategic, financial, and operational leadership across all divisions of the company, including the Brand Portfolio Group, Ad Sales, Distribution, Digital and International, in order to drive the company’s overall growth and value creation. While at A+E Networks, Mr. Granville-Smith served on the boards of A+E Networks Latin America, Propagate Content, and Vice TV. Prior to joining A+E Networks, Mr. Granville-Smith held various positions at J.P. Morgan Chase Co. (“J.P. Morgan”) and The Bear Stearns Companies, Inc., which was acquired by J.P. Morgan in 2008, from 1991 to 2014, including Managing Director and Head of the Media Group in the Investment Banking Division at J.P. Morgan from 2008 to 2014. Prior to that, he worked in the Mergers Acquisitions
128
Group at Smith Barney from 1989 to 1991. Throughout his career in banking, Mr. Granville-Smith worked on a multitude of significant strategic and financing transactions for companies in the diversified media and entertainment, television network, content distribution and telecommunications industries. Mr. Granville-Smith serves as a trustee of the Parrish Art Museum in Water Mill, New York.
GAUTAM RANJI, 53, has served as the Executive Vice President, Chief Financial Officer, and Treasurer of the Company since the MSGE Distribution. Prior to that, Mr. Ranji served as the Senior Vice President, Chief Financial Officer — Sphere Division from July 2022 through the MSGE Distribution Date. Prior to joining the Company, Mr. Ranji served as both Chief Strategy Officer of Argus Capital Corp., a special purpose acquisition company, and as Chief Operating Officer of Blavity Inc., a digital media company seeking to engage communities of color, from 2021 through 2022. Mr. Ranji served as Executive Vice President, Strategic Planning and Business Development of ViacomCBS (now known as Paramount Global), a media and entertainment company, from 2019 through 2020, and served as Executive Vice President, Strategic Planning and Business Development of CBS Corporation prior to the merger with Viacom from 2016 through 2019. Prior to that, Mr. Ranji held various roles with the Hearst Corporation, Dun Bradstreet and
Viacom. Mr. Ranji has served as a director of Blavity, Inc. since August 2022, as well as Vice Chair of Breakthrough New York, since July 2022, having previously served as Chair from June 2019 through June 2022.
GREGORY BRUNNER, 40, has served as the Senior Vice President, Controller and Principal Accounting Officer of the Company since June 2023. Previously, from October 2018 to June 2, 2023, Mr. Brunner served as Partner at KPMG LLP (“KPMG”), a U.S. professional services firm providing audit, tax and advisory services. In that role, he was primarily responsible for the global coordination and execution of financial statement audits and audits of internal control over financial reporting under US Generally Accepted Accounting Principles. He coordinated and was responsible for the service delivery of multiple global teams within multiple disciplines, including audit, tax, transaction advisory and information technology practices, and also led the resolution of highly technical, complex accounting and financial reporting issues and provided strategic input to senior executives, audit committees and board members with respect to regulatory updates and risk oversight. Prior to his role as Audit Partner, Mr. Brunner served in numerous roles at KPMG since 2005. Mr. Brunner has also served on the New York City Executive Leadership Team of the American Heart Association and as a student mentor for buildOn and the National Retail Federation.
129
TRANSACTIONS WITH RELATED PARTIES
RELATIONSHIP BETWEEN US, MSGE, MSGS AND AMC NETWORKS
The Company, MSGE, MSGS and AMC Networks are all under the control of members of the Charles F. Dolan family and certain related family entities. The Company, on the one hand, and MSGE, MSGS or AMC Networks, on the other hand, are party to the agreements described in this section. Certain of the agreements summarized in this section are included as exhibits to our 2023 Form 10-K, and the following summaries of those agreements are qualified in their entirety by reference to the agreements as filed. Additional information concerning the arrangements between us and each of MSGE, MSGS and AMC Networks is set forth in Note 17 to our financial statements included in our 2023 Form 10-K.
Agreements with MSGE
As a result of the MSGE Distribution, the Company initially retained approximately 33% of the outstanding common stock of MSGE (in the form of MSGE Class A common stock). Following certain dispositions of such MSGE Class A common stock, we no longer hold any of the outstanding common stock of MSGE. For purposes of governing the ongoing relationship between the Company and MSGE and to provide for our orderly transition of MSGE from a wholly-owned subsidiary of the Company to a separate, publicly traded company, we entered into several agreements with MSGE.
Distribution Agreement
On March 29, 2023, we entered into a Distribution Agreement (the “MSGE Distribution Agreement”) with MSGE as part of a series of transactions pursuant to which MSGE acquired the subsidiaries, business and other assets of ours that now constitute MSGE’s business.
Under the MSGE Distribution Agreement, we distributed approximately 67% of MSGE’s
common stock to our common stockholders. Pursuant to the MSGE Distribution Agreement, MSGE provides us with indemnities with respect to liabilities, damages, costs and expenses arising out of any of: (i) MSGE’s business (other than businesses of ours); (ii) certain identified claims or proceedings; (iii) any breach by MSGE of its obligations under the Distribution Agreement; (iv) any untrue statement or omission in the registration statement or in the information statement for the MSGE Distribution relating to MSGE and its subsidiaries (excluding the Company and our subsidiaries); and (v) indemnification obligations we may have to the NBA or NHL that result from acts or omissions of MSGE. We provide MSGE with indemnities with respect to liabilities, damages, costs and expenses arising out of any of (i) our businesses; (ii) any breach by us of our obligations under the Distribution Agreement; (iii) any untrue statement or omission in the registration statement or in the information statement for the MSGE Distribution other than any such statement or omission relating to MSGE and its subsidiaries (excluding the Company and our subsidiaries) and (iv) indemnification obligations we may have to the NBA or NHL that result from acts or omissions of the Company.
In the MSGE Distribution Agreement, MSGE released the Company from any claims MSGE might have arising out of:
| • | the management of the businesses and affairs of the MSGE business segment (excluding Sphere) on or prior to the MSGE Distribution; |
| • | the terms of the MSGE Distribution, our amendment to the amended and restated certificate of incorporation, our amended by-laws and the other agreements entered into in connection with the MSGE Distribution; and |
130
| • | any decisions that have been made, or actions taken, relating to the MSGE business segment (excluding Sphere) or the MSGE Distribution. |
Additionally, in the MSGE Distribution Agreement, the Company released MSGE from any claims the Company might have arising out of:
| • | the management of the businesses and affairs of the Company’s MSG Networks business segment, the formerly owned Tao Group Hospitality segment or related to the Sphere business on or prior to the MSGE Distribution; |
| • | the terms of the MSGE Distribution and the other agreements entered into in connection with the MSGE Distribution; and |
| • | any decisions that have been made, or actions taken, relating to the MSGE Distribution. |
The MSGE Distribution Agreement also provides for access to records and information, cooperation in defending litigation, as well as methods of resolution for certain disputes.
Transition Services Agreement
On March 29, 2023, we entered into a Transition Services Agreement with MSGE (as may be amended from time to time, the “MSGE TSA”), with a term of two years, under which, in exchange for the fees specified in such agreement, MSGE has agreed to provide certain corporate and other services to the Company, including with respect to such areas as information technology, accounts payable, payroll, tax, certain legal functions, human resources, insurance and risk management, government affairs, investor relations, corporate communications, benefit plan administration and reporting, and internal audit functions as well as certain marketing functions. The Company similarly agreed to provide certain transition services to MSGE. The Company and MSGE, as
parties providing services under the MSGE TSA, agreed to indemnify the party receiving services for losses incurred by such party that arise out of or are otherwise in connection with the provision by such party of services under the agreement, except to the extent that such losses result from the receiving party’s gross negligence, willful misconduct or breach of its obligations under the agreement. Similarly, each party receiving services under the agreement agreed to indemnify the party providing services for losses incurred by such party that arise out of or are otherwise in connection with the indemnifying party’s receipt of services under the agreement if such losses result from the receiving party’s gross negligence, willful misconduct or breach of its obligations under the agreement.
Tax Disaffiliation Agreement
On March 29, 2023, we entered into a Tax Disaffiliation Agreement (the “MSGE Tax Disaffiliation Agreement”) with MSGE that governs MSGE’s and our respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits and other tax matters. References in this summary description of the Tax Disaffiliation Agreement to the terms “tax” or “taxes” mean taxes as well as any interest, penalties, additions to tax or additional amounts in respect of such taxes.
MSGE and its eligible subsidiaries previously joined with the Company in the filing of certain consolidated, combined, and unitary returns for state, local, and other applicable tax purposes. However, for periods (or portions thereof) beginning after the MSGE Distribution, MSGE generally does not join with the Company or any of its subsidiaries in the filing of any federal, state, local or other applicable consolidated, combined or unitary tax returns.
Under the MSGE Tax Disaffiliation Agreement, with certain exceptions, the Company is generally responsible for all of MSGE’s U.S. federal, state, local and other applicable income
131
taxes for any taxable period or portion of such period ending on or before the MSGE Distribution Date. MSGE is generally responsible for all taxes that are attributable to it or one of its subsidiaries after the MSGE Distribution Date.
For any tax year, we are generally responsible for filing all separate company tax returns that relate to us or one of our subsidiaries and that do not also include MSGE or any of its subsidiaries. MSGE is generally responsible for filing all separate company tax returns that relate to MSGE or its subsidiaries (other than tax returns that will be filed by us), and for filing consolidated, combined or unitary returns that include (i) one or more of MSGE and its subsidiaries and (ii) one or more of us and our subsidiaries. Where possible, we have waived the right to carry back any losses, credits, or similar items to periods ending prior to or on the MSGE Distribution Date, however, if we cannot waive the right, we are entitled to receive the resulting refund or credit, net of any taxes incurred by MSGE with respect to the refund or credit.
Generally, we have the authority to conduct all tax proceedings, including tax audits, relating to taxes or any adjustment to taxes for which we are responsible for filing a return under the Tax MSGE Disaffiliation Agreement, and MSGE has the authority to conduct all tax proceedings, including tax audits, relating to taxes or any adjustment to taxes for which MSGE is responsible for filing a return under the MSGE Tax Disaffiliation Agreement. However, if one party acknowledges a liability to indemnify the other party for a tax to which such proceeding relates, and provides evidence to the other party of its ability to make such payment, the first-mentioned party has the authority to conduct such proceeding. The MSGE Tax Disaffiliation Agreement further provides for cooperation between MSGE and the Company with respect to tax matters, the exchange of information and the retention of records that may affect the tax liabilities of the parties to the agreement.
Finally, the MSGE Tax Disaffiliation Agreement requires that neither MSGE nor any of its
subsidiaries will take, or fail to take, any action where such action, or failure to act, would be inconsistent with or preclude the MSGE Distribution from qualifying as a tax-free transaction to the Company and to its stockholders under Section 355 of the Code, or would otherwise cause holders of SPHR stock that received MSGE stock in the MSGE Distribution to be taxed as a result of the MSGE Distribution and certain transactions undertaken in connection with the MSGE Distribution. Additionally, for the two-year period following the MSGE Distribution, MSGE is restricted from engaging in certain activities that may jeopardize the tax-free treatment of the MSGE Distribution to the Company and its stockholders, unless MSGE receives the Company’s consent or otherwise obtains a ruling from the IRS or a legal opinion, in either case reasonably satisfactory to the Company, that the activity will not alter the tax-free status of the MSGE Distribution to the Company and its stockholders. Such restricted activities include:
| • | entering into any transaction pursuant to which all or a significant portion of MSGE’s shares or assets would be acquired, whether by merger or otherwise, unless certain tests are met; |
| • | issuing equity securities, if any such issuances would, together with certain other transactions, constitute 50% or more of the voting power or value of MSGE’s capital stock; |
| • | certain repurchases of MSGE’s common shares; |
| • | ceasing to actively conduct MSGE’s business; |
| • | amendments to MSGE’s organizational documents (i) affecting the relative voting rights of MSGE’s stock or (ii) converting one class of MSGE’s stock to another; |
| • | liquidating or partially liquidating; and |
| • | taking any other action that prevents the MSGE Distribution and certain related transactions from being tax-free. |
132
Moreover, MSGE is required to indemnify the Company and its subsidiaries, directors and officers for any taxes, resulting from action or failure to act, if such action or failure to act precludes the MSGE Distribution from qualifying as a tax-free transaction (including taxes imposed as a result of a violation of the restrictions set forth above).
Employee Matters Agreement
On March 29, 2023, we entered into an employee matters agreement (the “MSGE Employee Matters Agreement”) with MSGE that allocates assets, liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs and certain other related matters in connection with the MSGE Distribution. Following the MSGE Distribution Date, we and MSGE generally each have responsibility for our respective employees and compensation plans.
Stockholder and Registration Rights Agreement
On March 29, 2023, the Company entered into a stockholder and registration rights agreement (the “MSGE Stockholder and Registration Rights Agreement”) with MSGE that provided the Company with “demand” and “piggyback” registration rights with respect to the MSGE Class A common stock that the Company retained following the MSGE Distribution. In addition, the Company agreed to vote the MSGE Class A common stock that it owned in proportion to the votes cast by the other holders of MSGE Class A common stock on such matter, to the extent such shares of MSGE Class A common stock were entitled to be voted on such matter. The shares of MSGE Class A common stock owned by the Company would have been present at all stockholder meetings for quorum purposes. The Company granted MSGE an irrevocable proxy to implement these voting agreements. As of September 22, 2023, the Company no longer held any shares of MSGE Class A common stock.
Delayed Draw Term Loan Facility
On the MSGE Distribution Date, the Company entered into a delayed draw term loan facility (the “DDTL Facility”) with MSG Entertainment Holdings, LLC (“MSGEH”), a wholly-owned subsidiary of MSGE. Pursuant to the DDTL Facility, MSGEH committed to lend up to $65 million in delayed draw term loans to the Company on an unsecured basis for a period of 18 months following the consummation of the MSGE Distribution, which was to expire on October 20, 2024.
The DDTL Facility was fully drawn on July 14, 2023 and on August 9, 2023, the Company repaid all amounts outstanding under the DDTL Facility (including accrued interest and commitment fees) using a portion of the shares of MSGE Class A common stock retained in connection with the MSGE Distribution.
Borrowings under the DDTL Facility bore interest at a variable rate equal to either, at the option of the Company, (a) a base rate plus an applicable margin, or (b) Term SOFR plus 0.10%, plus an applicable margin. The applicable margin was equal to the applicable margin under MSGE’s credit agreement dated June 30, 2022 among MSG National Properties, LLC, the guarantors party thereto, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent, as amended, plus 1.00% per annum. Subject to customary borrowing conditions, the DDTL Facility could have been drawn in up to six separate borrowings of $5 million or more. The DDTL Facility was prepayable at any time without penalty and amounts repaid on the DDTL Facility may not be reborrowed. The Company was only be permitted to use the proceeds of the DDTL Facility (i) for funding costs associated with the Sphere initiative and (ii) in connection with refinancing of the indebtedness under that certain amended and restated credit agreement, dated as of October 11, 2019, among MSGN Holdings, L.P., as borrower, the guarantors party thereto, the lenders party thereto and JPMorgan
133
Chase Bank, N.A., as administrative agent, as amended, modified, restated or supplemented from time to time.
The DDTL Facility contained certain representations and warranties and affirmative and negative covenants, including, among others, financial reporting, notices of material events, and limitations on asset dispositions, restricted payments, and affiliate transactions.
Agreements with MSGS
As a result of the 2020 Distribution, we entered into several agreements with MSGS. In connection with the MSGE Distribution, some of these agreements have been assigned to MSGE as further described below.
Distribution Agreement
On March 31, 2020, the Company entered into a Distribution Agreement with MSGS (the “2020 Distribution Agreement”) in connection with the 2020 Distribution.
Under the 2020 Distribution Agreement, the Company and MSGS provided each other with indemnities with respect to certain liabilities, and released each other from certain claims, in each case arising out of each company’s business and other matters related to the 2020 Distribution.
The 2020 Distribution Agreement also provides for access to records and information, cooperation in defending litigation, as well as methods of resolution for certain disputes.
Transition Services Agreement
On March 31, 2020 we entered into a Transition Services Agreement with MSGS (as may be amended from time to time, the “2020 TSA”), with a term of two years, under which, in exchange for the fees specified in such agreement, the Company agreed to provide certain corporate and other services to MSGS, including with respect to such areas as information technology, security, accounts payable, payroll, tax, certain legal functions, human resources, insurance and
risk management, government affairs, investor relations, corporate communications, benefit plan administration and reporting, and internal audit functions as well as certain marketing functions. MSGS similarly agreed to provide certain transition services to the Company, including certain legal functions, communications, ticket sales and certain operational and marketing services. For the year ended June 30, 2023, the Company recorded approximately $31.3 million of cost reimbursement from MSGS pursuant to the 2020 TSA (inclusive of certain amounts received for the provision of executive support discussed below under “— Other Arrangements and Agreements with MSGE, MSGS and/or AMC Networks”).
The Company and MSGS, as parties providing services under the 2020 TSA, agreed to indemnify the party receiving services for losses incurred by such party that arise out of or are otherwise in connection with the provision by such party of services under the agreement, except to the extent that such losses result from the receiving party’s gross negligence, willful misconduct or breach of its obligations under the agreement. Similarly, each party receiving services under the agreement agreed to indemnify the party providing services for losses incurred by such party that arise out of or are otherwise in connection with the indemnifying party’s receipt of services under the agreement if such losses result from the receiving party’s gross negligence, willful misconduct or breach of its obligations under the agreement.
In connection with the MSGE Distribution, this agreement was assigned to MSGE.
Tax Disaffiliation Agreement
On March 31, 2020, the Company entered into a Tax Disaffiliation Agreement with MSGS (the “2020 Tax Disaffiliation Agreement”) that governs the Company’s and MSGS’ respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits and other tax matters.
134
The 2020 Tax Disaffiliation Agreement requires that neither us nor any of our subsidiaries take, or fail to take, any action where such action, or failure to act, would be inconsistent with or preclude the 2020 Distribution from qualifying as a tax-free transaction to MSGS and to its stockholders under Section 355 of the Code, or would otherwise cause holders of the MSGS’ stock receiving SPHR stock in the 2020 Distribution to be taxed as a result of the 2020 Distribution and certain transactions undertaken in connection with the 2020 Distribution.
Moreover, each party must indemnify the other party and its subsidiaries, directors and officers for any taxes, resulting from action or failure to act, if such action or failure to act precludes the 2020 Distribution from qualifying as a tax-free transaction (including taxes imposed as a result of a violation of the restrictions set forth above).
