SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
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/_/ Preliminary Proxy Statement
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Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to section 240.14a-11(c) or
section 240.14a-12
THE MCCLATCHY COMPANY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
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<PAGE>
THE MCCLATCHY COMPANY
2100 Q STREET
SACRAMENTO, CA 95816
March 29, 1999
To our Shareholders:
I am pleased to invite you to attend the annual meeting of shareholders
of The McClatchy Company on Wednesday, May 19, 1999 in the Vizcaya Pavilion,
2019 21st Street, Sacramento, California 95818.
At this year's meeting, you are being asked to elect Directors for the
coming year and to ratify the appointment of McClatchy's independent auditors.
The notice of meeting and proxy statement that follow this letter describe these
items in detail. Please take the time to read these materials carefully.
Your Board of Directors unanimously believes that the two items
proposed by the Board are in the best interests of McClatchy and its
shareholders, and recommends that you vote in favor of both proposals on the
enclosed proxy card.
In addition to these items of business, at the meeting I will report to
you on McClatchy's operations and results, and respond to comments and answer
questions of general interest to shareholders.
Whether or not you plan to attend the meeting, it is important that
your shares be represented. Therefore, please sign, date and mail the enclosed
proxy in the envelope provided at your earliest convenience. By doing so, your
right to attend or vote at the meeting will in no way be limited.
Thank you.
Sincerely,
Gary Pruitt
President and Chief Executive Officer
<PAGE>
THE MCCLATCHY COMPANY
2100 Q STREET
SACRAMENTO, CA 95816
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
THE McCLATCHY COMPANY
TO BE HELD MAY 19, 1999
To the Shareholders:
The annual meeting of shareholders of The McClatchy Company will be
held at the Vizcaya Pavilion, 2019 21st Street, Sacramento, California 95818, on
Wednesday, May 19, 1999, at 9:00 a.m. local time, for the following purposes:
1. The election of Directors;
2. To ratify the appointment of Deloitte & Touche LLP as McClatchy's
independent auditors for the 1999 fiscal year; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has chosen March 22, 1999 as the "record date"
to identify those shareholders who are entitled to notice of the Annual Meeting
and to vote at the meeting. A list of those shareholders will be available at
the meeting and for ten days prior to the meeting at McClatchy's corporate
offices, 2100 Q Street, Sacramento, California. This notice, the attached proxy
statement and the enclosed form of proxy for the meeting are first being mailed
on or about March 29, 1999.
By Order of the Board of Directors
Karole Morgan-Prager, Corporate Secretary
March 29, 1999
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED REPLY ENVELOPE. THIS WILL NOT
LIMIT YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING.
<PAGE>
THE MCCLATCHY COMPANY
2100 Q STREET
SACRAMENTO, CALIFORNIA 95816
--------------------
PROXY STATEMENT
--------------------
The Board of Directors is sending you this Proxy Statement and
soliciting your proxy. This proxy statement explains the matters to be
considered and acted upon at the Annual Meeting of Shareholders on May 19, 1999
and how to vote your shares. This proxy statement and the accompanying proxy
card are first being mailed to shareholders on or about March 29, 1999.
GENERAL INFORMATION FOR SHAREHOLDERS
As a shareholder of McClatchy, you can be represented at the Annual
Meeting and have your shares voted as you direct by means of the enclosed proxy
card. When you sign the proxy card, you name Gary Pruitt and Karole
Morgan-Prager as your proxy holders. They will vote your shares (and all of the
shares of McClatchy stock represented by every properly signed and returned
proxy card) at the Annual Meeting as directed on your proxy card.
You specify your voting choices by marking the appropriate boxes on the
proxy card. If you don't specify your voting choices, your proxy holders will
vote your shares as recommended by the Board of Directors. The recommendations
of the Board of Directors are set forth on the proxy card and in this proxy
statement.
The proxy card also authorizes the proxy holders to vote your shares on
any matters that may be properly presented for action at the Annual Meeting if
McClatchy did not have notice of the matter before February 14, 1999.
YOU MUST RETURN A PROPERLY SIGNED PROXY CARD TO AUTHORIZE THE PROXY
HOLDERS TO VOTE YOUR SHARES.
The Board of Directors encourages you to complete and sign the proxy
card even if you plan to attend the Annual Meeting. You may revoke your proxy at
any time before it is voted at the Annual Meeting. If you attend the Annual
Meeting and wish to vote in person, your completed ballot at the Annual Meeting
will cancel any proxy that you previously sent.
OUTSTANDING SHARES AND VOTING RIGHTS
Shareholders of record on March 22, 1999 are entitled to vote at the
Annual Meeting. On that day, there were 16,124,622 shares of McClatchy Class A
Common Stock and 28,611,912 shares of McClatchy Class B Common Stock
outstanding. Each share of Class A Common Stock is entitled to one vote in the
election of the four Class A directors, no vote in the election of the nine
Class B directors and one-tenth vote on other matters presented at the meeting.
Each share of Class B Common Stock is entitled to one vote in the election of
the nine Class B directors, no vote in the election of the four Class A
directors and one vote on other matters presented at the meeting.
With respect to the election of directors, each outstanding share of
McClatchy stock is entitled to cast one vote for as many separate nominees as
there are directors of the Class to be elected. The nominees who receive the
most votes for the number of positions to be filled are elected as Directors.
Other proposals are approved if the number of votes cast in favor of the
proposal exceeds the number of votes cast against the proposal.
If you do not return your proxy, or you indicate "withhold authority to
vote" for any nominee on your proxy card, your vote will not count either for or
against the election of the nominee. If you do not return your
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<PAGE>
proxy in connection with the proposal to ratify the selection of independent
auditors, or "abstain" from voting, it has the same effect as if you voted
against the proposal.
Under the New York Stock Exchange's current rules, if your broker holds
your shares in "street" name, the broker may vote your shares for the election
of the Class A nominees and for the ratification of the selection of independent
auditors, even if it does not receive instructions from you. However, if your
broker does not return your proxy for the election of a nominee for director,
the non-vote will not count either for or against the nominee. Likewise, if your
broker does not return your proxy for the proposal to ratify the selection of
our independent auditors, that non-vote will have no effect on the outcome of
the proposal.
COST OF SOLICITING PROXIES
McClatchy will reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation material to McClatchy shareholders. Employees
of McClatchy and its subsidiaries may also solicit proxies personally and by
telephone. The expense for this would be nominal.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
McClatchy's Restated Certificate of Incorporation provides that the
holders of Class A Common Stock have the right as a class to elect 25% of
McClatchy's directors, or the nearest larger whole number, but no vote with
respect to the election of the other directors. The holders of the Class B
Common Stock have the right to elect the remaining directors. At the Annual
Meeting, four Class A Directors will be elected by the Class A shareholders and
nine Class B Directors will be elected by the Class B shareholders.
Your shares will be voted, unless authority is withheld on your proxy
card, for the election of the four nominees for Class A Directors named below if
you are a Class A shareholder and for the election of the nine nominees for
Class B Directors named below if you are a Class B shareholder. Each nominee is
presently a Director of McClatchy. The Directors will serve for the ensuing year
and until their successors are elected. If any Director nominee is unable or
declines to serve as a director at the time of the Meeting, the Board may, by
resolution, provide for a lesser number of Directors or designate a substitute
Director to fill the vacancy
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
NOMINEES FOR CLASS A DIRECTORS
ELIZABETH BALLANTINE, 50, has been a Director of McClatchy since March
1998. Prior to joining the Board, Ms. Ballantine was a director of Cowles Media
Company, a position she had held since 1993. Ms. Ballantine has been an attorney
with Dickstein Shapiro Morin & Oshinsky LLP since November 1993. From August
1990 until November 1993, she worked as a private consultant for international
business investments. Ms. Ballantine has also been an Adjunct Professor of
History with The George Washington University since August 1991.
LARRY JINKS, 70, has been a Director of McClatchy since July 1995. He
spent 37 years with Knight Newspapers and Knight-Ridder, Inc. and, during that
time, he served as managing editor of THE MIAMI HERALD from 1966 to 1972, as
executive editor of THE MIAMI HERALD from 1972 to 1976, as editor of the SAN
JOSE MERCURY NEWS from 1977 to 1981, as a corporate officer of Knight-Ridder
from 1981 to 1989, and as publisher of the SAN JOSE MERCURY NEWS from 1989 to
1994. He is a member of the executive committee of NMC, the media management
center at Northwestern University, and is chairman of the Knight Foundation's
Journalism Advisory Committee.
