[KRI LOGO]
KNIGHT RIDDER
ONE HERALD PLAZA, MIAMI, FLORIDA 33132
MARCH 27, 1998
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Company's 1998 Annual Meeting of
Shareholders which will be held on Tuesday, April 28, 1998, 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,
Tony Ridder
Chairman of the Board
and Chief Executive Officer
<PAGE>
KNIGHT-RIDDER, INC.
One Herald Plaza, Miami, Florida 33132
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 28, 1998
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 28, 1998 FOR THE FOLLOWING PURPOSES:
1. To elect 4 directors;
2. To ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the year 1998;
and to consider and vote upon:
3. A shareholder proposal seeking redemption of rights issued pursuant to the
Company's Shareholder Rights Plan (Shareholder Proposal No. 1);
4. A shareholder proposal asking the Board of Directors to take the steps
necessary to provide for the annual election of all directors (Shareholder
Proposal No. 2); and
5. A shareholder proposal seeking adoption of an executive compensation
policy which deals primarily with the Company's newspapers' content
(Shareholder Proposal No. 3);
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 9, 1998 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
Douglas C. Harris
Vice President and Secretary
March 27, 1998
<PAGE>
KNIGHT-RIDDER, INC.
One Herald Plaza, Miami, Florida 33132
PROXY STATEMENT
1998 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, APRIL 28, 1998
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 28, 1998 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 28, 1997 are being mailed together to
shareholders for the first time on March 27, 1998.
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 and AGAINST each of the three
shareholder proposals.
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 9, 1998 on all matters which may come before the
meeting. On that date, 79,378,945 shares of the Company's Common Stock were
outstanding and entitled to vote.
The following table sets forth information as of January 31, 1998 with respect
to the only persons known by the Company to own beneficially more than 5% of the
outstanding Common Stock of the Company.
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNERS OWNED CLASS
- -------------------------------------------------------------------------------
Southeastern Asset Management, Inc............ 14,019,198 17.4%
6075 Poplar Avenue
Memphis, TN 38119
Harris Associates L.P......................... 7,261,064 9.0%
2 North LaSalle Street, #500
Chicago, IL 60602
1
<PAGE>
The following table sets forth information as of January 31, 1998 with respect
to the only persons known by the Company to own beneficially more than 5% of the
outstanding Series B Preferred Stock of the Company. Except as otherwise
provided by law, the holders of Common Stock and shares of Series B Preferred
Stock vote together as a single class on all matters. A share of Series B
Preferred Stock is entitled to two votes, subject to adjustment. If any shares
of Series B Preferred Stock are transferred to any person other than The Walt
Disney Company or any of its affiliates, each such share shall automatically
convert into 10 shares of Common Stock, subject to adjustment. The Company can
cause the conversion of shares of Series B Preferred Stock. There are
restrictions on the transfer of such shares.
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- --------------------------------------------------------------------------------
The Walt Disney Company....................... 1,754,930 99.8%
500 South Buena Vista Street
Burbank, CA 91525
ELECTION OF DIRECTORS
The Company's Charter provides for a Board of Directors divided into three
classes having staggered three-year terms. Four directors are to be elected at
the 1998 Annual Meeting, to hold office until the 2001 Annual Meeting of
Shareholders.
The individuals nominated by the Board of Directors to stand for election at the
1998 Annual Meeting for three-year terms are Joan Ridder Challinor, elected by
shareholders at the 1996 Annual Meeting, Gonzalo F. Valdes-Fauli, elected by
shareholders at the 1995 Annual Meeting and Dr. Kathleen Foley Feldstein and Dr.
Thomas P. Gerrity nominated by the Board at its last meeting.
John C. Fontaine and C. Peter McColough, whose terms expire in 1998, are not
standing for re-election.
The other ten directors who were elected at prior Annual Meetings will continue
to serve their respective terms.
Proxies will be voted for the election of the four 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>
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS ENDING 2001
[PHOTO OF JOAN RIDDER CHALLINOR]
JOAN RIDDER CHALLINOR, age 71 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 and Nominating Committees.
[PHOTO OF KATHLEEN FOLEY FELDSTEIN]
KATHLEEN FOLEY FELDSTEIN, age 57
President
Economic Studies, Inc.
Dr. Feldstein graduated from Radcliffe College and received her Ph.D. in
economics from MIT. She has been President of Economic Studies, Inc., a private
consulting firm, since 1987. Dr. Feldstein is a director of BankAmerica
Corporation, Conrail Corporation, Digital Equipment Corporation, Ionics
Corporation and the John Hancock Mutual Life Insurance Company. She also is a
Trustee of the Committee for Economic Development, the Museum of Fine Arts,
Boston, McLean Hospital and the Concord Museum.
[PHOTO OF THOMAS P. GERRITY]
THOMAS P. GERRITY, age 56
Dean, The Wharton School
Reliance Professor of Management and Private Enterprise
Dr. Gerrity earned his bachelor's and master's degrees in electrical engineering
from MIT. A Rhodes Scholar in economics at Oxford University, Dr. Gerrity
received his doctorate in management from the Sloan School of Management at MIT.
He is a director of CVS Corporation, Digital Equipment Corporation, Fannie Mae,
Reliance Group Holdings, Inc., Sun Company, Inc. and Union Carbide Corporation.
He also is a Trustee of MAS Funds.
[PHOTO OF GONZALO F. VALDES-FAULI]
GONZALO F. VALDES-FAULI, age 51 Director since 1992
Regional Chief Executive
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.
CONTINUING DIRECTORS
[PHOTO OF JAMES I. CASH, JR.]
JAMES I. CASH, JR., age 50 Director since 1995
James E. Robison Professor of Business Administration Term Expires 1999
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 and the Massachusetts Computer Software Council. He is a director of
Cambridge Technology Partners, Chubb Corporation, State Street Bank and Trust,
Tandy Corporation and WinStar Communications, Inc. Mr. Cash is Chairman of the
Environmental Committee and serves on the Finance Committee.
