<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
KNIGHT-RIDDER, INC.
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
<PAGE> 2
[KNIGHT-RIDDER LOGO]
KNIGHT-RIDDER, INC.
ONE HERALD PLAZA, MIAMI, FLORIDA 33132
MARCH 12, 1996
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Company's 1996 Annual Meeting of
Shareholders which will be held on Tuesday, April 23, 1996, at 9:30 a.m. at the
Hotel Inter-Continental, Miami, Florida.
Shareholders who attended past Annual Meetings have found them interesting and
informative. We hope you will be able to attend.
Your vote is important. Whether or not you expect to attend the Annual
Meeting, please sign, date and return the enclosed Proxy. A prompt return of
your Proxy Card will be appreciated as it will save the expense of further
mailings. If you do attend the Annual Meeting, you may still vote in person if
you wish to.
Sincerely yours,
/s/ P. Anthony Ridder
- ---------------------
P. Anthony Ridder
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
KNIGHT-RIDDER, INC.
One Herald Plaza, Miami, Florida 33132
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 23, 1996
To the Shareholders of
KNIGHT-RIDDER, INC.
THE ANNUAL MEETING OF SHAREHOLDERS OF KNIGHT-RIDDER, INC. WILL BE HELD AT 9:30
A.M. AT THE HOTEL INTER-CONTINENTAL, 100 CHOPIN PLAZA, MIAMI, FLORIDA, ON
TUESDAY, APRIL 23, 1996 FOR THE FOLLOWING PURPOSES:
1. To elect 7 directors;
and to consider and vote upon:
2. A proposal recommended by the Board of Directors that the shareholders
ratify the appointment of Ernst & Young LLP as independent auditors of the
Company for the year 1996 (Proposal No. 1);
3. A proposal recommended by the Board of Directors that the Company amend
its Employee Stock Option Plan to extend the period following death or
disability during which an option may be exercised; and to limit the
number of shares that may be optioned to any employee in a calendar year
(Proposal No. 2); and
4. A shareholder proposal seeking redemption of rights issued pursuant to
the Company's Shareholder Rights Plan (Shareholder Proposal);
and to transact such other business as may properly come before the meeting.
The accompanying Proxy Statement contains further information with respect to
the matters to be acted upon at the meeting.
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MARCH 4, 1996 ARE ENTITLED
TO NOTICE OF AND TO VOTE AT THE MEETING.
All proxies, ballots and vote tabulations that identify the vote of a
shareholder will be kept confidential except to the extent necessary to allow
the independent inspectors to tabulate the results of the vote or to meet
applicable legal requirements.
You are invited to attend the meeting; however, if you do not expect to attend
in person, you are urged to execute and return immediately the enclosed Proxy,
which is solicited by the management. You may revoke your Proxy and vote in
person should you attend the meeting.
By Order of the Board of Directors
/s/ Douglas C. Harris
- ---------------------
Douglas C. Harris
Vice President and Secretary
March 12, 1996
<PAGE> 4
KNIGHT-RIDDER, INC.
ONE HERALD PLAZA, MIAMI, FLORIDA 33132
PROXY STATEMENT
1996 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, APRIL 23, 1996
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation on behalf
of the Board of Directors of Knight-Ridder, Inc. (the "Company") of Proxies for
use at the Annual Meeting of Shareholders to be held at 9:30 a.m. on Tuesday,
April 23, 1996 at the Hotel Inter-Continental, Miami, Florida for the purposes
described in the accompanying Notice of Annual Meeting of Shareholders. This
Proxy Statement, the accompanying Proxy card and the Annual Report of the
Company for the year ended December 31, 1995 are being mailed together to
shareholders for the first time on March 12, 1996.
Shares represented by a valid Proxy Card received in time for voting will be
voted in accordance with the shareholder's instructions with respect to matters
for which a ballot is provided in the Proxy. If no such instructions are
specified, the Proxy will be voted FOR the election of the directors nominated
by the Board of Directors, FOR ratification of the appointment of Ernst & Young
LLP as the Company's independent auditors (Proposal No. 1), FOR the amendments
to the Employee Stock Option Plan (Proposal No. 2) and AGAINST the Shareholder
Proposal.
Votes by shareholders will be confidential and not disclosed to the Company
except as necessary to tabulate voting results or as required by law.
COMMON STOCK OUTSTANDING AND PRINCIPAL HOLDERS
Each shareholder or shareholder's Proxy will be entitled to one vote for each
share held of record on March 4, 1996 on all matters which may come before the
meeting. On that date, 48,910,116 shares of the Company's Common Stock were
outstanding and entitled to vote.
The following table sets forth information as of January 31, 1996 with respect
to the only persons known by the Company to own beneficially more than 5% of
the outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERS OWNED CLASS
- ------------------------------------------------------------------------------
<S> <C> <C>
Southeastern Asset Management, Inc. .................. 6,431,239 13.19%
6075 Poplar Avenue
Memphis, TN 38119
Harris Associates L.P. ............................... 3,444,270 7.06%
2 North LaSalle Street, #500
Chicago, IL 60602
Regents of the University of California .............. 2,650,200 5.44%
300 Lakeside Drive
Oakland, CA 94612
John S. and James L. Knight Foundation ............... 2,630,541 5.40%
Two South Biscayne Boulevard, #3800
Miami, FL 33131
</TABLE>
1
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Charter provides for a Board of Directors divided into three
classes having staggered three-year terms. Seven directors are to be elected
at the 1996 Annual Meeting, five to hold office until the 1999 Annual Meeting
of Shareholders and two to hold office until the 1998 Annual Meeting of
Shareholders.
The individuals nominated by the Board of Directors to stand for election at
the 1996 Annual Meeting for three-year terms are James I. Cash, Jr., who was
elected to the Board at the September, 1995 Board Meeting, Randall L. Tobias,
who was elected by shareholders at the 1994 Annual Meeting of Shareholders and
Jesse Hill, Jr., Thomas L. Phillips and P. Anthony Ridder, all of whom were
elected by shareholders at the 1993 Annual Meeting.
Joan Ridder Challinor, who was elected by shareholders at the 1993 Annual
Meeting and John C. Fontaine, who was elected to the Board at the June, 1995
Board Meeting, were nominated by the Board of Directors to stand for election
for two-year terms.
The nominations of Mrs. Challinor and Mr. Fontaine for two-year terms were to
comply with the Bylaw requirement that, to the extent practicable, the classes
of directors be of equal size.
James K. Batten, former Chairman of the Board and Chief Executive Officer of
the Company, whose term would have continued until the 1998 Annual Meeting,
died in June, 1995. Ben R. Morris and Eric Ridder, whose terms expire in 1996,
did not stand for re-election.
The other seven directors who were elected at prior Annual Meetings will
continue to serve their respective terms.
Proxies will be voted for the election of the seven nominees of the Board of
Directors unless instructions are given on the Proxy to withhold authority to
vote for one or more of the nominees.
Although it is not contemplated that any nominee will decline or be unable to
serve, the shares will be voted by the proxyholders in their discretion for
another person should that occur unless the Board acts to reduce the number of
directors to be elected.
2
<PAGE> 6
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS ENDING 1999
[PHOTO] JAMES I. CASH, JR., age 48 Director since 1995
James E. Robison Professor of Business Administration
Harvard University, Graduate School of Business Administration
Professor Cash graduated from Texas Christian University. He
received a Master of Science degree in Computer Science and his Ph.D.
in Management Information Systems from Purdue University. He has been
a member of the Harvard Business School Faculty since 1976. Professor
Cash is a trustee of Massachusetts General Hospital, Texas Christian
University and the Massachusetts Computer Software Council. He is a
director of Cambridge Technology Partners, State Street Bank and Trust
and Tandy Corporation. Mr. Cash serves on the Environmental Affairs
Committee.
[PHOTO] JESSE HILL, JR., age 69 Director since 1980
Chairman and Chief Executive Officer of
Atlanta Life Insurance Co.
A native of St. Louis, Mr. Hill graduated from Lincoln University of
Missouri and received a Master of Business Administration degree
from the University of Michigan. Mr. Hill has been with Atlanta Life
Insurance Co. since 1949. He became President and Chief Executive
Officer in 1973. He is Chairman of the Board of the Martin Luther
King Center for Nonviolent Social Change. He serves on the boards of
Delta Air Lines, Inc.; Trust Company of Georgia; and National Service
Industries, Inc. He is Chairman of the Audit Committee and serves on
the Finance Committee.
[PHOTO] THOMAS L. PHILLIPS, age 71 Director since 1983
Retired Chairman and Chief Executive
Officer of the Raytheon Company
Mr. Phillips graduated and received a master's degree from Virginia
Polytechnic Institute. He has honorary degrees from eight
universities. He joined Raytheon in 1948 and served as Chief
Executive Officer from 1968 to March 1991 and Chairman of the Board
from 1975 to March 1991, when he retired. He is a director of Digital
Equipment Corporation, Raytheon Company and John Hancock Financial
Services and is a trustee of State Street Funds, Massachusetts General
Hospital and Gordon College. He is Chairman of the Finance Committee
and serves on the Compensation Committee.
[PHOTO] P. ANTHONY RIDDER, age 55 Director since 1987
Chairman of the Board and
Chief Executive Officer of the Company
Mr. Ridder graduated from the University of Michigan. He spent the
early part of his newspaper career in various editorial and business
capacities at several of the Company's newspapers and joined the
San Jose Mercury News in 1964. He served as its general manager until
1977 when he was named Publisher. In 1986, Mr. Ridder became
President of the Newspaper Division of the Company and in 1989, he
became President of the Company. He was named Chief Executive Officer
and Chairman of the Board in 1995. He is a director of the Seattle
Times Company, the United Way of Dade County and the Florida
International University Foundation. He is Chairman of the Operating
and Executive Committees and serves on the Environmental Affairs
Committee.