S. DONLEY RITCHEY, 65, has been a Director of McClatchy since July
1985. He retired from Lucky Stores in 1986, where he was chief executive officer
and chairman of its board of directors. Mr. Ritchey served as Chair of the
Governing Board of the California Power Exchange from May 1997 through March
1999. Currently, he is a director of SBC Communications, De La Salle Institute,
Liberty House, Inc., and the Rosenberg Foundation and is
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<PAGE>
managing partner of Alpine Partners, a family investment general partnership. He
served as a council member of the town of Danville, California from 1987 to 1995
and twice served as mayor of Danville.
FREDERICK R. RUIZ, 55, has been a Director of McClatchy since July
1993. He is chairman of Ruiz Foods, Inc., a privately held frozen food company.
Mr. Ruiz currently serves on the board of directors of Gottschalks, Inc., The
American Frozen Food Institute, The California Endowment, and The Hispanic
College Fund. He is Chair of the Institute for Family Business and a member of
the Business Advisory Council of California State University, Fresno.
NOMINEES FOR CLASS B DIRECTORS
WILLIAM K. COBLENTZ, 76, has been a Director of McClatchy since March
1979. He is a senior partner in the San Francisco law firm of Coblentz, Patch,
Duffy & Bass. He was a member of the board of directors of Pacific Telesis Group
from 1976 to 1992 and is a member of the board of directors of the Koret
Foundation, The Central Valley Foundation and the Public Policy Institute of
California. From 1964 through 1980 Mr. Coblentz was a member of the University
of California Board of Regents and he was its chairman for two years.
MOLLY MALONEY EVANGELISTI,(1) 46, has been a Director of McClatchy
since July 1995. She worked in various capacities for THE SACRAMENTO BEE from
October 1978 to December 1996, including the oversight of special projects for
THE SACRAMENTO BEE.
JOAN F. LANE, 70, has been a Director of McClatchy since March 1989.
She is currently a Special Assistant to the Board of Trustees and to the
President of Stanford University. She has served on the board of directors of
the James Irvine Foundation since 1990. She served on the board of directors of
The Brown Group, Inc. from 1985 to 1996, and as a trustee of the San Francisco
Foundation from 1984 to November 1991. From 1982 to 1992, Mrs. Lane served as
Special Assistant to the Dean of the School of Humanities and Sciences of
Stanford University. She was a member of the board of trustees of Smith College
from 1978 to 1985, and chairman of that board from 1982 to 1985.
JAMES B. MCCLATCHY,(1) 78, is Publisher of McClatchy, having been
elected to that position in July 1987. He served as the Chairman of the Board of
Directors from April 1989 to May 1995 and from August 1980 to July 1987. Mr.
McClatchy was a Director of McClatchy from 1943 through 1965, was again elected
a Director in March 1976 and has served in that capacity since that time. He is
a former owner and publisher of several weekly newspapers in California and
Nevada. He is a board member and past president of the Inter-American Press
Association, board chairman and director of the French American International
School, and a director and president of The Central Valley Foundation. He is
also a member of the board of directors of Valley Vision.
KEVIN S. MCCLATCHY,(1) 36, has been a Director of McClatchy since
September 1998. He has been the Managing General Partner and Chief Executive
Officer of the Pittsburgh Pirates major league baseball team since 1996. From
1994 to 1995 he was President of the Northern California Sports Development
Group and The Modesto A's, a minor league baseball team. He was Sales Director
for The Newspaper Network, Inc. from 1993 to 1994, Advertising Director at the
Amador LEDGER-DISPATCH from 1992 to 1993 and sales representative for THE
SACRAMENTO BEE from 1990 to 1992.
WILLIAM ELLERY MCCLATCHY,(1) 75, has been a Director of McClatchy since
March 1976 and Assistant Secretary since August 1980.
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(1) James B. McClatchy and William Ellery McClatchy are brothers. Keven S.
McClatchy is their nephew and Molly Maloney Evangelisti is their cousin.
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<PAGE>
ERWIN POTTS, 66, has been the Chairman of the Board of Directors of
McClatchy since May 1995. Mr. Potts served as Chief Executive Officer of
McClatchy from April 1989 to May 1996, as President from July 1987 to May 1995
and as Chief Operating Officer from July 1987 to April 1989. He was McClatchy's
Executive Vice President from March 1985 to July 1987, and a Vice President from
March 1979 to March 1985. In addition, Mr. Potts has been a Director of
McClatchy since 1976. He has served as a director of Rainbird Sprinkler
Manufacturing Corporation since January 1999. He also currently serves on the
boards of the Committee to Protect Journalists and the Sacramento Regional
Foundation. He is a former director of the Newspaper Association of America and
the California Newspaper Publishers Association and a former member of the
California Business Roundtable.
GARY B. PRUITT, 41, has been Chief Executive Officer of McClatchy since
May 1996 and President since May 1995. He served as Chief Operating Officer of
McClatchy from May 1995 to May 1996. He has been a Director of McClatchy since
July 1995. From May 1994 to May 1995 he served as Vice President, Operations and
Technology of McClatchy. Prior to that time he was Publisher of THE FRESNO BEE
from October 1991 to May 1994. He served McClatchy as Secretary and General
Counsel from 1987 to 1991 and Counsel from 1984 to 1987. He currently serves as
a member of the board of director of the Newspaper Association of America (NAA),
the American Press Institute, the James Irvine Foundation and the Crocker Art
Museum Association. He is also Chairman of the NAA Postal Committee and a member
of the California Business Roundtable, the Associated Press Auditing Committee
and the Chancellor's Committee for The University of California, Berkeley,.
WILLIAM M. ROTH, 82, has been a Director of McClatchy since September
1980. He was chief financial officer for Matson Navigation Company from 1952 to
1961, chairman of the board of Pacific Life Assurance Company from 1960 to 1963,
and U.S. Ambassador and Special Trade Representative from 1963 to 1969. He also
served as a member of the University of California Board of Regents for 16
years.
OTHER EXECUTIVE OFFICERS
PETER M. CAJACOB, 55, has been Vice President, Human Resources of
McClatchy since December 1993. He joined McClatchy as its Director of Human
Resources in February 1990. From 1989 to February 1990 he was director of human
resources for the GenCorp Automotive Group and prior to that time held
management positions in human resources with Aerojet General Corporation and
Whirlpool Corporation. Mr. CaJacob served on the board of directors of the
Industrial Relations Bureau of the California Newspaper Publishers Association
in 1990 and 1991.
GREGORY E. FAVRE, 63, has been Vice President, News of McClatchy since
January 1990. From 1984 to 1998 he served as Executive Editor of THE SACRAMENTO
BEE. Prior to that he was managing editor of the CHICAGO SUN TIMES and managing
editor of the CHICAGO DAILY NEWS. Mr. Favre is a past President and director of
the American Society of Newspaper Editors and is currently a board member and
membership chair of the Inter-American Press Association. He was the recipient
of the 1997 National Association of Minority Executives Catalyst award for
leadership in advocating and advancing diversity. He is a board member of the
Advisors of the Pacific Coast Center of the Freedom Forum and the Board of
Visitors for the University of California, Davis, Medical School and the
Foundation of American Communications. He currently serves as a member of the
Board of Visitors, Medill School of Journalism and the Board of Advisors,
Graduate School of Journalism of the University of California, Berkeley. Mr.
Favre was named California Newspaper Executive of the Year by the California
Newspaper Publishers Association in 1993. He served as President of the
California Society of Newspaper Editors during the 1988-1989 term.
KAROLE MORGAN-PRAGER, 36, has been General Counsel and Corporate
Secretary of McClatchy since July 1995 and was named Vice President in May 1998.
From May 1992 to July 1995 she was Associate General Counsel of The Times Mirror
Company. She was an associate with the Morrison & Foerster law firm from October
1987 to May 1992. She currently serves on the board of directors of The Boys &
Girls Club of Greater Sacramento.
JAMES P. SMITH, 61, is Vice President, Finance and Treasurer of
McClatchy. He was a Director of McClatchy from March 1982 until May 1998. He was
named Vice President, Finance in December 1985 and
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Treasurer in July 1980. Prior to that time he had served as Assistant Treasurer.
Mr. Smith served as Secretary from July 1980 through January 1987. Mr. Smith has
been McClatchy's chief financial officer since 1980.
ROBERT J. WEIL, 48, is Vice President, Operations of McClatchy. In this
capacity, he oversees McClatchy's newspaper operations in the Northwest and the
Twin Cities of Minneapolis/St. Paul and The Newspaper Network. He was named to
this position in September 1997. From May 1994 to September 1997, he served as
Publisher of THE FRESNO BEE. From September 1992 to May 1994, he was President
and Chief Operating Officer for Persis Media, a privately held company with
newspaper operations headquartered in Bellevue, Washington. Mr. Weil held other
senior management positions with Persis and Gannett from April 1973 to September
1992.
