Focus Media Holding Limited Notice of 2007 Annual General Meeting of Shareholders To Be Held on December 27, 2007

Transcription

1 Focus Media Holding Limited Notice of 2007 Annual General Meeting of Shareholders To Be Held on December 27, 2007 On December 27, 2007, Focus Media Holding Limited, a Cayman Islands exempted company (the Company ), will hold its annual general meeting of shareholders at the Company s offices on the 30 th Floor of the Zhao Feng World Trade Building, 369 Jiangsu Road, Shanghai, , People s Republic of China, at 10 a.m. local time for the following purposes: 1. The re-election of four directors to serve on the board of directors for a further three year term. 2. The election of two directors to serve on the board of directors for a three year term. 3. The approval of the 2007 Employee Share Option Plan and the authorization of officers to allot, issue or deliver shares pursuant to the 2007 Employee Share Option Plan. 4. Ratification and appointment of independent auditors. 5. In addition, the meeting will transact any other business properly brought before the meeting. You can find more information about each of these items, including the nominees for directors, in the attached proxy statement. Only shareholders registered in the register of members at the close of business on November 12, 2007 can vote at this meeting or any adjournment that may take place. We cordially invite all shareholders to attend the annual general meeting in person. However, a shareholder entitled to attend and vote is entitled to appoint a proxy to attend and, on a poll, vote instead of such shareholder. A proxy need not be a shareholder of the Company. Whether or not you expect to attend the annual general meeting in person, please mark, date, sign and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope provided to ensure your representation and the presence of a quorum at the annual general meeting. If you send in your proxy card and then decide to attend the annual general meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the proxy statement. This proxy is to be delivered to the attention of Jie Chen, Investor Relations Manager, Focus Media Holding Limited, 28-30/F, Zhao Feng World Trade Building, 369 Jiangsu Road, Shanghai , People s Republic of China, and arrive not later than 48 hours prior to the meeting. The notice of the 2007 Annual General Meeting of Shareholders, the Proxy Statement and a copy of the Company s 2006 Annual Report are also available through our website at ir.focusmedia.cn. By Order of the Board of Directors, Dated: November 9, 2007 Jason Nanchun Jiang Chairman and Chief Executive Officer

2 FOCUS MEDIA HOLDING LIMITED PROXY STATEMENT General Our board of directors is soliciting proxies for the annual general meeting of shareholders to be held on December 27, 2007 at 10 a.m., local time, or at any adjournment or postponement thereof. The annual general meeting will be held at Company s offices on the 30 th Floor of the Zhao Feng World Trade Building, 369 Jiangsu Road, Shanghai, , People s Republic of China. This proxy statement and the form of proxy are first being mailed to shareholders on or about November 19, Revocability of Proxies Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by delivering a written notice of revocation or a duly executed proxy bearing a later date or, if you hold ordinary shares, by attending the meeting and voting in person. A written notice of revocation must be delivered to the attention of Focus Media, if you hold our ordinary shares, or to Citibank, N.A. if you hold American Depositary Shares, known as ADSs, representing our ordinary shares. Record Date, Share Ownership and Quorum Shareholders of record at the close of business on November 12, 2007 are entitled to vote at the annual general meeting. Our ordinary shares underlying ADSs are included for purposes of this determination. As of November 12, 2007, 643,144,062 of our ordinary shares, par value US$ per share, were issued and outstanding, of which approximately 559,652,070 were represented by ADSs. Two shareholders or more entitled to vote and present in person or by proxy that represent in the aggregate not less than one-third of our issued and outstanding voting shares will constitute a quorum for all purposes. Voting and Solicitation Each ordinary share outstanding on the record date is entitled to one vote. Voting at the annual general meeting will be by a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded (i) by the chairman of such meeting, (ii) by at least three shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; (iii) by a shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting, or (iv) by a shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and holding our ordinary shares conferring a right to vote at the meeting being ordinary shares on which an aggregate sum has been paid up equal to not less than onetenth of the total sum paid up on all ordinary shares conferring that right. The costs of soliciting proxies will be borne by us. Proxies may be solicited by certain of our directors, officers and regular employees, without additional compensation, in person or by telephone or electronic mail. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names our ordinary shares or ADSs beneficially owned by others to forward to those beneficial owners. Voting by Holders of Ordinary Shares When proxies are properly dated, executed and returned by holders of ordinary shares, the ordinary shares they represent will be voted at the annual general meeting in accordance with the instructions of the shareholder. If no specific instructions are given by such holders, the ordinary shares will be voted FOR each proposal and in the 1