Employee Matters Agreement
On March 31, 2020, we entered into an employee matters agreement (the “2020 Employee Matters Agreement”) with MSGS that allocates assets, liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs and certain other related matters in connection with the 2020 Distribution. Following the 2020 Distribution Date, we and MSGS generally each have responsibility for our respective employees and compensation plans.
Arena License Agreements
On April 15, 2020, one of our subsidiaries (which is now a subsidiary of MSGE following the MSGE Distribution) entered into Arena License Agreements with subsidiaries of MSGS that require the Knicks and the Rangers to play their home games at The Garden. These agreements were assigned to MSGE in connection with the MSGE Distribution. Under the Arena License Agreements, which each have a term of 35 years, the Knicks and the Rangers pay an annual license fee in connection with their respective use of The Garden. For each, the Arena License Agreement provides that the license fee for the first full
contract year ended June 30, 2021 was to be approximately $22.5 million for the Knicks and approximately $16.7 million for the Rangers, and then for each subsequent year, the license fees will be 103% of the license fees for the immediately preceding contract year. The teams are not required to pay the license fee during a period in which The Garden is unavailable for use due to a force majeure event (including when events at The Garden were suspended by government mandate as a result of the COVID-19 pandemic). If, due to a force majeure event, capacity at The Garden is limited to 1,000 or fewer attendees, the teams may schedule and play home games at The Garden with applicable rent payable to the Company (or MSGE following the MSGE Distribution) under the Arena License Agreements reduced by 80%. If, due to a force majeure event, capacity at The Garden is limited to less than full capacity but over 1,000 attendees, the parties will agree on an appropriate reduction to the rent payments.
For the year ended June 30, 2023, the Company recognized total license fee revenue under the Arena License Agreements of approximately $68.1 million from MSGS.
The Arena License Agreements set forth the terms of the teams’ use of The Garden, including arrangements for the provision of amenities, game day and other services. While the Company (prior to the MSGE Distribution) and MSGE (following the MSGE Distribution) provide game day services for the Knicks and the Rangers, most of the associated costs are borne by the teams. Pursuant to the Arena License Agreements, the Company (prior to the MSGE Distribution) and MSGE (following the MSGE Distribution), at their sole cost and expense, are responsible for the maintenance, equipment and other functions needed to operate, repair and maintain The Garden.
Pursuant to the Arena License Agreements, the Company operated and managed food and beverage services during all Knicks and Rangers events, for which the Company shared 50% of net profits with the applicable team. For the year
135
ended June 30, 2023, the Company’s revenue sharing expense for food and beverage services was approximately $12.4 million for MSGS.
Pursuant to the Arena License Agreements, the Company also had the right and obligation to operate and manage team merchandise sales at The Garden. The Company retained a 30% portion of revenues from team merchandise sold in The Garden. The Company maintained the exclusive right to control the operation and sale of non-team merchandise. For the year ended June 30, 2023, the Company recorded revenue of approximately $10.1 million from team merchandise sales at The Garden.
Pursuant to the Arena License Agreements, the Company had the exclusive right to license and manage suites and club memberships at The Garden, including for use during team games, subject to certain exceptions, and shares a portion of the revenues from such licenses and club memberships with MSGS. MSGS is entitled to 67.5% of revenues (net of any contracted catering credits), for suites or club memberships sold for all or substantially all events at The Garden, including team home games. MSGS receives all revenues from the sale of suites licensed for team-only packages or individual team games, subject to a 20-25% commission to the Company. For any customizable suite package, revenues were divided between the Company and MSGS on a proportional basis, with MSGS receiving all revenues attributable to the team events included in the package, less a 20-25% commission to the Company. For the year ended June 30, 2023, the Company recorded approximately $93.2 million of revenue sharing expense from licensing suite and club memberships.
Pursuant to the Arena License Agreements, the Company retained 52.5% of revenue from the sale of certain arena shared sponsorship assets, such as fixed signage or entitlements at The Garden. The Company was not entitled to any revenue from certain team sponsorship assets, such as courtside or rinkside advertising and other team or event-
specific sponsorship assets. The Company was also entitled to 67.5% of the revenue from the sale of any arena naming rights. For the year ended June 30, 2023, the Company recorded approximately $6.3 million of revenue sharing expense from arena shared sponsorship assets.
Pursuant to the Arena License Agreements, the Company did not have the right to sell or retain revenues from ticket sales or resales to team events. The Arena License Agreements set forth the Company’s responsibilities with respect to box office services, ticket printing and the teams’ respective responsibilities to comply with the Company’s ticket agent agreements.
The Arena License Agreements provided that the teams were responsible for 100% of any real property or similar taxes applicable to The Garden. If the tax exemption were repealed or the teams were otherwise subject to property tax through no fault of the teams, the revenue opportunity that the Company would have generated from team events would have been reduced on a percentage basis as set forth in the Arena License Agreements.
The Arena License Agreements provided for the Company to prepare an annual budget, in consultation with the teams, subject to certain team consent rights.
NBA consent is required to amend the Knicks’ Arena License Agreement.
Team Sponsorship Allocation Agreement
Prior to the MSGE Distribution, the Company and MSGS each routinely entered into sponsorship agreements with third-parties that included the assets of both companies with either the Company or MSGS serving as the contracting party with the third-party sponsor. On April 15, 2020, the Company entered into a team sponsorship allocation agreement with MSGS pursuant to which the Company and MSGS agreed to distribute payments received under the third-party sponsorship agreements to each other generally in
136
accordance with the relative value of the assets provided by each company under the respective third-party agreement. The Company and MSGS also agreed to use commercially reasonable efforts to continue to receive the payments by the third-party sponsors, and agreed that neither party would take any action that would cause the other one to be in breach under the third-party agreements (to the extent they had knowledge or reason to have knowledge of such agreement), as well as to consult with each other in the event of a breach by a third-party sponsor.
In connection with the MSGE Distribution, the team sponsorship allocation agreement was assigned to MSGE.
Group Ticket Sales and Service Representation Agreement
On April 15, 2020, the Company entered into a group ticket sales and service representation agreement with MSGS, with an initial term lasting until June 30, 2024 and automatically renewing annually thereafter, pursuant to which MSGS was the Company’s sales and service representative to sell group tickets and ticket packages. The Company paid a 7.5% commission on gross revenue derived from group ticket sales placed on its behalf by MSGS and reimbursed MSGS for a share of certain of its costs, which was determined by mutual good faith agreement of the parties and revisited each month to cover costs such as sales and service staff and overhead allocated to commission sales. For the year ended June 30, 2023, the Company recorded expenses, within operating expenses, of approximately $2.8 million related to the group ticket sales and service representation agreement.
In connection with the MSGE Distribution, this agreement was assigned to MSGE.
Media Rights Agreements
The media rights agreements between MSGN and MSGS covering the Knicks and the Rangers provide MSGN exclusive media rights to team games in their local markets. Each of the media rights agreements became effective July 2015
with a stated term of 20 years, with a stated annual rights fee in the fiscal year ended June 30, 2023 of $131.6 million for the Knicks and $39.5 million for the Rangers. The rights fee in each media rights agreement increases annually. For the fiscal year ending June 30, 2024, the stated rights fee increased to $136.9 million for the Knicks and $41.1 million for the Rangers. The rights fee is subject to adjustments in certain circumstances, including if MSGS does not make available a minimum number of games in any year. MSGN has certain rights to match third-party offers received by the Knicks or the Rangers, as the case may be, for the media rights following the term of the agreement.
Other Arrangements and Agreements with MSGE, MSGS and/or AMC Networks
The Company shares certain executive support costs, including office space, executive assistants, security and transportation costs, for the Company’s Executive Chairman and Chief Executive Officer with MSGE and MSGS, for Gregg G. Seibert, the Company’s Vice Chairman, with MSGE, MSGS and AMC Networks, and for David Granville-Smith, the Company’s Executive Vice President, with MSGS and AMC Networks. The Company’s portion of such executive support expenses for the fiscal year ended June 30, 2023 was approximately $1 million.
The Company has also entered into a number of commercial and other arrangements and agreements with MSGS and its subsidiaries and AMC Networks and its subsidiaries, none of which are material to the Company. For the fiscal year ended June 30, 2023, these included, but were not limited to, arrangements for the use of equipment, lease and use of offices and other premises, provision of transport services and vendor services, access to technology, certain licensing agreements, sponsorship agreements, certain trademark licensing arrangements and lease of suites and sponsorship assets of the Company. Prior to the MSGE Distribution, the Company also subleased approximately 47,000 square feet of office space at Two Pennsylvania Plaza in New York City to MSGS.
137
In addition, the Company and each of MSGE, MSGS and AMC Networks are party to aircraft
arrangements described below. See “— Aircraft Arrangements.”
AIRCRAFT ARRANGEMENTS
Current Aircraft Arrangements
Effective as of the MSGE Distribution, the Company has various arrangements with a subsidiary of MSGE, pursuant to which the Company has the right to lease on a “time-sharing” basis certain aircraft owned or leased by MSGE. The Company is required to pay MSGE specified expenses for each flight it elects to utilize, but not exceeding the maximum amount payable under Federal Aviation Administration (“FAA”) rules. The Company made payments to MSGE of $469,152 during the fiscal year ended June 30, 2023. In calculating the amounts payable under these agreements, the parties allocate in good faith the treatment of any flight that is for the benefit of both companies.
The Company has agreed to an allocation of the costs of (i) personal helicopter use (including commutation) with MSGE, MSGS and AMC Networks and (ii) personal aircraft use with MSGE and MSGS, in each case, for certain executives. The Company’s portion of such expenses during the fiscal year ended June 30, 2023 was $402,496. See “Compensation Discussion Analysis — Perquisites — Aircraft Arrangements.”
Pre-MSGE Distribution Aircraft Agreements
Prior to the MSGE Distribution, the Company was a party to the agreements and arrangements described below. Following the MSGE Distribution, MSGE owns or leases the aircraft previously owned or leased by the Company and the Company is no longer party to any of the agreements or arrangements described below.
A subsidiary of the Company was a party to various arrangements with subsidiaries of each of MSGS and AMC Networks, pursuant to which they each had the right to lease on a “time-sharing” basis certain aircraft to which the
Company had access or were otherwise required to reimburse the Company for use of the aircraft in connection with use by MSGS executives. When leasing such aircraft under this arrangement, the lessee is required to pay us specified expenses for each flight it elects to utilize, but not exceeding the maximum amount payable under Federal Aviation Administration (“FAA”) rules. MSGS paid the Company $440,057 for use of such aircraft during the fiscal year ended June 30, 2023. AMC Networks paid the Company $47,252 for use of such aircraft during the fiscal year ended June 30, 2023. In calculating the amounts payable under the arrangements, the parties allocated, in good faith, the treatment of any flight that is for the benefit of both companies.
A subsidiary of the Company was a party to agreements with Charles F. Dolan, a director of the Company and the father of James L. Dolan, pursuant to which Mr. Charles F. Dolan had the right to lease on a “time-sharing” basis certain Company aircraft. Mr. Dolan was required to pay us specified expenses for each flight he elected to utilize, but not exceeding the maximum amount payable under FAA rules. Pursuant to this arrangement, Mr. Dolan paid the Company $244,193 for use of the Company’s aircraft during the fiscal year ended June 30, 2023. In addition, a subsidiary of the Company was party to an agreement with Sterling 2K, LLC (“S2K”), a company controlled by Deborah Dolan-Sweeney, the daughter of Charles F. Dolan and the sister of James L. Dolan, pursuant to which the Company had the right to lease on a non-exclusive basis S2K’s Gulfstream Aerospace GV-SP (G550) aircraft (the “DFO G550”). The Company was required to pay S2K rent at an hourly rate and specified expenses (which mirror the types of expenses we charge S2K for use of our aircraft) for each flight we elected to utilize. The agreement included a “true-up” mechanism such
138
that, to the extent the Company’s annual usage of the DFO G550 exceeded Mr. Charles F. Dolan’s annual usage of the Company’s aircraft, the Company would pay an additional hourly rate with respect to excess hours intended to cover additional costs. Pursuant to this arrangement, the Company paid S2K $297,485 for use of the DFO G550 during the fiscal year ended June 30, 2023. In addition, the agreement provided for equitable adjustments in the event that discrepancies in hours of usage or other factors cause the arrangement to be economically unfair to either party.
A subsidiary of the Company and Brighid Air, LLC (“Brighid”), a company controlled by Patrick F. Dolan, were parties to agreements, pursuant to which the Company had a right to lease on a non-exclusive basis (the “dry-lease”) and on a “time-sharing basis” (the “time-share”) Brighid’s Bombardier BD100-1A10 Challenger 350 aircraft (the “Challenger”). The Company was required to pay Brighid specified expenses of each flight it elected to utilize, but not exceeding the maximum amount payable under FAA rules. The Company paid Brighid $50,697 under the dry-lease agreement. No payments were made under the time-share because the Company did not use the Challenger under this agreement during the fiscal year ended June 30, 2023. In connection with the agreement for the Company’s use of the Challenger, a subsidiary of the Company and Dolan Family Office, LLC (“DFO”), an entity controlled by Charles F. Dolan, were parties to a Flight Crew Services Agreement, pursuant to which the Company
could utilize pilots employed by DFO for purposes of flying the Challenger when the Company was leasing the Challenger under its agreement with Brighid. The Company was required to pay DFO an hourly rate for the use of such pilots, as well as reimburse certain expenses of the pilots. Pursuant to this arrangement, the Company paid DFO $14,623 for use of DFO pilots during the fiscal year ended June 30, 2023.
A subsidiary of the Company was party to various Aircraft Support Services Agreements (as such agreements may be amended from time to time, the “Aircraft Services Agreements”) pursuant to which the Company provided aircraft support services to (i) Charles F. Dolan and certain of his other children (specifically, James L. Dolan, Deborah Dolan-Sweeney, Patrick F. Dolan, Marianne Dolan Weber, a director of the Company, and Kathleen Dolan) and (ii) an entity controlled by Patrick Dolan, the son of Charles F. Dolan and brother of James L. Dolan. Pursuant to the Services Agreements, the Company provided certain aircraft support services in exchange for a monthly agency fee. These services included providing pilots, crew and maintenance personnel, aircraft maintenance, FAA compliance, flight scheduling and dispatch services, negotiation/management of third-party contracts and other services necessary and appropriate for the support of aircraft. Pursuant to the Aircraft Services Agreements, each of the parties noted above paid the Company (i) $167,331 and (ii) $146,232, respectively, during the fiscal year ended June 30, 2023.
DOLAN FAMILY ARRANGEMENTS
Prior to the MSGE Distribution, the Company charged the Knickerbocker Group LLC, an entity owned by James L. Dolan, the Executive Chairman and Chief Executive Officer, as well as a director, of the Company, for office space equal to the allocated cost of such space and certain technology services provided in connection with the use of such space. The amount paid by the Knickerbocker Group LLC during the fiscal year
ended June 30, 2023 was $32,200. In addition, from time to time, certain other services of the Company may be made available to members of the Dolan family and to entities owned by them. It is the policy of the Company to receive reimbursement for the costs of these services. See “Stock Ownership Table” for a description of registration rights agreements among the Dolan family interests and the Company.
139
Kristin Dolan, a director of the Company and the spouse of James L. Dolan, the Executive Chairman and Chief Executive Officer of the Company, is the founder and was the Chief Executive Officer of 605, LLC (“605”), an audience measurement and data analytics company in the media and entertainment industries, until February 2023. James L. Dolan and Kristin Dolan owned 605 during the fiscal year ended June 30, 2023. The Company paid 605 $48,994 during the fiscal year ended June 30, 2023 for data analytics services approved in accordance with the Company’s Related Party Transaction Approval Policy. In addition, the Company’s Audit Committee approved the entry into one or more agreements with 605 to provide certain data analytics services to the Company for an aggregate amount of up to $1 million. In August 2022 a subsidiary of the Company entered
into a three-year agreement with 605, valued at approximately $750,000, covering several customer analysis projects per year in connection with events held at our venues, which was assigned to MSGE in the MSGE Distribution. The Company expects to engage 605 to provide additional data analytics services in the future.
Since March 2016, Ryan T. Dolan, a director and the son of James L. Dolan, the Executive Chairman and Chief Executive Officer, as well as a director, of the Company, has been employed by Sphere Entertainment Group, LLC in a non-executive officer position. During the fiscal year ended June 30, 2023, Mr. Ryan T. Dolan earned $467,195.
In addition, the Company and certain Dolan family entities are party to aircraft arrangements described above. See “— Aircraft Arrangements.”
OTHER
Vincent Tese has been a director of the Company since the 2020 Distribution Date and a director of MSGS since 2015. Charles A. Tese, the brother of Vincent Tese, was employed by MSG Entertainment Group, LLC (“MSGEG”), a subsidiary of the Company, in a non-executive officer position from September 2015 until August 2020. Mr. Charles A. Tese was re-hired by MSGEG in December 2021 and his
employment was transferred to MSGE in connection with the MSGE Distribution. During the fiscal year ended June 30, 2023, Mr. Charles A. Tese earned $64,367. In addition, Charles A. Tese was employed by a subsidiary of MSGN in a non-executive officer position from 2005 until September 2015 and Vincent Tese served as a director of MSGN from 2010 until September 2015.
CERTAIN RELATIONSHIPS AND POTENTIAL CONFLICTS OF INTEREST
Our Executive Chairman and Chief Executive Officer, James L. Dolan, also serves as the Executive Chairman and Chief Executive Officer of MSGE, the Executive Chairman of MSGS and as Non-Executive Chairman of AMC Networks. Furthermore, nine of our director nominees (including James L. Dolan) also serve as directors of MSGE, ten of our director nominees (including James L. Dolan) also serve as directors of MSGS, and seven of our director nominees (including James L. Dolan) also serve as directors of AMC Networks, and Charles F. Dolan serves as Chairman Emeritus of AMC Networks concurrently with his service on our Board. In
addition, Gregg G. Seibert, the Company’s Vice Chairman, also serves as Vice Chairman of MSGE, MSGS and AMC Networks, David Granville-Smith, the Company’s Executive Vice President, also serves as Executive Vice President of MSGS and AMC Networks, and Mark C. Cresitello, the Company’s secretary, also serves as Senior Vice President, Associate General Counsel and Secretary of MSGS. Therefore, these individuals may have or have had actual or apparent conflicts of interest with respect to matters involving or affecting the Company, on the one hand, and MSGE, MSGS or AMC Networks, on the other hand. For example, there
140
is the potential for a conflict of interest when we and MSGE, MSGS and/or AMC Networks look at certain acquisitions and other corporate opportunities that may be suitable for more than one of the companies. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that exist between MSGE, MSGS and/or AMC Networks and us. In addition, certain of our officers and directors own MSGE, MSGS and/or AMC Networks stock, restricted stock units, performance stock units, stock options and/or performance stock options. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for the Company, MSGE, MSGS, or AMC Networks. See “Related Party Transaction Approval Policy” below for a discussion of certain procedures we instituted to help ameliorate any such potential conflicts that may arise.