FRANK R. J. WHITTAKER, 49, is Vice President, Operations of McClatchy.
In this capacity, he oversees McClatchy's operations in California and the
Carolinas as well as Nando Media. He was named to this position in September
1997. Mr. Whittaker joined McClatchy as general manager of THE SACRAMENTO BEE in
1985. From January 1990 to September 1997, he served as both President and
General Manager of THE SACRAMENTO BEE. For 13 years prior to that time, Mr.
Whittaker served THE TORONTO STAR in Canada in a variety of management
positions, including director of strategic planning and circulation director.
Mr. Whittaker is past president of the California Newspaper Publishers
Association and serves on the board of the Audit Bureau of Circulations.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met six times during 1998. The Board of
Directors has Compensation, Audit, and Pension and Savings Plans Committees, and
a Committee on the Board. The Board of Directors has no nominating committee.
COMPENSATION COMMITTEE. Mr. Coblentz, Chairperson, Mr. Jinks, Mrs.
Lane, and Mr. Ritchey are the members of the Compensation Committee. The
Compensation Committee adopts and administers the following compensation plans
for executive officers and certain other employees of McClatchy: the Management
By Objective Annual Bonus Plan, the Chief Executive Officer Bonus Plan, the
Long-Term Incentive Plan, the Employee Stock Purchase Plan, the 1987 Amended and
Restated Stock Option Plan, the 1994 Amended and Restated Stock Option Plan and
the 1997 Stock Option Plan. The Compensation Committee held six meetings in
1998.
AUDIT COMMITTEE. Mr. Ruiz, Chairperson, Ms. Ballantine, Mr. Coblentz,
Mrs. Lane and Mr. Ritchey are the members of the Audit Committee. The Audit
Committee recommends selection of the independent auditors for McClatchy to the
Board of Directors (selection being subject to ratification by the
stockholders), reviews the scope and results of the annual audit, approves the
services to be performed by the independent auditors, and reviews the
independence of the auditors, the performance and fees of the independent
auditors, the effectiveness and adequacy of the systems of financial reporting
and internal accounting controls, and the scope and results of internal auditing
procedures. The Audit Committee held four meetings during 1998.
PENSION AND SAVINGS PLANS COMMITTEE. Mr. Ritchey, Chairperson, Mr.
Coblentz, Mrs. Lane and Mr. Pruitt are the members of the Pension and Savings
Plans Committee. The Pension and Savings Plans Committee reviews McClatchy's
pension funding policy and objectives, monitors the investment of the assets in
the Company's 401(k) and Pension Plans, and recommends appropriate related
action to the Board of Directors. The Pension and Savings Plans Committee held
two meetings in 1998.
COMMITTEE ON THE BOARD. Mrs. Lane, Chairperson, Ms. Ballantine, Mr.
Coblentz, Mr. Jinks, Mr. Ritchey, Mr. Roth, and Mr. Ruiz are the members of the
Committee on the Board. The Committee on the Board develops criteria for Board
membership and advises the Board of Directors with respect to such other matters
relating to directors as may be deemed appropriate. The Committee on the Board
held three meetings in 1998.
All Board and Committee members attended more than 75% of the combined
meetings of the Board of Directors and Committees on which they served during
1998, except William Ellery McClatchy, who attended 67% of the meetings of the
Board.
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STOCK OWNERSHIP
CLASS B COMMON STOCK
The following table shows information about the beneficial ownership of
the Class B Common Stock as of March 22, 1999 by (i) certain of the Directors
and nominees for Director, (ii) all executive officers and Directors (including
nominees) of McClatchy as a group, and (iii) each person known by McClatchy to
own beneficially more than 5% of the outstanding shares of the Class B Common
Stock.
<TABLE>
<CAPTION>
Certain Directors, Directors and Number of Shares
Executive Officers as a Group, of Class B
and 5% Stockholders(1) Common Stock Percent
- ---------------------------------------------------------------- ---------------- -------
<S> <C> <C>
James B. McClatchy.............................................. 15,992,053(2) 55.9%
William K. Coblentz............................................. 13,769,049(3) 48.1%
William Ellery McClatchy........................................ 13,000,000(4) 45.4%
Erwin Potts..................................................... 12,500,000(5) 43.7%
William M. Roth................................................. 12,500,000(5) 43.7%
Molly Maloney Evangelisti....................................... 5,662,500(6) 19.8%
Brown McClatchy Maloney......................................... 5,578,748(7) 19.5%
Kevin S. McClatchy.............................................. 707,968 2.5%
All executive officers and directors as a group (20 persons).... 22,532,989 78.8%
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(1) All addresses: c/o The McClatchy Company, P. O. Box 15779, Sacramento,
CA 95852-0779.
(2) Includes: (i) 12,500,000 shares held under five separate trusts with
2,500,000 shares and different income beneficiaries. James B.
McClatchy, William Ellery McClatchy, William K. Coblentz, William M.
Roth and Erwin Potts share joint voting and investment control with
respect to these trusts. James B. McClatchy disclaims beneficial
ownership of all but 2,500,000 shares in one such trust as to which he
has a present income interest; (ii) 598,581 shares over which James B.
McClatchy and William K. Coblentz share joint voting and investment
control as co-executors under the will of Charles K. McClatchy,
deceased. James B. McClatchy disclaims beneficial ownership of these
shares; and (iii) 500,000 shares over which James B. McClatchy, William
Ellery McClatchy and William K. Coblentz share joint voting and
investment control as co-trustees of certain trusts established under
the will of Charles K. McClatchy, deceased. James B. McClatchy
disclaims beneficial ownership of these shares.
(3) Includes: (i) 12,500,000 shares held under five separate trusts with
2,500,000 shares and different income beneficiaries. James B.
McClatchy, William Ellery McClatchy, William K. Coblentz, William M.
Roth and Erwin Potts share joint voting and investment control with
respect to these trusts. William K. Coblentz disclaims beneficial
ownership of these shares; (ii) 598,581 shares over which James B.
McClatchy and William K. Coblentz share joint voting and investment
control as co-executors under the will of Charles K. McClatchy,
deceased. William K. Coblentz disclaims beneficial ownership of these
shares; (iii) 500,000 shares over which James B. McClatchy, William
Ellery McClatchy and William K. Coblentz share joint voting and
investment control as co-trustees of certain trusts established under
the will of Charles K. McClatchy, deceased. William K. Coblentz
disclaims beneficial ownership of these shares; and (iv) 170,468 shares
with regard to which William K. Coblentz acts as a co-trustee under one
trust agreement with voting and investment control shared with other
trustees. William K. Coblentz disclaims beneficial ownership of these
shares.
(4) Includes: (i) 12,500,000 shares held under five separate trusts with
2,500,000 shares and different income beneficiaries. James B.
McClatchy, William Ellery McClatchy, William K. Coblentz, William M.
Roth and Erwin Potts share joint voting and investment control with
respect to these trusts. William Ellery McClatchy disclaims beneficial
ownership of all but 2,500,000 shares in one such trust as to which he
has a present income interest; and (ii) 500,000 shares over which James
B. McClatchy, William Ellery McClatchy and William K. Coblentz share
joint voting and investment control as co-trustees of certain
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trusts established under the will of Charles K. McClatchy, deceased.
William Ellery McClatchy disclaims beneficial ownership of these
shares.
(5) These shares are held under five separate trusts each with 12,500,000
shares and different income beneficiaries. James B. McClatchy, William
Ellery McClatchy, William K. Coblentz, William M. Roth and Erwin Potts
share joint voting and investment control with respect to these trusts.
Both Erwin Potts and William M. Roth disclaim beneficial ownership of
these shares.
(6) Includes 1,850,000 shares held in trust over which Molly Maloney
Evangelisti and Brown McClatchy Maloney share joint voting and
investment control. Molly Maloney Evangelisti is a beneficiary under
this trust.
(7) Includes 1,850,000 shares held in a trust over which Brown McClatchy
Maloney and Molly Maloney Evangelisti share joint voting and investment
control as co-trustees. Brown McClatchy Maloney is a beneficiary under
this trust. Also includes 134,440 shares held in four trusts for the
benefit of each of his four children, each containing 33,610 shares.
Brown McClatchy Maloney has sole voting and investment control with
respect to these trusts. Brown McClatchy Maloney disclaims beneficial
ownership of these shares.
