<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
JOURNAL REGISTER COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO]
March 31, 1999
Dear Fellow Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Journal Register Company, which will be held on Tuesday, May 18, 1999, at The
War Memorial, West Lafayette Street, Trenton, New Jersey 08608, at 10:00 a.m.,
local time.
The business to be considered and voted upon at the meeting is explained in
the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
We hope that many of you will be able to attend our 1999 Annual Meeting in
person. If you plan to attend, please write your name on the enclosed admission
ticket and bring it with you to the Annual Meeting.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares of Common Stock be represented and voted at the
Annual Meeting. Accordingly, after reading the enclosed Notice of Annual Meeting
of Stockholders and Proxy Statement, please sign, date and return the enclosed
proxy card in the postage-paid envelope provided.
Thank you for your support of Journal Register Company.
Sincerely,
/s/ Robert M. Jelenic
Robert M. Jelenic
Chairman, President and Chief
Executive Officer
<PAGE>
JOURNAL REGISTER COMPANY
STATE STREET SQUARE
50 WEST STATE STREET
TRENTON, NJ 08608-1298
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
------------------------
To the Stockholders of Journal Register Company:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Journal Register Company, a Delaware corporation (the "Company"), will be held
on Tuesday, May 18, 1999, at The War Memorial, West Lafayette Street, Trenton,
New Jersey 08608, at 10:00 a.m., local time, for the following purposes:
1. To elect three Class B directors to hold office until the 2002 Annual
Meeting of Stockholders;
2. To approve the Executive Incentive Compensation Plan;
3. To ratify the appointment of Ernst & Young LLP as independent auditors for
the Company for fiscal year 1999; and
4. To transact such other business as may properly be presented at the 1999
Annual Meeting and at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 23, 1999 as
the record date for the purpose of determining the stockholders who are entitled
to notice of and to vote at the 1999 Annual Meeting of Stockholders of the
Company and any adjournments or postponements thereof. A list of such
stockholders will be available during regular business hours at the offices of
the Company at State Street Square, 50 West State Street, Trenton, New Jersey
08608 for the ten days before the meeting, for inspection by any stockholder for
any purpose germane to the meeting.
By Order of the Board of Directors,
/s/ Jean B. Clifton
Jean B. Clifton
SECRETARY
Trenton, New Jersey
March 31, 1999
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE 1999 ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES
IN PERSON IF YOU WISH, EVEN IF YOU PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
JOURNAL REGISTER COMPANY
STATE STREET SQUARE
50 WEST STATE STREET
TRENTON, NJ 08608-1298
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is being furnished to stockholders of Journal Register
Company, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board") from
holders of the outstanding shares of the Company's common stock, $0.01 par value
per share (the "Common Stock"), for use at the 1999 Annual Meeting of
Stockholders of the Company to be held on Tuesday, May 18, 1999, at The War
Memorial, West Lafayette Street, Trenton, New Jersey 08608, at 10:00 a.m., local
time, and at any adjournments or postponements thereof (the "Annual Meeting"),
for the purpose of considering and acting upon the matters set forth herein.
Only holders of record of Common Stock as of the close of business on March
23, 1999 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting and any adjournments or postponements thereof. At the close of
business on such date, the Company had 47,295,781 shares of Common Stock issued
and outstanding. Holders of Common Stock are entitled to one vote on each matter
considered and voted upon at the Annual Meeting for each share of Common Stock
held of record as of the Record Date. Holders of Common Stock may not cumulate
their votes for the election of directors. Shares of Common Stock represented by
a properly executed proxy, if such proxy is received in time and not revoked,
will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxy. IF NO INSTRUCTIONS ARE INDICATED, SHARES REPRESENTED BY
PROXY WILL BE VOTED "FOR" THE ELECTION, AS DIRECTORS OF THE COMPANY, OF THE
THREE NOMINEES NAMED IN THE PROXY TO SERVE UNTIL THE 2002 ANNUAL MEETING OF
STOCKHOLDERS, "FOR" THE APPROVAL OF THE EXECUTIVE INCENTIVE COMPENSATION PLAN,
"FOR" THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR FISCAL YEAR 1999 AND IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTER WHICH MAY PROPERLY BE PRESENTED AT THE ANNUAL
MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
This Proxy Statement and the accompanying proxy card are being mailed to
Company stockholders on or about March 31, 1999.
Any holder of Common Stock giving a proxy in the form accompanying this
Proxy Statement has the power to revoke the proxy prior to its use. A proxy can
be revoked (i) by an instrument of revocation delivered prior to the Annual
Meeting to the Assistant Secretary of the Company, (ii) by a duly executed proxy
bearing a later date or time than the date or time of the proxy being revoked,
or (iii) at the Annual Meeting if the stockholder is present and elects to vote
in person. Mere attendance at the Annual Meeting will not serve to revoke the
proxy. All written notices of revocation of proxies should be addressed as
follows: Journal Register Company, State Street Square, 50 West State Street,
Trenton, NJ 08608-1298, Attention: Melissa L. Capestro, Assistant Secretary.
In determining the presence of a quorum at the Annual Meeting, abstentions
and broker non-votes (votes withheld by brokers in the absence of instructions
from street-name holders) will be included. The Company's Amended and Restated
By-laws (the "By-laws") provide that directors are elected by a plurality of the
votes cast at the meeting and that all other matters must be approved by the
affirmative vote of a majority of the shares present in person or represented by
proxy at the meeting and entitled to vote on the matter (unless the matter is
one for which the Delaware General Corporation Law, the Company's Amended and
Restated Certificate of Incorporation or the By-laws require a greater vote).
Therefore, with respect to any matter requiring approval of the affirmative vote
of a majority of the shares
1
<PAGE>
present in person or represented by proxy, abstentions will have the same effect
as a vote against the matter but, with respect to the election of directors,
abstentions will be excluded when calculating the number of votes cast on the
matter. In all instances, broker non-votes will be excluded from the
calculation.
PROPOSAL 1--ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board, is
currently eight. The Board has not yet selected a candidate to fill the open
Class C directorship. The Board consists of three classes: Class A, Class B and
Class C. One of the three classes, comprising approximately one-third of the
directors, is elected each year to succeed the directors whose terms are
expiring. Directors hold office until the annual meeting for the year in which
their terms expire and until their successors are elected and qualified unless,
prior to that date, they have resigned, retired or otherwise left office. In
accordance with the By-laws, the Board has determined that Class B directors are
to be elected at the Annual Meeting, Class C directors are to be elected at the
Annual Meeting of Stockholders to be held in the year 2000 and Class A directors
are to be elected at the Annual Meeting of Stockholders to be held in the year
2001.
At the Annual Meeting, three Class B directors are to be elected to the
Board, to serve until the Annual Meeting of Stockholders to be held in 2002. The
nominees for election at the Annual Meeting are Gary D. Nusbaum, Jean B. Clifton
and Joseph A. Lawrence. Each nominee is presently a director of the Company. If
any of the above nominees is unable or unwilling to serve as a director, proxies
may be voted for a substitute nominee designated by the present Board. The Board
has no reason to believe that any of the above nominees will be unable or
unwilling to serve as a director.
The following table sets forth the name and age (as of the date of the
Annual Meeting) of the directors, the class to which each director has been
nominated for election or elected, their principal occupations at present, the
positions and offices, if any, held by each director with the Company in
addition to their position as a director, and the period during which each has
served as a director of the Company.
<TABLE>
<CAPTION>
SERVED AS A
DIRECTOR OF THE
NAME AGE PRINCIPAL OCCUPATION--POSITION HELD COMPANY SINCE
- --------------------------------------- --- -------------------------------------------------- -----------------
<S> <C> <C> <C>
CLASS A--2001
Douglas M. Karp........................ 44 Managing Director of E.M. Warburg, Pincus & Co., 1997
LLC
John R. Purcell........................ 67 Chairman and Chief Executive Officer of Grenadier 1997
Associates Ltd.