[PHOTO] RANDALL L. TOBIAS, age 54 Director since 1994
Chairman and Chief Executive Officer
Eli Lilly & Co.
Mr. Tobias is a graduate of Indiana University. He is Chairman of the
Board and Chief Executive Officer of Eli Lilly and Company. Prior to
joining Lilly in 1993, he served as Vice Chairman of the Board of
American Telephone and Telegraph Company ("AT&T") since 1986 and as
Chairman and Chief Executive Officer of AT&T International (an AT&T
subsidiary) since 1991. He joined AT&T in 1964. Mr. Tobias is a
director of Phillips Petroleum Company and Kimberly-Clark Corporation.
He is a trustee of Duke University, the Colonial Williamsburg
Foundation, and the Indiana University Foundation and serves on the
boards of The Business Roundtable, the Business Council, the
Indianapolis Museum of Art and the Indianapolis Symphony Orchestra.
Mr. Tobias serves on the Environmental Affairs Committee.
3
<PAGE> 7
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS ENDING 1998
[PHOTO] JOAN RIDDER CHALLINOR, age 68 Director since 1989
Director of Various Educational
Organizations
Dr. Challinor attended Wells College and received her Ph.D. in History
from The American University, Washington, D.C. She is a presidential
appointee to the U.S. National Commission on Libraries and Information
Science, a board member of a number of educational organizations,
including the French-American Foundation and the Schlesinger Library
on the History of Women at Radcliffe College (chairperson), and is a
member of the Editorial Advisory Committee of the Adams Papers. She
serves on the Audit, Environmental Affairs and Nominating Committees.
[PHOTO] JOHN C. FONTAINE, age 64 Director since 1995
President of the Company
Mr. Fontaine graduated from the University of Michigan and the Harvard
Law School. For a number of years he was a partner in the New York
law firm of Hughes Hubbard & Reed. He joined the Company as Senior
Vice President and General Counsel in 1987. Thereafter, he has served
in various executive capacities, becoming President in 1995. Mr.
Fontaine is Chairman of the Samuel H. Kress Foundation and is a member
of the Trustees' Council of the National Gallery of Art and the Board
of the Florida Philharmonic. He serves on the Executive Committee.
[PHOTO] ALVAH H. CHAPMAN, JR., age 74 Director since 1962
Former Chairman of the Board and Term Expires 1997
Chief Executive Officer of the Company
Mr. Chapman graduated and received an honorary degree from the
Citadel, as well as honorary degrees from four other universities.
Mr. Chapman joined the Company in 1960 and held various executive
positions; from 1976 until 1988 he served as Chief Executive Officer,
and from 1982 until 1989 he served as Chairman of the Board. Mr.
Chapman is a director of Northern Trust Bank of Florida, N.A. and a
trustee of the John S. and James L. Knight Foundation. He also is
Chairman of Community Partnership for Homeless, Inc. and a Director of
Community Anti-Drug Coalitions of America, the Miami Coalition for a
Safe and Drug Free Community and Florida International University
Foundation and Advisory Director of We Will Rebuild, a not-for-profit
organization dedicated to assisting South Florida rebuild after the
damage of Hurricane Andrew. He serves on the Executive Committee of
the Board and on the Executive and Nominating Committees.
[PHOTO] PETER C. GOLDMARK, JR., age 55 Director since 1990
President of The Rockefeller Foundation Term Expires 1997
Mr. Goldmark graduated from Harvard College. He has served as
President of The Rockefeller Foundation since 1988. From 1985 to
1988, he was Senior Vice President of Times Mirror Company, and
prior to that, held posts as Executive Director of the Port Authority
of New York and New Jersey, Director of Budget for the State of New
York, and Secretary of Human Services for the Commonwealth of
Massachusetts. He is a director of the Dreyfus Third Century Fund and
a member of the Council on Foreign Relations. He serves on the
Finance and Nominating Committees.
4
<PAGE> 8
[PHOTO] BARBARA BARNES HAUPTFUHRER, age 67 Director since 1979
Director of Various Public Companies Term expires 1997
Mrs. Hauptfuhrer graduated from Wellesley College. She is a director
of The Vanguard Group of Investment Companies and all of the mutual
funds in the Group; The Great Atlantic & Pacific Tea Co.;
Massachusetts Mutual Life Insurance Company; Alco Standard
Corporation; and the Raytheon Company. She serves as a Trustee
Emerita of Wellesley College. She is a director of the Ladies
Professional Golf Association. She chairs the Nominating Committee
and serves on the Compensation Committee.
[PHOTO] WILLIAM S. LEE, age 66 Director since 1990
Retired Chairman and President of Term expires 1997
Duke Power Co.
Mr. Lee graduated from Princeton University. Until his retirement in
1994, he was Chairman and President of Duke Power Co. in Charlotte,
N.C., which he joined in 1955. In 1994, he became Chairman Emeritus
of Duke Power. He is a director of J.P. Morgan & Co., Morgan Guaranty
Trust Co., the Liberty Corporation and Texas Instruments. Mr. Lee is
Chairman of the Environmental Affairs Committee and serves on the
Compensation Committee.
[PHOTO] C. PETER McCOLOUGH, age 73 Director since 1982
Former Chairman and Chief Executive Term expires 1998
Officer of Xerox Corporation
A native of Halifax, Nova Scotia, Mr. McColough, following a career in
sales, served as President of Xerox from 1966 through 1971 and as
Chief Executive Officer from 1968 through May 1982. He serves as a
director of Union Carbide Corporation. He serves on the Compensation,
Nominating and Environmental Affairs Committees.
[PHOTO] GONZALO F. VALDES-FAULI, age 49 Director since 1992
Regional Chief Executive Term expires 1998
Barclays Bank PLC
Mr. Valdes-Fauli was born in Havana, Cuba in 1946. He graduated from
Spring Hill College in Mobile, Alabama and received his master's
degree from Thunderbird Graduate School for International Management.
He has spent his professional life in banking, specializing in
international matters. He joined Barclays Bank in 1980. He is a
trustee and member of the Executive Committee of the University of
Miami and a director of Blue Cross/Blue Shield of Florida. Mr.
Valdes-Fauli serves on the Finance and Audit Committees.
[PHOTO] JOHN L. WEINBERG, age 71 Director since 1969
Senior Chairman Term expires 1997
Goldman, Sachs & Co.
Mr. Weinberg graduated from Princeton University. He received a
Master of Business Administration degree from Harvard Business School.
He has served as an investment banker with Goldman, Sachs & Co. since
1950. He was senior partner of The Goldman Sachs Group, L.P. and its
principal affiliate, Goldman Sachs & Co. until November 30, 1990 when
he retired as a general partner and became Senior Chairman of The
Goldman Sachs Group, L.P. In July, 1991, he became Senior Chairman of
Goldman, Sachs & Co. Mr. Weinberg is a director of Champion
International Corporation; The B.F. Goodrich Company and The Seagram
Company Ltd. He is a member of The Business Council. Mr. Weinberg is
Chairman of the Compensation Committee and serves on the Executive
Committee of the Board.
5
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides information with respect to the shares of the
Company's Common Stock beneficially owned as of January 31, 1996 by each
director and by each other member of management named in the table on page 11
and by all directors and officers as a group. None of such persons
beneficially owned more than 1% of the Company's Common Stock except for Mr.
Eric Ridder, who beneficially owned 2.2%. All directors and officers of the
Company as a group beneficially owned 10.2% of the Company's Common Stock.
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
OF COMMON STOCK
SHARES OTHER THAN SHARES SUBJECT BENEFICIALLY OWNED
NAME OPTION SHARES TO OPTIONS (1) (1) (2)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Joan Ridder Challinor ............ 56,585 56,585 (4)
James I. Cash .................... 0 0
Alvah H. Chapman, Jr. ............ 129,352 129,352 (3)
Mary Jean Connors ................ 3,497 33,784 37,281 (3)
John C. Fontaine ................. 4,924 50,667 55,591 (3)
Peter C. Goldmark, Jr. ........... 200 200
Barbara B. Hauptfuhrer ........... 1,200 1,200 (5)
Jesse Hill, Jr. .................. 800 800
Ross Jones ....................... 2,142 24,667 26,809
William S. Lee ................... 700 700
C. Peter McColough ............... 400 400
Ben R. Morris .................... 82,500 82,500 (3)
Thomas L. Phillips ............... 1,200 1,200
Eric Ridder ...................... 1,110,534 1,110,534 (6)
P. Anthony Ridder ................ 65,651 185,334 250,985 (3)
Patrick J. Tierney ............... 297 31,667 31,964
Randall L. Tobias ................ 1,000 1,000
Gonzalo F. Valdes-Fauli .......... 600 600
John L. Weinberg ................. 14,000 14,000
All directors and officers as
a group (36) ................... 4,443,162 601,117 5,044,279 (7)
</TABLE>
__________________________
(1) For purposes of computing the amounts and percentages shown, the number of
shares of Common Stock outstanding includes any shares which may be acquired by
a named person or group upon the exercise of stock options which may be
exercised within sixty days after January 31, 1996.
(2) Except as otherwise indicated, the beneficial owner has sole voting and
investment power.
(3) Includes shares owned by, or jointly held with, spouses as follows: Mr.