</TABLE>
CLASS A COMMON STOCK
The following table shows information about the beneficial ownership of
the Class A Common Stock as of March 22, 1999 by (i) each Director and nominee
for Director, (ii) certain of McClatchy's executive officers, (iii) all
executive officers and Directors (including nominees) as a group, and (iv) each
person known to own beneficially more than 5% of the outstanding shares of the
Class A Common Stock. In addition, Securities and Exchange Commission rules deem
a person to be the beneficial owner of McClatchy Class A Common Stock if he or
she can exercise an option to acquire the shares presently or sometime within
the next 60 days. Also, each holder of Class B Common Stock is deemed to be the
beneficial owner of the same number of shares of Class A Common Stock under the
Securities and Exchange Commission rules, on the basis that he or she has the
right, subject to the terms of the Stockholders Agreement discussed later in
this Proxy Statement, to convert Class B Common Stock into Class A Common Stock.
For purposes of calculating the percentage of outstanding shares of Class A
Common Stock beneficially owned by each shareholder, the shares of Class A
Common Stock deemed to be owned by each shareholder because of his or her
ownership of Class B Common Stock are treated as outstanding only for that
shareholder. As a result, the column showing the percentage of deemed beneficial
ownership of Class A Common Stock does not reflect the beneficial ownership of
Class A Common Stock actually outstanding on March 22, 1999.
<TABLE>
<CAPTION>
Deemed Beneficial Ownership
Beneficial Ownership of of Class A Common Stock
Directors, Executive Officers, Outstanding Shares of --------------------------------
Directors and Executive Class A Common Stock Number of Shares
Officers as a Group, (including Shares Of Class A
and 5% Stockholders(1) held by spouse) Common Stock Percent
- ------------------------------------------ ------------------------- ---------------- -------
<S> <C> <C> <C>
James B. McClatchy...................... 2,500 15,994,553 49.8%
William K. Coblentz..................... 17,470(2) 13,786,519 46.1%
William Ellery McClatchy................ 6,845(3) 13,006,845 44.6%
Erwin Potts............................. 43,498(4) 12,543,498 43.8%
William M. Roth......................... 20,220(5) 12,520,220 43.7%
Molly Maloney Evangelisti............... 28,865(6) 5,691,365 26.1%
Brown McClatchy Maloney................. 15,000(7) 5,593,748 25.8%
Estate of Sue Maloney Stiles............ 2,850 1,263,457 7.3%
Kevin S. McClatchy...................... 0 707,968 4.2%
Elizabeth Ballantine.................... 66,737(8) 66,737 (9)
Gary B. Pruitt.......................... 111,091(10) 111,091 (9)
James P. Smith.......................... 61,437(11) 61,437 (9)
Gregory E. Favre........................ 23,772(12) 23,772 (9)
Robert J. Weil.......................... 11,637(13) 11,637 (9)
-7-
<PAGE>
Frank R. J. Whittaker................... 56,669(14) 56,669 (9)
S. Donley Ritchey....................... 16,720(5) 16,720 (9)
Joan F. Lane............................ 15,470(5) 15,470 (9)
Frederick R. Ruiz....................... 10,970(15) 10,970 (9)
Larry Jinks............................. 3,595(16) 3,595 (9)
Wellington Management Company, LLP...... 1,404,150(17) 1,404,150 8.7%
Private Capital Management, Inc......... 1,143,849(18) 1,143,849 7.1%
Vanguard PRIMECAP Fund.................. 1,000,000(19) 1,000,000 6.2%
PRIMECAP Management Company............. 1,000,000(20) 1,000,000 6.2%
GAMCO Investors, Inc.................... 859,957(21) 859,957 5.3%
All executive officers and directors as a
group (20 persons as Beneficial Owners)(22) 534,574 23,067,563 59.1%
- ----------
(1) All addresses are c/o The McClatchy Company, P.O. Box 15779,
Sacramento, CA 95852-0779, except as follows: (i) Wellington Management
Company, LLP, 75 State Street, Boston, MA 02109; (ii) Private Capital
Management, Inc., 3003 Tamiami Trail N., Naples, FL 33940; (iii)
Vanguard PRIMECAP Fund, P.O. Box 2600, Valley Forge, PA 19482; (iv)
PRIMECAP Management Company, 225 South Lake Avenue, Suite 400,
Pasadena, CA 91201; and (v) GAMCO Investors, Inc., One Corporate
Center, Rye, NY 10580.
(2) Includes 10,470 shares subject to stock options which are currently
exercisable.
(3) Includes 6,720 shares subject to stock options which are currently
exercisable.
(4) Includes 625 shares subject to stock options which are currently
exercisable.
(5) Includes 14,220 shares subject to stock options which are currently
exercisable.
(6) Includes 1,563 shares subject to stock options which are currently
exercisable. Also includes 15,000
shares subject to stock options which are currently exercisable and
held by the Estate of Betty Lou Maloney, over which Molly Maloney
Evangelisti is a co-executor.
(7) Includes 15,000 shares subject to stock options which are currently
exercisable and held by the Estate of Betty Lou Maloney, over which
Brown McClatchy Maloney is a co-executor.
(8) Includes 625 shares subject to stock options which are currently
exercisable and 43,548 shares held under a trust pursuant to which Ms.
Ballantine is one of the trustees.
(9) Percentage is less than 1%.
(10) Includes 101,250 shares subject to stock options which are currently
exercisable.
(11) Includes 43,875 shares subject to stock options which are currently
exercisable.
(12) Includes 21,875 shares subject to stock options which are currently
exercisable.
(13) Includes 10,625 shares subject to stock options which are currently
exercisable.
(14) Includes 55,625 shares subject to stock options which are currently
exercisable.
(15) Includes 6,720 shares subject to stock options which are currently
exercisable.
(16) Includes 2,970 shares subject to stock options which are currently
exercisable.
(17) Based on a Schedule 13G/A filed February 10, 1999.
(18) Based on a Schedule 13G/A filed on February 17, 1999.
(19) Based on a Schedule 13G/A filed February 10, 1999.
(20) Based on a Schedule 13G/A filed on October 30, 1998.
(21) Based on a Schedule 13D filed on June 22, 1998. Includes beneficial
ownership of entities affiliated with GAMCO Investors, Inc.
(22) Includes 357,011 shares subject to stock options which are currently
exercisable.
</TABLE>
-8-
<PAGE>
AGREEMENT AMONG CLASS B SHAREHOLDERS
The holders of the Class B Common Stock are parties to an agreement
which will terminate September 17, 2047 (unless terminated earlier in accordance
with its terms). In this agreement the Class B shareholders have agreed that,
subject to certain exceptions, none of them can transfer any shares of Class B
Common Stock (unless such shares are, as generally permitted by the agreement,
first converted into Class A Common Stock) except to one or more "Permitted
Transferees." A "Permitted Transferee" is any current holder of Class B Common
Stock of McClatchy; any lineal descendant of Charles K. McClatchy (1858 - 1936);
or a trust for the exclusive benefit of, or in which all of the remainder
beneficial interests are owned by, one or more of his lineal descendants.
In the event that a Class B shareholder attempts to transfer any shares
of Class B Common Stock in violation of the agreement, or upon the happening of
certain other events enumerated in the agreement as "Option Events," the
remaining Class B shareholders have the option to purchase that shareholder's
Class B Common Stock. The option to purchase would entitle each remaining Class
B shareholder to purchase the number of shares of Class B Common Stock
proportionate to that party's holdings of Class B Common Stock. If all the
shares proposed to be transferred are not purchased by the remaining Class B
shareholders, McClatchy has the option of purchasing the remaining shares. In
general, any shares not purchased under this procedure will be converted into
shares of Class A Common Stock and then transferred freely (unless following
conversion the outstanding shares of Class B Common Stock would constitute less
than 25% of the total number of all outstanding shares of common stock of
McClatchy). The intent of the agreement is to preserve family control of
McClatchy. The agreement can be terminated by the vote of the holders of 80% of
the outstanding shares of Class B Common Stock who are subject to the agreement.
COMPENSATION
DIRECTORS' COMPENSATION
McClatchy pays its non-employee Directors an annual retainer of $30,000
per year plus $1,200 per day for in-person attendance at meetings of the Board
of Directors and $1,000 per day for in-person attendance at Committee meetings.
Attendance at Board or Committee meetings by teleconference is compensated at
one-half the rate for in-person meetings. Erwin Potts, as Chairman of the Board,
receives an additional $50,000 per year for his services. Committee Chairs
receive an additional $5,000 per year for their services. Compensation for
attendance at meetings is subject to a limitation of two meetings in any one
day, whether by teleconference or in-person attendance. McClatchy also
reimburses non-employee Directors for expenses incurred by them in connection
with the business and affairs of McClatchy.