CLASS B--1999
Gary D. Nusbaum........................ 32 Managing Director of E.M. Warburg, Pincus & Co., 1999
LLC
Jean B. Clifton........................ 38 Executive Vice President, Chief Financial Officer 1997
and Secretary
Joseph A. Lawrence..................... 49 Private Investor 1997
CLASS C--2000
John L. Vogelstein..................... 64 Vice Chairman and President of E.M. Warburg, 1997
Pincus & Co., LLC
Robert M. Jelenic...................... 48 Chairman, President and Chief Executive Officer 1997
</TABLE>
2
<PAGE>
CLASS A DIRECTORS
DOUGLAS M. KARP has been a director of the Company since March 1997. Mr.
Karp has been a General Partner of Warburg, Pincus & Co. ("WP") and a Member and
Managing Director of E.M. Warburg, Pincus & Co., LLC ("EMWP") and its
predecessors since 1991. Mr. Karp is a director of Qwest Communications
International, Inc. ("Qwest"); Golden Books Family Entertainment, Inc.; Primus
Telecommunications Group, Inc.; TV Filme, Inc.; Paging Network do Brasil, S.A.;
and several privately held companies.
JOHN R. PURCELL has been a director of the Company since June 1997. Mr.
Purcell has been Chairman and Chief Executive Officer of Grenadier Associates
Ltd., a venture banking firm, since 1989. From 1991 to 1996, Mr. Purcell was
also Chairman of Donnelly Marketing, Inc., a data-based direct marketing
company. From 1987 to 1990, Mr. Purcell served as Chairman of Mindscape, Inc.,
an educational and entertainment computer software company. From 1982 to 1986,
Mr. Purcell was Chairman and President of SFN Companies, Inc., a communications
company. Prior to 1982, Mr. Purcell was also an Executive Vice President of CBS,
Inc. and was a Senior Vice President, Finance and Business Operations of Gannett
Co., Inc. Mr. Purcell is a director of Bausch & Lomb, Inc.; Technology Solutions
Company and Omnicom Group, Inc.
CLASS B DIRECTORS
GARY D. NUSBAUM has been a director of the Company since February 1999. Mr.
Nusbaum has been a General Partner of WP and a Member and Managing Director of
EMWP since January 1997. Mr. Nusbaum was a Vice President of Warburg, Pincus
Ventures, LLC from January 1995 to December 1996 and was an Associate at
Warburg, Pincus Ventures, LLC from September 1989 to December 1994. Mr. Nusbaum
is a director of TV Filme, Inc.; Paging Network do Brasil, S.A.; and several
privately held companies.
JEAN B. CLIFTON has been a director of the Company and its predecessors for
more than the past five years. Ms. Clifton is the Executive Vice President,
Chief Financial Officer and Secretary of the Company, positions she has held
since the Company's inception. Prior to joining the Company, Ms. Clifton, a
Certified Public Accountant, had been employed by Arthur Young & Co. (a
predecessor to Ernst & Young LLP). Ms. Clifton has 13 years of senior management
experience in the newspaper industry. Ms. Clifton is a member of the Board of
Trustees of Junior Achievement of Central New Jersey, the Honorary Advisory
Board of KidsBridge Children's Cultural Center in Trenton, the Board of
Directors of The Fresh Air Fund, and the Postal Affairs and Employee Benefits
committees of the Newspaper Association of America.
JOSEPH A. LAWRENCE has been a director of the Company since August 1997.
From June 1998 (the date when Qwest and LCI International, Inc. ("LCI") merged)
to February 1998, Mr. Lawrence was Executive Vice President and Chief
Administrative Officer of Qwest. Prior to June 1998, Mr. Lawrence was Executive
Vice President of LCI. Mr. Lawrence joined LCI in October 1993 as Senior Vice
President of Finance and Development and Chief Financial Officer, assuming the
role of Executive Vice President and Chief Financial Officer in August 1997.
From 1990 to 1993, Mr. Lawrence was Vice President of Finance and Administration
for MCI Communications Corporation's Consumer Markets division and from 1985 to
1990 was Senior Vice President of Finance for MCI Communications Corporation's
Mid-Atlantic division.
CLASS C DIRECTORS
JOHN L. VOGELSTEIN has been a director of the Company and its predecessors
for more than the past five years. Mr. Vogelstein is a General Partner of WP and
a Member, Vice Chairman and President of EMWP, where he has been employed since
1967. Mr. Vogelstein is a director of ADVO, Inc.; Golden Books Family
Entertainment, Inc.; and Mattel, Inc.
3
<PAGE>
ROBERT M. JELENIC has been a director of the Company and its predecessors
for more than the past five years. Mr. Jelenic is the Chairman, President and
Chief Executive Officer of the Company. He has been President and Chief
Executive Officer since the inception of the Company in 1990. A Chartered
Accountant, Mr. Jelenic began his business career with Arthur Andersen in
Toronto, Canada. Mr. Jelenic has 23 years of senior management experience in the
newspaper industry, including 12 years with the Toronto Sun Publishing Corp. Mr.
Jelenic is a director of the Newspaper Association of America.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF GARY
D. NUSBAUM, JEAN B. CLIFTON AND JOSEPH A. LAWRENCE AS CLASS B DIRECTORS.
GENERAL INFORMATION RELATING TO THE BOARD
THE BOARD
The Board manages the business and affairs of the Company. To assist it in
carrying out its duties, the Board has delegated certain authority to two
committees. The Board held five meetings in 1998. Each member of the Board
attended at least 75% of the aggregate meetings of the Board and the committees
thereof of which he or she was a member during 1998.
COMMITTEES OF THE BOARD
During 1998, the standing committees of the Board consisted of an Audit
Committee, established in September 1997, and a Compensation Committee,
established in May 1997. The By-laws provide, in general, that if a stockholder
intends to propose business or make a nomination for the election of directors
at the annual meeting, the Company must receive notice of such intention no
later than the close of business on the 90(th) day nor earlier than the close of
business on the 120(th) day prior to the first anniversary of the preceding
year's annual meeting. If the date of the annual meeting is changed by more than
30 days before or more than 60 days after such anniversary date, notice must be
delivered not earlier than the close of business on the 120(th) day prior to
such annual meeting nor later than the close of business on the later of the
60(th) day prior to such annual meeting or the 10(th) day following the day on
which public announcement of the date of such meeting is first made by the
Company. The notice must include (a) as to each person who the stockholder
proposes to nominate for election or reelection, all information relating to the
proposed nominee required by the Securities and Exchange Commission (the
"Commission") to be disclosed in solicitations of proxies for election of
directors in an election contest or, is otherwise required (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected), or, (b) as to any other business, a brief
description of the business desired to be brought before the annual meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of the stockholder and the beneficial owner, if any, on whose
behalf the proposal is made. The notice must also include (i) the name and
address of the stockholder and the beneficial owner, if any, on whose behalf the
nomination or proposal is made and (ii) the class and number of shares of the
Company that are owned beneficially and of record by such stockholder and such
beneficial owner. Notwithstanding the foregoing, in the event that the number of
directors to be elected to the Board is increased and there is no public
announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board at least 70 days prior to the first
anniversary of the preceding year's annual meeting, the required stockholder's
notice will also be considered timely, but only with respect to nominees for any
new positions created by such increase, if the notice is delivered to the
Company's Secretary at its principal executive offices not later than the close
of business on the 10(th) day following the day on which such public
announcement is first made by the Company. The foregoing is only a summary of
detailed provisions of the By-laws and is qualified by reference to the text
thereof.