Chapman -- 7,682 shares owned jointly with Mrs. Chapman; Ms. Connors -- 1,056
shares owned by Mr. Geoffrey Tomb, her spouse; Mr. Fontaine -- 2,996 shares
owned jointly with Mrs. Fontaine; Mr. Morris -- 2,100 shares owned by Mrs.
Morris; Mr. P. Anthony Ridder -- 1,296 shares owned by Mrs. Ridder. Ms.
Connors and Messrs. Morris and P. Anthony Ridder disclaim beneficial ownership
of the shares owned by their respective spouses. Messrs. Chapman and Fontaine
share voting and investment power with their respective spouses as to those
shares owned jointly.
(4) Does not include 52,500 shares owned by a trust in which Mrs. Challinor has
an income interest; she has neither the power to vote these shares nor the power
to direct their disposition and she disclaims beneficial ownership of them.
(5) Does not include shares owned by The Vanguard Group of Investment Companies
or the mutual funds in the Group, of which Mrs. Hauptfuhrer is a director.
Mrs. Hauptfuhrer disclaims beneficial ownership of such shares.
(6) Includes 353,804 shares held by Mr. Eric Ridder as a trustee as to which he
shares voting power. Mr. Ridder disclaims beneficial ownership of 171,708 of
such shares.
(7) Includes 2,630,541 shares held by the John S. and James L. Knight Foundation
as to which Mr. Chapman shares voting and investment power and disclaims
beneficial ownership. Also includes 300,000 shares held by the Company's
Retirement Plan as to which voting and dispositive power is exercised by the
Investment Committee under the Plan which includes certain officers of the
Company. Each member of the Committee disclaims beneficial ownership of the
300,000 shares.
6
<PAGE> 10
BOARD COMMITTEES
The Board of Directors conducts its business through meetings of the Board and
the activities of its Committees. The active standing Committees of the Board
are the Nominating Committee, the Compensation Committee, the Audit Committee,
the Finance Committee and the Environmental Affairs Committee.
The Nominating Committee reviews the composition of the Board and recommends
changes in its membership as and if needed. During 1995, the Committee was
comprised of Barbara B. Hauptfuhrer, Chairperson, Joan Ridder Challinor, Alvah
H. Chapman, Jr., Peter C. Goldmark, Jr. and C. Peter McColough. The Committee
met three times in 1995.
The Committee considers nominees for the Board of Directors recommended by
shareholders. A shareholder wishing to submit a recommendation for the Board
should mail his or her recommendation to the Committee at the Company's
Executive Offices, One Herald Plaza, Miami, Florida 33132. A shareholder
wishing to nominate a person for election to the Board at an Annual Meeting
must notify the Secretary at least 120 days prior to the first anniversary of
the date of the Company's Proxy Statement relating to the immediately preceding
Annual Meeting.
The Compensation Committee approves salary levels of all corporate officers of
the Company and incentive compensation for certain senior officers of the
Company. It also authorizes grants under the Company's Employee Stock Option
Plan. During 1995, the Committee was comprised of John L. Weinberg, Chairman,
Barbara B. Hauptfuhrer, William S. Lee, C. Peter McColough and Thomas L.
Phillips, all of whom are outside directors. The Committee met five times in
1995.
The Audit Committee, which in 1995 was comprised of Jesse Hill, Jr., Chairman,
Joan Ridder Challinor, Ben R. Morris, Eric Ridder and Gonzalo F. Valdes-Fauli,
reviews the activities of the internal audit staff, the independent auditors'
report and the qualifications, performance and independence of the independent
auditors, and makes recommendations to the Board respecting these matters.
Both the internal and the independent auditors have free access to the
Committee and, from time to time, the Committee directs them to carry out
special assignments. The Committee met twice in 1995.
The Finance Committee periodically reviews the Company's financial position and
capital structure and makes recommendations to the Board concerning financings.
The Finance Committee, which met once in 1995, was comprised of Thomas L.
Phillips, Chairman, Peter C. Goldmark, Jesse Hill, Jr., Ben R. Morris, Eric
Ridder and Gonzalo F. Valdes-Fauli.
The Environmental Affairs Committee oversees the policies of the Company
formulated to carry out the Company's commitment to preserving the natural
environment of the communities it serves and the safety of its workplaces. The
Committee consists of William S. Lee, Chairman, Joan Ridder Challinor, C. Peter
McColough, P. Anthony Ridder, Randall L. Tobias and James I. Cash, Jr. The
Committee met once in 1995.
In 1995, the Board of Directors met eight times. Each of the nominees for
election at the Annual Meeting and each of the continuing directors (other than
Mr. McColough) attended at least 75% of the meetings of the Board and of the
Committees of the Board on which he or she served and was eligible to attend.
Mr. McColough attended 70% of the meetings that he was entitled to attend.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Weinberg, Lee, McColough and Phillips and Mrs. Hauptfuhrer served as
members of the Company's Compensation Committee during 1995. None of them was
or is an officer or employee of the Company or any of its subsidiaries. None
of the Company's executive officers served on the compensation committee or
board of a company of which a member of the Company's Compensation Committee or
other director of the Company was an executive officer or an executive officer
of that company was one of the Company's directors.
John L. Weinberg was Senior Partner of The Goldman Sachs Group, L.P. and its
principal affiliate, Goldman, Sachs & Co., until November 30, 1990 when he
retired as a general partner and
7
<PAGE> 11
became Senior Chairman of The Goldman Sachs Group, L.P. In July 1991, he became
Senior Chairman of Goldman, Sachs & Co. Goldman, Sachs & Co. is an investment
banking firm that regularly performs services for the Company such as acting as
a financial advisor and serving as principal or agent for the Company in the
purchase and sale of securities. In the future, Goldman, Sachs & Co. may be
called upon to provide similar or other services for the Company.
Barbara B. Hauptfuhrer is a director of The Vanguard Group of Investment
Companies. The Vanguard Group of Investment Companies provides continuing
services in connection with administering and investing funds in the Investment
Savings (401(k)) Plan of the Company.
EXECUTIVE COMPENSATION
SUMMARY
Decisions affecting the compensation of senior management of the Company are
made on behalf of the Board of Directors by the Compensation Committee, which
is composed entirely of outside directors.
This section of the Proxy Statement discusses the compensation awarded by the
Committee for 1995 services to the Company's Chairman of the Board and Chief
Executive Officer, Mr. Ridder, his predecessor, Mr. Batten, and the four
management members of the Company's Executive Committee who are the company's
senior policymaking executives -- Mr. Fontaine, President of the Company; Mr.
Jones, Senior Vice President & CFO; Mr. Tierney, Vice President and President
of Knight-Ridder Information, Inc.; and Ms. Connors, Vice President - Human
Resources. The discussion includes a report of the Compensation Committee
regarding the Company's compensation policies and explaining the standards
applied in determining compensation to Mr. Ridder and Mr. Batten.
The Compensation Committee report is followed by tables that summarize the
compensation of members of senior management for the past three years, stock
options granted to and exercised by senior management in 1995 and the estimated
pension benefits that senior management will receive upon retirement. The
section concludes with a graph that compares the total return on the Company's
stock over the past five years with the total return on stocks of other
publicly held newspaper companies (including the Company) and on the stocks of
the companies which make up the S&P 500 Stock Index.
COMPENSATION COMMITTEE REPORT
The following is a report of the Compensation Committee to the Knight-Ridder
shareholders:
Compensation Policies. The Committee operates on the principle that the
compensation opportunities of Knight-Ridder's executive officers, including its
chief executive officer and the other executive officers named in the table on
page 11, should be competitive with compensation of senior executives at
comparable companies. The Committee has a policy of basing a significant
portion of the cash compensation of senior executive officers on the operating
performance of the Company. In addition, the Committee administers the
Company's Stock Option Plan, under which an executive's compensation is
directly dependent on the performance of the Company's stock.
Salary and bonus make up the current compensation of senior executives. Stock
options comprise the long-term compensation program. The Company has no other
compensation programs for senior executives.
1995 Compensation Review. During 1995, the Committee reviewed the Company's
executive compensation program with the assistance of Strategic Compensation
Associates, specialists in executive compensation. Among other things, the
Committee reviewed data comparing the compensation of executives of the Company
with that of the other companies included in the performance graph on page 14,
as well as with a broader range of newspaper and media companies.
Data for 1990 - 1994, the period covered by the inquiry, showed that over those
five years, salary levels and stock option compensation of Company executives
were comparable to the median compensation paid by both groups of comparative
companies, but that over the same period the cash bonuses of Company executives
were lower than the median paid by the comparative companies.
8
<PAGE> 12
The Committee establishes senior executive salaries based on its review of the
executive's performance and compensation history and information regarding
salary levels at comparable companies. It awards cash bonuses under, or taking
into consideration, the Company's Incentive Compensation Plan, which was
reviewed and revised effective with 1994 bonus awards.
Incentive Compensation. Under the Incentive Compensation Plan, participants
are eligible for cash bonuses ranging from 25% of salary in the case of
participants whose annual salary is less than $50,000 to 50% in the case of
those whose salary exceeds $250,000. Thirty-five percent of an executive's
bonus potential is tied to his or her performance of individual objectives
established at the beginning of each year and 65% of the executive's bonus
potential is tied to the financial performance of the Company or one of its
operating units compared to budget.
If the Company or operating unit meets its financial budget, the executive
would receive 100% of that part (65%) of the potential bonus tied to financial
performance; performance below or exceeding budget would result in payment
ranging from 10% of the targeted bonus (in the case of financial performance
equal to 91% of budget) to 150% of the targeted bonus (if the budget is
exceeded by 10%).