Each non-employee Director receives an annual grant of an option to
purchase 2,500 shares of Class A Common Stock under the 1990 Directors' Stock
Option Plan, as amended. The stock options are granted at fair market value,
have a ten-year term and vest equally over four years beginning March 1
following the date of award.
REPORT OF THE COMPENSATION COMMITTEE
This report is provided by the Compensation Committee to assist
shareholders in understanding the Committee's objectives and procedures in
establishing the compensation of McClatchy's Chief Executive Officer and other
senior executives.
The Compensation Committee, which consists entirely of Directors who
are not employees of McClatchy, is responsible for establishing and
administering McClatchy's executive compensation program. The program focuses on
both short-term and long-term performance utilizing a combination of cash and
equity incentives. It is designed to reward and create incentives for excellence
in individual achievement as well as McClatchy's performance. All members of the
Committee qualify as "outside directors" under Section 162(m) of the IRS Code.
The principal elements of McClatchy's executive compensation program
are (i) annual base salary, (ii) annual cash bonus (including the bonus paid to
the CEO under the Chief Executive Officer Bonus Plan) based
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<PAGE>
on the Committee's assessment of success in meeting performance objectives on an
individual, unit and/or McClatchy-wide basis, (iii) cash compensation under the
Long-Term Incentive Plan based upon growth in pretax earnings over a three-year
period of time, and (iv) stock option awards under McClatchy's stock option
plans which provide equity compensation, the value of which will ultimately be
determined by growth over time in the market price of McClatchy's common stock.
In carrying out its duties, the Committee sets the salary and annual cash bonus
of the CEO and, after review and consideration of the recommendations of the
CEO, approves the annual cash compensation of the other executive officers. The
Committee also administers McClatchy's employee stock option plans and the
Long-Term Incentive Plan, and in so doing, designates all persons who will
receive awards and sets the amount, form and other conditions of the awards.
In evaluating McClatchy's performance, the Committee considers
improvement in revenue and earnings, growth in circulation, product excellence
and market acceptance, sound strategic planning, development of new products and
services, and community involvement and good corporate citizenship. In
evaluating individual performance of key executives, the Committee also reviews
leadership and individual achievement.
The Committee believes McClatchy's compensation program is vital to the
achievement of McClatchy's objectives, in that it will:
o Enable McClatchy to attract and retain key executives essential
to its long-term success;
o Motivate and reward senior executives for development and
achievement of sound strategic business objectives; and
o Provide opportunity to selected executives to acquire an interest
in the success of McClatchy through stock ownership under its
stock option plans.
The Committee views other companies in the media industry (including
the fourteen publicly traded companies included as the Peer Group in the
Five-Year Performance Graph set forth on page 17 of this proxy statement) as
McClatchy's competition when determining competitive compensation practices.
In order to maximize the tax deductibility of option awards upon
exercise under Section 162(m) of the IRS Code, in 1994 McClatchy submitted for a
vote of the shareholders its 1994 Stock Option Plan, which Plan was approved.
The Amended and Restated 1994 Stock Option Plan, which added an additional
1,000,000 shares to the Plan, was submitted to the shareholders in 1998, which
Plan was approved. Effective January 1, 1998, McClatchy adopted the Chief
Executive Officer Bonus Plan and the Long-Term Incentive Plan, each of which was
approved by the shareholders at the 1998 Annual Meeting and qualify under
Section 162(m). McClatchy may also determine to pay compensation to the
executive officers, including the Chief Executive Officer, that may not be
deductible under Section 162(m).
COMPENSATION OF EXECUTIVE OFFICERS, 1998
McClatchy's existing executive compensation program consists of three
basic elements: base pay, short-term incentives and long-term incentives. In
late 1997 the Committee set salary and incentive levels of McClatchy's executive
officers for fiscal 1998. At that time the Committee reviewed compensation data
provided by an outside consultant to obtain a perspective on compensation levels
at McClatchy compared to companies within the newspaper industry, including the
Peer Group.
BASE PAY. In determining salaries, the Committee reviews publicly
available information on compensation at other newspaper companies, including
companies in the Peer Group, and data provided by an outside consultant, with
particular emphasis on salary levels at companies of a size comparable to
McClatchy. The Committee generally targets salary structures at the median pay
levels of those companies. The Committee also considers internal pay equity
factors, general economic conditions, McClatchy's financial performance (growth
in revenues, ability to control operating costs, improvement in operating cash
flow and operating income, and improvement in
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<PAGE>
net income and earnings per share), and individual responsibility, experience
and job performance. No specific weight is assigned to any particular factor.
Based on these factors, the Committee granted 1998 salary increases to
executive officers ranging from 3.5% to 18.2% over prior year salary. The
Committee believes these increases are consistent with salary and wage increases
granted throughout McClatchy, and believes that base salaries for McClatchy's
executive officers generally are at or below the median base salaries for other
newspaper companies, including companies in the Peer Group.
SHORT-TERM INCENTIVES (MANAGEMENT BY OBJECTIVE ANNUAL BONUS PLAN). The
Committee's goal is to establish short-term incentive opportunities that are
meaningful in relation to each executive's total compensation and the
executive's level of responsibility. In general, in evaluating performance, the
higher the level of responsibility, the greater the proportion of the
executive's total compensation is at risk. The Management by Objective Annual
Bonus Plan ("MBO Plan") is an annual cash incentive plan that links awards to
performance results of the prior year. Awards for 1998 under the MBO Plan, which
applies to each executive officer other than the CEO, were based on full or
partial achievement of pre-established performance goals relating to corporate
results, business unit results and individual performance. Each performance
objective is weighted to reflect its relative contribution to specific
short-term and long-term financial, strategic and/or management practices goals
applicable to the executive. To determine the bonus to which an executive is
entitled, a certain number of points, targeted at 100, were awarded to each
executive officer based upon his performance during the year. A certain
percentage of total points possible, typically not exceeding 10%, is reserved
for subjective evaluation. Points are applied as a percentage to an amount equal
to a predetermined percent, varying from 30% to 45% (depending on the particular
participant) of his or her base salary during the year. The Committee determined
cash bonuses for 1998 in early 1999 based on year-end assessment of actual
results as compared to predetermined objectives.
LONG-TERM INCENTIVES.
STOCK OPTION AWARDS. Non-qualified stock option awards are usually
granted each year to selected management personnel, including all executive
officers permitted by the terms of the employee stock option plans to
participate. The Committee believes stock option awards help align the financial
interests of the executive officers with those of shareholders. In fixing stock
option grants, the Committee, through subjective evaluation processes,
determines the award for the CEO, and as to the other participants, including
the four remaining named executive officers, considers the recommendation of the
CEO. Elements given weight by the Committee in considering the number of options
to be awarded are individual responsibility and accountability, anticipated
contributions, and long-term value of the participant to McClatchy. The process
employed by the Committee in determining individual awards under McClatchy's
employee stock option plans, including those of executive officers, relates
primarily to levels of responsibility but also includes subjective factors not
subject to predetermined specific criteria.
LONG-TERM INCENTIVE PLAN AWARDS. In January 1998, McClatchy
decided to replace its Executive Performance Plan ("EPP") with a Long-Term
Incentive Plan ("LTIP"). The LTIP was approved by the McClatchy shareholders at
the 1998 Annual Meeting. Awards for 1998 under McClatchy's LTIP were made in
early 1998. These awards are comprised of Incentive Units, each of which
represents a contingent right to receive in cash an amount equal to $1 times the
number of percentage points by which McClatchy's pre-tax earnings (without
giving effect to any gain or loss on the sale of assets) increase over a
three-year performance period. The performance period for the 1998 LTIP awards
began on January 1, 1998 and will end on December 31, 2000.
The Committee selects executives as participants in the LTIP and
determines the number of Incentive Units awarded. In determining awards the
Committee, through a subjective evaluation process, sets the number of Incentive
Units awarded to the CEO, and as to the other participants, including the four
other named executive officers, considers the recommendation of the CEO. The
Committee believes LTIP awards contribute to keeping participating executives
sharply focused upon maintenance of strong shareholder value even in challenging
economic environments. The selection of participants and determination of award
units relate primarily to levels of responsibility, but also include subjective
factors not subject to specific criteria. As noted above, in 1998
-11-
McClatchy replaced the awards under the EPP with awards under the LTIP. However,
because EPP awards vest over a period of four years, commencing March 1 of the
year following the year for which the grant was made, participating executives
will continue to receive cash payments under the EPP through 2001, as prior
awards vest.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER, 1998
BASE PAY. Mr. Pruitt's 1998 base pay was considered in late 1997 and
was set at that time at $650,000, an 18.2% increase over his 1997 salary. Mr.
Pruitt's 1998 salary reflected his excellent performance as McClatchy's CEO.