Our Certificate of Incorporation acknowledges that the Company may have overlapping directors and officers with MSGS, MSGN and AMC Networks and their respective subsidiaries and that the Company may engage in material business transactions with such entities. In our Certificate of Incorporation, the Company has renounced its rights to certain business opportunities and provided that in certain circumstances our directors and officers will not have liability to the Company or its stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to MSGS, MSGN or AMC Networks or any of their respective subsidiaries instead of the Company, or does not refer or communicate information regarding such corporate opportunity to the Company. The Certificate of Incorporation
also expressly validates certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Company and MSGS, MSGN and AMC Networks and/or any of their respective subsidiaries and provides that, to the fullest extent permitted by law, the actions of the overlapping directors and officers in connection therewith are not breaches of fiduciary duties owed to the Company or its stockholders. In connection with the Networks Merger, our Board adopted an Overlap policy to broaden the specified Company business opportunities to also cover business opportunities that had been associated with the MSGN business. In connection with the MSGE Distribution, we further updated the policy to extend similar provisions to overlapping directors and officers with MSGE and to update the specified Company business opportunities to account for the change in business following the MSGE Distribution.
Prior to the 2020 Distribution, the members of the Dolan Family Group entered into an agreement with the Company in which they agreed that during the 12-month period beginning on the 2020 Distribution Date, the Dolan Family Group must obtain the prior approval of a majority of the Company’s independent directors prior to acquiring common stock of the Company through a tender offer that results in members of the Dolan Family Group owning more than 50% of the total number of outstanding shares of common stock of the Company. For purposes of this agreement, the term “independent directors” means the directors of the Company who have been determined by our Board to be independent directors for purposes of the NYSE corporate governance standards.
141
RELATED PARTY TRANSACTION APPROVAL POLICY
The Company has adopted a written policy whereby an Independent Committee of our Board reviews and approves or takes such other action as it may deem appropriate with respect to transactions involving the Company and its subsidiaries, on the one hand, and in which any director, executive officer, greater than 5% stockholder of the Company or any other “related person” (as defined in Item 404 of Regulation S-K adopted by the SEC) has or will have a direct or indirect material interest. This approval requirement covers any transaction that meets the related party disclosure requirements of the SEC as set forth in Item 404, which currently apply to transactions (or any series of similar transactions) in which the amount involved exceeds the dollar threshold set forth in Item 404 (currently $120,000). To simplify the administration of the approval process under this policy, the Independent Committee may, where appropriate, establish guidelines for certain of those transactions. The policy does not cover decisions on compensation or benefits or the hiring or retention of any person. The hiring or retention of executive officers is determined by our full Board. Compensation of executive officers is subject to the approval of our Compensation Committee. This policy also does not cover any pro rata distributions to all Company stockholders, including a pro rata distribution of our Class A Common Stock to holders of our Class A Common Stock and our Class B Common Stock to holders of our Class B Common Stock. No director on the Independent Committee will participate in the consideration of a related party transaction with that director or any related person of that director.
In addition, our Board has adopted a special approval policy for transactions with MSGE, MSGS and AMC Networks and their respective subsidiaries whether or not such transactions qualify as “related party” transactions described above. Under this policy, the Independent Committee oversees approval of all transactions
and arrangements between the Company and its subsidiaries, on the one hand, and each of MSGE and its subsidiaries, MSGS and its subsidiaries and/or AMC Networks and its subsidiaries, on the other hand, in which the amount exceeds a $1,000,000 threshold. In addition, an Independent Committee receives a quarterly update from the Company’s Internal Audit Department of all related party transactions, including transactions and arrangements between the Company and its subsidiaries on the one hand, and each of MSGE and its subsidiaries, MSGS and its subsidiaries and AMC Networks and its subsidiaries, on the other hand, regardless of value. To simplify the administration of the approval process under this policy, an Independent Committee may, where appropriate, establish guidelines for certain of these transactions. The approval requirement does not apply to the implementation and administration of the intercompany arrangements under the policy but does cover any amendments, modifications, terminations or extensions involving amounts in excess of $1,000,000, as well as the handling and resolution of any disputes involving amounts in excess of $1,000,000. Our executive officers and directors who are also senior executives or directors of MSGE, MSGS and/or AMC Networks may participate in the negotiation, execution, amendment, modification, or termination of intercompany arrangements subject to the policy, as well as in any resolution of disputes thereunder, on behalf of any or all of the Company, MSGE, MSGS and/or AMC Networks, as applicable, in each case under the direction or ultimate approval of an Independent Committee or the comparable committee of the board of directors of the Company, MSGE, MSGS and/or AMC Networks, as applicable.
Our related party transaction approval policy cannot be amended or terminated without the prior approval of a majority of the Company’s independent directors and by a majority of the directors elected by our Class B Common
142
Stockholders. For purposes of this policy, “independent directors” means those directors who have been determined by our Board to be
independent directors for purposes of the NYSE corporate governance standards.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires our directors, certain executive officers, and persons who beneficially own more than 10% of the outstanding Class A Common Stock to file reports of ownership and changes in ownership with the SEC. The SEC regulations require the Company to identify anyone who failed to file a required report or filed a late report during the fiscal year ended June 30, 2023. With respect to Mr. Isiah Thomas’ holdings, 200 shares of
Company Class A common stock that were issued in connection with the 2020 Distribution in respect of existing MSGS holdings at the time were inadvertently not reported, and were thus not recorded on his initial Form 3. An amended Form 3 was filed on March 10, 2023 to correct the reported holdings as of April 17, 2020. Based solely on a review of reports filed under Section 16(a) of the Exchange Act, the Company is not aware of other failures.
143
STOCK OWNERSHIP TABLE
The table sets forth, to the best of the Company’s knowledge and belief, certain information as of October 16, 2023 (the “Reference Date”) with respect to the beneficial ownership of the Company’s Class A Common Stock and Class B Common Stock by (i) each person that
beneficially owns more than 5% of any class of the outstanding shares of the Company based on the Company’s review of SEC filings, (ii) each director or director nominee of the Company and (iii) each NEO of the Company.
| Name and Address |
Title of Stock Class(1) |
Beneficial Ownership |
Percent of Class |
Combined Voting Power of All Classes of Stock Beneficially Owned(1)(2) | ||||
| Dolan Family Group (3) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
1,627,051 6,866,754 |
5.6% 100% |
72.1% | ||||
| Charles F. Dolan (3)(4)(6)(15)(17)(23) – (27) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
281,185 3,863,285 |
1.0% 56.3% |
40.2% | ||||
| James L. Dolan (3)(5)(6)(7)(8)(11)(14)(18) P.O. Box 420 Oyster Bay, NY 11771 |
Class A Common Stock Class B Common Stock |
1,073,972 1,140,792 |
3.7% 16.6% |
12.8% | ||||
| Kristin A. Dolan (3)(5)(6)(7)(8)(11)(14)(18) P.O. Box 420 Oyster Bay, NY 11771 |
Class A Common Stock Class B Common Stock |
1,073,972 1,140,792 |
3.7% 16.6% |
12.8% | ||||
| Thomas C. Dolan (3)(6)(9)(14)(16)(19) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
49,511 468,423 |
* 6.8% |
4.9% | ||||
| Brian G. Sweeney (3)(6)(10)(13)(14)(15)(21) 20 Audrey Avenue, 1st Floor Oyster Bay, NY 11771 |
Class A Common Stock Class B Common Stock |
110,754 806,076 |
* 11.7% |
8.4% | ||||
| Paul J. Dolan (3)(6)(11)(18)(22) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
115,136 1,380,548 |
* 20.1% |
14.4% | ||||
| Marianne Dolan Weber (3)(6)(12)(14)(16)(20) MLC Ventures LLC P.O. Box 1014 Yorktown Heights, NY 10598 |
Class A Common Stock Class B Common Stock |
85,114 450,152 |
* 6.6% |
4.7% | ||||
| Charles P. Dolan (6) | Class A Common Stock Class B Common Stock |
11,830 — |
* — |
* | ||||
| Ryan T. Dolan (5) | Class A Common Stock Class B Common Stock |
1,661 — |
* — |
* | ||||
| Quentin F. Dolan (6) | Class A Common Stock Class B Common Stock |
5,405 — |
* — |
* | ||||
| Joseph J. Lhota (6) | Class A Common Stock Class B Common Stock |
1,327 — |
* — |
* | ||||
| Joel M. Litvin (6) | Class A Common Stock Class B Common Stock |
— — |
— — |
— |
144
| Name and Address |
Title of Stock Class(1) |
Beneficial Ownership |
Percent of Class |
Combined Voting Power of All Classes of Stock Beneficially Owned(1)(2) | ||||
| John L. Sykes (6) | Class A Common Stock Class B Common Stock |
— — |
— — |
— | ||||
| Vincent Tese (6) | Class A Common Stock Class B Common Stock |
6,335 — |
* — |
* | ||||
| Isiah L. Thomas III (6) | Class A Common Stock Class B Common Stock |
— — |
— — |
— | ||||
| Carl E. Vogel (6) | Class A Common Stock Class B Common Stock |
— — |
— — |
— | ||||
| Andrea Greenberg (5) | Class A Common Stock Class B Common Stock |
88,781 — |
* — |
* | ||||
| David Granville-Smith (5) | Class A Common Stock Class B Common Stock |
— — |
— — |
— | ||||
| Gautam Ranji (5) | Class A Common Stock Class B Common Stock |
867 — |
* — |
* | ||||
| Gregory Brunner (5) | Class A Common Stock Class B Common Stock |
— — |
— — |
— | ||||
| David F. Byrnes (5) | Class A Common Stock Class B Common Stock |
4,704 — |
* — |
* | ||||
| Jamal H. Haughton (5) | Class A Common Stock Class B Common Stock |
4,368 — |
* — |
* | ||||
| Philip G. D’Ambrosio (5) | Class A Common Stock Class B Common Stock |
17,202 — |
* — |
* | ||||
| All current executive officers and directors as a group (4) – (12) |
Class A Common Stock Class B Common Stock |
1,737,229 6,851,436 |
6.0% 99.8% |
72.0% | ||||
| Deborah A. Dolan-Sweeney (3)(6)(10)(13)(14)(15)(21) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
110,754 806,076 |
* 11.7% |
8.4% | ||||
| Kathleen M. Dolan (3)(11)(14)(18) – (22) MLC Ventures LLC P.O. Box 1014 Yorktown Heights, NY 10598 |
Class A Common Stock Class B Common Stock |
189,694 2,778,833 |
* 40.5% |
28.9% | ||||
| Mary S. Dolan (3)(15)(21)(23) – (27) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
71,948 3,985,993 |
* 58.0% |
41.2% | ||||
| Matthew J. Dolan (3)(16)(19)(20) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
46,357 918,575 |
* 13.4% |
9.5% | ||||
| Corby Dolan Leinauer (3)(17)(23) – (27) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
41,392 3,521,601 |
* 51.3% |
36.4% | ||||
| Charles F. Dolan Children Trust FBO James L. Dolan (3)(7)(8)(11)(14)(18) P.O. Box 420 Oyster Bay, NY 11771 |
Class A Common Stock Class B Common Stock |
44,342 916,156 |
* 13.3% |
9.5% |
145
| Name and Address |
Title of Stock Class(1) |
Beneficial Ownership |
Percent of Class |
Combined Voting Power of All Classes of Stock Beneficially Owned(1)(2) | ||||
| Charles F. Dolan Children Trust FBO Thomas C. Dolan (3)(9)(14)(16)(19) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
20,156 468,423 |
* 6.8% |
4.9% | ||||
| Charles F. Dolan Children Trust FBO Marianne Dolan Weber (3)(12)(14)(16)(20) MLC Ventures LLC P.O. Box 1014 Yorktown Heights, NY 10598 |
Class A Common Stock Class B Common Stock |
24,187 450,152 |
* 6.6% |
4.7% | ||||
| Charles F. Dolan Children Trust FBO Deborah Dolan-Sweeney (3)(10)(13)(14)(15)(21) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
24,187 464,392 |
* 6.8% |
4.8% | ||||
| Charles F. Dolan Children Trust FBO Kathleen M. Dolan (3)(11)(14)(22) MLC Ventures LLC P.O. Box 1014 Yorktown Heights, NY 10598 |
Class A Common Stock Class B Common Stock |
24,187 464,392 |
* 6.8% |
4.8% | ||||
| Charles F. Dolan 2009 Family Trust FBO James L. Dolan (3)(4)(15)(17)(23) P.O. Box 420 Oyster Bay, NY 11771 |
Class A Common Stock Class B Common Stock |
6,718 1,046,565 |
* 15.2% |
10.8% | ||||
| Charles F. Dolan 2009 Family Trust FBO Thomas C. Dolan (3)(4)(15)(17)(24) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
6,718 652,490 |
* 9.5% |
6.7% | ||||
| Charles F. Dolan 2009 Family Trust FBO Marianne E. Dolan Weber (3)(4)(15)(17)(25) MLC Ventures LLC P.O. Box 1014 Yorktown Heights, NY 10598 |
Class A Common Stock Class B Common Stock |
6,718 646,426 |
* 9.4% |
6.7% | ||||
| Charles F. Dolan 2009 Family Trust FBO Deborah A. Dolan-Sweeney (3)(4)(15)(17)(26) 340 Crossways Park Drive Woodbury, NY 11797 |
Class A Common Stock Class B Common Stock |
6,718 561,530 |
* 8.2% |
5.8% | ||||
| Charles F. Dolan 2009 Family Trust FBO Kathleen M. Dolan (3)(4)(15)(17)(27) MLC Ventures LLC P.O. Box 1014 Yorktown Heights, NY 10598 |
Class A Common Stock Class B Common Stock |
6,718 614,590 |
* 9.0% |
6.3% | ||||
| Ariel Investments, LLC (28) 200 E. Randolph Street, Suite 2900 Chicago, IL 60601 |
Class A Common Stock Class B Common Stock |
5,073,532 — |
18.0% — |
5.2% | ||||
| The Vanguard Group (29) 100 Vanguard Blvd. Malvern, PA 19355 |
Class A Common Stock Class B Common Stock |
2,514,028 — |
8.9% — |
2.6% |
146
| Name and Address |
Title of Stock Class(1) |
Beneficial Ownership |
Percent of Class |
Combined Voting Power of All Classes of Stock Beneficially Owned(1)(2) | ||||
| T. Rowe Price Associates, Inc. (30) 100 E. Pratt Street Baltimore, MD 21202 |
Class A Common Stock Class B Common Stock |
1,926,339 — |
6.8% — |
2.0% | ||||
| BlackRock, Inc. (31) 55 East 52nd Street New York, NY 10055 |
Class A Common Stock Class B Common Stock |
1,763,630 — |
6.2% — |
1.8% | ||||
| GAMCO Investors, Inc. (32) One Corporate Center Rye, NY 10580 |
Class A Common Stock Class B Common Stock |
1,546,326 — |
5.5% — |
1.6% |
| * | Less than 1%. |
| (1) | Beneficial ownership of a security consists of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose or direct the disposition) with respect to the security through any contract, arrangement, understanding and relationship or otherwise. Unless indicated, beneficial ownership disclosed consists of sole voting and investment power. Beneficial ownership of Class A Common Stock is exclusive of the shares of Class A Common Stock that are issuable upon conversion of shares of Class B Common Stock. Share ownership reflects rounding for share-based compensation in the aggregate, not by specific tranche or award. |
| (2) | Shares of Class B Common Stock are convertible into shares of Class A Common Stock at the option of the holder on a share for share basis. The holder of one share of Class A Common Stock has one vote per share at a meeting of our stockholders and the holder of one share of Class B Common Stock has ten votes per share at a meeting of our stockholders, except in the separate elections of directors. Holders of Class A Common Stock have the right to elect 25% of our Board rounded up to the nearest whole director and the holders of Class B Common Stock have the right to elect the remaining members of our Board. |
| (3) | Members of the Dolan family have formed a “group” for purposes of Section 13(d) of the Securities Exchange Act. The members of this group (the “Group Members”) are: Charles F. Dolan, individually and as co-trustee of the Charles F. Dolan 2009 Revocable Trust (the “CFD 2009 Trust”) and the Helen A. Dolan 2009 Revocable Trust (the “HAD 2009 Trust”); James L. Dolan; Thomas C. Dolan; Kathleen M. Dolan, individually and as co-trustee of the Charles F. Dolan Children Trust FBO Kathleen M. Dolan, the Charles F. Dolan Children Trust FBO Deborah Dolan-Sweeney, the Charles F. Dolan Children Trust FBO Marianne Dolan Weber, the Charles F. Dolan Children Trust FBO Thomas C. Dolan and the Charles F. Dolan Children Trust FBO James L. Dolan (hereinafter collectively referred to as the “Dolan Children Trusts” and individually, a “Dolan Children Trust”) and as sole trustee of the Ryan Dolan 1989 Trust and Tara Dolan 1989 Trust; Marianne E. Dolan Weber; Deborah A. Dolan-Sweeney; the CFD 2009 Trust; the HAD 2009 Trust; the Dolan Children Trust FBO Kathleen M. Dolan; the Dolan Children Trust FBO Marianne Dolan Weber; the Dolan Children Trust FBO Deborah Dolan-Sweeney; the Dolan Children Trust FBO James L. Dolan; the Dolan Children Trust FBO Thomas C. Dolan; the Charles F. Dolan 2009 Family Trust FBO James L. Dolan; the Charles F. Dolan 2009 Family Trust FBO Thomas C. Dolan; the Charles F. Dolan 2009 Family Trust FBO Kathleen M. Dolan; the Charles F. Dolan 2009 Family Trust FBO Marianne E. Dolan Weber; the Charles F. Dolan 2009 Family Trust FBO Deborah A. Dolan-Sweeney; the Ryan Dolan 1989 Trust; and the Tara Dolan 1989 Trust. Individuals who are not Group Members but are trustees of trusts that are Group Members include Brian G. Sweeney, as co-trustee of the CFD 2009 Trust and the HAD 2009 Trust; Corby Dolan Leinauer, as co-trustee of the Charles F. Dolan 2009 Family Trust FBO Thomas C. Dolan, the Charles F. Dolan 2009 Family Trust FBO James L. Dolan, the Charles F. Dolan 2009 Family Trust FBO Marianne E. Dolan Weber, the Charles F. Dolan 2009 Family Trust FBO Kathleen M. Dolan and the Charles F. Dolan 2009 Family Trust FBO Deborah A. Dolan-Sweeney (collectively, the “2009 Family Trusts” and individually, a “2009 Family Trust”); Paul J. Dolan, as co-trustee of the Dolan |
147
| Children Trust FBO Kathleen M. Dolan and the Dolan Children Trust FBO James L. Dolan; Matthew J. Dolan, as co-trustee of the Dolan Children Trust FBO Marianne Dolan Weber and the Dolan Children Trust FBO Thomas C. Dolan; and Mary S. Dolan, as co-trustee of the Dolan Children Trust FBO Deborah Dolan-Sweeney and each of the 2009 Family Trusts. The Group Members may be deemed to beneficially own an aggregate of (i) 1,627,051 shares of Class A Common Stock and (ii) 6,866,754 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof. Group Members in the aggregate may be deemed to have the shared power to vote or direct the vote of and to dispose of or direct the disposition of 6,866,754 shares of Class B Common Stock (representing all outstanding Class B Common Stock) and the equal number of shares of Class A Common Stock issuable upon conversion thereof by reason of the terms of an agreement among the group members. Individuals who are not Group Members but are trustees of trusts that are Group Members may be deemed to beneficially own 63,823 shares of Class A Common Stock that are not beneficially owned by Group Members. |