During 1998, the Audit Committee, consisting of Messrs. Purcell and
Lawrence, held three meetings. The Audit Committee reviews annually the
qualifications of the Company's independent certified public
4
<PAGE>
accountants, makes recommendations to the Board as to their selection and
reviews the planning, fees and results of the audit.
During 1998, the Compensation Committee, consisting of Messrs. Karp, Purcell
and Lawrence, held two meetings. The Compensation Committee is responsible for
reviewing and approving the amount and type of consideration to be paid to
senior management and for administering all executive compensation plans.
COMPENSATION OF DIRECTORS
Independent directors receive an annual fee of $10,000, a fee of $1,000 for
each Board meeting attended in person and a fee of $500 for each Board meeting
attended by telephone conference call. All directors are reimbursed for all
reasonable expenses incurred in connection with their attendance at Board
meetings. Under the Company's 1997 Stock Incentive Plan, the Company grants
independent directors, during the term of their directorships, non-qualified
stock options ("NQOs") to purchase 10,000 shares of Common Stock annually on
terms and conditions specified by the Compensation Committee.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to the Company's Chief
Executive Officer and the other four most highly compensated executive officers
of the Company, whose aggregate cash and cash equivalent compensation exceeded
$100,000 (the "Named Executives"), with respect to 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
COMPENSATION(1) SECURITIES
NAME AND ----------------------- UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) PAYOUTS($)(2) COMPENSATION(3)
- ------------------------------------------ --------- --------- ------------ ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Jelenic,........................ 1998 $ 825,000 $ 195,000 320,000 $ 255,623 $ 24,750
Chairman, President and 1997 825,000 10,497,142(4) 645,834 431,137 24,750
Chief Executive Officer 1996 800,000 200,000 -- 326,667 24,000
Jean B. Clifton,.......................... 1998 465,000 125,000 160,000 116,124 13,950
Executive Vice President, 1997 445,000 5,268,571(4) 322,916 190,746 13,350
Chief Financial Officer 1996 425,000 125,000 -- 143,850 12,750
and Secretary
William J. Rush,.......................... 1998 232,019 5,000 25,000(5) 60,796 2,803
Vice President of the 1997 275,000 1,189,676(4) 52,474(5) 34,293 3,500
Company and Publisher 1996 265,000 15,000 -- 76,050 3,450
and Chief Executive
Officer, NEW HAVEN REGISTER
Allen J. Mailman,......................... 1998 187,500 12,500 25,000 40,359 5,625
Senior Vice President of 1997 185,000 1,174,676(4) 56,510 64,091 5,550
Technology 1996 180,000 7,500 -- 48,250 5,400
William J. Higginson,..................... 1998 180,000 12,500 25,000 17,359 5,400
Vice President of Production 1997 175,000 1,041,184(4) 53,126 8,213 5,175
1996 170,000 7,500 -- 4,301 5,100
</TABLE>
- --------------------------
Footnotes on following page.
5
<PAGE>
- ------------------------
(1) All other annual compensation has been omitted because such compensation
(which related only to perquisites and personal benefits) did not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported for
each Named Executive.
(2) Prior to the Company's initial public offering of Common Stock in May 1997
(the "Offering"), the Company maintained a bonus plan (the "StarShare
Plan"), which commenced in January 1992 and in which key employees were
eligible to participate. Each participant received award units (the
"StarShare Units") based on target percentages of his or her base salary.
Each StarShare Unit represented a proportionate share of an aggregate dollar
amount. Such dollar amount was based on certain performance measures related
to the Company's compound annual growth in cash flow and revenue and
reduction in debt and/or equity redemption over a three-year performance
period. In general, StarShare Units granted under the StarShare Plan vest at
the end of the third year of the grant. Following the applicable vesting
period, the values of the StarShare Units are paid to the participants in
three equal annual installments, with interest paid on the second and third
payments at the applicable treasury note rate from the first applicable
payment date. The Company discontinued making grants under the StarShare
Plan prior to completion of the Offering and all future payouts with respect
to outstanding grants are payable solely in cash.
(3) These amounts represent the Company's matching contributions under the
Company's 401(k) Plan and Supplemental 401(k) Plan.
(4) Includes special management bonuses paid to these Named Executives for past
services to the Company and its predecessors (the "Management Bonuses") in
the following amounts: Mr. Jelenic, $10,337,142 ($5,685,428 in shares of
Common Stock and $4,651,714 in cash); Ms. Clifton, $5,168,571 ($2,842,714 in
shares of Common Stock and $2,325,857 in cash); Mr. Rush, $1,174,676
($646,072 in shares of Common Stock and $528,604 in cash); Mr. Mailman,
$1,174,676 ($646,072 in shares of Common Stock and $528,604 in cash); and
Mr. Higginson, $1,033,684 ($568,526 in shares of Common Stock and $465,158
in cash).
(5) In connection with his retirement in October 1998, Mr. Rush forfeited all of
his unvested options. As of his retirement, Mr. Rush had 10,494 vested
options which, in accordance with the Company's 1997 Stock Incentive Plan
(as hereinafter defined), may be exercised by Mr. Rush for a period of one
year from the date of his retirement.
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase shares of Common Stock made by the Company during the fiscal year ended
December 31, 1998 to each of the Named Executives. No stock appreciation rights
("SARs") were granted during 1998.
6
<PAGE>
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED (#) 1998(1) ($/SHARE)(2) DATE (5%) (10%)
- -------------------------- ----------- --------------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Jelenic......... 320,000(4) 34.6% $ 22.50 05/01/08 $ 4,528,000 $ 11,475,000
Jean B. Clifton........... 160,000(4) 17.3 22.50 05/01/08 2,264,000 5,737,500
William J. Rush........... 25,000(5) 2.7 22.50 05/01/08 353,750 896,500
Allen J. Mailman.......... 25,000(4) 2.7 22.50 05/01/08 353,750 896,500
William J. Higginson...... 25,000(4) 2.7 22.50 05/01/08 353,750 896,500
</TABLE>
- ------------------------
(1) The Company granted options to purchase a total of 925,700 shares of Common
Stock during 1998.
(2) The exercise price was equal to the fair market value of the shares of
Common Stock underlying the options on the grant date.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Common Stock over the term of the options. These assumptions are based on
rules promulgated by the Commission and do not reflect the Company's
estimate of future stock price appreciation. Actual gains, if any, on the
stock option exercises and Common Stock holdings are dependent on the timing
of such exercise and the future performance of the Common Stock. There can
be no assurance that the rates of appreciation assumed in this table can be
achieved or that the option holder will receive the amounts reflected.
(4) Options vest and become exercisable in five equal annual installments
beginning on the first anniversary of the date of grant.
(5) Mr. Rush forfeited these options in connection with his retirement from the
Company in October 1998.
YEAR-END OPTION VALUES
The following table sets forth information regarding the number and year-end
value of unexercised options held at December 31, 1998 by each of the Named
Executives. The Named Executives exercised no SARs during fiscal 1998.
FISCAL 1998 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY"
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------------------------------------------------------- ----------------------- --------------------------
<S> <C> <C>
Robert M. Jelenic............................................ 129,166/836,668 $ 64,583/$258,334
Jean B. Clifton.............................................. 64,582/418,334 32,291/129,167
William J. Rush(2)........................................... 10,494/0 5,247/0
Allen J. Mailman............................................. 11,302/70,208 5,651/22,604
William J. Higginson......................................... 10,624/67,502 5,312/21,251
</TABLE>
- ------------------------
Footnotes on following page.
7
<PAGE>
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set forth
represent the difference between $15.00 per share, the fair market value of
the Common Stock issuable upon exercise of options at December 31, 1998, and
the exercise price of the option, multiplied by the applicable number of
options.