During 1997, McClatchy posted record revenues and earnings and reached
agreement, under Mr. Pruitt's leadership, to acquire the STAR TRIBUNE in the
Twin Cities of Minneapolis/St. Paul. The acquisition, which was completed in
March 1998, was the largest in McClatchy's history and has positioned McClatchy
as one of the top ten newspaper companies in the nation based on daily and
Sunday circulation.
SHORT-TERM INCENTIVES (CEO BONUS PLAN). In January 1998 McClatchy
adopted a Chief Executive Officer Bonus Plan. This Plan was approved by the
shareholders at the 1998 Annual Meeting. Under the Plan, the Committee
determines the CEO's bonus payment based on an objective formula established in
advance by the Committee. In March of 1998, the Committee determined the formula
for Mr. Pruitt's 1998 bonus. Under this formula, Mr. Pruitt's 1998 bonus was
based on McClatchy's actual results compared to budgeted earnings per share and
budgeted operating cash flow. The target payout of 50% of Mr. Pruitt's annual
base pay is adjusted up or down based on McClatchy performance relative to
budgeted earnings per share and operating cash flow, with each measurement
equally weighted at 25% of annual base pay.
In 1998, under Mr. Pruitt's leadership, McClatchy successfully
completed the acquisition of the STAR TRIBUNE and continued to sharpen its
strategic focus with the sale of certain non-strategic businesses. McClatchy
posted earnings of $61.1 million, or $1.41 per share, compared to $63.8 million
or $1.67 per share (excluding 14 cents per share gain on the sales of
operations) in 1997. The dilutive impact of the STAR TRIBUNE acquisition was
much lower than management originally anticipated--about half of the 45% to 50%
originally projected. Operating cash flow (operating income plus depreciation
and amortization) for 1998 was $274.6 million compared to $169.8 million for
1997. Although not factored into Mr. Pruitt's bonus, revenues for the year were
$968.7 million, up 50.9%, and were $654.0 million, excluding the STAR TRIBUNE
and revenues from sold operations, compared to revenue of $629.2 million from
ongoing operations in 1997.(2) Also, advertising revenues grew 4.1% excluding
the STAR TRIBUNE, and average paid circulation of McClatchy's daily newspapers
grew in 1998 by 1.5% daily and 0.4% Sunday, despite the continued industry trend
of declining circulation. Given McClatchy's 1998 earnings per share and
operating cash flow performance, as compared to budget, the Committee awarded
Mr. Pruitt a cash bonus of $455,000 in January 1999.
LONG-TERM INCENTIVES. Generally, the Committee grants to the CEO his
long-term incentive awards for the following year at the end of each year.
However, due to the compensation review process undertaken by the Committee in
late 1997 and the fact that McClatchy adopted its LTIP in early 1998, Mr. Pruitt
received no long-term incentive awards in 1997. Rather, in early 1998 the
Committee made the stock option and LTIP awards that it normally would have made
in late 1997. Returning to its normal practice, the Committee made Mr. Pruitt's
stock option and LTIP awards for 1999 in late 1998. Therefore, Mr. Pruitt
received his long-term incentive awards for both 1998 and 1999 during 1998. Mr.
Pruitt's first long-term incentive award in 1998 consisted of non-qualified
stock options to purchase 50,000 shares of McClatchy Class A Common Stock and
4,000 Incentive Units under the McClatchy LTIP. His 1999 award, made in late
1998, consisted of non-qualified stock options to purchase 55,000 shares of
McClatchy Class A Common Stock and 5,000 Incentive Units under the LTIP. Based
on McClatchy's performance and data provided by an outside consultant, the
Committee believes these awards are reasonable and well within competitive
practice for his level of responsibilities. Also, Mr. Pruitt received $68,101 in
1998 from vested awards under the EPP, which was replaced by the LTIP in 1998.
- ------------
(2) In 1998, McClatchy changed from a calendar year to a fiscal year ending on
Sunday nearest December 31. As a result, 1998 results are reported through
Deember 27, and include four fewer days than 1997 results.
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<PAGE>
The Committee, in setting salary and bonus levels for Mr. Pruitt, and
in fixing the number of stock option awards granted to Mr. Pruitt under
McClatchy's employee stock option plans, and LTIP Units awarded him under the
LTIP, does not assign relative weight to the indicated factors. The process is
primarily subjective in nature. Each Committee member may well accord a
different weight to the various factors considered.
The tables which follow, and accompanying narrative, reflect the
decisions covered by the above discussion.
WILLIAM K. COBLENTZ, CHAIRMAN
LARRY JINKS
JOAN F. LANE
S. DONLEY RITCHEY
EXECUTIVE COMPENSATION
The following tables set forth the annual compensation paid or accrued
by McClatchy to or on behalf of the Chief Executive Officer and the four other
most highly compensated executive officers for the fiscal years ended December
31, 1996 and 1997 and December 27, 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
-------------------------
Annual Compensation Awards Payouts
--------------------------------------------- ------------- ---------
Securities
Name and Other Annual Underlying LTIP All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Options(#)(2) Payouts(3) Compensation($)(4)
- -------------------------- ---- --------- -------- ------------------ ------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pruitt, Gary B.(5)........ 1998 $650,000 $455,000 $ 0 105,000 $ 0 $ 8,456
President and Chief 1997 550,000 350,000 120,473 0 N/A 7,441
Executive Officer 1996 429,167 225,000 96,214 62,500 N/A 7047
Whittaker, Frank R. J.(6). 1998 $340,000 $130,000 $ 0 20,000 $ 0 $ 7,869
Vice President, 1997 276,255 96,000 58,675 20,000 N/A 7,386
Operations
Weil, Robert (6).......... 1998 $330,000 $140,000 $ 0 20,000 $ 0 $ 7,828
Vice President, 1997 271,580 96,000 114,256(7) 20,000 N/A 7,299
Operations
Smith, James P............ 1998 $300,000 $ 95,550 $ 0 15,000 $ 0 $ 10,108
Vice President, Finance 1997 290,000 67,425 69,288 15,000 N/A 9,516
and CFO 1996 280,020 57,754 62,410 12,500 N/A 8,795
Favre, Gregory E.......... 1998 285,000 $ 84,075 $ 0 12,500 $ 0 $ 10,988
Vice President, News 1997 252,789 61,579 58,675 12,500 N/A 10,023
1996 232,024 50,175 52,780 12,500 N/A 9,224
- ----------
(1) Represents earnings accrued under McClatchy's Executive Performance
Plan. These earnings are vested and paid out in four equal annual
installments of 25% each commencing March 1 following the year for
which the award is made. However, under the Executive Performance Plan,
the earnings vest by an additional 25% upon a participant's early
retirement under the McClatchy Restated Retirement Plan. Upon normal
retirement under the Restated Retirement Plan, 100% of the earnings
vest immediately. In 1998 McClatchy replaced the Executive Performance
Plan with the Long-Term Incentive Plan (see footnote (3) below).
(2) Stock option awards in 1996 have been adjusted to reflect the five for
four stock split, paid in the form of a stock dividend on shares of
McClatchy Class A and Class B Common Stock on January 2, 1997, to
stockholders of record on December 16, 1996.
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<PAGE>
(3) In January 1998 McClatchy adopted its Long-Term Incentive Plan. Awards
under the LTIP consist of Incentive Units, each of which represents a
contingent right to receive in cash an amount equal to $1 times the
number of percentage points by which McClatchy's pre-tax earnings
increase over a three-year period. No payouts have yet been made under
this plan. The first awards under this plan were granted in 1998 for
the performance period beginning January 1, 1998 and ending December
31, 2000. The first payout will be in 2001.
(4) This sum includes (i) Company contributions to McClatchy's 401(k) Plan
on behalf of each of the named executive officers to match pre-tax
elective deferral contributions (included under Salary) made by each
officer to such Plan, and (ii) premium payments to continue life
insurance coverage under the Group Executive Life Insurance Plan at a
level not otherwise available under McClatchy's standard life insurance
coverage. The amount of the contribution to McClatchy's 401(k) Plan for
each named executive officer for 1998 was $6,400.00.
(5) With respect to Mr. Pruitt's 1996 salary, from January 1, 1996 through
May 31, 1996 his annual salary was $400,000. On June 1, 1996, his
annual salary was increased to $450,000. In addition, Mr. Pruitt was
granted an option on January 13, 1998 to purchase 50,000 shares of
Class A Common Stock and an option on November 30, 1998 to purchase
55,000 shares of Class A Common Stock.
(6) Messrs. Weil and Whittaker became executive officers in September 1997.
(7) This amount also includes certain perquisites, including $42,626 paid
to Mr. Weil as reimbursement of relocation expenses.
