SCHEDULE 14A
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The E.W. Scripps Company
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THE E. W. SCRIPPS COMPANY
Scripps Center
TO THE SHAREHOLDERS OF THE E. W. SCRIPPS COMPANY
The Annual Meeting of the Shareholders of The E. W. Scripps Company (the Company) will be held at the Queen City Club, Cincinnati, Ohio, on Thursday, May 10, 2001 at 10:00 a.m., local time, for the following purposes:
1. | To elect twelve persons to serve as directors for the ensuing year; | |
2. | To transact such other business as may properly come before the meeting. |
The board of directors has fixed the close of business on March 22, 2001 as the record date for the determination of shareholders who are entitled to notice of and to vote at the meeting and any adjournment thereof.
We encourage you to attend the meeting and vote your shares in person. If you plan to attend the meeting and need special assistance because of a disability, please contact the secretarys office.
We have enclosed the 2000 Annual Report, including financial statements, and the Proxy Statement with this Notice of Annual Meeting.
It is important that your shares be represented at the meeting, whether or not you are personally able to attend. Registered shareholders can vote their shares by using a toll-free telephone number or the Internet. Instructions for using these convenient services are set forth on the enclosed proxy card. Of course, you may still vote your shares by marking your vote on the enclosed proxy card, signing, dating it and mailing it in the envelope provided. Returning your executed proxy card, or voting your shares using the toll-free number or the Internet, will not affect your right to attend the meeting and vote your shares in person.
Your proxy is being solicited by the board of directors,
M. DENISE KUPRIONIS, ESQ. | |
Secretary |
March 29, 2001
312 Walnut Street
Cincinnati, Ohio 45202
2001 ANNUAL MEETING
This proxy statement, together with the accompanying notice of meeting, proxy card and annual report, is being mailed to shareholders on or about March 29, 2001. It is furnished in connection with the solicitation of proxies for use at the Annual Meeting of Shareholders of The E.W. Scripps Company, an Ohio corporation (the Company), which will be held on Thursday, May 10, 2001.
The close of business on March 22, 2001 has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the meeting.
On February 28, 2001 the Company had outstanding 59,921,822 Class A Common Shares, $.01 par value per share (Class A Common Shares), and 19,096,913 Common Voting Shares, $.01 par value per share (Common Voting Shares). Holders of Class A Common Shares are entitled to elect the greater of three or one-third of the directors of the Company but are not entitled to vote on any other matters except as required by Ohio law. Holders of Common Voting Shares are entitled to elect all remaining directors and to vote on all other matters requiring a vote of shareholders. Each Class A Common Share and Common Voting Share is entitled to one vote upon matters on which such class of shares is entitled to vote.
PROPOSAL 1
Election of Directors
A board of twelve directors is to be elected, four by the holders of Class A Common Shares voting separately as a class and eight by the holders of Common Voting Shares voting separately as a class. In the election, the nominees receiving the greatest number of votes will be elected. All directors will hold office until the next Annual Meeting of Shareholders and until their respective successors are elected and qualified.
Each proxy for Class A Common Shares executed and returned by a holder of such shares will be voted for the election of the four directors hereinafter shown as nominees for such class of shares, unless otherwise indicated on such proxy. Each proxy for Common Voting Shares executed and returned by a holder of such shares will be voted for the election of the eight directors hereinafter shown as nominees for such class of shares, unless otherwise indicated on such proxy. Although the board of directors does not contemplate that any of the nominees hereinafter named will be unavailable for election, in the event that any such nominee is unable to serve, the proxies will be voted for the remaining nominees and for such other person(s), if any, as the board may propose.
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REPORT ON THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The following table sets forth certain information as to each of the nominees for election to the board of directors.
Director | Principal Occupation or Occupation/Business | |||||||||
Name | Age | Since | Experience for Past Five Years | |||||||
Nominees for Election by Holders of Class A Common Shares | ||||||||||
Daniel J. Meyer (1)
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64 | 1988 | Chairman since January 1, 1991 and Chief Executive Officer since April 24, 1990 of Milacron Inc. President from January 1, 1998 through September 21, 1999 (a manufacturer of metal working and plastics processing machinery and systems). | |||||||
Nicholas B. Paumgarten
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55 | 1988 | Managing Director of J.P. Morgan & Co. Incorporated since February 10, 1992 (an investment banking firm). | |||||||
Ronald W. Tysoe (2)
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47 | 1996 | Vice Chairman, Finance and Real Estate since December 1997 and Vice Chairman and Chief Financial Officer from April 1990 to December 1997 of Federated Department Stores, Inc. | |||||||
Julie A. Wrigley (3)
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52 | 1997 | President and CEO of Wrigley Investments, LLC since March 1999, Chairman and CEO of Wrigley Management Inc. from 1995 through 1998, Assistant to the President/ CEO of Wm. Wrigley Jr. Company from 1994 through 1998, Investment Advisor & Manager of Wrigley Family Trusts and Estates from 1977 through 1998. | |||||||
Nominees for Election by Holders of Common Voting Shares | ||||||||||
William R. Burleigh (4)
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65 | 1990 | Chairman of the Company since May 1999. Chief Executive Officer of the Company from May 1996 to September 2000, President of the Company from August 1994 to February 2000, Chief Operating Officer from May 1994 to May 1996, Executive Vice President from March 1990 through May 1994 and Senior Vice President/ Newspapers and Publishing from September 1986 to March 1990. | |||||||
John H. Burlingame (5)
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67 | 1988 | Active Retired Partner, Senior Partner January 1, 1998 to December 31, 1999, Partner from June 1, 1997 through December 31, 1997 and Executive Partner from 1982 through June 1, 1997 of Baker & Hostetler LLP (law firm). | |||||||
Joseph P. Clayton (6)
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51 | 2000 | President and Chief Executive Officer of North America for Global Crossing Ltd. since October 1999 (a global IP-services company). CEO of Frontier Corp. from September 1997 to September 1999, President and Chief Operating Officer from June 1997 to August 1997. Executive Vice President of Marketing and Sales for the Americas and Asia for Thompson Multimedia from March 1992 to January 1997. | |||||||
Kenneth W. Lowe
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50 | 2000 | President and Chief Executive Officer since October 2000, President and Chief Operating Officer of the Company from January 2000 to September 2000, Chairman and CEO of Scripps Networks, a division of a subsidiary of the Company from 1994 to January 2000. | |||||||
Nackey E. Scagliotti (7)
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55 | 1999 | President since January 2001, President and Publisher from May 1999 to December 2000, Acting Publisher in 1998 and Assistant Publisher from 1994 through 1998 of Neighborhood Publications, Inc. (weekly newspapers). Chairman of the Board of Directors since May 1999, Assistant Publisher from 1996 to May 1999 of Union Leader Corp. (publisher of Sunday and daily newspapers). | |||||||
Charles E. Scripps (7)
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81 | 1946 | Chairman of the Executive Committee of the Company from August 1994 to September 2000 and Chairman of the Board of Directors of the Company from 1953 to August 1994. |
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Director | Principal Occupation or Occupation/Business | |||||||||
Name | Age | Since | Experience for Past Five Years | |||||||
Edward W. Scripps (7)
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42 | 1998 | Trustee of the Scripps Howard Foundation from 1994 through 1998. Vice President of Scripps Howard Foundation from 1995 through 1998. News Director at KJRH-TV, a division of a subsidiary of the Company from February 1983 through September 1993. | |||||||
Paul K. Scripps (7)(8)
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55 | 1986 | Vice President/ Newspapers of the Company since November 1997 and Chairman from December 1989 to June 1997 of a subsidiary of the Company. |
(1) | Mr. Meyer is a director of Milacron Inc., Broadwing Inc. (formerly Cincinnati Bell Telephone Co.), AK Steel Corporation, and Hubbell Incorporated (manufacturer of wiring and lighting devices). |
(2) | Mr. Tysoe is a director of Federated Department Stores, Inc. and Great American Financial Resources, Inc. |
(3) | Ms. Julie A. Wrigley is a member of the Advisory Committee of Sun Valley Bank Corp. She was a director of First Bank of Idaho during 1998 and 1999 and was a director of Associated Bank, Chicago, from 1988 to 1996. |
(4) | Mr. Burleigh is a director of Ohio National Financial Services Company (a mutual insurance and financial services company). |
(5) | Mr. Burlingame is a trustee of The Edward W. Scripps Trust. |
(6) | Mr. Clayton was elected a director on May 25, 2000 by the board of directors of the Company in accordance with the Code of Regulations of the Company. Mr. Clayton is a director of Global Crossing Ltd., Asia Global Crossing and Good Guys. |
(7) | Mr. Charles E. Scripps is Chairman of the Board of Trustees of The Edward W. Scripps Trust. Mr. Paul K. Scripps is a second cousin of Mr. Charles E. Scripps, Mr. Edward W. Scripps is Mr. Charles E. Scripps nephew and Mrs. Scagliotti is a niece of Mr. Charles E. Scripps. Mr. Charles E. Scripps, Mr. Edward W. Scripps and Mrs. Scagliotti are income beneficiaries of The Edward W. Scripps Trust. |
(8) | Mr. Paul K. Scripps serves as a director of the Company pursuant to an agreement between The Edward W. Scripps Trust and John P. Scripps. See Certain TransactionsJohn P. Scripps Newspapers. |
REPORT ON THE BOARD OF DIRECTORS AND ITS COMMITTEES
2000 Board and Committee Meetings
The board held four regularly scheduled meetings and five special meetings. The following committees of the board held the number of meetings indicated: Executive, 3; Audit, 4; Compensation and Incentive Plan, 4; and Policy Governance, 3. Each director attended all of the regularly scheduled board of director meetings.