Messrs. Jones and Tierney and Ms. Connors are participants in the Plan.
Although Mr. Batten was not and Messrs. Ridder and Fontaine are not
participants in the Plan, the Committee considers the criteria and standards
under the Plan in determining their bonuses.
In 1995, cash bonuses for Messrs. Batten, Ridder, Fontaine, and Jones and Ms.
Connors were based upon the Company's operating profit in comparison to its
budget and upon an assessment of individual performance during the year. Mr.
Tierney is President of Knight-Ridder Information, Inc., a subsidiary of the
Company; the financial performance portion of his bonus was based upon the
financial performance of Knight-Ridder Information, Inc. Mr. Tierney also
received a special bonus of $50,000 for serving, during a part of 1995, as
acting President of Knight-Ridder Financial, Inc., in addition to his duties as
President of Knight-Ridder Information, Inc.
In the case of participants in the Plan, specific individual performance goals
were set at the beginning of the year and performance against the goals
measured at the end of the year. The individual overall performance of Messrs.
Batten, Ridder and Fontaine was judged by the Committee on a subjective basis.
The Company's operating profit was adversely affected in 1995 by the prolonged
strike against the Company's Detroit newspaper. After careful consideration,
the Committee concluded that because the objectives of management in dealing
with the strike were in the long-term interests of the Company and its
shareholders, the potential impact of losses at the Detroit newspaper on
incentive compensation payments should be mitigated. The Compensation
Committee determined that the bonuses of Plan participants at the Company's
operating companies should not be affected by the Detroit strike, but that the
portion of the bonuses of Company officers, including those listed in the table
on page 11, related to the operating profit of the Company, should be
calculated excluding the impact of financial results in Detroit and then
reduced by 50%.
1995 Compensation of the Chief Executive Officer. Mr. Ridder succeeded Mr.
Batten as Chief Executive Officer on March 24, 1995 and as Chairman on July 21,
1995 following Mr. Batten's death on June 24, 1995. Mr. Ridder's salary was
increased from $525,000 to $625,000 effective March 24, 1995. In December the
Committee authorized an increase in his salary to $725,000 effective March 1,
1996. Based on studies available to the Committee, we believe that Mr.
Ridder's salary after this increase will continue to be somewhat below the
median salary paid by comparable companies.
Mr. Ridder was awarded a bonus for 1995 of $195,000, compared to $315,000 for
1994. As we noted above, Mr. Ridder is not a formal participant in the
Company's Incentive Compensation Plan although the Committee has for a number of
years, including 1995, taken into account the criteria that would have been
applicable to him had he been a Plan participant, including the impact of the
Detroit strike. In 1995, the Company achieved 101% of its operating profit
budget, excluding the impact of the Detroit strike. The
9
<PAGE> 13
maximum bonus that Mr. Ridder could have received under the Plan (maximum bonus
with adjustment for the impact of the Detroit strike comparable to that made in
the case of other Company officers), in light of that level of Company operating
profit performance, was $208,124. The maximum bonus Mr. Ridder could have
received, had he been a Plan participant and had the Company achieved 110% of
its operating profit budget, was $398,935.
The Committee granted Mr. Ridder a 1995 stock option covering 35,000 shares.
As we noted above, the comparative data we reviewed indicated that a grant of
this size was comparable to the median long-term compensation in comparable
companies and it is the policy of the Committee to make grants in that range.
Mr. Batten was ill in 1995 and was not able to perform all of his
responsibilities on a full-time basis. Until he relinquished the position of
chief executive officer on March 24, he participated in major decisions
requiring senior management attention. After that date, he continued as
Chairman and consulted with Mr. Ridder and other members of the Company's
senior management group on various matters until shortly before his death in
June. The Committee authorized an increase in Mr. Batten's salary effective
March 24, 1995 to $695,000 from $665,000, which it had been since April 1,
1994. The Committee granted Mr. Batten a bonus of $100,000 for 1995; the
Committee took into account the same criteria it employed in awarding Mr.
Ridder's bonus, as well as the fact that Mr. Batten was employed for
approximately half of the year. Mr. Batten did not receive a stock option
grant in 1995.
Other Officers. The compensation of Messrs. Fontaine, Jones, Tierney and Ms.
Connors was determined in accordance with the policies discussed earlier in
this report. As in the case of Mr. Ridder, the amounts of their bonuses were
directly related to operating profit performance compared to the 1995 operating
budget and also reflected assessments of their individual performances.
Tax Considerations. Provisions of the federal tax law deny a company a tax
deduction to the extent an executive's total compensation (excluding certain
categories of compensation) in any year exceeds $1 million. It is the policy
of the Company to defer payment of that portion of an executive's cash
compensation which might exceed the $1 million limit.
All members of the Committee concur and join in this report to the
Knight-Ridder shareholders.
John L. Weinberg, Chairman
Barbara Barnes Hauptfuhrer
William S. Lee
C. Peter McColough
Thomas L. Phillips
10
<PAGE> 14
SENIOR EXECUTIVE COMPENSATION
The following table summarizes the compensation during the past three years of
the chief executive officer, his predecessor and each of the four management
members of the Company's Executive Committee in 1995, who are the Company's
senior policy-making executives.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- -------------
OTHER STOCK ALL
ANNUAL OPTION OTHER
SALARY BONUS COMPENSATION AWARDS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2)(3) (# OF SHARES) ($)(2)(4)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
P. Anthony Ridder (5) ........... 1995 602,996 195,000 -- 35,000 12,079
Chairman and CEO 1994 518,000 315,000 -- 28,000 8,808
1993 490,750 134,000 -- 25,000 8,449
James K. Batten (5) ............. 1995 340,692 100,000 -- -- 8,725
Former Chairman and CEO 1994 656,250 325,000 -- 35,000 14,415
1993 622,500 170,000 -- 30,000 13,239
John C. Fontaine ................ 1995 463,834 150,000 -- 25,000 13,865
President 1994 430,180 265,000 -- 20,000 14,187
1993 390,000 105,000 -- 18,000 12,497
Ross Jones (6) .................. 1995 381,167 127,738 -- 17,000 7,505
Senior Vice President and CFO 1994 364,167 196,458 -- 14,000 8,243
1993 297,051 159,872 126,383 20,000 2,350
Patrick J. Tierney (6) .......... 1995 384,607 229,266 -- 12,000 7,582
Vice President and President of 1994 321,676 145,302 -- 11,000 6,027
Knight-Ridder Information, Inc. 1993 284,500 154,880 -- 10,000 5,434
Mary Jean Connors ............... 1995 262,500 84,295 -- 12,000 5,201
Vice President/Human Resources 1994 237,500 119,205 -- 10,000 5,125
1993 212,500 51,924 -- 8,000 5,045
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The 1993 bonus shown for Mr. Jones includes $75,000 paid to Mr. Jones when
he joined the Company. The 1995 bonus shown for Mr. Tierney includes $50,000
in recognition of his service for part of the year as acting President of
Knight-Ridder Financial, Inc. See the discussion at page 9 regarding the
effect of the Detroit strike on the bonuses of Messrs. Ridder, Batten, Fontaine
and Jones and Ms. Connors.
(2) The Company does not have a restricted stock plan or any long-term
incentive plan other than its Employee Stock Option Plan. Except as disclosed
in tables in this proxy statement, none of the named officers received a
perquisite or benefit in 1995 in an amount exceeding established reporting
thresholds.
(3) The amount shown for Mr. Jones for 1993 relates to expenses incurred by the
Company in connection with his move to Miami when he joined the Company.
(4) In the case of each executive, the amounts shown represent Company
contributions to the Company's Investment Savings (401(k)) Plan and the cost of
insurance on the life of the executive named. The 401(k) contributions in 1995
were as follows: Mr. Ridder -- $4,500; Mr. Batten -- $4,500; Mr. Fontaine --
$4,500; Mr. Jones -- $4,500; Mr. Tierney -- $4,620; and Ms. Connors -- $4,500.
The life insurance amounts in 1995 were as follows: Mr. Ridder -- $7,579; Mr.
Batten -- $4,225; Mr. Fontaine -- $9,365; Mr. Jones -- $3,005; Mr. Tierney --
$2,962; and Ms. Connors -- $701.
(5) Mr. Batten served as Chairman and CEO until March 24, 1995 and as Chairman
until his death on June 24, 1995. Mr. Ridder became CEO on March 24, 1995 and
Chairman on July 21, 1995.
(6) Mr. Jones became an officer of the Company on February 23, 1993. Mr.
Tierney became an officer of the Company on June 22, 1995.
11
<PAGE> 15
STOCK OPTIONS GRANTED
The Company's long-term incentive program consists of its Employee Stock Option
Plan pursuant to which the Compensation Committee may grant key executives
options which give the executive the right in the succeeding ten years to
purchase shares of the Company's stock at the market price at the option grant
date. The options granted in 1995 are exercisable in three equal installments
vesting over a three-year period from the date of grant.
Options permit executives who contribute to the performance of the Company and
the market price of its stock to benefit along with the shareholders in
increases in the value of the stock.