| (4) | Charles F. Dolan may be deemed to have the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 281,185 shares of Class A Common Stock (including 50,307 shares of Class A Common Stock owned of record by the CFD 2009 Trust, for which he serves as co-trustee, 197,288 shares of Class A Common Stock owned of record by the Dolan Family Foundation and an aggregate of 33,590 shares of Class A Common Stock owned of record by the 2009 Family Trusts) and an aggregate of 3,863,285 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 228,992 shares of Class B Common Stock owned of record by the CFD 2009 Trust, for which he serves as co-trustee, 112,692 shares of Class B Common Stock owned of record by the HAD 2009 Trust, for which he serves as co-trustee and of which he is the sole beneficiary, and an aggregate of 3,521,601 shares of Class B Common Stock owned of record by the 2009 Family Trusts). This includes an aggregate of 33,590 shares of Class A Common Stock and 3,521,601 shares of Class B Common Stock owned of record by the 2009 Family Trusts which Charles F. Dolan may be deemed to have the right to acquire because he has the right to substitute assets with each of the trusts, subject to the trustees’ reasonable satisfaction that the substitute assets received by the trust are of equal value to the trust property exchanged therefor. He disclaims beneficial ownership of an aggregate of 230,878 shares of Class A Common Stock (including 197,288 shares of Class A Common Stock owned of record by the Dolan Family Foundation and an aggregate of 33,590 shares of Class A Common Stock owned of record by the 2009 Family Trusts) and an aggregate of 3,521,601 shares of Class B Common Stock owned of record by the 2009 Family Trusts. |
| (5) | Does not include unvested restricted stock units granted under the Employee Stock Plan or MSGN’s Employee Stock Plan, or the target amount of unvested performance stock units granted under the Employee Stock Plan (except for restricted stock units and performance stock units subject to vesting within 60 days of the Reference Date). The excluded number of restricted stock units for the following individuals are: Messrs. James L. Dolan, 174,769 units; David Granville-Smith, 167,122 units; Gautam Ranji, 13,627 units; Gregory Brunner, 4,438 units; Ryan T. Dolan, 1,283 units; David F. Byrnes, 11,799 units; Jamal H. Haughton, 9,810 units; and Philip G. D’Ambrosio, 7,921 units; and Ms. Andrea Greenberg, 51,351 units. The excluded number of target performance stock units for the following individuals are: Messrs. James L. Dolan, 264,175 units; David Granville-Smith, 26,897 units; Gautam Ranji, 15,395 units; Gregory Brunner, 4,438 units; Ryan T. Dolan, 1,739 units; David F. Byrnes, 21,405 units; Jamal H. Haughton, 18,731 units; and Philip G. D’Ambrosio, 15,530 units; and Ms. Andrea Greenberg, 73,167 units. For the avoidance of doubt, amounts do not include Mr. James Dolan’s performance award of 1,224,492 premium priced options granted under the Employee Stock Plan following the Reference Date. For more information regarding Mr. James Dolan’s performance award, see “Performance Awards Granted During 2024 Fiscal Year.” |
| (6) | Does not include restricted stock units granted under the Director Stock Plan (including restricted stock units assumed by the Company in connection with the Merger in respect of existing MSG Networks awards that were granted under the MSG Networks Director Stock Plan to Messrs. Charles F. Dolan, Paul J. Dolan, Thomas C. Dolan, Joseph J. Lhota, Joel M. Litvin, Brian G. Sweeney, John L. Sykes and Ms. Kristin A. Dolan prior to the Merger). The excluded number of restricted stock units for each of the following |
148
| individuals is: Messrs. Charles F. Dolan, 17,773 units; Charles P. Dolan, 8,141 units; Paul J. Dolan, 14,749 units; Quentin F. Dolan, 8,141 units; Thomas C. Dolan, 17,773 units; Joseph J. Lhota, 16,636 units; Joel M. Litvin, 13,070 units; Brian G. Sweeney, 17,773 units; John L. Sykes, 14,906 units; Vincent Tese, 8,141 units; Isiah L. Thomas III, 8,141 units; and Carl E. Vogel, 4,072 units; and Mses. Kristin A. Dolan, 12,201 units; and Marianne Dolan Weber, 8,141 units. |
| (7) | James L. Dolan may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of an aggregate of 1,014,880 shares of Class A Common Stock (including 383,895 shares of Class A Common Stock owned of record personally, options owned of record personally to purchase 630,239 shares of Class A Common Stock that are exercisable within 60 days of the Reference Date and 746 shares of Class A Common Stock held as custodian for one or more minor children) and 224,636 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record personally and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 59,092 shares of Class A Common Stock (including 631 shares of Class A Common Stock owned jointly with his spouse, 14,119 shares of Class A Common Stock owned of record personally by his spouse and 44,342 shares of Class A Common Stock owned of record by the Dolan Children Trust for his benefit) and 916,156 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for his benefit. He disclaims beneficial ownership of an aggregate of 59,207 shares of Class A Common Stock (including 746 shares of Class A Common Stock held as custodian for one or more minor children, 14,119 shares of Class A common Stock owned of record personally by his spouse and 44,342 shares of Class A Common Stock owned of record by the Dolan Children Trust for his benefit) and 916,156 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for his benefit. |
| (8) | Kristin A. Dolan may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 14,119 shares of Class A Common Stock owned of record personally and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 1,059,853 shares of Class A Common Stock (including 631 shares of Class A Common Stock owned jointly with her spouse, James L. Dolan, 383,895 shares of Class A Common Stock owned of record personally by her spouse, options held personally by her spouse to purchase 630,239 shares of Class A Common Stock that are exercisable within 60 days of the Reference Date, 746 shares of Class A Common Stock held by her spouse as custodian for one or more minor children and 44,342 shares of Class A Common Stock owned of record by the Dolan Children Trust for the benefit of her spouse) and an aggregate of 1,140,792 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 224,636 shares of Class B Common Stock owned of record personally by her spouse and 916,156 shares of Class B Common Stock owned by the Dolan Children Trust for the benefit of her spouse). She disclaims beneficial ownership of an aggregate of 1,059,222 shares of Class A Common Stock (including 383,895 shares of Class A Common Stock owned of record personally by her spouse, options held personally by her spouse to purchase 630,239 shares of Class A Common Stock that are exercisable within 60 days of the Reference Date, 746 shares of Class A Common Stock held by her spouse as custodian for one or more minor children and 44,342 shares of Class A Common Stock owned of record by the Dolan Children Trust for the benefit of her spouse) and an aggregate of 1,140,792 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 224,636 shares of Class B Common Stock owned of record personally by her spouse and 916,156 shares of Class B Common Stock owned of record by the Dolan Children Trust for the benefit of her spouse). |
| (9) | Thomas C. Dolan may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 29,355 shares of Class A Common Stock owned of record personally and (b) the shared power to vote or direct the vote of and to dispose of or to direct the disposition of 20,156 shares of Class A Common Stock and 468,423 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for his benefit. He disclaims beneficial ownership of 20,156 shares of Class A Common Stock and 468,423 |
149
| shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for his benefit. |
| (10) | Brian G. Sweeney may be deemed to have (a) the sole power to vote or direct the vote of and dispose or direct the disposition of 22,427 shares of Class A Common Stock owned of record personally and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 88,327 shares of Class A Common Stock (including 10,419 shares of Class A Common Stock owned personally by his spouse, Deborah A. Dolan-Sweeney, an aggregate of 3,414 shares of Class A Common Stock held in trusts for his children, for which he serves as trustee, 50,307 shares of Class A Common Stock owned of record by the CFD 2009 Trust, for which he serves as co-trustee, and 24,187 shares of Class A Common Stock owned by the Dolan Children Trust for the benefit of his spouse) and an aggregate of 806,076 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 464,392 shares of Class B Common Stock owned of record by the Dolan Children Trust for the benefit of his spouse, 228,992 shares of Class B Common Stock owned of record by the CFD 2009 Trust, for which he serves as co-trustee, and 112,692 shares of Class B Common Stock owned of record by the HAD 2009 Trust, for which he serves as co-trustee). He disclaims beneficial ownership of an aggregate of 88,327 shares of Class A Common Stock, (including 10,419 shares of Class A Common Stock owned personally by his spouse, 3,414 shares of Class A Common Stock held in trusts for his children, for which he serves as trustee, 50,307 shares of Class A Common Stock owned of record by the CFD 2009 Trust, for which he serves as co-trustee, and 24,187 shares of Class A Common Stock owned by the Dolan Children Trust for the benefit of his spouse) and an aggregate of 806,076 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 464,392 shares of Class B Common Stock owned of record by the Dolan Children Trust for the benefit of his spouse, 228,992 shares of Class B Common Stock owned of record by the CFD 2009 Trust, for which he serves as co-trustee, and 112,692 shares of Class B Common Stock owned of record by the HAD 2009 Trust, for which he serves as co-trustee). |
| (11) | Paul J. Dolan may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of an aggregate of 46,607 shares of Class A Common Stock (including 398 shares of Class A Common Stock owned of record personally and 46,209 shares of Class A Common Stock owned of record by the CFD Trust No. 10, for which he serves as co-trustee) and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 68,529 shares of Class A Common Stock owned of record by the Dolan Children Trusts for the benefit of Kathleen M. Dolan and James L. Dolan, for which he serves as co-trustee, and an aggregate of 1,380,548 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trusts for the benefit of Kathleen M. Dolan and James L. Dolan, for which he serves as co-trustee. He disclaims beneficial ownership of an aggregate of 114,738 shares of Class A Common Stock (including 46,209 shares of Class A Common Stock owned of record by the CFD Trust No. 10, for which he serves as co-trustee, and an aggregate of 68,529 shares of Class A Common Stock owned of record by the Dolan Children Trusts for the benefit of Kathleen M. Dolan and James L. Dolan, for which he serves as co-trustee) and an aggregate of 1,380,548 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trusts for the benefit of Kathleen M. Dolan and James L. Dolan, for which he serves as co-trustee. |
| (12) | Marianne Dolan Weber may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 11,606 shares of Class A Common Stock owned of record personally and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 73,508 shares of Class A Common Stock (including 49,321 shares of Class A Common Stock owned of record by the Heartfelt Wings Foundation Inc. and 24,187 shares of Class A Common Stock owned of record by the Dolan Children Trust for her benefit) and 450,152 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for her benefit. She disclaims beneficial ownership of an aggregate of 73,508 shares of Class A Common Stock (including 49,321 shares of Class A Common Stock owned of record by the |
150
| Heartfelt Wings Foundation Inc. and 24,187 shares of Class A Common Stock owned of record by the Dolan Children Trust for her benefit) and 450,152 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for her benefit. |
| (13) | Deborah A. Dolan-Sweeney may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of 10,419 shares of Class A Common Stock owned of record personally and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 100,335 shares of Class A Common Stock (including 22,427 shares of Class A Common Stock owned of record personally by her spouse, 3,414 shares of Class A Common Stock held by trusts for her children, for which her spouse serves as trustee, 50,307 shares of Class A Common Stock owned of record by the CFD 2009 Trust, for which her spouse serves as co-trustee, and 24,187 shares of Class A Common Stock owned of record by the Dolan Children Trust for her benefit) and an aggregate of 806,076 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 464,392 owned of record by the Dolan Children Trust for her benefit, 228,992 shares of Class B Common Stock owned of record by the CFD 2009 Trust, for which her spouse serves as co-trustee, and 112,692 shares of Class B Common Stock owned of record by the HAD 2009 Trust, for which her spouse serves as co-trustee). She disclaims beneficial ownership of an aggregate of 100,335 shares of Class A Common Stock (including 22,427 shares of Class A Common Stock owned of record personally by her spouse, 3,414 shares of Class A Common Stock held by trusts for her children, for which her spouse serves as trustee, 50,307 shares of Class A Common Stock owned of record by the CFD 2009 Trust, for which her spouse serves as co-trustee, and 24,187 shares of Class A Common Stock owned of record by the Dolan Children Trust for her benefit) and an aggregate of 806,076 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 464,392 owned of record by the Dolan Children Trust for her benefit, 228,992 shares of Class B Common Stock owned of record by the CFD 2009 Trust, for which her spouse serves as co-trustee, and 112,692 shares of Class B Common Stock owned of record by the HAD 2009 Trust, for which her spouse serves as co-trustee). |
| (14) | Kathleen M. Dolan may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of an aggregate of 3,314 shares of Class A Common Stock (including 2,378 shares of Class A Common Stock owned of record personally and 936 shares of Class A Common Stock held as custodian for one or more minor children) and an aggregate of 15,318 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 7,659 shares of Class B Common Stock owned of record by the Ryan Dolan 1989 Trust and 7,659 shares of Class B Common Stock owned of record by the Tara Dolan 1989 Trust, for which she serves as sole trustee) and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 186,380 shares of Class A Common Stock (including 49,321 shares of Class A Common Stock owned of record by the Green Mountain Foundation Inc. and an aggregate of 137,059 shares of Class A Common Stock owned of record by the Dolan Children Trusts, for which she serves as co-trustee) and an aggregate of 2,763,515 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trusts, for which she serves as co-trustee. She disclaims beneficial ownership of an aggregate of 187,316 shares of Class A Common Stock (including 936 shares of Class A Common Stock held as custodian for one or more minor children, 49,321 shares of Class A Common Stock owned of record by the Green Mountain Foundation Inc. and an aggregate of 137,059 shares of Class A Common Stock owned of record by the Dolan Children Trusts, for which she serves as co-trustee) and an aggregate of 2,778,833 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 7,659 shares of Class B Common Stock owned of record by the Ryan Dolan 1989 Trust and 7,659 shares of Class B Common Stock owned of record by the Tara Dolan 1989 Trust, for which she serves as sole trustee, and 2,763,515 shares of Class B Common Stock owned of record by the Dolan Children Trusts, for which she serves as co-trustee). |
151
| (15) | Mary S. Dolan may be deemed to have (a) the sole power to vote or direct the vote and to dispose of or direct the disposition of 3,453 shares of Class A Common Stock held as custodian for one or more minor children and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 68,495 shares of Class A Common Stock (including 3,947 shares of Class A Common Stock owned jointly with her spouse, 24,187 shares of Class A Common Stock owned of record by the Dolan Children Trust for the benefit of Deborah Dolan-Sweeney, for which she serves as co-trustee, an aggregate of 1,692 shares of Class A Common Stock (including 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Aidan J. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Quentin F. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Marianne Rose Weber and 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Kevyn A. Dolan, for which she serves as co-trustee), 5,079 shares of Class A Common Stock owned of record by the CFD 2012 Descendants Trust, for which she serves as co-trustee, and an aggregate of 33,590 shares of Class A Common Stock owned of record by the 2009 Family Trusts, for which she serves as co-trustee) and an aggregate of 3,985,993 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 464,392 shares of Class B Common Stock owned of record by the Dolan Children Trust for the benefit of Deborah Dolan-Sweeney, for which she serves as co-trustee, and an aggregate of 3,521,601 shares of Class B Common Stock owned of record by the 2009 Family Trusts, for which she serves as co-trustee). She disclaims beneficial ownership of an aggregate of 68,001 shares of Class A Common Stock (including 3,453 shares of Class A Common Stock held as custodian for one or more minor children, 24,187 shares of Class A Common Stock owned of record by the Dolan Children Trust for the benefit of Deborah Dolan-Sweeney, for which she serves as co-trustee, an aggregate of 1,692 shares of Class A Common Stock (including 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Aidan J. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Quentin F. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Marianne Rose Weber and 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Kevyn A. Dolan, for which she serves as co-trustee), 5,079 shares of Class A Common Stock owned of record by the CFD 2012 Descendants Trust, for which she serves as co-trustee, and an aggregate of 33,590 shares of Class A Common Stock owned of record by the 2009 Family Trusts, for which she serves as co-trustee) and an aggregate of 3,985,993 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof (including 464,392 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trust for the benefit of Deborah A. Dolan-Sweeney, for which she serves as co-trustee, and an aggregate of 3,521,601 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the 2009 Family Trusts, for which she serves as co-trustee). |
| (16) | Matthew J. Dolan may be deemed to have (a) the sole power to vote or direct the vote of and to dispose of or to direct the disposition of an aggregate of 1,206 shares of Class A Common Stock (including 619 shares of Class A Common Stock owned of record personally and 587 shares of Class A Common Stock held as custodian for one or more minor children) and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 45,151 shares of Class A Common Stock (including 480 shares of Class A Common Stock owned jointly with his spouse, 328 shares of Class A Common Stock held by his spouse as custodian for one or more minor children and an aggregate of 44,343 shares of Class A Common Stock owned of record by the Dolan Children Trusts for the benefit of Marianne Dolan Weber and Thomas C. Dolan, for which he serves as co-trustee) and an aggregate of 918,575 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trusts for the benefit of Marianne Dolan Weber and Thomas C. Dolan, for which he serves as co-trustee. He disclaims beneficial ownership of an aggregate of 45,258 shares of Class A Common Stock (including 587 shares of Class A Common Stock held as custodian for one or more minor children, 328 shares of Class A Common Stock held by his spouse as custodian for one or more minor |
152