3
<PAGE>
[PHOTO OF ALVAH H. CHAPMAN, JR.]
ALVAH H. CHAPMAN, JR., age 77 Director since 1962
Former Chairman of the Board and Term Expires 2000
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 trustee of the John S. and James L. Knight Foundation.
He also is Chairman of Community Partnership for Homeless, Inc., Founding
Chairman of Community Anti-Drug Coalitions of America and a Director of the
Miami Coalition for a Safe and Drug Free Community and Florida International
University Foundation. He is Advisory Director of We Will Rebuild Foundation, 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, Audit and Nominating Committees.
[PHOTO OF PETER C. GOLDMARK, JR.]
PETER C. GOLDMARK, JR., age 57 Director since 1990
Chairman and CEO Term Expires 2000
International Herald Tribune
Mr. Goldmark graduated from Harvard College. He served as President of The
Rockefeller Foundation from 1988 until 1997. 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.
[PHOTO OF BARBARA BARNES HAUPTFUHRER]
BARBARA BARNES HAUPTFUHRER, age 69 Director since 1979
Director of Various Public Companies Term Expires 2000
Mrs. Hauptfuhrer graduated with honors 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; IKON Office Solutions, Inc.; 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 OF JESSE HILL, JR.]
JESSE HILL, JR., age 71 Director since 1980
Former Chairman and Chief Executive Officer Term Expires 1999
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 served with Atlanta Life Insurance Co. since 1949, becoming
President and Chief Executive Officer in 1973 and retiring as Chairman and Chief
Executive in 1994. He serves on the boards of Delta Air Lines, Inc. and National
Service Industries, Inc. He is Chairman of the Audit Committee and serves on the
Finance Committee.
[PHOTO OF M. KENNETH OSHMAN]
M. KENNETH OSHMAN, age 57 Director since 1996
President, Chairman and Chief Executive Term Expires 2000
Officer of Echelon Corporation
Mr. Oshman earned his BAand BSdegree from Rice University and MS and PH.D.
degrees in electrical engineering from Stanford. Mr. Oshman, along with three
associates, founded Rolm Corporation in 1969. He served as Chief Executive
Officer, President and Director until Rolm's merger with IBM in 1984. He then
served as a vice president of IBM until 1986. He currently is a director of Sun
Microsystems and CMC, Inc., and has served as director of a number of other
private and public companies. He serves on the Nominating Committee.
4
<PAGE>
[PHOTO OF THOMAS L. PHILLIPS]
THOMAS L. PHILLIPS, age 73 Director since 1983
Retired Chairman and Chief Executive Term expires 1999
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 Raytheon Company, Digital Equipment Corporation and SRA International, Inc.
Mr. Phillips is a trustee of State Street Research Management Company and Gordon
College. He is Chairman of the Finance Committee and serves on the Compensation
Committee.
[PHOTO OF P. ANTHONY RIDDER]
P. ANTHONY RIDDER, age 57 Director since 1987
Chairman of the Board, Chief Executive Term expires 1999
Officer and President 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,
Associated Press, Newspaper Association of America and the Florida International
University Foundation. He is Chairman of the Operating and Executive Committees
and serves on the Environmental Affairs Committee.
[PHOTO OF RANDALL L. TOBIAS]
RANDALL L. TOBIAS, age 56 Director since 1994
Chairman and Chief Executive Officer Term expires 1999
Eli Lilly & Co.
Mr. Tobias is Chairman of the Board and Chief Executive Officer of Eli Lilly and
Company. He was named to that position in June 1993. He had previously been vice
chairman of the board of AT&T since 1986, and had been employed by AT&T since
1964. Mr. Tobias is a director of Eli Lilly & Co., Phillips Petroleum, Inc., and
the Kimberly-Clark Corporation. He is a member of the Business Council and the
Business Roundtable. He is chairman of the board of trustees of Duke University,
and a trustee of the Colonial Williamsburg Foundation. Mr. Tobias serves on the
Compensation and Environmental Affairs Committees.
[PHOTO OF JOHN L. WEINBERG]
JOHN L. WEINBERG, age 73 Director since 1969
Senior Chairman Term Expires 2000
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. Mr. Weinberg was senior
partner and Chairman of the Management Committee 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. Mr. Weinberg is a director of Champion International
Corporation, Providian Financial Corporation and Tricon Global Restaurants 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>
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, 1998 by each
director and nominee 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. All directors and
officers of the Company as a group beneficially owned 5.7% 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(1) TO OPTIONS (2) (1)(2)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James I. Cash................. 400 400
Joan Ridder Challinor......... 100,484 100,484 (3)
Alvah H. Chapman, Jr.......... 238,386 238,386 (4)
Mary Jean Connors............. 20,083 98,201 118,284 (4)(5)
Kathleen Foley Feldstein...... -- --
John C. Fontaine.............. 6,482 90,001 96,483 (4)
Thomas P. Gerrity............. -- --
Peter C. Goldmark, Jr......... 400 400
Barbara B. Hauptfuhrer........ 2,400 2,400 (6)
Jesse Hill, Jr................ 1,600 1,600
Ross Jones.................... 18,566 102,002 120,568 (5)
C. Peter McColough............ 800 800
Frank McComas................. 21,628 22,667 44,295 (4)(5)
M. Kenneth Oshman............. 30,000 30,000 (7)
Thomas L. Phillips............ 2,400 2,400
P. Anthony Ridder............. 161,863 338,002 499,865 (4)
Randall L. Tobias............. 2,000 2,000
Gonzalo F. Valdes-Fauli....... 1,500 1,500
John L. Weinberg.............. 28,000 28,000
Robert C. Woodworth........... 305 305
All directors and officers as
a group (31)............... 3,543,699 1,014,933 4,558,632 (8)(9)
</TABLE>
- --------------------------
(1) Except as otherwise indicated, the beneficial owner has sole voting and
investment power.