The following table sets forth information regarding stock options granted in
1995 to each of the executive officers named earlier in the Summary
Compensation Table.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Exercise Grant Date
Options Employees in Price Expiration Present Value
Name Granted Fiscal Year ($/share) Date ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
P. Anthony Ridder ............. 35,000 5.27% 64.75 13-Dec-2005 575,050
James K. Batten ............... 0 0.0% -- -- --
John C. Fontaine .............. 25,000 3.76% 64.75 13-Dec-2005 410,750
Ross Jones .................... 17,000 2.56% 64.75 13-Dec-2005 279,310
Patrick J. Tierney ............ 12,000 1.80% 64.75 13-Dec-2005 197,160
Mary Jean Connors ............. 12,000 1.80% 64.75 13-Dec-2005 197,160
</TABLE>
The "grant date present value" shown is a hypothetical value based upon
application of the "Black-Scholes" model which often is used to estimate the
market value of transferable options by calculating the probability, based on
the volatility of the stock subject to the options, that the stock price will
exceed the option exercise price at the end of the option term. The
assumptions used in calculating the Black-Scholes value of the options were
expected volatility of 14%, risk-free return of 5.76%, a dividend yield of 2.4%
and vesting of exercisability in equal annual installments over a three-year
period from the date of grant.
The Company's stock options are not transferable and, the Black-Scholes
estimate notwithstanding, an option granted under the Stock Option Plan will
have value to the optionee only if and to the extent the market price of the
Company's stock rises above the market price on the date the option was
granted.
STOCK OPTIONS EXERCISED
The following table summarizes information regarding stock options exercised in
1995 by each of the officers named in the table on page 11 and the number of
unexercised options held by them at the end of the year.
12
<PAGE> 16
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-money
Options at Options at
Shares Fiscal Fiscal
Acquired on Value Year-end (#) Year-end ($)(1)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
P. Anthony Ridder ....................... 20,000 341,394 185,334/53,666 2,217,904/249,657
James K. Batten (2) ..................... 350,000 3,322,937 -- --
John C. Fontaine ........................ -- -- 50,667/38,333 295,296/178,328
Ross Jones .............................. -- -- 24,667/26,333 122,171/124,828
Patrick J. Tierney ...................... -- -- 31,667/19,333 252,171/98,078
Mary Jean Connors ....................... 675 11,510 33,784/18,666 342,373/89,157
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The amount shown is the amount by which the market value at year-end of all
shares subject to unexercised options exceeded the exercise price of those
options.
(2) As noted earlier, Mr. Batten died in June, 1995. Under the provisions of
the Stock Option Plan, his estate had six months within which to exercise any
options that he held at the time of his death. Following his death, his estate
exercised 325,000 options. Mr. Batten had exercised 25,000 options in January,
1995.
PENSION BENEFITS
The following table sets forth the annual benefits payable as a straight-life
annuity under the Company's retirement program to an officer retiring in 1995
at age 65 with a specified combination of final average earnings (salary and
bonus) and years of service with the Company. The benefits shown are not
subject to any deduction for social security.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 ............. 35,676 41,319 46,961 52,603 55,728 58,853
200,000 ............. 58,176 67,569 76,961 86,353 91,353 96,353
300,000 ............. 88,176 102,569 116,961 131,353 138,853 146,353
400,000 ............. 118,176 137,569 156,961 176,353 186,353 196,353
450,000 ............. 133,176 155,069 176,961 198,853 210,103 221,353
500,000 ............. 148,176 172,569 196,961 221,353 233,853 246,353
550,000 ............. 163,176 190,069 216,961 243,853 257,603 271,353
600,000 ............. 178,176 207,569 236,961 266,353 281,353 296,353
700,000 ............. 208,176 242,569 276,961 311,353 328,853 346,353
800,000 ............. 238,176 277,569 316,961 356,353 376,353 396,353
900,000 ............. 268,176 312,569 356,961 401,353 423,853 446,353
1,000,000 ............. 298,176 347,569 396,961 446,353 471,353 496,353
1,100,000 ............. 328,176 382,569 436,961 491,353 518,853 546,353
1,200,000 ............. 358,176 417,569 476,961 536,353 566,353 596,353
1,300,000 ............. 388,176 452,569 516,961 581,353 613,853 646,353
</TABLE>
The salary and bonus of the senior officers of the Company is set forth in the
summary compensation table at page 11. As of the end of 1995, Mr. Ridder had
34 years of services with the Company, Mr. Fontaine 8, Mr. Jones 3, Mr. Tierney
5 and Ms. Connors 15. Mr. Fontaine has a retirement agreement which provides
for the payment to him of an annual benefit of up to $200,000 annually upon
retirement or earlier termination due to disability and a death benefit payable
to his surviving spouse.
13
<PAGE> 17
PERFORMANCE OF THE COMPANY'S STOCK
The following graph compares the cumulative total return on the Company's stock
during the past five years with the average cumulative total return during the
same period on the stocks which comprise the S&P 500 Stock Index and the S&P
Publishing/Newspapers Index.
The S&P 500 Stock Index is comprised of 500 U.S. companies in the industrial,
transportation, utilities and financial industries, weighted by market
capitalization. The S&P Publishing/Newspapers Index is comprised of Dow Jones
& Company, Inc., Gannett Co., Inc., Knight-Ridder, Inc., The New York Times
Company, The Times Mirror Company and Tribune Company, weighted by market
capitalization.
The graph reflects the investment of $100 on December 31, 1990 in the Company's
Common Stock, the S&P 500 Stock Index and the S&P Publishing/Newspapers Index.
Dividends are assumed to have been reinvested as paid in the Company's Common
Stock and in the stocks in the S&P 500 Stock Index and quarterly in the stocks
in the S&P Publishing/Newspapers Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
KNIGHT-RIDDER, INC., S&P PUBLISHING/NEWSPAPERS INDEX
AND S&P 500 INDEX
DECEMBER 31, 1990 - DECEMBER 31, 1995
[GRAPH]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Knight-Ridder, Inc. $100.00 $118.79 $133.44 $140.91 $122.43 $155.50
S&P 500 $100.00 $130.47 $140.41 $154.56 $156.60 $215.45
S&P Publishing/Newspapers $100.00 $121.09 $135.41 $156.83 $144.88 $182.54
</TABLE>
14
<PAGE> 18
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of the Company receive an annual
retainer of $26,000 plus $1,000 for each Board meeting and $800 for each
Committee meeting attended as compensation for their services. Directors of
the Company are eligible to enter into individual agreements to defer with
interest all or a portion of the directors' fees payable to them until such
later dates as may be provided in the agreements.
Directors who have never been employed by the Company are eligible to receive a
retirement benefit commencing upon retirement from the Board at or after age 65
with at least five years of service or because of disability following at least
two years of service. The annual lifetime benefit ranges from 50% of the
annual retainer in the case of directors who retire after five years of service
on the Board to 100% of the retainer in the case of directors who retire with
10 or more years of service.
Mr. Chapman, a former chief executive officer of the Company, agreed to
continue to serve as Chairman of the Executive Committee and to provide
consulting services to the Company during the period ending May 31, 1995. The
Company paid Mr. Chapman $62,500 for these services in 1995. Mr. P. Anthony
Ridder succeeded Mr. Chapman as Chairman of the Executive Committee in June,
1995. Mr. Chapman's retirement agreement with the Company, in recognition of
his contribution to the Company, provides for payment of a $79,900 annual
benefit to him for his life and thereafter to Mrs. Chapman if she survives him
for her life, in addition to benefits payable under the Company's retirement
program.
Mr. Fontaine has a retirement agreement which provides for the payment to him
of an annual benefit of up to $200,000 annually upon retirement or earlier
termination due to disability and a death benefit payable to his surviving
spouse.
CERTAIN RELATIONSHIPS AND REPORTS OF CERTAIN STOCK TRANSACTIONS
Joan Ridder Challinor and Eric Ridder are first cousins. Peter B. Ridder,
President and Publisher of the Saint Paul Pioneer Press, is a brother of P.
Anthony Ridder. Alvah H. Chapman, Jr.'s son-in-law, Robert L. Hilton, is
Circulation Marketing Manager at The Wichita Eagle. Frank Page Morris, who
resigned as Executive Vice President of The State-Record Company, Inc., in
October 1995, is a son of Ben R. Morris. These persons related to directors of
the Company received aggregate compensation from the Company in 1995 of
$746,935.
The Securities Exchange Act of 1934 requires that the Company's directors and
officers file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the New York Stock Exchange. The Company believes
that all directors and officers filed on a timely basis all such reports
required of them with respect to stock ownership and changes in ownership
during 1995, except that Robert Ingle, Vice President of the Company,
inadvertently was late in reporting a transaction which affected the number of
shares in his account under the Company's Investment Savings (401(k)) Plan and
that Polk Laffoon, IV, Vice President/Corporate Relations, inadvertently filed
a late report regarding his purchase in 1995 of 83 shares of Common Stock.
See "Compensation Committee Interlocks and Insider Participation" on page 7 for
information concerning transactions between the Company and organizations with
which Mrs. Hauptfuhrer and Mr. Weinberg are associated.
PROPOSALS
PROPOSAL NO. 1 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP, Independent Certified Public Accountants, have been
appointed by the Board of Directors of the Company to examine the books and
accounts of the Company for the year 1996. They have served as the Company's
independent auditors since 1951. The Board of Directors recommends that
shareholders approve and ratify this appointment.
Representatives of Ernst & Young LLP will be present at the meeting and will
have the opportunity to make a statement if they desire to do so. They will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 1.
15
<PAGE> 19
PROPOSAL NO. 2 -- AMENDMENT TO EMPLOYEE STOCK OPTION PLAN EXTENDING THE
POST-DEATH AND POST-DISABILITY EXERCISE PERIODS AND LIMITING THE TOTAL SHARES
WHICH CAN BE AWARDED TO AN EMPLOYEE ANNUALLY.