</TABLE>
STOCK OPTION AWARDS
The following table contains information concerning stock option awards
to the Chief Executive Officer and the four other most highly compensated
executive officers during the year ended December 27, 1998. Annual stock option
grants consist of stock options granted based upon assessment by the
Compensation Committee of the individual's past performance, level of
responsibility and accountability, anticipated future contributions and
long-term value to McClatchy. Stock options are granted at fair market value,
have a ten-year term and vest equally over four years beginning on March 1
following the year for which the award was made.
<TABLE>
<CAPTION>
Securities % of Total
Underlying Options Granted Exercise Grant Date
Options To Employees In or Base Expiration Present
Name Granted(#) Fiscal Year Price($/sh) Date Value($)(1)
- ------------------------- ---------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Pruitt, Gary B.(2)....... 50,000 9.00% $ 26.1875 1/13/08 $ 414,145
55,000 9.90% 32.8750 11/30/08 548,595
Whittaker, Frank R. J.... 20,000 3.60% 32.8750 11/30/08 199,489
Weil, Robert J........... 20,000 3.60% 32.8750 11/30/08 199,489
Smith, James P........... 15,000 2.70% 32.8750 11/30/08 149,617
Favre, Gregory E......... 12,500 2.20% 32.8750 11/30/08 124,681
- ----------
(1) Options vest in increments of 25% over four years. These values are
determined using the Black-Scholes Option Pricing Model. The
Black-Scholes Option Pricing Model is one of the methods permitted by
the Securities and Exchange Commission for estimating the present value
of options. The Black-Scholes Option Pricing Model is based on
assumptions as to certain variables as described below, and is not
intended to estimate, and has no direct correlation to, the amount that
an individual will actually realize upon exercise of options. The
actual value of the stock options that an executive officer may
realize, if any, will depend on the excess of the market price on the
date of exercise over the exercise price. The values listed above were
based on the following assumptions: volatility (measured as the
annualized
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<PAGE>
standard deviation of the sample, as determined from the
daily closing prices over the past eleven years, ending with December
24, 1998) (the last trading day of the fiscal year) of .2868; risk free
rates of return for such period of 4.5% to 5.8%; dividend yields for
such period of 1.2% to 1.4%; and time of exercise ranging from 4 to 7
years as the options vest.
(2) Mr. Pruitt was granted an option on January 13, 1998 to purchase 50,000
shares of Class A Common Stock and an option on November 30, 1998 to
purchase 55,000 shares of Class A Common Stock.
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table shows the number of shares of Class A Common Stock
represented by outstanding stock options held by the Chief Executive Officer and
the four other most highly compensated executive officers as of December 27,
1998, and the value of such options based on the closing price of McClatchy's
Class A Common Stock on December 24, 1998, which was $32.1875.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Shares Number of Unexercised Value of Unexercised
Acquired Value Options at FY-End(#) Options at FY-End($)
Name on Exercise Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Pruitt, Gary B.......... 0 $ 0 63,125/168,125 $820,773/$867,898
Whittaker, Frank R. J... 30,625 640,405 41,250/58,750 596,734/282,891
Weil, Robert J.......... 0 0 5,625/51,250 68,180/201,734
Smith, James P.......... 19,375 320,184 30,750/48,750 420,690/262,891
Favre, Gregory E........ 2,812 55,432 9,375/43,750 113,633/252,891
</TABLE>
LONG-TERM INCENTIVE AWARDS
The following table shows the awards made to the Chief Executive
Officer and the four other most highly compensated executive officers during the
last fiscal year.
-15-
<PAGE>
<TABLE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<CAPTION>
Estimated future payouts under
Performance non-stock price-based plans
Number of period until --------------------------------------------
units maturation Threshold Target Maximum
Name (#) or payout ($) ($)(1) ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pruitt, Gary B............ 4,000 1/1/98-12/31/2000 $56,800 $ 0 $1,000,000
5,000 12/28/98-12/30/2001 0 N/A 1,000,000
Whittaker, Frank R. J. ... 1,800 1/1/98-12/31/2000 25,560 0 1,000,000
2,000 12/28/98-12/30/2001 0 N/A 1,000,000
Weil, Robert J. .......... 1,800 1/1/98-12/31/2000 25,560 0 1,000,000
2,000 12/28/98-12/30/2001 0 N/A 1,000,000
Smith, James P............ 1,200 1/1/98-12/31/2000 17,040 0 1,000,000
1,300 12/28/98-12/30/2001 0 N/A 1,000,000
Favre, Gregory E.......... 1,000 1/1/98-12/31/2000 14,200 0 1,000,000
1,100 12/28/98-12/30/2001 0 N/A 1,000,000
(1) LTIP payouts with respect to any award year will be based on increases
in McClatchy's pre-tax earnings over a three-year performance period,
and paid at the rate of $1 per unit multiplied by the number of
percentage points of increase in pre-tax earnings (subject to a maximum
payout per award per individual of $1,000,000). Because fiscal 1998 was
the first year for the LTIP, McClatchy has not yet made any payments
under the LTIP. SEC rules require McClatchy to show, in the "Target"
column, payouts for the fiscal 1998 awards that would have been made
based on fiscal year 1998 performance as an illustration of the
payments that might be made under the LTIP in the future. The amounts
shown for the fiscal 1998 awards reflect the increase in pre-tax
earnings in fiscal 1998 over 1997 (excluding the gain or loss on sales
of assets). No amount is shown for the fiscal 1999 awards as no
financial results for any portion of the performance period have yet
been published. The actual value of these LTIP awards upon payout may
differ significantly from the numbers set forth above.
</TABLE>
-16-
<PAGE>
FIVE-YEAR PERFORMANCE GRAPH
The SEC requires that McClatchy include in this proxy statement a
line-graph presentation comparing cumulative, five-year stockholder returns on
an indexed basis with (i) a broad equity market index and (ii) an industry index
or peer group. Shown below is a line graph comparing the percentage change in
the cumulative total stockholder return on McClatchy's common stock against the
cumulative total return of the S&P Midcap 400 Index and a Peer Group Index for a
period of five years ended December 31, 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
THE MCCLATCHY COMPANY VS.
THE S&P MIDCAP 400 INDEX VS. A PEER GROUP INDEX
[LINE GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Peer Group Weighted Average: 100 94 116 140 215 224
McClatchy Co. 100 92 100 155 153 201
S&P Midcap 400 100 96 126 150 199 228
</TABLE>
* $100 invested on 12/31/93 in stock or index-including reinvestment of
dividends. Fiscal Year Ending December 31.
The Peer Group Index is comprised of the following publicly traded
newspaper publishing companies, and is weighted according to market
capitalization as of the beginning of each year: (1) A. H. Belo Corporation, (2)
Central Newspapers, Inc., (3) Dow Jones & Company, (4) E. W. Scripps Company,
(5) Gannett Co., Inc., (6) Journal Register Co., (7) Knight Ridder, Inc., (8)
Lee Enterprises, Inc., (9) The McClatchy Company, (10) Media General, Inc., (11)
The New York Times Company, (12) Pulitzer Publishing Company, (13) Times Mirror
Company, (14) Tribune Company and (15) Washington Post Company.
-17-
<PAGE>
PENSION PLANS
The following table shows the estimated annual pension benefits payable
to the executive officers named below at normal retirement age (age 65) under
McClatchy's qualified defined benefit pension plan, as well as its nonqualified
supplemental pension plan that provides benefits that would otherwise be denied
participants by reason of certain Internal Revenue Code limitations on qualified
plan benefits, based on remuneration that is covered under the plans and years
of service with McClatchy:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
----------------------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35 AND ABOVE
- ------------ -------- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 15,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $ 105,000
400,000 30,000 60,000 90,000 120,000 150,000 180,000 210,000
600,000 45,000 90,000 135,000 180,000 225,000 270,000 315,000
800,000 60,000 120,000 180,000 240,000 300,000 360,000 420,000
1,000,000 75,000 150,000 225,000 300,000 375,000 450,000 525,000
1,200,000 90,000 180,000 270,000 360,000 450,000 540,000 630,000
</TABLE>
Benefits under the qualified defined pension plan are computed using
basic compensation exclusive of overtime and other compensation; benefits under
the supplemental plan are calculated using basic salary plus any annual cash
bonus awarded. The benefits shown in the foregoing table are not subject to any
deduction for social security or other offset amounts. For single persons,
benefits are computed as straight life annuity amounts. Married persons may
chose between straight life or joint and survivor annuity amounts. Covered
compensation for the named executive officers would consist of the salary and
bonus set forth in the Summary Compensation Table above, and for the named
executive officers as of the end of the last fiscal year is: Gary B. Pruitt,
$1,000,000; Frank R. J. Whittaker, $436,000; Robert J. Weil, $426,000; James P.