(2) In connection with his retirement in October 1998, Mr. Rush forfeited all of
his unvested options. As of his retirement, Mr. Rush had 10,494 vested
options which, in accordance with the Company's 1997 Stock Incentive Plan
(as hereinafter defined), may be exercised by Mr. Rush for a period of one
year from the date of his retirement.
COMPENSATION PURSUANT TO PLANS
1997 STOCK INCENTIVE PLAN
Prior to completion of the Offering, the Board adopted and the stockholders
approved the Company's 1997 Stock Incentive Plan (the "1997 Plan"). Set forth
below is a discussion of the material terms of the 1997 Plan.
Subject to adjustment as provided in the 1997 Plan, the 1997 Plan authorizes
the granting of up to 4,843,750 shares of Common Stock through (i) incentive
stock options ("ISOs") and NQOs (in each case, with or without related SARs) to
acquire Common Stock, (ii) awards of restricted shares of Common Stock
("Restricted Stock"), and (iii) performance units ("Performance Units")
(collectively, "Awards") to such directors, officers and other employees of, and
consultants to the Company, its subsidiaries and affiliates, as may be
designated by the Compensation Committee or such other committee of the Board as
the Board may designate. All directors, officers, employees of, and consultants
to the Company, its subsidiaries and affiliates who are responsible for or
contribute to the management, growth and profitability of the business of the
Company, its subsidiaries and affiliates are eligible to receive Awards under
the 1997 Plan, provided, that (i) consultants are not eligible to receive grants
of ISOs and (ii) directors are eligible to receive only NQOs, as described
below, and Restricted Stock. Approximately 200 persons are currently
participating in the 1997 Plan. No participant in the 1997 Plan may be granted
Awards covering in excess of 700,000 shares of Common Stock in any fiscal year.
The aggregate number of shares available for Awards and the per-participant
limitation are 4,843,750 and 2,000,000, respectively, subject to adjustment for
certain changes in the Company's capitalization, such as stock dividends or
stock splits. Each of the Named Executives received a grant of stock options
during 1998. For details regarding the 1998 grants made to the Named Executives,
see "--Summary Compensation Table" and "--Stock Option Grants."
The Compensation Committee currently administers the 1997 Plan, approves the
eligible participants who will receive Awards, determines the form and terms of
the Awards and has the power to fix vesting periods. Subject to certain
limitations, the Compensation Committee may from time to time delegate some of
its authority under the 1997 Plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that publicly traded companies may not deduct compensation
paid to the chief executive officer or any of the four most highly compensated
other officers ("Covered Employees") to the extent it exceeds $1,000,000 in any
one tax year, unless the payments are made based upon the attainment of
objective performance goals that are established by a committee of the Board, in
accordance with requirements of Section 162(m) of the Code, based upon business
criteria and other material terms approved by stockholders. This limitation
applies to the Company but did not apply to the Management Bonuses because they
were issued prior to the Offering. The 1997 Plan is designed so that options and
SARs granted with a fair market value exercise price, and awards of Common Stock
designated as "Performance Awards" (as described below), that are made to
Covered Employees will be considered performance-based and hence fully
deductible. However, the Compensation Committee will have the discretion to
grant awards to Covered Employees that will not qualify for the exemption from
Section 162(m). Moreover, in certain cases such as death or disability (as
described below), Performance Awards may become payable even though the
performance goals are not
8
<PAGE>
met, in which event the Performance Awards will not be exempt from Section
162(m) and the Company might lose part or all of its tax deduction.
Under the terms of the 1997 Plan, the Compensation Committee may from time
to time grant options to purchase shares of Common Stock at a price (generally
payable in cash and/or shares of Common Stock) determined by the Compensation
Committee which in the case of ISOs may not be less than the Fair Market Value
(as defined in the 1997 Plan) of the shares of Common Stock, as determined by
the mean between the highest and lowest sale prices on the New York Stock
Exchange or such other exchange on which the Common Stock is listed on the date
the option is granted. Generally, options may not be exercised later than ten
years after the date of grant. The Compensation Committee may also grant SARs
related to the options granted under the 1997 Plan. A SAR would entitle the
holder thereof to receive, upon exercise, the appreciation from the option price
to the fair market value of the shares of Common Stock on the date of exercise,
such appreciation being payable in cash and/or in shares of Common Stock as
determined by the Compensation Committee. Exercise of a SAR cancels the related
option to the extent of such exercise, and the shares of Common Stock related
thereto are not available for future grants under the 1997 Plan.
The Compensation Committee determines the times at which an option may be
exercised. Except as otherwise determined and as set forth below, an option may
only be exercised during employment or generally during the three months
following termination of employment for any reason other than death, permanent
disability, retirement or cause. Upon termination of employment for cause, an
option may no longer be exercised. Stock options generally may be exercised
during the period of one year after death if the optionee is still in the employ
of the Company or any of its subsidiaries or affiliates at the time of death, to
the extent exercisable at the time of termination by death. After termination of
an optionee's employment with the Company or any of its subsidiaries or
affiliates on account of permanent disability, stock options generally may be
exercised during the period of three years after the date of termination to the
extent exercisable at the time of termination; provided, that in the event of
death prior to expiration of the option term following termination of employment
for permanent disability, options generally may be exercised during the period
of one year following the date of death, to the extent exercisable at the time
of death. After an optionee retires from the Company or any of its subsidiaries
or affiliates, the optionee's stock options generally may thereafter be
exercised to the extent to which they were exercisable at the time of the
optionee's retirement and may be exercised at any time during the one-year
period following retirement (or such shorter period as the Compensation
Committee determines); provided, that in the event of death prior to the
expiration of the option, options generally may be exercised during the period
of one year following the date of death.
The 1997 Plan provides that the Compensation Committee may establish option
exercise procedures for purposes of permitting an optionee to defer receipt of
compensation beyond the date of the option exercise.
Under the 1997 Plan, the Compensation Committee may also make awards of
Restricted Stock. The Committee may condition the grant or vesting of such
awards on the attainment of certain performance goals and/or upon the
participant's continued service with the Company or any of its subsidiaries or
affiliates. During the period (the "Restricted Period") commencing with the
grant of Restricted Stock and ending on attainment of the applicable performance
goals or satisfaction of the requisite period of service, the participant is not
permitted to sell, transfer, assign or otherwise dispose of the Restricted
Stock. The participant generally has the right during the Restricted Period to
vote the Restricted Stock and to receive cash dividends paid thereon. However,
the Compensation Committee may determine that such cash dividends be deferred
and reinvested in additional Restricted Stock and that dividends payable in
Common Stock be paid in Restricted Stock. Upon termination of employment prior
to the end of the Restricted Period, the Restricted Stock will be forfeited,
although the Compensation Committee may waive any remaining restrictions upon
termination of employment due to retirement or involuntary termination of
employment other than for cause.
9
<PAGE>
The Compensation Committee may award Performance Units. The Compensation
Committee may condition the vesting of such Performance Units on the attainment
of specified levels of one or more performance goals described below and/or upon
the continued service of the participant. The Performance Units may not be sold,
assigned or otherwise transferred during the period (the "Performance Cycle")
over which the Performance Units are to be earned. Upon termination of
employment prior to the end of the Performance Cycle, the Performance Units will
be forfeited, although the Compensation Committee may waive any remaining
payment limitations, except as described in the immediately following paragraph,
upon termination of employment due to retirement or involuntary termination
other than for cause. Subject to the Compensation Committee's approval, a
participant may, generally prior to commencement of the Performance Cycle, elect
to defer receipt of cash or shares in settlement of the Performance Units. At
the end of the Performance Cycle, the Compensation Committee will determine
which Performance Units have been earned and will cause to be delivered to the
participant a number of shares equal to the number of Performance Units deemed
by the Compensation Committee to have been earned or cash equal to the fair
market value of such shares.