The Company's Employee Stock Option Plan, originally adopted in 1971, provides
for the grant to eligible employees of the Company and its subsidiaries of
non-qualified and incentive stock options to purchase shares of Common Stock.
The Plan also provides for the grant of stock appreciation rights although none
have been granted in recent years.
At the end of 1995, 2,202,718 shares remained available for options under the
Plan. On February 16, 1996, the closing price of the Company's Common Stock on
the New York Stock Exchange Composite Tape was $67.00.
The Compensation Committee administers the Stock Option Plan and determines, in
its sole discretion, which employees will receive options, the times when such
options will be granted and the number of options to be granted to each
employee. The Committee makes these determinations on an individual basis
which reflects its assessment of which management level employees of the
Company and its operating companies are key to the Company's success. In 1995,
442 employees were granted options covering a total of 665,150 shares.
Directors who are not employees are not eligible to receive options. No member
of the Compensation Committee is eligible to receive stock options.
The Stock Option Plan does not have an expiration date, but all options must
expire no later than ten years from the date of grant. Beginning with options
granted in 1994, options are exercisable in three equal installments vesting
over a three-year period from the date of the grant. The price at which
options may be exercised may not be less than the fair market value of the
shares covered by the options on the date the options are granted. Payments
for options may be made in cash or by delivery to the Company of shares of the
Company's Common Stock or a combination of cash and shares.
The Compensation Committee, in its discretion, may grant stock appreciation
rights in tandem with options. A stock appreciation right entitles the
optionee to receive from the Company, upon surrender of the related option, an
amount (in cash, Company stock, or a combination of cash and stock, as the
Committee may determine) equal to the difference between the option price of
the shares covered by the surrendered option and the fair market value of the
shares on the date the right is exercised. No stock appreciation rights have
been granted in recent years.
The Stock Option Plan provides for equitable adjustments by the Board of
Directors in the event of stock dividends, recapitalizations, stock splits, or
combinations or exchanges of shares by merger, consolidation or other similar
means. Although the plan authorizes the grant of both incentive and
non-qualified options, only non-qualified options are outstanding.
Upon the exercise of a non-qualified option, the difference between the
exercise price and the fair market value of the shares will be taxable as
ordinary income to the optionee. The Company will be entitled to a deduction
for federal income tax purposes at the same time and in the same amount that
the holder of an option recognizes ordinary income.
At the present time, the Company's Employee Stock Option Plan provides that an
optionee (or his/her representative) has six months in which to exercise an
option following the optionee's death or disability. On several occasions in
the last few years, there have been instances when these short exercise periods
have posed hardships to employees and their families. The Board recommends
that the Stock Option Plan be amended by increasing from six months to three
years the period during which an option may be exercised following the death or
disability of the optionee (and by permitting the options to continue to vest
during that period). This amendment will put a disabled employee or the estate
of a deceased employee in the same position as a retired employee who has three
years under the current provisions of the Plan to exercise an option.
The Board further recommends that the Stock Option Plan be amended to limit to
100,000 the number of shares as to which options can be granted to any
individual during a calendar year (subject to adjustment to reflect stock
dividends, splits, combinations, etc.).
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 2.
16
<PAGE> 20
SHAREHOLDER PROPOSAL -- REDEMPTION OF RIGHTS ISSUED PURSUANT TO THE COMPANY'S
SHAREHOLDER RIGHTS PLAN
The Central Laborer Pension Fund of Jacksonville, Illinois, owner of 500 shares
of Common Stock, has informed the Company that it intends to present the
following resolution at the Annual Meeting and has submitted the following
statement of its reasons.
"RESOLVED: That the Shareholders of Knight-Ridder Corp. urge that the board
of directors redeem any shareholder rights plan unless the issue is approved
by the affirmative vote of a majority of the outstanding shares at a meeting
of the shareholders held as soon as possible.
SUPPORTING STATEMENT: Knight-Ridder has adopted a shareholder rights plan,
often known as a "poison pill."
Generally, we believe the "pill" is an antiquated and unnecessary device
given protections afforded by state law. Further we believe "pills" can
serve to insulate management from basic shareholder concerns.
At Knight-Ridder, we think such insulation could be especially dangerous
given rapid restructuring of the media industry, and because of basic
business decisions before the board and senior management.
In 1995, the media industry witnessed major mergers, both proposed and
consummated, from the CBS-Westinghouse deal, to the Time-Warner purchase of
Turner, to the alliance between Gannett and Multimedia. The emergence of
telecommunications continues to challenge print media, and even here, mergers
join with advancing technology to present entirely new circumstances for
Knight-Ridder on an almost daily basis.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE
SHAREHOLDER PROPOSAL
Management's Position
In 1986, the Board of Directors adopted a Shareholder Rights Plan pursuant to
which Rights to purchase the Company's Common Stock were distributed to
shareholders. The Plan was amended in 1988. The Board adopted the Plan in
order to assure that ALL of the Company's shareholders receive fair and equal
treatment in the event of a proposed takeover of the Company and to guard
against coercive tactics sometimes used to gain control of a corporation
without paying all shareholders an adequate return on their investment. The
Shareholder Proposal requests that your Board of Directors immediately redeem
the Rights unless the Shareholder Rights Plan is approved by the affirmative
vote of the holders of a majority of outstanding shares. YOUR BOARD OF
DIRECTORS BELIEVES THAT NOW IS NOT THE TIME TO CONSIDER WHETHER TO REDEEM THE
RIGHTS AND RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE PROPOSAL. A similar
shareholder proposal was presented at the 1990 Annual Meeting of Shareholders
and was defeated.
In the event of an attempted takeover of the Company, the Shareholder Rights
Plan is designed to encourage potential acquirors to negotiate with the Company
in advance and to provide the Board of Directors with the time to take what the
Board believes are the most effective steps to maximize the value that can be
achieved for shareholders and to protect their investment in the Company. It
protects shareholders in the event of an unsolicited attempt to acquire the
Company, including a gradual accumulation of shares in the open market, a
partial or two-tiered tender offer that does not treat all shareholders
equally, an offer to purchase shares at an inadequate price and other abusive
takeover tactics which the Board believes are not in the best interests of the
shareholders.
The Shareholder Rights Plan is not intended to prevent a fair offer to purchase
all the Company's outstanding shares. The Plan is intended to discourage a
takeover which would not be in your best interests. Redeeming the Rights now,
and not in the context of a specific acquisition proposal, would deprive the
shareholders and the Board of Directors of an important tool which could be
effective in dealing with potential acquirors.
When the Plan was adopted, the Board, in accordance with its fiduciary duties
to shareholders, consulted with the Company's outside legal and financial
advisors and gave careful and thoughtful consideration to the interests of the
Company's shareholders and the effect of the Shareholder Rights Plan on them.
When the Shareholder Proposal was received, the Board again reviewed the
17
<PAGE> 21
Shareholder Rights Plan, including advice from legal and financial advisors,
and again concluded that the Plan was in the best interests of shareholders.
FOR THESE REASONS, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE
SHAREHOLDER PROPOSAL.
VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding shares of
Common Stock of the Company is necessary to constitute a quorum at the Annual
Meeting. To be elected, each director must receive the affirmative vote of the
holders of a plurality of the outstanding shares of Common Stock entitled to
vote and represented at the Annual Meeting. Approval of Proposal No. 1 and
the Shareholder Proposal will require the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote and
represented at the Annual Meeting. Approval of Proposal No. 2 will require the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote on the Proposal.
Shares represented at the meeting in person or by proxy which abstain on a
matter or are not voted by a broker because the proxy has not received
necessary authorization will be counted in determining the presence of a
quorum, but will not be counted as for or against the matter.
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1997 Annual Meeting
of Shareholders and for inclusion in the Company's Proxy Statement and form of
Proxy relating to that meeting must be received by the Secretary of the Company
at the Company's Executive Offices, One Herald Plaza, Miami, Florida 33132, by
November 12, 1996. It is suggested that proposals be submitted by Certified
Mail -- Return Receipt Requested.
GENERAL
A shareholder may revoke his or her Proxy by giving notice to the Company in
writing or in open meeting.
All expenses incurred in connection with the solicitation of Proxies will be
borne by the Company. In addition to solicitation by mail, arrangements may be
made with brokerage houses and other custodians, nominees and fiduciaries to
send material to their principals, and the Company may reimburse them for their
expenses in so doing.
To the extent necessary and in order to insure sufficient participation in the
meeting, officers and regular employees of the Company may, without additional
remuneration, in person or by telephone or telegram, request the return of
Proxies. In addition, the Company has retained D.F. King & Co., Inc. for
assistance in the solicitation of Proxies. For its services, D.F. King will
receive a fee estimated at $9,000 plus reimbursement for reasonable and
customary out-of-pocket expenses.
Except as stated above, the Board of Directors knows of no other business to be
presented at the meeting; but if any other matters come before the meeting, the
persons named in the enclosed Proxy will vote the Proxies in accordance with
their best judgment.
Douglas C. Harris
Vice President and Secretary
18
<PAGE> 22
APPENDIX A
KNIGHT-RIDDER, INC.
EMPLOYEE STOCK OPTION PLAN
(As amended through March 20, 1996)
1. PURPOSE
The purpose of this Stock Option Plan (hereinafter referred to
as the "Plan") is to attract and retain key employees of Knight-Ridder, Inc.
(hereinafter referred to as the "Company") and its subsidiaries, by the grant
of options and stock appreciation rights.