3 proxy holder s discretion as to other matters that may properly come before the annual general meeting. Abstentions by holders of ordinary shares are included in the determination of the number of ordinary shares present and voting but are not counted as votes for or against a proposal. Broker non-votes will not be counted towards a quorum or for any purpose in determining whether the proposal is approved. Voting by Holders of American Depositary Shares Citibank, N.A., as depositary of the ADSs, has advised us that it intends to mail to all owners of ADSs this proxy statement, the accompanying notice of annual general meeting and an ADR Voting Instruction Card. Upon the written request of an owner of record of ADSs, Citibank, N.A. will endeavor, to the extent practicable, to vote or cause to be voted the amount of ordinary shares represented by the ADSs, evidenced by American Depositary Receipts related to those ADSs, in accordance with the instructions set forth in such request. Citibank, N.A. has advised us that it will not vote or attempt to exercise the right to vote other than in accordance with those instructions. As the holder of record for all the ordinary shares represented by the ADSs, only Citibank, N.A. may vote those ordinary shares at the annual general meeting. Citibank, N.A. and its agents have advised us that they are not responsible if they fail to carry out your voting instructions or for the manner in which they carry out your voting instructions. This means that if the ordinary shares underlying your ADSs are not able to be voted at the annual general meeting, there may be nothing you can do. If (i) the enclosed ADR Voting Instruction Card is signed but is missing voting instructions, (ii) the enclosed ADR Voting Instruction Card is improperly completed or (iii) no ADR Voting Instruction Card is received by Citibank, N.A. from a holder of ADSs by December 20, 2007, Citibank, N.A. will deem such holder of ADSs to have instructed it to give a proxy to the chairman of the annual general meeting to vote in favor of each proposal recommended by our board of directors and against each proposal opposed by our board of directors. Deadline for Shareholder Proposals for 2008 Annual General Meeting We anticipate that our 2008 Annual General Meeting will be held in October Proposals which our shareholders wish to be considered for inclusion in our proxy statement and proxy card for the 2008 annual general meeting must be received by June 30, 2008 at Focus Media Holding Limited, 28-30/F, Zhao Feng World Trade Building, 369 Jiangsu Road, Shanghai , People s Republic of China, attention: Jie Chen, Investor Relations Manager and must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the Exchange Act ). The submission of a proposal does not assure that it will be included in the proxy statement or the proxy card for the 2008 annual general meeting. PROPOSAL 1: RE-ELECTION OF DIRECTORS The term of office of the following four directors is due to expire at the 2007 annual general meeting: Mr. Jason Nanchun Jiang, Mr. Jimmy Wei Yu, Mr. Neil Nanpeng Shen and Mr. Fumin Zhuo. We now hereby nominate these four directors for re-election at the 2007 annual general meeting. Each director to be elected will hold office for a further three year term and until such director s successor is elected and is duly qualified, or until such director s earlier death, bankruptcy, insanity, resignation or removal. Ordinary shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees named below. The board has no reason to believe that any of the nominees named below will be unable or unwilling to serve as a director if elected. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, such ordinary shares will be voted for the election of such substitute nominee as management may propose. 2

4 The names of the nominees, their ages as of October, 2007, the principal positions currently held by them and their biographies are as follows: Name Age Position Jason Nanchun Jiang 34 Chairman of the Board of Directors and Chief Executive Officer Jimmy Wei Yu 34 Director Neil Nanpeng Shen 39 Director Fumin Zhuo (1) 55 Director (1) Independent director and a member of our audit committee, compensation committee and nomination committee. Jason Nanchun Jiang, our founder, has served as the chairman of our board of directors and our chief executive officer since May From 1994 to 2003, Mr. Jiang was the chief executive officer of Everease Advertising Corporation. Starting in 2003, Mr. Jiang was general manager of Aiqi Advertising, an advertising company founded by his immediate family members in 1997 which was renamed Focus Media Advertisement in May 2003 in connection with the establishment of our current business operations. In December 2003, Mr. Jiang was selected by China News Publisher s Media magazine as one of the Media People of the Year. In September 2003, Mr. Jiang was selected by the Television and Newspaper Committees of the China Advertising Commission as one of its contemporary outstanding advertising media personalities. Mr. Jiang received a Bachelor of Arts degree in Chinese language and literature from Huadong Normal University in Jimmy Wei Yu has served as our director since May Mr. Yu is the chairman and chief executive officer of United Capital Investment (China) Limited, the management company of United China Investment Limited