Committees
Executive Committee. William R. Burleigh succeeded Charles E. Scripps as chairman of the executive committee on October 1, 2000. Mr. Scripps remains a member of the committee. John H. Burlingame is a member and Kenneth W. Lowe was elected a member of the executive committee effective October 1, 2000. The executive committee exercises all of the powers of the board in the management of the business and affairs of the Company between board meetings except the power to fill vacancies on the board or its committees.
Audit Committee. Ronald W. Tysoe (chairman), Daniel J. Meyer, Nackey E. Scagliotti and Julie A. Wrigley are the members of the audit committee, which nominates the independent auditors each year, reviews the audit plans of both the internal and independent auditors, evaluates the adequacy of and monitors compliance with corporate accounting policies, and reviews the Companys annual financial statements. The internal and independent auditors have unrestricted access to the audit committee. Mrs. Scagliotti was elected a member of the committee on May 25, 2000.
Compensation Committee. Daniel J. Meyer (chairman), John H. Burlingame, Joseph P. Clayton, Edward W. Scripps and Ronald W. Tysoe are the members of the compensation committee, which oversees all compensation matters relating to the Companys senior executives. Mr. Edward W. Scripps
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Incentive Plan Committee. Daniel J. Meyer (chairman), Joseph P. Clayton and Ronald W. Tysoe, three of the Companys independent directors, are the members of the incentive plan committee, which approves all awards under the Companys Long-Term Incentive Plan and approves all performance based bonus awards for the Companys senior executives. The incentive plan committee is a subcommittee of the compensation committee and meets at the same time as the compensation committee. Mr. Clayton was elected a member of the committee on November 16, 2000.
Policy Governance Committee. John H. Burlingame (chairman), William R. Burleigh, Daniel J. Meyer, Nicholas B. Paumgarten and Julie A. Wrigley are the members of the policy governance committee. The purpose of the committee is to review the size and scope of the board, to recommend nominees to the board of directors, to formulate policies of board conduct and to insure that the board adopts generally accepted corporate governance standards. The committee does not consider nominees recommended by shareholders. Mr. Paumgarten was elected a member of the committee on May 25, 2000.
REPORT ON THE COMPENSATION OF DIRECTORS
Directors who are employees of the Company are not compensated for their service on the board.
Directors who are not employees of the Company received an annual fee of $30,000 and an additional $2,000 for each meeting that he or she attended of the board of directors or a committee thereof on which she or he served. Additionally, each director who was a committee chairman received an annual fee of $3,000. Directors who are employees of the Company did not receive any compensation for services as directors or committee members. The annual fee for directors who are not employees of the Company was increased to $35,000 effective as of January 1, 2001.
Pursuant to an agreement with the Company, Mr. Scripps received a fee for consulting services and services as chairman of the executive committee at the annual rate of $50,000. Effective October 1, 2000, this agreement was terminated and Mr. Scripps began receiving fees in accordance with the fee schedule for other non-employee directors.
In May 2001 the non-employee directors will receive a nonqualified stock option award to purchase 5,000 of the Companys Class A Common Shares. The award will be exercisable for ten years and the exercise price will be the Fair Market Value of a Class A Common Share, as defined in the Plan, on May 10, 2001, the effective date of the award.
REPORT ON THE SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to persons known to management to be the beneficial owners, as of February 28, 2001, of more than five percent of the Companys outstanding Class A Common Shares or Common Voting Shares. Unless otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares shown therein as being beneficially owned by them.
Common | ||||||||||||||||
Name and Address | Class A | Voting | ||||||||||||||
Of Beneficial Owner | Common Shares | Percent | Shares | Percent | ||||||||||||
The Edward W. Scripps Trust (1)
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29,096,111 | 48.56% | 16,040,000 | 83.99 | % | |||||||||||
312 Walnut Street Cincinnati, Ohio |
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Paul K. Scripps and
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612 | .00% | 1,616,113 | 8.46 | % | |||||||||||
John P. Scripps Trust (2) 625 Broadway, Suite 625 San Diego, California |
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Common | ||||||||||||||||
Name and Address | Class A | Voting | ||||||||||||||
Of Beneficial Owner | Common Shares | Percent | Shares | Percent | ||||||||||||
Franklin Mutual Advisors, LLC (3)
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5,206,688 | 8.69% | | | ||||||||||||
51 John F. Kennedy Parkway Short Hills, New Jersey |
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Wellington Management Company, LLP (4)
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3,146,360 | 5.25% | | | ||||||||||||
75 State Street Boston, Massachusetts |
(1) | Under the Trust Agreement establishing The Edward W. Scripps Trust (the Trust), the Trust must retain voting shares sufficient to ensure control of the Company until the final distribution of the Trust estate unless earlier stock dispositions are necessary for the purpose of preventing loss or damage to such estate. The trustees of the Trust are Charles E. Scripps, Robert P. Scripps and John H. Burlingame. The Trust will terminate upon the death of the last to survive of two persons specified in the Trust, the younger of whom is 81 years of age. Upon the termination of the Trust, substantially all of its assets (including all shares of capital stock of the Company held by the Trust) will be distributed to the grandchildren of Robert Paine Scripps (a son of Edward W. Scripps), of whom there are 28. Certain of these grandchildren have entered into an agreement among themselves, other cousins and the Company which will restrict transfer and govern voting of Common Voting Shares to be held by them upon termination of the Trust and distribution of the Trust estate. See Certain TransactionsScripps Family Agreement. |
(2) | See footnote 5 to the table under Security Ownership of Management. |
(3) | Franklin Mutual Advisors, LLC has filed a Schedule 13G with the Securities and Exchange Commission with respect to the Companys Class A Common Shares. The information in the table is based on the information contained in such filing for the year ended December 31, 2000. |
(4) | Wellington Management Company, LLP has filed a Schedule 13G with the Securities and Exchange Commission with respect to the Companys Class A Common Shares. The information in the table is based on the information contained in such filing for the year ended December 31, 2000. |
REPORT ON THE SECURITY OWNERSHIP OF MANAGEMENT
The following information is set forth with respect to the Companys Class A Common Shares and Common Voting Shares beneficially owned as of February 28, 2001, by each director and each nominee for election as a director of the Company, by each named executive, and by all directors and executive officers of the Company as a group. Unless otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares shown therein as being beneficially owned by them.