"Subsidiaries" as used herein shall mean corporations (other
than Knight-Ridder, Inc.) or partnerships in an unbroken chain of corporations
and/or partnerships beginning with Knight-Ridder, Inc. if, at the time the
granting of the option or stock appreciation right, each of the corporations
and partnerships other than the last corporation or partnership in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in a corporation in such chain or at least a 50%
partnership in such chain.
Except as provided in Paragraph 7, a "stock appreciation
right" shall mean the right of a holder thereof to receive from the Company,
upon surrender of the related option, an amount equal to (A) the excess of the
fair market value of a share of common stock on the date the stock appreciation
right is exercised over the option price provided for in the related option,
multiplied by (B) the number of shares with respect to which such stock
appreciation right shall have been exercised.
The term "fair market value" of a share of common stock as of
any date shall be the mean between the highest and lowest sales price of a
share of common stock on the
<PAGE> 23
date in question as reported on the composite tape for issues listed on the New
York Stock Exchange. If no transaction was reported on the composite tape in
the common stock on such date, the prices used shall be the prices reported on
the nearest day preceding the date in question. If the common stock is not
then listed or admitted to trading on such Exchange, "fair market value" shall
be the mean between the closing bid and asked prices on the date in question as
furnished by any member firm of the New York Stock Exchange selected from time
to time for that purpose by the Compensation Committee.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee as appointed
from time to time by the Board of Directors of the Company, which committee
shall consist of not less than three (3) members of such Board of Directors,
all of whom shall be disinterested persons. Said committee shall be called the
"Compensation Committee."
In administering the Plan, the Compensation Committee may
adopt rules and regulations for carrying out the Plan. The interpretation and
decision with regard to any question arising under the Plan made by the
Committee shall, unless overruled or modified by the Board of Directors of the
Company, be final and conclusive on all employees of the Company and its
subsidiaries participating or eligible to participate in the Plan.
A Committee member shall be a "disinterested person" only if
such person is not, at the time such person exercises discretion in
administering the Plan, eligible and has not at any time within one year prior
thereto been eligible for selection as a person to whom
2
<PAGE> 24
stock may be allocated or to whom stock options or stock appreciation rights
may be granted pursuant to the Plan or any other plan of the Company or any of
its affiliates entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or any of its affiliates.
3. STOCK
The stock which may be issued and sold pursuant to the
exercise of options or stock appreciation rights granted under the Plan may be
authorized and unissued common stock or shares of common stock reacquired by
the Company and held in treasury of a total number not exceeding 16,100,000
shares.
The shares deliverable under the Plan shall be fully paid and
non-assessable shares. Any shares, in respect of which an option is granted
under the Plan which shall have for any reason expired or terminated, may be
again allotted under the Plan. Any shares covered by options which have been
canceled by reason of the exercise of related stock appreciation rights as
provided in the immediately following paragraph or which are used to exercise
other options or to satisfy tax withholding obligations shall not be available
for other options under the Plan.
The exercise of options with respect to which stock
appreciation rights shall have been granted shall cause a corresponding
cancellation of such stock appreciation rights, and the exercise of stock
appreciation rights issued in respect of options shall cause a corresponding
cancellation of such options.
3
<PAGE> 25
Each option and stock appreciation right granted under the
Plan shall be subject to the requirement and condition that if the Board of
Directors shall determine that the listing, registration or qualification upon
any Securities Exchange under any state or federal law, or the approval or
consent of any governmental body is necessary or desirable as a condition of
granting such option or stock appreciation right, or the issue or purchase of
any shares thereunder, then no such option or stock appreciation right may be
exercised in whole or in part unless or until such listing, registration,
qualification or approval has been obtained, free of any conditions which are
not acceptable to the Board of Directors of the Company.
4. ELIGIBILITY
Options and stock appreciation rights will be granted
only to persons who are employees of the Company and its subsidiaries
(including officers and directors except for persons acting as directors only).
The Compensation Committee of the Board of Directors of the Company shall
determine in its sole discretion the employees to be granted options, the
number of shares subject to each option, the employees to be granted stock
appreciation rights and the options with respect to which such stock
appreciation rights shall be granted. Subject to the provisions of Section 12
of the Plan, the maximum number of shares with respect to which options or
stock appreciation rights, or a combination thereof, may be granted under the
Plan to any person in any calendar year is 100,000.
4
<PAGE> 26
5. PRICE
The purchase price under each option shall be determined by
the Compensation Committee subject to approval by the Board of Directors of the
Company, but such price shall not be less than one hundred percent (100%) of
the fair market value of the stock at the time such option is granted.
6. THE PERIOD OF THE OPTION AND THE EXERCISE OF THE SAME
Each option granted under the Plan shall expire no later than
ten (10) years from the date such option is granted, but the Compensation
Committee may prescribe a shorter period for any individual option or options.
The shares subject to the option may be purchased from time to
time during the option period, subject to any waiting period or vesting
schedule the Compensation Committee may specify for any individual option or
options. In order to exercise the option or any part thereof, the employee
shall give notice in writing to the Company of his intention to purchase all or
part of the shares subject to the option, and in said notice he shall set forth
the number of shares as to which he desires to exercise such option, and shall
pay for such shares at the time of exercise of such option. Such payment may
be made in cash, through the delivery to the Company of shares of common stock
of the Company with a value equal to the total option price, or through a
combination of cash and shares, and any
5
<PAGE> 27
shares so delivered shall be valued at their fair market value on the date on
which the option is exercised. Such payment may also be made through the
delivery to the Company of all or part of the shares of common stock of the
Company that are the subject of the option; provided that such option is not an
incentive stock option, and such employee instructs Chemical Mellon Shareholder
Services ("CMSS") to effect on the date of such exercise or as early as
practicable thereafter the sale of such number of such shares "at the market"
in a broker's transaction (within the meaning of Section 4(4) of the Securities
Act of 1933, as amended), the proceeds of which shall be at least equal to the
purchase price of such option, plus the amount of income tax required to be
withheld by the Company plus transaction costs. In accordance with these
instructions CMSS shall sell such shares, deliver to the Company the portion of
the proceeds of such sale which equals the purchase price of such option plus
the amount of income tax required to be withheld by the Company and remit the
remaining sale proceeds (net of transaction costs) to such employee.
Said employee shall set forth in said notice, if in the
opinion of Counsel for the Company it is necessary or desirable, that it is his
present intention to acquire said shares being purchased for investment and not
with a view to, or for sale in connection with, any distribution thereof.
Except as specified in Paragraph 10 below, no option may be exercised except by
the Optionee personally while he is in the employ of the Company or its
subsidiaries and shall have been so employed continuously since the granting of
his option.
6
<PAGE> 28
No Optionee or his legal representative, legatees or
distributees, as the case may be, shall be or have any of the rights and
privileges of a shareholder of the Company by reason of such option unless and
until certificates for shares are issued to him under the terms of the Plan.
7. THE PERIOD OF THE STOCK APPRECIATION RIGHT AND THE EXERCISE OF THE
SAME
A stock appreciation right granted under the Plan shall be
exercisable during the period commencing on a date specified by the
Compensation Committee and ending on the date on which the related option
expires unless such option is earlier canceled or terminated, provided that
such right may be exercised by an officer (as that term is defined in the
Securities Exchange Act of 1934), a director or a beneficial owner of more than
10% of any class of the Company's equity securities only during any period
beginning on the third business day following the release of a quarterly or
annual summary statement of the Company's sales and earnings and ending on the
twelfth business day following such date (a "ten-day window period").
Notwithstanding the preceding sentence, the Compensation Committee may provide
for the grant of a stock appreciation right the exercise of which may occur
outside of a ten-day window period but shall be limited to a sixty-day period
following certain events specified by the Compensation Committee in the grant
of such stock appreciation right. Moreover, notwithstanding the third
subparagraph of Paragraph 1
7
<PAGE> 29
above, the Compensation Committee may provide that such stock appreciation
right shall be payable only in cash and that, in addition to payment of the
amount otherwise due upon exercise of such stock appreciation right, the holder
thereof shall receive (unless such stock appreciation right is in tandem with
an incentive stock option, as defined in Section 422A(b) of the Internal
Revenue Code of 1986, as amended), an amount equal to the excess of the highest
price paid for a share of common stock in the open market or otherwise over the
sixty-day period prior to exercise over the fair market value of a share of
common stock on the date the stock appreciation right is exercised.
In order to exercise the stock appreciation right or any part
thereof, the employee shall give notice in writing to the Company of the
intention to exercise such right, and in said notice the employee shall set
forth the number of shares as to which such employee desires to exercise the
stock appreciation right, provided that such right may not be exercised with
respect to a number of shares in excess of the number for which such option
could then be exercised.
Except as specified in Paragraph 10 below, no stock
appreciation right may be exercised except by the holder thereof personally
while such holder is in the employ of the Company or its subsidiaries and shall
have been so employed continuously since the granting of the stock appreciation
right.
8
<PAGE> 30
No holder of a stock appreciation right or such holder's legal
representatives, legatees or distributees, as the case may be, shall be or have
any of the rights and privileges of a shareholder of the Company by reason of
such stock appreciation right unless and until certificates for such shares are
issued to such holder under the terms of the Plan.
8. NON-TRANSFERABILITY OF OPTION AND STOCK APPRECIATION RIGHT
No option or stock appreciation right granted under the Plan
to an employee shall be transferred by him otherwise than by Will or by the
laws of Descent and Distribution, and such option or stock appreciation right
shall be exercisable during his lifetime only by him.