The Compensation Committee may designate an award of Restricted Stock or
Performance Units to a Covered Employee as a qualified performance-based award
("Performance Award") and condition the vesting of such awards upon the
attainment of specified levels of one or more of the following performance
goals: earnings per share and/or return on equity. The Compensation Committee
does not have the power to waive achievement of such goals, except upon the
death or disability of the participant.
The 1997 Plan provides that the Compensation Committee may establish
procedures for the distribution of shares distributable pursuant to Performance
Units for purposes of permitting an awardee to defer compensation.
At the time any Award under the 1997 Plan is granted, the Compensation
Committee may grant the participant the right to receive a cash payment in an
amount specified by the Compensation Committee, to be paid when the Award
results in compensation income to the participant and to help the participant
pay the resulting taxes.
The 1997 Plan also provides that each director of the Company who is not
otherwise an employee of the Company or any of its subsidiaries or affiliates
and is not an officer, director or employee of EMWP or one of its affiliates
will receive, during the term of his or her directorship, an annual grant of
NQOs to purchase 10,000 shares of Common Stock on terms and conditions specified
by the Compensation Committee.
The 1997 Plan provides for the use of authorized but unissued shares of
Common Stock or treasury shares. To the extent that treasury shares are not
used, authorized but unissued shares of Common Stock of the Company have been
reserved for issuance upon exercise of options or distribution of Awards granted
under the 1997 Plan.
No Awards may be granted under the 1997 Plan after May 6, 2007, but Awards
theretofore granted may extend beyond that date. The 1997 Plan may be amended or
discontinued by the Board at any time, but no termination may impair the rights
of any holders of options or Awards granted prior thereto without such holder's
consent. Subject to certain limitations, the Compensation Committee may amend
the terms of any Award retroactively or prospectively, but the 1997 Plan does
not permit the Compensation Committee to cause a Performance Award to fail to be
exempt from Section 162(m) or impair the rights of any holder without the
holder's consent. The Compensation Committee has the power to interpret the 1997
Plan and to make all other determinations necessary or advisable for its
administration.
The Company has filed a registration statement covering the issuance of
shares of Common Stock pursuant to the 1997 Plan.
10
<PAGE>
PENSION PLAN
Mr. Rush participated in the Journal News, Inc. Retirement Plan (the "JNI
Retirement Plan"), which is a noncontributory defined benefit pension plan
covering substantially all non-union employees of certain of the Company's
subsidiaries. The JNI Retirement Plan provides for normal retirement benefits on
the later of the date on which the participant attains age 65 or the fifth
anniversary of such participant's becoming a JNI Retirement Plan participant.
Annual normal retirement benefits are based on career average pay and generally
consists of the sum of the following: (i) for each year after 1993, 1% of the
participant's "covered compensation" plus 1.5% of compensation in excess of
"covered compensation," (ii) if the participant also participated in the
predecessor pension plan, 1.5% of the participant's average annual compensation
for 1988-1993, times years of service through October 31, 1993, minus 1.25% of
the participant's Social Security benefit, times years of service through
October 31, 1993 (up to 40) and (iii) for the period from November 1, 1993
through December 31, 1993, 1% of compensation for such period, up to $3,786,
plus 1.5% of the compensation for such period in excess of $3,786. "Covered
compensation" is the average of the taxable Social Security wage bases for the
35 years ending in the year of retirement. Mr. Rush retired early, on October
23, 1998, with an annual retirement benefit of $56,458.
11
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The current members of the Compensation Committee are Messrs. Karp, Purcell
and Lawrence. The Compensation Committee oversees the compensation policies
applicable to all employees, including the executive officers; has the
responsibility for establishing the specific compensation packages for the
Company's Chief Executive Officer and Chief Financial Officer; has the primary
responsibility for administering the 1997 Plan; and will administer the
Executive Incentive Compensation Plan, if it is approved by stockholders.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to achieve four fundamental
objectives: (1) to provide competitive salary levels and compensation incentives
that attract and retain qualified executives; (2) to motivate executives to
achieve specific strategic short-term and long-term objectives of the Company;
(3) to recognize individual performances and achievements, as well as the
performance of the Company relative to that of certain of its peers; and (4) to
link the interests of its senior management with the long-term interests of the
Company's stockholders. During 1998, the Company's compensation program
consisted of base salary, an annual incentive bonus and an annual grant of stock
options. Base salary provides the foundation for the Company's executive pay;
its purpose is to compensate the executive for performing his or her basic
duties. The purpose of annual incentive bonuses is to provide recognition for
favorable performance and achievement of intermediate-term objectives while the
purpose of long-term incentive plan awards and stock option grants is to provide
incentives and rewards for long-term performance and to motivate long-term
strategic planning. The Company generally establishes base salary, annual
incentive bonuses and other compensation awards primarily based on job
responsibilities, prior job performance and Company and/or unit performance.
BASE SALARIES. Base salaries for the Company's executive officers are
established annually and when there is a significant change in the executive's
level of responsibility. During 1998, the Company did not utilize any formal
survey or other compilation of empirical data on executive compensation paid at
other companies. Instead, executive compensation was determined based on a
number of factors, including the responsibilities, experience, performance and
potential of the executive officers and their period of service at current
salary levels. In addition, the Company also considered the financial results of
the Company and/or unit and certain non-financial measures. The base salary of
$825,000 paid to the Company's Chief Executive Officer in 1998 was unchanged
from his 1997 base salary. The 1998 stock option grant demonstrates that the
Company has continued to transition the Company's compensation program from one
based purely on cash to one containing a significant equity component.
INCENTIVE BONUSES. The Company's executive officers are eligible to receive
annual incentive bonuses, which are linked to the operating performance of the
Company and/or the operating unit(s) for which they are responsible. The annual
incentive bonus is designed to reward selected key employees of the Company who
contributed materially to the success of the Company during the most recent
fiscal year, thus enabling them to participate in that success as well as
providing future incentives. In determining the amount of incentive bonus
awarded, the Company takes into account a number of factors including the
individual's level of responsibility, performance and achievement of their
annual performance goals. For 1998, the Company's Chief Executive Officer
received an annual incentive bonus of $195,000. This bonus amount was determined
based on a number of factors, including the achievement of the Company's 1998
goals which included the Company's acquisitions completed during the year.
STOCK OPTIONS. Since May 1997, the Company has been utilizing stock options
as a means of providing long-term incentives to members of the Company's
management. All stock option awards are granted with an exercise price of at
least 100% of Fair Market Value (as defined in the 1997 Plan) of the Common
Stock on the date of grant and currently vest in increments of 20% annually.
Currently, no specific formula is
12
<PAGE>
used to determine the number of options granted to employees but instead awards
are based on an evaluation of each individual's overall past and expected future
contribution to the Company. The 1997 Plan also provides for the grant of other
forms of long-term awards including restricted stock, SARs and performance
units. The Company's Chief Executive Officer received a grant of 320,000 options
during 1998, which have an exercise price of $22.50.
If approved at the 1999 Annual Meeting, the Company intends to implement the
Executive Incentive Compensation Plan which provides for quarterly and/or annual
incentive awards to the Chief Executive Officer and the Chief Financial Officer
if the Company achieves certain specified performance objectives. See "Proposal
2--Approval of the Executive Incentive Compensation Plan."
SECTION 162(M) OF THE INTERNAL REVENUE CODE
In connection with making decisions with respect to executive compensation,
the Company has taken into account, as one of the factors considered, the
provisions of Section 162(m), which limits the deductibility by the Company of
certain categories of compensation in excess of $1,000,000 paid to Covered
Employees.