and KTB/UCI China Ventures I Limited and UCI China Venture II Limited. Mr. Yu is also the chairman of Shanghai Multimedia Park Venture Capital, a position he has held since From 1995 to 1999, Mr. Yu served in various capacities in several telecommunications companies, including as chief representative of UTStarcom (Hong Kong) Ltd. He also has been the chief representative of Softbank China Venture capital, which is the management company of SB China Holdings Pte. Ltd. Fumin Zhuo has served as our director since December 2004 and has more than 27 years of experience in investment and corporate management. Mr. Zhuo has also served as a general partner in SIG Capital Limited since July Prior to this, Mr. Zhuo served as chairman and chief executive officer of Vertex China Investment Company (VCI), a company concentrating in investments in the Greater China region, since he joined the fund in July From 1995 to July 2002, Mr. Zhuo was chief executive officer of Shanghai Industrial Holding Ltd. and chairman of SIIC Medical Science & Technology (Group). Prior to this, starting in 1987, Mr. Zhuo served as chief assistant officer of the Shanghai Economic System Reform Committee. Mr. Zhuo has extensive experience in venture capital fund formation, mergers and acquisitions, and investment management. Mr. Zhuo graduated from Shanghai Jiaotong University s Electrical Engineering School with a degree in enterprise management and also holds a Master s degree in economics from Fudan University. Neil Nanpeng Shen has served as our director since December Mr. Shen is the founding managing partner of Sequoia Capital China Advisors (Hong Kong) Limited. Mr. Shen co-founded Home Inns & Hotels Management Inc., a leading economy hotel chain in China listed on the Nasdaq Global Market, and Ctrip.com International, Ltd., the largest travel consolidator in China listed on the Nasdaq Global Market, and served as Ctrip s chief financial officer from 2000 to October 2005 and as its president from August 2003 to October Prior to founding Ctrip, Mr. Shen worked for more than eight years in the investment banking industry in New York and Hong Kong. He was a director at Deutsche Bank Hong Kong where he worked from 1996 to Prior to 1996, he worked at Chemical Bank, Lehman Brothers and Citibank in various investment banking areas. Currently, Mr. Shen is a co-chairman of Home Inns, a director of Ctrip and also a director of E-House (China) Holdings Limited, an NYSE-listed real estate services company based in China. Mr. Shen received his bachelor s degree from Shanghai Jiao Tong University in China and his master s degree from the School of Management at Yale University. The directors will be elected by an affirmative vote of the holders of a majority of the ordinary shares present in person or represented by proxy and voting at the annual general meeting. In electing directors, each 3

5 shareholder may cast one vote per ordinary share owned for each director to be elected. Shareholders cannot use cumulative voting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-ELECTION OF EACH OF THE NOMINEES NAMED ABOVE. PROPOSAL 2: ELECTION OF DIRECTORS Since the previous annual general meeting of shareholders, the board of directors appointed two new directors, Dr. Zhi Tan and Mr. David Ying Zhang. According to Article 86 of our Amendment and Restated Memorandum of Association, as these two directors were appointed by the board of directors, they can only hold office until the following annual general meeting whereupon they will need to be appointed by the members. We now hereby nominate these two directors for election at the 2007 annual general meeting. Each director to be elected will hold office for a three year term and until such director s successor is elected and is duly qualified, or until such director s earlier death, bankruptcy, insanity, resignation or removal. Ordinary shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees named below. The board has no reason to believe that any of the nominees named below will be unable or unwilling to serve as a director if elected. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, such ordinary shares will be voted for the election of such substitute nominee as management may propose. The names of the nominees, their ages as of October, 2007, the principal positions currently held by them and their biographies are as follows: Name Age Position Zhi Tan 52 President and Director David Ying Zhang (1) 34 Director (1) Independent director. Zhi Tan was appointed as our president and director in January Prior to his appointment as president, Dr. Tan was the senior vice president in charge of the operations of our poster frame network. Dr. Tan was previously the chairman and chief executive officer of Framedia. Dr. Tan has extensive management and operational experience. He served as senior advisor at Tom.com of Hong Kong prior to join Framedia. From 1999 to 2002, he was the chief executive officer of 8848.net Corporation, which was one of the largest online e-commerce organizations in China. Before joining 8848.net, Dr. Tan was deputy general manager for Microsoft China in Prior to Microsoft, Dr. Tan was senior vice-president for UTStarcom China from 1995 to He was directly responsible for all aspects of operations for both Microsoft China and UTStarcom China. Dr. Tan received his PhD in Computer Science from Worcester Polytechnic Institute of Massachusetts in 1987and a B.S. in Computer Engineering from Jilin Industrial University in China in David Ying Zhang was appointed as our