(2) 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, 1998.
(3) Does not include 125,000 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.
(4) Includes shares owned by, or jointly held with, spouses as follows: Mr.
Chapman -- 15,364 shares owned jointly with Mrs. Chapman; Ms. Connors -- 2,504
shares owned by Mr. Geoffrey Tomb, her spouse; Mr. Fontaine -- 5,115 shares
owned jointly with Mrs. Fontaine; Mr. McComas -- 1,183 shares owned jointly with
Mrs. McComas; Mr. P. Anthony Ridder -- 2,701 shares owned by Mrs. Ridder and 898
shares owned jointly with Mrs. Ridder. Ms. Connors and Mr. Ridder disclaim
beneficial ownership of the shares owned by their respective spouses. Messrs.
Chapman, Fontaine and McComas share voting and investment power with their
respective spouses as to those shares owned jointly.
(5) Includes interests with respect to approximately 5,482 shares in the case of
Ms. Connors, 5,549 shares in the case of Mr. Jones and 9,561 shares in the case
of Mr. McComas arising as a result of the deferral of portions of their 1996 and
1997 bonus and the investment of such deferred amounts in the Company's Common
Stock.
(6) 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.
(7) All shares are owned by a partnership in which Mr. Oshman has a 97% income
interest. He has the power to vote those shares and the power to direct their
disposition and he claims beneficial ownership as to 97% of the shares.
(8) Includes 2,808,282 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.
(9) Includes interests with respect to shares arising as a result of the
deferral by some officers of all or portions of their 1996 and 1997 bonus and
investment of such deferred amounts in the Company's Common Stock.
6
<PAGE>
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 1997, the Committee was
comprised of Barbara B. Hauptfuhrer, Chairperson, Joan Ridder Challinor, Alvah
H. Chapman, Jr., Peter C. Goldmark, Jr., C. Peter McColough and M. Kenneth
Oshman. The Committee met twice in 1997.
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 next year's Annual Meeting
must notify the Secretary by November 27, 1998.
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 1997, the Committee was com-prised of John L. Weinberg, Chairman,
Barbara B. Hauptfuhrer, C. Peter McColough, Thomas L. Phillips and Randall L.
Tobias, all of whom are outside directors. The Committee met five times in 1997.
The Audit Committee, which in 1997 was comprised of Jesse Hill, Jr., Chairman,
Joan Ridder Challinor, Alvah H. Chapman, Jr. 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 1997.
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 1997, was comprised of Thomas L.
Phillips, Chairman, James I. Cash, Jr., Peter C. Goldmark, Jr., Jesse Hill, Jr.
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 was comprised of James I. Cash, Jr., Chairman, C. Peter McColough, P.
Anthony Ridder and Randall L. Tobias. The Committee met once in 1997.
In 1997, the Board of Directors met seven times. Each of the nominees for
election at the Annual Meeting and each of the continuing directors (other than
Mr. Oshman) 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. Oshman attended 63% of the meetings that he was eligible to attend.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Weinberg, McColough, Phillips and Tobias and Mrs. Hauptfuhrer served as
members of the Company's Compensation Committee during 1997. None of them was or
is an officer or employee of the Company or any of its sub-sidiaries. 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 is Senior Chairman of Goldman, Sachs & Co., 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 and the acquisition or sale of certain
properties of the Company. In the future, Goldman, Sachs & Co. may be called
upon to provide similar or other services for the Company.
7
<PAGE>
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.
Mr. Fontaine is a partner in Hughes Hubbard & Reed LLP, a law firm that
regularly renders legal services to the Company and will continue to do so in
the future.
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 1997 services to the Company's Chairman of the Board, Chief
Executive Officer and President, Mr. Ridder; and the other four most highly paid
senior executive officers -- Mr. Jones, Senior Vice President/Finance & CFO; Mr.
McComas, Senior Vice President/Operations; Ms. Connors, Senior Vice
President/Human Resources; and Mr. Woodworth, Vice President, who, among his
responsibilities, oversees the four newspapers acquired from The Walt Disney
Company in 1997. This 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 to the other officers
named above.
The Compensation Committee report is followed by tables that summarize the
compensation of these members of senior management for the past three years,
stock options granted to and exercised by them in 1997, restricted shares
granted under the Long-Term Incentive Plan and the estimated pension benefits
that they 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 certain other publicly-held newspaper companies
(including the Company) comprising the S&P Publishing/Newspapers Index 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 Company's
shareholders:
COMPENSATION POLICIES. The Committee operates on the principle that the
compensation opportunities of the Company's executive officers, including its
chief executive officer and the other senior 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. The Committee also administers the Company's Stock
Option Plan, under which an executive's compensation is directly dependent on
the performance of the Company's stock.
In 1997, shareholders at their Annual Meeting also approved a Long-Term
Incentive Plan under which an executive's rights to receive a stock award are
contingent on and related directly to the total return received by shareholders
on their investment in the Company's stock over a three-year period compared to
the return received by holders of stock in the S&P Publishing/Newspapers Index
(the same companies used in the total shareholder return comparison on page 15
of this proxy statement).
Salary and bonus make up the current compensation of senior executive officers.
The long-term compensation program consists of the Company's Stock Option Plan
and Long-Term Incentive Plan.
1997 COMPENSATION REVIEW. During 1997, the Committee reviewed the
competitiveness of compensation awarded executives of the Company with that of
the other companies included in the performance graph on page 15. It found that
total compensation for 1996 and for the 1994 - 96 period were generally
comparable to the median compensation paid by both groups of comparative
companies as were total benefits under its long-term incentive program.
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 Annual Incentive Compensation Plan.