| children and an aggregate of 44,343 shares of Class A Common Stock owned of record by the Dolan Children Trusts for the benefit of Marianne Dolan Weber and Thomas C. Dolan, for which he serves as co-trustee) and an aggregate of 918,575 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the Dolan Children Trusts for the benefit of Marianne Dolan Weber and Thomas C. Dolan, for which he serves as co-trustee. |
| (17) | Corby Dolan Leinauer may be deemed to have (a) the sole power to vote or direct the vote and to dispose of or direct the disposition of 192 shares of Class A Common Stock held as custodian for one or more minor children and (b) the shared power to vote or direct the vote of and to dispose of or direct the disposition of an aggregate of 41,200 shares of Class A Common Stock (including 154 shares of Class A Common Stock owned jointly with her spouse, 685 shares of Class A Common Stock owned of record by the Leinauer Family Education Trust, an aggregate of 1,692 shares of Class A Common Stock (including 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Aidan J. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Quentin F. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Marianne Rose Weber and 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Kevyn A. Dolan, for which she serves as co-trustee), 5,079 shares of Class A Common Stock owned of record by the CFD 2012 Descendants Trust, for which she serves as co-trustee, and an aggregate of 33,590 shares of Class A Common Stock owned of record by the 2009 Family Trusts, for which she serves as co-trustee) and an aggregate of 3,521,601 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the 2009 Family Trusts, for which she serves as co-trustee. She disclaims beneficial ownership of an aggregate of 41,238 shares of Class A Common Stock (including 192 shares of Class A Common Stock held as custodian for one or more minor children, 685 shares of Class A Common Stock owned of record by the Leinauer Family Education Trust, an aggregate of 1,692 shares of Class A Common Stock (including 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Aidan J. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Quentin F. Dolan, 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Marianne Rose Weber and 423 shares of Class A Common Stock owned of record by the CFD 2012 Grandchildren Trust FBO Kevyn A. Dolan, for which she serves as co-trustee), 5,079 shares of Class A Common Stock owned of record by the CFD 2012 Descendants Trust, for which she serves as co-trustee and an aggregate of 33,590 shares of Class A Common Stock owned of record by the 2009 Family Trusts, for which she serves as co-trustee) and an aggregate of 3,521,601 shares of Class B Common Stock and the equal number of shares of Class A Common Stock issuable upon conversion thereof owned of record by the 2009 Family Trusts, for which she serves as co-trustee. |
| (18) | Kathleen M. Dolan and Paul J. Dolan are the trustees of the Charles F. Dolan Children Trust FBO James L. Dolan and have the shared power to vote and dispose of the shares held by the trust. |
| (19) | Kathleen M. Dolan and Matthew J. Dolan are the trustees of the Charles F. Dolan Children Trust FBO Thomas C. Dolan and have the shared power to vote and dispose of the shares held by the trust. |
| (20) | Kathleen M. Dolan and Matthew J. Dolan are the trustees of the Charles F. Dolan Children Trust FBO Marianne Dolan Weber and have the shared power to vote and dispose of the shares held by the trust. |
| (21) | Kathleen M. Dolan and Mary S. Dolan are the trustees of the Charles F. Dolan Children Trust FBO Deborah Dolan-Sweeney and have the shared power to vote and dispose of the shares held by the trust. |
| (22) | Kathleen M. Dolan and Paul J. Dolan are the trustees of the Charles F. Dolan Children Trust FBO Kathleen M. Dolan and have the shared power to vote and dispose of the shares held by the trust. |
| (23) | Corby Dolan Leinauer and Mary S. Dolan are the trustees of the Charles F. Dolan 2009 Family Trust FBO James L. Dolan and have the shared power to vote and dispose of the shares held by the trust. |
153
| (24) | Corby Dolan Leinauer and Mary S. Dolan are the trustees of the Charles F. Dolan 2009 Family Trust FBO Thomas C. Dolan and have the shared power to vote and dispose of the shares held by the trust. |
| (25) | Corby Dolan Leinauer and Mary S. Dolan are the trustees of the Charles F. Dolan 2009 Family Trust FBO Marianne E. Dolan Weber and have the shared power to vote and dispose of the shares held by the trust. |
| (26) | Corby Dolan Leinauer and Mary S. Dolan are the trustees of the Charles F. Dolan 2009 Family Trust FBO Deborah A. Dolan-Sweeney and have the shared power to vote and dispose of the shares held by the trust. |
| (27) | Corby Dolan Leinauer and Mary S. Dolan are the trustees of the Charles F. Dolan 2009 Family Trust FBO Kathleen M. Dolan and have the shared power to vote and dispose of the shares held by the trust. |
| (28) | Based upon a Schedule 13G/A (Amendment No. 6) filed with the SEC on August 10, 2023, Ariel Investments, LLC (“Ariel”) beneficially owns 5,073,532 shares of Class A Common Stock. Ariel has sole voting power over 4,481,003 shares of Class A Common Stock and sole dispositive power over 5,073,532 shares of Class A Common Stock. |
| (29) | Based upon a Schedule 13G/A (Amendment No. 2) filed with the SEC on February 9, 2023, The Vanguard Group, Inc. (“Vanguard”) beneficially owns 2,514,028 shares of Class A Common Stock. Vanguard has shared voting power over 17,682 shares of Class A Common Stock, sole dispositive power over 2,471,218 shares of Class A Common Stock and shared dispositive power over 42,810 shares of Class A Common Stock. |
| (30) | Based upon a Schedule 13G filed with the SEC on February 14, 2023, T. Rowe Price Associates, Inc. (“T. Rowe Price”) beneficially owns 1,926,339 shares of Class A Common Stock. T. Rowe Price has sole voting power over 746,693 shares of Class A Common Stock and sole dispositive power over 1,926,339 shares of Class A Common Stock. |
| (31) | Based upon a Schedule 13G/A (Amendment No. 1) filed with the SEC on February 1, 2023, BlackRock, Inc. (“BlackRock”) beneficially owns 1,763,630 shares of Class A Common Stock. BlackRock has sole voting power over 1,710,461 shares of Class A Common Stock and sole dispositive power over 1,763,630 shares of Class A Common Stock. |
| (32) | Based upon a Schedule 13D filed with the SEC on April 27, 2020, Mario J. Gabelli, personally, and certain operating subsidiaries of GAMCO Investors, Inc. (“GAMCO”) beneficially own 1,044,793 shares of Class A Common Stock. Mario J. Gabelli, who directly or indirectly controls, or for which he acts as Chief Investment Officer of all the GAMCO filing entities, is deemed to have beneficial ownership of the shares of Class A Common Stock held by such entities. GAMCO Asset Management Inc. has sole voting power over 608,706 shares of Class A Common Stock and sole dispositive power over 645,240 shares of Class A Common Stock. Gabelli Funds, LLC has sole voting and dispositive power over 392,633 shares of Class A Common Stock. Gabelli Company Investment Advisers, Inc. (“GCIA”) has sole voting and dispositive power over 700 shares of Class A Common Stock. Gabelli Foundation Inc. has sole voting and dispositive power over 1,000 shares of Class A Common Stock. Mario J. Gabelli has sole voting and dispositive power over 1,720 shares of Class A Common Stock. MJG Associates, Inc. has sole voting and dispositive power over 2,500 shares of Class A Common Stock. GGCP, Inc. has sole voting and dispositive power over 1,000 shares of Class A Common Stock. Based upon information reported on Schedule 13F by GAMCO and GCIA, each filed with the SEC on August 15, 2023, as of June 30, 2023, GAMCO and GCIA owned 908,406 and 637,920 shares of Class A Common Stock, respectively, for a total of 1,546,326 shares. |
154
As a result of their ownership of all of the shares of Class B Common Stock, certain members of the Dolan family, including certain trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”), are able to collectively control stockholder decisions on matters on which holders of our Class A Common Stock and Class B Common Stock vote together as a single class, and to elect up to 75% of the Company’s Board. The members of the Dolan Family Group holding Class B Common Stock are parties to a Stockholders Agreement, which has the effect of causing the voting power of the holders of our Class B Common Stock to be cast as a block with respect to all matters to be voted on by holders of our Class B Common Stock. Under the Stockholders Agreement, the shares of Class B Common Stock owned by members of the Dolan Family Group (representing all of the outstanding Class B Common Stock) are to be voted on all matters in accordance with the determination of the Dolan Family Committee (as defined below), except that the decisions of the Dolan Family Committee are non-binding with respect to the Class B Common Stock owned by certain Dolan family trusts that collectively own approximately 40.5% of the outstanding Class B Common Stock (“Excluded Trusts”). The “Dolan Family Committee” consists of Charles F. Dolan and his six children, James L. Dolan, Thomas C. Dolan, Patrick F. Dolan, Kathleen M. Dolan, Marianne Dolan Weber and Deborah A. Dolan-Sweeney. The Dolan Family Committee generally acts by majority vote, except that approval of a going-private transaction must be approved by a two-thirds vote and approval of a change in control transaction must be approved by not less than all but one vote. The voting members of the Dolan Family Committee are James L. Dolan, Thomas C. Dolan, Kathleen M. Dolan, Deborah A. Dolan-Sweeney and Marianne Dolan Weber, with each member having one vote other than James L. Dolan, who has two votes. Because James L. Dolan has two votes, he has the ability to block Dolan Family Committee approval of any Company change in control transaction. Shares of Class B Common Stock owned by Excluded Trusts will on all matters be voted in
accordance with the determination of the Excluded Trusts holding a majority of the Class B Common Stock held by all Excluded Trusts, except in the case of a vote on a going-private transaction or a change in control transaction, in which case a vote of trusts holding two-thirds of the Class B Common Stock owned by the Excluded Trusts is required.
Charles F. Dolan, all other holders of our Class B Common Stock (other than the Charles F. Dolan Children Trusts), certain trusts for the benefit of members of the Dolan family and the Company have entered into a registration rights agreement (the “Dolan Registration Rights Agreement”). Under this agreement, the Company will provide the parties to the Dolan Registration Rights Agreement (the “Dolan Parties”) (and, in certain cases, transferees and pledgees of shares of Class B Common Stock owned by these parties) with certain demand and piggy-back registration rights with respect to their shares of Class A Common Stock (including those issued upon conversion of shares of Class B Common Stock). As of the Reference Date, the Dolan Parties owned 4,103,239 shares of Class B Common Stock (the “Dolan Shares”), which represented approximately 59.8% of our Class B Common Stock as well as 1,489,992 shares of Class A Common Stock (inclusive of exercisable options), which represented approximately 5.2% of our Class A Common Stock. Such shares of Class B Common Stock and Class A Common Stock, collectively, represented approximately 15.6% of our Common Stock and 43.6% of the aggregate voting power of our Common Stock.
The Charles F. Dolan Children Trusts (the “Children Trusts”) and the Company have entered into a registration rights agreement (the “Children Trusts Registration Rights Agreement”). Under this agreement, the Company will provide the Children Trusts (and, in certain cases, transferees and pledgees of shares of Class B Common Stock owned by these parties) with certain demand and piggy-back registration rights with respect to their shares of Class A Common Stock (including those issued upon conversion of shares of Class B
155
Common Stock). As of the Reference Date, the Children Trusts owned approximately 2,763,515 shares of Class B Common Stock (the “Children Trust Shares”), which represented 40.2% of our Class B Common Stock, as well as 137,059 shares of Class A Common Stock, which represented 0.5% of our Class A Common Stock. Such shares of Class B Common Stock and Class A Common Stock, collectively, represented approximately 8.3% of our Common Stock and 28.7% of the aggregate voting power of our Common Stock.
In the Children Trusts Registration Rights Agreement, each Children Trust has agreed that in the case of any sale or disposition of its shares of Class B Common Stock (other than to Charles F. Dolan or other Dolan family interests) by such
Children Trust, or of any of the Children Trust Shares by any other Dolan family interest to which such shares of Class B Common Stock are transferred, such shares will be converted into shares of Class A Common Stock. The Dolan Registration Rights Agreement does not include a comparable conversion obligation, and the conversion obligation in the Children Trusts Registration Rights Agreement does not apply to any other shares of Class B Common Stock (including the Dolan Shares).
The Dolan Registration Rights Agreement and the Children Trusts Registration Rights Agreement are included as exhibits to our 2023 Form 10-K, and the foregoing discussion of those agreements is qualified in its entirety by reference to those agreements as filed.
OTHER MATTERS
STOCKHOLDER PROPOSALS FOR 2024 ANNUAL MEETING
Our stockholders who, in accordance with Rule 14a-8 of the Exchange Act, wish to present proposals at our 2024 annual meeting and have those proposals included in the proxy materials to be distributed by us in connection with our 2024 annual meeting must submit their proposals to Sphere Entertainment Co., Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121 on or before June 27, 2024. Any such proposal must meet the requirements set forth in the rules and regulations of the SEC, including Rule 14a-8, in order for such proposal to be eligible for inclusion in our 2024 proxy statement.
In accordance with our Amended By-laws, in order for proposals, including stockholder director nominations for election, to be properly brought before the 2024 annual meeting, notice of any proposal to be presented by any stockholder must be delivered to Sphere Entertainment Co., Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121, not less than 60 nor more than 90 days prior to the date of the annual meeting. If, however, the date of the meeting is publicly announced or disclosed less than 70 days prior to the date of the meeting, such notice must
be given not more than ten days after such date is first announced or disclosed. Any stockholder who gives notice of any such proposal shall deliver the text of the proposal to be presented and a brief written statement of the reasons why such stockholder favors the proposal and set forth the stockholder’s name and address, the number and class of all shares of each class of stock of the Company beneficially owned by the stockholder, any material interest of such stockholder in the proposal (other than as a stockholder) and any additional information required under the rules of the SEC. Any stockholder desiring to nominate any person for election as a director of the Company shall deliver with such notice a statement in writing setting forth the name of the person to be nominated, the number and class of all shares of each class of stock of the Company beneficially owned by such person, the information regarding such person required by Item 401 of Regulation S-K adopted by the SEC (or the corresponding provisions of any regulation subsequently adopted by the SEC applicable to the Company), such person’s signed consent to serve as a director of the Company if elected, such stockholder’s name and address, the number
156
and class of all shares of each class of stock of the Company beneficially owned by the stockholder and any additional information required under the rules of the SEC.
In addition to satisfying the foregoing requirements under our Amended By-Laws, to comply with the universal proxy rules,
stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than October 9, 2024. The advance notice requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under our Amended By-Laws.
ADVANCE NOTICE OF PROXY HOLDERS AND QUALIFIED REPRESENTATIVES
Our stockholders must provide advance written notice to the Company if they intend to have any legal proxy (other than the persons appointed as proxies on the Company’s proxy card) or qualified representative attend the virtual annual meeting on their behalf. The notice must include the name and address of the legal proxy or
qualified representative and must be received by 5:00 p.m. Eastern Time on November 30, 2023. Notices should be directed to Sphere Entertainment Co., Attention: Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121.
2023 FORM 10-K
A copy of our 2023 Form 10-K, as filed with the SEC, will be sent to any stockholder, without charge, by regular mail or by email upon written request addressed to Sphere Entertainment Co., Attention: Corporate Secretary, Two Pennsylvania Plaza, New York, NY 10121.
You also may obtain our 2023 Form 10-K at the SEC’s website, www.sec.gov, or at www.sphereentertainmentco.com by clicking on “Investors,” then “Financials” and following the link from our “SEC Filings” page.
|
|
Mark C. Cresitello Secretary |
New York, New York
October 25, 2023
157
ANNEX A — RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The Company believes that presenting Adjusted Operating Income (“AOI”), a non-U.S. GAAP financial measure, is meaningful, as it reflects metrics considered by the Compensation Committee in making its compensation determinations. The Company defines adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) before (i) adjustments to remove the impact of non-cash straight-line leasing revenue associated with the arena license agreements with MSGS (if applicable for the period), (ii) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets, (iii) amortization for capitalized cloud computing arrangement costs, (iv) share-based compensation expense, (v) restructuring charges or credits, (vi) merger and acquisition-related costs, including litigation expenses, (vii) gains or losses on sales or dispositions of businesses and associated settlements, (viii) the impact of purchase accounting adjustments related to business acquisitions, and (ix) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan. The Company believes that given the length of the arena license agreements and resulting magnitude of the difference in leasing revenue recognized and cash revenue received, the exclusion of non-cash leasing revenue provides investors with a clearer picture of the Company’s operating performance. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of our business without regard to the settlement of an obligation that is not expected to be made in cash. The Company eliminates merger and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to
the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with U.S. generally accepted accounting principles (“GAAP”), gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan are recognized in Operating income (loss) whereas gains and losses related to the remeasurement of the assets under the Company’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Miscellaneous income (expense), net, which is not reflected in Operating income (loss).
The Company believes adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of our business segments and the Company on a consolidated basis. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, the Company uses revenues and adjusted operating income (loss) as the most important indicators of our business performance, and evaluates management’s effectiveness with specific reference to these indicators. Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.