director on September 28, Mr. Zhang is the managing director and head of the Beijing office of WI Harper, a private equity investment fund. Mr. Zhang joined WI Harper in late 2001 in the San Francisco office and moved back to China in early Prior to joining WI Harper, Mr. Zhang was a senior venture associate with ABN AMRO Capital focusing on the life sciences, information technology, and Internet sectors. Before joining ABN AMRO Capital, Mr. Zhang worked at Salomon Smith Barney. At WI Harper, Mr. Zhang Mr. Zhang has been responsible for investments in a number of companies including Pollex, Cardiva, Celestry Designs, Focus Media and ikang Healthcare. Mr. Zhang was born in Shanghai, grew up in the United States and holds a M.S.degree in biotechnology and business from Northwestern University and a B.S. in biology and chemistry from California State University, San Francisco. The directors will be elected by an affirmative vote of the holders of a majority of the ordinary shares present in person or represented by proxy and voting at the annual general meeting. In electing directors, each 4

6 shareholder may cast one vote per ordinary share owned for each director to be elected. Shareholders cannot use cumulative voting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE. Our Current Board of Directors MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The name of our current board of directors, their ages as of October, 2007, the principal positions currently held by them and their biographies are as follows: Name Age Position Jason Nanchun Jiang 34 Chairman of the Board of Directors and Chief Executive Officer David Feng Yu (1) 45 Co-chairman of the Board of Directors Jimmy Wei Yu 34 Director Fumin Zhuo (2) 55 Director Neil Nanpeng Shen (2) 39 Director Charles Chao (2) 41 Director Daqing Qi (3) 43 Director David Ying Zhang (4) 34 Director Zhi Tan 52 President and Director (1) Mr. Yu was appointed as co-chairman of the board of directors of Focus Media on February 28, 2006 pursuant to the terms of the share purchase agreement between us and Target Media in connection with our acquisition of Target Media. (2) Independent director and a member of our audit committee, compensation committee and nomination committee. (3) Mr. Qi was appointed as an independent director on February 28, 2006 by the seller parties of Target Media pursuant to the terms of the share purchase agreement between us and Target Media in connection with our acquisition of Target Media. (4) David Ying Zhang was appointed as an independent director on September 28, 2007 by our nominations committee and board of directors in order to restore a majority of independent directors to our board. For biographical information on Jason Nanchun Jiang, Jimmy Wei Yu, Neil Nanpeng Shen, Fumin Zhao, Zhi Tan and David Ying Zhang, please see Proposal 1: Re-Election of Directors and Proposal 2: Election of Directors. David Feng Yu resigned from his position as president since January 2007 and retains his position as cochairman of the Board. He has served as co-chairman of our board of directors and as our president since February 28, From 2003 until February 2006, Mr. Yu was chairman and chief executive officer of Target Media, which we acquired in February From 2000 to 2003, Mr. Yu was chief executive offer and the sole beneficial owner of Dian Yang, whose flat panel display advertising business was transferred to Target Media in December From 1999 to 2000, Mr. Yu was the general manager of Shanghai Yuanye Info Tech Co., Ltd. In May 2005, Mr. Yu was selected by the Advertising Newspaper in China as one of the Most Influential Advertising People of the Year. In December 2004, Mr. Yu was selected by China Venture Capital Forum 2004 as one of the Top 10 Enterprisers of the Year. Mr. Yu received an Executive M.B.A. degree from China Europe International Business School in 2001 and a Master of Arts degree in philosophy from Fudan University in Charles Chao was appointed as our director in November 2005 to replace Ted Tak Dee Sun who passed away in September Mr. Chao is president and chief executive officer of SINA Corporation, an online media company listed on the NASDAQ Global Market. Before he joined SINA Corporation in September 1999, Mr. Chao served as an experienced audit manager with PricewaterhouseCoopers LLP, providing auditing and business consulting services for high tech companies in Silicon Valley, California. Mr. Chao received his master of professional accounting from University of Texas at Austin. He also holds an MA degree in journalism from University of Oklahoma and a BA degree in Journalism from Fudan University in Shanghai, China. Mr. Chao is a certified public accountant and a member of the American Institute of Certified Public Accountants. 5