8
<PAGE>
Under the Annual 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 was tied in 1997
to his or her performance of individual objectives established at the beginning
of 1997, and 65% of the bonus potential was tied to the financial performance of
the Company compared to budget. For 1997, the measure of financial performance
was economic value added (EVA); which is the increase in operating profit after
deducting the cost of capital.
If the Company meets its financial budget, the executive receives 100% of that
part (65%) of the potential bonus tied to financial performance; performance
below or exceeding budget results in payment ranging from 10% of the targeted
bonus (in the case of financial performance equal to 91% of budget) to 200% of
the targeted bonus (if the budget is exceeded by 10%). Performance at 90% of
target or below results in no bonus award for financial performance. In 1997,
the Plan was revised to put greater focus on strategic management and EVA for
shareholders. In 1997, the Company's performance surpassed its financial
targets.
Plan participants have the option of deferring any portion of their bonus to a
later year.
Messrs. Jones, McComas and Woodworth, and Ms. Connors are participants in the
Plan. Although Mr. Ridder was not a participant in the Plan, the Committee
considered the criteria and standards under the Plan, as well as information
concerning senior executive incentive compensation at comparable companies, in
determining his bonus.
In 1997, cash bonuses for Messrs. Ridder, Jones, McComas and Woodworth and for
Ms. Connors were based upon the Company's EVA in comparison to budget and upon
an assessment of individual performance during the year. Some subjectivity was
applied in determining Mr. Woodworth's cash bonus because he did not become a
Vice President of the Company until June 1997. 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 Mr. Ridder was judged by the Committee on a
subjective basis.
1997 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. In January, 1997, the
Committee recognized that Mr. Ridder's salary was below the median for CEOs at
other leading newspaper companies and so increased his salary effective March 1,
1997 to $785,000 from $725,000. Based on studies available to the Committee, we
believe Mr. Ridder's 1997 salary was in the range of the median salary paid by
comparable companies.
Mr. Ridder was awarded a bonus for 1997 of $760,000. As noted above, Mr Ridder
is not a participant in the Company's Annual Incentive Compensation Plan,
although the Committee has for a number of years, including 1997, considered in
part the criteria that would have been applicable to him had he been a Plan
participant. Beginning in 1996, the Committee, based on advice by SCA
Consulting, set Mr. Ridder's bonus target at 70% of salary to provide a more
competitive award. As we stated earlier, the Company in 1997 surpassed its EVA
and operating profit budget. The maximum bonus Mr. Ridder could have received
under the Plan in light of the level of Company performance, would have been
$789,337.
In awarding Mr. Ridder $760,000, the Committee took into account that the
Company's operating income and earnings per share based on operations reached an
all-time high in 1997.
The Committee granted Mr. Ridder a 1997 stock option covering 80,000 shares,
after reviewing the Company's financial performance and a competitive analysis
from SCA Consulting.
OTHER OFFICERS. The compensation of Messrs. Jones, McComas and Woodworth 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 EVA budgets 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) exceeds $1 million in any year. It is the policy of
the Company to
9
<PAGE>
defer payment of that portion of an executive's cash compensation which might
exceed the $1 million limit. As a result of this policy, payment of a
significant portion of Mr. Ridder's 1997 bonus award will be deferred.
- --------------------------------------------------------------------------------
All members of the Committee concur and join in this report to the Company's
shareholders.
John L. Weinberg, Chairman
Barbara Barnes Hauptfuhrer
C. Peter McColough
Thomas L. Phillips
Randall L. Tobias
10
<PAGE>
SENIOR EXECUTIVE COMPENSATION
The following table summarizes the compensation during the past three years of
the chief executive officer and each of the other four most highly compensated
senior executive officers in 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- -------------------------
OTHER STOCK ALL
ANNUAL OPTION OTHER
SALARY BONUS COMPENSATION AWARDS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3)(4) (# OF SHARES) ($)(5)(6)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
P. Anthony Ridder................... 1997 775,000 760,000 -- 80,000 14,762
Chairman, CEO & President 1996 708,333 695,000 -- 70,000 13,612
1995 602,996 195,000 -- 70,000 12,079
Ross Jones.......................... 1997 448,750 318,613 -- 45,000 10,326
Senior Vice President/Finance & CFO 1996 412,583 250,696 -- 34,000 7,777
1995 381,167 127,738 -- 34,000 7,505
Frank McComas....................... 1997 441,667 297,545 -- 45,000 8,315
Senior Vice President/Operations 1996 332,917 188,510 -- 33,000 7,096
1995 269,578 154,777 80,625 16,000 5,733
Mary Jean Connors................... 1997 362,500 256,423 -- 45,000 6,490
Senior Vice President/Human 1996 306,250 181,530 -- 33,000 5,335
Resources 1995 262,500 84,295 -- 24,000 5,201
Robert Woodworth.................... 1997 254,278 450,000 -- 80,000 4,068
Vice President
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The 1995 salary shown for Mr. McComas includes $815 for personal use of a
company vehicle.
(2) Mr. Woodworth became Vice President of the Company on June 1, 1997. The
$450,000 bonus shown for Mr. Woodworth includes $200,000 paid to Mr. Woodworth
when he joined the Company.
(3) Except as disclosed in tables in this proxy statement, none of the named
officers received a perquisite or benefit in 1997 in an amount exceeding
established reporting thresholds.
(4) The amount shown for Mr. McComas for 1995 relates to expenses incurred by
the Company in connection with his move to Miami when he became a corporate
officer.
(5) 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
Company-provided insurance on the life of the executive named. The Company's
401(k) contributions in 1997 were as follows: Mr. Ridder -- $4,750; Mr. Jones --
$4,800; Mr. McComas -- $4,750; Ms. Connors -- $4,800; and Mr. Woodworth -- $481.
The life insurance amounts in 1997 were as follows: Mr. Ridder -- $10,012; Mr.
Jones -- $5,526; Mr. McComas -- $3,565; Ms. Connors -- $1,690; and Mr. Woodworth
- -- $3,588.