Common | ||||||||||||||||
Name of Individual or | Class A | Voting | ||||||||||||||
Number of Persons in Group | Common Shares (1) | Percent | Shares | Percent | ||||||||||||
William R. Burleigh
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494,550 | * | | | ||||||||||||
John H. Burlingame (2)
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2,714 | * | | | ||||||||||||
Joseph P. Clayton
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1,000 | * | | | ||||||||||||
Kenneth W. Lowe
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378,099 | * | | | ||||||||||||
Daniel J. Meyer
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13,000 | * | | | ||||||||||||
Nicholas B. Paumgarten (3)
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15,250 | * | | | ||||||||||||
Nackey E. Scagliotti
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2,200 | * | | | ||||||||||||
Charles E. Scripps (2) (4)
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21,850 | * | | | ||||||||||||
Edward W. Scripps
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3,000 | * | | | ||||||||||||
Paul K. Scripps (5)
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612 | * | 1,616,113 | 8.46 | % |
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Common | ||||||||||||||||
Name of Individual or | Class A | Voting | ||||||||||||||
Number of Persons in Group | Common Shares (1) | Percent | Shares | Percent | ||||||||||||
Ronald W. Tysoe
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3,900 | * | | | ||||||||||||
Julie A. Wrigley
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22,000 | * | | | ||||||||||||
Richard A. Boehne
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111,171 | * | | | ||||||||||||
Daniel J. Castellini (6)
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221,402 | * | | | ||||||||||||
Frank Gardner
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193,801 | * | | | ||||||||||||
Alan M. Horton
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155,301 | * | | | ||||||||||||
All directors and executive officers as a group (24 persons) (7)
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30,967,413 | 51.68 | % | 17,656,113 | 92.46 | % |
* | Shares owned represent less than one percent of the outstanding shares of such class of stock. |
(1) | The shares listed for each of the officers and directors include Class A Common Shares underlying exercisable options and options that are exercisable within 60 days of March 1, 2001, held by him or her. The shares listed do not include the balances held in any of the directors or officers phantom share accounts that are the result of an election to defer compensation under the 1997 Deferred Compensation and Stock Plan for Directors or the 1997 Deferred Compensation and Phantom Stock Plan for Senior Officers and Selected Executives, respectively. |
(2) | This person is a trustee of the Trust and has the power, together with the other trustees of the Trust, to vote and dispose of the 29,096,111 Class A Common Shares and the 16,040,000 Common Voting Shares of the Company held by the Trust. Mr. Charles E. Scripps has a life income interest in the Trust. Mr. Burlingame disclaims any beneficial interest in the shares held by the Trust. |
(3) | The shares listed for Mr. Paumgarten include 2,000 Class A Common Shares held in trusts for the benefit of Mr. Paumgartens sons and 850 shares owned by his wife. Mr. Paumgarten is the sole trustee of the aforesaid trusts. Mr. Paumgarten disclaims beneficial ownership of the shares held in such trusts and the shares owned by his wife. |
(4) | The shares listed for Mr. Charles E. Scripps include 1,050 Class A Common Shares owned by his wife. Mr. Scripps disclaims any beneficial interest in these shares. |
(5) | The shares listed for Mr. Paul K. Scripps include 119,520 Common Voting Shares and 400 Class A Common Shares held in various trusts for the benefit of certain relatives of Paul K. Scripps and 100 Class A Common Shares owned by his wife. Mr. Scripps is a trustee of the aforesaid trusts. Mr. Scripps disclaims beneficial ownership of the shares held in such trusts and the shares owned by his wife. The shares listed also include 1,445,453 Common Voting Shares held by five trusts of which Mr. Scripps is a trustee. Mr. Scripps is the sole beneficiary of one of these trusts, holding 349,018 Common Voting Shares. He disclaims beneficial ownership of the shares held in the other four trusts. |
(6) | The shares listed for Mr. Castellini include 1,000 Class A Common Shares owned by his wife. Mr. Castellini disclaims any beneficial interest in these shares. |
(7) | The shares listed include the 29,096,111 Class A Common Shares and the 16,040,000 Common Voting Shares of the Company owned by the Trust. |
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Committee
The members are Mr. Ronald W. Tysoe (chair), Mr. Daniel J. Meyer, Ms. Nackey E. Scagliotti and Ms. Julie A. Wrigley. The board of directors of the Company determined that none of the members of the committee has any relationship with the Company that could interfere with their exercise of independence from management and the Company. Each of the members is independent as defined under the rules of the NYSE. The board also determined that each member of the committee is financially literate
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Charter
The board of directors adopted a written charter for the committee, which is included as an appendix to this proxy statement.
Responsibilities/ Meetings
The committee is responsible for the oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the company and for such other activities as may be directed by the board. It is the policy of the committee that the Company notifies the audit committee if it enters into any material consulting contracts.
The committee held 4 meetings during 2000 and, as of February 28, 2001, has had one meeting in 2001. During such meetings management represented to the committee that the companys consolidated financial statements were prepared in accordance with generally accepted accounting principles. The committee reviewed and discussed such financial statements with management and Deloitte & Touche, LLP, the companys independent accountants, and discussed such other matters deemed relevant and appropriate by the committee. The committee discussed with Deloitte & Touche the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, (Communications with Audit Committees). Deloitte & Touche also provided to the committee the written disclosures required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). The committee also discussed the independence of the independent accountants and whether the auditors provision of information technology services and other non-audit services is compatible with maintaining the auditors independence.
In reliance on the reviews and discussions referred to above, the committee recommended to the board of directors that these financial statements be included in the companys annual report on Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission.
Audit Fees
The aggregate fees billed by Deloitte & Touche, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, Deloitte) for professional services rendered for the audit of the Companys annual financial statements for the year ended December 31, 2000 and for the reviews of financial statements included in the Companys Quarterly Reports on Form 10-Q for that year were $658,500.
Financial Information Systems Design and Implementation Fees
Deloitte was not engaged to perform financial information systems design and implementation services for the year ended December 31, 2000.
All Other Fees
The aggregate fees billed by Deloitte for services rendered to the Company, other than services described above under Audit Fees and Financial Information Systems Design and Implementation Fees, for the year ended December 31, 2000 were $453,400.
The Audit Committee | |
Ronald W. Tysoe, Chair | |
Daniel J. Meyer | |
Nackey E. Scagliotti | |
Julie A. Wrigley |
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Committee
The compensation committee of the board of directors is comprised of non-management directors. The committee establishes and oversees the Companys executive compensation program. The members are Messrs. Daniel J. Meyer, Ronald W. Tysoe, Edward W. Scripps, John H. Burlingame and Joseph P. Clayton.
A subcommittee of the compensation committee is the incentive plan committee. This committee approves awards under the Companys Long-Term Incentive Plan. Messrs. Meyer, Tysoe and Clayton are the members of the incentive plan committee. (The compensation committee and the incentive plan committee hereinafter are jointly referred to as the Committee.)
Overview of the Companys Compensation Philosophy
The Companys approach to compensation for executive officers remained unchanged in 2000. The Company employs various short and long-term compensation plans with a goal of attracting, retaining and motivating a highly qualified management team. These plans reflect a pay-for-performance philosophy, and are designed to be consistent with competitive market practices, within and outside the media industry. Incentive award opportunities are aligned with target operating results set forth in the Companys strategic plan. All of the elements of the Companys compensation program have been developed with the objective of facilitating coordinated and sustained efforts toward enhancing the Companys performance and maximizing value to shareholders.
Components of the Compensation Program
The compensation program is reviewed annually for consistency with competitive practices and alignment with Company objectives. It is comprised of cash compensation, including salary and annual bonus, and grants of restricted stock and nonqualified stock options under the Companys 1997 Long-Term Incentive Plan. These pay elements are effectively administered to serve the collective interests of employees, management and shareholders.
The Company routinely participates in various compensation surveys, including the Towers Perrin Media Industry Compensation Survey, which is a well-recognized resource within the media industry. These surveys provide competitive compensation data categorized by relevant factors such as industry segments, employee base, and annual revenue. This information provides the foundation for determining appropriate compensation levels.
Base Salary
Salary levels for executive officers of the Company are targeted to be at the median or market level in comparison to their respective industry and professional peers. Typically, this level of base pay is reached within two to three years of commencing ones executive position. Salary adjustments are a function of multiple factors, including: an examination of market surveys; an evaluation of an executives position responsibilities; consideration of an executives contributions; and a review of the Companys performance. The performance factors are not assigned specific weights. Rather, the Committee applies its own subjective judgment in evaluating the aggregate impact of these factors and in making base salary determinations.