7 Daqing Qi was appointed as our director in February 28, 2006 upon the closing of our acquisition of Target Media. Professor Qi is professor of accounting and associate dean of the Cheong Kong Graduate School of Business, where he has taught since From 1996 until 2002, Professor Qi taught in the School of Accountancy at the Chinese University of Hong Kong. Professor Qi also has extensive experience in providing executive training and consulting services in accounting and corporate finance to government departments and private companies, including the Ministry of Information Industries of the People s Republic of China, the Shanghai Municipal Government, China Mobile, China Unicom, China Telecom, China Netcom, Nokia and Ericsson. Professor Qi also serves on the board of directors of Sohu.com, a Nasdaq-listed company that provides online services in China. Professor Qi holds a B.S. degree in biophysics and a B.A. degree in journalism from Fudan University, an MBA degree from the University of Hawaii Manoa with a concentration in accounting and finance and a Ph.D. degree in accounting from the Eli Broad Graduate School of Management of Michigan State University. Meetings and Committees of the Board of Directors Our board of directors met in person or passed resolutions by unanimous written consent eight times during All of the directors who were serving in office during 2007 attended at least 75% of all the meetings of our board and its committees on which he or she served. We have no specific policy with respect to director attendance at our annual general meetings of shareholders. Our board of directors has established an audit committee, a compensation committee and a nominations committee. Neil Nanpeng Shen, Charles Chao and Fumin Zhuo are the current members of our audit committee, our compensation committee and our nominations committee. In 2007, our audit committee met in person or passed resolutions by unanimous written consent approximately eight times. Each member of our audit committee satisfies the independence and financial literacy requirements of the Nasdaq s listing standards. Our board has also concluded that each of Neil Nanpeng Shen and Charles Chao qualify as an audit committee financial expert as established by the U.S. Securities and Exchange Commission. Our board of directors has adopted a written audit committee charter pursuant to which the audit committee is responsible for overseeing the accounting and financial reporting processes of our company, including the appointment, compensation and oversight of the work of our independent auditors, monitoring compliance with our accounting and financial policies and evaluating management s procedures and policies relative to the adequacy of our internal accounting controls. Our compensation committee held 2 meetings in The compensation committee s functions are to review and make recommendations to our board of directors regarding our compensation policies and all forms of compensation to be provided to our executive officers and directors. Our nominating committee held 2 meetings in Our nominations committee is responsible for, among other things, selecting and recommending the appointment of new directors to our board of directors. Copies of the charters of the audit, compensation and nominating committees are available on our website at ir.focusmedia.cn. Compensation Committee Interlocks and Insider Participation None of the members of the compensation committee is our current or former officer or employee. During 2006, none of our executive officers served as members of the board of directors or compensation committee of any entity that has one or more executive officers who served on our board or the compensation committee. As a result, there are no compensation committee interlocks and no insider participation in compensation decisions that are required to be reported under the rules and regulations of the Exchange Act. 6

8 Access to Corporate Governance Policies We have adopted a Code of Business Conduct which applies to our employees, officers and non-employee directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. This code is intended to qualify as a code of ethics within the meaning of the applicable rules of the SEC. To the extent required by law, any amendments to, or waivers from, any provision of the Code of Business Conduct will be promptly disclosed to the public. Copies of the Code of Business Conduct are available on our website at ir.focusmedia.cn. PROPOSAL 3: APPROVAL OF THE 2007 EMPLOYEE SHARE OPTION PLAN AND THE AUTHORISATION OF OFFICERS TO ALLOT, ISSUE OR DELIVER SHARES PURSUANT TO THE 2007 EMPLOYEE SHARE OPTION PLAN On November 8, 2007, our board of directors established the 2007 Employee Share Option Plan (the 2007 Plan ) subject to shareholder approval. The following description of the 2007 Plan is a summary only and is qualified in its entirety by reference to the full text of the terms and provisions of the 2007 Plan, a copy of which, as of the date of the notification of this annual meeting of shareholders, has been publicly filed on Form 6-K with the SEC. Purpose of the 2007 Plan The 2007 Plan is intended to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants and to promote the success of our business. Authorized shares The amount of ordinary shares of the Company, par value US$ , authorized for issuance under the 2007 Plan during the three years starting from the date of the 2007 Plan s approval pursuant to this shareholder s meeting will be limited to 3% of our issued and outstanding ordinary shares from time to time plus ordinary shares reserved for issuance, but not yet issued, under the 2006 Plan Plan Administration Our compensation committee, or certain designated members of our compensation committee, will serve as the Administrator under the 2007 Plan and will be able to determine the terms and conditions of awards under the 2007 Plan, subject certain limitations set forth in the 2007 Plan. The Administrator will also be responsible for making grants in accordance with the 2007 Plan. For example, as with our 2006 Plan, the Administrator will determine who will be granted options, the type and timing of options to be granted, vesting schedules and other terms and conditions of options, including whether awards are settled in shares or cash. Eligibility and Number of Options Awarded Any of our directors, officers and employees may be granted options. In addition, at the discretion of the Administrator, individual consultants or advisors may also be granted options, subject to certain limitations. The number of options awarded to a person, if any, is based on the person s potential ability to contribute to our success, the person s position with us and other factors chosen by the Administrator. Acceleration of Vesting in Certain Circumstances Under the 2007 Plan, options generally do not vest unless the grantee remains under our employment or in service with us on the given vesting date. Thus, where the grantee s employment by or service with us has 7