All dollar amounts included in this Annex A are represented in thousands, except as otherwise noted. The following is a reconciliation of
A-1
operating income (loss) (GAAP) to adjusted operating income (loss) (non-GAAP) for each of the fiscal years ended June 30, 2023, 2022 and 2021 as disclosed in our Annual Report on Form 10-K for the relevant fiscal year. See each of our Annual Reports on Form 10-K for the fiscal year ended June 30, 2023, June 30, 2022
and June 30, 2021 for additional information. The MSGE Distribution and Tao Group Hospitality both qualified for discontinued operations presentation under GAAP during Fiscal Year 2023. As such, the Company’s Fiscal Year 2023 results exclude the operations of each disposed business.
| Year Ended June 30, 2023 ($) |
||||
| Operating loss |
(273,042 | ) | ||
| Share-based compensation(a) |
42,607 | |||
| Depreciation and amortization |
30,716 | |||
| Restructuring charges |
27,924 | |||
| Impairment and other gains, net |
(6,120 | ) | ||
| Merger and acquisition related costs |
55,047 | |||
| Amortization for capitalized cloud computing costs |
161 | |||
| Remeasurement of deferred compensation plan liabilities |
187 | |||
|
|
|
|||
| Adjusted operating loss |
(122,520 | ) | ||
| (a) | For periods through the MSGE Distribution, share-based compensation includes expenses related to corporate employees that the Company does not expect to incur in future periods, but which do not meet the criteria for inclusion in discontinued operations. |
| Year Ended June 30, 2022 ($) |
||||
| Operating loss |
(102,697 | ) | ||
| Non-cash portion of arena license fees from MSG Sports |
(27,754 | ) | ||
| Share-based compensation expense |
72,552 | |||
| Depreciation and amortization(a) |
124,629 | |||
| Restructuring charges |
14,690 | |||
| Impairment and other gains, net |
(3,045 | ) | ||
| Merger and acquisition related costs, including litigation |
48,764 | |||
| Amortization for capitalized cloud computing costs |
271 | |||
| Other purchase accounting adjustments |
6,099 | |||
| Remeasurement of deferred compensation plan liabilities |
46 | |||
|
|
|
|||
| Adjusted operating income |
133,555 | |||
| (a) | Depreciation and amortization included a purchase accounting adjustment of $12,037 for the fiscal year ended June 30, 2022.. |
A-2
| Year Ended June 30, 2021 ($) |
||||
| Operating loss |
(450,200 | ) | ||
| Non-cash portion of arena license fees from MSG Sports |
(13,026 | ) | ||
| Share-based compensation |
52,917 | |||
| Depreciation and amortization(a) |
114,664 | |||
| Restructuring charges |
21,299 | |||
| Impairment of intangibles, long-lived assets and goodwill |
— | |||
| Gain on disposal of assets held for sale and associated settlements |
— | |||
| Other purchase accounting adjustments |
3,334 | |||
|
|
|
|||
| Adjusted operating loss |
(271,012 | ) | ||
| (a) | Depreciation and amortization included a purchase accounting adjustment of $25,567 for the fiscal year ended June 30, 2021. The increase in purchase accounting adjustment related depreciation and amortization include $14,280 of accelerated amortization expense for certain Tao Group Hospitality venue management contracts that were converted to operating leases. |
A-3
ANNEX B — 2020 EMPLOYEE STOCK PLAN AS AMENDED
THROUGH DECEMBER 8, 2023
1. Purpose. The purpose of the 2020 Employee Stock Plan, as amended, is to compensate eligible service providers of the Company and its Affiliates who are and have been largely responsible for the management and growth of the business of the Company and its Affiliates and to advance the interest of the Company by encouraging and enabling the acquisition of a personal proprietary interest in the Company by such service providers upon whose judgment and keen interest the Company and its Affiliates are largely dependent for the successful conduct of their operations. It is anticipated that such compensation and the acquisition of such proprietary interest in the Company will stimulate the efforts of such service providers on behalf of the Company and its Affiliates, and strengthen their desire to remain with the Company and its Affiliates. It is also expected that such compensation and the opportunity to acquire such a proprietary interest will enable the Company and its Affiliates to attract and retain desirable personnel.
2. Definitions. When used in this Plan, unless the context otherwise requires:
(a) “Affiliate” shall mean (i) any Entity controlling, controlled by, or under common control with the Company or any other Affiliate and (ii) any Entity in which the Company owns at least five percent of the outstanding equity interest of such Entity.
(b) “Award” shall mean an Option, Right, Restricted Share or Restricted Stock Unit or other equity based award which is granted or made under the Plan.
(c) “Award Agreement” shall mean an agreement which may be entered into by a Participant under the Plan and the Company, setting forth the terms and provisions applicable to Awards granted to such Participant.
(d) “Board of Directors” shall mean the Board of Directors of the Company, as constituted at any time.
(e) “Committee” shall mean the Compensation Committee of the Board of Directors, as described in Section 3.
(f) “Company” shall mean Sphere Entertainment Co. (formerly known as Madison Square Garden Entertainment Corp. and MSG Entertainment Spinco, Inc.), a Delaware corporation.
(g) “Consent” shall mean (i) any listing, registration or qualification requirement in respect of an Award or Share with respect to any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Participant with respect to the disposition of Shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or qualification requirement or to obtain an exemption therefrom, (iii) any and all other consents, clearances and approvals in respect of an action under the Plan by any governmental or other regulatory body or any stock exchange or self-regulatory agency, (iv) any and all consents by the Participant to (A) the Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan and (B) the Company’s imposing sales and transfer procedures and restrictions on Shares delivered under the Plan and (v) any and all other consents or authorizations required to comply with, or required to be obtained under law.
(h) “Entity” shall mean any business, corporation, partnership, limited liability company or other entity.
B-1
(i) “Fair Market Value” on a specified date shall mean the closing price for a Share on the stock exchange, if any, on which such Shares are primarily traded, but if no Shares were traded on such date, the average of the bid and asked closing prices at which one Share is traded on the over-the-counter market, as reported on the New York Stock Exchange or any other stock exchange on which the Shares may be traded, or, if none of the above is applicable, the value of a Share as established by the Committee for such date using any reasonable method of valuation.
(j) “GAAP” shall mean accounting principles generally accepted in the United States of America.
(k) “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended.
(l) “Options” shall mean the stock options granted pursuant to Section 6 hereof.
(m) “Participant” shall mean any current or former service provider to the Company or any Affiliate who holds an outstanding Award granted under the Plan.
(n) “Performance Criteria” shall mean a goal or goals established by the Committee and measured over a period or periods selected by the Committee, such goal(s) to constitute a requirement that must be met in connection with the vesting, exercise and/or payment of an Award under the Plan as specified by the Committee.
(o) “Plan” shall mean this 2020 Employee Stock Plan, as amended from time to time.
(p) “Restricted Period” shall mean the period of time during which Restrictions shall apply to a Restricted Share, as determined by the Committee pursuant to Section 9 hereof.
(q) “Restricted Shares” shall mean the Shares awarded pursuant to Section 9 hereof that are subject to restrictions upon their sale, assignment, transfer, pledge or other disposal or encumbrance as determined by the Committee.
(r) “Restricted Stock Units” shall mean awards made pursuant to Section 10 hereof, each such unit representing an unfunded and unsecured promise to deliver a Share (or cash or other property equal in value to the Share).
(s) “Restrictions” shall mean the restrictions upon sale, assignment, transfer, pledge or other disposal or encumbrance on a Restricted Share as determined by the Committee in respect of an Award of a Restricted Share pursuant to Section 9 hereof.
(t) “Rights” shall mean stock appreciation rights granted pursuant to Section 7 of the Plan.
(u) “Share” shall mean a share of Class A Common Stock, par value $0.01 per share of the Company.
(v) “Subsidiary” shall mean any “subsidiary corporation,” as defined in Section 424(f) of the Internal Revenue Code.
3. Administration. (a) The Plan shall be administered by the Committee, which shall consist of at least two members of the Board of Directors who shall be appointed by, and shall serve at the pleasure of, the Board of Directors. Except as otherwise determined by the Board of Directors, the members of the Committee shall be “non-employee directors”, as defined in Rule 16b-3 of the Securities Exchange Act of 1934 (the “Exchange Act”); provided, however, that the failure of the Committee to be so comprised shall not cause any Award to be invalid. The Committee may delegate any of its powers under the Plan to a subcommittee of the Committee (which hereinafter shall also be referred to as the Committee). The Committee may also delegate to any person who is not a member of the Committee or to any administrative group within the Company, any of its powers, responsibilities or duties. In delegating its authority, the Committee shall consider the extent to which any delegation may fail to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act.
B-2
(b) The Committee shall have full authority, subject to the terms of the Plan (including Section 19), to (a) exercise all of the powers granted to it under the Plan, (b) construe, interpret and implement the Plan and all Awards and Award Agreements, (c) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations, (d) make all determinations necessary or advisable in administering the Plan, (e) correct any defect, supply any omission and reconcile any inconsistency in the Plan, (f) amend the Plan, (g) grant Awards and determine who shall receive Awards and the terms and conditions of such Awards, including, but not limited to, conditioning the exercise, vesting, payout or other term or condition of an Award on the achievement of Performance Criteria, (h) amend any outstanding Award in any respect, including, without limitation, to (1) accelerate the time or times at which the Award becomes vested or unrestricted or may be exercised or at which Shares are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee may provide that any Shares delivered pursuant to such Award shall be Restricted Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s underlying Award) or (2) waive or amend any goals, restrictions, conditions or Performance Criteria applicable to such Award, or impose new goals or restrictions and (i) determine at any time whether, to what extent and under what circumstances and method or methods (1) Awards may be (A) settled in cash, Shares, other securities, other Awards or other property, (B) exercised or (C) canceled, forfeited or suspended or (2) Shares, other securities, cash, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the participant or of the Committee. The enumeration of the foregoing powers is not intended and should not be construed to limit in any way the authority of the Committee under the Plan which is intended, to the fullest extent permitted by law, to be plenary. The Plan, and all such rules,
regulations, determinations and interpretations, shall be binding and conclusive upon the Company, its stockholders and all Participants, and upon their respective legal representatives, heirs, beneficiaries, successors and assigns and upon all other persons claiming under or through any of them.
(c) No member of the Board of Directors or the Committee or any employee of the Company or any of its Affiliates (each such person a “Covered Person”) shall have any liability to any person (including, without limitation, any Participant) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award. Each Covered Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan and against and from any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that, the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered
B-3
Persons may be entitled under the Company’s Certificate of Incorporation or by-laws, as a matter of law, by agreement or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.
4. Participants. Except as hereinafter provided, all employees and other service providers of the Company and its Affiliates who are eligible under General Instruction A.1(a) to Form S-8, excluding any member of the Board of Directors who is not a current employee of the Company or its subsidiaries, shall be eligible to receive Awards under the Plan, except that Options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code shall be granted only to employees of the Company or a Subsidiary. Nothing herein contained shall be construed to prevent the making of one or more Awards at the same or different times to the same individual.
5. Share Limitations.
(a) Effective December 8, 2023, the Committee may make Awards under this Plan for up to an aggregate number of 8,500,000 Shares, inclusive of Shares underlying Awards granted prior to such effective date (that have not become available for grant again pursuant to this Section 5(a)) and Shares remaining available for grant immediately prior to such effective date, which may be either treasury Shares or authorized but unissued Shares. To the extent that (i) an Award shall be paid, settled or exchanged or shall expire, lapse, terminate or be cancelled for any reason, in whole or in part, without the issuance of Shares, (ii) any Shares under an Award are not issued because of payment or withholding obligations or (iii) Restricted Shares shall revert back to the Company prior to the lapse of the Restrictions or be applied by the Company for purposes of tax withholding obligations, then the Committee may also grant Awards with respect to such Shares or Restricted Shares. Awards payable only in cash or property other than Shares shall not reduce the aggregate remaining number of Shares with respect to which Awards may be
made under the Plan and Shares relating to any other Awards that are settled in cash or property other than Shares, when settled, shall be added back to the aggregate remaining number of Shares with respect to which Awards may be made under the Plan. The maximum number of Shares that may be issued under the Plan shall be adjusted by the Committee as appropriate to account for the events provided for in Section 12 hereof. Any Shares with respect to which the Company becomes obligated to make Awards through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity, shall not count against the Shares available to be delivered pursuant to Awards under this Plan.
(b) In no event shall any Participant be granted Awards during any one (1) calendar year for, or that relate to, an aggregate number of Shares exceeding 2,000,000. The maximum number of Shares underlying Awards that may be granted to an individual in any one (1) calendar year under the Plan shall be adjusted by the Committee as appropriate to account for the events provided for in Section 12 hereof.
6. Options. Options granted under the Plan shall be either incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, or non-qualified options, as determined by the Committee in its sole discretion.
(a) Terms and Conditions. The form, terms and conditions of each Option shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, provisions relating to the vesting and exercisability of such Options as well as the conditions or circumstances upon which such Options may be accelerated, extended, forfeited or otherwise modified. The Committee may, in its sole discretion, establish one or more conditions to the vesting or exercise of an Option including, without limitation, conditions the satisfaction of which are measured by Performance Criteria; provided that, if such Option is designated as an incentive stock option, then such condition or conditions shall not be
B-4
inconsistent with Section 422 of the Internal Revenue Code. Unless the Award Agreement specifies that the Option is an incentive stock option, it shall be a non-qualified stock option. All or any part of any Options granted to any Participant may be made exercisable upon the occurrence of such special circumstances or events as determined in the sole discretion of the Committee.
(b) Exercise Price for Options. The exercise price per Share of the Shares to be purchased pursuant to any Option shall be fixed by the Committee at the time an Option is granted, but in no event shall it be less than the Fair Market Value of a Share on the day on which the Option is granted, except for Options granted pursuant to the Distribution in connection with outstanding MSG Sports stock options granted prior to the Distribution. Such exercise price shall thereafter be subject to adjustment as required by the Award Agreement relating to each Option or Section 12 hereof.
(c) Duration of Options. The duration of any Option granted under this Plan shall be for a period fixed by the Committee but shall, except as described in the next sentence, in no event be more than ten (10) years. Notwithstanding the foregoing, an Award Agreement may provide that, in the event the Participant dies while the Option is outstanding, the Option will remain outstanding until the first anniversary of the Participant’s date of death, and whether or not such first anniversary occurs prior to or following the expiration of ten (10) years from the date the Option was granted.
(d) Incentive Stock Options Granted to Ten Percent Stockholders. To the extent required by Section 422 of the Internal Revenue Code, no Option which is intended to qualify as an incentive stock option shall be granted under this Plan to any employee who, at the time the Option is granted, owns, or is considered owning, within the meaning of Section 422 of the Internal Revenue Code, shares possessing more than ten percent (10%) of the total combined voting power
or value of all classes of stock of the Company or any Subsidiary, unless the exercise price under such Option is at least one hundred and ten percent (110%) of the Fair Market Value of a Share on the date such Option is granted and the duration of such option is no more than five (5) years.
(e) Initial Exercisability Limitation. The aggregate Fair Market Value (determined at the time that an Option is granted) of the Shares with respect to incentive stock options granted in any calendar year under all stock option plans of the Company or any corporation which (at the time of the granting of such incentive stock option) was a parent or Subsidiary of the Company, or of any predecessor corporation of any such corporation, which are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000, or, if different, the maximum allowed under Section 422 of the Internal Revenue Code.
(f) Settlement of an Option. When an Option is exercised pursuant to Section 8 hereof, the Committee, in its sole discretion, may elect, in lieu of issuing Shares pursuant to the terms of the Option, to settle the Option by paying the Participant an amount equal to the product obtained by multiplying (i) the excess of the Fair Market Value of one Share on the date the Option is exercised over the exercise price of the Option (the “Option Spread”) by (ii) the number of Shares with respect to which the Option is exercised. The amount payable to the Participant in these circumstances shall be paid by the Company either in cash or in Shares having a Fair Market Value equal to the Option Spread, or a combination thereof, as the Committee shall determine at the time the Option is exercised or at the time the Option is granted.
7. Rights. The Committee may grant to eligible service providers the right to receive such number of Rights, as determined by the Committee in its sole discretion.
(a) Terms and Conditions. The form, terms and conditions of each Right shall be determined by
B-5
the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, provisions relating to the vesting and exercisability of such Rights as well as the conditions or circumstances upon which such Rights may be accelerated, extended, forfeited or otherwise modified. The Committee may, in its sole discretion, establish one or more conditions to the vesting or exercise of a Right including, without limitation, conditions the satisfaction of which are measured by Performance Criteria. All or any part of any outstanding Rights granted to any Participant may be made exercisable upon the occurrence of such special circumstances or events as determined in the sole discretion of the Committee.
(b) Exercise Price for Rights. The exercise price of each Right shall be fixed by the Committee at the time a Right is granted, but in no event shall it be less than the Fair Market Value of a Share on the day on which the Right is granted. Such exercise price shall thereafter be subject to adjustment as required by the Award Agreement relating to each Right or Section 12 hereof.
(c) Duration of Rights. The duration of any Right granted under this Plan shall be for a period fixed by the Committee but shall, except as described in the next sentence, in no event be more than ten (10) years. Notwithstanding the foregoing, an Award Agreement may provide that, in the event the Participant dies while the Right is outstanding, the Right will remain outstanding until the first anniversary of the Participant’s date of death, and whether or not such first anniversary occurs prior to or following the expiration of ten (10) years from the date the Right was granted.
(d) Settlement of Rights. Upon the exercise of any Rights, the Participant shall be entitled to receive from the Company an amount equal to the product obtained by multiplying (i) the excess of the Fair Market Value of one Share on the date the Rights are exercised over the exercise price of the related Right by (ii) the number of Shares to which such Rights are related. Such amount shall be paid in cash, in Shares having a Fair Market
Value equal to such amount, or a combination of cash and Shares, as the Committee shall determine at the time the Right is exercised or at the time the Right is granted.
8. Exercise of Options and Rights.
(a) An Option or Right shall be exercised by the delivery to any person who has been designated by the Company for the purpose of receiving the same, of a written notice duly signed by the Participant (or the representative of the estate or the heirs of a deceased Participant) to such effect (or electronic notice in a manner, if any, previously approved by the Company). Unless the Company chooses to settle an Option in cash, Shares or a combination thereof pursuant to Section 6(f) hereof, the Participant shall be required to deliver to the Company, within five (5) days of the delivery of the notice described above, either cash, a check payable to the order of the Company, Shares duly endorsed over to the Company (which Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise) or any combination of such methods of payment, which together amount to the full exercise price of the Shares purchased pursuant to the exercise of the Option. Notwithstanding the preceding sentence, the Company may establish an electronic exercise program with a broker and the Company and the Participant may agree upon any other reasonable manner of providing for payment of the exercise price of the Option.
(b) Except to the extent the Committee chooses to settle any Option or Right in cash pursuant to Section 6(f) or 7(d) hereof, within a reasonable time after exercise of an Option or Right the Company shall either issue to the Participant a certificate representing the Shares purchased pursuant to the exercise of the Option or Right or credit the number of such Shares to a book-entry account. To the extent the Committee chooses to settle any Option or Right in cash pursuant to Section 6(f) or 7(d), within a reasonable time after exercise of an Option or Right the Company shall cause to be delivered to the person entitled thereto
B-6
a payment for the amount payable pursuant to the exercise of the Option or Right.
9. Restricted Shares. The Committee may grant to eligible service providers the right to receive such number of Restricted Shares, as determined by the Committee in its sole discretion.
(a) Issuance; Terms and Conditions. The form, terms and conditions of each Restricted Share shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, the Restrictions upon such Restricted Shares, the dates as of which Restrictions upon such Restricted Shares will cease, and the conditions or circumstances upon which such Restricted Shares will be forfeited or otherwise modified. The Committee may, in its sole discretion, establish one or more Restrictions to the vesting of a Restricted Share that relate to the satisfaction of Performance Criteria.
(b) Payment of Par Value. To the extent a Participant is required by law to pay to the Company the par value of a Restricted Share, such Participant shall have forty-five (45) business days from the date of such grant to pay to the Company, in cash or by check, an amount equal to the par value of a Share multiplied by the number of Shares or Restricted Shares which have been granted to such Participant by the Committee. In such instances, if the Participant fails to make payment to the Company for such Shares or Restricted Shares within forty-five (45) business days of the grant thereof, the Company shall withhold, or shall cause to be withheld, the amount of such payment from compensation otherwise due the Participant from the Company or any Affiliate. Unless the Committee determines otherwise, a Participant’s prior service with the Company or any of its Affiliates shall be deemed sufficient consideration for such Restricted Shares and no payment therefore (including, without limitation, for the par value of the Restricted Shares) shall be due from the Participant. Subject to the provisions of Section 15 hereof, the Committee, in its sole
discretion, shall either issue to the Participant a certificate representing such Restricted Shares or credit the number of such Restricted Shares to a book-entry account upon the payment due, if any, pursuant to this paragraph.