In considering salary increases for persons other than the chief executive officer, the committee also takes into consideration recommendations made by the chief executive officer. Actual base salaries and corresponding adjustments for the named executives during calendar year 2000 were consistent with the previously referenced philosophy. Only Mr. Lowe, the chief executive officer, has an employment contract with the Company. This contract governs the terms of his compensation arrangement.
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Annual Bonus
The purpose of the annual bonus program is to support the Companys objective of enhancing shareholder value by directly linking incentive pay to selected financial goals. The annual bonus opportunity reflects competitive market practices, and combined with base pay, represents the total cash element of the Companys compensation program. Two key financial performance measures, operating cash flow and earnings-per-share, were utilized in 2000. These measures represented 60% and 40%, respectively, of each named executives bonus opportunity. The operating cash flow target for Mr. Horton was based on the performance of the Companys newspaper division. The cash flow target for other named executives was based on consolidated performance.
The Companys 2000 bonus plans for Messrs. Gardner, Horton and Castellini provided for a target bonus opportunity of 50% of base salary. The target bonus opportunity for Mr. Boehne was 60% of his base salary. It was possible for an actual bonus award to exceed or be less than an assigned target opportunity value, but in no case could an executive earn greater than 150% of his target bonus amount. The Company fell modestly short of its 2000 earnings-per-share and operating cash flow goals. This resulted in the named executives receiving slightly less than 100% of their 2000 target bonus awards.
The bonus award typically is payable in the first quarter of the calendar year following the actual plan year, although executives may elect to defer payment of the bonus until retirement or another predetermined date.
Long-Term Incentive
The Committee continues to endorse the position that stock ownership by management and stock-based performance compensation arrangements are beneficial in aligning the collective interests of management and shareholders. In 1987, the Company adopted its first Long-Term Incentive Plan. Upon expiration of that Plan in 1997, the Company adopted the 1997 Long-Term Incentive Plan.
Eligible participants in the Plan include executive officers, senior corporate and operating managers, and other key corporate and operating employees. The Plan allows for several different types of stock-based awards, but only two types of awards have been granted to date, nonqualified stock options and restricted stock awards. Stock options represent a right to purchase the Companys Class A Common Shares at the fair market value per share as of the date the option is granted. Restricted stock awards represent Class A Common Shares of the Company which the recipient cannot sell or otherwise dispose of until the applicable restriction period lapses, and they are subject to forfeiture under certain circumstances.
Stock Options. Generally, executives receive a stock option award when they first attain an executive position. Annually, the Company considers whether or not to make additional stock option awards. Individual award amounts are predicated on an executives past personal achievements, his or her contributions to the business, market competitiveness associated with respective job responsibilities, and his or her potential to materially build future shareholder value.
Stock options are granted at not less than fair market value of the Companys Class A Common Shares on the date of the grant. Stock options have value only if the share price appreciates following the date of the grant, thereby providing the incentive for participating executives to focus on the long-term financial performance of the Company.
Each of the named executives received a nonqualified stock option award in 2000. These awards are exercisable in three equal annual installments, beginning in January 2001.
Restricted Stock. Generally, executives receive restricted stock awards with a three-year vesting period when they first attain an executive position. Executives may be granted additional restricted stock awards in conjunction with successive promotions or the assignment of additional responsibilities. Mr. Lowe was the only named executive to receive a restricted stock award in 2000.
9
Compensation of the Chief Executive Officer
Mr. Burleigh retired as chief executive officer on September 30, 2000. His compensation package prior to his retirement consisted of an annual base salary of $800,000 and a target bonus opportunity of 80% of such salary, adjusted to reflect nine months of service for the award year. Thus, he received a prorated bonus of $464,918 for the 2000 plan year. On January 24, 2000, Mr. Burleigh was awarded an option to purchase 75,000 of the Companys Class A Common shares.
Mr. Lowe became chief executive officer on October 1, 2000 at an annual base salary of $720,000. His target bonus opportunity for the year was increased to 80% upon succeeding Mr. Burleigh. The prorated bonus paid to Mr. Lowe for the 2000 plan year totaled $400,992.
The Company entered into an employment contract with Mr. Lowe in July of 1999 when he served as president of Scripps Networks, Inc., a subsidiary of the Company that operates cable television networks Home & Garden Television, Do It Yourself, Food Network and Fine Living. This contract remained in force for calendar year 2000, and in addition to the previously referenced salary and bonus opportunities, included material stock-based compensation.
Mr. Lowe was awarded an option on January 24, 2000 to purchase 60,000 of the Companys Class A Common shares in recognition of his performance in the previous calendar year, and an option for another 60,000 shares on October 1, 2000 when he became chief executive officer.
Pursuant to his employment contract, Mr. Lowe was issued 19,208 unrestricted shares on January 15, 2000 in recognition of his contributions to the success of Scripps Networks. Mr. Lowe received a cash payment of $5,378.24 on January 31, 2000 related to the issue of the unrestricted shares. The amount of this payment represented 1999 dividend income that would have been payable to Mr. Lowe had he received the shares on July 20, 1999, the date he entered into an employment contract with the Company. On April 15, 2000, Mr. Lowe was awarded, under the terms of the Companys Long-Term Incentive Plan, 62,763 restricted Class A Common shares which vest over five years. The shares were awarded pursuant to an incentive arrangement governed by his employment contract.
Response to Omnibus Budget Reconciliation Act of 1993
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over $1 million paid in any one year to a companys chief executive officer and each of its four other most highly compensated executives. Performance-based compensation, if approved by shareholders, is exempt from Section 162(m). The Companys executive compensation plans adhere to the exemption provisions set forth by Section 162(m).
The compensation tables that follow are intended to better enable our shareholders to understand the compensation practices of the Company. Shareholder comments may be sent to the attention of the Companys secretary.
The Compensation Committee | |
Daniel J. Meyer, Chairman | |
John H. Burlingame | |
Joseph P. Clayton | |
Edward W. Scripps | |
Ronald W. Tysoe |
10
Summary Compensation Table
The following table sets forth information regarding the compensation earned by, paid to or awarded to the Companys chief executive officer, and each of the Companys four other most highly compensated executive officers, during each of the Companys last three fiscal years.