9 terminated, the options will terminate and become unexercisable at the discretion of the Administrator. However, in circumstances where there is a death or disability of the grantee, the vesting of options may be accelerated to permit immediate exercise of all options granted to a grantee. Issuance and delivery of shares under the 2007 Plan Subject to shareholder approval of the 2007 Plan, our officers will be authorized on our behalf to issue or deliver shares in payment of the awards granted under the 2007 Plan, subject to the terms and conditions specified in the 2007 Plan. In addition, ordinary shares delivered under the 2007 Plan may be issued or transferred in consideration of cash, rights, services, shares, other securities, property, or rights, obligations assumed or such other lawful consideration, as may be approved from time to time by our compensation committee in accordance with the terms of the 2007 Plan and applicable law. Future Modifications Our board of directors may amend, alter, suspend, or terminate the 2007 Plan at any time, provided, however, that our board of directors must first seek the approval of our shareholders and, if such amendment, alteration, suspension or termination would adversely affect the rights of a person who has been granted options under any option granted prior to that date, the approval of such person. Termination of the 2007 Plan Without further action by our board of directors, the 2007 Plan will terminate at the close of business on December 31, The affirmative vote of the holders of a majority of the ordinary shares present in person or represented by proxy and voting at the annual general meeting will be required to approve this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2007 EMPLOYEE SHARE OPTION PLAN. PROPOSAL 4: RATIFICATION AND APPOINTMENT OF INDEPENDENT AUDITORS Our audit committee recommends, and our board of directors concurs, that Deloitte Touche Tohmatsu CPA Ltd. be appointed as our independent auditors for the year ending December 31, Deloitte Touche Tohmatsu CPA Ltd. has served as our independent auditors since In the event our shareholders fail to ratify the appointment, our audit committee will reconsider its selection. Even if the selection is ratified, our audit committee in its discretion may direct the appointment of a different independent auditing firm at any time during the year if the audit committee believes that such a change would be in the best interests of our company and shareholders. A representative of Deloitte Touche Tohmatsu CPA Ltd. is expected to be present at the annual general meeting, will have the opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions. The affirmative vote of the holders of a majority of the ordinary shares present in person or represented by proxy and voting at the annual general meeting will be required to approve this proposal. THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE TOUCHE TOHMATSU CPA LTD. AS OUR INDEPENDENT AUDITORS. 8

10 AUDIT COMMITTEE MATTERS Audit Committee Report All current members of the audit committee (the Committee ) of Focus Media Holding Limited (the Company ) are independent as defined under the applicable Nasdaq rules. The Committee operates under a written charter that has been adopted by the Company s board of directors (the Board of Directors ) and is reviewed by the Committee on an annual basis. The responsibilities of the Committee are to assist the Board of Directors in fulfilling its oversight responsibilities as they relate to the Company s accounting policies, internal controls, financial reporting practices and legal and regulatory compliance. The Committee fulfills its responsibilities through periodic meetings with the Company s independent auditors, internal auditors and management. The Committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. Throughout the year, the Committee monitors matters related to the independence of Deloitte Touche Tohmatsu CPA Ltd., the Company s independent auditors. The Committee also discussed with management and the independent auditors the quality and adequacy of the Company s internal controls. The Committee reviewed with the independent auditors their audit plans, audit scope, and identification of audit risks. The Committee discussed and reviewed with the independent auditors all matters required by auditing standards generally accepted in the United States of America, including those described in SAS 61, Communication with Audit Committees. With and without management present, the Committee discussed and reviewed the results of the independent auditors examination of the financial statements. The Committee also carried out and completed an investigation into allegations made by U.S. counsel to an investor described as holding a short position in the Company s stock, and discussed the