(c) Restriction on Shares. In no event shall a Restricted Share be sold, assigned, transferred, pledged or otherwise disposed of or encumbered until the expiration of the Restricted Period which relates to such Restricted Share. All or any part of any outstanding Restricted Shares granted to any Participant may be vested in full and the Restrictions thereon shall lapse upon the occurrence of such special circumstances or events as determined in the sole discretion of the Committee.
(d) Forfeiture of Restricted Shares. If Restricted Shares are forfeited pursuant to the terms of the Plan or an Award Agreement, such Restricted Shares shall revert back and belong to the Company. In the event that any Restricted Shares should be forfeited by the Participant, revert back and belong to the Company, any stock certificate or certificates representing such Restricted Shares shall be cancelled and the Restricted Shares shall be returned to the treasury of the Company. Upon the reversion of such Restricted Shares, the Company shall repay to the Participant or (in the case of death) to the representative of the Participant’s estate, the full cash amount paid, if any, to the Company by the Participant for such Restricted Shares pursuant to Section 9(b) hereof.
(e) Right to Vote and Receive Dividends on Restricted Shares. Each Participant shall, during the Restricted Period, be the beneficial and record owner of such Restricted Shares and shall have full voting rights with respect thereto. Unless the Committee determines otherwise, during the Restricted Period, all ordinary cash dividends (as determined by the Committee in its sole discretion) paid upon any Restricted Share shall be retained by the Company for the account of the relevant Participant. Such dividends shall revert back to the Company if for any reason the Restricted Share upon which such dividends were
B-7
paid reverts back to the Company. Upon the expiration of the Restricted Period, all such dividends made on such Restricted Share and retained by the Company will be paid to the relevant Participant.
10. Restricted Stock Units. The Committee may grant to eligible service providers such number of Restricted Stock Units as it may determine in its sole discretion.
(a) Terms and Conditions. The form, terms and conditions of each Restricted Stock Unit shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, the conditions or circumstances upon which such Restricted Stock Unit will be paid, forfeited or otherwise modified, and the date or dates upon which any Shares, cash or other property shall be delivered to the Participant in respect of the Restricted Stock Units. The Committee may, in its sole discretion, establish one or more conditions to the vesting of a Restricted Stock Unit including, without limitation, conditions the satisfaction of which are measured by Performance Criteria. All or any part of any outstanding Restricted Stock Unit granted to any Participant may be vested in full or paid upon the occurrence of such special circumstances or events as determined in the sole discretion of the Committee.
(b) Settlement of Restricted Stock Units. The Committee, in its sole discretion, may instruct the Company to pay on the date when Shares would otherwise be issued pursuant to a Restricted Stock Unit, in lieu of such Shares, a cash amount equal to the number of such Shares multiplied by the Fair Market Value of a Share on the date when Shares would otherwise have been issued. If a Participant is entitled to receive other stock, securities or other property as a result of an adjustment, pursuant to Section 12 hereof, the Committee, in its sole discretion, may instruct the Company to pay, in lieu of such other stock, securities or other property, cash equal to the fair market value thereof as determined in good faith
by the Committee. Until the delivery of such Shares, cash, securities or other property, the rights of a Participant with respect to a Restricted Stock Unit shall be only those of a general unsecured creditor of the Company.
(c) Right to Receive Dividends on Restricted Stock Units. Unless the Committee determines otherwise, during the period prior to payment of the Restricted Stock Unit, all ordinary cash dividends (as determined by the Committee in its sole discretion) that would have been paid upon any Share underlying a Restricted Stock Unit had such Shares been issued shall be paid only at the time and to the extent such Restricted Stock Unit is vested.
11. Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards (including unrestricted Shares) in such amounts and subject to such terms and conditions as the Committee shall determine. Such Awards may entail the transfer of actual Shares, or payment in cash or otherwise of amounts based on the value of Shares.
12. Certain Adjustments. (a) In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects Shares such that the failure to make an adjustment to an Award would not fairly protect the rights represented by the Award in accordance with the essential intent and principles thereof (each such event, an “Adjustment Event”), then the Committee shall, in such manner as it may determine to be equitable in its sole discretion, adjust any or all of the terms of an outstanding Award (including, without limitation, the number of Shares covered by such outstanding Award, the type of property to which the Award is subject and the exercise price of such Award). In determining adjustments to be made under this Section 12(a), the Committee may take into
B-8
account such factors as it determines to be appropriate, including without limitation (i) the provisions of applicable law and (ii) the potential tax or accounting consequences of an adjustment (or not making an adjustment) and, in light of such factors or others, may make adjustments that are not uniform or proportionate among outstanding Awards.
(b) Fractional Shares or Securities. Any fractional shares or securities payable upon the exercise of an Award as a result of an adjustment pursuant to this Section 12 shall, at the election of the Committee, be payable in cash, Shares, or a combination thereof, on such bases as the Committee may determine in its sole discretion.
13. No Rights of a Stockholder. A Participant shall not be deemed to be the holder of, or have any of the rights of a stockholder with respect to, any Shares subject to Options, Rights or Restricted Stock Units unless and until the Company shall have issued and delivered Shares to the Participant and said Participant’s name shall have been entered as a stockholder of record on the books of the Company. Thereupon, such Participant shall have full voting, dividend and other ownership rights with respect to such Shares. The Company will not be obligated to issue or deliver any Shares unless and until all legal matters in connection with the issuance and delivery of Shares have been approved by the Company’s counsel and the Company’s counsel determines that all applicable federal, state and other laws and regulations have been complied with and all listing requirements for relevant stock exchanges have been met.
14. No Right to Continued Service. Nothing in the Plan or in any Award Agreement shall confer upon any Participant the right to continued service by the Company or any Affiliate or affect any right which the Company or any Affiliate may have to terminate such service.
15. Issuance of Shares and Consents. If the Committee shall at any time determine that any Consent is necessary or desirable as a condition of, or in connection with, the granting of any
Award, the delivery of Shares or the delivery of any cash, securities or other property under the Plan, or the taking of any other action, then such action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee. Any stock certificate representing Restricted Shares shall contain an appropriate legend referring to the Plan and the Restrictions upon such Restricted Shares. Simultaneously with delivery of any stock certificate for Restricted Shares, the Company may cause a stop transfer order with respect to such certificate to be placed with the transfer agent of the Shares.
16. Withholding. If the Company or an Affiliate shall be required to withhold any amounts by reason of a federal, state or local tax laws, rules or regulations in respect of any Award, the Company or an Affiliate shall be entitled to deduct or withhold such amounts from any payments (including, without limitation Shares which would otherwise be issued to the Participant pursuant to the Award; provided that, to the extent desired for GAAP purposes, such withholding shall not exceed the statutory minimum amount required to be withheld) to be made to the Participant. In any event, the Participant shall make available to the Company or Affiliate, promptly when requested by the Company or such Affiliate, sufficient funds or Shares to meet the requirements of such withholding and the Company or Affiliate shall be entitled to take and authorize such steps as it may deem advisable in order to have such funds made available to the Company or Affiliate out of any funds or property due to the Participant.
17. Right of Offset. The Company shall have the right to offset against its obligation to deliver Shares, cash or other property under any Award that does not constitute “non-qualified deferred compensation” pursuant to Section 409A of the Internal Revenue Code any outstanding amounts of whatever nature that the Participant then owes to the Company or any of its Affiliates.
18. Non-Transferability of Awards. Unless the Committee shall permit (on such terms and
B-9
conditions as it shall establish) an Award to be transferred to a member of the Participant’s immediate family or to a trust or similar vehicle for the benefit of members of the Participant’s immediate family (collectively, the “Permitted Transferees”), no Award shall be assignable or transferable except by will or by the laws of descent and distribution, and except to the extent required by law, no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant or, if applicable, the Permitted Transferees.
19. Administration and Amendment of the Plan. The Board of Directors or the Committee may discontinue the Plan at any time and from time to time may amend or revise the terms of the Plan or any Award Agreement, as permitted by applicable law, except that it may not (a) make any amendment or revision in a manner unfavorable to a Participant (other than if immaterial), without the consent of the Participant or (b) make any amendment or revision without the approval of the stockholders of the Company if such approval is required by the rules of an exchange on which Shares are traded. Consent of the Participant shall not be required solely pursuant to the previous sentence in respect of any adjustment made pursuant to Section 12(a) except to the extent the terms of an Award Agreement expressly refer to an Adjustment Event, in which case such terms shall not be amended in a manner unfavorable to a Participant (other than if immaterial) without such Participant’s consent.
20. Clawback. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement, or any clawback policy adopted by the Company.
21. No Repricing Reloads. Unless otherwise approved by the stockholders of the Company, Options and Rights will not be repriced (other than in accordance with the adjustment provisions of Section 12), repurchased for cash on a date when the exercise price of such Option or Right is equal to or exceeds the Fair Market Value a Share or be subject to automatic reload provisions.
22. Effective Date. The Plan, as amended, shall become effective on December 8, 2023.
23. Severability. If any of the provisions of this Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby; provided that, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder.
24. Plan Headings. The headings in this Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof.
25. Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements, as to the persons to receive Awards under the Plan, and the terms and provisions of Awards under the Plan.
26. Governing Law. The Plan and any Award Agreements shall be governed by and construed
B-10
in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.
27. Successors and Assigns. The terms of this Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns.
28. Duration. This Plan shall remain in effect until ten years from December 8, 2023 unless sooner terminated by the Committee or the Board of Directors. Awards theretofore granted may extend beyond that date in accordance with the provisions of the Plan.
29. Distribution Issuance. (a) Notwithstanding Section 3 of the Plan, the Compensation Committee (the “MSG Sports Committee”) of the Board of Directors of Madison Square Garden Sports Corp. (“MSG Sports”) previously granted Awards with respect to outstanding equity awards of MSG Sports in connection with the distribution by MSG Sports to holders of its common stock of all of the outstanding Shares (such distribution,
the “Distribution”). In this capacity, the MSG Sports Committee had full authority to grant Awards prior to, and in connection with, the Distribution and determine the recipients, terms and conditions of such Awards, and each member of the MSG Sports Committee shall be considered a “Covered Person” for purposes of Section 3(c) of the Plan. Following the Distribution, such Awards that were granted by the MSG Sports Committee prior to, and in connection with, the Distribution shall be administered solely by the Committee in accordance with Section 3 of the Plan.
(b) Notwithstanding Section 6(b) of the Plan, the exercise price of each Option granted by the MSG Sports Committee in connection with the Distribution may be less than the Fair Market Value of a Share on the day on which the Option is granted, in order to preserve the intrinsic value of the outstanding MSG Sports equity awards prior to the Distribution in accordance with the requirements of Section 409A of the Internal Revenue Code.
B-11
ANNEX C — 2020 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS AS AMENDED THROUGH DECEMBER 8, 2023
1. Purpose. The purposes of the 2020 Stock Plan for Non-Employee Directors, as amended, are to attract and retain individuals who are not employees of the Company as members of the Board of Directors, by encouraging them to acquire a proprietary interest in the Company which is parallel to that of the stockholders of the Company.
2. Definitions. The following terms shall have the respective meanings assigned to them as used herein:
(a) “Award” shall mean an Option, Restricted Stock Unit and other stock-based award granted under the Plan.
(b) “Award Agreement” shall mean an agreement which may be entered into by a Participant and the Company, setting forth the terms and provisions applicable to Awards granted to such Participant.
(c) “Board of Directors” shall mean the Board of Directors of the Company, as constituted at any time.
(d) “Committee” shall mean the Compensation Committee of the Board of Directors, as described in Section 3.
(e) “Company” shall mean Sphere Entertainment Co. (formerly known as Madison Square Garden Entertainment Corp. and MSG Entertainment Spinco, Inc.), a Delaware corporation.
(f) “Consent” shall mean (i) any listing, registration or qualification requirement in respect of an Award or Share with respect to any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the Participant with respect to the disposition of Shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing,
registration or qualification requirement or to obtain an exemption therefrom, (iii) any and all other consents, clearances and approvals in respect of an action under the Plan by any governmental or other regulatory body or any stock exchange or self-regulatory agency, (iv) any and all consents by the Participant to (A) the Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan and (B) the Company’s imposing sales and transfer procedures and restrictions on Shares delivered under the Plan and (v) any and all other consents or authorizations required to comply with, or required to be obtained under law.
(g) “Fair Market Value” on a specified date shall mean the closing price for a Share on the stock exchange, if any, on which such Shares are primarily traded, but if no Shares were traded on such date, the average of the bid and asked closing prices at which one Share is traded on the over-the-counter market, as reported on the New York Stock Exchange or any other stock exchange on which the Shares may be traded, or, if none of the above is applicable, the value of a Share as established by the Committee for such date using any reasonable method of valuation.
(h) “GAAP” shall mean accounting principles generally accepted in the United States of America.
(i) “Non-Employee Director” shall mean a member of the Board of Directors who is not a current employee of the Company or its subsidiaries.
(j) “Option” shall mean an option granted pursuant to Section 6.1 of the Plan.
(k) “Participant” shall mean a Non-Employee Director who has been granted an Award under the Plan.
C-1
(l) “Plan” shall mean the 2020 Stock Plan for Non-Employee Directors, as amended from time to time.
(m) “Restricted Stock Unit” shall mean a restricted stock unit granted pursuant to Section 6.2 of the Plan, each such unit representing an unfunded and unsecured promise to deliver a Share (or cash or other property equal in value to the Share).
(n) “Share” shall mean a share of Class A Common Stock, par value $0.01 per share of the Company.
3. Plan Administration.
3.1 Committee. The Plan shall be administered by the Committee, which shall consist of at least two members of the Board of Directors who shall be appointed by, and shall serve at the pleasure of, the Board of Directors. Except as otherwise determined by the Board of Directors, the members of the Committee shall be “non-employee directors” under Rule 16b-3 of the Securities Exchange Act of 1934 (the “Exchange Act”); provided, however, that the failure of the Committee to be so comprised shall not cause any Award to be invalid. The Committee may delegate any of its powers under the Plan to a subcommittee of the Committee (which hereinafter shall also be referred to as the Committee). It is expected and permitted that members of the Committee shall be Participants.
3.2 Authority. The Committee shall have full authority, subject to the terms of the Plan (including Section 12), to (a) exercise all of the powers granted to it under the Plan, (b) construe, interpret and implement the Plan and all Awards and Award Agreements, (c) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations, (d) make all determinations necessary or advisable in administering the Plan, (e) correct any defect, supply any omission and reconcile any inconsistency in the Plan, (f) amend the Plan, (g) grant Awards and determine who shall receive Awards and the terms and conditions of such
Awards, (h) amend any outstanding Award in any respect, including, without limitation, to (1) accelerate the time or times at which the Award becomes vested or unrestricted or may be exercised or at which Shares are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee may provide that any Shares delivered pursuant to such Award shall be subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s underlying Award) or (2) waive or amend any restrictions or conditions applicable to such Award, or impose new restrictions or conditions and (i) determine at any time whether, to what extent and under what circumstances and method or methods (1) Awards may be (A) settled in cash, Shares, other securities, other Awards or other property, (B) exercised or (C) canceled, forfeited or suspended or (2) Shares, other securities, cash, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Participant or of the Committee. The enumeration of the foregoing powers is not intended and should not be construed to limit in any way the authority of the Committee under the Plan which is intended, to the fullest extent permitted by law, to be plenary. The Plan, and all such rules, regulations, determinations and interpretations, shall be binding and conclusive upon the Company, its stockholders and all Participants, and upon their respective legal representatives, heirs, beneficiaries, successors and assigns and upon all other persons claiming under or through any of them.
3.3 Liability. No member of the Board of Directors or the Committee or any employee of the Company or any of its affiliates (each such person a “Covered Person”) shall have any liability to any person (including, without limitation, any Participant) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award. Each Covered Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or
C-2
incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan and against and from any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Certificate of Incorporation or by-laws, as a matter of law, by agreement or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.
4. Eligibility. All Non-Employee Directors are eligible for the grant of Awards. Non-Employee Directors of Madison Square Garden Sports Corp. (“MSG Sports”) were also eligible for the grant of Shares in connection with the spin-off of the Company from MSG Sports in respect of their outstanding awards issued by MSG Sports.
5. Shares Subject to the Plan.
5.1 Number. Effective December 8, 2023, the aggregate number of Shares that may be subject to Awards granted under this Plan shall not exceed 500,000, inclusive of Shares underlying
Awards granted prior to such effective date (that have not become available for grant again pursuant to this Section 5.1) and Shares remaining available for grant immediately prior to such effective date, which may be either treasury Shares or authorized but unissued Shares. To the extent that (i) an Award shall be paid, settled or exchanged or shall expire, lapse, terminate or be cancelled for any reason without the issuance of Shares or (ii) any Shares under an Award are not issued because of payment or withholding obligations, then the Committee may also grant Awards with respect to such Shares. Awards payable only in cash or property other than Shares shall not reduce the aggregate remaining number of Shares with respect to which Awards may be made under the Plan and Shares relating to any other Awards that are settled in cash or property other than Shares, when settled, shall be added back to the aggregate remaining number of Shares with respect to which Awards may be made under the Plan. The maximum number of Shares that may be issued under the Plan shall be adjusted by the Committee as appropriate to account for the adjustments provided for in Section 5.2 hereof. Any Shares with respect to which the Company becomes obligated to make Awards through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity, shall not count against the Shares available to be delivered pursuant to Awards under this Plan.
5.2 Adjustment in Capitalization. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects Shares such that the failure to make an adjustment to an Award would not fairly protect the rights represented by the Award in accordance with the essential intent and principles thereof (each such event, an “Adjustment Event”), then the Committee shall, in such manner as it may determine to be equitable in its sole discretion, adjust any or all of the terms of an outstanding
C-3
Award (including, without limitation, the number of Shares covered by such outstanding Award, the type of property to which the Award is subject and the exercise price of such Award). In determining adjustments to be made under this Section 5.2, the Committee may take into account such factors as it determines to be appropriate, including without limitation (i) the provisions of applicable law and (ii) the potential tax or accounting consequences of an adjustment (or not making an adjustment) and, in light of such factors or others, may make adjustments that are not uniform or proportionate among outstanding Awards. Any fractional shares or securities payable upon the exercise of an Award as a result of an adjustment pursuant to this Section 5.2 shall, at the election of the Committee, be payable in cash, Shares, or a combination thereof, on such bases as the Committee may determine in its sole discretion.