Respectfully submitted,
Douglas M. Karp
Joseph A. Lawrence
John R. Purcell
13
<PAGE>
CERTAIN TRANSACTIONS
In connection with the Offering, certain affiliates of E.M. Warburg, Pincus
& Co., LLC (collectively, "Warburg, Pincus") executed a voting agreement
pursuant to which it agreed with the Company that, with respect to any matter
brought to a stockholder vote, Warburg, Pincus will vote in its own discretion
shares representing no more than 50% of the voting power of the Company's shares
entitled to vote on the applicable matter. The shares owned by Warburg, Pincus,
which represent in excess of such 50%, will be voted in the same proportion as
the shares voted by the other stockholders on the applicable matter.
Pursuant to a registration rights agreement, Warburg, Pincus and certain
individuals are entitled to certain registration rights with respect to their
respective shares of capital stock of the Company aggregating approximately
36,556,250 shares.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock, as of March 23, 1999, by (i) each person known to the
Company to own beneficially more than 5% of the Company's outstanding shares of
Common Stock, (ii) each director of the Company, (iii) each of the Named
Executives, and (iv) all executive officers and directors of the Company, as a
group. All information with respect to beneficial ownership has been furnished
to the Company by the respective stockholders of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------------------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
Warburg, Pincus Capital Company, L.P.(2)....................................... 24,248,774 51.3%
466 Lexington Avenue
New York, NY 10017
Warburg, Pincus Investors, L.P.(2)............................................. 12,086,349 25.6
466 Lexington Ave.
New York, NY 10017
Douglas M. Karp(2)(3).......................................................... 36,457,927 77.1
Gary D. Nusbaum(2)(3).......................................................... 36,457,927 77.1
John L. Vogelstein(2)(3)....................................................... 36,457,927 77.1
Robert M. Jelenic(4)(5)........................................................ 730,384 1.5
Jean B. Clifton(4)(6).......................................................... 365,831 *
John R. Purcell(7)............................................................. 67,000 *
Joseph A. Lawrence............................................................. 5,750 *
William J. Rush(4)............................................................. 56,642 *
Allen J. Mailman(4)(8)......................................................... 75,552 *
William J. Higginson(4)........................................................ 66,859 *
All directors and executive officers as a group (10 persons)................... 37,825,945 79.0%
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock subject
to options and warrants held by that person that are currently exercisable
or exercisable within 60 days of March 23, 1999 are deemed outstanding. Such
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
14
<PAGE>
Except as otherwise indicated, the persons in this table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) The sole General Partner of Warburg, Pincus Capital Company, L.P. ("WPCC")
and Warburg, Pincus Investors, L.P. ("Investors") is WP, a New York general
partnership. EMWP manages WPCC and Investors. The members of EMWP are
substantially the same as the partners of WP. Lionel I. Pincus is the
Managing Partner of WP and the Managing Member of EMWP, and may be deemed to
control both WP and EMWP. WP has a 20% interest in the profits of WPCC and
Investors, as the General Partner. Douglas M. Karp, Gary D. Nusbaum and John
L. Vogelstein, directors of the Company, are Members and Managing Directors
of EMWP and General Partners of WP. As such, Messrs. Karp, Nusbaum and
Vogelstein may be deemed to have an indirect pecuniary interest (within the
meaning of Rule 16a-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), in an indeterminate portion of the shares
beneficially owned by WPCC, Investors and WP. See Note 3 below.
(3) All of the shares indicated as owned by Messrs. Karp, Nusbaum and Vogelstein
are owned directly by WPCC, Investors or Warburg, Pincus Capital Partners
Liquidating Trust, a New York trust ("WPLT"), and are included because of
their affiliation with WPCC, Investors and WPLT. The principal business of
WPLT is to manage the orderly liquidation of the assets formerly held by
Warburg, Pincus Capital Partners, L.P., a Delaware limited partnership
("WPCP"), whose partnership agreement terminated on September 30, 1997.
Prior to termination of the partnership agreement, WPCP distributed an
aggregate of 122,804 shares of Common Stock to WPLT. The trustees of WPLT
are Lionel I. Pincus, John L. Vogelstein and Stephen Distler.
Messrs. Karp, Nusbaum and Vogelstein disclaim "beneficial ownership" of
these shares within the meaning of Rule 13d-3 under the Exchange Act. The
address of Messrs. Karp, Nusbaum and Vogelstein is c/o E.M. Warburg, Pincus
and & Co., LLC, 466 Lexington Avenue, New York, New York 10017. See Note 2
above.
(4) Includes shares of Common Stock which these individuals have the right to
acquire through the exercise of stock options within 60 days of March 23,
1999 as follows: Robert M. Jelenic, 322,332; Jean B. Clifton, 161,166;
William J. Rush, 10,494; Allen J. Mailman, 27,604; William J. Higginson,
26,250; John R. Purcell, 4,000; and Joseph A. Lawrence, 4,000.
(5) Includes 250 shares of Common Stock owned by Mr. Jelenic's spouse and 800
shares of Common Stock held by Mr. Jelenic as custodian for his children.
(6) Includes 50 shares of Common Stock owned by Ms. Clifton's spouse, 914 shares
of Common Stock held by Ms. Clifton as custodian for her children and 600
shares of Common Stock held by Ms. Clifton as custodian for the benefit of
her nieces and nephews.
(7) Includes 7,850 shares of Common Stock owned by Mr. Purcell's spouse. Mr.
Purcell disclaims "beneficial ownership" of these shares within the meaning
of Rule 13d-3 under the Exchange Act.
(8) Includes 1,800 shares of Common Stock owned by Mr. Mailman's spouse.
15
<PAGE>
CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph shows a comparison of cumulative total returns on the
Common Stock against the cumulative total return for the Standard & Poors
("S&P") 500 Index and the S&P Publishing (Newspapers) Index. The graph assumes
an investment of $100 on May 8, 1997 (the date the Common Stock began trading on
the New York Stock Exchange) in the Common Stock, the S&P 500 Index and the S&P
Publishing (Newspapers) Index. Cumulative total return assumes reinvestment of
dividends. The performance shown is not necessarily indicative of future
performance.
COMPARISON OF 20 MONTH CUMULATIVE TOTAL RETURN*
AMONG JOURNAL REGISTER COMPANY, THE S&P 500 INDEX
AND THE S&P PUBLISHING (NEWSPAPERS) INDEX
[GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL VALUES*($)
---------------------------------------------------
THE S&P S&P PUBLISHING
1997 AND 1998 THE COMPANY 500 INDEX (NEWSPAPERS) INDEX
- ------------------------------------------------------------------- --------------- ----------- ---------------------
<S> <C> <C> <C>
May 8, 1997........................................................ $ 100 $ 100 $ 100
June 30, 1997...................................................... $ 142 $ 111 $ 115
September 30, 1997................................................. $ 140 $ 119 $ 126
December 31, 1997.................................................. $ 150 $ 123 $ 144
March 31, 1998..................................................... $ 149 $ 140 $ 163
June 30, 1998...................................................... $ 120 $ 144 $ 165
September 30, 1998................................................. $ 105 $ 130 $ 123
December 31, 1998.................................................. $ 107 $ 158 $ 149
</TABLE>
* $100 invested on May 8, 1997 in Common Stock or index, including
reinvestment of dividends, fiscal year ending December 31, 1998.
16
<PAGE>
PROPOSAL 2--APPROVAL OF THE EXECUTIVE INCENTIVE COMPENSATION PLAN
On December 30, 1998, the Board approved and recommended for stockholder
approval the Executive Incentive Compensation Plan, a copy of which is attached
hereto as Annex A. The Executive Incentive Compensation Plan provides quarterly
and/or annual incentive awards to certain executive officers of the Company
contingent upon the financial performance of the Company, to motivate individual
and corporate performance that will inure to the benefit of the Company's
stockholders. The Executive Incentive Compensation Plan is being submitted for
stockholder approval in order for the Company's Chief Executive Officer's
incentive compensation to comply with the requirements of Section 162(m) of the
Code. In general, Section 162(m) disallows deductions for compensation paid to a
public corporation's top five executives, unless the compensation is based on
performance and approved by stockholders. In the event stockholder approval of
the Executive Incentive Compensation Plan is not obtained, no compensation will
be paid to the Chief Executive Officer under the plan and the Compensation
Committee will consider other alternatives.