Long-Term Compensation | ||||||||||||||||||||||||
Awards | ||||||||||||||||||||||||
All | ||||||||||||||||||||||||
Restricted | Securities | Other | ||||||||||||||||||||||
Annual Compensation | Stock | Underlying | Compen- | |||||||||||||||||||||
Name and | Award(s) | Options/ | sation | |||||||||||||||||||||
Principal Position | Year | Salary | Bonus | (1) | SARs (#) | (2) | ||||||||||||||||||
William R. Burleigh (3)
|
2000 | $ | 600,000 | $ | 464,918 | $ | 0 | 75,000 | $ | 14,974 | ||||||||||||||
Chairman
|
1999 | 750,000 | 601,200 | 0 | 60,000 | 25,821 | ||||||||||||||||||
1998 | 700,000 | 242,550 | 0 | 40,000 | 4,800 | |||||||||||||||||||
Kenneth W. Lowe
|
2000 | $ | 630,000 | $ | 400,992 | $ | 2,840,025 | 120,000 | $ | 21,819 | ||||||||||||||
President and
|
||||||||||||||||||||||||
Chief Executive Officer (4)
|
||||||||||||||||||||||||
Richard A. Boehne
|
2000 | $ | 475,000 | $ | 276,045 | $ | 0 | 40,000 | $ | 14,761 | ||||||||||||||
Executive
|
1999 | 379,417 | 218,436 | 622,950 | 35,000 | 11,759 | ||||||||||||||||||
Vice President (5)
|
||||||||||||||||||||||||
Frank Gardner
|
2000 | $ | 490,000 | $ | 237,302 | $ | 0 | 35,000 | $ | 7,376 | ||||||||||||||
Senior Vice President/
|
1999 | 470,000 | 224,895 | 0 | 35,000 | 16,898 | ||||||||||||||||||
Interactive Media
|
1998 | 450,000 | 64,125 | 0 | 30,000 | 4,800 | ||||||||||||||||||
Alan M. Horton
|
2000 | $ | 475,000 | $ | 193,943 | $ | 0 | 35,000 | $ | 18,904 | ||||||||||||||
Senior Vice President/
|
1999 | 450,000 | 230,351 | 0 | 35,000 | 16,173 | ||||||||||||||||||
Newspapers
|
1998 | 430,000 | 129,000 | 0 | 30,000 | 4,800 | ||||||||||||||||||
Daniel J. Castellini
|
2000 | $ | 410,000 | $ | 198,559 | $ | 0 | 30,000 | $ | 40,892 | ||||||||||||||
Senior Vice President
|
1999 | 390,000 | 195,390 | 0 | 25,000 | 14,017 | ||||||||||||||||||
and Chief Financial Officer
|
1998 | 370,000 | 73,260 | 0 | 20,000 | 4,800 |
(1) | The aggregate number and value of restricted share holdings for each named executive officer as of the end of 2000 were as follows: Mr. Lowe held 92,763 shares, with a value of $5,792,121; and Mr. Boehne held 15,000 shares, with a value of $936,600. Dividends were paid during 2000 on shares of restricted stock held by each named executive officer at a rate of fourteen cents per share for each quarter. Messrs. Burleigh, Gardner, Horton and Castellini did not hold any restricted shares at December 31, 2000. The value of the restricted shares is based on the average of the high and low closing sale prices of the Companys shares on December 31, 2000 which was $62.44. |
(2) | Represents compensation paid pursuant to the Scripps Retirement and Investment Plan, the Scripps Executive Savings Restoration Plan and insurance premiums paid by the Company for its executives. |
(3) | Mr. Burleighs annual base pay rate at January 1, 2000 was $800,000. Prorated for the time he served as Chief Executive Officer, the actual amount paid to Mr. Burleigh was $600,000. |
(4) | On January 1, 2000 Mr. Lowes annual base pay rate was $500,000. On January 24, 2000 he was elected president and chief operating officer and his annual base pay rate was increased to $600,000. He was elected president and chief executive officer of the Company effective in October 2000 and his annual base pay rate was increased to $720,000. Mr. Lowe entered into an employment agreement with the Company as of July 20, 1999. The terms of this agreement are disclosed under Other Transactions. |
(5) | On January 1, 1999 Mr. Boehnes annual base pay rate was $270,000. He was elected executive vice president of the Company in February 1999 and his annual base pay rate was increased to $400,000. |
11
Option/ SAR Grants in 2000
The following table sets forth certain information regarding options for Class A Common Shares granted in 2000 under the Companys Long-Term Incentive Plan to named executives who participate therein.
Potential Realizable | ||||||||||||||||||||||||
Individual Grants | Value at | |||||||||||||||||||||||
Assumed Annual | ||||||||||||||||||||||||
Number of | % of Total | Rates of | ||||||||||||||||||||||
Securities | Options/ | Share Price | ||||||||||||||||||||||
Underlying | SARs | Exercise | Appreciation for | |||||||||||||||||||||
Options/SARs | Granted to | Or Base | Option Term | |||||||||||||||||||||
Granted | Employees | Price | Expiration | |||||||||||||||||||||
Name | (#) | in 2000 | ($/Sh) | Date | 5%($) | 10%($) | ||||||||||||||||||
William R. Burleigh
|
75,000 | 6.2% | $ | 49.00 | 2010 | $ | 2,311,188 | $ | 5,857,004 | |||||||||||||||
Kenneth W. Lowe
|
60,000 | 4.9% | $ | 49.00 | 2010 | $ | 1,848,950 | $ | 4,685,603 | |||||||||||||||
Kenneth W. Lowe
|
60,000 | 4.9% | $ | 52.79 | 2010 | $ | 1,991,961 | $ | 5,048,020 | |||||||||||||||
Richard A. Boehne
|
40,000 | 3.3% | $ | 49.00 | 2010 | $ | 1,232,633 | $ | 3,123,735 | |||||||||||||||
Frank Gardner
|
35,000 | 2.9% | $ | 49.00 | 2010 | $ | 1,078,554 | $ | 2,733,268 | |||||||||||||||
Alan M. Horton
|
35,000 | 2.9% | $ | 49.00 | 2010 | $ | 1,078,554 | $ | 2,733,268 | |||||||||||||||
Daniel J. Castellini
|
30,000 | 2.5% | $ | 49.00 | 2010 | $ | 924,475 | $ | 2,342,801 | |||||||||||||||
Total awards to all employees
|
1,208,413 | 100.0% |
Aggregated Option/ SAR Exercises in 2000 and FY-End Option/ SAR Values
The following table sets forth certain information regarding the number and value of options for Class A Common Shares held by the named executives at December 31, 2000. Two executives exercised options during 2000.
Number of | ||||||||||||||||
Securities | Value of | |||||||||||||||
Underlying | Unexercised | |||||||||||||||
Unexercised | In-the-Money | |||||||||||||||
Options/SARs at | Options/SARs at | |||||||||||||||
12/31/00(#) | 12/31/00($) | |||||||||||||||
Shares Acquired | Value | Exercisable/ | Exercisable/ | |||||||||||||
Name | on Exercise(#) | Realized | Unexercisable(1) | Unexercisable(1) | ||||||||||||
William R. Burleigh
|
48,550 | $ | 1,866,747 | 358,467/128,333 | $ | 13,279,726/1,816,128 | ||||||||||
Kenneth W. Lowe
|
| | 125,400/130,000 | $ | 4,729,612/1,537,600 | |||||||||||
Richard A. Boehne
|
| | 59,367/68,333 | $ | 1,898,570/1,024,528 | |||||||||||
Frank Gardner
|
| | 153,067/68,333 | $ | 5,375,246/975,628 | |||||||||||
Alan M. Horton
|
| | 121,967/68,333 | $ | 4,119,688/975,628 | |||||||||||
Daniel J. Castellini
|
19,700 | $ | 803,953 | 169,467/53,333 | $ | 6,590,663/756,828 |
(1) | In 1999, Mr. Burleigh transferred 47,600 option shares to a trust. Such shares are included in the table. |
12
REPORT ON STOCKHOLDER RETURNPERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on the Companys Class A Common Shares, assuming an initial investment of $100 as of December 31, 1995, and based on the market prices at the end of each year and assuming reinvestment of dividends, with the cumulative total return of the Standard & Poors Composite-500 Stock Index and an index based on a peer group of media companies.
Comparison of 5-Year Cumulative Total Return
1995 | 1996 | 1997 | 1998 | 1999 | 2000 | |||||||||||||||||||||
S&P 500
|
$ | 100 | 123 | 164 | 211 | 255 | 232 | |||||||||||||||||||
Scripps
|
$ | 100 | 145 | 203 | 211 | 192 | 272 | |||||||||||||||||||
Media Index
|
$ | 100 | 124 | 196 | 210 | 275 | 232 | |||||||||||||||||||
The companies in the peer group index are Belo Corporation, Gannett Co. Inc., Knight-Ridder, Inc., Lee Enterprises, Inc., The New York Times Company, Tribune Company, and the Washington Post Company. The index is weighted based on market capitalization. The companies included in the peer group were approved by the compensation committee. The Times Mirror Company had been included in the peer group index but was removed because it was merged into Tribune Company in 2000.
The Companys divestiture of its cable television business on November 13, 1996 was treated as a dividend of $19.83 per share that was reinvested in the Companys Class A Common Shares.
13
REPORT ON COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. John H. Burlingame, Joseph P. Clayton, Daniel J. Meyer, Charles E. Scripps and Ronald W. Tysoe are the members of the Companys compensation committee.
Mr. Charles E. Scripps resigned as chairman of the executive committee of the Companys board of directors in October 2000 but remains a member of such committee. Mr. John H. Burlingame is also member of the executive committee.