results of this investigation with the independent auditors. Based upon its review of the evidence, the Committee concluded that nothing had come to its attention apart from the initial allegations that gave rise to the investigation that would cause the Committee to believe that the Company made undisclosed rebate payments to a third party advertising agency through another advertising agency, namely, Everease Advertising & Communication Ltd. The Company informed the independent investigators that it had concluded that Everease is a related party based upon information developed during the investigation. Based upon its review of the evidence, the Committee concurred with the Company's conclusion that Everease should be deemed a related party. The Committee reviewed the audited financial statements of the Company as of and for the fiscal year ended December 31, 2006 with management and the independent auditors. Management has the responsibility for the preparation and integrity of the Company s financial statements and the independent auditors have the responsibility for the examination of those statements. Based on the above-mentioned review and discussions with management and the independent auditors, the Committee recommended to the Board of Directors that the Company s audited consolidated financial statements be included in its annual report on Form 20-F for the fiscal year ended December 31, The Committee also approved the reappointment of the independent auditors and the Board of Directors confirmed such appointment. As specified in the audit committee charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company s financial statements are complete and accurate and in accordance with accounting principles generally accepted in the United States of America. That is the responsibility of management and the Company s independent auditors. In giving its recommendation to the Board of Directors, the Committee has relied on (i) management s representation that such financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America, and (ii) the report of the Company s independent auditors with respect to such financial statements. 9

11 The Audit Committee Neil Nanpeng Shen, Chairman Fumin Zhuo Charles Chao Principal Accountant Fees and Services The aggregate fees and expenses billed by Deloitte Touche Tohmatsu CPA Ltd. for professional services rendered for the year ended December 31, 2006 and 2005 are set forth below Audit Fees (1) $1,184,000 $711,00 Audit-Related Fees (2) Tax Fees (3) 83,000 46,000 All Other Fees (4) Total Fees $1,267,000 $757,000 (1) (2) (3) (4) Audit fees consist of fees associated with the annual audit, the reviews of our quarterly financial statements and statutory audits required internationally. They also include fees billed for those services that are normally provided by the independent accountants in connection with statutory and regulatory filings. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements but not described in footnote (1) above. These services include consultations concerning financial accounting and reporting standards and review of capitalization of retained earnings, financial covenants in loan agreements, and our affiliates financial information. Tax fees include fees billed for professional services rendered by Deloitte Touche Tohmatsu CPA Ltd., primarily in connection with our tax compliance activities. All other fees comprise fees for all other services provided by Deloitte Touche Tohmatsu CPA Ltd., other than those services covered in footnotes (1) to (3) above. Prior to forming an audit committee, our board of directors is responsible for the oversight of our independent registered public accounting firm. The policy of our board of directors is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu CPA Ltd., including audit services, audit-related services, tax services and other services, as described above. Audit Committee Pre-Approval Policies and Procedures Our audit committee must pre-approve all audit services and permissible non-audit services provided by Deloitte Touche Tohmatsu CPA Ltd. to ensure that the work does not compromise its independence in performing audit services. Our audit committee may consult with management in the decision-making process, but may not delegate this authority to management. Our audit committee may delegate its authority to pre-approve services to one or more members of the audit committee, provided that such members present any such approvals to the full audit committee at the next audit committee meeting. Our audit committee has adopted the following policies as to pre-approval: All services provided by Deloitte Touche Tohmatsu CPA Ltd. in 2006 were pre-approved by the audit committee. Director and Executive Compensation COMPENSATION COMMITTEE MATTERS 10