PLAN ADMINISTRATION. The Executive Incentive Compensation Plan is
administered by the Compensation Committee of the Board and all decisions and
all actions thereof are conclusive and binding. The Compensation Committee
establishes the performance goals which must be met before awards are payable
under the plan, administers the plan in accordance with terms and conditions of
the plan, and certifies prior to payment of any awards that the performance
goals for which awards are payable were, in fact, met.
EFFECTIVE DATE AND ELIGIBILITY. The Executive Incentive Compensation Plan
was effective as of January 1, 1999, subject to stockholder approval, and will
end on December 31, 2001. The plan applies to the Company's fiscal quarters and
fiscal year. Only the Chief Executive Officer, the Chief Financial Officer and
executives in comparable positions with the Company are eligible to participate
in the Plan.
CALCULATION OF AWARDS. Each eligible participant is assigned an Individual
Incentive Target for the purpose of calculating awards under the Executive
Incentive Compensation Plan. The targets are expressed as a percentage of the
participant's base compensation rate. For purposes of the Executive Incentive
Compensation Plan, neither the Individual Incentive Target nor the base
compensation rate used for the Chief Executive Officer may be increased
following approval of the Executive Incentive Compensation Plan by the
Compensation Committee. The Individual Incentive Target represents the amount a
participant would receive as an award under the plan adjusted up or down
depending on actual Company financial performance during the quarter or year for
which the award is calculated. The adjustment for Company performance could
result in no payout or a payout up to two times the Individual Incentive Target.
For all eligible participants other than the Chief Executive Officer, a
subjective evaluation of the participant's contribution to the Company's
performance is also completed by the Chief Executive Officer and the
Compensation Committee and the award may be adjusted upward or downward as a
result; provided, however, in no event may a participant's award be more than
200% of the applicable Individual Incentive Target.
FINANCIAL PERFORMANCE CRITERIA. Company financial performance is measured
by comparing actual financial results for a given quarter or year against the
pre-determined financial performance goals established by the Compensation
Committee. Once established, such goals may not be changed as they apply to the
Chief Executive Officer; however, the Compensation Committee has discretion to
change the performance goals for participants other than the Chief Executive
Officer. The specific financial elements to be used in the comparison to actual
financial results are: Revenue Growth; Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA"); and Earnings Per Share. The
Compensation Committee will authorize the payment of incentive awards
immediately before, or as soon as practicable following the end of each quarter
or year through a certification that the performance goals for which incentives
are payable have been met.
17
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF PLAN PARTICIPATION. Compensation payable
under the Executive Incentive Compensation Plan will be taxable to participants
as ordinary income (compensation) at the time of payment. The Company will
generally be entitled to a corresponding compensation deduction, provided that
the payments comply with the requirements of Section 162(m) of the Code.
NEW PLAN BENEFITS UNDER THE EXECUTIVE INCENTIVE COMPENSATION PLAN. The
dollar value of benefits under the Executive Incentive Compensation Plan is
based on the future performance of the Company and, therefore, is not readily
ascertainable. The maximum incentive compensation payable under the Executive
Incentive Compensation Plan to the Chief Executive Officer and Chief Financial
Officer is $1,000,000 and $650,000, respectively.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL OF THE
EXECUTIVE INCENTIVE COMPENSATION PLAN.
PROPOSAL 3--RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board desires to obtain stockholder ratification of the resolution
appointing Ernst & Young LLP, MetroPark, New Jersey, as independent auditors for
the Company for fiscal year 1999. Ernst & Young LLP served as the Company's
auditors for the fiscal year ended December 31, 1998.
If the appointment of Ernst & Young LLP is not ratified, the adverse vote
will be considered as an indication to the Board that it should select other
independent auditors for the following fiscal year. Given the difficulty and
expense of making any substitution of auditors after the beginning of the
current fiscal year, it is contemplated that the appointment for fiscal year
1999 will be permitted to stand unless the Board finds other good reason for
making a change.
A representative of Ernst & Young LLP will attend the Annual Meeting, will
have an opportunity to make a statement if he or she desires to do so, and will
be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
FISCAL YEAR 1999.
COSTS OF SOLICITATION
The cost of preparing, printing and mailing this Proxy Statement and the
accompanying proxy card and the cost of solicitation of proxies on behalf of the
Board will be borne by the Company. In addition to the use of the mail, proxies
may be solicited personally or by telephone or by regular employees of the
Company without additional compensation. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward the proxy
materials to the beneficial owners of the Common Stock held of record by such
persons and entities and will be reimbursed for their reasonable expenses
incurred in connection with forwarding such material.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other matters
that will be brought before the Annual Meeting. In the event that any other
business is properly presented at the Annual Meeting, it is intended that the
persons named in the enclosed proxy will have authority to vote such proxy in
accordance with their judgment on such business.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors, certain
officers and persons holding more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the Commission and the New York Stock Exchange. Directors,
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certain officers and greater than 10% stockholders are also required by
Commission regulations to furnish the Company with copies of all such reports
that they file. Based on the Company's review of copies of such forms provided
to it, the Company believes that all filing requirements were complied with
during the fiscal year ended December 31, 1998.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the Proxy Statement to be
issued in connection with the Company's 2000 Annual Meeting of Stockholders must
be mailed to the Secretary, Journal Register Company, State Street Square, 50
West State Street, Trenton, NJ 08608-1298, and must be received by the Secretary
on or before December 1, 1999. In addition, stockholder proposals for
presentation at the Company's 2000 Annual Meeting of Stockholders must be
received by the Secretary no sooner than January 19, 2000 and no later than
February 18, 2000. See "General Information Relating to the Board-- Committees
of the Board."
ANNUAL REPORT
A copy of the Company's 1998 Annual Report is being mailed with this Proxy
Statement to each stockholder entitled to vote at the Annual Meeting.
Stockholders not receiving a copy of the Annual Report may obtain one, without
charge, by writing or calling Melissa L. Capestro, Assistant Secretary, Journal
Register Company, State Street Square, 50 West State Street, Trenton, NJ
08608-1298, telephone (609) 396-2200.
By Order of the Board of Directors,
/s/ JEAN B. CLIFTON
Jean B. Clifton
SECRETARY
Trenton, New Jersey
March 31, 1999
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ANNEX A
JOURNAL REGISTER COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
PURPOSE OF THE PLAN
The Executive Incentive Compensation Plan (the "Plan") has been established
to support Journal Register Company's (the "Company") objective of being a
leader in the newspaper industry, and a company that stresses high quality
products and services, superior customer service, and a good return on its
stockholders' investment. The Plan provides quarterly and/or annual incentive
awards to certain executive officers of the Company, contingent upon the
financial performance of the Company, to motivate individual and corporate
performance that will inure to the benefit of the Company's stockholders.
The Plan, as it applies to the Chief Executive Officer ("CEO"), is intended
to comply with Section 162(m) of the Internal Revenue Code. Any Plan provision
which is determined to be in conflict with the Code section shall be null and
void.
PLAN ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee establishes the performance goals which
must be met before awards are payable under the Plan, administers the Plan in
accordance with terms and conditions of the Plan, and certifies, prior to
payment of any awards, that the performance goals for which awards are payable
were, in fact, met.
EFFECTIVE DATE
The Plan applies to the Company's fiscal quarters and fiscal year.