Mr. Charles E. Scripps and Mr. Edward W. Scripps are general partners in Jefferson Building Partnership, (the Jefferson Partnership) which was formed in 1984. The Albuquerque Publishing Company, which is the Companys 50% owned partnership that operates The Albuquerque Tribune under a joint operating agreement, leases the facilities for The Albuquerque Tribune from a partnership controlled in part by the Jefferson Partnership. This lease terminates in 2004. Total rent under the lease for 2000 was approximately $1,907,000. The Albuquerque Publishing Company has an option to purchase the property that is exercisable until 2034. The purchase price will be equal to 7.7 times the basis rent for the lease year in which the property is purchased. The parties to the Albuquerque joint operating agreement lease the land on which the Albuquerque facilities are situated to the Jefferson Partnership under a lease terminating in 2034 and providing for rent of $150,000 per year, subject to certain adjustments for inflation. The Jefferson Partnership has subleased the land to the Albuquerque Publishing Company as part of the facilities lease arrangement described above.
Mr. Charles E. Scripps and Mr. Burlingame are trustees of The Edward W. Scripps Trust and for 2001 they are expected to continue to serve as trustees. As trustees, Mr. Scripps and Mr. Burlingame share the power, together with one other trustee, to vote and dispose of the 29,096,111 Class A Common Shares and 16,040,000 Common Voting Shares of the Company held by the Trust. Mr. Scripps has a life income interest in the Trust. Mr. Burlingame disclaims any beneficial interest in the shares held by the Trust. See Security Ownership of Certain Beneficial Owners.
Mr. John H. Burlingame is an active retired partner of Baker & Hostetler LLP. Baker & Hostetler served as legal counsel to the Company and to The Edward W. Scripps Trust in 2000 and is expected to provide legal services to the Company and to the Trust in 2001.
REPORT ON THE COMPANYS PENSION PLAN
The Companys executive officers and substantially all other non-union employees of the Company are participants in a non-contributory defined benefit pension plan maintained by the Company (the Pension Plan). Contributions to the Pension Plan are based on separate actuarial computations for each business unit and are made by the business unit compensating the particular individual.
Years of Services | ||||||||||||||||||||||
Remuneration | 15 Years | 20 Years | 25 Years | 30 Years | 35 Years | |||||||||||||||||
300,000 | $ | 55,000 | $ | 73,000 | $ | 92,000 | $ | 110,000 | $ | 128,000 | ||||||||||||
400,000 | 74,000 | 98,000 | 123,000 | 148,000 | 172,000 | |||||||||||||||||
500,000 | 93,000 | 123,000 | 154,000 | 185,000 | 216,000 | |||||||||||||||||
600,000 | 111,000 | 148,000 | 185,000 | 223,000 | 260,000 | |||||||||||||||||
700,000 | 130,000 | 173,000 | 217,000 | 260,000 | 303,000 | |||||||||||||||||
800,000 | 149,000 | 198,000 | 248,000 | 298,000 | 347,000 | |||||||||||||||||
900,000 | 168,000 | 223,000 | 279,000 | 335,000 | 391,000 | |||||||||||||||||
1,000,000 | 186,000 | 248,000 | 310,000 | 373,000 | 435,000 | |||||||||||||||||
1,500,000 | 280,000 | 373,000 | 467,000 | 560,000 | 653,000 | |||||||||||||||||
1,750,000 | 327,000 | 436,000 | 545,000 | 654,000 | 763,000 |
The above table shows the annual normal retirement benefits which, absent the maximum benefit limitations (the Benefit Limitations) imposed by Section 415(b) of the Internal Revenue Code of 1986,
14
In general, the Benefit Limitations limit the annual retirement benefits that may be paid pursuant to the Pension Plan to $135,000 (subject to further cost-of-living increases promulgated by the United States Secretary of the Treasury). The Company supplements payments under the Pension Plan with direct pension payments equal to the amount, if any, by which the benefits that otherwise would be payable under the Pension Plan exceed the benefits that are permitted to be paid under the Benefit Limitations. Annual normal retirement benefits are computed at the rate of 1% of average final annual compensation up to the applicable social security integration level plus 1.25% of average final annual compensation in excess of the social security integration level, multiplied by the employees years of credited service. An employees benefits are actuarially adjusted if paid in a form other than a life annuity.
An employees average final compensation is the average annual amount of his pensionable compensation (generally salary and bonus, excluding the Scripps Retirement & Investment Plan and any other annual or long-term compensation reflected in the Summary Compensation Table) for service during the five consecutive years within the last ten years of his employment for which his total compensation was greatest. The employees years of credited service equal the number of years of his employment with the Company (subject to certain limitations). As of December 31, 2000, the years of credited service of the individuals named in the cash compensation table were as follows: Mr. Lowe 21; Mr. Gardner 16; Mr. Castellini 30; Mr. Horton 30; Mr. Boehne 15.
In May 1996, the board of directors of the Company adopted a Selected Officer Retirement Program, the purpose of which is to provide supplemental retirement benefits to certain key employees of the Company who meet the eligibility requirements. Participants in the program must be specifically designated as participants by the compensation committee. As of March 1, 2001, there were no active employee participants in such plan. A participant begins to receive benefits under the program upon retirement. The amount of the benefit payable under such plan is a percentage of the participants highest three-year average earnings subject to certain offsets and maximums.
In December 1998, the compensation committee of the board of directors of the Company authorized adoption of an executive savings restoration plan designed to enable executives of the Company to restore savings benefits that may be lost due to tax law limitations. This plan is a nonqualified plan designed to complement the Companys 401(k) savings and retirement plan by enabling participants to enhance savings for retirement on a pre-tax basis.
REPORT ON CERTAIN TRANSACTIONS
Scripps Family Agreement
General. The Company and certain persons and trusts are parties to an agreement (the Scripps Family Agreement) restricting the transfer and governing the voting of Common Voting Shares that such persons and trusts may acquire or own at or after the termination of the Trust. Such persons and trusts (the Signatories) consist of certain grandchildren of Robert Paine Scripps who are beneficiaries of the Trust, descendants of John P. Scripps, and certain trusts of which descendants of John P. Scripps are trustees and beneficiaries. Robert Paine Scripps and John P. Scripps were sons of the founder of the Company.
If the Trust were to have terminated as of March 1, 2001, the Signatories would have held in the aggregate approximately 89.8% of the outstanding Common Voting Shares as of such date.
Once effective, the provisions restricting transfer of Common Voting Shares under the Scripps Family Agreement will continue until twenty-one years after the death of the last survivor of the descendants of Robert Paine Scripps and John P. Scripps alive when the Trust terminates. The provisions of the Scripps Family Agreement governing the voting of Common Voting Shares will be effective
15
Transfer Restrictions. No Signatory will be able to dispose of any Common Voting Shares (except as otherwise summarized below) without first giving other Signatories and the Company the opportunity to purchase such shares. Signatories will not be able to convert Common Voting Shares into Class A Common Shares except for a limited period of time after giving other Signatories and the Company the aforesaid opportunity to purchase and except in certain other limited circumstances.
Signatories will be permitted to transfer Common Voting Shares to their lineal descendants or trusts for the benefit of such descendants, or to any trust for the benefit of such a descendant, or to any trust for the benefit of the spouse of such descendant or any other person or entity. Descendants to whom such shares are sold or transferred outright, and trustees of trusts into which such shares are transferred, must become parties to the Scripps Family Agreement or such shares shall be deemed to be offered for sale pursuant to the Scripps Family Agreement. Signatories will also be permitted to transfer Common Voting Shares by testamentary transfer to their spouses provided such shares are converted to Class A Common Shares and to pledge such shares as collateral security provided that the pledgee agrees to be bound by the terms of the Scripps Family Agreement. If title to any such shares subject to any trust is transferred to anyone other than a descendant of Robert Paine Scripps or John P. Scripps, or if a person who is a descendant of Robert Paine Scripps or John P. Scripps acquires outright any such shares held in trust but is not or does not become a party to the Scripps Family Agreement, such shares shall be deemed to be offered for sale pursuant to the Scripps Family Agreement. Any valid transfer of Common Voting Shares made by Signatories without compliance with the Scripps Family Agreement will result in automatic conversion of such shares to Class A Common Shares.
Voting Provisions. The Scripps Family Agreement provides that the Company will call a meeting of the Signatories prior to each annual or special meeting of the shareholders of the Company held after termination of the Trust (each such meeting hereinafter referred to as a Required Meeting). At each Required Meeting, the Company will submit for decision by the Signatories, each matter, including election of directors, that the Company will submit to its shareholders at the annual meeting or special meeting with respect to which the Required Meeting has been called. Each Signatory will be entitled, either in person or by proxy, to cast one vote for each Common Voting Share owned of record or beneficially by him on each matter brought before the meeting. Each Signatory will be bound by the decision reached with respect to each matter brought before such meeting, and, at the related meeting of the shareholders of the Company, will vote his Common Voting Shares in accordance with decisions reached at the meeting of the Signatories.