(6) No officer of the Company has an employment contract. The Company does have
agreements with executive officers of the Company, including persons listed in
the above table, which entitle the executive to receive a severance payment
equal to three times the executive's annual salary and cash bonus if, following
a change in control (as defined) of the Company, the executive's employment is
terminated or the executive's compensation, position or benefits are reduced.
11
<PAGE>
STOCK OPTIONS GRANTED
The Company's long-term incentive programs consist of its Stock Option Plan and
its Long-Term Incentive Plan. Pursuant to the terms of the Stock Option Plan,
the Compensation Committee may grant key executives options which give the
executive the right in the succeeding ten years to purchase shares of the
Company's stock at the market price at the option grant date. The options
granted in 1997 are exercisable in three equal installments vesting over a
three-year period from the date of grant.
Options permit executives who contribute to the performance of the Company and
the market price of its stock to benefit along with the shareholders in
increases in the value of the stock.
The following table sets forth information regarding stock options granted in
1997 to each of the executive officers named earlier in the Summary Compensation
Table.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Exercise Grant Date
Options Employees in Price Expiration Present Value
Name Granted Fiscal Year ($/share) Date ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
P. Anthony Ridder................... 80,000 5.66% 51.7188 16-Dec-2007 995,200
Ross Jones.......................... 45,000 3.18% 51.7188 16-Dec-2007 559,800
Frank McComas....................... 45,000 3.18% 51.7188 16-Dec-2007 559,800
Mary Jean Connors................... 45,000 3.18% 51.7188 16-Dec-2007 559,800
Robert Woodworth.................... 35,000 (1) 2.47% 50.0000 22-July-2007 429,800
45,000 3.18% 51.7188 16-Dec-2007 559,800
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The 35,000 grant was given to Mr. Woodworth in connection with his becoming
a Vice President of the Company in June 1997.
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 .138%, risk-free rate of return of 5.67%, a dividend yield of
1.55% and exercisable in three equal annual installments vesting 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 optionee exercises the option at a
time when 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
1997 by each of the officers named in the Summary Compensation Table and the
number of unexercised options held by them at the end of the year.
12
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
Number of Value of
Securities Unexercised
Underlying In-the-
Unexercised 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> <C> <C>
P. Anthony Ridder............................ 90,000 1,917,051 338,002/149,998 7,768,165/947,159
Ross Jones................................... -- -- 102,002/78,998 2,096,848/460,033
Frank McComas................................ 17,001 434,660 22,667/72,332 382,104/343,623
Mary Jean Connors............................ 8,200 226,591 98,201/74,999 2,150,815/392,046
Robert Woodworth............................. -- -- 0/80,000 0/18,596
- -----------------------------------------------------------------------------------------------------------------------
</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.
LONG-TERM INCENTIVE PLAN
The Long-Term Incentive Plan, which was approved by shareholders in 1997, covers
the three-year performance period commencing January 1, 1997 and ending December
31, 1999. At the beginning of the performance period, each participant received
a grant of restricted shares of Company stock having a value (based on the
average closing price of the stock for December 1996) equal to 75% of the
participant's salary as of January 1, 1997 multiplied by the number of years
(three) in the performance period. Participants added after the start of the
performance period receive a pro-rated grant based on the remaining length of
the performance period.
The number of shares that will actually vest at the end of the three years
(i.e., the number of shares an executive will be entitled to receive) will
depend on the Company's total shareholder return ("TSR") compared to the median
TSR of the other companies in the S&P Publishing/Newspapers Index (the same
companies used in the total shareholder return comparison on page 15 of this
proxy statement). No vesting will occur unless the Company's TSR is positive,
regardless of relative ranking, nor will shares vest if the Company's TSR is
below the peer median.
In addition, should any of the shares vest, participants will also receive, in
cash or in shares of Company stock, as determined by the Compensation Committee,
an amount equal to the amount they would have received if dividends had been
paid to them on the vested portion of their award and such amounts had been
reinvested in Company stock from the time of payment to the time of vesting.
The following table sets forth information regarding the restrictive stock award
granted to each of the executive officers named earlier in the Summary
Compensation Table.
13
<PAGE>
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYMENTS
-------------------------
NUMBER OF MINIMUM # OF
UNVESTED PERFORMANCE SHARES PAYABLE MAXIMUM
NAME SHARES GRANTED (1) PERIOD UNDER THE PLAN (2) # SHARES (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
P. Anthony Ridder..................... 41,598 1/1/97 to 0 41,598
12/31/99
Ross Jones............................ 25,246 1/1/97 to 0 25,246
12/31/99
Frank McComas......................... 24,385 1/1/97 to 0 24,385
12/31/99
Robert Woodworth...................... 23,541 5/9/97 to 0 23,541
12/31/99
Mary Jean Connors..................... 20,082 1/1/97 to 0 20,082
12/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The number of shares granted equals the Dollar Value divided by the average
daily closing price of the Company's Common Stock during December 1996, which
was $39.21. The number of shares granted to Robert Woodworth is based on the
average closing price of the stock during June 1997, which was $37.98.
(2) Under the terms of the Plan, no vesting occurs if the Company's total
shareholder return is negative or is below the peer median of the other
companies in the S&P Publishing/Newspaper Index. Had the performance period
ended on December 31, 1997, no shares would have vested.
(3) All of the shares will vest only if the Company's total shareholder return
is positive and 5% or more above the peer median of the other companies in the
S&P Publishing/Newspaper Index.