9. TERMINATION OF EMPLOYMENT
If an Optionee shall cease to be employed by the Company or
one of its subsidiaries, as the case may be, for any reason other than death,
disability or retirement pursuant to a retirement plan of the Company or one of
its subsidiaries, any option and any stock appreciation right theretofore
granted to him which has not been exercised shall forthwith cease and
terminate. However, the Compensation Committee of the Board of Directors may
provide in the grant of any option or stock appreciation right or in an
amendment of such grant that in the event of any such termination of employment
(except termination for cause by the Company or one of its subsidiaries), any
option and any stock
9
<PAGE> 31
appreciation right theretofore granted to him which has not been exercised
shall be exercisable only within three months after his termination, but in no
event after the expiration of the stated term of said option or any such stock
appreciation right. The Company or any of its subsidiaries shall have "cause"
to terminate the Optionee's employment only on the basis of the Optionee's
having been guilty of fraud, misappropriation, embezzlement or any other act or
acts of dishonesty constituting a felony and resulting or intended to result
directly or indirectly in a substantial gain or personal enrichment to the
Optionee at the expense of the Company or any of its subsidiaries.
Notwithstanding the foregoing, the Optionee shall not be deemed to have been
terminated for cause unless and until there shall have been delivered to the
Optionee a copy of a resolution (i) duly adopted by three-quarters (3/4) of the
entire membership of the Compensation Committee of the Board of Directors, or
of the Board of directors of the Company, at a meeting called and held for such
purpose after reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard before such
Committee or the Board of Directors of the Company, as the case may be, and
(ii) finding that in the good faith opinion of such Committee or the Board of
Directors of the Company, as the case may be, the Optionee was guilty of
conduct described in the preceding sentence of this paragraph and specifying
the particulars of such conduct in detail.
10
<PAGE> 32
10. RETIREMENT, DEATH OR DISABILITY OF OPTIONEE OR HOLDER OF STOCK
APPRECIATION RIGHT
In the event of the retirement of an Optionee pursuant to a
retirement plan of the Company or one of its subsidiaries, as the case may
be, the option and any stock appreciation right heretofore granted to him
shall be exercisable during such period of time, not to exceed one (1) year
after the date of such retirement with respect to incentive stock options,
as defined in Section 422 (b) of the Internal Revenue Code of 1986, as
amended, and not to exceed three (3) years after the date of such retirement
with respect to all other stock options and stock appreciation rights, as the
Compensation Committee shall specify in the option grant either at the time
of grant or by amendment, but in no event after the expiration of the term
of said option or any such stock appreciation right.
In the event of the disability or death of an Optionee while in
the employ of the Company or one of its subsidiaries, or during the
post-employment period referred to in the immediately preceding paragraph, the
option heretofore granted to him shall be exercisable during such period of
time, not to exceed one (1) year after the date of such disability or death,
with respect to incentive stock options, as defined in Section 422 (b) of the
Internal Revenue Code of 1986, as amended, and not to exceed three (3) years
after the date of such disability or death, with respect to all other stock
options,
11
<PAGE> 33
as the Compensation Committee shall specify in the option grant either at the
time of grant or by amendment, but in no event after the expiration of the term
of said option.
In the event of the disability or death of the holder of a stock
appreciation right while in the employ of the Company or one of its
subsidiaries, or during the post-employment period referred to in the first
paragraph of this Section 10, the stock appreciation right heretofore granted
to him shall be exercisable any time prior to three (3) years after the date of
such disability or death, but in no event after the expiration of the term of
such stock appreciation right.
Such option or stock appreciation right may only be exercised
by the personal representative of such decedent or by the person or persons to
whom such employee's rights under the option or stock appreciation right shall
pass by such employee's Will or by the laws of Descent and Distribution of the
state of such employee's domicile at the time of death, and then only as and to
the extent that such employee was entitled to exercise the option or stock
appreciation right on the date of death.
11. WRITTEN AGREEMENT
Within a reasonable time after the date of grant of an option,
an option and stock appreciation right or a stock appreciation right related to
a previously granted option,
12
<PAGE> 34
a written agreement in a form approved by the Compensation Committee shall be
duly executed and delivered to the Optionee.
12. ADJUSTMENT BY REASON OF RECAPITALIZATION, STOCK SPLITS STOCK
DIVIDENDS, ETC.
If, after the effective date of this plan, there shall be any
changes in the common stock structure of the Company by reason of the
declaration of stock dividends, recapitalization resulting in stock split-ups,
or combinations or exchanges of shares by reason of merger, consolidation, or
by any other means, then the number of shares available for options and stock
appreciation rights, the shares subject to any options, the number of shares
available for and subject to stock appreciation rights and the maximum number
of shares with respect to which options and stock appreciation rights may be
granted to any person shall be equitably and appropriately adjusted by the
Board of Directors of the Company as in its sole and uncontrolled discretion
shall seem just and reasonable in the light of all the circumstances pertaining
thereto.
13. RIGHT TO TERMINATE EMPLOYMENT
The plan shall not confer upon any employee any right with
respect to being continued in the employ of the Company and its subsidiaries or
interfere in any way with the
13
<PAGE> 35
right of the Company and its subsidiaries to terminate his employment at any
time, nor shall it interfere in any way with the employee's right to terminate
his employment.
14. WITHHOLDING AND OTHER TAXES
The Company or one of its subsidiaries shall have the right to
withhold from salary or otherwise or to cause an Optionee (or the executor or
administrator of his estate or his distributee) to make payment of any Federal,
State, local or foreign taxes required to be withheld with respect to any
exercise of a stock option or a stock appreciation right. An Optionee may
irrevocably elect to have the withholding tax obligation or, if the
Compensation Committee so determines, any additional tax obligation with
respect to any exercise of a stock option satisfied by (a) having the Company
or one of its subsidiaries withhold shares otherwise deliverable to the
Optionee with respect to the exercise of the stock option, or (b) delivering
back to the Company shares received upon the exercise of the stock option or
delivering other shares of common stock; that any such election shall be made
either (i) during a "ten-day window period", or (ii) at least six months prior
to the date income is recognized with respect to the exercise of a stock
option.
15. AMENDMENT TO THE PLAN
The Board of Directors shall have the right to amend, suspend
or terminate the Plan at any time; provided, however, that no such action shall
affect or in any way
14
<PAGE> 36
impair the rights of the holder of any option or stock appreciation right
theretofore granted under the Plan; and provided further, that unless first
duly approved by the common shareholders of the Company entitled to vote
thereon at a meeting (which may be the annual meeting) duly called and held for
such purpose, no amendment or change shall be made in the Plan (a) increasing
the total number of shares which may be purchased or transferred upon exercise
of options or stock appreciation rights under the Plan by all employees; (b)
changing the minimum purchase price hereinbefore specified for the optioned
shares; (c) changing the maximum option period; (d) increasing the amount that
may be received upon exercise of a stock appreciation right; or (e) allowing a
stock appreciation right to be exercised after the expiration date of the
related option.
16. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of February 24, 1971.
17. SAVINGS CLAUSE
Nothing included in this Plan by amendment shall revoke or
alter the terms and provisions of the Plan as in effect prior to such amendment
with respect to options granted under the Plan prior thereto.
15
<PAGE> 37
APPENDIX B
KNIGHT-RIDDER, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P. ANTHONY RIDDER, JOHN C. FONTAINE and CRISTINA L. MENDOZA, or any
of them, with full power of substitution, are hereby authorized to represent
the undersigned and to vote all shares of Common Stock of KNIGHT-RIDDER, INC.
held of record by the undersigned on March 4, 1996 at the Annual Meeting of
Shareholders of said Company to be held on April 23, 1996 and at any
adjournment(s) thereof:
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<TABLE>
<S> <C> <C>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED IN THE SPACES PROVIDED BELOW. Please mark
IF NO INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED BELOW AND FOR your votes X
PROPOSALS NO. 1 AND NO. 2 AND AGAINST THE SHAREHOLDER PROPOSAL. as indicated in
this example
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" AND "FOR"
PROPOSALS NO. 1 AND NO. 2 AND "AGAINST" THE SHAREHOLDER PROPOSAL.
<TABLE>
<S> <C>
Election of the following FOR ALL WITHHOLD FOR Shareholder Proposal: Request FOR AGAINST ABSTAIN
nominees as Directors: NOMINEES ALL NOMINEES for redemption of rights [ ] [ ] [ ]
Nominees for Election as Directors [ ] [ ] issued pursuant to the Company's
for Terms Ending 1999 Shareholder Rights Plan.
James I. Cash, Jesse Hill, Jr.,
Thomas L. Phillips, P. Anthony Ridder
and Randall L. Tobias
Nominees for Election as Directors
for Terms Ending 1998
Joan Ridder Challinor and John C. Fontaine
To withhold authority to vote for any In their discretion, the proxies are authorized to vote
individual nominee, write the name of upon such other matters as may properly come before the
that nominee in the space below. meeting.
Proposal No. 1: Ratification of FOR AGAINST ABSTAIN NOTE: PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS
Appointment of Ernst & Young LLP [ ] [ ] [ ] BELOW AND RETURN IN THE ENCLOSED ENVELOPE. IF ACTING AS
as Independent Auditors. EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., YOU
SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS A
Proposal No. 2: Amendments to the FOR AGAINST ABSTAIN CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME, BY
Employee Stock Option Plan extending [ ] [ ] [ ] DULY AUTHORIZED OFFICER.
the period during which an option may be
exercised after death or disability and
limiting the number of shares that may be
optioned in a calendar year to any employee.
SIGNATURE_______________________________________________ SIGNATURE____________________________________________ DATE_______________
</TABLE>