John P. Scripps Newspapers
In connection with the merger in 1986 of the John P. Scripps Newspaper Group (JPSN) into a wholly owned subsidiary of the Company (the JPSN Merger), the Company and The Edward W. Scripps Trust entered into certain agreements discussed below.
JPSN Board Representation Agreement. The Edward W. Scripps Trust and John P. Scripps entered into a Board Representation Agreement dated March 14, 1986 in connection with the JPSN Merger. Under this agreement, the surviving adult children of Mr. Scripps who are shareholders of the Company have the right to designate one person to serve on the Companys Board of directors so long as they continue to own in the aggregate 25% of the sum of (i) the shares issued to them in the JPSN Merger and (ii) the shares received by them from John P. Scripps estate. In this regard, The Edward W. Scripps Trust has agreed to vote its Common Voting Shares in favor of the person designated by John P. Scripps children. Pursuant to this agreement, Paul K. Scripps currently serves on the Companys board of directors and is a nominee for election at the annual meeting. The Board Representation Agreement terminates upon the earlier of the termination of The Edward W. Scripps Trust or the completion of a public offering by the Company of Common Voting Shares.
Stockholder Agreement. The former shareholders of the John P. Scripps Newspaper Group, including John P. Scripps and Paul K. Scripps, entered into a Stockholder Agreement with the Company in
16
Other Transactions
For information concerning certain transactions which involve Mr. Charles E. Scripps and Mr. Edward W. Scripps, see Compensation Committee Interlocks and Insider Participation.
Mr. John H. Burlingame is an active retired partner of Baker & Hostetler LLP which served as legal counsel to the Company and to The Edward W. Scripps Trust (the Trust) in 2000 and is expected to perform such services in 2001.
Mr. Nicholas B. Paumgarten is a managing partner of J.P. Morgan & Co. Incorporated (J.P. Morgan). Morgan Guaranty Trust Company of New York (an affiliate of J.P. Morgan) is a lender to the Company under its Competitive Advance/ Revolving Credit Agreement. J.P. Morgan has performed investment banking services for the Company in the past and may again perform investment banking services for the Company.
Several of the Companys named executives have outstanding loan agreements with the Company pursuant to the Employee Stock Purchase Loan Program. This program is designed to assist key employees in exercising stock options. On January 31, 2000, Mr. Castellini borrowed $292,999, at an interest rate of 6.27%, which was the applicable Federal rate in effect under Section 1274(d) of the Internal Revenue Code of 1986, as of the day on which the loan was made. On September 28, 2000, Mr. Burleigh borrowed $1,478,868, at an interest rate of 5.93%, which was the applicable Federal rate in effect under Section 1274(d) of the Internal Revenue Code of 1986, as of the day on which the loan was made. In accordance with the terms of the loan program, executives agree to repay their loan within ten years of the effective date of the agreement. As of December 31, 2000, the outstanding balances of loan agreements between the Company and the named executives were as follows: Mr. Burleigh $3,017,485; Mr. Lowe $144,084; Mr. Boehne $68,325; Mr. Horton $595,886 and Mr. Castellini $496,983.
Mr. Kenneth W. Lowe entered into an employment agreement with the Company in July 1999. The original term of this agreement continues through 2003 and will be automatically extended as of January 1, 2004, and as of each January 1 of each succeeding even number calendar year thereafter, for two additional years, unless earlier terminated as provided in the agreement or unless either party gives the other six months advance notice of a decision not to extend the agreement. Under this agreement, Mr. Lowe is entitled to an annual salary, to be set by the Compensation Committee of the Company, at a rate not less than the annual salary payable by the Company to him for the immediately preceding year. In recognition of the value Mr. Lowe had created for the Company and to provide him with an incentive to enhance the profitability of the Company in the future, Mr. Lowe received a grant under the
17
REPORT ON SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Companys directors and executive officers, and owners of more than ten percent of the Companys Class A Common Shares (10% shareholders), to file with the Securities and Exchange Commission (the SEC) and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of Class A Common Shares and other equity securities of the Company. Executive officers, directors and 10% shareholders are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a).
To the Companys knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2000, all Section 16(a) filing requirements applicable to its executive officers, directors and 10% shareholders were complied with except that one form 4 for an officer of the Company, representing one purchase of shares, was filed four days late.
REPORT ON INDEPENDENT PUBLIC ACCOUNTANTS
At its February 20, 2001 meeting, the board approved the appointment of Deloitte & Touche LLP as independent public accountants for the Company for the fiscal year ending December 31, 2001. A representative of Deloitte & Touche LLP is expected to be present at the annual meeting.
18
REPORT ON SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Companys 2002 Annual Meeting of Shareholders must be received by the Company at 312 Walnut Street, Cincinnati, Ohio, on or before November 30, 2001, for inclusion in the Companys proxy statement and form of proxy relating to the 2002 Annual Meeting of Shareholders.
If a shareholder intends to raise at the Companys 2002 annual meeting a proposal that he or she does not seek to have included in the Companys proxy statement, the shareholder must notify the Company of the proposal on or before February 1, 2002. If the shareholder fails to notify the Company, the Companys proxies will be permitted to use their discretionary voting authority with respect to such proposal when and if it is raised at such annual meeting, whether or not there is any discussion of such proposal in the 2002 proxy statement.
OTHER MATTERS
The solicitation of proxies is made by and on behalf of the board of directors. The cost of the solicitation will be borne by the Company. The Company may also reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of the Companys Class A Common Shares.
The presence of any shareholder at the meeting will not operate to revoke his proxy. A proxy may be revoked at any time, insofar as it has not been exercised, by giving written notice to the Company or in open meeting.
The persons named in the enclosed proxy, or their substitutes, will vote the shares represented by such proxy at the meeting. The forms of proxy for the two respective classes of stock permit specification of a vote for persons nominated for election as directors by each such class of stock, as set forth under Election of Directors above, and the withholding of authority to vote in the election of such directors or the withholding of authority to vote for one or more specified nominees. Where a choice has been specified in the proxy, the shares represented thereby will be voted in accordance with such specification. If no specification is made, such shares will be voted to elect directors as set forth under Election of Directors.
Under Ohio law and the Companys Articles of Incorporation, broker non-votes for Class A Common Shares and abstaining votes for both Class A Common Shares and Common Voting Shares will not be counted in favor of, or against, election of any nominee.
If any other matters shall properly come before the meeting, the persons named in the proxy, or their substitutes, will vote thereon in accordance with their judgment. The board does not know of any other matters which will be presented for action at the meeting.
A copy of the Companys Annual Report for the year ended December 31, 2000 is enclosed.
By order of the board of directors, | |
M. DENISE KUPRIONIS, ESQ. | |
Secretary |
March 29, 2001
19
The E. W. Scripps Company
Role and Independence
The audit committee shall provide assistance to the board of directors in fulfilling its responsibility to shareholders, potential shareholders, and the investment community. The committee shall be responsible for the oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the company and for such other activities as may be directed by the board.
Committee members shall be composed of directors who are independent of the management of the company and are free of any relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment.
Organization
Members. The board of directors shall appoint the members of the committee. The membership shall consist of at least three directors who are generally knowledgeable in financial matters, including at least one member with accounting or related financial management expertise.
Meetings. The committee shall meet as required to discharge its responsibilities. The committee shall, as needed, require that members of management, internal auditors and external auditors be present at the meeting of the committee.
Quorum. A quorum of the committee shall be declared when a majority of the appointed members of the committee are in attendance.
Minutes. The committee shall prepare minutes for all meetings to document the committees discharge of its responsibilities. The minutes shall be circulated in draft form to all committee members to ensure an accurate final record, and shall be approved at a subsequent meeting of the committee. Such minutes shall be made available to the full board for its review.
Investigations. The committee is empowered to investigate any matter brought to its attention, with full power to retain outside counsel or other experts for this purpose.