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 1997 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.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
- -----------------------------------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 125,000............. 35,432 40,992 46,553 52,113 55,238 58,363
200,000............. 57,932 67,242 76,553 85,863 90,863 95,863
300,000............. 87,932 102,242 116,553 130,863 138,363 145,863
400,000............. 117,932 137,242 156,553 175,863 185,863 195,863
500,000............. 147,932 172,242 196,553 220,863 233,363 245,863
600,000............. 177,932 207,242 236,553 265,863 280,863 295,863
700,000............. 207,932 242,242 276,553 310,863 328,363 345,863
900,000............. 267,932 312,242 356,553 400,863 423,363 445,863
1,000,000............. 297,932 347,242 396,553 445,863 470,863 495,863
1,300,000............. 387,932 452,242 516,553 580,863 613,363 645,863
1,600,000............. 477,932 557,242 636,553 715,863 755,863 795,863
1,900,000............. 567,932 662,242 756,553 850,863 898,363 945,863
</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 1997, Mr. Ridder had 36
years of services with the Company, Mr. Jones 5, Mr. McComas 28, Ms. Connors 18
and Mr. Woodworth 6 months.
14
<PAGE>
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, 1992 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.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
KNIGHT-RIDDER, INC., S&P PUBLISHING/NEWSPAPERS INDEX
AND S&P 500 INDEX
DECEMBER 31, 1992 - DECEMBER 31, 1997
[THE FOLLOWING TABLE IS REPRESENTATIVE OF A GRAPH]
- -------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Knight-Ridder, Inc............... $100.00 $105.70 $91.90 $116.60 $145.10 $200.90
S&P 500.......................... $100.00 $109.80 $111.30 $153.10 $188.80 $252.00
S&P Publishing/Newspapers........ $100.00 $115.82 $107.00 $134.71 $166.98 $262.29
</TABLE>
15
<PAGE>
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of the Company receive an annual
retainer of $30,000 plus $1,500 for each Board and $1,000 for each Committee
meeting attended as compensation for their services. Beginning in January 1998,
half of the annual retainer is paid in Company stock. A director also may choose
to receive the balance of the retainer in Company stock. The chairperson of each
Board Committee also receives an annual retainer of $5,000. Effective December
1997, each outside director will receive an annual grant of options to purchase
2,000 shares. 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 and who were age 65 and
over on July 1, 1996 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.
Directors who have never been employed by the Company and were under age 65 on
July 1, 1996 participate in a retirement program under which they are credited
with 600 phantom shares of Company stock annually. Such phantom share accounts
are credited with dividend equivalents and paid in cash in a lump sum upon
termination of Board service.
Mr. Chapman, a former chief executive officer of the Company, has a retirement
agreement with the Company, which 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, who retired as president of the Company in July 1997, has agreed
to serve as a Director of the Company through its Annual Meeting. He will serve
as a member of the Executive Committee and will provide consulting services to
the Company until June 30, 1999. The Company has agreed to pay Mr. Fontaine
$150,000 for services provided through June 1998 and $100,000 for his services
from June 1998 through June 1999. Mr. Fontaine also has a retirement agreement
which provides for the payment to him of an annual benefit of $129,548 annually
upon retirement and a death benefit payable to his surviving spouse, in addition
to benefits payable under the Company's retirement program.
CERTAIN RELATIONSHIPS
Peter B. Ridder, President and Publisher of THE CHARLOTTE OBSERVER, is a brother
of P. Anthony Ridder. Alvah H. Chapman, Jr.'s son-in-law, Robert L. Hilton, is
Circulation Home Delivery/Distribution Manager at THE WICHITA EAGLE. These
persons related to directors of the Company received aggregate compensation from
the Company in 1997 of $651,426.
See "Compensation Committee Interlocks and Insider Participation" on page 7 for
information concerning transactions between the Company and organizations with
which Mrs. Hauptfuhrer, Mr. Fontaine and Mr. Weinberg are associated.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities Exchange Act of 1934 requires that the Company's directors and
officers file reports of ownership and changes in ownership of the Company's
equity securities with the Securities and Exchange Commission and the New York
Stock Exchange and furnish the Company with copies of such reports. The Company
believes that all directors and officers filed on a timely basis all such
reports required of them during 1997.
PROPOSALS
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 1998. They have served as the Company's independent
auditors since 1951. The Board of Directors recommends that shareholders approve
and ratify this appointment.
16
<PAGE>
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 RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS FOR 1998.
SHAREHOLDER PROPOSAL NO. 1 -- REDEMPTION OF RIGHTS ISSUED PURSUANT TO THE
COMPANY'S SHAREHOLDER RIGHTS PLAN
The Massachusetts Laborers Annuity Fund of Burlington, Massachusetts, owner of
15,900 shares of Common Stock, has informed the Company that it intends to
present the following proposal at the Annual Meeting and has submitted the
following statement of its reasons.
The shareholders of Knight-Ridder, Inc. request the Board of Directors to
redeem the shareholder rights issued in 1986 and renewed in 1996 unless
such issuance is approved by the affirmative vote of shareholders, to be
held as soon as may be practical.
SUPPORTING STATEMENT: On June 21, 1996, the Board of Directors of Knight
Ridder issued, WITHOUT SHAREHOLDER APPROVAL, certain shareholder rights
pursuant to a Shareholder Rights Plan. These rights are a type of
anti-takeover device, commonly known as a "poison pill," which injure
shareholders by reducing management accountability and adversely affecting
shareholder value.
While management and the Board of Directors should have the appropriate
tools to ensure that all shareholders benefit from any proposal to acquire
the Company, the future possibility of takeover does not justify the
unilateral imposition of a poison pill. As Nell Minow and Robert Monks note
in their book POWER AND ACCOUNTABILITY, poison pills "amount to major de
facto shifts of voting rights away from shareholders to management, on
matters pertaining to the sale of the corporation. They give target boards
of directors absolute veto power over any proposed business combination, no
matter how beneficial it might be for the shareholders."
Given the substantial power that poison pills shift from shareholders to
management, and the potential this holds for reducing management
accountability, shareholders should have the opportunity to vote on such a
significant corporate governance issue. This is particularly important
given the fact that the Company already contains measures which insulate
management from shareholders, including a classified board. Moreover, the
Company's common stock has lagged behind the S&P 500 Index and the S&P
Publishing/Newspaper peer group over the last five years (according to the
1996 proxy statement). This suggests that the Company would benefit from
greater shareholder input rather than less.