ELIGIBILITY
The Chairman, President and CEO, the Executive Vice President and Chief
Financial Officer, and executives in comparable positions with the Company are
eligible to participate in the Plan.
To be eligible to receive an incentive award during any given fiscal year, a
participant must be in an eligible position during that fiscal year and remain
in an eligible position until the date the awards for that fiscal year are paid.
Participants who assume an eligible position after the beginning of a fiscal
year will be eligible to participate in the Plan during that year. Their
Individual Incentive Target will be pro-rated; however, to reflect the actual
number of days in that position during the year versus the total number of
available work days in the year. Participants who leave the Company, either on a
voluntary or involuntary basis, prior to the date awards are paid will cease to
be eligible to participate in the Plan on the effective date of their
termination of employment.
CALCULATION OF AWARDS
Each eligible participant is assigned an Individual Incentive Target for the
purpose of calculating awards under the Plan. The targets are based in part on
the participant's base compensation rate. The Individual Incentive Target
represents the amount a participant would receive as an award under the Plan for
the quarter or year if all the Company financial performance goals are met. The
actual award amount may be higher or lower than this amount depending on actual
Company financial performance during the quarter or year for which the award is
calculated. For the purposes of the Plan, the base compensation rate
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<PAGE>
of the CEO may not be increased after the Individual Incentive Target has been
established by the Compensation Committee for that particular fiscal year.
Company financial performance is measured by comparing actual financial
results for a given quarter or year against the financial performance goals
established by the Compensation Committee prior to the beginning of that fiscal
quarter or year. Such goals shall not change, as this Plan applies to the CEO.
The specific financial elements used in this comparison are one or more of the
following: Revenue Growth; EBITDA; and Earnings Per Share. The Compensation
Committee authorizes the payment of incentive awards immediately before, or as
soon as practicable following the end of each quarter or year and certifies that
the performance targets for which incentives are payable have been met.
The award level based on Company financial performance may range from 0% to
200% depending on actual results. For participants other than the CEO, after the
award level is calculated, the Compensation Committee and the CEO subjectively
evaluate such participant's contribution to the Company's performance and the
award may be adjusted upward or downward as a result provided however, in no
event shall a participant's award be more than 200% of the applicable Individual
Incentive Target. The Compensation Committee reserves the right to reduce the
level of incentives payable for all participants, at their sole discretion.
AWARD PAYMENTS
Awards shall be paid immediately before, or as soon as practicable following
the end of the fiscal quarter or year for which awards are payable.
OTHER INFORMATION
The establishment of the Plan, the payment of any award, or any action of
the Compensation Committee in connection with the Plan shall not be held or
construed to confer upon any participant any legal right to be continued in the
employ of the Company.
Any decision made or action taken by the Compensation Committee in
connection with the construction, administration, interpretation and effect of
the Plan shall be within the absolute discretion of the Compensation Committee
and shall be conclusive and binding upon all persons.
The Plan may be terminated, suspended, withdrawn, amended or modified in
whole or in part at any time. No member of the Board of Directors or
Compensation Committee shall be liable for any act or action hereunder, whether
of commission or omission, taken by any other member, officer, agent or
participant, except in circumstances involving bad faith, for anything done or
omitted to be done by himself/herself.
21
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ADMISSION TICKET
JOURNAL REGISTER COMPANY
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999 AT 10:00 A.M.
THE WAR MEMORIAL
WEST LAFAYETTE STREET
TRENTON, NEW JERSEY
ADMITS ONE STOCKHOLDER
DIRECTIONS:
FROM PHILADELPHIA:
Take Interstate 95 North to U.S. Route 1 North (Exit 29A-Morrisville). Follow
U.S. Route 1 North (to Trenton) approximately six miles to toll bridge (no
toll North bound) entering into New Jersey. Immediately upon entering New
Jersey, exit onto U.S. Route 29 North. Follow Route 29 North approximately
two miles to Willow Street. The War Memorial is to your left, immediately off
the exit.
FROM NEW YORK:
Take the New Jersey Turnpike South to Interstate 195 West (Exit 7A). Follow
I-195 West (to Trenton) approximately 10 miles to U.S. Route 129 North. Route
129 North will merge onto U.S. Route 1 North. Follow Route 1 North for
approximately one mile and exit onto Perry Street. Turn left off the exit ramp
onto Perry Street. Turn left at the fifth traffic light onto North Warren
Street. Turn right at the third traffic light onto West Lafayette Street. The
War Memorial is ahead to your left.
FOLD AND DETACH HERE
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Election of Class B FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
Directors listed below / / for all nominees listed below / / / /
Nominees: Gary D. Nusbaum, Jean B. Clifton and Joseph A. Lawrence
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions
----------------------------------------------------------------------------------------------------------------
2. To approve the Executive Incentive Compensation Plan 3. To ratify the appointment by the Board of Directors
of Ernst & Young LLP as independent auditors for
the Company for fiscal year 1999.
FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /
- ------------------------------------------------------------ ---------------------------------------------------------
In their discretion the Proxies are authorized to vote upon such other matters as may properly come before the meeting
or any adjournment or postponement thereof.
ADDRESS CHANGE AND/OR
COMMENTS MARK HERE
The signature on the Proxy should correspond exactly
with stockholder's name as printed to the left in the
case of joint tenants, co-executors or co-trustees, both
should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their
full title.
Dated ____________________________________________, 1999
SIGNED _________________________________________________
SIGNED _________________________________________________
(PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.) VOTES MUST BE INDICATED /X/
IN BLACK OR BLUE INK.
</TABLE>
<PAGE>
JOURNAL REGISTER COMPANY
STATE STREET SQUARE
50 WEST STATE STREET
TRENTON, NEW JERSEY 08608-1298
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
Dear Stockholder:
The Annual Meeting of Stockholders of Journal Register Company will be held
at 10:00 a.m. on Tuesday, May 18, 1999 at the War Memorial, West Lafayette
Street, Trenton, New Jersey, for the following purposes:
1. To elect three Class B directors to hold office until the 2002
Annual Meeting of Stockholders.
2. To approve the Executive Incentive Compensation Plan.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company for fiscal year 1999.
4. To transact such other business as may properly be presented at
the 1999 Annual Meeting or any adjournments or postponements
thereof.
Only holders of Common Stock of Journal Register Company of record at the close
of business on March 23, 1999 will be entitled to vote at the meeting or any
adjournments or postponements thereof.
TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN THE
PROXY/VOTING INSTRUCTION CARD BELOW, DETACH IT FROM THIS LETTER AND RETURN IT IN
THE POSTAGE PAID ENVELOPE ENCLOSED IN THIS PACKAGE. The giving of such proxy
does not affect your right to vote in person if you attend the Annual Meeting.
The prompt return of your signed proxy will aid the Company in reducing the
expense of additional proxy solicitation.
If you plan to attend the Annual Meeting in person, detach, sign and bring this
letter to the meeting as an admission ticket. Directions to the meeting are on
the reverse side.
By Order of the Board of Directors
March 31, 1999
Jean B. Clifton
Secretary
FOLD AND DETACH HERE
JOURNAL REGISTER COMPANY
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
JOURNAL REGISTER COMPANY FOR THE ANNUAL MEETING ON MAY 18, 1999
The undersigned appoints Robert M. Jelenic and Jean B. Clifton, and each of
them will full power of substitution in each, the proxies of the undersigned, to
represent the undersigned and vote all shares of Journal Register Company Common
Stock which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders to be held on May 18, 1999 and at any adjournment or postponement
thereof, as indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR proposals 1, 2 and 3.
(Continued, and to be signed and dated, on the reverse side.)
JOURNAL REGISTER COMPANY
P.O.BOX 11422
NEW YORK, N.Y. 10203-0422