Charter. This charter shall be reviewed annually.
Communications and Reporting
The committee is expected to maintain free and open communication (including private executive sessions at least annually) with the companys independent auditors, the internal auditors, and the management of the company.
The committee will report to the board from time to time with respect to its activities and recommendations. When presenting any recommendation or advice to the board, the committee will provide such background and supporting information as may be necessary for the board to make an informed decision.
The committee will prepare an annual report, for inclusion in the companys proxy statement, that describes the committees composition and responsibilities, and how they are discharged.
A-1
Principal Responsibilities
1. | Each year, recommend to the board the engagement of independent auditors for approval by the board of directors and election by the shareholders. In the process, and among other things, the committee will discuss with the independent auditors: |
(a) | that their written affirmation that the auditor is independent has been received, and | |
(b) | that the independent auditors are ultimately accountable to the board of directors and the audit committee, as representatives of the shareholders. |
2. | Each year, review the internal and external audit programs with both internal and independent auditors. The external audit program review includes the scope of the annual audit examination and fee estimate. | |
3. | Review with management and the independent auditors the quarterly financial information prior to the companys filing of Form 10-Q. The committee or its chairman may perform this review. | |
4. | Monitor compliance relating to conflict of interest, business ethics and antitrust law by annually requiring appropriate company managers to review corporate policies. The committee shall also instruct internal and independent auditors to report any observed violations of such policies to the committee. | |
5. | Discuss with management the status of significant litigation, taxation, financial human resources issues, legal and compliance matters as may be appropriate. | |
6. | Upon completion of the annual examination by the independent auditors, the committee will: |
(a) | discuss the annual audited financial statements with management and with the independent auditors, including discussion of accounting principles and such other matters as the committee deems appropriate; and | |
(b) | make a recommendation to the board of directors as to inclusion of the companys annual audited financial statements in the companys annual report on Form 10-K. |
7. | Discuss with the independent auditors the quality of the internal audit and accounting staff. |
A-2
Vote by Telephone
Have your proxy card available when you call the Toll-Free
number 1-800-250-9081 using a Touch-Tone
phone. You will be prompted to enter your control number found
on the reverse side and then you can follow the
simple prompts that will be presented to
you to record your vote.
Vote by Internet
Have your proxy card available when you access the website
http://www.votefast.com. You will be prompted to enter your control
number found on the reverse side and then you can follow the simple
prompts that will be presented to you to record your vote.
Vote by Mail
Please vote, sign and date your proxy
card and return it in the postage-paid envelope provided or return
it to: Corporate Trust Services, P.O. Box 535800, Pittsburgh,
Pennsylvania 15253.
Vote by Telephone Call Toll-Free using a Touch-Tone phone 1-800-250-9081 |
Vote by Internet Access the Website and Cast your vote http://www.votefast.com |
Vote by Mail Return your proxy in the Postage-paid envelope provided |
Vote 24 hours a day, 7 days a week!
Your telephone and internet vote must be received by 11:59 P.M. Eastern Daylight Time on May 9, 2001 to be counted in the final tabulation. If you vote by telephone or Internet, please do not send your proxy by mail.
Your Control Number is printed on the reverse side.
THE E. W. SCRIPPS COMPANY |
PROXY FOR CLASS A COMMON SHARES |
The undersigned hereby appoints KENNETH W. LOWE, DANIEL J. CASTELLINI and M. DENISE KUPRIONIS and each of them, as the undersigneds proxies, with full power of substitution, to attend the Annual Meeting of Shareholders of The E. W. Scripps Company, to be held at The Queen City Club, Cincinnati, Ohio, on Thursday, May 10, 2001 at 10:00 A.M., local time, and any adjournment or adjournments thereof, and to vote thereat the number of shares which the undersigned would be entitled to vote, with all the power the undersigned would possess if present in person, as follows:
1. | FOR, or | WITHHOLD AUTHORITY to vote for the following nominees for election as directors: | ||||||||||||
Daniel J. Meyer, Nicholas B. Paumgarten, Ronald W. Tysoe and Julie A. Wrigley. | ||||||||||||||
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominees name on the line provided below.) | ||||||||||||||
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2. | On such other business as may properly come before the meeting. |
The Proxies will vote as specified above, or if a choice is not specified, they will vote FOR the nominees listed in item 1.
(Continued, and to be signed, on other side)
The E.W. Scripps Company
c/o Corporate Trust Services
Mail Drop 10AT664129
38 Fountain Square Plaza
Cincinnati, OH 45263
Your Control Number
is:
You are now able to cast your vote by using a
touch-tone telephone or by using the Internet.
Instructions for voting are on the reverse side. Your Control number
for voting is noted above.
fold and detach here
Receipt of the Notice of Meeting of Shareholders and the related Proxy Statement dated March 29, 2001 is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
Dated____________________________, 2001 |
(Please date your Proxy.) |
_____________________________________ |
Signature of Shareholder |
Please sign exactly as your name appears hereon, indicating, where proper, official position or representative capacity. |
When signing as Attorney, Executor, Administrator, Trustee, etc., give full title as such. |
Vote by Telephone
Have your proxy card available when you call the Toll-Free
number 1-800-250-9081 using a Touch-Tone
phone. You will be prompted to enter your control number found
on the reverse side and then you can follow the
simple prompts that will be presented to
you to record your vote.
Vote by Internet
Have your proxy card available when you access the website
http://www.votefast.com. You will be prompted to enter your control
number found on the reverse side and then you can follow the simple
prompts that will be presented to you to record your vote.
Vote by Mail
Please vote, sign and date your proxy
card and return it in the postage-paid envelope provided or return
it to: Corporate Trust Services, P.O. Box 535800, Pittsburgh,
Pennsylvania 15253.
Vote by Telephone Call Toll-Free using a Touch-Tone phone 1-800-250-9081 |
Vote by Internet Access the Website and Cast your vote http://www.votefast.com |
Vote by Mail Return your proxy in the Postage-paid envelope provided |
Vote 24 hours a day, 7 days a week!
Your telephone and internet vote must be received by 11:59 P.M. Eastern Daylight Time on May 9, 2001 to be counted in the final tabulation. If you vote by telephone or Internet, please do not send your proxy by mail.
Your Control Number is printed on the reverse side.
THE E. W. SCRIPPS COMPANY |
PROXY FOR COMMON VOTING SHARES |
The undersigned hereby appoints KENNETH W. LOWE, DANIEL J. CASTELLINI and M. DENISE KUPRIONIS and each of them, as the undersigneds proxies, with full power of substitution, to attend the Annual Meeting of Shareholders of The E. W. Scripps Company, to be held at The Queen City Club, Cincinnati, Ohio, on Thursday, May 10, 2001 at 10:00 A.M., local time, and any adjournment or adjournments thereof, and to vote thereat the number of shares which the undersigned would be entitled to vote, with all the power the undersigned would possess if present in person, as follows:
1. | FOR, or | WITHHOLD AUTHORITY to vote for the following nominees for election as directors: | ||||||||||||
William R. Burleigh, John H. Burlingame, Joseph P. Clayton, Kenneth W. Lowe, Nackey E. Scagliotti, Charles E. Scripps, Edward W. Scripps, and Paul K. Scripps. | ||||||||||||||
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominees name on the line provided below.) | ||||||||||||||
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2. | On such other business as may properly come before the meeting. |
The Proxies will vote as specified above, or if a choice is not specified, they will vote FOR the nominees listed in item 1.
(Continued, and to be signed, on other side)
The E.W. Scripps Company
c/o Corporate Trust Services
Mail Drop 10AT664129
38 Fountain Square Plaza
Cincinnati, OH 45263
Your Control Number
is:
You are now able to cast your vote by using a
touch-tone telephone or by using the Internet.
Instructions for voting are on the reverse side. Your Control number
for voting is noted above.
fold and detach here
Receipt of the Notice of Meeting of Shareholders and the related Proxy Statement dated March 29, 2001 is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
Dated____________________________, 2001 |
(Please date your Proxy.) |
_____________________________________ |
Signature of Shareholder |
Please sign exactly as your name appears hereon, indicating, where proper, official position or representative capacity. |
When signing as Attorney, Executor, Administrator, Trustee, etc., give full title as such. |