Rights plans such as Knight Ridder's have become increasingly unpopular in
recent years. Last year, shareholders proposals seeking to redeem rights
plans or subject plans to shareholder votes garnered 54% support from
shareholders. In addition, the Council of Institutional Investors -- an
organization of large corporate and public pension plans -- calls for
shareholder approval of all poison pills in its Shareholder Bill of Rights.
To assure shareholders that management and Board of Directors respect the
right of shareholders to participate in the fundamental decisions that
affect the Company's governance and performance, we urge the Company to
redeem the Shareholder Rights Plan or subject it to a vote as soon as may
be practical.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST SHAREHOLDER
PROPOSAL NO. 1.
MANAGEMENT'S POSITION
In 1986, the Board of Directors first adopted a Shareholder Rights Plan pursuant
to which Rights to purchase the Company's Common Stock were distributed to
shareholders. The Plan was adopted again in 1996. 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
17
<PAGE>
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.
Similar shareholder proposals were presented at the 1990 and 1996 Annual
Meetings of Shareholders and were 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 in 1986 and readopted in 1996, 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 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
SHAREHOLDER PROPOSAL NO. 1.
SHAREHOLDER PROPOSAL NO. 2 -- ANNUAL ELECTION OF DIRECTORS
Chris J. Manoleas, 17824 Biehl Road, Roseville, Michigan 48066, owner of 107
shares of Common Stock, has informed the Company that he intends to present the
following proposal at the Annual Meeting and has submitted the following
statement of his reasons.
RESOLVED: That Knight-Ridder, Inc. stockholders urge the Board of Directors
take the necessary steps, in compliance with state law, to declassify the
Board for the purpose of director elections. The board declassification
shall be completed in a manner that does not affect the unexpired terms of
directors previously elected.
SUPPORTING STATEMENT: Knight-Ridder's board is divided into three classes
of directors serving staggered three-year terms. This means that an
individual director faces elections only once every three years, and
shareholders only vote on roughly one-third of the board each year.
Although some companies continue to defend staggered boards as a guarantee
of continuity, we think a better way to insure continuity is through
director re-elections. When directors are performing well they routinely
are re-elected with majorities over 95%.
Generally, shareholders have grown less supportive of classified boards. In
1996, shareholders overturned staggered boards at General Instrument,
Rowan, Alumax, Liz Claiborne, and Stride Rite. Overall support for
declassification proposals increased to 42.4% in 1996, from 39.1% in 1995,
according to the IRRC's review of elections.
By adopting annual elections, Knight-Ridder can demonstrate its commitment
to fuller accountability to shareholders, accountability that respects the
importance of men and
18
<PAGE>
women of all races among our company's key constituents, and acceptability
that honors shareholder prerogatives.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST SHAREHOLDER
PROPOSAL NO. 2.
MANAGEMENT'S POSITION
Shareholders voted in 1989 to amend the Company's Charter to provide for the
present method of electing directors. Under the Company's Charter, the
shareholders annually elect approximately one-third of the directors to serve
for three-year terms. Similar proposals were presented at the 1994 and 1995
Annual Meetings of shareholders and were defeated.
The Board of Directors believes the existing Charter provision for a board of
three classes of directors who serve for three-year terms is serving the Company
well. Over 70% of corporations included in the S&P 500 Index currently have
classified boards. It promotes Board stability and continuity and protects the
Company against the demands of a minority shareholder or group.
The proposal would not amend the Company's Charter at this time, but instead
requests that the Board take the necessary steps, in accordance with Florida
State law, "to declassify the Board". Under the provisions of the Company's
Charter, approved by shareholders in 1989, an affirmative vote of 80% of the
outstanding shares of Common Stock entitled to vote on a resolution proposed by
the Board to amend the Charter would be required at a future meeting of
shareholders in order to provide for the annual election of all directors.
YOUR BOARD OF DIRECTORS BELIEVES THAT A CHANGE IN THE MANNER IN WHICH YOU ELECT
DIRECTORS IS NOT IN THE BEST INTERESTS OF ALL SHAREHOLDERS AND RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST SHAREHOLDER PROPOSAL NO. 2.
SHAREHOLDER PROPOSAL NO. 3 -- ADOPTION OF AN EXECUTIVE COMPENSATION POLICY
DEALING PRIMARILY WITH THE COMPANY'S NEWSPAPERS' CONTENT
The Newspaper Guild of Greater Philadelphia, Pennsylvania, owner of 20 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, the shareholders request that the Board of Directors adopt
executive compensation policies that require annual reviews of executive
performance that measure adherence to the following principles as part of
the process that determines executive compensation.
1. The company must be accountable to the communities in which it
publishes.
2. The company must be fair, responsible and law-abiding in its dealings
with local advertisers, vendors, employees and communities.
3. The company must dedicate adequate resources to news coverage in order
to ensure that the public has a quality product that provides the
information needed to make informed civic decisions.
4. The company must uphold freedom of speech and the press, and avoid
corporate censorship of news.
5. The company's newspaper content must reflect the diversity of the
communities that they serve.
SUPPORTING STATEMENT: The need to emphasize the above principles, and to
reward executives who carry out these principles, is heightened by the
proliferation of one -- newspaper cities. For example, in his book THE
CHAIN GANG, Richard McCord documents how one chain's predatory advertising
and reporting practices took unreasonable profits out of their communities
and hurt local businesses and residents. The adoption of the above
principles will encourage Knight-Ridder, Inc. (KRI) to act responsibly in
the communities the company serves, and to avoid predatory and
discriminatory practices.