Smith, $367,425; and Gregory E. Favre, $346,579. If they remain employees until
they reach 65, the years of credited service will be as follows: Gary B. Pruitt,
37.67; James P. Smith, 28.0; Gregory E. Favre, 16.17; Frank R. J. Whittaker,
29.17; and Robert J.
Weil, 21.0.
EMPLOYMENT AGREEMENT
McClatchy has an Employment Agreement with its Chief Executive Officer,
Gary Pruitt. The Agreement expires on June 1, 2001, or a later date to which the
term of the Agreement is extended under the Agreement. Each June 1, the term of
the Agreement extends automatically for one year (so that effective on each June
1, the remaining term of employment is a full three-year period). The Board of
Directors can elect to terminate the automatic extension feature of the
Agreement. However, that election would only apply to term extensions that would
become effective more than 60 days after the Board informs Mr. Pruitt that it
has decided to terminate the automatic extensions. If during the term of the
Agreement Mr. Pruitt's employment is involuntarily terminated for any reason
other than "cause," "mental incompetence" or "disability," or if he resigns for
"good reason" (as these terms are defined in the Agreement), he would be
entitled to a supplemental severance payment for the balance of his term equal
to 300% of his base salary, at the rate then in effect. The severance payment
can be made in a lump sum or, at Mr. Pruitt's election (subject to the approval
of the Board of Directors), in five equal annual installments. In addition, if a
severance payment is made, Mr. Pruitt's group insurance coverage would be
continued until the third anniversary of the effective date of the termination
of employment or until he and his dependents become eligible for comparable
coverage as a result of his reemployment, whichever is earlier. If during the
term of the Agreement Mr. Pruitt's employment is terminated because of his
disability, he would be entitled to a supplemental disability benefit in an
amount equal to 60% of his base salary at the rate then in effect, reduced by
all other disability benefits that are payable to him under McClatchy's group
insurance plan and all federal or state insurance programs. The supplemental
disability benefit would be payable until the third anniversary of the effective
date of the termination of employment or until disability benefits under
McClatchy's group insurance plan are discontinued,
-18-
<PAGE>
whichever is earlier. In addition, Mr. Pruitt's group insurance benefits would
be continued as long as any disability benefit is payable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1998, McClatchy determined for strategic reasons to sell
certain of its non-strategic assets, including BUSINESS NORTH CAROLINA, a
magazine operated through McClatchy's wholly-owned subsidiary, The News &
Observer Publishing Company (N&O). On October 19, 1998, the N&O entered into an
Asset Purchase Agreement with Red Hand Media, LLC, a North Carolina limited
liability company, to sell the magazine assets to Red Hand Media for $900,000.
After the Agreement was executed, but before the transaction was closed, Mr.
Potts agreed to purchase a 16% minority interest in Red Hand Media. The sale of
the assets to Red Hand Media was completed on November 30, 1998. McClatchy has
no continuing interest in BUSINESS NORTH CAROLINA and does not believe that Mr.
Potts' minority interest in Red Hand Media will have any impact on his ability
to serve as a director of McClatchy.
RATIFICATION OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY)
The Board of Directors has appointed, subject to ratification by the
shareholders, Deloitte & Touche LLP as independent auditors for the fiscal year
ending December 26, 1999. Representatives of Deloitte & Touche LLP will be
present at the Annual Meeting and will have an opportunity to make a statement
if they desire. They will also be available to respond to appropriate questions.
Ratification of this item requires an affirmative vote of a majority of
the aggregate voting power of the shares of Class A and Class B Common Stock
present or represented at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF DELOITTE
& TOUCHE LLP AS MCCLATCHY'S INDEPENDENT AUDITORS.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SEC regulations require McClatchy to identify the names of persons who
failed to file or filed late a report required under Section 16 of the
Securities Exchange Act of 1934. Generally, the reporting regulations under
Section 16 require directors, executive officers and greater than 10%
shareholders to report changes in ownership of Company securities. To
McClatchy's knowledge, based upon a review of the copies of such reports
furnished to McClatchy and written representations that no other reports were
required, during the year ended December 27, 1998, none of the directors,
officers and beneficial owners of greater than 10% of McClatchy's Class A Common
Stock failed to file on a timely basis the forms required by Section 16(a) of
the Exchange Act.
OTHER MATTERS
The Board of Directors does not know of any business to be presented at
the annual meeting other than the matters set forth above, but if other matters
properly come before the meeting your proxy holders will vote on the matters in
accordance with their best judgment.
-19-
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of shareholders to be presented at McClatchy's annual meeting
of shareholders in 2000 must be received at the Corporate Secretary's office,
2100 Q Street, Sacramento, California 95816, no later than December 1, 1999 to
be considered for inclusion in the proxy statement and proxy for that meeting.
By Order of the Board of Directors
Karole Morgan-Prager, Corporate Secretary
March 29, 1999
-20-
<PAGE>
APPENDIX A
<TABLE>
THE MCCLATCHY COMPANY
CLASS A COMMON PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 1999.
The undersigned hereby appoints Gary Pruitt and Karole Morgan-Prager, or either
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated herein, all the shares
of the Class A Common Stock of The McClatchy Company that the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held on May 19,
1999, or any postponement or adjournment thereof.
This proxy when properly executed will be voted as directed by the undersigned
shareholder. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR ITEM 2.
<S> <C>
- ----------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON |
REVERSE SIDE | (Continued and to be dated and signed, on other side)
|
- -----------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE>
Please Mark
your votes as / X /
indicated in
this example
1. To elect directors to serve until the next Annual Meeting of Shareholders
and until their successors are elected or chosen.
<S> <C> <C>
WITHHOLD
FOR all nominees AUTHORITY Nominees: Elizabeth Ballantine, Larry Jinks, S. Donley Ritchey, Frederick R.
listed to the right (to vote for all Ruiz
(except as marked to nominees listed at (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
the contrary) right) THE NOMINEE'S NAME BELOW:
/ / / / -----------------------------------------------------------------------------
<C> <C> <C>
I PLAN TO ATTEND MEETING / /
2. Ratification of the appointment 3. In their discretion, the
of Deloitte & Touche LLP as the proxies are authorized to vote COMMENTS/ADDRESS CHANGE Please mark
Company's independent auditors for upon such other business as the box if you have written / /
1999. may properly come before the comments/address change on the reverse
meeting. side
FOR AGAINST ABSTAIN Please sign exactly as name appears on your
stock certificate. When shares are held by
joint tenants, both should sign. When signing
/ / / / / / as attorney, as executor, administrator,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
Dated: , 1999
--------------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
THE MCCLATCHY COMPANY
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
</TABLE>
<PAGE>
APPENDIX B
<TABLE>
THE MCCLATCHY COMPANY
CLASS B COMMON PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 1999.
The undersigned hereby appoints Gary Pruitt and Karole Morgan-Prager, or either
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated herein, all the shares
of the Class B Common Stock of The McClatchy Company that the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held on May 19,
1999, or any postponement or adjournment thereof.
This proxy when properly executed will be voted as directed by the undersigned
shareholder. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR ITEM 2.
<S> <C>
- ----------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON |
REVERSE SIDE | (Continued and to be dated and signed, on other side)
|
- -----------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE>
Please Mark
your votes as / X /
indicated in
this example
1. To elect directors to serve until the next Annual Meeting of Shareholders
and until their successors are elected or chosen.
<S> <C> <C>
WITHHOLD Nominees: William K. Coblentz, Molly Maloney Evangelisti, Joan F. Lane,
FOR all nominees AUTHORITY James B. McClatchy, Keven S. McClatchy, William Ellery McClatchy, Erwin
listed to the right (to vote for all Potts, Gary B. Pruitt, William M. Roth
(except as marked to nominees listed at (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
the contrary) right) THE NOMINEE'S NAME BELOW:
/ / / / --------------------------------------------------------------------------------
<C> <C> <C>
I PLAN TO ATTEND MEETING / /
2. Ratification of the appointment 3. In their discretion, the
of Deloitte & Touche LLP as the proxies are authorized to vote COMMENTS/ADDRESS CHANGE Please mark
Company's independent auditors for upon such other business as the box if you have written / /
1999. may properly come before the comments/address change on the reverse
meeting. side
FOR AGAINST ABSTAIN Please sign exactly as name appears on your
stock certificate. When shares are held by
joint tenants, both should sign. When signing
/ / / / / / as attorney, as executor, administrator,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
Dated: , 1999
--------------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
THE MCCLATCHY COMPANY
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
</TABLE>