12 In 2006, we paid aggregate cash compensation of approximately $850,000 to our directors and executive officers as a group. In 2004, 2005 and 2006 and for the six months ended June 30, 2007, we granted to selected directors, officers and employees options to acquire an aggregate 25,208,200, 23,843,630, 14,800,000 and 1,300,000 ordinary shares, respectively. We have no service contracts with any of our directors or executive officers that provide benefits to them upon termination. We do not pay or set aside any amounts for pension, retirement or other benefits for our officers and directors. Compensation Committee Report The compensation committee (the Committee ) of the board of directors (the Board of Directors ) reviews and make recommendations to the Board of Directors regarding the compensation policies and all forms of compensation to be provided to the executive officers and directors of Focus Media Holding Limited (the Company ). Each member of the Committee is independent as defined under the applicable Nasdaq rules. Charles Chao is the chairman of the Committee, and Neil Nanpeng Shen and Fumin Zhuo also serves on the Committee. The annual base salary for the Company s executive officers is established in line with external market practices. When reviewing base salaries, the Committee considers the following factors: competitive pay practices, the overall performance of the executive officers as a whole and the executive officers prior experience. The objective in setting base salary is generally to pay salaries at a level roughly comparable to the median for similar sized companies in this industry. The compensation of the chief executive officer of the Company is reviewed annually on the same basis as discussed above for all executive officers. In determining his base salary and housing allowance, the Committee compared the compensation of chief executive officers at other companies of similar size. The Company s chief executive officer was also established in part by evaluating the Company s ability to recruit a suitable person for this position, either on a permanent or interim basis. The Company also has employee share option scheme in place, with the intended purpose of promoting the Company s success and increase shareholder value by providing an additional means to attract, motivate, retain and reward selected directors, officers, employees and third-party consultants and advisors. The Committee administers the share option schemes and has wide discretion to award options. Subject to the provisions of the option schemes and allocation targets, the Committee determines who will be granted options, the type and timing of options to be granted, vesting schedules and other terms and conditions of options, including the exercise price. Any of the Company s employees may be granted options. The number of options awarded to a person, if any, is based on the person s potential ability to contribute to the Company s success, the person s position within the Company and other factors chosen by the Board of Directors from time to time. These share options scheme generally have a vesting period of three years. The vesting period is designed to encourage the Company s employees to work with a long-term view of the Company s welfare and to establish their long-term affiliation with the Company. It is also designed to reduce employee turnover and to retain the knowledge and skills of valued staff. For the year ended 2006, the Committee has granted the following options: In February 2006, we granted options to purchase 3,000,000 of our ordinary shares with an exercise price of $5.093, to certain executive officers, employees and directors of Target Media pursuant to the Share Purchase Agreement of acquisition of Target Media in All of these options vest over three years. In November 2006, we granted options to purchase 11,800,000 of our ordinary shares to certain of our employees, executive officers and directors. Of these options, 10,300,000 were issued to nonmanagement employees and 1,500,000 were issued to our directors and officers. The issuance to our officers and directors included a grant to Jason Nanchun Jiang of options to purchase 500,000 of our ordinary shares. No other director or officer, upon exercise of all options granted, would beneficially own more than 1% of our outstanding ordinary shares. All of the options granted vest over a three year period, beginning one year from the date of issuance. The exercise price of the options is $5.724 per share which was based on the market price of our ADSs at the time the options were granted. The options expire on November 14,

13 In March 2007 and May 2007, we granted options to purchase 1,200,000 and 100,000 of our ordinary shares to certain of our employees. The exercise price of the options is $7.20 and $7.394 per share which was based on the market price of our ADSs at the time the options were granted. The options expire on March 18, 2017 and May 8, 2017, respectively. In October 2007, we granted options to purchase 9,592,685 of our ordinary shares to certain of our employees, executive officers and directors. Of these options, 6,982,500 were issued to nonmanagement employees and 2,610,185 were issued to our directors and officers. The issuance to our officers and directors included grants to Jason Nanchun Jiang and Zhi Tan of options to purchase 210,185 and 250,000 of our ordinary shares, respectively. No other director or officer, upon exercise of all options granted, would beneficially own more than 1% of our outstanding ordinary shares. All of the options granted vest over a three year period, beginning one year from the date of issuance. The exercise price of the options is $ per share which was based on the market price of our ADSs at the time the options were granted. The options expire on October 3, OTHER MATTERS The Compensation Committee Charles Chao, Chairman Neil Nanpeng Shen Fumin Zhuo We know of no other matters to be submitted to the annual general meeting. If any other matters properly come before the annual general meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares they represent as the board of directors may recommend. By Order of the Board of Directors, Dated: November 9, 2007 Jason Nanchun Jiang Chairman and Chief Executive Officer 12