The need to adopt the above principles is also heightened by the fact that
the industry has not solved its long-term dilemma of shrinking newspaper
readership, increasing competition from local television news, and
potential competition from new electronic media. In the 1960s more than
eighty percent of adults read a daily paper. By the 1990s, this had fallen
to sixty percent.
19
<PAGE>
It is incumbent on newspaper chains to reverse this downward trend in
readership by producing quality products and acting as responsible
corporate citizens. By adopting these principles, KRI, the second largest
chain, may prevent killing the goose that laid the golden egg.
A quality product is particularly important. In its September 29, 1997,
review of national newspapers, TIME magazine declared that the Miami HERALD
which used to appear regularly on its `ten-best' lists, seems "a shell of
its former self." It added that, "at the Detroit FREE PRESS, quality has
plummeted since a joint operating agreement with the afternoon NEWS."
In the late 1980s, KRIreceived no fewer than three and frequently 5-7
Pulitzer prizes in a given year. Beginning in the 1990s, KRI has never
exceeded three prizes in any one year. It received no prizes in 1995.
Adoption of the principles by the Board will enhance adherence to sound
business practices by our executives, help reverse the threats to our place
in the publishing world and protect our investment.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST SHAREHOLDER
PROPOSAL NO. 3.
MANAGEMENT'S POSITION
Adherence to the highest ethical principles is fundamental to Knight-Ridder's
culture. The Knight-Ridder Statement of Values -- set forth at page 71 of the
accompanying Annual Report -- says "due diligence is both a business and a
public trust, built on the highest standards of ethics and integrity. We are
rooted in our founders' conviction that high-quality newspapers -- fair,
independent, probing, relevant and compassionate -- are indispensable to our
free society."
The values the shareholder proposal seeks to embrace already are woven into
fundamental Knight-Ridder values and are made explicit in our undertakings to
our customers, employees, shareholders, the communities which we serve and
society in the Knight-Ridder Promise, which appears inside the back cover of the
Annual Report. The Knight-Ridder Promise emphasizes the Company's commitment to
"meeting the needs and expectations of its customers" with "honesty and
fairness," providing "personal respect and fair pay" to its employees and
vigorously supporting "a free press, freedom of speech and a free flow of
information around the globe."
The shareholder proposal goes beyond a restatement of Knight-Ridder values and
attempts to influence the content of the Company's newspapers -- and to force
the centralization of decisions on and assessments of local content through the
workings of the executive compensation process. THE BOARD BELIEVES THAT THE
EDITORIAL INDEPENDENCE OF EACH OF ITS NEWSPAPERS IS AN ESSENTIAL PART OF ITS
OPERATION AND OF A FREE PRESS. THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
AGAINST THIS PROPOSAL.
Although the Proposal begins by referring to "executive compensation policies,"
the five principles it requests the Company to adopt and the supporting
statement deal primarily with the content of the Company's newspapers. For
example, the principles speak about the amount of resources the Company should
devote to news coverage and seek to impose requirements on newspaper content. At
Knight-Ridder, we believe it is essential that decisions on content be made by
the publisher and editors of each newspaper, not by corporate staff or imposed
from the outside as this proposal would require. It is the publisher and editors
who decide how to deploy their news gathering resources and what information to
put in the newspaper, and it is the publisher and editors who are accountable to
the community for their decisions.
The Board believes that the editorial independence of each of its newspapers is
an essential part of its operations and of a free press.
FOR THESE REASONS, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST
SHAREHOLDER PROPOSAL NO. 3.
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
20
<PAGE>
at the Annual Meeting. Approval of all Proposals 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.
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. Such
shares will have no effect on the election of directors.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1999 Annual Meeting of
Shareholders and for inclusion in the Company's Proxy State-ment 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 27, 1998. 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 at the 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 ensure 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
21
<PAGE>
KNIGHT-RIDDER, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
P. ANTHONY RIDDER, ROSS JONES 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 9, 1998 AT THE ANNUAL MEETING OF
SHAREHOLDERS OF SAID COMPANY TO BE HELD ON APRIL 28, 1998 AND AT ANY
ADJOURNMENTS(S) THEREOF:
THIS PROXY IS CONTINUED ON REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED IN THE
SPACES PROVIDED BELOW. IF NO INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED BELOW AND FOR THE APPOINTMENT OF ERNST & YOUNG LLP AS
AUDITORS AND AGAINST SHAREHOLDER PROPOSALS NO. 1, NO. 2 AND NO. 3.
Please mark your votes as indicated in this example [ X ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES' AND FOR THE
APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS AND A VOTE "AGAINST" PROPOSALS NO.
1, NO. 2 AND NO. 3.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR ALL WITHHOLD FOR ALL
NOMINEES NOMINEES
Election of the following nominees as Directors for Terms Ending 2001: [ ] [ ]
Joan Ridder Challinor, Kathleen Foley Feldstein, Thomas P. Gerrity and Gonzalo
F. Valdes - Fauli
To withhold authority to vote for any individual nominee, write the name of that
nominee in the space below.
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Ratification of Appointment of Ernst & Young LLP as Independent [ ] [ ] [ ]
Auditors.
Shareholder Proposal No. 1: Redemption of the Shareholder Rights [ ] [ ] [ ]
Plan.
Shareholder Proposal No. 2: Declassification of the Board for the [ ] [ ] [ ]
purpose of directors elections.
Shareholder Proposal No. 3: Adoption of an executive compensation [ ] [ ] [ ]
policy dealing directly with newspapers' content.
</TABLE>
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting.
NOTE: PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS BELOW AND RETURN IN THE
ENCLOSED ENVELOPE. IF ACTING AS EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN,
ETC., YOU SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS A CORPORATION,
PLEASE SING THE FULL CORPORATE NAME, BY DULY AUTHORIZED OFFICER.
I will attend the annual meeting in Miami
[ ] [ ]
YES NO
SIGNATURE________________________SIGNATURE_______________________DATE__________