6. Terms and Conditions of Awards.
6.1 Options.
6.1.1 Terms and Conditions. The form, terms and conditions of each Option shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, provisions relating to the vesting and exercisability of such Options as well as the conditions or circumstances upon which such Options may be accelerated, extended, forfeited or otherwise modified; provided, however, that unless the Award Agreement states otherwise, all Options granted under the Plan shall be fully vested and exercisable on the date of grant. All or any part of any unexercised Options granted to any Participant, to the extent not otherwise exercisable, may be made exercisable upon the occurrence of such special circumstances or events as determined in the sole discretion of the Committee.
6.1.2 Exercise Price. The exercise price per Share of the Shares to be purchased pursuant to each Option shall be fixed by the Committee at the time an Option is granted, but in no event shall it be less than the Fair Market Value of a Share on
the date on which the Option is granted. Such exercise price shall thereafter be subject to adjustment as required by the Award Agreement relating to each Option or Section 5.2 hereof.
6.1.3 Duration of Options. The duration of any Option granted under this Plan shall be for a period fixed by the Committee but shall, except as described in the next sentence, in no event be more than ten (10) years. Notwithstanding the foregoing, an Award Agreement may provide that, in the event the Participant dies while the Option is outstanding, the Option will remain outstanding until the first anniversary of the Participant’s date of death, and whether or not such first anniversary occurs prior to or following the expiration of ten (10) years from the date the Option was granted.
6.1.4 Written Notice for Exercise. An Option shall be exercised by the delivery to any person who has been designated by the Company for the purpose of receiving the same, of a written notice duly signed by the Participant (or the representative of the estate or the heirs of a deceased Participant) to such effect (or electronic notice in a manner, if any, previously approved by the Company).
6.1.5 Payment. Unless the Company chooses to settle an Option in cash, Shares or a combination thereof pursuant to Section 6.1.6 hereof, the Participant shall be required to deliver to the Company, within five (5) days of the delivery of the notice described above, either cash, a check payable to the order of the Company, Shares duly endorsed over to the Company (which Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise) or any combination of such methods, which together amount to the full exercise price of the Shares purchased pursuant to the exercise of the Option. Notwithstanding the preceding sentence, the Company may establish an electronic exercise program with a broker and the Company and the Participant may agree upon any other reasonable manner of providing for payment of the exercise price of the Option. Except to the extent the Committee chooses to settle any Option in cash
C-4
pursuant to Section 6.1.6 hereof, within a reasonable time after exercise of an Option the Company shall either issue to the Participant a certificate representing the Shares purchased pursuant to the exercise of the Option or credit the number of such Shares to a book-entry account. To the extent the Committee chooses to settle any Option in cash pursuant to Section 6.1.6, within a reasonable time after exercise of an Option, the Company shall cause to be delivered to the person entitled thereto a payment for the amount payable pursuant to the exercise of the Option.
6.1.6 Settlement of an Option. When an Option is exercised pursuant to Section 6.1.4 hereof, the Committee, in its sole discretion, may elect, in lieu of issuing Shares pursuant to the terms of the Option, to settle the Option by paying the Participant an amount equal to the product obtained by multiplying (i) the excess of the Fair Market Value of one Share on the date the Option is exercised over the exercise price of the Option (the “Option Spread”) by (ii) the number of Shares with respect to which the Option is exercised. The amount payable to the Participant in these circumstances shall be paid by the Company either in cash or in Shares having a Fair Market Value equal to the Option Spread, or a combination thereof, as the Committee shall determine at the time the Option is exercised or at the time the Option is granted.
6.2 Restricted Stock Units.
6.2.1 Terms and Conditions. The form, terms and conditions of each Restricted Stock Unit shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, the conditions or circumstances upon which such Restricted Stock Unit will be paid, forfeited or otherwise modified, and the date or dates upon which any Shares, cash or other property shall be delivered to the Participant in respect of the Restricted Stock Units; provided, however, that unless the Award Agreement states otherwise, all Restricted Stock Units granted under the Plan shall be fully vested on the date of grant and shall be payable on such date as determined by the
Committee. All or any part of any Restricted Stock Units granted to any Participant, to the extent not otherwise paid, may be paid to the Participant upon the occurrence of such special circumstances or events as determined in the sole discretion of the Committee.
6.2.2 Settlement of Restricted Stock Units. The Committee, in its sole discretion, may instruct the Company to pay on the date when Shares would otherwise be issued pursuant to a Restricted Stock Unit, in lieu of such Shares, a cash amount equal to the number of such Shares multiplied by the Fair Market Value of a Share on the date when Shares would otherwise have been issued. If a Participant is entitled to receive other stock, securities or other property as a result of adjustment, pursuant to Section 5.2 hereof, the Committee, in its sole discretion, may instruct the Company to pay, in lieu of such other stock, securities or other property, cash equal to the fair market value thereof as determined in good faith by the Committee. Until the delivery of such Shares, cash, securities or other property, the rights of a Participant with respect to a Restricted Stock Unit shall be only those of a general unsecured creditor of the Company.
6.2.3 Right to Receive Dividends on Restricted Stock Units. Unless the Committee determines otherwise, during the period prior to payment of the Restricted Stock Unit, all ordinary cash dividends (as determined by the Committee in its sole discretion) that would have been paid upon any Share underlying a Restricted Stock Unit had such Shares been issued shall be paid only at the time and to the extent such Restricted Stock Unit is vested.
6.3 Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards (including, without limitation, restricted Shares, unrestricted Shares and stock appreciation rights) in such amounts and subject to such terms and conditions as the Committee shall determine. Such Awards may entail the transfer of actual Shares, or payment in cash or otherwise of amounts based on the value of Shares.
C-5
7. No Rights of a Stockholder. A Participant shall not have any of the rights or privileges of a stockholder of the Company with respect to the Shares subject to an Award unless and until such Shares have been issued and have been duly registered in the Participant’s name. Thereupon, such Participant shall have full voting, dividend and other ownership rights with respect to such Shares. The Company will not be obligated to issue or deliver any Shares unless and until all legal matters in connection with the issuance and delivery of Shares have been approved by the Company’s counsel and the Company’s counsel determines that all applicable federal, state and other laws and regulations have been complied with and all listing requirements for relevant stock exchanges have been met.
8. Compliance with Rule 16b-3. It is the Company’s intent that the Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Act”). If any provision of the Plan is later found not to be in compliance with such Rule, the provision shall be deemed null and void. All actions with respect to Awards under the Plan shall be executed in accordance with the requirements of Section 16 of the Act, as amended, and any regulations promulgated thereunder. To the extent that any of the provisions contained herein do not conform with Rule 16b-3 of the Act or any amendments thereto or any successor regulation, then the Committee may make such modifications so as to conform the Plan and any Awards granted thereunder to the Rule’s requirements.
9. Consents. If the Committee shall at any time determine that any Consent is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of Shares or the delivery of any cash, securities or other property under the Plan, or the taking of any other action, then such action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee.
10. Withholding. If the Company shall be required to withhold any amounts by reason of a federal,
state or local tax laws, rules or regulations in respect of any Award, the Company shall be entitled to deduct or withhold such amounts from any payments (including, without limitation Shares which would otherwise be issued to the Participant pursuant to the Award; provided that, to the extent desired for GAAP purposes, such withholding shall not exceed the statutory minimum amount required to be withheld) to be made to the Participant. In any event, the Participant shall make available to the Company, promptly when requested by the Company, sufficient funds or Shares to meet the requirements of such withholding and the Company shall be entitled to take and authorize such steps as it may deem advisable in order to have such funds made available to the Company out of any funds or property due to the Participant.
11. Non-Transferability of Awards. Unless the Committee shall permit (on such terms and conditions as it shall establish) an Award to be transferred to a member of the Participant’s immediate family or to a trust or similar vehicle for the benefit of members of the Participant’s immediate family (collectively, the “Permitted Transferees”), no Award shall be assignable or transferable except by will or by the laws of descent and distribution, and except to the extent required by law, no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant or, if applicable, the Permitted Transferees.
12. Administration and Amendment of Plan. The Board of Directors or the Committee may discontinue the Plan at any time and from time to time may amend or revise the terms of the Plan or any Award Agreement, as permitted by applicable law, except that it may not (a) make any amendment or revision in a manner unfavorable to a Participant (other than if immaterial), without the consent of the Participant or (b) make any amendment or revision without the approval of the stockholders of the Company if such approval
C-6
is required by the rules of an exchange on which Shares are traded. Consent of the Participant shall not be required solely pursuant to the previous sentence in respect of any adjustment made pursuant to Section 5.2 except to the extent the terms of an Award Agreement expressly refer to an Adjustment Event, in which case such terms shall not be amended in a manner unfavorable to a Participant (other than if immaterial) without such Participant’s consent.
13. No Repricing Reloads. Unless otherwise approved by the stockholders of the Company, Options and stock appreciation rights will not be repriced (other than in accordance with the adjustment provisions of Section 5.2), repurchased for cash on a date when the exercise price of such Option or stock appreciation right is equal to or exceeds the Fair Market Value of a Share or be subject to automatic reload provisions.
14. Effective Date. The Plan, as amended, shall become effective on December 8, 2023.
15. Severability. If any of the provisions of this Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby; provided that, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder.
16. Plan Headings. The headings in this Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof.
17. Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among
Participants (whether or not such Participants are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements, as to the terms and provisions of Awards under the Plan.
18. Governing Law. The Plan and any Award Agreements shall be governed by, and construed in accordance with, the laws of the state of Delaware, without reference to principles of conflicts of laws.
19. Successors and Assigns. The terms of the Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns.
20. Duration. This Plan shall remain in effect until ten years from December 8, 2023 unless sooner terminated by the Committee or the Board of Directors. Awards theretofore granted may extend beyond that date in accordance with the provisions of the Plan.
21. Distribution Issuance.
21.1 Notwithstanding Section 3 of the Plan, the Compensation Committee (the “MSG Sports Committee”) of the Board of Directors of MSG Sports previously granted Awards with respect to outstanding equity awards of MSG Sports in connection with the distribution by MSG Sports to holders of its common stock of all of the outstanding Shares (such distribution, the “Distribution”). In this capacity, the MSG Sports Committee had full authority to grant Awards prior to, and in connection with, the Distribution and determine the recipients, terms and conditions of such Awards, and each member of the MSG Sports Committee shall be considered a “Covered Person” for purposes of Section 3.3 of the Plan. Following the Distribution, such Awards that were granted by the MSG Sports Committee prior to, and in connection with, the Distribution shall be administered solely by the Committee in accordance with Section 3.
C-7
SCAN TO VIEW MATERIALS VOTE w SPHERE ENTERTAINMENT CO. TWO PENNSYLVANIA PLAZA YOUR VOTE IS IMPORTANT, PLEASE VOTE TODAY. Vote by the Internet or Telephone or Mail NEW YORK, NY 10121 24 Hours a Day, 7 Days a Week Your Internet or telephone vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR barcode above. Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Time, on December 7, 2023 (December 5, 2023 for participants in the AMC Networks Inc. 401(k) Plan). Have your proxy card in hand when you access the website and then follow the instructions provided. During The Meeting - Go to www.virtualshareholdermeeting.com/SPHR2023 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m., Eastern Time, on December 7, 2023 (December 5, 2023 for participants in the AMC Networks Inc. 401(k) Plan). Have your proxy card in hand when you call and then follow the instructions provided. VOTE BY MAIL Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Sphere Entertainment Co., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Your proxy card must be received by December 7, 2023 (December 5, 2023 for participants in the AMC Networks Inc. 401(k) Plan). If you vote by the Internet or by telephone you do NOT need to mail back your proxy card. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V23609-P99248-Z86160 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY SPHERE ENTERTAINMENT CO. For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the Unless otherwise specified in the spaces provided, number(s) of the nominee(s) for whom you do not the undersigned’s vote is cast FOR the election wish to vote on the line below. of the director nominees listed in Proposal 1 and ! ! ! FOR Proposals 2, 3, 4 and 5 below, as more fully described in the accompanying Proxy Statement. The Board of Directors recommends you vote FOR ALL the following director nominees: 1. Election of the following nominees as directors: (01) Joseph J. Lhota (02) Joel M. Litvin (03) John L. Sykes (04) Carl E. Vogel The Board of Directors recommends you vote FOR the following proposals: For Against Abstain 2. Ratification of the appointment of our independent registered public accounting firm. ! ! ! 3. Approval of the Company’s 2020 Employee Stock Plan, as amended. ! ! ! 4. Approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended. ! ! ! 5. Approval of, on an advisory basis, the compensation of our named executive officers. ! ! ! NOTE: Such other business as may properly come before the meeting or any adjournment thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. Your signature should appear the same as your name appears. If signing as attorney, executor, trustee or guardian, please indicate the capacity in which signing. When signing as joint tenants, all parties to the joint tenancy must sign. When a corporation gives the proxy, it should be signed by an authorized officer and the corporate seal affixed. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders: The Notice, Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com. FOLD AND DETACH HERE V23610-P99248-Z86160 CLASS A PROXY CARD SPHERE ENTERTAINMENT CO. Solicited by the Board of Directors for the Annual Meeting of Stockholders on December 8, 2023 The undersigned hereby appoints Gautam Ranji, Greg Brunner and Mark C. Cresitello, and each of them, jointly and severally, proxies with full power of substitution, to vote all stock of Sphere Entertainment Co. (the “Company”) which the undersigned is entitled to vote at the Company’s Annual Meeting of Stockholders to be held virtually at www.virtualshareholdermeeting.com/SPHR2023, on Friday, December 8, 2023, at 10:00 a.m., Eastern Time, and any adjournment or postponement thereof, hereby ratifying all that said proxies or their substitutes may do by virtue hereof, and the undersigned authorizes and instructs said proxies to vote as stated on the reverse side. If you sign and return this proxy card but do not give any direction, these shares will be voted FOR each of the director nominees in Proposal 1 and FOR Proposals 2, 3, 4 and 5, in the discretion of the proxies, and upon such other matters as may properly come before the Annual Meeting and at any adjournment or postponement thereof. Attention participants in the AMC Networks Inc. 401(k) Plan: If you hold shares of the Company’s Class A Common Stock through the AMC Networks Inc. 401(k) Plan, you should complete, sign and return this proxy card to instruct Fidelity Management Trust Company, as Trustee of the AMC Networks Inc. 401(k) Plan, how to vote these shares. Your proxy card must be received no later than 11:59 p.m., Eastern Time, on December 5, 2023 so that the Trustee (who votes the shares on behalf of the AMC Networks Inc. 401(k) Plan participants) has adequate time to tabulate the voting instructions. Fidelity Management Trust Company shall not vote shares of the Company’s Class A Common Stock allocated to a participant’s account for which it has not received instructions from the participant. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting, the Proxy Statement and Annual Report on Form 10-K of the Company. (Continued and to be signed on the reverse side)
SCAN TO VIEW MATERIALS VOTE w SPHERE ENTERTAINMENT CO. TWO PENNSYLVANIA PLAZA YOUR VOTE IS IMPORTANT, PLEASE VOTE TODAY. Vote by the Internet or Telephone or Mail NEW YORK, NY 10121 24 Hours a Day, 7 Days a Week Your Internet or telephone vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR barcode above. Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Time, on December 7, 2023. Have your proxy card in hand when you access the website and then follow the instructions provided. During The Meeting - Go to www.virtualshareholdermeeting.com/SPHR2023 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m., Eastern Time, on December 7, 2023. Have your proxy card in hand when you call and then follow the instructions provided. VOTE BY MAIL Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Sphere Entertainment Co., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Your proxy card must be received by December 7, 2023. If you vote by the Internet or by telephone you do NOT need to mail back your proxy card. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V23611-Z86161 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY SPHERE ENTERTAINMENT CO. For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the Unless otherwise specified in the spaces provided, number(s) of the nominee(s) for whom you do not the undersigned’s vote is cast FOR the election wish to vote on the line below. of the director nominees listed in Proposal 1 and ! ! ! FOR Proposals 2, 3, 4 and 5 below, as more fully described in the accompanying Proxy Statement. The Board of Directors recommends you vote FOR ALL the following director nominees: 1. Election of the following nominees as directors: (01) James L. Dolan (07) Quentin F. Dolan (02) Charles F. Dolan (08) Ryan T. Dolan (03) Charles P. Dolan (09) Thomas C. Dolan (04) Kristin A. Dolan (10) Brian G. Sweeney (05) Marianne Dolan Weber (11) Vincent Tese (06) Paul J. Dolan (12) Isiah L. Thomas III The Board of Directors recommends you vote FOR the following proposals: For Against Abstain 2. Ratification of the appointment of our independent registered public accounting firm. ! ! ! 3. Approval of the Company’s 2020 Employee Stock Plan, as amended. ! ! ! 4. Approval of the Company’s 2020 Stock Plan for Non-Employee Directors, as amended. ! ! ! 5. Approval of, on an advisory basis, the compensation of our named executive officers. ! ! ! NOTE: Such other business as may properly come before the meeting or any adjournment thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. Your signature should appear the same as your name appears. If signing as attorney, executor, trustee or guardian, please indicate the capacity in which signing. When signing as joint tenants, all parties to the joint tenancy must sign. When a corporation gives the proxy, it should be signed by an authorized officer and the corporate seal affixed. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders: The Notice, Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com. ? FOLD AND DETACH HERE? V23612-Z86161 CLASS B PROXY CARD SPHERE ENTERTAINMENT CO. Solicited by the Board of Directors for the Annual Meeting of Stockholders on December 8, 2023 The undersigned hereby appoints Gautam Ranji, Greg Brunner and Mark C. Cresitello, and each of them, jointly and severally, proxies with full power of substitution, to vote all stock of Sphere Entertainment Co. (the “Company”) which the undersigned is entitled to vote at the Company’s Annual Meeting of Stockholders to be held virtually at www.virtualshareholdermeeting.com/SPHR2023, on Friday, December 8, 2023, at 10:00 a.m., Eastern Time, and any adjournment or postponement thereof, hereby ratifying all that said proxies or their substitutes may do by virtue hereof, and the undersigned authorizes and instructs said proxies to vote as stated on the reverse side. If you sign and return this proxy card but do not give any direction, these shares will be voted FOR each of the director nominees in Proposal 1 and FOR Proposals 2, 3, 4 and 5, in the discretion of the proxies, and upon such other matters as may properly come before the Annual Meeting and at any adjournment or postponement thereof. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting, the Proxy Statement and Annual Report on Form 10-K of the Company. (Continued and to be signed on the reverse side)